Category: Industrial Organization

Columbia College’s freshman course on Contemporary Civilization, a.k.a. “CC”, has been a core element in the undergraduate experience for over a century. This is the second post providing an excerpt of the third edition of the course syllabus (1921) that should be of particular interest for economists. Topics include: industrial organization, regulation, organized labor, and alternate systems of economic control. As in the earlier post, links to all the items referenced have been added.

_________________________

Another Post from the Syllabus

Book III, Sections 1-5. Historical background of contemporary civilization, 1400-1870.

_________________________

BOOK VIII. INDUSTRIAL PROBLEMS

1. A survey of the prominent features of the modern industrial system.

1. Private property.
   *Seligman, Principles of Economics, 125-138; *Hamilton, Current Economic Problems, 762-775; R.T. Ely, Property and Contract in their Relation to the Distribution of Wealth, Vol. I, 165-190.

1. 1. The meaning of the right of private property: the exclusive control over valuable things by private persons.
   2. Theories concerning the basis of property rights
      1. Occupation, or seizure.
      2. Natural rights.
      3. Labor.
      4. Legal theory
      5. Social utility.
   3. Property rights — rights vested in the owner of private property.
      1. Right of gift.
      2. Right of disposition by contract.
      3. Right of use.
      4. Right of bequest.
      5. Right of unlimited acquisition.
      6. Right to exclude.
   4. Limitations on property rights: social considerations limit the extent of private property rights.
      1. Right of use limited by principle of “eminent domain.”
      2. Right of use restricted by laws against “nuisances,” etc.
      3. Right of bequest limited by inheritance tax laws.
      4. Proposed limitations on the right of unlimited acquisition; the modern attitude toward great fortunes.
   5. Property and social authority. In the modern economic system private property is the chief basis of social authority and power.

1. Competition as an economic principle. (See 3.A. below)

The doctrines of individualism and laissez faire are still regarded by modern business and industry as the basis for economic operation. It is felt that competition stimulates producers and protects both producers and consumers.

1. The use of machinery and artificial power.
   *Marshall and Lyon, Our Economic Organization, 207-227; *Clay, H., Economics for the General Reader, 21-27; Marshall, Wright & Field, Materials for the Study of Elementary Economics, 158-160, 198-199.

1. 1. The standardization and mechanization of industrial processes and of industrial labor.
   2. Resulting tendency toward an elaborate technical division of labor, and toward a reduction of human effort to the simple repetition of a single operation. This mechanical character is typical of modern productive processes even where machinery is not employed.
   3. Limitations to the use of machinery.
      1. Unadapted to processes incapable of reduction to routine.
      2. Not applicable where tastes of individual consumers must be considered; the demand for quality and distinction.

1. The factory system. (See above, p. 29.)
   *Hamilton, 112-113.
2. The wage system.
   *Hamilton, 121-122; 617-619.

1. 1. The elaboration of the means of production has rendered ownership of the productive equipment by the laborers impossible under the present system.
   2. Modern industrial workers are thus in large part detached from direct personal control and responsible interest in the production and sale of commodities; dependent for livelihood upon employment as wage-workers by the owners of the means of production. The wage connection (“cash nexus”) the primary bond between the worker and his work. The proletariat.
   3. The mobility of labor under the wage system.

1. The extensive use of capital and credit in promoting and conducting business and industrial undertakings.
   *Ely, Outlines of Economics, 212-230; *Hamilton, 110-112, 185-195, 206-208, 211-215; Clay, 97-104.

1. 1. Distinction between business and industrial units.
      1. The business unit: the unit of promotion and management. Types of business units.
         1. The individual business enterpriser.
         2. The partnership. (See (c) below.)
         3. The corporation. (See (c) below.)
      2. The industrial unit: the unit of production; the store, workshop, and factory.
   2. The necessity of capital and credit in industry today.
      1. The use of extensive plants and complicated machinery.
      2. The interval between production and sale may be long. Stock must be carried, workers must be paid, and other business and industrial expenses met in the meantime.
   3. Means of securing capital and credit.
      1. Individual and partnership enterprises.
         1. Use of capital of individual owners of the business.
         2. The use of bank credit.
            1. Banks as depositories of idle capital.
            2. Banks as agencies of credit.
      2. The corporation.
         1. Capital secured by sale of stock.
            1. Types of stock — common and preferred.
            2. The function and rights of stockholders.
         2. Capital secured by borrowing; the issuance of bonds.
            1. Types of bonds.
            2. The function and rights of bondholders.
      3. The use of bank credit.
   4. The relation of the business enterpriser (entrepreneur) to the owners of capital.
      1. The function of the promoter or organizer of a large corporation.
         1. The work of promotion.
         2. The relation of the promoter to the investors.
         3. The rewards of the promoter.
      2. The function of the executive officials of a corporation.
         1. The powers of the board of directors.
         2. The theoretical and actual relation of the directors to the investors and creditors.
      3. The possibility of misuse of power by the business representatives of owners of capital.

1. 1. The social importance of the separation of the actual ownership of property from direct control of that property.
      1. Corporate type of organization is breaking the direct relation of ownership between men and goods.
      2. Resulting change in the nature of the institution of private property.

1. The dominance of large-scale enterprise in certain lines of industry.
   *Taussig, Principles of Economics, Vol. I, 49-66; Clay, 123-127. (Note — This section treats only the “legitimate” aspects of large scale production. Monopolies, combinations and “trusts” are treated under 3.B below).

1. 1. Marked increase in the size of the industrial unit within recent years.
   2. Reasons for the development of large-scale enterprises.
      1. Industrial reasons.
         1. Tendency toward increasing returns in industry.
         2. Advantages of standardization of product.
         3. Utilization of by-products.
         4. Economy of power.
         5. Greater division of labor possible.
         6. Scientific and technical research possible.
      2. Business reasons.
         1. Elimination of cost of competition.
         2. Selling advantages.
         3. Buying advantages.
         4. The stimulus of promoter’s profits.
   3. Restriction of the tendency toward large-scale production to certain industrial fields.
   4. Large scale enterprise and wide markets. As local specialization develops and the size of the productive unit increases, the entrepreneurs are driven to more distant markets to sell their produce. Large-scale enterprise is therefore dependent upon good means of transportation.
      1. Requirements for effective means of transportation.
         1. Speed: the importance of the time element in transportation, especially in the case of perishable goods. Refrigeration cars. Interest on invested capital while goods are in transit.
         2. Regularity: e.g. the milk supply of New York City. Commutation.
         3. Safety: passenger traffic, fragile goods.
         4. Cheapness: high rates reduce the size of the market. “Discriminating rates” in U. S.
            *Marshall, Wright & Field, 259-266.
         5. Elasticity: ability of the transportation systems to meet
            1. the peak-load requirements; e.g., coal in U. S. The after-the-harvest situation.
            2. the needs of the localities off the main lines of communication. The great increase in motor-truck transportation in the U. S.
      2. [Can the economic and social demands for means of transport be met by private companies? See 5.B.f below]

1. The interdependence of all parts of the industrial structure.
   *Hamilton, 113-115, 204-205, 208-211; L. Alston, How It All Fits Together, 14-49.

1. 1. Industrial and geographical division of labor; resulting interdependence of different industries and regions. The whole industrial system thus constitutes what is in effect a single productive machine.
   2. The credit structure knits all modern business and industry together. The credit basis typical of modern business.
   3. Modern monetary and banking systems international in their scope.
   4. Manifestations of this interdependence: financial panics and industrial depressions. (Business cycles.) Railway strikes.

2. The organization of production: problems arising from the conflicting interests of certain of the agents of production.

1. The agents of production.
   *Ely, Outlines of Economics, 116-130; *Clay, 46-63, 92-94; Seligman, Principles of Economics, 283-287; Seager, Principles of Economics (Second Edition), 122-169; Marshall, Wright & Field, Materials, 58-61, 106-108, 204-206.

1. 1. Natural agents: the basis of all production; the source of raw materials.
      1. Types of natural agents.
         1. Agricultural land.
         2. Urban land, furnishing sites for dwellings, stores, office-buildings, factories, etc.
         3. Forests.
         4. Mines and quarries.
         5. Waterways and harbors.
         6. Sources of natural power: wind, waterfalls, etc.
      2. Certain characteristics of natural agents.
         1. Incapable of material increase in amount.
         2. Different units may vary in productivity.
         3. Varying locations make different units more or less accessible.
   2. Labor: physical and intellectual activities conducing to production.
      1. Labor and natural agents are the two primary factors in production.
      2. The gain in efficiency secured by division of labor. (See above, p. 30.)
      3. Different individuals possess varying degrees of productive ability.
   3. Capital.
      1. Technical meaning of the term “capital”: goods produced by man and used by man to assist him in further production.
      2. The money value of capital goods not to be confused with the concrete capital goods.
      3. The function of capital in production.
         1. Increases the efficiency of man’s labor by enabling labor to be more effectively applied.
         2. Enables labor to be supported during the process of production.
   4. Business enterprise, or organization.
      1. The necessity of an organizer in modern production. In the modern highly complex industrial system natural agents, labor and capital have to be brought together and suitable arrangements made for their cooperation in the production of any desired commodity. The task has become especially important under modern industrial conditions, for the productive factors are in general separately owned.
      2. The function of the business enterpriser in production.
         1. To organize the factors in production.
         2. To evaluate the services rendered by each factor to his undertaking.
         3. To assume, in part, the business risks involved in the enterprise.
      3. The relation of the enterpriser to production under the corporate form of organization. (See above.)
      4. The work of the business enterpriser may involve labor of management, which is separately remunerated. The business enterpriser may invest his own capital, for which service he is also separately remunerated.

1. The relation of the business enterpriser to labor; conditions underlying the labor problem; the conflict of interests.
   *Hamilton, 615-619, 628-635.

1. 1. The business interests of the employer.
      1. Maximum profits : ordinarily secured by
         1. Efficient and well-disciplined labor force.
         2. Low labor costs.
         3. Production on basis of market conditions. The process of production is normally subordinated to that of sale, for advantage must be taken of changing market conditions, (e.g., coal.) This may result in irregular production.
         4. Limitation of expenditures on plant to those which will increase profits.
      2. Complete control of his own business and of his working force.
   2. The interests of the laboring force.
      1. High wages.
      2. Short hours.
      3. Protection against industrial accident and disease by elimination of dangerous and insanitary working conditions.
      4. Regular employment.
      5. Participation as responsible agents in the industrial process.
   3. These competing interests, together with the necessity of cooperation in production, give rise to the labor problem.

1. The machinery of agreement; methods of adjusting the conflict of interests.

1. 1. Individual versus collective bargaining.
      *Hamilton, 32-37, 636-640. M.R. Beard, A Short History of the American Labor Movement, 19-21; L.C. Marshall, Readings in Industrial Society, 560-569.
      1. The system of individual bargaining.
         1. The meaning of individual bargaining. Separate agreements made between employer and each of his employees as to wages and general conditions of employment; both parties to the contract free and equal agents; laborers free to work for any employer and to leave at will; employers free to employ any one they choose, and to terminate that employment at will.
         2. The assumptions underlying the system of individual bargaining.
            1. Laissez faire; the interests of the whole are advanced by allowing complete freedom to each individual. (See above: Competition, p. 71, and also below, p. 88.)
            2. Bargaining equality of employer and employee.
            3. The rôle of the employer in this concept of the industrial relation: a private individual engaged in a private enterprise, employing private property and subject to no control, except that furnished by business competition.
         3. Advantages claimed for the system of individual bargaining.
            1. Costs kept down and production increased by allowing full liberty to the employer.
            2. A mobile, elastic labor supply is thus secured. The employer is free to increase force when business is good, and to decrease force when business conditions call for limited production. The free and independent laborer, following his own interests will be found where he is wanted and when his labor is needed. Supply and demand given free play.
            3. Domination by organizations of laborers prevented when each man is free to bargain individually with the employer.
            4. Each individual worker secure in the superior advantage of his own efficiency.
         4. Defects charged to the system of individual bargaining.
            1. Fallacies in the assumption of complete equality between the parties to the bargain.
               1. The stakes at issue are not the same: for the employer it is a question of one employee more or less in any individual case; for the worker it is a question of the means of livelihood for himself and his family. He is thus forced to accept employer’s terms, and is not free to bargain in regard to them.
               2. The employee may be a minor, in which case there can be no equality of bargaining power.
            2. The system has resulted in the exploitation of minors and of many classes of male and female workers.
            3. The right of the employer to take on and discharge at will, depending upon business conditions, leads to irregularity of employment and consequent suffering on part of workers.
      2. The system of collective bargaining.
         Different interpretations of “collective bargaining.”
         1. The right of wage-earners within a given industrial unit (e.g., a factory or mine) to organize and to bargain with their employer through representatives elected from their own number.
         2. “The right of wage-earners to organize without discrimination, to bargain collectively, to be represented by representatives of their own choosing in negotiations and adjustments with their employers in respect to wages, hours of labor and conditions of employment.” (Resolution presented to Industrial Conference at Washington, October 22, 1910, by Labor Group.)
         3. The concept of full collective bargaining: bargaining between representatives of organized employees and of organized employers in a given industry. (e.g., New York Garment Workers; English Industrial Conference program.)

(The use of the system of collective bargaining, and its advantages and defects, will be considered in connection with the discussion of labor organizations below.)

1. 1. Collective bargaining further considered ; the combination movement in labor.
      1. Causes of the movement toward combination.
         *Hamilton, 619-622.

1. 1. 1. 1. Development of large-scale industry with increased use of capital after the Industrial Revolution led to a sharp differentiation between employers and workers, creating a class of industrial wage-workers divorced from the land. (See III.4.F)
         2. Weakness of the individual employee under a system of individual bargaining.
         3. Desire of workers to escape labor competition in regard to hours, wages, and conditions of employment. “The union organization attempts to cover the industrial field within which there is labor competition with respect to hours, wages, and conditions of employment.” Hoxie.
         4. Development of class consciousness among the permanent wage-workers. (The Communist Manifesto.)
      2. Main types of labor combinations. Labor unionism is complex, many-sided, and opportunistic.
         *Hoxie, Trade Unionism in the United States, 31-53.
         1. Structural division of labor combinations.
            1. The craft or trade union: an organization of wage-workers engaged in a single craft.
            2. The federation of craft unions.
               1. The local trades council.
               2. The state or district federation.
               3. National or international federation. In a federation the constituent organizations retain a large part of their individual independence.
            3. The industrial union: an organization of wage-workers employed in a given industry; attempts to unite skilled and unskilled in a single group. Industrial unions may be plant, local, district, national, or international, (e.g., the I.W.W.; the French syndicates.)
            4. The labor union: an organization of all workers in a given district regardless of craft or industry (e.g., The Knights of Labor).
            5. The “inside union” (employers’ union).
         2. Functional classification of unionism. (Hoxie.)
            1. Business unionism.
               1. Characteristics: trade conscious, conservative, aiming at immediate results, “more.”
               2. Methods: collective bargaining, trade agreements, strikes and boycotts as last resort, (e.g., R.R. brotherhoods.)
            2. Friendly or uplift unionism.
               1. Characteristics: conservative, law-abiding, idealistic.
               2. Methods: collective bargaining, mutual insurance, profit-sharing and cooperation, (e.g., Knights of Labor.)
            3. Revolutionary unionism.
               1. Characteristics: class conscious, radical in view-point and action, repudiating existing institutional order, and refusing to be bound by prevailing morals and laws.
               2. Methods: direct action, sabotage, strikes. Collective bargaining and mutual insurance regarded as conservative. (e.g., the I.W.W.)
            4. Predatory unionism.
               1. Characteristics: opportunistic, selfish and ruthless.
               2. Methods: may be those of open bargaining combined with secret bribery and violence (e.g., those of certain building trades organizations) or a secret “guerilla” warfare (e.g., that carried on by Bridge and Structural Iron Workers a few years ago).

1. 1. 1. Labor combinations in the United States.
         Hoxie, Trade Unionism in the United States, 89-98, *103-135; Brissenden, The I.W.W.; C. H. Parker, The I.W.W., Atlantic Monthly, November, 1917; Marshall, Wright & Field, Materials for the Study of Elementary Economics, 668-694, 700-704.
         1. The early character of labor combination in both England and U. S. was idealistic, friendly, and altruistic. The members favored political action, cooperation and education. The Knights of Labor in the U. S. is an illustration.
         2. The American Federation of Labor.
            1. General characteristics.
               1. A loose federation of virtually independent unions. Because of the elastic character of the organization room has been found within the A.F. of L. for many diverse types of unions. Originally a federation of craft unions. Recently several industrial unions have been admitted to membership (e.g., United Mine Workers of America).
               2. Non-theoretical and opportunistic. Immediate results sought.
            2. Types of subordinate organizations.
               1. National and international unions.
               2. Local unions.
               3. Local and district councils: organizations of local craft unions in the same or allied industries to govern interrelations and deal with employers.
               4. City central labor unions: composed of delegates from the local unions of the A.F. of L. in a given city.
               5. State federation: organization of A.F. of L. union bodies within a given state.
               6. The departments: federations of allied national and international unions.
            3. Organic character of the A.F. of L.
               1. The annual convention, the sovereign power.
               2. The permanent executive council, to carry out the will of the convention.
            4. General functions of the A.F. of L.
               1. Administration of intercraft union affairs; settling jurisdictional disputes.
               2. Advancing labor’s interests by labor legislation.
               3. Maintenance of a labor press.
               4. Promoting the organization of wage-workers.
               5. Promoting the use of the union label.
               6. Mediation between unions and employers.
               7. Giving financial and moral assistance to unions on strike.
               8. Education and publicity.
            5. Weaknesses charged to the A.F. of L.
               1. Limited membership: less than 10% of workers.
               2. Lacks adherence of several strong unions, (e.g., R.R. brotherhoods.)
               3. Inability to organize laborers in great trust-controlled industries.
               4. Failure to organize and help unskilled labor.
               5. Jurisdictional disputes within A.F. of L.
               6. Tendency to pursue immediate results; opportunistic policy said to have limited its accomplishments.
               7. Craft form of organization not adapted to progressive specialization found in scientifically managed industries.
         3. The Railroad brotherhoods.
            1. General characteristics.
               1. Models of pure craft unions.
               2. Highly centralized control, disciplined membership.
               3. Skilled, specialized and highly paid membership.
               4. Conservative type business union.
               5. Recent tendency to change policy because of problem of government ownership of railroads — The Plumb Plan.
            2. Methods:
               1. Collective bargaining, trade agreements. Avoidance of strikes except as last resort.
               2. Legislation.
               3. Mutual insurance.
               4. Recent movement for Plumb Plan.
         4. The unions in the clothing industry.
            Budish and Soule, The New Unionism, 27-45, 256-273, 191-204.
            1. The nature of the clothing industry.
               1. Seasonal demand and seasonal unemployment.
               2. Highly competitive system and “contracting out” in small producing units.
               3. Prevalence of immigrant labor, large percentage of women.
            2. Union organization of the industry.
               1. Early prevalence of the sweat shop with low wages and bad sanitary conditions.
               2. Early failures to correct these evils by legislation and union organization.
               3. Rapid growth of unionism after 1914.
               4. The establishment of trade agreements and joint boards with impartial chairmen.
            3. Policies of the Amalgamated Clothing Workers as a type.
               1. Belief in industrial unionism.
               2. Ultimate aim to establish self-government and control in industry.
               3. Encouragement of collective bargaining, shop committees and “industrial government.”
               4. Opposition to sabotage as a hindrance to the training of the workers in self-government.
               5. Promotion of workers’ education and cooperative enterprises.
               6. Anti-restrictionist attitude toward immigration.
               7. Promotion of separate political action.
         5. Revolutionary Unionism.
            The types of labor combinations given above stand for the modification and improvement of the status of the laborer under the existing systems of government. Revolutionary unionism is opposed to the existing political as well as economic organization. It believes that no real improvement of the position of labor can take place under the present political regime. It is organized therefore with the expressed purpose of over-throwing the governments as they are, and reorganizing society so that labor will receive its proper share of the national dividend. The Industrial Workers of the World is the most prominent example of this form of labor combination in the U.S. (See 5.B.h.iv below. American Syndicalism: the I.W.W.)
      2. Labor combinations in Great Britain.
         S. & B. Webb, Industrial Democracy; G.D.H. Cole, An Introduction to Trade Unions; G.D.H. Cole, The World of Labor.
         British industry is rather thoroughly organized into unions of many varieties and types. Craft unions, industrial unions and general labor unions are found side by side, often competing for members in the same industry. Since these unions have grown up haphazardly, without control or direction, no common principle of organization is found. In England, as in the United States, there are two rival types at present contending for supremacy: craft unionism and industrial unionism.
         1. The growth in strength of organized labor in Great Britain.
            1. 1892: total population, United Kingdom, 40,000,000; membership of unions, 1,500,000; 4% of population organized; 20% of male manual workers organized; 3% of women workers organized.
            2. 1915: total population, 46,000,000; membership of unions, 4,127,000; 9% of population organized; 45% of male manual workers organized; 10% of women workers organized.
            3. In 1917 the total membership in the unions was 5,287,522.
         2. Types of labor organizations in Great Britain.
            1. The Miners’ Federation of Great Britain: a strong industrial federation.
               S. & B. Webb, Industrial Democracy, 51, 57, 146.
            2. The National Union of Railwaymen: an industrial union.
            3. Transport Workers’ Federation: a federation of unions among dock and vehicle workers.
               Webb, History of Trade Unionism, 499-502.
            4. Cotton, engineering (steel-working), and ship-building industries organized into a great many separate craft unions, of which the Amalgamated Society of Engineers (A.S.E.) is the most powerful.
            5. General labor unions: strong organizations including unskilled and general laborers in many industries. General labor unions have developed comparatively recently, for up to 1890 craft unions of skilled workers dominated the labor movement in Great Britain. The organization of unskilled workers has been carried forward rapidly since that date.
         3. Mechanism of unification and cooperation.
            S. & B. Webb, Industrial Democracy, 265-278.
            1. Trades’ councils; federations of local trade union branches in each particular district; workers in different industries included.
            2. National federations of trade unions: federal combinations of local or of national trade unions. These federations, many of them strongly centralized, add strength and unity to labor organization.
            3. The Triple Alliance: the first great inter-industrial federation in the British labor movement. A general alliance between the Miners’ Federation of Great Britain, the National Union of Railwaymen and the Transport Workers’ Federation to secure joint action in industrial disputes. The disintegration of the Triple Alliance in 1921. S. and B. Webb, History of Trade Unionism (1920), 516-517.
            4. The Trades Union Congress. (Approximately 75% of the membership of British trade unions are included in this Congress.)
               S. and B. Webb, History of Trade Unionism (1920), 561-575, 649-663.
               1. 1. Character of the Congress: an annual conference of delegates from affiliated societies.
                  2. The Parliamentary Committee of the Trade Union Congress. The central executive authority of the Congress.
                     1. Limitation of powers, because it cannot enforce any obligation upon the affiliated unions.
                     2. Resemblance to Executive committee of the A.F. of L.
                  3. The functions of the Trade Union Congress and its parliamentary committee primarily industrial.
            5. The Labor Party. A federation of trade unions, socialist and other societies organized for purposes of political action. (See below: The use of the political weapon by labor.)
               Ogg, Economic Development of Modern Europe, 441-447.
         4. Policies and methods of British unions.
            1. Policies.
               1. Earlier policies: conservative uplift unionism.
               2. Radical character of recent policies: the fight for nationalization and participation in control. (See below.)
               3. The proposed use of the industrial weapon for political purposes.
            2. Methods.
               S. & B. Webb, Industrial Democracy, 796-806.
               1. Mutual insurance and benefits.
               2. Collective bargaining.
               3. Trade agreements; the standard rate.
               4. Legislation.
               5. Combined industrial action: the methods of the Triple Alliance.

1. 1. Combination among employers.
      *Hoxie, 188-206; Marshall, Wright and Field, Materials, 694-699.
      1. Types of employers’ organizations. There are many structural and functional types, corresponding closely to similar union bodies. In general, two main functional types may be distinguished.
         The conciliatory association, seeking to maintain industrial peace
         1. largely through bargaining and conciliation.
         2. The militant association, one of the chief objects of which is to break union organizations.
      2. Methods of militant employers’ associations.
         1. Effective counter organization, paralleling union structure.
         2. War on closed shop, by action and propaganda; blacklisting.
         3. Mutual aid; assistance given employers in time of strikes.
         4. Establishment of welfare plans, insurance and pension schemes which are subject to forfeiture in case of strike.
         5. Organization of counter-unions.
         6. The use of the law: injunctions and damage suits, etc.
         7. Methods of political action.
      3. Mediatory employers’ associations.
         1. Organization paralleling union structure.
         2. Collective bargaining and conciliation. (See below.)
      4. The employers’ associations and the principle of individualism. Significant departure from strict laissez-faire principles is involved in the formation of strong employers’ organizations.
   2. Relations between labor combinations and employers.
      1. Typical forms of collective bargaining in operation.
         *Hoxie, 254-275; Seager, Principles of Economics, 548-572; Taussig, Principles of Economics, Vol. 2, 313-322; Hamilton, 638-650, 663-666, 602-605, 731-739, 788-793; Marshall, Wright and Field, Materials, 683-691; Arthur Young, The International Harvester Industrial Council Plan; J. D. Rockefeller, Jr., The Colorado Industrial Plan.
         1. The “inside union”; collective bargaining with Works Committees. The Colorado plan; the Midvale plan; the International Harvester plan.
         2. Negotiation and trade agreements between organized workers and organized employers.
            1. Examples of negotiation in American industry: the bituminous coal situation; the garment workers.
            2. Subjects of negotiation and character of agreements reached. The principle of uniformity; the standard rate; the minimum wage.
            3. The legal character of trade agreements.
         3. Mediation, conciliation and arbitration by outside agencies as modes of securing industrial peace.
            Report of President Wilson’s Second Industrial Conference.
            1. Limited applicability. Questions of recognition of union and of open versus closed shop not usually open to arbitration.
            2. Boards of arbitration, public and private.
         4. Compulsory arbitration: employers and employees must accept decision of a judicial arbitration tribunal; the case of New Zealand.
            1. The object of compulsory arbitration: to prevent industrial stoppage due to strikes and lockouts.
            2. Difficulties of compulsory arbitration.
               1. Difficulty of enforcing findings against labor.
               2. In attempting to determine what are “fair” wages the tribunal must determine what are “fair” profits and “fair” interest. Whole distributive process thus subject to regulation.
            3. The present status of compulsory arbitration: the attitude of labor; the situation in New Zealand and Australia.
         5. Kansas Industrial Relations Court plan.
            Allen, Party of the Third Part.
            Some provisions of the law:
            1. Creation of a tribunal vested with “power, authority and jurisdiction” to hear and determine all controversies which tend to threaten the operation of essential industries.
            2. All essential industries must be operated with reasonable continuity. Permission to discontinue must be given by Court.
            3. Right of collective bargaining is recognized.
            4. Violations of the act are punishable by fine or imprisonment or both.
      2. The appeal to force.
         *Hamilton, 650-659, 677-680; Marshall, Wright & Field, Materials, 705-709; Adams and Sumner, Labor Problems, 175-212.
         1. The weapons of the unions.
            1. The strike in relation to collective bargaining.
               1. Definition: The refusal of a number of workingmen to sell their labor for less than a stipulated price or to work under other than specified conditions of employment, coupled with the refusal of the purchaser of that labor to accede to their demands.
               2. The sympathetic strike.
               3. The utility of the strike as a weapon for the attainment of union ends. The right to strike considered by labor to be an essential element in collective bargaining.
               4. Criticisms of the strike. Strikes and violence. Proposed laws prohibiting strikes.
            2. The ostracism of non-union workers.
            3. The boycott and the “unfair list”: means of discouraging the purchase of products of a hostile employer. The law against the boycott; the Danbury Hatters’ case.
         2. The weapons of the employer.
            1. The lockout.
            2. The black-list.
            3. The use of strike-breaking and detective agencies.
            4. The employers’ associations sometimes in a position to use the power of the state in breaking strikes.
      3. The weapons of revolutionary unionism. Disavowal of collective bargaining, conciliation, arbitration, and trade agreements.
         1. The strike.
         2. The general strike: a general stoppage of work in all industries.
            1. Attempts to utilize the weapon of the general strike in the past.
            2. The general strike as the weapon by which the revolutionary unionists hope to achieve their final objects.
         3. Sabotage; “Ca Cannie”; the “strike on the job.” The reduction of output by disabling machinery, working less efficiently, or destroying part of the product.

1. Points of conflict between labor and capital and proposed solutions.
   *J. B. Andrews, Labor Problems and Labor Legislation, 23-44.
   (The discussion above has been confined largely to a description of the machinery of agreement, the means by which cooperation in production is normally secured. Some of the points at issue, other than that of collective bargaining, are now to be considered.)

1. 1. The struggle for higher wages.
      Hamilton, 586-602; 591-593; Marshall, Wright and Field, 643-647, 659-669; Seager, 583-590.
      1. Factors in the wage dispute.
         1. Earlier theories of wages according to which the remuneration of the laborer was fixed by agencies not in his control.
            1. Malthus and the subsistence theory of wages.
            2. The wages-fund theory.
         2. Wage levels in the early years of the Industrial Revolution. (See above, p. 30.)
         3. The standard of living and the fight for higher wages.
            1. Education and the standard of living.
            2. The struggle to maintain and to raise the standard of living an ever-present cause of conflict over wages.
            3. The standard of living and rising prices.
         4. The wage question and unionism. The standard rate an essential element in collective bargaining.
      2. Methods of adjusting wage disputes.
         1. Trade agreements as to wages. Such agreements constitute merely temporary solutions.
         2. Profit-sharing: an attempt to eliminate wage disputes, increase efficiency of workers and harmonize the interests of employers and employed by giving the workers a share in the profits.
            1. Types of profit-sharing.
            2. Advantages and defects of profit-sharing.
            3. Failure of profit-sharing to eliminate industrial disputes.
         3. Bonus and premium systems, involving additional rewards to exceptional men for added output.
            1. Object: increase in output without increase in labor cost per unit.
            2. Opposition of organized labor to these systems, based upon
               1. Tendency of such arrangements to weaken collective spirit in laborers.
               2. Danger of pace-making.
               3. Alleged cutting of rates by employers if earnings of men become large.
         4. The legal minimum wage.
            1. Definition: A minimum wage established by the state for work of a certain sort or workers of a certain class.
            2. The argument against the minimum wage: wages are automatically adjusted to the productive ability of the worker, and cannot be set above this point by legal enactment.
            3. The argument for the minimum wage.
               1. Exploitation of workers, especially women and children, must be prevented.
               2. Adequate standard of living must be maintained, and it is the duty of the state to see that this standard is not lowered.
            4. The application of minimum wage laws presents the problem of providing for the inefficient and the unemployable.
   2. The struggle for shorter hours.
      *Andrews, Labor Problems and Labor Legislation, 45-69; Hamilton, 784-787; Seager, 574-583; Goldmark, Fatigue and Efficiency; Marshall, Wright and Field, 716-721; Commons and Andrews, Principles of Labor Legislation, 221-286.
      1. The efficiency argument for short hours.
         1. Investigations concerning the relation of fatigue to efficiency.
         2. The experience of the war: the economy of short hours.
      2. Other arguments for short hours.
         1. Necessity of protecting women and children.
         2. Necessity of regulating hours in dangerous occupations.
         3. Short hours and democracy. Necessity of leisure for education and participation in the life of the democracy.
      3. The legal regulation of hours.
         1. Laws regulating hours of labor of children. State and federal legislation in United States.
            1. The federal law of 1916 forbidding interstate traffic in goods produced by children working long hours; set aside by Supreme Court.
            2. The federal tax on the profits of establishments employing children between 14 and 16 at night or for more than 8 hours daily. 1919.
         2. State legislation limiting hours of labor of women.
         3. Recent movements toward legal regulation of men’s hours. The Adamson railroad law establishing 8 hours as the standard for pay.
      4. Limitation of hours through collective bargaining.
         1. The 8-hour day being largely established through direct bargaining.
         2. The movement toward further reduction of hours: the 44-hour week.
      5. Increased productivity versus shorter hours.
         *Hamilton, 700-705.
   3. Conditions of employment.
      Andrews, Labor Problems and Labor Legislation, 69-82, 83-92; Hamilton, 566-570; 577-578, 584-586; Seager, Principles, 583-590; Seager, Social Insurance; Marshall, Wright & Field, 721-723; Ogg, Economic Development of Modern Europe, 568-641. Commons and Andrews, 323-382.
      1. Safety.
         1. General nature and causes of industrial accidents. Types of dangerous occupations.
         2. The cost of industrial accidents.
            1. The burden as borne by the workers; the theory that wages are adjusted to risk.
            2. Social results of this system.
         3. Methods of reducing the number of industrial accidents.
            1. Trade union regulations concerning working conditions.
            2. Industrial safety laws.
         4. Workmen’s compensation laws as a means of relieving the worker of the cost of accidents.
      2. Health.
         1. Nature and causes of occupational diseases.
         2. The improvement of working conditions and the reduction in amount of occupational disease through legal and trade union action. Prohibition of dangerous substances and regulation of working conditions.
         3. The movement for social insurance as a method of relieving the worker of the burden of sickness.
      3. Working conditions under the “sweat-shop” system.
         1. The evils of tenement house manufacture: congestion, unsanitary conditions, low wages, long hours, child labor.
         2. The fight against the sweating system.
   4. Scientific management.
      *Hamilton, 705-713; *Hoxie, 296-348; Marshall, Wright & Field, 219-233; Goldmark, Fatigue and Efficiency, 192-210; Marot, Creative Impulse in Industry, 29-55.
      1. The meaning of “scientific management.”
         1. The application to machines and workers of scientifically established laws governing the processes of production and the modes of payment for the purpose of increasing efficiency in industry.
         2. Time and motion study the method by which the facts and laws of efficient production are to be established.
            1. Narrow conception of time and motion study: an instrument for task-setting and efficiency rating merely.
            2. Broader conception: time and motion study as a method of analysis applicable to every feature of the productive and distributive process.
      2. Scientific management and production. Systematic scientific study of productive processes and methods affords possibility of great increase of world’s productive efficiency, a possibility which should be utilized.
      3. Scientific management in the mechanical and in the human sphere.
         1. The unquestioned success of scientific management in dealing with the mechanical, material factor in production; efficient mechanical arrangements and processes have been established.
         2. Inability of scientific management to discover objective laws of universal validity in regard to the human factor.
         3. Danger that scientific management will reduce workers to a little-skilled, interchangeable, unorganized mass.
            1. The tendency to extreme specialization.
            2. Traditional craft knowledge systematized in the hands of the employer; the workers’ skill vested in the foreman and manager.
            3. Established crafts and craftsmanship tend to break down.
      4. The opposition of organized labor to scientific management.
         1. Reasons given for labor opposition.
            1. Danger of narrow specialization and loss of craftsmanship.
            2. Undemocratic character of scientific management, with tendency to break down collective bargaining.
            3. Unfair character of tasks set and wages paid.
            4. Scientific management a device for increasing production and profits.
            5. Scientific management a speeding up and sweating system.
            6. Work under scientific management is monotonous routine.
            7. Continuity and certainty of employment lessened.
         2. Fundamental antagonism of scientific management and dominant type of modern unionism, the essential principle of which is uniformity.
      5. The problem of securing the benefits of increased productivity which scientific management can give, without reducing the status and craftsmanship of the worker.
         1. Antagonism of labor will persist if scientific management is used as an instrument for profit-making and exploiting the workers.
         2. Human defects of scientific management may in part be overcome by
            1. A broad and universally applied system of industrial education.
            2. Fuller and more intelligent participation by labor in the processes of industrial production.
   5. Insecurity of employment.
      Hamilton, 545-566, *547-549, 554-566; Marshall, Wright and Field, 709-715; W.H. Beveridge, Unemployment; Andrews, 7-21; F. C. Mills, Theories of Unemployment and of Unemployment Relief, 118-164.
      1. General causes of insecurity of employment.
         1. Seasonal fluctuations in the demand for labor.
         2. Cyclical fluctuations in the demand for labor.
         3. Necessity of labor reserve due to the casual character of employment in many industries.
         4. Changes in industrial structure resulting in decreased demand for labor of certain types.
         5. Deficiencies of industrial training.
         6. Old age and personal deficiencies.
      2. Results of insecurity of employment.
         1. Decreased productivity of industry.
         2. Evil effects of uncertainty of employment upon the worker.
         3. The evil of under-employment and under-nourishment.
         4. The development of the habit of casual employment.
         5. The migratory laborer a product of seasonal and casual demand for labor. Evil results of a migratory existence.
      3. Proposed methods of remedying insecurity of employment.
         1. The organization of the labor market. Haphazard hawking of labor should be replaced by systematic placing of labor through governmentally organized employment offices.
         2. The regularization of industry.
         3. Diversification of industries and systematic distribution of public work to offset fluctuations in demand for labor.
         4. Adequate industrial training.
         5. Unemployment insurance to protect worker during periods of unavoidable unemployment.
   6. Immigration in its relation to the labor problem.
      Hamilton, 496-527; 496-516; Frances Kellor, Immigration and the Future, 227-258. *See Appendix III, 4 (p. 146).
      1. The character of recent immigration to the United States contrasted with earlier immigration.
         1. Marked predominance of northern and western Europeans prior to 1890.
         2. The influx of southern and eastern Europeans since 1890; the stimulation of immigration by steamship companies and large employers of labor.
      2. Date of change in character of immigration practically corresponds with date of exhaustion of free land in U.S. Immigrants after 1890 thus became definitely laborers, rather than settlers and independent farmers.
      3. Problems arising from the changed character of recent immigration.
         1. Language and educational differences; the necessity of immigrant education today.
         2. Differences in standards of living.
            1. Inability of workers with high standards to compete with some of new arrivals.
            2. The forcing down of wages in unskilled occupations.
         3. Difficulties arising from the congestion of immigrant population in large cities; relation to unemployment and to the sweating system.
         4. Recent immigrants and organized labor.
            1. Occasional use of immigrants as strike-breakers.
            2. Difficulty of organizing immigrants.
            3. Successful organization of immigrants in certain industries within recent years.
      4. The problem of future immigration.
         1. Reasons advanced for curbing immigration.
            1. The alleged racial inferiority of certain types.
            2. The question of “hyphenated” Americans.
            3. The maintenance of the American standard of living.
            4. The danger of over-population and of forcing wages to a subsistence level.
            5. The difficulty of educating and absorbing large numbers of immigrants of a different culture.
         2. Arguments advanced for a continuance of our former immigration policy.
            1. There is no basis for the claim of racial inferiority of certain types.
            2. The United States must continue to furnish a haven for the oppressed of the world.
            3. American industries need a large supply of immigrant labor. More labor, not less, is needed, for overpopulation is a very distant danger.
            4. Immigrants make intellectual and moral contributions which are valuable to American democracy.
            5. Education and absorption will not be difficult if congestion in large cities is prevented.
         3. Proposed policies.
            1. The continuance of a selective immigration policy.
               1. Exclusion of paupers and illiterates.
               2. Prevention of stimulation of immigration.
               3. Perfection of machinery for educating and absorbing immigrants.
            2. Complete exclusion, permanently, or for a term of years.
         4. The recent immigration act, 1921.
   7. Recognition of the Union.
      The closed versus the open shop.
      1. Open shop with no recognition of unions.
      2. The closed shop with the closed union may result in a form of labor monopoly.
      3. The closed shop with the open union.
   8. Participation in management. (The demands of organized labor have in the past been confined in the main to questions of hours, wages and conditions of employment. Within recent years, however, questions of management and control have come within the scope of labor’s interest. In England and, to a lesser extent, in the United States, organized labor is now seeking to secure a share in the control of industrial undertakings, especially the large public service enterprises such as mining and transportation. This question is taken up below, in the section on “The problem of control in industry.”)

3. The organization of production: competition versus combination and monopoly.
*Clay, Economics for General Reader, 107-115; Seligman, 139-150. *Hamilton, 429-478; Seager, Chaps. XXIII, XXV.

1. The meaning and significance of competition.
   1. The doctrine of laissez-faire in industry; its importance during the nineteenth century. The basis of laissez-faire: the belief that an individual in seeking to advance his own interests is thereby, “as if led by a hidden hand,” advancing the interests of society.
   2. The meaning of modern business competition: the struggle to obtain the largest possible amount of wealth in exchange for commodities produced or services rendered.
   3. Competition the regulating factor by which the flow of economic goods is directed.
   4. Relation between competition and cooperation: both a conflict and a community of interests between individuals and groups in the modern economic system.
   5. The extent of competition today.
      1. Limitations placed on competition by government.
      2. Limitations placed on competition by agreement and combination between competitors.
      3. Inherent limitation because of the unnecessary expenses of competition in advertising; duplication of plant and services.
      4. Ultimate limitation claimed by some, who point out the general waste and social loss resulting from unregulated competition. This loss is illustrated by over-production, unequal, “unfair” and cut-throat competition.

2. Combination in business and industry.
   (Note — Monopolistic control may be obtained by forcing competitors out of business either by underselling or by taking them into a combination. The latter form has been the more prominent in recent years.)

1. 1. The movement toward combination in recent years.
      1. Causes of movement toward combination. (See above.)
      2. Forms of combination.
         1. The selling agreement.
         2. The pool.
         3. The trust.
         4. The holding company.
         5. The giant (unified) corporation.
      3. To what extent has the movement toward combination been a natural one and to what extent a forced one?
   2. Advantages of combination.
      1. General advantages of large-scale production. (Cf. above.)
      2. Monopolistic or semi-monopolistic advantages due to limitation of competition and partial or complete control of prices and markets through the complete or partial limitation of the supply of the monopolized commodity.
   3. Disadvantages of combination.
      1. Difficulty of adequate supervision and control.
      2. Tendency toward loss of personal initiative among employees.
      3. Burden of uneconomical charges carried (e.g., promotors’ profits, “water” of various types, etc.).

3. Competition versus combination in relation to the consumer
   1. Productive advantages of combinations in certain industries and avoidance of competitive charges make possible a lowering of price to consumers.
   2. If a combination secures a monopolistic or semi-monopolistic position extortionate prices may be charged. Thus competitive charges may be in some cases lower and in some cases higher than those of a combination. The problem is: How may the advantages of large-scale production be secured without placing unregulated monopolistic power in the hands of combinations? Governmental action has been found necessary to secure this.
4. The attitude of the state toward combinations.
   1. The historical development of governmental policy.
      1. The early attempts to enforce competition and to prohibit combination. Anti-trust laws: the Sherman Act, 1890, prohibiting monopolies and combinations “in restraint of trade.”
      2. The recognition of the necessity of permitting combination in certain fields; the problem of regulating combination.
   2. The present situation in the United States.
      1. The Clayton Act; reenforces the Sherman Act and makes illegal
         1. Intercorporate stockholding when the effect may be to lessen competition.
         2. Interlocking directorates.
         3. Discriminatory trade practices.
      2. Federal Trade Commission; vested with wide powers of investigation and supervision.

5. Proposed solutions of the Trust problem.
   1. Regulatory remedies.
      1. Full publicity.
      2. Strict prohibition of unfair competition.
      3. Prevention of monopolistic practices.
      4. Federal incorporation.
      5. Strict regulation by government commissions.
   2. Remedies involving greater changes in the industrial system. (Government ownership, and socialistic and syndicalistic proposals are discussed below.)

4. Problems connected with the distribution of the annual social income.
King, Wealth and Income of the People of the United States, 154-167; Ely, Outlines of Economics, 384-405; Seager, Chap. XI; Seligman, 352-431; Clay, 279-354. See Appendix, III, 5, (p. 147).

1. General statement of the problem. The total volume of goods produced each year constitutes an annual flow of consumable commodities and services which are apportioned among the agents of production. A share goes to the owners of the natural agents, a share to the owners of capital, a share to the laborers, and a share to the business organizers of production — the entrepreneurs. Money income is merely a claim to a share in the distribution of commodities and services which constitute the real income of an individual or a group. Many of the current economic problems arise from disputes concerning the right of certain of the agents of production to shares in this distribution, and from attempts of the different agents to increase their own shares. As the organizing factor in production the business enterpriser evaluates the services rendered by each of the other factors. Payment of the shares in distribution to the other agents is made through him. The fundamental question in distribution is: What determines the amount the business enterpriser must pay to each of the other agents and the amount he may keep for himself?
2. Briefly stated, the following are the principles on which distribution takes place today:
   1. The owners of the natural agents of production receive a share in the social income which is called rent. The amount of the rent paid the owner of any particular piece of land depends upon the relative advantage resulting from the utilization of that piece, as compared with others. This differential advantage may be due to

1. 1. 1. Favorable location.
      2. Fertility (or richness, as in the case of mines). Payment to the owners of these natural agents is based upon the fact of possession. The question as to whether the owner inherited the site, bought it when it was worth little and held it till its value increased, or bought it at its present value with money earned by his own labor has nothing to do with his receipt of a share in the social income, under the present distributive system.
   2. Interest. The owners of capital receive a return which is called interest. The amount of interest paid at any time for the use of a given amount of capital depends upon the amount of available capital in existence and upon the strength of the demand for the use of it. Business men are willing to pay for the capital borrowed because, by the use of capital, the productiveness of labor is increased (e.g., a man with a plough is more effective in tilling the soil than a man with a pointed stick). It is believed that the stimulus of interest is necessary in order to promote saving. Interest is paid to the owner of capital irrespective of the means by which he may have acquired ownership, whether by personal abstinence, inheritance, gift, or other means.
   3. Wages. The share of the annual income paid for labor, physical or mental, is called wages. In general, those who receive this form of income may be divided into six non-competing groups, set off from each other by differences of education and training, environmental differences, and differences of inborn gifts:
      1. Unskilled day laborers.
      2. Semi-skilled workers.
      3. Skilled workmen.
      4. Clerical workers.
      5. Professional workers.
      6. Salaried business managers.

Within each of these groups wages tend to a rough equality. The wage received by an individual within any group is fixed, in general, somewhere between a lower limit set by the standard of living (a standard of bare physical subsistence in the lowest group) and an upper limit determined by the relative degree of efficiency or indispensability of the labor constituting that group. This degree of indispensability will depend upon his productive ability, upon the number of workers within the group of equal productive ability, and upon the character of the demand for workers of that particular type. The point at which wages will be fixed between these two limits is determined by the relative bargaining power of employers and workers.

1. 1. Profits. The share in income which the business enterpriser receives is called profits. It is a residual share, left over after the other agents of production have been paid. Profits vary greatly in amount depending upon the degree of risk undertaken, the extent to which competition or monopoly operates in a given industry, and the degree of exceptional efficiency found in a given individual. Competitive profits tend to disappear, insofar as true competition operates, but profits based upon a monopolistic advantage do not.
      Summary. The distribution of the annual social income today is thus, in general, based upon the strategic strength of the position occupied by the owners of the various agents of production. Those individuals or groups which are in a relatively strong position, whose services are indispensable, (or relatively so) for any one of a number of reasons, secure a relatively high return. Those whose services are less indispensable, due to weaker demand for their products, greater number of competitors, lower efficiency, receive a lower return. The degree of indispensability, it is important to note, may depend upon personal efficiency, or upon any one of a number of other factors.

1. Arguments advanced to justify the present distributive system.

1. 1. Distribution under the present system is based upon competitive efficiency. Society gains by giving high prizes to the highly efficient.
   2. Inequalities of capacity must be recognized; corresponding inequalities of reward are justified.
   3. The various distributive shares at present criticized, such as interest, rent, profits, high salaries, are necessary to secure the services called forth — thrift necessary for accumulation of capital, effective use of land, and high business ability.
   4. Such payments as do not represent services (as rent) are necessarily involved in the retention of the system of private property, and are therefore legally and economically justifiable.

1. Arguments advanced against the present system of distribution.

1. 1. Distribution today is based chiefly upon the power to take, and only secondarily upon productive efficiency. Accordingly not all shares in distribution serve as stimuli to production.
   2. Men would save their surplus money, use their land effectively, and develop their individual capacities to the full without the bribe of a special pecuniary reward.
   3. Rent, in particular, does not arise as a result of personal effort and therefore should belong to the community as a whole.
   4. The stimulus of profits has perverted business enterprise from the production of commodities as the chief end to that of profit-making, with a consequent loss to the consumers. Greater profits may be made in some cases by limiting production than by increasing production.

1. Proposed changes in the system of distribution.
   *Russell, Proposed Roads to Freedom, 86-110.

1. 1. Continuance of present system, insofar as payments are based upon efficiency and productive ability, but with state appropriation of unearned increments; limitation of great fortunes and of rights of inheritance; the use of taxation as a means of correcting distributive injustice.
   2. [Socialistic and communistic ideals. (See below, p. 94.)
      1. Distribution on the basis of need; i.e., approximately equal distribution, irrespective of work performed.
      2. Distribution on the basis of sacrifice; payment based on irksomeness of various occupations.]

5. The problem of control in industry.

1. [The present system of control and management in industry: a brief restatement.

1. 1. Chief characteristics of modern system
      1. The system of private property.
      2. The four-fold division of function in production.
      3. The status, and degree of initiative, responsibility and control resting in each of the agents of production.
      4. The importance of large-scale industry today.
   2. Advantages claimed for the present system of management.
      1. Strong and efficient leaders reach the top and exercise power.
      2. Scope given for initiative and individual ability.
      3. Quantity production secured.
      4. Prices kept down by rigorous competition for markets.
      5. Compatible with human nature; strong instincts of acquisitiveness and pugnacity satisfied in a competitive system based on private property and survival of the strongest.
   3. Defects charged to the present system.
      1. Characterized by inefficiency in production.
         1. Duplication of services; competitive waste.
         2. Business side of industry over-developed at expense of productive efficiency; production subordinated to profits.
      2. Chaotic system of distribution; lack of order and system in marketing organization.
      3. Periodic breakdowns (financial panics and business depressions) constitute a fundamental weakness.
      4. Many individuals performing no useful service continue to share in the social income, while many productive workers continue to live in poverty.
      5. An autocratic rather than a democratic form of government exists in industry.
      6. Continual labor unrest affords evidence that the present industrial system does violence to human nature.

1. Proposed solutions of the problem of industrial control.

1. 1. Competitive individualism: continuance of the nineteenth century system without state interference.
      1. Conditions involved in this type of solution.
         1. Maintenance of full private property rights.
         2. Restoration of complete freedom of competition.
         3. Restoration and maintenance of individual bargaining; denial of right of collective bargaining; refusal to recognize labor organizations.
      2. Advantages claimed for competitive individualism. (Cf. above.)
      3. Difficulties involved in this solution. (Cf. above.)
         1. Recent changes in industrial structure, type and size of modern industrial unit, development of corporate form of organization, large scale enterprise, render impossible the maintenance of such a system.
         2. Return to this individualistic system impossible in view of present unrest.
   2. Continuance of present system of control; amelioration of labor conditions and limited degree of regulation of industry by the State.
      Object: The maintenance of the advantages of the present competitive system and the avoidance of competitive excesses by state protection of labor and state regulation of competition and monopoly. ‘The New Freedom.’
   3. Continuance of present system of management with collective bargaining in matters of wages, hours, and general conditions of employment.
      1. Collective bargaining in the organized trades today. (Cf . above.)
      2. Trade union control under this system.
         1. Negative character of trade union control; union rules and regulations necessarily restrictive, in that direct and positive control is exercised by the employer.
         2. This control, though negative, constitutes an important factor in the management of industry today.
      3. Inability of trade unions and industrial unions as at present organized to take over more effective control.
         1. Faulty organization; jurisdictional disputes.
         2. Lack of effective coordination between unions.
         3. Lack of adequate leadership.
         4. Technical experts and managers not included in union organization.
         5. The difficulty of securing capital.]
   4. Full collective bargaining, with a share in control vested in labor; the English program.
      *Hamilton, 716-729; Memorandum of the Industrial Situation after the War, (Garton Foundation), 158-175.
      1. Recognition and encouragement by the State of organization on the part of employers and workers.
      2. The National Industrial Council: a national council to secure joint action between representative organizations of employers and workers, prevent and adjust industrial disputes, and to serve as official consultative authority to the government upon industrial relations.
      3. Machinery of organization within each industry. The Whitley scheme.
         1. Joint Standing Industrial Councils (National) composed of representatives of employers and employed in each industry.
         2. District Councils: representative of trade unions and employers’ associations in each district.
         3. Works Committees: representative of management and workers in particular plants.
      4. Functions of Works Committees, District Councils and National Councils.
         1. To deal with questions of hours, wages and conditions of employment.
         2. To provide security and continuity of earnings and employment.
         3. To provide for technical education, training, and industrial research.
         4. To deal with proposed legislation affecting the industry.
      5. The advantages and limitations of the Whitley Plan and similar proposals: attitude of organized labor.
   5. The Cooperative system.
      Seager, Chap. XXXI; S. and B. Webb, A Constitution for the Socialist Commonwealth of Great Britain, 248-263.
      1. The object of cooperation: the elimination of the managing employer and of private profits; general policy settled and risks assumed by cooperators as a body; ownership and control vested in a body of cooperating equals.
      2. Cooperation in retail and wholesale trading; success of the Rochdale stores and the Schulze-Delitzsch societies.
      3. Cooperation in production. Comparative lack of success in this field.
         1. Character of operations fundamentally different from those of retail trading and banking.
         2. Difficulty of carrying on production on large scale, due to lack of capital.
         3. Failure to secure capable leaders.
      4. Cooperative Credit Societies.
   6. Government ownership of great public service industries (nationalization); control by joint boards representing workers, managers, and public.
      1. The proposed organization of the English coal mining industry; the Sankey Report.
         *Coal Industry Commission Act, 1919 — Second Stage, Reports, 5-26.
         1. State purchase of coal royalties and coal mines.
         2. Control by councils of workers, consumers and technical experts, under the general supervision of a Ministry of Mines; the National Mining Council, District Mining Councils, and Local Mining Councils.
      2. The Plumb Plan for railroad re-organization in the U.S. [Plumb Plan Weekly: Vol. I, No. 1; Vol. I, No. 2; Vol. I, No. 3; Vol. I, No. 4; Vol. I, No. 5; Vol. I, No. 6; Vol. I, No. 8; Vol. I, No. 9]
         *The Sims Bill. [Representative Thetus Sims of Tennessee was the ranking Democrat of the House Interstate Commerce Committee]
         1. Government purchase of all railroad systems, on basis of capital invested.
         2. Administration.
            1. Operation of roads by a board of fifteen directors, five representing the public, five the managers, five the classified employees.
            2. Rate-making by Interstate Commerce Commission.
         3. Division of surplus between government and employees, provided that if surplus exceeds a certain percentage of the operating revenues, rates must be reduced; deficits to be met by government.
      3. The present status of the Sankey scheme and the Plumb Plan. Significance of these proposals.
   7. Collectivism: ownership and control of all industrial undertakings by the state; State Socialism.
      *Hamilton, 847-860; *Russell, Proposed Roads to Freedom, 1-31; Ogg, Economic Development of Modern Europe, 477-567; Gide and Rist, History of Economic Doctrines, 407-479.
      1. The general principles of Socialism.
         1. Abolition of private property in the means of production (land and capital), with retention of private property in articles of personal use. Collective (State) ownership of means of production.
         2. Administration of collectively owned industrial system through a democratic political organization.
         3. Abolition of wage system as at present constituted.
      2. The basic doctrines of Marxian Socialism.
         1. The materialistic interpretation of history. All human phenomena can be explained in terms of the underlying material facts of life. Irresistible economic forces shape human history.
         2. The law of the concentration of capital. Capitalistic undertakings tend to become larger and larger; small competitive enterprises tend to disappear, and to be replaced by great trusts.
         3. The class war. Increasing concentration of capital leads to division of society into two great classes, the capitalist class and the wage-earning class, bourgeoisie and proletariat. Between these two classes a struggle will go on until all wage earners combine, locally, nationally and internationally, and take over the ownership and control of land and capital for the common good. View of Marx that this process of concentration of capital, increasing misery, class war and ultimate social control is natural and inevitable, a working out of irresistible economic forces. The Communist Manifesto. The great influence of Marx on socialist thought.
      3. Other types of socialistic doctrine; the Fabian policy of securing reforms and collective ownership gradually, by the use of constitutional methods; the Socialist Party in politics.
      4. The Socialist program today; arguments advanced for a Socialistic organization of industry, and objections to it.
   8. Syndicalism: ownership and control by the workers in each industry. (See above: The Industrial Workers of the World.)
      Russell, Proposed Roads to Freedom, 56-85; Kirkaldy, Economics and Syndicalism; Gide and Rist, 479-483; Brissenden, The I.W.W., 155-177, 259-282.
      1. General principles of syndicalism.
         1. Organization of industry by the workers as producers, not as consumers. The industry as the unit of ownership and control; ownership by organized labor.
         2. Substitution of industrial (direct) action for political action; boycott, union label, strike, and sabotage. The general strike the chief weapon.
         3. Destruction of the state.
      2. Syndicalism in practice.
         1. French syndicalism: The C.G.T.
         2. [American syndicalism: The I.W.W] (See iv below.)
      3. Syndicalism as a working principle of industrial organization; advantages claimed for it and objections to it.
      4. The Industrial Workers of the World.
         C. H. Parker, The Casual Laborer.
         1. Their principles.
            1. Class conflict. “The working class and the employing class have nothing in common. Between these two classes a struggle must go on until the workers of the world organize as a class, take possession of the earth and the machinery of production, and abolish the wage system”: Preamble of the I.W.W. Constitution.
            2. Abolition of the wage system.
            3. Organization on industrial instead of craft lines.
               1. The doctrine of working class solidarity, “One Big Union.”
               2. The organization of the unskilled together with the skilled; opposition to labor aristocracy.
            4. Accomplishment of ends by direct industrial action.
               [Note: A seceding wing of the Industrial Workers of the World (Detroit Branch) favors political action, but the dominant group (Chicago Branch) disavows political organization.]
            5. Ultimate complete control of the industrial system by the workers; control of the political system will necessarily accompany industrial control.

1. 1. 1. 1. The structure of I.W.W.
            1. The local industrial union.
            2. The District Industrial Council.
            3. The International Industrial Department.
            4. The General Executive Board.
               1. Power originally strongly centralized in the Executive Board.
               2. The movement toward decentralization; present weakness of the central authority.
         2. Method and tactics of the I.W.W.
            1. Direct action; various forms of direct action; sabotage.
            2. Free speech fights as means of propaganda.
            3. The general strike.
         3. The I.W.W. today.
            1. Membership.
               1. Confined to textile, steel, lumber, mining, farming, railroad construction and marine transportation industries.
               2. Majority of members migratory unskilled workers; a radical, militant, relatively unstable group recruited from industries characterized by irregularity of employment and bad working conditions.
               3. Numerical strength: not over 60,000 members at present. Actual influence not measured by paid-up membership.
            2. The I.W.W. as a social phenomenon; conditions and causes of its existence.
            3. Weaknesses of the I.W.W.
               1. Inability to maintain stable membership.
               2. Organic weaknesses due to internal conflict.
                  1. Centralization of power versus decentralization.
                  2. Constructive industrial unionism versus the revolutionary ideal of uncontrolled agitation, “guerilla” warfare against authority.
               3. Financial weakness.
               4. Membership unfitted for constructive endeavor.
            4. The future of industrial unionism in the United States; the agitation for industrial unionism in the A.F. of L.; dual unionism versus “boring from within.”

1. 1. Guild Socialism: a compromise type of organization, standing between collectivism and syndicalism.
      *Russell, 80-85; G.D.H. Cole, Self Government in Industry; S.G. Hobson, Guild Principles in War and Peace; *Hamilton, 860-870, G.D.H. Cole, Guild Socialism, 187-195.
      1. General principles of guild organization.
         1. Ownership of the means of production by the State, as trustees for the community.
         2. Management of industrial undertakings by guilds or workers in each industry, acting also as trustees for the community; payment of tax or rent to State.
         3. The Guild Congress: a body consisting of representatives of all National Guilds, and having supreme authority in industrial matters.
         4. Parliament to retain supreme authority in political matters; Parliament to represent consumers.
         5. Joint Committee of Parliament and Guild Congress to deal with conflicts arising between the two bodies; Joint Committee to reconcile interests of producers and consumers.
         6. Adjustment of prices by Joint Committee.
         7. Adjustment of pay within each industry by the National Guild controlling that industry.
      2. Guild socialism as a possible working principle; advantages claimed for it; objections to it.

Source: Columbia University. Introduction to Contemporary Civilization — A Syllabus, (Third edition, 1921), pp. 70-96.

Image Source: Cover of Labor Problems and Labor Legislation by John Bertram Andrews (1919).