The New State · Part I · Chapter 14 (2/2)

But more important than any of the illustrations yet given is the application of the group principle to the relations of capital and labor. People are at last beginning to see that industrial organization must be based on the community idea. If we do not want to be dominated by the special interests of the capital-power, it is equally evident that we do not want to be dominated by the special interests of the labor-power. The interests of capital and labor must be united.41

Even collective bargaining is only a milestone on the way to the full application of the group principle. It recognizes the union, it recognizes that some adjustment between the interests of capital and labor is possible, but it is still “bargaining,” still an adjustment between two warring bodies, it still rests on the two pillars of concession and compromise. We see now the false psychology underlying compromise and concession. Their practical futility has long been evident: whenever any difference is “settled” by concession, that difference pops up again in some other form. Nothing will ever truly settle differences but synthesis. No wonder the syndicalists label the “compromises” made between “antagonistic interests” as insincere. In a way all compromise is insincere, and real harmony can be obtained only by an integration of “antagonistic” interests which can take place only when we understand the method. The error of the syndicalists is in thinking that compromise is the only method; their fundamental error is in thinking that different interests are necessarily “antagonistic” interests.

Compromise is accepted not only as inevitable and as entirely proper, but as the most significant fact of human association, by those economists who belong to that school of “group sociologists” which sees present society as made up of warring groups, ideal society as made up of groups in equilibrium. Not only, I believe, is conflict and compromise not the true social process, but also it is not, even at present, the most significant, although usually the largest, part of the social process. The integrating of ideas which comes partly from direct interpenetration, and partly from that indirect interpenetration which is the consequence of the overlapping membership of groups, I see going on very largely in the groups to which I belong, and is surely an interesting signpost to future methods of association.

The weakness of Arbitration and Conciliation Boards, with their “impartial” member, is that they tend to mere compromise even when they are not openly negotiations between two warring parties.42 It is probable from what we see on all sides that the more “concessions” we make, the less “peace” we shall get. Compulsory Arbitration in New Zealand has not succeeded as well as was hoped just because it has not found the community between capital and labor.

The latest development of collective bargaining, the Trade Agreement,43 with more or less permanent boards of representatives from employers and workers, brings us nearer true community than we have yet found in industrial relations. The history of these Agreements in England and America is fruitful study. One of the best known in America is Mr. Justice Brandeis’ protocol scheme in 1910 for the garment industries of New York, which provided for an industrial court composed of employers and employed to which all disagreements should be brought, and for six years this prevented strikes in the needle trades of New York.44

One of the most interesting of the Trade Agreements to be found in the Bulletins of the National Labor Department, and one which can be studied over a long term of years, is that between the Stove Founders’ National Defence Association (employers) and the Iron Moulders’ Union of North America. It is not only that the permanent organ of “conference” (employers and employees represented) has brought peace to the stove industry after forty years of disastrous strikes and lockouts, but that question after question has been decided not by the side which the market rendered strongest at the moment seizing its advantage, but by a real harmonizing of interest. A good illustration is the treatment of the question of who should pay for the bad castings: that was not decided at once as a matter of superior strength or of compromise, but after many months a basis of mutual advantage was found.

For some years Trade Agreements have been coming to include more and more points; not wages and hours alone, but many questions of shop management, discipline etc. are now included. Moreover it has been seen over and over again that the knowledge gained through joint conference is the knowledge needed for joint control: the workmen ought to know the cost of production and of transportation, the relative value of different processes of production, the state of the market, the conditions governing the production and marketing of the competing product etc.; the employer must know the real conditions of labor and the laborer’s point of view.

The fundamental weakness of collective bargaining is that while it provides machinery for adjustment of grievances, while it looks forward to all the conceivable emergencies which may arise to cause disagreement between labor and capital, and seeks methods to meet these, it does not give labor a direct share in industrial control. In the collective bargain wages and the conditions of employment are usually determined by the relative bargaining strength of the workers and employers of the industrial group. Not bargaining in any form, not negotiation, is the key to industrial peace and prosperity; the collective contract must in time go the way of the individual contract. Community is the key-word for all relations of the new state. Labor unions have long been seeking their “rights,” have looked on the differences between capital and labor as a fight, and have sought an advantageous position from which to carry on the fight: this attitude has influenced their whole internal organization. They quite as much as capital must recognize that this attitude must be given up. If we want harmony between labor and capital, we must make labor and capital into one group: we must have an integration of interests and motives, of standards and ideals of justice.

It is a mistake to think that social progress is to depend upon anything happening to the working people: some say that they are to be given more material goods and all will be well; some think they are to be given more “education” and the world will be saved. It is equally a mistake to think that what we need is the conversion to “unselfishness” of the capitalist class. Those who advocate profit-sharing are not helping us. The quarrel between capital and labor can never be settled on material grounds. The crux of that quarrel is not profits and wages⁠—it is the joint control of industry.

There has been an increasing tendency of recent years for employers to take their employees into their councils. This ranges from mere “advisory” boards, which are consulted chiefly concerning grievances, through the joint committees for safety, health, standardization, wages etc., to real share in the management.45 But even in the lowest form of this new kind of cooperation we may notice two points: the advisory boards are usually representative bodies elected by the employees, and they are consulted as a whole, not individually. The flaw in these advisory boards is not so much, as is often thought, because the management still keeps all the power in its own hands, as that the company officials do not sit with these boards in joint consultation. There is, however, much variety of method. In some shops advisory committees meet with the company officials. Some companies put many more important questions concerning conditions of employment before these bodies than other companies would think practical. A few employers have even given up the right to discharge⁠—dismissal must be decided by fellow-employees.

Usually the management keeps the final power in its own hands. This is not so, however, in the case of Wm. Filene Son’s Co., Boston, which has gone further than any other plant in co-management. Here the employees have the right by a two-thirds vote to change, initiate, or amend any rule that affects the discipline or working conditions of the employees of the store, and such vote becomes at once operative even against the veto of the management. Further, out of eleven members of the board of directors, four are representatives of the employees.46

The great advantage of company officials and workers acting together on boards or committees (workshop committees, discipline boards, advisory councils, boards of directors, etc.) is the same as that of the regular joint conferences of the Trade Agreement: employers and employed can thus learn to function together and prepare the way for joint control. Workshop committees should be encouraged, not so much because they remove grievances etc., as because in the joint workshop committee, managers and workers are learning to act together. Industrial democracy is a process, a growth. The joint control of industry may be established by some fiat, but it will not be the genuine thing until the process of joint control is learned. To be sure, the workshop committees which are independent of the management are often considered the best for the workers because they can thus keep themselves free to maintain and fight for their own particular interests, but this is exactly, I think, what should be avoided.

The labor question is⁠—Is the war between capital and labor to be terminated by fight and conquest or by learning how to function together? I face fully the fact that many supporters of labor believe in what they call the “frank” recognition that the interests of capital and labor are “antagonistic.” I believe that the end of the wars of nations and of the war between labor and capital will come in exactly the same way: by making the nations into one group, by making capital and labor into one group. Then we shall learn to distinguish between true and apparent interests, or rather, between long-run and immediate interests; then we shall give up the notion of “antagonisms,” which belong to a static world, and see only difference⁠—that is, that which is capable of integration. This is not an idealistic treatment of the labor problem. Increase of wages and reduction in cost of production were once considered an irreconcilable antagonism⁠—now their concurrence is a matter of common experience. If the hope of that concurrence had been abandoned as visionary or idealistic, we should be sadly off today. Many people are now making a distinction, however, between production and distribution in this respect: in the former the interests of capital and labor are the same, it is said, but not in the latter. When that reorganization of the business world, which it is no longer utopian to think of, is further actualized, then in distribution too we shall be able to see the coincident interests of labor and capital.

As the most hopeful sign in the present treatment of industrial questions is the recognition that man with his fundamental instincts and needs is the very centre and heart of the labor problem, so the most hopeful sign that we shall fully utilize the constructive powers which will be released by this psychological approach to industrial problems, is the gradually increasing share of the workman in the actual control of industry.

The recognition of community rather than of individuals or class, the very marked getting away from the attitude of pitting labor interests against the interests of capital, is the most striking thing from our point of view about the famous report formulated by a subcommittee of the British Labor Party in the autumn of 1917. In every one of the four “Pillars” of the new social order this stands out as the most dominant feature. In explaining the first, The Universal Enforcement of the National Minimum, it is explicitly stated that this is not to protect individuals or a class, but to “safeguard” the “community” against the “insidious degradation of the standard of life.” The second, The Democratic Control of Industry, proposes national ownership and administration of the railways, canals and mines and “other main industries⁠ ⁠… as opportunity offers,” with “a steadily increasing participation of the organized workers in the management,” the extension of municipal enterprise to housing and town planning, public libraries, music and recreation, and the fixing of prices. This “Pillar,” too, we are told, is not a class measure, but is “to safeguard the interests of the community as a whole.”

Under the heading, “Revolution in National Finance,” the third “Pillar,” it is again definitely stated and moreover convincingly shown that this is not “in the interests of wage-earners alone.” Under “The Surplus Wealth for the Common Good,” the fourth “Pillar,” it is stated that the surplus wealth shall be used for what “the community day by day needs for the perpetual improvement and increase of its various enterprises,” “for scientific investigation and original research in every branch of knowledge,” and for “the promotion of music, literature and fine arts.” “It is in the proposal for this appropriation of every surplus for the common good⁠—in the vision of its resolute use for the building up of the community as a whole⁠ ⁠… that the Labor Party⁠ ⁠… most distinctively marks itself off from the older political parties.”47