DR. BRENTANO ON WORKING-CLASS INSURANCE.* PROFESSOR BRENTANO, whose last work

on the labour question was reviewed some weeks ago in the Spectator, has also recently published a companion volume, on working-class insurance, which, although treating of the subject with especial reference to German history and. German legislation, fully deserves the attention of the English reader.

The author's object, he tells us in his preface, is to show that on the ground of the existing economical constitution of society, and by carrying out its fundamental principles, working-men may free themselves from the greatest of the disadvantages under which they suffer, namely, the insecurity of their existence. Such fundamental principles he finds to be per- sonal freedom and legal equality. Every one should be free to use at his pleasure all economic forces at his disposal, so long as he does not injure the equal rights of others, There can be no special protection for individuals or classes, no con- ferring of privileges on some at the cost of others. There is no obligation to sell or not to sell any particular commodity. If a seller sells his commodity at a price which does not cover the cost of production, so much the worse for him. But inasmuch as to do so must in the long.run stop production altogether, it is a matter of public interest that the price paid for commo- dities should cover the cost of production, in order that the com- munity at large may always be enabled to find in sufficient quantity the commodities it needs.

Labour is a commodity like any other, with this difference, that it is inseparable from the seller's person. And although this fact bears with it peculiar consequences, it is nevertheless true that as between grown-up men, the sale of the commodity labour is left as free as that of any other. The buyer and seller are expected to look after their own interests as best they may. The seller, if he can find no sufficient price for his labour in one market, is free to carry it to another. And it is equally of public interest that the price of labour should cover the cost of production.

Now, the cost of production of a given commodity does not consist simply in that of the particular sample, but must include that of all failures in the production of the like articles. If I buy a pot, the price must cover not only the cost of the pot itself, but a proportion of the cost of all pots spoilt in the making, or the seller will be damnified, and will end by not being able to carry on his business. And in order that there may always come to market a sufficient quantity of the com- modity labour, the labourer's wages must not only supply what

4rr5thervaroici4ernng gernein der !Maim wirtscharnordnung: Ormaiddidche end Oetonamische Studien. Von Lujo Rrontano. Leipzig ; Duncicor und Humblot. 1879.

is sufficient to maintain him during his working days, but also when he is unable to work, through youth, sickness, infirmity, or simply through want of work. This forms what may be called the dead-cost of production, and it is of the public in- terest not only that the whole cost of production should. be covered, but that this dead-cost should be reduced to a minimu This may be done in two ways. Firstly, by diminishing the quantity of the days on which no work is done, on the one hand through all social and sanitary improvements which may diminish sickness, avert accidents, delay senility ; on the other, through an increase in the demand for work. Secondly, by the application of the best means of covering the dead-cost. It is clearly not the best means of so doing that the worker should be thrown upon his own individual savings. The means would be too costly, since the sum required to face every possible risk would be enormous, and would necessitate an impossible f:ise of wages. And it would be insufficient anyhow, since the accidents which throw a man out of work do not wait to befall him till he has saved, enough to meet them. But inasmuch as the risks to which all workers are liable only fall upon a certain number, if all those who arc threatened by them resolve to contribute the sum requisite for the maintenance of those on whom such risks actually fall, the contributions may be individually small, whilst nevertheless every one may reckon on receiving the necessary help, if misfortune befalls him. The cheapest and most effectual means, therefore, of covering out of the price of labour the dead-cost of its produc- tion is the mutual insurance of the workers.

The author, following chiefly Dr. Engel, proceeds next to analyse the cost of the production of labour. The price of labour, in order that it may replace its cost, should cover (1), the expense of maintaining the existence of the worker, accord- ing to the standard of the category of workers to which he belongs; (2), the cost of bringing up the number of children requisite to keep up the proper number of workers ; (3), a con- tribution for insuring the bringing-up of such children, in the event of the parents' early death, till they are fifteen ; (4), a contribution for insuring the maintenance of the worker, in the event of premature disablement, and in the same event, the bringing-up of his children, and funeral expenses ; (5), a con- tribution for insuring his maintenance in old age, and in the same event, the bringing-up of his children, and funeral ex- penses; (6), a contribution for insuring the necessary funeral expenses of himself and his wife ; (7), a contribution for insuring medical relief and maintenance for the worker in sick- ness, and keeping up during such period. the other necessary insurances above mentioned ; (8), a contribution for his main- tenance during want of work, and keeping up meanwhile the other necessary insurances. There are therefore six objects of insurance to be provided for out of the price of labour :-1. The bringing-up of children in the event of the parents' death. 2. Maintenance in old age. 3. Funeral expenses. 4. Main- tenance in case of disablement. 5. Maintenance in sickness. 6. Maintenance during want of work. [The above analysis does not seem entirely exhaustive. It would ecom to omit the cost of maintenance of the widow, in those cases where she can- not maintain herself, and also of children, in those cases where they may never become capable of self-maintenance,—e.g., through idiotcy.] .

Dr. Brentano then proceeds to consider whether, under the existing legislation of Germany, and by means of its existing institutions, the working-classes are inn position to provide for the cost of the production of labour. He finds that there are no exist- ing means of insuring the bringing-up of children till the pro- ductive age, in the event of the parents' early death ; that whilst there are institutions to provide maintenance for the aged and. permanently disabled, as well as for providing funeral expenses, these are imperfect, through not providing for the event of the contributors being unable to keep up their contribu- tions through sickness or want of work ; that there is no single institution for insuring the worker's maintenance in case of simple want of work through failure of demand. He then goes through the various institutions for sickness insurance. The insufficiency of the sick-funds established by the communal authorities, to which every worker who does not belong to a registered society is bound to contribute, he proves, it would appear, conclusively. Of these, there were in Prussia, in 1874, 1,641 confined to work- men of a single trade, with 146,981 members ; 1,161 comprising workmen of different trades, with 122,983 members. The average

number of members in each is under 97, and it falls as low for Breslau, for instance, as 8, 6, 4, 3, and in a number of instances 2 only. Of course, as Dr. Brentano observes, there can be no real insurance with such small numbers. Nor is the insurance effectual apart from all actuarial considerations (and Dr. Brentano declares that Germany has no sickness-tables even approximately safe). If a worker has to leave the town where he has been contributing to the communal sickness-fund, he loses, after thirteen weeks' absence, the whole benefit of his con- tributions, and has, in his new residence, to pay a new entrance fee, and remain for three weeks unentitled to benefit. The contributions, moreover, being uniform for all ages, have to be ex- orbitantly high for the young. It is true that the employers may be required to contributeto these institutions, unto one-half of the wages paid. But, as Dr. Brentano excellently shows, all so-called contributions by employers are in reality paid by the workers themselves. And after all, the dead cost of labour remains un- covered. For as the benefit of the fund is lost through six weeks' default in payment, any stoppage of labour during that period may deprive the worker of his insurance. And Dr. Brentano proceeds to show that, in spite of all compulsion, in Berlin, in 1876,37 per cent. of the working population remained uninsured, and the cost of production was weighted with over £8,000 of contributions sunk without return. He deduces similar conclusions from the statistics for Breslau, Showing that for 1875-6-7 the number of uninsured workers must have amounted to from over 45 to nearly 37 per cent. Compulsory sickness insurance, then, on the Prussian principle of com- munal sick-funds is a failure.

The registered sick-funds connected with particular establish- ments, membership in which nifty, and mostly does, cease with employment in the establishment itself, offer even less security to the worker than the compulsory funds, since even where for-

feiture of benefit is not incurred by merely leaving the the establish- ment, the bankruptcy of the employer brings the whole to ground. And the writer deduces from l3reslau statistics, con- clusions as to the failure of these institutions to give security to a large minority of the workers employed no less unfavourable than those before given as to the Zwangskassen. With respect to the " free " registered Societies of Germany, composed of per- sons of any class, answering to the bulk of our own Friendly Societies, the author's observations are strangely enough confined to a single sick and burial society founded in 1877. Passing, lastly, to the registered sick-funds in connection with particular societies —a class virtually confined to those which are combined with the trade unions promoted originally by Dr. Max Hirsch— he also finds that through the absence of any provision for maintenance during ordinary want of employment, a proportion of the members, though smaller than in the previous classes, remains uninsured. He maintains, therefore, that in the Ger- man Empire no single worker, although compelled to contribute to a sick-fund as soon as he is employed, is really insured against sickness. In other words, existing institutions do not afford the means of covering the dead cost of labour out of its price, and what is deficient must be made up by public or private benevolence.

The following, he concludes, are the requirements of the exist- ing social economy as respects working-class insurance. The first and capital one is,—insurance against want of work, with- out which all other forms of insurance are ineffective. Next, that the insurance funds be not local, but national. Third, that

the rates of contributions be exactly proportioned to the risks.

Provision for the bringing-up of children in the event of the parents' early death, for permanent disability, for old age, for death, he considers can best be made by means of ordinary in- surance societies. But provision for sickness should only be made by societies formed of working-men only, and of working- men of the same trade. The same applies to provision for want of work.

Highly suggestive as is the work, of a portion of which a brief summary has been sought to be given above, it is impossible

to assign to it an equal rank with the author's Arbeitergibien

der Gegenwart, or with his Arbeitsverhidtaiss gentiiss dent heutigen Becht. It is, indeed, remarkable that, although a

leader of the inductive school of German economists, he aban- dons here to a great extent the inductive method, for the deductive one. And whilst his two former works derive

their value from being founded on a serious philosophical study of our English Trade Unions, it seems pretty certain that had he devoted a similar study to our Friendly Societies---4ustitu-

tions vastly greater in magnitude and more advanced in most forms of experience—he would have come to conclusions widely different from those which be lids evolved out of theory. He would have learned, for instance, that friendly societies confined to a single trade, in course of time almost invariably either open their doors to men of other trades, or merge into trade unions ; so that there is only one friendly society of any magnitude answering to his pattern, as insuring against sickness, being confined to a particular trade, and yet extending over all the country, the "Locomotive Steam-En ginemen and Fire- men's Friendly Society ;" and whilst this numbers a few thousand members, our two great orders, the Manchester Unity of Oddfellows and the Ancient Order of Foresters, which throw their doors virtually open to all corners, number each half a million. Conversely, he would have learned that so far from the risk of permanent dis- ability in those trades which are most exposed to it, being one which is likely to be taken up by ordinary insurance companies, it is precisely one of those which have necessitated the formation of institutions confined to those particular trades, as the various' Miners' Permanent Relief Associations, extending over one or more counties, which provide for accidents, for disability, for relief to [widows and orphans, but not for ordinary sickness. He would have learned the hitherto hopeless difficulty for the working-man of providing adequately for his orphan children after his death. He would have found that the burial insurance of the working-class, when undertaken by societies for general insurance, is far from being conducted with economy to the. worker. He would have had to take into account the habitual reluctance of the young to provide for their old age. He would have seen that to postulate the exact apportionment of contri- butions to risks for forms of insurance which actuarial science has not yet touched is little short of childish, especially where, as he declares, no even approximately true data for sickness alone are in existence.

On the other band, Dr. T3rentano's work is extremely valu- able on two or three points. First, in its bold and clear setting- forth of the absolute impracticability of substituting indi- vidual savings for mutual insurance, implying as a corollary the wholly subordinate importance of savings' banks, as com- pared with friendly societies or trade unions. Second, in its equally bold and clear setting-forth of the necessity for the working-class of an insurance against want of work, as a condi- tion on which all other forms of insurance depend. Thirdly, in its searching criticism of the German system of compulsory insurance, and demouetration of its failure. Does he, how- ever, really carry out his object, and show that working-men may give security to their existence? One fails to see it. He admits that under whatever developments of working- class insurance, crises in production, stoppages of work, will and must still occur, the results of false calculations by the pro- ducers. But what insurance is practicable against false calcu- lation? What contribution can be devised " exactly " to cover that risk ? And if it cannot be covered, all other provisions, however scientific, may be swept away.