Co-operation is a vital essential for the reconstruction of industry. It is the true antidote to revolution. It will only be forthcoming in industry when sound economic conviction operates in an atmosphere and environment of justice and sympathy. As long as economic fallacy is allowed to permeate the minds of employers and employed, leading them to reject or belittle the material advantages of co-operation by representing it as inimical to their respective interests, and as long as the want of sympathy and justice continues to feed that fallacy, co-operation will never emerge as an integrating force in industry. The remedy is, therefore, obvious. CHAPTER XXVIII THE RIGHT RELATIONSHIP BETWEEN EMPLOYERS AND EMPLOYED 3. PRODUCTION IN INDUSTRY The Importance of Production—What Production Depends on—The Workers’ Notion of the Secret Fund—“Passing it on”—The Workers’ Belief in Restricted Output—Introduction of Time- and Labour-Saving Appliances—Payment by Results—Subdivision and Simplification of Process—No “Niggling” at Prices. The Importance of Production It is unnecessary to stress the national, the social, the industrial need for production. That does not mean more output with no improvement in the ratio of efficiency. It means more output accompanied with increased efficiency and therefore lower cost of production. It is on cheapness of output that the demands of the home and the foreign consumer for commodities largely depend. Restriction of output means for the community high costs of commodities, less purchasing power, a lower standard of living; it means that there will not be available either the wealth to finance social reforms, or the capital required for industry, and therefore worse conditions and less work for the workers; it means reduced export trade and adverse exchanges. Apart from production, there is no fund from which labour can be paid, the only fund is that consisting of the commodities and services and values which are produced. As the fund is made greater by the joint efforts of employers and workmen, so can the wage paid to the worker be increased. One worker is needed to realize the goods, values or services produced by another worker. If both increase their output as much as is reasonably practicable, each has the maximum available for exchange, and both can secure for themselves the greatest possible standard of living. On the other hand, if one particular worker limits his production, say, by one-half of its reasonable maximum, he not only injures himself and his dependents, because he throws away the opportunity of disposing of one-half of his labour, but he also injures the other workman who, directly or indirectly, exchanges with him, and who would like to exchange the whole of the goods and values and services which he produces, but who is prevented from disposing of more than one-half by reason of his opposite number’s selfish and stupid action. The present