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

Today, Big Ideas…Hang on to your hats

1. Capitalism & Free Markets

2.From “Labor Problem” to “Labor movement”

3. Lunch4. 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

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 comes to mind when I say the word?

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 in a free marketBusiness 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 “Free markets” with little or no government or outside regulation

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…

05

1015

2025

3035

4045

50

1870 1890 1910 1935

Percent in Poverty

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