126 SECTIONAL ADDRESSES. 



admit. How far ' selling expenses,' for example, are to be counted sheer 

 economic waste depends upon their effects upon the aggregate product of 

 industry, as distinguished from their efiects upon the fortunes of particular 

 undertakings. 



Increasing returns are often spoken of as though they were attached 

 always to the growth of ' industries,' and I have not tried to avoid that 

 way of speaking of them, although I think that it may be a misleading 

 way. The point which I have in mind is something more than a quibble 

 about the proper definition of an industry, for it involves a particular 

 thesis with respect to the way in which increasing returns are reflected in 

 changes in the organisation of industrial activities. Much has been said 

 about industrial integration as a concomitant or a natural result of an 

 increasing industrial output. It obviously is, under particular conditions, 

 though I know of no satisfactory statement of just what those particular 

 conditions are. But the opposed process, industrial difierentiation, has 

 been and remains the type of change characteristically associated with 

 the growth of production. Notable as has been the increase in the com- 

 plexity of the apparatus of living, as shown by the increase in the variety 

 of goods offered in consumers' markets, the increase in the diversification 

 of intermediate products and of industries manufacturing special products 

 or groups of products has gone even further. 



The successors of the early printers, it has often been observed, are 

 not only the printers of to-day, with their own specialised establishments, 

 but also the producers of wood pulp, of various kinds of paper, of inks and 

 their different ingredients, of type-metal and of type, the group of industries 

 concerned with the technical parts of the producing of illustrations, and 

 the manufacturers of specialised tools and machines for use in printing 

 and in these various auxiliary industries. The list could be extended, 

 both by enumerating other industries which are directly ancillary to the 

 present printing trades and by going back to industries which, while 

 supplying the industries which supply the printing trades, also supply 

 other industries, concerned with preliminary stages in the making of final 

 products other than printed books and newspapers. I do not think that 

 the printing trades are an exceptional instance, but I shall not give other 

 examples, for I do not want this paper to be too much like a primer of 

 descriptive economics or an index to the reports of a census of production. 

 It is sufficiently obvious, anyhow, that over a large part of the field of 

 industry an increasingly intricate nexus of specialised undertakings has 

 inserted itself between the producer of raw materials and the consumer 

 of the final product. 



With the extension of the division of labour among industries the 

 representative firm, like the industry of which it is a part, loses its identity. 

 Its internal economies dissolve into the internal and external economies 

 of the more highly specialised undertakings which are its successors, and 

 are supplemented by new economies. In so far as it is an adjustment to 

 a new situation created by the growth of the final products of industry 

 the division of labour among industries is a vehicle of increasing returns. 

 It is more than a change of form incidental to the full securing of the 

 advantages of capitalistic methods of production — -although it is largely 

 that — for it has some advantages of its own which are independent of 



