II. Upon the Regularity of Employment

The influence of machinery upon regularity of employment has a twofold significance. It has a direct bearing upon the measurement of demand for labor, which must take into account not only the number of persons employed but the quantity of employment given to each. It has also a wider general effect upon the moral and industrial condition of the workers, and through this upon the efficiency of labor, which is attracting increased attention among students of industrial questions. The former consideration alone concerns us here. We have to distinguish: (1) the effects of the introduction of machinery as a disturbant of regularity of labor; (2) the normal effects of machine production upon regularity of labor.

1. The direct and first effect of the introduction of machinery is, as we have seen, to displace labor. The machinery causes a certain quantity of unemployment, apart from the consideration of its ultimate effect on the number of persons to whom employment is given. Professor Shield Nicholson finds two laws or tendencies which operate in reducing this disturbing influence of machinery. He holds (1) that a radical change made in the methods of production will be gradually and continuously adopted; (2) that these radical changes – these discontinuous leaps – tend to give place to advances by small increments of invention.

History certainly shows that the fuller application of great inventions has been slow, though Professor Nicholson somewhat overestimates the mobility of labor and its ability to provide against impending changes. The story of the introduction of the power loom discloses terrible sufferings among the hand weavers of certain districts, in spite of the gradual manner in which the change was effected. The fact that along with the growth of the power loom the number of hand looms was long maintained, is evidence of the immobility of the hand weavers, who kept up an irregular and ill-paid work through ignorance and incapacity to adapt themselves to changed circumstances. In most of the cases where great distress has been caused, the directly operative influence has not been introduction of machinery but sudden change of fashion. This was the case with the crinoline-hoop makers of Yorkshire, the straw-plaiters of Bedfordshire, Bucks, Herts and Essex. The suddenly executed freaks of protective tariffs seem likely to be a fruitful source of disturbance. So far as the displacement has been due to new applications of machinery, it is no doubt generally correct to say that sufficient warning is given to enable workers to check the flow of labor into such industries and to divert it into other industries which are growing in accordance with the new methods of production.

Mr. Nicholson’s second law is, however, more speculative and less reliable in its action. It seems to imply some absolute limit to the number of great inventions. Radical changes are no doubt generally followed by smaller increments of invention; but we can have no guarantee that new radical changes quite as important as the earlier ones may not occur in the future. There are no assignable limits to the progress of mechanical invention, or to the rate at which that progress can be effected. If certain preliminary difficulties in the general application of electricity as a motor can be overcome, there is every reason to believe that, with the improved means of rapidly communicating knowledge we possess, our factory system may be reorganized and labor displaced far more rapidly than in the case of steam, and at a rate which might greatly exceed the capacity of labor to adjust itself to the new industrial conditions. At any rate we are not at liberty to take for granted that the mobility of labor must always keep pace with the application of new and labor-disturbing inventions. Since we are not able to assume that the market will be extended pari passu with the betterment in methods of production, it is evident that improvements in machinery must be reckoned as a normal cause of insecurity of employment. The loss of employment may be only “temporary,” but as the life of a workingman is also temporary, such loss may as a disturbing factor in the working life have a considerable importance.

2. Whether machinery, apart from the changes due to its introduction, favors regularity or irregularity of employment, is a question to which I think a tolerably definite answer can be given. The structure of the individual factory, with its evergrowing quantity of expensive machinery, would seem at first sight to furnish a direct guarantee of regular employment, based upon the self-interest of the capitalist. Some of the “sweating” trades of London are said to be maintained by the economy which can be effected by employers who use no expensive plant or machinery, and who are able readily to increase or diminish the number of their employees so as to keep pace with the demands of some “season” trade, such as fur-pulling or artificial flowers. When the employer has charge of enormous quantities of fixed capital, his individual interest is strongly in favor of full and regular employment of labor. On this account, then, machinery would seem to favor regularity of employment. On the other hand Professor Nicholson has ample evidence in support of his statement that great fluctuations in price occur in those commodities which require for their production a large proportion of fixed capital. These fluctuations in prices are accompanied by corresponding fluctuations in wages and irregularity of employment.

In a word, while it is the interest of each producer of machine-made goods to give regular employment, some wider industrial force compels him to irregularity. What is this force? It is uncontrolled machinery. In the several units of machine production, the individual factories or mills, we have admirable order and accurate adjustment of parts; in the aggregate of machine production, we have no organization, but a chaos of haphazard speculation. “Industry has not yet adapted itself to the changes in the environment produced by machinery.” That is all.

But, it may be asked, how is machinery to blame for the fluctuation of prices and the correspondent irregularity of employment? Professor Nicholson has with admirable candor set on the one hand the orthodox economic theory, that, since ultimately commodities exchange for commodities, there can be no such thing as over-production; on the other hand, the universal belief of the business man that bad trade is due to over-production, and that general bad trade implies not merely the theoretic possibility, but the actual existence, of a condition which is properly described as general over-production. Business men see that all the markets are congested with goods which remain unsold, that all kinds of machinery are in excess, that owing to an increase of supply in relation to demand, prices are falling all round; and they are naturally not contented with the airy declaration of economists that over-production is impossible. Would it not be better for economists to recast their theory, so as to be in harmony with facts? Going a little behind the business view, might they not admit that under-consumption, the reluctance of those who hold the purchasing power to demand consumptive goods, is the true cause of the disease which figures on the surface as over-production? Under a monetary system of commerce, though commodities still exchange for commodities, it is an essential condition of that exchange that those who possess purchasing power shall be willing to use a sufficient proportion of it to demand consumptive goods. Otherwise the production of productive goods is stimulated unduly while the demand for consumptive goods is checked, – the condition which the business man rightly describes as over-supply of the material forms of capital. When production was slower, markets narrower, credit less developed, there was less danger of this big miscalculation, and the corrective forces of industry were more speedily effective. But modern machinery has enormously expanded the size of markets, the scale of competition, the complexity of demand, and no longer produces for a small local present demand, but for a large world future demand. Hence machinery is the direct material cause of these great fluctuations which bring, as their most evil consequence, irregularity of wages and employment.

How far does this tend to right itself? Professor Nicholson believes that time will compel a better adjustment between machinery and its environment.

The enormous development of steam communication and the spread of the telegraph over the whole globe have caused modern industry to develop from a gigantic star-fish, any of whose members might be destroyed without affecting the rest, into a μέγα ζώον which is convulsed in agony by a slight injury in one part. A depression of trade is now felt as keenly in America and even in our colonies as it is here. Still, in the process of time, with the increase of organization and decrease of unsound speculation, this extension of the market must lead to greater stability of prices; but at present the disturbing forces often outweigh altogether the supposed principal elements.

The organization of capital under the pressure of these forces is doubtless proceeding, and such organization, when it has proceeded far enough, will indisputably lead to a decrease of unsound speculation. But these steps in organization have been taken precisely in those industries which employ large quantities of fixed capital, and the admitted fact that the severest fluctuations take place in these industries is proof that the steadying influences of such organization have not yet had time to assert themselves to much purpose. The competition of larger and larger masses of organized capital seems to induce heavier speculation and larger fluctuations. Not until a whole species of capital is organized into some form or degree of “trust” is the steadying influence of organization able to predominate. But there is also another force which, in England at any rate, under the increased application of machinery, makes for an increase rather than a diminution of speculative production. It has been seen that the proportion of workers engaged in producing comforts and luxuries is growing, while the proportion of those producing the prime necessaries of life is declining. How far the operation of the law of diminishing returns will allow this tendency to proceed, we cannot here discuss. But statistics show that this is the present tendency both in England and in the United States. Now the demand for comforts and luxuries is essentially more irregular and less amenable to commercial calculation than the demand for necessaries. The greatest economies of machine production are found in industries where the demand is largest, steadiest and most calculable. Hence the effect of machinery is to drive ever and ever larger numbers of workers from the less to the more unsteady industries – those which are most exposed to the influences of taste, caprice or changing income. Nor is this difficulty met by the admission that the comforts of one class or generation acquire the steadiness of necessaries as the standard of comfort rises. For the development of new comforts and luxuries, not less fluctuating, attends each rise in the standard of comfort. Nothing but a general change in morals, inducing a general increased regularity in methods of consumption, will diminish this tendency which makes for irregularity of employment.

On the whole it seems reasonable to conclude that the present net influence of machinery is towards an increased irregularity of employment, except in industries where (1) the demand for the commodities produced is regular and (2) supply is regulated by the organized action of those who control production.

Our reasoning from the ascertained tendencies of machinery inclines to the conclusion that, taking into consideration the two prime factors, namely, the number of those employed and the regularity of employment, machinery does not favor an increased steady demand for labor. It tends, apparently, to drive labor in three directions: