The Arcand Act: A New Form of Labour Legislation?

Abstract

In a few economics text-books the labour market is still an area in which the free play of supply and demand brings about the equation of wages to the marginal product of labour. But the modern economist knows very well that “free competition” and “a living wage” are often incompatible, and that free competition itself is to-day little more than an expository device. The determination of wages, and of labour conditions generally, must take into account two important sets of influences, (a) the circumstances which affect the wage bargain between employers and employees, and (b) the extent to which “minimum wages” and basic living and working standards are fixed by the state. To the economic historian each of these opens up long chapters of social movements and state legislation which are more complete in most of the older industrial countries but to which many new pages have been added on this continent in recent times.This experience has established the recognition of two main methods, and their accompanying sets of principles, by which wages and working conditions have been raised irrespective of the rate set in theory or practice “by the market”. The first is that of collective as distinct from individual bargaining. Collective—which is for all practical purposes, trade union— negotiation involves two principles, of which one is better known than the other. The first is that the ordinary wage-earner, even vis à vis the small employer, has little or no bargaining power on his own: not only is his labour a perishable commodity, but also his employer is likely to be a great corporation and he is beset by the potential competition of the army of the unemployed—and it may be added, even in the best of times by the potential competition of the migrant from the farm, the real “marginal worker” of an agricultural country.