Effect of Labor-Saving Improvements in Production
( Originally Published Early 1900's )
EVERY person familiar with industrial operations is aware of the contests which so often arise between artisans and the introducers of labor-saving processes. These contests are being continually waged in one shape or another. The general rule is that whenever a machine is introduced for making what was before made by hand, the workman opposes its introduction by every means in his power. The opposition is based on the very obvious ground that if the introduction of the machine is permitted, it will deprive a part or the whole of the workmen of their employment. For example, the number of boots and shoes which the people of a country wear will not be greatly increased by a reduction in their price. Consequently, if a machine is introduced which, under the guidance of one man, will do the work of twenty shoemakers, a falling off in the demand for the labor of shoemakers is inevitable.
The history of this subject shows one feature which does not receive the attention it deserves. In this contest between the artisan and the machine, the latter has been continually victorious for a hundred years. Class after class of men have seen a large part of their employment taken from them by machinery, so that at the present time there is scarcely any demand for the labor which millions of men had to perform a century ago. And yet, in spite of this, the laborer gets higher wages than he did a century ago, and is as fully employed as he ever was. His victor, instead of crushing him, has benefited him. In the whole history of the contest we do not find a case of a general and permanent fall of wages from the introduction of machinery.
The principles laid down in the preceding chapters enable us readily to account for this. Let us take for example the hypothetical case of a shoe-machine. Suppose a machine to be so perfect that it really makes shoes of every kind and quality for almost nothing, so that after its introduction there is absolutely no demand for the labor of the shoemaker. To fix the ideas, let us suppose that the average flow from the rest of the community to the shoemakers is $5 from each person. Let us also suppose, to make the case as extreme as possible, that the cost of the machine-work is practically nothing, so that every man's shoes on the average cost him $5 less per year. What. is the consequence ? An obvious consequence is that there is , no longer any demand for the labor of shoemakers. A consequence less obvious is that every man has $5 more to expend in some other direction. As already shown, he can only expend this $5 by directly or indirectly demanding that amount of labor or its products. Hence arises an increase in the demand for other kinds of labor exactly equal to the diminution in the demand for shoemakers. The equilibrium is completely re-stored by the class of men who are engaged in making shoes employing themselves in the kind of labor for which there is an increased demand. When this change is completed every one will be as fully employed as before; and every one will enjoy the advantage of cheaper shoes.
We may readily apply the principle here illustrated to the actual historical facts. The introduction of machinery during the last hundred years has to a certain extent changed the direction of men's occupations. Instead of making things with their own hands, as they formerly had to do, they are now managing machines or assisting in various ways in working them. The pin-makers are no longer at work ; a few of them are feeding a pin-making machine, but the majority have learned other employments. A large class of carpenters no longer push the plane ; a portion of them feed the planing-machine, and the remainder are fully occupied in executing work with that in-creased refinement which increased demand has encouraged.
The same change may be traced all through the channels of industry. The general rule which we may lay down is this :
How coperation of cheapening production can cause a diminution in the sum total of the demand for labor. Every diminution which it may cause in one direction is compensated by an increased demand in some other direction.
Effect of Improvements in Production upon Different Classes. In the preceding discussion we have been principally concerned with sums total as affecting the prosperity of men in general, but we have not considered the effects of improvements in production upon special classes. Our general conclusion has been that, taking society at large, there has been a general improvement in the ability of men to command the necessaries and luxuries of life with a given amount of labor. We have also shown that the demand for labor in general can-not be said to vary from generation to generation, because it adapts itself to the varying conditions which come into play from time to time. When the flow of currency increases, the demand for labor increases. Higher wages then can and will be commanded ; but with these higher wages come higher prices, so that if the conditions of production are unchanged, the power on the part of the laborer to command the necessaries of life is unchanged. When we measure demand, not by money, but by commodities, then improvements in production give rise to increased demand, which is met by wages becoming higher when measured by the necessaries of life, though they may not be higher in money.
Thus each class of men is affected by changes in production in two ways—(1) by changes in its money wages, and (2) by changes in the price of the sustenance which it consumes.
The question which now arises is this : From the fact that the demand by the community at large for labor in general remains unaltered through all variations in production, does it follow that the benefit of these improvements extends to all classes? Does it follow that the shoemakers just spoken of can do what the savers of money want done? We reply that it does not so follow by virtue of any general or necessary principle. To get the advantage of improvements in production the laborer may have to accommodate himself to new conditions, and if he cannot do this he may be as badly off as before, if not worse. The question whether he can so accommodate himself is one of mere fact to be settled, not by deductive reasoning, but by an appeal to the history of economic phenomena, and by an examination of the ways in which the laborer must accommodate himself to the new conditions. What we can say with certainty is that, the total demand for labor being unaltered, it follows that if there is a less demand for one kind of labor, there will be a greater demand for some other kind, and vice versa. Hence, if the laborers of any one class do not reap any benefit, there is so much the greater benefit to be reaped by those of some other class. This brings us to the main question ; that is, the power of laborers to pass from one kind of work to another. To consider this question intelligently the reader must have clearly in mind the conditions of this transfer of labor between competing and non-competing groups, as already developed.
Let us begin with the case of shoemakers. Suppose that by means of machinery the amount of labor necessary to the production of a pair of boots or shoes is suddenly reduced to one half. If the community wear no more shoes than before, then one half of the shoemakers must find some new employment. We have already shown that in such a case people who wear boots and shoes will have the amount of money saved by the improvement to spend for other commodities; and if the shoemakers who are thrown out of employment can make these commodities, then they will command the same wages as before, and will, in common with the rest of the community, reap the advantage of having cheaper shoes. But if they can do absolutely nothing but make shoes, they would be compelled to suffer distress.
To see whether any such state of things is probable, we recall that the supposition we have made, namely, a sudden reduction of one half in the cost of making shoes, is an extreme one. As a general rule the improvement is gradual, and the transfer of labor from shoemaking to other branches is brought about, not by men changing their employment under compulsion, but by people who under the old system would have learned to make shoes learning to do something else on the new system. The distress therefore could arise in the way we have pointed out only by a class of men being born who could never learn to do anything but make shoes. As a matter of fact no such men are ever born. There are a large number of mechanical trades requiring the same order of natural skill as making shoes, which men who would otherwise become shoemakers can readily learn.
The question then takes the form whether the members of the community would spend the money saved in their shoes in the demand for products requiring the same skill as shoemaking. Let us for clearness suppose the community divided into three classes, unskilled laborers, skilled laborers, and intellectual laborers. Let us also suppose that every man who is born can find a place in one of these classes, and in only one. We also suppose that in each class he can learn to follow any pursuit which he may select. Then if the community spends the money saved on shoes in demanding products of unskilled labor, the class of unskilled laborers will be the people most benefited, because they will have higher wages and cheaper shoes at the same time. The class of skilled laborers would gain by having cheaper shoes, but lose by having lower wages. We cannot say whether the advantage or disadvantage would be the greater in this case. The demand for intellectual labor would not be altered ; but the educated class also would gain by having cheaper shoes. The general result would be that unskilled labor would gain doubly; intellectual labor would gain singly; skilled labor might either gain or lose. The average result to the community at large would be a gain equal to the saving on shoes.
If the money saved on shoes was expended in the products of other skilled labor of the same order as shoemaking, then the balance would be completely preserved, and all classes would command the same wages as before, but would gain by having cheaper shoes. Finally, if the increased demand was in the direction of intellectual labor, the result would be of the saine general nature as when the demand was for unskilled la-bor. Intellectual laborers would gain doubly by having higher wages and getting cheaper shoes; unskilled laborers would gain singly by having cheaper shoes with the same wages; while the class of skilled laborers would gain in one direction and lose in another.
The question whether all classes are equally benefited therefore turns upon whether, when machinery, knowledge, and methods of production are improved, the general order of skill required in production is increased or diminished. This, I say, is the form which the historical question takes. It is one to be answered by a comprehensive examination of the requirements of modern machinery and labor. The result would probably be that a lower order of some qualities and a higher order of others is required. It is probable that less natural skill of a rare kind is required when goods are made by machinery. So far as this is true, the introduction of machinery is doubly beneficial to the day-laborer by securing him a higher order of employment and cheaper necessaries of life at the same time. It is also true that the management of the machine may require moral characteristics-industry, sobriety, steadiness, honesty, and reliability—of a higher degree than ordinary irresponsible labor. If so, the laborer who does not possess these qualities would again be at a relative disadvantage in consequence of improvements in production. That is to say, he would lose by lower wages and gain by cheaper pro-ducts, and the loss might exceed the gain. We may lay it down as a general rule that the idle, dissipated, and unreliable classes will be in about the same low state, no matter how far society advances. Even philanthropists could do nothing for them, unless it could do away with them in the future by preventing them from being born ; and perhaps there is no effective way of doing this unless by extermination.
There is yet another way of looking at the subject which will lead us to similar general conclusions. The way in which improvements really benefit society is by increasing the quantity and quality of the commodities necessary to existence, health, comfort, and happiness. But when we consider the relations of special classes of men we find that different classes consume different commodities. Improvement in the production of silk dresses, linen shirts, white neckties, gold watches, and fine houses are of no benefit to the class of unskilled laborers, who cannot command or do not want any of these commodities, even when they are cheapest. What is necessary to the amelioration of this class is improvement in the production of corn, pork, coarse cloth, flannel, and cheap houses. We may then inquire whether the production of this last class of commodities has improved as much as that of the other and higher classes. If so, then all classes will be benefited in the saine proportion. If the improvement in producing the necessaries of life exceeds that in producing the luxuries, the laboring classes will have been the greatest gainers. In the contrary case the higher classes will have been the gainers. This, again, leads us to considerations of fact which the reader can advantageously enter upon for himself.
There is, however, one defect in his conclusions to be guard eda gainst. If we inquire into the effect of improvements in production upon human progress, we should make a great mistake if we did. nothing more than compare class with class in the way we have followed in the preceding examples. One of the great fallacies which pervade popular economic reasoning arises from failing to distinguish between small classes and large ones. We hold up for public sympathy a few individual sufferers whom we suppose to have suffered in consequence of the advance of society, and we ask society at large to stop its progress for the benefit of the unfortunate class supposed to be represented by these sufferers, without calculating the number of this class. We must admit that, as men are constituted, they will be moved more strongly to action by individual cases which chance to be presented to them than by considerations of the good of a large class which they do not see. They forget, or will not comprehend, that the interests of millions are more important than the interests of thou-sands represented by some particular petitioner or sufferer whose case has excited their sympathies. This leads us to see that in considering the subject from a philanthropic point of view, the beneficent effect of improvements in production consists in this, that whole classes of men are enabled to enjoy more of the luxuries of life. Fifty years ago the majority of the inhabitants of this country slept on straw beds ; now every inhabitant who wants to can command as good a bed as the richest man in the country, so far as its substantial qualities are concerned. We now see in the cottages of every class of laborers little comforts which fifty years ago could be commanded only by the wealthy. In a word, the number of those who can enjoy the substantial comforts of life is continually increasing through improvements in production, no matter what doubt may be entertained as to the status of the lowest classes of humanity.
It appears that the general effect of the improvements in question is to leave the two extreme classes, the wealthy and the worthless, comparatively unchanged. The former can command all they want whether improvements go on or not. They do indeed gain by the discovery of new means of enjoyment, but this is not a merely economic effect, being due to improvements in knowledge, taste, and morals. The worthless class will always be what it is now, no matter what society tries to do for it. But all classes between these extremes are constantly advancing, and the luxuries of life are becoming accessible to a continually increasing proportion of the population.