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great as to constitute "capitalism" a virtually new phenomenon.

The immensity of modern industrial undertakings necessitates the employment of the surplus wealth of the entire community. No small company of men can furnish the requisite amount of capital. It is demanded in such gigantic quantities that it cannot be supplied by the managers of industry, nor even by those more conspicuous. capitalists who manipulate stocks and shape policies. These very wealthy men may own a large share of the whole; well-to-do people who take no active part in business management also own a large share; while the better class of artisans likewise supply hundreds of millions of capital, especially of that floating portion which is supplied through the banks for the payment of their own wages and the purchase of materials. Modern capitalistic production is essentially co-operative.

The wide ownership of the means of production is an indication. of the social character of production. Practically all of the available wealth of society is now directed to productive uses. If a completely socialistic scheme could be carried out, it would be necessary, unless society should confiscate all private property now held, to obtain the capital from those who are now furnishing it. If public bonds. should be given to the present capitalists, it is difficult to see how the new system would differ materially from the present one. In short, there has been developed, along with this great industrial system, a banking and credit system through which all wealth not reserved for consumption may be made available for production. Before the Industrial Revolution, banking was of very minor importance. At present the enormous banking interests of all civilized countries and the equally important credit arrangements by which capital may easily be turned into the industries which need it, make possible the employment of the resources of the whole society in the production of the goods desired by society.

The individual is compelled to serve society in caring for his own. interests by turning back into the productive processes much of the profit derived from invested capital or managerial ability. The incomes of the wealthy are largely turned back to productive purposes, making possible the enlargement of plants, the employment of more laborers, the increase of production, the cheapening of prices. In many directions the consuming capacity of the individual, rich or poor, is limited. Extravagant consumption is possible to a certain extent, and is, perhaps, a growing evil. But the total waste of the rich is probably a small item which, if saved and distributed throughout the whole society, would be of little consequence. The chief use which the wealthy capitalist can make of the income of his

capital is to add it to his capital and employ it in the production of still larger quantities of the goods of common consumption. The evil of the possession of great wealth lies rather in the unworthy social prestige and opportunity for corrupt use which its possession gives to the rich than in the greater amount of goods which the rich consume. The evils connected with capitalism should not blind us to the real efficiency of our present social system in harmonizing individual and social interests by controlling all surplus wealth in the interests of society.

29. The Factory System10

BY CARL BÜCHER

The factory system organizes the whole process of production; it unites various kinds of workers, by mutual relations of control and subjection, into a compact and well-disciplined body, brings them together in a special business establishment, provides them with an extensive and complex outfit of the machinery of production, and thereby immensely increases their productive powers. Just as in an army corps ready for battle, troops of varied training and accoutrement-infantry, cavalry, and artillery regiments, pioneers, engineers, ammunition columns, and commissariat,-are welded into one, so under the factory system groups of workers of varied skill and equipment are united and enabled to accomplish the most difficult tasks of production.

The secret of the factory's strength for production thus lies in the effective utilization of labor. To accomplish this, it takes a peculiar road, which at first appears circuitous. It divides as far as possible all the work necessary to a process of production into its simplest elements, separates the difficult from the easy, the mechanical from the intellectual, the skilled from the rude. It thus arrives at a system of successive functions, and is enabled to employ simultaneously and successively human powers of the most varied kind— trained and untrained men, women and children, workers with the hand and head, workers possessing technical, artistic, and commercial skill. The restriction of each individual to a small section of the process effects a mighty increase in the volume of work turned out. A hundred workmen in a factory accomplish more than a hundred independent master craftsmen, although each of the latter understands the whole process, while none of the former understands more than a small part of it.

10 Adapted from Industrial Evolution, 173-176, translated by S. Morley Wickett. Copyright by Henry Holt & Co. (1900).

The machine is not the essential feature of the factory, although the subdivision of work just described has, by breaking up labor into simple movements, multiplied the application of machinery. Its application attained its present importance only when men succeeded in securing a motive power that would work unintermittently, uniformly and ubiquitously, namely, steam. An example will illustrate. In 1787 the canton of Zurich had 34,000 male and female hand-spinners producing cotton yarn. After the introduction of English spinning machines a few factories, employing one-third the former number of workers, produced an even greater quantity of thread. What is the explanation? The machine? But was not the former spinning-wheel a machine? Certainly it was, and a very ingenious one. Machine was thus ousted by machine. Or better, the entire spinning process had been decomposed into its simplest elements, and perfectly new operations had arisen for which even immature powers could in part be utilized.

In the subdivision of work originate these further peculiarities of factory production-the necessity of manufacturing on a large scale, the requirement of a large capital, and the economic dependence of the workman.

Finally, its large fixed capital assures to factory work greater steadiness in production than was possible under other systems. The manufacturer must go on producing, because he fears loss of interest and shrinkage in the value of his fixed capital, and because he can not afford to lose his trained body of workmen.

30. The Machine Process11

BY THORSTEIN B. VEBLEN

In its bearing on modern life and modern business, the "machine process" means something more comprehensive and less external than a mere aggregation of mechanical appliances. The civil engineer, the mechanical engineer, the mining expert, the industrial chemist, the work of all these falls within the limits of the modern machine process. The scope of the process is larger than the machine. Many agencies which are not to be classed as mechanical appliances have been drawn into the process, and have become integral factors in it. Wherever manual dexterity, the rule of thumb, and the fortuitous conjectures of the seasons have been supplanted by a reasoned procedure on the basis of a systematic knowledge of

11Adapted from The Theory of Business Enterprise, 5-19. Copyright by Charles Scribner's Sons (1904).

the forces employed, there the mechanical industry is to be found, ́even in the absence of intricate mechanical contrivances. It is a question of the character of the process rather than a question of the contrivances employed. Chemistry, agricultural, and animal industries, as carried on by modern methods and in due touch with the market, are to be included in the modern complex of mechanical industry.

Not one of the processes carried on by the use of a given outfit of appliances is independent of other processes going on elsewhere. Each draws upon and presupposes the proper working of many other processes of a similar mechanical character. Each of the processes in the mechanical industries follows some and precedes other processes in an endless sequence, into which each fits and to the requirements of which each must adapt its own working. The whole concert of industrial operations is to be taken as a machine process, made up of interlocking detail processes, rather than as a multiplicity of mechanical appliances each doing its particular work in severalty. The whole makes a more or less delicately balanced complex of sub-processes.

Looked at in this way the industrial process shows two wellmarked general characteristics: (a) the running maintenance of interstitial adjustments between the several sub-processes or branches of industry; and (b) an unremitting requirement of quantitative precision, accuracy in point of time and sequence, in the proper inclusion or exclusion of forces affecting the outcome, in the magnitude of the various physical characteristics, weight, size, density, etc., of the materials handled as well as the materials used. This requirement of mechanical accuracy and nice adaptation to specific uses has led to a gradual enforcement of uniformity, to a reduction to staple grades and staple character in the materials handled, and to a thorough standardizing of tools and units of measurement. Standard physical measurements are the essence of the machine régime.

Standardization has outrun urgent industrial needs and has penetrated every corner of the mechanical industries. Modern communities show an unprecedented uniformity in legally adopted weights and measures. As a matter of course tools and the various structural materials used are made of standard sizes, shapes, and gauges. The adjustment and adaptation of part to part and of process to process has passed out of the category of craftsmanlike skill into the category of mechanical standardization. Modern industry has little use for, and can make little use of, what does not conform to the standard. This latter calls for too much of craftsmanlike

skill, reflection, and individual elaboration, and is therefore not available for economic use in the processes. Irregularity is itself a fault in any item, for it brings delay, and a delay at any point means a more or less far-reaching and intolerable retardation of the comprehensive industrial process at large.

The materials, and moving forces of industry are undergoing a like reduction to staple kinds, styles, grades, and gauges. The like is true of finished products. As regards the mass of civilized mankind, the idiosyncrasies of the individual consumers are required to conform to the uniform gradations imposed upon consumable goods by the comprehensive mechanical processes of industry. Because of this it follows that the demand for goods settles upon certain defined lines of production which handle certain materials of definite grade, in certain, somewhat invariable, forms and proportions. Standardization means economy at nearly all points of the process of supplying goods, and at the same time it means certainty and expedition at nearly all points in the business operations involved in meeting current wants. It also reduces the interdependence of businesses to more definite terms. Machine production also leads to a standardization of services.

By virtue of this concatenation of processes the modern industrial system at large bears the character of a comprehensive, balanced mechanical process. To an efficient working of this industrial process at large, the various constituent sub-processes must work in due coördination throughout the whole. Any degree of maladjustment in some degree hinders its working. Similarly, any detailed process or industrial plant will do its work to full advantage only when due adjustment is had between its work and the work done by the rest. The more fully a given industry has taken on the character of a mechanical process, the more urgent is the need of maintaining proper working arrangements with other industries.

31. The New Domestic System12

BY HERBERT J. DAVENPORT

So long as industry held its place in the home-down, that is, to the close of the handicraft era-even the palace and the castle retained their share of industrial activity. Under the supervision of the lady-mistress, the spinning maiden and the weavers were at their tasks. In truth each great dame was a lady in the strict and early sense of the word, a bread-dispenser, the mistress of an ex

12Adapted from an unpublished address entitled "The Economics of Feminism" (1914).

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