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Worker of the worlds, unite! Using incentive design for scaling trust in vertical unions

— by and

Currently, union membership is declining all across the OECD and in most other regions in the world while anti-union sentiment and legislation have become commonplace giving workers few, if any, means to collectively bargain with increasingly large and diffuse firms. At the same time, zero hour contract models and the platformization of labor have fragmented and deconstructed many of the labor protections that unions have made possible which has, in turn, destabilised the conditions for social solidarity that once made collective bargaining effective.  All of these conditions add up to some severe questions that unions must face regarding their efficacy and survival in a 21st century global economy that is structurally stacked against their current ability to leverage power.

The kernel of these questions is related to the scale and form of most local and international unions which have not kept pace with the scale and form of planetary-scale production. As global supply chains have become more distributed since the mid-1990s due to international tariff and trade normalisation, conglomerations of firms have been moving away from largely centralised enterprises – those that firm-oriented or trade-specific unions have traditionally been structured around – by shifting activities into component parts, distributed ins such a way so as to gain comparative cost advantages in local material and labor markets. The new shape of production is therefore more of a diffuse, global network of firms, national regulatory contexts, and markets containing many and varied forms workers that fall through the cracks of union structures. This is particularly true with regards to just-in-time production processes that can shift components of production in profoundly flexible manners by skirting localised labor disputes or disruptions, not to mention regulation. The flexibility of gig-based and flexible labor provisions have complicated this even more by further decentralising workers and their component tasks. 

What this structural transformation does is to weaken collective bargaining by centralised or trade-based unions. When the ability for workers to effectively strike at a single firm or locale becomes just one node within an ever shifting network full of alternatives, the collective leverage power of shutting down the labor supply is radically diminished. Large firms increasingly plan for this even as they form logistics chains that are resilient against political, economic, or worker disruption. Unions, to become more effective, must therefore do more than just re-brand or increasing lobbying to promote their cause. They rather need to be updated structurally so that they can become formidable again; actively and effectively bargaining for collectives of workers that work for many firms, in many sectors, and in many locations all around the world.

To ameliorate this problem, new infrastructures for union organisation need to be created that are able to coordinate workers in a self-determined form that mirrors the flexible and distributed supply chains that they must bargain with. In a way, this echoes the same formal and structural demands that led to legal frameworks for unions in 19th century Europe. In their infancy, unions effectively solved the issue of equivalency in scale for their time through enabling workers to collectively band together by parasitising the institutional parameters of firms, matching their scale and legal form. What unions do is to institutionalise collective bargaining in the form of a legal entity that has similar rights and obligations to firms, creating equivalence for greater leverage.

Such an analog today would involve mimicking the structure of distributed supply chains and multinationals. By finding legal and formal organisation strategies that mirror this new model of production, labor could institutionalise entities for collective bargaining that alleviate the power firms have over them. One way to do this could be to vertically integrate labor organisations down the supply chain in order to create a vertical monopoly on the labor supply.  This translates into organising workers across sectors and across national boundaries in addition to horizontally within a given sector with a more explicit focus on the efficacy of direct action measures such as strikes; garnering more urgent and direct means for leveraging demands in the face of formidable legal and political conditions. 

Verticality

Vertical integration is a production model wherein a firm controls all aspects of the production in a given supply chain from raw material to sales. The advantages for a firm to do this is that it reduces transaction costs and enables centralised control over the supply and demand of the components that become a product without the variance of other firms’ production schedules and cost fluctuations. It is also known as a vertical monopoly in that this model monopolises an entire supply chain through different sectors of the production process, streamlining the many components into one centralised firm. This idea of a vertical monopoly seems the most fertile for unions in that a vertically integrated union could control the supply and demand of labor for a given supply chain (or multiple chain pathways) through a monopoly on labor power. This would mean that workers from each of the firms in a supply chain bind together with a formal organisation that, if necessary, could potentially shut down the production of a supply chain effectively enough to become a formidable force against their corporate bosses. This of course would need to happen in tandem with horizontal organisational efforts already in place so that orthogonal coordination can make it near impossible for firms and managers to avert some bloc of the union. It means leveraging the one monopoly workers can have – the monopoly of labor power – across the entire Go-like game board that is planetary-scale production.

Challenge

Yet a number of practical problems immediately present themselves with any new form of union organising that is, by nature, as distributed as these supply chains are.

  1. How does one coordinate strikes and collective actions amidst a multitude of people involved in these supply chains who all speak different languages, live far from each other, experience radically different labor conditions, and have different class and cultural backgrounds that may not align?
  2. How to manage this centralised, vertical monopoly democratically and without too much managerial overhead?
  3. How to coordinate aims and goals toward wage parity between workers, building equity, fostering inter-sector and inter-national financial incentives for people to work together?

After all, workers who are less likely to know each other or encounter each other in this distributed model are less likely to trust each other to keep their word when coordinating strikes and other collective actions with them, especially when the stakes are varied depending on location. While multinationals contain whole teams of workers to connect, communicate, and hold accountable different actors along the supply chain, workers themselves are often left with little to no armature for coordinating such a team outside of some centralised body to coordinate responsibility and enforce protocols that they themselves would create, even at the expense of bloating their administration through the creation of yet another managerial class. What this amounts to is the need for enforceable mechanisms for coordinating people and actions so that trust within the union is not totally lost within the scale and distribution of the form.

What these measures and mechanisms could hopefully diminish is the risk of strikebreakers that take new forms in this model. In a vertical supply chain, for instance, strikes become ineffective as production is merely shifted around to other companies doing similar work. Workers end up undercutting each-other, mimicking the classical problem of strikebreakers – or scabbing – down the chain which often fuels xenophobic ideas on the pretexts of localist protectionism. Rather than exacerbate the divisions and in-fighting that these generate, this type of vertical integration requires intensified trust mechanisms that incentives collaboration through shared equity which ties workers closer internationally. One therefore needs to prevent scaling-up the possibility of cross-organisational strikebreaking, considering that the social and legal repercussions that have been put in place to prevent them, fall apart when scaled due to the lack of social and jurisdictional overlap between the different organisations that would make up a such a vertical union.

For this reason, the issue of trust between the participating organisations and workers needs to be addressed first and foremost if people are going to collaborate at such a scale. As physical distance between workers could make their knowing each other limited, mechanisms need to be in place that enable workers to coordinate activities without knowing the character of their fellow union members or their relative vulnerability to social pressure. And this needs to be done in a decentralised, sustainable and democratic fashion. Without doing so would certainly undermine the key tenants of workers’ struggle and possibly exacerbate the already severe administrative bloat that plagues many larger union bodies.

Proposal

So how can the social and legal protocols that de-incentivise strikebreakers be scaled-up to aid the formation of vertical and orthogonal unions? Are there mechanisms that could help with strike coordination while also enforcing strike commitment to prevent this form of cross-organisational strikebreaking? We claim that this problem could be looked at through the lens of decentralised protocol design.

Blockchain research, and research on decentralised protocols in general aim to solve similar problems of decentralised consensus through incentive design and game theory. This is done through protocols that formalise the rules for interaction among a set of actors and create incentives for certain participant behaviour. If our intent is to increase collective bargaining power through scalable strike coordination and enforcement, borrowing ideas on incentive alignment from the decentralised protocol space can open up new fruitful possibilities. 

Below we will sketch out example mechanisms for strike-consensus and decentralised enforcement that could attenuate the mutual trust problem that arises when attempting to scale unions vertically and even aid current horizontal organisation. These mechanisms would live on a decentralised ledger and would be executed through smart contracts, which allow the self-execution of contractual agreements and transactions without third parties. It is worth clarifying that not having to rely on a third party here strictly concerns executing the contracts that make up the mechanism and not the overall framing of tenants and values. There might still be the need for systems of representation and mediation on the side of the union organisations that are necessary to interact with these contracts. This sketch is meant to open up the possibility space for these forms of designs and should not be seen as a implementable proposal in its current form.

Consensus and commitment on strike

Problem: If  a worker or an organisation of workers want to strike, but does not want to disclose their identity and willingness to strike to other parties, how can they reach strike consensus with other organisations within a supply chain to increase collective bargaining power?

The creation of a strike would happen in three steps. First, one of the of parties that wants to strike creates the framework for a strike through a contract that stipulates the number of potential organisations, the time-frame for allowing strike commitment, and the threshold for the strike to be enacted.

If the threshold of votes is reached within the timeframe, the strike proceeds and the committed parties now need to fulfil their commitment.

Enforcement of commit 

Problem: 15 organisations have agreed to a strike but there is little innate trust between the parties. How can they make sure that no one breaks the strike for short term profit, thus undercutting the collective effort? 

To ensure that the parties full-fill their commitment, the original strike contract needs to stipulate collateral required for a commitment by each party. If the participant threshold is reached, the stakes are transferred to an escrow contract that holds them until the strike deadline. If the threshold is not reached or the strike is successful, the stake is returned to the original union member. If the strike is unsuccessful, union member loses their stake. This incentivises the involved organisations to full-fill their strike commitment and deincentivises strikebreaking.

This collateral could be either a financial or reputational currency. If the collateral is financial, using the capital in the escrow to also short or invest in potential outcomes of the strike, opens up further, albeit mostly illegal, incentive possibilities for strike participants.

Oracle problem of strike outcome

Problem: The strike was successful. How is the strike result evaluated to give back union member collateral?

This problem of how to find an observable truth about an event to be used in decentralised systems is called “the oracle problem”, as one often has to resort to third party oracles to provide this information. For our purpose, this is a hard problem to solve, as observable efficiency of strikes is hard to measure.

The metric and process for evaluation are different for each strike, and the creator of the strike contract would need specify the metric for evaluating outcomes on a per strike basis. These would then be agreed on by all participating parties. Preferably there would be a number of templates and an automated framework for evaluating input data to combat scaling issues of this model caused by needed customisation.

Further research on how existing tracking systems for supply chains and how fluctuations in value of publicly traded assets can be used as input data for evaluating strike results could be an interesting next step for this research. 

These are of course only preliminary first steps toward sketching out some of the technical instruments that could make this new form of union a reality. We take these first thoughts as a starting point, one that needs to be tinkered with and developed further. Nevertheless, it should act as a prompt and a first attempt to work on through these many problems of trust and scale that riddle current union organising. We hope that, if nothing else, these attempts could start a conversation about actionable means for collective bargaining that provides for more leverage by workers the world over and eventually can be part of a process of creating a more equitable economic order.