But after all qualifications have been made these four indictments are sufficiently serious and must be met, for it is these and similar considerations which have driven many to desire the complete abolition of the system. Some wish to abolish private property, and desire a Communist solution. Others practically attack the system of private enterprise, and wish to substitute either the community in some form or another (e.g. state socialism), or some corporate form of industry (e.g. guild socialism).
The Liberal Bias
Liberals, on the other hand, reject these solutions, and desire not to end the present system but to mend it. The grounds for this conclusion need to be clearly expressed, for after all it is the fundamental point of doctrine which distinguishes them from the Labour party. In the first place, there is the fact that Liberals attach a special importance to the liberty of the individual. The general relation of the individual to the State is rather outside my subject, but we start from the fact that the bias of Liberals is towards liberty in every sphere, on the ground that spiritual and intellectual progress is greatest where individuality is least restricted by authority or convention. Variety, originality in thought and action, are the vital virtues for the Liberal. It is still true that “in this age the mere example of Nonconformity, the mere refusal to bow the knee to custom, is itself a service.” The Liberal who no longer feels at the bottom of his heart a sympathy with the rebel who chafes against the institutions of society, whether religious, political, social or economic, is well on the road to the other camp. But the dynamic force of Liberty, that great motive power of progress, though a good servant, may be a bad master; and the perennial problem of society is to harmonise its aims with those of the common good.
When we come to the more specific problem of industry, which is our immediate concern, a glance at history shows that the era of most rapid economic progress the world has ever seen has been the era of the greatest freedom of the individual from statutory control in economic affairs. The features of the last hundred years have been the rapidity of development in industrial technique, and constant change in the form of industrial organisation and in the direction of the world’s trade. Could any one suppose that in these respects industry, under the complete control of the State or of corporations representing large groups of wage earners and persons engaged in trade, could have produced a sufficiently elastic system to have permitted that progress to be made? In reply to this it may be said that though this was true during the industrial revolution, it does not apply to-day; that our industries have become organised; that methods of production, population, and economic conditions generally are stabilised, and that we can now settle down to a new and standard form of industrial organisation. But this agreement is based on false premises. The industrial revolution is far from complete. We are to-day in the full flood of it. Look at the changes in the last four decades—the evolution of electricity, the development of motor transport, or the discoveries in the chemical and metallurgical industries. Consider what lies ahead; the conquest of the air, the possible evolution of new sources of power, and a hundred other phases which are opening up in man’s conquest of nature, and you will agree that we are still at the threshold of industrial revolution.
I may mention here a consideration which applies practically to Great Britain. We are a great exporting country, living by international trade, the world’s greatest retail shopkeeper whose business is constantly changing in character and direction. The great structure of international commerce on which our national life depends is essentially a sphere in which elasticity is of the utmost importance, and in which standardised or stereotyped methods of control of production or exchange would be highly disastrous. Liberal policy, therefore, aims at keeping the field of private enterprise in business as wide as possible. But in the general discussion of political or personal liberty in economic affairs, we have to consider how far and in what way the freedom of private enterprise needs to be limited or curtailed for the common good. We must solve that problem. For Liberals there is no inherent sanctity in the conceptions of private property, or of private enterprise. They will survive, and we can support them only so long as they appear to work better in the public interest than any possible alternatives.
Retrospect and Prospect
My object, then, is to show how a system which embodies a large amount of private enterprise can be made tolerable and acceptable to modern ideas of equity. For this purpose we need to consider (1) what have we done in that direction in the past? (2) what is the setting of the economic problem to-day, and (3) what is to be our policy for the future?
Dealing first with wealth and wages, the whole field of social legislation has a bearing upon them, including particularly education, elementary and technical, the Factory Acts, and a great mass of legislation which has affected the earning powers of the worker and the conditions under which he labours. Just before the war we had come to the point of fixing a minimum wage in the mines, but an even more important factor was that we had introduced the Trade Board system, which had begun to impose a minimum wage in certain trades where wages were particularly low. But the most important direct attack upon the unequal distribution of wealth was by taxation in accordance with the Liberal policy of a graduated and differential income-tax, and still more important by taxes upon inheritance; for it has long been recognised that though it may be desirable to allow men to accumulate great wealth during their lifetime, it by no means follows that they should be entitled to control the distribution of wealth in the next generation and launch their children on the world with a great advantage over their fellows of which they may be quite unworthy. On the question of insecurity it cannot be said that any serious attack has been made on the problem of how to diminish fluctuations of trade, but again the Liberal solution for dealing with that difficulty was to remedy not the cause but its effects by insurance.
On the question of monopolies and exploitation, though we hear a great deal of the growth of capitalistic organisation, in fact we find that, of the three greatest industrial countries in the world, Great Britain is the least trust-ridden, mainly because of its free trade system. In the case of enterprises not subject to foreign competition, we had begun to develop a fairly satisfactory system of control of public utility services which were of a monopolistic character.
Finally, there had been growing up a complete system of collective bargaining and conciliation, and though we always heard of it whenever there was dispute and strife, the ordinary public did not know that this machinery was working and developing in many great and important industries a feeling of co-operation or at all events of conciliation between the two sides. I only mention these points very briefly in passing in order to show that with the evolution of modern industry we were already feeling our way, haltingly and far too slowly, it is true, towards a solution of its most serious defects.