In 1930, W.H. Hutt demonstrated several spectacular points: labor unions cannot lift wages overall; their earnings come at the expense of the consumer; their effect is to cartelize business and reduce free competition to the detriment of everyone. He demonstrated these points with intricate logic that took on the main economic arguments for labor unions.
In 1954, this little volume was published in the United States, with a very complimentary essay by none other than Ludwig von Mises, who saw Hutt’s work as valid for the ages. All of his points still hold true, particularly the least intuitive one that unions actually benefit some producers at the expense of others, and always harm the consumer.
The brevity of this essay is as notable as its power to persuade.
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Hutt was an economist of the classical tradition who identified himself with the Austrian School. He studied at the London School of Economics and became a professor at the University of Cape Town. He is particularly known for his works “The Factory System of the Early Nineteenth Century” (1925), The Theory of Collective Bargaining (1930), and The Strike-Threat System (1973).
The salient fact, and one which most writers fail to stress, is that, insofar as the working people then had a "choice of alternative benefits," they chose the conditions which the reformers condemned.
The political influence of labor unions has aimed at the entrenchment of privileged employment and the protection of the officials' "profession."
Glencoe, IL: The Free Press, 1954.
