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STRIKES AND THE INDUSTRIAL ORGANIZATON - William Graham Sumner, The Forgotten Man and Other Essays (corrected edition) 
The Forgotten Man and Other Essays, ed. Albert Galloway Keller (New Haven: Yale University Press, 1918).
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STRIKES AND THE INDUSTRIAL ORGANIZATON
STRIKES AND THE INDUSTRIAL ORGANIZATION1
Anyone who has read with attention the current discussion of labor topics must have noticed that writers start from assumptions, in regard to the doctrine of wages, which are as divergent as notions on the same subject-matter well can be. It appears, therefore, that we must have a dogma of wages, that we cannot reason correctly about the policy or the rights of the wages system until we have such a dogma, and that, in the meantime, it is not strange that confusion and absurdity should be the chief marks of discussion carried on before this prime condition is fulfilled.
Some writers assume that wages can be raised if the prices of products be raised, and that no particular difficulty would be experienced in raising prices; others assume that wages could be raised if the employers would be satisfied with smaller profits for themselves; still others assume that wages could be raised or lowered according as the cost of living rises or falls. These are common and popular assumptions, and have nothing to do with the controversies of professional economists about the doctrine of wages. The latter are a disgrace to the science, and have the especial evil at this time that the science cannot respond to the chief demand now made upon it.
If the employer could simply add any increase of wages to his prices, and so recoup himself at the expense of the consumer, no employer would hold out long against a strike. Why should he? Why should he undertake loss, worry, and war, for the sake of the consumers behind him? If an employer need only submit to a positive and measurable curtailment of his profits, in order to avoid a strike and secure peace, it is probable that he would in almost every case submit to it. But if the employees should demand five per cent advance, and the employer should grant it, adding so much to his prices, they would naturally and most properly immediately demand another five per cent, to be charged to the consumers in the same way. There would be no other course for men of common sense to pursue. They would repeat this process until at some point or other they found themselves arrested by some resistance which they could not overcome. Similarly, if wages could be increased at the expense of the employer's gains, the employer who yielded one increase would have to yield another, until at some point he decided to refuse and resist. In either case, where and what would the limit be? Whenever the point was reached at which some unconquerable resistance was encountered, the task of the economist would begin.
There is no rule whatever for determining the share which any one ought to get out of the distribution of products through the industrial organization, except that he should get all that the market will give him in return for what he has put into it. Whenever, therefore, the limit is reached, the task of the economist is to find out the conditions by which this limit is determined.
Now it is the character of the modern industrial system that it becomes more and more impersonal and automatic under the play of social forces which act with natural necessity; the system could not exist it they did not so act, for it is constructed in reliance upon their action according to ascertainable laws. The condition of all social actions and reactions is therefore set in the nature of the forces which we have learned to know on other fields of scientific investigation, and which are different here only inasmuch as they act in a different field and on different material. The relations of parties, therefore, in the industrial organism is such as the nature of the case permits. The case may permit of a variety of relations, thus providing some range of choice.
A person who comes into the market, therefore, with something to sell, cannot raise the price of it because he wants to do so, or because his “cost of production” has been raised. He has already pushed the market to the utmost, and raised the price as high as supply and demand would allow, so as to win as large profits as he could. How, then, can he raise it further, just because his own circumstances make it desirable for him so to do? If the market stands so that he can raise his price, he will do it, whether his cost of production has increased or not. Neither can an employer reduce his own profits at will; he will immediately perceive that he is going out of business, and distributing his capital in presents.
The difficulty with a strike, therefore, is, that it is an attempt to move the whole industrial organization, in which all the parts are interdependent and intersupporting. It is not, indeed, impossible to do this, although it is very difficult. The organization has a great deal of elasticity in its parts — an aggressive organ can win something at the expense of others. Everything displaces everything else; but if force enough is brought to bear, a general displacement and readjustment may be brought about. An organ which has been suffering from the aggression of others may right itself. It is only by the collision of social pressure, constantly maintained, that the life of the organism is kept up, and its forces are developed to their full effect.
Strikes are not necessarily connected with violence to either persons or property. Violence is provided for by the criminal law. Taking strikes by themselves, therefore, it may be believed that they are not great evils; they are costly, but they test the market. Supply and demand does not mean that the social forces will operate of themselves; the law, as laid down, assumes that every party will struggle to the utmost for its interests — if it does not do so, it will lose its interests. Buyers and sellers, borrowers and lenders, landlords and tenants, employers and employees, and all other parties to contracts, must be expected to develop their interests fully in the competition and struggle of life. It is for the health of the industrial organization that they should do so. The other social interests are in the constant habit of testing the market, in order to get all they can out of it. A strike, rationally begun and rationally conducted, only does the same thing for the wage-earning interest.
The facts stare us plainly in the face, if we will only look at them, that the wages of the employees and the price of the products have nothing to do with each other; that the wages have nothing to do with the profits of the employer; that they have nothing to do with the cost of living or with the prosperity of the business. They are really governed by the supply and demand of labor, as every strike shows us, and by nothing else.
Turning to the moral relations of the subject, we are constantly exhorted to do something to improve the relations of employer and employee. I submit that the relation in life which has the least bad feeling or personal bitterness in it is the pure business relation, the relation of contract, because it is a relation of bargain and consent and equivalence. Where is there so much dissension and bitterness as in family matters, where people try to act by sentiment and affection? The way to improve the relation of employer and employee is not to get sentiment into it, but to get sentiment out of it. We are told that classes are becoming more separated, and that the poor are learning to hate the rich, although there was a time when no class hatreds existed. I have sought diligently in history for the time when no class hatreds existed between rich and poor. I cannot find any such period, and I make bold to say that no one can point to it.
Popular Science News, July, 1887.