Organized Labor and the Post-War World


By RAYMOND L. BUELL, Round Table Editor, Fortune Magazine

Before Massachusetts Federation of Labor, Annual Institute, North Andover, Mass., June 26, 1942

Vital Speeches of the Day, Vol. VIII, pp. 627-628.

THE international situation after this war will be governed largely by what happens inside the United States. If we fail to find a democratic solution of our gigantic economic and political problems at home, we will only obstruct a solution of world problems.

America at the end of this war will be confronted with two alternatives. First, we can create what I call cooperative enterprise under which private initiative aided by collective bargaining, will create peacetime jobs and raise standards of living on the basis of the world market; secondly, we can go in for a collectivized system, under which government will narrowly direct investment and employment, keeping the system afloat with permanent deficit financing, and in which the U. S. will put the whole world on W.P.A.

The supporters of American collectivism after this war are already vocal. They are unconsciously aided by a number of business men, politicians, and even labor leaders who already intimate that after this war, government should boost tariffs and grant subsidies to keep in operation high cost industries, created by wartime need.

Which way America will go will depend in large part upon organized labor. If it can compose its internal differences, the American labor movement will be far stronger at the end of World War II than after the last war.

In my opinion, organized labor should oppose post-war collectivism in favor of cooperative enterprise. I say this for three reasons: (1) government cannot efficiently compel production of goods people really want in peacetime; (2) a government-directed economic system will end up in political dictatorship; (3) political dictatorship will mean the end of free labor unions.

If cooperative enterprise is to be restored after this war, wartime plants and jobs must be re-converted to peacetime work. This means a difficult transition both for labor and capital. The shock of this transition should be cushioned by temporary government controls and by liberal unemployment compensation to dismissed war-workers. Incentives should be created for capital and labor to create new peacetime jobs. Both must accept the goal of full employment and earnestly work to achieve it.

If cooperative enterprise is to flourish after this war, a new atmosphere of trust must be created. We must reject the assumption of the Leftists that business men—particularly big business men—are crooks and traitors; along with the assumption of the Rightists that labor leaders are racketeers. The law should take care of both business crooks and racketeers, but we must assume that the majority in both groups are honorable men.

Secondly, we must oppose the attacks against the so-called profit system, coming not only from the communists but even from some pulpits and schools. There is no inconsistency between production for profit and production for use. Profit is a regulator which determines how our resources can bestbe utilized. Just as labor is entitled to a wage, so is capital. Profit is simply a contingent wage which in some years is not paid at all. Profit cannot be destroyed in peacetime without destroying jobs. Profit should be controlled by competition, taxation, and collective bargaining. Subject to these controls, profit can be the most important incentive after this war toward increased economic expansion. Organized labor has a primary concern in such expansion, if living standards are to be increased and full employment maintained.

During and after this war I favor new forms of cooperation between organized labor and management. Both should reject scarcity economics and give up restrictive practices, whether of excessive prices or make-work jobs. These may help a few people, but they injure production and consumption for the country and the world as a whole. Both industrial and labor monopolies are unsound.

Labor unions are already linking up their wage demands to production and profits. Wage increases coming out of increased efficiency are justified. Wage increases which merely boost costs of production and prices to the public, as a rule are unsound. Only two weeks ago the International Ladies' Garment Workers Union, one of the most enlightened unions in the country, offered to reduce wages in war contracts so as to keep certain clothing industries in New York from going bankrupt. It might be a good idea after the war to divide wages into two parts: (1) a cost of living wage—remaining fairly constant—and (2) a profit-sharing wage which would vary with general prosperity.

Labor and management should also demand that government adopt policies which will encourage rather than restrict cooperative economic expansion. The most serious obstacle to private investment and employment after this war is our tax system. It is not so much the height of the taxes that discourages private employment as it is their nature. The investor and inventor who risk thousands of dollars on an idea which creates new jobs are performing a public service. Such men should pay less taxes than those who risk nothing by putting their money into bonds—government or otherwise. In fact, the New Deal tax system does the opposite. It has actually penalized venture capital and encouraged a flight to safety. Taxes have borne down more heavily on small business than on the large corporations. This has been admitted by recent monographs of the TNEC submitted to Congress. Labor and management have a common interest in demanding that this system be changed and that our tax system give incentive to new investment and employment.

I believe in Labor and Management Committees to discuss both conditions of employment and production. There is a difference of function, of course, between management and labor; management must have the final say about production questions. But labor can be of enormous assistance to management in making suggestions as to production if encouraged to do so in an organized way. For many years great corporations such as the General Electric, have paid bonuses to employees making new suggestions of value, and this policy has now been adopted in the Labor-Management Committees set up by the War Production Board. Many future presidents of corporations—not to mention plant managers— today are punching time clocks. It is absurd for the present management to think it has a monopoly on ideas. Labor-Management committees would increase the opportunity for new men to rise to the top. These committees ought to be continued after the war as part of a system of collective bargaining.

Finally, I believe that both organized labor and organized industry, as well as other groups, should have a far greater role today in the formulation of governmental policies affecting industrial relations. For this purpose I favor the creation of some kind of National Economic Council which both the President and Congress should consult periodically before framing legislation. In a truly representative Council, labor, management and other groups would have to face economic realities and recognize the necessity of reconciling immediate interests with the long-time economic program serving the country as a whole.

Today we have an Administration which professes to be pro-labor. In fact it has given numerous handouts to labor but has declined to share its power with either labor or management. Organized labor today has far less responsibility in America than in Britain for the prosecution of the war. Organized labor deserves to be represented in the Cabinet.

Two weeks ago Archibald MacLeish publicly attacked the American press for stating that Washington was a bureaucracy. His speech portrays a misunderstanding of the nature of political power and the democratic process. When new positions are hastily filled by Presidential appointees inexperienced in public affairs, responsible neither to the people nor to Congress; when such officials issue confused and conflicting statements in matters of vital importance to American people; when they quickly improvise rationing and wage policies without legislative debate or organized consultation with labor or industry, they deserve to be called a bureaucracy. They are given virtually unlimited power, and unlimited power inevitably tends to be abused. The framers of the American Constitution recognized this universal fact of human nature and devised the doctrine ofchecks and balances to correct it. This doctrine has been forgotten in Washington today.

It is one thing for a government bureaucrat to tell organized labor to "work or fight." It is quite another thing for organized labor and management to sit down with government and thrash out a policy which they recognize as necessary and which they will voluntarily carry out down to the Local Shop. Organized labor and every other American ought to oppose the present system of over-centralized and irresponsible bureaucracy in Washington with a new concept of democracy. This concept would not only restore to Congress its rightful place with respect to legislative policy, but would give the great labor, employer and farm organizations a responsible and continuous opportunity to make agreed recommendations as to government policy. Government should not abdicate its authority; but it should adopt the British practice of consulting both organized labor and management before adopting a policy affecting their direct interests.

If the kind of cooperation which I have outlined between labor and capital should take place after the war, it must be based on good will and equality in fact and in law. I believe the great majority of business men today realize that trade unions and collective bargaining are here to stay. I hope they will reject any effort on the part of a minority in a period of reaction to crack down on unions as was done in 1919.

At the same time I am frank to say that under the present setup the cards are stacked against the employer. I opposed the Smith Bill when passed by the House. I oppose it now. I do believe the Wagner Act has inequalities which should be removed and that the employer should have the same right as the unions, for example, to petition against unfair practices.

Employers also are at a disadvantage because today they negotiate agreements as individual firms with unions backed by national organizations. This means that a national union can mobilize great strength against a single employer. In Sweden and England the problem is met by agreements between national associations of both employers and workers. America is too large, in my opinion, for national labor agreements, but I would like to see further experiments with regional agreements both of a crafts and industrial nature.

The only sound basis for a post-war world is for labor and industry in America to get together on a program of cooperative enterprise and of a decentralized functional democracy. Both must realize that power begets responsibility.