Unions should Love Capitalism
Well, thank goodness! The union of striking service workers at Loyola Marymount University agreed to a new contract with the service provider, Sodexo, so that the presidential debate scheduled for Thursday, December 19, 2019 could go on as planned. The candidates, from liberal to progressive, had refused to cross the picket line, which gave the workers great leverage. The final deal was negotiated by none other than Democratic National Committee Chairman Tom Perez, who used to be President Obama’s Labor Secretary. How appropriate!
Mr. Perez must be a pretty good negotiator as the new contract features a twenty-five percent increase in pay and a reduction by half of the cost of medical benefits. I don’t know how much that is in real terms, but a union publication noted that the pay of some of the striking workers was below (Gasp) the living wage of $15 an hour.
This was a great victory for lowly service workers, including cafeteria workers, janitors and cleaning staff, against a giant multinational corporation (and a great incentive for all the service workers at future Democratic debate venues to renegotiate their contracts). And it would be a wonderful victory for every right-thinking person if the humongous Paris-based corporation had at least a little bite taken out of their greedy profits (the 150 striking workers representing only .04% of Sodexo’s employees). But that’s not how business works. Sodexo will pass on those higher costs to the university which, in turn, will pass them on to the students.
As Milton Friedman noted, the sole purpose of a corporation is to maximize the return to shareholders. The corollary to this notion is that the sole purpose of the workers’ union is to maximize the return to the workers. The loser in the relationship is the consumer. Except for one thing. Consumers don’t like having to pay high prices for shoddy goods. And competition makes sure that consumers have choices, so it is in the interest of both corporations and unions to give consumers the combination of quality and cost that they are seeking. Otherwise, the corporation goes bankrupt and the workers are unemployed. That is how capitalism works.
Despite strikes and lockouts and other unsavory methods of gaining an advantage over others, there is balance and harmony in this relationship. Whenever one element of this relationship gains too much power and abuses that power, market forces will tend to bring the relationship back into balance. The worst abuses of the early Industrial Revolution have been eliminated or at least greatly reduced, and the products and services available to modern consumers are generally of high quality at reasonable cost.
There is only one thing that can disturb the wonderful harmony of this relationship – government. Government, through its regulatory power, has the ability to shape the playing field to the advantage of one side or another. The role of government as guarantor of the social contract is to keep the playing field level. But the political powers that control government often favor one group over the other disturbing the balance of the system and tipping the playing field to the advantage of one side. Republicans have generally favored business and Democrats have long supported workers and their unions while the nation and its economy rocked back and forth based on the ebb and flow of the political power.
But the Democratic Party has swung much further to the left in this presidential cycle and many of the presidential candidates (perhaps most) want to greatly increase the power of government to control the greedy corporations and their greedy shareholders. Many workers applaud these proposals and their unions have endorsed many of these candidates. But, while some of the proposals may favor the unions and their workers, the real winner if the Democrats regain power will be government and the politicians that run it.
So, here is the conundrum. Why do unions support politicians that threaten to destroy or hobble businesses? Politicians, even leftist politicians, don’t like to share power with unions. I don’t get it. I mean the National Nurses United union has endorsed Bernie Sanders along with the National Union of Healthcare Workers (that also co-endorsed Elizabeth Warren). Don’t they understand that Bernie Sanders is advocating that the government take over all of healthcare. Don’t they understand that when it comes time to bargain collectively that they won’t be negotiating with a company on a somewhat level playing field managed by the government, they will be negotiating with the government on a playing field managed by the government.
A lot of workers would say, “hey what’s wrong with that? Leftist governments support the workers.” Is that so? Let’s look at the historical record. The Soviet Union was supposed to be a workers’ paradise but under Stalin the All-Union Central Council of Trade Unions was controlled by the Communist Party. Party apparatchiks controlled production at the factory level as well as worker discipline and productivity. According to Lenin the socialist state must have “unity of will” and that meant the unity defined by the Communist Party.
All the trade unions in the Eastern Bloc had to conform to the will of the local communist party which, in turn, had to submit to the will of the Communist Party of the Soviet Union (CPSU). Communist party leaders did not want independent unions advocating for workers’ rights or better conditions or wage increases. The party must control everything, or things would begin to fall apart.
And that is just what happened in Poland. When crops failed or production faltered it was the workers that took the brunt of it. Discontent led to the formation of Solidarity, a trade union of ship workers at the Lenin Shipyards in Gdansk. People flocked to this organization that dared to tell the truth about working conditions and the other failures of the regime. Supported by the United States and the Catholic Church, Solidarity was able to resist the government’s attempts to destroy it. Solidarity finally was able to enter into negotiations with the communist government that led to real elections for the first time since the Red Army rolled over Poland on the way to Berlin.
Let’s bring our analysis back to the present. There are no independent trade unions in China. All union activity is under the control of the All-China Federation of Trade Unions which, in turn, is under the control of the Communist Party of China. There are no independent trade unions in North Korea. Or Cuba, where the leaders of the Cuban Confederation of Workers are chosen by the Communist Party.
Independent unions still exist in Venezuela but only because Hugo Chavez was unable to fully complete his dream and his successor, Nicolas Maduro, and his government are completely incompetent. Nevertheless, most workers have been compelled to join the government sponsored union UNT (or Union Nacional de Trabajadores). In Nicaragua, part of the strategy of the Sandinistas in attempting to overthrow the Somoza regime was to organize labor organizations and unions. These unions formed the backbone of the Sandinista movement but are now under the control of the official Sandinista National Liberation Front (FSLN) and the dictatorship of Daniel Ortega.
The purpose of socialist governments is to take control of the means of production. Under Communist theory as propounded by Karl Marx there are two elements that make up the means of production; capital and labor. And socialist governments routinely gobble up capital through nationalization or confiscation (really the same thing). But if they don’t control labor, they do not control the means of production, so labor is also subjected to the will of the party.
When Bernie Sanders or Elizabeth Warren (and many of the other candidates should they win) implement Medicare for All they will nationalize healthcare and the National Nurses United will lose their ability to bargain collectively with their employer. Maybe not right away. There may be a honeymoon period between the progressives and the workers. But when those progressive politicians face reelection and must deliver on reducing healthcare costs for voters, guess who will be paying the price.
This is why unions should love capitalism and capitalists. Unions can only thrive under capitalism. The current relationship between labor and capital may appear unbalanced to you and you may scoff at the government’s ability to reign in corporate power to restore some balance or level the playing field. But when capital and regulatory power are combined in the hands of the government there is no balance at all, and the workers will lose all their ability to control their fate. They will be at the mercy of the government. And governments are not known for their mercy.