Part 9

In the Economic realm all human exertion is usually and appropriately distinguished by the technical term “Labor.” This Economic term for human exertion in the production of satisfactions for human wants has been much abused by colloquial interpretations. So interpreted, Labor is often limited in meaning to the exertions of persons hired in “lower class” pursuits for fixed “wages.” For somewhat “higher” grades of service, “salaries” instead of “wages” are paid. For self-employers still other terms are colloquially used, such as “profits” for the services of merchants and manufacturers and contractors; “fees” for the services of lawyers and physicians; “commissions” for the services of salesmen and brokers; and “discounts” for the services of bankers. Those verbal variations are of course admissible for such secondary purposes as private business may require; but for fundamental or general Economic distinctions which concern the whole human family, they are recklessly undiscriminative and hopelessly confusing. This lack of discrimination is attributable to a tendency in Economic study toward devotion to infinite detail regardless of precise generalization.

The result is a confusion of fundamentally different objects in messy categories, such as Labor with Labor-products; such as Labor-products with Natural Resources; such as income from Natural Resources with income from Labor--as, for instance, “Land” (Natural Resources) with “Capital” (Artificial Objects). It is like thinking of oil and water as a chemical compound when they happen to be in the same receptacle.

Fundamental conclusions in Economics cannot be based upon unassorted details. Students must concentrate their study upon the big facts, the Basic Facts, those primary categories which distinctively classify the whole swarm of secondary facts. Well enough it may be not to start out with assumed principles, nor with the scientific substitute known as “hypotheses;” but all rational study of Economics must begin with the Basic Facts and proceed thence to a consideration of details with reference to their basic relations.

The distinctive phase of the present Lesson with reference to human exertion is exertion of the Economic type. Whatever its kind as matter of secondary classification, all human exertion comes within the meaning of the comprehensive Economic term for human service, which, as already stated, is Labor.

No more truly in the Labor category are the services of “wage-workers” than are those of farmers, of manufacturers, of merchants, of brokers, of bankers, of architects, of lawyers, of physicians, of engineers, of authors, publishers, teachers, or the services of any other useful workers who participate in the intricate processes of Economic production. All are within the Labor category. Be the Economic service whatever it may which any human being--from inventor to chattel slave--contributes to the satisfaction of human wants, such service belongs in the same basic category with every other Economic service. Consequently, it must be identified in fundamental Economic classification by the same technical term.

What term may be best for that purpose is of minor importance, if of any importance at all, since names are for identification rather than description. Consequently, the technical term Labor, adopted long ago by Economists of the highest rank to identify human service in Economics, is fully justified regardless of its descriptive qualities. Even as a descriptive term, what other word could better identify human service as a whole?

Among the outstanding minor classifications of Labor is Business, and to this another attaches which some advanced students in Economics classify by itself fundamentally. The latter is the service of the “entrepreneur” or “enterpriser.” As a secondary classification this distinction is probably useful; but for comprehensive Economic study it is as useless as “carpenter” or “bricklayer” would be. Worse yet, it is misleading.

The “enterpriser” is a worker whose compensation for service is not fixed but depends upon the profitableness of the enterprise he pursues, which may be any business venture from mining or manufacturing to merchandizing, and in any capacity from employer seeking “profits” to salesman on “commission.” To eliminate this type of Economic service from the fundamental Labor category in Economic science is not only useless and misleading but also absurd. The fact that the “enterpreneur’s” service may or may not prove profitable to himself--the fact, in other words, that when he enters upon an enterprise he “takes chances” as to compensation--does not alter the Economic character of his functioning. He is none the less nor any the more in the Man category of Economics in contradistinction to the Natural Resource category and the Artificial Objects category. The only Economic difference, essentially, between him and the “common laborer” or “wage-worker”--except that one may be more serviceable than the other, individual for individual--is that the compensation of the “common laborer” or “wage-worker” is nominally secured by contract, whereas the “enterpriser’s” is contingent; and this difference is not fundamental. To take the “enterpriser” out of the Labor category in Economics by assigning him to a fourth fundamental category, is to trifle with Economic classifications. Why extend the basic categories of Economics from Natural Resources, Artificial Objects and Man, to Natural Resources, Artificial Objects, Man and Enterprisers?

A similar classification of Business itself--which, by the way, is usually managed by “enterprisers”--would likewise be absurd and trifling as well as confusing. What is legitimate Business but human service? And what else in Economic classification fundamentally can human service be but Labor? Business is in the Man class of Economics in contradistinction to the Natural Resource class and the Artificial Objects class. No other fundamental classifications are possible. Consequently, the activities of Business classify themselves naturally in the domain of Economics as Labor.

And so of the professions.

So, too, of every other kind of human service in the Productive Process, whether the service take on such direct forms of Production as making Artificial Objects and such as delivering them from hand to hand or place to place, or such indirect forms as promoting the comfort, the enjoyment, the health, the education, the cleanliness or what not (provided it be Economically legitimate), of such human workers as literally do make or deliver Artificial Objects. All are in the Labor category.

Labor comprises, too, the serviceable operations of partnerships as such; also of corporations, of chambers of commerce, of labor unions; the services of schools and churches and theaters and social clubs; of political parties and religious societies--every kind of corporate service, in short, including the service of governments--to the extent that such service contributes, in addition to the contributions of its constituents in their individual capacities, to the production of Artificial Objects.

And Production--let the reference to this fact be not overlooked--comprises Delivery throughout the whole Productive Process to and including its termination in delivery to ultimate consumers. Railway workers and sailors and storekeepers and household servants and waiters at hotels and restaurants and all their Economic associates from employer to “menial,” are producers as truly as are farmers, mechanics or manufacturers.

Human services of the corporate type, as well as those of the individual distinctively, are too numerous and too intricately woven together to permit of detailed consideration here. It is enough to note that far and away as some of them may at a glance seem to be from the Productive Process in Economics, they will be found upon intelligent inquiry--except as they may be more or less perverted in operation--to be in the Economic category of Labor. That is to say, they are human factors in the Production of Artificial Objects from and upon Natural Resources.

One kind of corporate service, a comprehensive kind, should perhaps be given brief special consideration for the double purpose of illustrating the Productive functions of every variety of corporate service and of explaining the Economic characteristics of that outstanding one of all. This particular kind is Government.

The “business” of Government, to use a colloquialism, the Labor of Government, to use the technical Economic term, is comprehensive and effective in the Productive Process to the degree--a reservation that applies to all other subclassifications of Labor, from the lowest grade of “hired man” to the most powerful partnership or corporation, from the most awkward apprentice to the shrewdest business “enterpriser,”--that its functions are wisely and fairly devoted to the task.

Governments are legislative, executive and judicial agencies of social wholes. It is their function to contribute service to the production of Artificial Objects by preserving public order, defining and protecting private rights, distinguishing and conserving common rights, and managing or providing for the management of common affairs. To the degree that governments faithfully exercise their legitimate public functions and refrain from interfering with legitimate private functions, they contribute to the Productive Process. This is demonstrated by observable Economic results. Wherever Government approximates a realization of its functions, Economic conditions are manifestly better than where it neglects or abuses them. Evidently, then, Government is a form of human service which, like all other human service forms, belongs as an Economic factor in the Labor category.

And as with Governments, so is it with all other organizations in so far as their organic activities tend to promote good order, fair dealing, righteous social adjustments, peace, and general Economic prosperity.

The essential considerations with reference to Labor may be compactly summarized in these terms: (1) Labor can create nothing; it can only produce, by altering the forms and locations of natural substances. (2) Nothing but Labor can so produce. (3) Labor is therefore the sole directing factor in the production of Artificial Objects from and upon Natural Resources.

II. NATURAL RESOURCE FACTORS

In the foregoing discussion of the relation of Labor in its broad Economic meaning to the Productive Process, it has been necessary, as a precaution in the interest of clear thinking, to give warning that the technical term Labor is often blurred in its significance by colloquial or business interpretations. A like warning is necessary with reference to the technical term for Natural Resources. This term, adopted long ago and quite appropriate and distinctive, is Land.

If it be said that Labor applied to Land produces Artificial Objects, the Economic meaning is the same precisely as if it were said that Artificial Objects are produced by Man from and upon Natural Resources. But all rational Economic meaning departs from the statement if indefinite colloquialisms or loose business terms be substituted for the precise technical terms.

Yet the technical term Land, like the technical term Labor, suffers in significance from a variety of colloquial and indefinite business interpretations. Indiscriminately it may mean open prairie land, or improved farms, or vacant building-lots, or buildings and the lots on which they stand, or all of them together. The absurdity of such undiscriminating interpretations is obvious to any one who reflects upon the significance of the three Basic Facts of Economics--Man, Natural Resources and Artificial Objects.

Such colloquial and business-habit confusions of the technical Economic term Land, like similar confusions with reference to the technical Economic term Labor, often mislead advanced students of Economics as well as “the man on the street.” In any serious consideration of the Productive Process it is of the utmost importance that the Basic facts be kept distinctively and definitely in mind.

As Labor in Economics means service by and for Man, and nothing else, so Land in Economics means neither more nor less than any and all Natural Resources. It is the technical Economic term for the Natural Resource factor in the Productive Process.

Without Land, Labor would be powerless to produce Artificial Objects. But Land is abundant in all varieties. Trees grow in forests, minerals repose in the earth, the soil offers itself to the farmer, the sea to the sailor, solid ground to the builder, flowing streams to all. Together with the winds, the lightning, the snow, the rain and all the other subtle and mysterious forces of Nature, those Natural Resources respond freely to the multifarious energies, the broadening knowledge of natural law, and the intensifying skill of Labor. They are among the natural substances and forces which are comprehended in the word Land as a technical Economic term.

As Labor is the active factor in the production of Artificial Objects, so Land is the corresponding passive factor.

III. ARTIFICIAL OBJECTS