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not an employer simply because he is a capitalist, or to the extent only to which he is a capitalist.
Now all this is evident to any man who looks carefully on our modern industry. Yet the economists, having made their analysis of production in a primitive state, wholly neglect these later developed duties of the employer, this new and far higher function; and insist on regarding the capitalist as himself the employer. They resolve the entire industrial community into capitalists and laborers;1 and divide the whole product between the two. To the contrary, I hold that no theory of the distribution of wealth, in modern industry, can be complete which fails to make account of the employing class, as distinguished in idea, and largely also iu its personnel, from the capitalist class.
It would, I admit, be difficult to prove the importance of the entrepreneur function in industry, just as it would be difficult by argument to establish in the mind of an objector, a true conception of the functions of the general in war. Those who know nothing about warfare might believe that campaigns could be conducted on the principle of popular rights and universal suffrage. Why not? There is the materiel of war (capital) in abundance; here are the soldiers, (laborers), who, if any fighting is to be done, will have to do the whole of it; why should not these soldiers take those guns, and do their work? In much the same way, those who know little practically about production are easily persuaded that the troublesome and expensive "captain of industry" may be dispensed with, and his place occupied by a committee or a mass meeting.
1 "The ultimate partners in any production maybe divided into two classes, capitalists and laborers. ... If the distributor be the capitalist, the share of the laborer is called wages. If the distributor be the laborer, the share of the capitalist is called either interest 01 rent."—Hearn's Plutology, pp. 325-7.
We have had but few instances of actua] attempts to conduct campaigns on the town-meeting plan, the most notable, perhaps, being the crusade of Walter the Penniless and the first Bull Run ; but there have been numerous efforts made to get rid of the entrepreneur, and it is in the almost universal failure of such efforts that we have the highest evidence of the importance of this functionary in modern industry. Cooperation,1 which is nothing more or less than the doing away with the middleman, has several distinct advantages, of vast scope, in production; yet these have been weighed down again and again, even under conditions most favorable to the experiment, by the losses resulting from the suspension of the employing function. Let those who resolve the industrial community into capitalists and laborers only, and divide the whole product between these two classes, explain, if they can, the failures of cooperation.
It has been said that the omission of the economists to recognize the employers as a distinct class in modern industry, is presumably due, in part, to the tendency to go back to the savage, or to a very primitive state, for illustrations of the nature and offices of labor and capital. But I believe that it is also in part due to the fact that the real employing class is covered up, more or less, from casual viewr, by what may be called a false employing class, many times more numerous. This false employing class, as I make bold to call it, is composed of several considerable bodies of so-called employers.
JL Th£Sj3jvJioJiir£_^^ to be paixL out of revenues already acquired^ Eeasons have already2 been assigned for removing persons so engaged or employed from the wages class, and treating them by themselves as the "salary or stipend class/' Of
1 A wholly erroneous conception of cooperation, due to the neglect of the entrepreneur-function, is exposed on page 264.
2 P. 215.
course, the same reasons require the removal of their masters or patrons from the lists of the employing class. If we were to consider the domestic servants, alone, of England and the United States, we should find the socalled employers to be far more numerous than those who pay wages to laborers whom they hire for profit. No wonder that when those who are paid out of revenue are confounded with those who are paid out of the product of their labor, the inclusion of the masters of the former class should obstruct the view of the far less numerous employers of the latter class.
JL, In this false employing class are large numbers of artisans, who have single apprentices. Such an artisan might, for instance, earn. $500 a year by his own unassisted labor, while his gains by the apprentice's services might be $50. So far, doubtless, he is an employer of labor, and his gains are entitled, on a nice judgment of the case, to be called "profits ; " but these bear so small a proportion to his other source of income, and he is, in his capacity of employer, of so little account, that we cannot afford to be encumbered by carrying him on as the employer of a third or a fifth part of an able laborer. A single cotton manufacturer or iron master may employ a thousand times, or five thousand times, as much effective labor. It is of more importance that we should see the cotton manufacturer and the iron master in their true relations to the great body of labor seeking employment, than that we should trouble ourselves about the economical status of the fraction of a laborer who is perhaps, at present, spoiling more material than his work is worth. The principle of the lawT, de minimis non citratur, applies with even greater force in political economy. What we need in studying the problem of distribution is not a nice theoretical classification, but a just and strong exhibition of the great groups of our modern industrial society.1
1 For remarks of Prof. Cairnes regarding the office of economic definition, see page 218.
3.. Another large body which we need to exclude, temporarily, at least, from the employing class, in order that we may get a proper view of its real constitution, is that where the condition is one of nominal employment but of substantial partnership. This includes a great number of cases where two men, or perhaps three, of a trade, approximately equal in skill and experience, the work of the one being merely a repetition of the work of the other, labor together at the bench, one being recognized as the master, the other receiving wages; yet where the reason for one being the employer and the other the employed is so slight, the equality of skill and experience so well maintained, the character and the profits of the business so well understood by him who receives wrages, and the ability of that person to set up for himself so evident, that the employer virtually becomes little more than the senior member of a partnership where the nominal wages and terms of service are scaled to give a substantial equality of remuneration, with some slight compensation to the senior member for extra trouble and responsibility.
4. There remains to be characterized a fourth class of persons to whom I do not wish to deny the title of employer, but whom it is desirable for the moment to isolate, those, namely, who, having mistakenly become by occupation the employers of labor, through helplessness or false pride cling to the skirts of the profession, and remain in a small and miserable way conductors of industry, following humbly and at a distance the example of leading houses; content, in flush times, to make a little profit on a little product, using generally antiquated machinery, consuming materials of doubtful quality, and making a low class of goods, but shutting up promptly on the first intimation of hard times, or just so soon as competition becomes close and persistent. Numerically the men of this class constitute a considerable proportion of every trade; but if we consider the aggregate product, their part is comparatively slight.
I do not mean to embrace in this class any manufacturer merely because his establishment is a small one. It would be easy to show that in some departments of production, perhaps in most, petty establishments fill a place, take up a certain amount of labor not otherwise employed (as, for instance, the labor of the wives and daughters of agriculturists in the immediate neighborhood), find a distinct market to which, in a homely but useful way, they adapt themselves perhaps better than the monster factory can do. The commerce of the world requires not only the ship of 5,000 tons, but the schooner, the lighter, and the dory.
Yet of no small part of these petty establishments wrhich make short runs from point to point between storm and squall, it may be boldly asserted that they answer no true industrial purpose. Their only raison tfttre is found in the fact that their proprietors, having committed themselves to the profession of the entrepreneur, having come into the possession of a certain amount of the machinery and agencies of production, and being unable to betake themselves, at the point of life they have reached, to another occupation, or being unwilling to so openly confess failure, can pick up a very poor living in this way. And of employers of this sort, it is significant to note, laborers are not apt to be jealous. They are known to have a pretty hard time of it. Their lot is not envied, and they commonly receive the sympathy of the general community and of their hands; while the successful captain of industry, who amasses a giant fortune, is regarded by not a few as having despoiled the laboring class. Yet it is incontestable that the profits of the former constitute by far the heavier tax, dollar for dollar, upon the product of labor. Nothing costs the working classes so dearly, in the long run, as the bad or merely commonplace conduct of business.