Various - Essays in Liberalism
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Various >> Essays in Liberalism
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REPRESENTATION OF "INTERESTS"
There is a third reason for dissatisfaction with the composition of the
House of Commons, which has become more prominent in recent years. It is
that, increasingly, organised interests are making use of the
deficiencies of our electoral system to secure representation for
themselves. If I may take as instances two men whom, in themselves,
everybody would recognise as desirable members of the House, Mr. J.H.
Thomas plainly is, and is bound to think of himself as, a representative
of the railwaymen rather than of the great community of Derby, while Sir
Allan Smith as plainly represents engineering employers rather than
Croydon. There used to be a powerful trade which chose as its motto "Our
trade is our politics." Most of us have regarded that as an unsocial
doctrine, yet the growing representation of interests suggests that it
is being widely adopted.
Indeed, there are some who contend that we ought frankly to accept this
development and universalise it, basing our political organisation upon
what they describe (in a blessed, Mesopotamic phrase) as "functional
representation." The doctrine seems to have, for some minds, a strange
plausibility. But is it not plain that it could not be justly carried
out? Who could define or enumerate the "functions" that are to be
represented? If you limit them to economic functions (as, in practice,
the advocates of this doctrine do), will you provide separate
representation, for example, for the average-adjusters--a mere handful
of men, who nevertheless perform a highly important function? But you
cannot thus limit functions to the economic sphere without distorting
your representation of the national mind and will. If you represent
miners merely as miners, you misrepresent them, for they are also
Baptists or Anglicans, dog-fanciers, or lovers of Shelley,
prize-fighters, or choral singers. The notion that you can represent the
mind of the nation on a basis of functions is the merest moonshine. The
most you can hope for is to get a body of 700 men and women who will
form a sort of microcosm of the more intelligent mind of the nation, and
trust to it to control your Government. Such a body will consist of men
who follow various trades. But the conditions under which they are
chosen ought to be such as to impress upon them the duty of thinking of
the national interest as a whole in the first instance, and of their
trade interests only as they are consistent with that. The fundamental
danger of functional representation is that it reverses this principle,
and impresses upon the representative the view that his trade is his
politics.
But it is useless to deplore or condemn a tendency unless you see how it
can be checked. Why has this representation of economic interests become
so strong? Because Parliament is the arena in which important industrial
problems are discussed and settled. It is not a very good body for that
purpose. If we had a National Industrial Council charged, not with the
final decision, but with the most serious and systematic discussion of
such problems, they would be more wisely dealt with. And, what is quite
as important, such a body would offer precisely the kind of sphere
within which the representation of interests as such would be altogether
wholesome and useful; and, once it became the main arena of discussion,
it would satisfy the demand for interest-representation, which is
undermining the character of Parliament. In other words, the true
alternative to functional representation in Parliament is functional
devolution under the supreme authority of Parliament.
But still more important than the dissatisfaction aroused by the
composition of the House is the dissatisfaction which is due to the
belief that its functions are very inefficiently performed. It is
widely believed that, instead of controlling Government, Parliament is
in fact controlled by it. The truth is that the functions imposed upon
Parliament by increased legislative activity and the growth of the
sphere of Government are so vast and multifarious that no part of them
_can_ be adequately performed in the course of sessions of reasonable
length; and if the sessions are not of reasonable length--already they
are too long--we shall be deprived of the services of many types of men
without whom the House would cease to be genuinely representative of the
mind of the nation.
Consider how the three main functions of Parliament are
performed--legislation, finance, and the control of administration. The
discussion of legislation by the whole House has been made to seem
futile by the crack of the party whip, by obstruction, and by the
weapons designed to deal with obstruction--the closure, the guillotine,
the kangaroo. A real amendment has been brought about in this sphere by
the establishment of a system of committees to which legislative
proposals of various kinds are referred, and this is one of the most
hopeful features of recent development. But there is still one important
sphere of legislation in which drastic reform is necessary: the costly
and cumbrous methods of dealing with private bills promoted by
municipalities or by railways and other public companies. It is surely
necessary that the bulk of this work should be devolved upon subordinate
bodies.
When we pass to finance, the inefficiency of parliamentary control
becomes painfully clear. It is true that a good deal of parliamentary
time is devoted to the discussion of the estimates. But how much of this
time is given to motions to reduce the salary of the Foreign Secretary
by L100 in order to call attention to what is happening in China?
Parliament never, in fact, attempts any searching analysis of the
expenditure in this department or that. It cannot do so, because the
national accounts are presented in a form which makes such discussion
very difficult. The establishment of an Estimates Committee is an
advance. But even an Estimates Committee cannot do such work without the
aid of a whole series of special bodies intimately acquainted with the
working of various departments. In short, the House of Commons has
largely lost control over national expenditure. As for the control of
administration, we have already seen how inadequate that is, and why it
is inadequate.
These deficiencies must be corrected if Parliament is to regain its
prestige, and if our system of government is to attain real efficiency.
For this purpose two things are necessary: in the first place,
substantial changes in the procedure of Parliament; in the second place,
the delegation to subordinate bodies of such powers as can be
appropriately exercised by them without impairing the supreme authority
of Parliament as the mouthpiece of the nation. I cannot here attempt to
discuss these highly important matters in any detail. In regard to
procedure, I can only suggest that the most valuable reform would be the
institution of a series of committees each concerned with a different
department of Government. The function of these committees would be to
investigate and criticise the organisation and normal working of the
departments, not to deal with questions of broad policy; for these ought
to be dealt with in relation to national policy as a whole, and they
must, therefore, be the concern of the minister and of the Cabinet,
subject to the overriding authority of Parliament as a whole. In order
to secure that this distinction is maintained, and in order to avoid the
defects of the French committee system under which independent
_rapporteurs_ disregard and override the authority of the ministers, and
thus gravely undermine their responsibility, it would be necessary not
only that each committee should include a majority of supporters of
Government, but that the chair should be occupied by the minister or his
deputy.
DEVOLUTION
Nor can I stop to dwell upon the very important subject of the
delegation or devolution of powers by Parliament to subordinate bodies.
I will only say that devolution may be, and I think ought to be, of two
kinds, which we may define as regional and functional. To regional
bodies for large areas (which might either be directly elected or
constituted by indirect election from the local government authorities
within each area) might be allotted much of the legislative power of
Parliament in regard to private Bills, together with general control
over those public functions, such as Education and Public Health, which
are now mainly in the hands of local authorities. Of functional
devolution the most important expression would be the establishment of a
National Industrial Council and of a series of councils or boards for
various industries endowed with quasi-legislative authority; by which I
mean that they should be empowered by statute to draft proposals for
legislation of a defined kind, which would ultimately receive their
validity from Parliament, perhaps without necessarily passing through
the whole of the elaborate process by which ordinary legislation is
enacted. I believe there are many who share my conviction that a
development in this direction represents the healthiest method of
introducing a real element of industrial self-government. But for the
moment we are concerned with it as a means of relieving Parliament from
some very difficult functions which Parliament does not perform
conspicuously well, without qualifying its supreme and final authority.
One final point. If it is true, as I have argued, that the decay of the
prestige and efficiency of Parliament is due to the fact that it is
already overloaded with functions and responsibilities, it must be
obvious that to add to this burden the responsibility for controlling
the conduct of great industries, such as the railways and the mines,
would be to ensure the breakdown of our system of government, already on
the verge of dislocation. In so far as it may be necessary to undertake
on behalf of the community the ownership and conduct of any great
industrial or commercial concern, I submit that it is essential that it
should not be brought under the direct control of a ministerial
department responsible to Parliament. Yet the ultimate responsibility
for the right conduct of any such undertaking (_e.g._ the telephones,
electric supply, or forests) must, when it is assumed by the State, rest
upon Parliament. How is this ultimate responsibility to be met? Surely
in the way in which it is already met in the case of the Ecclesiastical
Commissioners or the Port of London Authority--by setting up, under an
Act of Parliament, an appropriate body in each case, and by leaving to
it a large degree of freedom of action, subject to the terms of the Act
and to the inalienable power of Parliament to alter the Act. In such a
case the Act could define how the authority should be constituted, on
what principles its functions should be performed, and how its profits,
if it made profits, should be distributed. And I suggest that there is
no reason why the Post Office itself should not be dealt with in this
way.
It is only a fleeting and superficial survey which I have been able to
give of the vast and complex themes on which I have touched; and there
is no single one of them with which I have been able to deal fully. My
purpose has been to show that in the political sphere as well as in the
social and economic spheres vast tasks lie before Liberalism, and,
indeed, that our social and economic tasks are not likely to be
efficiently performed unless we give very serious thought to the
political problem. Among the heavy responsibilities which lie upon our
country in the troubled time upon which we are entering, there is none
more heavy than the responsibility which rests upon her as the pioneer
of parliamentary government--the responsibility of finding the means
whereby this system may be made a respected and a trustworthy instrument
for the labours of reconstruction that lie before us.
THE STATE AND INDUSTRY
BY W.T. LAYTON
M.A., C.H., C.B.E.; Editor of the _Economist_, 1922; formerly Member of
Munitions Council, and Director of Economic and Financial Section of the
League of Nations; Director of Welwyn Garden City; Fellow of Gonville
and Caius College, Cambridge, 1910.
Mr. Layton said:--The existing system of private enterprise has been
seriously attacked on many grounds. For my present purpose I shall deal
with four: (1) The critic points to the extreme differences of wealth
and poverty which have emerged from this system of private enterprise;
(2) it has produced and is producing to-day recurrent periods of
depression which result in insecurity and unemployment for the worker;
(3) the critics say the system is producing great aggregations of
capital and monopolies, and that by throwing social power into the hands
of those controlling the capital of the country, it leads to
exploitation of the many by industrial and financial magnates; (4) it
produces a chronic state of internal war which saps industrial activity
and the economic life of the community.
I shall not attempt to minimise the force of these objections; but in
order to get our ideas into correct perspective it should be observed
that the first two of these features are not new phenomena arising out
of our industrial system. You find extreme inequalities of distribution
in practically all forms of society--in the slave state, the feudal
state, in India and in China to-day. Nor is this the first period of
history in which there has been insecurity. If you look at any primitive
community, and note the effect of harvest fluctuations and the
inevitable famine following upon them, you will recognise that the
variations of fortune which affect such communities are more disastrous
in their effect than the trade variations of the modern world.
But after all qualifications have been made these four indictments are
sufficiently serious and must be met, for it is these and similar
considerations which have driven many to desire the complete abolition
of the system. Some wish to abolish private property, and desire a
Communist solution. Others practically attack the system of private
enterprise, and wish to substitute either the community in some form or
another (_e.g._ state socialism), or some corporate form of industry
(_e.g._ guild socialism).
THE LIBERAL BIAS
Liberals, on the other hand, reject these solutions, and desire not to
end the present system but to mend it. The grounds for this conclusion
need to be clearly expressed, for after all it is the fundamental point
of doctrine which distinguishes them from the Labour party. In the first
place, there is the fact that Liberals attach a special importance to
the liberty of the individual. The general relation of the individual
to the State is rather outside my subject, but we start from the fact
that the bias of Liberals is towards liberty in every sphere, on the
ground that spiritual and intellectual progress is greatest where
individuality is least restricted by authority or convention. Variety,
originality in thought and action, are the vital virtues for the
Liberal. It is still true that "in this age the mere example of
Nonconformity, the mere refusal to bow the knee to custom, is itself a
service." The Liberal who no longer feels at the bottom of his heart a
sympathy with the rebel who chafes against the institutions of society,
whether religious, political, social or economic, is well on the road to
the other camp. But the dynamic force of Liberty, that great motive
power of progress, though a good servant, may be a bad master; and the
perennial problem of society is to harmonise its aims with those of the
common good.
When we come to the more specific problem of industry, which is our
immediate concern, a glance at history shows that the era of most rapid
economic progress the world has ever seen has been the era of the
greatest freedom of the individual from statutory control in economic
affairs. The features of the last hundred years have been the rapidity
of development in industrial technique, and constant change in the form
of industrial organisation and in the direction of the world's trade.
Could any one suppose that in these respects industry, under the
complete control of the State or of corporations representing large
groups of wage earners and persons engaged in trade, could have
produced a sufficiently elastic system to have permitted that progress
to be made? In reply to this it may be said that though this was true
during the industrial revolution, it does not apply to-day; that our
industries have become organised; that methods of production,
population, and economic conditions generally are stabilised, and that
we can now settle down to a new and standard form of industrial
organisation. But this agreement is based on false premises. The
industrial revolution is far from complete. We are to-day in the full
flood of it. Look at the changes in the last four decades--the evolution
of electricity, the development of motor transport, or the discoveries
in the chemical and metallurgical industries. Consider what lies ahead;
the conquest of the air, the possible evolution of new sources of power,
and a hundred other phases which are opening up in man's conquest of
nature, and you will agree that we are still at the threshold of
industrial revolution.
I may mention here a consideration which applies practically to Great
Britain. We are a great exporting country, living by international
trade, the world's greatest retail shopkeeper whose business is
constantly changing in character and direction. The great structure of
international commerce on which our national life depends is essentially
a sphere in which elasticity is of the utmost importance, and in which
standardised or stereotyped methods of control of production or exchange
would be highly disastrous. Liberal policy, therefore, aims at keeping
the field of private enterprise in business as wide as possible. But in
the general discussion of political or personal liberty in economic
affairs, we have to consider how far and in what way the freedom of
private enterprise needs to be limited or curtailed for the common good.
We must solve that problem. For Liberals there is no inherent sanctity
in the conceptions of private property, or of private enterprise. They
will survive, and we can support them only so long as they appear to
work better in the public interest than any possible alternatives.
RETROSPECT AND PROSPECT
My object, then, is to show how a system which embodies a large amount
of private enterprise can be made tolerable and acceptable to modern
ideas of equity. For this purpose we need to consider (1) what have we
done in that direction in the past? (2) what is the setting of the
economic problem to-day, and (3) what is to be our policy for the
future?
Dealing first with wealth and wages, the whole field of social
legislation has a bearing upon them, including particularly education,
elementary and technical, the Factory Acts, and a great mass of
legislation which has affected the earning powers of the worker and the
conditions under which he labours. Just before the war we had come to
the point of fixing a minimum wage in the mines, but an even more
important factor was that we had introduced the Trade Board system,
which had begun to impose a minimum wage in certain trades where wages
were particularly low. But the most important direct attack upon the
unequal distribution of wealth was by taxation in accordance with the
Liberal policy of a graduated and differential income-tax, and still
more important by taxes upon inheritance; for it has long been
recognised that though it may be desirable to allow men to accumulate
great wealth during their lifetime, it by no means follows that they
should be entitled to control the distribution of wealth in the next
generation and launch their children on the world with a great advantage
over their fellows of which they may be quite unworthy. On the question
of insecurity it cannot be said that any serious attack has been made on
the problem of how to diminish fluctuations of trade, but again the
Liberal solution for dealing with that difficulty was to remedy not the
cause but its effects by insurance.
On the question of monopolies and exploitation, though we hear a great
deal of the growth of capitalistic organisation, in fact we find that,
of the three greatest industrial countries in the world, Great Britain
is the least trust-ridden, mainly because of its free trade system. In
the case of enterprises not subject to foreign competition, we had begun
to develop a fairly satisfactory system of control of public utility
services which were of a monopolistic character.
Finally, there had been growing up a complete system of collective
bargaining and conciliation, and though we always heard of it whenever
there was dispute and strife, the ordinary public did not know that this
machinery was working and developing in many great and important
industries a feeling of co-operation or at all events of conciliation
between the two sides. I only mention these points very briefly in
passing in order to show that with the evolution of modern industry we
were already feeling our way, haltingly and far too slowly, it is true,
towards a solution of its most serious defects.
Turning to the present situation, we have to face the fact that Great
Britain is to-day faced with one of the most serious positions in its
economic history. We must make allowances for the readily understood
pessimism of a miners' leader, but it should arrest attention that Mr.
Frank Hodges has recently described the present situation as the coming
of the great famine in England. For nearly two decades before the war
there was occurring a slight fall in the real wages of British
workpeople. Food was becoming dearer, as the world's food supply was not
increasing as fast as the world's industrial population, and the
industrial workers of the world had, therefore, to offer more of their
product to secure the food they needed. Hence the cost of living was
rising faster than wages, except in trades where great technical
advances were being made. There is some reason to fear that the war may
have accentuated this tendency.
For some years the distant countries of the world have had to do without
European manufactured goods. You are all aware of the tendency, for
example, of India, Australia, and Canada to develop their own steel
resources and to create manufacturing industries of all kinds. Moreover,
we have lost part of our hold on the food-producing countries of the
world by the sale of our capital investments in those countries to pay
for the war. These and other considerations all suggest that we may find
it increasingly difficult to maintain our position as one of the main
suppliers of the manufactured goods of the world. In such circumstances
we shall be hard put to it to maintain, far less raise, the pre-war
standard of living.
How then are we to cope with this problem of retaining our economic
position? We can only hope to do it if the present financial
difficulties and obstructions working through the exchanges, by which
international commerce is restricted and constrained, are removed. We
can only do it if and so long as the conception of international
division of labour is maintained. And we can only do it if--granted that
we can induce the world to accept this principle of international
division of labour--we can prove ourselves, by our economic and
productive efficiency, to be the best and cheapest producer of those
classes of goods in which our skilled labour and fixed capital is
invested.
Assuming the financial difficulty is overcome, and that the old regime
of international specialisation revives, can we still show to the world
that it is more profitable for them to buy goods and services from us
than from other people? Can we compete with other industrial countries
of the world? The actual output of our labour in most cases is far less
than its potential capacity, partly because of technical conservatism,
and partly for reasons connected with the labour situation. How are we
to mobilise these reserve resources. I have only space to deal with the
second of these problems. In Germany labour is well disciplined, and has
the military virtues of persistence and obedience to orders in the
factory. But we cannot hope to call forth the utmost product of our
labouring population by drill-sergeant methods.
In America this problem is a different one, because the American
employer is often able to take full advantage of his economic position.
For he has a labouring population of mixed nationality, which does not
readily combine, and he can play off one section against the other.
British employers cannot, if they would, deal with British labour on the
principle of Divide and Rule. There is only one method by which we can
hope to call forth this great reserve capacity of British labour, and
that is by securing its confidence. If Free Trade is one of the legs on
which British prosperity rests, the other is goodwill and active
co-operation between the workman and his employer. How is that goodwill
to be gained?
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