CHAPTER V
Ownership and the Competitive System

I.Peaceable Ownership

The pecuniary system of social organisation that so results has grave and lasting consequences for the welfare of society. It brings class divergence of material interests, class prerogative and differential hardship, and an accentuated class disparity in the consumption of goods, involving a very extensive resort to the conspicuous waste of goods and services as an evidence of wealth. These consequences of the pecuniary economy may be interesting enough in themselves, even to the theoretician, but they need not be pursued here except in so far as they have an appreciable bearing on the community’s workmanlike efficiency and the further development of technology.110 But the more direct and immediate technological consequences of this move from a predatory to a peaceable or quasi-peaceable economic system are also sufficiently grave—partly favourable to workmanship and partly otherwise—and these it is necessary for the purposes of this inquiry to follow up in some detail.

The interest and attention of the two typical pecuniary classes between whom the affairs of industry now come to lie, presently part company and enter on a course of progressive differentiation along two divergent lines. The workmen, labourers, operatives, technologists,—whatever term may best designate that general category of human material through which the community’s technological proficiency functions directly to an industrial effect,—these have to do with the work, whereby they get their livelihood, and their interest as well as the discipline of their workday life converges, in effect on a technologically competent apprehension of material facts. In this respect the free workmen under this peaceable régime of property are very differently placed from the servile workman of the predatory régime of mastery and servitude. The latter has little if any interest in the efficiency of the industrial processes in which he is engaged, less so the more widely his status differs from that of the free workman. His case is analogous to that of the tenant at will, who has nothing to gain from permanent improvement of the land which he cultivates. Whereas the free workman is, at least immediately and transiently, and particularly in his own current apprehension of the matter, quite intimately dependent on his own technological proficiency and vitally interested in any available technological expedient that promises to heighten his efficiency. Such is particularly the case during the earlier phases of the régime of peaceable ownership, so long as the free workman is in the typical case working at his own discretion and disposes of his own product in a limited market. And such continues to be the case, on the whole, under the wage system so long as the large-scale production and investment have not put an end to the employer’s intimate supervision of his employés. Indeed, under the driving exigencies of the competitive wage system the workmen are somewhat strenuously held to such a workmanlike apprehension of things, even though they may no longer have the same intimate concern in their own current efficiency as in the earlier days of handicraft. The severe pressure of competitive wages and large organisation, it might well be thought, should logically offset the slighter attraction which work as such has for the hired workman as contrasted with the man occupied with his own work. The effect of this régime of free labour should logically be, as it apparently has in great part been, a close and progressively searching recourse to the logic of matter-of-fact in all the workmen’s habitual thinking, and in all their outlook on matters of interest, whether in industry or in the other concerns of life that may conceivably be of more capital interest.

On the other hand the owners under this régime of peaceable ownership have to do with the pecuniary management, the gainful manipulation of property. In the transitional beginnings of this system of peaceable ownership and free workmen the owners are in the typical case owners of land or similar natural resources; but in due course of time there arises a class of owners holding property in the material equipment of industry and deriving their gains and livelihood from a businesslike management of this property, at the same time that the landlords also fall into more businesslike relations with their tenants on the one hand and with the industrial community that supplies their wants on the other hand. These owners, investors, masters, employers, undertakers, businessmen, have to do with the negotiation of advantageous bargains; it is by bargaining that their discretionary control of property takes effect, and in one way or another their attention centres on the quest of profits. The training afforded by these occupations and requisite to their effectual pursuit runs in terms of pecuniary management and insight, pecuniary gain, price, price-cost, price-profit and price-loss; and these men are held to an ever more exacting recourse to the logic of the price system, and so are trained to the apprehension of men and things in terms which count toward a gainful margin on investments and business undertakings; that is to say in terms of the self-regarding propensities and sentiments comprised in human nature, and perhaps especially in terms of human infirmity.

This last point in the characterisation may seem unwarranted, and may even strike unreflecting persons as derogatory. It is, of course, not so intended; and any degree of reflection will bring out its simple bearing on the facts of business. As is well and obviously known, the sole end of business as such is pecuniary gain, gain in terms of price. It need not be held, as has sometimes been argued, that one businessman’s gain is necessarily another’s loss; although that principle was once taken for granted, as the foundation of the Mercantilist policies of Europe, and is still acted on uncritically by the generality of statesmen. But it is at any rate true, because it is contained in the terms employed, that a successful business negotiation is more successful in proportion as the party of the second part is less competent to take care of his own pecuniary interest, whether through native or acquired incapacity for pecuniary discretion or from pecuniary inability to stand out for such terms as he otherwise might conceivably exact. A shrewd businessman can, notoriously, negotiate advantageous terms with an inexperienced minor or a necessitous customer or employé. Pecuniary gain is a differential gain and business is a negotiation of such differential gains; not necessarily a differential of one businessman as against or at the cost of another; but more commonly, and more typical of the competitive system, it is a differential as between the businessman’s outlay and his returns,—that is to say, as between the businessman and the unbusinesslike generality of persons with whom directly or indirectly he deals as customers, employés, and the like. For the purposes of such a negotiation of differentials the weakness of one party (in the pecuniary respect) is as much to the point as the strength of the other,—the two being substantially the same fact. The discipline of the business occupations should accordingly run to the habitual rating of men, things and affairs in terms of emulative human nature and of precautionary wisdom in respect of pecuniary expediency. Instead of workmanlike or technological insight, this discipline conduces to worldly wisdom.111

But the disparity between the discipline of the business occupations and that of industry is by no means so sheer as this contrast in their main characteristics would imply, nor do the men engaged in these two divergent lines of work differ so widely in their habitual outlook on affairs or their insight into facts. Such is particularly the case in the earlier and simpler phases of the régime, before the specialisation of occupations had gone so far as to divide the working community in any consistent fashion into the two contrasted classes of businessmen on the one side and workmen on the other. As this modern régime of peaceable ownership and pecuniary organisation has advanced and its peculiar features of organisation and workmanship have reached a sharper definition, the division between the two contrasted kinds of endeavour—business and workmanship—has grown wider and the disparity in the distinctive range of habits engendered by each has grown more marked. So that something of a marked and pervading contrast should logically be found between the habitual attitude taken by members of the business community on the one hand and that of the body of workmen on the other hand; and this contrast should, logically, go on increasing with each successive move in advance along this line of specialisation of occupations and “division of labour.” Some such result has apparently followed; but neither has the specialisation been complete and consistent, nor has the resulting differentiation in respect of their intellectual and spiritual attitude set the two contrasted classes of persons apart in so definitive a fashion as a first and elementary consideration of the causes at work might lead one to infer.

Businessmen have to do with industry; more or less remotely perhaps, but often at near hand, for it is out of industry that their business gains come; and they are also subject to the routine of living imposed by the use of the particular range of industrial appliances and processes available for that use. The workmen on the other hand have also to do with pecuniary matters, for they are forever in contact with the market in one way and another, and it is in pecuniary terms that the livelihood comes to them for which they are set to work. And both businessmen and workmen enter on their two divergent lines of training with much the same endowment of propensities and aptitudes. Yet it appears that the training in pecuniary wisdom that makes up the career of the typical businessman is after all of little avail in the way of technological insight or efficiency, as witness the ubiquitous mismanagement of industry at the hands of businessmen who are, presumably, doing their best to enhance the efficiency of the industries under their control with a view to the largest net gain from the output.112 If the “efficiency engineers” are to be credited, it is probably within the mark to say that the net aggregate gains from industry fall short of what they might be by some fifty per cent, owing to the trained inability of the businessmen in control to appreciate and give effect to the visible technological requirements of the industries from which they draw their gains. To appreciate the kind and degree of this commonplace mismanagement of industry it is only necessary to contrast the facility, circumspection, shrewd strategy and close economy shown by these same businessmen in the organisation and management of their pecuniary, fiscal and monetary operations, as against the waste of time, labour and materials that abounds in the industries under their control. But for the workmen likewise, their daily work and their insight into its requirements and possibilities are, by more than half, a “business proposition,” a proposition in the pecuniary calculus of how to get the most in price for the least return in weight and tale.

These various considerations, taken crudely in their first incidence, would seem to preclude any technological advance under this quasi-peaceable régime of business. Business principles and pecuniary distinctions rule the familiar routine of life, and even the common welfare is conceived in terms of price, and so of differential advantage; and under such a system there should apparently be little chance of the dispassionate pursuit of such a non-invidious interest as that of workmanship. The prime mover in this cultural scheme appears to be invidious self-aggrandisement, without fear or favour; and its goal appears to be the conspicuous waste of goods and services. Yet in point of fact the technological advance under these modern conditions has been larger and more rapid than in any other cultural situation. Therefore the circumstances under which these modern gains in technology have been made will merit somewhat more detailed attention; as also the cultural consequences that have followed from this technological advance or been conditioned by it. And at the risk of some tedious repetition it seems pertinent summarily to recall these peculiar circumstances that have conditioned the modern culture and have presumably shaped its technological output.

By and large this modern technological era runs its course within the frontiers of Occidental civilisation, and in the period subsequent to the feudal age. Roughly, its centre of diffusion is the region of the North Sea, and its placement in point of time is in that period of comparative peace spoken of as “modern times.” Such of the peoples comprised within this Western culture as have continued to be actively occupied with fighting during this modern period have had no creative share in this technological era, and indeed they have had little share of any kind. The broad centre of diffusion of this technology coincides in a curious way with that of the singularly competent and singularly matter-of-fact neolithic culture of northern Europe; and the racial elements that have been engaged in this modern technological advance are still substantially the same, and mixed in substantially the same proportions, as during that prehistoric technological era of the lower barbarism or the higher savagery. This implies, of course, that the spiritual (instinctive) endowment of the peoples that have made the modern technological era is still substantially the same as was that of their forebears of the Danish stone age.

The peoples that have taken the lead in this cultural growth, and more particularly in the technological advance, have never lived under a full grown and consistently worked out patriarchal system, nor have they, therefore, ever fully assimilated that peculiarly personal and arbitrarily authoritative scheme of anthropomorphic beliefs that commonly goes with the patriarchal system. In the earlier phases of their cultural experience, and until recently, they have lived in small communities, under more or less of local self-government, and have in great part shown some degree of religious scepticism and insubordination. They have had some experience of the sea and of that impersonal run of phenomena which the sea offers; which call on those who have to do with the sea for patient observation of how such impersonal forces work, and which constrain them to learn by trial and error how these forces may be turned to account. Latterly, in the days of their most pronounced technological advance, these peoples have had experience of an economic and industrial system organised on an unexampled scale, such as to constitute a very wide and inclusive industrial community within which intercourse has been increasingly easy and effective.

These circumstances have determined the range of their habituation in its larger features; and these peoples have come under the discipline of this situation with a spiritual endowment apparently differing in some degree from what any other group of peoples has ever brought to a similar task. How much of the outcome, cultural and technological, is to be set down naïvely and directly to a peculiar temperamental bent in this human raw material would be hazardous to conjecture. Something seems fairly to be credited to that score. The particular mixture of hybrids that goes to make up these peoples, and in which the dolicho-blond enters more or less ubiquitously, appears to lack a certain degree of subtlety, such as seems native to many other peoples that have created civilisations of a different complexion,—a subtlety that shows itself in a readiness for intrigue and farsighted appreciation of the springs of human nature, and which often shows itself also in high-wrought and stupendous constructions of anthropomorphic myth and theology, religion and magic, as well as in such large and fertile systems of creative art as will commonly accompany these anthropomorphic creations. Those peoples that are infused with an appreciable blond admixture have on the other hand, not commonly excelled in the farther reaches of the spiritual life, particularly not in the refinements of a sustained and finished anthropomorphism. Their best efficiency has rather run to those bull-headed deeds of force and those mechanic arts that touch closely on the domain of the inorganic forces.

Of such a character is also this modern technological era. It is in the mechanic arts dealing with brute matter that the modern technology holds over all else, in matter-of-fact insight, in the naïveté of the questions with which its adepts search the facts of observation, and in the crudity (anthropomorphically speaking) of the answers with which they are content to go back to their work. Outside of the mechanic arts this technology must be rated lower than second best. In subtlety of craftsmanlike insight and contrivance or in delicacy of manipulation and adroit use of man’s physical aptitudes the peoples of this Western culture are not now and never have been equal to the best.

Such a characterisation of the modern technology may seem too broad and too schematic,—that it overlooks features of the case that are sufficiently large and distinctive to call for their recognition even in the most general characterisation. So, e. g., in the light of what has been noted above in speaking of the domestication of the crop plants and animals, the question may well suggest itself: Is not the patent success of these modern industrial peoples in the use and improvement of crops and cattle to be accepted as evidence of a genial anthropomorphic bent, of the same kind and degree as took effect in the original domestication of plants and animals? For some two hundred years past, it is true, very substantial advances have been made in tillage and breeding, and this is at the same time the peculiar domain in which the anthropomorphic savages of the stone age once achieved those things which have made civilisation physically possible; but the modern gains made in these lines have, in the main if not altogether, been technologically of the same mechanistic character as the rest of the modern advance in the industrial arts, with little help or hindrance due to any such anthropomorphic bias as guided the savage ancients. It is rather by virtue of their having come competently to apprehend these facts of animate nature in substantially inanimate terms, mechanistic and chemical terms, that the modern technological adepts in tillage and cattle-breeding have successfully carried this line of workmanship forward at a rate and with an effect not approached before. The livestock expert is soberly learning by trial and error what to attempt and how to go about it in his breeding experiments, and he deals as callously as any mechanical engineer with the chemistry of stock foods and the use and abuse of ferments, germs and enzymes. The soil specialist talks, thinks and acts in terms of salts, acids, alkalies, stratifications, 200-mesh siftings, and nitrogen-fixing organisms. The crop-plant expert looks to handmade cross-fertilisation and to the Mendelian calculus of hybridisation, with no more imputation of anthropomorphic traits than the metallurgist who analyses fuels and fluxes, mixes ores, and with goggled eye scrutinises the shifting tints of the incandescent gases in the open hearth. It is from such facts so construed that modern technology is made up, and it is by such channels that the sense of workmanship has gone to the making of it.

So the question recurs, How has it come about that this pecuniary culture—with its institutions drawn in terms of differential advantage and moved by sentiments that converge on emulative gain and the invidiously conspicuous waste of goods—has yet furthered the growth of such a technology, even permissively? In its direct incidence, the discipline of this pecuniary culture is doubtless inimical to any advance in workmanlike insight or any matter-of-fact apprehension and use of objective phenomena. It is a civilisation whose substantial core is of a subjective kind, in the narrowly subjective, personal, individualistic sense given by the self-regarding sentiments of emulous rivalry.113 But when all is said it is after all a peaceable culture, on the whole; and indeed the rules of the business game of profit and loss, forfeit and sequestration, require it to be so. It has at least that much, and perhaps much else, in common with the great technological era of the north-European neolithic age. The discipline to which its peoples are subject may be exacting enough, and its exactions may run to worldly wisdom rather than to matter-of-fact; but its invidious distinctions run in terms of price, that is to say in terms of an objective, impersonal money unit, in the last resort a metallic weight; and the traffic of daily life under this price system affords an unremitting exercise in the exact science of making change, large and small. Even the daydreams of the pecuniary day-dreamer take shape as a calculus of profit and loss computed in standard units of an impersonal magnitude, even though the magnitude of these standard units may on analysis prove to be of a largely putative character. The imputation under the price system is of an impersonal kind. In the current apprehension of the pecuniary devotee these magnitudes are wholly objective, so that in effect the training that comes of busying himself with them is after all a training in the accurate appreciation of brute fact.

At the same time, the instinct of workmanship, being not an acquired trait, has not been got rid of by disuse; and when the occasion offers, under the relatively tranquil conditions of this peaceable or quasi-peaceable pecuniary régime, the ancient proclivity asserts itself in its ancient force, uneager and asthenic perhaps, but pervasive and resilient. And when this instinct works out through the Bœotic genius of the north-European hybrid there is a good chance that the outcome of such observation and reflection will fall into terms of matter-of-fact, of such close-shorn naïveté, indeed, as to afford very passable material for the material sciences and the machine technology.

So also, the ancient and time-worn civil institutions of the north-European peoples have apparently not been of the high-wrought invidious character that comes of long and strenuous training in the practices and ideals of the patriarchal system; nor are their prevailing religious conceits extremely drastic, theatrical or ceremonious, as compared with what is to be found in the cults of the great dynastic civilisations of the East. On the whole, it is only through the Middle Ages that these peoples have been subject to the rigorous servile discipline that characterises a dynastic despotism, secular or religious; and much of the ancient, pagan and prehistoric preconceptions on civil and religious matters appear to have stood over in the habits of thought of the common people even through that interval of submergence under aristocratic and patriarchal rule. In the same connection it may be remarked that the blond-hybrid peoples of Christendom were the last to accept the patriarchal mythology of the Semites and have also been the first and readiest to shuffle out of it in the sequel; which suggests the inference that they have never fully assimilated its spirit; perhaps for lack of a sufficiently strict and protracted discipline in its ways and ideals, perhaps for lack of a suitable temperamental ground.

There is, indeed, a curiously pervasive concomitance, in point of time, place, and race, between the modern machine technology, the material sciences, religious scepticism, and that spirit of insubordination that makes the substance of what are called free or popular institutions. On none of these heads is the concomitance so close or consistent as to warrant the conclusion that race and topography alone have made this modern cultural outcome. The exceptions and side issues are too broad and too numerous for that; but it is after all a concomitance of such breadth and scope that it can also not be overlooked.

The course of mutations that has brought on this modern technological episode may be conceived to have run somewhat in the following manner. For lack of sufficient training in predatory habits of thought (as shown, e. g., in the incomplete patriarchalism of the north-Europeans) the predatory culture failed to reach what may be called a normal maturity in the feudal system of Europe, particularly in the North and West, where the blond admixture is stronger; by “normal” being here intended that sequence of growth, institutionalisation, and decay shown typically by the great dynastic civilisations erected by Semitic invaders in the East. In the full-charged predatory culture, in its earlier phases, there appear typically to be present two somewhat divergent economic principles (habits of thought) both of which have something of an institutional force: (a) The warrant of seizure by prowess,114 which commonly comes to vest in the dynastic head in case a despotic state is established; and (b) the prescriptive tenure of whatever one has acquired. These two institutional factors are at variance, and according as one or the other of the two finally takes precedence and rules out or masters its rival postulate, the predatory culture continues on lines of coercive exploitation, as in these Asiatic monarchies; or it passes into the quasi-peaceable phase marked by secure prescriptive tenure of property and a settled nobility, and presently into a commercialised industrial situation. Either line of development may, of course, be broken off without having reached a consummation.

Within the region of the Western Civilisation, both in north Europe and repeatedly in the Ægean, the course of events has fallen out in the line of the latter alternative; the growth of institutions has shifted from the footing of prowess to that of prescriptive ownership. So soon as this shift has securely been made, the development of trade, industry and a technological system has come into the foreground, and these habitual interests have then reacted on the character of the institutions in force, thereby accelerating the growth of conditions favourable to their own further advance. There is, of course, no marked point of conjuncture in the cultural sequence at which this transition may definitely be said to have been effected, but in a general way it may be held that the point of transition has been passed so soon as the current political and economic speculations uncritically give precedence to the “commonweal” as against the fiscal interests of the crown or the “state,” whereby the crown and its officers come, in theory and public pronouncement, to be rated as guardians of the community’s material welfare rather than autocratic exploiters of the community’s productive capacity. Roughly from the same period there will duly set in something of an acceleration in rate of improvement in the state of the mechanic arts. This movement seems plainly to come on the initiative of the lower or industrial classes and to be carried by their genius, rather than by that of the ruling classes, whether secular or spiritual. It shows itself, typically, in a growth of handicraft and petty trade.

So the sense of workmanship and its associated sentiments again come, by insensible degrees, to take the first place among the factors that determine the run of habituation and therefore the character of the resulting culture,—so making the transition from barbarism to civilisation, in the narrower sense of the term; which is accordingly to be characterised, in contrast with the predatory barbarian culture, as a qualified or mitigated (sophisticated) return to the spirit of savagery, or at least as a spiritual reversion looking in that direction, though by no means abruptly reaching the savage plane. The new phase has this in common with the typical savage culture that workmanship rather than prowess again becomes the chief or primary norm of habituation, and therefore of the growth of institutions; and that there results, therefore, a peaceable bent in the ideals and endeavours of the community. But it is workmanship combined and compounded with ownership; that is to say workmanship coupled with an invidious emulation and consequently with a system of institutions embodying a range of prescriptive differential benefits.

II. The Competitive System

Dominated by the tradition handed down from the beginning of the nineteenth century, current economic theory has habitually made much of accumulated goods as the prime requisite of industry. In industrial enterprise as it was then carried on the prevailing unit of organisation was the private firm, with partnership concerns making up a secondary and less commonplace element in the business community. Ordinarily and typically these private firms and partnerships owned a certain material equipment employed in industry, and they took the initiative in industrial enterprise on the ground of this ownership; hiring the workmen, buying materials and supplies, and selling the products of the establishment. Credit relations, such as go to the creation and conduct of a modern corporation, were still of secondary consequence, being resorted to rather as an expedient in emergencies than as the initial move and the substantial ground of business organisation; the measure of the concern’s magnitude and consequence was still (typically) its unencumbered ownership of the material equipment, the size of the plant and the numbers of its hired workmen. It follows by easy consequence that in the practical business conceptions of that time the equipment of material means, which embodies the concern’s assets and affords the ground of its initiative and its rating in the business community, should commonly be rated as the prime mover in industry and the chief productive factor. So, also, the theoretical speculation that drew on that business traffic for its working concepts came unavoidably to accept these tangible assets, the community’s material equipment,—implements, livestock, raw materials, means of subsistence,—as the prime agency in the community’s economic life. As is true for the working conceptions and principles of industrial business, so also in the theoretical formulations of the economists, the community’s immaterial equipment of technological proficiency is taken for granted as a circumstance of the environment conditioning the community’s economic life,—the state of the industrial arts and the current workmanlike aptitudes and efficiency. As the phrase runs, “given the state of the industrial arts.”

This is good, homely, traditional common sense; it reflects the habitual practical run of affairs in the industrial community of that recent past. Such was the attitude of practical men toward industrial matters at the time when the current economic situation took its rise. But such a conception is no longer so true to the practical exigencies of the immediate present, nor do the men of affairs today habitually see these matters in just this light; although the principles of the law that govern industrial enterprise still continue to embody these time-worn conceptions, to which the economists also continue to yield allegiance. Like other elements of habitual knowledge this conception of things is drawn from past experience—chiefly from a past not too remote for ready comprehension—and it carries over the frame of mind out of which it arose.

In the earlier days of the machine industry, then,—say, in the closing quarter of the eighteenth century,—the conduct of industrial affairs was in the hands of business men who owned the material equipment and who directed the use of this equipment and turned it to account for their own gain, on the prescriptive ground of such ownership. Discretion and initiative vested in the capitalist-employer, who at that time, (typically) combined ownership of the plant with a somewhat immediate supervision and control of the industrial processes. The directive control of industry, covering both the volume and the character of the processes and output, was in the typical case directly bound up with the ownership of the material equipment as such,—as tangible assets, not as corporation stock-holdings. Since then changes have come over the business situation, particularly through an extensive recourse to credit, such that this time-worn conception will no longer answer the run of current business practice, particularly not as touches that large-scale enterprise that now rules industrial affairs and that is currently accepted as the type of modern business enterprise.

Among the assumptions of a hundred years ago was the premise, self-evident to that generation of thoughtful men, that the phase of commercialised economic life then prevailing was the immutably normal order of things. And the assumptions surrounding that preconception were good and competent for a formulation of economic theory that takes such an institutional situation for granted and assumes it to be unchanging, or to be a terminus ad quem. But for anything like a genetic account of economic life, early or late, capitalistic or otherwise, such assumptions and the theoretical propositions and analyses that follow from them are defective in that they take for granted what requires to be accounted for. Theoretical speculation that presupposes the (somewhat old-fashioned) institutions formerly governing ownership and business traffic, and assumes them to have the immutable character and indefeasible force de facto which is assigned them de jure, and that likewise assumes as immutable a passing phase in the “state of the industrial arts,” may serve passably for a theory of how business affairs should properly arrange themselves to fit the conditions so assumed; and such, indeed, has commonly been the character of theoretical formulations touching industry and business. And as should fairly be expected, in the speculations of the economists, these theoretical formulations have also commonly been accompanied by a parallel line of remedial advice designed to show what preventive measures should be applied to prevent the run of business practice from doing violence to these assumed conditions that are held to be immutably normal and indefeasibly right.

Now, since in the received theories the accumulated “productive goods” are conceived to be the most consequential factor in industry, and therefore in the community’s material welfare and in the fortunes of individuals, it logically follows that the discretionary ownership of them has come to be accounted the most important relation in which men may stand to the production of wealth and to the community’s livelihood; and the pecuniary transactions whereby this ownership is arranged, manipulated and redistributed are held to be industrially the most productive of all human activities. It is only during the nineteenth century that this doctrine of pecuniary productivity has been worked out into finished shape and has found secure lodgment in the systematic structure of economic theory—in the current theory of “the Function of the Entrepreneur;”115 but it is also only during this period that business enterprise (pecuniary management) has come to dominate the economic situation in a substantially unmitigated degree, so that the material fortunes of the community have come to depend on these pecuniary negotiations into which its “captains of industry” enter for their own gain.116 In the sense that no other line of activity stands in anything like an equally decisive relation of initiative or discretion to the industrial process, or bears with a like weight on the material welfare of the community, these business negotiations in ownership are unquestionably the prime factor in modern industry. But that such is the case is due to the peculiar institutions of modern times and to the peculiar current state of the industrial arts; and the former of these peculiar circumstances is conditioned by the latter.

It is not practicable to assign a hard and fast date from which this modern era began, with its peculiar scheme of economic life and the economic conceptions that characterise it. The date will vary from one country to another, and even from one industrial class to another within the same country. But it can be said that historically the modern era begins with the rise of handicraft; it is along the line of growth marked out by the development of handicraft that the modern technology has emerged, together with that industrial organisation and those pecuniary conceptions of economic efficiency and serviceability that have gradually come to their current state of maturity on the ground afforded by this technology. What historically lies back of the era of handicraft is not of a piece with the economic situation of modern times; nor is it characteristic of the Western civilisation, as contrasted with the agricultural and predatory civilisations of antiquity.

As indicated in an earlier chapter, in speaking of the decay of the predatory (feudalistic) régime and its servile agricultural organisation of industry, when peace and order supervene the instinct of workmanship by insensible degrees and in an uncertain measure supplants the invidious self-regarding sentiments that actuate the life of prowess and servility characteristic of that culture; so that workmanship comes again into the foreground among the instinctive propensities that shape the community’s habitual interest and so bend the course of its institutional growth and determine the bias of its common sense.

The habitual outlook and the bias given by the handicraft system are of a twofold character—technological and pecuniary. The craftsman was an artificer engaged in mechanical operations, working with tools of which he had the mastery, and employing mechanical processes the mysteries of which were familiar to his everyday habits of thought; but from the beginning of the era of handicraft and throughout his industrial life he was also more or less of a trader. He stood in close relation with some form of market, and his proficiency as a craftsman was brought to a daily practical test in the sale of his wares or services, no less than in the workmanlike fashioning of them. Also, the price as well as the workmanlike quality of the goods presently became subject of regulation under the rules of the crafts; and the petty trade which grew up as an occupation accessory to the handicraft industry was itself organised on lines analogous to the crafts proper and was regulated by similar principles; the trader’s work being accounted serviceable, or productive, in the same general sense as that of any other craftsman and being recognised as equitably entitling those who pursued it to a fair livelihood.

The handicraft system was an organised and regulated system of workmanship and self-help; and under the conditions imposed by its technology proficiency in the latter respect was no less indispensable and no less to the purpose than in the former. Both counted equally and in combination toward the successful working of the system, which is a practicable plan of economic life only so long as the craftsmen combine both of these capacities in good force and only so long as the technological exigencies admit the exercise of both in conjunction. The system broke down so soon as the state of the industrial arts no longer enabled the workmen to acquire the necessary technological proficiency and do the required work at the same time that they each and several were able to oversee and pursue their individual pecuniary interests. With the coming on of a wider and more extensively differentiated technological scheme, and with wider and remoter market relations, due in the main to increased facilities of transportation, these necessary conditions of a practicable handicraft economy gradually failed, and the practice of industrial investments and the larger commerce then gradually supplanted it.

The discipline of everyday life under the handicraft economy was a discipline in pecuniary self-help as well as in workmanship. In the popular ideal as well as in point of practical fact the complete craftsman stood shrewdly on his individual proficiency in maintaining his own pecuniary advantage, as well as on his trained workmanship; and the gilds were organised to maintain the craft’s advantages in the market, as well as to regulate the quality of the output. The craft rules governing the quality of the output of goods were in the main enforced with a view to the maintenance of price, and so with a view to securing an adequate livelihood for the craftsmen. Efficiency in the crafts came in this way presently to be counted very much as the modern “efficiency engineers” would count it,—proximately in terms of mechanical performance, ultimately in terms of price, and more particularly in terms of net gain. So that the habits of life ingrained in the gildsman, and in the community at large where the gild system prevailed, comprised as a main fact a meticulous regard for details of ownership and for pecuniary claims and obligations. It is out of this insistent, pervasive, and minutely concrete discipline in the practice and logic of pecuniary detail that there have arisen those “natural rights” of property and those “business principles” that have been taken over by the later era of the machine industry and capitalistic investment.

The rules of the gild, as well as the larger legislative provisions that had to do with gild regulations, were avowedly drawn with a view to securing the gildsman in a fair customary livelihood, and the measures logically adopted to this end were designed to secure him in the enjoyment and disposal of the returns of his work as well as in his right to pursue his trade within the rules laid down for the collective welfare by the gild. With due training in this logic of the handicraft system it became a plain matter of common sense that the craftsman should equitably be entitled to whatever he can get for his work under the conventionally settled rules of the trade, and should be free to make the most of his capacities in all that pertains to his pursuit of a livelihood; and the like principles (habits of thought) apply to the traffic of the petty trade; which, being presently interpreted in terms of contract and investment, has come to mean the right to do business and to enjoy and dispose of the returns from all bargains made in due form.

Presently, as the technological situation gradually changed its character through extensions and specialisation in appliances and processes—perhaps especially through changes in the means of communication and in the density of population—the handicraft system with its petty trade outgrew itself and broke down in a new phase of the pecuniary culture. The increasingly wide differentiation between workmanship and salesmanship grew into a “division of labour” between industry and business, between industrial and pecuniary occupations,—a disjunction of ownership and its peculiar cares, privileges and proficiency from workmanship. By this division of labour, or divergence of function, a fraction of the community came to specialise in ownership and pecuniary traffic, and so came to constitute a business community occupied with pecuniary affairs, running along beside the industrial community proper, with a development of practices and usages peculiar to its own needs and bearing only indirectly on the further development of the industrial system or on the state of the industrial arts.

Master-workmen with means would employ other workmen without means, and might or might not themselves continue to work at the trade. Petty traders or hucksters, nominally members of some craft gild, would grow wealthy with the increasing volume of traffic and would organise a more and more extensive household (sweatshop) industry to meet the increasing demands of their market; or they might become jobbers, carry on more far-reaching trade operations over a longer term, withdraw more distantly from the actual work of the craft, and in the course of a generation or two (as, e. g., the Fuggers) would grow into merchant princes and financiers who maintained but a remote and impersonal relation to the crafts. Or, again, the associated merchants (as, e. g., those of the Hansa) would establish depots and agents, “factories,” that would gradually assemble something of a working force of craftsmen to sort, warehouse and finish the products which they handled, at the same time that they would exercise an increasingly close and extensive oversight of the industries from which these products were derived; until these depots, under the management of the factors, in some cases grew into factories in somewhat the modern acceptance of the term. In one way and another this trading or huckstering traffic, which had been intimately associated with the handicraft industry and gild life, branched off in the course of time as the industries advanced to a larger scale and a more extensive specialisation; and this increasing “division of labour” between workmanship and salesmanship led presently to such a segregation of the traders out of the body of craftsmen as to give rise to a business community devoted to pecuniary management alone.

But the principles on which the new and larger business was conducted were the same as those on which the earlier petty trade had been carried on, and therefore the same in point of derivation and tenor as had been worked out by long experience within the handicraft system proper. Business traffic was an outgrowth of the handicraft system, and it was in as secure a position in respect of legitimacy and legal and customary guaranty as the industrial system from which its principles were derived and from which its gains were drawn.

The source from which the new line of businessmen drew the accumulations of wealth by force of which they were enabled to do business is somewhat in dispute; but however interesting a question that may be in its own right, it does not particularly concern the present inquiry, and the like is true for the still more interesting and spectacular phenomena that marked the growth and decline of that early business era that ran its course within the life-history of the handicraft system.117 Throughout that great period of business activity on the continent of Europe that gathered head in the sixteenth century and that closed in decay and collapse in the seventeenth, the principles (habits of thought) which underlay, authenticated and animated the business community and its pecuniary traffic continued to be much the same as animated the body of craftsmen in their pecuniary relations from the beginning of the era of handicraft to its close. Such, in its turn, was also the case with the later business era that set in with the great industrial advance of England in the Eighteenth Century, and such continued to be the case through the greater part of its life-history in the Nineteenth Century. Of the latterday and latest developments in business practice and principles the like cannot unhesitatingly be said, but this too is a matter that does not immediately concern the inquiry at this point. But the principles of the new and larger business were the same as had been slowly worked out under the system of petty trade. These business principles have proved to be very tenacious and stable, even in the face of apparently adverse technological circumstances, coming as they do out of a long and rigorous habituation of very wide sweep and having acquired the authenticity due to formal recognition in legal decisions and to the painstaking definition given them in the course of a protracted and exacting struggle against the institutional remnants of the feudal system. These circumstances attending the genesis and growth of modern business principles have led to their being formulated in a well-defined conceptual scheme of customary right and also to their embodiment in statutory form. To this, perhaps, they owe much of their tenacious resistance to latterday exigencies that have tended to modify or abrogate them. In their elements, of course, these business principles are even older than the era of handicraft, being substantially of the same nature as that sentimental impulse to self-aggrandisement that lies at the root of the predatory culture and so makes the substantial core of all pecuniary civilisations.

The distinguishing mark of any business era, as contrasted with the handicraft economy, is the supreme dominance of pecuniary principles, both as standards of efficiency and as canons of conduct. In such a businesslike community efficiency is rated in terms of pecuniary gain; and in so far as business principles rule, efficiency in any other direction than business traffic can claim recognition only in the measure in which it may be reduced to terms of pecuniary gain. Workmanship, therefore, comes to be rated in terms of salesmanship. And the canons of workmanship, and even of technological efficiency, fall more and more into pecuniary lines and allow pecuniary tests to decide on points of serviceability.

The instinct of workmanship is accordingly contaminated with ideals of self-aggrandisement and the canons of invidious emulation, so that even the serviceability of any given action or policy for the common good comes to be rated in terms of the pecuniary gain which such conduct will bring to its author. Any pecuniary strategist—“captain of industry”—who manages to engross appreciably more than an even share of the community’s wealth is therefore likely to be rated as a benefactor of the community at large and an exemplar of the social virtues; whereas the man who works and does not manage to divert something more from the aggregate product to his own use than what one man’s work may contribute to it is visited not only with dispraise for having fallen short of a decent measure of efficiency but also with moral reprobation for shiftlessness and wasted opportunities. So also, to the current common sense in a community trained to pecuniary rather than to workmanlike discrimination between articles of use, those articles which serve their material use in a conspicuously wasteful manner commend themselves as more serviceable, nobler and more beautiful than such goods as do not embody such a margin of waste.118

Under this system of business principles, in one way and another, the sense of workmanship is contaminated in all its ramifications by preconceptions of pecuniary merit and invidious distinction. But what is here immediately in question is its deflection into the channels of gainful business, together with the more obvious consequences that follow directly from the substitution of differential gain in the place of material serviceability as the end to which the instinctive propensity of workmanship so comes to drive men’s ideals and efforts under the discipline of the pecuniary culture.

For the purposes of a genetic inquiry into this modern business situation and its bearing on the sense of workmanship and on the technological phenomena in which that instinct comes to an expression, it is necessary summarily to recall certain current facts pertinent to the case: (a) It is a competitive system; that is to say it is a system of pecuniary rivalry and contention which proceeds on stable institutions of property and contract, under conditions of peace and order. (b) It is a price system, i. e., the competition runs in terms of money, and the money unit is the standard measure of efficiency and achievement; hence competition and efficiency are subject to a rigorous accountancy in terms of a (putatively) stable money unit, which is in all business traffic assumed to be invariable. (c) Technologically this situation is dominated by the mechanical industries; so much so that even the arts of husbandry have latterly taken on much of the character of the mechanic arts. Hence a somewhat thoroughgoing standardisation of processes and products in mechanical terms; which for business purposes has with a fair degree of success been made convertible into terms of price, and so made subject to accountancy in terms of price. (d) Hence consumption is also standardised, proximately in mechanical terms of consumable products but finally, through the mechanism of the market, in terms of price, and like other price phenomena consumption also is competitively subject to and enforced by the like accountancy in terms of the money unit. (e) The typical industries, which set the pace for productive work, for competitive gains, and through the standard rates of gain ultimately also for competitive consumption, are industries carried on on a large scale; that is to say they are such as to require a large material equipment, a wide recourse to technological insight and proficiency, and a large draught on the material resources of the community. (f) This material equipment—industrial plant and natural resources—is held in private ownership, with negligible exceptions; the noteworthy exceptions to this rule, as e. g., harbours, highways, and the like, serving chiefly as accessory means of industry and so come in chiefly as a gratuitous supplement to the industrial equipment held in private ownership and used for competitive gain. (g) Technological knowledge and proficiency is in the main held and transmitted pervasively by the community at large, but it is also held in part—more obviously because exceptionally—by specially trained classes and individual workmen. Relatively little, in effect a negligible proportion, of this technological knowledge and skill is in any special sense held by the owners of the industrial equipment, more particularly not by the owners of the typical large-scale industries. That is to say, the technologically proficient workmen do not in the typical case own or control any appreciable proportion of the material equipment or of the natural resources to which this technological knowledge and skill applies and in the use of which it takes effect. (h) It results that the owners of this large material equipment, including the natural resources, have a discretionary control of the technological proficiency of the community at large, as well as of those special lines of insight and skill that are vested in these specially trained expert men in whom a specialised proficiency is added to the general proficiency that is diffused through the community at large. (i) In effect, therefore, the owners of the necessary material equipment own also the working capacity of the community and the usufruct of the state of the industrial arts. Except for their effective ownership of these elements of productive efficiency their ownership of the material equipment of industry would be of no effect. But the usufruct of this productive capacity of the community and its trained workmen vests in the owners of the material equipment only with the contingent qualification that if the community does this work it must be allowed a livelihood, whereby the gross returns that go in the first instance to these owners suffer abatement by that much. This required livelihood is adjusted to a conventional standard of living which, under the current circumstances of pecuniary emulation, is in great part—perhaps chiefly—a standardised schedule of conspicuous waste.

In what has just been said above, the view is implied that the owners of the material means, who are in great part also the employers of workmen and are sentimentally spoken of as “captains of industry,” have, in effect and commonly, but a relatively loose grasp of the technological facts, possibilities, and requirements of modern industry, and that by virtue of their business training they are able to make but a scant and uncertain use of such loose ideas as they have on these heads. To anyone imbued with the commonplaces of current economic theory it may seem that exception should dutifully be taken to this view, as being an understatement of the businessmen’s technological merits. In current theoretical formulations the businessman is discussed under the caption of “entrepreneur,” “undertaker,” etc., and his gains are spoken of as “wages of superintendence,” “wages of management,” and the like. He is conceived as an expert workman in charge of the works, a superior foreman of the shop, and his gains are accounted a remuneration for his creative contribution to the process of production, due to his superior insight and initiative in technological matters. This conception of the businessman and his relation to industry has stood over from an earlier period, the period of the small-scale industry of handicraft and petty trade, when it still was true that the owner-employer, in the typical case, kept a personal oversight of his workmen and their work, and so filled the place of master-workman as well as that of buyer and seller of materials and finished goods. And such a characterisation of the businessman and his work will still hold true in the modern situation in so far as he still is occupied with industry conducted on the same small scale and continues to fill the place of a foreman of the shop. But under current conditions—the conditions of the past half century—and more particularly under the conditions of that large-scale industry that is currently accounted the type of modern industry, the businessman has ceased to be foreman of the shop, and his surveillance of industry has ceased effectually to comprise a technological management of its details; and in corresponding measure this traditional theoretical conception of the businessman has ceased to apply.

The view here spoken for, that the modern businessman is necessarily out of effectual touch with the affairs of technology as such and incompetent to exercise an effectual surveillance of the processes of industry, is not a matter of bias or of vague opinion; it has in fact become a matter of statistical demonstration. Even a cursory survey of the current achievements of these great modern industries as managed by businessmen, taken in contrast with the opportunities offered them, should convince anyone of the technological unfitness of this business management of industry. Indeed, the captains of industry have themselves latterly begun to recognise their own inefficiency in this respect, and even to appreciate that a businessman’s management of industrial processes is not good even for the business purpose—the net pecuniary gain. And it is all the more ineffectual for the purposes of workmanship as distinct from the businessmen’s gains. So, a professional class of “efficiency engineers” is coming into action, whose duty it is to take invoice of the preventable wastes and inefficiencies due to the business management of industry and to present the case in such concrete and obvious terms of price and percentage as the businessmen in charge will be able to comprehend. These men, in a way, take over the functions assigned in economic theory to the “entrepreneur;” in that they are men of general technological training and insight, who go into their inquiry on the ground of workmanship, take their data in terms of workmanship and convert them into terms of business expediency, somewhat to the same purpose as the like work of conversion was done by the owner-employers under that small-scale system of industrial enterprise from which the current theoretical concept of the “entrepreneur” was derived. It is then the duty of these efficiency engineers to present the results so obtained, for the conviction and guidance of the businessmen in charge, who thereupon, if their business training has left them enough of a sense of workmanship, will give permissive instructions to the expert workmen in direct charge of the industrial processes to put these statistically indicated changes into effect. It is the testimony of these efficiency engineers that relatively few pecuniary captains in command of industrial enterprises have a sufficient comprehension of the technological facts to understand and accept the findings of the technological experts who so argue for the elimination of preventable wastes, even when the issue is presented statistically in terms of price. These men go about their work of ascertaining the efficiency, actual and potential, of any given plant, process, working force, or parcel of material resources, by the methods of precise physical measurement familiar to mechanical engineers, and as an outcome they have no hesitation in speaking of preventable wastes amounting to ten, twenty, fifty, or even ninety per-cent, in the common run of American industries.119

The work of the efficiency engineers being always done in the service of business and with a view to business expediency, their findings bear directly on the business exigencies of the case alone, and give definitive results only in terms of price and profits. How much greater the ascertained discrepancies in the case would appear if these findings could be reduced to terms of serviceability to the community at large, there is no means of forming a secure conjecture. That the discrepancy would in such case prove to be appreciably greater than that shown by the price rating is not doubtful. Under such an appraisal, where the given industrial enterprises would be brought to the test of net serviceability to the community instead of the net gain of the interested businessmen, many industrial enterprises would doubtless show a waste of appreciably more than one hundred per cent of their current output, being rather disserviceable to the community’s material welfare than otherwise.

That the business community is so permeated with incapacity and lack of insight in technological matters is doubtless due proximately to the fact that their attention is habitually directed to the pecuniary issue of industrial enterprise; but more fundamentally and unavoidably it is due to the large volume and intricate complications of the current technological scheme, which will not permit any man to become a competent specialist in an alien and exacting field of endeavour, such as business enterprise, and still acquire and maintain an effectual working acquaintance with the state of the industrial arts. The current technological scheme cannot be mastered as a matter of commonplace information or a by-occupation incidental to another pursuit. The same advance to a large and exhaustive technological system, in the machine industry, that has thrown the direction of industrial affairs into the hands of men primarily occupied with pecuniary management has also made it impossible for men so circumstanced at all adequately to exercise the oversight and direction of industry thereby required at their hands. And the ancient principles of self-help and pecuniary gain by virtue of which these men are held to their work of business enterprise make it also impossible for them adequately to surrender the discretionary care of the industrial processes to other hands or to permit the management of industry to proceed on other than these same business principles.

This technological infirmity of the businessmen assuredly does not arise from a lack of interest in industry, since it is only out of the net product of industry that the business community’s gains are drawn—except so far as they are substantially gains of accountancy merely, due to an inflation of values. Perhaps no class of men have ever been more keenly alert in their interest in industrial matters than the modern businessmen; and this interest extends not only to the industrial ventures in which they may for the time be pecuniarily “interested,” but also and necessarily to other lines of industry that are more or less closely correlated with the one in which the given businessman’s fortunes are embarked; for under modern market conditions any given line of industrial enterprise is bound in endless relations of give and take with all the rest. But this unremitting attention of businessmen to the affairs of industry is a business attention, and, so far as may be, it touches nothing but the pecuniary phenomena connected with the ownership of industry; so that it comes rather to a training in the art of keeping in touch with the pecuniary run of business affairs while avoiding all undue intimacy with the technological facts of industry,—undue in the sense of being in excess of what may serve the needs of a comprehensive short-term outlook over market relations, and which would therefore divert attention from this main interest and befog the pecuniary logic by which businessmen are governed.

Probably, also, no class of men have ever bent more unremittingly to their work than the modern business community. Within the business community there is properly speaking no leisure class, or at least no idle class. In this respect there is a notable contrast between the business community and the landed interest. What there is to be found in this modern culture in the way of an idle class, considered as an institution, runs back for its origins and its specific traits to a more archaic cultural scheme; it is a survival from an earlier (predatory) phase of the pecuniary culture. In the nature of things an idle life of fashion is an affair of the nobility (gentry), of predatory antecedents and, under current conditions, of predatory-parasitic habits; and as regards those modern rich men who withdraw from the business community and fall into a state of otium cum dignitate, it is commonly their fortune to be assimilated by a more or less ceremonial induction into the body of this quasi-predatory gentry or nobility and so assume an imitative colouring of archaism.

The business community is hard at work, and there is no place in it for anyone who is unable or unwilling to work at the high tension of the average; and since this close application to pecuniary work is of a competitive nature it leaves no chance for any of the competitors to apply himself at all effectually to other than pecuniary work. This high tension of work is felt to be very meritorious in all modern communities, somewhat in proportion as they are modern; as is necessarily the case in any work that is substantially of an emulative character. It spends itself on salesmanship, not on workmanship in the naïve sense; although the all-pervading preoccupation with pecuniary matters in modern times has led to its being accounted the type of workmanlike endeavour. It concerns itself ultimately with the pecuniary manipulation of the material equipment of industry, though there is much of it that does not bear immediately on that point. The exceptions under this broad proposition are more apparent than real, although there doubtless are exceptions actual as well as apparent. In such a case the business transactions in question are likely to bear on the ownership of certain specific elements of the immaterial technological equipment, as e. g., habits of thought covered by parent-right or mechanical expedients covered by franchise. Beyond these there are elements of “good-will” that are subject of traffic and that consist in preferential advantages in respect of purely pecuniary transactions having to do not with the material equipment but with the right to deal with it and its management, as e. g., in banking, underwriting, insurance, and the phenomena of the money market at large.

But the mature business situation as it runs today is a complex affair, large and intricate, wherein the effective relations in which business traffic stands to workmanship and to the community’s immaterial equipment of technological knowledge at large are greatly obscured by their own convolutions and by the institutional arrangements and convictions to which this traffic has given rise. So that the matter is best approached by way of a genetic exposition that shall take as its point of departure that simpler business enterprise of early modern times out of which the larger development of the present has grown by insensible accretions and displacements.

Business enterprise came in the course of time to take over the affairs of industry and so to withdraw these affairs from the tutelage of the gilds. This shifting of the effectual discretion in the management of industrial affairs came on gradually and in varying fashion and degree over a considerable interval of time. But the decisive general circumstance that enforced this move into the modern way of doing was an advance in the scope and method of workmanship.120 What threw the fortunes of the industrial community into the hands of the owners of accumulated wealth was essentially a technological change, or rather a complex of technological changes, which so enlarged the requirements in respect of material equipment that the impecunious workmen could no longer carry on their trade except by a working arrangement with the owners of this equipment; whereby the discretionary control of industry was shifted from the craftsmen’s technological mastery of the ways of industry to the owner’s pecuniary mastery of the material means. In the change that so took place to a larger technological scale much was doubtless due to the extension of trade, itself in great part an outcome of technological changes, directly and indirectly. For the craftsmen and their work the outcome was that recourse must be had to the material equipment owned by those who owned it, and on such terms as would content the owners; whereby the usufruct of the workmen’s proficiency and of the state of the industrial arts fell to the owners of the material equipment, on such terms as might be had.121 So it fell to these owners of the material means and of the products of industry to turn this technological situation to account for their own gain, with as little abatement as might be, and at the same time it became incumbent on them each and several competitively to divert as large a share of the community’s productive efficiency to his own profit as the circumstances would permit.