WITHOUT PROFIT

Evening Post, Volume XCII, Issue 108, 3 November 1926, Page 22

WITHOUT PROFIT

INDUSTRY IN RUSSIA

HEAVY FALL IN OUTPUT

AN AUTHORITATIVE INVESTIGATION.

"If the people whom they set out to serve would not give the social service that was necessary to make a success of those ventures, then there was no policy left but for the Government to abandon those particular things, until the people were willing to give the social service which was so essential to all." Queensland's Labour Premier admitted, in the speech quoted above, that it might be necessary to abandon some State enterprises if greater aid were not forthcoming from, the people whom those enterprises were designed to serve. His speech is aii admission that the Socialist slogan: "Production for use, not profit," is an excellent slogan, but has a flaw as a practical working principle in a community not fully educated in altruistic service. More striking still is the evidence lurnished by Russia. There, production without profit has been proved highly unprofitable. The Soviet abolished private capital—and private profit. There was then nothing to prevent the workers from obtaining the full fruits of their industry. What was the result? "The efficiency of industrial labour, a neglected problem during the first years after the Russian Revolution, was abruptly brought to the attention of the Soviet Government in 1924. Since the abandonment of Communism in 1921, wages, which had fallen to an extremely low level, have risen steadily, and, while still lower than in 1913 or 1916, are nevertheless a heavy burden on industry owing.to the high cost of production in general arid the decreased output of -labour. If they are to maintain their predominance on the home market, the state industries must reduce the prices of their goods—in other words, cut down their production costs—and this reduction can only be effected by an increase in the workers' output per head, which had fallen considerably after the revolution. This view of the situation, which was held by the Communist' Party and by the Supreme Economic Council, was the predominant one in 1924 and 1925, and is still being very seriously considered by the State industries and the trade unions." ONE-THIRD EFFICIENT. This is not a statement by some private capitalist. It is the finding of scientific investigations published in the "International Labour Journal" issued by the International Labour Office of the League of Nations. The article is highly illuminating. It shows that where the "chains" of private capital were broken tho labour output did not immediately respond to the call for "production for use not profit." Instead it sank steadily. Taking the output per worker in 1913 as a basis for comparison tho result is:— 1913 100 1914 97.2 ,1915 '.. H3.7 1916 114-3 1917 i....... • 86.6 1918 37.3 1919 ................ 33.6 1920 ....-29.0 1921 ''..1...' 31.0 COMMUNIST PROGRAMME CULPABLE. "This abrupt fall (states the 'Journal') must bo attributed primarily to the social and economic resulting from the revolution, and'chief among these to the application of the Communist programme during the three years following the advent of the, Soviet Government to power: These causes may be classMedin two groups: those of a general economic nature, which led to a sharp decline in industrial output, and particular causes inherent in the system of managing undertaking* and. in the remuneration of ■the: workers. The social upheaval consequent on the Bolshevist revolution resulted in the wholesale destruction of wealth and i greatly decreased the national income; Disorganisation, civil war, and then the Communist regime led to a general lowering of output. The socialisation of trade in particular caused an, important decline in agricultural production. The peasants would. only produce enough for their own needs, as the surplus was commandeered by the State. The nationalised industries rapidly declined. A great number of workers, anticipating famine in the towns, and thrown out of work by the closing of many undertakings, left the industrial centres^and returned to their native villages. Others were recruited for the Red Army, Others again joined the Communist Party and abandoned the factory for politics. These circumstances alone are sufficient to explain the fall, in industrial production. The drop in individual output was due, first and foremost,' to the reduction of wages and the system of remuneration in force under the Communist regime, the official term for which was 'social relief.' The State was responsible for all workers, and paid them uniformly at fixed wage rates (State supply). These wages are preferably. paid in kind, owing to the depreciation of the rouble and general tendency to abolish money in 1918-1920. The proportion of payments in kind to the total wage\(food supplies, working clothes, communal service—tramways, gas, ' electricity, etc.) rapidly increased, rising from 6.7 per cent, at the time of the Bolshevist revolution to 47.4 in 1918, 79.3 in 1919, and 92.6 in 1920, dropping to 86.2 in 1921." THE ABOLITION OF "WAGE SLAVERY." "Cash wages being insignificant and supplies in kind very limited and irregular, the worker was chiefly concerned to secure a livelihood. Ho thought less of Ms work, which did not even provide a living,'than of conserving his strength. He did as little possible at the factory, and sometimes did nothing at all, or went to work only two or three days a week. He lost nothing by this, for his wages had no relation to his output, and were due to him regardless of his absences or the quantity or quality of his work. . . . "Factory discipline was completely relaxed, both among the workers and among the Government officials responsible for the management of industry. On the average a man worked only 228.3 days out of 299 in 1920, and only 221.5 days in the following year. (These figures are only approximate; absences were really more frequent.) RETRACING THE STEPS. "In 1921 the Soviet Government inaugurated the 'New Economic Policy' by starting to manage nationalised industry with a view to a commercial return and allowing some liberty to private enterprise. The management of industry was. thus profoundly changed. The system of 'State supplies,' under which industry was financed by the Treasury regardless of its out- ■ put or deficit, was replaced }by management on a commercial basis. The remuneration of labour by payments in kind on the principles •of social relief could not be continued. In 1921 the Soviet Government authorised the workers to augment their income—rpreyiousljj limited to. fixed rates .

—by means of outside work, odd jobs, overtime, etc. Piece .rates were also allowed, but only within certain limits. A year later, in September, 1922, »the fifth Congress of Trade Unions supported a Government decree requiring .that wages should thenceforth be paid in cash. "These measures brought an undoubted improvement in the industrial situations generallf, and the ontput of labour in particular. The authorities in charge of State industries,, while continuing to receive loans and subsidies from the Treasury, had thenceforth to rely mainly on their own resources to pay the workers' wages, and were thus compelled to supervise more closely the conduct of the undertakings which they controlled. The workers on their side, no longer benefiting by State assistance through payments in kind, had to work harder and reduce the number of unauthorised absences, which were so frequent during the period of Communism. Thus the average number of days' work per year, after falling to 219.5 in 1920-1921 (the fiscal year begins on Ist October) rose to 254.2 in 1921-22, to 262.4 in 1922-23, and to 262.6 in 1923-24. The average number of days' absence, which was 34.6 in 1920-21, fell to 13^4 in 1922-23, and-13.3 in 1923-24. Output per worker also in- . creased, though slowly. The daily average output reached a value of 3.8 pre-war roubles in October, 19.22, 4.09 in October, 1923, and 5.09 in August, 1924. Nevertheless, in spite of these undoubted improvements, labour was much less productive in 1924 than in 1913 or 1916." . » .' HOW THE SOVIET SAVED. Before the currency reform of 1924 much interest was not taken in labour output. If industry could not meet its charges a saving could be made by delaying payment of wages, with the cerj tain knowledge that, owing to the rapid, loss of value of the rouble, the payment would cost less than if made promptly/ A dishonest dodge for a proletarian Bepublic—but that is by'tho way. When the currency was stabilised other means had to be adopted and the Supreme Economic Council instituted inquiries. Tho_ trade .unions would not admit that tho worker was always to blame, and they claimed in June, 1924, that the output was back to 75 per cent, of normal; ' but the President of the Supreme Economic Council contested the accuracy of even this estimate. In the light of the inquiries he had made, he declared that in the best undertakings, particularly in the metal industry, output varied between 20 and '50 per cent, of the normal pre-war Itandard. -As a result of discussions a special Commission, including representatives of the unions and of the State industries, was set up to investigate the output of labour and to find'measures to improve it. The Commissariat of Inspection and the Supervisory Committee of the Communist Party also undertook independent inquiries. From the mass of sometimes contradictory information gathered by the various investigators, it appeared that in the most important branches of industry output was not more than 50 per cent, of the standard before the revolution. According to the prosident, output in some typical undertakings in nationalised industries in the Doretz Basin had varied in 1924 between 34 and 53.3 per cent, of the 1913 output. It was found, moreover, that wages from the fourth quarter of 1922 to the second quarter of 1924 had risen 83 per cent., but output had increased only 24 per cent. CAUSES OF THE FALL. "The extensive investigations of the' Joint Commission of the Trade Unions and the Supreme Ecpnoniic Council,- together with the statements of manyj'directors of State undertakings, revealed unmistakably the fundamental causes ot the fall in output. According to the conclusion of the Commission, they may be summarised as % follows:— "(I) Causes attributable to the worker: (a) Failure to work full hours; (b) frequent absences; (c) bad discipline; (d) lack of interest shown by the workers and technical staff in the output of the undertaking. "(2) Causes attributable to management: Unsystematic organisation (disproportionate number of supernumerary workers, high percentage of spoiled work). \ ;"(3) External causes, notably the dilapidated condition of plant, 60 per cent, of which needed replacing. "The lack of capital for modernising equipment and making the essential repairs forced the managements of the nationalised industries to devote their chief attention to increasing the intensity of work. As the Commissary of Inspection-said: 'What can be dona to increase outputf Our scheme is to reconstruct our undertakings on better technical lines and to electrify the factories, but its execution will require an enormous amount of wo»k lasting many years. In view of our poverty and the impossibility of devoting large'sums to industry at the moment, we cannot achieve much in this direction in the near future. At the moment we have another task; to fight disorder, slackness, waste of time and money, and the lack of all discipline in work.' " THREE HOURS A DAY. The article proceeds to set forth in detail the causes of the fall in output. They make illuminating reading, as brief extracts will show. For example, on waste of working time it;isvstated:—" According to y statements by supervisory committees, work is actually' done for only from 50 to 80 per cent, of the working day, the proportion varying in different industries. There are even factories where only two or three hours' actual work is done in tho day. . . .In the building materials factories of the Maltzeff Trust the situation, described by the Commissary of Inspection as 'only too typical in its -disgraceful features,' was as follows: In July-August, 1924, in general the period of real work was from two to five hours a day; only four classes of workers worked from 6 to 6J hours. A few worked only 1} hours instead of 8. The average actual day's work waa not more than three hours. According to the official journal of the Council of Labour and Defence, 'It has become the rule that really productive work lasts only four or four and a half hours a day in our undertakings. At least two hours'a day are completely wasted. If actual working time could be increased, even for one hour a day, monthly output would be increased by 15.6 million roubles.' The shortness of real working time is due to inadequate use of the machinery, its bad condition, the time spent on all sorts of subsidiary jobs, continual bad timekeeping at the beginning and end of the day, hours spent in smoking, eating, chatting, etc., not to mention attendance at -trades union or Communist meetings." PROTECTING THE INEFFICIENT. Unauthorised absences and malinger-, ing accounted for another big drop— an average of 40 days a year, compared with 12.6 before the revolution. "Illnesses of short duration" were encouraged by "unwarranted complaisance of the doctors and sickness funds in granting certificates without valid reason, notably the day after holidays." also by the workers' right to full wages for the first three days of sickness and by a clause in the Labour Code forbidding his discharge unless he had been absent improperly for more than six days a month. Lack of discipline was a cause laid, in part at the doors of the trades unions. A manager of a State undertaking stated: "The unions prefer to have a highly skilled worker discharged rather than one whose work is unsatisfactory." Inefficient management, leading to much 1

spoiled work and high overhead expenses, is also debited with loss, and many provisions of the Labour Code are condemned by the managers of State undertakings for their hampering effects upon organisation and upon discipline. BACK TO PIECE-WORK. Time wages and piece-work were acknowledged to be a prime cause of slackness. "The nature of the wage itself provided no incentive for the worker to increase his output. 'If the intensity'of labour is to be increased, the worker must be given an interest in production,'1 declared the official organ of the trade unions. The payment of wages by the hour, day, or month_ and the limitation of overtime work to 25 or 50 per cent, of the output standard fixed by collective agreement or by the joint committee, robs the worker of any inclination to work harder. 'He comes to the conclusion that *to exceed, the limits laid down is useless, and may even be dangerous since it involves the t risk that the rates of wages may be reduced or the standard of output raised without a corresponding increase in wages.' He is alarmed by the frequent revisions of the standard; for fear that his task will be increased without an equivalent -increase in his fixed wage, he prefers to 'ca'canny' in order to avoid artificial reduction in his earnings. The technical staff, who, also receive a fixed wage which they cannot augment by overtime work, even within the limits imposed on the workers, and. who often earn less than the workers under their orders, naturally lose all interest in the working of the undertaking and do just enough to avoid discharge." "The first practical steps to increase output were those advocated by the Central Committee of the Communist Party in a resolution adopted on 19th August, 1924. The most important of its recommendations were that:—(l) The workers should work a full day; (2) output standard should be raised to the maximum technically possible; (3) all obstacles to the payment of wages at piece rates should' be removed, and piece wages should be introduced wherever this was feasible; (4) output standards and piece rates should be revised periodically with a view to increasing the intensity of work. INCREASED OUTPUT ESSENTIAL. '' The sixth T,rado Union Congress, held in November, 1924, adopted the principles laid down by the Communist Party, and declared in a resolution that 'the interests of tho working class and the material interests of each worker demand that the trade unions devote all their efforts to increasing the output of labour.' While admitting that output depends in part on the industry of each individual worker, the resolution stated that it was also desirable to improve the management and organisation of the undertakings, especially to replace dilapidated machinery, to decrease the number of supernumerary workers and clerks, and to effect; rigid economy in fuel and raw material. The trade union resolution advocated the same measures as the Communist Party for increasing individual output, notably, a wider use of piece wages, but included a warning against the too frequent revision of output standards and piece, rates which might alarm the workefij) and prevent him giving his best efforts. The Congress also protested against the delays in paying wages and against the practice of paying' them in vouchers to be redeemed at the consumers' cooperatives, stAting that such practices could not fail to weaken the enthusiasm of the workers." , THE RESULTS ACHIEVED. The "International Labour Journal" sums up the position thus: "It may be stated that the campaign instituted in 1924 with a view to increasing the output of workers took the following forms: (a) Extensive introduction of the system of piece wages, without restriction; (b) raising the minimum standards of output to the extreme limit possible; (c) improvement of discipline in the undertakings. All these measures, as has been shown, were designed primarily to increase the intensity of the workers' efforts. Reorganisation of production on more scientific lines, simplification of management, reduction of the number of auxiliary workers, and so forth are still merely at the stage of proposals. The repair of plant and machinery and the modernisation of equipment are lengthy opera-, tions requiring large quantities of capital which the nationalised industries do not possess. On the other hand, there was a prospect of immediate results from efforts.to increase the individual worker's output, the direct efforts of labour, which had diminished considerably after the revolution, more particularly during the Communist regime, and were only improving slowly. The president of the Supreme Economic Council could therefore declare recently that the essential success achieved in the sphere of labour output waa due almost exclusively to the increased effort on the part of the workers consequent upon the introduction, without restriction, of the system of piece wages. The intensification of effort on the part of the workers would now appear to have reached the maximum possible. It is increasingly realised that unrestricted adoption of piece wages has a,bad effect upon the quality of the output and the health of the workers. The trade, unions consider that the worker _v doing his utmost, and that no great increase in the intensity of work can be achieved without an improvement in manufacturing processes and a- real increase in wages. At a recent plenarymeeting of the Central Council of Trade Unions, it was even stated that the worker's output showed a distinct tendency to fall. . V . The situation is therefore as follows: Industry cannot raise wages,' for those which it is'now paying are already a very heavy_ charge, and even threaten to upset its finances. If the level of wages is to be maintained, the output of labour: must be; increased. Such an increase can come about only if plant and processes are improved and modernised. But' these changes necessitate funds, which the State industries do not possess, being anxious to increase their output for the very purpose of renewing their capital." Seemingly the. abolition of the private capitalist, even when his capital is confiscated, is not the wide-open gateway to the industrial millennium.