3.17.2011

Smith on unions

With the craziness in Wisconsin going on, one might be inclined to ask: Where does Adam Smith, the "father of modern economics and capitalism." stand on the issues of labor and unions?

From Smith's "An Inquiry into the Nature and Causes of the Wealth of Nations" (via The American Conservative):

Our merchants and master-manufacturers complain much of the bad effects of high wages in raising the price, and thereby lessening the sale of their goods both at home and abroad. They say nothing concerning the bad effects of high profits. They are silent with regard to the pernicious effects of their own gains. They complain only of those of other people. 
...
What are the common wages of labour, depends every where upon the contract usually made between those two parties, whose interests are by no means the same. The workmen desire to get as much, the masters to give as little as possible. The former are disposed to combine in order to raise, the latter in order to lower the wages of labour. It is not difficult to foresee which of the two parties must, upon all ordinary occasions, have the advantage in the dispute and force the other into a compliance with their terms. The masters, being fewer in number, can combine much more easily; and the law, besides, authorizes, or at least does not prohibit their combinations, while it prohibits those of the workmen. We have no acts of parliament against combining to lower the price of work; but many against combining to raise it.

1 Intelligent Comment(s):

Abner said...

Great post, though it should be noted that unions =/= public unions and private CEOs and shareholders =/= taxpayers. 95% of the complaint in WI is with public unions. Many conservatives and libertarians (myself included) respect the role of unions in the private sector.

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