Editorial: Is the Living Wage sound? (1927)

Editorial from the March 1927 issue of the Socialist Standard

“The Living Wage” is a pamphlet written by H. N. Brailsford, J. A. Hobson, A. Creech Jones and E. F. Wise, and published by the I.L.P. It takes the form of a report submitted to the National Administrative Council of that party.

The opening chapter is entitled “The place of Wages in a Labour Strategy,” and is chiefly concerned with an attempt to strike a balance between the industrialists, on the one hand, and the political socialists, so-called, on the other. The latter, we are told, hope to tackle the problem of a living-wage, gradually, by nationalising, as occasion offers, the more essential industries one after the other.

“The New Leader,” 21.1.1927, page 7, devotes a column to proving that nationalised industries are run on business lines equal to anything under private enterprise. Expenses are cut down to a minimum, both in the number of employees and the wages paid. It would appear, therefore, that the I.L.P. have sufficient evidence to prove that the workers under nationalised institutions are no better off than those under ordinary capitalist concerns. At any rate, the enquiry now going on into the question of wages and conditions of Post Office employees should cause them to hesitate before accepting nationalisation as a means to raise wages or improve conditions for the workers.

But the writers of this pamphlet do not base their ideas on facts. To them nationalisation stands for Socialism, and Socialism stands for State control of all industries. According to them the workers remain wage-workers, living by the sale of their labour-power, whatever changes may take place; consequently they say :

“That to nationalise important industries in conditions which resemble those which prevail to-day would be a disappointing and even perilous proceeding.” (p. 3.)

We can now see the necessity for “labour strategy,” industries must only be nationalised by a Labour Government, when the possibility of raising wages will gain for them additional political kudos. How futile, even, such a policy as this would be is shown by the writers themselves :

“The industry of coal-mining is overmanned, and is carrying to-day a burden of surplus labour of anything over 100,000 men. A national administration would have to make its choice. It might maintain the uneconomic pits, risk the consequences of over-production, and continue to carry the burden of this surplus labour. In that case, it would either pay low wages or require a subsidy. The other alternative before it would be to close down the uneconomic pits and turn a big body of men adrift.” (p. 4.)

Exactly ! A Labour administration, neither elected for, nor understanding Socialism, would have to face the same responsibilities as the present capitalist Government. They would have to ensure the normal working of the system, including the exploitation of the class they pretend to represent. They could not excuse themselves for extravagance in administration because they have always preached economy in this respect in the workers’ interests. To the industrialists the writers say :

“Labour when it sells itself as a commodity in the market must usually accept a price which varies according to its scarcity.” (p. 6.)

While this statement is incomplete and unscientific in itself it is, nevertheless, an admission that wages are not determined by “public opinion” or “ethical principles that have been generally accepted.” In the body of the pamphlet there is a good deal of absurdity along these lines. All that kind of sentimental nonsense vanishes before their grudging admission that :

“In the last resort it is on the organised refusal of men to work for less than a living wage that our hope of securing it lies.’ (p. 7.)

It will be seen from the quotation in reference to coal mines that the writers appear to be impressed with the idea that capitalists are confronted with grave difficulties in the business of making profits. Hence a large portion of the pamphlet is devoted to assisting them with advice on (1) the reorganisation of industry, and (2) how to create a market.

It is now generally accepted that the enormous increase of unemployment in recent years is due to the extended application of machinery and labour-saving devices and methods. Yet the writers specifically stipulate that reorganisation of industry and mass production is a necessary condition of higher wages. They ignore the fact that in order to pay higher wages numbers of workers must be dismissed. They admire American methods, especially Ford’s, and seriously advise British capitalists to follow suit. They use the following figures as evidence of American prosperity :

“Mr. Hoover, in the annual report of his department for 1925, has published an official analysis of American prices and wages. Taking 100 as the index of the year 1913, he shows that wholesale prices had risen in 1924 to 150, while wages had risen to 228.” (p. 48.)

To understand the significance of this quotation we must first of all recognise that the workers’ improvement does not commence until his wages have reached the 150 mark. Moreover, he must buy his necessaries at retail prices, which will be much higher. The difference in 1924 was, therefore, only 78 minus the difference between wholesale and retail prices. However, this difference applies to the average worker when lucky enough to be employed. No account whatever is taken of unemployment and its increase resulting from the reorganisation. When reckoning the workers’ share of the national income, the writers should have expressed it as a proportional fraction of the total and not as the average wage of those workers lucky enough to be fully employed.

The facts regarding the Ford methods and the relation of production to wages were dealt with in the S.S. for December, 1926, and need not be repeated here. These facts show conclusively that mass production everywhere returns far less in wages per unit of production, and that it depends upon progressively doing this for its success as a business concern.

The contention of the writers that the higher wages of mass production constitute a market, becomes a myth when we realise that the total wages bill is actually reduced by this method.

The writers, however, do not rely entirely on reorganisation to bring about their eldorado. They have two further reforms. First, “An enlightened credit policy,” and second, “family allowances.” The object of the first, we are told, is to stabilise prices and employment.

“At the first distant signs of a slump, it must be the duty of the bank slightly to expand the volume of credit and to lower its price; at the first distant signs of a boom, it will gently apply restrictive measures. Our assumption is that in this way the price level can be kept steady, and the general level of employment constant.”

Their object is clearly stated. It is to wipe out the fluctuations in trade ; to reduce trade and consequently production and employment to its mean level. But there is no more water in the sea when its surface is calm than when it is boisterous. Trade is not increased by restricting it when it is inclined to rise and encouraging it when it flags. The volume remains the same. It is only the fluctuations that have been wiped put.

The second reform is easily seen to be useless as a means to increase the purchasing power of the workers. Capitalists and capitalist governments understand business methods too well to be induced to pay for the same thing twice over. If they keep the children by increased taxation through the State machinery, wages can be reduced to the cost of keeping man and wife.

This is clearly shown in the pamphlet under review. A scheme drawn up by an Australian Federal Commission is instanced. The Commission estimated the weekly sum necessary for a family of 5 persons to be £5 16s. When it was shown by the Federal Statistician that such a sum would absorb all profits, the Commission reviewed their figures and suggested a wage of £4 for man and wife with an allowance of 12s. for each dependent child.

Here, then, is an actual case, quoted by the writers themselves, where a Commission evidently favourably inclined towards the workers, did exactly what the capitalist would be expected to do. Moreover, it is obvious that the writers have this result in mind all the time. They say :

“It is important to note that family allowances provide the only hopeful method of realising the ideal of ‘equal pay for equal work’ as between women and men. There would, for example, be no reasonable objection to equal salaries for men and women teachers if the children of married teachers were provided for in this way.” (p. 26.)

In other words, the salaries of men teachers could be reduced to the level of women if they were relieved of the responsibility of keeping their children.

The net result of the three reforms : reorganisation of industry, stabilisation, and family allowances, so far as the workers are concerned, is a balance on the wrong side. Reorganisation increases unemployment, stabilisation does nothing, one way or the other, while family allowances merely reduce the employers’ wages costs.

But the futility of the reforms is nothing compared to the harm done to the workers by the publication of the work. Apart from the confusion it engenders, the real relations of capitalists and workers, the class antagonism, is glossed over and smothered. It puts on one side the opposing interests of the two classes and holds out the bait of a prosperous industry that will enrich capitalists and keep the workers fully employed.

It is an attempt to persuade the workers that it is possible so to reform the capitalist system that there will be no occasion to work for its abolition. Under mass production, stabilisation, and family allowances, the workers would find their interests identical with their masters’. Yet the writers of this work call themselves “Socialists.” If they have not written it with the deliberate intention of confusing the workers, they should begin at once to try and understand what Socialism means.