ocial groups is impossible, should remember that
the organs of the human body have been gaming experience in co-operative
and harmonious function for hundreds of thousands or for millions of
years, while the organization of society is an art that is still in its
extreme infancy. The astonishing thing about the various social groups
is not that they work so badly together, but that they work so well.

As the centralization of authority increases, the amount of red-tape
piles up until more social energy is consumed in overcoming social
inertia and the friction that is the result of social function, than is
produced by the function in question. When this point is reached, the
social machinery operates at a constant loss, and it is only a question
of time when it will cease to operate altogether, and the social
machinery will begin to disintegrate into its constituent elements. The
greater the degree, therefore, of localization, provided the mechanism
can be held together and kept in working order, the less the loss in
social energy.

4. _An Ideal Economic Unit_

The social group thus faces two problems: One is the development of
sufficient energy to keep the social machinery going. This problem is
tied up with the stimulation of human wants, as it is only from the
aroused energies of men and women that the social energy is derived. The
other is the reduction of social friction and other forms of social
waste to a minimum, in order that the largest possible amount of social
energy may be devoted to the work of driving society.

The present social order relies, in part, for its driving power on man's
desire for personal economic advantage. Where the rewards have been
considerable, large amounts of energy and ingenuity have been developed
as the result of this stimulus. The worker, the manager, the whole
producing unit strove to excel, both because failure carried with it the
penalty of destruction (bankruptcy or unemployment) and because success
carried with it the probability of large economic rewards (profits). The
result was an outpouring of social energy in the various independent
local groups.

The real difficulty inherent in the earlier stages of the present order
was not its failure to secure abundant human exertion, but its failure
to provide any means of co-operation between individuals and between
groups. The same set of social principles which decreed local rewards
and local punishments for initiative an