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Apology for Privilege

(January 1951)

From The New International, Vol. XVII No. 1, January–February 1951, pp. 61–63.
Transcribed & marked up by Einde O’Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

Unions and Capitalism
by Charles E. Lindblom
Yale University Press. 267 pp, $3.75

The profession of labor leader has become almost as respectable as that of insurance salesman. High ranking union officials who once spoke to scornful men in their socialist youth formulate weighty arguments in defense of “free enterprise,” adding to their stock of arguments as they rise in the labor hierarchy. Their testimony is heard by Congressional committees; their counsel sought on advisory boards of sub-investigating committees. Public officials listen with respect, solemnly nodding their heads. A fraternity of labor and capital seems solidly cemented in mutual tolerance and regard. Unions appear to have won a permanent place under capitalism; capitalism a loyal ally and advocate.

But a melancholy dissent comes from Yale Professor Charles E. Lindblom who insists, contrary to the apparent weight of evidence, that the maintenance of unions and the continued existence of capitalism are incompatible. Such is the sorrowful theme of his book, Unions and Capitalism; sorrowful, because he admires capitalism but can discover no practical scheme for avoiding its destruction at the hands of unionism.

The author would quickly deny harboring preconceived prejudices. In a cautionary preface he assures us that he passes no judgment on inexorable social processes, that he treats social trends and class forces with the unemotional detachment of a scientist. Such objectivity is indeed a rare quality. Our normal scepticism sounds warning when we learn that he intends to demonstrate, on the basis of pure social science, that the pending doom of capitalism is read in the rapidly rising curve of wages. Powerful unions, he tells us, are forcing wages up to impossible heights. “This is the great labor problem of our time: unionism is destroying the competitive price system.”

Does the disintegration of world capitalism (and its impact upon the American working class) cause the conservative American labor movement to lean toward an alternative philosophy and program. Or, does the rise of conservative mass unions in the United Stites cause the disintegration of capitalism? Lindblom advances the second, and tries, most painfully, to bolster it. He discovers the principal danger to capitalism in the rise of powerful unions which encourage the stubborn pursuit of narrow, self-seeking class aims by the workers, without regard for the interests of “society.” (He uses the terms “society" and capitalism almost interchangeably.)

The whole book is flavored with a quaint one-sided “objectivity” as in some of the following random thoughts.

Item: Unions disrupt and disorganize society. But, of course, capitalism does have defects. For example, labor is treated as a commodity. Yet it is more “propaganda” than fact to say that labor is a commodity under our present system. Our order is fundamentally and genuinely democratic because the consumer, “voting” in the market place with his dollar, dominates and rules production. Such is the essence of democracy. Still, it must be granted that some consumers have more dollars than others, even very many more. On the other hand, this is inevitable under any “incentive” economy. One might say that such inequalities are flaws in our dollar democracy. But, after all, society has declared by a majority vote to maintain such an incentive system with all its inequalities and that is truly democratic. Besides, if unions took over control of production, as a scientific analysis discloses they tend to do, we would have an undemocratic rule of producers over consumers. But let us not be too harsh on unionism, for such is their natural tendency under our present form of society.

Item: His analysis spirals around one central pivot: high, “monopoly” wages undermine capitalism. Lindblom fans out this thought into 200 pages. Since every strike and every new union contract inspire the critics of labor unions to ring the changes on this theme, let us follow the author’s special variation which goes somewhat as follows:

Item: Capitalism is a “competitive price” system. Consumers will pay only a limited price for goods. The cost of production of any commodity must be lower than its selling price; otherwise, no profits and no production. But wages enters as one of the elements in the cost of production; for wages is the cost of labor to the employer and he must buy it like any other commodity; the true level of wages is the “competitive” wage (1) permits profits to employers and reasonable prices to consumers, and (2) is established in the competitive market place, free from “monopoly” control by unions; once the competitive wage disappears, inflation and unemployment follow; capitalism begins to disintegrate. By insisting on a “human wage” and proclaiming “human rights before property rights,” labor leaders reject the “competitive wage” and establish a “monopoly wage”; wages break loose from all moorings; workers wolf down a larger and larger share of production justly belonging to other sections of society; prices skyrocket, higher, higher, higher. Unions take wages completely out of competition by industry-wide bargaining and in agreement with management establish joint “syndicalist” control over separate industries, an alliance against the interests of society. So powerful are the unions that neither government nor management will block their way. Capitalism appears doomed.

“Now one may be quick to endorse the sentiment that people deserve more considerate treatment than things ... But this does not deny that labor is bought and sold on the market, that unionism through its power in collective bargaining does establish what is technically called a monopoly and that union monopoly will disrupt the economy. To insist that labor is not a commodity is to bypass these issues and register simply a moral objection to the treatment of labor in a price system.”

The author would soar above simple moral considerations to the summits of pure science but his economics is hopelessly bound to earth. Viewed with Lindblom’s standpoint, every commodity has its production cost and selling price; cost must remain less than price to allow profit. The justification of the selling price of a given commodity can be sought only by comparing it with its own cost of production. If by such a comparison, its price is reasonable, then this price must enter as a necessary element in the cost of production of any other commodity to whose production it was essential, say, as raw material. For example, if the price of leather permitted repayment of its cost of production plus a reasonable profit, then this price would become a necessary and justifiable element in the cost of producing shoes. Obeying the rules of the game, we could hardly make “moral” demands upon the owner and producer of leather and insist that he sell his product at a price to guarantee profits to the shoe manufacturer. If leather sold at reasonable prices, according to these norms, only an emotional shoe manufacturer could attribute a decline of the shoe industry to an exorbitant price of leather. He is allowed to make such a complaint only if leather sells at a “monopoly” price far above its cost of production. But Lindblom requires labor to be far more generous, self-effacing, and obliging than a mere scrap of leather.

If we really abandoned all “normal” considerations in analyzing labor as a commodity, we would have to view it like all other commodities. If it is burdened with equal duties it should command equal rights. If it is obliged to sell at a certain “competitive price” it should be privileged to receive at least its cost of production. Lindblom, however, makes labor a second class commodity citizen: he discovers its selling price easily enough (wages) but no cost of production! An oversight which makes it possible to test wages not in terms of the cost of production of labor but exclusively in terms of the ability of employers to make a profit. Every other commodity which violates the etiquette of commodity behavior is tried by a jury of its peers; labor, by its masters.

What is the “cost of production” of commodity labor power? This question, so carefully skirted by the author, can be answered only by examining the standard of living of the working class, a level set in the course of the class struggle, in decades of organization and social conflict. By waving aside this modest factor, a series of logical apologetics for exploitation and privilege can be readily arranged.

How can the existence of “monopoly wages” be detected? By some statistical device? If wages are tearing loose from all moorings and workers are cutting deeper and deeper into the national income, such trends should be easily demonstrated. We might still debate whether labor was “entitled” to its more generous portion but at least the facts would be incontestable. But Lindblom’s deep confidence in his theory rescues him from any annoying preoccupation with facts. According to New York Times reports, Martin R. Gainsburgh, chief economist of the National Industrial Conference Board in an address before the New York Chamber of Commerce announced that labor’s total share of the income originating in private corporate enterprise, after allowing for indirect payments, has remained relatively unchanged over recent decades. It amounted to $73.80 out of every $100 of such income in 1929 and $73.40 in 1948.

Economist Seymour E. Harris compares “the rise of employee compensation of 180 per cent from 1929 to 1948 with that of business and professional incomes of 220 per cent.” The People’s Lobby Bulletin reports:

“In 1949, national income was 207 per cent larger than in 1939: compensation of employees was 197 per cent larger; proprietors’ and rental income was 210 per cent larger, corporate profits after taxes 244 per cent larger, dividend payments 121 per cent larger and undistributed profits 633 per cent larger. In 1949, total employee compensation was only 63.7 per cent of national income and 66 per cent in 1939.”

Hardly a picture of labor hogging the national income.

But perhaps the inexorable trend toward monopoly wages and its devastating effects on our otherwise sound economy can be detected by some more reliable, if less statistical, examination. Lindblom warns us away from the search.

“Monopoly rates will raise price and restrict output in an industry; but in any given case of price and output changes, no obvious evidence of union responsibility will be found. It will be known that both wage rate and price are high but whether the wage rate is a monopoly rate will not be known.”

Like God, monopoly wages seem to belong in the realm of the unknowable.

Chase as fast as he can, the workingman cannot overtake the upper classes. This simple thought is twisted into a supple apologetic for privilege; the great gulf between worker and non-worker, between opulence and mere humdrum existence becomes an inherent characteristic of any free, stable social system.

“The worker is in fact insisting on no fixed goal at all. He is in effect demanding that he be put within reach of standards set by the middle and upper income groups. And as he moves toward them, they move away, for the constant rise in the national income raises the accomplishments and standards of the middle and higher income groups themselves.”

At bottom, Lindblom’s quarrel with unionism stems from its assault not only on capitalist inequalities but against social inequality in general. And here lies the explanation of a queer ambivalence in his attitude toward labor leaders.

On gloomy first thought, he expects the worst. “The new leadership [Murray, Reuther] understands the complexities of the market place better than the old. It therefore realized how great the obstacles are to the achievement of union objectives without altering the market structure itself.” And elsewhere he predicts, “The latter [these leaders] may come ultimately to confess publicly their desire to lead the way to a new order.” But a faint ray of optimism flickers from an unexpected source, when Lindblom puzzles out a wistful program for preserving capitalism. On second thought, the union leadership alone seems able to exercise a moderating restraint upon the anti-social tendencies of unionism. If no one else can protect and preserve a privileged upper stratum against the rude pushing of the workers below, perhaps the labor leaders will. At least, such seems to be his hope.

The author documents the impinging of unionism on the rights of management and the sprouting of a laborite anti-capitalist ideology at the core of the union’s pro-capitalist philosophy. In this respect, his book is of great interest to socialists. But if we seek a scholarly explanation of social trends in the labor movement we do so in vain, discovering only a scholar’s reaction and his literary revenge upon them. The effects of two world wars and preparations for a third, the impact of economic crises, the threat of mass unemployment, the rise of giant monopolies in industry, the trends toward authoritarianism and dictatorship, the intervention of the state in industry ... all these tendencies, inherent in modern capitalism and inseparably associated with its threatened collapse and gradual disintegration are either lightly dismissed or completely ignored. Thus any examination of their effects in forming a new working class ideology is avoided. Such trivia may be ignored; for the author is convinced that the faithless desertion of capitalist principles by the unions is at the root of all difficulties. As her former courtiers abandon her in ugly senility, the doddering hag of capitalism is consoled by the thought that if her admirers had remained eternally loyal, her youth would have bloomed forever.

If we discount its pretensions to objectivity and its pseudo-scientific detachment and consider only its symptomatic significance, this book assumes real importance. Lindblom reveals a striking loss of faith in the ability of capitalism to reward its workers with an ever rising wage level and a rapidly improving standard of living. Once capitalism proudly boasted that it alone offered higher and higher pay; now comes the sad discovery that the struggle for fulfillment of yesterday’s promises undermines the system itself. The author is compelled to throw overboard the theories of Selig Perlman which maintained that the working class and its unions were inherently conservative; that its characteristic loyalty to the capitalist status quo doomed the hopes of socialists who saw the labor movement as a powerful vehicle for social transformation. Lindblom proclaims, on the contrary, that the labor movement is revolutionary by nature. Despite its professed aims, its loyal intentions, and its own conservative cast of mind, the labor leadership is impelled along paths that lead away from capitalism and trespass on the sacred rights of private property. He is no socialist. He foresees the coming demise of capitalism with regret. Fascinated by the perquisites it allows its upper classes, he hopes finally and wistfully that some modus vivendi with the labor officialdom will permit their perpetuation.

Nor are our American union leaders socialists. They hold tightly to the coattails of bourgeois politicians; they fear the formation of a labor party; they are bureaucratic; they jealously guard their own lofty position, exalted way above their rank and file. The tragedy of our times lies not in a tendency of the existing unions to undermine capitalism but in the failure, thus far, of the labor movement to replace it with socialism. Meanwhile the internal chemical processes of capitalist degeneration corrode the bases of modern civilization. Socialism demands the conscious participation of millions of workers to end capitalism and replace it with social ownership of industry, to eradicate bureaucratism and permit the flowering of democracy in all phases of social life; it requires the end of a system where leisure, luxury, and culture become the privilege of a few and rest upon the toil and degradation of the peoples. Our labor movement is far, far away from such a program. But in his own queer way, Lindblom reminds us of the enormous revolutionary potentialities of the working class movement.

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