第9章

Somesuchbusinessesorgroupsofbusinessespossessavirtualmonopolyofthemarket，andcancontroloutputandprices，soastosecureabnormaldividends。Suchcontrolis，tobesure，neverabsolute，itscontrolofpricesbeingsubjecttotwochecks，therestrictionofdemandwhichattendseveryriseofprices，andtheincreasingprobabilityofcompetitionspringingupifprofitsaretoohigh。Butqualifiedmonopolies，earningdividendsfarlargerthanareeconomicallynecessarytosupporttherequiredcapital，areeverywhereinevidence。Trusts，cartels，pools，combines，conferences，andtradeagreementsofvariouspotencyandstringency，pervadethemorehighlyorganisedindustries，substitutingtheprincipleofcombinationforthatofcompetition。Inallmajorbranchesofthetransporttradebylandandsea，inlargesectionsoftheminingindustry，intheironandsteelindustryandinmanybranchesofmachine-making，inmanyofthespecialisedtextiletrades，inthechemicalandothermanufactureswherespecialscientificknowledgecounts，inmanydepartmentsofwholesaleandretaildistribution，and，lastnotleast，inbanking，financeandinsurance，freedomofinvestmentandofcompetitionhavevirtuallydisappeared。Toassumethatfreshstreamsofcapital，labourandbusinessability， havelibertytoenterthesefieldsofenterprise，andbytheirequalcompetitionwiththebusinessesalreadyinpossessionsotoincreasetheoutput，lowersellingpricesandkeepinterestandprofitsatabare\'costs\'level，isachildishtravestyoftheknownconditionofthesetrades。Toaffirmthatsuchmobilityandlibertyofcompetitionisthesolenormal\'tendency\'，andthatthemonopolisticandcombinativeforcesmerelyrepresentfriction，issograveafalsificationofthefactsastoputoutofcourtthewholemethodofeconomicinterpretationwhichisbasedthereon。Concretecapitalhasnoneofthequalitiesassignedtotheabstractcapitaloftheseeconomists。Itisneitherinfinitelydivisible，norabsolutelymobile，noraccuratelydirected，norlegallyandeconomically\'free\'todisposeitselfinanypartoftheindustrialsystemwherethecurrentinterestorprofitexceedstheaverage。Overlargetractsofindustrycombinationismorenormalandmorepotentthancompetition，andwherethisisnotthecase，themostcompetitivetradeswillbefoundhoneycombedwithobstructiveclots，businessesenjoyingspecialadvantagesandearningcorrespondinglyhighprofits。 §；13。Becausecertainqualitiesofbusinessabilityarerequisite，towitastuteness，keennessofjudgment，calculatingpower，determination，capacityfororganisationandexecutiveability，itissometimesclaimedthatthehighratesofprofitwhichaccruefromsuchbusinessesaswehaveindicatedarereallythecreation，notofmonopolyorcombination，butofthetalentsoftheseentrepreneurs。Buteventhoughitbeadmittedthatsomesuchabilityisessentialtoproduceortomaintainasuccessfulcombination，cantheentireprofitsofsuchacombinationbeimputedtothisabilityorregardedasitsnaturalandproperreward？Takethecommoninstanceofthe\'forestaller\'，whostopsthesupplyofsomecommodityonitswaytoamarket，securesthewholesupplyatcompetitivepricesfromthevariouscontributors，andthensellsitatamonopolypricefixedbyhimself。Aretheprofitsofthiscorneraproductofabilityandarewardofability，andnota\'surplus\'representinganartificiallycontrivedscarcityvalue？ Ortakethecaseofacontractingfirm，whichpersuadesalltheotherfirmsinapositiontocompetetocomeintoanarrangementastoaminimumtender。 Aretheextraprofitsduetosuchanarrangementtoberegardedaswagesofability，becausesometactwasneededtoworkthething？Butsupposewegrantedthewholecontention，andagreedthattheextradividendspaidtoshareholdersinfavouredorprotectedbusinesseswerereallyproducedbytheabilityoftheentrepreneurormanager，whatthen？Itisnotprovedthattheseextraprofitsare\'costs\'，not\'surplus\'。Onthecontrary，thefactthattheycanbetakenasextradividendsorbonusesbytheownersofthecapital，insteadofpassingin\'wagesofability\'totheentrepreneur，isproofpositivethattheyaresurplus。Foriftheywereasubsistencewageofability，orevena\'prize\'，essentialtoevokesomespecialoutputofskillorenergy，theycouldnotbethusdivertedfromtheentrepreneurtotheshareholders。Infact，thereisnoreasontosupposethatanyveryrareorconspicuousabilityisevincedinworkingasuccessfulpoolorcombine，oreveninorganisingasuccessfulbusiness。Stilllessistherereasontosupposethattheprofitsattendingsuchanenterpriseareinanywayproportionatetotheskillorenergyoftheentrepreneur。Everyoneisawarethatthecontraryisthecase。Indeed，sofarasscientific，professional，andbusinessabilityisindustriallyusefulandhasaclaimtoincome，enquiryshowsthatthereisnobettersecurityformobility，freedomofcompetitionandequalityofpayment，thaninthecaseofcapital。Inequalitiesofeconomicconditionsbetweenvariousclassesofourpopulation，involvinginequalitiesofnurtureandofeducation，andofeveryothersortof\'opportunity\' relevanttothediscovery，training，equipmentandsuccessof\'naturalability\'，setupaseriesofalmostimpenetrablebarrierstothefreeflowofnaturalabilitythroughouttheindustrialsystem，andgiverisetoanelaboratehierarchyofrestrictedemploymentswheretheratesofremunerationrepresent，notanyinherentservicesofability，butthedegreeoftherestrictioninrelationtotheimportanceofthework。Allsuchadvantagesofopportunityarereflectedinratesofpaymentfor\'ability\'whichcarryelementsof\'surplus。\'Thoughsomeportionofthehigherremunerationpaidtosuccessfulprofessionalworkersmayberegardedasinterestuponthecapital-outlayoftheireducationandtraining，thereisnoreasontoholdthattheextrapaymentisadjustedtothecostsofthisoutlay。Stilllesscananysuchargumentavailinthecaseofhighbusinessprofits。Thoughabilityandexpensivetrainingmaybefavouringconditionstosuchfinancialsuccess，restrictedcompetitionmustbeaccountedtheprincipaldirectdeterminantofallsuchextrapayments。 §；14。Thereremainsonefinaldemurrertoourdoctrineoftheunproductive\'surplus\'。Ifyoutakeintoconsideration，itisurged，alltheunsuccessfulaswellasthesuccessfulbusinesses，youwillfindthattheaveragereturnforcapitalandforbusinessabilityislowenough，notinfactmorethanrepresentsabare\'costs\'economy。Similarlywiththehighincomesearnedbythefewsuccessfulmenintheprofessionsandinotherwalksoflife。 Setthefailuresfairlyagainstthesuccessesandthereisnonet\'surplus\' totakeaccountof。 Butthiscontentionisonemoreabuseofthemethodofaverages。Tothechargethatonemanisoverpaid，itisnoanswerthatanotherisunderpaid。 Tothestatementthatsurplusemergesinthepaymentforsomeordersofcapitalorabilityitisnoanswertosaythatothercapitalandabilitydoesnotevengetitstrue\'costs\'orsubsistencewages。Theforceofthisrebuttalisstillfurtherstrengthenedwhenitisrealisedtowhatextentthesuccessofthosewhosucceedisdirectlyresponsibleforthefailureofthosewhofail。Fortheeconomicstrengthofthosewhosesuperioradvantageshavesecuredforthemapositionofcontrolwillnecessarilyoperatetomakethecompetitionofoutsidersdifficultandtheirfailureprobable。 Indeed，aportionofthegainswhichcombinationyieldswilloftenbeconsciouslyappliedtokillthecompetitionofoutsiders，ortorestricttheirtradetothelessprofitableorthemoreprecariousformsofenterprise。Butevenwherethisbusinesspolicyisnotadopted，theveryfactthatstrongfirmsand\'combines\'controlmanymarkets，must，bylimitingtheareaoffreecompetition，intensifythecompetitionwithinthatareaandsocausethefailurestobenumerous。 Thecontention，thattheexcessiveprofitsofsuccessfulfirmsarebalancedandinsomewaycancelledbythelossesofthosethatfail，isalsocontradictedbythepsychologyofthecase。Ifitcouldbeshownthatthechanceofwinningthesehighgainswasinfactanecessaryinducementtothewinnerstostaketheircapitalandbusinesscapacityinaninherentlyriskylineofenterprise，theremightbesomeforceinthisplea。Buttothemenwhoachievethesesuccessesbusinessisnotasimplegameofhazardinwhichtheyhavemerelythesamechanceastheothers。Successiscommonlyachievedbyforce，strategyandthepossessionofknownadvantages，andisusedtostrengthentheseadvantagesandsotoincreasecontinuouslythe\'pull\'bywhichtheyaccumulatetheirgainsandruintheirwould-becompetitors。Althoughtightformsofmonopolyareveryrare，looseorpartialrestrictionsuponcompetitionareverynumerousandoftenveryprofitable。 Alltheseextragains，issuingfromvariousformsofnaturalorcontrivedscarcityinallsortsofindustries，arerightlyclassedasunproductivesurplus。Manyofthemareasconstantandascertainastheeconomicrentsofland，ariseinthesamewayfromalimitationofsomeproductivefactor，andare\'unearned\'incomeinthesamesenseofthatterm。Otherofthesegainsaremorefluctuating，proceedingfromlessstableformsofprivilegeorcombination，butwhiletheyexisttheyequallybelongtounproductive\'surplus。\'8 §；15。Thedistinctionbetweenthatportionofthesocialincomewhichgoesasnecessarypaymentstosupportandevoketheenergiesofbodyandmindofwealth-producers，i。e。，costsofproduction，andthatwhichgoesasunproductive\'surplus\'tothosewho，possessingsomenecessaryinstrumentofproductionthatisrelativelyscarce，canexactascarcityprice，isfundamentalinavaluationofindustry。Forthissurplusnotonlyrepresentssheereconomicwaste，regardedfromthesocialstandpoint，butitcanbeshowntobedirectlyresponsible，asanefficientcause，formostofthoseparticularmaladiesinourcurrentprocessesofproductionandconsumptionwhichimpedetheeconomicandthehumanprogressofthenation。 Forifouranalysisofthissurplusiscorrect，itconsistsintheseizureofalargeportionofthefruitsofindividualandsocialproductiveenergies，requiredforthefullsupportandfurtherstimulationoftheseenergiesandforthewiderhumanlifewhichtheyaredesignedtoserve，andtheirassignmenttopersonswhohavenothelpedtomakethem，donotneedthem，andcannotusethem。Thepaymentofsurplustakeslargesectionsoftheincome，neededtoraisetheeconomicandhumanefficiencyoftheworking-classes，ortoenablesocietytoenlargethescopeandtoimprovethequalityofthepublicservices，anddisposestheminwaysthatarenotmerelywastefulbutinjurious。Ineffect，alltheexcessivehumancostsofproductionandallthedefectivehumanutilitiesofconsumption，whichourseparateanalysisofthetwoprocessesdisclosed，findtheirconcreteandcondensedexpressioninthis\'surplus\'。Thechiefinjuriesitcausesmaybesummarisedasfollows: (1)。Flowingabundantlyas\'unearned\'incomeintothepossessionof\'wealthy\'individualsandclasses，ittherebycauseslargequantitiesofthenationalincometobeconsumedwithlittleornobenefit。Formuch，ifnotmost，ofthissurplus，beingdevotedtoluxury，waste，extravaganceand\'illth\'，furnishesbyitsexpenditurenothumanutilitybuthuman\'cost\'，notanenhancementbutadiminutionofthesumofhumanwelfare。 (2)Byenablingitsrecipientstodisobeythesoundbiologicalandmoralprecept，\'inthesweatofthyfacethoushalteatbread，\'itcallsintobeingandsustainsaleisuredorunemployedclasswhoseexistencerepresentsalossofproductiveenergyandofwealth-productiontothenation。 (3)Theevilprestigeandattractionofthelifeofsensationalfrivolitythisidleclassisdisposedtoleadtendsbysuggestiontosapthewholesomerespectforworkinthestandardsoftherestofthecommunity，andtoencouragebyservileimitationinjuriousorwastefulmethodsofexpenditure。 (4)Theeconomicnecessityofproducingthissurplusimposesexcessivetoilupontheproductiveclasses，beingdirectlyresponsibleforthelonghoursandspeeding-upwhichconstitutetheheaviestburdenofhumancosts。 Thedirectionwhichtheexpenditureofthesurplusgivestocapitalandlabourdegradesthecharacteroflargebodiesofworkersbysettingthemtofutile，frivolous，viciousorserviletasks。 (5)Thedisturbingirregularityofthetradeswhichsupplythecapriciousandever-shiftingconsumption，uponwhichthe\'surplus\'issolargelyspent，imposesupontheworkersagreatcostintheshapeofirregularityofemployment，andaconsiderableburdenofcostlysavingbywayofinsuranceagainstthisirregularity。 (6)Bystampingwiththebadgeofirrationalityandinequitythegeneralprocessofapportionmentofincome，thesurplusimpairsthatspiritofhumanconfidenceandthatconsciousnessofhumansolidarityofinterestswhicharethebeststimuliofindividualandsocialprogress。 Thesurpluselementinprivateincomethusrepresentsthehumanlossfromdefectsinthecurrentdistributionofwealth，notonlythelossfromwastefulandinjuriousconsumptionbutfromwastefulandinjuriousproduction，anexaggerationofhumancostsandadiminutionofhumanutilities。Theprimaryobjectofallsocial-economicreformsshouldbetodissipatethissurplusandtosecureitsapportionmentpartlyasusefulincomeforindividualproducers，partlyasusefulincomeforsociety，sothat，insteadofpoisoningthesocialorganismasitdoesnow，itmaysupplyfullernourishmentandstimulustothelifeofthatorganismanditscells。 Thusdirected，partlyintohigherwagesofefficiencyforworkers，partlyintofurtherincomefortheenrichmentofthecommonlife，the\'surplus\' willineffectceasetobesurplus，beingcompletelyabsorbedinsatisfyingthehumanrequirementsofindividualsandsociety。Fornotonlywillitfurnishtheexpenditurerequiredtobringthestandardofconsumptionofallgradesofworkersuptothelevelofafullsatisfactionofhumanneeds，butitwillestablishanentirelynewconceptionofpublicincome。Foritwillberecognisedthatthepublicrevenue，takeneitherbytaxationorasprofitsofpublicindustry，isearnedbypublicworkpreciselyastherevenueofindividualsisearnedbyprivatework，andisrequiredforpublicconsumptionjustasprivateincomeisrequiredforprivateconsumption。 Thusthewholeofwhatnowfiguresasawasteful\'surplus\'wouldbeappliedinproductiveconsumption。 Thescopeoftheoperationofthisorganiclaw，ofcourse，widelytranscendsthisspecialapplicationtothedistributionofeconomicincome。Itisthegenerallawoforderandofprogressinalldepartmentsoforganicactivity。Butforourtask，thatofahumanvaluationofindustry，itsworthissupreme。ForintheapplicationoftheorganiclawofdistributionallthegreatantagonismswhichloomsobigassocialProblems，LuxuryandPoverty，Toilandidleness，TheindividualandSociety，AuthorityandLiberty，findtheirsolution。9 NOTES: 1。Eventhereheisnotseparatedinphysicalfunctions。Thesexual，philoprogenitive，andthegregariousinstincts，whicharerootedinphysicalstructure，negatephysicalindividualism。Sodoesthestructureofhisbrain，whichinsolitudedecaysorbecomesdiseased。 2。TheCommon-senseofPoliticalEconomy，p。698。 3。p。345。 4。WorkandWages，Vol。I，p。14。 5。ProfessorPigou(WealthandWelfare，p。176)，thoughadoptingthegeneralpositionofmarginalism，makesaconcession，astoitsapplicability，whichisavirtualadmissionofitsfutility。Forbyshowingthatonlyin\'industriesofconstantreturns\'are\'supplyprice\'and\'marginalsupplyprice\'equal，andthatinindustriesof\'decreasing\'orof\'increasing\' returnsthereexistsatendencytoexceedortofallshortof\'themarginalnetproductyieldedinindustriesingeneral，\'hevirtuallyendorsesthecriticismthat\'marginalism\'assumesastaticalconditionofindustry。 Foronlyinastaticalconditionwouldallindustriesbefoundconformingtoconstantreturns:theoperationofincreasingordiminishingreturnsmeansnothingelsethanthatchangesinvolumeormethodsofproductionareraisingorloweringproductivityandremunerationaboveorbelowtheequallevelwhich\'marginalism\'desiderates。 6。Fromthestandpointoftheindividualbusinessfirm\'costsofproduction\' mayincludemanyhigherratesofpayments，necessaryundertheactualconditionsofcompetitiveindustrytosecuretheuseoftherequiredagents。 7。Foritmustbekeptinmindthatthe\'productiveexpenditure\'towhichreferenceisheremadereferultimatelytoastandardnotofmarketbutofhumanvalues。 8。Economists，followingtheclassicaldistinctionmadebyAdamSmithinthecaseoflandvalues，maybreakupthesurplusintovariousspeciesofscarcityrentsontheonehandanddifferentialrentsontheother。 Ascarcityor\'specific\'rentwilloccurwhenthewholesupplyofsomefactorofproduction，e。g。，allthelandavailableforsomeparticularuse，orallthecapitalemployedinsometrade，isinapositiontotakeapaymenthigherthanisobtainablewheremorelandorcapitalisavailableforthisparticularusethanisrequiredtoturnoutthesupplyofgoodsthatisactuallysold。TheworsthoplandinuseinEnglandobtainsapositiverent，theworstequippedshipsintheAtlanticcombineobtainasurplus-profit: betteracresofhopland，better-equippedshipsobtainadifferentialrentorprofitinaddition。Bothspecificgainanddifferentialgainaresurplus，andthebasisofeachisascarcityofsupplyandarestraintofcompetition。 9。Foradetailedandmoretechnicaldefenceofthefundamentallyimportantdistinctionbetween\'costs\'and\'surplus\'andforacloseranalysisofthesourcesof\'unproductivesurplus，\'readersmaybereferredtotheauthor\'searlierwork，TheIndustrialSystem:anenquiryintoearnedandunearnedincome。(Longman\'s2ndandrevisededition，1909)。CHAPTERXIII:THEHUMANCLAIMSOF LABOUR §；1。ThevalidityofthehumanlawofdistributioniswelltestedbyconsideringthelightitshedsuponthemodernclaimsofLabourandtheMovementwhichisendeavouringtorealisetheseclaims。ForthesignificanceoftheLabourMovementwillcontinuetobemisunderstoodsolongasitisregardedasameredemandforalargerquantityofwagesandofleisure，importantastheseobjectsare。TherealdemandofLabourisatoncemoreradicalandmorehuman。ItisademandthatLabourshallnolongerbeboughtandsoldasadeadcommoditysubjecttothefluctuationsofDemandandSupplyinthemarket，butthatitsremunerationshallberegulatedonthebasisofthehumanneedsofafamilylivinginacivilisedcountry。 Atpresentmostsortsoflabourersarepaidaccordingtothequantityoflabour-powertheygiveout，andaccordingtothemarket-pricesetuponaunitofeachseveralsortoflabour-power。Thismeansthattheactual weeklyearningsofsomegradesoflaboureraremuchhigherthanthoseofothergrades，notbecausetheworktakesmoreoutofthem，orbecauseitinvolvesahigherstandardofliving，butbecausesomenatural，somefortuitous，orsomeorganisedscarcityofsupplyexistsintheformergrades，whilethereisabundanceofsupplyinthelatter。1Moreover，theweeklyearningsforanyofthesesortsoflabourwillvaryfromweektoweek，frommonthtomonth，oryeartoyear，withthevariationsofSupplyandDemandintheLabourMarket。Theincomeoftheworkingfamilywillthusvaryforreasonsutterlybeyonditscontrol，thoughitsrequirementsforeconomicandhumanefficiencyshownosuchvariation。Thusthereisnosecurityforanyclassstandardofliving。 Withineachclassorgradeoflabourtherewillbevariationsoftheindividualfamilywage，basedontheamountoflabour-poweractuallygivenoutintheweek。Alesseffectiveworker，eventhoughheputsoutasmucheffort，willearnlessmoneythanamoreeffective。Thisseemsnecessary，reasonableandevenjust，solongasweaccepttheordinaryviewthatlabourshouldbeboughtandsoldlikeanyothercommodity。 Butonceaccepttheviewthattobuylabour-power，likeothercommodities，atapricedeterminedpurelybyrelationsofSupplyandDemand，isapolicydangeroustothelifeandwell-beingoftheindividualwhoselabour-poweristhusboughtandsold，tothoseofhisfamilyandofsociety，yourattitudetowardsthelabour-movementingeneral，andeventocertaindemandswhichatfirstsightseemunreasonable，willundergoagreatchange。 ThefundamentalassumptionoftheLabourMovement，initsdemandsforreformedremuneration，isthattheprivatehumanneedsofaworkingfamilyshouldberegularlyandsecurelymetoutofweeklypay。Thelifeandhealthofthefamily，andthatsenseofsecuritywhichisessentialtosoundcharacterandregularhabits，totheexerciseofreasonableforesight，andtheformationandexecutionofreasonableplans，allhingeuponthiscentraldemandforasufficiencyandregularityofweeklyincomebaseduponthehumanneedsofafamily。 §；2。Thisexplainsaliketheworking-classobjectionstopiecework，thedemandforaminimumwage，andthepolicyoflimitationofindividualoutput。Forpiece-work，evenmorethantime-work，isbaseduponatotalignoringofthehumanconditionswhichaffectthegivingoutoflabour-power。 Itistheplainestandmostlogicalassertionofthecommodityviewoflabour，themostcompletedenialthatthehumanneedsoftheworkerhaveanyclaimtodeterminewhatheshouldbepaid。 Sofirmly-rootedinthebreastoftheordinarynon-workingman，andofmanyworking-men，isthenotionthataman，whohasproducedtwiceaslargeanoutputasanotherman，ought，asasimplematterofrightorjustice，toreceiveapaymenttwiceaslarge，thatitisverydifficulttodislodgeit。Itrepresentsthegreatesttriumphofthebusinesspointofviewoverhumanity。Ifamanhasdonetwiceasmuch，ofcoursebeoughttoreceivetwiceasmuch!Itseemsanethicaltruism。AndyetIventuretoaffirmthatithasnothingethicalinit。Ithasassumedthismoralguisebecauseofadeepdistrustofhumannaturewhichitexpresses。Howwillyougetamantodohisbestunlessyoupayhimaccordingtotheamounthedoes？ Itisthispurelypracticalconsiderationthathasimposeduponthepiece-worksystemtheappearanceofaxiomaticjustice。 Itisnotdifficulttostripoffthespuriousethicsoftheprinciple。 Yousaythatpiece-wagesorpaymentbyresultisrightbecauseitinducesmentodotheirbest。Butwhatdowemeanby\'doingtheirbest。\'？Aweakmanmayhewonetonofcoalswhileastrongmanmayhewtwo。Hasnottheformer\'donehisbest\'equallywiththelatter？Thestrengthofastrongman，thenaturaloreventheacquiredskillofaskilfulman，cannotbeassumedasapersonalmeritwhichdeservesrewardinthetermsofpayment。 Ifthereismeritanywhere，itisintheeffort，notintheachievementorproduct，andpiece-wagesmeasureonlythelatter。 No!thereisnothinginherentlyjustinthepiece-wagesystem。Itsrealdefenceisthatitisthemostpracticalwayofgettingmentoworkashardastheycan:itisacheckonskulkingandsugaring。Itassumesthatnoothereffectivemotivecanbemadeoperativeinbusinessexceptquantityofpayment。 §；3。AsRuskinandmanyothershaveremarked，thelieisgiventothisassumptioninanincreasingnumberofkindsofworkwherethehighestqualitiesofhumanpower，thefinestsortsofmentalskillandresponsibility，areinvolved。Publicservantsofallgrades，fromCabinetMastersandJudgesdowntomunicipaldustmen，arepaidbysalaries，notbypiece-wages。Thesameistrueofthemoreremunerativeandmoreresponsibleworkinprivatebusinesses。NoGovernment，noprivatefirm，buystheservicesofitsmostvaluableemployeesatthelowestmarket-price，orattemptstoapplytothemapiece-workscale。Itwouldnotpaythemtodoso，andtheyknowit。Noristhismerelybecausesomesortsofworkdonoteasilyadmitofbeingmeasuredbythepiece。ItwouldbepossibletopayJudges，ascounselarepaid，bythecase。CabinetMinistersmightbepaidonpiece-wagesforLawsmeasuredbythenumberorlengthoftheirclauses。Thechiefreasonforadoptingpaymentbyfixedsalaryisthatitisreckonedawisemodeofsecuringgoodindividualservices。Itisrecognisedthat eachpieceofworkwillbebetterdone，iftheworkerssetaboutitinathoroughlydisinterestedmanner，concentratedintheirthoughtsandfeelingsentirelyontheworkitself，andnotentangledintheconsiderationofwhattheyaretogetoutofit。Thisissupposedtobethedifferencebetweentheprofessionalmanandthetradesman，thattheformerperformsafunctionandincidentallyreceivesafee，whilethelatter，bytheveryactsofbuyingandsellingthatconstitutehisbusiness，keepshismindsetupontheprofitfromeachseveraltransaction。 Butthefixedandguaranteedsalaryforpublicservantshasanotherground。Itmayprofitabusinessfirmtopractiseaneconomyofsweating，todriveitsemployeesandconsumetheirhealthandstrengthbyafewyears\' excessivetoil，totakeonnewcasualworkersforbriefspurtsoftrade，tosackemployeesruthlessly，assoonastradebeginstoflag，ortheirindividualpowersofworkareimpairedbyage。Apiece-worksystem，withnoguaranteeofemploymentorofweeklywage，maybeasoundbusinesseconomyforaprivatefirm。ItcannotbeasoundeconomyforaStateoraMunicipality。 ForalargeandincreasingshareoftheworkandtheexpenditureofmostStatesandMunicipalitiesisappliedintryingtomendoralleviatedamagesordangerstothehealth，security，intelligence，andcharacteroftheworkersandtheirfamilies，arisingfrominsufficiencyofworkandwagesorotherdefectsofprivateindustrialism。Itwouldobviouslybebadpubliceconomytobreakdownthelivesandhomesofpublicemployeesbyunderpayingoroverworkingthem，orbydismissingandleavingthemtostarvewhenworkwasslack。Forwhatwassavedinthewage-billoftheparticulardepartment，wouldbesquanderedinpoor-law，police，hospitals，old-agepensions，invalidityandemploymentrelief。Noristhatall。A massofill-paid，ill-housedworkers，alternatelyoverworkedandoutofwork，standsasachiefbarrierineveryoneofthosepathsofsocialprogressandnationaldevelopmentwhichmodernstatecraftsetsitselftofollow。 Thelowwageofunskilledlabouristo-dayasourceofinfinitewasteoftheforcesofnationaleducation。Stillkeepingourargumentuponthenarrowestlinesofeconomy，weplainlyrealisethatthefinancialresources，uponwhichtheStatecandrawforallherservices，dependinthelastresortuponthegeneraleconomicefficiencyoftheworkingpopulation，andthatasystemofpublicemploymentwhichwas，howeverindirectly，detrimentaltothishealth，longevityandintelligence，wouldrankasbadbusinessfromthepublicstandpoint。 Itispossiblethatinthiscountrythesalarymodeofpaymentisgainingground。Apartfromthepublicservices，nationalandmunicipal，whichnowemploysome7percentofthetotalemployedpopulation，thegreattransportandthedistributiveindustriesarealmostentirelyrunuponthesalarybasis。Thesedepartmentsofindustryareconstantlyincreasing，notonlyinabsolutesize，butintheproportionofthetotalemploymenttheyafford。 Tothemmustbeaddedthelargeclassofdomesticservice。Suchgreatsalariedservicescannot，indeed，beclaimedastriumphsfortheorganicprincipleofdistribution，orpaymentaccordingtoneeds。Forthemostparttheyareveryunsatisfactorymodificationsofthepiece-wageorcommodityviewoflabour。For，exceptforthesmallhighergradesofofficials，theymostlyretainthetwochiefdefectsoftheordinarywage-system，apaymentofweeklyincomenotbasedonapropercomputationofhumanneeds，andalackofadequatesecurityoftenure。Overalargepartofthefieldofindustryandcommercewhereweeklyfixedsalariesarepaid，thereexistsaflagrantdisregardforallconsiderationsofhumansubsistence。Someoftheworse，thoughnottheworst，formsof\'sweating\'arefoundinshops，workshopsandfactorieswherewomenareemployedonweeklysalaries。 Nonetheless，itremainstruethatthesalaryisamorerationalformofpaymentforlabourthanthetimeorpiecewage，andthat，asthehumanisationofindustryproceeds，itwillmoreandmoredisplacethewage-system。Forwheresalariesarepaid，theconsiderationofneedsorsubsistencedoestendalwaystoqualifythemerecommodityviewoflabour。 Piece-wageortime-wageignorestheworkerasahumanbeingandthesupporterofafamily:itignoreshimasapersonalityandregardshimmerelyasaninstrumentforgivingoutunitsofproductivepowertobepaidforonthesametermsastheunitsofmechanicalpowerusedinworkingmachinery。 §；4。TheLabourMovementinsiststhatthepersonalandhumanfactorisfundamentalasaconditioninthelabourbargain。Iflabouristreatedasamerecommodity，itspriceaffordsnosecurityoflifetothelabourer。 Itmaynotfindacustomeratall，andsohestarvesandwithhimhisfamily，thefuturesupplyoflabour。Or，lefttothefluctuationsofthemarket，itmaysellatapricewhichisinsufficientforhismaintenance。Thefluctuationsofpriceinallothermarketsinvolveonlythepecuniaryprofitorlossofthosewhosell，fluctuationsofthepriceoflabourinvolvetheexistenceandwell-beingofhumanfamiliesandofthenation。Hencetheattackoforganisedlabouronthiswholeconceptionofthelabour-market，andthedemandthattheremunerationoflabourshallnotbelefttothehigglingofamarket。 Thechieffightisforasecureweeklyincome，orforconditionsofemploymentwhichleaduptothis。Aminimumoralivingwageistheusualnamegiventothisdemand。Complaintismadeofthevaguenessofthedemand。 Butthisvaguenessdoesnotmakethedemandunreasonable。Alivingwageindeediselasticaslifeitself:itexpandsandwillcontinuetoexpand，withthedevelopmentoflifefortheworkers。Butwhatineffectismeantatthepresentbyalivingorsubsistencewageissucharegularweeklysumassufficestomaintaintheordinaryworkingfamilyinhealthandeconomicefficiency。 Itiscontendedthatnopurchaseoflabourshouldbepermittedwhichentailsthedegradationofthatstandard。Whenaminimumrateofpiece-wagesisdemanded，theimplicitunderstandingisthatitissuchaswillyieldundernormalconditionstheordinaryweeklysubsistenceorstandardwage。 Sincepiece-wagesaresofirmlyestablishedinmanytradesthatitisimpracticabletodemandtheirimmediateabolition，theactualstrugglebetweenemployeesandemployersisastowhetherthesepiece-wagesshallbeallowedtofluctuateindefinitely，beingdraggedattheheelsofthepricesofcommodities，orwhetheranabsolutelimitshallbesetupontheirfall。Theemployersays，\'Whentradeisgoodandpricesandprofitshigh，labourwillsharetheprosperityinhighratesofwageandlargeweeklyearnings:so，whentradeisbadandpricesandprofitslow，labourmustsharethisadversityandtakelow。pay，Organisedlabourreplies，\'No，thereisnoparitybetweenthepowerofcapitalandoflabourtobeardepressions:capitalisstrongandcanbearupagainstlowprofitswithoutperishing，labourisweakandcannotbearupagainstlowwages。Wewillonlysellourlabour-poweronconditionthatalowerlimitissetuponitsprice，suchalimitaswillenablethelabourertokeepbodyandsoultogether，andtomaintainthatefficiencywhichconstituteshisworkingcapital。Thisminimumwageshouldberegardedasafixedcostinyourproduction。Atpresentthepricesofyourgoodsoscillatewithoutanyassignedlimit。Youacceptlowcontractsforwork，andthenadducethislowpriceasareasonforreducingwages。 Letaminimumwageoncebeadoptedinthetrade，andcontractpricescannotbeacceptedonsolowalevel。Theminimumwagewillthushelptosteadysellingpricesandtoregulateemploymentandoutput。\' Boththeeconomicsandthesocialethicsofthislabourcontentionareinsubstancesound。Solongasthepriceoflabourislefttohigglinginacompetitivemarket，thereisnothingtopreventthewagesfallingtothelowestlevelatwhichasufficientnumberofworkerscanbeinducedtoconsenttowork，andthatlevelmayinvolveareductionofthestandardoflivingintheirfamiliesbelowthetruesubsistencepoint。Thefixingofwagesbyso-calledfreecompetitionaffordsnosecurityforafamilywageofefficiencyorevenofsubsistence。Thereshouldbenomistakeuponthisessentialmatter。Thedoctrineof\'economyofhighwages\'hasnosuchgeneralefficacyasissometimessuggested。Thoughinmanycaseshighwagesareessentialtomaintainandevoketheenergyandefficiencyrequired，inothercasestheyarenot。Fromthestandpointoftheimmediateprofitsofemployers\'sweating\'oftenpays。Butfromthestandpointofsocietyitneverpays。 Therefore，thepolicyoftheorganisedworkers，inseekingtoenforcethedoctrineofaminimumwage，isnotonlyapolicyofself-preservationfortheworking-classesbutasalutarysocialpolicy。ItisforthisreasonthattheStateintervenesinfavourofthepractice，establishingTradeBoardstoenforceitsapplicationinso-called\'sweatedtrades\'，andacknowledges，intheoryatanyrate，itsvalidityinallpublicemploymentsandpubliccontracts。 §；5。Althoughthisminimumwageistolerablyremotefromtheidealofafixedweeklysalaryinmosttrades，itisatruestepinthisdirection。 Themostcontroverteditemintrade-unionpolicy，thelimitationofindividualoutput，isalsopartlyactuatedbythesamemotive。Fewthingsmaketheordinarybusinessmanmoreindignantthanthetrade-unionregulationsincertaintradeswhichrestrainstrongerorquickerworkersfromputtingforththeirfullproductiveenergy。Theydenouncealikeitsdishonestyanditsbadeconomy。Itisbased，theysay，uponthe\'lumpoflabour\'fallacy，thefalsenotionthatthereexistsanabsolutelylimitedamountofemployment，orworktobedone，andthatifthestrongerorquickermendomorethantheirshare，theotherswillgoshort。Thisrefusaltoalloweachmantodohisbest，liketherelatedrefusalto getthefullworkoutofnewlabour-savingmachinery，appearsmonstrouslyperverseandwicked。But，thoughpartlyanimatedbyshort-sightedeconomicviews，thispolicyisnotentirelytobethusexplained。Thelevellingdownoftheoutputofallworkerstoastandardhaspartlyforitsobjecttheestablishmentofgreaterevennessofincomeamongtheworkersinatrade。Atanygiventimeinagivenmill，orfactorytown，theactualamountofavailableemploymentislimited，andforthetimeitistruethatbylimitationofindividualoutputalargernumberofworkersareemployed，andalargernumberofworkingfamiliesareprovidedwithanormalwage，thanwouldhavebeenthecaseifacertainnumberofmenwereencouragedtoanunrestrictedenergyandunlimitedovertime。 Inthelongrun，itmaybebettertoencouragefullindividuallibertyofoutput，evenintheinterestoftheaggregateofemployment，buttherestraintstowhichiherealludebecomemoreintelligiblewhentheyareregardedasattemptstoenforceacommonclassweeklywagebymeansofanevendistributionofemployment。 Aminimumpiece-wage，basedonamoderatecomputationoftheweeklyoutputperworker，andaccompaniedbyasubstantialsecurityoffullregularemployment，wouldineffectplacethepiece-workerinthepositionofasalariedemployee。But，ofcourse，aminimumpiece-wage，howeverhigh，doesnotgofartothisend，unlesssecurityoftenureatfairlyfullemploymentisobtained。Theproblemofun-andunder-employmentandofirregularemploymentisnowbeginningtoberecognisedinitsfullsocialgravity。Aweeklywageofbareefficiencywithregularemploymentissociallyfarsuperiortoahigheraveragewageaccompaniedbygreatirregularityofwork。Theformeradmitsstabilityofmodesoflivingandreadymoneypayments:itconducestosteadinessofcharacterandprovisionforthefuturewithoutanxiety。Rapidandconsiderablefluctuationsofwages，evenwithfullemployment，aredamagingtocharacterandstabilityofstandards:butirregularityofemploymentisthemostdestructiveagencytothecharacter，thestandardofcomfort，thehealthandsanityofwage-earners。Theknowledgethatheisliableatanytime，fromcommercialornaturalcausesthatlieentirelyoutsidehiscontrol，tolosetheopportunitytoworkandearnhislivelihood，takesoutofamanthatconfidenceinthefundamentalrationalityoflifewhichisessentialtosoundnessofcharacter。Religion，ethics，education，canhavelittleholduponworkersexposedtosuchpowerfulillustrationsoftheunreasonandinjusticeofindustryandofsociety。 Theregularisationofindustry，soastoaffordsubstantialguaranteesoffullregularemployment，thusrankswiththeminimumwageasthemostsubstantialcontributiontowardsthesubstitutionofsalaryforwages，whichtheorganiclawofDistributionrequires。TheStateisbeginningtocooperatewiththeLabourMovementfortheattainmentofthissocialobject，stimulatingemployerstoorganisetheirindustriessoastofurnishamoreevenvolumeofemployment。 §；6。ThisinterpretationoftheLabourMovementasahalf-consciousmanifoldendeavourtorescuetheremunerationofLabourfromtherisksanddefectsofthecompetitivelabourmarket，andtoestablishitonaneconomyofhumanneeds，isnotfullyunderstoodwithoutsomefurtherreferencetotheactionoforganisedsociety。TheLabourMovement，initsendeavourtogetabetterdistributionoftheincome，isnotconfinedtotryingtosecureasatisfactoryminimumorstandardwage，fortifiedbygreatersecurityofworkandpersonalinsuranceagainstunemployment。Itseeksalsotosupplementitswagesbycooperativeandpublicprovisions。 Thecooperativemovementisanattempttoconvertintorealwagessomeoftheprofitsofemployersandshareholdersinmanufacturingandcommercialbusinesses，soenlargingtheproportionoftherealincomeofthenationwhichgoestotheremunerationoflabour。ButthegrowingattachmentoftheLabourOrganisationstopoliticsisequallymotivedbytheendeavourtosecurefromtheState，notmerelylegalsupportsforhigherwagesandimprovedconditionsofemployment，butactualsupplementstowagesintheshapeofcontributionsfromthepublicservicestotheirstandardofliving。 Freeeducation，old-agepensions，andpublicsubsidiestowardsinsuranceareadirectcontributionfromtheStatetothehigherstandardoflifewhichmoderncivilisedsocietydemands。Health，education，recreation，andprovisionagainstemergencies，arecomingmoreandmoretoberecognisedasproperobjectsofgovernmentalaction，andotherimportantservices，suchastransport，credit，art，musicandliterature，arefaronthewaytobecomingcommunal supplies。Althoughthesemodesofsocialprovisionmaybechieflymotivedbyconsiderationsofpublichealthandothercommongoods，theyneverthelessmustrankascontributionstothestandardofcomfortandwell-beingoftheworking-classfamilieswhoarethespecialbeneficiaries。Relieving，astheydoinmanyinstances，theprivateincomesoftheworkersfromexpenditurewhichotherwisethefamilywouldfindittoitsprivateinteresttoincur，thesegrowingpublicservicesformagenuineandaconsiderablecontributiontotheavailablerealincomeoftheworking-classes。Sofarasbytaxationdirectorindirectthecostofsuchpublicservicescanbeconsideredaburdenupon，oradeductionfromthewage-incomeoftheworkers，itforms，ofcourse，nonetadditiontotheirshare，butisonlyapubliccontrolovermethodsofexpenditure。 Butinasmuchasthedistincttendencyofmoderntaxationistowardsanincreasingtaxationoftheincomesandpropertyofthenon-workingclasses，thesepublicservicesrankassupplementaryincome，paidinkind，andtendingtoequalisethestandardoflivingofindividualworkersandgradesofworkers。ThecriticismsometimesdirectedagainstthisStatesocialism，uponthegroundthatittendstoweakentheforceofwage-bargainingandtransferstotheshouldersof\'society\'costswhichemployerswouldotherwisehavetobearintheshapeofhighermoneywages，wouldhaveconsiderableforce，iftheoldlaissez-faireprincipleof\'freecontract\'wereallowedotherwisetoworkunimpeded。Butthis，aswesee，isnotthecase。Thegrowingpolicyofminimumandstandardrates，supportedbypublicopinionand，wherenecessary，bypubliclaw，andhardeningintoapolicyoffixedsalaries，isnowiseinconsistentwithasimultaneousdevelopmentofcommunalsuppliesofgoodsandserviceswhichusuallyliealittleabovethenormalstandardofcomfortofthosewhoarethechiefbeneficiaries。 ThegrowingpoliticalactivitiesofalabourmovementwhichonceeschewedStateaidsnotmerelyattestthegeneralgrowthofconsciousdemocracybutimplyarecognitionofthedirectcontributionwhichtheStateismakingtowardsageneraldistributionofthenationalincomeinaccordancewithaneconomyofhumanneeds。 NOTES: 1。Thewidthofvariationsintheweeklyearnings，involvinginmostinstancesanearlycorrespondingvarietyoffamilyincome，maybeillustratedbythefollowingestimatecompiledbyMr。Webb，fromacarefulanalysisofofficialwagereturns。NewStatesman，May10，1913。 CHAPTERXIV:SCIENTIFICMANAGEMENT §；1。Nohumanisttreatmentofmodernindustrycanignoretherecentadvancesofscientificmethodsintotheregulationbothofstandardsofproductionandstandardsofconsumption。Inbothartsalikethecrudeempiricismofthepastisgivingplacetoamoreordered，consciousrationalism。Asisonlynatural，theadvanceofscienceismorerapidintheproductivearts。 Inrecentyearsmanyscatteredattemptshavebeenmadetoapplyphysiologyandpsychologytoeconomicprocesses。Businessmenbyscientificobservationandexperimenthavebroughtcriticismtobearuponthetraditionalandempiricalmodesoforganisingandconductingbusinesses。Themoreorlesshand-to-mouthmethodswhichwerepossibleinsmallbusinesseswherethemanagerwasowner，andcouldkeepaclosepersonalsupervisionofhisemployeesandalltheirwork，werefoundincreasinglyunsuitabletomoderntypesoflargecapitalistbusiness。Itwasnecessarytodeviseregularmethodsforcorrelatingtheworkofthedifferentdepartments，andforenablingasinglecentralpurposetooperatebycomplexdelegationthroughseveralgradesofsubordinateofficialswithautomaticchecksandregisters。Moreaccuratemethodsofbook-keeping，especiallyofcost-taking，weredevised； experimentsweremadeinbonuses，profit-sharing，fines，pace-makingandvariousmodificationsofthewage-systemsappliedtoevokemoreenergy，skill，orcarefromtheworkersandofficials；hoursoflabourandshift-systemsweresubjectedtomeasuredtests。Stillmorerecentlythedetailedtechnologyofmanualandmentallabourhasbeenmadematerialofphysiologicalandpsychologicalinvestigation。ScientificManagementhasbecomeaconsciousart。BusinesscollegesinAmericaandgermanygivecoursesofinstructioninthisart，andanewprofessionhasarisenofexpertadviserswhoarecalledinasspecialiststodiagnosethedeficienciesorwastesofindustrialorfinancialpowerinparticularbusinessesandtoprescriberemedies。 Economicprogress，regardedfromthestandpointofthebusinessman，consistsingettingagivenquantityofsaleablegoodsturnedoutatalowercostofproduction。Thatcostofproductionconsistsofthesalariesandwagespaidtovariousgradesofemployeesformentalandmanuallabour，costofmaterialsandpower，standingexpensesformaintenanceofplantandpremises，includingreplacementandinsurance，andinterestuponcapital。 Anythingthatreducesanyoneofthesecosts，withoutacorrespondingincreaseofanother，isprofitablefromthestandpointoftheindividualemployer，orofallemployersinthetrade，ifitbegenerallyadopted，oroftheconsumingpublic，ifitwhollyorpartlygoestotheminlowersellingprices。Wherethereductionofcostssimplytakestheshapeofreducedwagesforthesamework，however，itcausesnonetincreaseofconcretewealth，butmerelydistributesthesameamount(orlessbyreasonofreducedefficiencyoflabour)inadifferentmanner。Suchareductioncannotthenberegardedaseconomicprogress，fromthenationalstandpoint。 Buteveryotherreductionofcostcarrieswithitprimafacieevidenceofanetincreaseofconcretewealth。Inventionsofmachinery，improvedchemicalorothertreatmentofmaterials，betterbusinessorganisationandsubdivisionoflabour，improvedskillandenergyinemployees，betterbook-keeping，credit，marketingarrangements，——allsuchtechnicalimprovementspromotetheincreaseofconcretewealth。Inallthesewaysmanygreatadvanceshavebeenmadeinvariousindustries。But，alikeininventionandinorganisation，toomuchhasbeenlefttochance，ortothepressureofsomeemergency，toolittleistheresultoforderedthought。Businesshasbeenconductedtoomuchinthespiritofanart，toolittleinthatofappliedscience。 Themoderntendencyistointroducetheexactermethodsofscience。Themodernlargemanufacturingorminingenterpriseemploysexpertengineersandchemists，notonlytotestandcontroltheoperationofexistingprocesses，buttoinventnewandcheaperwaysofcarryingoutaprocess，todiscovernewproductsandnewusesforby-products。Itemploysexpertaccountantstooverhaulitsbook-keepingandfinanceandtosuggestimprovements。Initiativeandeconomyaretobestudied，evokedandappliedalongeverypath。 §；2。Butuntillatelythedetailedorganisationoflabouranditsutilisationforparticulartechnicalprocesseshadreceivedlittleattentioninthegreatroutineindustries。Evensuchtechnicalinstructionashasbeengiventobeginnersinsuchtradesasbuilding，engineering，weaving，shoemaking，etc。，hasusuallytakenforgrantedtheexistingtools，theacceptedmethodsofusingthemandthematerialtowhichtheyareapplied。 Tomakeeachsortofjobthesubject-matterofacloseanalysisandofelaborateexperiment，soastoascertainhowitcouldbedonemostquicklyandaccuratelyandwiththeleastexpenditureofneedlessenergy，comesasanovelcontributionofbusinessenterprise。TogettherightmantousetherighttoolsintherightwayisafairaccountoftheobjectofScientificManagement。Atpresentamanentersaparticulartradepartlybyuninstructedchoice，partlybychance，seldombecauseheisknownbyhimselfandhisemployertohaveanaturaloracquiredaptitudeforit。 Hehandlesthetoolsthataretraditionalandareingeneraluse，copyingthewaysinwhichothersusethem，receivingchancetipsorsuggestionsfromacomradeoraforeman，andlearningfrompersonalexperiencehowtodotheparticularworkinawaywhichappearstobeleasttroublesome，dangerous，orexhausting。Bothmodeofworkandpacearethoseofprevailingusage，moreorlessaffectedbymachineryorothertechnicalconditions。 Thescientificmanagerdiscoversenormouswastesinthiswayofworking。 Partofthewastehefindsduetoimpropertoolsandimpropermodesofworking，arisingfrommereignorance；partheattributestosystematicorhabitualslacking，moreorlessconsciousandintentionalonthepartoftheworkers。Thenaturaldispositionoftheworkerto\"takeiteasy\"