This principle of social federation through specialization, association and co-operation is nowhere better illustrated than in the case of the present economic system. In each centre of population, in each town or city, in each state, in each nation, in the world at large,—the economic system is divided into various elemental economic groups or units, falling under six main headings:
1. The extractive units, which are concerned with the taking of wealth from nature's storehouse—the farm, the mine, the lumber camp.
2. The fabricating units, which are busy changing the products of farm, mine and lumber-camp into semi-finished or finished forms—the mill, the smelter, the factory.
3. The transportation units, which carry goods or people or messages from place to place—railroads, ships, trucks, telephones.
4. The merchandising units, which assemble the goods turned out by the fabricators and distribute them to the users, wholesalers, jobbers, retailers.
5. Personal service units, which render a service to the consumer in some direct, personal way—housekeepers, educators, entertainers, health experts.
6. The financial units, which are concerned with the handling of money and of credit (the counters of the economic system) banks, loan associations, credit houses.
These are some of the main divisions of the economic system as it exists at the present time. Each division is a great net-work of economic inter-relations, specialized and subdivided into individual plants, factories, departments and the like. Take, as an example, one group, the manufacturing industries of the United States. When the Census of 1914 was compiled, the manufacturing industries were classed in fourteen groups,—food and food products, textiles, iron and steel and their products, lumber and its remanufactures, etc. There were 496,234 wage-earners working in 59,317 food and food products establishments, 1,498,644 wage-earners in 22,995 textile establishments, 1,061,058 individuals working in 17,719 iron and steel establishments, and so forth. Each of the fourteen subdivisions of the manufacturing industries of the United States employ hundreds of thousands of men and women who are at work in tens of thousands of establishments in thousands of cities and town. The same kind of specialization is to be found throughout the various modern industries, and in the different industrial countries.
Each one of the larger establishments—each factory or plant—is in turn composed of departments, divisions, shops and the like.
Whether the individual establishment or the individual department be regarded as the unit of economic activity, the outstanding feature of the manufacturing industry is the immense number of units that must be in working order and co-operating harmoniously with the others before the whole can function smoothly. And this is but one of the general divisions of industry. At the time of the Census of 1920 there were in the United States alone, 6,447,998 farms; in 1914 there were 275,791 manufacturing establishments; in 1910 there were 1,127,926 retail dealers and 50,123 wholesale dealers. Literally, there are millions of productive economic units in this one country which are specialized, which are associated in their activities and which must be put on a co-operative basis if effective results are to be obtained from them.