The Origin and Nature of Unions
The history of labor unionism dates back to the 18th century when craft unions were formed in the United States (US). According to Shaw, during this time, “groups of skilled artisans – carpenters, shoemakers, tailors, and the like – formed secret societies for two reasons: to equalize their relationship with their employers and professionalize their crafts” (p. 299). The involved parties agreed on various issues, such as the number of working hours and the acceptable wages and swore not to work for any entity that was not willing to meet the set terms. Importantly, the workers in these unions pledged to keep their allegiance as a secret because, until the mid-1800s, it was a crime for employees to form unions, and thus anyone involved in such activities would be prosecuted for conspiracy.
Despite the challenges that labor unions faced, workers did not give up, and in 1869, the first formal trade union, the Knights of Labor, was formed and it had national representation. The Knights sought to unite all workers despite their different skills, gender, or race, and form one major union that could address their interests, especially collective bargaining. The Knights set the pace for the emergence of other labor unions and in 1886, the American Federation of Labor (AFL) was formed, and it mainly focused on bringing together other various craft unions. However, with time, AFL became appealing to skilled laborers, and it became more popular than the Knights were and by 1917, it had over 2 million registered members (Shaw, p. 299). Nevertheless, despite this progress companies used the existing laws to repress labor unions, specifically the 1890 Sherman Act, “to obtain anti-strike injunctions from the courts on the grounds that strikes illegally restrained trade” (Shaw, p. 299). Under this law, a firm would merely allege that a planned strike would cause damage and get a restraining order even without providing proof.
However, the 1929 stock-market crash and the ensuing Great Depression, was a blessing to labor unions because the public started sympathizing with the plight of workers. In 1932, Congress passed the Norris LaGuardia Act, which barred the issuance of federal injunctions in labor disputes that did not involve any form of violence (Shaw, p. 299). Three years later in 1935, Congress passed the Wagner Act establishing a federal right to unionize (Levine, p. 531). Therefore, workers were now allowed to join unions of their choosing for collective bargaining, and employers were legally prohibited from interfering with the operations of such unions. According to Shaw, by the end of World War II, unionized workers had reached 12 million due to the Wagner Act (p. 299). However, the widespread strikes post the war era led to the passage of the Taft-Hartley Act in 1947 and outlawed closed shops, which could only hire union members. This law is still in effect today and it bars unions from engaging in unfair practices, including secondary boycotts and sympathetic strikes.
The Origin, Development, and Nature of Corporations
Before the 1800s, the first entities with semblance to corporations were established in Europe to promote the public good through building institutions, such as learning institutions and hospitals, as not-for-profit organizations. During this time, corporations were subject to control by governments, and they operated under strict constitutions. However, in the 17th century, these entities shifted focus from public good to money making, with the accumulated wealth being used mainly to finance European imperialism. Specifically, Britain was the leading player in the establishment and development of corporations to control trade and resources around the world. In the US, the colonial monopoly enjoyed by the British aristocracy ended after independence and other players. According to New Internationalist, the modern-day corporations emerged in Britain after the passage of an 1844 Act that gave such organizations to define their purpose. In other words, governments were no longer controlling corporations – a task that was left for the courts. Within a year, the concept of limited liability was born whereby shareholders’ personal assets “were protected from the consequences of their corporate behavior” (New Internationalist). This development set the stage for corporate irresponsibility.
In the US, a court ruling in 1886 indicated that a corporation was a natural person under the law. This determination was abused under the 14th amendment of the Constitution, which stated, “no state shall deprive any person of life, liberty or property” (New Internationalist). This clause was meant to protect freed slaves in the South, but it was used to guard corporations and minimize regulations. With the unbridled and pervasive capitalism of the 19th century, corporations continued to evolve to become what they are contemporarily.
Limited liability defines the default nature of corporations in the 21st century. Under this model, Shaw notes that shareholders or stockholders (those that provide capital resources) own the organizations, and “they are financially liable for debts of the organization only up to the extent of their investment” (p. 152). On the other hand, stakeholders include every other party involved or affected by corporations, including governments, consumers, workers, shareholders, and society. The issue of corporate morality is debatable due to the vanishing individual responsibility based on the nature of these entities. While it could be argued that every shareholder shares personal responsibility for what occurs in corporations, the diffusion of accountability also means that no one is morally responsible.
With the evolution of corporations to focus on money, the issue of corporate social responsibility emerged. Companies had an implied moral obligation to make social goals as important as economic ones. However, the primary duty of organizations is to make a profit and maximize the shareholders’ wealth. In the process, various externalities – “the unintended negative (or in some cases positive) consequences that an economic transaction between two parties can have on some third party” (Shaw, p. 161) occur. For instance, pollution due to company operations is an externality. The idea of corporations is complex and it continues to evolve into a sophisticated maze with most entities focusing more on profits and less on the public good.
Consumer Protection
Before the 1900s, consumers were not adequately protected, and thus they had to check and verify the quality of the products they were using. Sellers could only be held responsible in cases of gross and blatant negligence. According to Corradi, “The first consumer’s organizations were born in Denmark in 1947 and in Great Britain in 1955 where the Government created the Consumer Council…But the real normative breakthrough came with the Single European Act; it modified the Treaty of Rome.” However, the introduction of the Federal Trade Commission (FTC) in 1914 had sought to protect consumers. Various players are involved in the issue of consumer protection, including governments, NGOs, corporations, and individuals to ensure that people are guarded against the harmful effects of products that they use.
Governments around the world have created product liability laws to ensure that companies are regulated to manufacture goods that are safe for human consumption. In the US, Congress passed the Consumer Product Safety Act in 1972, which is part of the government’s regulation efforts to protect consumers from harm or injury when they use different products (Shaw, p. 195). Every product in the market has to undergo specific testing and verification to make sure that it meets the set safety standards. As such, if the relevant body realizes that a certain product has been released to the market without proper testing, recalls are made, where possible. This assertion explains the increasing number of vehicle recalls over the last 20 years, and Shaw notes that one in every 12 cars is recalled (196). Consumer protection comes with economic costs for companies because they are expected to take extra measures in compliance with the set laws.
However, it is important to question whether regulations as part of consumer protection are effective. Shaw argues that people work under the assumption that whatever they can find in the market, especially foodstuffs, is tested and certified (p. 198). However, this presumption is misplaced because the available data shows that regulation has many loopholes, and thus it does not guarantee the safety of products. For instance, the meat sold in the US is prone to mad cow disease and unapproved drugs could stay in the market for a long time without the realization of the Food and Drug Administration (FDA). In addition, Shaw warns that some products, such as shampoos, other personal care, and cosmetic items, are not under any regulation to ensure consumer safety yet some have ingredients deemed harmful (p. 198). Therefore, while the purpose of consumer protection is to guard users against the harmful effects of products in the market, the regulation approach adopted by many governments is wanting and it might not guarantee safety.
Works Cited
Corradi, Antonella. “International Law and Consumer Protection: The History of Consumer Protection.” Global Law and Justice.
Levine, Peter. “The Legitimacy of Labor Unions.” Hofstra Labor and Employment Law Journal, vol. 18, no. 2, 2000, pp. 529-573.
New Internationalist. A Short History of Corporations. Web.
Shaw, William. Business Ethics. 8th ed., Cengage Learning, 2014.