Capitalism and Labor Part I: At-Will Employment

The ideology of capitalism is pervasive.  It permeates all corners of our culture and academic understandings of America. We are taught from a young age the “American Dream” can be achieved if you “pull yourself up by the bootstraps.” We are told if you apply a “Protestant work ethic,” you will be able to “enjoy the fruits of your labor.” The language of capitalism is frankly poetic. It empowers the listener and gives hope where there is dwindling economic security. The legal doctrine of at-will employment shatters any hope capitalism whispers in our ears. Under this doctrine, big capital has been brutal, indignant and repressive to the worker despite its fancy language. 

At-will employment originates in the 19th century, in a time period of industrial revolution and mass production. The doctrine was first espoused by a renown legal scholar named Horace Wood. In his work, “A Treatise on the Law of Master and Servant,” (which is anything but Nietzschean) Wood invents the doctrine based on his interpretation of case law. According to Wood, at-will employment meant the relationship between employer and employee may be terminated, without notice, by either party. This was unlike the British common law system in which termination required notice and the duration of employment was set for one year. 

The purpose of Wood’s new rule was to help facilitate the unbridled, laissez-faire expansionism occurring during the industrial revolution. At-will employment promoted the social Darwinist ideas of “survival of the fittest” and rugged individualism into the workplace. It became every worker for themselves.

One year after Wood’s publication, Frederick Taylor introduced the technique of “scientific management” of the workplace into steel shops of the Midvale Steel Company, outside of Philadelphia. Taylor’s scientific management brought many rigid and untraditional changes to the workflow and production of the steel company. In fact, many workers resisted the new conditions they were subjected to. At-will employment provided Taylor and his hyper-capitalistic theories of workplace management a way of getting rid of employees who resisted any rule of the employer. Taylor and his theories were ultimately touted as successful despite his heavy-handed application of at-will employment.

Considering Taylor’s scientific management required Wood’s at-will doctrine, we can conclude modern capitalism necessarily operates on job insecurity for the worker. It cannot manage the workplace and achieve the same profit dividends without destroying their employee’s security in their job. By not allowing employees to have the psychological comfort of knowing they can only be terminated for cause – a showing of misconduct or poor work performance – capitalism was able to manage the workplace more effectively. Faster. Quicker. At the clear detriment of its workers. At-will employment established the employer’s legal power to dictate all terms and conditions of the workplace and to get rid of any employee with impunity who failed to meet those conditions. Consequently, capitalists managed the workplace through a form of economic and psychological duress which creates more docile and controllable workers. This process was part and parcel of the industrial revolution and America’s economic expansion.

Wood and Taylor’s theories reveal capitalism as more of a managerial strategy and ideological program that changes over time with the economic environment. We can see this in the dichotomy between the American and European legal systems. The English common law viewed employment as a social relationship of mutual obligations by both the employer and employee. Employment was presumed to exist for a fixed period, or, required notice and cause for termination.

Prior to Wood’s 1877 treatise, American law was largely silent on this issue. Though prior case law indicated ambivalence toward the English common law, no court in America had ruled or determined a case through the at-will doctrine. Instead, Wood’s rule was not supported by either precedent or policy, yet it became the controlling legal principle. The doctrine clearly enhanced the economic power of the employer. If the contract is at-will, then there are no legal limits on the authority of the employer, especially in terms of workload and disciplinary actions. Thus, the employee lacks both interest and power to challenge terminations or modifications in the workplace.   

At-will employment struck at the heart of collective action in the workplace. As capitalism advanced, the rule precluded workers from asserting any meaningful control over an enterprise. It provided a way to terminate workers, without any risk, who refused to comply with company standards, thus restricting collectivism in the workplace. In this regard, at-will employment was both a tool for day-to-day management as well as stripping workers of power within the workplace. At will employment legitimized the imbalance of power which was being generated under Taylor’s scientific management. 

Taylor’s scientific management further stripped workers of control over the production process by dividing the labor into various divisions of unskilled tasks. This scientific management of the production process was to ensure employees would not become relied upon as a master and/or expert on the production process.

Today, many workers mistakenly believe they can only be fired for cause and with notice. Their belief is reasonable as it is the most natural approach to a professional and economic relationship. However, the ideology of capitalism seldom matches reality. Courts have expanded the at-will doctrine to permit “wrongful termination” lawsuits if employees can prove they made complaints about legal violations in the workplace. However, this expansion placed the evidentiary onus on the employee to prove their case, assuming they can afford an attorney or find one that will take the case. Regardless, the state has taken a hands-off approach to the rights, security and dignity of its citizenry by placing the onus on workers to protect their own rights.

When we analyze capitalism, we must dissect its many moving parts. Capitalism is not mechanical like the gears of a clock. Instead, it is more akin to an amoeba. To understand capitalism, we must look at each and individual aspect as it transforms over time. Today’s lack of job security and high turnover rate for modern jobs finds its roots in the 19th century. The industrial revolution created new methods of organizing the workplace and exercising power over workers. Scientific management in conjunction with at-will employment profoundly altered the American economic environment. It is highly doubtful these two theories appeared simultaneously by coincidence. Regardless, what took place was a massive change in the workplace that protected the ruling class. One thing truly becomes clear; the enigma of capitalism will continue to change its management strategies and workplace environment to suit its own needs.

Perseus is an attorney and the author of the upcoming book, Iranian Sun, which can be found at www.IranianSun.com