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Salient. An Organ of Student Opinion at Victoria University College, Wellington N.Z. Vol. 21, No. 10. August 6, 1958

Profit Sharing

page 10

Profit Sharing

It is not enough that the labouring masses should enjoy good wages, short hours and security against the evils of sickness, accidents, unemployment and old age. The best interests of the wage-earning classes, and of society generally, demand that wage-earners should be something more than wage-earners. They have an undoubted moral right to share in the profits and control of industry as well. Society must rebel against the detestable heresy that the instruments of production fall under the ownership and control of a very small proportion of the population while the great majority can hope only for good living conditions as wage-earners and industrial dependents. Such an unnatural and immoral theory is degrading and reduces human personality to the status of a mere commodity. It also ignores man's undoubted right to own productive property—a right which is not the God-given prerogative of a few, but of all.

Captains of industry must be forced to accept the Christian doctrine that the primary right of property is not the right of exclusive control but the right of common use. This means that the interests of the individual owner must be subordinated to those of society as a whole. In the words of St. Ambrose, the earth was intended to be "the common possession of all" and "the earth belongs to all, not to the rich." St. John Chrysostom writes: "Are not the earth and the fullness thereof the Lord's? If, therefore, our possessions are the common gift of the Lord, they belong also to our fellows; for all the things of the Lord are common."

This right of common use demands first and foremost that the surplus profits of industry be shared among the workers. It must be bora in mind that what I am recommending is not philanthropy but the dictates of natural justice. It is not charity but justice that is required. Acting on this principle, St. Thomas Aquinas declared that a man's superfluous goods belong by natural right to the poor. St. Gregory the Great wrote likewise that "when we give necessaries to the needy, we do not bestow upon them our goods; we return to them their own; we pay a debt of justice, rather than fulfil a work of mercy." St. Jerome quoted with approval a saying that was common in his time that "all riches come from iniquity, and unless one has lost another cannot gain." This doctrine springs, of course, from the intrinsic worth and sacredness of the individual and the essential equality of all human persons.

After just wages have been paid to employees and a fair dividend has been given to investors, and the other expenses of production have been paid, the wage earners should share the surplus. They should share it not with the owners of capital but with the managers of the particular business concerned. No part of the surplus would go to the owners of capital as owners; it would go only to those capitalists who participate in actual management or production and in proportion to their productive importance. This means that people who purchase shares in companies and corporations are to be restricted to a fixed dividend rate of about six per cent, of the profits, in much the same way as holders of debentures or bonds. At present the officers of a corporation must divide the surplus profits with the inactive shareholders. In the system here proposed, they would have to share the surplus with all the workers. An important social effect of the limitation of dividends would be the discouragement of unproductive and anti-social speculation. When the annual return on shares was fixed and limited their value would fluctuate only slightly on the stock exchanges. It would have little attraction for the professional speculators. Thus the corporation would be operated as a productive concern, not as a means of gambling.

Incidentally, I can never understand how people who profess religions such as Methodism and Seventh Day Adventism can intransigentally oppose gambling and yet turn a blind eye to its operation on the stock market. It seems inconsistent to me.

The disposition which society now makes of industrial profits is uneconomic, unscientific and inefficient. The current practice over-rewards idle ownership and encourages absentee control of industry. It is both more just and more scientific that surplus profits should go to those who create them and who require them as a stimulus to increased production.

Not only is profit-sharing based upon the dictates of natural justice but it also has the additional merit of providing a powerful incentive for increasing production. Not only is it just that profits should be shared but also that control and ownership should be shared. It is paradoxical that in a political democracy an industrial autocracy can, or ought to survive. Companies should be democratised so that control is in the hands, not of absentee shareholders, but of the managers and employees. There is no earthly reason why business concerns should be subject to control by outside investors rather than by those who actively participate in the operation of the business itself. Furthermore, the law should provide for the issuing of workers' shares. This is an experiment that has been tried overseas and in many cases has proved successful. From the point of view of stimulating worker interest and establishing him as a man and not a machine tender the ownership of interest in the capital of the industry is perhaps the best method next to complete ownership.

T. J. Kelliher.