Gladstonian Ghosts - The Fetish of Free Trade

Let it not be supposed that I propose to argue the eternal Fiscal Question here. For the last twelve-month and more we have had quite enough flinging backward and forward of childish platitudes, scraps of obsolete economics, and masses of irrelevant and ill-digested figures by both parties to the controversy. You are quite safe from figure-shuffling as far as I am concerned, and you are equally safe from bodiless a priori economics. For me, indeed, the question is not one that can ever be decided on general principles.' To ask whether nations ought to adopt Protection is exactly like asking whether men ought to wear over-coats. Obviously in both instances the answer depends on a number of attendant facts not stated on the weather, the constitution of the men, and the thickness of the coats in the one case, on the character of the people, the distribution of their wealth, the state of their commerce, and the character of the proposed tariff in the other. Tell me that you wish in certain specified circumstances to impose protective duties on certain specified imports, and I am willing to examine the evidence and express an opinion. But so long as you put the issue as one of abstract principle, I must ask to be excused from indulging in what seems to me an utterly barren and profitless exercise in immaterial logic.

Of course, as I have already insisted, there is a sense in which every Socialist is of necessity a Protectionist and Preferentialist. As Mr. Bernard Shaw once expressed it, (I quote from memory) he believes that the highest wisdom of governments is to know "what to protect and what to prefer." For him the Utopia of "economic harmonies" is a foolish and mischievous dream. He knows that the commercial instinct unless subjected to energetic and un- sparing state supervision, is certain to become a cause of ruinous social disorder. His whole mind will be set to the task of regulating it, directing it, curbing its excesses, and protecting the public interest against it. In a word the advanced social reformer of the new school is necessarily an emphatic Protectionist, only differing from Mr. Chamberlain and his supporters in that he gives to the word "Protection" a wider scope and a fuller meaning than they.

Now it inevitably follows that there is not and cannot be any kind of objection from his point of view to a protective tariff on grounds of principle. The theoretic objection which used to be urged against such a tariff was founded on the assumption that Adam Smith, Bastiat and others had demonstrated the futility and peril of all legislative interference with commerce. Cobden put the whole case as he and his party saw it in one phrase of one of his ablest speeches, when he declared that you could not by legislation add anything to the wealth of a nation. That is a doctrine which no one (save perhaps Mr. Auberon Herbert) now holds; which no one who approves for instance of any kind of factory legislation can possibly hold. And that doctrine once fairly out of the way, the question becomes simply one of expediency and the balance of utilities.

But, when we come to the balancing, another point of divergence instantly arises. The Socialists' conception of utilities differs in essence from that of Free Traders and Protectionists alike. For Mr. Chamberlain, for Mr. Morley, for the Tariff Reform League and for the Cobden Club, the aim of commercial statesmanship is simply and solely to increase the aggregate commercial wealth of the country. But this is by no means what the Socialist is mainly concerned about. His object is not so much to increase the sum total of such wealth as to secure its better distribution and more socially profitable use. He sees that the economic struggle between nations is by comparison a matter of surface fluctuations, while the economic struggle between classes is an enduring and essential feature of our social system. And whether or no he likes the old Marxian phrase "Class War," he is bound to recognise the existence of a class antagonism cutting right across society as a fact without the understanding of which the structure of capitalist civilisation is unintelligible. This implies that the Socialist, whether he be a "Free Trader" or no, has to dismiss as untenable practically the whole of the old economic case for Free Trade. Adam Smith did doubtless prove that under a system of absolutely free exchange, every country would tend to engage in those trades which were (for the moment at any rate) most commercially profitable to it ; but he never proved or attempted to prove that these would be the trades which were most socially beneficent. It might, for example, happen that the White Lead trade proved the most commercially advantageous industry in which English- men could engage. But would any modern reformer say that in that case it would be well for us to abandon all our other industries and take to the manufacture of white lead with all its inevitable concomitants. It may be urged that such a case is not likely to occur. But cases differing from it only in degree may very well occur have indeed occurred already. Such a case is the decline of our agriculture and the consequent flooding of the towns with cheap unskilled labour; such also is the tendency already more than faintly visible for small trades, largely unskilled and often sweated, to supplant our staple industries. And these things, though they are the inevitable consequence of unrestricted competition and though Cobden would have regarded them with complete equanimity, are the very things against which social reformers have for years been fighting a long and apparently a hopeless battle. No Socialist can give them a moment's toleration. Whether Socialists will think Mr. Chamberlain's remedy adequate is another thing. For Mr. Chamberlain's point of view a purely commercial one is at bottom identical with that of his Cobdenite opponents.

And it is just this that makes mere statistics of trade and comparisons between imports and exports so barren and misleading. What we want to know is not how much tribute the capitalist gets out of our foreign trade, but what wages the labourer gets, what are the conditions under which he works, and what is the amount of employment available. Thus for instance foreign investments pay the capitalist as well as British investments and are accordingly highly esteemed by the Cobdenites as "invisible exports." But they are not equally satisfactory to the workman who loses his job and drifts into the ranks of the unemployed. From this point of view Protection if it kept capital in the country and even attracted foreign capital might be eminently beneficial to the workers, even though the aggregate of national wealth were thereby diminished.

Now we have reached two conclusions. Firstly that Socialists will approach the tariff question with an open mind; secondly that they will approach it mainly from the standpoint of its effect upon the social condition of the people and upon the distribution of wealth. That, I say, is what one would naturally expect Socialists to do. What the English Socialists and the leaders of organised labour in this country have actually done is to fling their Socialism and their "class-consciousness " to the winds, to stampede once more into the Liberal camp (as they did before over South African affairs), to sing pious hymns in honour of the memories of Bright and Cobden, oblivious of the former's opposition to factory legislation and the latter's freely expressed detestation of trade unionism, to trot out for the confusion of Mr. Chamberlain the very doctrines which Socialist economists have spent the last fifty years in riddling with destructive criticism, and generally to devote their energies to the hopeless task of strengthening the ruined fortifications which protect Liberalism from the attacks of the time-spirit.

When the Fiscal Question first began to agitate the minds of Englishmen the new-born Labour Party was in an unusually strong position. It was as yet uncommitted on the subject, and both sides would willingly have paid a high price for its support. Nothing strikes one more in Mr. Chamberlain's early speeches than his evident anxiety to gain at all costs the sympathy of Labour. And the Liberals were at that time equally anxious. Had the leaders of British Trade Unionism followed the excellent example set them by Mr. Redmond and the Irish Nationalists, had they held their hands and said frankly to both combatants " What social reforms will you give us as the price of our support ? " what unprecedented pressure might they not have been able to exert ! To Mr. Chamberlain they might quite fairly have said "You say that all is not well with British Trade": we agree with you, we have been saying so for years. But before we accept your proposed remedies we want reliable guarantees that the working classes shall not be the sufferers. Tack on to your programme a maximum price for bread (or some system of municipal bakeries which would achieve the same object) and a minimum wage for labour, and we will consider them." To the Liberals again they could have said "You tell us that Mr. Chamberlain's policy will not remedy the evils to which he rightly draws attention; granted, but what is your remedy? If we help you to resist these proposals what drastic measures are you ready to pro- pose for dealing with the unemployed and kindred problems?" Had they taken this line, they might have achieved much. But, having the game in their hands, the labour leaders deliberately threw all their cards away. Directly the question of fiscal reform was mooted, without waiting for any pledge from either party, they began to violently espouse one side and violently denounce the other. By this they fruitlessly abandoned their excellent strategic position. Mr. Chamberlain, seeing that he had nothing to hope from them, treated them as enemies and organised the Tariff Reform movement frankly as a purely capitalist affair, leaving Labour out of account in the formation of his celebrated Commission as completely as Cobden himself left it out of account in the formation of the Anti-Corn Law League. The Liberals on the other hand are not so foolish as to give pledges to those who do not ask for them, so that the opposition to Mr. Chamberlain is as completely capitalist- ridden as is his own propaganda. Thus, instead of standing to win either way, Labour now stands to lose either way. Should Mr. Chamberlain succeed, as he very well may, if not at this election at the one after it, his tariff will be framed by powerful organisations representing capital and finance, who will naturally follow their own pecuniary interests. Should the Opposition triumph they will come into power quite unpledged, save to Lord Rosebery's programme of "commercial repose" which is the newest name for our old friend "laissez faire." And we shall be unable to make use of the stir made by Mr. Chamberlain's agitation, as we might well have done had we acted wisely, in order to get measures which we really do want and which are in some sense of the nature of counter-remedies the nationalisation of railways, an imperial shipping fleet with preferential rates, and the re-organisation of our agriculture by state aid and state supervision.

But there are reasons other than tactical ones why Labour should have refused to adopt the Liberal attitude of non-possumus in regard to fiscal reform. Whether or no Mr. Chamberlain's tariff scheme would have been favourable to the interests of labour,* there are a great many proposals which are clearly and unmistakeably in its interests which are yet in their nature protectionist even in the narrow sense in which that word is ordinarily used.

*Lest I should be accused of "sitting on the fence" (a phrase much beloved by those who always want to have judgment first and evidence afterwards) I may as well state definitely that in my opinion a protective tariff, if framed by genuine reformers solely in the public interest, would be decidedly advantageous to Labour.

It is characteristic of the Liberal party that even when it has dropped accidentally across a right conclusion it invariably seizes with great eagerness upon the wrong reasons for supporting it. The most striking example of this is to be found in the case of Chinese Labour. For myself, I detest Chinese Labour, and am prepared to go, I fancy, a good deal further than the Liberal front bench in fighting it. But then I am a Protectionist; and I believe that a plentiful supply of cheap labour is the worst curse with which a nation can be visited. The Liberals and their Labour henchmen, precluded by reason of their Free Trade orthodoxies from taking up this sane and tenable position, have to devote their energies to denouncing the "slavery" involved in the conditions of the Ordinance. Now no Socialist can be expected to get very excited on this point. He hates slavery, but he recognises that in one form or another it is an inherent part of the capitalist system, and the difference between telling a man that he must work for his master or be imprisoned and telling him that he must work for his master or be starved, can hardly seem to him important enough to make all this fuss about. Moreover "forced labour" is implicit in the Socialist ideal, though most of us would prefer to begin by applying it to the Rand shareholders. As a matter of fact the conditions of the Ordinance are a mitigation of the evils resulting from Chinese Labour, not an aggravation of them. They serve to circumscribe to some extent the limits of the damage which the imported Chinaman can do. My objection to them is that I do not for one moment believe that they can be made effective. But the danger of denouncing the conditions of importation instead of denouncing the importation itself, is that one of these days our Hebrew masters will say to us: "Very well. You object to conditions; you shall have none. We will import Chinamen freely and without restriction, and they shall supplant white men, not in the mines only, but in every industry throughout South Africa. We shall reap still larger dividends, and the danger of a white proletariat will be still more remote. Now we hope you are satisfied." What will our Free Trade Labourites say then?

A less serious but more amusing example of the shifts to which trade union leaders are sometimes reduced in their efforts to reconcile the obvious interests of the workers with their holy and sacred "Free Trade Principles" was afforded by an episode which took place at the Leeds Trade Union Congress last year. It appears that in certain mines in these islands the capitalists have taken to employing foreign un- skilled labour. Their motives are doubtless the same as those of the Rand magnates, namely to bring down the price of labour all round by the competition of indigent Poles and Italians with the fairly well-paid workers of this country. It was a very natural thing for capitalists to do; it was an equally natural thing for workmen to resist. They are resisting and a resolution was proposed at the Congress condemning the employment of foreign unskilled labour in the mines. So far so good; but now comes the comedy of the situation. To exclude the foreigner as a foreigner is clearly protection of the most barefaced kind; and the proposal had to be recommended to a body which had just declared in favour of unmitigated Free Trade. Then some genius had an almost miraculous inspiration. It was suggested that the foreigner ought to be excluded, not because he was a foreigner, not even because his labour was cheap, but because he could not read the Home Office regulations which are hung up in the mines. The plea was eagerly clutched at, and seems to have been received with all solemnity. The correspondent of the Daily News who had at first regarded the resolution with natural suspicion felt all his scruples vanish, and actually hailed the declaration as proof of the unflinching Cobdenism of the workers. Now what I want to know is does anyone, does the Daily News correspondent himself really believe in the sincerity of this ridiculous excuse? Would the British miners have been satisfied if the regulations were printed in Polish or Italian? Or, supposing this to be impossible, would they be satisfied if the immigrants learnt enough English to read them? Of course they would not. The objection to foreign unskilled labour is a purely protectionist objection, as inconsistent with Free Trade as anything proposed by Mr. Chamberlain. I may add that it has my entire sympathy.

Very soon, much sooner I think than they suppose, the leaders of organised labour will be forced by the sheer pressure of events to throw "free trade principles " over-board and find another foundation for their economic faith. For buying in the cheapest market clearly implies buying labour in the cheapest market; and the capitalists will not be slow to grasp its consequencesat a time when the expansion of European civilisation is every day throwing new drafts of cheap labour on the market. Less developed races with a lower standard of life are exceedingly useful weapons to the hand of the capitalist eager to force down wages. Already the appearance of the Chinaman in South Africa is parallelled on the other side of the Atlantic by the employment of negro blacklegs to defeat the Colorado strikers. What has happened in Africa and America may happen is indeed beginning to happen here. Are the labour leaders prepared to go on defending Free Trade, if Free Trade should prove to mean the free importation of great masses of cheap blackleg labour from Poland, Italy and China? And, if they so far abandon Free Trade as to shut out such labour, what about the goods which it produces? Suppose the capitalist, forbidden to bring the Chinaman here, take to exploiting him in his own country, relying on our policy of free imports to secure the admission of his sweated goods. Will not the champions of labour begin to regard the question of free imports in a different light? The slope is steep and slippery and the end is Protection!

Yes the Labour party will have in the end to become protectionist. Already progressive municipalities do not buy in the cheapest market but in the best market, regard being had to the remote social consequences of the purchase. And since the home market is the only one where they can exercise any real or effective supervision over the conditions of production, we have the curious spectacle of local bodies with a big Liberal majority forced into what is in effect a policy of Protection by the protests of unimpeachable Free Trade Labourites such as Mr. Steadman. Of course the new Protectionism will not be that of Lord George Bentinck or even of Mr. Chamberlain. It will "protect" not the landlord or the capitalist but the labourer and if to this end import duties are found useful it will make no more fuss about imposing them than any other necessary piece of state intervention.