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Subject: Saga in Steel and Concrete - 478-488-end
Date: Sat, 31 May 2003 10:17:31 -0700


Acknowledgment

The following selection is taken from "Saga in Steel and Concrete:
Norwegian Engineers in America" by Kenneth Bjork published by the
Norwegian-American Historical Association (NAHA) in 1947. The volume is
still available from NAHA at http://www.naha.stolaf.edu where you will
also find the first 33 volumes of Studies and Records online. This
chapter is published with the kind permission of NAHA. The book this
selection is drawn from is under copyright and permission has been
granted for educational purposes and it is not to be used in any way for
commercial purposes.

VI
When we turn from the group and its problems in modern society to
individual representatives who were students of economic and social life,
we find a few engineers who have made worthy contributions. Two men, each
for a different reason, have dealt with economic problems on a level
sufficiently above class prejudice to merit more than casual reference to
their published writings. They were Alfred Alsaker and Anton
Grønningsæter.
The first of these men, Alfred Alsaker, was chief engineer in charge of
drafting and sales for the Delta Star Electric Company in Chicago at the
time of his accidental death in 1936. He was a graduate of Bergen's
Technical College who came to America in 1905; he was keenly interested
in social and cultural activities; he served as president of both the
Norwegian-American Technical Society and the Chicago Norske Klub, and was
known for his fair and logical mind. {20} Before his death, at the age of
fifty-one; he had completed a book, The Capitalistic System and the
Nature of Unemployment, and arranged for its private publication. {21}
Unique among studies of unemployment, Alsaker's analysis is based upon
several fundamental mathematical equations; it proceeds therefrom with a
contagious optimism and faith in the potentialities of capitalism, once
the problem of unemployment is handled justly. In his preface Alsaker
informs us:
After the crash in October 1929, economic problems became most active
subjects of discussions. I was often puzzled by the astonishing confusion
of thought on economic questions even among my friends in the engineering
profession who by their accomplishments had proven themselves to be men
of more than average ability. . . . During one of these discussions I
conceived the idea of analyzing the general behavior of the capitalistic
system by the method commonly applied to engineering problems: First
define the measurable economic quantities that have a pertinent effect on
the operation of the system and, secondly, establish their mathematical
relationship if any.
It is interesting to note that Alsaker fully expected his analysis to
"prove the capitalistic system to be inherently unstable and detrimental
to the workers' interests. This expectation was based upon studies made
in my younger days when I had come to the conclusion that the
capitalistic system was obsolete and ready to be replaced by a planned
economic system." As his book amply demonstrates, this expectation was
not fulfilled. He explains:
I had neglected to search beneath the surface for an explanation why a
seemingly helter-skelter system should work at all. I had failed to
realize that by the very fact of its continued existence the capitalistic
system must by necessity contain within itself an automatic stabilizing
force of some kind. Actually my analysis resulted in equations showing
that the capitalistic system is like an exceedingly interesting,
complicated and self-regulating machine. Not an old thing in process of
dissolution, but a young institution, considering its ultimate objective.
Not an enemy of labor but a system whose very existence depends upon
continually increasing the workers' standard of living.
In the idealized system of capitalism, according to Alsaker, the prime
mover is the desire for profit-earning wealth, which in turn provides
economic security, power, and independence in old age. Since capitalism
is a dynamic institution, the average total production of goods must
increase, even if the population becomes static. "The rate of increase in
production wealth must conform to the rate of increase in the consumption
of goods and services," since it is impossible for "workers and
capitalists to save more from the processes of production than the total
amount required for new investment goods." Any excess of savings beyond
the needs of capital investment "becomes idle money and results in
unemployment to the extent that the total rate of consumption of goods by
all the unemployed is always equal to the total rate of idle
money-income."
Unemployment, Alsaker maintains, sets in when an attempt "is made to use
money or credit as a medium for storing wealth, and the system
automatically frustrates such attempts by causing unemployment to the
extent that the purchase price of the goods consumed by all the
unemployed is equal to the idle money-income stored by others." Although
it is impossible for the economic unit as a whole to bring about such a
maladjustment, it is quite "possible for certain individuals to do so and
it is those individuals who cause workers to lose their jobs resulting in
loss of property to both workers and capitalists." The responsibility for
the tragedy of devaluation, bankruptcies, and the transfer of property
from the unemployed to those only slightly affected by the depression
must rest squarely on the shoulders of those who disturb the natural
equilibrium of our economic life.
Since it is what Alsaker calls idle money-income that causes
unemployment, he proposed an optional unemployment tax on surplus income.
The effect on unemployment would be the same whether taxpayers delivered
the money to the government or bought consumers' goods for themselves,
for in either case public works or private employment would result. The
important thing is that "the owners of idle money-income should be
compelled to pay the cost directly." Even without such a tax the
self-regulating capitalistic system would "gradually and automatically"
eliminate both idle-money income and unemployment by "increasing the
workers' consumption rate and by reducing the income to capital without
destroying the incentive to acquire profit-earning wealth."
But Alsaker, the humanitarian, was eager to avoid injustice and hardship
to individuals who during periods of deflation are unemployed through no
fault of their own, who quickly exhaust their meager savings, and whose
needed consumption of goods must be financed by others. The "duration and
intensity of deflation periods can be limited and unemployment
practically eliminated by providing work for the unemployed, financed by
an optional unemployment tax on surplus income." The capitalistic system
would be further improved, in Alsaker's mind, by "gradually eliminating
income from parasitic investments, by gradually divorcing the . . .
government from all economic activities that can be run by private
capital." Finally, when the consumptive capacity of the workers has
approached the point of saturation, the government should institute "a
system of old age annuities through which the active workers would
support the aged and disabled workers at their accustomed standard of
living. The operation of the system would then approach the operation of
an Ideal Capitalistic System," which he believed fairly easy to attain.
{22}
Despite his engineer's approach, the use of analysis based on
mathematical equations, and his spirited defense of an ideal capitalism,
Alsaker differs from others only in his method of solving what is
admittedly one of the greatest problems in modern life --- unemployment.
It is commonly agreed that depression will eventually generate a period
of recovery and that recovery will sooner or later be followed by a new
prosperity stage. What any fair-minded economist is concerned about are
the human and economic losses inherent in depression and deflation.
Alsaker's plan for ending unemployment is best stated in the engineer's
words: "Spend your share of the idle money-income or pay it to the State
to provide work for those who are forced out of employment when you
refuse to use your allotment from the production of goods. . . . You are
denied the right to keep workers in idleness. . . . If you cannot use the
share you receive from production, the State is justified in taxing away
from you, that portion which you are unable or unwilling to use. This
share will then be given to the unemployed who can use it."
VII
No less important than unemployment in the consideration of contemporary
American problems is the question of the relationship of employee to
employer. Full employment and full production are impossible without
industrial harmony. That many Norwegian engineers, among them Carl Barth,
should have given serious thought to the labor problem, is but natural;
no less natural is their tendency to make comparisons between the Old
World and the New and to draw upon the long experience of the
Scandinavian countries. As in their technical work, so in their social
thought; they think in terms of transplanting, where advisable, the
progressive measures of the homeland. Representative of the best thought
on employer-employee relations is an address presented before the Toronto
branch of the Canadian Institute of Mining and Metallurgy, by Anton
Grønningsæter. His paper, "Employer-Employee Relations in Norway," is a
modified version of a lecture originally delivered before students at the
University of Toronto. {23} Grønningsæter is impressed by the fact that
in America, while much is said about labor unions, very little is heard
of a corresponding organization of employers. "I believe," he said, "a
strong organization on one side necessitates a correspondingly strong
organization on the other side." Familiar with conditions in Norway,
"where they have struggled with these problems [of industrial strife] for
fifty years," he found that the New World was at least thirty or forty
years behind Western Europe in the development of organizations to solve
industrial conflicts. America now, however, faces much the same situation
as Europe, and she must sooner or later set up the machinery needed for
the peaceful solution of differences between worker and employer.
In northern Europe, notably in England, labor, during the early stages of
the industrial revolution, was at a distinct disadvantage in bargaining;
this could be overcome only by the organization of trade unions-first in
England and later in the other countries bordering on the North Sea. The
organization of labor led, in turn, to the adoption of similar principles
of co-operation and majority rule on the part of the employers. In the
Scandinavian countries, Grønningsæter said:
There are now few employers who believe that a final solution to the
labour problem in a democratic society can be found independently by the
individual . . . employer, by Workmen's Councils, by Company Unions, or
by doing nothing. Quite a few thought fascism or nazism would provide the
solution, but I expect most of them have changed their mind about that.
Labour strongly believes that groups of co-operative unions directed from
the outside, independent of the management, are necessary for a
satisfactory protection of labour. The employers have adjusted themselves
to the situation, some cheerfully, others perhaps reluctantly resigning
themselves to the unions as an unavoidable evil.
They have also come to accept employers' associations as "necessary for
an orderly settlement of labour conditions and for protection of
industry." The majority of the Scandinavian people have recognized both
collective organization and collective bargaining as "justified in our
present form of democratic society." Norway, about twenty years ago,
tried compulsory arbitration and found it wanting. "It only seems to work
under dictatorships." Compulsory mediation, on the other hand, has had a
greater success.
Why, more specifically, did the Norwegian employers organize into
associations? "It was very soon found that the pressure exerted by the
labour unions tended to disorganize a reasonable balance in industry."
The only means of restoring the balance was a union of employers. Those
who did not join the association soon discovered that the "very
aggressive and intelligent Union management" put them "under constant
pressure." Grønningsæter, himself for ten years manager of a unionized
plant in Norway, knew whereof he spoke:
In the event of a strike, the comparatively few employees of a single
plant can be supported by the large membership of a group, or even by the
central labour organization, whereas the company has nowhere to turn for
help or support . . . . After obtaining . . . . strong advantages in a
number of individual plants, the Unions use these as arguments for
demanding like terms in all other plants. As a consequence, a plant or
company staying outside the Employers Association was sometimes looked
upon as a "scab," likely to make trouble for others.
More important still is the lack of a general policy toward employees in
the absence of effective organization. Labor naturally expects a
reasonable similarity in pay for work of the same kind in different
industries; an orderly adjustment is possible only when both labor and
management form associations.
Recognizing these facts, employers in all of the Scandinavian countries
were organized by 1900. Growth in membership was slow because individual
firms were hesitant to join a strike or lockout, "perhaps in another line
of business," simply because a majority of the association members voted
in favor of such action. Many also objected to subscribing to standard
wage rates and working conditions; "quite often the employer was inclined
rather to buy peace by paying higher wages than were in force in
neighbouring plants." Anyone familiar with the history of trade unionism
senses the story, on the side of management, of the reluctant surrender
of individual freedom for collective security. But the choice had to be
made, for "the final and inescapable consequence of unrestricted
individualism is anarchy." In Norway today very few companies remain
outside the Employers' Association.
Within each field of production --- such as mining, shipping, and the
paper and pulp industry --- employers combine and maintain a staff to
handle disputes as they arise. General policies are determined by a board
of directors chosen from the co-operating plants. All such groups, in
turn, are united in a central organization which strives for uniformity
in wages and working conditions on a national scale. The voting power of
the individual companies is roughly proportional to the number of
employees on its payroll. The national association maintains a
policy-determining central board, an executive committee, and a managing
director. In organization and function, the Employers' Association
parallels the national organization of labor.
Certain principles and practices have gradually evolved as the products
of negotiation between employee and employer. One is the 48-hour week.
Another is a two weeks' vacation with pay. Generally speaking, uniform
pay for work of one general type is insisted upon by labor, and the
employers are equally insistent on maintaining the "open shop" ---
despite the fact that almost all Norwegian workers belong to a union and
pay their fees without argument. Craft unions are regarded by Norwegian
labor leaders as obsolete; employers, too, insist on agreements based on
industries. Some craft unions have attempted, without success, to exist
independently of the Central Association of Labor Unions. According to
Grønningsæter, a struggle like that between the C.I.O. and the A.F.L. in
the United States "can happen only at an early, undisciplined stage of
the development of labour relations, before employers are organized, and
there is nothing of that sort in the Scandinavian countries."
Norway's dependence on foreign trade necessitates production costs that
permit her to compete in world markets. For this reason the major work of
the Employers' Association is the "maintenance of reasonable wage
relations as between different industries." The individual employer is
protected against added burdens imposed by organized labor just as
individual workers are protected by their unions against exploitation.
During the long industrial struggle that has taken place in Norway, the
union leaders, if not the mass of workers, have come to accept the
position of the organized employers, that wages should be determined by
what the marginal firms are able to pay.
Collective bargaining, as already stated, has obtained general acceptance
in the Scandinavian North. The essential difference between a country
like Norway and our own in this matter is that in Norway machinery has
been created to facilitate the bargaining process in a manner reasonably
fair to both sides in a dispute --- and to the public. If a local union,
for example, is dissatisfied with its present agreement, which usually
runs for two years, it files notice, several months before the old
agreement terminates, that certain changes are desired. Representatives
of the workers and management get together, discussions follow, and when
the two groups are in agreement and their settlement has been approved by
the central organizations of labor and industry, a vote of the members of
both sides gives final ratification. The local plant must accept what the
labor and management groups decide.
If agreement is not reached locally or between the groups, a mediator
representing the national government appears on the troubled scene. If he
is successful in working out a settlement acceptable to both parties, the
negotiators recommend approval by their organizations; this is usually
given. If, however, the members of the rival groups reject the mediator's
proposal, a strike or renewed government intervention follows. In the
event of a strike, at least two weeks' notice must be given; the strike
once on, government intervention again occurs until ultimately agreement
is reached.
The fact that most strikes and lockouts are of short duration, however,
is due as much to the expert and responsible leadership of labor and
management as to the efforts of the state mediator. Grønningsæter
believes that the compromise inherent in mediation is bad for union and
management discipline alike. Labor in Norway, as elsewhere, is opposed to
government intervention. That both labor and management have reached a
state of maturity in industrial disputes is evidenced by the fact that
strikes are conducted in an orderly fashion by the unions, and owners do
not resort to the strike-breaking tactics that have blackened the pages
of industrial history. Mediation has been reasonably successful and has
served as a necessary step in the evolution of greater responsibility on
the part of the leaders of labor and management, and it has worked in the
interest of the public.
Grønningsæter, looking back upon his experiences as a manager in Norway,
considers that the chief value of labor unions lies in "providing
protection for classes of labour formerly paid unreasonably low wages
compared to the bulk of labour." Among the "bad" features are an
occasional tendency to push wages beyond what technological and business
conditions would seem to justify, unlawful strikes, and interference with
the general efficiency of management. He qualifies his judgments,
however, and readily admits that management all too frequently is to
blame for what is commonly considered the doings of organized labor.
Turning the spotlight upon the American industrial scene, Grønningsæter
feels that, since conditions here have not as yet crystallized as in
Europe, certain new features, based upon the lessons learned from
European experience, may be introduced through legislation to correct
existing abuses. These would include "annual elections of Union
officials; publication of annual financial statements; and secret,
perhaps compulsory, publicly controlled election votes and strike votes.
Last --- but not least --- [they] should if possible make the unions
responsible, financially and otherwise, for the sanctity of contracts
made for the unions as such and for the individual members." Though
Grønningsæter does not here specifically mention management, it is clear
from what he says elsewhere that he also favors curbs on industrialists
as a safeguard to the public and to the workers.
The Scandinavian countries appear to have made considerable progress
within the frame of democracy toward "adjusting labour conditions to the
twentieth century industrial society." Here in America it may not be
necessary to undergo this extensive evolution; it "should be possible to
get a good deal of benefit from this experience and thereby shorten and
ease the process" of attaining the harmony which is essential to modern
life.
VIII
It cannot be said of any professional group, in America or elsewhere,
that in its social philosophy it is very far ahead of the general body of
citizens. Engineers --- like teachers, doctors, and lawyers --- are
naturally eager to advance the interests of their group, and wherever
possible they like to increase their influence in society. For the most
part, however, they are conscious of their opportunities and prefer to
work within the frame of the existing order --- a system that fixes
definite limits to their power but is also becoming increasingly
dependent on technically-trained men. It cannot fairly be said that this
order, motivated as it is by the drive for profit that Veblen deplored,
is unfriendly to the engineer. His grievance, if he has one, is simply
that his voice in determining the direction and purposes of production,
as well as his remuneration, is less than his importance in society would
seem to merit.
In the light of these facts, the Norwegian engineers are not apt to
consider themselves fitted for a role in our economy such as that
predicted by Veblen. The most that one can reasonably expect is that they
retain a regard for the general public as well as for the owners of
industry, and an absence of reactionary tendencies; and that they produce
a few leaders capable of great detachment and with a sharp eye to
improvement. In these respects the Norwegian engineers show up remarkably
well. Moderation, good common sense, and enlightened conservatism are
blended in their thinking with a full measure of responsible liberalism.
Though deeply concerned about the welfare of their class, they are also
devoted --- in their social philosophy as in their technical work --- to
the engineer's ideal of increased benefits to the rank and file of
mankind.

<20> Norwegian-American Technical Journal, vol. 10, no. 1, p. 7
(February, 1937); Scandia, August 6, 1936 Skandinaven, August 7, 1936.
<21> The Pioneering Publishing Company, Oak Park, Illinois, 1936.
<22> The quotations are from Alsaker, The Capitalistic System, 202-207.
<23> Canadian Institute of Mining and Metallurgy, Transactions, 46:97-112
(1943).

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