Chapter 15

These authorities seem to agree in thinking (1) that the capitalist is a thief, (2) that the manual worker is a wage slave, (3) that freedom (in the sense of being able to work as he likes) is every man's rightful birthright, and (4) that this freedom is to be achieved through the establishment of National Guilds. As to (1) Messrs Bechhofer and Reckitt speak on page 99 of their book of the "felony of Capitalism" as a matter that need not be argued about. Mr Cole makes the same assumption by observing on page 235 of the work already mentioned that "to do good work for a capitalist employer is merely, if we view the situation rationally, to help a thief to steal more successfully." Well, this view of capital and the capitalist may be true. Mr Cole is a highly educated and gifted gentleman, and a Fellow of Magdalen. He may have expounded and proved this point in some work that I have not been fortunate enough to read. But as the abolition of the capitalist is one of the chief aims put forward by these writers it seems a pity that they should thus first assert that he is a thief to be stamped out, instead of explaining the matter to old-fashioned folk who believe that capitalists are, in the main, the people (or representatives of the people) who have equipped industry, and enormously multiplied its efficiency and output, and so have enabled the greater part of the existing population of this country (and most others) to come into being. But to the Guild Socialists the identity of robbery with capitalism seems to be so self-evident that it needs no proof. Next, as to the wage system. They seem to think that to earn a wage is slavery and degradation, but to receive pay is freedom. With the best will in the world I have tried to see where this immense difference between the use of two words, which seem to me to mean much the same thing, comes in in their view, but I have not succeeded. Perhaps you will be able to if I give you Mr Cole's own words.

On page 154 of the book cited, he says that the wage system is "the root of the whole tyranny of capitalism," and then continues:

"There are four distinguishing marks of the wage system upon which National Guildsmen are accustomed to fix their attention. Let me set them out clearly in the simplest terms,

"1. The wage system abstracts 'labour' from the labourer, so that the one can be bought and sold apart from the other.

"2. Consequently, wages are paid to the wage worker only when it is profitable to the capitalist to employ his labour.

"3. The wage worker, in return for his wage, surrenders all control over the organisation of production.

"4. The wage worker, in return for his wage, surrenders all claim upon the product of his labour.

"If the wage system is to be abolished, all these four marks of degraded status must be removed. National Guilds, then, must assure to the worker, at least, the following things:--

"1. Recognition and payment as a human being, and not merely as a mortal tenement of so much labour power for which an efficient demand exists.

"2. Consequently, payment in employment and in unemployment, in sickness and in health alike.

"3. Control of the organisation of production in co-operation with his fellows.

"4. A claim upon the product of his work, also exercised in co-operation with his fellows."

Now, looking with a most dispassionate eye and an eager desire to find out what it is that Labour and its spokesmen are grouping after, can one find in these "marks of degraded status" any serious evil, or anything that is capable of remedy under any conceivable economic system? In all of them the wage-earner is on exactly the same footing as the salary-earner or the professional piece-worker. The labour of the manager of the works can also be abstracted from the manager, and can be bought and sold apart from him. One would have thought that this fact is rather in favour of the manager and of the wage-earner--or would Mr. Cole prefer that the latter should be bought and sold himself? The salary-earner and the professional are only employed when somebody wants them. The manager's term of employment is longer, but the professional pieceworker, such as I am when I write this article, has usually no contracted term, and is only paid for actual work done. I also have no control over the organisation of the production of _Sperling's Journal_ or any other paper for which I do piecework. I am very glad that it is so, for organising production is a very difficult and complicated and risky business, and from all the risks of it the wage-earner is saved. The salary-earner or the professional, when once his product is turned out and paid for, also surrenders all claim upon the product. What else could any reasonable wage-earner or professional expect or desire? The brickmaker or the doctor cannot, after being paid for making bricks or mending a broken leg, expect still to have the bricks or the leg for his very own. And how much use would they be to him if he could? Unless he were to be allowed to sell them again to somebody else, which, after being once paid for them, would merely be absurd.

But when we come to the remedies that Mr. Cole suggests for these "marks of degraded status," we find in the forefront of them that the worker must be secured "payment as a human being, and not merely as a mortal tenement of so much labour power for which an efficient demand exists." This, especially to an incurably lazy person like myself, is an extremely attractive programme. To be paid, and paid well, merely in return for having "taken the trouble to be born," is an ideal towards which my happiest dreams have ever struggled in vain. But would it work as a practical scheme? Speaking for myself, I can guarantee that under such circumstances I should potter about with many activities that would amuse my delicious leisure, but I doubt whether any of them would be regarded by society as a fit return for the pleasant livelihood that it gave me. And human society can only be supplied with the things that it needs if its members turn out, not what it amuses them to make or produce, but what other people want. And It is here that the National Guildsmen's idea of freedom seems, in my humble judgment, to be entirely unsocial As things are, nobody can make money unless he produces what somebody wants and will pay for. Even the capitalist, if he puts his capital into producing an article for which there is no demand, will get no return on it. In other words, we can only earn economic freedom by doing something that our fellows want us to do, and so co-operating in the work of supplying man's need. (That many of man's needs are stupid and vulgar is most true, but the only way to cure that is to teach him to want something better.) The Guildsmen seem to think that this necessity to make or do something that is wanted implies slavery, and ought to be abolished. They are fond of quoting Rousseau's remark that "man is born free and is everywhere in chains." But is man born free to work as and on what he likes? In a state of Nature man is born--in most climates--under the sternest necessity to work hard to catch or grow his food, to make himself clothes and build himself shelter. And If he ignores this necessity the penalty is death. The notion that man is born with a "right to live" is totally belied by the facts of natural existence. It is encouraged by humanitarian sentiment which, rightly makes society responsible for the subsistence of all those born under its wing; but it is not part of the scheme of the universe.

Such are a few of the weaknesses involved by the theoretical basis on which Guild Socialism is built. When we come to its practical application we find the creed still more unsatisfactory. Even if we grant--an enormous and quite unjustified assumption--that the Guildsman, if he is to be paid merely for being alive, will work hard enough to pay the community for paying him, we have then to ask how and whether he will achieve greater freedom under the Guilds than he has now. Now, freedom is only to be got by work of a kind that somebody wants, and wants enough to pay for it. And so the consumer ultimately decides what work shall be done. The Guildsman says that the producer ought to decide what he shall produce and what is to be done with it when he has produced it. "Under Guild Socialism," says Mr Cole,[1] "as under Syndicalism, the State stands apart from production, and the worker is placed in control." Very well, but what one wants to know is what will happen if the Guilds choose to produce things that nobody wants. Will they and their members be paid all the same? Presumably, since they are to be paid "as human beings" and not because there is a demand for their work. But if so, what will happen to the Guildsman as consumer? There will be no freedom about his choice of things that he would like to enjoy. And what about admission to membership of a Guild, the price at which the Guilds will exchange products one with another, and the provision of capital? The nearest approach to an answer to these questions is given by Messrs Bechhofer and Reckitt in Chapter VIII, of the "Meaning of National Guilds." This chapter describes "National Guilds in Being." It tells us that "each man will be free to choose his Guild," which sounds very pleasant, but is completely spoilt by the end of the sentence, which says "and actual entrance will depend on the demand for labour." It sounds just like a capitalistic factory. And then--"Labour in dirty industries, sewaging, etc.--will probably be in the main of a temporary character, and will be undertaken by those who are for the time unable to obtain an entry elsewhere." Most sensible, but where is the freedom? The Guildsman will not be able to do the work that he wants to do unless there is a demand for that kind of labour, and in the meantime, just like the unemployed in the days of darkness, he will be set to cleaning the streets and flushing the drains. Messrs. Bechhofer and Reckitt are, in fact, so sensible and practical that they abandon altogether the freedom of the producer to produce what he likes. "Indeed," they write, "a query often brought to confound National Guildsmen is this: What would happen to a National Guild that began to work wholly according to its own pleasure without regard to the other Guilds and the rest of the community? We may reply, first, that this spirit would be as unnatural among the Guilds as it is natural nowadays with the present anti-communal, capitalist system of industry" (but under the present system any one who worked without regard to the rest of the community would very soon be in the hands of a Receiver); "secondly, if it did arise in any Guild, this contempt for the rest of the community would be met by the concerted action of the other Guilds. The dependence of any individual Guild upon the others would be necessarily so great that a recalcitrant Guild would find itself at once in a most difficult position, and a Guild that pressed forward demands that were generally felt by the rest of the community to be impossible or unreasonable would soon be brought back into line again."

[Footnote 1: "The Meaning of Industrial Freedom," page 39.]

Of course; but if so, where is the Guildsman's alleged freedom? Every Guild and every Guildsman would have to adapt himself to the wants of the community, just as all of us who work for our living have to do now. He would be no more free than I am, and I am no more free than the person who is sometimes described as a "wage slave." The Guildsman might be happier in the feeling that he worked for a Guild rather than a capitalist employer, but this is by no means certain. The writers just quoted show with much frankness and good sense that there would be plenty of opening for friction, suspicion, discontent and strikes. "A Guild," they say, "that thought itself ill-used by its fellows would be able to signify its displeasure by the threat of a strike." The officials of the Guild are to be chosen by the "men best qualified to judge" of their ability, whoever they may be, and every such choice would be ratified by the workers who are to be affected by it. "The Guild would build up in this way a pyramid of officers, each chosen by the grade immediately below that which he is to occupy," Did not the Bolsheviks try something like this system, with results that were not conducive to efficient production? And to meet the danger that the officials as a whole might combine "in a huge conspiracy against the rank and file," Messrs Bechhofer and Reckitt can only suggest vigilance committees within the Guilds. In a word, Guild Socialism seems to be a system that might possibly be worked by a set of ideally perfect beings; but as folk are in this workaday world one can only doubt whether it would be conducive either to freedom, efficiency or a pleasant life for those who lived under it.

XV

POST-WAR FINANCE

_November_, 1918

Taxation after the War--Mr. Hoare's Scheme described and analysed--The Position of the Rentier--Estimates of the Post-War Debt--The Compulsory Loan Proposal--What Advantages has it over a Levy on Capital?--The Argument from Social Justice--Questions still to be answered--The Choice between a Levy and Stiff Taxation--Are we still a Creditor Nation?--Our Debt not a Hopeless Problem--Suggestions for solving it.

Under this heading two very interesting articles were contributed to the October issue of _Sperling's Journal_ by Mr Alfred Hoare and an "Ex-M.P.," and the subject is clearly one to which, now that the end of the war has been brought appreciably nearer by the feats of the Allied armies, too much thought and discussion can hardly be given. How are we going to face the problem that has been built up for us by the bad finance of the war, the low proportion of its cost that has been paid for out of taxation, and the consequent huge debt with which--it is already over £7000 millions gross--the State will be saddled? Mr. Hoare answered the question by proposing a scheme of taxation of what he called Rente, by which he meant all forms of "unearned income"--"rentals from freehold and leasehold property, interest upon loans whether public or private, and dividends on joint stock companies or sleeping partnerships." He added that in his opinion earned income above a certain figure might reasonably be added to this category on the ground that it has, in some instances, very much the same characteristics as unearned; the income of a "successful professional man or clown or jockey or opera star" being due to peculiar qualities; "and it would be no great hardship if earned income above, say, a thousand a year for a married couple, with an additional three hundred for every child under twenty-five years of age were regarded as unearned, and taxed accordingly." Income was thus the basis of Mr Hoare's scheme. Rente he regards as an agency regulating distribution, and requiring to be constantly checked. "It is," he says, "an elementary principle of social health, and economic prosperity that the share of the national wealth enjoyed by the Rentier, by the owner, that is, of unearned income, should not be excessive," Most people who can follow his admirable example and take a detached and unbiassed view of questions which affect their pocket so closely, will agree with him In this opinion. The Rentier lives on the proceeds of work done in the past by him or by some other person; and it is not good for our economic health that he should grow too fat at the expense of those who are working now, lest the latter be discouraged and work with less spirit.

At the same time we have to remember that the work done in the past by the Rentier or those whom he represents, has given us the plant and equipment (in the widest sense of the phrase) with which we are now working. If, therefore, we penalise the Rentier too severely we shall discourage his future creation; the present race of earners, if they see that those who are living on past savings are shorn too close will be deterred from saving, will put their surplus earnings into extravagant spending instead of into plant and equipment, and the economic future of the nation, and of the world, will be _pro tanto_ less hopeful. If once our fiscal system is going to propagate the view--already so rampant among the happy-go-lucky citizens of this unthrifty people--that the worst thing to do with money is to save it there will be bad times ahead for our industry and commerce, which can only get the capital that it needs if somebody saves it. Mr Hoare's elaborate calculations led him to conclusions involving a tax of 11s. 6d. in the pound on unearned income. This figure is, I hope, needlessly high. To arrive at it he assumed that peace might be concluded towards the end of 1919, and that when peace conditions are fully re-established--which will take, he thinks, three years, the National Debt will amount to £10,000 millions, involving annual interest of £500 millions, which, added to the total Rente of the country in 1913 (which he made out to be £520 millions), will make a total Rente in 1923 of £1020 millions. His view is that the burden of the National Debt should be thrown by means of the income tax upon the national Rente, not taxing it out of existence, but by such a scale of taxation as would reduce the net Rente of the country to approximately the level at which it stood before the war.

There is good reason to hope that Mr Hoare's figures will not be reached. He took £10,000 millions merely as a round sum. Mr Bonar Law, it will be remembered, worked out our net debt on March 31st next at £6856 millions, taking credit for half the estimated amount of loans to Allies as a good asset. If we prefer as sounder bookkeeping to write off the whole of our loans to Allies for the time being and to apply anything that we may hereafter receive on that account to Sinking Fund, the debt, on the Chancellor's figures, will amount on March 31st (if the war goes on till that date) to £7672 millions. Even if the war went on for six months more it ought not to bring the debt up to more than £9000 millions at the outside. It is quite true, as Mr Hoare says, that the return to peace conditions will be a gradual process, and that expenditure will not come back to a peace basis all at once. Demobilisation and other matters which were left, by our cheery Chancellor, out of the airy after-war balance-sheet that he so light-heartedly constructed, may cost £1000 millions or more before we have done with them. But against them we can set a string of recoverable assets which, in the Chancellor's hands, footed up a total of £1172 millions--balances in agents' hands, due debts (apart from loans to Allies), land, securities, ships, buildings, stores In Munitions Department, arrears of taxation, and so on. With his 11s. 6d. in the pound on unearned and 6s. in the pound on earned incomes, Mr Hoare expects a revenue of £620 millions, "or enough to provide for the interest of the debt with a 1 per cent. Sinking Fund, and leave £20 millions towards the Supply Services." But Mr Bonar Law anticipated a total peace Budget (if the war ended by March 31st next) of £650 millions. This was probably too low, but we may at least hope that Mr Hoare has gone rather further than was necessary to be on the safe side.

In the other article on the subject of post-war debt contributed to the last number of this Journal, an "Ex-M.P." plumped for a somewhat novel variety of the Levy on Capital, in the shape of a Compulsory Loan, bearing no interest and repayable in 100 years. Each individual citizen to be made to subscribe to the extent of 20 per cent. of his possessions. Ten per cent. of the amount due to be paid on application, 10 per cent. six months after allotment, and 80 per cent. on January 1st of the following year. When desired, the Government to advance at 5 per cent. the money necessary for the payment subsequent to allotment, full repayment of such advances to be made within eight years. A Sinking Fund to be established to redeem the loan at maturity. But is there any real advantage in this scheme over the Levy on Capital, from which it only differs by the receipt by the payer of a promise to repay in 100 years' time? The approximate value of £1000 nominal of the Compulsory Loan stock would be, according to "Ex-M.P.'s" calculation, in the year of issue £7 12s., money being worth 5 per cent. and assuming that rate to be current during the remainder of the term. The claim that there is no confiscation, because "a perfectly good security is given for the money received," would seem rather futile to those who paid £1000 and received a security, the present value of which might be below £10. They might very likely think that outright confiscation (since confiscation originally means nothing but "putting into the Treasury") is really a simpler way of dealing with the problem. "Ex-M.P.," however, estimates that the immediate redemption of £2800 millions of debt (which he, rather modestly, expects to be the result of his 20 per cent. levy) would enable the balance of the War Debt to be converted into 3-1/2 per cent. stock. This may be true, but if so it is equally true if a similar or larger amount of debt is cancelled by means of an outright Levy on Capital.

The merits and demerits of a Levy on Capital have already been dealt with in the pages of this Journal "Ex-M.P.," however, brought forward a slightly novel form of argument in its favour. He pointed out that the money constituting the great increase in debt that has taken place during the war will have been, in the main, contributed by people who have worked at home under the protection of the Army and Navy, while the soldiers and sailors have been prevented by the duty which sent them out to risk their lives from subscribing a proportionate share to the National Debt. Hence "a class that deserves most of the State will find itself indebted to a class which--if it does not deserve least of the State--has, at any rate, turned a national emergency to personal profit." This is a strong argument, which, has been used frequently in the course of the war in the pages of the _Economist_, against borrowing for war purposes to the large extent to which our timid rulers have adopted the policy. "To be really just," the writer continued, "the process of taxation ... must be applied with greatest force to those who have accumulated their money since the outbreak of war, and only to a less degree to those whose fortunes have not been built upon their country's necessity. The difficulty of separating these two classes of wealth is great, and must, in the writer's opinion, be effected by separate legislation--legislation which might justly be based upon the increase in post-1913 incomes, a record of which should now be in preparation at Somerset House." Everyone will agree that everything possible should be done to take the burden of the war debt off the shoulders of those who have fought for us; but it is equally clear that now that the mischief of this huge debt has been done, it will be exceedingly difficult to repair it by any ingenuities of this kind. For instance, if the kind of taxation--in the shape of a Compulsory Loan--proposed by "Ex-M.P." were enforced, how can we be sure that it would not take a large slice off capital, the next heir to which is a soldier or a sailor? Bad finance is so much easier to perpetrate than to remedy that one is almost certain to come across such objections as this to any scheme for making the war profiteers "cough up" some of their gains.