Labour policy—false and true

If too little consideration for the community has been exercised by industry—and that is unquestionably proved in the foregoing chapters—the community has scarcely realized its duties to the workers in industry.

The Formation of Sound Public Opinion

Industrial disputes in the long run must be decided by the force of public opinion. In the past there has been far too great an inclination on the part of the public to dissociate themselves from industrial controversy as though it concerned them not. Apart from the direct economic effect of any great strike upon the consuming public, the community is under a definite moral obligation to try and reach a right conclusion on the issue and to use the weight of its opinion to secure a fair and equitable settlement. In the course of any strike of importance immediate tribute is paid by both sides to the power of the public. This is evidenced by the various statements of their respective cases which emanate from each side. Labour is specially sensitive to the control of public opinion, and is the first to realize the hopelessness of protracting any strike against which public opinion is hardening. Therefore, both in regard to ascertainment of facts and an intelligent determination of the merits of each industrial controversy, the public is laid under great obligations. It is one of labour’s chief complaints that the average shareholder makes no effort whatever at general meetings of his company to ascertain the facts in regard to strikes or lock-outs, or to regulate his investments with some regard to his company’s treatment of its workers. This complaint is justified.

The Responsibility of the Consumer

Every consumer has definite responsibilities. In the middle of last century he was almost omnipotent, and industry’s chief object was to meet, indeed to anticipate, his desires. His power to-day is not so unrestricted by reason of the competition between consumers in different nations for limited world supplies, and because of the better organization of employers and employed. But still the consumer has immense power, and in the interests of industry, society, and, indeed, of the nation, he ought to realize his duties. The day has long gone past when it was thought that all expenditure by a consumer, whether in necessaries or luxuries, conduced alike to the benefit of trade and the increase of the national wealth. It is now recognized that at all times the supply of labour and raw material and capital—“the wealth heap,” as Mr. Hartley Withers graphically describes it in his Poverty and Waste—is limited. If, therefore, any consumer demands that more luxuries be produced than necessaries, there must be fewer necessaries for those who want them, and those at higher prices because we are expending on luxuries capital and labour and raw materials otherwise available for the production of necessaries. Even if at any time the supply of necessaries exceeds the demand, that does not justify the production of luxuries. If luxuries are demanded, capital and labour and raw materials must be more or less permanently hypothecated for their production. If, on the other hand, luxuries are dispensed with, then capital and labour will be diverted to the production of necessaries, with consequent reduction of prices and improvement in real wages of workers as the supply of necessaries increases. As capital more or less automatically tends to flow to whatever class of production affords the greatest remuneration, it is really only the consumer who can control in what particular class of production it is invested. A question will always remain: What is unreasonable luxury? That is, of course, a question which each person must answer for himself, but anything, as I view the matter, is a reprehensible luxury when its production results in the consumption of wealth or attraction of labour which is needed for more urgent national purposes. If any consumer is in doubt, he can save instead of spend. He can invest his savings in industry, or, if not, leave them on deposit with his bank, which can do it for him. By this means new permanent industries will be started, production of necessaries increased, wages and purchasing power improved, and a definite service rendered to the community by the establishment of undertakings which, if sound and properly managed, will supply employment, and increase and circulate wealth in a way the production of a luxury could not attempt to rival. The consumer has a duty nowadays to think.

There is a much smaller supply of wealth than most persons realize, which accentuates the duty of every person to use his income in the manner most beneficial to the community. In his book The Division of the Product of Industry, Professor Bowley shows (p. 47) that if we take the tax-paying income for 1911 of residents in the United Kingdom derived from home sources, viz. £742,000,000, and from it subtract (i) earned incomes—giving no earner more than £160 per annum—(ii) farmers’ incomes, and (iii) endowed charities, the balance left is only £550,000,000. Subtracting from this latter figure the pre-war amounts required for national saving and national expenses there remained only 200 to 250 millions “which on the extremist reckoning can have been spent out of home-produced income by the rich or moderately well-off on anything in the nature of luxury.” This sum would have been little more than sufficient to bring the average wages of adult men and women up to a minimum of 35s. 3d. weekly for a man and 20s. for a woman, which Mr. Rowntree in The Human Needs of Labour estimates as reasonable—with prices as at July, 1914. Professor Bowley puts it in yet another way. Before the war, there were about 10,000,000 households each containing on an average about 4½ persons, of which nearly 2 in each household were wage-earners. If the total home income had been divided equally round, the average net income per family, after all rates and taxes were paid and an adequate sum invested in home industries, would have been nominally £153 from home income, which, if the balance of income brought home from abroad and not re-invested abroad were also divided equally round, would be increased to £162 per annum. The equal distribution of income would, of course, have enormously increased prices. Professor Bowley observes: “When it is realized that the whole income of the nation was only sufficient for reasonable needs if equally divided, luxurious expenditure is seen to be more unjustifiable even than has been commonly supposed.”

The Brussels International Financial Conference said: “Above all, to fill up the gap between the supply of, and the demand for, commodities, it is the duty of every patriotic citizen to practise the strictest possible economy, and so to contribute his maximum effort to the common weal. Such private action is the indispensable basis for the fixed measures required to restore public finances.”

The Duty of the Citizen

The principles of Labour policy which I have outlined are generally in the direction of freedom and in its best sense individualism, looking rather to the development in industry of co-operation than to struggle and the use of power to settle differences and express the balance of economic forces. But industrial freedom and individualism impose correlative responsibilities on all citizens, especially in regard to the maintenance of efficient social services. At first sight, any mention of social services may appear a contradiction of the argument developed so far. Social services to many minds are inevitably associated with relief in the narrow sense of the word, conceived as a concession to the clamour of Socialist theorists. In reality they are the growing expression of an increased social sensitiveness. No State can be healthy which is based on a foundation of hardship and suffering. Certain abuses must be removed, and certain conditions remedied. In any advanced economic society the State must take action, has taken action, and will in future extend its action. The social conscience, to anyone who reads history, is a real and growing force. But to be sound and effective it must of necessity be based upon voluntary individual co-operation.

As things are to-day, we must recognize that State activity in social services is in many branches ahead of the understanding of the ordinary man. It has, through the nature of our political machinery, developed in a specialized manner, which throws a heavy burden upon legislators and administrators whether voluntary or official. There is a consequent confusion, lack of co-ordination, and overlapping of effort which leads to waste, not merely of money, but of what is, in the long run, more important—human enthusiasm, effort and efficiency. In dealing with this problem, the individual is of vital importance. The average citizen must know more, take more interest, and render more service, if order and economy are to take the place of confusion and waste. The necessity for this individual interest is reinforced by the present financial situation.

We are, as a nation, recovering, in fact, becoming slowly convalescent, from the effects of war-time and post-war inflation of money and credit. We have realized that sound finance and the balancing of the Budget are the necessary foundations of prosperity. Other European nations are still enjoying the temporary delusive prosperity that can always be obtained by inflation and dishonest finance. To carry the economic argument one stage further, we must realize that the State can only carry non-producers to the extent to which industry can obtain a surplus, after providing for wages, interest, replacements, etc. The State cannot, by any arrangement of taxation, loans or administrative activity, provide an artificial standard of life, which is not earned by human individual activity. There is, therefore, urgent need for education in finance, in both its public and private aspects. Some of us are learning the lesson by the bitter experience of high rates and taxes, others by the hardships of unemployment. But out of this experience much good is coming. We are learning the true and permanent bases of national prosperity. The dangers of Great Britain to-day are not to be found in Red Revolution. Democracy will fail, if it fails at all, from a lack of understanding of economics and finance. Politicians without scruple or foresight may hold out bribes of immediate material advantages, trusting to some juggling of figures to enable them to redeem their promises. During the war, the National Savings Committee, by a steady education in economics—converting financial theories of currency, goods and services into the terms of men and munitions—educated the general public into the social consequences of spending and thrift. The control of national finances so established under the patriotic stimulus and urgency of war is no less necessary in peace.

The history of social legislation in the twentieth century is the expression not merely of democratic pressure, but of the increased social sensitiveness to the national conscience, awakened by individuals of outstanding merit protesting that certain evils should no longer exist. As the industrial revolution worked itself out, it was possible to ascertain, by patient investigation, its weaknesses and evils, and to provide certain remedies. Based on a steadily growing prosperity, its record is worth reciting; a wide extension of education providing in increasing degree an opportunity to the able men and women in all ranks of society to develop their individuality; a general standard of education which proved its value in increasing temperance, diminished crime, and growing sense of public spirit, culminating in attention to the physical condition of school-children, that in normal times would have given every child a happy healthy childhood. In public health, the elimination of the most dangerous infectious diseases, a steady improvement of sanitary conditions, and an education in preventive medicine, that can be proved by statistics to have been directly remunerative. On the positive side, an extension of infant welfare work, which, relying on the natural affection of mothers, and calling upon them to develop their own individuality, has for a small expenditure reduced the infant death rate by half. Health Insurance on a contributory basis has lessened the sham of sickness in the wage-earner’s family, and as the results of the quinquennial valuations of Approved Societies are more widely known and understood, will overcome any remaining adverse criticism. Old age pensions have removed the fear of an old age spent in dependence on grudging relatives, or on the Poor Law, with its deterrent associations. The treatment of unemployment has gained in efficiency and thoroughness by the steady gaining of experience—the Labour Bureaux, Unemployment Insurance, the use of State credits to finance international trade and guarantee extensions of industry at home are laying foundations of a new order—the irregular activities of voluntary organizations and local authorities in emigration have developed into an Imperial Scheme for Overseas Settlement. Under the existing conditions of financial stringency, we have to consider how this burden can, in the future, be borne. How much of the national income can, in the years immediately to come, be devoted to services admittedly admirable in their objects? One fact becomes clear: at all costs we must hold on to the main essentials in the public services and keep the machinery in working order so that it will be ready for expansion when financial conditions make it possible. The fall in prices, resulting in a reduced cost of living, lower war bonuses, lower cost of materials, is bringing, and will bring, even further relief to the taxpayer and ratepayer. The adjustment, however, lags behind the change in individual circumstances, and is the cause of much criticism of those in authority. If, however, this policy of holding on to essentials is to be carried out, there will have to be an increased measure of economy—economy, not merely of money, but, in its original Aristotelian sense, of management of a household. This can only be done by attention to details, by a higher standard of public spirit, by which the services in health, education, etc., are looked upon by those who benefit as something for which they pay, and for which, in the long run, they are responsible. If the desire for education were widespread, there would be an immediate economy in school attendance officers, rota committees, and all the machinery devised to block the holes in the educational net. If the individual standard of care for health were raised as it can be raised by such movements as health weeks, baby weeks, etc., there would be a consequent reduction in the expenditure on Public Health. But the largest measure of economy of the household management type would come through a co-ordination of the activities of national departments, local authorities and voluntary organizations. Attention has recently been called to the advance of expenditure due to the system of grants-in-aid to local authorities, by which local authorities are led to spend money on the false assumption that the ratepayer will gain something to be paid for by the taxpayer. The discrepancy between the rating system and the tax-paying system is the root cause of many difficulties, but a wider understanding of finance would obviate the grosser evils.

Under our English system of government, all recent legislation has been of specialized character dealing with specified classes, or a particular evil. As each need was recognized, a special administration was set up to deal with it, and we now have innumerable inquiry officers, inspectors, officials of various grades administering Acts of Parliament and regulations in varying ways. The whole relationship of national departments and local authorities requires revision and reorganization. Owing to the burden of rates on the ratepayer driving the local authorities to rely more and more upon subsidies from the National Exchequer, and to their refusing to undertake new burdens, social services have been identified with departmental activity, red tape and bureaucracy. Local government has suffered from a gradual atrophy.

Now, under pressure of financial stringency, is the time to overhaul our social machinery. It needs the services of the best brains that the country can produce. The problem has two aspects. First comes financial policy. Owing to the complexity of administration, no local check can exist on the total expenditure in any area. Inquiry is urgently needed, on the lines of the national return known as the Drage return, setting out for each local government area the sums paid by the local authority, Health and Education, etc., the Poor Law, and the National Ministries of Pensions, Labour, etc. At present the facts are not known, and, indeed, are not available. Secondly, in administration, we need a co-ordination of investigation and inquiry, and some measure of co-ordination in the payment of relief; at the very least, a register of assistance by which overlapping in payments and machinery could be avoided. The extent to which either of these movements could be successful depends almost entirely upon local interest. Any scheme set up by Government would but add to the general confusion. Economy in this sense is a strict inquiry and attention to detail, and is a service which can only be rendered by those of business experience and ability. Finally would come a reorganization of the Poor Law, not in any spirit of hostility to those who have done such admirable work in spite of abuse and misrepresentation, but a reorganization on to new areas coinciding with the other areas of local government, and more nearly adjusted to the present industrial conditions.

As a social policy, the insistence on economy will seem dull, but the comment of the old lady about husbands that the good ones are dull applies equally to social policy. The future development of social services must depend upon the economic and financial future. No one under present conditions can advocate fresh channels of expenditure, or the widening of existing channels. This is not a confession of failure, or an admission of social stagnation. We can no longer measure social reform by the gradually increasing sums of money spent in particular specialized services. We must, for a future as long as we can foresee, measure social progress in the terms of the social service that the individual is prepared to render. As a preparation we need two elements: (1) wider economic education; (2) wider knowledge of social conditions, and the provision for dealing with social evils. For the first the development of the Savings Movement is a guide. Started in 1916, with the twofold function of economic education and the provision of facilities for the small investor, it has grown into a financial instrument of unlimited possibilities.

In the six months ending March 31, 1922, £93,000,000 have been invested in Savings Certificates, a sum which is more remarkable when one considers the conditions in industry during this time. By a wise foresight, arrangements have been made by which local authorities can borrow from the Public Works Loans Commissioners 50 per cent. of the money raised in the area of any local authority. In brief, this means that £46,500,000 per annum of new capital is being saved, and made available for works of public improvement if required, while another £46,500,000 will be available for the repayment of ways and means advances which will thus set free bank credits for the financing of private trade. It is a steady regular funding of the floating debt by money which is actually saved. As a measure of comparative magnitude of millions it is well to point out that the total cost of Old Age Pensions for the past financial year was £21,750,000, and the total cost of Poor Law in the year ending March 31, 1920, was £28,500,000. This measure of success has concealed to some extent the other function of the Committee, viz. economic education. In the last analysis the problem of unemployment becomes one of finance. So far as it can be alleviated by measures of insurance or relief or emigration, taxation and rates will provide the means, but beyond all compulsion, the individual has a measure of responsibility. Wise spending, the avoidance of waste and extravagance, will do more to restore the foundations of industry and credit than any action by Government. Just as during the war it was possible to divert goods and services from private ends to the main national need of providing men and munitions necessary for victory, so to-day a conscious control of individual expenditure, including a measure of personal thrift and saving, will mean lower rates of interest, a larger amount of credit, and a general improvement of trade and employment.

As regards the second element, viz. the wider knowledge of social conditions, foundations are being laid by voluntary effort. In all the big industrial areas a growing measure of interest is being taken in social conditions. The pre-war voluntary associations are realizing their inevitable connection with the Government Departments and local authorities. Councils, representative of local authorities and voluntary associations, have been formed, based, not on the Victorian ideal of the Lady Bountiful, but on the juster, saner ideal of a common citizenship owing service to the community. Practical steps are being taken to reduce the chaos and overlapping in effort and money: in one place a survey of local conditions; in another a handbook of information on the local provision; in yet another a system of mutual registration of assistance and relief, and finally, an investigation into the total sums spent out of public funds in social services. Underlying it all is the personal service rendered by social workers, as welfare workers, Guilds of Help, prohibition officers, infant welfare workers, etc. Out of experience has come the understanding that two types of co-operation are needed: first, the co-operation of experts in co-ordinating questions of policy; secondly, the co-operation of individual citizens in solving the problems of the individual in trouble. From a wide experience of industrial unrest there is a firm conviction that the hard cases, the unintentional injustices, the administrative difficulties, summed up by the phrase “red tape,” are a more fruitful source of trouble than the larger grievances.

This advocacy of personal service in many fields and in differing degrees is not the vapouring of a social visionary, but is an expression of the genius of our race. Every reform, every method of social advance, has owed its existence to the enthusiasm of volunteers trying a new idea, finding it work successfully, and then convincing others that it should apply throughout the country. It is not muddling through, but the onward march of individual freedom, which includes a freedom to combine and a freedom to persuade and convince others that a new way is the right way. The Teutonic method of social improvement by compulsion, not for its own sake, but for military purposes, influenced English thought for a generation. The result is seen in a development of the State far beyond the capacity or desires of our people. The remedy is to be found, not in a further treatment of homœopathic doses of the same medicine, but by relying upon the natural, healthy development of the national spirit through and in the individual.

The uncovenanted service that is needed from each member of the community “is inspired service that is not measured in cash, about which there are no overtime disputes, and in which time and a half or double time is welcomed rather than objected to. And is not that the kind of service for which the world is pining? Unless we can do away with the nicely balanced give and take we shall not make progress in alleviating the sufferings of humanity.” And there is an even broader vision. As against the extreme Socialists who preach class-warfare, and try to sever class from class, there is only one true antidote—some strong, compelling, active principle that tends to bring together all classes, not for selfish ends, but springing from an ever-present sense of the brotherhood of men.