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unskilled workers, the difference in Melbourne was only 22 per cent. This does not mean that the Australian unskilled man is paid too much; in New York he is probably paid too little. It means that the Australian skilled worker is not paid enough. The result is that there is little inducement to Australian youths to embark on periods of apprenticeship and technical training, and much inducement to them to enter unskilled or semi-skilled occupations, where good wages can be obtained at once, instead of after a long period of probation.
Finally, wages regulation has been in operation in a period of scarcity of labour, energetic government borrowing, and rising prices. It is open to debate whether under these conditions workers might not have been able to get just as large an increase of wages without state action. In practice, the machinery has in recent years been largely engaged in pulling wages up to prices. It still remains to be seen how the machinery will work in a period when prices are falling, credit is restricted, and labour is over-abundant.
Present Chaos. As this volume goes to press, the whole wages position is clouded. Two causes stand out. (1) In 1920 members of the Federal Parliament increased their salaries from £600 to £1,000 a year; this startling piece of constitutional direct action had its inevitable effect in stimulating wage-earners to demand large increases. (2) Late in 1919 the Federal Government appointed a royal commission to investigate the whole question of the cost of living “according to reasonable standards of comfort” and the automatic adjustment of the basic wage. This commission, after twelve months' work, submitted a unanimous report in November, 1920. Allowing for a slightly more liberal definition of “reasonable standards of comfort” than had been accepted in earlier wage estimates, it declared that the actual cost of living in November, 1920, for a man, wife, and three children under 14 years of age, ranged from £5 6/2 in Brisbane to £5 17/in Sydney. Since the basic wage figures fixed by the various courts in 1920 ran between £3 15/- and £4 5/-, and since the payment of the commission's figure to all male adult workers would add about £100,000,000 to the country's annual wages bill, the report came as a thùnderbolt. It brought several vital questions forward, questions which fundamentally affect the whole future of wages regulation. Of these, two only need be noted here.
(1) Can the basic wage be determined without any regard to the total volume of wealth produced and available for distribution It has often been laid down that in fixing a basic wage no account can be taken of the ability of an dustry to pay that wage, and that any industry which cannot afford to pay it is better closed down. This nonchalance becomes impossible when inability to pay becomes general or affects big staple industries, as would probably happen if a wage based on the commission's figures were applied all round. The Wealth Census of 1915 revealed the fact that if all Australian incomes over £156 were divided among those receiving less than £156, then each income-receiver would obtain 10/5 a week more than he was getting. If all income in excess of £300 a year were distributed among income-receivers (over 14 years of age) getting less than £300, the dividend would be 4/5 each a week. The surplus has grown since 1915; but even then it is very doubtful whether industries producing for export could pay the commission's rates, whilst industries working for the home market could only do so by largely increasing their prices, a step which would at once make necessary a further increase of the basic wage. We are driven back on to the question, “Is the volume of production sufficient to give every
worker an income big enough to enable him to enjoy "a reasonable standard of comfort'? If not, by what means and in what directions-agricultural or industrial, primary or secondary-can the production of the continent be increased ?'
(2) Can we continue the practice of paying every male adult workersingle, married but with no children, married and with children—a wage based on the cost of keeping man, wife, and two or three children? In the past, the same rate has been applied to all workers, regardless of the number of dependents; it has been payment, not “according to needs,” but "according to the needs of the average family.” The arguments in favour of this practice have been (a) that the single man will save his surplus in order to set up a home some day; (b) that if lower rates were paid to single men than to married men, the former would be employed in preference to the latter. The second argument may be sound; the first is not so valid, for the single man may, or may not, save. Further, the married man who limits his family to one child is overpaid, whilst the man with more than three children is underpaid. Industry, therefore, in paying a wage to all based on the needs of a family of five, pays for 450,000 non-existent wives and over 2,000,000 non-existent children.
The facing of this problem is an inevitable corollary of a system of regulation based upon the needs of the wage-earner, and leads irresistibly to consideration of plans for the endowment of children. If a reasonable standard of living is to be maintained, the flat rate income must give place to one which varies in accordance with the number of dependents. But the employer cannot be left to pay the varying rates: if he were, he would endeavour to employ single men only. The state, which laid down the basic wage principle, must follow its own idea to the logical conclusion. Au unsuccessful attempt was made to do this in N.S.W. in 1918; the matter was brought forward much more prominently in a personal memorandum submitted to the Federal Government by Mr. A. B. Piddington, K.C., chairman of the Basic Wage Commission, at the same time as the commission's report. Mr. Piddington suggested that in order to make the commission's recommendations workable, the basic wage for a single man or a man and wife should be £4. In addition to paying each employee £4, the employer was to pay a tax of 10/9 per employee to the state, and the state would then use this money to pay wage-earners 12/- a week for each child under 14 years of age. Thus a man with three children would get £4 wages and 36/- endowment, a total of £5 16/-; the man with five children would get £4, plus 60/-, a total of £7. The single man would get only his £4 wages. What will happen to this proposal has yet to be seen. In December, 1920, the Federal Government agreed to pay the £4 minimum to its employees and 5/- for each child. Any attempt at state endowment as outlined above would entail complicated administrative machinery. Still, the idea is now definitely in the field and cannot be ignored, unless we scrap the whole principle of payment according to needs.
Books Recommended. New South Wales Royal Commission on Industrial Arbitration, 1912; Commonwealth Year Book, chapter on “Industrial Legislation''; Commonwealth Labour and Industrial Branch Reports ; Murphy, H. M., “Wages and Prices in Australia”; Industrial Court Reports for N.S.W., S.A., Q., and Federal Court; Atkinson, M. (ed.), “Australia: Economic and Political Studies," chap. 5; Reports of Federal Basic Wage Commission, 1920.
THE CRITICAL BASIS OF SOCIALISM.
TRADE unionism and industrial legislation were in essence and origin attempts to make labour more bearable and less exploited in the new capitalist system. We now turn for the remainder of this volume to consider movements which had as their aim the creation of a quite different economic system. They are co-operation and socialism. Co-operation, in its inception, dreamed of a new heaven, where each worked for all and all for each, and socialism was equally revolutionary in its search for a system in which the labourer would not be exploited for private gain. Both have been assisted by the congregation of population into large industrial centres; both have been driven along by the motive force of poverty; both are material in methods, but spiritual in aims. Both owe much to the assistance of middle-class supporters, but rely for their progress upon the awakening of the world's mass of
wage-earners. Both have achieved great measures of success; co-operation has many substantial material accomplishments to its credit, but the successes of socialism lie largely in the field of propaganda, individual conversion, and political power.
In its progress through a century socialism shows four aspects. First, and most powerful, is its criticism of existing society and denunciation of the methods and results of modern capitalism. This task is easy, for the volume of information on poverty in all its aspects supplies the socialist with an inexhaustible store of ammunition. Second comes the socialist philosophy of social evolution, first fully enunciated by Marx, in which it is shown that the rate and direction of social progress are determined by the development of the means of production, distribution, and exchange, and that this development leads inevitably to the eventual breakdown of capitalism and the institution of socialism. The third feature is the socialist alternative to capitalism—the ideal—which sees the liberation of the genius and happiness of mankind in an economic society based on the social ownership and control of capital. In order that this ideal may be realized, and realized quickly, we have the fourth aspect, the propagandist movement, which has spread to nearly every land, and which numbers its converts by the tens of millions. In order to understand socialism we must keep these four strands clearly and distinctly in mind.
Like most movements, socialism began as a reaction. It did not emerge fully fledged; it had its origin in discontent and criticism of existing conditions, and found therein one of the staple articles of diet during its growth. Let us first examine, therefore, the main lines of socialistic criticism as they appear to-day.
The Shadow of Equality and the Substance of Inequality. The main line of attack is the contention that side by side with the growth of political democracy and equality there have grown up economic despotism and inequality. The fight for political democracy was one of the great struggles of the 19th century, and in some countries achieved a considerable measure of success. Democracy, liberty, equality, and fraternity have been popular watchwords since the French Revolution, and equality of rights is the keynote of modern times. Great strides have been made towards political equality by the extension of the franchise, women's suffrage, proportional representation, the referendum, etc. Absolute monarchies have had their wings clipped or their heads cut off; the privileges of non-elected second chambers have been curtailed, and responsibility of ministers to parliament has been established in many lands. The payment of members theoretically opens the way to high political position to the poorest, and party organization has enabled working men to enter upon and go far across the political field. Finally, the scope of democracy has been extended from the national to the local sphere, and democratic local government has great powers in some countries. Thus, so far as political machinery can give it, we have secured government of the people, by the people, for the people.
To political equality we must add legal equality. The principle that all are equal in the eyes of the law has been given general assent. One parliamentarian may be fined for disloyal utterances, another for not sending in an income-tax return. A trust magnate may be prosecuted for restraint of trade, an eminent novelist for hoarding food in war-time. Even although in practice the legal system may fall short of perfect impartiality, and although the cost of litigation may keep the poor plaintiff out where the rich goes in, society has nevertheless moved far in a century towards the ideal of absolute justice.
Thirdly, the barriers between poverty and knowledge have been broken down, and equality of opportunity in education is accepted as a principle of statecraft. Free elementary education, scholarships for secondary schools, technical colleges, and universities, and the W.E.A., have opened a highway of education on which the poorest may travel far. Public libraries, a cheap press, the spread of theatres, the growth of choral societies and orchestras in provincial towns, all help to break down the monopoly of education and culture formerly enjoyed by the well-to-do.
Thus in the political, legal, and intellectual spheres, liberty, equality, and democracy have made rapid strides. Yet side by side with all this progress, there has been a trend towards economic inequality and despotism. This is largely the result of the Industrial Revolution, which gave to' men possessing supplies of capital the leadership and control of the new industrial system. Capital bred capital; much of the wealth produced passed to the owners of capital in the form of rent, interest, and profit; private property became a much more important thing than it had ever been in previous forms of iety, and inheritance passed the accumulated property down from the generation which made it to generations which merely enjoyed it,
Economic Inequality and Economic Classes. From this new form of economic organization certain results emerged. Firstly, there was marked cleavage of classes, which seemed to grow wider and more permanent with every decade. One class lives by the receipt of rent from land, agricultural or urban. The landlord class reached its highest point in England and Wales, where it was estimated in the seventies that half of the land was owned by 4,000 people. The worst form of landlordism grew up in cities; the growth of industries and commerce, the coming of roads, railways, and population, all increased the value of sites and the consequent rents beyond recognition. Another class is that which receives interest or profit on the capital which it owns; in some cases the owner of that capital personally directs its use, but with the growth of the joint stock company the manage
ment of capital has passed largely into the hands of paid servantsmanaging directors, etc.—and the shareholders receive their dividends, possibly without ever having been within 1,000 miles of the place where the money is invested. Lastly, there is the class of salaried or wage-earning employees, who, owning neither land to work not capital to invest, sell their labour in order to live.
Secondly, the distribution of wealth amongst these economic classes is unequal. It has been estimated that in 1908-9 one-half the income of the United Kingdom went to 39,000,000 people, whilst the other half went to 5,500,000. In the early nineties of last century Charles Booth discovered that over 30 per cent. of the population of London were living below the poverty line of a family income of 21/- a week, and there is little reason to doubt that the percentage had been seriously reduced in 1914. The Australian wealth census of 1915 discovered that of the 2,200,000 people (chiefly adults) who furnished returns, 17 per cent. owned 87 per cent. of the total net assets, and 10 per cent. received 40 per cent. of the net annual income. In 1910 47 per cent. of the total national income of the United States went for wages and salaries; the remaining 53 per cent. was absorbed in rent, interest, and profit.. Every country has its millionaires, with every gradation of personal wealth from them down to the very poor. Some fortunes have been the reward of enterprise, risk, adventure, hard work, self-denial, the ability to forecast possibilities, to seize on a profitable resource, or supply a new popular demand; others are the fruits of luck, of grinding the faces of the poor, or of a consistent neglect of most of the ten commandments. But inheritance allows the wealth thus created to pass on into hands which bave done nothing to create it and do nothing but spend it. The poor meanwhile pass on their legacies-hard work, drab surroundings, and possibly stunted physique, health, and outlook. This inequality cannot be explained away by asserting that the poor owe their lot to drink, vice, or laziness. Drink, vice, and laziness find equally devoted worshippers amongst the rich. Further, the inequality of income flouts itself in the public gaze nowadays. The big shop windows, with their display of expensive clothes and jewels, the sumptuous motor car, and the other evidences of wealth and what wealth can give are more ostentatiously displayed than formerly, and therefore excite the envy of the many. Thirdly, inequality has disastrous effects on the stamina of rich and
Poverty means slums and over-crowding. It was ascertained in about 1905 that one-fifth of the population of Glasgow was living in one-roonied tenements. During the Dublin strike of 1913 two houses simply tumbled down, and inquiries revealed the fact that thirteen families had been residing there. Slums take heavy toll in mortality. In Paris in 1912 the death-rate was 7.9 per 1,000 in an aristocratic suburb and 33.5 in a poor region; for London the figures were 11.3 and 50. This mortality was heaviest amongst children, and in France threequarters of the infantile mortality was due to preventible causes which mostly found their explanation in poverty. Some diseases pass by or touch lightly all but the poor; over-crowding, ignorance, bad or insufficient food, and the inability to afford the services of a doctor enable epidemics to run riot, and small ailments become serious. Mental deficiency, crime, and suicide can in a percentage of cases be traced to poverty, and while drunkenness is sometimes the cause of poverty, it is often the result of fatigue and semi-starvation. The war, with its revelations of wide