Toward a Theory of the Labor Market

W I HILE the present paper is focussed upon the conceptual tools used in the analysis of labor and some of the barriers which prevent understanding of this highly significant area of modern urban life, it is directed to those who neglect to treat the constructed types with which they operate as social inventions and as subject to the social process. Many areas of behavior still difficult to comprehend would be more understandable if the conceptual tools used by the scientist were either sharpened or had others substituted for them. To the present, the tools used in the analysis of the labor market have been those of the economist and have consisted of rational models or constructed types which, while giving much insight into economic behavior, have serious limitations in that much of "economic" behavior is non-rational. By the very nature of a model which cannot treat of the non-rational, vast areas which might legitimately be considered as part of the economic system have been relatively untouched by the theoretical application of economic tools. These areas have often been considered as "conditions" of action and therefore, understandably, have not been included within the theoretical schema of the economist. Neither have the end results or goals of the individual in a market setting been included in this schema.' In order for us as a people to derive a maximum productivity from the utilization of our labor force, we must understand the conditions of action which are dynamic forces in the functioning of labor markets. Conditions of action have been defined by Pareto as those elements in a situation ". . . over which the actor has no control."2 These the individual cannot alter or prevent from being altered in conformity with his desired ends. Those elements which the actor can control are considered the "means" to action. Robbins isolates specific conditions: "The technical arts of production are simply to be grouped among the given factors influencing the relative scarcity of different economic goods.. . . the problem of technique and the problem of economy are fundamentally different problems. "3 What are the specific conditions of action under which the commodity "labor" is distributed? Dunlop has emphasized the role of the trade union as a basic condition for interaction in the labor market.4 He also recognizes the existence of collective bargaining as an important element of this condition. "Economists would have a much more penetrating insight into the functioning of economic processes today . . . if they were more familiar with the operation of trade union organizations. . . . A systematic knowledge of the wage-fixing features of collective bargaining is indispensable if . . . this analytical work is to be more than gymnastics."5 A fundamental tenet of Dunlop's study is ". . . that modes of behavior that are broader then economic theory contribute materially to the understanding of wage determination."6 While many analytical models have been formulated or proposed which will and do include the wage-fixing economic functions of the trade union, other studies have emphasized the fact that the trade union is a multi-dimensional phenomenon operating within institutional frameworks other than the economic. C. W. Mills has emphasized the political dimensions of trade union activity as has A. M. Ross, though on a different level.7 The complexities inherent in the construction of an economic analytical model are dependent upon conditions which are broadly "social" in character and not merely confined within the limits of the traditional economic framework. A great step forward has been taken with the