Front Page Titles (by Subject) 4: Trade Unions - Socialism: An Economic and Sociological Analysis
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4: Trade Unions - Ludwig von Mises, Socialism: An Economic and Sociological Analysis 
Socialism: An Economic and Sociological Analysis, trans. J. Kahane, Foreword by F.A. Hayek (Indianapolis: Liberty Fund, 1981).
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The fundamental problem for the appreciation of the economic and social consequences of the trade unionism is the question whether labour can succeed, within a market economy, by association and by collective bargaining, in getting high wages lastingly and for all workers. To this question, economic theory—both the classic (including its Marxist wing), and the modern (including its socialist wing too)—answers categorically in the negative. Public opinion believes that the facts have proved the efficiency of trade unionism to improve the conditions of labour, because the standard of living of the masses has been steadily rising in the last hundred years. But economists explain this fact in an absolutely different way. According to them, this improvement is due to the progress of capitalism, to the progressive accumulation of capital and to its corollary, the increase of the marginal productivity of labour. And there is no doubt that we must give more credit to the views of the economists, substantiated as they are by the actual course of events, than to the naive belief of men who simply argue post hoc ergo propter hoc (after this, therefore, because of it). It is true that this fundamental point has been entirely misunderstood by many thousands of worthy labour leaders, who have devoted their life work to the organization of trade unions, and by many eminent philanthropists who have advocated trade unionism as the cornerstone of future society. It was the true tragedy of the age of capitalism that this attitude was wrong and that trade unionism developed into the most important weapon of destructionist policy. Socialist ideology has so successfully obscured the nature and peculiarity of the trade union that nowadays it is difficult to envisage what trade unions are and what they do. People are still inclined to treat the problem of workers’ associations as if it were a question of the freedom to combine and the right to strike. But there has been no question for decades now of whether the workers shall be granted liberty to form associations or whether they shall have the right to cease work, even in violation of a labour contract. No legislation denies them this right, for the legal damages which might devolve upon individual workers for stopping work in breach of contract have no importance in practice. Thus even the most extreme advocates of destructionism have hardly bothered to claim for the worker the right to break contractual obligations at will. When in recent years some countries, and among them Great Britain, the cradle of modern trade unionism, tried to limit the power of trade union policy, it was not part of their purpose to do away with what they considered the non-political action of trade unionism. The Act of 1927 attempted to outlaw general strikes and sympathetic strikes, but did not in any way interfere either with the freedom of association or with the strike for the sake of obtaining better rates of pay.
The general strike has always been considered, both by its supporters and by its opponents, as a revolutionary measure, or even as the essence of revolution itself. The vital element in the general strike is the more or less complete paralysis of the economic life of the community in order to bring about certain desired ends. How successful a general strike can be was proved when the Kapp Putsch,15 supported both by the German legal army and by a great illegal armed force which had compelled the Government to flee from the capital, was defeated in a few days by the general strike. In this case the weapon of the general strike was used to defend democracy. But whether one finds the political attitude of organized labour sympathetic or not, is of no consequence. The fact is that in a country where trade unionism is strong enough to set in motion a general strike, the supreme power is in the hands of trade unions and not in the hands of parliament and the government dependent on it. It was the comprehension of the real meaning of trade unionism and its working which inspired the French Syndicalists with their basic idea that violence is the means which political parties must use if they want to come to power. It should never be forgotten that the philosophy of violence, which replaced the conciliatory teaching of liberalism and democracy, started as a philosophy of trade unionism. Syndicalism is nothing else but the French word for trade unionism. The glorification of violence which characterizes the policy of Russian Sovietism, of Italian Fascism and of German Nazism, and which today seriously threatens all democratic governments, sprang from the teachings of revolutionary syndicalists. The essence of the trade union problem is the compulsion to coalesce and to strike. The unions claim the right to force out of employment all those who refuse to combine with them or those to whom they have refused membership. They claim the right to stop work at will, and to prevent anyone from taking the place of the strikers. They claim the right to prevent and punish by violence the contravention of their decisions, and to take all steps to organize this violent action so that its success shall be assured.
Every association becomes more cumbrous and prudent when the men at its head have grown old. Fighting associations lose the desire to attack and the ability to overcome their opponents by swift action. The armies of military powers, above all the armies of Austria and Prussia have learned over and over again that victory is difficult under old leaders. The Unions are no exception to the rule. So it may come about that some of the older and fully developed trade unions have temporarily lost some of their destructionist lust for attack and readiness for battle. Thus when the aged resist the destructive policy of impetuous youth, an instrument of destruction becomes for the moment an instrument which supports the status quo. It is just on this ground that the radicals have continually reproached the trade unions, and it is just this plea which the trade unions have themselves put forward when they have wanted help from the nonsocialist classes of the community in their work of extending compulsory unionism. These pauses for breath in the trade unions’ destructive fights have always been short. Over and over again those who triumphed were those who advocated an uninterrupted continuation of the fight against the capitalist social order. The violent elements have either pushed out the old trade union leaders or erected new organizations in the place of the old. It could not be otherwise. For, consistently with the idea on which they have developed, the associations of workers in trade unions are only imaginable as a weapon of destruction. We have shown that the solidarity of the members of the trade union can be founded only on the idea of a war to destroy the social order based on private ownership in the means of production. The basic idea and not merely the practice of the trades unions is destructionist.
The cornerstone of trade unionism is compulsory membership. The workers refuse to work with men who belong to an organization not recognized by themselves. They exclude the non-union men by threatening to strike or, ultimately, by striking. Those who refuse to join the union are sometimes compelled to do so by rough handling. It is not necessary to dilate upon the drastic violation of the liberty of the individual which this implies. Even the sophistries of advocates of trade union destructionism have not succeeded in reassuring public opinion on this point. When from time to time specially gross examples of violence against a non-union worker get publicity, even those newspapers which otherwise stand more or less on the side of the destructionist parties are moved to protest.
The weapon of the trade union is the strike. It must be borne in mind that every strike is an act of coercion, a form of extortion, a measure of violence directed against all who might act in opposition to the strikers’ intentions. For the purpose of the strike would be defeated if the entrepreneur were able to employ others to do the work of the strikers, or if only a section of the workers joined the strike. The long and the short of trade union rights is in fact the right to proceed against the strike-breaker with primitive violence, and this right the workers have successfully maintained. How this right was established by the trade unions in various countries does not concern us here. It is sufficient to say that in the last decades it has been established everywhere, less by explicit legislative sanction than by the tacit toleration of public authority and the law. For years it has hardly been possible to break a strike in any part of Europe by employing strike-breakers. For a long time it was at least possible to avoid strikes on railways, lighting and water services, and the most important urban food supply enterprises. But here, too, destructionism has at last carried the day.
No one has seriously contested the destructionist function of trade unionism. There has never yet been a wage-theory from which one could deduce that association by means of trade unions led to a permanent increase in the real income of the workers. Certainly Marx was far from allowing that trade unions had any effect on wages. In a speech made in 1865 before the General Council of the “International”16 Marx tried to win over his comrades to joint action with the trade unions. His introductory words reveal his object in doing so. The view that increase of wages could not be obtained by strikes—a view represented in France by the Proudhonists, in Germany by the Lassallians—was, he said, “most unpopular with the working class.” But his great qualities as a tactitian, which a year before had enabled him in his “Inaugural Address” to weld into one unitary programme the most diverse opinions upon the nature, aims, and tasks of the labour movement, were now again brought into play, and as he was anxious to link up the trade union movement with the International, he produced everything that can be said in favour of trade unions. Nevertheless he is careful not to commit himself to a statement that the workers’ economic position could be directly improved through the trade unions. As he sees it, the foremost task of the trade unions is to lead the fight against Capitalism. The position he assigns to trade unions admits of no doubt as to the results he expects from their intervention. “In place of the conservative motto: ’A just day’s wage for a just day’s work’ they ought to print on their banners, ’Abolition of the wage system’—They generally miss their aim because they limit themselves to carrying on a guerilla war against the consequences of the present system, instead of working at the same time for its transformation and employing their organized power as a lever for the final emancipation of the working classes; that is, for the final abolition of the wage system.”17 Marx could hardly have said more plainly that he could see nothing more in the trade unions than tools for the destruction of the capitalist social order. It remained for the “realistic” economists and revisionist Marxians to assert that the trade unions were able to maintain wages permanently above the level at which they would have stood without trade unionism. There is no need to argue the point, for no attempt was made even to develop a theory from it. It remains an assertion which is always made without any reference to the interdependence of economic factors and without any sort of proof.
The policy of strike, violence, and sabotage can claim no merit whatever for any improvement in the workers’ position.18 It has helped to shake to the foundations the skillfully constructed edifice of the capitalist economy, in which the lot of everyone down to the poorest worker has been continually rising. And it has operated not in the interests of Socialism but in that of Syndicalism.
If workers in the so-called non-vital industries succeed in their demand for wages above the level given by the situation on the market, there ensues a dislocation which sets in motion forces that lead finally to a readjustment of the market’s disturbed equilibrium. If, however, the workers in vital industries are able to enforce by strikes or threat of strikes their demands for higher wages, and to claim all those rights claimed in the wage struggle by other workers, the position is altogether different. It would be misleading to say that those workers were then virtually monopolists, for the question here lies outside the concept of economic monopoly. If the employees of all transport undertakings strike and circumvent action which might weaken the intended effect of their strike, they are absolute tyrants of the territories under their dominion. One may say, of course, that they make a sober use of their power, but this does not alter the fact that they have the power. That being so, there are only two classes in the country: members of the trade unions for the branches of production essential to life, and the remainder of the people, who are slaves without rights. We arrive at a position where “the indispensable workers dominate the remaining classes by the rule of violence.”19
And, speaking once again of power it may be well to inquire at this point on what this power, in common with all other power, is based. The power of the workers organized in trade unions, before which the world now trembles, has precisely the same foundations as the power of any other tyrants at any time; it is nothing more than the product of human ideologies. For decades it was impressed upon people that the association of workers in trade unions was necessary and useful to the individual as well as to the community, that only the wicked selfishness of exploiters could think of combating the unions, that in strikes the strikers were always right, that there could hardly be a worse infamy than strike-breaking, and that attempts to protect those willing to work were anti-social. The generations which grew up in the last decades have been taught from childhood that membership in a trade union was a worker’s most important social duty. A strike came to mean a sort of holy action, a social ordinance. On this ideology rests the power of the workers’ association. It would break down if the theory of its social utility were superseded by other views on the effects of trade unionism. Plainly, therefore, it is precisely the most powerful unions which are obliged to use their power sparingly, since, by putting an undue strain on society, they might cause people to reflect upon the nature and effect of trade unionism and so lead to a re-examination and rejection of these theories. This, of course, is and always has been true of all holders of power and is no peculiarity of the trade unions.
For this surely is clear: that should there ever be a thorough discussion of the right of the workers in vital industries to strike, the whole theory of trade unionism and compulsory strikes would soon collapse and such strike-breaking associations as the “Technische Nothilfe”20 would receive the applause which today goes to the strikers. It is possible that in the ensuing conflict society would be destroyed. On the other hand, it is certain that a society which aims at preserving trade unionism on its present lines is in a fair way towards destroying itself.
[15. ]The Kapp Putsch (March 13, 1920) was both symptom and product of the post World War I revolutionary turmoil in Germany. Gustav Noske’s (1868-1946) new army, organized by the post-war Majority Socialist government to crush the left, revolted against the government and Wolfgang Kapp (1868-1922), founder of the Fatherland Party, was placed in office. Karl Legien (1861-1920) leader of the right wing German trade unions, then called a general strike. Response to this rightwing move was tremendous and the Putsch promptly collapsed. The two competing Socialist Parties then came to terms and formed a coalition administration in April 1920, which excluded the extreme leftists and Communists from political power (Pub.).
[16. ]The speech, translated into German, has been published by Bernstein under the title Lohn, Preis und Profit. I quote from the third edition, which appeared in Frankfurt in 1910. Publisher’s Note: The speech by Marx was published originally in English as Value, Price and Profit, ed. Eleanor Marx Aveling (Chicago: Charles H. Kerr & Co., 1910).
[17. ]Ibid., p. 46. Publisher’s Note: In English edition, pp. 126-128.
[18. ]Adolf Weber, Der Kampf zwischen Kapital und Arbeit, 3rd and 4th eds. (Tüyingen, 1921), pp. 384 ff.; Robbins, Wages (London, 1926), pp. 58 ff.; Hutt, The Theory of Collective Bargaining (London, 1930), pp. 1 ff.; also my Kritik des Interventionismus (Jena, 1929), pp. 12 ff.; 79 ff.; 133 ff. Publisher’s Note: Hutt’s The Theory of Collective Bargaining was reprinted in 1954 by the Free Press of Glencoe, Illinois. Preface to the American edition is by Ludwig von Mises. Please also note that in the English edition of Mises’ A Critique of Interventionism, the page references are pp. 26 ff., 95 ff., and 148 ff., respectively.
[19. ]Kautsky, quoted by Dietzel, “Ausbeutung der Arbeiterklasse durch Arbeitergruppen” (Deutsche Atbeit, vol. 4, 1929), PP. 145 ff.
[20. ]Technische Nothilfe, established September 1919 to help provide essential services during strikes, lock-outs and natural cataclysms. A voluntary politically neutral association, under the German Ministry of Interior, with 260,000 members in 1928, converted into a public agency in 1939, dissolved by the Allied Occupational Forces in 1945, then replaced by a government institution, Technisches Hilfswerk, in 1953 to give assistance during catastrophes (Pub.).