Sunday, January 3, 2010

why study traditional economic institutions? part III of a week-long series

Question 1, commodification of labor

One thing I really like about being an economic historian is the ability to compare what I learned in my theory courses to what actually goes on in the real world. Sometimes, theory is strengthened this way, but more often than not (at least in economics) a study of economic history yields substantial deviations from the models learned in class. For example, I enjoy discussing historical deviations from the Marxist model because they generally strengthen the central claims of Marx while adding, at the same time, "exceptions" in certain variables that enrich our understanding of the fundamental concepts.

Commodification of labor doesn't fall into the category of "historical deviations" but there is significant variation in how laborers protested against it, specifically in early American history. Discussion of society in the Early Republic must include talk of the republican ideology that is a direct product of the Revolution. Historians from Left to Right have acknowledged the importance of individualism plus community values and the rhetoric of republicanism is the key expression of this concept. And one of the core requirements of this individualism was ownership of property: whether that means land or the product of one's labor more generally does not matter. I argue this republicanism shaped early labor struggles in a way that shows the importance of historically-rooted values of individualism that were a product of the Revolution.

There is a big difference between 1. wanting one's own share of the pie and no less, based on both the work one has put in and some norm of fairness; and 2. wanting control over the size of the pie itself. Both can be seen as radical views of the production process because both assert a democratic alteration of the existing property rights distribution. Certain groups such as Luddites have been concerned with (2). The revolutions in Russia and Cuba were also concerned, primarily, with (2) (of course the story is much more complicated than this, even for the Luddites, but this was one of their aims). We could even argue that some important radical groups in the U.S. were concerned with (2) and carried it through with the development of worker cooperatives and other democratic institutions in the workplace.

However, early labor movements in the U.S. were predominantly concerned with (1). In other words, it is much rarer in the U.S. labor history tradition to see the fundamental institutions of capitalism questioned and much more likely you see them fighting over wage shares or other aspects of the workplace. This is, in fact, one of the central points of Wilentz' arguments against American Exceptionalism. The problem is that this faocus leads to more market-oriented reforms. For example, the U.S. provides millions of dollars in subsidies for private healthcare programs. Social Security was at first very limited (agricultural workers and workers in the home were not qualified) and today to still is limited to market work (care work is completely excluded from compensation, despite the substantial portion of GDP it represents).

The issue, of course, is not to leave the explanation at that. The world is far too complicated to say that the American republican tradition can explain policy today. Furthermore, policy itself is not a constant and some people argue that the labor reforms of the New Deal, for example, were a significant leap forward for labor, not to be spit on by radicals searching solely for the overthrow of capitalism. Additional explanations can be found in analysis of the role of the state in capitalist society, in the peculiar politics of the South, in the legal system, and in private repression of strike behavior. In fact, some would argue that emphasizing these traditional institutions could weaken Marxist analysis, which is the point made at the end of my previous post (point 1), which I will address in my next article. I will then finish with the "big question", how contract law (and law more generally) broke up traditional institutions.

In summary, this post was written to get you thinking about how to apply a theoretical emphasis on traditional economic institutions to current day problems in practice and theory.


  1. A somewhat interesting question that occurs to me here:
    Do you think that (2) has to reach a critical mass of size before people are able to argue over (1)?
    The examples of Cuba and Russia that you give are what brought this to mind. I don't want to get into a rant about American exceptionalism here, but rather say that this is something we should discuss further sometime.

  2. Yeah you need to elaborate a bit because I don't understand what you're asking and I'm thinking you are reversing 1 and 2 but I might be wrong. Anyway please clarify but thanks for the comments!