The state of bewilderment and sense of futility that hang like a pall over the peoples of Christendom are commonly laid to the Great War and the strange peace, conceived in terms of mutual defeat, that marked its provisional close. These events are viewed as the immediate causal circumstances that gave rise alike to the decade of golden opportunities and its collapse in the relentless retreat of `values' that continue to march past day after day in columns of three--`high,' `low,' `close.'
But, as everyone knows, there were more remote events out of which the Great War and the unstable peace unfolded. And so, historians, statesmen, philosophers, economists, bankers, business men, and politicians explore the background in search of the `fundamental' causes which they discuss in conflicting accounts of their explorations. Thus we are buffeted by events and by currents of opinion which bewilder and confuse.
Living in the twentieth century, these explorers of the past would go to their work under guidance of the twentieth century point of view. But it happens in this fourth decade of the twentieth century that the current point of view covers an extremely wide area of thought with rapidly shifting frontiers. Within its boundaries the ancient principles (habits of thought) which guided men's action in the days of pagan antiquity still do service. We rationalize and debate after the manner of the schoolmen of the Middle Ages: we think and act under the principles of right, equity, propriety, duty, belief, and taste as stabilized in the days of the handicraft guilds of Central Europe.
But during the last century and a half a series of ever-changing material factors unfolded at an accelerating rate within the field of industrial activity. Coincident with the introduction of these swiftly moving technological changes there developed, both independently and consequent upon their introduction, a new matter-of-fact way of looking at facts and events and of dealing with an ever-increasing range of problems--the modern, scientific point of view.
The eighteenth century saw the introduction of the powered machine, which was first conceived as an extension of the hand operations of craftsmen. The close of the nineteenth century witnessed the machine process occupying a dominant place in the technological scheme and reshaping men's habits and methods of thinking. The turn of the century marked the introduction and the accelerating rise, under guidance of science, of the modern, continuous technological processes of production. In this new industrial order the machine was no longer conceived as an extension of the hand tool; it became a moving mechanical element in a sequence of events, the course and rate of which had been arranged and ordered in strict accordance with the exact quantitative calculations of science. Men in the fields of scientific inquiry and technological research, the same as those directly engaged in technological employment, gradually ceased to think in terms of workmanlike efficiency of a given cause working to like effect: they began to think in terms of process.
The work of accounting for the present state of affairs falls, naturally, to those whose interest and preoccupations revolve about the institution of absentee ownership with our system of pecuniary evaluation and pecuniary canons of taste. They explain the present in terms of this institution, its system of evaluation, and the range of faiths and beliefs that stand to support it. It follows that these men who so attempt to account for the present situation, as well as those who are called upon to do something about it, are drawn from occupations most widely removed from the technological and scientific thought and activities which serve to mark off and distinguish the last half century from the entire period of time that lies in the background.
But the men of science and of technology are likewise concerned with the present precarious state of the common welfare and the general atmosphere of futility, and it is not to be wondered at that they should turn their attention to the causal circumstances out of which the present condition of affairs unfolded. Nor is it to be wondered at that they should interest themselves in what should be done about it.
They read the accounts of historians, statesmen, and economists with their constant references to a `normal' course of things. To the scientist, this insistence upon a `normal' course of things or a beneficent run of events bars out any serious consideration of the explanations offered. Nor do these scientists and technologists understand why all these explorers should forever busy themselves with the facts of ownership and pecuniary values while ignoring altogether the accelerating rate of change that is going on in the processes of technology. They do not understand the current accounts of what has happened or the proposals as to what should be done about it. For the entire range of facts and events dealt with lies completely outside the range of facts and events with which they are concerned in their own accounts, viz., the accelerating rate of change in the state of the industrial arts and the corresponding accelerating rate of energy conversion. To these men of matter-of-fact and of quantitative measurements, with their knowledge of our energy resources and our ways and means of turning them to the account of the common welfare, the current proposals looking toward a return to better times are utterly beside the point.
A cleavage has arisen within the field by which things and events are apprehended. The words, phrases, and concepts of modern science and of technology which pass current among men engaged in scientific research and in technological production have no meaning whatsoever to those engaged in business and the affairs of the market, or who direct the financial affairs of corporations, states, or nations. And by the same token, to the men accustomed to the exact quantitative measurements of materials and work--that is to say, to the quantitative measurements of energy resources and energy conversion' and to the men who deal with the problems of balanced load, the current discussions--of `value,' of fluctuating prices, of the gold standard, of changing interest rates, of items of pecuniary wealth which are at the same time items of debt--are merely discussions looking toward a readjustment of the factors which prevent them from doing their work. For the modern technologist does not view production as a process that terminates at a point which may be designated as F. 0. B. plant. Production would be a meaningless activity if the goods produced could not be utilized. Hence, they view the matter of production and distribution as a single problem-the technological problem of (quantitatively) balanced load.
Through endless books, magazines, newspapers, and reports of conferences and discussions we are familiar with what the statesmen, bankers, economists, business men, and philosophers have to say as to what brought on this depressing state of affairs and as to what should be done about it. While men in the field of science have occasionally explored the general field of the past and have voiced opinions as to the present, the men in technology have had little to say. Since the technologist occupies the center of the stage in the field of modern industry, we may well ask him to indicate what he finds when he explores the background, and what he finds when he looks in his matter-of-fact way at current events.
When the technologist explores the past, his interest centers, naturally, upon items of evidence which disclose the methods--the techniques--through which man has turned the things of his environment to account. The records of archaeology yield relatively little that he can use; for men in this field have been preoccupied with other matters than the state of the industrial arts, quantitative measurements of the energy resources available in a given case, and the quantitative relation between the rates at which man has been able to convert energy to use forms. But even so, from the fragments of archaeological explorations and the more recent explorations of scientists, he has been able to put together the outlines of a quantitative record of the changing states of the industrial arts and men's unfolding ability to turn the energy resources of his environment to account. And the outstanding feature of that record is the controlling nature of the prevailing technology at any given time upon the course of subsequent events--that is to say, upon social change. From the viewpoint of the technologist, man has experienced but few sweeping social changes--that is, few conversion changes in the rates of energy; and these are widely separated in point of time. The domestication of the crop plants and the development of them in a dim, historic past thrust man into a larger control of his environment--that is, to use a technological term, into a new energy state. In the same way, the domestication of animals gave him new powers to command and carried him a little further along the way of control. The introduction of these factors, each in its turn, wrought revolutionary changes in the social scheme under which he had lived.
But following these two technological changes man did little from the dawn of history to the middle of the eighteenth century to increase his powers or to alter his energy state. What man could produce during that long period was largely a matter of what he could produce with his hands. Vast stores of energy were available then, as now, but his use of them--his ability to convert energy to use forms--was largely limited to the rate at which he could turn the energy of the food which he consumed into work performed by hand. Man's own body, whether free or slave, was the only energy conversion engine available over a period of countless centuries.
Up to the middle of the eighteenth century the number of man hours required to cultivate an acre, or to quarry a yard of stone or to transport it, or to perform any given piece of work, remained approximately the same as was the case of 6,000 years earlier. We are in the habit of thinking of this stretch of some sixty centuries as one of ever-changing social schemes. It is true, forms of government passed, one after the other; and cultural patterns ran their course from Ancient Egypt, Greece, and Rome, to the Middle Ages and the Renaissance of Europe. But to the technologist these sixty centuries cover a steady state of man's ability to deal with the material factors of his environment. They cover a steady state in the rate of energy conversion.
For, during the entire period, the standard of living--the common welfare--was definitely, quantitatively limited to the work that man could do with his hands, tools, and a few crude machines that added little to his power.
That these sixty centuries of recorded history constitute a steady state in respect to the industrial arts, technology and the rate of energy conversion and the social and political schemes that unfolded during the period, will be more readily apprehended when we deal, quantitatively, with the magnitudes of energy resources available during the entire period, and the rapidly accelerating rate of change that has taken place during the last century and a half.
Before we may proceed with the technologist to an examination of the present social structure it will be necessary to establish an understanding as to the meaning of certain terms that he constantly uses and as to what it is that he rates as important.
When he looks at the world he notes that everything that moves, including the human body, does so by an expenditure of energy which may be expressed in terms of calories or joules. An automobile does work because it is able to utilize the heat energy contained in gasoline. A waterwheel turns by utilizing the energy contained in the water in motion at a waterfall. The human body runs by means of the energy contained in the food it `burns.' All of these are measurable in calories or joules. And he rates this as a fact of great importance.
All forms of heat-transfer, or of work done, are said to involve a transfer of energy-energy being the capacity for doing work. Thus a waterfall is continuously expending energy regardless of whether this energy is utilized or not. If a pound of coal is burned, the energy in that coal may or may not be used to drive an engine or to do other work. But whether or not work is done, after the coal is burned the energy it contained has been irretrievably spent. It is through the expenditure of energy that we convert all raw materials into use forms and,operate all the equipment which we use. It is through the expenditure of energy that we live.
Now, we can measure the heat energy contained in a pound of coal by burning the coal in a tightly closed vessel surrounded by water and noting the rise in temperature of the water.
One kilogram calorie of heat is the amount of heat required to raise the temperature of one kilogram (1 kilogram = 2.2 lbs.) of water one degree centigrade.
Likewise, the unit of work is the erg or the joule. One joule is the amount of work required to lift a one pound weight to the height Of 0.7373 feet. One joule is equal to ten million ergs.
Also, there is a definite relation between work and heat or between joules and calories. If we let a one pound weight fall through a height of 0.7373 feet in such a manner that all of its energy is converted into heat--instead of turning a pulley or lifting a weight-- one joule of work is also done. This, in turn, will produce enough heat to raise 0.239 grams of water 1 degree centigrade, or heat equivalent to 0.239 gram-calories (1 gram-calorie = 1/1000 kilogram-calorie).
It is in these terms that the technologist thinks when he considers the `standard of living,' rather than in dollars, pounds and shillings, francs, marks, or rubles.
In all social systems there are various forms and amounts of motion. Stated positively, social change involves a change in the technique whereby people live. We shall define as a social steady state any society in which the quantity per capita of physical motion, or energy expended, of the whole society shows no appreciable change as a function of time. Such a society would be one in which the methods for the production of commodities and operation of services do not essentially change.
On the other hand, a society wherein the methods of obtaining a livelihood, or the average quantity of energy expended per capita, undergo appreciable change as a function of time, is said to exhibit social change.
Since social change has been defined above in terms of physical action, then any method of its measurement must likewise be physical and all social activity whether in a steady or changing state must obey the laws of physics and must likewise be subject to the limitations imposed by those laws.
The fundamental physical concept for relating and measuring all forms of physical activity is that of work, or energy expended. By work the physicist means the application of energy to mass to produce a resultant change of state.
Upon this basis we can measure quantitatively the physical status of any given social system. Take any non-machine society: The total energy used by that society is the energy of the food eaten by man and his domestic animals, and the fuel burned. Man himself is the chief engine. The energy per capita is this total amount expended divided by the population.
Prior to the advent of modern science and technology a little more than a century ago, it is doubtful whether any society had ever exceeded an extraneous energy consumption of 2,000 kilogram calories per capita per day. Since all human activity is determined, quantitatively, by the amount of energy consumed, we can truly say that all history, until recently, has not witnessed an appreciable social change, in the sense herein defined.
The steady state of any social system of the past was set up and limited as such because no nation in history possessed any other engine of energy conversion than that of the human being, limited in size from 125 to 200 pounds and in total output to 1,500,000 foot-pounds per eight hour day. The rate of doing work of the human engine laid down the limits of mechanical operation of any social unit possessing this type of engine alone. No change in the rate of work done in any social system was evident until after the advent of technology in the early nineteenth century. The introduction of other engines of energy conversion in the nineteenth century, and the discovery of new materials and new energy sources in the last hundred years, have brought about a change of rate impossible of envisagement in any social system founded on the human engine. Not until other energy resources became available through other engines of energy conversion was man in his engine category relieved from the age-long limitations of one of the lowest rates of output per weight for size we know of. The human engine in an eight hour day is only capable of producing work approximately at the rate of 1/10 horsepower during that time.
The first engine of energy conversion other than the human body, free or slave, that was of social significance, was the crude Newcomen atmospheric steam engine of 1712, of approximately seven horsepower. This engine reached its maximum in 177.2 in the Chasewater development with an energy conversion of 76 1/2 hp. Here is a 765-fold increase of rate over the human engine. In the late eighteenth century, Watt brought out the first true steam engine. This type reached its maximum in the 2,500 hp. Corliss at the Centennial Exhibition of 1876. The reciprocating engine of conversion reached its maximum rate of output in the marine triple-expansion development of the '90's. In this type the rate of energy conversion jumped to 234,000 times the rate of the human engine, as calculated on a twenty-four hour basis, for this engine can work three shifts every day.
The introduction of the turbine and the waterwheel brought in still newer types of energy conversion. While the first turbines ever made were less than 700 hp. per unit, and the first turbine ever installed in a central station was only 5,000 hp., they have risen in rated output until units of approximately 300,000 hp. are operated today--3,000,000 times the output of a human being on an eight hour basis. But the turbine runs twenty-four hours a day. Therefore the total output of the above turbine is 9,000,000 times the rate of output of the first engine of energy conversion socially used.
The first station turbine consumed 6.88 pounds of coal per kw. hour in 1903. By 1913 the central station coal consumption in the U. S. had fallen to 2.87 pounds per kw. hour; in 1929 the average was approximately 1.2; today, the more efficient stations are operating at less than 1 pound per kw. hour.
From 6.88 to less than one pound measures this rate of change in three decades.
Waterwheels were known to the ancients, but even in the eighteenth century, the most efficient size of waterwheels seemed to be limited to twenty feet in diameter, although larger ones were built. The famous pumping machine at Marly which worked the fountains at Versailles was driven by fourteen waterwheels which delivered 75 hp. in actual work, or not more than 5 hp. per wheel. The waterwheels of the Middle Ages and the ancients can be dismissed, therefore, as primitive toys, as their installation costs in most cases were not justified by the small increase in the energy conversion rate which they made possible. Their installation was not practical until the development by Fourneyron in 183.2 of his original 50 hp. turbine type wheel. In 1855 an 800 hp. turbine was installed in the Parisian water works at Pont Neuf. Thompson and Francis developed the crude reaction water turbine, but the perfection of this type of engine did not come until after the development of the steel industry and the discovery of electrical generation.
The water turbines installed in Power House #1 at Niagara Falls have risen in size from 5,000 hp. each in 1891 until today we build them over 60,000 hp. and could build 100,000 hp. units, were it necessary.
Just as we can say that the maximum rate of output of ancient Egypt rarely exceeded 150,000 hp: for eight hours on a basis of 1,500,000 adult workers, we can point out that prior to the first quarter of the nineteenth century of our own era, engines of conversion were under two hundred pounds in average weight with an output of 1/10 hp. per unit, per eight hour day.
When, only a century ago, the first significant change in the rate of energy conversion occurred, it marked the beginning of a social change, the magnitude and rate of which had never been dreamed of by a pre-nineteenth century brain. But once under way, wave after wave of technological development has swept the processes of each decade into yesterday's seven thousand static years. The first engine, developed by Newcomen, did not survive the century. The second change in energy conversion only survived a century to be replaced by a newer engine of higher output. For six thousand years of social history no change in the rate of doing work was effected, except that in the metabolism of the human engine of conversion due to dietary changes. Within the last hundred years we have multiplied the original output rate of that human engine by 9,000,000, in a modern energy conversion unit. Most of this 9,000,000 (or 8,766,000) has occurred in the last twenty-five years.
This tremendous acceleration in the rate of doing work has altered the entire physical complex of social existence. We are able to produce physical substances and forms impossible of production except where a tremendous energy input per day is available. We gather the materials and produce physical forms that could not have been attempted nor probably even envisaged in a social mechanism possessing only that low rate engine of conversion, the human being. This tremendous acceleration in the rate of doing work has reached a point at which the energy available is in such huge volume that we can affect transformations at continually accelerating rates proportional to the amount of energy consumed per given unit of time.
The social mechanisms of the past six thousand years had no means of energy conversion available other than the human body. When tillage was a matter of spading the soil, a man could spade about one-eighth of an acre per day of twelve hours, or at the rate of ninety-six man hours per acre. Today, the large tractor-drawn sixty disc or duck foot of modern power farming has reduced the man hours per acre to 0.088. Thus we have reached a rate of tilling soil which is more than eleven hundred times that of the human engine.
Brickmakers for over five thousand years never attained on the average more than 450 bricks a day per man; a day being over ten hours. A modern straightline continuous brick plant will produce 300,000 bricks a day with twenty men on the machine. Even a century ago in these United States one man produced not more than twenty-five tons of pig iron per year, while it took another man a year to produce eight hundred tons of iron ore. In 1929 in one pit we mined ore on the Mesabi Range at the rate of 20,000 tons per man per year and in six weeks moved a greater tonnage than that of the Khufu pyramid at Gizeh, while our best blast furnace technique has made it possible for thirty men working in crews of ten to produce 300,000 tons per annum, or for one man to produce at the rate of 10,000 tons of pig iron per annum.
In 1830 the United States had slightly over 12,000,000 population and was witnessing but the crude beginnings of new means of energy conversion; for at that time from coal and timber it was producing less than seventy-five trillion B.T.U. (British Thermal Units) per annum in order to drive its factories, its ships, and operate all other equipment. Nineteen twenty-nine saw the United States with a population of approximately 122,000,000--an increase of ten times; but its energy produced had risen to almost twenty-seven thousand trillion B.T.U. or 353 times the energy conversion from the coal and water power of 1830. Most of this increase has occurred since 1900, for in that year we only produced eight thousand trillion B.T.U. While our bituminous coal production has leveled off to slightly over 500,000,000 tons per annum, we have been consuming ever-increasing amounts of gas, oil, and hydroelectric power, tending, temporarily at least, to limit the total rate of coal consumption.
We are face to face with an immediate depletion of certain energy and mineral resources in combination with this rising productive capacity. We may very well ask ourselves where we shall obtain the iron ore of the future even if there were no other wastes involved, when we consider the annual depletion due to the production of 22,000,000,000 tin cans, most of which go to decorate our garbage dumps.
Assuming that we have the same number of oil consuming units (motor cars) as we have today, we may also ask where the oil is going to come from in the next ten or twenty years. Oil production rose from its discovery in 1859 to 64,534,000 barrels in 1900. In 1929 it had jumped to a billion barrels a year. Let us realize that the average oil pool drops 96 percent from flush flow within four years. Of the approximate 1,000,000 oil wells drilled on the North American Continent since 1859, oil is still coming from 323,000 wells, but less than 6,000, or about 2 percent, of the latter supply the bulk of our oil.
If one plots a graph of the production capacity expansion of any basic industry on this Continent, such as iron or steel, for the last 100 years, he will note that the industry showed no great development until about 1870. After 1870 and until the turn of the century the development of every basic industry increased at a rate which accelerated with time (in other words, the annual rate of increase of production was itself increasing with time).
Finally, in the development of each industry, a point was reached after which the rate of expansion became less each succeeding year-- the rate of production capacity expansion changed from a period characterized by an ever-increasing acceleration to one of an ever-decreasing acceleration.
The point on the curve at which this occurs is called the `point of inflection.' The point of inflection for American railroad development occurred in 1900. The inflection point on a composite curve, made up of the basic industries in the United States, occurred about the year 1921.
Similarly, if one plots the total number of plants or amount of physical equipment for any basic industry during the last hundred ears, he will note that the total number of plants increases with time until their total reaches a maximum. Then, with technological improvement and resulting quantity production methods, obsolescent equipment is abandoned and the total number of operating plants declines.
This is clearly illustrated, for instance, by the clay products industry. In 1849 there were 2,121 plants in the United States. The number increased to a maximum of 6,535 plants in 1889, and then by 1929 had declined to 1,749, or below the level of 1849, and all this with an increasing rate of production and an increase in total production capacity.
During the period of industrial development which we are considering, the number of man hours of human effort required per unit output was greatest one hundred years ago, and has declined steadily ever since, approaching the limit of zero in all our best practices. The total employment in a given industry began small and increased as the industry expanded until as a result of technological improvement and larger scale mechanization the rate of replacement of men by machines exceeded the rate of expansion, of the industry, at which time a maximum of employment was reached, and since when total employment has declined. It has been observed in the major industries that, wherever mechanization has taken place, employment or man hours tends to become an inverse function of the rate of total output and, after passing the peak, tends to decline proportionally to the decline of the energy per unit produced.
In 1920 the railroads of the country employed 2,160,000 men; in 1930 they employed 1,518,000 men; and in December 1931, 1,164,000 men. In 1929 the carriage of freight was 6.3 percent greater than in 1920.
The automobile industry reached its maximum employment, exclusive of body and accessory plants, in 1923, producing 4,180,450 units with 241,356 employees. In 1929, with 226,116 employees and with a total output of 5,621,715 cars, man hours per car fell from 1,291 in 1904 to 133 in 1923 and again to 92 in 1929.
The flour milling industry had 9,500 plants in 1899, which increased to a maximum of 11,700 mills in 1909, only to decline by 1929 to 4,022 mills. This industry had 32,200 wage earners in 1899, a maximum of 39,400 in 1914 and only 27,000 in 1929. The wheat ground in the meantime increased continuously from 471 million bushels in 1899 to 546 million bushels in 1929.
These are merely averages from industries selected at random. One of the more striking instances which might be considered is the A. O. Smith plant in Milwaukee with its output of 10,000 automobile chassis frames per day with 208 men in the plant, or the Corning electric lamp plant in New York with its output of 650,000 lamp globes per machine per day--an increase per man of 550 times that of the method previously employed.
After 1850 displaced workers were reabsorbed in the expansion of general industrial development. Machinery and equipment could be made only by hand-tool methods; consequently tremendous numbers could be reemployed. Today the development of new industry does not mean any considerable increase in national employment, except temporarily in its formative stages. The moment a new industry reaches the state of organization defined as complete mechanization or, in other words, when it becomes a technological mechanism, employment drops sharply, always tending to further decrease. The production of new equipment for a new industry today means no great change in the numbers employed in machine tool fabrication, as the same process of mechanization has occurred in this field as elsewhere.
All these changes have been made possible by the finding of methods of generating energy other than that of human toil and through the development of a concomitant technology. The cases cited above are but a few instances of the effect of the new methodology which is applicable to any process of production involving repetitive action.
In a simple agrarian society the only means of increasing the standard of livelihood was by the application of more human effort to the soil resources, or, stating it in another way, only by lengthening working hours. But by the application of technology we now have reached the point where more goods are produced by increasing the total amount of energy consumed and decreasing the energy per unit produced--the process automatically resulting in a decrease of the amount of human labor required.
It follows that, under our present system, if technology is extended into more fields of social activity, the rate of production tends to outstrip the rate of population growth and the rate of possible consumption growth, causing simultaneously an ever-increasing unemployment. This process is observable over the period of the last thirty years in every industry for which statistics are available, and this includes every major industry on the North American Continent.
Malthus assumed sustenance to be the limiting factor of population growth. Even today Dr. Pearl and Prof. East are worried over sustenance requirements of the American social system of tomorrow. Of the total per capita energy consumption of the United States today only about 7 percent is directly involved in sustenance, the remainder going toward the operation of the social mechanism. The energy involved in the operation of our social structure here in the United States is 15 times as much as the energy consumed in sustenance. So, long before we of this present century have to concern ourselves on this score, we shall be forced to predicate our population growth on the probable rate of the energy conversion of this Continent as a whole.
When the technologist looks at the unfolding events of the past six thousand years, he notes the same changes in political frontiers and systems, in thought, and in theories of the outer manifestation of the industrial arts, as noted by other men who have looked at the same train of unfolding activities. But his insistence upon a quantitative analysis of the technique whereby men have lived leads him to view these changes in a new light. He speaks of the period from the dawn of history to the middle of the eighteenth century as six thousand static years because the social changes that occurred during that period did not appreciably increase man's ability to organize for his use the energy resources of his environment. The changes that occurred were all, therefore, in his view, of a single order of magnitude. In Egypt, Greece, Rome, and in Europe of the Middle Ages, the social order succeeded in organizing a particular area of the world's surface, and in operating it to obtain the maximum security under its inherent limitations. These limitations prescribed that its upper limits were 2,000 kilogram-calories of extraneous energy consumption per capita per day. We have no instance in previous social history of an agrarian economy that exceeded these limits.
Social mechanics remained in this order of magnitude until the advent of technology in the middle of the eighteenth century, after which the limits of energy consumption rose in the United States to 150,000 kilogram-calories per capita per day. This increase from 2,000 to 150,000 kilogram-calories constitutes a social change from one order of magnitude to another. In ancient social mechanisms practically all of the total per capita energy consumption was required for sustenance; in twentieth century America approximately ninety-three percent of our total energy is consumed in the operation of our social structure. Our society involves a greater expenditure of energy per capita per day than any other social mechanism, past or present. We have achieved a fundamental social change which is susceptible to measurement in physical units.
While the modern technologist lives and does his work under the Price System he has to do his thinking in other than pecuniary terms; there is no way of avoiding that. The nature of his work, the facts, relations, and forces handled by him impose the use of unvarying standards whereby he may make exact measurements. His world is one of materials, energy resources, quantitative relations, and rates of energy conversion. Without unvarying standards of measurement the modern processes of production could not be carried on. Quantitative measurements of materials, of energy flow, of energy conversion, of work-constitute essentials.
While financiers and business men have occupied positions of authority and control in the fields of production, the technologist has designed the machines, the engines, and the continuous processes that account for the present rate of energy conversion. Within narrow limits he has worked with freedom, so that it may be said that he has been the principal agent in bringing on the present industrial capacity. But he has had nothing to do with the methods of distribution. Financial business has not only exercised complete control over this field and dictated what should be produced, regardless of the resources available, but has also failed in the distribution of the ever-increasing volume of goods and services released by the accelerating rates of energy conversion.
When the technologist looks at the processes of distribution, as he is forced to do at the present juncture, a number of things thrust themselves upon his attention. He notes immediately that all measurements in this field of activity are made by a pecuniary stand that is continuously variable, and that all relations are expressed as prices. He notes that price controls the utilization of energy resources, the rate of flow of materials and labor into the productive processes, and the flow of goods and services into the field of use or consumption. The only feature of the system that seemingly cannot be brought under the jurisdiction of price control is the rate of energy conversion, which is a function--that is to say, the outcome--of man's increasing ability in turning things to account. All this constitutes a situation which is obviously alien to the technologist's world of thought, theory, and action.
When the technologist looks at the magnitude of our pecuniary wealth, he notes that the items--bonds, mortgages, and instruments of loan credit of one sort and another--which foot up to a truly grand total, constitute the same items that foot up to an equally grand total of debt. He also notes that pecuniary wealth cannot be created without first creating a corresponding item of debt. For the purposes of industry, these items are purely fictitious. But he notes that there is a definite purpose behind the creation of these fictitious items in the current scheme, and that they serve the purpose for which they were created. He notes that they afford the borrower a differential advantage in bidding against others for the use and control of industrial processes and materials, and that they afford him a differential advantage in the distribution of the material means of industry. He also notes that they constitute no physical addition to the material means of industry at large. It is obvious to him that funds of whatever sort are a pecuniary fact, not an industrial one; that they serve the distribution of the control of industry, not its materially productive work.
Before the run of current events set in in 1929, this factual statement of the case was not treated kindly by financiers and economists, nor will it be looked upon with favor now. But the nature and meaning of pecuniary wealth is becoming more obvious day by day. The rapidly diminishing `value' of our items of pecuniary wealth (which are at the same time items of debt, the burden of which is increasing at something like an inverse ratio) has in nowise affected the material items of our industrial plant.
The technologist examines our so-called standard of measurement, the monetary unit-the dollar. He notes that it is a variable. Why anyone should attempt, on this earth, to use a variable as a measuring rod is so utterly absurd that he dismisses any serious consideration of its use in his study of what should be done.
He also considers `price' and `value' and the fine-spun theories of philosophers and economists who have attempted to surround these terms with the semblance of meaning. These terms, like the monetary unit, may have had meaning to men in the past but they mean nothing whatsoever to the modern technologist. The standard of measurement is not relevant to the things measured; and the measuring rod and the things, measured as if they were stable, are all variables. We read thousands of newspaper captions such as this: `FARM VALUE CUT BY SLUMP TO 45 BILLIONS. PRESENT WORTH COMPARES WITH 79 BILLION AT WAR'S END-OFF 15 PERCENT IN YEAR' (1931) - And then we read that farm income has fallen from $16,900,000,000 in 1919 to $6,900,000,000 in 1931. It is, of course, quite possible to rationalize this in terms of the functions of the Price System; but after it has been rationalized it still remains to the technologist nothing more nor less than an item of nonsense. He simply refuses to think of that item of our technological equipment as waving up and down like that. It doesn't.
To bring production and distribution into balance under such conditions would be much the same as attempting to determine how many pounds of electrical current would come to balance on a scale with a constantly increasing magnitude of fluctuating density. To the technologist the problem of balanced load under the Price System is a problem of that order of nonsense. It is not a problem--it is an impossibility.
Moreover to maintain a balance between production and consumption, with the number of factors involved, requires quantitative calculations that lie beyond the frontiers of arithmetic. And so the technologist does not blame the men of business, finance, and politics for not doing what they are not prepared to do. But when he examines the arithmetical impossibility of what they postulate as quantitatively possible, the entire system of financial business takes on the air of unreality; it becomes an impossible world of fairy-tale and magic.
The criterion of successful operation of a modern industry under the ancient Price System is that it shall make a monetary profit. Another requirement of industry under a Price System is that it shall consider among its expenses the payment of a monetary return upon the capital investment in that industry.
Regarding the first of these requirements, considering other factors to be constant for the moment, the profit possible from a given industry is a direct function of the quantity that can be sold. This fact is largely responsible for the ever-insistent demand of business for an ever-increasing production rate and expansion of trade, both domestic and foreign. From the point of view of the individual manufacturer under a Price System, the ideal conditions for continued prosperity are an infinite supply of cheap raw materials and labor, and an infinite market, so that there will never be a decline in the rate of increase of production.
In the internal operation of the industry, external factors being considered for the moment constant, the amount of profit that can derive from a given output is an inverse function of the internal cost of production. It has been found that the most efficacious way of reducing internal costs is by means of large scale quantity production by processes as automatic as can be devised. This requirement dovetails perfectly with the first, or increased output, and the net result is the industrial trends that we have observed in our analysis of the growth of industry on the North American Continent.
Another factor which acts in the direction of those already enumerated, is that a monetary return must be paid by the industry to the owner of the invested capital. This is in the form of interest and dividends. In other words, the bonded indebtedness must draw interest. Suppose the rate of this interest on investments is taken to be 5 percent per annum. Consider the total capital investment in the industries of this Continent. Industrial investment is made largely by a very small percentage of the total population, and for that reason the 5 percent return accruing annually is for the most part re-invested in industry. In order that industry in turn can continue to pay the same percent return on the added investment it must expand by a similar increment of itself per annum. To continue to satisfy these conditions industry would have to expand at a compound interest rate--the rate of increase of production per annum must itself continuously increase ad infinitum--which is a physical impossibility.
Another way of increasing profits, under the laissez-faire competition of a Price System, is to cut down the cost of production by manufacturing inferior products. This will increase the number of sales on an otherwise saturated market because of the resultant increased replacement rate.
The mathematical, that is, the arithmetical impossibilities of the assumptions which underlie what we are now attempting to do may be readily seen.
Suppose we level production off (as is being done) until an ample mean standard of living compatible with our resource supplies could be provided for the inhabitants. Then under the Price System the requirement to cut internal costs to a minimum would result in an ever-increasing unemployment. If, on the other hand, an attempt were made to keep all the people employed, the increasing rate of output per man hour would result quickly in an overproduction of goods that would of necessity extend toward infinity.
Moreover, should industry level off, the lack of new industries or expanded old ones in which to invest the returns already accruing from existing investments, would tend to drive the interest rate to zero.
The problem in its last analysis is primarily one of the effects of different orders of magnitude. The same fundamental characteristics are inherent in the change of magnitude of any mechanism. Consider, for example, vehicles of transportation. The ox-cart is a sturdy, slow-motion vehicle. The driver of an ox-cart need have no technical training except to call `whoa-haw' or `gee-haw.' If the cart hubs a tree nothing happens. In fact there is no ordinary error that such a driver could commit that would be of any great consequence either to himself or his vehicle. Consider in like manner the driver of an express train. He must always be awake and alert. He must operate strictly according to the schedule and the signals. Violation of any one of a large number of conditions can, and probably will, wreck the train; and moreover the magnitude of the wreck will be proportional to the mass and velocity of the train. In a like manner the duty of a train dispatcher, who controls the operation of not one train but many, is even more exacting. Thus we pyramid from a single train to a railway system, and from a railway system to a whole transportation system, and from a transportation system to a whole industrial complex with the same generalizations that the larger and higher powered the industrial system, the more rigorously exacting must be its technical control in order to avert a wreck, and that moreover the wreck resulting from the lack of such control will be of an order of magnitude proportional to the size and the rate of operation of that mechanism.
Against the picture of the man with the ox-cart or the man with the hoe we now have the accelerating upward sweep of the energy curves, and the curves of an enormous total production; the accelerating declination of the curve of employment, involving millions of men, and the still more violent fall of the curve of man hours per unit produced--the sweep across the charts of all these curves, dealing with unprecedented magnitudes and numbers, constituting unmistakable evidence that the whole system is due to go out of balance in the not distant future.
What are we going to do under the conditions delineated above to avert the disaster that science and technology view as highly probable-which is science's way of saying unavoidable? This question brings us to a subject exceedingly difficult to discuss: for habits of thought and connotations differ fundamentally in the world of business, banking, and politics from those that obtain in the world of science, technology, and the field of materially productive work. Items of ownership, credit, debt, monetary units of value--dollars, shillings, etc.--or interest rates and relations, expressed as prices, constitute the realities in the former world; but they are unreal and fictitious items in the latter, where energy. resources, materials, rates of energy conversion, and use-forms constitute the real and basic things with which men deal.
Any scheme of social organization, designed to utilize our resources and ability under conditions of security, offered by technology in the name of science, will involve the disallowance of the Price System. Such a proposal will appear revolutionary from the viewpoint of the massive interests which now look after the far-flung rights of ownership and seek vainly to keep the system under control and in balance.
The present is unique in that the ancient ways of politics, and the firmly established strategies of modern finance and business, may be observed in operation, while the ways of life and habits of thought are being transformed by the impact of modern science and the methods of modern technology. In contrast to the devious ways of politics, the fumbling methods of finance and business with the concomitant, mysterious movements of prices and values, and the anthropomorphic discussions concerning what The Market `wants to do'--all of which is carried as conspicuous news--we have the methods of science and technology. Our daily life throws us into intimate relations with the peculiar competence of modern technology. Out of this contact we have developed a high regard for the accuracy of its factual analyses, its mathematical measurements and handling of materials and forces, and for th@ validity of its procedure.
Although we live in a world of price and of speculation; of ever-increasing magnitude of fluctuations of `value' of bonds, mortgages, equities, land, buildings, salaries, wages, savings; of numbers unemployed and an ever-decreasing number of jobs available;--all of which means the increase of insecurity and want, in the face of rapidly-increasing industrial competence--these very things force us to turn to science and technology, since the incompetence of all other agencies prompts the progressive forfeiture of our esteem.
To modern civilized men, science has become the court of last resort. The explanations offered in the name of science are accepted under the new order of common sense within which we live and do our work. And so at the present time we are witnessing in the body of beliefs that stand to support the Price System and the current institutional scheme, a repetition of what has taken place repeatedly within the fields of belief which sought to support systems and institutions beyond their allotted day.
When the oncoming march of physical science arrived in the field of chemistry, it found its way blocked by alchemists, Philosopher's Stones, and phlogistonites. Its pace was retarded, its movement checked but for a moment, and it rolled on to occupy the entire field once so completely filled with all manner of superstitious theories and opinions. It ended with the total exclusion and complete intolerance of the obsolete methods of philosophic speculation in these fields. The same onward march has been proceeding. It has driven the astrologer out of astronomy, the geographer out of meteorology and seismology, the barber out of blood-letting, and Providence out of the field of bacteriology.
Current events have already declared the pressing need for change. Around us we hear the rumbling of discontent that voices itself in Marxian philosophies, and the cry of fear that calls for a dictatorship. And now come the men of physical science who state in no uncertain terms that bolshevism, communism, fascism, and democracy are utterly impotent to deal with the advanced technological situation in which we, of the North American Continent, find ourselves placed. None of these systems of thought and action will be given the mandate when the present system fails to function. North Americans are now calling upon physical science and technology to extend the frontiers of their domain.