ill iiiiiv i: ■liii;:;:;! I lilt!!!! iiiil j|!fi iliSi? m/k Hatt OfoUegc of Agricultuw At (fforneU JlniaerHtts Kibrarg Cornell University Library HD 6476.H68 National guilds and the state. 3 1924 013 954 171 Cornell University Library The original of tiiis book is in tine Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924013954171 NATIONAL GUILDS AND THE STATE BY THE SAME AUTHOR NATIONAL GUILDS AN ENQUIRY INTO THE WAGE- SYSTEM AND THE WAY OUT Second Edition. 6s. GUILD PRINCIPLES IN WAR AND PEACE Second Edition. 2s. 6d. LONDON : G. BELL AND SONS, Ltd. NATIONAL GUILDS AND THE STATE BY S. G. HOBSON :sv^(// '^ht)i\\'' NEW YORK THE MACMILLAN COMPANY LONDON G. BELL AND SONS LTD. PREFACE The theoretical discussion in Part I. of this book on the relations between producer and consumer and their joint relations with the State presupposes that rny readers have some acquaintance with the principles and purposes of the National Guilds movement. The argument is largely the outcome of considerable controversy between Mr. Cole and me, in which we each laid different stresses upon the status of the consumer, and, in consequence, upon the structure of the State. Although I think I have in no way misrepresented Mr. Cole's views, never- theless it was inevitable that the controversy, as it appears here, should be ex parte. I recommend those interested to read Mr. Cole's books so that they can the better appreciate the points at issue. Particularly I would draw attention to his preface to the third edition of Self-Gov eminent in Industry, in which, with char- acteristic intellectual honesty, he- materially modifies his views upon the position of the consumer in relation to the State. I have referred to the National Guilds movement. Is it a movement } There is certainly an organisation, known as the National Guilds League, with an executive committee and other officers, which publishes excellent pamphlets, organises conferences, holds meetings, has branches in various parts of the country, commands the loyal support of its members, and, in general, possesses the usual attributes of a living movement. Nevertheless, it is perhaps more correct to regard it as an influence rather than a movement. For this reason : unlike a vi NATIONAL GUILDS AND THE STATE political association, which can hope to give effect to its principles by political action, National Guilds can never be realised save by economic action and by industrial associations. Primarily, it is the Trade Unions who must constitute the driving force. The National Guilds League, therefore, with the Guild writers, must content themselves with the development and dissemination of ideas. In that sense, it is an influence, a spirit, rather than a movement. For my part, I would not have it otherwise. Truth to tell, most of us, whose names are associated with National Guilds propaganda, are undeniably of middle-class origin. In the nature of the case we cannot ourselves smash the wage-system ; that supreme task rests with the organised proletariat. We can but place our views before the wage-earners for their acceptance. However strong our convictions, whatever the degrees of our hatred of wagery, ultimately it is the wage-earner himself who must strike his tent and march. So far as it is conscious and articulate, the doctrine embodied in National Guilds has followed a course somewhat different from other subversive movements — the Socialist agitation, for example, with which National Guilds has an obvious affiliation, sometimes expressed in the term Guild Socialism. Socialism, to be sure, has been rich in intellectuals, who, in sum total, have profoundly affected the thought of the world ; but, in the main, historically considered, it has been a working- class movement, an inspiration to millions of class- conscious workers, who at its touch have dreamed of redemption from the dreadful grind of industrial life. It is only in recent years that Socialism has politically drawn to its banners any considerable number of the academics and middle classes. Although the basis of National Guilds is wage-abolition — could there be a stronger appeal to the wage-earner ? — yet from its inception, six or seven years ago, down to to-day, it is broadly true that the idea, rooted no doubt in industrial PREFACE vii reality, first found lodgment in academic and intellectual circles. The result is that the theory and literature of National Guilds bear little, if any, relation to the numerical strength of convinced Guildsmen. Intellectually, the doctrine has loomed large ; numerically, we are, I fear, a feeble folk. University students have had to answer examination papers upon the economics of National Guilds ; the vast majority of the workers have, as yet, heard but vaguely of the new evangel. There are several reasons for this curious anomaly. The new movement has not yet developed a popular writer. No young Cobbett has come our way ; no young dramatist has been seised of the idea ; no young poet has captured rich raptures at our altar. They will arrive in good time ; we have just begun. I think, however, we must look deeper for the true explanation. If we examine the democratic movements of the past century, we shall see that, with the possible exception of Chartism, which partially embodied a philosophy of life, and whose influence, in consequence, persisted through two generations, they generally concentrated upon one single issue, which might be purely political or quasi-economic — the franchise, first for the artisan, next for the agricultural labourer, old age pensions, reform of the poor-law, land reform, the eight-hours day, and the like. None of these represented a new scheme of life or emanated from a new philosophy. Each might be incorporated in the law with no funda- mental change in the social or industrial system. One might with truth affirm that each and all strengthened the existing order. The whole body of factory rules and regulations is to-day not a menace but a buttress of the large industry. It has brought automatic machinery in its train to speed up capitalist production ; it has conferred the odour of respectability upon the manu- facture of shoddy. But the moment a new doctrine touches the existing fabric, we are plunged into the complexities and subtleties of a civilisation that inherits viii NATIONAL GUILDS AND THE STATE the past and is perplexed by the present. Each com- plexity must be met by patient examination, each subtlety brought to its true focus, a new psychology must confront each outworn tradition. All this spells detailed and exhausting work, intellectual candour, invincible faith. The consequence is that, be it never so sound, the new doctrine only " gets across the footlights " with the greatest difficulty. It generally happens, too, that the more spectacular aspects are the least important, and yet the first to strike the popular imagination. For example, the most obvious and attractive feature of National Guilds is their outward form and construction. This appeals to the practical instinct of the English people, who are drawn towards the concrete and the definite. It was, therefore, not surprising to find such organisations as the Whitley Councils almost universally described as experiments in, or steps towards, National Guilds. I have been repeatedly congratulated upon such a famous victory, and I doubt not that Mr. Cole, Mr. Reckitt, and other Guild writers have had the same experience. But the essence of the Guild idea is the abolition of the wage- system, with the consequent elimination of the master class. The new network of Industrial Councils, far from abolishing the wage- system or the master class, formalises, sanctions, and strengthens both the one and the other. The reason for this exasperating misunderstanding is that the Guild analysis of the wage-system is subtle and difiicult to grasp, whilst its application to industry in all its Protean forms is matter rather for the student than " the man in the street." Unless, therefore, my readers grasp the meaning of the wage-system, as analysed by all the Guild writers, they will not appreciate the fundamental argument of this book. It is extraordinarily difficult to keep men's minds on the dominant fact of modern industry that the wage relation poisons or distracts every social controversy. There is no solution of any social problem PREFACE ix to-day if it predicate the continuance of wagery. Yet wagery remains the permanent hypothesis of every conventional writer and thinker. I take almost at random two quotations from the current literature on my table. The first is from the weekly contribution of the dis- tinguished writer in the Nation known as " Wayfarer." " We despise ideas and fail to see that an idea is upsetting the world, an idea which for many of us is old and dis- credited. What is the notion that sustains the revolt of Labour here and elsewhere ? What but Marx's theory of surplus value } It is a stirring fallacy embedded in an unreadable book. Most of the economists have fallen upon it. I was brought up in the belief that the Fabian Society had analysed it out of existence. It is obviously untrue as a description of the workman to-day. He is not living on a wage of barest subsistence, the rest of the industrial product, which is rightly his, having been absorbed by the capitalist. On the contrary, the elasticity of the wage-system even under capitalism would have astonished the great Socialist thinker had he lived to witness it. Nevertheless, the magic formula, though dead, yet speaketh." ^ My second quotation is from a Government advertise- ment in the daily press of October 4, 191 9, the day I am writing. After tabulating the graded wage-rates, rejected by the railwaymen, a note is appended : " As the cost of living falls, the pound is worth more and real wages increase — that is your pound purchases more." Now suppose we grant that the Fabian writers analysed the Marxian " fallacy " out of existence. It by no means follows that " surplus value " is dissolved in the process. Surplus value is a fact and not a theory. At the end of a great war out of which fabulous fortunes have been exacted, when the word " profiteer " stinks in our nostrils, what are these gigantic war-profits but surplus value ^ " Wayfarer " would perhaps argue that they are not surplus value because they are not 1 The Nation, September 27, 1919. X NATIONAL GUILDS AND THE STATE derived from " barest subsistence." Here, no doubt, a verbal point can be scored against Marx, who wrote before Mr. John A. Hobson had elaborated the economy of high wages, and before he had witnessed the existing wage variations under the trusts and combines. Never- theless, it remains as true now as in the days of Marx that wages are indubitably governed by the cost of subsistence. The old phrase was " bare subsistence." I do not insist upon the adjective. As an intellectual exercise, it could be maintained ; it is not, however, essential to the argument. The real formula is sub- sistence necessary to the maintenance and development of a particular industry. There are several categories of social problems — decasualisation, physical deteriora- tion, human wastage, housing, and the like — that hinge upon bare subsistence ; the sustenance of the wage- earner at a level necessary to a skilled industry is an economic problem, pure and simple. It is the confusion between the social aspects of bare subsistence and the economic aspects of an industrially essential subsistence that has led to loose thinking upon the implications of surplus value. Put bluntly and inhumanly, it costs very little to train and maintain a scavenger ; it costs perhaps ten times as much to train and maintain an engineer. But, in the end, from the standpoint of industrial power, what is the difference ? I remember, in the days of my youth, a declaration by Mr. Frederic Harrison to the effect that only a fortnight stood between the workman and the workhouse. The fortnight may now be extended to a month. What if it be three months ? Under the wage-contract, whereby the worker, of his necessity, forgoes any share in or control over the product, the result in every trade is inevitably the same. That is to say that an increased expenditure, by the medium of higher wages, upon improving the quality of the labour commodity, in no way invalidates the theory that wages are based upon subsistence. The " elasticity of the wage-system," upon which " Wayfarer " comments. PREFACE xi does not modify the inequity of the wage- contract. The wage-earner remains in servitude. It is the fashion of the harness that varies. Mr. Massingham suggests that there should be an attempt " to restate the elements of value and disinter the Fabian criticism of Marx." It is the main business of political economy to discover, define, explain, and restate the elements of value. It is to be hoped that the elements of value have many times been examined and restated since the days of Marx. But the controversy, in the sense indicated, is dead ; it has merged into the great living issue of the extirpation of the wage-contract. If " Wayfarer " harbours any doubts whether there is more than meets the eye in the theory of surplus value, the Government note, quoted above, should at least give him pause. For what precisely is meant by the assertion that " as the cost of living falls the pound is worth more and real wages increase " .'' We need not discuss the grave admission that our boasted stable currency is no longer stable, even though upon it an inviting chapter lies to my hand. My readers will indeed find something upon it in the text. The immediate point is that no sooner do you arrive at nominal wages than you must start again upon an enquiry into real wages. There always has been a certain divergence between nominal and real wages, but never so acute as to-day. Now I do not think it will be disputed that these fluctuations in currency value bear hardly upon labour and all small debtors. In any event, the wage- earner pays both ways. High prices, cheap pounds ; high wages less than high prices ; cheap pounds, reduced wages. As capital, through its docile instrument finance, controls the commodity currency, it is evident that, even if nominal wages apparently refute" Marx, real wages are still based upon subsistence, and even bare subsistence. The capitalist not only controls pro- duction ; he can bring labour back with a jerk to the subsistence level by the ingenious mechanism of currency xli NATIONAL GUILDS AND THE STATE and prices. There is a tendency to blame the Banks for this. The banking organisation of this country is not a separate interest, a self-contained sovereignty. It is an integral, almost a subsidiary, part of the industrial and commercial system. It would be a profound blunder to make it the whipping-boy for its masters, the great industrial magnates and associations. I have not wantonly dragged into this Preface the subjects of surplus value, bare subsistence, currency, and prices. They happen to be topical problems that throw light upon the wage-system. They are material to lend emphasis to the fundamental fact that every argument in this book strikes its roots into the subsoil of a system as universal as it is disastrous. It would be equally easy to trace its absurdities, anomalies, and biting ignominy in almost every paragraph of every periodical. So universal is it, so all-pervading, that we accept it as a permanent hypothesis, as the one inevitable condition, that only occasionally does some uncon- ventional critic seriously enquire into its validity. Yet it eats into the vitals of industry: vitiates, where it does not caricature, our social and political life.. It breeds discord and perpetuates inefficiency ; it divides mankind into hateful segregations — the " Two Nations " portrayed by Disraeli in Sybil. Naturally, in parental pride, I want National Guilds established ; but the essential thing, the supreme task, is wage abolition, the restoration of the product to the producer. Since this book was planned and written, there have been certain developments upon which I wish briefly to comment. In a living community such as ours we are confronted with a situation in which nearly all move- ment is dynamic, in which habits and customs are transitory, and whose social principles are by no means static. The ink is barely dry before new conditions arise and new tendencies are disclosed. Upon these ceaseless activities we found our hopes, but it lays an almost intolerable burden upon the writers and critics. PREFACE xiii Why write a line if to-morrow our words are dead in the presence of the accomplished fact, the unexpected or the unforeseen ? Nevertheless one is occasionally fortunate in hitting upon some underlying principle at once theoretically sound and achievable in practice. I think that the Guild writers may claim, without mock modesty, to have evolved a social and economic doctrine which derives strength and sanction from each new development. The analysis of the wage-system in National Guilds, published in serial form in 1912 and 19 13 and in book form in 1914, still remains as true as when it was written ; the main constructive idea, known as National Guilds, draws nearer and yet nearer to realisation. Have recent events changed or modified our views .'' There has been one important adventure in theory, namely. Major Douglas and Mr. Orage's examination of price as a factor in economic revolution ; the Labour Party, by a large majority, has declared for " Direct Action " ; there has been a series of strikes, some of great magnitude and significance. On the horizon, too, has appeared a little cloud, no bigger than a man's hand : an intimation from the compositors to certain newspaper proprietors that there were limits to what they would print of unfair attacks upon their comrades on strike. In truth, the pace is swift. Mr. Orage regards price as the active principle of distribution. The just price is one that " enables the producers to purchase the whole of their product or its equivalent— counting as producers the whole community." Price, he argues, must be below cost because overhead charges are reckoned in cost. But, since " consumption, as represented by the purchasing- power of wages, salaries, and dividends, is always less than production as measured in price," and since overhead charges tend to increase production and decrease purchasing capacity, it follows that price must be fixed at a point below cost at least equivalent to the cost of overhead charges. We xiv NATIONAL GUILDS AND THE STATE need not — certainly I do not — adopt this line of reason- ing to understand that a social price may be imposed without regard to its economic cost. It is certainly significant that the two great Labour upheavals of 1919 were in the two industries affected by the demand for a social price as against the economic cost. The effect of the mining settlement has been to add several shillings per ton to the cost of coal. It is granted, however, that the miner, in equity, is entitled to all and more than he at present earns. In like manner, the railway settlement either forces the Government to run the railways at a great nominal loss, or, alternatively, to raise passenger and freight rates. Let us, then, suppose that our industry demands cheap coal and freightage. Hitherto, when faced with this necessity, we have adopted the simple expedient of depressing wages to barest subsistence. That is no longer possible. The Sankey Commission and the Railway Strike mark a definite turn of policy, which recognises that labour must not again pay in starvation wages ; that there must be no return to the 19 14 standard. We therefore arrive at an impasse. Coal is a dominant factor in production. If its price rise beyond a given point, industry after industry may be disrupted. Freightage is a dominant factor in production. If its rates are raised beyond a certain maximum, production may be choked. In days gone by, the average man would have said that the life of the nation must not be endangered by selfish miners and railwaymen. To-day he recognises that the loss must fall elsewhere. Must then the com- munity pay .'' Are the manufacturers who obtain coal and freightage under cost to be quit of any quid pro quo ? If not the individual employer, then have we any claim upon the industry as a whole ? In a world of profiteers one can vividly realise the mad rush, the " lobbies " and " pulls," to benefit by cheap coals and freight-rates at somebody else's expense. If, however, there is substance in the suggestion that PREFACE XV prices of " key " products must sooner or later be regulated by considerations other than economic cost, then the logic of the situation involves a change in the status of labour. You cannot contend that the social price of a given commodity may be divorced from ascertained cost (overhead charges included or excluded), unless you apply this principle first to the labour commodity. But if you put a price upon labour irrespective of its commodity value, you inevitably change its status ; it ceases to be a fluctuating factor in cost and becomes a first charge upon production. Thus the economic necessity of averaging cost throughout an entire industry that price may ensure distribution, lifts labour out of its commodity valuation and so destroys the basis of the wage-system. It is generally admitted, I think, that, throughout their whole range, post-war prices are artificial, bearing little relation either to actual cost or to their social values. It seems certain that the function of price-fixing must in the near future rest upon a more definite and conscious authority than the mere higgling of the market. But no solution of the problem is possible until we have discovered new methods and principles of credit in its several phases. The formal incorporation of " Direct Action " in the programme of the Labour Party is an event of unusual importance. The Labour Party acts only in a political capacity and presumably, therefore, its acceptance of this weapon is either ultra vires or a declaration that economic powers must be pressed into its service. It has no power to order a strike ; that is the preserve of the Trade Unions. Why, then, does it advocate " Direct Action " } Is it a counsel of despair .? More to the point, what is the Guildsman's attitude .'' We may dismiss the idea of despair. A political party fully imbued with the belief that it will soon be the arbiter, if not the actual dispenser, of power is assuredly in no despairing mood. But we can readily understand that twenty years' experience of Parliamentary xvi NATIONAL GUILDS AND THE STATE life has taught the Labour members, as well as the rank and file, that under capitalism economic power dictates political policy. They may accordingly decide that two can play that game and call up their industrial reserves. It is in the nature of the case that the exercise of economic power in politics must be done more bluntly and unaffectedly by Labour than by Capital. The master-class is trained to government : knows how to apply its economic power subtly and with a sure touch : has long since elaborated a terminology that means one thing to the master and an innocuous thing to the masses. " Free-trade " was the master-stroke ; it still leads Labour captive. But, we may enquire, why should the purse rule the political roost when presumably the function of politics is to apply principles of public conduct ? What has the State to do with industry ? The answer is, of course, that in the past generation great economic responsibilities have been thrust upon Parliament, which at the present time concerns itself with industrial problems to the exclusion of its dis- tinctively spiritual duties. If the political State is to undertake these economic functions, then it follows that the economic battle must be fought in Parliament and its administrative purlieus. It is .futile to condemn Direct Action in politics, if politics is degraded from its high estate to an economic class struggle. We cannot have it both ways : either political life must revert to its true purpose or we must expect Labour to bring to bear its economic power, in ways it understands, by methods with which it is familiar. The fault does not lie with Labour ; it is inherent in the existing inter- mixture of prostituted politics with misapplied economics. The Railway Strike of 19 19 illustrates the point. The men took a view of their industrial position not acceptable to the management, which happened to be the State. Wages are still wages, whether paid by the State or the private employer. To strike against the private employer is now recognised as all in the day's work. PREFACE XVI 1 But when the State chances to be the employer the strike is denounced as "an anarchist conspiracy," as treason, as an attack upon the community. Apparently it occurred to no one that it was the State and not the men which was in a false position. And so it is in regard to Direct Action. What is it that would unite Labour in Direct Action ? Clearly something which binds it in functional unity. That normally can only be an industrial issue of prime importance. Should Direct Action be taken on a purely political question, then a state of affairs has arisen to justify a revolution. One of the strongest reasons in favour of National Guilds is that all, or practically all, industrial functions are withdrawn from the State and distributed through the Guild organisation. Guildsmen, like other mortals, may and do take individual views of the State structure in relation to the Guilds, particularly how and in what circumstances a special duty is thrown upon the State to protect the consumer as such. In practice that may mean a greater or less remnant of industrial responsibility retained by the State — but a remnant none the less. In this way we undoubtedly purify politics, release from bondage the human judgment in public affairs, and cut away all grounds for Direct Action, which can only be justified when the State engages in industrial activities alien to its true ro/e. The threat of the compositors not to print certain opinions distasteful to trade-union sentiment had better be considered very seriously before it is accepted as a principle. A la guerre comme a la guerre; it was incidental to the railway strike. But the preservation of our right to speak, write, and publish what we do veritably believe is a cardinal matter. It is more precious to the community than any conceivable industrial organisation. The spirit must have the freedom of its wings. S. G. H. Manchestkr, December 1919, CONTENTS PART I.— THE PRODUCER, THE CONSUMER, AND THE STATE I, Producers and Consumers II. The Consumer III. The Producer . IV. The Consumer further considered V. Distribution VI. Function and the Class-Struggle VII. Nation, State, and Government PAGE 3 22 33 49 63 80 96 PART II.— TRANSITION I. Signs of Chance II. The Workshop III. The Influence of the War upon Labour IV. The Profiteer V. The Equities of Expropriation VI. The Civil Guilds VII. The Civil Guilds {continued) . VIII. The Civil Guilds {continued) . IX. Finally, I believe APPENDIX On the Reorganisation of University Education. By M, W. ROBIESON, M.A. ...... 147 172 226 272 281 292 321 337 345 363 PART I THE PRODUCER, THE CONSUMER AND THE STATE PRODUCERS AND CONSUMERS I cannot recollect seeing any examination of what appear to me the two main objections to the Guild theory. These are : (i) That the Guilds will be profiteering societies, armed with economic power, and having interests opposed both to the interests of other Guilds and to those of the non-producing members of the community — the old, the young, and the housekeeping women ; (2) that the theory is based on the control of industry by the producers. That this principle has been widely tried (see Fabian Research Committee's publication on the matter), and for two main causes has regularly failed. These two causes are («) that the workers develop a vested interest in the tools and processes to which they are accustomed and are unwilling to change ; and (h) that when the manager is appointed by the workers he gets more interference than is compatible with manage- ment. The upshot of these two forces is .relative inefficiency, which in due course has led to failure. I have heard the Secretary of the National Guilds League sing a paean in praise of inefficiency. But in practice it must certainly mean longer hours or shorter holidays or a lower standard of comfort. Faced with this issue, it therefore seems to me that, providing — an all-important con- sideration — the well-being of the producers can be otherwise secured, the community is likely to select the rival principle, the control of industry by the consumers, in the shape of the State, the municipality, or the co-op. Very likely, however, there is some reply on this matter of which I am ignorant, and which other readers besides m3rself would be glad to hear. — Mr. A. K. BuLLEY, Letter to the Writer. In the last chapter of your book. Guild Principles in War and Peace, you endorse Mr. Anderson's contention that the capitalist is the real protagonist of the consumer. But the National Guilds League always seems to argue that the State's 3 4 NATIONAL GUILDS AND THE STATE justification for representation upon the Guilds Congress is that it protects the consumer. You cannot both be right. — Mr. Godfrey Jackson, Letter to the Writer. I. Producer and Non-Producer Mr. Bulley assumes that the fundamental Guild theory is the control of industry by the producers, and upon that assumption he bases his argument. The underlying theory of Guild doctrine is the rejection of the commodity theory of labour. Mr. Bulley may reply that, even so, he is . substantially right, because the refusal to treat labour as a commodity involves the control of industry by the producer. Before we can discuss that point it is imperative that we should reach an agreed definition of " producer." We are all of us apt to use the word loosely. We think of the producer as one who is exclusively engaged upon a productive process — coal-mining, iron and steel work from the ore to the finished article, textiles, and so on. I have never heard of a railwayman, or a carter, or a clerk, or a journalist described as a " producer." If Mr. Bulley has in mind the narrow meaning here indi- cated — producer as distinct from worker — then I can only reply that there is nothing in Guild theory to warrant the assumption that industry should be con- trolled by the " producer." If, however, he gives the word a wider connotation, meaning a man or woman for whose work there is a social demand, then it is difficult to follow his argument, for we are faced with a community of workers, including " housekeeping women,"' and the distinction between producers and consumers loses its significance. But I am not certain if Mr. Bulley does not accept the broad interpretation, for he seems to limit the non-producers to the old and young and the housewives. It is improbable that any body of economically emancipated workers, con- stituting, in fact, the whole nation, would for a single PRODUCERS AND CONSUMERS 5 day contemplate the social subjection of such as these. If it were so, no economic rearrangement would mend matters, for their political power would malignly assert itself in correlation with their economic power. Our attitude towards our families (for that is what it comes to) is fundamentally ethical and social, and not economic. Who, then, are the other non-producers .'' If there is none, then our problem is confined to a possible corporate struggle between the Guilds. If, however, Mr. Bulley postulates a body of workers who are nevertheless non- producers, and in consequence economic victims of the Guilds, then he has misconceived the economic effect of the rejection of the commodity theory. As we are not now concerned with non-workers, whether investors or tramps, we may perhaps arrive at the distinction between producers and non-pro- ducers by defining the former as those for whose pro- ducts there is an effective economic demand, and the latter for whose services there is a social demand. (Incidentally we may remark that if labour be really a commodity, the economic demand is primarily for the labour and not its product, whereas if it be essen- tially a living and human thing, the demand for it ceases to be economic and becomes social. Nor must we confuse commercial with economic demand. To admit commercial demand into our problem would be fatal to the theory of qualitative production, which must ultimately be a vital issue in Guild poUcy.) I am not prepared to define here economic and social demand — that in its turn depends upon our future appreciation of function — but broadly stated, economic demand may be restricted to wealth production and social demand to wealth distribution. Thus, all those who are engaged on the production of commodities (properly so-called), in every stage, from the raw material to the product finished and delivered, may be said to be producers. But there is a large army of workers whose services are demanded in social life — writers, 6 NATIONAL GUILDS AND THE STATE artists, preachers, actors, professional footballers, dog- fanciers, billiard-markers. There is a social demand for all these, not strictly economic, yet having an economic bearing. They may be all defined as " non- producers." I apprehend that Mr. Bulley fears that these non-producers' interests are " opposed " to the producers' ; that whereas the former are not susceptible to Guild organisation, the latter are, and, in consequence, would have the non-producers at their mercy. Even if it were so, the non-producers would be no worse ojfF than they are to-day. One and all, their occupations may be described as appetitive ; in their several ways and varying degrees they minister to the spiritual, intellectual, and carnal appetites. That is to say, they are primarily concerned with the expenditure of life-energy. As under the wage-system the proletarian has little, if any, surplus energy after the purchase of his labour commodity, the appetitive occupations are necessarily restricted in their scope or degraded by their subservience to the present possessing classes. But the object of economic emancipation being to release life-energy that we may live on a higher spiritual and intellectual plane, it follows that the demand for the appetitive services would increase to a degree not now realisable. The problem would then revolve round the several functional values of these appetitive occupations and not their remuneration. A concrete case may help us. Let us assume a church whose congregation is almost entirely prole- tarian. The priest or pastor does not depend upon such a congregation for his stipend, which comes either from the one or two • rich men in his congregation or from the church organisation, which finally depends upon the rich members of that particular religious connection. If, however, this proletarian congregation finds its economic power enormously increased by Guild organisation (secured by the labour monopoly) it no longer lives or thinks on the subsistence level, becomes PRODUCERS AND CONSUMERS 7 master in its own spiritual house, releases its priest or preacher from dependence upon rich men, and so un- binds the religious spirit now admittedly in bondage. The same liberating spirit would operate amongst authors, journalists, artists, and others. Not to idealise the picture, we may agree that the more carnal appetites would equally seek satisfaction. But we are not con- cerned with the ethical aspect ; the point now to be noted is that the non-producers, as defined here, would be of greater social consideration than is their case to-day. It is inconceivable to me that increased social con- sideration should result in less remuneration or in greater relative economic weakness. The abolition of wagery would indeed be a delusion if it did not result in an intensification of life-energy, with a corresponding improvement in the status of all who minister to it. But these appetitive occupations hardly come into contact with the Guilds as such. They meet the demands of the Guildsmen purely in their personal and social relations. There is, however, yet another category of non - producers, namely, all those whose activities are covered by what will probably be known as the Civil Guilds — ^teachers, doctors, administrators, and the like. It will be more convenient to deal with these when we consider that part of Mr. BuUey's letter which refers to the State and the municipality. II. Profiteering and Pay If, as I hope, we have now got the non-producer into focus, the, way is clear to explore the possibility of the Guilds degenerating into " profiteering societies." And, if the foregoing analysis be approximately cor- rect, it follows that the profiteering must be by Guilds at the expense of Guilds. Mr. Bulley further assumes that the several Guilds will have " interests opposed to the other Guilds." If this be so, then our search 8 NATIONAL GUILDS AND THE STATE for economic harmony is a failure ; the Guild snark remains a boojum, I am anxious to get at the substance of Mr. BuUey's letter, and that leads me to think twice what he really means by " profiteering." He doubtless knows that the word springs from Guild sources — the Editor of The New Age, in fact — and was meant to differentiate Guild from capitalist practice. We know that the capitalists (who grab a good thing when they see it) captured the word, and tortured it to their own pur- poses. Its original meaning was that in Guild philo- sophy production for profit is anti-social. I think it probable that Mr. Bulley has unthinkingly applied the word in its vulgar meaning, and that what he means is that the Guilds, having opposed interests, will apply their economic power to forward their own particular corporate interests. If I am right, then the inference is that Mr. Bulley visualises the Guilds as soulless in- dustrial bodies, and reads into their methods the present spirit of capitalist production. In other words, he forgets that the Guilds ex hypothesi are the logical outcome of wage abolition. Now what precisely is meant by that .'' Wage abolition means that the proletarians, by securing a monopoly of their labour, have determined that they will no longer sell it at a commodity valua- tion. The labour monopoly is obtained by the organi- sation of the Guilds. But profit is only possible by the power to buy labour as a commodity, and to sell the product at a surplus value. If, however, labour has already absorbed that surplus value, there remains no possible margin for profit. And this applies as much to the Guilds as to the capitalists — ^you cannot absorb your profits and still retain them. It therefore follows that when Mr. Bulley writes of " profiteering societies " (and assuming that he understands the fundamental argument), he really means the exaction by Guild eco- nomic power of higher pay relative to the weaker Guilds. PRODUCERS AND CONSUMERS 9 If this be all he means, he is forcing an open door. I do not doubt that, in the first instance, those Guilds dominated by the old craft unionists will secure advantages in pay — pay, not wages, please observe. But neither do I doubt that the tendency, observable even under wagery, of all pay to approximate will be irresistible. In this connection two comments may be made. " Skilled " wages to-day are not reached by purely economic valua- tion, but rather by their approach to labour monopoly through the unions. Secondly, we have as yet no criterion to indicate how a general labour monopoly will operate. But the elemental necessities of the war are disclosing some facts hitherto obscure, notably, the economic value of the labour of agriculturists, seamen, and transport workers. A new tradition in regard to pay is rapidly being created ; its influence will be felt long after the war has ended. We may expect that it will expedite the inovement towards a common standard of pay. It is possible that Mr. Bulley has it in mind that the Guilds will only exchange their products after reserving a surplus value. To what end ? Provision would properly be made for the next year's require- ments in machinery, building, or what not, but this would be done, not by reserve funds, but by agree- ments and contracts with the producing Guilds con- cerned. To what end then ? Since the Guilds are only the owners of their labour monopoly, their assets being vested in the State (or in the Guild Congress, if a certain school prevail), no motive is disclosed for exacting any surplus beyond a cost price agreed upon by the Guilds, and, if necessary, arbitrated by the Guild Congress. We must remember that these Guilds are public bodies, and not close corporations ; that upon their governing bodies there would be repre- sentatives of the other Guilds, just as to-day inter- locked public companies exchange directors. Even if any Guild were so stupid as to play dog in lo NATIONAL GUILDS AND THE STATE the manger there would remain some tolerably strong deterrents. First, we have the Guild Congress, whose authority in many directions would be absolute. It could, if necessary, order a boycott of the offending Guild ; it could make representations to the State as trustee, and in which is vested the charter. But we must predicate some common sense and some states- manship. Men would not become the leaders of such gigantic organisations unless they possessed, if not statesmanship, at least tact, discretion, and knowledge. Nor can I perceive any divergence of purpose, any "opposed" interests, between the Guilds. If I make cotton goods I want machinery, coal, buildings, labour. The existing " opposition " between me and the producers of these commodities (including labour) is that they want as much out of me as they can exact, whilst I want their commodities at bottom prices. But if the element of profit be eliminated, and I know that these commodities are at my disposal at cost price, in what other way are our interests opposed ? The fundamental change envisaged in the Guilds is the withdrawal of labour as a commodity, its recognition as a function, and its consequent economic predominance. It would seem then that Mr. Bulley's objections to Guild theory melt away under examination. We find that the non-producers, far from being prejudiced by Guild organisation, benefit by it both socially and materially. We find that, even if the non-producers should suffer, it would not be due to the Guilds as such, but to purely social causes. We fail to discover any economic discord between the Guilds and, in conse- quence, any sufficient motive for " profiteering," whether we interpret the word as profit-mongering or more generally as the selfish corporate exercise of economic power. We have yet to consider the alleged inefficiency of producers, the " rival principle " of Collectivism, the function of the State generally and particularly whether PRODUCERS AND CONSUMERS ii it can claim in any pertinent sense to represent the consumer. III. Efficiency of the Producer Before we come to the difficult question of the con- sumer there is the problem, cited by Mr. Bulley, of the alleged inefficiency of the producer. This he ascribes to a natural conservatism on the part of the craftsman and to a lack of discipline arising out of industrial de- mocracy. A publication on the subject by the Fabian Research Committee is called in aid. Mr. Bulley seems to think that National Guildsmen positively welcome inefficiency, and quotes the secretary of the National Guilds League as " singing a paean in praise of ineffi- ciency." I do not know the circumstances, but, accepting Mr. Bulley's statement as correct, I surmise that Mr. Mellor was probably emphasising the fact that there are many elements in our problem of a much more sacred character than efficiency. It is a god before which many well-meaning people prostrate themselves. The priest in " John Bull's Other Island," we may remember, had something very pertinent and memorable to say about English efficiency. - Those who lay most stress on it often forget that the present industrial system is extraordinarily inefficient. Why, for example, do the products of Oldham cost the consumers twice as much as they do the producer ? Why have our industrial leaders permitted such an army of purely commercial vampires to fasten on production .'' Prior to the war, there were at least two million commercial employes who, under an efficient industrial regime, would have been set to productive work. If our em- ployers have brought the exploitation of labour to a fine art, they have proved their incompetence beyond cavil by allowing themselves to be blackmailed by railways, middlemen, money-lenders, and harpies to an astonishing degree. It is no small part of the 12 NATIONAL GUILDS AND THE STATE Guildsman's case that modern industry has developed weaknesses and diseases that effectually put it out of court for any criticism on this score which it may make of democratic control. In any event, if it be a choice between industrial democracy and efficiency — an alter- native I do not for a single instant admit — my unequivocal choice is for Democracy. We may admit that Demo- cracy must painfully acquire, by errors, disappoint- ments and treacheries, a knowledge of its business ; there is, nevertheless, no reason to doubt that it will, in due season^ become the efficient master of its own affairs. Nor need it be too tedious a process, judging by the mentality of the average successful business man. I dogmatically assert that, whatever their degree of democratic control, every previous experiment in pro- letarian production throws absolutely no light upon the present problem. No such experiment, however volu- minously analysed, is required to prove that produc- tion, within the ambit of the wage-system, must prove a failure. Students may pile up the records to the utmost limit ; the Fabians and other quidnuncs may draw their bureaucratic or capitalistic deductions ; the most they can do is to prove, what we already knew, that wagery is not only nasty but cheap, not only de- grading but inefficient. Nor does it help to be told that these proletarians share in the profits or win a wondrous bonus. It is altogether beside the point, which is that the sale of labour as a commodity — the wage-system — is a monstrous injustice, whether efficient or inefficient ; that all deductions drawn from it, as a guide to future Guilds, are misleading and mis- chievous. On that issue there can be neither parley nor compromise. Labour under the Guilds may commit blunders of the first magnitude : may flounder in industry as the Russian democracy is now floundering in politics : so be it ; nevertheless we are not matching the possibilities of future inefficiency with present oppression and robbery. PRODUCERS AND CONSUMERS 13 It is necessary always to stress this point. Mr. Bulley, it will be observed, bases his case upon purely utilitarian grounds. I do not shrink from the specu- lative comparison of methods ; but the significant omission in his letter of any reference to the funda- mental principle of wage-abolition compels me to remind him that Guildsmen have reached their conclusion, not on the superficial question of efficiency, but on the deeper issue of economic justice and emancipation. With this reservation, we may now briefly consider whether Guildsmen will be conservative in their methods or fall short in a discipline incompatible with good management. What, we may ask, does Mr. Bulley mean by the workers developing " a vested interest in the tools and processes to which they are accustomed " ? This may be due to an innate conservatism, or it may be a natural objection to a new machine or process which may throw them upon the unemployed market, where they have leisure to worship that god of the economist — the price- less " mobility of labour." It is obvious that the second alternative is inapplicable, because, whatever the mechanical or scientific changes adopted by the Guilds, they would not be obstructed by any fear of unemployment. Once a Guildsman always a Guildsman — ^he is " on the strength " for life. It is conceivable, indeed probable, that a Guildsman would develop a pride in his own workmanship and methods — ^it is certainly our hope — but that very pride and tenacity would, in an intelligent man, ultimately yield to the more effective process. In my own business — that of ideas — I am reluctant to change ; but when I find the contrary argument irresistible (very seldom I am glad to say !), I yield and become a convert. In my experience of engineering shops, both in England and America, I have always found the worker keen on new tools and interested in new processes. Nearly always -, it is only when his living is threatened that the 14 NATIONAL GUILDS AND THE STATE obstruction begins. And, of course, under the Guilds there could be no " vested interest " ; such a thing would be unthinkable. For the moment I leave the matter here. I must return to it later when I deal with a letter from a craft-unionist, who raises the question of qualitative production. IV. Guild Discipline The problem of industrial discipline, which looms up in Mr. Bulley's mind as interference with the manage- ment, is not so serious as it seems. But first let me draw attention to a curious inconsistency. Mr. BuUey pictures the Guilds as " profiteering societies," in an early sentence, but later he pictures them as slack in their methods, owing to indiscipline. It would seem that if the Guilds are to be profiteering in character and " armed with economic power," they cannot possibly afford to be slack and undisciplined. Mr. BuUey cannot have it both ways. The corporate impulse to acquire economic power necessarily involves an indus- trial discipline to secure the end in view. If this be so, then Mr. Bulley's first contention effectually destroys his second. Moreover, even if he be wrong in his first contention, he is still out of court in his second, for — right or wrong — he inferentially admits the power of the Guilds to impose a discipline designed to meet their industrial requirements. But we need not press the point unduly against Mr. Bulley — to demonstrate inconsistency is by no means to prove error — for it is a simple fact that men united in a single purpose, whether it be profiteering or quantitive or qualitative production, or revolution, or church policy, or cricket or football, can always impose the requisite discipline. They can impose it by a prevailing and acceptable spirit ; they can impose it by expulsion, or, in the last resort, by resource to the nearest lamp-post. All of which is implicit in a corporative society. PRODUCERS AND CONSUMERS 15 But it by no means follows that Guild discipline would be the same as, or similar to, capitalistic dis- cipline. Let us devoutly hope not ! To-day, a work- man who argues or disagrees with his foreman or manager is in constant danger of dismissal. I have known cases where the man was indubitably in the right of it, yet was dismissed on grounds of discipline — to encourage the others. Guildsmen, I doubt not, would be vastly more concerned with the intrinsic merits of the dispute than with the transitory dignity of the foreman or manager. Disputes of this kind have been largely instrumental in stimulating the demand for workshop control. Consciously or unconsciously, workmen are sensing the underlying truth that their labour is a human element and not an inanimate com- modity. And if it be a human, sentient thing, then the workers, at their peril, even to interfering with the management, must see to it that it is put to the best available uses. The day of the compulsorily silent workman is dead. Whatever its value in the industrial struggle, his right is now established to boo a goose or damn a foreman. V. Motive Mr. BuUey may with reason retort that a motive to efficiency and discipline can be discovered in profiteering whilst it is not at present discoverable in Guild organisa- tion. I agree that, unless there is a motive under the Guilds, they are liable to collapse. But, first, it is important to distinguish between efficiency and dis- cipline. An inefficient manager may be a good dis- ciplinarian and yet prove hopelessly incompetent in the higher reaches of his work : may, in fact, cloak his incompetence in a rigid discipline. The problem of motive relates to efficiency, and only indirectly to dis- cipline. Efficient workers are naturally disciplined ; they hate disorder. But their sense of efficiency invari- ably compels them to seek out and remedy the causes 1 6 NATIONAL GUILDS AND THE STATE of discontent and disorder. In other words, discipline Cometh not with observation ; it is the sequel to con- tentment born out of competence and harmony. Good leadership provides a motive, and sensibly lets discipline take care of itself. The Fathers of the Church learnt that lesson a thousand years ago. The patriotic motive was invoked during the war to in- duce all citizens to produce war munitions. They re- sponded by hundreds of thousands, their most powerful deterrent being the profiteers. There are, in fact, many motives other than profiteering to make men work. But I am assuming too much. What possible motive is there under Capitalism to stimulate either work or discipline .'' So far as I know, only these : the immediate chance of selling one's labour, and so avoid- ing charity or starvation ; the remote chance of join- ing the capitalist class. Personally, I should say that neither is particularly enticing. But wage-abolition accomplished, the motive to produce spreads to the whole working population, instead of being confined, as it is to-day, to a small group of people, whose motive is not primarily production, but exploitation for profit. An obvious motive under the Guilds would be to retain and preserve that profit or surplus value to be absorbed into the life of the workers, instead of dissipated in the maintenance of a society of shearers and shorn. Statistically considered, this would represent an im- provement of at least loo per cent in the present standard of living. With such a prize in view, I am content to wait for a democratic industrial discipline that will show no mercy to shirkers and slackers. " Content " is not quite the word ; I am a little afraid of a harsh insistence upon purely material results. The strictly economic consideration is to ensure that value passes enhanced or undiminished from the raw material to the moment of consumption, whether such consumption be for subsequent production or for the maintenance or amenity of life. Now, political economy PRODUCERS AND CONSUMERS 17 is fundamentally a search for value. Most economic works are theses ad hoc, the unconscious and sincere defences of existing interests, the appreciation of value largely conditioned by the medium in which they were written. Nothing has so confused the economists as the discords, evident and palpable, between the indus- trial, commercial, and consuming classes. Bastiat, we may remember, would have none of it. Yet any amateur economist, with the labour commodity theory exploded in his mind, can with the greatest ease tear to pieces the " Harmonies." I do not doubt that the liberation of labour from the commodity theory will open out vast untrodden tracts for the discovery of real value. VI. Discords between Producer and Consumer The next step is to inquire whether, under the Guilds, there would be that economic discord between producers and consumers predicated by Mr. Bulley when he demands " the control of industry by the con- sumers, in the shape of the State, the Municipality, or the Co-op." The inclusion of the Co-op. surprises me. Here is Mr. Bulley denouncing the Guilds as " pro- fiteering societies," and in the next breath suggesting the Co-op. If the Co-op. be not a " profiteering society," what is it .'' Has Mr. Bulley never heard of the " divi." .'' What is the dividend if it isn't profit } In its intention, and at its best. Co-operation is merely an alleviation of the wage-payment. But I now dis- cover that Mr. Bulley believes in the wage-system. " Faced with this issue, it therefore seems to me that, providing — an all-important consideration — the well- being of the producers can be otherwise secured." Otherwise ! Mr. Bulley's " otherwise " is the con- tinuation of wagery under Collectivism. At this point also, the logic of the argument calls for the consideration of the issue raised by Mr. Jackson, c 1 8 NATIONAL GUILDS AND THE STAIE whether, in fact, the r61e of the State is to protect the consumer against the producer. It is of considerable importance, for upon its right solution depends the future relations between the State and the Guild Congress. I must devote my next chapter to it. To clear the way for what immediately follows, I will simply affirm my belief that the State, either now or under the Guilds, has no definite or formal connection with the consumer as such. Mr. BuUey states it as a dogma ; it is a delusion. We will discuss, then, in the next chapter, the alleged " opposition " between producer and consumer, and whether the consumer will seek protection through the appropriate Guild or look to the State. I think I have now examined all the issue? so tersely and clearly stated in Mr. Bulley's letter. He will hardly expect me to discuss wagery under the Bureau- cracy when he knows that I object to it in principle. He will agree with me, I am sure, that wagery is wagery whether under State Socialism or private capitalism. Temporarily, at least, wage-conditions may be amelior- ated by State Socialism — an improvement in degree but not in principle. But there is this deadly objection : State Socialism involves the secured continuance of rent and interest, and so the more firmly and legally rivets the chain that binds Labour to its commodity- valuation. Mr. Bulley must choose between the Guilds with labour as a function, and State Socialism with labour as a commodity. But when Labour awakes to the falsity of the commodity theory, we may be sure that it will grasp economic power through its labour monopoly, and assume industrial partnership. Nor will the State be able, without Labour's consent, to com- pensate those who now exploit it through their control of the labour market. Nevertheless, much will remain for State action. The Civil Guilds — the great spending corporations — will be essentially State institutions and representing PRODUCERS AND CONSUMERS 19 the State in the Guild Congress, in addition to its special representation as Trustee and nominal owner of the Guild assets. Perhaps Mr. Bulley was a little puzzled at my caution in approaching, first, the definition of non-producer, and, secondly, the definable difference between economic and social demand. There is no secret about it. I was preparing the way for a recog- nition of that Social demand, which is the basis of the Civil Guilds, of the Municipalities and of the State. But whatever role the State may play in the Guild Congress, or through the Civil Guilds, it will literally have no concern with the consumers considered as a special interest. Addendum to Chapter I I have received the following letter from Mr. J. H. Matthews. It bears with such force upon the points dealt with in this chapter that I cannot ignore it. I draw the readers' particular attention to the writer's remarks on stratification of control, to the sloth and ignorance of the technical administrators (thousands of similar instances have been brought to light by war- pressure), and to the Shylock methods of the Costs Department : Your article in a recent number of The New Age has given me an impulse to write you. It is about your answer to Mr. BuIIey re " the vested interests in tools and processes." For more than a few years I was employed as a mechanic (shipwright) in Portsmouth Dockyard, and it may or may not interest you to know the attitude of the skilled workers of my own and allied trades when working for a State-managed concern which offered security of employment. Ten years ago all light plate work — that is, the making of cupboards, lockers, bins, shelves, bed berths, cabin lining, rifle racks, ventilation trunks, was done entirely by hand. We went to the field where the plates lay stacked, selected a suitable size, marked it off, cut it out to shape with hammer and chisel, punched the holes with a hand punch, did the necessary flanging, and then riveted the whole thing again by hand. 20 NATIONAL GUILDS AND THE STATE To-day each of these operations, except the marking oflF, is done by machinery, awkward work, of course, being still done in some part by hand. Piecework prices, a fair measure of the increased efficiency, have been halved at least, with the earning capacity measured in wages somewhat heightened, and the physical strain very considerably lightened. This change has been wel- comed. When the mechanic doing a particular job is allowed to put his work through the machine himself, there is almost an over-eagerness to use the machine and an endeavour to make it do impossible things. Reversion to handwork only occurs when machines are glutted with work, in which case the pieceworker prefers slow progress to no progress. Another case. The use of pneumatic machines for riveting and drilling is now general in shipwork. It now seems incon- ceivable that work was ever accomplished without them. Here, again, the semi-skilled riveter and driller welcomed the machines, devised means of adapting them to difficult work, and used them, when first introduced, even when, owing to the mechanical crudity of the early machines, some physical discom- fort was involved in their use. Periodically the men are driven to prefer hand work to machine work because a zealous officialism cuts machine piece-rates down to an impossible figure. My experience is that machines and new contrivances are welcomed. They are often scoffed at, but the scoifers cannot restrain their interest in the " new toy." So far as my own industry is concerned, what I have written above is a true picture of the workers' attitude to machinery under conditions which offer fair security of employment, as is the case in Admiralty dockyards. The people who restrict mechanical efficiency are the technical administrators, who are too lazy or ignorant to gain a sufficient knowledge of mechanical processes to enable them to provide a mechanical equipment co-ordinated in detail to the work which has to be turned out. Then, too, they will never maintain the machinery in first-class condition, nor provide for continuous adaptation to new demands. Then the costs department aims at extracting the last farthing of additional surplus value created by the use of the machine and to extort a few more by squeezing the worker's level of subsistence. Of these three forces restricting mechanical efficiency the first is the result of control being stratified into grades, the second mainly due to the supposed economy of grossly overworking PRODUCERS AND CONSUMERS 21 two men as an alternative. to employing three men and having the pressure of w^ork occasionally below the normal, and the third is an old friend which needs no diagnosis from me. If I have bored you, please forgive me ; if the above informa- tion is of any value, please take it as a modest offering to the cause of National Guilds. II THE CONSUMER But, as usual, these developments have emptied the baby out writh the bath, and imagined that the community can be super- seded altogether by the Guilds, and Mr. Everybody the consumer by Mr. Somebody the producer. — Mr. Bernard Shaw. Is it not evident, therefore, that " rent " or prices will be fixed by the same authority ? A joint Congress, equally representative of the State, or the consumers, and the Guild Congress, or the producers, is the body suggested for this office. — Mr. G. D. H. Cole. I. The Relation of Consumer to Producer Mr. Bulley visualises the State as the natural pro- tector of the consumer, I suspect that he has been influenced by three reports of the Fabian Research Department, the first on " Co-operative Production and Profit Sharing," the second on " The Co-operative Movement," the third on " State and Municipal Enter- prise." The argument underlying these reports is mainly this : that Associations of Producers have failed, in part due to lack of discipline, and in part to lack of capital. The conclusion reached, with certain large reservations, is that, as an alternative to Capital- ism, we must look to a Co-operative movement of consumers, rather than to any association of producers. " So far," we are told, " as the control of industry is concerned, experience proves the Co-operative Move- ment of Associations of Consumers to afford, so far THE CONSUMER 23 as it goes, no less in manufacturing than in wholesale and retail trading, a genuine and practical alternative to the Capitalist system." The logic of the argu- ment inevitably leads to the control of the producer by the consumer. Mr. Cole, a distinguished member, both of the Labour Research Department, and of the National Guilds League, aims at a balance of power between producer and consumer, objecting as much to the dominance of the one as the other. Whilst the Collectivist sees in the modern State the machinery for securing control of production by the consumer, Mr. Cole looks to Guild organisation to redress the balance. But he agrees with the Collectivist that the State truly represents the consumer. I do not think it will be difficult to show that the Guilds represent both producers and consumers ; that the basis of Guild organisation is the control of every economic process, productive and consumptive — ^its supreme raison d'etre, in fact ; that the State has quite other functions and purposes. On an issue so vital, involving ex hypothesi a bicameral government, it is remarkable that no attempt has been made to define consumption or delimit the role of the consumer. Mr. Cole is conscious of this grave omission. In his last book, which every student of these problems ought promptly to procure,^ he draws some distinctions : " The municipal council represents the individuals who inhabit the city as ' users ' or * enjoyers ' in common, and is qualified to legislate on matters of ' use ' or ' enjoyment.' " But a few paragraphs later, he assigns the generic term of consumer to users and enjoyers : " The State, on the other hand, we have decided to regard as an association of ' users ' or * enjoyers,' of * consumers ' in the common phrase." It would, there- fore, seem that the term " consumer " covers both effect- ive demand and ordinary citizenship. To do this, however, is to rob the word of any specific meaning. 1 Self-Government in Industry. By G. D. H. Cole. (London : Bell. Js.) 24 NATIONAL GUILDS AND THE STATE If I walk in the public park, maintained out of the rates, I am, presumably, an " enjoyer " ; but it is difficult to see what community of interest I have on that account with my neighbour who buys a bottle of whiskey. If he should have a grievance against his spirit merchant, he can hardly approach me to help him to remove it, on the score that we are both consumers, he of whiskey and I of the public park. I may detest his whiskey- drinking propensities : may desire the price of whiskey to be doubled, or the stuff prohibited altogether. In this regard, my neighbour and I have nothing in common ; it is, therefore, impossible to consider myself as belonging to an " association," namely, the State, which can by any stretch of imagination be deemed to represent us. But my neighbour may smoke my brand of tobacco, and we may jointly desire to rectify our relations with the tobacconist. Our community of interest is not that I am a municipal enjoyer, and he a tobacco con- sumer ; we fight on the issue that we both are more or less devotees of tobacco. But there is a large army of non-smokers — probably the majority of the com- munity — whose attitude to tobacco may be similar to mine to whiskey. The State can only act on grounds of public policy, which would obviously embrace both producer and consumer. It cannot make flesh of one and fowl of the other. Some mode of redress, other than State intervention, must therefore be found. We have heard of sand in the machinery ; the proposal to make the State the protagonist of the consumer, thus generically con- sidered, as against the producer, is to choke the whole machine with sand, not in grains but by the ton. We must seek a more precise definition of consumer. II. Definition of Consumer It may be true, but in a sense so broad as to lose any definite significance, that I am a consumer when I walk through the public park, visit the Art Gallery, or THE CONSUMER 25 resort to any municipal convenience. Labour has gone into the construction of these utilities, and has been paid for by moneys out of the National Exchequer or the rates. But it is surely evident that ' all these activities are in a different category, from the ordinary production and consumption of commodities. It is, in fact, a category of public policy, aiming to raise my status, not as a producer or consumer, but as a citizen. No question here arises between producer and consumer, even though, incidentally, producers are employed. In the pursuit of this policy, the State or Municipality, neither in intention nor fact, acts as representative of the consumers as such. It is fulfilling its real function, the enhancement of citizenship. Unless, therefore, the term " citizen " is to be stripped of its spiritual connota- tion, and so blunted down as to be interchangeable with the word " consumer," we shall find ourselves in a morass of fatal misunderstanding, not only in regard to the particular problem now confronting us, but the larger issue as to what constitutes the State. We shall, I think, find it more accurate, and cer- tainly more convenient, to define the consumer as one who in his functional capacity makes an effective demand upon the producer. My whiskey-drinking neighbour makes an effective (though not necessarily an economic) claim upon the publican, my tobacco-smoking neighbour plays the same role in regard to the tobacconist, our several wives descend upon the grocers, drapers, milliners, chemists, with their varying demands to purchase commodities for their market values — subsequently, under the Guilds, for their equivalent values. Subject to an important reservation, about to be discussed, all these belong to the class of final consumers. Equally germane to our inquiry is the class of intermediate consumers — those who consume to produce again. The coal now burning in my grate, I bought as a final consumer. But the vast bulk of coal brought to the surface is bought by intermediate consumers for 26 NATIONAL GUILDS AND THE STATE purposes of manufacture. Although we both make an effective demand upon the colliery, we are not in the same category of consumers, nor are our interests identical — a disagreeable fact now acutely realised in Berlin. 1 We may remember that the same distinction was grasped both by Free Traders and Tariff Reformers in those distant days before the war. As I am not writing an economic treatise, let me reduce the issue to Guild terms. It is evident that a manufacturing Guild, making effective demand upon the Miners' Guild, would know how to arrange matters, probably appealing to the Guild Congress as arbitrator in case of dispute. I assume that neither Mr. Shaw nor Mr. Cole would regard the State as in any sense the representative of the manufacturing Guilds against the Miners. I imagine that if it intervened, it would meet with a chilly reception from both parties to the suit. Yet, any decision reached by the Guild Congress might affect me as a final consumer. But under Guild organisation, I must have obtained my coal from some Guild, either direct from the Miners, by arrangement with the Transit Guild, or through a definitely organised Distributive Guild. This latter seems to be the solution, and the practical question arises whether the Co-operative Movement can be organised and adapted to that end. If my definition of consumer be accurate, it would logically follow that the contentious issues between pro- ducers and consumers as such (and apart from public policy, when other social factors enter) would range round price, quality, and variety. Negotiations on such points could best be decided between the Distributive Guild and the manufacturing Guilds concerned. In this connection, I will add that the producer must be master of his craft, subject only to the formulation of certain fundamental principles vaguely adumbrated in the law of restraint of trade. In the event of an insoluble dispute between the ' November 19 1?. THE CONSUMER 27 Guilds, when the Guild Congress has exhausted all its resources, certain speculative questions must be asked. What would be the locus standi of the judiciary ? Where, ultimately, would the sovereign authority reside ? III. Capitalism and Consumption We now see that there are consumers and consumers, constituting no definite class as such, having few, if any, interests in common, integrated neither vertically nor horizontally. A concourse of unrelated atoms — a slender foundation upon which to build a social theory. I know of no social or economic issue which would differentiate producers, as such, from consumers, as such — not even remotely. The posing of the problem as between the State, representing the consumers, and the Guilds, representing the producers, is the sequel to the misapplied activities of the Fabian Research Department, who spent enviable skill and ingenuity on a laborious investigation — and forgot to define their terms. The unhappy result is that they have confused the citizen with the consumer, rendering their meaning unintelligible and robbing the citizen of his spiritual heritage. Vital to our inquiry is the right solution to the question whether, having regard to the commodity theory of labour, the wage-earners' consumption is to be classed as final or intermediate. Is the consumption necessary to maintain the labour commodity on all fours with the consumption of the millionaire .? Does it differ only in degree or in substance ? Is there any economic distinction between the consumptive demand of the active and passive citizen .-' S'"'