Essentials of Economic Theory / As Applied to Modern Problems of Industry and Public Policy

by John Bates Clark

Trade Labels and the Quality of Goods.—The experience of the trade-label movement thus far has been, that in some instances the label vouches for prices which are high, if quality be considered, or for a quality which is poor if the prices are the current ones. Instead of telling the purchaser that the shoes, hats, cigars, etc., which bear the label are surely the best that can be had for the money, the labels are more apt to tell him that the goods are poorer than others which can be had. In some instances this is not the case, and the union-made articles are as good and as cheap as others. When the label stands for a high price or a poor quality, the union fails to control its members and especially its members' wives. Having the meager pay of a week to invest, the wife needs to use it where it will do the most for the family. There is so strong an inducement to buy goods which are really cheap and good that the trade-label movement fails whenever loyalty to it means very much of self-taxation.

The Object Lesson of the Consumers' Boycott.—Organized labor gives itself a costly and impressive object lesson when it tries to force all men of its class to buy the dearer of two similar articles. What this shows is that the demands of unions must be limited, and that for the highest success they must be so limited that there shall be no decisive advantage given to an employer who has a non-union shop. A marked difference in costs of production will cause the free shop to grow and the union shop to shrink. A certain moderate difference in wages there may be, provided always that the union labor is highly efficient; but more than such a difference there cannot safely be. If the trade-label movement should be generally successful, that fact would prove that the demands of trade unions were kept within reasonable limits.

The Policy of Restricting the Product of Labor.—It is a part of the policy of trade unions to limit the intensity of labor. The term "ca'-canny" means working at an easy-going pace, which is one of the methods adopted in order to make work for an excessive number of men. For some of this the motive is to avoid an undue strain on the workers. If the employer selects "pacemakers," who have exceptional ability and endurance, and tries to bring other laborers to their standard, then the rule of the trade union, which forbids doing more than a certain amount of work in a day, becomes a remedy for a real evil—the excessive nervous wear of too strenuous labor. This, however, by no means proves that the policy as carried out is a good one. Beyond the relief that comes when undue speeding of machinery and driving of workers is repressed, it will be impossible to prove that in the long run there is any good whatsoever in it, and the evil in it is obvious and deplorable.

"Making Work" as related to Technical Progress.—The policy reverses the effects of progress. That which has caused the return to labor to grow steadily larger is labor saving or product multiplying, and labor making and product reducing are the antithesis of this. Enlarging the product of labor has caused the standard of pay to go steadily upward and the actual rate to follow it; and the prospect of a future and perpetual rise in the laborers' standard of living depends almost entirely on a continuance of this product-multiplying process. A single man maintaining himself in isolation would gain by everything that made his efforts fruitful, and society, as a whole, is like such an isolated man. It gains by means of every effective tool that is devised and by every bit of added efficiency in the hands that wield it.

Reversing the Effect of Progress.—It follows that undoing such an improvement and going back to earlier and less productive methods would reverse the effect of the improvement, which is higher pay for all; it is restoring the condition in which the product of labor and its pay were lower. The "ca'-canny" policy—the arbitrary limiting of what a man is allowed to do—has this effect. It aims to secure a reduction of output, not by enforcing the use of inferior tools, but by enforcing the inferior use of the customary tools. The effect, in the long run, is, and must be, to take something out of the laborers' pockets.

The Effect of the Work-making Policy under a Régime of Strong Trade Unions.—It is, of course, only a strong trade union that can enforce such a policy as this. Making one's own work worth but little offers a large inducement to an employer to hire some one else if he can. Within limits, the powerful union may prevent him from doing this, and if for the time being society is patient and tolerant of anarchy,—if it allows men who are willing to work well in a given field to be forcibly excluded from it by men who are determined to work ill,—the policy may be carried to disastrous lengths.

How Static Law thwarts the Work-making Policy.—Even strong unions, as we have seen, succeed in maintaining only a limited difference of pay between their trade and others. The effort to maintain an excessive premium on labor of any kind defeats itself by inducing free labor to break over the barrier that is erected against it. The same thing happens when we reduce the productive power of organized labor. If, at a time when the premium that union labor bears above the non-union kind is at a maximum, the policy of restricting products is introduced, it so increases the inducement to depend on an independent working force that there is no resisting it. The palisade which union labor has built about its field gives way, and other labor comes freely in. If the ca'-canny policy makes it necessary to pay ten men for doing five men's work, the union itself will have to give place to the independent men. No single good word can be said for the ultimate effect of the policy as carried beyond the moderate limit required by hygiene. Up to the point at which it will avert undue pressure upon workers, stop disastrous driving and the early disabling of men, the effect is so good as amply to justify the reduction of product and pay which the policy occasions. Beyond that there is nothing whatever to be said for it, and if it shall become a general and settled policy of trade unions, it will be a clog upon progress and mean a permanent loss for every class of laborers.

Notwithstanding all this, it must be true that some motive which can appeal to reasonable beings impels workers to this policy. No plan of action, as general as this, can be sustained unless some one, at least transiently, gains by it. Workers have a tremendous stake in the success of any plan of action they adopt, and they have every motive for coming to a right conclusion concerning it. They are in the way of getting object lessons from every mistaken policy, as its pernicious effects become apparent, even though some local and transient good effects also become evident. It is not difficult to see what it has been that has appealed to so many laborers and induced them voluntarily to reduce the value of their labor.

A Common Argument against Product Restricting.—What is commonly said of the policy is that it is based on the idea that there is a definite amount of work of each kind to be done, and that if a man does half as much as he could do, twice as many men will be employed to do the whole amount. Nobody who thinks at all actually believes that the amount of work of a given kind is fixed, no matter how much is charged for it. If workers on buildings charged from five to ten dollars a day, there would be fewer houses erected than would be erected if they charged three dollars; and the same thing is true everywhere. The amount of labor to be done in any field of employment varies constantly with changes of cost, and making labor more costly in a particular department reduces the amount of its product that can be sold.

A trade union often finds that there are too many workers in its field to be constantly employed at the rate of pay it establishes. The result is partially idle labor; the men work intermittently, and though the high wages they get for a part of their time may compensate them for idle days or weeks, the idleness which is the effect of the oversupply is inevitable.