A free market in labour: libertarians, employment and the unions

Trade unions are an interesting problem for libertarians. Although they are essentially anti-liberal forces, most attacks on trade unions historically stem from the authoritarian Right. Too often the conflict between unions and business leads to many potential subscribers to libertarianism supporting decidedly illiberal business practises, due to a misconception that one can either be pro-business or pro-union.

For a libertarian, employment must be approached in a manner that is independent of the interests and prejudices of either side. Employment legislation inspired by libertarian principles would at once counter the serious business abuses that justify trade unions whilst removing the ability of unions to act as monopolies.

A libertarian believes that human beings should be free to undertake exchanges with each other free from force, fraud or coercion. Trade unions found their origins in defending workers against abuse by business, abuse often supported by the state. A libertarian state that functioned properly would not collude with anti-liberal business practises and would protect people from forceful, fraudulent or coercive practises that might necessitate trades union membership.

But libertarian employment law would undermine unions too. Like most things, labour is a commodity. A job is a contract between an employer and an employee in which the latter’s labour is traded at a given rate for remuneration in wages and perhaps other perks. Despite this trades unions are not seen as what they are in business terms: cartels working to inflate prices (wage costs) by restricting the labour market. While the horrors of the closed shop and the flying picket have (for the most part, student politics aside) disappeared, the fundamental leverage behind a strike is the idea that a union can exercise a labour monopoly and use the threat of withdrawal to coerce employers.

No libertarian system would ban strikes or unions. People are free to associate with each other as they wish and no libertarian would argue that a worker does not have the right to withdraw their labour. What is critical is that a libertarian recognises the right of an employer to replace that labour. In the same way in which a libertarian government would fight monopolist practises on the business side of industry, so it should strive to create a free market in labour. Not only would this be morally right in accordance with libertarian principles, but it would allow the market to adjust British wages back to internationally competitive levels.

Henry Hill is the winner of the 2011 Young Writer on Liberty Award.