Page 3, 13th May 1949

13th May 1949
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Page 3, 13th May 1949 — THE THIRD WAY BETWEEN CAPITALISM AND SOCIALISM Catholicism And Co-Ownership
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THE THIRD WAY BETWEEN CAPITALISM AND SOCIALISM Catholicism And Co-Ownership

By Paul Derrick

BOTH the Liberal and the Labour parties have recently issued pamphlets outlining the policies upon which they are likely to fight the election. The Liberal pamphlet is called People in Industry and is concerned with the Co-ownership proposals which were so enthusiastically endorsed at the Liberal Assembly in March. The Labour Party's pamphlet is called Labour Believes in Britain and is an outline of general policy.

Basically the Liberal proposals are simple enough ; they suggest that labour should have the legal right to share in profits as soon as capital has received a return of 3 per cent or so and also the legal right to be represented on Boards of Directors. Apart from this they would allow for the greatest variety in different schemes; their pamphlet makes it clear at the outset that they have no intention of trying to impose the same kind of scheme throughout industry. The fact that every industrial firm employing more than 50 persons would be required to prepare some kind of schememight reduce

the paternalism and the Trade Union suspicions which arc apt to be associated with even else best schemes introduced on the initiative of the employer. In considering these proposals we should remember in the first place that they form part of the Liberal "Ownership for All " policy which is specifically designed to achieve a more equitable distribution of property, an aim which is very much in conformity with Catholic social teaching.

Does not Pope Leo X111 in Rcrum Novarum write: '' The law. therefore, should favour ownership and its policy should be to induce as many as possible of the people to become owners"? Have not Belloc and Chesterton and other Catholic social reformers untiringly urged the distribution of property as the proper aim of economic policy? The "Ownership for All " proposals, which include changes in the law on inheritance which would make it easier for the worker to accumulate capital out of earnings and start on his own, and measures to break up monopolies, protect the small man and assist home ownership are very much in line with Distributist ideas. We must remember. however. that the Conservatives and Socialists now also advocate the distribution of property, the former since Mr. Churchill spoke of building a " property-owning democracy" at Blackpool in 1946, and the latter since April 13, 1949, when Mr. Douglas Jay announced in the House of Commons that the Labour Party also wanted to establish a " propertyowning democracy."

The Conservative and Labour parties both say they oppose monopoly and want to help the small man, and the former at least want to extend home ownership. We are all distributists now; the distinctive feature of Liberal policy lies the Co-ownership proposals. How far can these be said to be an application of Catholic teaching ?

The Guild Social Order

We should, in the first place, remember that these co-ownership proposals have a great deal in common with suggestions for a return to a Guild social order which have been made by Catholic sociologists since the days of Bishop Kettler, de Mun and La Tour du Pin.

Under them the worker would become a member of a producing group. as in the old Guilds, instead of simply a hired labourer. La Tour du Pin. in Vers an Ordre Social Chreltien puts forward ideas which are in many ways very similar to those underlying the Liberal co

ownership proposals. These ideas are also developed by Pius XI in Quadragesimo Anno when he refers to modifying the wage-relationship and to Vocational Groups.

" We deem it advisable," he writes. " that the sedge-relationship should, when possible. be modified by a contract of partnership, as is already lying tried in various st'a.VA to fhe 711, stool! gain of both the wageearners and of the employers. In this Warr wage-earners and other employees participate in the ownership or the management or in some way share in the profits."

He goes on later to speak of Vocational Groups. " The primary duty of the state is to abolish disputes between opposing classes and create and foster harmony between vocational groups. The aim of social policy must therefore be the

re-establishment of vocational groups. . As things are now the wage system divides men on what is called the labour market into two sectiqns. . There cannot be any question of any perfect cure unless this opposition be done away with and well-organised members of the social body be constituted. vouetional groupings claiming the allegiance of men according to the diveriet functions which they exercise in society. . . . Such a bond of union is provided by the production of goods or the rendering of services in which employers and employeee of one and the same vocational group collaborate."

Limiting Return on Capital

How should Catholics interpret this teaching on Vocational Groups? Many C.S.G. pamphlets, such as The Guild Social Order are not very much more specific than the Encyclicals about the problem of establishing a common purpose in industry. Maritain, in the Rights of Man favours "an associative systern, substituting,as far as possible. joint ownership for the wage sys tem." Fle is careful to emphasise that he means "an association of persons entirely different from the associations of capital which the idea of joint ownership might suggest under the present regime." He develops the theme in greater detail in True HfilfralliStlf. In discussing the problem of establishing such an associative system the Sword of the Spirit pamphlet " Industry: Control or Self-Control?" refers to the conclusion of the 1943 Nuffield College Conference that the return on capitat in large joint stock enterprise should be limited. The same conclusion is reached by Rt. Rev. Mgr. John A. Ryan, DD.. in his pamphlet. A Suggested Limitation of Capitalist Property while Fr. Andrew Gordon. Si., in the C.S.G. pamphlet Property concludes that limiting the return on capital is an excellent Way of establishing a system of copartnership though he recognises that it may not be appropriate for all industries. The limitation of the return on capital is, of course, the basic principle of the co-operative movement and operates very successfully in the co-operative co-partnership societies as well as in the John Lewis Partnership as described in a recent honk Partnership for All.

The Liberate come to very much the same conclusions as Mgr. Ryan and Fr, Gordon; that is to say that the limitation of the return on capital is one very good way of establishing a system of co-ownership but that it might not be appropriate throughout industry. While they do not propose to require firms to adopt that particular system. they look on it in a favourable light and note the. success of firms such as Glacier Metals Ltd. which operate it. Two of the industrialists interviewed by the Liberal Committee argued strongly for the limitation of the return on capital on the ground that it was necessary to set the worker,' suspicions at rest and lead, through improved works relations, to higher production. It is also interesting to note that it is favoured by a large section of Trade Unionists. A Transport and General resolution calling for a more effective control of profits was carried by a large majority at the Labour Party Conference at Scarborough in 1948, while another, from the Tailor and Garment Workers, calling for a " stricter limitation of profits " was carried by an overwhelming maiority at the Trade Union Congress at Margate a few months later.

Division of Profits

The Liberal Committee recognised that the principle of limiting the return on capital had the great attraction of simplicity but decided not to make it the basis of their proposals on the ground that it Would be difficult to arrive at a "reasonable " return on capital and that it would remove incentive from shareholding Directors. The objections do not seem particularly formidable in that the Liberals have to arrive at a " reasonable " valuation of shares under their own proposals while shareheIding directors would receive an unlimited return as a dividend on salary. Even that is shown Co be unnecessary in the John Lewis Partnership where the return on capital is limited and top manage

ment does not participate in benefit.

The Liberals, however, are probably wise not to propose the limitation of the return on capital throughout industry. Like Mgr. Ryan and Fr. Gordon they contend that it is a good method; but their legislative proposals only go as far as saying Labour should have some share in profits as soon as capital has received 3 per cent. As in the Lincoln Electric scheme of Cleveland, 1.7S.A., the question of how profits are to be !divided between capital and labour is left open; and Lincoln Electric is said to be the most efficient firm in America paying the " highest wages in the world "—an average of 5,800 dollars a year to 1,200 workers, and selling the product—arc welders—at about half the price charged by other firms. It is only because the Liberal proposals allow great flexibility in detail that it is possible to introduce them by legislation. : Though the compulsory introduction of co-partnership schemes has only recently been adopted by the Liberals. it was part of the Distrileutist Programme 15 years ago which favoured the '' compulsory adoption .of a system which will lead to a position in which the control and surplus profits will be vested in the persons engaged therein."

Both of the other two parties deprecate the friction which is so apt to arise under the wage-relationship; hut as yet neither of them propose , to do anything about it,

All those who appreciate the urgent need for co-operation between management and labour and seek a third way between capitalism on the one hand and collectivism on the other will be well advised to study the carefully worked out and very definite proposals of the Liberal Party, Catholics in particular should remember that while there is nothing particularly Catholic about the idea of nationalisation or about the idea of Empire there is something specifically Catholic about harmonising the interests of capital and labour so that management and workers co-operate for the common good. The Liberal proposals do go a very long way towards realising those " Vocational Groups" to which Pope Pius XI referred and that associative ownership about which Maritain has written. There is, indeed, a really remarkable measure of agreement between what the Liberals mean by " Ownership for All" and what Fr. Andrew Gordon means by

" Property for All."

St. Jeanne Antide Thouret, foundress of the Sisters of Charity under the Protection of St. Vincent de Paul. was canonised on January 14. 1934, and the title below the picture of St. Jeanne which appeared on this page in our issue of April 29 was incorrect in this particular.




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