Requisites of Production
( Originally Published Early 1900's )
To see what we mean by the requisites of production, let us return to our starting-point. We see in man a being moved to action by innumerable wants. The satisfaction of these wants constitutes his well-being, and the exertions which he makes to attain this well-being are called his labor. The process of employing his labor so as to produce the greatest well-being requires certain agencies which are included under the term wealth. The operation of bringing wealth into existence and making it available for well-being is called production. Now if men could at any moment produce all the wealth they wanted without regard to conditions, the state of the world would be entirely different from what it is. As a matter of fact, the successful production of wealth requires the employment of objects and agencies of various kinds. Any object or agency which conduces to production is called a requisite of production. To illustrate the requisites of production, let us see what had to be done in order that a coat should be made for a man to wear.
In the first place, sheep had to be reared, pastured, and sheared in order that the wool necessary for the coat should be obtained. The breeding of the sheep required a considerable expanse of land on some western prairie or in the interior of Australia. It is obvious that without land there could be no grass and therefore no wool. Now land is in its original state a gift of nature which men cannot make at all. In the further process of manufacture a factory had to be erected and machinery of brass and iron employed. A particular kind of earth was necessary to make the bricks out of which the factory was built, and the iron had to be extracted from iron ore. Both these materials had to be taken out of the earth, and their ownership is associated with that of land. If the machinery was run by water-power, a river was necessary ; if by steam-power, coal had to be dug from the earth to make the fires which produced the steam.
If we take up any other article of wealth and inquire how it was made, we shall find that we start in the same way with natural products, such as soil, metallic ores, beds of coal, rivers and oceans. These products are at the basis of production, and the most important of them are found under or in the ground. We therefore have the two following propositions :
I. Natural products are the first requisites of production.
II. The principal natural products which are material in form are found under or are derived from the soil.
Another requisite to the coat is capital, of which the material and machinery may be considered typical. They are appliances which have no use in themselves, but without which the coat cannot be made. Capital is therefore another requisite of pro duction.
Yet another requisite is labor. Everybody sees that a coat cannot be made unless the drovers, shearers, railway employés, operators, dealers, and merchants all perform certain functions; and such performance we call labor.
But there is yet another condition which may be to a certain extent included under labor and skill, but which nevertheless has a basis distinct from either. This something is organaization. It probably took many hundred men to make the coat. Only one man out of all these knew who the coat was for, and he did not know it until the owner went to buy it or to order it. All these hundred men must work in unison, and must acquire certain habits and Customs in order to do their work to the best advantage. The men who direct them, especially those who bought and sold the goods, required long experience to know just whither the wool and the cloth should be taken, and to whom they should be sold, in order that the wearer might get his coat in the most economical way. These habits, this knowledge, and this business skill are things of slow growth from generation to generation, and being necessary to the coat should be considered requisites of production.
Of Knowledge as a Requisite of Production. Proceeding with our inquiry, we see that another requisite equally necessary, though often forgotten, is knowledge. In knowledge we may include skill of any kind.
If men do not know how to cultivate the ground, to shear sheep, to spin and weave economically, and to manage all the complicated machinery necessary in applying the powers of nature, there could be no coat made, or at least only a very inferior and costly article. Knowledge is therefore an indispensable requisite, and one for which large sums of money may be paid. The owners of a silver-mine will readily give thou-sands of dollars to an expert geologist merely to be informed of the probable amount and situation of the ore which may be contained within their property. What they pay for in this case is nothing but knowledge, since the geologist they employ is not expected to do anything but give them information. Knowledge is a product of labor, since, omitting exceptional cases, no one can acquire it without that exertion of the faculties called labor. The acquisition of knowledge may therefore be regarded as an act of production. But there are two essential points in which the acquisition of knowledge differs from other kinds of production.
I. Diffusibility of Knowledge. In general when wealth is produced it can be transferred only to a limited number of persons. ,What one person gets another cannot have. But valuable knowledge may, by speaking, writing, or printing, be rapidly diffused over the whole world. The producer of knowledge may indeed keep it to himself and seek to derive the whole benefit of it. But as a general rule little benefit will be acquired unless he transmits the knowledge to others. Among men professionally engaged in the increase of knowledge it is generally a matter of honor to make known to the world everything that they discover.
II Tentative Character of the Labor of acquiring Knowledge. The second point in which the acquisition of knowledge differs from other kinds of production is that the acquirer necessarily works in the dark to a greater or less extent. As a general rule the person who is engaged in production knows exactly what he is going to produce, and can estimate in advance with more or less accuracy the amount of labor which lie must expend to attain a given end. But in the pursuit of knowledge the very fact that the investigator is intent on discovering something not before known implies a greater or less degree of ignorance as to what he is going to learn. In consequence there will sometimes, though not always, be doubt whether he is going to learn anything of value. Searching after knowledge is generally like seeking to discover whether a country does or does not abound in mineral wealth. Labor must be spent in investigation, and until the work is done it must be doubtful whether any discovery of value will be made.
Classification of Knowledge. To understand the relations of the different classes of knowledge to the prosperity of mankind we must examine more in detail the different kinds of knowledge. We frequently bear the term" useful knowledge" employed. The use of this term implies the antithetical idea of useless knowledge. From a purely economic point of view this distinction has a certain foundation. Some kinds of knowledge have been applied so as to increase the production of wealth, while other kinds have not. The former may be called useful, and the latter, so far as the production of wealth is concerned, may be called useless. It is therefore very common, especially among men of narrow views, to ask what is the use of scientific investigation or of any kind of learning which does not evidently conduce to the production of wealth. The reply to this is that it is impossible to decide whether a result of investigation is or is not useless until it is fully mastered and understood. Even then years or generations may elapse before we can ascertain how it is to be applied in promoting the good of mankind. As a matter of fact, it is rarely. found that investigations made with an immediate utilitarian object in view lead to any result which is of extended utility. The general experience of mankind shows that, in order to attain results of permanent value and capable of the widest applications, the ruling motive must be the mere desire of learning and not the acquisition of useful results. The explanation of this seeming paradox is found in the tentative character of the search after knowledge already described. We cannot know how a result is going to be useful until we have fully mastered it.
A body of knowledge collected and arranged with respect to its intrinsic completeness, and without respect to its economical applications, is called a science. The relation which we have described between science and the production of wealth may be illustrated by a glance at the history of electricity. When, two centuries ago, physical philosophers began to investigate the attractions and repulsions which were noticed between bodies after being rubbed together, it was impossible to foresee how these facts could be turned to any useful purpose. A hundred years later the experiments of Franklin were looked upon with comparative indifference by his neighbors. The same thing remained true when Galvani and Volta began to experiment on the contraction of the muscles of a frog's leg produced when pieces of metal were brought into contact with it. Mathematicians devoted great labor to investigating the laws of the electric currents before any utilitarian application of the principles could be foreseen. Thus, out of pure curiosity and a desire for thoroughness of knowledge, a science was constructed without any reference to utility.
But as the science became perfected it was found susceptible of uses which its founders could never have dreamed of. First came the electric telegraph, which has been gradually perfected by the laws discovered by mathematicians. Then came the dynamo machine, by which a curious transformation of physical forces was perfected. Instead of getting light directly from combustion we may now burn the coal, turn the heat thus generated into energy by an engine, turn this energy into electricity by a dynamo machine, and finally turn the electricity into heat of great intensity, and thus generate an amount of light exceeding many times over what could have been obtained from the original combustion of the coal. What we are to remember is that all the benefits now or hereafter to be obtained from electricity would never have been known had not several generations of philosophers, out of pure curiosity, devoted themselves to the investigation of the laws of that agent. The same thing is to a greater or less extent true of all the modern applications of scientific principles to production. The knowledge of these principles originates in investigation undertaken from the desire. of acquiring thorough and complete knowledge, and not with the object of reaching any evidently useful result.
The knowledge just described is that of the laws of nature. But after the laws of nature are discovered another class of investigation comes in. It is necessary to discover by measure-ment and observation the constant quantities which enter into the expressions of these laws. For example, it is a law of nature that heavy bodies are attracted towards the centre of the earth. The mere knowledge of this law does not tell us how strong the attraction is. But when we learn by experiment that a heavy body in a vacuum falls sixteen feet in one second, we have an exact quantity which it is necessary to know in order to apply our knowledge. The attractive forces of electricity under different circumstances, the boiling points of liquids, the pressure of gas and vapors at various temperatures and densities, the electric resistances of various materials, and the distances of the heavenly bodies, are examples of an ndefinite number of physical constants which must be known in order that natural laws may be applied so as to secure the greatest results with the least expenditure of labor.
Statistical and geographical knowledge, maps of the country, and tables of fertility of the soil may be considered as belonging to the same class with the knowledge of the constants of nature. What distinguishes this class of knowledge is that it is not pursued in the dark as one has to pursue the discovery of new laws. In determining a chemical constant, making a map of a country, or analyzing a soil, one may know before-hand exactly what he has to do and what the general character of his result will be.
It is an essential characteristic of all the knowledge just de-scribed that when once found it may be transmitted to man-kind in general. But there is something closely allied to knowledge which is not thus transferable. It may perhaps be called individual skill and power of judgment, rather than knowledge. The skill of the mechanic, the administrative abilities of the president of a railroad, and the business knowledge and skill of a merchant belong to this class. All are essential to the most efficient production. In nearly every branch of business a person possessed of the proper talents gradually acquires a sort of knowledge by which lie instinctively avoids mistakes, forms correct judgments of what should be done under various circumstances, and thus acquires a wealth-producing power which inexperienced persons would not possess. If all the producers of the country should lose the special skill and faculties which they have acquired by experience, a severe blow would be struck at the, production of wealth.