Problems of modern industry

Preface To The Issue Of 1920

THE authors of these studies had not contemplated reprinting them. But there continues to be a demand for them, even after a couple of decades ; and it seems ungracious to let them gb out of print, imperfect as they are. We therefore reissue them uniform, not only with our Industrial Democracy, in which the theory and practice of Trade Unions is analysed in detail, but also with our History of Trade Unionism^ in the revised and greatly enlarged edition, in which the story is brought down to 1920.

It is interesting, at least to the authors, to trace in these essays of the nineteenth century the forecasts of the solutions which the twentieth century is accepting. With regard to Women's Wages, dealt with in Chapter III., the reader may be referred to the elaborate Report of the War Cabinet Committee on Women in Industry, 1919 ; and especially to the Minority Report by one of ourselves, which has been separately published under the title of Men's and Women's Wages : Should they be Equal ? *

The once-disputed question of the propriety of legal regulation of the conditions of employment, dealt with in Chapters IV. and V., is no longer a matter of controversy among educated people, though each particular application

1 Fabian Bookshop, 25 Tothill Street, Westminster ; or George Allen and Unwin, Limited, price is. net.

600151 vi Problems of Modern Industry

of the principle still meets with opposition among the uninstructed. The analysis of the economic and social effects of legal regulation, as contrasted with those of the absence of regulation on the one hand, and those of regulation by voluntary association on the other, is given in great detail in our Industrial Democracy. We should explain, for the benefit especially of readers in the United States and other countries in which the desirability of legal regulation is not yet fully accepted, either by some of the men's Trade Unions or by the employers and legislators, that the authors retain the view that Factory Laws applicable to women only are better, even in the women's interests, than no Factory Laws at all ; and that* ' the fear of women's exclusion from industrial employment/ as a result of such one-sided and imperfect legislation, ' is wholly unfounded.' A quarter of a century of further experience confirms the conclusion that the effect of such legislation is, * by encouraging machinery, division of labour and production on a large scale, to increase the employment of women, and largely to raise their status in the labour market.' In countries where more comprehensive Factory Legislation cannot, for the moment, be obtained, it is in 1920 even more desirable than it was in 1895, that legislative regulation of the conditions of women's employment should be obtained. We have seen in Great Britain during the past decade, how true was the conclusion that ' with this regulation, experience teaches us that women can work their way in certain occupations to a man's skill, a man's wages, and a man's sense of personal dignity and independence.' Wherever, as in the United Kingdom, the men's Trade Unions and instructed public opinion accept Factory Legislation as desirable, there is, of course, no reason for any one-sided treatment ; and Factory Laws

Preface to the Issue of 1920 vii

should not be differentiated, any more than Standard Rates of Payment, by sex, race or the colour of the hair.

In Chapter VII. the reader may detect an imperfect foreshadowing of the elaborate Minority Report of the Royal Commission on the Poor Law, 1909; republished without its bewildering but instructive footnotes and references, with introductions by ourselves, as The Break- Up of the Poor Law and The Public Organisation of the Labour Market} State Pensions for the Aged were granted, imperfectly, in 1908 ; and the British Government expressly pledged itself in 1919, as a Parliamentary bargain by which it secured the passage of the Ministry of Health Bill, to the immediate Abolition of the Poor Law, and the distribution of its services among the several committees of the local municipal authorities, to be conducted under the Education, Public Health, Mental Deficiency, Old Age Pensions and Unemployment Acts, as proposed, ten years before, in the Minority Report. Each year's postponement of this far-reaching reform is involving a waste of millions of pounds, and doing incalculable social harm.

If the reader is alive to the acute controversy that now exists, not in Great Britain only, but also, under other forms of words, among whole sections of the population of most European countries (though scarcely at all as yet among those who fill the places of statesmen), as to the form in which the Democratic governments of the future should be cast, he should weigh Chapter VIII. In that popular exposition of the relation between Co-operation and Trade Unionism, dating as far back as 1892, will be found the contrast between the nature and functions of Associations of Consumers and Associations of Producers respectively — terms which are gradually coming into the consciousness of

1 Longmans, Green & Co. , price, respectively, 73. 6d. net and 55. net.

viii Problems of Modern Industry

those whose duty it is to scrutinise the evolution of Democracy. The authors do not believe to-day, any more than they did in 1892, that the government and control of industry can, or even will, be in the future vested wholly in the Democracy of Producers, whether self-governing workshop, Trade Union, Gild or factory soviet, any more than it can be allowed to be vested in a class of private employers or an employers' association. On the other hand, they recognise, as they explained in 1897 in their Industrial Democracy, that it is equally impossible to attain either the highest productivity or that fullest development of individual faculty which we mean by freedom, where the govern-* ment and control of industry is trusted exclusively to the Democracy of Consumers, whether Co-operative Society, Municipality or completely democratised National Government. We believe now, as we said in 1892, that, for any genuinely efficient Democracy, both forms must coexist, and be fully recognised — the Association of Consumers and the Association of Producers each having its own lawful and necessary sphere of power and influence, and each working continuously in full activity. The ' proper relationship ' between them, as was indicated in 1892, is 'that of an ideal marriage, in which each partner respects the individuality and assists the work of the other, whilst both cordially join forces to secure their common end — the Co-operative State.'

SIDNEY WEBB.

BEATRICE WEBB.

41 GROSVENOR ROAD, WESTMINSTER, February 1920.

Introduction To The 1902 Edition

A VOLUME which continues for over four years to find a steady sale may be assumed to meet the needs of some part of the world. We have therefore not hesitated, in spite of our consciousness of manifold imperfections, to allow the publication of a cheaper edition of these collected essays, uniform with the 1902 editions of our History of Trade Unionism and Industrial Democracy.

The opening of the twentieth century finds both England and the United States in a state of acute self-consciousness with regard to the organisation of industry and commerce, and the influence of financial considerations in national politics. The last decade has witnessed important and even dramatic changes in the economic organisation of the civilised world. These changes have, both in the United Kingdom and the United States, produced a marked effect on the public imagination. Public opinion learns, it is to be feared, little from books, and only occasionally absorbs a discovery in the realm of thought. Its most effective teacher is always some objective happening in the world of things. The English municipalities learned the elements of sanitation, not from the physiologists, but from three successive visitations of Asiatic cholera. The economic changes of the last few years — the scramble for Africa, the territorial expansion of the United States, the enormous development of individual x Problems of Modern Ind^lstry

fortunes, the * Intel-nationalisation ' of every branch of industry, and, above all, the startling multiplication of syndicates, trusts, and giant amalgamations — -all these have worked a great change in the mind of the electorate. In the new Introductions to the current editions of the History of Trade Unionism and Industrial Democracy we have described some of these developments of public opinion, with special reference to trade unions and strikes. We now add a few suggestions with regard to Trusts, and the public alarm concerning them.1

It is curious to notice with what a start the ordinary citizen has all of a sudden realised how entirely both England and the United States have departed from the industrial organisation described by the classic economists. Adam Smith's Wealth of Nations and the Declaration of Independence were given to the world in the same year. We need not here inquire to what extent the argument and philosophy of both these masterpieces may have been influenced by the industrial organisation then common to England and New England. What is brought vividly and dramatically to our minds by the formation of the so-called ' Billion Dollar Steel Trust ' and the * Atlantic Shipping Combine ' is the extent of the change which has come over the economic status of the mass of the nation. A century and a quarter ago, when Jefferson and Adam Smith were writing, it could be taken for granted that the normal state of things was for every man to become, in due course, ' his own master ' ; it could be assumed that the work of the world was, for the most part, done by men who were moved by the stimulus of making * profit ' as distinguished from wages or salary ; it seemed a scientific fact that values were determined by the mutual exchange of the commodities and services of independent producers. It was on these assumptions that the classic political economy was based. What is

1 Much of the substance of this Introduction appeared in The International Monthly for February 1902, and we are indebted to the editor for permission to reproduce it.

Introduction to the 1902 Edition xi

more important to us to-day is that, both in England and in the United States, the public opinion of the educated and prosperous classes still makes, with regard to haif its judgments, much the same assumptions. Neither the prosperous Englishman nor the prosperous American can rid himself of the feeling that it is open to every one to become a profit-maker, that no one need long remain a mere wage-earner, and that it is therefore not really of vital consequence to the nation how those members of the community who happen temporarily to be wage-earners are actually living. The opening of the twentieth century sees, perhaps, some weakening of this assumption. England pays more and more attention to its factory legislation. The prosperous American still believes, however, that at any rate every native-born American can rise to a higher place, and that the status of the hired labourer is therefore, on the American continent, still something transient, exceptional, and relatively unimportant. He is still revolted by any glimpse of American democracy as a ' democracy of the " hired man." ' Yet surely nothing is more certain than that in the United States, as in Western Europe and Australia, the hired men form, and must necessarily continue to form, at least three - fourths of the population. This is a fact which the advent of the Trust, the supremacy of business conducted on a large scale, the rapidly increasing concentration of nearly every kind of industry, can hardly fail to drive home to the mind of the American, as to that of the English citizen. He will, for the first time, become aware of himself as one of a democracy of hired men.

We shall be conscious, too, by whom we are hired. It has long been a fond dream, both in England and in the United States, to prove, by some mysterious juggling with wage and price statistics, that wealth is getting more equally distributed, that the proportion of small competences is increasing, and that the number is growing of those who, as shareholders or interest receivers, share in industrial profits. This has, for forty or fifty years, been an amiable delusion xii Problems of Modern Industry

of the statistical philanthropist. It is now dispelled, The dramatic concentrations of capital exhibited by the Rockefellers and Pierpont Morgans, like the visible accumulations of some English ducal ground-landlords, have forced upon everybody's notice the indisputable testimony of deathduty statistics. The only point in dispute is whether wealth-concentration has as yet gone further in England or in the United States. This is, of course, not to deny that some or all of the property-less masses have, during the past fifty years, found their conditions of life improved. But the advent of the Trust is making both England and America realise, as they have never realised before, that in both countries nine-tenths of all the realised property belongs to-day to a class that comprises only one-tenth of the population,— that ninety per cent of the citizens, the great mass of the people, share among them, even including their little homes and furniture, and all their much-vaunted hoards, the ownership of not more than ten per cent of the capital wealth.

But if the advent of the Trust makes us conscious of ourselves as nations of hired men, it necessarily compels us to realise that the conditions of our hiring are all-important, not only to ourselves individually, but to the community as a whole. ' Every society is judged,' as Mr. Asquith, the late Home Secretary, said the other day, — ' and survives, according to the material and moral minimum which it prescribes to its members.' Note that word * prescribes.' As hired men, we find ourselves graded in elaborate hierarchies, from the sweated trouser-hand or day-labourer, right up to Mr. Schwab or Mr. Clinton Dawkins at fabulous salaries. But the census shows four-fifths of us to be manual-working wage-earners, keeping our families out of earnings which may be anything from ten shillings to ten pounds a week. These earnings depend on our successful bargaining with our employers, — employers who used to be men like ourselves, but who, as we now realise, are, for the majority of us, gigantic capitalist corporations, huge joint-stock mills, railways, shipping combines,

Introduction to the 1902 Edition xiii

and ' Billion Dollar Steel Trusts.' Between these employers and the individual workmen there has hitherto been assumed to be ' freedom of contract,' secured to us by the Constitution of the United States or by the contemporary general principles of the law in the United Kingdom ; and this freedom of contract was inaugurated, and is to-day still usually defended, as being in the highest interests of the wage-earner himself. * The patrimony of a poor man,' says Adam Smith, * lies in the strength and dexterity of his hands ; and to hinder him from employing that strength and dexterity in what manner he thinks proper, without injury to his neighbour, is a plain violation of this most sacred property.' But the conditions of industry have somewhat changed since 1776, and the 'Billion Dollar Steel Trust,' though it does not appreciably alter the circumstances, is opening our eyes to them. We see now, what the professors of political economy have gradually become conscious of, that freedom of contract in the hiring of labour may mean something very like the compulsion of one party to serve the other, on terms nominally contractual, but virtually fixed by overwhelming superiority in strength. When the conditions of the workman's life are settled, without interference by law or trade unionism, by absolutely free contract between man and man, the workman's freedom is delusive. Where he bargains, he bargains at a hopeless disadvantage ; and with regard to many of the terms most important to his health, comfort, and industrial efficiency, he cannot bargain at all.1

This conclusion will carry with it such momentous consequences, and is as yet so imperfectly realised, that it is worth while to think it over. Let us consider how the wage - contract is actually entered into. Leave out of account, to begin with, any period of bad trade, when mills

1 The whole argument on this point, with the facts on which it is based, will be found more fully set forth in our Industrial Democracy, part iii. chap. ii. , 'The Higgling of the Market' ; and chap, iii., 'The Economic Characteristics of Trade Unionism.' See, for a more popular presentation, The Case for the Factory Acts> edited by Mrs. Sidney Webb (London, 1902).

xiv Problems of Modern Industry

are shutting down or running only short time, and armies of unemployed are looking for work. Assume that things are in equilibrium, — that there is only one place vacant, and only one * hand ' applying for it. Watch carefully the play of motives acting on the two minds, that of the * man with the dinner pail ' seeking employment, and that ot the employer or foreman with a place to fill. Suppose the workman to demur to the wage offered by the employer. There is, we assume, absolutely no other spare hand in sight. To leave the vacancy unfilled may cause some inconvenience in the mill. To complete the orders in hand, some of the other men may have to work more overtime. The delivery of the goods may even have to be delayed, the year's output may be diminished, and the year's profits may be fractionally less than they would have been. But in the meantime the capitalist or his agent is not actually affected in his daily life. He and his family go on eating and drinking as they did before. At most, the matter is a trifling one to them. Thus, the capitalist can afford to wait until the workman returns in a humbler frame of mind. And this is just what the workman must do. What is only a trifling matter to the capitalist is to the workman his whole livelihood. Moreover, he cannot wait. Even if he stands out one day, he has thereby lost that day. His very subsistence depends on his quickly coming to an agreement. If he is obstinate, consumption of his little hoard or the sale of his furniture may delay the catastrophe. Sooner or later slow starvation forces him to come to terms. And, since success in the ' higgling of the market ' is largely dependent on the relative eagerness of the parties to come to terms — conspicuously so if this eagerness cannot be concealed from the antagonist, — capitalist and workman always meet, in the absence of law or effective trade unionism, on unequal terms. Further, the capitalist knows the cards, and the workman does not. Even in the rare cases in which the absence of a single workman is of any real consequence to the employer, this is usually unknown to any

Introduction to the 1902 Edition xv

one but himself. He, too, knows the state of the market, and can judge whether it might not even suit him better to slacken production for the moment. The isolated individual workman bargains in the dark. Add to this the fact that the workman is not trained in the art of bargaining, which is the daily business of the employer, or the constant task of an expert specially trained for the particular work of hiring men. Thus, in the bargaining between a capitalist corporation and the individual labourers whom it hires, the labourers stand to lose at every point.

So far we have been assuming that the labour market is in equilibrium, and that only one hand applies for one vacant place. But at what periods and in what trades is so perfect an equilibrium to be found ? When wealthy companies are concentrating their works and shutting down unnecessary mills ; when new processes or new machines are displacing labour ; when industrial crises, changes of fashion, or the mere shifts and gusts of international commerce cause our production to wane, now in this branch, now in that, — what freedom has the hired man ? When the unemployed are crowding round the factory gates, it is plain to each one among them that, unless he can induce the foreman to choose him rather than another, his chance of subsistence for weeks to come may be irretrievably lost. Bargaining, in any genuine sense, there can be none. The foreman has but to pick his man, and name the price,— even if he does so much as name the price. Once inside the gates, the lucky workman knows that if he grumbles at any of the surroundings, however intolerable ; if he demurs to any speeding up, lengthening of the hours, or arbitrary deductions ; or if he hesitates to obey any orders, however unreasonable, he condemns himself once more to the semi-starvation and misery of unemployment. The alternative to the foreman or ganger is merely to pick another labourer out of the eager crowd at the gate. The difference to the joint-stock company is nil.

But much more remains to be said. To the capitalist xvi Problems of Modern Industry

corporation the wage-contract is simply a question of so much money to be paid. To the workman it is a matter of placing, for ten or twelve hours out of every twenty-four, his whole life at the disposal of his hirer. What hours he shall work, when and where he shall get his food, the sanitary conditions of his employment, the safety of the machinery, the temperature and atmosphere to which he is subjected, the fatigue or strains that he endures, the risks of disease or accident that he incurs, — all these are involved in the workman's contract, and not in his employer's. These are matters of as vital importance to the wage-earner as are his wages. Yet about these matters he cannot, in practice, bargain at all. Imagine a weaver, before accepting employment in a cotton-mill, examining the proportion of steam in the atmosphere of the shed, testing the strength of the shuttle-guards, and criticising the soundness of the shafting belts ; a mechanic prying into the security of the hoists and cranes or the safety of the lathes and steam-hammers among which he must move ; a work-girl in a sweating den computing the cubic space which will be her share of the work-room, discussing the ventilation, warmth, and lighting of the place in which she will spend nearly all her working life, or examining disapprovingly the sanitary accommodation provided ; think of the man who wants a job in a white lead works testing the poisonous influence of the particular process employed, and reckoning in terms of weekly wages the exact degree of injury to his health which he is consenting to undergo. On all these matters, at any rate, we must at once give up the notion of freedom of contract. In the absence of any restraint of law, the conditions of sanitation, decency, and security from accident in the various enterprises of the United States Steel Corporation or the Standard Oil Company are really at the mercy of the rulers of these great undertakings. They decide these conditions of life for the millions of workmen whom they employ — and thus, to this extent, for the nation, — as arbitrarily (and, it is to be hoped, as humanely) as they do for their horses. ' In

Introduction to the 1902 Edition xvii

the general course of human nature/ remarked the shrewd founders of the American Constitution, ' power over a man's subsistence amounts to a power over his will.' l

These features of the lot of the hired man are common to England and America, and, indeed, to every country in which capitalist industry and production are found on a large scale. We must, in intellectual honesty, recognise the fact. But this is not to say that the condition of the hired man is either good or bad, or better or worse than in bygone times. It is different from what it was when industry was carried on by the village blacksmith, different from that described by Adam Smith, different from that which Jefferson knew. The dinner pail may be fuller — as regards whole sections of the community, it can certainly be proved to be fuller, — but there has been a change of relative status. Meanwhile, let us accept the result in the great wage-earning class as we now know it, — a community of hired men ; a relatively small proportion of skilled artisans earning ' good money ' ; the great mass living on wages, in England of five and twenty or thirty shillings, in the United States of ten or twelve dollars, per fully employed week ; while below these come the unskilled labourers and most women workers, existing, in greater or smaller numbers, under conditions of * sweating,' — authoritatively defined as ' earnings barely sufficient to sustain existence, hours of labour such as to make the lives of the workers periods of almost ceaseless toil, sanitary conditions injurious to the health of the persons employed, and dangerous to the public.' 2 Into one or another of these three categories come seventy or eighty per cent of the whole population. Such are the loyal subjects of Edward the Seventh of England ; such are the free citizens of the United States. We hate to think about it, but it is so ; and the advent of the Trust is going to make us realise that it is so.

1 Federalist^ No. Ixxix.

2 Final Report of the Select Committee of the House of Lords on the Sweating System, 1890.

xviii Problems of Modern Industry

What effect will this growing consciousness of industrial subordination have upon public .opinion ? England developed its capitalist industry a couple, of generations earlier than did the United States. Though the time for trusts and great railway combinations had not yet come, the new mills and mines which, at the end of the eighteenth- century, spread over the northern and midland counties, were the leviathans of their day, and great was the power which they wielded in the labour market. Complete ' freedom of contract ' prevailed. The result, as every one knows, was the terrible ' white slavery ' of the first quarter of the nineteenth century, when generation after generation of workers in the factories and coal-mines were stunted and maimed, brutalised and degraded, and hurried into early graves, by the long hours, low wages, and insanitary conditions of those halcyon days, in which, as has been said, ' it was not five per cent, or ten per cent, but thousands per cent, that made the fortunes of Lancashire.' But England grew alarmed, amid all its profit, at the rapid degeneration of whole sections of its people. By the untiring efforts of the philanthropists, Factory Act after Factory Act was passed, setting limits to freedom of contract, and substituting, for individual bargaining between man and man, definite ' common rules/ on every point deemed of prime importance to the welfare of the operatives. These common rules, securing a reasonable minimum of leisure, safety, and sanitation, applied at first only to the textile and mining industries, and are, to this day, not yet coextensive with the English wage-earning class. Nor do they apply to wages. But there grew up, after 1824, in all the principal English industries, strong trade unions, which enforced, by the instrument of collective bargaining, new common rules supplementing those laid down by law. The employers in each trade were numerous and divided. Differing among themselves in wealth and magnitude of business, as well as in personal character, they proved unable to present a solid front to the trade unions. The result is that, in the course of the last half century,

Introduction to the 1902 Edition xix

some of the principal and most successful branches of English industry- — notably cotton manufacture, coal-mining, ship-building, engineering, and the building trades — have come to be regulated by codes of common rules, enforced partly by law and partly by collective agreement. The rates of wages, like the hours of work and the fundamental conditions of safety and sanitation are therefore no longer at the mercy of individual capitalists. There exists in each trade a sort of minimum standard, fixed practically by general agreement among the whole body of employers on the one hand, and the whole body of workmen on the other, below which it is found impossible for any employer to descend. He may break away, but he discovers presently that it no more pays him to outrage the public opinion of his trade than to infringe the factory law. The general opinion of the community acts, in all well-organised trades, as a real though curiously intangible check upon the capitalist. Public sympathy is always on the side of a stable and highly -organised trade union defending itself against any encroachment on the common rules or reduction in rates. Great corporations like the London and North- Western Railway find themselves pulled up sharp by the peremptory interference of the Board of Trade when they are guilty of any conspicuous tyranny over their employees. Even in the late engineers' strike, where the men lost sympathy because they were believed to be resisting machinery, and the employers won all along the line, the final agreement formally recognised the -right of collective bargaining and the need for common rules, while the result has been the establishment of a new tribunal of the trade to maintain these rules, — a joint tribunal, in which, for the moment, the associated employers doubtless have a larger influence than the associated workmen, but one to which every individual employer, no less than every individual workman, finds himself practically subject. This collective rule of the whole trade over every individual employer in it, as well as over every individual workman, is typical of most xx Problems of Modern Industry