Full Employment in a Free Society (Works of William H. Beveridge)

A Report

William H. Beveridge

• Publisher: Routledge
• Year: 2014
• Print ISBN:
  9781138830370
• eBook ISBN:
  9781317569770
• Topic: Business
• Subtopic: Business General
• Index: Business

Beveridge defined full employment as a state where there are slightly more vacant jobs than there are available workers, or not more than 3% of the total workforce. This book discusses how this goal might be achieved, beginning with the thesis that because individual employers are not capable of creating full employment, it must be the responsibility of the state. Beveridge claimed that the upward pressure on wages, due to the increased bargaining strength of labour, would be eased by rising productivity, and kept in check by a system of wage arbitration. The cooperation of workers would be secured by the common interest in the ideal of full employment. Alternative measures for achieving full employment included Keynesian-style fiscal regulation, direct control of manpower, and state control of the means of production. The impetus behind Beveridge's thinking was social justice and the creation of an ideal new society after the war.

The book was written in the context of an economy which would have to transfer from wartime direction to peace time. It was then updated in 1960, following a decade where the average unemployment rate in Britain was in fact nearly 1.5%.

Part I

INTRODUCTION AND SUMMARY

Relation of the Two Reports (paras. 1–2). The Meaning of Full Employment (paras. 3–7). The Purpose of Employment (paras. 8–9). Preservation of Essential Liberties (paras. 10–18). Diagnosis of Unemployment (paras. 19–29). Diagnosis of War (para. 30).

The Nature of a Full Employment Policy (paras. 31–5). Local and Quali-tative Adjustment (paras. 36–7). International Implications (paras. 38–43). The State and the Citizen (paras. 44–7). Plan for Social Security—Policy for Employment (paras. 48–50).

RELATION OF THE TWO REPORTS

1. THE Report on Social Insurance and Allied Services which I presented to His Majesty’s Government in November, 1942, takes freedom from Want as its aim, and sets out a Plan for Social Security to achieve this aim. Want is defined as lack of income to obtain the means of healthy subsistence—adequate food, shelter, clothing and fuel. The Plan for Social Security is designed to secure, by a comprehensive scheme of social insurance, that every individual, on condition of working while he can and contributing from his earnings, shall have an income sufficient for the healthy subsistence of himself and his family, an income to keep him above Want, when for any reason he cannot work and earn. In addition to subsistence income during interruption of earnings, the Report proposes children’s allowances to ensure that, however large the family, no child need ever be in Want, and medical treatment of all kinds for all persons when sick, without a charge on treatment, to ensure that no person need be sick because he has not the means to pay the doctor or the hospital.

2. The Report which I now present is a sequel to my earlier Report, in that it is concerned with what was named in that Report as one of the assumptions of Social Security: the assumption that employment is maintained, and mass unemployment prevented. But it is more than a sequel. Maintenance of employment is wanted for its own sake and not simply to make a Plan for Social Security work more easily. The new Report takes as its aim freedom from Idleness and sets out a Policy for Full Employment to achieve that aim. Choice of the term Idleness has two implications. Idleness is a different word from unemployment; freedom from Idleness secured by full employment does not mean that there must literally be no unemployment at all. Idleness is not the same as Want; it is a positive separate evil from which men do not escape by having an income. These two implications must be examined in turn.

THE MEANING OF FULL EMPLOYMENT

3. What is meant by “full employment,” and what is not meant by it? Full employment does not mean literally no unemployment; that is to say, it does not mean that every man and woman in the country who is fit and free for work is employed productively on every day of his or her working life. In every country with a variable climate there will be seasons when particular forms of work are impossible or difficult. In every progressive society there will be changes in the demand for labour, qualitatively if not quantitatively; that is to say, there will be periods during which particular individuals can no longer be advantageously employed in their former occupations and may be unemployed till they find and fit themselves for fresh occupations. Some frictional unemployment¹ there will be in a progressive society however high the demand for labour. Full employment means that unemployment is reduced to short intervals of standing by, with the certainty that very soon one will be wanted in one’s old job again or will be wanted in a new job that is within one’s powers.

4. Full employment is sometimes defined as “a state of affairs in which the number of unfilled vacancies is not appreciably below the number of unemployed persons, so that unemployment at any time is due to the normal lag between a person losing one job and finding another.”² Full employment in this Report means more than that in two ways. It means having always more vacant jobs than unemployed men, not slightly fewer jobs. It means that the jobs are at fair wages, of such a kind, and so located that the unemployed men can reasonably be expected to take them; it means, by consequence, that the normal lag between losing one job and finding another will be very short.

5. The proposition that there should always be more vacant jobs than unemployed men means that the labour market should always be a seller’s market rather than a buyer’s market. For this, on the view of society underlying this Report—that society exists for the individual—there is a decisive reason of principle. The reason is that difficulty in selling labour has consequences of a different order of harmfulness from those associated with difficulty in buying labour. A person who has difficulty in buying the labour that he wants suffers inconvenience or reduction of profits. A person who cannot sell his labour is in effect told that he is of no use. The first difficulty causes annoyance or loss. The other is a personal catastrophe. This difference remains even if an adequate income is provided, by insurance or otherwise, during unemployment; idleness even on an income corrupts; the feeling of not being wanted demoralizes. The difference remains even if most people are unemployed only for relatively short periods. As long as there is any long-term unemployment not obviously due to personal deficiency, anybody who loses his job fears that he may be one of the unlucky ones who will not get another job quickly. The short-term unemployed do not know that they are short-term unemployed till their unemployment is over.

6. The human difference between failing to buy and failing to sell labour is the decisive reason for aiming to make the labour market a seller’s rather than a buyer’s market. There are other reasons, only slightly less important. One reason is that only if there is work for all is it fair to expect workpeople, individually and collectively in trade unions, to co-operate in making the most of all productive resources, including labour, and to forgo restrictionist practices. Another reason, related to this, is that the character and duration of individual unemployment caused by structural and technical change in industry will depend on the strength of the demand for labour in the new forms required after the change. The greater the pace of the economic machine, the more rapidly will structural unemployment¹ disappear, the less resistance of every kind will there be to progress. Yet another reason is the stimulus to technical advance that is given by shortage of labour. Where men are few, machines are used to save men for what men alone can do. Where labour is cheap it is often wasted in brainless, unassisted toil. The. new lands empty of men are the homes of invention and business adventure in peace. Stimulus to labour saving of all kinds is one of the by-products of full employment in war.

7. The full employment that is the aim of this Report means more vacant jobs than unemployed men. It means something else as well. If there were 2 million chronically unemployed men in Britain and 2 1/4 million vacant jobs which they could not or would not fill, there would be more vacant jobs than unemployed men, but to call this state of affairs “full employment” would be mockery. It is not enough to say that there must be more vacant jobs than idle men—more or about as many. It is also necessary to be sure that the number unemployed, or rather the duration of unemployment in the individual case, is not excessive. Full employment, in any real sense, means that unemployment in the individual case need not last for a length of time exceeding that which can be covered by unemployment insurance without risk of demoralization. Those who lose jobs must be able to find new jobs at fair wages within their capacity, without delay. This means that the demand for labour and the supply of labour are related qualitatively as well as quantitatively. The demand must be adjusted to the kind of men available or the men must be capable of adjusting themselves to the demand. In the light of the facts of unemployment set out in Part II, it is clear that the qualitative and local adjustment of demand for labour and supply of labour has to be approached from both ends, that of demand and that of supply. The demands must not only be sufficient in total but must be directed with regard to the quality and the location of the labour that is available. The labour supply must be capable of following the changes of demand that are inseparable from technical advance.

THE PURPOSE OF EMPLOYMENT

8. Idleness is not the same as Want, but a separate evil, which men do not escape by having an income. They must also have the chance of rendering useful service and of feeling that they are doing so. This means that employment is not wanted for the sake of employment, irrespective of what it produces. The material end of all human activity is consumption. Employment is wanted as a means to more consumption or more leisure, as a means to a higher standard of life. Employment which is merely time-wasting, equivalent to digging holes and filling them again, or merely destructive, like war and preparing for war, will not serve that purpose. Nor will it be felt worth while. It must be productive and progressive. The proposals of this Report are designed to preserve all the essential springs of material progress in the community, to leave to special efforts its rewards, to leave scope for change, invention, competition and initiative.

9. In so far as room is left for change and for freedom of movement from job to job, room is left for some unemployment. The aim of this Report is expressed in numerical terms in paragraph 169 as a reduction of unemployment to not more than 3 per cent, as compared with the 10 to 22 per cent experienced in Britain between the wars. But though the Report assumes the continuance of some unemployment and suggests a figure of 3 per cent, it is the essence of the proposals made in the Report that this 3 per cent should be unemployed only because there is industrial friction, and not because there are no vacant jobs. For men to have value and a sense of value there must always be useful things waiting to be done, with money to pay for doing them. Jobs, rather than men, should wait.

PRESERVATION OF ESSENTIAL LIBERTIES

10. The labour market in the past has invariably, or all but invariably, been a buyer’s market rather than a seller’s market, with more unemployed men—generally many more unemployed men—than unfilled jobs. To reverse this and make the labour market always a seller’s rather than a buyer’s market, to remove not only unemployment but the fear of unemployment, would affect the working of many existing institutions. It would change and is meant to change fundamentally the conditions of living and working in Britain, to make Britain again a land of opportunity for all. There are some things in Britain which neither full employment nor the means of achieving it should be allowed to change.

11. The Report, as its title indicates, is not concerned simply with the problem of full employment. It is concerned with the necessity, possibility and methods of achieving full employment in a free society, that is to say, subject to the proviso that all essential citizen liberties are preserved. The precise effect of the proviso depends on the list of essential citizen liberties. For the purpose of this Report they are taken as freedom of worship, speech, writing, study and teaching; freedom of assembly and of association for political and other purposes, including the bringing about of a peaceful change of the governing authority; freedom in choice of occupation; and freedom in the management of a personal income. The proviso excludes the totalitarian solution of full employment in a society completely planned and regimented by an irremovable dictator. It makes the problem of full employment more complex in many ways, of which four call for special notice.

12. First, in a free society the governing authority is liable to be changed at short intervals by peaceful methods of political organization and voting. There must be reasonable continuity of economic policy in spite of such changes of government. The machinery of government, while responsive to general changes of opinion, must be resistant to “lobbies”—that is to say, organized sectional pressures.

13. Second, freedom of association for industrial purposes raises the issue of wage determination. Under conditions of full employment, can a rising spiral of wages and prices be prevented if collective bargaining, with the right to strike, remains absolutely free? Can the right to strike be limited generally in a free society in peace-time?

14. Third, freedom in choice of occupations makes it harder to ensure that all men at all times are occupied productively. It makes it impossible to retain men forcibly in particular work or to direct them to it with the threat of imprisonment if they refuse to go. One assumption underlying this Report is that neither the Essential Work Order nor the powers of industrial direction which have been found necessary in war should be continued when the war is over. In Britain at peace the supply of labour cannot be adjusted by decree to the demand for labour; it can only be guided by economic motives. From another angle, freedom in choice of occupation raises also the issue of industrial discipline. Under conditions of full employment, if men are free to move from one employment to another and do not fear dismissal, may not some of them at least become so irregular and undisciplined in their behaviour, as to lower appreciably the efficiency of industry?

15. Fourth, freedom in the management of a personal income complicates the problem of full employment from another side. If men cannot be forced to buy just what has been produced, this means that the demands for labour and its products cannot be fitted forcibly to the supply. There may be continual changes in the kinds of things on which consumers want to spend their money, that is to say, in the quality of consumers’ outlay.¹ There may be changes also in its quantity. For freedom in the management of a personal income includes freedom to decide between spending now and saving¹ so as to have the power of spending later. A totalitarian regime, even if it used money and price and wage differentials to stimulate and guide individual activity, might abolish freedom of saving. It might retain from the national income of each year that portion which it needed for investment,¹ i.e. for the sustenance of persons engaged in making instruments and materials of further production, and might issue to consumers money which, like ration coupons, could not be saved for spending later., In a free society individuals must be allowed to plan their spending over their lives as a whole.

16. Many of the points thus briefly noted will be discussed more fully in Part V, in dealing with the internal implications of a fall employment policy. Here it is sufficient to say that none of these freedoms can be exercised irresponsibly. Perpetual instability of economic or social policy would make full employment and any other social reforms futile or impossible. Bargaining for wages must be responsible, looking not to the snatching of short sectional advantages, but to the permanent good of the community. Choice of occupation means freedom in choosing between occupations which are available; it is not possible for an individual to choose to be an Archbishop of Canterbury, if that post is already filled by another. Work means doing what is wanted, not doing just what pleases one. All liberties carry their responsibilities. This does not mean that the liberties themselves must be surrendered. They must be retained.

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Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Original Title Page
• Original Copyright Page
• Table of Contents
• Prologue
• Preface of 1944
• Part I—Introduction and Summary
• Part II—Unemployment in Peace
• Part III—Full Employment in War
• Part IV—A Full Employment Policy for Peace
• Part V—Internal Implications of Full Employment
• Part VI—International Implications of Full Employment
• Part VII—Full Employment and Social Conscience
• Postscript The Government's Employment Policy
• Appendices A. The International Trade Cycle and other Fluctuations
• B. Statistical and Technical Notes
• C. The Quantitative Aspects of the Full Employment Problem in Britain, by Nicholas Kaldor
• D. Explanation of Terms
• Index