Factory is, of course, a very loose word, and Mr. Cole asks us to take it as meaning mines, shipyards, docks, stations, and every place which is "a natural center of production." [Footnote: _Op. cit._, p. 41] But a factory in this sense is quite a different thing from an industry. The factory, as Mr. Cole conceives it, is a work place where men are really in personal contact, an environment small enough to be known directly to all the workers. "This democracy if it is to be real, must come home to, and be exercisable directly by, every individual member of the Guild." [Footnote: _Op. cit._, p. 40.] This is important, because Mr. Cole, like Jefferson, is seeking a natural unit of government. The only natural unit is a perfectly familiar environment. Now a large plant, a railway system, a great coal field, is not a natural unit in this sense. Unless it is a very small factory indeed, what Mr. Cole is really thinking about is the shop. That is where men can be supposed to have "the habit and tradition of working together." The rest of the plant, the rest of the industry, is an inferred environment.
Anybody can see, and almost everybody will admit, that self-government in the purely internal affairs of the shop is government of affairs that "can be taken in at a single view." [Footnote: Aristotle, _Politics_, Bk. VII, Ch. IV.] But dispute would arise as to what constitute the internal affairs of a shop. Obviously the biggest interests, like wages, standards of production, the purchase of supplies, the marketing of the product, the larger planning of work, are by no means purely internal. The shop democracy has freedom, subject to enormous limiting conditions from the outside. It can deal to a certain extent with the arrangement of work laid out for the shop, it can deal with the temper and temperament of individuals, it can administer petty industrial justice, and act as a court of first instance in somewhat larger individual disputes. Above all it can act as a unit in dealing with other shops, and perhaps with the plant as a whole. But isolation is impossible. The unit of industrial democracy is thoroughly entangled in foreign affairs. And it is the management of these external relations that constitutes the test of the guild socialist theory.