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civilised countries; those immemorial principles of privilege 
equitably vested in the master class have fallen into discredit 
as being not sufficiently grounded in fact; so that mastery and 
servitude are disallowed and have disappeared from the range of 
legitimate institutions。 The enlightened principles of self…help 
and personal equality do not tolerate these things。 However; they 
do tolerate free income from investments。 Indeed; the most 
consistent and most reputable votaries of the modern point of 
view commonly subsist on such income。 
    Ever since these enlightened principles of the modern point 
of view were first installed in the eighteenth century as the 
self…evident rule of reason in civilised life; the industrial 
arts have also continued to gain in productive efficiency; at an 
ever…accelerated rate of gain; so that today the industrial 
methods of the machine era are highly productive; beyond any 
earlier state of the industrial arts or anything that is known 
outside the range of this new order of industry。 The output of 
this industrial system yields a wider margin of net product over 
cost than has ever been obtainable by any other or earlier known 
method of work。 It consequently affords ground for an uncommonly 
substantial vested interest in this disposable net margin。 
    But the industrial system of the new order will work at the 
high rate of efficiency of which it is capable; only under 
suitable conditions。 It is a comprehensive system of 
interdependent working parts; organised on a large scale and with 
an exacting articulation of parts;  works; mills; railways; 
shipping; groups and lines of industrial establishments; all 
working together on a somewhat delicately balanced plan of mutual 
give and take。 No one member or section of this system is a 
self…sufficient industrial enterprise; even if it is true that no 
one member is strictly dependent on any other one。 Indeed; no one 
member or section; group or line of industrial establishments; in 
this industrial universe of the new order; is a productive factor 
at all; except as it fits into and duly gives and takes its share 
in the work of the system as a whole。 Such exceptions to this 
rule of interlocking processes as may appear on first 
examination; are likely to prove exceptions in appearance only。 
They are chiefly the backward trades and occupations which have 
not had the benefit of the Industrial Revolution and do not 
belong under the new; mechanistic order of industry; or they are 
trades; occupations and works devoted to the consumption of goods 
or to the maintenance of the rules governing the distribution and 
consumption of wealth; as; for instance; banking; menial service; 
police service and the apparatus of the law; the learned 
professions and the fine arts。 
    It is also of the essence of this industrial system and its 
technology that it necessarily involves the industrial community 
as a whole; its working population and its material resources; 
and the measure of its successful operation is determined by the 
effectual team…work of its constituent parts。 And the industrial 
system of the new order is drawn on a large scale and rests on a 
comprehensive specialisation of processes and standardisation of 
output; so that the 〃community〃 which is required for the 
necessary team…work is necessarily a large community; larger than 
the total population and resources that would have served the 
like purpose under any earlier state of the industrial arts; at 
the same time that the needed coordination of processes is also 
wider and more delicately balanced than ever before。 Indeed; the 
〃industrial community〃 of the new order is always and necessarily 
larger than any existing national unit。 The ramification of give 
and take under the new industrial system invariably overlaps the 
national frontiers; among all those peoples who occupy what would 
be called an 〃advanced〃 place in industry。 The system; and 
therefore the industrial community engaged in team…work under 
this system; is drawn on cosmopolitan or international lines; 
both in respect of the body of technological knowledge which is 
turned to account and in respect of the range and volume of 
materials necessary to be used according to this new order in 
productive industry。 
    Evidently the total output of product turned out under this 
industrial system; the 〃annual production;〃 to use Adam Smith's 
phrase; or the 〃annual dividend;〃 to use a phrase taken from 
later usage;  this total output is the output of the total 
community working together as a balanced organisation of 
industrial forces engaged in a moving equilibrium of production。 
No part or fraction of the community is a productive factor in 
its own right and taken by itself; since no work can be done by 
any segment of the community in isolation from the rest; no one 
plant or works would be a producer in the absence of all the 
rest。 The total product is the product of the total community's 
work; or rather it is the product of the work of that fraction of 
the people who are employed in productive work; which is not 
quite the same thing; since there is much work spent on the 
consumption of goods; and on ways and means for such consumption; 
as well as on their production。 
    Indeed; it is by no means certain that there is not more 
time; strain and ingenuity spent on the consumption of goods than 
on their production。 Apart from sports; menial service; 
fashionable dress and equipage; pet animals and mandatory social 
amenities; there would also have to be included under the ways 
and means of consumption virtually all that goes into 
salesmanship and advertising。 Virtually all of these things have 
to do with the organised consumption of goods; and virtually all 
are therefore to be written off as waste motion; so far as 
regards their effect on the net productive efficiency of the 
industrial community; or of the industrial system whose tissues 
are consumed in enterprise of that kind。 The amount which is to 
be written off as consumptive waste in this way is approximately 
the same as the net margin of product over cost; and according to 
the enlightened principles of self…help and equal opportunity; as 
these principles work out under the new order of industry; it is 
for the investors to take care of this consumptive waste and to 
see that no unconsumed residue is left over to cumber the market 
and produce a glut。 
    Evidently; too; the amount of the annual production depends 
on the state of the industrial arts which the working population 
has the use of for the time being; which is in the main a matter 
of technological knowledge and popular education。 So that the 
question of productivity and net productivity may be stated in 
general terms to the following effect: The possible or potential 
productive capacity of any given community; having the disposal 
of a given complement of man power and material resources; is a 
matter of the state of the industrial arts; the technological 
knowledge; which the community has the use of。 This sets the 
limit; determines the 〃maximum〃 production of which the community 
is capable。 The actual production in such a community will then 
be determined by the extent to which the available technological 
efficiency is turned to account; which is regulated in part by 
the intelligence; or 〃education;〃 of the working population; and 
in greater part by market conditions which decide how large a 
product it will be profitable for the business men to turn out。 
The net product is the amount by which this actual production 
exceeds its own cost; as counted in terms of subsistence; and 
including the cost of the necessary mechanical equipment; this 
net product will then approximately coincide with the annual 
keep; the cost of maintenance and replacement; of the investors 
or owners of capitalised property who are not engaged in 
productive industry; and who are on this account sometimes spoken 
of as the 〃kept classes;〃 Indeed; it would seem that the number 
and average cost per capita of the kept classes; communibus 
annis; affords something of a rough measure of the net product 
habitually derived from the community's annual production。 
    The state of the industrial arts; therefore; is the 
indispensable conditioning circumstance which determines the 
productive capacity of any given community; and this is true in a 
peculiar degree under this new order of industry; in which the 
industrial arts have reached an unexampled development。 The same 
decisive factor may also be described as 〃the community's joint 
stock of technological knowledge。〃 This common stock of 
technological knowledge decides what will be the ordinary ways 
and means of industry; and so it decides what will be the 
character and volume of the output of product which a given man 
power is capable of turning out。 Evidently no man power and no 
working population can turn out any annual product without the 
use of something in the way of technological knowledge; that is 
to say some state of the industrial arts。 The working community 
is a prod

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