Mises Daily Articles
Auberon Herbert on Labor and Unions
On Labor Day, Americans honor the often incredible contributions of its working men and women. But that honor is typically hijacked by unions who portray themselves as representing all American workers and claim that they are largely responsible for the gains workers have made. Those assertions are false. In fact, unions have harmed workers as a whole by their actions.
Nowhere was this made clearer than in an article published over a century ago by the Englishman, Auberon Herbert. In "The True Line of Deliverance," in 1891 (in A Plea for Liberty: An Argument Against Socialism and Socialistic Legislation, edited by Thomas Mackay), he laid out a more accurate appraisal of the effects of unions than anything you are likely to read this Labor Day.
Consider the following excerpt (spelling modernized):
- ...Unionism...[utilizes] crude doctrines of sheer force, constraint of anybody and everybody who stand in the way of the immediate end, limitation of numbers and excessive prices built up on monopoly, ingenious dovetailing of political action into unionist action, universal federation with rigid centralization and strict dependence of all parts on the center...
- Centralization, coercion and monopoly, always have been the advance guard of eventual failure and suffering, and always will be...
- Trades-Unionism was in a sort of way a success—for the trades unionist...of course the more a union could restrict the admission of members into the trade by limiting the number of apprentices, or in other ways, the more it could for the moment keep up or raise its rate of wages...The effect of all restriction is to diminish production and raise prices. The trade which previously had a dam, when other trades had not, was at an advantage; for it was exchanging its restricted production against the unrestricted production of other trades—a state of things, which was good for it, but bad for all others. It was taking more and giving less. For this reason, as the New Unionists restrict production...the labor of other trades will exchange for less.
- ...the action of the State is rather cleverly brought in to make good the gap which Unionism fails to cover... Municipalities and County Councils are to pay union prices in all their contracts...An ordinary employer...might decline the article at the union price; but the municipality or Council which has once been captured, can be made to undertake certain work, and in doing it to strike almost any key-note that is desired. The body which spends public funds is independent of the market rate, and is therefore admirably suited for forcing the pace.
- There are two roads, and only two roads, which offer themselves to us. One is the road of restriction, regulation, monopoly, and absolute power entrusted to the hands which have to win the successive positions, and defend them when won; the other is the road of free action, unlimited competition, and voluntary association... all the methods of restriction...are wrong and will only end in disappointment after a grievous loss of effort and time...the weight of argument is strongly on the side of liberty of action and unrestricted competition...The coercionists of every kind can offer the bribe of immediate results; but we have in our hands the appeal to the truer reason and the higher motives...
- ...Unionism...is founded on distinctly wrong principles...Unionism essentially means the sacrifice of one section of the laborers to another section—it means this in more than one sense; it means the setting aside of the desires and the judgment of the individual for the sake of a common end; it means temptations to coerce; it means regulation, restriction, and centralization, with all the evils that flow from these fatal methods.
- ...the unionist only bargains for a part... A union is formed...[then] there begins to be a divergence of certain other interests between those who are in the union and those outside the union. The union, intent on raising wages, finds it must fix a minimum of pay below which its members must not go. But either this minimum is so low that it is of no service, or else it cuts off from employment the old worker and the second-class worker.
- ...the class of ordinary workman who for many different reasons prefers to be outside the union...is a real danger to the unionist, as when any quarrel occurs, he may take his place. He therefore must be brought in, until the number outside the union is sufficiently reduced so as not to be dangerous. Here begins the temptation to coerce. The quickest way of securing this end is to make life uncomfortable for the outsider who works in the same shop with unionists; finally, unless he joins the union, tools may be thrown down, and the employer have to choose between standing by a few men on principle or finding himself involved in a strike. But while it is necessary for the stability of the union to bring a certain proportion of the ordinary outsiders into the union, an artificial rate of wages cannot be maintained, if labor flows freely in the trade. Therefore the inflow into the trade must be restricted...after limiting their own numbers, refusing to allow any man to work who did not possess the union ticket.
- ...what does this control of the entrance mean? It means war on other kinds of labor. Just as the union means a kind of war upon those in the same trade whom it is important to bring in and yet themselves do not wish to be admitted, so it also means war on outside labor. It means that the laborers in other less well paid trades cannot find free access to the better paid trades, that the dam is preventing the true level being found, and that those inside the dam are profiting by keeping others out. Now that is a bad arrangement for all concerned...
- The restriction we forge against others is always to our own grievous hurt.. all systems of restriction hurt more than they advantage...even the better forms of Unionism are always lending themselves to a certain amount of restriction, if they are to be effective for raising wages.
- We see that Unionism may mean interference and coercion as regards certain outside labor in the same trade; that it tends to cut off from itself the most pushing and the best men; that in some cases it dams back the labor that would flow into the more highly paid trades from less highly paid occupations...but besides these there are many other forms of restriction which are apt to spring up whenever men begin regulating for each other the conditions of their labor....rigid boundaries...often leading to much inconvenience and expense...rules forbidding certain methods of work and payment, which are not the authorized method...the rules enforcing a rigid uniformity in the method of doing work...rules against besting his fellows;—all these are examples of how thick and fast restriction is apt to grow when once men begin to employ it as their instrument. It is only what we ought to expect. Restriction will always breed restriction, both because the first restriction is found to be incomplete without the second, and the second without the third; and because men who once lend themselves to restriction acquire the temper of betaking themselves to restriction in face of every difficulty.
- ...the moment you have entered the path of restriction, you may be sure that whatever further restrictions are necessary to make your first restrictions efficient will presently be employed. That is the danger of all restriction; there are so many steps waiting to succeed to the first.
- ...other faults of Trades Unions. It not only surrounds a man with restrictions, which every frank person will admit to be an evil...but it does much harm by disregarding natural variety, by tending to throw men into one class, and treating them as if they were all alike...it is a wrong and cruel system which ignores all these differences...
- ... there is no living man who can measure the full result of restrictions. They are always clumsy things, and though some of their results can be foreseen, they always produce some startling and unexpected results...they are apt to lead to centralized management—one of the greatest curses in the world—placing the arrangements of the men in a particular shop with the employer at the mercy of some established system and the officers who enforce it; they sometimes hang like a thundercloud over the head of the best employers who desire to try new paths; and they are apt to destroy the possibility of a close alliance and partnership growing up between such employers and their men, and thus to prevent the energies of the country being freely given to production.
- ...these evils seem to me the necessary result of restrictive methods. I think all restriction—wherever and by whomsoever employed—works out badly; and I feel sure that the workmen will never gain the inheritance waiting for them, as long as they seek to advance along that line.
- Ahead a still graver evil lurks in these restrictions...no person who once enters the road of restriction ever stands still. Either, conquering all former scruples, he goes on supplementing the old restrictions with new restrictions in order to make them efficient, or, disgusted with the odiousness of compelling men to act against their own wishes and of reducing them to ciphers by regulation, he throws up the whole attempt and retraces his steps...to persevere in the path of restriction, they must be prepared to put themselves and their brother-workmen under a system in which their own individual wish, and even the wish of their own particular trade, can count for almost nothing. You cannot form the 1/100th or 1/500th part of a huge fighting system, and keep any real control over yourself. The necessities of the system as a whole will govern your action, and you will be carried forward with the general movement, whether you approve or disapprove...judge present Unionism, not simply by what we see today, not simply by the restrictions and coercions which they are occasionally tempted to employ towards their fellow-workmen either at the moment of a strike or when it is thought necessary to force men into union, but by the threatened development of Trade Unionism—all trades being federated into one body and negotiating with all employers...think of the tremendous power that must be lodged in a few hands; of all the countless struggles and intrigues to obtain that power; of the worthless men who will succeed in obtaining it; of the fatal mistakes that will be made even by good and true men, holding this power in their hands; and of the harsh unscrupulous use that will be made of this power to destroy all individual resistance that is inconvenient. I ask them if this is an ideal to which they are ready to devote such part of their lives and energies as still remain to them...
- Can a system of restrictions really better the men's position? Can it better wages? Can it take from the employers and give to the men?...the mass of evidence is distinctly against any true and permanent bettering of the men's position by such means.
- ...where a trade is in the nature of a monopoly...wages may be pushed up for a time considerably higher than they would have gone, or than they can healthily go, as regards the trade itself; grant all this, yet is this a sufficient compensation for the state of war that is established between men of the same trade, between different trades, and between employer and employed; for all the individual inconvenience and restriction, and the loss of individual free action; for all the arbitrary things done by those in power, and the temptations towards coercing others; for all the sums that go daily and hourly in war-subscriptions...for all the time and energy of the men spent on the unions...If it can be shown that Unionism cannot permanently alter the wage of labor, and that economical injury constantly results from its action, would it not be wise and right for every unionist to reconsider the whole matter, and ask himself if he cannot spend the very limited amount of time and energy that each man possesses, to serve the cause of labor in some other fashion?
- ...the true method of increasing wages is to increase the whole body of capital..the all-important fact—which in reality is a mere truism—remains, that only as the methods of production are improved and more is produced at less cost, can more be divided between employer and employed. Let it be clearly seen how the worker is benefitted by increasing production, and by better and cheaper methods of production...A clear perception of this method by which labor is benefitted, shows us several great truths; how fatal is all protection; how unfair to the rest of labor are any forms of restriction and monopoly in certain trades, inasmuch as these trades take more and give less in the general exchange; and how unwise are the struggles over the ratio or proportion in which the product is divided, when the matter of prime importance is to improve production, and thus increase the share falling both to employer and employed.
- The workman has simply to care about the increase of the product, leaving the market to arrange the proportions that come to him. They will be increasingly in his favor. It is indeed to the workman more than to any other person that free-trade is of vital importance. The man who wants to be protected is the second-rate employer, with backward methods, who feels that he is being squeezed out by the better methods. One can only be very sorry for his position, which is often a hard one; but to protect him is to sacrifice general prosperity.
- Government exactions and restrictions, joined to labor troubles...only lessen the reward of the employer...
- Is it therefore worth while...to be quarreling about the proportion in which the product is to be divided, when the great aim must be to make the course of production easier and smoother, get more brains and invention devoted to the work, and everywhere increase the points of concord and lessen the points of friction?...successful production depends upon the willingness and, so to speak, good temper of capital,-its readiness to run risks and try new methods,-and the theory of universal Unionism—if candidly stated—is to get capital into a corner, and make a mere labor's drudge of it.
- ...[with] increased production...the competition among the masters for the men must carry the wage up...in a perfectly healthy natural manner. There have been no disputes; contracts have come in and been accepted; the trade has expanded and contracted according to natural requirements...For if the profit of the masters is at all in excess it produces the very thing that is most in the interest of the men. They borrow capital and enlarge their turnout, while, if the upward movement seems likely to last, new employers begin to enter the trade.
- Now I think it is hardly possible to review the two processes, remembering how all strain between employers and employed checks production, remembering the unwise things that will be done on both sides, the mistakes made on both sides, the waste of time and energy on both sides, in offensive and defensive preparations, and the fatal effect of a fight at the moment when trade is becoming favorable, without believing that the workman would actually gain more in wages if his Union abstains from all interference in the matter. The Union is so liable to make mistakes; the market, left to itself, will not make mistakes. I suspect the union often acts like a fisherman, who snatches the bait out of the fish's mouth, in his hurry to secure his prize, instead of waiting for the fish to pouch it. The first rise in a trade is the bait to the employer to enlarge his business, put on more hands, and accept contracts. When he has once taken those steps, the wage must rise; even if the workman's share in the profit does not come to him quite as quickly...he has no occasion to repent it. It is probably the very best investment that he could have made. It is ground-bait, and with moderate patience will bring far more to his basket than what he loses at the moment.
- Trades Unions have a power to raise wages for a time...But this power is both hurtful to others and limited in its own extent. In the first place, such extra wage is taken from the pockets of their fellow-laborers. It is in fact nothing but war against labor. Taking advantage of their position, these monopolists accept the labor of their fellow-workmen at a lower price, whilst they charge a higher price for their own. And does it profit them? The trade is pinched and starved by the high prices; there is perpetual war between employers and employed, wasting the extra gains of labor; capital arms itself at all points, and retaliates; quick brains begin to devise new methods of circumventing the monopoly and working through other trades or through other channels; while the men succumb to the universal fate which overtakes all those, poor or rich, who are artificially protected, and begin to deteriorate in their own character...The men not only hurt themselves as consumers, by restricting their own trade, but they may throw out of gear other allied trades, and by depressing the production of these other trades still further, hurt both themselves and all other workmen by reducing the general product...It is the interest of all other trades, as well as of the public, to discourage all such dams, and to make the free-trade footing universal for all. I do not mean that A and B should accept work on any terms other than those that they themselves approve; but that they should throw no dam round their labor by preventing C from taking a share in their work or from accepting terms which they decline. That is the true labor principle, universal individual choice, and no pressure exerted upon others.
- ...under a free system the extra profit must eventually come to the men, whilst the restriction or the pressure, employed to gain that profit, is likely in the end to destroy the extra profit by lessening the vigor and expansion of the trade...unfriendly pressure exercised upon capital, a slight discouragement to its investment, would probably do far more in reducing wages by reducing the amount of capital employed, than in raising wages by raising the proportion of the product which comes to the laborer...[there is] much capital invested in buildings and plant, which could be nipped safely by the union because it could not be withdrawn without great loss. But that is profit for the moment at the cost of sacrificing the profit for the future. "Once bit, twice shy." The capital which is so treated avoids the trade in question, like a plague-infested district, and the trade suffers grievously instead of profiting by such folly. Nor is it right to say a trades union could permanently raise wages in the case of increased product. If such increase were general over the whole field of production, all the laborers would profit, with or without Trade Unions, for there would be a larger product-fund to be divided amongst them, and each man's labor would exchange for more.
- ...the laborer with the extra profit must either dam back by some artifice the inflowing labor, or lose his extra profit. He therefore would not be profited except at the expense of other labor.
- ...high wages. They may be the truest sign of national health and vigor; or they may be just the reverse. If they are the result of monopoly, because in some special field labor has cornered capital, and by violence has driven other labor out of competition, or the result of the high prices existing under a protective tariff, they only indicate unhealth... and are sure to be accompanied or followed by disturbances of various kinds; if they are the result of perfectly free competition existing everywhere, then they are the truest sign of health...
- ...it is only a truism to say that the labor of the country never can obtain for itself, except at the expense of other labor, more than the free and open market will yield..what is the true course to follow? To turn our backs on the method which must be pronounced to be the true one, because it is still imperfect, and plunge into an interminable morass of restriction and regulation, through which we can only make our way by guess-work and reckless adventure; or, instead of this, press steadily on in what we know is the true direction, and gradually remove the obstacles in our way?...No man...can reasonably claim more than what his work is worth to his fellow-men...he has no title to more; and if by any device he succeeds in extracting more, he is behaving with something that is very near to dishonesty, since he is forcing this higher price at the expense of others.
- ...it must not be forgotten that it is in the interest of masters in some trades to preserve a state of restriction and monopoly; since...they are able to make it difficult for new capital to enter such trades..In open trades the new employer is unlikely to enter into any such combination.
- ...restrictions of trades unions...may limit the numbers engaged in a trade, which may disallow the nonunionist working with the unionist, and prevent a man acquiring a trade at any moment of his life. Till these restrictions are done away with, there can be no true labor mart...Once the great mass of our workmen recognize that the true and fair policy for all is making the labor-market as free of access as possible to all...much can be done to help this object. The needful thing is to get effort into the right direction.
- ...what would be the attitude of the men under the new state of things...They would leave every man free to settle his own price of labor, just as every shopkeeper settles his own prices...They would let every man follow his own inclination as to the number of hours he worked, or the character of his work...They would break down every fence that prevented a man acquiring a trade for which he had an aptitude...There would be no minimum of wage, except such as each man chose to fix for himself, and there would be no strikes, such as exist today. In the case of a serious disagreement between an employer and his men, the union would remove all such men as wished to leave...But there would be no effort to prevent the employer obtaining new hands...There would be no strike, no picketing, no coercion of other men, no stigmatizing another fellow-workman...because he was ready to take a lower wage—all this would be left perfectly free for each man to do according to what was right in his own judgment. If the employer had behaved badly, the true penalty would fall upon him; those who wished to leave his service would do so...That would be at once the true penalty and the true remedy. Further than that in labor disputes has no man a right to go. He can throw up his own work, but he has no right to prevent others accepting that work.
- If all the money wasted in labor—war had been invested in industrial concerns, wages would be higher than they are now, and the men would be part owners...the outcome would be for the ever-increasing advantage of the men.
- ...the result of the abandonment by the men of their war-organizations....the vast effect of transferring the energy and intelligence that are spent today upon war-purposes to the direct purpose of reconstructing the circumstances of the workman's life...Capital relieved of all attacks and of all misgivings would become intensely active. The same wise spirit in the men which had led them to abandon all attacks upon it through their organizations, would also lead them to put a sharp curb upon the mischievous activities of the politician...Capital would thus...know that under all circumstances it would receive its full market reward...The consequences would be that this country would become the home and storehouse of capital... not only would wages rise, but many useful commercial undertakings would be carried out on behalf of the workmen which now are left undone...the competition of capitalists will drive the reward of labor up to the highest point...the ready inflow of capital does so much to keep all trades in a healthy and vigorous condition, and thus to raise the general product, and thus to raise wages.
- ...upon the increase of this product depends the prosperity of the workmen, as a body. If this product is small, no earthly ingenuity, no organization, no government systems, no grants in aid, no form of protection, can make the general condition of the laborers good. It is altogether past praying for. If, on the other hand, this product is large, and goes on steadily increasing...nothing can prevent the material prosperity of the workmen...
- It is the workmen's interest therefore that no trade-monopoly should exist anywhere, that every trade should be free from restrictions, should be attracting capital, should be producing largely and efficiently, so that in every direction where each man exchanges the product of his own labor, he should receive much in return.
- ...I urge upon Trade Unionists and all workmen...Seek to get rid of war. Seek to get rid of the war-organization, which is a terrible hindrance to all developments of a higher kind. Give up attacking capital. Leave capital to reduce its own reward, which it will do far more effectually than you can do, by competition with itself. Create for it the most favorable atmosphere. Cultivate with all the better employers friendly personal relations. Disregard stories of excessive profits. Here and there some men, possessing powers of a very high order, and excelling in commercial judgment and aptitude for organization, may build up great fortunes. Don't grudge such man a single penny of their wealth. They are the true servants and helpers of all.
- As the wealth of the country increases, larger and larger shares of it must come to [a worker]. He has only to let the natural processes go on, to resist all temptation to fight, or to rely upon artificial protection for his labor...Honestly, happily, with no hurt and no oppression of others, he can obtain all that the State-Socialist vainly promises at the end of useless crime and revolution—for crime and revolution will not bring it; they are instruments that defeat themselves—and far more, for he can obtain it, while he preserves that priceless gift of remaining the master of his own actions, and not being under the regulation of other men.
- ...of paramount importance to the workmen..the abandonment of struggles with capital over wages. It must be remembered that everything turns upon the willing temper of capital. Capital stands on this vantage ground, that to set production going, or to increase it, it must be attracted, eager, and filled with confidence. We have therefore to insist upon these general truths—that all war between capital and labor is fatal to the general good; that it cannot permanently increase wages, seeing that higher wages can only permanently come from larger and cheaper production, and that capital must be coaxed, not bullied, into the perfect performance of its true service; that capital should be thoroughly secure and at ease, so that on account of this ease it should be content with a lower reward, itself by competition with itself reducing that reward; that no violence or threat of violence from any quarter should be offered it; that employers should be constantly tempted to invest their profits in their business, thus enlarging their operations and increasing the fund that gives employment...that the fullest encouragement should be given to employers to introduce improved processes and improved machinery, no employer being afraid to invest the largest sums of money permanently in his business; that by such improved processes all articles should be manufactured at the lowest possible price, thus ensuring to the workman the highest return from his wages...that in no trade should there be any restriction or monopoly, seeing that the higher prices derived from such restriction and monopoly are obtained at the expense of other workmen, who only receive free trade prices for their labor, while themselves paying to such monopolists protective prices; that all labor should be free to move in such channels as best suited it, and that efforts should be directed to perfect the competition of the open market, as offering both the truest and justest return for the labor of each...
- ... no foolish legislative steps should be taken to restrict or impede...the politician should not be allowed either to come between the employer and the employed, in the arrangement of their affairs, or to interfere with the profits of the employer, upon which the whole fabric of production rests, and with it the prosperity of the workmen.
- Of course this abandonment of industrial war on the part of the workmen would be nearly in vain, if the politician is still allowed to play his usual high antics upon his own stage, if capital is to be harassed by ill-considered laws, its reward filched from it, and thus the growing inclination to invest is to be checked...if everybody who climbs to power is to indulge his fancies and speculations at the expense of other people...if free arrangements between employers and employed are to be prevented, and schemes like Employers' Liability (with all the mischief of uniformity about them) are to be forced on the whole nation...if every blessed occupation in turn..are to ask for charters and are to regulate their own numbers, under the flimsy plea of saving the public from incompetence, if the workmen's thoughts and energies are all to be given to these worthless political methods and to the barren struggle for power over each other, if the lies, self-seeking and hypocrisy of party warfare are to reign supreme in our hearts—then the immense gain which would come from a cessation of industrial war will be neutralized both by other forms of monopoly and by the continuance of political war. Both forms are equally mischievous. Both in due time will destroy the nations that give themselves up to them, for both are opposed to the great principle on which alone happy and progressive society can be founded—the unflinching respect for every man's will about his own actions.
Auberon Herbert made the clear and compelling case for liberty rather than labor unions as the source of the greater economic output that leads to correspondingly higher real incomes for workers. He also showed how the restrictions and other distortions imposed by labor unions have harmed the vast majority of workers. Rather than the annual repetition by labor unions that they represent all American workers and deserve the credit for their progress, that is the message that needs to be heard on Labor Day, if we are to truly honor workers by benefitting them.