Labour policy—false and true

Before we can construct any scheme of reform of our industrial system we must have a clear idea of what is industry. In the prosaic language of economics it is a purposive production of commodities and services, the immediate object of those engaged in it being to provide, through the result of their work, the material means of satisfying their wants and desires.

Viewed in broad outline, industry will be seen to involve three fundamental processes:

(i) The combination in due proportion of the five things requisite for all production, viz., capital, enterprise, organization, labour—both hand and brain—and natural forces and resources.

(ii) The realisation of the product—industrial work is nowadays useless unless and until the product is marketed. The amount realized depends mainly on the public demand for the product, and invariably the cheaper the selling price, the greater is the demand.

(iii) The division of the realized surplus amongst those associated in production.

Further, it will also be observed that industry necessarily involves six fundamental human relationships, the importance of which has been much neglected in the past.

1. The Industrial, i.e. between the classes of persons associated together in industry:

(a) Capital and the Administrative Staff.

(b) Capital and the Manual Workers.

(c) The Administrative Staff and the Manual Workers.

(d) Manual Workers between themselves.

2. The Social—between industry and the community.

3. The National—between industry and the nation. These relationships are of paramount importance. The individual is no longer the unit—in things industrial, it is the group of those associated in production—in things social, it is the community—in things national, the whole people. Each small group is included in, and directly reacts on, a larger group. Labour, in its Official Policy for Reconstruction after the War, truly says: “We are members one of another. No man liveth to himself alone. If any, even the humblest, is made to suffer, the whole community and every one of us, whether or not we recognize the fact, is thereby injured.” How frequently Labour forgets its own irrefutable proposition! The problem then is so to organize the processes of industry and harmonize the human relationships involved in it, that to the utmost practicable extent productive efficiency will be secured, the human qualities of all those associated in industry recognized, their capacities fully developed and utilized, their aspirations satisfied, and their respective services co-ordinated to promote the benefit and happiness of all of them, the good of the community, and the welfare of the nation.

Capital and the Administrative Staff

Let us first examine the relationship between Capital and the Administrative Staff. In the Administrative Staff, I include every one from the managing director down to the gate-keeper. They are the brains and mechanism of the organization and management, the connecting link between Capital and Labour. The success of an employer’s business is dependent on their tact, judgment, and power of governing men, but Capital has not yet risen to that conception. It has not conceded to the Administrative Staff a status commensurate with their enormous private and public responsibilities, nor, except at the very top, adequate financial recognition. The art of managing men so as to get the best out of them and secure their cordial co-operation, is generally considered by Capital to be a customary by-product of technical ability. In truth, it is a special qualification requiring its own special training, exceptional attributes of mind and temperament, and particular fibres of character, of the possession of which technical ability is no criterion whatsoever. If industry is to progress, Capital must elevate its conception of the duties of the Administrative Staff and recognize that administration, even in its lowest branches, is work as skilled as that of an expert craftsman.

Capital and the Manual Workers

We must next scrutinize the basic industrial relationship between Capital and the Manual Workers. Permeating it, we find, as the result of the causes already mentioned, seething discontent and active antagonism—not cordiality—not mutual confidence, but unreasoning distrust. We see on both sides black suspicion twisting the motive behind every action, and the task is to create contentment among the workers, and enlist their hearty co-operation with employers in the process of production.

The Manual Workers inter se

The Manual Workers are far from being a happy family. In this country all work in every industry is allocated by tradition or Trade Union agreement to this trade or that trade as its sacrosanct preserve. Woe betide an unskilled man who invades the industrial territory of a tradesman! These rigid lines of demarcation of work are the cause of untold industrial friction and operate most detrimentally to prevent an employer introducing modern methods or installing time- and labour-saving appliances. There is no greater need in industry than for a peace-treaty between the warring Trade Unions under which this system of dividing work into so many water-tight compartments will be modified.

The Administrative Staff and the Manual Workers

The Administrative Staff has not yet attained to a true conception of their great part in industry. I often found that, so far as their relationship to Labour is concerned, they are inclined to regard their general functions as solely to maintain discipline. The preservation of robust discipline is a vital matter. Too often discipline is bolstered up by arbitrary and dictatorial methods, to which means weak men usually have recourse. That, if not productive of immediate friction, certainly sows broadcast the seeds of trouble and unrest. The vital matter, the atmosphere of the shop, is mainly dependent on the conciliatory personalities of the Administrative Staff. What has to be remembered in industry is that despotism is not leadership, and arbitrariness is not good government. “The moral effects of good leadership,” as Professor McDougall truly says in The Group Mind, “work throughout a mass of men by subtle processes of suggestion and emotional contagion rather than by a process of purely intellectual appreciation.” This many employers have yet to learn; they regard courtesy on the part of the Administrative Staff in dealing with Labour as cowardice, and consideration as subversive of good discipline. But consideration is the oil which makes shop wheels go round, and there never was more scope for its application in industry than at the present time, especially in such things as interviewing, selecting and taking on, promoting and dismissing men, and dealing with shop complaints.

Industry and the Consuming Community

Industry as a whole does not appreciate the close relationship between itself and the community, nor its responsibilities to the community. In reality industry has to rely on the community for innumerable services, and for many facilities vital to its existence, and to its prosperity, and for a market for its product. Yet almost invariably strikes and lock-outs are called, regardless of the effect upon the consuming public. In fact, Labour claims the right to use its economic power in furtherance of its own interests, irrespective of the damage to the community. If, under compelling necessity, the community attempts to carry on the services for itself, or provide the commodities of which by organized strikes it is deprived, it is charged with anti-social conduct, and condemned for declaring a class-war against Labour, those who assist being stigmatized as strike-breakers and black-legs. Labour has gone even further in recent years. In a number of cases it has deliberately adopted the policy of depriving the community of essential services through strikes, in order to produce such social hardship as will drive the community to constrain employers to accept Labour’s industrial demands. There have also been recent instances of agreements between employers and Trade Unions—as in the building industry—by which wages have been forced up to unreasonably high rates simply because those industries were necessary to the community and, with the knowledge that whatever the resulting cost of the product might be, the community would have to pay. At the same time, the community is largely dependent upon industry, and if the whole of an industry, or each section of it, fulfils its obligations to the community, the community must perform certain duties in return. I speak more fully of these later.

Industry and the Nation

Industry will never progress to vigorous and healthy development unless our conception of the relationship between industry and the nation is radically revised. That conception to-day is mean, stunted, and utterly devoid of any power of inspiration. Industry I have defined, in the language of economics, as the production of commodities and services for the purpose of satisfying the wants and desires of men. On this commonplace process, which sounds so dull in definition, and on none other, the future well-being of our country and the practicability of further social improvements and reforms depend. Production ought, therefore, to be regarded as the principal means of advancing the happiness, social welfare and material prosperity of the nation, and industry, the chief instrument in that beneficent work, as the highest and the noblest form of national service.