The Organization of Industry

labor, division, industries, agencies, producers, capital, productive, production, control and subdivision

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In actual industry we see these agencies only in combination. We see also different persons combining their efforts as producers. It is easier to classify the persons than to classify the agencies. A rough classification of producers as capitalists and laborers early becomes popular and is retained in ordinary use. After other qualities than those neces sary for the accumulation of capital and for the application of physical strength to mate rials become prominent, this classification be comes inaccurate and misleading. Attempts to rectify it by differentiating the landlord and then the entrepreneur, or manager of in dustry, from the capitalist class afford only a partial remedy, for to an increasing extent individual producers unite in themselves the control of two or more agencies, and especially those who furnish labor are seen to be capa ble of furnishing also the capital, the intelli gence, and such control of natural forces as the industry in which they are engaged may require. We are compelled finally to abandon the attempt to analyze production by classify ing producers as persons, and to resort to a study of the efficient agencies without regard to the arrangements, whether legal or physi cal, which place the control of those agencies in one place rather than another.

The organization of industry begins with the earliest forms of industry. As new feat ures develop, they appear within the organiza tion. There is no industry except organized industry. But the organization becomes more complex as society develops new wants and increases its productive power. The most prominent features of this more complex or ganization are : first, an extension of the divi sion of labor ; second, an increased localization of industry or territorial division of labor ; third, a tendency to production on a larger scale, and, fourth, the development of special ized machinery and skill.

Organization is possible without very exten sive division of labor or differentiation. ducers may merely combine their powers to accomplish results which would be impossi ble without combination. But when the stage is reached in which a person confines himself to one occupation, instead of attempting to supply his wants largely by his own direct efforts, new methods of increasing productive power become possible. Much practice makes possible a high degree of dexterity. The ex perienced proof-reader, for instance, detects the smallest error, even the slight imperfec tion in a letter which the ordinary reader would overlook. With many repetitions the most difficult manual operation becomes easy, and if the workman cares to improve his skill, becomes more nearly perfect. Invention and discovery are encouraged by the subdivision of labor, and what is more important the in ventions are more likely to be made by those engaged in the industries. In this way the possibility of a reward for invention becomes an inducement to more painstaking work. The division of labor further allows a better utiliza tion of all grades of labor, giving to each so far as a proper division extends, as nearly as possible, the exact duties for which his strength and abilities thus qualify him.

The localization of industry brings somewhat similar advantages. In some cases particular communities have developed the industries which they have established and fostered to a higher degree than would have been possible elsewhere, and the total wealth product of the world is doubtless increased by such territorial subdivision. The causes by which the localiza tion has been brought about are partly physical and partly the deliberate results of man's choice. "The iron industries of England first sought those districts in which charcoal was plentiful, and afterwards they went to the neighborhood of collieries . . . The Sheffield cutlery trade is

due chiefly to the excellent grit of which its grindstones are made." The beet sugar in Germany, however, and the potteries of Tren ton, N.J., owe their existence to different causes. A slight disadvantage in physical conditions is more than compensated by the superior man agement and the more intelligent labor of those engaged in the industries.

Combination and subdivision of labor do not exhaust the possibilities of organization. Both 1 Marshall, Principles of Economics, Bk. IV., Chapter X. Marshall suggests as other causes the patronage of a court; and among the modern influences tending to favor the localized industries he mentions the cheapening of the means of commu nication, the establishment of subsidiary industries, etc.

for the individual and for communities there are limits to profitable subdivision. The principle of diversification of industry is the last to be consciously adopted, but it has its own obvious advantages, which have been too frequently sacrificed from failure to consider all features of the industrial situation.

By the organization of industry is meant not merely the separation of producers into trades, and into minute portions of trades, but, further, the bringing together of the various productive agencies in such a way that they become really operative and efficient. It is the name applied to a series of positive actions. A farmer, by years of saving, succeeds in getting control of a certain amount of capital, or he borrows from some one who has saved it, the capital he needs ; he selects a farm suitable to the crop which he expects to raise and within reach of his market, he employs the necessary laborers, he purchases the necessary implements, he chooses the seed that is to be planted, he directs how much labor shall be put on each field, how many times the corn shall be ploughed, what fences shall be built, when the crop shall. be harvested, where it shall be offered for sale, in a word, he organizes industry. With the extension of the division of employments the organization becomes more complex, but the division and the organization are not identical. The organization may be very highly developed in industries which, from their nature, do not allow a minute division of labor, and the organization may be very weak at cer tain points, though a thorough division of labor has been introduced. Those improvements in the organization of industry which prevent mis applications of capital or energy materially reduce the costs of production. As the organi zation of industry becomes more intricate, it be comes at times more sensitive, and a reduction of costs may often be secured by such changes in the forms of organization as shall secure more perfect insurance against loss.

The survey of the organization of industry should lead to a clear conception of the source of the productive power of society. Modifying the phraseology of to bring it more nearly into conformity with the terms employed in the preceding discussion, and reversing the order of 1 Prznciples, Bk. I., Chapter VII.

enumeration that the sources may appear in the order of their importance, we may conclude that the productive power of society will be great when there exist : (a) active cooperation of society, especially of the State, and consequent judicious direction of the social forces ; (b) con ditions favorable to a high degree of energy, enterprise, and moral trustworthiness; (c) serial methods of production — the outward indication of which is the presence of relatively large quantities of future goods ; (d) possession of abundant material resources.

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