ng.

How then are we to cope with this problem of retaining our economic
position? We can only hope to do it if the present financial
difficulties and obstructions working through the exchanges, by which
international commerce is restricted and constrained, are removed. We
can only do it if and so long as the conception of international
division of labour is maintained. And we can only do it if--granted that
we can induce the world to accept this principle of international
division of labour--we can prove ourselves, by our economic and
productive efficiency, to be the best and cheapest producer of those
classes of goods in which our skilled labour and fixed capital is
invested.

Assuming the financial difficulty is overcome, and that the old regime
of international specialisation revives, can we still show to the world
that it is more profitable for them to buy goods and services from us
than from other people? Can we compete with other industrial countries
of the world? The actual output of our labour in most cases is far less
than its potential capacity, partly because of technical conservatism,
and partly for reasons connected with the labour situation. How are we
to mobilise these reserve resources. I have only space to deal with the
second of these problems. In Germany labour is well disciplined, and has
the military virtues of persistence and obedience to orders in the
factory. But we cannot hope to call forth the utmost product of our
labouring population by drill-sergeant methods.

In America this problem is a different one, because the American
employer is often able to take full advantage of his economic position.
For he has a labouring population of mixed nationality, which does not
readily combine, and he can play off one section against the other.
British employers cannot, if they would, deal with British labour on the
principle of Divide and Rule. There is only one method by which we can
hope to call forth this great reserve capacity of British labour, and
that is by securing its confidence. If Free Trade is one of the legs on
which British prosperity rests, the other is goodwill and active
co-operation between the workman and his employer. How is that goodwill
to be gained?

The solution of that problem is only partly in the hands of the
politician; that is one of the reasons why it is extremely difficult to
suggest an industrial policy which is going to hold out the hope of
reaching Utopia in a shor