The busi ness man stands at the helm of industry. Qualities necessary to success judgment. the occasional call of his customers. He is liable, in consequence, to be frequently without any. What he earns, therefore, while he is employed, must not only maintain him while he is idle, but make him some compensation for those anxious and desponding moments which the thought of so precarious a situation must sometimes occasion. [Thus masons and bricklayers earn from one half more to double the wages of common laborers.] . . . No species of skilled labor, however, seems more easy to learn than that of masons and bricklayers. . . . The high wages of those workmen, therefore, are not so much the recompense of their skill, as the compensation for the inconstancy of their employment... 54. Some factors influencing profits 1 We have briefly considered some of the factors which influence the payment of rent to the land owner, interest to the capitalist, and wages to the laborer. We have, last of all, to notice some of the influences which help to determine the amount of profits going to the entrepreneur or business man. The business man receives the proceeds of the enterprise which he conducts, and in turn distributes the shares going to the land-owner, the capitalist and the laborers. What is left, over and above any other expenses which he may have incurred, he keeps as profits. Whether profits are large or small will depend partly upon the characteristics of the business man. The qualities of a successful business man are discussed by Professor Taussig in the following language: The business man of the first order must have imagination and judgment; he must have courage; and he must have administrative capacity. Imagination and judgment, these are needed for the generalship of industry. The successful business man must be able to foresee possibilities, to estimate with sagacity the outcome in the future. Especially is this necessary in new ventures; and it is in new ventures that the qualities of generalship are most called for, and the greatest profits reaped. Countless schemes for money-making are being con 1 From Frank W. Taussig, Principles of Economics. The Macmillan Co., 1915. Vol. II, pp. 163-166. stantly urged on the business community, most of them visionary. Among them the captain of industry will pick out those that really have possibilities, will reshape and develop them, and bring them eventually to success. Sometimes he errs; there could be no great successes unless there were occasional failures; but the right sort of man has a handsome balance of profitable ventures. Courage and some degree of venturesomeness are obviously Courage essential to the successful business man: so much follows from that assumption of risks which is of the essence of his doings. But courage and imagination and personality will not avail in the end unless there be sound judgment. and It ability. Executive ability is probably less rare than the combination of executive judgment with imagination. But it is by no means common. calls, on the one hand, for intelligence in organization, on the other hand for knowledge of men. The work must be planned, and the right man assigned to each sort of work. The selection of efficient subordinates is of the first importance. A business man almost always has to do with the physics and mechanics of industry. Every director of large enterprises must choose between competing mechanical dev ces, must watch the course of invention, must be in the fore with improvements. . . . In selecting among the numberless projects constantly pressed on his attention, the business man exercises one of his most characteristic functions. Too much stress must not be laid on any enumeration of the business man's qualities. All sorts and conditions of men prove to have the qualities needed for pecuniary success, the cautious and the daring, the sober and the enthusiastic, the loquacious and the taciturn, those given to detail and those negligent of detail. The different aptitudes appear in every kind of combination. . . . No one key opens the doors to success. . . . The variety among the men who prove to have the money-making capacity is a standing cause of wonder. But no one key opens the door to success. Among all these different sorts of persons, a process very like The process of natural selection is at work. To predict who has in him the qualities trial among for success is much harder than is prediction with regard to most business occupations. The aptitudes and abilities which must be possessed by one who would succeed in law, in medicine, in engineering, in men. teaching, show themselves at a comparatively early age, and a friendly observer can often give good advice as to the choice of these professions. But the qualities that make for success in business management not infrequently develop late, or at least show themselves late and only under actual trial. Surprises are more common in this walk of life than in any other. A constant process of trial is going on. Those who have the requisites for success come to the fore, those who lack in some essential drop to the rear. . . . Questions on the foregoing Readings 1. What is the most difficult and important problem in the field of economics? 2. Why was it necessary for the people who lived on farms in colonial times to be self-sufficing? 3. Name three classes of articles which were produced by the farmer and his family in colonial times. 4. Describe briefly the making of clothing on the colonial farm. 5. Give two reasons why the problem of distribution was not important in colonial times. 6. What, in brief, is the relation of the division of labor to the problem of distribution? 7. What is Professor Carver's definition of the problem of distribution? 8. What are the two kinds of division of labor mentioned by Professor Carver? 9. In connection with which of these is the problem of distribution most important? 10. Into how many classes is it customary to classify those who take part in the contemporaneous division of labor? II. Define rent. 12. Explain the importance of fertility in agricultural land. 13. Explain the importance of location with respect to land values. 14. What was one reason why some people formerly objected to the payment of interest? 15. What is the most familiar ground for differences in the return from different investments? 16. What is the relation of interest to the danger of accident? 17. Explain why the interest rate is different in different sections of the United States. 18. Why is the question of wages considered by some persons as being of more social importance than the question of rent or interest? 19. What examples does Adam Smith give to show that wages may vary with the ease or hardship, cleanliness or dirtiness, of work? 20. Explain the principle upon which is founded the difference be tween the wages of skilled labor and those of common labor. 21. What does Adam Smith mean by saying that the wages of labor in different occupations vary with the constancy or inconstancy of employment? 22. Explain the relation of imagination and judgment to success in business. 23. Is executive ability common or uncommon in business? Explain. 24. To what extent is a business man concerned with the physics and mechanics of industry? 25. Why should we not place too much stress upon any enumeration of the business man's qualities? Nature of the capi talistic System. The beginnings of private property. Extension of property rights. CHAPTER X BASES OF THE CAPITALISTIC SYSTEM 55. The evolution of private property 1 which We are accustomed to speak of capitalism as constituting an industrial "system." The term "system" is thus applied because capitalism not only exhibits a considerable regularity of outline, but in addition shows a strong tendency to function in conformity with the basic laws of economics. The capitalistic system, as it may be called, is based upon certain fundamental institutions and principles. Of these bases of capitalism, the right of private property is one of the oldest and most important. The evolution of private property is described by Professor Gide in the following passage: At the present time all wealth that can be appropriated excludes the air, the sea, running waters - may become the object of private property rights. In civilized communities almost all wealth constitutes some one's private property. This, however, has not always been the case. There was a time when the scope of private property was confined to a few objects. There is no doubt that at first it comprised only those kinds of wealth that in civilized countries have long ago ceased to be the object of property rights, namely, slaves and women. It also included objects of immediate personal use, such as jewels, weapons, horses, the individual ownership of which was evidenced by the custom of burying them with their owner. Later, property came to include the home, not as individual property, but as family property, - because the home was the abiding place of the household gods, and these gods belonged to the family. Still later, it extended to a portion of the land. . . Different kinds of property have successively played a dominant 1 From Charles Gide, Principles of Political Economy. D. C. Heath & Co., 1903; pp. 430-436. |