June 2016        

The legitimacy of strike action:
How to argue with a capitalist

Niall Curran

Striking workers get a bad rap. Luas workers on strike, it seems, inconvenience commuters, hold the good people of Dublin to ransom, upset St Patrick’s Day, and put an ordinary decent tram company at risk.
     The problem with this guff is that it fails to appreciate the realities of a market economy. That’s right: a market economy—which, after all, is allegedly the most efficient mechanism we have for running economic affairs. The misguided ones who berate strikes simply don’t understand “real-world economics,” for to strike is a natural consequence of buying and selling in a labour market.
     Let me explain.
     Labour—much like capital—is in the market to make a “return on investment.” The “investment” is labour effort expended for a financial return. Unlike capital, the return is in the form of wages, rather than profit. The capacity to labour is inherent in the individual worker. It is their innate “property,” which they provide to a capitalist for a specific time. The capacity to labour is like an “investment fund” for the worker: labour is invested in a particular factory or office, providing financial rewards to the individual that they would otherwise not secure; or—assuming they have the freedom to do so—they might choose to “invest” elsewhere in another factory or office.
     In capitalist parlance, we might say that wages are a reward for risk, for to sell one’s labour to a capitalist risks that individual capitalist going out of business in the future, leaving labour with the costs of unemployment and subsequent search for work.
     The supply of labour to a firm in a market economy, like the continuing supply of capital funds, is subject to uncertainty. Market oscillations or technological change can alter the initial conditions that the labour investor first reckoned were a part of the market exchange.
     Furthermore, the buyer and seller of labour have different interests regarding rewards and effort, i.e. differences over the distribution between profit and wages and how much “satisfactory” labour effort is to be supplied in any given period.
     Given all these uncertainties affecting the supply of labour, it is to be expected that circumstances will arise when the seller of labour becomes dissatisfied with the terms on which their labour is being supplied, in the same way that a shareholder might become dissatisfied with the return on their investment.
     From a purely capitalist viewpoint, if the supplier of labour becomes dissatisfied with the “return” on their investment then it would be unwise, even irrational, for the worker to continue to invest at the same level unchecked. It would be a woeful investment decision, pouring in “good money after bad,” so to speak.
     In a free market, therefore, investors of labour effort should be free to withdraw (strike) when so desired. (Incidentally, the commitment of employers and capitalist politicians to free markets is very shallow here, for they would rather restrict labour investors by imposing red tape to regulate free withdrawal. Of course this suits the buyer of labour, for if the employer believed the seller of labour would never check their supply under conditions of unsatisfactory return, then the seller has little or no power and the management can proceed as before without constraint: the employer is being cosseted from labour market forces.)
     Now the investor of money capital can, under conditions of dissatisfaction, switch their funds to another source. This is relatively easy, as money stocks are generally fluid and there are innumerable market options for investment. This is less true for the investor of the labour resource. In theory, exit options exist for workers, and high staff turnover can become a problem for the buyers of labour; but for reasons of mobility, employment opportunities, and job search, exit is rarely feasible. It is more useful for the seller to try to negotiate that supply, using their labour resource as leverage over the buyer. In this way the strike (or threat of a strike) might represent one point in the spectrum of negotiation over labour supply, rather than, as the media dramatically put it, a “breakdown” of negotiations.
     While we might accept this analogy of workers withdrawing continuous investments of labour to ensure better returns, some might be tempted to argue that this hardly makes striking “socially desirable,” for many of the reasons suggested at the beginning of this article. Let us consider these arguments.
     A common argument, among employers at least, concerns “property rights.” The crux of this argument is that strikes obstruct an employer’s ability to legitimately go about their daily private business. Politicians of the capitalist class sympathise (not surprisingly) with this argument, which is why we get rules regulating the picketing of employers’ premises and preventing the obstruction of employers’ continued right to trade.
     Yet if we follow the logic of defending one’s property rights, such arguments ring hollow. After all, the worker also has a “property right” over their labour power—their means to a livelihood. Indeed the creation of legislation on workers’ redundancy rights emerged from an acceptance of the principle that a worker has some measure of “ownership” in the job.
     If we accept that the worker has a property right over their labour effort, then to uphold this right they must be free to negotiate the terms on which it is provided.
     True, it could be countered that upon entering a contract of employment the employee hands over this labour to the possession of the employer for a finite period; therefore the employee’s right to dispose of their property has been traded away for the receipt of financial remuneration. This empowers the employer to dispose of such purchased labour capacity in any (legal) way they see fit.
     But this argument is unsatisfactory, for the exchange of labour is more like a lease than full ownership rights—in fact it is more helpful to think about the exchange as similar to a tenancy agreement between a landlord and tenant. The tenant receives the property for their use, but such usage is highly constrained by the landlord’s ultimate right to ownership. Should the property be “misused” in some way, perhaps through unruly parties that destroy fixtures, the landlord will probably reassert their property rights.
     Similarly, an employee might find that their labour property, hired out to the employer, can be misused in some way—perhaps new technology intensifies labour effort above and beyond the initial expectations of the worker when they first agreed to supply effort—thereby encouraging a reassertion of the worker’s rights and sanction.
     Of course the landlord of a house, as a static and inanimate object, has the advantage (as any tenancy agreement will demonstrate) of being able to specify rigorously the responsibilities of how the tenant may use the property. In contrast, the employee in an open-ended employment relationship faces a more dynamic and uncertain exchange and can only specify at the outset some basic conditions on which the labour is supplied, without knowing how it will change at some point in the future.
     Both worker and employer can argue “interference with property,” and it seems, in logic, that there is simply no reasonable defence of an employer’s property rights as a valid counterbalance to strike action. Indeed in a free market of buyers and sellers one cannot make a decision not to sell without at some level undermining the freedom of the buyer to buy. To cushion the employer from interference from strikes is to undermine market influences.
     Another argument for those who would deny the legitimacy of strikes is the disruption that such actions cause to the “ordinary public.” No doubt when airline staff strike, Rupert Murdoch’s reporters will be on hand to cover those stranded in airport terminals, or the sick and needy when striking hospital staff disrupt medical services. Such presentations can be powerful in their effect, often portraying those striking as a narrow interest group with a selfish agenda that unfairly disrupts a community by “holding the public to ransom.” It may often be accompanied by claims that the strike is a product of an unrepresentative minority, thereby raising a question about undemocratic power.
     Yet it takes two to tango. Imagine a company in financial trouble, perhaps suffering declining profits. Shareholders are upset, and their agents, the management, must see to it that the returns on investment improve. Having identified the shareholders’ grievance (falling profits), the managers take it upon themselves to identify and attribute the source of the problem—let’s say it’s labour costs. The management mobilise; redundancies follow, there is curtailment in investment in plant, and assembly lines are mothballed. Their message to those lucky enough to remain in their job is clear: offer concessions on terms and conditions or suffer loss of a job and denial of a livelihood.
     How different is this behaviour from a labour-led strike? It is a withdrawal, or threat thereof, of investment by employers in response to their grievance (an unsatisfactory rate of profit) or to enforce a particular demand (such as a concession on wages). Yet whereas the striking worker receives no income or social insurance, and suffers the consequences of going unpaid, striking capital can at least earn interest in a bank account or can reinvest elsewhere. Furthermore, unlike the temporary nature of a workers’ strike, an employer’s investment strike may become a permanent affair through sackings or moving plant elsewhere.
     Yet capital investment strikes are rarely the subject of outraged editorial commentaries in the Irish Independent. It is the reality of market economies, apparently. Yet if the employer’s investment strike is of significant proportions its effects resonate for months, years, indeed decades following closures, as the Rust Belt of the American Mid-West and the deindustrialisation of the Ruhr testify. Worker-led strikes, for all the inconvenience they may cause, are ephemeral affairs, rarely lasting more than one day.
     Despite the consequences of corporate strikes, it is rare to find media criticisms of narrow interest groups, of shareholders holding a work force, their families and indeed communities to “ransom.” Politicians, far from castigating company directors, will hurry out with generous tax breaks, grants and subsidies to appease the corporate strikers.
     Nor is one likely to hear calls for greater legal regulation of the investment strike in defence of the “national interest.” An employer would soon cry foul if any government prevented their freedom and capacity to withdraw their investment resources as required, challenging such regulation as undemocratic and totalitarian. Yet the same case applies to the employee, who must be entitled to the same rights to withdraw their labour where returns on investment are unsatisfactory. Of course regulating the weak, not the strong, is preferred capitalist policy.
     Finally, capitalists may charge that such freedom risks the viability of the business as a going concern, placing jobs and future employment at risk. Yet this is the least convincing argument a capitalist can muster. In the main, workers are likely to be rational investors. They are unlikely to strike if the consequences are to put their employment and their livelihood at risk. If workers did strike in circumstances where it genuinely risked a business closing they could only undertake such action because of incomplete information and a mistaken judgement of the real standing of the firm. If this is the case, employers could easily rectify the situation by simply “opening the books,” allowing workers free and independent access to the company’s financial information.
     The often-used claim about the irrationality of workers’ strikes, then, could not be a better justification for some real industrial democracy and participation.

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