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THE RELATION OF THE C U C T LABOR A D CAPITAL HRH O N Laymen's Council of Churches of Massachusetts Copley Plaza Hotel, November 12, 1945 Ralph E.Flanders The s u b j e c t of t h i s evening's meeting, in the discussion of which I am i n v i t e d to take p a r t , . i s one which has been a matter of grave concern to me for a number of y e a r s . As a C h r i s t i a n , brought up in a Christian home by parents who lived t r u l y Christian l i v e s , my i d e a l s and some of my impulses have been fashioned on the moral p r i n c i p l e s of the" Bible* On the other hand, f i r s t as a wase earner, and in the end as an employer of labor, I have found myself controlled by c e r t a i n r e s p o n s i b i l i t i e s which do not completely p a r a l l e l the moral influ-v ences which surrounded my youth* This does not mean t h a t in any large measure the early t r a i n i n g and t h e mature r e s p o n s i b i l i t i e s are a t swords 1 p o i n t s , though they may be in some few p a r t i c u l a r s * The d i f f i c u l t y l i e s r a t h e r i n the seeming discovery t h a t C h r i s t i a n e t h i c s are not concerned with some of the important moral r e s p o n s i b i l i t i e s of modern l i f e * In no area of business a c t i v i t y i s t h i s lack of consonance more c l e a r l y defined than in labor r e l a t i o r s . I t therefore seems very much worthwhile to discuss with you t h i s evening some of the problems involved, to see whether they cannot be brought i n t o sharper focus and thus have t h e i r solution Such is the plan of t h i s t a l k . assisted. In c a r r y i n g i t out i t is my i n t e n t i o n t o present the case of t h e businessman as f o r c i b l y as possible, r a t h e r than to c a r e f u l l y balance the statement pro and con as between the labor and management points of view* F i r s t l e t us have a few words s e t t i n g the h i s t o r i c a l background of labor r e l a t i o n s since the beginning of the i n d u s t r i a l revolution. For a hundred years or more the r e l a t i o n s between -2employer and employee were typically conducted on the basis of the laissez faire economic philosophy. The industrial revoluation did greatly increase the productivity of "*reat Britain so that a higher standard of living was possible, "but i t s immediate result was to permit an increase in the population wbich kept pace with the increase of productivity and, by the competition of numbers in the working class, set limits to the share of the total production which they enjoyed. I t was not until after the population increase had come under purposeful control in the l a t t e r half of the 19th Century that this mass competition of the working population with each other permitted, under laissez faire conditions, any marked improvement in the lot of the working people. Since that chancre the standard of living among British workmen has advanced scmewhat irregularly but s t i l l continuously. Their present problems center around the popu- lation expansion inherited from the early industrial area, the inability to raise food in the British Isles sufficient to feed this population, and the consequent necessity for a large export trade to pay for the needed imports of food and raw materials. I t may be mentioned in passing that there is grave doubt whether any political changes in India can do of themselves very much to improve the lot of. the common people of that country, until population srrowth ceases to press insistently upon produc t i v i t y . This is an introductory example which illustrates the subject of this talk - that a problem ordinarily discussed as one of morals between erovemine* and subject races may have material considerations underlying them which are more fundamental. In this country conditions are somewhat different. Instead of bavin < to wait until population growth was under control before * workers could set an increasing sh are of production, their interests -3were to a considerable extent preserved by the opportunities offered by the public lands available on our frortiers* The new srene rations had an alternative to seeking work as employees in a business* could 20 West, and they did sro West* * They The process of population growth therefore did not hold them down as i t did in England in the early years* At the same time the expansive development of the frontier offered new business opportunities as well, so that there was a continued Increase of opportunity for the ordinary man both Inside and outside of business* As a result of these influences in the United States, the rise in living standards has had an almost uninterrupted history in this country without lone: periods of stagnation* In fact the longest period of marking time took place d urine the ^reat depression of tte 1950 f s , and then at a higher general standard of living than is to be found in any other country at any other time although, of course, the period involved a cere at many individuals and families in serious privation* I t was more than a generation aero that the frontier was fully occupied* What has kept up our expansion since that time** The improvement in living conditions in this century has come rrom tte occupation and development of frontiers that are net sreoecraphJcal; they are frontiers of science engineering ancl industry* Wot merely new inventions like the automobile and the radio, and numerous items of household equipment, but also new business manae;enc nt ideas and techniques have constituted a frontier, which like the old geographical one, has offered us new opportunities for production, employment, and raised standards of living* There is no evidence that this frontier ha? yet been fully occupied or that i t s stimulating effects on our economy is wear In* away* So far as we can see into the immediate future, i t s beneficial effects should continue • There are-, however, differences in the effects of the flreocrraphlcal and scientific frontiers. The P e Graphical frontier war much *o more directly effective on the individual employee in connection vdtl work opportunities and tine wages which could be rained frcm work* I t was also more nearly automatic in i t s action and was thus more effective in a lalssez faire economy* That the si Nation on the whole was favorable is evidenced by the continued rise in the standard of living wbi le i t s influence was paramount* The modern non-ereoorrapbieal frontiers, however effective they may be, have certain difficulties attending them* They are nowhere near so automatic, and their effects are subject to wide and sometimes violent fluctuations. Only the weather can seriously disturb the rate of consumption of people 11 vine: in a simple agricultural economy, or in a more elaborate one based on agriculture. O the n other hand, a highly industrial economy is subject to a number of influences which are d i ^ i cult to control* A o < them are speculamn ? tion In inventories, real estate <\nd securities, the expansion and contraction cf credit, forced liquidation and deflation, larsre volumes of funds hoarded rather than spent for consumption or Investment, etc* Progress is no longer automatically assured* A high level of profitable productive employment is no longer automatically assured* Life has become complicated. W have concluded * at w Mve to orab e e the handles of this complicated mechanism and thus apply controls to i t . It is exceedingly dangerous to work these handles without knowing what they do, and knowing what the secondary *.nd tertiary effects may be. To discuss this general problem of controls Is no part of the purpose of this talk* Let i t only be said that i t is probably true that the technique of Tabbing and turning of tens of thousands of l i t t l e handles is beyond the ability of the human m5nd to master • The best we can do is to study the effects of, and to wisely operate, a few of the major valve bandies, the Inter-relations of whose effects we have sane hope of comprehending* One of these areas of ccntrol, however, does relate to tte subject under discussion* Wage rates and working conditions are no longer left to laissez faire for automatic determination* They are instead detennSned by negotiation in which political pressure an3 tte threat of strikes and lockouts are major determining factors* As already indicated, i t is m purpose to s u r e s t some of the diffiy cult? es and dangers of this process from the employer's stand point. In the f i r s t place, the tremendous amount of time and nervous and mental energy which has to be ejven to the subject of labor relations, comes as a disconcerting discovery to us industrialists of an older generation* I t is only matched by the live expenditure of time and enerpry required for carrying on our relations with the Federal government. There is some hope that the end of the war and the eventual liquidation of our war production will greatly diminish our Government relations* mism in the It is difficult to have the same opti- labor area. W older businessmen were brought up to crncorn ourselves to e the full limit of our time and powers with such subjects as purchasing, production, transportation, sales and financing* Close reasoning and w se action in these fields resulted in business 3 success and business expansion and was the raw material out of which the waste earner's increased standards of living were made. His part in i t was on the whole not too unjustly determined by competitive forces s t i l l acting in the early decades of this century• The f i r s t World War, the great depression, and the second World War, brought labor problems which had to be met and solved as of major importance in business. iO actcr s They sr e at the present moment major factors in business success and failure, and there is nothing to lead us to believe that their importance Js lively to diminish* W ttereforr have to hire specialists to handle labor relations as e well as to manage our purchases, our production and our sales. Periodically, however, problems get to be so pr^at that hired help cannot reach the solutions and the major executives have to rive themselves over to this new proup of problems. As already said this is unpalatable. disturbing. I t is discouraging and W had been taught to make and to s e l l , and to think e Instead about getting along with our employees, and nearly neorlectine the problems of manufacturer and selling as new on occasion has t o be done, is something which the new generation of businessmen may become acclimated t o , but for us older men i t comes as an unexpected artl embarrassing necessity. W had better accustom ourselves to i t , e however, for i t has become a permanent element in business responsibilities. N w for e few words as to the >*uMness p^int of view in this o new area of discussion and conflict. Let m add that these words e come from one whose employees have chosen to deal collectively with management and who is endeavoring to live up to the ]£bter and s p i r i t of the situation. The unfavorable aspects to date in m own expery ience have been principally the heavy drain on the time and energy o^ responsible officials. Jn the f i r s t place i t appears from the business sJ de of the fence that many situations are developing wflcb will rot be solved by discussion, but may have to pass on into conflict. a weapon* The stri 1 ^ is I t is a weapon of conflict, not a tool of discussion. lockout belongs to the same category. The I t used to be that the threat of a strike was the last resort when negotia t i m s came to an impasse. In too many instances in the present situation the vote to strike is the first step, not the l a s t . Combat is assumed, not avoided. This is not a situation easily amenable to a real meeting of minds on the merits of tte questions at i^sue. The appeal is made to another tribunal than that of justice and fair JTJdspment. Another unfortunate tendency i s that, toward Industry-wide or nation-wide wage and hours policy ir spite of wide variations in conditiors. I t is assumed, for instance, that an increase that can be given by an industry whose labor costs ere* small compared with i t s capital costs can be transferred without price adjustment to Indust r i e s whose labor costs are high with reference to their capital or other n on-labor costs. There is also the threat of applying tte wage rates which can be paid by the rnost sue cess fill and best managed firm in an industry to others which for various reasons c;mrot so easily carry the load, without a price adjustment which may be either unwise or impossible. Another danger is that of interfering with the plowing back of earnings into a company to expand employment which is permitted, although to an inadequate decree, by the 194 6 tax laws* This policy, favorable to labor, can be destroyed by the determination to transfer an undue percentage of the profits to the payroll. Not enough attention has Ven given by tcx law legislators, Federal administrators, labor leader?, or even by business itself, to removing some of the tax burdens n w lalid upon the job maker as o distinguished from the job holder. H w many of us realize that in o the great era of industrial expansion in this country, business firms paid no federal taxes and put in anyamount of their profits to build up production and employment; ard that likewise investors could put mcrey into ^rowino: businesses with some expectation of personal profit, instead of having to have almost the whole amount paid in to the federal government? Partly by the necessities of war taxation, partly by the imbecilities of the immediate prewar taxation, we as a nation expressed our determination that we would m c e i t so ha? d as d to be well nirti impossible far private enterprise to expand employment and the standard of living. Organized labor in i t s negotiations can if i t is similarly unwise demand that profits be so largely diverted into payrolls that the expansion on wbich labor f e future progress depends will be stifled. In the face of these imminent possibiliti es p or harm and the throwing of the negotiations at the s t a r t in too many cases into the area of combat rather thar judicial determination, employers would be less than human i f they did not threaten with the lockout as tfce only weapon of defense against the brandished weapon of the s t r i k e . There is another factor which supports a stiffened resistence or even a combative attitude o the part of the employer* n It is, I believe, generally considered amoncr businessmen that Jr some instances the unions have a very poor record of cooperation with employers who have gore out of their way to cooperate with them* believe this t o be true in the Detroit district* I I t has availed nothing to the manufacturer, beatin in the union election, w o abanh dons his position and pioes cut wholeheartedly for cooperation* avails nothing that the head of an automobile industry should be temperamentally disposed to cooperate on a reasonable basis with It -9his employees and, through union machinery, should m r e every effort d to do so* In too many instances such attitudes have been interpreted as evidences of weakness, and or^arired labor has been correspondingly unjust and outrageous in i t s actions particularly in the day to c?ay contacts in labor-management relations, which to TO make up the marl burdensome of the problems which the businessman faces today, I a not saylna that business has not deserved some of the m di fficialtie s which now face i t . As a whole we carrtd over too far into the new period our assumptions that labor relations would take care of themselves. Ve neglected them in the recent years when they - had become a primary responsibility of business management. All this is true, but i t is also true that there is no way out alon^ the road which sane elements of labor are at this moment foil owl n*r. Should this discourse be quoted at a l l , i t may happen that i t Is so quoted, by using separate passages out of their context so as to indicate that your speaker holds a hostile anti-worker point of view. This is not the case. This jj3 an ey parte presentation and a much needed one, since on occasions of th?s sort i t is the custom to srloss over difficulties and conflicts, and to c&ve expression to lofty platitudes instead of facing unpleasant r e a l i t i e s . W will o find the solutions to these problems more quickly i f we describe their? r e a l i s t i c a l l y than will be the case if w avoid the r e a l i t i e s . e That Is the reason for the turn this address has taken. The situation is indeed capable of solution. Perhaps a better way to put it is to say that ten thousand situations of this sort are capable of ten thousand solutions. They are capable of solution when honest and just men meet across the table and through honest discussion come t o just conclusions. They ore not cnpable of solu- tion on a nation-wide or an industry-wid e basis. In that way i t -10* is difficult to find solutions other than by conflict, $id social justice is seldom attained by that route* I t is fortunate for Few England employers and employees tha*- we have not often or deeply been drawn into national labor disputes. W have tended to settle e them man to man. That does not mean that there are not nation-wide and industrywide things to be done. I t does not even mean that the Federal Government should not do them. Much depends on federal administration an3 administrative policy in maintaining conditions of business health under which i t is possible for employers ard employees to met across the table an^ ,1ustly devise a payment for joipt services of a l l parties concerned, which is dravn from Inro-e onourh production so that i t serves an increasing standard of living• Those Government measures to be effective must, as indicated earlier, be of the la r ere scale sort and in fields which are properly governmental. The Fu^ray P i l l offers the opportunity for developing such policies and in putting them into effective use. Let us hope that the opportunity will rot be missed.w hen speaking to a Christian audience and in the presence of Christian leaders, I a quite aware of the fact that what I have been m saying up to this point has l i t t l e reference to Christian ethics and ideals* Once or twice the word "justice 11 has been used, but for the mcFt part T have been concerned with the mechanisms of production and distribution, the material rewards of labor, maracrerncnt and capital and with other earthly things. That this has been so is to me at ?'V.ot a matter of crr°at interest ^nd importance. As T indicated in tte beginning* of t h i s talk, i t has become plain to m as I srow older e that the man in active business life finds himself concerned with a set of values which may be in some eases contradictory to the -11values vMch he has been taught, but in many more cases seem to be off to one side of those values, which in their turn seem to be inapplicable. Perhaps this business responsibility keeftly felt by businessmen can best be expressed as the responsibility for keeping things Ting* This is r-o lierbt responsibility. I t is « responsibility infinitely heavier than anything of i t s kind which has devolved upon men ?lnce the ccllepse of the R m n Empire - which, by the way, was not kept o a p:olno> "Bread and circuses" did not solve their problem. That responsibility is n w very crreat* e plex and delicately poised, that of i t s e l f Civilisation is so comi t tends to ^et out of <*ear, if crrouips of people, whether as consumers, manufacturers,worte rs merchants or culators behave unwisely or within certain types of shortsighted selfishness. Not merely must i t s i n s t a b i l i t i e s be recognised and compensated for, but tte maintenance of i t s stricture a? rx whole i s exceedingly important. The very lives of those who 3ive under i t are dependent upon the maintenance of i t s operations. A few thousands of Indians was a l l that this State could support In a barbarian economy. A few' tens or a very few hundreds of thousands was all th3t i t could support in the sirrp^e agricultural economy of our forefathers. This delicate- ly poised industrial economy permits millions to live in this State with far more of material blessings than had their pioneering ancestors, or their original predecessors, the Red Mm • « It i s net a matter of purely academic concern that this complicated machinery should be kept in rood working order. I t is really a matter of life or death, for if i t docs not operate* a ^odly perc^tacre of those whose lives are deperient upon i t will perish, sibility. ^eepinc? i t ^oingis a ^rave respon- HxpandJns and improving i t s operations as an instrument of -12s1 is a s t i l l greater responbiM l i t y and <n even more diffi** cult one* This is the area in w Lf the modern businessman finds W co his responsibilities!! This being the case, I think i t should be clear to those of you concerned primarily with religion that sane sort of a bridge needs to be built over to us materially-minded businessmen to span the ffulf which row lies "between us* Are oiir responsibilities real? ^rhat has Christian ethics to say about the mechanism by w^ich these intricate operations are carried out4? Does our field of responsibi- l i t y relate to a natural order, while you are concerned v&th a spiritual order? What are the relationships between ouch a natural order and a spiritual order? Years aiao I read a l i t t l e book entitled, "The foundations of Ethics11, written by a your? disciple of wjlliara Jares* The 3 a en. he developed is that selfishness, if sufflcieutly far-sichted, becones idertical with wisdom and virtue. This is an approach to the problem of morality from the direction of the material order rather than from divine revelation. Does i t arrive at the same ends9 These questions as to the have loner interested me* roral responsibilities of modern man I believe they have interested some other men actively ensraered in.business* I t may be that they areo^nt in part for the loss of vital contact between businessmen and the churcher I have found no definite recognition of the existence of these problems on the part of religious teachers* T leave them with Ralph E.Flinders 20 Pearl Street Boston, Massachusetts After the mretin^ w had nn informal discussion in w^ich I crave e a specific example of the direct inapplicability of n Christian prin. ciple to a modern problem* If we "turn the other cheek" or ff eo th> -13second mile" in a labor controversy, w may fird oirselves not only e diminishing stockholders 1 profits but decreasing job opportunities. Whether in the case of our plant or of our national economy, the interests of tie wage earner may on occasion be bost served by a stiff backbone behind the shirt front of management.
