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Harry Glasbeek on how the law keeps workers’ aspirations firmly in check

The very laws designed to safeguard rights and freedoms often act as invisible shackles

Economic CrisisLabour

Cartoon of American industrialist Andrew Carnegie, 1900. Illustration by Udo J. Keppler. Image courtesy Library of Congress/Wikimedia Commons.

The following is an excerpt from Law at Work: The Coercion and Co-option of the Working Class by renowned legal scholar and York University professor emeritus Harry Glasbeek. The book uncovers how the legal system, through its structures and mechanisms, legitimizes and reinforces the exploitation of workers. Published by Between the Lines 2024. Copyright © Between the Lines 2024. For more information, visit www.btlbooks.com. All links that appear in the text were added by the editors of Canadian Dimension and do not appear in the original.


The drive to maximize profits is capitalism’s life force. Keeping down the costs of production is a ceaseless quest. Integral to that is the diminution, to a vanishing point if possible, of the price employers need to pay to purchase labour power. Just as important to them is the need to minimize the costs incurred in getting the most value possible out of each unit of labour power purchased. Those primordial drives are not deeply hidden. We are continuously reminded that, if they could have their druthers, our capitalists would still be exploiting child labour, provide no health and safety precautions, offer no replacement income when workers are injured or let go, would not want to be held responsible for workers’ welfare when they become too old or sick to sell their labour power, would much prefer not to have to abide by any limitations on the hours of work they can demand from workers, and so on, and so on. We know this because of what they do. Many of the more impoverished parts of the ever-more-integrated worldwide networks of capitalist relations of production attract investment capital. They do so because those poorer, less developed, locales do not put any meaningful checks on investors’ drive to accumulate. Child labour is rampant; health and safety is disregarded; maiming and killing in the workplace is commonplace; attempts at unionization have to overcome repressive laws; police and the military are called out to help employers facing resistance; an upper limit to work hours, compensation for injuries, and income when unemployed or beyond working age are virtually unknown. Profit-seekers’ havens.

In this context, the advances that have been made by workers in the countries focused on in this book are seen as precious, and workers will want to protect them. Yet, significant as they are, the scope of these worker protections is not as great as is commonly believed, nor are they solidly embedded. They are limited by the legal institutions and instruments used to give them life. They are not natural, not eternal, not inviolable. These gains constitute temporary and narrowly carved out relief from the hardships that would be imposed by the unfettered use of economic power by the owners of the means of production. Workers, in order to avail themselves of this confined relief, must bring themselves within the four corners of the legally created zones of protection. If they cannot, they will be thrown back into the same maw of an unmediated labour market where so many workers in the less economically developed sectors of the world find themselves.

The gains made by workers were attached to contracts of employment. This is still true today. When workers claim their entitlement to benefits under standard-setting legislative schemes, they must prove that they have entered into a legally recognized contract of employment with a specific firm. Workers, not having any assets but their labour power, will be better off if they can conclude a contract of employment because they will have a parcel of protecting standards included in that contract. This creates incentives for cynical manipulations engineered by lawyers and accountants, professionals who are willing to render a service which mirrors that delivered by fellow professionals for the rich who seek to avoid taxes.

A paradox comes into view. It is workers who now will insist that they have entered into an enforceable contract of employment. They are reifying what, not so long ago, many renounced as adverse to their interests.

That logic impels employers to take the opposite tack. Given that their potential to squeeze more out of workers is diminished by governments’ interferences with the “natural” operation of labour markets, they continuously seek to reverse the impacts of these interferences. They want to restore what they and their intellectual allies claim to be the natural order of things.

The owners of the means of production have always remained in a position to claim that the entitlements won by workers—to bargain collectively and to force the employer to meet some minimum standards of employment—are unnatural. They interfere with the basic principles of the system (especially property owners’ right to enjoy their property as they choose), and it is perfectly right and just that the owners of the means of production should be allowed to purchase their labour power without such interventions. Owners follow through on this claim of inherent entitlement with zeal.

They do not always do so in a legal manner. Some employers, perhaps driven by their sense that the distortions of the market are unfair to them, simply cheat. Broken Laws, Unprotected Workers, a 2019 National Employment Law Project report, reported that 37 percent of undocumented workers in the US were victims of underpayment for work done, that is, were paid less than the minimum wage legislation required they be paid. This compared to 24 percent of documented immigrant workers and 16 percent of US-born workers who were similarly short-changed. The Economic Policy Institute recorded that, in 2017, 2.4 million workers in 10 states were owed $8 billion that year by scoff-law employers. Extrapolating this degree of underpayment to the national stage led the study to claim that unpaid wages in the US totalled $15 billion per annum and that this staggering sum did not include amounts owed for unpaid overtime worked. Manifestly, some members of the employing class are more than eager to exploit the vulnerability of workers. The peculiar weakness of undocumented and documented migrants and their resulting deprivations speak to this, loudly.

The same phenomenon is observed in Australia, where wage theft is so rife that two state governments, Victoria and Queensland, have created a new crime to deal with the situation. The pressure to do so came from some unions which see wage theft as a systemic problem, a business model. One study has calculated that one in five Australian workers are underpaid, to the tune of $1.8 billion a year, a very large number in Australian terms. As is to be expected, people holding visas which limit their work rights and immigrants are favourite targets for rapacious employers.

One of the possible reasons why so many employers engage in these plainly unlawful ways to reduce their labour costs is not only that so few workers are in a position to enforce the laws but also that enforcement of these kinds of minimum standard laws is notoriously poor. For the moment it suffices to note that, if there is an opportunity to exploit workers, legally or illegally, many employers stand ready to do so.

To take these opportunities, however, employers need not stoop to illegality. They rely on the ideologically and legally unchallenged principle that their right to deploy their private property as they choose should be as untrammelled as possible. This allows them to argue that government interventions should be kept to a minimum. They get a great deal of help from ideologically friendly functionaries as they relentlessly pursue this anti-regulatory agenda. Both their lobbying and legal arguments have resonance with law-makers, judges, and administrators.

These legal functionaries are personnel who have internalized judicial teachings. That signifies that, like judges, they can best serve the system of prevailing social relations by treating interventions with property rights as unnatural incursions. In all sorts of spheres, these legal functionaries and practitioners are told, every day, by normal judicial practices and scholarly teachings, that it is right and proper to defend a status quo where the owners of the means of production deserve protection from all others.

Here are just a few examples of how this capitalist-favouring stage is set, how everything adjudicators know points them toward providing greater protection for the owners of the means of production than for those with nothing to invest but their bodies and minds.

The corporation’s personhood

The creation of the corporation-for-profit is justified because it leads to a more efficient use of property, the holy grail in capitalism. A number of property owners are given incentives to pool their resources because, when collectivized in this way, the bits of property invested are likely to be put to more effective use than they could be as smaller, atomized lots of capital. To this end, the created corporation is an envelope. It can hold all the contributed properties, as one single lot, owned by it. To enable this, it is given legal personhood, that is, it becomes a person with the same legal capacities any human being has. It can buy and sell; it can be a market actor; it can be a capitalist. The corporation is treated as a person separate from all other persons in the world, separate from the investors (shareholders), from those who lend it money (creditors), from those appointed to design its profit-chasing agenda (its directors, appointed by the shareholders), separate from the hands-on executives (chosen by the appointed directors), separate from any other corporations the corporation as a legal person can create (subsidiaries who, in turn, can create separate persons, producing a family or group of corporations), and, of course, separate from the workers who carry out the tasks that are intended to yield profits. The beneficiaries are to be the shareholders, the investors who gave up some of their property to set this machinery in motion. They are promised a share of any profits made by the corporation as it deploys the property it now owns and controls. Their share of the profits/dividends distributed by the corporation reflects the size of their contribution to the corporation’s capital. They are incentivized to give up some of their property to a corporation, not only by having the right to vote for directors whom they can thus control and push to maximize the profits in which the shareholders will share, but also by having much of the risk associated with investing taken out of play. They have limited financial responsibility. If the corporation incurs debts or obligations, the shareholders may lose their investment, but no more than that. Shareholders are not on the hook to make up any losses the corporation incurred as it chased profits on their behalf. And because the corporation is a separate legal person, it, not the shareholders, will be held responsible for any violations of regulatory or criminal laws that may have taken place as it pursued profits for those shareholders. In addition to these incentives to get them to transfer some of their property to an incorporated firm, shareholders are treated as if they belong to a peculiarly vulnerable class that is in dire need of statutory protections. There are a host of public institutions and laws to ensure that corporations put out accurate information to all those who have invested or who might invest in them. Access to such vital information must be made available to all of those who contribute or might contribute capital so that no unfair advantage is obtained by some capitalists and not by others. This kind of government intervention is much appreciated by the property owning class. These investor-friendly interventions offer far better and better-enforced protections than any worker protections do.

All these legally bestowed generous benefits create an environment of which judges and administrative tribunals are fully conscious. It is an environment which uses refined legally created doctrines and institutions designed to protect private property owners and their drive to accumulate wealth. The message is hard to miss, especially by legal functionaries, most of whom have spent a lifetime serving corporations. This slants their views when pronouncing on the validity of a scheme by employers seeking to avoid the cost of a worker-favouring limitation on property rights. They sense that law is, and expects them to be, on the side of the owners of the means of production.

Themis (scales of justice) statue outside the Brisbane Supreme Court, Australia. Photo from Flickr.

Workers’ interests?

Workers have none of the legal rights that investors have when the corporation makes a decision which affects their lives. Say a corporate decision is made to sell a substantial part of its assets, or to pay a special dividend rather than invest in more production, or to give executives a bonus at the same time as it declares redundancies—all garden-variety corporate decisions. There is nothing in law which gives workers a say in that kind of corporate decision-making. They must wrest any participatory role they would like to play from the corporation and its directors and shareholders by exercising such private bargaining clout as they can muster. Investors, of course, not only have legal control over the directors—and thus executives—but also have a right to say no if they do not like a decision, such as a sale of a substantial part of the corporation’s assets or a declaration by it of a bonus for executives, or a transaction which might lead to a merger or takeover with deep implications for the way the business is to be run. The shareholders’ rights to have a voice are legally endorsed rights. Investors of capital do not have to fight for them.

Judges and administrative tribunals are told, again and again, that capitalists’ interests are worthy of protections. Everything around them, everything they know about law, tells them that it is unremarkable, nay, commendable, for employers to fend off regulations merely to help workers out by imposing costs on property owners.

Security interests

For investors in corporations to bring an action under the government spawned regulatory protections they have been granted, they must show they have a special kind of interest that needs protection, much as workers have to demonstrate that they had been working under a contract of employment when they claim a legislated benefit. What investors must show is that they had a “security interest.” A “security” is created when one person invests money in a common enterprise and is led to expect profits solely from the efforts of the promoter or third parties.

Legal functionaries are being told, explicitly, that the expropriation of value generated by others’ efforts are worthy of protection by law. They are told that the investment of property to get more property permits the taking of value produced by non-property owners, a remarkable deviation from the idea that everyone should be entitled to the product of their own labour.

Partnerships

One way of conducting a business is by the formation of a partnership. Every one of the jurisdictions under discussion here has enacted a statute that codifies the principles of partnership law developed by common law judges. These statutes define a partnership as a firm in which two or more people carry on a business in common with a view to the making of a profit. On the face of it, this is the precise relationship between (a) investors of inorganic capital and (b) workers who have invested their labour power in a business. It looks as if they are in business to make profits together. Should the law, then, not hold that the workers are partners in this business? And if they are partners, should they not have the same rights as the partners who invested capital rather than labour power? The statutory definition does not make this a crazy idea. Indeed, in popular discourse, investors often can be heard to proffer the sentiment that their workers are their “partners.” It is true, of course, that all too often we hear this when the investors ask workers to make sacrifices during a down cycle or when there is a shortage of available labour. But that is just talk. Law and its judges and administrators are not swayed by common sense or mere logic. Having defined a partnership as they do, the partnership statutes go on to declare that, just because the remuneration paid for doing tasks on behalf of the profit-making activity takes the form of a share of the profits of the business, such a remunerated contributor is not necessarily a partner with all the responsibilities and rights which this implies. The “mere” fact that workers contribute to a firm’s profit-making activity and that their pay is based on a share of the profits made will not automatically make them partners; they might still be a different species, namely workers. The vagueness of this legislative formulation and, therefore, the difficulty of its application, is evident.

Once again, the judges and administrative tribunals charged with determining whether or not a contract of employment exists are given a strong signal: it is appropriate and right to treat the investors of inorganic capital and investors of labour power differently. The signal that it is permissible to draw such a distinction is posited on an assumption about the nature of the relationship between these two classes of investors, albeit there is nothing in liberal thinking or liberal law which specifies that there are these two classes. A choice is made, somehow. Unspoken assumptions colour the decision-making. Unarticulated assumptions undergird the legal characterization of relationships.

Servants and gentlemen

The decision in Lumley v. Gye was discussed at some length in the previous chapter. One of the issues was whether Johanna Wagner, an opera singer in great demand, was a servant within the meaning of the 14th-century Black Plague statute. A servant was identified as a person of low economic status, as “every person of whatever condition, free or bond, able in body, and under the age of sixty, not living by merchandise nor having certain craft, and having of his own wherewith to live, nor land of his own on the cultivation he may occupy himself, and not being in service.” In holding that the highly respected and sovereign Johanna Wagner was a servant, the reasoning of the court revealed how judges saw (and see) the world. The clearest exposition is to be found in the judgment of the dissentient, Coleridge, J. He noted that any new principles being formulated to found civil liability could never be applied to cases in which the person persuaded to break a contract was a knight, an esquire, or a gentleman. To be sure, such persons could, as violators of their contracts, be sued for breach of contract, but the party who had persuaded them to so act could not be. Why was this so? They were not servants because they had incomes of their own. This was crucial: they did not have to engage in work for wages as servants/workers must. People without any wealth or income of their own could not survive unless they agreed to be servants/workers. Knights, esquires, and gentlemen were not being forced to work. The centrality of this distinction was illustrated by intriguing comparisons made between different kinds of chaplains. Those who were private chaplains and who did not have any specific services to perform were to be treated as the equivalents of knights, esquires, and gentlemen. Nothing compelled them to conduct services, indeed to do anything they did not choose to do. Parochial chaplains, however, had duties, such as being required to visit parishioners, to attend to the ill and stricken, and the like. They had to perform tasks to be paid; they had been forced to take on remunerative work. This made them more like labourers than like gentlemen.

While all this may seem a little quaint today, it does demonstrate that the law is always looking for the distinction between those who have capital and can make choices about what they do with it and those whose circumstances give them little option but to find someone to buy their labour power.

Law draws these distinctions because it is committed to give protections to those with material wherewithal. The safeguarding of property rights is law’s default position. Law’s functionaries understand that owners of the means of production (a term they never use, of course) are to be protected. They understand the opposite is true when it comes to workers’ interests, that is, when it comes to those who do not own any of the means of production. Legislation may step in to force them to do so, but judges and administrative tribunals do not sense that this means that they should be generous in their interpretation and enforcement of unnatural entitlements given by legislation.

This should suffice to establish the proposition that, when policy- and law-makers approach the question of rights and obligations that govern our capital-labour institutions, they come with ideas and notions that colour their thinking and decision-making. The illustrations were chosen to indicate that those internalized views are traceable to (oft-unacknowledged) opinions about status and class.

Harry Glasbeek is professor emeritus and Senior Scholar of Osgoode Hall Law School, York University. He has taught in both Australia and Canada and has written 140 articles and 12 books, including Between the Lines titles Wealth by Stealth: Corporate Crime, Corporate Law, and the Perversion of Democracy, Class Privilege: How Law Shelters Shareholders and Coddles Capitalism, and Capitalism: A Crime Story. He lives in Toronto, Ontario.

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