Labour

A Heterodox Approach

Jean Vercherand

• Publisher: Palgrave Macmillan
• Year: 2014
• ISBN:
  9781137373618
• Topic: Economics
• Subtopic: Economic History
• Index: Economics

Labour: A Heterodox Approach provides a theoretical reconstruction of the labour and job market by examining it in a rich historical context. It explores the fundamental implications of the theories of consumption and growth and aims at solving the difficulties raised by the dominant economic theories (neoclassical, Keynesian, supply side) by taking into account the dimension of the historical conflict of the labour market and the public intervention that results from it, such as the construction of a specific legal framework that is to say, labour law.The work focuses on providing a description of conflict and intervention, the market's leading characteristics, and demonstrates that they can be interpreted by introducing two major remedial hypotheses in economic fundamentals. It also contributes to solving several theoretical controversies and highlights the two main perspectives on the economic regulation of the labour market.

1

The “Social Question” since the 19th Century

Introduction

The aim of this chapter is to present a number of mainly qualitative characteristics of or having to do with the labour market. These characteristics have been well established and are subject to wide consensus among the jurists, sociologists, historians and contemporary witnesses that have expressed views on the subject. However, these characteristics have been given little attention or else ignored by economists. They can be called “stylised facts”, the terminology used by Nicholas Kaldor.¹ These generally very elementary facts are related to (1) the nature of the wage relation and the interpretation made of it by jurists; (2) the conflictual nature of this relation and the upheavals historically associated with it – the famous “social question” of the 19th century; (3)the content and recurrence of the claims made by employees and the organisations that represent them; (4) the reception given to these claims by employers and economists; and (5) the public intervention that this conflictual nature triggers with the edification of laws specific to only wage labour, a point that should be emphasised. In parallel, we shall examine other economic and social facts linked to this problem of salaried employment, in particular the fluctuations of the economy through different crises.

Being exhaustive in this analysis is out of the question. However, I shall pay great attention to the issue of working time, as it is the focal point of a huge contradiction between theory and reality. Indeed, for two centuries, dominant economic theories (classical, neoclassical, Keynesian, supply-side) have never validated the idea that the State should intervene to reduce this duration, since such intervention is deemed incongruous or Malthusian. But history shows that these two centuries have seen a long succession of claims and public interventions. One of the specific objectives of this work is to solve this contradiction. Although historians are obviously well aware of the history of working time on a general level, it has not been subjected to in-depth study, and it remains “a thoroughly modern issue”.²

1 An evidently asymmetrical power relationship

1.1 An asymmetry already acknowledged by Adam Smith

For both historians and contemporary observers, this asymmetry of power is patent. Thus, according to the authors of Histoire générale du travail:

In the 19th century, employers often wielded a kind of feudal power which, in the best cases, was softened by paternalism; in parallel factories were often organised by using military methods of discipline and hierarchy as models. Workers had no guarantee and employers ruled as absolute masters. Whereas the latter used market laws to determine wage levels, the discipline in workshops was founded on the most arbitrary principles.³

Apart from a few variations, this statement holds for every industrial country of the time. Even Adam Smith, the father of political economics, was aware of this asymmetry.

What are the common wages of labour depends everywhere upon the contract usually made between those two parties [the employee (worker) and the employer (master)], whose interests are by no means the same. The workmen desire to get as much, the masters to give a little as possible. The former are disposed to combine in order to raise, the latter in order to lower the wages of labour. It is not, however, difficult to foresee which of the two parties must, upon all ordinary occasions, have the advantage in the dispute, and force the other into a compliance with their terms. The masters, being fewer in number, can combine much more easily; and the law, besides, authorises, or at least does not prohibit their combinations, while it prohibits those of workmen. We have no acts of parliament against combining to lower the price of work; but many against combining to raise it. In all such disputes the masters can hold out much longer. A landlord, a farmer, a master manufacturer, or merchant, though they did not employ a single workman, could generally live a year or two upon the stocks which they have already acquired. Many workmen could not subsist a week, few could subsist a month, and scarce any a year without employment. In the long-run the workman may be as necessary to his master as his master is to him; but the necessity is not so immediate.⁴

One would be hard put to make things clearer! The final sentences of this citation from Adam Smith emphasise that this asymmetry of power existed independently of the inequality of the law upheld at the beginning of the Industrial Revolution, between employees and employers, and that this was also the case in France. Employees mostly lacked any independent means of existence, generally having only their labour for hire. On the contrary, the masters, who own not only their own workforce but the means of production, are far more protected from the uncertainty boded by the future.

We know that capitalism at its emergence drew on the force of its first cohorts of proletarians taken from a large and miserable population, landless and roofless peasants ruined beforehand by the fiscal and usurious pressure of the Ancien Régime, feudal reaction, the appropriation of communal land, natural disasters and wars. Then the technical progress and economies of scale generated by industry in turn impoverished and ruined concentric swathes of artisans. Lastly, the increase in labour productivity had an increasing impact on agriculture and, with competition from “new countries”, led to a growing divide between the stagnating living conditions of peasants incapable of modernising their practices and those of employees, which nonetheless improved despite economic crises. Thus, labour supply has been constantly fuelled by successive swathes of artisans, shopkeepers, farmers and so forth, unable to compete in an economy in which labour productivity continues to progress. And when this reserve of increasingly economically dependent labour becomes exhausted, recourse to immigration becomes a possible solution.

After having observed this asymmetry of power between employers and employees, Adam Smith observed that the natural and spontaneous behaviour of employers is to tacitly exert constant pressure on employees.

We rarely hear, it has been said, of the combinations of masters; though frequently of those of workmen. But whoever imagines, upon this account, that masters rarely combine, is as ignorant of the world as of the subject. Masters are always and everywhere in a sort of tacit, but constant and uniform combination, not to raise the wages of labour above their actual rate. To violate this combination is everywhere a most unpopular action, and a sort of reproach to a master among his neighbours and equals. We seldom, indeed, hear of his combination, because it is the usual, and one may say, the natural state of things which nobody ever hears of.⁵

Following Smith, Jean-Baptiste Say⁶ reutilised this analysis of the asymmetry of power, but, like Smith, he did not go beyond the stage of observation. Whatever the case, this does not lead to calling into question the main liberal principles underlying the functioning of the labour market. When all is said and done, it was Sismondi and, above all, Marx who most sought to determine the economic and social consequences of this relation (cf. §4.5 below).

1.2 A contemporary manifestation of asymmetry: stress and harassment at work

In the 19th century, the asymmetry of power in the labour market was apparent in the physical pressure subjected on the work provided by the employees and on their working time and work rates. Today this asymmetry is more apparent in mental and psychological forms. Apart from the recurrent problem of mass unemployment, the issue of labour henceforth includes aspects such as the suffering, stress and moral harassment that employees can endure in the workplace. The book by the psychotherapist Marie-France Hirigoyen on moral harassment in the workplace has met with immense and unexpected success,⁷ a tangible sign of a reality many employees endure in silence. What is more, it is a reality particularly well-hidden by modern management methods based on the individualisation of empowerment, with evermore ambitious targets, sometimes accompanied by a reduction of the resources required to achieve them. The least difficulty necessarily stirs self-guilt. Corporate management can draw advantage from this individualisation of empowerment to exert moral pressure, sometimes in perverse ways, to make the employee more efficient or more docile or to push them towards resignation. Over the last few years in France, a series of suicides in certain large companies by managers heavily committed to their work have had a considerable impact on opinion.

A number of international studies have highlighted the importance of psychosocial problems occurring in the workplace. In the European Union it is estimated that 22% of employees suffer from stress at work, while 5% are subjected to harassment and 5% are victims of physical violence.⁸ The International Labour Organization (ILO) has evaluated the cost of occupational stress as amounting to 3% to 4% of the gross national product (GNP) of the industrialised countries. The social partners have been called to question about these issues at European level, and an agreement was signed in 2004; it became part of French law in 2008.

Obviously, stress and harassment do not exist only at work, and even then they do not always originate from management. However, there is general consensus that certain management practices implemented over the last two or three decades have considerably contributed to the development of such psychosocial risks.

These phenomena demonstrate that despite labour laws designed to protect workers, whose origins date back to the 19th century, the asymmetry of power between employers and employees is still evident at the beginning of the 21st century, although in far more insidious forms.

1.3 An asymmetry that lawmakers and jurists have had to acknowledge

1.3.1 The contract of engagement of service or the fiction of free will

It is often recalled that originally, according to the Civil Code of 1804, the supply of labour in return for remuneration was qualified as a contract of engagement of service. The lawmakers of the time grouped both the supply of commercial services to customers by independent workers and the engagement of servants under this heading, however, thereby highlighting that the Code’s authors made no great distinction between the two types of labour relationships.

Wage labour was at that time perceived only as a relationship in which servants hired themselves out, generally for a period of a year, usually to landowners and the upper middle classes. Lawmakers did not foresee the development of this wage relationship. Quite the contrary, in the political scheme promulgated by the French Revolution, it was to remain and constitute the temporary condition through which individuals passed before they set up as independent producers. The principle of equality of heritage, the sharing of communal property, the sale of church property across the nation, as well as that of emigrants and suspects, the abolition of feudal rights and so forth should have led to this goal. However, the emergence of the Industrial Revolution wrecked this ideal of a democracy of small independent producers, peasants and artisans who would produce and trade in complete freedom. Each and all installed! Each his own master.⁹

The relationship binding an employee to an employer was still considered one in which two perfectly independent wills acted freely and on an equal footing. Therefore an agreement between such entities could only be fair: nobody is unjust unto themselves, asserted Jean-Jacques Rousseau.¹⁰ The employee’s obligations resulting from this contract of engagement were limited to performing the work required from them, whereas it was the employer’s obligation to pay the agreed wage.

With its succession of workers’ grievances, strikes, sometimes violent revolts, always suppressed with the greatest severity, the 19th century provides abundant proof that this independence of will of the contractors on the labour market was biased. The position of the employees, often bereft of any means of existing independently and only possessing their arms and brains, was in fact economically and psychologically inferior to that of the owners of productive resources free of the uncertainty of what tomorrow might bring. Working time could be extended excessively at the discretion of the employer, who could pay derisive wages bearing no relation to the added value generated.

In fact, this contract [engagement o...

Table of contents

• Cover
• Title
• General Introduction
• 1  The “Social Question” since the 19th Century
• 2  The Neoclassical Model of the Labour Market
• 3  The Asymmetry of Bargaining Power
• 4  The Dual Impact of Technical Progress
• 5  The Normative Implications for Labour Policies
• 6  Is a Synthesis of Economic Theories Possible?
• General Conclusion
• Notes
• References
• Index