organized to express most perfectly the principle of purpose. The
application to industry of the principle of purpose is simple, however
difficult it may be to give effect to it. It is to turn it into a
Profession. A Profession may be defined most simply as a trade which
is organized, incompletely, no doubt, but genuinely, for the
performance of function. It is not simply a collection of individuals
who get a living for themselves by the same kind of work. Nor is it
merely a group which is organized exclusively for the economic
protection of its members, though that is normally among its purposes.
It is a body of men who carry on their work in accordance with rules
designed to enforce certain standards both for the better protection of
its members and for the better service of the public. The standards
which it maintains may be high or low: all professions have some rules
which protect the interests {93} of the community and others which are
an imposition on it. Its essence is that it assumes certain
responsibilities for the competence of its members or the quality of
its wares, and that it deliberately prohibits certain kinds of conduct
on the ground that, though they may be profitable to the individual,
they are calculated to bring into disrepute the organization to which
he belongs. While some of its rules are trade union regulations
designed primarily to prevent the economic standards of the profession
being lowered by unscrupulous competition, others have as their main
object to secure that no member of the profession shall have any but a
purely professional interest in his work, by excluding the incentive of
speculative profit.
The conception implied in the words "unprofessional conduct" is,
therefore, the exact opposite of the theory and practice which assume
that the service of the public is best secured by the unrestricted
pursuit on the part of rival traders of their pecuniary self-interest,
within such limits as the law allows. It is significant that at the
time when the professional classes had deified free competition as the
arbiter of commerce and industry, they did not dream of applying it to
the occupations in which they themselves were primarily interested, but
maintained, and indeed, elaborated machinery through which a
professional conscience might find expression. The rules themselves
may sometimes appear to the layman arbitrary and ill-conceived. But
their object is clear. It is to impose on the profession itself the
obligation of maintaining the quality of the service, and to prevent
its common purpose being frustrated through {94} the undue influence of
the motive of pecuniary gain upon the necessities or cupidity of the
individual.
The difference between industry as it exists to-day and a profession
is, then, simple and unmistakable. The essence of the former is that
its only criterion is the financial return which it offers to its
shareholders. The essence of the latter, is that, though men enter it
for the sake of livelihood, the measure of their success is the service
which they perform, not the gains which they amass. They may, as in
the case of a successful doctor, grow rich; but the meaning of their
profession, both for themselves and for the public, is not that they
make money but that they make health, or safety, or knowledge, or good
government or good law. They depend on it for their income, but they
do not consider that any conduct which increases their income is on
that account good. And while a boot-manufacturer who retires with half
a million is counted to have achieved success, whether the boots which
he made were of leather or brown paper, a civil servant who did the
same would be impeached.
So, if they are doctors, they recognize that there are certain kinds of
conduct which cannot be practised, however large the fee offered for
them, because they are unprofessional; if scholars and teachers, that
it is wrong to make money by deliberately deceiving the public, as is
done by makers of patent medicines, however much the public may clamor
to be deceived; if judges or public servants, that they must not
increase their incomes by selling justice for money; if soldiers, that
the service comes first, and their private inclinations, {95} even the
reasonable preference of life to death, second. Every country has its
traitors, every army its deserters, and every profession its blacklegs.
To idealize the professional spirit would be very absurd; it has its
sordid side, and, if it is to be fostered in industry, safeguards will
be needed to check its excesses. But there is all the difference
between maintaining a standard which is occasionally abandoned, and
affirming as the central truth of existence that there is no standard
to maintain. The meaning of a profession is that it makes the traitors
the exception, not as they are in industry, the rule. It makes them
the exception by upholding as the criterion of success the end for
which the profession, whatever it may be, is carried on, and
subordinating the inclination, appetites and ambitions of individuals
to the rules of an organization which has as its object to promote the
performance of function.
There is no sharp line between the professions and the industries. A
hundred years ago the trade of teaching, which to-day is on the whole
an honorable public service, was rather a vulgar speculation upon
public credulity; if Mr. Squeers was a caricature, the Oxford of Gibbon
and Adam Smith was a solid port-fed reality; no local authority could
have performed one-tenth of the duties which are carried out by a
modern municipal corporation every day, because there was no body of
public servants to perform them, and such as there were took bribes.
It is conceivable, at least, that some branches of medicine might have
developed on the lines of industrial capitalism, with hospitals as
factories, {96} doctors hired at competitive wages as their "hands,"
large dividends paid to shareholders by catering for the rich, and the
poor, who do not offer a profitable market, supplied with an inferior
service or with no service at all.
The idea that there is some mysterious difference between making
munitions of war and firing them, between building schools and teaching
in them when built, between providing food and providing health, which
makes it at once inevitable and laudable that the former should be
carried on with a single eye to pecuniary gain, while the latter are
conducted by professional men who expect to be paid for service but who
neither watch for windfalls nor raise their fees merely because there
are more sick to be cured, more children to be taught, or more enemies
to be resisted, is an illusion only less astonishing than that the
leaders of industry should welcome the insult as an honor and wear
their humiliation as a kind of halo. The work of making boots or
building a house is in itself no more degrading than that of curing the
sick or teaching the ignorant. It is as necessary and therefore as
honorable. It should be at least equally bound by rules which have as
their object to maintain the standards of professional service. It
should be at least equally free from the vulgar subordination of moral
standards to financial interests.
If industry is to be organized as a profession, two changes are
requisite, one negative and one positive. The first, is that it should
cease to be conducted by the agents of property-owners for the
advantage of property-owners, {97} and should be carried on, instead,
for the service of the public. The second, is that, subject to
rigorous public supervision, the responsibility for the maintenance of
the service should rest upon the shoulders of those, from organizer and
scientist to laborer, by whom, in effect, the work is conducted.
The first change is necessary because the conduct of industry for the
public advantage is impossible as long as the ultimate authority over
its management is vested in those whose only connection with it, and
interest in it, is the pursuit of gain. As industry is at present
organized, its profits and its control belong by law to that element in
it which has least to do with its success. Under the joint-stock
organization which has become normal in all the more important
industries except agriculture, it is managed by the salaried agents of
those by whom the property is owned. It is successful if it returns
large sums to shareholders, and unsuccessful if it does not. If an
opportunity presents itself to increase dividends by practices which
deteriorate the service or degrade the workers, the officials who
administer industry act strictly within their duty if they seize it,
for they are the servants of their employers, and their obligation to
their employers is to provide dividends not to provide service. But
the owners of the property are, _qua_ property-owners functionless, not
in the sense, of course, that the tools of which they are proprietors
are not useful, but in the sense that since work and ownership are
increasingly separated, the efficient use of the tools is not dependent
on the maintenance of the proprietary rights exercised over them. {98}
Of course there are many managing directors who both own capital and
administer the business. But it is none the less the case that most
shareholders in most large industries are normally shareholders and
nothing more.
Nor is their economic interest identical, as is sometimes assumed, with
that of the general public. A society is rich when material goods,
including capital, are cheap, and human beings dear: indeed the word
"riches" has no other meaning. The interest of those who own the
property used in industry, though not, of course, of the managers who
administer industry and who themselves are servants, and often very
ill-paid servants at that, is that their capital should be dear and
human beings cheap. Hence, if the industry is such as to yield a
considerable return, or if one unit in the industry, owing to some
special advantage, produces more cheaply than its neighbors, while
selling at the same price, or if a revival of trade raises prices, or
if supplies are controlled by one of the combines which are now the
rule in many of the more important industries, the resulting surplus
normally passes neither to the managers, nor to the other employees,
nor to the public, but to the shareholders. Such an arrangement is
preposterous in the literal sense of being the reverse of that which
would be established by considerations of equity and common sense, and
gives rise (among other things) to what is called "the struggle between
labor and capital." The phrase is apposite, since it is as absurd as
the relations of which it is intended to be a description. To deplore
"ill-feeling" or to advocate {99} "harmony" between "labor and capital"
is as rational as to lament the bitterness between carpenters and
hammers or to promote a mission for restoring amity between mankind and
its boots. The only significance of these _cliches_ is that their
repetition tends to muffle their inanity, even to the point of
persuading sensible men that capital "employs" labor, much as our pagan
ancestors imagined that the other pieces of wood and iron, which they
deified in their day, sent their crops and won their battles. When men
have gone so far as to talk as though their idols have come to life, it
is time that some one broke them. Labor consists of persons, capital
of things. The only use of things is to be applied to the service of
persons. The business of persons is to see that they are there to use,
and that no more than need be is paid for using them.
Thus the application to industry of the principle of function involves
an alteration of proprietary rights, because those rights do not
contribute, as they now are, to the end which industry exists to serve.
What gives unity to any activity, what alone can reconcile the
conflicting claims of the different groups engaged in it, is the
purpose for which it is carried on. If men have no common goal it is
no wonder that they should fall out by the way, nor are they likely to
be reconciled by a redistribution of their provisions. If they are not
content both to be servants, one or other must be master, and it is
idle to suppose that mastership can be held in a state of suspense
between the two. There can be a division of functions between
different grades of workers, or between worker and consumer, and each
can {100} have in his own sphere the authority needed to enable him to
fill it. But there cannot be a division of functions between the
worker and the owner who is owner and nothing else, for what function
does such an owner perform? The provision of capital? Then pay him
the sum needed to secure the use of his capital, but neither pay him
more nor admit him to a position of authority over production for which
merely as an owner he is not qualified. For this reason, while an
equilibrium between worker and manager is possible, because both are
workers, that which it is sought to establish between worker and owner
is not. It is like the proposal of the Germans to negotiate with
Belgium from Brussels. Their proposals may be excellent: but it is not
evident why they are where they are, or how, since they do not
contribute to production, they come to be putting forward proposals at
all. As long as they are in territory where they have no business to
be, their excellence as individuals will be overlooked in annoyance at
the system which puts them where they are.
It is fortunate indeed, if nothing worse than this happens. For one
way of solving the problem of the conflict of rights in industry is not
to base rights on functions, as we propose, but to base them on force.
It is to re-establish in some veiled and decorous form the institution
of slavery, by making labor compulsory. In nearly all countries a
concerted refusal to work has been made at one time or another a
criminal offense. There are to-day parts of the world in which
European capitalists, unchecked by any public opinion or authority
{101} independent of themselves, are free to impose almost what terms
they please upon workmen of ignorant and helpless races. In those
districts of America where capitalism still retains its primitive
lawlessness, the same result appears to be produced upon immigrant
workmen by the threat of violence.
In such circumstances the conflict of rights which finds expression in
industrial warfare does not arise, because the rights of one party have
been extinguished. The simplicity of the remedy is so attractive that
it is not surprising that the Governments of industrial nations should
coquet from time to time with the policy of compulsory arbitration.
After all, it is pleaded, it is only analogous to the action of a
supernational authority which should use its common force to prevent
the outbreak of war. In reality, compulsory arbitration is the
opposite of any policy which such an authority could pursue either with
justice or with hope of success. For it takes for granted the
stability of existing relationships and intervenes to adjust incidental
disputes upon the assumption that their equity is recognized and their
permanence desired. In industry, however, the equity of existing
relationships is precisely the point at issue. A League of Nations
which adjusted between a subject race and its oppressors, between Slavs
and Magyars, or the inhabitants of what was once Prussian Poland and
the Prussian Government, on the assumption that the subordination of
Slavs to Magyars and Poles to Prussians was part of an unchangeable
order, would rightly be resisted by all those who think liberty more
precious than peace. A State which, in the {102} name of peace, should
make the concerted cessation of work a legal offense would be guilty of
a similar betrayal of freedom. It would be solving the conflict of
rights between those who own and those who work by abolishing the
rights of those who work.
So here again, unless we are prepared to re-establish some form of
forced labor, we reach an impasse. But it is an impasse only in so
long as we regard the proprietary rights of those who own the capital
used in industry as absolute and an end in themselves. If, instead of
assuming that all property, merely because it is property, is equally
sacred, we ask what is the _purpose_ for which capital is used, what is
its _function_, we shall realize that it is not an end but a means to
an end, and that its function is to serve and assist (as the economists
tell us) the labor of human beings, not the function of human beings to
serve those who happen to own it. And from this truth two consequences
follow. The first is that since capital is a thing, which ought to be
used to help industry as a man may use a bicycle to get more quickly to
his work, it ought, when it is employed, to be employed on the cheapest
terms possible. The second is that those who own it should no more
control production than a man who lets a house controls the meals which
shall be cooked in the kitchen, or the man who lets a boat the speed at
which the rowers shall pull. In other words, capital should always be
got at cost price, which means, unless the State finds it wise, as it
very well may, to own the capital used in certain industries, it should
be paid the lowest interest {103} for which it can be obtained, but
should carry no right either to residuary dividends or to the control
of industry.
There are, in theory, five ways by which the control of industry by the
agents of private property-owners can be terminated. They may be
expropriated without compensation. They may voluntarily surrender it.
They may be frozen out by action on the part of the working
_personnel_, which itself undertakes such functions, if any, as they
have performed, and makes them superfluous by conducting production
without their assistance. Their proprietary interest may be limited or
attenuated to such a degree that they become mere _rentiers_, who are
guaranteed a fixed payment analogous to that of the debenture-holder,
but who receive no profits and bear no responsibility for the
organization of industry. They may be bought out. The first
alternative is exemplified by the historical confiscations of the past,
such as, for instance, by the seizure of ecclesiastical property by the
ruling classes of England, Scotland and most other Protestant states.
The second has rarely, if ever, been tried--the nearest approach to it,
perhaps, was the famous abdication of August 4th, 1789. The third is
the method apparently contemplated by the building guilds which are now
in process of formation in Great Britain. The fourth method of
treating the capitalist is followed by the co-operative movement. It
is also that proposed by the committee of employers and trade-unionists
in the building industry over which Mr. Foster presided, and which
proposed that employers should be paid a fixed salary, and a fixed rate
of {104} interest on their capital, but that all surplus profits should
be pooled and administered by a central body representing employers and
workers. The fifth has repeatedly been practised by municipalities,
and somewhat less often by national governments.
Which of these alternative methods of removing industry from the
control of the property-owner is adopted is a matter of expediency to
be decided in each particular case. "Nationalization," therefore,
which is sometimes advanced as the only method of extinguishing
proprietary rights, is merely one species of a considerable genus. It
can be used, of course, to produce the desired result. But there are
some industries, at any rate, in which nationalization is not necessary
in order to bring it about, and since it is at best a cumbrous process,
when other methods are possible, other methods should be used.
Nationalization is a means to an end, not an end in itself. Properly
conceived its object is not to establish state management of industry,
but to remove the dead hand of private ownership, when the private
owner has ceased to perform any positive function. It is unfortunate,
therefore, that the abolition of obstructive property rights, which is
indispensable, should have been identified with a single formula, which
may be applied with advantage in the special circumstances of some
industries, but need not necessarily be applied in all. Ownership is
not a right, but a bundle of rights, and it is possible to strip them
off piecemeal as well as to strike them off simultaneously. The
ownership of capital involves, as we have said, three main claims; the
right to interest as the price of capital, the right to {105} profits,
and the right to control, in virtue of which managers and workmen are
the servants of shareholders. These rights in their fullest degree are
not the invariable accompaniment of ownership, nor need they
necessarily co-exist. The ingenuity of financiers long ago devised
methods of grading stock in such a way that the ownership of some
carries full control, while that of others does not, that some bear all
the risk and are entitled to all the profits, while others are limited
in respect to both. All are property, but not all carry proprietary
rights of the same degree.
As long as the private ownership of industrial capital remains, the
object of reformers should be to attenuate its influence by insisting
that it shall be paid not more than a rate of interest fixed in
advance, and that it should carry with it no right of control. In such
circumstances the position of the ordinary shareholder would
approximate to that of the owner of debentures; the property in the
industry would be converted into a mortgage on its profits, while the
control of its administration and all profits in excess of the minimum
would remain to be vested elsewhere. So, of course, would the risks.
But risks are of two kinds, those of the individual business and those
of the industry. The former are much heavier than the latter, for
though a coal mine is a speculative investment, coal mining is not, and
as long as each business is managed as a separate unit, the payments
made to shareholders must cover both. If the ownership of capital in
each industry were unified, which does not mean centralized, those
risks which are incidental to individual competition would be {106}
eliminated, and the credit of each unit would be that of the whole.
Such a change in the character of ownership would have three
advantages. It would abolish the government of industry by property.
It would end the payment of profits to functionless shareholders by
turning them into creditors paid a fixed rate of interest. It would
lay the only possible foundations for industrial peace by making it
possible to convert industry into a profession carried on by all grades
of workers for the service of the public, not for the gain of those who
own capital. The organization which it would produce will be
described, of course, as impracticable. It is interesting, therefore,
to find it is that which experience has led practical men to suggest as
a remedy for the disorders of one of the most important of national
industries, that of building. The question before the Committee of
employers and workmen, which issued last August a Report upon the
Building Trade, was "Scientific Management and the Reduction of
Costs."[1] These are not phrases which suggest an economic revolution;
but it is something little short of a revolution that the signatories
of the report propose. For, as soon as they came to grips with the
problem, they found that it was impossible to handle it effectively
without reconstituting the general fabric of industrial relationships
which is its setting. Why is the service supplied by the industry
ineffective? Partly because the workers do not give their full
energies to the performance of their part in production. {107} Why do
they not give their best energies? Because of "the fear of
unemployment, the disinclination of the operatives to make unlimited
profit for private employers, the lack of interest evinced by
operatives owing to their non-participation in control, inefficiency
both managerial and operative." How are these psychological obstacles
to efficiency to be counteracted? By increased supervision and
speeding up, by the allurements of a premium bonus system, or the other
devices by which men who are too ingenious to have imagination or moral
insight would bully or cajole poor human nature into doing what--if
only the systems they invent would let it!--it desires to do, simple
duties and honest work? Not at all. By turning the building of houses
into what teaching now is, and Mr. Squeers thought it could never be,
an honorable profession.