THE WAGES SYSTEM

Rotorua Morning Post, Volume 1, Issue 205, 22 April 1932, Page 6

THE WAGES SYSTEM

AMPLIFYING CHANNELS. (By H. Valder, Hamilton). PART III How, then, may the cliannels be increased ? The English economist, Mr. J. A. Hobson, writing concerning the existing economic crisis, after referring to the amazing conquests in the domain of natural law, points out, in contrast, man's failure to cope with the present chaotic condition of industry. "The problem presented," •he says, "by the trade slump (which, j of course, includes unemployment) is j not even a problem of hidden natural law. Ilt is a problem of defective hu- ' man organisation.' The astonishing thing is that there is any problem at all. It used not to exist." It is submitted that the cause of the emergence of the problem is the choking up of the only two channels of distribution. This view is corroborated by Mr .Reginald MeKenna, one of England's most influential bankers who attributes the "choking up" process to three causes, each of them matters "of currency. Now it is clearly important, if we • are to get to the bottom of the matj ter, to disgulsh between "causes" and effects." Are not Mr. McKenna's "causes" really "effects"in disguise? Is it not true, on the contrary, that the basic cause of our troubles is the inadequacy of the "wages" and "interest" systems to cope with the steadily increasing volume of wealth produced ? Statistics Silent. In New Zealand the, statistics do not disclose a shortage of total national wealth, nor have the banks a shortagle of money. The financial constipation is no doubt affected by the inadequacies of our monetary system, and New Zealand, bound ^s she is to the European market, is affected by the balance of trade. It does not appear, however, that there is sufficient breakdown on the material side to account for the present posit'on. It seems more consonant with the facts to say that we have set up a financial machine based on a fetish called supply and demand, and, despite our civilisation, we v ership it as a Juggernaut as long as we ourselves are not caught in ihe wheels. There is no burking the stark fact. We can produce enougb, and we have the people hungermg for the production. The hurnan is being sacrificed to the material. The mere physical transferenee of commodities is easy, but our monetary history imposes obligations which create difficulty. Those who control the mach/-e have an obligation to humanity which they do not deem big enough to discharge. It will be remembered that there are two means at present by which alone the increase of wealth can he distributed, wages and interest. Wages cannot be interfered with without interference in the life and living of men and women, and distribution by wages is the most comprehensive method we have devised. It is, in fact, universal. We can alter the system to make it conform more truty to the dictates of justice, but for the purposes of the present argument let us now give our whole attenticn to "interest." Is there any way in which interest can be set free ftom the psychological and other impediments to its natural circulat:on? D'ifferentiation. In the first place, as we have seen, it is clear that "capital" has an ascertainable value. ' One unit of currency has always the same value as another. The only just cause for differentiating in the matter of interest on such units is the risk of non-payxnent at the end of an ascertained or an undefined period. It is suggested that all capital should receive its aseertained value, and that, in order to eliminate tHe element of risk, it should be compulsorily insured, preferably with a State guarantee. There would then be no psychological reason for withholding capital from industrial enterprise. "Low interest rates which provide an inducement to the long-term investment of accumulated bank depos'ts," rates "which would naturally help to stimulate industrial activity," these give to Mr. Reginald MeKenna the "direction of recovery." Such interest rates would be one of the "constants" if we had a predetermined rate of interest on capital. Would not Mr. McKenna's purpose be aclreved? It is not to be imagined that the economic millennium would even then be reached. Social organisation will merely have been carried one important step further. Statisticians have est mated that the capital invested in industry is owned by less than 10 per cent. of the community and consequently the other 90 per cent. rest upon the wage system for their means of living. This seems to point to the fact that the solution of the econonr'c problem lies largely in increasing the share in industry to the contributors of labour, that is, all those actively engaged in production. !It is suggested that this can be brought about in an evolutionary way by us:ng the wage payment as an advance on partnership aceouiit. It has already been shown that such a method would reconcile our present system with the requirements of justice. Moral Problem. Our statisticians and economists are very apt to forget that every economic problem, dealing as it does? with the' lives of human beings, involves also a moral problem. Wealth has value , only in relation to life The industrial constituency has made this great discovery and the industrial st'atesman must so handle the situation that full recognit'on shall in np manner violate the strietest code of business honour. Revolutions, remedies which involve confiscation or repudiation may have at times some elements of poetic just:ce, but they invariably tend to create greater problems than they solve. On the other hand, we must not allow yested interests, which by virtue of power and position have entrenched themselves in our customs and institutions, to control the future because they have dominated the past. We can produce wealth sufficient to bring plenty and comfort to all the sons of men, and we are defeated by the problem of "distribution." Surely it is because our leaders have concentrated upon things instead of upon man.