Hayek framed unions as distortions of spontaneous order requiring legal disenfranchisement

Evidence

Traditionally, Hayek’s position on unions has been enshrined as the foundation of the neoliberal standpoint on this question (Schulten 2004, 71–76). According to Hayek, unions are a perversion of the “spontaneous order,” and as such, an exception to the rule of law. Indeed, governments have failed to prevent the unions’ use of coercion and violence, since their behavior has been protected by law. This unlimited power allowed unions to occupy powerful positions in the wage-bargaining process, or in some instances, in the conduct of enterprise. In both cases, employers are portrayed as helpless, unable to resist union power and thus forced to accept wage increases. Unions are thus put in the artificial position of being able to manipulate wages in relative terms. However, if wages are distorted in this way, costs and prices will be misallocated. In such a situation, the market, as a device for signaling changes in supply and demand, is disrupted and unemployment results on the labor market. In this manner of framing the situation, unions represent the foremost threat to the economic order and free society. Consequently, Hayek urged a legal disenfranchisement of unions and the restoration of a well-functioning rule of law. — Philip Mirowski & Dieter Plehwe (eds.), The Road from Mont Pèlerin, 978

Categorization

• DEFINE: Lays out the core Hayekian causal mechanism by which union wage manipulation distorts market signals and produces unemployment.
• XREF: connects to: Hayek held that mixing spontaneous order with organization is never rational — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 209; Hayek saw society as a spontaneous order, not a dutiful organization — Jessica Whyte, The Morals of the Market: Human Rights…, 146; Hayek saw trade-union power as the thorniest question for reviving a free economy. — Philip Mirowski & Dieter Plehwe (eds.), The Road from Mont Pèlerin: The Making…, 953 (+5 more)

Broader Connections

• Early neoliberals saw large unions as monopoly threats distorting wages #corroborates (0.85) — Philip Mirowski & Dieter Plehwe (eds.), The Road from Mont Pèlerin, 968
• Neoliberal union critique reframed labor organization as monopoly power backed by coercion. #expands (0.82) — Philip Mirowski & Dieter Plehwe (eds.), The Road from Mont Pèlerin, 971
• Hayek rejected social and economic rights as incoherent and unenforceable #corroborates (0.72) — Jessica Whyte, The Morals of the Market, 145