Labour policy—false and true

by Lynden Livingston Macassey

Even by means of increased production, and a reduced standard of living, a debtor country may be unable to meet its war indebtedness in full. Should it be forced to do so, it must borrow the balance of the money annually due, which can seldom be achieved by external or internal loans, but usually by increase of paper currency which soon brings its own retribution—national bankruptcy. The total amount of Inter-Allied Debts, as between the United States of America, Great Britain, France, Italy, Russia and Belgium, is 4,000 millions sterling, to which, if the Reparation payments of 6,600 millions sterling are added, makes a total of 10,600 millions sterling which does not include the war-debt owing by each country to its own nationals nor by the Dominions to Great Britain. Mr. Goodenough’s suggestions were eminently practical, that the amount to be paid by each debtor nation should be fixed as soon as possible, so as to clear away the present disturbing atmosphere of uncertainty, that bonds for as long a period as practicable should be created by each debtor country representing the total amount of its national war-debt, and that these should be gradually offered to the public for investment supported by the national guarantees of the debtor country. Bonds handed by one debtor nation to a creditor nation in respect of a debt could be endorsed by the latter nation to another country in respect of a debt owing by the endorsor to the endorsee, and so find a ready market among investors all over the world. Each country creating a bond would be compelled to provide a fund out of its own taxation for the redemption of its own bonds. The scheme of Mr. Goodenough urgently needs consideration, as the whole question of Inter-Ally indebtedness calls for a decision.

Export Credits

Acting with prudence, and exercising co-operation with business men, the Government can, as experience has shown, beneficially use its credit to assist sound trading between this and foreign countries and to enable works to be carried out which provide employment; and so long as the Government employs the normal machinery of finance and commerce, much can be done in this way to further the restoration of trade and industry. The Export Credits Scheme administered by the Department of Overseas Trade is conferring substantial benefits on industry in stimulating orders from abroad, and developing markets to replace those permanently lost or temporarily closed to us in countries which are, at the time being, potential producers of commodities exchangeable for the commodities we produce. The guarantee of loans so ably administered by the Advisory Committee under the Trade Facilities Act, 1921, is materially encouraging sound commercial business.

Bringing down Costs of Production

But after all is said and done, we are living in a fool’s paradise if we think that, even when financial equilibrium and stability have been attained, we shall be able to compete in foreign markets at our present real costs of output. Wages constitute the greatest proportion of costs of production in every industry, and wages will have to be reduced—the standard of living of 1920-1 cannot be maintained. A lower standard of profits must likewise be accepted by employers. There must be equality of sacrifice all round. Labour argues that reduction of wages in industry means diminished national purchasing power, and consequently increased trade depression. That is only true when there is an effective demand at existing prices for the output of industry. The object now is to reduce costs so as to get down to a price at which demand may be effective. The foolish expectations nurtured by the working-classes of getting out of the war a higher standard of living than they enjoyed before the war was largely due to the utterly impossible—and sometimes grotesque—pictures painted by members of the Government of “the good times coming.” These reductions in cost by reductions of wages and profits can be immediate; any reductions in cost of production through improvement of management, organization and plant or increasing the efficiency of labour’s output, while necessary for the permanent well-being of industry, are too slow acting for the present emergency.

CHAPTER XXIII
THE RIGHT RELATIONSHIP OF GOVERNMENT TO INDUSTRY

2. The Normal Position of Government in Relation to Industry—Regulation of Factory Conditions—Conciliation and not Intervention—Protection of the Community—Wages in Unorganized Industries—Industrial Research—Need of a Real Ministry of Labour—Regulation of Combinations and Monopolies.

2. THE NORMAL POSITION OF GOVERNMENT IN RELATION TO INDUSTRY

We must now consider the relationship of Government to industry in normal times. Whether or not any particular industries should be nationalized and thereafter conducted as State industries or under some other system than the present, are constitutional questions to be decided by the Government in power in accordance with what they believe to be the will of the people. That the author of this book is strongly opposed to nationalization as a general principle of industrial organization is sufficiently apparent from what has already been written and for the reasons given. Assuming, however, that there is no nationalization of an industry, but that it continues on a reformed basis of private ownership, it is important to discuss under what circumstances the Government ought to intervene in regard to any question affecting the administration and control of that industry, or, indeed, of all industries in general. Our recent experience of Government direction of industries, both during and after the war, assists us in answering that question. If, as during the war, a large supply of munitions has to be organized at a moment’s notice, and maintained irrespective of all considerations of economy and industrial efficiency, probably no other course would remain but for the Government of the day to control the industries concerned; but, in normal times, when economy of production is imperative, industrial efficiency essential, and enterprising and far-sighted administration of paramount importance, Government direction has shown itself to be quite hopeless. Employers and Trade Unions are in firm agreement on this point, that Government control of industry spells ineptitude, incompetence, extravagance, and confusion all along the line. We may, therefore, emphasize this as the first cardinal principle regulating the relationship of Government to industry: that the circumstances are few and seldom arise which justify intervention by Government in the economic administration and control of any industry.