SPECULATIONS FROM POLITICAL ECONOMY
1. EFFICIENCY OF LABOUR.
Political economists have not overlooked efficiency of labour: they have underestimated its importance in the opinion of Edward Wilson, who has supplied me with the examples and arguments that follow and who has verbally given me leave to publish as much as I like.
The English workman, especially in a country town of moderate size, regards capital as unlimited, employment ("work") as limited. A wall six feet high is to be built along the length of a certain garden: if one bricklayer is employed, the fewer bricks he lays daily the more days' employment he will get; if several bricklayers are employed, the fewer bricks one lays daily the more employment is left for the others. It thus appears that the more inefficient the labourer is, the better for himself, his fellow-handicraftsmen, and for "labour" in general: the more money is drawn from the capitalist.
There is a grain of truth in this view with respect to petty unavoidable repairs in a narrow locality: but the capital spent on such is as a drop in the ocean compared with that embarked in a single large work. Consider the case of the London Building Trade, as practised in the suburbs on all sides of London. The London bricklayers thoroughly believe that it is their interest to be inefficient: it is said that they have a rule that no bricklayer shall ever lay a brick with the right hand; they have also a rule against "chasing," i.e. that no bricklayer, whatever his skill, shall lay more than a certain number of bricks a day; they believe that if the bricklayer laid a larger number of bricks he would get no more pay for a harder day's work, while the "work" would afford employment to a smaller number of labourers. Look however a little further. The speculative builders round London compete against each other, so that they carry on their trade on ordinary trade profits. Such a builder is building streets, house after house, each house costing him £800, and selling for £1000 say; and this, after paying his interest at the bank, etc., pays him about 10 to 15 per cent on his own capital embarked. Suppose now that the bricklayers increase their inefficiency either by a trade rule or by a combination to shorten the hours of labour. The cost of each house is increased £50 to him: nothing in the new bricklaying rules or rates affects the purchasers; the builder estimates that his profits will fall to 5 to 8 per cent on his capital. He does not care to pursue so risky a business at this rate of profit; he determines to contract operations. When he goes to his bank, a branch of one of the gigantic London joint-stock banks, at the end of the quarter, the manager of the branch comes forward as usual ready to continue the bank advances; but the builder says simply, "The building trade is not so good as it was," and declines. The increased cost of bricklaying has affected all other speculative builders in much the same way; the consequence is that "gold" accumulates in the branch banks. The secretaries and managers of the great joint-stock banks do not let their capital idly accumulate; they buy New Zealand 6 per cents, or transfer to Frankfort or New York the capital that, but for the rise in cost of bricklaying, would have gone to the London bricklayers.
In this case it is easy to see that the quantity of work to be done is not limited. Should the cost of building diminish but a little, the rate of profit of the builders on their own capital (in many cases not one-tenth of the capital they employ) will run up to 20 or 30 per cent, or even more; and at even a 20 per cent profit the bricklayers would find that a perfect rage for building would set in. Every speculative builder in the trade would strain his credit to the utmost, and take up every £100 from his bank that he could induce the bank manager to let him have.
A second illustration. Forty years ago, on our farm in the south of England, two men with flails used to begin threshing wheat in the long barn about 1st November, and used to thresh till 1st April. They got eight shillings a week with us, but in adjoining counties seven shillings (and even six) were winter wages. Now the steam threshing-machine will empty that long barn in two short days' work. It takes half a dozen men to do the work, and they get about fifteen shillings a week, though their labour is much shorter and easier than that of the old flail men. At the same time our farmers now are much poorer men than they were forty years ago: they have less capital, they have made for many years past a low rate of profit, and they are frequently themselves complaining that they cannot afford to pay their labourers well, and inferring that they should get Protection back again in some shape or other. The labourers on their part imagine very generally that their increased wages for less work are due to Mr. Arch and agitation; that the employers of labour will never pay more than is wrested from them (this is in large measure true); and that employers must pay whatever agitators are strong enough to demand (this is wholly erroneous).