Rethinking Labour-Management Relations

The Case for Arbitration

Christopher J. Bruce, Jo Carby-Hall

• Editore: Routledge
• Anno: 2021
• ISBN:
  9781000349306
• Edizione: 1
• Argomento: Law
• Categoria: Law Theory & Practice

First published in 1991, Rethinking Labour-Management Relations explores how the contemporary system of industrial relations developed and outlines proposals for a better alternative.

The book examines the positives and negatives of three systems of industrial relations: a freely operating market for labour where workers bargain individually with employers; a strike-based system of collective bargaining; and, a compulsory arbitration system. It discusses how the strike replaced individual bargaining, highlighting the deficiencies in these respective systems and presenting arbitration as the more efficient and effective way of settling disputes. In doing so, the book emphasises the role of the parties involved in finding solutions and considers how government intervention could be kept to a minimum.

Exploring a wealth of literature relating to compulsory arbitration systems around the world and formulating a set of criteria for establishing the best possible form of arbitration, Rethinking Labour-Management Relations will appeal to those with an interest in the history of trade union theory, public policy, and labour law.

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Chapter 1
The origins of the strike-based system

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INTRODUCTION

A recurring theme in the literature of law and economics is that democratic societies possess a tendency to generate laws and legal structures which are efficient.¹ According to this hypothesis, which we shall call the theory of legal evolution, either by design or through the relative atrophy of those aspects of the law which prove unsatisfactory, society gradually develops the legal system which best suits the needs and desires of the age. Concomitant with this evolutionary view of the process is the assumption that the prevailing system is, if not superior to, then at least the equal of, any alternative system which might be proposed; for, in the evolutionary battle, it is the existing system which has won through. If the theory of legal evolution is accepted, it becomes incumbent on those who wish to recommend that a new legal structure be substituted for the existing one to show not only that the proposed structure is the theoretically superior one, but also to explain why the existing system was able to dominate its rivals in spite of its supposed inferiority. In particular, if an argument is to be made for the replacement of the strike-based system, it must first be shown that that system has superseded all alternatives, not because it is necessarily the best system of industrial relations for our current age, but because the circumstances of the age in which it arose gave it advantages which no longer apply. That is the purpose of this chapter. Accordingly, we begin by reviewing, briefly, the origins of the trade union movement in Britain and North America and by identifying the reasons why it was the strike-based model of collective bargaining which proved to be successful.

COLLECTIVE BARGAINING AND THE INDUSTRIAL REVOLUTION

According to the Webbs,² the origins of trade unionism can be traced to the early stages of the industrial revolution. Three elements of this revolution were of particular importance to the development of employer–employee relations: (i) the creation of large, depersonalised workplaces; (ii) the attenuation of the guild system; and (iii) the automation of many processes which had previously employed skilled tradespeople.

The development of the factory system and of large-scale mining operations was crucial to the evolution of a collective form of bargaining. First, individuals who had previously enjoyed an element of self-autonomy in cottage industries, small craft shops, and agricultural villages found that the demands of the new technologies required the transference of control to their masters. At the same time, bargaining power in the labour market shifted away from workers towards employers. In the small workshops of the pre-industrial era, the revenue earned by the employment of one worker may have produced a significant portion of the employer’s profits, thereby providing each employee with some power for bargaining with his employer. In the larger factories and mines of the nineteenth century, however, no individual employee performed a crucial role within the company, thereby increasing the credibility of employers’ threats to lay off workers who refused to accept the conditions of employment offered to them. The contract of employment became a contract of adhesion – the employee could accept or reject the terms of employment, but had no direct input into their determination. Thus, at the same time that employees had begun to feel an increased desire to regain control of their worklives, their power, as individuals, to obtain this control had decreased.

Industrialisation increased the probability that workers would react to this feeling of powerlessness by turning to collective action. First, the contract of adhesion, by its very nature, applied equally to all workers within the establishment. Accordingly, all workers felt a common interest in the terms of employment of each of their fellow employees. Second, whereas the primitive means of transport and communication of the eighteenth and nineteenth centuries had made it difficult to coordinate the efforts of workers spread throughout the land in small workshops and villages, industrialisation brought workers into close proximity in factories and mines. Thus industrialisation had provided manual workers not only with the desire but also the to act collectively.

The second major effect of the industrial revolution was to reduce the importance of the guild system. Whereas under that system, apprentices and journeymen could aspire to become masters, under the factory system the number of workers per master was so increased and the amount of money required to become a master so great that these aspirations could seldom be realised. As a result, the commonality of purpose between the employers and employees was severed and a class of skilled wage workers was created – workers who no longer expected to become profit- earners and who, therefore, no longer could be persuaded that wage reductions were in their long-term interests.

Finally, the introduction of mass production techniques, primarily in the second half of the nineteenth century, reduced the demand for, and therefore the wages of, many skilled trades-people, such as cutlers, hatmakers, tailors, and glovemakers. Seeking strength in numbers, these workers attempted to defend their positions through the use of collective action.

In every instance, the industrial revolution increased the likelihood that workers would turn to collective action in their dealings with their employers. Industrialisation removed workers’ control over their places of employment, reduced their ability to apply personal skill and initiative, and weakened their bargaining power with their employers. At the same time, it standardised workpractices such that more workers shared common complaints and aspirations and it brought workers into closer proximity to one another, where they could more easily organise collectively. The result was that from the end of the eighteenth century in Britain and from the middle of the nineteenth century in North America, workers began to experiment with numerous forms of collective action. So why did the strike-based system succeed where these other experiments failed?

EXPERIMENTS IN COLLECTIVE BARGAINING

In the late twentieth century we have become so accustomed to the idea that collective bargaining will be conducted by craft or industrial unions bargaining in the shadow of the strike threat that we tend to forget that experiments with many other forms of labour-management relations were conducted in the eighteenth and nineteenth centuries. Before asking, in the following section, why the strike threat system became predominant, it will be useful to review briefly the factors which led to the demise of a number of alternative forms of employer-employee relations. Five of these will be discussed in this section.

Statutes

Until late in the eighteenth century, the primary means through which skilled workers could obtain control over their working conditions took the form of petitions to the legislatures and courts. In Britain, under the celebrated Statute of Apprentices, for example, the justices of each locality were empowered to set wages and apprenticeship regulations, after hearing representations from citizens of the district.³ Furthermore, it was not uncommon for associations of operatives to appeal directly to Parliament for regulation of wages or of certain workpractices – such as the introduction of new, labour-saving technology. However, two events placed severe restrictions on this practice by the early stages of the nineteenth century. First, in the mid-1700s, the pace of technological change began to increase substantially. As a result, whereas entreaties to restrict the introduction of labour-saving techniques had previously been relatively rare events, which could be acceded to without having an apparent effect on GNP, those entreaties became much more common. Gradually, an implicit understanding seems to have grown up among parliamentarians that if agreement was given to all of the petitions which were being received, the economy would stagnate – particularly relative to Britain’s continental competitors. Second, it was at this time that Adam Smith published his famous treatise on The Wealth of Nations (1776), in which he argued that social output would be maximised if competition among producers was encouraged. Parliament, which had been groping towards this conclusion on its own, quickly adopted Smith’s laissez-faire doctrine wholeheartedly and used it to reject all restraints on trade, including those resulting from combinations among workers. In this atmosphere, worker petitions for regulation of wages and apprenticeship requirements fell upon deaf ears. The practice of government regulation of working conditions was not resurrected until the early twentieth century, with the development of Wages Councils,⁴ well after the modern structure of trade unions had been established.

Coercion

With the adoption of a laissez-faire approach towards the economy, governments in both Britain and North America became hostile to collective bargaining. In Britain, for example, the Combination Acts of 1799 and 1800 were passed, making it illegal for workers to combine to fix wages. The effect of these Acts and other anti-labour policies of the government was to drive worker associations underground. From that vantage, the primary methods available to workers to ‘bargain’ with employers were those which derived from violence. Hence, much of the early history of trade unionism was marked by what Hobsbawm⁵ called ‘collective bargaining by riot’ and occasionally by overtly criminal acts, such as the murder in America of foremen by the ‘Molly Maguires’ of the Pennsylvania coalfields.⁶ Whether or not these activities met their short-term goals, however, it is clear that they could not form a long-term model for industrial relations in a civilised society and they soon gave way to alternative forms of collective bargaining.

Socialist/Utopian

One of these alternatives was what might be called the socialist, or utopian, general unions. In Britain, these included the Owenite⁷ Grand National Consolidated Trades Union and National Union of the Working Classes; while the most prominent example in America was the Knights of Labor, and in Canada, the One Big Union. In each case, an attempt was made to bring together workers of all kinds under one umbrella organisation which was to represent, not the narrow interests of individual trades, but the broad interests of the ‘working classes’. Thus, for example, the Knights of Labor included among their ranks farmers, members of the cooperative movement, and unorganised workers as well as members of identifiable unions.

None of these organisations was able to maintain cohesion for more than a few years. In part, their failure arose from the strength of employer opposition to their socialistic goals and from a lack of leadership among men whose utopian idealism far exceeded their practical abilities. In the main, however, it appears that the collapse of such organisations derived from internal stress. Whereas self-interest often provided sufficient motivation to induce workers to support strikers in their own or related trades, the desire to maintain ‘worker solidarity’ proved inadequate to induce skilled workers to support unskilled, native workers to support foreign-born, or farmers to support professionals. The struggle to establish the legitimacy of the trade union movement required such intense dedication, in the face of concerted opposition from employers, that only the strongest of incentives were capable of persuading workers to commit themselves to its support.

Radical unions

Workers responded in two ways to the failure of the utopian unions. Some concluded that the general unions should be disbanded, to be replaced by inward-looking, trade-based unions which would be connected to one another only loosely. Others, however, concluded that the problem with the utopian unions had not been their attachment to the cause of worker solidarity, but their lack of attachment. They argued that the utopian unions had failed because they had treated labour–management contracts on a case-by-case basis, rather that seeing each contract as being part of the larger conflict between the capitalist and working classes. These radical unionists, who were best exemplified by the leaders of the North American union, the Industrial Workers of the World (the ‘wobblies’), preached that the explicit goal of the union movement should be the overthrow of the capitalist system.

These organisations failed for a number of reasons. One of these was that their revolutionary rhetoric attracted individuals who were willing to use violence in the pursuit of their goals, a willingness which was not always shared by the average worker of the time. Indeed, in many jurisdictions, radical unions found themselves opposed directly by the members of skilled trades, whose (relatively) high incomes had made them supporters of the capitalist system. Second, like the utopian unions, the radicals spread their attacks too broadly, attempting to resolve so many issues simultaneously that the money and the patience of their supporters began to run dry. Finally, employers were so violently opposed to socialism that they used every means at their disposal to squash the radical unions. The combination of these factors has, to this day, left radical unions in the definite minority.

Arbitration

At a number of times in the history of the trade union movement it has been suggested that the parties use arbitration, instead of the strike threat, as the means of inducing them to reach agreement. Why has this technique been so unsuccessful? First, as we have seen, in the nineteenth century governments, as well as employers, stood in opposition to the trade union movement at almost every turn. Hence, the method chosen for bringing employers to the bargaining table had to be implementable without the support of the law. But arbitration could not fulfil this role. In the absence of a legal requirement, employers could only be induced to enter arbitration if workers first developed an extra-legal threat, such as the strike. But once this threat had been developed, it became difficult to supplant it with arbitration. The reason for this was that in those sectors in which it gave employers more bargaining power than they would have enjoyed under arbitration, employers preferred the strike threat; and in those sectors in which it was the unions who obtained more power from the strike than from arbitration, it was the unions who preferred the strike. Only in the unlikely event that arbitration maintained the same balance of power which was provided by the strike would the two sides agree voluntarily to submit to binding arbitration. But even under that circumstance, arbitration suffered relative to the strike threat during the nineteenth century because it was difficult to identify a group of educated individuals which was perceived to be sufficiently unbiased that its members would have been acceptable to both sides as arbitrators.⁸ Furthermore, once the struggle to entrench the ...