Kingdom-In the United States-The Constitutionality of Labor Laws-Child-labor Laws in the United States-Laws Protecting Women Workers in the United States-The Legal Eight-hour Day-Arguments against It-Arguments for It -Conclusion as to Hour Legislation for Men-The Sweating System-Its Evils-Remedies Tried in the United Kingdom and the United States-Minimum Wage Regulations-Ŏther Remedies Advocated and Conclusion-Dangerous Trades— System of Regulation of the United Kingdom-The Wisconsin Plan-Associations Working for Labor Legislation-Present State of Public Opinion in the United States-Need of Subjects of Concluding Chapters-Defects of Wages System— Definition of Profit Sharing-Sliding-scale System-Need of Standard Minimum Wage-Limited Application of Sliding- scale System-Simple Profit Sharing and Circumstances Limit- ing Its Extension-Its Limitations-Profit-sharing and Insur- ance Schemes-Profit Sharing Through Stock Ownership- Other Plans--Gain Sharing-Its Advantages and Disadvan- tages-Labor Copartnership or Coöperation-Coöperative Stores-Success of the Rochdale System-Coöperative Whole- sale Societies The Scottish Society-Advantages of Distribu- tive Coöperation-Reasons for Its Slow Development in the United States-Coöperative Banking-Producers' Coöperation -Conditions to Its Success-Contrast Between Coöperation in Stores and in Shops and Factories-Limitations in Profit Evils to be Guarded Against-Argument for Insurance-Definition of Social Insurance Germany's Compulsory Accident Insur- ance System-State Accident Insurance-The Workmen's Com- pensation System-Argument for Compensation Principle- Industrial Accident Insurance in the United States-The Con- stitutional Obstacle-Elective Systems of Compensation— Policy Advocated for the United States-Germany's Compul- sory Illness Insurance System-Benefits Provided-Statistics of Illness-The British National Insurance Act-Benefits Provided Germany's Compulsory Old Age and Invalidity Insurance System-Other Methods of Providing for the Aged Poor Conclusion-Difficulty of Insuring Against Unemploy- ment The Ghent System-Unemployment Insurance System Socialism-The Utopian Socialists-Socialism of Karl Marx-Its Basic Principles Other Theories-Criticism of Argument of Marx-True Significance of the Class Struggle-Criticism of Theory of Surplus Value Of Theory of Crises-Reasons for Progress of Socialism-Strength of Socialist Parties— Advantages Claimed for Socialism-Difficulties to be Over- come by the Socialist State-Other Criticisms-The Attitude The Nature of Economic Progress Changes in Wages and Hours of Employment Progress in Consumption-Progress in Produc- tion-Progress in Distribution-Reasons Why Wages Remain Low-Influence of the Growth of Population-Economic Justi- fication of Competitive Profits Monopoly Profits-Rent and Interest Justification of Rent Justification of Interest— Unequal Distribution of Wealth and Its Causes-Argument for Heavy Taxation of Inheritances-Progress in the Future- Function of Trade Unions-Labor Laws-Regulation of Mo- nopolies Of Housing Conditions-Free Public Schools-Re- form in Taxation-Progress Depends on Response of the Individual-Probable Course of Wages, Interest and Rent CALIFORNIA PRINCIPLES OF ECONOMICS CHAPTER I RISE OF MODERN INDUSTRY IN ENGLAND § 1. Economics, or political economy, is the social science Definition which treats of that portion of human activity which is con- of Ecocerned with making a living. It deals, on the one hand, with nomics. man's wants and, on the other, with the goods (i.e., the commodities and services) upon which the gratification of his wants depends. It analyzes wants, classifies goods with reference to them and considers all of the circumstances which affect the production and distribution, or sharing, of goods among the individuals who compose society. In discussing production and distribution economists treat the same problems that engage the attention of business men, but from a social rather than an individual point of view. It is to emphasize this distinction that economics is styled a "social science." A definition easy to remember is that economics is the social science of business. Other § 2. Closely related to economics are the other social sciences Its Rela-sociology, politics, law and history. By some writers so- tion to ciology is made to include all of the social sciences, not ex- Social cepting economics. Others define it as the science which treats Sciences: of the beginnings of society and of the fundamental prin- Sociology. ciples of social organization. Still a third group understands the term to include problems connected with society's treatment of its dependent classes. Whichever of these definitions be accepted, the relation of sociology to economics need cause no confusion. Economics has to do primarily with contemporary conditions and with the relations between independent, self-supporting individuals and families and the goods upon which their well-being depends. Politics and Law. History. The Manorial RISE OF MODERN INDUSTRY IN ENGLAND Politics treats of the political organization of society, and law is the aggregate of rules and regulations through which formal expression is given to the social will. Neither is likely to be mistaken for economics, although both influence largely the business institutions and practices with which economics is concerned. The political organization determines what classes shall have a dominant influence in choosing the laws that are to be passed and enforced, and laws themselves establish standards to which all must conform. The solution of many of the practical economic problems which are discussed in later sections of this book will be found to hinge upon the repeal of old laws or the enactment of new ones. History, in the broadest sense, is the narrative of past events. To the economist, economic or industrial history, the narrative of past events touching relations between men and goods, is of special significance. In fact, a knowledge of the principal facts of modern industrial history is so necessary to an understanding of present economic phenomena that it has seemed wise to introduce this book with sketches of the Rise of Modern Industry in England, and of the Industrial Expansion of the United States. § 3. The earliest form of industrial organization of which we have full knowledge from English history is the "manorial" system. In existence before the Norman Conquest (1066), it was not entirely superseded until the sixteenth century. It, therefore, controlled English industrial activity for a greater number of years than any system which has since developed. To understand it clearly it is necessary to remember that during the period when it flourished international intercourse took the form of fighting more commonly than that of trading, that each country was economically self-sufficient or nearly so, and that in order to maintain itself each community was forced by its ignorance of efficient industrial processes to give nearly all of its time to providing for the gratification of its primary wants, for food, clothing and shelter. The manorial system was thus, on one side, a method of organizing the nation for military purposes and, on the other, a plan for securing the cultivation of the soil. It is the latter aspect which interests the economist. The manorial system was at its height about the middle Its Charof the thirteenth century. At that time the whole cultivated acteristics. portion of England was divided up into estates or "manors averaging perhaps 5000 acres in extent. The actual work of tillage on these manors was performed for the most part by serfs or "villeins," whose position was, from our modern point of view, peculiar. The villein was not a slave, and yet he could not legally leave the place in which he was born nor neglect his customary work without the consent of the lord of the manor. On the other hand, although he did not own the allotment of land which he cultivated, he was entitled to it by immemorial usage and might appeal to the manorial court for redress if it was withheld from him. The method of tillage was even more remarkable. Instead of being divided up into a number of separate farms or allotments, each to be cultivated independently and continuously by the same tenant, the arable land of the manor was usually divided up into three great fields, hundreds of acres in extent, each one of which was planted with a single crop. The usual practice was to sow one field with wheat or rye, another with oats or barley, and to allow the third to lie fallow as a preparation for the heavy crop to be grown the following year. The ordinary allotment made to a villein was some thirty acres, assigned usually in half-acre or acre strips from different parts of the farm. By this plan the villein was enabled to participate in the different kinds of agriculture carried on in the different fields, while at the same time he received a share of the good as well as of the poor land. He paid for his allotment, not with money, but with labor, and the amount of labor was fixed by immemorial custom. The most important labor was "week-work," i.e., work on the land which the lord retained for himself for two or three days each week throughout the year, and "boon-day "' work or continuous work on the lord's land for one or two weeks during the plowing season and the season of harvest. In addition certain presents and special services were required of the villein at stated seasons. § 4. The manorial system, which flourished for hundreds of years on the Continent of Europe as well as in England, was :: |