Author(s): | Robertson, David Brian |
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Reviewer(s): | Sundstrom, William A. |
Published by EH.NET (January 2002)
David Brian Robertson, Capital, Labor, and State: The Battle for American
Labor Markets from the Civil War to the New Deal. Lanham, MD: Rowman and
Littlefield, 2000. xxii + 297 pp. $75 (cloth), ISBN: 0-8476-9728-2; $22.95
(paperback), ISBN: 0-8476-9729-0.
Reviewed for EH.NET by William A. Sundstrom, Department of Economics, Santa
Clara University.
In this book political scientist David Brian Robertson (University of
Missouri, St. Louis) offers an account of American labor exceptionalism that,
perhaps unsurprisingly, appeals to the uniqueness of American political and
legal institutions. Contrasting American and European labor law and
regulations during the late nineteenth and early twentieth centuries,
Robertson argues that the constitutional separation of powers — in particular
federalism and the commerce clause — and antitrust law were the fundamental
sources of U.S. distinctiveness. Although there are many points on which one
might challenge Robertson’s evidence or interpretation, economic historians
interested in labor or political economy will find much to sink their teeth
into here.
Robertson begins with a useful comparative overview of labor law in the United
States and Europe during the late nineteenth century. A strength of the book
is its attention to labor law broadly defined: not merely laws relating to
unions and bargaining, but also the regulation of working conditions, workers’
compensation, and unemployment and health insurance. Robertson offers evidence
suggesting that as late as 1900 U.S. labor law was overall no less developed
or interventionist than the laws in developed western European countries.
Furthermore, union density (union membership as a percentage of the workforce)
was not significantly lower in the United States.
Still, the book’s underlying theme is that labor law in the United States was
ultimately shaped by the country’s core legal and political institutions. (In
this sense it would be a misreading of Robertson to infer that the development
of labor law was historically contingent, despite the similarities across
countries around 1900.) The national government was constitutionally
constrained to regulate only interstate commerce, while the states were of
course unable to restrict interstate trade. The consequence, in Robertson’s
view, was that labor market regulation was largely left to the states, but
political competition between states inevitably led to a race to the bottom,
as stringent regulation would put local firms at a competitive disadvantage in
interstate trade.
U.S. antitrust law reinforced the laissez-faire orientation of U.S. labor law.
In Europe, Robertson argues, labor unions and government management of labor
relations were accepted by employers because they could help stabilize cartels
by standardizing labor costs and conditions across firms. In the United
States, antitrust efforts busted the cartels and fostered the merger
movements, leading to large corporations and concentrated markets. Having no
use for unions to help coordinate and enforce cartels, large American
corporations tended to view them as an unnecessary evil and adopted various
union avoidance strategies: production shifting across plants to break
strikes, deskilling technological and organizational innovations, and welfare
capitalism (chapter 4). These strategies involved scale economies, and were
largely unavailable to smaller firms. Instead, small employers formed the
vanguard of active anti-union efforts: the open-shop movement. All considered,
“Anti-trust probably made American labor market exceptionalism irreversible”
(p. 115).
Robertson’s race-to-the-bottom thesis reverberates in current debates over
international trade and labor standards. Economists have, of course, raised
doubts about the theoretical and empirical validity of the race-to-the-bottom
idea, so it would be of obvious interest if Capital, Labor, and State
could make its case convincingly. What is the evidence? Robertson gains some
leverage examining the exceptional U.S. industries in which labor-market
regulation or unionization was particularly successful. These included the
railroads, where of course federal regulatory oversight was established under
the Interstate Commerce Commission. In the building trades, where markets
tended to be highly localized and insulated from trade, employers could use
unions to regulate local competition, much along the lines of the European
corporatist model. Negative examples are instructive as well: In bituminous
coal mining, for instance, an 1897 agreement between the United Mine Workers
(UMWA) and Midwestern coal operators failed under competitive pressure from
anti-union West Virginia mines. Indeed, Robertson includes a lengthy 1903
quotation from UMWA President John Mitchell that nicely summarizes the
difficulties competitive federalism posed for labor unionists and reformers
(p. 71).
Other aspects of the argument are less compelling. For example, Robertson
suggests that state-level workers’ compensation laws tended to be weak and
inadequate, again reflecting political competition and a race to the bottom
(chapter 9). He cites recent work in this area by Fishback and Kantor (1998),
but his interpretation seems to be at odds with the evidence they present: the
terms and generosity of these programs actually varied considerably across
states, a heterogeneity that hardly seems consistent with the cross-state
uniformity that a race to the bottom would imply. Similarly, under the Social
Security system, unemployment insurance and welfare benefit levels are set by
the states and also vary significantly. More generally, Robertson takes it for
granted that interstate competition would disfavor firms in states that
adopted a more regulated regime or more generous social benefits. Yet there
were persistent interstate differences in social spending as well as wages,
for example between the northern and southern regions (see Wright 1986). These
regional differences did not place northern firms at a competitive
disadvantage during the first half of the twentieth century, at least in most
industries.
The claim that antitrust and corporate mergers killed any hopes of cooperation
between capital and labor by obviating the use of unions to stabilize cartels
seems to rest on Robertson’s perception of corporations as monopolies in the
U.S. Steel or Standard Oil mode. But in most industries mergers resulted in a
number of oligopoly firms that competed fairly vigorously, if not over price
then over products and market share. Is it not possible that such firms would
also have greatly benefited from collusion, and that such collusion might have
been enforced or stabilized by unions? Pattern bargaining in the postwar
automobile industry might be cited as an example.
Read as an account of American exceptionalism, Capital, Labor, and
State is incomplete because it never really tests its thesis against
alternative explanations, such as mass immigration, internal mobility,
individualistic cultural values, or racism. As I have noted, early in the book
Robertson establishes rather convincingly that American labor law really was
not exceptional before 1900, and thus one might question accounts of
exceptionalism that rely on longstanding national differences such as mobility
or national character; these should have shaped labor institutions earlier on.
But the same objection would apply to Robertson’s thesis as well, resting as
it does on the distinctiveness of the American system of government going back
to the Constitution.
As a political history, Capital, Labor, and State is more interested in
the positive than the normative, but it is clear that Robertson’s sympathies
lie with the European corporatist model, in which the law provides “a fabric
of worker protections,” and labor and capital cooperate in setting wages and
working conditions. Of course, those advantages have to be paid for, and
Robertson is essentially silent on the costs to consumers and economic
efficiency of permitting or even promoting cartelization. He does acknowledge
those critics who blame rigid labor-market regulations for Europe’s high
unemployment and slow growth during the 1980s and 1990s, but he questions
whether U.S. performance during the same period can be attributed to more
flexible, free-market labor institutions, and notes the costs of those
institutions in terms of inequality and job insecurity.
Where Robertson faults federalism, with its checks and balances that have
served to limit the centralization and regulation of markets, admirers of
American laissez-faire might see evidence of the enduring wisdom of the
federalist system. It is a virtue of David Brian Robertson’s stimulating
historical interpretation that both sides of the debate will find much to
learn and ponder.
References:
Fishback, Price V., and Shawn Everett Kantor, “The Political Economy of
Workers’ Compensation Benefit Levels, 1910-1930,” Explorations in Economic
History 35 (April 1998): 109-139.
Wright, Gavin, Old South, New South: Revolutions in the Southern Economy
since the Civil War (New York: Basic Books, 1986).
William A. Sundstrom is Associate Professor of Economics a Santa Clara
University. His research interests include the history of U.S. labor markets
and racial discrimination. His recent publications include “Discouraging
Times: The Labor Force Participation of Married Black Women, 1930-1940,”
Explorations in Economic History 38 (January 2001): 123-146.
Subject(s): | Labor and Employment History |
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Geographic Area(s): | North America |
Time Period(s): | 20th Century: Pre WWII |