Labor Day got me thinking, which I know is a dangerous notion. Much is made in our nation about the conflict between unions and big business, and the derived conflict between ideologies that posit themselves as friends to either the individual worker or business. In our label-driven society of extremes, in this political economy of no middle ground, one cannot be both pro-labor and a capitalist; and wo betide the capitalist who is accepting of organized labor. All of which is odd when one considers the nature of capitalism.
Capitalism is, of course, nothing more or less than the private ownership of capital. Labor is, as a factor of production, an element on equal footing with capital. In a market economy where private ownership of land and capital creates the driving incentive, it follows that private ownership of labor serves the same purpose. If an entrepreneur has the motivation to produce because they own their own capital, labor that owns itself has the same motivation.
Labor unions are no different than independent business. They are corporations offering human resources to entrepreneurs who need labor. They are a legitimate market force with most of the same pros and cons that the other natural market forces display. Business naturally seeks to grow in order to leverage economies of scale; labor coalesces, it organizes in order to leverage similar scale economies.
The strident and consistent complaints of the supposedly pro-business in our democracy revolve around their reservations about price. Those who, in our economy, seem bent on complaining about freeloaders are themselves bent on freeloading; the pseudo-capitalists want the land, natural resources, and labor at near-zero price levels. Any entity in the political economy that seeks to charge appropriate and fair rents for land, natural resources, and labor are therefore labeled as “job-killers”. We live in a modern day equivalent of the Oklahoma Land Rush; capitalists without conscience rush to plant a flag on resources or cheap labor.
Nowhere in the works of Adam Smith can one find a notion of capitalism that is dependent on free capital; private ownership assumes, explicitly, that the holders of capital may charge economic rents. The owners of labor, be they individuals or individuals organized, have legitimate market rights to sell their capital at a rate they feel appropriate or a rate mutually negotiated. And nations who collectively own both the natural resources with which they are endowed and their own posterity, may reasonably charge rents for the extraction of natural resources and for replacement of polluted resources.
Capitalism demands responsibility and accountability equal to the personal investment one hopes to leverage; where such responsibility and accountability is not offered, the democracy may reasonably demand both.
The Rational Middle is listening…