Workers as shareholders (1986)

From the December 1986 issue of the Socialist Standard

In preparation for the next general election the Tory Party is popularising the idea of worker-shareholders as part of that party's long-held vote-catching conception of a "property-owning democracy". From the earliest days of capitalism the rich and governments have always urged the workers to work hard, be loyal to their employers, live prudently, save money and never get into debt. The advice also included warning them to put the money in a safe place such as the Trustee Savings Banks or. in 1861. in the newly established Post Office Savings Bank. The one thing they were advised not to do was to enter the risky field of company shares.

But times change and the advice also. Every inducement is now given to getting into debt by buying on credit. Working hard and being loyal to the employer remain, but nowadays this calls for more sophisticated methods. At all times the motives behind the advice have been the same. Workers who followed the advice would, it was thought, be better profit-producers for their employers, would be less likely to fall into destitution and become a burden on the rates.

In the middle of the nineteenth century few workers were able to save anything. British capitalism was booming but the wages of most workers were at bare subsistence level. Only skilled workers could put anything by. But it was only out of their own resources that any workers could make provision for sickness, unemployment and old age, or the cost of funerals. What provision some workers could make was through membership of the Friendly Societies and trade unions. (This and other information will be found in Paul Johnson's Savings and Spending: The Working Class Economy in Britain 1870-1939).

As Paul Johnson says, few workers even troubled about what they would live on in old age because they did not expect to live long enough Only the trade unions had provision for unemployment but as late as 1911 Lloyd George reckoned that not even ten per cent of the working class were covered for it. As the trade unions grew in membership and effectiveness, in the second half of the century. wages steadily increased and savings also. Between 1870 and 1914 the number of depositors in the Post Office Savings Bank and Trustee Savings Banks grew from 2,500,000 to 11,000,000. Yet in 1911 it was reckoned that the total assets of adult workers were only £11.10p a head — just enough to cover two months' unemployment or sickness.

Since 1945 conditions have altered in various ways. The purchasing power of workers' take home pay (after deductions of PAYE and NI contributions) has continued to increase and is now well above the level of 1938. Workers' savings have grown but the ownership of accumulated wealth of all kinds remains highly unequal. The Royal Commission on the Distribution of Wealth and Income, in its report in 1975, found that the top twenty per cent of adult population owned seventy-eight per cent of the wealth and the bottom eighty per cent of the population only twenty-two per cent of the wealth. One new factor has been the payment of £10,000 million redundancy pay to workers who have lost their jobs, producing the somewhat novel feature of unemployed workers having, for a time, cash at their disposal. It is against this background that the Tory Government launched its programme for a property-owning democracy. This included a change in the law enabling council house tenants to buy their houses at prices below the market rate. The Tory Election Manifesto 1983 said. "There are a million more owner-occupiers today than four years ago".

Other items in the Tory programme have been encouragement to companies to introduce "profit sharing" to their workers and schemes to increase the buying of shares by workers. In the "privatisation" of British Telecom and other nationalised industries shares have been issued at prices below market rates, with preference to employees to buy shares. The result has been that those who acquired shares saw an immediate big rise in their stock-exchange price. According to the British Market Research Bureau the proportion of individual shareholders among the adult population has more than doubled in the past two years, to about 16 per cent. The British Telecom share issue is reported to have attracted about a million investors who had never owned shares before, including a large proportion of the firm's employees.

The latest government scheme (still in its discussion stage) aims to encourage companies to make agreements with their workers to have part of their wages related to the ups and downs of profits. Instead of an agreed wage of. say, £10,000 a year (£192 a week) there might be a basic rate of £8,000 (£154) plus a share in profit. In an average year the profit share would be £38 which, with the basic £154. would give £192 as before. If profits rose, the total would be above £192 but in a bad year the worker would receive only the basic £154. The inducement to the worker would be that some part (half has been suggested) of the profit element of pay would be exempt from PAYE deduction, worth about £5 a week to a worker on average pay.

The advantage to the employer would be that the workers would have an interest in co-operating to produce maximum profits and avoid strikes, and would make it easier for the employer to adjust costs in times of bad trade. Instead of having to try to reduce wages, the fall in total payments to the workers would be automatic, in the terms of the agreement. However the supposed effect of the scheme to which the government attaches most importance is that it would, in the governments view, encourage employers to take on more workers and thus reduce unemployment, instead of having to pay £192 a week to additional workers the employers' commitment would be only the basic rate. £154. Only if profits again increased would the employer have to pay more than that.

The scheme has received a very mixed reception. The Confederation of British Industry is lukewarm about it and the largest employers' organisation, the Engineering Employers' Federation, is hostile. The Federation doubts whether it would change the workers' attitude towards their employers and whether it would have any effect in reducing unemployment. Among the objections raised to the scheme by employers is that the unions would counter any fall in the profit-related part of wages simply by claiming an increase of the basic rate and that the workers would resist the employment of additional workers because it would mean sharing the profits among a larger number, reducing the amount going to each worker. In spite of the objections, present indications are that the government will go on with the scheme.

The TUC is sceptical and the attitude of the Labour Party is not yet known. But about worker shareholders the Deputy Leader of the Labour Party. Roy Hattersley, has come out in favour. "The extension of employee shareholding . . .  is wholly consistent with the aims of socialism. It is also in the interests of the economic success and social cohesion of the country" (Observer 16 March 1986). Whether or not the government really believes that their various schemes for a property owning democracy will make any difference to the way capitalism operates, it is certain that they will feature prominently at the next general election, in confrontation with the Labour Party's attempts to revive the lagging popularity of nationalisation by giving it the new name "Social Ownership"

The Labour Party will claim that, in selling the nationalised industries to raise revenue and to make possible a reduction of income tax, the Tories have been guilty of a profligate misuse of "public property". The Tories will retort that a Labour government, with its plans for a vast increase of government expenditure, will have to raise income tax drastically and that employee share ownership “is the truest public ownership of all" (Tory Election Programme 1983).

The Tories will make the most of the Labour Party's declared intention of government action about the shareholders in British Telecom. At present the holders of shares in British Telecom and other privatised industries are seeing a big increase in the stock exchange price of their shares. A Labour government will offer to these shareholders the option of selling the shares to the corporation only at the lower price paid for them, or of having Consumer Bonds which will not carry voting rights.

Of course, by the time the election comes round the stock exchange price of British Telecom and British Gas shares (under the impact of increased competition) may have fallen below the present price. But if the stock exchange prices keep up to the present high level, the Tories will represent the Labour Party's taking over of the shares as an act of "robbery of the workers' savings".

The Tories will not have forgotten what happened at the general election in 1931. The Labour government had collapsed, with the Labour Prime Minister. J. R. MacDonald and his Chancellor of the Exchequer. Philip Snowden, joining a National government with the Tories and Liberals. The Labour Party lost heavily in votes and seats and political commentators said that a major factor in their defeat was a broadcast by Snowden asserting that if a Labour government were elected it intended to "rob the Post Office Savings Bank" in which the workers had their savings.

Edgar Hardcastle

Letter: Co-partnership, Fact or Fantasy? (1962)

Letter to the Editors from the July 1962 issue of the Socialist Standard

‘John Lewis’ replies

Dear Sir,

In the article in your March issue on Co-Partnership—with particular reference to the John Lewis Partnership—there are so many statements which are not in accordance with the facts, that I should be grateful if you would publish this letter in order to correct the quite erroneous impression which your article might create.

The Partners—and the definition you quote is a perfectly happy one, “persons associated with others in business of which they share risks and profits’—are, in fact, joint owners. All the ordinary share capital—the equity—of all the companies is held, either directly or indirectly, by the John Lewis Partnership Trust Ltd. on behalf of all members of the Partnership. You say “the workers in the J.L.P. no more share the profits than do the employees of various concerns who have in recent years taken up the idea known as profit sharing”, This is palpably and demonstrably untrue. Several companies in recent years have issued shares to their employees as a means of profit sharing, but the number of shares so issued is fixed arbitrarily by the Board concerned and the balance of the profit is distributed amongst the holders of the ordinary shares, who may be, and usually are, members of the general public. In the J.L.P. none of the general public can own a J.L.P. ordinary share—they are all held in trust for the “Partners ’—and all of the profit that would otherwise go to ordinary shareholders goes, under irrevocable settlements in Trust, in one way or another to the Partners themselves.

You go on to say that ’’the so called profits are no more than part of their wages—a bonus and an incentive for harder work”. Entirely untrue. The J.L.P. pays wages which are at least as high, if not higher, than their competitors pay and this sharing of profits is something entirely additional and is given pro rata according to their salaries whether they work harder or not. This is pure profit which in most other businesses would go to outside shareholders. It is not irrelevant in this connection to note that last year profits distributed to Partners or applied; for their benefit amounted to £1,500,000—a sum of money which could, had the Founder of the J.L.P. —Mr. J. Speden Lewis—decided to retain the business himself, have gone into his own pocket or, had he decided to float the Company in the normal way, into the pockets of outside shareholders of ordinary shares.

You dismiss gaily the amenities which the J.L.P. offers on the grounds that most of the amenities are also offered—and sometimes bettered—by their competitors. This clearly is no place to go into the detailed merits of amenities offered, but it can be confidently stated that no other comparable organisation offers better or even as wide a scope of amenities. Virtually every type of leisure time activity both intellectual and sporting is catered for and subsidised, e.g.. music, drama, chess, painting, sailing and all normal sporting activities. In addition there are residential clubs at Cookham on the Thames, at Stockbridge in Hampshire and at Liverpool. Partners can also buy subsidised tickets for operas, plays and concerts.

You seem to find it strange that Partners should be prosecuted for alleged dishonesty. This is quite incomprehensible. If, for example a Partner steals, that Partner is stealing from his fellow workers—universally regarded as being one of the most despicable forms of anti-social behaviour. It is surprising that it appears that you take exception to such a course of action.

The committees and councils of the J.L.P. are, you say, “supposed to be democratic bodies but in fact have a large percentage of members nominated by management and in every case are nearly always biased in favour of management This is particularly true of the General Council of the firm". Here the figures speak for themselves. In the Central (Not General) Council of I36 members, 28 are “nominated” by the management and 108 are freely elected by the members of the Partnership.

Legal ownership of the Partnership is vested not in ’’the Board of Directors and the Chairman”, but in the Trustees of the Partnership, who hold it for all present and future members of the Partnership. The powers of the Chairman are certainly wide, but they are limited by a written constitution and a breach thereof on his part could lead to his displacement by the democratically elected Central Council.

Despite your remarks that “J.L.P. workers are. if anything, worse off than workers employed elsewhere”, it is a fact that of our 15.000 members. 55%, have been with us over 3 years and 41% over 5 years. They are all at liberty to go elsewhere anytime they please.

The Founder of the John Lewis Partnership has said that the Partnership is a possible advance in civilisation and perhaps the only alternative to communism. Could it be that the success of this experiment has got “under the skin” of the Socialist Standard?

Yours faithfully.

H. C. Pugh

Public Relations Department.

John Lewis and Company Ltd.

Our reply

Mr. Pugh says “there are so many statements which are not in accordance with the facts” that the article on co-partnership might create an erroneous impression. In fact, the only error was our reference to the Central Council as the General Council.

Apparently Mr. Pugh is happy to accept our definition of “partners" taken from the Concise Oxford Dictionary, but he has ignored the important qualification which we were careful to stress. So, let us repeat that partners have definite—tangible-legal ownership in Capitalist enterprises and in the surplus value extracted from their employees. If this is borne in mind, it is quite clear that J.LP. workers have no stake in that concern.

Even accepting the definition from the Concise Oxford Dictionary without any qualifying statement, however it is still impossible to fit J.L.P. workers into the category of “partners" unless you want to go into an “ Alice in Wonderland " realm of fantasy and double-talk. For years now the J.LP. has referred to its employees as partners, even though they have come and gone as in any other capitalist concern and in all that time have had no legal ownership in the firm any more than workers have for example in the nationalised industries.

The fact is of course that the J.L.P. workers, like workers anywhere in the world, sell the only thing they have to sell, their ability to work. The wage they receive for expending their energies on behalf of the J.L.P. takes into account not only the actual money received, but includes the various amenities referred to by Mr. Pugh, and part of this wage is the so-called "profits" which we repeat are but a bonus and an incentive to harder work; it is actually referred to by the J.L.P. as a “general bonus" in various issues of their Gazette. Profit is unearned income—money which is realised by investing in industry and it only goes to those who have the necessary legal title. In other words, to those who possess stocks and shares etc. This obviously has no relevance to the mass of J.LP. workers.

Dividends

Mr. Pugh says that “none of the general public can own a J.LP. ordinary share . . ." by which he presumably means that no one can hold any of the 612.000 deferred ordinary shares of J.L. Partnership Ltd.. 6,995 ordinary shares of the Odney Estate Ltd., and 75 shares of the Leckford Estate Ltd. These are held by the J.L.P. Trustees who are also represented on the J.LP. Board. The implication to be drawn from the above statement apparently is that there is no exploitation of the workers in the J.LP. But Mr. Pugh does not mention the £287,000 paid out as dividends upon the preferred ordinary and preference stocks of the company and its subsidiaries, and no mention is made of the actual amount of debenture interest paid out in 1961. According to the Gazette of 3rd June. 1961 Loans and Debentures amounted to £10,227,619 and the interest of Outside Stockholders in Subsidiaries amounted to £6,841,389.

Mr. John Bedford. Chairman of Debenhams Limited, in an interview given to the Gazette touched upon this. He was asked about the efficiency of the Partnership by comparison with Debenhams. He said he thought "his own group's profitability was higher, but it was difficult to make a comparison without knowing exactly what capital was tied up to produce the Partnership’s results. Debenhams made a return to the Stock Exchange giving such information; the Partnership, he thought, did not."

We have already touched upon amenities, but as Mr. Pugh maintains that no other "comparable organisation offers better or even as wide a scope of amenities", it would be as well to deal with some of his figures. 55% of the 15,000 staff have been with Lewis's over 3 years and 41% over five years. “They are all at liberty to go elsewhere any time they please". Apparently they do so, for these figures from another angle show that out of 15,000 staff, 45% have been less than three years with the J.LP. and 59% have been there less than five years. Making allowance for normal wastage for retirement and other reasons it would seem that quite a large numbercome to Lewis's, find they do not like it, and go elsewhere. If on balance pay and conditions are so favourable in the J.L.P. they should be able to maintain a labour turnover much lower than this.

It can happen, of course, that a firm competes for labour by offering a combination of pay and amenities which really are above the average. What happens in that case is that they get a large number of applicants for vacancies and are able to pick the best: best qualified, best trained, and best from a health point of view. They are, therefore, paying above average wages but getting above average efficiency. The other side of the picture is that some other firms cannot or do not want to compete in this way, so they get the least efficient workers and pay wages below the average. Whether the J.L.P. fits into the latter category is anybody’s guess, but one thing is certain and that is that they do not fit into the first category; the staff wastage figures make that crystal clear.

Special Facilities

Mr. Pugh gives information about the special facilities offered to J.LP. staff. Different firms of course use different attractions. Some offer their employees four weeks holiday, luncheon vouchers, and so on. Other employers are able to offer free or cheap travel. Some workers have free or very cheap accommodation, food, clothes, shoes etc., or loans for house purchase at very low interest rates. But it is only necessary to look at the consequences to see that these are not additions to wages. It is obvious that free travel for railwaymen is a necessary accompaniment of low money wages, and the same thing can be found elsewhere.

Mr. Pugh says that we “seem to find it strange that Partners should be prosecuted for alleged dishonesty." But he has again missed the point we were trying to make. A man cannot steal from himself and the very fact that prosecutions take place means that someone else is the legal owner of the stolen goods, not the J.L.P. workers. Apparently Jones Bros, of Holloway (a member firm of the J.L.P) are under no such illusions as Mr. Pugh. They have installed a buzzer theft trap and anyone caught between two white lines near the staff exit when the buzzer goes, is asked by the watchman to empty his pockets, or may even be taken to a private room to be searched. (See Observer 22-4-62).

Regarding the Councils, in particular the Central Council. Mr. Pugh himself tells us “In the Central Council of 136 members. 28 are ‘nominated’ by the management and 108 are freely elected by the members of the Partnership." The nominated members amount to just over one fifth of the Council; in other words, one in five are there on behalf of the management. In actual fact, as many as a third of the members of the Central Council could be appointed by the management, according to the J.L.P. rules. This still doesn't take into account the very high percentage of management members amongst the "freely elected”. A quick glance through the Gazette reveals that this year's council is no different from previous councils, the majority of them being management employees.

Council representation and the percentage of nominated councillors have in fact been the subject of some discussion on the Central Council only recently. The following was reported in the Gazette of 25th November as part of the discussion of the Central Council:—“Ex-officio members are also a matter of concern to a number of Councillors. Need they be so large a proportion? ” "While they could number over thirty in the Central Council when Rank and File Councillors only numbered thirteen the situation was appalling, said one Councillor.” It can be seen from this that our statements in the article on co-partnership were perfectly correct and that Mr. Pughs’ phrase “freely elected” amounts to precisely nothing.

Says Mr. Pugh “Legal ownership of the Partnership is vested not in the Board of Directors and the Chairman, but in the Trustees of the Partnership . . ." What we actually said—we were referring to the Councils at the time—was that the Councils have no real power and that this is vested as in all capitalist concerns in the people who have legal ownership represented in this case by the Board of Directors and the Chairman. The Central Board and its Chairman have the real power; the real decisions are taken by the Central Board. Surely we do not have to cite the various decisions taken by the Board which are printed so regularly in the Gazette?

In conclusion Mr. Pugh along with Mr. Lewis apparently thinks “that the Partnership is a possible advance in civilization and perhaps the only alternative to communism" and that the success of this experiment has got "under the skin of the Socialist Standard." To which we would say that co-partnership, like nationalisation both at home and abroad, and in Communist Russia in particular, is just another way of running capitalism. One can certainly not consider co-partnership therefore as a “possible advance in civilization”. That will only come with Socialism.

In the meantime' no amount of word juggling is going to conceal the degrading business of the exploitation of the working class even though it may go under the guise of co-partnership and claim to he an "advance in civilization”. We say again that co-partnership schemes have nothing to offer the working class.

JONQUIL.

Co-partnership: Fact or Fantasy? (1962)

From the March 1962 issue of the Socialist Standard

To be a partner, or not to be! Well might Mr. John Spedan Lewis have soliloquised if he had thought at any great length upon the economic and legal implications of the term. Especially, when it is associated with ownership of a Capitalist undertaking, in particular the business known as the John Lewis Partnership which was founded in 1914.

JLP (John Lewis Partnership) employees arc all referred to as "Partners" so it might be as well if we take a look at what exactly a partner is. There are, of course, all sorts of partners. Marriage partners, partners in crime, whist partners, dancing partners. There are partners too such as those defined in the Concise Oxford Dictionary: “person(s) associated with others in business of which he shares risks and profits; . . ." That is, people who have definite tangible—legal ownership in Capitalist enterprises and in the surplus value extracted from their employees.

It is fairly obvious that most of the JLP employees do not fit into this last category. If they did, then this would apply to all Capitalist ventures and therefore, all workers would be partners!

Mr. Lewis and the present Chairman, Mr. O. B. E. Miller, would no doubt reply that the employees of the JLP are partners because they share the profits and the risks and have a variety of amenities which they would not get elsewhere. This, however, is so much nonsense; most of the amenities that the JLP has to offer are also offered—and sometimes bettered—by their competitors, who do not call their employees partners. Likewise with profit sharing. The workers in the JLP no more share the profits than do the employees of any of the various concerns who have in recent years taken up the idea known as profit sharing. Workers do not receive profits, unless they have money invested, which generally they haven't. In the few instances where they have, the amounts are so small as to be negligible and certainly would not be large enough to change them into “partners." The point is that workers sell the only thing they have to sell, their ability to work, and the wage or salary they receive is generally speaking roughly what is necessary to maintain them as the particular grade of workers they are; to maintain a family and to produce further potential wage slaves to take their place when they arc too old to work any more.

The so-called profits that the JLP workers receive are no more than part of their wage—a bonus as an incentive for harder work. From an employers view “profit-sharing" is a good gimmick. For if you can convince workers that they are getting a share of the profits, they are more likely to identify their interests with yours.. The worker who thinks in terms of “my business" is less likely to come to work late and go home early; to take a long lunch hour or stretch his coffee and tea breaks; to slack on the job; to scamp his work or to pilfer. He is the sort who is going to switch off unnecessary electric lights or machinery; make sure that stationery and other materials are not wasted; and report to the management the people who do those things. With a bunch of workers like this, any management is likely to see an increase' in its profits. This type of worker would, o! course, never dream of striking, for he would conceive it as being against his interests.

Profit is unearned income—part of surplus value—something for nothing. It is the wealth produced by workers which is unpaid and only goes to those who have money invested in stocks and shares. This hardly applies to the JLP workers. They are taken on in the same manner as other workers. They are hired and fired according to the dictates of Capitalism. If a particular branch of the JLP proves to be unprofitable, it may be sold and the employees fired, with the possible exception of a few higher executives who can be usefully transferred elsewhere. If any of the workers employed by the JLP fail to make the grade as surplus value producers, they get their cards, or as they say “their membership is terminated." When this happens, it is no good pleading that you are a partner, for the JLP is only concerned with economic facts, not fantasies.

If any of the so-called partners are caught taking some of the wealth they are supposed to own, or even suspected of doing so, they are sacked—just as they would be by any other Capitalist employer. The truth of this was recently rammed home to a few misguided employees of the JLP who apparently took the “partnership" gospel a little too literally, for according to the Guardian (11/9/61): “ During the past six months the John Lewis Partnership prosecuted eight partners for dishonesty, and all of them were convicted . . . In addition, 15 partners lost their membership for similar reasons."

Another aspect that is supposed to set the JLP apart from other Capitalist concerns is its committees and councils. These are supposed to be democratic bodies, but in fact have a large percentage of members nominated by the management, and in any case are nearly always biassed in favour of the management. This is particularly true of the General Council of the firm. However, even if they were democratically based and the JLP workers tried to use them to further their interests, it would not make a lot of difference, for none of these bodies has any real power. This is vested—as in all Capitalist concerns in the people who have the legal ownership; in this case in the Board of Directors and the Chairman. This is the body that makes the real decisions, the financial decisions, and decides whether a business shall be bought or sold, and so on.

It can thus be seen that JLP workers are, if anything, worse off than workers employed elsewhere, for in addition to the economic hazards of Capitalism, they are continually confronted with that diabolical device, the dossier.

However, the workers of the JLP are not “burdened” (if that is the expression) with the risks of the business, any more than any other employees are. If JLP went bust, the workers would obviously seek re-employment elsewhere. The risks of the business belong to the people who invest their money in the JLP as a going Capitalist concern, and who receive interest in return for such investment. This interest does not come out of thin air; it is wrung from the labour of the workers in JLP.

Although it is highly unlikely that such a successful profit-making concern as the JLP will wind up its affairs in the foreseeable future, one can be sure that if this did happen, the ex-workers would really be able to see who actually owned the company. It would be those people who had the necessary legal documents proving their ownership, not workers who happen to be called partners. Imagine applying to the Official Receiver for a share of whatever was realised when the assets were liquidated, on the strength of having been called a partner during the period of your employment!

It would do the workers in the JLP and other co-partnerships a lot of good if they were to think deeply and to ask themselves why their employers refer to them as partners and not employees. It is rather like the fox telling the chickens that they are foxes. The main reason for co-partnership is, of course, to help keep Capitalism running as smoothly as possible. The aim is to reconcile some of the system's class antagonism. For while workers accept Capitalism they will not be looking for an alternative.

JONQUIL.

Blogger's Note:

This article received a critical letter of reply from the Public Relations Department of John Lewis in the July 1962 issue of the Socialist Standard.

Loving fathers of industry. (1914)

From the July 1914 issue of the Socialist Standard

An interesting advertisement booklet recently published by Messrs. Joseph Crosfield & Sons, the Warrington soapworkers’ exploiters, shows how “model employers” dominate even the “private life” of their wage slaves, dictating as to how they should spend their scanty leisure.

After giving the names of the directors and other parasites who “run” the business, the pamphlet shows us how increased efficiency in the worker only benefits the capitalist class. For it states: “It is compulsory upon all boys and girls (employees) between the age of 14 and 17 to attend an evening school at least three nights a week. The course of instruction for boys is naturally concerned with questions relating to their line of work.” (Italics mine.)

Not a bad wheeze, teaching the poor kiddies their trade at night schools in their all too meagre spare time, after they have put in 8½ hours hard graft at the works for their lords and masters ! It is obvious, of course, that no time will be lost at work in teaching these youngsters soap making ! For the workers’ time is money to the capitalist.

We are then told that in the day-work departments, the 9½ hour day has been reduced to an 8½ hour day, “and events have proved that as much work as previously is done in the shorter hours.” Will the “B.S.P.” please note, that if the 8 hour day for all workers came into vogue, the capitalists would see to it, as they have done in this case, that the workers’ output was not lessened, but that they would be “speeded up,” so that the same or even an in­creased output was maintained in the shorter working day, with less expense to the masters in running machinery, lighting and heating the factories, etc.

With an eye to business the firm tells us: “The physical aspect of education is not over­ looked, for all work-girls up to the age of 17 undergo a course of gymnastics during the winter months.” Because strong, healthy, well-developed workers can obviously turn out more and better work than weak, unhealthy, and ill-nourished workers. So that from a purely busi­ness point of view—the point of view the master class always take—this little incidental expense well repays the employers.

Under the ironical heading “Social Recreation during Leisure Hours,” we are informed that the firm provide a company of the 4th Battalion, South Lancashire Regiment (Territorials), also a company of boy-scouts.

Note the masters’ determination to inocculate their workers with that brain-disease, patriotism. One can imagine how useful would these same workers be in defending their masters’ property against foreign invaders, or more probably, strike rioters.

Verily, the capitalist moves in mysterious ways, his wonders to perform !

This, we are told, is how the firm take a keen interest in the social life of the work-people ! Not much time for these workers to study their slave position in society. The firm see to it that their workers’ minds are diverted into less revolutionary and dangerous channels.

“Garden Village” employers go one better even, by providing their workers with libraries filled with capitalist works, libraries from which working class books and papers are vi­gorously excluded. Gardening, too, is taught, and thus the workers keep the “garden village” well cultivated in their spare time, without expense to the employers. Free fire brigade staff, ambulance staff, and gardening staff ! And so on, ad nauseam.

After giving a description of the soapmaking the pamphlet concludes with photos, several showing the work-people cheering and flag-wagging, on the occasion of a recent visit to the works of our royal parasites.

The enormous profits made out of the unpaid labour of the workers by soap kings was demonstrated by the “Daily Chronicle,” (24.4.14). According to that rag, Messrs. Joseph Watson & Sons, the Leeds soapmakers, made a profit of £103,999 last year, as compared with £84,215 in the year previous.

How much more of this devilish game will you workers submit to ? Aren’t you tired of being referred to in contemptuous terms as the working asses? or are you going to quietly wait for that last phase of this rapidly decaying system, State Capitalism, with its universal “model employers,” “garden villages,” “ideal conditions of labour,” “co-partnership,” “profit-sharing,” etc.; which is really more intensified slavery still—to a hide-bound State, instead of private employers—than that which exists at present ?

Capitalism has long since outstayed its wel­come ; why not organise with us and overthrow it at once ? “Now is the accepted time ”

A. C. Kelly

50 Years Ago: The Profit-Sharing Snare (1973)

The 50 Years Ago column from the December 1973 issue of the Socialist Standard

When we have pointed out that profit-sharing and bonus schemes introduced by so-called good employers were merely means to increase profit, effect economies, and attempts to subdue the growing unrest of the workers, we have been accused of being impossibilists, carping critics, or agitators actuated by malice. From time to time we have dealt with the boasted benevolence of the Levers’, the Cadburys, and the various co-partners, and now we have further confirmation of the correctness of our case from the profit-sharing proposals of Lloyds Bank, Ltd. Discussing these proposals, Mr. J. W. Beaumont Pease, the Chairman of Lloyds, said (Daily Chronicle), October 22, 1923;

  “The directors firmly believed the scheme would improve relations between employer and employed and would be all for the good of the shareholders, the directors and the staff.”

To improve relations means, of course, to anticipate the stifling of future discontent, and the recent organisation of bank clerks may have helped the directors toward their latest decision. Further we read:

  “The scheme was not likely to diminish the amount of profit available for the shareholders’ dividend, and it was quite possible it would not cost the bank anything. There was, Mr. Pease added, no question of the loyalty of the staff, but the scheme would increase the zeal with which they worked for the bank, and it would materially increase the profit. . . .With the large number employed, these economies in the aggregate would mean much.”

[From an unsigned article in the Socialist Standard, December 1923.]

50 Years Ago: Profit sharing (1963)

The 50 Years Ago column from the June 1963 issue of the Socialist Standard

Co-partnership is the curative syrup for all capitalist ills just now. Fabians recommend it, Liberal and Tory newspapers have given it their blessing, and business men who have tried it are loud in their praises. It has a double effect in its application—it increases profits and stifles labour “unrest.”

Some sociological and political experts, indeed, regard it as the solution, par excellence, for the labour troubles. The hard-headed, unscientific capitalist, who has “no soul above immediate profits,” is, however, somewhat sceptical, and not without reason. For profit-sharing in at least one case was productive of labour trouble.

The instance in question was recounted at a fashionable gathering of co-partnership apostles, at Lord and Lady Brassey’s, in Park Lane—a meeting arranged for the purpose of devising ways and means of sharing profits with the workers—something eminently desirable from the Park Lane point of view. One speaker said that he offered shares to his employees, one of whom took up a hundred. Next day in the workshop he remonstrated with a fellow workman for wasting the gas. The reply was: “Oh, there are too many blooming policemen about this business!” (just what we say) and the following day the whole of the employees struck work.

[From the Socialist Standard, June 1913.]

Work, You Workers, Work (1948)

From the April 1948 issue of the Socialist Standard

Bonus systems, payment by results, co-partnerships, piece work, profit sharing, all these and other schemes we have known. Each and every one has the same objective—to get a little more effort out of the workers, to encourage them to expend their utmost on the job.

Of the co-partnership and profit sharing schemes we hear little these days. Some years ago they were quite popular propositions. Probably one of the largest and most widely publicised of these schemes was the one introduced by Lever Bros, at Port Sunlight. The idea was to share a portion of the profits produced in the industry amongst the workers. This should give them an interest in the business and encourage them to serve it more zealously.

The American journal “Fortune,” which, by any stretch of the imagination, cannot be considered a working class magazine, in its December, 1947, issue, deals with this Lever profit sharing scheme and its failure. On page 204:

“But he (W. H. Lever) seemed obsessed with sharing profits. He concluded that profit sharing was fine provided it resulted in better production . . .” 

and on page 207:

“The idea of direct profit sharing continued to obsess him even after Port Sunlight was built, and he decided to make qualified employees 'co-partners' with whom he shared some of the amount available for ordinary (common) dividends. For a while his scheme worked. The dividends, however, amounted to so little per capita that their effect on production and efficiency over a long time was debatable, and the practice was discontinued after Lever died.”

For the employer it was a matter of an additional investment. The workers were induced to consider that they had an identity of interest with him. The greater the increase in profits resulting from their better production and increased efficiency, the greater would be their dividend—and the dividend of the employers. Unless the amount of increased profit to the employer was greater than the amount he paid out in dividends to his employees, then it was a bad investment for him. Also to be taken into account, of course, was the fact that the “identity of interest” idea is a fine deterrent to strikes and is a means of persuading workers to soft pedal their wage demands. Labour disputes and high wages would tend to affect profits and the co-partner would fear that he might not get a good ”divi.” In practise, the amount received by the worker was so infinitesimal, that the scheme failed in its object At least, the Lever one did.

As we have said, not much is heard of these profit sharing schemes these days and in the collapse of the Lever scheme we see the reason. But a new method has arisen to encourage the workers to foster this idea of an identity of interest with their exploiters. A cheaper method, too. It does not even require that the employer shall disgorge the small amount of wealth that the profit sharing proposition necessitated.

Listen-in at Trade Union branch meetings, Trades Council meetings and other places where workers gather to talk about their wages and conditions. You will hear some one get on his feet and trot out this kind of thing: “ Now that it is 'OUR' industry, we must moderate our demands. We must work to get it on its feet. We must increase our production and efficiency. We are all share-holders now, we must work to make the industry pay. We must not ask for too much . . .” And so on, ad infinitum, ad nauseam.

That is how it is put over today. Old man Lever allotted a portion of his dividends to get the utmost out of his workers. Today we find working class supporters and defenders of the Labour Party (they are all on the defensive now) falling over themselves to give of their damnedest without even the meagre dividend that Port Sunlight workers collected as an inducement.

If nationalised industry were engaged in producing goods or services for use, this point of view would be understandable. Then, better production and increased efficiency would result in more goods and better services for the workers themselves. But nationalised industry, as with all forms of capitalist industry, is engaged in the production of goods and services for sale with a view to a profit being made in the process. This fact is not disguised, not even by the advocates of nationalisation. The workers produce a quantity of wealth in excess of the amount they receive in the form of wages, salaries, etc. This surplus goes into State coffers and forms the fund out of which is shared the dividends to the investors in Government bonds.

True, an increase in production and efficiency in State industries does not mean an increase in the amount paid out as interests to bondholders. Neither does it mean an increase in wages. It may possibly result in an increase in the salary of the chairman of the “Board” or the “Executive," or in a fine, fat, five-figure pension to these "high” officials when they retire. It may also, by increasing the amount flowing into the State coffers, be a means of defraying national expenditure, and so help to alleviate the burden of taxation borne by the exploiting class. We know that finally it will result in an excess of commodities over and above the amount that the markets can absorb. Then we shall get from the Labour Party the same nauseating idea trotted out in slightly different words. “Sorry, fellows—an economic blizzard—tighten your belts and pull 'YOUR’ industry through.” Probably the blame will be put on to the Russians or maybe, the “Yanks,” It will be difficult for them to apportion the blame to the bankers as has been done in the past. It would sound rather puerile to tell us that it was “OUR” nationalised Bank of England that is holding up credit, or doing something or other to cause a financial and economic crisis. Anyway, it will be the workers who will be cajoled to make sacrifices to help "THEIR" industry through the difficult times. The rate of interest to the investor is guaranteed. He will not be worried. It is no longer his headache. He is the holder of “gilt edged.”

There are all sorts of things in store for the working class whilst Capitalism remains. There are no end to the reasons why they should work harder, more efficiently and be patient. Another war will make it necessary for the workers to make sacrifices to pull "THEIR” country through. After a war or after a trade depression there will be the need to produce more to recapture the foreign markets. It will always be possible to concoct some excuse for cracking the whip.

It is interesting to watch how this increased efficiency idea works out. For example, London’s nationalised transport. An agreement has recently been signed by the London Transport Executive and the Transport and General Workers Union adjusting the rates of pay of drivers and conductors of buses, coaches and trolley buses. At the same time, these contracting parties have agreed upon a letter to the effect that they will jointly recommend to the Minister of Transport that the existing rule shall be relaxed to enable eight standing passengers to be carried, instead of five as at present. This, so the letter says, is with the object of increasing the efficiency of the service to the public.

London Transport’s new 70-seat, eight feet wide trolley bus is now in operation in areas on the west Side of London. The Surrey Comet, reporting on the inaugural run of the first of these new vehicles, says (21/2/48):

"The extra width of six inches on the new buses is taken up by having the gangways four inches wider with an additional inch on each seat This should give greater comfort to the standing passenger . . .”

So better production and increased efficiency in this nationalised industry will mean that, (1) Drivers will drive bigger buses; (2) Conductors will pack in a few more passengers; (3) Passenger will be able to enjoy the increased standing comfort, or should we say more passengers will be able to enjoy the decreased discomfort, and (4) last, but by no means least, all passengers will pay their fares, thus increasing the takings per bus when the additional standing passengers are carried.

There is no advantage here that would make it advisable for the workers to moderate their demands for increased wages or better working conditions. We suggest to all workers that they should regard the State in the same way as they should regard any other employer, as an opponent who is out to get as much energy from his employees for the price that he pays, as is possible. The workers, in turn, should endeavour to get the highest price (wage) and best conditions of sale for the energy that they sell, as they possibly can. All increased efficiency should be directed to this end, and to the struggle to abolish the system of Capitalist exploitation.

To paraphrase Prime Minister Attlee :

"This year, let us all put into our struggle that spirit that will make our class free.”

W. Waters

Limitarianism (2024)

Book Review from the April 2024 issue of the Socialist Standard

Enough. Why It’s Time to Abolish the Super-Rich. By Luke Hildyard. Pluto Press. 2024

Luke Hildyard, director of the think-tank the High Pay Centre, shows that the super-rich (the top 1 percent) don’t need most of their income and refutes all the arguments that they deserve it all. He also shows that, if they were reduced to being merely rich (a maximum income of £187,000 a year), then there would be enough money available for other uses, in particular improving the standard of living of others. This, he says, could be done both by redistribution (taxation) and by what he calls ‘pre-distribution’ (preventing too much income going to them in the first place). An average figure of around £2,500 a year per adult for everyone else is floated at one point. The money is definitely there but could it be diverted in the way he wants?

He favours the money going mostly to those currently with the lowest incomes. In fact, he sees the amount available being enough to ‘eliminate poverty pay at a stroke’. This would be done by raising the minimum wage, which, by reducing profits, would prevent so much income flowing to the super-rich.

But that’s not how the capitalist system works. It runs on profits and any reduction in profits would reduce the incentive and the amount to invest and risk proving an economic slowdown if not a recession. On the other hand, the aim of capitalist production is not the consumption of the rich owners of productive resources. It is the accumulation of profits as more and more capital invested for profit. In this sense, a disproportionate amount of profits going to the super-rich to spend on a personal super-luxurious lifestyle (yachts, private jets, bunkers, 40-bedroom mansions, lavish parties, etc) is a drag on capital accumulation. This in fact is what Hildyard argues in chapter 3 on ‘The Economic Case for Equality’, though a better title would have been ‘The Capitalist Case for Less Income Inequality’ since that’s what in effect he is arguing for.

Two other ‘pre-distributive’ measures that he advocates are worker-directors and profit-sharing. He thinks that workers on the board is likely to mean less exorbitant executive salaries. Maybe, but that wouldn’t mean that the money saved would go to increase wages. Profit-sharing is a snare which, besides tying workers to their employers, also means that they have an unpredictable income from year to year rather than a secure contracted amount.

As to the money raised by taxing the consumption income of the super-rich, this could in theory be used to provide improved public services and amenities but, capitalism not being geared to meeting people’s needs, is more likely to be used to reduce taxes on businesses or spent on capitalist priorities such as the armed forces.

Capitalism is based on the exclusion of the vast majority of the population from the ownership of productive resources, thereby obliging them to get a living by working for the tiny minority which does own them. Inequality in the ownership of productive resources is thus built into the system. This results in inequality in incomes too since profits are shared by a small number, giving each a high income. As capital accumulates, through the reinvestment under the pressure of competition of most profits, so does the wealth and income of the owners. The tendency, then, is for the rich as a whole to get richer. Reformist measures to redistribute wealth and income are up against this tendency which wins out in the long run.

Despite its naive reformism, the book is very readable and, as you would expect from the director of a think-tank devoted full-time to the issue, is well researched and referenced and so a useful source of information on the inequality of income and wealth ownership built into capitalism.

Adam Buick

Notes by the Way: More Profit-sharing and Why (1955)

The Notes by the Way Column from the November 1955 issue of the Socialist Standard

More Profit-sharing and Why

The Conservative Government has given its blessing to profit sharing and we may expect to see more of it. But, surprisingly, one firm that for years has had such a scheme has now announced its termination. This is the Triplex Safety Glass Company. The head of the firm, Sir Graham Cunningham, has told the thousand hourly paid workers that the share in profits now to be paid will be the last, though the salaried staff will continue in the scheme. The reason for the ending of profit-sharing for the others is that the workers have gone on pressing for higher wages and they are now told they can have one or the other but not both.

"Successful Union pressure for higher wages has caused the management to cut out all shares in profits.”—(News Chronicle, 15/10/55.)

Sir Graham Cunningham is quoted as saying:—

“I am a blunt fellow. I told them they cannot have their bun and eat it”

He added, according to the News Chronicle, “that profit sharing could be restored to the men paid by the hour if they accepted a wage cut.”

The Liberal News Chronicle, which supports profit sharing, thinks that Cunningham has been too blunt:— 

“This is not so much being blunt as topsy-turvy. The whole principle of profit sharing is to provide incentive and loyalty, so that management and labour work with and not against each other. It means something extra in the good years, but with a reasonable wage as the background.” 

Another interesting comment on profit-sharing has been made by Mr. J. Spedan Lewis, founder and chairman of the John Lewis Partnership, on the occasion of his retirement. According to the Daily Telegraph (23/9/55), Mr, Lewis

“said last night that some profit-sharing schemes seemed to be in the nature of offering ransom. The people who ran them appeared to be offering to give up part of what they had been keeping for the sake of increasing their chance of retaining the rest.”

The Lewis firm has just had a spot of bother because some of the workers have objected to the firm opening letters to the staff marked "private” or “personal"; but a majority voted down a resolution of protest (Daily Express, 29/55).

The Labour Party and Cyprus

The Tory Government has declared that they do not accept for universal application the principle of “self-determination” and intend to hold on to Cyprus for strategic purposes in spite of the evident wish of the majority of the population to join Greece.

The Labour Party, now in opposition, condemns this and declares its support for “self-determination” in Cyprus.

It was not always so. When the Labour Party were in office and the Tories were in opposition, the Labour Government took up the same attitude as that now taken by the Tories. It was in 1950 that the Labour Government, through a letter to the Archbishop of Cyprus, declared that despite a plebiscite showing the Greek speaking Cypriots in favour of joining Greece

“The British Government regarded the question of Enosis (union with Greece) as closed (The Times, 24/2/50). 

Molotov Confesses

Molotov, Russia’s Foreign Minister since Litvinoff was removed when the Stalin-Hitler Pact of Friendship was being fixed up in 1939, has been made to eat humble pie in a letter published in the Russian journal Kommunist. He had made the statement that in Russia “the foundations of Socialism have already been built.” But this implied that Socialism bad not yet been completely established. He has now had to confess that this was wrong and that this “does not correspond to reality and contradicts the numerous estimates of the result of the construction of Socialism in the U.S.S.R. given in Party documents.” (Manchester Guardian, 10/1 /55.).

Thus the year-long word trickery of the Russian Communist Party goes a stage further. Their official version is that Communism does not exist in Russia but that Socialism has already been achieved. They conveniently forget their earlier publications in which, like Marx, they used the word Socialism and Communism as alternative names for the same thing. Lenin, who at that time was less mealy-mouthed gave the real name that covers the Russia system, State Capitalism.

The Myth of Planning

One of the clever-silly notions of the reformists ever since they started trying to reform Capitalism has been that someone could plan its production and distribution. Sometimes, as at the end of last century, many of the reformists thought that the Capitalists, through trusts and cartels, would do the job. Others have thought that Labour Governments would do it and so did the Labour Governments until they tried. The 1929 Labour Government planned a “boom” and reaped a “bust”; in the years 1945-1951, their annual plans never came out right, as the yearly “Economic Surveys” showed; and the planned production and profit and price reductions of the nationalised industries were farcical. And either the Labour Government planned the big rise of the cost of living that accompanied their administration (with wage rates lagging behind) or else they have to admit that their plan for a steady or falling cost of living was a failure.

The Tories have fared no better. In April the Chancellor of the Exchequer and Treasury, helped by their expert financial and economic advisers, planned the Budget for a year. But by October he had to produce a new Budget. Things had gone so badly adrift from the plan that Mr. Butler could not even wait till next April to have another go.

Our Ancient Scholastic Establishments

According to Dr. Kathleen Ollerenshaw, a co-opted member of the Manchester Education Committee, who has collected information about school buildings from all the chief education officers in England and Wales, about half the children attend schools that were built over half a century ago, before 1903. The number in schools built since 1944 is about 750,000, but another 750,000 are in schools built before the Education Act of 1870. The number in schools built between 1870 and 1903 is about 2,000,000.

The report appeared in “Education,” organ of the Association of Education Committees and the details given above were published in the Manchester Guardian (23/9/55).

The International Wheat Plan

Of recent years the emphasis of the planners has been on international action, often through United Nations and its Agencies.

One of the fields in which there has been long experience is the attempt to regulate the production and sale of wheat in the world. It was the enormous accumulation of unsaleable wheat that was one of 'the outstanding features of the crisis of the nineteen thirties, and Governments and economists have gone in fear of a repetition ever since. The idea of the original planners for an international wheat agreement was to cut out the extremely violent ups and downs of prices and make the movement of prices more even without eliminating them altogether. It was supposed that production would still rise in response to a moderate rise of price and would fall when prices fell. A writer in the Manchester Guardian (23/9/55) in the second of two articles on the international wheat conference and the possibility of a new agreement being reached, points out that in practice this has not happened. He quotes a secretary of the pre-war International Wheat Council, Mr. Andrew Cairns, as follows:—

“An increase in wheat prices generally produces an increase in wheat acreage, but a decrease . . . . generally produces an increase in direct or indirect Government assistance to wheat growers.” 

This is what has been happening since the end of the war and there is no chance whatever of a solution being found except that a series of bad harvests might temporarily relieve the pressure.

The result is that there is again far too much wheat for the markets to absorb.

“In the four main exporting countries—the United States, Canada, Argentina and Australia—production remained high and exports fell further; as a result supplies available for export and carry-over on April 1st, 1953, rose sharply by nearly 400 million bushels to a new high record of 2,090 million. A year later the carry-over was higher still at 2,155 million bushels, and it rose again to 2,374 million bushels on August 1st this year, despite poor crops in certain countries last season.”—(Economist, 1st October, 1955.)

And what are the planners supposed to do for those who employ them, the Governments? Plan to grow more wheat and give it away? Or cut the acreage by force, take away farmers' subsidies and lose votes for the Government candidates in rural areas?

Capitalism is not just a system of production but a class system of society. No Capitalist industry is, or can be, interested in feeding hungry mouths unless there are full purses attached thereto. No Government does, or can, think merely in terms of producing what food they need, or of buying it elsewhere where it is being produced. Each Government has to think politically of farmers' votes, and militarily in terms of having food produced at home in case of war. The efforts of the Governments and the wheat growers therefore end up by producing one of Capitalism's characteristic contradictions—too little wheat for the world’s stomach, but too much wheat for the digestion of the Capitalist market.

The Merchants of Death, British aid Russian

Like belligerent stay-at-home politicians and parsons who send others out to be killed, the manufacturers of armaments have always been held in popular disrepute. The Labour Party, I.L.P. and Communists, for years made the “merchants of death" the target for their attacks as part of their muddled propaganda based on the idea that you can prevent war by nationalising the armament trade.

Behind it was the odd notion that while private Capitalists sell armaments, where they can, Governments do not. As recently as 29 July of this year Tribune, the Bevanite journal, had the following under the heading “Plain Stupid":—

“Shells bombard British ships in the Suez Canal. Who fires them? Egyptian destroyers. And who gave Egypt the destroyers? Britain.

"This is one of the brilliant achievements of the Tory Government. As a contribution to reducing tension in the Middle East we are busy selling arms to both sides. Thus Egypt is given the privilege of buying two destroyers from us. And so is Israel.

“Likewise with war planes. Equal numbers are sold to each Arab state and to Israel.

“Here the system of fair shares breaks down. There is only one Israel. There are several Arab states. Thus we tip the balance against a new, progressive nation, in favour of highly aggressive, largely reactionary rulers.

“Does Tribune want more arms for Israel ? Not at all. We are proposing no arms for either side. Simply that Britain should seek to apply the principles stated at Geneva instead of apparently doing her best to make war in the Middle East inevitable.

Since that was written the news that Russia and her satellites are supplying arms to Egypt and other Middle East Governments has knocked sideways Tribune’s belief in the Geneva spirit.

We may also recall that when Mr. Bevan was in the Labour Government in 1950 that Government, too, was selling arms to Egypt and many other countries (including Czechoslovakia, which is now selling arms to Egypt). The 1950 deals were disclosed by Mr. Attlee in the House of Commons on 16 March, 1950, and were justified by him on the ground of “the need for exports," in other words selling instruments of death for profit.

Now we have the Czechoslovak Government putting forward exactly the same kind of justification; it is just “trade.”

The Daily Worker (3/10/55) reports as follows:—

“Referring to the arms deal, Prague Radio said: “The Egyptian Government, in the interests of security and peace in the region, has turned to where deliveries of arms can be obtained on a purely commercial basis, without political or other conditions'.”

This recalls a letter written to the Manchester Guardian, on 21 January, 1941, by the Communist Albert Inkpin, who at that time was secretary of the Russia Today Society. This was before Germany attacked Russia, in the period when the Pact of Friendship between the two Governments was still in being. Germany and Britain had been at war for nearly 18 months and some M.P.s had commented on the supplies of materials useful for war flowing into Germany from Russia. To this Mr. Inkpin replied by assuring the readers of the Manchester Guardian that while Russia was supplying “oil products, raw materials and grain” to Germany, they were quite willing to export them to Britain as well.

It is, of course, good Capitalist principle to sell to both sides in a war, but if the Russian Government had been concerned to stop the war they could have refitted to supply either side.

There are plenty of precedents for this. History recalls the British manufacturers who supplied uniforms to Napoleon's armies.

The Crimean War over again ?

Just over a century ago there was war between England and her Allies, and Russia nominally over the Holy Places in Jerusalem, but actually over the effort of Russia to break into the Mediterranean and British Capitalists desire to stop it

Now we have Russia and Czechoslovakia selling arms in the Middle East, the British Government protesting against this threat to the balance of power, and newspaper editors working up a scare about a new Russian drive to the Mediterranean and Africa—the Crimean war episode again.

Here is the reaction of the Daily Express (19/10/55):-

“Cold War Again?

“Three months after the Geneva conference a new diplomatic war is developing, this time in the Middle East. The Russians are going all out to extend their influence there.

“First, there was the Egyptian-Czech arms deal. Now the Russians establish diplomatic relations with the Yemen, a country which lays claim to Britain’s Colony of Aden.

“They are also negotiating a new trade deal with Syria. They are offering Egypt £89,000,000 or more to build a dam on the Nile.

“The Reason Why

“All these moves are aimed at undermining the West’s defence plans in this area. How come the Russians are able to bring them off ?

“It all stems from Britain’s scuttle from Suez. If this country were still securely in the Canal Zone the Russians could never hope to establish themselves in the Middle East.

“But Britain's departure creates vacuum and weakness which Russia is now able to exploit. So the folly of scuttle is exposed. Let Britain resolve that this policy shall never, never be repeated.”

Edgar Hardcastle

The Profit-Sharing Snare. Co-partnership Schemes Exposed. (1930)

From the October 1930 issue of the Socialist Standard

The economics of cheapness.

Great Britain is losing her hold over the world market. That means producing firms are finding it harder to compete successfully against producers abroad. Every scheme is being tried to regain lost trade and to increase the quantity of goods sold. Industry to-day is carried on for the profit of the owners, and more trade, therefore, means more profit.

The most effective way to capture markets is to sell cheaper than your rivals. How can goods be sold at a lower price? Modern industry answers—”Reduce the time taken to produce them.” That is how the modern cry of Rationalisation pays tribute to the economics of Karl Marx.

Marx showed that the average amount of time taken under prevailing conditions to produce an article determined its value. So in order to sell cheaper, the manufacturers to-day use every possible method to lessen the time necessary to produce their wares.

Piece-work rates, bonus systems and other profit-sharing-schemes are adopted to arouse the worker to greater effort; to produce quicker; and to save waste. This enables the employer to produce more cheaply, whilst the workers are told they will share in the increased profits.

The “Pace-maker” and his function.

The cotton trade to-day is in decline, and these speeding-up methods are being pushed in Lancashire to enable the employers to ensure their profits. The Manchester Guardian recently had an article suggesting piece-work and bonus systems as a remedy. The fixing of piece-work rates, however, we are told by the writer, is difficult, as it means getting “pace-makers,” or sloggers who can lead the rest by turning out more goods. The standards of price per piece can be fixed more profitably for the employers if really rapid workers are employed as “time setters” to cut down the time required to turn out each job. Thus the Taylor system in all its variations of efficiency is offered as a cure for “Lancashire ills.” Its adoption will certainly raise the employers’ profits, but will simply mean in practice that fewer workers are required to do the same amount of work. Any apparent increase in wages by sharing in the profits is only in actual practice a reduction of wages in relation to the increased amount of work performed. The employer’s share is that his profits are increased vastly. The worker is paid a fraction more than before for turning out a much larger product. The sole result is that the increased efforts of the workers reduce the “share” of the total product given back to the workers as wages. That is why prominent employers are so much in favour of these piece-work and profit sharing systems.

One feature of all these piece price and premium bonus ideas was noted by the Manchester Guardian writer; that is the policy of firms cutting down the piece rate once they find efficiency going up and adding to the workers’ wage. So almost as fast as the workers’ output is increased by slogging, the unit price comes down and the workers are back again to subsistence wages. Once the workers raise output it becomes the average standard for all to comply with in order to get the basic wage.

The Co-partnership fraud. 

Many leading employers have recently boomed another artful dodge to ensnare the workers into working in harmony with the employers. Co-partnership or shareholding by employees is the stale device which is being revived. The Economic League—that body of employers’ friends—issue many leaflets praising co-partnership as the way to social peace and workers’ prosperity.

One of the great examples of this scheme is the South Metropolitan Gas Works, who smashed their employees’ strike on the profit-sharing issue, and afterwards raised hours from 8 to 12 per day. This firm boasts that since “allowing” employees to own shares the efficiency has increased, the price of gas has fallen, and better still— profits have risen considerably. In this firm the profit-sharing scheme was made compulsory, so that all workers would take a “greater interest in their work.” It worked out in practice that fewer men were required to do the same amount of work and the tiny “share” of the workers in dividend at the end of the year proved that the owners had really shared in the added wages due to the workers for their increased efforts and output.

The workers get the "leavings."

Lord Leverhulme, of the Soap Trust, was a great believer in co-partnership. But on his death we found from the published will that he owned the entire two millions of ordinary shares himself. Not much co-partnership there ! And by “allowing” some workers to have special “employees’ shares,” receiving interest after the ordinary shareholders, Lord Leverhulme was able to pile up millions in profit. In his book on the “Six Hour Day,” he points out that he always insisted that the co-partner workers must share in the losses as well as profits. This policy was calculated to teach the workers the importance of helping the firm to make profits.

All co-partnership and similar schemes are put forward to kill any organised efforts by the workers to increase their share of the wealth produced. Under the spell of the “divi.” or bonus, the worker is to be enticed away from the struggle to push up his wages or in any way reduce the employers’ surplus.

The Co-partners get the sack.

Cadbury’s and Rowntree’s are examples of “good” firms with profit-sharing policies. Recent efforts on the part of these companies to hold or increase their trade led them to use more machinery to reduce the labour costs. A reduction of workers employed resulted, and Rowntree appealed through the press for employers to give his superseded men a job. After all the work and efforts of the employees in these firms working hard to produce profits they were replaced by machines ! The co-partners were out of work ! Do you need more evidence of the function of bonus systems and co-partnership ?

The fruits of profit sharing.

In the Ministry of Labour Gazette (July, 1930) appears a complete survey of all profit-sharing and co-partnership schemes operating during 1929. These schemes numbered 495, and were participated in by 260,000 employees out of 531,000 employed in these firms. The report tells us that “in all industries taken together nearly one half of the schemes started have come to an end.” We are also informed that “a considerable number of the schemes admit employees to participation in the profits only to the extent that they are able and willing to deposit savings with the firm or purchase shares.”

A famous firm practising co-partnership is the Eastman Kodak Co. Listen to Mr. George Eastman’s testimony of the profit­ able results to the firm :—

“In 1919 several thousand pounds’ worth of shares were distributed to our employees. One result was that after handing over to the workers one-third of my shares, the value of the remaining holdings soon climbed a third higher than the previous total. That was not the purpose in distributing the shares, but the result shows the business value of the act. Since the shares were distributed the market value has gone up over 150 per cent. Part of this increase in value unquestionably has been due to the wide distribution among workers and officials.”—(Co-partnership, Dec., 1927.)

The Chemical combine.

Sir Alfred Mond (now Lord Melchett) is one of the chief apostles of the co-partnership device. He boasted at the annual meeting of the Imperial Chemical Industries, 1929, that 53,000 employees held shares, totalling about 850,000 shares. (This is about 17 shares each.) They are allowed to buy ordinary shares at market prices less 2/6 per share, and preference shares at the fixed price of 21/6 each. He “trusts” his employees not to sell their shares. Why so many employees put their savings into “their firm’s” shares is easily understood, as it is thought to be a means of being kept on or possibly useful in promotion. How little the workers own in the mighty Imperial Chemical Industries can be seen when it is found that the capital of this combine is over 76 millions. The co-partners have no control over “their” jobs nor any control over the business. What are a few shares owned by each worker against the huge amount owned by such Directors of the firm as Lord Melchett, Lord Birkenhead, Lord Colwyn, Sir Max Muspratt, Henry Mond, Marquess of Reading, Lord Weir, etc. ?

Longer hours for co-partners.

How little Lord Melchett is interested in workers’ conditions can be seen by his efforts in Parliament to get a longer working day for miners. The Amalgamated Anthracite Collieries (owned by Imperial Chemicals) controls 12 coal concerns, and has paid huge dividends in recent years.

Who really owns most of the capital can be seen by its share-list, where dozens of shareholders own 10,000 shares and upwards each, and prominent holders like Guest, Keen & Nettlefolds own £395,000 in shares. Lady Buckland, the well-known miner, owns £395,000 in shares in company with two other aristocrats.

Is this an example of the widespread diffusion of capital that the Economic League and Mond refer to ?

How co-partnership rivets the employees to the firm which holds their “savings” can be seen from Mond’s speech at a co­ partnership luncheon :—

“What is the effect of making them shareholders? We saw some of it in the last General Strike. Not one workman in Brunner, Mond’s left his job ! while many were heard to observe that they did not intend to jeopardise their dividends at the dictates of any outside person. In the business with which I am connected we have been free from Labour disputes for fifty years.”

Lord Melchett is very reticent about the wages paid by his alkali works, mines and every other of the 50 concerns amalgamated into his trust. But the Chemical Workers’ Union are continually protesting’ against the “low” wages paid in that industry practically controlled by the combine.

The workmen co-partners have no control of the share market. Should they want to sell their shares just now what will they get? £1 ordinary shares have fallen from 45/- last year to 19/- to-day. And the 10/- deferred shares have fallen to 5/- each. (Observer, August 3rd, 1930).

The right "spirit" for slaves.

Perhaps there is no better indication of Lord Melchett’s policy than the following- :

“After all, there is no more competitive spirit than that displayed by the British people. If you put them into a football match they will kill themselves every Saturday afternoon for nothing. Why not introduce the same spirit into industry?”—(Co-partnership, Dec., 1927.)

This is from his speech at the same co-partnership luncheon. How tragically true ! that is the spirit of industry—killing themselves for nothing !

Some of the conditions of the Imperial Chemical’s co-partners’ scheme are interesting :

“The scheme is an investment one, and while no absolute restriction is placed upon the workers, they will not be expected to speculate with their shares. The directors reserve the right to refuse to allot further shares to a worker who does not enter into the right spirit of the scheme.

The maximum individual allotment will be such number of shares as can he purchased by an expenditure of a sum not exceeding 20 per cent. of the annual wages or salary of the employee. To this 20 per cent. an additional 1 per cent, for each year of service above five may be added.”—(Co-partnership, Dec., 1927.)

The conditions are, of course, laid down by the firm ! The worker must enter into “the right spirit,” and he must not buy (even if he could afford it) too many shares. Perhaps he might then give up working and, like the real “partners,” live upon profits !

The purpose behind Imperial Chemicals “profit sharing” can be gleaned from the following paragraph : —

“This departure from the normal method of dealing with manual workers is described in the current issue of the Imperial Chemical Industries Magazine as an “experiment,” the continuance of which must depend on its economic result. The creation of the Staff Grade will involve a heavy initial cost which must be balanced by compensating increase of efficiency.—(Co-partnership, Sept., 1928.)

Lion and lamb shall unite!

Another well-known “Co-partnership” firm is the Brush Electrical Engineering Co. The Chairman of that concern, speaking of the results of co-partnership in his firm, says : —

“The scheme also gives us confidence of being able to maintain a fairly satisfactory dividend on the share capital, and it enables us to satisfy our customers that good service deserves a fair and adequate, though not excessive, reward for the shareholders and the staff of workers, both mental and manual.”—(Co-partnership, Sep., 1928.)

The same employer, speaking at the annual meeting of his firm this year, explained some of his principles thus : —

1. Greater economy by elimination of waste.
2. Higher efficiency by elimination of inefficient machinery and methods.
3. Larger output to neutralise low prices by removal of Trade Union restrictions.”—(Co-partnership, June, 1930.)

The last principle is striking, in view of the fact that the supporters of the movement, as the above magazine shows, are prominent Labour leaders, like Citrine, Ben Turner, E. F. Wise, E. L. Poulton (General Secretary of Boot and Shoe Workers). This last leader spoke at the Co-partnership Conference, May 10th, this year, and he served up this slop :—

“If the co-partnership principles are properly adopted, we shall soon get out of the slough in which we find ourselves at the present time.”

The financial steam roller.

One prominent co-partner advocate is Angus Watson, of the Newcastle firm selling Skipper Sardines. His firm was recently bought out by the monster international trust, Unilever, Ltd. Angus Watson resigned as Director, and commented very bitterly on the effects of combination of firms and rationalisation. The worker who had played his part building up the firm’s assets was ruthlessly pushed out by machinery and the power of capital. What can copartnership do in face of the modern International Trust?

Edward Cadbury, the cocoa manufacturer, admits our indictment. Speaking at the Quaker Employers’ Conference :—

“He said they would all agree that the workman ought to have some voice in the management, but at present there was no way in which he could be given any effective control in large scale industry; stressing the words ‘effective control’.”—(Co-partnership, Sept., 1928.)

Reviewing the Life of Lord Leverhulme, by his son, the same paper says :—

“Lord Leverhulme’s ideas did not extend to giving any share of the control to the workers. In his particular case he did not see the reason, and perhaps there was not the demand.”

All the evidence we have produced shows that copartnership and profit-sharing schemes are merely another method of inducing the workers to continue a system in which the real control and ownership is in the hands of the employers and in which all the work must be carried on by the workers.

C.