_Of the Products of Machinery or Fixed Capital, as distinguished
from the Products of Human Exertion._
[Sidenote ◆1 To understand how much of the gross product is made
by Capital, it will be well to turn from agriculture to
manufactures;]
[Sidenote ◆2 As Capital plays in manufactures a more obvious part.]
◆¹ Land, which in economics means everything that the earth produces
and the areas it offers for habitation, is of course in a sense at
the bottom of every industry. But if we wish to understand the case
of Capital, it will be well to turn from agriculture to industry of
another kind; the reason being that the part which Capital plays in
agriculture is not only, comparatively speaking, small, but is also a
part which, when we are first approaching the subject, is comparatively
ill fitted for purposes of illustration. ◆² What is best fitted for
the purpose of illustration is Capital applied to manufactures; and it
is best at first not to consider all such Capital, but to confine our
attention to one particular part of it. I must explain to the reader
exactly what I mean.
[Sidenote ◆1 Capital, when actually employed, is of two kinds:]
[Sidenote ◆2 Fixed Capital, such as plant and machinery; and Wage
Capital.]
[Sidenote ◆3 The Capital embodied in machinery is what, for our
present purpose, we must first consider.]
◆¹ People constantly speak of Capital as being a sensitive thing—a
movable thing—a thing that is easily driven away—that can be
transferred from one place to another by a mere stroke of the pen.
We all of us know the phrases. But though they express a truth, it
is partial truth only. Capital before it is employed, when it is
lying, let us say, in a bank, to the credit of a Company that has not
yet begun operations—Capital, under such circumstances, is no doubt
altogether movable; for before it is employed it exists as credit only.
◆² But the moment it is employed in manufacture, a very considerable
part of it is converted into things that are very far from movable—into
such things as buildings and heavy machinery; and only a part remains
movable—namely that reserved for wages. For example, M’Culloch
estimates that the average cost of a factory is about _one hundred
pounds_ for every operative to be employed in it; whilst the yearly
wages of each adult male would now on the average, be about _sixty
pounds_. Thus, if a factory is started which will employ _one thousand_
men, and if the wages of all of them have to be paid out of Capital
for a year, the amount reserved for wages will be _sixty thousand
pounds_, whilst _a hundred thousand pounds_ will have been converted
into plant and buildings. Most people are familiar with the names given
by economists to distinguish the two forms into which employed capital
divides itself. The part which is reserved for, and paid in wages, is
called “Circulating Capital”; that which is embodied in buildings and
machinery is called “Fixed Capital.” Of Circulating Capital—or, as we
may call it, Wage Capital—we will speak presently. ◆³ We will speak
at first of Fixed Capital only; and of this we will take the most
essential part, namely machinery; and for convenience sake we will omit
the accidental part, namely buildings, which render merely the passive
service of shelter.
[Sidenote ◆1 We shall see that machinery adds to the product of
Labour in the same way that a superior soil adds to it;]
Now in any operation of manufacturing raw material, or—what means the
same thing—conveying raw material, say water or coal or fish, to the
places where they are to be consumed, certain machines or appliances
are necessary to enable the operation to take place well. Thus fish
or coal could hardly be carried without a basket, whilst water could
certainly not be carried without some vessel, nor in many places raised
from its source without a rope and pail. For all purposes therefore of
practical argument and calculation, appliances of these most simple and
indispensable kinds are merged in Human Exertion, just as is the case
with the poorest kind of Land, and are not credited separately with
any portion of the result. We do not say the man raised so much water,
and the rope and the pail so much. We say the man raised the whole. ◆¹
But the moment we have to deal with appliances of an improved kind, by
which the result is increased, whilst the labour remains the same, the
case of the appliances becomes analogous to that of superior soils;
and a portion of the result can be assigned to them, distinct from the
result of Labour.
[Sidenote ◆1 As a certain simple instance will show.]
◆¹ Let us suppose, for instance, that a village gets all its water
from a cistern, to keep which replenished takes the labour of ten men
constantly raising the water by means of pails and ropes, and then
carrying it to the cistern, up a steep wearisome hill. These men, we
will say, receive each _one pound_ a week, the village thus paying
for its water _five hundred pounds_ a year, the whole of which sum
goes in the remuneration of labour. We will suppose, further, that the
amount of water thus obtained is _a thousand_ gallons daily, each man
raising and carrying _a hundred_ gallons; and that this supply, though
sufficient for the necessities of the villagers, is not sufficient for
their comfort. They would gladly have twice that amount; but they are
not able to pay for it. Such is the situation with which we start. We
have _a thousand_ gallons of water supplied daily by the exertion of
ten men, or _a hundred_ gallons by the exertion of each of them.
And now let us suppose that the village is suddenly presented with a
pumping-engine, having a handle or handles at which five of these men
can work simultaneously, and by means of which they, working no harder
than formerly, can raise twice the amount of water that was formerly
raised by ten men—namely _two thousand_ gallons daily, instead of _one
thousand_. The villagers, therefore, have now _a thousand_ gallons
daily which they did not have before; and to what is the supply of
this extra quantity due? It is not due to Labour. The Labour involved
can produce no more than formerly; indeed it must produce less; for
its quality is unchanged, and it is halved in quantity. Obviously,
then, the extra _thousand_ gallons are due to the pumping-engine, and
this not in a mere theoretical sense, but in the most practical sense
possible; for this extra supply appears in the cistern as soon as the
engine is present, and would cease to appear if the engine were taken
away.
[Sidenote ◆1 It may be also observed that the added product will
go to the owner of the machine, just as rent goes to the
owner of the land.]
◆¹ And here let me pause for a moment, as I did when I was discussing
land, to point out a fact which at the present stage of argument has
no logical place, but which should be realised by the reader, in order
to avoid misconception: namely, the fact that the extra water-supply
which is due to the pumping-engine, will necessarily be the property of
whoever owns the engine, just as rent will be the property of whoever
owns the land that yields it. We supposed just now that the owner of
the engine was the village. We supposed that the engine was presented
to it. Consequently the village owned the whole extra _thousand_
gallons. It had not to pay for them. But let us suppose instead that
the engine was the property of some stranger. Just as necessarily in
that case the gallons would belong to him; and he could command payment
for them, just as if he had carried them to the cistern himself. We
supposed that the village was able to pay _five hundred pounds_ for
its water; and that it really wanted, for its convenience, twice
as much as it could obtain for that sum expended on human labour.
The owner of the pumping-engine, by allowing the village to use it,
doubles the water-supply, and halves the labour bill. The expenditure
on labour sinks from _five hundred pounds_ to _two hundred and fifty
pounds_; and the owner of the pumping-engine can, it is needless to
say, command the _two hundred and fifty pounds_ which is saved to the
village by its use. In actual life, no doubt, the bargain would be
less simple; because in actual life there would be a number of rival
pumping-engines, whose owners would reduce, by competition, the price
of the extra water; but whatever the price might be, the principle
would remain the same. The price or the value of the water would go to
the owner of the engine; and it would fail to do so only if one thing
happened—if the owner refused to receive it, and, for some reason
or other, made the village a free gift of what the village would be
perfectly willing to buy. In this truth there is nothing that makes for
or against Socialism. The real contention of the Socialist is simply
this—not that labour makes what is actually made by machinery; but that
labourers ought to own the machinery, and for that reason appropriate
what is made by it. A machine or engine, in fact, which is used to
assist labour is, in its quality of a producing agent, just as separate
from the labour with which it co-operates, as a donkey, in its quality
of a carrying agent, is distinct from its master, if the master is
walking along carrying one sack of corn, and guiding the donkey who
walks carrying seven.
[Sidenote ◆1 A machine, then, as a productive agent, is as
distinct from human labour as are the efforts of an
animal.]
◆¹ And this brings us back into the line of our main argument; the
comparison just made being a very apt and helpful illustration of it.
Every machine may be looked on as a kind of domestic animal, and each
new machine as an animal of some new species; which animals co-operate
with men in the production of certain products: and the point I am
urging on the reader may accordingly be put thus. When a man, or a
number of men, without one of these animals to assist them, produce a
certain amount of some particular product, and with the assistance of
one of these animals produce a much larger amount, the added quantity
is produced not by the men, but by the animal—or, to drop back again
into the language of fact, by the machine.
[Sidenote ◆1 The history of the cotton industry is a remarkable
illustration of this.]
◆¹ I have taken an imaginary case of drawing and pumping water, because
the operation is of an exceedingly simple kind. We will now turn from
the imaginary world to the real, and clench what has been said by an
illustration from the history of our own country—and from that period
which at present we specially have in view—namely the close of the last
century.
From the year 1795 to the year 1800, the amount of cotton manufactured
in this country was on the average about _thirty-seven million pounds_
weight annually: ten years before it was only _ten million pounds_;
ten years before that, only _four million pounds_; and during the
previous fifty years it had been less than _two and a half million
pounds_. The amount manufactured, up to the end of this last-named
period, was limited by the fact that spinning was a much slower
process than weaving. It was performed by means of an apparatus known
as “the one-thread wheel.” No other spinning-machine existed; and it
was the opinion of experts, about the year 1770, that it would hardly
be possible in the course of the next thirty years, by collecting and
training to the spinning trade every hand that could be secured for
such a purpose, to raise the annual total to so much as _five million
pounds_. As a matter of fact, however, _five million pounds_ were spun
in the year 1776. In six years’ time, the original product had been
doubled. In ten years, it had been more than quadrupled; in twenty
years, it had increased nearly elevenfold; and in five and twenty
years, it had increased fifteenfold.[27]
[Sidenote ◆1 For every pound of cotton spun by labour, Arkwright’s
machinery spun fourteen pounds.]
◆¹ To what, then, was this extraordinary increase due? It was due to
the invention and introduction of new spinning machinery—especially to
the machines invented by Hargreaves and Arkwright, and the successive
application of horse-power, water-power, and lastly of steam-power, to
driving them. Previous to the year 1770, such a thing as a cotton-mill
was unknown. During the ten following years, about forty were erected
in Great Britain; in the six years following there were erected a
hundred more; and from that time forward their number increased
rapidly, till they first absorbed, and then more than absorbed, the
whole population that had previously conducted the industry in their
own homes. As we follow the history of the manufacture into the present
century, a large part of the increasing gross produce is to be set down
to the increase in the employed population; but during the twenty-five
years with which we have just been dealing, the number of hands
employed in spinning had not more than doubled,[28] whilst the amount
of cotton manufactured had increased by fifteen hundred per cent. It
is therefore evident that the increase during this period is due almost
entirely, not to human exertion, but to machinery.[29]
[Sidenote ◆1 The manufacture of iron offers a similar example.]
◆¹ And next, with more brevity, let us consider the manufacture of
iron. By and by we shall come back to the subject; so it will be enough
here to mention a single fact connected with it. From about the year
1740, when a careful and comprehensive inquiry into the matter was
made, up to the year 1780, the average produce of each smelting furnace
in the country was _two hundred and ninety-four tons_ of iron annually.
Towards the close of this period machinery had been invented by which a
blast was produced of a strength that had been unknown previously; and
in the year 1788, the average product of each of these same furnaces
was _five hundred and ninety-five tons_, or very nearly double what it
had been previously. An extra _two hundred and fifty tons_ was produced
from each furnace annually: and if we attribute the whole of the former
product to human exertion, _two hundred and fifty tons_ at all events
was the product of the new machinery; since if that had been destroyed,
the product, in proportion to the expenditure of exertion, would at
once have sunk back to what it had been forty-eight years earlier.
[Sidenote ◆1 The products, then, of Capital embodied in machinery
are easily distinguishable from the products of Labour.]
◆¹ Here, then, we have before us the two principal manufactures of this
country, as they were during the closing years of the last century; and
we have seen that in each a definite portion of the product was due to
a certain kind of capital, as distinct from human exertion—distinct
from human exertion in precisely the same way, as we have already seen
land to be, when we find it producing rent; and we have seen further
that the products both of this kind of Capital and of Land, are to
be distinguished from those of Human Exertion on precisely similar
principles.[30]
[Sidenote ◆1 In the next chapter we will consider the products of
Wage Capital.]
◆¹ Machinery, however,—or fixed capital, of which we have taken
machinery as the type,—is only a part of Capital considered as a whole.
We have still to deal with the part that is reserved for and spent in
wages; and this will introduce us to an entirely new subject—a subject
which as yet I have not so much as hinted at—namely human exertion
considered in an entirely new light.