Free Trade and Protection
We are witnessing England, which has been a so-called “Free Trade” country for more than 80 years, turning over to Protection. An examination of these two policies from the worker’s point of view is necessary in order to make clear what attitude the working class should adopt towards the question.
Free Trade does not necessarily mean that duties are not levied on imported goods but that any duties levied should be for the purpose of raising revenue, and be balanced by excise duties on similar goods produced within the country. Protection means the imposition of duties on imports for the protection of home industries, or on exports to protect the consumers from the export of commodities they may desire to purchase.
History provides a typical instance of protection in the Corn Laws, which were in operation in England for nearly three centuries. Their alleged object was to encourage the home farmers by protecting them against lowered prices, which were due either to a good season or to the import of foreign corn. Accordingly, in 1660, the export of wheat was only allowed when the price was below 40s. a quarter, and small duties were imposed on foreign wheat. Three years later the price below which wheat could be imported was raised to 48s. and the import duty was increased. Later the import of wheat was prohibited when there was an abundance in the home market. The Government of 1688 even went so far as to pass a Bounty Act granting a bounty on the export of corn when there was an abundance, in order to keep corn scarce in England and to maintain a good price. These protective measures fostered agriculture in England ; and competition among the farmers prevented the price of corn soaring too high.
England at this time, and during the first three-quarters of the 18th century, was mainly agricultural. But a rapid change took place—an industrial revolution, which took definite shape from about 1760 and was completed by about 1830. A series of inventions began to substitute machinery for hand labour. Kay’s flying shuttle, Hargreave’s spinning jenny, Arkwright’s water-frame, Cartwright’s power-loom, were inventions which, among others, outstripped the craftsman’s tools and forced the craftsman into the factory. This change transformed England into a manufacturing-country, and brought forward a new propertied section, the factory owners—or industrial capitalists. It also produced the modern working class, a class composed of those who were dependent solely on the sale of their labour-power in order to live. Previous to this, propertylcss workers formed only a small part of the population. The new industrial capitalists were seriously hampered by the system of protection. For over three centuries tariffs had been placed upon foreign imports with the object of helping home industries, bringing in taxes, and attempting to maintain a “favourable balance of trade.” The tariffs and restrictions were irksome to these new industrial capitalists and opposed to their interests. They wanted cheap raw material and cheap food for their workers in order to be able to drive down wages. They therefore opposed tariffs which, it was argued, made food dear. Hence the rise of Free Trade organisations and the agitation for the repeal of the Corn Laws.
In 1820 the merchants of London sent a petition to Parliament praying that every restriction upon trade not imposed on account of revenue should be abolished; a similar petition was sent from the Edinburgh Chamber of Commerce. A Parliamentary committee investigated the claims of the petitioners and reported in favour of Free Trade. During the third quarter of the 18th century there were hundreds of Acts imposing duties on almost every commodity. Peel had reduced these to just over 400, thus preparing the way for future reforms which culminated in the repeal of the Corn Laws.
Before dealing with the repeal of the Corn Laws some mention of the Parliamentary Reform Act would be to the point.
For over three centuries the House of Commons had been made up of two representatives from each county and two from certain towns. But as a result of industrial development some great towns had arisen which were not represented in Parliament. The House of Commons was, therefore, an inadequately representative body ; in fact, only approximately one hundred thousand people were represented out of a population of fourteen millions. The Reform struggle which arose out of the need of the new capitalists for some measure of political control culminated in the Reform Act of 1832. This Act extended the franchise to about a haif-a-million large and small property holders. The workers were drawn into the struggle bv the promise that its success would mean the repeal of the Corn Laws, the lowering of the price of bread, and a consequent increase in the purchasing power of their wages. Political power had previously been held by the Tory landowners and Whig merchants. The Reform Act broke their power and admitted the industrial capitalists to a share in the making of the laws. The repeal of the Corn Laws fourteen years later was one ihe results Parliamentary Reform. In the year following the repeal there was a crisis, which, in the words of Marx, brought “a general reduction of wages in honour of the big loaf.” In short, the lowering of prices which resulted from the abolition of the Corn Laws was cancelled by an approximate corresponding decrease in wages. The advantage gained by the worker was nil. The advantage gained bv the capitalist was lower wages.
It is sometimes argued that a tax placed upon or taken away from those commodities which the worker consumes, cause a rise or fall in their prices and that, therefore, the worker stands to lose or gain. This view is false. The worker owns nothing but his labour-power which he must sell for a wage, i.e., its price. This labour-power is bought and sold in the market and, like all other commodities, its value is determined by the amount of labour-time necessary for its production. Its price fluctuates around its value according to supply and demand. The wage the worker receives, therefore, is determined primarily by the cost of food, clothing and shelter required to produce his labour-power, according to the standard of living prevailing. If the prices of these articles are raised by taxes, then wages will be—on an average—higher to the extent of the taxes. The workers’ wages are based upon the market prices of certain commodities. If rates and taxes are reduced, and if (which is not necessarily the case) the prices of commodities fall in consequence of the reduction, wages will tend to be forced to a lower level. If an increase in rates and taxes leads to an increase in the price of commodities, the increase in prices will induce the workers to press for higher wages, and induce the employers to yield in order that their efficiency as workers may not be impaired and output reduced.
The working class produce all the wealth but receive in return only the price of the labour-power, leaving a “surplus” in the shape of rent, interest, profit, etc. Not all this surplus is retained by the capitalist class; a portion is paid away as rates and taxes to administer capitalism, that is, to enable the Government and local authorities to do for the capitalists collectively what they cannot do for themselves individually. All quarrels over rates and taxes and tariffs are ultimately quarrels between rival sections of the capitalist class as to who shall bear the greatest share of the burden. Whatever the outcome of these quarrels, the workers’ position remains untouched.
E. C.