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November 15, 2007

Strike!

James Surowiecki's article on the mechanics, historical probabilities, and behavioral economics that go into a strike is fantastic. After running through research showing that strikes rarely end with large gains for workers, that both sides tend to systematically overstate the strength of their position, that the longer a strike goes on the less likely it is to end well, and that, in the end, strikes are rarely economically rational once you factor in the lost wages, Surowiecki gets to what I think is the exact right bottom line:

Justice matters quite a bit in strikes, which often turn more on questions of fairness than on strict economics. Fairness doesn’t matter much in conventional economics, which assumes that, if you and I can make a deal leaving us both better off, we’ll make it. But, in the real world, if the deal seems unfair to me I may very well reject it, even if doing so leaves me worse off. The quintessential example of this is the so-called ultimatum game, where participants offered a share of a ten-dollar bill by a fellow-participant will actually turn down the free money if they think their share isn’t big enough. In the same way, a capuchin monkey who’s being rewarded for working with another monkey will often refuse to participate if she sees her partner get a better reward. And in a series of experiments run by the economists Simon Gaechter and Ernst Fehr people prove willing to pay in order to punish those who act unfairly. Readiness to pay a price in order to enforce an idea of what is right is part of what keeps sides from settling: writers accept the loss of paychecks because they believe they deserve a cut of the revenue from their work, and producers accept the loss of business because they believe that TV shows and movies are their property. The paychecks and the profit-and-loss statements may indicate that the writers and the producers should be able to resolve their dispute quickly. But in labor relations the bottom line isn’t always the bottom line.

Or, as Labor types would put it, strikes are about dignity and justice. There's also the argument that the threat of strikes, and the occasional demonstration of one, ensure better treatment in non-strike conditions (i.e, negotiations take place with the threat of a strike in the background), and so they're rational in a long-term sense, even if few individual strikes make much of a difference.

November 15, 2007 in Labor | Permalink

Comments

Hmm. Right now my S.O. and I are deeply entrenched in a major argument/mutual strike, and it occurs to me that this entire post and block quote explain much about why it continues even though we are both unhappy,and becoming more so each day. Ezra's last point seems right on in this case -- we're both hoping for better behavior in future non-strike times, as well as being stuck in a justice-oriented stance from which it's impossible to back down, lest it affect the crediblity of future strike threats. This is probably not a novel insight.

How do participants in labor disputes signal their total commitment to the strike, such that the other side is motivated to make concessions? Is there a way to apply this to relationship strikes? Anyone know of any papers considering strikes in this context?

Posted by: LP | Nov 15, 2007 1:54:30 PM

Hmm. Right now my S.O. and I are deeply entrenched in a major argument/mutual strike, and it occurs to me that this entire post and block quote explain much about why it continues even though we are both unhappy,and becoming more so each day. Ezra's last point seems right on in this case -- we're both hoping for better behavior in future non-strike times, as well as being stuck in a justice-oriented stance from which it's impossible to back down, lest it affect the crediblity of future strike threats. This is probably not a novel insight.

How do participants in labor disputes signal their total commitment to the strike, such that the other side is motivated to make concessions? Is there a way to apply this to relationship strikes? Anyone know of any papers considering strikes in this context?

Posted by: LP | Nov 15, 2007 1:55:21 PM

Shocking! Disputes involving labor - i.e., human capital, i.e., people - are not purely rational! I'm floored.

Have you seen the YouTube clip from the Daily Show writers covering their strike? Priceless. The only thing they're missing is the Austin Powers-esque gestures to accompany their "$1 Billion Dollars!" screaming.

http://www.kaichang.net/2007/11/writers-on-stri.html

LP, sounds like you two need a mediator.

Posted by: Redstar | Nov 15, 2007 3:20:45 PM

Yeah, a mediator would help.

Separately, strikes aren't just about wages, they're also about working conditions. Decreased safety risk can add up to a lot of value very quickly.

Posted by: Punditus Maximus | Nov 15, 2007 6:26:18 PM

Or, as Labor types would put it, strikes are about dignity and justice.

At the expense of the actual economic circumstances of the workers, which, as Surowiecki points out, rarely improve as a result of strikes. Which suggests that a little more sympathy and tolerance for those workers who oppose a strike is in order. But instead, they are typically treated despicably by strike leaders are their sycophants on the picket lines.

Posted by: JasonR | Nov 15, 2007 10:10:00 PM

There's another side of this -- strikes usually cost more for employers* than it would cost to meet the demands of workers. Why, then, does management court a strike rather than signing a deal? The answer, I think, is that the decision makers in management don't want to share their decision making power with employees. To do so would threaten the status hierarchy in the workplace. This, I think, is the other side of the respect coin.

*For example here is some really simple math I did analyzing the 2004 grocery strike in California.

Posted by: dr | Nov 15, 2007 11:42:10 PM

"The answer, I think, is that the decision makers in management don't want to share their decision making power with employees. To do so would threaten the status hierarchy in the workplace."

Good point. Capitalist workplaces are organised like fascist states, very much top-down "do what you are told" -- which is why anarchists are anti-capitalist.

This also explains why experiments in workers' control in corporations have all been discontinued in spite of the improved productivity and efficiency they produced. Simply, the bosses soon realised that they would be out of a job and so stopped the experiment. David Noble has discussed this in length in his books (which is quoted in An Anarchist FAQ" -- sections B.4 and J.5, in particular).

Posted by: Anarcho | Nov 16, 2007 4:23:05 AM

The Wobbly model of "striking on the job" makes a lot more sense.

The Wagner regime was adopted in the '30s in order to put union bureaucracies in the business of enforcing contracts against their own rank and file, and to direct labor struggle into a model based on official, declared strikes.

The practical effect was like telling the farmers in the militia at Lexington and Concord to come out from behind the rocks, put on bright red uniforms, and march in parade-ground formation.

Going on a declared strike is just an invitation to the boss to lock you out and hire scabs--he's just looking for the chance to do it. It makes far more sense to stay at work and look for ways to raise production costs and lower profits, meanwhile enlisting the customer as an ally through "good work strikes" and "open mouth sabotage," and taking advantage of the new network culture to systematically sabotage the company's name and enlist public sympathy on the outside (e.g., Wal-Mart workers' organized publicity campaign against open-availability, which caused the company to cave in under pressure). The average worker can probably think of a hundred ways to drive up costs and impede productivity, with virtually zero cost of getting caught. And if you DO have to go on a conventional strike then, by God, it's good to remember there's no point in the boss hiring scabs when the machines are also "on strike."

Posted by: Kevin Carson | Nov 16, 2007 5:07:22 AM

One interesting sidenote to the ultimatum-experiment work is that in some studies students who had taken just a few economics courses were willing to accept much more one-sided divisions than those who had taken either no courses or those who had completed a major. Probably says something about simple versus sophisticated understandings of utility and signalling.

I'm not suprised to learn that strikes, like wars, leave both sides worse off, even if they "win". But the proper comparison probably isn't with the status quo ante, rather with a longterm status quo post.

Posted by: paul | Nov 16, 2007 11:37:38 AM

Anarcho wrote: "Capitalist workplaces are organised like fascist states, very much top-down "do what you are told" -- which is why anarchists are anti-capitalist."

This seems rather broad. I've worked in many workplaces, some in the private 'capitalist', for-profit sector, some not. So far, I've seen no correlation between for-profit workplaces and inflexible top-down organization. On my pro-capitalism days, I might even argue that for-profit workplaces are motivated to discover and implement better management strategies.

Also, not all anarchists are anti-capitalist. On my pro-anarchist days, I might even argue that a true anarchist gives up the right to self-identify with any particular economic model, and recognizes that whatever economic system might emerge from anarchy, it probably wouldn't look much like capitalism, communism, or anything else familiar.

Posted by: LP | Nov 16, 2007 12:08:38 PM

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