23. Another statesman urged that no commodity which can be produced in the United States with the same amount of labor as in foreign countries could be economically imported. Do you think this position tenable? 24. It has been asserted that the income of the citizens of the United States could be greatly augmented if all commodities now imported were produced at home, and all commodities now exported were consumed at home. The cost of transportation, now amounting to several hundred millions annually, would then be saved. Apply this argument to trade between the Middle West and the Pacific slope, and expose the fallacies involved in it. 25. "We may often by trading with foreigners obtain their commodities at a smaller expense of our labor and capital than these commodities cost the foreigners themselves." a) Explain carefully how this can be. b) Show that in spite of this the foreigner gains by the transaction. 26. What fixes the mechanical limit to specialization? What fixes the commercial limit? 27. Why is it that a country store keeps a little of everything, while a city store very often deals in only one kind of commodities, such as shoes or china or sporting goods? 28. Can specialization be carried as far in bicycle repair shops as in bicycle manufacturing? Why or why not? 29. Give examples of specialized occupations which are made possible by the degree of exchange co-operation which exists within (a) small villages; (b) towns of 5,000 inhabitants; (c) large cities. 30. Cite cases where specialization is limited by (a) the nature of the industry itself; (b) the extent of the market; (c) social institutions; (d) financial organization; (e) commercial organization. What factors go to make up "the extent of the market"? 31. Have widening markets led to specialization or has the increased productivity of specialized industry enlarged markets? 32. “Specialization is a means whereby a nation attains to essential unity. It develops the sense of each working for all and all for each." Has our specialization developed any such sense? 33. Draw up a generalized list of types of interdependence in modern industrial society. Try to work out another list of consequences of this interdependence. 34. "There is a sympathy and opposition between all trades due to the fact that they draw the very breath of life from common sources. What does this mean? What determines how much "breath" a given industry shall obtain ? 35. "Mining and agriculture are fundamental industries; transport and finance are pervasive and connective." What does this mean? Do mining and agriculture serve as connective industries in any sense? What does transport include? What does finance include? 36. "One of the connecting fibers of our interdependent society is the financial mechanism. It makes the structure particularly sensitive to shock." Is this true? 37. Is interdependence peculiar to the competitive system? Would there be any interdependence under socialism? Under the family economy? 38. Trace in detail and from the very first the processes which have aided in supplying you with your cup of coffee. How many people do you suppose helped in those processes? Do you think it is desirable to be dependent on so many people in the satisfying of your wants? 39. "Interdependence puts us, as it were, at one another's mercy, and so ushers in a multitude of new forms of wrongdoing." Explain. What can we do about it? 40. "One evil of interdependence—and one that is commonly overlookedis the fact that by so much leaning on others the stamina of individuals is weakened." Is this true? 41. "You cannot touch the consumer in any point in his expenditure without altering in countless ways his whole standard of valuation and thus affecting industrial processes." Show what this means by working out some specific illustration. 42. "Among other evils which may be charged against interdependence is the pervasive sensitiveness of our modern society. There follows the widespread evils resulting from commercial panics." Is this true? Would these things be true under socialism? Is it your guess that something more than interdependence may be needed to explain the cause of panics? 43. "A football celebration in which windows are broken may harm householders but it is a good thing for labor. It gives employment to labor." Prove or disprove this on the basis of the thoughts suggested by the topic of interdependence. 44. "Such events as the Galveston flood are not unmixed evils. Employment will now be found for many laborers and this benefit should not be forgotten or minimized by us." What do you think of the statement? B. Some Forms of Specialization 141. SPECIALIZATION AND CO-OPERATION1 In our general account of the co-operation prevailing under the present order, no attempt was made to go into the matter at all specifically. In fact it was vaguely assumed that all co-operation Taken by permission from F. M. Taylor, Principles of Economics, pp. 21-23. (University of Michigan, 1916.) the takes a form wherein each producer makes some one thing from first to last starts it and finishes it ready for the consumer, e.g., farmer supplying potatoes. This sort of co-operation we might distinguish as primary co-operation or primary division of occupation. But everyone knows that co-operation commonly goes much further than this. Almost no one carries from the beginning to the end the processes necessary to the production of a particular consumption good. The work of the baker must be preceded by that of the miller and the farmer. So, the work of the shoemaker must be preceded by that of the tanner and the stock farmer. Further, between each producer in the series and his successor, must come the dealer, the middleman, to effect the necessary transfer of the product between the independent producers. In addition, the various members in the original series make much use of the products and services of producers in other series. Thus, the dealers who transfer the hides from the stock farmer to the tanner make use of the services of various producers outside the series, especially those engaged in the transportation business. Tanners again use coal produced by another group, also bark, and various chemicals. In like manner, shoemakers use thread, bristles, needles, machinery, cloth, etc., etc., which they obtain from other classes of producers quite outside our original series. Here then we have division of occupation within division of occupation. We might call it secondary co-operation or secondary division of occupation. But, in an economic society having any considerable degree of development, co-operation and specialization go still further than has yet been brought out. Even in the last case we were thinking of undivided industrial units, though each was devoted to providing only some one element in the ultimate product; e.g., a stock farm devoted to raising cattle, a tannery occupied in preparing hides for leather and so on. But we all know that there is specialization within each industrial unit. The tannery, which as a whole produces leather, has some men scraping hides, some attending to the curing of the hides in the various baths, some staining, some finishing, some keeping books, some writing letters, etc. Obviously this sort of specialization is also of very great significance. Writers have sometimes distinguished it from the kinds already considered as Division of Labor, while those are called Division of Occupation. But we have not yet brought out the full extent of co-operation and specialization under the present order. The specialization thus far considered more especially grows out of the differences in the physical or technical operations to be performed, as just seen in the case of tanning. But there are deeper differences among the functions, processes, factors, involved in production. Production requires that some man possessing more or less wealth should assume the responsibility of production; it requires that he should have land upon which to work; it requires that he should have laborers to perform the different tasks; it requires that he should have materials, tools, and machines to assist these men. In short, to use the more technical language of economics, there must be at least three factors of production: land, labor, and capital. As the last of these comes to the work in two different relations, controlled by two different sets of persons, we have in reality something like four groups of productive agents engaged in every industry, namely: landlords, laborers, capitalists proper, those who supply the capital needed in production, and entrepreneurs, those owners of wealth who assume the responsibility of production. Here, manifestly, we have a deeper sort of co-operation and specialization than anything yet considered. This particular kind of co-operation and specialization now under consideration, I will for the lack of a better term designate as functional co-operation. We at least ought to realize the existence of such a system, even if we seldom have occasion to make special reference to it. The student should further note that the development of this functional specialization and co-operation brings in its train new cases of specialization analogous to the simpler forms already considered. Thus, the more completely the furnishing of capital has become isolated from taking the responsibility of production, the more there have developed institutions for dealing in this capital. Prominent among such institutions are commercial banks, savings banks, trust companies, and so on. At this point it seems desirable to remark on one very important general result of the great extremes to which specialization is carried in the present order, viz., that this fact gives to the existing system an extraordinary complexity which is very confusing to the general public and not a little so to the trained thinker. It is often difficult to isolate the precise function played by a particular business; and people who form hasty conclusions are very apt to deny the existence of such a function, to affirm that the business in question plays no legitimate part, so that those who pursue it are mere parasites upon society. The student should studiously avoid this practice. In fact, he will do well to assume at the outset that every occupation, not catering to human vice, plays a real and legitimate rôle in the total conduct of economic affairs-is doing some one of the numberless things necessary to be done if we are to attain the highest economic efficiency. To summarize this discussion: The present economic system presents itself to us as one wherein we have a vast complex of different industries, mining, stock-raising, farming, manufacturing, transporting, etc., each concerned in the production, of some commodity at one or another stage of completion, while, within each of these industries, different functional groups of productive agents, entrepreneurs, capitalists, laborers, and landlords are co-operating, and while, finally, this vast industrial complex is brought together, is held together, and is regulated through exchange-buying and selling. See also 4. The System of Individual Exchange Co-operation. 85. 142. SPECIALIZATION IN CAPITAL' Certain fundamental principles characterize American methods of manufacture; such as the employment of special machines to perform specific operations only, whereby the output of a factory is enormously increased, minute and systematized division of labor effected, the costly work of finishing and adjusting minimized, and the highest development of skill, accuracy, and dispatch acquired. The high wages paid to skilled labor in this country have acted as a stimulus to the invention and perfecting of labor-saving machinery, and the employment of such labor-saving machinery operated by high-priced, intelligent mechanics has resulted sometimes in a very much larger output and lower cost of product per man employed than anywhere in the world under old conditions. These features have perhaps received most notable development in the fine art of watchmaking by machinery in America, wherein the acme of perfection and economy is shown. The system of concentration of labor in large factories for making watches in this country is the antithesis of the method of scattered manufacturing which prevailed for centuries in Europe, notably in Switzerland. M. Favre-Peret, who investigated this industry in the New England States some years ago, stated that the average production of 40,000 workmen in Switzerland was 40 watches each per annum, Taken by permission from A. E. Outerbridge, Jr., "Specialization in Manufacture," Annals of the American Academy of Political and Social Science, XXV (1905), 47-48. |