Economics

“ In general, however, the progress of economics has followed the same lines as progress in other sciences, through a 'minute investigation and the application of principles already discovered or outlined by painstaking inquiry as to facts.' This method of work has been especially fruitful in the study of monetary problems, of finance, taxation and insurance, in the study of labor problems and conditions, in the study of commerce and in the study of crime and pauperism. ”

“ Economics is not politics. One is a science, concerned with the immutable and constant laws of nature that determine the production and distribution of wealth; the other is the art of ruling. ”

“ We may readily see, moreover, that those two primary allocations subdivide into almost infinitesimal and extremely confusing secondary categories, comprising every variety of Labor, every variety of Land, every variety of Wealth, every variety of Economic desire. It is to satisfy those desires out of that continuous flow of Wealth that the infinitude of processes indicated in the next preceding Lesson enter into the comprehensive Productive Process which includes delivery to ultimate consumers, and that an infinitude of corresponding processes enter into Distribution. ”

“ The most conspicuous method yet suggested for realizing such a Value level takes the specific form of a proposal to determine Money standards by frequent comparisons with the Price level of simple types of Wealth. Resting nominally upon the Value in Trade of such staples, this method rests fundamentally upon the Economic fact that Labor, as the continuous producer of all Wealth, is the real source and regulator at all times of all Values in the channels of Trade, and that Money is the measuring rod and its terms the language. ”

“ Yet systematic Economic thinking assigns every Economic detail to three categories which can be studied without risk of confusion. It need hardly be again explained that those three categories are Labor, Land and Wealth. Every constituent of such a habitation, no matter how minute, is assignable for primary Economic study to one or another of those Basic Facts—to Land for the site, and for all the rest, from architectural designing to decorative completion, to composites of Land and Labor. ”

“ One of the deplorable tendencies in Economic study comes from a disposition among advanced students to think exclusively within such narrow fields as banking, manufacturing, transportation, merchandizing, the cotton trade, the silk industry or agriculture. All trustworthy Economic thinking must be from fundamentals—from Natural Resources, Man and Artificial Objects—to the minute details of the respective Economic specializations. ”

“ Another familiar demonstration of this natural Economic law that men both individually and in the mass seek to satisfy their Economic desires with least exertion, is the human craving for Labor-saving invention. ”

“ We have surveyed the field of economical facts, and have examined how they stand related to one another as causes and effects; what circumstances determine the amount of production, of employment for labour, of capital and population; what laws regulate rent, profits, and wages; under what conditions and in what proportions commodities are interchanged between individuals and between countries. We have thus obtained a collective view of the economical phenomena of society, considered as existing simultaneously. ”

“ We have investigated the laws which determine the value of two classes of commodities: the small class which, being limited to a definite quantity, have their value entirely determined by demand and supply, save that their cost of production (if they have any) constitutes a minimum below which they cannot permanently fall; and the large class, which can be multiplied ad libitum by labour and capital, and of which the cost of production fixes the maximum as well as the minimum at which they can permanently exchange. ”

“ The higher civilization advances, the dearer all those commodities in the production of which the factor nature with [pg 390] value in exchange predominates are apt to become; and the cheaper, on the other hand, all those in which labor and capital play the principal productive part.790 This is accounted for, not only by the almost unlimited capacity of labor and capital to be increased, while the natural forces which have value in exchange are susceptible of increase to so small an extent ”

“ For example, it has been greatly the custom of English political economists to discuss the laws of the distribution of the produce of industry, on a supposition which is scarcely realized anywhere out of England and Scotland, namely, that the produce is “shared among three classes, altogether distinct from one another, laborers, capitalists, and landlords; and that all these are free agents, permitted in law and in fact to set upon their labor, their capital, and their land, whatever price they are able to get for it. ”

“ Therefore, not all things which have an exchange value are wealth, in the only sense in which the term can be used in Political Economy. Only such things can be wealth the production of which increases and the destruction of which decreases the aggregate of wealth. ”

“ Thus, neither in its common meaning nor in the meaning expressly assigned to it in the current political economy, can profits have any place in the discussion of the distribution of wealth between the three factors of production. Either in its common meaning or in the meaning expressly assigned to it, to talk about the distribution of wealth into rent, wages, and profits is like talking of the division of mankind into men, women, and human beings. ”

“ Seeing distinctly that labor was the basis of all production (not merely in agriculture) , he shows (Books I and II) that the wealth of a country depends on the skill with which its labor is applied, and upon the proportion of productive to unproductive laborers. The gains from division of labor are explained, and money appears as a necessary instrument after society has reached such a division. He is then led to discuss prices (market price) and value; and, since from the price a distribution takes place among the factors of production, he is brought to wages, profit, and rent. ”

“ It is evident enough, that produce makes a market for produce, and that there is wealth in the country with which to purchase all the wealth in the country; but those who have the means, may not have the wants, and those who have the wants may be without the means. A portion, therefore, of the commodities produced may be unable to find a market, from the absence of means in those who have the desire to consume, and the want of desire in those who have the means. ”

“ In making labour the foundation of the value of commodities, and the comparative quantity of labour which is necessary to their production, the rule which determines the respective quantities of goods which shall be given in exchange for each other, we must not be supposed to deny the accidental and temporary deviations of the actual or market price of commodities from this, their primary and natural price. ”

“ Economy no more means saving money than it means spending money. It means, the administration of a house; its stewardship; spending or saving, that is, whether money or time, or anything else, to the best possible advantage. In the simplest and clearest definition of it, economy, whether public or private, means the wise management of labour; and it means this mainly in three senses: namely, first, applying your labour rationally; secondly, preserving its produce carefully; lastly, distributing its produce seasonably. ”

“ Capital and enterprise could, under such circumstances, be retained in the business at all only by an increase in the price of the product through reduced production, increased demand, or other means, so as to pay both the increase of wages and the usual interest of capital and profit to management. ”

“ It is the positive fruits of production that we have first to consider; and what in this connection we wish first to know is how wages and interest are determined when industry is carried on in a social way and under a system of competition. We shall find that these incomes are always tending toward standards which they would reach if society were in the state which we have described as static. ”

“ Take, for instance, the common notion so plausible at the first glance, of the encouragement given to industry by lavish expenditure. A, who spends his whole income, and even his capital, in expensive living, is supposed to give great employment to labor. B, who lives on a small portion, and invests the remainder in the funds, is thought to give little or no employment. For every body sees the gains which are made by A's tradesmen, servants, and others, while his money is spending. ”

“ Throughout the book economic principles are discussed with special reference to American conditions, and their workings are illustrated by frequent allusions to American experience. The subjects of wealth, its consumption, production, and distribution, exchange, money, credit, bimetallism, monopolies, international trade, wages, land nationalization and socialism, and the economic functions of Government are thus treated ”

“ The works of the great economists on value, capital, supply and demand, wages, taxes, machinery, farm-rent, increase of population, over-accumulation of products, markets, banks, monopolies, etc., seem to have set the limit of dogmatic researches, and form a body of doctrine beyond which there is little to hope. ”

“ If the cost be low, it means that the industry is very productive; that the same capital and labor produce more for their exertion in this than in other industries. And yet it is precisely in the most productive industries that higher wages and profits can be, and are, paid. Although each article is sold at a low price, the great quantity produced makes the total sum, or value, out of which the industrial rewards, profits, and wages, are paid, large. ”

“ The pecuniary activities of men, efforts directed to acquisition and operations incident to the acquisition or tenure of wealth, are treated as incidental to the distribution to each of his particular proportion in the production of goods. Pecuniary activities, in short, are handled as incidental features of the process of social production and consumption, as details incident to the method whereby the social interests are served, instead of being dealt with as the controlling factor about which the modern economic process turns. ”

“ Economically it extended from peasant proprietorship and a use economy to a market-money economy; from a society of working peasant farmers to an economy resting upon war captives reduced to slavery; from an economy based on production for trade and profit to an economy based on power-grabbing, special privilege, speculation and corruption; from an austerity economy based on primary production to an economy based on affluence, exploitation, and gluttony. ”

“ Nay, though capable of conceiving the idea of intrinsic value with respect to beasts of burden, no economist has endeavoured to state the general principles of National Economy, even with regard to the horse or the ass. ”

“ Labour being thus various in its result, the prosperity of [Pg 190] any nation is in exact proportion to the quantity of labour which it spends in obtaining and employing means of life. Observe,—I say, obtaining and employing; that is to say, not merely wisely producing, but wisely distributing and consuming. Economists usually speak as if there were no good in consumption absolute. [57] So far from this being so, consumption absolute is the end, crown, and perfection of production; and wise consumption is a far more difficult art than wise production. ”

“ The labourer may obtain greater comforts; wages in kind real wages may rise. Or the progress of population may force down cultivation to inferior soils, and more costly processes; thus raising the cost of production, the value, and the price, of the chief articles of the labourer's consumption. On either of these suppositions, the rate of profit will fall. ”

“ The proper view of capital is, that anything whatever, which a person possesses, constitutes his capital, provided he is able, and intends, to employ it, not in consumption for the purpose of enjoyment, but in possessing himself of the means of production, with the intention of employing those means productively. Now the means of production are labour, implements, and materials. The only productive power which anywhere exists, is the productive power of labour, implements, and materials. ”

“ We must examine the nature of Capital with care, and follow its varied forms without confusion, because it is the only other factor besides labor in the production of commodities, that has to be paid for out of their sale. ”

“ The great end of legislation in matters of national wealth, according to the prevalent opinion, was to create consumers. A great and rapid consumption was what the producers, of all classes and denominations, wanted, to enrich themselves and the country. This object, under the varying names of an extensive demand, a brisk circulation, a great expenditure of money, and sometimes totidem verbis a large consumption, was conceived to be the great condition of prosperity. ”

“ Let it practice true and conscientious economy, not only in the expenditure and application of public moneys, but also in the method of levying them, so as to be equally just to all classes and all economical interests. ”

“ Mill expounds the doctrine, that cost of production is made up of wages and profits. When we speak of an increased cost of production of a given article, we mean that its production requires more labor and capital than before; and of a decrease in cost of production, that it requires less labor and capital than before; meaning by “more labor” that a given quality of labor is exerted for a longer or shorter time, and by “more capital” that a greater or less quantity of wealth abstained from is employed for a longer or shorter time ”