Liberty For All

by Dennis D. Hayes

A response to T.L. Knapp’s piece-Unions: Part of the Market

It’s safe to say the value or disvalue we place on unions is subjective. This is an important place to begin as I attempt to respond to T.L. Knapp’s recent rebuttal to my article, Not So Nice- “Sno-In-U”.  In the true libertarian fashion it appears we can agree to disagree.  Even so, there are some interesting points in his rebuttal that I would like to address. Perhaps I can at least show Mr. Knapp that my dislike of unions is not merely reflexive after all, but is in fact contextual even if in a general sense. I know and like Tom very much and I certainly don’t want to leave him with an impression of “discomfiture” regarding the subject, so I will attempt to make my argument such that he can at least acknowledge a measure of validity in my points, especially when placed in the light of his own most recent efforts involving the free market. ” No Tom, I am referring to your lawn mowing business!!”

Following his excellent definition of Laissez-faire, the philosophy that government should not interfere in economic matters, Mr. Knapp is careful to point out that unions, rightly formed and empowered, are private, not government entities. I made no such claim. I only offered that the government is usually chuckling in the background as the facilitator of unionization efforts. Still, it interests me that he can call my comment regarding Laissez-faire illogical. He nearly argues my point for me when he says, “that government interference is what has made unions in their current incarnations offensive.” I should have been a little clearer…how’s this? With unions, coercion resides “privately” in the form of a strike-threat, and “publicly” in the form of laws designed to protect unionization. Mr. Knapp can certainly support the notion that even if nice packaging veils it, legislation that favors one group over another (employees over employers) still interferes with the free market.

Next we have an analogy designed to represent a microcosm of a strike. Tom? Is it intellectually honest to present your analogy in terms of two individuals, when strikes really involve a collective versus an individual?

To do so fails to acknowledge the duress that can force employers to capitulate to collective bargaining tactics. It would also go towards revealing that the duress I speak of is not caused by the strike itself but more correctly by the threat of strike, especially when this involves a large number of employees.  As an individual, one achieves bargaining power as the services he offers become more valuable, either through training, experience, or market demand. In your microcosm analogy Tom you offered none of these criterion but simply raised your price. See, this is another example of how bargaining demands should reflect and /or be respectful of market forces. All too often they are not.

As a final point of contention I will take issue with Mr. Knapp’s description of how the union served him in the food industry when compared with his previous non-union position. I have no doubt as to the veracity of his statement, but to be fair he should have made clear that this change of fortune was only true for that particular union. A noted British economist, W.H. Hutt puts it very well when he says, ” While the power to strike can redistribute income in favor of members of particular unions, it cannot redistribute income in favor of labor in general at the expense of capital in general.”  The money has to come from somewhere Tom. This explains the basis of my statement that generally speaking unions leave us all a little poorer. Mr. Hutt further expresses my sentiments when he says, ” When the market value of output is forced, whether by right to strike or through legal enactment, above the level the free market would have determined, the general effect is to harm the poorer classes disproportionately.”  And what of the moral implication?  Unions, in general, appear to advocate the idea that someone else should pay for your happiness. This is not a free market ideal. It is however, one of the purest examples of why, in my opinion, they do not lend themselves to a libertarian perspective.

It is at this juncture that I feel we should briefly examine the error that gave rise to such things as unions in the first place. It happened around 1776, and is traceable to the great work of Adam Smith, ” Wealth of Nations.” At about the same time a guy named Karl Marx is looking this work over, looking for anything he can exploit in his bid to discredit capitalism. Marx found it in Smith’s so called Labor Theory of Value.

Now it is well known that Smith was very sympathetic to the working class, but unfortunately it was probably this soft spot that contributed to his major mistake. Essentially Smith said, “All things owe their value to the labor that goes into their production.”  This has been shown to be false innumerable times by many people and examples, but in the most enlightening way by A. J. Galambos, who was a physicist and author, and was the developer of the Theory of Volition. Galambos correctly points out that Karl Marx lifted the statement from Smith and then reworked it to support his own exploitation of the masses concept. Marx’s version states, ” All the value is created by the laborer.”

Galambos quickly and efficiently dismisses both statements as huge mistakes, Marx’s because it does not recognize anything but the worker as imparting value to a product, and Smith’s as it implies that value is determined primarily by the time and labor put into it. Smith’s mistake is why we have the situation even today where most working people are paid by the hours worked and not according to what the product may actually be worth in light of market forces. It is an objective determination, wholly at odds with the reality that the worth of product is for the most part a subjective determination.

Thus, it is not hard to see that if the majority still believes that product worth is determined by the labor that goes into it; it is not such a stretch for things like unions to exist. Someone has to measure the income of the innovator against labor’s expenditure of time in its manufacture. Someone has to protect against Marx’s “exploitation of the masses” concept. Ironically, as long as we have unions to insure that labor remains the determining factor of product cost and value, we will always have employees working for hourly wages and employers being pressured to pay them more.

Don’t we deserve better?

I think you will agree, Mr. Knapp, that we do indeed deserve something better. In fact you yourself have taken a progressive step forward by developing and publishing your own E-Magazine.  Rational Review is an excellent example of how value is subjective.

Since you have started your magazine, you have grown in readership and content. Your reputation and character have climbed in nearly everyone’s estimation. Still, as you have said yourself, you have not been making great amounts of money. Imagine how it would seem if you had valued the magazine according to the number of hours you have invested into it, I submit that you would have folded a long time ago not only as a result of debt, but out of sheer frustration. Instead, you have properly waited and paid yourself and your staff with the happiness that comes from pursuing freedom through the expression of old and new ideas.

Ultimately, you have made a leap of faith into the subjective valuation of your magazine. You have opted to let market forces prevail.  People will begin to pay you for your efforts through the purchase of your future products. I am not saying people have been buying your name on Rational Review Gear, although some have and even more will. But my point is that by ignoring the time determination of your future products worth, your growing readership will begin to place its own value on any number of products like books, newsletters or taped debates and discussions.

The bottom line that I am trying to get to is that whatever it is that you are selling you should be paid according to the inviolate law of supply and demand coupled with free market subjective valuation. This is not an environment that unions can thrive in because what is at odds between laissez faire capitalism and unions is this- Unions promote the “collective” mentality of Marx’s  “labor creates value” error. Unions provide for the happiness of their members at the expense of non-members. Unions do not integrate well (if at all) with free market forces.

As individuals we can be innovative and disciplined. We can take our innovations to the market place where the value will be subjectively determined by what the consumer is willing to pay according to the law of supply and demand. Therein lies our profit and our indication of whether we will have a successful product or not. To me unions stand as an impediment to the idea that all great products come from the individual mind first. Not very many arise from a collective mind. I think Mr. Knapp agrees with this as evidenced by his utilization of individual minds at his fine magazine.  What’s more, every union can be defined by its relationship between the employees and the employers, but only individuals can be self-employed. In terms of the free market, I simply put my faith in the individual over the collective. It’s a subjective valuation I know…but that was my point.

Pacificus

Originally published in Liberty For All June 09, 2002.

Dennis Hayes is a healthy, independent thinker, author, and medical professional. Never one to pass up the opportunity to play at being a wordsmith, especially when it comes to politics and music, he has been actively writing for more than two decades. He has been with Liberty for All since its inaugural issue and devotes the bulk of his time to his family, his work, and the pursuit of happiness.