The People’s Republic: The Forces At Work

CONTINUED FROM LAST WEEK

Granting his own expertise, the supreme and overriding objective of the entrepreneur is to so organise his production activities as to make each of the other three factors give its very best. He must do more than these. He must ensure that more is produced than is required for immediate consumption; and he must ensure the increasing quantity and ever-rising quality of the things produced, to meet the ever- growing demands of a rising population with changing tastes and fashions.

In order to achieve these laudable and necessary objectives, he must extract natural resources from Nature and transform them; he must move them either in their natural or transformed state, from place to place; he must market them; and he must preserve and store them to ensure their availability during periods or seasons when Nature does not normally lend support to their primary production. These stage~ of production can be precisely specified and elaborated.

(i) The first stage is the extraction of raw materials and power from Nature; such as farming and agriculture of all kinds, fishing, mining, etc. This is the primary stage of production, and all those who participate in it are said to be engaged in primary occupation.

(ii) The second stage is the processing of raw materials, that is, converting them into semi-manufactured and finished goods: such as the conversion of latex into crepe and of the latter into tyres; of cocoa into chocolate; of raw cotton into textiles; the canning of oranges, pineapples, tomatoes and the like with a view to preserving them for consumption in seasons when Nature does not lend support to their primary production. This is the secondary or manufacturing stage of production, and its participants are said to be engaged in secondary or manufacturing occupation.

These two stages would have been ample if all the raw materials required for the manufacture of goods were available in close proximity to the factories, and all the prospective consumers were also living close by the factories. But we have already noted that this is not always the case in the vast majority of instances. Therefore, in addition to these primary and secondary occupations, there are other occupations which are essential to the complete production of any goods. Here we have used ‘complete production’ advisedly, because goods are not completely produced until they are in the form and place where they are ready, and are accessible to the consumers, for consumption. These other occupations are as follows:

(i) Transport occupations which consist of the railways, shipping, road transport plus all the ancillary clerical, mental, and manual activities. These occupations ensure the movement of raw materials and semi-manufactured goods to factories, and of the finished goods from factories to wholesale and retail distributive centres, and sometimes from these centres to individual consumers.

(ii) Distributive occupations which consist of middlemen of various kinds including wholesalers, retailers, commercial travellers, commission agents, advertising agents, together with all the ancillary clerical and other activities. These occupations handle the marketing and distribution of goods, and ensures that they reach individual consumers.

(iii) Banking and insurance occupations which facilitate the smooth, rapid, and efficient working of the extractive, manufacturing, transport, and distributive occupations, by the provision of credit and the underwriting of risks.

(iv) Infrastructural occupations which are responsible for those services without which neither the consumers nor the producers will be in a fit state to consume or produce; and without which society itself will be in a state of disorder, with consequent ill- effects on both the consumers and producers. These are the occupations of the doctor, teacher, lawyer, domestic servant, civil servant, members of the armed forces, policemen, judges, local government officials, etc.

In each of these occupations, there are various industries, specialised branches, or callings. Four instances will be given in support of this assertion. In the primary occupations, there are agricultural, fishing, and mining industries, each of which has a number of specialised firms. In the transport occupations there are the road transport and railway industries within each of which there are a number of specializations. Banking and insurance are distinct occupations; but in each of them there are also a number of specializations. In the infrastructural occupations, no one has so far successfully combined the profession of medicine with that of law, each of which again has a number of its own specialities. For optimum efficiency, the entrepreneur cannot, generally speaking, specialise in more than one industry, specialised branch or calling. If one entrepreneur is in a specified branch of the agricultural or mining industry, he must, for the sake of efficiency, leave the transportation of his products entirely to another entrepreneur who specialises in an appropriate branch of the road transport or railway industry. An entrepreneur may operate through a one-man concern, a partnership, or a joint-stock undertaking.

The picture which emerges from the foregoing considerations is that of a welter of consumers versus a multitude of unco-ordinated producers or entrepreneurs. The problem thus created is complicated by the fact that each consumer is free to consume what he likes, and each producer is also free to produce what he likes, though it must be stated that both are subject to limitations which we shall discuss later. Furthermore, in order that the producer may meet and satisfy the wants of this welter of consumers and make some profits for himself, he.must, as we have noted, see to it that each factor of production has a maximum efficiency. It follows, therefore, that in his particular occupation, he must, from time to time, seek to improve the efficiency of each of the other three factors with a view to maximizing it. Let us have a quick look.at how this may be done.

 

Land

The utmost fertility of the land must be maintained. A fertile land diminishes in quality with use; and some lands, though virgin, lack the requisite fertility.

CONTINUES NEXT WEEK

 

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