Socialism as it is

by William English Walling

The Australasian labor leaders were the first and are still the chief advocates of compulsory arbitration among the unionists, and if they find it used against them they have nobody but themselves to blame. That Labor is disappointed in the result in those countries is shown by the fact that of late years, both in Australia and New Zealand, the most important strikes have been settled outside of the compulsory arbitration acts, and Mr. Clark states that he is unaware of any important exception.

But that the workers in Australia still hope to use this legislation for their purposes is shown by the referendum of 1911, by which they sought to nationalize the State laws on the subject. At the time of the railroad strike in Victoria, Australia, in 1903, a law was passed which imposed a penalty of "twelve months' imprisonment or a fine of one hundred pounds" for engaging in a strike on government railways, and made a man liable to arrest without warrant or bail "for advising a strike orally or by publication, or for attending any meetings of more than six persons for the purpose of encouraging strikers." Even then the limit had not been reached. In 1909 the Parliament of New South Wales passed an act especially directed against strikes in any industry which produced "the necessary commodities of life [these being defined as coal, gas, water, and food] the privation of which may tend to endanger human life or cause serious bodily injury," and the penalty of twelve months' imprisonment of the Victorian law was extended to all this vast group of industries also. The law of New South Wales was most stringent, providing that any one taking part in a strike meeting under these circumstances is also liable to twelve months' imprisonment, and that the police may break into the headquarters of any union and seize any documents "which they reasonably suspect to relate to any walk-out or strike." Under this law the well-known labor leader, Peter Bowling, was sentenced to one year of imprisonment.

The unions violently denounced this enactment, but chiefly as they had denounced previous legislation, on the ground that it permitted unorganized workmen to apply for relief under the law. That is to say, while the employers were using the law to make striking a crime, they were extending such benefits as it produced to the nonunion workers who can often be used as tools for their purposes. But the astounding hold that "State Socialism" has on the Australian masses, especially on the working people, is shown by the steadfast belief that this measure can be amended so as to operate to their interest. Bowling and his unions made a serious agitation for the general strike against the coercive measure just mentioned, but it was only by a tie vote that the New South Wales Labour Congress even favored protest in the form of cancelling the agreement which the unions had made under the Industrial Disputes Acts, while in the next elections New South Wales returned a majority of labor representatives opposing Bowling's policy of radical protest. That is, the majority of the working people still express confidence in the possibilities of compulsory arbitration, and even want to extend it.

Professor Le Rossignol of the United States and Mr. William D. Stewart of New Zealand have undertaken a careful and elaborate investigation of compulsory arbitration in New Zealand.[74] A reference to a few of their quotations from original documents will show the nature and possibilities of this coercive measure as it has developed in the country of its origin. The original law in New Zealand was introduced by the Honorable William Pember Reeves, the Minister of Labor, in 1894, and was supported by the labor leaders. Mr. Reeves says: "What the act was primarily passed to do was to put an end to the larger and more dangerous class of strikes and lockouts. The second object of the act's framer was to set up tribunals to regulate the conditions of labor."

"Mr. Reeves' chief idea," say our authors, "was to prevent strikes, and a great deal more was said in Parliament about industrial peace than about the improvement in the conditions of labor which the act was to bring about. But there can be little doubt that the unionists, without whose help the act could not have been passed, thought more of the latter than of the former result, and looked upon the act as an important part of the new legislation for the benefit of the working class." Here is the contrast that we must always keep in mind. The purpose of the unionists is to see if they cannot obtain improvements in their conditions; the purpose of the employers and also of "the public" is to prevent strikes. One of the most able students of the situation, Mr. MacGregor, has shown that since the passing of the law the latter purpose has been thoroughly accomplished, since it has been used not only as was originally intended, to settle labor disputes which become so serious as to threaten to "arrest the processes of industry," but that it has practically built up a "system of governmental regulation of wages and conditions of labor in general." That is to say, the law has accomplished rather the purposes of the employers than those of the employees.

In another point of the most fundamental importance the law has become something radically different from what the labor leaders who first favored it hoped it would be. The act of 1894 was entitled: "An act to encourage the formation of industrial unions and associations and to facilitate the settlement of industrial disputes by conciliation and arbitration." By the amendment of 1898 the words, "to encourage the formation of industrial unions and associations," were left out. Thus the law ceased to be directly helpful to the very unions which had done so much to bring it about and are the only means employees possess to make the law serve them instead of becoming a new weapon for employers.

An early decision of the Arbitration Court in 1896 had declared that preference should be given to the unionists. "Since the employer was the judge of the qualifications of his employees, the unionists did not gain much by this decision," say Le Rossignol and Stewart. "In later awards it was usually specified that preference was granted only when the union was not a closed guild, but practically open to every person of good character who desired to join." These later decisions brought it about that the so-called preference of unionists became no preference at all. "The Arbitration Court, except in a few minor cases, has refused to grant unconditional preference and the unionists, realizing that preference to an open union is no preference at all, now look to Parliament for redress and demand statutory unconditional preference to unionists."

In 1905 strikes and lockouts were made statutory offenses, and a single judge was given the power practically to force the individual worker to labor. After ten years of trial the law had become almost unrecognizable from the workingman's standpoint, and from this moment on the resistance to it has grown steadily. In a decision rendered in 1906, the Chief Justice said: "The right of a workman to make a contract is exceedingly limited. The right of free contract is taken away from the worker, and he has been placed in a condition of servitude or status, and the employee must conform to that condition." Not only do judges have this power, but they have the option of applying or not applying it as they see fit, for the amendment of 1908 "expressly permits the court to refuse to make an award if for any reason it considers it desirable to do so." With a law, then, that in no way aids the unions, as such—however beneficial it may be at times to the individual workingman—and which leaves an arbitrary power in the hands of the judge elected by an agricultural majority, what has been the concrete result? Especially, what principles have been applied by the judges?

Of course the first principle has been that all the working people should get what is called a "minimum" or a "living" wage, but our authors show that merely to keep their heads above the sea of pauperism was not at all the goal of the workers of New Zealand. No doubt they were already getting such a wage in that relatively new and prosperous country, yet this was all the new law did or could offer, besides keeping existing wage scales up to the rising cost of living. Anything more would have required, not compulsory arbitration, but a series of revolutionary changes in the whole economic and political structure. "Another stumbling block in the way of advance in wages is the inefficient or marginal or no-profit employer, who, hanging on the ragged edge of ruin, opposes the raising of wages on the ground that the slightest concession would plunge him into bankruptcy. His protests have their effect on the Arbitration Court, which tries to do justice to all the parties and fears to make any change for fear of hurting somebody. But the organized workers, caring nothing for the interests of any particular employer, demand improved conditions of labor, though the inefficient employer be eliminated and all production be carried on by a few capable employers doing business on a large scale and able to pay the highest wages."

Here is the essential flaw in compulsory arbitration in competitive industries (its limitations under monopolies will be mentioned later). The courts cannot apply a different standard to different employers. On the other hand, they cannot fix a wage which any employer cannot afford to pay or which will drive him out of business. That is to say, the standard tends to be fixed by what the poorest employer can pay, the employer who, from the standpoint either of capital or of labor or of efficient industry, really deserves to be driven from business. An exception is made only against such employers as cannot even afford to pay a living wage—these alone are eliminated.