A new, wider electorate (see Chapter 13) could now scrutinize government policy. In Britain, in the years leading up to the 1906 elections, arguments in favour of free trade became increasingly constructed on the basis that it would improve the standards of the working class.136
The great Liberal welfare legislation of 1906–11 encountered only mild Conservative opposition. The Tories, smarting from the scale of their defeat in 1906, were still, at least technically, in alliance with the Liberal Unionist Party (founded by Liberals opposed to Irish Home Rule but in favour of social reform). When, in 1907, the Liberals introduced the Old Age Pensions Act, the Conservatives gave it a welcome and few campaigned against it in the election of 1910.137
The Conservatives did not even try to mutilate the Liberals’ Trades Disputes Act (which established that trade unions could not be sued for damages arising out of a strike, thus reversing Conservative legislation); nor did they object strongly to the School Meals and School Health measures.138 But they drew the line over the financing of this legislation by an increase in taxes.
The Liberal 1909–10 budget, which went down in history as ‘the people’s budget’, pushed through the Commons by the Chancellor David Lloyd George and Winston Churchill, then a Liberal and President of the Board of Trade, was a brutally redistributive budget. It taxed both the incomes of the rich and their land. As Lloyd George declared on 29 April 1909 to the House of Commons:
This is a war Budget. It is for raising money to wage implacable warfare against poverty and squalidness. I cannot help hoping and believing that before this generation has passed away, we shall have advanced a great step towards that good time, when poverty, and the wretchedness and human degradation which always follows in its camp, will be as remote to the people of this country as the wolves which once infested its forests.139
The Conservatives used their majority in the House of Lords to veto the budget. New elections were called (January 1910). The Liberals won again and passed the budget with the help of the Irish nationalists and the nascent Labour Party. A second election was called for December 1910 to push through a major piece of legislation: the Parliament Act (1911), which severely curtailed the powers of the House of Lords. The Liberals won again and, this time, the Lords were too scared to veto it. The construction of the British welfare state had begun in earnest. Its unlikely architects were what was once the main pro-capitalist force in Victorian Britain, the Liberal Party, in alliance with Irish nationalism. Yet, even then, British welfarism should not be reduced to its ‘state’ element. The annual income and expenditure of registered and unregistered charities, friendly societies, benefit-paying trade unions, and other benevolent and self-help institutions, vastly exceeded the expenditure on social welfare of central government up until just before the First World War.140
It was realized that one could no longer just rely on private charity; even in poorer countries, such as Italy, the state had to intervene. Francesco Crispi, once a strong supporter of the ‘revolutionary’ Garibaldi, turned out as a Prime Minister (1887–91, 1893–6) to be authoritarian at home and colonialist abroad, which is why he is often regarded as a precursor of Mussolini. Nevertheless, unlike his more ‘liberal’ (in the economic sense) colleagues, he understood the need for social reforms. As Antonio Gramsci put it, ‘he was the true man of the new bourgeoisie’.141 Crispi himself would not have disagreed. He wrote to his fellow Sicilian politician Giuseppe Tasca-Lanza in August 1891 that the common people (he used the word plebe, then less insulting than it sounds now) should be reminded that it was the bourgeoisie who had united Italy, expelled foreign occupiers, and established basic freedoms. And while it was politically imperative that there should be no differences among the citizens, the plebe should be grateful and happy to be given a place at the ‘banquet of life’.142
Crispi’s visits to his remote southern constituency (Tricarico in Basilicata) had brought home to him, or so he wrote, the poverty of its inhabitants, the gap between the people and the institutions, the squalor, and the arrogance of local public officials: ‘The organism of the state is corrupted. We must cure this body.’143 When he became Prime Minister he promoted a major Public Health Act (1888), giving a central role to government-appointed prefects, thus bypassing locally elected officials. The law established for the first time in newly united Italy the principle that ‘The health of both mind and body should be the responsibility of the government.’ As Crispi declared to the Chamber of Deputies, ‘On this depends … the greatness of nations.’144 Two years later he proceeded to move against Church charities (12,000 of them!), claiming that much of their money was not spent on welfare and that most of them were totally unaccountable. From now on welfare would be secularized.145
Throughout Europe, more than in Japan or the United States, welfare reformism – what one might call the ‘nationalization’ of private charity – in the run-up to the First World War, united the majority of Liberal politicians, many Conservatives, the Roman Catholic Church, and the majority of Socialists. However, reformism could not be just about welfare, which, by and large, was something that involved the poor and the old. Of even greater importance was the ‘social question’ (then the accepted name for the labour question). Organized workers, after all, were a greater threat than those in need of welfare. Here, once again, the state had to take the commanding role and interfere in the relations between capitalists and workers. It is to this that we now turn.
15
Managing Capital and Labour
‘The executive of the modern state is but a committee for managing the common affairs of the whole bourgeoisie,’ declared Marx and Engels in The Communist Manifesto, unaware that this would later be taken as seriously as a biblical pronouncement. This has been interpreted by some of their followers, somewhat crudely, as suggesting that the ‘bourgeois’ state would always be on the side of the capitalists, that it could not be reformed and hence would have to be abolished. Yet Marx and Engels’s blunt statement contains a grain of truth. The words ‘the common affairs of the whole bourgeoisie’ is a recognition that capitalism has a common interest, but that it would be safer if this was not left to the vagaries of the internecine competition that constantly pits capitalists against each other. A Leviathan is needed to regulate the competitive jungle, to enforce contracts, redress grievances, and, more generally, make sure that the conditions of existence of the system, and not just of this or that individual capitalist, endure. Relying on the occasional philanthropic capitalist is too risky for the long-term prospects of capitalism as a whole.
The ‘state’ that acts as a guarantor and that sets the rules does not have to be the state of the actual territory within which capitalists find themselves. An external and commercially powerful state could set the rules, often informally as was the case with the Dutch Republic in the seventeenth and eighteenth century, Great Britain in the eighteenth and nineteenth century, and the United States in the twentieth century. It could be an international organization such as the IMF or the World Bank, dominated by the most powerful hegemonic countries.
Modernity, ‘progress’, and capitalism, although they offered exciting prospects, were also frightening, with forebodings of unhappiness and suffering. These worries did not just exist in fully fledged capitalist countries, such as France or Britain, but also in others where the movement towards industrialization was seen as an unavoidable stage of progress. In nineteenth-century China liberals were dismayed by the social evils that capitalism seemed to bring about.1 In Russia anti-capitalist attitudes developed early in the nineteenth century, even before industrialization had set in. They knew what was happening elsewhere and saw the consequences. Indeed, many Westernizers, such as the literary critic Vissarion Belinsky, held anti-capitalist ideas. Vasil Bervi-Flerovskiĭ, a populist writer, declared in The Condition of the Working Class in Russia (1869) that the conditions of factory workers were worse than those of the peasantry.2 Populists, in Russia and even more so in America, approved of
markets but not of capitalism. They approved of small firms and detested large ones. They wished capitalism had only produced the small entrepreneur, the smallholder, the small landowner, the small shopkeeper. They had looked forward to a capitalism of little guys not of big conglomerates. Small-time capitalists, merchants, and landowners hated the state when it interfered with them but wanted the state to protect them from the rapacious threats of large-scale manufacturing and finance. They hated finance (banks) even more than they hated big capitalists because they needed banks, borrowed money from them, and had to pay it back – with interest.
Global migration reproduced the essential condition for the reproduction of capitalism: the uprooting of workers from the land – any land – and the constant expansion of the market for commodities. No wonder that the enormous migration from countryside to cities of the period 1880 to 1910 coincided with the growing regulation of labour markets since workers too – increasingly organized – wanted some form of regulation of capitalism.
Of course, in liberal theory, the capitalist and the worker face each other in the labour market on a footing of equality. The former offers work at a given rate and with certain conditions. The latter can accept or reject it. If all workers reject the work, the capitalist will have to revise his offer, or cease being a capitalist. Eventually a bargain is struck. A wage is agreed, as is the length of the working day. Each side can quit at any time. Everyone is free. Any interference by the state into this bargain would be nonsensical, an encroachment on basic liberties.
Except that the parties are not equal.
The individual worker is powerless if there is always another worker ready to step in to take his place and work harder and for less. Matters change if workers bargain collectively and do not face the capitalist as individuals but as a united force – one of the many reasons why the language of solidarity and fraternity is favoured by the labour movement while that of individualism is extolled in pro-capitalist discourse. This, of course, was rhetoric: capitalists, like socialists, required organization and cooperation, required people to work together, inside a firm, towards its expansion and ever greater profits. Capitalists were competing against other capitalists, but workers too were competing against other workers over jobs, over wages, and restricting employment to keep wages high. And though individual capitalists would always try to do with fewer workers, and, by introducing machines, to eliminate the need for some of them, capitalism as a system required an ever expanding market of consumers, of people working, earning money, and spending it on the products of capitalism. Nor was there much room for individualism in the traditional bourgeois family – a model of conformity, where the paterfamilias demanded the same kind of unquestioned obedience that a boss required in a factory.
Well before Karl Marx, Adam Smith was perfectly aware of the power differential between employers and trade unions and the inequalities in law between workers and capitalists:
The masters, being fewer in number, can combine much more easily; and the law, besides, authorises, or at least does not prohibit their combinations, while it prohibits those of the workmen. We have no acts of parliament against combining to lower the price of work; but many against combining to raise it. In all such disputes the masters can hold out much longer … Many workmen could not subsist a week, few could subsist a month, and scarce any a year without employment. In the long run the workman may be as necessary to his master as his master is to him; but the necessity is not so immediate.3
A. V. Dicey concurred: ‘an individual artisan or labourer does not bargain on fair terms … The sale of labour, in short, is felt to be unlike the sale of goods.’4 In other words, labour is not a simple commodity. It needs to reproduce itself (himself, and herself, and the future labour force). Capitalist production is a social issue.
In the second half of the nineteenth century the state did not just intervene on welfare matters (as we saw in the previous chapter) but in labour disputes, on the length of the working day, in establishing who could work (children, women), in the quality of the commodity sold, and in the safety of workers. Regulation of production and commerce existed in the Middle Ages, but it was only in the nineteenth century that matters such as working hours and the establishment of a minimum age for workers became a major political matter. In some Swiss cantons, as early as 1848, laws were introduced that restricted men’s work in factories to thirteen hours during the day and eleven hours at night. In 1877 the Swiss Federal Factory Act (Eidgenössisches Fabrik-gesetz) established an eleven-hour day, restricted night work, made Sunday a day of rest, and banned children under fourteen from working in factories (they could work in the fields).5
In France social investigators such as Louis René Villermé (see Chapter 2 above) denounced the conditions of child labour in his Tableau de l’état physique et moral des ouvriers employés dans les manufactures de coton, de laine et de soie (1840). This was decisive for the law of 1841, which established that factories employing twenty or more workers should restrict child labour. At the time some 150,000 children, 12 per cent of the labour force, were working in French factories. Implementing the law was problematic since there was no factory inspectorate, and the law encountered opposition from both employers and working-class families.6 Finally, in 1874 the regulation of child labour was applied to all factories and a salaried inspectorate was created. The implementation of the law, however, remained difficult.7 The working day was still long and exhausting. According to a contemporary survey (Salaire et durée du travail dans l’industrie française), 90 per cent of those working in the Paris region and 60 per cent of those working elsewhere worked between nine and a half and eleven hours a day (hence the strength of the socialist struggle for the eight-hour day and the forty-hour week).8 To some extent the relative lack of concern about the social question on the part of French politicians was due to the quietness of workers after the terrible repression that followed the Paris Commune of 1871.9
In Belgium, in 1886, shortly after the stunning electoral victory of the Catholic Party against the liberals, King Leopold II, in a speech from the throne, declared that one needed to regulate the work of women and children.10 For the first three-quarters of the nineteenth century the average working day in that country was twelve hours, one of the longest in western Europe.11 In 1889 new laws banned the employment of children under twelve and shortened the working week for women under the age of twenty-one and boys under sixteen (to seventy-two hours!).12 In 1896, 50 per cent of the workforce worked more than ten hours a day and one-fifth worked eleven hours.13 Trade unions had been legal in Belgium since 1830, but employers were allowed to sack union organizers. Only in the 1860s did unions start to gain strength, and a new electoral law (1894) enabled more socialists to be represented in Parliament. As a result, social legislation developed further while the stubborn liberalism of both Catholics and liberals began to give way to a more interventionist outlook.14 Marx commented acidly, praising the struggle for a shorter working day in Great Britain: ‘Belgium, the paradise of Continental Liberalism, shows no trace of this movement. Even in the coal and metal mines, labourers of both sexes, and all ages, are consumed, in perfect “freedom” at any period and through any length of time.’15
Marx was right: the pathbreaker in the reduction of the working day was Victorian Britain. In 1819 children in textile factories could not work more than twelve hours a day; this was reduced to nine hours in 1833; in 1847 working hours for women were restricted to ten. The French lagged behind: only in 1900 would the French achieve the British legal standard for women and children.16
Towards the final decades of the century Russia took some tentative steps towards regulation of the labour market (see Chapter 8). In 1882, Nikolai Bunge, then Finance Minister, introduced the first major laws limiting night work for children. In 1897 the maximum length of the working day was set at eleven and a half hours. Before that a fourteen-hour day had been normal and an eighteen-hour day was not uncommon; workers worked on Su
ndays in appalling conditions. The labour reforms had been, at least in part, a response to the labour unrest of 1884–5, itself a consequence of the repressive use of police by factory owners and the heavy fines imposed on workers for turning up late for work. In 1903 workers suffering injury at work were to be compensated, the first step towards accident insurance, and in 1912 a general law on accident and medical insurance finally emerged.17 But the problem with laws regulating the labour market in many countries was their implementation. In Russia the state, though it appeared strong, was weak, like many authoritarian states.18 Bunge, in his famous memorandum (1894), wrote that ‘though desirable it is impossible to have in Russia the kind of factory legislation which is the norm in England’. He blamed it on the workers, a population in constant flux, consisting ‘of all the rabble from the various ends of Russia …’.19 Socialism, he explained, arises when social discipline is weak, when mankind ceases to be resigned, when the wealth of others is envied, and when men have doubts about justice and legality. To fight socialism it was necessary to establish not just justice for all but also to provide everyone with the chance of acquiring property and capital. And it was necessary to tie the interests of the workers to those of factory owners, ‘who understand very little of the social question and the means for its solution’.20 Industrialists viewed Bunge’s factory laws as an unwarranted intrusion into their private affairs; they assumed that they should be able to do what they wanted with their workers and even regarded Bunge as a ‘socialist’ (already a generic term for anyone with mildly progressive views on labour issues).21
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