Are labor unions anti-capitalist?

I was viewing another thread, and I decided I had to have an answer to this question. I searched the SDMB and didn’t quite find what I wanted, so here goes…

I guess it’s mostly conservatives (and libertarians?) who think labor unions are un-American or a Communist plot to destroy our economic system. They have been stereotyped as socialist.

And economically, it may be that unions have caused some corporations to suffer losses relative to non-unionized competitors.

But as a logical purist, I fail to see how workers’ banding together to make a profit is any different philosophically from owners’ banding together to make a profit. What is bad about labor unions, so long as they’re non-violent?

I say, if workers want to form their own “corporation” - the union - and sell their labor to another corporation, then that’s just good business. Whatever terms they want to negotiate (benefits, seniority, work rules, exclusivity, etc.) are between the two entities. Let the market provide the consequences.

Conversely, I fail to see how workers’ seeking government protection (e.g., minimum wage, overtime rules, occupational safety, etc.) is really any different from corporations’ seeking government protection (e.g., limited liability, subsidies, bailouts, etc.)

So why do conservatives/libertarians paint labor unions black and “private enterprise” white?

What am I missing here?

-Puzzled in the South


I don’t consider myself a conservative but I do lean towards the libertarian side of the fence. Unions exist to make things better for their members, not society at large, so I don’t really consider them to be leaning towards socialism.


Probably. I like the concept of unions just as much as I like the concept of a corporation. Sometimes unions are rife with corruption and if you’ve upset the powers that be you might have difficulty finding work. Elizabeth Hurley’s future as an actress in Hollywood was threatened because she pissed off SAG.


Wel, it really comes down to what you define as capitalism.

Myself, since the capitalist system is pretty much just keeping the fruits of your labor, and all the accretions that implies (banks, savings and loans, insurance companies etc), it could be argued that any sort of top-down or centrally organised wealth re-distribution is at root anti-capitalist, and I include in that tarriffs, protectionism, etc.

In short, any time competition is artificially limited by central or planned mechanisms, capitalism is limited. If there is no free trade, and no free market, there is no capitalism.

But as a logical purist, I fail to see how workers’ banding together to make a profit is any different philosophically from owners’ banding together to make a profit. What is bad about labor unions, so long as they’re non-violent?

Well, I would consider owners banding together to make a profit anti-capitalistic as well. Its just another restriction of the market, in this case a private restriction, but a restriction none the less.

This is one of the things I dont like about unions. While it is rightfully illegal for two competing grocery stores (or anything) to set prices together, and thus restrict the market, two union electricians competing in the same town allready have a floor beneath which they are not free to charge. And in states where it is impossible to work as an electrician without being in a union, this is uncapitalistic, as it is an artificial restriction on the market.

I say, if workers want to form their own “corporation” - the union - and sell their labor to another corporation, then that’s just good business. Whatever terms they want to negotiate (benefits, seniority, work rules, exclusivity, etc.) are between the two entities. Let the market provide the consequences.

And thats fine. Until that union starts to lobby government, at usually the state level, to enact legislation which effectively stiffles anyone but the union from being able to negotiate with that corporation. Or to enact legislation taking workers choice out of the matter, in effect granting unions a monopoly on labor.

Conversely, I fail to see how workers’ seeking government protection (e.g., minimum wage, overtime rules, occupational safety, etc.) is really any different from corporations’ seeking government protection (e.g., limited liability, subsidies, bailouts, etc.)

Well, companies seeking and getting subsidies, bailouts etc is anti-capitalistic as well, and shouldnt happen either. But the equivelant to that is not overtime rules, occupational safety etc, its welfare, unemployment insurance, etc.

So why do conservatives/libertarians paint labor unions black and “private enterprise” white?

As for myself, its because while private enterprise has largely learned and adapted to economic realities in the past 100 years, unions are pretty much the same as they were 100 years ago. Not all private enterprise is ‘white’; there are still many industries that were protected during the cold war that should no longer be getting the protection. Just because something is a private industry doesnt mean that there is a free market.

Unions came about as a result of lack of competition (lack of capitalism) in business; it was a time when government granted/protected monopolies were commonplace. Its one thing to say one doesnt need to unionize in a town of mutiple industries/companies; if you dont like the conditions where you work, you go somewhere else. But a town with one major industry, no place else to go to get work, is ripe for unionization.

Which is why the largest gains in union membership are in industries that dont really have competition, namely government workers. And the industries with big declines in union memberships are ones that used to be more protected but now are less so, such as the auto industry.

Workers have far more choices as to where they labor and for whom or what; when institutionalized protectionism declines, so does institutionalized protective reactions to it.

What am I missing here?

-Puzzled in the South **

No offense, but I think your confusing the theory of unions as you state it with the reality of unions as it is, and thats what youre missing.

If all unions were was ~workers’ banding together to make a profit~, negotiating contracts with companies etc, I wouldnt personally have a problem with them. But unfortunately unions are to a large extent just medieval trade guilds, existing not so much to have bargaining weight to their members but also to restrict the number of people able to get work in order to artificially increase their own gains. And yes, companies that do the same thing are just as wrong and just as anti-capitalistic.

I’m in agreement with Voodoochile.

There is nothing inherently anti-capitalist about labor unions. They only become anti-capitalist when they lobby for and obtain special treatment from the government. For instance, if unions get the goverment to require union membership in order to work, then that is anti-capitalist. Same thing when corportations lobby for and obtain special treatment from the government.

Here is the Libertarian Party position on labor unions.

I recognize that the LP does not speak for all libertarians, but I think most libs would agree that workers are welcome to unionize and bargain collectively, but that employers should not be compelled to negotiate with unions or hire only union workers and that neither side must be allowed recourse to violence or coercion.

So, Voodoochile, you seem to be saying that both unions and corporations can meet and violate the spirit of the free market, depending on how they operate.

Okay, thinking out loud, the analogy between labor unions and corporations is not perfect, but I do see some important parallels:

[li]Labor unions try to gain a monopoly (e.g., control the relationship between all workers and the management, seek regulatory barriers to entry). Corporations try to gain a monopoly (in various ways - e.g., exclusive rights to sell, eliminating or buying competitors).[/li][li]Labor unions are a way for a number of individuals to gain more clout as a group. Corporations are ways for a number of individuals (investors, shareholders, entrepeneurs) to gain more clout as a single entity.[/li][li]Labor unions can become corrupt, tyrannical, and vicious. Corporations likewise.[/li][/list=1]

It certainly appears to me that both big labor and big business tend to be anti-capitalistic – at least in the sense that everyone is trying to gain control of everything and eliminate their competition, rather than trying to do a better job and serve/retain customers.

So then, the real question is not the original thread title, but how do we keep the market free?

There must be some pre-existing threads on that issue. I’ll check.

You have made the assumption that it is not possible to eliminate the competion by doing a better job for the customer. That is not true.

Communist plots are so five minutes ago.

Or forty years, actually.

So then, the real question is not the original thread title, but how do we keep the market free?

We don’t; not in any meaningful way. If the government does not involve itself in market regulation, then people (with statistical generality) will flock towards private structures that best advance their self-interest; labor unions, corporations, religious entities, etc, depending on their tastes and station in life. That is to say, in a totally free economy, it seems natural for aggregations to form that work to slow the free economy down. Think of them as thick blobs of clogging organic material spontaniously forming in a flowing stream.

I gather that libertarians may argue that a totally unregulated market would correct these problems naturally, and that it is only when these aggregations seek government sanction or priviledge that they become a problem for the operation of the free market. After all, if a labor union becomes too demanding of workers or corporations, won’t competeing labor unions spring up if they are free to?

The market will not self-correct in this way, however, for the following reasons (for a start):

  1. The transaction costs associated with forming a new aggregation are substantial, and related to the operating budget of a current aggregation. Even if an existing aggregation is inefficent, therefore, as long as it is less expensive to inviduals than the total cost of starting and maintaining a new aggregation, rational actors won’t form new aggregations. The aggregation can raise transaction costs of forming other aggregation in two major ways, noted in 2 and 3.

  2. Aggregations will use state police power to self-preserve. (See the actions of managers in Delaware when corporations were threatened with takevoers in the 80s.) If there is a state police power, the aggregations figure out how to use the police power for their benefit will gain an advantage. All else being equal, the market will favor those who get a legal advantage. This advantage is not artificial; it is inevitable that aggregations will seek out loopholes or leverage in any police power.

  3. In the absensce of a state police power, aggregations will self-preserve by raising the transaction costs of alternatives in extralegal ways. Some of these extra legal tactics are favored by libertarians- using strike breakers to stop a union, or forming a trust to monopolize a market - but some are patently not. An aggregation could (and they do) use threats, moral pressure, rhetoric, violence, and what have you to make it difficult for competitors. Once again, all else being equal, the market will self-select for aggregations who are good at doing this because they will be the de facto most efficent alternative.

  4. Drawing a distinction between using the state police power to PRESERVE free markets and using it to MANIPULATE free markets is a purely rhetorical distinction. It seems like libertarians are against both 2 and 3 forms of aggregate self-preservation, and they want to achieve this by forbidding government from acting in the manner described in 2, and encouraging it to stop action like that described in 3. The problem is that there is a spectrum on market regulation. It’s easy to pigeonhole some laws - like laws against violence, for example - as being strictly in category 2, but that is because we have a shared moral disposition against violence. More esoteric laws are harder to place; do laws encouraging collective bargaining involve taking power away from market actors, or do they merely correct for corporations taking invalid self-preservation measures against unions?

It is problems like this that make me refuse to sign on to the starry-eyed Liberterian party. The Libertarian ideal only works if you can pigeonhole regulation into one of the above categories, and in many cases you can only do THAT if you start with a laundry list of valid and invalid aggregate measures. This ends up becoming an a priori list. (Objectivism’s promise to the contrary.)


Well, as Mr Mace pointed out, doing a better job to please the consumer is the ideal way of getting rid of competition.

But we have to be pragmatic, and recognize that biological organisms will tend to expend the least energy for the most benefit.

If more and more companies find that it is cheaper to, say, buy a few congressmen or city councilmen than it is to invest in R&D and customer service or whatever, more and more companies will try that route. A system that relies on the members of it having a certain common moral outlook for it to work is a system built to fail. As the free market, and thus competition, increases, so exponentially does the pressure to undercut any competitors before they even have the chance to compete. It often is just plain going to be cheaper.

If there were a bazillion dollar award attached to winning the figure skating competition, Tanya Harding would only be one of many.

In my opinion, one of the single most important things that will have to be done in the next 20 years is a complete overhaul of the US tax code. This myriad labirynth of rules, specs, deductions, etc is where soooo many inequalities have their root.

I support taxing all commerical enterprises at the same rate, whether they be corporations, partnerships or sole proprietorships or whatever. As it is now, its impossible for a business to grow beyond a certain income level without incorporating; this has nothing at all to do with any kind of economic fundamentals but everything to do with our tax code.

I support a flat tax, with congresses ability to grant tax incentives/benefits for certain industries or certain companies severely curtailed (as in a 3/4s vote). I dont understand how the Left can be so much against a flat tax when its the lack of it that is the core root cause of so many of the Lefts gripes. Seems rather than remove the source of inequity, the Left often would rather compensate for it. I also support requiring all congressmen to divest themselves of all personal private holdings upon taking office just like the Pres has to.

This would have an effect beyond just free trade; take away a congressmans ability to insert a clause giving a 5% reduction to, say, any company that produces chromium bromide within 2 miles of a federal blah blah blah that has x amount of workers (which is the way the vast majority of protectionism in this country works), and you reduce the value of congressmen, thus reducing the incentive for special interests to try to buy them. Political finance reform is needed when politicians are valuable commodities for a company/industry to have. Remove their value as economic commodities and finance reform becomes much less of an issue.

I also support a federal Right to Work Act. I am convinved that the one fundamental reason Cal can still bounce back and remain competitive and produce so much even with its high tax rates and ding-dong state government is the right to work clause in the state constitution.

Non competition claues that contrators or employees are often forced to sign in other states dont hold up in court here. If a company cant manage its resources (employees) well, then its too bad if they leave and go to the competition or start their own competing business. Thats kinda one of the incentives for not mismanaging your resources (employees).

The right to work clause here is also why labor can either join a union, or not. You can become a contractor here and work in a trade without ever having been in a union. In many states, sure you can be non union, but the only accredited trade schools the state will recognize are guess what? Union trade schools.

These are just two obvious effects the right to work clause has here, there are many many more subtle ones, and I think a federal Right to Work Act would empower many working people in many states to not be so at the mercy of their employer.

There are quite a few other things that could be done as well, but I think it more wise to start with a few fundamentals, let the effects of those changes percolate through, and let further necessary changes reveal themselves. What has been built up over many many years isnt going to be done away with in a few months.

Well, Im not sure anyone mentioned an unregulated market. Myself, Ive only been talking about a free market. Of course that implies a certain amount of regulation, just as people being free to walk down the street implies a certain amount of regulation.

No, think of them as a means for groups to cooperater towards whatever activity they are striving to achieve. If, as you seem to assume, most people will engage in plunder or obstructionism rather than production, then yes they will be a drag on the economy. I’m not sure you have demonstrated that ALL such “aggregations” would be formed for this purpose, however.

  1. If the economic costs of forming a new “agregations” are too high to justify it, then the “monolopy” is not gouging its consumers.

2 and 3. If anyone uses force they have violated the first tenet of a “free” market. The principle is the “initiation of force”. That is, any actor (individual or “agregate”) can only legitimately use force as a defence against anothers initiation of it.

If what you are saying is that making laws is a complex undertaking, then I agree. If, however, what you are saying is that we cannot have free markets “in any meaningful way”. then I vehemently disagree. For instance, your question can be answered simply enough. It depends on how the law “encourages” collective bargaining. If the law Requires all workers to be members of a particular union, then that can be described as monopolistic. If however, it simply says that force cannot be used to by either side to restrict the other, then there may not be such a problem. Or, perhaps it simply establishes some third party tools that can be used to resolve disputes. Again, the principle is initiation of force. As long as force is not initiated by either side the law in question can be “pigeon holed” quite nicely thank you.

I’m not at all sure what you mean by this. Are you suggesting that all laws restrict freedom and so any laws imply an unfree market? Or are you simply objecting to an apriori list of laws which must be accepted?

I’m not aware that the Libertarians or Objectivism suggest any such list. I know that both offer the principles that they believe will lead to laws which are more free than the alternatives. But I am still unable to fathom what you mean by that we cannot have free markets “in any meaningful way”.

BTW I may be misreading your post altogether. If you are only ranting against that extreme form of libertarianism better described as anarchy, then perhaps I missed it.

Here’s how I see it:

Labor unions are supposed to be pro-labor. Now, we’ll forget about the corrups unions run by organized crime and political unions that are nothing better than fronts for communism for the moment. If labor unions actually are pro-labor–and I think that most of them at least try to be, they would only end up being anti-capitalist to the extent that the capitalists are anti-labor and no more.

Sure, that’s no doubt how most of them start out. But I think if you follow the history of groups, you will find they develop a strong sense of self-preservation that often leads them toward plunder or obstructionism when threatened with extinction. And constant threat of extinction pretty much defines the free market.

Since the defining characteristic here is that these groups want to persist, and making a profit seems to define the groups we call producers, then I suspect that it’s pretty much a law of nature that producers will try to obtain dominance and control of their markets.

There have been some interesting game-theory simulation “experiments” done that seem to show you can never get rid of behavior deemed “unfair” or “illegal”. You can just reduce it below a certain level. Unfortunately, these simulations have not allowed individual entities to ally with each other and exhibit group behavior.

(I don’t have a cite for this, but it was in Scientific American a while back…)

But I think the basic principle probably continues to be true: if a behavior can occur, it will occur; and if it appears to benefit the actor, the actor will repeat it.

So, I don’t expect producers to “play nice” forever, even if they intend to initially. And I don’t expect the market’s invisible hand necessarily to discourage what we think of as “unfair” competition.

Well, what you have hit on there is a question of how a market really determines price. When there are few or no competitors and the barriers to entry are high, the market does not operate to produce the best price for consumers. “Gouging” is a term that can only apply when the market does not have adequate competition.

So, again, let’s turn the free market model on its head. Clearly, Voodoochile and Maximum C both have the concept that it isn’t so much a market in the sense of producers’ being an altogether different kind of thing than consumers. Rather, the proper model is an ecological one, in which producers and consumers all do the same kinds of things. Everyone (individual or group) produces something and consumes something else.

As a particular group in its role as a producer becomes more dominant, the class of consumers of its product becomes larger. When the class of consumers is large enough, the opinion of the consumers relative to the product can begin to matter.

What I mean is, if the producer has an effective monopoly, and the costs of entry are so high that no reasonable competitor can start up, then the consumers themselves may want to do something to influence the product’s quality or cost.

Typically, consumers at this mass level band together via governments. They can then try to regulate the quality and cost of the product (as with utilities) or try to promote competition (e.g., by subsidizing entry into the market or limiting corporate size/market share). In the absence of other influences, you would get an initial increased cost to the consumers (in terms of taxes) followed by a long-term reduced cost (due to competition).

Unfortunately for these consumers, there are other influences, most notably the efforts of the target producers themselves to leverage control of the regulatory system. This bears a remarkable resemblance to the ecological relationships of predator/prey and parasite/host.

(Also, the government itself is a group in the system and subject to the same tendency toward self-preservation and corruption.)

I can’t argue with that. But I do think some of the those beliefs are wrong.

My main gripe is that the Libertarians I have spoken with seem to think that left alone in a free market, producers will not engage in nefarious behavior and will not naturally tend to produce monopolies. I don’t think they always will, but I am sure they do – and we need to keep an eye on that.

My points: Government regulation initially is a direct systemic response to a failure of the market otherwise to maintain high quality and low cost in a product sector. It is to be expected in an ecological model that governmental entities will arise and will attempt to influence markets, for exactly the same reasons that producers arise and attempt to gain control of markets.

So, if anyone wants to propose a way to prevent government from messing with the market, they need to show how they can prevent what consumers perceive as unfair or intolerable producer behavior. Which I don’t think can be shown. So we’ll always have (and probably need) various entities balancing each other (government, labor, the press, business).

Yes, I’ve betrayed my age and origins. Actually, there are still quite a few folks I know who think the Communists are out to take over the world. That’s why I mentioned it.

vknowles described my responce to pervert perfectly. Still, a few more comments that bear mentioning:

  1. A Priori Economic Rules

Whenever a government regulation influences economics, the real-world effect of that rule will be redistribution. Someone will give something up and someone else will gain it. Perhaps industry will lose the power to crush unions. Perhaps unions will lose the power to exclude others. Perhaps John is going to make fifty less dollars this paycheck and Samantha will make fifty dollars more.

All of the free-market theories I know of- such as Libertarianism, Objectivism, Law-and-Economics- all rely on making a distinction between GOOD regulation - make it illegal to beat up your competitor - and BAD regulation - minimum wages, working condition laws, advertising regulation. You can’t make a distinction between good and bad regulation based on where the dollars go at the end of the day- every regulation serves someone and hurts someone else.* The distinction between the two relies on a set of a prori concerns or rules that each theory brings to the table; the distinction relies on what specific platform the party has produced.

  1. Misbehaving Aggregations, Transaction Costs, and Social Darwinism

vknowles pointed out, very nicely, the fact that orginizations eventually find themselves self-preserving. If the market is full of rational actors, then an existing aggregation survives by being cheaper than alternatives. This can be done internally, by making a better product, providing better service, enjoying a better reputation- or it can be done externally, by attacking, discrediting, and generally making life difficult for alternative aggregations. This externalization functions to increase the transaction costs- that is, effort wasted on procedure that doesn’t offer any direct return to the actor- of other aggregations. Basically an existing aggregation can make itself cheaper, or make everyone else more expensive.

The natural tendancy of a rational aggregation will probably be to externalize or internalize transaction costs, depending upon what is cheaper. When law enforcement is lax, it’s cheaper for corporations to hire goons and beat up union leaders. When law enforcement is strong, it’s cheaper for them to pay higher wages.

I would tenatively say that externalizing transaction costs is USUALLY cheaper than internalizing it. It costs less money to advertise that your products are made in America than it does to actually ensure that is happening. Even if this isn’t true, it is certainly true that externalization can happen in many circumstances that internalization cannot. Take tobacco, for instance. The industry had no way of providing a product that was safe AND delivered the nicotine necessary to keep up profits.** They were forced to externalize, trying to convince the consumer that smoking did not cause damage. Because of this, externalization will propogate throughout a capitalist system naturally- because the companies willing to do it will survive in areas companies not willing would perish.

  • = Law-and-Econmics claim that they are just trying to maximize wealth or utility, but these models end up restating the problem without solving it and invetiably still need some a priori values to function. Objectivism does the same thing, only more egregiously and dishonestly.

**= The tobacco companies tried this and failed. The Next cigarette, manufactured by RJR (I think), had especially low amounts of all of the smoking-related carcinogens. The problem was that people had to smoke so many to get the nicotine they were craving that it became more trouble than it was worth. One analyst noted that Next cigarettes turned out to be “the best way to quit.”

Well, I’m not very sure about this. You see, plunder is not the only choice for self preservation. I’m afraid this assumes a zero sum game which I don’t believe in. I agree that the history of many groups may fit your sequence. And I may even be persuaded that unions follow it more often than other groups. However, I am by no means convinced that it is a general trend nor that it is even common. Especially I disagree that such a sequence is a necessity for all types of groups.

Granted. But the difference between your asertions and the way the world works IMNSHO is that there are many means for obtaining dominance in a market. Many more, and many more effective means than simply buying the government or privately initiating force against the competition.

The problems I have found with most models I’ve seen is that they tend to over simplify the economies in favor of a particular political slant. That is given the incredible complexity of any economic system, a model must ignore some forces in the name of simplicity. Obviously I don’t know exactly the game theory experiments you are refering to, but I’d be interested in knowing how the “unfair” or “illegal” activities affected changed the nature of the game transactions.

Now, this I can agree with. This is stated a little more vaguely. Certainly any particular business could turn “rogue” if you will. And while I do believe in the market’s invisible hand, It is certainly not infallible nor immediate. So, you could also say that at any given time you might find groups benifiting (short term) by some sort of “unfair” behavior.

However, I object to the assertion that all “aggregations” necessarily progress from nice to bad.

This, again, assumes some sort of improper barriers to entry. And, I think, misunderstands the concept of value in the first place. So, let me define my terms. The best price for the consumers is and agregate of the value placed on a good or serviece by most consumers. That is, any particular consumer will assign a value for a particular good or service. Typically this value will be related to the costs associated with doing without said good or service. So, as long as the cost of aquiring a good is less than the cost of doing without it, then purchasing the good is profitable for the consumer. (Note: obviously I’m only considering the consumer side here. A similar analysis can be done from the producers side of the equation.)
There are many forms of barriers to entry into a particular market. Intellectual property rights, capitalisation for production capibility, as well as overall market stability are some common ones. And of course organizations can impose other barriers as well. They can burn competitors factories, bribe legislators into imposing legal restrictions on competitors, or simply assasinate competing groups.
The problem with your suggestions is that they seem to confuse the 2 types of barriers.

I like this very much. I may use it elsewhere.

The argument that followed this quote I also agree with. However, I think it mostly identifies the dangers associated with economic regulation. Specifically we need to come to a consensus about the principle of free market economics and what their virtues are. This requires a much greater understanding of economics than is available or even possible maybe. But isn’t that the fun part of politics :slight_smile:

Well, I have met some libertarians who seem to advocate anarchy more than laize faire economics. But I’m still not sure what you include as “nefarious” activity. I tend to limit such terms to uses of force to keep or aquire market share. But you seem to think that other things might qualify as well.

I agree with this. However, a sharp distinction has to be drawn between coercive monopolies and other monopolies. There are important differences and our laws currently confuse them horribly.

How about if I take your earlier tactic and apply it here :wink:
This may be true initially, or this may be the intention. However, such regulation inevitably turns into a self justification exercise. And just for fun, regulators do not produce anything. Therefore their only means of continued self preservation involves predatory or plundering behavior.

Of course we will always have all these groups. The only question is what is the proper role of each. I would suggest that governments are charged with protecting citizens from force. And that this principle is broad enough to protect us from coercive monopolies. If we simply remove the ability of the government to regulate free economic transactions, the rest will take care of itself.

That inflamatory enough for you?:smiley:

No, but you can based on where the dollars started out. Taking money from someone who owns it and giving it to someone else is naughty. Taking money from someone who stole that money and giving it back to the person he stole if from is not.

Now all we have to do is understand all of the various ways money can be stollen. Again, the principle of initiation of force suffices.

Again, I’m not sure drawing distinctions between internal and external activities is useful. It does not draw attention to the necessary moral differences between theft and competition. For instance I could make my products cheaper “internal function” simply by stealing the raw materials for my widgets. Or I could make the competition more expensive “external function” by Advertising more agressively in favor of my product. My point is that an external or internal distinction is not useful for deciding what and if regulation is necessary.

I’m not a fan of tobacco nor of the anti tobacco lobby. But I think that big tobacco may in fact be an example of my theroy of economic justice. Specifically they are currently being punished for fraudulent practices. That is agreeing to provide one thing and actually providing another. I don’t think this example demonstrates the effectiveness of what you are calling “external” activities nor that such activities are in any way prefferable.
And, If I may, I would suggest that smoking was declining even before this. I might make the argument that Tobacco’s deceptive tactics were doomed to fail without any government activities.

Well, no, because of your example (and other reasons) externalization will be tried by all sorts of people in any economy.

I’d like to summarize my points in this argument between me,vknowles, and Maximum C.

I agree that some Libertairans and Objectivists seem to believe in a fairy tale force of economics which will prevent all naughty activities from causing any harm. I certainly don’t go that far.

However, I do think that the tendancy of a free market will be towards production rather than plunder. And I mean by that, that most companies, unions, and consumers will tend to act in a reasonable and just manner.

I do acknowledge that this does NOT mean that everyone will be happy all the time. Certainly some companies will charge more than people like. Some unions will demand more than other think is fair. And even consumers will choose technically inferior products over their betters. But none of these require government regulation to correct.

Further, and I cannot stress this enough, there are distinctions to be drawn between these behaviors and others which are demonstrably immoral (and therefore should be illegal). The principle of initiation of force should be sufficient to define these distinctions. Saying that government regulations take money from one party and give it to another, and that therefore any such regulations are morally equal is just silly. Saying that fraudulent activites and productive activities by corporations both raise costs for competition and therefore are morally equal amounts to equating trade with theft.

And while all of this has strayed somewhat from a discussion of unions, the same principle can be applied to their activities.

I think unions are not anti-capitalist as much as anti-monopolists.
When there is a healthy give and take marketplace for jobs then unions don’t have a beef.
But when there is a non-marketplace situation, like a single employer for a mining town, or only one automaker in an assemblyplant town, then they are there to keep the bigshots from running rampant, closing entire plants all at once for retooling when staged changes would make life easier for the whole community, etc.

Actually, I think most of us are agreeing on the basics.

Just a couple of clarifications:

pervert, I meant to say that I think most entities (businesses and governments, for instance) start out trying to do a good job (providing a good product at a good price). It’s only what happens later that’s problematic.

And when a producer does an excellent job and becomes successful, it tends to become larger. At some point, the value of self-preservation tends to supersede the value of customer service, and the use of other means (market manipulation, localized price-cutting, political influence-buying, coercion, or even violence) may appear to be more cost-effective.

But this doesn’t happen in all cases. I don’t think we can know how often.

I tend to be rather more suspicious of larger producers, although I am well aware of fraud perpetrated by individual operators.

By the way, government regulators do provide a product: ideally, protection and/or information, both of which have considerable value.

I think the tobacco industry is a great example to consider from a number of angles, although I did not mention it myself. Tobacco companies not only conspired to hide information, they founded the Tobacco Institute to promulgate misinformation. This is externalization if you consider that healthcare costs were transferred from the companies (in terms of liability) to the consumers.

Although tobacco companies are now paying some of those costs, I think we need to consider some other questions: How much injury (in terms of dollars or health or lives) needs to occur before some action is taken? What might be done to prevent these kinds of behavior?