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

by J. A. Hobson

It is true that some of the leading exponents of Trade Unionism deny that the chief object of the Unions is to limit competition. Mr. Howell considers that the "standard wage" qualification for membership is designed in order to ensure a high standard of workmanship, and regards the "out of work" fund merely as belonging to the insurance or prudential side of Trade Unionism. But though it may readily be admitted that one effect of these measures may be to maintain good workmanship and to relieve distress, it is reasonable to regard the most important result actually attained as being the object chiefly sought. It is fair to suppose, therefore, that while Unionists may not be indifferent to the honour of their craft, their principal object is to strengthen their economic position. At any rate, whatever the intention of Trade Unions may be, the principal effect of their regulations is to limit the effective supply of competing labour in their respective branches of industry.

§ 5. Can Low-skilled Workers successfully combine?--Now the question which concerns our inquiry may be stated thus. Supposing that the workers in "sweating" industries were able to combine, would they be able to secure themselves against outside competition as the skilled worker does? Will their combination practically increase the difficulty in replacing them by outsiders? Now it will be evident that the unskilled or low-skilled workers cannot depend upon the methods which are adopted by Unions of skilled workers, to limit the number of competitors for work. A test of physical fitness, such as was recently proposed as a qualification for admission to the Dock-labourers Union, will not, unless raised far above the average fitness of present members, limit the number of applicants to anything like the same extent as the test of workmanship in skilled industries. Neither could rules of apprenticeship act where the special skill required was very small. Nor again is it easy to see how funds raised by the contribution of the poorest classes of workers, could suffice to support unemployed members when temporarily "out of work," or to buy off the active competition of outsiders, or "black-legs," to use the term in vogue. The constant influx of unskilled labour from the rural districts and from abroad, swollen by the numbers of skilled workmen whose skill has been robbed of its value by machinery, keeps a large continual margin of unemployed, able and willing to undertake any kind of unskilled or low-skilled labour, which will provide a minimum subsistence wage. The very success which attends the efforts of skilled workers to limit the effective supply of their labour by making it more difficult for unskilled workers to enter their ranks, increases the competition for low-skilled work, and makes effective combination among low-skilled workers more difficult. Though we may not be inclined to agree with Prof. Jevons, that "it is quite impossible for Trade Unions in general to effect any permanent increase of wages," there is much force in his conclusion, that "every rise of wages which one body secures by mere exclusive combination, represents a certain extent, sometimes a large extent, of injury to the other bodies of workmen."[[31]] In so far as Unions of skilled workers limit their numbers, they increase the number of competitors for unskilled work; and since wages cannot rise when the supply of labour obtainable at the present rate exceeds the demand, their action helps to maintain that "bare subsistence wage," which forms a leading feature in "sweating."

Are we then to regard Unions of low-skilled workers as quite impotent so long as they are beset by the competition of innumerable outsiders? Can combination contribute nothing to a solution of the sweating problem? There are two ways in which close combination might seem to avail low-skilled workers in their endeavours to secure better industrial conditions.

In the first place, close united action of a large body of men engaged in any employment gives them, as we saw, a certain power dependent on the inconvenience and expense they can cause to their employers by a sudden withdrawal. This power is, of course, in part measured by the number of unemployed easily procurable to take their place. But granted the largest possible margin of unemployed, there will always be a certain difficulty and loss in replacing a united body of employés by a body of outsiders, though the working capacity of each new-comer may be equal to that of each member of the former gang. This power belonging inherently to those in possession, and largely dependent for its practical utility on close unity of action, may always be worked by a trade organization to push the interests of its members independently of the supply of free outside labour, and used by slow degrees may be made a means of gaining piece by piece a considerable industrial gain. Care must, however, be taken, never to press for a larger gain than is covered by the difficulty of replacing the body of present employés by outside labour. Miscalculations of the amount of this inherent power of Union are the chief causes of "lock-outs" and failures in strikes.

Another weapon in the hands of unskilled combination, less calculable in its effectiveness, is the force of public opinion aided by "picketing," and the other machinery of persuasion or coercion used to prevent the effective competition of "free" labour. In certain crises, as for example in the Dock strike of 1889, these forces may operate so powerfully as to strictly limit the supply of labour, and to shut out the competition of unemployed. There can be no reason to doubt that if public authority had not winked at illegal coercion of outside labour, and public opinion touched by sentiment condoned the winking, the Dock strike would have failed as other movements of low-skilled labour have generally failed. The success of the Dockers is no measure of the power of combination among low-skilled labourers. It is possible, however, that a growing sense of comradeship, aided by a general recognition of the justice of a claim, may be generally relied upon to furnish a certain force which shall restrict the competition of free labour in critical junctures of the labour movement. If public opinion, especially among workmen, becomes strongly set in favour of letting capital and labour "fight it out" in cases of trade disputes, and vigorously resents all interference of outsiders offering to replace the contending labourers, it seems likely that this practical elimination of outside competition may enable combinations of unskilled workmen to materially improve their condition in spite of the existence of a large supply of outside labour able to replace them.

§ 6. Can Trade Unionism crush out "Sweating"?--But here again it must be recognized that each movement of public opinion in this direction is really making for the establishment of new trade monopolies, which tend to aggravate the condition of free unemployed labour. Unions of low-skilled labour can only be successful at the expanse of outsiders, who will find it increasingly difficult to get employment. The success of combinations of low-skilled workers will close one by one every avenue of regular employment to the unemployed, who will tend to become even more nomadic and predatory in their habits, and more irregular and miserable in their lives, affording continually a larger field of operation for the small "sweater," and other forms of "arrested development" in commerce. It must always be an absorbing interest to a Trades Union to maintain the industrial welfare of its members by preventing what it must regard as an "over-supply" of labour. No organization of labour can effect very much unless it takes measures to restrict the competition of "free labour"; each Union, by limiting the number of competitors for its work, increases the competition in trades not similarly protected. So with every growth of Trade Unionism the pressure on unprotected bodies of workmen grows greater. Thus it would seem that while organization of labour may become a real remedy for "sweating" in any industry to which it is vigorously applied, it cannot be relied upon ever entirely to crash out the evil. It can only drive it into a smaller compass, where its intenser character may secure for it that close and vigorous public attention which, in spite of recent revelations, has not been yet secured, and compel society to clearly face the problem of a residue of labour-power which is rotting in the miserable and degraded bodies of its owners, because all the material on which it might be productively employed is otherwise engaged.

§ 7. Public Workshops.--Those who are most active in the spread of Unionism among the low-skilled branches of industry, are quite aware that their action, by fencing off section after section of labour from the fierce competition of outsiders, is rendering the struggle more intense for the unprotected residuum. So far as they indulge any wider view than the interest of their special trades, it may be taken that they design to force the public to provide in some way for the unemployed or casually employed workers, against whom the gates of each Union have been successively closed. There can be little doubt that if Unionism is able to establish itself firmly among the low-skilled industries, we shall find this margin of unemployed low-skilled labour growing larger and more desperate, in proportion to the growing difficulty of finding occupation. Trade Union leaders have boldly avowed that they will thus compel the State to recognize the "right to employment," and to provide that employment by means of national or municipal workshops. With questions of abstract "right" we are not here concerned, but it may be well to indicate certain economic difficulties involved in the establishment of public works as a solution of the "unemployed" problem. Since the "unemployed" will, under the closer restrictions of growing Trade Unionism, consist more and more of low-skilled labourers, the public works on which they must be employed must be branches of low-skilled labour. But the Unions of low-skilled workers will have been organized with the view of monopolizing all the low-skilled work which the present needs of the community require to be done. How then will the public provide low-skilled work for the unemployed? One of two courses seems inevitable. Either the public must employ them in work similar to that which is being done by Union men for private firms, in which case they will enter into competition with the latter, and either undersell them in the market and take their trade, or by increasing the aggregate supply of the produce, bring down the price, and with it the wage of the Union men. Or else if they are not to compete with the labour of Union men, they must be employed in relief works, undertaken not to satisfy a public need or to produce a commodity with a market value, but in order that those employed may, by a wholly or partially idle expenditure of effort, appear to be contributing to their own support, whereas they are really just as much recipients of public charity as if they were kept in actual idleness. This is the dilemma which has to be faced by advocates of public workshops. Nor can it be eluded by supposing that the public may use the unemployed labour either in producing some new utility for the public use, such as improved street-paving, or a municipal hot-water supply. For if such undertakings are of a character which a private company would regard as commercially sound, they ought to be, and will be, undertaken by wise public bodies independently of the consideration of providing work for unemployed. If they are not such as would be considered commercially sound, then in so far as they fall short of commercial soundness, they will be "charity" pure and simple, given as relief is now given to able-bodied paupers, on condition of an expenditure of mere effort which is not a commercial quid pro quo.

If the State or municipality were permitted to conduct business on ordinary commercial principles, it might indeed be expected to seize the opportunity afforded by a large supply of unemployed labour, to undertake new public works at a lower cost than usual. But to take this advantage of the cheapness of labour is held to be "sweating." Public bodies are called upon to disregard the rise and fall of market wages, and to pay "a fair wage," which practically means a wage which is the same whether labour is plentiful or scarce. This refusal to permit the ordinary commercial inducement to operate in the case of public bodies, cuts off what might be regarded as a natural check to the accumulation of unemployed labour. If public bodies are to employ more labour, when labour is excessive, and pay a wage which shall be above the market price, it must be clearly understood that the portion of the wages which represents the "uncommercial" aspect of the contract is just as much public charity as the half-crown paid as out-door relief under the present Poor Law. Lastly, the establishment of State or municipal workshops for the "unemployed" has no economic connection with the "socialist" policy, by which the State or municipality should assume control and management of railways, mines, gas-works, tramways, and other works into which the element of monopoly enters. Such a "socialist" policy, if carried out, would not directly afford any relief to the unemployed. For, in the first place, the labour employed in these new public departments would be chiefly skilled, and not unskilled. Moreover, so far as the condition of the "workers" was concerned, the nationalization, or municipalization of these works would not imply any increased demand for labour, but merely the transfer of a number of employés from private to the public service. The public control of departments of industry, which are now in private hands, would not, so long as it was conducted on a commercial footing in the public interest, furnish either direct, or indirect, relief to "the unemployed." A reduction of hours of labour in the case of workers transferred to the public service, might afford employment to an increased number of skilled labourers, and might indirectly operate in reducing the number of unemployed. But such reduction of hours of labour, like the payment of wages above the market rate, forms no essential part of a "socialist" policy, but is rather a charitable appendage.

§ 8. State Business on uncommercial terms.--It cannot be too clearly recognized that the payment by a public body of wages which are above the market price, the payment of pensions, the reduction of hours of labour, and any other advantages freely conferred, which place public servants in a better position than private servants, stand on precisely the same economic footing with the establishment of public workshops for the relief of the unemployed, in which wages are paid for work which is deficient in commercial value. In each case the work done has some value, unless the unemployed are used to dig holes in the ground and fill them up again; in each case the wages paid for that work are in excess of the market rate.

If it were established as a general rule, that public bodies should always add a "bonus" to the market wage of their employés to bring it up to "fairness," and take off a portion of the usual "working-day" to bring it down to "fairness," it would follow quite consistently that a wage equal to, or exceeding, the minimum market rate might be paid to "unemployed" for work, the value of which would be somewhat less than that produced by the lowest class of "employed" workers. The policy throughout is one and the same, and is based upon a repudiation of competition as a test of the value of labour, and the substitution of some other standard derived from moral or prudential considerations.