According to his autobiography, it was around 1885 that John R. Commons started the intellectual journey that later brought him to the forefront of the Progressive impulse. He was working in a printing office in Leesburg, Florida, when he stumbled on a book in which Herbert Spencer contended that according to the science of physics, it was impossible to pitch a curve ball. To the young Commons, this was an egregious mistake. “He knew not the seams on the ball and forgot the friction of the air,” Commons noted. “His was evidently a single-track mind. Ever after, I looked for the omitted factors, or the ones taken for granted and therefore omitted, by the great leaders in the science of economics. That was how I became an economic skeptic.”1
Quite beyond Spencer’s gross error, John R. Commons was well situated to contemplate heterodox ideas and join the Progressive banner. Born in 1862 to a Quaker father and a Presbyterian mother who had been active in abolitionist feminist advocacy, he was steeped in a tradition of reform that caused him, like a generation of middle-class Americans, to look uneasily at the growing social dislocation of the country. At Oberlin, where he spent seven years between 1881 and 1888, he was a mediocre student who spent a lot of time earning money as a typesetter—and trying to pitch curve balls, which he achieved at least once. But in Cleveland, Commons was also immersed in the daily toils of printers who tried to exercise control over their working conditions by associating, and he received his first bit of education by heeding a fellow printer’s advice—reading Henry George’s Progress and Poverty, by that time a well-known denunciation of growing social inequalities. George was no advocate of labor unions or class consciousness, preferring to agitate for a single tax, but his argument that unions could not really improve the rate of wages failed to sway Commons, who had a decided knack to put a premium on empiricism over theory: “In my own case, I knew [trade unions] resulted in conditions of employment preferable to those existing in the open shop across the way.”2
It was upon moving to Johns Hopkins in 1888 that Commons gained the intellectual ability to put a theoretical spin on his skepticism. In completing his education with Richard Ely—one of the main advocates of the ideal of industrial democracy—Commons was plunged in the transnational academic élan that engulfed the energies of Progressive scholars who believed the market and the economy should be seen as social constructions. Seeking to analyze these constructions, Sidney and Beatrice Webb in Great Britain, Emile Durkheim and his followers in France, Thorstein Veblen in the United States, and Gustav von Schmoller and Max Weber in Germany all sought to develop a kind of economic sociology that aimed at determining what subjective and contingent forces acted as social determinations of human choices.3
After graduating from Johns Hopkins, Commons eventually decided to embrace an academic career, which proved to be a rocky path. In spite of Ely’s prominence, at the time the field of labor relations was only emerging, its scientific contours unclear and its legitimacy in doubt. Hired in 1890 at Wesleyan, Commons taught political science for two years before losing his job. At Oberlin and Syracuse, he taught sociology but was dismissed in 1898 for his “radical” ideas. His academic exile ended only in 1904, when Commons landed a permanent appointment—this time in economics—at the University of Wisconsin. By then, the Progressive legislative impulse was gaining strength, and Commons subsequently made the most of his position, translating his expertise into political action with his contribution to the Wisconsin idea.
“Class conflict may be growing,” Commons contended, “but it’s not inevitable.” From his post in Madison, Commons conducted the research that provided the intellectual underpinnings of the Progressive transformation and revival of the ideology of social harmony. He trained a significant amount of students in the new discipline of “institutional economics,” which conceived of class conflict as a pathological social fact that could be remedied. Alongside the process of natural selection described by Spencer, Commons argued, there was an equally important process of social selection whereby society chose the institutions most adequate to further its goals. Through institutions, society could “subordinate” the individual by “institutionalizing” his or her mind.4 Indeed, it was his grounding in the emerging social sciences that led Commons to discard Marxist materialism and focus instead of individual behavior as a social product built through institutions and mental habits, and therefore susceptible to constructive change. Unions and trade agreements, Commons taught, should be seen as engines of cooperation in the workplace.5
When the Wagner Act was passed in 1935, Commons had passed from the scene, but under his academic influence the ideal of the harmony of interests between capital and labor had been refashioned into an academic discipline that paved a Progressive, scientific way out of the labor question. Indeed, Commons’s vision of industrial democracy and collective bargaining would remain influential for decades to come, guiding the efforts of two generations of labor experts eager to proceed with the search for order he had pioneered, one that included an orderly process of negotiation between “employers and employees.”
“The masses of this country want not less democracy but more. They want … industrial democracy added to political democracy. Their problem is not how to limit the suffrage but to protect the liberties of the people.”6 The entry “democracy” in the 1897 edition of the Encyclopedia of Social Reformreminds us that the term “industrial democracy” came in use well before Commons and the Wisconsin school left their mark on labor relations. At the time its meaning was ambiguous, and the degrees of “democratization” that advocates of industrial democracy envisioned were quite different, ranging from collective ownership of the means of production to cooperative partnerships, trade agreements, and even profit-sharing plans offered by enlightened businessmen who wanted both to cultivate their workers’ loyalty and foster a definition of industrial democracy that would not threaten managerial prerogatives.7
Still, an important element in the rise of the ideal of industrial democracy was the American egalitarian tradition. Many of its first advocates hoped to secure the recognition of the individualrights of workers. Like Knights of Labor leader George McNeill, who suggested that a company should be run on the “town meeting plan,” labor advocates who agitated for the extension of the principles of democracy to the workplace sought to make a claim on the country’s political culture. The influence of this egalitarian tradition remained very strong well after the decline of the Knights of Labor, and even during the Great War, workers demanded forcefully that the American struggle for democracy in Europe be replicated by a democratization of the factories in which the weaponry used to wage the war was produced. Frank Walsh, the head of the National Labor War Relations Board, created in April 1918 to arbitrate labor conflicts, then became one of the main proponents of industrial democracy: “political democracy, he explained, is an illusion unless builded upon and guaranteed by a free and virile industrial democracy.”8
Like Walsh, Commons agreed that a profound sociological imbalance now characterized the American polity. The recognition that all classes have rights, he explained in Labor and Administration, was essential if civil war was to be avoided in America. In fact, Commons’s early work was precisely aimed at securing the political representation of the working class in Congress by shifting the dynamics of representation from a geographical to a social basis. The reorganization of political power he called for would send representatives of business and workers to Capitol Hill along with economists standing on either side of the labor question. “As long as an economist does not recognize the existence of classes, he will fail to see the need for this readjustment of electoral machinery, which shall represent all classes,” he explained at a meeting of the American Economic Association in 1899, trying—to no avail—to defend his plan.9
Had this focus on individual rights and equality been enough to justify industrial democracy, Commons’s role would have been quite modest. Yet, like other Progressives, Commons spoke a language emphasizing social bonds as much as individual rights, and it was precisely because he helped develop a sociology that constructed collective bargaining as a vehicle of social harmony, and not simply as agencies of worker empowerment, that his vision of democracy at work became dominant and was translated into an academic discipline. Therefore we need to try to reconstruct his intellectual journey, keeping in mind that the democratic ideal did not, in and of itself, solve the labor question.
One difficulty in approaching Commons’s work is that his writings span a long period—roughly from the late 1890s to the 1934 publication of Institutional Economics. This is clearly a long enough period for any active scholar to evolve, particularly if, like Commons, one was involved in the building of a whole scientific paradigm. Yet Commons’s research was conceived from the outset as a study of the dynamics of coercion in society, not historical materialism. In “A Sociological View of Sovereignty” (1899), he argued that there is no such thing as individual freedom, for “coercion is the decisive social relation.” The struggle for the control of material goods governed human actions and preceded all institutions (the family, political parties, corporations). Because self-interest and scarcity of material resources and services led to sharp conflicts between individuals over the acquisition and control of property, men designed institutions whose natural evolution drove them to become monopolistic and centralized, thus turning coercion into the dominant social relation. In the course of history, a number of social organizations, ranging from English barons and chartered companies to the church, political parties, and the patriarchal family, had evolved and developed, gaining political privileges that allowed them to mediate the allocation of property in disproportionate fashion toward the few.10
However, this in turn led to collective responses by the subordinated to force their superiors to redirect the use of monopoly in a way that serves the interests of the community as a whole.11 In “A Sociological View of Sovereignty,” Commons contended that throughout its history, the state had grown by “abstracting” the coercive power of an institution (its capacity to use violence), leaving it with only “persuasive” powers, thus giving a specific social group a new right that served as the basis for a new order based on negotiation.
According to Commons, because the “institutionalized” power of corporations was so great, they were able to exercise a disproportionate amount of economic coercion on workers. American companies had acquired a political privilege that was the source of conflict. For this conflict to disappear, workers had to “enter the constitution” too, that is, judges had to provide general rules of conduct setting limits on the corporations’ ability to exercise economic coercion, even if Commons was wise enough to admit that economic coercion would never disappear altogether. Still, Commons argued that by setting limits on the coercive power of companies, the reform of the common law would put employers and workers in a situation of cooperative dependency—such was the very logic of his vision of industrial democracy.
Commons’s analysis therefore discarded very early on the possibility that labor conflict might stem from the inherent inequalities or imbalances in the capitalist system, which explains that he was more attracted to the language of social harmony than to the Marxian language of class. Indeed, Commons’s approach of society through “institutions” that were gradually divested of their coercive powers allowed him to sketch a positive evolution from “conflict to order and interdependence.” As he noted in 1901, the main result of collective bargaining and trade agreements was the “new feeling of equality and mutual respect that springs up in both employer and employee.”12
Yet the common law, which represented the evolutionary body of working rules of society, was only the first level of this “institutionalization” of minds. It remained for Commons to show that in the very field of labor relations, institutions could indeed produce norms that would, as he claimed in “A Sociological View of Sovereignty,” regulate the economy and deflect class polarization. Such was the task he took on in 1909 by launching a historical investigation titled “American Shoemakers: A Sketch of Industrial Evolution,” in which he retraced Sidney Webb’s footsteps in opting for a kind of ethical positivism that put customs and legal norms at the center of experience and meaning of wage work.13
Cast in the mold of the German historicist tradition, “American Shoemakers” was aimed at showing how industrial evolution had deprived a “homogeneous craftsman”—combining the functions of merchant, master, and journeyman—of “property rights,” that is, control of over earnings. The dynamic driving this process, Commons explained, was the gradual expansion of markets, which had gradually created gaps within the three functions that were united in the journeyman. In the late nineteenth century, some masters had become retail merchants, thus separating the merchant function from the master-journeyman ones. Then, in the early nineteenth century, better modes of transportation and access to credit had turned merchants into wholesale dealers looking for outside markets, thus widening the gap between them and the master-journeymen on the other side. In the 1830s, larger credit flows from the North had resulted in the rise of the merchant capitalist, who no longer obtained his goods from a master, but from a contractor who himself employed several journeymen—the functions of master and journeymen were now distinct, and Commons saw in this stage of industrial evolution the emergence of the “worker” in the modern sense, an emergence symbolized in the word “boss.” Finally, in the middle and late nineteenth century, it was the tools of production—heretofore unaltered—that evolved to allow the merchant capitalist to redefine the market and expand it once again, leading to a fresh attempt at regulation on the part of the union to impose “working rules.”14
Written against the “abstractions of Marx,” this historicist analysis led Commons to reject the existence of a proletariat, or any other unitary division of society. Indeed, Commons argued, the centrality of the expansion of markets in American industrial history suggested that the driving force precipitating these successive “realignments of interests” among journeymen, masters, and merchants was actually the tension between the producer and the consumer. Harmony between master and journeyman and a commonality of interests had obtained through the first stages in the expansion of markets until the emergence of the merchant capitalist made it impossible to pass the cost of the worker’s standard of living onto consumers because the employer and the retailer were no longer the same. Throughout his career, his sociology was aimed at restoring this harmony, which he described in “American Shoemakers” as the “primitive harmony of capital and labor.”15
Commons argued that tensions arising in the wage relationship could be solved through the negotiations of norms and the creation of institutions. Following the model established in “A Sociological View of Sovereignty,” Commons suggested in “American Shoemakers” that at all stages, unions of workers made coercion impossible and led to negotiations based on persuasion—“institutionalized” workers had recovered their property rights, thus reverting to a harmonious relationship with employers. This historical analysis echoed the history of labor written by Commons’s students at Wisconsin in the early 1900s and foreshadowed the work of Selig Perlman on the working class. Not only was the American working class “job conscious” and conservative, but from the standpoint of the Wisconsin school of evolutionary sociology, the disappearance of social harmony could be interpreted as a temporary historical process, and reformers could hope to restore harmony through institutions.
The ambition to restore industrial harmony was pursued through the Wisconsin version of the ideal of industrial democracy, which in many ways was a quest for a return to preindustrial norms of social order and interdependence, an ideal expressed once again through the anticlass implications of the pair “employer and employee.” As Commons’s student Jett Lauck explained in 1926 in his aptly titled—and influential—Political and Industrial Democracy, industrial democracy meant returning to peaceful relations that obtained before the industrial revolution: “The effects of this development [the industrial revolution] upon social and political life were serious,” Lauck noted, “the breakdown of personal relations between employer and employee was complete…. Cooperation between employer and employees rapidly disappeared. It was supplanted by industrial strife and industrial dislocations.”16
In Commons’s later work, particularly The Legal Foundations of Capitalismand Institutional Economics, this interest into organized forms of collective action led him to develop a new concept to express the centrality of harmony in any capitalist enterprise, namely, the going concern, which he defined as “a living body … animated by a common purpose, governed by common rules of its own making.” A “going concern” was first and foremost a voluntary association, since employers did not enjoy the power to force workers to stay on the job and workers had no property rights in their jobs—the going concern was based on the voluntary cooperation of both employers and workers. This cooperation Commons explained through the idea of futurity—what shaped the employment relationship was not the atemporal law of supply and demand for labor, but the expectation on both sides of future benefits deriving from the cooperation. What made this futurity possible was the fact that both employers and workers had internalized a number of customs and rules that allowed them to project themselves in the future: what Commons and his students often defended as industrial democracy was simply the notion that the employment relationship was not the meeting of two individuals, or a group of individuals, but a “collective act” resting on established social relations that made this joint expectation possible.17
Quite clearly, Commons’s goal was social harmony, not social strife, and by his own admission his sociology of labor relations was designed to place restraints on individuals. Tellingly, his definition of institutional economics was “collective action in control of individual action.”18 Equally important to understand his sociology, however, was his weariness at the “new immigrants” who were transforming the social makeup of the American working class. Like many of his contemporaries, Commons doubted that these immigrants had the same democratic inclinations as the English middle class, whose struggles he had depicted in “A Sociological View of Sovereignty,” and from whom American workers were descended. Yet his sociology and the discipline of industrial relations he was trying to build precisely allowed him to think that immigrants could be led to share in cooperation and compromise—as long as experts were there to guide their negotiations with managers—rather than turning to radical political activities. Quite beyond his conservative weariness of immigrants, unionism was to Commons a true American freedom because it was an engine for assimilation.19
However, there were other limitations to Commons’s Progressive vision of labor relations. In fact, what he had painstakingly conceptualized was the process whereby employers and employees could develop a relationship based on cooperation and compromise, not the constitutional rights of American citizens.
True to the realist spirit of the age, Commons found an empirical base for this new reading of the employment relationship in his involvement with the National Civic Foundation, an organization created by the AFL with open-shop leaders hoping to thwart the rise of radical unionism. In 1900, he witnessed the proceedings of the annual Interstate Joint Conference, which brought together the companies of the Central Competitive Field and the United Mine Workers to decide matters pertaining to wages, working conditions, and output goals. To Commons, the most striking feature of this negotiation process was that it was premised on the equality of the parties and was patterned like the British Parliament—the unelected members of management met with the elected representatives of the workers. Commons thought that in place of strife, he had discovered a parliamentary process based on ordered liberty, a total redefinition of democracy and representation that promised to solve the labor question.20
Such political metaphors, however, must not be misunderstood, and should be seen in the broader context of Commons’s sociological research. Tellingly, the tables of contents of his main works of economic sociology do not feature the term “industrial democracy.” By contrast, in the public sphere it was through the metaphor of the democratic political process that the new “institutionalization” of the employment relationship was promoted, with recurring attempts to invoke the memory of British parliamentary struggles. Indeed, the analogy between the collective bargaining process and the British parliamentary system became the crux of the defense of American workers’ right to organize. Commons called it “constitutional government” in industry, and his protégés, particularly William Leiserson, Jett Lauck, and Edwin Witte, followed suit. In his Political and Industrial Democracy, Lauck squarely planted the struggle for industrial democracy in a Whiggish historical account that started with the American and the French Revolutions and followed a predictable republican thread weaving the basic principle of the consent of the governed with the importance of checks and balances and respect for individual rights—a process that pointed naturally to the need to extend democracy in industry.21 Tackling the issue from the angle of his struggle against trusts, the jurist Louis Brandeis sounded the same theme in his testimony at the Industrial Commission in 1915. Industrial unrest, he explained, flowed from the absolutism of business executives, with the result that “we lose the necessary contact between employers and employees, which the American aspirations for democracy demand.” “We Americans are committed not only to social justice, like unjust distribution of wealth, but we are committed to democracy. The social justice for which we are striving is an incident of our democracy, not the main end. It is rather the result of democracy—perhaps its finest expression—but it rests upon democracy, which implies the rule by the people.”22
Yet industrial democracy can be a slippery doctrine, particularly because it was used more to promote than to conceptualize the reform of labor relations that Commons and his students were advocating. Indeed, neither legal realists nor institutional economists ever tried to give a concrete, legal dimension to the right to organize. As Brandeis himself explained in 1921, the right to organize would serve a useful purpose, but it was not a fundamental one: “Because I have come to the conclusion that both the common law of a state and a statute of the United States declare the rights of industrial combatants to push their struggle to the limits of justification of their self-interest, I do not wish to be understood as attaching any moral or constitutional sanction to that right. All rights are derived from the purposes of the society in which they exist.”23
The Progressives’ defense of unions was no doubt replete with constitutional references, and Commons even emphasized that contrary to classical economics, institutional scholars did not view workers as “commodities” but as “citizens.” Yet those AFL leaders who preached for a constitutional right to unionize premised on the Thirteenth Amendment found little support in the Commons school, and one may say that they couldn’t have.24 Cast in the mold of the debate over institutions in the economy, the regulation of the employment relationship was impervious to the rhetoric of individual rights, and focused on the need to promote collective bargaining. To the extent that institutional economics conceived of the worker as a citizen, it was not through natural rights, but as a citizen of a given, institutionalized social group with a number of duties and rights conceived during a negotiation—an “economic status,” spelling security through conformity.25 In Commons’s work, the language of democracy occupied the same function as Calvinism in Max Weber’s Protestant Ethic and the Spirit of Capitalism—it was an ethos, a mental habit. But Commons had reversed the focus of European economic sociology, for he proposed to foster the mental habit so as to obtain the social result.
The main idea stemming from this sociological perspective was the notion that there was not one class struggle, but myriads of legal disputes between employers and groups of employees that could be easily remedied by adopting institutions that produced peaceful labor relations. Some years on, reflecting on the contribution of institutionalism to the reconceptualization of the employment relationship, William Leiserson, one of Commons’s most prominent heirs, took pride in the success of this endeavor, noting the conceptual gap between capital and labor and employer and employee and the consequent disappearance of the “labor question”:
Employee and Employer are no longer the economists’ abstractions, Capital and Labor, but personalities bound together in contractual agreements not unlike the relations set up by a marriage contract. The search for a theoretical labor problem therefore appears as futile as a search for a solution of an abstract marriage or family problem. Instead, we seek methods of securing mutual accommodations and adjustment…. The change from the Labor Problem to Labor relations was no mere academic refinement.26
Leiserson believed that “employee” and “employer” had acquired an important, concrete social meaning in the lives of workers and employer, one that had displaced the class struggle by instituting new social norms of industrial relationships. Indeed, one may contend that what institutionalists believed they had achieved was in fact similar to the social regulation that Durkheim called for by producing a new social fact, that is, “a system of representation and mental states” in different industrial settings.27 Institutionalists believed they had given American society the conceptual and technical toolbox for the resolution of the labor question, and it was no coincidence that they were able to develop a whole academic field—industrial relations—to that effect. No longer the natural consequence of the harmony of the market, the harmony between “employer and employee” would return as a social product.
The economic sociology of institutionalism had profoundly reignited the traditional hope that class polarization could be prevented, opening a reformist venue that guided efforts through the New Deal. By then, the trade agreement—the central institution according to institutional economics— stood at the heart of the reformers who drafted and promoted the nation’s first attempt to afford unionism the protection Commons had long called for.
The Wagner Act’s unambiguous affirmation of American workers’ right to organize only partly satisfied the industrial pluralists because the law made no provision for the actual mediation of labor disputes by arbitrators such as Leiserson. Nevertheless, they joined in the effort to defend Wagner’s bill because they realized that it was necessary both to sustain the level of wages and to affirm the political legitimacy of unionism. In fact, the Wagner Act represented the first stage that Commons had identified in the transition from economic coercion to order and interdependence. As Leiserson explained to labor journalist John Fitch in 1936, “the New Deal has accomplished this much: it has convinced people that men have a right to organize.” To Leiserson it remained for labor progressives to build a structure that would help managers and employees develop the working rules needed to resolve their conflicts peacefully. Collective bargaining would not magically work by itself—rather, it would require the guiding hand of labor expertise.28
Whether such as structure was necessary in the eyes of New Dealers such as Robert Wagner and Leon Keyserling was doubtful. Yet this was not because they defined their task as simply empowering workers in their struggle for better working and living conditions. On the contrary, the main tenets of industrial democracy as defined by the pluralists had been so extensively discussed since the Great War that by the 1930s the idea that collective bargaining was a vehicle of social peace was endorsed by many labor progressives who had been in contact with the pluralists. “The cooperation between employer and employee is boldly written in the law,” Wagner joyfully explained about the inclusion of Section 7a in the National Industrial Recovery Act.29 Indeed, Robert Wagner always couched his defense of associational rights in a language that reflected the staying power of the ideals of social harmony and comity between “employer and employee.” Although Section 7a in the NIRA put the weight of the federal government for the first time behind the process of collective bargaining, it was not meant to simply empower the working class in the class struggle, as socialists would have demanded. Rather, cooperation was to endsocial strife, which was a fixture of the “old order.” Lamenting the existence of “cross currents of distrust and antagonism between labor and industry that have no substantial basis in fact,” Wagner contended that “cooperation based on trust and understanding must be the keynote henceforward.”30
The main problem behind the depression, the ill apportionment of income, would thus be solved by a partnership for economic reconstruction. As Wagner himself noted in a congressional debate in 1932, workers should not feel alienated from management; rather, they should feel like “partners, shouldering the responsibilities of management.”31 Workers were not simply expected to regain a freedom of which modern industrial society had deprived them (the preindustrial ability to bargain with the employer), but they were expected to use this freedom in an ethical fashion, to pursue a common goal. In a prominent interview with the New York Times, Wagner referred to the NIRA experiment as a “moral” one, in which various social groups should try to reach beyond their immediate interest and fulfill a common goal. “Partnership,” “harmony” equally pointed to the hope that both employers and employees would go beyond the enjoyment of individual, positive rights and attempt to cooperate for the common benefit of what Dewey called “socialized intelligence.” Sounding a sociological theme that harkened back to the beginning of institutional economics, Wagner and others saw the NIRA as the best protection against “social disintegration.”32 Cooperation, he argued, was an ethos that should develop in the “hearts and minds” of all Americans. The macro-management of the economy was to be based on a cultural and psychological change. The cartoonist Clifford Barryman aptly captured the essence of this new language of harmony with a cartoon titled “The Spirit of the New Deal,” which depicted Uncle Sam standing between a happy “employer” dressed in a suit and a merry “employe” wearing overalls, Sam’s arms outstretched around their shoulders as a sign of unity.33
One of the problems with the language of harmony, of course, was that it could easily be captured by conservatives opposing the development of unionism, particularly those who had defeated the radical impulse for industrial democracy after the Great War.34 Thus, Paul Litchfield, talking to Goodyear employees in March 1934, undercut much of the argumentation for Section 7a by sounding the very Progressive themes of social cohesion and efficiency that labor reformers had marshaled earlier in their defense of the NIRA: “I view the service Goodyear renders the public as being the product of a partnership effort in which men, money and management are pooling their strength and intelligence. Each branch of the partnership contributes an indispensable part to the whole, and each branch must depend of the other branches for the balanced support which is the value measure of the final product.”35
After the NIRA was adopted, labor organizations did march in strides in the mining, textile, and construction industries, as militancy reached levels unseen since 1921. And in 1933 alone, the AFL added five hundred thousand members to its existing ranks.36 But in many mass-production industries, businessmen countered this organizing tide by setting up company unions. In September 1933, a National Industrial Conference Board study revealed that the proportion American workers covered by an Employee Representation Plan—45 percent—had increased by 169 percent since 1932. Notably, this trend was even stronger in companies with a workforce of more than five hundred workers, which means that the biggest engines of the Fordist economy were unwilling to follow Wagner’s calls for a “partnership” with labor.37
Indeed, it was those companies that had always frowned upon company unions that now set them up: General Motors, Chrysler, and RCA, for example. In the steel industry, ever the antiunion citadel, some 85 percent of the workers were covered by an Employee Representation Plan.38 In the spring of 1934, as Congress debated a bill to create the NLRB to arbitrate disputes, U.S. Steel, which had created an ERP in June 1933, still felt confident enough to hand out to workers a leaflet arguing that the Wagner Bill would “legalize the closed shop and force all employers to operate under it” and “force all employees into labor unions.” Ironically, the leaflet listed all the advantages workers might derive from the law, but portrayed them as so many threats hanging over “Friendly Relations between Employers and Employees.”39
Corporate America was not about to let labor reformers capture the language of industrial harmony. ERPs, after all, were businessmen’s most recent victory on industrial unionism. In the aftermath of the Great War, “employee representation” had been management’s most effective device against the growth of a working-class conscious of its political power. Designed to foster “factory solidarity” at the expense of “class solidarity,” ERP plans usually followed the model established in 1913 by John Rockefeller in Colorado—which granted workers an “Employee’s Bill of Rights”—in creating a communication link between managers and workers. Coming as they did with other programs composing welfare capitalism, ERPs promised to solve the atomization of individuals in modern society by conceptualizing the worker as a social figure dependent on social bonds forged and maintained at the local and community level by business benevolence. Whether they relied on constitutional metaphors as in the Colorado plan or portrayed the company as a “family,” they reflected the growing purchase of personnel management and constituted a recent but determined attempt to build a social edifice on the nineteenth-century legal notion that the “employer-employee” relation was a naturally peaceful and beneficial one for both parties.40
Why then, did not Wagner and other labor progressives part with the language of harmony? Although he often emphasized the idea that the right to organize was a fundamental one, Wagner was sometimes at pains to reaffirm the difference between his vision of industrial harmony and that of corporate America: “A tranquil relationship between employer and employe, while eminently desirable is not a sole desideratum,” he argued in 1934 as the nation debated the virtues of company unionism. “It all depends on the basis of that tranquility. The slave system of the Old South was as tranquil as a Summer’s day, but there is no reason to perpetuate in modern industry any of the aspects of master-servant relationship.”41 The reason why Wagner did not part with this ambiguous ideal is that he shared with Commons the basic belief that it was the legal context that structured economic exchanges. Once a social group “entered the constitution,” Commons explained in A Sociological View of Sovereignty, duress could no longer be applied in relations with its members, and negotiation became inevitable. Wagner made very much the same point regarding workers when he argued that labor conflicts stemmed from the workers’ lack of industrial rights.
Furthermore, this faith in harmony derived additional impetus from the Taylor Society, which was created in 1910 as the Society to Promote Scientific Management, and was renamed after Taylor in 1915.42 Prominent among its members were the engineer Morris L. Cooke and the jurist Louis Brandeis, who had been trying to refurbish the theory of scientific management by remedying its main lacuna, its inability to obtain the workers’ consent. Calling on businessmen to accept the authority of claims for industrial democracy, Cooke argued that class consciousness in the United States was weak and limited enough for a spirit “partnership” and “cooperation” to develop in American workshops, one in which union leaders would accept deferring to the demands of science in the organization of production.43 Overall the Taylorites had few followers, but the application of their principles in the needle trades did reveal that technocratic management, planning, and unionism were compatible. In the prolabor group assembled by Wagner, Sidney Hillman, the leader of the Amalgamated Clothing Workers of America, spoke for a “new unionism”—a theory of mass-production premised on unionism as a means to stabilize an industry by homogenizing costs and production methods, but also as a means to provide workers with the purchasing power they needed as consumers to make mass production viable.44
Hence even as he pushed a proto-Keynesian argument to defend his bill and as he stressed the nugatory economic effects of company unions, Robert Wagner held fast to the idea of harmony between managers and workers, explaining that the NLRB he wanted to create was “an agency designed for harmony and mutual concessions … where employers and employees could appear as equals, where they could look with frank and friendly eyes into each other’s problems, where they could banish suspicion and hatred, and where they could sign contracts of enduring peace rather than mere articles of uncertain truce.”45 No doubt, Wagner’s ambition was to make the worker a “free and dignified workman,” but this emancipation would not simply come through a Marxist recognition of the structural inequity of the wage bargain. Rather, the process of collective bargaining and the enhanced consuming capacities were the New Deal’s version of the old leftist utopia that worker and capital could be reconciled.
Naturally, there were dissenting voices. One came from the social reformer Mary Van Kleeck—a sharp critic of the New Deal—who registered her opposition to the Wagner Bill in a letter sent to Wagner in March 1934. Van Kleeck, who had spent almost two decades studying women’s work and labor relations, harbored less sanguine views about collective bargaining than the labor reformers working with Wagner. It is “impossible to equalize the bargaining power of employers and employes,” she noted, “since the decision to produce at all and in what quantities and by what processes … rest with the employer.” Consequently, she argued in private correspondence with Wagner, the list of unfair labor cases included in the bill offered no real protection to workers—rather, it would discourage strikes by triggering the intervention of the government in disputes, thus favoring the “status quo.”46 “I need not say to you that a strike in itself often generates strength for the workers and has indeed been an important method of organization.”47 One year later, Roger Baldwin, the director of the ACLU, sent Wagner a letter in which he sounded the same notes. Contrary to union sentiment, Baldwin argued, the bill would not help strengthen the position of workers in their struggles with employers because it did not sufficiently protect the right to strike, but also because the very preamble of the law suggested that strikes were to be condemned rather than supported.48
Much later, the work of Christopher Tomlins and other critical scholars would vindicate the concerns expressed by Van Kleeck and Baldwin, but Wagner himself disagreed. Section 7a, he argued, had not “lulled labor into a sense of security,” as Baldwin suggested, but had rather been a “galvanizing force.”49 While the senator politely acknowledged the two letters, he held fast to the idea that it was possible to equalize the bargaining power of employers and employees to such a degree that cooperation and mutual gains would be possible. In this respect, the spirit that underwrote the Wagner Act was aptly captured by the labor economist Harry M. Millis in his testimony before the Senate Committee on Education and Labor in 1934: “If and when collective bargaining is freed from undue militancy, as it can be when wise management and good labor leadership are brought into cooperation, special problems connected with collective bargaining clear up and there are opportunities to gain to all parties,” Commons’s student declared.50
However, this harmony depended on a clear definition of the two entities that were expected to cooperate and bargain with one another, namely “labor” and “management.” There again, the influence of Commons’s work was significant. Indeed, Commons’s work premised social harmony on a restrictive sociological view of the worker. Although he was quite close to the AFL and the skilled trades—they had served as a model for the job conscious working class that he and Selig Perlman had analyzed—in his later work he provided a sociological definition of “employees” that actually reflected the organization of work in the modern, Fordist companies. Indeed, it was restricted to manual workers who followed the foremen’s orders, but it excluded those higher up in the hierarchy. In Commons’s prescription for a new industrial order based on the harmony of the collective bargaining process, we thus find some of the origins of the contemporary problems associated with the legal definition of workers.
Whether those who conduct and lead the work of others are workers themselves was never an easy question. In Capital, Marx emphasized the “double nature” of the labor of superintendence. On the one hand, he compared the work of foremen and managers to that of the conductor of an orchestra and firmly situated their role in the realm of productive work. Indeed, he noted, any cooperative work required “commanding will to coordinate and unify the process,” and socialist cooperatives amply revealed this need, as they too were organized to make this coordination possible. As Marx further explained in the unpublished chapter 6 of volume 1 of Capital, foremen and managers were part of an abstract, collective worker, a “socially combined labour capacity,” including engineers and manual workers.51
On the other hand, Marx contended that in the capitalistic system, the labor of superintendence sprang from the sheer antagonism between workers and capitalists—it was necessary to the submission of the former to the latter. Moreover, it was used to justify the inequalities between the social classes, as economists argued that workers should not simply be expected to produce the maximum surplus value, but also the wages of those overseers and superintendents who helped to turn them into useful social beings. As a result, for Marx overseers and superintendents had a “divided allegiance” typical of the petty bourgeoisie—they were wage laborers, sprang from the same social classes as the workers, and took part in the productive endeavor, yet their role in the exercise of social control aligned them with capital.52
Commons’s economic sociology, however, identified no such divided allegiance, for he perceived no structural antagonism between workers and capitalists. Commons agreed with Marx that labor combined “mental and managerial faculties” as well as “manual” ones, but he did not conclude that all workers using such faculties made up an abstract, collective entity.53 In fact, very early on Commons repudiated the theory of labor’s right to the entire product as passé: ever true to the perspective of evolution, he saw this theory as the mere product of a moment in the history of political economy when it was a “science of the production of wealth”—an allusion to the fact that Marxist theory, like all classical economics since Adam Smith, was focused on the liberty to produce and, following Locke, posited the right of people to their own labor. As Commons, noted, the Marxist definition of the worker derived from this approach.54
Commons meant to operate a break with the Marxian association of labor with the physical product. As we have seen, he conceived of the labor process as a process implying interdependence between employers and workers, whose joint expectation of a future profit entailed mutual interests and order—this collective act he called “going concern.” Moreover, he approached this going concern from the standpoint of consumption. The “gross income” that both workers and employers expected ultimately derived from the exchange value of the commodities they produced on the market. To produce this commodity, employers and workers engaged in three successive transactions that, for Commons, were the core of economic activity. If we look further into this part of his sociology, we can understand why he ended up offering a restrictive definition of the worker in labor relations, or “employee.”
First, workers and employers engaged in a bargaining transactionin which they were equals, that is, both sides enjoyed an intangible property, sanctioned by the Supreme Court in 1897 in the Allgeyercase—the right to a future expected earning.55 This property right, Commons explained, included the right to withhold services one may need but did not own. Workers needed the job, and employers needed the workforce of workers. So there was no alienation in the employment relationship—what the workers really sold, he argued, was neither their body nor the use of their body, which were inalienable. Rather, workers, like employers, sold their goodwill, the workers their acceptance to follow the commands of the employer and the latter their acceptance to furnish the means of production. The key to this bargaining transaction between equals was that the worker became a creditor, owning an “encumbrance” on the future benefits of the company, while the employer was to become the owner of the product of the work. A bargaining transaction necessarily grew out of a relation among five parties—the employer, the worker, the two (at a minimum) alternatives to which each could theoretically look, and the state that institutionalizes this transaction, setting limits on the ability to coerce in the public interest.56
The second transaction, the managerial transaction, creates wealth, and thus derives from a technological imperative—to organize the work according to efficiency principles. To Commons, this meant that this transaction was necessarily between a legal superior—management, foremen—and a legal inferior, namely, the worker. Command and obedience govern the managerial transaction, which means that through the bargaining transaction, the workers commit to renounce their liberty and place themselves under the authority of the manager. To Commons, this renunciation of liberty was inevitable and did not constitute a problem because the managerial transaction was nonetheless to be governed by working rules and custom, and more generally the need to find lasting expedients to solve disputes. Moreover, it squarely fitted with the idea that what brought workers and employers together in an ongoing concern was an expectation of earnings, and this renunciation reflected Commons’s long-standing belief that unions should not concern themselves with the management of production and should rather focus on the distribution of incomes.57
The third transaction was the rationing transaction, whereby the distribution of the wealth produced was conducted. Collective bargaining and trade agreements were examples of this type of transaction just like legislatures dealing with economic questions of courts of justice solving disputes. In all these cases, the institution in charge of the rationing was the legal superior, and the participants the legal inferiors. The boards of mediation and arbitration that Commons advocated throughout his career and helped create in Wisconsin were prime examples of this type of transaction. More than the two others, it was the rationing transaction that exemplified the potential for social harmony that Commons sought to demonstrate. In this respect, there was no better example than the policy set by Herbert Hoover during the Great War to set the price of wheat. Indeed, Commons applauded Hoover’s decision to ask associations of farmers and the AFL to negotiate and agree to a compromise on the price under the aegis of the government. It was, Commons wrote, “representative democracy in industry … a procedure of appealing to the harmony of interest of both classes for the public good.”58
Not only did this theory of economic transactions offer a rebuttal to the inevitability of class polarization, but it also led Commons to suggest that in labor relations, foremen did not belong with “employees.” According to him, foremen and managers, who had to accept or reject the laborers’ output, were not “employees,” for they stood on the opposite side of workers in the managerial transaction.59 This was an important difference between scientific management advocates and Commons. The former believed that both engineers and workers should cooperate to maximize the output of the company. But, very early on, Commons disagreed with this notion on the grounds that in “modern industry it is the employer upon whom the responsibility of production is placed.” Indeed, Commons believed that this was an employer prerogative and that unions had no right to bargain over production or investment. Moreover, Commons insisted that cooperating with employers on the question of production or investment would compromise the ability of the union to bargain over its share of the final product. The creation of wealth was the sole responsibility of the employer, and the union bargained only over wages.60
Commons’s sociology thus legitimized relations of power within the modern factory because he believed that ultimately, the harmony that prevailed in a “going concern” rested on the common expectation of a gross income. However, Commons did not hold that all participants contributed equally to that goal, nor even that workers were the most important element in this endeavor. Rather, he argued that in modern enterprises the pursuit of this expected joint income was conducted through a vertical, hierarchical organization of people whose individual influence on the total product differed greatly—it was great at the top but insignificant at the bottom. Speaking the Progressive language of efficiency, Commons suggested that it was necessary to differentiate between two types of actions in the workplace—there were “discretional” and “ministerial” “acts of will,” with the latter term conveying the nearly total absence of discretion. To Commons, manual workers naturally stood at the bottom of this hierarchy because they mainly acted “in subjection to the will of others,” while foremen, superintendents, and managers had greater discretional influence.61
Moreover, Commons connected the notion of “employee” with “ministerial” acts rather than “discretional acts.” In modern factories, this implied a link between “employee” and physical exertion, arduous labor, as opposed to the use of mental faculties—a link that limited the idea of the worker to the blue-collar world. “The agent deals with people, and therefore must rely on persuasion and coercion, whereas the employee deals with physical and animal forces,” he explained in The Legal Foundations of Capitalism. 62 In this respect, Commons seems to have followed a tradition going back to English political economists, according to whom productive work was the transformation of nature into objects.63 Most important, as we will see in the next chapter, his definition of “employee” was also in tune with the new organization of work in the Fordist system—the industrial sector organized around the methods and objectives of mass production—where the new foremanship closely allied foremen and many supervisors with management and separated them from “employees,” that is, line workers. A Progressive endeavor, Commons’s sociology of the factory world nonetheless justified—and to some extent reinforced—the social organization of the Fordist factory, for the main element characterizing the “employee” was precisely his or her inability to use discretion on the job, whereas discretion was an attribute of “agents” who were really agents of efficiency because they used their knowledge to influence the objectives and prospects of production. By contrast, “employees” were only the means of this efficiency, as they provided the brawn.
This traditional vision of the worker, however, was only one part of the definition of “employee,” which to Commons really revolved around the lack of discretionary powers. In fact, to Commons, “employees” were not necessarily manual workers. As he noted, the American government had long called some of its workers “employees,” although they were white-collar workers. But what mattered to him is that these governmental clerks were indeed “employees” because their duties were largely instrumental, or “ministerial” in his vocabulary: “The State itself is but one of many going concerns, whose sovereign working rules are but a larger collective will, and the behavior of whose officials is collective behavior. It too has its ministerial agents with such slight discretionary powers that they are held in law to be only ‘employees.’”64
This definition of “employee” had significant consequences for Commons’s theory of collective bargaining, for it was the basis for the definition of the two social entities involved in the bargaining process. As William Leiserson explained to the members of Congress in 1939, it was important for these two entities to remain stable over time:
Quite frequently, individual members of a board of directors and individual managers, superintendents, or foremen, differ with the majority of the directors or managers regarding wages, hours, and conditions of employment. But they are not permitted to bargain as individuals … there must be collective, unified bargaining on behalf of the management of the corporation. Similarly … there must be unified bargaining by the whole of the employees who constitute an appropriate bargaining unit.65
Leiserson’s description of the two social groups involved in collective bargaining left the labor of superintendence squarely planted in the realm of management. Indeed, the labor sociology developed in Wisconsin implied a link between unionism and tedious, routine work. It moved the idea of collective bargaining away from the egalitarian tradition that had first underwritten the claims to industrial democracy—the idea that the right to organize and bargain collectively might be a political right accruing from citizenship. Commons simply never envisioned that “agents” might demand the right to organize too, and he did not do so because he did not believe that unionism should challenge managerial prerogatives. Moreover, he understood collective bargaining as a vehicle for harmony because it was first and foremost a process of negotiation between well-established social entities.
As we have seen, Wagner, Keyserling, and other labor reformers believed that the legal definition of the worker they had adopted—although lacking in some respects—was broad enough to cover the industrial working class and thus solve the labor question. Similarly, Leiserson believed that the representation of the social world of the workplace as one made up of two distinct social groups, “management” and “labor” or, as they were now increasingly called, “employers” and “employees,” was essential to the Progressive axiom of reconcilable social interests. In either case, there were limits to the recognition of workers’ individual rights to organize, and this recognition stemmed precisely from contemporary perceptions of who a worker was.
In November 1945, Governor Thomas Dewey of New York celebrated the creation of the New York State School of Industrial Relations at Cornell University with a nationally broadcast radio address that Commons, who had recently passed away, would certainly have applauded:
It is a school which denies the alien theory that there are classes in our society that must wage war against each other. This is a school dedicated to the common interest of employer and employee and the whole of the American people. It is dedicated to the concept that when men understand each other and work together harmoniously, then and only then do they succeed. The State of New York will here provide the equipment to abate the fevers which rise from claims and counter-claims which are now the language of industrial relations.66
Later known as “industrial pluralism,” this science of social peace dominated the theory and practice of labor relations well into the 1970s, providing a source of inspiration and beliefs for three generations of labor economists interpreting the Wagner Act.
Even as Thomas Dewey gave his radio address, however, the sociological assumptions that guided such encomiums to the “common interest of employer and employee” were coming under severe strain because of the unionization wave that had swept through the ranks of foremanship during the war, and it was not clear any more what groups of workers should be included in the category “employee.” More than any other, it was the case of Packard foremen that exemplified the first challenge that the heirs of John R. Commons would have to confront—reconciling the tenets of their science of social harmony with the egalitarian claims stemming from the democratic principle.