◆1 The operation of Trade Unionism in raising wages can be easily seen at a glance by reference to the simple community which was imagined in the last chapter.
◆¹ If the reader has not already forgotten our imaginary community,—our eight labourers with John and James directing them,—our easiest course will be to turn again to that. We saw that when the labourers were employed by John only,—John who found them each making fifty pounds a year, and enabled them by his Ability each to make four hundred pounds—we saw that the whole of this increase, in the natural course of things, would be kept by John himself, by whose Ability it was practically created; for it would not be to John’s advantage to part with any of it, and the labourers, so long as they all acted separately, would have no means of extracting any of it from him. It would be useless for one of them at a time to strike for higher wages. The striker and the employer would meet on wholly unequal terms; because the striker, whilst the strike lasted, would be sacrificing the whole of his income, whilst depriving the employer of only an eighth part of his. But let us alter the supposition. Let us suppose that the labourers combine together, and that the whole eight strike for higher wages simultaneously. The situation is now completely changed; and the loss that the struggle will entail on both parties is equal. The employer, like the labourer, will for a time lose all his income. It is true that if the employer has a reserve fund on which he can support himself whilst production is suspended, and if the labourer has no such fund, the employer may still be sure of an immediate victory, should he be resolved at all costs to resist the labourers’ demand. But, in any case, the cost of resisting it will be appreciable: it is a loss which the labourers will be able to inflict on him repeatedly; and he may see that they would be able, by their strikes, to make him ultimately lose more than he would by assenting to their demands, or, at all events, making some concessions to them. It is therefore obvious that the labourers, in such a case, will be able to extract extra wages in the inverse proportion to the loss which the employer will sustain if he concedes them, and in direct proportion to the loss which would threaten him should he refuse to do so.[58]
◆1 Combination amongst labourers puts them at an advantage as against competing employers, until their demands grow so unreasonable as to force the employers to combine.
There is, however, much more to be said. With each increase of their wages which the labourers succeed in gaining, they will be better equipping themselves for any fresh struggle in the future; for they will be able to set aside a larger and larger fund on which to support themselves without working, and thus be in a position to make the struggle longer, or, in other words, to inflict still greater injury on the employer. ◆¹ And if such will be the case when there is one employer only, much more will it be the case when there are two—when John and James, as we have seen, are forced by the necessities of competition to grant part of the labourers’ demands, even before they are formulated. It might thus seem that there is hardly any limit to the power which a perfected system of Trade Unionism may one day confer upon the labourers. There are, however, two which we will consider now, in addition to others at which we will glance presently. One is the limit with which we are already familiar, and of which in this connection I shall again speak, namely, the limit of the minimum reward requisite as a stimulus to Ability. The other is a limit closely connected with this, which is constituted by the fact that if the demands of Labour are pushed beyond a certain point against disunited employers, the employers will combine against Labour, as Labour has combined against them, and all further concessions will be, at all costs, unanimously refused.
◆1 The ultimate tendency of Trade Unionism is to make any conflict between the employer and employed like a conflict between two individuals.
◆2 The limit to which it can raise wages is fixed by the minimum reward that suffices to make Ability operative.
◆¹ Now a situation like this is the ultimate situation which all Trade Unionism tends to bring about. It tends, by turning the labourers into a single body on the one hand, and the employers into a single body on the other, to make the dispute like one between two individuals; and though for many reasons this result can never be entirely realised,[59] the limits of the power of Trade Unionism can be best seen by imagining it. What, then, is the picture we have before us? We have Labour and Ability in the character of two men confronting each other, each determined to secure for himself the largest possible portion of a certain aggregate amount of wealth which they produce together. Now we will assume, though this is far from being the case, that neither of them would shrink, for the sake of gaining their object, from inflicting on the other the utmost injury possible; and we shall see also, if we make our picture accurate, that Labour is physically the bigger man of the two. It happens, however, that the very existence of the wealth for the possession of which they are prepared to fight is entirely dependent on their peacefully co-operating to produce it; so that if in the struggle either disabled the other, he would be destroying the prize which it is the object of his struggle to secure. Thus the dispute between them, however hostile may be their temper, must necessarily be of the nature not of a fight, but of a bargain; and will be settled, like other bargains, by the process of compromise which Adam Smith calls “the higgling of the market.” ◆² When such a bargain is struck, there will be a limit on both sides: a maximum limit to what Ability will consent to give, and a minimum limit to what Labour will consent to receive. There will be a certain minimum which Ability must concede in the long run; because if it did not give so much, it would indirectly lose more: and conversely there is a certain maximum more than which Labour will never permanently obtain; because if it did so the stimulus to Ability would be weakened, and the total product would in consequence be diminished, out of which alone the increased share which Labour demands can come.
◆1 Thus the possible power of Trade Unionism in raising wages is far more limited than it seems.
◆2 If we judge hastily by the magnitude of modern Labour combinations, and the extent to which they can terrorise the community.
◆¹ Thus the extent to which Trade Unionism can assist in raising wages, no matter how wide and how complete its development, is far more limited than appearances lead many people to suppose. For the labourers, not only in this country, but all over the world, are growing yearly more expert in the art of effective combination, and are increasing their strength by a vast network of alliances; ◆² and from time to time the whole civilised world is startled at the powers of resistance and destruction which they show themselves to have acquired, and which they have called into operation with a view to enforcing their demands. The gas-strikes and the dock-strikes in London, and the great railway-strikes, and the strike at Homestead in America, are cases in point, and are enough to illustrate my meaning. They impress the imagination with a sense that Labour is becoming omnipotent. But in all these Labour movements there is one unchanging feature, which seems never to be realised either by those who take part in them or by observers, but on which really their entire character depends, and which makes their actual character entirely different from what it seems to be. That this feature should have so completely escaped popular notice is one of the most singular facts in the history of political blindness, and can be accounted for only by the crude and imperfect state in which the analysis of the causes of production has been left hitherto by economists. The feature I allude to is as follows.