This video is the final video in this module, and serves as a nice bridge to module number three. Now, as we saw in the last video, for people who see labor as nothing more than a commodity, perfect competition holds a special place in that viewpoint. And so this is typically associated with mainstream economic thinking and the neo-market liberal ideology. And as we saw last time, if markets are perfectly competitive, that means that all agents are equal, and you can do no better than to rely on the invisible hand of free market competition to optimally allocate scarce resources and to maximize overall welfare. You might remember this picture from an earlier video where I use this portrayal of union leader Eugene Debs in a strike in the 1890's as a monopolistic agent tying up commerce and therefore bringing distortionary outcomes to a free labor market, and other free markets as a reminder of the importance of perfect competition and free market competition in the mainstream economic school of thought. And again, from this perspective, markets are king. You can do no better than relying on the invisible hand of competition, and things that distort the marketplace, like a union strike, or even just union bargaining, government regulations, those are seen as bad. In fact, workers shouldn't need a union or government protection against exploitation, or sub standard working conditions, excessively low wages, and other types of bad outcomes. Because an employer who tries to do those things in a competitive labor market will be unable to recruit or retain employees. And so not only are union laws bad, but the best protection that an employee can have from this mindset is a perfectly competitive labor market. But all of this relies on whether agents actually are equals. In the last video, I said whether employers and employees really are equals is a question we'll come back to in the next video. Well here we are. Unfortunately, this is an unwinnable debate. People have disagreed about this for at least two centuries and we're certainly not going to settle it here. But given the depth of this disagreement, and more importantly, given the importance of this question for workers, it's an important question for us to consider here. So, are agents all equal? Well, Marxist radical and critical perspectives give us the clearest contrary perspective. And in that school of thought, the answer to the question are all agents equal is clearly no. Rather, these views believe that labor and capital have radically, sorry for the pun, different goals and markedly different levels of power. So recall this piece of line art from an earlier video, as well, all right, which portrays a snake as capitalism strangling the workers and their families in the world because of their excess power. And again, radical schools of thought see capital as having distinct power advantages, not only in the labor market but in other sectors of society as well. They can spend more lobbying on politicians. They can spend more money supporting schools, do other things to support their advantage not only in the workplace, but throughout society. And so the radical and critical schools sees capital as using this advantage to exploit and perpetuate their advantage over workers. And this imposes such significant harm on workers, their families, and communities that adherence to these types of critical perspectives believe that the only way of reforming this, the only way of avoiding these harms is through deep seeded structural change. Now in this picture deep seeded structural change is portrayed as an overthrow of capitalism and a replacement with socialism. You don't need to go that far, not everybody in the critical school would necessarily go that far these days, but would definitely view that you need deep seeded structural change to replace the ills of capitalism. Another school thought that questions the equality of labor and employers in competitive labor markets is the pluralist industrial relation school. And rather than seeing employers and employees interacting as equals in competitive labor markets, the pluralist industrial relation school sees the employment relationship as a bargaining problem. And again, it's not a bargaining problem between equals, it's a bargaining problem between unequals. This imbalance in the workplace is seen as rooted in inequalities between large corporations who have deep resources, and individual workers who lack savings and safety nets, so markets are not seen as perfectly competitive. Rather, labor markets are seen as destructively competitive. Now in theory, bad social outcomes can occur when either side has too much power, but the usual concern is with employers having too much power. So what's the desired situation? The desired situation is a balance. But because markets aren't seen as perfectly competitive, markets perpetuate imbalance and inequalities, rather than serving a balance. So you need institutional checks and balances, like laws and unions, to facilitate a balance. A company in this school of thought is like unionized investors, shareholders banding together, pooling their resources. And so labor needs to be able to band together, pool its resources, in order to have something approaching equal balance of power. The contrast between these two schools of thought raises another important issue. What are the goals of the employment relationship? The neo-market liberal ideology prioritizes efficiency, which is just a short hand for profit maximization, productivity, and other economic concerns. In contrast, the critical schools emphasize equity and voice. Equity is simply fairness in the employment relationship, fairness not only in economic rewards but also in terms of the administration of employment policies like nondiscrimination and the provision of employee security. Voice is participation in workplace decision making, autonomy, and discretion. Notice that this highlights the contrast between these two schools, because the market approach focuses almost exclusively on organizational goals, as captured here by efficiency. Whereas a critical approach focuses almost exclusively on employee interest, to the exclusion of an organization's interest in profitability. The pluralist industrial relation school, however, brings these interests together. The industrial relation school believes that employer and employee goals are legitimate, so none should dominate. Instead, we should be seeking a balance. Somebody, in fact, once wrote a book about balancing these objectives and called the desired outcome, employment with a human face. All truth be told, that was actually me. But managers will hopefully find this to be a good way of thinking as well. Good employees are usually concerned with serving organizational interest. But they also wanna be treated fairly and have some autonomy and discretion. In other words, efficiency, equity and voice should all be seen as important. Also, both the industrial relations and critical views emphasize the importance of the human element. In the most critical views, workers lose an important part of their humanness by selling part of themselves, that is selling their labor to someone else. But even without going this far, we still have an important reminder that society needs to be concerned with standards around wages and working conditions that promote human dignity in the workplace, and in their families. That is, labor is not just a commodity, and is entitled to human rights as human beings. So we've seen three of my favorite pieces of line art. So if you're paying attention, you might be asking, well, where's the turkey? Where's that picture of the Pilgrim holding the gun labeled new methods bringing home plenty of turkey for the stockholders and workers to share? Well, this unitris school of thought It is essentially on the side lines in these debates over market inequalities and power, and over these debates is to whether labor is just a commodity. This unitarist school of thought implicitly assumes that markets are not perfectly competitive, because it emphasizes organizational discretion in establishing terms and conditions of employment. But markets and power aren't central to the unitarist school and high road human resources. The central question that this school is focused on, is how to design win win HR policies that will engage and motivate employees in mutually beneficial ways. For that you need to understand what drives employees beyond money. That's the subject of module three.
