Economic crises are as endemic to capitalism as is its resilience. Nonetheless, the system seldom survives in the terms predicted even by its most powerful players. The corporate CEOs that dominate contemporary capitalism know that the system cannot survive in its present incarnation. Most, however, demand that however much they rely on public dole, they should continue to dominate business and finance.
The Employee Free Choice Act is at the center of a battle to challenge such hubris. For more than a year, right-wing groups have lavishly funded anti-labor initiatives. These charge that granting employees the right to choose either card check or secret ballot elections would subject workers to possible workplace coercion. Yet their oft stated concern for workplace democracy won’t stand common sense scrutiny.
Would American workers consent to hundreds of millions in bonuses to corporate CEOs who trashed their businesses? Or would workers accept a generation-long wage freeze even as their productivity increases every year? Not surprisingly, polls show that a majority would like to join independent unions.
Since corporate claims of concern for worker democracy ring hollow in the face of CEO crime and abuse, employer interests have opened another front in the war: this is not a good time to unionize. Unions will increase labor costs, thereby making it impossible to hire new workers. This new corporate tack is based on an ideol-ogy being discredited every day. The very inequalities fostered by corporate workplaces led to the current crisis. Underpaid workers had insufficient income to purchase the goods their own more productive plants produced. Future profit-making possibilities came to depend on perilous forms of “creative finance.”
The corporate offensive against unions relies on two myths. Free markets guarantee full employment and corporations are natural ways of doing business. The corporation, however, is a creation of government and law. From its inception it has been the recipient of special privileges. Those privileges are justifiable only to the extent that a public purpose is served.
Corporations can raise capital far more effectively than business partnerships. Government grants them limited liability. The owners of the corporation, its shareholders, only stand to lose what they have invested in the stock. They cannot be held personally liable for any other debts if the company goes bankrupt.
Government allows individuals to form corporations in order to facilitate economic growth. Nevertheless, government will be less effective in promoting this goal if it does not impose the right rules for corporate governance. As economist Dean Baker points out, “The rules placed on corporate conduct are part of quid pro quo in-volved in establishing a corporation.”
Lax anti-trust enforcement, no-bid contracts and special favors now enhance corporate power. These have fostered domination of many sectors of the economy by a few firms. Major corporations no longer negotiate with workers on a level playing field. Workers suffer diminished wages. Smaller suppliers also often see their margins squeezed. The markets that sustain many small businesses shrink.
Americans historically have worried about corporations abusing their power. That concern often manifests itself in support for small businesses, viewed both as job creation machines and escapes from the tyranny of the boss.
Yet small business is no complete answer to corporate power. Small business can be a source of innovation and flexibility. Nonetheless, return to an early 19th century world constituted primarily by small enterprise is neither likely nor desirable. Large corporations are often vital to the economies of scale of which we are justly proud. And though small business is, as President Obama argues, our largest source of job creation, small-business failures constitute our largest source of job destruction.
Only a strong union movement can provide the countervailing force that will sustain equitable wages and a more robust democracy. Unions as countervailing power can also supplant much of the need for detailed government regulation.
Many Maine small-business leaders fear unions. They should reconsider. As Jack McKay of Food and Medicine recently pointed out on Bangor television, union workers care about their jobs and won’t push management with unsustainable demands. But by the same token, when WalMart fails to share its growing profits with productive workers, it drives all wages down and threatens job growth and prosperity everywhere.
John Buell is a political economist who lives in Southwest Harbor. Readers may reach him at email@example.com.