The Strike-Threat System

Professor William H. Hutt is one of the Grand Old Men of free-market economics. Fully a half-century ago, the English-born Professor Hutt published onery’ the best defenses of child labor in the Industrial Revolution ever written (later reprinted in F. A. Hayek’s superb volume Capitalism and the Historians); around the same time, Hutt compiled an outstanding Individualist Bibliography that was later to form the heart of Henry Hazlitt’s annotated Free Man’s Library. In more recent years, Hutt has written a comprehensive critique of Keynesianism (Keynesianism: Retrospect and Prospect), outstanding for his demolition of the “Acceleration Principle”; and he has shown (in Economics of the Colour Bar) that apartheid legislation in South Africa originated not with Boer farmers, but with Anglo labor unions led by the head of the Communist Party of South Africa. For a half century, Hutt has been a courageous battler against statism and statist fallacies in the economics profession.

Forty years ago, Hutt published a little gem of a book on the economic theory of trade unionism (The Theory of Collective Bargaining); his new book, The Strike-Threat System is an updating and an elaboration of his analysis of trade unions. His central point is that labor unions can never increase the income going to workers at the expense of capital; all they can do is to shift income from non-unionized, or less powerfully unionized workers, to more powerfully unionized workers. In short, unions can only redistribute income from other workers. The problems with this theme is that, while Hutt is thoroughly familiar with the economic literature on unions, he has not fully absorbed the fact that almost all economists now agree with this “anti-union” position. In short, Hutt believes that he is fighting hard and virtually alone for a position which has now been almost universally adopted in the economics profession; in a sense, he is pushing hard against an open door.

Even the “labor economists,” whom he properly scorns, have quietly abandoned their former enthusiasm for labor unions; their big hobby horses now are fallacious diatribes against alleged “discrimination” in the labor market against women and Negroes. Professor Hutt would have to search long and hard in the economics profession to find any enthusi-asts for labor unions.

There are, nevertheless, as there always are in Hutt’s works, keen insights scattered throughout the book; particularly interesting is Chapter 6, “The Employer Stereotype,” which demonstrates that consumers are the real “employers,” and that workers, if they only wished to assume the risks, are perfectly free to become entrepreneurs themselves and hire the capital instead of vice versa. Since they don’t care to assume these risks, Hutt points out, they should allow the investors to select the managers of the firm.

Unfortunately, Professor Hutt’s hostility to unions is such that he is willing to use coercive methods to hinder them; he advocates the outlawry of strikes, without realizing that this would lead inevitably to compulsory arbitration and also without realizing that if one does not have the right not to work this means slavery. He is hostile to unions, and he wishes to outlaw the closed shop (even if the employer is voluntarily willing to sign a closed shop contract) and to outlaw voluntary “lock-in” contracts, such as pension agreements which the worker may be eager and willing to sign.

Professor Hutt, in short, does not fully realize that the union problem would wither away if the government only removed the special privileges and coercions that it has been using on behalf of unionism. All government need do is to repeal the Norris-LaGuardia Act, which prevents the use of injunctions against union violence and prohibits “yellow-dog contracts” (agreements by the workers not to join unions); and to repeal the Wagner-Taft-Hartley Act, which coerces the employer to bargain collectively with a majority of a “bargaining unit,” and prohibits him from firing striking union organizers. Add to this the stern use of local police to crack down hard on union picket violence against strikebreakers; for in labor disputes the police have long been instructed to look the other way as union pickets employ violence. In short, all the government need do is to abolish its own special privileges to unions, for the union menace to fade away.

Reviewed by Murray N. Rothbard / Economics (290 pages) / BFL Price $11.95