The Reality of the Labour Issue, and the 'Good' Entrepreneurs of History

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If you read Quadrant, or listen to various free-market advocates, you'll get the view that Australia is marching towards greater prosperity, with regulation of the labour market only getting in the way, and that in particular, unions just get in the way - selfishly claiming more than their fair share. This whole issue bears on what labour regulation we have, whether it is Work Choices or something else. That's the bigger issue, where things hit the bedrock of Government policy.

However, my engagement is going to be with the broader issues around this debate, rather than Work Choices or other Government policy. Broadly speaking, organised labour and capital are both willing to abuse their power when they're able to. We need to look at the broader picture to see if labour getting the short end of the stick happens often enough to be of concern. Further, there's both a historical and a contemporary issue - it does seem that some apologists for capitalism grudingly admit that things used to be bad - but they're better now - to the point where labour getting the short end of the stick is just no longer a relevant issue. Ok, this needs some consideration - but it is interesting to note just how familiar an excuse "it used to be bad - but its better now" is - till a new problem is identified. That problem is acknowledged, and the same excuse still used - though clearly the old use of it has just been invalidated. But let's start of with a few of my experiences and observations :

  • Long ago, the oil refinery workers had an annual strike, regular as clockwork, when their pay claim came up. Clearly, they were in a position to abuse their power.
  • At university, when I suggested to one of the staff that I rewire some equipment myself after struggling with the bureaucracy to get it fixed, their comment was : You do that and we'll all walk out. A great introduction to union realities for a student otherwise sympathetic to the union cause.
  • BR described to me the work he did during University break; while keen to help, he was told not let others see him fill the containers, as otherwise the unionised workers would walk out as part of a demarcation issue.
  • Looking around a union meeting hall in Lidcombe, I saw old B&W photos of workers carrying around "bricklayers hods" - and was amazed that such an unsafe work practice could be so prevalent in times past.
  • Attending a union picnic, I was struck with some positives in the union movement, what it can be at its best : Atheism, Community and Family.
  • In Colonial times, the labour market in the UK was, as I understand it, totally degregulated, ( I'll listen to an argument if someone wants to correct me). You'd notionally expect such an unregulated market to ratchet up the prosperity for all. Instead, many people were in poverty, and stole even though the penalty was capital punishment - indicating to me a state of absolute desperation.
  • In the UK, Robert Owen ran the New Lanark settlement, and was able to run a profitable business while looking after his workers - something that his fellow industrialists found incredible. 
  • In Australia, we had our own version of Robert Owen - Thomas Sutcliffe Mort - Mortdale is named after him - a local entrepreneur who made a point of looking after his workers.
  • While it is easy to see how growth can mean skilled workers are scarce and get paid more - it is difficult to think of a mechanism by which growth will make unskilled workers able to earn more.

So, historically it is clear that Capital was quite willing to treat workers poorly if it could. There would have been an attempt to excuse it by saying "we can't afford to treat the workers any better and still make a profit" - but entrepreneurs like Robert Owen put a lie to this sort of "Economic Determinism" - someone with enough initiative can push past what supposedly contrains them and find a new solution. Similarly, poverty was endemic in the totally unregulated labour market of Colonial times in the UK - putting a lie to the idea that an unregulated labour market will "naturally" ratchet up wealth for everyone. And, more recently, the use of such work practices as the "Hod" shows the willingness of Capital to allow callous workplace practice.

So, this is the past. We probably know of employers who are decent people, nothing like these demons from the past. Sure. They're a part of the mix, along with employees that will abuse the power they have. But the point is that while we might not have this obvious brutality of times past, there can be an assymetry of power - the employer knows the situation, the employee has minimal knowledge. Now, certainly for skilled trades where there's a lot of discussion between people in the trade, and people are footloose and able to move - they can be paid well. But when you're less skilled, unfamilar with the market, or constrained to the point where you can't readily change jobs - well, then you will have a power assymetry in the employer's favour.

The question is then, how much of the labour market is skilled and bouyant enough that the employers little power advantage, as compared to those where the employer has the advantage? And, certainly, you might still have a few situations where, like the oil refinery workers of old, employees have the upper hand. For me, this is an empirical question, to be answered by examining the world around us, not one to be answered ideologically by thumping the table - something I've seen a lot of.

Another issue is whether we are so prosperous that labour is no longer at a disadvantage. Well, on average we might be doing well. But, there's a saying that, if you have your head in an oven, and your feet in a freezer - on average - you're doing OK. The point is that wealth can still be unevenly distributed. The Patchwork Economy has been a topic for debate. Before you can make this claim, you need to look at not just prevailing wealth, but also equity - and I do not think that has been addressed. Sure. Increasing wealth can reduce the impact of the Capital-Labour assymetry. But it does not eliminate it, and it certainly warrants closer examination.

I hope I'm doing a fair job of outlining the free-market position, and am willing to listen to those who would claim I am not. But you'll have to engage me in terms I understand. I do believe I've made a genuine attempt to engage with the free-market view, without setting up a straw man.