The Exploitation of Cheap Labour

We British in particular can draw full warning from our past against the
errors which all Europe is now committing. It is not a matter of theory but
of fact that the chief industries of Britain were ruined in the twenties and
thirties by the exploitation of cheap labour in undercutting competition,
not only on world markets but by import of their goods to our own
market. The experience of the cotton industry of Lancashire and the
woollen industry of Yorkshire is evidence of what can occur when
advanced countries export machinery to countries where finance can
exploit labour with lower wages to compete disastrously against them.
The uncontrolled competition developed by a greedy and anarchic
capitalism within the Empire from India and Hong Kong, and without
from China and Japan, was responsible for the ruin of Britain's main
industries in its primary effect, and for the throwing of China to
communism by the ruthless brutality of the exploitation in its secondary
effect.
Britain was saved from the full consequences of these errors, against
which I warned at the time, not by the wisdom of statesmanship but by the genius of science. The
diversification of our industries through the new inventions of science saved us as clearly in the economic
sphere as the development of nuclear weapons saved us in the military sphere. No one could have
foreseen either event with certainty at that time; it is the task of statesmanship to deal with facts as they
are, not to entrust the destinies of great peoples to the vagaries of chance or the luck of other people's
inventions. Our scientists and technicians are singularly gifted and we can rely upon them to keep us in
the forefront of the nations if we do not treat them so badly that we drive them abroad, but we cannot be
sure that every time and in every sphere their talents will provide at exactly the right moment a life-raft for
politicians drowning in the sea of their own follies.
The lessons of this experience have not been learnt either by Britain or by Europe, now busily engaged in
including within its economic community the same possibility for the exploitation of backward labour by
finance to provide a cheap internal competition in many of the relatively new industries which have
recently been developed. This tendency is maturing slowly in the particular conditions prevailing since the
war, because finance has had so many profitable distractions from the process which previously made
vast fortunes in the East at the expense of the West, but the opportunity is still present in Africa and it will
undoubtedly be exploited if nothing is done about it.
The three phases of industrial development which I concluded were inevitable in my early observations of
Detroit and Pittsburgh are still a valid forecast, and are liable to occur in a world of free and intensifying
competition. We have already passed the period of the classic economics when skilled labour in
competition was sure to defeat the unskilled, and are progressing into the period of rationalised industry
and simplified mechanical processes which enabled India to beat Lancashire in the cotton business. I
long ago observed in Detroit that the elementary individual tasks of the conveyor belt could ensure the
victory of unskilled labour, even in the motor industry. We are in the phase of rationalised industry which
is eminently suited to the exploitation of cheap African and Asian labour, and it will inevitably occur if
nothing is done about it because it can be so immensely profitable.
The third phase, suggested to me long ago by my observation of tendencies in Pittsburgh, lies in general
much further ahead; the development of almost fully automatic machinery in which relatively few highly
skilled men work machines, or even supervise them. At that point the triumph of advanced labour will
return, and the world will be presented with a quite exceptional problem if in the interval millions of
Africans have been drawn from the soil to the factories and are eventually thrown into unemployment
because their exploitation is no longer profitable. All looking too far ahead, all too fantastic, will come the
usual reply; and again I answer that we have suffered enough from not looking far enough ahead, and
that worse is to come.