The Evolution of Modern Capitalism: A Study of Machine Production

by J. A. Hobson

§ 18. Organic Relations between Production and Consumption.

§ 19. Summary of Progress towards a Coherent Industrial Organism.

§ 1. Modern industrial societies have hitherto secured to a very inadequate extent the services which modern machinery and methods of production are capable of rendering. The actual growth of material wealth, however great, has been by no means commensurate with the enormously increased powers of producing material commodities afforded by the discoveries of modern science, and the partial utilisation of these discoveries has been attended by a very unequal distribution of the advantages of this increase in the stock of common knowledge and control of nature. Moreover, as an offset against the growth of material wealth, machinery has been a direct agent in producing certain material and moral maladies which impair the health of modern industrial communities.

The unprecedented rapidity and irregularity of the discovery and adoption of the new methods made it impossible for the structure of industrial society to adjust itself at once to the conditions of the new environment. The maladies and defects which we detect in modern industry are but the measure of a present maladjustment.

The progressive adjustment of structure to environment in the unconscious or low-conscious world is necessarily slow. But where the conscious will of man, either as an individual or as a society, can be utilised for an adjusting force, the pace of progress may be indefinitely quickened. A strongly-rooted custom in a man yields very slowly to the pressure of changed circumstances which make it useless or harmful, unless the man consciously recognises the inutility of the custom and sets himself to root it out and plant another custom in its place. So the slowness of this work of industrial adjustment has been in no small measure due to the lack of definite realisation by the members of modern communities of the need and importance of this adjustment. A society which should bring its conscious will to bear upon the work of constructing new social and industrial forms to fit the new economic conditions, may make a progress which, while rapid, may yet be safe, because it is not a speculative progress, but one which is guided in its line of movement by precedent changes of environment.

Regarding, then, this conscious organised endeavour, enlightened and stimulated by a fuller understanding of industrial forces in their relation to human life, as a determinant of growing value in the industrial evolution of the future, it may properly belong to a scientific study of modern industry to seek to discover how the forces of conscious reform can reasonably work in relation to the economic forces whose operations have been already investigated.

In other words, what are the chief lines of economic change required to bring about a readjustment between modern methods of production and social welfare? The answer to this question requires us to amplify our interpretation of the industrial evolution of the past century, by producing into the future the same lines of development, that they may be justified by the appearance of consistency with some rational social end. The most convenient, and perhaps the safest way to meet this demand is to indicate, with that modesty which rightly belongs to prophecy, some of the main reforms which seem to lie upon the road of industrial progress, rendered subordinate to larger human social ends.

§ 2. So far as the waste of economic maladjustment consists in the excessive or defective application of various kinds of productive force at different points of industry, upon the existing basis of individual initiative and control, the reforms which are desirable must be considered as contributing to the more complete establishment of "free" competition in industry.

The complete breakdown of all barriers which impede the free flow of commerce and the migration of capital and labour, the fullest and widest dissemination of industrial information, are necessary to the attainment of the individualistic ideal of free trade. Perfect transparency of industrial operations, perfect fluidity of labour and of wealth would effect incalculably great economies in the production of commercial wealth. The free-trader, in his concentration upon the achievement of the latter economy, has generally failed to do full justice to the importance of the former. He has indeed to some limited extent recognised the value of accurate and extended industrial information as the intellectual basis of free trade. But, in common with most economists, he has failed to carry this consideration far enough. It is generally admitted that the increased publication of accounts and quotations of stock, springing out of the extension of joint-stock enterprise, the growth of numerous trade journals, the collection and dissemination of industrial facts by government bureaux and private statisticians, are serviceable in many ways. But the extreme repugnance which is shown towards all endeavours to extend the compulsory powers of acquiring information by the state, the extreme jealousy with which the rights of private information are maintained, show how inadequately the true character of modern industry is grasped. In the complexity of modern commerce it should be recognised that there is no such thing as a "self-regarding" or a private action. No fact bearing on prices, wages, profits, methods of production, etc., concerns a single firm or a single body of workers. Every industrial action, however detailed in character, however secretly conducted, has a public import, and necessarily affects the actions and interests of innumerable persons. Indeed it is often precisely in the knowledge of those matters regarded as most private, and most carefully secreted, that the public interest chiefly lies. Yet so firmly rooted in the business mind is the individualistic conception of industry, that any idea of a public development of those important private facts upon which the credit of a particular firm is based, would appear to destroy the very foundation of the commercial fabric. But, although in the game of commerce a single firm which played its hand openly while others kept theirs well concealed might suffer failure, it is quite evident that the whole community interested in the game would gain immensely if all the hands were on the table. Many, if not most, of the great disasters of modern commercial societies are attributable precisely to the fact that the credit of great business firms, which is pre-eminently an affair of public interest, is regarded as purely private before the crash. As industry grows more and more complex, so the interest of the public and of an ever-wider public in every industrial action grows apace, and a correspondingly growing recognition of this public interest, with provision for its security, will be found necessary. So far as the natural changes of industrial structure in the private business fail to provide the requisite publicity, the exercise of direct public scrutiny must come to be enforced. The reluctance shown alike by bodies of employers and of workers to divulge material facts is in large measure due to the false ideas they have conceived as to the nature of industrial activity, which education can do something to remove, but which, if not removed, must be over-ruled in the public interest.

§ 3. It must not, however, be supposed that the most thorough transparency of industry, any more than the removal of the political barriers which prevent Free Trade, would tend to bring about the desirable adjustment between the healthy social organism and the environment of machine-production. Full free trade would supply, quicken, and facilitate the operation of those large economic forces which we have seen at work: the tendency of capital to gravitate into larger and fewer masses, localised where labour can be maintained upon the most economical terms: a correspondent but slower and less complete organisation of labour in large masses: the flow of labouring population into towns, together with a larger utilisation of women and (where permitted) children for industrial work: a growing keenness of antagonism as the mass of the business-unit is larger, and an increased expenditure of productive power upon aggressive commercial warfare: the growth of monopolies springing from natural, social, or economic sources, conferring upon individuals or classes the power to consume without producing, and by their consumption to direct the quantity and character of large masses of labour.