Chapter XIX. Conflict Between Wage-Earners And Profit-Makers.
The nature of the conflict.—The mutual interest of all whose energies are used in production, that the total product of wealth should be as great as possible, is often disturbed by doubt as to the fair division of what is produced. Under the modern factory system, the multitude sustain the relation of employés to a comparatively few employers. Antipathies are liable at any time to arise between these two classes of workers. Those who officially control wealth in great enterprises are subject to suspicion of unfair treatment of their less independent employés. Ignorance among the mass of laborers of the intricacies of business life contributes to such suspicion. In fact, the so-called conflict of capital and labor is a struggle for and against profits. Interest and rent are only indirectly involved in the question. The manager's profits may be assumed by both manager and wage-earners to arise from reduction of wages. The necessary reticence of business managers and the frequent arbitrary decisions as to wages help the wage-earner to feel that his interests conflict with those of his employer.
It is well for all to realize that this conflict, when [pg 258] there is one, is not so much between the rich and the poor as between the struggler for profits and the struggler for wages. In many instances the true solution lies in the same direction, if both could see the facts alike. It is an acknowledged fact that generous wages make enlightened, energetic laborers, and that greater profits come in the long series of undertakings from the most intelligent service. A farm-hand at $20 a month is sometimes worth more than two at $15. On the other hand, if markets are low and profits decline, permanence of employment will depend upon a readiness of wage-earners to accept a new adjustment of wages to conditions. Everything which fosters a better understanding between profit-makers and wage-earners contributes to the welfare of both. Everything which hinders such understanding injures the welfare of both. The cost of such friction is borne by both parties. But in the long run, the wage-earners are liable to carry the larger part. Even the destruction of property by rust, decay, or even violence, comes back upon the wage-earners who might have been employed in its use, quite as truly as upon the manager whose profits and accumulations are wasted.
Obstacles to fair understanding.—The necessary ills connected with advancing civilization, in the laying aside of old methods for new, in the adoption of extensive machinery, and in the more perfect competition with the world, fall upon both profit-maker and wage-earner. The wage-earner feels the immediate loss of his usual opportunities. The profit-maker feels the weight of providing new machinery, devising new methods and taking the longer range of chances. All these ills are [pg 259] met in time by intelligent and hopeful struggles for the best. In the worst conditions ever brought by improved machinery, a very few years have brought relief and improvement to the very class of laborers injured.
The danger is that wholesome competition upon a clear basis of fair understanding and free range of enterprise may be checked by legislation or organization for class purposes. Against the interests of the mass of the people are all extended franchises, giving arbitrary control for long periods of years over any industry; monopolies sustained by patent rights or protective duties; trusts, so far as they imply a combination of men to resist the law of supply and demand; and laws which in any way favor one class of people engaged in one kind of industry as opposed to any or every other.
Quite as prominent are those hindrances which come from every kind of fraud, including adulteration and misrepresentation of products, deception as to market conditions, false credit, and violence of every kind. The more perfect the light thrown upon all the conditions of production, the better the understanding which all men may have of a neighbor's welfare, and the easier it is to put ourselves in our neighbor's place.
Strikes.—The methods of warfare between wage-earners and profit-makers are quite generally understood under the names of strikes, boycotts and lockouts. The occasion for a strike, which means a sudden stopping of work by the employés of an establishment, is usually some question of immediate advantage to the workmen. A desire for increased wages, fewer or different hours of labor, or the removal of some restriction upon habits or [pg 260] associations, gradually becomes general, and through some permanent or temporary organization united action is taken. Quite frequently a strike is occasioned by a sudden and apparently arbitrary reduction of wages, affecting a large body of men. Many strikes are inaugurated in the interests of discharged workmen, when the organization to which they belong is supposed to be interested.
Thus a strike is always a form of warfare, and should be entered upon only after the same careful consideration that makes war sometimes a necessity. Under ordinary circumstances and upon general principles, no body of workmen has any more right to suddenly stop work without notice than railway managers have to stop a daily milk train. The end to be secured must be important enough to humanity to overbalance the injury of the strike itself.
Since a strike is an effort to produce a corner in the labor market, it will succeed in the end sought only when conditions for cornering the market are favorable. Even then the loss to the entire community is considerable. The injury to property, while directly borne by the profit-makers, is widely distributed. First, all wages stop and wage-earners suffer. Second, ability to pay debts ceases and capital owners suffer. Third, insurance companies have their risks increased and all insurers suffer. Fourth, the market for the products is demoralized and all consumers suffer. Fifth, almost always social disorder results, police expenses are greatly increased, and all taxpayers suffer. Sixth, in the end the relation between employers and employed is more [pg 261] strained and less free than before, so that all humanity suffers.
The chances of success, as indicated by the record of many years, are small, and apparent successes are often temporary. And yet the world recognizes the right of a body of laborers to strike, just as it recognizes the right of revolution to secure the general welfare. Formerly a combination of workmen in a strike was treated as a conspiracy and punished as such. Now the general rule is absolute freedom of combination with rigorous repression of fraud and violence. This enables any body of men to make a serious test of the conditions of a labor market, at the risk, primarily, of their own welfare, but with serious strain upon the general good. It leaves room for the possible breaking down of old customs, which are stronger than law, and it sometimes proves, like a war for liberty, a means of great enlightenment to those who take part in it. It is properly held as the last resort in the struggle for fair recognition of the rights and necessities of wage-earners.
It is noticeable that the tendency to strikes among the more skilled workmen is diminishing, and that the mass of communities are weighing their own interests more carefully as they see the general destructiveness of the method. At present strikes are expected among laborers of least skill, where they are, from usual conditions, least effective. Strikes are frequent among coal miners, where wages are liable to reach the lowest possible mark because of the ease of competition from all parts of the world, though the effect of such strikes [pg 262] in bettering the condition of miners has scarcely been felt. The fact that destruction of property and the natural waste from strikes is so widely distributed among workmen and consumers retards popular sympathy, and the fact that strikes increase the risk of capital employed, and actually reduce the amount of capital in use, diminishes the chance of increasing wages or comfort in those employments where they are likely to occur. It seems evident that some better remedy for oppressive conditions of wage-earners must take the place of strikes.
The boycott.—The boycott is a comparatively recent device for enlarging the field of combat to include not only the employés of an establishment but the consumers of its products. This is especially applicable to those industries the products of which are largely consumed by wage-earners, whose sympathies can be depended upon to carry it out. It asks all sympathizers to refuse to purchase products from the employer or firm attacked. A great bakery, for instance, can easily be ruined by a boycott, if its customers are chiefly wage-earners. It is easily applied in cases where custom has allowed the use of a label from some organization of workers. It has been attempted with some success against a railroad so related to other roads as to require the services of sympathizers with its striking employés to carry its freight to final destination. An instance of its widest application is in an effort to persuade the people of a city to refuse to patronize the street-car system.
The warlike nature of this method is apparent in [pg 263] the effort to use terror as one means of persuasion. In this case it uniformly overreaches itself in destroying public sympathy with the strikers. That it has a possible place in the struggle of wage-earners for their rights cannot be disputed, since it corresponds with the nature of a blockade or a siege in other warfare. But its nature as a method of warfare is equally clear, and its use in the interests of humanity belongs, with all war, as a last resort.
The lockout.—Lockout is a name given to a method employed by managers to prevent the continuance of a strike by aid of the sympathy of employés not directly interested. It often happens that a comparatively small body of workmen in a great factory strike for higher wages, and are sustained in their strike by the sympathy and support of other workmen in the same factory. Under these conditions the employer is tempted to stop all work by a sudden closing of all shops, that the pressure of suffering among a large body of wage-earners may force the smaller body to accept the old conditions. The lockout seldom gains a popular sympathy, for the reason that employers appear to be using this method of warfare from a superior position of power. And yet no one can dispute the general right of employers to control of their business. Such a sudden stopping of business without an attack by a strike or some similar provocation would be considered inhuman, and popular sympathy would be wholly with the laborers and consumers interested.
General evils of such conflicts.—The incidental effects of such violent opposition between profit-makers [pg 264] and wage-earners are certainly detrimental to all interests. The great multitude of farmers throughout the country depend for welfare upon the body of people using farm products, and all the waste of power from enforced idleness of wage-earners, managers and machinery is shared by farmers through diminished power of the rest of the world as consumers. In only a few instances have strikes affected agriculture directly, partly because the relations of employer and employed are so largely personal; partly because the supply of agricultural laborers for the season is usually large; but chiefly because wage-earners upon farms in this country expect eventually to become themselves proprietors, and so no separate organization is probable. In some countries, however, where wage-earners in farming communities are a class by themselves, a strike has been the only method by which the barrier of custom and law, built up through many generations, could be broken. The great agricultural strike in England will always be remembered as having elevated the standard of labor and living in that country. It is to the interest of all farmers to cultivate a better understanding between employers and employed than can be maintained with any general expectation of strikes, boycotts, lockouts or similar warlike methods of settling fair wages.
Trades' unions.—The organizations known as trades' unions, in which the wage-earners in any particular kind of business unite for self-protection, have had a gradually widening influence upon the relation of managers to employés. Once they were characterized as “machinery by which 10 per cent of the working classes [pg 265] combine to rob 90 per cent,” because the advantage secured usually comes out of the consumers of products. But today reasonable doubts of the general advantage of a well-managed trades' union have disappeared. If once they seemed a conspiracy against society in general, they are now recognized as a part of the general progress in mutual recognition of rights and privileges. It seems right to expect from them still larger usefulness, with a clearer perception of their importance. It is evident that they contribute somewhat to general intelligence of their members, and so far as this is true they help toward greater efficiency. At the same time they help to maintain stability of employment and stability of other conditions surrounding labor.
A brief enumeration of ends they may serve directly will help to appreciate their importance. First, they can as truly estimate the market value of wages by gathering statistics from all parts of the country and from other countries as can any organization in commerce estimate the market value of produce. Second, they can serve as an employment bureau in furnishing information of places where work is wanted, thus equalizing the advantages as well as the burdens of their associates. Third, they can make more uniform and more satisfactory the customs in regard to the length of a day's work or privileges of any kind associated with the work as perquisites. Fourth, they can, if they will, find the true gradation of skill and of wages among workmen, so as to establish a natural line of advancement. Fifth, they rightly do, and can still further, serve for mutual support in cases of illness, and for protection [pg 266] of a community against fraud in pleas of poverty. Sixth, they may easily and properly, if they will, provide for insurance of character, both as men and as workmen, by issuing certificates, and under proper provision giving bonds, such as are required in many positions of trust. Seventh, they may extend their operations even to the taking of jobs that require a variety of work continuing through a period of time. Eighth, they can, under most favorable circumstances, undertake various stock enterprises, especially coöperative stores, thus securing an incentive to saving, and diminishing the spirit of antagonism against the profit-makers. Finally, though they have the best possible organization for a successful strike, if necessary, they can subordinate this disposition toward warfare to a broader machinery for fair consideration of all interests and for individual arbitration of rights.
Such organizations, under good management, win the respect of all, and find a recognition of their methods satisfactory. Farmers' clubs and granges, though far from reaching ideal efficiency, furnish suggestions of the general utility. Unfortunately, these organizations, having little if any basis of capital, have seldom been incorporated under the laws of the state. Could the powers and purposes of such organizations be established upon a basis of statute law, the range of their usefulness might be greatly increased. They might even sustain a method for enforcing in the courts the collection of wages, where the single wage-earner often accepts the half loaf in a compromise rather than meet the expense and loss of time involved in a law suit. [pg 267] Certainly the establishment of legal relations between the trades' union and the state would give to it a character and stability most likely to promote all interests.
Federations of labor.—The so-called federations of labor, in which practically the only bond of union between individuals is the fact that all are wage-earners, have so far worked out but a small part of the problem involved in their existence. They have the advantage of uniting large numbers and a variety of interests; but they have the disadvantage of subordinating all other interests to the supposed conflict between employers and employed. Their tendency is almost certain toward lowering standards of efficiency, and attempting by class legislation to get the advantage of mere numbers.
It is almost impossible that the organization shall be kept out of the field of bargains in politics and contrivance for special legislation, demoralizing to the whole country. Too often the votes of members are made a bribe for securing certain favors. In the nature of the case, they sustain a body of officers whose chief business is in danger of becoming that of either political agitators or political bosses. The machinery of organization is liable to reduce the independence of individuals. The organization itself is liable to demand a personal subordination almost equivalent to military rule, and the badge of the society may mark a man as under direction of authority. Even in questions where the majority rule, the force of the federation requires the caucus principle of absolute adherence, even though the majority represents the weakest and least intelligent [pg 268] part of the organization. The demoralizing effect of such methods, including wholesale trading of opinions, is liable to debase citizenship, and so to diminish the individual self-respect, which is the highest possible protection for laborers.
Courts of arbitration.—Arbitration between employers and employed, in cases of serious misunderstanding, has long been advocated as a wise means of settling differences. The obstacles to its general, voluntary adoption are considerable. Employers object because it involves the admission of an outsider as a judge of their business methods. The employés object because they fear the sympathy of arbitrators with the superior intelligence, wealth and power of employers. Yet there seems no good reason why a representative body of men, chosen for character and ability, should not be appealed to by both parties in a contest which has already broken up the natural relations of business. As has been shown, the whole community suffers in every interruption of production and trade, and so far the community has the right, and should have the legal privilege, of insisting upon the fairest and quickest means of settling the controversy. In far less important difficulties between individuals, society insists that either individual shall have the right to bring the other into court.
Society is waiting only to settle the best form of a court of arbitration for labor difficulties. The trend of popular judgment is in favor of a well-organized commission, having the dignity if not the authority of a supreme court. That such commissions have not generally [pg 269] come up to the ideal is due largely to political influence among leaders of organizations, so that the commissioners become the choice of a faction rather than of the people. It is conceivable that the functions of judges in a series of state courts may be so enlarged under carefully framed laws as to include the duty of arbitration in labor contests.
If the people are not yet ready for compulsory settlement of such questions, the time is surely coming, under the enormous aggregation of industries and the immense combination of employés, when the judgment of the people expressed in due form of law will control both employer and employé. The whole world is recognizing methods of arbitration as better than warfare. It will soon insist that these minor wars within the commonwealth shall cease.
Profit-sharing.—Some general system of preventing antipathy between profit-makers and wage-earners seems desirable. Certain interests are known to be mutual, and both employers and employed welcome any system by which those mutual interests can further the success of the business. Among the methods proposed, and sometimes successfully employed, the most prominent is profit-sharing. This implies on the part of employers after payment of current wages a distribution, at stated times, far enough apart to secure a fair average in the profit and loss account, of some portion of net profits among all the wage-earners. The per cent of net profits to be thus distributed is matter of agreement, and the basis of distribution is naturally the scale of wages accepted by the employés in their contract [pg 270] for employment. The particular methods of applying these principles vary with circumstances, but in all cases depend upon the actual confidence of employés in their employers. The effects seem to be good, bad or indifferent, in proportion to the general intelligence and stability of the employés. With really skilled workmen, established in homes and feeling responsibility as citizens, profit-sharing stimulates to the highest energy. With weak and irresponsible wage-earners it is likely to bring waste and sometimes false notions in regard to wealth production.
The weakness of the whole system is the lack of provision for fairly sharing burdens in the constantly recurring periods of loss. If the employé's share of the profits is consumed upon comfort or luxury, he is even less prepared than without such profits to meet the loss of not only profits, but his wages, in times of depression. If these additional earnings shared as profits become an insurance to the wage-earner, a sort of reserve for sustenance and safety in the necessary times of weakness in any industry, they stimulate the best characteristics of saving and character-building, and cultivate a disposition to meet all emergencies in patience. It is quite customary, therefore, in any system of profit-sharing to provide also an investment for the employés in a reserve fund, from which the necessities of the business and the needs of the whole community of workers may be met. Such a method, if wisely managed, makes the interests of the employés coincide with those of the employer. If added to this there is ample opportunity for suggestions as to enlargement and improvement [pg 271] of the business in all minutiæ, the best abilities of the workmen are called out and the heartiest sympathy is possible. There still remains against such a system the objections, that losses are not shared as truly as profits, and that employés are liable to require too intimate an acquaintance with the condition of their employer's business to foster the success of the enterprise. Its successful application is so far confined to lines of business easily comprehended and direct in their methods.
Sliding scales of wages.—Another device for connecting directly with the fluctuations of business any compensation of wage-earners is called the sliding scale of wages. This is an attempt to make each sharer in production depend directly upon the price of products in the market for rate of wages. The wages of different workers are adjusted to each other by contract upon some ratio established by experience, and then the wages of each are made to vary from month to month with the average price of the finished product in the general market. This subjects all parties directly to the fluctuations of the business in both profit and loss. Its success is dependent upon the confidence placed by employés in the fairness of the adjustment. It stimulates to highest productiveness when prices are high, and checks production slightly when prices are low. But it provides no direct method for readjusting business under the pressure of great changes in methods of management, nor does it save from strong antipathy against the improvement of a business by labor-saving machinery. Its successful employment depends in general [pg 272] upon the character and efficiency of employers and the general intelligence and enterprise of employés.
Coöperative industry.—Coöperative industries are sometimes advocated as a complete solution of labor difficulties. The system implies a union of independent workmen, all of whom shall be sharers in the capital employed as well as in the labor involved, including management. The management of the enterprise is entrusted to chosen members of the coöperative force, and wages or salaries are fixed according to abilities employed, essentially upon the scale of current wages outside the coöperative enterprise. All profits are then shared among all members of the association in proportion to their wages. But an investment of such profits in the growth of the business is an essential part of the plan.
This method satisfies the ideal of equity in division of wealth produced, provided the basis of adjustment between classes of wage-earners is accepted as fair. The principal difficulty in this respect arises in reference to the salary of managers and overseers. Such salaries are less clearly defined in the labor market, being usually complicated with profit-making, and are liable to be considered out of all proportion with the wages of other workers. If underestimated, the marked abilities required in management are likely to be withdrawn from the enterprise for independent management in profit-making.
The chief difficulties, however, with coöperative production grow from the want of confidence of the multitude of shareholders in their managers. Few kinds of [pg 273] business can be carried on successfully under a body of absolute rules, and fewer still will bear the delays and hesitation required for a general consultation of many authorities. The comparatively few instances of genuine success in coöperative production are due, in the first place, to the comparative simplicity of the undertaking; and, in the second place, to the genius of some organizer, who has been willing to contribute his superior abilities for the sake of the enterprise itself rather than the compensation.
A few principles may be fairly drawn from the general experience. First, all shareholders must be actual workers, in some way responsible for a part of the production. Second, the influence of each shareholder must in some way be held in direct ratio to his share in the production. Third, the system of accounts must be such as all can fairly understand. Fourth, the management must be entrusted to a chosen few, whose interests are chiefly in the business itself, whose character secures the confidence of all, and whose administrative ability is not too much hampered by rules.
The opportunity for coöperative industry is nowhere greater than in a community of farmers. Butter and cheese factories, cold storage plants and milk stations invite the coöperation of interested farmers upon the simplest possible basis of agreement. The multiplication of such enterprises is desirable, and the farmers of every community may profitably study the conditions of success. The greatest obstacle heretofore, has been the want of competent management, and the distrust aroused and maintained by the inefficiency [pg 274] and fraud of managers. It is possible, too, that farmers generally do not recognize the actual importance of executive abilities, and are unwilling to pay the salary actually earned by a thoroughly competent man.
Legal restrictions as to labor.—It is natural for those who suffer in the struggle for better wages to seek the support of law in restrictions upon contracts as to wages, hours of employment and conditions of comfort. The principle that governments must protect the weak against the strong in any community is a thoroughly established one. Yet its applications are subject to continual readjustment. Multitudes of experiments have been tried, affecting the whole range of inequalities in wages and perquisites. In many instances, wages have been fixed by law, and that for long periods of time, but without relieving in any respect the actual force of competition among wage-earners themselves. Indeed, the tendency of very explicit enactments is to weaken the individual ability of wage-earners by destroying ambition. Wages fixed by law are necessarily as low as the average would be in a free competition; otherwise production is hindered and capital is diminished. With this low average any worker of more than average ability gains nothing by exerting his ability, but does gain ease by neglect. Thus enforced uniformity reduces the energy of the producing forces and practically closes the doors of advancement from wage-earning to profit-making.
A similar effect is found in efforts to regulate the hours of labor by law, except where the law simply defines the meaning of a day's work or emphasizes the importance [pg 275] of public health and vitality rather than equality in distribution. Humanity has done much in reducing hours of toil, and may yet do more; but it will be for humanity's welfare in larger considerations than are measured by money. The eight-hour question, so constantly agitated in certain callings, concerns the entire people just so far,—and no farther,—as the general health and energy of the community depend upon it. Farming communities stand aloof from its application; and yet there is no question that the farmer's home might be even better than it is for developing physical and mental vigor, if hours of toil were more carefully restricted to meet the conditions of healthful growth and activity.
Other conditions, affecting the employment of children and women, are proper subjects of restriction by law; for these also involve the consideration of general welfare in the elevation of the physical, mental and moral characteristics of the race. Upon the same plane must be put all legal restrictions upon methods and machinery, reducing the dangers from accident and promoting the comfort of employés. All restrictions serve their purpose only so long as they are appreciated as having their reason for existence in general welfare. The rights of an employer, under contract with his employé, like the rights of a parent in control of his child, are subject to the law of good will; and the world will yet find a way to make its restrictions felt wherever recklessness or carelessness or greed destroys good will.
Nationalization of industry.—A somewhat popular [pg 276] suggestion in solution of labor difficulties is the so-called nationalization of industry. This, in general terms, is a proposition to equalize compensation and avoid fluctuation in both wages and employment by public control of all industries under official management. While this involves some principles of socialism, more properly discussed in connection with consumption of wealth, its relations to productive industry may be briefly presented here. The plans proposed are as yet expressed only in most general terms. Even the method of bringing about such a revolution of thought, feeling and action has not been devised. Still less ready is anyone to point out the details of a plan for the actual production. The nearest associated ideas are found in governmental services through a post office department or the management of a system of transportation. Most advocates of the method overlook the fact that in such government administration of partial industries the law of competition is still operative between these enterprises and the universal industry of the people.
The difficulties in governmental management under present conditions are anything but small, especially under popular rule, where the dominion of party and the influence of position are all-powerful. Under monarchial rule the organization of such industries becomes like that of an army, in which arbitrary power predominates. It seems easy to see that any effort to solve the problems of labor employment by national control involves finally the arbitrary decision of power, in adjustment of both duties and compensation. The management by officials, however those officials are appointed, [pg 277] is not necessarily wiser, more efficient or more benevolent than the management by interested men, whose life is in natural contact, through business relations, with employés. Those who have had experience with official control under popular government are not likely to expect a readjustment of all interests from the standpoint of politicians to be marked by either universal good will or universal common sense. It is reasonable to suppose that wherever general welfare in actual use of wealth can be best promoted by public control, such control will come through the free exercise of individual judgment with reference to the work in hand. While there ought to be no objection on the part of any to a government enterprise which can be shown to serve in that way the greatest good of all, nobody ought to assume that the nationalization of industries is for the greatest good. Each great undertaking will require its own proof, not only of the welfare to be expected, but of the practical means by which that end can be secured.
The spirit of equity chief.—The trend of experience goes to show that true economic interests, not only of the community but of individuals, are in accord with general principles of welfare. It seems certain that communities paying the highest wages are those which gain the highest return for labor in product, and maintain the highest general rates of profit. In general, also, those enterprises which are controlled with most care for equity in wages and for the general welfare of employés are most stable under fluctuations of business and most genuinely successful. While wealth may be [pg 278] accumulated unjustly in the hands of those who oppress their neighbors, there can be no doubt that in long periods of time the best adjustment of all interests gives not only the truest welfare but the largest wealth and the best use of it. The spirit of equity must eventually control both managers and wage-earners, and no other disposition can furnish a final solution of the problems of distribution between employers and employed. If employers are greedy, the wrong will not be righted by an equal display of greed on the part of wage-earners. The spirit of true philanthropy is the only proper spirit for discussion of these questions.