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activities in all their relations as economic life or economy. Accordingly, economics is the science which deals with the economy of man. A useful distinction in language is thus made between economy, the life itself, and economics, the science dealing with that life. If this distinction could always be observed, much confusion would be avoided.

We have economies of various sorts: the economy of an individual, of a family, a tribe, a city, a state, or a nation, and we have, correspondingly, many economic units. The dominant unit in ancient Greece, for example, was the household, which included the family and all the slaves and other dependents. These lived together and formed a little group by themselves. The economic life of Greece meant, largely, a sum of the economic activities of these households, each of which strove to be sufficient unto itself. It is interesting to know that many a well-managed Southern plantation before the late Civil War endeavored to produce all the means of life on the plantation, and in this respect, as in others, resembled a Greek household. But as time has progressed, these old groups have been partially dissolved, and in many instances in modern times the individual, in his economic activity, constitutes a unit, although the family is still the prevalent economic unit. It is a natural outcome of industrial progress, as already explained, that the relations between these units have multiplied indefinitely in number and in importance. This is simply another way of describing the growing interdependence of men. Economics deals especially with the mutual relations of economies of all kinds, private and public. It is chiefly, if not exclusively, a science of human relations, and without these relations could not exist.

Because of the organic connection of these relations in their common origin, man, and because economics deals with the individual as he is, and not with an artificially simplified "economic man," it is impossible wholly to dissociate the social sciences, and particularly impossible to divorce economics completely from ethics and politics. This does not mean that these sciences are all one and cannot be profitably subdivided. On the contrary, because of the limitations of the human mind, they must be

studied separately so far as is possible. Scientific progress, like industrial progress, comes largely through specialization and the division of labor. Man cannot profitably study things in general. What it does mean is that there is some territory common to all these sciences, and that occasionally the economist is forced to pass ethical judgment and to decide political questions. In the consideration of railway rates, for instance, the economist is not only compelled to pass judgment upon what is just and reasonable, but he discovers upon investigation that by common consent what is fair or reasonable is decided largely upon economic grounds. The same is true of the apportionment of taxes, in which subject ethical, legal, and economic questions are inextricably interwoven. Commercial policies, restrictive regulations, and sumptuary laws have been the very stuff and subject-matter of the science of economics from its very beginning. In analyzing the progress of the past or the conditions of the present, we are forced to pass judgment upon the success or failure of many laws and policies which are still in force or under active discussion. Many of these must be indorsed or repudiated either solely or largely upon economic grounds; and because of these facts, the economist cannot, even if he would, refrain from passing judgment upon laws and political policies. Nevertheless, as was stated before, economics does not undertake the complete and systematic study of law, ethics, and politics, and its conclusions must almost always be supplemented by non-economic considerations which the economist may not have taken into account.

In the preface to the first edition of his Principles of Economics, Professor Marshall seems to dissent from the views here expressed, maintaining that "the laws of economics are statements of tendencies expressed in the indicative mode and not ethical precepts in the imperative." But even this most cautious and consistent of economists cannot refrain from laying down ethical precepts in many parts of his work. On almost the very last page he declares that: "The most imperative duty of this generation is to provide for the young such opportunities as will both develop their higher nature, and make them efficient producers. And an essential condition to this end is long-continued freedom from mechanical toil; together with abundant leisure for school and for such kinds of play as strengthen and develop the character."

'Marshall, Principles of Economics, 5th ed., p. 720.

Principal Divisions of Economics. This view of the inevitably practical character of economic science is carried out in the treatment of the subject in the following pages. The history and evolution of economic society, sketched in Book I, are followed, in Book II, by a discussion of the consumption, production, exchange and distribution of wealth. These subjects are treated in close connection with those illustrative economic problems of which the so-called "economic theory," at its best, is but a more comprehensive and consequently more abstract analysis. Book III has been reserved for the subject of public finance, which, in the opinion of the authors, constitutes as integral a part of economic science as the subjects of money or international trade. In Book IV is given a brief sketch of the history of economic thought:

QUESTIONS

1. What is the most essential characteristic of economics? Define economics.

2. Is man or goods the more prominent thing in economic study? Does economics teach the student how to get rich?

3. What determines ultimately whether a man is poor or not? What kinds of poverty are there?

4. What is meant by "dear labor"? Is it a good thing for society in general? for employers in general? for an individual employer?

5. What is the difference between natural and artificial selection? Which applies to human society?

6. Are practical ethical and political judgments the chief ends and products of economic science?

7. Is economics concerned with the negro question? asset currency? prohibition? anti-trust laws? race suicide? protection?

REFERENCES

CAIRNES, J. E. The Character and Logical Method of Political Economy. Cossa, L. An Introduction to the Study of Political Economy.

INGRAM, J. K. A History of Political Economy. Chap. VII.

KEYNES, J. The Scope and Method of Political Economy.

MARSHALL, ALFRED. Principles of Economics, 5th ed., Appendix C.
MILL, J. S. Essays on Some Unsettled Questions of Political Economy.
SIDGWICK, HENRY. The Scope and Method of Economic Science.

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WAGNER, A. 'On the Present State of Political Economy." Quarterly Journal of Economics, Vol. I.

CHAPTER II

THE CHARACTERISTICS OF THE PRESENT ECONOMIC SYSTEM

IT is the object of the present chapter to give a descriptive survey of the fundamental institutions and forces of the existing economic order.

Our Environment. - Lying back of all of our economic activity is the fact that we live in an environment in which the things that we desire are not furnished spontaneously in unlimited quantities. Whether it be looked upon as due to the niggardliness of nature or to the insatiability of human wants, the fact is that, for the most part, the material things that we use must be economized. We must put forth effort and exercise self-denial in order to enjoy the good things of life. Those human arrangements which help to determine how much of effort, of self-denial, and of enjoyment is to fall to the lot of each of us are the characteristics to which we now turn our attention. There are, however, a number of social institutions which do not fall within the scope of the pres/ent chapter. We deal here only with the social conditions directly underlying our economic activity, which is but one aspect of our social life. We must leave to the sociologists and other students of society a discussion of such topics as the family, religion, morality, ceremonial institutions, and the nature of government, although, to be sure, these also have their effect upon the economic sphere and are in turn affected by it. In the present chapter also we omit a study of the economic significance of our physical environment, which receives independent treatment in books on economic geography.

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Private Enterprise and State Activity. We live in an age when private enterprise, for the most part, is relied upon to furnish us

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with the necessities and enjoyments of life. The cultivation of the soil, the exploitation of the mines, transportation, the various stages of manufacture, and the distribution of the finished product are all left mainly to private initiative. The discovery of new processes, invention, and experimentation are carried on mostly by private individuals or corporations who take upon their own shoulders the risk of failure. The State, on the other hand, participates in this activity in a variety of ways. It maintains order, promotes the public health and safety, provides roads, and takes charge of some industries completely. In its educational institutions the State, through its agents, undertakes various experiments, and encourages the growth and diffusion of knowledge, an indispensable condition of continuous advancement of our economic life. The state university and the experiment farms may be mentioned, and also the large and extremely useful Department of Agriculture of the United States, with its annual expenditure now exceeding six million dollars. Certainly in the vast majority of the enterprises with which we are familiar, private and public activities are combined in varying proportions. Let us take the case of an industry which is as nearly private, perhaps, as any we can find,- that of agriculture, and notice the part which public activities play in securing the farmer's result. First, we may say that the farmer owns the farm that he cultivates; this is private property. But how comes it that the farm is his? Why does not a stronger man drive him off and take the farm himself? Plainly because the State protects him in the possession of the farm. When he bought the farm, he took his deed to a government official, who recorded it, and thus gave him an additional guarantee of possession. A neighbor's dog kills his sheep, and an appeal to the State compels the neighbor to redress the grievance. Another, far below, dams a river and backs the water up so that it overflows his land. Another appeal to the State removes the dam or secures compensation. When wheat is raised, the farmer hauls it to market by a road built, not by private, but by public, activity. The railway lowers the price

1 This applies especially to the United States and England so far as transportation is concerned; it would scarcely hold true of the world as a whole.

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