Pascal McDougall

Volume 29.1 (download PDF)

Abstract

The impact of large firms on workers’ interests has drawn scholarly interest at least since the Industrial Revolution. In recent decades, that interest has intensified, and the view that large firms are incompatible with egalitarian labor market outcomes has been voiced by scholars across the ideological spectrum. Centrist scholars bemoan a rise in market concentration and would use antitrust to restore “competition” and empower workers by raising wages. Scholars in the neo-Brandeisian wing of the left agree with the centrist diagnosis and add that large firms often impose exploitative and authoritarian working conditions. Scholars on the right draw different normative conclusions but also assume that large firms can only offer low wages, hierarchical work, and high manager/ investor incomes—because of the need to secure risk diversification, efficient management, and investments in long-lived assets.

This Article addresses notes of caution to all three camps of the “bigness- necessarily-harms-workers” intellectual coalition. Against centrist advocates of competition as a tool to empower workers, it contends that large firms are often potentially more congenial than smaller firms to the exercise of collective worker power and to large-scale income redistribution towards low-wage workers. Against right-wing defenders of large, shareholder-controlled firms, this Article shows that, under favorable institutional and political conditions, sufficiently strong labor unions can make “efficient” large firms perfectly compatible with significant transfers of income and power from managers/investors to workers. Finally, against left-wing assertions that bigness breeds hierarchy, the Article contends that large firms, because they can enable easier income redistribution, are also potentially more amenable to non-hierarchical working conditions.

This Article builds on old themes from socialist and labor-union-adjacent literatures outlining the mobilizational, technological, and organizational advantages of large firms for redistribution. It sheds new light on these themes by combining simple microeconomic distributive analytics and an institutionalist emphasis on the legally constructed nature of markets. Sectoral and cross-sectoral bargaining coverage, work-sharing within the firm, and bargaining at once on wages and employment are a few of the distributive benefits this Article shows can be more easily attained by unionizing large firms than by unionizing small ones.

In keeping with institutionalist agnosticism about the distributive valence of broadly defined legal forms like “capitalist firms” or “private property,” this Article does not claim that large firms are always better for labor. Instead, it calls for contextual analysis and openness to the idea that—if only for reasons related to the mobilizational constraints facing social movements—larger economic structures may often offer advantages for large-scale redistribution. Moreover, even if in a given context bigness poses disadvantages for redistribution that outweigh the advantages outlined here, the dynamics of political-economic struggle uncovered in this Article will remain important to keep in mind for anyone interested in bringing about large-scale egalitarian redistribution.