The Trade Union Movement and Competition - the Labor Monopoly Question

At the same time it has been emphasized that the union is a very special kind of monopoly organization, negotiating on behalf of its members rather than selling their services, and constrained by various internal and external political considerations in its conduct of negotiations. There is no reason to expect then that the market power possessed by a union will be translated into a certain predictable pattern of economic performance via some sort of wage-maximizing motivations and procedures. If we turn to commodity markets the closest resemblance is a particular kind of cartel which, though it does not behave as a single monopoly seller would behave, is a monopoly organization for all that. And so is a labor union.

Unreasonable Union Power

It needs to be recognized at the outset of any discussion of "appropriate" limits to union power or use of power that this is a political question. There is no possiblity, by means of an application of the principies of economics, the philosophy of the common law, or any other technique of analysis or body of doctrine, of arriving at an "optimum" solution to this problem. The determination of wages and working conditions through the process of collective bargaining is highly valued by important elements of the community not only because of "bargaining" considerations but because it permits the participation of labor in a process of industrial self-government. Under the Wagner Act collective bargaining was the preferred method of wage determination and even under Taft-Hartley it is an approved method. But collective bargaining inevitably requires the existence of unions with a substantial degree of market power. In general the more power unions have the more rapidly unorganized sectors of the economy can be brought within the framework of collective bargaining and the more deeply union representatives can penetrate into the process of joint labor-management decision making. Those who set a high value on this process are apt to take the position that since collective bargaining is a "good thing" public policy should favor whatever measures are necessary to expand it.

It is equally clear, on the other hand, that a substantial degree of union power can adversely affect the functioning of competition in both labor and product markets. I say can rather than will both because the evidence is unclear and because there is a difference between the possession and the exercise of market power. There is a substantial body of opinion favoring the maintenance of competition and, ipso facto, whatever measures are necessary to attain these ends. Furthermore, some attach

value to continued opportunities for self-employment even in areas where so-called "businessmen-workers" are in competition with union members. And others point out that individual workers can be "oppressed" by union as well as business power. Thus there appears to be a respectable set of values held by a considerable number of people that are unlikely to be realized without some check to union power and, I suppose it would have to be said, that for those who esteem highly the benefits—supposed or real—of a competitive price system, the check would need to be sharp and severe.

A conflict of some magnitude between the values of collective bargaining and the values of competition seems to me inescapable. Under these circumstances how much of the one, as against how much of the other, a democratic society will permit itself to have will, in the last analysis, be determined at the polls. All that an "independent" and "objective" student can hope to contribute is a somewhat clearer understanding of the question how much of the one of necessity has to be sacrificed in order to secure some part of the other. This seems to me a fruitful field of inquiry for those interested in public policy in this area. Even if we set a high value on collective bargaining we can recognize that there are some types of union practice that seriously damage the competitive process without adding very much to the union's ability to attain its ends. And, no doubt, similar conclusions could be reached by asking the question whether the competitive process would really be damaged very much by certain union practices that are essential to collective bargaining. But this type of inquiry is detailed and difficult, and I propose here to avoid it in favor of the much easier task of commenting on certain proposed solutions to this question of the appropriate limits to union power and its use.

Let us consider first the implications of the so-called self-interest doctrine; that so long as a union acts in its own self-interest and eschews violence and coercion no limits should be placed by government on the acquisition and use of union power. So far as federal legislation is concerned this doctrine was, of course, in effect between 1941 and 1947, after the Hutcheson decision and before the enactment of Taft-Hartley.