Unequal Power in Labor Relations and Cosmopolitan Ethics

Introduction: Capitalism and the Manufacturing Division of Labor

The unequal power relationship that characterizes many employment relationships is a defining feature of industrialized capitalism. Capitalism itself is defined by the manufacturing division of labor, which systematically divides the work of economic production into limited operations. The result is that no single worker in the capitalist system knows how to produce a good from start to finish, destroying the traditional notion of occupations such as those of artisans or craftsmen.

Because each worker is only qualified to perform a particular, often narrow, task — one that creates no value in itself but must be combined with the fruits of other tasks by the capitalist — the worker is at the mercy of the capitalist who owns the means of production. The dominant mode of employment arising from the manufacturing division of labor is wage labor. In wage labor, a worker does not work to improve his own property, as in agricultural labor. Rather, the worker, who does not own the means of production in capitalist society, works for wages alone.

The capitalist system results in an exploitative relationship between the employer and the large pool of wage laborers eager to work at whatever wage the market will bear. Because all wage labor is directed at a narrow aspect of the production process, wage laborers can be moved and substituted without compromising production. The manufacturing division of labor splits the production process to the point where many workers are qualified to perform one particular task, but none can perform every task.

Measures to Balance Unequal Power Relationships

This gives the employer enormous bargaining power over the wage laborer. The wage laborer must seek an employer who can make use of the narrow task the laborer is qualified to perform. The employer, who can choose among numerous wage laborers, can set wages as low as the market will accept. As illustrated in Adler's example of the maquila worker Balbina, many in such societies consider any type of job — no matter how unpleasant or underpaid — a gift, an "answered prayer," as Balbina put it (Adler, 15). Employment is considered such a gift in these economies that employers can subject workers to probationary periods, even though the cost of hiring an inadequate worker is minimal given the low skill level required. Even foreign workers in the United States experience the effects of this unequal bargaining dynamic, as Bowe's account of local economies in Florida demonstrates. Foreign workers are often expected to work twice as hard as the average American for less pay and without complaint, as the case of the Indian welders illustrated (Bowe, 77).

The unequal power relationship in industrial capitalist society is rooted in the unequal bargaining positions between employers and employees in the labor market. The organization of labor is a natural check on the superior bargaining power of the employer. Through organizations such as labor unions, employees can deploy their greatest — and often only — bargaining asset: their willingness to work. Labor organizations allow employees to present this asset collectively, the most visible exercise of which is a labor strike. Labor unions are often the most effective means of balancing bargaining positions because they are the most natural means, arising organically from organization among a particular group of bargainers in the market. Organized labor does not require government intervention to form, though it often requires government protection against suppression.

Organized labor has one major potential drawback to overall economic productivity: its primary instrument, the strike, halts production. Such disruptions can be harmful to the broader economy as well as to the employer. However, given the undesirable loss of income suffered by striking workers, strikes are a very rare last resort — especially in an exploitative economy. In this sense, strikes are self-limiting and should not be seen as a necessary or even likely consequence of labor organization. The broader economy is rarely, if ever, materially affected by strikes. Moreover, strikes can be averted through advance negotiation or halted by judicial injunctions. The proliferation and development of labor organizations is, on the whole, an effective means of balancing unequal employment relationships without fundamentally compromising market activity.

Contract Law as a Check on Employer Power

Another check on the bargaining power of employers is contract law. In certain legal regimes, such as Anglo-American contract law, employers are prohibited from holding employees to duties arising from illegal contract terms. Contract terms may be held illegal on grounds of unequal bargaining positions or duress, thereby relieving employees of the obligation to perform duties under such a contract or remedying non-performance. Contract law could, for example, allow an employee to withhold labor that was paid for under an unconscionable agreement.

However, contract law is only effective when the employee still possesses something the employer wants — primarily labor or money. When the employee has nothing that the employer cannot readily obtain elsewhere without significant loss, contract law does little to balance the power relationship. In a labor surplus, the employer does not depend on any particular unskilled employee's services and may use the courts to enforce compliance, rendering contract law largely ineffective for employees in most common employment situations.

Conclusion: Toward a Constructivist Approach

Many of the measures proposed to balance unequal power relationships in modern economies operate by restraining employer bargaining power, or the abuse of it. They interfere with natural market forces — primarily bargaining — under the capitalist mode of industrial organization. In some ways, they represent checks on pure capitalism, designed to reduce its worst excesses.