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R. C. K. (Robert Charles Kirkwood) Ensor.

Modern socialism, as set forth by socialists in their speeches, writings, and programmes; online

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progressive industries like English agriculture), will usually be exporting
trades, not subject to the competition of foreign imports. Merely to put an
import duty on the odds and ends of foreign-made clothing or cheap knives
that England imports would in no way strengthen the strategic position, as
against the employer, of the sweated outworkers of East London or Sheftield,
or render the respectable young women of Leeds less eager to be taken on
at a pocket-money wage in the well-appointed clothing factories of that
city.



234 MODERN SOCIALISM

diversion of the nation's brains and capital away from cotton
manufacture to some other industry, in which, by reason of a
subsidy or bounty, the employer stood at a greater relative
advantage towards the home or foreign consumer. The
country having the greatest natural advantages and technical
capacity for cotton manufacture would doubtless satisfy the
great bulk of the world's demand for cotton goods. But, if
there existed within that same country any trades carried on
by parasitic labour, or assisted by any kind of bounty, it would
obtain less of the cotton trade of the world than would other-
wise be the case ; the marginal business in cotton would tend
to be abandoned to the next most efficient country, in order
that some brains and capital might, to the economic loss of
the nation and of the world, take advantage of the subsidy
or bounty.' We see, therefore, that even an international
uniformity of conditions within a particular trade would not,
in face of industrial parasitism at home, prevent the advan-
tageously situated country from losing a portion of this uniformly
regulated trade. The parasitic trades have, in fact, upon the
international distribution of industry, an effect strictly analo-
gous to that which they have upon the home trade. By ceding
as a bribe to the consumer the bounty or subsidy which they
receive, they cause the capital, brains, and labour of the world
to be distributed, in the aggregate, in a less productive way
than would otherwise have been the case.

We can now see that the economists of the middle of the
century only taught, and the Free Trade statesmen only
learnt, one-half of their lesson. They were so much taken up
with the idea of removing the fiscal barriers between nations
that they failed to follow up the other part of their own con-
ception, the desirability of getting rid of bounties of every
kind. M'Culloch and Nassau Senior, Cobden and Bright,
realized clearly enough that the grant of money aid to a

* This hypothetical case is, we believe, not unlike the actual condition
of the cotton manufacture in the United Kingdom at the present time, in
spite of the absence of international uniformity.



SIDNEY AND BEATRICE WEBB 235

particular industry out of the rates or taxes enabled that
industry to secure more of the nation's brains and capital, and
more of the world's trade, than was economically advan-
tageous. They even understood that the use of unpaid slave
labour constituted just such a bounty as a rate in aid of wages.
But they never clearly recognized that the employment of
children, the overwork of women, or the payment of wages
insufficient for the maintenance of the operative in full indus-
trial efficiency stood, economically, on the same footing. If
the object of " Free Trade " is to promote such a distribution
of capital, brains, and labour among countries and among
industries, as will result in the greatest possible production,
with the least expenditure of human efforts and sacrifices, the
factory legislation of Robert Owen and Lord Shaftesbury
formed as indispensable a part of the Free Trade movement
as the tariff reforms of Cobden and Bright, " During that
period," wrote the Duke of Argyll of the nineteenth century,^
"two great discoveries have been made in the Science of
Government : the one is the immense advantage of abolishing
restrictions upon Trade; the other is the absolute necessity
of imposing restrictions on labour. . . . And so the Factory
Acts, instead of being excused as exceptional, and pleaded
for as justified only under extraordinary conditions, ought
to be recognized as in truth the first legislative recognition of
a great Natural Law, quite as important as Freedom of Trade,
and which, like this last, was yet destined to claim for itself
wider and wider application."

Seen in this light, the proposal for the systematic enforce-
ment, throughout each country, of its own National Minimum
of education, sanitation, leisure, and wages, becomes a neces-
sary completion of the Free Trade policy. Only by enforcing
such a minimum on all its industries can a nation prevent the
evil expansion of its parasitic trades being enormously aggra-
vated by its international trade. And there is no advantage in
this National Minimum being identical or uniform throughout
' The Reign of Laio (London, 1867), pp. 367, 399.



236 MODERN SOCIALISM

the world. Paradoxical as it may seem to the practical man, a
country enforcing a relatively high National Minimum would
not lose its export trade to other countries having lower con-
ditions, any more, indeed, than a country in which a high
Standard of Life spontaneously exists, loses its trade to others
in which a standard is lower. If the relatively high National
Minimum caused a proportionate increase in the productive
efficiency of the community, it would obviously positively
strengthen its command of the world market. But even if
the level of the National Minimum were, by democratic
pressure, forced up further or more rapidly than was com-
pensated for by an equivalent increase in national efficiency, so
that the expenses of production to the capitalist employer
became actually higher than those in other countries, this
would not stop (or even restrict the total of) our exports.
" General low wages," emphatically declare the economists,
"never caused any country to undersell its rivals, nor did
general high wages ever hinder it from doing so." ^ So long
as we continued to desire foreign products, and therefore to
import them in undiminished quantity, enough exports would
continue to be sent abroad to discharge our international
indebtedness. We should, it is true, not get our tea and
foodstuffs, or whatever else we imported, so cheaply as we
now do; the consumer of foreign goods would find, indeed,
that these had risen in price, just as English goods had. If
we ignore the intervention of currency, and imagine foreign
trade to be actually conducted, as it is virtually, by a system
of barter, we shall understand both this rise of price of foreign
goods, and the continued export of English goods, even when
they are all dearer than the corresponding foreign products.
For the English importing firms, having somehow to discharge
their international indebtedness, and finding no English products
which they can export at a profit, will be driven to export some
even at a loss — a loss which, like the item of freight or any

' J. S. Mill, Principles of Political Economy, Book III. chap. xxv. § 4,
p. 414 of 1865 edition.



SIDNEY AND BEATRICE WEBB 237

other expense of carrying on their business, they will add to
the price charged to the consumer of foreign imports. They
will, of course, select for export those English products on
which the loss is least — that is to say, those in which England
stands at relatively the greatest advantage, or, what comes
to the same thing, the least disadvantage. Therefore, if the
rise in the expense of English production were uniform, not
only the total, but also the distribution of our exports would
remain unaffected. The foreign consumer, by reason of the
cheapness of production of his own goods, will then be getting
English-made goods at a lower price than would otherwise be
the case — it may be, even a lower price than the Englishman
is buying them at in his own country — just as the Englishman
at the present time buys American products in London at the
comparatively low level of English prices, and sometimes
actually cheaper than they are sold at in New York. For
this process of exporting at an apparent loss, as a set-off
against a profitable import trade, actually takes place, now in
one country, now in another.^ It sometimes happens that the
same firm of merchants both exports and imports : more
usually, however, the compensatory process is performed
through the banking houses, and manifests itself in those
fluctuations of the foreign exchanges, which, though clear
enough to the eye of the practical financier and economist,
shroud all the processes of international exchange from the
ordinary man by a dense veil of paradox.

The practical check to a rise in the National Minimum
comes, indeed, not from the side of international trade, but, as
we have already explained, from the home taxpayer and the
home consumer. Every rise in the National Minimum not
compensated for by some corresponding increase in the
efficiency with which the national industry was carried on

' When, for instance, the export of gold is prohibited, or when all the
gold has already been sent away ; or when, for any reason, less expensive
ways of discharging a balance of indebtedness do not exist. — See Goschen's
Theory of the Foreign Exchanges, or Clare's A.B.C. of the Foreign Exchanges.



238 MODERN SOCIALISM

would imply an increase in the number of the unemployable,
and thus in the Poor Rate or other provision for their mainte-
nance ; and every increase in the expenses of production would
be resented as a rise in the price by the bulk of the popula-
tion. The lowlier grades of labour, employing a majority of
the citizens, would clearly benefit by the improvement which
the rise would cause in their own conditions. Other grades
of producers, including the brain-working directors of industry,
would find their own " rent " of specialised or otherwise
exceptional faculty undiminished, even if they had to pay away
more of it in taxes and higher prices. The great and growing
army of officials on fixed incomes would loudly complain of
the increased cost of living, which would presently be met by
a rise in salaries. But the real sufi"erers would be the rentier
class, existing unproductively on their investments. These
persons would be hit both ways : they would find themselves,
by increased taxation, saddled with most of the cost of the un-
employable, and by higher prices, charged with at least their
share of the increase in the nation's wage-bill. Such a prac-
tical diminution in the net income of the dividend-receiving
classes would, from Ricardo down to Cairnes, have been sup-
posed to correct itself by a falling off in their rate of saving,
and therefore, as it was supposed, in the rate of accumulation
of additional capital. This, as we have seen, can no longer be
predicted, even if we cannot yet bring ourselves to believe,
with Sir Josiah Child and Adam Smith, that the shrinking of
incomes from investments would actually quicken production
and stimulate increased accumulation. What it might con-
ceivably do would be to drive the rentier class to live increas-
ingly abroad, with indirect consequences which have to be
considered.

We have hitherto left on one side the possible migration of
capital from a country, in which the National Minimum had
been unduly raised, to others in which labour could be hired
more cheaply. This is hindered, to an extent which we do
not think is sufficiently appreciated, by the superior amenity



SIDNEY AND BEATRICE WEBB 239

of English life to the able business man. So long as our
captains of industry prefer to live in England, go abroad with
reluctance even for high salaries, and return to their own
country as soon as they possibly can, it will pay the owners of
capital to employ it where this high business talent is found.
The danger to English industrial supremacy would seem to us,
therefore, to lie in any diminution of the attractiveness of life in
England to the able brain-working Englishman. An increase in
the taxation of this class, or a rise in the price of the commodities
they consume, is not of great moment, provided that facilities
exist for them to make adequate incomes ; and these rewards
of exceptional talent are, it will be remembered, in no way
diminished by the Device of the Common Rule. But any
loss of public consideration, or any migration of their rentier
friends or relations, might conceivably weaken their tie to
England, and might, therefore, need to be counteracted by
some increase in their amenities or rewards.^ Our own opinion
is that this increased amenity, and also this increased reward
of exceptional ability, would actually be the result of a high
National Minimum. It is difficult for the Englishman of
to-day to form any adequate idea of how much pleasanter
English life would be if we were, once for all, rid of the slum
and sweating den, and no class of workers found itself con-
demned to grinding poverty ; if science had so transformed
our unhealthy trades that no section of the population suffered
unnecessarily from accident or disease ; and if every grade of
citizens was rapidly rising in health, intelligence, and character.
It follows that each community is economically free, with-
out fear of losing its foreign trade, to fix its own National
Minimum, according to its own ideas of what is desirable, its
own stage of industrial development, and its own customs of
life. The course and extent of International trade — if we

' It would be interesting to inquire how far the fatal "absenteeism " of
Ireland's men of genius has been caused or increased by the reduction of
Dublin from the position of a wealthy and intellectual capital to that of a
second-rate provincial town.



240 MODERN SOCIALISM

imagine all fiscal barriers to be removed, and all bounties
to be prevented — is, in fact, determined exclusively by the
desires of the world of consumers, and the actual faculties and
opportunities of the producers in the different countries ; not
by the proportion in which each nation chooses to share its
National Dividend between producers and property-owners.
Each community may, therefore, work out its own salvation in
the way it thinks best. The nation eager for progress, con-
stantly raising its National Minimum, will increase in pro-
ductive efficiency, and steadily rise in health and wealth. But
it will not thereby interfere with the course chosen by others.
The country which honours Individual Bargaining may reject
all regulation whatsoever, and let trade after trade become
parasitic ; but it will not, by its settling down into degrada-
tion, gain any aggregate increase in international trade, or
really undermine its rivals.^ Finally, the nation which prefers
to be unprogressive, but which yet keeps all its industries self-
supporting, may, if circumstances permit its stagnation, retain
its customary organization, and yet continue to enjoy the same
share in international commerce that it formerly possessed.

' Let us suppose, for instance, that the capitalists of the United States so far
strengthen their position as to put down all combinations of the wage-earners,
annul all attempts at factory legislation, and, in fact, prohibit every restriction
on Individual Bargaining as a violation of the Constitution. The result
would doubtless be a proletarian revolution. But assuming this not to occur,
or to be suppressed, and the rule of the Trusts to be unchecked, we should
expect to see the conditions of employment in each trade fall to subsistence
level, and with the advance of population, stimulated by this hopeless
poverty, even below the standard necessary for continued efficiency. The
entire continent of America might thus become parasitic, and successive
generations of capitalists, served by a hierarchy of brain-working agents,
might use up for their profit successive generations of degenerated manual
toilers, until these were reduced to the level of civilization of the French
peasants described by La Bruyere. But the total international trade of
America would not be thereby increased ; on the contrary, it would certainly
be diminished as the faculties of the nation declined.



XVIII

THE ECONOMICS OF DIRECT EMPLOYMENT

By the Fabian Society

This is Fabian Tract, No. 84, the basis of which was a paper
read at the British Association's Oxford meeting, 1894, by Mr.
Sidney Webb. It includes an account of the Fair Wages policy,
which is possibly the greatest success achieved by the Fabian
method.

During the last twelve years there has gradually been
developed, among the various Town and County Councils
and other public authorities, a definite economic policy with
regard to the employment of labour. This policy, initiated by
the School Board for London in January, 1889,^ has been
adopted, to a greater or lesser degree, by several hundred
local governing bodies throughout the United Kingdom. It
has, perhaps, been most completely carried out by the London
County Council, where it has been successfully maintained for
over ten years, and where it has lately been endorsed and
confirmed by a decisive majority at the election of 1898.

The Labour Policy of the London County Council.

The Labour Policy of the London County Council has been
intelligently criticized, from the point of view of economic

' The London School Board was, in January, 1889, the first public
body to adopt the principle of insisting that not less than the recognized
standard rates of wages should be paid. See The History of Trad*
Unionism, and also Tndiistrial Democracy, by Sidney and Beatrice Webb.

241 R



24-2 MODERN SOCIALISM

science, mainly under three heads. Instead of " buying its
labour in the cheapest market," as it was termed, it has, from
the first, striven to adopt as its standard, the trade-union rate
of wages, and to assert a " moral minimum " of earnings below
which it was inexpedient that any London citizen should be
allowed to sink. Moreover, not content with proceeding on
these lines as regards the workmen whom it directly employs,
it has sought throughout to secure that all contractors execut-
ing its work should adopt the same principle. Finally, it has
endeavoured, wherever possible, to dispense with the middle-
man entrepreiicur, and to substitute salaried supervision and
management directly under public control.

The Fair Wages Movement.

Let us take first what is known as the Fair Wages Move-
ment. After prolonged discussions, repeated at intervals
during nine years, it has become the settled policy, {a) to pay,
in each trade, the recognized standard rate of wages, {b) to give
no adult male workman less than 6d. per hour, and no adult
woman less than \Zs. per week.^ Those unfamiliar with
the actual practice of industrial life at first imagined that
the trade-union rate of wages meant just whatever rate the
trade-union might choose to claim. As a matter of fact, the
trade-union rate of wages is, in every organized trade, a well-
understood expression, denoting the actual rate which has
been agreed to, more or less explicitly, by representative
employers and the trade-union executives. What the Council
has done has been merely to insert in its own standard list of
wages the rate proved, on inquiry, to be actually recognized
and adopted by the leading employers in the particular trade

• "The Standing Orders of the L.C.C.," containing the Fair Wages
Clauses, is sold at is. by P. S. King & Son, Great Smith Street, West-
minster. For other places see House of Commons Return, " Urban
Sanitary Districts (Conditions of Contracts)," No. 47, i Ith February, 1898 ;
■2>.,d. (P. S. King& Son.)



THE FABIAN SOCIETY 243

within the London district. In the whole of the building
trades, for instance, which include seven-eighths of the work
done for the Council, the trade-union rate of wages has been
solemnly agreed to in a formal treaty between the London
Building Trades Federation and the London Master Builders'
Association. So far as the organized skilled trades are
concerned, the Council has not attempted to do more than
place itself on a line with the common average of decent
employers.

With regard to unskilled labour, the case is more difificult.
Here, in most cases, no generally recognized trade-union rate
exists. The Council has accordingly taken the position that
it is undesirable, whatever the competition, that any of its
employees should receive less than the minimum required
for efficient and decent existence. Seeing that Mr. Charles
Booth places the actual " poverty line " in London at regular
earnings of 21s. per week, it cannot be said the Council's
" moral minimum " of 24s. for men and 185-. for women errs
on the side of luxury or extravagance. But, unlike the
Council's wage for skilled workmen, it is more than is actually
paid by many conscientious employers ; and it is undoubtedly
above the rate at which the Council could obtain such labourers,
if it chose to disregard all other considerations.

The labour policy of the London County Council, whether
with regard to skilled or unskilled labour, may be explained as
the deliberate choice of that form of competition which secures
the greatest possible efficiency, as compared with the form
which secures the greatest apparent cheapness. Public offices
may be filled in one of two ways. We may, on the one hand,
practically put the places up to auction, taking those candi-
dates who offer to do the work for the lowest wage ; or, on the
other hand, we may first fix the emoluments, and then pick the
best of the candidates coming forward on those terms. When
we want brain-workers of any kind, every one agrees that the
latter policy is the only safe one. We do not appoint as a
judge the lawyer who offers to take the place at the lowest



244 MODERN SOCIALISM

rate. No one would think of inviting competitive tenders
from clergymen as to the price at which they would fill a
vacant bishopric. And a Town or County Council which
bought its engineer or its medical officer in the cheapest
market would, by common consent, make a very bad bargain.
In all these cases we have learnt, by long and painful expe-
rience, that there is so much difference between competence
and incompetence, that we do not dream of seeking to save
money by taking the candidate who offers his services at the
lowest rate. Unfortunately, many worthy people who realize
this aspect of brainwork, because they belong themselves to
the brainworking class, are unconscious that it applies no less
forcibly to mechanical labour. They will pay any price for a
good architect, but are apt to regard bricklayers and masons
as all equally " common workmen." The consequence is that,
owing to the extraordinary ignorance of the middle and upper
classes about the actual life of the handicraft trades, it has
gradually become accepted as good business that, though you
must take all possible trouble in choosing your manager, it is
safe and right to buy wage labour at the lowest market rates.
But, as a matter of fact, there is as great a relative difference
between one painter or plasterer and another, as there is
between one architect or manager and another. If the
pressure of competition is shifted from the plane of quality
to the plane of cheapness, all economic experience tells us
that the result is incompetency, scamped work, the steady
demoralization of the craftsman, and all the degradation of
sweating. When a man engages a coachman or a gardener he
understands this well enough, and never for a moment thinks
of hiring the cheapest who presents himself. Even the
sharpest-pressed employer does not entrust expensive
machinery to the mechanic who offers to take the least wages.
The London County Council, realizing it more vividly than
some bodies less in touch with the actual facts of industrial
life, applies the principle all round. Whether the post to be
filled be that of an architect or a carpenter, the wage to be



THE FABIAN SOCIETY 245

paid is first fixed at a rate sufficient to attract the best class of
men in the particular occupation. Then the most competent
candidate that can be found is chosen. Competition among
the candidates works no less keenly than before ; but
it is competition tending not to reduce the price, thereby
lowering the standard of life throughout the nation, but
to enhance efficiency, and thus really to reduce the cost of
production.

With regard to the lowlier grades of labour a further con-
sideration enters in. It may be economically permissible,
under the present organization of industry, for a private



Online LibraryR. C. K. (Robert Charles Kirkwood) EnsorModern socialism, as set forth by socialists in their speeches, writings, and programmes; → online text (page 23 of 35)