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The emerging general-equilibrium models of union-ridden economies are static or short run; they abstract altogether from the processes of capital accumulation and population change. (See the symposium in The Scandinavian Journal of Economics 87 (2), 1985.) In the present paper we offer a model of a growing union-ridden economy in which union policies and the process of growth are allowed to interact. In the context of such a model it is possible to pose several novel questions. How does the pursuit of union objectives affect the path of economic development; in particular, does a union-ridden economy move towards a nontrivial steady-state and, if so, is the steady state characterized by unemployment? The question may be turned about: If unionists understand the implications of alternative policies for the process of capital formation, how does that understanding affect the choice of union policy? The salient features of our model may be mentioned at once. First, it is assumed that labourers earn only wages; that is, they are pure labourers. This implies that labourers do not save and raises the possibility that, collectively, they may find it to their advantage to moderate their claims on the current pie in order to ensure that the future pie is larger. Symmetrically, capitalists earn no wages; that is, capitalists are pure capitalists.' Second, there is a single union to which all workers belong regardless of whether or not they are
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