My object, then, is to show how a system which embodies a large amount
of private enterprise can be made tolerable and acceptable to modern
ideas of equity. For this purpose we need to consider (1) what have we
done in that direction in the past? (2) what is the setting of the
economic problem to-day, and (3) what is to be our policy for the
future?
Dealing first with wealth and wages, the whole field of social
legislation has a bearing upon them, including particularly education,
elementary and technical, the Factory Acts, and a great mass of
legislation which has affected the earning powers of the worker and the
conditions under which he labours. Just before the war we had come to
the point of fixing a minimum wage in the mines, but an even more
important factor was that we had introduced the Trade Board system,
which had begun to impose a minimum wage in certain trades where wages
were particularly low. But the most important direct attack upon the
unequal distribution of wealth was by taxation in accordance with the
Liberal policy of a graduated and differential income-tax, and still
more important by taxes upon inheritance; for it has long been
recognised that though it may be desirable to allow men to accumulate
great wealth during their lifetime, it by no means follows that they
should be entitled to control the distribution of wealth in the next
generation and launch their children on the world with a great advantage
over their fellows of which they may be quite unworthy. On the question
of insecurity it cannot be said that any serious attack has been made on
the problem of how to diminish fluctuations of trade, but again the
Liberal solution for dealing with that difficulty was to remedy not the
cause but its effects by insurance.
On the question of monopolies and exploitation, though we hear a great
deal of the growth of capitalistic organisation, in fact we find that,
of the three greatest industrial countries in the world, Great Britain
is the least trust-ridden, mainly because of its free trade system. In
the case of enterprises not subject to foreign competition, we had begun
to develop a fairly satisfactory system of control of public utility
services which were of a monopolistic character.
Finally, there had been growing up a complete system of collective
bargaining and conciliation, and though we always heard of it whenever
there was dispute and strife, the ordinary public did not know that this
machinery was working and developing in many great and important
industries a feeling of co-operation or at all events of conciliation
between the two sides. I only mention these points very briefly in
passing in order to show that with the evolution of modern industry we
were already feeling our way, haltingly and far too slowly, it is true,
towards a solution of its most serious defects.
Turning to the present situation, we have to face the fact that Great
Britain is to-day faced with one of the most serious positions in its
economic history. We must make allowances for the readily understood
pessimism of a miners' leader, but it should arrest attention that Mr.
Frank Hodges has recently described the present situation as the coming
of the great famine in England. For nearly two decades before the war
there was occurring a slight fall in the real wages of British
workpeople. Food was becoming dearer, as the world's food supply was not
increasing as fast as the world's industrial population, and the
industrial workers of the world had, therefore, to offer more of their
product to secure the food they needed. Hence the cost of living was
rising faster than wages, except in trades where great technical
advances were being made. There is some reason to fear that the war may
have accentuated this tendency.
For some years the distant countries of the world have had to do without
European manufactured goods. You are all aware of the tendency, for
example, of India, Australia, and Canada to develop their own steel
resources and to create manufacturing industries of all kinds. Moreover,
we have lost part of our hold on the food-producing countries of the
world by the sale of our capital investments in those countries to pay
for the war. These and other considerations all suggest that we may find
it increasingly difficult to maintain our position as one of the main
suppliers of the manufactured goods of the world. In such circumstances
we shall be hard put to it to maintain, far less raise, the pre-war
standard of living.
How then are we to cope with this problem of retaining our economic
position? We can only hope to do it if the present financial
difficulties and obstructions working through the exchanges, by which
international commerce is restricted and constrained, are removed. We
can only do it if and so long as the conception of international
division of labour is maintained. And we can only do it if--granted that
we can induce the world to accept this principle of international
division of labour--we can prove ourselves, by our economic and
productive efficiency, to be the best and cheapest producer of those
classes of goods in which our skilled labour and fixed capital is
invested.
Assuming the financial difficulty is overcome, and that the old régime
of international specialisation revives, can we still show to the world
that it is more profitable for them to buy goods and services from us
than from other people? Can we compete with other industrial countries
of the world? The actual output of our labour in most cases is far less
than its potential capacity, partly because of technical conservatism,
and partly for reasons connected with the labour situation. How are we
to mobilise these reserve resources. I have only space to deal with the
second of these problems. In Germany labour is well disciplined, and has
the military virtues of persistence and obedience to orders in the
factory. But we cannot hope to call forth the utmost product of our
labouring population by drill-sergeant methods.
In America this problem is a different one, because the American
employer is often able to take full advantage of his economic position.
For he has a labouring population of mixed nationality, which does not
readily combine, and he can play off one section against the other.
British employers cannot, if they would, deal with British labour on the
principle of Divide and Rule. There is only one method by which we can
hope to call forth this great reserve capacity of British labour, and
that is by securing its confidence. If Free Trade is one of the legs on
which British prosperity rests, the other is goodwill and active
co-operation between the workman and his employer. How is that goodwill
to be gained?
The solution of that problem is only partly in the hands of the
politician; that is one of the reasons why it is extremely difficult to
suggest an industrial policy which is going to hold out the hope of
reaching Utopia in a short time. But it is obviously essential somehow
or another to develop, particularly among employers, the sense of
trusteeship--the sense that a man who controls a large amount of capital
is in fact not merely an individual pursuing his own fortune, but is
taking the very great responsibility of controlling a fragment of the
nation's industrial resources. And we have also to develop a conception
of partnership and joint enterprise between employer and employed.