Adam Smith and Collective Bargaining

Adam Smith, for all the considerable flaws in his thinking, wasn’t stupid. He understood the class conflict inherent to the economic system he was describing.

What are the common wages of labour, depends everywhere upon the contract usually made between those two parties, whose interests are by no means the same. The workmen desire to get as much, the masters to give as little as possible. The former are disposed to combine in order to raise, the latter in order to lower the wages of labour.

He also understood that this wasn’t an even match-up. Under 18th Century capitalism, not only were most workers living hand to mouth, organizing was expressly forbidden by law. It’s pretty clear that Smith thought this was an unfair state of affairs.

It is not, however, difficult to foresee which of the two parties must, upon all ordinary occasions, have the advantage in the dispute, and force the other into a compliance with their terms. The masters, being fewer in number, can combine much more easily; and the law, besides, authorizes, or at least does not prohibit their combinations, while it prohibits those of the workmen. We have no acts of parliament against combining to lower the price of work; but many against combining to raise it. In all such disputes the masters can hold out much longer. A landlord, a farmer, a master manufacturer, a merchant, though they did not employ a single workman, could generally live a year or two upon the stocks which they have already acquired. Many workmen could not subsist a week, few could subsist a month, and scarce any a year without employment. In the long run the workman may be as necessary to his master as his master is to him; but the necessity is not so immediate.

Of course, workers organized and fought anyway, were beaten, killed, thrown in prison, and vilified in the capitalist press. But their “masters,” the owners of the factories, organized themselves as well. These organizations operated with the consent of the law to do what it is masters always do, the very aspect that unites them as a class: lower the wages of the workers. But this operated out of sight.

We rarely hear, it has been said, of the combinations of masters, though frequently of those of workmen. But whoever imagines, upon this account, that masters rarely combine, is as ignorant of the world as of the subject. Masters are always and everywhere in a sort of tacit, but constant and uniform combination, not to raise the wages of labour above their actual rate.

“As ignorant of the world as of the subject” is a phrase I’ve had occasion to deploy more than a few times today. Smith realized that part of the invisibility was ideological. Implicit to the capitalist system was that owners would try to pay their workers as little as possible, so it didn’t seem worth remarking upon. He also saw how this secrecy was a great asset to owners, who could maneuver out of sight until they were in a better position to thwart worker aims. So they worked behind closed doors.

We seldom, indeed, hear of this combination, because it is the usual, and one may say, the natural state of things, which nobody ever hears of. Masters, too, sometimes enter into particular combinations to sink the wages of labour even below this rate. These are always conducted with the utmost silence and secrecy, till the moment of execution, and when the workmen yield, as they sometimes do, without resistance, though severely felt by them, they are never heard of by other people.

The Wealth of Nations, Book 1 Chapter 8

So Smith would have understood what is happening in Wisconsin right now, and he would have expected most news to look like this. The “masters” are trying to revert back to those glory days when workers had no right to organize because it will allow them to better lower those workers’ wages. Why? Not to balance the budget, but to shift wealth — in this case, public funds — into the hands of those in the ruling class. And Adam Smith knew what the result of that was:

Many would not be able to find employment even upon these hard terms, but would either starve, or be driven to seek a subsistence either by begging, or by the perpetration perhaps of the greatest enormities.

Or as Krugman says:

The whole budget debate, then, is a sham. House Republicans, in particular, are literally stealing food from the mouths of babes — nutritional aid to pregnant women and very young children is one of the items on their cutting block — so they can pose, falsely, as deficit hawks.

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5 Responses to Adam Smith and Collective Bargaining

  1. […] This post was mentioned on Twitter by Janet Stewart, exiledsurfer, khawkins5, Timothy Morton, Scott Madin and others. Scott Madin said: RT @zunguzungu: Adam Smith and collective bargaining: http://tinyurl.com/4k4zdtx […]

  2. […] Adam Smith, union thug. We rarely hear, it has been said, of the combinations of masters, though frequently of those of […]

  3. […] So the sci-fi scenario of countercultural youth making their own stuff that Mason provides us slips into relations of production that very few people (and almost no children) fall into — the oft-romanticized (and oft-reviled) petit bourgeoisie (or “small business owner”) who owns his means of production and works on them. But what if we looked at 3D printing from the perspective of the relevant class division under capitalism, the one that hasn’t fundamentally changed from the time Adam Smith was looking at it? […]

  4. […] Mueller, “Adam Smith and Collective Bargaining,”Unfashionably […]

  5. Pettersson says:

    Awsome short article. Im currently trying to find out more analytical material on Smith’s work, However it is hard much seems hijacked by modern capitalist but as i read Smith he looks like what i consider a true libertarian. Not these fake market rules over all, sure the market is there but we will not let it control us we will control ourselves in democratic fashion.

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