The Profits of Revolution

In the last 50 years, the U.S. has undergone an industrial revolution as significant to the world as Britain's industrial revolution in the 18th Century. How has the U.S. revolution changed the industrial face and the standard of living of the nation? Last week, in a fact-packed, 26-page report, the Committee for Economic Development reported that a half-century of change had tripled the standard of living of the average U.S. worker.

The average real wage (i.e., what wages actually buy in terms of consumer goods) rose from 43-c- an hour in 1900 (measured 1949 prices) to $1.33 an hour in 1950. In the same span, each worker's productivity rose 2.5% a year. If this increase continues, said C.E.D., real wages will double again before 1980.

New Machines. The C.E.D. report, Drepared by a subcommittee headed by United Airlines' William A. Patterson, was not only a study of wages; it was also a common-sense blueprint to show low a socially responsible U.S. capitalism could achieve the full benefits of the industrial revolution it had wrought.

The revolution was achieved by substiuting mechanical energy for human and animal energy on a vast scale, by developing mass production, better distribution, and "a multitude of new and improved machines," e.g., earth movers, cranes, mechanical mixers, coal-mining machines. Also developed was a complex new form of industrial organization to integrate the vast numbers of men and machines. Said C.E.D.: "The managers of 100 years ago [could not] administer enterprises ... as large as those in modern industry . . ." To run the huge new enterprises, corporations had perfected a vast system of management, run by staff and line officers, in turn guided by technical men--in effect, decentralized control of decentralized operations. The vast mechanization had been made possible by investing an average of 10% of the net U.S. product each year in new plants, equipment and inventories.

Bigger Target. To make up for the drain of the cold war, and provide for growing numbers of retired workers, C.E.D. thought that the U.S. would have to step up production in the future. The Government could make some major contributions to higher productivity, mainly through tax reforms, such as a quicker write-off of new machinery, and adjustment of taxes which now discourage investors.

In taking its part in the nation's prime task of preventing a major depression, C.E.D. said, industry itself has two big jobs of its own: 1) to find ways of reducing seasonal unemployment, and 2) to provide jobs for older people "who prefer work to retirement."

Management, said C.E.D., must also make the lives of its workers "more meaningful and satisfying" by making clear the importance of an individual's contribution to the total output, and by drawing on his ideas for improving output. Unions should relax their seniority rules, which have hampered "management's right to recognize ability and efficiency in making promotions." and swap their featherbedding requirements, where they exist, for higher wages.

Adding his own postscript to the report, C.E.D. Chairman Marion B. Folsom, treasurer of Eastman Kodak Co., summed up the job for management: "Everyone [must] receive, and feel that he is receiving, a square deal."

* And including Harvard Economists Sumner H. Slichter, Edward S. Mason and John T. Dunlop, VI.I.T.'s Douglass V. Brown, General Foods' 'hairman Clarence Francis, International Harvester's Chairman Fowler McCormick.

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