Industrial Organization 1.Writers on social science from the time of Plato downwards have delighted to dwell on the increased efficiency which labour derives from organization.But in this, as in other cases, Adam Smith gave a new and larger significance to an old doctrine by the philosophic thoroughness with which he explained it, and the practical knowledge with which he illustrated it.After insisting on the advantages of the division of labour, and pointing out how they render it possible for increased numbers to live in comfort on a limited territory, he argued that the pressure of population on the means of subsistence tends to weed out those races who through want of organization or for any other cause are unable to turn to the best account the advantages of the place in which they live.
Before Adam Smith's book had yet found many readers, biologists were already beginning to make great advances towards understanding the real nature of the differences in organization which separate the higher from the lower animals; and before two more generations had elapsed, Malthus' historical account of man's struggle for existence started Darwin on that inquiry as to the effects of the struggle for existence in the animal andvegetable world, which issued in his discovery of the selective influence constantly played by it.Since that time biology has more than repaid her debt; and economists have in their turn owed much to the many profound analogies which have been discovered between social and especially industrial organization on the one side and the physical organization of the higher animals on the other.In a few cases indeed the apparent analogies disappeared on closer inquiry: but many of those which seemed at first sight most fanciful, have gradually been supplemented by others, and have at last established their claim to illustrate a fundamental unity of action between the laws of nature in the physical and in the moral world.This central unity is set forth in the general rule, to which there are not very many exceptions, that the development of the organism, whether social or physical, involves an increasing subdivision of functions between its separate parts on the one hand, and on the other a more intimate connection between them.(1*) Each part gets to be less and less self-sufficient, to depend for its wellbeing more and more on other parts, so that any disorder in any part of a highly-developed organism will affect other parts also.
This increased subdivision of functions, or "differentiation," as it is called, manifests itself with regard to industry is such forms as the division of labour, and the development of specialized skill, knowledge and machinery: while "integration," that is, a growing intimacy and firmness of the connections between the separate parts of the industrial organism, shows itself in such forms as the increase of security of commercial credit, and of the means and habits of communication by sea and road, by railway and telegraph, by post and printing-press.
The doctrine that those organisms which are the most highly developed, in the sense in which we have just used the phrase, are those which are most likely to survive in the struggle for existence, is itself in process of development.It is not yet completely thought out either in its biological or its economic relations.But we may pass to consider the main bearings in economics of the law that the struggle for existence causes those organisms to multiply which are best fitted to derive benefit from their environment.
The law requires to be interpreted carefully: for the fact that a thing is beneficial to its environment will not by itself secure its survival either in the physical or in the moral world.
The law of "survival of the fittest" states that those organisms tend to survive which are best fitted to utilize the environment for their own purposes.Those that utilize the environment most, often turn out to be those that benefit those around them most;but sometimes they are injurious.
Conversely, the struggle for survival may fail to bring into existence organisms that would be highly beneficial: and in the economic world the demand for any industrial arrangement is not certain to call forth a supply, unless it is something more than a mere desire for the arrangement, or a need for it.It must be an efficient demand; that is, it must take effect by offering adequate payment or some other benefit to those who supply it.(2*) A mere desire on the part of employees for a share in the management and the profits of the factory in which they work, or the need on the part of clever youths for a good technical education, is not a demand in the sense in which the term is used when it is said that supply naturally and surely follows demand.
This seems a hard truth: but some of its harshest features are softened down by the fact that those races, whose members render services to one another without exacting direct recompense are not only the most likely to flourish for the time, but most likely to rear a large number of descendants who inherit their beneficial habits.
2.Even in the vegetable world a species of plants, however vigorous in its growth, which should be neglectful of the interests of its seeds, would soon perish from the earth.The standard of family and race duty is often high in the animal kingdom; and even those predatory animals which we are accustomed to regard as the types of cruelty, which fiercely utilize the environment and do nothing for it in return, must yet be willing as individuals to exert themselves for the benefit of their offspring.And going beyond the narrower interests of the family to those of the race, we find that among so-called social animals, such as bees and ants, those races survive in which the individual is most energetic in performing varied services for the society without the prompting of direct gain to himself.
