Regarded as methods of harmonising capital and labour in the business structure, most of these schemes appear to be of dubious worth, when we apply the proper test, viz., the ability to divert into wages a portion of the unproductive surplus.For, though the stimulus of a 'bonus' or a so-called3 share of profit may increase the absolute wage of the workers in the business, if at the same time it proportionately increases the dividend or profit, it does nothing to reduce either the aggregate or the proportion of unproductive surplus.Moreover, if the increased productivity of labour under such a stimulus is attended by enhanced intensification of effort in muscle or in nerve, with accompanying exhaustion, the total utility of the process to the worker may be a negative quantity, when the increased human cost of production has been set against the utility of the higher income, less advantageously consumed by reason of the exhaustion.Again, though many of these schemes expressly induce the workers to become small shareholders in the business, by applying the 'bonus' or 'profit' to the purchase of shares, nowhere has this ownership by the workers been permitted to go so far as to give them any determinant voice in the administration of the business.Finally, many of these schemes by express intention, nearly all of them in actual tendency, weaken the attachment of the workers in these businesses to their fellow-workers in other businesses belonging to the trade.So, whatever power proceeds from collective bargaining, for raising wages and improving the other conditions of employment, is diminished by these attempts to harmonise the capital and labour within the area of the single business.
It is significant that nearly all the businesses where co-partnership shows signs of enduring success are legal monopolies, or are otherwise protected from free competition, so that the prices for the commodities or services they sell contain a considerable element of surplus.A fraction of this surplus is diverted from unproductive into productive purposes by a subsidy to wages.In the case of gas-works, the most conspicuous example, this process is furthered by the fact that legal restrictions upon dividends make what at first sight appears a policy of generosity to labour, costless to capital.
§5.This criticism of the defects of these private experiments in industrial peace is reinforced by the experience of cooperative movements.
Of the completely self-governing workshop or other business in which the whole body of the workers are sole owners of the whole capital they employ, there have been too few examples to enable any conclusion to be drawn.
But nearly all the cases where the actual full administration of a business has been in the hands of those employed have been signal failures, save in rare instances where the possession of some skill or situation endowed with a scarcity value has assisted them.Experiments in the self-governing workshop make it evident that direct government by the workers in their capacity of producers is technically worse than government by the owners of the capital.The selection and the remuneration of ability of management are always found defective, and the employees are often unwilling to submit to proper discipline, even when they have elected the persons who shall exercise it.A few successful experiments conducted in favourable circumstances, i.e., where a special market is available, or where only a section of the employees wield the power of administration, afford no considerable grounds of hope for this mode of cooperative settlement.
Thus there seems no ground for holding that any really satisfactory settlement of the conflicts between capital and labour can be got by private arrangements of a profit-sharing or a cooperative character.
Part II: PRODUCER AND CONSUMER
§6.Before considering more definitely 'socialistic' remedies, it is best, however, to open out the other conflict of interest, between producer and consumer.It is, of course, often held, even by those who recognise some reality in the opposition between capital and labour, that the supposed opposition between producer and consumer has no real foundation.
When producers compete, the gains of such competition in lower prices, better quality, etc., drop into the consumer's lap.Even where producers combine, or a single business holds the market, it is supposed that the monopolist will generally find it most profitable to furnish a sound article at a moderate price.
But this natural harmony between producer and consumer is subject to precisely the same qualification as that between capital and labour.Producer and consumer are necessary to one another, there is community of interests up to a limit.But beyond that limit there is an equally natural conflict.
It is true that where producers compete freely prices are cut down for the consumer.But it is by no means true that he tends to get the cheapest goods which current arts of production render possible.For the expenses of competition, which are enormous, are defrayed by him in the price he pays.Nor does free competition secure quality of product.It stimulates the arts of adulteration and deceit, and sets the cunning of the skilled producer against the simplicity of the unskilled purchaser.While, therefore, it may be urged that where competition of producers is effective, comparatively little 'surplus' passes into their hands, the waste of industrial power through the maintenance of excessive machinery of production and of distribution is a grave social loss.
