CHAPTER IV
Of Socialism and Trade Unionism—the Extent and Limitation of their Power in increasing the Income of Labour.
◆1 Legislation of the kind just alluded to is commonly called Socialistic:
◆2 But this way of describing it is inaccurate;
◆¹I willspeak first of the kind of legislation, popularly called Socialistic, which certain people now regard with so much hope, and others with corresponding dread; and I shall show that both of these extreme views rest on a complete misconception of what this so-called Socialism is. For what is popularly called Socialism in this country, so far as it has ever been advocated by any political party, or has been embodied in any measure passed or even proposed in Parliament, ◆² does not embody what is really the distinctive principle of Socialism. Socialism, regarded as a reasoned body of doctrine, rests altogether on a peculiar theory of production, to whichalready I have made frequent reference—a theory according to which the faculties of men are so equal that one man produces as much wealth as another; or, if any man produces more, he is so entirely indifferent as to whether he enjoys what he produces or no, that he would go on producing it just the same, if he knew that the larger part would at once be taken away from him. Hence Socialists argue that the existing rewards of Ability are altogether superfluous, and that the existing system of production, which rests on their supposed necessity, can be completely revolutionised and made equally efficacious without them.
◆1 As all the so-called Socialistic legislation in this country rests on the very system of production which professed Socialists aim at destroying.
But whatever may be the opinions of a few dreamers or theorists, or however in the future these opinions may spread, the fundamental principle of Socialism, up to the present time, has never been embodied in any measure or proposal which has been advocated in this country by any practical party. ◆¹ On the contrary, the proposals and measures which are most frequently denounced as Socialistic—even one so extreme as that of free meals for children at Board Schools—allpresuppose the system of production which is existing, and thus rest on the very foundation which professed Socialists would destroy.[55]They merely represent so many ways—wise or unwise—of distributing a publicrevenue, which consists almost entirely of taxes on an income produced by the forces of Individualism.
Now, so far as the matter is a mere question of words, we may call such proposals or measures Socialistic if we like. On grounds of etymology we should be perfectly right in doing so; but we shall see that in that case, with exactly the same propriety, we may apply the word to the institution of Government itself. The Army, the Navy, and more obviously still the Police Force, are all Socialistic in this sense of the word; nor can anything be more completely Socialistic than a public road or a street. In each case a certain something is supported by a common fund for the use of all; and every one is entitled to an equal advantage from it, irrespective ofhis own deserts, or the amount he has contributed to its support.
◆1 What is called Socialism in this country is a necessary part of every State;
◆2 And the principle may probably be extended with good results, if not pushed too far.
◆¹ If, then, we agree to call those measures Socialistic to which the word is popularly applied at present, Socialism, instead of being opposed to Individualism, is its necessary complement, as we may see at once by considering the necessity of public roads and a police force; for the first of these shows us that private property would be inaccessible without the existence of social property; and the second that it would be insecure without the existence of social servants. The good or evil, then, that will result from Socialism, as understood thus, depends altogether on questions of degree and detail. There is no question as to whether we shall be Socialistic or no. ◆² We must be Socialistic; and we always have been, though perhaps without knowing it, as M. Jourdain talked prose. The only question is as to the precise limits to which the Socialistic principle can be pushed with advantage to the greatest number.
◆1 That it can easily be pushed too far is obvious.
What these limits may be it is impossible to discuss here. Any general discussion of such a point would be meaningless. Eachcase or measure must be discussed on its own merits. But, though it is impossible to state what the limits are, it is exceedingly easy to show on what they depend. They depend on two analogous and all-important facts, one of which I have already explained and dwelt upon, and which forms, indeed, one of the principal themes of this volume. This is the fact, that the most powerful of our productive agents, namely Ability, cannot be robbed, without diminishing its productivity, of more than a certain proportion of the annual wealth produced by it; and, as it is from this wealth that most of the Socialistic fund must be appropriated, Socialistic distribution is limited by the limits of possible appropriation. The other fact—the counterpart of this—is as follows. Just as Ability is paralysed by robbing it of more than a certain portion of its products, Labour may equally be paralysed by an unwise distribution of them; and thus their continued production be at last rendered impossible. ◆¹ For instance, quite apart from any initial difficulty in raising the requisite fund from the wealthier class of tax-payers, the providing of free meals for children inBoard Schools is open to criticism, on account of the effect which it might conceivably have upon parents, of diminishing their industry by diminishing the necessity for its exercise. Whether such would be the effect really in this particular case, it is beside my purpose to consider; but few people will doubt that if such a provision were extended, and if, even for so short a time as a single six months, free meals were provided for the parents also, half the Labour of the country would be for the time annihilated. Labour, however, is as necessary to production as is Ability, even though, under modern conditions, it does not produce so much; and it is therefore perfectly evident that there is a limit somewhere, beyond which to relieve the individual labourer of his responsibilities by paying his expenses out of a public fund will be, until human nature is entirely changed, to dry up the sources from which that fund is derived.
◆1 The sort of natural limit that there is to its beneficial effects is shown by the history of our Poor Laws.
◆2 Such Socialism, whatever good it may do, can never do much in the way of raising money wages.
As I have said already, it is impossible, in any general way, to give any indication of what this limit is; but the industrial history of this country supplies a most instructiveinstance in which it was notoriously overpassed, and what was meant as a benefit to Labour, under circumstances of exceptional difficulty, ended by endangering the prosperity of the whole community. I refer to our Poor Law at the beginning of this century, the effects of which form one of the most remarkable object-lessons by which experience has ever illustrated a special point in economics. ◆¹ That Poor Law, as Professor Marshall well observes, “arranged that part of the wages [of the labourers] should be given in the form of poor relief; and that this should be distributed amongst them in the inverse proportion to their industry, thrift, and forethought. The traditions and instincts,” he adds, “which were fostered by that evil experience are even now a great hindrance to the progress of the working classes.”[56]Now that particular evil on which Professor Marshall comments,—namely, that the part of the wages coming through this Socialistic channel were in the inverse proportion to what had really been produced by the labourer—is inherent in allSocialistic measures, the principal object of which is to raise or supplement wages; as is clearly enough confessed by the Socialistic motto, “To every man according to his needs.” ◆² It may accordingly be said that, absolutely necessary as the Socialistic principle is, and much as may be hoped from its extension in many directions, it neither has been in the past, nor can possibly be in the future, efficacious to any great extent in increasing the actual income of the labourer.[57]
◆1 Trade Unionism in this way can do far more. We will see first how, and then within what limits.
◆¹ Such being the case, then, let us now turn our attention to another principle of an entirely different kind, which, so far as regards this object, is incalculably more important, and which has constantly operated in the past, and may operate in the future, to increase the labourer’s income, without any corresponding disadvantages. I mean that principle of organisation amongst the labourers themselves which is commonly called Trade Unionism; and which directly or indirectly represents the principal means by which Labour is attempting, throughout the civilised world, to accelerate and regulate the natural distribution of wealth. I will first, in the light of the conclusions we have already arrived at, point out to the reader what, speaking generally, is the way in which Trade Unionism strengthens the hands of Labour; and then consider what is the utmost extent to which the strength which Labour now derives from it may be developed.
◆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 makingfifty poundsa year, and enabled them by his Ability each to makefour 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 truethat 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 bethe 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 labourersinto 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 limitsof 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 betheir 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 theirstrength 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.
◆1 The imperfect state of economic science has allowed a totally false idea to be formed as to the force which Trade Unionism represents.
◆2 The force which it represents is not Labour at all, but a power of combining in order to abstain from labour.
◆3 And even this power could never be universal, nor last long; and whilst it lasts it depends on Capital.
◆¹ These great developments of Trade Unionism which are commonly called Labour movements do not really, in any accurate sense, represent Labour at all. ◆² All that they represent in themselves is a power to abstain from labouring. In other words, the increased command of the labourers over the machinery of combination, and even their increased command of the tactics of industrial warfare, represents no increased command over the smallest of industrial processes, nor puts them in a better position, without the aid of Ability, to maintain—still less to increase by the smallest fraction—the production of that wealth in which they are anxious to share farther. A strike therefore, however great or however admirably organised, no more represents any part of the power of Labour than the mutiny organised amongst the crew of Columbus, with a view to making him give up his enterprise, represented the power which achieved the discovery of America. And this is not true of the average labourers only; it is yet more strikingly true of the superior men who lead them. From the ranks of the labourers, men are constantly rising whoseabilities for organising resistance are remarkable, and indeed admirable; but it is probably not too much to say that no leader who has devoted himself to organising the labourers for resistance has ever been a man capable, to any appreciable degree, of giving them help by rendering their labour more productive. Those who have been most successful in urging their fellows toaskfor more, have been quite incompetent to help them tomakemore. Thus these so-called Labour leaders, no matter how considerable may be many of their intellectual and moral qualities, are indeed leaders of labourers; but they are no more leaders of Labour than a sergeant who drilled a volunteer corps of art students could be called the leader of a rising school of painting; and a strike is no more the expression of the power of Labour than Byron’s swimming across the Hellespont was an expression of the power of poetry, or than Burns’s poetry was an expression of the power of ploughing. A strike is merely an expression of the fact that the labourers, for good or ill, can acquire, under certain circumstances, the power to cease from labouring, and can use this as a weapon not of production, but ofwarfare. ◆³ The utmost that the power embodied in Trade Unionism could accomplish would be to bring about a strike that was universal; and although no doubt it might do this theoretically, it could never do so much as this practically, for the simple reason that, as I have already pointed out, Labour could not be entirely suspended for even a single day. Further, the more general the suspension was, the shorter would be the time for which it could be maintained; and to mention yet another point to which I have referred already, it could be maintained only, for no matter how short a time, by the assistance of the very thing against which strikes are ostensibly directed, namely Capital; and not even Capital could make that time long. Nature, who is the arch-taskmaster, and who knows no mercy, would soon smash like matchwood a Trade Union of all the world, and force the labourers to go back to their work, even if no such body as an employing class existed.
All the ideas, then, derived from the recent developments of Trade Unionism, that Labour, through its means, will acquire any greatly increasing power of commanding an increasingshare of the total income of the community, rests on a total misconception of the power that Trade Unionism represents, and a total failure to see the conditions and things that limit it. It is limited firstly by Nature, who makes a general strike impossible; secondly by Capital, without which any strike is impossible; and lastly by the fact that the labourers of the present day already draw part of their wages from the wealth produced by Ability; that any further increase they must draw from this source entirely; and that, being thus dependent on the assistance of Ability now, Trade Unionism, as we have seen, has not the slightest tendency to make them any the less dependent on it in the future.
When the reader takes into account all that has just been said, he will be hardly disposed to quarrel with the following conclusions of Professor Marshall, who derives them from history quite as much as from theory, and who expresses himself with regard to Trade Unions thus: “Their importance,” he says, “is certainly great, and grows rapidly; but it is apt to be exaggerated: for indeed many of them are little more than eddies such as have alwaysfluttered over the surface of progress. And though they are now on a larger and more imposing scale in this age than before, yet much as ever the main body of the movement depends on the deep, silent, strong stream of the tendencies of Normal Distribution and Exchange.”
◆1 Trade Unionism, in raising wages, can do little more than accelerate or regulate a rise that would take place owing to other causes.
◆2 But none the less it may be of great benefit to the labourers, and remove many evils which a general rise in wages has not removed, and could not remove by itself.
◆¹ But in the case of Trade Unionism, just as in that of Socialism, because the extent is limited to which it can raise the labourers’ income, it does not follow that within these limits its action may not be of great and increasing benefit. ◆² Thus Mill, whose general view of the subject coincides broadly with that of Professor Marshall, points out that though a Union will never be able permanently to raise wages above the point to which in time they would rise naturally, nor permanently to keep them above a point to which they would naturally fall, it can hasten the rise, which might otherwise be long delayed, and retard the fall, which might otherwise be premature; and the gain to Labour may thus in the long run be enormous. Unions have done this for Labour in the past; and with improved and extended organisation, they may be able to doit yet more effectively in the future; and they have done, and may continue to do many other things besides—to do them, and to add to their number. It is beyond my purpose to speak of these things in detail. In the next chapter, I shall briefly indicate some of them; but the main points on which I am concerned to insist are simpler; and the next chapter—the last—will be devoted principally to these.