Economist

“ The economist must, therefore, not only be prepared to take account of the physical features of the world, the general structure and organization of the industry and commerce of different states, the character of their administration and other important causes of economic change. He must be in touch with the actual life of the community he is studying, and cultivate “that openness and alertness of the mind, that sensitiveness of the judgment, which can rapidly grasp the significance of at first sight unrelated discoveries or events.” ”

“ Such remarks, now familiar enough, are enough to suggest that a full explanation of the economic phenomena would require reference to considerations which lie beyond the proper sphere of the economist. Yet the economist may urge that he is making a fair and perhaps necessary abstraction. He may consider the forces to be constant, although he may be fully aware that the assumption requires to be corrected when his formulæ are applied to facts. ”

“ To make anything of them, the economist must become a literary artist and bring54 his discoveries home to our imaginations—make these innumerable details of his pour in a concentrated fire upon the central citadels of men’s understandings. A single step or two would then bring him within full sight of the longed for time when political economy is to dominate legislation. ”

“ Such problems involve elements of which the Economist, purely as an Economist, is an incompetent judge; and the further we get from those questions in which purely economical considerations are dominant, towards those in which other factors become relevant,—from questions as to currency, for example, to questions as to the relations of capitalists and labourers,—the greater the inadequacy of our methods. ”

“ If a political economist, for instance, finds himself puzzled by any recent or present commercial phenomena; if there is any mystery to him in the late or present state of the productive industry of the country, which his knowledge of principle does not enable him to unriddle; he may be sure that something is wanting to render his system of opinions a safe guide in existing circumstances. ”

“ When, therefore, the economist indulges in a generalization about psychology, even when he gives it as a reason for an economic proposition, in nine cases out of ten the economics will not depend upon the psychology ”

“ When it becomes matter of question to whom such things are to belong, the richest person has necessarily the first choice, unless some arbitrary mode of distribution be otherwise determined upon. The business of the economist is to show how this choice may be a wise one. ”

“ If he reads the Economist, he will find that exhilarating print filled with complaints of general distress and want of demand; he will be startled from time to time by the announcement that in some places, such as Dundee, trade has experienced a most decided check; or that in others, such as Nottingham and Leicester, the operatives are applying by hundreds for admission to the workhouse! ”

“ In the same way, the economist describes the army of industry, and classifies its constituent parts. In order to explain their mutual relations, he has to make certain further assumptions, of which it would be rash to attempt a precise summary. He assumes as a fact, what has of course always been known, that scarcity implies dearness and plenty cheapness; that commodities flow to the markets where they will fetch the highest prices; that there is a certain gravitation towards equalisation of profits among capitalists, and of wages among labourers ”

“ 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. ”

“ He may think that too much importance, or if not too much importance, too exclusive an attention, is directed towards wealth. He may wish that economists would consider man as a being with [17] higher qualities, higher duties, and higher enjoyments than those which are concerned in the production, distribution, and consumption of commodities and services, and may regret to see him treated merely as a cause or a recipient of rents, profits, and wages. ”

“ In the department of economy, an act, a habit, an institution, a law, gives birth not only to an effect, but to a series of effects. Of these effects, the first only is immediate; it manifests itself simultaneously with its cause--it is seen. The others unfold in succession--they are not seen: it is well for us if they are foreseen. Between a good and a bad economist this constitutes the whole difference--the one takes account of the visible effect; the other takes account both of the effects which are seen and also of those which it is necessary to foresee. ”

“ 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. ”

“ Economists argue against government restrictions on trade and manufacture.
The economists wrote treatises on taxation, scattered pamphlets about, and conducted a magazine or two. They not only brought the existing economic evils home to the intelligent reader, but suggested remedies for them. ”

“ There are practically no technical teachings on economics in the Cause, such as banking, the price system, and others. The Cause is not an economic system, nor its Founders be considered as having been technical economists. ”

“ The reputation, however, of the economists is too well established to be affected, either by the clamours of the ignorant, or the mad intemperance of political alarmists. The doctrine of the great men who formed the school of the economists, was, that the produce of the land is the sole or principal source of the revenue and wealth of every country ”

“ Finally, a circumstance should be borne in mind which bears not only upon the intrinsic desirability of a regulative plan, but also upon the attitude of the general public and the consequent political and industrial possibilities. Economists are familiar with the difference between the phrase which they use in describing the new conditions, and that which is current in popular discussion. The economists speak of the "rise in prices"; the general public speaks of the "high cost of living." ”

“ Far be it from me to question the wisdom of political economists, but I cannot refrain from remarking that of the three classes concerned—small producers, middle-men, and consumers—two fail to perceive and appreciate the benefits which have been conferred upon them. ”

“ The substantial difference between this school and the generality of classical economists lies mainly in the fact that in the marginal-utility economics the common postulates are more consistently adhered to at the same time that they are more neatly defined and their limitations are more adequately realized. ”

“ You've probably seen in the paper in the last few days a number of private economists are now downsizing their estimates for surpluses, showing that, in fact, economic growth is related to the surpluses at some point. ”

“ These were the main topics of discussion among the economists in the middle of the eighteenth century in so far as they dealt with anything larger than the technique of particular arts or of commercial transactions as a whole. ”

“ Many of my friends are under the impression that I write these humorous nothings in idle moments when the wearied brain is unable to perform the serious labours of the economist. My own experience is exactly the other way. The writing of solid, instructive stuff fortified by facts and figures is easy enough. There is no trouble in writing a scientific treatise on the folk-lore of Central China, or a statistical enquiry into the declining population of Prince Edward Island. ”

“ I shall show that the quantity theory conflicts with most of our doctrines of prices, as worked out in our systems of economics. I shall show that, in important cases, the quantity theory conflicts with the law of supply and demand, with the doctrine of cost of production, with the capitalization theory, and with the doctrine of imputation as worked out by the Austrians, whereby the prices of labor, land, and other agents of production rise or fall with the prices of the consumption goods which they produce. ”

“ 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. ”

“ And it is impossible to read the works of the economists who since the time of Smith have endeavored to build up and elucidate the science of political economy without seeing how, over and over again, they stumble over the law of wages without once recognizing it. Yet, “if it were a dog it would bite them!” Indeed, it is difficult to resist the impres216sion that some of them really saw this law of wages, but, fearful of the practical conclusions to which it would lead, preferred to ignore and cover it up, rather than use it as the key to problems which without it are so perplexing. ”

“ Whether we like it or not, the American wage earner and the American housewife are a lot better economists than most economists care to admit. They know that a government big enough to give you everything you want is a government big enough to take from you everything you have. ”

“ 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. ”

“ If the industrial, commercial and leisure classes of the population are collectively considered, total income and aggregate prices are subject to similar concurrent changes. It is a truism, often overlooked, that the sum of prices paid constitutes the total of wages, interest, rents and profits which compose the money-income of society and, per se, the direct means of acquiring the necessities and comforts of life. The measuring and estimating of changes in the cost of living, therefore, is resolved into a comparative study of incomes and expenditures. ”

“ He who produces from and upon better grades will naturally achieve greater or better results with the same expenditure of Labor than he who produces from poorer grades. This difference is measureable by variations in the productive grades of Land, from nothing in excess of production cost on the lower side of the Margin of Production—the poorest in demand, the Economic frontier—to something in excess of production cost on the higher side of the Margin, the hither side of the Economic frontier, and to more and more for higher and higher grades up to the best. ”

“ 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. ”

“ 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. ”

“ 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. ”

“ There is in every society or neighbourhood, an ordinary or average rate of wages and profit in every different employment of labour and stock, regulated by principles to be explained hereafter, as also an ordinary or average rate of rent. These may be called the natural rates at the time when and the place where they prevail; and the natural price of a commodity is what is sufficient to pay for the rent of the land, the wages of the labour, and the profit of the stock necessary for bringing the commodity to market. ”