Friday, January 17, 2014

Power Can't Keep Labor Down Forever

The NY Times has an interesting article on how employer groups are taking a strong stand against worker centers. I hadn't heard of these before, but worker centers are groups which advocate for employee rights without going to the level of organizing workers at the individual employer level.

I don't have enough knowledge to add any insights into the organizations themselves. However, I do think this is an interesting example of how needs drive an institutional response no matter how hostile the economically and politically powerful are to those needs. America has been very anti-union for many decades and there have been a variety of institutional responses, both politically and systemically at the employer level, that have served to greatly weaken unions.

This did not however in any way diminish the need society has for the functions that unions played. Given that our institutions no longer allow unions to fulfill their social purpose it is inevitable that new institutions would develop that would be able to get around the limitations placed on unions. Worker centers seem to be at least one possible form those institutions will take.

The message employers should be getting from this is that there is a social need that needs to be filled and that their activities are actively undermining this need. It is impossible to be successful in this for any length of time and they would be better off coming to terms with the fact that they cannot simply get their way through wielding power. Sooner or later they will have to cede influence to labor, the question is if they want to do this with organized labor, which they have a long history with and can probably reach some form of mutually beneficial symbiotic relationship with, or if they want to role the dice with innovative new organizations that are being formed in response to the social needs going unmet due to their anti-union activities.

Given the often expressed fear of uncertainty I hear about the sensible thing would be to make nice with the unions. I doubt, however, that business groups will be able to acknowledge to themselves that these groups fulfill a necessary social function and will instead take the riskier, and almost definitely worse for everyone, option of rolling the dice and relying on their power instead.


  1. I was having a discussion related to this some weeks ago with my mother. When I noted the idea of the firm as one where shareholders have a marginal claim and that the company's duty was to its stakeholders, she responded by saying "ah, the Japanese model, then." I, and I suspect you, didn't have that in mind, but then again it made me think: is the adversarial relationship a necessary part of the relationship between labor and capital in non-employe-owned firms?

    1. The Japanese model was certainly an influence, though not exactly what I had in mind.

      I would say generally that the anglo-saxon countries are unique in the degree to which capital and labor are adversarial. I do think that in non-employee owned firms there is a degree of natural tension but anglo-saxon common law has a notion that objectivity is likely to result from the open airing of competing claims between two interested parties. This is grounded in our legal system and has been applied more generally. This greatly magnifies the degree to which inherent conflicts are expressed in our system as well as magnifies the difference in outcomes. I tend to think of the global shifts in income as representing something closer to the actual skill based shifts occurring, while the anglo specific magnitude reflects the ideological component of the labor/capital relationship.

      My belief, with the caveat that I think there is a literature on this but have not read any, is that this idea was accurate enough for simple relationships that dominated the 18th and 19th centuries, wasn't so far off that its disadvantages were significant for most of the 20th century, but has become a significant problem today as social institutions have become more complex and interrelated.

      To get back on point, adversarial relationships are primarily a construction based on our history as well as our individualistic ideology. I don't think there is anything systemic that leads to them, this is not how labor and capital relate in Europe, for on example. While I think best practices are moving away from this adversarial relationship, I think a lot of investors and managers are heavily invested in an ideology that conceives of the relationship as adversarial and they believe that the outcomes we are witnessing are the fair results of this competition as opposed to results skewed to reflect relative power rather than contribution. This makes untangling the degree to which this conflict is necessary difficult. Our employment law and business norms are structured with the assumption this will be an adversarial relationship. Changing this will be rather difficult, but it is also fairly obvious that for this relationship to be productive both sides need to be nearly equal in power. This is obviously not the case today and should make everyone, including business owners, question why we would continue with this model. After all, business requires accurate information and if power relationships are such that the adversarial relationship between capital and labor is no longer generating the information the adversarial process theoretically should then it should be disadvantageous to continue this relationship since the costs of bad information will gradually exceed the benefits of increased bargaining power (especially given there are many more dimensions in which the current relationship is failing aside from information generation).