LABOR AND

INDUSTRY
Melis Tuncay – 2015431061
Uğur Fırat Demir – 2013432124
Kutay Serbest - 2014432064
CONTENTS
 Introduction
 The Classical Liberal Perspective
 The Radical Perspective
 The Conservative Perspective
 The Modern Liberal Perspective
INTRODUCTION

Division of labor

Debate to organize Organize

productive activities Industries
Delegate
Authority
THE
CLASSICAL
LIBERAL
PERSPECTIV
E
 THE NATURE OF WORK
 Rise of the factory system large-scale production Development of Classical
Liberalism
 Independent farmers and craftsmen adopted wage-labor system
 Classical Liberals think that workers dislike the monotony and submissiveness of factory
work.
 Adam Smith on industrial jobs’ effects: ‘’ As stupid and ignorant as it is possible for a human
creature to become.’’
 No forms of public welfare and increased penalties for vagrancy and theft workers enter the
factories; Classical Liberal choice
 Classical Liberals; work isn’t harmful, but people would prefer not to work, monetary rewards are
the main reason for labor
 People work because utility of earnings exceeds the costs of sacrificed leisure and unpleasantness
of work
 Individuals choose the work offering the greatest net advantage.
 Classical Liberals; people view work as a ‘disutility’, it is only a means to earn money so that
leisure time can be enjoyed better.
 Classical Liberals defend that if some people want fulfilling work, maket can best guarantee that
such preferences can be met; artists can accept lower standarts of living and do their crafts.
 People who value a more personalized work environment can work in small businesses and
sacrifice hight wages and greater job security.
 The market allows people to balance the desire for satisfying work at the cost of higher wages.
EXPLANATIONS OF
HIERARCHY
 Superior practices evolve, inefficient institutions get eliminated over time.
 Competition in the market forces firms to adopt the most efficient organization of work
 Frederick W. Taylor and Frank Gilbreth; ‘’time-and-motion studies’’
 To reduce skilled jobs to simple motions quickly mastered by any worker.
 ‘’Scientific management’’ was based on the Classical Liberal view of work as unpleasant.
 Taylor assumed scientific management would relieve workers as they don’t get satisfaction from
their jobs and wouldn’t object to routunization.
 It also helps management to better monitor work performance by putting quantity, quality and time
standards for each specific task.
 Classical Liberals face a contradiction; while defending market as the best institutional
arrangement for achieving efficiency, they recognize the obvious efficiency of large corporations in
which thousands of people are ‘’governed’’ by hierarchical, centralized authority.
 The success of modern corporation indicates that efficiency can be enhanced by suppressing individual
choice and market forces over a significant range of production process.
 ‘’ New institutional economics’’ and ‘’ property rights theory’’
 Society is a market, individuals get in mutually beneficial exchanges, if benefits are not realized
they will negotiate a contract specifying future rights and obligations.
 Labor contracts aren’t clear about the obligations of labor and management
 Classical Liberal economists; ‘’governance structure’’ solves the difficulties in labor contracting by
establishing a pyramid of which employers assign tasks and monitor work performance.
 Blue-collar workers: rigid hierarchies and authority works in industries such as mining and
manufacturing
 White-collar workers: promotion ladders and pay raises work.
 Classical Liberals argue that a cooperative or egalitarian system whereby workers monitor one
another and share in the benefits of increased productivity is inconvenient.
 Classic Liberals; hierarchy within the firm is consistent with workers’ freedom. If hierarchy is
efficient, firms would encourage effective supervision by granting supervisory personnel the
benefits from increased productivity. The structure of authority is independent of who owns the
firm. Paul Samuelson, ‘’it makes no difference whether capital hires labor or the other way
around.’’
 Large number of workers in traditionally-structured jobs suggests that they value high wages more
than satisfying work, if people wanted more egalitarian work, they would seek employment at
lower wages with firsms offering less structured environments.
 Employers should willingly remove hierarchy in exchange for lower wages as long as reduced
wage costs offset any productivity loss.
 No worker owned firms therefore Classical Liberals think hierarchy is the most efficient form or
organization.
ROLE OF UNIONS
 Classical Liberals; labor unions promote their own interests, suppress the competition in labor
market
 Wage raises cause employers to substitute capital for labor, result in loss of jobs
 Employers whose production processes are labor intensive in competitive markets will have to
relocate or shut down. The region or nation where unions are strong will suffer loss of
industry.
 Employers with enough market power will respond to high wages with higher prices to avoid
profit loss, the cost of living will increase.
 The gains made by unionized workers come largely at the expense of other workers
 To the extent that union demands for higher wages cause inflation, government will be forced to
implement contractionary fiscal and monetary policies resulting in unemployment.
 Unions also lower productivity. They interfere with efficient production.
 Classical Liberals insists that both management and workers share a common interest in high
profits to expand, create jobs and pay higher wages.
 Mass unionization did not succeed until unions were exempted from antitrust laws and protected
by favorable legislation.
 Some Classical Liberals propose the application of existing antitrust laws to unions and the
passage of ‘’right to work’’ laws abolishing the mandatory hiring of union workers in particular
firms.
 Another proposal to reduce union power is to place legal restrictions on the right to strike.
THE
RADICAL
PERSPECTI
VE
THE NATURE OF WORK
 Work provides a context for becoming fully human through the exercise and development of
abilities, the formation of meaningful social relations and the transfromation of ideas into
material form.
 The products of work represent material expressions of the self. By viewing and appreciating
the fruits of their labor, workers attain greater self-awareness.
 Work in capitalist societies are degrading and alienating.
 Capitalists monitor the work process, suppressing workers’ sense of autonomy and dignity.
 Capitalists are owners, workers are denied the gratification that comes from viewing their
producsts as extensions of themselves.
 Jobs in capitalist economy offer little personal satisfaction to the worker.
 Radicals condemn capitalism; one group of people control the organization of work and the
products of other people’s labor. Work isn’t an outlet for self-expression and creativity when
workers simply perfrom motions to carry out the capitalists’ plans.
 Marx portrayed work in capitalism as so alienating that people actually lose essential aspects of
their humanity.
 Modern Radicals have extended this argument to claim that boring jobs makes workers frustrated.
 The lack of resistance to capitalism is explained by the Radicals that most people have no access to
alternative means of production and are at the mercy of capitalists.
 Workers may also exhibit ‘’hostage syndrome.’’ Workers at the mercy of capitalists, may cease to
resist their plight and actually seek approval from their employers as a means of self-validation.
 Although Radicals condemn the alienating nature of work in capitalism, they express ambivalence
about the nature of work in a socialist or communist society.
 Marks envisioned a future society without authority or a division of labor in which a person could
‘’ hunt in the morning, fish in the arternoon, rear cattle in the evening and criticize after dinner.’’
 Marx also rejected utopian socialists who envisioned communities without divisions of labor and
modern technology. He predicted that industrial labor would be unfulfilling even in a communist
society.
 He favored technology to shorten the workday, leaving people with as much free time as possible
for personal development.
 In contrast to the Marxian view, Radicals today insist worker control over the production process
can make industriallabor fulfilling.
 Worker control doesn’t stop delegating authority to democratically elected managers accountable
to workers. Workers would retain sufficient power to assure that the work experience fosters
personal development
EXPLANATİONS OF
HİERARCHY
 Radical explanations of hierarchy are based on Marx's distinction between labor-power and
labor.
 Labor-power is the commodity sold by workers to capitalists in exchange for wages.
 Labor is the actual productive activity of workers.
 Workers know that capitalists want to increase their profit by extracting as much labor as
possible from their employees with low labor cost; that is, they exploit their employees’ labor
in order to increase their profit.
 For this reason, capitalists establish hierarchical structures of control to increase the amount of
labor performed.
 By generating social stratas within the firm and creating competition between workers for promotions,
capitalists demolish sense of solidarity and efface class consciousness among employees and thus,
they maintain control over workers and suppressing wage costs.
 In contrast with capitalists, Radicals argue that hierarchy actually reduces efficiency because it
demoralize workers and increase conflict within workplace.
 Also Radicals are opposed to hierarchy because they believe that more egalitarian and
participatory forms of work unleash the repressed talents and energies of workers.
  Moreover,in contrast with Classical Liberals that define efficiency as cost-minimization,
Radicals define efficiency as input-minimization.
 İnput-minimization is explained that a business is efficient if it producess a particular good with the
fewest economic resources.
 Cost-minimization may be useful in competitive markets but Radicals argue that although
capitalist firms actually use more resources than similar firms relying on more egaliterian
methods, their cost is less because they suppress wage costs.
 Furthermore, the inefficiency of hierarchy manifests itself in inability to utilize technology
relying on a cooperative and knowledgeable workforce.

 According to Radicals, labor-savign technologies enabled capitalist to increase their

productivity. However, besides that this technology reduced their reliance on skilled artisans;
that is, they were assigned tasks that require no particular skills, thus capitalists gained a
monopoly over knowledge of production and wages were hold down by virtually supply of
unskilled labor.

 Then, when the workers realized that deskilling is against their interests, they are organized to
defend themselves. In response, capitalists launced a new strategy of ‘’divide and conquer’’
the labor force.
 Briefly, in contrast with the Classical Liberals, Radicals claim that profit maximization and
efficiency will normally diverge.
 
 For instance, hierarchy may be adventageous to the capitalists, it is contrary to the public
interests.
 ROLE OF UNİONS
 Racidals claim that unions have evolved from their original purpose of challenging capitalist power to
actually serving the interest of capitalists.
 In return for union cooperation, capitalists grant substantial wage increases to unionized workers while
ignoring the minorities and nonunionized workers on the purpose of restraining solidarity among
workers.
 However, despite this criticism, Radicals support labor unions as essential to organize the working class.
Because they believe that as the industrialized sectors of the economy deteriorate, unions will become
increasingly politicized.
 Unions demands will extend beyond wage increases to issues involving participation and control.

 
 Along with politicized unions, workers will be more conscious with their problems and they become
more interested in broadening their membership by actively organizing minorities, women, government
employees,…. Thus, the solidarity among workers will increase.
THE CONSERVATIVE
PERSPECTIVE
THE NATURE OF WORK
 Conservatives exhibit conflicting attitudes toward work.
 Some religious Conservatives appeal to the notion of original sin to argue that work is
mankind’s punishmment for defying God’s will and therefore is necessarily unpleasant.

 However, most Conservatives find work honorable and fulfilling when it accords with a
natural order in which a social hierarchy meshes with the varying natural abilities of different
individuals
 Conservatives believe that people develop their talents and find purpose in their lives only in
the context of closely knit social structures such as families, churches and neighborhoods.

 Conservatives blame the aversion to work in modern societies and they say that work enables
individuals to achieve personal identity and self-esteem. However, if individuals focus on
income and status, work loses its intrinsic worth and becomes merely a means to an end.

 Moreover, the competition for status leads to conflict, hostility and personal insecurity and
also weakens traditional bonds.
  Most Conservatives want to restore the intrinsic value of work without sacrificing the
prosperity made possible by industrialization. For this goal they propose that,
 Most Conservatives want to restore the intrinsic value of work without sacrificing the
prosperity made possible by industrialization. Proposals for accomplishing this goal include
the formation of occupational groups to provide workers with a sense of belonging and
community, restrictions on free trade to protect workers from global market forces, and
strengthening of families, churches, and neighborhoods so that workers can approach their
jobs well-sustained by their nonworking lives.
 Some Conservatives also anticipate that advancing technology will eliminate much of the
routine drudgery in society.
EXPLANATİONS OF
HİERARCHY
 Conservatives believe that hierarchical structures of authority are essential within businesses
and throughout society. And they observe it under 4 topic:
 1. Utilization of differences in ability: All people very different between each other according
to conservative's thougts and their abilities differentiated. And they believe that some special
abilities like leadership skills, wisdom, virtue, and charisma, exist in only a minority of the
population, and therefore most individuals must be motivated by top-down authority.
 2. Smooth social interaction: Authority is essential to human relations because it provides
predictability and stability.In a well-organized hierarchy, leaders know the extent of their
authority and subordinates know their responsibilities. Humans need the external standards
provided by social structures to guide their actions and define the boundaries of proper
conduct.
 3. Role models: Hierarchy places elites in visible positions where they serve as role models.
Human development depends on social mimicry, so all people benefit from prominent displays
of talent and virtue by those at the top of the social hierarchy.
 4. Identity formation. Humans need clear distinctions in social status to enable them to define
themselves and their purposes according to their position in the social hierarchy. If everyone
has the same status and is treated equally, people will be unable to form unique images of
themselves.
THE ROLE OF UNİONS
 Conservatives criticized labor unions because it destroy the hierarchical order. But they don't
against the occupational groupings because they believed social bonds melting day by day.
Industrialization affect to community very badly because individualism increasing day by day.
 So they believed that labor unions should not work for just their members.Instead of they
should integrate with other businesses or sectors and they should work for community and
personal development.
MODERN LIBERALISM
NATURE OF WORK
 In the twentieth century general view has evolved from classical perspective to modern liberal
perspective.Beacuse technology was beginning to develop and new inventions began to do
menial jobs instead of the people.So that jobs can be sources of personal satisfaction and
fullfilment.
 Thanks to rising living standarts in industrialized nations, people began to meet their
physiological needs easily.After that people wanted to develop their personal needs.According
to that Abraham Maslow described "hierarchy of needs".
EXPLANATİONS OF
HİERARCHY
 According to F. W. Taylor's principles of "scientific management", workers view their jobs
primarily as a means of providing food and shalter for their families. But the standart of living rose
with modern liberalism and this perspective has to change because workers began to resist
routanization and crate some problems. Therefore Elton Mayo and Kurt Lewin began to create new
approaches. These theorists defend that workers want to gain intrinsic satisfaction. If firms want to
increase productivity, they have to satisfy the needs of workers for respect, autonomy and a sense
of belonging.
 When it became more popular, wage is not the only factor for employee satisfaction. Firms also
should satisfy the social needs of workers. It increased the reliance of the employee and this is ver
affective on employee's productivity.
 Modern Liberals conclude that "enlightened management" can reduce hierarchy and "humanize"
the workplace without necessarily sacrificing profitability. Workers become more productive when
they feel trusted and valued; building trust requires that managers relinquish tight control of the
production process. 
 However, humanization of work does have limits. Economist Kenneth Arrow claims that
under conditions of uncertainty and imperfect information, some hierarchy is essential to
economic efficiency. Even highly motivated workers require clear lines of authority for
processing information and communicating decisions. Hierarchy gives workers knowledge of
the location of authority and responsibility.
 In addition to that Modern Liberals believe that greater equality and participation in the
workplace possible.They thought hierarchy can be reduce by attacking to poverty and
discrimination. Thanks to that all workers can develop their work skills.
THE ROLE OF UNİONS
 Modern Liberals supported labor unions for balance in the business power. Because businesses
want to hire employees for minimum wage and don't want to bear the cost for organize the
working conditions.Unionization so important for that because it has the countervailing power
for both side.
 At the Keynesian economics stage, unions importance increased so highly because Keynes
defend to pay higher wage to employees for inrease the consumption.
 For know, Modern Liberals defend to unions still. But they don't just defend to higher wage
also they defend right and benefits of workers.Because market do not think about workers
rights.
 THANKS FOR LISTENING…