The Achievement of William Harold Hutt

by Rafe Champion

"I was born in the last century, the 3rd of August, 1899, of a working class family in London, England. My father was a compositor. He was a well educated man; he left school at the age of 12 but when he left school he could do problems in arithmetic which very few children in the United States could do today, even at the age of 16...and he was very well read, he bought the complete works of Dickens, which he purchased out of his meagre earnings as a compositor".

His father was a reluctant union member because this was required by the employer, W H Smith and Son,

a concession to the trade union which Hutt senior regarded as weak-kneed on the part of the firm.

Bill Hutt completed high school during World War I and trained as a pilot but the war finished before he gained his "wings". He took the B.Com. degree from the University of London where he was taught by Cannan and became  friendly with Arnold Plant, a fellow student. From 1924 until 1928 he worked as a personal assistant with the publisher Sir Ernest Benn.

He wrote his first paper in 1925 to describe how the enduring mythology of the evils of industrialisation and especially the cotton mills can be traced to the deliberately one-sided account by the "Sadler Committee" report of 1832. According to Friedrich Engels "The report was emphatically partisan, composed by strong enemies of the factory system for party ends...Sadler permitted himself to be betrayed by his noble enthusiasm into the most distorted and erroneous statements". Several generations of socialist propaganda directed against both capitalism and the class system have probably enabled most people to remain ignorant of the bitter resentment that was aroused among the upper classes (essentially the landed gentry) and the Tory Party towards the factories and the rising middle class who made their living in trade and commerce.

The absurd attitude of the upper classes towards paid employment was apparent in the distinction between amateur and professional cricketers, up to the 1960s. The grubby professionals "players" used separate dressing rooms from the amateur "gentlemen" and they used different gates to enter the field of play. Of course that was just the tip of an iceberg of traditional prejudices and practices which undermined excellence and achievement in practically all areas of public life (especially commerce and education) and unfortunately prompted equally debilitating rejoinders from socialist reformers.

It is difficult to avoid the impression that the Industrial Revolution was very badly planned, both in its timing and its location. As to timing, the onset of the protracted Napoleonic Wars in the midst of the process diverted a massive amount of manpower and money into the war and away from domestic investment, while international trade practically ceased. Hence a great deal of the misery and privation in the early 1800s that are blamed on the new industrial system can more reasonably be attributed to the war.  England was not a good location because the class system produced many perverse effects. One of these was the way that many of the successful new entrepreneurs bought their way into the gentry and hid their past as a guilty secret. This contrasts with the proud tradition of the self-made man in the United States. In politics, the Tory Party made common cause with socialist and "humanitarian" reformers to regulate and restrict the factory system while remaining blind to greater evils and abuses in other industries such as farming (where they themselves were the masters) and domestic service (in their own homes).

Hutt's argument is supported by Lord Macaulay's 1830 rejoinder to Southey, the Poet Laureate who advocated big government, bigger public debt and abominated free trade and the factories. The reader is warned that the relevant part of Macaulay's long paper begins almost half way through, at the point where he discusses an imagined conversation between Southey and Sir Thomas Moore, "or rather between two Southeys, equally eloquent, equally angry, equally unreasonable, and equally given to talking about what they do not understand."  

Benn was so impressed that he printed hundreds of copies of Hutt’s paper for private circulation. In 1928 Hutt left England to take up a post as senior lecturer at the University of Cape Town where his friend Plant was the professor. When Plant moved on to a chair at the LSE, Hutt assumed the vacant chair and in due course became the Dean of Commerce.

Wage Fixing and Collective Bargaining

One of the features of Hutt's books was his penchant for lengthy subtitles. His first book, The Theory of Collective Bargaining (1930) was subtitled A critique of the argument that trade unions neutralise labour's 'disadvantage' in bargaining and enhance wage-rates by the use, or threat, of strikes. [This book is on line at Questia]. He explained how the threat to disrupt the entrepreneurial process by the concerted withdrawal of labour (boosted by supplementary force) has:

1. severely curtailed the wages-flow;

2. raised the cost of the capital resources which constitute labour's tools;

3. extensively attenuated the wage-multiplying power of the assets provided;

4. aggravated inequalities of income;

5. materially worsened industrial relations, tending to destroy the workers' dignity, their pride in achievement and their sense of purpose;

6. often frustrated attempts to improve conditions of employment in the work-shop and office;

7. mitigated against the market provision of employment security;

8. through the increasing pressures of 'wage-push' in recent years, been mainly responsible for the political expediency of inflation.

The cure that he proposed was the enactment of the principle underlying the British Combination Acts of 1799 and 1800 adapted to the present day. The reform suggested:

1. would bring to an end an era of distributive injustices and tolerated poverty-creation;

2. would raise the material welfare of perhaps 90% of the people;

3. would release resources for new occupations in which the product enriches life;

4. would enormously increase income security; and, above all,

5. would bring about an unprecedented improvement in the quality of human relations.

Hutt challenged the "conventional wisdom" that the workers were initially at a disadvantage in dealing with management, a disadvantage which justified the militant action of trade unions. In reply, Hutt showed that the main aims of the early trade unionists were to frustrate the legitimate aims and ambitions of the unemployed. Part of his argument can be found in this extract from Collective Bargaining..

He returned to these themes some years later in The Strike Threat System with detailed arguments and evidence to show that militant trade union activity could not effect transfers from capital to labour at large, but only to favoured groups within labour, at the expense of other labourers and the rest of society as well. Apparently this is acknowledged by some apologists for the British trade union movement. Hutt quoted Baroness Wootton on the record as saying that it is the duty of trade unions to be antisocial.  The most striking example of this process in Australia is probably the waterside workers and the commercial building unions, the two areas where communist leadership remained in place persisted despite the efforts of Bob Santamaria's Catholic "groupers" and their helpers who fought the communists inside the Australian trade union movement during the early 1950s.

An important part of The Strike Threat System is a chapter which de-constructs the mythology of Labor's Bitter Struggle.  For example he corrected the garbled story about the Tolpuddle martyrs, one of many that are handed down to maintain the rage in the "class war". The Webbs described the conviction and transportation to Australia of the five leaders of the movement as "a scandalous perversion of the law" and an instance of the "policy of repression" of the workers combinations. In fact the men were charged under the "Unlawful Oaths Offences Act" after the authorities had warned them to cease their activities which included elaborate rituals for induction into the movement. In any case, it was not combination that was illegal, it was the activity of combining for the purpose of putting up prices and the law applied to suppliers of goods, not just labour unions. 

It might be asked what purpose the trade unions might serve, to which Hutt stated emphatically that he had no wish to see the unions abolished. They had (and have) many useful functions in addition to acting as friendly societies for health and welfare provision. They could help their members to improve their qualifications and locate the best paid work, and they could provide  assistance to members subjected to unfair treatment by management.

Vote Buying Behaviour - the Achilles Heel of Democracy

Hutt's work on the economic impact of the labour unions in the nineteenth century drew his attention to the rise of the vote-buying motive in politics as the working classes gained the vote. This led him to some insights about politics and the behaviour of politicians and political parties that have become best known from the work of Schumpater and even more so from the modern school of thought called public choice theory, led by Tulloch and Buchanan. In fact the Australian historian Keith Hancock reported this phenomenon in his book Australia (1930). He described how the major parties were forced to compete for the votes of minority interests in "marginal" electorates where the major players are evenly matched.

"The same necessity which moderates the zeal of Labour politicians moderates the ardour of their opponents. They, too, must go scouting from their base of class interest and instinct and theory far out into the electoral no-man's land, where free companies and guerrilla mercenaries wonder irresolutely between the two armies which chaffer for their support. The free companies are sometimes ridiculously small but their adherence to one side or the other is decisive of electoral battles. Their numbers may be contemptible but their price is high". (p. 189).

One of the most extreme examples of vote buying behaviour was the apartheid system in South Africa, to which Hutt devoted a book. Other examples which appear in his book Politically Possible include monetary policy, income transfers, Keynesianism and the strike-threat system. Hutt's proposal to minimise the damage inflicted by factional interests, whether majorities or minorities, is the constitutional entrenchment of safeguards to protect everyone from abuses of power by politicians and parliaments. Of course most traditional safeguards are at risk from the doctrine of parliamentary sovereignty according to which a government is entitled to do anything it likes if it can raise a majority of votes among the elected representatives.

Hutt's second book, Economists and the Public appeared in 1936, the same year as Keynes' General Theory. Hutt argued that many economists had sacrificed their intellectual integrity by supporting "politically feasible" policies instead of telling unpopular truths about the policies that were required to handle the depression. He repeated this message some years later in " Politically Impossible...".

As far as I can make out, Economists and the Public fell stillborn from the press. Subtitled A Study of Competition and Opinion it is a great work of classical political economy. Hutt wrote in the Preface "The present book has arisen out of what I originally intended to be an important side-issue in a study of a certain equalitarian and democratic ideal, namely, the competitive system. But further reflection caused the problems here dealt with to acquire major importance and demand separate treatment".

The "side-issue" that he felt obliged to address was the overwhelming opposition to free enterprise capitalism and free markets among intellectuals, politicians and other people of influence. Hutt's deliberations on the anti-free trade mentality drove him to a major survey of the nature of the social sciences and their relationship to public opinion and politics. "I have simply tried here to bring to light the causes which lead to current fallacies being so uncritically accepted". Surprisingly I do not recall Hayek making reference to this pioneering work in his subsequent deliberations on the intellectual props of socialism and anti-market sentiments. 

The first chapter, on economists and rationalists, surveys the situation where both practical men and the overwhelming majority of the literati, both radical land conservative, were hostile to classical economics and its implications. He suggested that the retreat of economists into 'pure theory' may reflect their realisation that no authority is attached to their opinions on matters of policy. He then moved on to explore the ways that 'custom thought' and 'power thought' frustrate the application of 'rational thought' in the social sciences and politics. One of the many case studies and historical incidents which he described was the retreat of John Stuart Mill from laissez faire and the consequences in theory and practice due to his very considerable influence. It is not feasible to summarise 400 pages of dense arguments here and it may turn out that critical analysis reveals that Hutt's contribution has merely historical interest because it is superseded by the work of Hayek and others. Still, it is a remarkable achievement for a scholar working in relative isolation and pursued as a sideline to his major tasks and interests as a teacher, his administrative duties as Dean of the Faculty of Commerce and his other writing and research projects.

One would like to see a replay of history with the economists, especially Lord Keynes, following the advice and the example of Bill Hutt. In Politically Impossible: An Essay on the Supposed Electoral Obstacles Impeding the Translation of Economic Analysis into Policy he proposed a "dual formula" for economists to deal with the problem of unpopular policies. He quoted Milton Friedman on the duty of economists to prescribe what should be done, without courting political approval. He then noted that Friedman had departed from his own advice on occasions.

"Friedman's maxim implies that the economist's role is to do this (the ideal) and not to do that (the expedient). I suggest it is the economist's role and duty (in public policy discussions) to do both. Why should not advice proferred typically take the form of saying to the politicians (and indirectly to electorates) with complete candour, something like the following?"

'In our judgement, the best you will be able to get away with is programme A along the following lines; but if you could find a convincing way of really explaining the issues to the electorate, our advice would have to be quite different. We should have to recommend programme B along the following lines'."

"I am not suggesting that economists ought ever close their eyes to political realities. On the contrary, when they are concerned with the practical applications of their science, they ought in every instance to bring voting prospects into the picture - but explicitly."

The Failure of Debate

Shortage of time and space precludes discussion of Hutt's views in his books on postwar reconstruction, Says Law and Keynes, except to mention a point that he raised in the Prologue to his second book on Keynes. [This book is on line at Questia]. This is the failure of Keynesians to come to grips with (a) the U-turn to "classical" thinking and policy prescriptions in the later essays of Keynes (including posthumous essays which were almost suppressed) and (b) the possibility of scholarly and carefully considered criticism of the doctrines and methods of The General Theory. The failure to engage in polite and scholarly debate with opponents remains topical because it has been a constant feature of socialist thinkers to the present day, notably in their refusal or their incapacity to engage in genuine dialogue on economic policy and economic rationalism in Australia.

The reasons for the extraordinary seductiveness of the notions which Keynes' disciples gradually systematised into 'Keynesianism' and later rehabilitated into 'neo-Keynesianism', concern the psychology of opinion- the genesis of intellectual fashions, creeds and ideologies. The broad topic is one that began to interest me as a young man...I recorded the results of my early endeavours to clarify my thoughts on the subject in Economists and the Public.

That book was in press when Keynes’ General Theory appeared but he managed to insert some brief comments on it, predicting "that The General Theory would have a quite unparalleled influence by reason of what I judged to be its demerits as a contribution to thought". This prediction turned out to be accurate. The arguments, or the appearance of arguments in The General Theory carried all before them, pleasing the public by reinforcing their prejudices against earlier economists, telling the politicians what they wanted to hear, and impressing intellectuals by the language of science and the impression of profundity that was conveyed by its exciting radicalism, its obscurity and its bad organisation (which bewildered even his admirers and his uncritical expositors). Those of us who have picked up The General Theory on and off over the years, thinking that this was one of the great seminal books of the 20th century that we should try to comprehend, like the rudiments of Einstein's relativity and Freud, only to find that we could make no sense of it, are excused, because indeed it makes no sense (like a great deal of Freud - see Ian D Suttie!). 

In conclusion, it is a great pleasure to come across a body of important but largely ignored or forgotten work by a great scholar, and it is exciting to have the medium at hand which can be used to widely and economically circulate Bill Hutt's thoughts to a wider audience.

W.H Hutt

Revivalist4

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