It is not needed nor fitting here that a general argument should be made in favor of popular institutions, but there is one point, with its connections, not so hackneyed as most others, to which I ask a brief attention. It is the effort to place capital on an equal footing with, if not above, labor in the structure of government. It is assumed that labor is available only in connection with capital; that nobody labors unless somebody else, owning capital, somehow by the use of it induces him to labor. This assumed, it is next considered whether it is best that capital shall hire laborers, and thus induce them to work by their own consent, or buy them and drive them to it without their consent. Having proceeded so far, it is naturally concluded that all laborers are either hired laborers or what we call slaves. And further, it is assumed that whoever is once a hired laborer is fixed in that condition for life.
Now there is no such relation between capital and labor as assumed, nor is there any such thing as a free man being fixed for life in the condition of a hired laborer. Both these assumptions are false, and all inferences from them are groundless.
Labor is prior to and independent of capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration. Capital has its rights, which are as worthy of protection as any other rights. Nor is it denied that there is, and probably always will be, a relation between labor and capital producing mutual benefits. The error is in assuming that the whole labor of community exists within that relation. A few men own capital, and that few avoid labor themselves, and with their capital hire or buy another few to labor for them. A large majority belong to neither class–neither work for others nor have others working for them. In most of the Southern States a majority of the whole people of all colors are neither slaves nor masters, while in the Northern a large majority are neither hirers nor hired. Men, with their families–wives, sons, and daughters–work for themselves on their farms, in their houses, and in their shops, taking the whole product to themselves, and asking no favors of capital on the one hand nor of hired laborers or slaves on the other. It is not forgotten that a considerable number of persons mingle their own labor with capital; that is, they labor with their own hands and also buy or hire others to labor for them; but this is only a mixed and not a distinct class. No principle stated is disturbed by the existence of this mixed class. – Abraham Lincoln – First Annual Message – December 3, 1861 [emphasis added]
Lincoln’s remarks, while made in the context of slavery, were not only about slavery. They were about labor in general. His remarks were also made in the context of a relatively high percentage of the population being self-employed in one way or another.
A few unsupported (but I think supportable) observations: The existence of a large self-employed population with ready markets for their trade allowed mobility for free citizens between labor and self-employment. On a large scale, that option is not available today. The near disappearance of those who are neither labor nor capital has in many ways changed the relationship between labor and capital in significant and largely negative ways. The advent of pension funds and then 401ks has also changed that relationship. But labor has never been able to figure out how to leverage what was once their growing role in the capital market. This failure has resulted in capital being able to blur the lines between itself and labor to the detriment of labor. Now large numbers of people have some stake in capital but only a very few still control capital.
Via E. J. Dionne Jr. of The Washington Post