Labour policy—false and true

by Lynden Livingston Macassey

We propose now to offer some broad criticisms upon Labour’s Industrial and Land Policy.

What Capitalism Is

The primary object, as we have shown, of the Labour Party is to abolish capitalism. What, therefore, do we understand by that? It cannot be better described than has been so admirably done by that distinguished writer, Mr. Hartley Withers, in the Case for Capitalism, p. 13:

“The present system under which we work and exchange our work for that of others is that commonly described as Capitalism. Under it each one, male or female, can choose what work he will try to do and what employer he will try to serve; if he does not like his job or his employer, he can leave it or him and try to get another. He cannot earn unless he can do work that somebody wants to buy, and so he competes with all other workers in producing goods or services that others want and will pay for. His reward depends on the success with which he can satisfy the wants of others. Whatever money he earns in return for his labour he can spend as he chooses on the purchase of goods and services for his own use or for that of his dependents, or he can invest it in opening up a business or industry on his own, account, or in shares and debts of public companies, and debts of Governments or public bodies; these securities will pay him a rate of profit or interest if the companies or debtors prosper and are solvent. Whatever money he earns by labour or by investment he can, after paying such taxes on it as the State demands, hand on to any heirs whom he may name.

“The system is thus based on private property, competition, individual effort, individual responsibility and individual choice. Under it, all men and women are more or less often faced by problems which they have to decide and, according as their decision is right or wrong, their welfare and that of their dependents will wax or wane. It is thus very stimulating and bracing, and might be expected to bring out the best effort of the individual to do good work that will be well paid so that he and his may prosper and multiply. If only every one had a fair start and began life with an equal chance of turning his industry and powers to good account, it would be difficult to devise a scheme of economic life more likely to produce great results from human nature as it now is; by stimulating its instincts for gain and rivalry to a great output of goods and services and by sharpening its faculties, not only for exercise in this purely material use, but also for solving the bigger problems of life and human intercourse that lie behind it.”

The capitalistic system dates from the Industrial Revolution (1780-1830), when domestic industry was replaced by factory production. Since those days, as Labour was plentiful and ill-organized and capital more difficult to obtain, the capitalist occupied relatively to the worker a stronger position in industry. This transient incident is what Mr. Sidney Webb in his A Constitution for a Socialist Commonwealth of Great Britain describes as “the central wrong of the Capitalist System”:—

“But the central wrong of the Capitalist System is neither the poverty of the poor nor the riches of the rich: it is the power which the mere ownership of the instruments of production gives to a relatively small section of the community over the actions of their fellow citizens and over the mental and physical environment of successive generations. Under such a system personal freedom becomes, for large masses of people, little better than a mockery. The tiny minority of rich men enjoy, not personal freedom only, but also personal power over the lives of other people; whilst the underlying mass of poor men find their personal freedom restricted to the choice between obeying the orders of irresponsible masters intent on their own pleasure or their own gain, or remaining without the means of subsistence for themselves and their families.”

Our Debt to Capitalism

Labour’s proposal, therefore, is to abolish capitalism and replace it by that brand of Socialism known as “nationalization and democratic control.” We should first realize what we owe to the capitalism which we are asked to destroy. Our first debt is certainly liberty. This is convincingly worked out by Mr. Harold Cox in his Economic Liberty, p. 2. Liberty to possess and use property consistently with the good of the community, liberty to buy, to sell, to work, to strike, in fact complete liberty in all economic relations. This is to be surrendered and replaced by the bureaucratic control of the State Socialist, or the equally autocratic control under the scheme of the Guild Socialist. Liberty is a prize not hastily to be relinquished. This capitalistic system is not the selfish system as described by Labour. It can only exist provided it supplies commodities and services, of which the community stands in need, at prices which the community can afford to pay. That is no light responsibility. One of the necessary consequences of any socialistic organization of industry is that the community must use and pay for such commodities as it is convenient and desirable for industry to produce; under any socialistic regime, therefore, the consumer, instead of being an object of regard, becomes a mere wheel in the mechanism of production.

The capitalistic system develops energy and thrift, though the former has been largely neutralized by the sterilizing effect of Trade Union doctrines against output, and the latter frustrated by the inability of industry as a result of production thus restricted to pay high wages. Under a socialistic regime the worker is to receive not wages but “pay” and whether he works or not. All progress in industry depends upon initiative and enterprise and the readiness to take risks. To-day risks are assumed by the owner of capital and, if they materialize, they are borne by him and not by the workers or the community. It would be ludicrous to say that either the State under State Socialism or industry under any form of democratic control would or could exert the same initiative or show the same enterprise as the private capitalist. Economic history teems with examples of great industries now employing thousands of workers which were originally established by capitalists who, stubbornly persistent, refused to accept failure and by sheer dogged enterprise won through. The world has wonderfully prospered under the capitalistic organization in industry. We see social conditions enormously improved, innumerable social reforms effected, the welfare and well-being of the people prodigiously advanced. Sir Josiah Stamp—an outstanding authority—said in 1921, as a result of a statistical investigation, “the ordinary person of to-day is four times as well off in real commodities as the person in the corresponding stage in the scale in the beginning of the nineteenth century.” During this hundred years the population has quadrupled. The lot of the worker steadily progressed from 1800 up till 1900, when, in certain industries, there set in tendencies of retrogression. It has been one continuous record of rise in standard of living, and in wages, both nominal amount and purchasing power, due to improvement in production from the introduction of machinery, development of food production in new countries, and expansion of our export trade. This has been largely the result of the capitalistic organization of industry, and of its ability to meet the demands of the consumer, and of the extraordinary elasticity inherent in the system of adapting itself to varying circumstances.