life from falling, and the equal or greater desirability of raising those standards as much as possible. The doctrine of a living wage, then, is not an established legal principle, but an ideal toward which people may strive.

In practice, the awards appear to be based on two main principles; first the desire and intention of the Court to secure a living wage to all able-bodied workers; second, the desire of the Court to make a workable award, that is, to grant as much as possible to the workers without giving them more than the industry can stand. In doing this regard must be had to the prosperity of a given industry as a whole, if not to the profits of individual employers. It is usually taken for granted that no reduction will be made in the customary wages in any industry, and, in times of depression, this might be regarded as a third regulative principle. Again, it is the custom of the unions, in formulating their disputes, to demand more than they expect to get, knowing that, in the worst case, they will lose nothing. So frequently has this been done that one might almost lay down a fourth regulative principle, the principle of splitting the difference.

The rigidity of system which is characteristic of the railway rates seems to be taking possession of the regulation of wages also. When the awards were few in number, it was easy to make a change without any serious disturbance to industry; but now that they are numerous and their scope has been widely extended, it is difficult to make a change in one without making many other changes, for the sake of adjusting conditions of labour to the changing conditions of business.

Another stumbling-block in the way of advance in wages is the inefficient or marginal or no-profit employer, who, hanging on the ragged edge of ruin, opposes the raising of wages on the ground that the slightest concession would plunge him into bankruptcy. His protests have their effect on the Arbitration Court, which tries to do justice to all the parties and fears to make any change for fear of hurting somebody. But the organized workers, caring nothing for the interests of any particular employer, demand improved conditions of labour, even though the inefficient employer be eliminated and all production be carried on by a few capable employers doing business on a large scale and able to pay the highest wages. This is not to say that even the most efficient employers could afford to pay wages much in excess of those now prevailing.

From such a statement as this it is but a step to the position that wages are determined chiefly by economic laws, and that the Arbitration Court can cause, at most, very slight deviations from the valuations of the market.

It is not easy to show that compulsory arbitration has greatly benefited the workers of the Dominion. Sweating has been abolished, but it is a question whether it would not have disappeared in the years of prosperity without the help of the Arbitration Court. Strikes have been prevented, but New Zealand never suffered much from strikes, and it is possible that the workers might have gained as much, or more, by dealing directly with their employers as by the mediation of the Court.

It is a common opinion in New Zealand that the increase in the cost of living has been due largely to the high wages and favourable conditions of labour fixed by the Arbitration Court, but so widespread a result cannot have been due chiefly to local causes.

Manufacturers complain that the awards have been so favourable to the workers as to make it difficult to compete with British and foreign manufacturers, and demand that either the arbitration system be abolished or that they be given increased protection by increased duties on imported goods. It is claimed that the growth of manufactures has not kept pace with the growth of population and the importation of manufactures from abroad.

There is such agreement among manufacturers as to the effect of compulsory arbitration in increasing the cost of production that their statements cannot be lightly dismissed, especially as many unbiased writers concur in the opinion.

Unquestionably, manufacturers, with the exception of the great industries which work up raw materials for market, are not doing any too well, but it is not likely that compulsory arbitration is the chief cause of this. The high wages which manufacturers have to pay are due chiefly to industrial conditions which always prevail in a new, thinly populated country with great natural resources. awaiting development.

'XI

THE PROBLEMS OF TRADE UNIONISM

You have doubtless heard the statement, "In America there is no classconscious proletariat; for the American laborer sees in himself a capitalist in embryo." When our country possessed an open frontier, undeveloped natural resources, opportunities for the ready acquisition of property, and a rising standard of living, a vigorous protest against conventional social arrangements was not to be expected. But with the passing of the frontier, the restriction of opportunity, and the increasing tendency toward social stratification, sentiments are changing. As laborers are convinced in increasing numbers that they are permanently of the "proletariat," they express themselves more vigorously against a "system" that makes inequalities possible. This, however, hardly threatens a "class-conflict" in the immediate future; our class and group lines run in too many directions and cut each other at too many angles for that.

The "social unrest" is much more closely associated with group than with class interests. There are many groups of large capitalists and of skilled laborers. There exist accordingly many types of "capitalism" and even more of "unionism." Small capitalists and unskilled laborers alike are without consciously developed group feelings and vehicles for the expression of these feelings. It is those who are best off, those who appeal least to our sympathies, whose strength lies in union. However, since these labor groups are everywhere in contact with much the same type of "capitalist groups," they have much the same prejudices, sentiments, and theories. Fighting as they are, each for self, they are creating a common body of labor theory, and their respective interests are impelling them to a certain amount of common activity. The like is true of the capitalists.

A study of the appraisals placed upon unionism by men whose relations to it are very different, such as those of an employer, a unionist, and a college president given below, show fundamental differences as to the value of such an institution. Perhaps nothing connected with "the labor movement" is harder to understand-or more necessary to an appreciation of the problems of trade unionism-than the theories and attitudes-the viewpoints if you will-of capitalists and laborers. They are as conflicting and contradictory to an outsider as they are obvious and axiomatic to those who hold them. The capitalist, concerned with the "business" side of industry, easily acquires an understanding of the importance of basic institutions. He accordingly thinks in terms of legality, assumes the schemes of values surrounding him to be absolute, surrounds "property," "contract," and their complements with an air of sanctity, regards "the constitution" as supreme, and puts his full trust in the integrity of the courts. In determining the relations of employer and employees, he relies upon the efficacy of free competition and individual bargaining, insists upon his right to prescribe the conditions of employment, and believes quite firmly that identical legal rights guarantee equality of treatment to the two parties.

The laborer, concerned with the technical side of the process, acquires a common-sense philosophy of force; he believes in fatalism; he thinks that the employer has a more strategic position in bargaining than he possesses; he is convinced that capital concentrated under corporate ownership can be fought only by "united" labor. Unity in the labor group, accordingly, is the one thing that is necessary to an improvement in conditions. To secure it he thinks it necessary to insist uncompromisingly upon the "principle of

uniformity"; upon a control of apprenticeship, of hiring and discharge, of technique, of materials-in short of all that is necessary to secure in the larger sense the absolutely necessary "closed shop"; and particularly upon collective bargaining. This attitude serves to make quite intelligible such peculiar phenomena as restriction of output, taboos upon non-union materials, and the intense hatred of "scabs."

The antithesis between the two systems finds a clear expression in "scientific management." The employers, who are responsible for the many innovations which masquerade under this catholic name, aim at giving to management the control of technique, the selection of men properly qualified for various productive tasks, the establishment of a close connection between the individual's work and his pay, and inferentially they aim at individual bargaining. The laborers oppose it because it strips them of the control of technique, of the right to hire and discharge laborers, of the prescription of the conditions of employment-of that "uniformity" which is essential to collective activity.

Industrial conflict, which is the most spectacular side of the trade-union movement, is to be explained very largely in terms of "collective bargaining." The opposing parties make use of quite similar weapons: the strike, for example, finds its counterpart in the lockout, and the boycott in the blacklist. Each of these, curiously enough, resolves itself into the collective exercise of a right which in the individual case is legally recognized. It is not surprising that law, lacking an adequate social philosophy, and accustomed to discover society by aggregating individuals, should have been put to some sore shifts in dealing with these collective weapons. The use of these is usually part of a protracted campaign prosecuted for many years, using a varied strategy, and employing many different instruments.

In the last ten years the strategic position of the employers has been greatly strengthened, that of the laborers correspondingly weakened. This is partly due to the greater staying power of capital. In part it is due to the close correspondence between the interests of the employers and the natural development of an individualistic social system. This is evident in the undermining of the powers of unionism by a long succession of court decisions. But to a considerable extent it is due to the effectiveness of employers' associations. Because of their smaller numbers, employers better than laborers can make use of devices which lack full legal approval. The blacklist, for instance, can be effectively used where its very publicity prohibits the use of the boycott. Likewise, through "spies," employers can get advance information of the strategy of an anticipated industrial conflict. It is beyond the power of unions to get any such information. The association has, through careful study, reduced strike-breaking almost to an exact science. The employers have liberally used funds to "educate" the public to the evils of those practices of the unions which are most inimical to them. Immigration, too, has stood them in good stead.

This weakening in the strategic position of labor is producing some very important modifications in our social institutions. It is forcing "labor into politics." The "exemption clauses" of the Clayton act are but earnests of what we may eventually expect. Organized labor at the polls is far stronger than organized capital. If its theory is forced into our institutional system, our whole social life will be profoundly affected. Another form in which it is seeking expression is through such subtle and harassing methods as "the intermittent strike" and sabotage. These devices of "revolutionary unionism" are making their way into some very well-established unions. It need not be said that back of these methods is an attitude which insists upon the welfare of the small group even at the expense of society as a whole.

Our study of its more conspicuous features must not allow us to overlook the importance of unionism as an agency of social control. The information, theories, and prejudices which the laborers acquire from their unions

influence profoundly their thought and action upon non-industrial as well as upon industrial matters. The unions can eliminate from the lives of their members much of economic insecurity, can do much to establish better working conditions, and can set models for the state to use in improving the conditions of unorganized labor. It is more than possible that eventually they can, through the trade agreement, create permanent positions and equities in property for labor, and that these will, under the guise of having been established under free contract, be recognized by the law. Our gravest concern is lest, in seeking the interest of the group, the interests of society be completely lost sight of.

A. GROUP AND CLASS CONSCIOUSNESS

283. Bourgeoisie and Proletariat1

BY WERNER SOMBART

Capitalism is based on the private ownership of all commodities, and therefore also of those which are required for production-raw material, machinery, factories, land. Historic development has brought it about that production in these days is on a large scale; that is to say, it is carried on by the combination of many laborers under uniform direction. Thus, a thousand men are united to work a mine or a machine factory, and hundreds to spin or weave in some big establishment. But the same development has also brought it about that those who work together in this way have not the same rights with regard to the means of production. Some own these means of production, and therefore become the directing factors in the work of production, and also owners of the commodities produced. The others, who form the great mass of the workers, are shut out of possession of the means of production. Hence it follows that, in order to live, they are forced to put their labor power at the disposal of those who do possess the means of production, in return for a money payment. This comes about by way of a wage contract, wherein the laborer, who possesses naught but his labor, agrees with the owner of the means of production, who is on that account the director of production, to undertake to render a certain amount of work in return for a certain amount of pay.

When we remember that all production depends on the combination of labor and the material means of production, then the capitalist system of production differs in the first instance from other systems in that the two factors of production are represented by two separate groups, which must meet and combine if a useful product is to ensue. In this the capitalist system differs, from, let

'Adapted from Socialism and the Social Movement 3-8. Published by E. P. Dutton & Co. (1908).