Contemporary Socialism

by John Rae

The proximate demand for labour is, of course, capital, but the amount of capital which a community tends to possess—in other words, the amount of wealth it tends to detach for industrial investment—bears a constant relation to the amount of its general production. There is a disposition among economists to speak of the quantity of a nation's savings, as if it was something given and complete that springs up independently of industrial conditions, and as irrespectively of the purpose to which it is to be applied as the number of eggs a fowl lays or the amount of fruit a tree bears. But, in reality, it is not so. The amount of a nation's savings is no affair of chance; it is governed much more by commercial reasons than is sometimes supposed. It is no sufficient account of the matter to say that men save because they have a disposition to save, because there is a strong cumulative propensity in the national character. They save because they think to get a profit by saving, and the point at which the nation stops saving is the point at which this expectation ceases to be gratified, the point at which enough has been accumulated to occupy the entire field of profitable investment which the community offers at the time. Some part of a nation's savings will always have originated in a desire to provide security for the future, but, as this part is less subject to fluctuation, it exercises less influence in determining the extent of the whole than the more variable part, which is only saved when there is sufficient hope of gain from investing it. There may be said to be a natural amount of capital in a country, in at least as true a sense as there is a natural price of labour, or a natural price of commodities. Capital has its bounds in the general industrial conditions and stature of the community, but it moves and answers these conditions with much more elasticity than the wage-fund theory used to acknowledge. It is, as Hermann said, a mere medium of conveyance between consumer and consumer, and has its size decreed for it by the quantities it has to convey. The general demand for commodities is a demand for capital. It creates the expectation of profit which capital is diverted from expenditure to gratify, and since it is itself in another aspect the general supply of commodities, it furnishes the possibilities for meeting the demand for capital which it creates. This whole argument may seem to be reasoning in a circle or wheeling round a pivot, and so in a sense it may be, for the wheel of industry is circular. The rate of wages depends on the demand for labour; the demand for labour depends on the amount of capital; the amount of capital depends on the aggregate production of and demand for commodities; and the amount of aggregate production depends on the average productivity of labour. It is but a more circuitous way of saying the same thing as the older economists said, when they declared the rate of wages to depend on the supply of capital, as compared with population; but it shows that the supply of capital is a more elastic element than they conceived, that it adjusts and re-adjusts itself more easily and sensitively to industrial conditions, including perhaps even those of population, and that it is governed in a very real way by the great primary factor that determines the whole size and scale of the industrial system in all its parts, the general productivity of labour. Taking one country with another, the rate of wages will be found to observe a certain proportion to the amount of production per capita in the community.

This view will be confirmed by a comparison of the actual rate of wages prevalent in different countries. Lord Brassey has published an important body of positive evidence tending to show that the cost of labour is the same all over the world, that for the same wages you get everywhere the same work, and that the higher price of labour in some countries than in others is simply due to its higher efficiency. Mr. Cairnes, who did not accept this conclusion unconditionally, had, however, himself previously estimated that a day's labour in America produced as much as a day and a third's in Great Britain, to a day and a half's in Belgium, a day and three-fourths' or two days' in France and Germany, and to five days' labour in India. Now, when due regard is had for the influence of special historical circumstances, it will be found that the rate of wages observes very similar proportions in these several countries. In America it is higher than the relative productivity of the country would explain, because a new country with boundless natural resources creates a permanently exceptional demand for labour; because the facilities with which land can be acquired and wrought, even by men without previous agricultural training, affords a ready correction to temporary redundancies of labour; and because the labour itself is more mobile, versatile, and energetic in a nation largely composed of immigrants. Other modifying influences also interfere to preclude the possibility of a precise correspondence between national rates of wages and national amounts of production per capita, for different countries vary much in the extent of the fixed capital they employ to economize personal labour. But enough has been said to show that, if a natural rate of wages is to be sought at all, it must be looked for, not in the cost of the production of subsistence, but in the rate of the production of commodities; and while the standard of living and the price of labour tend to some extent to keep one another up, the higher standard of living prevalent among labourers in some countries is a consequence much more than a condition of the higher rate of wages, which the higher productivity of labour in those countries occasions.

There is therefore no ground for Lassalle's representation that the law of necessary wages condemns ninety-six persons in every hundred to an existence of hopeless misery to enable the other four to ride in luxury. The principles that govern the rate of wages are much more flexible than he supposed, and the experience of trade unions has sufficiently demonstrated that it is within the power of the wage-labourers themselves to effect by combination a material increase in the price of their labour. Trade unions have taken away the shadow of despondency that lay over the hired labourer's lot. Their margin of effective operation is strictly limited; still such a margin exists, and they have turned it to account. They have put the labourer in a position to hold out for his price; they have converted the question of wages from the question, how little the labourer can afford to take, into the question, how much the employer can afford to give. They have been able, in trades not subject to foreign competition, to effect a permanent rise in wages at the expense of prices, and they can probably, in all trades, succeed in keeping the rate of wages well up to its superior limit, viz., to the point at which, while the skilful employers might still afford to give more, the unskilful could not do so without ceasing to conduct a profitable business and being driven out of the field altogether. For unskilful management tells as ill on wages as inefficient labour. On the other hand, high wages, like many other difficult conditions, undoubtedly tend to develop skilful management. The employer is put on his mettle, and all his administrative resource is called into action and keen play. They who, like socialists, inveigh against this modern despot, ought to reflect how much less possible it would have been for wages to have risen, if industry had been in the hands of hired managers who were not put to their mettle, because they had no personal stake in the result. It must not be forgotten, however, that while trade unions are able to keep the rate of wages up to its superior limit, they have no power to raise that limit itself. This can only be done by an increase in the general productivity of labour, and, in fact, the action of trade unions could not have been so effective as it has been, unless the high production of the country afforded them the conditions for success. And since, in consequence of their action and vigilance, the rate of wages in the trades they represent may be now taken as usually standing close to its superior limit, the chief hope of any further substantial improvement in the future must now be placed in the possibility of raising that limit by an increased productivity.

Of this the prospect is really considerable and promising. Of course labourers will never benefit to the full from improvements in the productive arts, until by some arrangement, or by many arrangements, they are made sharers in industrial capital; but they will benefit from these improvements, though in less measure, even as pure wage-labourers. Their unions will be on the watch to prevent the whole advantage of the improvement from going towards a reduction of the price of the commodity they produce, and such reduction in the price of the commodity as actually takes place will enable its consumers to spend so much the more of their means on commodities made by other labourers, and to that extent to increase the demand for the labour of the latter. But the field from which I expect the most direct and extensive harvest to the working class is the development of their own personal efficiency. At present neither employers nor labourers seem fully alive to the resources which this field is capable of yielding, if it were wisely and fairly cultivated. Both classes are often so bent on immediate advantage that they lose sight of their real and enduring interest. It is doubtful whether employers are more slow to see how much inadequate remuneration and uncomfortable circumstances impair efficiency and retard production, or labourers to perceive how much limiting the general rate of production tends to reduce the general rate of wages. In labour requiring mainly physical strength, contractors sufficiently appreciate the fact that their navvies must be well fed if they are to stand to their work, and that an extra shilling a day makes a material difference in the output. But in all forms of skilled labour, likewise, analogous conditions prevail. Just as slave-labour is inefficient because it is reluctantly given, and is wanting in the versatility and resourcefulness that comes from general intelligence, so is free labour less efficient or more efficient in exact proportion to its fertility of resource and to the hopefulness and cheerfulness with which it is exerted; and both conditions are developed in the working class in precise ratio with their general comfort. The intelligent workman takes less time to learn his trade, needs less superintendence at his work, and is less wasteful of materials; and the cheerful workman, besides these merits, expends more energy with less exhaustion. But men can have no hope in their work while they live purely from hand to mouth, and you cannot spread habits of intelligence among the labouring class, if their means are too poor or their leisure too short to enable them to participate in the culture that is going on around them.

But if employers are apt to take too narrow a view of the worth of good wages as a positive source of high production, labourers are apt to take equally narrow views of the worth of high production as a source of good wages. The policy of limiting production is expressly countenanced by a few of their trade unions, with the concurrence, I fear, of a considerable body of working-class opinion. This is shown in their idea of "making work," in their prohibition of "chasing"—i.e., of a workman exceeding a given average standard of production—and in their prejudice against piecework. Their notion of making work is irrational. They think they can make work by simply not doing it, by spinning it out, by going half speed, under the impression that they are in this way leaving the more over to constitute a demand for their labour to-morrow. And so, in the immediate case in hand and for the particular time, it may sometimes be. But if this practice were to be turned into a law universal among working men, if all labourers were to act upon it everywhere, then the general production of the country would be immediately reduced, and the general demand for labour, and the rate of wages, would inevitably fall in a corresponding degree. Instead of making work, they would have unmade half the work there used to be, and have brought their whole class to comparative poverty by contracting the ultimate sources from which wages come. The true way to make work for to-morrow is to do as much as one can to-day. For the produce of one man's labour is the demand for the produce of another man's. There is nothing more difficult for any class than to reach an enlightened perception of its own general interest.

The objection usually made to "chasing" and piecework is that they always end in enabling employers to extract more work out of the men without giving them any more pay, and that they conduce to overstraining. Now piecework, without a fixed list of prices, is of course liable to the abuse which, it is alleged, masters have made of it. But with a fixed list of prices the labourers ought, with the aid of their unions, to be as able to hold their own against the encroachments of the masters under piecework as under day work, and piecework is so decidedly advantageous, both to masters and to men, that it would be foolish for the former to refuse the reasonable concession of a fixed list of prices; and it would be equally foolish for the latter to oppose the system under the delusive fear of a danger which it is amply in their own power to meet. There is a good deal of force in the view of Mr. William Denny, that piecework will prove the best and most natural transition from the present system to a régime of co-operative production, because it furnishes many kinds of actual opportunities for practising co-operation; but whatever may be the promise of piecework for the age that is to come, there is no question about its promise for the life that now is. Mr. Denny, speaking from experience in his own extensive shipbuilding works at Dumbarton, says that "a workman under piecework generally increases his output in the long run—partly by working hard, but principally by exercising more intelligence and arranging his work better—by about 75 per cent., while the total amount of his wages increases by about 50 per cent., making a distinct saving in the wages portion of the cost of a given article of about 14 per cent." ("The Worth of Wages," p. 19.)[5] Similar testimony is given by Goltz, Boehmert, and a writer in Engels' Zeitschrift for 1868, as to the effect of the introduction of piecework into continental industries, and Roscher ascribes much of the industrial superiority of England to the prevalence of piecework here. According to Mr. Howell, more than seventy per cent. of the work of this country is done at present by the piece, and the Trades' Union Commission found it the accepted rule in the majority of the industries that came under their investigation; in fact, in all except engineering, ironfounding, and some of the building trades. The engineers entertain a strong objection to it, and their union has sometimes expelled members who have persisted in taking it. But the system works smoothly enough when an established price-list has become a recognised practice of the trade. The objection that the piece system leads to careless, scamped and inferior work, call hardly be considered a genuine working-class objection. That is the look-out of the masters, and they find it easier to check quality than to check quantity. Another reason sometimes given against piecework is that under it some men get more than their share in the common stock of work, but there lurks in this reason the same fallacy which lies in the notion of "making work," the fallacy of seeking to raise the level of wages by limiting production, and so diminishing the common stock of work of society. Labourers seem sometimes to harbour an impression as if they were losing something when their neighbours were making more than themselves. Work appears to them—no doubt in consequence of the fluctuations and intermittent activity of modern trade—to come in bursts and windfalls, nobody knows whence or how, and they are sometimes uneasy to see the harvest being apparently disproportionately appropriated by more active and efficient hands. But in the end, and as a steady general rule, they are gainers and not losers by the efficiency of the more expert workmen, because productivity, so far from drying up the sources of work, is the very thing that sets them loose.

A more important objection is the danger of overstraining, against which of course the working class are wise to exercise a most jealous vigilance. But, in the first place, it is easy to exaggerate this danger. It is not really from any deepened drain on the physical powers of the workmen, so much as from a quickening of his mental life in his work, that increase in his productivity is to be expected. Mr. Denny, it will be observed, attributes the additional output under piecework not nearly so much to harder labour as to the exercise of more intelligence and to a better arrangement of the work. But, in the next place, to my mind the great advantage of piecework is that it affords a sound economic reason for shortening the day of labour. The work being intenser, demands a shorter day, and being more productive, justifies it. If the figures I have quoted from Mr. Denny are at all representative, then a labourer, working by the piece, can turn out 40 per cent. more in eight hours than working by the day he can do in ten. Differences may be expected to obtain in this respect in different trades and kinds of work, so that there possibly cannot be any normal day of labour for all trades alike, and each must adjust the term of its labour to its own circumstances. But wherever piecework can increase the rate of production to the extent mentioned by Mr. Denny, the day of labour may be shortened with advantage, and it can apparently do so in the very trades that most strongly object to it. A fact mentioned by Mr. Nasmyth, in his remarkable evidence before the Trades Union Commission, opens a striking view of the possibilities of increasing production through developing the personal efficiency of the labouring class, and of doing so without requiring any severe strain. "When I have been watching men in my own work," he says, "I have noticed that at least two-thirds of their time, even in the case of the most careful workmen, is spent, not in work, but in criticising with the square or straight-edge what they have been working, so as to say whether it is right or wrong." And he adds—"I have observed that wherever you meet with a dexterous workman, you will find that he is a man that need not apply in one case in ten to his straight-edge or square." And why are not all dexterous, or, at least, why are they not much more dexterous than they now are? Mr. Nasmyth's answer is, because the faculty of comparison by the eye is undeveloped in them, and he contends that this faculty is capable of being educated in every one to a very much higher degree than exists at present, and that its development ought to be made a primary object of direct training at school. "If you get a boy," he says, "to be able to lay a pea in the middle of two other peas, and in a straight line with these two, that boy is a vast way on in the arts." He has gone through a most valuable industrial apprenticeship before he has entered a workshop at all. If, through training the eye, workmen can save two-thirds of their time, it is manifest that there is abundant scope for increasing productivity and shortening the day of labour at the same time. Industrial efficiency is much more a thing of mind than of muscle. Jeder Arbeiter ist auch Kopfarbeiter. All work is also head work. Skill is but a primary labour-saving apparatus engrafted by mind on eye and limb, and it is in developing the mental faculties of the labourers by well-directed training, both general and technical, that the chief conditions for their further improvement lie. Their progress in intelligence may therefore be expected to increase their productivity so as to justify a shortening of their day of labour, and the leisure so acquired may be expected to be used so as to increase their intelligence. Any advance men really make in the scale of moral and mental being tends in this way to create the conditions necessary for its maintenance.

We sometimes hear the same pessimist prophecy about shorter hours as we have heard for centuries about better wages, that they will only seduce the working class to increased dissipation. But experience is against this view. Of course more leisure and more pay are merely means which the labourer may according to his habits use for his destruction as easily as for his salvation. But the increase in the number of apprehensions for drunkenness that frequently accompanies a rise in wages proves neither one thing nor another as to the general effect of the rise on the whole class of labourers who have obtained it; it proves only that the more dissipated among them are able to get oftener drunk. Nor can the singular manifestations which the full hand sometimes takes with the less instructed sections of the working class, especially when it has been suddenly acquired, furnish any valid inference as to the way it would be used by the working class in general, particularly if it were their permanent possession. The evidence laid before the House of Lords Committee on Intemperance shows that the skilled labourers of this country are becoming less drunken as their wages and general position are improving; and Porter, in his "Progress of the Nation," adduces some striking cases of a steady rise of wages making a manifest change for the better in the habits of unskilled labourers. He mentions, on the authority of a gentleman who had the chief direction of the work, that "the formation of a canal in the North of Ireland for some time afforded steady employment to a portion of the peasantry, who before that time were suffering all the evils so common in that country which result from precariousness of employment. Such work as they could previously get came at uncertain intervals, and was sought by so many competitors that the remuneration was of the scantiest amount. In this condition the men were improvident to recklessness. Their wages, insufficient for the comfortable maintenance of their families, were wasted in procuring for themselves a temporary forgetfulness of their misery at the whisky shop, and the men appeared to be sunk into a state of hopeless degradation. From the moment, however, that work was offered to them which was constant in its nature and certain in its duration, and on which their weekly earnings would be sufficient to provide for their comfortable support, men who had been idle and dissolute were converted into sober, hardworking labourers, and proved themselves kind and careful husbands and fathers; and it is stated as a fact that, notwithstanding the distribution of several hundred pounds weekly in wages, the whole of which, would be considered as so much additional money placed in their hands, the consumption of whisky was absolutely and permanently diminished in the district. During the comparatively short period in which the construction of this canal was in progress, some of the most careful labourers—men who most probably before then never knew what it was to possess five shillings at any one time—saved sufficient money to enable them to emigrate to Canada, where they are now labouring in independence for the improvement of their own land" (p. 451). It may be difficult to extirpate drunkenness in our climate even with good wages, but it is certainly impossible with bad, for bad wages mean insufficient nourishment, comfortless house accommodation, and a want of that elasticity after work which enables men to find pleasure in any other form of enjoyment. As with better wages, so with shorter hours. The leisure gained may be misused, especially at first; but it is nevertheless a necessary lever for the social amelioration of the labouring class, and it will more and more serve this purpose as it becomes one of their permanent acquisitions. There can be no question that long hours and hard work are powerful predisposing causes to drunkenness. Studnitz mentions that several manufacturers in America had informed him that they had invariably remarked, that with solitary exceptions here and there, the men who wrought for the longest number of hours were most prone to dissipation, and that the others were more intelligent, and formed on the whole a better class. Part of the prejudice entertained by working men against piecework comes from the fact that it is very often accompanied with overtime, and when that is the case, it generally exerts an unfavourable effect on the habits of the workman. Mr. Applegarth said, in his evidence before the Trades Union Commission, that nothing degraded the labourer like piecework and overtime. Mr. George Potter stated, in his evidence before the Select Committee on Masters and Operatives in 1860, that it was a common saying among working people with regard to a man who works hard by piecework and overtime, that such a man is generally a drunkard. He ascribed much of the intemperance of the labouring class to the practice of working "spells"—i.e., heats of work at high pressure on the piece and overtime system—instead of steadily; and he says—"When I was at work at the bench, I worked to a firm where there was much overtime and piecework, and I found that the men at piecework were men who generally spent five or six times more money in intoxicating drink, for the purpose of keeping up their physical strength, than the men at day work. I find, on close observation, that the men working at piecework are generally a worse class of men in every way, both in intelligence and education, and in pecuniary matters." Now, the ill effects which issue from piecework combined with overtime could not accrue from piecework combined with shorter hours. Besides, in a case of this kind it is sometimes difficult to say which is cause and which effect, or how much the one acts and reacts on the other. For both Mr. Potter and the manufacturers mentioned by Studnitz represent the men who wrought longest as being not only more drunken, but less intelligent and educated, and, in fact, as being every way inferior; and we can easily understand how men of unsteady habits should prefer to work "spells," and try to make up by excessive work three days in the week, for excessive drinking the other three.

Dissipation and overtime generally go together, but neither of them is a necessary accompaniment of piecework. The best check to both is probably the spread of general education among the working class, for the better educated workmen are even at present usually found against them; and the spread of general education—I do not speak here of technical—among the working class is more fruitful than even piecework itself in opening up fresh reserves of industrial efficiency in our labouring manhood. Roscher has pointed out how a stimulant like piecework produces in a fairly well-educated district twice the result it produces in a comparatively illiterate one. Taking the figures of Goltz on rural labour in different German States, he shows that while the earnings of pieceworkers were only 11 per cent. higher than the earnings of day-workers in Osnabruck, they were as much as 23 per cent. higher in Hesse. Mr. Peshine Smith mentions that the Board of Education in Massachusetts procured from overseers of factories in that State a return of the different amounts of wages paid and the degree of education of those who received them. Most of the work was done by the piece, and it was found that the wages earned rose in exact ratio with the degree of education, from the foreigners at the bottom who made their mark as the signature of their weekly receipts to the girls at the top who did school in winter and worked in factories in summer. In some branches of industry many new improvements remain unused because the workpeople are too ignorant to work them properly. Moreover, for the supreme quality of resourcefulness, education is like hands and feet, and if we may judge from the number of useful labour-saving inventions which working men give us even now, we cannot set limits to the number they will give when the whole labouring class will have got the use of their mind by an adequate measure of general education, and when, as we may hope, they will have got leisure to use it in through a shortening of the day of labour. The possibilities of this last source are very well illustrated by an experiment of Messrs. Denny. In 1880 they established in their ship-building yard at Dumbarton an award scheme for recompensing inventions made by their workmen for improving existing machinery or applying it to a new class of work, or introducing new machinery in place of hand labour, or discovering any new method of arranging or securing work that either improved its quality or economized its cost. Mr. William Denny stated, after the scheme had been nearly seven years in operation, that in that time as many as 196 awards had been given for inventions which were thought useful to adopt, that three times that number had been submitted for consideration, and that besides being beneficial in causing so many useful improvements to be made, the scheme had the effect of making the workmen of all departments into active thinking and planning beings instead of mere flesh and blood machines.

I cannot, therefore, take so dark a view as is sometimes entertained of the futurity of the wage-labourer, even if he were compelled to remain purely and permanently such. His position has substantially improved in the past, and contains considerable capabilities for continued improvement in the future. Of course the action of trade unions, besides being confined to the limits I have described, is subject to the further restriction, that it can only avail for the labourers who belong to them, and is indeed founded on the exclusion or diminution of the competition of others. They impose limitations on the number of apprentices, and prescribe a certain standard of efficiency, loosely ascertained, as a condition of membership. There can be no manner of objection to the latter measure, nor does the former, though it is manifestly liable to abuse and is sometimes vexatious in its operation, seem to be practically worked so as to diminish the labour in any particular industry beneath the due requirements of trade, or to create an unhealthy monopoly. Then, though the trade unionists gather their gains by keeping off the competition of others, it cannot be said that these others are necessarily in any worse position than they would have occupied if trade unions had never come into existence. It may even be that through the operation of custom, which will always have an influence in settling the price of labour, a certain benefit may be reflected upon them from a rise in the usual price effected by trade union agency. But in any case, it is no sound objection to an agency of social amelioration that its efficiency is only partial, for it is not so much to any single panacea, as to the application of a multitude of partial remedies, that we can most wisely trust for the accomplishment of our great aim.