ECONOMICS 



1917 



ECONOMICS 



THOMAS R.MALTHUS 

 CA/DRCARDO 

 ACAM SMITH 

 JOHN STUART MILL 

 HENRY GEORGE 

 FRANCIS WALKER 



KARL MARX 



^ CONOMICS, ekonom'iks, the knowl- 

 edge of the principles which govern business 

 and the production, exchange and consump- 

 tion of all those things which man considers 

 valuable. The word originally referred to 

 household management, so the term political 

 economy was introduced to deal with the 

 affairs of the whole family of mankind. In 

 recent years the two names have become iden- 

 tical in meaning. 



All sciences show us that things are not 

 always what they seem to the casual observer. 

 Just as astronomy has taught us that the sun 

 does not move across a flat earth, so economics 

 reveals to us that we have held many false 

 notions about such matters as value, money, 

 wages, capital, interest, rent, taxes, tariff, in- 

 surance, labor organizations and socialism. 



Wealth. Economics might be termed the 

 study of the relation of man to wealth and to 

 wealth-getting and wealth-using. In economics 

 wealth does not mean great riches, but those 

 things which make up riches, or in other words, 

 all things of value. Thus a poor man has some 

 wealth if he merely owns his clothing; he is 

 only called poor because he has less wealth 

 than others. In the past, too many economists 

 emphasized the study of wealth itself, neglect- 

 ing man's relation to it. This has resulted 

 in such doctrines as the laisscz fairc (French 

 for let alone), popular a century ago, which 

 maintained that the government should never 

 interfere with private business, no matter what 

 injustices were involved. To-day, as character- 

 istic of the newer age in which we live, eco- 

 nomics is concerned first of all with man. 

 Where the students of previous generations 

 merely observed that wealth seems to be 

 unequally distributed, those of to-day search 

 for possible remedies for poverty und want. 



The Cooperation of the World. No one with 

 a broad outlook on life can advance very far 

 into the study of economics without seeing 

 that mankind is truly one family, with com- 

 mon interests and common aspirations. If you 

 are selfish and greedy, a knowledge of the laws 



underlying wealth will show you that if you 

 rob or withhold from others you injure your- 

 self as well. 



Selfish viewpoints have resulted in many 

 false beliefs about political economy, some of 

 which are still widely held. Wealth is always 

 the joint product of three primary factor*. 

 land, labor and capital, and never of one alone. 

 In many places the private holding of large 

 areas of land is plainly detrimental to a na- 

 tion's advance, but the land owners are always 

 firm in the belief that their possession is the 

 direct and just result of the working of eco- 

 nomic laws. Laborers, on their side, urge the 

 injustice of private ownership of capital, but 

 it is noticeable that in countries where the 

 working man finds it easy to invest his sav- 

 ings to earn interest, so that in effect he be- 

 comes a small capitalist, his objection is less 

 strong. The capitalist, in his turn, almost to 

 the present time, has believed that all laws 

 in behalf of the laborer, for shorter hours, for 

 better places to work, for a minimum wage, 

 for the prevention of child labor, were in defi- 

 ance of all economic principle. It is plain 

 that these conflicting claims cannot all be right. 

 Each factor is entitled to its share, and when 

 all abandon the bias with which they study 

 economics they will realize the necessity of 

 cooperation. 



Division of Labor. If you had boon a lone 

 castaway on a distant island, obliged to gather 

 all your own food, and another wreck gave 

 you a companion, you would agree with him 

 upon a division of labor; that is, while one of 

 you hunted turtle's eggs on the shore, the otln-r 

 might be picking berries in the woods; if one 

 went inland to get fresh water, the other might 

 stay to watch for the smoke of a passing 

 steamer. By this cooperation much more than 

 twice the work would be acvomplir-hecl than hud 

 been previously performed by you alone. 



It is upon such division of labor that mod- 

 ern industry is built. From the simple coop- 

 eration of two persons we have advanced to 

 that of all nations. All of us arc more dc- 



