Today,
Big Ideas…Hang on to your hats
1. Capitalism & Free Markets
2.From “Labor Problem” to
“Labor movement”
3. Lunch
4. Trip: American Labor Museum

Site of the famous 1913
Patterson Silk Strike
Website:
http://www2.widener.edu/~
spe0001

Click on Courses, then Local
32BJ Summer Program
Week 1 Reflection
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Solidarity Bingo
Triangle Shirtwaist Factory Video Clip
Walking tour: Statue in Washington Square, the
Triangle Building, Union Square
Thinking back to last week’s class, what lessons, ideas,
thoughts, insights or questions did you take away from
the activities listed above
No names…no pressure
New York City Labor History:
It’s All Around You...You Just Have to Poke Around…



Read each clue and figure out what the clue is referring to. Go to the site and
take a picture of yourself in front of it. The first person to get all the pictures,
and to provide a brief answer to each question, will receive a book and a $25
gift certificate.
Scavenger Hunt Clue 1
Some regard me as the “father’ of American labor, but today more people
know about the star of Harry Potter.. Most people are never taught about who I
am or what I did, it’s really a crime, a shame, like a fib. At Delancey and Pitt
there is a Housing Project named for me. Photograph my sign and figure out
who I was and what organization I helped create.
Understanding Inequality…Why does this
this happen? Why is it like this?


To start…we have to consider how
our economic system works…
So…what is capitalism?
 What
word?
comes to mind when I say the
 What
are some characteristics of
capitalism?
 What
are the rules…how does it work?
Capitalism

a form of economic activity in which the means of
production (factories, mines, hotels, software
companies etc.) are privately owned and in which
others, lacking access to the means of production,
are forced to sell their labor power for a wage in a
labor market.

Production is geared toward the pursuit of profit and is
regulated through market competition.

Profits that are generated belong to the owners of the
means of production.

I know…that’s a mouthful…lets focus in…
Capitalism. Not that Old……

France, 1666…Tailors vs. Button Makers
 Tailors
Learn to make buttons
 Button makers complain to King
 King tells tailors to stop
 Button makers pleased…Tailors gasp in disbelief…

Enter Adam Smith
 Anyone
know who this guy was?
Adam Smith: Hero of Wall Street Journal,
Republicans and others…


In 1776 writes, “Wealth of Nations”

Get rid of Kings and crazy rules

Give business people the freedom to compete with one another in
a free and open marketplace

If this means some win (tailors) and some lose (button makers)…too
bad for the losers
Just let individuals pursue their own self interest in a free
market, and all of society will be better off…
Adam Smith

Self-interest, individual action and selfishness as core value for
society

“Greed is Good”


Gordon Gecko, Wall Street…if you haven’t seen this movie…see it..
“It is not from the benevolence of the butcher, the brewer or the
baker, that we expect our dinner, but from their regard to their
own interest.”
-Adam Smith
Lots of Questions Emerge


If every individual pursues their own self interest, what
will hold society together?
Consider Eimer’s Blanket Factory
Read my Adam Smith
 See Opportunity in New World
 Decide to pursue my self interest & enter the blanket market


With no King to set prices, what will keep me from
gouging people by charging very high prices?
Regulating Self Interest

With no King to set prices, what will
keep me from ripping people off?
Competition
Business
in a free market
against Business
Regulating Self Interest…

With no King to give orders, what will
keep me from making things nobody
wants…or that might be dangerous, like
Fiberglass blankets?
Regulating Self Interest…

With no King to give orders, what will keep me from
making things nobody wants or dangerous things?

Consumer will make Choices in line with their self interest
Don’t want itchy dangerous blankets so choose not to buy them
 Supply will be regulated by demand of individual consumers


And again…Competition between Businesses


“Look at that ass making fiberglass blankets…let’s try fleece!”
“…the market will arrange for production of the goods that
society wants, in the quantities that society wants- without
anyone ever issuing an order of any kind.”- Adam Smith
A Self Regulating System…


Bottom line: No need for a central authority like King or
Government to regulate economic activity… just let
individuals pursue their own self interest in a free
market…
The “Invisible Hand” will organize society

Individual businessmen & consumers pursue their own self
interest


Markets will develop in many goods and services
Paradoxically, selfish behavior will lead to a happy society

“The pressures of the marketplace direct the selfish activities of individuals as
if by invisible hand into socially responsible paths.”- Adam Smith
A Laissez faire society…?

idea that government should limit itself to the
maintenance of law and order, and remove all legal
restraints on trade and prices.

From the French “Leave us alone”

Emphasis on
government or outside regulation
“Free markets” with little or no
Market Society…

In many ways markets are an astounding new system
of social coordination
 Pursuit
of profit and competition spurs new inventions &
innovation
Market Society…

Markets coordinate complex relationships between
people without anyone ever issuing an order
 Buy
a chocolate bar instead of pretzel…and your
sending a message to a farmer in Brazil…pretty cool!
Here’s one of the catches…The “Labor Problem”

In a capitalist free market, human labor power (a
person's ability to work) becomes something that is
bought & sold, just like blankets, coal or steel…
 Just
as farmer sells cocoa beans or chickens to gain
money…Workers sell their ability to work to gain $
 “Labor for sale…Labor for sale!”


So how will the price of labor be determined in a
capitalist free market society?
Let’s look at a concrete example…
Markets in human labor…

You needs ten unskilled workers for your blanket
factory

Will invest $1000 and would like to make 10% profit

Analyze situation and decide you’ll need 10 workers and
will offer $5 a day


Advertise your need to buy some labor and 1,000
people show up at factory gate…all with hungry
families to feed, rents to pay, clothes to buy…
How to decide who to hire?
Markets in human labor…


$5…$4…$3…$2…$1…
What’s happening…How is price of labor
being determined?
Markets in human labor…

$5…$4…$3…$2…$1…

Competition between workers in a free market for
labor sets the price

Each individual is pursuing his/her own self interest

Employers cut individual deals with each worker

The lower the wage paid, the more the employer
will make
Markets in human labor…


$5…$4
…$3…$
2…$1
Cheapest
workers
that can
do the job
win…
Cheapest workers who can do the job
win…
Cheapest workers who can do the job
win…
Cheapest workers who can do the job
win…
Cheapest workers who can do the job
win…
Cheapest workers who can do the job
win…
A Free Market in human labor…

Wages, Hours and Working Conditions
should be set the same way the price of
any commodity is set: in a free market
through competition

Do these rules seem to favor owners or
workers?

Who seems to have more power in this
relationship?
A Free Market in human labor…

Do these rules seem to favor owners or workers?

Who seems to have more power in this
relationship?

Note video clip on work in NYC’s garment
industry…who do rules favor…who has power?

Try to note some concrete examples
(NYC clip 2)
A “Free Market” in human labor?

Development of labor markets generate a
simple, but very important question:
 “Can
human labor be treated just like any other
thing we buy and sell in a free market…”

So…let me ask you…in what ways is the
experience of selling your ability to work
different from selling an extra apple that you
happen to have?

Think from the perspective of the worker…the seller of
labor
Labor Markets are different from other
markets because people are people

Selling labor power entails entering into an
ongoing relationship of authority and
subordination


Can’t hand over labor power like you hand over an
apple & then go home to watch TV… you must
accompany your labor power to work
You agree to take orders from the person who buys
your labor (the boss)
Labor Markets Create Conflict in a way
that other markets don’t…

Wages vs. Profits


How will the economic pie that a company bakes be
divided?
Hours

Length of day? Will there be bathroom breaks? Coffee
breaks? Paid Vacations? Sick Days? Maternity leave? Paid
Maternity Leave? Easter Sunday?
Labor Markets Create Conflict

What type of working conditions?


Speed of assembly line? How many rooms will a janitor
clean? How many students in a class-room? Patient to Nurse
ratio? One or two officers to a car? Scaffolding? Toilets?
Emergency exits? Fire alarms?
Questions of power and dignity?

How will people be dismissed? Will the manager check the
toilet to see if you took a crap? Will the work environment
be one of fear or respect? How will problems be solved?
Labor Power as Different…


Selling labor power brings people into relationships
marked by inherent conflicts of interest
Conflict is economic, not pathological …not due to bad
apples or mean people

Owners and/or Management must generate a profit

Workers must secure a livelihood


Concerned with wages, hours, job security, working conditions, dignity…
This Conflict is universal …though methods for dealing
with it vary widely…
Beyond conflict to exploitation…

For some in the labor movement, including the union that
led the strike where we’re going this afternoon, capitalism
is about more than conflict…it is about exploitation of
workers by capitalists…


Owners get rich by taking what workers produce
Consider my blanket factory
Low Wages for Some…Riches for Others…
10 workers @ $1 each a day
$10
10 workers produce $500 of goods by lunch
 Paid
$10…made $500…workers say
“Great. See you tomorrow, Boss…” And
the Boss says…?
Uh-uh. Back to work…10 workers produce
another $500 of goods by 8pm
Low Wages for Some…Riches for Others…
$1000 of Wealth Created
After paying $10 for wages, and $100
for the other costs of production there is
$890 left…
WHO GETS THE $890?
In this new game called Capitalism…The
owner gets it…those are the rules

Owner: Gets the $890
created by the workers



Can buy a nice house, a horse, a
fancy Monet painting, bury it in
his yard, reinvest it in the
factory, give workers a
raise…It’s his decision to be
made…
Workers: Get to go home with
their $1 and get ready for
the next day
Owners get rich by taking
what workers produce…
Early American labor market generates
Low Wages and Widespread Poverty…
50
45
40
35
30
25
20
15
10
5
0
Percent in Poverty
1870 1890 1910 1935
Early American labor market…Long
Hours…100 hour weeks

In an 1895 study the bureau did in cooperation with the
bakers' union, it found that bakers worked inhumanly
long hours, sometimes over 100 per week and that 11
percent of them had been ill the previous year. Over a
thousand bake shops in New York City were in
basements. Some of them were "cellars of the worst
description .... damp, fetid, and devoid of proper
ventilation and light." Many of them had very low
ceilings, forcing workers to labor in a stooped-over
position all day. Two/thirds of the bakeries inspected
were classed as "totally unfit.” –NY State Bureau of
Labor Statistics, 1895
Early American Labor Market…Long
hours…dangerous conditions

“Fatal accidents in the steel mills…accounted
for 20% of all male deaths in Pittsburgh in the
1880s. Newspaper lists of men killed and
wounded each year were as long as a casualty
list for a small battle in the American civil war.
Carnegie could not have cared less. When a
steel furnace exploded, he worried about loss
of production, not loss of life. …By the age of
40, most of his men were rendered useless
through working 12 hours a day, seven days a
week and they were discarded.”
 The
Economist, February 1, 2003
“How the Other ½ Lives,” Jacob Riis
(1890)
So what to do…



Sale of labor in a capitalist free market generates
conflict about wages, hours, working conditions,
dignity…
Some suggest the whole system is based on
exploitation
Individuals who must sell their labor, and who don’t
like their current work situation, can choose from a
broad range of strategies to improve their
situation…consider the following…
Choices: Paterson, NJ
Your family has just been forced off of the land in Italy. You head to
Rome hoping to find someone to buy your labor. Nobody wants to
buy it. You get on a boat and go to Paterson, NJ. Upon arriving you
learn of a silk mill that is buying labor. You apply, and are hired to
run two looms. You are expected to work 12 hours a day, 6 days a
week and 6 hours on Sunday. You receive no benefits or vacations,
and are paid $1 a day, which is barely enough to feed your family.
Working at the mill sucks. It is dark, dirty and dangerous. A
manager looks in the toilet to make sure you’ve actually done your
business. After 4 months on the job, the owner buys new machinery
and informs you that that you will now have to operate 4 looms but
will not get a pay increase. You can take it or leave it.

What some ways that you, as an individual working alone, can improve your
life? There are many options…
Choices…

Individual Strategies Include
Kiss the bosses ass for better treatment
 Sleep with the boss (Anyone ever read The Jungle)
 Bring your kids to work so they can sell their labor power
 Go back to Italy
 Go to school for new skills
 Work harder to impress boss
 Abandon your family


Just quit…someone explain how individuals pursuing their own
self interest and quitting can fix this entire problem…
Invisible Hand Self Regulates
Solve the problem on individual basis…QUIT
Factory sucks, individual worker should pursue own self interest
and quit
 If Eimer’s workers keep leaving
 Eimer will either have to change or go out of business
 It will be in his own self interest to improve conditions
 Invisible hand will correct situation
 Firms with bad working conditions will ultimately disappear
 No need for outside intervention


In the long run, the invisible hand will regulate things
But in the long run, we’re all dead…


In the real world, how realistic is it to expect that all
workers will quit all the bad jobs and make them
disappear?
What kind of things make it hard for people to quit
bad jobs?
Choices: Paterson, NJ


Your family has just been forced off of the land in Italy. You
head to Rome hoping to find someone to buy your labor.
Nobody wants to buy it. You get on a boat and go to
Paterson, NJ. Upon arriving you learn of a silk mill that is
buying labor. You apply, and are hired to run 2 looms. You
are expected to work 12 hours a day, 6 days a week and 6
hours on Sunday. You receive no benefits or vacations, and
are paid $1 a day, which is barely enough to feed your
family. Working at the mill sucks. It is dark, dirty and
dangerous. A manager looks in the toilet to make sure you’ve
actually done your business. After 4 months on the job, the
owner buys new machinery and informs you that that you will
now have to operate 4 looms but will not get a pay increase.
You can take it or leave it.
What are some ways that you could work with others to
improve your life? There are many…
One Group Strategy…Unions




Opt for collective action instead of individual
action
Cooperate with other workers (limit
competition between workers) and
Collectively demand that wages, hours and
working conditions are improved
If boss won’t change, Collectively Refuse to
Sell Your Labor…Strike!
Replace Individual Bargaining with Collective
Bargaining
Organizing Labor




From individual bargaining to collective
bargaining…easier said than done!
The Uprising of the 20,000
How does the formation of unions change the power
relationship?
Who seems to have more power in this relationship?
“Organized Labor”

Free Market Capitalism



Individual workers bringing their labor to market and sells it for
whatever price it will fetch
Price of labor set by competition between self interested workers
competing in the labor market
Unions & Capitalism

Convincing/Organizing individual workers to cooperate with other
workers to collectively make demands on management

Wages, hours and working conditions set by negotiation between
employer and union…a contest of
power
Organizing labor

Anywhere capitalism develops, individuals come together to try to
“organize” their labor into unions…to become “organized labor.”

Look at China now

Decision to organize brings many, many questions…

Who should be in the union and who should you try to bargain with?



Every worker in one craft (weavers) bargaining with mill owner. Only skilled?
Only men? Only Whites?
All workers in one factory bargaining with mill owner.
All workers in an area or industry bargaining with a group of employers?
Building a labor movement…

What should they demand from employers?

Better wages, hours, working conditions?

Health insurance & Pensions?

A role in managing the organization of production or the
delivery of services?

A say in how things are priced & investments are made?

Control of production and profits?
Building a Labor Movement…

What, if anything, should they demand of government.?

Protection for the right to form unions?

Laws about wages, hours and working conditions?

Unemployment Insurance? Health Insurance? Safety Regulations?

Health Insurance & Pensions?

Affordable housing, more parks, new immigration policy?

The abolition of wage labor and an end to capitalism?
Choices emerge…

Unions will not agree about the best strategy…then
or now…
Building a labor movement…

There will be many different opinions about
this…

Next we’ll consider the choices made in America.

For now…lunch and then our trip