Industrial Organization Continued.
Business Management 1.Hitherto we have been considering the work of management chiefly in regard to the operations of a manufacturing or other business employing a good deal of manual labour.But we now have to consider more carefully the variety of the functions which business men discharge; the manner in which they are distributed among the heads of a large business, and again between different classes of business which co-operate in allied branches of production and marketing.And incidentally we have to inquire how it occurs that, though in manufacturing at least nearly every individual business, so long as it is well managed, tends to become stronger the larger it has grown; and though prim?facie we might therefore expect to see large firms driving their smaller rivals completely out of many branches of industry, yet they do not in fact do so.
"Business" is taken here broadly to include all provision for the wants of others which is made in the expectation of payment direct or indirect from those who are to be benefited.It is thus contrasted with the provision for his wants which each one makes for himself, and with those kindly services which are prompted by friendship and family affection.
The primitive handicraftsman managed his whole business for himself; but since his customers were with few exceptions his immediate neighbours, since he required very little capital, since the plan of production was arranged for him by custom, and since he had no labour to superintend outside of his own household, these tasks did not involve any very great mental strain.He was far from enjoying unbroken prosperity; war and scarcity were constantly pressing on him and his neighbours, hindering his work and stopping their demand for his wares.But he was inclined to take good and evil fortune, like sunshine and rain, as things beyond his control: his fingers worked on, but his brain was seldom weary.
Even in modern England we find now and then a village artisan who adheres to primitive methods, and makes things on his own account for sale to his neighbours; managing his own business and undertaking all its risks.But such cases are rare: the most striking instances of an adherence to old-fashioned methods of business are supplied by the learned professions; for a physician or a solicitor manages as a rule his own business and does all its work.This plan is not without its disadvantages: much valuable activity is wasted or turned to but slight account by some professional men of first-rate ability, who have not the special aptitude required for obtaining a business connection;they would be better paid, would lead happier lives, and would do more good service for the world if their work could be arranged for them by some sort of a middleman.But yet on the whole things are probably best as they are: there are sound reasons behind the popular instinct which distrusts the intrusion of the middleman in the supply of those services which require the highest and most delicate mental qualities, and which can have their full value only where there is complete personal confidence.
English solicitors however act, if not as employers or undertakers, yet as agents for hiring that branch of the legal profession which ranks highest, and whose work involves the hardest mental strain.Again, many of the best instructors of youth sell their services, not directly to the consumer, but to the governing body of a college or school, or to a head master, who arranges for their purchase: the employer supplies to the teacher a market for his labour; and is supposed to give to the purchaser, who may not be a good judge himself, some sort of guarantee as to the quality of the teaching supplied.
Again, artists of every kind, however eminent, often find it to their advantage to employ someone else to arrange for them with customers; while those of less established repute are sometimes dependent for their living on capitalist traders, who are not themselves artists, but who understand how to sell artistic work to the best advantage.
2.But in the greater part of the business of the modern world the task of so directing production that a given effort may be most effective in supplying human wants has to be broken up and given into the hands of a specialized body of employers, or to use a more general term, of business men.They "adventure" or "undertake" its risks; they bring together the capital and the labour required for the work; they arrange or "engineer" its general plan, and superintend its minor details.Looking at business men from one point of view we may regard them as a highly skilled industrial grade, from another as middlemen intervening between the manual worker and the consumer.
There are some kinds of business men who undertake great risks, and exercise a large influence over the welfare both of the producers and of the consumers of the wares in which they deal, but who are not to any considerable extent direct employers of labour.The extreme type of these is the dealer on the stock exchange or the produce markets, whose daily purchases and sales are of vast dimensions, and who yet has neither factory nor warehouse, but at most an office with a few clerks in it.The good and the evil effects of the action of speculators such as these are however very complex; and we may give our attention at present to those forms of business in which administration counts for most and the subtler forms of speculation for least.Let us then take some illustrations of the more common types of business, and watch the relations in which the undertaking of risks stands to the rest of the work of the business man.
3.The building trade will serve our purpose well, partly because it adheres in some respects to primitive methods of business.Late in the Middle Ages it was quite common for a private person to build a house for himself without the aid of a master builder; and the habit is not even now altogether extinct.
