CENTRALIZED WAGES POLICY
| Author | B. C. ROBERTS |
| Date | 01 June 1958 |
| Published date | 01 June 1958 |
| DOI | http://doi.org/10.1111/j.1467-9485.1958.tb00361.x |
CENTRALIZED WAGES POLICY
AT the outset of his article
Mr.
Flanders states that ‘the case for a
national wages policy rests on the single and simple premise, that there
is an undefended public interest in the results
of
collective bargaining.’
It may, however, be questioned whether the results
of
collective bar-
gaining are as bad as
Mr.
Flanders assumes,
or,
if
they are, whether a
national wages policy is the best way of protecting the public interest.
Since the ability
to
fix
a price above the equilibrium level in any
market depends upon the enjoyment of
a
degree
of
monopoly,
it
follows that
Mr.
Flanders’ initial proposition must rest on the
assumption that the trade unions have, under full employment, a pre-
ponderant bargaining strength. Henry Simons,’ Charles Lindblom2
and, more recently, Edward
H.
chamber lair^,^
have argued with ruth-
less logic and passionate conviction that trade union bargaining power
menaces the general public welfare, and threatens to undermine the
basis
of
a free society. This point of view was also much in the mind
of
F.
A.
Hayek when he wrote his famous polemic against collectivism,
The
Road
lo
Serfdom.
Though it
is
ironical to find an editor
of
Socialist Commentary starting his analysis from the same basic
assumptions as these well-known advocates of extreme liberalism, it
cannot be said that the remedies which he suggests have much
in
common with theirs. The difference between them lies in the fact that
Mr.
Flanders believes in the value of strong trade unionism and wishes
to prevent unions from inadvertently abusing their bargaining power.
But in proposing to do this by strengthening the unions
in
order
to
take the collective control of wages
a
stage further than at present,
his cure will appear to many people worse than the disease, and they
may well ask why the power of the unions should not be curbed,
rather than enhanced,
if
it is they who are the cause of
our
economic
difficulties.
The view that the trade unions are able to exercise a marked
influence on the course of wages has been sharply challenged by many
economists, both from the point of view
of
theory: and as a result
of careful empirical studie~.~ Opinion as to the impact of the unions
Henry Simons,
Economic Policy
for
a Free Society
(1948).
C.
E. Lindblom,
Unions
and Capitalism
(1949).
:’
E.
H.
Chamberlain,
The Economic Analysis
of
Labor
Union
Power
(1958).
Milton Friedman,,
‘
Some Comments on the Significance
of
Labor Unions
for
Economic Policy
,
in
The Irnmzc?
of
?he Union.
Ed.
D.
M.
Wright
(1951).
For a discussion
of
the literature see
C.
Kerr, ‘Wage Relationships-The
Comparative Impact
of
Market and Power Forces
’.
in
The Theory
of
Wage
Dererminarion
(1957).
Ed.
J.
T.
Dunlop, and L.
G.
Reynolds and C. Taft,
The
Evolution
of
Wage Structure
(1956).
154
To continue reading
Request your trial