ON SLIDING SCALES AND ECONOMIC THEORY. 525 



succeeded in reacliing it. And so I was led to reconsider the attitude I 

 had oriojinally adopted. 



And here 1 am afraid that I can only explain ray meaning and define 

 my attitude by quoting the three passages in the book to which my critics 

 referred where the relation of economic theory to methods of industrial 

 conciliation is considei-ed. Nor will these quotations be irrelevant to the 

 strict subject of this paper, the relation of that theory to sliding scales : 

 foi-, on the one hand, the starting-point of a scale must almost necessarily 

 be an agreement obtained by conciliatory methods — by conciliation that 

 is, or arbitration ; and, on the other, the pi-inciple which has as a matter 

 of fact, 1 believe, been invariably taken as the basis of a scale in industrial 

 matters — the concurrent variation of wages and prices — is also the prin- 

 ciple to which recourse has generally been had at boards of conciliation or 

 courts of ai'bitration. 



The first of these passages occurred at a place > where the nature of 

 what I had ventured to call ' irregular negotiations ' between masters and 

 men in industrial disputes was examined. The passage ran in these terms : 

 ' Nor, be it noticed, does there seem to be any economic standard Avhich 

 can be called into requisition in sucb disputesj for, as Professor Sidgwick 

 has pointed out, where two combinations meet one another, political 

 economy is perforce silenced.' 



In the second and longest passage ^ it was argued that the ' principle ' 

 on which an arbitrator should act in adjusting industrial disputes ' could 

 hardly be supplied by Political Economy.' . . . . ' As Jevons has shown 

 in his " Theory of Political Economy," in all bargains about a single 

 ■Indivisible object ' — and I lay special stress, for reasons which will appear 

 later, upon the word indivisible — ' there may arise a " deadlock " because 

 neither party can read the mind of the other, and discern the exact length 

 to which it is prepared to go in pushing demands or accepting conces- 

 sions. Nor indeed, did they possess the gift of clairvoyance, would the 

 problem be necessarily solved. For even then there might be no definite 

 point fixed in the mind of either. After alluding to this passage in his 

 " State in Relation to Labour," he' (i.e., Jevons) ' proceeds to point out that 

 the existence of indivisible combinations in trade disputes ' — and here 

 again 1 would emphasise the word indivisible — ' usually reduces them to 

 a bargain of this " indeterminate " nature. To avoid a strike it may be 

 the interest of either party to relinquish, or at least to relax, its demands; 

 but theoretic economics cannot resolve the problem. It is, in mathema- 

 tical phraseology, " indeterminate." ' 



The third and last passage occurred ^ where the introduction into a 

 sliding scale of such elements as the cost of materials and the state of the 

 labour market was under consideration. ' From an economic point of 

 view indeed,' it was argued, 'there is considerable reason for having 

 regard to them, but it is the traditions of the trade which are of the 

 greatest importance. For the existence of combinations on either side 

 banishes, as we have noticed, to a very great extent all economic consider- 

 ations, so far at least as the determination of the exact basis of the settle- 

 ment is concerned.' And then, later on in the same paragraph, it was 

 urged that ' the negotiations into whichi ' the two parties ' enter can 

 hardly be reduced to a question of pure economics, nor is there any econo- 

 mic touchstone which can be brought into requisition to decide the 



P. 14. ' P. 54. > P. <)3.. 



