The Theory of Collective Bargaining

PART OF THIS ESSAY was included in papers read to the Economic Society of South Africa at Cape Town on the 18th September, 1928, and to Section “F” of the British Association at Johannesburg on the 2nd August, 1929. The study on which it is based arose out of doubts as to the validity of much current teaching on the subject which had been suggested in the lectures of Professor Edwin Cannan. My indebtedness to his teaching and methods must be obvious. I must also acknowledge the help, direct and indirect, that I have received from the criticism and encouragement of Professor Arnold Plant.

I have no prefatorial apologies to make. The essay is brief, but brevity I claim as a virtue. It is absolutely untopical, but in avoiding reference to current events or controversy I may lessen suspicion of partisanship. In content and exposition it will have many defects, but I have attempted a difficult task which others have neglected. It is strange that there should be a complete absence of any modern treatise on the theory of trade unionism, for there is a colossal literature on its organization and history. We have, it is true, the Webbs’ Industrial Democracy, but that famous work is respected as a study of the government and organization of unionism rather than as a contribution to economic theory. My attempt may help to fill the gap until it is superseded by a better one.

The need was expressed by the Secretary of the General Federation of Trade Unions, Mr. W. A. Appleton, in his book Trade Unions, their Past, Present, and Future, 1925. He said (pp. 136-7):

“To ensure the consideration of trade unionism as a fundamental industrial problem, and apart from inherited or acquired prejudices and unbiassed by its possible applications, requires the type of mind which is sometimes developed in the universities, but which is seldom found in the partisan atmosphere of the actual movement. Few men in the movement realise its complexities or the need for abstract study as a preparation for official work, and fewer still there are who, apprehending, possess the time, the temperament and the capacity for the task. It is rather in the world of economics and letters that one may hope to find men who have not only the temperamental aptitudes and scientific attainments required for a study of the movement, but also the leisure which financial competence gives. It may indeed be groups of men engaged in research, deduction and explanation who will elucidate the philosophy of trade unionism and tell us what ought to be, and what can be.”

Now, I cannot claim to possess the qualities of Mr. Appleton’s ideal student and, unfortunately, I do not think he would endorse my conclusions. Yet, on the above quotation, I base my defense against those “practical men” who would decry these pages as the work of an academic theorist; and from it also I gather hope that some trade-union officials at least may endeavor to understand the thoughts of a detached and independent student of the institution they control.

I hardly dare express a hope that existing legislators will condescend to read what I have written. The student has to face the fact that many men of action find continuous intellectual effort irksome; he must cheerfully recognize that practically none of those people appointed to make laws controlling wages, or to make actual wage-board determinations, have even the most elementary understanding of issues such as those discussed here. The hope that rational thought may one day be imported as an active force into this field of human activity lies mainly in the universities. The student of today may, in some few cases, be the legislator of tomorrow, and he may carry with him and transmit some glimmering of enlightenment.

It is, thus, to the genuine student (in whatever class of society he may happen to be) rather than to the practical man that this book is addressed. Adult school tutors and W.E.A. tutors should find it of assistance even if they are unable to accept its conclusions. Those who have made no systematic study of economic theory will be unable to understand the compressed argument which follows, but it should not be too difficult for any perservering student who has mastered, say, the Ruskin College correspondence course in economics or who is thoroughly familiar with any good elementary book on economics. The subject is a difficult one and I am afraid that my discussion will be read with ease only by the fairly advanced student. A satisfactory “popular” work is beyond my powers and, perhaps, impossible. The student who is not familiar with the Webbs’ Industrial Democracy should read Part II, Chapters XII and XIII; and Part III, Chapters I and II of that work before tackling my contribution.

The popularity of economics has happily greatly extended in recent decades. But the study of wage questions has, it seems to me, been handicapped all along by the vague and erroneous ideas which I endeavor here to sweep away. So long as it was held that there was an increment of real income which could be transferred from the relatively rich to the relatively poor by control of wage rates, it was essential that a satisfactory wage theory should show exactly what that increment was and how control affected the transfer. Instead of this we were given phrases about combination leading to “equality of bargaining power” and wage fixation protecting “the economically weak.” Critics have often complained in recent years of the lack of a realistic theory of wages. The purging of the discussion of these misleading ideas and phrases may, perhaps, clear the way for more useful investigations into the working of the value mechanism in the sphere of labor’s remuneration.

W. H. HUTT.

University of Cape Town, March, 1930.