Labor Unions: A Corporatist Institution in a Competitive World

Union membership, as a percentage of the private sector workforce, has been in decline for 50 years. I argue that the cause of this unrelenting decline is a single, fundamental factor – the change in the United States economy from a corporatist-regulated economy to one based on free competition. Most labor commentators have explained the decline by a confluence of unrelated economic and legal forces. Labor economists typically stress economic explanations, which vary from compositional shifts in the job structure to increased competition both domestically and internationally. On the other hand, labor law commentators naturally focus on labor law explanations, such as the difficulty of controlling management opposition to unions. This paper shows that both economic and legal forces have to be viewed through the same lens. What matters is the choice of the political economy. Once that system is chosen, the role and centrality of unions is determined. Unions are central to a corporatist regime and are peripheral in a liberal pluralist regime. Consequently, in my approach, to understand the causes of the decline in union membership it is critical to return to the period of the original growth in union power; that is, to the New Deal. In examining the differences in the political economy between today and the New Deal, one must look not only to labor law, but to also to corporate law and antitrust. Unions were successful in the 1930s when the goals of labor law were consistent with the goals of corporate law and antitrust. These goals are in conflict today