The Labor Policy of the Free Society
13. Collective Bargaining in the General Juridical Structure
The common law, tracing to a large extent to free-market thinking, is a system of general rules for governing relationships, economic and otherwise, involving individual natural persons and such artificial “persons” as corporations which have been given a legal identity by positive legislation. An unincorporated labor union had no legal identity and therefore could not be a party to a common-law action. It could not sue or be sued as an entity, in its formal name. Contracts between an employer and a labor union as such could have no legal reality; they could not be enforced in favor of or against the union.
The Common Law and Collective Bargaining
There were two factors at work in the common-law rule which accorded employers legal freedom to deal or not to deal with unions. In the first place a “contract” with a union under the common law would be a nullity—an arrangement lacking qualified legal parties as well as legal methods of enforcement. In the second place, the idea of compelling even two legal persons to enter into a contractual relationship had no place in the common-law scheme of things, a scheme which viewed such relationships as strictly voluntary. The common law never compelled one legal entity to bargain with another. For a common-law judge, therefore, it would have seemed idiotic to compel a legal person, the employer, to bargain with a legal nonentity.
It is something of a mistake, then, to speak of a common law concerning collective bargaining. The common law, because of its inherent character, could deal with the situations arising among employers, employees, and unions only in terms of its concepts concerning individual, voluntary action. The common law did not, however, prohibit or even discourage collective bargaining. It permitted employers to deal with employee representatives on a collective basis. It permitted employees to cease work in groups as a means of putting pressure on employers to deal on that basis. Still, since the accord reached between union and employer had no legal standing, it could confer no legal benefits and could create no legal duties as regards the individual employees, the union, or the employer. The employer could specify one rate of pay in the “collective agreement” and actually pay another; as far as the law was concerned, he could equally disregard any or all other features of the “agreement.” So too, of course, could the union and the employees.
That far the common law went, and, as a practical matter, that is about as far as it could go so long as unions refused to acquire legal identity and so long as the legislative and administrative branches of government did nothing to facilitate the process of collective bargaining. Viewed in proper legal context and with an understanding of the nature of constitutional government in the United States, it becomes evident that the judiciary and the common law could not be held responsible for the situation in which the institution of collective bargaining found itself in the common-law period. Unions themselves, in refusing to incorporate, were primarily responsible for the vague and chaotic legal status of the collective agreement. One may certainly understand why unions refused to incorporate; it is in many ways more convenient to operate beyond the reach of the law. But then one who understands this point is scarcely likely to praise the law-evader or to support his criticisms of the law.
Collective Bargaining Under Interventionism:
Planned Chaos
The situation seems on the whole to have been one of deliberately calculated legal chaos—a special kind of planned confusion in which strong affiliated unions had all the arms and all the immunities, and in which employers, employees, and independent unions were both unarmed and defenseless. Employers could not interfere in the formation of unions. When unions acquired even a semblance of majority status, the law forced employers to bargain with them. But if unions did not have majority status the law still protected them in using coercive methods to compel collective bargaining. Once written, a collective contract was worth little more than the paper it was written on, since there was no method of enforcing it. As far as interventionist legislation was concerned, there was no such thing as an unlawful union activity; furthermore, to the extent that some union activities were unlawful under the common law, the interventionist legislation made it virtually impossible to hold unions responsible for those unlawful acts. Nothing comes out perfectly in this world, but for a while unions got from law and government almost exactly what they wanted—legal rights without any legal duties or responsibilities.
