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CHAPTER VIII.

INDUSTRIAL ORGANIZATION.

tion increases

logy.

§ 1. WRITERS on social science from the time of Plato downwards have delighted to dwell on the in- The doctrine creased efficiency which labour derives from or- that organizaganization. Adam Smith gave a vivid descrip- efficiency owes tion of the advantages of the division of labour; much to biohe pointed out how they render it possible for increased numbers to live in comfort on a limited territory; and he argued that the pressure of population on the means of subsistence tends to weed out those races who through want of organization or for any other cause are unable to turn to the best account the advantages of the place in which they live. Before two more generations had elapsed Malthus' historical account of man's struggle for existence set Darwin thinking as to the effects of the struggle for existence in the animal world. Since that time biology has more than repaid her debt; and economists have learnt much from the profound analogies which have been discovered between industrial organization on the one side and the physical organization of the higher animals on the other. The development of the organism, whether social or physical, involves a greater subdivision of functions between its separate parts on the one hand, and on the other a more intimate connection between them. Each part gets to be less and less self-sufficient, to depend for its well-being more and more on other parts, so that no change can take place in any part of a highlydeveloped organism without affecting others also.

This increased subdivision of functions, or "differentia

Differentiation and Integration.

tion" as it is called, manifests itself with regard to industry in such forms as the division of labour, and the development of specialized skill, knowledge and machinery : while "integration," that is, а growing intimacy and firmness of the connections between the separate parts of the industrial organism, shows itself in such forms as the increase of security of commercial credit, and of the means and habits of communication by sea and road, by railway and telegraph, by post and printing-press. This leads us to consider the main bearings in economics of the law that the struggle for existence causes those organisms to multiply which are best fitted to derive benefit from their environment. This law is often misunderstood; and taken to mean that those organisms tend to survive which are best struggle for fitted to benefit the environment. But this is not its meaning. It states that those organisms tend to survive which are best fitted to utilize the environment for their own purposes. Now those that utilize the environment most, may turn out to be those that benefit it most. But it must not be assumed in any particular case that they are thus beneficial, without special study of that case'.

The law of

survival.

Harmonies

and discords between individual and collective interests.

§ 2. Adam Smith was aware that competition did not always cause the survival of those businesses and those methods of business which were most advantageous to society; and though he insisted on the general advantages of that minute division of labour and of that subtle industrial organization which were being developed with unexampled rapidity in his time, yet he was careful to indicate points in which the system failed, and incidental evils which it involved. But many of his followers were less careful. They were not contented with arguing that the new industrial organization was obtaining victories over its rivals in every direction, and that this very fact proved that it met a want of the 1 This subject is discussed at some length in Principles IV. VIII. 2, 3.

times, and had a good balance of advantages over disad vantages: but they went further and applied the same argument to all its details; they did not see that the very strength of the system as a whole enabled it to carry along with it many incidents which were in themselves evil. For a while they fascinated the world by their romantic accounts of the flawless proportions of that "natural" organization of industry which had grown from the rudimentary germ of self-interest. They depicted each man selecting his daily work with the sole view of getting for it the best pay he could, but with the inevitable result of choosing that in which he could be of most service to others. They argued for instance that, if a man had a talent for managing business, he would be surely led to use that talent for the benefit of mankind: that meanwhile a like pursuit of their own interests would lead others to provide for his use such capital as he could turn to best account; and that his own interest would lead him so to arrange those in his employment that everyone should do the highest work of which he was capable, and no other.

This "natural organization of industry" had a fascination for earnest and thoughtful minds; it prevented them from seeing and removing the evil that was intertwined with the good in the changes that were going on around them; and it hindered them from inquiring whether many even of the broader features of modern industry may not be transitional, having indeed good work to do in their time, as the caste system had in its time: but like it chiefly serviceable in leading the way towards better arrangements for a happier age1.

1 Physical peculiarities acquired by parents during their life-time are seldom, if ever, transmitted. But the children of those who lead healthy lives physically and morally are perhaps born with a firmer fibre than others, and certainly are more likely to be well nourished, well trained, to acquire wholesome instincts, and to have that self-respect which is a mainspring of progress.

CHAPTER IX.

INDUSTRIAL ORGANIZATION, CONTINUED. DIVISION OF LABOUR. THE INFLUENCE OF MACHINERY.

§ 1. THE first condition of an efficient organization of

Plan of this

and the two

following chapters.

industry is that it should keep everyone employed at such work as his abilities and training fit him to do well, and should equip him with the best machinery and other appliances for his work. We shall confine ourselves to the division of labour between different classes of operatives, with special reference to the influence of machinery. In the following chapter we shall consider the reciprocal effects of division of labour and localization of industry; in a third chapter we shall inquire how far the advantages of division of labour depend upon the aggregation of large capitals into the hands of single individuals or firms, or, as is commonly said, on production on a large scale; and lastly, we shall examine the growing specialization of the work of business management.

Everyone is familiar with the fact that "practice makes Practice perfect," that it enables an operation, which at makes perfect. first seemed difficult, to be done after a time with comparatively little exertion, and yet much better than before; and physiology in some measure explains this fact'. Adam Smith pointed out that a lad who had made nothing but nails all his life could make them twice as quickly as a firstrate smith who only took to nailmaking occasionally. Anyone who has to perform exactly 1 This point is studied in some detail in Principles IV. Ix. 1.

Illustrations.

the same set of operations day after day on things of exactly the same shape, gradually learns to move his fingers exactly as they are wanted, by almost automatic action and with greater rapidity than would be possible if every movement had to wait for a deliberate instruction of the will. One familiar instance is seen in the tying of threads by children in a cotton mill. Again, in a clothing or a boot factory, a person who sews, whether by hand or machinery, just the same seam on a piece of leather or cloth of just the same size, hour after hour, day after day, is able to do it with far less effort and far more quickly than a worker with much greater quickness of eye and hand, and of a much higher order of general skill, who was accustomed to make the whole of a coat or the whole of a boot.

Again, in the wood and the metal industries, if a man has to perform exactly the same operations over and over again on the same piece of material, he gets into the habit of holding it exactly in the way in which it is wanted, and of arranging the tools and other things which he has to handle in such positions that he is able to bring them to work on one another with the least possible loss of time and of force in the movements of his own body. Accustomed to find them always in the same position and to take them in the same order, his hands work in harmony with one another almost automatically: and, as he becomes more practised, his expenditure of nervous force diminishes even more rapidly than his expenditure of muscular force.

The provinces

machinery.

But when the action has thus been reduced to routine, it has nearly arrived at the stage at which it can be taken over by machinery. The chief difficulty of manual lato be overcome is that of getting the machinery bour and of to hold the material firmly in exactly the position in which the machine tool can be brought to bear on it in the right way, and without wasting too much time in taking grip of it. But this can generally be contrived when it is worth

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