Daring the last 12 months or so we have had in this House many Debates on the economic situation. In those Debates almost every speaker has stressed one thing: the need for more production; more production in order to close the gap in our balance of payments; more production in order to relieve the inflationary pressure; and more production in order to raise the standard of living of the British people. Whatever differences may exist as to the cause or character of the present crisis, I believe there is general agreement that more production is the one thing vitally necessary in order to overcome the crisis.
In this task of producing more the proper use of our manpower is of fundamental importance. Productive labour is the most vital element in our economy. It is not, as economists like to say in their textbooks, simply one of the factors of production: it is the one creative agent in the productive process. Machines and materials are dead and inanimate things unless living labour is applied to them. In the words of Sir William Petty: the founder of classical political economy:
Labour is the father and the earth is the mother of all wealth.
Economists have travelled far since then, but in these days of crisis we all have to come back to this basic and fundamental truth. There are four aspects of this manpower problem. First, there is the size of the available labour force; secondly, there is its distribution throughout the economy; thirdly, there is its distribution within industry, or, as the economists say, the division of labour, and, fourthly, there is the productivity of each unit of labour.
These are large and complex questions, and I have no time to deal with them all. I propose, therefore, to confine my observations to the distribution of labour throughout our economy.
Since this Government came into power, we have heard a great deal about the overall shortage of labour. I am sure that the significance of that will not be missed by the workers of Britain. In the past, our problem was not a shortage of labour, but a surplus of labour—not too few men for the jobs, but too few jobs. Since then, the wheel has turned full circle, and whatever our present difficulties, we do not want to see it reversed. Apart from the fear of war, the workers of Britain have one dominant fear, and that is the fear of the return of mass unemployment. That, I believe, is the one thing which will make the workers of Britain lose confidence in this Labour Government, and I hope that the Chancellor of the Exchequer and the Minister of Labour will take special note of that.
I do not accept the view that there is an overall shortage of labour. An absolute shortage of labour is a quite meaningless expression. It is as meaningless as an absolute shortage of population; indeed, it comes to the same thing—we cannot add to the one without increasing the other, and I do not think anyone will argue that these islands are under-populated. Our problem, therefore, is not a shortage of labour, but maldistribution of labour. The task which faces this Government and the British people is to secure the redistribution of our available labour force in accordance with our national needs. This is the starting point of any policy of putting first things first.
It is no use allowing labour to be drained from productive sources into nonproductive activities. It is no use allowing labour to be drained from production into distribution, when the available goods for distribution are being reduced in quantity. Lastly, we cannot afford the basic industries, coalmining, textiles, and agriculture, to be deprived of essential manpower, when the products of these industries are absolutely indispensable for our national salvation. Yet this is happening now, and it has been happening for quite a long time. We cannot overcome this crisis until these tendencies are reversed. This, I believe, is the most urgent problem that faces us in 1948.
It is clear that the present distribution of our manpower is completely unsatisfactory. We are not using our labour force in the best national interests. The Economic Survey for 1947 made that perfectly clear. The present position is that we have a whole variety of anomalies in the utilisation of our available manpower. For one thing, our most important basic industries are seriously undermanned. Secondly, in the less essential industries there is too much labour in relation to the available supplies of raw materials. Thirdly, non-productive and non-essential activities absorb far too large a proportion of our available labour force.
In some areas, notably in London and the Midlands, there is a shortage of labour. I understand that the local employment exchanges have far more vacancies than can be filled from the local working population, whereas in the Development Areas —and I come from one of the worst—we have vast pools of unemployment, and have had them for many years. We have over 40,000 people unemployed in South Wales. They are not temporarily unemployed for a day or a season, but it is a long drawn out helpless and hopeless process which is undermining the hopes of prosperity for this area and for these people. All this shows a serious lack of balance in our economy. This, in turn, reflects itself in a lack of balance in the use of our labour force. We are not using our labour to the best national advantage, and this aggravates and intensifies the economic crisis, and makes it far more difficult to overcome it.
This lack of balance in our economy is no postwar phenomenon. This was not something which was invented when this Government took office in 1945. Its roots go back far into the inter-war years. No one will argue, I am sure, not even hon. Members opposite, that we made the best use of our labour force in the inter-war period. For one thing, we had a vast army of unemployed, ranging from one million to three million. During the whole of that period, the Development Area in South Wales from which I come had the highest percentage of unemployment in the country. There was this surplus of labour, and no one bothered about the basic organic disequilibrium affecting the economy. The problem was there, but it was concealed. An army of two million unemployed provided an iron curtain which concealed this disequilibrium from the eyes of the economists and from the eyes of the ordinary people. Since this Government has been in power, with the application and implementation of the policy of full employment, that iron curtain has been torn down.
We can all see now that the economy is badly out of balance and needs drastic and far-reaching readjustment. This disequilibrium has been going on for a long time. During the inter-war period, our basic industries were declining. The numbers in employment in them fell each year. Between 1927 and 1937, coalmining employment dropped by 26 per cent.; the cotton industry by 28 per cent.; the pig iron industry by 26 per cent., and shipbuilding and ship repairing by 18 per cent. During the same period, there was an enormous increase in employment on non-productive, non-essential and, if I may use the expression, parasitical activities. Between 1927 and 1937 employment in entertainment and sport increased by 105 per cent.; in hotels, restaurants, public houses, clubs and boarding houses by 157 per cent.; in professional services by 53 per cent.; and in the distributive trades by 51 per cent.
These figures show that our economy was in a dangerously unhealthy state during the inter-war period. It was seriously out of balance. This went on for 20 years or more, and no real attempt was made to correct it. We were developing a spiv economy, and, even worse, these tendencies were creating a spiv psychology. These tendencies, which operated during the whole of the interwar period, were temporarily submerged by the war. Since the war, this pattern of economy has re-emerged and it is now aggravated by inflation. Surplus money, in the form of capital, drains labour and materials away from production and the important industries to less essential and less productive activities. Inflation always aggravates every unhealthy tendency in the economy.
Now we are faced with a very serious disequilibrium. It is not going to be easy to correct it. It is going to be a long-term job, but it has to be done if we are to overcome the present crisis. The Government, of course, are quite aware of the seriousness of the problem. In last year's economic survey a special section was devoted to the problem of the distribution of manpower, and a series of targets were set for some of the most important industries. It was evident that the Government attached a great deal of importance to those targets, because they said that the achievement of the objectives of the White Paper could only be guaranteed if the manpower targets in the basic industries were reached.
The survey for 1948 enables us to compare and to assess how far these targets have been reached. If we examine the figures, I am afraid that we are all bound to come to the conclusion that the results are most unsatisfactory. People have been entering the wrong industries. That is one very clear lesson of the statistics in the 1948 Survey. Our under-manned industries have been far short of their target, and the non-essential industries have exceeded their targets considerably. From August, 1946, to August, 1947, 1,300,000 people entered industry—new manpower available for industry. NN hat use was made of this huge army of labour? One hundred and sixty thousand went into distribution; 191,000 went into other consumer services; 45,000 went into entertainment and sport; only 17,000 went into agriculture and fisheries and 12,000 went into agriculture alone. In the coalmining industry, which is our basic industry, without which everything goes, there was a net increase in employment of only 20,000. The Economic Survey showed clearly that we were short of the target in every one of the essential industries. In coal we were short by 12,000; in textile and clothing by 91, coo; in agriculture and fisheries by 30,000; and in distribution services the target was exceeded by 178,000. These figures reveal a very serious state of affairs. They reveal, I am afraid, that we are not putting first things first. Until we do that we cannot hope to overcome the present crisis.
The root of our trouble is that we have not enough producers especially in coal, textiles, agriculture, pig iron and the other basic industries. On the other hand, we have far too many people employed in non-productive and non-essential activities. These services are absorbing far too large a proportion of our available labour force, and the numbers are increasing. At the same time, we have had, as the result of the export drive and the import cuts fewer goods to distribute and more people distributing them. There are many forms of inflation. The most pernicious form is too many distributors chasing too few goods produced by too few producers. That is the root of our problem and until we put this right we cannot hope to overcome the present economic crisis.