as the quantity and complexity of the management-capital, typified in the first instance by the small mill, increase.

The crucial matter about this class of capital is that it cannot be a part of the personality of the owner, in the same intimate and literal and complete sense as in the case of the hoe. If we try to express the facts about the mill in terms of a tool, we are confronted by the fact that no very large part of that tool has ever been actually in the owner's hands at once. If he took a personal part in building the dam, he was not at the same time building the water wheel. Supposing that his own hands alone constructed both, it is difficult to imagine that he also alone quarried and installed the millstones, or that he fashioned the rest of the machinery. Given the mill in running order, the owner cannot be in all parts of it at once. He must have one or more helpers. One of them may be needed to keep the gearings in repair, while another tends the hoppers, and the owner deals with the customers. At times the owner must leave the premises for food, or sleep, or bargaining with his neighbors. At those times the mill has to be left in charge of others. That is, the owner is forced to rely upon actual co-operation with others, in order to make his managementcapital effective; and the ratio between his own literal operation of the capital and that of the other co-operators varies with the volume and form of this sort of capital. Moreover, another kind of co-operation is involved, both as condition and consequence of the existence and efficiency of this sort of capital. This is the co-operation of the surrounding community in maintaining the conditions without which this type of capital would be impossible.

The moment a worker is in any degree dependent upon another person for the success of his work, the stage is set for a moral conflict. Actual conflict may not occur in a given case. The co-operation may proceed without friction. Each may perform his part to the entire satisfaction of the other. On the contrary, there may be friction from the beginning. Each party may suspect the other party of getting or trying to get too much advantage out of their common labors. Each party may take measures accordingly to embarrass the supposed unjust purposes of the other. Neither

party could prosper if left exclusively to its own resources in adjusting these differences. Appeal must lie at last to customs and laws enforceable and enforced by the community. In the degree of the bulk of management-capital, and of the complexity of its operations, this social co-operation must develop. It comes about at last that the literal tool element in many cases of managementcapital shrinks till it includes nothing but an office chair and desk, with pieces of paper which the management-capitalist may hold in his hand while dictating to his stenographers or using the telephone. At the same time, the actual wealth controlled by this tool-capitalist may be distributed among buildings in which thousands of helpers work, over the transportation lines of the world, upon which raw material or finished products are in transit, and in warehouses where marketable stock is stored.

We cannot state too strongly that we are neither asserting nor implying that this phenomenon of management-capital is wrong. We are pointing out in the first place that it is artificial, as compared with tool-capital. The control of the management-capitalist over this large and dispersed wealth is not principally by virtue of his own power. It is principally by virtue of the organized action of society, which gives power not his own to his volitions. This being the case, the terms of this relationship between society and the men whom it empowers to be management-capitalists will always demand closer scrutiny, as to their justice and wisdom, than the simple and obvious resolution of the neighbors to protect the farmer in possession of his hoe. Compared with the group opinion about the hoe, group opinion which results in the development of management-capital must necessarily always be in a high degree contingent. The community, in which the owner of the management-capital may be only a millionth or a hundredmillionth part, must have guaranteed certain elements of social uniformity and stability; it must have put at his disposal certain physical and moral resources reinforcing his own energies; it must have created and supported legislatures, and courts, and civil and military forces available to sustain the legal institutions. Thus the management-capitalist is not, like the man with the hoe, chiefly a self-sufficient individual. On the contrary, the management

capitalist is chiefly a social product. Measured by the ratio of his powers as a literal tool-wielder, and the influence which he actually exerts as a wielder of other men who actually use the bulk of the tools, he is in a very small fractional degree himself, and he is in a very large degree what his community has enabled him to be. The community has gone before him, and stood behind him and around him, and has potentially or actually exercised a collective power for his benefit, in comparison with which the most capable man is puny.

We must go out of our way to guard against possible suspicion that we are actually or by implication denying or belittling the importance of managerial functions. In fact, no capitalistic fallacy is planted more directly in the path of concrete economic progress, and of clear moral thinking, than the fallacy of some socialists and some labor leaders not socialists, that managerial functions are fictions. Not long ago, within ten days of each other, three organizers of three different types of labor movement told me, in the most deliberate way, that in their opinion there is no such thing as a special kind of work for managers that could not be done just as well by anyone drawn by lot from employees; that the notion of a managerial function is merely a blind to cover up exploitation. We do not question the fact of exploitation in many cases. We do not doubt that the idea of a managerial function is made to go as far as it can in many cases to conceal the fact of exploitation. The laborer will be his own worst enemy, however, until he educates himself out of the notion that there is "no such thing as a managerial function." The laborer has really a larger stake than anybody else in competent discharge of the managerial function. If it is not well performed, it may mean the loss of his job and indirectly of his life and the life of his family. At the same time, it might mean to the capitalist only the loss of a fraction of his property.

There ought to be enough "baseball sense" scattered among American laborers to retire the dangerous fallacy that the managerial function is merely an alias for fraud. Every baseball fan knows better. The "Giants" won a pennant last year and the "Athletics" two, not merely because each was a bunch of capable

players, but also because John J. McGraw and "Connie Mack" handled the players. If either of those managers should announce his retirement, the betting fraternity would change the odds on the prospects of the team before the news was fairly off the wire. What is true of baseball is equally or more true of every complicated business. The difference between competent and incompetent management may quickly mean the difference between life and death for the business. Competent managers can no more be chosen by lot than competent bricklayers, or plumbers, or electricians, or train dispatchers could be selected by lot from the names in the Chicago telephone book. In any system of industry that could ever succeed, the managerial function would have to be insured by some method of selecting competence, not by reliance on chance.

It should be said at the same time, that our present capitalistic system does not insure competent management, although in that respect present methods are far more effective than chance would be. Hereditary management is no more certainly efficient in economics than it used to be in politics. The fact that man is a lazy animal, and that management-capitalists by grace of accident are inclined to hire men more competent than themselves for the strict managerial work guards the technical side of managementcapital, but does not remove its social anomalies.

Our analysis of the social relations of management-capital, therefore, in no way implies doubt about the necessity of management as a distinct economic factor, our discussion takes that for granted, but it aims straight at these two facts: first, the function of economic management would be relatively impotent without the support of social co-operation; second, this social co-operation morally entitles the co-operating laborers and the co-operating society to a share in controlling the terms under which the management-capitalist shall work, and a larger and more influential share than our present economic system has either realized in practice or admitted in theory. We return then from this side issue to the main argument.

It is a curious fact that English-speaking economists have almost wholly ignored the necessity of analyzing the relationships which differentiate the management-capitalist morally from the

tool-capitalist. The whole range of the "labor question" has been befogged by employers and employees and theorists alike, through failure to throw on it the light of this simple perception, viz.: It begs the question at the outset to assume that the managementcapitalist is simply an individual, like the man with the hoe; to regard him as exercising solely his own personal faculties; as acting merely in the enjoyment of indubitable natural rights; as possessing and using only those things and those powers which belong to him strictly as a person, which are to all intents and purposes his own proper self, just as the hoe is the extended arms of the man who uses it. On the contrary, the management-capitalist is a highly artificialized social contrivance. A large part of the efficiency which is credited to him is in fact merely symbolized by him. It is really the working of other men, first in the immediate economic organization of which he is the head, second, in the entire legal and social community whose institutions make the industrial operations possible. Just at this moment it is timely to illustrate by asking the question, Why are capitalistic operations at a standstill in Mexico (March 1, 1914)? Several of the most efficiently managed concerns in the world are anxious to operate there, but they are powerless until the social conditions prerequisite to their efficiency are restored.

An important factor will be introduced among the forces that are making the present social transition, by working out the omitted passage in social theory to which this perception points. The problem is: What neglected elements are brought into the social question by attention to the fact that the management-capitalist is not merely an individual exercising his unaided powers, but that he is an individual with powers increased tens, hundreds, or thousands of times by virtue of artificial arrangements, which make him the repository of social powers incomparably greater than his own?

It is a part of the instinct or the strategy of obscuration to represent all formulations of questions like this as attacks upon persons or upon the foundations of morals. No one can deal judicially with a social problem unless he is able to keep the involved questions of principles distinct in thought from the individuals or interests that may be immediately affected by the principles. The problem here in question is no more an attack upon individuals,