MACHINERY AND DEMAND FOR LABOUR.
Sec. 1. _The Influence of Machinery upon the number of Employed,
dependent on "elasticity of demand."_
Sec. 2. _Measurement of direct effects on Employment in Staple
Manufactures._
Sec. 3. _Effects of Machinery in other Employments--The Evidence
of French Statistics._
Sec. 4. _Influence of Introduction of Machinery upon Regularity of
Employment._
Sec. 5. _Effects of "Unorganised" Machine-industry upon Regularity._
Sec. 6. _Different Ways in which modern Industry causes Unemployment._
Sec. 7. _Summary of General Conclusions._
Sec. 1. In discussing the direct influences of machinery upon the
economic position of the labourer we must distinguish its effects upon
(1) the number of workers employed; (2) the regularity of employment;
(3) the skill, duration, intensity, and other qualities of labour; (4)
the remuneration of labour. Though these influences are closely
related in complex interaction, it is convenient to give a separate
consideration to each.
(1) _Effects of Machinery upon the number of Employed._--The motive
which induces capitalist employers to introduce into an industry
machinery which shall either save labour by doing work which labour
did before, or assist labour by making it more efficient, is a desire
to reduce the expenses of production. A new machine either displaces
an old machine, or it undertakes a process of industry formerly done
by hand labour without machinery.
In the former case it has been calculated that the expenses incurred
in making, maintaining, and working the new machines so as to produce
a given output will be less than the corresponding expenses involved
in the use of the old machines. Assuming that the labour of making and
working the new machines is paid at no lower rate than the labour it
displaces, and that the same proportion of the price of each machine
went as wages and as profits, it must follow that the reduction of
expenses achieved signifies a net displacement of labour for a given
quantity of production. Since the skilled labour of making new
machines is likely to be paid higher than that of making more old
machines, and the proportion of the price which goes as profit upon a
new invention will be higher than in the case of an old one,[174] the
actual displacement of labour will commonly be larger than is
represented by the difference in money price of the two machines.
Moreover, since in the case of an old manufacturing firm the cost of
discarding a certain amount of existing machinery must be reckoned in,
the substitution of new machinery for old will generally mean a
considerable displacement of labour.
Similarly, when a new process is first taken over by machinery the
expenses of making and working the machines, as compared with the
expenses of turning out a given product by hand labour, will, other
things being equal, involve a net diminution of employment. The fact
that the new machinery is introduced is a proof that there is a net
diminution of employment as regards a given output; for otherwise no
economy would be effected.
What then is meant by the statement so generally made, that machinery
gives more employment than it takes away--that its wider and ultimate
effect is not to diminish the demand for labour?
The usual answer is that the economy effected by labour-saving
machinery in the expenses of production will, through competition of
producers, be reflected in a lower scale of prices, and this fall of
prices will stimulate consumption. Thus, it is urged, the output must
be greatly increased. When we add together the labour spent in
producing the machinery to assist the enlarged production, the labour
spent in maintaining and working the same, and the labour of conveying
and distributing the enlarged production, it will be found that more
labour is required under the new than under the old conditions of
industry. So runs the familiar argument.
The whole argument in favour of the gain which machinery brings to the
working classes hinges upon the contention that it increases rather
than decreases the amount of employment. Now, though we shall find
reason to believe that machinery has not caused any net diminution of
employment, there is nothing to support the rough-and-ready rule by
which the optimism of English economists argues the case in its
application to a single trade.
The following is a fair example of the argument which has passed
current, drawn from the pages of a competent economic writer:--
"The first introduction of machinery may indeed displace and diminish
for a while the employment of labour, may perchance take labour out of
the hands of persons otherwise not able to take another employment,
and create the need of another class of labourers altogether; but if
it has taken labour from ten persons, it has provided labour for a
thousand. How does it work? A yard of calico made by hand costs two
shillings, made by machinery it may cost fourpence. At two shillings a
yard few buy it; at fourpence a yard, multitudes are glad to avail
themselves of it. Cheapness promotes consumption; the article which
hitherto was used by the higher classes only is now to be seen in the
hand of the labouring classes as well. As the demand increases, so
production increases, and to such an extent that, although the number
of labourers now employed in the production of calico may be immensely
less in proportion to a given quantity of calico, the total number
required for the millions of yards now used greatly exceeds the number
engaged when the whole work was performed without any aid of
machinery."[175]
Now, turning from the consideration of the particular instance, which
we shall find reason to believe is peculiarly unfortunate when we deal
with the statistics of the cotton industry, it must be observed that
economic theory makes dead against this _a priori_ optimism. Ignoring,
for the sake of convenience, the not improbable result that an economy
of production may, at any rate for a time, swell profits instead of
reducing prices, it will be evident that the whole value of the
argument turns upon the effect of a fall of price in stimulating
increased consumption. Now the problem, how far a given fall in price
will force increased consumption, we have found in our discussion of
monopoly prices to involve extremely intricate knowledge of the
special circumstances of each case, and refined calculations of human
motives. Everything depends upon "elasticity of demand," and we are
certainly not justified in assuming that in a particular industry a
given fall of prices due to machine-production will stimulate so large
an increase of consumption that employment will be given to as many,
or more persons than were formerly employed. On the contrary, if we
apply a similarly graduated fall of prices to two different classes of
goods, we shall observe a widely different effect in the stimulation
of consumption. A reduction of fifty per cent. in the price of one
class of manufactured goods may treble or quadruple the consumption,
while the same reduction in another class may increase the consumption
by only twenty per cent. In the former case it is probable that the
ultimate effect of the machinery which has produced the fall in
expenses of production and in prices will be a considerable increase
in the aggregate demand for labour, while in the latter case there
will be a net displacement. It is therefore impossible to argue _a
priori_ that the ultimate effect of a particular introduction of
machinery must be an increased demand for labour, and that the labour
displaced by the machinery will be directly or indirectly absorbed in
forwarding the increased production caused by machinery. It is alleged
that the use of steam-hammers has displaced nine of the ten men
formerly required, that with modern machinery one man can make as many
bottles as six men made formerly, that in the boot and shoe trade one
man can do the work five used to do, that "in the manufacture of
agricultural implements 600 men now do the work which fifteen or
twenty years ago required 2145, thus displacing 1515," and so
forth.[176] Now in some of these cases we shall find that the fall of
prices following such displacements has led to so large an increase of
demand that more persons are directly engaged in these industries than
before; in other cases this is not the case.
The following quotation from a speech made at the Industrial
Remuneration Conference in 1885 will present the most effective
criticism upon Professor Leone Levi's position:--
"In carpet weaving fifty years ago the workman drove the shuttle with
the hand, and produced from forty-five to fifty yards per week, for
which he was paid from 9d. to 1s. per yard, while at the present day a
girl attending a steam loom can produce sixty yards a day, and does
not cost her employer 1-1/2d. per yard for her labour. That girl with
her loom is now doing the work of eight men. The question is, How are
these men employed now? In a clothier's establishment, seeing a girl
at work at a sewing machine, he asked the employer how many men's
labour that machine saved him. He said it saved him twelve men's
labour. Then he asked, 'What would those twelve men be doing now?'
'Oh,' he said, 'they will be much better employed than if they had
been with me, perhaps at some new industry.' He asked, 'What new
industry?' But the employer could not point out any except
photography; at last he said they would probably have found employment
in making sewing machines. Shortly afterwards he was asked to visit
the American Singer Sewing Machine Factory, near Glasgow. He got this
clothier to accompany him, and when going over the works they came
upon the very same kind of machines as the clothier had in his
establishment. Then he put the question to the manager, 'How long
would it take a man to make one of these machines?' He said he could
not tell, as no man made a machine; they had a more expeditious way of
doing it than that--there would be upwards of thirty men employed in
the making of one machine; but he said 'if they were to make this
particular kind of machine, they would turn out one for every four
and a half days' work of each man in their employment.' Now, there was
a machine that with a girl had done the work of twelve men for nearly
ten years, and the owner of that machine was under the impression that
these twelve men would be employed making another machine, while four
and a half days of each of these men was sufficient to make another
machine that was capable of displacing other twelve men."
In cases like the above we must, of course, bear in mind that a
diminution in employment in the several manufacturing processes
directly and indirectly engaged in forwarding an industry, is not of
itself conclusive evidence that the machinery has brought about a net
displacement of labour. If the output is increased the employment in
the extractive, the transport, and the various distributing processes
may compensate the reduction in making goods and machinery.
Sec. 2. The industrial history of a country like England can furnish no
sufficient data for a conclusive general judgment of the case. The
enormous expansion of production induced by the application of
machinery in certain branches of textile industry during the first
half of this century indisputably led to an increased demand for
English labour in trades directly or indirectly connected with textile
production. But, in the first place, this cannot be regarded as a
normal result of a fall of prices due to textile machinery, but is
largely attributable to an expansion in the area of consumption--the
acquisition of vast new markets--in which greater efficiency and
cheapness of transport played the most considerable part. Secondly,
assuming that the more pressing needs of the vast body of consumers
are already satisfied by machine-made textile goods, we are not at
liberty to conjecture that any further cheapening of goods, owing to
improved machinery, will have a correspondent effect on consumption
and the demand for labour. If England had been a self-contained
country, manufacturing only for her own market, the result of
machinery applied to textile industries would without doubt have been
a considerable net displacement of textile labour, making every
allowance for growth of population and increased home consumption. The
expansion of English production under the rapid development of
machinery in the nineteenth century cannot therefore be taken as a
right measure of the normal effects of the application of machinery.
What direct evidence we have of the effect of machinery upon demand
for labour is very significant. Mr. Charles Booth, in his _Occupations
of the People_, presents an analysis of the census returns, showing
the proportion of the population engaged in various employments at
decennial points from 1841 to 1881. To these may be added such
statistics of the 1891 census as the present condition of their
presentation allows us to relate to the former censuses.[177] If we
turn to manufactures, upon which, together with transport, machinery
exercises the most direct influence, we find that the aggregate of
manufactures shows a considerable increase in demand for labour up to
1861--that is, in the period when English wares still kept the lead
they had obtained in the world market--but that since 1861 there is a
positive decline in the proportion of the English population employed
in manufactures. The percentages up to 1881 run as follows:--
1841[178] 27.1 per cent.
1851 32.7 "
1861 33.0 "
1871 31.6 "
1881 30.7 "
If we take the staple manufactures, employing the largest number of
workers, we shall find that for the most part they show a rising
demand for labour up to 1861, a stationary or falling demand when
compared with the population after that date. The foundational
industries--machinery and tools, shipbuilding, metal working--whose
demand for labour during the period 1841-61 increased by leaps and
bounds, still show in the aggregate an increased proportion of
employment, largely due to the rise since 1861 of a large export
trade in machinery. But while the machine-making industries continue
to grow faster than the population in the employment they give,
increasing from 209,353 in 1881 to 262,910 in 1891, and shipbuilding
also gives a proportionate increase, it is noteworthy that the steel
and iron trades, which up to 1871 grew far faster than the population,
began to show signs of decline. In 1881 the number of steel and iron
workers was 361,343, in 1891 it had increased to 380,193, a growth of
only 5.3 per cent. as compared with a growth of population amounting
to 11.7 per cent., and a growth of the number of occupied persons
amounting to 15.3 per cent.
Fuel, gas, chemicals, and other general subsidiary trades show a
steady advance in proportionate employment. The textile and dyeing
industries, on the other hand, showing an increased proportion of
employment up to 1851, by which time the weaving industry was taken
over by machinery, present a continuous and startling decline in the
proportion of employment since that date. A considerably smaller
proportion of the employed classes are now engaged in these trades
than in 1841. The dressmaking industries give the same result--a
continuous decline in proportion of employment since 1851, though in
this case the 1891 figures indicate a slight recovery. The following
are the percentages:--
Textile and
Dyeing. Dress.
1841 9.1 7.8
1851 11.1 10.3
1861 10.2 9.8
1871 9.3 8.5
1881 8.2 8.1
1891 7.6 8.3
The failure of demand for labour to keep pace in its growth with the
growth of population in the main branches of the spinning and weaving
industries is emphasised by Mr. Ellison. Comparing 1850 with 1878, he
says:--"In spinning-mills there is an increase of about 189 per cent.
in spindles, but only 63 per cent. in hands employed; and in weaving
mills an increase of 360 per cent. in looms, but only 253 per cent. in
operatives. This, of course, shows that the machinery has become more
and more automatic or self-regulating, thus requiring the attendance
of a relatively smaller number of workers."[179] When the subsidiary
branches of textile industry are added the results point still more
conclusively in the same direction.
No. of Spindles. No. of Looms. No. of Operatives.
1850 20,977,817 249,627 330,924
1878 44,206,690 514,911 482,903
More recent statistics show that the relative diminution of employment
in textile industries traceable since 1851, became a positive
diminution after 1871, though the statistics of 1891 indicate a
certain recovery.
1841 618,509[180]
1851 603,800
1861 934,500
1871 970,000
1881 962,000
1891 1,016,100[181]
The significance of these figures in relation to the demand for labour
receives further emphasis when the large and rapid displacement of
male by female labour is taken into account. In the dress trades it
may be observed that the absolute increase which every census, save
that of 1871, discloses, is absorbed by the tailoring and millinery
branches, where machinery plays a relatively unimportant part, and
that in the boot and shoe trade, where there has been a greatly
increased application of machinery, there has been not only a
proportionate but an absolute fall-off of employment in the twenty
years following 1861, though the 1891 census again brings up the
absolute numbers of the boot and shoe trade to a little above the
level of 1851.[182]
The branches of manufacture which show a large increase in the
proportion of employment they give in 1891 as compared with 1861 are
machinery and tools, printing and bookbinding, wood furniture and
carriages, fuel, gas, chemicals, and unspecified trades (chiefly
connected with machinery). Machinery and tools alone, among the larger
manufactures, yield a large proportionate increase of employment,
amounting, according to the Census Report, to 27.7 per cent. between
1881 and 1891, though dealers are included in this estimate as well as
makers.
From these facts two conclusions may be drawn regarding the direct
effects of machinery. First, so far as the aggregate of manufactures
is concerned, the net result of the increased use of machinery has not
been to offer an increased demand for labour in these industries
commensurate with the growth of the working population. Second, an
increased proportion of the manufacturing population is employed
either in those branches of the large industries where machinery is
least used, or in the smaller manufactures which are either subsidiary
to the large industries, or are engaged in providing miscellaneous
comforts and luxuries.
Sec. 3. When we turn from manufactures to other employments, we perceive
that while mining and building employ an increasing proportion of the
working classes since 1851, agriculture offers a rapidly diminishing
employment, descending from 20.9 per cent. in 1851 to 11.5 per cent.
in 1881, and 9.9 in 1891.[183]
It is, however, to the transport trades, to the distributing or
"dealing" trades, and to industrial service that we must look for the
notable increase of employment. All of these departments have grown
far faster than the population since 1841.
Transport. Dealing. Industrial
Service.
1841 2.1 5.3 5.4
1851 4.1 6.5 4.5
1861 4.6 7.1 4.0
1871 4.9 7.8 6.0
1881 5.6 7.8 6.7
The statistics of 1891 still further emphasise this movement. The
transport services show an enormous rise upon 1881, yielding a
proportionate employment of 7.4 per cent. The dealing classes show
likewise a great increase. Merchants and agents increase from 285,138
to 363,037, dealers in money are about 30 per cent. more numerous,
while insurance employs more than double the number employed in 1881,
and six times the number of 1871. Taking drapers and mercers as
indicative of the dealing class in a staple trade, we find an increase
from 82,362 to 107,018, or 29.9 per cent. The numbers of those
employed in thirteen representative retail trades have increased
between 1881 and 1891 by not less than 27.9 per cent.
[Illustration: DIAGRAM (COMPARISON OF ENGLISH EMPLOYMENTS).]
When we look at these figures there can be no doubt that one indirect
result of the increased production due to the application of machinery
has been increased employment in the distributing and transport
industries. This increased employment in transport is by no means
confined to the new services of steam locomotion by land and sea. The
earlier apprehensions that railways would destroy road traffic is not
justified by experience. Though employment on railways has of course
grown very fast, road traffic has increased almost in the same ratio.
Railways. Roads.
1841 .03 .7
1851 .3 .9
1861 .5 1.1
1871 .8 1.2
1881 1.2 1.5
1891 1.4 2.8
The census returns for the United States show clearly that carts and
horses have not been displaced by railways, or, more strictly
speaking, that railways have made more cartage work than they have
taken away. In 1850 the manufacture of carriages and waggons employed
15,590 men, in 1870 it employed 54,928. During the same period of
railway growth the number of horses in the country increased from
4,336,717 to 7,145,370. In fact, while the population grew 66 per
cent., the number of carriage and cart makers, in spite of the
increased use of labour-saving machinery in their manufacture, grew
more than 200 per cent.
It must, however, be clearly recognised that the direct effect of
machinery upon the transport industries also is to cause a diminished
proportionate employment of labour. A comparison of the two chief
branches of steam locomotion will bring this home.
Machinery occupies a very different place in the railway from that
which it occupies in steam transport by sea. The engine only
indirectly determines and regulates the work of the majority of
railway men. Most of them are not tenders of machinery. Engine-driver,
stoker, and guard are alone in close direct association with the
machine. To them must be added those engaged in construction and
repair within the workshops. Pointsmen and certain station officials
come next in proximity to the machine; shunters and porters are also
"tending" machinery, though their work is more directly dominated by
general business considerations. But are we to say that the army of
platelayers, navvies, etc., engaged along the line is serving
machinery instead of using tools?[184] The work of ticket clerks and
collectors is only governed by the locomotive in a very indirect way.
Though the steam-engine is the central factor in railway work, the
bulk of the labour is skilled or unskilled work in remote relation to
the machine. This explains why the growth of the railway industry,
after the chief work of construction has been done, is not attended by
a diminishing proportion of employment. On the contrary, we find that
railway employment increases faster than mileage and railway capital.
The following statistics of railways in the United Kingdom illustrate
this fact:--
Year. Mileage. Capital (paid up). Operatives.
1851 ... ... 25,200
1861 10,865 L362,327,338 53,400
1871 15,376 L552,661,551 84,900
1881 18,175 L745,528,162 139,500
1891 20,191 L919,425,121 186,700
But when we turn to the shipping trade, where a much larger proportion
of workers is directly concerned with the tending and direction of
machinery, and trace the effect upon employment of the application of
steam, the result is very different.
Sailing Vessels Steamers Men on Men on
(Tonnage). (Tonnage). Sailing-ships. Steam-ships.
1850 3,396,359 168,474 142,730 8,700
1860 4,204,360 454,327 145,487 26,105
1870 4,577,855 1,112,934 147,207 48,755
1880 3,851,045 2,723,488 108,668 84,304
1890 2,907,405 5,037,666 84,008 129,366[185]
If we take the period 1870-90, during which there is an absolute
shrinkage of sailing tonnage, we find that this shrinkage is
accompanied by a less than corresponding diminution of employment. On
the other hand, the tonnage of steamships in this period increased
more than fourfold, but brought with it an increase of employment
which is less than threefold.
[Illustration: TONNAGE OF SHIPS IN RELATION TO EMPLOYMENT OF
SEAMEN.]
French statistics during the last half century indicate the same
general movement so far as employment is concerned, though the
movement is less regular.
There is the same decline in the proportion of those engaged in
agriculture, though less rapid than in England, the same shrinkage of
the proportion engaged in manufacture, and generally in "making"
industries, and the same notable expansion of the "dealing" classes. A
rapid growth of the professional and public services is common to
England and France. The following percentages mark these movements in
France:--[186]
1856. 1861. 1866. 1872. 1876. 1881. 1886.
Agricultural
classes 52.9 53.2 51.5 52.5 53.0 50.0 47.8
Industrial 29.1 27.4 28.8 24.1 25.9 25.6 25.2
Commercial 4.5 3.9 4.0 8.4 10.7 10.5 11.5[187]
Professional, }
public service, }
persons living } 9.1 9.2 9.5 11.1 10.3 10.2 11.1
on their incomes }
These facts and figures seem to support the following conclusions:--
(1) That along with the increased application of machinery to the
textile and other staple manufactures there has been in these
industries a decrease of employment relative to the growth of the
working population.
(2) That in the transport industries the increase of employment is in
inverse proportion to the introduction of machinery into the several
branches as a dominating factor.
(3) That the considerable diminution of agricultural employment is not
compensated by any proportionate increase of manufacturing employment,
but that the displaced agricultural labour finds employment in such
branches of the transport and distributive trade as are less subject
to machinery.
In the rough estimate of the effect of machinery upon employment, its
influence upon English agriculture has been left untouched by reason
of the inherent complexity of the forces which are operative. But it
must not be forgotten that by far the most important factor in the
decline of English agricultural employment is the transport machinery
which has brought the produce of distant countries into direct
competition with English agricultural produce.
So far, therefore, as the statistics of employments present a just
register of the influence of machinery upon demand for labour, we are
driven to conclude that the net influence of machinery is to diminish
employment so far as those industries are concerned into which
machinery directly enters, and to increase the demand in those
industries which machinery affects but slightly or indirectly. If this
is true of England, which, having the start in the development of the
factory system, has to a larger extent than any other country
specialised in the arts of manufacture, it is probable that the net
effect of machinery upon the demand for labour throughout the
industrial world has been to throw a larger proportion of the
population into industries where machinery does not directly enter.
This general conclusion, however, for want of exact statistical
inquiries conducted upon a single basis, can only be accepted as
probable.
Sec. 4. (2) _Effects of Machinery upon the Regularity of
Employment._--The influence of machinery upon regularity of employment
has a twofold significance. It has a direct bearing upon the
measurement of demand for labour, which must take into account not
only the number of persons employed, but the quantity of employment
given to each. It has also a wider general effect upon the moral and
industrial condition of the workers, and through this upon the
efficiency of labour, which is attracting increased attention among
students of industrial questions. The former consideration alone
concerns us here. We have to distinguish--(_a_) the effects of the
introduction of machinery as a disturbant of regularity of labour;
(_b_) the normal effects of machine-production upon regularity of
labour.
(_a_) The direct and first effect of the introduction of machinery is,
as we have seen, to displace labour. The machinery causes a certain
quantity of unemployment, apart from the consideration of its ultimate
effect on the number of persons to whom employment is given. Professor
Shield Nicholson finds two laws or tendencies which operate in
reducing this disturbing influence of machinery. He holds (1) that a
radical change made in the methods of production will be gradually and
continuously adopted; (2) that these radical changes--these
discontinuous leaps--tend to give place to advances by small
increments of invention.[188]
History certainly shows that the fuller application of great
inventions has been slow, though Professor Nicholson somewhat
over-estimates the mobility of labour and its ability to provide
against impending changes. The story of the introduction of the
power-loom discloses terrible sufferings among the hand-weavers of
certain districts, in spite of the gradual manner in which the change
was effected. The fact that along with the growth of the power-loom
the number of hand-looms was long maintained, is evidence of the
immobility of the hand-weavers, who kept up an irregular and ill-paid
work through ignorance and incapacity to adapt themselves to changed
circumstances.[189] In most of the cases where great distress has been
caused, the directly operative influence has not been introduction of
machinery, but sudden change of fashion. This was the case with the
crinoline-hoop makers of Yorkshire, the straw-plaiters of
Bedfordshire, Bucks, Herts, and Essex.[190] The suddenly-executed
freaks of protective tariffs seem likely to be a fruitful source of
disturbance. So far as the displacement has been due to new
applications of machinery, it is no doubt generally correct to say
that sufficient warning is given to enable workers to check the
further flow of labour into such industries, and to divert it into
other industries which are growing in accordance with the new methods
of production, though much suffering is inflicted upon the labour
which is already specialised in the older method of industry.
Moreover, the changes which are taking place in certain machine
industries favour the increasing adaptability of labour. Many machine
processes are either common to many industries, or are so narrowly
distinguished that a fairly intelligent workman accustomed to one can
soon learn another. If it is true that "the general ability, which is
easily transferable from one trade to another, is every year rising in
importance relatively to that manual skill and technical knowledge
which are specialised in one branch of industry,"[191] we have a
progressive force which tends to minimise the amount of unemployment
due to new applications of specific machinery.
Professor Nicholson's second law is, however, more speculative and
less reliable in its action. It seems to imply some absolute limit to
the number of great inventions. Radical changes are no doubt generally
followed by smaller increments of invention; but we can have no
guarantee that new radical changes quite as important as the earlier
ones may not occur in the future. There are no assignable limits to
the progress of mechanical invention, or to the rate at which that
progress may be effected. If certain preliminary difficulties in the
general application of electricity as a motor can be overcome, there
is every reason to believe that, with the improved means of rapidly
communicating knowledge we possess, our factory system may be
reorganised and labour displaced far more rapidly than in the case of
steam, and at a rate which might greatly exceed the capacity of labour
to adjust itself to the new industrial conditions. At any rate we are
not at liberty to take for granted that the mobility of labour must
always keep pace with the application of new and labour-disturbing
inventions. Since we are not able to assume that the market will be
extended _pari passu_ with the betterment in methods of production, it
is evident that improvements in machinery must be reckoned as a normal
cause of insecurity of employment. The loss of employment may be only
"temporary," but as the life of a working man is also temporary, such
loss may as a disturbing factor in the working life have a
considerable importance.
Sec. 5. (_b_) Whether machinery, apart from the changes due to its
introduction, favours regularity or irregularity of employment, is a
question to which a tolerably definite answer can be given. The
structure of the individual factory, with its ever-growing quantity of
expensive machinery, would seem at first sight to furnish a direct
guarantee of regular employment, based upon the self-interest of the
capitalist. Some of the "sweating" trades of London are said to be
maintained by the economy which can be effected by employers who use
no expensive plant or machinery, and who are able readily to increase
or diminish the number of their employees so as to keep pace with the
demands of some "season" trade, such as fur-pulling or artificial
flowers. When the employer has charge of enormous quantities of fixed
capital, his individual interest is strongly in favour of full and
regular employment of labour. On this account, then, machinery would
seem to favour regularity of employment. On the other hand, Professor
Nicholson has ample evidence in support of his statement that "great
fluctuations in price occur in those commodities which require for
their production a large proportion of fixed capital. These
fluctuations in prices are accompanied by corresponding fluctuations
in wages and irregularity of employment."[192] In a word, while it is
the interest of each producer of machine-made goods to give regular
employment, some wider industrial force compels him to irregularity.
What is this force? It is uncontrolled machinery. In the several units
of machine-production, the individual factories or mills, we have
admirable order and accurate adjustment of parts; in the aggregate of
machine-production we have no organisation, but a chaos of haphazard
speculation. "Industry has not yet adapted itself to the changes in
the environment produced by machinery." That is all.
Under a monetary system of commerce, though commodities still exchange
for commodities, it is an essential condition of that exchange that
those who possess purchasing power shall be willing to use a
sufficient proportion of it to demand consumptive goods. Otherwise the
production of productive goods is stimulated unduly while the demand
for consumptive goods is checked,--the condition which the business
man rightly regards as over-supply of the material forms of capital.
When production was slower, markets[193] narrower, credit less
developed, there was less danger of this big miscalculation, and the
corrective forces of industry were more speedily effective. But modern
machinery has enormously expanded the size of markets, the scale of
competition, the complexity of demand, and production is no longer for
a small, local, present demand, but for a large, world, future demand.
Hence machinery is the direct material cause of these great
fluctuations which bring, as their most evil consequence, irregularity
of wages and employment.
How far does this tend to right itself? Professor Nicholson believes
that time will compel a better adjustment between machinery and its
environment.
"The enormous development of steam communication and the spread of the
telegraph over the whole globe have caused modern industry to develop
from a gigantic star-fish, any of whose members might be destroyed
without affecting the rest, into a +mega zoon+ which is convulsed in
agony by a slight injury in one part. A depression of trade is now
felt as keenly in America and even in our colonies as it is here.
Still, in the process of time, with the increase of organisation and
decrease of unsound speculation, this extension of the market must
lead to greater stability of prices; but at present the disturbing
forces often outweigh altogether the supposed principal
elements."[194]
The organisation of capital under the pressure of these forces is
doubtless proceeding, and such organisation, when it has proceeded far
enough, will indisputably lead to a decrease of unsound speculation.
But these steps in organisation have been taken precisely in those
industries which employ large quantities of fixed capital, and the
admitted fact that severe fluctuations still take place in these
industries is proof that the steadying influences of such organisation
have not yet had time to assert themselves to much purpose. The
competition of larger and larger masses of organised capital seems to
induce heavier speculation and larger fluctuations. Not until a whole
species of capital is organised into some form or degree of
"combination" is the steadying influence of organisation able to
predominate.
Sec. 6. But there is also another force which, in England at any rate,
under the increased application of machinery, makes for an increase
rather than a diminution of speculative production. It has been seen
that the proportion of workers engaged in producing comforts and
luxuries is growing, while the proportion of those producing the prime
necessaries of life is declining. How far the operation of the law of
diminishing returns will allow this tendency to proceed we cannot here
discuss. But statistics show that this is the present tendency both in
England and in the United States. Now the demand for comforts and
luxuries is essentially more irregular and less amenable to
commercial calculation than the demand for necessaries. The greatest
economies of machine-production are found in industries where the
demand is largest, steadiest, and most calculable. Hence the effect of
machinery is to drive ever and ever larger numbers of workers from the
less to the more unsteady employments. Moreover, there is a marked
tendency for the demand for luxuries to become more irregular and less
amenable to calculation, and a corresponding irregularity is imposed
upon the trades engaged in producing them. Twenty years ago it was
possible for Coventry ribbon-weavers to "make to stock" during the
winter months, for though silk ribbons may always be classed as a
luxury, certain patterns commanded a tolerably steady sale year after
year. Now the fluctuations of fashion are much sharper and more
frequent, and a far larger proportion of the consumers of ribbons are
affected by fashion-changes. Hence it has become more and more
difficult to forecast the market, less and less is made to stock, more
and more to order, and orders are given at shorter and shorter notice.
So looms and weavers kept idle during a large part of the year are
driven into fevered activity of manufacture for short irregular
periods. The same applies to many other season and fashion trades. The
irregularity of demand prevents these trades from reaping the full
advantages of the economies of machinery, though the partial
application of machinery and power facilitates the execution of orders
at short notice. Hence the increased proportion of the community's
income spent on luxuries requires an increased proportion of the
labour of the community to be expended in their production. This
signifies a drifting of labour from the more steady forms of
employment to those which are less steady and whose unsteadiness is
constantly increasing. A larger proportion of town workers is
constantly passing into trades connected with preparing and preserving
animal and vegetable substances, to such industries as the hat and
bonnet, confectionery, bookbinding, trades affected by weather,
holiday and season trades, or those in which changes in taste and
fashion are largely operative.
Thus it appears there are three modes in which modern capitalist
methods of production cause temporary unemployment. (1) Continual
increments of labour-saving machinery displace a number of workers,
compelling them to remain wholly or partially unemployed, until they
have "adjusted" themselves to the new economic conditions. (2)
Miscalculation and temporary over-production, to which machine
industries with a wide unstable market are particularly prone, bring
about periodic deep depressions of "trade," temporarily throwing out
of work large bodies of skilled and unskilled labour. (3) Economies of
machine-production in the staple industries drive an increasing
proportion of labour with trades which are engaged in supplying
commodities, the demand for which is more irregular, and in which
therefore the fluctuations in demand for labour must be greater.
Most economists, still deeply imbued with a belief in the admirable
order and economy of "the play of economic forces," appear to regard
all unemployment not assignable to individual vice or incapacity as
the natural and necessary effect of the process of adjustment by which
industrial progress is achieved, ignoring altogether the two latter
classes of consideration. There is, however, reason to believe that in
an average year a far larger number of the "unemployed" at any given
time owe their unemployment to a temporary depression of the trade in
which they are engaged, than to the fluctuations brought about by
organic changes in the economic structure of the trade.
The size and importance of the "unemployment" due primarily to trade
depressions is very imperfectly appreciated. The following statistics
of the condition of the skilled labour market in the period 1886-92,
based upon the reports of twenty-two trades unions, have an important
bearing on this point:--
Year. Percentage out of work.
1886 10.1 per cent.[195]
1887 8.6 "
1888 4.4 "
1889 1.8 "
1890 2.6 "
1891 4.45 "
1892 7.33 "
1893 7.9[196] "
When it is remembered that these figures apply only to the
well-organised trades unions, which, as a rule, comprise the best and
most highly-skilled workers in the several trades, who are less likely
than others to be thrown out in a "slack time," that the building and
season trades are not included in the estimate, and that women's
industries, notoriously more irregular than men's, are altogether
ignored, it will be evident that these statistics very inadequately
represent the proportion of unemployment for the aggregate of the
working classes at the several periods. The _Report on Principal and
Minor Textile Trades_ deducts 10 per cent. from the normal wages to
represent unemployment, though the year 1885, to which the figures
refer, is spoken of as "fairly representative of a normal year."[197]
The injury inflicted upon the wages, working efficiency, and character
of the working classes by irregular employment is, however, very
inadequately represented by figures indicating the average of
"unemployment" during a long period. In the first place, in such an
estimate no allowance is made for the "short time," often worked for
months together by large bodies of operatives. Secondly, in measuring
the evil of "unemployment," we must look rather to the maximum than to
the mean condition. If a man is liable to have his food supply cut off
for a month at a time, no estimate showing that on the average he has
more than enough to eat and drink will fairly represent the danger to
which he is exposed. If once in every ten years we find that some 10
per cent. of the skilled workers, and a far larger percentage of
unskilled workers, are out of employment for months together, these
figures measure the economic malady of "unemployment," which is in no
sense compensated by the full or excessive labour of periods of better
trade.
Sec. 7. Our reasoning from the ascertained tendencies of
machine-production points to the conclusion that, having regard to the
two prime constituents in demand for labour, the number of those
employed, and the regularity of employment, machinery does not, under
present conditions, generally favour an increased steady demand for
labour. It tends to drive an increased proportion of labour in three
directions.
(1) To the invention, construction, and maintenance of machinery to
make machines, the labour of machine-making being continually
displaced by machines, and being thus driven to the production of
machines more remote from the machines directly engaged in producing
consumptive goods. The labour thus engaged must be in an
ever-diminishing proportion to a given quantity of consumption.
Nothing but a great increase in the quantity of consumption, or the
opening of new varieties of consumption, can maintain or increase the
demand for labour in these machine-making industries.
(2) To continual specialisation, subdivision, and refinement in the
arts of distribution. The multiplication of merchants, agents,
retailers, which, in spite of forces making for centralisation in
distributive work, is so marked a feature in the English industry of
the last forty years, is a natural result of the influence of
machinery, in setting free from "making" processes an increased
proportion of labour.
(3) To the supply of new forms of wealth, which are either (_a_)
wholly non-material--_i.e._, intellectual, artistic, or other personal
services; (_b_) partly non-material--_e.g._, works of art or skill,
whose value consists chiefly in the embodiment of individual taste or
spontaneous energy, or (_c_) too irregular or not sufficiently
extended in demand to admit the application of machinery. The learned
professions, art, science, and literature, and those branches of
labour engaged in producing luxuries and luxurious services furnish a
constantly increasing employment, though the supply of labour is so
notoriously in excess of the demand in all such employments that a
large percentage of unemployment is chronic.
So long then as a community grows in numbers, so long as individuals
desire to satisfy more fully their present wants and continue to
develop new wants, forming a higher or more intricate standard of
consumption, there is no evidence to justify the conclusion that
machinery has the effect of causing a net diminution in demand for
labour, though it tends to diminish the proportion of employment in
the "manufacturing" industries; but there is strong reason to believe
that it tends to make employment more unstable, more precarious of
tenure, and more fluctuating in market value.
FOOTNOTES:
[174] Against this we may set the possibility of a fall in the rate of
interest at which manufacturers may be able to borrow capital in order
to set up improved machinery. Where an economy can be effected in this
direction, the displacement of labour due to the introduction of
machinery may not be so large--_i.e._, it will pay a manufacturer to
introduce a new machine which only "saves" a small amount of money, if
he can effect the change at a cheap rate of borrowing. (Cf. Marshall,
_Principles of Economics_, 2nd edit., pp. 569, 570.)
[175] Leone Levi, _Work and Pay_, p. 28.
[176] Statement by Mr. Shaftoe, President of the Trades Union
Congress, 1888; cf. Carroll D. Wright, _Report on Industrial
Depressions_, Washington, 1886, pp. 80-90.
[177] The merging of retail dealers with the "making" classes, the
classification of merchants with those engaged in transport
industries, and certain departures from precedent in the mode of
classification, render a full use of the 1891 figures impossible at
present.
[178] In the years 1831-41 there was an enormous increase of the
factory population. Between 1835 and 1839, according to Porter, the
increase amounted to 68,263, or a rise of 19.2 per cent. (_Progress of
the Nation_, p. 78.)
[179] T. Ellison, _Cotton Trade of Great Britain_, p. 74.
[180] Only 349,452, or 56.8 per cent. in factories. (Porter, p. 78.)
[181] This increase since 1881 is chiefly explained by the feverish
expansion and over-production of the cotton industry. The census
return for 1891 is reduced to correspond with the earlier estimates in
Booth's _Occupations of the People_.
[182] The 1851 census gives 235,447, that of 1891 gives 240,000 (with
an estimated deduction for clog and patten-makers).
[183] The enormous fall between the census of 1861 and 1871 is partly
attributable to changes in classification. (1) Female relatives of
farmers, included in 1861, were excluded in later censuses; (2)
certain changes were made in the treatment of "retired" persons.
[184] The "steam-navvy" is, however, making digging a machine
industry. Thirteen men with a machine-navvy can do the work of between
60 and 70 human navvies.
[185] The aggregate effect of the change upon employment of seamen is
traced by the following figures, in which the tonnage of sailing and
steam vessels is massed together:--
Tonnage. Men.
1850 3,564,833 151,430
1860 4,658,687 171,592
1870 5,690,789 195,962
1880 6,574,513 192,972
1890 7,945,071 213,374
[186] M.S. Levasseur, _La Population Francaise_. Paris, 1889.
[187] From 1876 the transport services, which in 1886 amounted to 2.8
per cent. of the income-receiving population, were included under
commercial. Taking this into consideration, a comparison of the
industrial and the commercial population of 1866 and 1886 shows that
while the former falls from 28.8 to 25.2, the latter rises from 4.0 to
8.7.
[188] J.S. Nicholson, _Effects of Machinery on Wages_, p. 33.
[189] Babbage, _Economy of Manufactures_, p. 230.
[190] Cf. Thorold Rogers, _Political Economy_ (1869), pp. 78, 79.
[191] Marshall, _Principles of Economics_, p. 607; cf. Cunningham,
_Uses and Abuses of Money_, p. 59. See, however, _infra_ Chap. ix.
[192] _Effects of Machinery on Wages_, p. 66.
[193] An increase in the space-area of a market may, however, in some
cases make a trade more steady, especially in the case of an article
of luxury subject to local fluctuations of fashion, etc. A narrow silk
market for England meant fluctuating employment and low skill. An open
market gave improved skill and stability, for though silk is still the
most unsteady of the textile industries, it is far less fluctuating
than was the case in the eighteenth century. (Cf. Porter, p. 225.)
[194] _Op. cit._, p. 117.
[195] _Board of Trade Journal_, November 1892.
[196] For twenty-six societies.
[197] Page xii.