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Institutionalization and dissolution of the twentieth century's corporate labor


KIM Seok-hyeon.   first upoaded: 2017-06-05.   last updated: 2020-12-31. 


Corporate labor of the twentieth century with characteristics of regulated working hours, corporate welfare, and lifelong employment settled down at the golden period of 1950-60s.[1] Probably the concurrence of corporate labor and the time's prosperity engraved the notion of labor into the mind of people. So corporate labor has become an ideal type of labor which is believed to hold universally irrelevant of time and space and has worked as a view frame that makes other forms of labor regarded as just exceptional or even undesirable. Contrarily, corporate labor started to emerge after the turn of the century and reached its dominant position in the 1950-60s but soon started to ebb. In spite of the temporal nature of corporate labor, its strong position as an ideal type makes us incapable of seeing its dissolution and helplessly sticking to it. As the disparity of reality and ideal becomes large, the resulting friction and strain intensifies but still people are astray, hesitant, or prospect-less and so have to bear further pains.

Although the modern capitalism of the West came into being after the industrial revolution, before the twentieth century the form of labor was only the wage labor where only the compensation was the wage against the amount of time.[2] The labor was terribly long each day and off only on Sunday reflecting the Christian weekly ritual. Such binge labor led to chronic fatigue and alienated feelings of workers and resulted in workers' delinquency and shun. Workers' absence on Monday was so common that Benjamin Franklin, versatile genius and a founding father of America, recalled that his advance in the hierarchy of the printing house was due to his uninterrupted attendance on Monday.[3] In order to encourage the due attendance and diligence of the workers, Ford Motors raised the daily wage to 5 dollars from 2.34 in 1914 and continued to introduce and enhance labor-concerned welfare institutions within the corporate including the installment of the social department and five day work a week, each the first of such a kind. This corporate welfare and protective labor form was a breakthrough departure from the previous form of wage-only labor. Ford's progressive approach to labor surely serves the protection and welfare of workers, but in return Ford was able to get loyalty and diligence of its workers and as a result a streamlined production dubbed conveyor belt system which was a monumental innovation of manufacturing in the twentieth century.[4] Furthermore well-paid and -rested workers turn out to be a huge group of consumers capable of purchasing expensive durable goods, particularly cars, eventually contributing to the beneficial cycle of the blossoming economy of the 1950-60s.

Ford's corporate welfare system stimulated other leading corporations and governments over the US and Europe and finally led to the modern concept of corporate labor. Corning Glass Works introduced health-care insurance funded by the corporate in 1923. U.S. Steel (integration of Andrew Carnegie's steel companies and more) reduced the daily working hours to 8 from 12. International Harvester introduced a paid vacation of two weeks. President Roosevelt signed on The Fair Labor Standards Act (FLSA) in 1938, which legislated still-prevalent concepts of labor: 8 hour work a day, 40 hour work a week, over-time payment, minimum wage, youth-labor protection and so on. In 1955 around, Britain and Canada adopted five working day a week and other advanced countries adopted at least half-day work on Saturday and in 1970s in any advanced countries the 40 hour work a week was the maximum.[5]

However, the 1960s started to see the dissolution of corporate labor and adjoined welfare. The leading US corporation faced global-scale competitions and profit squeezes and even survival pressures.[6] And the services or service companies expanded fast and began to employ service workers while manufacturing companies' employment began to contract. The FLSA targeted mainly at manufacturing workers and so then services workers like managers or professionals were exempted. The transformation of labor from manufacturing to service helped savvy trend readers like Alvin Toffler and Daniel Bell to produce then mega-selling and still steady-selling classic works: respectively Future Shock (1970) and The Coming of post-industrial society (1973).

The dissolution of corporate labor has taken a variety of ways or forms such as: wage restraints, shortened work hours, part time, outsourced and contracted labor, reduction of corporate funding on pensions, increased mobility between jobs and occupations. This transformation on one side provides upper hands to corporate capital at the costs of workers, but on the other side may serve as more opportunities as flexible work, let's say freelancers, and further welfare such as shortened labor if combined with favorable terms of labor. In this sense, we can say that we also observe new institutionalizations of labor or at least clues to them. However, the deepening inequalities and resulting frictions across advanced countries say more for capital then for labor. And furthermore this transformation may come along well with short-sighted individual capital but break ground for the total capital by weakening purchasing power. Particularly, the recent rapid development of artificial intelligence further endangers and raises concerns on jobs. Against this background lie the worrying voices of tech leaders such as Bill Gates and Elon Musk on the growing disparity between technological advances and lagging social institutions.

The land enclosures of Britain in the 18th century(enforcement of the ownership of private land) brought about dissolution of the peasant class and turned them into the wage earners in industrializing cities. Labor hours were very long, wages were very low (even labor hours were cheated by employers), and the urban environment was filthy and dangerous. This is what Karl Marx described in detail and criticized seriously in this classic work 'capital'. And we can see that it took a long time for a dissolution of agricultural labor to finally reach a reformation to corporate labor. But ironically soon the new reformation started to dissolve. Until we reach another resolution of labor, the transition period cannot help but be very painful. Thus naively believing that we only have to wait for another equilibrium to come may be not only unethical but also hindering the active efforts for adjustments; the corporate labor of the twentieth century were themselves the result of such efforts. We also have to note that individuals have to be able to make strategic decisions to get through difficulties, simply instead of waiting for institutional re-arrangements considering that adjustments will take long. And since concerted efforts between the whole society and individuals will bring about most desirable outcomes in fastest time, in this case transition costs will be minimized.


(*) This article is published in intelligence korea, Summer and Winter, 2020. The Korean version is available at intelligencekor.kr/periodical/article.html?bno=2.

Notes


[1] For Europe, US, and Japan, 1950-60s was the period when economic growth and the expansion of the middle income class. Among developing countries, Asian Four tigers (Hongkong, Singapore, Korea, Taiwan) experienced economic take-off later and some countries followed but many developing countries have not yet experienced such a golden period.

[2] According to Gøsta Esping-Andersen (1990, The Three Worlds of Welfare Capitalism, Chapter 4, Princeton University Press: Princeton), although at the late nineteenth century there existed corporate pension plans, the benefited are arbitrarily chosen and plans are not premised on contractual entitlements. The cases of pension plans of the time if any are more or less organized by government or trade unions. Above all at the turn of the century, even those youths of the age 20 have expected life expectancy of only 60 so that people of old age enough to retire are rare and usually people did not have the concept of retirement at all. So Esping-Andersen says that it is only after the second world war when retirement plans are formally institutionalized.

[3] The source about working hours and Franklin is Katrina Onstad's article in Quartz, May 6, 2017, “UN-HOLY DAYS: It took a century to create the weekend—and only a decade to undo it”, qz.com/969245/it-took-a-century-to-create-the-weekend-and-only-a-decade-to-undo-it. This article is an author's own excerpt from the author's book: The Weekend Effect: The Life-Changing Benefits of Taking Time Off and Challenging the Cult of Overwork.

[4] The source of Ford's labor protection is Daniel Gross's article in Salong, September 30, 2004, “Goodbye, Pension. Goodbye, Health Insurance. Goodbye, Vacations: Welfare capitalism is dying. We're going to miss it”, www.slate.com/articles/business/moneybox/2004/09/goodbye_pension_goodbye_health_insurance_goodbye_vacations.html.

[5]  Katrina Onstad (op. cit.) introduces the FLSA with basic characteristics of 8 hour work a day and 40 hour work a week and its spread across the world. More detailed contents of the FLSA is from wikipedia under the entry of 'Fair Labor Standards Act', en.wikipedia.org/wiki/Fair_Labor_Standards_Act.

[6] Daniel Gross (op. cit.) tells that it is already in the 1960s when the corporate protection of labor started to retard.