Problems of Poverty: An Inquiry into the Industrial Condition of the Poor

by J. A. Hobson

This opinion is not, however, inconsistent with the belief that such work of "direction" or "organization" may be paid on a scale wholly out of proportion to the real worth of the services performed. Extremely strong evidence has been tendered to show that in many large towns, especially in Leeds and Liverpool, the "sweating" tailor has frequently "no practical knowledge of his trade." The ignorance and incompetence of the working tailors enables a Jew with a business mind, by bribing managers, to obtain a contract for work which he makes no pretence to execute himself. His ability consists simply in the fact that he can get more work at a cheaper rate out of the poorer workmen than the manager of a large firm. In his capacity of middleman he is a "convenience," and for his work, which is nominally that of master tailor, really that of sweating manager, he gets his pay.

Part of the "service" thus rendered by the sweater is doubtless that he acts as a screen to the employing firm. Public opinion, and "the reputation of the firm," would not permit a well-known business to employ the workers directly under their own roof upon the terms which the secrecy of the sweater's den enables them to pay. But in spite of this, whether the "Jew sweater" is really a competent tailor or is a mere "organizer" of poor labour, it should be distinctly understood that he is paid for the performance of real work, which under the present industrial system has a use.

§ 6. Different Species of Middlemen.--It may be well here to say something on the general position of the "middleman" in commerce. The popular notion that the "middleman" is a useless being, and that if he could be abolished all would go well, arises from a confusion of thought which deserves notice. This confusion springs from a failure to understand that the "middleman" is a part of a commercial System. He is not a mere intruder, a parasitic party, who forces his way between employer and worker, or between producer and consumer, and without conferring any service, extracts for himself a profit which involves a loss to the worker or the consumer, or to both. If we examine this notion, either by reference to facts, or from à priori consideration, we shall find it based on a superstition. "Middleman" is a broad generic term used to describe a man through whose hands goods pass on their way to the consuming public, but who does not appear to add any value to the goods he handles. At any stage in the production of these goods, previous to their final distribution, the middleman may come in and take his profit for no visible work done. He may be a speculator, buying up grain or timber, and holding or manipulating it in the large markets; or he may be a wholesale merchant, who, buying directly from the fisherman, and selling to the retail fishmonger, is supposed to be responsible for the high price of fish; he may be the retailer who in East London is supposed to cause the high price of vegetables.

With these species of middlemen we are not now concerned, except to say that their work, which is that of distribution, i.e. the more convenient disposal of forms of material wealth, may be equally important with the work of the farmer, the fisherman, or the market-gardener, though the latter produce changes in the shape and appearance of the goods, while the former do not. The middleman who stands between the employing firm and the worker is of three forms. He may undertake a piece of work for a wholesale house, and taking the material home, execute it with the aid of his family or outside assistants. This is the chamber-master proper, or "sweater" in the tailoring trade. Or he may act as distributor, receive the material, and undertake to find workers who will execute it at their own homes, he undertaking the responsibility of collection. Where the workers are scattered over a large city area, or over a number of villages, this work of distribution, and its responsibility, may be considerable. Lastly, there may be the "sub-contractor" proper, who undertakes to do a portion of a work already contracted for, and either finds materials and tools, and pays workers to work for him, or sublets parts of his contract to workers who provide their own materials and tools. The mining and building trades contain various examples of such sub-contracts. Now in none of these cases is the middleman a mere parasite. In every case he does work, which, though as a rule it does not alter the material form of the goods with which it deals, adds distinct value to them, and is under present industrial conditions equally necessary, and equally entitled to fair remuneration with the work of the other producers. The old maxim "nihil ex nihilo fit" is as true in commerce as in chemistry. In a competitive society a man can get nothing for nothing. If the middleman is a capitalist he may get something for use of his capital; but that too implies that his capital is put to some useful work.

§ 7. Work and Pay of the Middleman.--The complaint that the middleman confers no service, and deserves no pay, is the result of two fallacies. The first, to which allusion has been made already, consists in the failure to recognize the work of distribution done by the middleman. The second and more important is the confusion of mind which leads people to conclude that because under different circumstances a particular class of work might be dispensed with, therefore that work is under present circumstances useless and undeserving of reward. Lawyers might be useless if there were no dishonesty or crime, but we do not therefore feel justified in describing as useless the present work they do. With every progress of new inventions we are constantly rendering useless some class or other of undoubted "workers." So the middleman in his various capacities may be dispensed with, if the organization of industrial society is so changed that he is no longer required; but until such changes are affected he must get, and deserves, his pay. It may indeed be true that certain classes of middlemen are enabled by the position they hold to extract either from their employers or from the public a profit which seems out of proportion to the services they render. But this is by no means generally the case with the middleman in his capacity of "sweater." Even where a middleman does make large profits, we are not justified in describing such gain as excessive or unfair, unless we are prepared to challenge the claim of "free competition" to determine the respective money values of industrial services. The "sweating" middleman does work which is at present necessary; he gets pay; if we think he gets too much, are we prepared with any rule to determine even approximately how much he ought to get?

§ 8. The Employer as "Sweater."--Since it appears that the middleman often sweats others of necessity because he is himself "sweated," in the low terms of the contract he makes, and since much of the worst "sweating" takes place where firms of employers deal directly with the "workers," it may seem that the blame is shifted on to the employer, and that the real responsibility rests with him. Now is this so? When we see an important firm representing a large capital and employing many hands, paying a wage barely sufficient for the maintenance of life, we are apt to accuse the employers of meanness and extortion: we say this firm could afford to pay higher wages, but they prefer to take higher profits; the necessity of the poor is their opportunity. Now this accusation ought to be fairly faced. It will then be found to fall with very different force according as it is addressed to one or other of two classes of employers. Firms which are shielded from the full force of the competition of capital by the possession of some patent or trade secret, some special advantage in natural resources, locality, or command of markets, are generally in a position which will enable them to reap a rate of profit, the excess of which beyond the ordinary rate of profit measures the value of the practical monopoly they possess. The owners of a coal-mine, or a gas-works, a special brand of soap or biscuits, or a ring of capitalists who have secured control of a market, are often able to pay wages above the market level without endangering their commercial position. Even in a trade like the Lancashire cotton trade, where there is free competition among the various firms, a rapid change in the produce market may often raise the profits of the trade, so that all or nearly all the employing firms could afford to pay higher wages without running any risk of failure. Now employers who are in a position like this are morally responsible for the hardship and degradation they inflict if they pay wages insufficient for decent maintenance. Their excuse that they are paying the market rate of wages, and that if their men do not choose to work for this rate there are plenty of others who will, is no exoneration of their conduct unless it be distinctly admitted that "moral considerations" have no place in commerce. Employers who in the enjoyment of this superior position pay bare subsistance wages, and defend themselves by the plea that they pay the "market rate," are "sweaters," and the blame of sweating will rightly attach to them.

But this is not to be regarded as the normal position of employers. Among firms unsheltered by a monopoly, and exposed to the full force of capitalist competition, the rate of profit is also at "the minimum of subsistence," that is to say, if higher wages were paid to the employés, the rate of profit would either become a negative quantity, or would be so low that capital could no longer be obtained for investment in such a trade. Generally it may be said that a joint-stock company and a private firm, trading as most firms do chiefly on borrowed capital, could not pay higher wages and stand its ground in the competition with other firms. If a benevolent employer engaged in a manufacture exposed to open competition undertook to raise the wages of his men twenty per cent, in order to lift them to a level of comfort which satisfied his benevolence, he must first sacrifice the whole of his "wage of superintendence," and he will then find that he can only pay the necessary interest on his borrowed capital out of his own pocket: in fact he would find he had essayed to do what in the long run was impossible. The individual employer under normal circumstances is no more to blame for the low wages, long hours, &c., than is the middleman. He could not greatly improve the industrial condition of his employés, however much he might wish.

§ 9. The Purchaser as "Sweater." A third view, a little longer-sighted than the others, casts the blame upon the purchasing public. Wages must be low, we are told, because the purchaser insists on low prices. It is the rage for "cheapness" which is the real cause, according to this line of thought. Formerly the customer was content to pay a fair price for an article to a tradesman with whom he dealt regularly, and whose interest it was to sell him a fair article. The tradesman could thus afford to pay the manufacturer a price which would enable him to pay decent wages, and in return for this price he insisted upon good work being put into the goods he bought. Thus there was no demand for bad work. Skilled work alone could find a market, and skilled work requires the payment of decent wages. The growth of modern competition has changed all this. Regular custom has given way to touting and advertising, the bond of interest between consumer and shopkeeper is broken, the latter seeks merely to sell the largest quantity of wares to any one who will buy, the former to pay the lowest price to any one who will sell him what he thinks he wants. Hence a deterioration in the quality of many goods. It is no longer the interest of many tradesmen to sell sound wares; the consumer can no longer rely upon the recommendation of the retailer as a skilled judge of the quality of a particular line of goods; he is thrown back upon his own discrimination, and as an amateur he is apt to be worsted in a bargain with a specialist. There is no reason to suppose that customers are meaner than they used to be. They always bought things as cheaply as they knew how to get them. The real point is that they are less able to detect false cheapness than they used to be. Not merely do they no longer rely upon a known and trusted retailer to protect them from the deceits of the manufacturer, but the facilities for deception are continually increasing. The greater complexity of trade, the larger variety of commodities, the increased specialization in production and distribution, the growth of "a science of adulteration" have immensely increased the advantage which the professional salesman possesses over the amateur customer. Hence the growth of goods meant not for use but for sale--jerry-built houses, adulterated food, sham cloth and leather, botched work of every sort, designed merely to pass muster in a hurried act of sale. To such a degree of refinement have the arts of deception been carried that the customer is liable to be tricked and duped at every turn. It is not that he foolishly prefers to buy a bad article at a low price, but that he cannot rely upon his judgment to discriminate good from bad quality; he therefore prefers to pay a low price because he has no guarantee that by paying more he will get a better article. It is this fact, and not a mania for cheapness, which explains the flooding of the market with bad qualities of wares. This effectual demand for bad workmanship on the part of the consuming public is no doubt directly responsible for many of the worst phases of "sweating." Slop clothes and cheap boots are turned out in large quantities by workers who have no claim to be called tailors or shoemakers. A few weeks' practice suffices to furnish the quantum of clumsy skill or deceit required for this work. That is to say, the whole field of unskilled labour is a recruiting-ground for the "sweater" or small employer in these and other clothing trades. If the public insisted on buying good articles, and paid the price requisite for their production, these "sweating" trades would be impossible. But before we saddle the consuming public with the blame, we must bear in mind the following extenuating circumstances.

§ 10. What the Purchaser can do.--The payment of a higher price is no guarantee that the workers who produce the goods are not "sweated." If I am competent to discriminate well-made goods from badly-made goods, I shall find it to my interest to abstain from purchasing the latter, and shall be likewise doing what I can to discourage "sweating." But by merely paying a higher price for goods of the same quality as those which I could buy at a lower price, I may be only putting a larger profit in the hands of the employers of this low-skilled labour, and am certainly doing nothing to decrease that demand for badly-made goods which appears to be the root of the evil. The purchaser who wishes to discourage sweating should look first to the quality of the goods he buys, rather than to the price. Skilled labour is seldom sweated to the same degree as unskilled labour, and a high class of workmanship will generally be a guarantee of decent wages. In so far as the purchaser lacks ability to accurately gauge quality, he has little security that by paying a higher price he is securing better wages for the workers. The so-called respectability of a well-known house is a poor guarantee that its employés are getting decent wages, and no guarantee at all that the workers in the various factories with which the firm deals are well paid. It is impossible for a private customer to know that by dealing with a given shop he is not directly or indirectly encouraging "sweating." It might, however, be feasible for the consuming public to appoint committees, whose special work it should be to ascertain that goods offered in shops were produced by firms who paid decent wages. If a "white list" of firms who paid good wages, and dealt only with manufacturers who paid good wages, were formed, purchasers who desired to discourage sweating would be able to feel a certain security, so far, at any rate, as the later stages of production are concerned, which ordinary knowledge of the world and business will not at present enable them to obtain. The force of an organized public opinion, even that of a respectable minority, brought to bear upon notorious "sweating" firms, would doubtless be of great avail, if carefully applied.

At the same time, it must not for a moment be imagined that the problem of poverty would be solved if we could insure, by the payment of higher prices for better qualities of goods, the extermination of the sweating trades. This low, degraded and degrading work enables large numbers of poor inefficient workers to eke out a bare subsistence. If it were taken away, the direct result would be an accession of poverty and misery. The demand for skilled labour would be greater, but the unskilled labourer cannot pass the barrier and compete for this; the overflow of helpless, hopeless, feeble, unskilled labour would be greater than ever. Whatever the ultimate effects of decreasing the demand for unskilled labour might be, the misery of the immediate effects could not be lightly set aside. This contradiction of the present certain effect and the probable future effects confronts the philanthropist at every turn. The condition of the London match-girls may serve as an illustration of this. Their miserable life has rightly roused the indignation of all kind-hearted people. The wretched earnings they take have provoked people to suggest that we should put an end to the trade by refusing to buy from them. But since the earnings of these girls depend entirely on the amount they sell, this direct result of your action, prompted by humane sentiment, will be to reduce still further these miserable earnings; that is to say, you increase the suffering of the very persons whose lot you desire to alleviate. You may say that you buy your matches all the same, but you buy them at a shop where you may or may not have reason to believe that the attendants are well paid. But that will not benefit the girls, whose business you have destroyed; they will not be employed in the shops, for they belong to a different grade of labour. This dilemma meets the social reformer at each step; the complexity of industrial relations appears to turn the chariot of progress into a Juggernaut's car, to crush a number of innocent victims with each advance it makes. One thing is evident, that if the consuming public were to regulate its acts of purchase with every possible regard to the condition of the workers, they could not ensure that every worker should have good regular work for decent wages.