It is the duty of a union to be anti-social; the members would have a just grievance if their officials and committees ceased to put sectional interest first.
—Lady Barbara Wootton
I want the reader to consider whether the survival of the democratic system may not be dependent upon a general recognition of the illegitimacy of privately motivated coercion in all forms.
For the first time in a quarter of a century a major economic reform has been rolled back. It will take time to filter through, but Australia will pay a heavy price.
The trade unions are revitalised under the Rudd administration and industrial confrontations are emerging on several fronts. So the arguments for the control of trade union power need to be repeated for the benefit of people who have never seen militant trade unions in full cry.
The British-born William Harold Hutt (1899–1988) was one of the most helpful commentators on the use and abuse of trade union power. He exploded eight myths about industrial relations and the role of trade unions:
1. The industrial revolution and the factory system resulted in a period of brutal exploitation of the labouring masses.
2. The workers were frustrated and oppressed by the Combination Acts, which were designed to favour the employers and to prevent the workers from forming associations.
3. Labour has an inherent disadvantage in the contest with capital unless the state intervenes to provide assistance, especially by protecting the right to engage in collective bargaining and strike activity.
4. Labour had to wage a bitter struggle to achieve improved pay and conditions.
5. Collective bargaining by the trade unions is a manifestation of the solidarity of the working class to resist exploitation and get a fair go.
6. Wage rates are “indeterminate” so it is good for unions to bargain as hard as they can to get the best possible pay and conditions for their members.
7. Strike activity with the use of violence against non-conforming workers is morally legitimate to adjust for the imbalance of power between labour and capital.
8. Collective bargaining, with strikes or the threat of strikes, is not only morally legitimate but was also necessary to improve the share of the common wealth between labour and capital.
If his views are correct, how did so many people manage to be so wrong for so long? For an explanation, consider what will happen if the contents of the Bringing Them Home report find their way without qualification into the standard histories about the treatment of Aboriginal people that are used as the authoritative sources for all students and laypeople for a century or two. In addition, imagine a procession of films, novels, television dramas, ballads and plays, both popular and highbrow, perpetuating the same message. Then in the future anyone who attempts to tell the truth about this topic will have a hard time getting a hearing, especially if one of the major political parties and other significant interest groups benefit from the traditional story and the majority of the intelligentsia are passionately committed to defending it.
Bill Hutt has a low profile. He commented that most people are forgotten after their death, but he was forgotten while he was still alive. As a classical free market economist he stood against the tides of fashion, especially the economics of Keynes, and so he became marginalised in the profession. In addition he spent most of his career in South Africa, isolated from the informal networks of information and influence.
It is important to anticipate the accusation that this is all just “union bashing”. Neither Hutt nor any other responsible commentator has ever suggested that associations of workers should be suppressed, and that was never the intention or the outcome of the British Combination Acts. Associations of workers have many useful functions in addition to acting as friendly societies for health and welfare provision. They could help their members to improve their qualifications and locate the best-paid work, and they could provide legal advice and other assistance to members subjected to unfair treatment by management.
Even supporters of the centralised wage fixing system such as Keith Hancock know that the only way to improve the position of the workers at large is by way of increased productivity. This means that responsible unions will work enthusiastically with management to lift productivity by implementing improved work practices and new technologies. That is likely to reduce the need for personnel on site for the time being and that has prompted the unions to protect jobs in the short term rather than implement improved practices. Where unions succeed in that aim there is a cost in job creation both upstream and downstream from overmanned and inefficient sites. Progress occurs through the creation and destruction of jobs; the main thing is to make both of those processes as painless as possible without cramping productivity and efficiency.
Myth 1: The Brutality of the Factory System
This is the idea that the industrial revolution and the factory system resulted in a period of brutal suffering for the workers. For example, Bertrand Russell wrote in The Impact of Science on Society:
The industrial revolution caused unspeakable misery both in England and America. I do not think that any student of economic history can doubt that the average happiness in England in the early nineteenth century was lower than it had been a hundred years earlier; and this was due almost entirely to scientific technique.
This contention does not relate directly to the issue of trade union powers and privileges, but the almost universal assumption of the horrors of the industrial system ensures that most people start off on the wrong foot when they start to think about industrial relations and wage fixing.
Hutt’s first published paper in 1925 was an exposure of the fraudulent 1832 Sadler report that provided much of the false and misleading information that ended up in the standard histories of the factory system (such as the writings of Cole, the Hammonds, and the Webbs). As with the more recent report on the so-called stolen generation, witnesses were carefully selected and the evidence was cherry-picked to produce a wildly inaccurate picture of the conditions in the cotton mills. Engels (the sponsor and supporter of Karl Marx) wrote that the committee “was emphatically partisan, composed by strong enemies of the factory system for party ends … Sadler permitted himself to be betrayed by his noble enthusiasm into the most distorted and erroneous statements.” Sadler’s work may be best described as a counter-attack by the Tories, who were upset by their defeat on tariff protection and wanted to attack trade, industry and the new factory system by hook or by crook.
The mill owners were not alert to the power of adverse publicity or the extent of ignorance about the real state of affairs and they thought that the claims of the reformers were so obviously bogus that reasonable people would not take them seriously. For example, the reformers made much of children in the factories with deformities (as though these were caused by the work). Deformities were common at the time, and there was light work that could be performed by partially handicapped children, thus allowing them to make a useful contribution to the family income. Charles Dickens was able to support himself at the age of twelve, doing light indoor work while his parents were in prison for debt. Hutt reported that when children were banned from the factories they were replaced by Irish labourers at the same rate of pay.
A doctor noted that the conditions in the factories compared favourably with the great boarding schools, rife with bullying and sadistic disciplinary practices, where the gentry sent their own children. Others pointed out that the domestic servants of the Tories who supported the reform worked longer hours than the mill-hands. Various of the Bronte girls were barred from factory work by their class; instead they worked as governesses and recorded bitter discontent with their hours and their pay compared with the girls in the mills.
Myths 2, 3 and 4: The Suppression of the Trade Unions, the Disadvantage of Labour and the Bitter Struggle
According to the standard labour account, the English Combination Acts of 1799 and 1800 were deliberately designed to favour the employers and to prevent the workers from forming associations. In the chapter “Labour’s Bitter Struggle” in his book The Strike Threat System (1973), Hutt sketched the history of the relevant legislation from the Middle Ages to the nineteenth century. The aim was to control what we would nowadays call restrictive trade practices. Hutt cited numerous examples of the application of these laws: in 1298 an organisation of coopers in London was prosecuted for having agreed to raise the price of hoops; in 1339 there were cases brought against London carpenters; in 1349 against shoemakers; in 1773 the publicans of Westminster were warned that if they raised the price of beer collusively they would be prosecuted for conspiracy.
Commentators such as the Webbs depicted the Combination Acts of 1799 and 1800 as carefully planned and premeditated onslaught on the rights of the workers. But on Hutt’s account:
The 1799 Act came to be passed almost by accident … What actually happened in 1799 was that a bill, more or less in the form of the 40 or so other anticombination statutes already applying to particular trades, was introduced in Parliament. The original aim in 1799 was simply to forbid “conspiracy” on the part of millwrights. During the proceedings Wilberforce [the famous antislavery champion] suddenly and unexpectedly moved for an amendment to make the principle apply to all industries and occupations. There seemed to be no good reason for opposing this amendment and the bill became law …
Hardly a bad thing, given the intention to control restrictive trade practices.
The important point to remember is that the new combination laws did not make any activities illegal which had not already been criminal offenses for centuries … Yet they are described as “severe,” as inaugurating “a new and momentous departure”, “a far-reaching change of policy,” an era of “legal persecution” of would-be strikers or strikers. These are descriptions of the acts by Sidney and Beatrice Webb, in a seriously slanted work characterized at times by meticulous scholarship—a work which has had an enormous influence in spreading the myth.
In the light of Hutt’s research on this topic there is no reason to believe that the workers, as distinct from groups participating in restrictive trade practices, were subjected to any novel or oppressive constraints under the Combination Acts of 1799 and 1800, or indeed any other legislation, before or since.
The idea of the inherent disadvantage of labour has been a potent influence in gaining widespread acceptance of the systematic use of violence and intimidation to pursue industrial claims. The mythology of struggle, “us against them”, is explicit in the radical Marxist worldview and also in the militant but not necessarily Marxist sections of the labour movement.
The notion of disadvantage of labour versus capital is supposed to be self-evident, especially in the case of large firms, but it can be contested on the ground that the firm needs workers just as much as the workers need the firm, so it is just a matter of how much the firm is prepared to pay or can afford to pay in hard times. Common sense suggests that firms, large and small, will do best with a productive, harmonious and healthy workforce, so there is no rational economic justification for managers to use high-handed, unfair or unsafe practices.
Human nature being what it is, there is no doubt that cases of unfair treatment, including unfair dismissals, are going to occur. It is here that an association of workers has a role to play in providing advice, legal aid and assistance as required. However there is a world of difference between the damage that is done in individual cases of unfair treatment and the mass unemployment and immiseration caused by the strike threat system in the course of obtaining better wages and conditions for the “bloody aristocracy” of labour.
Hutt challenged both of the myths (disadvantage and bitter struggle) in The Theory of Collective Bargaining (1930) and The Strike Threat System. It is not clear when there ever was disadvantage on the labour side because the history of industrial legislation from 1824 (repeal of the Combination Acts) is a record of the scales being tipped more and more in favour of labour at the expense of capital and managers.
Even without a leg up from the government, trade unionists soon learned to use a variety of techniques to obtain their objectives by destructive and productivity-eroding means: the strike in detail, when one competing firm after another is subjected to strike activity; the “go slow” or work to rule; bogus safety issues and outright sabotage at sensitive stages of work such as concrete pours, harvesting and the transport of perishable goods. The question has to be asked, what do they think they are achieving for the workers at large and the common good, by these tactics? Writing in 1944, Lady Barbara Wootton of the British Labour Party provided an answer: It is “the duty of a union to be anti-social; the members would have a just grievance if their officials and committees ceased to put sectional interest first”. This brings us to the solidarity of the workers.
Myth 5: Working-Class Solidarity v The Bloody Aristocracy of Labour
One of the most resonant myths about the origin of the strike-threat system is that it emerged out of a concerted struggle of the poor against subjection by the employers. Hutt wrote:
The truth is that, with hardly any exceptions, it was relatively affluent artisans (by contemporary standards) who first organised for the collusive pricing of their labour. And their motive was, in every case, to defend their privileges—special rights which were contrary to the interests of the poorer classes. On this point, even the Webbs note: “It is often assumed that trade unionism arose as a protest against intolerable oppression. This was not so.” Labour unionism emerged indeed in the form of a strongly class-conscious movement, expressing a determination to maintain a class structure. Throughout, this has been an unchallengeable attribute of the union form of organization. The Webbs describe the union system as “strengthening the almost infinite grading of the industrial world into separate classes, each with its own distinctive ends, and each therefore exacting its own ‘rent of opportunity’ or ‘rent of ability’.”
Hutt pointed out that the last terms actually refer to privilege, though the Webbs were too delicate or biased to say so. Hutt went on:
The defence of such privilege was, in the Webbs’ words, “the common purpose” of nearly all eighteenth-century combinations. Already, in that century, workers’ combinations in Britain had resisted powerful equalitarian forces that were being released through the emergence of freer markets in most spheres.
It is important to realise that the most influential historians of the labour movement, such as the Webbs, were partisans in the class war and strong opponents of classical economics, which represented what we would nowadays call economic rationalism. The Webbs sometimes admitted the existence of monopolistic tendencies on the part of unions, but they never publicly deplored the downside of militant unionism even though during the Great Depression Sidney Webb wrote scathing comments in his diary, referring to the union leadership as “greedy pigs” “sabotaging British industry”.
For a more realistic opinion Hutt turned to some alternative views, such as William Thompson, a friend of Robert Owen, who some regarded as the most significant founder of modern scientific Socialism and the originator of the idea of “surplus value”:
Thompson can hardly be regarded as a biased witness against working-class bodies. He was, we are told, of the most kindly and gentle disposition, but when he considered the workmen’s combinations of his day he was moved to passionate condemnation of them. To him they were “bloody aristocracies of industry … The apprenticeship or excluding system depended on mere force and would not allow other workers to come into the market at any price … It matters not,” he said in 1827, “whether that force … be the gift of law or whether it be assumed by the tradesmen in spite of the law: it is equally mere force.”
The early literature of the trade union movement is full of abuse amounting virtually to dehumanisation of the unemployed or lesser workers, “knobsticks” and “scabs”, who were regarded as a threat. J.S. Mill summed up this attitude in his attempted justification of unionism in 1869. Acting as the unions’ advocate, he put the following words into the mouth of their witness:
Those whom we exclude are a morally inferior class of labourers to us; their labour is worthless and their want of prudence and self-restraint makes them more active in adding to the population. We do them no wrong by entrenching ourselves behind a barrier, to exclude those whose competition would bring down our wages, without more than momentarily raising theirs, but only adding to the total numbers in existence.
So much for the solidarity of the working class. As Hutt suggested, it is mostly about the protection of privilege. Antipathy towards other workers who happen to be outside the privileged group is the very reverse of working-class solidarity and is expressed in demarcation disputes and contests for membership and control of the workplace. Above everything else the lack of solidarity of the working class is manifest in the pay and conditions achieved by the most powerful unions, through strikes and the threat of strikes and other exclusionary and productivity-eroding practices that have damaged other industries, the workers in those industries and the community at large.
Myth 6: Wages Are “Indeterminate”
An essential prop for the theory of collective bargaining is the idea that wage rates are “indeterminate” so that it is essential to push for a higher rate, like a determined seller haggling at a market stall. One of the fallacies in that analogy is that a potential buyer at a market stall can refuse to accept the price that a seller demands, walk away and leave the item for others to make an offer. But the striking workers who walk away from their jobs do not leave them for others to take up, they enforce a picket line to keep the facility idle until such time as they choose to return. And a factory owner, unlike a buyer of merchandise, is not usually in a position to walk away and leave the investment behind. That is also a part of the argument against the idea of the natural advantage of capital.
A large part of The Theory of Collective Bargaining is devoted to a review of the literature on the “indeterminateness of the price of labour”. This theory challenged the older “wage fund theory” according to which wages took up some fixed proportion of the national product and if some workers increase their share, then others have to make do with less. The apparent demise of the wage fund theory opened the gate for unions to push as hard as they could with the apparent blessing of economic theory (if they wanted it).
Hutt suggested that the more robust case against the “no holds barred” approach by trade unions is based on considerations of productivity and the downstream effects of anything that undermines it. Equally damaging are the consequences when governments intervene to set wages too high. The most striking example of this in Australia was the case of the native stockmen in the Northern Territory. They were effectively sacked by the Commonwealth Arbitration Commission, which ruled in 1965 that white and native station hands should be paid the same wage, regardless of the actual work performed and of the payments in kind that were made to the native stockmen under informal arrangements that suited both parties.
Wage gains that are not related to productivity cause inflation that affects other workers and the community at large. In addition, the legal minimum wage is likely to make the slow, the unskilled and the inexperienced unemployable at “the going rate”.
Myth 7: The Moral Legitimacy of Violence by Trade Unionists
At this point we approach the remaining assumptions with some layers of protective misinformation cleared out of the way. But still the going is likely to be heavy. Hutt wrote in The Strike Threat System:
Unfortunately most writing on this topic is emotion-charged. That is hardly surprising. The strike is a form of warfare and the expectation of its use—as a fact or as a threat—has come to condition nearly all private policy in determining wage offers. The strike-threat system has created a species of continuous aggression and resistance to aggression; and union policymakers have felt it essential to keep alive suspicion and hostility toward management and investors … Time-honoured but virtually fictional stories of the inequities and iniquities of former days are propagated and reiterated with conviction by public-spirited novelists, journalists, jurists, clergymen and academics, as well as by parties seeking to exploit the myths.
Hutt noted that exploiters of aggressive nationalism usually make much of legendary struggles for “freedom” in ages past, just as unionists and their apologists have perpetuated the myths of “labour’s bitter history”.
The threat of violence is usually kept hidden (the gun under the table) as much as possible in genteel talk about “collective bargaining”. This is the term invented by Sidney and Beatrice Webb to describe the function of trade unions when they represent the workers to negotiate with management on wages and conditions. It is particularly useful for their purposes because it conveys a picture of convivial and benevolent solidarity among the workers. As described above, this picture has turned out to be an illusion. Worse, the innocent-sounding words do not signal the role of violent coercion, which has usually been an ingredient of strike action, which in turn is an essential adjunct to collective bargaining.
The question of the moral legitimacy of “the right to strike” is confused by the different meanings of “strike” and “the right to strike”. It is often presented as a self-evident fact that workers have the right to absent themselves from the workplace in a free society. From this it is supposed to follow that there is a right to have mass “absenting” when the shop stewards signal “all out”.
Leaving aside the matter of contractual agreements that may be violated by leaving work at short notice, the gritty moral issues arise when (a) not all the workers want to go out and (b) management tries to recruit replacement workers for the ones who have gone out.
What is the legitimate use of violence? It is generally accepted that the state, or at least agents of the state, have the right and indeed the duty to use violence (under clearly defined rules) to maintain law and order and to protect the realm. The lawful use of private violence is generally restricted to self-defence. In the light of this principle, the use of violence by trade unions to enforce conformity in strikes and the use of violence on picket lines is clearly outside the law unless the law has been revised to permit the unions to operate outside the limits that apply to everyone else.
Hutt put the question in strong terms in The Strike Threat System: “I want the reader to consider whether the survival of the democratic system may not be dependent upon a general recognition of the illegitimacy of privately motivated coercion in all forms.” The particular form of coercion that he had in mind of course was the violence of striking workers.
The acceptance of trade union violence is one of the great blemishes on the face of the Western democracies. The tolerance that is extended to trade unionists in that respect (and not generally to common criminals, apart from the glamorisation of the mafia and other thugs in film and television dramas) reflects the hold on the popular imagination that is exerted by the mythology of the labour movement. This was very clear during the waterfront dispute of recent memory when the liberal intelligentsia and sympathetic commentators in the media lined up to support the wharfies without blinking an eye over the potentially lethal violence that they were prepared to use. The ultimate absurdity of their stance was demonstrated by the suggestion or implication that the substitute dockworkers were equipped with balaclavas and dogs in order to inflict violence instead of the real reason, which was to save themselves and their families from violent retribution.
Myth 8: Collective Bargaining to Even Up the Shares Between Labour and Capital
Reasonable and peace-loving supporters of the labour movement may concede that violence in industrial relations is an evil, but they may argue that it is (or was) a necessary evil to obtain justice for the downtrodden and disadvantaged. Can these people continue to defend the strike-threat system if it is demonstrated that the main beneficiaries are the most reckless and violent players, the “bloody aristocracy of labour” such as the waterside workers whose members achieved pay and conditions that most other workers, white and blue collar alike, can only dream about?
The humanitarian purpose of collective bargaining is to improve the lot of the working class as a whole by a redistribution of wealth from capital to labour. This is the central point that Hutt contested in his two major books on collective bargaining and the strike-threat system. He argued that claims enforced by the threat of strikes can only advance sections of the labour force at the expense of unorganised labour, the unemployed and the community at large, without affecting any overall transfer of wealth to the working class at large.
He spelled out how the threat to disrupt the entrepreneurial process by the concerted withdrawal of labour (boosted by supplementary force) has:
1. severely curtailed the wages-flow;
2. raised the cost of the capital resources which constitute labour’s tools;
3. extensively attenuated the wage-multiplying power of the assets provided;
4. aggravated inequalities of income;
5. materially worsened industrial relations, tending to destroy the workers’ dignity, their pride in achievement and their sense of purpose;
6. often frustrated attempts to improve conditions of employment in the workshop and office;
7. mitigated against the market provision of employment security;
8. through the increasing pressures of “wage-push” in recent years (he was writing of the 1920s), been mainly responsible for the political expediency of inflation.
As far as Hutt could find in the literature, unprotected and non-unionised workers gained proportionately as much from general upward movements in productivity as workers in unions. It seems that there is no clear correlation between the degree of unionisation and the speed of wage-rate increases.
The exceptions to that pattern are (a) the “bloody aristocrats of labour” who do better than average and (b) workers (or the unemployed) who do worse than average either because they are excluded from any kind of work by “the going rate” (wage rates set too high which render them unemployable) or because they are kept in lower paying jobs by exclusive practices enforced by the strike threat.
Hutt referred to some tendentious writing by the Webbs regarding the eighteenth-century unions being “forced” into demanding protection because the industries in which their members were employed were menaced by “pauper labour”. Hutt argued that the industries where union members were employed would have prospered if labour had been recruited from less productive and less well-paid occupations. Releasing the “paupers” from their poverty would have enabled them to buy goods and services and generate multiplier effects that would benefit an ever-widening circle of trades and industries. In his view the unions were simply asking for protection of sectional privilege. “The interests of those referred to as ‘pauper labour’ were regarded as of no importance, either by the unions or (in this context) by their famed defenders, the Webbs.”
The cure that Hutt proposed was the enactment of the principle underlying the British Combination Acts of 1799 and 1800 adapted to the present day. In his view such reforms would reduce economic inequalities, release resources for more productive use and “bring about an unprecedented improvement in the quality of human relations”.
Remarkably, William Stanley Jevons anticipated much of Hutt’s case in his book Methods of Social Reform (1883). Among other things Jevons made the following points.
Firstly. The supposed struggle with capitalists in which many Unions engage, for the purpose of raising wages, is not really a struggle of labour against capital, but of certain classes or sections of labourers against other classes or sections.
Secondly. It is a struggle in which only a few peculiarly situated trades can succeed in benefiting themselves.
Thirdly. Unions which succeed in maintaining a high rate of wages only succeed by PROTECTION—that is, by levying contributions from other classes of labourers and from the population in general.
Fourthly. Unionism as at present conducted tends therefore to aggravate the differences of wages between the several classes of operatives; it is an effort of some sections to raise themselves at the expense of others.
At the end of the argument Jevons concluded:
The Unionist overlooks the fact that the cause to which he is so faithful, is only the cause of a small exclusive class; his triumph is the injury of a vastly greater number of his fellow-workmen, and regarded in this point of view, his cause is a narrow and selfish one, rather than a broad and disinterested one. The more I admire the perseverance, the self-forgetfulness, the endurance, abstinence, and a hundred other good qualities which English workmen often display during the conduct of a great trade dispute, the more sincerely do I regret that so many good qualities should be thrown away, or rather misused, in a cause which is too often a hurtful one to their fellow-men.
People who have imbibed the eight myths virtually with their mother’s milk and those who use them to justify their own careers will need some time to assimilate Hutt’s message. However, if his ideas turn out to be robust, then searching questions will be asked about the courses that academics have been teaching and the ideas about labour history that intellectuals and other second-hand dealers in ideas have been spreading.
More about Bill Hutt, including his account of the origins of South African apartheid and some of his other writings can be found at Rafe Champion’s website, www.the-rathouse.com.