(I have taken the liberty of breaking up JJ's rather long paragraphs into shorter ones more suitable for screen display. Apart from this it is exactly as JJ wrote it. Ed RJ)

The Factors in Production - Enterprise

The process of Wealth Production in itself appears to involve only a fertile association between Labour, Capital and Land, or Natural Resources. On a casual inspection, one sees only Labour suitably equipped working on certain materials which originate as a free gift of Nature. But who takes the initiative ? Who sees to it that the association of Labour, Capital, and Land is fertile in the production of Economic Utility, and not Economic futility?

Everybody recognises and makes allowance for at least three Factors in production - Labour, Capital, and Land. But the Factor of Enterprise or Initiative is so enormously important that, although it is itself a form of Labour, it requires to be treated as a distinct Factor in Production. The efforts of Labour to produce Wealth are likely to be addled efforts, unless they are fertilised by a fruitful association with the element of intelligent organisation and direction.

It is the special function of the enterprising class, the class that takes the initiative in, and undertakes the risks incidental to Production, to provide this necessary element. But for the grim associations of the word, it would be convenient to call them 'Undertakers'; as it is, they are usually called by the French name, entrepreneurs, which may perhaps be translated by a coined English word - Enterprisers.

The Entepriser, using his own capital, if he has any or hiring the capital of others at a rate of interest agreed on, proceeds to buy the materials, machinery and stock appropriate to his undertaking, be it factory, farm or shop. He also hires any outside Labour he requires at an agreed rate of wages, and organises all the available Labour: with a view to the Production of agricultural produce, or factory produce, or shop-keeping service, at a minimum cost to himself. He takes his chance of his finished goods, whether material or immaterial, fetching a price which will compensate him for the expenses incidental to their production, and, in addition, showing, a surplus, which is his means of livelihood. If we follow his fortunes over a period of years, it will be found in general he succeeds, though sometimes he fails and goes under.

The Labour of the typical British businessman or Enterpriser is confined exclusively to the task of organisation and direction, while the Labour of execution is assigned to others. The typical Irish Enterpriser or business man is a small farmer exploiting a farm of' thirty or forty acres with his own and his family's Labour, and perhaps some hired Labour from outside. Such an Enterpriser does not confine himself to the task of organisation and direction. He performs an important portion of the heavy manual labour personally.

In the case of such an Entepriser, as in that of the Cobbler, the Blacksmith, and other Independent Producers, our economic analysis, while distinguishing the separate Factors of Enterprise and Labour, must recognise the fact that these Factors co-exist in the same human beings. The self-paid incomes received by such persons, especially, those of the 'small farmer' are partly the Profits of Business Enterprise, but mainly the self-paid wages of manual Labour. The wages of the small farmer differ from the wages of those who work for others in the facts that he is not always sure of his wages an a Friday night and his wages, when they are received, are frequently the wages of one man, for the work of one man and his family.

In the economic society with which we are familiar in Ireland, a vast amount of the Labour which is performed is the self-paid Labour of those who employ themselves. Economic doctrines derived from a country where the converse conditions hold good, cannot, therefore with safety be applied to Irish conditions.

Individual Enterprise and Group Enterprise.

Not all Enterprise is the private Enterprise of individual Enterprisers, working each for his own hand. There are various forms of Group Enterprise, or' Collective Enterprise. When a number of people pool their capital in order to form a Joint Stock Company, when a number of farmers put up the capital necessary to the formation of a Co-Operative Creamery, when a number of Consumers combine to establish a Consumers Co-Operative Society, or, as sometimes happens, when a number of workers collectively form a Co-Operative Productive Society, the enterprise in such a case is a Group Enterprise. In such cases the Factor of Enterprise is divorced from any active participation in organisation ,and management. A salaried expert, who is in an essential respects a wage-earner, is hired to perform the work of management.

There is a similar divorce between the Factor of Enterprise and the work of management in Municipal undertakings, for example a Municipal Tramway System, and in State Enterprise, the commonest example of which is the Postal Service.

However important Individual Private Enterprise may have been in the past, it is certain that Collective Enterprise in one or other of its forms, both Private and Public, will play a.part of increasing importance in the future. The real opposition is not between Private Enterprise as such and Public Enterprise as such, but between the principle of isolated Individual Enterprise with its obvious limitations, and the principle of associated effort with its limitless possibilities of economic achievement, intellectual development, and social amelioration.

Labour

The Factor of Enterprise, though capable of divorce from all other forms of Labour, is usually in fact associated with the Labour of organisation and direction.

Labour in general is frequently classified under two main heads -- Manual Labour and Brain Labour. However convenient for practical purposes, this classification suggests a false simplification of a very complicated matter. The manual labourer, so-called, must use his brains, and the brain labourer must use his hands. Is a surgeon a manual labourer or a brain labourer? The economic system, as it now is, calls for the services of an enormous number of different kinds of Labour, requiring different kinds and degrees of strength and intelligence. There is no hard and fast line separating brain labour from manual labour. Every person who renders useful service is a worker, whether he is a poet, a captain of industry, or a dock-labourer.

Land

"Land" is the name given to all natural resources, for example soil, climate, minerals, water-power, geographical position, fisheries etc etc. The part played by this Factor in the general economic scheme is so obvious as to need little emphasis. The character of a country's resources goes a long.way in determining the general character of its economic activities. The deposits of coal and iron occurring in Great Britain help to explain her present industrial position. Her geographical situation and the traditional mercantile Enteprise of her people account, to some extent, for her commercial, position.

Natural resources which, for one reason or another, remain undeveloped, play no part in determining a country's economic position. The age of coal and iron has helped to make Great Britain, Germany, and the United States what they are, because these resources have been developed.

The age of electricity, if it comes to us, will revolutionise the social and economic structure of Ireland as profoundly as the Industrial Revolution affected Great Britain, and it should be more uniformly beneficent in its social and economic consequences. So long as our admittedly bountiful natural resources are merely a theme for oratory, that revolution will be successful averted. Resources without Enterprise are barren.

Capital

As a Factor in Production, "Capital" is the name given to the materials on which Labour works, the tools and machinery with which it works, and the buildings which are used to accommodate these. When a new undertaking is begun, it is clear that besides machinery, materials, and plant, there must be available the means of maintaining the workers during the unproductive period that must elapse before receipts can balance expenditure. This available surplus of Consumer's Wealth is, in fact, the most elementary form of Capital.

In a community destitute of all Capital Goods, Labour, with bare hands, would be occupied exclusively in hand-to-mouth activities -- hunting wild animals, fishing, searching for edible fruits and roots. Before such Labour could turn aside to the manufacture Capital Goods -- better appliances for hunting and fishing and the like -- a surplus of Consumers' Goods would have to be available or in sight. Once the Labour in question had suitably equipped itself, it is clear that it can provide itself with its daily necessities with cumulative efficiency and success. In such a case, if the numbers remained stationary and the total product of industry was equally distributed, the resulting economic gain would reflect itself either in a higher standard of living for all, or a higher degree of leisure, or both.

Modern capitalistic methods of production are roundabout. Men must wait as well as labour. But in the aggregate, they are immensely more productive than those in use one hundred and twenty years ago. The production of wealth per head of a population of nine million in England in 1801 was £20 per annum. In 1907, when the population of the United Kingdom was forty-five million and the general level of prices was much the same, it amounted to £47 per head. The answer to the question, "Why is there not a higher standard of leisure or of living, in view of the increased productivity of capitalistic methods of Production?" will be very inadequately given by any scrutiny of the existing distribution of income. The population of Great Britain has increased from 14,092,000 in 1821 to 42,768,000 in 1921 and a considerable proportion of the economic gain has been absorbed by the necessity of feeding so many additional mouths.

If the undeveloped resources of Ireland are vigorously and intelligently developed, a substantial increase in the present population is possible, without any reduction of the standard of living --- or even, up to a certain point, an increasing population might go hand in hand with a rising standard of living, as happened in Great Britain in the latter half of the nineteenth century. Physiologically speaking, population can easily double itself every twenty-five years. It is, however, the opinion of competent observers that the population of Great Britain.has reached the point at which any further substantial increase will be possible only by a wide-spread reduction of the standard of living.

In the modern Economic System, Capital in its most elementary form may be regarded as a surplus of Consumers' Goods. But, actually, no considerable surplus of such Goods is stored up, or saved up, or possesses a physical existence anywhere. There is always a floating surplus of clothes and boots ready to wear, of bread ready to eat, and so on, but this is relatively small. The real surplus is a surplus of Productive Energy --- Enterprise in association with Labour, capable of being switched on to the Production of a vastly increased.quantity of Consumers' Goods, if for any reason it is desired to accumulate them, equally capable of being diverted to the Production of Capital Goods in the form of ploughs, tractors, eighteen-inch guns --- engines of peace or engines of war.

The proportion in which the total productive energies of the community are devoted to different economic activities is determined by Demand; that is, it reflects the proportion in which the total available purchasing medium in the hands of individuals and the government is spent on the purchase of different things. If more money than before is spent on horse-racing, or motoring, a larger portion of the productive energies of the community will find occupation in the services connected with these. If those possessed of surplus: purchasing power invest larger amounts than before in the promotion of new enterprises, or the development of old, the incidental Demand for new Capital Goods stimulates business activity and increases employment, in the industries providing them.

In the economy of the human body, the blood carries the energies of life in various proportions to every bone and sinew, muscle, tissue, and cell in exact obedience to the decree of the brain and nervous system when they function properly.

In physical exertion, the blood supply of the muscles, is increased; in mental exertion the brain comes in for a larger supply. After a meal, the blood rushes to the digestive organs, and it is agreeable to.sit at the fire giving brain and.muscles a rest.

Money is the nervous system of the Body Economic. Individuals and governments, in proportion to the purchasing power they exercise, unconsciously cooperate in determining the exact proportion in which the available energies of the community,shall be devoted to various economic activities.

A surplus of vital energy in the body, exists, first of all, in the blood in an undifferentiated form, and is afterwards differentiated in.building up bone or brain or muscle. A surplus of productive energy in Society may realise itself, first of all, in an addition to the available stock of Consumers' Goods -- Capital in its undifferentiated form -- but it tends to differentiate itself in the production of a larger supply Producers' Goods --more machines, more raw materials, better roads, and the like, in obedience to the decree of the "Almighty Dollar."

Enterprise, Labour, Land, and Capital -- these are the four Factors in Production. Each is necessary to the other three, and none may claim to be of paramount importance.

Government.

In the background of all economic activities, even in the most individualistic State, there lurks Government. It is a quiet, unostentatious thing as a rule, whose existence is assumed as a matter of course, and straightway forgotten as we go about the daily business of life, until it comes with its inexorable demand for Rates or Income Tax, when it is regarded as an unmitigated nuisance, Government, like virtue, 'in columen odimus, sublatum ex oculis quirimus invidi'. Yet the economic functions of Government are so important that it deserves to rank as a 5th Factor in Production. Modern economic society cannot exist without the services of Law Courts, Police, Sanitation, and Education which it is the function of Government to supply. Even the worst Government is better than no Government at all. In a state of anarchy every economic activity withers.

The traditional view is that Governments can make little positive contribution to the growth of a people's Wealth. The negative services of Government are still of paramount importance. It is undoubtedly true, that while its power for good is limited and requires the co-operation of' non-governmental factors, its power for evil is unlimited and can be directly exercised. Nevertheless the function of Government as a positive factor in economic development is of increasing importance. In the promotion of agricultural and industrial research, in the of reliable Statistical information, in penalising the economic activities of those whose inefficient or dishonest methods lower the market value of their neighbours' produce, it can render invaluable services in nearly every field of agricultural or industrial activity.

Some navigational notes:

Copyright Dr Roy Johnston 1999