A little more on Feudalism, Labor Unions and the Creation of “Free” Labor Through Regulation

There were comments I wanted to share on the previous Labor Day post on feudalism, labor unions and the creation of “free” labor through regulation. From Corey Robin:

the contracts workers entered into freely had these features you mention, regardless of whether workers/employers tried to stipulate otherwise. In other words, principles like entirety were considered to be structural features of the contract, which judges enforced, even in the face of express stipulations by the parties to the contrary. Even if legislatures tried to overturn these provisions. That’s the other piece of “feudalism” that often gets lost in these discussions. So the notion that there was a right to free contract — which is so common in conservative and liberal and left accounts of the period — actually overlooks the fact that neither party to the contract (but especially workers) had the juridical right (let alone practical ability) to determine all of the content of those contracts. That’s what the structure of common law and judicial power entailed, and it remained intact — despite the Constitution and an array of social movements to the contrary — well into the turn of the century. This, by the way, was also true of marriage contracts.

Also I hadn’t realized that friend-of-the-blog and economic historian Suresh Naidu has dug into post these topics in two pretty impressive papers.  First up, dealing with some of the serfdom aspects of 19th century Southern labor, is Recruitment Restrictions and Labor Markets: Evidence from the Post-Bellum U.S. South. Abstract:

This paper estimates the impact of recruitment restrictions on job-to-job transitions and wages in the post-bellum U.S. South. I estimate the effects of criminal fines charged for enticement (offers made to workers already under contract) on sharecropper mobility, tenancy choice and agricultural wages. I find that a $13 (10% increase in the fine charged for enticement lowered the probability of a move by black sharecroppers by 12%, lowered daily wages by 1 cent (.1%) and lowered the returns to experience for blacks by 0.6% per year.  These results are consistent with an on-the-job search model, where the enticement fine raises the cost of offering a job to employed workers.

Here’s an interesting result from his paper on criminal penalties against industrial worker in 19th century England, Coercive Contract Enforcement: Law and the Labor Market in 19th Century Industrial Britain (my bold):

British Master and Servant law made employee contract breach a criminal offense until 1875.  We develop a contracting model generating equilibrium contract breach and prosecutions, then exploit exogenous changes in output prices to examine the effects of labor demand shocks on prosecutions.  Positive shocks in the textile, iron, and coal industries increased prosecutions.  Following the abolition of criminal sanctions, wages differentially rose in counties that had experienced more prosecutions, and wages responded more to labor demand shocks.  Coercive contract enforcement was applied in industrial Britain; restricted mobility allowed workers to commit to risk-sharing contracts with lower, but less volatile, wages.

Fun fact from the paper: “10,000 Master and Servant prosecutions per year between 1858 and 1875 – more prosecutions than for petty larceny.”

Notice that bolded text. Under these feudal contracts, contracts that work to reduce mobility, wages are both lower and less volatile. People are worried about volatile wages, and, especially since the work of Jacob Hacker put wage volatility onto the agenda, it’s a focus for liberals as well.

One way to deal with wage and income volatility is to adopt feudal mechanisms – let your employers jail you if they aren’t happy, let them hit you, let them prevent you from leaving your job, let them pay you once a year and be able to threaten that pay. Another way to reduce this kind of volatility is through the liberal social safety net – provide social insurance for the unemployed, delink health care from employment, make sure a baseline old-age pension is in place for the elderly, etc.

Which option for income volatility reduction do you prefer? If you are a strict libertarian, you’d have to go with the former. If you don’t have the freedom to enter freely into the most coercive labor contracts imaginable, are you even free? The road to serfdom is a government traveled road only. I understand the logic of it, but I’d go with the second option instead.

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4 Responses to A little more on Feudalism, Labor Unions and the Creation of “Free” Labor Through Regulation

  1. Corey Robin says:

    There’s an another interesting angle to pursue here, Mike. The whole debate about the feudal structure of the 19th century American workplace was kicked off, in part, by Louis Hartz’s famous argument in *The Liberal Tradition in America* that the reason there’s no socialism in America is that there was no feudalism in America. Hartz’s argument — which, whatever you think about it, is nothing short of brilliant; despite my many disagreements with it, I think it’s the all-time best book, next to Tocqueville’s Democracy in America, on American political culture — is that socialism arises from the collision feudalism and capitalism: the proletariat learns its class consciousness from the bourgeoisie, who learned it from their conflict with the aristocracy. So without a confrontation with feudalism, you get no confrontation with capitalism. Anyway, the end of your post suggests that there may indeed be an elective affinity of sorts between social democratic regulations of the workplace and feudal regulations. The very fact that those are the two choices you posit as alternatives/answers to wage volatility suggests the connection. This is also, incidentally, William Appleman Williams’ argument in Contours of American History, where he suggests that Marxism is the inheritor of feudalism, and liberalism (understood as laissez-faire unregulated capitalism) is the great detour/exception. Or so Greg Grandin tells me. And of course in some ways Hayek is playing off that connection as well in his Road to Serfdom. I don’t in the end really buy the whole argument but just wanted to alert you to the deeper resonance and background buzzing around your post.

  2. Greg says:

    The more I read their stuff, the more I think libertarians want slaves. They harp on nominal liberty, and totally disregard effective liberty. Nominally free, effectively slave. They seek to destroy the things, the commons, which makes men effectively equal, and imagine an effective contract can exist between those who are not equal.

    You will have all the rights you can afford, and since the consequence of unrestrained free markets and elimination of the commons will be that most (almost all) people will have nothing… Consider the wealth distribution already…Hmm. Most libertarians want to be slaves…?

  3. Pingback: In advance of ‘the speech’ « thecurrentmoment

  4. Blissex says:

    «libertarians want slaves. They harp on nominal liberty, and totally disregard effective liberty.»

    The whole “purpose” of libertarianism is social Darwinism: winners take all, and losers lose all.

    To foster that they astutely campaign against liberty of contract, and naive suckers like the blog author fall for that quite innocently. Because this option is strictly libertarian:

    «Another way to reduce this kind of volatility is through the liberal social safety net – provide social insurance for the unemployed, delink health care from employment, make sure a baseline old-age pension is in place for the elderly, etc.»

    because free people can voluntarily enter into mutually advantageous collective insurance agreements. The “libertarian” logic is that freely entered mutually advantageous insurance agreements should be forbidden, or breaking them should be permitted, because the only liberty they want to permit is that of individual risk tasking. That is not about liberty, it is about social Darwinism.

    The big lie of libertarianism is that membership in the State and any collective mutual advantage insurance agreements it establishes is not voluntary, when everybody knows that there is a market in State memberships, and if one does not like to be a member of the Canadian commonwealth one can purchase membership in the Monaco Principality.

    Having Canadian state membership and paying the related fees to be a member of the related insurance schemes is a voluntary exchange of mutual advantage, and if one does not like that bargain, they are entirely free to buy a different bargain from some other state membership fee provider.

    Libertarians are like people who coffee at Starbucks is too expensive and they don’t want high prices for a cool cafe` atmosphere; they are entirely free to buy they coffee somewhere else, instead of arguing that Starbucks infringe their liberty to have a cheap coffee in a cheaper looking place.

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