<h2>CHAPTER 1</h2>
<h3>THE NATURE AND PURPOSE OF POLITICAL ECONOMY</h3>
<h4>§ I. NAME AND DEFINITION</h4>
<div class="sidenote">Verbal definition of economics</div>
<p>1. <i>Economics, or political economy, may be defined, briefly, as the
study of men earning a living; or, more fully, as the study of the
material world and of the activities and mutual relations of men, so far
as all these are the objective conditions to gratifying desires.</i> To
define, means to mark off the limits of a subject, to tell what
questions are or are not included within it. The ideas of most persons
on this subject are vague, yet it would be very desirable if the student
could approach this study with an exact understanding of the nature of
the questions with which it deals. Until a subject has been studied,
however, a definition in mere words cannot greatly aid in marking it off
clearly in our thought. The essential thing for the student is to see
clearly the central purpose of the study, not to decide at once all of
the puzzling cases.</p>
<p><span class="pagenum"><SPAN name="Page_4" id="Page_4">[Pg 4]</SPAN></span></p>
<div class="sidenote">Natural sciences deal with material things</div>
<p>2. <i>A definition that suggests clear and familiar thoughts to the
student seem at first much more difficult to get in any social science
than in the natural sciences.</i> These deal with concrete, material things
which we are accustomed to see, handle, and measure. If a mere child is
told that botany is a study in which he may learn about flowers, trees,
and plants, the answer is fairly satisfying, for he at once thinks of
many things of that kind. When, in like manner zoölogy is defined as the
study of animals, or geology as the study of rocks and the earth, the
words call up memories of many familiar objects. Even so difficult and
foreign-looking a word as ichthyology seems to be made clear by the
statement that it is the name of the study in which one learns about
fish. It is true that there may be some misunderstanding as to the way
in which these subjects are studied, for botany is not in the main to
teach how to cultivate plants in the garden, nor ichthyology how to
catch fish or to propagate them in a pond. But the main purpose of these
studies is clear at the outset from these simple definitions. Indeed, as
the study is pursued, and knowledge widens to take in the manifold and
various forms of life, the boundaries of the special sciences become not
more but less sharp and definite.</p>
<div class="sidenote">Economics studies some social acts and relations</div>
<p>Political economy, on the other hand, as one of the social sciences,
which deal with men and their relations in society, seems to be a very
much more complex thought to get hold of. We are tempted to say that it
deals with less familiar things; but the truth may be, as a thoughtful
friend suggests, that the simple social acts and relations are more
familiar to our thought than are lions, palm-trees, or even horses.
Every hour in the streets or stores, one may witness thousands of acts,
such as bargains, labor, payments, that are the subject-matter of
economic science. Their very familiarity may cause men to overlook their
deeper meaning.</p>
<p>Many other definitions have been given of political economy. It has been
called the science of wealth, or the science of exchanges. Evidently
there are various ways in which<span class="pagenum"><SPAN name="Page_5" id="Page_5">[Pg 5]</SPAN></span> wealth may be considered or exchanges
made. The particular aspects that are dealt with in political economy
will be made clear by considering two other questions, the place of
economics among the social sciences and the relation of economics to
practical affairs.</p>
<h4>§ II. PLACE OF ECONOMICS AMONG THE SOCIAL SCIENCES</h4>
<div class="sidenote">Economics contrasted with the natural sciences</div>
<p>1. <i>Political economy, as one of the social sciences, may be contrasted
with the natural sciences, which deal with material things and their
mutual relations, while it deals with one aspect of men's life in
society, namely, the earning of a living, or the use of wealth.</i> It is
true that political economy also has to do with plants and animals and
the earth—in fact, with all of those things which are the
subject-matter of the natural sciences; but it has to do with them only
in so far as they are related to man's welfare and affect his estimate
of the value of things; only in so far as they are related to the one
central subject of economic interest, the earning of a living.</p>
<div class="sidenote">Character of the social sciences</div>
<p>2. <i>The social sciences deal with men and their relations with each
other.</i> The word "social" comes from the Latin socius, meaning a fellow,
comrade, companion, associate. As men living together have to do with
each other in a great many different ways, and enter into a great many
different relations, there arise a great many different social problems.
Each of the social sciences attempts to study man in some one important
aspect—that is, to view these relations from some one standpoint.</p>
<p>Man's acts, his life, and his motives are so complex that it is not
surprising that there has been less definiteness in the thought of the
social sciences, and that they have advanced less rapidly toward
exactness in their conclusions, than have the natural sciences. This
complexity also explains the discouragement of the beginner in the early
lessons in this subject. Usually the greatest difficulties appear in the
first few<span class="pagenum"><SPAN name="Page_6" id="Page_6">[Pg 6]</SPAN></span> weeks of its study. The thought is more abstract than in
natural science; it requires a different, I will not say higher, kind of
ability than does mathematics. But little by little the strangeness of
the language and ideas disappears; the bare definitions become clothed
with the facts of observation and recalled experiences; and soon the
"economic" acts and relations of men in society come to be as real and
as interesting to the student as are the materials in the natural world
about him—often, indeed, more interesting.</p>
<div class="sidenote">Economics, politics, law, and ethics</div>
<p>3. <i>Political economy is related to all the other social sciences, it
being the study of certain of men's relations, while politics, law, and
ethics have to do with other relations or with relations under a
different aspect.</i> Politics treats of the form and working of government
and is mainly concerned with the question of power or control of the
individual's actions and liberty. Law treats of the precepts and
regulations in accordance with which the actions of men are limited by
the state, and the contracts into which they have seen fit to enter are
interpreted. Ethics treats the question of right or wrong, studies the
moral aspects of men's acts and relations. The attempt just made to
distinguish between the fields occupied by the various social sciences
betrays at once the fundamental unity existing among them. The acts of
men are closely related in their lives, but they may be looked at from
different sides. The central thought in economics is the business
relation, the relation of men in exchanging their services or material
wealth. In pursuing economic inquiries we come into contact with
political, legal, and ethical considerations, all of which must be
recognized before a final practical answer can be given to any question.
Nevertheless the province of economics is limited. It is because of the
feebleness of our mental power that we divide and subdivide these
complex questions and try to answer certain parts before we seek to
answer the whole. When we attempt this final and more difficult task, we
should rise to the standpoint of the social philosopher.</p>
<p><span class="pagenum"><SPAN name="Page_7" id="Page_7">[Pg 7]</SPAN></span></p>
<h4>§ III. THE RELATION OF ECONOMICS TO PRACTICAL AFFAIRS</h4>
<div class="sidenote">Economics is first a science</div>
<p>1. <i>The ideal of political economy here set forth is that it should be a
science, a search for truth, a systematized body of knowledge, arriving
at a statement of the laws to which economic actions conform.</i> It is not
the advocacy of any particular policy or idea, but if it arrives at any
conclusions, any truths, these cannot fail to affect the practical
action of men.</p>
<div class="sidenote">But it touches many practical interests</div>
<p>Political economy, because defined as the science of wealth, has been
described by some as a gospel of Mammon. It is hardly necessary to
refute such a misconception. Political economy is not the science of
wealth-getting for the individual. Its study is not primarily for the
selfish ends and interest of the individual. (Certainly some of its
lessons may be of practical value to men in active business) for many
economic "principles" are but the general statement of those ideas that
have been approved by the experience of business men, of statesmen, and
of the masses of men. Some of its lessons must have educational value in
practical business, for political economy is not dreamed out by the
closet philosopher, but more and more it is the attempt to describe the
interests and the action of the practical world in which men must live.
Many men are working together to develop its study—those who collect
statistics and facts bearing on all kinds of practical affairs, and
those who search through the records of the past for illustrations of
experiments and experiences that may help us in our life to-day.</p>
<div class="sidenote">Economic study needed in a democracy</div>
<p>2. <i>But, in the main, the study of political economy is a social study
for social ends and not a selfish study for individual advantage.</i> The
name political economy was first suggested in France when the government
was monarchical and despotic in the extreme. As domestic economy
indicates a set of rules or principles to guide wisely the action of
the<span class="pagenum"><SPAN name="Page_8" id="Page_8">[Pg 8]</SPAN></span> housekeeper or the owner of an estate, so political economy was
first thought of as a set of rules or principles to guide the king and
his counselors in the control of the state. The term has continued to
bear something of that suggestion in it, though of late the term
"economics," as being broader and less likely to be confused with
politics, has very generally come into use. But in the degree in which
unlimited monarchy has given way to the rule of the people, the
conception of political economy has been modified. In a democracy there
is need for a general diffusion of knowledge. The power now rests not
with the king and a few counselors, but in the last resort with the
people, and therefore the people must be acquainted with the experience
of the past, must have all possible systematic knowledge to enlighten
public policy and to guide legislation.</p>
<div class="sidenote">Is of growing interest and influence</div>
<p>Moreover, with the growth of the modern state, with the interest
increasing importance of business, and of industrial and commercial
interests, as compared with changes of dynasty or the personal rivalries
of rulers, economic questions have grown in relative importance. In our
own country, particularly since the subjects of slavery and of States'
rights ceased to absorb the attention of our people, economic questions
have pushed rapidly into the foreground. Indeed, it has of late been
more clearly seen that many of the older political questions, such as
the American Revolution and slavery, formerly discussed almost entirely
in their political and constitutional aspects, were at bottom questions
of economic rivalry and of economic welfare. The remarkable increase in
the attention given to this study in colleges and universities in the
last twenty years is but the index of the greatly increased interest and
attention felt in it by citizens generally.</p>
<p>To sum up, it may be said that in the study of political economy we are
seeking the reason, connection, and relations in the great multitude of
acts arising out of the dependence of desires on the world of things and
men.</p>
<hr class="chap" />
<p><span class="pagenum"><SPAN name="Page_9" id="Page_9">[Pg 9]</SPAN></span></p>
<div style="break-after:column;"></div><br />
1 of 2
2 of 2
Previous
Next
Update Required
To play the media you will need to either update your browser to a recent version or update your Flash plugin.