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The solution of that problem is only partly in the hands of the
politician; that is one of the reasons why it is extremely difficult to
suggest an industrial policy which is going to hold out the hope of
reaching Utopia in a short time. But it is obviously essential somehow
or another to develop, particularly among employers, the sense of
trusteeship--the sense that a man who controls a large amount of capital
is in fact not merely an individual pursuing his own fortune, but is
taking the very great responsibility of controlling a fragment of the
nation's industrial resources. And we have also to develop a conception
of partnership and joint enterprise between employer and employed.

STATE OWNERSHIP: FOR AND AGAINST

What policy in the political field can be adopted to further these
objects? Reverting once more to the fourfold division which I made at
the outset, but taking the points in a different order, there is first
the question whether there should be a great extension of State
ownership, management, or control of monopolies and big business. In
spite of the experience of the war, I suggest tentatively that no case
has been made out for any wide or general extension of the field of
State management in industry. This, however, is not a matter of
principle, but of expediency, where each case must be considered on its
merits. Liberals should, indeed, keep an open mind in this connection
and not be afraid to face an enlargement of the field of State
management from time to time. There are, however, two special cases to
be considered: the mines and the railways. As to the mines, the solution
Mr. McNair puts forward is on characteristically Liberal lines, because
it will endeavour to harmonise the safeguarding of the interests of the
State with the maximum freedom to private enterprise and the maximum
scope for variety in methods of management. As to transport, we have
recently passed an Act altering the form of control of British railways.

Personally I think the question whether railways should or should not
be nationalised is very much on the balance. It is obviously one of the
questions where objections to State management are less serious than in
most other cases. On the other hand, we may be able to find methods of
control which may be even better than State management. I do not think
the Act of last year fulfils the conditions which Liberals would have
imposed on the railways, for the principle of guaranteeing to a monopoly
a fixed income practically without any means of securing its efficiency,
is the wrong way to control a public utility service. If we are going to
leave public utilities in the hands of private enterprise, the principle
must be applied that profit should vary in proportion to the services
rendered to the community. In this connection the old gas company
principle developed before the war is an admirable one. Under it the gas
companies were allowed to increase their dividends in proportion as they
lowered their prices to the community. That is a key principle, and some
adaptation of it is required wherever such services are left in private
hands. My own view is that an amended form of railway control should
first be tried, and if that fails we should be prepared for some form of
nationalisation.

TRUSTS AND MONOPOLIES

But if we refuse at present to enlarge the sphere of State management,
we are still faced with the problem of dealing with trusts and
monopolies. In this matter, as in so many other instances, the right
policy has already been worked out. Under the stimulating conditions
which obtained during the war, when old-established methods of thought
had been rudely shaken, progressive ideas had unusually free play; and
you will find in the general economic policy adumbrated during and
immediately after the war much that Liberals are looking for. On this
question of monopolies, we should put into force the recommendation of
the Committee on Trusts of 1919, with one qualification. The policy I
suggest is the policy of the majority, namely, that we should give very
much enlarged powers of inquiry to the Board of Trade, and that a
Tribunal should be set up by which investigations could be made. But I
would go further, and, taking one item from the Minority Report, I would
add that either to this Tribunal or to the Board of Trade department
concerned there should be given in reserve the power in special cases to
regulate prices. I do not think it would be necessary often to use that
power, indeed the mere inquiry and publicity of results would be
sufficient to modify the action of monopolies. But such a power in
reserve, even though price-fixing in ordinary circumstances is usually
mischievous and to be deprecated, would have a very salutary effect.

In the case of public utilities of a standard kind, into which the
element of buying and selling profits does not greatly enter, we should
endeavour to start the experiment of putting representatives of the
workpeople on the boards of directors, but in carefully selected cases,
and not as a general rule. My own view is that if we are ready with the
machinery of investigation, and are prepared to deal in these ways with
public utilities at home where foreign competition is absent, we have
little to fear from trusts.

DISTRIBUTION

As regards distribution and wages, in the first place we should adhere
to our traditional policy, developing the system of differential and
graduated taxation, and we should be prepared, if unequal distribution
of wealth continues, to limit further the right of inheritance. This is
not a new Liberal doctrine: it is many decades old. On the question of
wages we have to recognise that unless we can secure an increase in
terms of food and other commodities of the national production the State
cannot radically modify the general standard of living in the country;
or by administrative action raise the level of wages which economic
conditions are imposing on us. But the State can and should enforce a
minimum in certain industries, provided that minimum is reasonably in
harmony with the competitive level of wages. Such action can prevent
workers whose economic position is not a strong one--and this applies
particularly to many women's employment--from being compelled to accept
wages substantially less than the current standard. I therefore welcome
the gradual extension of the Trade Board system, provided it follows the
general principle recommended in the Cave Report--that the community
should use its full powers of compulsion only in regard to the minimum,
and that so far as all other classes of wages are concerned, the State
should encourage collective bargaining. With this proviso, compulsory
enforcement of a minimum could also be extended to the workpeople
covered by Whitley Councils.

As regards all wages above the minimum the Cave Committee recommended
that, provided they are reached by agreement on the Board, and provided
that a sufficiently large proportion of the Board concur, the wage so
determined shall be enforced by civil process, whereas in the cases of
the minimum, the rates would be determined if necessary by arbitration
of the State-appointed members of the Board, and non-payment would be a
penal offence. The Trade Boards now cover three million workers. Two
million are in occupations for which Trade Boards are under
consideration, and there are a further two million under Industrial
Councils or Whitley Councils. If State powers are to be employed in
trades employing seven millions of the eighteen million wage-earners of
the country, the scope of those powers needs to be very carefully
defined.

THE CASE FOR PROFIT-SHARING

Many Liberals are, however, asking whether this is sufficient and
whether it is not possible for the State to intervene to alter the
distribution of the product of industry in favour of the wage-earner. In
particular, they are wondering whether it is possible to secure the
universal application of some system of profit-sharing. The underlying
principle of profit-sharing is indeed one which we must look to if the
whole-hearted assistance of labour is to be enlisted behind the
productive effort of the country. But the profit we have to consider is
the profit over which the worker has some influence. There is no merit
in inviting him to share in purely commercial profits or losses which
may be due to some one else's speculation or business foresight. It is
futile to imagine you can reverse the functions of labour and capital,
and say that capital should have a fixed wage, and that the employee
should bear all the risks of the industry.

Again, in some cases it is suitable that profits should be considered in
regard to a whole industry, but in others only in regard to a particular
firm or section; and finally the rate of profit suitable to various
trades varies between very wide limits. In short, there can be no
universal rule in this matter which can be enforced by Act of
Parliament.

Nevertheless, we must all desire to proceed along the lines of
associating the pecuniary interests of the worker in the success of the
enterprise, and if any one can suggest a way in which direct assistance
to that end can be given by political action, as distinct from
industrial, he will be doing a great service. I may add that there is an
argument in favour of profit-sharing which is of the utmost importance
and which was recently expressed by a prominent industrialist: who
declared to me that at long last and after much opposition he has come
round to believe in profit-sharing, _because it enables him to show his
men the balance sheet_. The solution adopted last year in the mining
industry contains the sort of elements we wish to see adopted in
principle. The men are given, through their officials, the results of
the industry. They see that they cannot get more than the industry can
pay, and though the present economic conditions are putting the men in a
desperate state to-day, the miners, who were often regarded before the
war as the most pugnacious in the country, are not burning their
employers' houses, but are studying how the economic conditions of the
industry can be improved for the benefit of themselves and their
employers.

INDUSTRIAL PUBLICITY

This brings me to the question of publicity, which is at the root of the
whole problem. We desire the principle of private enterprise to remain.
The one thing that can destroy it is secrecy. We argue that the
self-interest of the investor makes capital flow into those channels
where economic conditions need it most. But how can the investor know
where it should go when the true financial condition of great industrial
companies is a matter of guesswork? Again, we rely upon our bankers to
check excessive industrial fluctuations. How can they do this if they do
not know the facts of production? The public should know what great
combines are doing, but they do not know; and how can we expect the man
in the street to be satisfied when his mind is filled with suspicions
that can be neither confirmed nor removed?

It is of the utmost importance to seek for greater publicity on two
main lines. The illustration of the mines suggests one--production and
wage data. There are only three industries in this country--coal, steel,
and ships--in which production statistics exist. I suggest that in many
of our great staple industries a few simple data with regard to
production should be published promptly, say every three months. The
data I have in mind are the wages bill, the cost of materials, and the
value of the product. It is desirable that this should be done, and I
believe it can be done, for almost every great industry in the country.
These three facts alone will bring the whole wages discussion down to
earth.

Then on finance, I suggest that one of the first things a Liberal
Government should do should be to appoint a commission to overhaul the
whole of our Company Law. This is not the occasion to enter in detail
into a highly technical problem. But I would call attention to the
following points: There is no compulsion on any joint-stock company to
publish a balance sheet. It is almost the universal practice to do so;
but as it is not an obligation, the Company Law lays down no rules as to
what published balance sheets must contain. Again, the difference
between private and public companies must be considered; a private
company which employs a great mass of capital and large numbers of
work-people--a concern which may cover a whole town or district--should
in the public interest be subject to the same rules as a public company.
Thirdly, in view of the amalgamation of industry, the linking up of
company with company, there must be reconsideration as regards publicity
in the case of subsidiary companies. Finally, I think we have been wrong
in assuming that a law applicable to a company with a modest little
capital is suitable to regulate the publicity of a great combine
controlling tens of millions of capital. Some attempt should therefore
be made to differentiate between what must be told by the big and by the
little concerns respectively. I am well aware of the myriad difficulties
that this demand for publicity will encounter. But difficulties exist to
be overcome. And they must be overcome, for of this I feel certain: that
if the system of private enterprise dies, it will be because the canker
of secrecy has eaten into its vitals.

A NATIONAL INDUSTRIAL COUNCIL

I have left very little time for dealing specifically with the question
of industrial relations, though much that I have said has a bearing upon
it. There has been great disappointment with the results of the Whitley
Council movement. Many thought they were going to bring in a new era.
But they have not lived up to these hopes, firstly, because they came
into being at a time of unexampled economic difficulty, and, secondly,
because they were introduced into industries where there was no
tradition of co-operative action--being established mainly in industries
lying between the entirely unorganised and the highly organised trades.
But we must persist in encouraging Whitley Councils, and still more in
the associated objective of encouraging works committees. The basis of
industrial peace is in the individual works. Co-operation cannot be
created by Act of Parliament, but depends upon the development of
opinion among employers and workmen. Starting from Works Councils up
through the Whitley Council, Trade Boards, or National Trade Union
machinery for the negotiation of wages, we arrive at the National
Industrial Council, which is the point at which the Government can most
directly assist the movement towards more cordial relations. The plan of
this Council is ready. It was proposed and developed in 1919, and I
personally do not want to change that plan very much.

But I think it is of the utmost importance that we should embody in our
Liberal programme the institution of a National Industrial Council or
Parliament representing the trade organisations on both sides. Whether
it should represent the consumers, I, personally, am doubtful. It should
be consulted before economic and particularly industrial legislation is
introduced into Parliament. It should be the forum on which we should
get a much better informed discussion of industrial problems than is
possible in Parliament or through any other agency in the country. The
National Council also needs to have specific work to do. I would be
prepared to see transferred to it many of the functions of the Ministry
of Labour, or rather that it should be made obligatory for the Minister
of Labour to consult this Council on such questions as whether it should
hold a compulsory inquiry into an industrial dispute. I would also
throw upon it the duty of advising Parliament exactly how my proposals
as to publicity are to be carried out, and would give it responsibility
for the Ministry of Labour index figures of the cost of living upon
which so many industrial agreements depend. I believe if we could set
out a series of specific functions to give the plan vitality, in
addition to the more nebulous duty of advising the Government on
industrial questions, we should have created an important device for
promoting the mutual confidence of which I have spoken.

The suggestions I have made are perhaps not very new, but they seem to
me to be in the natural line of evolution of Liberal traditions. Above
all, if they are accepted they should be pursued unflinchingly and
persevered with, not as a concession to this or that section which may
happen to be strong at the moment, but as a corporate policy, which aims
at combining the interests of us all in securing increased national
wealth with justice to the component classes of the commonwealth.

THE REGULATION OF WAGES

BY PROFESSOR L.T. HOBHOUSE

Professor of Sociology, London University.

Professor Hobhouse said:--The wages, hours, and general conditions of
industrial workers are of interest to the community from two points of
view. So far as the less skilled and lower paid workers are concerned,
it is to the interest and it is the duty of the community to protect
them from oppression, and to secure that every one of its members, who
is willing and able to contribute honest and industrious work to the
service of others, should be able in return to gain the means of a
decent and civilised life. In this relation the establishment of a
minimum wage is analogous to the restriction of hours or the provision
for safety and health secured by Factory Legislation, and carries
forward the provision for a minimum standard of life. The problem is to
determine upon the minimum and adjust its enforcement to the conditions
of trade in such wise as to avoid industrial dislocation and consequent
unemployment.

With regard to workers of higher skill, who command wages or salaries on
a more generous scale, the interest of the community is of a different
kind. Such workers hardly stand in need of any special protection. They
are well able to take care of themselves, and sometimes through
combination are, in fact, the stronger party in the industrial bargain.
In this region the interest of the community lies in maintaining
industrial peace and securing the maximum of goodwill and co-operation.
The intervention of the community in industrial disputes, however, has
never been very popular with either party in the State. Both sides to a
dispute are inclined to trust to their own strength, and are only ready
to submit to an impartial judgment when convinced that they are
momentarily the weaker. Nor is it easy when we once get above the
minimum to lay down any general principles which a court of arbitration
could apply in grading wages.

For these reasons the movement for compulsory arbitration has never in
this country advanced very far. We have an Industrial Court which can
investigate a dispute, find a solution which commends itself as
reasonable, and publish its finding, but without any power of
enforcement. The movement has for the present stuck there, and is likely
to take a long time to get further. Yet every one recognises the damage
inflicted by industrial disputes, and would admit in the abstract the
desirability of a more rational method of settlement than that of
pitting combination against combination. Such a method may, I would
suggest, grow naturally out of the system which has been devised for the
protection of unskilled and unorganised workers, of which a brief
account may now be given.

THE ESTABLISHMENT OF TRADE BOARDS

Utilising experience gained in Australia, Parliament in 1909 passed an
Act empowering the Board of Trade (now the Ministry of Labour) to
establish a Trade Board in any case where the rate of wages prevailing
in any branch was "exceptionally low as compared with that in other
employments." The Board consisted of a number of persons selected by the
Minister as representatives of employers, an equal number as
representatives of the workers, with a chairman and generally two
colleagues not associated with the trade, and known as the Appointed
Members. These three members hold a kind of casting vote, and can in
general secure a decision if the sides disagree.

No instruction was given in the statute as to the principles on which
the Board should determine wages, but the Board has necessarily in mind
on the one side the requirements of the worker, and on the other the
economic position of the trade. The workers' representatives naturally
emphasise the one aspect and the employers the other, but the appointed
members and the Board as a whole must take account of both. They must
consider what the trade in general can afford to pay and yet continue to
prosper and to give full employment to the workers. They must also
consider the rate at which the worker can pay his way and live a decent,
civilised life. Mere subsistence is not enough. It is a cardinal point
of economic justice that a well-organised society will enable a man to
earn the means of living as a healthy, developed, civilised being by
honest and useful service to the community. I would venture to add that
in a perfectly organised society he would not be able--charitable
provision apart--to make a living by any other method. There is nothing
in these principles to close the avenues to personal initiative or to
deny a career to ability and enterprise. On the contrary, it is a point
of justice that such qualities should have their scope, but not to the
injury of others. For this, I suggest with confidence to a Liberal
audience, is the condition by which all liberty must be defined.[1]

[Footnote 1: I may perhaps be allowed to refer to my _Elements of Social
Justice_, Allen & Unwin, 1921, for the fuller elaboration of these
principles.]

If we grant that it is the duty of the Boards to aim at a decent
minimum--one which in Mr. Seebohm Rowntree's phrase would secure the
"human needs" of labour--we have still some very difficult points of
principle and of detail to settle. First and foremost, do we mean the
needs of the individual worker or of a family, and if of the latter, how
large a family? It has been generally thought that a man's wages should
suffice for a family on the ground that there ought to be no economic
compulsion--though there should be full legal and social liberty--for
the mother to eke out deficiencies in the father's payment by going out
to work. It has also been thought that a woman is not ordinarily under a
similar obligation to maintain a family, so that her "human needs" would
be met by a wage sufficient to maintain herself as an independent
individual.

These views have been attacked as involving a differentiation unfair in
the first instance to women, but in the second instance to men, because
opening a way to undercutting. The remedy proposed is public provision
for children under the industrial age, and for the mother in return for
her work in looking after them. With this subvention, it is conceived,
the rates for men or women might be equalised on the basis of a
sufficiency for the individual alone. This would certainly simplify the
wages question, but at the cost of a serious financial question. I do
not, myself, think that "human needs" can be fully met without the
common provision of certain essentials for children. One such
essential--education, has been long recognised as too costly to be put
upon the wages of the worker. We may find that we shall have to add to
the list if we are to secure to growing children all that the community
would desire for them. On the other hand, the main responsibility for
directing its own life should be left to each family, and this carries
the consequence, that the adult-man's wage should be based not on
personal but on family requirements.

WOMEN'S WAGES

But the supposed injustice to woman is illusory. Trade Boards will not
knowingly fix women's rates at a point at which they can undercut men.
Nor if women are properly represented on them will they fix their rates
at a point at which women will be discarded in favour of male workers.
In industries where both sexes are employed, if the women workers are of
equal value with the men in the eyes of the employer, they will receive
equal pay; if of less value, then, but only then, proportionately less
pay. It is because women have received not proportionately but quite
disproportionately less pay that they have been undercutting men, and
the Trade Boards are--very gradually, I admit--correcting this error.
For well-known historical reasons women have been at an economic
disadvantage, and their work has secured less than its worth as compared
with the work of men. The tendency of any impartial adjustment of wages
is to correct this disadvantage, because any such system will attempt to
secure equality of opportunity for employment for all the classes with
which it is dealing. But it is admitted that there is a "lag" in women's
wages which has been but partially made good.

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