§1.So far, in discussing the human 'costs' of production, we have confined our attention to the activities of body and mind directly operative in producing marketable goods or services, grading them from the creative and generally 'costless' work of the artist and inventor to the repetitive and 'costly' work of the routine manual labourer.We now proceed to examine the human costs involved in the processes of providing the capital which cooperates with labour in the various productive operations.The economic 'costs', for which payment is made out of the product to capital, are two, risk-taking and saving.What are the human costs involved in these economic costs?
To clear the ground for this enquiry it will be well to begin by making plain the sense in which risk-taking and saving are 'productive' activities.
Neither of them is 'work' in the ordinary organic sense of the application of muscle or nervous energy to the production of wealth.Both would rather be considered as activities of the human will and judgment which increase the efficiency of the directly productive operations.Their productivity may thus be regarded as indirect.But it is none the less real and important on that account.For unless there was postponement of some consumption which might have taken place, and the application of the non-consumptive goods, which this postponement enabled to come into existence, to uses involving risks of loss, 'work' would be very unproductive in comparison with what it is.
Risk-taking, the giving up of a present certain utility or satisfaction for the chance of a larger but less certain satisfaction in the future, is, we know, the essence of business enterprise.Such enterprise by no means always entails a human cost.In industry, as in all human functions, experiments, involving risk, are frequently a source of vital interest and of conscious satisfaction.There are two roots of this satisfaction, the staking of one's judgment and skill in forecasting and determining future events, and the actual joy of hazard.The former is a common trait of intelligent personality, the latter a powerful, though less general motive, involving a 'sporting' interest in life.The spirit of adventure applied to business, enhances the conscious values.Whether it be motived by some physical restlessness or by some element of faith, it must be accounted an organic good, alike as means and end.If all the risk-taking involved in current industry were of this nature, it would not then figure in our bill of human costs, but on the other side of the account.But where the conditions of actual business impose elements of risk that are either in kind or magnitude compulsory, not voluntary, not only does no satisfaction attend the taking of these risks, but considerable loss and suffering may accrue.Risks that are either great in themselves or great in relation to the capacity to bear them are frequently required by the conditions of modern business enterprise.The men who undergo these risks do not deliberately or with express intention stake their faith and foresight on a game of gain or loss, or even enter into the risks with the gambler's zest.They undergo these risks because they cannot help themselves, and the anxiety attendant on these risks is often one of the heaviest psychical and physical costs of the business man.
§2.In analysing risk-taking as a special cost of capital, I must guard against one misunderstanding.Risk-taking, of both sorts, humanly good and humanly bad, is not of course by any means confined to administration of capital.Everyone who, either by choice or by the necessity of his situation, devotes his personal energies to making any product for the market, or to improving some personal capacity with a view to its productive use, incurs risks.In some cases the risks may not indeed entail real human waste, as where the artist or inventor speculates with his creative faculty.
Or the professional man, preparing for his career, may willingly and with zest enter a competition in which prizes are few.Men equipped with vigorous intellect and determination will get out of the struggle for professional or commercial success a satisfaction of which the risk of failure is a necessary condition.But for most men a small quantum of hazard suffices.
A little risk may stimulate but a larger risk will depress efficiency.
A doctor, a lawyer, an engineer is willing to put his natural and acquired ability against those of his fellows in a fair field where the chances of success are reasonably large.But when the risks are so numerous and so incalculable as they are to-day in most professional careers, the anxiety they cause must be accounted a heavy human cost.The same applies to the career of most modern business men.It also constitutes a new and growing cost of labour.
For though it may be true that the actual risks of a working life, personal or economic, are no greater than in former times, the emotional and intellectual realisation of these risks is growing.Education enables and compels the intelligent workman to understand the precarious nature of his livelihood, and his growing sensibility accumulates in 'worry'.
This is certainly one of the main sources of 'industrial unrest'.
But though risk-taking thus enters as a human cost into the life of other owners of productive powers, we do right to accord it special attention in relation to the supply of capital.For in the provision of all forms of capital, and in the payment for its use, risk-taking is an element of primary importance, and, though in theory separable from the act of abstinence, postponement, or waiting, which comes into prominence as the direct psychical cost of saving, it is not separable in industrial practice.
