A Blog of the Global Justice Movement

Tuesday, December 16, 2008

The Unions Forever?

Dinosaurs ruled the Earth until (as some paleontologists believe) a large comet or meteor hit the planet, causing massive climatic change that destroyed the great lizards' food supply, allowing mammals to gain a foothold and eventually dominate the world. Similarly, labor unions ruled the economic world until accelerating technology and cheaper foreign labor caused unions to seek State support to maintain their position. As State-imposed solutions rarely if ever work, union membership has declined to the point where only 7.9% of the private sector workforce was unionized in 2004, down from a high of 34.9% in 1949, according to statistics published by the Labor Research Association. That means that for the past half century, private sector union membership has declined by an average of 0.48% per year. Assuming the decline continues at a steady rate, there will be no private sector union membership by 2021.

That, of course, is unrealistic. One of two things will happen before private sector unions fade away like old soldiers. One, the government will step in and offer its protection. Backed up by the coercive power of the State, union membership will become a virtual mandate if anyone wants to secure a job in America's disappearing industrial base. Effectively socialism, this will allow the State to control both employers and employed in a self-defeating and panic-stricken effort to "save American jobs" and the remnants of the once-great industrial powerhouse.

By redistributing an increasing share of a shrinking pie to unions and their members, today's union leadership and the country's policymakers believe that they will somehow achieve progress and economic growth by undermining an essential aspect of human nature. That is, the only reason people invest and form capital is to derive the "fruits of ownership" from their productive assets. In a rational universe, people do not invest their time, effort, and ownership in something to secure an adequate income for others, especially when they and their dependents have not secured an adequate income.

This brings us to the other thing that could happen. Union leadership and the country's policymakers could wake up to the fact that human labor since the Industrial Revolution has been responsible for less and less of the total production of goods and services that takes place. "Capital" and "labor" are two independent variables in the production equation. Neither one can do without the other, but the coefficients of capital and labor have been changing as technology advances.

A "coefficient" is the number by which a variable is multiplied that expresses how the variables relate to one another. For example, in the equation 2x + y = z, there has to be twice as many "x"es as there are "y"s — regardless how big y or small x is — or the equation will no longer equal z. Over time, capital's coefficient has been getting rapidly larger, while labor's has been just as rapidly decreasing to keep the equation equal. (Of course, under the illogic of Keynesian economics, the equation has been distorted to such an extent by artificial manipulation of the system by the State that it is not equal, but that is a different issue, and is causing its own problems.)

Faced with the mathematical certainty that as the coefficient of capital increases, that of labor must decrease, the obvious solution is to cut labor in on some of the returns to capital. Keynesian economic policy does this by redistribution, inflation, job creation, and various other expedients that do nothing to increase the coefficient of labor, and, in fact, probably operate to increase the coefficient of capital at a faster rate, as owners of capital seek to replace increasingly expensive labor with more cost efficient capital.

A more direct means of getting some of the returns to capital legitimately to labor is to ensure that sellers of labor are also owners of capital. Workers would then derive the fruits of ownership (income and control) by right, rather than by expropriation or other coercive and illegitimate means.

If America's labor unions would grasp the reality of the situation, they would leap at the chance to expand their sphere of influence from mere labor, to ownership. Within an economy in which the rights of labor are becoming negligible due to the diminished importance of labor in the production equation, the rights of ownership are left without any organized movement to make certain that the ownership rights of ordinary workers are recognized, secured, and protected.

By concentrating exclusively on the rights of labor, unions are letting a much broader field of activity lie fallow. As the role of human labor decreases, there are fewer and fewer workers to protect, and thus less perceived need for unions. Potentially, however, as the role of capital increases, the number of owners whose rights need to be protected is limited only by the number of people. There can, after all, be only one person per job, but a single asset can be owned by an effectively infinite number of people.

There is only one obvious course of action for America's unions, and after them the unions of the world. They must transform themselves from organizations protecting the extremely limited and decreasing number of people who sell their toil, to the potentially infinite number of people who can own the means of production.

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