Principles of Economics
By Alfred Marshall
Economic conditions are constantly changing, and each generation looks at its own problems in its own way. In England, as well as on the Continent and in America, Economic studies are being more vigorously pursued now than ever before; but all this activity has only shown the more clearly that Economic science is, and must be, one of slow and continuous growth. Some of the best work of the present generation has indeed appeared at first sight to be antagonistic to that of earlier writers; but when it has had time to settle down into its proper place, and its rough edges have been worn away, it has been found to involve no real breach of continuity in the development of the science. The new doctrines have supplemented the older, have extended, developed, and sometimes corrected them, and often have given them a different tone by a new distribution of emphasis; but very seldom have subverted them…. [From the Preface to the First Edition]
First Pub. Date
London: Macmillan and Co., Ltd.
The text of this edition is in the public domain.
- Appendix A
- Appendix B
- Appendix C
- Appendix D
- Appendix E
- Appendix F
- Appendix G
- Appendix H
- Appendix I
- Appendix J
- Appendix K
INDUSTRIAL ORGANIZATION, CONTINUED. DIVISION OF LABOUR. THE INFLUENCE OF MACHINERY.
BOOK IV, CHAPTER IX
§ 1. The first condition of an efficient organization of industry is that it should keep everyone employed at such work as his abilities and training fit him to do well, and should equip him with the best machinery and other appliances for his work. We shall leave on one side for the present the distribution of work between those who carry out the details of production on the one hand, and those who manage its general arrangement and undertake its risk on the other; and confine ourselves to the division of labour between different classes of operatives, with special reference to the influence of machinery. In the following chapter we shall consider the reciprocal effects of division of labour and localization of industry; in a third chapter we shall inquire how far the advantages of division of labour depend upon the aggregation of large capitals into the hands of single individuals or firms, or, as is commonly said, on production on a large scale; and lastly, we shall examine the growing specialization of the work of business management.
Everyone is familiar with the fact that “practice makes perfect,” that it enables an operation, which at first seemed difficult, to be done after a time with comparatively little exertion, and yet much better than before; and physiology in some measure explains this fact. For it gives reasons for believing that the change is due to the gradual growth of new habits of more or less “reflex” or automatic action. Perfectly reflex actions, such as that of breathing during sleep, are performed by the responsibility of the local nerve centres without any reference to the supreme central authority of the thinking power, which is supposed to reside in the cerebrum. But all deliberate movements require the attention of the chief central authority: it receives information from the nerve centres or local authorities and perhaps in some cases direct from the sentient nerves, and sends back detailed and complex instructions to the local authorities, or in some cases direct to the muscular nerves, and so co-ordinates their action as to bring about the required results
The physiological basis of purely mental work is not yet well understood; but what little we do know of the growth of brain structure seems to indicate that practice in any kind of thinking develops new connections between different parts of the brain. Anyhow we know for a fact that practice will enable a person to solve quickly, and without any considerable exertion, questions which he could have dealt with but very imperfectly a little while before, even by the greatest effort. The mind of the merchant, the lawyer, the physician, and the man of science, becomes gradually equipped with a store of knowledge and a faculty of intuition, which can be obtained in no other way than by the continual application of the best efforts of a powerful thinker for many years together to one more or less narrow class of questions. Of course the mind cannot work hard for many hours a day in one direction: and a hard-worked man will sometimes find recreation in work that does not belong to his business, but would be fatiguing enough to a person who had to do it all day long.
Some social reformers have indeed maintained that those who do the most important brain work might do a fair share of manual work also, without diminishing their power of acquiring knowledge or thinking out hard questions. But experience seems to show that the best relief from overstrain is in occupations taken up to suit the mood of the moment and stopped when the mood is passed, that is, in what popular instinct classes as “relaxation.” Any occupation which is so far business-like that a person must sometimes force himself by an effort of the will to go on with it, draws on his nervous force and is not perfect relaxation: and therefore it is not economical from the point of view of the community unless its value is sufficient to outweigh a considerable injury to his main work
§ 2. It is a difficult and unsettled question how far specialization should be carried in the highest branches of work. In science it seems to be a sound rule that the area of study should be broad during youth, and should gradually be narrowed as years go on. A medical man who has always given his attention exclusively to one class of diseases, may perhaps give less wise advice even in his special subject than another who, having learnt by wider experience to think of those diseases in relation to general health, gradually concentrates his study more and more on them, and accumulates a vast store of special experiences and subtle instincts. But there is no doubt that greatly increased efficiency can be attained through division of labour in those occupations in which there is much demand for mere manual skill.
Adam Smith pointed out that a lad who had made nothing but nails all his life could make them twice as quickly as a first-rate smith who only took to nail-making occasionally. Anyone who has to perform exactly the same set of operations day after day on things of exactly the same shape, gradually learns to move his fingers exactly as they are wanted, by almost automatic action and with greater rapidity than would be possible if every movement had to wait for a deliberate instruction of the will. One familiar instance is seen in the tying of threads by children in a cotton-mill. Again, in a clothing or a boot factory, a person who sews, whether by hand or machinery, just the same seam on a piece of leather or cloth of just the same size, hour after hour, day after day, is able to do it with far less effort and far more quickly than a worker with much greater quickness of eye and hand, and of a much higher order of general skill, who was accustomed to make the whole of a coat or the whole of a boot
Again, in the wood and the metal industries, if a man has to perform exactly the same operations over and over again on the same piece of material, he gets into the habit of holding it exactly in the way in which it is wanted, and of arranging the tools and other things which he has to handle in such positions that he is able to bring them to work on one another with the least possible loss of time and of force in the movements of his own body. Accustomed to find them always in the same position and to take them in the same order, his hands work in harmony with one another almost automatically: and with increased practice his expenditure of nervous force diminishes even more rapidly than his expenditure of muscular force.
But when the action has thus been reduced to routine it has nearly arrived at the stage at which it can be taken over by machinery. The chief difficulty to be overcome is that of getting the machinery to hold the material firmly in exactly the position in which the machine tool can be brought to bear on it in the right way, and without wasting too much time in taking grip of it. But this can generally be contrived when it is worth while to spend some labour and expense on it; and then the whole operation can often be controlled by a worker who, sitting before a machine, takes with the left hand a piece of wood or metal from a heap and puts it in a socket, while with the right he draws down a lever, or in some other way sets the machine tool at work, and finally with his left hand throws on to another heap the material which has been cut or punched or drilled or planed exactly after a given pattern. It is in these industries especially that we find the reports of modern trades-unions to be full of complaints that unskilled labourers, and even their wives and children, are put to do work which used to require the skill and judgment of a trained mechanic, but which has been reduced to mere routine by the improvement of machinery and the ever-increasing minuteness of the subdivision of labour.
§ 3. We are thus led to a general rule, the action of which is more prominent in some branches of manufacture than others, but which applies to all. It is, that any manufacturing operation that can be reduced to uniformity, so that exactly the same thing has to be done over and over again in the same way, is sure to be taken over sooner or later by machinery. There may be delays and difficulties; but if the work to be done by it is on a sufficient scale, money and inventive power will be spent without stint on the task till it is achieved
Thus the two movements of the improvement of machinery and the growing subdivision of labour have gone together and are in some measure connected. But the connection is not so close as is generally supposed. It is the largeness of markets, the increased demand for great numbers of things of the same kind, and in some cases of things made with great accuracy, that leads to subdivision of labour; the chief effect of the improvement of machinery is to cheapen and make more accurate the work which would anyhow have been subdivided. For instance, “in organizing the works at Soho, Boulton and Watt found it necessary to carry division of labour to the furthest practicable point. There were no slide-lathes, planing machines or boring tools, such as now render mechanical accuracy of construction almost a matter of certainty. Everything depended on the individual mechanic’s accuracy of hand and eye; yet mechanics generally were much less skilled then than they are now. The way in which Boulton and Watt contrived partially to get over the difficulty was to confine their workmen to special classes of work, and make them as expert in them as possible. By continued practice in handling the same tools and fabricating the same articles, they thus acquired great individual proficiency
*111.” Thus machinery constantly supplants and renders unnecessary that purely manual skill, the attainment of which was, even up to Adam Smith’s time, the chief advantage of division of labour. But this influence is more than countervailed by its tendency to increase the scale of manufactures and to make them more complex; and therefore to increase the opportunities for division of labour of all kinds, and especially in the matter of business management.
§ 4. The powers of machinery to do work that requires too much accuracy to be done by hand are perhaps best seen in some branches of the metal industries in which the system of Interchangeable Parts is being rapidly developed. It is only after long training and with much care and labour that the hand can make one piece of metal accurately to resemble or to fit into another: and after all the accuracy is not perfect. But this is just the work which a well made machine can do most easily and most perfectly. For instance, if sowing and reaping machines had to be made by hand, their first cost would be very high; and when any part of them was broken, it could be replaced only at great cost by sending the machine back to the manufacturer or by bringing a highly skilled mechanic to the machine. But as it is, the manufacturer keeps in store many facsimiles of the broken part, which were made by the same machinery, and are therefore interchangeable with it. A farmer in the North-West of America, perhaps a hundred miles away from any good mechanic’s shop, can yet use complicated machinery with confidence; since he knows that by telegraphing the number of the machine and the number of any part of it which he has broken, he will get by the next train a new piece which he can himself fit into its place. The importance of this principle of interchangeable parts has been but recently grasped; there are however many signs that it will do more than any other to extend the use of machine-made machinery to every branch of production, including even domestic and agricultural work
The influences which machinery exerts over the character of modern industry are well illustrated in the manufacture of watches. Some years ago the chief seat of this business was in French Switzerland; where the subdivision of labour was carried far, though a great part of the work was done by a more or less scattered population. There were about fifty distinct branches of trade each of which did one small part of the work. In almost all of them a highly specialized manual skill was required, but very little judgment; the earnings were generally low, because the trade had been established too long for those in it to have anything like a monopoly, and there was no difficulty in bringing up to it any child with ordinary intelligence. But this industry is now yielding ground to the American system of making watches by machinery, which requires very little specialized manual skill. In fact the machinery is becoming every year more and more automatic, and is getting to require less and less assistance from the human hand. But the more delicate the machine’s power, the greater is the judgment and carefulness which is called for from those who see after it. Take for instance a beautiful machine which feeds itself with steel wire at one end, and delivers at the other tiny screws of exquisite form; it displaces a great many operatives who had indeed acquired a very high and specialized manual skill, but who lived sedentary lives, straining their eyesight through microscopes, and finding in their work very little scope for any faculty except a mere command over the use of their fingers. But the machine is intricate and costly, and the person who minds it must have an intelligence, and an energetic sense of responsibility, which go a long way towards making a fine character; and which, though more common than they were, are yet sufficiently rare to be able to earn a very high rate of pay. No doubt this is an extreme case; and the greater part of the work done in a watch factory is much simpler. But much of it requires higher faculties than the old system did, and those engaged in it earn on the average higher wages; at the same time it has already brought the price of a trustworthy watch within the range of the poorest classes of the community, and it is showing signs of being able soon to accomplish the very highest class of work
Those who finish and put together the different parts of a watch must always have highly specialized skill: but most of the machines which are in use in a watch factory are not different in general character from those which are used in any other of the lighter metal trades: in fact many of them are mere modifications of the turning lathes and of the slotting, punching, drilling, planing, shaping, milling machines and a few others, which are familiar to all engineering trades. This is a good illustration of the fact that while there is a constantly increasing subdivision of labour, many of the lines of division between trades which are nominally distinct are becoming narrower and less difficult to be passed. In old times it would have been very small comfort to watch-makers, who happened to be suffering from a diminished demand for their wares, to be told that the gun-making trade was in want of extra hands; but most of the operatives in a watch factory would find machines very similar to those with which they were familiar, if they strayed into a gun-making factory or sewing-machine factory, or a factory for making textile machinery. A watch factory with those who worked in it could be converted without any overwhelming loss into a sewing-machine factory: almost the only condition would be that in the new factory no one should be put to work which required a higher order of general intelligence, than that to which he was already accustomed.
§ 5. The printing trade affords another instance of the way in which an improvement of machinery and an increase in the volume of production causes an elaborate subdivision of labour. Everyone is familiar with the pioneer newspaper editor of newly settled districts of America, who sets up the type of his articles as he composes them; and with the aid of a boy prints off his sheets and distributes them to his scattered neighbours. When however the mystery of printing was new, the printer had to do all this for himself, and in addition to make all his own appliances
*114. These are now provided for him by separate “subsidiary” trades, from whom even the printer in the backwoods can obtain everything that he wants to use. But in spite of the assistance which it thus gets from outside, a large printing establishment has to find room for many different classes of workers within its walls. To say nothing of those who organize and superintend the business, of those who do its office work and keep its stores, of the skilled “readers” who correct any errors that may have crept into the “proofs,” of its engineers and repairers of machinery, of those who cast, and who correct and prepare its stereotype plates; of the warehousemen and the boys and girls who assist them, and several other minor classes; there are the two great groups of the compositors who set up the type, and the machinists and pressmen who print impressions from them. Each of these two groups is divided into many smaller groups, especially in the large centres of the printing trade. In London, for instance, a minder who was accustomed to one class of machine, or a compositor who was accustomed to one class of work, if thrown out of employment would not willingly abandon the advantage of his specialized skill, and falling back on his general knowledge of the trade seek work at another kind of machine or in another class of work
*115. These barriers between minute subdivisions of a trade count for a great deal in many descriptions of the modern tendency towards specialization of industry; and to some extent rightly, because though many of them are so slight that a man thrown out of work in one subdivision could pass into one of its neighbours without any great loss of efficiency, yet he does not do so until he has tried for a while to get employment in his old lines; and therefore the barriers are as effective as stronger ones would be so far as the minor fluctuations of trade from week to week are concerned. But they are of an altogether different kind from the deep and broad partitions which divided one group of mediæval handicraftsmen from another, and which caused the lifelong suffering of the handloom-weavers when their trade had left them
In the printing trades, as in the watch trade, we see mechanical and scientific appliances attaining results that would be impossible without them; at the same time that they persistently take over work that used to require manual skill and dexterity, but not much judgment; while they leave for man’s hand all those parts which do require the use of judgment, and open up all sorts of new occupations in which there is a great demand for it. Every improvement and cheapening of the printer’s appliances increases the demand for the judgment and discretion and literary knowledge of the reader, for the skill and taste of those who know how to set up a good title-page, or how to make ready a sheet on which an engraving is to be printed, so that light and shade will be distributed properly. It increases the demand for the gifted and highly-trained artists who draw or engrave on wood and stone and metal, and for those who know how to give an accurate report in ten lines of the substance of a speech that occupied ten minutes—an intellectual feat the difficulty of which we underrate, because it is so frequently performed. And again, it tends to increase the work of photographers and electrotypers, and stereotypers, of the makers of printer’s machinery, and many others who get a higher training and a higher income from their work than did those layers on and takers off, and those folders of newspapers who have found their work taken over by iron fingers and iron arms.
§ 6. We may now pass to consider the effects which machinery has in relieving that excessive muscular strain which a few generations ago was the common lot of more than half the working men even in such a country as England. The most marvellous instances of the power of machinery are seen in large iron-works, and especially in those for making armour plates, where the force to be exerted is so great that man’s muscles count for nothing, and where every movement, whether horizontal or vertical, has to be effected by hydraulic or steam force, and man stands by ready to govern the machinery and clear away ashes or perform some such secondary task.
Machinery of this class has increased our command over nature, but it has not directly altered the character of man’s work very much; for that which it does he could not have done without it. But in other trades machinery has lightened man’s labours. The house carpenters, for instance, make things of the same kind as those used by our forefathers, with much less toil for themselves. They now give themselves chiefly to those parts of the task which are most pleasant and most interesting; while in every country town and almost every village there are found steam mills for sawing, planing and moulding, which relieve them of that grievous fatigue which not very long ago used to make them prematurely old
New machinery, when just invented, generally requires a great deal of care and attention. But the work of its attendant is always being sifted; that which is uniform and monotonous is gradually taken over by the machine, which thus becomes steadily more and more automatic and self-acting; till at last there is nothing for the hand to do, but to supply the material at certain intervals and to take away the work when finished. There still remains the responsibility for seeing that the machinery is in good order and working smoothly; but even this task is often made light by the introduction of an automatic movement, which brings the machine to a stop the instant anything goes wrong.
Nothing could be more narrow or monotonous than the occupation of a weaver of plain stuffs in the old time. But now one woman will manage four or more looms, each of which does many times as much work in the course of the day as the old hand-loom did; and her work is much less monotonous and calls for much more judgment than his did. So that for every hundred yards of cloth that are woven, the purely monotonous work done by human beings is probably not a twentieth part of what it was
Facts of this kind are to be found in the recent history of many trades: and they are of great importance when we are considering the way in which the modern organization of industry is tending to narrow the scope of each person’s work, and thereby to render it monotonous. For those trades in which the work is most subdivided are those in which the chief muscular strain is most certain to be taken off by machinery; and thus the chief evil of monotonous work is much diminished. As Roscher says, it is monotony of life much more than monotony of work that is to be dreaded: monotony of work is an evil of the first order only when it involves monotony of life. Now when a person’s employment requires much physical exertion, he is fit for nothing after his work; and unless his mental faculties are called forth in his work, they have little chance of being developed at all. But the nervous force is not very much exhausted in the ordinary work of a factory, at all events where there is not excessive noise, and where the hours of labour are not too long. The social surroundings of factory life stimulate mental activity in and out of working hours; and many of those factory workers, whose occupations are seemingly the most monotonous, have considerable intelligence and mental resource
It is true that the American agriculturist is an able man, and that his children rise rapidly in the world. But partly because land is plentiful, and he generally owns the farm that he cultivates, he has better social conditions than the English; he has always had to think for himself, and has long had to use and to repair complex machines. The English agricultural labourer has had many great disadvantages to contend with. Till recently he had little education; and he was in a great measure under a semi-feudal rule, which was not without its advantages, but which repressed enterprise and even in some degree self-respect. These narrowing causes are removed. He is now fairly well educated in youth. He learns to handle various machinery; he is less dependent on the good-will of any particular squire or group of farmers; and, since his work is more various, and educates intelligence more than the lowest grades of town work do, he is tending to rise both absolutely and relatively.
§ 7. We must now proceed to consider what are the conditions under which the economies in production arising from division of labour can best be secured. It is obvious that the efficiency of specialized machinery or specialized skill is but one condition of its economic use; the other is that sufficient work should be found to keep it well employed. As Babbage pointed out, in a large factory “the master manufacturer by dividing the work to be executed into different processes, each requiring different degrees of skill or force, can purchase exactly that precise quantity of both which is necessary for each process; whereas if the whole work were executed by one workman that person must possess sufficient skill to perform the most difficult and sufficient strength to execute the most laborious of the operations into which the work is divided.” The economy of production requires not only that each person should be employed constantly in a narrow range of work, but also that, when it is necessary for him to undertake different tasks, each of these tasks should be such as to call forth as much as possible of his skill and ability. Just in the same way the economy of machinery requires that a powerful turning-lathe when specially arranged for one class of work should be kept employed as long as possible on that work; and if there is occasion to employ it on other work, that should be such as to be worthy of the lathe, and not such as could have been done equally well by a much smaller machine.
Here then, so far as the economy of production goes, men and machines stand on much the same footing: but while machinery is a mere implement of production, man’s welfare is also its ultimate aim. We have already been occupied with the question whether the human race as a whole gains by carrying to an extreme that specialization of function which causes all the most difficult work to be done by a few people: but we have now to consider it more nearly with special reference to the work of business management. The main drift of the next three chapters is to inquire what are the causes which make different forms of business management the fittest to profit by their environment, and the most likely to prevail over others; but it is well that meanwhile we should have in our minds the question, how far they are severally fitted to benefit their environment.
Many of those economies in the use of specialized skill and machinery which are commonly regarded as within the reach of very large establishments, do not depend on the size of individual factories. Some depend on the aggregate volume of production of the kind in the neighbourhood; while others again, especially those connected with the growth of knowledge and the progress of the arts, depend chiefly on the aggregate volume of production in the whole civilized world. And here we may introduce two technical terms.
We may divide the economies arising from an increase in the scale of production of any kind of goods, into two classes—firstly, those dependent on the general development of the industry; and, secondly, those dependent on the resources of the individual houses of business engaged in it, on their organization and the efficiency of their management. We may call the former
external economies, and the latter
internal economies. In the present chapter we have been chiefly discussing internal economies; but we now proceed to examine those very important external economies which can often be secured by the concentration of many small businesses of a similar character in particular localities: or, as is commonly said, by the localization of industry.
To take a higher instance: when an artist is painting at his best, his cerebrum is fully occupied with his work: his whole mental force is thrown into it, and the strain is too great to be kept up for a long time together. In a few hours of happy inspiration he may give utterance to thoughts that exert a perceptible influence on the character of coming generations. But his power of expression had been earned by numberless hours of plodding work in which he had gradually built up an intimate connection between eye and hand, sufficient to enable him to make good rough sketches of things with which he is tolerably familiar, even while he is engaged in an engrossing conversation and is scarcely conscious that he has a pencil in his hand.
Inquiry, p. 282) quotes Xenophon’s argument that the best work is done when each confines himself to one simple department, as when one man makes shoes for men, and another for women; or better when one man only sews shoes or garments, another cuts them out: the king’s cooking is much better than anybody else’s, because he has one cook who only boils, another who only roasts meat; one who only boils fish, another who only fries it: there is not one man to make all sorts of bread but a special man for special qualities.
Boulton and Watt, pp. 170, 1.
Typography in the
More recently the casting of the type has been brought under the new methods. The compositor plays on a keyboard like that of the type-writer, and the matrix of a corresponding letter goes into line: then after spacing out, molten lead is poured on the line of matrices, and a solid line of type is ready. And in a further development each letter is cast separately from its matrix; the machine reckons up the space taken by the letters, stops when there are enough for a line, divides out the free space equally into the requisite number of small spaces between the words; and finally casts the line. It is claimed that one compositor can work several such machines simultaneously in distant towns by electric currents.
Wealth of Nations, Book I. chapter VII.
Cotton Trade of Great Britain, ch. IV. and V.).