Labor Roundtable: Kevin Carson

by Kevin Carson

[Editors note: This is the first post in a series – or ‘roundtable’ – on the rise and fall of organized labor in America. Other guest authors will be posting, and we urge others to submit posts as well. Regular League authors are also encouraged to chime in.]

In a recent post, “Labor 2.0 (initial thoughts),” Erik Kain asks:

Does a revived labor movement require protectionist policies, increasing tariffs, etc.? If not, what policies do need to change in order to strengthen labor? Obviously something is out of balance between big business and the working class. Question #2: Does a revived labor movement require harsher immigration policies?

It would certainly help if some policies change. But the room for change lies mainly, not with adding further economic intervention to aid labor at the expense of capital, but rather with eliminating those policies which currently benefit capital at the expense of labor. The question is not what new laws would strengthen the bargaining power of labor, but which existing ones weaken it.

This was the subject of a recent research paper I did at Center for a Stateless Society (“Labor Struggle: A Free Market Model“), in which I discussed these issues at much greater length.

The most obvious forms of state intervention that hobble labor are legislation like:

1) The provisions of Taft-Hartley which criminalize sympathy and boycott strikes;

2) The Railway Labor Relations Act and the “cooling off” provisions of Taft-Hartley, which enable the government to prevent a strike from spreading to common carriers and thus becoming a general strike; and

3) “Right-to-Work” (sic) laws, which restrict the freedom of contract by forbidding employers to enter into union shop contracts with a bargaining agent.

Further, we should examine the extent to which even ostensibly pro-labor laws, like the Wagner Act, have served in practice to weaken the bargaining power of labor. Before Wagner, what is today regarded as the conventional strike — an announced walkout associated with a formal ultimatum — was only one tactic among many used by unions.

Labor struggle involved, at least as much as the conventional strike, assorted forms of on-the-job direct action like slowdowns, “open-mouth sabotage,” work-to-rule, “good work” strikes, wildcat strikes, and unannounced one-day walkouts at random intervals. The idea was to take advantage of the inherent agency problems of the wage labor contract, in order to do things on the job that would drive up the costs of business and reduce the rate of profit.

Walking off the job in a formal, declared strike just gives the boss the opportunity to lock you out and hire scabs. It’s a bit like the Massachusetts militia at Lexington deciding to fight the British by putting on bright red uniforms and marching in parade ground formation.

The model of industrial unionism established under Wagner had actually been advocated before then by a major segment of capital. Industrial unionism, and the New Deal labor accord in general, was supported by large, capital-intensive, export-oriented industries for which labor costs were a relatively modest part of the entire cost package, but which had long planning horizons and the need for long-term stability and predictability. These industries were willing to trade significant wage increases, job security and improved working conditions in return for more stable control of the production process. They were willing to offer seniority and productivity-based wage increases, in return for a union policy of “letting the managers manage.”

Gerard Swope, the President of General Electric and the leading progressive capitalist associated with the New Deal, was an advocate of industrial unionism. The company unions under the American Plan, in many ways, bore a functional resemblance to Wagner-style industrial unions. Both served the employer’s need for a single bargaining unit which could keep the rank-and-file in line. After Wagner, union bureaucrats became primarily the enforcers of contracts against the rank-and-file. Unions suppressed wildcat strikes on behalf of the bosses.

To the extent that labor did get a share of productivity increases during the heyday of Consensus Capitalism, until 1970 or no, there were benefits to this model. But it diverted the labor movement into a single, statist track that left it vulnerable if employers and the state were to later decide the labor accord was no longer in their interest.

Now that capital has, in fact, decided on a neoliberal path of busting unions and capping real wages, for labor to continue to fight by the capitalist state’s rules is suicidal.

So while a repeal of anti-labor legislation would be nice, the essential thing is for labor to rediscover the wide range of direct action tactics it had at its disposal before its reliance on Wagner caused them to atrophy.

These things include:

1) Minority unionism, in which even a minority of workers in a workplace begin to act as a bargaining unit without waiting to be officially certified by the NLRB;

2) The French model of socially-based unionism, in which unions derive membership from the unemployed and from individuals in non-union workplaces, as well as members of certified bargaining agents, and offer services like affordable insurance and assorted forms of training;

3) The guild model, which overlaps with socially-based unionism to some extent, offering insurance and training, negotiating with employers on behalf of members, and offering reliable certification of skill for prospective employers;

4) The counter-economic or informal economic model, which also overlaps with the socially-based unionism. Unions promote self-provisioning in the informal and household economy, promote production for barter between members, offer cheap group housing and subsistence for the unemployed, provide assorted risk- and cost-pooling arrangements amounting to a socially-based welfare state of the kind described by Kropotkin in Mutual Aid, provide access to cheap micromanufacturing facilities and internet cafes for members, and generally increase the base of independent production in which subsistence needs can be met outside the wage labor relationship;

5) Open mouth sabotage, or the strategic targeting of the company’s suppliers and outlets, consumers, the press, advocacy organizations, and institutions in the community where it is headquartered, with all the dirt on how the company treats its workers. It’s the “culture jamming” model that Frank Kernaghan used against Kathie Lee Gifford, which when coupled with the Streisand Effect is devilishly effective;

6) Networked resistance on the model of the Wal-Mart Workers Association and the Immolakee Workers, based on open-mouth sabotage and maximum public embarrassment of the employer, large-scale consumer boycotts, and broad alliances with community activists and assorted social justice organizations. This has been quite effective. It’s the “Netwar” model described by David Ronfeldt and John Arquilla at Rand Corporation — the networked swarm model used by the global support network for the Zapatistas and which was later adopted by the anti-globalization movement.

____________________________________________

Kevin Carson

Center for a Stateless Society

Mutualist Blog: Free Market Anti-Capitalism

The Homebrew Industrial Revolution: A Low-Overhead Manifesto

Organization Theory: A Libertarian Perspective


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114 thoughts on “Labor Roundtable: Kevin Carson

  1. Pingback: The Free Market and Unions

  2. 1) The provisions of Taft-Hartley which criminalize sympathy and boycott strikes;

    The NLRA does not outlaw sympathy strikes or boycotts. It outlaws secondary boycotts, and most labor contracts have no-strike provisions which may, or may not, prohibit sympathy strikes. In the absence of such a provision, workers can refuse to cross lawful picket lines and their refusal is protected, concerted activity.

    Even where an employee honors an illegal picket line, the act is not criminalized by the Act. It would merely be “unprotected activity” carrying no criminal sanction but subjecting the employee to possible disciplinary action from his employer.

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  3. Thanks to all.

    Alex: I should have been clearer, but I meant “secondary sympathy and boycott strikes.” One reason the CIO strikes of the early ’30s were so effective was that they achieved defense in depth by bringing in suppliers and outlets, and sometimes bringing in transportation workers to create a regional general strike. A strike that degrades the effectiveness of an entire production chain carries a lot more punch.

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    • Kevin,

      “secondary strikes and boycotts” would probably be a better way of stating it. Sympathy strikes most commonly are refusals to cross picket lines placed by other crafts or unions. Another example was the longshoremen refusing to load/unload ships to or from Poland during Solidarity’s actions. The primary mechanism for dampening sympathy strikes is the no strike clause in the CBA, which is a matter of bargaining rather than Taft-Hartley.

      Also, the Wagner Act did not contain any prohibitions on union activity whatsoever. Section 8(b)’s prohibitions on Union conduct (like secondary boycotts) came with Taft-Hartley. At most, the Wagner Act excluded certain conduct from its protections. I doubt many union leaders saw the Wagner Act as putting any limitations on them at all. I knew an old time union lawyer who practically spat every time he said “Taft-Hartley,” though.

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      • What do you think of the view, advanced by, among others, Christopher Tomlins, that in practice, the way the Wagner Act was administered put limitations on unions, in particular by the NLRB’s control over which unions be recognized when two or more competed for the loyalty of workers in the same shop?

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        • I think he conflates the Wagner Act with both Taft-Hartley and after the fact judicial and other modifications of federal labor law when discussing the present day state of the labor movement. Unit definition is always a difficult issue, but having multiple unions representing the same unit is unworkable. Jurisdictional disputes between unions for the same employees are rare anyway.

          In the present day, the Board is increasingly irrelevant since unions prefer to organize without elections through card checks and neutrality agreements, using , political or economic pressure and avoiding Board certification whenever possible.

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      • It depends on which people or group of people you are talking about. In the case of an individual worker it may or may not depending upon that workers point of view (if he favors the union it restricts it, if he does not then it restricts his choice of where to work). So we have to judge which is the higher right. Do we use the greatest good for the greatest number approach?
        In this sense the purely libertarian point of view would actually outlaw unions as at least some workers (and of course the managers) freedoms are infringed.
        So in the end the question becomes whom do you see as more needy of support the union worked or the union hating worker.

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        • But you don’t have a “right to work” under whatever terms you stipulate, it’s not like you can demand an employer remunerate you for labor according to what you deem is fair. The employer extends an offer to a prospective employee and he may either accept or reject– if the employer has signed a union contract, the union is one of the terms of employment. In the same way, if the employer has a 401(k) match and not a pension, that’s a term of employment, take it or leave it.

          What you might be stuck on is the fact that employers usually agree to union contracts under a certain duress, in the face of a strike action or boycott. But here, we see large groups of people freely deciding to suspend their productivity and (in the case of a boycott) consumption. I mean, Ayn Rand got the idea of Galt’s strike from somewhere, she just thought that solidarity of Capital could work just as well as solidarity of the Labor.

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          • “she just thought that solidarity of Capital could work just as well as solidarity of the Labor.”

            The funny thing is that capital already has a state-enforced system of solidarity — the corporation.

            Also, I think that “going Galt” was about solidarity among entrepreneurs, not capital.

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            • Mr. Ricketson gets to the heart of the current semantic crisis: one side hears “capitalism” and thinks liberty, individualism and entrepreneurship. Yay!

              The other hears “capitalism” and hears oppressive corporatism and high finance, where money makes money yet creates no wealth, parasitic at its base. Boo!

              Both sides are correct. The only question is in that they overlap, and in correcting the latter, we risk strangling the former. One size doesn’t fit all.

              A needed clarification, and well done, sir.

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              • Thanks for the encouragement, Mr. Van Dyke.

                One more thing that may be worth clarifying is the overlap between entrepreneurs and capital — entrepreneurs typically put a lot of their own capital into the firm, and they end up with a lot of capital if the firm succeeds. Because of this, it is easy to equate them with “capital”. However, I think it is important to distinguish them from the people who live off of the interest of their bank accounts or trust funds. Basically, its the difference between old money and new money.

                From the entrepreneur’s perspective, he needs to organize other people’s capital and labor in order to make the firm succeed. Of course he also contributes his own capital and labor.

                In my ideal world, workers would take part of their compensation as ownership in the company, and they would take more responsibility for the success of the company. In effect, they’d become junior partners to the original entrepreneur. The caveat is that this gains stability at the cost of flexibility — it becomes harder to reallocate labor among firms if workers are financially tied to a single firm. But I think that conflict can be managed once we get away from the idea that workers should act like mindless drones.

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    • If you run the typical scenario backwards it might make more sense:

      You and your friends in North Carolina work for AmericaBank’s online support unit. Let’s say you and your friends trust each other and all get together and call yourselves the “AmericaBank Online Support Crew” (or something). One day you hear there’s going to be layoffs so you all go to your boss and say:

      “Hey boss. All of us got together and we’d be happy to make you an offer. We’d be happy to keep working for a 10% cut in salary and we’d also be willing to take over all of our health and pension obligations after this point – we made a deal with the Freelancer’s Union to get in their risk pool. If you’d agree to this, we’d need to make sure that anyone who you hired after this would agree to these terms, so there’s an even playing field between us and the new hires, and that you’d give us a guarantee that you wouldn’t fire any of us without cause for the next 5 years.”

      As it stands now, just about everything the employees are asking from the employer in this agreement, really the heart of what they need in order for the deal to work, is unenforceable. They’d be giving serious concessions in their pay and benefits and would be able to obtain no guarantees in return, even though from the employer’s perspective this might be a really good deal.

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    • “Right to work” prohibits unions from placing a clause in the contract where the firm pays the union a sum each year that is dependent upon the number of people that the firm employs.

      When it is phrased this way, it’s a pretty simple arrangement, which is complicated by the nominal assignment of the fee to the new employee.

      However, even if we view the terms as “the firm can only hire union members”, then it is just an exclusive contract. Such contracts are common in many industries. No big deal.

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  4. Unions want the benefits of ownership without any of the responsibility related to ownership. Saturn was a great example of transparency that works fine as long as union demands can be accomodated by economic conditions. But when economic conditions change, the union decides to opt out of reality.

    Again and again when unions have been given the opportunity to have their say in management, they opt out because then they may have to do something besides just complain.

    I absolutely believe unions have been necessary in the past and may have a legitimate place now, but mostly what I see is a bunch of power hungry thugs I can’t endorse.

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    • It is up to each of us to associate with others who will help us to meet our goals. Firms have to deal with this fact every time they make a personnel decision. Firms that fail to select personnel effectively will go out of business. It’s normal and appropriate.

      Workers will fall into three categories:
      1) They take no responsibility; they just do what they are told
      2) They demand influence and take responsibility
      3) They demand influence but are irresponsible

      Blanket anti-unionism pushes all workers into the first category, even if they would naturally fit into the second category. Blanket unionism may place all workers into categories 2 and 3; however, even within a union a worker could still choose to take no responsibility and just do his job.

      The problem with blanket anti-unionism is that the second category probably contributes the most to the firm. Additionally, the “happy go lucky” appearance of the first category is an illusion. When something goes wrong, they’ll find themselves on the street and then they’ll desperately look for some way out of their jam. They’ll either turn to crime or demagogues, and everyone will pay for their irresponsibility.

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  6. Mad Rocket Scientist: Right-to-work laws prohibit employers and bargaining agents in a particular bargaining unit from negotiating a labor contract which provides for a union shop (i.e. requiring all members of the bargaining unit to join the union after employment).

    Martin: Well, everyone’s mileage differs, I guess. But what I see is a bunch of power-hungry CEOs whose pay has rocketed into the stratosphere while hourly workers’ pay has stagnated for a generation. I see a cowboy CEO culture in which MBAs reflexively follow the Nardelli, Fiorina and “Chainsaw Al” strategy of downsizings, speedups, crushing authoritarianism — and bonuses for themselves. The typical MBA recipe these days is that of an Ottoman tax farmer: to gut human capital, strip assets, and hollow out long-term productive capabilities so as to massage the quarterly numbers and game their own options and bonuses. And the more the workforce is downsized, the more adversarial and authoritarian the internal workplace culture becomes. Those who remain, who are so desperate to keep their jobs that they’ll crawl on their bellies like dogs and eat any kind of shit to avoid the pink shit, every day they come to work find another memo explaining in graphic detail what new kind of shit they’ll have to eat. And all the while the CEO keeps hauling money out by the truckload.

    So to me hearing about a world where unions used to be necessary, but are too powerful today, sounds like the magical land of Cockaigne where the rivers run with beer and capons grown on bushes.

    So I agree that we have an economy dominated by power-hungry thugs, but I strongly disagree on who they are. Frankly, in my worse moments I’d like to see the bleeding heads of every fucking Fortune 500 CEO and billionaire on pikes along Wall Street.

    Incidentally, “the benefits of ownership without the responsibility” sounds to me pretty much like the status of corporate management.

    Shareholder ownership is a legitimizing myth. Proxy fights have been virtually worthless for a long time, and hostile takeovers ran their course after management changed the rules of corporate governance in the 1980s. Most new investment (as opposed to market consolidations) comes from retained earnings rather than either stock or bond issues.

    So the idea that management bureaucrats represent shareholders is the same kind of legitimizing myth as the Soviet myth that the bureaucrats represented “the workers.”

    In both cases, what you really have is a self-perpetuating managerial oligarchy in de facto control of a huge free-floating mass of unowned capital.

    The corporate manager is a lot like the manager under the Oskar Lange model of “market socialism,” risking money that he did not contribute from his own labor or past abstention. He gets a huge bonus in a good year and loses nothing in a bad year.

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    • Then my question is, how does strengthening Unions help this, considering Unions have been major political contributors for decades, and don’t seem to have done anything (perhaps because it’s in the Union Managements own interest to maintain the status quo)?

      I’d agree that Unions needed strengthening if I didn’t see data like the fact that the UAW owned a Country Club & Golf Course, or that the public sector unions (e.g. AFSCME & the NEA) dropped almost $100M in the last 20 years (99% to Dems) whereas business usually split their contributions between the parties.

      Seems to me that Unions are pretty strong, at least financially. If they thought that CEO compensation was a problem, they could have started a campaign to raise public awarenenss and drum up public support for doing something about it.

      I do agree that executive compensation, and financial managers bonuses are out of control, but I just don’t see how Unions are the tool to fix this.

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      • I think that the issue of minority unionism is important here. Under current law (as I understand it) the employees in each shop are strongly pressured to form a single union. IIRC, unions have no legal standing unless they get a majority vote from the employees, and once one union has acquired majority support, management is prohibited from negotiating with anyone else, so minority unions are prohibited. Please correct me if I’m wrong.

        This arrangement may give the majority union a better bargaining position relative to management, but it also gives the union leaders control over the workers. It basically creates a new class conflict — that between the union bosses (a political class) and the rank-and-file workers.

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  7. I live in Richmond, Virginia, a place where anti-union sentiment is visceral and strong. Many of my neighbors and colleagues point to studies and reports highlighting a claimed relationship, a negative one, between union membership and job growth. These folks are unshakeably convinced that unions are poison and that our right-to-work laws are inoculating the Old Dominion from the danger. Well, I’d like to at least try and shake ’em. I’ve been dispirited, trolling around the interWebs, by my inability to unearth the sort of counter-punching studies and reports I’d like to knock some sense with. Are you all aware of any such papers focusing on “Oh, yeah” stuff such as the right-to-work states also being some of the lowest wage and highest income-inequality place? Thanks.

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      • Yes, it is often remarked that people go to work for the state for the benefits. This has not always been seen as pernicious or the result of public employee union capture. Controlling for ed. level (which one doesn’t have to do, but reasonably can), public employees in Wisconsin and elsewhere take a small hit on total compensation. Total compensation. This may disappear in bad economic times (I’ve commented extensively here on legitimate reasons why we might as a polity not view this as a bad policy outcome, namely because of retention of institutional capital and automatic stimulus/stabilization effects.), but you’ll notice that PEUs in Wisconsin have already willingly taken hits (which is to say, not without making counter demands in the course of legitimate negotiations, but still with full understanding that the hits are coming) in this downturn and have signaled willingness to take more.

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  8. It seems like this should put to rest any notion that the legal regime currently in place actually favors labor on net at all. I’m not sure it follows that only repeal actions and not new laws must be the best, or certainly the most effective or pragmatic ways to redress this, though such repeals certainly seem very well-indicated to me. but not all avenues are equally traversable, or likely to be followed to success. The ideas about re-embracing a broader palette of tactics seems essential. It should be said that tactics being used in Wisconsin are very clearly more varied and spontaneous than formally declared walk-off strikes.

    Also, as someone who lives in the community in which the actions are being taken, it also feels quite clear that the more broad, (French!) “social” base of union-building is strongly implied by the embrace of the broader community of the actions, contrary to so many in the broader national commentariat who seem simply unable to grasp that elements of society at large could respond to public laborers’ expressions of discontent with the newly elected government’s approach to longstanding agreements with them with anything other than impatience or contempt (because they had to arrange for daycare! because they make more money than I do!) I may be misunderstanding the idea being presented at (2) above, but I think it is relevant and maybe the most important aspect of this moment that, again, contrary to the reactions prescribed for them by the national media, in my experience workers in the private economy in my community whom I have encountered are driven in their response at least as strongly by common aims and concerns with those who have gone to the Capitol this week that are borne of a common insecurity of economic standing (i.e, trying to remain in some part of a “middle class”), as they are by a primary focus on the distinction (the one insisted upon at the national level) that those with the direct complaint (to the extent one exists, the Big Talkers would say) are employed and paid *by the public*, meaning *at the expense of private workers and producers*. Not that that isn’t the case, or that private citizen observers are unaware of it, but that the ubiquity of the view that the public/private divide is the most salient aspect of this dispute, as opposed to shared concerns of people trying to preserve a quality of life willed to all by all, and how this kind of political development affects that shared goal, being key if not exclusive drivers of the response, has been dramatically overstated.

    It is interesting, given the ubiquity of that public/private distinction in the national media conversation, that in this piece that distinction between the putative “different animals” of public versus private labor organization makes no appearance. Don’t get me wrong, as I said, I applaud that as a accurate depiction of the real driving political-economic currents of this moment. But I wonder if I have read too much into that absence vis a vis Mr. Carson’s views on the question he may have not directly addressed here. In any case, this piece was for me a very constructive, helpful account of the environment & challenges facing, and strategies available to, what remains of a labor movement and any attempts at rejuvenation it may yet be able to undertake.

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  9. Pingback: Labor Roundtable: Why Market Anarchy Favors Labor — The League of Ordinary Gentlemen

  10. Unions have become nothing more than a lecherous corporations in their own right who play the workers against the companies and screw both. Anything which breaks their hold, particularly in the public sector, is a great thing in my book. In the private sector the union is at least *somewhat* kept in check by market forces. After all, if a union is too aggressive and inflexible, it runs the risk off killing the golden goose by putting the company out of business. A public sector union, on the other hand, is not so restrained, because the government never goes out of business it just raises taxes and borrows more from China.
    Everything should be subject to supply and demand. The price system determines how much money you deserve to make for the goods and services you offer. This applies whether you are a business who is selling goods or services or if you are a worker. Anytime an external force defies the universal law of supply and demand and attempt to fix prices by force the results are always negative. There are countless government programs that prove this point. What happened in Detroit is another illustration of it.
    Ultimately, why it is acceptable that non-unionized workers be put out of work and shut out from government contracts? Why eliminate the right of work for people unless they join the political organization you approve of?

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    • I agree with the general sentiment. However, the problem come primarily from the state’s monopoly over certain services (such as education). Unfortunately, many state-employee unions advocate for the state’s monopoly whenever it is threatened…so they don’t get any sympathy from me.

      But just getting rid of state-employee unions is not the answer if the state’s monopoly remains– the end result here could be extremely low wages resulting from artificial constraints on employment options. This is a common strategy in the autocratic socialist systems (e.g. the Soviet Union, Baathist Iraq): large segments of the economy are state-owned, and state-employees are prohibited from bargaining. Since the state is the main employer, it gets to set wages at whatever level it wants.

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  11. Now that capital has, in fact, decided on a neoliberal path of busting unions and capping real wages, for labor to continue to fight by the capitalist state’s rules is suicidal.

    Kevin – a couple of questions:

    What differentiates contemporary libertarianism from neoliberalism? You are a free-market anti-capitalist. How do you reconcile the two, or rather how do you get the free markets without the capitalism?

    If contemporary libertarianism is essentially capitalist libertarianism, or a particular form of neoliberalism, what is the alternative? How does mutualism differentiate itself and would you say it is more than just left-wing libertarianism?

    And finally, where I find I myself get hung up is the notion of the public sphere – public libraries, public schools, public spaces, these seem at times to be the last places that aren’t corporatized. What libertarians often want is to privatize everything, subject it to competition. Removing the state too often seems to be laying the welcome mat for big corporations that aren’t any better and sometimes are much worse.

    What is the mutualist or left-wing libertarian alternative to this?

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    • In 1943 a New York supreme court judge said:

      “To tolerate or recognize any combination of civil service employees of the government as a labor organization or union is not only incompatible with the spirit of democracy, but inconsistent with every principle upon which our government is founded. Nothing is more dangerous to public welfare than to admit that hired servants of the State can dictate to the government the hours, the wages and conditions under which they will carry on essential services vital to the welfare, safety, and security of the citizen. To admit as true that government employees have power to halt or check the functions of government unless their demands are satisfied, is to transfer to them all legislative, executive and judicial power. Nothing would be more ridiculous.”

      …that pretty much says it all

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      • “To admit as true that government employees have power to halt or check the functions of government unless their demands are satisfied”

        Well, that is the reality. When push comes to shove, it’s the rank and file workers who have to decide if they will “do their jobs”. If they don’t, the government falls (as in Egypt and Libya).

        The problem is that the state has become so big that its employees are not “public servants” who act from a sense of civic responsibility. They are workers, plain and simple. They are here to get a paycheck and feed their families. When the government monopolizes industries that require specialized training, it leaves its employees no other realistic options than to work for the state, and it creates a conflict with them.

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      • At this point bans on interracial marrages were in effect in how many states?

        Perhaps, just perhaps, *an* opinion of *a* judge from the Bad Old Days shouldn’t be considered the end of the argument.

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    • Not to butt in, but from reading Kevin’s previous work, my interpretation has been that the proper thing to do would be transfer control to those occupying and using those structures. It’d be “privatization” in the sense that government would no longer hold control, but rather than fire sales to connected interests they’d become service providers organized on syndicalist lines, the previous ownership arrangement becoming void.

      Public services are OK for the most part. The question is why “public” (that is, collective endeavors) seems to automatically = “government” (which operates on a completely different set of incentives).

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      • To continue butting in…

        As I understand “neoliberalism”, it’s driving value system is “growth”, whereas the value system behind libertarianism is “freedom”.

        In practice, this manifests itself as a dispute over state funding for infrastructure. Neoliberals want the state to support the financial system, transportation infrastructure, R&D, and many other things (up to and including military intervention in foreign countries). Basically, neoliberals want the state to create conditions that maximize productivity. Viewing it as a capitalist ideology, its drive is to maximize investment opportunities.

        By contrast, libertarianism is a bottom-up ideology, focused on letting people live whatever life they want–productive or not.

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  12. Interesting ideas, indeed. See, Kevin? This is a LOT more productive than whining and complaining about anarchy and talking about hypothetical crap about how, “Things would be SO much better if we adopted free-market anticapitalism.” Uh, newsflash: AIN’T GONNA HAPPEN! God, I hate theoretical idiots like Kevin Carson who spend their time theorizing about “what could be” in some faraway future that has a 1% chance of ever becoming reality.

    I live for the here and now. You need to do more blog posts like this, Kevin, and stop that “stateless society” advocacy nonsense. Fight for change IN THE EXISTING SYSTEM, not some pie-in-the-sky fairy tale.

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  13. And Kevin, your 3rd point in the first half of the paper about RTW just sounds like extreme union propaganda. I have nothing per se against unions, and I’m all for giving the little guy a chance, but come on! Right to work RESTRICTS freedom by denying unions the right to basically monopolize a workplace and force all employees to join and pay dues??

    I mean, this is America, dude. Isn’t freedom of association one of the core bedrock principles of our country?? How can you say that unions should be allowed to tell workers in ANY company that they MUST join? As stupid as it may be, I think workers should at least be given the CHOICE. If you can’t even have freedom of association and that choice at work, where can you have it?

    I’ve heard many arguments for not enacting RTW laws, none of which seem all that credible to me, but your claim it “restricts” freedom even though it GIVES workers more freedom in the workplace is just doublespeak. I find it funny how many liberals are hypocritical in the way they treat companies as “public” in terms of enacting antidiscrimination laws and whathaveyou, but then they shift it to “private” when it comes to allowing closed shops.

    WTF?

    Also, might I suggest that we GET RID OF the antitrust exemption for unions in this country? I don’t see any real economic or moral reason for it. Maybe I’m missing something, but isn’t competition GOOD, especially when it comes to providers of collective bargaining at the workplace? Why should every industry or co. only have 1 union to turn to? Seems to me like that kind of monopoly would just breed complacency and laziness among many unions. I want STRONG unions that are held accountable and made better with age.

    Hell, if I wanted to form a union in the auto sector to compete with UAW, why shouldn’t I? What’s the worst that could happen?

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    • Read the next post, answers many of these questions.

      But the short answer is that rarely is the answer “more freedom” sufficient as there are competing interests. Here, you correctly note that the freedom of association is indeed a valuable right. However, experience (and basic game theory) tell us that in many cases not requiring union membership in a union shop is essentially legislating the union out of existence. How can the union operate without dues? On the other hand, why should I join the union if I can get all the benefits of the union’s collective bargaining without paying the dues?

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    • Discrete “bargaining units” are restricted to being represented by a single union, but afaik there’s no ban on multiple unions within industries. Craft unionism (unions organised around the particular skills of workers, rather than the industries they work in) was the favoured model of the AFL (which was one of the reasons the CIO was formed). The SEIU and breakaway NUHW compete for workplaces.

      The “right-to-work” issue is covered in other comments in this thread, but to summarise: Carson argues that an employer should, if they wish to, be allowed to only hire union members, or to only hire people who agree to join a union. This does not restrict anybody’s right to freedom of association. Nobody is compelled to be a member of a union because nobody is compelled to work for that employer. Most employers will not want to do this, but if one wishes to grant this as a concession in negotiations with their employees, they should be able to.

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    • Isn’t freedom of association one of the core bedrock principles of our country?

      “Freedom of association” does not entail a positive claim to be furnished a non-union job by a companies that would otherwise be willing to make an exclusive contract with the union.

      People should of course be free to get a job with any company willing to hire them, but companies should be free to negotiate any conditions of employment that workers are willing to accept, and to turn down offers if they can’t find anyone to accept them. If someone convinces the company that they ought to make it a condition of employment that people attend weekend retreats, finish school, join a gym, or — yes — join a union, but you don’t care to join, well, all that freedom of association demands is that you’re free to walk out. It’s not like they owe you a living.

      If you want to defend freedom of association, then part of that is freedom of contract. So-called “right-to-work” laws violate that.

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      • “It’s not like they owe you a living.”

        Actually, the term “right-to-work” does imply that someone owes you a living. Of course, the people who advocate for these “right-to-work” laws will be the first to insist that there really is no right to (paid) work.

        So they’re just con-men.

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  14. Is there some secret history of many unions in various industries competing “Too much” that it caused some kind of disaster or breakdown in our early industrial history? The antitrust exemption just seems like pure politics, really. No economic efficiency to be made, if you ask me.

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  15. Pingback: “Libertarian unionism” and right to work laws — The League of Ordinary Gentlemen

  16. Erik:

    1. There’s actually a wing of libertarianism — which is often taken as the public face of the movement as a whole in the mainstream press — that’s heavily neoliberal leaning. I call it “vulgar libertarianism,” and Roderick Long calls it “right-conflationism.” It’s the defense of the actually existing corporate economy as if it were the free market, or the defense of the interests of big business in terms of “free market” principles. Vulgar libertarians are essentially what the commenters at Daily Kos call “pot-smoking Republicans.”

    A central focus of my writing over the past several years has been to point out that neoliberalism is in fact about as anti-market as you can get. It’s statist to its core. Generally the central focus of a “Free Trade Agreement,” far more than removing tariffs and trade barriers, is to get the other side to adopt strong “intellectual property” protections. IP law is just one example of typical neoliberal policies that are in fact directly repugnant to genuine market principles. Neoliberalism also opposes land reform based on legitimate property standards, instead upholding the land titles of feudal landed oligarchies (the haciendas and latifundia throughout Latin America, the plantations of UFC in Guatemala, etc.). As for the kind of phony “privatization” and “deregulation” entailed in the neoliberal agenda, I wrote about them here:
    The Neoliberal Myth of Small Government
    Deregulation, Texas-Style
    Vulgar Libertarianism Watch Part XVII (an extended discussion of fake privatization)

    The misappropriation of “free market” rhetoric should be as offensive to genuine libertarians as (say) Stalin’s use of the language and symbolism of the socialist movement was to Rosa Luxemburg.

    For me, the actually existing corporate economy is defined by artificial scarcities, artificial property rights, subsidies, protections, regulatory cartels, mandated levels of artificial overhead and other entry barriers, and the rents on artificial scarcity. Or as R. A. Wilson put it, capitalism is a system that combines elements of the free market with landlordism, usury, and patents. You get a free market by removing all the assorted artificial property rights, etc., and allowing competition to destroy all the rents resulting from them.

    Frankly, the hostility of people like Naomi Klein to what they call “free markets” is understandable. If I understood the “free market” to mean what I saw it associated with by its “defenders” on CNBC and the WSJ editorial page, I’d hate it too. One of my central goals is to get the word out to people outside the echo chamber that the “free market” isn’t just a world owned by Wal-Mart, and that genuine market competition is the enemy–not the friend–of big business.

    2. As b-psycho has already suggested, I believe we need an alternative to government ownership/provision of public services and their provision by capitalist corporations. I’d prefer to see them reorganized as private sector services, but on a cooperative basis. Public services like water utilities should be reorganized as consumer co-ops owned by the ratepayers, and government-owned industry should be placed under worker control.

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  17. Pingback: The power of free association: Libertarian unionism | The Economist | The Libertarian Alliance: BLOG

  18. Pingback: Wisconsin Labor Brouhaha | The Freeman | Ideas On Liberty

  19. Pingback: Front Porch Republic » Blog Archive » A (Compromised) Localist Looks at Wisconsin

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  21. Pingback: How to Make Unions More Powerful, the Libertarian Way | Daily Libertarian

  22. Kevin wrote:

    “I believe we need an alternative to government ownership/provision of public services and their provision by capitalist corporations. I’d prefer to see them reorganized as private sector services, but on a cooperative basis. Public services like water utilities should be reorganized as consumer co-ops owned by the ratepayers, and government-owned industry should be placed under worker control.”

    We should also bring back the whole idea of the commons that is different from collective ownership.

    For instance, power generation should be provided by private or cooperative efforts but the transmission lines should be consumer coop owned but protected by common right of ways within the transmission line corridor or possibly within the transmission lines themselves.

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  23. Pingback: Theses on Unions, Wisconsin, and Other Things | Front Porch Republic

  24. Pingback: Theses on Unions, Wisconsin, and Other Things | Philosophy

  25. I think you are missing the point that corporations are corrupt, government is corrupt, and labor unions are also corrupt. If you ever tried to depend on a union worker you would understand. Unions don’t help the poor people, they exist for the financial benefit first of the union leaders and second to keep wages for union members high by limiting access to employment. At one time they were important in protecting workers from corporate exploitation. That time is long past, at the present time they are part of the problem not the solution.

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    • Human organizations are corrupt, because organizations abstract power from individuals and put it in aggregate containers.

      The non-idiotic black hat knows this, and seeks out access to the aggregate container, ’cause abstracted power is very useful. However, the non-idiotic white hat also knows this, and fights the black hattery for access to the power.

      So this comment is really of null value, unless you’re proposing that *all* organizations are inherently and pervasively corrupt, in which case just admit to yourself that you’re an anarchist and call it a day.

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    • I always love this ‘unions belonged to the Bad Old Dayz – not in our modern times’ argument, because the elites are clearly longing to bring back the Bad Old Dayz.

      It’s like somebody saying that we don’t need to vaccinated against a particular disease because it’s no longer around, even as that disease rages among us.

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      • Barry, you get a cigar for putting it much better than I could have. That’s exactly what I meant by the prosecutor analogy. Unions are something that’s needed all the time, because as soon as they’re gone the evil they restrain will come back. You’d think the (perhaps not coincidental) correlation between the decline of organized labor and the rise of neoliberal version of cowboy capitalism a la Bob Nardelli and Chainsaw Al Dunlap would be a little more obvious to people.

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        • What I forgot to add was that by now the right and the elites are even dropping former pretenses. They’ve spent decades scorning the New Deal; now they’re openly rolling it back – not trying, but succeeding. Liberals and leftists are trying to defend the core of the New Deal, with moderate success.

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      • Barry:

        You seem to think the era of Matewan is still here or could be here tomorrow if the unions stop their wage extortion. Please join us in the real world.

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  26. I don’t know what your financial situation is but I don’t think you know what the problems of the poor are like. I’m poor. When property taxes went up my landlord passed them on to me by increasing my rent. Government unions are contributing money and voting for politicians who pay them back with high wages and benefits and cushy pensions that I don’t get but I payed for theirs with higher rents.

    I had to buy a car to get to work. To buy a car costs me more money because the union workers get high wages and benefits and pensions that I don’t get but I payed for through the price of the car. I don’t mind if the corporate executives and stock holders don’t make as much money because the union workers extort their share of the pie but when I can barely make ends meet and have to struggle to make a car payment so the union workers can have wages I’ll never get I care about that.

    The worst art of it is workers don’t even do a decent job. When my apartment was burgled and I had to get a police report for the insurance company I went down to the town hall. I had to wait about ten minutes for the union worker clerk to sulk over to the service window. I told her what I needed and she consented to get it for me even though I could tell I was just an annoyance to her. Ten minutes later she sulked back to the window and gave me the report.

    I tried out a high speed dsl computer connection but I cancelled it because every time my neighbor had work on their phone lines the lineman cut my dsl line because it was from a competing company. I was told there was nothing they could do about it because the linemen are in the union and they can’t discipline them.

    I worked at a trade show where my company had a booth. I had to stay up all night sunday night setting up my equipment because union workers took all weekend before they go to my stuff. I knew exactly where the equipment was but I couldn’t take it out of the store room because it was against union rules.

    At another show they hung my sigh up crooked. I wanted to straighten it but I was warned by a coworker that I couldn’t do that – a union worker had to do it. They told me that someone who disregarded that kind of warning was injured in an “accident” with a fork lift soon after.

    Do a little research on the internet. Look at the work rules for the teachers in wisconsen or the complainst of managers about auto worker work rules. You will see that the unions today are just as corrupt as the corporations, or the government. They don’t want to work, they just want to get paid.

    So if I vote for a republican because he promises to cut the cost of government and to allow workers to opt out of the union and I read the republicans are taking orders from the Koch brothers or how they are corporate lackeys I know that whoever wrote it doesn’t know what he is talking about. People are voting for conservative fiscal policy because they are tired of eating ground beef when the of union workers are eating t-bone steaks.

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    • > At another show they hung my sigh up crooked.
      > I wanted to straighten it but I was warned by a
      > coworker that I couldn’t do that – a union worker
      > had to do it. They told me that someone who
      > disregarded that kind of warning was injured
      > in an “accident” with a fork lift soon after.

      Color me incredulous at this. It’s been a while since I’ve been in the private sector, but I’ve been to I don’t know how many conferences and trade shows and I’ve never seen anybody setting up a booth who had a second’s hesitation at fixing their own sign (or fetching their own gear and setting it up, for that matter), or even horking their own power and network because the IT guys were too slow. Maybe I’ve been to too many tech conferences and not enough tool-n-die, I dunno.

      I’m pretty sure that “Jesus Christ that guy just hit me with an effing forklift” would be a gazillion-dollar lawsuit and would have enough press that everybody in Uzebeckistan would have heard the story, regardless of trade show.

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      • He’s actually right. At a conference three months ago where my organization had a booth, our staff guy couldn’t take his storage case into the building by himself because only a union worker was allowed to move equipment/supplies from the delivery vehicle to the site. It was ridiculous.

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        • Albert:

          Clearly Pat has never tried to do something like that at a convention center in a place like Pittsburgh, Philly or Chicago. The union thugs would teach him a lesson he wouldn’t forget.

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          • Nope, never been to a convention center in any of those three places. San Francisco, Los Angeles, Palm Desert, Las Vegas, Baltimore, Boston, Washington, New York, and a couple of places overseas.

            So my experience doesn’t necessarily generalize, I’ll grant that readily.

            However, this also sorta begs the question… is the problem with the union, or is the problem that Chicago is one of the more historically corrupt cities in the country?

            Hm; makes me wonder… in this day and age of police thuggery trapped on camera and secret filming, how come nobody gets this stuff on film? Maybe they do.

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    • dknbgv879dzt:

      Funny you should mention unions and trade shows as my wife used to work for an association and had to plan their convention. She told me horror stories of dealing with the unions. One union to unload your stuff off a truck even though my wife could do it herself, another union to set up your display even though my wife could do it herself and another union to lay an extension cord so you could have electricity at you display, even though my wife could do it herself. All these unions had to be paid off by hiring their members so their stuff didn’t get “damaged.” And you couldn’t just hire one guy for hour, no you had to hire a minimum number of guys for a minimum numbers of hours. So one guy did the ten minutes of work while the others sat around and scratched their asses and then the first guy joined them in scratching for the next hour or two (assuming they even bothered to show in the first place).

      There was a article about stagehand salaries, linked below. The top hand at Carnegie Hall makes over$500k thanks to the unions extortion. Nice for some guy that might have a high school education.

      I especially like the quote, “Joshua B. Freeman, a U.S. labor historian at Queens College and author of “Working Class New York,” said the union’s power to shut down a vital part of New York’s entertainment industry gives it leverage in negotiations.

      “They have a credible threat of withdrawing their labor,” Freeman said. ”

      That sounds like extortion to me, pay us what we want or we shut you down.

      http://www.bloomberg.com/apps/news?pid=newsarchive&sid=agzioCanEd0s

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      • It’s very easy to argue by throwing up the bad apples.

        In both the pro- and anti-union camp, we see lots of bad apple examples (the pro-side showing bad apple examples of corporate behavior, the anti-side showing bad apple examples of union behavior).

        I don’t really find this to be a very interesting argument, in and of itself. Human organizations have bad apples, can we move on now?

        Just because someone in a union makes 500K doesn’t mean that everyone in the organization is overpaid (maybe they are). Just because a CEO is making $10 million a year doesn’t necessarily mean that everyone *else* in that organization is underpaid (maybe they are).

        > That sounds like extortion to me, pay us what we
        > want or we shut you down.

        It’s “pay us what we want or we won’t do the work”. This is negotiation chicken. And every business entity does it to each other, their suppliers, their customers, you name it. “Pay us what we want” is the difference between a supremely profitable organization and the organizations that charge “Pay us what *you* want”. Most organizations and their customers settle somewhere on “Pay us with what we can both agree is fair” at some point, but they hardly start there.

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        • Pat:

          If I as the consumer don’t like the price of the Ford, I can buy a GM car. GM can’t get new workers if they choose not accept the union’s extortion demands. Not to mention that the unions have the cudgel of federal law to use on the companies. Then they also have their paid Dems pols that they get to comment on TV , like Obama did with the situation in Wisc.

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          • > GM can’t get new workers if they choose not
            > accept the union’s extortion demands.

            Ford has plants overseas. GM can get new workers, they just shutter the fishing doors and move elsewhere. GM has five plants in China, as Google just revealed, I’m pretty sure they can negotiate hardball with the unions if they want: “Cut your damn demand or I’m taking my ball and going to freaking Singapore.”

            This is a suboptimal solution for everybody, granted, and we ought to be able to not have these sorts of cut off your nose to spite your face moments in business, but I’m not really convinced that this is a problem I need to address through the legislative process. If GM and the Union can’t negotiate their way to an amicable solution, why should I enforce a demand?

            Yes, the unions can misuse power (I believe I said that already). That misuse can still be trumped by the guy with the capital -> they can close their plant and write it off and go elsewhere. Game over, because you’re not playing.

            Or they can be stupid and sign an agreement they can’t honor… so they go bankrupt and then the union contract gets re-written by the courts, as Tom pointed out the example of the airline union on another thread.

            And yes, sometimes they get bailed out and they get better deals than they ought, I’ll grant you that. But that’s the final result of *lots* of power misuse on both sides.

            Wouldn’t it be a better idea for us as voters to stay out of this fight, and put our 401k and 403b money in car companies overseas and let GM and the Union figure out reality on their own?

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      • Believe it or not, management typically has endless easily-mocked rules that limit workers’ discretion to apply common sense to a situation and do the obvious thing, without getting sign-offs from six levels of administrative bureaucracy.

        You know why? For the same reason that all idiotic rules are made: The people making the rules don’t trust the people who are restricted by them to employ their common sense in a good-faith manner. They don’t trust the people they are restricting not to abuse their discretion to their own benefit. Management sets up all sorts of idiotic “official policies” that defy common sense because they believe that giving the workers the power to use their own common sense will also give them the power to feather their own nests or destroy something. And the reason for that is, when ownership and control are separated from the performance of a task, you get serious agency problems. Hierarchies create zero-sum situations where the main function of authority is to shift blame and unpleasant consequences and effort downward, while shifting credit and benefits upward.

        Well, guess what? Unions deal with a mirror-image situation. If workers had some real control over their jobs, and reaped some share of the profits when they figured out how to do things in a more productive way, it would be to their own interest to do things efficiently and in a common sense manner. But they don’t have such control over their jobs. That’s why there are union work rules. Because if management is given the discretion to apply common sense in making work assignments, and to ask one person to perform another’s job description when it’s clearly within general competence, guess what will happen? Management will start doubling up on job descriptions, downsizing people, and shifting more and more assignments to the “lucky” survivors, until the workplace is a sped-up, nightmarish sweatshop.

        I’m sure you believe the old saying “if you give them an inch, etc.,” in relation to workers. And so does most management, which is why us workers are not allowed to decide for ourselves how many squares of toilet paper to use on our own butts without an official management policy in place. Well, it works both ways. You give management an inch, they’ll take a mile. And that’s why we have silly union work rules — because you can’t trust people with the discretion to apply common sense when their interests aren’t aligned with yours.

        I keep wondering about all these people who tell the horror stories about “those lazy, uppity union workers.” Are most of you all supervisory or management folks? If so, I can understand the perspective, because you come from the standpoint of trying to maximize what you can get out of other people rather than trying to control what the bosses can extract from you. But if you’re mostly non-supervisory production workers, I really have to wonder about the obsession with what “those workers” are getting away with, as opposed to “those bosses.”

        For the vast majority of people in our economy, a lot more misery results from what unaccountable bosses are able to get away with than what union workers are able to get away with. So for a production worker to focus mainly on the latter smacks a bit of the house slave’s attitude of “I ain’t like them shiftless field slaves — I get to wear nice clothes and work in the house around nice things and quality people. Ole Massa knows I’m really like him, white on the inside.” It’s always been common for class-insecure white collar workers to overcome their insecurity by identifying with their superiors, and to see advancement by their inferiors as a threat to their precarious standing. The authoritarian personality tends to achieve a vicarious sense of status and power by identifying with the alpha male and vilifying out-groups.

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  27. xdlkjnbg869d86: When I hear someone say that “There may have been a need for unions once, but not any more..,” to me it sounds like “Defendants may have needed attorneys once, but no more.” And this magical world where we don’t need unions any more, from the perspective of someone like me whose workplace becomes more adversarial and authoritarian by the week and where downsizings and speedups are the norm, sounds a bit like the wonderful land of Cockaigne or Big Rock Candy Mountain, where the streams flow with beer and capons grow on bushes.

    So long as there are bosses, there’s a need for some weapon that can rein in their unaccountable authority and even up the fight by picking up a heavy object.

    If we don’t need unions in a world where the ratio of top management pay to hourly worker pay has exploded from 50 to 500 over the past two decades, and real hourly wages are currently at a 1970 level, just when the hell would we ever need them? If we don’t need unions now, in a world where senior management downsize human capital, strip assets, and hollow out long-term productive capabilities in order to massage the quarterly numbers and game their own bonuses and stock options, then when did we ever need them?

    I’ve worked in places where I was an at-will employee, and I’ve worked in union shops where I was protected by a contract and a progressive discipline process subject to union oversight. I’ve also had the satisfaction, when a supervisor screamed at me until her face turned purple and the veins stood out, of saying “Just a minute — let me call a shop steward to witness this conversation.” You know what? She turned off the screaming like flipping a light switch. And if I hadn’t had a union, I’d have had the choice of either eating her shit or getting fired on her whim.

    Ask someone who has to put up with that degrading, dehumanizing treatment, day after day, and who comes to work every fucking day with a feeling of dread in the pit of their stomach, wondering how much shit they’ll have to eat today to keep a roof over their head, whether they think unions have outlived their usefulness.

    Back in the days when you say you believe unions served a purpose, presumably when Pinkerton thugs were smashing people’s heads in and sheriff’s deputies were fighting pitched battles with coal miners, I’m sure there were workers who thought there was no need for unions. There have always been people who’ve thought, in the words of Cool Hand Luke, “Them pore ole bosses need all the help they can get.”

    dknbgv879dzt: I notice that all your sob stories involve the part of your life in which you are a consumer — where you are the one who gets to pay the money and play king. None of them involves the forty hours a week most people spend as a serf, taking orders from someone else and being subject to arbitrary and unaccountable authority. If you feel empowered during the hours of the day from the time you punch in and punch out, rather than feeling like you’re totally at the mercy of people who are completely and utterly unaccountable to you, and who are doing their best to demonstrate that fact to you by brutalizing you daily in new and creative ways, then I recommend you hold onto that job like grim death. I work in a hospital where the staffing levels have been reduced to one orderly for the first nineteen patients, patients go for days without a bath, and people shit the bed waiting an hour for the bedpan. (And they don’t get crappy service because of the lack of a union. They get crappy service because when it comes to a choice between adequate nursing staff and the payments on the CEO’s third vacation home, guess which one wins.) Every communication we get from management is in the form of a threat: “Do this or else. No straw shall be given you, but the tale of bricks shall not be diminished. You will be assimilated. Resistance is futile.” Every day I go to work is like walking through the gates of Hell. I continue to do it because it’s still marginally preferable to bankruptcy and homelessness. But if we ever have a Pol Pot who puts the bleeding head of every billionaire and Fortune 500 CEO on a pike along Wall Street, I won’t shed any tears on my pillow.

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    • Kevin:

      So your answer is to just let unions continue extorting wage increases from companies? Then when it becomes cheaper to move their operations overseas because they have to pay a group of barely educated high school grads salaries that can rival those that college grads, you blame the company. And we wonder why America is losing our manufacturing base.

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      • And we wonder why America is losing our manufacturing base.

        You’re implying that the demise of the manufacturing base is the result of unions demanding to high a concession from ownership (right?).

        But this makes no sense. Market efficiency principles coupled with differential spending power of a unit of currency across national borders is all you need to see outsourcing of manufacturing. The calculus is simple: if it’s cheaper to outsource production and repatriate goods and services, then there is an incentive to outsource. On you premise, if there were no unions, then US wages would be competitive with (say) China, or at least close enough, so that only shipping costs would determine whether outsourcing is profitable. Do you really think that’s the case?

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        • There’s a theory about environmental standards as well.

          The pink dolphins are extinct now, for example… and their extinction is a testament to the difference in standards in countries where manufacturing is more important than the environment and countries where the environment is more important than manufacturing.

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        • stillwater:

          I think that labor costs including benefits, which are a component of the price of any finished good, can be a factor in a decision to move manufacturing overseas.

          I remember when GM used to be a car company. The UAW turned it into a UAW health care company that had a sideline making cars.

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  28. Ford seemed to weather the Union beat down pretty well. And didn’t even have to take any TARP money! Maybe the problems with GM go a little higher than the union.

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  29. Scott: Interesting that you see unions “extorting” wages “from the company” in union industries, but not bloated pigs of CEOs extorting money from workers whose pay has been stagnant for thirty years in non-union industries.

    One reason so much manufacturing is the utter stupidity of the starting assumptions of MBAs. You might check out the take of lean production consultants William Waddel and Norman Bodek (“The Rebirth of American Industry”) on this. The standard management accounting system in corporate America — they call it “Sloanist” because it was developed by Donaldson Brown, an accountant who worked under Alfred Sloan first at DuPont and then at GM — is at the root of it. It’s as irrational as the metrics used by Gosplan in the Soviet centrally planned economy. Sloanist accounting treats labor hours as the only direct, variable cost; it groups administrative costs under overhead and treats it all as an indirect cost. It also treats inventory as a liquid asset; so thanks to the miracle of “overhead absorption,” all those “indirect costs” — all those costs besides labor — are simply incorporated, as a markup, into the artificial transfer price of the goods which are “sold” to inventory. It’s the same “broken windows” methodology entailed in GDP calculations and in the Soviet Union’s central planning system: the consumption of inputs (except for direct labor hours, of course) translates directly, by definition, into the creation of value. So you have MBAs awash in a sea of administrative costs, bloated management salaries, overhead, inventory, etc., who are meanwhile obsessively looking over direct labor hours with a microscope looking for ways to shave off an additional second.

    See, because labor costs are THE ONLY COSTS THERE ARE. All that other stuff, like the CEO’s salary and all the irrational capital investments they undertake in an atmosphere of calculational chaos, are “creating shareholder value,” dontcha know.

    Waddell and Bodek say it’s impossible to implement genuine lean principles at a corporation which uses Sloanist accounting metrics. Waddell, at his Evolving Excellence blog, mentioned being brought in as an consultant by a bunch of MBAs who kept asking him if he couldn’t find ways to cut labor costs even more. His response was “Um, have you noticed that production workers’ wages are only 6% of your total unit costs? Have you ever considered maybe cutting something BESIDES labor costs?” Of course, they looked at him like he’d grown a second head.

    The workers at the recuperated enterprises in Argentina, forced to learn about managing factories for themselves, learned very quickly that the MBAs’ poor-mouthing about “labor costs” and “competitiveness” was so much horse shit. They found that when they eliminated all the high-salared managers, most of the unit cost problem just evaporated. Since they didn’t have accounting degrees, they also didn’t know anything about ROI and the theology of direct labor hours. So they essentially reinvented, without knowing it, the cash accounting model of Henry Ford: if you have more money at the end of the week than at the beginning, you’ve made a profit.

    And cuts in labor costs are undertaken in complete isolation from consideration of what Crosby called the costs of poor quality. In hospitals, nursing staff is cut drastically because the only thing that shows up in their cost accounting calculations is the actual decline in direct labor hours, which is the only thing that matters. The increased costs from falls, med errors, hospital-acquired MRSA infections, legal liability for negligent understaffing, etc., which MORE THAN OUTWEIGH the nominal savings from decreased staffing, don’t even show up as part of the same bottom line. And the reductions in efficiency that result from decimating the human capital, with all its tacit, distributed, job-specific knowledge, don’t show up in their cost calculus either.

    So, my short answer to your question of why I think the MBAs are offshoring manufacturing, is that they’re made as functionally stupid by their self-serving ideology as the apparatchiks at Gosplan.

    I’d also throw in, BTW, the role of the state in facilitating the offshoring model or what Naomi Klein calls the “Nike model” of TNCs outsourcing actual production to independent job shops while retaining corporate control of finance, marketing and IP rights. If it weren’t for a strong IP regime (including trademarks), the legal infrastructure for maintaining corporate HQ’s control of oursourced production wouldn’t exist. The multiple hundreds of percent brand name markup between what the job shops are paid for a lot and the retail price paid by consumers in the U.S. would disappear.

    The state also directly subsidizes the offshoring model. The main item financed by foreign aid and by World Bank loans, over the past sixty years, has been the utility and road infrastructure needed to make much offshored production profitable.

    You’ve got a corporate culture that obsessively strains with a teaspoon at the alleged costs of “extortionate” union workers, while pouring corporate welfare by the billions of gallons down the swinish gullets of extortionate CEOs and coupon-clippers.

    But yeah, you’ve got to keep them nasty unions in line because them pore ole bosses need all the help they can get.

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  30. Thanks, Stillwater. BTW, I also meant to add…

    Before anyone raises the converse of the “If you’re so smart, why ain’t you rich?” question (“If the MBAs are so friggin’ stoopid, as you say, why are they laughing all the way to the bank?”), I’d point out that they’re able to get away with running the American equivalent of the Soviet planned economy because they’re functioning in a corporate economy which has been cartelized by the state. A handful of oligopoly firms dominate each industry, competing only against other firms that share the same dysfunctional organizational culture and whose managers went to the same B-schools. It’s what Paul Goodman once called “the great realm of cost-plus.”

    One might as well ask, if Soviet planned industries were so inefficient compared to market firms, how come there weren’t more market firms in the USSR? The answer: Because they werent’ competing with market firms. They had a system rigged for the Party apparatchiks who had Zils, dachas and GUM shopping privileges. We have a system rigged for multimillionaire CEOs guzzling at the corporate welfare trough and lining their pockets while they hollow out their enterprises in the name of (snicker) “creating shareholder value,” where the MBAs and coupon-clippers have appropriated virtually the entire productivity gain over the last forty years for throwing themselves a party instead of raising wages commensurate with productivity.

    This abomination is the kind of thing the guillotine was invented for, the kind of thing that peasants in the Wat Tyler rebellion and the Jacquerie roasted the lords of the manor alive in their armor for, the kind of thing that should be punished by fire and sword and the burning wrath of THE LORD God of Hosts, unto the fourth generation — and someone actually thinks UNIONS are “extortionate”?!! In what Bearded Spock universe?

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    • I’d add that the elites clearly have sucked almost all of the growth for decades, and with the collapse of the financial/credit/housing bubble, it’s becoming clear that the extent of looting was far more than apparent before. The USA has a lot of wealth; parasites can draw upon that for decades.

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    • In defense of the MBA (the actual degree) as opposed to the MBA (the dude with the piece of paper walking into middle management)… most of the literature I’m reading in my minor courses from Drucker’s management program actually talks about this stuff.

      In fact, I’ve remarked on more than one occasion that it seems to me that most people who hold an MBA got an undergraduate degree in business, followed by a 2-year MBA, and then jumped immediately into the workforce and promptly forgot every fishing thing they learned in the last 6 years. No, that’s inaccurate: they can’t be this bad by happenstance. They’re actually doing the *opposite* of what they’ve been taught.

      To which I usually hear the canard: “Academic learning doesn’t survive impact with the real world” which is astonishing given that all of these books used in academic organization science are written by people with years of actual business experience, doing actually decent research programs in real working organizations.

      The other one I hear is: “That’s all well and good, but the culture of my organization is too hide-bound”… which is astonishing, because… dude, you’re in the officer cadre. Presumably you *wanted* to be in the officer cadre. Who is supposed to change the organizational culture, the janitor? Do your damn job!

      Here endeth the rant.

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  31. Kolohe: The phrase you quote, “because labor costs are the only costs there are,” was my characterization of WHAT THE MBAs BELIEVE when it comes to corporate cost-cutting. For the MBAs, the only way to cut costs is to downsize labor without touching their bonuses or stock options or inefficient production methods or petty bureaucratic empires. Did you really miss that? How, exactly, did you manage to read that clause without reading a single other word from the rest of my comment?

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    • Ah got it. My mistake. Based on your other writings here, and at The Art of the Possible, I had thought that was pretty close to your belief anyway. But my apolgies nonetheless.

      (I still think you vastly underate how cheap global containerized transport has become for non-perishable goods – specifically, removing the IP regimes and other instruments of state power would substantially *increase* ‘off-shoring’ of mass production* in the absence of any other instruments of state power, like tariffs.)

      *retail would be a different matter.

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  33. Question for the author, et. al.:

    If you could start over from scratch, what kind of legal environment would you craft that would, in your mind, strike a fair & equitable balance between the rights of labor & the rights of capital?

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  34. Mad Rocket Scientist:

    As far as the labor regime itself goes, my legal agenda would be simple: Repeal Taft-Harley, the Railway Labor Relations Act, Wagner, and all other legislation except for Norris-LaGuardia (which took the feds out of the business of issuing injunctions).

    Indirectly, I’d abolish all laws that make land and capital artificially scarce, erect market entry barriers for those with little capital, and otherwise cause artificial scarcity rents to accrue to the owners of land and capital.

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