CHAPTER XXVIII

THE RIGHT RELATIONSHIP BETWEEN EMPLOYERS AND EMPLOYED

3. PRODUCTION IN INDUSTRY

The Importance of Production—What Production Depends on—The

Workers’ Notion of the Secret Fund—“Passing it on”—The

Workers’ Belief in Restricted Output—Introduction of Time- and

Labour-Saving Appliances—Payment by Results—Subdivision and

Simplification of Process—No “Niggling” at Prices.

The Importance of Production

It is unnecessary to stress the national, the social, the industrial

need for production. That does not mean more output with no improvement

in the ratio of efficiency. It means more output accompanied with

increased efficiency and therefore lower cost of production. It is

on cheapness of output that the demands of the home and the foreign

consumer for commodities largely depend. Restriction of output means

for the community high costs of commodities, less purchasing power, a

lower standard of living; it means that there will not be available

either the wealth to finance social reforms, or the capital required

for industry, and therefore worse conditions and less work for the

workers; it means reduced export trade and adverse exchanges. Apart

from production, there is no fund from which labour can be paid, the

only fund is that consisting of the commodities and services and values

which are produced. As the fund is made greater by the joint efforts of

employers and workmen, so can the wage paid to the worker be increased.

One worker is needed to realize the goods, values or services produced by

another worker. If both increase their output as much as is reasonably

practicable, each has the maximum available for exchange, and both can

secure for themselves the greatest possible standard of living. On the

other hand, if one particular worker limits his production, say, by

one-half of its reasonable maximum, he not only injures himself and

his dependents, because he throws away the opportunity of disposing

of one-half of his labour, but he also injures the other workman

who, directly or indirectly, exchanges with him, and who would like

to exchange the whole of the goods and values and services which he

produces, but who is prevented from disposing of more than one-half by

reason of his opposite number’s selfish and stupid action. The present

national standard of living can by no human ingenuity be maintained under

to-day’s conditions of output.

What Production Depends on

Lord Weir has truly pointed out[21] that there are only four methods of

improving the volume and efficiency of our national production:

(1) An increase in intensity of effort per operative hour;

(2) An increase in the number of operative hours per individual per day;

(3) An increase in the number of operative individuals;

(4) A perfecting of methods, processes and organizations, by which waste

of operative hours is eliminated.

Accepting this as an accurate statement, which it is, of how alone output

can be increased, I wish to point out the immediate obstacles to an

achievement of these four objects. They are these:

In regard to (1)—the workman’s low conception of work, his tendency, in

many trades, to lose time, his inveterate belief in restriction of output.

In regard to (2)—the conception of organized Labour that the present

47- or 48-hour ordinary working week is a social reform with which no

tampering will be permitted, and that if in times of trade prosperity

more hours are necessary, they ought to be worked as overtime.

In regard to (3)—the insistence of the Trade Unions, in this country,

on their rigid lines of demarcation of work—in other words, on certain

work being always reserved for certain Unions, without reference to the

prevailing industrial or commercial conditions.

In regard to (4)—the opposition of the workers to the introduction of

time- and labour-saving appliances, or of payment by results—and Lord

Weir adds: the killing of the spirit of enterprise among employers,

as the result of the taxation policy of the Government; the lack of

reciprocity and co-operation on the part of the Trade Unions, amounting

to active obstruction; and bad statesmanship on the part of the

employers’ organizations.

To state these four methods in their order of relative practicability,

they run (1), (4), (3) and (2). All the obstacles enumerated above to

securing greater production by methods (1), (4) and (3), are the fruit of

unsound economic theories that have for many years past been sedulously

instilled into Labour, and are now accepted by it as part of its everyday

rule of life and conduct.

The Workers’ Notion of the Secret Fund

Foremost, in normal times, comes the erroneous belief that all the

aspirations of Labour for increased remuneration, shorter hours,

improved conditions of employment, can be satisfied to the full out of

the existing profits of employers and current production. This has been

argued incessantly before myself. It is honestly believed that all that

is necessary to liquidate the demands of Labour is to devote to that

purpose part only of the existing profits of industry, in their entirety

said to be appropriated by avaricious employers. The sole impediment

is considered to be the greed of employers, coupled with the fact that

as industry is now organized they hold the money-bags. But this error

can be exposed if the demands of Labour are reduced to a definite

charge per annum on the industry in question, and each particular

establishment involved. It can usually be shown on the actual accounts in

typical establishments, at any rate in the engineering and shipbuilding

industries, that the demands of Labour could not be met out of existing

profits. In fact, in many cases, if the whole of employers’ profits were

handed over to Labour, and Capital left without any return whatsoever,

the demands of Labour could not be satisfied to anything like the full

extent.

This delusion is one of the most pernicious in industry, because of its

widespread acceptance and its fatal results. It has been fostered by the

war conditions, as has already been explained. Employers made profits

which exceeded in many cases those retainable under the Munitions of War

or Finance Acts, and so it frequently did not matter to them what rate of

wages they paid in order to expedite work. Moreover, war advances, far

above the rate of wages, were distributed under order of the Government

Courts of Arbitration to cover the increased cost of living arising out

of the abnormal conditions resulting from the war. These war advances

were generally paid by Government, in addition to the contract price for

munitions. Thus the workman saw very high nominal rates of wages paid,

and the employers at the same time making much greater profits than they

could by law appropriate. Nothing was, therefore, more natural than

to suppose that all demands could on the current basis of output be

satisfied out of existing profits.

“Passing it on”

Accepting, as will some sections of Labour, that their demands cannot

be met out of employers’ profits on present output, the alternative

is, they say, that the manufacturer must raise his selling price by an

amount sufficient to cover the extra cost. In this it is assumed, of

course, that the rate of production remains the same. It is a fixed

idea that every manufacturer and the owners in every industry can raise

prices without any difficulty whatsoever. In discussing this delusion,

as I have frequently done, it becomes quite obvious that workmen do not

appreciate the effect which an increase in the cost of production has

in reducing the ambit of the market for the sale of the commodity in

question, or in lessening the demand for it in a specific market, with

consequential curtailment of employment, and undermining of standard

rates of wages. The regulation retort is that any trade not able to pay

proper wages ought not to live. That, of course, depends on what is

“proper,” When the wages are starvation wages, every one will agree the

industry ought not to live. When the wages, though sufficient to cover

(1) subsistence, are not sufficient for (2) reasonable amenities of life,

nor to allow adequately for (3) trade-skill, there may be difference

of opinion, according to the circumstances of the particular industry,

whether it should be maintained or not. When, however, full and adequate

remuneration is paid to cover (1), (2) and (3), it is suicidal policy for

Labour to insist on such advances in wages as must kill the industry.

In advancing the contention that if the employer cannot, out of his

existing profits, pay the advance on wages claimed, it should be added to

the sales price, workmen invariably repudiate as wholly immaterial the

resultant effect on trades other than their own, and especially on the

consuming community. If those claiming the advance are engaged in what is

inelegantly called a “key industry,” that is to say, where their output

is raw or semi-raw material for other industries, it is obvious that

any rise in its cost may inflict serious damage on both employers and

employed in the dependent industries. But the workman’s retort is “let

them pass it on.” I have had that put to me on hundreds of occasions. The

effect on the community is dismissed as quite irrelevant.

During the war, the fashion of general advances in wages to cover

increased cost of living came into vogue. The consequent reaction on

prices set up the “vicious circle” known to all economists where a

general advance in wages raises prices, thus forcing up the cost of

living, and so creating a fresh demand for a further increase in wages.

Over and over again by simple illustrations I have tried to make this

“vicious circle” clear to workmen. I have always been much impeded by

one circumstance. In the early days of the war, in certain districts, as

soon as a general advance in wages was awarded by the wages tribunals, or

conceded by Government, the various lodging-house keepers put up their

rents for rooms, or their charge for board. This was stigmatized by

Labour as “profiteering.” Arguing by analogy, the workpeople contended

that when a general rise in prices followed a general advance in wages,

it was entirely due to profiteering. It was never admitted by the

workmen that any part of the rise in prices was the natural, inevitable,

logical result of the general advances in wages, through the increase

of purchasing power operating on the same supply of commodities. War

experiences have equally confused workmen’s minds with regard to the

effect of high wages on the volume of employment. Whatever glimmering

suspicion the workmen had before the war that an advance in wages in

many industries tended directly, through increased cost of production,

to bring about unemployment, has now practically been dissipated by the

war. Time after time, I have been told that none of the general advances

in wages during the war has ever caused unemployment. The explanation,

of course, is that during the war workmen were not to any great extent

producing commodities for an ordinary commercial market, but munitions of

war for the Government, and all they could turn out the Government could

take, so insatiable was its demand.

The Workers’ Belief in Restricted Output

We come to another dangerous and widespread fallacy, the assumed

advantage of restricting output. This declares itself in many varied

forms. One of the commonest is a definite limitation on the tonnage, or

feet lineal or square of the day’s work. When the day’s work is completed

the workman, if paid on time, will frequently remain at work, but doing

nothing until the “hooter goes.” In other cases if paid on a piece-work

basis, the workman will sometimes leave the shop after his day’s work or

“stint” is finished. I have investigated cases where workmen coming on

at 7 a.m. finished their day’s work and went home by 10.30 or 11 a.m.

Other methods of reaching the same end are less open. The operative,

instead of finishing his work early and then allowing his machine “to

cut air” for the rest of the day, will with nice calculation slow down

all day long so as to spin out the allotted day’s work more or less

uniformly over the working day. Industrial experience during the war

has proved the existence, to an almost inconceivable extent, of this

latter method of limiting production. Perhaps I can best illustrate it

from some cases within my personal knowledge. In one instance some boys

straight from a board school were put on to do a simple operation from

which men had been withdrawn for more arduous duty. Working at the men’s

piece-prices, they averaged £4. 15_s._ per normal working week against

the men’s £2 10_s._ That meant the boys turned out—nor were they any the

worse for it physically—almost twice the men’s output. Women I put on

to replace men at some simple machining operations made, after a short

period of training, £6-£10 per week, against the men’s £4-£5. The women

were paid the men’s piece-prices for the operation. In another case men

who were working on piece-work, after learning of the announcement of

the Minister of Munitions that under no circumstances would piece-prices

be “cut,” speeded up their output by 120 per cent. These are only a few

selected illustrations out of a large number.[22] They are concrete

exemplifications of the appalling extent to which the false doctrine of

limiting output is rampant in industry—operative as an active orthodox

Trade Union principle.

By limiting output the workman genuinely believes that he is performing

a moral duty to himself and to his trade. He argues first, that he is

reducing unemployment by making the work go round; secondly, that he

is keeping up the value of his handicraft by putting a premium on its

application. Workmen have described to me the difference between possible

and actual production as being “their reserve fund.” Over and over

again this policy has been justified to me by reference to the action

of commercial trade combinations which pool orders and limit the output

of the works of certain of their members in order to ensure business

for other members less fortunately situated, and also by reference to

groups of manufacturers who systematically keep up prices by “keeping the

bottom in the market” through restricting the quantity of their output

that is offered for sale. The workmen will tell you in words to which

no economist can object that value is due to utility and to limitation

of supply. What he overlooks is that all that is thereby established

in practice is a minimum rate of wages, and that maximum earnings

depend on maximum output. There are many classical instances, well

within memory, where unemployment in certain trades was in fact almost

entirely abolished by restricting the output of those employed, notably

by discontinuing the then existing systems of payment by results—“blood

money” as it was called. These recollections live. But, as a matter

of fact, these instances prove nothing. They occurred just about the

commencement of a depression in trade, and, in fact, the extra cost of

production subsequently caused by the limitation of output, accelerated

the unemployment in those very trades. Still working men, like most men,

argue from particular cases of personal experience to universals.

The only way to attack the heresy is from the concrete illustration

drawn from the United States of America. There restriction of output is

not merely unknown, it is definitely repudiated by the Trade Unions.

Unfortunately, many labour intellectuals who have no knowledge of

American conditions pervert the facts and hold up to execration the

industrial organization in the United States of America. “Scientific

management,” they have told the British workman, “is merely cunningly

devised slavery in which the shackles of serfdom are so precisely

adjusted that the workman is a mere cog, helplessly and inhumanly

enmeshed in a grinding anti-social mechanism.” The average workman,

however, pays little attention to rhetoric and rodomontade, from

whomsoever it may emanate, and I have succeeded in satisfying bodies of

workmen as to the value of production by taking an American establishment

and giving the output, hours and remuneration per man per annum, or

any other convenient period of time, along with the output, hours and

remuneration per man for the same period in a comparable establishment

in England. The output will be expressed in pounds sterling of wholesale

market prices. This really does sink in. Then the moral can be driven

home. The vital truth can be shown that in a well-run establishment, as

output increases, the cost of the fixed charges per unit of production

decreases. Consequently every percentage increase in output—assuming no

“softening” of the selling price—results in a larger percentage increase

in the amount available for division between workmen and employer.

If that division is effected on equitable lines, there is an obvious

advantage to the worker. That is why the workman in the United States

of America can take home much higher real earnings than his brother in

this country. It is not difficult to satisfy the hard-headed practical

English worker that these higher American earnings are neither manna

dropped from heaven nor doles from more compassionate employers.

If there is scepticism as to the value to Trade Unions of production,

there is complete apathy as to the necessity of production for the

nation’s sake. What is wanted is to secure conviction of the need by

simple homely illustrations. The extent to which in any community

increased production conduces to plenty, and plenty to employment, good

wages, a higher standard of living, and low prices is beyond the present

ken of Labour. In other words, the proposition that the prosperity of a

country depends upon the production in the country obtains no credence

whatsoever; it is generally treated by working men as a sheer irrelevance.

On the other side of the account some reactionary employers, and

under-managers and foremen, cling to the hoary fallacy that however high

the output may be, workmen are never worth high earnings. Such persons

seem to think that the payment of high wages, even when accompanied

by high output, is a reflection on the management of the shop. They

constantly argue that high wages degenerate the workmen, and lead to

lost time. In order to reduce earnings, when they are considered to be

inordinately high, the piece-prices are “cut,” and time-allowances are

“docked.” This is a peculiarly English folly. No American employer would

dream of it. The results in England are disastrous. With the fear of

having his trade-prices reduced, the workman will not “go all out,” but

will limit output and maintain his earnings at such a figure as he thinks

will not stimulate the employer to reduce prices or time-allowances. In

commencing a piece-job the operative will deliberately go slow so as to

get a high price fixed, and thereby allow for any future cutting. The

employer ought to know that the more jobs that pass through or over a

workman’s machine or bench in the shift or working day the greater is the

number of jobs over which standing and fixed charges and the invariable

portion of the working costs are apportioned, and, therefore, the smaller

is the debit on each operation and the lower is the cost of production.

If the employer can get high production, it is to his direct interest to

allow high earnings for it. This is well accepted by American employers,

and represents normal shop practice in the United States of America.

Introduction of Time- and Labour-Saving Appliances

Anyone acquainted with industry in the United States of America and in

England cannot fail to notice one further striking contrast. In the

United States of America time- and labour-saving appliances, machines and

methods are being continually put into service by employers, and loyally

operated by labour. It is recognized as being in the joint interests

of them both. It clearly is. Anything that results in a net reduction

of output-cost, after allowing for extra interest and depreciation,

benefits not merely employers, but also employed. In England, however,

workpeople seriously regard time- and labour-saving devices as inimical

to their interests, and subversive of trade-rights. It is contended that

the introduction of such devices leads to the displacement of labour

and to unemployment. In this connection labour has learned nothing from

experience. Improved machinery has enormously bettered the worker’s lot.

In the United States of America the resultant reduction in output-cost

is admittedly the reason for the much higher real wages of American

workmen as compared with their English and Scottish confrères. Nor

has it led to unemployment in the United States of America. There is

no reason why it should do so even temporarily. The introduction of

time- and labour-saving appliances is always a gradual process in any

factory. Ordinary foresight and organization by an employer ought to

enable any men displaced still to be retained in employment. But many

English employers have impeded the introduction of labour-saving devices

by haggling over the readjustment of piece-rates in respect of the

installation of machines giving improved output. The American employer,

on the other hand, tries, after allowing for the costs of the new

machine, to maintain, as far as possible, the old piece-rates, with the

result that the workmen’s daily earnings are increased by its use. The

English employer is inclined to think that he is justified in reducing

piece-rates so long as the workmen’s daily earnings are maintained. It

is unnecessary to point out which policy is most likely to attract the

wage-earner to the use of improved machinery.

Payment by Results

Nothing in industry is surrounded by so much confusion and ignorance,

both among employers and employed, as the question of payment by

results. The value of this method of payment in promoting production is

indisputable. I have many actual cases in mind where the introduction of

piece-work in place of time-work resulted in an increase of output up

to 110 per cent., thereby materially reducing the cost of production.

Yet while in some trades, for example the cotton trade, the operatives

refuse to work on any basis other than piece-work, in other trades,

for example carpentering and many sections of engineering, piece-work

is considered a “pestilential system” [_sic_] tending to unemployment,

degradation of the worker, and untold evils. It is in regard to payment

by results on the premium bonus system that the greatest misconception

prevails amongst both masters and men. That is a system under which a

time is fixed for each job. If the job is done in less than the fixed

time, the time saved is divided in a definite proportion between employer

and worker—generally half and half in England—and the latter paid for

his portion at his ordinary time-rate. The system has provoked in this

country, unlike the United States of America, the greatest animosity on

the part of the Trade Unions. Their point is that on a piece-work basis,

where the man is paid a definite price for each article or operation,

the more he does the more he is paid. For all time he saves in finishing

an article, he receives the full benefit, the employer’s benefit being

the lower cost of production resulting from increased output. What right

then, it is argued, has the employer, like a parasite, to make anything

out of the time which the worker saves on the premium-bonus system. The

argument is plausible, but misleading. It entirely overlooks the fact

that under a piece-work system, where the workman is paid for all the

time saved, prices are necessarily fixed on a much less liberal basis

than time allowances on a premium-bonus basis. In the latter case, just

because the employer gets a share of the time saved, he can adjust the

rate generously, or as rate-fixers put it, “fix the price loosely.”

If production is to be furthered in this country, the whole system of

payment proportioned to output must be lopped free of its perversion by

certain employers, and emancipated from the prejudice of Trade Unions.

When displayed intelligibly in its true economic characteristics, the

system will speak for itself. The actual rates to be fixed under any

particular system are, of course, a fair matter for collective bargaining.

Subdivision and Simplification of Process

An idea is commonly encountered among the rank and file that to keep

up the labour costs of every operation or job is the best way to

maintain the general value of the labour of the operatives concerned. An

illustration may be taken from the engineering industry. In engineering,

as is well known, England was the pioneer. The practice in the early

days was for a skilled turner or millwright, or other craftsman, to

undertake a job, perform all the necessary machine and bench operations,

and carry it through to completion. Later, as work increased in volume,

and still later in diversity, there gradually evolved a differentiation

between the turner and the fitter, and in more recent times, between

turners and fitters and other kinds of engineering craftsmen. But the

essence of the business was that every person concerned in the work

should be a tradesman, or skilled man. In recent times, the employers

succeeded in establishing “their right”—which is now being questioned—to

promote unskilled men, perhaps shop labourers, to work certain classes

of machines, capstan and turret lathes, etc. These men were graded as

machinists, and when the trade became organized generally received

about three-fourths of the skilled turner’s rate. They were designated

“semi-skilled” men. The point to be observed is that any operation

among the many thousands that constitute skilled work is deemed to be a

“skilled operation,” performable only by a skilled man, and if in special

circumstances it is undertaken by any other person, supposing such an

improbable case, it carries the full skilled rate of pay. Very similar,

but somewhat less rigid, conventions exist in regard to semi-skilled

work. The inflexible way in which the engineering Unions enforce these

trade practices has certainly reserved exclusively for skilled men a

large sphere of work, but it keeps up production costs, and retards

development of the industry. Whenever a new and improved machine has been

introduced, a machine, say, of a type where the skill was mainly in the

machine, and no longer to anything like the same degree required of the

worker, there has been a constant struggle between the Unions and the

employers as to whether the machine should or should not be operated by

a skilled man. Sometimes the employers have won, sometimes the Unions—it

is a pure question of relative strength. But the obvious waste of skill

in employing one skilled man on one of these machines when he could

manage two or more, and the payment of the skilled rate, all added to the

prevailing limitation of production, have discouraged English employers

from installing up-to-date appliances and so cheapening production.

This is not all the story. In the United States of America the invariable

practice is to subdivide every job into its simple constituent

operations, allocate each simple machine operation to a machine expressly

designed, or “set up” or “rigged” for that special operation, and

capable of being tended by an unskilled person after a small modicum of

training. So also in regard to non-machine operations, that is to say,

assembling or fitting. Each operation is allocated to a special person,

in the first instance probably quite unskilled, who becomes proficient

and efficient at this one line of work. There is little or no haggling

about the remuneration of these unskilled operatives. The volume of

production and the consequent ability to pay high wages obviate that. It

is never contended by the Machinists’ Union that all of these subdivided

operations must be done by skilled men, and by them only. Yet in England

it is practically a rule that no man in a Union engineering workshop may

lift a file and do the smallest amount of “rough” filing unless he is a

skilled fitter.

It is a platitude to insist that the natural and efficient evolution of

industry involves subdivision. It is, in fact, the governing condition of

efficiency and low production cost. It is equally evident, from American

experience, that there is nothing in subdivision really hurtful to the

skilled men, their trade, or their standard of remuneration. Subdivision

in the United States of America has led to an enormous output. All

the vast number of machines in service must be set up, repaired, and

periodically overhauled. Only the skilled men can do that. The machine

“tenders” or “minders” must be supervised. That, again, is work for

skilled men. All the tools for the machines must be ground, repaired,

and in most cases “set up”—more work for which skilled men alone are

suitable. In short, in the United States of America, the skilled men

enjoy better conditions, a higher status, and receive greater real wages

than the skilled men in this country. The latter must be helped to

realize, and quickly, that their present policy of preserving for skilled

men exclusively each simple constituent operation now included in skilled

men’s work is detrimental to their interests, is stifling industry, and

strangling the trade of the nation.

No “Niggling” at Prices

At the same time, a stern caution must be administered to certain

employers. With labour charges forming so large a proportion of the costs

of production, some employers are constantly on the alert to pull down

wages by fair means or foul. A slight alteration is made in the method

of manufacture, or some device that would not deceive a first year’s

apprentice is fitted to a machine, and it is then claimed that the work

has become such as entitles the employer to put unskilled or semi-skilled

men on to it, or alternatively, to reduce the skilled man’s price. Sharp

practice of that sort sours the shop. It intensifies enormously the

difficulty, at present great enough, of the good employer, struggling

to reorganize his business fairly and properly on efficient and honest

subdivision lines. Present trade customs, as long as they effectively

exist, must be honoured. No employer should be entitled to vary the

accepted trade grading of the work or its accompanying rate of wages

or prices unless there is a genuine and substantial change in process

or machinery which in reality supplants the skill of the worker and

manifestly increases production.

So far as improvement of production is concerned, the difficulty first,

last, and all the time is the bitter enslavement of the mind of the

worker, and, if I may borrow the phrase, the “collective mind” of

the Trade Unions, by economic fallacy, and this must be attacked and

vanquished before any real progress can be made. The remedy is education.

Labour policy—false and true · 第 9 / 10 章