Friday, 31 December 2010

Unions, mutuals, regulation and libertarians

I'm always a bit surprised by the level of dislike towards trade unions expressed by 'libertarians' (at least in their generally right-of-centre, online form we most often see in the UK). It's surprising because a) unions are surely exactly the sort of voluntary association libertarians ought to like b) unions act as a countervailing force to power in the workplace c) unions have often been at the centre of opposition to political tyranny and d) there's a significant history of libertarianism, and even explicitly anarchism (most famously in Spain), within trade unions.

Many libertarians recognise the validity of some or all of these points, yet still end up viewing unions as part of the problem. One of the most common ways I have seen of reaching this conclusion is to argue that unions were alright in the past when there were real injustices at work, but now they have (to a greater or lesser extent) served their function. So now they are the enemy.

Aside from the question of whether all injustices at work have, or ever can be, addresses at work, it does pose a bit of a problem too, surely? After all, many of the issues that unions pushed on, like shorter working weeks, sick pay and paid holidays to name but a handful, are now 'solved' because certain standards have been put into law. The state, in other words, got rid of the problem. But if we are arguing that unions now don't have a positive role that then is surely to accept that a solution to workplace grievances is better achieved through the state mandating it than by self-organisation. That may or may not be true, but it doesn't sit very easily with a libertarian world view. What next? A crowd-sourced campaign if favour of allowing the state to execute those that threaten it's monopoly on the legitimate use of lethal violence... ;-)

There's an interesting parallel here with the relative benefits of mutuals compared to other forms of business organisation. One argument is that mutuals ought to be less risky than say PLCs because the agency problem is reduced. For example a mutual insurer might be less risky than an insurance PLC. But what happens when you regulate the industry to remove risks - do the potential benefits of the mutual form reduce?

According to Henry Hansmann the answer is yes, and this at least in part explains the decline of mutual insurers. Once again it looks like the value of a self-organised approach declines because of state intervention. The state appears to 'crowd out' the self-organised alternative. Yet I'm finding libertarian enthusiasm for reviving mutuals and similar forms of organisation hard to find.

Of course many libertarians would argue that they recognise the need for regulation, they just want to keep it to the minimum. Similarly they accept that in some cases this means that other forms of resolving issues emerge, hence it's ok that the state does what unions used to try to do. But to me it's notable that many libertarians seem more willing to give ground on their principles when there would otherwise be a challenge to power in the workplace either in terms of the rights of employees or the nature of the organisation of the business. Again, I'm sure there are plenty of good counterpoints, but this in part explains why I (and I am sure many others) see much 'libertarianism' as fairly familiar right-wing stuff, albeit with more swearing and drugs.

1 comment:

BlackRaven said...

Unions were a necessary evil, when there existed employers with monopolistic powers; however we now have legislation which limits monopolistic positions within industries, a welfare system that provides a safety net and much higher employee and company mobility. As such allowing an employee group a monopoly position in the form of a union is no longer a balancing force to a greater evil, but an illiberal force. The characterisation of strike action as simply “withdrawal of labour” is perhaps the principle objection, given that it is a state sponsored option to break a contract and enforces a monopoly position to labour providers. Contrast that with a company supplying goods being able to break a contract and insist the consumer not be allowed to buy substitutes.
Regardless a union which operates on a national scale can only cause harm if it attempts to achieve a superior wage and working condition settlements. Necessarily that additional cost provides an opportunity for other non-unionized firms that will damage the long term prospects of the unionized firm and the host county’s competitiveness. One only has to take a look at the shocking behaviour of the UAW and how it has killed the competitiveness of GM and Ford domestically.