The Evolution of Modern Capitalism: A Study of Machine Production

by J. A. Hobson

The first assumption is open to a number of criticisms which must be held to greatly modify its force, and which may be summarised as follows:—

(1) Much individual enterprise in industry does not make for industrial progress. A larger and larger proportion of the energy given out in trade competition is consumed in violent warfare between trade rivals, and is not represented either in advancement of industrial arts or in increase of material wealth.

(2) History does not show greed of gain as the motive of the great steps in industrial progress. The love of science, the pure delight of mechanical invention, the attainment of some slight personal convenience in labour, and mere chance, play the largest part in the history of industrial improvements. These motives would be as equally operative under state-control as under private enterprise.

(3) Such personal inducements as may supply a useful stimulus to the inventive faculty could be offered in socially-controlled industry, not merely publicity and honour, but such direct material rewards as were useful.

Industrial history shows that in modern competitive industry the motive of personal gain is most wastefully applied. On the one hand, the great mass of intelligent workers have no opportunity of securing an adequate reward for any special application of intelligence in mechanical invention or other improvement of industrial arts. Few great modern inventors have made money out of their inventions. On the other hand, the entrepreneur, with just enough business cunning to recognise the market value of an improvement, reaps a material reward which is often enormously in excess of what is economically required to induce him to apply his "business" qualities to the undertaking.

(4) The same charges of weakened individual interest, want of plasticity and enterprise, routine torpidity, are in a measure applicable to every large business as compared with a smaller. Adam Smith considered them fatal barriers to the growth of joint-stock enterprise outside a certain narrowly-defined range. But the economies of the large business were found to outweigh these considerations. So a well-ordered state-industry may be the most economical in spite of diminished elasticity and enterprise.

But while these considerations qualify the force of the contention that state-control would give no scope for industrial progress, they do not refute it. The justification of the assumption by the State of various functions, military, judicial, industrial, is that a safe orderly routine in the conduct of these affairs is rightly purchased by a loss of elasticity and a diminished pace of progress. The arts of war and of justice would probably make more advance under private enterprise than under public administration, and there is no reason to deny that postal and railway services are slower to adopt improvements when they pass under government control.

It may be generally admitted that, as the large modern industries pass from the condition of huge private monopolies to public departments, the routine character will grow in them, and they will become less experimental and more mechanical. It is the nature of machines to be mechanical, and the perfection of machine-industries, as of single machines, will be the perfection of routine. Just in proportion as the machine has established its dominancy over the various industries, so will they increase in size, diminish in flexibility, and grow ripe for admission, as routine businesses, into the ranks of state-industry. If the chief object of society was to secure continual progress in military arts and to educate to the utmost the military qualities, it would be well to leave fighting to private enterprise instead of establishing state monopolies in the trade of war. It sacrifices this competition, with the progress it induces and the personal fitness it evolves, in order that the individual enterprise of its members may be exercised in the competition of industrial arts, inducing industrial progress and evolving industrial fitness. The substitution of industrialism for warfare is not, however, understood to imply a diminution of individual enterprise, but an alteration in its application.

If, starting from this point of view, we regard human life as comprising an infinite number of activities of different sorts, operating upon different planes of competition and educating different human "fitnesses," we shall understand how the particular phase of industrial evolution we are considering is related to the wider philosophic view of life. All progress, from primitive savagedom to modern civilisation, will then appear as consisting in the progressive socialisation of the lower functions, the stoppage of lower forms of competition and of the education of the more brutal qualities, in order that a larger and larger proportion of individual activity may be engaged in the exercise of higher functions, the practice of competition upon higher planes, and the education of higher forms of fitness.

If the history of past civilisation shows us this, there is an à priori presumption that each further step in the repression of individual enterprise and in the extension of state-control does not mean a net diminution in individual activity or any relaxation of effort in self-assertion, but merely an elevation of the plane of competition and of the kind of human qualities engaged. This is, in fact, the philosophical defence of progressive socialism, that human progress requires that one after another the lower material animal functions shall be reduced to routine, in order that a larger amount of individual effort may be devoted to the exercise of higher functions and the cultivation by strife of higher qualities.