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The Capitalist’s Place in the New Economy

Wordsworth Donisthorpe's "The Claims of Labour; or, Serfdom, Wagedom, and Freedom"

Donisthorpe argues that once workers were respected as more than drudge-laborers, everyone could be a capitalist and entrepreneur with few settling for socialism.

Editor’s Note

In our previous selections, Wordsworth Donisthorpe introduced and expanded upon his scheme for a quasi-syndicalist, profit-sharing, humanity-respecting, individualist mode of production. Having asked “what will be the effect of paying for labour by a share of profits,” our author proceeds to address potential concerns with his proposal. He argues that profit-sharing between capitalist and laborer would encourage popular thrift, economy of production (largely by doing away with the parasitic faction of factory “overlookers”), an invaluable sense of liberty to the individual working person, and the freshly individualized workers would then create self-governing and automatically economizing factories. In Donisthorpe’s system, physical capital should no longer serve as the dividing line between the classes—the owners of productive material wealth could no longer claim the providers of labor capital as their serfs, nor should they treat working people as mere wage slaves. Rather, those who wished to avoid both communism and plutocracy should advocate positive, constructive, individualistic changes to social institutions and conventions.

In our current selection, Donisthorpe addresses the counterargument that while he may have devised a perfectly humane system, it simply does not account for reality. What, for example, would happen to the productive capacity of the economy during depressions? If laborers bore the burden of entrepreneurial hazard along with the capitalist, they too would be vulnerable to market vicissitudes. He responds to this potential line of questioning with reference to another subject he knew extraordinarily well: mechanical engineering. Donisthorpe replies that his profit-sharing system would “resemble the action of the governor-balls in a steam-engine; that is to say, it will substitute automatic equilibration for intermittent readjustment.” Once their wages were converted to profits, laborers would also be active participants in the social process of determining prices. Their wages served to separate them from the entrepreneurial process, but Donisthorpe’s profit-sharing would firmly root workers and their activities to the market economy. There would still, no doubt, be depressions; but armed with a greater amount of economic information about the process of production (reflected in their profit-sharing), workers could automatically regulate their numbers and even provide for ingenious methods of insuring the unemployed. He does not deny the risk involved in remaking themselves into entrepreneurs—in fact, he assures his workingman audience that their path to profit-sharing will be extremely difficult. In assuming much of the capitalist’s economic power, they must also assume much of his socio-economic responsibility. Rather than demand that the wealthy pay higher and higher taxes that the plutocratic state might redistribute, Donisthorpe implored people to bravely and wisely seize their freedom that they might enjoy in capital’s fruits.

Further Reading:  Stephen Herbert & Mo Heard. Industry, Liberty, and a Vision: Wordsworth Donisthorpe’s Kinesigraph. London: The Projection Box. 1998.

Anthony Comegna, PhD
Assistant Editor for Intellectual History

The Claims of Labour; or, Serfdom, Wagedom, and Freedom

By Wordsworth Donisthorpe. London: Samuel Tinsley & Co. 1880.

7. On Equilibration in Trade Fluctuations.—One of the most important results of the new system will be the equilibration of supply and demand in the labour market during times of depression and expansion. It is well known that in periods of great commercial distress large manufacturers are in the habit of keeping their works going, and paying full wages, even though they may be working at a dead loss, in order to keep the hands together to be ready with the full complement in case of revival; and also in many cases for another reason, namely, as a blind to their creditors, to whom a sudden contraction of business would be a revelation.

And then, when the depression has continued too long for endurance, batch after batch of workmen and women are indiscriminately dismissed; not those who are best qualified to obtain a livelihood in other occupations, but, if anything, rather the reverse. Under the new system, when trade is bad and profits low the hands will suffer equally with the masters: those of them who know other crafts will prefer to change their work rather than go on at very low pay; and having thus eased the drag at the ‘wage-fund,’ will leave behind them those least qualified to change their occupation. Those who go will gain, and those who remain will gain.

Thus the action of the profit-system will resemble the action of the governor-balls in a steam-engine; that is to say, it will substitute automatic equilibration for intermittent readjustment. A more perfect analogy cannot be found. A smooth continuous readjustment by infinitesimal adaptations is, all will admit, vastly better than artificial readjustments at comparatively long intervals and by rule of thumb. In the engine an accelerated pace causes the governor-balls to fly out at a tangent, and by rising to shut off steam and so to slacken the pace; which slackening of the pace causes the balls to fall, and thereby to put on steam and so accelerate the pace. So that in fact the acceleration of the pace is the cause of its slackening, and vice versa. This is true equilibrium. And so in trade, a falling off in profits would at once bring about a dimunition in the number of the recipients of those profits, and thereby raise the average profits received by the remaining recipients. The rate of wages will no longer limp and hobble up and down after the rate of profits, dragged by fits and starts, as it were, by an elastic chain; but will accompany it, while at the same time the number of those who divide the ‘wage-fund’ will dwindle, pari passu, with the dwindling of the profits. By the antiquated term ‘wage-fund’ is here meant merely the lump sum which is paid over to the workmen’s president, and is not in any way connected with the wage-fund of the economists.

An incidental result of this self-reduction in the number of hands in response to a falling off in profits will be the consequent limitation of production, an effect greatly to be desired; an effect, too, obtained without imposing enforced idleness upon the working classes at a time when they are least anxious to be idle.

This beautiful self-adjustment of the industrial machine is one of the most convincing proofs of the soundness of the profit-system.

8. On the Differentiation of the Employer’s Functions.—It has probably escaped the notice of most writers on social subjects that the ordinary employer of labour performs no less than three distinct functions: firstly, that of the capitalist pure and simple, whose business it is, like speculators on the Stock Exchange, to examine every conceivable kind of investment, and to invest his own (and in certain cases his client’s) capital accordingly. This requires great study, careful training, and vast experience. Owing to the present defective, and indeed absurd, law concerning partnership and joint-stock companies in this country, the possible developments of this branch of industry have been immensely retarded. Amongst other evil consequences of this abnormal state of the law, we have monstrous growths known as co-operative stores, to say nothing of bubble companies, which are a disgrace to the age in which we live, and impossible but for the fostering care of the legislature.

The second function undertaken by the ordinary employer is that of superintending-labourer or manager: a function which requires an intimate knowledge of every branch of the business, and is in itself sufficient to absorb the energies of a lifetime. Attention must be paid to the minutest economies in each department and the economical co-ordination and organization of all. This function is altogether apart from speculation.

The third function referred to is the most remarkable and abnormal. The present employer of labour actually undertakes to guarantee the labourers a certain average remuneration for their services. It is the province of an insurance company or of one who sells annuities, and not of a private person, whose duties are already too onerous for him. When pointed out and examined, does it not seem preposterous that the capitalist who finds the non-human capital should also guarantee those who supply the human capital a definite profit? The product may sell at a dead loss, yet must he pay his workpeople as though a profit had been made. The product may turn out a great success, yet may not those whose labour contributed to it share beyond the stipulated amount called their wages. It is not contended that there is anything immoral or unfair in thus compounding with labourers for so much a week, any more than a man would be blameworthy for tanning skins, preparing leather, and performing all the processes in the manufacture of boots; indeed, in certain obvious positions it would be both right and reasonable, just as it would be right and reasonable in many instances to borrow money at a fixed rate of interest in preference to taking additional capital into the business. For example: no man having bought land in the expectation of finding coal would think of paying his workmen for sinking shafts in the shape of a predetermined share of the profits. He would prefer to buy or borrow (so to speak) all the capital required for the purpose, including the labourers themselves, and to take the risk on his own shoulders.

All that is contended is that a division of labour is in the ordinary run of cases expedient. It is expedient from the employer’s point of view, because he cannot be sure of getting his money’s worth by compounding or wage-paying. Is it likely? Would a doctor get up at all hours of the night if he had compounded to hand over all his professional fees to another for £1000 a year? The workman has his wages guaranteed, and it is of no concern to him whether the work is done or not, so long as he can keep the place. Again, it is expedient, because under the new system the employer will pay away most when he can best afford it, and least when he can least afford it; in fact, the more he pays the more he will have left! But if it is thus desirable from the employer’s point of view to disintegrate this fasciculus of functions, how much more is it to the interest of the workpeople! At all events this is so with respect to the function of guaranteeing or compounding for the remuneration of labour.

Whenever a man undertakes to do two or three different things at a time, he is pretty sure to do all badly. When a carpenter is a doctor and a horse-dealer he is likely to lose at all three undertakings, and to cheat and humbug his customers besides. So it is with the employer of labour to-day. He tries to combine the three distinct operations of speculating in trade, of superintending work, and of insuring the success of other people’s investments—other people, forsooth, who have little or no interest in their own success! In consequence, his works are frequently superintended badly and at great expense, his ventures are often hastily and foolishly calculated, and end in failures, and those with whom he compounds by the week are almost invariably wheedled out of a large portion of their legitimate gains, without benefit to the guarantor. This is what might be expected a priori.

Do labourers really suppose that their salaries or wages can be guaranteed without something like a heavy discount being charged by the guarantor? Do they actually believe that he runs all their risk for nothing? Is he in other respects so generous and self-denying? Let it then be reiterated that it is the fault of the labourers themselves if they allow this sort of patronage to be accorded them. Are they incapable of taking care of their own pounds, shillings, and pence, that their fair incomes must be doled out by the week, and taken care of by a guardian? Let them assume the toga virilis. It is high time to sever the apron-strings and to proclaim the freedom of the working classes. But it will not be done for them; it must be done by them. Consider this, O toiling myriads! Cease to agitate for regulations of hours of labour, for bank holidays, for high minimum of wages, for State emigration, for this, that, and the other restriction on your liberty. Claim your liberation; throw off the shackles of wagedom, and the rest will follow to the full!

And so farewell to the much-harassed employer of labour. The elected manager, raised from the ranks, will take his place as superintendent; and in nine cases out of ten will occupy it far more competently. The workpeople will take care of their own earnings, and the capitalist of non-human capital will be relegated to his right province, and become the recipient of interest varying with the risk of his investments.

9. Status of Manual Labour and Tone of Industrial Art.—The effect produced by the new system in the course of time upon the social standing of those who work with their hands will be of the nature of a revolution. Being one of the more indirect consequences, it is perhaps somewhat difficult of explanation.

Time was when bankers were goldsmiths, and goldsmiths were common folk to be cuffed and kicked by gentlemen, to cringe and flatter and be useful. Between the days of Shylock and the days of the Rothschilds much has happened. Again, the civil engineer of to-day was in old times a kind of master navvy. He helped to dig, to wheel, and to carry. Engineering now ranks with the learned professions. So that bankers and engineers, as such, are socially held to be in no way inferior, setting aside the separate question of titles of distinction, to any in the land. A master carpenter still continues to work with his hands along with his workpeople. A master builder seems at present to stand in an intermediate position; showing that there are graduated stages in the social standing of the trades and professions from that of a sweep to that of a Lord Chief Justice. Amongst actual manual workers this is at first sight less obvious. Yet when we compare a working watchmaker or a type-setter with a navvy or chimney-sweep we see that there are well marked degrees of social elevation among them.

A working man under the present regime is said to have raised himself when he has accumulated enough to retire from his handiwork, to become a master or an idler. One can hardly picture a gentleman going down daily to his forge and his anvil and hammering away all day at the glowing iron. Even a poor gentleman must do work of the scribbling order. The pen, and not the hammer or the spade, must be his tool, even though the pay be less, the atmosphere unwholesome, the work distasteful, and the hours longer. How many poor curates, needy tutors, pallid clerks and sub-editors, have been heard to envy the lot of the rubicund Hodge, whose outdoor work, with pay almost equal to their own, seems like a continuous holiday. But it cannot be; there is a rigidity in custom which cannot be overcome. The question now presents itself: Why cannot true gentlemen become blacksmiths, carpenters, glass-blowers, potters, house-decorators, etc., etc.? and why cannot, or why should not, the blacksmiths and carpenters become gentlemen? Why should the son of a barrister, who has made a fortune at the bar, follow in his father’s shoes, and this, too, with pride, while the son of a man who has made money as a labourer, or even in most trades, is ashamed of his origin, and does his best to succeed at some more dignified occupation?

The reason usually alleged is that it always has been and still is regarded as servile to work with the hands; that in the olden times the dominant classes were of the military order, and the tilling of the soil and manufacture of goods were performed exclusively by the despised classes. But granting the survival of the sentiment, though in point of fact it is almost extinct, it yet fails to account for certain exceptional cases which throw much light on the subject. The first is the case of painters and sculptors and other workers in fine art, whose labour is manual; and the second is the case of engineers and bankers above alluded to, whose occupations have soared above the region of contempt. The explanation is simple. It is not the accident of its being manual that renders work undignified. Artists have always been held in esteem. Nor is it the historical associations; for banking was surpassed by no other branch of industry in meanness of origin and the abject circumstances of its early history. At the bottom of the whole matter lies the ineradicable admiration for intellectual power which is inherent in human nature; whether that power be manifested in military genius, in forensic skill, in inventive talent, in philosophic insight, or in artistic subtlety. Anyone with a hale body can carry out a canal across the Suez isthmus. Anyone with eyesight can paint a house-front or a deal box, but only a Millais the portrait of Gladstone in the Academy exhibition of 1879. Any Hebrew usurer can lend money at 60 per cent to needy gentlemen with expectations, but only the man of a rare combination of talents can borrow at a low rate of interest, invest discreetly, and found a bank of stability and repute. The very poorest quality of human nature can be moulded pretty quickly into a mason capable of chipping stone evenly and in an average manner, but it is not every mason who has it in him to be a William of Wykeham or a Barry. Ordinary mortals are fit to do the correspondence of a mercantile firm, but those who can write a “Hamlet” or a “Locksley Hall,” take their seats among the gods.

Now, therefore, if this is the true rendering, it is asked, is there no room in wrought-iron workmanship for a blacksmith to exercise his imagination and his powers of artistic manipulation? What of those beautiful gates in the Kensington Museum? Does ancient pottery support the belief that there is no room for the exercise of the higher powers in the manufacture of earthenware? How is it we never find any evidence of the labour of love among the carvings over our gateways, among our tables and chairs, among our carpets, our books (their bindings, that is to say), our garden railings or walls, our cups and saucers, anywhere?

The answer is summed up in a single word, Wagedom. The builders of our old abbeys were not wage-receivers. Upon each minutest portion of the work there is the impress of an individual mind. The carvings, the frescoes, the stained-glass designs, the mosaics, everything down to the little conceits in oak-work as seen in Ely Cathedral, recall an age when art was not sold by the yard. In these degenerate days (and it is no falsification of history to style them degenerate in this respect), all our decoration is worked out at the least expenditure of force by the soulless and indifferent worker. Nor is there any expression of individuality; there is a regulation pattern, and all the designs are as if run in the same mould. This has been pointed out so frequently before, and with such force and ability by John Ruskin and others, that it is only necessary to mention it in order to call to mind the cause to which it is usually attributed. We are told that it is the introduction of machinery which has thus swept all the poetry out of our surroundings; that a machine having no soul can infuse no true art into its productions. But this is fallacious and sophistical. As well say that a painter must paint without a brush: for behind every machine there is a thinking mind. Besides, what do we find where there is no machine? Precisely the same monotonous heartlessness. In the industrial arts there is a certain dead level of dullness and apathy. The art is all in the design and none in the execution. The artisan lavishes no last loving touches on his handiwork ere it leaves his affectionate care, as the workers in fine art do. The explanation is Wagedom.

Let us now take a glimpse into the future. Here is a firm of iron-workers. The hands are self-elected and authonomous. The company has made a name, and the returns are high and increasing. A place in the factory is a vested interest. The original twenty per cent paid to the workpeople’s president still remains twenty per cent, but the returns have quadrupled, and with them the twenty per cent. It is difficult to be elected a workman in such a concern. When a vacancy occurs, mindful of the reputation of the firm for fine workmanship, merit is the qualification for election—the greatest amount of skill, of artistic talent in iron-work design or execution (as the case may be), combined with a good character for industry, etc. The mere fact of working in this foundry is amongst metal-workers equivalent to the much-coveted membership of the Royal Academy in the present English world of fine art. So with the other industrial arts. Let the quality of workmanship once rise above the deal level of wage-work, and competition will soon accomplish the rest.

And, as has been already observed, the true key to the respect and homage of our fellow men is Power. It is not the horny hand that degrades the labourer, it is the absence of any need for intellectual power in his calling: it is the fact that his profession is open to all, too difficult for none. It is merely a matter of drudgery. Efficiency is a question not of ability, of genius, but of time and industry.

An artist is a gentleman. He has the status of a gentleman. He is sought after and honoured, be he rough or smooth in his manners. A house-painter may or may not be a gentleman, probably not; but most certainly he has not the status of one by reason of his class. When house-painters shall be true artists, they will be gentlemen. In the distant future the elite of the land (strange as it may seem) will include blacksmiths and carpenters; not the masters and employers of many hands, but the bona-fide hammer-man himself. There is nothing in all this of the morbid fraternite of the Frenchman. It is only a following-up of the lines of history in order to “dip into the future far as human eye can see,” and form a juster estimate of the workman’s destiny than can be arrived at by any other route.

But the whole question of the indirect effects of the new system on art and on society is too wide for present treatment. Perhaps it would have been more prudent to have passed over in silence these indirect effects on the introduction of a logical system of labour payment, as tending to derogate from the practical character of the proposal advocated; but to those who do not care to peer too far down the vistas of the future, it is quite competent to confine their attention entirely to the more immediate and direct effects, treating the more remote consequences as too problematical for practical consideration. Those who anticipate great social changes must, however, guard themselves against misunderstanding. It is not to be expected that all branches of handicraft will simultaneously rise in status; that gentlefolk will flock into all the now-despised occupations. The duke and his younger brother the chimney-sweep will probably never walk arm-in-arm in Pall Mall. It will be with labour as it has been with trade. Some branches will outstrip the rest. Some will come to the front as handicrafts of honour, just as engineering and banking have done in trade. Those departments which have in them the most room for intellectual or artistic cultivation will leave the rest behind: and those which have least will never rise into a higher social stratum at all. Blacksmith and butcher will not visit. 

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