The Law and Labor Strife in the U.S., 1881-1894
Posted: 24 Jul 1996
Date Written: March 1996
Abstract
Economic models of disputes often assume that the rules of the game are well understood and that parties know the possible consequences of their actions. In this paper we show the apparently unintended consequences of state-level legal innovations governing labor disputes that took place in the late 1800s. This was a period of legal ferment in which labor and capital actively lobbied state governments for changes in the rules governing labor disputes. We assume that parties acted in what they believed was their own best interest, so that when organized labor lobbied for legal changes such as the abolition of the blacklist, it was because labor believed that these institutional changes would benefit its constituents. Similarly, we assume that employers who applauded the use of the injunction against striking workers did so because they thought that the development of this legal instrument would tilt negotiations in their favor. The cross-state heterogeneity in the legal environment governing labor disputes at the end of the nineteenth century provides a unique opportunity to investigate the effects of the law. We use a rich source of data about more than 12,000 disputes that took place between 1881 and 1894 to show that many of the legal changes we examine had effects that were unlikely to have been anticipated by their proponents. This experience provides a rationale for labor's abandonment of direct political action in favor of "business unionism" at the end of the nineteenth century and for the eventual decline in the use of the injunction.
JEL Classification: J52, K31, N31
Suggested Citation: Suggested Citation