Mises on Unions

From NRA Economic Planning (1937), Roos quotes the November 1934 issue of American Federationist which reads:

If you are a union member, your union can watch every increase in production and every technical improvement which reduces cost. Your officers will know when to drive for restoration of the 1929 wage level, and you need not stop with the 1929 level. Since you are now producing 7 per cent more than you produced in 1929, your wages should eventually be above 1929 by a proportionate amount.

But the assumption that labor should reap the full reward of higher productivity – producing 7 per cent more – and should demand it through collective bargaining is a mistake. As Mises eloquently explained, in Human Action (1949):

Present-day labor-union doctrine operates with a concept of productivity of labor that is designedly constructed to provide an alleged ethical justification for syndicalistic ventures. It defines productivity either as the total market value in terms of money that is added to the products by the … divided by the number of workers employed … they call the …[the] "increase in productivity of labor," and they pretend that it by rights belongs entirely to the workers…

One thousand men working with the traditional old-fashioned tools in small artisan shops somewhere in the backward countries of Asia produce over the same period of time, even when working much longer than forty hours weekly, many fewer than m pairs. Between the United States and Asia the difference in productivity computed according to the methods of the union doctrine is enormous … The superiority of the American plant is entirely caused by the superiority of its equipment and the prudence of its entrepreneurial conduct …

On the eve of the "Industrial Revolution," conditions in the West did not differ much from what they are today in the East. The radical change of conditions that bestowed on the masses of the West the present average standard of living (a high standard indeed when compared with precapitalistic or with Soviet conditions) was the effect of capital accumulation by saving and the wise investment of it by farsighted entrepreneurship. No technological improvement would have been possible if the additional capital goods required for the practical utilization of new inventions had not previously been made available by saving.

While the workers in their capacity as workers did not, and do not, contribute to the improvement of the apparatus of production, they are (in a market economy which is not sabotaged by government or union violence), both in their capacity as workers and in their capacity as consumers, the foremost beneficiaries of the ensuing betterment of conditions.

Mises wasn't being anti-labor, he was just laying out the facts. Roos explained the effect that this had on the economy and on standard of living for the average American:

Because of resulting higher costs of construction, the workers in other industries muse pay scandalously high prices for even the most modest homes. Similarly, in the almost completely unionized anthracite coal industry, the wage scales of 1934 were so high that price was prohibitive; the industry was prostrate and thousands of miners were on public relief.

Though, of course he would not need it, Mises had plenty of evidence to work with, and though we may forget our history, he was speaking of America at that time. We should not forget, especially as we inch back toward some of the more corporatist roots, as we expand union power once again.