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_THE CONTEMPORARY SCIENCE SERIES._
EDITED BY HAVELOCK ELLIS.
EVOLUTION
OF MODERN CAPITALISM.
THE EVOLUTION
OF
MODERN CAPITALISM
A STUDY OF MACHINE PRODUCTION.
BY
JOHN A. HOBSON, M.A.,
AUTHOR OF "PROBLEMS OF POVERTY."
THE WALTER SCOTT PUBLISHING CO., LTD.,
PATERNOSTER SQUARE, LONDON, E.C.
CHARLES SCRIBNER'S SONS,
153-157 FIFTH AVENUE, NEW YORK.
1902.
PREFACE.
In seeking to express and illustrate some of the laws of the
structural changes in modern industry, I have chosen a focus of study
between the wider philosophic survey of treatises on Social Evolution
and the special studies of modern machine-industry contained in such
works as Babbage's _Economy of Manufactures_ and Ure's _Philosophy of
Manufactures_, or more recently in Professor Schulze-Gaevernitz's
careful study of the cotton industry. By using the term "evolution" I
have designed to mark the study as one of a subject-matter in process
of organic change, and I have sought to trace in it some of those
large movements which are characteristic of all natural growth.
The sub-title, _A Study of Machine-Production_, indicates a further
narrowing of the investigation. Selecting the operation of modern
machinery and motors for special attention, I have sought to enforce a
clearer recognition of organic unity, by dwelling upon the more
material aspects of industrial change which mark off the last century
and a half from all former industrial epochs. The position of central
importance thus assigned to machinery as a factor in industrial
evolution may be--to some extent must be--deceptive, but in bringing
scientific analysis to bear upon phenomena so complex and so
imperfectly explored, it is essential to select some single clearly
appreciable standpoint, even at the risk of failing to present the
full complexity of forces in their just but bewildering interaction.
In tracing through the Business, the Trade, and the Industrial
Organism the chief structural and functional changes which accompany
machine-development, I have not attempted to follow out the numerous
branches of social investigation which diverge from the main line of
inquiry. Two studies, however, of "the competitive system" in its
modern working are presented; one examining the process of
restriction, by which competition of capitals gives way to different
forms of combination; the other tracing in periodic Trade Depressions
the natural outcome of unrestricted competition in private capitalist
production.
In some final chapters I have sought to indicate the chief bearings of
the changes of industrial structure upon a few of the deeper issues of
social life, in particular upon the problem of the Industrial Town,
and the position of woman as an industrial competitor.
A portion of Chapters VIII., IX., and X. have already appeared in the
_Contemporary Review_ and in the _Political Science Quarterly Review_,
and I am indebted to the courtesy of the editors for permission to use
them.
I have also to acknowledge most gratefully the valuable assistance
rendered by Dr. William Smart of Glasgow University, who was kind
enough to read through the proofs of a large portion of this book, and
to make many serviceable corrections and suggestions.
JOHN A. HOBSON.
CONTENTS.
CHAPTER I.
PAGE
INTRODUCTION 1
Section.
1. Industrial Science, its Standpoint and Methods of Advance.
2. Capital as Factor in Modern Industrial Changes.
3. Place of Machinery in Evolution of Capitalism.
4. The Monetary Aspect of Industry.
5. The Literary Presentment of Organic Movement.
CHAPTER II.
THE STRUCTURE OF INDUSTRY BEFORE MACHINERY 10
1. Dimensions of International Commerce in early Eighteenth
Century.
2. Natural Barriers to International Trade.
3. Political, Pseudo-economic, and Economic Barriers--
Protective Theory and Practice.
4. Nature of International Trade.
5. Size, Structure, Relations of the several Industries.
6. Slight Extent of Local Specialisation.
7. Nature and Conditions of Specialised Industry.
8. Structure of the Market.
9. Combined Agriculture and Manufacture.
10. Relations between Processes in a Manufacture.
11. Structure of the Domestic Business: Early Stages of
Transition.
12. Beginnings of Concentrated Industry and the Factory.
13. Limitations in Size and Application of Capital--Merchant
Capitalism.
CHAPTER III.
THE ORDER OF DEVELOPMENT OF MACHINE INDUSTRY 44
1. A Machine differentiated from a Tool.
2. Machinery in Relation to the Character of Human Labour.
3. Contributions of Machinery to Productive Power.
4. Main Factors in Development of Machine Industry.
5. Importance of Cotton-trade in Machine Development.
6. History refutes the "Heroic" Theory of Invention.
7. Application of Machinery to other Textile Work.
8. Reverse order of Development in Iron Trades.
9. Leading Determinants in the General Application of
Machinery and Steam-Motor.
10. Order of Development of modern Industrial Methods in the
several Countries--Natural, Racial, Political, Economic.
CHAPTER IV.
THE STRUCTURE OF MODERN INDUSTRY 88
1. Growing Size of the Business-Unit.
2. Relative Increase of Capital and Labour in the Business.
3. Increased Complexity and Integration of Business
Structure.
4. Structure and Size of the Market for different
Commodities.
5. Machinery a direct Agent in expanding Market Areas.
6. Expanded Time-area of the Market.
7. Interdependency of Markets.
8. Sympathetic and Antagonistic Relations between Trades.
9. National and Local Specialisation in Industry.
10. Influences determining Localisation of Industry under
World-Competition.
11. Impossibility of Final Settlement of Industry.
12. Specialisation in Districts and Towns.
13. Specialisation within the Town.
CHAPTER V.
THE FORMATION OF MONOPOLIES IN CAPITAL 117
1. Productive Economies of the Large Business.
2. Competitive Economies of the Large Business.
3. Intenser Competition of the few Large Businesses.
4. Restraint of Competition and Limited Monopoly.
5. Facilities for maintaining Price-Lists in different
Industries.
6. Logical Outcome of Large-Scale Competition.
7. Different Species of "Combines."
8. Legal and Economic Nature of the "Trust."
9. Origin and _Modus Operandi_ of the Standard Oil Trust.
10. The Economic Strength of other Trusts.
11. Industrial Conditions favourable to "Monopoly"
CHAPTER VI.
ECONOMIC POWERS OF THE TRUST 143
1. Power of a Monopoly over earlier or later Processes in
Production of a Commodity.
2. Power over Actual or Potential Competitors.
3. Power over Employees of a Trust.
4. Power over Consumers.
5. Determinants of a Monopoly Price.
6. The Possibility of low Monopoly Prices.
7. Considerations of Elasticity of Demand limiting Prices.
8. Final Summary of Monopoly Prices.
CHAPTER VII.
MACHINERY AND INDUSTRIAL DEPRESSION 167
1. The external phenomena of Trade Depression.
2. Correctly described as Under-production and
Over-production.
3. Testimony to a general excess of Productive Power over the
requirement for Consumption.
4. The connection of modern Machine-production and Depression
shown by statistics of price.
5. Changing forms in which Over-supply of Capital is
embodied.
6. Summary of economic relation of Machinery to Depression.
7. Under-consumption as the root-evil.
8. Economic analysis of "Saving."
9. Saving requires increased Consumption in the future.
10. Quantitative relation of parts in the organism of
Industry.
11. Quantitative relation of Capital and Consumption.
12. Economic limits of Saving for a Community.
13. No limits to the possibility of individual Saving--Clash
of individual and social interests in Saving.
14. Objection that excess in forms of Capital would drive
interests to zero not valid.
15. Excess is in embodiments of Capital, not in real Capital.
16. Uncontrolled Machinery a source of fluctuation.
CHAPTER VIII.
MACHINERY AND DEMAND FOR LABOUR 220
1. The Influence of Machinery upon the number of Employed,
dependent on "elasticity of demand."
2. Measurement of direct effects on Employment in Staple
Manufactures.
3. Effects of Machinery in other Employments--The Evidence of
French Statistics.
4. Influence of Introduction of Machinery upon Regularity of
Employment.
5. Effects of "Unorganised" Machine-industry upon Regularity.
6. Different Ways in which modern Industry causes
Unemployment.
7. Summary of General Conclusions.
CHAPTER IX.
MACHINERY AND THE QUALITY OF LABOUR 244
1. Kinds of Labour which Machinery supersedes.
2. Influence of Machine-evolution upon intensity of physical
work.
3. Machinery and the length of the working day.
4. The Education of Working with Machinery.
5. The levelling tendency of Machinery--The subordination of
individual capacity in work.
CHAPTER X.
THE ECONOMY OF HIGH WAGES 261
1. The Economy of Low Wages.
2. Modifications of the Early Doctrine--Sir T. Brassey's
Evidence from Heavy Manual Work.
3. Wages, Hours, and Product in Machine-industry.
4. A General Application of the Economy of High Wages and
Short Hours inadmissible.
5. Mutual Determination of Conditions of Employment and
Productivity.
6. Compressibility of Labour and Intensification of Effort.
7. Effective Consumption dependent upon Spare Energy of the
Worker.
8. Growth of Machinery in relation to Standard of Comfort.
9. Economy of High Wages dependent upon Consumption.
CHAPTER XI.
SOME EFFECTS OF MODERN INDUSTRY UPON THE WORKERS AS CONSUMERS 285
1. How far the different Working Classes gain from the Fall
of Prices.
2. Part of the Economy of Machine-production compensated by
the growing Work of Distribution.
3. The Lowest Class of Workers gains least from
Machine-production.
CHAPTER XII.
WOMEN IN MODERN INDUSTRY 290
1. Growing Employment of Women in Manufacture.
2. Machinery favours Employment of Women.
3. Wages of Women lower than of Men.
4. Causes of Lower Wages for Women.
5. Smaller Productivity or Efficiency of Women's Labour.
6. Factors enlarging the scope of Women's Wage-work.
7. "Minimum Wage" lower for Women--Her Labour often
subsidised from other sources.
8. Woman's Contribution to the Family Wages--Effect of
Woman's Work upon Man's Wages.
9. Tendency of Woman's Wage to low uniform level.
10. Custom and Competition as determinants of Low Wages.
11. Lack of Organisation among Women--Effect on Wages.
12. Over-supply of Labour in Women's Employments the
root-evil.
13. Low Wages the chief cause of alleged Low "Value" of
Woman's Work.
14. Industrial Position of Woman analogous to that of
Low-skilled Men.
15. Damage to Home-life arising from Women's Wage-work.
CHAPTER XIII.
MACHINERY AND THE MODERN TOWN 324
1. The Modern Industrial Town as a Machine-product.
2. Growth of Town as compared with Rural Population in the
Old and New Worlds.
3. Limits imposed upon the Townward Movement by the Economic
Conditions of World-industry.
4. Effect of increasing Town-life upon Mortality.
5. The impaired quality of Physical Life in Towns.
6. The Intellectual Education of Town-life.
7. The Moral Education of Town-life.
8. Economic Forces making for Decentralisation.
9. Desirability of Public Control of Transport Services to
effect Decentralisation.
10. Long Hours and Insecurity of Work as Obstacles to
Reforms.
11. The Principle of Internal Reform of Town-life.
CHAPTER XIV.
CIVILISATION AND INDUSTRIAL DEVELOPMENT 350
1. Imperfect Adjustment of Industrial Structure to its
Environment.
2. Reform upon the Basis of Private Enterprise and Free
Trade.
3. Freedom and Transparency of Industry powerless to cure the
deeper Industrial Maladies.
4. Beginnings of Public Control of Machine-production.
5. Passage of Industries into a public Non-competitive
Condition.
6. The _raison d'etre_ of Progressive Collectivism.
7. Collectivism follows the line of Monopoly.
8. Cases of "Arrested Development:" the Sweating Trades.
9. Retardation of rate of Progress in Collective Industries.
10. Will Official Machine-work absorb an Increasing
Proportion of Energy?
11. Improved Quality of Consumption the Condition of Social
Progress.
12. The Highest Division of Labour between Machinery and Art.
13. Qualitative Consumption defeats the Law of Decreasing
Returns.
14. Freedom of Art from Limitations of Matter.
15. Machinery and Art in production of Intellectual Wealth.
16. Reformed Consumption abolishes Anti-Social Competition.
17. Life itself must become Qualitative.
18. Organic Relations between Production and Consumption.
19. Summary of Progress towards a Coherent Industrial
Organism.
INDEX 385
THE EVOLUTION OF MODERN CAPITALISM.
THE EVOLUTION OF MODERN CAPITALISM.
CHAPTER I.
INTRODUCTION.
Sec. 1. _Industrial Science, its Standpoint and Methods of Advance._
Sec. 2. _Capital as Factor in Modern Industrial Changes._
Sec. 3. _Place of Machinery in Evolution of Capitalism._
Sec. 4. _The Monetary Aspect of Industry._
Sec. 5. _The Literary Presentment of Organic Movement._
Sec. 1. Science is ever becoming more and more historical in the sense
that it becomes more studiously anxious to show that the laws or
principles with whose exposition it is concerned not merely are
rightly derived from observation of phenomena but cover the whole
range of these phenomena in the explanation they afford. So likewise
History is ever becoming more scientific in the sense that facts or
phenomena are so ordered in their setting as to give prominence to the
ideas or principles which appear to relate them and of which they are
the outward expression. Thus the old sharp line, of distinction has
slipped away, and we see there is no ultimate barrier between a study
of facts and a study of the laws or principles which dominate these
facts. In this way the severance of History and Science becomes less
logically justifiable. Yet it is still convenient that we should say
of one branch of study that it is historical in the sense that it is
directly and consciously engaged in the collection and clear
expression of facts or phenomena as they stand objectively in place or
time without any conscious reference to the laws which relate or
explain them; of another branch of study that it is scientific because
it is engaged in the discovery, formulation, and correct expression of
the laws according to which facts are related, without affecting to
give a full presentment of those facts. The treatment in this book
belongs in this sense to economic science rather than to industrial
history as being an endeavour to discover and interpret the laws of
the movement of industrial forces during the period of the eighteenth
and nineteenth centuries.
It cannot, however, be pretended that any high degree of exactitude
can attach to such a scientific study.
Two chief difficulties beset any attempt to explain industrial
phenomena by tracing the laws of the action of the forces manifested
in them. The first is that only a limited proportion of the phenomena
which at any given time constitute Industry are clearly and definitely
ascertainable, and it may always be possible that the laws which
satisfactorily explain the statical and dynamical relations of these
may be subordinate or even counteracting forces of larger movements
whose dominance would appear if all parts of the industrial whole were
equally known.
The second difficulty, closely related to the first, is the inherent
complexity of Industry, the continual and close interaction of a
number of phenomena whose exact size and relative importance is
continually shifting and baffles the keenest observer.
These difficulties, common to all sciences, are enhanced in
sociological sciences by the impossibility of adequate experiment in
specially prepared environments.
The degree of exactitude attainable in industrial sciences may thus
appear to be limited by the development of statistical inquiry. Since
the collection of accurate statistics, even on those matters which are
most important, and which lend themselves most easily to statistical
description, is a modern acquirement which has not yet widely spread
over the whole world, while the capacity for classifying and making
right use of statistics is still rarer, it is held by some that in a
study where so much depends upon accurate statements of quantity
little advance is at present possible.
And it is, of course, true that until the advance of organised
curiosity has provided us with a complete measurement of industrial
phenomena over a wide area of commerce and over a considerable period
of time, the inductive science of Economics cannot approach
exactitude.
But a study which cannot claim this exactness may yet be a science,
and may have its value. A hypothesis which best explains the generally
apparent relation between certain known phenomena is not the less
science because it is liable to be succeeded by other hypotheses which
with equal relative accuracy explain a wider range of similar
phenomena. It is true that in studies where we know that there exists
a number of unascertained factors we shall expect a more fundamental
displacement of earlier and more speculative hypotheses than in
studies where we know, or think we know, that most of the phenomena
with which we are concerned are equally within our ken: but the
earlier scientific treatment, so far as it goes, is equally necessary
and equally scientific.
In modern industrial changes many different factors, material and
moral, are discernibly related to one another in many complex ways.
According as one or other of the leading factors is taken for a
scientific objective the study assumes a widely different character.
For example, since the end of Industry is wealth for consumption it
would be possible to group the industrial phenomena accordingly as
they served more fully and directly to satisfy human wants, or as they
affected quantitatively or qualitatively the standard of consumption,
and to consider the reflex actions of changed consumption upon modes
of industrial activity. Or again, considering Industry to consist
essentially of organised productive human effort, those factors most
closely related to changes in nature, conditions, and intensity of
work might form the centre of scientific interest; and we might group
our facts and forces according to their bearing upon this. These
points of view would give us different objective scientific studies.
Or, once more, taking a purely subjective standpoint, we might search
out the intellectual expression of these industrial changes in the
changing thought and feeling of the age, tracing the educative
influences of industrial development upon (1) the deliberate judgments
of the business world and of economic thinkers as reflected in
economic writings; (2) politics, literature, and art through the
changes of social environment, and the direct stimulation of new ideas
and sentiments. The deeper and more important human bearings of the
changes in industrial environment might thus be brought into
prominence as well as the reaction by which, through the various
social avenues of law, public opinion, and private organised activity,
these intellectual forces have operated in their turn upon the
industrial structure.
The crowning difficulty of an adequate scientific treatment consists in
the fact that each and all of these scientific objects ought to be
pursued simultaneously; that is to say, the whole of the
phenomena--industrial, intellectual, political, moral, aesthetic--should
be presented in their just but ever-changing proportions.
This larger philosophic treatment is only named in order that it may
be realised how narrow and incomplete would be even the amplest
fulfilment of the purpose indicated in the title of this book.
Sec. 2. Industrial science has not yet sufficiently advanced to enable a
full treatment of the objective phenomena to be attempted.
The method here adopted is to take for our intellectual objective one
important factor in modern industrial movements, to study the laws of
its development and activity, and by observing the relations which
subsist between it and other leading factors or forces in industry to
obtain some clearer appreciation and understanding of the structure of
industry as a whole and its relation to the evolution of human
society. This central factor is indicated by the descriptive title
peculiarly applied to modern industry, Capitalism. A clear view of the
phenomena grouped together under the head of the Industrial Revolution
cannot fail to give prominence to the changes that have taken place in
the structure and functional character of Capital. Whatever
transformations have taken place in the character of land, the raw
material of industrial wealth, and of labour, or those abilities and
faculties of man which operate upon the raw material, have occurred
chiefly and directly through the agency of the enlarged and more
complex use of those forms of material wealth which, while embodying
some element of human effort, are not directly serviceable in
satisfying human want.
Writers upon Political Economy have brought much metaphysical acumen
to bear upon definitions of Capital, and have reached very widely
divergent conclusions as to what the term ought to mean, ignoring the
clear and fairly consistent meaning the term actually possesses in the
business world around them. The business world has indeed two views of
Capital, but they are consistent with one another. Abstractly, money
or the control of money, sometimes called credit, is Capital.
Concretely, capital consists of all forms of marketable matter which
embody labour. Land or nature is excluded except for improvements:
human powers are excluded as not being matter; commodities in the
hands of consumers are excluded because they are no longer marketable.
Thus the actual concrete forms of capital are the raw materials of
production, including the finished stage of shop goods; and the plant
and implements used in the several processes of industry, including
the monetary implements of exchange. Concrete business capital is
composed of these and of nothing but these.[1] In taking modern
industrial phenomena as the subject of scientific inquiry it is better
to accept such terminology as is generally and consistently received
by business men, than either to invent new terms or to give a private
significance to some accepted term which shall be different from that
given by other scientific students, and, if we may judge from past
experience, probably inferior in logical exactitude to the current
meaning in the business world.
Sec. 3. The chief material factor in the evolution of Capitalism is
machinery. The growing quantity and complexity of machinery applied to
purposes of manufacture and conveyance, and to the extractive
industries, is the great special fact in the narrative of the
expansion of modern industry.
It is therefore to the development and influence of machinery upon
industry that we shall chiefly direct our attention, adopting the
following method of study. It is first essential to obtain a clear
understanding of the structure of industry or "the industrial
organism" as a whole, and of its constituent parts, before the new
industrial forces had begun to operate. We must then seek to ascertain
the laws of the development and application of the new forces to the
different departments of industry and the different parts of the
industrial world, examining in certain typical machine industries the
order and pace of the application of the new machinery and motor to
the several processes. Turning our attention again to the industrial
organism, we shall strive to ascertain the chief changes that have
been brought about in the size and structural character of industry,
in the relations of the several parts of the industrial world, of the
several trades which constitute industry, of the processes within
these trades, of the businesses or units which comprise a trade or a
market, and of the units of capital and labour comprising a business.
It will then remain to undertake closer studies of certain important
special outcomes of machinery and factory production. These studies
will fall into three classes. (1) The influences of machine-production
upon the size of the units of capital, the intensification and
limitation of competition; the natural formation of Trusts and other
forms of economic monopoly of capital; trade depressions and grave
industrial disorders due to discrepancies between individual and
social interests in the working of modern methods of production. (2)
Effects of machinery upon labour, the quantity and regularity of
employment, the character and remuneration of work, the place of women
in industry (3) Effects upon the industrial classes in the capacity of
consumers, the growth of the large industrial town and its influences
upon the physical, intellectual, moral life of the community. Lastly,
an attempt will be made to summarise the net influences of modern
capitalist production in their relation to other social progressive
forces, and to indicate the relations between these which seem most
conducive to the welfare of a community measured by generally accepted
standards of character or happiness.
Sec. 4. Since every industrial act in a modern community has its monetary
counterpart, and its importance is commonly estimated in terms of
money, it will be evident that the growth of capitalism might be
studied with great advantage in its monetary aspect. Corresponding to
the changes in productive methods under mechanical machinery we should
find the rapid growth of a complex monetary system reflecting in its
international and national character, in its elaborate structure of
credit, the leading characteristics which we find in modern productive
and distributive industry. The whole industrial movement might be
regarded from the financial or monetary point of view. But though such
a study would be capable of throwing a flood of light upon the
movements of concrete industrial factors at many points, the
intellectual difficulties involved in simultaneously following the
double study, in constantly passing from the more concrete to the more
abstract contemplation of industrial phenomena, would tax the mental
agility of students too severely, and would greatly diminish the
chance of a substantially accurate understanding of either aspect of
modern industry. We shall therefore in this study confine our
attention to the concrete aspect of capitalism, merely indicating by
passing references some of the direct effects upon industrial methods,
especially in the expansion and complexity of markets, of the
elaborate monetary system of modern exchange.
Sec. 5. The inherent difficulty which besets every literary presentation
of the study of a living and changing organism is here present in no
ordinary degree. A book of physiology is necessarily defective in that
it can neither present the just simultaneity of phenomena which occur
together, nor the just sequence of phenomena which are successive.
Diagrams may serve effectively to set forth tolerably simple
simultaneity, but a complex diagram inevitably fails of its object;
for it confuses the sight of one who seeks to simultaneously grasp the
whole, and thus compels a successive examination of different parts
which is generally inferior to skilled narration, in that it affords
no security of the fittest order of examination of the parts. For
certain simple relations between the movements of a few definite
objects a working model may be serviceable; but when complex changes
of shape, pace, and local relations exist, when intricate interaction
takes place, and when new phenomena arise affecting by their presence
all former ones, little can be effected by such visual presentment.
Still less can a succession of diagrams assist us to realise the
continuity of the working of such shifting forces as are presented in
industrial movements.
Thus while the impossibility of adequate experimentation, the
difficulties of scientific observations of phenomena so vast in scope
and so intricate in their relations, make the student of sociological
subjects more dependent upon printed records for his material than is
the case in most other sciences, these printed records induce a
sequence of thought antagonistic to the grasp of a living and moving
unity. This cause is primarily responsible for the failure of many of
the ablest and subtlest economic treatises to impress upon the reader
a clear conception of the industrial world as a single "going
concern." Each piece of the mechanism is clearly described, and the
reader is informed how it fits into the parts which are most closely
related to it, but no simultaneous grasp of the mechanism as a working
whole is attained. When we graft upon the idea of a mechanism that
character of continuous self-development which transforms it into an
"organism," the synthesis of the changing phenomena is still more
difficult to comprehend. These difficulties can only be overcome by a
recognition that the scientific imagination must play a larger part
here than it does in those sciences whose subject-matter is more
amenable to direct observation. In the latter the chief function of
the imagination will be the increase of knowledge by means of
hypotheses which tentatively transcend the region of known facts.
In economic science, as Cairnes has ably shown, the use of hypothesis
is much wider, serving in large measure as a substitute for
experiment.[2] But the scientific imagination has another constant
service to perform. Its exercise is constantly required by the
economist, and in general by the sociologist, to gather into true
relations of time, space, and causality those intricately connected
phenomena which, though individually amenable to sensuous
presentation, are not able to be thus presented as an aggregate in
their right organic order.
The attempts to construct a deductive economic science upon a
piece-meal basis by framing special and separate theories of wages,
rent, value, the functions of money, and so forth, are now recognised
to be in large measure failures precisely because they involve the
fundamental scientific fallacy of supposing that the several parts of
an organic whole can be separately studied, and that from this study
of the parts we can construct a correct idea of the whole. As in
economic theory so in the comprehension of industrial history, no
detailed investigation of a number of different heaps of facts
laboriously collected by intellectual moles will suffice for our
purpose. To understand the evolution of the system of modern industry
we must apply to the heaps of bare unordered facts those principles of
order which are now recognised as the widest generalisations or the
most valid assumptions derivable from other sciences, and endeavour
without slavish conformity to the formulae of these other sciences to
trace in the growth of industrial organisms those general laws of
development which seem common to all bodies of closely-related
phenomena.
FOOTNOTES:
[1] Professor Marshall regards this restricted use of capital as
"misleading," rightly urging that "there are many other things which
truly perform the services commonly attributed to capital"
(_Principles_ Bk. II., chap. iv.). But if we enlarge our definition so
as to include all these "other things" we shall be driven to a
political economy which shall widely transcend Industry as we now
understand the term, and shall comprehend the whole science and art of
life so far as it is concerned with human effort and satisfaction. If
it is convenient and justifiable to retain for certain purposes of
study the restricted connotation of Industry now in vogue, the
confinement of Capital as above to Trade Capital is logically
justified. For a fuller treatment of the question of the use of the
term Capital in forming a terminology descriptive of the parts of
Industry the reader is referred to Chapter VII., and in particular to
Appendix I.
[2] _Logical Method of Political Economy_, p. 81, etc.