Excerpt from Conciliation and Arbitration

In all stoppages of work, great and small, the purchasing power of the people as a whole is diminished. The loss of wages and of returns on capital must lessen the demand for the products of industry. Apart from more or less measurable losses, however;r industrial disputes create a psychological condition which directly affects the power of production. The constant irritation, antago nism, anxiety and ill-feeling engendered by lockouts or strikes, result in irksome work and sullen service. Unwilling or grudged service is usually bad service, and is reflected either in the amount or quality of output. Apart from trade union rules imposing restrictions on output, the psychological effect of strife on output. Must always be reckoned as one of the most an ti-economic as pects of industrial warfare. Industrial society is like an organism. The whole organism functions well only when each part functions harmoniously with the whole. It is to this aspect of the problem that the Whitley Reports. Specially addressed themselves. The underlying principle of their recommendations is harmony or good feeling within each industry or works, with the corollary of willing, and, therefore, productive service.

Lockouts and strikes are really an application of the theory of force to industry. Just as war has often been held to be beneficial to society on the plea either of the survival of the fittest or of its beneficial action in cultivating the finer qualities in man, so strikes have sometimes been commended from the economic point of view for good by-products. A strike in one area, it is said, results in intensified activity in another area, or in an allied industry. The actual deduction in the national dividend is, therefore, not a net fall in output or wages. It is only a local and temporary deduc tion. This may be true of small and localized strikes; it certainly is not true of strikes in basic industries. Further, it has been argued that industrial unrest is a direct incentive to invention. This is no doubt true. But it is very questionable whether such in vention would not have come independently of strikes. Normally competition is incentive enough to invention, and the less the or dinary forces of supply and demand are interfered with by strikes the more do the ordinary forces of competition impel managers and capitalists to seek new processes. To argue that strikes are justifi able for this end is on a par with arguing that war is justifiable because it may produce some good effects on society. Certainly strikes lead to substitution: but this is quite an other matter. The recent coal strikes in Britain, for example, have already led to a big diminution in the demand for coal. Oil fuel has been sub stituted for coal, not only because of the enormous rise in the price of coal, but because the coal supply has become uncertain owing to stoppages of work. This of course on the whole may be a net gain to industry in the long run. It represents a direct and perhaps a permanent loss to the coal industry. The dislocation of industry due to the diversion of capital and labour, moreover, must be taken into account. To make new channels requires the expenditure of power, and it is always a matter of argument whether such new channels will ultimately be productive or not. Sudden and forced changes are at least temporarily unproductive. The gradual erosion made by supply and demand is usually productive. Dislocations and fractures rarely increase the strength of the body; gradual adaptations of physical strength to the necessities of environment do.

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