The Acquisitive Society Part 3

The course of wisdom in the affairs of industry is, after all, what it is in any other department of organized life. It is to consider the end for which economic activity is carried on and then to adapt economic organization to it. It is to pay for service and for service only, and when capital is hired to make sure that it is hired at the cheapest possible price. It is to place the responsibility for organizing industry on the shoulders of those who work and use, not of those who own, because production is the business of the producer and the proper person to see that he discharges his business is the consumer for whom, and not for the owner of property, it ought to be carried on. Above all it is to insist that all industries shall be conducted in complete publicity as to costs and profits, because publicity ought to be the antiseptic both of economic and political abuses, and no man can have confidence in his neighbor unless both work in the light.

As far as property is concerned, such a policy would possess two edges.

On the one hand, it would aim at abolishing those forms of property in which ownership is divorced from obligations. On the other hand, it would seek to encourage those forms of economic organization under which the worker, whether owner or not, is free to carry on his work without sharing its control or its profits with the mere _rentier_.

Thus, if in certain {86} spheres it involved an extension of public ownership, it would in others foster an extension of private property.

For it is not private ownership, but private ownership divorced from work, which is corrupting to the principle of industry; and the idea of some socialists that private property in land or capital is necessarily mischievous is a piece of scholastic pedantry as absurd as that of those conservatives who would invest all property with some kind of mysterious sanct.i.ty. It all depends what sort of property it is and for what purpose it is used. Provided that the State retains its eminent domain, and controls alienation, as it does under the Homestead laws of the Dominions, with sufficient stringency to prevent the creation of a cla.s.s of functionless property-owners, there is no inconsistency between encouraging simultaneously a multiplication of peasant farmers and small masters who own their own farms or shops, and the abolition of private ownership in those industries, unfortunately to-day the most conspicuous, in which the private owner is an absentee shareholder.

Indeed, the second reform would help the first. In so far as the community tolerates functionless property it makes difficult, if not impossible, the restoration of the small master in agriculture or in industry, who cannot easily hold his own in a world dominated by great estates or capitalist finance. In so far as it abolishes those kinds of property which are merely parasitic, it facilitates the restoration of the small property-owner in those kinds of industry for which small ownership is adapted. A socialistic policy towards the former is not {87} antagonistic to the "distributive state," but, in modern economic conditions, a necessary preliminary to it, and if by "Property" is meant the personal possessions which the word suggests to nine-tenths of the population, the object of socialists is not to undermine property but to protect and increase it. The boundary between large scale and small scale production will always be uncertain and fluctuating, depending, as it does, on technical conditions which cannot be foreseen: a cheapening of electrical power, for example, might result in the decentralization of manufactures, as steam resulted in their concentration. The fundamental issue, however, is not between different scales of ownership, but between ownership of different kinds, not between the large farmer or master and the small, but between property which is used for work and property which yields income without it. The Irish landlord was abolished, not because he owned a large scale, but because he was an owner and nothing more; if, and when English land-ownership has been equally attenuated, as in towns it already has been, it will deserve to meet the same fate. Once the issue of the character of ownership has been settled, the question of the size of the economic unit can be left to settle itself.

The first step, then, towards the organization of economic life for the performance of function is to abolish those types of private property in return for which no function is performed. The man who lives by owning without working is necessarily supported by the industry of some one else, and is, therefore, too expensive a luxury to be encouraged.

Though he deserves to be {88} treated with the leniency which ought to be, and usually is not, shown to those who have been brought up from infancy to any other disreputable trade, indulgence to individuals must not condone the inst.i.tution of which both they and their neighbors are the victims. Judged by this standard, certain kinds of property are obviously anti-social. The rights in virtue of which the owner of the surface is ent.i.tled to levy a tax, called a royalty, on every ton of coal which the miner brings to the surface, to levy another tax, called a way-leave, on every ton of coal transported under the surface of his land though its amenity and value may be quite unaffected, to distort, if he pleases, the development of a whole district by refusing access to the minerals except upon his own terms, and to cause some 3,500 to 4,000 million tons to be wasted in barriers between different properties, while he in the meantime contributes to a chorus of lamentation over the wickedness of the miners in not producing more tons of coal for the public and incidentally more private taxes for himself--all this adds an agreeable touch of humor to the drab quality of our industrial civilization for which mineral owners deserve perhaps some recognition, though not the $400,000 odd a year which is paid to each of the four leading players, or the $24,000,000 a year which is distributed among the crowd.

The alchemy by which a gentleman who has never seen a coal mine distills the contents of that place of gloom into elegant chambers in London and a place in the country is not the monopoly of royalty owners. A similar feat of prestidigitation is performed by the {89} owner of urban ground-rents. In rural districts some landlords, perhaps many landlords, are partners in the hazardous and difficult business of agriculture, and, though they may often exercise a power which is socially excessive, the position which they hold and the income which they receive are, in part at last, a return for the functions which they perform. The ownership of urban land has been refined till of that crude ore only the pure gold is left. It is the perfect sinecure, for the only function it involves is that of collecting its profits, and in an age when the struggle of Liberalism against sinecures was still sufficiently recent to stir some chords of memory, the last and greatest of liberal thinkers drew the obvious deduction. "The reasons which form the justification ... of property in land," wrote Mill in 1848, "are valid only in so far as the proprietor of land is its improver.... In no sound theory of private property was it ever contemplated that the proprietor of land should be merely a sinecurist quartered on it." Urban ground-rents and royalties are, in fact, as the Prime Minister in his unregenerate days suggested, a tax which some persons are permitted by the law to levy upon the industry of others. They differ from public taxation only in that their amount increases in proportion not to the nation's need of revenue but to its need of the coal and s.p.a.ce on which they are levied, that their growth inures to private gain not to public benefit, and that if the proceeds are wasted on frivolous expenditure no one has any right to complain, because the arrangement by which Lord Smith spends wealth produced by Mr. Brown on objects which do no good to either is part {90} of the system which, under the name of private property, Mr.

Brown as well as Lord Smith have learned to regard as essential to the higher welfare of mankind.

But if we accept the principle of function we shall ask what is the _purpose_ of this arrangement, and for what end the inhabitants of, for example, London pay $64,000,000 a year to their ground landlords. And if we find that it is for no purpose and no end, but that these things are like the horseshoes and nails which the City of London presents to the Crown on account of land in the Parish of St. Clement Danes, then we shall not deal harshly with a quaint historical survival, but neither shall we allow it to distract us from the business of the present, as though there had been history but there were not history any longer. We shall close these channels through which wealth leaks away by resuming the ownership of minerals and of urban land, as some communities in the British Dominions and on the Continent of Europe have resumed it already. We shall secure that such large acc.u.mulations as remain change hands at least once in every generation, by increasing our taxes on inheritance till what pa.s.ses to the heir is little more than personal possessions, not the right to a tribute from industry which, though qualified by death-duties, is what the son of a rich man inherits to-day. We shall treat mineral owners and land-owners, in short, as Plato would have treated the poets, whom in their ability to make something out of nothing and to bewitch mankind with words they a little resemble, and crown them with flowers and usher them politely out of the State.

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VII

INDUSTRY AS A PROFESSION

Rights without functions are like the shades in Homer which drank blood but scattered trembling at the voice of a man. To extinguish royalties and urban ground-rents is merely to explode a superst.i.tion. It needs as little--and as much--resolution as to put one's hand through any other ghost. In all industries except the diminishing number in which the capitalist is himself the manager, property in capital is almost equally pa.s.sive. Almost, but not quite. For, though the majority of its owners do not themselves exercise any positive function, they appoint those who do. It is true, of course, that the question of how capital is to be owned is distinct from the question of how it is to be administered, and that the former can be settled without prejudice to the latter. To infer, because shareholders own capital which is indispensable to industry, that therefore industry is dependent upon the maintenance of capital in the hands of shareholders, to write, with some economists, as though, if private property in capital were further attenuated or abolished altogether, the constructive energy of the managers who may own capital or may not, but rarely, in the more important industries, own more than a small fraction of it, must necessarily be impaired, is to be guilty of a robust _non-sequitur_ and to ignore the most obvious facts of {92} contemporary industry. The less the mere capitalist talks about the necessity for the consumer of an efficient organization of industry, the better; for, whatever the future of industry may be, an efficient organization is likely to have no room for _him_. But though shareholders do not govern, they reign, at least to the extent of saying once a year "_le roy le veult_." If their rights are pared down or extinguished, the necessity for some organ to exercise them will still remain. And the question of the ownership of capital has this much in common with the question of industrial organization, that the problem of the const.i.tution under which industry is to be conducted is common to both.

That const.i.tution must be sought by considering how industry can be 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 a.s.sumes 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 compet.i.tion, 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 a.s.sume 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 cla.s.ses had deified free compet.i.tion 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 ama.s.s. 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, appet.i.tes 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 munic.i.p.al 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 compet.i.tive 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 a.s.sumed, 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 pa.s.ses 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 repet.i.tion tends to m.u.f.fle 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 inst.i.tution 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 circ.u.mstances 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 a.n.a.logous 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 a.s.sumption 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 a.s.sumption 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 impa.s.se. But it is an impa.s.se 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 a.s.suming 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 a.s.sist (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 a.s.sistance. Their proprietary interest may be limited or attenuated to such a degree that they become mere _rentiers_, who are guaranteed a fixed payment a.n.a.logous 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 cla.s.ses 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 munic.i.p.alities, 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 c.u.mbrous 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 circ.u.mstances 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 ent.i.tled 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 circ.u.mstances 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 compet.i.tion 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 reconst.i.tuting 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-partic.i.p.ation 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.

"We believe," they write, "that the great task of our Industrial Council is to develop an entirely new system of industrial control by the members of the industry itself--the actual producers, whether by hand or brain, and to bring them into co-operation with the State as the central representative of the community whom they are organized to serve." Instead of unlimited profits, so "indispensable as an incentive to efficiency," the employer is to be paid a salary for his services as manager, and a rate of interest on his capital which is to be both fixed and (unless he fails to earn it through his own inefficiency) guaranteed; anything in excess of it, any "profits" in fact, which in other industries are distributed as dividends to shareholders, he is to {108} surrender to a central fund to be administered by employers and workmen for the benefit of the industry as a whole. Instead of the financial standing of each firm being treated as an inscrutable mystery to the public, with the result that it is sometimes a mystery to itself, there is to be a system of public costing and audit, on the basis of which the industry will a.s.sume a collective liability for those firms which are shown to be competently managed. Instead of the workers being dismissed in slack times to struggle along as best they can, they are to be maintained from a fund raised by a levy on employers and administered by the trade unions.

There is to be publicity as to costs and profits, open dealing and honest work and mutual helpfulness, instead of the compet.i.tion which the nineteenth century regarded as an efficient subst.i.tute for them.

"Capital" is not to "employ labor." Labor, which includes managerial labor, is to employ capital; and to employ it at the cheapest rate at which, in the circ.u.mstances of the trade, it can be got. If it employs it so successfully that there is a surplus when it has been fairly paid for its own services, then that surplus is not to be divided among shareholders, for, when they have been paid interest, they have been paid their due; it is to be used to equip the industry to provide still more effective service in the future.

So here we have the majority of a body of practical men, who care nothing for socialist theories, proposing to establish "organized Public Service in the Building Industry," recommending, in short, that their industry shall be turned into a profession. And they do it, it {109} will be observed, by just that functional organization, just that conversion of full proprietary rights into a mortgage secured (as far as efficient firms are concerned) on the industry as a whole, just that transference of the control of production from the owner of capital to those whose business is production, which we saw is necessary if industry is to be organized for the performance of service, not for the pecuniary advantage of those who hold proprietary rights. Their Report is of the first importance as offering a policy for attenuating private property in capital in the important group of industries in which private ownership, in one form or another, is likely for some considerable time to continue, and a valuable service would be rendered by any one who would work out in detail the application of its principle to other trades.

Not, of course, that this is the only way, or in highly capitalized industries the most feasible way, in which the change can be brought about. Had the movement against the control of production by property taken place before the rise of limited companies, in which ownership is separated from management, the transition to the organization of industry as a profession might also have taken place, as the employers and workmen in the building trade propose that it should, by limiting the rights of private ownership without abolishing it. But that is not what has actually happened, and therefore the proposals of the building trade are not of universal application. It is possible to retain private ownership in building and in industries like building, {110} while changing its character, precisely because in building the employer is normally not merely an owner, but something else as well.

He is a manager; that is, he is a workman. And because he is a workman, whose interests, and still more whose professional spirit as a workman may often outweigh his interests and merely financial spirit as an owner, he can form part of the productive organization of the industry, after his rights as an owner have been trimmed and limited.

But that dual position is abnormal, and in the highly organized industries is becoming more abnormal every year. In coal, in cotton, in ship-building, in many branches of engineering the owner of capital is not, as he is in building, an organizer or manager. His connection with the industry and interest in it is purely financial. He is an owner and nothing more. And because his interest is merely financial, so that his concern is dividends and production only as a means to dividends, he cannot be worked into an organization of industry which vests administration in a body representing all grades of producers, or producers and consumers together, for he has no purpose in common with them; so that while joint councils between workers and managers may succeed, joint councils between workers and owners or agents of owners, like most of the so-called Whitley Councils, will not, because the necessity for the mere owner is itself one of the points in dispute.

The master builder, who owns the capital used, can be included, not _qua_ capitalist, but _qua_ builder, if he surrenders some of the rights of ownership, as the Building Industry Committee proposed that he should. But {111} if the shareholder in a colliery or a shipyard abdicates the control and unlimited profits to which, _qua_ capitalist, he is at present ent.i.tled, he abdicates everything that makes him what he is, and has no other standing in the industry. He cannot share, like the master builder, in its management, because he has no qualifications which would enable him to do so. His object is profit; and if industry is to become, as employers and workers in the building trade propose, an "organized public service," then its subordination to the shareholder whose object is profit, is, as they clearly see, precisely what must be eliminated. The master builders propose to give it up. They can do so because they have their place in the industry in virtue of their function as workmen. But if the shareholder gave it up, he would have no place at all.

Hence in coal mining, where ownership and management are sharply separated, the owners will not admit the bare possibility of any system in which the control of the administration of the mines is shared between the management and the miners. "I am authorized to state on behalf of the Mining a.s.sociation," Lord Gainford, the chief witness on behalf of the mine-owners, informed the Coal Commission, "that if the owners are not to be left complete executive control they will decline to accept the responsibility for carrying on the industry."[2] So the mine-owners blow away in a sentence the whole body of plausible make-believe which rests on the idea that, while private ownership remains {112} unaltered, industrial harmony can be produced by the magic formula of joint control. And they are right. The representatives of workmen and shareholders, in mining and in other industries, can meet and negotiate and discuss. But joint administration of the shareholders' property by a body representing shareholders and workmen is impossible, because there is no purpose in common between them. For the only purpose which could unite all persons engaged in industry, and overrule their particular and divergent interests, is the provision of service. And the object of shareholders, the whole significance and _metier_ of industry to them, is not the provision of service but the provision of dividends.

In industries where management is divorced from ownership, as in most of the highly organized trades it is to-day, there is no obvious halfway house, therefore, between the retention of the present system and the complete extrusion of the capitalist from the control of production. The change in the character of ownership, which is necessary in order that coal or textiles and ship-building may be organized as professions for the service of the public, cannot easily spring from within. The stroke needed to liberate them from the control of the property-owner must come from without. In theory it might be struck by action on the part of organized workers, who would abolish residuary profits and the right of control by the mere procedure of refusing to work as long as they were maintained, on the historical a.n.a.logy offered by peasants who have destroyed {113} predatory property in the past by declining to pay its dues and admit its government, in which case Parliament would intervene only to register the community's a.s.sent to the _fait accompli_. In practice, however, the conditions of modern industry being what they are, that course, apart from its other disadvantages, is so unlikely to be attempted, or, if attempted, to succeed, that it can be neglected. The alternative to it is that the change in the character of property should be affected by legislation in virtue of which the rights of ownership in an industry are bought out simultaneously.

In either case, though the procedure is different, the result of the change, once it is accomplished, is the same. Private property in capital, in the sense of the right to profits and control, is abolished. What remains of it is, at most, a mortgage in favor of the previous proprietors, a dead leaf which is preserved, though the sap of industry no longer feeds it, as long as it is not thought worth while to strike it off. And since the capital needed to maintain and equip a modern industry could not be provided by any one group of workers, even were it desirable on other grounds that they should step completely into the position of the present owners, the complex of rights which const.i.tutes ownership remains to be shared between them and whatever organ may act on behalf of the general community. The former, for example, may be the heir of the present owners as far as the control of the routine and administration of industry is concerned: the latter may succeed to their right to dispose of residuary profits. The elements composing property, have, in fact, to be {114} disentangled: and the fact that to-day, under the common name of ownership, several different powers are vested in identical hands, must not be allowed to obscure the probability that, once private property in capital has been abolished, it may be expedient to re-allocate those powers in detail as well as to transfer them _en bloc_.

The essence of a profession is, as we have suggested, that its members organize themselves for the performance of function. It is essential therefore, if industry is to be professionalized, that the abolition of functionless property should not be interpreted to imply a continuance under public ownership of the absence of responsibility on the part of the _personnel_ of industry, which is the normal accompaniment of private ownership working through the wage-system. It is the more important to emphasize that point, because such an implication has sometimes been conveyed in the past by some of those who have presented the case for some such change in the character of ownership as has been urged above. The name consecrated by custom to the transformation of property by public and external action is nationalization. But nationalization is a word which is neither very felicitous nor free from ambiguity. Properly used, it means merely ownership by a body representing the nation. But it has come in practice to be used as equivalent to a particular method of administration, under which officials employed by the State step into the position of the present directors of industry, and exercise all the power which they exercised.

So those who desire to maintain the system under which industry is carried on, not as a profession {115} serving the public, but for the advantage of shareholders, attack nationalization on the ground that state management is necessarily inefficient, and tremble with apprehension whenever they post a letter in a letter-box; and those who desire to change it reply that state services are efficient and praise G.o.d whenever they use a telephone; as though either private or public administration had certain peculiar and unalterable characteristics, instead of depending for its quality, like an army or railway company or school, and all other undertakings, public and private alike, not on whether those who conduct it are private officials or state officials, but on whether they are properly trained for their work and can command the good will and confidence of their subordinates.