lørdag den 20. september 2008

Socialism (part 3)

The Cause of Unemployment.

It is seen that the general insufficiency of wages to lift the workers above poverty is due to the operation of economic forces which determine that wages shall approximate to bare subsistence level. We will now turn to unemployment.

There are two aspects — the constant, and the periodic. We will deal with the constant first.

When a master buys labour power he buys it in order to produce wealth. But his object is not simply to produce wealth. The law of the land demands that he shall, in view of the possibility that the official receiver may at any time develop an unwelcome interest in his affairs, keep certain books recording his transactions. Any worker who has to keep those books for his master knows that each of those records starts with money — the money thrown into the process in which the concern is engaged — and ends with money — the money that comes back with the sale of the product. Nay, this is hardly correct, for the record, strictly speaking, is not complete until a balance has been struck showing the difference between the two sums. The process is not, therefore, one of producing goods and selling them in order to produce more goods, but one of putting money into production in order to get money.

But the essence of the transaction is not simply the turning of money into money. To spend £1 in labour-power wherewith to produce wealth which one sells for £1 is only •exchanging one sovereign for another, which is absurd. To record only such transactions would soon bring even the wealthiest firms into troubled waters. The money realised at the end of the transaction must differ from that spent at the beginning. It can only, in the eye of the book-keeper, differ in amount — it must be greater. Therefore, it is this difference, this increase, or surplus, alone which impels the capitalist to engage in production.

The purchaser of labour-power therefore endeavours to make that surplus as large as he possibly can.

Now there are several ways of doing this. He may cut down wages, he may lengthen the working hours, he may introduce new methods and organisation. But the most important means he has at hand for increasing the surplus wealth is machinery.

New mechanical devices for rendering labour-power more fertile are always being developed and constantly being adopted. This unceasing introduction of machinery has the effect of continually reducing the number of people required to produce a like amount of wealth, and as every advance of machinery at the same time makes greater the difference between what the worker produces and what he buys back (because his product increases while his wages remain stationary), the result is that the surplus grows more rapidly than the demand, and consequently the workers find that, their labour-power is unsaleable. In this way improved machinery and methods add to the army of unemployed.

In the American automobile industry, for instance, the productivity of each man employed has increased 10 times in the 24 years since 1899 The figures given below are taken from a report prepared for the U.S.A. Dept. of Labour by M. W. La Fever.

Year. Cars produced. Cars per worker.

1899 3,723 ... 1.66
1904 21,692 ... 1.80
1909 126,570 ... 2.47
1914 568,781 ... 7.17
1919 1,888,059 ... 8.97
1921 1,602,336 ... 11.15
1923 3,890,134 ... 16.11

The result in 1924 is that tens of thousands of workers were being paid off from the factories, and enormous numbers of cars were left unsaleable on the hands of the factory owners.

Similar progress has taken place in the building industry in Great Britain. It was pointed out by Mr. R. Coppock, at the Court of Enquiry presided over by Lord Bradbury (March, 1925), that
whereas in 1914 the 73,761 bricklayers in the country used 3,000 million bricks, in 1924 57,170 bricklayers used 2,000 million bricks more.

Now for the second aspect of the same process. The surplus which the masters so anxiously desire bears a certain proportion to the wealth produced, hence, other things remaining the same, the more wealth there is produced the more surplus will there be.

In their anxiety to obtain surplus the employers, when the markets are favourable, strain every nerve and fibre to increase their output. New machinery is laid down ; fresh " hands " are taken on; the hours of labour are extended. There is a trade boom. Then at the very height of the boom reaction sets in. One day we read such a notice as. this, which appeared in the Daily Chronicle (Nov. 11th,. 1913): —

Nearly 3,000 cotton workers in Colne, Nelson, Barrowford and Earby are affected by the reduction of working time adopted by individual firms. About 10,000 looms were idle yesterday in North-east Lancashire. Manchester merchants find themselves overstocked and with no foreign demand.

It is clear what has happened. Production has out¬stripped demand; the markets are glutted and the warehouses full to bursting. Orders have fallen off and products have become unsaleable. A note such as the above is the first ominous warning. Workers are discharged, and these, losing their purchasing power with the loss of their wages, affect other industries, and so the depression spreads. Soon there is a crisis and the streets are full of starving unemployed — a crisis and starvation — not because of sterility or famine, but because of the fertility of human labour; not because the necessaries of life are scarce, but because they are too abundant!

James J. Davis, Secretary of the U.S.A. Department of Labour, showed in 1923 that many of the chief industries in the U.S.A. were

so over-developed during the war that nothing can be done to warrant their full-time operation in peace time production, since such production could not possibly be marketed either at home or, at present, abroad.

The coal industry could produce twice as much as America required ; the iron and steel industries could satisfy all demands in 7 months out of 12, and if the plant were made as efficient as is possible the whole of the output could be maintained with one-third of the labour; with the latest machinery 5,000 men could make enough bricks for the whole country, instead of the 33,000 at present inefficiently employed.

In this way does Capitalism hinder production and perpetuate poverty.

The existence of unemployment, as regards its constant aspect, is seen to arise from the development of the means of production, and with regard to its aspect of periodic severity, from unrestrained output in the wild scramble of the masters for the surplus which results from the exploitation of their wage-workers.

Can unemployment be removed by shortening the hours of labour? And can poverty be abolished by higher wages? Machinery and organisation prevent these proposals from being permanently effective.

The Laws of Machine Development.

It may be stated as a preliminary, that every increase in the price of labour-power tends to hasten the development of machinery. Many people do not grasp this because they fail to understand the general condition of the instruments of labour. They think that, for the statement to be correct, every increase in the price of labour-power must give birth to a number of new inventions, and they say inventions are not made to order.

This, however, is a wrong view to take. In almost every industry the instruments of labour vary very much as regards their stage of development. Thus in the printing of posters, some firms who print enormous numbers do them on special machines, others lower in the scale print them on the general purposes machine, while yet others can employ nothing better than a hand press. But there are degrees among presses, and while many posters are run off on modern presses, here and there the " Stanhope " of our great-grandfathers clanks its tardy way to destruction.

Every industry may be viewed as a sort of inclined plane down which machines are more or less steadily slipping to the scrap heap. No matter how useful a machine may be, it is not profitable or advantageous to every firm in the industry. Above are those to whom it is not sufficiently economical; below arc those who find it beyond their reach.

But ever, both above and below, there is a fringe of doubt, on the one hand where users are hesitating whether to relinquish it for something higher in the scale, on the other hand where capitalists are wondering whether it would be sound policy to adopt the appliance.

Let us take the Linotype composing machine for example. This wonderful appliance, though a great labour-saver, is profitable only to a certain circle of printers — those who have a considerable amount of book or newspaper work. But many are considering the pros and cons of its adoption. A very little will decide. An extra monthly magazine — or perhaps putting in a machine, by saving two or three men's room, will avoid an expensive removal to larger premises.

Now suppose wages rise, immediately the doubters are decided. They adopt the machine, and each machine throws three or four compositors into the street. Machinery takes a step forward, not by a new invention, but by the wider adoption of what is already invented and in use.

It is quite true that this development of production is always going on, and would continue in the face even of declining wages. But nevertheless, since machinery is at all times the competitor of the worker, an increase in the cost of labour-power, whether by a direct rise in wages, or by a reduction of working hours or restriction of output, is in the competition between labour-power and machinery, a handicap on labour-power. Desirable as it undoubtedly is, it gives a jolt to the inclined plane, quickens the development of machinery, reduces the number of workers needed to produce the social requirements, and by forming a new army of out-of-works, defeats every attempt to solve the unemployed " problem."

It may be argued that at all events higher wages would have been secured, but it is evident that could only last until the full fruits of the reform had been realised in a new unemployed army.

It is not denied, of course, that legal enactment may, to some extent, prevent those fearfully low wages being paid which are the reward of arduous toil in the lowest strata of the so-called sweated industries, but the fact must not be, lost sight of that many of these unhappy workers are deprived by such legislation of the opportunity of selling their labour-power at any price. The many earning a pittance by toiling in their own slum dens are enabled to compete with factory machinery and factory organisation only by debasing their standard of living to a point that now and again shocks humanity. But to try to raise their remuneration by minimum wage acts has the effect of making it more to the advantage of the " sweater " to have the work done by a higher strata of labour and higher means of production in factories — the law of the development of machinery again.

That this is some improvement, is possible, but as a cure for poverty it falls a long wiy behind consigning the displaced workers to the lethal chamber, instead of setting them clamouring at the factory gates to depress higher wages to the legal minimum. The legal minimum always tends to become a maximum also.

The Struggle for Higher Wages Necessary

It may appear that the condition of the workers is fixed, and that it is useless for them to struggle for better conditions under the present system. That idea is foolish. To say that supply and demand is the immediate regulator of wages is to say that wages find their natural base through competition Competition is strife, therefore the operation of the laws of wages presupposes struggle.

In the world of commodities prices in the long run are just as much pre-determined, yet no one would dream of suggesting that because the fluctuations of price cancel one another and leave an average corresponding to value, buyers and sellers should cease to struggle over prices.

The exchange of goods at their value is the result of the struggle, and in the same way, the result of the struggle between masters and men is that wages are determined by the cost of subsistence.

The Standard of Comfort.

It is not to be supposed, however, that this cost of subsistence is necessarily the absolute lowest amount of food, clothing, and shelter upon which a man can produce a given number of foot pounds of energy.

If wages tend to sink to the level of subsistence, it is to the level of subsistence under the prevailing standard of comfort. We shall see, however, that this does not weaken in the slightest degree, the contention that the cost of producing labour-power determines its price.

When the present system arose in England it found a producing class who had emancipated themselves from serfdom and become peasant-proprietors, owning all they produced. They, therefore, were accustomed to a comparatively high standard of living. Fighting on this basis, the working class of this country have maintained a higher standard of comfort than races overtaken by capitalism while they yet had a lower standard of subsistence.

On the other hand, in America, where, instead of a constant drift from the country to the towns, large numbers constantly drifted from the towns to the country, labour-power was very scarce in industrial centres, and a very high standard of subsistence, became established in consequence. But, just as in England, the development of capitalism, and particularly the increasing difficulty of making a living on the land, has resulted in a steady lowering of the worker's standard. In fifteen chief American industries it has been declining sinee 1896: between 1896 and 1907 by 6 per cent.: and over the whole 24 years to 1920 by nearly 25 per cent. (American Economic Review, September, 1921.) And again, while the poor have grown poorer, the rich have grown richer. Professor Alvin H. Hansen. of the University of Minnesota, tells us that—

In the period from 1897 to 1915. when real wages were falling in spite of an enormous increase in national production, business profits far outran the rise in the general price level. From 1807 to 1913 railroad and industrial stocks advanced about 100 per cent. . . . Moreover, this was a period in which huge., corporate surpluses were being set aside out of profits. — American Econ. Review, March, 1925.

Now how does the law work out to the result that, though there is such a divergence in the standard of living of the respective peoples, that standard everywhere represents the physical limit of exploitation in the given circumstances.

The answer is simple enough. Labour-power, having for its competitor machinery, becomes more intensely exploited where it is dearer, in accordance with the law which provides that as the price of labour-power increases, more and higher grades of machinery are introduced.

This explains why it is that machinery has reached such a high state of development in America compared with what it has in this country. It is not that the inventive faculties of Uncle Sam's children are so much greater than those of other people. Labour-power being dearer provides the condition under which machinery develops most rapidly, that is all. In the Victorian decades much machinery was designed and manufactured in England solely for use in America, for the simple reason that labour-power was too cheap to provide an opening for it here.

Two generations ago this contrast existed between England and the Continental countries. This is shown by the report of Mr. Commissioner Wells, the Special Commissioner of Revenue in the United States, to Congress in 1868, and the report of Mr. Bedgrnve, one of the Inspectors of factories.

The former said: (Work and Wages, Brassey. Page 103, First Edition.)

Whereas female labour in {he cotton manufacture is paid at from 12s. to 15s. a week in Great Britain; at from 7s. 3d. to 9s. 771. in France, Belgium and Germany; at from 2s. 4d. to 2s. 11d. in Russia : the one thing which is most dreaded by the continental manufacturers everywhere is British competition.
Mr. Hedgvave reported (Ibid. Page 101):

The average number of persons employed to spindles is — in France, one person to 14 spindles; in Russia one to 28 spindles; in Prussia one to 37 : in Great Britain one to 74.

(The explanation of the seeming discrepancy in the case of France compared with Russia is that the French spindles produced higher quality goods.)

Mr. Thomas Brassey, son of one of the largest contractors of the 19th century, gives in his book. Work and Wages, many striking instances of the truth of our contention. He says, for example (Pages 67 and 68):

At the commencement of the. construction of the North Devon Railway the wages of the labourers were 2s. a day. During the progress of the work their wages were raised to 2s. 6d. and 3s. a day. Nevertheless it was found that the work was executed more cheaply when the men were earning the higher rate of wage. ... In carrying out a part of the Metropolitan Drainage Works in Oxford Street, the wages of the bricklayers were gradually raised from 6s. to 10s. a day; yet it was found that the brickwork was constructed at a cheaper ra.te per cubic yard after the wages of the workmen had been raised to 10s. than when they were paid at the rate of 6s. per day.

Finally Mr. Brassey shows that whatever the wages are the capitalist gets his ratio of plunder. He asserts (Page 75) :

On my father's extensive contracts, carried out in almost every country of the civilised world and in every quarter of the globe, the daily wage of the labourer was fixed at widely different rates; but it was found to be the almost invariable rule that the cost of labour was the same that for the same sum of money the same amount of work was everywhere performed.

So much for work which is performed without the aid of machinery, and work that is peculiarly of a muscular character, concerning which no one could speak with greater authority.

But let it not be supposed that the efficiency even of the " manual " worker is merely a matter of food, clothing, and shelter. Mr. Edward Cadbury in his book, Experiments in Industrial Organisation, says (pp. 3-4):

In the early days at least half the girls taken on would be in the fifth standard, but now no girl is taken on who has not attained to the sixtli standard. Within the last few years the number taken on from the seventh standard has largely increased, and on a recent occasion when fifty girls were taken on, all were in the seventh standard. . . A record was recently taken of the wages of sixth and seventh standard girls, both doing the same work under the same conditions. The results were :

At the end of three months. At the end of six months.

Sixth standard 1.24 pence per hour. 1.58 pence per hour.
Seventh ,, 1.33 ,, „ 2.07 ,, „

These girls are employed at mechanical work, and the figures show that even in such work the mental development is a very important factor.

We see, then, that the standard of subsistence of the workers may, and does, vary very widely, yet the masters have always the means, provided by the automatic development of machinery and of other means of speeding-up, of exhausting their workers of all their productive capabilities, and, by increasing the intensity of labour as the cost of labour-power increases, of ensuring that high standards of comfort are not maintained at the expense of profits.

Let us take it that a higher standard of subsistence and a shorter working day are possible. In theory and in practice this induces an advance of machinery. It also enables the workers to go at a higher pace, and hence encourages new methods of organisation and speeding up. We may turn to the baking trade for an example.

In high-wage America there has sprung up an entirely different method of organisation in bread factories. The whole plant is divided into two complete and independent sets, down to the merest detail. The two sets of machinery are operated by two gangs of men, each under a separate ganger, in one large room. In the middle of the room hangs a clock, and up and down the pathway that separates the two gangs marches a man with a note-book. This individual's duty is to record the time taken by each gang over the performance of every operation. Both gangers know that no matter how fast they may get the work done, sooner or later the slower will have to go. Thus pitted against each other, they drive and bully as only those can who have to do it for their living. Moreover, since each ganger's job depends upon his ability to screw his gang up faster than the other, his success rests largely upon the keenness with which he singles out his slowest units, and the ruthlessness with which he throws them into the street.

This, of course, is a new phase of exploitation. A generation ago even the most forward employers worked on the theory that generally any five workmen taken haphazard yielded a fair average of efficiency, and little endeavour was made to select. But the higher the organisation and the more machinery is resorted to, the more is the pace of the whole retarded by the slowest operator. What this means to the weaker may be imagined. The least sign of slackness, of declining vigour, of departing youth, is doom. The eight hours day makes possible a pace that only the young and the strong can stand; it also calls for a severe process of elimination, and for a system of harassing and bullying hitherto unknown.

Employment under such harassing conditions wears men out very quickly. It also requires greater forces of oppression to keep the operatives submissive. These forces are provided by the method of organisation itself, for the higher the organisation, the more intense is the speeding-up, and therefore the fewer are the workers needed to produce the wealth required, and the greater is the number of unemployed clamouring at the factory gates.

So we see that, although the standard of comfort of the workers varies in different countries, the higher standard by no means implies better general conditions. A higher standard of living for the working class means, from the capitalist point of view, a higher standard of efficiency and correspondingly greater possibilities of exploitation. This is why greater intensification, greater insecurity, and greater unemployment are invariably found in those countries where wages are highest.

That the struggle for higher wages and shorter hours results in greater intensification of labour and increasing unemployment is no argument against the prosecution of that struggle. It does, however, foredoom any attempt of the workers to materially alter their conditions by means of such a struggle alone. To exchange exhaustion in twelve hours for exhaustion in eight might be a gain — we are not concerned to argue that it is not. The thing to be remembered is that it is exhaustion. The struggle, then, of itself, fails. It cannot alter the essential conditions of working-class existence. It must be maintained to prevent the more rapid worsening of working-class existence, but it cannot lift the workers from that vicious circle wherein a victory in the matter of hours or wages is answered by greater intensification of labour and increased unemployment. It can never lift them above poverty and anxiety.

Therefore the struggle must be supplemented by something else if any extensive and permanent improvement in the position of the working class is to be secured.

Our enquiries have shown us the hopelessness of any attempt to alter appreciably the condition of the working class while the present social system continues. We have seen that the reason is that every effort at reform is defeated by economic laws inseparable from capitalism — laws which arise from the fact that labour-power is sold. We see that labour-power can never be free from the governance of these laws while it is sold, because a sale is necessarily based upon competition, and these economic laws are laws arising from competition. Competition springs from the desire for advantage. When the production of one class of goods is excessive, it is an economic law that the price of that class of goods falls. There is then less profit for the capitalists engaged in their manufacture, and again by economic law capital is repelled and used in more advantageous enterprises. As a consequence the output of the first class of goods is restricted and their price recovers.

This illustration serves to show that the effects of competition are by no means accidental, hut are an integral part of the competitive struggle.

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