130 SECTIONAL ADDRESSES. 



reduction there. And so with other competitive inequalities. In the 

 industries sheltered from foreign competition, the workers have been able 

 to exploit the ' shelter.' Where subsidies have been paid the unions 

 have secured for their members a share of the subsidy. Where an 

 industry or section of an industry enjoys some element of monopoly, 

 wage-rates, when compared with wage-rates in the other sections of the 

 industry, suggest that the monopoly profits are shared by labour. In 

 industry in general, the lower-paid classes of workers, who secured greater 

 proportional advances during the war, have so far been able to retain 

 their advantages, a power explained by the spread of trade unionism 

 among them and Government protection of wage-rates through Trade 

 Boards. 



Thus the movement of wage-rates does not bring about an adjustment 

 to the capacity of the different industries to pay wages and provide 

 employment to the workers seeking employment ; the set of wage-rates 

 it results in represents the power and opportunities, often temporary 

 and accidental, that organised workers have had of exacting wages, with 

 little or no regard to the ultimate demand for labour as shown by the 

 extent of unemployment. 



In producing this result the extension of public and collective regula- 

 tion of wages has been an influence. By preventing the nibbling at them 

 by hard-pressed or unscrupulous employers, that undermines standards 

 in unorganised trades, it tends to adjust rates to the capacity of the larger 

 and better-organised firms. More important, it opens the door to the 

 influence of non-economic factors. The mere fact of publicity, or 

 organised discussion, invites appeal to social and ethical standards of 

 ' fair ' and ' living ' wages, to pseudo-principles such as the sanctity of 

 pre-war renl wages, to the unpopularity of reducing rates of wages of the 

 lower-paid workers, none of which have any bearing on the capacity of 

 industry to pay wages and provide employment. Economists in the 

 seclusion of a private circular may state baldly that ' the fundamental 

 hindrance to recovery . . . lies in the abnormal relationship between the 

 movement of the cost of materials and that of the cost of labour,' ^ but 

 directors of large companies, who may be candidates for Parliament, will 

 not commit themselves publicly to such unpopular opinions. 



VI. 



The increased element of publicity and public control of wages, there- 

 fore, will tend to harden wage-rates in a depression, provided that the 

 representatives of the wage-earners really wish to resist reductions. 

 Whether they will do so or not, however, will depend on the consequences 

 of successful resistance, at which we must glance. Before the war the 

 consequence would have been unemployment ; and unemployment 

 would have involved, for the small minority of wage-earners covered by 

 trade union unemployment insurance a drain on the union funds ; for 

 the great mass of wage-earners, who had no such resource, early and 

 extreme hardship. It was impossible for the representatives of the 

 wage-earners in wage-negotiations to ignore unemployment. 



' London and Cambridge EGonomic Service : Bulletin of October, 1928, p. 3. 



