The Reality for Labor


The recent events at the Boeing and Volkswagen plants are tragic examples of the challenges facing labor and the left, more generally. The reasons for the concessions, in the case of Boeing, and the organizing defeat, in the case of Volkswagen, are not political or social factors unique to the individual states, but long developing currents in the class struggle between capital and labor. They are, in a sense, a culmination of capitals total capture of the state, and the neoliberal economics that have come out of this. To understand labors challenges and its future, an understanding of the current situation is critical.
There are two perspectives that historians usually take when discussing the New Deal Era. The conservative approach is to understand it as fixing a peripheral flaw in capitalism, that is, a fine tuning of the correct balance between ‘economic freedom” and government intervention (fiscal policy). The more revisionist account is to see the New Deal Era as a serious of reforms and government programs that, in some sense, ‘saved capitalism’ from its own contradictions. The contradictions are not in the internal sense of Marx’s ‘realization crisis,” but the fact that with the staggering inequality capitalism produces, the workers will inevitably seek to change the relations between capital and labor. This is what is commonly associated with Roosevelt and the bargain he struck with business at the time. In essence, ‘you do this or they are going to pursue even more radical reforms.’ Now, not without its flaws, the revisionist account does provide a plausible framework of discussing the time period, in that, the reforms and programs instituted can be characterized as’ pressure valves’ that sought to capture the massive popular discontent into an legal and institutional framework. Instead, of a fundamental reorganization of societal relationships, steps were taken to alleviate some of capitalism’s most onerous effects.
This is certainly most clear in the case of the National Labor Relations Act. Its very purpose states quite clearly its commitment to maintaining the legal rights of property. Its casts the relationship between labor and capital in the typical contractual arrangement, enshrining the rights of property, while also seeking to rectify the improper balance of power between labor and capital in their bargaining relationship. So the bill did not seek a radical change in the relationship between capital and labor, but reform in the bargaining position between the parties. It acknowledges that without organized labor, capital was in a position to exert massive power over an individual; in effect, an employment contract took more the forms characteristic to duress than a ‘meeting of the minds.’ By alleviating this bargaining relationship, the two the parties could meet on equal terms and through mutual processes come to an employment agreement that benefited them each.
The envisioning of the Wagner Act and its language, was taken primarily from previous bills such as: Roosevelt’s National Income Recovery Act, The Norris LaGuardia Act, and the its most heavily relied upon source: the National War Labor Board, where the Wagner Act’s language is taken straight from it. (Interestingly, the passage of the NWLB, which is many ways diffused much of popular discontent during the time period, was more on account of the need for industrial production during Work War I free from labor disputes. Perhaps if there had been no war, government may never have taken these initial reformist actions and possibly, would have resulted in more fundamental change.)
For a time the grueling class war that had been waging, since the late nineteenth and early twentieth century, was in someways mitigated. The NLWB served as a model to ensure the smooth functioning of the economy through wartime, and the Wagner Act in many ways sent a message to the business community that they had to play ball, even during peacetime. The AFL and the CIO grew exponentially during this time, and by the 1950’s unionized labor was near thirty percent of the population. But elites were quick to combat the progressive legislation. Among the the Republicans and the business community there was fierce opposition to the Act. Almost immediately it was brought before the Supreme Court in the case of Jones Steel. Thankfully, unlike the NIRA, which was struck down, the NLRA was upheld, but this didn’t limit the power of the Supreme Court through the decades to slowly unravel any power the Act held though a series of pro-business decisions.

“Buyer and Seller”

The main opposition to the Wagner Act by the business community was that it was not neutral. It was a pro-labor piece of legislation that conferred a variety of protections to labor organizing and collective bargaining, without conferring protections to the employer, as well. But this attitude reflects a fundamental misunderstanding between the relationship between labor and capital and the very purpose of the bill, because it was meant to rectify the improper bargaining relationship between the two parties by being pro-labor. Legal rights and protections were already pro-business. State protection, patent rights, property rights, incorporation rights and liability shields are but a few privileges that business enjoyed. So to believe that the act needed to be neutral by conferring rights to both labor and capital was especially ironic, since it would distil any purpose for the Act in the first place.
(Of note, is that the Supreme Court acted as a legislator during this. Not only by interpreting the Act in a fashion that upheld the fundamental rights of capitalism; but also, in connected case law that developed the rights of corporations as supreme. A few examples of this are illustrative.)
The reinterpretation of the Act started quickly, in the case of McKay Radio. The court basically set the groundwork for strikes. It found that, in the case of a unfair labor practice, the employer was legally obligated to re-hire the workers that had struck. In fact, it reasoned that a striking worker is still an employee in the midst of a labor dispute, so there wasn’t an actual re-hire, there was just a coming to terms. Crucially, however, a strike that was simply an economic strike, gave the employer the freedom to hire ‘replacement workers’ or scabs, that is. Contrary to the rest of the industrial world, which found it illegal to hire scabs during a strike, the Supreme Court reasoned that the right of the employer to choose to hire or fire was supreme and that the federal government had no authority to tell them to do otherwise. The Supreme Court duly fulfilled its role as the ultimate arbiter to enforce the sacred property rights on which this country was founded. Further, the common practice in collective bargaining agreements became the addition of a ‘no strike clause.’ All contractual disputes would be put to arbitration. So, unions couldn’t strike during the life of the contract and they couldn’t strike without fear of job loss outside of the contract, while the employer always had the freedom to close shop, runaway or lockout. This was a monumental victory for capital because the economic weapon of the strike was the main bargaining tool that unions had. To take it away meant to take away the leverage that the Act was supposed to have provided them.
Another interpretation of the Act was that employees needed a majority in order to have collective bargaining rights. Nowhere in the Act is there mention of an actual percentage majority needed to form a union, this was a creation of the court. This allowed employers the ability to exert pressure on union campaigns through a variety of anti-union tactics and further allowed them the opportunity to dispute election results in the courts based on vague notions of ‘bargaining units.’ Charles Morris, in his legal treatise, The Blue Eagle at Work, offers a convincing argument that the original interpretation of the Section 7 rights guarantees the bargaining power of minority employees in a private workplace setting. He argues, quite convincingly, that while the National Labor Relations Board interprets the Act to only guarantee electoral rights if at least thirty percent of the workforce is in favor, the original language of the Act suggests that minority representation is a right as well. By not guaranteeing minority representation employees are stripped of a very important organizational tool. In workplace settings that are hesitant of union membership, a minority representation acts as a very strong organizing tool because small groups of employers can act as catalyst for a larger campaign and serve as alternative models. It helps to push up wages and provides a powerful organizing advantage for the employees. The current law, which requires the employees to petition for an election even after a showing of majority only adds further leverage to an employer.
Further examples include: Bell Aerospace, which barred managerial employees the right to organize and bargain collectively; NLRB v USW, which guarantees the employer the right to engage in election campaign propaganda; Lechmere, Inc v. NLRB, which bars union organizers access to employer property and thus, striping unions of a fundamental organizing tool. And the list goes on and on. Effectively, reading case history is like reading the slow unraveling of every right that the Wagner Act was supposed to have enshrined. And to make matters worse, while this was going on through the judiciary, the legislator also passed a bill to further restrict organizational protection and bargaining rights.
The Taft-Hartley Act was passed to much cheering and adulation by the business community. It further stripped employees of organizing and bargaining tools. There were now restrictions for boycotts, picketing and an end to closed shops. The Act rectified business worry of the Wagner act being too pro-labor by now providing some ‘neutrality.’ Section 8 included provisions whereby the union could be held to unfair labor practices which was, in effect, a reemergence of the injunction statutes that had been struck down by the Norris-LaGuardia Act. So, as the judiciary was interpreting the Wagner Act in accordance with sacred property rights, the legislature was also taking the offensive by passing laws to reduce the efficacy of organized labor.
Another development that took place was the emergence of labor arbitration. Industrial disputes would no longer be resolved through economic warfare, but by independent arbiters that would issue binding orders. A typical feature of this would be the addition of “no strike” clauses in collective bargaining agreements. This is a further way in which labor was herded into a legal framework, acting as a ‘pressure valve’, to transform organized labor into an institution overseen by bureaucrats. Further distancing of the rank and file, and a lack of class consciousness are a direct result.
By passing reformist measures during the New Deal Era to protect labor, the government was capturing the power of organized labor and placing it into a legal and contractual framework. There were two options available that are just as relevant today. Labor could have used these protections as springboards to further reform the economic and political institutions, or capital could use the legal and political institutions to roll back labor rights, now that much of its power had been consolidated into these very institutions. As history shows, the latter, unfortunately, was the case.

“An All-Out Class War”

Even though the legislator and courts stripped much of the Wagner Act of its original purpose, up until the 1970’s, employers still cooperated with unions to an extent and accepted the fact of unionized labor, albeit an organized labor that was constrained by arbitration and their own bureaucratic unions. But, a sea change occurred with the presidency of Ronald Reagan, reaching its penultimate moment with the PATCO strike. As background, federal and state employees were held to a different standard than private employees under the labor law. They had even less bargaining power because they didn’t have the right to strike. So, when the air traffic controllers went on strike in the seventies, rather then try to mediate the situation, the federal government simply hired scabs to come in and displace the workers. This sent a clear message to the business community: no longer will labor law be enforced. Very, quickly, huge numbers of illegal firings began to take place and the NLRB, with its already diluted enforcement powers, and starved of federal funds, refused to prosecute the majority. While the judiciary had been protecting the rights of capital for decades, now the executive branch was taking measures to do the same. Companies, taking their cue, began to use any many methods as they could to rid the unions of the power that they had gained in the decades before. ‘Dual breasted operations’ became commonplace, relying more on contingent and undocumented laborers to undercut the unions. But what came next would be the death nil for labor.
The trade deals orchestrated in the 90’s, cost millions of jobs in the manufacturing sector. Employers now had an even larger bargaining advantage because they could always resort to the threat of shipping production across the borders if employees did not meet their demands. The legislative and judicial routes used to roll back the rights guaranteed to labor in the Wagner Act were meager, when compared to the awesome economic power that companies could now resort to. “Runaway shops” replaced the “dual breasted operations”, leaving behind nothing but industrial wasteland in the once formidable manufacturing cities of the Midwest. Devolution (whereby the federal government grants more power to the states) allows companies to pit states against each other to further roll back wages and benefits. Employers can, not only threaten to move overseas, but to move over state lines, where they can receive lucrative tax breaks and other state subsidies in their favor, all while violating federally mandated labor rights. In the case of Boeing, this is exactly what recently happened. They forced the union to reopen negotiations on the contract under the threat of moving to the South, where states were already offering subsidies and tax breaks in record numbers. Of note, is that Boeing is one of the largest recipients of state subsidies. In fact, their profit margin is almost exactly correlated to the subsidies they receive. So the states transfer wealth from the working class to the corporation and then the corporation turns around and squeezes them even further. A perfectly acceptable business model in today’s economic reality.

Bargaining Power?

Predictably, the history of bargaining power since the late sixties, would reflect the waning influence labor had. The record, tragically, is that and more. Over the last forty years, collective bargaining has assumed the form of concessionary bargaining; whereby, the gains that had been realized in the middle part of the twentieth century, have been slowly taken away. When unions sit down to bargain today, the question is not, “what can we gain in this contract”, but rather, “what can we hold onto.” As discussed this is primarily due to four factors:

1. The consolidation of organized labor into the legal and political institutions: collective bargaining agreements, restrictions though labor law, “no-strike clauses” traded for grievance and arbitration.
2. The division within labor itself.
3. The federal governments willingness to allow states to control many aspects of interstate commerce, and the simultaneous growth of corporate power (the two being interconnected).
4. The trade deals that de-industrialized many parts of the country.
5. All of these lead to further transfer of wealth to the wealthiest households, which in turn repeats the process.

These factors have gone further then to roll-back the relationship between labor and capital in the early twentieth century. One could easily argue that the relative bargaining power between the two parties is even more skewed in favor of capital.
The response by unions to these forces reflect the division of industries and the internal hierarchy within individual unions, they are, in fact, exacerbated further by these forces. Union leadership, whose interests are at odds with the rank and file, continue to strike deals with corporate power in an effort to perpetuate their own bureaucracies first and foremost, leaving the rank and file as a peripheral concern. Unions will support Republicans or Democrats, and disassociate themselves with their union brothers in an effort to gain contracts, favors, etc… All of this, in the long run, is bad for the rank and file.
Thus we have a situation now where unions are on the edge of extinction, simply trying to hold on to what rights they have left, as they are simultaneously attacked, evermore, by the corporate state. The most recent development broadens the attack, including not only the private sector, but the public sector as well. In a few years, there may not even be an unionized state and federal workforce if things keep going the way they are.

Perspectives Revisited

The deal struck with business in the early twentieth century is gone. Neoliberalism, a result of the total capture of the state by corporate power, particularly, financial capital, has fundamentally changed the dichotomy between the capital and labor. There is a return to the pre-New Deal days, where there is no government regulation or fiscal policy to alleviate the most harmful effects of capitalism. Capitalism had been saved, but it has destroyed the very policies that had been instrumental in it’s saving. Many historians and economists that are, what you could loosely call Keynesian, fail to see that the regulatory and fiscal policy developed during the New Deal era was not some fix to the capitalist economy, but a strategy born from the historical context in which the decisions were made. It was a temporary save, a tourniquet to a gaping wound. What this reveals, more deeply, is that fiscal policy of the Keynesian type, coupled with labor protections and financial regulation, are not possible alternatives to unbridled capitalism. The economic institutions capture the state to erode any liberal democratic principles. Any ‘deals’ are deals with the devil. The incentives and pressure within the market system are such a way that it must seek to erode regulations and labor protections, seeking monopoly, lower costs, exploitable resources, in an ever expanding game. This is not to say that reformist Keynesian type measure should not be pursued, but only as short term remedies. Crucially, as was not done in the past, these measures should be platforms for ever expanding change or the tides of capital will quickly ensnare them.

1 comment

  1. avatar
    David Jone April 3, 2014 3:13 pm 

    The reason reformist measures do not work as “platforms for ever expanding change” is the role ideology plays. Workers internalize market ideology when they believe it “works” for them. Social democracy is dead, best to stop sugar coating the pill.

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