The Industrial Problem
Capital for Labour. By W. Francis Lloyd and Bertram Austin. (T. Fisher Unwin. 3s. 6d. net.)
Tars little book contains one important contribution to the industrial problem. The authors rightly maintain that the wage-earners feel to-day that while the political system is democratic the industrial system is not, and that their fear of dismissal without any voice in the matter or opportunity of explanation is one of the chief causes of our industrial unrest. They boldly assert what many modern captains of industry vehemently deny—that industrial aristocracy is at an end.
" If Capitalism fails to develop along democratic lines, it must give way to Socialism as being the next best organization of industry. If the capitalist system fails to give workers a voice in industry it will collapse. By ` a voice in industry' we mean not merely a hearing, but a vote in industry as in government." To achieve this end they propose a system of universal payment by results, and the creation of employees' shares. Capital is entitled to receive a dividend equal to the interest on long-dated Government securities plus a percentage varying according to the risk involved. Profits over and above this should be issued to all employees in the form of ordinary shares. The original capitalists' shares (class " A ") would be senior capital and would rank as cumulative par- ticipating and voting Preference shares. Employees' shares (class " B ") would have the same voting power as class " A " shares, and would be converted either into cash at par or class " A " shares upon a holder leaving the firm.
By this means the authors consider that it would be possible in many cases for the workers to obtain control of -industry, but they emphasize the importance of representative Works Councils to prevent misunderstandings between management and labour.
It is a pity that the book was not confined to a detailed exposition and elaboration of this interesting scheme. But a general survey of the economic position of Great Britain is also attempted, which is both inadequate and contradictory. The authors have some sensible, if platitudinous, observations to make upon the appointment of directors, the elimination of waste, co-operation in agriculture, and the value of adver- tisement. They maintain, with Mr. Wheatley, that " the
extent of the home market depends on the amount of wag/it paid." But the fundamental causes of our industrial depres. skin escape their attention. For example, they fail altogether to grasp the significance of monetary policy—the havoc wrought by price instability. There is only one brief reference to the deflation which has reduced the price level by half since 1920, doubled the weight of the National Debt, raised the un- employment figure to over a million, crippled agriculture, upset every wage agreement, and which precipitated last year the greatest industrial crisis we have ever known.
The fall in the price-level during the past two years alone has been sufficient to neutralize all our efforts to reduce the debt burden since the War, and if it continues, if credit remains tight and money dear, the virtual extinction of all our basic exporting industries is inevitable.
All the profit-sharing schemes and Works Councils in the world are useless in the face of the arbitrary and unjust alterations in the distribution of wealth caused by price instability, and in particular the deadly effects of deflation upon production and upon our exporting trade.
The authors leave the whole subject untouched. Nor do they mention another matter of vital importance—the inci- dence of taxation and the burden of rates upon industry. They state at p. 84 that " international competition is likely to become more intensified " ; a possibility which air parently causes them some apprehension. Yet at p. 107 they come out with a whole-hearted condemnation of the Inter- national Steel Cartel, which is the first serious attempt on the part of producers to avoid some of the consequences of such competition.
They declare, at p. 106, that " amalgamation is the only hope of survival for the iron and steel industry." Yet at p. 118 we find them advocating anti-Trust legislation to prevent price fixing. It is difficult to see how trustification can be carried out on a large scale without some measure of price control. Nevertheless, the book is a notable contribu- tion to a difficult problem in that it puts forward one suggestion of real value, and the fact that Mr. Hichens and Mr. Pugh have written forewords gives it an added interest.
ROBERT BOOTHBY.
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