Liberty and Unions

Some within the libertarian movement look askance at some of my proposals on Social Security and the reform of the workplace, as they include a major role for organized labor. There is a belief by many in the movement that organized labor has a history of thuggery (which it has), which somehow renders the basic idea of the labor movement impure. Many even find the basic idea of organized labor unacceptable as interference between the owner of the firm and its employees and potential employees (who are unable to bargain in a closed shop for a better deal). The answer to these objections is that I am not advocating turning the world over to Unions in their current form. The Union movement must undergo significant changes (as does organized religion) before they can serve as an alternative to government intervention in the workplace and the provision of social services. How to do this will be addressed at the end of this essay. First, I will explore the environment in which Unions operate: the workplace.

The standard libertarian model for the workplace is of a single owner negotiating employment contracts with employees in a free market where the employees have other options. If this model was the predominant paradigm in the American workplace, all of the objections to the Union movement would be valid. In most cases, however, this is not the case. The majority of jobs are with corporations, not single owners, which function according to a hierarchical principal/agent model. The labor market is also multifaceted, meaning there are several labor markets, one for each occupation. Many so-called small businesses are also nothing of the kind. They are franchises of larger corporations established to move inventory risk from the manufacturer to the franchisee, with the added advantage of breaking up the labor force into units that cannot organize. Additionally, information sharing among employers regarding employees who would organize goes beyond simple information sharing to collusion, so that “troublemakers” are unable to find work in their profession. Looking at Dr. Carl Milsted’s Equality/Aristocracy and Liberty/Tyranny, the workplace clearly tends more towards the bottom right than most pure Libertarians would care to admit. Opposing governmental and union alternatives to this state of affairs effectively pulls the Party to that quadrant as well, since life is not just politics but what comes from it – at least in the minds of most voters. A friendly attitude toward organized labor would go a long way to overcome this perception. Further, organizing workers directly is the only alternative to government intervention in the workplace, which tends toward socialism in its ugliest form and the lower left of Carl Milsted’s typology.

There are other models of the workplace worth considering. Dr. Milsted, in his Holistic Politics, justifies higher management and specialist salaries as providing a service to workers. His explanation makes economic sense, although the management of these firms does not follow this model. If his model were more largely accepted it would, by its existence, change the attitude of workers when dealing with management and management when dealing with workers.

The model that I propose is to use Social Security privatization to actually give control of the workplace to employees by allowing corporate firms to issue stock to their employees rather than pay the full amount of their tax liability to the government. To duplicate the redistributional effects of the program, I would insist on an equal stock contribution, regardless of salary level, for all full time workers, and to avoid turning the American economy into one big Enron, I would insist upon factional rather than unitary corporate boards, with representation provided through employee unions or professional organizations. I have also proposed an educational program which has the employer rather than the worker underwrite the costs of training and higher education and pay for living expenses concurrently so that the risk and presumably the benefits of that education are borne more by the employee-owned firm (leading to a flatter salary structure).

The Unions are not big fans of this proposal, as it would require that they change their paradigm. Explicitly owning a firm takes away the incentive to strike against it. It also takes away the incentive to insist on work rules and benefits that make the company unprofitable. If everyone has a financial incentive to join in order to maximize voting power in ones occupation, Union muscle in the form of cousin Vito is no longer required.

The advantages of this arrangement from a libertarian point of view are obvious. Employee-owned firms need no outside watchdog to ensure safe products or a safe workplace. The most they need are consultants. Further, once the practice of training and educating employees is engrained, government support for both workforce development and higher education can be dispensed with, with the possible exception of the inclusion of a tax benefit to level the playing field so that small firms are not disadvantaged.

Currently, organized labor is effectively a wing of the Democratic Party. That did not do them too much good under the Clintons, which sold them down the road as part of the North American Free Trade Agreement. A new party of the upper left, or possibly the Libertarian Party itself, can offer them a new home. Employee-ownership will do more for its members in the long term than any program offered by the Democrats. As important, if we are ever to get beyond government intervention in the workplace, we need Labor and must offer a more effective appeal to labor than we currently do. As I stated at the outset, the Labor movement has its problems. The stance we take toward it (one of condemnation) has not been very effective in transforming the movement. Offering an olive branch might be more effective if we are to suggest reforms to it and generally attract its constituency to the logic of liberty.