Economic organization

“ Why organization is essential. Organization and Management as a Factor in Production.—When labor and capital are brought into play upon natural resources the production of economic goods is the outcome. But these three factors are in separate hands and have to be brought into co-operation. Owners of lands, mines, and forests control the natural resources; another class possesses the capital; a third is in a position to furnish the labor. Organization brings all three into joint action for the production of wealth. ”

“ They have shown under widely different conditions the power of nationalizing their economic organization; and in spite of the commission of many errors, particularly in this country, a system of national economy appears to make for a higher level of economic vitality than a system of international economy. ”

“ The essential economic decisions, however, are still made by the owners of private wealth. If there is to be an organization of economic society that will function successfully and autonomously, the knowledge on which the decisions affecting economic policy are made must be public property. Until that step is taken the economic life of society will be directed by the chance desires of those who own the machinery of production. ”

“ THE FRUITS OF INDUSTRIAL ORGANIZATION The only sound point of departure for a national economic policy is, as we have seen, the acceptance by the state of certain of the results of corporate industrial organization. Such state recognition is equivalent to discrimination in their favor, because it leaves them in possession of those fundamental economic advantages, dependent on terminals, large capital, and natural resources, which place them beyond effective competition ”

“ Economic function would seem to be most effectively aided by some organization of the economic units that would provide a structurally sound skeleton for the whole economic mechanism. The needs of particular localities, the requirements of larger groups within one industry, the economic relations of continental areas, and finally the world organization of industries must be provided for. In order to meet this situation, it would seem desirable to think in terms of several different grades or classes of economic units. As a working basis, four are suggested ”

“ Manufacturing in Corporations and Associations.—Back of all organization and legislation lies a real [307] national unity, through which the nation exercises indirectly an economic function. In spite of a popular jealousy of big business in the last decade, there is a pride in the ability of American business men to create a profitable world commerce, and middle-class people in well-to-do circumstances subscribe to the purchase of stocks and bonds in trusted corporations. Without this general interest and participation such a rapid extension of industrial enterprise could not have taken place. ”

“ As a matter of necessity, organization followed in the wake of this concentration. The owners of industry organized on the one side: the workers organized on the other. Besides these two major forms of organization within the field of industry, there was the organization of the state, which has played a leading rôle in the life of present-day society.
The organization of the owners, which is far more complex and more highly developed than that of the workers, has followed four general lines ”

“ The organization of unlike and unrelated industries—manufacturing industries, public utilities, insurance companies, railroads, trust companies and banks brought under the financial control of Morgan and Company or of some other banking syndicate. ”

“ The corporation aggregate, which is but a mode of substituted service, is one of the great forces of civilization. It is the prevailing form of the associated energies, the money, enterprise, and intelligence of society. It is particularly adapted to those branches of business like salvage and wrecking, which require a permanent organization, costly appliances, trained services, and considerable capital, which is content with slow or uncertain returns. ”

“ Economic enterprises and associations may, by legislation, be combined into autonomous organizations in order to ensure the collaboration of all working elements of the nation, to give workers and employers a share in the management, and to regulate production, manufacture, distribution, utilization, prices, as well as import and export of commodities along the principles of collective economic interests. ”

“ Our courts of justice, our financial institutions, our methods of trade, and our schools of all grades are examples of social harmonies which found their form by long conflict, and settled down to smooth action by custom. The financial institutions and the methods of trade belong to the economic system. The system of production is modern and new. ”

“ Great emphasis was laid on the improvement in industry and on the effective work done by the State Planning Commission, whose object is the control of production and trade. "The existing economic system is not only viable, but has real vitality ... ”

“ Here, too, is joint venture on the part of the Community just as much as on the part of Labor, Capital, or Management. What is 99 per cent. of the expenditure of government in normal times but outlays in the nature of investment in industry: investment in property and services of one kind or another, which alone makes possible the vast co-operation and co-ordination of effort which is the very life-blood of industry? The vaster industrial organization becomes, the more it depends, in a multitude of directions, upon the investments of the Community. ”

“ To this end the authorities have switched to a system of household responsibility in agriculture in place of the old collectivization, increased the authority of local officials and plant managers in industry, permitted a wide variety of small-scale enterprise in services and light manufacturing, and opened the foreign economic sector to increased trade and joint ventures. ”

“ While political life has been thus organized about the administration of certain public affairs, economic life has remained disorganized, or has been organized largely with an eye to owners' profits. The producers society will be organized in economic terms very much as the present society is organized in political terms. ”

“ Without organization of Labor — where Capital, Management, and the Community are organized — what equality of relationship can there possibly be between the four parties to industry? And where, under such a condition, are the individual units of Labor likely to find themselves in the teeth of a world competition, more relentless where Labor is concerned than in the case of Capital or Management? ”

“ Economic conditions require readjustment, important matters of trade must be regulated, vital questions of finance and taxation must be handled, in fact, the whole country must settle down to production, manufacture, distribution of merchandise, and the transaction of the nation’s regular business. ”

“ Recently a careful study was made of the concentration of business in the United States. It showed that our economic life was dominated by some six hundred odd corporations who controlled two-thirds of American industry. ”

“ This unreasoning faith in large and difficult combinations has been induced in the modern community by its experience with the large-scale organization of the mechanical industries, and still more particularly by the convincing pecuniary efficiency of large capital, authoritative control, and devious methods, in modern business enterprise ”

“ There are three classes of establishments by which industry is carried on—those that are the property of an individual, those which belong to partnerships or firms of unlimited liability, and those belonging to corporations of limited liability. The usefulness of the individual system is of course limited to small undertakings, where but little capital and credit are necessary; this form of organization still dominates the field in agriculture, in the small retail trade, and in the repairing industries. ”

“ The so-called industrial and transportation trusts, the banking rings and investment pools, the labor unions and cooperative societies, and the associations of commission men and retail merchants are simply concerned in seeking to acquire the advantages of exclusion and organization. In each instance, united action for the elimination of waste and competition is the initial motive. "Cooperative efficiency in production" is the shibboleth of industrial organization ”

“ The constant development and concentration of the ownership and control of industry will be met by a like concentration of the number of industrial unions and industrial departments. It is meant that the organization at all times shall conform to the needs of the hour and eventually furnish the medium through which and by which the organized workers will be able to determine the amount of food, clothing, shelter, education, and amusement necessary to satisfy the wants of the workers. ”

“ For catering to the general market and producing staple goods the large establishment has a decisive advantage, and this insures the centralization which is the marked feature of recent industrial life. ”

“ The modern industrial organization, including banks, corporations, joint-stock companies, financial devices, national debts, paper currency, national systems of taxation, is largely the creation of legislation (not in its historical origin, but in the mode of its existence and in its authority) , and is largely regulated by legislation. Capital is the breath of life to this organization, and every day, as the organization becomes more complex and delicate, the folly of assailing capital or credit becomes greater. ”

“ Only one essential phase of a constructive national policy remains to be considered—and that is the organization of labor. The necessity for the formulation of some constructive policy in respect to labor is as patent as is that for the formulation of a similar policy in respect to corporate wealth. ”

“ Competition, by which alone can a healthy condition of trade be maintained, has been entirely eliminated. The Government is but one tremendous commercial organization; its administrative machinery is worked to bar out all outside trade and to absolutely control for its own benefit and the concessionary companies the natural resources of the country. ”

“ This organization affords a unique medium for exhibition of new variations of human ingenuity and efficiency as well as perversity. These opportunities are embraced both by aggregations of capital on the one hand and by aggregations of labor on the other hand. ”

“ The state shall coordinate and regulate state-owned economy, co-operative economy, the individual economy of peasants and handicraftsmen, private capitalist economy and state capitalist economy, in their spheres of operations, supply of raw materials, marketing, labour conditions, technical equipment, policies of public and general finance, etc. ”

“ The world has progressed, or retrogressed, as the most powerful interests at any time adjusted the institutions and customs governing wealth production to their own advantage. As the controlling interests in our present scheme are the business interests, it is the business man, not the workman, who directs industry and determines its policy as well as the general policy of the nation in which it operates. ”

“ Their very movement constantly reallocates resources to the production of a variety of goods and services in just the proportion which the consumers demand. In this theory the institutions which comprise the framework of the economic order are taken for granted. ”

“ The corporation employing thousands of men and supplying millions of people with some necessary service or commodity may reduce the cost of production only for its own profit. The state may use its great authority chiefly for the benefit of special interests. ”

“ The stimulation of nationalism which has taken place in modern times is, however, due very largely to another factor, namely the increase of organization, which is of the very essence of industrialism. Wherever expensive fixed capital is required, organization on a large scale is of course necessary. In view of the economies of large scale production, organization in marketing also becomes of great importance. For some purposes, if not for all, many industries come to be organized nationally, so as to be in effect one business in each nation. ”

“ You must remember that, under the national organization of labor, all industries are carried on by great bodies of men, many of your farms or shops being combined as one. It is also owing solely to the vast scale on which each industry is organized, with co-ordinate establishments in every part of the country, that we are able by exchanges and transfers to fit every man so nearly with the sort of work he can do best. ”

“ Manufacturing, mercantile, and banking companies have all tended to combine in large corporations, partly for greater economy, partly for an increase of profits through manipulating reorganization of stock companies, and partly for centralization of control. ”

“ The State, acting independently or through the Trade Unions, shall check all disloyal competition in the realms of production, as well as those activities that hamper the normal development of the national economy, and shall encourage, on the other hand, all efforts aimed at improving the national economy. ”

“ It is true that the same amount of capital can be raised by bringing together many small sums. But this (besides that it is not equally well suited to all branches of industry) supposes a much greater degree of commercial confidence and enterprise diffused through the community, and belongs altogether to a more advanced stage of industrial progress. ”