THE PROFITS OF CO-OPERATION.
THE address of Mr. Sedley Taylor to the 16th annual Co-operative Congress, which has been sitting this week at Derby, may usefully be compared with Miss Simcox's article in the new number of the Nineteenth Century. The one sets out the theoretical advantages of profit-sharing ; the other narrates the difficulties that have attended its working in a particular, and in some respects a favourable, instance. We know beforehand what Mr. Taylor has to say. Profit-sharing does not upset existing trade arrangements ; it grafts itself upon them. It takes payment by time or by the piece as its basis, and offers the workmen something over and above what it can make by either system. The wages in a profit-sharing concern are precisely those which are paid in any similar concern worked on the ordinary plan. The utmost that a man's work can command, either by the hour or by the piece, in the ordinary labour market, that it can command in a profit- sharing business. The only difference is that in the latter the workman receives, by way of additional remuneration, at the end of the business year, a share in the net profits realised on the operations of the preceding twelve months. It seems almost superfluous to preach the benefits of this system to a meeting of working men. An arrangement which offers them something over and above anything that they can at present get, is too plainly to their interest to make its reception doubtfuL It is with employers that the difficulty arises ; and Mr. Taylor admits that as yet employers have only given him "promissory notes, with no date filled in." If they are in a large way of business, they think that profit-sharing may do very well for small con- cerns; if they are in a small way of business, they remark that it is just the thing for large concerns. But Mr. Taylor is confident in his cause, and he believes that he can offer em- ployers such solid advantages, that they too must in time be converted. At first sight, profit-sharing seems to mean to the employer the surrender, without compensation, of a part of what is now his own property. He is to pay the full wages all through the year, and at the end of it to make the work- man a present besides. But profit-sharing, though it takes something away from the sum which the employer has been accustomed to call his own, makes the sum from which the something is subtracted •very much greater. Why is it that employers prefer payment by the piece to payment by time ? Because payment by time gives no guarantee for the quantity of the work done. So long as the workman is not idle enough • to be sent about his business, he can do as little as he likes in the hour, -without affecting the hour's pay. In piecework, it is the workman's interest to turn out as much as he can ; but here the employer has no guarantee for the quality of the work done. He can examine it, indeed, and refuse to pay for it ; but he would only be likely to do this in very extreme cases. Profit-sharing, on the other hand, gives him the guarantee he wants in both respects. The amount of profits made will depend partly upon the quantity and partly upon the quality of the work produced ; consequently, the workman is under direct inducements to do as much as he can, and to do it as
well as he can. Then Mr. Taylor expects a great deal from the stimulus which profit-sharing will give alike to the ingenuity, to the carefulness, and to the honesty of the workmen. When a man knows that he is to have a share of the profits, he naturally wishes that this share should be a large one ; and he is, therefore, under no tempta- tion to conceal from his master any mode of improving the production that may occur to him. Profit-sharing, again, would check the enormous waste of materials and the injury to costly machinery which is due to carelessness on the part of the workman. Add to this the diminished coet of super- intendence arising from the direct interest which the workman has in his own and his fellows' diligence, and Mr. Taylor believes that the employer will save enough money to pay the workmen's share of the profits. .Miss Simcox tells us how a business conducted on the principle of profit-sharing has actually worked. In one respect, the experiment was tried under conditions which helped to its success ; in another respect, some ordinary aids were wanting. Miss Simcox and her friends provided the capital on easy terms. They were content, in the first instance, with 5 per cent, interest, and they only asked in addition the half of any further profits. Of the other half, one moiety was divided as bonus among the workers; the other went to forth a reserve fund for their benefit. On the other hand,
the concern was started with very imperfect knowledge of business, and at the first the amount of trade done was very far from being sufficient to establish an equilibrium between receipts and expenditure. But the second year brought an increase of nearly 50 per cent. in the gross earnings ; and though this fell off in the following year, the subsequent progress was continuous, and in 1882 and 1883 respectively the partners might have divided 11 per cent. and 8 per cent. upon the capital invested. As a matter of fact, they divided only 5 per cent., the surplus in each year going to make good back losses. During the eight years, therefore, that the firm. has been in existence it does not appear that the partners— who answer to the employer in an ordinary profit-sharing concern—have made more than 5 per cent, on their capital—. "An investment," says Miss Simcox, "not to be despised in these hard times." But when the risk and worry come to be taken into account, we fear that the prospect of 5 per cent, will not, even in these hard times, tempt capitalists to try the profit-sharing plan.
It must be noted, however, that a co-operative concern, or, at all events, this particular concern, laboured under some diffi- culties which need not beset a business which is only co-opera- tive to the extent of dividing the profits between workman and employer. "That some workers," says Miss Simcox, "are more skilled than others, and some kinds of skill worth a higher -price than others, is admitted and acquiesced in [by the work- man] ; what is not acquiesced in is the exceptionally high price commanded by the skill of the born exploiteur Those who are born with the knack of driving, or playing boss,' of getting the maximum amount of work out of their subordinates, frankly don't care to exercise their special skill pro bono pub- lic° ; if they are to make themselves disagreeable by keeping all workers constantly up to the mark, they require to be paid as much as they could earn by driving on their own account." In a co-operative business the ordinary workmen object to their share of profits being lessened in order to give these " bosses " the share which they think is their due. In an ordinary case of profit-sharing, the opinion of the workmen on such a point as this would not matter. The employer would give his foremen what he thought their work was worth, and the profits would not be declared until after this item of expense had been allowed for. Still, it must be said that Miss Simcox is apparently not of opinion that co-operation has the magic virtue ascribed to it of making driving in every grade unnecessary ; and if she is right in thus thinking, Mr. Sedley Taylor will have to reduce the saving he- expects to make in the coat of superintendence. We confess that we should be surprised if self-interest made men uniformly industrious in a co-operative workshop, when it lacks the power to make them so when they are working by themselves. It must be remembered, however, that shirt-making, which was the field Miss Simcox chose for her experiment, is a singularly ill-paid trade ; so that it is perhaps satisfactory that throughout eight years the partners should have been able to pay on an average 5 per cent. on their capi- tal and full average wages to their workwomen. One thing, at all events, may be learned from Miss Simeox's article. If people want to do real service to the London poor, they had better spend their money in promoting co-operative workshops than in doles in aid of starvation wages, or in the encouragement of industries which can only be carried on by paying starvation wages. "What about the shilling Bibles and sixpenny or penny Testaments which it is supposed a good work to disseminate V" Their cheapness is due to the fact that they are really "slop goods "—goods, that is, pro- duced at a price which cannot give the worker a decent main- tenance; and every one who buys or distributes them is really more responsible for the misery caused by their production than the middleman, who simply feeds the demand whicl. mistaken benevolence creates.
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