II.  PROFIT SHARING, COOPERATION, AND CONSUMERS’ LEAGUES?

(1) The usual method of profit-sharing is for the employer to set aside voluntarily a certain proportion of the profits of successful years, to be distributed among the employees in addition to their regular wages, the distribution being made proportionate to the amount of each man’s wages.  It is thus properly called a dividend to wages, and is equivalent to a small ownership of the stock of the business by each worker.  The advantage lies not only in the fairer distribution of the profits of a business, but in the interest, contentment, and increased efficiency of the employees.  The self-interest of the laborers is enlisted to prevent strikes, and a feeling of good will tends to prevail.  Not a few employers are giving a degree of profit sharing as a mere business proposition; and the results have been generally successful.  But the method is only a sop.  It touches only one of the evils above mentioned, that of underpayment of workers.  And, for that matter, it is oftenest introduced where the workers are already well paid.  It is possible only in successful and firmly established industries; and even in them, bad years may necessitate a temporary cessation of dividends to wages, and generate resentment in the minds of the laborers, who do not know the precise status of the business.  Moreover, since the workers cannot be expected to reverse the procedure in lean years and contribute to the maintenance of the business, it is necessary, in most industries, to reserve a considerable sum from the profits of fat years to tide over possible periods of lean years.  It might be possible to enforce by law the accumulation of such a reserve fund, and then the distribution of a fixed percentage of the net profits of the business to labor-instead of permitting all the profits to go into the pockets of owners or stockholders.  But such a plan will probably be superseded by or incorporated into some more comprehensive solution for industrial evils, a scheme that can remedy other wrongs besides that of inadequate wages.

(2) Cooperation in production involves democratic management of a business as well as a more radical sharing of its profits.  The workers themselves contribute the capital, elect the managers, and divide the profits.  By their votes they can determine hours of work, and arrange conditions to suit themselves, so far as their capital allows.  Cooperation-when fully carried out-is socialism on a small scale introduced into the midst of a capitalistic regime.  Its defects are, first, that it is difficult while that regime lasts to find capital enough-since those who have capital to invest usually prefer to manage the business themselves or to entrust their money to a business conducted on ordinary lines; secondly, that failure means the loss of the hard-earned savings of workingmen; thirdly, that it is difficult to retain skillful managers,