Published by Victor Perton as part of Australian Liberalism: The Continuing Vision
You have invited me to speak of the interdependence of political and industrial leadership in the modern world. I am delighted with the subject, for I have lived with this problem for many years as a political leader, and am now given the opportunity of setting down, in a more or less ordered form, some of the results of that experience.
I begin by saying that we must bring our vocabulary up to date. The word 'statesmanship' has usually been applied to the highest level of politics. It has connoted the management of state affairs which, when the term came into use, were political affairs, 'pure and simple' - if you will forgive such an imaginative expression. Those were the years, not so many generations behind us, when even lawyers could profess to find an intelligible distinction between governmental functions and business functions, with mutual exclusiveness.
Those days have gone. The lines have not been merely blurred; they have disappeared under the pressure of modern complexities. Today the management of state affairs cannot be artificially confined in its scope. Politics and industry are deeply involved with each other, acting and re-acting upon each other. The qualifications of the modern statesman will be inadequate or incomplete unless he is conscious of the problems of industry and the impact upon those problems of political policies and actions. This is not just to say that there has been a change in political outlook, it is also to say that there has been a change in industrial outlook. Neither change is as yet complete.
Industrial activities are, in the modern world, no longer purely private matters, to be resolved by private decision alone in the light of unfettered competition. I beg of you not to think that I suffer from the reactionary socialist doctrine which discourages the rewarded enterprise of the individual and attributes quite mystical faculties to that omniscient and omnipotent body, the State. What I am saying is that neither politics nor industry can live alone. The old fashioned 'sturdy individualist' who told government to keep clear of his business, that he wanted neither help nor hindrance from it, is as dead as the dodo. The doctrinaire socialist still flourishes, but, in my country at least, his voice becomes fainter.
It is frequently charged against those of us who are not Socialists that we are reactionaries; that we want to turn the clock back; that we yearn for a restoration of laissez-faire. In the modern world, this is quite untrue. The truth is that it is the non-Socialists who have moved with the times. I can understand, as an intellectual and historical exercise, how Socialism attracted the support of radical thinkers after the industrial revolution in Great Britain, the creation of 'dark satanic mills', the horrors of child labour, when industrial power was in a limited number of hands, when the rights of employed people were either denied or imperfectly recognised, when the infant Trades Unions were too commonly regarded as subversive bodies, when social services as we now know them were almost non-existent. It is not strange that under these circumstances there grew up in many thoughtful minds the egalitarian belief that the creation of social and industrial Justice demanded a high measure of uniformity, and that uniformity could be achieved only by the mastery and management of the State.
But we know, and occasionally admit, that there is no uniformity among personalities, or talents, or energy. We have learned that true rising standards of living are the product of progressive enterprise, the acceptance of risks, the encouragement of adventure, the prospect of rewards. These are all individual matters. There is no Government department which can create these things. What governments can and should do, when encountering some new problem or developing state of affairs, is not to say 'the Government will run this,' but first of all to seek the private enterprise answer, to help the individual to help himself, to create, by legislation and administration, a social economic and industrial climate favourable to his activity and growth. ...Clearly the definition and function of Statesmanship have widened.
Industrialists may protest that politicians should not interfere in business affairs. But it is impossible to believe that in a complicated world of international trade and finance, of economic theories and policies which are no longer academic exercises but touch and concern all forms of human activity, and of the domestic social demands which have brought about what we call 'the welfare state,' governments, however non-socialist, can be passive observers.
Today's industrialists, whether primary or secondary, and however individualist they may be, demand and obtain government intervention by way of aid and organisation. I will illustrate from my own country. There are internal marketing schemes for the handling of certain primary products and price stabilisation schemes - administered through various boards - for such commodities as dairy products, wheat, and sugar. The farmer is still a free agent, farming his own land and producing his own goods. But he has called government aid in to secure for him the adequate and reasonably stable prices and if possible stable markets which he needs to make his individual enterprise effective and profitable.
Under special circumstances, government provides subsidies. One example is butter, where a domestic subsidy gives to the dairy farmer some assurance of a profitable domestic price to be set off against his frequently unprofitable price on world[ markets of considerable instability. Another is a recently introduced bounty on superphosphates, designed to encourage the use of fertilisers and the consequent increase of production and reduction in costs.
The manufacturer has frequent resort to the Tariff Board and special statutory authorities for customs tariffs and bounties. In the broad sense, he looks to Government for assistance and protection. He may not put it in so many words, but he is acutely conscious of the interdependence of government and industry.
But perhaps he tends to over-simplify the problems of government. He is occasionally disposed to see his own industrial problem as if it were in a national vacuum. 'My business is being adversely affected by lower-cost imports; the solution is a higher tariff; please provide it!'
This is, of course, a dangerous over-simplification. Protective tariffs are designed to avoid unfair competition; but they should not be designed to prevent all competition. Complete domestic monopolies are inconsistent with international trade.
Now, whatever could have happened domestically in the absence of government intervention and controls, it is clear that international trade is today so involved with government trade services, trade treaties, international conventions and export inducements, that it could not survive without them. Speaking again of my own country, this has been recognised by both government and industry. We have regular consultations with industrial and financial leaders. We are assisted in specific fields by many groups of advisers. We have an expanding overseas Trade Commissioner Service which provides an exploratory instrument which individual industrial exporters could probably not afford. An Export Development Council of leading businessmen advises us on ways and means of increasing our export income. Two notable results have been the creation of the Export Payments Insurance Corporation - with outstandingly good results - and the introduction of a scheme of tax concessions successfully designed to encourage more production for export and a more vigorous search for and development of new industrial markets overseas.
We are, of course, all familiar with such inter- governmental agreements as those relating to wheat and meat and sugar and certain metals. On our side, at least, all such agreements are worked out in the closest consultation with the industries concerned.
The Trade Treaty is now a commonplace. It enlarges the horizons and opportunities of individual producers while helping to bring into a healthy condition, the trade and financial balances which are a constant care of government.
I will not seek to multiply instances or make anything like a complete catalogue. But I
will say a once that such examples as I have given are al examples of the inevitable
inter-dependence of political and industrial leadership in the modern world. Once this is
acknowledged on both sides, the future become
Thus, it is still the practice of many economists and financial writers to refer to capital expenditure in 'the public sector' and in 'the private sector' as if they were referring to two mutually exclusive and indeed actively competitive zones. Nothing could be more wrong When private capital is laid out upon capital expansions of industry, this is done on the assumption that public capital expenditure will be made to provide the streets or roads, the water services, the lighting services, the schools, the means of public transport, the housing, without which an extended industry could not hope to carry on. I would be prepared to say that in my own country, the overwhelming bulk of expenditure in the so-called public sector is basic expenditure in the private sector.
There are other old prejudices and limitations of outlook in the industrial world. Let me look at some of them quite frankly.
In the economic field, now so directly and indirectly affected by government economic policies and actions, it has become essential that industrial leaders should understand something of politics, should, by getting to know something of the complexity of national and international economic problems, come to understand that it is dangerous as well as selfish, to behave like a pressure group. We have all seen occasions when representative bodies in the business and industrial world have demanded higher import duties at a time when the best judgment of a wise and well-informed government might lead it to increase imports in the interest of some international trading advantage. It is, I suppose, natural that many men in industry should take short views and be affected by the prospect of some immediate advantage. After all, very few of us look over the wall of our own garden to get a picture of the outside world. It is simple, and tempting, to demand reductions of taxation when things are going well (so that they may go even better!), and not always popular to point out that, while deficits in Government budgets are appropriate in times of recession, they could hardly be deliberately planned at a time of expansionary growth and inflationary pressures.
In short, there is still a considerable failure of mutual understanding Governments have a disposition to be overstatistical and sometimes - if I may make such a confession - to lean too heavily on economic orthodoxy - or its current version - in a highly unorthodox and muddled world, where the laws of reason or of nature receive much violent treatment. We have discovered that, in evaluating the effects of some economic measure, statistics are not enough, for in their very nature, statistics are always out of date. This is one of the reasons for my own Government’s consultations with industrial leaders whose knowledge is gained at first hand in the factory and the market-place.
It is one of the occupational hazards of political leadership or responsibility that, in our anxiety to avoid the dangers of travelling in a 'wilderness of single instances,' of being induced by hard cases into bad laws, we may, under the compulsion to make laws of wide and general application, come to treat men and women as just ciphers in a calculation, and not as individual human beings whose individual welfare and development must be the greatest ultimate concern of government.
Avoidance of this hazard requires constant contact with people as well as papers with practical managers of industry as well as economists, with the people who provide the revenues as well as those who spend them, with Trades Unions as well as organisations of employers.
For, if we are to be civilised people in truth as well as in name, we must be members one of another. For me, the perfect society would be one in which, by equality of opportunity and a full development of individual character and talent, each citizen was independent in his own heart and mind, but all citizens were inter-dependent in all social rights and duties.
Has it ever occurred to you that, in spite of our parliamentary democracy, the characteristic of which is that the rulers and the ruled are the same people, putting into or casting out of Parliament those of their own number whom they freely choose, and thus coming to obey laws of their own making, we still hear on all sides 'why doesn't the Government do this or that or cure this or that?', as if the Government was a foreign body. I cannot suppose that this engaging habit is peculiar to Australia. But it illustrates a serious defect in our social development. Politics is too often, and by too many politicians, seen as a clash of material] interests, a 'dialectical materialism.' Employment is seen by too mary advocates, as importing an inevitable conflict between the interests of the employer and of the employee. And there are those with 'webbed and inward turning eye' who appear to believe that there is a conflict between government and industry, that they do not understand each other and never will, and that in this conflict each must get the better of the other if it can. I imagine that the pure Socialist, the stern unbending nationaliser of all industry, will seek to get rid of this conflict by making Government the master. If our antipodean experience counts for anything, the creation of a nationalised industry does not dispose of the other problem of employer-employee relationships but rather complicates them by adding political overtones to industrial demands.
In all these matters, we need a greater sense of interdependence. The great common interest in any industry is that it should be successful, growing and profitable. Only thus can it provide a growing employment, good wages and conditions, and personal security.
I do not want to be misunderstood on these points. Though I am the leader of a great non-Socialist party, I am not a doctrinaire non-Socialist. I recognise that there are some things which, in their very nature, lend themselves to government management or control. Over our history in Australia, we have established government control of the postal, telegraphic, and telephone services, the international communication services, the railways. In a country like Australia at least, such things lend themselves to Government monopoly control, which nobody seeks to change.
But the practical difference between the Socialist and the non-Socialist seems to be this. People like myself, before resorting to State Management, first seek for the private enterprise answer. Only when that is not forthcoming do we put the Government in charge. The Socialist approaches the problem from the opposite direction. He seeks first the Socialist solution, and turns reluctantly to private enterprise only when the Socialist plan proves to be unworkable.
...Certain matters which seemed simple to me when I was young now seem to me most difficult. This is inevitable when you begin by seeing the problem from a distance and end by seeing it from the inside. One lives and learns. Some things I have learned to believe most strongly can be put in a short series of propositions.
In brief, it is in co-operation that we will do best. Within that framework, there will still be conflicts about wages and hours and long leave and retirement benefits and health schemes, and even mutual criticism of government's bureaucratic tendencies and the insensitivity of the individual manufacturer to the overall economic needs of the country. But they will all be more readily resolved if all concerned are conscious of the paramount need for co-operative effort in what is seen to be the common cause.
First Baillieu Lecture: A British Institute of Management publication - 1964
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