MR. GREG ON ENGLAND'S COMMERCIAL DECADENCE.
MR. W. R. GREG somewhat overplays his character of political Cassandra, in the very ably-written paper on the second of his "Rocks Ahead" which appears in the new number of the Contemporary. He gives us, indeed, very good reason, in the certainty of an increasing dearness and increasing scarcity of those natural advantages which have made England, as a manufacturing country, what she is, for apprehending that the relative supremacy which England holds in the com- mercial world must very soon be exchanged for a position nearer equality with a few of her rivals, and possibly, before very long again, for one of relative inferiority
to some of them. But Mr. Greg, usually so strong on the economical side of his mind, has made a very serious blunder, which is of first-rate importance in the interpretation of the true meaning of "relative inferiority," even supposing, what it is by no means necessary to suppose, that our position must tend towards one of relative inferiority towards any of our European rivals. Sooner or later, we have no doubt at all that America, with her vast natural resources both in fuel and land, will far outrun us in the race of commercial and manufacturing enterprise. That is a mere question of time, though there is apparently no such reason for apprehend- ing any very formidable industrial rivalry in Europe. But admitting, as we do admit, the certainty that the United States, if they fulfil the hopes reasonably formed of them, will, before very long, take our place in the commercial supremacy of the world, what we are anxious chiefly to point out is the very grave error made by Mr. Greg in interpreting the true meaning of the loss by any country of its relative advantages as a producer :—
" Now, let us face boldly, and state in the plainest language, what the industrial decadence of our country, whether it comes sooner or later, will mean when it arrives—will in a great measure mean when it begins. (Statistics are unnecessary here : they cannot be precise, and might give rise to useless controversy on details.) It will moan that we shall lose one foreign market after another; that we shall gradually cease to manufacture for other manufacturing countries ; then, that those countries, after supplying themselves, will meet us and beat us in neutral markets ; finally, that we shall be reduced to the supply of our home demand—possibly to secure even that market by recurrence to a Protectionist policy."
Now, when he wrote this passage, Mr. Greg must have for- gotten, we think, one of the most elementary facts of com- mercial science, namely, that even a nation, if one could suppose one, which is at a disadvantage as compared with every other nation in every branch of production or distribution, i.e., which produces and distributes all that it produces and dis- tributes at a greater cost of labour than any other country in the world, still is by no means necessarily in a declining state, and may be in an advancing state, able to support a greater population in greater comfort than at any former period of its history ; and that the reason for this, if it be so, will probably be that its competitors have so greatly developed their superior advantages in production and distribution, that all nations, from that at the very top of the scale of natural advantage, to that at the very bottom of it, have shared in the benefit of the result. Mr. Greg's error is really closely akin to that old Protectionist fancy that one nation suffers by the development of the resources of other nations, instead of gaining by it. Nothing is more certain, we take it, than that it is for England's national advantage, to put it plainly, that she should lose her commercial supremacy, if she loses it by no wasteful blunder of her own, but solely by the legitimate development of such of the resources of other nations as were hitherto unknown or unused. Of course
we are not alleging that England gains by the partial exhaustion of her own resources. That is a loss not only to herself, but to the whole world. What we are asserting is that the relative position of nations in relation to com- mercial and productive enterprise is no index at all to their absolute prosperity ; for instance, that a nation once at the head of the enterprise of the world might easily drop to the fourth or fifth place, and yet be much more prosperous than before; and that, as a rule, the industrial development of the whole world has a far greater effect on the national pros- perity of each country in it, than that country's own relative puor- tion among the various countries of the world. Nothing is easier than to prove this. What a nation gains by its foreign trade is the difference between the cost of producing what it exports, and what it would cost it to produce what it receives in ex- change for those exports. If a producer of linen exchanges a roll of linen for a horse, what he gains by that exchange is the difference between what it cost him to produce that linen and what it would have cost him to breed the horse. It is obvious, therefore, that what a nation gains by its foreign commerce is a function of two variables; it increases as the cost of producing its exports decreases, or decreases as that cost increases, and this is the only consideration which Mr. Greg has kept in view. But it also increases as the cost at which it would have to produce what it imports would in- crease, and decreases as that cost would decrease, and this is what Mr. Greg has left out of view. Now, it is quite obvious that even if we exported a century hence only what we export now, and if it cost us twice as much labour and capital to produce it as it costs us now, still we might be quite as rich as before, if what we got in exchange for what we sent was worth twice as much to us as what we get now. And whether this last supposition may so fall out or not, will depend chiefly on the development of foreign resources, not on the develop- ment of our own.
There is no such thing as being beaten out of all the markets of the world at one time. What being beaten out of a market really means is that a particular
product exchanges in that market for means, of other products than will replace with a profit the capital and labour which produced it. But that can only be when the capital and labour which produced it might have been more advantage- ously employed on making something else. If the product is one for the production of which the producing country has as great a natural advantage as it has for any other,_ then it must pay to produce it, even though every other nation can produce it at a less cost of labour. No doubt you will not be as well paid for your labour as your more fortunate rivals. But you will be better paid than you could be by any other appli- cation of your labour, and prosperity is measured not by com- paring yourself with somebody else, but by comparing yourself with yourself. A man is prosperous who earns more at less cost to himself than he did, even though some other man earns the same at far less cost than he. England will be prosperous if she can earn as many comforts and luxuries for her people at leas cost than before, and that depends not nearly so much on her relative place in the commercial world, as on the absolute development of the resources of that world at large. It is conceivable enough,—we do not say it is at present probable,—that, with a very much more advanced de- velopment of the resources of the whole globe, England might earn absolutely more as a mere carrying and distributing nation, with not a single branch of manufacture depending on cheap coal remaining to her, than she earns now in the acme of her manufacturing prosperity. No doubt she would then be not at the top, but perhaps very near the bottom of the relative commercial scale. But it is just for the sake of illustrating this position that we take so extreme a, case. We want to make it clear that the worst relative place in the scale at one time, may be better than the best relative place in the scale at another time. And no doubt the poorest of European countries is richer now than the _richest was in an antiquity not very remote. So far as Mr. Greg's position rests on a probable loss of our own resources and skill, he is insisting on a real cause, so far as it goes, of impoverishment ; but so far as he draws atten- tion to the rapid development of the wealth and --ergy and skill of oler peoples, he is dwelling on a cause whi,,–;in- stead of aggravating, will tend directly to lessen, and probably to lessen very materially indeed, any diminution impending in our own resources and industry. Indeed if Switzerland, with nothing but cheap water-power and the excellent education of her working-class to help her, is gaining on us so rapidly as some authorities think, we should be disposed to expect that England, with an education law that before long, we hope, may be as good, even though with a rising price of coal, is not unlikely to keep for a long time all her competitors at a distance. But so far as her rivals gain upon her, not through her fault, but by virtue of developing their own resources, we shall divide the benefit with them, whatever we may lose in relative corn- imercial position. Industry remaining the same, it is on the i'..lvance in the wealth of the world,—foolish laws apart,— that the advance of every individual nation depends,—much more, even, than on the advance in its own private stores of resources.
And this leads us to our second point, that Mr. Greg also overacts his part of Cassandra in relation to the dismal prophecies which he indulges, on the ground of the workman's disposition to limit the hours of labour. In the first place, that disposition does not necessarily involve less production, because the system of working by relays would certainly be the logical result of such a limitation, and would, in relation to the mechanical arrangements, yield a much larger interest on the fixed capital employed than even the ten or twelve-hours day. Next, the bad and unconscientioue work of which Mr. Greg complains is, we believe with the Pall Mall, due more to the intention of the capitalist, who desires to produce inferior articles to tempt buyers by their low price, than to the failure of the labourer in conscientious work; nor does Mr. Greg give the least evidence to show that this practice of ‘scamping' work, and so cheating the employer, is gaining on the British work- man, a statement we greatly doubt. And lastly, the desire for limited hours is undoubtedly due, in a very large degree, to the growing taste for education, or at all events, what, as compared with the former habits of the British workman, may stand for education ; and there is nothing in the world which will, in all probability, give so high an additional value to English labour as education. Mr. Greg concludes his paper with a panegyric on Mr. Mill's preference for "the Stationary State,"—the State in which capital and labour, instead of accumulating rapidly, as they have done lately, should remain at the same level,—the surplus labour being drafted off, according to Ur. Greg's proposal, to new countries and virgin soils. Surely that panegyric is radically inconsistent with the main thesis of the article, which represents a loss of relative commercial prosperity as necessarily involving a lose of absolute prosperity, and diminished resources even for maintaining the population we have. Did it not strike Mr. Greg, just at the close of his lament, that perhaps the key-note of it was not altogether according to reason and sobriety ?
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