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cated; when many persons of all degrees of skill and strength must be joined in labor, each in his place contri. buting to a result which he very imperfectly, if at all, comprehends; when the materials to be used are brought from distant fields, and the products are in turn to be scattered by the agencies of commerce over vast regions, the consumers constituting an ill-defined or an undefinod body, personally unknown to the producer or any immediate agent of his; then a reason for an employer exists which is wholly in addition to that which exists in a primitive condition of industry. The mere possession of capital no longer constitutes the one qualification for employing labor; and, on the other hand, the laborer no longer looks to the employer to furnish merely food and the materials and tools of the trade; but to furnish also technical skill, commercial knowledge, and powers of administration ; to assume responsibilities and provide against contingencies; to shape and direct production, and to organize and control the industrial machinery. And, moreover, so much more important and difficult are the last specified duties of the employer; so much rarer are the abilities they require, that he who can perform these will find it easy to perform those ; if he be the man to conduct business, capital to purchase food, tools, and materials will not, under our modern system of credit, long be wanting to him. On the other hand, without these higher qualifications, the capitalist will employ labor at the risk, or almost the certainty, of total or partial loss. The employer thus rises to be master of the situation. It is no longer true that a man becomes an employer because he is a capitalist. Men command capital because they have the qualifications to profitably employ labor. To these, captains of industry, despots of industry, if one pleases to call them so, capita! and labor alike resort for the opportunity to perform their several functions. I do not mean that the employer is not in any case, or to any extent, a capitalist; but that he is
not an employer simply because he is a cajitalist, or to the extent only to which he is a capitalist.
Now all this is evident to any man who looks carefally 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 em ployer, this new and far higher function; and insist on regarding the capitalist as himself the employer. They resolve the entire industrial community into capitalista and laborers; ? 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 in 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.
I "The ultimate partners in any production may be 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 or rent."—Hearn's Plutology, pp. 325-7.
We have had but few instances of actual attempts to conduct campaigns on the town-meeting plan, the most notable, perhaps, being the crusade of Walter the Penni. less and the first Rull Run; but there have been pumerons 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. Coöperation, 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 coöperation.
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 dne to the fact that the real employing class is covered up, more or less, froin casual view, 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.
1. Those who hire servants or retain assistants who are to be paid out of revenues already acquired. Reasons have already 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
"A wholly erroneous conception of coöperation, due to the neglect of the entrepreneur-function, is exposed on page 264.
· 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.
2. 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 encunibered by carrying him on as the employer of a third or a fifth part of an able laborer. A single cotton mannfacturer 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 w.anufacturer 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 law, de minimis non curatur, applies with even greater force in politi. cal 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 mod ern industrial society."
· 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 pominal employment but of substantial partnership. This includes a great number of cases where two men, or perhaps three, of a trade, approximately cqual 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 wages, and the ability of that person to set up for himself so evident, that the employer virtually becomes little more than the senior inember 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 & 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 constitnte a considerable proportion of every trade; but if we consider the aggregate product, their part is com. paratively slight.