Under a well-regulated legal system these efforts of the individual also benefit the community, but until he is able to support himself and his family, the average individual does not consciously make the public interest the chief end of his labors. However altruistic a man may be, he will not be able to labor consistently in behalf of others, unless he will thereby serve his own interests as well, or unless his personal needs have already been met.
64. THE OLD WAY OF GETTING A LIVING.—The economic history of eighteenth century England illustrates two rather distinct methods of getting a living, one of which may be called the old, and the other the new. Up to about the middle of the century, the masses of Englishmen, in common with the people of other countries, got a very poor living. Most common necessities were made in the home and for purely family use. Shoes, clothing, tools, and similar articles were produced laboriously and on a small scale. In comparison with industrial conditions in the nineteenth century, there was at that time little industrial co÷peration [Footnote: By co÷peration is here meant simply the working together of different persons or groups of persons. Co÷peration in this sense is to be distinguished from co÷peration as discussed in Chapter XII.], little division of labor, little suspicion that men were, in spite of hard work engaged in for long hours, getting a very poor living. The trouble was, partly, that men had not yet fully realized the possibilities of helping one another, and partly that they were ignorant of how to make Nature really an efficient aid in getting them a living.
65. THE NEW WAY OF GETTING A LIVING.—After the middle of the eighteenth century the invention of a series of remarkable machines enabled Englishmen greatly to increase their productivity, first in the manufacture of textiles, and later in numerous other industries. By subdividing their labor more and more minutely, and by each specializing in the particular type of work which he could do best, men found that their total output could be greatly increased. This complex division of labor, made possible by the use of water and steam power to run machines and to move vehicles of transportation, reduced the difficulty of getting a good living, that it constituted a veritable revolution in industry. Indeed, this change is known in history as the Industrial Revolution.
66. EFFECTS OF THE INDUSTRIAL REVOLUTION.—In the last century and a half the Industrial Revolution has spread to every important civilized country in the world, everywhere encouraging the application of machine methods to more and more industries. This change from production on a small scale, and often by hand, to large-scale production in factories equipped with complex machines, has had important results. It has so increased our control over Nature that even the humblest workman of to-day enjoys many comforts denied kings a few centuries ago. On the other hand, the Industrial Revolution has tended to create a numerous class which depends entirely upon wages, and to set off against this class an employing group which possesses and controls most of the income-producing equipment of industry. The significance of this last development will become clearer as we go along.
67. NATURE OF MODERN PRODUCTION.—In the study of modern production two fundamental facts confront us. The first is that the economist does not define production as merely the making of material objects. We desire material objects only if they will satisfy our wants. Since, also, the satisfaction of wants is the important thing, it is clear that the performance of a service, such as teaching or painting, may be more important than the manufacture of a material object which no one wants. Production may thus be defined as the satisfaction of human wants. The manufacturer of a material object is productive only if that object is wanted by someone; he who supplies personal or professional service is productive if that service satisfies the wants of someone.
The second fundamental fact which confronts the student of modern production is the complexity of our industrial system. Three hundred years ago most of the commodities in daily use were made, either in the home and by the family members, or by small groups of artisans working together under relatively simple conditions. To-day production is a vast and complicated process. To the eye of the untrained observer a great mass of factories, farms, railroads, mills, machines, ships, and busy laborers appears without order and, often, without purpose. The task immediately before us is to analyze this mass, and to point out the nature of the various factors which contribute to the productive power of a community.
68. NATURE A FIRST FACTOR IN PRODUCTION.—Nature is defined by the economist as inclusive of all of the materials and forces furnished in the form of land and its products, oceans, lakes, rivers, rain, humidity, and climate. Since Nature is rather a vague term, and since, also, the economist looks upon land as the most important element in Nature, we may lump together all of the materials and forces of Nature and apply the term "land."
Taken in this sense, land is clearly of great importance in production. We build houses and factories upon it, we use it as a basis of transportation, we harness its motive power, and we make extensive use of the innumerable raw materials which it furnishes. Without land there could be no production, in the sense in which the economist understands the word.
69. MAN'S LABOR A SECOND FACTOR IN PRODUCTION.—Something besides land, or Nature, is necessary before our wants can be satisfied. Nature is often careless of our needs and desires. True, she offers us berries, coal, firewood, and many other commodities which are practically ready to use, but even these articles will not satisfy our wants unless we go to the trouble to secure possession of them. In an important sense Nature is passive, and if she is to furnish us with a living, we must engage in labor. This labor may be mental or physical, the important point being that it is effort undertaken to increase our control over Nature. Savages are content to use products in substantially the form in which Nature provides them; civilized peoples work over the products of Nature until the utility or want- satisfying power of those products has been greatly increased. Man's living improves as he progresses from indolence to hard physical labor, then from hard physical labor alone to a combination of physical and mental labor intelligently directed.
70. CAPITAL A THIRD FACTOR IN PRODUCTION.—Land to furnish raw materials, and man to make use of those materials,—what more is necessary? Nothing else would be necessary if all of Nature's gifts were readily accessible, and if man unaided could make the best use of them. But Nature hides or disguises many of her treasures, and man is physically weak. Hence he has hit upon the device of making tools to help him in his contest with Nature. During the period of the Industrial Revolution many simple tools were supplanted by complicated devices run by power and called engines and machines. To the economist tools and similar devices are a form of capital, capital being defined as inclusive of everything which man has created, or caused to be created, in order to help in further production. [Footnote: Land has not been created by man but is a gift of Nature. Land, therefore, is not a form of capital.]