Loe raamatut: «Essays in Liberalism», lehekülg 11
Retrospect and Prospect
My object, then, is to show how a system which embodies a large amount of private enterprise can be made tolerable and acceptable to modern ideas of equity. For this purpose we need to consider (1) what have we done in that direction in the past? (2) what is the setting of the economic problem to-day, and (3) what is to be our policy for the future?
Dealing first with wealth and wages, the whole field of social legislation has a bearing upon them, including particularly education, elementary and technical, the Factory Acts, and a great mass of legislation which has affected the earning powers of the worker and the conditions under which he labours. Just before the war we had come to the point of fixing a minimum wage in the mines, but an even more important factor was that we had introduced the Trade Board system, which had begun to impose a minimum wage in certain trades where wages were particularly low. But the most important direct attack upon the unequal distribution of wealth was by taxation in accordance with the Liberal policy of a graduated and differential income-tax, and still more important by taxes upon inheritance; for it has long been recognised that though it may be desirable to allow men to accumulate great wealth during their lifetime, it by no means follows that they should be entitled to control the distribution of wealth in the next generation and launch their children on the world with a great advantage over their fellows of which they may be quite unworthy. On the question of insecurity it cannot be said that any serious attack has been made on the problem of how to diminish fluctuations of trade, but again the Liberal solution for dealing with that difficulty was to remedy not the cause but its effects by insurance.
On the question of monopolies and exploitation, though we hear a great deal of the growth of capitalistic organisation, in fact we find that, of the three greatest industrial countries in the world, Great Britain is the least trust-ridden, mainly because of its free trade system. In the case of enterprises not subject to foreign competition, we had begun to develop a fairly satisfactory system of control of public utility services which were of a monopolistic character.
Finally, there had been growing up a complete system of collective bargaining and conciliation, and though we always heard of it whenever there was dispute and strife, the ordinary public did not know that this machinery was working and developing in many great and important industries a feeling of co-operation or at all events of conciliation between the two sides. I only mention these points very briefly in passing in order to show that with the evolution of modern industry we were already feeling our way, haltingly and far too slowly, it is true, towards a solution of its most serious defects.
Turning to the present situation, we have to face the fact that Great Britain is to-day faced with one of the most serious positions in its economic history. We must make allowances for the readily understood pessimism of a miners’ leader, but it should arrest attention that Mr. Frank Hodges has recently described the present situation as the coming of the great famine in England. For nearly two decades before the war there was occurring a slight fall in the real wages of British workpeople. Food was becoming dearer, as the world’s food supply was not increasing as fast as the world’s industrial population, and the industrial workers of the world had, therefore, to offer more of their product to secure the food they needed. Hence the cost of living was rising faster than wages, except in trades where great technical advances were being made. There is some reason to fear that the war may have accentuated this tendency.
For some years the distant countries of the world have had to do without European manufactured goods. You are all aware of the tendency, for example, of India, Australia, and Canada to develop their own steel resources and to create manufacturing industries of all kinds. Moreover, we have lost part of our hold on the food-producing countries of the world by the sale of our capital investments in those countries to pay for the war. These and other considerations all suggest that we may find it increasingly difficult to maintain our position as one of the main suppliers of the manufactured goods of the world. In such circumstances we shall be hard put to it to maintain, far less raise, the pre-war standard of living.
How then are we to cope with this problem of retaining our economic position? We can only hope to do it if the present financial difficulties and obstructions working through the exchanges, by which international commerce is restricted and constrained, are removed. We can only do it if and so long as the conception of international division of labour is maintained. And we can only do it if—granted that we can induce the world to accept this principle of international division of labour—we can prove ourselves, by our economic and productive efficiency, to be the best and cheapest producer of those classes of goods in which our skilled labour and fixed capital is invested.
Assuming the financial difficulty is overcome, and that the old régime of international specialisation revives, can we still show to the world that it is more profitable for them to buy goods and services from us than from other people? Can we compete with other industrial countries of the world? The actual output of our labour in most cases is far less than its potential capacity, partly because of technical conservatism, and partly for reasons connected with the labour situation. How are we to mobilise these reserve resources. I have only space to deal with the second of these problems. In Germany labour is well disciplined, and has the military virtues of persistence and obedience to orders in the factory. But we cannot hope to call forth the utmost product of our labouring population by drill-sergeant methods.
In America this problem is a different one, because the American employer is often able to take full advantage of his economic position. For he has a labouring population of mixed nationality, which does not readily combine, and he can play off one section against the other. British employers cannot, if they would, deal with British labour on the principle of Divide and Rule. There is only one method by which we can hope to call forth this great reserve capacity of British labour, and that is by securing its confidence. If Free Trade is one of the legs on which British prosperity rests, the other is goodwill and active co-operation between the workman and his employer. How is that goodwill to be gained?
The solution of that problem is only partly in the hands of the politician; that is one of the reasons why it is extremely difficult to suggest an industrial policy which is going to hold out the hope of reaching Utopia in a short time. But it is obviously essential somehow or another to develop, particularly among employers, the sense of trusteeship—the sense that a man who controls a large amount of capital is in fact not merely an individual pursuing his own fortune, but is taking the very great responsibility of controlling a fragment of the nation’s industrial resources. And we have also to develop a conception of partnership and joint enterprise between employer and employed.
State Ownership: For and Against
What policy in the political field can be adopted to further these objects? Reverting once more to the fourfold division which I made at the outset, but taking the points in a different order, there is first the question whether there should be a great extension of State ownership, management, or control of monopolies and big business. In spite of the experience of the war, I suggest tentatively that no case has been made out for any wide or general extension of the field of State management in industry. This, however, is not a matter of principle, but of expediency, where each case must be considered on its merits. Liberals should, indeed, keep an open mind in this connection and not be afraid to face an enlargement of the field of State management from time to time. There are, however, two special cases to be considered: the mines and the railways. As to the mines, the solution Mr. McNair puts forward is on characteristically Liberal lines, because it will endeavour to harmonise the safeguarding of the interests of the State with the maximum freedom to private enterprise and the maximum scope for variety in methods of management. As to transport, we have recently passed an Act altering the form of control of British railways.
Personally I think the question whether railways should or should not be nationalised is very much on the balance. It is obviously one of the questions where objections to State management are less serious than in most other cases. On the other hand, we may be able to find methods of control which may be even better than State management. I do not think the Act of last year fulfils the conditions which Liberals would have imposed on the railways, for the principle of guaranteeing to a monopoly a fixed income practically without any means of securing its efficiency, is the wrong way to control a public utility service. If we are going to leave public utilities in the hands of private enterprise, the principle must be applied that profit should vary in proportion to the services rendered to the community. In this connection the old gas company principle developed before the war is an admirable one. Under it the gas companies were allowed to increase their dividends in proportion as they lowered their prices to the community. That is a key principle, and some adaptation of it is required wherever such services are left in private hands. My own view is that an amended form of railway control should first be tried, and if that fails we should be prepared for some form of nationalisation.
Trusts and Monopolies
But if we refuse at present to enlarge the sphere of State management, we are still faced with the problem of dealing with trusts and monopolies. In this matter, as in so many other instances, the right policy has already been worked out. Under the stimulating conditions which obtained during the war, when old-established methods of thought had been rudely shaken, progressive ideas had unusually free play; and you will find in the general economic policy adumbrated during and immediately after the war much that Liberals are looking for. On this question of monopolies, we should put into force the recommendation of the Committee on Trusts of 1919, with one qualification. The policy I suggest is the policy of the majority, namely, that we should give very much enlarged powers of inquiry to the Board of Trade, and that a Tribunal should be set up by which investigations could be made. But I would go further, and, taking one item from the Minority Report, I would add that either to this Tribunal or to the Board of Trade department concerned there should be given in reserve the power in special cases to regulate prices. I do not think it would be necessary often to use that power, indeed the mere inquiry and publicity of results would be sufficient to modify the action of monopolies. But such a power in reserve, even though price-fixing in ordinary circumstances is usually mischievous and to be deprecated, would have a very salutary effect.
In the case of public utilities of a standard kind, into which the element of buying and selling profits does not greatly enter, we should endeavour to start the experiment of putting representatives of the workpeople on the boards of directors, but in carefully selected cases, and not as a general rule. My own view is that if we are ready with the machinery of investigation, and are prepared to deal in these ways with public utilities at home where foreign competition is absent, we have little to fear from trusts.
Distribution
As regards distribution and wages, in the first place we should adhere to our traditional policy, developing the system of differential and graduated taxation, and we should be prepared, if unequal distribution of wealth continues, to limit further the right of inheritance. This is not a new Liberal doctrine: it is many decades old. On the question of wages we have to recognise that unless we can secure an increase in terms of food and other commodities of the national production the State cannot radically modify the general standard of living in the country; or by administrative action raise the level of wages which economic conditions are imposing on us. But the State can and should enforce a minimum in certain industries, provided that minimum is reasonably in harmony with the competitive level of wages. Such action can prevent workers whose economic position is not a strong one—and this applies particularly to many women’s employment—from being compelled to accept wages substantially less than the current standard. I therefore welcome the gradual extension of the Trade Board system, provided it follows the general principle recommended in the Cave Report—that the community should use its full powers of compulsion only in regard to the minimum, and that so far as all other classes of wages are concerned, the State should encourage collective bargaining. With this proviso, compulsory enforcement of a minimum could also be extended to the workpeople covered by Whitley Councils.
As regards all wages above the minimum the Cave Committee recommended that, provided they are reached by agreement on the Board, and provided that a sufficiently large proportion of the Board concur, the wage so determined shall be enforced by civil process, whereas in the cases of the minimum, the rates would be determined if necessary by arbitration of the State-appointed members of the Board, and non-payment would be a penal offence. The Trade Boards now cover three million workers. Two million are in occupations for which Trade Boards are under consideration, and there are a further two million under Industrial Councils or Whitley Councils. If State powers are to be employed in trades employing seven millions of the eighteen million wage-earners of the country, the scope of those powers needs to be very carefully defined.
The Case for Profit-Sharing
Many Liberals are, however, asking whether this is sufficient and whether it is not possible for the State to intervene to alter the distribution of the product of industry in favour of the wage-earner. In particular, they are wondering whether it is possible to secure the universal application of some system of profit-sharing. The underlying principle of profit-sharing is indeed one which we must look to if the whole-hearted assistance of labour is to be enlisted behind the productive effort of the country. But the profit we have to consider is the profit over which the worker has some influence. There is no merit in inviting him to share in purely commercial profits or losses which may be due to some one else’s speculation or business foresight. It is futile to imagine you can reverse the functions of labour and capital, and say that capital should have a fixed wage, and that the employee should bear all the risks of the industry.
Again, in some cases it is suitable that profits should be considered in regard to a whole industry, but in others only in regard to a particular firm or section; and finally the rate of profit suitable to various trades varies between very wide limits. In short, there can be no universal rule in this matter which can be enforced by Act of Parliament.
Nevertheless, we must all desire to proceed along the lines of associating the pecuniary interests of the worker in the success of the enterprise, and if any one can suggest a way in which direct assistance to that end can be given by political action, as distinct from industrial, he will be doing a great service. I may add that there is an argument in favour of profit-sharing which is of the utmost importance and which was recently expressed by a prominent industrialist: who declared to me that at long last and after much opposition he has come round to believe in profit-sharing, because it enables him to show his men the balance sheet. The solution adopted last year in the mining industry contains the sort of elements we wish to see adopted in principle. The men are given, through their officials, the results of the industry. They see that they cannot get more than the industry can pay, and though the present economic conditions are putting the men in a desperate state to-day, the miners, who were often regarded before the war as the most pugnacious in the country, are not burning their employers’ houses, but are studying how the economic conditions of the industry can be improved for the benefit of themselves and their employers.
Industrial Publicity
This brings me to the question of publicity, which is at the root of the whole problem. We desire the principle of private enterprise to remain. The one thing that can destroy it is secrecy. We argue that the self-interest of the investor makes capital flow into those channels where economic conditions need it most. But how can the investor know where it should go when the true financial condition of great industrial companies is a matter of guesswork? Again, we rely upon our bankers to check excessive industrial fluctuations. How can they do this if they do not know the facts of production? The public should know what great combines are doing, but they do not know; and how can we expect the man in the street to be satisfied when his mind is filled with suspicions that can be neither confirmed nor removed?
It is of the utmost importance to seek for greater publicity on two main lines. The illustration of the mines suggests one—production and wage data. There are only three industries in this country—coal, steel, and ships—in which production statistics exist. I suggest that in many of our great staple industries a few simple data with regard to production should be published promptly, say every three months. The data I have in mind are the wages bill, the cost of materials, and the value of the product. It is desirable that this should be done, and I believe it can be done, for almost every great industry in the country. These three facts alone will bring the whole wages discussion down to earth.
Then on finance, I suggest that one of the first things a Liberal Government should do should be to appoint a commission to overhaul the whole of our Company Law. This is not the occasion to enter in detail into a highly technical problem. But I would call attention to the following points: There is no compulsion on any joint-stock company to publish a balance sheet. It is almost the universal practice to do so; but as it is not an obligation, the Company Law lays down no rules as to what published balance sheets must contain. Again, the difference between private and public companies must be considered; a private company which employs a great mass of capital and large numbers of work-people—a concern which may cover a whole town or district—should in the public interest be subject to the same rules as a public company. Thirdly, in view of the amalgamation of industry, the linking up of company with company, there must be reconsideration as regards publicity in the case of subsidiary companies. Finally, I think we have been wrong in assuming that a law applicable to a company with a modest little capital is suitable to regulate the publicity of a great combine controlling tens of millions of capital. Some attempt should therefore be made to differentiate between what must be told by the big and by the little concerns respectively. I am well aware of the myriad difficulties that this demand for publicity will encounter. But difficulties exist to be overcome. And they must be overcome, for of this I feel certain: that if the system of private enterprise dies, it will be because the canker of secrecy has eaten into its vitals.
