The Mechanism of Production of Labor
( Originally Published Early 1900's )
IN the sense of the definition of labor given in as it will be seen that nearly all men are laborers, because they are nearly all engaged in doing something for a living. The exceptions would be capitalists who live entirely from the interest upon their investments, and owners of real estate who live entirely upon their rents. But the capitalist or owner generally has a large surplus income which he has to manage, and in this case the work of managing it might legitimately be considered labor. It is, however, little more than a question of taste whether to call it so or not. Leaving out of consideration this and other exceptional cases, we may see that every able adult man is doing something to make a living, and so may be called a laborer.
The Economic Laboring Unit. Only a minority of the population which inhabits a country is actually engaged in economic production. The general rule is that the laborer has a wife and family to support. The former is lending him material help by cooking his food and mending his clothes; but there is no need of our complicating the matter by considering her a separate agent in production. The subject will be most easily treated by considering the laborer and his family as a unit in the social organism. The producing power of this unit is in our own country the work of the laborer himself. Its consumption is not only his individual consumption, but that of his whole family. Hence when, as in the last chapter, we consider the food and clothing consumed by the shoemaker as elements which go into the making up of a pair of boots, we ought to add the food and clothing consumed by his family.
In most European countries the wife and even the children of the laborer are obliged to take part in the work of production. In this case we cannot so well consider the family as a unit, and in fact it would be rather difficult to define the unit with precision. Perhaps the best course would be to consider the number of men who could do the work of the whole family as representing the number of laboring units included in the family. We should then have to divide the consuming power of the family into that number of parts in order to get the relation of the productive and consuming powers.
Distinction of Laborer and Capitalist. The typical laborer is a man who saves nothing from his income to assist him in future production, and who is therefore dependent upon some one else for the capital to render his labor effective. This definition applies not merely to the day-laborer, but to many in the higher walks of life ; to any one, in fact, who does not save money for investment, or own property or capital engaged in production. Such a person may be a physician, a lawyer, a clergyman, or a general. The philanthropic tendencies of society, which we shall hereafter have to consider, lead men to look upon those who live by manual labor as forming a class distinct from those who practise the professions or perform only mental labor.. In economics this distinction is of secondary importance. Yet we should recognize it wherever any essential question depends upon it.
It will be seen that the above definition of laborer would not include a shoemaker who owned his own tools and leather. He would be at the same time laborer and capitalist. Although the laborer and capitalist are so often identical, there is an advantage in considering them as economically distinct. We must therefore separate the functions of laborers from those of capitalists, even when they are united in the same person.
The Wages of Labor. If we define wages as meaning in the widest sense the gainings of the laborer, then we should consider all classes of laborers as receiving wages. The wages of the farmer and mechanic would be the value of his product sold after paying all the costs of raw material, rent, etc. It would therefore depend entirely upon his own ability and exertions whether his wages were great or little. But, in the ordinary acceptation of the term, wages include only the moneys paid the laborer by an employer. This pay may be either according to the time employed, so much per day, month, or year, or it may be by the piece, as in the case of the physician and of many mechanical trades. In the first case the rate of wages would be defined as the amount paid by the employer to the laborer per unit of time in exchange for the laborer's services.
Although the term wages is in ordinary language thus restricted, yet the wider sense, which includes all earnings by the use of one's faculties, would be the more proper one in the general problems of political economy. When we have to consider the case of a person who is obliged to work for somebody else, in contradistinction to the person who is not, then, and then only, is a distinction between wages and other earnings necessary.
Of the Different Kinds of Labor. Prof. F. A. Walker divides labor and laborers into the following five classes :
I. The class who work for themselves and by themselves, either on their own land or in mechanical trades. This class would include small farmers taking part in the cultivation of their own ground, shoemakers who owned and sold their own products, as well as many other workers in mechanical trades. These persons combine the functions of laborer and capitalist.
II. The tenant occupier of land who owns the whole produce, subject only to the deduction for rent.
III. Persons who render personal services for pay, but not in order to assist their employers in production. Such per-sons are domestic servants, soldiers, and clergymen.
IV. Persons working for hire who are paid out of the product of their industry, and whose employers expect to make a profit ont of their services.
V. Persons who employ and manage labor, and who conduct and control business operations.
There is, however, no one classification which will answer all the purposes of economics : the various kinds and conditions of labor merge into each other in such a way that a scientific classification is scarcely possible. From the point of view of practical politics the most important distinction is that between laborers who work by time, that is, who are employed by the hour, day, or month, and those whose gains depend entirely upon what they produce, irrespective of the time it has taken them to produce it. The importance of this distinction arises from the liability of workers by time to be dissatisfied with their wages. When one's gains depend upon what he actually does, he can more readily decide upon the justice or injustice of what he receives than when he works by time. Whether the day-laborer talks about his own wages, or whether the philanthropic public talk about his wrongs, there is in either case an entire want of perception of the relation between the money he receives and the wealth which lie is helping to produce. When one works by the piece for an employer, the evil is lessened, though not entirely done away with. It may be difficult, and even impossible, for the laborer to decide to his own satisfaction whether what his employer pays him per piece is the just equivalent of what he does on that piece. Yet the relation between his labor and what he receives from the product is more evident than in the case of the day-laborer.
The man who sells the products of his labor directly to the public is on a higher plane than either of the preceding : he buys such materials as he needs where he can get them on the best terms, he labors as much or as little as he pleases, and he sells to the best advantage he can. His position is therefore such as to give him a much more accurate view of his relations to society than if he is subject to an employer. In buying his material he feels that he has the whole market to choose from, and that it is wise to be satisfied with the price which he is obliged to pay. If he finds that his product will not command so high a price this week as it did last, he accepts the result as one of the obvious necessary drawbacks of society, and does not fight against the inevitable as the day-laborer sometimes does. If he finds an increase in the price of his product, he takes prompt advantage of it, and does not see the employer get all the advantage of it as the day-laborer does.
From the laborer's point of view it is unimportant whether, when he works under an employer, lie is engaged in productive or unproductive work. That is to say, it makes no difference whether he is merely administering to his employer's gratification by taking care of his horses, beautifying his grounds, and administering to his wants, or whether he is making things for him to sell. But from an economic point of view this distinction is the most important one of all. In other words, Walker's third class, whose services to society terminate with their employers, form economically a class by themselves, having entirely different functions from those of all other classes.
The Modern Orgagaization of Labor. If we compare our industry with that of past ages we shall see that its most remarkable feature is the large scale on which manufacturing operations are conducted, and the number of persons who con-tribute to each product. Necessarily connected with this is a complexity of operations formerly unknown. A hundred years ago there was only one best way known to make every part of a gun, and that way had been known and followed for so many generations that any person of fair mechanical talent could learn to make a gun as well as any one else. In nearly all the trades a regular apprenticeship was gone through with; the boy became a journeyman, and the journeyman in time became a master-workman. Each did his work as generations before him had done it, and each supplied only a limited community immediately around him. Transportation was so costly that nearly all bulky commodities had to be produced near the place where they were consumed, and none but those which had great value in a small space could be transported to any great distance overland, except at a corresponding disadvantage.
Modern inventions, especially the steam-engine, the railway, and labor-saving machinery, have changed all this. Three new factors have come into play :
I. The division and combination of labor. Instead of one man finishing an article for himself, he may do only a minute part of it, and it may go through scores of hands before being finished.
II. The substitution of labor-saving machinery for human hands in production. Single pieces of machinery will do work which would have required hundreds of men ; thus production on a large scale is facilitated.
III. The construction of railways, whereby it has become possible to collect and manufacture most articles in great central establishments.
These three factors are inseparably connected. Without cheap transportation manufacture on a large scale could not have been advantageous. Labor-saving machinery can be used only when the sale of the commodity is sufficiently great to justify the construction of the machine.
The Division of labor. The term division of labor is applied to that system under which, instead of each laborer completing an article of manufacture, a number of laborers divide the work up in such a way that each person shall do repeatedly a small portion of it. A striking example is seen in a modern American watch-factory. Instead of one person making a whole watch, hundreds of hands unite their labors. Each different kind of wheel is made independently by a separate person. Each person who makes these separate parts puts his product in a little case by itself. An operative takes from each case the parts necessary to make one watch, and puts them in a box. He is doing this nearly all the time. The box containing the parts necessary to one watch is handed to an operative near one end of a long table. This operative puts together a certain portion of the watch, and passes it to the next one. The operation is repeated as the box goes from hand to hand, and thus, in a few minutes, what at one end of the table had been a miscellaneous pile of screws, wheels, and pieces of brass appears at the other end of the table a finished watch.
The advantage of the division of labor is that a given number of persons can complete a much larger product than they could working singly. The reason of this is that a skill is acquired in the performance of one operation which could not be acquired if the person had to learn a great many operations, and that the time of passing from one to the other is saved. Moreover, the number of tools and other appliances required is greatly diminished. If one person had to finish the product, he would need to command all the tools necessary for all the processes. When doing but a single process, he only needs the tools necessary for that one.
The disadvantage of the division of labor is that when carried to the fullest extent it dwarfs the mental development of the individual. But lamentations over the sad lot of the man who spends his whole life in making the tenth part of a pin belong to the moralist and philanthropist, rather than to the economist. Such a man may be regarded as an extreme example of the effects of civilization, since his life contrasts most strongly with that of the savage roaming at pleasure over the plains.
Labor-saving Machinery. Before the invention of cotton-spinning machinery and power looms, wool had to be spun and cloth woven by hand. " Each weaver's cottage formed a separate and independent little factory. The yarn for his warp was bought by him in a prepared state, the wool for his welt was carded and spun by the female members of his family, and the cloth was woven by himself and his sons." * Of course the present system was not substituted for this ancient one at a single step. The greatest step, however, and that from which it is usual to date our modern cotton manufacture, was the invention of the spinning-jenny and throstle, by Hargreaves and Arkwright, about 1770. The result of this is that more cloth is now manufactured by a limited number of operatives than without machinery could be produced by the united labor of the whole world.
The invention and application of labor-saving machinery is a process which is continually going on, and to which it is difficult to see any limit. The mere enumeration of the kinds of machinery now used in special branches of manufacture would fill a book. The boots on our feet, the coats on our backs, the watches in our pockets, the furniture in our houses, are now mostly made by machinery, and all that human hands have to do is to direct and feed the machine.
Steam Transportation. A century ago the number of people who could be supplied with any but the lightest articles of manufacture from a single point was greatly limited by the cost of transportation. It is difficult for us to imagine a state of things in which goods could be brought overland from one point to another only in wagons drawn by horses, mules, or oxen. Steam navigation has done much to facilitate transportation across the ocean, but has been more effective in facilitating intercourse between men than it has in transporting goods, since even now the heavier and cheaper style of goods are still carried across oceans by sailing-ships. But on land the railway has worked a complete revolution. The most important effect of this revolution is this : that all but the heaviest goods can be carried a thousand miles at a cost which is comparatively small compared with that of their manufacture on a small scale. Roughly speaking, the cost of transportation over long distances on the competing lines of rail-ways is from three quarters of a cent to two cents per ton per mile. A pound weight is carried from one to two thousand miles at the cost of a single cent. If a pair of boots be made in New York and delivered in Chicago, the additional cost due to transportation will not be ten cents.
Thus arises a tendency to concentrate in great establishments the manufacture of those articles which are widely used and are not very heavy. We may imagine that ten millions of people scattered over a tract a thousand miles broad could have all their clothing, boots, furniture, and books made at one central point. This would enable the division of labor to be carried to the greatest extent, the most improved 'forms of machinery to be introduced, and all the advantages of manufacturing on a large scale to be made available. Although this state of things is by no means reached, we see a continual approximation towards it, in the increasing number of great manufacturing establishments which can supply large tracts of country with goods more cheaply than they can be made in the place where wanted.
To do this successfully requires organization. In organization two elements are necessary : there must be willingness on the part of laborers to become parts of the organization, and to work conscientiously and persistently in that capacity, and there must be organizers of their labor. To the latter class our attention is next to be directed.
The Organizers of Labor. If the laborers whose work is to be combined in the modern system could all work together in unison, and do everything necessary to success without any one to guide and direct them, modern society would be very different from what it is. But as a matter of fact they cannot do this. Thus the necessity of an organizing power arises. This organizing power is as important as the labor itself; and in one sense it is more so, because there are hundreds of men who are fit to labor to one who is fit to organize and direct.
We may illustrate the necessity of an organizer by adducing a familiar and not at all extreme case, that of building a house. When one looks at a house in connection with labor, he is prone to think of it merely as the product of the work of so many bricklayers, hod-carriers, carpenters, plasterers, and glaziers. But if we look closely into the matter we can see how badly these laborers would have got along without a managing head. The bricklayers would not have known where they could have bought the brick and sand suited to the house on the most economical terms. They would probably get all their material at once, and on mixing their mortar find that they' had forgotten the necessity of its ripening before the building was commenced. During the week or two required for this purpose they might have to remain idle. On commencing work they would have endless trouble in deciding what each man should do and how the money should be divided. They would probably misunderstand' the plans, build wrong, and have to begin over again in consequence. When the time came to put in the first window-frame they would find that the carpenters were not ready with the material, and would have to wait for them. The same difficulty would occur in laying the joists, and would repeat itself oftener and oftener at every stage of the process. The final result would be either that the house would never get built at all or would get very badly built, and that only after the men had put into it twice as much labor as they would have done under competent direction.
To describe the functions of the manager more in detail : He must see that all the necessary raw materials are purchased in the best markets and at the proper time ; that they are of proper quality and are suited to his machinery and labor; that they arrive at the factory at the proper moment ; that the factory is ready to receive them, and that they are so cared for as not to suffer deterioration from any external or internal cause ; that the machinery is kept in good order ; that the various employés know their business ; that the least possible amount of waste occurs while the processes are going on ; that the things made are those which other people want, and that they are made in the proper quantities ; that arrangements are made for preserving them until they can be sold ; that the employees are paid at the proper times; that useful improvements in the machinery are introduced, while no money is wasted in unsuccessful experiments ; that the proper number of operatives are at work in every department, and that they are the persons best suited to perform their respective duties. In a word, the manager must see that every one of the countless causes that might lead to the injury of so complicated and delicate an organization is carefully guarded against. The ability to do all this well is so rare that we must look upon the manager as the most important factor in the work of production on a large scale.
The Efficiency of the Laborer. We have spoken of the laboring unit in a way which might imply that one such unit could be considered the equivalent of another. Such, however, is by no means the case. It is impossible to measure the labor of a railway manager and that of the digger of a canal by any common standard. This is obvious enough. But it is also true, though not so obvious, that we cannot assume any equality between laborers of different classes, even when they are engaged in similar kinds of work. The result of the day's work depends upon the man who does it, what he does it with, and what he does it for; and when any of these three factors are different the result is different. Laborers differ among themselves in hereditary capacity. for work, and their efficiency depends upon their food and their abilities. 'A single beef-fed English laborer is the equivalent of several, we could hardly say how many, under-fed Russian peasants. If we are to compare them, we should consider a group of the latter as representing a single one of the former.
Disposition to labor is equally important with physical strength. Certain races of men will not work more than absolutely necessary for their subsistence on any account what-ever; other races would be unhappy without constant employment.
This explains the fact that those countries where wages are high compete successfully with those where they are low. For example, although nominal wages are fifty per cent higher in America than in England, and twice as high in England as on most of the continent of Europe, yet American manufacturers of cotton can compete with those of England on even terms, while but few European countries can compete with either of them, and feel obliged to protect their home manufacturers by protective tariffs. The docility and know-how of the American enables him to manage machinery so much better than his European competitor that the cost of the labor put into a yard of cotton is actually less here than in any other part of the world.
Of course the efficiency of the laborer depends also upon his adaptation to his special work. For the work of digging a canal nothing but physical strength is necessary. But if we consider any work higher than that of carrying and digging, we shall find that the laborer needs qualifications of a higher order than mere physical strength. If he learns a trade, the time required for this purpose will depend largely upon his natural aptitude. If he does not possess a certain amount of skill lie can never be entrusted to manage a machine. Thus his efficiency would be greater or less according to his natural or acquired qualities. Finally, it goes without saying that one class of laborers might do one kind of work better, and another class another kind. As an example showing how national habits affect the efficiency of labor, we may cite a drawback under which manufacturers labor in Russia. The religious holidays, which the common people of that country consider it imperative to observe, are so numerous and come at such irregular intervals, that great manufacturing establishments requiring regularity for their economical management can scarcely be managed without the aid of foreign labor. When the holiday comes, the Russian laborer must leave his work no matter what the state of affairs, the pressure of steam, or the need of his being present to carry on the operations of the establishment.
Friction of Exchange. The kinds of labor described in the preceding sections are those entirely devoted to the work of production. But if we use the terms labor and laborer in their most general sense, we should include all exertion of the human faculties necessary to keeping the social organism in operation. Among the operations necessary for this purpose, one of the most important is that of exchange; hence whatever time or work is required in effecting exchanges should be included under the head of labor. We have, therefore, another class of laborers whose function it is merely to buy, to take charge of and to sell commodities, without any changes being made in them in other respect This class includes bankers, brokers, merchants, shop-keepers, and retail dealers of every kind.
On a superficial view this labor does not really appear to be a necessity of the social organism. If the producer of a commodity sends it at his own expense to the very place where the consumer lives, and the latter is willing to go and get it, why should a third party step in to take a portion of the price ? The answer is that if his services were not valuable, men would certainly not pay for them. Quite possibly, if human nature were a little nearer perfection than it is, and if men knew their wants exactly and adopted the best system for supplying them, we could get along with a good deal less labor in conducting exchanges. There is a certain analogy between the necessity for this labor and friction in machinery. In a perfect machine, as it is conceived in the mind of the mathematician or physicist, there need be no friction. But in all machines actually made by man there is friction, and the mathematician who calculates the forces necessary to run it must take this friction into account as a resistance requiring additional power to be applied. So the cost of getting a barrel of flour from a firm in New York City to a baker in England is not only the cost of freight and of the handling and carrying of the flour, but also certain profits or wages of jobbers, grocers, shippers, and others who have to buy the flour from one party and sell it to another. From the analogy of this labor to the power required to overcome friction in a machine we shall call what it overcomes friction of exchange.
In the wholesale markets, where goods are bought and sold on a large scale, the friction of exchange is very small. It attains its minimum in the sale of stocks at the great money centres. The commission of the broker is here only about one eighth of one per cent. It is larger where goods of any sort are traded in, because the man who buys the goods must always run some risk of their deteriorating on his hands; but in wholesale transactions it is still too small to be a very important factor in the ultimate price to the consumer. The friction attains its maximum in the sale at retail of those commodities which are most likely to deteriorate or become worthless in the hands of the dealer. It is also great in the case of those goods sold in quantities so small that the time spent by the dealer in showing them to his customers, or wrapping them up, has a value equal to an important fraction of the value of the goods. For reasons which the reader can readily work out for himself, books, fancy goods, including haberdashery, and fresh vegetables, are among the things for which the friction of exchange is greatest.
With the labor necessary to overcome the friction of exchange must be included that of merely inducing people to buy things which they would not buy if left to themselves. Very often a man who does this successfully may get one third, one half, or even two thirds of the price. The labor of travelling book-agents is an example. In country districts, where there are no stores within convenient reach, the services of peddlers may be really necessary, but in cities we must consider their principal function to be that of persuading people to buy their wares.