Justice, Charity and Power
Glenn E. Hoover
[Reprinted from Henry George News, September,
At the time this article was published, Glenn
Hoover was professor emeritus of economics and sociology of
Mills College in California. He was also a City Councilman in
Oakland, where he lived, and president of the Fast Bay Extension
of the Henry George School, comprising Berkeley, Oakland and
surrounding cities. The foregoing is an abbreviated version of
his address at the Annual Conference of the Henry George School
in San Diego in July of 1958.
The eternal verities do not change from year to year, as do the
fashions in automobiles or women's clothes. Nor do the ills of our
society result from our failure to find new truths, but rather to our
failure to understand and accept the old ones. For this reason, as
Justice Holmes once said, it is often more useful to "elaborate
the obvious than to elucidate the obscure."
Notions of justice are important in all human relations, but there is
time here to comment only on the just distribution of scarce goods and
services. You will note that I said "scarce" goods, because,
luckily for us, what economists call "free goods," the air
for example, are normally so abundant that there are no disputes about
the equitable distribution of them. If and when some evil genius
develops a feasible way to "fence in" the air we need, we
would pay tribute to airlords as we now pay tribute to landlords, but
as yet we have been spared that species of extortion.
To reach any valid conclusion about the just distribution of scarce
and useful goods, we must begin by noting the origin of them. There
is, first of all, the planet on which we live, the product of Nature
or of Nature's God. The more desirable parts of our earth are now the
property of private persons, although neither they nor any of their
predecessors produced it. Nor is the value of these private holdings
the product of their past or present owners, but rather it derives
from the population which surrounds them.
That all men should share equally in the free gifts of Nature is a
thesis so obviously just that it appeals to all who can give it
unbiased consideration. The practical way to respect these equal
rights is not to attempt to "divide up" the earth, but to
take the annual value of land for public purposes.
Although one can, in the name of justice, ask that the socially
created value of land be used for public purposes so that all may
share alike, we have no such equal right to the product of labor.
Mankind, in all its stages of development, has recognized that he who
produces something has a special claim to it which must be respected
by others. The same holds true for whatever he acquires by a free
exchange on terms accepted by both parties. Difficulties arise
however, when a group of men work together at a joint task. What does
a worker in a large factory "produce"? He must have added
something to the total value of the output, but how much? How can the
value of his services be determined, if at all?
It is dangerous to conclude that we have no method for determining
the value of a worker's service, because such a conclusion leads
logically to a system of equal pay for all workers who contribute to a
common task. It is worthy of note, I believe (that the notion that all
workers in a joint enterprise should receive equal pay finds no more
favor in the USSR than in the USA. It runs counter to the common sense
of mankind, everywhere and at all times.
Fortunately, however, justice does not require that we determine how
much of the value of an automobile, for instance, should be attributed
to each worker who has helped in the building of it. Justice requires
only that each worker shall get a "fair" wage in the market
in which he sells his labor. And if the word "fair" is to b
more than a "weasel" word, it must mean a price for his
labor determined, in the way "fair" prices for all goods and
services are determined, i.e., in a free, competitive market.
We are often told that there can never be free, competitive markets,
and that if there were, we could have no assurance that the prices
determined in them would be just prices. The fact remains, however,
that there are no alternatives to free market pricing, other than
prices fixed by governments or private monopolies. Where competition
is impracticable, as in the public utility field, prices are fixed by
governments. With this exception, free peoples insist that goods be
priced in free markets, and they may ultimately conclude that the
service of workers be priced in the same way.
Charity is a topic more often discussed by clerics than by
economists, but it plays an important role in the distribution of our
goods and services. The total amount dispensed each year can only be
estimated, but if aid to needy foreign countries is added to the aid
given our own indigents, the total is very large indeed. However, my
chief concern is that the traditional distinction between charity and
justice is becoming blurred. We should not juggle the meaning of words
to deceive either ourselves or others. If and when we cannot support
ourselves we should take Our charity "straight," to use a
bartender's term, and not call government assistance a "pension."
Another innovation in the field of governmental charity is that it is
now often demanded for whole classes of persons. The farmers, for
instance, insist that they are not getting their "fair"
share of the national income, and therefore all farmers, rich and poor
alike, must be given governmental subsidies of one kind or another.
Our protective tariffs are essentially devices which restrict imports
and thus compel consumers to give charitable aid to producers. The
builders and operators of our merchant marine, unable to compete with
foreign companies, also demand -- and get -- what are essentially
charitable payments from the Treasury.
The most recent development is the aid we give to needy, "underdeveloped"
countries. Few of them can show that their "need" is the
result of wars, natural calamities, or any worsening in the chronic
poverty of their peoples. Consciously or otherwise, they measure their
"need" by contrasting their poverty with the relative riches
of other nations. In this way, the more productive peoples, by
increasing their productivity, add to the "need" of the
poorer ones, and therefore, presumably, should alleviate it by
Many of us who favored the Marshall plan for war-torn Western Europe
cannot agree that we should aid nations simply because they are "under-developed"
and needy. It seems that such countries should be told that they can
have free access to Our private capital markets where solvent
borrowers can always get loans for projects that are economically
sound. We should tell them too that we will tear down our tariff wall,
and every other barrier that prevents them from selling in our market
anything that they can produce and our consumers wish to buy.
Goods and services may also be distributed in accordance with the
economic power of the various parties concerned. As used here,
economic power means the ability to interfere with the operations of
free markets, either by control of the demand or the supply of a good
or service, and whether this is accomplished by the concentration of
ownership or by concert and agreement among buyers or sellers.
There are certain fields in which monopolies are inevitable. For
instance, many of our smaller towns and cities, and some rather large
ones are served by but one railroad. Practically all of us have access
to but one local transit company, one provider of gas, electricity,
telephone service, etc. Firms operating in these fields are not only "natural
monopolies," but normally the law designates them as "public
utilities," and accords them the exclusive privilege of providing
service in the areas in which they operate. They are, however,
monopolies without monopoly power because government, either federal
or state, fixes the rates they may charge and the types of service
they must provide their patrons.
Nor has governmental policy changed in respect of monopolies that are
not natural, but are man-made. All monopolies resulting from the
agreement, concert and conspiracy of sellers of commodities are
forbidden by both federal and state law, and in many cases by
provisions in the state constitutions. All of these provisions are
commonly called "anti-trust" laws, and there is no
governmental policy more firmly established than the prohibition of
such monopolies among the sellers of commodities.
When unionists first undertook to fix a monopoly price for their
services the courts held such agreements to be as illegal as were
similar agreements among the sellers of goods. But as the political
strength of the unions increased, they were held to be exempt from the
general rule forbidding monopolies. In many sectors of our economy
their power to fix the wage rates they wilt accept are now unlimited.
They cannot always get what they want, but unless the employer's final
offer is accepted, he has no alternative but to close his plants. In
our major industries employers no longer try to operate with non-union
The abilities to force the closing, not only of particular firms, but
of entire industries, is one of the most significant developments in
the economies of the Western World. Until recently, power on the grand
scale was exercised only by governments. Little wonder that both our
government and our citizens are baffled by this power, and totally
unprepared for dealing with it.
The Liberals and the Unions
It is, however, the confusion of those who are vaguely described as "Liberals"
that is my chief concern. They have consistently opposed monopolies in
all their traditional forms, and while weak unions were struggling for
survival and recognition, their sympathies were with the workers. They
now find that their friends in the trade unions are equipped with
unprecedented monopoly power. To oppose such power in the hands of
industrial tycoons and merchant princes is one thing, but what are
they to do when they find such power in the hands of their traditional
The confusion of the liberals is largely due to their
misunderstanding of the way in which modern labor markets function.
They sometimes assume that, in the absence of union power, an employer
could arbitrarily set his wage rates, however low, and still get all
the workers he wanted. At other times they make the equally false
assumption that, in free markets, each worker's wage would be fixed by
If the liberals want to know how wages are actually determined in the
absence of union power, they have but to look about them. Only about
one-fourth of those gainfully employed belong to unions, and the other
three-fourths have their wages determined in free markets. For those
liberals who prefer to read, rather than observe, the history of our
economy prior to the "bargaining" era will be equally
illuminating. We are often reminded of the "low" wages paid
in those bad, old days when unions were few and weak. But what really
needs to be explained is why our wages were then so high that they
attracted workers from every part of the world.
Surely they would not have us believe that the relatively high wages
paid to unorganized American workers, past or present, has been due to
the compassion of our employers. On the contrary, they undoubtedly
paid as little as they could, but competition among employers
compelled them to pay approximately what the services of the marginal
workers were worth. The workers produced more, and were paid more, and
this in the absence of any union power whatever.
Thus far American liberals have limited themselves to condemning the
corruption of various union officials and the undemocratic way in
which some unions conduct their internal affairs. One suspects that
our legislators and the public have concentrated on the minor defects
of our unions in order to postpone consideration of a power so great
that few will consider it and fewer still will challenge it.
The program for dealing with union power should be formulated by men
and women of good will. If I offer no solution, it is not from
excessive timidity. It is rather that I believe that I should
disqualify myself because of my fear of power and my aversion for it.
I am distrustful of power, even governmental power, and my dislike of
power in the hands of private persons borders on the fanatical.
Whether or not the private power of unionists, or anyone else, can be
allowed unlimited scope in a free society, is a question that cannot
with safety be indefinitely postponed.