LABOUR IN THE ERA OF CAPITALIST GLOBALIZATION

A HISTORICAL ANALYSIS

André Mommen

CEPS
Maarssen
2010

1
Globalization includes rapid growth in imports, exports, and the share of trade in the world
economy, and even more rapid growth in the international flows of foreign investment around
the world. The term is also used to refer to the international convergence of rules,
regulations, and even the social structure and role of government in many countries. This
process is often viewed as a neo-liberal "race-to-the-bottom" in global working standards,
wages, and working conditions. Economic competition, along with America’s trade
liberalization and European Union’s (EU) deepening economic integration and geographical
expansion are challenging the role f he trade unions. New forms of work, company
restructuring, welfare-state reforms and trade liberalization have weakened the systems of
collective bargaining until now prevailing in most developed capitalist countries. A common
trend across the EU, Japan and the USA is towards consolidation and merger of union
organizations. Union density is declining in Japan, the USA and almost all European
countries in recent years. Even where union membership losses have been stemmed,
increasing employment levels in many countries have meant that union density has fallen.

The survival of restraints on neo-liberalism in most countries owes much to their

institutionalization after the Second World War and to Europe’s divided past. The continuing
existence of a distinct ideological dimension associated with social integration, which
embraces commitments to social justice, fairness and class harmony, are present in all trade-
union movements. Richard Hyman is right when he calls for greater sensitivity to the
complexities of trade-union ideological dimensions, and to the pluralistic and contested
character of European trade unionism (Hyman 1996). In the USA, the trade-union movement
was predominantly pragmatic and combined market orientations with social-integration
ideologies. In Europe, unions are affiliated to political parties or they have contracted close
ties to them, which helps them establishing neo-corporatist forms of interest intermediation.
However, these forms of interest intermediation are challenged by economic and social
transformations engendered by transnational capital and the ‘new economy’. Well-paid
technicians, engineers, and designers became independent contractors. ‘Consultants’ and
other ‘free agents’ are the ‘flexible workers’ par excellence, because they are escaping from
any collective agreements. With them emerged millions of involuntary contingent workers,1
most of them parked into precarious small jobs, who are excluded from any pension packages
and other forms of job security. These unorganizable workers are forming an ever-growing
workforce submitted to ‘alternative arrangements’. Apart from the regular labour market, a
large permanent workforce of temporary employees, whereby free agents bid for jobs, is
rapidly growing. Are we returning to the old ‘sweating’ system of farming out work to
competing contractors according to the nineteenth-century model? At any rate, labour history
is full of this kind of little boot-traps. For the time being, pre-industrial relics have emerged as
new tools in the hands of the post-industrial managers.

Beyond the ‘Dunlop model’

1
In 1997 there were 5,6 million workers with contingent jobs in the USA ((Ross 2000: 79).

2
Until the 1970s it was assumed that unionism adopting the ‘Dunlop model2’ would expand in
all developed capitalist countries and that collective bargaining on an industry-wide base
would become the preferred method of setting wages, hours, and working conditions. This
proved to be the case in the 1950s and 1960s in North America and Western Europe. But the
economic slump of the 1970s and 1980s gave rise to a neo-liberal reaction, trade liberalization
and deregulation. This meant the end of the so-called ‘Dunlop model’ (Dunlop 1958) that
prevailed in post-World War II.

In Dunlop’s model, attention was also turning to other actors and their interactions, and
concluded with an explanation of the rules governing employment relationships that evolved
out of these interactions. According to Dunlop and his school (Kerr, Harbison, Dunlop, and
Myers 1960), the logic of industrialization would lead to a convergence toward a common set
of formal arrangements as capitalist mechanisms expand to all economic sectors. Therefore,
the rise of industrial unionism and industry-wide bargaining has to be considered as
inevitable. The merits and shortcomings of the Dunlop model were extensively discussed in
later works on American industrial relations (Kochan, Katz, and McKenzie 1986). In addition,
Marxists (Davis 1980) and institutionalists (Goldfield 1987) argue that the functionalist
Dunlop model does not pay enough attention to the nature of American capitalism,
international competition and the process of capitalist accumulation determining the
entrepreneurial and trades-union strategies. Moreover, the rise of industrial unionism and the
subsequent industry-wide bargaining practices should be seen as a response of organized
labour to monopoly capital and Taylorism hollowing out the very base of craft unionism after
World War I, not as the outcome of a modernization process affecting governmental policies
and management strategies.

The ‘Dunlop model’ was the outcome of a long history of class conflicts, sectoral struggles
and economic changes leading to the formation of a semi-skilled industrial working class
concentrated in large production units. In the history of industrial relations, three broad stages
can be discerned in the transition from craft unionism to industrial unionism and the rise of
collective bargaining systems:
• Task differentiation breaking down the craft into a series of simpler jobs with foremen
still knowing the entire production process and with a wage system based on piece
rates;
• Increasing capital requirements with the introduction of simple machines for some
tasks in big workhouses and putting-out for some tasks still done by hand;
• Large factories with power-driven machinery and the end of putting-out practices. As
long as a retail or custom-order market existed local craftsmen could survive in their
old manner, especially in local a luxury markets and defend the traditions of craft
unionism during the first decades of monopoly capitalism (Hirsch 1978: 15-36).

2
According to Dunlop’s system model, analysis of industrial relations should begin by considering the various
environmental contexts that affect employment relationships economic forces, technology, and the broad
political legal and social forces that determine the power of labour and management. Dunlop was on the National
Wear Labor Board and consulted with the Office of Economic Stabilization and the Office of War Mobilization
and Reconversion. After the war, Dunlop returned to Harvard. He served as Chairman of the National
Commission on Productivity (1970-1975) and chairman of the Construction Industry Stabilization Committee
(1971-1973). He was also director of Nixon’s Cost of Wage Council (1973-194) and Ford’s Secretary of Labor
(1975-1976) until he resigned in a dispute over policy. He served Clinton as chairman of the Commission on the
Future of Worker-Management Relations (1993-1995).

3
Dunlop’s model worked fairly well as long as the environment remained stable. However, his
model is now outdated. Since then, international pressures on national economies and
wage levels have increased. In practically all countries union membership does expand
any more. Today, labour power is currently concentrated in the state sector (education,
civil service) and in older and mature industries, especially the older firms in those
industries, and the older plants within diversified firms. The growing and dynamic parts
of the economy are today unorganized. Especially the 1980s witnessed a significant
change in the system of collective bargaining and industrial relations. As a result of the
“disaggregation of the working class” (Hyman 1992) denoting a variety of processes
union power is declining now that a post-Fordist organization of production, also
described as ‘flexible specialization’ (Piore and Sabel 1984) or ‘flexible mass production’
(Boyer 1986), led to a growing diversification of the composition of the working force.
Employers became less interested in nation-wide patterns of industrial relations designed
to deal with macroeconomic problems and solutions.

The ‘Dunlop model’ emerged in the US at the end of World War II, but influenced practices
of collective bargaining in other capitalist countries. Typical for the USA was that there are
few national sectoral employer bodies with any bargaining role. Therefore, bargaining takes
place predominantly at enterprise or local level. Major business organizations such as the
National Association of Manufacturers (NAM) and the US Chamber of Commerce do not
deal with trade unions, though they have some role in developing policy on labour issues.
Collective bargaining plays a key role in industrial relations in most European states. In Japan
and the USA, collective bargaining is a relatively marginal activity, though it may have a
wider impact beyond its direct sphere, especially in Japan. Despite differences and a trend
towards decentralization, bargaining in the EU is considerably more centralized than in the
two competing competitor economies. Nonetheless, centralized systems of collective
bargaining at the intersectoral or sectoral level have been superseded by the growing
importance of company-based accords.

The purpose of this article is to address this debate and to answer to the question whether
recent changes in the world economy are fundamental. Economic liberalization and free trade
have made an important progress since the invention of Reaganomics and Thatcherism.
Deregulation and privatization have become twins guiding economic strategies of all
governments wanting to balance their budgets. These neo-liberal policies have affected the
social power balance between capital and labour and have fostered anti-labour policies
promoting more labour flexibility, wage cuts and a lean welfare state. Actual labour relations
are reflecting these profound environmental changes now that neo-liberalism has become the
predominant ideology of globalizing capitalist forces re-establishing pre-1914 economic and
social relations. My thesis is that changes which have occurred since the 1970s reflect deep-
seated environmental pressures that have been building up gradually as well as organizational
strategies that have been evolving quietly for a number of decades. I address this debate in the
following manner. First, I describe the growth of unionism from the very beginning as a
response to industrialism. Second, I analyze union practices as a response to the constraints
dictated by accumulation of capital globalization processes.

Prolegomena of trade unionism

Let’s start from the beginning when labour strategies and industrial relations were unknown
concepts. The main problem for the entrepreneur was the creation of work discipline in his

4
shop. In order to prevent workers from walking out employers locked the gates of their
factories. Absenteeism was a much more difficult phenomenon to deal with. Workers would
be absent on traditional holidays, on blue Mondays and on days when potatoes had to be dug.3
There was little that employers could do about this kind of absenteeism. Methods of indirect
employment in combination with outsourcing of tasks offered a solution to the delicate
problem of disciplining workers. Parents brought their children to the factory or the mines as
their own assistants. Kinship links provided an avenue to employment in the industrial towns
and mining areas. This family-based employment scheme was characterized forms of
subcontracting already known in capitalist agriculture. This family-based employment was
broken up by a series of technical and legal changes making these forms of subcontracting
less attractive to the employers. The introduction of automatic mules and the power-loom
weaving in combination with limitations to working hours of children opened the door to
more outsiders and broke the kinship system to pieces. From this moment on workers became
wage earners subjected to an individual labour contract and workhouse discipline.

As industry expanded throughout the nineteenth and twentieth century the cleavage between
workers and capital sharpened. Task breakdown and mechanization rendered craftsmen’s
skills obsolete, lessened their control over their work, and changed the content of their jobs,
but industrialization also altered the character of the work force itself and its organization. It
was not until the industrial expansion of the mid-nineteenth century that organized labour
came into its own as an economic and political force to be reckoned with. In most countries
national trade unions of skilled workers were founded in the middle of the nineteenth century.
Their success depended on their ability to organize skilled workers in the same branches of
activities or trades in order to resist to wage cuts and unemployment. At the same time the
failure of wages to keep pace with prices, the growth of mechanization that threatened the
jobs of skilled craftsmen in certain industries, and the influx of immigrants willing to accept
lower pay and poorer working conditions combined to create a demand for a coalition of
workers with the same skill belonging to the same trade. As industrialism made progress,
these skilled workers were confronted with an army of unskilled workers carrying out their
odd jobs as best they could. As more were needed for work as semi-skilled machine
operatives the same situation was repeated in jobs the technique of which was initially a little
more difficult. In skilled trades formal apprenticeship came to be less used mainly because the
increased mobility of labour and the expansion of employment made it impossible to procure
the practice of a particular craft as a privilege confined to those who had undergone sacrifices
of serving on apprenticeship. At the end of the nineteenth century it was estimated that British
trade unions which effectively restricted their trade to men who had been apprentices had only
90,000 members, and shipbuilding was the only large industry where apprenticeship was still
common.

Two fundamental options struggled in the nineteenth and early twentieth century for
predominance in the trade-union movement. One view was represented by the trade unions,
which drew the great bulk of their members from the skilled craftsmen; the other position
advocated bringing all – skilled and unskilled - workers into one big union. For sure, most
union leaders were by no matters revolutionaries. Many union leaders preached cooperation
between labour and capital, because they interpreted labour’s goals simply and pragmatically:
better wages, shorter working hours and improvement of working conditions. Though some

3
Many workers had a dual life over the cycle of the year as industrial and agricultural workers. In summer when
the coal trade was slack miners transformed themselves in harvesters. Many agricultural workers could pick up
enough of the miners’ skills to be eventually a perfect strikebreaker or competitor in the labour market
(Hammond and Hammond 1978a, 1978b, 1979).

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cherished utopian or anarchist ideas, the spontaneous ideology of the working-class leaders
was impregnated by pragmatism and democratism. As defensive organizations of skilled
workers the unions had survived throughout the depression of the 1880s. Though they were
worried by pressures coming from below as well as from above, they were prepared to fight
with tenacity their skills. The skilled workers feared the men from the ‘dishonourable’ trades
and therefore they campaigned against piecework, overtime and the laxity of apprenticeship
regulations. More serious to the artisan elite was the threat from new machinery. Especially
the quickening rise of the semi-skilled operative offered a direct challenge to the craft control
of the labour market through zealously maintained apprenticeship restrictions. All crafts
tended to succumb to inexorable division-of-labour pressures, which led to the creation of a
new generation of sweated labour, as in the notorious, immigrant-based cheap clothing
industry already was the case after the introduction of the sewing machine.

A fundamental long-term shift in economic power away from craft towards the skilled worker
was taking place especially in the new metal industries and construction works. Ironworking,
engineering and shipbuilding were all specialized occupations attracting skilled workers
tramping in search of varied, often seasonal employment. Manufacturers introducing new
methods and machinery to increase the volume of production hired also cheaper and more
tractable labour to keep their selling prices lower. The versatile artisan found himself having
to specialize in order not to disappear altogether with the inflow of unskilled workers. The
working classes provided three possible sources of cheap labour: women, children, and
immigrants. In the pre-industrial workshop teenage apprentices and women had become a
source of increased exploitation. As apprenticeship declined with the progress of
mechanization and social legislation forbade women’s labour in mines and in some trades
adult male immigrants offered new opportunities to the employers.

The workers were gradually forced to protect themselves by nation-wide combinations as

greater power passed to the owners of capital. Craft unionism still nurtured a narrow,
sectional mentality, but its eroding position had made the skilled artisan sensitive of his
changed position. Already by 1860 the British labour aristocracy was concerned with
maintaining status within a vertical craft structure. Skilled cotton operatives had federated into
the Weavers’ First Amalgamation (1858). Though these workers did not accept the free
market as such, they accepted the existing liberal organization of society. They still attempted
to enforce a strict apprenticeship system as long as they could survive in a fragmented,
subcontracting economy which persuaded people to believe that they might one day rise to
mastership. This explains why John Bright, the self-proclaimed ‘terror of the squires’ and
himself an industrialist could trust on a considerable working-lass following, while Karl
Marx’s International Workingmen’s Association made only a slight impact in Britain
(Robbins 1979).

The assumption that working men as working men rather than as lumberjacks or odd fellows
or Methodists had a common interest which required organization and representation was
rather new in the first half of the nineteenth century. For most working people the crucial
experience of industrialization was the change in the nature and intensity of exploitation. In
the view of E.P. Thompson the industrialization process brought apart from intensified
exploitation, greater insecurity, and increasing misery also an intensification of political
oppression (Thompson 1968: 207-232). Manufacturers coalesced with landowners in order to
keep control over their employees. The Hammonds (1978a, 1978b, 1979) said that in effect
the state abdicated in favour of the employers so far as labour policy was concerned:
“Workmen were to obey their master as they would obey the State, and the State was to

6
enforce the master’s commands as it would its own.” (Hammond and Hammond 1978b: 80).
However, the workers were not entirely at the mercy of their masters. Illegal unionism seems
to have kept a potent force in certain trades.

Workers were able to believe that the government’s anti-protectionist policies were to blame
rather than the driving down of prices by intense internal competition. The conclusion was
that both masters and workers should unite to defend their common sectional interests (Foster
1977: 122-124). However, the major force pushing to the growth of national unions came
from expanding national and international trade. Railways and steamships had disturbing
effects by reducing the ability of imposing output and price-controlling mechanisms on
society. Natural barriers to the expansion of markets were destroyed when railways and
steamships brought in their wake a flood of new producers. Many remnants of local self-
containment broke down and most economic activities were directly exposed to the unifying
influence of national or global market conditions (Ashworth 1960: 246).

By 1870, most unions were themselves in a process of transformation when the steel industry
started its expansion after 1870. Increased demand of steel in the era of railroad construction
and shipbuilding did much contribute to transition from iron to steel production and to an
increased demand of coking coal. Huge amounts of capital provided by banks and the stock
market were invested in large steel mills and coal mines which had to provide the downstream
industries with ever-larger amounts of steel and coking coal. As a consequence, liberal
capitalism now became in need of better regulations to create market equilibriums, while
trade unions started campaigning for labour legislation.

The appearance of national and international cartels in especially the steel industry and
international trade-union federations had its origins in this period that is also known as the age
of classical imperialism. Tariff protection to preserve the domestic market for native
producers rose high on the parliamentary agenda. They should enable domestic producers to
enter into agreements to maintain prices at profitable levels and to avoid disastrous price
swings. In France, cotton and coal industries protected by a tariff wall could cartelize the
domestic market (Kuisel 1984:60). Charging high prices to domestic customers could
subsidize the dumping of surpluses abroad at less than the costs of production. Cartels
offered, in contrast to the United States and the United Kingdom, a substitute form of capital
concentration (Freedeman 1993: 107-128). In the United States high tariffs combined with the
Sherman Act4 (1890) were favouring industrial mergers. In the United Kingdom the exporting
industry was advantaged by imperial preferences but was confronted with fast-rising tariffs
elsewhere.5 In Germany, France or Belgium state interference and/or strong unions could
enforce better working conditions upon employers in these highly cartelized and tariff-
protected industrial sectors. With the growth of collective bargaining in this period, there was
a tendency towards greater uniformity of wage-rates in the skilled trades and some leveling-
up in the worst-paid areas.

4
Small businessmen, farmers, and workers felt an increasing disadvantage to the new large corporations
emerging after the Civil War. This discontent found its political expression in the 1880s. The Sherman Act’s key
provisions were directed toward actual monopoly and conspiracies or agreements designed to secure monopoly
power, but they did not target concentration of capital (Einhorn and Smith 1968: 29-35).
5
In 1902 the Board of Trade calculated that the import duty on British goods exported to the United States
amounted to 73 per cent of their value. France imposed an average duty of 34 per cent, and Germany of 25 per
cent. Australia and South Africa were at the low level of an average 6 per cent duty, New Zealand at 9 per cent
and Canada at only 16 per cent (Cole and Postgate 1971: 447-448).

7
In Britain, the Trade Union Congress (TUC) acquired a growing influence after its inception
in 1869, but it had no real coordinating power in industrial matters. Significant was the
tendency for trade unions in the same or closely related occupations to form national
federations. Such developments, together with attempts by large unions or federations in
different industries to coordinate their politics, as the miners, the railwaymen and the transport
workers undertook to do when they formed their ‘triple alliance’6 in 1913, foreshadowed a
much more complete departure from individualistic competition. Other union delegates
thought that labour should be directly represented in politics. Support for the eight-hour day
(‘a normal working day’) received widespread appeal as a slogan that seemed possible of
achievement within a relatively short span of time, and consequently all labour organizations
included an eight-hour plank in their platforms. The most important stimulus for wage
regulation came from the Royal Commission on Trade Unions, which propagated a new form
of conciliation. There followed a campaign in the coal and iron districts for the formation of
Boards and Conciliation. There were a number of reasons for promoting conciliation.
Arbitration presupposed closer cooperation and industrial co-partnership and stronger
unionization of both workers and employers. They would gradually form national associations
able to arrange wages and prices through arbitration in order to prevent violent price and wage
cutting. Arbitration was meant to interfere with the market, an idea that soon was formalized
in the ‘sliding scale’. The logic of union policy was to even out wage costs in all coal districts
and to use strike power only against wage and price cutting employers. The same argument
was used when pressing for a shorter working day.

However, the power of preventing wages from falling unreasonably and disastrously low, was
in the hands of strong unions assisting strikes and lockouts. In Britain, the decision to create
such a strong miners’ union and to agitate about hours at work and wages was taken in the
aftermath of unsuccessful strikes in 1867 that had left Lancashire collier’s unionism in ruins.
The existing national union, the MNA offered no alternative and had transformed itself into
an inter-county union only for the purpose of promoting social legislation in combination with
subsidized coal prizes.7 Responsibility for the conduct of strikes remained with the districts
and the support of one of one district for another was a purely voluntary matter. At the other
hand, the unions were tempted by projects aiming at regulating labour supply (emigration,
apprenticeship, and other forms of craft control) or the market for coal. If over-production
was the problem then the coal industry were to restrict its output, thereby forcing up the price
of coal and, in turn, wages.8 That the miners wanted to restrict output was against the liberal
credo: it was nothing less than a blueprint for a coalition of producers against consumers.

The sliding scale

International competition and expanding markets obliged entrepreneurs to adjust their costs.
In most industries wages constituted an important cost. They could be compressed by several
means (wage cuts, lay-offs, longer working days or weeks). By 1841 a British ironmaster
linked the wages of his puddlers to the selling price of iron bars. Later on, these sliding scales
became standard practice for skilled workers in the American and British iron and steel

6
The miners, railwaymen, and transportmen were less united than their opponents believed. Their strategy had to
be attuned to each union’s needs and to economic circumstances, such as the level of real wages and
unemployment (Middlemas 1979: 154).
7
A community of interest in price control was contained in the address of the MNA to the owners of the Durham
and Northumberland mines in 1864 (Fisher and Smethurst 1978).
8
Its was agreed that by restricting output there would be a shortage of coal on the markets, and this would have a
tendency to keep up the selling price, and thus wages would be kept up.

8
industry, and common in coalmining. In both countries four struggles representing moments
in a broader process of inter-class and intra-class conflict emerged as a result of

• The competition over control of the domestic markets;

• The struggle between industrial capital and the landing interests;
• Competition over control of domestic markets for coal and steel;
• The assertion of capital over labour to wrest control away from craft workers
culminating in mass strikes (Santoro 2003: 11-31);
• Liberal economic regimes without “third party”9 reducing the frequency of strikes.

Sliding scales were adopted in British coalmining to transfer risk from mine-owners to
workers. The sliding scales had nowhere been pressed more hardly than in British coal-
mining, where the MNA, or what was left of it,10 were pretty steady in their support of the
sliding scales and opposed even a legal eight-hour day (which might have worsened the
conditions of the most influential section, the hewers). In the metals industry sliding scales
were gradually extended to unskilled occupations (Hanes 2003). After the First World War
coal miners’ unions abandoned the sliding scale as a part of a process by which the burden of
the risk induced by shifts in the demand function for the output was shifted from employees to
the employers by favouring schemes linking wages to operating profits. In coking and iron
mining sliding scales were still used throughout the 1920s. Manufacturers and textile unions
never could reach an agreement on sliding scales. In the United States, the iron and steel
industry adopted sliding scales for the remuneration of skilled workers in many a plant. After
the formation of the U.S. Steel Corporation sliding scales disappeared. In the coal industry
sliding scales unions had started enforcing sliding scales upon the pit owners by 1869 in the
anthracite mines of Pennsylvania and later on in several silver and copper mines too.

The idea that wages were dependent on the varying price of the commodity produced, which
was very different from the notion of a minimum standard wage autonomous of supply-and-
demand considerations, was deeply rooted into the working classes of the coal fields. Sliding
scales required conciliation and arbitration procedures the union leaders could use in order to
pacify labour relations. Already in March 1869 the Board of Arbitration and Conciliation for
the Manufactured Iron Trade of the North of England was instituted. In Durham and South
Staffordshire, miners and pit owners also could agree on the idea of wage regulation by
sliding scales providing for the adjustment of wages in a definite relation to changes in the
market price of coal. Payment of wages at the pit was accomplished by time-rates and price-
lists that outlined specific piece-rates taking account of the variations in the type of coal won
and conditions of work.

The miners in Northumberland and, to a lesser extent, Durham shared with the cotton-
spinners and shipbuilders a certain conjunction with their employers, derived from their
leading role in maintaining the nation’s export. These union leaders relied heavily on friendly
benefits to create disciplined control from the center. In 1872, they established with the pit
owners a Joint Committee to arbitrate and to settle all questions relating to matters of wages,
practices of working, “or any other subject which may arise from time to time at any
particular colliery” (Garside 1971: 22). This Joint Committee acted as an important social
peace-keeping body at pit level. Other districts adopted the sliding scale too. The adoption of

9
Like in France where the state could help enforcing labour agreements (Gillet 1973: 332-334).
10
Or what left of it, was now controlled by the Durham and Northumberland Societies, whose leaders were true
to the Liberal Party.

9
sliding-scale procedures in the coalfields culminated in the slump of 1874-1880 in growing
dissatisfaction with the device.

The sliding scale embodied the opinions of the new liberal school who now, at this time,
dominated the miners’ movement. The idea of a minimum wage was alien to the pit owners’
viewpoint: the risks of capital were to be borne by workers in terms of lower wages. In South
Wales, for the first four years of the working of the sliding scale, the miners suffered first a
7.5 per cent reduction, and later a 10 per cent reduction. This led to considerable
dissatisfaction among the workmen, whose wages were determined by the sliding scale. The
principle of the sliding scale continued down to 1903. Its termination was decided by the
South Wales Miners’ Federation (Edwards 1926: 76-107). The Yorkshire, Lancashire and
Cheshire miners terminated their local sliding-scale agreements too.

Spearhead of the miners’ actions promoted by the MNA11 consisted of promoting a legal
eight-hour day and nationalization of the coal sector (Arnot 1979: 105-108).12 During the
depression of the 1880s and 1990s nationalization of the pits soon would become the miners’
central demand brought up at conferences or put forward to an annual meeting of the Trades
Union Congress. In November 1893 a parliamentary Bill to nationalize mines and minerals
was brought in by a group of Labour MPs. The Government were to create a Mining
Department which would pay such wages as would ensure a comfortable existence and during
the continuance of incapacity, the result of sickness or of an accident sustained while at work,
the worker should receive his full weekly wages and free medical attendance. After twenty
years of debates no practical progress was made into the direction of nationalization.
However, turbulent economic and social changes occurred after 1900 with several great
strikes and the definitive decay of the lasting craft unions. Strikes paved the way for social
legislation. The minimum wage strike of over a million miners in March and April 1912 gave
a strong impetus to the Coal Mines (Minimum Wage Act, 1912) Act and to a parliamentary
Bill (1913) on nationalization of all mines.

High war profits were invoked by the miners of South Wales in 1915 to launch a strike for a
minimum wage. Government control of coal-mining in 1916 took this sector out of the
dangerous arena of the ‘free’ labour market in a period the shop stewards’ movement13
competed with the TUC for the mandate of popular defense. The miners pleaded for a new
method of wage regulation and during the negotiations they stressed the necessity of
eliminating the injustices of regulating wages almost solely in relation to the movements in
the price of coal. More direct control on selling prices including the costs of production and

11
The Miners’ National Association (MNA) was established in 1863 and contained the miners associations of
Durham, Northumberland, South Staffordshire the Sliding Scale Associations of the South Wales coalfield. In
1869 the Amalgamated Association of Miners (AAM) was founded during a meeting of delegates from
Lancashire. The AAM was a collection of small unions in places which had not previously organized. The MNA
was governed by moderates whose primary concern was bargaining and arbitration. By 1902 only the Durham
and Northumberland were still members of the MNA. As its influence decreased, that of the Miners’ Federation
(MFGB) increased by a rapid expansion in the coal industry (Fisher and Smethurst 1978: 114-155). In 1908
Northumberland and Durham joined the MFGB. Total membership increased to almost 600,000.
12
Because of local reasons the opposition to the eight-hour day remained strong in the northeastern coalfields.
The miners in Durham feared that there would be an insufficient number of boys available to work an equal
number of shifts with the hewers and that an increase in the number of shifts would entail greater domestic and
social problems.
13
This anarcho-syndicalist movement combined a popular championship of working-class grievances with
demands for workers’ participation, a negotiated peace and socialism. The movement attempted, with some
success, to break down traditional divisions between craftsmen and the less skilled workers, and to transmute the
ideas of craft control into ideas of workers’ control (Hinton 1973).

10
productivity increases was demanded in order to know real costs and what wages the industry
was in a position to pay. In January 1919, the MFGB annual conference agreed to demand
higher wages, a six-hour working day and nationalization14 with joint control and
administration by the workers and the State (Saville 1988: 41-47).

During the First World War the Miners’ Federation of Great Britain (MFGB) uniting all
district unions sought to establish new conciliation procedures throughout the districts aimed
at providing wage advances more in line with the prevailing economic conditions and at
imposing a degree of coordination amongst the districts. Though coal was of strategic
importance for the world economy and there were over a million miners in Britain, social and
economic conditions had changed. Substitution of other forms of power for coal and the
growth of the fuel economy had a disastrous impact on the coal-mining industry. Never
throughout the inter-war period did the industry ever again equal the record level of output
and coal exports in 1913. Before the war, the mining industry seldom experienced any serious
long-term unemployment. At first, only particular coalfields, dependent upon the export trade,
were seriously affected when Germany started paying reparations in coal deliveries. Already
in 1921, over-stocked markets and falling commodity prices put great pressure on the British
Cabinet to decontrol the mines, leaving owners and miners unprepared to match the high cost
of modernization. The ‘triple alliance’ of railwaymen, miners and transport workers broke
down: joint action was impossible without joint control (Middlemas 1979: 156-157).

By 1925 the Baldwin Government started subsidizing the mine-owners, which provided a
temporary revival to the coal business.15 Meanwhile, coal owners had resorted to the
traditional palliatives of attempting to reduce wages and increase working hours. In exporting
districts particularly susceptible to the ramifications of the trade cycle, the necessity to remain
competitive incited pit owners during the post-war period of depression to make relatively
more frequent and severe attacks upon wages and hours than those made in districts
producing predominantly for the home market. In addition, basic industries, themselves
important coal consumers and similarly depressed after 1921, added to the plight of the coal
industry. This illustrates the relative weak position of the miners’ unions in the inter-war
period. This explains why nationalization of the coal industry soon would represent the most
acceptable way of improving the working conditions of the miners and provide the means of
reducing costs without necessarily resorting to alterations in wages and hours based upon the
competitive needs of the coal districts. The demand for a national system of wage regulation,
politically less demanding than nationalization, represented a similar, but limited, ideal. In
1947 nationalization was decided by the Labour Government, which allowed concentration of
coal production on low-cost pits in expanding coalfields.16

Craft unionism versus industrial unionism

In the United States, the National Labor Union (founded in 1866) advocated harmony
between capital and labour, but also defended rights for blacks and women and pleaded for
better housing.17 But most union leaders found that the needs of their members could not be
14
A Royal Commission established in 1919 could not agree on state ownership of the coal mines. Bills
introduced in 1919 and, in similar terms in 1923 and 1924 to nationalize the mines, were easily defeated.
15
In March 1926, there were employed in and about the mines 1,111,900 men, and in April 1927 1,280,687. By
July there were 258,203 miners registered as unemployed (Hannington 1979: 154-155).
16
“Cheap coal can only be obtained by efficient organization of the coal industry, while at the same time the
miners must enjoy conditions that make mining a career as attractive as any in the country.” (Lawther, 1944: 11).
17
In 1871, the National Labor Union transformed itself into the National Labor Reform Party. In other countries,
political demands never were absent from the union agenda. In Britain, the National Miners’ Association (MNA)

11
subordinated to utopianism offering nothing tangible in the immediate future. When reform
and political elements captured the leadership most union leaders left the National Labor
Union (Grob 1961: 11-33). The National Labor Union did not survive the economic downturn
of 1873. Its role was taken over by the in 1869 founded Knights of Labor. From the outset,
the Knights advocated the abolition of the wage system and labour owning and operating
mines, factories and railroads. They also promoted the concept of an all-inclusive
organization that was divided geographically by districts with membership open to almost
anyone who worked. This organizational concept, which sharply contrasted with the
horizontal organization of the trade unions, also reflected utopian ideas about the future
organization of society. The Knights thought that strikes betrayed the principle of
cooperation. Therefore they opposed the trade-union leaders who viewed strikes as almost the
only effective weapons against recalcitrant employers.

Many factors contributed to the Knights’ initial success. A fair part of the Knights’ popularity
among workers was derived from their support of the successful Southwest Railroads
shopmen’s strike of 1885. For the first time in American history a large company negotiated a
collective agreement with a national labour organization (Commons and Perlman1970: 72-
102). By 1886, the Knights boasted a membership of over 700,00018 in 5,500 local assemblies
against 250,000 for the unions. Contemporaries like Edward Aveling and Eleanor Marx
(1891: 139; 144) qualified the Knights as a “huge heterogeneous organization” and as “the
first spontaneous and indigenous outgrowth of the American working class as it became
conscious of itself”. However, some conditions augured well for he success of the movement.
To begin with, the rural element had always been numerically strong in the Knights. After
1886 these elements even gained proportionally in strength and provided a strong impetus for
a farmer-labour coalition. Secondly, the leaders of the Knights were wedded to the concept of
a fluid society lacking in class distinctions, and they thought in terms of a community of
interests between farmers and workers. Thirdly, growing occupation with and reform inspired
the Knights to gravitate to the farmers as a possible ally. Finally, there was the fact that
Populism and labour reformism had emerged from the same American traditions: both were
equal-rights and anti-monopoly movements and from the monetary schemes in vogue after
1840. Circumstances appeared propitious for a farmer-labour coalition as mechanization of
agriculture forced the farmer into a difficult position. Caught between decreasing farm prices,
an ever-increasing surplus, and relatively high costs of transportation, the farmers were
looking for urban allies for union on a programme of mutual relief.

By 1887 the Knights had lost their hold upon the large cities with their “conscious” workers
and immigrant population. They soon would become an organization predominantly of
country people, small merchants, mechanics, and farmers. In many states members of the
Order drew up with farmers a common platform and in 1891 they contributed to the formation
of the People’s Party (Grob 1961: 37; 90-98). However, the strength of this party was situated
in the rural areas of the West, not in the industrialized counties where the working-class
voters had abandoned Populism. The fact that the interests of farmers and workers were not
identical contributed to the failure to forge an effective alliance between the two. Because of
this alliance the Knights no longer represented the aspirations of the American worker and
they soon would disappear from the political and social scene.

(1863) took up questions which demanded legislation.

18
Edward Aveling and Eleanor Marx estimated that membership was 300,000 to 500,000 in 1886 and that other
estimations its number reached at least one million (Aveling and Marx 1891: 136).

12
Initially, strikes occurred during periods of retrenchment and drastic reorganizations after
waves of capital concentration. This was especially the case in the railway sector where
discipline had become stricter and acquired a military character throughout the long
nineteenth century. However, many industrial workers were employed for part of their time in
commerce and transport. Outworkers did most of the fetching and carrying of their raw
materials and finished goods. Small producers were still involved in commercial activities or
they owned a shop. As outwork declined and economic activities became more specialized
and large-scaled, the proportion of industrial employees whose full industrial time was given
to industrial production must have increased. The greater part of this change was probably
accomplished by about 1900 when electric power became available at an ever-larger scale and
the chemical industry could break through. These changes known in America as the
‘managerial revolution’ influenced management methods of large numbers of firms in a
similar way. But in Europe its influence was insignificant before 1914. In 1907, a British
observer could write that the rule of the thumb was dead in the workshop and that the day was
with the engineer and the chemist (Ashworth 1960: 102).

‘Scientific management’ was a declaration of war on craft unionism and on the skilled
worker. Frederick W. Taylor, who drew his experience from his work for the Bethlehem Steel
Company (Braverman 1974: 102-106), wanted the managers to assume “the burden of
gathering together all of the traditional knowledge which in the past has been possessed by the
workmen and then of classifying, tabulating, and reducing this knowledge to rules, laws, and
formulae which are immensely helpful to the workmen in doing their daily work” (Taylor
1919: 36). Taylor ‘s idea was that conception should be separated from execution and his
purpose4 was to cheapen the worker by decreasing his training and enlarging his output
(Braverman 1974: 118).

The increasing consolidation of employees in some industries and activities and the greater
impact of management on the organization of work in the large factories and mines appeared
to be leaving purely industrial action by workers less chance of success, and the increase of
adverse legal decisions in trade union cases also implied the inadequacy of such action.
Moreover, a growing number of workers was becoming articulate, though they never had the
chance to improve their position much through trade union of friendly society activities. It
was in such circumstances that substantial minorities of trade-union militants and socialists
were able to revolutionize the trade unions. In the US and Britain different socialist sects tried
to take over the trade-union movement or to conduct its activities into the direction of politics.
These militants were able in 1899 to induce the TUC to call in a conference of interest bodies
which created the Labour Representation Committee (the beginning of the Labour Party) and
marked the decline of socialist sectarianism.

In the US, the in 1886 constituted American Federation of Labor (A.F. of L.) soon assumed
the role of unofficial advocate of labour after the decay of the Knights of Labor. Contrary to
the general impression, its leaders were not, on principle, either in favour of or opposed to
industrial organization, or to the organization of the unskilled. The majority of its affiliates
were craft unions, but some, especially in coal mining and brewing, were already industrial in
their arrangement. The Federation leaders believed that eventually all workers would find
their way into a union, and would solve their own problems. This made them oppose
government intervention in economic and social affairs. They wanted to concentrate their
efforts and resources upon organizing on the economic front, and limit their political activity,
which brought them in conflict with the Socialists. The A.F. of L. refused to adopt the

13
principle of independent political action and declared in 1895 that political debates should
have no place in the convention of the Federation (Taft 1957: 71-75). One has argued that the
absence of feudalism in America, the greater class mobility, higher standards of living, the
existence of the right of the franchise, as well as the greater social democracy, were serious
handicaps to the spread of Socialist ideas. Observers had to conclude that the American
worker failed to respond to the appeal of a class struggle doctrine and a classless society.
Against these negative elements, one must recognize the intransigence of the American
industrialist when facing the unions and the industrialists’ absolute domination over the terms
of employment without any intrusion or recognition of the union.

The years between 1909 and 1913 marked the end of socialist sectarianism, but also coincided
with the last major outbursts of syndicalism. The outbreak of violent mass strikes and the
entry of new strata of unskilled workers into the class struggle went hand in hand with the
formation of industrial cartels and monopolies. In the US, the rebellion of immigrant steel
workers in Pennsylvania (Brody 1960) and sweated garment workers (New York) in 1909, the
supposedly unorganizable immigrant workers were supported by the Industrial Workers of
the World (IWW). Simultaneously, the A.F. of L. had to fight bitter, rearguard battles against
the degradation of their crafts by dilution, ‘Taylorism’, and speed-up. Instead of the A.F. of L.
motto of a “fair day’s wage for a fair day’s work”, the IWW inscribed on its banner the
socialist watchword “abolition of the wage system” (Lorwin 1933: 86). The IWW
concentrated all energies on building the One Big Union, but this syndicalism proved to be
only temporary (Renshaw1999). Though IWW’s syndicalism created the first industrial
unions, this form of syndicalism did not reach the already organized workers in the traditional
crafts and industries, but only the instable groups of workers in metal and coal mining
(Wyman 1979: 235-255; Corbin 1981: 240-241; Brown 1979: 149) and agriculture, or the
dock and river workers, i.e. relatively unskilled seasonable and migratory workers (De Caux
1978). By 1917, the IWW had reached its peak with about 30,000 lumberjacks, 40,000 metal
miners, 24,000 agricultural workers, 15,000 building-trade workers, and about 10,000 in other
occupations (Bimba 1927: 258).

The sources of labour stability had broken down in World War I. Restoration meant a total
reconstruction of the prewar labour situation in the USA. The central problem was to start a
new free-flow supply of unskilled labour. The movement of Slavic peasants into the industry
was stopped when the Johnson Act went into effect in 1921. Obviously, Congress was more
concerned with safeguarding American “racial” parity than with the needs of industry.
However, Southern Negroes had constituted the chief source during the war, and their
numbers continued to mount afterward (Drake and Cayton 1962: 88-89). These migrants were
commonly considered inferior workmen, but careful selection made it possible to cull an
efficient force from the mass available on the Chicago labour market. Thousands of
immigrant workers arrived from Mexico (Daniel 1981). The importation of Mexicans became
widespread in agriculture and in the steel industry where many unskilled workers could find
an employ. Permanent Mexican communities were taking root in the industrial and
agricultural areas and many advanced into the semi-skilled ranks. A similar process was
occurring among the Negroes. Meanwhile, the Eastern Europeans were occupying the lesser
positions once held by the English speaking workforce.

Notwithstanding a continuous inflow of cheap, unskilled labour, mechanization would cause a

fast decline of IWW union membership in all trades. An inflow of unskilled operators created
new opportunities for an industrial unionism based on occupation instead of crafts where
transforming industries started reorganizing their factories on the base of Fordist or Taylorist

14
principles of work organization. As a consequence, craft unions had to open up their
membership to semi-skilled workers now predominant in most industrial activities.

In many aspects, World War I had marked the watershed between old and new unionism in
most developed countries. Unions in Western Europe saw the number of their adherents
increase explosively as the system of collective bargaining was introduced and favoured by
governments in which social democrats participated. All workers employed by one industry
were organized in the same union and where unions of different ideological background
existed, they co-operated when dealing with entrepreneurial organizations. In the US, the A.F.
of L. remained a federation of craft unions, but also comprised several industrial unions - such
as the United Mine Workers of America (UMWA) - showing much more militancy than the
average craft unions (UMWA1976). Yet, labour leaders seemed to face an insoluble dilemma.
Without mass organization, labour lacked effective political influence; without the
guardianship of a benevolent government, unions could not defeat recalcitrant employers.
During the New Deal, more so than ever before, the federal government acted as society’s
arbiter. Because of the growth of membership, unions started playing an important role in
national politics. The UMWA led by John L. Lewis realized that labour’s fate was
inextricably linked with its political and social influence. He offered his fellow barons of trade
unionism another chance to build a powerful mass working-class movement. According to his
admirers, he provided them with the shock troops of militant American labour and committed
the Union’s resources to building of the unions of automobile workers, steel workers, rubber
workers and other new industrial unions (UMWA 1976; Dubovsky and Van Tine 1977: 203-
217). In the US, unions’ influence was based on the resources they could mobilize to
influence the working-class vote. But they did not present themselves as political
organizations representing the interests of labour as a class. Obviously, the American unions
accepted the existing social and political order (Davis 1980). This contrasted sharply with the
situation in Europe where the unions belonged to socialist movements and where they helped
forming socialist parties.

“Responsible” American unionism

With the growth of the trade-union movement, employers began to understand that a
responsible trade-union movement could act as a stabilizing element. Centralized or industry-
wide collective bargaining tends to reduce strikes and to protect employers and society against
mass-labour unrest (Hyman 1977; Coates and Topham 1974: 51-55). This idea was, however,
slow to convince employers and governments as long as the numerous craft unions did not
amalgamate and federate or transformed themselves into industrial unions. However, craft
unionism was still long living because individual employers preferred bargaining with craft
unions defending sectional interests. This explains why in the US, the A.F. of L. remained a
federation of craft unions. In Britain the unions, strengthened by amalgamation and
federation, and inflated by vast membership, were still fighting their own battles since the
creation of the General Council in 1921. The issue of whether or not the TUC should organize
assistance for affiliated unions had been subject to constant debate (Lovell and Roberts 1968:
49-94).

In the 1920s, craft unionism, however, was a phenomenon of the industrial past. Craft unions
were absorbed by industrial unions or they had to merge in order to widen their field of action
or to enhance their appeal to semi-skilled workers. Business or ‘yellow’ unions had no chance
to compete with the independent unions stressing the interest of labour in opposition to
capital. Collective bargaining promoted by these independent unions slowly superseded the

15
practice of individual labour contracts as industrial firms were employing thousands of semi-
skilled workers. This was the case in the new industrial sectors such as the motorcar industry
and the sector of electric home-appliances, where Taylorist forms of work organization
already had reached a high degree of perfection and demanded also at the national level a
specific type of labour management. In the US, this framework would be provided by the
New Deal legislation. In Europe, most countries already had experienced just after World War
I with nation-wide collective labour agreements and social legislation.

In the US, the passage of the National Labor Relations Act (NLRA) in 1935 and various other
pieces of New Deal labour legislation designed to protect worker rights represented a shift in
the prevailing view of the employment relationship and how to regulate it. Prior to the 1930s,
the role of government policy was protecting the workings of the free labour market and to
guarantee the freedom of contracting. New Deal legislation endorsed collective bargaining as
a part of a broader economic and social reform. The choice of collective bargaining as the
preferred institutional mechanism reflected not so much the creation of a new idea, but the
legitimation of a process that had made some progress in some industries in prior years. The
NLRA incorporated many of the principles and policies embodied in previous advisory
committees ad industrial commissions (the National War Labor Board of World War I and the
National Labor Board established in 1933 under the National Industrial Recovery Act). The
NLRA was expected to give employees the freedom to choose whether or not they wanted to
be unionized. Election procedures and institutionalized collective bargaining therefore were to
replace conflict and violence so typical for American labour relations. Corporatism, which
had become a common feature in several European countries establishing new forms of labour
relations, was not even discussed in the US.

Keynesian macroeconomic theory also helped provide acceptance for the New Deal industrial
relations system. Union policies that increased wages through collective bargaining were
compatible with this strategy as long as markets continued to operate and productivity
continued to increase. The best example of this tendency is offered by the American motorcar
industry and that has been characterized by very rapid growth in its early years and by
concentration in the hands of a few producers (General Motors - GM, Ford, and Chrysler).
Therefore, the United Automobile Workers (UAW) led by the legendary Walter Reuther
(Barnard 1983) could operate as a major driving force in the American labour relations since
the late 1930s when the UAW started pioneering institutionalized industry-wide bargaining.
Before this, union influence was minimal. These changes came suddenly and violently. From
1935, the car industry was singled out by the new Congress of Industrial Organization (CIO)
as area of potential recruitment for industrial unionism (Zieger 1995). The success of the sit-
down strikes at GM’s plants at the end of 1936 marked a turning point. Although full-scale
industrial bargaining was introduced in the coal-mining industry in the 1930s, the UAW
extended the concept of collective bargaining well beyond the traditional boundaries of
business unionism. Chrysler was organized very soon after GM. Ford managed to resist until
1941. President Roosevelt and legal provisions had encouraged unionization, but specific
managerial practices19 had provided the impetus to labour unrest among the unskilled
workers. The link with the then-triumphant Fordism has to be stressed, because the UAW met
the needs of the unskilled ‘mass workers’ when negotiating production standards (line speeds
and labour loading) and taking them through the grievance procedure. Application of the
‘seniority rule’ established job security and abolished the arbitrary authority of the foreman.

19
Irregular employment, limited job security, re-engaging at the flat rate men who had been laid off work at
higher rates shortly before, speed-up practices, widespread employment rackets based partly on the considerable
responsibility and discretion given to foremen and the firms’ espionage systems.

16
After World War II, the divide between A.F. of L. and CIO20 was healed when the so-called
‘Dunlop model’ of collective bargaining spread over all sectors and American trade-union
officials deployed activities sponsored by the State Department and the CIA (Romero 1993;
Busch 1983; Windmuller 1954). This New Deal model of industrial relations developed in the
postwar economic environment of growth and market expansion, was encouraged by
government policies and prevailing union and business values. This model included the use of
pattern bargaining and wage formulas to set wages. Union bargaining power was strengthened
by their substantial organization of a number of the nation’s core industries. Economic growth
and the collective bargaining process gave stability to contract negotiations and led to
important wage increases combined with fringe benefits. In the motorcar industry, the UAW
consolidating its initial success became for a time the largest union with 90 per cent of the
eligible workers in the car industry unionized (Turner, Clack, and Robert 1967: 293-306). The
UAW-GM 1950 five-year contract (also called the ‘Treaty of Detroit’) became an example for
other industrial sectors, including rubber, steel, farm construction equipment, trucking and the
food and retail sector.21 Union power, however, gradually declined in the 1970s and 1980s.
Intensified competition from either international or domestic nonunion competitors induced
major modifications in traditional bargaining approaches. In addition, the anti-union stance of
the Reagan administration gave a green light to union busting and helped reducing the
absolute number of unionized workers for the first time since the 1930 (Goldfield 1987: 3-
25). Deregulation in industries such as airlines, trucking, and communication opened the door
to new entrants and produced abrupt increase in cost competition. Furthermore, the deep
macroeconomic recession of the early 1980s exacerbated the economic pressure for wages
cuts.

As these competitive pressures increased, unions were confronted with large-scale layoffs and
plant closings. Employment in the Fordist motorcar industry dropped from a December 1978
peak of 800,800 to 487,700 in January 1983. As a result of increased competition on the US
motorcar market unions had to face a significant decline in their bargaining power. As labour
and management in union firms searched for a response to intensified competition, they often
modified collective bargaining by introducing new subjects into the negotiations. In many
cases this entailed making changes at either the workplace or strategic levels of industrial
relations practice. Labour gained quid pro quos in exchange for concessions in pay or work
rules. A number of firms improved job security. A guaranteed income stream programme was
created in the 1982 agreement at Ford and GM to compensate high-seniority auto workers
permanently laid off because of plant closings and other reasons.22 But new work structures
geared toward greater flexibility. Firms pushed for fewer classifications and more firm-
specific training. As labour and management struggled to respond to environmental pressures,
they made significant changes in the bargaining process as well. These changes announcing
the end of the ‘Dunlop model’ included
• A decentralization of bargaining structures;

20
The refusal of the A.F. of L. to accept industrial organizations was long since settled. The CIO industrial
unions were permanently established. Several A.F. of L. affiliates, such as the teamsters, machinists, and ladies’
garments workers, were primarily industrial in nature. During the war both federations had cooperated on
government advisory bodies (Taft 1959: 473-486). By 1954 the decision was taken to merge both federations
into the AFL-CIO.
21
This system established industry-wide patterns of wage, benefits, and working conditions, unaffected by
competitive conditions in other separate industries and sectors, and lasted until the 1980s.
22
Airlines and trucking were highly affected by liberalization policies and increased competitive pressures.
Therefore, American Airlines introduced lifetime job guarantees and lowered the pay of new hires during 1983
negotiations.

17
 • An increased emphasis on contingent compensation criteria;
• A changing pattern of strike activity.
Decentralization reversed the trend toward centralized and pattern bargaining that had
emerged in the post-World War II period as a result of the extensive union coverage in Fordist
Industries. First of all, economic pressures created the decentralization of longstanding formal
and informal bargaining structures in a number of industries and created an erosion of the
inter-company pattern of bargaining in rubber, motorcar, and meatpacking industries. Within
trucking, the influence of the National Master Freight Agreement declined as regional and
company modifications gained importance. In addition, deviations form the national
agreements emerged in 1982, when the steel industry established different bargaining goals
for such distressed industries as basic steel and such healthy industries as nonferrous metals or
containers. This caused a weakening of the inter-industry (intra-union) pattern bargaining so
characteristic for the United Steelworkers negotiations. In 1985, an end was put to the steel
industry’s thirty-year old tradition of coordinated bargaining.23

Secondly, a new form of decentralization emerged from national-level to company- or plant-

level bargaining in the rubber, steel, and motorcar industries, where plant-level modifications
in work rules were frequently introduced as part of the efforts to lower costs and keep
business in-house. Plants agreements in the automotive industry introduced pay systems and
transfer rights that differed from prevailing industry practices.

Thirdly, intensified pressures in the 1970s and 1980s forced decentralization as part of a
process whereby wage and work-rule concessions were introduced in response to increased
competition and an associated erosion of union coverage. Trucking illustrates both tendencies.
Contracts had been set before and immediately after World War II at the company level. In
the 1950s, however, Jimmy Hoffa was able to induce regional agreements. In 1964, a
National Master Freight Agreement set common increases in wages and fringe benefits and a
number of work rules for truckers. Although regional agreements still supplemented the terms
of the national agreement. In the 1970s, the number of independent drivers increased
significantly. Unionized carriers started cutting prizes and wages while abandoning the
national agreement. The Motor Carrier Act of 1980 and the decision of the Interstate
Commerce Commission to allow free entry and rate competition in industry increased
pressure on wages and obliged the Teamsters Union to abandon centralized bargaining
(Galenson 1997).

Militant European unionism

In most European countries, the 1960s and 1970s were characterized by growing working-
class militancy, which in some cases broke out of the regular institutionalized forms of
collective bargaining. Attacks on union leadership were commonplace in all European
countries where growing working-class militancy was striving for ‘workers’ control’ at the
factory level and participation at the sectoral level.24 At stake was the unions’ ability to
accommodate workers’ demands by forcing them into the normal procedures of interest
intermediation. This strained relationship stemmed both from changes in the composition of
the working class and in workers’ demands, and from the problems facing trade unions as
organizations. However, most European unions benefited from this wave of radicalism, as
most employers and governments found themselves compelled to grant them recognition.
23
Other industries, such as printing, underwent a similar erosion of pattern bargaining.
24
In Germany, Mitbestimmung (Co-determination) was established in the 1960s. (On the debate on workers’
control, see Hunnius, Garson, and Case 1973.)

18
Hence, this greater labour strength disturbing the normal patterns of industrial bargaining
would become an issue politicians and entrepreneurs had to include into their strategies and
policy frameworks.

Industrial conflicts at the micro-level of the firm were connected to wide-ranging

reorganizations of production and the expansion or consolidation of Fordism. Work rhythms
were stepped up and jobs fragmented so that workers lost their occupational identities or their
opportunities to pursue careers. At the macro-level, however, economic growth permitted the
draft of Keynesian welfare schemes favouring massive migration from the rural areas in and
outside Europe to the cities. A situation of quasi-full employment gave workers a relative job
security and therefore increased bargaining power. New generations of unskilled workers had
access to the labour market in a period the unions were confronted with growing workers’
demands. New long-term union goals had to be formulated in such a climate of growing class
conflicts, factory occupations and street violence. Trade union weakness meant that many
new grievances could not be dealt with by institutional means and that ‘maoist’ militants
originating from the universities could establish their influence in several ‘Fordist’ factories in
Italy and France and organize there the protest of the ‘mass workers’.

In the 1970s, labour organizations slowly increased their influence as collective mobilization
was progressively institutionalized and collective bargaining patterns could be re-established.
In countries with strong unions, governments and employers regarded the participation of
trade unions in the macro-economic management as a ‘second-best’ solution. As far as
workers could be reintegrated into their union strategy employers could avoid labour conflicts
inside of their factories. In the literature on these topics, most authors describe this
phenomenon as the ‘century of neo-corporatism’. The central issue, however, was not the
relationship between unions and workers, but between labour and the state. The problem was
how the working-class movement could articulate its newly acquired strength in the political
arena and in the political institutions of capitalism (Panitch 1977). In most European
countries, union policies focused on incomes and full-employment policies (The London CSE
Group 1980; Panitch 1976). Neo-corporatist trends in several European countries promised
long-term stability, but coincided with instability in Italy or the United Kingdom, where the
political system frustrated social concertation. By the mid-1980s, however, in virtually all
advanced capitalist countries concertation was no longer the major focus of the labour
movement. Changes toward a ‘post-Fordist’ organization of production as a response to
increased competition on the domestic markets, led to a growing diversification of the labour
force. Managers became more interested in increasing flexibility and industrial relations
underwent a shift from the macro-economic level to the shop-floor level.

Economic adjustment could be obtained by increased management control at the company

level, which went at the expense of decisions made at the macro-level. Radical changes in the
productive system occurred in some industries as a result of increased competition affecting
the organization of production in individual countries. This required the building of a new
relationship between unions and management. Market and political (neo-liberal policies)
trends can be singled out as the driving forces behind deregulation policies weakening the
trade unions and their allied political forces. Changes in labour markets, technology, and the
organization of production, and its consequences on the ability of labour movements to
represent workers’ interests adequately explain why the inherited institutional arrangements
or the industrial relations systems are not functioning anymore or have revealed their
weaknesses.

19
The industrial restructuring of the 1980s and 1990s occurred in a period of growing mass
unemployment and required an adjustment to the changed international economic situation.
The crisis of the large corporations which was paralleled by an impressive growth of small
subcontracting firms and an even more impressive growth of the informal economy, would
undermine the bargaining power of the large industrial unions whose leaders had to trust in
periods of large-scale conflicts and bankruptcies on governmental aid and compromises
(Hancké 1991) in order to alleviate the social costs of these massive shakeouts. This was
notably the case in the coal and steel industry, where modernization and innovation was
accompanied by contraction (Mény and Vincent 1987). The same can be said of the
expanding tertiary sector with its growing number of a-typical (i.e. unorganizable) skilled
workers in the new economy. The need for a continuous reorganization of production and the
importance of product quality and flexibility for international competition transformed the
trade-union movement into a social peacekeeping organization assisting managers and
governments.

The European Single Market signified the advent of a less regulated economy, in which the
stronger unions are enjoying a greater protection, while the weaker unions are forced into a
process of leveling down. Convergence will lead to the emergence of cooperative and
pragmatic labour relations and the growth of business unionism. A soft version of the German
model, rather than an outright neo-liberal policy, is already taking on the role of the second-
best solution for all actors involved at the macro-national levels. The Lisbon Agenda the
European Union agreed on in 2000 provides us with a catalogue of new demands unions and
entrepreneurs have to deal with. For entrepreneurs and unions aggregate labour costs will no
longer be the sole focal issue of negotiation now that various aspects of the use and
reproduction of the labour force (organization of working time, internal mobility and career,
incentives, vocational training) are become even more crucial in order to make the European
economy more competitive than the American economy. Meanwhile, employers are
responding to the globalization challenges by adopting their own personnel policies and by
transferring their production units to low-cost countries in the capitalist periphery.

NAFTA’s impact on American labour

The US has experienced steadily growing global trade deficits for nearly three decades, and
these deficits have accelerated rapidly since North American Free Trade Agreement
(NAFTA) took effect on January 1, 1994. Although gross US exports to its NAFTA partners
have increased dramatically - with real growth of 147 percent to Mexico and 66 percent to
Canada - these increases have been overshadowed by the larger growth in imports, which
have gone up by 248 percent from Mexico and 79 percent from Canada. As a result, the
US$16.6 billion US net export deficit with these countries in 1993 increased by 378 percent to
US$62.8 billion by 2000 (all figures in inflation-adjusted 1992 dollars). The NAFTA
eliminated 766,030 actual and potential US jobs between 1994 and 2000 because of the rapid
growth in the net US export deficit with Mexico and Canada. As a result, NAFTA has led to
job losses in all 50 states and the District of Columbia. The loss of these real and potential
jobs is just the most visible tip of NAFTA's impact on the US economy. In fact, NAFTA has
also contributed to rising income inequality, suppressed real wages for production workers,
weakened collective bargaining powers and ability to organize unions, and reduced fringe
benefits.

NAFTA's impact in the US, however, often has been obscured by the boom and bust cycle
that has driven domestic consumption, investment, and speculation in the mid- and late 1990s.

20
Between 1994 (when NAFTA was implemented) and 2000, total employment rose rapidly in
the US, causing overall unemployment to fall to record low levels. Unemployment, however,
began to rise early in 2001, especially in the manufacturing sector. If, as expected, US trade
deficits continue to rise with Mexico and Canada while job creation slows, then the job losses
suffered by US workers will be much larger and more apparent than if US NAFTA trade were
balanced or in surplus. However, NAFTA supporters have remained silent on the impacts of
rapid import growth on domestic production. The growth in US trade and trade deficits has
put downward pressure on the wages of "unskilled" (i.e., non-college-educated) workers in
the US, especially those with no more than a high school degree. This group represents 72.7
percent of the total US workforce and includes most middle- and low-wage workers. These
US workers bear the brunt of the costs and pressures of globalization (Mishel et al. 2001: 157,
172-79). NAFTA has also contributed to growing income inequality and to the declining
wages of US production workers, who make up about 70 percent of the workforce. NAFTA,
however, is but one contributor to a larger globalization process that has led to growing
structural trade deficits and has shaped the US economy and society over the last few decades.
Rapid growth in US trade and foreign investment, as a share of US gross domestic product,
has played a large role in the growth of inequality in income distribution in the last 20 years.
NAFTA has continued and accelerated international economic integration, and thus
contributed to the growing tradeoffs this integration requires. Because the United States tends
to import goods that make intensive use of less-skilled and less-educated workers in
production, it is not surprising to find that the increasing openness of the US economy to trade
has reduced the wages of less-skilled workers relative to other workers in the United States
(Bakvis 2004).

Globalization has reduced the wages of "unskilled" workers for at least three reasons. First,
the steady growth in US trade deficits over the past two decades has eliminated millions of
manufacturing jobs and job opportunities in this country. Most displaced workers find jobs in
other sectors where wages are much lower, which in turn leads to lower average wages for all
US workers. Recent surveys have shown that, even when displaced workers are able to find
new jobs in the US, they face a reduction in wages, with earnings declining by an average of
over 13 percent (Mishel et al. 2001: 24). These displaced workers' new jobs are likely to be in
the service industry, the source of 99 percent of net new jobs created in the United States
since 1989, and a sector in which average compensation is only 77 percent of the
manufacturing sector's average (Mishel et al. 2001: 169). This competition also extends to
export sectors, where pressures to cut product prices are often intense. Increased import
competition and capital mobility resulting from globalization increased the "threat effects" in
bargaining between employers and workers, further contributing to stagnant and falling wages
in the USA (Bronfenbrenner 1997a). Employers' credible threats to relocate plants, to
outsource portions of their operations, and to purchase intermediate goods and services
directly from foreign producers have a substantial impact on trade-union bargaining
positions.25

NAFTA's supporters promised that the accord would lead to the creation of more and better
jobs in all three countries. In reality, the opposite has occurred. Job creation in Mexico has
been sluggish, the jobs that have been created are of a precarious nature, and it is still difficult
for many workers to form unions to defend their interests. Between mid-1993 and mid-1996,
2,421,055 new jobs were created in Mexico, while the working-age population increased by
5,037,735 persons. Officially, the number of absolutely unemployed people those who did not
25
A unique study of union organizing drives in 1993-95 found that over 50 percent of all employers made threats
to close all or part of their plants during organizing drives (Bronfenbrenner 1997b).

21
work even one hour a week - in that period grew from 819,132 persons in 1993 to 1,354,710
in 1996. It is difficult to separate the unemployment generated by NAFTA from that resulting
from other causes, but it must be taken into account that, in Mexico, NAFTA is the
culmination and legal formalization of an economic policy that began in 1983. At the very
least, it is clear that NAFTA does not improve the current economic model's capacity to
generate employment. It is important to analyse the manufacturing sector, since it is
responsible for 83.65 percent of Mexico's exports and is considered the "engine" of growth in
the government's strategies. In terms of job creation, however, the sector is not only incapable
of generating new jobs, but it has experienced an absolute decrease in employment. During
the NAFTA period (1993-1996), manufacturing GDP grew 9.9 percent. However, a decline of
9.9 percent in employment was recorded in the sector. Also, despite a 12.62 percent increase
in productivity, average real wages have decreased 21.9 percent since NAFTA was
implemented (RMAC 2005).
The contrast between promises and reality could not be more dramatic. The manufacturing
sector is one of the most dynamic sectors, but it employs fewer people; productivity increases
but the average real wage falls even more than that of workers in other sectors. In fact, the
average manufacturing wage has become even more "competitive" in order to attract
investment and promote exports. In 1993, the average wage of a manufacturing worker in the
United States was five times higher than the wages of his or her Mexican counterpart. In
1996, this disparity increased to 8.75 to 1. During the NAFTA era, the average manufacturing
wage in Mexico, measured in U.S. dollars, has decreased 60 percent. Persistent and trade-
distorting violations of minimum-wage laws can be grounds for complaint under NAFTA's
labour side agreement. Nevertheless, in Mexico, more and more employers are paying less
than the legal minimum wage. In 1996, 19.53 percent of workers earned less than the
minimum wage. A basic consumption "basket" costs more than the equivalent of two
minimum wages. The assessment wage used by the Mexican Social Security Institute (which
includes the value of some benefits) during the first three years of NAFTA fell by 23.11
percent. The minimum wage contracted 10.81 percent during that period, but that is the
culmination of a continuous decline starting in 1976. Since that year, the minimum wage has
lost almost 73.72 percent of its purchasing power. The Labour Side Agreement permits
complaints on child labour cases to the extent that they violate national laws. Child labour is
completely prohibited in Mexico. There are estimates, however, that 10 million children
work. The Instituto Nacional Indigenista (INI, National Institute for Aboriginals) asserts that,
in such agricultural areas as San Quintin in Baja California, and Culiacán in Sinaloa, a
sizeable number of workers (more than 20 percent) are indigenous people under the legal age
to work who are forced into that situation by the miserable conditions in which their families
live. The Mexican government and corporations have not kept the promises made during the
NAFTA debate to improve the condition of workers. Employment is falling in the
maquiladoras. Mexican government data have confirmed that employment in the
maquiladora zones, which the report implies are the showcases of NAFTA's success, has
declined from 1.3 million in 2000 to 1.0 million in 2003.

NAFTA has served as an efficient mechanism for reducing employment levels and wages in
Canada and the United States. While labour laws have not changed, labour relations have
been modified through a process of "modernization" of collective bargaining contracts. Most
export companies, for example, work with official unions linked to the government and have
changed their workers' labour conditions.26 The principles that these companies continue to
promote in current salary or contractual negotiations include improvements in production
26
There are examples in various sectors and among a variety of Mexican and foreign firms. These include
Roche-Syntex, of Swiss origin, and such automotive companies as Ford, General Motors and Chrysler.

22
levels, quality and competitiveness. The implementation of these principles has brought as a
consequence a new conception of labour relations, in which the bilateral relationship between
workers and employers is undermined, since employers can deal with "unions" that they have
selected. This has also weakened the remaining unions' ability to participate in negotiations on
the nature of the new work rules. This commonly occurs through the use of so-called
"protection contracts" with official unions. Upon arrival in Mexico, companies receive
instructions - often official - to negotiate future labour relations with a particular union, most
often unions affiliated with the Confederación de Trabajadores de México (CTM,
Confederation of Mexican Workers), which is closely linked to the government and to sign a
kind of collective bargain contract, normally with the benefits guaranteed by law. This
contract is of a very flexible nature, however, so that when workers start work the contract
and union are already in place. If workers wish to affiliate with another union, they will not
obtain employment. The chances of changing the union or the contract in the future depend on
organization by the workers, who will obviously confront all kinds of pressures, repression
and problems, up to the loss of their jobs or even their lives.27 The majority of new automotive
companies based in the north of the country have negotiated protection contracts with the
CTM. These new plants utilize modern technologies, including computers, robotics and fluid
processes, coupled with flexible work contracts. Their practices, in turn, put pressure on older
plants in the centre of Mexico, many of which, including Renault, have now closed. In the
cases of Ford and Volkswagen, old labour contracts have been eliminated and wages and
benefits have been set at the same levels as in the newer plants, along with the same flexible
labour conditions. NAFTA has served to ratify these practices (RMAC 2005).

Conclusions

Globalization is pressing for alternative labour strategies now that ruthless competitive
dynamism of capitalism is reasserting itself in the form of free trade and foreign direct
investment and ‘lean’ production through job ‘flexibility’ and ‘casualization’ has become the
norm. The trade-union movements were not prepared for all this. The spatial relocation of
industrial activities to lower income countries and changes in the process of capital
accumulation on a world scale from material to financial expansion are not an aberration but a
normal development of the accumulation of capital. The worldwide relocation of capital to
financial activities and aggressive competition had a devastating effect on segments of the
working force and on organized labour in the highly developed capitalist countries where the
number of jobs in manufacturing industries fell and the proportion of the workforce employed
by small companies grew. This transformation changed the context not just of labour-capital
relations, but also of the North-South relations. In this situation, most trade unions are
attempted by nationalist or protectionist strategies in order to keep competitors out. National-
protectionist reactions have been strong in all countries now that the working-class vote is
going to populist protest parties.

Uneven capitalist development has engendered unevenly developed trade-union movements

and weak or “failed states”. In the “labour-friendly” (Silver and Arrighi 2000: 55) developed
world, American hegemony created with the help of its own trade-union leaders a favourable
climate for stabile industrial relations (the ‘Dunlop model’) and economic prosperity. In the
poor developing world, social conflicts were contained by military or authoritarian regimes.
However, as we have seen, uneven development caused social unrest among workers in most
countries. Apart from the New Deal period, American capital had no interest in making peace
with the trade-union movement at home. With the advent of Thatcher in 1979 and Reagan in
27
As occurred to the Ford-Cuautitlán automotive workers or the workers at Refrescos Pascual.

23
1980, radical policy changes marked the end of all labour-friendly arrangements and the
beginning of profound economic restructurings. However, there is also evidence that the
decline in union membership is beginning to slow up. Many unions are stepping up their
efforts to recruit in new industries and jobs and more people are turning to trade unions
because they want the protection they can provide.

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