It is well known that too intensive a division of labor can result in the atrophy of certain of our vital functions. There are several reasons for this. To begin with, the greatest part of our waking hours is spent on the job which yields us our daily bread. To be compelled to pass these hours in the performance of one narrowly confined operation is to cause the atrophy not only of certain muscles of the body, but of faculties of the mind and spirit as well. The highly specialized man is robbed of the chance to experience the fulness of his own personality; he becomes stunted. The country youth who comes from an unspecialized milieu will quickly adapt himself to city life. Indeed, it is a popular maxim that the “small town boy” makes good in the big city. On the other hand, the specialized industrial worker who goes to the country is, more often than not, a failure. Modern man does less and less by himself for himself. Canned foods replace those that were once prepared at home; ready-made clothes are substituted for those formerly made by mother or wife; the phonograph, the radio, and now television drive out the music once made around the family piano; football “fans” crowd gigantic stadia to experience on the vicarious level thrills that were once procured by genuine participation. And this vicarious way of life is extended even to letting others manufacture our thoughts and our opinions through the instruments of the press, the radio, and the movies. If credence be given to information emanating from certain cities that the demand for illegitimate children for adoption exceeds the supply, then we have reached the point where people even have their children made by others. Thus, as it encroaches on new fields of human activity, the division of labor leads increasingly to mechanization, to monotonous uniformity, to social and spiritual centralization, to the assembly-line production of human beings, to depersonalization, to collectivization—in a word, to complete meaninglessness which may one day generate a terrible revolt of the masses thus victimized. If there were not at this time evidence of encouraging countermovements, if the birth rate had not already begun to decline, thus freeing us from the principal mechanism of this development, we might easily imagine that we were moving full tilt towards the dreadful termite state of which Aldous Huxley has given us such a shocking glimpse in his Brave New World.
The dangers of an intensive division of labor lie not only in the fact that specialized work causes the impairment, through lack of use, of important human faculties, but also in the fact that it reduces the human content of the specialized work itself. Thus, we have the worker in a modern mass-production plant going through the same monotonous motions day after day to make some part of whose end use he may be only dimly or not at all aware, an object which in any case is being made for total strangers in whom he has not the slightest interest, nor they in him. This may kill the joy of work and the pride of craftsmanship. There is a tendency, moreover, for quality to worsen when it is performed for anonymous third parties, with advertising making up in aggressiveness what the goods lack in quality. But lest we exaggerate these evils, it is well to remember that we are speaking here only of dangers and tendencies. It is not true that specialized work is always more monotonous than non-specialized work, particularly since the progress of technology (automation) has made it possible to turn over to the machine, in large part, precisely those motions which are most monotonous. We would be equally in error if we were to believe that genuine enjoyment of work, meaningful work content, professional pride, and quality performance are necessarily denied to the highly specialized worker. Much can be done to restore real meaning to the work of the specialist by the right kind of plant organization and by awakening in him the professional pride of the craftsman in work well done. The problems of excessive specialization are primarily problems of large industrial establishments, so that the forces opposing industrial concentration (and the strength of these has been too often underestimated) may be expected to mitigate the evils here described.10
But much more immediate and obvious than the moral-cultural dangers we have mentioned are those which arise from the mutual dependence of one individual upon another which the method of specialization requires. The denser and the more complex the division of labor, the more difficult it will be to achieve harmonious coordination and the more widespread will be the reverberations of every disturbance of this complicated process. A simple example will serve to illustrate what this means.
Let us assume that a collection has been taken up for the construction of military aircraft, and let us see what effects this action will have upon a country’s economy. The action begins with the contribution of money by different people and it ends with the construction of planes of metal and wood for the use of the state for whom the collection was originally taken up. The question we must ask is: How are all those goods and services which the citizens, by virtue of their contributions, must forego, changed into aeroplanes? The case would be simple enough if all of the things which the donors renounce could be immediately used in the construction of aeroplanes; no change would then occur in the country’s economy beyond the substitution of one group of buyers (the state) for another (the donors). But this is a marginal case which we may exclude from our inquiry. Ordinarily, the donors are required to forego the consumption of quite different things than wood and metal.
In Turkey, some years ago, just such a collection as we have been describing was taken up. The population was urged to forego during the Kurban-Bayram (the Mohammedan spring festival) the feasts of mutton traditional on this occasion for the benefit of the national subscription for the construction of military aircraft. But why give up mutton? The Turkish government could no more make airplanes out of sheep than governments in Christian countries could make them out of Christmas trees or Easter eggs.
We can, at this point, glimpse the complications which a collection taken up for the construction of airplanes will involve. Let us suppose that the amount of my subscription compels me to give up a bouquet of flowers, or a taxi ride, or an evening at the theatre. The result of my sacrifice is to upset in some degree the markets which counted on my purchases. The bouquet wilts in the flower shop, the taxi driver awaits me in vain, my seat in the theatre stays empty. Each of the enterprises concerned sees its profits decline as the result of my abstentions. And these losses entail still further losses since the florist, the taxi owner, and the proprietor of the theatre will have to forego certain planned expenditures of their own in view of their diminished receipts. In all these cases, acts of consumption are foregone without others appearing to take their place. Moreover, the sacrifice which I impose on myself is multiplied throughout the economy until at last, by series of devious detours, production is adapted to the change in the flow of purchasing power. Disturbances of this kind affect, in the first instance, goods and services which cannot be used in alternative ways. We speak of such goods and services as having a “specific” character. The effects of such disturbances may be more clearly visualized if we compare the entire process of production to the biological process which goes on in a tree. As the sap mounts in the tree and penetrates to the very ends of the leaves, so production, as it advances from raw material to finished manufacture, removes farther and farther from goods with numerous alternative uses to direct itself towards the creation of goods having a more and more specific character. The cut flowers offered for sale represent, literally and figuratively, the “leaves” for which there is no alternative use. These “leaves” must wilt, unconsumed, if there occurs a change in the flow of purchasing power such as we have described. A rearrangement of production which will be adapted to the change in patterns of demand will take place ultimately, but such rearrangement requires time and inevitably entails some economic loss.
The problem we have just analyzed can be called the general problem of economic transfer, of which the much discussed “transfer problem” of Germany in connection with its World War I reparations payments represents a special case. It arises wherever there are changes in the flow of purchasing power regardless of the causes of such changes. Changes in taste and fashion, in the tax and expenditure policies of the state, in the velocity of circulation of money, fluctuations in harvests or in savings and investments, migrations, the rise and fall of population, inflation and deflation, the vicissitudes of foreign trade, technological progress, wars and revolutions—each of these can be the source of progressive disturbances in the structure of the division of labor. The more suddenly these changes occur, the greater is the amplitude and the severity of the disturbances they provoke.
There are a number of such changes, however, which it would be counter to the general interest to resist. Thus, if the consumers decide to spend less for alcohol and more for sport, if the urban population turns from rye bread to white bread, or from bread in general to vegetables, fruit, eggs, meat and cheese, or from automobiles to boats, it would be hardly proper for us to oppose these changes in demand in the interest of the producers of alcohol, of rye, of wheat, and of automobiles who are affected by these changes. For this would be favoring private interests against the general interest in defiance of the elementary economic truth that we produce in order to consume, and not consume in order to produce. We would evidence a like disregard for the general interest if we opposed changes in the flow of purchasing power and in the structure of production resulting from the introduction of cheaper methods of obtaining one or another good or service. Such a cheapening of production can take place in two ways which are basically similar in principle and in effect: by progress in technology and organization and by foreign trade. To take deliberate measures to destroy that which lightens our eternal struggle against scarcity, to dismantle the machines which can produce more cheaply than the old methods, to bar imports—all of this would doubtless be in the interest of the producers directly affected. But then it would also be in the interest of doctors to make the manufacture of cheap and efficacious remedies illegal, and in the interest of living authors to ban the publication of cheap editions of their dead confrères and to agitate against the translation of foreign writers.
In the last-named cases, we mean to direct attention to the attempts made in the interest of certain producers to oppose the lessening of the scarcity of goods which the general interest demands. But we can go a step further and consider the efforts, camouflaged usually in pseudo-economic theories, to increase the scarcity of commodities in the selfish interest of the producers and to have it believed that such increases in scarcity are advantageous in terms of general economic welfare. The hoodlum who has broken all the windows in the block may not have been hired by the local glazier for this job, but that he has acted in the interest of this glazier is just as certain as that he has grossly injured the general interest. An amusing variation on this same theme is the case of the East Prussian farmer who, many years ago, recommended with a straight face that German vegetable production be transferred to the maximum extent possible to Eastern Prussia, first, because the harsh climate of this area would necessitate the building of greenhouses, thus encouraging the iron, glass, and coal industries and secondly, because the higher costs of transport to German centers of consumption would stimulate the railroad and, indirectly, the coal industries. On the same reasoning, it would be possible to draw up a much longer list of promising developments that would follow the transfer of the whole of world agriculture to the spacious ice fields in the vicinity of the North Pole. Needless to add, this Prussian farmer’s proposal was accompanied by a demand for a drastic increase in the German tariff on vegetable imports.
The proposal of our Prussian farmer was not the gesture of a clown but simply a particularly flagrant example of the kind of thinking which is encountered daily under multiple guises and which is one of the most influential undercurrents in the economic policies of every modern state. For this reason, the author has been somewhat reluctant to tell, even in jest, such an anecdote as the preceding. The uninstructed might have taken the Prussian farmer at his word! The instances in which the efforts of private interests to maintain or increase scarcity have been applauded as acts beneficial to the general interest are certainly numerous enough to justify such concern.
Plainly, it is in the interest of the individual producer to maintain or even increase the scarcity of the goods or services he supplies. But since the whole purpose of a rational human economy is to lessen scarcity, we have here an irreconciliable antagonism between individual and general welfare, between the interest of the individual and the interest of the commonweal. This is a perversity which in a self-sufficient, exchangeless economy would appear completely absurd. It is something which is peculiar to an economy based on the division of labor; indeed, it is legitimate to describe such an economy as marred by a latent and persistent disharmony between the private interests of the producers and the general welfare. It is no exaggeration to say that this disharmony is one of the gravest defects from which our free society suffers.
But what is of still more concern than this disharmony is the growing ease with which the special interests of the producers customarily prevail over the general interest. The reasons for this are, in large part, psychological in origin. Thanks to the division of labor, each one of us in our role as producers is desirous of keeping our goods and services as rare, and therefore as expensive as possible in relation to other goods. By the same token, in our role of consumer, each of us is desirous of having abundance and cheapness prevail in all categories of goods other than those which we ourselves happen to produce. But since the consumer’s interest is spread over innumerable goods, the judgment of each man in economic matters is determined more by his position as producer than by his position as consumer. The concentration of producer interests in a given case will normally permit these interests to enjoy easy victories over the divided consumer interests. Thus, though the interests of the consumers taken as a whole are greater and more encompassing than the opposed interests of the producers in question, the latter will be easily able to override the dispersed and hence ineffectual power of the consumers. The producers’ task is made all the easier by the use of pseudo-economic theories which lull consumers into accepting their own impotence as a normal and beneficial state of affairs.
There is another important fact, closely connected with that just mentioned, which explains the ability of producers to exploit consumers. In our economic system, the general interest is secured by the mechanism of competition. In recent decades, however, increasing success has attended efforts to discredit competition as something egoistic and inimical to an integrated society. The result has been a substantial weakening of the psychological supports of competition. And the attackers of competition have been all the more successful to the extent that they have managed to identify it as “liberal” (in the European sense), thereby stamping it as an object meriting general contempt. Such attacks conveniently ignore the fact that it is the liberal economic philosophy* which recognizes the latent disharmony between consumer and producer and which sees in competition the means of mitigating this disharmony and thus of safeguarding the consumers’ interests. Piquantly enough, the enemies of competition answer this argument by saying that it was liberalism, after all, which developed the doctrine of the harmony of economic interests. Thus we find the real advocates of disharmony engaging with high glee in the task of obstructing those who seek to mitigate the evil by ridiculing them as the naive adherents of outworn doctrines of “harmony.” But our economic system can remain viable only if this disharmony is redressed by effective and continuous competition. Of course, we cannot overlook the fact that competition occasionally entails costly shifts in the structure of production which must be weighed against its long run benefits to the whole community. These considerations must, at all events, underlie any constructive economic policy, i.e., one which aims at minimizing the losses and inconveniences caused by such shifts in production and at mitigating the personal hardships involved without hindering the adjustment itself.
The extreme sensitivity of a society founded on a highly developed division of labor means that a disturbance in one sector of the economy (as illustrated by our innocuous miniature example of the collection for aeroplanes) will be transmitted, avalanche-style, through the whole of the system. A proper awareness of this sensitivity helps us understand more fully those disquieting phenomena known as “boom” and “bust,” or the cyclical alternation of prosperity and depression. A study of cyclical movements must properly begin with the recognition that in a mechanism as complicated and differentiated as that of the modern economic system a degree of friction among the moving parts cannot be avoided. It is inevitable that the different parts of this most complex machine will mesh with each other sometimes better, sometimes worse. We can understand now—and when we have become familiar with the sources of monetary disturbances and the especial complications connected with the production of capital goods we shall understand even better—how the friction among the moving parts of the economic machine may become so great as to result in the total breakdown known as a depression. Remembering our miniature Turkish example, we can also understand why “overproduction” may be found, paradoxically, side by side with increasing poverty and why a depression can lead to unemployment and “excess capacity.” Where the structure of production and the flow of purchasing power significantly diverge, the economy suffers from a glut of cut flowers, passengerless taxis, unoccupied theatre seats, and of other and even more important kinds of “unused capacity”: superabundance in the midst of poverty.
The paradoxical character of a Western depression becomes even more apparent when we consider the effects of a depression on the undifferentiated economy of a country like China. For the Chinese peasant of the pre-Communist era, content with the subsistence that could can be eked out on the land, “hard times” occurred when the pressure of rising population caused the average peasant holding to shrink. The obvious remedy, in such case, was to work the available land harder and longer. The Chinese peasant would have been unable to comprehend the Western phenomenon of unemployment. He would have taken it as a joke in rather bad taste to be told that there are countries where at times a job may become an envied privilege, begged for like bread, where those who hold two jobs are hatefully labeled “moonlighters.” Such things he would have held to be grotesque and irrational and we must admit that he is not far wrong. These periodic absurdities are nevertheless the price we must pay for the extraordinary productivity of a highly refined division of labor. The greater the refinement of the division of labor, the less is the economic system able to resist internal and external disturbances but conversely, the greater is its productivity. To ensure a state of equilibrium that would be proof against all disturbance, we would have to return to the primitive and impoverished conditions of a Robinson Crusoe-type economy. If this alternative repels, then we must accept the present economic system with its sensitivity and its instability.
This is the dilemma on which we are driven. But as a matter of fact we are no longer free to choose. The die is cast. For the growth of productivity which accompanied the extensive and intensive development of the division of labor is now claimed as a birthright by the new millions of individuals who owe their very existence to it. We cannot go back, we cannot cause a contraction in the division of labor without putting in peril the lives of numberless millions of human beings and thereby the very existence of our social order. This is the fact, as brutal as it is prosaic, which explodes the fond reveries of economic romanticists and autarkists. It is a fact, moreover, which should lead us to view with anxiety the continuation of the present rate of population growth and to hail its diminishment with a feeling of relief. The contemporary instability of the economies of all advanced countries indicates that our industrial civilization with its ever more extreme division of labor may be approaching some sort of limit in this respect. Moreover, when the political consequences of mass civilization are taken into account, it is patent that the psycho-moral fundaments of our society have become increasingly inadequate in respect to the existing degree of division of labor.
In the space of one unique century, mankind has simply attempted too much at once. Too much emphasis cannot be placed on the fact that the chief cause of our present difficulties must be sought not in the kind of economic system we have, but in a division of labor which has been carried to an unhealthy extreme. A socialist economy, compelled as it would be to preserve the present degree of division of labor, would change nothing in this respect. We shall have occasion later in a special section (Chapter VIII) to study these matters in detail.
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