Hayek on Unions

Hayek on Unions


one of the arguments you have been advancing
in the last few years is that you will never be able to defeat inflation until
you tackle the trade unions which I think is the argument behind the rigidities of wages
do you take the view that more needs to be done – oh I am quite sure oh yes that particular and effective prevention of all use of violence by pickets must be carried through in all strictness so long as there are possibilities of workers prevent other workers from working I think we will still have an intolerable position which is not compatable with an operating market system – does your liberal individualist society have any role for
trade unions and if so what is it well no doubt if I were an owner of an enterprise and trade unions had not been invented I would invent them
I would want someone to talk to on behalf of the workers but I would not tollerate them taking any exclusive monopolistic control so far as collective contracts for the people who want
to accept them i’m all in favour but of course the whole problem is that the trade unions
particularly in this country more then else- where in the course of time were granted privileges
which the ordinary citizens has not essentially various uses of force & violence in order to prevent other people from working
at the terms that they work and I am convinced that in a functioning market order trade unions must have no monopolitic power of any kind
so you would outlaw the closed shop you would presumably also insist that trade unions
must be answerable at law for any actions they undertake like other citizens and the underlying principle here I suppose
you’re saying that people have a right to undercut other peoples wages
that is a human right like any other I am sure they have I don’t see how you can possibly morally
justify… see it is not realised the extent present trade union powers leads to
an exploitation of a large part of the workers by the others and one of the most extreme forms of it is that by driving up the wages of a particular group
far above the level of others these groups attract most of the available capital because the more expensive labour becomes the more it is worthwhile to replace labour by
capital with the result that capital is attracted to
those industries where wages have been driven up fastest at the expense of the others the mass of the workers can’t get better equipped and therefore can not be made more efficent by investment because the investment goes
all to where wages are highest already so you are saying that trade unions cause unemployment
i’m sure they do… not only unemployment they keep the wages of a large part of labour
low why then do they continue to be
so widely supported I think in Britain for example because they just don’t understand it the thing is that it is not too
difficult to understand the naive idea that you can by fixing wages drive up the wages of all workers
still prevails although it should be obvious to any intellegent person that any wage above competitive level must mean that some people earn more
at the expense of others who don’t get employment at all but i noticed that for example recently in America
some defenders of unions have argued that by increasing wages they compel companies to
be more efficient then they would otherwise be in other words that they are themselves
part of the cold blast of competition – but you see that is exactly what I have been saying in a different form yes it is true that where wages are pushed up most
highly the firms are compelled to invest much more then they otherwise would
and therefore adopt technically advanced things but that happens at the expense of labour
elsewhere capital which ought to go to the industries where labour is least well equipped
by capital is diverted to the industries where
labour is already equipped with a great deal of capital where wages in consequence however
are pushed still higher while the workers who need assistence from capital most urgently and those which are still little mechanised are deprived of that capital – but I wonder if there isn’t a
change coming up for example in the United States recently labor unions have agreed
contacts which actually reduced their wages and benefits under the impact of recession
and in Great Britain again under the impact of recession the
labor unions/trade unions have been prepared to abandon restrictive practices which in many cases have
been there for thirty, forty, or fifty years, well they’re beginning
to see it but I don’t think you can really compare the two countries in the United States there… I have said and I think it’s still true the Unions are really a capitalist Racket fully accepting the capitalist system and just
trying on the imitation of capitalist monopolies to get a to get a local gain by enforcing a local monopoly they’re not inspired by any any… labour theory, any ideology the English are still much to
much tied up with an idea of changing order of society all together american trade unionists knows that he is dependent on competition he just wants to protect himself
but he knows he lives in a competitive society the typical English trade unionist has a contempt
for competition he thinks competition is something unfair and unsocial and this attitude is as far as I can judge still very strong I think in England it is a question of converting the workers to admit the market order as a principle

59 thoughts on “Hayek on Unions

  1. "Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if Labor had not first existed. Labor is superior to capital, and deserves much the higher consideration."
    — Abraham Lincoln.

  2. "Trade Unions are violent institutions"
    Yet another idiot who knows nothing about the violence visited upon workers by the goons of capital and police throughout the past two centuries.

    Freidrich Von Hayek was a fascist.

  3. @caribolas Yet another idiot who ignores labor history, as all so-called "free"-marekteers do. Hayek sure loved him some fascism when it came to South America in the 70s & 80s. Come clean, now, you loved those South American dictators too, didn't you? Get rid of that socialist scum. Take 'em out and shoot 'em! Nice & clean. All for the profits, baby, all for the profits. Human rights? A COMMUNIST INVENTION! Don't worry about it. War.

  4. yeah right.. still has a terrible poverty problem (chile), and relies purely on the price of copper… also,liberalist economics erre not the short, nor long term impulse to democracy in chile.. just like china today..

  5. Zero inflation with competing currency is the answer for sustainability. look at his explanation of flexible wages which shows the distributon of capital and equity in a justified manned. Also examine his view on targeting an inflation rate which is not gonna help anyway. All that we are heading for is a global systematic disaster!!!!!!

  6. This human is a genius.

    Seriously, the left needs to stop their nonsense… you are doing great damage to society.

  7. @bapyou bahahhahhahah! oh my god. go away you stupid sheep. you can't just use terms you don't understand against the man that not only predicted how fascist nazism and the enslaving soviet union dictatorships would occur, but also offered a reason/logic/common sense/libertarian based method of preventing them from occuring, or occuring again.

  8. @samm1809

    "(Hayek) preventing (totalitarianism) from occuring again."

    Tell that to the morons in the Tea Party & the Fox News nitiwts here in the States. The scapegoating of immigrants, blacks & liberals in the face of an economic crisis, is exactly how fascist movements take shape, i.e. 1990s Yugoslavia.

    In the name of profits, capitalists have no morals. None whatsoever. America's history of intervention, destabilization & government overthrow in the name of capitalism proves this.

  9. @bapyou whatever. the US is heading down the road to serfdom and ron paul is the only one that can stop you. it's not about scapegoating liberals, it's about educating them.

  10. @samm1809 "whatever"

    That's a huge dismissal of everything I wrote in my last comment, which touched on a considerable range of topics and issues.

    "the US is heading down the road to serfdom"

    A catchy phrase pitting on economic system against another. What it ignores is that serfdom has arrived in many countries already, and not via any leftist movement. Neoliberal economic policy & the IMF (whose loans stipulate labor have few rights) have placed multitudes into debt servitude.

  11. @bapyou oh here we go. under a libertarian state (what america used to be before woodrow wilson prayed to the commy bible and gave the power to the reserve bank to create and destroy money/control interest rates which along with other government intervetion/corruption is what causes monopolies and corrupt actions by corporations in the first place) discrimination would cause nothing but loss to the discriminator. the fact that you put blacks, immigrants and idiots in the same boat is stupid.

  12. @selfrealizedexile Yes. It's the effect of a guild. The older workers drive up their wages by suppressing employment opportunities for younger workers.

  13. @1madmartagan1

    Sure, but wages aren't the quantity of money. Inflation and deflation, in my opinion, are more appropriately tied to overall prices. If a good rises in price relative to others, it is poor nomenclature to call that inflation even if you want to say 'local' inflation.

  14. @bonfirejovi

    Technically, there is no such thing as an optimum amount of money (cutting it itself isn't actually a solution). Prices of goods in a given currency constantly fluctuate. If I have more of a good, it is worth less in a currency which hasn't increased in quantity. So, the market already adjusts to changes in the money supply. Where there becomes a problem in relation to the money supply is the discoordination. So, Thatcher might be in a position to decrease the gap the

  15. @bonfirejovi

    market needs to adjust by to a smaller range by cutting the money supply, but the losses suffered through the discoordination can never be redone and the market will eventually liquidate, rearrange, and replenish wasted resources.

  16. Hayek is correct (as always). Look no further than the UAW. Look at the prices of an American automobile. Say Chrysler. They build an inferior product to a Japanese product. They do! Everyone knows this. Yet, tho the Japanese manufacturer has to export their cars to America. By in large, the price of their automobiles are not only competetive, in some cases actually cheaper. Why? The UAW have their workers at 75 an hour while the Japanese have theirs at 45. No doubt. Unions destroyed Chrysler!

  17. @SuperGuitarman69 the 75/ hr was not an accurate calculation. it was propaganda first spat out by the NYT and then carried by many of the news media -mainly Fox… but it is not accurate at all…

  18. @mcshobe2008 The first category is simply cash payments, which is what many people imagine when they hear the word “compensation.” It includes wages, overtime and vacation pay, and comes to about $40 an hour. (The numbers vary a bit by company and year. That’s why $73 is sometimes $70 or $77.) The second category is fringe benefits, like health insurance and pensions. These benefits have real value, even if they don’t show up on a weekly paycheck. At the Big Three, the benefits (Part 1)

  19. @mcshobe2008 Add the two together, and you get the true hourly compensation of Detroit’s unionized work force: roughly $55 an hour. It’s a little more than twice as much as the typical American worker makes, benefits included. The more relevant comparison, though, is probably to Honda’s or Toyota’s (nonunionized) workers. They make in the neighborhood of $45 an hour, and most of the gap stems from their less generous benefits. The third category is the cost of benefits for retirees. These(Part2)

  20. @mcshobe2008 essentially fixed costs that have no relation to how many vehicles the companies make. But they are a real cost, so the companies add them into the mix — dividing those costs by the total hours of the current work force, to get a figure of $15 or so — and end up at roughly $70 an hour. The crucial point, though, is this $15 isn’t mainly a reflection of how generous the retiree benefits are. It’s a reflection of how many retirees there are. [emp. added] The Big Three (Part 3)

  21. @mcshobe2008 and Toyota opened plants in this country. You’d never know this by looking at the graphic behind Wolf Blitzer on CNN last week, contrasting the “$73/hour” pay of Detroit’s workers with the “up to $48/hour” pay of workers at the Japanese companies. So there you have it. I love how people like to taught FOX news as being inaccurate. Every fact they give can be proven. Just as Beck has been doing everyday. Progressivism is history in this country. Get used to it!

  22. Hes talking about feudalism really isnt he?

    Anyways, funny to see that he sort of respected the European unions as opponents, whilst laughing at the US…

  23. Whether or not what Hayek said is true is not the present day concern. The real concern is how these logics are used by capitalists to discipline labour and states through increased mobility. And the desire for reduced production costs is realized by taking advantage of regulatory weakness of labour, human rights, etc. in order to externalize true costs of production.

  24. with nafta and gatt – which opened up world wide labor markets – now we have more employment but at slave wages – nike contracts with vietnam where people earn 10cents an hour and work 16hours a day and resorces are wasted moving goods so far is perrferred method now- my gandfather worked in the coal mines of tennessee at 6yrs old – wtg capatalist – couple the massive oversupply of labor worldwide and increasing technological unemployment – and the over supply of labor = more sweat shops

  25. a rbe solves all labor problems by accelarating robotic and cybernetic production of all goods and service – thus freeing man from labor -while sharing the fruits equally

  26. I'd like to know why Chicago area news media NEVER have carpenters, and other building trade workers, complaining about the use of illegal immigrants to ruin UNIONS. Instead we hear idiots like Ed Schultz say that GOv Walker is ruining unions. Where is he when illegal mexicans take jobs from hard working Americans who USED TO work at those jobs? What benefit does the media get?

  27. Except for the 1940s thru the 1960s when economic development was at its highest and labor unions were most prevalent.

  28. "Economics is a religion, not a science or philosophy." Oh cool are you one of those trendy Anarcho-Communists?

  29. Your fallacy is character assassination. Also I'm guessing by your logic you reject the personality cult of Che Guevara as well then?

  30. It's certainly not a science, you have Marx, Hayek, Friedman, Keynes, among others, who are all regarded as great 'economists', yet have nothing philosophically in common. It would be as if Darwin or Einstein said Newton or Galileo were know nothings and worthless.

  31. Anyone who disagrees with unions has clearly never done a real days work in the real world.Not everything done by them is or was good in entirety,nothing is.But unions of organised working people have achieved much over the years in terms of pay and conditions,safety,working hours and rights in the workplace,All those twats who would see us go back to the Victorian way of working,and the rights no one had-would you work in such an environment and suffer such indignities,would you fuck as like!

  32. Not too many liberals able to stomach Hayek, but in a nutshell, to my liberal fiends out there, I have a retort to your constant refrain of "corporations aren't people", and that is, "(trade) unions aren't people/"

  33. the living standards of the working class went way up after the labour unions won their battles .And i dont recall hearing about any great recession of jobs in america or anywhere else in those eras.

  34. Very smart fool……..Economists are social scientists and Hayek has missed this. Trade unions are a reflection of our human nature to organize and improve conditions. Workers have lives and interests too. It's called freedom….But yes violence and keeping others from crossing a picket line is wrong.

  35. Monopoly over land is the root of inequality. That means nobody must have monopoly over land. These neoclassical and neoliberal economists will not tell you this. They are bought and paid for by the land monopolists. Marxism is just the Left Cheek of monopolism. The Hegelian dialectic: Hitler or Stalin. "Freedom of Choice" by monopolist strategy. That is why the language of the privileged (by monopoly over land) talk of "the road to serfdom" meaning they would have to do work instead of living off rental income.So I will "swear" now and say " Henry George Land Value Tax"

  36. Off topic I know… Do you notice how today's interviewer differs from that of yesteryear? It seems then that a good interview is one where the the interviewee was helped to fully express themselves but today it they need to defend themselves… by any means necessary.

  37. What he says here also applies to minimum wages. Yes, they provide some people with higher wages, employers however adopt labour saving technologies whenever it is profitable to do so (and the higher the min. wage, the more profitable it is to turn to labour saving technologies) and some people lose their jobs but also, and more importantly, jobs that would have existed b4 the min. wage, would never even be created in the first place. It's not merely that it causes some people to be fired; it's much more that it causes a reduction in the long-term employment prospects of low skilled workers.

  38. I lived thru unions. Unions took too much and industry had little left to reinvest. Along came Asia and our industry flounded and died. Saw it all. Saw thru it at the time too, luckily.

  39. Unions engage in the same monopolistic practices as the capitalist. Unions benefit unions; that’s it. I have seen no evidence that I have benefited from lower prices or higher quality because of unions. That unions generally benefit working people or me specifically is marketing at best and propaganda at worst

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