Read Chapter VII. of Problems of Poverty, free online book, by John A. Hobson, on ReadCentral.com.

Over-Supply of Low-Skilled Labour.

Sec 1. Restatement of the “Low-skilled Labour” Question. Our inquiry into Factory Legislation and Trade Unionism as cures for sweating have served to emphasize the economic nature of the disease, the over-supply of low-skilled labour. Factory legislation, while it may abate many of the symptoms of the disease, cannot directly touch the centre of the malady, low wages, though by securing publicity it may be of indirect assistance in preventing the payment of wages which public opinion would condemn as insufficient for a decent livelihood. Trade Unionism as an effective agent in securing the industrial welfare of workers, is seen to rest upon the basis of restriction of labour supply, and its total effectiveness is limited by the fact that each exercise of this restriction in the interest of a class of workers weakens the position of the unemployed who are seeking work. The industrial degradation of the "sweated" workers arises from the fact that they are working surrounded by a pool of unemployed or superfluous supply of labour. So long as there remains this standing pool of excessive labour, it is difficult to see how the wages of low unskilled workers can be materially raised. The most intelligent social reformers are naturally directing their attention to the question, how to drain these lowlands of labour of the superfluous supply, or in other words to keep down the population of the low-skilled working class. Among the many population drainage schemes, the following deserve close attention

Sec 2. Checks on growth of population. We need not discuss in its wider aspect the question whether our population tends to increase faster than the means of subsistence. Disciples of Malthus, who urge the growing pressure of population on the food supply, are sometimes told that so far as this argument applies to England, the growth of wealth is faster than the growth of population, and that as modern facilities for exchange enable any quantity of this wealth to be transferred into food and other necessaries, their alarm is groundless. Now these rival contentions have no concern for us. We are interested not in the pressure of the whole population upon an actual or possible food supply, but with the pressure of a certain portion of that population upon a relatively fixed supply of work. It is approximately true to say that at any given time there exists a certain quality of unskilled or low-skilled work to be done. If there are at hand just enough workers to do it, the wages will be sufficiently high to allow a decent standard of living. If, on the other hand, there are present more than enough workers willing to do the work, a number of them must remain without work and wages, while those who are employed get the lowest wages they will consent to take. Thus it will seem of prime importance to keep down the population of low-skilled workers to the point which leaves a merely nominal margin of superfluous labour. The Malthusian question has in its modern practical aspect narrowed down to this. The working classes by abstinence from early or improvident marriages, or by the exercise of moral restraints after marriage can, it is urged, check that tendency of the working population to outgrow the increase of the work for which they compete. There can be no doubt that the more intelligent classes of skilled labourers have already profited by this consideration, and as education and intelligence are more widely diffused, we may expect these prudential checks on “over-population” will operate with increased effect among the whole body of workers. But precisely because these checks are moral and reasonable, they must be of very slow acceptance among that class whose industrial condition forms a stubborn barrier to moral and intellectual progress. Those who would gain most by the practice of prudential checks, are least capable of practising them. The ordinary “labourer” earns full wages as soon as he attains manhood’s strength; he is as able to support a wife and family at twenty as he will ever be; indeed he is more so, for while he is young his work is more regular, and less liable to interruption by ill-health. The reflection that an early marriage means the probability of a larger family, and that a large family helps to keep wages low, cannot at present be expected to make a deep impression upon the young unskilled labourer. The value of restraint after marriage could probably be inculcated with more effect, because it would appeal more intelligibly to the immediate interest of the labourer. But it is to the growing education and intelligence of women, rather than to that of men, that we must look for a recognition of the importance of restraint on early marriages and large families.

Sec 3. The “Emigration” Remedy. The most direct and obvious drainage scheme is by emigration. If there are more workers than there is work for them to do, why not remove those who are not wanted, and put them where there is work to do? The thing sounds very simple, but the simplicity is somewhat delusive. The old laissez faire political economist would ask, “Why, since labour is always moving towards the place where it can be most profitably employed, is it necessary to do anything but let it flow? Why should the State or philanthropic people busy themselves about the matter? If labour is not wanted in one place, and is wanted in another, it will and must leave the one place and go to the other. If you assist the process by compulsion, or by any artificial aid, you may be removing the wrong people, or you may be removing them to the wrong place.” Now the reply to the main laissez faire position is conclusive. Just as water, though always tending to find its own level, does not actually find it when it is dammed up in some pool by natural or artificial earthworks, so labour stored in the persons of poor and ignorant men and women is not in fact free to seek the place of most profitable employment. The highlands of labour are drained by this natural flow; even the strain of competition in skilled hand-labour finds sensible relief by the voluntary emigration of the more adventurous artisans, but the poor low-skilled workers suffer here again by reason of their poverty: no natural movement can relieve the plethora of labour-power in low-class employments. The fluidity of low-skilled labour seldom exceeds the power of moving from one town to a neighbouring town, or from a country district to the nearest market towns, or to London in search of work. If the lowlands are to be drained at all, it must be done by an artificial system. Now all such systems are in fact open to the mistakes mentioned above. If we look too exclusively to the requirements of new colonies, and the opportunities of work they present, we may be induced to remove from England a class of men and women whose services we can ill afford to lose, and who are not in any true sense superfluous labour. To assist sturdy and shrewd Scotch farmers, or a body of skilled artisans thrown out of work by a temporary trade depression, to transfer themselves and their families to America or Australia, is a policy the net advantage of which is open to grave doubt. Of course by removing any body of workers you make room for others, but this fact does not make it a matter of indifference which class is removed. On the other hand, if we look exclusively to the interests of the whole mass of labour in England, we should probably be led to assist the emigration of large bodies of the lowest and least competent workers. This course, though doubtless for the advantage of the low class labour, directly relieved, is detrimental to the interest of the new country, which is flooded with inefficient workers, and confers little benefit upon these workers themselves, since they are totally incapable of making their way in a new country. The reckless drafting off of our social failures into new lands is a criminal policy, which has been only too rife in the State-aided emigration of the past, and which is now rendered more and more difficult each year by the refusal of foreign lands to receive our “wreckage.” Here, then, is the crux of emigration. The class we can best afford to lose, is the class our colonies and foreign nations can least afford to take, and if they consent to receive them they only assume the burden we escape. The age of loose promiscuous pauper emigration has gone by. If we are to use foreign emigration as a mode of relief for our congested population in the future, it will be on condition that we select or educate our colonists before we send them out. Whether the State or private organizations undertake the work, our colonizing process must begin at home. The necessity of dealing directly with our weak surplus population of low-skilled workers is gaining more clear recognition every year, as the reluctance to interfere with the supposed freedom of the subject even where the subject is “unfree” is giving way before the urgency of the situation.

Sec 4. Mr. Charles Booth’s “Drainage Scheme.” The terrible examples our history presents to us of the effects of unwise poor law administration, rightly enjoin the strictest caution in contemplating new experiments. But the growing recognition of the duty of the State to protect its members who are unable to protect themselves, and to secure fair opportunities of self-support and self-improvement, as well as the danger of handing over their protection to the conflicting claims of private and often misguided philanthropy, is rapidly gaining ground against the advocates of laissez faire. It is beginning to be felt that the State cannot afford to allow the right of private social experiment on the part of charitable organizations. The relief of destitution has for centuries been recognized as the proper business of the State. Our present poor law practically fails to relieve the bulk of the really destitute. Even were it successful it would be doing nothing to prevent destitution. Since neither existing legislation nor the forces of private charity are competent to cope with the evils of “sweating,” engendered by an excess of low-class labour, it is probable that the pressure of democratic government will make more and more in favour of some large new experiment of social drainage. In view of this it may not be out of place to describe briefly two schemes proposed by private students of the problem of poverty.

Mr. Charles Booth, recognizing that the superfluity of cheap inefficient labour lies at the root of the matter, suggests the removal of the most helpless and degraded class from the strain of a struggle which is fatal not merely to themselves, but to the class immediately above them. The reason for this removal is given as follows

“To effectually deal with the whole of class B for the State to nurse the helpless and incompetent as we in our own families nurse the old, the young, and the sick, and provide for those who are not competent to provide for themselves may seem an impossible undertaking; but nothing less than this will enable self-respecting labour to obtain its full remuneration, and the nation its raised standard of life. The difficulties, which are certainly great, do not consist in the cost. As it is, these unfortunate people cost the community one way or another considerably more than they contribute. I do not refer solely to the fact that they cost the State more than they pay directly or indirectly in taxes. I mean that altogether, ill-paid and half-starved as they are, they consume, or waste, or have expended on them, more wealth than they produce.”

Mr. Booth would remove the “very poor,” and plant them in industrial communities under proper government supervision.

“Put practically, my idea is that these people should be allowed to live as families in industrial groups, planted wherever land and building materials were cheap; being well-housed and well-warmed, and taught, trained, and employed from morning to night on work, indoors or out, for themselves, or on Government account.”

The Government should provide material and tools, and having the people entirely on its hands, get out of them what it can. Wages should be paid at a “fair proportionate rate,” so as to admit comparison of earnings of the different communities, and of individuals. The commercial deficit involved in the scheme should be borne by the State. This expansion of our poor law policy, for it is nothing more, aims less at the reformation and improvement of the class taken under its charge, than at the relief which would be afforded to the classes who suffered from their competition in the industrial struggle. What it amounts to is the removal of the mass of unemployed. The difficulties involved in such a scheme are, as Mr. Booth admits, very grave.

The following points especially deserve attention

1. Since it is not conceivable that compulsion should be brought to bear in the selection and removal out of the ordinary industrial community of those weaker members whose continued struggle is considered undesirable, it is evident that the industrial colonies must be recruited out of volunteers. It will thus become a large expansion of the present workhouse system. The eternal dilemma of the poor law will be present there. On the one hand, if, as seems likely, the degradation and disgrace attaching to the workhouse is extended to the industrial colony, it will fail to attract the more honest and deserving among the “very poor,” and to this extent will fail to relieve the struggling workers of their competition. On the other hand, if the condition of the “industrial colonist” is recognized as preferable to that of the struggling free competitor, it must in some measure act as a premium upon industrial failure, checking the output of energy and the growth of self-reliance in the lower ranks of the working classes. No scheme for the relief of poverty is wholly free from this difficulty; but there is danger that the State colony of Mr. Booth would, if it were successful as a mode of “drainage,” be open to it in no ordinary degree.

2. Closely related to this first difficulty is the fact that Mr. Booth provides no real suggestion for a process of discrimination in the treatment of our social failures, which shall distinguish the failure due directly to deep-seated vice of character and habit, from the failure due to unhappy chance or the fault of others. Difficult, almost impossible, as such discrimination between deserving and undeserving is, it is felt that any genuine reform of our present poor law system demands that some attempt in this direction should be made. We must try to distinguish curable from incurable cases, and we must try to cure the former while we preserve society from the contamination of the latter. The mere removal of a class of “very poor” will not suffice.

Since however the scheme of Mr. C. Booth does not proceed beyond the stage of a suggested outline of treatment, it is not fair or profitable to press close criticism. It is, however, a fact of some significance that one who has brought such close study to bear upon the problem of poverty should arrive at the conclusion that “Thorough interference on the part of the State with the lives of a small fraction of the population, would tend to make it possible, ultimately, to dispense with any Socialistic interference in the lives of all the rest."

Sec 5. Proposed remedies for “Unemployment.” In discussing methods of dealing with “the unemployed,” who represent an “over-supply” of labour at a given time, it is often found convenient to distinguish the temporary “unemployment” due to fluctuations rising from the nature of certain trades, and the permanent unemployment or half employment of large numbers of the least efficient town workers. The fluctuations in employment due to changes of season, as in the building trades, and many branches of dock labour, or to changes of fashion, as in the silk and “fancy” woollen trade, or to temporary changes in the field of employment caused by a transformation of industrial processes, are direct causes of a considerable quantity of temporary unemployment. To these must be added the unemployment represented by the interval between the termination of one job and the beginning of another, as in the building trades. Lastly, the wider fluctuations of general trade seem to impose a character of irregularity upon trade, so that the modern System of industry will not work without some unemployed margin, some reserve of labour.

These irregularities and leakages seem to explain why, at any given time, a certain considerable number of fairly efficient and willing workmen may be out of work. It is often urged that this class of “unemployed” must be regarded as quite distinct from the superfluity of low-skilled and inefficient workers found in our towns, and that the two classes present different problems for solution. The character of the “chronic” class of unemployed makes the problem appear to be, not one of economic readjustment, but rather of training and education. But this appearance is deceptive. The connection between the two kinds of “unemployment” is much closer than is supposed. The irregularity of the “season” and “fashion” trades, the periodic spells of bad trade, are continually engaged in degrading and deteriorating the physique, the morale, and the industrial efficiency of the weaker members of each trade: these weaklings are unable to maintain a steady and healthy standard of life under economic conditions which make work and wages irregular, and are constantly dropping out of the more skilled trades to swell the already congested low-skilled labour market. Every period of “depressed trade” feeds the pool of low-skilled labour from a hundred different channels. The connection between the two classes of “unemployed” is, therefore, a close and vital one. To drain off this pool would, in fact, be of little permanent use unless those irregularities of trade, which are constantly feeding it, are also checked.

Still less serviceable are those schemes of rescuing “the unemployed,” which, in the very work of rescue, engender an economic force whose operation causes as much unemployment as it cures. A signal example of this futile system of social drainage has been afforded by certain experiments of the Salvation Army in their City Works and Farm Colony. The original draft of the scheme contained in the volume, In Darkest England, clearly recognized the advisability of keeping the bounty-fed products of the Salvation Colonies from competition in the market with the products of outside labour. The design was to withdraw from the competitive labour market certain members of “the unemployed,” to train and educate them in efficient labour, and to apply this labour to capital provided out of charitable funds: the produce of this labour was to be consumed by the colonists themselves, who would thus become as far as possible self-supporting; in no case was it to be thrown upon the open market. As a matter of fact these sound, economic conditions of social experiment have been utterly ignored. Matches, firewood, furniture, etc. produced in the City factories have been thrown upon the open market. The Hadleigh Farm Colony, originally designed to give a thorough training in the arts of agriculture so as to educate its members for the Over Sea Colony, has devoted more and more attention to shoemaking, carpentering, and other special mechanical crafts, and less and less to the efficient cultivation of the soil; the boots, chairs, etc. being thrown in large quantities upon the open market. Moreover, the fruit and vegetables raised upon the Farm have been systematically placed upon the outside market. The result of such a line of conduct is evident. Suppose A is a carpenter thrown out of work because there are more carpenters than are required to turn out the current supply of chairs and tables at a profitable price; the Salvation Army takes A in hand, and provides him with capital upon which no interest need be paid. A’s chairs, now thrown on the market, can undersell the chairs provided by B, C, D, his former trade competitors. Unless we suppose an increased demand for chairs, the result is that A’s chairs displace those of B in the market, and B is thrown out of employment. Thus A, assisted by the Salvation Army, has simply taken B’s work. If the Salvation Army now takes B in hand, it can engage him in useful work on condition that he takes away the work of C. If match-makers are thrown out of work by trade conditions, and the Salvation Army places them in a factory, and sells in the open market the matches which they make, the public which buys these matches abstains from buying the matches made by other firms, and these firms are thus prevented from employing as much labour as they would otherwise have done. No net increase of employment is caused by this action of the Salvation Army, and therefore they have done nothing towards the solution of the unemployed problem. They have provided employment for certain known persons at the expense of throwing out of employment certain other unknown persons. Since those who are thrown out of work in the labour market are, on the average, inferior in character and industry to those who are kept in work, the effect of the Salvation Army policy is to substitute inferior for superior workers. The blind philanthropist may perhaps be excused for not seeing beyond his nose, and for ignoring “unseen” in favour of “seen” results. But General Booth was advised of the sound economic conditions of his experiment, and seemed to recognize the value of the advice. The defence of his action sometimes takes the form of a denial that the Salvation Army undersells outside produce in the market. Salvation matches are sold, it is said, rather above than below the ordinary price of matches. If this be true, it affords no answer to the objection raised above. The Salvation matches are bought by persons who would have bought other matches if they had not bought these, and if they choose to pay 3d. for Salvation matches instead of 21/2d. for others, the effect of this action is still to take away employment from the 21/2d. firm and give it to the Salvation firm. Indeed, it might be urged that a larger amount of unemployment is caused in this case, for persons who now pay 3d. for matches which they formerly bought for 21/2d., will diminish their expenditure upon other commodities, and the result will be to diminish employment in those industries engaged in supplying these commodities. Here is another “unseen” result of fallacious philanthropy.

The inevitable result of the Salvation Army placing goods in the open market is to increase the supply relatively to the demand; in order that the larger supply may be sold prices must fall, and it makes no difference whether or no the Salvation Army takes the lead in reducing the price. If the fall of price enables the whole of the increased supply to be taken off at the lower price, then an increase of employment has been obtained in this trade, though, in this case, it should be remembered that in all probability the lower level of prices means a reduction of wages in the outside labour market. If the increased supply is not taken off at the lower prices, then the Salvation goods can only be sold on condition that some others remain unsold, employment of Salvationists thus displacing employment of other workers. The roundabout nature of much of this competition does not impair one whit the inevitability of this result.

This objection is applicable not only to the method of the Salvation Army, but to many other industrial experiments conducted on a philanthropic basis. Directly or indirectly bounty-fed labour is brought into competition with self-supporting labour to the detriment of the latter. It is sometimes sought to evade the difficulty by confining the produce which the assisted labour puts upon the open market to classes of articles which are not for the most part produced in this country, but which are largely imported from abroad. It is urged that although shoes and furniture and matches ought not to be produced by assisted labour for the outside market, it is permissible for an agricultural colony to replace by home products the large imports in the shape of cheese, fruit, bacon, poultry, etc., which we now receive from abroad. Those who maintain this position commonly fail to take into consideration the exports which go out from this country to pay for these imports. If this export trade is diminished the trades engaged in manufacturing the exported goods will suffer, and labour employed in these trades may be thrown out of employment. This objection may be met by showing that the goods formerly exported, or an equivalent quantity of other goods, will be demanded for the increased consumption of the labourers in the agricultural colony. This is a valid answer if the home consumption rises sufficiently to absorb the goods formerly exported to pay for agricultural imports. But even where this just balance is maintained, allowance must be made for some disturbance of established trades owing to the fact that the new demand created at home will probably be for different classes of articles from those which formed the exports now displaced. The safest use of assisted labour, where the products are designed for the open market, is in the production of articles for which there is a steadily growing demand within this country. Even in this case the utmost care should be exercised to prevent the products of assisted labour from so depressing prices as to injure the wages of outside labour engaged in similar productions.

Since the existence of an unemployed class who are unemployed because they are unable, not because they are unwilling, to get work, is proof of an insufficiency of employment, it is apparent that nothing is of real assistance which does not increase the net amount of employment. Since the amount of employment is determined by, and varies with, the consumption of the community, the only sure method of increasing the amount of employment is by raising the standard of consumption for the community. Where, as is common in times of trade depression, unemployment of labour is attended by unemployment of capital, this joint excess of the two requisites of production is only to be explained by the low standard of consumption of the community. Since the working-classes form a vast majority of the community, and their standard of consumption is low compared with that of the upper classes, it is to a progressive standard of comfort among the workers that we must look for a guarantee of increasing employment. It may be urged that the luxurious expenditure of the rich provides as much employment as the more necessary expenditure of the poor. But, setting aside all considerations of the inutility or noxious character of luxury, there is one vital difference between the employment afforded in the two cases. The demand for luxuries is essentially capricious and irregular, and this irregularity must always be reflected in the employment of the trades which supply them. On the other hand, a general rise in the standard of comfort of the workers creates an increased demand of a steady and habitual kind, the new elements of consumption belonging to the order of necessaries or primary comforts become ingrained in the habits of large classes of consumers, and the employment they afford is regular and reliable. When this simple principle is once clearly grasped by social reformers, it will enable them to see that the only effective remedy for unemployment lies in a general policy of social and economic reform, which aims at placing a larger and larger proportion of the “consuming power” of the community in the hands of those who, having received it as the earnings of their effort, will learn to use it in building up a higher standard of wholesome consumption.