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vidual modern scientists owe to their fellow workers much credit for coöperation. Individualistic achievement is rare and difficult, coöperative achievement is the common thing. The reaction of mind on mind is of vital importance.

The coöperators are commonly paid a salary for their work. Promotion is based upon effectiveness in getting results from investigation. The corporation finances the undertaking, and provides the capital equipment necessary for laboratory facilities. The research expert does not ordinarily patent his development or improvement. The patent is taken out in the name of the corporation, and the profits to be derived from patent monopoly enrich the corporation rather than the scientist.

The Incentives to Invention and Discovery.—The modern scientist or inventor usually works as a salaried employee. His financial incentive is simply to earn his salary, or perhaps to win a promotion and thereafter to receive a higher salary. If he is in the employ of a corporation, the corporation will usually take out the patents in its own name and for its own benefit. If he is in the employ of the government, no private patent will be taken out, but the discovery will be reported for the public good. If he is in the employ of a university, he may or may not be allowed the privilege of patenting his discoveries, according to the policy of the university concerned. In case he is in a position to take out a patent, he must face the probability of encroachments upon his rights. If he prosecutes such encroachments at law, he must face the fact that the corporation opposing him has endless legal resources for a long drawn out battle in the courts. The prospect of winning a fortune from patent rights is no longer a primary incentive to the inventor. The typical inventor works for some one else, and if he makes a discovery, the patent rights and royalties, if there are any, redound to the benefit of the employer, not the employee.

In addition to the financial incentive, there is the incentive of prestige in the profession. Great scientists become famous, and to no small extent, fame is its own reward. The inventor is not forgetful of the glory and renown which attaches to the names of great discoverers. The desire to achieve leadership, to be hailed as a benefactor of the race, to be recognized as an authority, is a powerful motive in all modern research.

Underlying the incentives of finance and fame, is the impetus of a purely scientific love of truth. The great minds of pure science have been animated by a spontaneous desire to extend the fields of knowledge. The inventor becomes interested in his task and gives up his entire life to its completion. The scientist may work on a single problem for decade after decade for the love of the work. Intellectual curiosity, absorption in a difficult problem, constructive imagination,—these are characteristics of the motives everywhere apparent in modern research.

Moreover, the scientist is public spirited in his studies. He is not

9 Valuable discussion of research is contained in an unpublished monograph by A. C. Gubitz, The Inventor's Contribution to Industry.

wanting in a sense of service to humanity. Part of his incentive is to ameliorate human suffering, improve the life of the community, and advance the social good.

The incentives are mixed and varied. They combine in different proportions in different men. One thing is significant, however, that the profit motive is not the paramount factor in most modern invention and research. That is to say, it is not the motive in the mind of the scientist. It is, however, likely to be the motive of the corporation sponsoring the research. The corporation decides to employ scientists and to equip laboratories because thereby it hopes to enlarge its possibilities of profits. The profit motive is doubtless uppermost in the minds of the business men who finance research, but it appears to be only one of several major motives in the minds of the inventors and scientists themselves. They have a salary motive, but scarcely a profit motive.

Business Research.-Scientific investigation is not confined to the physical sciences and the mechanical arts. It extends to the field of management, both within the plant and over the economic system as an entirety.

Science applied to internal management leads to industrial psychology, personnel administration, human engineering. It also leads to efficiency methods, to industrial engineering, and to scientific management. The detailed considerations in these applications of science are discussed in later chapters dealing with management and with labor. The important fact to be noted at this point is that scientific methods and principles have been proved applicable to this type of problem. Progress in managerial technology within the plant comes, not from rule of thumb methods, but from modern methods of scientific analysis.

Science applied to external economic problems leads to business statistics, analysis of the business cycle, knowledge of production, distribution, and consumption. It leads to fact finding in fields that have hitherto remained unexplored and obscure. It supplies data of value in articulating the various parts of the business structure. The relations between factories, railroads, warehouses, farms, mines, and stores must be correlated. The immense complexities which are involved require refined methods of mathematical and statistical analysis. Detailed consideration of these types of research is given in later chapters dealing with the business cycle. Bureaus of business research have become a common feature of schools of business administration. Similar bureaus have in many cases been created by private foundations and endowments. Corporations maintain private statistical departments, or cooperate to maintain collectively a statistical bureau for their common use. Various departments of the government supply statistical analysis and statistical data. The application of science to general business problems is a highly important development of modern economic technique.

The Significance of Scientific Research for Production Theory.The work of the scientist and the inventor is chiefly significant in the theory of production because it tends to increase the product from a given expenditure of effort. Research results in greater output from a given quantity of labor. It leads to an economy of human energy, by multiplying the economic effectiveness of each unit of human energy. Every improvement in technology must justify its existence, from the production standpoint, by this acid test: Does it augment the product from a given expenditure of effort ?

By a variety of methods, the scientific technique of production measures up to the productive test set for it. Science in industry increases the division of labor and intensifies specialization. It leads to standardization, automatic methods, and quantity production. It increases the substitution of non-human energy for that of the human hand and brain. It conserves the resources of nature by prevention of waste and utilization of by-products. It improves the effectiveness of the machine and of the machine technology. And it leads to a reproportioning of the basic factors in production. Scientific technique increases the relative importance of capital and decreases the relative importance of labor in production. It substitutes mechanism for man power, capital for labor. The value added by manufacture is more and more attributable to the capital factor. The utilities created are more and more due to the agency of the machine and the scientific process. By these various and sundry methods, scientific technology tends to meet the productive test, in that it increases the output from a given expenditure of effort.

BIBLIOGRAPHY

CASSEL, G., A Theory of Social Economy, Chapters I, V.
COMMITTEE OF FEDERATED ENGINEERING SOCIETIES, Waste in Industry, 1921.
FARNHAM, D. T., AND OTHERS, Profitable Science in Industry.
GANTT, H. L., Organizing for Work.
HUNT, E. E., Scientific Management Since Taylor.
MARSHALL, ALFRED, Industry and Trade.
MARSHALL, L. C., Readings in Industrial Society, Chapter IX.
Mees, C. K., The Organization of Industrial Scientific Research.
MITCHELL, W. C., AND OTHERS, Business Cycles and Unemployment.
Persons, WARREN M., AND OTHERS, The Problem of Business Forecasting.
TAYLOR, F. W., Scientific Management.
TOYNBEE, A., The Industrial Revolution.
WOLMAN, LEO, “Theory of Production," American Economic Review, March,

1921, pp. 37-56.

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CHAPTER VI

PRINCIPLES OF CONSUMPTION

The Meaning of Consumption. Consumption deals with the satisfaction of wants. Economics views the consumer as a bundle of wants. His wants for food, for clothing, for recreation, and for countless other things require gratification. Take away man's wants and you take away the mainsprings of economic activity. The whole mechanism lies dead and inert. But stimulate and satisfy man's wants, and you galvanize the economic mechanism into action. The forces which make the economic wheels go round are the wants of consumers. Hence economics, in dealing with consumption, concentrates its analysis upon the nature of wants.

What happens to the individual when wants are satisfied? What goes on in human nature when consumption takes place? The answer leads into the domain of related sciences, psychology, biology, philosophy. An act of consumption involves stimulus and response. It involves activity of the sensory organs in reception of stimuli. It involves activity of the nerve system in transmitting stimuli. It involves activity of muscular and glandular organs in responding to stimuli. The reaction of human organism to environment involves the functioning of the physical mechanism of the individual. The individual is a set of reaction systems. All that happens to the individual happens by the pathway of stimulus and response, by the pathway of reaction.

The consumption of food is not merely the act of destroying the material thing. It is an act of nutrition or malnutrition, in which the functioning of the digestive system, the nervous system, the entire physical organism is involved. Consumption is not merely what the individual does with food; it is what food does to the individual. The consequence of consumption is the building of health, of energy, of strength. The want for food, then, goes beyond the mere appetite of hunger; it extends to the want for the healthy functioning of the individual, to the want for life itself.

This physical and mechanistic view of the nature of want satisfaction may be supplemented by the mental or spiritual view of the same phenomenon. In coördination with the mechanism of sense organs, nerves, and muscles, there goes on a conscious process of desires, wishes, and ambitions. Consciousness and the whole subjective life are to be reckoned with. If we take the purpose of life to be happiness, then consumption, broadly speaking, is the satisfaction of all those wants by means of which the individual seeks happiness. If we take the purpose of life to be service, then consumption, broadly speaking, is the satisfaction of all those wants by means of which the individual seeks to render service. Whatever we take the purpose of life to be, consumption is the attempt to achieve that purpose.

The Measurement of Consumption.—Production has already been defined as the creation of utilities. Consumption involves the using up of the utilities so created. Consumption destroys utilities, but does not destroy matter or energy. The shapes and forms of matter are changed, and the kinds of energy are changed, but there is neither more nor less matter and energy after consumption than before. The only thing destroyed in the process of consumption is economic utility. This view of the consumption process is especially useful in formulating a theory of value. Its significance is discussed in a later chapter dealing with the problem of value.

Important though the concept of economic utility is for such a purpose, it nevertheless is inadequate as a basis for a full analysis of consumption. This inadequacy of the utility concept is chiefly apparent whenever we attempt to measure the phenomenon of consumption. An utility is purely an abstraction. We can postulate it and use it as a logical tool, but we cannot measure it. There is no unit of measurement which applies to the abstract concept.

However, one thing the economist can do, that is, measure the amount of goods which embody the utilities. He can ascertain the number of bushels of wheat, the number of pounds of sugar, the number of yards of cloth which a community uses. He can derive from these physical measurements of the things consumed an estimate of the volume of consumption.

A second method of measurement is open to the economist. He can ascertain the amount of money for which economic goods or economic utilities are exchangeable. He can take the price measure of consumption. The number of dollars the consumer spends for each item on his budget affords a basis for a pecuniary estimate of the volume of consumption.

Whether the physical or the money measurement of consumption be taken, the economist must also take into account the ultimate factor of consumers' welfare. Unless the volume of goods and the volume of money spent results in a proper volume of human welfare, consumption has fallen short of its goal. Physical things and dollars and cents are of no avail unless they lead to the well-being of the community. The goods and the money are not the end of consumption, for the end is welfare. At the same time that we measure the things being consumed, we must take into account the effect for good or ill upon the consumer.

What is Consumed?—The national income is spent for consumption. To ascertain what are the things consumed, it is necessary to find how the national income is spent. What proportion goes for food, what proportion for clothing, what proportion for shelter, what propor

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