Many economists like to think of the markets as a place where equals negotiate and bargain to find mutually beneficial deals. Employers and workers need each other and so come to a deal that benefits them both. As these agreements are reached voluntarily, there can be no injustice in the system, as otherwise why would they have agreed to it? There is therefore no need for government intervention as people are well able to look after themselves. Unfortunately, in the real world, things are very different. In the real world, employers have market power over workers that prevent the market reaching a fair balance. It is for this reason that strong unions and government intervention is needed.
There are several reasons why employers have more power. Firstly, there are thousands of employers but millions of workers. As there will always be more employees than employers, employees will always need employers more than the other way around. Secondly, there are always more people looking for work than jobs available. Even in the best of times there is unemployment and nowadays there are huge numbers desperate for any kind of work. You cannot bargain when it is obvious that there are many who will take your place without asking questions. Thirdly, if an employer cannot fill a vacancy, this is a nuisance, but for a person to not find work means poverty. Employers have far greater resources and can last much longer than any person can. Labour must work to support itself and therefore always dependent on Capital. Only Capital can support itself.
Libertarians claim that employees have agreed to the working conditions, so they mustn’t have a problem. After all, if they don’t like their job why would they choose to work there? But this ignores the crucial fact that people have to work somewhere. No matter where you go, you will more than likely have to work for an employer and be subject to their rules. Few people have the resources and skills to set up a business of their own and it is not possible for everyone to be self-employed. So while people have some degree of choice between where they work, few have any choice about working at all.
If you look at any job it becomes immediately clear that employers and employees are not equal. First of all, interviews are not negotiations between equals; instead they are an examination of the candidate where they try to prove themselves worthy of the role. For low skilled jobs in times of unemployment, they are more like begging than negotiating. The focus is on the candidate, surprisingly little is about the job (I have gone to interviews and been offered a job without even knowing what the job involved.) It is even consideration poor form to ask how much you will be paid. It is of course madness to ask how many holidays you will get or how long your break is (it would instantly make you seem lazy and ruin your chances).
There is a double standard in how the rules are applied. Arriving 5 minutes late to work is a serious offence that can cause you to be fired. But if you had to work 5 minutes extra you would get no reward nor be able to reprimand your boss. If you declared that your contract only required you to work until 5 o’clock and therefore you will not do a minute extra, you would be either quickly brought into line or else dismissed. Your boss can and will criticise you as much as they want, but I have never seen anyone dare criticise or even hint at a fault on the part of the boss (to their face). Does this sound like the free association of equals?
Likewise, looking at any contract will quickly rubbish any notion of equality or partnership. The contract is dictated entirely by the employer and mostly contains restrictions and requirements of the employee. Conditions such as pay, hours, conditions etc are fixed and the employee must take it or leave it. For example, most companies have a fixed working week, roughly 40 hours per week. Economists fool themselves when they think that a worker can work as little or as much as they want. If someone decided that they only felt like working 30 hours this week, they would be shown the door. No employee (apart from a handful of highly paid, highly skilled) would dare attempt to draft their own contract or request a better deal. The employer holds all the power; the employee must take what they are given.
Libertarians seem to believe that clear contracts will solve all problems. But a quick examination of any contract will show that they say very little about the job or working conditions. Every contract would be as long as a Tolstoy novel if they had to detail every aspect of the job. There is not enough time in the day to make a contract stipulating every aspect of a job and it is ridiculous to think that every employee completely agrees with every part. In fact, employees only see the contract after they have accepted the job, at which point it is a mere formality and too late for negotiation. Almost no employees have any idea what their job is like when they are hired. Most agree to do a job before fully knowing what it involves, what their boss and co-workers are like or their pay and conditions. To pretend that employees have agreed to every aspect of their job by signing a contract is an exercise in fantasy.
Most workplaces are authoritarian institutions where democracy ends at the door. There is the head that must be obeyed and cannot be criticised. Their will is law and the role of everyone else is to obey and follow. Whatever you might think of your boss, you can no more criticise them than you could a tyrant. Your true thoughts are to be whispered while looking over your shoulder. The idea of the employees having in a say in how the company is run is as unknown and unacceptable as the idea of medieval peasants running the Kingdom. If you think I am exaggerating, try setting up a union or suggesting that the company becomes a co-operative and see how far you get. Like Kings there are benevolent ones and tyrants and I have experienced my share of both. Thankfully, there are a range of government laws to protect workers from unchecked employer power.
However, Libertarians are so desperate to shrink the power of the state that they are blind to the power of employers. They fill books decrying the arbitrary rules of the government, but have nothing to say about the arbitrary rules of employers. Were the state to punish people for having the wrong opinions or forming associations it didn’t like (such as political parties) they would erupt in outrage. Yet when employers punish and blacklist people for having the wrong opinions or forming associations they don’t like (like unions) these so-called promoters of liberty are silent.
I have never been afraid of getting in trouble with the state over anything I write on this blog, the mere thought is ridiculous. However, sometimes I get hesitant about writing about some topics for fear a future employer may see it and decide I don’t have the right attitude for their company. I have never felt the slightest fear in joining a political party or organisation. However, as much as I admire them, I have never dared join a union for fear I would be fired or otherwise punished. I have never cared about whether or not the Irish government was spying on me, but I have looked over my shoulder to make sure the camera operated by the boss wasn’t watching me take a break.
Now a libertarian might argue that as long as an employee can quit, the employer has no power over them. But as I detailed before, employees simply cannot credibly threaten to leave as doing so would impose serious costs on themselves. Leaving a job means losing friends and job specific skills (which are the most valuable skills) and having to start from scratch. There is the danger that you may not find any work for a long time and have to live off handouts (which most people find shameful). Even if you do find a replacement job there is a good chance that it will be worse as the new company doesn’t know you. There is also the fact that no matter where they work, they will have to work for someone (just as no matter where a libertarian goes, they will be subject to some state power). Most people would rather stick with the devil they know.
But even more important is the fact that people rarely change jobs. Sure we can sit around all day about what employees could do, but it is meaningless if they never actually do it. Sure they could quit if their boss treats them badly, but few do. Many people stay for years in jobs they hate or suffer a boss they hate but still don’t quit. For most people, the thought of losing their job is a terrifying prospect that they will go to great lengths and put up with large amounts of crap to avoid. After all, even if you do get a new job, your new boss could be just as bad or worse. Most bosses make their changes in small steps so as to avoid people quitting. If your boss reduces your break by 5 minutes, who is going to quit? No one would quit if you had to stay 10 minutes later every night or if slight changes were made to the dress code. So piece by piece, the job becomes worse and worse but no one is going to quit over such minor issues (imagine going to an interviewer finding out that you quit your last job because the break was cut by 5 minutes?)
A libertarian cannot understand why an employee would stay in an exploited role, but why do women stay in abusive and violent relationships? Just because you don’t understand why someone does something doesn’t mean it doesn’t happen. Some people are too afraid of their boss to tell them they’re quitting or are so battered down that they believe it’s their fault they are being treated this way. Or they think it is normal and all bosses are jerks and nothing can be done about it. I once had an abusive boss who cursed me all down long in the foulest terms and even threatened to stab me in the throat with a knife. The thing is that by the end of the day, I started to believe that I was as useless as kept he saying.
Libertarians don’t really have any answers for these issues. The fact that employers push people around more than the government ever does, is a notion that has almost never occurred. The few traces I can find of them discussing it are pretty poor with little more than a vague belief that the market will solve any problem. They either presume that workers can easily walk away from their job (seemingly forgetting that unemployment exists) or a particularly silly idea that the market will pay them to compensate for bad bosses. Apparently, if my boss shouts at me, my wage automatically jumps to compensate me for the trouble. If my employer decides to punish me for my political or religious beliefs or setting up a union, they don’t fire me, no apparently they buy the right from me. It seems that all long workers really did have the right to be treated as equals, we just sold it off. Strange how none of us remember it? Is there any need to point out how delusional this is? If that is the argument that the most respected libertarian bloggers can come up with, it is clear that they have no clue.
It never ceases to amaze me how out of touch with reality some libertarians are. They get so caught up in perfect competition that they forget that the real world is completely different. Sure in theory the idea of workers and bosses as equals sounds lovely, but in reality bosses have huge power over their workers. They can use to push down wages and abuse their workers, safe in the knowledge that most have nowhere else to go. Why else have US wages not risen since the 70s despite an enormous growth in productivity? It is because of employers’ market power that we need labour laws, unions and minimum wages. Unless libertarians leave the fantasy world of perfect competition and face the reality of the power of employers they will never understand how the economy really works.