markets, came our great trust problems and that rivalry of nations which culminated in the disaster of 1914. On the administrative side of business attention is still given to technique, but in addition systems or philosophies of management are coming to the front.

These are some of the matters connected with the transition from the mediaeval period to the present day-with the coming in of capitalism. And what does capitalism mean? Not the same thing at different times; with different nations; or under different circumstances. All civilized societies of the nineteenth and twentieth centuries might be called "capitalistic," but clearly the term would not have precisely the same content as applied to all these countries. Capitalism is, then, an ever-changing concept. Whatever capitalism means, when did it come into being? No one can say. Some of its elements emerged very early and existed in germ even earlier. Some came on the stage much later. Very likely new ones will be added in the future. While we shall gain nothing by trying to define capitalism in a precise way or in trying to determine the exact date of its emergence, we shall gain by attempting to enumerate some of the outstanding features of present-day capitalism. How inadequate such enumeration must be at this time may be realized when we remind ourselves that the rest of this book deals with only some of the phases of the subject.

1. Modern capitalism is organized on the basis of the money economy. A barter régime could not have produced capitalism of the kind we know.

2. It is organized primarily on an individualistic basis, and its outstanding motivating force is the gain spirit. That is to say, production for profit-making rather than for the direct subsistence of the producer is an outstanding feature. This does not deny, of course, that in earlier forms of society men were greedy to accumulate money. It merely calls attention to a certain method of accumulation.

3. Production for gain means production for a market. Capitalism could not, accordingly, come into its own until large accessible markets were available. Markets may be made up of space areas or of time areas or of both. Good transportation and communication enlarge the space areas; storage facilities and financial devices, such as credit, which reach out into the future, enlarge the time area.

4. The word itself, "capitalistic," is significant. Obviously, capitalistic production is so called on account of the important part played in it by capital. This involves:

a) "A production of wealth not required to satisfy the current wants of its owners, and therefore saved," or turned back into profit-making production. Capital is created through saving, and the saving process is dependent upon, and greatly facilitated by, the money economy and the financial structure of society. b) Progress in technology-including the invention of machines. It is by the use of surplus wealth in the production of "capital goods," such as tools and machinery, that this surplus "turned back into profit-making production" achieves its significance. c) Control of these goods through private property rights, by "capitalists." A full discussion of this point involves the discussion of private property as a basic assumption of the present order.

5. Capitalism of today means certain things with respect to the worker:

a) The worker secures his livelihood under a wage system. That is, he sells his services to another, who converts these services into, say, a commodity, and this commodity belongs to the person who has hired the laborer. In other words, the worker has been "divorced from the product."

b) The worker has also been "divorced from his tools." The tools-capital goods-belong to another, to his employer. Closely connected with this is the further fact that

c) The worker has been "divorced from control of the conditions of work." "Conditions" is here a broad term, including methods of processing, supervision of technique, hours, sanitary conditions, etc. To be sure, the worker has something to say concerning certain phases of the conditions of work, but the initiative manifestly rests with his employer. d) Typically, labor today is group labor. It is performed under the conditions of the factory system. This is dependent upon the progress in technology already mentioned. It presupposes "such a development of the industrial arts (including organization and management) as enables indirect methods of production to afford profitable employment to group labor using tools or machinery." Clearly, also, it is dependent upon the development of large markets.

The material presented in this chapter is the result of a more or less arbitrary selection. Many topics would have served as

illustrations of the coming in of capitalism and only a few have been utilized. Notable omissions are such matters as the history of commerce, the relation of the state to industry, governmental finance, changes in philosophical outlook, and the relation of capitalism to agriculture. The inclusions speak for themselves.

QUESTIONS

1. "There were forces undermining the manorial system as early as the thirteenth century. In particular there were (1) the substitution of money for produce and labor rents, (2) the leasing of the manor by the bailiff, the tenants, or others, (3) exchange betweeen manor and town, and (4) external relations (notably the Crusades)." Precisely how could each of these factors undermine the manorial system?

2. Make a list of the events usually described as those ushering in the modern era. How did each of these affect the coming in of capitalism? 3. It is generally said that capitalism came in, not as a steady movement, but in a succession of waves. What are the chief periods in the coming in of capitalism?

4. "Capitalism arose out of commerce and moved over the surface of the earth in the channels of commerce." Support both parts of this quotation with details.

5. Just why was it necessary to develop instruments and methods of calculation before capitalism could come into its own? Have these instruments and methods been fully developed or is the development still going on? Can you give instances of present-day developments? 6. How do you account for the fact that Italy was the "cradle of commercial arithmetic"?

7. What has been the relation of the state to the coming in of capitalism? Is capitalism related in any way to governmental functions today? 8. What is meant by the capitalistic spirit?

9. "It is difficult to realize how modern is the capitalistic spirit, the disposition to employ accumulated wealth in furthering production for the sake of profit." How modern is this spirit? What factors delayed its development? What factors finally caused it to emerge?

10. "A spirit of reckless adventure and one of careful and laborious calculation are the parents of modern capitalism." Can you clear up this paradox ?

II. "The inherent tendency of the use of currency is to weaken custom. It suggests rational valuation in a way not suggested by the customary vending of commodities or labor." Explain.

12. "As compared with the Middle Ages, the modern period saw the development of improved facilities for investing money in business.' Make a list of these improved facilities.

13. How did the charging of interest come to be considered a moral procedure? What would happen in industry today if no such thing as interest were possible?

14. What is meant by "the middle-class virtues"? What is their relationship to capitalism?

15. What is meant by technology? What is its relation to the development of capitalism?

16. Tabulate (1) the hindrances found in mediaeval society to the development of capitalism; (2) the forces or factors which overcame these hindrances.

17. “An outstanding fact in the development of capitalism is this: The captains of industry of one economic period are newcomers. They are not the descendants of the captains of the preceding period. These descendants have become conservatives." Why should you expect this to be true?

18. It is generally believed that we are now in the midst of a great transition in economic life. Does this mean opportunities for new captains of industry? If so, can these new captains of industry adopt the policies and practices of their predecessors ?

19. "In the history of the rise of capitalism, there is a truly surprising regularity with which the phases of economic freedom and economic regulation have succeeded each other." What does this mean? From this point of view, into what periods does the coming in of capitalism divide itself?

20. "Capital means tools, machines, durable goods which man uses in his

struggle with nature. Capitalism, therefore, means simply the tool or machine period of man's struggle with nature." Does this seem to you an adequate definition of capitalism?

21. "The intervention of capital eventually brought about an entire reconstruction of the social system of Western Europe." Fill in the details. 22. "As the woolen industry was the first, on any considerable scale, to take the gild form, it was the first to break away from it; and this for the same reason the extent of the demand." Explain. In what periods did the two events occur?

23. "In the fifteenth century, four vital changes take place in industrial organization: (1) the weaving and allied branches of the manufacture are establishing themselves in villages and hamlets and isolated cottages over the countryside; (2) the gild association drops asunder in the woolen industry; (3) the industry concentrates in certain particular districts; (4) a new class of entrepreneurs appears the clothiers-who now control the whole process of production." Omitting No. 3, explain the why of each of these changes. Where did the capital come from? Where did the country weavers come from?

24. The first inclosure movement meant, in large part, the removal of population from the vills. These people would not be welcomed by the gilds at this time. What became of them? Can you see any connection between this problem and the decay of the gilds? between this problem and the development of the laissez-faire attitude toward manufactures in England? between this problem and the rise of the clothiers?

25. "Enclosures contributed greatly to self-reliant individualism." How? 26. Where did the capital and enterprise which are indicated by the advent of the clothier come from?

27. What, with respect to the coming of capitalism, does the draper mean? What does the clothier mean? In each case precisely what conditions called this personage into being?

28. Take the list of the essential elements of modern capitalism and trace the intervention of each in the woolen industry, with respect to time of entry and to causes of entry.

29. "The commercial organization of the woolen industry assumed the shape of capitalistic industry even earlier than did the manufacturing phase of that industry." Furnish proof of this position.

30. To what extent had the domestic system permeated eighteenth-century industry in England? Give the proofs of your position.

31. What elements of modern capitalism came in with the domestic system? Make a list of the factors which caused the emergence of the domestic system.

32. It has been said that English industry had become dependent upon capitalistic enterprise in certain respects long before the Industrial Revolution. In what respects? What new respects were added by the revolution?

33. Why was there relatively little large-scale production in England prior to 1750? Where large-scale production did exist, what factors brought it into being?

34. To what extent had capitalists brought considerable bodies of workingmen together under one roof prior to the outbreak of the Industrial Revolution? Make a list of the pecuniary advantages and disadvantages of such a procedure.

35. "The fluctuation of employment was likely to be even greater under the domestic system than under the factory system." Why or why not? What has overhead cost to do with the matter? speculative industry? wider markets?

36. "As compared with mediaeval times the modern laborer has lost stability of position." Why or why not?

37. "The revolutionary element of the Middle Ages was the merchant." Explain what this means.