Labour-Exchanges (1893)

by Gustave de Molinari (1819-1912)

Chapter VIII:
What Advances Must Be Made to Expand and Unify Labour Markets

The supply and demand of labor. – Why these have remained local. – Expectations of the consequences of the multiplication of intermediaries and of the improvement of this necessary mechanism in the circulation of labour. – That the price of labor would become impersonal, as is already that of capital, grain, etc. – That this price would be determined by general market conditions.
– That the extension of labour markets would prompt the creation of Exchanges and the improvement of advertising. – How the obstacle to the remuneration of intermediaries might be overcome.
– The collective guarantee of workers’ mutual societies substituted for the individual guarantee. – Creation and role of labour credit.

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LE-8.1 There exists today, throughout all civilised countries, a constant demand for, and supply of, free labour, just as there was once a constant demand for, and supply of, slave labour. The demand results on the one hand from empty slots opened up by death, accidents, etc. among personnel employed by existing companies, and on the other hand by the jobs created by new companies, in countries where production is on the path of development. The supply arises from the generation that has arrived at the age where its labour can be utilised, and from workers who find themselves without employment. But while the supply of, and demand for, capital and products operate across a more and more extended range, the supply of and demand for labour are ordinarily confined within the same home region of industry and population: the workers for Lyonnaise industry are recruited in Lyon itself and in the neighbouring region, the workers for the Hainaut coal-works in Hainaut, etc., etc. When a higher-than-ordinary demand occurs, it no doubt attracts labour from elsewhere, and, similarly, in case of oversupply, the excess labour in part flows away: workers who possess a few resources head off, on the basis of information that is frequently uncertain, to seek work in some great home base of industry.1 So it is that Belgian workers flock to the department of Nord and to Paris, and Italian workers to the departments of the Midi. But the localised character of labor markets holds nonetheless as a general rule.
LE-8.2 It would be otherwise if labour had at its service a system of intermediaries, developed on a par with the one that mobilises capital and products in space and time. Let us suppose the placement industry to become productive enough to attract, like the other intermediary systems, entrepreneurship and capital: with powerful companies being formed to carry it off, labour markets would not be slow to extend themselves, just as markets for capital and products have been extended in proportion as credit institutions and commercial enterprises have multiplied and expanded, the deficits of each being filled by the abundance of the other; until at last the determination of the price of labor would cease to be influenced by the unequal intensity of the needs of both parties; it would become impersonal, would be established, like the rate of interest, the price of grain, cotton, wool, and other items already in possession of a general market, according to the amount and proportion of the quantities supplied and demanded. The worker could no longer complain of being “exploited” by the entrepreneur, as the wage rate would depend on a fact on which entrepreneurs and workers could no longer exert an appreciable influence by suspending individually or collectively their supply or their demand – namely the market’s having become unlimited. And just as the extension of markets for capital and products has attracted the intervention and development of financial and commercial advertising, and the creation of Exchanges, the extension of the labor market would give rise to like agencies and institutions. These intermediaries would have to be familiar on a daily basis with market conditions, in order to find labour in markets where supply exceeds demand, and bring it to markets where demand exceeds supply. Advertising and the Exchanges would be able to supply this need on the part of industry for intermediaries in the placement of labour, just as they supply industry’s need for intermediaries in the placement of capital and products. Is it necessary to add that this mechanism for the mobilisation of labour would arise and develop of itself, as soon as entrepreneurship and capital should take an interest in creating it, that is to say, as soon as it should be able to secure for them a lucrative profit? All that would be need would be to leave them free [laisser faire].
LE-8.3 However, this advance has encountered an obstacle that has it has not yet been able to overcome, namely the inability of the intermediary to find, in the transport of labour across space and time, a lucrative profit. This obstacle does not arise not from the nature of the article to be transported, as free labour does not differ essentially from slave labour. It is to be found, as we have noted, in the conditions of the exchange of free labour. The productive forces of the slave were the object of purchase, and the purchaser enjoyed possession of them throughout the duration of this instrument of labour. The productive forces of the free labourer are the object of mere hire, and are commonly rented for a short term. The operating life of the productive forces of the slave could consequently provide enough profit to cover interest and depreciation on capital employed in its acquisition, and this capital sufficed in its turn to reimburse the intermediary for the costs of training and transportation, with the addition of a lucrative profit. Renting the labourer’s productive for a day, a week, a month, by no means secures to the contractor a profit large enough to permit him to provide a lucrative compensation to an intermediary that would have to advance the expenses of transportation from one market at some distance to another. For these expenses the intermediary might indeed seek reimbursement from the labourer himself. But the labourer is ordinarily devoid of resources, he could provide the intermediary with no more than the guarantee of his future work, and this guarantee could be made effective only if the worker undertook a commitment to work for a period long enough for his debt to be extinguished by means of a payroll deduction. Yet a labourer engaged for a long term, and deprived of the capacity to terminate his commitment until the extinction of his debt, ceases to be free; he even finds himself reduced to a servitude more harsh than that of slavery – as attested by the example of coolies’ being committed for seven years – because he is placed under the authority and discretion of an entrepreneur who has no incentive to conserve his forces, who is even interested in exhausting them, as a farmer is interested in exhausting a plot of land that will soon depart from his possession.
LE-8.4 In summary, the substitution of the short-term rental of the labourer’s productive forces for the purchase of those forces for their entire duration, the lack of resources on the part of the labourer, and the insufficiency of the guarantee that he can offer by mortgaging its future work, constitute for the transportation of labour across space and time an obstacle hat has not yet been surmounted except by recourse to irrevocable commitments, that is to say, by the reestablishment of the worst form of slavery – the slavery of time. So is this obstacle insurmountable?
LE-8.5 Not at all, but it points to a problem in need of solution – that of establishing labour credit. We must therefore examine under what conditions credit may be put in the service of the working class in order to draw the greatest advantage from the exploitation of its productive forces.
LE-8.6 All credit requires guarantees. The lender needs to be more or less assured of recovering at maturity the capital that he has relinquished, and to receive exact interest, or else he refrains from lending. This assurance the workers taken individually are not in a position to provide, but might they not provide it collectively? Let us suppose that the trade’s unions and the syndicates that are formed and are multiplying every day, instead of using their resources to foment and maintain those strikes that turn too often to the detriment of workers, transform themselves into mere mutual credit societies; that these mutual societies provide their collective guarantee to enterprises of transportation and job placement, a guarantee backed by the subscriptions of their members, and who already stand, in the principal trade’s unions of England and the United States, at several million, the intermediaries will find in this collective guarantee the security that an individual guarantee could not secure them, and it will become possible for them to advance to the mutualised labourers the funds necessary to pay the costs of transporting their labour to the most advantageous market. For if this advance were not repaid by the borrower, it would be so by the mutual society. Recovering this amount would be up to it, and this recovery which the intermediary could not accomplish without difficulty and great expense would be achieved by the mutual society safely and without trouble, by the mere threat of exclusion and the blacklisting of any debtor unfaithful to his commitments.
LE-8.7 To all appearance, the people’s banks on the lines of the Schultze Delitzsch, Raiffeisen, and Wollemborg systems, which thus far have been barely use to provide capital to small-scale entrepreneurs of industry and small traders, that is to say, to a class which the economic transformation of business condemns to disappearance sooner or later, are destined to play an important role in the reestablishment of labour credit, thus to facilitate the creation of a mechanism of transportation and placement at a distance.
LE-8.8 The problem of the extension of markets and their gradual unification will then be solved for labour as it already is for products and capital.

LE-8.n1.1 Appendix. Note Y.

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