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The Organization of Industry

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THE ORGANIZATION OF INDUSTRY In a previous chapter on the making of goods we made a broad survey of the economic activi ties of human society, describing the making of goods as the entire series of activities by which man secures from his surroundings the satisfactions which his nature demands. The brief account given in that chapter was from the outside only, as we might describe the in dustrial activity of a colony of bees. We have now gone far enough into the explanation of wealth to enable us to view the industrial or ganization of society from the inside and to attempt an analysis of the industrial factors.

Human industry, as a whole, is like a great stream which flows continuously under the management of man from its sources in the natural forces to its destination in the supply of the wants of man. The stream is made up of products continually changing as it rolls on, 261 until, at its mouth, it discharges only products. Four elements are clearly distinguishable as we watch it : the unfinished products; the physical energy which makes their motion and trans formation possible ; the human labor which transfers the energy to the material product, though it is itself a form of that energy ; and the intelligence which directs the general course of the stream. It is clear that all of these four elements are essential to the indus trial product. Let us begin with the unfinished products themselves.

As soon as they are seized upon by man, however much they may resemble natural prod ucts in appearance, they are in fact industrial products. On the other hand, however much they may resemble goods for immediate con sumption, they serve a different purpose in that they are to be employed in further production. They may be regarded as unfinished or future goods. The satisfaction which their tion was intended to meet will not be realized until the commodity which is to be consumed has actually been produced. The plough, the wagon, and the reaper, in so far as they are used in the production of wheat, may be regarded as wheat not yet ready for consumption. They

have no reason for existence except as they bring nearer that for the production of which they were themselves produced.

To be clearly distinguished from these future goods are the present goods which minister directly to the satisfaction of human desires. Food, clothing, and fuel used in protection against cold are obviously present goods. Commodities which satisfy higher desires — as paintings, ornaments, and articles of household furniture —are of the same The spoken oration, the musician's notes, and the plunge of the surgeon's knife are goods in the economic sense, and furnish excellent examples of the class of goods under consideration. The goods which have ultimately taken form as present goods, have been at various stages of their production future goods. They have become present goods through the operation of productive agencies. They were products ; they have become Clark, Philosophy of Wealth, Chapter I.

Patten, " Fundamental Idea of Capital," in Quarterly Journal of Economics, Vol. III., p. 193.

The future goods are of two distinct kinds. There are those which will reappear visibly in the finished product, as wood, cotton, flax, and coloring matter in cloth, leather in shoes, and those which will not thus reappear, as coal, bleaching material, and the build ings which have been required in the produc tion. Goods of the first-mentioned class are themselves on the way to the goal of consump tion. Those of the second are aiding in the transformation of other future goods into pres ent goods. If the produce of industry under consideration be bread, the labor that has been expended in its production has taken form on the one side, at different stages, as plant food, wheat, flour, and dough ; and the other as im provement on land, agricultural machinery, wagon, railroad, flour mill, and baker's oven. The latter are fundamentally of the same eco nomic character as the Future goods of the first class are called by Clark passive capital, 1 Andrews, Institutes of Economics, p. 49.

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