Retrospect and Prospect
My object, then, is to show how a system which embodies a large amount of private enterprise can be made tolerable and acceptable to modern ideas of equity. For this purpose we need to consider (1) what have we done in that direction in the past? (2) what is the setting of the economic problem to-day, and (3) what is to be our policy for the future?
Dealing first with wealth and wages, the whole field of social legislation has a bearing upon them, including particularly education, elementary and technical, the Factory Acts, and a great mass of legislation which has affected the earning powers of the worker and the conditions under which he labours. Just before the war we had come to the point of fixing a minimum wage in the mines, but an even more important factor was that we had introduced the Trade Board system, which had begun to impose a minimum wage in certain trades where wages were particularly low. But the most important direct attack upon the unequal distribution of wealth was by taxation in accordance with the Liberal policy of a graduated and differential income-tax, and still more important by taxes upon inheritance; for it has long been recognised that though it may be desirable to allow men to accumulate great wealth during their lifetime, it by no means follows that they should be entitled to control the distribution of wealth in the next generation and launch their children on the world with a great advantage over their fellows of which they may be quite unworthy. On the question of insecurity it cannot be said that any serious attack has been made on the problem of how to diminish fluctuations of trade, but again the Liberal solution for dealing with that difficulty was to remedy not the cause but its effects by insurance.
On the question of monopolies and exploitation, though we hear a great deal of the growth of capitalistic organisation, in fact we find that, of the three greatest industrial countries in the world, Great Britain is the least trust-ridden, mainly because of its free trade system. In the case of enterprises not subject to foreign competition, we had begun to develop a fairly satisfactory system of control of public utility services which were of a monopolistic character.
Finally, there had been growing up a complete system of collective bargaining and conciliation, and though we always heard of it whenever there was dispute and strife, the ordinary public did not know that this machinery was working and developing in many great and important industries a feeling of co-operation or at all events of conciliation between the two sides. I only mention these points very briefly in passing in order to show that with the evolution of modern industry we were already feeling our way, haltingly and far too slowly, it is true, towards a solution of its most serious defects.
Turning to the present situation, we have to face the fact that Great Britain is to-day faced with one of the most serious positions in its economic history. We must make allowances for the readily understood pessimism of a miners’ leader, but it should arrest attention that Mr. Frank Hodges has recently described the present situation as the coming of the great famine in England. For nearly two decades before the war there was occurring a slight fall in the real wages of British workpeople. Food was becoming dearer, as the world’s food supply was not increasing as fast as the world’s industrial population, and the industrial workers of the world had, therefore, to offer more of their product to secure the food they needed. Hence the cost of living was rising faster than wages, except in trades where great technical advances were being made. There is some reason to fear that the war may have accentuated this tendency.
For some years the distant countries of the world have had to do without European manufactured goods. You are all aware of the tendency, for example, of India, Australia, and Canada to develop their own steel resources and to create manufacturing industries of all kinds. Moreover, we have lost part of our hold on the food-producing countries of the world by the sale of our capital investments in those countries to pay for the war. These and other considerations all suggest that we may find it increasingly difficult to maintain our position as one of the main suppliers of the manufactured goods of the world. In such circumstances we shall be hard put to it to maintain, far less raise, the pre-war standard of living.
How then are we to cope with this problem of retaining our economic position? We can only hope to do it if the present financial difficulties and obstructions working through the exchanges, by which international commerce is restricted and constrained, are removed. We can only do it if and so long as the conception of international division of labour is maintained. And we can only do it if—granted that we can induce the world to accept this principle of international division of labour—we can prove ourselves, by our economic and productive efficiency, to be the best and cheapest producer of those classes of goods in which our skilled labour and fixed capital is invested.
Assuming the financial difficulty is overcome, and that the old régime of international specialisation revives, can we still show to the world that it is more profitable for them to buy goods and services from us than from other people? Can we compete with other industrial countries of the world? The actual output of our labour in most cases is far less than its potential capacity, partly because of technical conservatism, and partly for reasons connected with the labour situation. How are we to mobilise these reserve resources. I have only space to deal with the second of these problems. In Germany labour is well disciplined, and has the military virtues of persistence and obedience to orders in the factory. But we cannot hope to call forth the utmost product of our labouring population by drill-sergeant methods.
In America this problem is a different one, because the American employer is often able to take full advantage of his economic position. For he has a labouring population of mixed nationality, which does not readily combine, and he can play off one section against the other. British employers cannot, if they would, deal with British labour on the principle of Divide and Rule. There is only one method by which we can hope to call forth this great reserve capacity of British labour, and that is by securing its confidence. If Free Trade is one of the legs on which British prosperity rests, the other is goodwill and active co-operation between the workman and his employer. How is that goodwill to be gained?
The solution of that problem is only partly in the hands of the politician; that is one of the reasons why it is extremely difficult to suggest an industrial policy which is going to hold out the hope of reaching Utopia in a short time. But it is obviously essential somehow or another to develop, particularly among employers, the sense of trusteeship—the sense that a man who controls a large amount of capital is in fact not merely an individual pursuing his own fortune, but is taking the very great responsibility of controlling a fragment of the nation’s industrial resources. And we have also to develop a conception of partnership and joint enterprise between employer and employed.