The Irony of State Intervention: American Industrial Relations Policy in Comparative Perspective, 1914-1939

Published by EH.NET (February 2006)

Larry G. Gerber, The Irony of State Intervention: American Industrial Relations Policy in Comparative Perspective, 1914-1939. DeKalb, IL: Northern Illinois University Press, 2005. viii + 212 pp. $40 (cloth), ISBN: 0-87580-347-4.

Reviewed for EH.NET by Gerald Friedman, Department of Economics, University of Massachusetts at Amherst,

“How Many Exceptions?” There was a time when social scientists explored American Exceptionalism and debated why the United States lacked a strong socialist movement. But then American labor historians challenged the premise of American Exceptionalism by showing the strength of labor radicalism in the United States; and experience has challenged the assumption that capitalism generally leads to socialism because labor movements throughout the world have become more conservative over time and have lost power and membership. Now, instead of one there are many “exceptionalisms” and the task for social scientists has become to explore the divergent responses by workers in different countries to capitalist economic development.

From this perspective Larry Gerber, Professor of History at Auburn, has written a book that addresses questions of exceptionalism in a way that also provides insight into current policy debates. Comparing state policy towards labor relations in the United States and the United Kingdom, he asks why countries with similar political cultures adopted such different policies in the 1930s. “No nation,” Gerber contends, “is more identified with the philosophy and practice of limited government than the United States.” However, in the field of industrial relations, “the American state has long played an active and critically important role” culminating in 1935 with the enactment of the National Labor Relations Act (NLRA). By contrast, Gerber argues, such intrusive “state intervention would have been inconceivable during the same period in Britain, the one other major industrial democracy generally viewed as having a ‘weak state'” (p. 3).

Gerber attributes the paradox of an activist American liberal state to a pattern of industrialization that weakened American labor unions. The rapid development of large-scale enterprises in the United States concentrated economic power, allowing powerful capitalists to crush labor unions in major industries, such as steel, automobiles, chemicals, and electric equipment manufacture. By contrast, the slower pace of British industrialization allowed British craft unions to survive and even flourish in older industries left intact with large numbers of independent firms using older technologies dependent on traditional craft labor. Because British collective bargaining was established firmly when industry was still overwhelmingly competitive and conducted in small firms, many British employers came to rely on industry-wide collective bargaining to contain competition. Without strong or hostile employers, British labor did not need to go to the state for help, leaving antistatist ideology, or “collective laissez-faire,” unchallenged among workers. By contrast, weak American unions needed state power to force employers to accept collective bargaining.

Note that Gerber here reverses the popular social-democratic model where stronger labor unions and working-class political organizations win state support. Instead, his argument relies on some outside motive for state officials to help relatively weak labor organizations. Gerber argues that this happened during the Great Depression of the 1930s when national politicians, notably New York’s powerful Senator Robert F. Wagner, sought to build up labor unions to restore purchasing power by raising wages. Politicians with similar concerns in Britain found little support among workers and unions; but they were welcomed by American labor in desperate need of support against overwhelmingly powerful employers. One might anticipate an extension of Gerber’s thesis to the last twenty years or so where British unions have turned to the state for support against powerful, anti-union employers who are behaving more like their earlier American counterparts, and American unions have found little response to appeals for labor law reform from state officials who no longer believe in Keynesian ideas about restoring purchasing power by redistributing income.

By integrating employers into a study of class conflict, Gerber’s work is a major advance. He adds a dimension to labor history, often written as if only workers were active participants, and to political history, which too often neglects the economy and social conflicts completely. Nonetheless, his analysis remains too narrow. His argument is essentially technological: rapid technological change in American industry led to a larger scale of production using semi-skilled workers where employers had the bargaining power to resist unions but slower technological change denied British employers this power. Immediately, one may question the direction of causality: was slow technological change the cause, or was it the consequence, of union strength? Were British unions strong because technological change was slow in Britain? Or was technological change slow because it was inhibited by strong trade unions? Recent work by Chris Howell, Trade Unions and the State (Princeton, 2005), suggests the latter. Dismissing the concept of collective laissez-faire as a myth, Howell rewrites the history of British industrial relations by showing the crucial role of state officials in establishing industry-level collective bargaining before World War I.

Gerber may also underestimate the importance of worker action in his analysis of the development of American labor law. Rather than the result of beneficent political action by liberal politicians with proto-Keynesian economic notions, the NRA and the Wagner Act can be seen as a response to labor and political unrest. An attempt to contain strikes by establishing strong union institutions, these laws were also part of a strategy by Democratic politicians to solidify the emerging Roosevelt coalition. Concessions to organized labor were meant to win working-class votes; and politicians hoped that established union institutions would hold these votes for the Democrats.

To be sure, these criticisms are a little unfair: the text of Gerber’s book is only 152 pages and we should not expect him to do much more than to present and support an intriguing new thesis in that space. As it is, Larry Gerber has written an important book that adds to our understanding of class conflict and the state. It should be read by anyone interested in comparative twentieth-century history or the history of industrial relations systems.

Professor of Economics at the University of Massachusetts at Amherst, Gerald Friedman has written numerous works in labor economics and in the history of France and the United States in the nineteenth and early-twentieth centuries including a study of the origins of the modern labor movement, State Making and Labor Movements: France and the United States, 1876-1914 (Cornell, 1999). He is currently writing a book on union decline in advanced capitalist economies, titled, Reigniting the Labor Movement (Routledge, forthcoming).