LETTERS TO THE EDITOR.
COMBINATIONS OF CAPITAL AND LABOUR.
[TO THE EDITOR OF THE SPECTATOR:1
SIR,—As the Report, under the above title, read on Tuesday (August 31) by Professor Leone Levi, before the British Associa- tion meeting at Bristol, is likely to be received with much deference in many quarters ; and as, moreover, I believe its arguments and conclusions are capable of and deserve refutation, I beg your per- mission to attempt that task in the columns of the Spectator. I am not unconscious of the favour I am asking. Views so ex- treme as those I am about to enunciate do not frequently find expression in high-class journals. But one of the most honour- able—and most peculiar—characteristics of the Spectator is its courageous Liberalism. Many papers profess Liberalism ; the Spectator nobly practises it, by affording publicity to premature proposals and unfashionable theories.
To the first question which the Committee submitted to their own judgment, namely, "What determines the minimum rate of wages ?" they answer in their Report that the minimum rate of wages is determined by the amount of capital divisible amongst the competitors for the same. This is, of course, in a certain narrow sense, a truism. But so regarded, it is absolutely mean- ingless. The really important point is obviously antecedent, and is,—What are the causes which determine the amount of this divisible capital ? Upon this point—the increase or decrease of the wages fund—hinges the whole matter in dispute. At present, this amount is determined by the employer, upon the sole principle of obtaining the largest amount of labour for the smallest expenditure of capital. The exigencies of the labour market—i.e., the necessities of the labourer—are alone calculated. This is called the natural operation of the inevitable law of supply and demand. The intrinsic value of the labourer's product is ignored. Its extrinsic value—calculated upon the urgent poverty of its producer and the capital-com- manding powers of its purchaser—is the sole measure of its market value. But it is evident that such a standard of value is altogether immoral and unjust.– It has, clearly, been established by, and in the interests of, the capitalists. The product of the labourer has, obviously, another value, one calculated upon its actual utility. For example, the spade made by the Birmingham artisan has an actual value to the Suffolk agricultural labourer. But the amount the artisan receives for it in the Birmingham factory is, perhaps, not one-fourth of what has ultimately to be paid for it by the Suffolk labourer or his employer. It is obvious that if the difference between these two amounts—at present appropriated by middlemen—was added to the fund available for the artisan's wages, the answer given by the Committee to their first question, while still technically true, would have an infinitely wider meaning. There would, of course, under such supposed conditions, remain the work of distribution. How, it might be asked, is the Birmingham spade to be conveyed to the Suffolk labourer, and how is the labourer's products to reach, without the help of middlemen, the Birmingham artisan ? These are fair questions, and must be answered, and my answer to them is that I should allow both the artisan and the labourer to employ their own dis- tributor. In this way would the producer receive the actual value of his product, and while the rate of wages (minimum and otherwise) would still continue to be determined by the amount of capital relatively divisible, that capital would have a real, and not, as at present, a fictitious character, and would, moreover, by the elimination of the capitalist, be so increased in amount as to satisfy all the just demands of the working-class. Of course such a theory does not commend itself to capitalists. The present order of things suits them very well, and the more in- telligent of them spare neither time, nor money, nor British- Association Committees, nor artisans' institutes, in the vain hope of convincing working-men that everything is for the best in this best of all possible worlds. I say vain hope, for the growing discontent of the working-class with their economical condition is to be read by those who run. An amusing illustration of this occurred at the reading of the Committee's own Report. The local representatives of labour, brought in triumph to bless the work, cursed it altogether. Mr. Widlake said workmen would soon refuse to make capital for capitalists, and make it for them- selves. This, and this only, is the key to the economical emanci- pation of the working-class, and the fact that English workmen are beginning to realise it is one of the signs of the times.
The other three questions, "Can the minimum rate be uniform in any trade, and can that uniformity be enforced ?" "Is com- bination capable of affecting the rate of wages, whether in favour of employers or employed?" and "Can an artificial restriction of labour or of capital be economically right or beneficial under any circumstances ?" are all answered by the Committee in the negative. But, strangely enough, these gentlemen con- tradict their own conclusions repeatedly. Speaking on the first of these three questions, they say :—" A man (in many trade unions) is subject to no examination, and is generally admitted (as a member of the union) upon the testimony of those who have worked with him, whose evidence must frequently be fallacious and insufficient. Nor does it appear that the rejection is absolutely certain, even if the applicant should not be deemed a man of average ability, the acceptance or rejec- tion of the party being always optional with the lodge to which he is introduced:" Now, the foregoing sentences may not prove that the Committee knew how to speak civilly of Trade Unions ; nor do they manage to conceal the strong leaning of that body towards the opinion that the acts specified were, in them- selves, wrong. But they undoubtedly do prove that the minimum rate of wages can be made uniform, and that that uniformity can be enforced. Again, speaking on the second of these three questions, they say that the work- men "point to the fact that almost every increase of wages has been due to the action of Trade Unions," a " fact " somewhat at variance with the Committee's ultimate conclusion on the point. Finally, on the last question of all, they say, "It may be a point for consideration whether, under certain circumstances, it may not be better for either labour or capital to submit to the evil of restriction, in order to avoid a still greater evil of producing at a loss, or working at rates of wages not sufficiently remunera- tive." Quite so, and that point has been always settled in the affirmative sense by the great mass of the employers of labour. But however valuable, from a polemical point of view, these evidently unconscious admissions are, they constitute the smallest part of the case which may be set up against the conclusions of this Committee's Report. Even accepting the status quo, and granting the continued existence of the capitalist, the unsoundness of the argument of that Report and the inconsequence of its conclusions are easily demonstrated.
The undoubted object of the Report is to persuade working- men that Trade Unions are generally useless, and sometimes positively injurious to them. They are also accused of injuring and endangering the prosperity of the nation, by exposing it to foreign competition. But while workmen are in daily enjoyment of the benefits secured to them by union, and while, moreover, they see employers combining in order to be able to resist further concessions, they may be pardoned for regarding with suspicion the exhortations of capitalists to abandon their Unions. And with respect to foreign competition, the English Trade Unionists seem about to take most effectual precautions against that danger by federating the Unions of all countries. When this is done, foreign employers will not be able to undersell their English brethren. This, therefore, is a work in which English capitalists
ought to co-operate. "But what," ask the Committee (and here- they evidently believe themselves to be "on the solid principles of political economy "), "what if the consumer will not or- cannot pay sufficient price to enable the employer to pay the wages demanded by the workmen? Must not production cease if there be no market ? And where will be the wages if there be no production?" Ah ! where indeed ? And where will' be the consumer if there be no consumption? And must not consumption cease if there be no product? And where will be the products if there be no producers ? I hope the Committee like their own argument. Again, Unions are condemned for establishing an uniform minimum rate of wages. But this rule is cc,' • established, as the employers themselves admit, in the interest of the relatively inferior workman. Now, various causes conspire to constitute this relative inferiority, and not uare- quently they are beyond the man's own control. What do the- employers desire the Unions to do with this man ? Shut him out of the Union, and thus cast him upon their (the employers') tender mercies ? The Unions are wiser and, at the same time, kinder than the employers wish them to be. The man is included, and thus, by one stroke, the man's subsistence is secured, and a possible weapon is taken out of the hand of the employer. There is no positive loss sustained by the employer, otherwise the man would be dismissed ; there is only a comparatively diminished profit. As to the hardship which the rule involves upon more excellent workmen, the remedy is in the employer's own hand ; the Unions will not object to him increasing their wages indefinitely.
The last point in the Report to which I shall refer is that of the limitation of production. And it is upon this point that the Committee present the most ridiculous appearance. When there is a superfluity of any product in the market, common-sense at once suggests either a discontinuance or diminution of supply. This is one of the employer-economist's own doctrines, and he acts on it in a thousand ways, as we all know. But while he acts on it himself, he objects to his workmen doing the same. When Stocks are low, holders who are wealthy as well as wise do not selL But, for the same reason that they will not sell, they are anxious to buy. So with the coal-owner. When coals are not in demand, he does not send them to market. But although he does not send them to market, he does not let them lie in the mine. He raises and banks them, using the absence of demand as a reason for reducing the miners' wages. In this way he profits by both seasons, and alternations of dearth and glut suit him infinitely better than a steady demand. This is the explanation of his objection to the limitation of out-put, and one can easily understand it, but the confused phrases and circumlocutionary periods of the Report show how embarrassing to the professorial mind was the task of its justification. Professor Levi is an able man, and the Committee with whom he was associated in the preparation of this Report comprises one or two names of real distinction. Had the task which they set themselves been possible of accomplishment, they would probably have succeeded. That such men have failed, and failed so utterly, is the strongest possible evidence of the economic soundness of the principle of trade-unionism. The Committee, it is announced, intend distributing copies of the Report amongst the Trades Unions throughout the country. By all means let them do so. Better seed for Union propaganda it would be difficult to conceive.—I am, Sir, &c., Temple Club, September 6. MALTMAN BARRY.
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