Rationalisation and Unemployment. (1929)

From the June 1929 issue of the Socialist Standard

We were amused last year when the Government started to solve the problem of the 250,000 out-of-work miners by transferring them from the mining areas where there are no vacant jobs, to those places where there are vacant jobs. This would have been simplicity itself if there had been any such places, though in that event it would not have been necessary to set up an Industrial Transfer Board to coax the unemployed man to seek the vacant job. Some 20,000 have been transferred, and nobody knows how many of these have been thrust into jobs which were not vacant.

We suspect, however, that the politicians responsible for that venture were not greatly concerned about its success or failure. While it was useful for election purposes, the existence of an unemployed army of a million or so does not, and need not, cause sleepless nights to the Capitalist class or their politicians as long as the workers in the main, whether in work or out, accept as a necessity the Capitalist system of which unemployment is but one feature.

There are, however, many people whose sympathy for the unemployed is beyond question, but whose remedies for the problem contain just that same silly fallacy. They treat each industry or each country as if the workers in it alone suffered from unemployment. By disregarding the same problem due to the same causes in every other industry and country, they are then able easily enough to solve the problem by the simple device of transferring the unemployed in industry A to industries B, C, and D, and by emigrating the surplus population of country Z to countries X and Y.

The Unemployed Miners.

The Labour Party proposes to put the mining industry on its feet again by nationalising and reorganising it. The elimination of wasteful and inefficient methods, both on the productive and marketing sides, will enable it to regain its lost world markets and develop new ones, including the supply of coal for the manufacture of bye-products. This is the theory.

Our first criticism is that competing mining industries in Europe and America are busily doing the same thing, and the relative position of each will be more or less the same after the process as it was before. Each will be more efficient and all will be faced with the same problems as now.

The main point is that greater efficiency does not solve the problem of unemployment.

Between September, 1924, and September, 1928, the number of miners employed decreased from 1,082,340 to 859,259, and over that period the output per man shift rose from 17.33 cwts. to 21.13 cwts.

Thus the fall in numbers employed far exceeded a fall in total output. (See Ministry of Labour Gazette, February, 1929.)

The Bulletin of the International Management Institute (Geneva, June, 1928) gives an illustration of the similar effects of rationalisation in a German group of mines. Between 1924 and 1927 the output per man rose by 60 per cent., the total coal output and sales rose by 10 per cent. and the number of men employed fell by 31 per cent. from 6,942 men in 1924 to 4,815 men in 1927. More work done by fewer workers. Unemployment resulting from greater efficiency.

Mr. Baldwin, speaking at Cardiff on May 15th, stated that the output per man in the South Wales mines “was 18 per cent. more than in a good year before the war.” (“The Times,” May 16th.)

Then Mr. H. N. Brailsford, after observing this process at work in America, offers his contribution towards a solution. Writing in the “New Leader” (January 4th, 1929), he suggested a simple remedy. If, he says, we develop the “home market,” this would

create a call for labour, especially in agriculture, which would soon absorb the surplus thrown idle by the progress of rationalisation (notably the miners).

So the miners “rationalised” out of the mines must go on the land. Good !

Putting the miners on the land.

But if Mr, Brailsford had looked a little further afield in the U.S.A., he would have observed that, owing to various causes, not ably “rationalisation,” the number of men forced out of U.S.A. agriculture is enormous. The March, 1928, issue of the Review of the National City Bank of New York states that during 1926 alone, “the net movement from agriculture to the cities . . was approximately 1,000,000.” Nevertheless, the supply of wheat is in excess of effective demand, and wheat growers have been faced with the “greatest slump of recent years.” (See “Manchester Guardian,” May 9th.) The New York correspondent of the “Daily Telegraph” (May 22nd) said that the only solution for this glut was a “poor harvest” this year.

In this country we have been told that the decline in wheat and other arable cultivation can be offset by the development of dairy farming. This in itself means a vast decrease in the number of men per acre, as arable land is put under grass.

The effect of rationalisation in agriculture is the same as in any other industry, and the same in every branch. To take one instance alone, the ordinary farm milk-hand can milk and attend to 8 or 10 cows. Mr. R. Borlase Matthews, the noted writer on agriculture, tells us (“The Times,” June 6th, 1927) that with electric power and mechanical milking machines 150 cows can be tended by 3 men, whereas without these mechanical aids at least 15 would be needed. Thus the farmer increases the productivity of the farm and sacks some farm hands.

Agricultural Productivity.

The output of agriculture in England and Wales in 1925 was £225 million.

After allowing for price changes, this was the same as in 1908. (See “Agricultural Output of England and Wales, 1925,” Cmd. 2815, p.78.)

In the meantime, there had been a great decrease in the number of persons employed in agriculture and a great increase in the use of machinery.

Owing to changes in method of compiling statistics comparable figures are not available, but the decrease in persons was almost continuous and was very large. The following figures are taken from official sources and are reproduced in “Land and the Nation" (p. 146). This is the Rural Report of the Liberal Land Committee.

Between 1911 and 1921 the number of men and boys over 15 fell from 1,267,000 to 1,212,000. (These figures include farmers, small-holders, etc.) The decrease between 1871 and 1921 was 154,000. Between 1908 and 1913 the number of employees (excluding farmers’ sons, etc.) fell from 722,000 to 651,000. And between 1921 and 1924 the number of employees (including farmers’ sons, etc.) fell from 859,000 to 802,000. (See “Land and the Nation,” p. 146.)

The number of young men fell by 16 per cent. between 1924 and 1928 (Sir Daniel Hall in “Daily Telegraph,” January 24th, 1929).

On the other hand, the number of agricultural engines in use in England and Wales rose from 17,331 in 1908 to 83,535 in 1925. (See “Agricultural Output,” p. 108.)

Petrol or oil engines rose from 6,911 to 56,744 in the same period.

What about Denmark?

Mr. T. Shaw, Minister of Labour in the Labour Government, wrote in the “Morning Post” (February 18th) setting out his views on unemployment. He saw the solution in rationalising agriculture and making it efficient in all its branches, like agriculture in Denmark. How futile is the remedy is shown by the figures of unemployment in that country. The Ministry of Labour Gazette for January shows that the percent age of unemployment in Denmark on November 30th (the latest figure available) was no less than 17.6 per cent. as compared with 11.7 per cent. in this country.

Conditions in America.

Then we have “experts” here and in the U.S.A. who tell us that this increased productivity and consequent reduction of staff in productive industry and agriculture need not disturb us, because the displaced men will find work in commercial and financial occupations. Thus, Mr. Herbert Hoover explains in the Fifteenth Annual Report of the U.S.A. Secretary of Commerce, how the men displaced from industry have been absorbed in “distribution” and in “professional” and “personal” services. This would be a plausible explanation of the absence of unemployment in the U.S.A. if, in fact, unemployment were absent. Unfortunately, there is heavy unemployment, and what is required is a theory explaining the existence of unemployment, not a theory explaining its non-existence.

The American Federation of Labour reported early last year that 18 per cent. of its members were out of work, and that on this basis they estimated unemployment amounting in all to six million (“Daily Telegraph,” April 3rd, 1928).

In this country we have Lord Ebbisham, President of the Federation of British Industries, admitting that rationalisation in the productive industries produces unemployment, but assuring us that the men relieved of jobs can go into commerce, finance and marketing. (See “Morning Post,” January 14th.)

Put the landworkers behind the counter.

So our miners who have been placed on the land by Mr. Brailsford, and then rationalised off the land, must look for salvation in the banks and the distributive trades.

Lord Ebbisham, when making this statement, of course overlooked the fact that there is already 6.4 per cent. of unemployment in the distributive trades (See Ministry of Labour Gazette, April), and that the recent rapid extension of the use of automatic machines of a large type has brought forth protests from shop assistants and small shopkeepers that their livelihood is being threatened still further. Recent amalgamations of big departmental stores have been accompanied by considerable economies in staff. In addition, it must be remembered that small shopkeepers, crowded out by the stores, are not entitled to un employment pay, and so will, in many cases, not register as unemployed.

What shall we do with the Bank Clerks?

And the Bank Clerks are also playing this great game of General Post. They, too, are being “rationalised.”

Mechanical ledger-posters and other machines are being installed with the result not only that staffs will be decreased, but scales of pay also. Mr. Clegg, President of the Bank Officers’ Guild, anticipates the reorganisation of the bank staffs in two grades, “the administrative being a small, well-paid body, chiefly of directors’ nominees, and the clerical a large and not well-paid body.” (“The Times,” May 20th, 1929.)

Two of the five big Joint Stock Banks have already decided on complete mechanisation, and the others are expected to follow suit in the immediate future. The “Daily Express” (May 8th) sums up the position in the following words : –

 The bank clerks of past generations will disappear and machine hands will take their place. . . . Bank clerks are naturally apprehensive. The introduction of the new machines opens up the prospect of wholesale unemployment.

In an interview reported in the same issue, the Secretary of the Bank Officers’ Guild told a “Daily Express” representative that

  two girls can easily perform the work of five or six men with the help of the machine …. The Midland Bank already has a considerable surplus staff as a result of the adoption of mechanical methods.

Let us all be Civil Servants.

But this problem, too, has been “solved.” In August last year, the “New Leader” had been explaining how the I.L.P. proposed to nationalise and make more efficient the banks of this country. A correspondent had claimed that “enormous economies could be effected.” This led to a Bank Clerk’s wife writing to ask what was going to happen to the bank clerks whose jobs were economised out of existence. (“New Leader,” August 24th, 1928.)

The Editor of the “New Leader” replied that the bank clerk’s wife need not worry, because the redundant staff “could usefully be incorporated in the Civil Service, which would require to be extended by the development of social activity in many directions.”

So our miner, after a brief sojourn down on the farm, and a briefer passage through a bank, will land eventually in the Civil Service, somewhat puzzled, but doubtless still trusting in the wisdom of his various leaders and still hopeful of a permanent resting place soon.

What shall we do with the Civil Servants?

It is, however, hardly necessary to add that the replacement of men by machines, and their displacement owing to the elimination of wasteful methods, goes on just as inevitably in the Civil Service. Foot-postmen are being replaced by a smaller number of motor-cyclists and motor-vans; the indoor handling of parcels is economised by the use of mechanical conveyors ; automatic telephone exchanges make the employment of telephone operators less and less necessary. For many years the total volume of old and new varieties of work in the Post Office has been increasing more rapidly than the size of the staff. The output per head is rising just as in the mines, and factories generally. The constant extension of Post Office work is offset by the increased demands made on the workers–and the machinery which is revolutionising banking is also being introduced into Government Departments.

The Conservative Government stated their intention of appointing a Civil Service Royal Commission to enquire into various questions. “The Times” then pointed out that

  there are many members of the House of Commons who believe that an inquiry of this kind might lead to a reduction in the number of civil servants (26 April, 1929).

So that prospects in the Civil Service look no more rosy than outside.

The Films and the "Talkies.”

Then we find our old friend Lord Ebbisham going a step further in his study of the problem. On Wednesday, May 1st, he addressed the Federation of British Industries on the trade prospects. He said that the falling-off in the pre-war basic trades had been offset by expansion in distribution services.

  Then there was the increased demand for entertainment and amusement, resulting largely from the post-war reduction in hours of employment. (Report in Times, 2 May, 1929.)

So now our ex-miner farmhand-bank-clerk-Civil Servants are to pin their hopes on the entertainment industry. The first objection is that although shorter hours may increase the time available for going to cinemas and theatres this is not of much use to unemployed men, who cannot afford the price of entry. But what is more to the point is that rationalisation is vigorously attacking the entertainment industry too. The percentage of unemployment in “Entertainments and Sports” is 11.1 per cent. (See Ministry of Labour Gazette, April.) Theatres are complaining more and more of their inability to compete with cinemas, and for many years now the unemployment among actors and variety artistes has been appalling. The latest development – the “talkies” – has spread consternation among the cinema musicians as cinema after cinema dispenses with its orchestra. The “Evening News” (April 30th) contained the following : –

  While all the talkie-talkie among the moneyed friends and the equally well-to-do opponents of the voice film is going on, there is a silent and melancholy drama happening in London.

 Cinema musicians are, orchestra by orchestra, being told to pack up their bows and violins, their ‘cellos, and all the rest and take formal notice of “the sack.” Most of them are accomplished players to whom the cinema seemed to promise a lifetime of steady work.

  Now the majority, scrapped by the talkie, do not know where bread and butter is to come from a few weeks hence.

  An orchestra recently played, brilliantly, behind closed doors a record for a British talkie that, when it is developed in America and sent back here for exhibition, will throw that same orchestra out of its job, and will circulate all over the country and similarly displace other orchestras.

The Musicians’ Union held a meeting to discuss the question on Wednesday, May 15th (See “Evening Standard” of that date.) Here it was pointed out that the new methods had the effect not only of causing unemployment, but also of lowering the salaries of those who succeeded in keeping their jobs. An official of the Union also made a very telling point. The Home Office have, in the past, kept alien musicians out of the country on account of unemployment. The official said : –

  An alien musician throws only one British musician out of work ; one ‘talkie’ may put a hundred out of work.

It is true, of course, that the declining demand for cinema actors and actresses who have not suitable voices is offset by the demand for others who have, but, in America, the home of the movies, unemployment is already widespread among actors. In January it was stated that there were nearly 9,000 unemployed in New York alone.

Miss Lya de Putti, the famous film star, also points out (“Evening Standard,” May 20th) that

  as crowds are not required in many talking films, “extras,” too, are being thrown out of work in hundreds.

Mr. Lawrence Wright, in a letter to the “Morning Post” (May 20th) on the “talkie” threat to the employment of musicians in the 10,000 cinemas of this country, stated that the “talkies” in the U.S.A. had “precipitated the most shocking unemployment among musicians in America.”

Good news for cigarette makers. 

The next move is obviously with Lord Ebbisham. One thing, however, he must not do. He must not try to put the ex-musicians at work making cigarettes. A representative of the “Daily Telegraph” (May 3rd, 1929) witnessed a demonstration of a new machine installed at the factory of the General Tobacco Co., St. Luke’s, London.

 It was said to be the first of its kind in Great Britain capable of converting tobacco into the finished cigarette—plain or tipped—in five seconds, and at the record speed of 1,200 a minute. Only three persons were required to tend the machine, with an output equal to 700 workers under old methods. Another machine, which was also said to be the first installed in this country, was a cutter run by one man which turned out sufficient material to keep three of the cigarette machines going at the rate of over 200,000 cigarettes an hour.

Having got so far, and while we await further brilliant solutions of the problem, what about making work for the redundant Civil Servants by setting up another department to transfer the unemployed ex-miner-farm-labourer-bank-clerks to the pits, while the Industrial Transfer Board transfers them back again. Then the unemployed musicians can play them along the road, both ways ! One improvement, at least, there promises to be. Mr. Lloyd George’s road schemes would certainly facilitate the movement and counter-movement of the unemployed at the hands of the Transfer Board.

A question for the employers.

When these undeniable facts showing the displacement of labour by machinery are brought to the notice of the employers and the professional apologists for Capitalism, they usually fall back on two arguments.

First they reply that machinery reduces costs and prices, and that lowered prices result in bigger sales, which render unnecessary the dismissal of staff. But their actions do not square with what they profess to believe. Lowered prices will, it is true, generally speaking, result in increased sales, but if the increase were sufficient to require the employment of the whole of the former staff, why do the employers ever dismiss workers when installing labour-saving machines?

The employers could demonstrate their belief in their theory by pledging themselves not to decrease their staff, something they will certainly not do.

Their second argument rests on the belief that when men are displaced by machinery an equal number of additional men are required in the machine-making and allied industries. This ignores the effects of labour-saving also applied in these branches of production. Again the facts belie the theory.

The Ministry of Labour Gazette (April, 1929) reported the following percentages of unemployment at the end of March in industries directly concerned in the making of machinery. Engineering, 8.1 per cent.; Iron and Steel Manufacture, 17.6 per cent.; Tinplate and Steel Sheet industries, 23.7 percent.

The following brief announcement gives point to our contention : –

 Two hundred workers at Dowlais steel-works are on notice to terminate their employment owing to the introduction of new machinery (Daily Herald, May 8th.)

In the cotton industry a new automatic loom is being introduced so simple in its mechanism that one man can operate 25 looms in place of the present average of one man to 4 looms. The new looms will run for an hour or more without attention, and it is recognised that “dislocation of labour conditions would inevitably follow any large scale introduction of such a revolutionary piece of mechanism.” (See “Daily Telegraph” and “Manchester Guardian,” May 13th.) But even should there be a big demand for these and other machines, the existing capacity of the machine manufacturing plants is already well above demand, and they are, in consequence, not working full pressure. In spite of the recent growth of artificial silk production and the resulting demand for machinery, John Hetherington & Sons, Ltd., the textile machinery manufacturers, lament the “deplorably intense competition in the textile machinery industry.” (See 1928 Annual Report, “Observer,” May 12th, 1929.)

The truth is that unemployment is a feature of Capitalism as such, and cannot be solved in one industry or country while Capitalism remains. So long as the Capitalist class own and control the factories, the land, the railways, the cinemas and so forth, they will continue to operate them for profit. They will continue to decide when to have them working and when to close them down. They will decide how many men they will employ and they will go on under the pressure of home and foreign competition reducing costs by installing labour-saving machinery and thus adding to the army of unemployed.

So great is the wealth of the possessing class that their necessities, their luxuries and their charitable gifts leave them with a vast and increasing surplus out of income which they must needs re-invest. The productivity of the wealth-producers increases more rapidly than the spending of the Capitalist class. Goods are left unsold, and more and more wealth is re-invested, thus further increasing the volume of production.

Constantly more wealth is turned out by fewer workers, and the unemployed are compelled to fall back on private and State charity for their subsistence.

No “remedy” for unemployment is worth considering which leaves untouched the private ownership and control of the means of production and distribution, and leaves the workers dependent for their livelihood on the possibility of goods being sold at a price profitable to their masters. The Socialist remedy is the common ownership of the means and instruments for producing wealth, and the production of goods for the use of the members of society in place of production for sale and private profit. There is no other solution of the unemployment problem.

Edgar Hardcastle