Trade union immunity under the law
From Professor F. A. Hayek, FBA
Sir, When will the British public at last learn to understand that there is no salvation for Britain until the special privileges granted to the trade unions by the Trade Disputes Act of 1906 are revoked? Mr Robert Moss is probably right when in his recent book he writes that "the Liberals who blithely passed a Bill drawn up by the first generation of Labour MPs in keeping of an electoral promise quite literally had no idea what they were doing".
But they were soon unmistakably told. A. V. Dicey presently spoke of the Act of 1906 as having conferred "upon a trade union a freedom. from civil liability for the commission of even the most heinous wrong by the union or its servant, and in short conferred upon every trade union a privilege and protection not possessed by any other person or body of persons, whether corporate or incorporate. The law makes a trade union a privileged body exempted from the ordinary law of the land."
And in 1925 another great jurist, Sir Paul Vinogradoff, again emphasized that "the Trades Disputes Act of 1906 conferred upon the unions an immunity from prosecution on the ground of tortious acts of their agents: the immunity stands in flagrant disagreement with the law of agency and the law as to companies represented by their officers in accordance with the Statutory Order of 1883".
In 1942 a foreign economist intimately familiar with British affairs, the late Professor Joseph Schumpeter, looking back on developments, wrote that "it is difficult, at the present time, to realize how this measure must have struck people who still believe in a state and in a legal system that centred in the institution of private property. For in relaxing the law of conspiracy in respect to peaceful picketing - which practically amounted to legalization of trade union action implying the threat of force - and in exempting trade union funds from liability in action for damages for torts - which practically amounted to enacting. that trade unions could do no wrong- this measure in fact resigned to the trade unions part of the authority of the state and granted to them a position of privilege which the formal extension of the exemption to employers' unions was powerless to affect."
And only twenty years ago Lord MacDermott reiterated that, in short, the act "put trade unionism in the same privileged position which the Crown enjoyed until ten years ago in respect to wrongful acts committed on its behalf".
Yet still, when the fatal effects of this are before everybody's eves, nobody dares tn consider removing the source of all that misfortune.
There can indeed be little doubt to a detached observer that the privileges then granted to the trade unions have become the chief source of Britain's economic decline. It is an illusion to believe that a Labour government is in a better position to deal with the unions. It is no use suggesting to them moderation when they do all that harm by exercising their chartered rights.
A Labour government cannot touch the sacred charter which is the authorization of all this license. The public hardly yet understands that the power of the trade unions to destroy the economy has been conferred on them as a special privilege by an irresponsible government buying a few more years of power. That fatal mistake must be undone if Britain is to recover. No movement can pull the country out of the mire unless it obtains at the elections an explicit mandate to revoke the unique privileges which the trade unions have enjoyed too long. Only such a power can enable a Conservative government to reverse the trend towards abject poverty.
I am, etc.
F. A. HAYEK
Urachstrasse 27, D-78 Freiburg, July 14.