BookOne：PreliminarySurveyChapter1

Introduction1。Politicaleconomyoreconomicsisastudyofmankindintheordinarybusinessoflife。itexaminesthatpartofindividualandsocialactionwhichismostcloselyconnectedwiththeattainmentandwiththeuseofthematerialrequisitesofwellbeing。

Thusitisontheonesideastudyofwealth。andontheother，andmoreimportantside，apartofthestudyofman。Forman’scharacterhasbeenmouldedbyhisevery-daywork，andthematerialresourceswhichhetherebyprocures，morethanbyanyotherinfluenceunlessitbethatofhisreligiousideals。andthetwogreatformingagenciesoftheworld’shistoryhavebeenthereligiousandtheeconomic。Hereandtheretheardourofthemilitaryortheartisticspirithasbeenforawhilepredominant：

butreligiousandeconomicinfluenceshavenowherebeendisplacedfromthefrontrankevenforatime。andtheyhavenearlyalwaysbeenmoreimportantthanallothersputtogether。Religiousmotivesaremoreintensethaneconomic，buttheirdirectactionseldomextendsoversolargeapartoflife。Forthebusinessbywhichapersonearnshislivelihoodgenerallyfillshisthoughtsduringbyfarthegreaterpartofthosehoursinwhichhismindisatitsbest。duringthemhischaracterisbeingformedbythewayinwhichheuseshisfacultiesinhiswork，bythethoughtsandthefeelingswhichitsuggests，andbyhisrelationstohisassociatesinwork，hisemployersorhisemployees。

Andveryoftentheinfluenceexertedonaperson’scharacterbytheamountofhisincomeishardlyless，ifitisless，thanthatexertedbythewayinwhichitisearned。Itmaymakelittledifferencetothefulnessoflifeofafamilywhetheritsyearlyincomeis？000or？000。butitmakesaverygreatdifferencewhethertheincomeis？0or？50：forwith？50thefamilyhas，with？0ithasnot，thematerialconditionsofacompletelife。

Itistruethatinreligion，inthefamilyaffectionsandinfriendship，eventhepoormayfindscopeformanyofthosefacultieswhicharethesourceofthehighesthappiness。Buttheconditionswhichsurroundextremepoverty，especiallyindenselycrowdedplaces，tendtodeadenthehigherfaculties。ThosewhohavebeencalledtheResiduumofourlargetownshavelittleopportunityforfriendship。theyknownothingofthedecenciesandthequiet，andverylittleevenoftheunityoffamilylife。

andreligionoftenfailstoreachthem。Nodoubttheirphysical，mental，andmoralill-healthispartlyduetoothercausesthanpoverty：butthisisthechiefcause。

And，inadditiontotheResiduum，therearevastnumbersofpeoplebothintownandcountrywhoarebroughtupwithinsufficientfood，clothing，andhouse-room。whoseeducationisbrokenoffearlyinorderthattheymaygotoworkforwages。whothenceforthareengagedduringlonghoursinexhaustingtoilwithimperfectlynourishedbodies，andhavethereforenochanceofdevelopingtheirhighermentalfaculties。Theirlifeisnotnecessarilyunhealthyorunhappy。RejoicingintheiraffectionstowardsGodandman，andperhapsevenpossessingsomenaturalrefinementoffeeling，theymayleadlivesthatarefarlessincompletethanthoseofmany，whohavemorematerialwealth。

But，forallthat，theirpovertyisagreatandalmostunmixedeviltothem。Evenwhentheyarewell，theirwearinessoftenamountstopain，whiletheirpleasuresarefew。andwhensicknesscomes，thesufferingcausedbypovertyincreasestenfold。And，thoughacontentedspiritmaygofartowardsreconcilingthemtotheseevils，thereareotherstowhichitoughtnottoreconcilethem。Overworkedandundertaught，wearyandcareworn，withoutquietandwithoutleisure，theyhavenochanceofmakingthebestoftheirmentalfaculties。

Althoughthensomeoftheevilswhichcommonlygowithpovertyarenotitsnecessaryconsequences。yet，broadlyspeaking，thedestructionofthepooristheirpoverty，andthestudyofthecausesofpovertyisthestudyofthecausesofthedegradationofalargepartofmankind。

2。SlaverywasregardedbyAristotleasanordinanceofnature，andsoprobablywasitbytheslavesthemselvesinoldentime。ThedignityofmanwasproclaimedbytheChristianreligion：ithasbeenassertedwithincreasingvehemenceduringthelasthundredyears：but，onlythroughthespreadofeducationduringquiterecenttimes，arewebeginningtofeelthefullimportofthephrase。Nowatlastwearesettingourselvesseriouslytoinquirewhetheritisnecessarythatthereshouldbeanyso-calledlowerclassesatall：thatis，whetherthereneedbelargenumbersofpeopledoomedfromtheirbirthtohardworkinordertoprovideforotherstherequisitesofarefinedandculturedlife。whiletheythemselvesarepreventedbytheirpovertyandtoilfromhavinganyshareorpartinthatlife。

Thehopethatpovertyandignorancemaygraduallybeextinguished，derivesindeedmuchsupportfromthesteadyprogressoftheworkingclassesduringthenineteenthcentury。

Thesteam-enginehasrelievedthemofmuchexhaustinganddegradingtoil。wageshaverisen。educationhasbeenimprovedandbecomemoregeneral。therailwayandtheprinting-presshaveenabledmembersofthesametradeindifferentpartsofthecountrytocommunicateeasilywithoneanother，andtoundertakeandcarryoutbroadandfar-seeinglinesofpolicy。whilethegrowingdemandforintelligentworkhascausedtheartisanclassestoincreasesorapidlythattheynowoutnumberthosewhoselabourisentirelyunskilled。Agreatpartoftheartisanshaveceasedtobelongtothelowerclassesinthesenseinwhichthetermwasoriginallyused。andsomeofthemalreadyleadamorerefinedandnoblelifethandidthemajorityoftheupperclassesevenacenturyago。

Thisprogresshasdonemorethananythingelsetogivepracticalinteresttothequestionwhetheritisreallyimpossiblethatallshouldstartintheworldwithafairchanceofleadingaculturedlife，freefromthepainsofpovertyandthestagnatinginfluencesofexcessivemechanicaltoil。andthisquestionisbeingpressedtothefrontbythegrowingearnestnessoftheage。Thequestioncannotbefullyansweredbyeconomicscience。Fortheanswerdependspartlyonthemoralandpoliticalcapabilitiesofhumannature，andonthesematterstheeconomisthasnospecialmeansofinformation：hemustdoasothersdo，andguessasbesthecan。Buttheanswerdependsinagreatmeasureuponfactsandinferences，whicharewithintheprovinceofeconomics。andthisitiswhichgivestoeconomicstudiestheirchiefandtheirhighestinterest。

3。Itmighthavebeenexpectedthatascience，whichdealswithquestionssovitalforthewellbeingofmankind，wouldhaveengagedtheattentionofmanyoftheablestthinkersofeveryage，andbenowwelladvancedtowardsmaturity。Butthefactisthatthenumberofscientificeconomistshasalwaysbeensmallrelativelytothedifficultyoftheworktobedone。sothatthescienceisstillalmostinitsinfancy。Onecauseofthisisthatthebearingofeconomicsonthehigherwellbeingofmanhasbeenoverlooked。Indeed，asciencewhichhaswealthforitssubject-matter，isoftenrepugnantatfirstsighttomanystudents。forthosewhodomosttoadvancetheboundariesofknowledge，seldomcaremuchaboutthepossessionofwealthforitsownsake。

Butamoreimportantcauseisthatmanyofthoseconditionsofindustriallife，andofthosemethodsofproduction，distributionandconsumption，withwhichmoderneconomicscienceisconcerned，arethemselvesonlyofrecentdate。Itisindeedtruethatthechangeinsubstanceisinsomerespectsnotsogreatasthechangeinoutwardform。andmuchmoreofmoderneconomictheory，thanatfirstappears，canbeadaptedtotheconditionsofbackwardraces。Butunityinsubstance，underlyingmanyvarietiesofform，isnoteasytodetect。andchangesinformhavehadtheeffectofmakingwritersinallagesprofitlessthantheyotherwisemighthavedonebytheworkoftheirpredecessors。

Theeconomicconditionsofmodernlife，thoughmorecomplex，areinmanywaysmoredefinitethanthoseofearliertimes。

Businessismoreclearlymarkedofffromotherconcerns。therightsofindividualsasagainstothersandasagainstthecommunityaremoresharplydefined。andabovealltheemancipationfromcustom，andthegrowthoffreeactivity，ofconstantforethoughtandrestlessenterprise，havegivenanewprecisionandanewprominencetothecausesthatgoverntherelativevaluesofdifferentthingsanddifferentkindsoflabour。

4。Itisoftensaidthatthemodernformsofindustriallifearedistinguishedfromtheearlierbybeingmorecompetitive。Butthisaccountisnotquitesatisfactory。Thestrictmeaningofcompetitionseemstobetheracingofonepersonagainstanother，withspecialreferencetobiddingforthesaleorpurchaseofanything。Thiskindofracingisnodoubtbothmoreintenseandmorewidelyextendedthanitusedtobe：butitisonlyasecondary，andonemightalmostsay，anaccidentalconsequencefromthefundamentalcharacteristicsofmodernindustriallife。

Thereisnoonetermthatwillexpressthesecharacteristicsadequately。Theyare，asweshallpresentlysee，acertainindependenceandhabitofchoosingone’sowncourseforoneself，aself-reliance。adeliberationandyetapromptnessofchoiceandjudgment，andahabitofforecastingthefutureandofshapingone’scoursewithreferencetodistantaims。Theymayandoftendocausepeopletocompetewithoneanother。butontheotherhandtheymaytend，andjustnowindeedtheyaretending，inthedirectionofco-operationandCombinationofallkindsgoodandevil。Butthesetendenciestowardscollectiveownershipandcollectiveactionarequitedifferentfromthoseofearliertimes，becausetheyaretheresultnotofcustom，notofanypassivedriftingintoassociationwithone’sneighbours，butoffreechoicebyeachindividualofthatlineofconductwhichaftercarefuldeliberationseemstohimthebestsuitedforattaininghisends，whethertheyareselfishorunselfish。

Thetermcompetitionhasgatheredaboutitevilsavour，andhascometoimplyacertainselfishnessandindifferencetothewellbeingofothers。Nowitistruethatthereislessdeliberateselfishnessinearlythaninmodernformsofindustry。butthereisalsolessdeliberateunselfishness。Itisdeliberateness，andnotselfishness，thatisthecharacteristicofthemodernage。

Forinstance，whilecustominaprimitivesocietyextendsthelimitsofthefamily，andprescribescertaindutiestoone’sneighbourswhichfallintodisuseinalatercivilization，italsoprescribesanattitudeofhostilitytostrangers。Inamodernsocietytheobligationsoffamilykindnessbecomemoreintense，thoughtheyareconcentratedonanarrowerarea。andneighboursareputmorenearlyonthesamefootingwithstrangers。Inordinarydealingswithbothofthemthestandardoffairnessandhonestyislowerthaninsomeofthedealingsofaprimitivepeoplewiththeirneighbours：butitismuchhigherthanintheirdealingswithstrangers。Thusitisthetiesofneighbourhoodalonethathavebeenrelaxed：thetiesoffamilyareinmanywaysstrongerthanbefore，familyaffectionleadstomuchmoreself-sacrificeanddevotionthanitusedtodo。andsympathywiththosewhoarestrangerstousisagrowingsourceofakindofdeliberateunselfishness，thatneverexistedbeforethemodernage。Thatcountrywhichisthebirthplaceofmoderncompetitiondevotesalargerpartofitsincomethananyothertocharitableuses，andspenttwentymillionsonpurchasingthefreedomoftheslavesintheWestIndies。

Ineveryagepoetsandsocialreformershavetriedtostimulatethepeopleoftheirowntimetoanoblerlifebyenchantingstoriesofthevirtuesoftheheroesofold。Butneithertherecordsofhistorynorthecontemporaryobservationofbackwardraces，whencarefullystudied，giveanysupporttothedoctrinethatmanisonthewholeharderandharsherthanhewas。orthathewasevermorewillingthanheisnowtosacrificehisownhappinessforthebenefitofothersincaseswherecustomandlawhavelefthimfreetochoosehisowncourse。Amongraces，whoseintellectualcapacityseemsnottohavedevelopedinanyotherdirection，andwhohavenoneoftheoriginatingpowerofthemodernbusinessman，therewillbefoundmanywhoshowanevilsagacityindrivingahardbargaininamarketevenwiththeirneighbours。Notradersaremoreunscrupulousintakingadvantageofthenecessitiesoftheunfortunatethanarethecorn-dealersandmoney-lendersoftheEast。

Again，themodernerahasundoubtedlygivennewopeningsfordishonestyintrade。Theadvanceofknowledgehasdiscoverednewwaysofmakingthingsappearotherthantheyare，andhasrenderedpossiblemanynewformsofadulteration。Theproducerisnowfarremovedfromtheultimateconsumer。andhiswrong-doingsarenotvisitedwiththepromptandsharppunishmentwhichfallsontheheadofapersonwho，beingboundtoliveanddieinhisnativevillage，playsadishonesttrickononeofhisneighbours。

Theopportunitiesforknaveryarecertainlymorenumerousthantheywere。butthereisnoreasonforthinkingthatpeopleavailthemselvesofalargerproportionofsuchopportunitiesthantheyusedtodo。Onthecontrary，modernmethodsoftradeimplyhabitsoftrustfulnessontheonesideandapowerofresistingtemptationtodishonestyontheother，whichdonotexistamongabackwardpeople。Instancesofsimpletruthandpersonalfidelityaremetwithunderallsocialconditions：butthosewhohavetriedtoestablishabusinessofmoderntypeinabackwardcountryfindthattheycanscarcelyeverdependonthenativepopulationforfillingpostsoftrust。Itisevenmoredifficulttodispensewithimportedassistanceforwork，whichcallsforastrongmoralcharacter，thanforthatwhichrequiresgreatskillandmentalability。Adulterationandfraudintradewererampantinthemiddleagestoanextentthatisveryastonishing，whenweconsiderthedifficultiesofwrong-doingwithoutdetectionatthattime。

Ineverystageofcivilization，inwhichthepowerofmoneyhasbeenprominent，poetsinverseandprosehavedelightedtodepictapasttrulyGoldenAge，beforethepressureofmerematerialgoldhadbeenfelt。Theiridyllicpictureshavebeenbeautiful，andhavestimulatednobleimaginationsandresolves。

buttheyhavehadverylittlehistoricaltruth。Smallcommunitieswithsimplewantsforwhichthebountyofnaturehasmadeabundantprovision，haveindeedsometimesbeennearlyfreefromcareabouttheirmaterialneeds，andhavenotbeentemptedtosordidambitions。Butwheneverwecanpenetratetotheinnerlifeofacrowdedpopulationunderprimitiveconditionsinourowntime，wefindmorewant，morenarrowness，andmorehardnessthanwasmanifestatadistance：andweneverfindamorewidelydiffusedcomfortalloyedbylesssufferingthanexistsinthewesternworldto-day。Weoughtthereforenottobrandtheforces，whichhavemademoderncivilization，byanamewhichsuggestsevil。

Itisperhapsnotreasonablethatsuchasuggestionshouldattachtothetermcompetition。butinfactitdoes。Infact，whencompetitionisarraigned，itsanti-socialformsaremadeprominent。andcareisseldomtakentoinquirewhethertherearenototherformsofit，whicharesoessentialtothemaintenanceofenergyandspontaneity，thattheircessationmightprobablybeinjuriousonthebalancetosocialwellbeing。Thetradersorproducers，whofindthatarivalisofferinggoodsatalowerpricethanwillyieldthemagoodprofit，areangeredathisintrusion，andcomplainofbeingwronged。eventhoughitmaybetruethatthosewhobuythecheapergoodsareingreaterneedthanthemselves，andthattheenergyandresourcefulnessoftheirrivalisasocialgain。Inmanycasestheregulationofcompetitionisamisleadingterm，thatveilstheformationofaprivilegedclassofproducers，whooftenusetheircombinedforcetofrustratetheattemptsofanablemantorisefromalowerclassthantheirown。Underthepretextofrepressingantisocialcompetition，theydeprivehimofthelibertyofcarvingoutforhimselfanewcareer，wheretheservicesrenderedbyhimtotheconsumersofthecommoditywouldbegreaterthantheinjuries，thatheinflictsontherelativelysmallgroupwhichobjectstohiscompetition。

Ifcompetitioniscontrastedwithenergeticco-operationinunselfishworkforthepublicgood，theneventhebestformsofcompetitionarerelativelyevil。whileitsharsherandmeanerformsarehateful。Andinaworldinwhichallmenwereperfectlyvirtuous，competitionwouldbeoutofplace。butsoalsowouldbeprivatepropertyandeveryformofprivateright。Menwouldthinkonlyoftheirduties。andnoonewoulddesiretohavealargershareofthecomfortsandluxuriesoflifethanhisneighbours。

Strongproducerscouldeasilybearatouchofhardship。sotheywouldwishthattheirweakerneighbours，whileproducinglessshouldconsumemore。Happyinthisthought，theywouldworkforthegeneralgoodwithalltheenergy，theinventiveness，andtheeagerinitiativethatbelongedtothem。andmankindwouldbevictoriousincontestswithnatureateveryturn。SuchistheGoldenAgetowhichpoetsanddreamersmaylookforward。Butintheresponsibleconductofaffairs，itisworsethanfollytoignoretheimperfectionswhichstillclingtohumannature。

Historyingeneral，andespeciallythehistoryofsocialisticventures，showsthatordinarymenareseldomcapableofpureidealaltruismforanyconsiderabletimetogether。andthattheexceptionsaretobefoundonlywhenthemasterfulfervourofasmallbandofreligiousenthusiastsmakesmaterialconcernstocountfornothingincomparisonwiththehigherfaith。

Nodoubtmen，evennow，arecapableofmuchmoreunselfishservicethantheygenerallyrender：andthesupremeaimoftheeconomististodiscoverhowthislatentsocialassetcanbedevelopedmostquickly，andturnedtoaccountmostwisely。Buthemustnotdecrycompetitioningeneral，withoutanalysis：heisboundtoretainaneutralattitudetowardsanyparticularmanifestationofituntilheissurethat，humannaturebeingwhatitis，therestraintofcompetitionwouldnotbemoreanti-socialinitsworkingthanthecompetitionitself。

Wemayconcludethenthatthetermcompetitionisnotwellsuitedtodescribethespecialcharacteristicsofindustriallifeinthemodernage。Weneedatermthatdoesnotimplyanymoralqualities，whethergoodorevil，butwhichindicatestheundisputedfactthatmodernbusinessandindustryarecharacterizedbymoreself-relianthabits，moreforethought，moredeliberateandfreechoice。Thereisnotanyonetermadequateforthispurpose：butFreedomofIndustryandEnterprise，ormoreshortly，EconomicFreedom，pointsintherightdirection。anditmaybeusedintheabsenceofabetter。Ofcoursethisdeliberateandfreechoicemayleadtoacertaindeparturefromindividualfreedomwhenco-operationorcombinationseemstoofferthebestroutetothedesiredend。Thequestionshowfarthesedeliberateformsofassociationarelikelytodestroythefreedominwhichtheyhadtheiroriginandhowfartheyarelikelytobeconducivetothepublicweal，liebeyondthescopeofthepresentvolume。(1*)

5。Thisintroductorychapterwasfollowedinearliereditionsbytwoshortsketches：theonerelatedtothegrowthoffreeenterpriseandgenerallyofeconomicfreedom，andtheothertothegrowthofeconomicscience。Theyhavenoclaimtobesystematichistories，howevercompressed。theyaimonlyatindicatingsomelandmarksontheroutesbywhicheconomicstructureandeconomicthoughthavetravelledtotheirpresentposition。TheyarenowtransferredtoAppendicesAandBattheendofthisvolume，partlybecausetheirfulldriftcanbestbeseenaftersomeacquaintancehasbeenmadewiththesubject-matterofeconomics。andpartlybecauseinthetwentyyears，whichhaveelapsedsincetheywerefirstwritten，publicopinionastothepositionwhichthestudyofeconomicandsocialscienceshouldholdinaliberaleducationhasgreatlydeveloped。

Thereislessneednowthanformerlytoinsistthattheeconomicproblemsofthepresentgenerationderivemuchoftheirsubject-matterfromtechnicalandsocialchangesthatareofrecentdate，andthattheirformaswellastheirurgencyassumethroughouttheeffectiveeconomicfreedomofthemassofthepeople。

TherelationsofmanyancientGreeksandRomanswiththeslavesoftheirhouseholdsweregenialandhumane。ButeveninAtticathephysicalandmoralwellbeingofthegreatbodyoftheinhabitantswasnotacceptedasachiefaimofthecitizen。

Idealsoflifewerehigh，buttheyconcernedonlya。few。andthedoctrineofvalue，whichisfullofcomplexitiesinthemodernage，couldthenhavebeenworkedoutonaplan。suchascouldbeconceivedto-day，onlyifnearlyallmanualworkweresupersededbyautomaticmachineswhichrequiredmerelyadefiniteallowanceofsteam-powerandmaterials，andhadnoconcernwiththerequirementsofafullcitizen’slife。MuchofmoderneconomicsmightindeedhavebeenanticipatedinthetownsoftheMiddleAges，inwhichanintelligentanddaringspiritwasforthefirsttimecombinedwithpatientindustry。Buttheywerenotlefttoworkouttheircareerinpeace。andtheworldhadtowaitforthedawnoftheneweconomiceratillawholenationwasreadyfortheordealofeconomicfreedom。

Englandespeciallywasgraduallypreparedforthetask。buttowardstheendoftheeighteenthcentury，thechanges，whichhadsofarbeenslowandgradual，suddenlybecamerapidandviolent。

Mechanicalinventions，theconcentrationofindustries，andasystemofmanufacturingonalargescalefordistantmarketsbrokeuptheoldtraditionsofindustry，andlefteveryonetobargainforhimselfasbesthemight。andatthesametimetheystimulatedanincreaseofpopulationforwhichnoprovisionhadbeenmadebeyondstanding-roominfactoriesandworkshops。Thusfreecompetition，orrather，freedomofindustryandenterprise，wassetloosetorun，likeahugeuntrainedmonster，itswaywardcourse。Theabuseoftheirnewpowerbyablebutunculturedbusinessmenledtoevilsoneveryside。itunfittedmothersfortheirduties，itweigheddownchildrenwithoverworkanddisease。

andinmanyplacesitdegradedtherace。MeanwhilethekindlymeantrecklessnessofthepoorlawdidevenmoretolowerthemoralandphysicalenergyofEnglishmenthanthehardheartedrecklessnessofthemanufacturingdiscipline：forbydeprivingthepeopleofthosequalitieswhichwouldfitthemfortheneworderofthings，itincreasedtheevilanddiminishedthegoodcausedbytheadventoffreeenterprise。

Andyetthetimeatwhichfreeenterprisewasshowingitselfinanunnaturallyharshform，wastheverytimeinwhicheconomistsweremostlavishintheirpraisesofit。Thiswaspartlybecausetheysawclearly，whatweofthisgenerationhaveinagreatmeasureforgotten，thecrueltyoftheyokeofcustomandrigidordinancewhichithaddisplaced。andpartlybecausethegeneraltendencyofEnglishmenatthetimewastoholdthatfreedominallmatters，politicalandsocial，wasworthhavingateverycostexceptthelossofsecurity。ButpartlyalsoitwasthattheproductiveforceswhichfreeenterprisewasgivingothenationweretheonlymeansbywhichitcouldofferasuccessfulresistancetoNapoleon。Economiststhereforetreatedfreeenterprisenotindeedasanunmixedgood，butasalessevilthansuchregulationaswaspracticableatthetime。

Adheringtothelinesofthoughtthathadbeenstartedchieflybymedievaltraders，andcontinuedbyFrenchandEnglishphilosophersinthelatterhalfoftheeighteenthcentury，Ricardoandhisfollowersdevelopedatheoryoftheactionoffreeenterprise(or，astheysaid，freecompetition)，whichcontainedmanytruths，thatwillbeprobablyimportantsolongastheworldexists。Theirworkwaswonderfullycompletewithinthenarrowareawhichitcovered。Butmuchofthebestofitconsistsofproblemsrelatingtorentandthevalueofcorn：-problemsonthesolutionofwhichthefateofEnglandjustthenseemedtodepend。butmanyofwhich，intheparticularforminwhichtheywereworkedoutbyRicardo，haveverylittledirectbearingonthepresentstateofthings。

AgooddealoftherestoftheirworkwasnarrowedbyitsregardingtooexclusivelythepeculiarconditionofEnglandatthattime。andthisnarrownesshascausedareaction。Sothatnow，whenmoreexperience，moreleisure，andgreatermaterialresourceshaveenabledustobringfreeenterprisesomewhatundercontrol，todiminishitspowerofdoingevilandincreaseitspowerofdoinggood，thereisgrowingupamongmanyeconomistsasortofspiteagainstit。Someeveninclinetoexaggerateitsevils，andattributetoittheignoranceandsuffering，whicharetheresultseitheroftyrannyandoppressioninpastages，orofthemisunderstandingandmismanagementofeconomicfreedom。

Intermediatebetweenthesetwoextremesarethegreatbodyofeconomistswho，workingonparallellinesinmanydifferentcountries，arebringingtotheirstudiesanunbiasseddesiretoascertainthetruth，andawillingnesstogothroughwiththelongandheavyworkbywhichalonescientificresultsofanyvaluecanbeobtained。Varietiesofmind，oftemper，oftrainingandofopportunitiesleadthemtoworkindifferentways，andtogivetheirchiefattentiontodifferentpartsoftheproblem。Allareboundmoreorlesstocollectandarrangefactsandstatisticsrelatingtopastandpresenttimes。andallareboundtooccupythemselvesmoreorlesswithanalysisandreasoningonthebasisofthosefactswhicharereadyathand：butsomefindtheformertaskthemoreattractiveandabsorbing，andothersthelatter。Thisdivisionoflabour，however，impliesnotopposition，butharmonyofpurpose。Theworkofalladdssomethingorothertothatknowledge，whichenablesustounderstandtheinfluencesexertedonthequalityandtoneofman’slifebythemannerinwhichheearnshislivelihood，andbythecharacterofthatlivelihood。

NOTES：

1。TheyoccupyaconsiderableplaceintheforthcomingvolumeonIndustryandTrade。

Chapter2

TheSubstanceofEconomics1。Economicsisastudyofmenastheyliveandmoveandthinkintheordinarybusinessoflife。Butitconcernsitselfchieflywiththosemotiveswhichaffect，mostpowerfullyandmoststeadily，man’sconductinthebusinesspartofhislife。

Everyonewhoisworthanythingcarrieshishighernaturewithhimintobusiness。and，thereaselsewhere，heisinfluencedbyhispersonalaffections，byhisconceptionsofdutyandhisreverenceforhighideals。Anditistruethatthebestenergiesoftheablestinventorsandorganizersofimprovedmethodsandappliancesarestimulatedbyanobleemulationmorethanbyanyloveofwealthforitsownsake。But，forallthat，thesteadiestmotivetoordinarybusinessworkisthedesireforthepaywhichisthematerialrewardofwork。Thepaymaybeonitswaytobespentselfishlyorunselfishly，fornobleorbaseends。andherethevarietyofhumannaturecomesintoplay。Butthemotiveissuppliedbyadefiniteamountofmoney：anditisthisdefiniteandexactmoneymeasurementofthesteadiestmotivesinbusinesslife，whichhasenabledeconomicsfartooutruneveryotherbranchofthestudyofman。Justasthechemist’sfinebalancehasmadechemistrymoreexactthanmostotherphysicalsciences。

sothiseconomist’sbalance，roughandimperfectasitis，hasmadeeconomicsmoreexactthananyotherbranchofsocialscience。Butofcourseeconomicscannotbecomparedwiththeexactphysicalsciences：foritdealswiththeeverchangingandsubtleforcesofhumannature。(1*)

Theadvantagewhicheconomicshasoverotherbranchesofsocialscienceappearsthentoarisefromthefactthatitsspecialfieldofworkgivesratherlargeropportunitiesforexactmethodsthananyotherbranch。Itconcernsitselfchieflywiththosedesires，aspirationsandotheraffectionsofhumannature，theoutwardmanifestationsofwhichappearasincentivestoactioninsuchaformthattheforceorquantityoftheincentivescanbeestimatedandmeasuredwithsomeapproachtoaccuracy。，andwhichthereforeareinsomedegreeamenabletotreatmentbyscientificmachinery。Anopeningismadeforthemethodsandthetestsofscienceassoonastheforceofaperson’smotives-notthemotivesthemselves-canbeapproximatelymeasuredbythesumofmoney，whichhewilljustgiveupinordertosecureadesiredsatisfaction。oragainbythesumwhichisjustrequiredtoinducehimtoundergoacertainfatigue。

Itisessentialtonotethattheeconomistdoesnotclaimtomeasureanyaffectionofthemindinitself，ordirectly。butonlyindirectlythroughitseffect。Noonecancompareandmeasureaccuratelyagainstoneanotherevenhisownmentalstatesatdifferenttimes：andnoonecanmeasurethementalstatesofanotheratallexceptindirectlyandconjecturallybytheireffects。Ofcoursevariousaffectionsbelongtoman’shighernatureandotherstohislower，andarethusdifferentinkind。

But，evenifweconfineourattentiontomerephysicalpleasuresandpainsofthesamekind，wefindthattheycanonlybecomparedindirectlybytheireffects。Infact，eventhiscomparisonisnecessarilytosomeextentconjectural，unlesstheyoccurtothesamepersonatthesametime。

Forinstancethepleasureswhichtwopersonsderivefromsmokingcannotbedirectlycompared：norcaneventhosewhichthesamepersonderivesfromitatdifferenttimes。Butifwefindamanindoubtwhethertospendafewpenceonacigar，oracupoftea，oronridinghomeinsteadofwalkinghome，thenwemayfollowordinaryusage，andsaythatheexpectsfromthemequalpleasures。

Ifthenwewishtocompareevenphysicalgratifications，wemustdoitnotdirectly，butindirectlybytheincentiveswhichtheyaffordtoaction。Ifthedesirestosecureeitheroftwopleasureswillinducepeopleinsimilarcircumstanceseachtodojustanhour’sextrawork，orwillinducemeninthesamerankoflifeandwiththesamemeanseachtopayashillingforit。wethenmaysaythatthosepleasuresareequalforourpurposes，becausethedesiresforthemareequallystrongincentivestoactionforpersonsundersimilarconditions。

Thusmeasuringamentalstate，asmendoinordinarylife，byitsmotor-forceortheincentivewhichitaffordstoaction，nonewdifficultyisintroducedbythefactthatsomeofthemotivesofwhichwehavetotakeaccountbelongtoman’shighernature，andotherstohislower。

Forsupposethattheperson，whomwesawdoubtingbetweenseverallittlegratificationsforhimself，hadthoughtafterawhileofapoorinvalidwhomhewouldpassonhiswayhome。andhadspentsometimeinmakinguphismindwhetherhewouldchooseaphysicalgratificationforhimself，orwoulddoakindlyactandrejoiceinanother’sjoy。Ashisdesiresturnednowtowardstheone，nowtheother，therewouldbechangeinthequalityofhismentalstates。andthephilosopherisboundtostudythenatureofthechange。

Buttheeconomiststudiesmentalstatesratherthroughtheirmanifestationsthaninthemselves。andifhefindstheyaffordevenlybalancedincentivestoaction，hetreatsthemprimafacieasforhispurposeequal。Hefollowsindeedinamorepatientandthoughtfulway，andwithgreaterprecautions，whateverybodyisalwaysdoingeverydayinordinarylife。Hedoesnotattempttoweightherealvalueofthehigheraffectionsofournatureagainstthoseofourlower：hedoesnotbalancetheloveforvirtueagainstthedesireforagreeablefood。Heestimatestheincentivestoactionbytheireffectsjustinthesamewayaspeopledoincommonlife。Hefollowsthecourseofordinaryconversation，differingfromitonlyintakingmoreprecautionstomakeclearthelimitsofhisknowledgeashegoes。Hereacheshisprovisionalconclusionsbyobservationsofmeningeneralundergivenconditionswithoutattemptingtofathomthementalandspiritualcharacteristicsofindividuals。Buthedoesnotignorethementalandspiritualsideoflife。Onthecontrary，evenforthenarrowerusesofeconomicstudies，itisimportanttoknowwhetherthedesireswhichprevailaresuchaswillhelptobuildupastrongandrighteouscharacter。Andinthebroaderusesofthosestudies，whentheyarebeingappliedtopracticalproblems，theeconomist，likeeveryoneelse，mustconcernhimselfwiththeultimateaimsofman，andtakeaccountofdifferencesinrealvaluebetweengratificationsthatareequallypowerfulincentivestoactionandhavethereforeequaleconomicmeasures。Astudyofthesemeasuresisonlythestarting-pointofeconomics：butitisthestarting-point。(2*)

2。Thereareseveralotherlimitationsofthemeasurementofmotivebymoneytobediscussed。Thefirstofthesearisesfromthenecessityoftakingaccountofthevariationsintheamountofpleasure，orothersatisfaction，representedbythesamesumofmoneytodifferentpersonsandunderdifferentcircumstances。

Ashillingmaymeasureagreaterpleasure(orothersatisfaction)atonetimethanatanotherevenforthesameperson。becausemoneymaybemoreplentifulwithhim，orbecausehissensibilitymayvary。(3*)Andpersonswhoseantecedentsaresimilar，andwhoareoutwardlylikeoneanother，areoftenaffectedinverydifferentwaysbysimilarevents。When，forinstance，abandofcityschoolchildrenaresentoutforaday’sholidayinthecountry，itisprobablethatnotwoofthemderivefromitenjoymentexactlythesameinkind，orequalinintensity。Thesamesurgicaloperationcausesdifferentamountsofpaintodifferentpeople。Oftwoparentswhoare，sofaraswecantell，equallyaffectionate，onewillsuffermuchmorethantheotherfromthelossofafavouriteson。Somewhoarenotverysensitivegenerallyareyetspeciallysusceptibletoparticularkindsofpleasureandpain。whiledifferencesinnatureandeducationmakeoneman’stotalcapacityforpleasureorpainmuchgreaterthananother’s。

Itwouldthereforenotbesafetosaythatanytwomenwiththesameincomederiveequalbenefitfromitsuse。orthattheywouldsufferequalpainfromthesamediminutionofit。Althoughwhenataxof？istakenfromeachoftwopersonshavinganincomeof？00ayear，eachwillgiveupthat？worthofpleasure(orothersatisfaction)whichhecanmosteasilypartwith，i。e。eachwillgiveupwhatismeasuredtohimbyjust？。

yettheintensitiesofthesatisfactiongivenupmaynotbenearlyequal。

Nevertheless，ifwetakeaveragessufficientlybroadtocausethepersonalpeculiaritiesofindividualstocounterbalanceoneanother，themoneywhichpeopleofequalincomeswillgivetoobtainabenefitoravoidaninjuryisagoodmeasureofthebenefitorinjury。IfthereareathousandpersonslivinginSheffield，andanotherthousandinLeeds，eachwithabout？00

a-year，andataxof？isleviedonallofthem。wemaybesurethatthelossofpleasureorotherinjurywhichthetaxwillcauseinSheffieldisofaboutequalimportancewiththatwhichitwillcauseinLeeds：andanythingthatincreasedalltheincomesby？wouldgivecommandoverequivalentpleasuresandotherbenefitsinthetwotowns。Thisprobabilitybecomesgreaterstillifallofthemareadultmalesengagedinthesametrade。

andthereforepresumablysomewhatsimilarinsensibilityandtemperament，intasteandeducation。Noristheprobabilitymuchdiminished，ifwetakethefamilyasourunit，andcomparethelossofpleasurethatresultsfromdiminishingby？theincomeofeachofathousandfamilieswithincomesof？00a-yearinthetwoplaces。

Nextwemusttakeaccountofthefactthatastrongerincentivewillberequiredtoinduceapersontopayagivenpriceforanythingifheispoorthanifheisrich。Ashillingisthemeasureoflesspleasure，orsatisfactionofanykind，toarichmanthantoapoorone。Arichmanindoubtwhethertospendashillingonasinglecigar，isweighingagainstoneanothersmallerpleasuresthanapoorman，whoisdoubtingwhethertospendashillingonasupplyoftobaccothatwilllasthimforamonth。Theclerkwith？00a-yearwillwalktobusinessinamuchheavierrainthantheclerkwith？00a-year。forthecostofaridebytramoromnibusmeasuresagreaterbenefittothepoorermanthantothericher。Ifthepoorermanspendsthemoney，hewillsuffermorefromthewantofitafterwardsthanthericherwould。Thebenefitthatismeasuredinthepoorerman’smindbythecostisgreaterthanthatmeasuredbyitinthericherman’smind。

Butthissourceoferroralsoislessenedwhenweareabletoconsidertheactionsandthemotivesoflargegroupsofpeople。

Ifweknow，forinstance，thatabankfailurehastaken？00，000

fromthepeopleofLeedsand？00，000fromthoseofSheffield，wemayfairlyassumethatthesufferingcausedinLeedshasbeenabouttwiceasgreatasinSheffield。unlessindeedwehavesomespecialreasonforbelievingthattheshareholdersofthebankintheonetownwerearicherclassthanthoseintheother。orthatthelossofemploymentcausedbyitpressedinunevenproportionsontheworkingclassesinthetwotowns。

Byfarthegreaternumberoftheeventswithwhicheconomicsdealsaffectinaboutequalproportionsallthedifferentclassesofsociety。sothatifthemoneymeasuresofthehappinesscausedbytwoeventsareequal，itisreasonableandinaccordancewithcommonusagetoregardtheamountsofthehappinessinthetwocasesasequivalent。And，further，asmoneyislikelytobeturnedtothehigherusesoflifeinaboutequalproportions，byanytwolargegroupsofpeopletakenwithoutspecialbiasfromanytwopartsofthewesternworld，thereisevensomeprimafacieprobabilitythatequaladditionstotheirmaterialresourceswillmakeaboutequaladditionstothefulnessoflife，andtrueprogressofthehumanrace。

3。Topasstoanotherpoint。Whenwespeakofthemeasurementofdesirebytheactiontowhichitformstheincentive，itisnottobesupposedthatweassumeeveryactiontobedeliberate，andtheoutcomeofcalculation。Forinthis，asineveryotherrespect，economicstakesmanjustasheisinordinarylife：andinordinarylifepeopledonotweighbeforehandtheresultsofeveryaction，whethertheimpulsestoitcomefromtheirhighernatureortheirlower。(4*)

Nowthesideoflifewithwhicheconomicsisspeciallyconcernedisthatinwhichman’sconductismostdeliberate，andinwhichhemostoftenreckonsuptheadvantagesanddisadvantagesofanyparticularactionbeforeheentersonit。

Andfurtheritisthatsideofhislifeinwhich，whenhedoesfollowhabitandcustom，andproceedsforthemomentwithoutcalculation，thehabitsandcustomsthemselvesaremostnearlysuretohavearisenfromacloseandcarefulwatchingtheadvantagesanddisadvantagesofdifferentcoursesofconduct。

Therewillnotingeneralhavebeenanyformalreckoningupoftwosidesofabalance-sheet：butmengoinghomefromtheirday’swork，orintheirsocialmeetings，willhavesaidtooneanother，Itdidnotanswertodothis，itwouldhavebeenbettertodothat，andsoon。Whatmakesonecourseanswerbetterthananother，willnotnecessarilybeaselfishgain，noranymaterialgain。anditwilloftenhavebeenarguedthat。thoughthisorthatplansavedalittletroubleoralittlemoney，yetitwasnotfairtoothers，anditmadeonelookmean，oritmadeonefeelmean。Itistruethatwhenahabitoracustom，whichhasgrownupunderonesetofconditions，influencesactionunderotherconditions，thereissofarnoexactrelationbetweentheeffortandtheendwhichisattainedbyit。Inbackwardcountriestherearestillmanyhabitsandcustomssimilartothosethatleadabeaverinconfinementtobuildhimselfadam。theyarefullofsuggestivenesstothehistorian，andmustbereckonedwithbythelegislator。Butinbusinessmattersinthemodernworldsuchhabitsquicklydieaway。

Thusthenthemostsystematicpartofpeople’slivesisgenerallythatbywhichtheyearntheirliving。Theworkofallthoseengagedinanyoneoccupationcanbecarefullyobserved。

generalstatementscanbemadeaboutit，andtestedbycomparisonwiththeresultsofotherobservations。andnumericalestimatescanbeframedastotheamountofmoneyorgeneralpurchasingpowerthatisrequiredtosupplyasufficientmotiveforthem。

Theunwillingnesstopostponeenjoyment，andthustosaveforfutureuse，ismeasuredbytheinterestonaccumulatedwealthwhichjustaffordsasufficientincentivetosaveforthefuture。

Thismeasurementpresentshoweversomespecialdifficulties，thestudyofwhichmustbepostponed。

4。Here，aselsewhere，wemustbearinmindthatthedesiretomakemoneydoesnotitselfnecessarilyproceedfrommotivesofaloworder，evenwhenitistobespentononeself。Moneyisameanstowardsends，andiftheendsarenoble，thedesireforthemeansisnotignoble。Theladwhoworkshardandsavesallhecan，inordertobeabletopayhiswayafterwardsataUniversity，iseagerformoney。buthiseagernessisnotignoble。

Inshort，moneyisgeneralpurchasingpower，andissoughtasameanstoallkindsofends，highaswellaslow，spiritualaswellasmaterial。(5*)

Thusthoughitistruethatmoneyorgeneralpurchasingpowerorcommandovermaterialwealth，isthecentrearoundwhicheconomicscienceclusters。thisisso，notbecausemoneyormaterialwealthisregardedasthemainaimofhumaneffort，norevenasaffordingthemainsubject-matterforthestudyoftheeconomist，butbecauseinthisworldofoursitistheoneconvenientmeansofmeasuringhumanmotiveonalargescale。Iftheoldereconomistshadmadethisclear，theywouldhaveescapedmanygrievousmisrepresentations。andthesplendidteachingsofCarlyleandRuskinastotherightaimsofhumanendeavourandtherightusesofwealth，wouldnotthenhavebeenmarredbybitterattacksoneconomics，basedonthemistakenbeliefthatthatsciencehadnoconcernwithanymotiveexcepttheselfishdesireforwealth，oreventhatitinculcatedapolicyofsordidselfishness。(6*)

Again，whenthemotivetoaman’sactionisspokenofassuppliedbythemoneywhichhewillearn，itisnotmeantthathismindisclosedtoallotherconsiderationssavethoseofgain。Foreventhemostpurelybusinessrelationsoflifeassumehonestyandgoodfaith。whilemanyofthemtakeforgranted，ifnotgenerosity，yetatleasttheabsenceofmeanness，andthepridewhicheveryhonestmantakesinacquittinghimselfwell。

Again，muchoftheworkbywhichpeopleearntheirlivingispleasurableinitself。andthereistruthinthecontentionofsocialiststhatmoreofitmightbemadeso。Indeedevenbusinesswork，thatseemsatfirstsightunattractive，oftenyieldsagreatpleasurebyofferingscopefortheexerciseofmen’sfaculties，andfortheirinstinctsofemulationandofpower。Forjustasaracehorseoranathletestrainseverynervetogetinadvanceofhiscompetitors，anddelightsinthestrain。soamanufactureroratraderisoftenstimulatedmuchmorebythehopeofvictoryoverhisrivalsthanbythedesiretoaddsomethingtohisfortune。(7*)

5。Ithasindeedalwaysbeenthepracticeofeconomiststotakecarefulaccountofalltheadvantageswhichattractpeoplegenerallytowardsanoccupation，whethertheyappearinamoneyformornot。Otherthingsbeingequal，peoplewillpreferanoccupationinwhichtheydonotneedtosoiltheirhands，inwhichtheyenjoyagoodsocialposition，andsoon。andsincetheseadvantagesaffect，notindeedeveryoneexactlyinthesameway，butmostpeopleinnearlythesameway，theirattractiveforcecanbeestimatedandmeasuredbythemoneywagestowhichtheyareregardedasequivalent。

Again，thedesiretoearntheapproval，toavoidthecontemptofthosearoundoneisastimulustoactionwhichoftenworkswithsomesortofuniformityinanyclassofpersonsatagiventimeandplace。thoughlocalandtemporaryconditionsinfluencegreatlynotonlytheintensityofthedesireforapproval，butalsotherangeofpersonswhoseapprovalisdesired。A

professionalman，forinstance，oranartisanwillbeverysensitivetotheapprovalordisapprovalofthoseinthesameoccupation，andcarelittleforthatofotherpeople。andtherearemanyeconomicproblems，thediscussionofwhichwouldbealtogetherunreal，ifcarewerenottakentowatchthedirectionandtoestimateprettycloselytheforceofmotivessuchasthese。

Astheremaybeataintofselfishnessinaman’sdesiretodowhatseemslikelytobenefithisfellow-workers，sotheremaybeanelementofpersonalprideinhisdesirethathisfamilyshouldprosperduringhislifeandafterit。Butstillthefamilyaffectionsgenerallyaresopureaformofaltruism，thattheiractionmighthaveshownlittlesemblanceofregularity，haditnotbeenfortheuniformityinthefamilyrelationsthemselves。

Asitis，theiractionisfairlyregular。andithasalwaysbeenfullyreckonedwithbyeconomists，especiallyinrelationtothedistributionofthefamilyincomebetweenitsvariousmembers，theexpensesofpreparingchildrenfortheirfuturecareer，andtheaccumulationofwealthtobeenjoyedafterthedeathofhimbywhomithasbeenearned。

Itisthennotthewantofwillbutthewantofpower，thatpreventseconomistsfromreckoningintheactionofmotivessuchasthese。andtheywelcomethefactthatsomekindsofphilanthropicactioncanbedescribedinstatisticalreturns，andcantoacertainextentbereducedtolaw，ifsufficientlybroadaveragesaretaken。Forindeedthereisscarcelyanymotivesofitfulandirregular，butthatsomelawwithregardtoitcanbedetectedbytheaidofwideandpatientobservation。ItwouldperhapsbepossibleevennowtopredictwithtolerableclosenessthesubscriptionsthatapopulationofahundredthousandEnglishmenofaveragewealthwillgivetosupporthospitalsandchapelsandmissions。and，insofarasthiscanbedone，thereisabasisforaneconomicdiscussionofsupplyanddemandwithreferencetotheservicesofhospitalnurses，missionariesandotherreligiousministers。Itwillhoweverprobablybealwaystruethatthegreaterpartofthoseactions，whichareduetoafeelingofdutyandloveofone’sneighbour，cannotbeclassed，reducedtolawandmeasured。anditisforthisreason，andnotbecausetheyarenotbasedonself-interest，thatthemachineryofeconomicscannotbebroughttobearonthem。

6。PerhapstheearlierEnglisheconomistsconfinedtheirattentiontoomuchtothemotivesofindividualaction。Butinfacteconomists，likeallotherstudentsofsocialscience，areconcernedwithindividualschieflyasmembersofthesocialorganism。Asacathedralissomethingmorethanthestonesofwhichitismade，asapersonissomethingmorethanaseriesofthoughtsandfeelings，sothelifeofsocietyissomethingmorethanthesumofthelivesofitsindividualmembers。Itistruethattheactionofthewholeismadeupofthatofitsconstituentparts。andthatinmosteconomicproblemsthebeststarting-pointistobefoundinthemotivesthataffecttheindividual，regardednotindeedasanisolatedatom，butasamemberofsomeparticulartradeorindustrialgroup。butitisalsotrue，asGermanwritershavewellurged，thateconomicshasagreatandanincreasingconcerninmotivesconnectedwiththecollectiveownershipofproperty，andthecollectivepursuitofimportantaims。Thegrowingearnestnessoftheage，thegrowingintelligenceofthemassofthepeople，andthegrowingpowerofthetelegraph，thepress，andothermeansofcommunicationareeverwideningthescopeofcollectiveactionforthepublicgood。

andthesechanges，togetherwiththespreadoftheco-operativemovement，andotherkindsofvoluntaryassociationaregrowingupundertheinfluenceofvariousmotivesbesidesthatofpecuniarygain：theyareeveropeningtotheeconomistnewopportunitiesofmeasuringmotiveswhoseactionithadseemedimpossibletoreducetoanysortoflaw。Butinfactthevarietyofmotives，thedifficultiesofmeasuringthem，andthemannerofovercomingthosedifficultiesareamongthechiefsubjectswithwhichweshallbeoccupiedinthistreatise。Almosteverypointtouchedinthepresentchapterwillneedtobediscussedinfullerdetailwithreferencetosomeoneormoreoftheleadingproblemsofeconomics。

7。Toconcludeprovisionally：economistsstudytheactionsofindividuals，butstudytheminrelationtosocialratherthanindividuallife。andthereforeconcernthemselvesbutlittlewithpersonalpeculiaritiesoftemperandcharacter。Theywatchcarefullytheconductofawholeclassofpeople，sometimesthewholeofanation，sometimesonlythoselivinginacertaindistrict，moreoftenthoseengagedinsomeparticulartradeatsometimeandplace：andbytheaidofstatistics，orinotherways，theyascertainhowmuchmoneyontheaveragethemembersoftheparticulargroup，theyarewatching，arejustwillingtopayasthepriceofacertainthingwhichtheydesire，orhowmuchmustbeofferedtothemtoinducethemtoundergoacertaineffortorabstinencethattheydislike。Themeasurementofmotivethusobtainedisnotindeedperfectlyaccurate。forifitwere，economicswouldrankwiththemostadvancedofthephysicalsciences。andnot，asitactuallydoes，withtheleastadvanced。

Butyetthemeasurementisaccurateenoughtoenableexperiencedpersonstoforecastfairlywelltheextentoftheresultsthatwillfollowfromchangesinwhichmotivesofthiskindarechieflyconcerned。Thus，forinstance，theycanestimateverycloselythepaymentthatwillberequiredtoproduceanadequatesupplyoflabourofanygrade，fromthelowesttothehighest，foranewtradewhichitisproposedtostartinanyplace。Whentheyvisitafactoryofakindthattheyhaveneverseenbefore，theycantellwithinashillingortwoaweekwhatanyparticularworkerisearning，bymerelyobservinghowfarhisisaskilledoccupationandwhatstrainitinvolvesonhisphysical，mentalandmoralfaculties。Andtheycanpredictwithtolerablecertaintywhatriseofpricewillresultfromagivendiminutionofthesupplyofacertainthing，andhowthatincreasedpricewillreactonthesupply。

And，startingfromsimpleconsiderationsofthiskind，iseconomistsgoontoanalysethecauseswhichgovernthelocaldistributionofdifferentkindsofindustry，thetermsonwhichpeoplelivingindistantplacesexchangetheirgoodswithoneanother，andsoon：andtheycanexplainandpredictthewaysinwhichfluctuationsofcreditwillaffectforeigntrade。oragaintheextenttowhichtheburdenofataxwillbeshiftedfromthoseonwhomitislevied，ontothoseforwhosewantstheycater。andsoon。

Inallthistheydealwithmanasheis：notwithanabstractoreconomicman。butamanoffleshandblood。Theydealwithamanwhoislargelyinfluencedbyegoisticmotivesinhisbusinesslifetoagreatextentwithreferencetothem。butwhoisalsoneitherabovevanityandrecklessness，norbelowdelightindoinghisworkwellforitsownsake，orinsacrificinghimselfforthegoodofhisfamily，hisneighbours，orhiscountry。amanwhoisnotbelowtheloveofavirtuouslifeforitsownsake。Theydealwithmanasheis：butbeingconcernedchieflywiththoseaspectsoflifeinwhichtheactionofmotiveissoregularthatitcanbepredicted，andtheestimateofthemotor-forcescanbeverifiedbyresults，theyhaveestablishedtheirworkonascientificbasis。

Forinthefirstplace，theydealwithfactswhichcanbeobserved，andquantitieswhichcanbemeasuredandrecorded。sothatwhendifferencesofopinionarisewithregardtothem，thedifferencescanbebroughttothetestofpublicandwell-establishedrecords。andthusscienceobtainsasolidbasisonwhichtowork。Inthesecondplace，theproblems，whicharegroupedaseconomic，becausetheyrelatespeciallytoman’sconductundertheinfluenceofmotivesthataremeasurablebyamoneyprice，arefoundtomakeafairlyhomogeneousgroup。Ofcoursetheyhaveagreatdealofsubject-matterincommon：thatisobviousfromthenatureofthecase。But，thoughnotsoobviousapriori，itwillalsobefoundtobetruethatthereisafundamentalunityofformunderlyingallthechiefofthem。andthatinconsequence，bystudyingthemtogether，thesamekindofeconomyisgained，asbysendingasinglepostmantodeliverallthelettersinacertainstreet，insteadofeachoneentrustinghisletterstoaseparatemessenger。Fortheanalysesandorganizedprocessesofreasoningthatarewantedforanyonegroupofthem，willbefoundgenerallyusefulforothergroups。

Thelessthenwetroubleourselveswithscholasticinquiriesastowhetheracertainconsiderationcomeswithinthescopeofeconomics，thebetter。Ifthematterisimportantletustakeaccountofitasfaraswecan。Ifitisoneastowhichthereexistdivergentopinions，suchascannotbebroughttothetestofexactandwell-ascertainedknowledge。ifitisoneonwhichthegeneralmachineryofeconomicanalysisandreasoningcannotgetanygrip，thenletusleaveitasideinourpurelyeconomicstudies。Butletusdososimplybecausetheattempttoincludeitwouldlessenthecertaintyandtheexactnessofoureconomicknowledgewithoutanycommensurategain。andrememberingalwaysthatsomesortofaccountofitmustbetakenbyourethicalinstinctsandourcommonsense，whentheyasultimatearbiterscometoapplytopracticalissuestheknowledgeobtainedandarrangedbyeconomicsandothersciences。

NOTES：

1。SomeremarksontherelationofeconomicstothesumtotalofsocialsciencewillbefoundinAppendixC，sections1，2。

2。Theobjectionsraisedbysomephilosopherstospeakingoftwopleasuresasequal，underanycircumstances，seemtoapplyonlytousesofthephraseotherthanthosewithwhichtheeconomistisconcerned。IthashoweverunfortunatelyhappenedthatthecustomaryusesofeconomictermshavesometimessuggestedthebeliefthateconomistsareadherentsofthephilosophicalsystemofHedonismorofUtilitarianism。For，whiletheyhavegenerallytakenforgrantedthatthegreatestpleasuresarethosewhichcomewiththeendeavourtodoone’sduty，theyhavespokenofpleasuresandpainsassupplyingthemotivestoallaction。

andtheyhavethusbroughtthemselvesunderthecensureofthosephilosophers，withwhomitisamatterofprincipletoinsistthatthedesiretodoone’sdutyisadifferentthingfromadesireforthepleasurewhich，ifonehappenstothinkofthematteratall，onemayexpectfromdoingit。thoughperhapsitmaybenotincorrectlydescribedasadesireforself-satisfactionorthesatisfactionofthepermanentself。

(SeeforinstanceT。H。Green，ProlegomenatoEthics，pp。165-6)

Itisclearlynotthepartofeconomicstoappeartotakeasideinethicalcontroversy：andsincethereisageneralagreementthatallincentivestoaction，insofarastheyareconsciousdesiresatall，maywithoutimproprietybespokenofshortlyasdesiresforsatisfaction，itmayperhapsbewelltousethiswordinsteadofpleasure，whenoccasionarisesforreferringtotheaimsofalldesires，whetherappertainingtoman’shigherorlowernature。Thesimpleantithesistosatisfactionisdissatisfaction：butperhapsitmaybewelltousetheshorterandequallycolourlessworddetriment。initsplace。

ItmayhoweverbenotedthatsomefollowersofBentham(thoughperhapsnotBenthamhimself)madethislargeuseofpainandpleasureserveasabridgebywhichtopassfromindividualisticHedonismtoacompleteethicalcreed，withoutrecognizingthenecessityfortheintroductionofanindependentmajorpremiss。andforsuchapremissthenecessitywouldappeartobeabsolute，althoughopinionswillperhapsalwaysdifferastoitsform。SomewillregarditastheCategoricalImperative。

whileotherswillregarditasasimplebeliefthat，whateverbetheoriginofourmoralinstincts，theirindicationsareborneoutbyaVerdictoftheexperienceofmankindtotheeffectthattruehappinessisnottobehadwithoutself-respect，andthatself-respectistobehadonlyontheconditionofendeavouringsotoliveastopromotetheprogressofthehumanrace。

3。CompareEdgeworth’sMathematicalPsychics。

4。Thisisspeciallytrueofthatgroupofgratifications，whichissometimesnamedthepleasuresofthechase。Theyincludenotonlythelight-heartedemulationofgamesandpastimes，ofhuntsandsteeplechases，butthemoreseriouscontestsofprofessionalandbusinesslife：andtheywilloccupyagooddealofourattentionindiscussionsofthecausesthatgovernwagesandprofits，andformsofindustrialorganization。

Somepeopleareofwaywardtemperament，andcouldgivenogoodaccounteventothemselvesofthemotivesoftheiraction。

Butifamanissteadfastandthoughtful，evenhisimpulsesaretheproductsofhabitswhichhehasadoptedmoreorlessdeliberately。And，whethertheseimpulsesareanexpressionofhishighernatureornot。whethertheyspringfrommandatesofhisconscience，thepressureofsocialconnection，ortheclaimsofhisbodilywants，heyieldsacertainrelativeprecedencetothemwithoutreflectionnow，becauseonpreviousoccasionshehasdecideddeliberatelytoyieldthatrelativeprecedence。Thepredominantattractivenessofonecourseofactionoverothers，evenwhennottheresultofcalculationatthetime，istheproductofmoreorlessdeliberatedecisionsmadebyhimbeforeinsomewhatsimilarcases。

5。SeeanadmirableessaybyCliffeLeslieonTheLoveofMoney。

Wedoindeedhearofpeoplewhopursuemoneyforitsownsakewithoutcaringforwhatitwillpurchase，especiallyattheendofalonglifespentinbusiness：butinthisasinothercasesthehabitofdoingathingiskeptupafterthepurposeforwhichitwasoriginallydonehasceasedtoexist。Thepossessionofwealthgivessuchpeopleafeelingofpowerovertheirfellow-creatures，andinsuresthemasortofenviousrespectinwhichtheyfindabitterbutstrongpleasure。

6。Infactaworldcanbeconceivedinwhichthereisascienceofeconomicsverymuchlikeourown，butinitthereisnomoneyofanysort。SeeAppendicesB，sec。8andD，sec。2。

7。SomeremarksonthelargescopeofeconomicsasconceivedinGermanywillbefoundinAppendixD，sec。3。

Chapter3

EconomicGeneralizationorLaws1。Itisthebusinessofeconomics，asofalmosteveryotherscience，tocollectfacts，toarrangeandinterpretthem，andtodrawinferencesfromthem。Observationanddescription，definitionandclassificationarethepreparatoryactivities。Butwhatwedesiretoreachtherebyisaknowledgeoftheinterdependenceofeconomicphenomena……Inductionanddeductionarebothneededforscientificthoughtastherightandleftfootarebothneededforwalking。(1*)Themethodsrequiredforthistwofoldworkarenotpeculiartoeconomics。theyarethecommonpropertyofallsciences。Allthedevicesforthediscoveryoftherelationsbetweencauseandeffect，whicharedescribedintreatisesonscientificmethod，havetobeusedintheirturnbytheeconomist：thereisnotanyonemethodofinvestigationwhichcanproperlybecalledthemethodofeconomics。buteverymethodmustbemadeserviceableinitsproperplace，eithersinglyorincombinationwithothers。Andasthenumberofcombinationsthatcanbemadeonthechess-board，issogreatthatprobablynotwogamesexactlyalikewereeverplayed。sonotwogameswhichthestudentplayswithnaturetowrestfromherherhiddentruths，whichwereworthplayingatall，evermadeuseofquitethesamemethodsinquitethesameway。

Butinsomebranchesofeconomicinquiryandforsomepurposes，itismoreurgenttoascertainnewfacts，thantotroubleourselveswiththemutualrelationsandexplanationsofthosewhichwealreadyhave。Whileinotherbranchesthereisstillsomuchuncertaintyastowhetherthosecausesofanyeventwhichlieonthesurfaceandsuggestthemselvesatfirstarebothtruecausesofitandtheonlycausesofit，thatitisevenmoreurgentlyneededtoscrutinizeourreasoningaboutfactswhichwealreadyknow，thantoseekformorefacts。

Forthisandotherreasons，therealwayshasbeenandthereprobablyalwayswillbeaneedfortheexistencesidebysideofworkerswithdifferentaptitudesanddifferentaims，someofwhomgivetheirchiefattentiontotheascertainmentoffacts，whileothersgivetheirchiefattentiontoscientificanalysis。thatistakingtopiecescomplexfacts，andstudyingtherelationsoftheseveralpartstooneanotherandtocognatefacts。Itistobehopedthatthesetwoschoolswillalwaysexist。eachdoingitsownworkthoroughly，andeachmakinguseoftheworkoftheother。Thusbestmayweobtainsoundgeneralizationsastothepastandtrustworthyguidancefromitforthefuture。

2。Thosephysicalsciences，whichhaveprogressedmostbeyondthepointstowhichtheywerebroughtbythebrilliantgeniusoftheGreeks，arenotallofthemstrictlyspeakingexactsciences。Buttheyallaimatexactness。Thatistheyallaimatprecipitatingtheresultofamultitudeofobservationsintoprovisionalstatements，whicharesufficientlydefinitetobebroughtundertestbyotherobservationsofnature。Thesestatements，whenfirstputforth，seldomclaimahighauthority。

Butaftertheyhavebeentestedbymanyindependentobservations，andespeciallyaftertheyhavebeenappliedsuccessfullyinthepredictionofcomingevents，oroftheresultsofnewexperiments，theygraduateaslaws。Ascienceprogressesbyincreasingthenumberandexactnessofitslaws。bysubmittingthemtotestsofeverincreasingseverity。andbyenlargingtheirscopetillasinglebroadlawcontainsandsupersedesanumberofnarrowerlaws，whichhavebeenshowntobespecialinstancesofit。

Insofarasthisisdonebyanyscience，astudentofitcanincertaincasessaywithauthoritygreaterthanhisown(greaterperhapsthanthatofanythinker，howeverable，whoreliesonhisownresourcesandneglectstheresultsobtainedbypreviousworkers)，whatresultsaretobeexpectedfromcertainconditions，orwhatarethetruecausesofacertainknownevent。

Althoughthesubject-matterofsomeprogressivephysicalsciencesisnot，atpresentatleast，capableofperfectlyexactmeasurement。yettheirprogressdependsonthemultitudinousco-operationofarmiesofworkers。Theymeasuretheirfactsanddefinetheirstatementsascloselyastheycan：sothateachinvestigatormaystartasnearlyaspossiblewherethosebeforehimleftoff。Economicsaspirestoaplaceinthisgroupofsciences：becausethoughitsmeasurementsareseldomexact，andareneverfinal。yetitiseverworkingtomakethemmoreexact，andthustoenlargetherangeofmattersonwhichtheindividualstudentmayspeakwiththeauthorityofhisscience。

3。Letusthenconsidermorecloselythenatureofeconomiclaws，andtheirlimitations。Everycausehasatendencytoproducesomedefiniteresultifnothingoccurstohinderit。Thusgravitationtendstomakethingsfalltotheground：butwhenaballoonisfullofgaslighterthanair，thepressureoftheairwillmakeitriseinspiteofthetendencyofgravitationtomakeitfall。Thelawofgravitationstateshowanytwothingsattractoneanother。howtheytendtomovetowardsoneanother，andwill’movetowardsoneanotherifnothinginterferestopreventthem。

Thelawofgravitationisthereforeastatementoftendencies。

Itisaveryexactstatement-soexactthatmathematicianscancalculateaNauticalAlmanac，whichwillshowthemomentsatwhicheachsatelliteofJupiterwillhideitselfbehindJupiter。

Theymakethiscalculationformanyyearsbeforehand。andnavigatorstakeittosea，anduseitinfindingoutwheretheyare。Nowtherearenoeconomictendencieswhichactassteadilyandcanbemeasuredasexactlyasgravitationcan：andconsequentlytherearenolawsofeconomicswhichcanbecomparedforprecisionwiththelawofgravitation。

Butletuslookatasciencelessexactthanastronomy。Thescienceofthetidesexplainshowthetiderisesandfallstwiceadayundertheactionofthesunandthemoon：howtherearestrongtidesatnewandfullmoon，andweaktidesatthemoon’sfirstandthirdquarter。andhowthetiderunningupintoaclosedchannel，likethatoftheSevern，willbeveryhigh。andsoon。Thus，havingstudiedthelieofthelandandthewaterallroundtheBritishisles，peoplecancalculatebeforehandwhenthetidewillprobablybeatitshighestonanydayatLondonBridgeoratGloucester。andhowhighitwillbethere。Theyhavetousethewordprobably，whichtheastronomersdonotneedtousewhentalkingabouttheeclipsesofJupiter’ssatellites。For，thoughmanyforcesactuponJupiterandhissatellites，eachoneofthemactsinadefinitemannerwhichcanbepredictedbeforehand：butnooneknowsenoughabouttheweathertobeabletosaybeforehandhowitwillact。AheavydownpourofrainintheupperThamesvalley，orastrongnorth-eastwindintheGermanOcean，maymakethetidesatLondonBridgedifferagooddealfromwhathadbeenexpected。

Thelawsofeconomicsaretobecomparedwiththelawsofthetides，ratherthanwiththesimpleandexactlawofgravitation。

Fortheactionsofmenaresovariousanduncertain，thatthebeststatementoftendencies，whichwecanmakeinascienceofhumanconduct，mustneedsbeinexactandfaulty。Thismightbeurgedasareasonagainstmakinganystatementsatallonthesubject。butthatwouldbealmosttoabandonlife。Lifeishumanconduct，andthethoughtsandemotionsthatgrowuparoundit。Bythefundamentalimpulsesofournatureweall-highandlow，learnedandunlearned-areinourseveraldegreesconstantlystrivingtounderstandthecoursesofhumanaction，andtoshapethemforourpurposes，whetherselfishorunselfish，whethernobleorignoble。Andsincewemustformtoourselvessomenotionsofthetendenciesofhumanaction，ourchoiceisbetweenformingthosenotionscarelesslyandformingthemcarefully。Theharderthetask，thegreatertheneedforsteadypatientinquiry。

forturningtoaccounttheexperience，thathasbeenreapedbythemoreadvancedphysicalsciences。andforframingasbestwecanwellthought-outestimates，orprovisionallaws，ofthetendenciesofhumanaction。

4。Thetermlawmeansthennothingmorethanageneralpropositionorstatementoftendencies，moreorlesscertain，moreorlessdefinite。Manysuchstatementsaremadeineveryscience：butwedonot，indeedwecannot，givetoallofthemaformalcharacterandnamethemaslaws。Wemustselect。andtheselectionisdirectedlessbypurelyscientificconsiderationsthanbypracticalconvenience。Ifthereisanygeneralstatementwhichwewanttobringtobearsooften，thatthetroubleofquotingitatlength，whenneeded，isgreaterthanthatofburdeningthediscussionwithanadditionalformalstatementandanadditionaltechnicalname，thenitreceivesaspecialname，otherwisenot。(2*)

Thusalawofsocialscience，oraSocialLaw，isastatementofsocialtendencies。thatis，astatementthatacertaincourseofactionmaybeexpectedundercertainconditionsfromthemembersofasocialgroup。

Economiclaws，orstatementsofeconomictendencies，arethosesociallawswhichrelatetobranchesofconductinwhichthestrengthofthemotiveschieflyconcernedcanbemeasuredbyamoneyprice。

Thereisthusnohardandsharplineofdivisionbetweenthosesociallawswhichare，andthosewhicharenot，toberegardedalsoaseconomiclaws。Forthereisacontinuousgradationfromsociallawsconcernedalmostexclusivelywithmotivesthatcanbemeasuredbyprice，tosociallawsinwhichsuchmotiveshavelittleplace。andwhicharethereforegenerallyasmuchlesspreciseandexactthaneconomiclaws，asthosearethanthelawsofthemoreexactphysicalsciences。

Correspondingtothesubstantivelawistheadjectivelegal。Butthistermisusedonlyinconnectionwithlawinthesenseofanordinanceofgovernment。notinconnectionwithlawthesenseofastatementofrelationbetweencauseandeffect。Theadjectiveusedforthispurposeisderivedfromnorma，atermwhichisnearlyequivalenttolaw，andmightperhapswithadvantagebesubstitutedforitinscientificdiscussions。Andfollowingourdefinitionofaneconomiclaw，wemaysaythatthecourseofactionwhichmaybeexpectedundercertainconditionsfromthemembersofanindustrialgroupisthenormalactionofthemembersofthatgrouprelativelytothoseconditions。

ThisuseofthetermNormalhasbeenmisunderstood。anditmaybewelltosaysomethingastotheunityindifferencewhichunderliesvarioususesoftheterm。WhenwetalkofaGoodmanoraStrongman，werefertoexcellenceorstrengthofthoseparticularphysicalmentalormoralqualitieswhichareindicatedinthecontext。Astrongjudgehasseldomthesamequalitiesasastrongrower。agoodjockeyisnotalwaysofexceptionalvirtue。

Inthesamewayeveryuseofthetermnormalimpliesthepredominanceofcertaintendencieswhichappearlikelytobemoreorlesssteadfastandpersistentintheiractionoverthosewhicharerelativelyexceptionalandintermittent。Illnessisanabnormalconditionofman：butalonglifepassedwithoutanyillnessisabnormal。Duringthemeltingofthesnows，theRhinerisesaboveitsnormallevel：butinacolddryspringwhenitislessthanusualabovethatnormallevel，itmaybesaidtobeabnormallylow(forthattimeofyear)。Inallthesecasesnormalresultsarethosewhichmaybeexpectedastheoutcomeofthosetendencieswhichthecontextsuggests。or，inotherwords，whichareinaccordancewiththosestatementsoftendency，thoseLawsorNorms，whichareappropriatetothecontext。

Thisisthepointofviewfromwhichitissaidthatnormaleconomicactionisthatwhichmaybeexpectedinthelongrunundercertainconditions(providedthoseconditionsarepersistent)fromthemembersofanindustrialgroup。ItisnormalthatbricklayersinmostpartsofEnglandarewillingtoworkfor10d。anhour，butrefusetoworkfor7d。InJohannesburgitmaybenormalthatabricklayershouldrefuseworkatmuchlessthan？aday。Thenormalpriceofbonafidefreshlaideggsmaybetakentobeapennywhennothingissaidastothetimeoftheyear：andyetthreepencemaybethenormalpriceintownduringJanuary。andtwopencemaybeanabnormallylowpricethen，causedbyunseasonablewarmth。

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