Part 4 (1/2)
The arguments on both sides are ingenious, but in reality nearly all of them are beside the point. The merits of nationalization do not stand or fall with the efficiency or inefficiency of existing state departments as administrators of industry. For nationalization, which means public owners.h.i.+p, is compatible with several different types of management. The const.i.tution of the industry may be ”unitary,” as is (for example) that of the post-office. Or it may be ”federal,” as was that designed by Mr. Justice Sankey for the Coal Industry.
Administration may be centralized or decentralized. The authorities to whom it is intrusted may be composed of representatives of the consumers, or of representatives of professional a.s.sociations, or of state officials, or of all three in several different proportions.
Executive work may be placed in the hands of civil {116} servants, trained, recruited and promoted as in the existing state departments, or a new service may be created with a procedure and standards of its own. It may be subject to Treasury control, or it may be financially autonomous. The problem is, in fact, of a familiar, though difficult, order. It is one of const.i.tution-making.
It is commonly a.s.sumed by controversialists that the organization and management of a nationalized industry must, for some undefined reason, be similar to that of the post-office. One might as reasonably suggest that the pattern exemplar of private enterprise must be the Steel Corporation or the Imperial Tobacco Company. The administrative systems obtaining in a society which has nationalized its foundation industries will, in fact, be as various as in one that resigns them to private owners.h.i.+p; and to discuss their relative advantages without defining what particular type of each is the subject of reference is to-day as unhelpful as to approach a modern political problem in terms of the Aristotelian cla.s.sification of const.i.tutions. The highly abstract dialectics as to ”enterprise,” ”initiative,” ”bureaucracy,”
”red tape,” ”democratic control,” ”state management,” which fill the press of countries occupied with industrial problems, really belong to the dark ages of economic thought. The first task of the student, whatever his personal conclusions, is, it may be suggested, to contribute what he can to the restoration of sanity by insisting that instead of the argument being conducted with the counters of a highly inflated and rapidly depreciating verbal currency, the exact situation, {117} in so far as is possible, shall be stated as it is; uncertainties (of which there are many) shall be treated as uncertain, and the precise meaning of alternative proposals shall be strictly defined.
Not the least of the merits of Mr. Justice Sankey's report was that, by stating in great detail the type of organization which he recommended for the Coal Industry, he imparted a new precision and reality into the whole discussion. Whether his conclusions are accepted or not, it is from the basis of clearly defined proposals such as his that the future discussion of these problems must proceed. It may not find a solution.
It will at least do something to create the temper in which alone a reasonable solution can be sought.
Nationalization, then, is not an end, but a means to an end, and when the question of owners.h.i.+p has been settled the question of administration remains for solution. As a means it is likely to be indispensable in those industries in which the rights of private proprietors cannot easily be modified without the action of the State, just as the purchase of land by county councils is a necessary step to the establishment of small holders, when landowners will not voluntarily part with their property for the purpose. But the object in purchasing land is to establish small holders, not to set up farms administered by state officials; and the object of nationalizing mining or railways or the manufacture of steel should not be to establish any particular form of state management, but to release those who do constructive work from the control of those whose sole interest is pecuniary gain, in order that they may be free to {118} apply their energies to the true purpose of industry, which is the provision of service, not the provision of dividends. When the transference of property has taken place, it will probably be found that the necessary provision for the government of industry will involve not merely the freedom of the producers to produce, but the creation of machinery through which the consumer, for whom he produces, can express his wishes and criticize the way in which they are met, as at present he normally cannot. But that is the second stage in the process of reorganizing industry for the performance of function, not the first.
The first is to free it from subordination to the pecuniary interests of the owner of property, because they are the magnetic pole which sets all the compa.s.ses wrong, and which causes industry, however swiftly it may progress, to progress in the wrong direction.
Nor does this change in the character of property involve a breach with the existing order so sharp as to be impracticable. The phraseology of political controversy continues to reproduce the conventional ant.i.theses of the early nineteenth century; ”private enterprise” and ”public owners.h.i.+p” are still contrasted with each other as light with darkness or darkness with light. But, in reality, behind the formal sh.e.l.l of the traditional legal system the elements of a new body of relations.h.i.+p have already been prepared, and find piece-meal application through policies devised, not by socialists, but by men who repeat the formulae of individualism, at the very moment when they are undermining it. The Esch-c.u.mmins Act in America, the {119} Act establis.h.i.+ng a Ministry of Transport in England, Sir Arthur Duckham's scheme for the organization of the coal mines, the proposals with regard to the coal industry of the British Government itself, appear to have the common characteristic of retaining private owners.h.i.+p in name, while attenuating it in fact, by placing its operators under the supervision, accompanied sometimes by a financial guarantee, of a public authority. Schemes of this general character appear, indeed, to be the first instinctive reaction produced by the discovery that private enterprise is no longer functioning effectively; it is probable that they possess certain merits of a technical order a.n.a.logous to those a.s.sociated with the amalgamation of competing firms into a single combination. It is questionable, however, whether the compromise which they represent is permanently tenable. What, after all, it may be asked, are the advantages of private owners.h.i.+p when it has been pared down to the point which policies of this order propose? May not the ”owner” whose rights they are designed to protect not unreasonably reply to their authors, ”Thank you for nothing”? Individual enterprise has its merits: so also, perhaps, has public owners.h.i.+p. But, by the time these schemes have done with it, not much remains of ”the simple and obvious system of natural liberty,” while their inventors are precluded from appealing to the motives which are emphasized by advocates of nationalization. It is one thing to be an entrepreneur with a world of adventure and unlimited profits--if they can be achieved--before one. It is quite another to be a director of a railway company or coal {120} corporation with a minimum rate of profit guaranteed by the State, and a maximum rate of profit which cannot be exceeded. Hybrids are apt to be sterile. It may be questioned whether, in drawing the teeth of private capitalism, this type of compromise does not draw out most of its virtues as well.
So, when a certain stage of economic development has been reached, private owners.h.i.+p, by the admission of its defenders, can no longer be tolerated in the only form in which it is free to display the characteristic, and quite genuine, advantages for the sake of which it used to be defended. And, as step by step it is whittled down by tacit concessions to the practical necessity of protecting the consumer, or eliminating waste, or meeting the claims of the workers, public owners.h.i.+p becomes, not only on social grounds, but for reasons of economic efficiency, the alternative to a type of private owners.h.i.+p which appears to carry with it few rights of owners.h.i.+p and to be singularly devoid of privacy. Inevitably and unfortunately the change must be gradual. But it should be continuous. When, as in the last few years, the State has acquired the owners.h.i.+p of great ma.s.ses of industrial capital, it should retain it, instead of surrendering it to private capitalists, who protest at once that it will be managed so inefficiently that it will not pay and managed so efficiently that it will undersell them. When estates are being broken up and sold, as they are at present, public bodies should enter the market and acquire them. Most important of all, the ridiculous barrier, inherited from an age in which munic.i.p.al corporations were corrupt oligarchies, which {121} at present prevents England's Local Authorities from acquiring property in land and industrial capital, except for purposes specified by Act of Parliament, should be abolished, and they should be free to undertake such services as the citizens may desire. The objection to public owners.h.i.+p, in so far as it is intelligent, is in reality largely an objection to over-centralization. But the remedy for over-centralization, is not the maintenance of functionless property in private hands, but the decentralized owners.h.i.+p of public property, and when Birmingham and Manchester and Leeds are the little republics which they should be, there is no reason to antic.i.p.ate that they will tremble at a whisper from Whitehall.
These things should be done steadily and continuously quite apart from the special cases like that of the mines and railways, where the private owners.h.i.+p of capital is stated by the experts to have been responsible for intolerable waste, or the manufacture of ornaments [Transcriber's note: armaments?] and alcoholic liquor, which are politically and socially too dangerous to be left in private hands.
They should be done not in order to establish a single form of bureaucratic management, but in order to release the industry from the domination of proprietary interests, which, whatever the form of management, are not merely troublesome in detail but vicious in principle, because they divert it from the performance of function to the acquisition of gain. If at the same time private owners.h.i.+p is shaken, as recently it has been, by action on the part of particular groups of workers, so much the better. There are more ways of killing a cat than {122} drowning it in cream, and it is all the more likely to choose the cream if they are explained to it. But the two methods are complementary, not alternative, and the attempt to found rival schools on an imaginary incompatibility between them is a bad case of the _odium sociologic.u.m_ which afflicts reformers.
[1] Reprinted in _The Industrial Council for the Building Industry_.
[2] _Coal Industry Commission, Minutes of Evidence_, Vol. I, p. 2506.
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VIII
THE ”VICIOUS CIRCLE”
What form of management should replace the administration of industry by the agents of shareholders? What is most likely to hold it to its main purpose, and to be least at the mercy of predatory interests and functionless supernumeraries, and of the alternations of sullen dissatisfaction and spasmodic revolt which at present distract it?
Whatever the system upon which industry is administered, one thing is certain. Its economic processes and results must be public, because only if they are public can it be known whether the service of industry is vigilant, effective and honorable, whether its purpose is being realized and its function carried out. The defense of secrecy in business resembles the defense of adulteration on the ground that it is a legitimate weapon of compet.i.tion; indeed it has even less justification than that famous doctrine, for the condition of effective compet.i.tion is publicity, and one motive for secrecy is to prevent it.
Those who conduct industry at the present time and who are most emphatic that, as the Duke of Wellington said of the unreformed House of Commons, they ”have never read or heard of any measure up to the present moment which can in any degree satisfy the mind” that the method of conducting it can in any way be improved, are also those apparently who, with some {124} honorable exceptions, are most reluctant that the full facts about it should be known. And it is crucial that they should be known. It is crucial not only because, in the present ignorance of the real economic situation, all industrial disagreements tend inevitably to be battles in the dark, in which ”ignorant armies clash by night,” but because, unless there is complete publicity as to profits and costs, it is impossible to form any judgment either of the reasonableness of the prices which are charged or of the claims to remuneration of the different parties engaged in production. For balance sheets, with their opportunities for concealing profits, give no clear light upon the first, and no light at all upon the second. And so, when the facts come out, the public is aghast at revelations which show that industry is conducted with bewildering financial extravagance. If the full facts had been published, as they should have been, quarter by quarter, these revelations would probably not have been made at all, because publicity itself would have been an antiseptic and there would have been nothing sensational to reveal.
The events of the last few years are a lesson which should need no repet.i.tion. The Government, surprised at the price charged for making sh.e.l.ls at a time when its soldiers were ordered by Headquarters not to fire more than a few rounds per day, whatever the need for retaliation, because there were not more than a few to fire, establishes a costing department to a.n.a.lyze the estimates submitted by manufacturers and to compare them, item by item, with the costs in its own factories. It finds that, through the mere pooling of knowledge, {125} ”some of the reductions made in the price of sh.e.l.ls and similar munitions,” as the Chartered Accountant employed by the Department tells us, ”have been as high as 50% of the original price.” The household consumer grumbles at the price of coal. For once in a way, amid a storm of indignation from influential persons engaged in the industry, the facts are published.
And what do they show? That, after 2/6 has been added to the already high price of coal because the poorer mines are alleged not to be paying their way, 21% of the output examined by the Commission was produced at a profit of 1/- to 3/- per ton, 32% at a profit of 3/- to 5/-, 13% at a profit of 5/- to 7/-, and 14% at a profit of 7/- per ton and over, while the profits of distributors in London alone amount in the aggregate to over $3,200,000, and the co-operative movement, which aims not at profit, but at service, distributes household coal at a cost of from 2/- to 4/- less per ton than is charged by the coal trade![1]
”But these are exceptions.” They may be. It is possible that in the industries, in which, as the recent Committee on Trusts has told us, ”powerful Combinations or Consolidations of one kind or another are in a position effectively to control output and prices,” not only costs are cut to the bare minimum but profits are inconsiderable. But then why insist on this humiliating tradition of secrecy with regard to them, when every one who uses their products, and every one who renders honest service to production, stands to gain by publicity? If industry is to become a profession, whatever its {126} management, the first of its professional rules should be, as Sir John Mann told the Coal Commission, that ”all cards should be placed on the table.” If it were the duty of a Public Department to publish quarterly exact returns as to costs of production and profits in all the firms throughout an industry, the gain in mere productive efficiency, which should appeal to our enthusiasts for output, would be considerable; for the organization whose costs were least would become the standard with which all other types of organization would be compared. The gain in _morale_, which is also, absurd though it may seem, a condition of efficiency, would be incalculable. For industry would be conducted in the light of day. Its costs, necessary or unnecessary, the distribution of the return to it, reasonable or capricious, would be a matter of common knowledge. It would be held to its purpose by the mere impossibility of persuading those who make its products or those who consume them to acquiesce, as they acquiesce now, in expenditure which is meaningless because it has contributed nothing to the service which the industry exists to perform.
The organization of industry as a profession does not involve only the abolition of functionless property, and the maintenance of publicity as the indispensable condition of a standard of professional honor. It implies also that those who perform its work should undertake that its work is performed effectively. It means that they should not merely be held to the service of the public by fear of personal inconvenience or penalties, but that they should treat the discharge of professional {127} responsibilities as an obligation attaching not only to a small _elite_ of intellectuals, managers or ”bosses,” who perform the technical work of ”business management,” but as implied by the mere entry into the industry and as resting on the corporate consent and initiative of the rank and file of workers. It is precisely, indeed, in the degree to which that obligation is interpreted as attaching to all workers, and not merely to a select cla.s.s, that the difference between the existing industrial order, collectivism and the organization of industry as a profession resides. The first involves the utilization of human beings for the purpose of private gain; the second their utilization for the purpose of public service; the third the a.s.sociation in the service of the public of their professional pride, solidarity and organization.
The difference in administrative machinery between the second and third might not be considerable. Both involve the drastic limitation or transference to the public of the proprietary rights of the existing owners of industrial capital. Both would necessitate machinery for bringing the opinion of the consumers to bear upon the service supplied them by the industry. The difference consists in the manner in which the obligations of the producer to the public are conceived. He may either be the executant of orders transmitted to him by its agents; or he may, through his organization, himself take a positive part in determining what those orders should be. In the former case he is responsible for his own work, but not for anything else. If he hews his stint of coal, it is no business of his whether the pit is a {128} failure; if he puts in the normal number of rivets, he disclaims all further interest in the price or the sea-worthiness of the s.h.i.+p. In the latter his function embraces something more than the performance of the specialized piece of work allotted to him. It includes also a responsibility for the success of the undertaking as a whole. And since responsibility is impossible without power, his position would involve at least so much power as is needed to secure that he can affect in practice the conduct of the industry. It is this collective liability for the maintenance of a certain quality of service which is, indeed, the distinguis.h.i.+ng feature of a profession. It is compatible with several different kinds of government, or indeed, when the unit of production is not a group, but an individual, with hardly any government at all. What it does involve is that the individual, merely by entering the profession should have committed himself to certain obligations in respect of its conduct, and that the professional organization, whatever it may be, should have sufficient power to enable it to maintain them.
The demand for the partic.i.p.ation of the workers in the control of industry is usually advanced in the name of the producer, as a plea for economic freedom or industrial democracy. ”Political freedom,” writes the Final Report of the United States Commission of Industrial Relations, which was presented in 1916, ”can exist only where there is industrial freedom.... There are now within the body of our Republic industrial communities which are virtually Princ.i.p.alities, oppressive to those dependent upon them for a livelihood {129} and a dreadful menace to the peace and welfare of the nation.” The vanity of Englishmen may soften the shadows and heighten the lights. But the concentration of authority is too deeply rooted in the very essence of Capitalism for differences in the degree of the arbitrariness with which it is exercised to be other than trivial. The control of a large works does, in fact, confer a kind of private jurisdiction in matters concerning the life and livelihood of the workers, which, as the United States' Commission suggests, may properly be described as ”industrial feudalism.” It is not easy to understand how the traditional liberties of Englishmen are compatible with an organization of industry which, except in so far as it has been qualified by law or trade unionism, permits populations almost as large as those of some famous cities of the past to be controlled in their rising up and lying down, in their work, economic opportunities, and social life by the decisions of a Committee of half-a-dozen Directors.