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The Limits Of An Economic Society
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Effects Of Dynamic Influences Within The Limited Economic Society
Perpetual Change Of The Social Structure


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Leading Facts Concerning Money
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Perpetual Change Of The Social Structure








Perpetual Change of the Social Structure

We confine ourselves to
that economic society par excellence which we have called the
industrial center of the world. In this region economic influences are
forever changing the very structure of the society itself. They move
labor from place to place in the system and they transfer capital to
and fro in the same way. If we think of our table of groups and
subgroups as representing the whole of this great industrial world, we
must think of labor and capital as in a perpetual flow from subgroup
to subgroup, making some industries larger and others smaller by
reason of every such movement. The great force of labor and the fund
of capital are like restless seas whose currents carry the water
composing them now hither and now yon as the direction and force of
the moving influences change.

Movements of Labor within the Group System caused by Increasing
Population

If the population were to increase while the amount of
capital and the mode of using it remained the same, the effect would
be a downward movement of both labor and capital in the series of
subgroups by which we represent industrial society. Labor and capital
would tend to desert the subgroups A''', B''', and C''' in our
table and to move to A, B, and C:--

A''' B''' C'''
A'' B'' C''
A' B' C'
A B C

Causes of Downward Flow of Labor in the Group System

A larger
population means, of course, not merely an increase in the amount of
labor performed, but also an increase in the number of consumers. It
means more mouths to feed and more bodies to clothe. It entails also,
according to principles that we have already studied, a lower earning
power and a lower rate of pay for labor. This means that simple food,
cheap clothing, inexpensive houses, furnishings, etc., constitute a
larger element in the consumers' wealth of society than they have
heretofore done. Society uses fewer luxuries and more necessaries, and
the necessaries of life are products in which raw materials
predominate and costly form utilities are wanting. This makes a
heavier draft upon the land than does the production of highly wrought
articles of the same value.

Luxurious articles are fashioned with a great amount of artisan's or
artist's labor and a relatively small amount of the labor of
cultivators and miners. The subgroups A, B, and C are the ones
that furnish the rawest materials, and it is they, therefore, that
receive the largest portions of the new labor that enters the field.

How Economic Friction works to the Disadvantage of
Immigrants

Unless capital grows more rapidly than population, there
is a certain friction to be overcome in obtaining places for new
laborers. If they come largely as immigrants, they are crowded at the
points of disembarkation and are then scattered over a large
territory. They may have to gain employment by offering to
entrepreneurs some inducement to take them. If capital has not
increased, and the entrepreneurs are in no special need of new men,
they will take them only at a rate of pay which is low enough to
afford of itself a slight margin of profit. If the capital has already
grown larger and the new men are needed, the situation favors them,
and their pay is likely to be as high as it was before, or higher.

The Effect of Increasing Capital

The growth of capital has an
opposite effect. It means a lower rate of interest, though it means
more interest in the aggregate, since it insures a larger fund on
which the interest is received. The rate does not decline as rapidly
as the amount of the fund increases, and this insures a larger gross
income from the fund; and it also insures larger individual incomes
for many persons. There is, then, a large number of people who are in
a position to make their consumption more luxurious, and this causes
an upward movement of labor and capital in the group system. More
workers will be needed in the subgroups A''', B''', and C''',
where raw materials receive the finishing touches, and also in the
other subgroups above the lowest tier. It is to these subgroups that a
large portion of the new capital itself will come, and the labor will
come with it. Larger incomes, more luxury, more labor spent in
elaborating goods as compared with that required for procuring crude
materials,--such is the order.

Effect of an Increase of Both Labor and Capital

It is clear that a
certain increase of capital might practically neutralize the increase
of population, in so far as the movements thus far considered are
concerned, and a greater increase of capital would reverse the
original downward movement caused by the increase of labor and result
in a permanent upward movement toward the subgroups A''', B''',
and C'''. In this case the men occupy themselves more and more in
making the higher form utilities. They make finer clothing, costlier
furniture, etc., and the new production requires proportionately less
raw material than did the old. This is the supposition which
corresponds to the actual facts. Capital is increasing faster than
labor, and consumption is growing relatively more luxurious;
dwellings, furnishings, equipage, clothing, and food are improving in
quality more than they are increasing in quantity. Goods of high cost
are predominating more and more, and the subgroups that produce them
are getting larger shares of both labor and capital. Population drifts
locally toward centers of manufacturing and commerce. It moves toward
cities and villages in order to get into the subgroups which have
there their principal abodes. The growth of cities is the visible sign
of an upward movement of labor in the subgroup series.

A Change in the Relative Size of General Groups

If all the steady
movements of labor and capital were stated, it would appear that a
relative increase in the amount of labor, as compared with the amount
of capital, would enlarge the three general groups, AA''', BB''',
and CC''', and reduce the comparative size of the general group
HH''', which maintains the fund of capital by making good the waste
of active instruments. Gain in capital estimated per capita would
cause relatively more of the labor and more of the fund of capital to
betake itself to the group HH'''. The movement toward the upper
subgroups which is actually going on is attended by a drift toward
this general group. An increase of luxurious consumption and an
enlargement of the permanent stock of capital goods go together.

Regularity and Slowness of Movements caused by Changes in the Amounts
of Labor and Capital

The important fact about the movements thus
far traced is that they are steady and slow. They do not often call
for taking out of one part of the system mature men who have been
trained to work there. They are movements of labor which do not, in
the main, involve any considerable moving of laborers from group to
group. The sons of the men in the subgroup A do not all succeed to
their fathers' occupations, but many of them enter A', A'', and
A''', so that labor moves from the lowest subgroup to higher ones.
Such a transfer of labor entails few hardships for any one, and in
general it is to be said that all the movements of labor and capital
which are occasioned by quantitative changes in the supply of these
agents are of this comparatively painless and frictionless kind. About
changes caused by new methods of production there is a different story
to tell. The transformation of the world does not go on without some
disquieting results, however inspiring is the remote outlook which
they afford. The irregularity of the general movement, the fact that
it goes by forward impulses followed by partial halts, is a further
serious fact. Hard times present their grave problems, and we need to
know whether it is necessary that dynamics--the natural and forward
movement of the industrial system--should produce them. This problem
is for later consideration.

Movements caused by Changes in the Processes of
Production

Mechanical inventions are typical movers of labor and
capital--constant disturbers of what would otherwise be a
comparatively tranquil state. Dynamos for generating electricity and
devices for conducting it to great distances from its sources have
done much to rearrange the society of a score of years ago, as
economical steam engines had done at an earlier date. Every device
that "saves labor" calls for a rearrangement of labor in the system
of organized industry.

In a perfectly static condition there would be, as we have seen, a
standard shape for all society, which means a normal apportionment of
labor and capital among the producing groups and subgroups and also
among the local divisions of the general area. The elements would
subside to a state of equilibrium and become motionless, as water
finds its level and becomes still in a sheltered pool. The body of
fluid takes its standard shape and retains it, so long as no
disturbing force appears. Now, society would have such a standard
shape and would require, in the absence of dynamic changes, a
relatively short time in order to conform more or less closely to it,
if it were not for the unnatural apportionment of population in
different parts of the area that the society inhabits and the
obstacles which wholesale migrations encounter. For the solution of
problems of the present and the near future we must accept as a
standard the quasi-static adjustment of the population and the
consequent quasi-static selection of industries in the different local
divisions of the broad area--the arrangement that we have described as
locating an excess of manufacturing in the more densely peopled areas
and an excess of agriculture in the more sparsely settled ones. With
this qualification it may be said that there is a standard
apportionment of labor and capital among the producing groups, and
that these agents gravitate powerfully and even rapidly toward it. If
there were a certain amount of labor and capital at A, a certain
amount at B, and so throughout the system, this standard shape would
be attained, and the elements would not move, except as a very slow
movement would be caused by changes in the comparative density of
population of different regions.[1] This standard shape would long
remain nearly fixed if it were not for the appearance of the dynamic
influences which are so active within the area we are studying.

[1] It is obvious that capital as well as population is
distributed with uneven density over the territory occupied
by society; but the movement of capital is less obstructed
than that of a great body of people, and moreover it is
chiefly the fact that the people are not dispersed over the
area in a natural way which creates the chief obstacle to the
moving of capital. It goes easily when it accompanies a
migration of laborers.

Alternations in the Direction of Movements caused by Improved
Methods

In a dynamic state this standard shape itself--the
approximately static one--is forever changing. At one time, for
example, conditions exist which call for a certain amount of labor at
A, another amount at B, etc. A little later these respective
quantities at A, B, etc., are no longer the natural or standard
quantities; for something has occurred that calls for less labor at
A, more at B, etc. If A represents wheat farming, the amount of
labor that it required when grain was gathered with sickles is more
than is necessary when it is gathered with self-binding reapers,
always provided that there has been no increase in population, which
would require an increase in the food supply. The society therefore
will not be in what has now become its standard shape till men have
been moved from the wheat-raising subgroup to others.

If the invention of the reaper were not followed by any others and if
no other disturbing changes took place, labor would move from the one
group, distribute itself among others, and bring the system to a new
equilibrium; but it has not time to do this. It begins to move in the
way that the new condition occasioned by the introduction of the
reaping machine impels it to move; but before the transfer is at all
complete there is a new invention somewhere else in the system that
starts a movement in some other direction. Before the labor from A
is duly distributed in B, C, etc., there is an invention in B
which starts some of it toward other points.

Why Movements are Perpetual as well as Changeful

Such improvements
are perpetual, and the dynamic society is not for an instant at rest.
If the disturbing causes would cease, the elements of the social body
would find their abiding place; and the important fact is that at any
one instant there is such a resting place for each laborer and each
bit of capital in the whole system. As we have seen, the men and the
productive funds would go to these points but for the fact that before
they have time to reach them new disturbances occur that call them in
new directions. Again and again the same thing occurs, and there is no
opportunity for placing labor and capital at exactly the points to
which recent changes call them before still further improvements begin
to call them elsewhere.

Why Technical Changes are more disturbing than a General Influx or
Efflux of Population

When the moving of labor is gradual, it is
effected, not so much by transferring particular men from one
occupation to another, as by diverting the young men who are about
entering the field of employment to the places where labor is most
needed. When the son of a shoemaker, instead of learning his father's
trade, becomes a carpenter, no laborer has abandoned an accustomed
occupation and betaken himself to another; but labor has gone from
the shoemaking trade to that of carpentering. A man often stays where
he is to the end of his life, although during that life labor has
moved freely out of his occupation to others. If we represent the
facts by a diagram, they will stand thus:--

A B C D

50 40 70 100 Natural and actual apportionment of labor
in 1850.

45 35>-->90 90 Natural apportionment after change of
----------^ ^---- method in 1850.

47 38 80 95 Apportionment in 1855 when the movement
initiated in 1850 is partially completed.

52 41<---65 102 Natural apportionment in 1855, with
^---------- ----^ movements then initiated.

A, B, C, and D represent different occupations or subgroups in
the table we have before used. At one date a static adjustment called
for fifty units of labor at A, forty at B, seventy at C, and one
hundred at D. A half decade later, after improvements had taken
place at A, B, and D, static forces, if they were allowed to
have their full effect, would leave only forty-five men at A, and
thirty-five at B, but they would place ninety at C and at D.
The first movements that would tend to bring this about are in the
direction indicated by the dotted lines. The transfers are made, not
by forcing men from A, B, and D to C, but chiefly by diverting
to C young laborers who would otherwise have gone to A, B, and
D to replace men who are leaving in these groups.

Now, before the transfers are completed something happens that calls
for a different movement. Let us say that only three units of labor
have as yet gone from A to C instead of five, leaving forty-seven
at A; only two have gone from B, leaving thirty-eight; and only
five have gone from D, leaving ninety-five at that point. Eighty
would then be at C, and the static adjustment would not have been
perfectly attained. It is at this point that a new change of
conditions occurs, which calls for fifty-two units at A, forty-one
at B, sixty-five at C, and a hundred and two at D. C now
contributes something to A and B, but it gives more to D; and
the fluctuations go on forever. Particular men may, more often than
otherwise, stay in their places, since the incoming stream of new
labor, by going where it is needed, may suffice to make the
adjustments, in so far as they are gradually made; but labor, in the
sense of the quantum of energy embodied in a succession of generations
of men, is never at rest. It is a veritable Wandering Jew for
restlessness and in a perpetual quest of places where it can remain.
Moreover, there are to be taken into account changes so sudden that
they thrust particular workers from one group to another.

A Perpetual Effort to conform to a Standard Shape which is itself
Changing

We think, then, of society as striving toward an endless
series of ideal shapes, never reaching any one of them and never
holding for any length of time any one actual shape. One movement is
not completed before another begins, and at no one time is the labor
apportioned among the groups exactly in the proportions that static
law calls for. Men are vitally interested to know what they have to
hope for or to fear from this perpetual necessity that some labor
should move from point to point.

Questions concerning the Effects of these Transformations

These
changes of shape involve costs as well as benefits. The gains are
permanent and the costs are transient, but are not for that reason
unimportant. They may fall on persons who do not get the full measure
of the offsetting gains. What we wish to know about any economic
change is how it will affect humanity, and especially working
humanity. Will it make laboring men better off or worse off? If it
benefits them in the end, will it impose on them an immediate
hardship? Will it even make certain ones pay heavily for a gain that
is shared by all classes? Are there some who are thus the especial
martyrs of progress, suffering for the general good?

Natural Transformations of Society increase its Productive
Power

There is no doubt that the changes of shape through which the
social organism is going cause it to grow in strength and efficiency.
More and more power to produce is coming, as we have seen, in
consequence of these transmutations. They always involve shifting
labor about within the organization and often involve shifting
laborers, taking some of them out of the subgroups in which they are
now working and putting them into others, something that cannot be
done without cost.

Immediate Effects of Labor Saving

Inventing a machine that can do
the work of twenty men will cause some of the twenty to be discharged.
They feel the burden of finding new places, and if they are skilled
workmen and their trade is no longer worth practicing, they lose all
the advantage they have enjoyed from special skill in their
occupations. Do they themselves get any adequate offset for this, or
does society as a whole divide the benefit in such a way that those
who pay nearly the whole cost get only their minute part of the gain?
Is there unfair dealing inherent in progress in the economic arts, and
must we justify the movement only on the ground of utility, though
knowing that a moralist would condemn it? These are some of the
general questions that are to be decided by a study of this phase of
economic dynamics. We need to know both what the movement will in the
end do for humanity and what it will at once do for particular
workmen.[2] In addition to ascertaining what the ultimate results of
the movement will be, we need to trace, with as much accuracy as is
possible, the effects of the disturbances that are involved in
generally beneficent changes.

[2] Our study may lead to a moral verdict without being
itself an ethical study; we limit the inquiry to questions of
fact, but perceive that some of the facts are of such a kind
that they must lead a reader to condemn or approve the social
economic system.





Next: Effect Of Improvements In Methods Of Production

Previous: Effects Of Dynamic Influences Within The Limited Economic Society



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