The Industrial Outlook of Low-Skilled Labour.
§ 1. The Concentration of Capital.--It must be remembered that we have
been concerned with what is only a portion of the great industrial
movement of to-day. Perhaps it may serve to make the industrial position
of the poor low-skilled workers more distinct if we attempt to set this
portion in its true relation to the larger Labour Problem, by giving a
brief outline of the size and relation of the main industrial forces of
the day.
If we look at the two great industrial factors, Capital and Labour, we
see a corresponding change taking place in each. This change signifies a
constant endeavour to escape the rigour of competition by a co-operation
which grows ever closer towards fusion of interests previously separate.
Look first at Capital. We saw how the application of machinery and
mechanical power to productive industries replaced the independent
citizen, or small capitalist, who worked with a handful of assistants,
by the mill and factory owner with his numerous "hands." The economic
use of machinery led to production on a larger scale. But new, complex,
and expensive machinery is continually being invented, which, for those
who can afford to purchase and use it, represents a fresh economy in
production, and enables them both to produce larger quantities of goods
more rapidly, and to get rid of them by underselling those of their
trade competitors who are working with old-fashioned and less effective
machinery. As this process is continually going on, it signifies a
constant advantage which the owner of a large business capital has over
the owner of a smaller capital. In earlier times, when trade was more
localized, and the small manufacturer or merchant had his steady
customers, and stood on a slowly and carefully acquired reputation, it
was not so easy for a new competitor to take his trade by the offer of
some small additional advantage. But the opening up of wider
communication by cheap postage, the newspaper, the railway, the
telegraph, the general and rapid knowledge of prices, the enormous
growth of touting and advertising, have broken up the local and personal
character of commerce, and tend to make the whole world one complete and
even arena of competition. Thus the fortunate possessor of some
commercial advantage, however trifling, which enables him to produce
more cheaply or sell more effectively than his fellows, can rapidly
acquire their trade, unless they are able to avail themselves of the new
machinery, or special skill, or other economy which he possesses. This
consideration enables the large capitalist in all businesses where large
capital contains these advantages, or the owner of some large natural
monopoly, who can most cheaply extract large quantities of raw material,
to crush in free competition the smaller businesses. In proportion as
business is becoming wider and more cosmopolitan, these natural
advantages of large capital over small are able to assert themselves
more and more effectively. In certain branches of trade, which have not
yet been taken over by elaborate machinery, or where everything depends
upon the personal activity and intelligence, and the detailed
supervision of a fully interested owner, the small capitalist may still
hold his own, as in certain branches of retail trade. But the general
movement is in favour of large businesses. Everywhere the big business
is swallowing up the smaller, and in its turn is liable to be swallowed
by a bigger one. In manufacture, where the cosmopolitan character is
strongest, and where machinery plays so large a part, the movement
towards vast businesses is most marked; each year makes it more rapid,
and more general. But in wholesale and retail distribution, though
somewhat slower, the tendency is the same. Even in agriculture, where
close personal care and the limitations of a local market temper the
larger tendency, the recent annals of Western America and Australia
supply startling evidence of the concentrative force of machinery. The
meaning of this movement in capital must not be mistaken. It is not
merely that among competing businesses, the larger showing themselves
the stronger survive, and the smaller, out-competed disappear. This of
course often happens. The big screw-manufacturer able to provide some
new labour-saving machinery, to advertise more effectively, or even to
sell at a loss for a period of time, can drown his weaker competitors
and take their trade. The small tradesman can no longer hold his own in
the fight with the universal provider, or the co-operative store.
But this destruction of the small business, though an essential factor
in the movement, is not perhaps the most important aspect. The
industrial superiority of the large business over the small makes for
the concentration both of small capitals and of business ability. The
monster millionaire, who owns the whole or the bulk of his great
business, is after all a very rare specimen. The typical business form
of to-day is the joint stock company. This simply means that a number of
capitalists, who might otherwise have been competing with one another on
a small scale of business, recognizing the advantage of size, agree to
mass their capital into one large lump, and to entrust its manipulation
to the best business ability they can muster among them, or procure from
outside. This process in its simplest form is seen in the amalgamation
of existing and competing businesses, notable examples of which have
recently occurred in the London publishing trade. But the ordinary
Company, whether it grows by the expansion of some large existent
business, or, like most railways or other new enterprises, is formed out
of money subscribed in order to form a business, represents the same
concentrating tendency. These share-owners put their capital together
into one concern, in order to reap some advantage which they think they
would not reap if they placed the capital in small competing businesses.
But though it has been calculated that about one-third of English
commerce is now in the hands of joint stock companies, this by no means
exhausts the significance of the centralizing force in capital. Almost
all large businesses, and many small businesses, are recognized to be
conducted largely with borrowed capitals. The owners of these debentures
are in fact joint capitalists with the nominal owner of the business.
They prefer to lend their capital, because they hope to enjoy a portion
of the gain and security which belongs to a large business as compared
with a small one. Along with this coming together of small capitals to
make a large capital, there is a constant centralization and
organization of business ability. It is not uncommon for the owner of a
small and therefore failing business to accept a salaried post in the
office of some great business firm. So too we find the son of a small
tradesman, recognizing the hopelessness of maintaining his father's
business, takes his place behind the counter of some monster house.
§ 2. How Competition affects Capital.--Now the force which brings about
all these movements is the force of competition. Every increase of
knowledge, every improvement of communication, every breakdown of
international or local barriers, increases the advantage of the big
business, and makes the struggle for existence among small businesses
more keen and more hopeless. It is the desire to escape from the heavy
and harassing strain of trade competition, which practically drives
small businesses to suspend their mutual hostilities, and to combine. It
is true that most of the large private businesses or joint stock
companies are not formed by this direct process of pacification. But for
all that, their _raison d'être_ is found in the desire to escape the
friction and waste of competition which would take place if each
shareholder set up business separately on his own account. We shall not
be surprised that the competition of small businesses has given way
before co-operation, when we perceive the force and fierceness of the
competition between the larger consolidated masses of capital. With the
development of the arts of advertising, touting, adulteration, political
jobbery, and speculation, acting over an ever-widening area of
competition, the fight between the large joint stock businesses grows
always more cruel and complex. Business failures tend to become more
frequent and more disastrous. A recent French economist reckons that ten
out of every hundred who enter business succeed, fifty vegetate, and
forty go into bankruptcy. In America, where internal competition is
still keener and speculation more rife, it has been lately calculated
that ninety-five per cent, of those who enter business "fail of
success." Just as in the growth of political society the private
individual has given up the right of private war to the State, with the
result that as States grow stronger and better organized, the war
between them becomes fiercer and more destructive, so is it with the
concentration of capital. The small capitalist, seeking to avoid the
strain of personal competition, amalgamates with others, and the
competition between these masses of capital waxes every day fiercer. We
have no accurate data for measuring the diminution of the number of
separate competitors which has attended the growing concentration of
capital, but we know that the average magnitude of a successful business
is continually increasing. The following figures illustrate the meaning
of this movement from the American cotton trade, which is not one of the
industries most susceptible to the concentrative pressure. "It will be
seen that in 756 large establishments in 1880, in which the aggregate
capital invested was five times as great as that in the 801
establishments in 1830, the capital invested per spindle was one-third
less, the number of spindles operated by each labourer nearly three
times as large, the product per spindle one-fourth greater, the product
per dollar invested twice as large, the price of the cotton cloth nearly
sixty per cent, less, the consumption _per capita _of the population
over one hundred per cent greater, and the wages more than double. What
is true of this industry is true of all industries where the
concentration of capital has taken place."[38]
It is needless to add that these large works are conducted, not by
single owners, but in nearly all cases by the managers of associated
capitals. Regarded from the large standpoint of industrial development,
all these phenomena denote a change in the sphere of competition. From
the competition of private capitals owned by individuals we have passed
to the competition of associated capitals. The question now arises,
"Will not the same forces, which, in order to avoid the waste and
destruction of ever keener competition, compelled the private
capitalists to suspension of hostility and to combination, act upon the
larger masses of associated capital?" The answer is already working
itself clearly out in industrial history. The concentrative adhesive
forces are everywhere driving the competing masses of capital to seek
safety, and escape waste and destruction, by welding themselves into
still larger masses, renouncing the competition with one another in
order to compete more successfully with other large bodies. Thus,
wherever these forces are in free operation, the number of competing
firms is continually growing less; the surviving competitors have
crushed or absorbed their weaker rivals, and have grown big by feeding
on their carcases.
But the struggle between these few big survivors becomes more fierce
than ever. Fitted out with enormous capital, provided with the latest,
most complex, and most expensive machinery, producing with a reckless
disregard for one another or the wants of the consuming public,
advertising on a prodigious scale in order to force new markets, or
steal the markets of one another, they are constantly driven to lower
their prices in order to effect sales; profits are driven to a minimum;
all the business energy at their command is absorbed by the strain of
the fight; any unforeseen fluctuations in the market brings on a crisis,
ruins the weaker combatants, and causes heavy losses all round. In
trades where the concentrative process has proceeded furthest this
warfare is naturally fiercest. But as the number of competing units
grows smaller, arbitration or union becomes more feasible. Close and
successful united action among a large number of scattered competitors
of different scales of importance, such as exist during the earlier
stage of capitalism, would be impossible. But where the number is small,
combination presents itself as possible, and in so much as the
competition is fiercer, the direct motive to such combination is
stronger. Hence we find that attempts are made to relieve the strain
among the largest businesses. The fiercest combatants weary of incessant
war and patch up treaties. The weapon of capitalist warfare is the power
of under-selling--"cutting prices." The most powerful firms consent to
sheathe this weapon, i.e. agree not to undersell one another, but to
adopt a common scale of prices. This action, in direct restraint of
competition, corresponds to the action of a trades union, and is
attained by many trades whose capital is not large or business highly
developed. Neither does it imply close union of friendly relations
between the combining parties. It is a policy dictated by the barest
instinct of self-preservation. We see it regularly applied in certain
local trades, especially in the production and distribution of
perishable commodities. Our bakers, butchers, dairy-men, are everywhere
in a constant state of suspended hostility, each endeavouring indeed to
get the largest trade for himself, but abiding generally by a common
scale of prices. Wherever the local merchants are not easily able to be
interfered with by outsiders, as in the coal-trade, they form a more or
less closely compacted ring for the maintenance of common terms, raising
and lowering prices by agreement. The possibility of successfully
maintaining these compacts depends on the ability to resist outside
pressure, the element of monopoly in the trade. When this power is
strong, a local ring of competing tradesmen may succeed in maintaining
enormous prices. To take a humble example--In many a remote Swiss
village, rapidly grown into a fashionable resort, the local washerwomen
are able to charge prices twice as high as those paid in London,
probably four times as high as the normal price of the neighbourhood.
Grocers or clothiers are not able to combine with the same effect, for
the consumer is far less dependent on local distribution for these
wares. But wherever such retail combinations are possible they are
found. Among large producers and large distributing agencies the same
tendency prevails, especially in cases where the market is largely
local. Free competition of prices among coal-owners or iron-masters
gives way under the pressure of common interests, to a schedule of
prices; competing railways come to terms. Even among large businesses
which enjoy no local monopoly, there are constant endeavours to maintain
a common scale of prices. This condition of loose, irregular, and
partial co-operation among competing industrial units is the
characteristic condition of trade in such a commercial country as
England to-day. Competitors give up the combat _à outrance_, and fight
with blunted lances.
§ 3. Syndicates and Trusts.--But it is of course extremely difficult to
maintain these loose agreements among merchants and producers engaged in
intricate and far-reaching trades. A big opportunity is constantly
tempting one of them to undersell; new firms are constantly springing up
with new machinery, willing to trade upon the artificially raised
prices, by under-selling so as to secure a business; over-production and
a glut of goods tempts weaker firms to "cut rates," and this breaks down
the compact. A score of different causes interfere with these delicate
combinations, and plunge the different firms into the full heat and
waste of the conflict. The renewed "free competition" proves once more
fatal to the smaller businesses; the waste inflicted on the "leviathans"
who survive forms a fresh motive to a closer combination.
These new closer combinations are known by the names of Syndicate and
Trust. This marks another stage in the evolution of capital. In the
United States, where the growth is most clearly marked, the Standard Oil
Trust forms the leading example of a successful Trust. In 1881, this
Standard Oil Company having maintained for some ten years tolerably
close informal relations with its leading competitors in the Eastern
States, and having crushed out the smaller companies, entered into a
close arrangement with the remaining competitors, with the view of a
practical consolidation of the businesses into one, though the formal
identity of the several firms was still maintained. The various
companies which entered into this union, comprising nearly all the chief
oil-mills, submitted their businesses to valuation, and placed
themselves in the hands of a board of trustees, with an absolute power
to regulate the quantity of production, and if necessary to close mills,
to raise and lower prices, and to work the whole number as a joint
concern. Each company gave up its shares to the Trust, receiving notes
of acknowledgment for the worth of the shares, and the total profits
were to be divided as dividend each half-year. This Trust has continued
to exist, and has now a practical monopoly of the oil trade in America,
controlling, it is reckoned, more than 90 per cent. of the whole market,
and regulating production and prices.
Everywhere this process is at work. Competing firms are in every trade,
where their small numbers permit, striving to come to closer terms than
formerly, and either secretly or openly joining forces so as to get full
control over the production or distribution of some product, in order to
manipulate prices for their own profit. From railways and corn-stores
down to slate-pencils, coffins, and sticking-plaster, everything is
tending to fall under the power of a Trust. Many of these Trusts fail to
secure the union of a sufficient proportion of the large competitors, or
quarrels spring up among the combining firms, or some new firms enter
into competition too strong to be fought or bought over. In these ways a
large number of the Trusts have hitherto broken down, and will doubtless
continue to break down. In England, this step in capitalist evolution is
only beginning to be taken. In glass, paper, salt, coal, and a few other
commodities, combinations more permanent than the mere Ring or Corner,
and closer than the ordinary masters' unions, have been formed. But Free
Trade, which leaves us open to the less calculable and controllable
element of foreign competition, and the fact that the earlier stages of
concentration of capital are not yet completed here in most trades, have
hitherto retarded the growth of the successful Trust in England. Even in
America there is no case where the monopoly of a Trust reigns absolute
through the whole country, though many of them enjoy a local control of
production and prices which is practically unrestricted. Excepting in
the case of the Standard Oil Trust, and a few less important bodies
which enjoy the control of some local monopoly, such as anthracite coal,
the supremacy of the leading Trust or Syndicate is brought in certain
places into direct conflict with other more or less independent
competing bodies. In other words, the evolution of capital, which tends
ever to the establishment of competition between a smaller number of
larger masses, has nowhere worked out the logical conclusion which means
the condensation of the few large competing bodies into a single mass.
This final step, which presents a completely organized trade with the
element of competition utterly eliminated under the control of a single
body of mere joint-owners of the capital engaged, must be regarded as
the goal, the ideal culmination of the concentrative movement of modern
capital. It is said that more than one-third of the business in the
United States is already controlled by Trusts. But most of them have
only in part succeeded in their effort to escape from competition by
integrating their personal interests into a single homogeneous mass.
Even in cases where they do rule the market untrammelled by the direct
interference of any competitors, they are still deterred from a free use
of their control over prices by the possibility of competition which any
full use of this control might give rise to. For it does not follow that
even where a Trust holds an absolute monopoly of the market of a
locality, that it will be able to maintain that monopoly were it to
raise its prices beyond a certain point. In proportion, however, as
experience yields a greater skill in the management of Trusts, and their
growing strength enables them to more successfully defy outside attempts
at competition, their power to raise prices and increase their rates of
profit would rise accordingly.
Regarding, then, the development of the capitalist system from the first
establishment of the capitalist-employer as a distinct industrial class,
we trace the massing of capital in larger and larger competing forms,
the number of which represents a pyramid growing narrower as it ascends
towards an ideal apex, represented by the absolute unity or identity of
interests of the capital in a given trade. In so far as the interests of
different trades may clash, we might carry on this movement further, and
trace the gradual agreement, integration, and fusion of the capitals
represented in various trades. There is, in fact, an ever-growing
understanding and union between the various forms of capital in a
country. The recognition of this ultimate identity of interest must be
regarded as a constant force making for the unification of the whole
capital of a country, in the same way as the common interests of
directly competing capitals in the same trade leads to a union for
mutual support and ultimate identification.
§ 4. Uses and Abuses of the Trust.--This, however, carries us beyond the
immediate industrial outlook. The successful formation of the Trust
represents the highest reach of capitalistic evolution. Although the
subject is too involved for any lengthy discussion here, a few points
bearing on the nature of the Trust deserve attention.
The Trust is clearly seen to be a natural step in the evolution of
capital. It belongs to the industrial progress of the day, and must not
be condemned as if it were a retrograde or evil thing. It is distinctly
an attempt to introduce order into chaos, to save the waste of war, to
organize an industry. The Trust-makers often claim that their line of
action is both necessary and socially beneficial, and urge the following
points--
The low rates of profit, owing to the miscalculation of competitors who
establish too many factories and glut the market; the waste of energy in
the work of competition; the adulteration of goods induced by the desire
to undersell; the enormous royalties which must be paid to a competitor
who has secured some new invention--these and other causes necessitate
some common action. By the united action of the Trust the following
economic advantages are gained--
a. The saving of the labour and the waste of competition.
b. Economy in buying and selling, in discovering and establishing new
markets.
c. The maintenance of a good quality of wares without fear of being
undersold.
d. Mutual guarantee and insurance against losses.
e. The closing of works which are disadvantageously placed or are
otherwise unnecessary to furnish the requisite supply at profitable
prices.
f. The raising of prices to a level which will give a living basis of
steady production and profit.
That all these economies are useful to the capitalists who form Trusts
will be obvious. How far they are socially useful is a more difficult
question. Reflection, however, will make one thing evident, viz. that
though the public may share that part of the advantage derived from the
more economical use of large capitals, it cannot share that portion
which is derived from the absence of competition. If two or more Trusts
or aggregations of capital are still in actual or even in potential
competition, the public will be enabled to reap what gain belongs to
larger efficient production, for it will be for the interest of each
severally to sell at the lowest prices; but if a single Trust rule the
market, though the economic advantage of the Trust will be greater in so
far as it escapes the labour of all competition, there will be no force
to secure for the public any share in this advantage. The advantageous
position enjoyed by a Trust will certainly enable its owners at the same
time to pay high profits, give high wages, and sell at low prices. But
while the force of self-interest will secure the first result, there is
nothing to guarantee the second and third. There is no adequate security
that in the culminating product of capitalistic growth, the single
dominant Trust or Syndicate self-interest will keep down prices, as is
often urged by the advocates of Trust. It is true that "they have a
direct interest in keeping prices at least sufficiently low not to
invite the organization of counter-enterprises which may destroy their
existing profits."[39] But this consideration is qualified in two
ways:--_a_. Where Trust is formed or assisted by the possession of a
natural monopoly, i.e. land, or some content of land, absolutely limited
in quality, such potential competition does not exist, and nothing, save
the possibility of substituting another commodity, places a limit on the
rise of price which a Trust may impose on the public.. Although the fear
of potential competition will prevent the maintenance of an indefinitely
high price it will not necessarily prevent such a rise of price as will
yield enormous profits, and form a grievous burden on consumers. For a
strongly-constituted Trust will be able to crush any competing
combination of ordinary size and strength by a temporary lowering of its
prices below the margin of profitable production, the weapon which a
strong rich company can always use successfully against a weaker new
competitor.
But though a Trust with a really strong monopoly, and rid of all
effective competition, will be able to impose exorbitant and oppressive
prices on consumers, it must be observed that it is not necessarily to
its interest to do so. Every rise of price implies a fall off in
quantity sold; and it may therefore pay a Trust better to sell a large
quantity at a moderate profit than a smaller quantity at an enormous
profit. The exercise of the power possessed by the owners of a monopoly
depends upon the proportionate effect a rise of price will have upon the
sale. This again depends upon the nature and uses of the commodity in
which the Trust deals. In proportion as an article belongs to the
"necessaries" of life, a rise of price will have a small effect on the
purchase of it, as compared with the effect of a similar rise of price
on articles which belong to the "comforts" or "luxuries" of life, or
which may be readily replaced by some cheaper substitute. Thus it will
appear that the power of a Trust or monopoly of capital is liable to be
detrimental to the public interest--1st. In proportion as there is a
want of effective existing competition, and a difficulty of potential
competition. 2nd. In proportion as the commodity dealt in by the Trust
belongs to the necessaries of life.
§ 5. Steps in the Organization of labour.--The movements of labour show
an order closely correspondent with those of capital. As the units of
capital seek relief from the strain and waste of competition by uniting
into masses, and as the fiercer competition of these masses force them
into ever larger and closer aggregates, until they are enabled to obtain
partial or total relief from the competitive strife, so is it with
labour. The formation of individual units of labour-power into Trades
Unions, the amalgamation of these Unions on a larger scale and in closer
co-operation, are movements analogous to the concentration of small
units of capital traced above. It is not necessary to follow in detail
the concentrative process which is gradually welding labour into larger
units of competition. The uneven pace at which this process works in
different places and in various trades has prevented a clear recognition
of the law of the movement. The following steps, not always taken
however in precisely the same order, mark the progress--
1. Workers in the same trade in a town or locality form a "Union," or
limited co-operative society, the economic essence of which consists in
the fact that in regard to the price and other conditions of their
labour they act as a complex unit. Where such unions are strongly
formed, the employer or body of employers deals not with individual
workmen, but with the Union of workmen, in matters which the Union
considers to be of common interest.
2. Next comes the establishment of provincial or national relations
between these local Unions. The Northumberland and Durham miners will
connect their various branches, and will, if necessary, enter into
relations with the Unions of other mining districts. The local Unions of
engineers, of carpenters, &c., are related closely by means of elected
representatives in national Unions. In the strongest Unions the central
control is absolute in reference to the more important objects of union,
the pressure for higher wages, shorter hours, and other industrial
advantages, or the resistance of attempts to impose reductions of wages,
&c.
3. Along with the movement towards a national organization of the
workers in a trade, or in some cases prior to it, is the growth of
combined action between allied industries, that is to say, trades which
are closely related in work and interests. In the building trades, for
example, bricklayers, masons, carpenters, plasterers, plumbers, painters
and decorators, find that their respective trade interests meet, and are
interwoven at a score of different points. The sympathetic action thus
set up is beginning to find its way to the establishment of closer co-
operation between the Unions of these several trades. The different
industries engaged in river-side work are rapidly forming into closer
union. So also the various mining classes, the railway workers, civil
servants, are moving gradually but surely towards a recognition of
common interests, and of the advantage of close common action.
4. The fact of the innumerable delicate but important relations which
subsist among classes of workers, whose work appears on the surface but
distantly related, is leading to Trade Councils representative of all
the Trade Unions in a district. In the midland counties and in London
these general Trade Councils are engaged in the gigantic task of welding
into some single unity the complex conflicting interests of large bodies
of workmen.
5. An allusion to the attempts to establish international relations
between the Unions of English workmen and those of foreign countries is
important, more as indicating the probable line of future labour
movement, than as indicating the early probability of effective
international union of labour. Though slight spasmodic international co-
operation of workers may even now be possible, especially among members
of English-speaking races, the divergent immediate interests, the
different stages of industrial development reached in the various
industrial countries, seem likely for a long time at any rate to
preclude the possibility of close co-operation between the united
workers of different nations.
§ 6. Parallelism of the Movements in Capital and Labour.--Now this
movement in labour, irregular, partial, and incomplete as it is, is
strictly parallel with the movement of capital. In both, the smaller
units become merged and concentrated into larger units, driven by self-
interest to combine for more effective competition in larger masses. The
fact that in the case of capital the concentration is more complete,
does not really impair the accuracy of the analogy. Small capitals, when
they have co-operated or formed a union, are absolutely merged, and
cease to exist or act as individual units at all. A "share" in a
business has no separate existence so long as it is kept in that
business. But the small units of labour cannot so absolutely merge their
individuality. The capital-unit being impersonal can be absolutely
merged for common action with like units. The labour-unit being personal
only surrenders part of his freedom of action and competition to the
Union, which henceforth represents the social side of his industrial
self. How far the necessity of close social action between labour-units
in the future may compel the labourer to merge more of his industrial
individuality in the Union, is an open question which the future history
of labour-movements will decide.
The slow, intermittent, and fragmentary manner in which labour-unions
have been hitherto conducted even in the stronger trades, is a fact
which has perhaps done more to hide the true parallelism in the
evolution of capital and labour. The path traced above has not yet been
traversed by the bulk of English working men, while, as has been shown,
working women have hardly begun to contemplate the first step. But the
uneven rate of development, in the case of capital and labour, should
not blind us to the law which is operating in both movements. The
representative relation between capital and labour is no longer that
between a single employer and a number of individual working men, each
of the latter making his own terms with the former for the sale of his
labour, but between a large company or union of employers on the one
hand, and a union of workmen on the other. The last few years have
consolidated and secured this relation in the case of such powerful
staple industries in England as mining, ship-building, iron-work, and
even in the weaker low-skilled industries the relation is gradually
winning recognition.
§ 7. Probabilities of Industrial Peace.--This concentrative process at
work in both capital and labour, consolidating the smaller industrial
units into larger ones, and tending to a unification of the masses of
capital and of labour engaged respectively in the several industries, is
at the present time by far the most important factor of industrial
history. How far these two movements in capital and in labour react on
one another for peace or for strife is a delicate and difficult
question. Consideration of the common interest of capital and labour
dependent on their necessary co-operation in industry might lead us to
suppose that along with the growing organization of the two forces there
would come an increased recognition of this community of interest which
would make constantly and rapidly for industrial peace. But we must not
be misled by the stress which is rightly laid on the identity of
interest between capital and labour. The identity which is based on the
general consideration that capital and labour are both required in the
conduct of a given business, is no effective guarantee against a genuine
clash of interests between the actual forms of capital and the labourers
engaged at a given time in that particular business. To a body of
employés who are seeking to extract a rise of wages from their
employers, or to resist a reduction of wages, it is no argument to point
out that if they gain their point the fall of profit in their employers'
business will have some effect in lowering the average interest on
invested capital, and will thus prevent the accumulation of some capital
which would have helped to find employment for some more working men.
The immediate direct interests of a particular body of workmen and a
particular company of employers may, and frequently will, impel them to
a course directly opposed to the wider interests of their fellow-
capitalists or fellow-workers. But it is evident that the smaller the
industrial unit, the more frequent will these conflicts between the
immediate special interest and the wider class interest be. Since this
is so, it would follow that the establishment of larger industrial
units, such as workmen's unions and employers' unions, based on a
cancelling of minor conflicting interests, will diminish the aggregate
quantity of friction between capital and labour. If there were a close
union between all the river-side and carrying trades of the country, it
is far less likely that a particular local body of dock-labourers would,
in order to seize some temporary advantage for themselves, be allowed to
take a course which might throw out of work, or otherwise injure, the
other workers concerned in the industries allied to theirs. One of the
important educative effects of labour organizations will be a growing
recognition of the intricate _rapport_ which subsists not only between
the interests of different classes of workers, but between capital and
labour in its more general aspect. This lesson again is driven home by
the dramatic scale of the terrible though less frequent conflicts which
still occur between capital and labour. Industrial war seems to follow
the same law of change as military war. As the incessant bickering of
private guerilla warfare has given way in modern times to occasional,
large, organized, brief, and terribly destructive campaigns, so it is in
trade. In both cases the aggregate of friction and waste is probably
much less under the modern _régime_, but the dread of these dramatic
lessons is growing ever greater, and the tendency to postponement and
conciliation grows apace. But just as the fact of a growing identity in
the interest of different nations, the growing recognition of that fact,
and the growing horror of war, potent factors as they seem to reasonable
men, make very slow progress towards the substitution of international
arbitration for appeals to the sword, so in industry we cannot presume
that the existence of reasonable grounds for conciliation will speedily
rid us of the terror and waste of industrial conflicts. It is even
possible that just as the speedy formation of a strong national unity,
like that of Prussia under Frederick the Great, out of weak, disordered,
smaller units, may engender for a time a bellicose spirit which works
itself out in strife, so the rapid rise and union of weak and oppressed
bodies of poorer labourers make for a shortsighted policy of blind
aggression. Such considerations as this must, at any rate, temper the
hopes of speedy industrial pacification we may form from dwelling on the
more reasonable effects and teaching of organization. Although the very
growth and existence of the larger industrial units implies, as we saw,
a laying aside of smaller conflicts, we cannot assume that the forces at
present working directly for the pacification of capital and labour, and
for their ultimate fusion, are at all commensurate in importance with
the concentrative forces operating in the two industrial elements
respectively. It is indisputably true that the recent development of
organization, especially of labour unions, acts as a direct restraint of
industrial warfare, and a facilitation of peaceable settlements of trade
disputes. Mr. Burnett, in his Report to the Board of Trade, on Strikes
and Lock-outs in 1888, remarks _à propos_ of the various modes of
arbitration, that "these methods of arranging difficulties have only
been made possible by organization of the forces on both sides, and
have, as it were, been gradually evolved from the general progress of
the combination movement."[40]
Speaking of Trade Unions, he sums up--"In fact the executive committees
of all the chief Unions are to a very large extent hostile to strikes,
and exercise a restraining influence"--a judgment the truth of which has
been largely exemplified during the last two or three years. But our
hopes and desires must not lead us to exaggerate the size of these
peaceable factors. _Conseils de prud'hommes_ on the continent, boards of
arbitration and conciliation in this country, profit-sharing schemes in
Europe and America, are laudable attempts to bridge over the antagonism
which exists between separate concrete masses of capital and labour. The
growth of piecework and of sliding scales has effected something. But
the success of the Board of Conciliation and Arbitration in the
manufactured iron trade of the north of England has not yet led to much
successful imitation in other industries. Recent experience of formal
methods of conciliation and of sliding scales, especially in the mining,
engineering, and metal industries, as well as the failure of some of the
most important profit-sharing experiments, shows that we must be
satisfied with slow progress in these direct endeavours after
arbitration. The difficulty of finding an enduring scale of values which
will retain the adherence of both interests amidst industrial movements
which continually tend to upset the previously accepted "fair rates," is
the deeper economic cause which breaks down many of these attempts. The
direct fusion of the interests of employers and employed, and in some
measure of capital and labour, which is the object of the co-operative
movement, is a steadily growing force, whose successes may serve perhaps
better than any other landmark as a measure of the improving _morale_ of
the several grades of workers who show themselves able to adopt its
methods. But while co-operative distribution has thriven, the success of
co-operative workshops and mills has hitherto been extremely slow. A
considerable expansion of the productive work of the co-operative
wholesale societies within the last few years offers indeed more
encouragement. But at present only about 2¼ per cent. of English
industry and commerce, as tested by profits, is under the conduct of co-
operative societies. Hence, while it seems possible that the slow growth
in productive co-operation, and the more rapid progress of distributive
co-operation, may serve to point the true line of successful advance in
the future, the present condition of the co-operative movement does not
entitle it to rank as one of the most powerful and prominent industrial
forces. Though it may be hoped and even predicted that each movement in
the agglomerative development of capital and labour which presents the
two agents in larger and more organized shape, will render the work of
conciliation more peremptory and more feasible, it must be admitted that
all these conciliatory movements making for the direct fusion of capital
and labour, are of an importance subordinate to the larger evolutionary
force on which we have laid stress.
We see then the multitudinous units of capital and labour crystallizing
ever into larger and larger masses, moving towards an ideal goal which
would present a single body of organized capital and a single body of
organized labour. The process in each case is stimulated by the similar
process in the other. Each step in the organization of labour forces a
corresponding move towards organization of capital, and _vice versâ_.
Striking examples of this imitative strategic movement have been
presented by the rapid temporary organization of Australian capital, and
by the effect of Dock Labourers' Unions in England in promoting the
closer co-operation of the capital of shipowners. By this interaction of
the two forces, the development in the organization of capital and
labour presents itself as a _pari passu_ progress; or perhaps more
strictly it goes by the analogy of a game of draughts; the normal state
is a series of alternate moves; but when one side has gained a victory,
that is, taken a piece, it can make another move.
§ 8. Relation of Low-skilled Labour to the wider Movement.--The relation
in which this large industrial evolution stands to our problem of the
poor low-skilled worker is not obscure. In comparing the movement of
capital with that of labour we saw that in one respect the former was
clearer and more perfect. The weaker capitalist, he who fails to keep
pace with industrial progress, and will not avail himself of the
advantage which union gives to contending pieces of capital, is simply
snuffed out; that is, he ceases to have an independent existence as a
capitalist when he can no longer make profit. The laggard, ill-managed
piece of capital is swept off the board. This is possible, for the
capital is a property separable from its owner. The case of labour is
different. The labour-power is not separable from the person of the
labourer. So the labourer left behind in the evolution of labour
organization does not at once perish, but continues to struggle on in a
position which is ever becoming weaker. "Organize or starve," is the law
of modern labour movements. The mass of low-skilled workers find
themselves fighting the industrial battle for existence, each for
himself, in the old-fashioned way, without any of the advantages which
organization gives their more prosperous brothers. They represent the
survival of an earlier industrial stage. If the crudest form of the
struggle were permitted to rage with unabated force, large numbers of
them would be swept out of life, thereby rendering successful
organization and industrial advance more possible to the survivors. But
modern notions of humanity insist upon the retention of these
superfluous, low-skilled workers, while at the same time failing to
recognize, and making no real attempt to provide against, the inevitable
result of that retention. By allowing the continuance of the crude
struggle for existence which is the form industrial competition takes
when applied to the low-skilled workers, and at the same time forbidding
the proved "unfittest" to be cleared out of the world, we seem to
perpetuate and intensify the struggle. The elimination of the "unfit" is
the necessary means of progress enforced by the law of competition. An
insistence on the survival, and a permission of continued struggle to
the unfit, cuts off the natural avenue of progress for their more fit
competitors. So long as the crude industrial struggle is permitted on
these unnatural terms, the effective organization and progress of the
main body of low-skilled workers seems a logical impossibility. If the
upper strata of low-class workers are enabled to organize, and, what is
more difficult, to protect themselves against incursions of outsiders,
the position of the lower strata will become even more hopeless and
helpless. If one by one all the avenues of regular low-skilled labour
are closed by securing a practical monopoly of this and that work for
the members of a Union, the superfluous body of labourers will be driven
more and more to depend on irregular jobs, and forced more and more into
concentrated masses of city dwellers, will present an ever-growing
difficulty and danger to national order and national health.
Consideration of the general progress of the working-classes has no
force to set aside this problem. It seems not unlikely that we are
entering on a new phase of the poverty question. The upper strata of
low-skilled labour are learning to organize. If they succeed in forming
and maintaining strong Unions, that is to say, in lifting themselves
from the chaotic struggle of an earlier industrial epoch, so as to get
fairly on the road of modern industrial progress, the condition of those
left behind will press the illogicality of our present national economy
upon us with a dramatic force which will be more convincing than logic,
for it will appeal to a growing national sentiment of pity and humanity
which will take no denial, and will find itself driven for the first
time to a serious recognition of poverty as a national, industrial
disease, requiring a national, industrial remedy.
The great problem of poverty thus resides in the conditions of the low-
skilled workman. To live industrially under the new order he must
organize. He cannot organize because he is so poor, so ignorant, so
weak. Because he is not organized he continues to be poor, ignorant,
weak. Here is a great dilemma, of which whoever shall have found the key
will have done much to solve the problem of poverty.
List of Authorities.
By far the most valuable general work of reference upon _Problems of
Poverty_ is Charles Booth's _Labour and Life of the People_ (Williams &
Norgate). By the side of this work on London may be set Mr Rowntree's
_Poverty: A Story of Town Life_ (Macmillan). A large quantity of
valuable material exists in _The Report of the Industrial Remuneration
Conference_, and in the _Reports of the Lords' Committee on the Sweating
System_ and of the _Labour Commission_. Among shorter and more
accessible works dealing with the industrial causes of poverty and the
application of industrial remedies, Toynbee's _Industrial Revolution_
(Rivington); Gibbins' _Industrial History of England (University
Extension Series_, Methuen & Co.); and Jevons'_The State in Relation to
Labour (English Citizen Series)_, will be found most useful. For a clear
understanding of the relation of economic theory to the facts of labour
and poverty, J.E. Symes' _Political Economy_ (Rivington), and Marshall's
_Economies of Industry_are specially recommended.
Among the large mass of books and pamphlets bearing on special subjects
connected with _Problems of Poverty_, the following are most useful. An
asterisk is placed against the names of those which deserve special
attention, and which are easily accessible.
Sweating and Its Causes.
* Booth, _Labour and Life of the People_.
* _Final Report of Lords' Committee on the Sweating System._
Marx, "Capital," chap. xv., _Machinery and Modern Industry_
(Sonnenschein).
Burnett, _Report to the Board of Trade on Sweating_ (Blue-Book, 1887).
"Socialism," _Fabian Essays_ (Walter Scott).
Booth, _Pauperism and the Endowment of Old Age_ (Macmillan).
J. A. Spender, _The State and Pensions in Old Age_ (Sonnenschein).
J. T. Arlidge, _Hygiene of Occupations_ (Rivington).
Co-Operation and Labour Organization.
* Webb, _History of Trade Unionism_ (Longman).
* Howell, _Conflicts of Capital and Labour_ (Chatto & Windus).
* Burnett, _Report of Trade Unions_ (Blue-Book).
Brentano, _Gilds and Trade Unions_ (Trübner).
* Baernreither, _Associations of English Working-men_.
Acland and Jones, _Working-men Co-operators_.
Gilman, _Profit-sharing between Employer and Employed_ (Macmillan).
_Co-operative Wholesale Society's Annual_.
Potter, _Co-operative Movement in Great Britain_ (Sonnenschein).
* Webb, _Industrial Democracy_ (Longman).
* Schloss, _Methods of Industrial Remuneration_ (Williams & Norgate).
Chartiable Work and Poor Law, &c.
* Aschrott, _The English Poor Law System_ (Knight).
H. Bosanquet, _The Strength of the People_ (Macmillan).
P. Alden, _The Unemployed_.
Fowle, _The Poor Law_ (_English Citizen Series_).
Booth, _In Darkest England_.
Blackley, _Thrift and Independence_ (People's Library, S.P.C.K.).
* Mackay, _The English Poor_ (Murray).
* _Report on Pauperism in England and Wales_ (Blue-Book, 1889).
Rev. S.A. Barnett, _Practicable Socialism_.
Loch, _Charity Organization_ (Sonnenschein).
_Report of Committee on National Provident Insurance_ (Blue-Book, 1887).
Socialistic Legislation.
Ensor, _Modern Socialism_ (Harpers).
* Jevons, _The State in Relation to Labour_.
Webb, _Socialism in England_ (Swan Sonnenschein).
Hyndman, _Historical Basis of Socialism in England_ (Kegan Paul).
* "Socialism" (_Fabian Essays_).
* Toynbee, _Industrial Revolution_ (Rivington).
Kirkup, _An Inquiry into Socialism_ (Longman).
Movements of Capital.
* Marx, "Capital," vol. ii., ch. xv.
* Baker, _Monopolies and the People_ (Putnams).
"Socialism," _Fabian Essays_.
Macrosty, _Trust and the State_ (Grant Richards).
Ely, _Monopolies and Trusts_ (Macmillan).
The Measure of Poverty.
*Giffen, _Economic Inquiries and Studies _(Bell).
Mulhall, _Dictionary of Statistics_ (Routledge).
Bowley, _National Progress in Wealth and Trade_(King).
* Board of Trade Memoranda, _British and Foreign Trade and Industrial
Conditions_ [cd. 1761 and 2237].
_Statistical Abstract of the United Kingdom_ [cd. 1727].
* _Census of England and Wales: General Report_, 1901 [cd. 2174].
* Leone Levi, _Wages and Earnings of the Working-Classes_ (Murray).
* _Report of the Industrial Remuneration Conference_ (Cassell).
Giffen, _Growth of Capital_ (Bell).
Valpy, _An Inquiry into the Conditions and Occupations of the People in
Central London_.
Footnotes
[1] This sum includes an allowance for the part of the wage of domestic
servants, shop-attendants, &c. paid in kind.
[2] Leone Levi's _Wages and Earnings of the Working-Classes_, p. II.
[3] _Labour and Life of the People_, vol. i. p. 38.
[4] _Poverty: A Study of Town Life_. (Macmillan & Co.)
[5] By Mr P.H. Mann in _Sociological Papers_. (Macmillan.)
[6] Cf. _An Inquiry into the Conditions and Occupations of the People in
Central London_, R. A. Valpy.
[7] This statement is borne out by _A Return of Expenditure of Working-
Men_, for 1889, published by the Labour Department of the Board of
Trade.
[8] See two interesting papers, "Our Farmers in Chains," by the Rev.
Harry Jones (_National Review_, April and July, 1890).
[9] Arnold White: _The Problems of a Great City_, p. 159.
[10] Marshall's _Principles of Economics_, II. ch. iv. §2.
[11] De Tocqueville, _Ancient Régime_, ch. xvi.
[12] _Report of the Industrial Remuneration Conference_, 1886, p. 429.
[13] Cannan's _Elementary Political Economy_, part ii. § 15.
[14] _Industrial Remuneration Congress Report_, p. 153. Mr. W. Owen.
[15] _Economics of Industry_, p. 111.
[16] _Principles of Economics_, pp. 314, 316.
[17] Kirkup, _Inquiry into Socialism_, p. 72.
[18] Booth's _Labour and Life of the People, _vol. i. Part. III. ch. ii.
_Influx of Population, _by H. Llewellyn Smith. A most valuable paper,
from which many of the facts here stated have been drawn.
[19] The official estimate is not precise, since our statistics of
emigration refer only to non-European countries.
[20] _Labour and Life of the People_, vol. i. p. 237.
[21] _Labour and Life of East London_, vol. i. p. 224.
[22] _Report on the Sweating System_, p. 14.
[23] _Labour and Life of the People_, p. 271.
[24] _Final Report on the Sweating System, _§ 68.
[25] _Lords' Committee on the Sweating System; Last Report, _ p. 184.
[26] _Labour and Life in London_, vol. i. p. 489.
[27] Howell, _Conflicts of Capital and Labour, _p. 128. Second Edition,
Macmillan & Co.
[28] Karl Marx, _Capital_, vol. ii. p. 480.
[29] _Labour and Life in East London, _vol. i. p. 112.
[30] Cf. Howell's _Conflicts of Capital and Labour_, p. 207.
[31] _The State in Relation to Labour_, p. 106.
[32] _Problems of Greater Britain_, vol. ii. p. 314.
[33] _Labour and Life of the People_, vol. i, p. 167.
[34] The match-box trade, however, is chiefly in the hands of
home-workers.
[35] _Labour and Life of the People_, vol, i p. 427.
[36] Roscher's _Political Economy_, § 242.
[37] Fabian Essays in Socialism, p. 48.
[38] Quoted by G. Gunton: _Political Science Quarterly_, Sept. 1880.
[39] G. Gunton: _Political Science Quarterly, _Sept. 1888.
[40] p. 17.