Wednesday, 13 October 2010

Why unemployment is not caused by worker organisation

In a 2003 paper (PDF) for the London School of Economics, Christopher A Pissarides argued that "the decline of trade union power" is one of the reasons for falling unemployment in Britain. Seven years later, this has been dredged up with much glee by the "Libertarian" blogosphere.

Unions, in this day and age, exist to do only two things: inflate wages and protect their members' jobs (regardless of ability or need).

High wages reduce the number of jobs that are created—especially as technology becomes cheaper—and making it difficult to sack people not only means that jobs can be occupied by those who are not best suited to them, but also reduces the willingness of employers to take people on in the first place (thus reducing the available jobs).

This isn't exactly rocket science, is it?
It's not rocket science, indeed. But then it's not a science at all - it's economics, which is the business of blinding people to the obvious to suit the interests of certain classes.

I have already, previously, torn down the Devil's argument that worker organisation has no place or purpose in the present day. It is, quite simply, an absurdity and I feel no need to labour the point here. Suffice to say that workers, without organisation, face only a race to the bottom.

In fact, you will find this by going back to the writings of Adam Smith. Whilst workers "are disposed to combine in order to raise" wages, bosses are equally disposed to combine "in order to lower the wages of labour." More than that, "the masters can hold out much longer" than the workers if employment ceases. They can exist "upon the stocks which they have already acquired" from the labour of others.

The difference is that, in Smith's time, there was "a certain rate below which it seems impossible to reduce, for any considerable time, the ordinary wages even of the lowest species of labour." The "wages must at least be sufficient to maintain" the workforce.

With the advent of cheap credit, that is no longer the case. According to the Joseph Rowntree Foundation (PDF), "a couple with two children needs [to earn] £29,200" in order "to afford a basic but acceptable standard of living." But many don't earn that. And many more have to work multiple jobs and live hand-to-mouth in order to barely scrape that figure.

Add to that the casualisation and ever cheaper labour that comes from un-organised workers, and the idea of a level below which employers cannot reduce wages quickly vanishes. Compared to previous generations, we are working for less - and harder.

Returning to the argument that strong unions increase unemployment, this may be true to a certain extent. But if lower wages mean more jobs, at what cost does that come? Talk to those stuck in precisely the casual work that such a market creates, such as Chugging, and you will see that trapped is exactly the right descriptor to use.

They have no base wages. They have no statutory entitlements. Attempts to assert their rights or to combine will see a target on their back and their arses out the door. They endure appalling conditions, for pitiful return, and often can find nothing better because of the declining standards of work.

Is this really an acceptable alternative to unemployment? Is this really the alleged prosperity created by the free market and the employers enjoying an unopposed monopoly of force?

The idea that high wages and job security leave those not employd out in the cold is an argument put forward in the past by Milton Friedman. In Free to Choose, he argued that unionisation frequently produces higher wages at the expense of fewer jobs, and that, if some industries are unionised while others are not, wages will decline in non-unionised industries.

But, from the left, this is a point that the Industrial Workers of the World (amongst others) make - in favour of more universal organisation!

One of the major left-libertarian criticisms of craft or trade unionism is that by organising along the lines of specific crafts or trades rather than across entire industries it creates a two-tier workforce and improves conditions for one group of workers only at the expense of another.

The alternative to this is not to get rid of organisation and equalise everything with a race to the bottom. That only benefits the bosses and makes the problem more acute.

Rather, the answer is to organise workers as a class, to unite everyone in any given industry under the same banner, and to challenge the broader injustices of the wage labour system. Rather than defending one insider group to the detriment of everybody else.
Part of which would involve pushing for greater investment and employment, both inside the workplace and outside through the organisation of the unemployed, to challenge exactly that issue.

But none of this increases the power and privilege of the ruling and propertied class, and so you won't here the right-wing (least of all self-styled "Libertarians") arguing for it. As Adam Smith noted so long ago, the combinations of the masters go unremarked upon, viewed as entirely natural, whilst the combination of workers is derided and scorned as the physical manifestation of evil or madness.

Unemployment is the product of an economic system built on theft and artificial scarcity. Those who would have us believe that combining to challenge that system is the real fault do so only because of ideological dogma. And, to be frank, they can fuck right off.