Board of Trade.

Part of Orders of the Day — Supply. – in the House of Commons at on 6 May 1929.

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Photo of Mr Frederick Montague Mr Frederick Montague , Islington West

I am sorry for that, but I must obey your ruling. I am, I suppose, in order in complimenting the President of the Board of Trade for his optimism. He is not the Micawber, but he is certainly the Mark Tapley, of the Treasury Bench, because I heard much the same kind of speech last year and a very similar speech the year before that. I do not want to carp at or criticise the hopes of the President with regard to the restoration of trade. If it be true that trade is reviving, that there are greater possibilities of revival in the future, it is something to be very thankful for indeed, but I should like to say something upon some of the problems involved in this idea of the restoration of trade.

First of all, I would like to reply to the hon. Baronet the Member for Anglesey (Sir R. Thomas), who said that what was wanted as an aid to the restoration of trade was fewer restrictions of a trade union character, and who instanced his own branch of trade, that of shipping. It comes down to this, that from the spokesman of the Liberal party what is required is that wages and hours shall be elastic enough to correspond with the conditions on the Continent. That attitude of mind is probably typically Liberal, so far as Liberalism has an economic history, because Liberalism does stand for Free Trade, in labour as well as in goods; but this is the sum total of the contribution of the Liberal party to this Debate, that wages should come down, if necessary, and that hours should be extended, if necessary. At the same time, the Liberal party are telling the country, in view of the approaching General Election, that unemployment will be conquered by putting people upon road making, land reclamation, afforestation, and so forth. There is at least this possibility for the trade unionists in the shipping industry on the Clyde, that they can be taken away from their families down to Buckinghamshire or Oxfordshire, given a pick and shovel, and told to reclaim land—if you do reclaim land by means of a pick and shovel—at the trade union wage of an agricultural labourer, which is practically what the Liberal proposal amounts to, so far as industries like the shipping industry are concerned. It is very interesting to get this idea from the Liberals, that we have always to be controlled economically by the lowest denominator on the Continent. I am not going to enter into an economic discussion about that, except to point it out and to emphasise it. If it be true that it is necessary for wages and hours to become more elastic in that particular way, it is the greatest possible condemnation that we could find of Liberal philosophy and of capitalism.

I was very much interested in what the President of the Board of Trade said on the subject of rationalisation. I do not know why he should have suggested, in reference to myself, that I did not accept the fact of rationalisation or that I was opposed to it. I am not opposed to the inevitable. Rationalisation in industry is as inevitable as was the introduction of machinery 100 years ago, and to oppose rationalisation would be as stupid to-day as those were stupid who broke up machinery in the early days of the modern development of capitalism. But there is something more to be said. Evidently it is the opinion of the right hon. Gentleman and his party that all that you have to do is to rationalise industry so as to be able to produce in larger quantities at a smaller expense, thus being able to compete at a cheaper price in foreign markets. That is all very well, but the objection to that, looking at the thing with, I think, a longer sight, is this. I do not say that you do not get temporary advantages by temporary changes, but if you look at the thing from a longer point of view, the disadvantage of that idea about the future of industry is that other countries are quite as capable of rationalising as we are.

You are not improving the position so long as you have a condition of production for profit the world over. You are going to have competition in rationalisation, and merely by reducing your prices as a result of rationalisation, you are not going to achieve the necessary result of getting rid of your product, as was pointed out by my hon. Friend the Member for Hillsborough (Mr. A. V. Alexander). You must not forget that rationalisation, however it may be done and whatever branches or departments of industry it may affect, means more product with less labour. Costs of production come down somewhere to a question of labour power. It may be that you reduce your overhead charges, but you are really reducing your wages, in the long run; you are really decreasing the amount of human effort required to produce the same or a bigger result. If that be the case, then you have that problem inevitably; it is a problem inevitable to capitalism, a problem that was dealt with and about which a great amount of prophecy was made, even by Karl Marx 50 years ago when he was writing in this country. That is the fact of the whole system of production under private ownership, that the more you increase your productivity, the fewer wages you are paying relatively.

Then comes the thought, "But if we can produce more at a cheaper price, we can compete better." That may be all very well for the time being and in particular markets, but rationalisation is not going to stop with this country, and it is not going to prevent rationalisation elsewhere. It is not going to stop the development of international rationalisation, and you have evidence of it in existence to-day. You have international combinations in finance and in steel, and you have the approach towards international organisation in chemicals. Only last year, I think it was, Sir Henry Schroeder went to America in order to investigate the banking system of that country with a view to international arrangements to finance international industry. If you are going to have international rationalisation, what guarantee have you of those cheaper prices which are going to have the effect of absorbing the product? As a matter of fact, there can be no equivalent cheapening as a result of rationalisation, because the purpose of rationalisation is to increase profits. There may be some amount of cheapening, but certainly not an equivalent amount, and you still have that central problem, that unless you rationalise your consumption as well as your production, you must necessarily have the difficulty of getting rid of your product.

What, after all, ought foreign trade to do? What is the philosophy of foreign trade? Foreign trade should be the exchange of surplus products. If one country has an advantage in resources or in manufacturing skill, it can produce more efficiently and more cheaply than other countries because of the advantages which it possesses, and it is perfectly entitled to export its surplus product under those circumstances; and, in exchange for that, the other countries, which have a different kind of advantage in resources and manufacturing skill, have also the right to export from their countries to the rest. That is a normal, natural exchange and the right kind of trade, but that is not the kind of thing that is talked of by the President of the Board of Trade as the only thing that it is possible to conceive of in world commerce. What he has in mind when he talks about foreign trade is the right of this country to produce any kind of article, without restriction at all, in order to compete, out of existence, if you can, competitors in other countries, where the same article can be produced just as well as it can be produced here; and it is because of that lack of scientific co-ordination that you have your difficulties with regard to this question of foreign competition.

6.0 p.m.

Take the case of Empire development. I am not opposed to the idea of developing trade within the Empire, particularly if you admit that Great Britain is part of the Empire, but there will be no solution of this question unless you attack the problem of getting rid of the product—the problem of production as against consumption power. The Empire has the same problem. They are competing with us in manufactures to a large extent. We can get food from the Empire, and we can sell commodities to the Empire, but they have these same conditions of production for profit, which lacks scientific co-ordination and does not mean production for use at all, and will lead to an intensification of the same problems within the Empire. The best way of developing Empire resources is to regard this country and the Empire as an economic unit. If it is good enough for American manufacturers to develop their own productions in foreign countries by putting their own capital down and establishing their own plant, what is to prevent this country having an agreement with, say, Canada or Australia, for the production and sale in bulk to this country of the amount of foodstuffs that we may require to obtain from these Dominions?

Why should not the idea of scientific trade and economics be applied to the Empire in the same way that the capitalists of this country are endeavouring to apply it within their own organisations? After all, this rationalisation idea, if there is no public control of it, simply means that a few people, with the aid of highly scientific methods and machinery, will employ the youth of the world, the highly nervous producer, who can carry out mass production efficiently, and leave the average men and women upon the industrial rubbish heap. The time is coming quickly when, with the aid of machinery, and with a fraction of the world's population, you can produce all that the world can really consume—that is, if we allow this development of rationalisation and capitalist co-operation. If rationalisation is to remain in capitalist hands, it will intensify all the economic problems from which we are suffering.

The President of the Board of Trade took a great amount of credit to the Food Council, and said that food prices were down by 18 per cent., suggesting that that was the result of the work of the Council. As a matter of fact, that 18 per cent. reduction has been due to a reduction in foreign prices. It has had nothing to do with the Food Council at all; it is due to the ordinary economic development of post-War conditions. We shall gradually get down to lower food-prices, with the inevitable result under present conditions of getting down to lower wages correspondingly. With regard to milk, the London Co-operative Society were responsible for the reduction in prices. In April last they reduced their prices, and it was not until that had been done that the Combine was forced to follow suit. The Food Council's Report shows that the Co-operative Society had a trade of £580,000, and were making the profit of 10½ per cent., while the Combine, with a trade of £5,500,000, made a profit of only 2 per cent. I suggest that nothing could better demonstrate the futility of the Food Council with its present methods of work. The Council have not the power to get at the facts, and do not get them, and until they have power to compel private traders to show the whole of their accounts and to put all their cards upon the table, it is nonsense to talk of the value of the Food Council to the consumers.

The question is a much deeper one than a mere question of prices. A great amount of wages in this country is controlled by a sliding scale, and all the wages of the workers are in the long run controlled by what is called the iron law of wages. You can reduce prices as much as you like, but as long as you have one class that labours to produce wealth, while another class owns the means of producing wealth, those who labour without owning will get upon an average, and in the long run, about enough to keep them as working animals in society. It is a much more fundamental question than a mere question of prices. Until we get down to the necessity for organising consumption as well as production on co-operative lines, by the people for the people, we can talk with all the optimism we like about fluctuations in trade and improvements in trade, but we will always have these fluctuations, and the reverse of improvement will come presently. It is admitted that the unemployment figures are normal at 6 per cent. This means that six people out of every 100 workers are to be unemployed under the capitalist system, and that is supposed to be a normal thing. It is a normal thing under capitalism, and it is normal because people do not get in consuming power enough to buy back their potential producing power.