5. We have already seen that an essential to any considerable
production is _capital_. We have seen the nature of capital and how
it comes to exist. We have also learned that though capital implies
saving, mere saving is not the sole condition of capital; indeed, a
narrow penuriousness prevents the rapid accumulation of capital. The
man who is accustomed to bring his water from a spring a quarter of
a mile from his house instead of digging a well at the cost of a few
dollars, or a few days’ work, acts uneconomically. In the long run
the bringing of the water from the spring costs him much more than
the digging of the well. The man who has extensive grain-fields, and
who, for the sake of saving the expense of a reaper, or even a cradle,
continues to use the sickle, will find that his saving results in a
loss instead of a gain.
A man does not need to be rich in order to be a capitalist. When the
savage has invented a bow and arrows he has the rudiments of capital.
The laborer who has reserved out of his earnings enough to buy him a
set of tools, or a few acres of land, is as really a capitalist as
the owner of factories or railroads. Whatever property is used for
production is capital.
Capital exists in many forms. It has been generally divided into
_fixed_ and _circulating_, though the limits of these divisions are
not very precisely defined. The main difference consists in this, that
while certain kinds of capital are used only once in the fulfillment of
their purposes, other kinds are used repeatedly. Fuel can be burned but
once. An axe may serve for years. Circulating capital is of two kinds:
(1) There are the stock and commodities which are to be consumed in
reproduction; (_a_) the material out of which the new product is to be
made, as lumber for cabinet ware, leather for shoes, etc.; (_b_) food
and other provisions for the sustenance of the laborers.
(2) There is the stock of completed commodities on hand and ready
for the market. The chairs that are finished and ready for sale in
the chair factory are of this character. It is to be observed that
the same article may be at one time circulating and at another fixed
capital. Thus the chairs just spoken of, while they are in the hands
of the manufacturer, or passing through those of the dealers, are
circulating capital. It is only when they become _fixed in use_ that
their character changes.
Fixed capital consists (1) of all tools, implements, and machinery,
used in the trades. Here, too, belong all structures of every sort
for productive purposes; (2) all beasts of burden and draft; (3)
all improvements of land implied in clearing, fencing, draining,
fertilizing, terracing, etc.; (4) all mental acquisitions gained by
labor and which give man power for productive results.
Obviously capital, by whomsoever owned, is an advantage to the laborer.
But such capital is useless to the owner unless he can unite it with
labor. So, too, the ability to labor is of no benefit to the laborer
unless he can employ it in connection with capital. Generally the more
capital there is in a community, other things being equal, the better
it is for the laborer; and the more laborers there are, other things
being equal, the better it is for the capitalist. When a factory burns
down it may destroy only a small part of the wealth of the owners, and
they may not palpably suffer; but it is very likely to deprive the
laborers, who are connected with it, of the means of securing their
daily sustenance.
There is no natural antagonism of interests between capital and labor,
but rather the utmost concord and interdependence. Whatever conflicts
arise between the laborers and the capitalists come from the unnatural
selfishness and jealousy of the parties concerned.
6. As has been intimated, it is only by application of principles
underlying political economy that we come to the conditions of the
highest production, or, in other words, find how to satisfy the largest
range of desires to the greatest extent at the smallest cost of labor.
One of the chief means of effecting this is by _the combination and
division of labor_. Recalling what was said concerning association and
individuality, we shall see what principles are involved here, and
how naturally they came into operation. As there was seen to be no
antagonism between the two latter conceptions when carefully analyzed,
so there is none, but rather the opposite, between combination
and division of labor. It is true that there are instances where
combination may take place without division, as when men unite to
effect purposes which one could not accomplish except in much more than
the proportionate time; as also in some cases to affect purposes which
the individual could not effect in any length of time, such as the
moving and placing of heavy timbers and stones, the management of ships
and railway trains, etc. But for the most part men divide their labor
in the process in order that they may combine the result. This is done
in two ways:
(1) Men divide up the work of supplying human wants into different
trades and occupations, according to their several tastes and
aptitudes. Each man needs nearly the same that every other needs.
But while each provides for only one kind of want, he provides more
than enough to satisfy his own desire in that particular respect,
and contributes the overplus to meet that same want in others. As
all others do the same, each is contributing to meet the desires
of one and all to each. The shoemaker, the tailor, the carpenter,
the cabinet-maker, the blacksmith, the weaver, the paper-maker, the
tin-man, the miner, the smelter, the painter, the glazier, etc., are
all contributing to supply the farmer’s needs, and the farmer is
contributing to all their needs. The wants of all are many times more
fully met in this way than if each one should undertake to supply all
his own wants.
(2) In some complicated trades the work is divided into a number of
processes. There are men who could do every one of these parts; but
such men are few, and their labor very costly, because some of the
parts require rare skill and talent. What is needed is to organize
several grades of laborers, so that the physically strong, the
intelligent and skillful may have the work that only they can do; the
less strong and skillful may find employment in the lighter and easier
parts, and so all grades of ability down to the delicate woman or the
little child, and up to the most powerful muscle and most advanced
intelligence, can find their place. It is almost incredible how great
is the increase of productiveness from the mere economical arrangement
of workers. It is said that in so simple a matter as the making of
pins, where the work is divided into ten processes and properly
distributed, that the production will be _two hundred and forty times_
as much as if each man did the whole work on each pin.
This connects itself with another important condition of large
production. I mean the diversification of employment in a community.
It is only in such a varied industry that all the varied tastes,
aptitudes and abilities of society can find scope and adaptation; and
without this, production must fall far short of its possibilities.
This, too, is required to develop those differences which constitute
individuality, and on which association depends.
There are other conditions of enlarged production, such as are implied
in freedom, good government, and the moral character of the community,
the influence of each of which will easily suggest itself to thoughtful
minds.