It's not widely known, but an earlier generation of libertarians condemned so-called right-to-work laws as anti-market. For example, Milton Friedman, in Capitalism and Freedom, compared right-to-work to anti-discrimination laws. The Spring 1966 issue of the libertarian student-run journal New Individualist Review carried Professor Hirschel Kasper's article "What's Wrong with Right-to-Work Laws." NIR was edited by University of Chicago libertarians Ralph Raico, Joe Cobb, and Jim Powell. Among its editorial advisers were Friedman, F.A. Hayek, and Ben Rogge, a classical liberal long associated with the Foundation for Economic Education. (Of course this does not mean that any of these men necessarily agreed with Kasper, although [with one exception] that may not be an unreasonable inference, considering that NIR never published a pro-right-to-work article. The exception is Hayek, who wrote, curiously, in The Constitution of Liberty that "closed- and union-shop contracts " must be treated as contracts in restraint of trade and denied the protection of the law.")
Percy L. Greaves Jr., a student and friend of Ludwig von Mises and a close associate of FEE founder Leonard E. Read, also made the libertarian and Austrian-economics case against right-to-work laws. The essay was published in a festschrift to Mises, On Freedom and Free Enterprise, which was assembled in 1956 to honor the 50th anniversary of his doctorate. One may draw one's own conclusion about how Mises saw the issue, given Greaves's choice of topic in this context.
In light of the controversy surrounding the recent passage of a right-to-work law in Michigan, Greaves's lengthy argument is worth examining. For the record, no one was more fully devoted to laissez-faire than Percy Greaves, a dedicated promoter of Mises's work. (See his Mises Made Easier.) And he was no union sympathizer -- or, to be precise, he had no sympathy for compulsory unions under the legal regime created by the National Labor Relations Act of 1935 (the Wagner Act).
But Greaves was consistent, and when he saw businesspeople asking states to pass right-to-work laws, which forbid employers from agreeing to make union membership a condition of employment, he objected. Let's first be clear about what these laws do. The 1947 Taft-Hartley Act, which amended the Wagner Act, contains provision 14(b), stating that Taft-Hartley should not
be construed as authorizing the execution or application of agreements requiring membership in a labor organization as a condition of employment in any State or Territory in which such execution or application is prohibited by State or Territorial law. [Emphasis added.]
Thus states may forbid a particular kind of contract between an employer and a union. (Under Wagner a majority of employees can authorize a union to represent them regardless of an employer's wishes, and employees who do not want to join must still pay fees -- not "dues" -- to the union for representation services since any conditions negotiated must by law apply all employees, members and nonmembers alike.)
Support for banning a voluntary agreement did not sit well with Greaves even if the ban is intended to counter an earlier government action. "The mass myopia of our age has been a reactionary reverence for government intervention," he wrote in "Is Further Intervention a Cure for Prior Intervention?" "When anything goes wrong, from a train wreck to a change in stock market prices, the craven crowds always clamor for just one more law."
He found "most astonishing" that businesspeople "seldom " ask for a repeal of the laws which are so often the root of their troubles. In accordance with the religion of the day, they ask for new legal restrictions which they think will protect them from the ills produced by the interventional laws already on the statute books." (Here he invoked Mises's "critique of interventionism": Intervention creates problems that, unless the original intervention is repealed, beget further intervention, and so on.)
Greaves knew well that those "who advocate the so-called right-to-work laws [believe] these laws will remedy some of the sins of the federal labor laws that now grant special privileges to labor unions." (For a statement of this "second-best" argument, see this.) He had no sympathy for the Wagner Act, but he wasn't buying the excuse: "Two wrongs never make a right. The economic answer is to repeal the bad intervention and not try to counterbalance it with another bad intervention. Such moves only provide the politicians with greater power over the entire economy." In other words, the end doesn't justify the means.
Those who advocate a legal ban on union shops seldom realize that they are sealing their own doom and placing their future fate in the hands of legislators who are only too eager to assume control of all economic activity.
Greaves was closely involved in the issue. At the request of Sen. Robert A. Taft in 1946, he helped draft a precursor to Taft-Hartley. According to Greaves, union activity had caused the Wagner Act to fall out of favor with the public. Taft wanted an ameliorative bill that would win enough votes to override a veto by President Harry Truman -- in another words, a watered-down bill. Then, after the Republicans won the White House and Congress in 1948, they would pass a better law.
Greaves "opposed this thinking on the basis that it would be better not to have any new law at that time[, contending] that a successful veto of a better law would result in a growing public pressure for the repeal of the Wagner Act and the election of the party that espoused such a move. The senator was not willing to go that far." Greaves feared that "if the senator's plan were successful, the public would be persuaded that the then evident economic distress flowing from union activity had been remedied and the next tide of public opinion might well be in the other direction."
Taft disagreed, and Greaves left the Senate committee. "Freedom " lost," Greaves wrote looking back, because once Taft-Hartley passed, the pressure on the Wagner Act disappeared.