CHAPTER III
Of the Products of Machinery or Fixed Capital, as distinguished from the Products of Human Exertion.
◆1 To understand how much of the gross product is made by Capital, it will be well to turn from agriculture to manufactures;
◆2 As Capital plays in manufactures a more obvious part.
◆¹Land, which in economics means everything that the earth produces and the areas it offers for habitation, is of course in a sense at the bottom of every industry. But if we wish to understand the case of Capital, it will be well to turn from agriculture to industry of another kind; the reason being that the part which Capital plays in agriculture is not only, comparatively speaking, small, but is also a part which, when we are first approaching the subject, is comparatively ill fitted for purposes of illustration. ◆² What is best fitted for the purpose of illustration is Capital applied to manufactures; and it is best at first not to consider all such Capital, but to confine our attention to one particular part of it. I must explain to the reader exactly what I mean.
◆1 Capital, when actually employed, is of two kinds:
◆2 Fixed Capital, such as plant and machinery; and Wage Capital.
◆3 The Capital embodied in machinery is what, for our present purpose, we must first consider.
◆¹ People constantly speak of Capital as being a sensitive thing—a movable thing—a thing that is easily driven away—that can be transferred from one place to another by a mere stroke of the pen. We all of us know the phrases. But though they express a truth, it is partial truth only. Capital before it is employed, when it is lying, let us say, in a bank, to the credit of a Company that has not yet begun operations—Capital, under such circumstances, is no doubt altogether movable; for before it is employed it exists as credit only. ◆² But the moment it is employed in manufacture, a very considerable part of it is converted into things that are very far from movable—into such things as buildings and heavy machinery; and only a part remains movable—namely that reserved for wages. For example, M’Culloch estimates that the average cost of a factory is aboutone hundred poundsfor every operative to be employed in it; whilst the yearly wages of each adult male would now on the average, be aboutsixty pounds. Thus, if a factory is started which will employone thousandmen, and if the wages of all of them have to be paid out ofCapital for a year, the amount reserved for wages will besixty thousand pounds, whilsta hundred thousand poundswill have been converted into plant and buildings. Most people are familiar with the names given by economists to distinguish the two forms into which employed capital divides itself. The part which is reserved for, and paid in wages, is called “Circulating Capital”; that which is embodied in buildings and machinery is called “Fixed Capital.” Of Circulating Capital—or, as we may call it, Wage Capital—we will speak presently. ◆³ We will speak at first of Fixed Capital only; and of this we will take the most essential part, namely machinery; and for convenience sake we will omit the accidental part, namely buildings, which render merely the passive service of shelter.
◆1 We shall see that machinery adds to the product of Labour in the same way that a superior soil adds to it;
Now in any operation of manufacturing raw material, or—what means the same thing—conveying raw material, say water or coal or fish, to the places where they are to be consumed, certain machines or appliances are necessary to enable the operation to take place well. Thus fish or coal could hardly be carried without a basket, whilst water couldcertainly not be carried without some vessel, nor in many places raised from its source without a rope and pail. For all purposes therefore of practical argument and calculation, appliances of these most simple and indispensable kinds are merged in Human Exertion, just as is the case with the poorest kind of Land, and are not credited separately with any portion of the result. We do not say the man raised so much water, and the rope and the pail so much. We say the man raised the whole. ◆¹ But the moment we have to deal with appliances of an improved kind, by which the result is increased, whilst the labour remains the same, the case of the appliances becomes analogous to that of superior soils; and a portion of the result can be assigned to them, distinct from the result of Labour.
◆1 As a certain simple instance will show.
◆¹ Let us suppose, for instance, that a village gets all its water from a cistern, to keep which replenished takes the labour of ten men constantly raising the water by means of pails and ropes, and then carrying it to the cistern, up a steep wearisome hill. These men, we will say, receive eachone pounda week, the village thus paying for its waterfivehundred poundsa year, the whole of which sum goes in the remuneration of labour. We will suppose, further, that the amount of water thus obtained isa thousandgallons daily, each man raising and carryinga hundredgallons; and that this supply, though sufficient for the necessities of the villagers, is not sufficient for their comfort. They would gladly have twice that amount; but they are not able to pay for it. Such is the situation with which we start. We havea thousandgallons of water supplied daily by the exertion of ten men, ora hundredgallons by the exertion of each of them.
And now let us suppose that the village is suddenly presented with a pumping-engine, having a handle or handles at which five of these men can work simultaneously, and by means of which they, working no harder than formerly, can raise twice the amount of water that was formerly raised by ten men—namelytwo thousandgallons daily, instead ofone thousand. The villagers, therefore, have nowa thousandgallons daily which they did not have before; and to what is the supply of this extra quantity due? It is notdue to Labour. The Labour involved can produce no more than formerly; indeed it must produce less; for its quality is unchanged, and it is halved in quantity. Obviously, then, the extrathousandgallons are due to the pumping-engine, and this not in a mere theoretical sense, but in the most practical sense possible; for this extra supply appears in the cistern as soon as the engine is present, and would cease to appear if the engine were taken away.
◆1 It may be also observed that the added product will go to the owner of the machine, just as rent goes to the owner of the land.
◆¹ And here let me pause for a moment, as I did when I was discussing land, to point out a fact which at the present stage of argument has no logical place, but which should be realised by the reader, in order to avoid misconception: namely, the fact that the extra water-supply which is due to the pumping-engine, will necessarily be the property of whoever owns the engine, just as rent will be the property of whoever owns the land that yields it. We supposed just now that the owner of the engine was the village. We supposed that the engine was presented to it. Consequently the village owned the whole extrathousandgallons. It had not to pay for them. But let us suppose instead that theengine was the property of some stranger. Just as necessarily in that case the gallons would belong to him; and he could command payment for them, just as if he had carried them to the cistern himself. We supposed that the village was able to payfive hundred poundsfor its water; and that it really wanted, for its convenience, twice as much as it could obtain for that sum expended on human labour. The owner of the pumping-engine, by allowing the village to use it, doubles the water-supply, and halves the labour bill. The expenditure on labour sinks fromfive hundred poundstotwo hundred and fifty pounds; and the owner of the pumping-engine can, it is needless to say, command thetwo hundred and fifty poundswhich is saved to the village by its use. In actual life, no doubt, the bargain would be less simple; because in actual life there would be a number of rival pumping-engines, whose owners would reduce, by competition, the price of the extra water; but whatever the price might be, the principle would remain the same. The price or the value of the water would go to the owner of the engine; and it would fail to do so only if one thinghappened—if the owner refused to receive it, and, for some reason or other, made the village a free gift of what the village would be perfectly willing to buy. In this truth there is nothing that makes for or against Socialism. The real contention of the Socialist is simply this—not that labour makes what is actually made by machinery; but that labourers ought to own the machinery, and for that reason appropriate what is made by it. A machine or engine, in fact, which is used to assist labour is, in its quality of a producing agent, just as separate from the labour with which it co-operates, as a donkey, in its quality of a carrying agent, is distinct from its master, if the master is walking along carrying one sack of corn, and guiding the donkey who walks carrying seven.
◆1 A machine, then, as a productive agent, is as distinct from human labour as are the efforts of an animal.
◆¹ And this brings us back into the line of our main argument; the comparison just made being a very apt and helpful illustration of it. Every machine may be looked on as a kind of domestic animal, and each new machine as an animal of some new species; which animals co-operate with men in the production of certain products: and the pointI am urging on the reader may accordingly be put thus. When a man, or a number of men, without one of these animals to assist them, produce a certain amount of some particular product, and with the assistance of one of these animals produce a much larger amount, the added quantity is produced not by the men, but by the animal—or, to drop back again into the language of fact, by the machine.
◆1 The history of the cotton industry is a remarkable illustration of this.
◆¹ I have taken an imaginary case of drawing and pumping water, because the operation is of an exceedingly simple kind. We will now turn from the imaginary world to the real, and clench what has been said by an illustration from the history of our own country—and from that period which at present we specially have in view—namely the close of the last century.
From the year 1795 to the year 1800, the amount of cotton manufactured in this country was on the average aboutthirty-seven million poundsweight annually: ten years before it was onlyten million pounds; ten years before that, onlyfour million pounds; and during the previous fifty years it had been less thantwo and a half million pounds. The amount manufactured, up to the end ofthis last-named period, was limited by the fact that spinning was a much slower process than weaving. It was performed by means of an apparatus known as “the one-thread wheel.” No other spinning-machine existed; and it was the opinion of experts, about the year 1770, that it would hardly be possible in the course of the next thirty years, by collecting and training to the spinning trade every hand that could be secured for such a purpose, to raise the annual total to so much asfive million pounds. As a matter of fact, however,five million poundswere spun in the year 1776. In six years’ time, the original product had been doubled. In ten years, it had been more than quadrupled; in twenty years, it had increased nearly elevenfold; and in five and twenty years, it had increased fifteenfold.[27]
◆1 For every pound of cotton spun by labour, Arkwright’s machinery spun fourteen pounds.
◆¹ To what, then, was this extraordinary increase due? It was due to the invention and introduction of new spinning machinery—especiallyto the machines invented by Hargreaves and Arkwright, and the successive application of horse-power, water-power, and lastly of steam-power, to driving them. Previous to the year 1770, such a thing as a cotton-mill was unknown. During the ten following years, about forty were erected in Great Britain; in the six years following there were erected a hundred more; and from that time forward their number increased rapidly, till they first absorbed, and then more than absorbed, the whole population that had previously conducted the industry in their own homes. As we follow the history of the manufacture into the present century, a large part of the increasing gross produce is to be set down to the increase in the employed population; but during the twenty-five years with which we have just been dealing, the number of hands employed in spinning had not more than doubled,[28]whilst the amount of cotton manufactured had increased by fifteen hundred per cent.It is therefore evident that the increase during this period is due almost entirely, not to human exertion, but to machinery.[29]
◆1 The manufacture of iron offers a similar example.
◆¹ And next, with more brevity, let us consider the manufacture of iron. By and by we shall come back to the subject; so it will be enough here to mention a single fact connected with it. From about the year 1740, when a careful and comprehensive inquiry into the matter was made, up to the year 1780, the average produce of each smelting furnace in the country wastwo hundred and ninety-four tonsof iron annually. Towards the close of this period machinery had been invented by which a blast was produced of a strength that had been unknown previously; and in the year 1788, the average product of each of these same furnaceswasfive hundred and ninety-five tons, or very nearly double what it had been previously. An extratwo hundred and fifty tonswas produced from each furnace annually: and if we attribute the whole of the former product to human exertion,two hundred and fifty tonsat all events was the product of the new machinery; since if that had been destroyed, the product, in proportion to the expenditure of exertion, would at once have sunk back to what it had been forty-eight years earlier.
◆1 The products, then, of Capital embodied in machinery are easily distinguishable from the products of Labour.
◆¹ Here, then, we have before us the two principal manufactures of this country, as they were during the closing years of the last century; and we have seen that in each a definite portion of the product was due to a certain kind of capital, as distinct from human exertion—distinct from human exertion in precisely the same way, as we have already seen land to be, when we find it producing rent; and we have seen further that the products both of this kind of Capital and of Land, are to be distinguished from those of Human Exertion on precisely similar principles.[30]
◆1 In the next chapter we will consider the products of Wage Capital.
◆¹ Machinery, however,—or fixed capital, of which we have taken machinery as the type,—is only a part of Capital considered as a whole. We have still to deal with the part that is reserved for and spent in wages; and this will introduce us to an entirely new subject—a subject which as yet I have not so much as hinted at—namely human exertion considered in an entirely new light.