What's Fair?

Todd's opening remarks at The Holleran Center for Community Action's Panel:
"What’s Fair? Current Issues in Trade and Labor Organizing"

Thank You for that wonderful introduction. I should start with a quick disclaimer and that is this: I’m here today sharing my personal thoughts and experiences, and not as a representative of any organization that I am affiliated with. The brief bio is meant merely for identification and proof of credentials I suppose.

So…that being said, I’d like to start by reading a short quote from Adam Smith’s book The Wealth of Nations . Is everyone familiar with this book? Or at least with Adam Smith and the concepts that his name embodies? Smith, in simple terms, is kind of like the Godfather of Free Market capitalism. The quote is this:

"It was not by gold or by silver, but by labor, that all the wealth of the world was originally purchased."
Sounds like something Karl Marx might have said?
So I’d like to use the premise of this quote as a starting point. “Labor creates wealth” is essentially what he said. “labor creates all wealth.”
It’s a very simple concept, and if you have any doubt, just consider any profitable corporation on an average day. What would happen if nobody showed up to work? There would be no product manufactured or services rendered or whatever the company does would not get done; hence the corporation would make no money .
Well… I guess the CEO and shareholders could go to work and do all the jobs in place of the wage earning employees and still share all of the profit….. but that would of course no longer be capitalism….It would be worker owned and controlled enterprise, or as some might say, socialism…
Okay. So we’ve determined that somebody has to do the work in order for the company to make money right? If the workers don’t show up the company goes belly up. Now lets consider the opposite. What happens if the owners or management doesn’t show up for the day? Well, this actually happens all the time and the company still makes money. Why? Because the surplus value, or profit, of any company is generated by it’s labor force.
The capitalist plays the important initial role of funding and starting the business, but the daily operations and hence income are results of the labor force.
Now some neoliberal economists might argue that that I’m all wrong about the necessity of paying workers in order to make profit…. Some would even argue that machines could do much of the work, but this fails to consider two very important issues: #1. Someone has to make the machines, and: #2. more importantly, even if machines made everything, including themselves, who would be able to buy their products? I mean if all the workers are replaced and presumably making zero income because they are unemployed, they certainly can’t afford to go out and purchase the goods and services made by these machines.
So the premise “labor creates all wealth” is actually a two-sided coin: Labor creates the wealth on one end as workers creating commodities, and on the other end as consumers purchasing them.
So, where the heck does fair labor practice come into this whole scheme?
Pretty much everywhere.
As we all know, corporations want to get as much work for as little pay as they can out of their employees in order to reduce their “bottom line” and increase their profits. Workers, on the other hand want to be paid as much as possible for their time and efforts.
This is a constant tug-of-war between employer and employee, between capital and labor, and it’s array of outcomes can be represented on a simple spectrum. On the far left of the spectrum, the worker would get back exactly what he or she produced. If I make one car per day, I should get paid 1 car per day, or the equivalent of 1 car per day of other goods, because really, who needs 260 cars per year? On the other end, the far right of the spectrum, there would simply be slavery, where the worker is given only enough to sustain his survival so as to continue working while all of the value of his or her work is kept by the employer.
What we have in the U.S. today falls somewhere in between these two extremes and in any given year can be further to the left or the right of where it was the previous year. Throughout the world we find varying degrees, more to the left in Europe and way to the right in parts of Asia, Central and South America.
So, what determines this?
I would argue that the amount of the value workers create that they actually get to keep is determined by the extent of their power to demand a more fair share from their employers, a la unionism.
The business-side reply to this exercise of power by employees is pretty straight forward. “We are putting our capital on the line in hopes that it will have a good return. We deserve the extra value because we are willing to take the risk of losing it.”
This is logical to some extent, but it precludes several pertinent facts. Most notably, that the worker is also engaging in risky behavior, perhaps with more dire consequences, because his livelihood and family depend on his or her income and hence the success of the capitalists business venture.
Furthermore, the worker does not have the luxury of diversification that the capitalist enjoys. If workers could diversify their employment the way that investors diversify their portfolios, they might be more willing to engage in more risky behavior as well. I mean, if I could work Monday at Pfizer, Tuesday at The Day, Wednesday at Aetna, Thursday, etc… I could afford to lose one of those jobs and still have an income. But workers are instead forced to carry all of their eggs in one basket as the saying goes, and therefore they need that basket to be pretty sturdy and filled with as many eggs as possible.
So the worker wants his or her one job to pay well.
But how can this one individual worker ensure that her salary is not forced down to the point of subsistence? If she speaks up by herself or makes too much fuss, the boss can simply terminate her…. And a small check is better than no check after all, right?
Well, one proven way to improve wages and working conditions is to organize with fellow workers and make demands collectively. Through this process, the American labor movement has won much for working people in this country. Not just for union members, but for all workers across the board.
Corporate voices, on the other hand, say that unions stifle their competitiveness and profitability. But, few stop to consider that some of the most prosperous and stable decades of the past century were those where the percentage of workers who were in unions was the greatest. This balanced the play between employers and workers and in-turn created the modern middle-class… the folks who earned enough money at work to purchase goods from the companies they and their neighbors and friends worked for.
This fragile balance has been drastically shifted over the past 3 decades and with the decline of unions in America so too has the middle class eroded.
Wages for the bottom half of society have been stagnant and in many cases declined while those of the top 1% have doubled, those of the top 1/10th percent have tripled. The ratio of CEO income to average worker pay was anywhere between 30 and 70 to 1 in the 1970s, it is now between 500 and 700 to 1 and in some cases 1,000 to 1. After three decades of incredible economic growth the working class still remains in the same boat, a boat which was not “lifted by the rising tide” as the free-market trickle-downers like to argue.
The tug-of-war is obviously uneven, but how is it that the workers in their roles as consumers can still continue to support this economy?
Well, the corporations have managed to have their cake and eat it too. They have both reduced wages and at the same time maintained a large enough pool of consumers to purchase their goods and services.
The main way in which they have accomplished this over the past few decades in this country is by outsourcing jobs to countries with little or no labor or environmental laws. This tactic gives them: 1. Cheap labor- -often children, and 2. The ability to sell their products for lower prices back here in the U.S. to consumers who are earning less than they used to.
The American middle class standard of living was built by labor victories, but is now sustained by cheap labor in Asia and of course endless consumer credit debt and also two full-time household incomes replacing traditionally just one.
This poses a moral dilemma to anyone of conscience.
It would seem that what is considered fair here in the U.S. should also be true for workers over seas that manufacture goods that we consume here. It is illegal to employ children here and we have minimum wage laws here, but it is not illegal to purchase goods here that were made somewhere else under working conditions that would be illegal here. This represents a large disconnect in the American psyche and it is why folks like Marcie and David and others who promote “Fair Trade” play such a vital role in creating a more fair world. It is up to us as consumers to avoid supporting exploitation whenever possible and it is up to us as workers to actively stand up to exploitation everywhere, not just in our own backyards anymore. Capital is global and labor must also be global in order to stand up to it’s injustices.
The tug-of-war will be around as long as capitalism is around. The past victories of labor do not mean that organized labor is no longer necessary. Victories of decades past are not guaranteed forever. Legislation can be over turned, laws can lay unenforced, regulatory agencies can be stacked with corporate insiders.
If we are to define fair as the ability to earn a respectable living by working and still have time to live outside of work, we will realize that most of the working masses around the world are not treated fairly.
The UN’s gini index, which measures the standard of living in all countries, when compared with union membership data for the same countries shows a strong positive correlation between the percentage of union membership and the quality of life.
When workers are able to organize and make demands on very profitable employers they are able to increase their stake and make better lives for themselves. That’s fair.
And I think I’ve probably overrun my time although I’ve hardly said as much as a drop in a barrel of what I’d like to say, but perhaps some of your questions will bring other areas to light.

Thank You.
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