Front Page Titles (by Subject) CHAPTER 36: MACHINERY AND WAGES - Economics, vol. 1: Economic Principles
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CHAPTER 36: MACHINERY AND WAGES - Frank A. Fetter, Economics, vol. 1: Economic Principles 
Economics, vol. 1: Economic Principles, (New York: The Century Co., 1915).
Part of: Economics, 2 vols.
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MACHINERY AND WAGES
§ 1. Progressive control over natural conditions. § 2. Labor-saving invention as a dynamic factor. § 3. The lump of labor notion. § 4. Evils of “the industrial revolution.” § 5. Some evils of the introduction of machinery. § 6. Loss to the less efficient workers. § 7. Effect of machinery in different industries. § 8. Beneficial effect of machinery upon wages. § 9. Dependence on abstinence. § 10. Grades of labor and gains from machinery. § 11. Opposing tendencies.
§ 1. Progressive control over natural conditions. Various stages of progress in human history have been recognized. First is the stage of appropriation—the stage of hunting, or of fishing, or of gathering the spontaneous fruits of the fields. Man in this stage is little beyond the animal in his economic methods; he uses some tools to gather what nature chances to bring forth, but he does not guide and direct the natural processes. The limitation to man’s powers in this stage are marked. There is excess of supply and waste at one season, scarcity and great suffering at another. With such crude utilization of the bounties of nature, a vast area will support but a small population. When sheep and cattle have been domesticated and where there is a large area for grazing, industry rises to the pastoral stage. While still dependent on nature’s bounties for the feeding of his cattle, man is hourly intervening to protect, increase, regulate, and improve the flocks and herds on which depends his supply of food and materials. Famines are more rare, economic welfare is greater, a larger population is nourished on the same area, The agricultural stage begins whenever man tills the soil, plants seeds, and increases by his care the supply of vegetable food. This is a still greater intervention in the course of nature. Man anticipates the future, directs forces, and groups materials to his purpose of getting a regular food-supply. He is thus forced into settled life, at the same time improves in hand-production of commodities, and makes further steps in commerce. Then gradually comes the industrial stage, in which control over nature grows, supplies increase, machinery and motive forces are utilized, and humanity is in the full tide of industrial development. Thus throughout history the economic progress of society has been marked by decreasing dependence on the bounties and chances of nature and by increasing shaping of materials and control of natural forces by man. There are no sharply marked changes, but there is a growth of security, of certainty, and of productivity. With man’s increasing power and foresight, the element of chance is reduced.
§ 2. Labor-saving inventions as a dynamic factor. For several centuries, accompanying the advance of the natural sciences, there has been a gradual improvement of mechanical appliances in the practical arts in western Europe and America. The question may be put as regards the simplest improvement of the simplest tools: how do they affect the wages of the workers? The question took a dramatic form when power-using machines were so rapidly introduced in the last half of the eighteenth century in England.
It is by the use of power that the greatest saving of labor can be effected. Machinery is applicable in very different degrees in different processes and industries. In many industries and parts of industries, machines are usable only in a slight measure, indirectly, or not at all. They are of the least assistance in the personal services, and in the immediate work of the thinker, the teacher, the speaker, and the artist. Agriculture presents conditions of difficulty for the use, in the fields, of power other than that of man and of draft animals. Even horse-drawn gang-plows, planters, seeders, mowers, reapers, harvesters, hay-loaders, etc., to be used profitably require a level surface and a pretty large area given to a single crop. Such farm machinery can not be used as well east of the Alleghany Mountains as in the Mississippi Valley, and it is still uneconomical in large portions of the civilized world. The use of traction engines for plowing is increasing slowly. Other machines that can be used at the barn, and can be moved from one farm to another, have a constantly widening use, as threshers, automatic unloading-forks, cornshellers, feed-cutters, hay-balers, steam and gasoline engines for pumping, wood-sawing, etc. With the aid of these machines the labor required to produce the staple food for one hundred people is a fraction of what it was a hundred years ago.
The use of machinery in land and water transportation (steamships, locomotives, electric power), has affected all other kinds of industries, by changing their locations, increasing the supplies of materials, and widening the markets. Yet the most typical applications of machinery have been in manufacturing, in making form-changes, in the mass-production of standardized products. (See Chapter 31 on large production.) The most striking changes took place in the textile industries. In 1840 a man’s work in spinning cotton was 320 times as effective as in 1769, in 1855 it was 700 times. Similar examples are found in the manufacture of shoes, and in all varieties of wood- and iron-work.
§ 3. The lump of labor notion. Of the countless inventions many do not “save labor,” but merely add to the comfort of the user, or to the ease of the worker; others enable men to do new things before quite beyond the power of any man or group of men; but many are “labor saving,” in the sense that they enable the same labor to get a larger result in the same time, or the same result in less time.
The popular judgment always has been that this reduces the “amount of work” to be done, meaning the opportunities for employment, the number of jobs to be had by workers. The “lump of labor” notion, as it is called, is widely held, especially among workingmen. The notion is that there is exactly so much labor predetermined to be done; therefore, if machines are introduced, there is that much less for men to do. The conclusion easily drawn is that labor-saving machines are the explanation of any existing unemployment; and that they make wages low. Yet few if any would be rash enough to say that the income of the masses would be higher to-day if all tools and machines were abandoned and men worked barehanded. It is recognized that such a course would reduce all alike to want; indeed, that without the aid of labor-saving appliances the present population would be utterly unable to support existence. The objection is rather vaguely felt to the use of too much machinery, and to that kind which has been recently introduced, and to that kind which is used in the objector’s own trade. The experience in the rapid introduction of machines in England in the period called “the industrial revolution” (about 1775 to 1825), as well as the experience of workers when a rapid change is made in their own trades, gives an appearance of truth to this view.
§ 4. Evils of “the industrial revolution.” It chanced that the extensive introduction of machinery in England, particularly in textile-manufacture, was coincident with the unhappy result of a lengthening of the hours of labor in factories and a lowering of wages. These were, in fact, quite abnormal consequences and have not been seen elsewhere, altho the owners of factories wish to keep their machines employed as many hours as possible. The laboring classes of England were at that time demoralized and depressed by industrial and social influences that had no logical connection with machinery: the very rapid growth of population, due in part to the evil workings of the system of poor relief, excessive taxation to carry on wars, the abnormally rapid growth of cities. In all other countries of Europe and in America, where the introduction of machinery has been more gradual, it has been followed by a shortening of working hours (as eventually it was in England also) and by a rise of wages. Indeed, the experience of England served as a warning to other nations, and by labor organization and factory-regulation much was done to reduce the shock of rapid introduction of machines.
§ 5. Some evils of the introduction of machinery. Not infrequently it has happened that employers have introduced labor-saving machines at the time of a strike, so that they could turn out the former amount of product with fewer men. The strike gave just the motive needed to overcome the inertia of changing to a more expensive process, one perhaps still of somewhat uncertain advantage. Small wonder that the striking workmen should view the machine as a strike breaker, for literally at the moment it was taking “their job” away from them.
In more normal conditions, when there is no strike, it often may happen that the immediate effect of improved machinery, if suddenly introduced, is to throw some men out of employment. Any sudden change in industry injures men that have become adapted to the work that is affected. This is as true of change brought about by the opening of new trade routes or by scientific discoveries (where machinery does not enter in) as in the case of labor-saving machines. If machines displace labor rapidly, men that can not adjust themselves to the new conditions suffer, and there are always some that can not adjust themselves, always some that suffer. A well-mastered trade, a wage-earning tho intangible possession, may be made suddenly valueless. Men can not quickly change their methods of working or their place of work. It is rarely possible for a man past middle life to shift over into a new trade where his efficiency will be as great and his pay as high as in the old.1 New methods of puddling iron sent many old men into the poorhouses of Pennsylvania between 1890 and 1900. Even where the total employment increases, the individual sometimes suffers. The increased demand resulting from the cheapening of a product may call for more workers than were employed before the new machinery came in, but men needing a different training, and some of the former workmen may be thrown out of employment. The introduction of the linotype and monotype is said to have displaced a large number of hand type-setters, but to have increased the amount of printing. As the machines are expensive and can not be worked properly by men not highly expert, men past thirty-five years of age have not been allowed to learn their use.2
§ 6. Loss to the less efficient workers. The least efficient men in any trade suffer most from the introduction of machinery. The new method crowds hardest the man at the margin of employment. The more skilled workman can, at his more rapid pace, still earn a living wage in competition with a machine, or can move into some other occupation. It often happens that they are advanced to be foremen or managers, and gain greatly by the change. The less skilled, unable to adapt themselves, can but drop out entirely, innocent victims of an economic change, sacrifices to the cause of industrial progress. Happily such pathetic incidents are relatively not numerous. Most machinery is introduced in commercial centers when demand for the products is increasing, and there is no need to discharge men; it gradually spreads to other factories in such a way that most men can adapt themselves to the change.
Since recorded history began there have been recurring periods of unemployment. Greece and Rome often had the problem. But it is helpful in getting some perspective in judging the effects of machinery, to note that in proportion to the number of the population the unemployed were probably more numerous in the reign of Queen Elizabeth than they are to-day, and the general level of income was much lower.
§ 7. Effect of machinery in different industries. Every new machine or process compels some readjustment of employment, the number in some industries increasing, in others diminishing. If extreme examples are taken, it may be made to appear either that an increase or that a decrease of employment results from machinery. Labor-saving machines may be roughly divided into three classes: those that create more employment in the particular industry than they take away; those that leave employment unchanged; those that reduce the amount of employment. To allow for changes in population these classes may be expressed as percentages of the whole population, (1) those labor-saving machines that call for a larger percentage of workers than before in the particular industry, (2) the same percentage, (3) a smaller percentage. The superficial appearance of “saving of labor” is greater than the reality in every industry where the new machines are more elaborate and costly than the former tools or machines. Labor is required to get out the material for the new machines, to make, repair and maintain them, and to supply them with power. But of course they would not be “labor-saving” if the labor thus required in new ways were equal to that released by the new process.
The chief changes of employment result from the shift of demand for products. The demand for different products is more or less elastic. Industries grade off from those that are capable of developing a great demand for labor to those at the other extreme that are capable of a very slight increase, as a result of a lowering of the price. There is hardly any assignable limit to the consumption of textiles, provided their price falls; the demand for dress alone is indefinitely expansible. Queen Elizabeth, who had a different dress for every day in the year, has many potential imitators. It is a striking fact, in view of the prominent part labor-saving machines had in the textile industries, that there were more handlooms in use in England in 1850 than fifty years before, tho in the meantime power-looms had displaced the handlooms in all the great factories. There was still room for variety of patterns and processes. There is a constant increase relatively, as well as absolutely, in the number employed in transportation, as each census shows; there are more railroad employees relative to the population than there were stage-drivers and teamsters before the day of railroads. The proportion of people now engaged in printing books and papers is larger by far than in the days when all the books of the world were written by the old monks in their cloisters. The proportion of workers in agriculture, on the other hand, is less than it formerly was. In part this is a change in appearance only, for the farmer once made a large part of his tools which are now made by workers employed in manufactures, yet who in a very real way are aiding in agriculture. In part the change is, however, the effect of the use of machinery and other improvements in agricultural processes. The amount of rawfood products required for each hundred persons is quite inelastic. As it becomes possible to expend more for food, the change is made in quality and in variety rather than in quantity. The greater part of the saving in the cost of food is, however, expended in other products, and the labor saved in agriculture finds employment in supplying new desires. In other cases, also, new industries are made possible as machines liberate energy from the production of the more necessary goods. At each census it is necessary to change the schedule of occupations, because men have adopted callings unknown before. The desires of men are variable and indefinitely expansible, and as the products of machines increase and the prices fall, income is expended in other directions. Between 1890 and 1910 the proportion of the population engaged in art, music, travel, social festivities, etc., in America has increased as is indicated in the following:
§ 8. Beneficial effect of machinery upon wages. Now let us look at the fundamental theory in the problem. The introduction of machinery has taken place along with changes in other dynamic forces, some of them doubtless in themselves “tending” to raise, others to lower, the level of real wages. Our question may take this form: What is the effect, given a stationary population, on a fixed area, with other resources unchanged? To an unchanging population come better, more efficient machines. It is as if the land became richer, the materials easier to get, the workers stronger and swifter. It is a richer economic environment. The owners of machines, competing for the sale of machine uses, have more to offer to each laborer. It is the converse of the decreasing returns when population grows and decreasing returns result; here the material equipment grows and increasing returns result. The application of labor stops at the higher uses or services of agents and is not forced to the lower. The more perfect the economic environment, the higher the incomes even of those who own no part of the machinery. A part of this benefit may appear in the form of higher money wages received, a part in the form of the lower prices of things bought. Real wages are the essential thing. As a consumer the laborer shares with every other member of society in the benefits of improved machinery. The benefits resulting from great abundance are diffused, and as goods are brought from the high, or scarcity, end of the scale of value down toward the level of free goods, everybody in the long run gains by the abundance and cheapness.
§ 9. Dependence on abstinence. The gain to the general welfare, however, can result only when the new inventions are actually embodied in machines. An invention is only an immaterial idea, and the machines in which inventions are incorporated are wealth which has a capital value. Further, a gain can result only when the usance of the machines is not so high as to absorb the larger part of the gain in efficiency. Not all labor-saving inventions call for more elaborate or more costly machines. Some are merely better methods, and require no more equipment—or even less. Some of them are simpler and less costly than the forms they displace. These (unless patented) are free goods, uplifting the efficiency of production “without money and without price.” But some inventions call for a larger and longer investment. Unless the rate of time-preference is low enough the new invention will not be embodied in machines that will displace the old, less-efficient forms. (See Chapter 21.) Labor-saving inventions thus simply enlarge the range of choice of means of production among which enterprisers and investors may choose, within the limits of their rates of time-preference. The gain in product by the new method as compared with the old may be so small that it only suffices to recompense the abstinence required for the larger investment. (The new method will not be used if it produces less than the old for a given outlay.) Thus as machines call for larger and longer investments, unless the gain in productive efficiency is large, a larger proportion of the total product must go to capital, while larger absolute amounts go both to labor and to capital. (But see below, on opposing tendencies.)
§ 10. Grades of labor, and gains from machinery. The general, or average, gain is not to be judged by comparing the conditions of the lowest grade of labor with those of fifty years ago, for while that grade may have been bettered only a little, it has been possible for large numbers to rise to higher grades because of the use of machinery. The physical tasks are to-day much lighter than ever before, and a larger proportion of society is engaged in industries that require skill and thought rather than physical labor. That portion of the work is being more and more shifted upon machines. A machine is “an iron man,” it has been said, and comes into competition with other men to lower their wages by outworking and underbidding them. But this iron man can do only automatic tasks; it is not capable of exercising judgment. Every intelligent laborer who can adjust, adapt, fit himself for more intelligent action, will rise above the machine and profit by its presence. But crude physical labor which can compete only on the plane of automatic machines must find its field of employment more and more hedged in. If, however, even a portion of the workers (or of their children) are able to change to new or to rise to more skilled occupations, they reduce by so much the presence of competition below, and make possible a rise of wages there also. (See the doctrine of non-competing classes.)
§ 11. Opposing tendencies. It appears from this survey, that the logical effect of labor-saving machinery is to lift the level of efficiency and productiveness on which labor operates. A richer world relative to population means a higher income to the average man. The benefits are unequally distributed, but nearly all share to some degree.
But it must not be overlooked that certain conditions are assumed and if they are curtailed or absent the general benefits which machinery in itself tends to create may be reduced and be more unequally distributed. These conditions are:
(a) Competition among the owners of machines. So far as machines favor large industry, and large industry widens the scope of monopoly power (Chapter 31), prices may be raised to the benefit of the monopolist so as to cancel a large part of the general gain.
(b) A population increasing but slowly, so as not to neutralize the gain from machinery. An increase in population driving the cultivation of the soil to lower levels, may increase food prices enough to offset the gain from lower prices in manufacturing and transportation.
(c) Natural resources not decreasing through consumptive use. The waste, destruction, and inevitable using up of basic material resources is a change which, like the preceding, operates to offset the gain from improving machinery.
[1 ]See chs. 18 and 19.
[2 ]These sudden changes in machinery also cause losses in many cases to the owners of the existing equipment. Every considerable improvement brings unfortunate results to some while it means gains to others. At every moment in a progressive society, some agents are being thrown out of use by improvements in tools and machinery. The machinery in flour-mills has been almost completely changed, parts of it repeatedly, while steam rollers have been substituted for the old millstones and many old mills have been abandoned. A change in the process of making paper threw out of use much machinery that was only in part saved by its removal and adaptation to the making of coarser grades of paper. Many minor inventions in the iron industry, still more the invention of the Bessemer process, threw out of use great numbers of the old appliances. Such illustrations can be indefinitely multiplied.