“A MILLION DOLLARS A DAY!” the headlines roared.
That is what attorney and future Supreme Court justice Louis Brandeis said the railroads could save by giving up familiar methods and adopting the latest efficiencies. Increase rates for the sake of purchasing rolling stock and repairing the roadbeds? Nonsense. The rates are too high already, Brandeis told the railroads; just do a better job of managing your workers, and you will have more than enough.
This was the substance of the winning argument in what is now remembered as the Eastern Rate Case. The Hepburn Act of 1906 had empowered the Interstate Commerce Commission (ICC) to put a ceiling on rates, and in 1910 the railroads were trying to get the ceiling raised. Brandeis, already famous for his ability to cloud the issues with great masses of data and the latest terminology, said their request was out of line. They did not need to charge more, he insisted. They just needed to apply the principles of “scientific management.”
Brandeis had never used the term before, and neither had anyone else. He seems to have invented it on the fly. It caught on, though, and the man to whose ideas it referred was catapulted to international renown. His name was Frederick W. Taylor, and his story is worth retelling because of what it teaches about modern statism.
The Age of Utopias
Taylor’s ideas must be understood against the background of the world in which he grew up. It was a time of breathtaking improvement. Real wages doubled between 1865 and 1890 and would double again by 1921. In 1890 industrial laborers worked an average of 60 hours a week; by 1910 the figure was down to 55 hours, and by 1929 it would be down to 50. Merchants like A. T. Stewart brought household luxuries within the reach of millions. George Gilman and George Huntington Hartford’s A&P stores put a wide variety of groceries within an easy walk of many homes. Singer sewing machines became a household fixture. In the 60 years after the Civil War American life expectancy increased rapidly, in some states by as much as 50 percent. Progressive propaganda notwithstanding, child labor had all but disappeared. Thanks to the efforts of John D. Rockefeller the price of kerosene—already an incredible bargain when compared to the whale oil that preceded it—fell by over two-thirds between 1860 and 1885.
Paradoxically, this was also a time in which many were unable to recognize the improvement for what it was. Henry George, whose Progress and Poverty came out in 1879 and sold more than 2 million copies in the next 20 years, believed that technological progress had dramatically worsened the situation of the average worker. “Wherever the new forces are anything like fully utilized,” he wrote, “large classes are maintained by charity . . . men die of starvation and puny infants suckle dry breasts.” Washington Gladden told his increasingly well-heeled congregation about the tendencies “of wages to sink to starvation point” and “of the workman’s share of the national wealth to grow constantly smaller.” Walter Rauschenbusch described the economy as a “gladiatorial game in which there is no mercy and in which ninety per cent of the combatants finally strew the arena.”
According to Robert Heilbroner, such sentiments were part of a critical mindset that was the inevitable correlate of rapid progress. It might be better said that they were the result of a mindset so insistent on sheltering itself from the clearing breeze of historical perspective that it always remained in a fog. From what earlier period, asked Clarence B. Carson, were the circumstances of the late nineteenth century actually a decline? Compared to where in the world or to what time in history did things seem so bad? Nineteenth century China? Antiquity? Medieval Europe? In all these and in every other historical situation we know about, the actual life of actual people was far less fortunate than in the world against which George, Gladden, and Rauschenbusch raised their protests.
Reality, though, never comes off well when compared to the perfect world of our grandest dreams. A future from which imagination has removed the constraints has a distinct advantage over the present. About this world and this future there were many late-nineteenth-century writers who could tell the story. The most popular was Edward Bellamy, whose Looking Backward hit the bookstands in 1888 and by 1890 was selling at the rate of 10,000 copies a week. It was the account of a man who was put to sleep in 1887 and awakened in 2000 to discover that everything the Progressives dreamed about had come to pass. Early in the twentieth century, he explained, the economy had been entrusted to “a single syndicate representing the people, to be conducted in the common interest for the common profit.” The result was a world in which human creativity had climbed to new heights and in which there were no wars, no crime, no poverty, no political corruption, and no labor disputes. Incomes had been equalized, competition had disappeared, and everyone enjoyed all of life’s material benefits.
As to the processes that gave rise to this state of affairs, Bellamy offered only tantalizing hints. One of these was that in the world as he envisioned it, production would be “scientifically” organized. A second was that labor would be provided by an “industrial army,” for which every male between the ages of 21 and 45 was expected to volunteer. Even as he wrote, there were some who saw that an army of this kind could measure up to expectations only if it had the right commander. One of the first to suggest himself was Frederick W. Taylor.
Taylor was the son of a prosperous Quaker lawyer. His mother’s close friendships with people like Lucretia Mott suggest that he was raised in an environment of relentless chatter about the need for social reform. He was homeschooled until he was 12, and then he studied for two years in France and Germany. He next set out for a European tour very much like the one on which Adam Smith had accompanied the young Duke of Buccleuch a century earlier. Taylor was 16 when he began his studies at New Hampshire’s prestigious Phillips Exeter Academy. His parents were expecting him next to matriculate at Harvard and were shocked to learn that he had taken an apprenticeship with the Enterprise Hydraulic Works.
Taylor had not been working for long before he discovered, as every one of history’s other employees has discovered, that his bosses were making a lot of mistakes. It was on these mistakes that he put the blame for poor labor-management relations and the workers’ tendency to turn out less than he knew they could. When he had risen through the ranks, however, and found himself in a position of authority at Midvale Steel, he discovered that what managers ought to do was less obvious than it had seemed when someone else had been giving the orders.
Rather than earning a regular salary or an hourly wage, the men working under him were being paid according to the number of pieces they produced. Taylor tried to help them earn more by suggesting better techniques. The Panic of 1873 (which before the 1930s was what people meant by “The Depression”) was unfortunately still in their minds, and they were afraid that reaching their quotas too quickly would lead to layoffs. Some of the more experienced among them may have resented this well-placed young whippersnapper’s opinion that he knew more about their work than they did. In spite of his admonitions they returned to their old methods. Apparently hoping that it would force them to adopt the recommended efficiencies and turn out more, Taylor cut the amount they were paid for each piece. They responded by jamming the machines. He responded by fining them.
The Tyranny of the Thumb
As to whether this see-saw settled at last into a happy balance, we have only Taylor’s account, and his other reports have been discovered to contain enough modifications of the truth as to raise some doubts about this one. However that may be, it was at this point that he discovered his purpose in life. He would henceforward dedicate himself to a battle against the old familiar methods, which he called the “tyranny of the thumb.” Experience had taught him the difficulty of fighting this battle with the people who were actually doing the work, so he turned to their employers. (If one cannot do a thing, there is always the possibility of teaching someone else to do it.) He had by means of a correspondence course earned a degree in engineering, and during his years at Midvale he had acquired an understanding of accounting, so he was ready to go on. Thirty-seven years old, he set himself up in 1893 as a specialist in “Systematizing Shop Management and Manufacturing Costs.”
The system he shared with his clients may be described as an ellipse, for which the first of the two foci was “the one best way.” Taylor taught that the ways in which a job might be performed fell into two categories: the right one and all the others. To discover the right one, he watched men working and created files of (a) the movements involved and (b) the time they took. He then developed breathtakingly elaborate formulae showing how to minimize the (a) and the (b) of every job. The application of this formula, he said, would lead to the lowest possible costs and the maximum possible productivity. Trained to use the “one best way,” workers would become more valuable not only to their employers but also to themselves.
The First-Class Man
The second focus of the ellipse was what Taylor called “the first class man.” Taylor described this individual as a normal person who was mentally and physically suited to his job and willing to give his best. There was for everyone, in Taylor’s thought, some task for which he or she was perfectly suited and therefore capable of becoming a “first class” person. Not everyone, though, was perfectly or even approximately right for every task. For the scientifically designed job it was necessary to select scientifically the person who was ideally suited to learn to do it perfectly.
Outside the ellipse determined by these foci were competition, injustice, and strife. Within it were joy and prosperity. Taylor said that that scientific management substituted peace for war, friendly cooperation for heated arguments, pulling in the same direction for pulling apart, and “mutual confidence” for “suspicious watchfulness.” Assigned to jobs that were perfectly designed and for which they were perfectly suited and perfectly trained, first-class workers would be both productive and content. Workers and capitalists could then “take their eyes off the division of the surplus as the all-important matter, and together turn their attention toward increasing the size of the surplus” until it becomes so large “that it is unnecessary to quarrel over how it should be divided.”
The Progressives read this description with a wide-eyed and even tearful wonder. It was just what they had always wanted: an economic system that, because it did not depend on self-interest or competition, could never lead to unjust riches, undeserved poverty, or labor violence. It was exactly what Bellamy had predicted, a “scientifically organized” system of production that elicited the highest possible level of effort from the worker and provided him with all he needed. Among Taylor’s breathless admirers were Ida M. Tarbell, Walter Lippmann, and Theodore Roosevelt. As many of them as still believed in Heaven could almost believe that they had died and gone there. Morris L. Cooke, a leading proponent of the “Social Gospel,” wrote that “neither the visions of Christianity nor the dreams of democracy” would be realized until “the principles of scientific management have permeated every nook and cranny of the working world.” Of scientific management’s many advocates, though, the one who understood it best was Lenin.
Lenin’s Seal of Approval
Lenin had read as much about utopia as anyone else, probably more, and he believed he could bring it into being. He thought of himself as a hero, not a villain. The Soviet national anthem talked about “the new path where Great Lenin did lead” and “the righteous cause” to which “he raised up the peoples.” He planned at first to ruin only “the oppressors” but soon ran into resistance from the very people he wanted to help. They unfortunately had their own ideas about what was best for them, and Lenin hoped that Scientific Management might be of some aid in dispelling their illusions. “We must arrange in Russia the study and teaching of the Taylor system,” he wrote, “and systematically try it out and adapt it to our own needs.”
He would have been well advised to consider Taylor’s own experience in attempting to apply these principles. The opinions of the acting individual are shaped by things of which not even the person himself is fully conscious and of which an external observer has not the slightest hint. Taylor never stopped to consider that the real expert about any job is usually the person performing it. The agonies of early Soviet history sprang almost entirely from the fact that, like Taylor, Lenin was acting on the basis of how he wanted people to behave rather than an understanding of why they behaved as they did. Both systems failed because of the false assumptions on which they were based.
Centuries earlier, Plato had seen that the realities of human nature would always be a problem for the social planner. The solution, he said, was education. Teach people that the majority are made of bronze or iron, are therefore suited only for economic tasks, and should leave the thinking to the few made of gold. Such indoctrination takes a long time, though, and revolutionaries rarely have much time. Lenin liked Taylor’s solution because it was more direct. Taylor thought that if the orders were sufficiently precise it would be enough simply to issue them. “Our scheme does not ask for any initiative in a man,” he said. “We do not care for his initiative. It is up to us to do all the talking, and John all the listening.”
This is the military solution, and there are some situations in which it does seem to work. When artillery roars in the distance and bullets fly through the bushes and the screams of wounded men fill the air, precise commands and instinctive obedience may be the best options. While valuable and perhaps even necessary in the face of a terror that isolates the individual from his past, these become less effective as the emergency recedes. People habituated to them begin to idle when there is a break in the stream of orders: thus the expression “soldiering,” one of Taylor’s favorites, which he discovered in Henry V. Poor’s record of how Major General Daniel C. McCallum built railroads to supply Sherman’s Atlanta campaign.
In the complexity of real work situations and in the infinitely greater complexity of the economic order, the qualities most in demand are precisely those that the military solution sets aside: individual experience, motivation, and insight. Scientific management was impractical because these were the qualities it aimed to eliminate. It came close to working as advertised only one time. In this case the worker selected was a man to whom Taylor referred as “Schmidt.” Schmidt’s qualifications? Taylor said that they were being “mentally sluggish” and “about as intelligent as an ox.” Taylor pointed to one of his assistants and told Schmidt to “do exactly as this man tells you from morning til night.”
The “first class man” turns out in practice to have been a person who was capable of nothing greater than mindless obedience. If it is impossible to rely on the intelligence and motivation of the people actually doing the work, however, resort must be had to a large number of administrators, and costs rise. Commenting on the Nazi use of slave labor, Albert Speer said it would have been less expensive to just let the guards and supervisors do the work. If the real Schmidts of the real workforce had in fact possessed the requisite stupidity, they would have been prohibitively expensive employees. A real-world employer would have had to pay not only the laborers’ piece rates but also the salaries of what Taylor called the “college men” who were given charge over them.
Its appealing ad copy notwithstanding, scientific management was never about efficiency. Nor was it about the workers, for whom Taylor felt a thinly veiled contempt: Schmidt, he said, was really not much more than “a trained gorilla.” It was not even “scientific,” at least not in the sense of discovering from experiment what will work and what will not. Learning of that kind is impossible if one already knows “the one best way.” Scientific management was about having a plan and being sure that everyone complied with it. It was statism writ small.
Scientific management is a historical case study on the failure of social planning. Utopians, though, are so busy with their dreams about the future that they have no time for the facts of history.