Unions to the Rescue
by Jack Beatty
NEGOTIATING THE FUTURE: A Labor Perspective on American Business by and . Basic Books, $25.00.
“DIGNITY MY father replied in his terse, impatient way when, as a boy of five or six, I asked him why he was helping to organize a union. I had no idea what the word meant, but I could tell from the way he said it that it meant a lot to him, and I knew that someday I would find out what it meant too. The day came when I was twenty. I was working as a truck driver in Boston, and in my second or third month on the job I made a fearfully stupid mistake—I delivered a load of leather bales that were supposed to go to a firm on Second Street in Chelsea to a firm on Second Street in South Boston. I will never forget the sound of my boss’s voice broadcasting my error to my fellow drivers over the truck radio. I tried to explain how innocent the error was. The only Second Street I knew was in South Boston, I told him over the radio, and I had got only that far in looking at the bill of lading ... I was young enough to think that stupidity needed to be explained. Taking my efforts at self-exoneration as a sign of insolence, my boss cursed me and my lineage back to the time the first Beatty and the first Dowd emerged from the Ice Age bogs. When I got back to the terminal that evening, the shop steward—for it was a closed Teamsters Union shop—was waiting for me. He gruffly gestured for me to follow him. In we marched to the boss’s office, me bracing myself for the inevitable firing. Instead, my boss, as if following a script, stood up from his desk, buttoned his jacket, and extended his hand to me. “I apologize for what I said to you over the radio this afternoon,” he said. I shook his hand, incredulous. Outside, the steward turned to me and told me that I was the goddamnedest fool he had met in a lifetime of experience with fools, and walked away, shaking his head in disgust.
I felt awful standing there. My face and neck were wet with shame. And yet I had just discovered what dignity was and what unions had to do with it. For if my boss had not apologized to me, the Teamsters Union would have closed down the terminal. A man cannot be cursed by his boss, whom he cannot knock down for the cursing without losing his job. It is an affront to his dignity. Even careless young fools had to be treated with respect—if, that is, they were protected by the union.
A thing like that makes an impression on you. On me it made this one: I have read in no man’s book, heard in no man’s talk, anything that can shake my belief in unions. They are justified to me in a way that they never could be to people without the benefit of my experience.
That unions are good for their members, however, is not news. That (by bidding up the price of labor) they are good for many workers who are not members, that they are especially good for African-Americans, and that they are good for the economy inasmuch as union shops are often more productive than nonunion ones—this was the news of an important 1984 book, What Do Unions Do? by two distinguished Harvard economists. Negotiating the Future builds on that book to argue the manbites-dog proposition that unions are good for business. It seems that the worse unions do in the real world— union membership in the private-sector work force fell in the 1980s and early 1990s from 17 to 11.9 percent—the better their academic press.
BARRY BLUESTONE is a professor of political economy at the University of Massachusetts at Boston and a co-author of a widely cited 1982 book, The Deindustrialization of America. His father, Irving Bluestone, formerly the vice-president of the United Auto Workers’ Union, is a university professor of labor studies at Wayne State University, in Detroit. These credentials are not warrants of impartiality: are there conservative professors of political economy? Still, the tradition of steered data in economics writing is honorable, stretching from John Kenneth Galbraith to Robert B. Reich, and (one thinks of the editorials in The Wall Street Journal) robustly bipartisan.
The direction in which the Bluestones steer their data is toward a “new union movement based on the principle of a shared set of labor and management rights and responsibilities.” They argue that the adversarial “workplace contract” of the postwar era must yield to a cooperative “enterprise compact.” This would involve unions in matters far removed from the shop floor—pricing, advertising, product quality and innovation, and other deliberations at “the strategic level of the firm.” This nightmare of meetings would make real the dream of economic democracy—the extension to the workplace of the rights we enjoy and that half of us exercise as citizens. It is a social-democratic dream, not one punctuating the sleep of corporate executives and stockholders. What’s in economic democracy for them ?
Before answering that question, the authors embark on an informed tour of the rise and fall of the workplace contract. This was the paradigm that governed labor-management relations from 1945 to 1970, “the most prosperous quarter-century in American history.” Under this regime labor negotiated over wages, fringe benefits, and hours of work, but left all strategic decisions to management, which operated without the threat of foreign competition for most of the period. Those were the days when a third of the work force was unionized. The good wages these workers earned helped to fuel the postwar economic boom and to make America a fairer place in which to live.
The oil shocks of the 1970s (prices jumped 50 percent in 1974 alone) and the ensuing surge of imported goods ended the glory days. The two decades since 1970 have, in the words of Paul Krugman, of MIT, seen “the worst US productivity performance of the century.” As a consequence of this decline in productivity growth, “by 1990 the typical paycheck was worth 11 percent less than in 1973, near the beginning of the import surge.”That statistic strongly suggests, to indulge in some data-steering of my own, that the Reagan “Morning in America” phenomenon was an exercise in denial. I recently saw a book with the title The Rational Voter, and did not envy the author having to argue that confutable thesis.
The oil shocks were the price the United States paid for its foreign policy, but the import surge had homegrown roots. “When people forget how to produce goods, and that appears to be the case in America,” a Japanese author quoted by the Bluestones writes, “they will not be able to supply themselves even with their most basic needs.”He is referring to the decline in quality of many American products and the indifference to customer preferences displayed by many American firms. General Motors, for example, did not see the need to set up a consumer marketresearch division until 1985. “A by no means exhaustive roster of U.S.-made products that have lost half or more of their world market share since 1950,”the authors write in a singularly depressing sentence, gathering up the bitter fruit of this indifference, “now includes: automobiles, cameras, stereo equipment, medical equipment, color television sets, hand tools, electron microscopes, electric motors, food processors, microwave ovens, athletic equipment, computer chips, industrial robots, radial tires, machine tools, and optical equipment.”
Behind this decline in industrial preeminence is the decline in productivity growth. The authors cite research showing that as much as 60 percent of it is not accounted for by the usual suspects—the hike in energy costs following the oil shocks, too little capital investment, the shift from manufacturing to services. Their prime candidate for the X factor is the damage to employeremployee relations brought on by the new competition from abroad—the firings, wage freezes, and benefit recisions that took place in dozens of industries as management tried to adapt by cutting the cost of labor. Reversing this trend, getting employer-employee relations “right in America,” they believe, “will likely play a greater role in raising productivity than any other single factor.” One might concede the point and still ask, Why are unions necessary to improve these relations?
HERE THE authors’ argument turns on the concept of market share. In the mid-1940s Walter Reuther, the UAW leader, wrote a pamphlet laying out two strategies that industry could pursue in the postwar era. Under “low-gear” production, companies would sell at high prices, pay low wages, and aim to maximize their profit on each item sold. Under “high-gear" production, companies would sell at low prices, pay high wages, and sacrifice per-unit profits to the goal of selling more units—market share. Both these strategies can produce profits, but highgear production is better for the nation, especially given the new international economy. Self-interest drives stockholders to demand low-gear production; the same force drives unions to advocate high-gear production. Management is in the middle, its loyalty divided between stockholders and work force. Only strong, independent unions involved in the strategic decisions of the firm can force stockholders to be patient, to take the long view, to follow the Japanese practice of sacrificing profit per unit to market share. If a failure to look beyond the short term is one of the chief ills of American business, then a new enterprise compact with unions is its cure. What’s good for the UAW is good for America—that is a fair summary of the Bluestones’ case.
Of course, unions have to give up something in return for taking on responsibilities formerly reserved for management. They must adjust their wage demands to productivity increases, allow greater flexibility in work rules, and help rather than hinder management in the task of securing an honest day’s work from each employee. In the most controversial provision of their seven-point compact, the Bluestones even want unions to he able to strike over “quality.” And why not? Their members’ jobs are at stake if the public ceases to buy what they make. This provision would also save companies from their stockholders’ demand to cut corners on quality for profit.
These recommendations are not just flights of political economy. The Bluestones extrapolate from farsighted realworld departures: most notably, the Saturn Project, at General Motors, which is testing how far labor and management can go in working together to meet the threat of foreign competition. Their book is lucid, vigorously argued, and on the side of the angels.
Yet there is a strain of unrealism in Negotiating the Future. The Bluestones almost recognize what an economist of a different stripe might call one of the “contradictions” of contemporary capitalism, but their wish to be upbeat gets in the way. That contradiction is the one between the real economy and the casino economy of Wall Street. It would take a new Thorsten Veblen to chart this phase of the old conflict between the “engineers” and the “price system,” and he would be sure to cast a sardonic eye on the way the pension-fund investments of unions drive corporate actions that undermine the self-same unions. What’s good for Wall Street is not necessarily good for Main Street—that would seem to be the message of the financial debauch and industrial decline of the 1980s. How to protect Main Street from mergers, takeovers, buyouts, and legal lootings instigated on Wall Street, how to protect our society from our economy while ensuring the economy’s dynamism—this is the challenge of the 1990s.
That economist of a different stripe would doubt that capitalism can surmount such a challenge. But Karl Marx did not reckon with the New Deal, which saved capitalism by putting limits on how the Wall Street of the time could affect Main Street and by guaranteeing the right of collective bargaining—steps that helped to legitimate capitalism when it was under ideological assault, as it is not now. A new New Deal is needed today, both to preserve our standard of living and to prevent exploitation abroad—for unlike the first New Deal, this one has to be international in scope. The world of free trade toward which we are heading demands nothing less. American w orkers, union and nonunion alike, are nowcompeting not only against impatient stockholders (who often are themselves) but also against Third World peasants who inhabit a predatory economic world inimical to dignity. The only answer to the threat to communities and families posed by history’s first truly international capitalism might well be the countervailing power of international unions that would not let capita! escape social responsibility, however far it might seek. Workers of the world, unite!