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February 23, 2005

History Repeats History...

Shoemakers, Wal-Mart, and the Eternal Return of the Same

Recently I decided to revisit John R Commons classic study of the American Shoemakers which spans the years 1648-1895. I'm struck by the parallels between what workers faced during this period and the challenges confronting today's workers - outsourcing, globalization, cheap labor, deskilling, lowering of wages & Increasing working hours, periods of union strength and union weakness.

In summing up his study Commons suggests a theme which was present throughout all the battles waged by the shoemakers in thier various incarnations:

"The conflict is ultimately one between the interests of the consumer and the interests of the producer. Wherever the consumer as such is in control, he favors the marginal producer, for through him he wields the club that threatens the other producers"

Presently the menace of Wal-Mart is having a downward pressure on wages (and prices). The American consumer drives the success of Wal-Mart at the expense of producers (workers). In the early 1800s small shoe manufacturing shops could not compete in the new public markets with large manufacturers. Small shops either cut shoemakers wages drastically or went out of business.
At one point small shoe merchants attempted to do the "right" thing and together pledged to honor the established workmen's wages. Within 9 months this collapsed, the small manufacturer could no longer pass on the higher wage costs to the consumer in the form of higher prices.

Food retailers, many which had come to tolerate, if not accept, unionization face this same pressure from Wal-Mart today. Grccery at one point was highly unionized and was dominated by pattern bargaining: Whatever wage settlement was agreed to was implemented by all grcoers in the region allowing a portion of the costs to be shifted onto the customer. When a competitor comes to town firms can no longer afford to do this and the relationship between the union and the firm changes drastically (as seen by the recent Southern California Grocers Strike).

I'm not sure at this point what lessons can be drawn from the history of the Shoemakers. On one hand the conflicts and their outcomes seemed pre-determined by  forces outside the control of either the manufacturers or the workers - Forces which continue to play themselves out today as noted above. Yet, John Commons would not have accepted a world of pre-determined outcomes. In fact his project was the creation of institutions and public policy which would lessen the negative effects of markets. His vision was realized through the creation of programs such as Unemployment Insurance and the passing of the National Labor Relations Act.

One thing is for sure, the current "crisis" in labor is nothing new. If we follow the study of the Shoemakers we see long periods of union decline and then resurgence. These periods however seems less the result of the activities of workers and more the outcomes of economic forces largely outside of our control.

February 23, 2005 in Notebooks | Permalink


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Hey, I'm a Belgian economic student and Commons intrests me a lot. I also think that this early 20th century economist can learn us a lot these days.

Posted by: Sacha Stassen | May 8, 2005 3:27:59 PM

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