VIII. Participating Idleness in Labor

CHAPTER VIII

PARTICIPATING IDLENESS IN LABOR

(1) Participating idleness in labor is most clear under “short-time” work with “work-sharing” motives, the monopoly-revenues being shared equally

“PARTICIPATING IDLENESS” in labor is found in its clearest form in “short-time” labor policy with “work-sharing” motives. By withholding labor, the workers receive a sum over and above what would have been the competitive (natural scarcity) value of the total work supplied. But instead of some of the workers moving out to other jobs when the amount of work supplied is thus cut down, they participate in the extra revenues by sharing in the reduced supply of work. Sharing the work confers the right to share the spoils. If they move out, they lose such rights: hence they stay, in partial idleness. Having once obtained a footing in the trade, they can claim their share by exploiting the supposed moral sanction of the “right to work.” This means an equal share of the revenues per individual, for such equality is regarded as obviously equitable.¹

(2) Cessation of recruitment is a means of sharing monopoly-revenues among a declining number

As those attached to a trade which has “withheld capacity” die off, however, their rights tend to die with them; and if things remain static, the monopoly-revenues will gradually come to be shared among a smaller number of individuals. But other things do not remain static in practice. External causes can be observed to lead to the breakdown of this form of protectionism. Moreover, even when the restrictions are most strong, it may be felt that the sons of those employed, for instance, also have the “right to work.” And public opinion, which has to be considered, is influenced by the search for careers. Sufficient apprenticeship or recruitment will sometimes be permitted, therefore, to spread the proceeds over a number of individuals which does not diminish. But the existence of “short-time” usually seems to justify the refusal to recruit. And there is no necessary reason why those with control of entry should not limit recruitment until, following deaths and departures, all attached to the trade are employed for the full conventional working day, whilst sharing the plunder among themselves. The monopoly continues, but “participating idleness” has then vanished.

(3) Participating rights are not conferred on a worker accepting another employment

Now, curiously enough, the point of view which regards an equal division of the monopoly revenues as obviously equitable almost always vanishes if an individual does not remain in the actual employment. We say “curiously” because no imaginable equity would be disturbed if an individual could carry such rights with him. Distributive arrangements are conceivable under which the smaller supply of work could be provided by a smaller number of workers, each working for the full working day, the rest leaving the trade and getting their proportion of the proceeds of exploitation in the form of compensation. The burden on the community would be less if that course were followed, for the workers withdrawing could compete (i.e., society could utilize their services) in other fields. But we have found no case of this in practice. Either there has been no recognition of the surplus of monopolistic earnings over competitive earnings under labor restrictionism;² or, if the surplus has been clearly or dimly recognized, it has been felt that public opinion would not approve of more blatant ways of dividing it up.

(4) An excluded worker may remain unemployed and attached to a monopolized trade because his availability increases his chance of the privileged employment it may offer

A rather similar and fairly common case is that which originates when a worker is ousted from his trade through an enforced wage-rate increase (which makes his continued employment unprofitable) or through wage-rate rigidity in times of depression. Work-sharing is not thought to be good policy and the benefits are held on to by those who are actually employed. Let us suppose also that there is no partial sharing through unemployment benefit. The ousted worker may then refuse other available work, not (as in the case of “pseudo-idleness”) because the competitive rate of earnings in his original trade makes his chance of employment there more valuable, but because his chance of sharing in the monopoly gains is thereby increased. If he has once been in the trade, his chance of this is higher than if he is purely an interloper. For, although his right to share equally in the spoils has been tacitly denied, it may still seem morally just that increased demand for the product should result in his being absorbed before any further exploitation of consumers should be practiced. His availability is, so to speak, privileged.

(5) Even if temporary employment would not destroy an excluded worker’s availability it might weaken his right to privileged employment

The amount of idleness may be enhanced in such a situation because the displaced worker is likely to regard it as good tactics to refuse other employments even when they do not reduce his actual availability in case of a revival of demand. For unless he has priority rights obtained through membership of a skilled union, the possession of another job may seem to weaken the force of his “right to work” in his former occupation. This factor probably works in very closely with another psychological consideration. The displaced worker may know that he will “lose caste” through accepting lowly paid work temporarily and that this will militate against his return to his main occupation. Thus J. S. Poyntz tells us³ how “one foreman says that a mechanic who is out of work would not go to the gas-works in the winter; he believes that he would rather starve. It would count against him in his next job. They would say, “He is only a gas-stoker; he is no mechanic.” In part, such refusal of work must be regarded as coming under the category of “preferred idleness,” in that the feared loss of prestige is a fear of the loss of amour propre. The loss of the right to work (or the right to priority in recruitment) as a mechanic may, however, often be the main factor in this kind of circumstance.

(6) Interlopers may be attracted in to share in the chance of employment in a monopolized field. The consequent participating idleness may be illustrated by the example of stockbrokers

“Participating idleness” of the type in which there is no struggle for distributive rights other than the reliance upon a certain chance of sharing in the spoils arises not only through those eliminated from employment in a trade remaining attached to it, but through interlopers actually being attracted in. When it is present, we have one of the circumstances in which the term “overcrowded,” as applied to an occupation, has some meaning. The state can occur when the remuneration of those in a trade is fixed monopolistically at a high rate, whilst freedom of entry cannot be completely prevented, or priority of recruitment cannot be effectively enforced. The clearest example is that of stockbrokers whose charges are fixed whilst entry is only partially restricted. Many stockbrokers have little business to do for quite long periods, but owing to the absence of competition, there is still a sufficient chance of earnings to make it worth their while to enter and remain.

(7) Participating idleness in the medical profession

In other professions, the participating idleness or idling is not so simply demonstrable. A complex and possibly important example is that of medicine. There are some grounds for fearing that the problem will become serious at some future time in this profession. But the situation is disguised in this case. Fees for medical services are not fixed as stockbrokers’ charges are fixed. There is, indeed, nothing to prevent a doctor from practicing discriminatory charges as between his patients. But this power in itself proves the existence of some personal or collective professional monopoly; and although not formally fixed, fees are controlled by “reasonableness” (tacit monopoly), custom (differing from district to district), understandings, and notions of professional etiquette. There is no “standard rate,” but the trade-union is powerful. On the other hand, the limitation of entrance through heavy charges for training, lengthy courses of study, and a process of elimination by examination cannot be completely effective. For apart from the possibility that public opinion would revolt against too conspicuous a restriction of entry, there are vested interests on the part of teaching institutions which can collect a tax for the privilege of competing for entry to the profession. The teaching interests are not likely to allow this valuable traffic to be killed by the practicing interests. There is also rivalry among the teaching bodies which weakens the tacit monopoly that gives rise to the tax. Fees for tuition and training are not so high as they could otherwise be fixed, and the percentage of passes at examinations is allowed to be higher. The result is that in the profession itself a system of sharing (of both work and remuneration) must sooner or later come into being, many practitioners earning a living more by the height of their fees than by the intensity of their work. The effects of overcrowding in this case would be seen in a certain leisureliness, or slackness, or padding, on the part of many practitioners; not in actual “idleness” in the usual connotation of that term. We may call the condition “participating idling.”⁴ As long as means of entry are not made too difficult or expensive, this dilution, both of services performed and of the monopoly-revenues, is likely to continue. Eventually, after successive dilutions, individual expectations of earnings within the profession must reach an equilibrium (a dangerously unstable equilibrium, perhaps) with those in other occupations. This equilibrium will depend upon the presence of under work—a diffused and disguised⁵ “withheld capacity”—in the protected profession.

(8) Participating idleness may exist in poorly paid casual trades

Something of the same situation can exist in some of the casual and very poorly paid trades. Difficulty arises in studying this province, however, for in the interpretation of practice, we are faced with a very complex situation. In the first place, such employments are already “overcrowded” in a sense different from that which is implied by our term “participating idleness.” As we have emphasized earlier, badly paid occupations represent the opportunities left to all those who have been excluded from better ones by restrictionism in the labor market. Hence, rates of earnings are likely to be very low in the remaining opportunities even if there is additional restrictionism in them. Second, and this is a more serious problem, with which we must deal, there may be no obvious monopolization but yet actual monopolization among workers in the least privileged types of occupation. In the absence of wage-fixation (say by trade boards), it may seem that we have absolutely no parallel to the cases of “participating idleness” which we have already discussed. But a similar situation may in fact arise for the reasons explained in the following paragraph.

(9) The odium attaching to employers of low-paid labor has the same consequence as wage-fixation

In the matter of the remuneration of the lowest paid sections of the working classes, a thoroughly confused public opinion tends to view with disfavor those who offer employment to workers whose services are of low market value. Instead of condemning practices and institutions which cause their value to be low, it is customary to frown on the entrepreneurs through whose initiative they are connected with the most satisfactory remaining opportunities. Consider the common reprobation of “the sweater,” for instance. So stupid have typical reformers been, that they have expected petty capitalists, as well as important ones, to rectify a situation which is the product of widespread restrictionism. The whole system of distribution through the value mechanism has been influenced by coercive interferences in the labor market; and yet the “sweater” (the “bad employer”) has been expected to put this right by paying more than the market rate for the dregs of the labor supply. Thus, when a “national minimum” has been advocated (on the grounds that great poverty is deplorable) the plea has not been for distributive arrangements to enable the community to pay (through taxation) for pensions or bonuses for the poor, which would remove the social conditions or injustices that offend it.⁶ On the contrary, the agitations have been unwittingly asking for production to be cut down (i.e., for scarcities to be contrived) in unmonopolized fields; for such is, of course, the actual effect of burdening any set of free productive operations with imposed costs. The poor are to be helped by the taxation of those who supply cooperant resources for the employment of the ousted poor, and by consumers being made to bear a wholly avoidable detriment. And as in general the poorest must also suffer most as consumers, and as those who are not poor usually manage to get part of the proceeds of contrived scarcities (especially “the good employers”),⁷ the ultimate result is to rob the under-dog of much more than is conspicuously distributed to him. It is widespread confusion of this kind which has led to the tragically misconceived anti-sweating propaganda and it is the same confusion which is indirectly responsible for “participating idleness” in the low-wage classes. It has meant that odium has attached to the employers of the poor. Hence, when “the employers” have been large corporations with some measure of “natural monopoly”; or when they have stood in tacit monopoly relation to their rivals (like, say, the London Dock companies in pre-war times), and when their managements have also been sensitive to public feeling; or when the humanitarianism of their directors has not been guided by social insight; they may have voluntarily offered wage-rates in excess of the market value of labor and so have burdened their economy with extra costs, restricted their demand for labor and recouped themselves from the consumer. In spite of the cause being misplaced altruism on the part of the employing corporations, or their conspicuous if reluctant response to public disapproval of low wage-rates, the effect in these circumstances is exactly the same as if wage-fixation had been resorted to by labor combinations or authoritarian action. Whether the origin of the policy is mainly altruistic or due to fear of odium is of no consequence. The fact must be recognized if the complexities of the unskilled labor market are to be realistically studied.⁸

(10) Participating idleness is an important contributory cause of the casual nature of some poorly paid employments. In these circumstances, decasualization is inequitable

We have to face, therefore, a curious result. A trade in which earnings would be regarded as low even under continuous employment for the conventional working day may yet be remunerated at so much above the market rate that, when all attached to it have a roughly equal chance of being taken on each day or each week, a sufficient number will share in that employment to reduce the average earnings of the marginal employees to what they could earn elsewhere. Surely this is an important contributory cause of “casual labor.” If this “participation” factor is the sole cause in any case, then the recurrent idleness of individuals cannot be regarded as the productive condition which can be called a “reserve.” The remedy in such a situation cannot be the arrangement of an imposed or collusive decasualization, unless those responsible for policy are prepared to enforce a less equitable division of the opportunities which the labor market offers. The reformer might regard that solution as the lesser of two evils. But, to be defensible, imposed or collusive decasualization ought to be advocated only after the fullest recognition has been given to these considerations.

(11) Work-sharing arrangements resemble the quota systems of cartels; and unemployment benefits paid out of union funds resemble cartel bonuses to compensate for the withdrawal of output

There is a very close analogy between cartel practice and current trade-union policy in the device of “short-time.” In so far as the latter represents deliberate work-sharing, it brings about a kind of under-employment similar to the effects of reduced quota allotments when the equipment, although having scrap value, is not scrapped. We have seen that alternative arrangements enabling participation in the spoils of restrictionism are conceivable. Such arrangements appear to exist under a trade union’s unemployment fund, or under an unemployment insurance scheme in which the funds are provided entirely by the workers’ own contributions. The object of unemployment pay is undoubtedly in part to secure the consent of those whose labor is displaced by high wage policy. They are potential interlopers, dangerous to the monopoly; and unemployment pay certainly makes their acquiescence more likely, or renders easier their loyalty to the unions in the advantages of whose restrictions they themselves may hope to share later on. The resemblance to the bonuses paid by some cartels for the idleness of certain plants is obvious.

(12) Unlike unemployment benefits, cartel bonuses are not contingent upon the continued idleness of the resources in alternative employments

But the existence of unemployment pay does not result in practice in the dissolution of “participating idleness” among displaced workers. This constitutes a possibly important distinction between the endowment of “withheld capacity” in plant and its endowment in labor. The factory owner who accepts a reduced quota (in return for a bonus) is free, if he wishes, to apply his “redundant” plant to some non-competing work: the displaced worker is not allowed to use his powers in other fields. Private and State unemployment insurance benefits are in practice virtually contingent upon the individual refusing any paid work, even outside the trade from which his colleagues have ejected him or from which he has “loyally” withdrawn. Moreover, similar conditions are insisted upon in respect of State and private philanthropic “poor relief.” “Participating” rights in these circumstances are dependent upon virtually absolute idleness. Possibly because those responsible for policy are inhibited from regarding such contributions as bonuses for scarcity creation—the frank recognition of which might cause disconcerting misgivings in respect of the morality of the policy; or possibly because, in contrast with work-sharing, the distribution of the advantages or the incidence of the burden will seem unjust; or perhaps because of other sources of confusion which cause the contributions to be regarded as charitable payments, generously subscribed by warm-hearted colleagues; the workers displaced by labor restrictionism are given, not unconditional compensation to make up their income to something near to what they could earn in a free market, but a bounty for keeping out of the labor market altogether. The idleness resulting must be regarded as “participating” in spite of the distributive rights acquired happening to confer such a very meager portion.

(13) In practice, State-subsidized unemployment benefits support general restrictionism in the labor market and are contingent upon absolute idleness

The position is complicated in practice because it is not only his union, or an organization representing “the industry” which buys the consent of displaced workers. The State also contributes. However admirable we may consider the political ideals which lead to the State contributing to unemployment funds, or however expedient we may consider the policy, we must admit that the effect is to provide an official support to private restrictionism in the labor market.⁹ Society, unconsciously—and given the past perhaps wisely—accepting the goodness of the status quo, endeavors to preserve the rates of earnings among the more favored groups of workers; and the pacification of those displaced is seen to be a more effective way of preserving traditional inequalities than wage fixations alone.

(14) Cartel arrangements are voluntary in a sense in which labor restrictions are not

As the effect of unemployment insurance is in some measure a purchase of the cooperation of workers in a system which deprives them of the right to the more remunerative forms of work, we must regard their displacement as giving rise to “withheld capacity.” It is less easy to regard it as “enforced idleness.” At the same time we have to remember that the trade unionism or wage-regulation which brings about their exclusion is not voluntary in the sense that cartel agreements are voluntary. The latter are usually rational agreements. Cartel members insist upon adequate bonuses in return for their promise not to under-cut. But to an impartial and dispassionate observer it seems, on the face of it, that displaced workers get (from their union or the State) a mere sop. They appear to consent because they do not understand. The impression persistently asserts itself in the present writer’s mind that it is nothing but their ignorance which prevents them from insisting upon an equal sharing of the spoils in return for their agreement to refrain from “blacklegging.” They apparently acquiesce; the unanimous voice of their teachers has, one feels, instructed them that the restriction of competition constitutes their great safeguard; but the question of the distribution of the benefits of such restriction is never raised. Surely the acquiescence of the unemployed is based on an illusion which survives only because it is to no one’s interest to dispel it. During the protests against “the means test” in Great Britain, this fundamental issue remained hidden.

(15) For justice, the compensation conferred by a union’s unemployment pay should be complete

That the true nature of unemployment insurance is that of a bonus which is similar to, but in one crucial respect different from, the reward paid to a member of a price ring who cooperates by ceasing to contribute to output, has received hardly any recognition in the printed word. Blindness to this compensatory aspect of the “dole” has certainly colored the current moral attitude towards it in a quite unjustifiable manner. We can illustrate this point from a recent book by Professor Knoop. He appears to be arguing against subsidiary employment being undertaken by those in receipt of unemployment insurance benefits. Of course, Professor Knoop is justified in deploring any breach of the law. Yet one feels that his attitude is dictated by his acceptance of the view that “the dole” should rightly be, not compensation, but a charitable payment to those for whom no other work whatsoever is available. Consider the following passage. He says that “... the Insurance Fund is being bled for purposes which ought not to be possible. For example, a suburban grocer, with a trade almost entirely concentrated on Fridays and Saturdays, may be paying his assistant 42/- per week. If such assistant were suspended from Monday to Thursday inclusive, he could draw 4 days’ benefit which in the case of a married man with one child would amount to 18/8d. The grocer might pay 25/- for his work on Friday and Saturday, so that the assistant would actually be better off than when on full work.”¹⁰ But why object to this? The ideal would surely be for the grocer to employ this man for the Friday and Saturday only for 25/- and leave him free to serve the community in some other regular job from Monday to Thursday, or in the almost unlimited casual employment for which the individual can bid in a free labor market. Could we then say that the grocer was “bleeding” the community? Could we in any way deplore his action when the shop assistant to whom he gives a regular two days’ work each week is paid i8/8d. out of the insurance fund on condition that he does not undertake other available work? And as for the shop assistant himself, if we bring in these moral issues, has he not a moral right to be “actually better off” than he would be if he depended on earnings alone? For has he not been ousted from, or persuaded to withhold his labor from the (individually) most profitable fields? We admit that many people will indignantly deny that the “ideal system” would leave such a person free to bid for whatever regular or casual work happened to be going during the first four days of the week. That, they will say, would cause him to compete and so to lower rates of earnings where they were already low. But if they argue this way, ought they not to contend also that compensation should be complete? If the leaders of organized labor really believe that “withheld capacity” generally practiced (taking the form of trade-union or State wage-fixation in the actual world, of course) can increase the earnings of the working classes as a whole, surely it is up to them to arrange an equitable system of sharing the benefits with those whom they force out of employment or persuade to withhold their labor. It is no answer to blame “the capitalist system.” This sort of injustice is obviously rectifiable in the present.

(16) Complete compensation would be insisted upon if the members of a trade-union regarded it as shareholders do a firm

There would be a different story to tell if the members of a union regarded that body as shareholders do a firm. Displaced workers would then insist upon work-sharing or full compensation. Such an enforced dilution of monopoly increments might, of course, give added strength to the motives which make trade-unions into closed corporations. It is possible that patrimony, favoritism and bribery would be more powerful factors determining entrance to the better paid trades, and that age would repress youth, and men repress women, with even greater fervor. But the assertion of their rights by displaced unionists would also be likely to expose to the unprivileged classes the nature of the parasitism which condemns them to relative poverty.

(17) Organized labor has usually been hostile to the dilution of monopoly-revenues through work-sharing

One feels that it has been a hazy recognition of such a threat to popular acquiescence in trade-unionism that has stimulated occasional opposition to “short-time” policy from the industrial and political labor camps. The arguments used have, of course, stressed the unfairness to the workers themselves; the injustice of placing the burden on those least able to bear it; the danger that incomes generally will be forced below the minimum required for the maintenance of physical efficiency; and other considerations which the social scientist cannot help suspecting have been devised to camouflage the real issue. It is very interesting to notice the “complete right about face”¹¹ on the part of Mr. Sidney Webb on the short-time question. In 1891, it was clearly the “withheld capacity” aspect of the practice which had caught his attention. He then stressed (in The Eight Hour Day) the “beneficial results” in respect of employment creation achieved through shorter hours. But by 1912 he could argue (at the National Conference on the Prevention of Destitution) that “a reduction of the hours of labor could not do anything whatsoever to prevent the occurrence of unemployment.” Are we wrong in surmising that the “dilution” aspect of short-time was now in Mr. Webb’s mind, with all its menacing and ominous implications?

(18) The failure of the poor to share their poverty is the most neglected aspect of the unemployment problem

If those social reformers who have no political or financial axe to grind could only be brought to realize that their strivings would be better guided if the light of economic analysis were allowed to fall on the labor market which they try to explore, they might see a new problem. We believe that they would recognize the fact that the poor do not share their poverty as the most worrying and neglected aspect of unemployment as a labor problem. The incidence of unemployment, even when of the type which we class as “preferred idleness,” is one expression of the unjust distribution¹² of the direct burdens of restrictionism. It is part of the wider issue of the inequitable sharing among the workers of their aggregate earnings. Because each class tries to be parasitic upon the class beneath it (in the wholly false belief that it is the capitalist class which is in fact mulcted), and because some compensation or relief is offered by society, distributive injustices are largely manifested in “preferred idleness.”

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1 The rights are not taken as completely equal where the question of grades comes in. If the proportionate numbers of workers in each grade (e.g., between bricklayers and their laborers) can be rigidly enforced, there can be any division of the spoils between the groups as such.

2 This is most frequently the explanation. The workers themselves, of course, do not recognize that they are in any sense sharing in the benefits of restrictionism. In the usual case, they may simply know that they have found the field which gives them the best attainable income.

3 In Seasonal Trades, edited by S. Webb and A. Freeman (London: Constable, 1912), p. 48.

4 The fact that the leisureliness is not very evenly spread (as it would tend to be if chance were the only factor) is due partly to the fact that differential reputation, social standing, personality (and perhaps differential skill), and the goodwill which is bought with a practice, and so forth, influence the amount of services rendered by individuals at the conventional or fixed fees.

5 Thus, consultations may take longer than would really represent economy of a practitioner’s time if he were trying to work at full capacity. This is one of the results of the situation which always arises when prices are fixed but not the output and quality of the commodity sold. Competition then tends to be expressed in other, less urgent things than prices (from the consumers’ point of view).

6 In other ways, such direct redistribution is resorted to, especially through the “social services.” A good example is the case of subsidized housing schemes. But here the benefits in practice go to those organized in building rings, the suppliers of building materials, architects and privileged artisans. This appears to work to the actual detriment of the poor, as the subventions have the effect of bolstering up the various building monopolies. With the education services, professional parasitism has not been so effective and some part of the benefits have been allowed to reach the poor.

7 On the significance of “the good employers,” protected by wage-fixation, see W. H. Hutt, Theory of Collective Bargaining (London: Staples, 1930), pp. 100–04.

8 There can be an additional cause of “participating idleness” associated with casual labor in a field in which there is free entry. When it is difficult for “the employers” to judge individual efficiency, it is very easy for tacit monopoly to arise among the workers employed. It will be expressed as “participating idling,” in the form of cd canny—not necessarily organized, but a spontaneous, hardly collusive withholding of efficiency with the immediate object of increasing the chance of employment—of making the job last as long as possible. But unless there is a barrier to the occupation, or unless there are no poorer classes capable of interloping, each extension of monopoly will result in a countervailing dilution, again until the expectation of earnings within is equated to that outside.

9 Post-war developments in England were realistically forecast by Sir Sydney Chapman in 1908. He pointed out how the subsidizing of trade-union insurance would eventually necessitate the State upholding trade-union policies and standards (L. Brassey and S.J. Chapman, Work and Wages [London: Longmans, Green, 1904], part II, pp. 325-36).

10 D. Knoop, Riddle of Unemployment (London: Macmillan, 1931), p. 166.

11 So described by R C. Mills in Contemporary Theories of Unemployment (New York: Columbia University Press, 1917), pp. 98–99, footnote, from which the following passages from Mr. Sidney Webb are quoted.

12 “Unjust” in the sense of unequal.