the self-evident rule of reason in civilised life, the industrial arts have also continued to gain in productive efficiency, at an ever-accelerated rate of gain; so that today the industrial methods of the machine era are highly productive, beyond any earlier state of the industrial arts or anything that is known outside the range of this new order of industry. The output of this industrial system yields a wider margin of net product over cost than has ever been obtainable by any other or earlier known method of work. It consequently affords ground for an uncommonly substantial vested interest in this disposable net margin.
But the industrial system of the new order will work at the high rate of efficiency of which it is capable, only under suitable conditions. It is a comprehensive system of interdependent working parts, organised on a large scale and with an exacting articulation of parts, -- works, mills, railways, shipping, groups and lines of industrial establishments, all working together on a somewhat delicately balanced plan of mutual give and take. No one member or section of this system is a self-sufficient industrial enterprise, even if it is true that no one member is strictly dependent on any other one. Indeed, no one member or section, group or line of industrial establishments, in this industrial universe of the new order, is a productive factor at all, except as it fits into and duly gives and takes its share in the work of the system as a whole. Such exceptions to this rule of interlocking processes as may appear on first examination, are likely to prove exceptions in appearance only.
They are chiefly the backward trades and occupations which have not had the benefit of the Industrial Revolution and do not belong under the new, mechanistic order of industry; or they are trades, occupations and works devoted to the consumption of goods or to the maintenance of the rules governing the distribution and consumption of wealth, as, for instance, banking, menial service, police service and the apparatus of the law, the learned professions and the fine arts.
It is also of the essence of this industrial system and its technology that it necessarily involves the industrial community as a whole, its working population and its material resources; and the measure of its successful operation is determined by the effectual team-work of its constituent parts. And the industrial system of the new order is drawn on a large scale and rests on a comprehensive specialisation of processes and standardisation of output; so that the "community" which is required for the necessary team-work is necessarily a large community; larger than the total population and resources that would have served the like purpose under any earlier state of the industrial arts, at the same time that the needed coordination of processes is also wider and more delicately balanced than ever before. Indeed, the "industrial community" of the new order is always and necessarily larger than any existing national unit. The ramification of give and take under the new industrial system invariably overlaps the national frontiers, among all those peoples who occupy what would be called an "advanced" place in industry. The system, and therefore the industrial community engaged in team-work under this system, is drawn on cosmopolitan or international lines, both in respect of the body of technological knowledge which is turned to account and in respect of the range and volume of materials necessary to be used according to this new order in productive industry.
Evidently the total output of product turned out under this industrial system, the "annual production," to use Adam Smith's phrase, or the "annual dividend," to use a phrase taken from later usage, -- this total output is the output of the total community working together as a balanced organisation of industrial forces engaged in a moving equilibrium of production.
No part or fraction of the community is a productive factor in its own right and taken by itself, since no work can be done by any segment of the community in isolation from the rest; no one plant or works would be a producer in the absence of all the rest. The total product is the product of the total community's work; or rather it is the product of the work of that fraction of the people who are employed in productive work, which is not quite the same thing, since there is much work spent on the consumption of goods, and on ways and means for such consumption, as well as on their production.
Indeed, it is by no means certain that there is not more time, strain and ingenuity spent on the consumption of goods than on their production. Apart from sports, menial service, fashionable dress and equipage, pet animals and mandatory social amenities, there would also have to be included under the ways and means of consumption virtually all that goes into salesmanship and advertising. Virtually all of these things have to do with the organised consumption of goods; and virtually all are therefore to be written off as waste motion, so far as regards their effect on the net productive efficiency of the industrial community, or of the industrial system whose tissues are consumed in enterprise of that kind. The amount which is to be written off as consumptive waste in this way is approximately the same as the net margin of product over cost; and according to the enlightened principles of self-help and equal opportunity, as these principles work out under the new order of industry, it is for the investors to take care of this consumptive waste and to see that no unconsumed residue is left over to cumber the market and produce a glut.
Evidently, too, the amount of the annual production depends on the state of the industrial arts which the working population has the use of for the time being; which is in the main a matter of technological knowledge and popular education. So that the question of productivity and net productivity may be stated in general terms to the following effect: The possible or potential productive capacity of any given community, having the disposal of a given complement of man power and material resources, is a matter of the state of the industrial arts, the technological knowledge, which the community has the use of. This sets the limit, determines the "maximum" production of which the community is capable. The actual production in such a community will then be determined by the extent to which the available technological efficiency is turned to account; which is regulated in part by the intelligence, or "education," of the working population, and in greater part by market conditions which decide how large a product it will be profitable for the business men to turn out.
The net product is the amount by which this actual production exceeds its own cost, as counted in terms of subsistence, and including the cost of the necessary mechanical equipment; this net product will then approximately coincide with the annual keep, the cost of maintenance and replacement, of the investors or owners of capitalised property who are not engaged in productive industry; and who are on this account sometimes spoken of as the "kept classes," Indeed, it would seem that the number and average cost per capita of the kept classes, communibus annis, affords something of a rough measure of the net product habitually derived from the community's annual production.
The state of the industrial arts, therefore, is the indispensable conditioning circumstance which determines the productive capacity of any given community; and this is true in a peculiar degree under this new order of industry, in which the industrial arts have reached an unexampled development. The same decisive factor may also be described as "the community's joint stock of technological knowledge." This common stock of technological knowledge decides what will be the ordinary ways and means of industry, and so it decides what will be the character and volume of the output of product which a given man power is capable of turning out. Evidently no man power and no working population can turn out any annual product without the use of something in the way of technological knowledge, that is to say some state of the industrial arts. The working community is a productive factor only by virtue of, and only up to the limit set by, the state of the industrial arts which it has the use of. The contrast of industrial Japan or of industrial Germany before the middle of the nineteenth century and after the close of the century will serve for illustration; that is to say before and after those peoples had come in for the use of the technology of the machine era. The disposable excess of the yearly product over cost is a matter of the efficiency of the available state of technological knowledge, and of the measure in which the working population is put in a position to make use of it. These, of course, are obvious facts, which it should scarcely be necessary to recite, except that they are habitually overlooked, perhaps because they are obvious.
The Industrial Revolution of the eighteenth century was a revolution in the state of the industrial arts, of course; it was a mutation of character in the common stock of technological knowledge held and used by the industrial population of the civilised countries from that time forward. The shift from the older to the new order of industry was of such a nature as to call for the