Production

Production includes distribution. And services, be they rendered by highly educated and trained professionals or people who have not completed high school, are part of production.

Henry George: Progress & Poverty: The Current Doctrine of Wages — Its Insufficiency

But the fundamental truth, that in all economic reasoning must be firmly grasped, and never let go, is that society in its most highly developed form is but an elaboration of society in its rudest beginnings, and that principles obvious in the simpler relations of men are merely disguised and not abrogated or reversed by the more intricate relations that result from the division of labor and the use of complex tools and methods. The steam grist mill, with its complicated machinery exhibiting every diversity of motion, is simply what the rude stone mortar dug up from an ancient river bed was in its day — an instrument for grinding corn. And every man engaged in it, whether tossing wood into the furnace, running the engine, dressing stones, printing sacks or keeping books, is really devoting his labor to the same purpose that the prehistoric savage did when he used his mortar — the preparation of grain for human food.

And so, if we reduce to their lowest terms all the complex operations of modern production, we see that each individual who takes part in this infinitely subdivided and intricate network of production and exchange is really doing what the primeval man did when he climbed the trees for fruit or followed the receding tide for shellfish — endeavoring to obtain from nature by the exertion of his powers the satisfaction of his desires. If we keep this firmly in mind, if we look upon production as a whole — as the co-operation of all embraced in any of its great groups to satisfy the various desires of each, we plainly see that the reward each obtains for his exertions comes as truly and as directly from nature as the result of that exertion, as did that of the first man.

To illustrate: in the simplest state of which we can conceive, each man digs his own bait and catches his own fish. The advantages of the division of labor soon become apparent, and one digs bait while the others fish. Yet evidently the one who digs bait is in reality doing as much toward the catching of fish as any of those who actually take the fish. So when the advantages of canoes are discovered, and instead of all going a-fishing, one stays behind and makes and repairs canoes, the canoe-maker is in reality devoting his labor to the taking of fish as much as the actual fishermen, and the fish which he eats at night when the fishermen come home are as truly the product of his labor as of theirs. And thus when the division of labor is fairly inaugurated, and instead of each attempting to satisfy all of his wants by direct resort to nature, one fishes, another hunts, a third picks berries, a fourth gathers fruit, a fifth makes tools, a sixth builds huts, and a seventh prepares clothing -- each one is to the extent he exchanges the direct product of his own labor for the direct product of the labor of others really applying his own labor to the production of the things be uses -- is in effect satisfying his particular desires by the exertion of his particular powers; that is to say, what be receives be in reality produces. If he digs roots and exchanges them for venison, he is in effect as truly the procurer of the venison as though be had gone in chase of the deer and left the huntsman to dig his own roots. The common expression, "I made so and so," signifying "I earned so and so," or "I earned money with which I purchased so and so," is, economically speaking, not metaphorically but literally true. Earning is making.

Now, if we follow these principles, obvious enough in a simpler state of society, through the complexities of the state we call civilized, we shall see clearly that in every case in which labor is exchanged for commodities, production really precedes enjoyment; that wages are the earnings -- that is to say, the makings of labor — not the advances of capital, and that the laborer who receives his wages in money (coined or printed, it may be, before his labor commenced) really receives in return for the addition his labor has made to the general stock of wealth, a draft upon that general stock, which he may utilize in any particular form of wealth that will best satisfy his desires; and that neither the money, which is but the draft, nor the particular form of wealth which he uses it to call for, represents advances of capital for his maintenance, but on the contrary represents the wealth, or a portion of the wealth, his labor has already added to the general stock.

Keeping these principles in view we see that

• the draughtsman, who, shut up in some dingy office on the banks of the Thames, is drawing the plans for a great marine engine, is in reality devoting his labor to the production of bread and meat as truly as though he were garnering the grain in California or swinging a lariat on a La Plata pampa; that he is as truly making his own clothing as though he were shearing sheep in Australia or weaving cloth in Paisley, and just as effectually producing the claret he drinks at dinner as though he gathered the grapes on the banks of the Garonne.
• The miner who, two thousand feet under ground in the heart of the Comstock, is digging out silver ore, is, in effect, by virtue of a thousand exchanges, harvesting crops in valleys five thousand feet nearer the earth's center; chasing the whale through Arctic icefields; plucking tobacco leaves in Virginia; picking coffee berries in Honduras; cutting sugar cane on the Hawaiian Islands; gathering cotton in Georgia or weaving it in Manchester or Lowell; making quaint wooden toys for his children in the Hartz Mountains; or plucking amid the green and gold of Los Angeles orchards the oranges which, when his shift is relieved, he will take home to his sick wife.

The wages which he receives on Saturday night at the mouth of the shaft, what are they but the certificate to all the world that he has done these things -- the primary exchange in the long series which transmutes his labor into the things he has really been laboring for? ... read the entire chapter

Rev. A. C. Auchmuty: Gems from George, a themed collection of excerpts from the writings of Henry George (with links to sources)

LET us try to trace the genesis of civilization. Gifted alone with the power of relating cause and effect, man is among all animals the only producer in the true sense of the term. . . . But the same quality of reason which makes him the producer, also, wherever exchange becomes possible, makes him the exchanger. And it is along this line of exchanging that the body economic is evolved and develops, and that all the advances of civilization are primarily made. . . . With the beginning of exchange or trade among men this body economic begins to form, and in its beginning civilization begins. . . . To find an utterly uncivilized people, we must find a people among whom there is no exchange or trade. Such a people does not exist, and, as far as our knowledge goes, never did. To find a fully civilized people, we must find a people among whom exchange or trade is absolutely free, and has reached the fullest development to which human desires can carry it. There is, as yet, unfortunately, no such people. — The Science of Political Economy — unabridged: Book I, Chapter 5, The Meaning of Political Economy: The Origin and Genesis of Civilization • abridged: Chapter 4, The Origin and Genesis of Civilization

WHEN we, come to analyze production, we find it to fall into three modes, viz::
ADAPTING, or changing natural products either in form or in place so as to fit them for the satisfaction of human desire.
GROWING, or utilizing the vital forces of nature, as by raising vegetables or animals.
EXCHANGING, or utilizing, so as to add to the general sum of wealth, the higher powers of those natural forces which vary with locality, or of those human forces which vary with situation, occupation, or character. — Progress & Poverty — Book III, Chapter 3, The Laws of Distribution: of Interest and the Cause of Interest

THESE modes seem to appear and to assume importance, in the development of human society, much in the order here given. They originate from the increase of the desires of men with the increase of the means of satisfying them, under pressure of the fundamental law of political economy, that men seek to satisfy their desires with the least exertion. In the primitive stage of human life the readiest way of satisfying desires is by adapting to human use what is found in existence. In a later and more settled stage it is discovered that certain desires can be more easily and more fully satisfied by utilizing the principle of growth and reproduction, as by cultivating vegetables and breeding animals. And in a still later period of development, it becomes obvious that certain desires can be better and more easily satisfied by exchange, which brings out the principle of co-operation more fully and powerfully than could obtain among unexchanging economic units. — The Science of Political Economy unabridged: Book III, Chapter 2, The Production of Wealth: The Three Modes of Production • abridged: Part III, Chapter 2, The Production of Wealth: The Three Modes of Production

IN the economic meaning of the term production, the transporter or exchanger, or anyone engaged in any subdivision of those functions, is as truly engaged in production as is the primary extractor or maker. A newspaper-carrier or the keeper of a news-stand would, for instance, in common speech be styled a distributor. But in economic terminology he is not a distributor of wealth, but a producer of wealth. Although his part in the process of producing the newspaper to the final receiver comes last, not first, he is as much a producer as the paper-maker or type-founder, the editor, or compositor, or press-man. For the object of production is the satisfaction of human desires, that is to say, it is consumption; and this object is not made capable of attainment, that is to say, production is not really complete, until wealth is brought to the place where it is to be consumed and put at the disposal of him whose desire it is to satisfy.  — The Science of Political Economy unabridged: Book III, Chapter 1, The Production of Wealth: The Meaning of Production • abridged: Part III, Chapter 1, The Production of Wealth: The Meaning of Production

PRODUCTION and distribution are not separate things, but two mentally distinguishable parts of one thing — the exertion of human labor in the satisfaction of human desire. Though materially distinguishable, they are as closely related as the two arms of the syphon. And as it is the outflow of water at the longer end of the syphon that is the cause of the inflow of water at the shorter end, so it is that distribution is really the cause of production, not production the cause of distribution. In the ordinary course, things are not distributed because they have been produced, but are produced in order that they may be distributed. Thus interference with the distribution of wealth is interference with the production of wealth, and shows its effect in lessened production. — The Science of Political Economy — unabridged Book IV, Chapter 2, The Distribution of Wealth: The Nature of Distribution • abridged Part IV, Chapter 2, The Distribution of Wealth: The Nature of Distribution

OUR inquiry into the laws of the distribution of wealth is not an inquiry into the municipal laws or human enactments which either here and now, or in any other time and place, prescribe or have prescribed how wealth shall be divided among men. With them we have no concern, unless it may be for purposes of illustration. What we have to seek are those laws of the distribution of wealth which belong to the natural order — laws which are a part of that system or arrangement which constitutes the social organism or body economic, as distinguished from the body politic or state, the Greater Leviathan which makes its appearance with civilization and develops with its advance. These natural laws are in all times and places the same, and though they may be crossed by human enactment, can never be annulled or swerved by it. It is more needful to call this to mind, because, in what have passed for systematic treatises on political economy, the fact that it is with natural laws, not human laws, that the science of political economy is concerned, has, in treating of the distribution of wealth, been utterly ignored, and even flatly denied. — The Science of Political Economy — unabridged: Part IV, Chapter 1, The Distribution of Wealth: The Meaning of Distribution • abridged: Part IV, Chapter 1, The Distribution of Wealth: The Meaning of Distribution

THE distinction between the laws of production and the laws of distribution is not, as is erroneously taught in the scholastic political economy, that the one set of laws are natural laws and the other human laws. Both sets of laws are laws of nature. The real distinction is that the natural laws of production are physical laws and the natural laws of distribution are moral laws. . . . The moment we turn from a consideration of the laws of the production of wealth to a consideration of the laws of the distribution of wealth, the idea of ought or duty becomes primary. All consideration of distribution involves the ethical principle, is necessarily a consideration of ought or duty — a consideration in which the idea of right or justice is from the very first involved. — The Science of Political Economy — unabridged: Book IV, Chapter 4, The Distribution of Wealth: The Real Difference Between Laws of Production and of Distribution • abridged: Part IV, Chapter 3: The Distribution of Wealth: Physical and Moral Laws

Co-operation — its Two Modes

ALL increase in the productive power of man over that with which nature endows the individual comes from the co-operation of individuals. But there are two ways in which this co-operation may take place. 1. By the combination of effort. In this way individuals may accomplish what exceeds the full power of the individual. 2. By the separation of effort. In this way the individual may accomplish for more than one what does not require the full power of the individual. . . . To illustrate: The first way of co-operation, the combination of labor, enables a number of men to remove a rock or to raise a log that would be too heavy for them separately. In this way men conjoin themselves, as it were, into one stronger man. Or, to take an example so common in the early days of American settlement that "log-rolling" has become a term for legislative combination: Tom, Dick, Harry and Jim are building near each other their rude houses in the clearings. Each hews his own trees, but the logs are too heavy for one man to get into place. So the four unite their efforts, first rolling one man's logs into place and then another's, until, the logs of all four having been placed, the result is the same as if each had been enabled to concentrate into one time the force he could exert in four different times. . . . But, while great advantages result from the ability of individuals, by the combination of labor to concentrate themselves, as it were, into one larger man, there are other times and other things in which an individual could accomplish more if he could divide himself, as it were, into a number of smaller men. . . . What the division of labor does, is to permit men, as it were, so to divide themselves, thus enormously increasing their total effectiveness. To illustrate from the example used before: While at times Tom, Dick, Harry and Jim might each wish to move logs, at other times they might each need to get something from a village distant two days' journey. To satisfy this need individually would thus require two days' effort on the part of each. But if Tom alone goes, performing the errands for all, and the others each do half a days' work for him, the result is that all get at the expense of half a day's effort on the part of each what otherwise would have required two days' effort. — The Science of Political Economy — unabridged: Book III, Chapter 9, The Production of Wealth: Cooperation — Its Two Ways • abridged: Part III, Chapter 7, The Production of Wealth: Co-operation: Its Two Ways

Co-operation — its Two Kinds

WE have seen that there are two ways or modes in which co-operation increases productive power. If we ask how co-operation is itself brought about, we see that there is in this also a distinction, and that co-operation is of two essentially different kinds. . .. There is one kind of co-operation, proceeding, as it were, from without, which results from the conscious direction of a controlling will to a definite end. This we may call directed or conscious co-operation. There is another kind of co-operation, proceeding, as it were, from within, which results from a correlation in the actions of independent wills, each seeking but its own immediate purpose, and careless, if not indeed ignorant, of the general result. This we may call spontaneous or unconscious co-operation. The movement of a great army is a good type of co-operation of the one kind. Here the actions of many individuals are subordinated to, and directed by, one conscious will, they becoming, as it were, its body and executing its thought. The providing of a great city with all the manifold things which are constantly needed by its inhabitants is a good type of co-operation of the other kind. This kind of co-operation is far wider, far finer, far more strongly and delicately organized, than the kind of co-operation involved in the movements of an army, yet it is brought about not by subordination to the direction of one conscious will, which knows the general result at which it aims, but by the correlation of actions originating in many independent wills, each aiming at its own small purpose without care for, or thought of; the general result. The one kind of co-operation seems to have its analogue in those related movements of our body which we are able consciously to direct. The other kind of co-operation seems to have its analogue in the correlation of the innumerable movement, of which we are unconscious, that maintain the bodily frame — motions which in their complexity, delicacy and precision far transcend our powers of conscious direction, yet by whose perfect adjustment to each other and to the purpose of the whole, that co-operation of part and function, that makes up the human body and keeps it in life and vigor, is brought about and supported. — The Science of Political Economy — unabridged: Book III, Chapter 10, The Production of Wealth: Cooperation — Its Two Kinds • abridged: Part III, Chapter 8, Cooperation: Its Two Kinds

To attempt to apply that kind of co-operation which requires direction from without to the work proper for that kind of co-operation which requires direction from within, is like asking the carpenter who can build a chicken-house to build a chicken also. — The Science of Political Economy — unabridged: Book III, Chapter 10, The Production of Wealth: Cooperation — Its Two Kinds • abridged: Part III, Chapter 8, Cooperation: Its Two Kinds

Co-operation and Competition

MANY if not most of the writers on political economy have treated exchange as a part of distribution. On the contrary, it belongs to production. It is by exchange, and through exchange, that man obtains, and is able to exert, the power of co-operation which, with the advance of civilization, so enormously increases his ability to produce wealth. — The Science of Political Economy — unabridged: Book III, Chapter 11, The Production of Wealth: The Office of Exchange in Production • unabridged Chapter 9, The Office of Exchange in Production

THEY who, seeing how men are forced by competition to the extreme of human wretchedness, jump to the conclusion that competition should be abolished, are like those who, seeing a house burn down, would prohibit the use of fire.

The air we breathe exerts upon every square inch of our bodies a pressure of fifteen pounds. Were this pressure exerted only on one side, it would pin us to the ground and crush us to a jelly. But being exerted on all sides, we move under it with perfect freedom. It not only does not inconvenience us, but it serves such indispensable purposes that, relieved of its pressure, we should die.

So it is with competition. Where there exists a class denied all right to the element necessary to life arid labor, competition is one-sided, and as population increases must press the lowest class into virtual slavery, and even starvation. But where the natural rights of all are secured, then competition, acting on every hand — between employers as between employed, between buyers as between sellers — can injure no one.

On the contrary it becomes the most simple, most extensive, most elastic, and most refined system of co-operation that, in the present stage of social development, and in the domain where it will freely act, we can rely on for the co-ordination of industry and the economizing of social forces.

In short, competition plays just such a part in the social organism as those vital impulses which are beneath consciousness do in the bodily organism. With it, as with them, it is only necessary that it should be free. The line at which the state should come in is that where free competition becomes impossible — a line analogous to that which in the individual organism separates the conscious from the unconscious functions. There is such a line, though extreme socialists and extreme individualists both ignore it. The extreme individualist is like the man who would have his hunger provide him food; the extreme socialist is like the man who would have his conscious will direct his stomach how to digest it. — Protection or Free Trade, chapter 28 econlib

THE mere abolition of protection — the mere substitution of a revenue tariff for a protective tariff — is such a lame and timorous application of the free-trade principle that it is a misnomer to speak of it as free trade. A revenue tariff is only a somewhat milder restriction on trade than a protective tariff.
 
Free trade, in its true meaning, requires not merely the abolition of protection but the sweeping away of all tariffs — the abolition of all restrictions (save those imposed in the interests of public health or morals) on the bringing of things into a country or the carrying of things out of a country.

But free trade cannot logically stop with the abolition of custom-houses. It applies as well to domestic as to foreign trade, and in its true sense requires the abolition of all internal taxes that fall on buying, selling, transporting or exchanging, on the making of any transaction or the carrying on of any business, save of course where the motive of the tax is public safety, health or morals. Thus the adoption of true free trade involves the abolition of all indirect taxation of whatever kind, and the resort to direct taxation for all public revenues.

But this is not all. Trade, as we have seen, is a mode of production, and the freeing of trade is beneficial because it is a freeing of production. For the same reason, therefore, that we ought not to tax anyone for adding to the wealth of a country by bringing valuable things into it, we ought not to tax anyone for adding to the wealth of a country by producing within that country valuable things. Thus the principle of free trade requires that we should not merely abolish all indirect taxes, but that we should abolish as well all direct taxes on things that are the produce of labor; that we should, in short, give full play to the natural stimulus to production — the possession and enjoyment of the things produced — by imposing no tax whatever upon the production, accumulation or possession of wealth (the things produced by labor), leaving everyone free to make exchange, give, spend or bequeath. — Protection or Free Trade — Chapter 26: True Free Trade - econlib -|- abridged 

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