Labour policy—false and true

The establishment of co-operation in industry between employers and employed is a matter almost entirely of the mind and spirit; it depends upon the elimination of the mutual suspicion that at present exists; it involves the creation of confidence; it entails the dissipation of certain economic fallacies that obsess the workers and also unprogressive employers.

The Workers’ Own Resort to Co-operation

Labour thoroughly well recognizes the productive power of the spirit of co-operation. In certain trades men work in squads, and the members of the squad share in agreed proportions the total price for the squad’s collective work. Many shops are paid on the output bonus system or on a “fellowship” basis. Under such conditions the earnings of the squad or shop, within the limits fixed for normal output, depend on the full co-operation of each member of the squad or shop. Co-operation is then recognized as a moral duty. It is almost invariably afforded without stint, if not it is sternly exacted. Many skilled men also paid on output are assisted by semi-skilled or unskilled “helpers” paid a fixed time wage, irrespective of output. Although the increased efforts of the “helpers” result in increased earnings only for the skilled men, in general co-operation is usually forthcoming from the “helpers,” and if not it is unconditionally demanded. There is no difficulty in identifying the doctrines to which the workers appeal in justification of their present attitude of non-co-operation with employers—they all come from Marxian Socialism. They are encountered everywhere in workshop, Trade Union branch and district committee, and form the foundations of belief amongst industrial democracy.

The Marxian Argument against Co-operation

Though it is not possible to crystallize the Marxian doctrines with absolute precision of language into a few lines of print, they may be stated in simple words, with tolerable accuracy, as follows:

In the doctrines of Marx there are three fundamental propositions: the first, that money is the primary form of capital; the second, that the value of a commodity is measured by the amount of labour expended upon it; the third, that the capitalist buys the use-value of a day’s labour in exchange for its market value, pocketing the surplus value, which is the difference. As long as we allow these theories to remain victorious, industry to-day is merely a process by which the capitalist constitutes himself the conduit-pipe to the sale-room for the workman’s labour, and as the latter passes through his hands filches for himself the “surplus value.”

Some Workshop Applications

As I write I have beside me a mass of leaflets, pamphlets and writings, which came into my possession during my recent industrial work, all reeking with this pernicious Marxianism. Some extracts from the Red Catechism, handed to me by way of argument in a shipyard, will give an idea of the doctrines:

These are only a few quotations, the list could be amplified enormously.

The Marxian Fallacy of the Origin of Capital

The Marxian proposition that money is the first form of capital is a discordant and disruptive delusion. Marx declared that all capital was derived from the profits obtained by paying labour less than the value it created. On this hypothesis the capitalist assists in no way in the business of production. He is in the position of reaping what he has not sown. He is a bandit who holds up to ransom the whole world of workmen. He lets labourers off with their lives, that is to say, with wages just sufficient for their subsistence and the reproduction of their species, thus securing the maintenance of a supply of labour, on condition that the labourers hand over to him practically the entire value of their labour. As long as such doctrines are taught to the young worker and are accepted by the old, of what good is it to prate about co-operation? It is about as sensible to advocate co-operation between a host and its parasite, between a vampire and its prey, between a highway robber and his victim. Yet that is the vain task on which so many eminent persons are now wasting their eloquence.

The first essential is boldly and openly to challenge this Marxian doctrine of the parasitic character of capital. There will never be, there cannot be, co-operation between capital and Labour until Labour has learned what capital is and the function it plays in production. Labour is ready to learn. I have found it possible to sustain the interest of workmen while explaining that capital consists primarily of things that are not money, of goods upon which people subsist while producing other goods, of factories, machinery, and raw material; that capital is a definite agent in production, capable of application, not merely by the conventional employer, but by every man; that it is something which, when used in production, is consumed, so that he who adventures it must possess such experience and judgment as will enable him to surmount the risk of loss, and obtain a return sufficient to replace the capital that has been consumed, and to recompense the lender for his thrift and remunerate himself for the services he has rendered and the risk to which he has been subjected. These particular aspects of capital, from their very novelty and unexpectedness, catch the immediate attention of Labour, so much so that in some districts the workmen, of their own accord, arranged meetings and invited me specially to discuss with them the character and function of capital in modern industry and the extent to which Labour was dependent upon it.

But realities must be faced. There is no good in evading the fact that while capital is essential and of incalculable benefit to humanity, it can, at the same time, like any other human possession, be used so as to cause inconvenience, injustice, distress, degradation, death. In short, the use of capital may be socially beneficent, or it may be maleficent, anti-social. The invariable example which the workman adduces of its anti-social use is “profiteering” in many of its accustomed forms. It is a great misfortune that there is no precise term in use to describe the particular function of capital as an agent in production. Aristotle distinguished on arbitrary principles which he enunciated, and derived from the conditions of his time, between the natural beneficial use of wealth, which he calls “economics,” and the unnatural abuse of wealth, which he calls “chrematistics.” His principles are out of date, the terminological distinction which he attempted was sound. This is what happens always in industrial discussion: employers, thinking of the beneficent function played by capital in production, emphasize the dependence of Labour on capital—Labour, thinking of the anti-social uses of capital, and reasoning from the particular to the general, retorts that capital is the cause of all Labour’s troubles. If both employers and workers could, by appropriate terms, get down to discussing the same thing, there would be substantial prospect of agreement; to-day there is none.

The Marxian Fallacy of Value

The next notion in the workman’s mind subversive of co-operation is his idea, derived from Marx, that “the value of a commodity is the amount of abstract human labour embodied in it.” If this be true, as so many workmen now fervently believe, it follows that the employer contributes nothing whatever to the value of the manufactured product, and that the only value-producing agency is labour. In truth neither workman nor employer creates value; both unite to perform services or produce things which other circumstances, e.g. demand, cause to be of value, and they do so because of that value. But the material point is that the Marxian doctrine rules out co-operation. Logically, it implies that the only possible remedy for the present lot of the worker consists in the complete demolition of the present organization of industry. The worker who accepts the Marxian theory of value, with its corollary theory of surplus value, is a weak-kneed individual and a traitor to his brethren, if he be cajoled for a moment into co-operating with his employer, or if he hesitates to fight whole-heartedly for the eradication of the employer, root and branch, from the industrial system.

The difficulty I have experienced in attacking this Marxian heresy is the common one which confronts any opponent of a popular doctrine accepted on faith and not on logic. A reasoned explanation of the fallacy is often not understood, a striking refutation is regarded as an extreme instance to which no reasonable person would ever suggest that the principle applied. When I have put the classic case of a man who discovers a precious stone, picks it up and finds it is worth, say, £50, and have suggested that the labour-force exerted by the finder in reaching down and lifting up the stone and carrying it to a purchaser cannot surely be the sole cause of its value, the answer has at once been made: “That is a case of raw material, and not a manufactured article.” I have then taken the case of some manufactured article like “pigs” or “ingots.” These when made were of a certain value, but they were put into store as against a rising market and became, subsequently, of greater value. According to Marx, the magnitude of the value of any commodity is determined by the amount of the labour socially necessary for its production and embodied in it under the normal conditions of production, and with the average degree of skill and intensity prevalent at the time. This amount of labour, in the case of the “pigs” and “ingots,” was the amount expended when they were first made, but since then, without the expenditure of any more labour, their value has greatly increased. The increase in value cannot obviously be attributed to the addition of “abstract”or any other kind of labour.

It is surprising how many workmen have learned quite glibly the outlines of the Marxian value and surplus value argument, and can express it by rote in flawless Marxian terminology. Even accepting it, as it has been so truly described, as “the greatest intellectual mare’s nest of the last century,” without any question it is an argument that has to be seriously considered. It must be driven by economic education out of the workers’ list of cherished convictions. No good will come of treating it with flippancy, or pouring ridicule upon it. I made it my practice to take up the argument stage by stage, emphasize what appeared to me to be the flaws, and then finish off with a number of practical workshop illustrations of cases where the argument fails egregiously to hold water. To be convincing, and to drive each point well home, takes a considerable amount of time, but it is well worth it. Few persons appreciate the extent to which this Marxian sophistry prevents achievement of the co-operative ideal in industry.

There is just one word of warning necessary. According to Marx, the workman receives from the employer the exchange value of his labour-force or power on handing over to the employer its use-value. Marx maintained, and unfortunately in the past there has been much to add force to his contention, that Labour in return received a wage no more than equal to “bare subsistence” or “bare cost of production of labour-power.” In many cases the past level of wages cannot be defended, and it would be foolish to try and vindicate it. But this much can be said, real wages have risen very considerably since Marx’s day, and without any overthrow of the industrial system. Such a result is absolutely in contradiction of his prophecy, and at variance with his doctrine. It strongly suggests the wisdom of constructive evolution as opposed to destructive revolution.

The Need of Sympathy in Workshop Life

The power of these economic fallacies is enormously reinforced by the injustice and want of sympathy that too often surrounds the industrial relationship between employers and employed. That atmosphere is due to old-fashioned employers holding fast to crude individualistic notions of industry, to the idea that a workman is the animated machine—ἔμψυχον ὄργανον—of the Greek philosophers—an “economic unit” without soul, sensibility, ideals or aspirations, who still labour under the discredited obsession that justice and sympathy are incompatible with discipline and the firm handling of labour. Of course, justice and sympathy can have no place in a creed where labour is merely one of a number of troublesome items of the cost of production. Neither is shown, neither is expected. That type of employer has never recognized that capital, brains and manual labour fill separate and distinct rôles in industry. He looks upon himself as the all-dominant personality and Labour as his feudal and dependent hireling.

Now domination, or any attempt at, or suspicion of it, is quite incompatible with co-operation; in fact, the least semblance of it in industry will speedily kill any latent spirit of co-operation. Nor does it matter in the slightest on what ground the domination is based or asserted. It may be on intellectual superiority, technical experience, organizing capacity, social standing, I care not what; it is the poison of all industrial harmony. As soon as it appears there is straightway an end of all co-operation in any democratic organization, and sectarianism and strife mark the reaction that immediately ensues. Mutual agreement is the essential basis of co-operation, both from the objective and subjective points of view. To secure agreement there must be the spirit to agree, and the existence of that spirit depends almost entirely on the knowledge and belief that matters of industrial controversy will be considered and adjusted on principles of justice and equity. My experience of industry has left me convinced beyond all doubt on one point—there is, deep down in the heart of the British workman, a sense of justice and fair-play. Often it takes time and trouble to vitalize it, to assist it in freeing itself from the tentacles of ignorance, Marxian sophistry and revolutionary formulae which entangle it, as weeds do a swimmer struggling to gain the surface, but in the end, if it gets a chance, it will assuredly triumph.

The Need of Strict Justice

The unenlightened employer has not yet given it a chance. He does not believe in its existence, nor in its efficacy as a moderating influence. There are no conceivable circumstances, he will tell you, which Labour will not unjustly use for its own aggrandisement, if an opportunity coincides with power. That in the past has, unfortunately, been the tradition on the part of reactionary employers no less than on the part of Labour. In regard to either justification or excuse, no distinction whatsoever can be drawn between the two. Propositions and proposals founded on equity and reason can, with confidence, be submitted to the workman’s sense of justice. In many instances during the war, I have appealed to this sense of justice with signal success in shop matters of peculiarly acute trade controversy. Even in regard to victimization disputes, always formidable questions, productive often of almost intractable controversy, that is to say, cases of dismissal, fine or reducing, on grounds alleged by the men of the prominence of the “victim” in furthering the interests of his Trade Union, or because of alleged breaches of unwritten shop law, invented, it would be said, by some vindictive foreman. When masters and men have failed to adjust the difference—the former taking their stand on “their right to maintain discipline,” the latter on their duty “to protect their Trade Union interests”—I have invariably found it possible to settle the dispute by getting down to principles of fair-play. If the workman who has been “dealt with” was a shop steward, and was really using his employer’s time for doing his Trade Union branch work when he might and ought to have been doing his shop work, the men have accepted the position that, after notice, the employer is entitled to take exception to that procedure. On the other hand, if he has only been utilizing for Union business the many periods of time which occur in the best organized shops when he is “waiting for work” or “standing by,” and has done it in such a way as not to interfere with his shop work, then the men claim that he has only done what he was entitled to do, and that an employer who objects to him doing Union business under such circumstances is really out against the Union. Most fair-minded people would probably draw the same inference.

The Money Value of Sympathy in Industry

There are to-day many employers, managers, under-managers, and foremen who still act on the dogma that there is nothing to be got out of the sympathetic handling of labour. “It’s so much cutting air,” more than one has said to me. If an employer of this type honestly believed there was money in it, he is far too keen a business man not to try it. But to many employers Labour is still only a machine which, as long as it runs in any sort of way, is to be left severely alone; when it jerks or sticks it is to be lubricated with smooth words, professions of the employer’s anxiety for its welfare, “soft sawder,” for which the men, naturally, have the utmost contempt.

The Sympathetic Handling of Labour a Special Art

A very large number of employers have not realized yet that the sympathetic management of labour is a special art, calling for peculiar qualities of temperament and tact. Until that is accepted as sound economics there can never be co-operation. Technical experience is the usual qualification required of a foreman, seldom, if ever, is the least regard paid to his ability to handle men sympathetically so as to get the best out of them. Yet that, much more than technical capacity, contributes to workshop efficiency. There are many persons wholly unfitted by nature to have the charge of men, more especially to perform the responsible duty of taking on and discharging them. Their presence in a shop is a chronic source of irritation, and keeps the men’s backs perpetually up. Co-operation, under such conditions, cannot exist. An outsider entering the shop can feel the strained relationship almost intuitively. A sort of nervous tension seems to pervade the place. No cheery words are exchanged between men and manager, as the latter passes through the shop. A notice is often found in the office: “Workmen must wipe their feet before entering.” As a workman said to me: “No such direction is given to anyone who comes to place an order,” How much better to say to every one, “Please wipe your feet.” If a workman wants to see some one in authority he is kept hanging about, losing his piece-work earnings, or is brusquely told that the manager is engaged, while all the time he sees customers admitted with welcome to the office. One manager frankly told me that but for his clerk, who artfully got rid of the workman always wanting to see him, he would never have had any time to do his business. That indicates the attitude of mind that good employers are fighting against. It is not considered by unprogressive employers any part of the recognized duty of a manager to apply sympathy, understanding, and tact to the treatment of Labour. There is no doubt it requires very great time and patience and prolonged study and investigation of numerous circumstances which are on the surface trivial. A manager is often loath to devote to work of that kind time and energy which he thinks, and which many employers certainly think, can more profitably be spent in technical and commercial activity.

An Illustration of its Successful Application

But assuming that management will accept the teaching of the best employers that the sympathetic handling of labour is an employer’s duty, and, apart from that, is good business, the problem then will be how to make and sustain such an appeal to the worker that he will be induced to co-operate with the management. A similar problem confronted myself during part of the war period when, as Director of Shipyard Labour, I had charge of the labour in some 2,500 firms, employing something like one million men. Output had to be secured and maintained at all costs, so when any trouble occurred my Department had to intervene if the management and men failed to come to a speedy settlement. When forming the Department I gathered together a small band of enthusiastic and far-sighted employers and Trade Unionists, and in conjunction we made a determined and intensive effort to get right down au fond and strike the chords in industrial human nature, on whose vibration co-operation is dependent. Some simple principles were formulated, which, later, as experience grew, were modified in detail. These were made the basis of the appeal, not merely in mass meetings, Trade Union lodges, and elsewhere among the men, but also, with the assistance—and it was loyally given—of the employers, carried into daily workshop practice. At the time when these principles were first put into operation, there were close on 200 strikes a week in the 2,500 firms. After a twelve-months’ regime the strikes which had fallen regularly, month by month, came down to under ten a week. Some employers denied that the principles had anything to do with the diminution of strikes. One of the most prominent described them as “so much pap.” But the Trade Unions took a different view, and I hold many personal letters from some of the principal Unions attributing the whole of the improvement to the sympathetic regime that had been put into operation—it was really nothing more than carrying sympathy and strict justice into all the details of workshop life. Far be it from me to suggest that any State department, without executive responsibility, can run labour as well as a private employer who has that responsibility; the point is that enormous improvement in the co-operative spirit between employers and employed can be effected by the adoption of a well-developed methodized system of handling labour based on sympathetic principles.

Co-operation is a vital essential for the reconstruction of industry. It is the true antidote to revolution. It will only be forthcoming in industry when sound economic conviction operates in an atmosphere and environment of justice and sympathy. As long as economic fallacy is allowed to permeate the minds of employers and employed, leading them to reject or belittle the material advantages of co-operation by representing it as inimical to their respective interests, and as long as the want of sympathy and justice continues to feed that fallacy, co-operation will never emerge as an integrating force in industry. The remedy is, therefore, obvious.