_THAT HE WHO WOULD BE WELL TAKEN CARE OF MUST TAKE CARE OF HIMSELF._
The discussion of "the relations of labor and capital" has not hitherto
been very fruitful. It has been confused by ambiguous definitions, and
it has been based upon assumptions about the rights and duties of
social classes which are, to say the least, open to serious question as
regards their truth and justice. If, then, we correct and limit the
definitions, and if we test the assumptions, we shall find out whether
there is anything to discuss about the relations of "labor and
capital," and, if anything, what it is.
Let us first examine the terms.
1. Labor means properly _toil_, irksome exertion, expenditure of
productive energy.
2. The term is used, secondly, by a figure of speech, and in a
collective sense, to designate the body of _persons_ who, having
neither capital nor land, come into the industrial organization
offering productive services in exchange for means of subsistence.
These persons are united by community of interest into a group, or
class, or interest, and, when interests come to be adjusted, the
interests of this group will undoubtedly be limited by those of other
groups.
3. The term labor is used, thirdly, in a more restricted, very popular
and current, but very ill-defined way, to designate a limited sub-group
among those who live by contributing productive efforts to the work of
society. Every one is a laborer who is not a person of leisure. Public
men, or other workers, if any, who labor but receive no pay, might be
excluded from the category, and we should immediately pass, by such a
restriction, from a broad and philosophical to a technical definition
of the labor class. But merchants, bankers, professional men, and all
whose labor is, to an important degree, mental as well as manual, are
excluded from this third use of the term labor. The result is, that the
word is used, in a sense at once loosely popular and strictly
technical, to designate a group of laborers who separate their
interests from those of other laborers. Whether farmers are included
under "labor" in this third sense or not I have not been able to
determine. It seems that they are or are not, as the interest of the
disputants may require.
1. Capital is any _product_ of labor which is used to assist
production.
2. This term also is used, by a figure of speech, and in a collective
sense, for the _persons_ who possess capital, and who come into the
industrial organization to get their living by using capital for
profit. To do this they need to exchange capital for productive
services. These persons constitute an interest, group, or class,
although they are not united by any such community of interest as
laborers, and, in the adjustment of interests, the interests of the
owners of capital must be limited by the interests of other groups.
3. Capital, however, is also used in a vague and popular sense which it
is hard to define. In general it is used, and in this sense, to mean
employers of laborers, but it seems to be restricted to those who are
employers on a large scale. It does not seem to include those who
employ only domestic servants. Those also are excluded who own capital
and lend it, but do not directly employ people to use it.
It is evident that if we take for discussion "capital and labor," if
each of the terms has three definitions, and if one definition of each
is loose and doubtful, we have everything prepared for a discussion
which shall be interminable and fruitless, which shall offer every
attraction to undisciplined thinkers, and repel everybody else.
The real collision of interest, which is the centre of the dispute, is
that of employers and employed; and the first condition of successful
study of the question, or of successful investigation to see if there
is any question, is to throw aside the technical economic terms, and to
look at the subject in its true meaning, expressed in untechnical
language. We will use the terms "capital" and "labor" only in their
strict economic significance, viz., the first definition given above
under each term, and we will use the terms "laborers" and "capitalists"
when we mean the persons described in the second definition under each
term.
It is a common assertion that the interests of employers and employed
are identical, that they are partners in an enterprise, etc. These
sayings spring from a disposition, which may often be noticed, to find
consoling and encouraging observations in the facts of sociology, and
to refute, if possible, any unpleasant observations. If we try to learn
what is true, we shall both do what is alone right, and we shall do the
best for ourselves in the end. The interests of employers and employed
as parties to a contract are antagonistic in certain respects and
united in others, as in the case wherever supply and demand operate. If
John gives cloth to James in exchange for wheat, John's interest is
that cloth be good and attractive but not plentiful, but that wheat be
good and plentiful; James' interest is that wheat be good and
attractive but not plentiful, but that cloth be good and plentiful. All
men have a common interest that all things be good, and that all
things but the one which each produces be plentiful. The employer is
interested that capital be good but rare, and productive energy good
and plentiful; the employé is interested that capital be good and
plentiful, but that productive energy be good and rare. When one man
alone can do a service, and he can do it very well, he represents the
laborer's ideal. To say that employers and employed are partners in an
enterprise is only a delusive figure of speech. It is plainly based on
no facts in the industrial system.
Employers and employed make contracts on the best terms which they can
agree upon, like buyers and sellers, renters and hirers, borrowers and
lenders. Their relations are, therefore, controlled by the universal
law of supply and demand. The employer assumes the direction of the
business, and takes all the risk, for the capital must be consumed in
the industrial process, and whether it will be found again in the
product or not depends upon the good judgment and foresight with which
the capital and labor have been applied. Under the wages system the
employer and the employé contract for time. The employé fulfils the
contract if he obeys orders during the time, and treats the capital as
he is told to treat it. Hence he is free from all responsibility, risk,
and speculation. That this is the most advantageous arrangement for
him, on the whole and in the great majority of cases, is very certain.
Salaried men and wage-receivers are in precisely the same
circumstances, except that the former, by custom and usage, are those
who have special skill or training, which is almost always an
investment of capital, and which narrows the range of competition in
their case. Physicians, lawyers, and others paid by fees are workers by
the piece. To the capital in existence all must come for their
subsistence and their tools.
Association is the lowest and simplest mode of attaining accord and
concord between men. It is now the mode best suited to the condition
and chances of employés. Employers formerly made use of guilds to
secure common action for a common interest. They have given up this
mode of union because it has been superseded by a better one.
Correspondence, travel, newspapers, circulars, and telegrams bring to
employers and capitalists the information which they need for the
defense of their interests. The combination between them is automatic
and instinctive. It is not formal and regulated by rule. It is all the
stronger on that account, because intelligent men, holding the same
general maxims of policy, and obtaining the same information, pursue
similar lines of action, while retaining all the ease, freedom, and
elasticity of personal independence.
At present employés have not the leisure necessary for the higher modes
of communication. Capital is also necessary to establish the ties of
common action under the higher forms. Moreover, there is, no doubt, an
incidental disadvantage connected with the release which the employé
gets under the wages system from all responsibility for the conduct of
the business. That is, that employés do not learn to watch or study the
course of industry, and do not plan for their own advantage, as other
classes do. There is an especial field for combined action in the case
of employés. Employers are generally separated by jealousy and pride in
regard to all but the most universal class interests. Employés have a
much closer interest in each other's wisdom. Competition of capitalists
for profits redounds to the benefit of laborers. Competition of
laborers for subsistence redounds to the benefit of capitalists. It is
utterly futile to plan and scheme so that either party can make a
"corner" on the other. If employers withdraw capital from employment in
an attempt to lower wages, they lose profits. If employés withdraw from
competition in order to raise wages, they starve to death. Capital and
labor are the two things which least admit of monopoly. Employers can,
however, if they have foresight of the movements of industry and
commerce, and if they make skillful use of credit, win exceptional
profits for a limited period. One great means of exceptional profit
lies in the very fact that the employés have not exercised the same
foresight, but have plodded along and waited for the slow and
successive action of the industrial system through successive periods
of production, while the employer has anticipated and synchronized
several successive steps. No bargain is fairly made if one of the
parties to it fails to maintain his interest. If one party to a
contract is well informed and the other ill informed, the former is
sure to win an advantage. No doctrine that a true adjustment of
interest follows from the free play of interests can be construed to
mean that an interest which is neglected will get its rights.
The employés have no means of information which is as good and
legitimate as association, and it is fair and necessary that their
action should be united in behalf of their interests. They are not in a
position for the unrestricted development of individualism in regard to
many of their interests. Unquestionably the better ones lose by this,
and the development of individualism is to be looked forward to and
hoped for as a great gain. In the meantime the labor market, in which
wages are fixed, cannot reach fair adjustments unless the interest of
the laborers is fairly defended, and that cannot, perhaps, yet be done
without associations of laborers. No newspapers yet report the labor
market. If they give any notices of it--of its rise and fall, of its
variations in different districts and in different trades--such notices
are always made for the interest of the employers. Re-distribution of
employés, both locally and trade-wise (so far as the latter is
possible), is a legitimate and useful mode of raising wages. The
illegitimate attempt to raise wages by limiting the number of
apprentices is the great abuse of trades-unions. I shall discuss that
in the ninth chapter.
It appears that the English trades were forced to contend, during the
first half of this century, for the wages which the market really would
give them, but which, under the old traditions and restrictions which
remained, they could not get without a positive struggle. They formed
the opinion that a strike could raise wages. They were educated so to
think by the success which they had won in certain attempts. It appears
to have become a traditional opinion, in which no account is taken of
the state of the labor market. It would be hard to find a case of any
strike within thirty or forty years, either in England or the United
States, which has paid. If a strike occurs, it certainly wastes capital
and hinders production. It must, therefore, lower wages subsequently
below what they would have been if there had been no strike. If a
strike succeeds, the question arises whether an advance of wages as
great or greater would not have occurred within a limited period
without a strike.
Nevertheless, a strike is a legitimate resort at last. It is like war,
for it is war. All that can be said is that those who have recourse to
it at last ought to understand that they assume a great responsibility,
and that they can only be justified by the circumstances of the case. I
cannot believe that a strike for wages ever is expedient. There are
other purposes, to be mentioned in a moment, for which a strike may be
expedient; but a strike for wages is a clear case of a strife in which
ultimate success is a complete test of the justifiability of the course
of those who made the strife. If the men win an advance, it proves that
they ought to have made it. If they do not win, it proves that they
were wrong to strike. If they strike with the market in their favor,
they win. If they strike with the market against them, they fail. It is
in human nature that a man whose income is increased is happy and
satisfied, although, if he demanded it, he might perhaps at that very
moment get more. A man whose income is lessened is displeased and
irritated, and he is more likely to strike then, when it may be in
vain. Strikes in industry are not nearly so peculiar a phenomenon as
they are often thought to be. Buyers strike when they refuse to buy
commodities of which the price has risen. Either the price remains
high, and they permanently learn to do without the commodity, or the
price is lowered, and they buy again. Tenants strike when house rents
rise too high for them. They seek smaller houses or parts of houses
until there is a complete readjustment. Borrowers strike when the rates
for capital are so high that they cannot employ it to advantage and pay
those rates. Laborers may strike and emigrate, or, in this country,
take to the land. This kind of strike is a regular application of
legitimate means, and is sure to succeed. Of course, strikes with
violence against employers or other employés are not to be discussed at
all.
Trades-unions, then, are right and useful, and it may be that they are
necessary. They may do much by way of true economic means to raise
wages. They are useful to spread information, to maintain _esprit de
corps_, to elevate the public opinion of the class. They have been
greatly abused in the past. In this country they are in constant danger
of being used by political schemers--a fact which does more than
anything else to disparage them in the eyes of the best workmen. The
economic notions most in favor in the trades-unions are erroneous,
although not more so than those which find favor in the counting-room.
A man who believes that he can raise wages by doing bad work, wasting
time, allowing material to be wasted, and giving generally the least
possible service in the allotted time, is not to be distinguished from
the man who says that wages can be raised by putting protective taxes
on all clothing, furniture, crockery, bedding, books, fuel, utensils,
and tools. One lowers the services given for the capital, and the other
lowers the capital given for the services. Trades-unionism in the
higher classes consists in jobbery. There is a great deal of it in the
professions. I once heard a group of lawyers of high standing sneer at
an executor who hoped to get a large estate through probate without
allowing any lawyers to get big fees out of it. They all approved of
steps which had been taken to force a contest, which steps had forced
the executor to retain two or three lawyers. No one of the speakers had
been retained.
Trades-unions need development, correction, and perfection. They ought,
however, to get this from the men themselves. If the men do not feel
any need of such institutions, the patronage of other persons who come
to them and give them these institutions will do harm and not good.
Especially trades-unions ought to be perfected so as to undertake a
great range of improvement duties for which we now rely on Government
inspection, which never gives what we need. The safety of workmen from
machinery, the ventilation and sanitary arrangements required by
factories, the special precautions of certain processes, the hours of
labor of women and children, the schooling of children, the limits of
age for employed children, Sunday work, hours of labor--these and other
like matters ought to be controlled by the men themselves through their
organizations. The laborers about whom we are talking are free men in a
free state. If they want to be protected they must protect themselves.
They ought to protect their own women and children. Their own class
opinion ought to secure the education of the children of their class.
If an individual workman is not bold enough to protest against a wrong
to laborers, the agent of a trades-union might with propriety do it on
behalf of the body of workmen. Here is a great and important need, and,
instead of applying suitable and adequate means to supply it, we have
demagogues declaiming, trades-union officers resolving, and Government
inspectors drawing salaries, while little or nothing is done.
I have said that trades-unions are right and useful, and perhaps,
necessary; but trades-unions are, in fact, in this country, an exotic
and imported institution, and a great many of their rules and modes of
procedure, having been developed in England to meet English
circumstances, are out of place here. The institution itself does not
flourish here as it would if it were in a thoroughly congenial
environment. It needs to be supported by special exertion and care. Two
things here work against it. First, the great mobility of our
population. A trades-union, to be strong, needs to be composed of men
who have grown up together, who have close personal acquaintance and
mutual confidence, who have been trained to the same code, and who
expect to live on together in the same circumstances and interests. In
this country, where workmen move about frequently and with facility,
the unions suffer in their harmony and stability. It was a significant
fact that the unions declined during the hard times. It was only when
the men were prosperous that they could afford to keep up the unions,
as a kind of social luxury. When the time came to use the union it
ceased to be. Secondly, the American workman really has such personal
independence, and such an independent and strong position in the labor
market, that he does not need the union. He is farther on the road
toward the point where personal liberty supplants the associative
principle than any other workman. Hence the association is likely to be
a clog to him, especially if he is a good laborer, rather than an
assistance. If it were not for the notion brought from England, that
trades-unions are, in some mysterious way, beneficial to the
workmen--which notion has now become an article of faith--it is very
doubtful whether American workmen would find that the unions were of
any use, unless they were converted into organizations for
accomplishing the purposes enumerated in the last paragraph.
The fashion of the time is to run to Government boards, commissions,
and inspectors to set right everything which is wrong. No experience
seems to damp the faith of our public in these instrumentalities. The
English Liberals in the middle of this century seemed to have full
grasp of the principle of liberty, and to be fixed and established in
favor of non-interference. Since they have come to power, however, they
have adopted the old instrumentalities, and have greatly multiplied
them since they have had a great number of reforms to carry out. They
seem to think that interference is good if only they interfere. In this
country the party which is "in" always interferes, and the party which
is "out" favors non-interference. The system of interference is a
complete failure to the ends it aims at, and sooner or later it will
fall of its own expense and be swept away. The two notions--one to
regulate things by a committee of control, and the other to let things
regulate themselves by the conflict of interests between free men--are
diametrically opposed; and the former is corrupting to free
institutions, because men who are taught to expect Government
inspectors to come and take care of them lose all true education in
liberty. If we have been all wrong for the last three hundred years in
aiming at a fuller realization of individual liberty, as a condition of
general and widely-diffused happiness, then we must turn back to
paternalism, discipline, and authority; but to have a combination of
liberty and dependence is impossible.
I have read a great many diatribes within the last ten years against
employers, and a great many declamations about the wrongs of employés.
I have never seen a defense of the employer. Who dares say that he is
not the friend of the poor man? Who dares say that he is the friend of
the employer? I will try to say what I think is true. There are bad,
harsh, cross employers; there are slovenly, negligent workmen; there
are just about as many proportionately of one of these classes as of
the other. The employers of the United States--as a class, proper
exceptions being understood--have no advantage over their workmen. They
could not oppress them if they wanted to do so. The advantage, taking
good and bad times together, is with the workmen. The employers wish
the welfare of the workmen in all respects, and would give redress for
any grievance which was brought to their attention. They are
considerate of the circumstances and interests of the laborers. They
remember the interests of the workmen when driven to consider the
necessity of closing or reducing hours. They go on, and take risk and
trouble on themselves in working through bad times, rather than close
their works. The whole class of those-who-have are quick in their
sympathy for any form of distress or suffering. They are too quick.
Their sympathies need regulating, not stimulating. They are more likely
to give away capital recklessly than to withhold it stingily when any
alleged case of misfortune is before them. They rejoice to see any man
succeed in improving his position. They will aid him with counsel and
information if he desires it, and any man who needs and deserves help
because he is trying to help himself will be sure to meet with
sympathy, encouragement, and assistance from those who are better off.
If those who are in that position are related to him as employers to
employé, that tie will be recognized as giving him an especial claim.