The Capitalist: “… an order of men whose interest is never exactly the same with that of the public, who generally have an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it.”

Adam Smith in “Wealth of Nations” (1776)

If he were alive today, Adam Smith would have smiled knowingly at recent events in Chattanooga, Tennessee. When Volkswagen of America took the un-American step of letting the UAW court its workers there, undisclosed sources poured millions of dollars into an all-out media blitz to threaten VW employees that a vote for the union meant a loss of jobs and security.

When the UAW lost the vote (712 to 626), conservatives cheered, but most of America yawned. A mere skeleton of its former self, the UAW seems headed for the graveyard without mourners. So what?

Many believe that unions have outlived their purpose. They note that issues like worker safety, child labor, and long hours with below subsistence pay are no longer threats to American workers. Yet Smith’s observation of capitalism from the eighteenth century begs a question here in the twenty-first: Has capital’s relentless drive for accumulation softened in the intervening years? Or has it merely found other ways to “deceive and oppress the public”?

One of the features of America’s historic wage and wealth disparity is that it was achieved by making money, not goods or services. Notes the Economist in “For richer, for poorer” (October 13, 2012), “…the share of investment bankers among the top 0.1 % is larger than the share of senior executives. America’s top 25 hedge-fund managers make more than all the CEOs of the S&P 500 combined.” Or, in the words of Henry C. K. Liu, commenting for the Asian Times, “the U.S. produces dollars and the rest of the world produces things that the dollar can buy.”

If America’s capital flight from productive capacity to the financial sector is a problem, however, the public is willing to ignore it. While the residual damage of the 2008 financial crisis is still being born by ordinary Americans, the most prominent political outcome of the crisis, notes author Michael Sandel, “was the rise of the Tea Party movement, whose hostility to government and embrace of free markets would have made Ronald Reagan blush.”

Trusting in something called the Efficient Market Hypothesis (EMH), American’s generally accept the idea that capital should be entirely free to chase the highest returns. Why build (or maintain) a factory if you can make more money without one?

America has mostly forgotten that capitalism is a good, but one that must face counterbalancing forces to guard the public welfare. One of those forces is organized labor.

In Germany, host country to Volkswagen, the flow of capital is balanced by government, culture and unions. Partially a byproduct of these influences, Germany runs the second largest trade surplus in the world (in contrast with America’s world-largest trade deficits) while its autoworkers earn more than twice their American counterparts.

More importantly however, the UAW’s German counterpart, IG Metall, is co-responsible for VW’s enviable success though a cooperative labor-management arrangement known as the “works council”. VW wanted a similar arrangement here in America but it could not legally do so without a union.

One naturally asks: Can the benefits of labor-management cooperation be achieved without a union? Yes, but in the absence of unions, such arrangements may depend on the presence of a philosopher-CEO like Robert Owen. Owen’s early 1800’s textile factory in New Lanark, Scotland ran very profitably without the labor abuses common to the early Industrial Revolution. But despite Owen’s renowned success, his cooperative workplace was never widely copied. Crushing labor practices were accepted for more than a century until events like New York’s “Triangle Shirtwaist Factory Fire” (March 25, 1911) awakened the public.

If a union lead cooperative labor-management arrangement works for Volkswagen, why does American business avoid such arrangements? Such arrangements do exist in America, but they do not get much air time, nor are they common.

The benefits of ‘cooperation’ are difficult to measure while the costs of labor are not. But more importantly, an American CEO has a relatively short tenure that is judged on a stream of profits graded every 90 days. The benefits of the cooperative labor-management relationship are slow working; require years of cultivation to be effective; and produce modest innovations that never gain the fawning attentions of the business press. Far more popular are such actions as mergers and acquisitions that create a splash on the cover of “Fortune”.

The source of America’s anti-union bias is its individualistic culture. This same culture allows America to excel at the invention of new technologies through an economic “dynamism” that is envied around the world. The trick for America is to retain this lead while learning to maintain its productive capacity against the influences that would abandon it. The intrinsic value of the dollar, after all, is the productive capacity it represents; to forget this is to be “deceived and oppressed”. This is the capitalist charade of twenty-first century. Here, organized labor can help.