The Nineteenth Century 105 (February 1929), 215-222
It is impossible to spend a week in the Rhondda Valley without being made to think. Those who are engaged in trying to administer relief and those who are in receipt of it resemble one another in this, that the general problem is never far from their lips. Economics is, so to speak, in the air. Indeed, bad as the conditions are – even though one may hear of case after case in which the individual has only seven or eight shillings a week after the rent is paid – still, one may dare to say that extremity of destitution is not the striking factor in the Valley. It is terrible; but there are as bad and worse cases to be found in many a London slum. What hangs over the Rhondda Valley like a thick cloud, bringing with it the subdued excitement associated with abnormal weather, is the magnitude and permanence of the problem.
One lends a hand distributing parcels and is told quite frankly by the people in charge that they are hardly even touching the problem. One thinks of the Lord Mayor’s Fund, and then immediately of the time when it will be exhausted. One thinks of industrial transference, and remembers the Prime Minister’s anxious admission as to its inadequacy. Or one talks with case after case of men who have already gone elsewhere (with a guarantee in their pockets), stayed for a few days, and then come back home out of work again. But there is still emigration – even if Australia has put her foot down already; and at any rate, all these efforts together must make some impression on the problem. So a man may think, staving off pessimism, till he calls at the cottages and sees in nearly every one of them three or four children, all drawing nearer with each tick of the clock to the employable age! And then at last he is obliged to take a longer view. What on earth, he thinks to himself in consternation, is to become of these children, of their characters and whole lives, as they gradually reach to manhood and find everlastingly no place for their hands but the trouser pocket?
Many characters have gone already. Self-respecting men have lost all self-respect under the pressure of two, three, even eight, years’ compulsory mooching. One miner, a Socialist who knew all about Marx, assured me that if only some scheme were started by which the men were allowed to work two or three days a week for the amount of the dole there would be an immediate response! Charity they do not want, though they are obliged to take it. And yet one is often surprised by complete absence of bitterness and a touching readiness to believe that something intelligent is being done by the big brains of the country. Now this same refusal to lose confidence in the outside world can arouse a very heavy sense of responsibility.
That the condition of the distressed mining areas can no longer be regarded as a temporary phenomenon is now almost a commonplace. Any remedy that could be described as ‘economic’ in the ordinary sense of the word would have to take one of two forms: it must involve either a general resumption of work in the district or a wholesale transference of miners and their families to other districts. To take the first. A general reopening of the closed mines presupposes the ‘capture’ or ‘recapture’ of markets from other coal-producing nations. Suppose that by some miracle of commercial adroitness this were accomplished. Every one of those nations has its own unemployment problem waiting to show a grisly head upon the slightest encouragement; and the problem is merely shifted to another part of the civilised world, with an increased risk of war for travelling expenses. There remains transference. Now a transferred miner must be either inside Great Britain or outside it. But if inside, there is already a queue of a million and a quarter in front of the labour exchanges. If outside, his changes are enclosed in a steadily narrowing circle of immigration ‘quotas.’ Which way is he to turn?
The miner who, finding himself in a situation as hopeless as this, is politely informed that it is permanent is surely entitled to ask the outside world at any rate to think, and to think rather harder than usual, even if it involves revising some first principles.
And this it is extremely likely to do. For suppose the manager of some big concern to be confronted with a seemingly permanent impasse of this kind. What kind of cause would he look for first? Almost certainly he would try to lay his hand on some part of his system which had been evolved to meet one set of conditions and was breaking down under the impact of another changed set. The permanence of the mines problem – and of the unemployment figure in general – makes it no longer academic to ask if this may not be the case to-day with our industrial civilisation as a whole.
The first thing that strikes us about this industrial civilisation is its youth. It has been growing ever since we have known it, ever since it was born. Moreover, it has grown fast – so fast that economic and social theory have had to keep up with it as best they could. They may possibly be abreast of its development. They are certainly not ahead. Is it possible, then, that our existing body of economic and social theory, and still more our existing technique of adjustment, organisation, finance, have hitherto unconsciously regarded this continuous growth, or expansion (notably an expansion of markets), as if it were a differentia of the system itself? Whereas in fact growth is only a temporary experience, and ought to be recognised as such long before the organism actually reaches the stage at which the growth ceases.
An example will make my meaning clearer. In the early days of the industrial era the introduction of labour-saving machinery led to rioting. The economists pointed out that the labour-saving machinery does not really create unemployment; it only makes labour more productive. Thy did not think it necessary to add – probably for the same reason that a man cannot see his own eyes – that the truth of this contention is dependent on two alternative conditions – either that initial access to the bounty of Nature becomes more difficult (diminishing returns), or that the total consumption per head of population is increased. (A mere Malthusian increase in the number of the population cannot stave off unemployment, for there is no reason to suppose it altering the relative proportion of employable producers.)
The notion of diminishing returns can also be dismissed for the present from an industrial world, which supports at the same time an increasing population and an increasing body of unemployed; it can be dismissed from a world whose member nations are competing less for resources than for markets. It follows that, in such a world, the continued introduction of labour-saving machinery must produce either increased consumption per head of population or unemployment. Of course I include under the heading ‘unemployment’ such phenomena as partial employment and reduced hours of labour.
Having seen that some form of unemployment is the necessary outcome, where the quantity and quality of labour-saving machinery increases, while the total consumption of goods and services either decreases or remains the same, we are left asking, Is this unemployment, which we have actually got, the result of labour-saving machinery? And the answer is, undoubtedly, yes. Even if, as in the case of the mining areas, the connexion is not immediately seen, yet a very little thought will reveal the causal chain which links together our markets, the tendency of other nations to exploit their own coal, the elaborate machinery which enables them to raise it, the increased transport facilities which allow them to export it profitably, and so on. We are confronted, in fact, with the general phenomenon of industrial civilisation itself. And the true differentia of industrial civilisation is, precisely, the use of labour-saving machinery. Not an everlasting, automatic expansion of markets, but the progressive use of labour-saving machinery. We see the white-faced unemployed miner in the Rhondda Valley, and close behind him we see – what? A certain state of industrial saturation. There is no other word for it. And it is to this state of saturation that we must attribute our unemployment problem, including (in spite of the peculiar circumstances which have brought it immediately to the front) that of the miners.
Now an economic system would be in a true state of ‘saturation’ only if it were producing either all that it was physically capable of producing, or as much as its members desired to consume. In such a system any unemployment that existed would clearly be permanent, while the introduction of every fresh piece of labour-saving machinery must necessarily increase it. The problem would therefore arise of organising this unemployment. But organised unemployment is leisure. It might take many forms, such, for example, as a substantial raising of the school-leaving age. The soul-destroying thing (unemployment) would thus become the soul-creating thing (leisure).
But can we say that our industrial civilisation has really reached such a state of saturation? The co-existence almost everywhere of under-consumption on the one hand with a hunt for markets on the other gives any such notion the lie. To-day it is known on all sides, and not in one country, but in nearly all, that industry could easily produce far, far more than it does. But production depends for its practical commercial possibility on markets, on expected demand – in short, on future consumption. If, then, an industrial civilisation which had reached its ‘saturation point’ would be faced by the problem of organising leisure, one which is prevented by a dearth of markets from moving in the direction of that saturation point is clearly faced by another problem – the problem of financing consumption.
These two functions are correlative. In a healthy state of the body economic the more you did of one the less you would need to do of the other. But in a starving, unhealthy condition like our present one both need doing at once, and quickly, simply in order to keep the patient alive.
There is nothing unnatural in the idea of financing consumption, though at first sight there may seem to be. I have pointed out that the use of machinery is the true differentia of an industrial civilisation. Its effects are twofold. Not only does it economise labour – which we have considered – but it also increases what I will call the period of industry. Financially a man may be said to have begun producing a lucifer match at the point at which he first borrows money for the construction of the machinery with which it will be manufactured. The period of industry, then, is the whole cycle that elapses between this act and the purchase by a consumer of a box of matches. What I want to suggest is (1) that, since the Industrial Revolution, the nature and importance of this period of industry has never been grasped in real and living thought; (2) that this is because (owing to the opening up of new countries, and for other reasons) markets have in point of fact continuously and automatically expanded; and (3) that this is why the phrase financing consumption sounds irresponsible and unthrifty, though in point of fact it is the opposite.
Schematically we might think of four successive periods – A, B, C, and D. In a system such as the existing one, where capital can only be raised for the purpose of financing production, the rhythm of the financing of industry is as follows. Goods are produced over period A for future consumption during period B. This consumption, however, is only made possible by the distribution among would-be consumers during this same period (B) of purchasing power. But the bulk of this purchasing power always takes the form of a reward (wages and salaries) for the production of further goods, which are expected in their turn to be consumed in period C. The amount of purchasing power distributed will therefore depend roughly on the quantity of goods and services expected to be consumed during period C. Now suppose the introduction of machinery to have caused an initial increase of productivity in the period B as compared with the previous period A. The increased quantity of goods which could be produced would be ready for consumption in period C; but the actual possibility of consuming them will depend on the amount of purchasing power available during this period C, and this in its turn will depend on the quantity of goods expected to be consumed during the next period, D. And yet, on this same possibility of consuming in period C – or, to be precise, on the prevision of it – depends ultimately the question whether goods, which could be produced during B, are actually produced. Everything depends on to-morrow.
This is difficult; and that is the whole trouble. Abstract as it is, we cannot afford to ignore it; nor is its truth affected by the fact that actually the periods interweave and overlap in a myriad different ways, like the waves of a sea.
I repeat: Our industrial civilisation has reached an artificial saturation point. It has not reached a real one. For this could only be true if all the goods that physically can be produced by our machines and labour were being produced – and consumed. This is certainly not the case. It has reached an artificial saturation point; and this has been brought about by the fact that markets are no longer expanding almost automatically, as they had done since the beginning of the Industrial Revolution. The symptom of our having reached this artificial saturation point is the universal dearth of markets. The remedy – the only possible way of assisting consumption to catch up, as it were, with productivity, instead of lagging further and further behind it – is consciously to tackle the problem of financing consumption. I say consciously, because it will be no use unless the whole problem is seen in a clear light. The problem is the problem of financing consumption, not of financing it indirectly, through the financing of further production, but of financing it directly – now. The indirect method is itself ultimately based, as we have seen, on the expectation of increased future consumption, and this expectation, imperfectly understood, underlies nearly all modern economic theory. The point is that we have now to find a way of fulfilling these past expectations; and this we can only do by financing consumption – i.e., by determining to think of wages not merely as an item in costs (and therefore in future prices), as hitherto, but also as rewards in the present for the increased productivity of labour-saving machinery invented and made in the past. The point is to understand that to-morrow has come.
These, then, are the two problems – intimately related with one another, dovetailing, complementary – organised leisure and financing consumption. Who is going to say that either of them is easy to solve? Who is going to deny that they must be solved somehow if war, revolution, human degeneracy on a vast scale, are to be avoided? None of the remedies that are talked about to-day, such as subsidising research, developing by-products, ‘rationalisation,’ nationalisation, and so forth, really touch these problems. On the contrary; for they would create more leisure to be organised and would procreate more consumption to be financed. We have only to look round us. The alternative to financing consumption is restricting production – a device already employed in several important trades and industries, such as milk, cotton, steel. The obviously uneconomic nature of this remedy (in the Rhondda Valley there are actually unemployed miners who are short of coal!) when consumption is still far from saturation point is dimly realised, and the realisation has led in America to, first, clumsy, hectic attempts at financing consumption in the shape of the instalment-selling boom. There the whole thing is obviously unsound and unscientific, since it depends on a deeper and deeper mortgaging of the future. Have we enough originality and initiative to find a genuinely scientific method of accomplishing the same end? Can we bring ourselves to finance consumption deliberately and scientifically, instead of the hugger-mugger way through the Poor Law guardians and an annual deficit of 15,000,00l. on the Unemployment Fund?
The alternative to organised leisure is unemployment. We have seen something of it, and are likely to see more. All regulations restricting hours of work are more or less unconscious, elementary attempts at organising leisure – elementary, because they have always been decided hitherto without reference to the immediately related factors of productivity and consumption. Henry Ford, on the other hand, continually sets us the example of a more controlled and deliberate organisation of leisure. He began the year 1929 by engaging 30,000 more employees in order to keep his machines working six days a week, while the men only work five. At the same time the phrase ‘organising leisure’ must be taken to include infinitely more than merely bringing about an equitable distribution of it. It includes everything that would lead to a human and spiritual use of the leisure achieved. In Rhondda, where the mere attainment of leisure, is alas, no longer a problem at all, experiments are already being made in this direction – though, of course, on a tiny scale. Thus, some of the unemployed miners whom I came across are beginning – thank to the Society of Friends – to get for the first time some glimmering of what the word education means. Others are finding themselves (what little of themselves is left) in handicrafts. Subscriptions are badly needed to keep some of them a term or two at college.
I said earlier that there is an obligation on the outside world to think. This article is an attempt to fulfil my part of that obligation, so far as I am capable. The essential suggestion it makes is that the causes of this ugly problem may be regarded in two ways. On the one hand they may be seen as the last sicknesses of an old and excessively complex organisation; and, on the other, by shifting the eye a little way to one side, they can actually appear as the infant gropings of a new order of society, which has hardly yet begun. I suggest, further, that the problem only has hope of solution if men are found able to preserve a balance between these two points of view.
Those who are able to achieve this balance will also be able to grasp the moral issue without confusion. There are two virtues without which no nation or community can continue to exist – thrift and industry. On the one hand, then, we have the great basic virtue of thrift – perhaps the root of all virtues. And over against it we have the problem of financing consumption. Between the two there is a surface antagonism indeed, but an actual affinity. For now, when all are at length reduced to the dole or the guardians, the miner who saved ten years back is usually no better off than his neighbour who squandered. Moreover, the virtue or thrift is stultified and eventually exterminated by the systematic sabotage of to-day, whether that be enforced from the cartel above or from the trade union below. Thrift, which is so universally praised and demanded by our orators, is in fact being steadily stamped out by the insidious necessity of restricting production for profit. It may be resurrected in a new and freer form by carefully and moderately financing consumption. The corresponding national virtue of industry, which is stultified, which must slowly but surely be destroyed, by the compulsory mooching that is unemployment, may still be rescued and freed if we can only solve satisfactorily the problem of organising leisure.
Sooner or later these two problems will confront every member of the industrial community. But owing to Great Britain’s peculiar geographical, commercial, and financial position, they are confronting her in a virulent form already. That, to my mind, is the lesson of South Wales. But if anyone will point out to me where I am wrong – ἐκεῑυος οὐκ ἔχδρος ὦυ ἀλλὰ φίλος κρατεῑ– it will be the victory, not of an enemy, but of a friend.