Hayek on Labor Unions: Coercion and the Rule of Law
Baird, Charles W., Journal of Private Enterprise
It is probably... impossible in our time for a student to be a true friend of labour and to have the reputation of being one (Hayek  1967, p. 294).
As this epigraph implies, unions have a much better reputation than they deserve. Even today (2007) a majority of the general public thinks that labor unions are the best friend that any working man or woman could have. That is simply wrong, and in Friedrich Hayek's writings on unions, from Monetary Nationalism and International Stability ( 1972, pp. 21-2) wherein he first noted the inflationary dangers of collective bargaining, to 1980s Unemployment and the Unions (1980), which Arthur Seldon characterized as the summation of Hayek's teaching on unions ( 1984, p. 9), Hayek explained why. He argued that while unions benefited some workers, it was always at the expense of other workers, and that as a whole, unions have made workers significantly worse off than they would otherwise have been. Moreover, he saw unions as they were (and, in large measure, as they still are) in Britain and the U.S. as major threats to the free economy as well as the free society in general. He endorsed voluntary unionism on grounds of freedom of association properly understood, but he saw actual unions in both countries as wholly involuntary organizations to which politicians had granted both immunity from the ordinary rule of law and power to wield coercive authority mainly against workers who preferred to be union free. The malign consequences of coercive unionism examined by Hayek fall into two broad categories: conflicts with the rule of law and perverse social and economic effects. In both, Hayek saw immense problems which could only be solved by major reforms of public policy.2 In this essay I discuss the issues of coercion and the rule of law.
I first discuss what Hayek meant by "coercive" unionism and what he saw as the sources of the unions' coercive powers in Britain and the U.S. Next I consider Hayek's vision of voluntary unionism as an instrument of discovery. Finally, I cover Hayek's views on coercive unionism and the rule of law as it relates to freedom of association, freedom of contract, and strikes and picketing.
In The Constitution of Liberty (1960), Hayek outlined his views concerning the proper scope of government. He argued that the principal function of a just government is to provide the protective services of the classical night watchman state. Later, in Law, Legislation and Liberty I (1973), he characterized these protective services as those necessary to enforce the "rules of just conduct" among people. I have characterized these rules of just conduct as the rules of voluntary exchange (Baird 1995). These rules are general (applicable to all situations) and abstract (not designed to accomplish specific purposes). They set the environment within which people remain free to pursue their own purposes. To enforce such rules government must have some coercive power. According to Hayek, coercion is evil; but some coercion, exercised exclusively by government for the sole purpose of preventing people from trespassing against each other, is necessary.
To Hayek the rule of law has two parts: Government must be limited to enforcing the rules of voluntary exchange, and government must apply those rules uniformly over all people and to itself. People wielding governmental authority may grant no special privileges to, and impose no special burdens on, anyone. Hayek referred to the principle of equality before the law as isonomia. (1960, Part II). The private use of coercive force, except in self defense, is always contrary to the rule of law.
Now, unions are not governments. They are private organizations of private individuals. They should never be able to deal with any people except on the basis of voluntary exchange. Yet, in Britain and the U.S. politicians have granted unions the unique privilege of using coercion to get what they want. …