I do not know what the answer to this question is. Here I wish merely to emphasize that the self-interest doctrine will inevitably lead to action that impinges on various values that may, somewhat loosely, be said to be bound up with the maintenance of competition. The self-interest doctrine then can be pushed to an extreme only by those who are willing to assign zero magnitudes to these values. If it is not to be pushed that far, what kinds of limits have been or may be suggested? The Doctrine of Equal Bargaining Power One of the oldest defenses of union organization depends on the supposed desirability of equalizing bargaining power between employees and employers. This argument appears in every textbook in Economics and as a statement of policy is written into paragraph 2 of the Wagner Act. One clear implication of this defense is that there are appropriate limits to the power of unions. If equality in the bargaining relation is desirable a growth of union power beyond the extent necessary to secure equality would appear to be undesirable. Do we have here a useful suggestion concerning the proper distinction between reasonable and unreasonable union power? I think not. Although there is some minimum of market power without which a union cannot bargain effectively or even exist as a continuing organization, to attempt by public action to equalize power on different sides of the labor market is neither possible nor desirable. In the first place the standard suggested by the doctrine of equal bargaining power is clearly non-operational. Does the U.A.W. have greater or less bargaining power than General Motors? I don't know. Not only do I not know but neither I nor anybody else has a very good idea what information, if diligently collected, would permit an answer to that question. It is difficult enough—some would say impossible—to form an objective judgment on whether the market power of a business firm exceeds or falls short of some permissible standard. But to estimate whether a labor union and a business firm confronting each other in wage negotiations have or do not have approximately equal bargaining power seems to me, by at least another order of magnitude, more difficult.
In the second place, equality of bargaining power, if attained, has a very different significance in different market contexts. If the negotiating parties are surrounded, on either side of the market, by effective competitors the results are likely to be quite different than if both are entitled to be called monopolists. The theory of bilateral monopoly tells us that stalemate is a distinct possibility and the more equal the negotiators the more likely is this possibility.
In the third place, the doctrine implicitly assumes that the attainment of equality is compatible with the efficient operation of organizations on both sides of the market. Why should this necessarily be so? If workers are unorganized we would not recommend, I presume, that firms be reduced to that size necessary to the attainment of equality of bargaining power with individual workers. Nor should we, I think, suppose that there is any virtue in the proposition that the size of the union, or of a union bargaining unit, be adapted to the scale considerations that influence the size of firms. Both firms and unions have scale problems of their own and there is no reason for believing that what is optimum on one side of the market will produce an equality of bargaining power with the optimum size on the other side of the bargaining table.
For all these reasons I suggest that the doctrine of equal bargaining power, having done its duty in the early history of trade unionism, be decently interred and quietly forgotten.
First, there is the question of the effect of union action on the number of firms in the market. Should unions be permitted to drive independent businessmen-workers out of the market? It is clear that their continuing competition may adversely affect union wage scales. On the other hand, to eliminate them may adversely affect competition in the product market. Should unions control the entrance of new firms through what is essentially a licensing process as allegedly has been done in the Pacific Northwest under conditions locally and familiarly known as "Dave Beck's N.R.A."? Should unions exclude from a local market the competition of firms located outside the market by refusing to work on their products? This appears to have been a fairly common practice in recent years and by no means all boycotts of this sort have been attempts to organize the unorganized employees of outside competitors.
Second, there is the question of union action interfering with the independence of price and output decisions by firms within the market. Should there be allowed to be accomplished by unions what would be condemned as a per se violation of the antitrust laws if undertaken by business firms? My colleague Professor Cox, in what is by far the most penetrating discussion of labor and the antitrust laws that I have seen, favors an amendment of these laws condemning "agreements with employers, fixing prices, limiting production or cutting off access to a market." It is not altogether clear, however, how far this condemnation is meant to go. Cox admits that union action limiting output presents a difficult problem. Were John L. Lewis' famous memorial days merely an attempt to spread the available work among union members or did they represent an attempt to maintain the price of coal by limiting output? He apparently also does not want to include in this condemnation union action designed to exclude the introduction of labor saving techniques and equipment and to "make work" by requiring the employment of non-workers, though this type of action would almost certainly be struck down by the antitrust laws if attempted by a combination of employers.