148 ECONOMIC PRINCIPLES

for the purpose of dealing in the goods which they need.
This distributive co-operation or co-operative shopkeeping
has achieved marked success in Great Britain, and has
served to enable co-operative industrial enterprises to be set
on foot. Capital accumulated in one class of enterprise has
been invested in the other. It will be obvious that
co-operative production relies for success on the favourable
balance between two opposing tendencies. The operatives
are stimulated by the sense of proprietorship in the concern
where they are employed, and by the assurance that
whatever their efforts contribute to its profits is, in part, a
sain to themselves. But the success of modern industrial
anterprise depends in a very high degree on the ability and
devotion of its management, and these are often bound up
with the independence of such management. When the
=mployer is displaced, so far as the profits of the business
are dependent on his abilities, they disappear. In practice
t would appear that the displacement of the employer goes
far to destroy the profit, a share of which was the motive for
displacing him.
In profit-sharing, and in co-operative industry, the
remoteness of connection, between any individual's effort
and his share of profits, operates to weaken the stimulus
to exertion found in the profits. The advantage arising from
personal effort is shared among a host of others, and only
if they display extra diligence in their turn can this effect
ve offset. Since personal gain usually stimulates to exertion
more powerfully than advantages secured by one’s fellows
as the result of one’s efforts, the effect of the share of profit,
as a stimulus, is not as direct as can be secured by other
methods. Moreover, the entire effect of devoted effort on
the part of wage-earners may be lost through mistakes or
misfortunes of the management, and this again weakens the
stimulus afforded by anticipation of a share in profits, on
account of their doubtful amount. The moral effect of the
sense of proprietorship in the one case, or of being treated
with justice and consideration in the other, is not to be
ignored as an influence on work done. While the magnitude
of earnings has a most important effect on the physical