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How Much of the Pie?

They Never Intended to Share It

by DAVID MACARAY

One of the criticisms you hear about organized labor is that unions are too adversarial in their dealings with management.  They’re too belligerent.  People tell you that instead of seeing themselves as management’s “enemy,” unions would be better served by seeing themselves as management’s partners, because, in effect, that’s what they are.  Labor unions being regarded as partners?  Working people being treated as equals?  Wow, those are great ideas.  In fact, they could be the basis of an excellent science fiction story.

Labor unions—organized collectives established to represent the interests of employees—haven’t always been the first choice of discriminating workers looking to better themselves economically.  Historically, union membership was often pursued only after earlier and more ambitious efforts to get a larger slice of the pie had failed.

Once it became clear that the wage-based labor system had too many inherent defects to provide long-term security, American workers began seeking alternatives.  One of
those alternatives was the “cooperative.”  This was an arrangement where the workers independently owned and operated the business, and split all the profits among themselves.  They didn’t need a union to fight management because they were management. U.S. cooperatives go all the way back to the 19th century.

Perhaps the most famous co-op in history was the Players League, established in 1890.  The Players League was a group of professional baseball players who decided they didn’t need to be “owned” by someone in order to flourish.  These weren’t marginal players or bench-warmers who recklessly set out on their own, believing they had little to lose.  The Players League (composed of eight teams) featured some of the biggest stars of the day, including legendary Hall of Famer Mike “King” Kelly.

While this was a revolutionary concept to many, the players themselves saw it as basic arithmetic.  In their view, all you needed to become a successful baseball team was a field to play on, teams to play against, and fans willing to pay to watch you play.  What could be simpler?  More to the point, what were the advantages of having a group of businessmen “own” you?  Alas, the Players League lasted only one year, falling victim to major league baseball’s threats, pleas and considerable muscle.

Manufacturing workers took a similar tack.  Because it was their sweat and toil that yielded the profits, workers decided to eliminate the middle-man, and run the operation themselves.  While it was a noble and ambitious endeavor, what killed the co-ops was, among other things, a terminal case of undercapitalization.  They simply didn’t have the cash to keep these enterprises going.  And unlike “conventional” businesses that always had the banks to turn to, worker co-ops found it difficult to get loans or attract investors.

Another creative alternative to the traditional wage-based format is what is loosely called “profit-sharing.”  Although profit-sharing schemes have been notoriously unreliable (e.g., profits are concealed, payments are deferred, benchmarks are manipulated, etc.), the premise itself is tantalizing.  You work for a base wage, but you also share in the profits.  In short, instead of simply being hired help, you are now part of the company.

It shouldn’t surprise anyone to learn that the reason many of these profit-sharing arrangements “failed” was because they were too successful.  It’s true.  Some of these profit-sharing ventures turned out to be wildly lucrative.  And once management saw how much money their employees (both salaried and hourly) were raking in under these profit-sharing plans, they immediately dismantled them.

Their thinking ran along these lines:  Why on earth are we giving people 6-and 7-percent annual raises when we know for a fact (by reviewing their earnings history) that they’re more than willing to accept 3-percent raises?  Why would we do that?  To management, the answer was simple.  You don’t do it.  Instead, you go back to the standard, wage-based format where workers are treated as “overhead,” and you take your chances at the bargaining table.

This is why the labor-management dynamic is adversarial.  The acquisitive impulse is biological.  Labor has to fight for every scrap because management is biologically hard-wired to resist any form of sharing.  No matter how profitable a business is, management cannot bring itself to part with one more nickel than is absolutely necessary, and therein lies the crux of the relationship.

Labor unions aren’t the solution to everything.  But given the unfortunate track record of worker co-ops and profit-sharing schemes—coupled with management’s detestation of sharing the wealth—unions (with roughly 14.8 million members) are clearly the only thing keeping the American working class afloat.

DAVID MACARAY, an LA playwright and author (“It’s Never Been Easy:  Essays on Modern Labor”), was a former union rep.   He is a contributor to Hopeless: Barack Obama and the Politics of Illusion, published by AK Press. Hopeless is also available in a Kindle edition. He can be reached at dmacaray@earthlink.net