Anothermisunderstandingtobeguardedagainstarisesfromthenotionthatonlythoseeconomicresultsarenormal，whichareduetotheundisturbedactionoffreecompetition。Butthetermhasoftentobeappliedtoconditionsinwhichperfectlyfreecompetitiondoesnotexist，andcanhardlyevenbesupposedtoexist。andevenwherefreecompetitionismostdominant，thenormalconditionsofeveryfacetandtendencywillincludevitalelementsthatarenotapartofcompetitionnorevenakintoit。

Thus，forinstance，thenormalarrangementofmanytransactionsinretailandwholesaletrade，andonStockandCottonExchanges，restsontheassumptionthatverbalcontracts，madewithoutwitnesses，willbehonourablydischarged。andincountriesinwhichthisassumptioncannotlegitimatelybemade，somepartsoftheWesterndoctrineofnormalvalueareinapplicable。Again，thepricesofvariousStockExchangesecuritiesareaffectednormallybythepatrioticfeelingsnotonlyoftheordinarypurchasers，butofthebrokersthemselves：andsoon。

Lastlyitissometimeserroneouslysupposedthatnormalactionineconomicsisthatwhichisrightmorally。Butthatistobeunderstoodonlywhenthecontextimpliesthattheactionisbeingjudgedfromtheethicalpointofview。Whenweareconsideringthefactsoftheworld，astheyare，andnotastheyoughttobe，weshallhavetoregardasnormaltothecircumstancesinview，muchactionwhichweshoulduseourutmosteffortstostop。Forinstance，thenormalconditionofmanyoftheverypoorestinhabitantsofalargetownistobedevoidofenterprise，andunwillingtoavailthemselvesoftheopportunitiesthatmayofferforahealthierandlesssqualidlifeelsewhere。theyhavenotthestrength，physical，mentalandmoral，requiredforworkingtheirwayoutoftheirmiserablesurroundings。Theexistenceofaconsiderablesupplyoflabourreadytomakematch-boxesataverylowrateisnormalinthesamewaythatacontortionofthelimbsisanormalresultoftakingstrychnine。Itisoneresult，adeplorableresult，ofthosetendenciesthelawsofwhichwehavetostudy。Thisillustratesonepeculiaritywhicheconomicsshareswithafewothersciences，thenatureofthematerialofwhichcanbemodifiedbyhumaneffort。Sciencemaysuggestamoralorpracticalprecepttomodifythatnatureandthusmodifytheactionoflawsofnature。Forinstance，economicsmaysuggestpracticalmeansofsubstitutingcapableworkersforthosewhocanonlydosuchworkasmatch-boxmaking。asphysiologymaysuggestmeasuresforsomodifyingthebreedsofcattlethattheymatureearly，andcarrymuchfleshonlightframes。Thelawsofthefluctuationofcreditandpriceshavebeenmuchalteredbyincreasedpowersofprediction。

Againwhennormalpricesarecontrastedwithtemporaryormarketprices，thetermreferstothedominanceinthelongrunofcertaintendenciesundergivenconditions。Butthisraisessomedifficultquestionswhichmaybepostponed。(3*)

5。Itissometimessaidthatthelawsofeconomicsarehypothetical。Ofcourse，likeeveryotherscience，itundertakestostudytheeffectswhichwillbeproducedbycertaincauses，notabsolutely，butsubjecttotheconditionthatotherthingsareequal，andthatthecausesareabletoworkouttheireffectsundisturbed。Almosteveryscientificdoctrine，whencarefullyandformallystated，willbefoundtocontainsomeprovisototheeffectthatotherthingsareequal：theactionofthecausesinquestionissupposedtobeisolated。certaineffectsareattributedtothem，butonlyonthehypothesisthatnocauseispermittedtoenterexceptthosedistinctlyallowedfor。Itistruehoweverthattheconditionthattimemustbeallowedforcausestoproducetheireffectsisasourceofgreatdifficultyineconomics。Formeanwhilethematerialonwhichtheywork，andperhapseventhecausesthemselves，mayhavechanged。

andthetendencieswhicharebeingdescribedwillnothaveasufficientlylongruninwhichtoworkthemselvesoutfully。

Thisdifficultywilloccupyourattentionlateron。

Theconditioningclausesimpliedinalawarenotcontinuallyrepeated，butthecommonsenseofthereadersuppliesthemforhimself。Ineconomicsitisnecessarytorepeatthemoftenerthanelsewhere，becauseitsdoctrinesaremoreaptthanthoseofanyothersciencetobequotedbypersonswhohavehadnoscientifictraining，andwhoperhapshaveheardthemonlyatsecondhand，andwithouttheircontext。Onereasonwhyordinaryconversationissimplerinformthanascientifictreatise，isthatinconversationwecansafelyomitconditioningclauses。because，ifthehearerdoesnotsupplythemforhimself，wequicklydetectthemisunderstanding，andsetitright。AdamSmithandmanyoftheearlierwritersoneconomicsattainedseemingsimplicitybyfollowingtheusagesofconversation，andomittingconditioningclauses。Butthishascausedthemtobeconstantlymisunderstood，andhasledtomuchwasteoftimeandtroubleinprofitlesscontroversy。theypurchasedapparenteaseattoogreatacostevenforthatgain。(4*)

Thougheconomicanalysisandgeneralreasoningareofwideapplication，yeteveryageandeverycountryhasitsownproblems。andeverychangeinsocialconditionsislikelytorequireanewdevelopmentofeconomicdoctrines。(5*)

NOTES：

1。SchmollerinthearticleonFolkswirschaftinConrad’sHandworterbuch。

2。Therelationofnaturalandeconomiclaws，isexhaustivelydiscussedbyNeumann(ZeitschriftfurdiegesamteStaatswissenschaft，1892)whoconcludes(p。464)thatthereisnootherwordthanLaw(Gesetz)toexpressthosestatementsoftendency，whichplaysoimportantapartinnaturalaswellaseconomicscience。SeealsoWagner(Grundlegung，86-91)。

3。TheyarediscussedinBookV，especiallychaptersIIIandV。

4。CompareBookII，chapterI。

5。Somepartsofeconomicsarerelativelyabstractorpure，becausetheyareconcernedmainlywithbroadgeneralpropositions：for，inorderthatapropositionmaybeofbroadapplicationitmustnecessarilycontainfewdetails：itcannotadaptitselftoparticularcases。andifitpointstoanyprediction，thatmustbegovernedbyastrongconditioningclauseinwhichaverylargemeaningisgiventothephraseotherthingsbeingequal。Otherpartsarerelativelyapplied，becausetheydealwithnarrowerquestionsmoreindetail。theytakemoreaccountoflocalandtemporaryelements。andtheyconsidereconomicconditionsinfullerandcloserrelationtootherconditionsoflife。Thusthereisbutashortstepfromtheappliedscienceofbankinginitsmoregeneralsense，tobroadrulesorpreceptsofthegeneralArtofbanking：whilethestepfromaparticularlocalproblemoftheappliedscienceofbankingtothecorrespondingruleofpracticeorpreceptofArtmaybeshorterstill。

Chapter4

TheOrderandAimsofEconomicStudies1。Wehaveseenthattheeconomistmustbegreedyoffacts。

butthatfactsbythemselvesteachnothing。Historytellsofsequencesandcoincidences。butreasonalonecaninterpretanddrawlessonsfromthem。Theworktobedoneissovariousthatmuchofitmustbelefttobedealtwithbytrainedcommonsense，whichistheultimatearbiterineverypracticalproblem。

Economicscienceisbuttheworkingofcommonsenseaidedbyappliancesoforganizedanalysisandgeneralreasoning，whichfacilitatethetaskofcollecting，arranging，anddrawinginferencesfromparticularfacts。Thoughitsscopeisalwayslimited，thoughitsworkwithouttheaidofcommonsenseisvain，yetitenablescommonsensetogofurtherindifficultproblemsthanwouldotherwisebepossible。

Economiclawsarestatementswithregardtothetendenciesofman’sactionundercertainconditions。Theyarehypotheticalonlyinthesamesenseasarethelawsofthephysicalsciences：forthoselawsalsocontainorimplyconditions。Butthereismoredifficultyinmakingtheconditionsclear，andmoredangerinanyfailuretodoso，ineconomicsthaninphysics。Thelawsofhumanactionarenotindeedassimple，asdefiniteorasclearlyascertainableasthelawofgravitation。butmanyofthemmayrankwiththelawsofthosenaturalscienceswhichdealwithcomplexsubject-matter。

Theraisond’etreofeconomicsasaseparatescienceisthatitdealschieflywiththatpartofman’sactionwhichismostunderthecontrolofmeasurablemotives。andwhichthereforelendsitselfbetterthananyothertosystematicreasoningandanalysis。Wecannotindeedmeasuremotivesofanykind，whetherhighorlow，astheyareinthemselves：wecanmeasureonlytheirmovingforce。Moneyisneveraperfectmeasureofthatforce。anditisnotevenatolerablygoodmeasureunlesscarefulaccountistakenofthegeneralconditionsunderwhichitworks，andespeciallyoftherichesorpovertyofthosewhoseactionisunderdiscussion。Butwithcarefulprecautionsmoneyaffordsafairlygoodmeasureofthemovingforceofagreatpartofthemotivesbywhichmen’slivesarefashioned。

Thestudyoftheorymustgohandinhandwiththatoffacts：

andfordealingwithmostmodernproblemsitismodernfactsthatareofthegreatestuse。Fortheeconomicrecordsofthedistantpastareinsomerespectsslightanduntrustworthy。andtheeconomicconditionsofearlytimesarewhollyunlikethoseofthemodernageoffreeenterprise，ofgeneraleducation，oftruedemocracy，ofsteam，ofthecheappressandthetelegraph。

2。Economicshasthenasitspurposefirstlytoacquireknowledgeforitsownsake，andsecondlytothrowlightonpracticalissues。Butthoughwearebound，beforeenteringonanystudy，toconsidercarefullywhatareitsuses，weshouldnotplanoutourworkwithdirectreferencetothem。Forbysodoingwearetemptedtobreakoffeachlineofthoughtassoonasitceasestohaveanimmediatebearingonthatparticularaimwhichwehaveinviewatthetime：thedirectpursuitofpracticalaimsleadsustogrouptogetherbitsofallsortsofknowledge，whichhavenoconnectionwithoneanotherexceptfortheimmediatepurposesofthemoment。andwhichthrowbutlittlelightononeanother。Ourmentalenergyisspentingoingfromonetoanother。

nothingisthoroughlythoughtout。norealprogressismade。

Thebestgrouping，therefore，forthepurposesofscienceisthatwhichcollectstogetherallthosefactsandreasoningswhicharesimilartooneanotherinnature：sothatthestudyofeachmaythrowlightonitsneighbour。Byworkingthusforalongtimeatonesetofconsiderations，wegetgraduallynearertothosefundamentalunitieswhicharecallednature’slaws：wetracetheiractionfirstsingly，andthenincombination。andthusmakeprogressslowlybutsurely。Thepracticalusesofeconomicstudiesshouldneverbeoutofthemindoftheeconomist，buthisspecialbusinessistostudyandinterpretfactsandtofindoutwhataretheeffectsofdifferentcausesactingsinglyandincombination。

3。Thismaybeillustratedbyenumeratingsomeofthechiefquestionstowhichtheeconomistaddresseshimself。Heinquires：

Whatarethecauseswhich，especiallyinthemodernworld，affecttheconsumptionandproduction，thedistributionandexchangeofwealth。theorganizationofindustryandtrade。themoneymarket。wholesaleandretaildealing。foreigntrade，andtherelationsbetweenemployersandemployed？Howdoallthesemovementsactandreactupononeanother？Howdotheirultimatedifferfromtheirimmediatetendencies？

Subjecttowhatlimitationsisthepriceofanythingameasureofitsdesirability？Whatincreaseofwellbeingisprimafacielikelytoresultfromagivenincreaseinthewealthofanyclassofsociety？Howfaristheindustrialefficiencyofanyclassimpairedbytheinsufficiencyofitsincome？Howfarwouldanincreaseoftheincomeofanyclass，ifonceeffected，belikelytosustainitselfthroughitseffectsinincreasingtheirefficiencyandearningpower？

Howfardoes，asamatteroffact，theinfluenceofeconomicfreedomreach(orhowfarhasitreachedatanyparticulartime)

inanyplace，inanyrankofsociety，orinanyparticularbranchofindustry？Whatotherinfluencesaremostpowerfulthere。andhowistheactionofalltheseinfluencescombined？Inparticular，howfardoeseconomicfreedomtendofitsownactiontobuildupcombinationsandmonopolies，andwhataretheireffects？Howarethevariousclassesofsocietylikelytobeaffectedbyitsactioninthelongrun。whatwillbetheintermediateeffectswhileitsultimateresultsarebeingworkedout。and，accountbeingtakenofthetimeoverwhichtheywillspread，whatistherelativeimportanceofthesetwoclassesofultimateandintermediateeffects？Whatwillbetheincidenceofanysystemoftaxes？Whatburdenswillitimposeonthecommunity，andwhatrevenuewillitaffordtotheState？

4。Theabovearethemainquestionswithwhicheconomicsciencehastodealdirectly，andwithreferencetowhichitsmainworkofcollectingfacts，ofanalysingthemandreasoningaboutthemshouldbearranged。Thepracticalissueswhich，thoughlyingforthegreaterpartoutsidetherangeofeconomicscience，yetsupplyachiefmotiveinthebackgroundtotheworkoftheeconomist，varyfromtimetotime，andfromplacetoplace，evenmorethandotheeconomicfactsandconditionswhichformthematerialofhisstudies。Thefollowingproblemsseemtobeofspecialurgencynowinourowncountry——

Howshouldweactsoastoincreasethegoodanddiminishtheevilinfluencesofeconomicfreedom，bothinitsultimateresultsandinthecourseofitsprogress？Ifthefirstaregoodandthelatterevil，butthosewhosuffertheevil，donotreapthegood。

howfarisitrightthattheyshouldsufferforthebenefitofothers？

Takingitforgrantedthatamoreequaldistributionofwealthistobedesired，howfarwouldthisjustifychangesintheinstitutionsofproperty，orlimitationsoffreeenterpriseevenwhentheywouldbelikelytodiminishtheaggregateofwealth？Inotherwords，howfarshouldanincreaseintheincomeofthepoorerclassesandadiminutionoftheirworkbeaimedat，evenifitinvolvedsomelesseningofnationalmaterialwealth？

Howfarcouldthisbedonewithoutinjustice，andwithoutslackeningtheenergiesoftheleadersofprogress？Howoughttheburdensoftaxationtobedistributedamongthedifferentclassesofsociety？

Oughtwetorestcontentwiththeexistingformsofdivisionoflabour？Isitnecessarythatlargenumbersofthepeopleshouldbeexclusivelyoccupiedwithworkthathasnoelevatingcharacter？Isitpossibletoeducategraduallyamongthegreatmassofworkersanewcapacityforthehigherkindsofwork。andinparticularforundertakingco-operativelythemanagementofthebusinessinwhichtheyarethemselvesemployed？

Whataretheproperrelationsofindividualandcollectiveactioninastageofcivilizationsuchasours？Howfaroughtvoluntaryassociationinitsvariousforms，oldandnew，tobelefttosupplycollectiveactionforthosepurposesforwhichsuchactionhasspecialadvantages？Whatbusinessaffairsshouldbeundertakenbysocietyitselfactingthroughitsgovernment，imperialorlocal？Havewe，forinstance，carriedasfarasweshouldtheplanofcollectiveownershipanduseofopenspaces，ofworksofart，ofthemeansofinstructionandamusement，aswellasofthosematerialrequisitesofacivilizedlife，thesupplyofwhichrequiresunitedaction，suchasgasandwater，andrailways？

Whengovernmentdoesnotitselfdirectlyintervene，howfarshoulditallowindividualsandcorporationstoconducttheirownaffairsastheyplease？Howfarshoulditregulatethemanagementofrailwaysandotherconcernswhicharetosomeextentinapositionofmonopoly，andagainoflandandotherthingsthequantityofwhichcannotbeincreasedbyman？Isitnecessarytoretainintheirfullforcealltheexistingrightsofproperty。

orhavetheoriginalnecessitiesforwhichtheyweremeanttoprovide，insomemeasurepassedaway？

Aretheprevailingmethodsofusingwealthentirelyjustifiable？Whatscopeisthereforthemoralpressureofsocialopinioninconstraininganddirectingindividualactioninthoseeconomicrelationsinwhichtherigidityandviolenceofgovernmentinterferencewouldbelikelytodomoreharmthangood？Inwhatrespectdothedutiesofonenationtoanotherineconomicmattersdifferfromthoseofmembersofthesamenationtooneanother？

Economicsisthustakentomeanastudyoftheeconomicaspectsandconditionsofman’spolitical，socialandprivatelife。butmoreespeciallyofhissociallife。Theaimsofthestudyaretogainknowledgeforitsownsake，andtoobtainguidanceinthepracticalconductoflife，andespeciallyofsociallife。Theneedforsuchguidancewasneversourgentasnow。alatergenerationmayhavemoreabundantleisurethanweforresearchesthatthrowlightonobscurepointsinabstractspeculation，orinthehistoryofpasttimes，butdonotaffordimmediateaidinpresentdifficulties。

Butthoughthuslargelydirectedbypracticalneeds，economicsavoidsasfaraspossiblethediscussionofthoseexigenciesofpartyorganization，andthosediplomaciesofhomeandforeignpoliticsofwhichthestatesmanisboundtotakeaccountindecidingwhatmeasuresthathecanproposewillbringhimnearesttotheendthathedesirestosecureforhiscountry。

Itaimsindeedathelpinghimtodeterminenotonlywhatthatendshouldbe，butalsowhatarethebestmethodsofabroadpolicydevotedtothatend。Butitshunsmanypoliticalissues，whichthepracticalmancannotignore：anditisthereforeascience，pureandapplied，ratherthanascienceandanart。AnditisbetterdescribedbythebroadtermEconomics’，thanbythenarrowertermPoliticalEconomy。

5。Theeconomistneedsthethreegreatintellectualfaculties，perception，imaginAtionandreason：andmostofallheneedsimagination，toputhimonthetrackofthosecausesofvisibleeventswhichareremoteorliebelowthesurface，andofthoseeffectsofvisiblecauseswhichareremoteorliebelowthesurface。

Thenaturalsciencesandespeciallythephysicalgroupofthemhavethisgreatadvantageasadisciplineoverallstudiesofman’saction，thatinthemtheinvestigatoriscalledonforexactconclusionswhichcanbeverifiedbysubsequentobservationorexperiment。Hisfaultissoondetectedifhecontentshimselfwithsuchcausesandsucheffectsaslieonthesurface。oragainifheignoresthemutualinteractionoftheforcesofnature，whereineverymovementmodifiesandismodifiedbyallthatsurroundit。Nordoesthethoroughstudentofphysicsrestsatisfiedwithameregeneralanalysis。heiseverstrivingtomakeitquantitative。andtoassignitsproperproportiontoeachelementinhisproblem。

Insciencesthatrelatetomanexactnessislessattainable。

Thepathofleastresistanceissometimestheonlyoneopen：itisalwaysalluring。andthoughitisalsoalwaystreacherous，thetemptationisgreattofollowitevenwhenamorethroughwaycanbefoughtoutbyresolutework。Thescientificstudentofhistoryishamperedbyhisinabilitytoexperimentandevenmorebytheabsenceofanyobjectivestandardtowhichhisestimatesofrelativeproportioncanbereferred。Suchestimatesarelatentinalmosteverystageofhisargument：hecannotconcludethatonecauseorgroupofcauseshasbeenoverriddenbyanotherwithoutmakingsomeimplicitestimateoftheirrelativeweights。Andyetitisonlybyagreateffortthatheperceiveshowdependentheisonhisownsubjectiveimpressions。Theeconomistalsoishamperedbythisdifficulty，butinalessdegreethanotherstudentsofman’saction。forindeedhehassomeshareinthoseadvantageswhichgiveprecisionandobjectivitytotheworkofthephysicist。Solong，atallevents，asheisconcernedwithcurrentandrecentevents，manyofhisfactsgroupthemselvesunderclassesastowhichstatementscanbemadethataredefinite，andoftenwereapproximatelyaccuratenumerically：andthusheisatsomeadvantageinseekingforcausesandforresultswhichliebelowthesurface，andarenoteasilyseen。andinanalyzingcomplexconditionsintotheirelementsandinreconstructingawholeoutofmanyelements。

Insmallermatters，indeed，simpleexperiencewillsuggesttheunseen。Itwill，forinstance，putpeopleinthewayoflookingfortheharmtostrengthofcharacterandtofamilylifethatcomesfromill-consideredaidtothethriftless。eventhoughwhatisseenonthesurfaceisalmostsheergain。Butgreatereffort，alargerrangeofview，amorepowerfulexerciseoftheimaginationareneededintrackingthetrueresultsof，forinstance，manyplausibleschemesforincreasingsteadinessofemployment。Forthatpurposeitisnecessarytohavelearnthowcloselyconnectedarechangesincredit，indomestictrade，inforeigntradecompetition，inharvests，inprices。andhowalloftheseaffectsteadinessofemploymentforgoodandforevil。ItisnecessarytowatchhowalmosteveryconsiderableeconomiceventinanypartoftheWesternworldaffectsemploymentinsometradesatleastinalmosteveryotherpart。Ifwedealonlywiththosecausesofunemploymentwhicharenearathand，wearelikelytomakenogoodcureoftheevilswesee。andwearelikelytocauseevils，thatwedonotsee。Andifwearetolookforthosewhicharefaroffandweightheminthebalance，thentheworkbeforeusisahighdisciplineforthemind。

Again，whenbyastandardruleoranyotherdevicewagesarekeptspeciallyhighinanytrade，imaginationseta-goingwilltrytotrackthelivesofthosewhoarepreventedbythestandardrulefromdoingwork，ofwhichtheyarecapable，atapricethatpeoplearewillingtopayforit。Aretheypushedup，oraretheypusheddown？Ifsomearepushedupandsomepusheddown，ascommonlyhappens，isitthemanythatarepushedupandthefewthatarepusheddown，ortheotherwayabout？Ifwelookatsurfaceresults，wemaysupposethatitisthemanywhoarepushedup。Butif，bythescientificuseoftheimagination，wethinkoutallthewaysinwhichprohibitions，whetheronTradeUnionauthorityoranyother，preventpeoplefromdoingtheirbestandearningtheirbest，weshalloftenconcludethatitisthemanywhohavebeenpusheddown，andthefewwhohavebeenpushedup。PartlyunderEnglishinfluence，someAustralasiancoloniesaremakingboldventures，whichholdoutspeciouspromiseofgreaterimmediatecomfortandeasetotheworkers。

Australasiahasindeedagreatreserveofborrowingpowerinhervastlandedproperty：andshouldtheproposedshortcutsissueinsomeindustrialdecadence，thefallmaybeslightandtemporary。

ButitisalreadybeingurgedthatEnglandshouldmoveonsimilarlines：andafallforherwouldbemoreserious。Whatisneeded，andwhatwemayhopeiscominginthenearfuture，isalargerstudyofsuchschemesofthesamekindandbythesameorderofmindsasareappliedtojudginganewdesignforabattleshipwithreferencetoherstabilityinbadweather。

Insuchproblemsasthisitisthepurelyintellectual，andsometimeseventhecriticalfaculties，whicharemostindemand。

Buteconomicstudiescallforanddevelopthefacultyofsympathy，andespeciallythatraresympathywhichenablespeopletoputthemselvesintheplace，notonlyoftheircomrades，butalsoofotherclasses。Thisclasssympathyis，forinstance，stronglydevelopedbyinquiries，whicharebecomingeverydaymoreurgent，ofthereciprocalinfluenceswhichcharacterandearnings，methodsofemploymentandhabitsofexpenditureexertononeanother。ofthewaysinwhichtheefficiencyofanationisstrengthenedbyandstrengthenstheconfidencesandaffectionswhichholdtogetherthemembersofeacheconomicgroup-thefamily，employersandemployeesinthesamebusiness，citizensofthesamecountry。ofthegoodandevilthataremingledintheindividualunselfishnessandtheclassselfishnessofprofessionaletiquetteandoftradeunioncustoms。andofmovementsbywhichourgrowingwealthandopportunitiesmaybestbeturnedtoaccountforthewellbeingofthepresentandcominggenerations。(1*)

6。Theeconomistneedsimaginationespeciallyinorderthathemaydevelophisideals。Butmostofallheneedscautionandreserveinorderthathisadvocacyofidealsmaynotoutrunhisgraspofthefuture。

Aftermanymoregenerationshavepassed，ourpresentidealsandmethodsmayseemtobelongtotheinfancy，ratherthantothematurityofman。Onedefiniteadvancehasalreadybeenmade。Wehavelearntthateveryoneuntilprovedtobehopelesslyweakorbaseisworthyoffulleconomicfreedom：butwearenotinapositiontoguessconfidentlytowhatgoaltheadvancethusbegunwillultimatelylead。InthelaterMiddleAgesaroughbeginningwasmadeofthestudyoftheindustrialorganism，regardedasembracingallhumanity。Eachsuccessivegenerationhasseenfurthergrowthsofthatorganism。butnonehasseensolargeagrowthasourown。Theeagernesswithwhichithasbeenstudiedhasgrownwithitsgrowth。andnoparallelcanbefoundinearliertimestothebreadthandvarietyoftheeffortsthathavebeenmadetocomprehendit。Butthechiefoutcomeofrecentstudiesistomakeusrecognizemorefully，thancouldbedonebyanypreviousgeneration，howlittleweknowofthecausesbywhichprogressisbeingfashioned，andhowlittlewecanforecasttheultimatedestinyoftheindustrialorganism。

Someharshemployersandpoliticians，defendingexclusiveclassprivilegesearlyinlastcentury，founditconvenienttoclaimtheauthorityofpoliticaleconomyontheirside。andtheyoftenspokeofthemselvesaseconomists。Andeveninourowntime，thattitlehasbeenassumedbyopponentsofgenerousexpenditureontheeducationofthemassesofthepeople，inspiteofthefactthatlivingeconomistswithoneconsentmaintainthatsuchexpenditureisatrueeconomy，andthattorefuseitisbothwrongandbadbusinessfromanationalpointofview。ButCarlyleandRuskin，followedbymanyotherwriterswhohadnopartintheirbrilliantandennoblingpoeticalvisions，havewithoutexaminationheldthegreateconomistsresponsibleforsayingsanddeedstowhichtheywerereallyaverse。andinconsequencetherehasgrownupapopularmisconceptionoftheirthoughtsandcharacter。

Thefactisthatnearlyallthefoundersofmoderneconomicsweremenofgentleandsympathetictemper，touchedwiththeenthusiasmofhumanity。Theycaredlittleforwealthforthemselves。theycaredmuchforitswidediffusionamongthemassesofthepeople。Theyopposedantisocialmonopolieshoweverpowerful。Intheirseveralgenerationstheysupportedthemovementagainsttheclasslegislationwhichdeniedtotradeunionsprivilegesthatwereopentoassociationsofemployers。ortheyworkedforaremedyagainstthepoisonwhichtheoldPoorLawwasinstillingintotheheartsandhomesoftheagriculturalandotherlabourers。ortheysupportedthefactoryacts，inspiteofthestrenuousoppositionofsomepoliticiansandemployerswhoclaimedtospeakintheirname。Theywerewithoutexceptiondevotedtothedoctrinethatthewellbeingofthewholepeopleshouldbetheultimategoalofallprivateeffortandallpublicpolicy。Buttheywerestrongincourageandcaution。theyappearedcold，becausetheywouldnotassumetheresponsibilityofadvocatingrapidadvancesonuntriedpaths，forthesafetyofwhichtheonlyguaranteesofferedweretheconfidenthopesofmenwhoseimaginationswereeager，butnotsteadiedbyknowledgenordisciplinedbyhardthought。

Theircautionwasperhapsalittlegreaterthannecessary：

fortherangeofvisionevenofthegreatseersofthatagewasinsomerespectsnarrowerthanisthatofmosteducatedmeninthepresenttime。when，partlythroughthesuggestionsofbiologicalstudy，theinfluenceofcircumstancesinfashioningcharacterisgenerallyrecognizedasthedominantfactinsocialscience。Economistshaveaccordinglynowlearnttotakealargerandmorehopefulviewofthepossibilitiesofhumanprogress。

Theyhavelearnttotrustthatthehumanwill，guidedbycarefulthought，cansomodifycircumstancesaslargelytomodifycharacter。andthustobringaboutnewconditionsoflifestillmorefavourabletocharacter。andthereforetotheeconomic，aswellasthemoral，wellbeingofthemassesofthepeople。Nowaseveritistheirdutytoopposeallplausibleshortcutstothatgreatend，whichwouldsapthespringsofenergyandinitiative。

Therightsofproperty，assuch，havenotbeenveneratedbythosemastermindswhohavebuiltupeconomicscience。buttheauthorityofthesciencehasbeenwronglyassumed：bysomewhohavepushedtheclaimsofvestedrightstoextremeandantisocialuses。Itmaybewellthereforetonotethatthetendencyofcarefuleconomicstudyistobasetherightsofprivatepropertynotonanyabstractprinciple，butontheobservationthatinthepasttheyhavebeeninseparablefromsolidprogress。andthatthereforeitisthepartofresponsiblementoproceedcautiouslyandtentativelyinabrogatingormodifyingevensuchrightsasmayseemtobeinappropriatetotheidealconditionsofsociallife。

NOTES：

1。ThisSectionisreproducedfromaPleaforthecreationofacurriculumineconomicsandassociatedbranchesofpoliticalscienceaddressedtotheUniversityofCambridgein1902，andconcededinthefollowingyear。

ThePrinciplesofEconomicsbyAlfredMarshallBookII

SomeFundamentalNotionsChapter1

Introductory1。Wehaveseenthateconomicsis，ontheoneside，aScienceofWealth。and，ontheother，thatpartoftheSocialScienceofman’sactioninsociety，whichdealswithhisEffortstosatisfyhisWants，insofarastheeffortsandwantsarecapableofbeingmeasuredintermsofwealth，oritsgeneralrepresentative，i。e。money。Weshallbeoccupiedduringthegreaterpartofthisvolumewiththesewantsandefforts。andwiththecausesbywhichthepricesthatmeasurethewantsarebroughtintoequilibriumwiththosethatmeasuretheefforts。ForthispurposeweshallhavetostudyinBookIIIwealthinrelationtothediversityofman’swants，whichithastosatisfy。andinBookIVwealthinrelationtothediversityofman’seffortsbywhichitisproduced。

ButinthepresentBook，wehavetoinquirewhichofallthethingsthataretheresultofman’sefforts，andarecapableofsatisfyingman’swants，aretobecountedasWealth。andintowhatgroupsorclassesthesearetobedivided。ForthereisacompactgroupoftermsconnectedwithWealthitself，andwithCapital，thestudyofeachofwhichthrowslightontheothers。

whilethestudyofthewholetogetherisadirectcontinuation，andinsomerespectsacompletion，ofthatinquiryastothescopeandmethodsofeconomicsonwhichwehavejustbeenengaged。And，therefore，insteadoftakingwhatmayseemthemorenaturalcourseofstartingwithananalysisofwants，andofwealthindirectrelationtothem，itseemsonthewholebesttodealwiththisgroupoftermsatonce。

Indoingthisweshallofcoursehavetotakesomeaccountofthevarietyofwantsandefforts。butweshallnotwanttoassumeanythingthatisnotobviousandamatterofcommonknowledge。

Therealdifficultyofourtaskliesinanotherdirection。beingtheresultoftheneedunderwhicheconomics，aloneamongsciences，liesofmakingshiftwithafewtermsincommonusetoexpressagreatnumberofsubtledistinctions。

2。AsMillsays：(1*)-Theendsofscientificclassificationarebestansweredwhentheobjectsareformedintogroupsrespectingwhichagreaternumberofgeneralpropositionscanbemade，andthosepropositionsmoreimportant，thanthosewhichcouldbemaderespectinganyothergroupsintowhichthesamethingscouldbedistributed。Butwemeetatstartingwiththedifficultythatthosepropositionswhicharethemostimportantinonestageofeconomicdevelopment，arenotunlikelytobeamongtheleastimportantinanother，ifindeedtheyapplyatall。

Inthismattereconomistshavemuchtolearnfromtherecentexperiencesofbiology：andDarwin’sprofounddiscussionofthequestion(2*)throwsastronglightonthedifficultiesbeforeus。

Hepointsoutthatthosepartsofthestructurewhichdeterminethehabitsoflifeandthegeneralplaceofeachbeingintheeconomyofnature，areasarulenotthosewhichthrowmostlightonitsorigin，butthosewhichthrowleast。Thequalitieswhichabreederoragardenernoticesaseminentlyadaptedtoenableananimaloraplanttothriveinitsenvironment，areforthatveryreasonlikelytohavebeendevelopedincomparativelyrecenttimes。Andinlikemannerthosepropertiesofaneconomicinstitutionwhichplaythemostimportantpartinfittingitfortheworkwhichithastodonow，areforthatveryreasonlikelytobeinagreatmeasureofrecentgrowth。

Instancesarefoundinmanyoftherelationsbetweenemployerandemployed，betweenmiddlemanandproducer，betweenbankersandtheirtwoclassesofclients，thosefromwhomtheyborrowandthosetowhomtheylend。Thesubstitutionoftheterminterest

forusurycorrespondstoageneralchangeinthecharacterofloans，whichhasgivenanentirelynewkey-notetoouranalysisandclassificationofthedifferentelementsintowhichthecostofproductionofacommoditymayberesolved。Again，thegeneralschemeofdivisionoflabourintoskilledandunskilledisundergoingagradualchange。thescopeofthetermrentisbeingbroadenedinsomedirectionsandnarrowedinothers。andsoon。

Butontheotherhandwemustkeepconstantlyinmindthehistoryofthetermswhichweuse。For，tobeginwith，thishistoryisimportantforitsownsake。andbecauseitthrowssidelightsonthehistoryoftheeconomicdevelopmentofsociety。Andfurther，evenifthesolepurposeofourstudyofeconomicsweretoobtainknowledgethatwouldguideusintheattainmentofimmediatepracticalends，weshouldyetbeboundtokeepouruseoftermsasmuchaspossibleinharmonywiththetraditionsofthepast。inorderthatwemightbequicktoperceivetheindirecthintsandthesubtleandsubduedwarnings，whichtheexperiencesofourancestorsofferforourinstruction。

3。Ourtaskisdifficult。Inphysicalsciencesindeed，wheneveritisseenthatagroupofthingshaveacertainsetofqualitiesincommon，andwilloftenbespokenoftogether，theyareformedintoaclasswithaspecialname。andassoonasanewnotionemerges，anewtechnicaltermisinventedtorepresentit。

Buteconomicscannotventuretofollowthisexample。Itsreasoningsmustbeexpressedinlanguagethatisintelligibletothegeneralpublic。itmustthereforeendeavourtoconformitselftothefamiliartermsofeverydaylife，andsofaraspossiblemustusethemastheyarecommonlyused。

Incommonusealmosteverywordhasmanyshadesofmeaning，andthereforeneedstobeinterpretedbythecontext。And，asBagehothaspointedout，eventhemostformalwritersoneconomicsciencearecompelledtofollowthiscourse。forotherwisetheywouldnothaveenoughwordsattheirdisposal。Butunfortunatelytheydonotalwaysavowthattheyaretakingthisfreedom。

sometimesperhapstheyarescarcelyevenawareofthefactthemselves。Theboldandrigiddefinitions，withwhichtheirexpositionsofthesciencebegin，lullthereaderintoafalsesecurity。Notbeingwarnedthathemustoftenlooktothecontextforaspecialinterpretationclause，heascribestowhathereadsameaningdifferentfromthatwhichthewritershadintheirownminds。andperhapsmisinterpretsthemandaccusesthemoffollyofwhichtheyhadnotbeenguilty。(3*)

Again，mostofthechiefdistinctionsmarkedbyeconomictermsaredifferencesnotofkindbutofdegree。Atfirstsighttheyappeartobedifferencesofkind，andtohavesharpoutlineswhichcanbeclearlymarkedout。butamorecarefulstudyhasshownthatthereisnorealbreachofcontinuity。Itisaremarkablefactthattheprogressofeconomicshasdiscoveredhardlyanynewrealdifferencesinkind，whileitiscontinuallyresolvingapparentdifferencesinkindintodifferencesindegree。Weshallmeetwithmanyinstancesoftheevilthatmaybedonebyattemptingtodrawbroad，hardandfastlinesofdivision，andtoformulatedefinitepropositionswithregardtodifferencesbetweenthingswhichnaturehasnotseparatedbyanysuchlines。

4。Wemustthenanalyzecarefullytherealcharacteristicsofthevariousthingswithwhichwehavetodeal。andweshallthusgenerallyfindthatthereissomeuseofeachtermwhichhasdistinctlygreaterclaimsthananyothertobecalleditsleadinguse，onthegroundthatitrepresentsadistinctionthatismoreimportantforthepurposesofmodernsciencethananyotherthatisinharmonywithordinaryusage。Thismaybelaiddownasthemeaningtobegiventothetermwhenevernothingtothecontraryisstatedorimpliedbythecontext。Whenthetermiswantedtobeusedinanyothersense，whetherbroaderornarrower，thechangemustbeindicated。

Evenamongthemostcarefulthinkerstherewillalwaysremaindifferencesofopinionastotheexactplacesinwhichsomeatleastofthelinesofdefinitionshouldbedrawn。Thequestionsatissuemustingeneralbesolvedbyjudgmentsastothepracticalconvenienceofdifferentcourses。andsuchjudgmentscannotalwaysbeestablishedoroverthrownbyscientificreasoning：theremustremainamarginofdebatableground。Butthereisnosuchmarginintheanalysisitself：iftwopeopledifferwithregardtothat，theycannotbothberight。Andtheprogressofthesciencemaybeexpectedgraduallytoestablishthisanalysisonanimpregnablebasis。(4*)

NOTES：

1。Logic，Bk。IV，ch。VII，Par。2。

2。OriginofSpecies，ch。XIV。

3。Weoughttowritemoreaswedoincommonlife，wherethecontextisasortofunexpressed’interpretationclause’。onlyasinPoliticalEconomywehavemoredifficultthingstospeakofthaninordinaryconversation，wemusttakemorecare，givemorewarningofanychange。andattimeswriteout’theinterpretationclause’forthatpageordiscussionlestthereshouldbeanymistake。Iknowthatthisisdifficultanddelicatework。andallthatIhavetosayindefenceofitisthatinpracticeitissaferthanthecompetingplanofinflexibledefinitions。Anyonewhotriestoexpressvariousmeaningsoncomplexthingswithascantyvocabularyoffastenedsenses，willfindthathisstylegrowscumbrouswithoutbeingaccurate，thathehastoUselongperiphrasesforcommonthoughts，andthatafterallhedoesnotcomeoutright，forheishalfthetimefallingbackintothesenseswhichfitthecaseinhandbest，andthesearesometimesone，sometimesanother，andalmostalwaysdifferentfromhis’hardandfast’sense。Insuchdiscussionsweshouldlearntovaryourdefinitionsaswewant，justaswesay’letx，y，z，mean’nowthis，andnowthat，indifferentproblems。andthis，thoughtheydonotalwaysavowit，isreallythepracticeoftheclearestandmosteffectivewriters。(Bagehot’sPostulatesofEnglishPoliticalEconomy，pp。78-9。)Cairnesalso(LogicalMethodofPoliticalEconomy，Lect。VI)combatstheassumptionthattheattributeonwhichadefinitionturnsoughttobeonewhichdoesnotadmitofdegrees。andarguesthattoadmitofdegreesisthecharacterofallnaturalfacts。

4。Whenitiswantedtonarrowthemeaningofaterm(thatis，inlogicallanguage，todiminishitsextensionbyincreasingitsintension)，aqualifyingadjectivewillgenerallysuffice，butachangeintheoppositedirectioncannotasarulebesosimplymade。Contestsastodefinitionsareoftenofthiskind：-AandBarequalitiescommontoagreatnumberofthings，manyofthesethingshaveinadditionthequalityC，andagainmanythequalityD，whilstsomehavebothCandD。ItmaythenbearguedthatonthewholeitwillbebesttodefineatermsoastoincludeallthingswhichhavethequalitiesAandB，oronlythosewhichhavethequalitiesA，B，C，oronlythosewhichhavethequalitiesA，B，D。oronlythosewhichhaveA，B，C，D。Thedecisionbetweenthesevariouscoursesmustrestonconsiderationsofpracticalconvenience，andisamatteroffarlessimportancethanacarefulstudyofthequalitiesA，B，C，D，andoftheirmutualrelations。ButunfortunatelythisstudyhasoccupiedamuchsmallerspaceinEnglisheconomicsthancontroversiesastodefinitions。whichhaveindeedoccasionallyledindirectlytothediscoveryofscientifictruth，butalwaysbyroundaboutroutes，andwithmuchwasteoftimeandlabour。

Chapter2

Wealth1。Allwealthconsistsofdesirablethings。thatis，thingswhichsatisfyhumanwantsdirectlyorindirectly：butnotalldesirablethingsarereckonedaswealth。Theaffectionoffriends，forinstance，isanimportantelementofwellbeing，butitisnotreckonedaswealth，exceptbyapoeticlicence。Letusthenbeginbyclassifyingdesirablethings，andthenconsiderwhichofthemshouldbeaccountedaselementsofwealth。

Intheabsenceofanyshorttermincommonusetorepresentalldesirablethings，orthingsthatsatisfyhumanwants，wemayusethetermGoodsforthatpurpose。

DesirablethingsorgoodsareMaterial，orPersonalandImmaterial。Materialgoodsconsistofusefulmaterialthings，andofallrightstohold，oruse，orderivebenefitsfrommaterialthings，ortoreceivethematafuturetime。Thustheyincludethephysicalgiftsofnature，landandwater，airandclimate。

theproductsofagriculture，mining，fishing，andmanufacture。

buildings，machinery，andimplements。mortgagesandotherbonds。

sharesinpublicandprivatecompanies，allkindsofmonopolies，patent-rights，copyrights。alsorightsofwayandotherrightsofusage。Lastly，opportunitiesoftravel，accesstogoodscenery，museums，etc。aretheembodimentofmaterialfacilities，externaltoaman。thoughthefacultyofappreciatingthemisinternalandpersonal。

Aman’snon-materialgoodsfallintotwoclasses。Oneconsistsofhisownqualitiesandfacultiesforactionandforenjoyment。suchforinstanceasbusinessability，professionalskill，orthefacultyofderivingrecreationfromreadingormusic。Alltheseliewithinhimselfandarecalledinternal。Thesecondclassarecalledexternalbecausetheyconsistofrelationsbeneficialtohimwithotherpeople。Such，forinstance，werethelabourduesandpersonalservicesofvariouskindswhichtherulingclassesusedtorequirefromtheirserfsandotherdependents。Butthesehavepassedaway。andthechiefinstancesofsuchrelationsbeneficialtotheirownernow-a-daysaretobefoundinthegoodwillandbusinessconnectionoftradersandprofessionalmen。(1*)

Again，goodsmaybetransferableornon-transferable。Amongthelatteraretobeclassedaperson’squalitiesandfacultiesforactionandenjoyment(i。e。hisinternalgoods)。alsosuchpartofhisbusinessconnectionasdependsonpersonaltrustinhimandcannotbetransferred，aspartofhisvendiblegoodwill。

alsotheadvantagesofclimate，light，air，andhisprivilegesofcitizenshipandrightsandopportunitiesofmakinguseofpublicproperty。(2*)

Thosegoodsarefree，whicharenotappropriatedandareaffordedbyNaturewithoutrequiringtheeffortofman。Thelandinitsoriginalstatewasafreegiftofnature。Butinsettledcountriesitisnotafreegoodfromthepointofviewoftheindividual。WoodisstillfreeinsomeBrazilianforests。Thefishoftheseaarefreegenerally：butsomeseafisheriesarejealouslyguardedfortheexclusiveuseofmembersofacertainnation，andmaybeclassedasnationalproperty。Oysterbedsthathavebeenplantedbymanarenotfreeinanysense。thosethathavegrownnaturallyarefreeineverysenseiftheyarenotappropriated。iftheyareprivatepropertytheyarestillfreegiftsfromthepointofviewofthenation。But，sincethenationhasalloweditsrightsinthemtobecomevestedinprivatepersons，theyarenotfreefromthepointofviewoftheindividual。andthesameistrueofprivaterightsoffishinginrivers。Butwheatgrownonfreelandandthefishthathavebeenlandedfromfreefisheriesarenotfree：fortheyhavebeenacquiredbylabour。

2。Wemaynowpasstothequestionwhichclassesofaman’sgoodsaretobereckonedaspartofhiswealth。Thequestionisoneastowhichthereissomedifferenceofopinion，butthebalanceofargumentaswellasofauthorityseemsclearlytoinclineinfavourofthefollowinganswer。

Whenaman’swealthisspokenofsimply，andwithoutanyinterpretationclauseinthecontext，itistobetakentobehisstockoftwoclassesofgoods。

Inthefirstclassarethosematerialgoodstowhichhehas(bylaworcustom)privaterightsofproperty，andwhicharethereforetransferableandexchangeable。Theseitwillberememberedincludenotonlysuchthingsaslandandhouses，furnitureandmachinery，andothermaterialthingswhichmaybeinhissingleprivateownership，butalsoanysharesinpubliccompanies，debenturebonds，mortgagesandotherobligationswhichhemayholdrequiringotherstopaymoneyorgoodstohim。Ontheotherhand，thedebtswhichheowestoothersmayberegardedasnegativewealth。andtheymustbesubtractedfromhisgrosspossessionsbeforehistruenetwealthcanbefound。

Servicesandothergoods，whichpassoutofexistenceinthesameinstantthattheycomeintoit，are，ofcourse，notpartofthestockofwealth。(3*)

Inthesecondclassarethoseimmaterialgoodswhichbelongtohim，areexternaltohim，andservedirectlyasthemeansofenablinghimtoacquirematerialgoods。Thusitexcludesallhisownpersonalqualitiesandfaculties，eventhosewhichenablehimtoearnhisliving。becausetheyareinternal。Anditexcludeshispersonalfriendships，insofarastheyhavenodirectbusinessvalue。Butitincludeshisbusinessandprofessionalconnections，theorganizationofhisbusiness，and-wheresuchthingsexist-hispropertyinslaves，inlabourdues，etc。

ThisuseofthetermWealthisinharmonywiththeusageofordinarylife：and，atthesametime，itincludesthosegoods，andonlythose，whichcomeclearlywithinthescopeofeconomicscience，asdefinedinBookI。andwhichmaythereforebecalledeconomicgoods。Foritincludesallthosethings，externaltoaman，which(i)belongtohim，anddonotbelongequallytohisneighbours，andthereforearedistinctlyhis。andwhich(ii)aredirectlycapableofamoneymeasure，-ameasurethatrepresentsontheonesidetheeffortsandsacrificesbywhichtheyhavebeencalledintoexistence，and，ontheother，thewantswhichtheysatisfy。(4*)

3。Abroaderviewofwealthmayindeedbetakenforsomepurposes。butthenrecoursemustbehadtoaspecialinterpretationclause，topreventconfusion。Thus，forinstance，thecarpenter’sskillisasdirectameansofenablinghimtosatisfyotherpeople’smaterialwants，andthereforeindirectlyhisown，asarethetoolsinhiswork-basket。andperhapsitmaybeconvenienttohaveatermwhichwillincludeitaspartofwealthinabroaderuse。PursuingthelinesindicatedbyAdamSmith，(5*)andfollowedbymostcontinentaleconomists，wemaydefinepersonalwealthsoastoincludeallthoseenergies，faculties，andhabitswhichdirectlycontributetomakingpeopleindustriallyefficient。togetherwiththosebusinessconnectionsandassociationsofanykind，whichwehavealreadyreckonedaspartofwealthinthenarroweruseoftheterm。Industrialfacultieshaveafurtherclaimtoberegardedaseconomicinthefactthattheirvalueisasarulecapableofsomesortofindirectmeasurement。(6*)

Thequestionwhetheritiseverworthwhiletospeakofthemaswealthismerelyoneofconvenience，thoughithasbeenmuchdiscussedasifitwereoneofprinciple。

Confusionwouldcertainlybecausedbyusingthetermwealthbyitselfwhenwedesiretoincludeaperson’sindustrialqualities。Wealthsimplyshouldalwaysmeanexternalwealthonly。Butlittleharm，andsomegoodseemslikelytoarisefromtheoccasionaluseofthephrasematerialandpersonalwealth。

4。Butwestillhavetotakeaccountofthosematerialgoodswhicharecommontohimwithhisneighbours。andwhichthereforeitwouldbeaneedlesstroubletomentionwhencomparinghiswealthwiththeirs。thoughtheymaybeimportantforsomepurposes，andespeciallyforcomparisonsbetweentheeconomicconditionsofdistantplacesordistanttimes。

Thesegoodsconsistofthebenefitswhichhederivesfromlivinginacertainplaceatacertaintime，andbeingamemberofacertainstateorcommunity。theyincludecivilandmilitarysecurity，andtherightandopportunitytomakeuseofpublicpropertyandinstitutionsofallkinds，suchasroads，gaslight，etc。，andrightstojusticeortoafreeeducation。Thetownsmanandthecountrymanhaveeachofthemfornothingmanyadvantageswhichtheothereithercannotgetatall，orcangetonlyatgreatexpense。Otherthingsbeingequal，onepersonhasmorerealwealthinitsbroadestsensethananother，iftheplaceinwhichtheformerliveshasabetterclimate，betterroads，betterwater，morewholesomedrainage。andagainbetternewspapers，books，andplacesofamusementandinstruction。House-room，foodandclothing，whichwouldbeinsufficientinacoldclimate，maybeabundantinawarmclimate：ontheotherhand，thatwarmthwhichlessensmen’sphysicalneeds，andmakesthemrichwithbutaslightprovisionofmaterialwealth，makesthempoorintheenergythatprocureswealth。

Manyofthesethingsarecollectivegoods。i。e。goods，whicharenotinprivateownership。Andthisbringsustoconsiderwealthfromthesocial，asopposedtotheindividualpointofview。

5。Letusthenlookatthoseelementsofthewealthofanationwhicharecommonlyignoredwhenestimatingthewealthoftheindividualscomposingit。Themostobviousformsofsuchwealtharepublicmaterialpropertyofallkinds，suchasroadsandcanals，buildingsandparks，gasworksandwaterworks。thoughunfortunatelymanyofthemhavebeensecurednotbypublicsavings，butbypublicborrowings，andthereistheheavynegativewealthofalargedebttobesetagainstthem。

ButtheThameshasaddedmoretothewealthofEnglandthanallitscanals，andperhapseventhanallitsrailroads。AndthoughtheThamesisafreegiftofnature(exceptinsofarasitsnavigationhasbeenimproved)，whilethecanalistheworkofman，yetweoughtformanypurposestoreckontheThamesapartofEngland’swealth。

Germaneconomistsoftenlaystressonthenon-materialelementsofnationalwealth。anditisrighttodothisinsomeproblemsrelatingtonationalwealth，butnotinall。Scientificknowledgeindeed，whereverdiscovered，soonbecomesthepropertyofthewholecivilizedworld，andmaybeconsideredascosmopolitanratherthanasspeciallynationalwealth。Thesameistrueofmechanicalinventionsandofmanyotherimprovementsintheartsofproduction。anditistrueofmusic。Butthosekindsofliteraturewhichlosetheirforcebytranslation，mayberegardedasinaspecialsensethewealthofthosenationsinwhoselanguagetheyarewritten。Andtheorganizationofafreeandwell-orderedStateistoberegardedforsomepurposesasanimportantelementofnationalwealth。

Butnationalwealthincludestheindividualaswellasthecollectivepropertyofitsmembers。Andinestimatingtheaggregatesumoftheirindividualwealth，wemaysavesometroublebyomittingalldebtsandotherobligationsduetoonememberofanationfromanother。Forinstance，sofarastheEnglishnationaldebtandthebondsofanEnglishrailwayareownedwithinthenation，wecanadoptthesimpleplanofcountingtherailwayitselfaspartofthenationalwealth，andneglectingrailwayandgovernmentbondsaltogether。Butwestillhavetodeductforthosebondsetc。issuedbytheEnglishGovernmentorbyprivateEnglishmen，andheldbyforeigners。andtoaddforthoseforeignbondsetc。heldbyEnglishmen。(7*)

Cosmopolitanwealthdiffersfromnationalwealthmuchasthatdiffersfromindividualwealth。Inreckoningit，debtsduefrommembersofonenationtothoseofanothermayconvenientlybeomittedfrombothsidesoftheaccount。Again，justasriversareimportantelementsofnationalwealth，theoceanisoneofthemostvaluablepropertiesoftheworld。Thenotionofcosmopolitanwealthisindeednothingmorethanthatofnationalwealthextendedoverthewholeareaoftheglobe。

Individualandnationalrightstowealthrestonthebasisofcivilandinternationallaw，oratleastofcustomthathastheforceoflaw。Anexhaustiveinvestigationoftheeconomicconditionsofanytimeandplacerequiresthereforeaninquiryintolawandcustom。andeconomicsowesmuchtothosewhohaveworkedinthisdirection。Butitsboundariesarealreadywide。

andthehistoricalandjuridicalbasesoftheconceptionsofpropertyarevastsubjectswhichmaybestbediscussedinseparatetreatises。

6。ThenotionofValueisintimatelyconnectedwiththatofWealth。andalittlemaybesaidaboutithere。Thewordvalue

saysAdamSmithhastwodifferentmeanings，andsometimesexpressestheutilityofsomeparticularobjectandsometimesthepowerofpurchasingothergoodswhichthepossessionofthatobjectconveys。Butexperiencehasshownthatitisnotwelltousethewordintheformersense。

Thevalue，thatistheexchangevalue，ofonethingintermsofanotheratanyplaceandtime，istheamountofthatsecondthingwhichcanbegotthereandtheninexchangeforthefirst。

Thusthetermvalueisrelative，andexpressestherelationbetweentwothingsataparticularplaceandtime。

Civilizedcountriesgenerallyadoptgoldorsilverorbothasmoney。Insteadofexpressingthevaluesofleadandtin，andwood，andcornandotherthingsintermsofoneanother，weexpressthemintermsofmoneyinthefirstinstance。andcallthevalueofeachthingthusexpresseditsprice。Ifweknowthatatonofleadwillexchangeforfifteensovereignsatanyplaceandtime，whileatonoftinwillexchangeforninetysovereigns，wesaythattheirpricesthenandthereare？5and？0

respectively，andweknowthatthevalueofatonoftinintermsofleadissixtonsthenandthere。

Thepriceofeverythingrisesandfallsfromtimetotimeandplacetoplace。andwitheverysuchchangethepurchasingpowerofmoneychangessofarasthatthinggoes。Ifthepurchasingpowerofmoneyriseswithregardtosomethings，andatthesametimefallsequallywithregardtoequallyimportantthings，itsgeneralpurchasingpower(oritspowerofpurchasingthingsingeneral)hasremainedstationary。Thisphraseconcealssomedifficulties，whichwemuststudylateron。Butmeanwhilewemaytakeitinitspopularsense，whichissufficientlyclearandwemaythroughoutthisvolumeneglectpossiblechangesinthegeneralpurchasingpowerofmoney。Thusthepriceofanythingwillbetakenasrepresentativeofitsexchangevaluerelativelytothingsingeneral，orinotherwordsasrepresentativeofitsgeneralpurchasingpower。(8*)

Butifinventionshaveincreasedman’spowerovernatureverymuch，thentherealvalueofmoneyisbettermeasuredforsomepurposesinlabourthanincommodities。Thisdifficultyhoweverwillnotmuchaffectourworkinthepresentvolume，whichisonlyastudyoftheFoundationsofeconomics。

NOTES：

1。For，inthewordsinwhichHermannbeginshismasterlyanalysisofwealth，SomeGoodsareinternal，othersexternal，totheindividual。Aninternalgoodisthatwhichhefindsinhimselfgiventohimbynature，orwhichheeducatesinhimselfbyhisownfreeaction，suchasmuscularstrength，health，mentalattainments。Everythingthattheouterworldoffersforthesatisfactionofhiswantsisanexternalgoodtohim。

2。Theaboveclassificationofgoodsmaybeexpressedthus：

Goodsare：1。externala。materiali。transferableii。non-transferableb。personali。transferableii。non-transferable2。internal-personal-non-transferableAnotherarrangementismoreconvenientforsomepurposes：

Goodsare：1。material-externali。transferableii。non-transferable2。personala。externali。transferableii。non-transferableb。internal-non-transferable3。Thatpartofthevalueoftheshareinatradingcompanywhichisduetothepersonalreputationandconnectionofthosewhoconductitsaffairsoughtproperlytocomeunderthenextheadasexternalpersonalgoods。Butthispointisnotofmuchpracticalimportance。

4。Itisnotimpliedthattheowneroftransferablegoods，ifhetransferredthem，couldalwaysrealizethewholemoneyvalue，whichtheyhaveforhim。Awell-fittingcoat，forinstance，maybeworththepricechargedforitbyanexpensivetailortoitsowner，becausehewantsitandcannotgetitmadeforless：buthecouldnotsellitforhalfthatsum。Thesuccessfulfinancierwhohasspent？0，000onhavingahouseandgroundsmadetosuithisownspecialfancy，isfromonepointofviewrightinreckoningthemintheinventoryofhispropertyattheircostprice：but，shouldhefail，theywillnotformanassettohiscreditorsofanythinglikethatvalue。

Andinthesamewayfromonepointofviewwemaycountthebusinessconnectionofthesolicitororphysician，themerchantorthemanufacturer，atthefullequivalentoftheincomehewouldloseifheweredeprivedofit。whileyetwemustrecognizethatitsexchangevalue，i。e。thevaluewhichhecouldgetforitbysellingit，ismuchlessthanthat。

5。Comp。WealthofNations，Bk。II，ch。II。

6。Thebodiesofmenarewithoutdoubtthemostvaluabletreasureofacountry，saidDavenantintheseventeenthcentury。

andsimilarphraseshvebeencommonwheneverthetrendofpoliticaldevelopmentshasmademenanxiousthatthepopulationsshouldincreasefast。

7。Thevalueofabusinessmaybetosomeextentduetoitshavingamonopoly，eitheracompletemonopoly，securedperhapsbyapatent。orapartialmonopoly，owingtoitswaresbeingbetterknownthanotherswhicharereallyequallygood。andinsofarasthisisthecasethebusinessdoesnotaddtotherealwealthofthenation。Ifthemonopolywerebrokendown，thediminutionofnationalwealthduetothedisappearanceofitsvaluewouldgenerallybemorethanmadeup，partlybytheincreasedvalueofrivalbusinesses，andpartlybytheincreasedpurchasingpowerofthemoneyrepresentingtheWealthofothermembersofthecommunity。(Itshould，however，beaddedthatinsomeexceptionalcases，thepriceofacommoditymaybeloweredinconsequenceofitsproductionbeingmonopolized：butsuchcasesareveryrare，andmaybeneglectedforthepresent。)

Again，businessconnectionsandtradereputationsaddtothenationalwealth，onlyinsofarastheybringpurchasersintorelationwiththoseproducerswhowillmeettheirrealwantsmostfullyforagivenprice。orinotherwords，onlyinsofarastheyincreasetheextenttowhichtheeffortsofthecommunityasawholemeetthewantsofthecommunityasawhole。Neverthelesswhenweareestimatingnationalwealth，notdirectlybutindirectlyastheaggregateofindividualwealth，wemustallowforthesebusinessesattheirfullvalue，eventhoughthispartlyconsistsofamonopolywhichisnotusedforthepublicbenefit。

Fortheinjurytheydotorivalproducerswasallowedforincountingupthevaluesofthebusinessesofthoserivals。andtheinjurydonetoconsumersbyraisingthepriceoftheproduce，whichtheybuy，wasallowedforinreckoningthepurchasingpoweroftheirmeans，sofarasthisparticularcommodityisconcerned。

Aspecialcaseofthisistheorganizationofcredit。Itincreasestheefficiencyofproductioninthecountry，andthusaddstonationalwealth。Andthepowerofobtainingcreditisavaluableassettoanyindividualtrader。If，however，anyaccidentshoulddrivehimoutofbusiness，theinjurytonationalwealthissomethinglessthanthewholevalueofthatasset。

becausesomepartatleastofthebusiness，whichhewouldhavedone，willnowbedonebyotherswiththeaidofsomepartatleastofthecapitalwhichhewouldhaveborrowed。

Therearesimilardifficultiesastohowfarmoneyistobereckonedaspartofnationalwealth。buttotreatthemthoroughlywouldrequireustoanticipateagooddealofthetheoryofmoney。

8。AsCournotpointsout(PrincipesMathematiquesdelaTheoriedesRichesses，ch。II)，wegetthesamesortofconveniencefromassumingtheexistenceofastandardofuniformpurchasingpowerbywhichtomeasurevalue，thatastronomersdobyassumingthatthereisameansunwhichcrossesthemeridianatuniformintervals，sothattheclockcankeeppacewithit。whereastheactualsuncrossesthemeridiansometimesbeforeandsometimesafternoonasshownbytheclock。

Chapter3

Production，Consumption，Labour，Necessaries1。Mancannotcreatematerialthings。Inthementalandmoralworldindeedhemayproducenewideas。butwhenheissaidtoproducematerialthings，hereallyonlyproducesutilities。orinotherwords，hiseffortsandsacrificesresultinchangingtheformorarrangementofmattertoadaptitbetterforthesatisfactionofwants。Allthathecandointhephysicalworldiseithertoreadjustmattersoastomakeitmoreuseful，aswhenhemakesalogofwoodintoatable。ortoputitinthewayofbeingmademoreusefulbynature，aswhenheputsseedwheretheforcesofnaturewillmakeitburstoutintolife。(1*)

Itissometimessaidthattradersdonotproduce：thatwhilethecabinet-makerproducesfurniture，thefurnituredealermerelysellswhatisalreadyproduced。Butthereisnoscientificfoundationforthisdistinction。Theybothproduceutilities，andneitherofthemcandomore：thefurniture-dealermovesandrearrangesmattersoastomakeitmoreserviceablethanitwasbefore，andthecarpenterdoesnothingmore。Thesailorortherailway-manwhocarriescoalabovegroundproducesit，justasmuchastheminerwhocarriesitunderground。thedealerinfishhelpstomoveonfishfromwhereitisofcomparativelylittleusetowhereitisofgreateruse，andthefishermandoesnomore。Itistruethatthereareoftenmoretradersthanarenecessary。andthat，wheneverthatisthecase，thereisawaste。

Butthereisalsowasteiftherearetwomentoaploughwhichcanbewellworkedbyoneman。inbothcasesallthosewhoareatworkproduce，thoughtheymayproducebutlittle。Somewritershaverevivedthemedievalattacksontradeonthegroundthatitdoesnotproduce。Buttheyhavenotaimedattherightmark。Theyshouldhaveattackedtheimperfectorganizationoftrade，particularlyofretailtrade。(2*)

Consumptionmayberegardedasnegativeproduction。Justasmancanproduceonlyutilities，sohecanconsumenothingmore。

Hecanproduceservicesandotherimmaterialproducts，andhecanconsumethem。Butashisproductionofmaterialproductsisreallynothingmorethanarearrangementofmatterwhichgivesitnewutilities。sohisconsumptionofthemisnothingmorethanadisarrangementofmatter，whichdiminishesordestroysitsutilities。Oftenindeedwhenheissaidtoconsumethings，hedoesnothingmorethantoholdthemforhisuse，while，asSeniorsays，theyaredestroyedbythosenumerousgradualagentswhichwecallcollectivelytime。(3*)Astheproducerofwheatishewhoputsseedwherenaturewillmakeitgrow，sotheconsumer

ofpictures，ofcurtains，andevenofahouseorayachtdoeslittletowearthemouthimself。butheusesthemwhiletimewastesthem。

Anotherdistinctiontowhichsomeprominencehasbeengiven，butwhichisvagueandperhapsnotofmuchpracticaluse，isthatbetweenconsumers’goods(calledalsoconsumptiongoods，oragaingoodsofthefirstorder)，suchasfood，clothes，etc。，whichsatisfywantsdirectlyontheonehand。and，ontheotherhand，producers’goods(calledalsoproductiongoods，oragaininstrumental，oragainintermediategoods)，suchasploughsandloomsandrawcotton，whichsatisfywantsindirectlybycontributingtowardstheproductionofthefirstclassofgoods。(4*)

2。Alllabourisdirectedtowardsproducingsomeeffect。Forthoughsomeexertionsaretakenmerelyfortheirownsake，aswhenagameisplayedforamusement，theyarenotcountedaslabour。Wemaydefinelabourasanyexertionofmindorbodyundergonepartlyorwhollywithaviewtosomegoodotherthanthepleasurederiveddirectlyfromthework。(5*)Andifwehadtomakeafreshstartitwouldbebesttoregardalllabourasproductiveexceptthatwhichfailedtopromotetheaimtowardswhichitwasdirected，andsoproducednoutility。Butinallthemanychangeswhichthemeaningofthewordproductive，，hasundergone，ithashadspecialreferencetostored-upwealth，tothecomparativeneglectandsometimeseventotheexclusionofimmediateandtransitoryenjoyment。(6*)andanalmostunbrokentraditioncompelsustoregardthecentralnotionofthewordasrelatingtotheprovisionforthewantsofthefutureratherthanthoseofthepresent。Itistruethatallwholesomeenjoyments，whetherluxuriousornot，arelegitimateendsofactionbothpublicandprivate。anditistruethattheenjoymentofluxuriesaffordsanincentivetoexertion，andpromotesprogressinmanyways。Butiftheefficiencyandenergyofindustryarethesame，thetrueinterestofacountryisgenerallyadvancedbythesubordinationofthedesirefortransientluxuriestotheattainmentofthosemoresolidandlastingresourceswhichwillassistindustryinitsfuturework，andwillinvariouswaystendtomakelifelarger。Thisgeneralideahasbeeninsolution，asitwere，inallstagesofeconomictheory。andhasbeenprecipitatedbydifferentwritersintovarioushardandfastdistinctionsbywhichcertaintradeshavebeenmarkedoffasproductiveandcertainothersasunproductive。

Forinstance，manywritersevenofrecenttimeshaveadheredtoAdamSmith’splanofclassingdomesticservantsasunproductive。Thereisdoubtlessinmanylargehousesasuperabundanceofservants，someofwhoseenergiesmightwithadvantagetothecommunitybetransferredtoother。uses。butthesameistrueofthegreaterpartofthosewhoearntheirlivelihoodbydistillingwhisky。andyetnoeconomisthasproposedtocallthemunproductive。Thereisnodistinctionincharacterbetweentheworkofthebakerwhoprovidesbreadforafamily，andthatofthecookwhoboilspotatoes。Ifthebakershouldbeaconfectioner，orfancybaker，itisprobablethathespendsatleastasmuchofhistimeasthedomesticcookdoes，onlabourthatisunproductiveinthepopularsenseofprovidingunnecessaryenjoyments。

WheneverweusethewordProductivebyitself，itistobeunderstoodtomeanproductiveofthemeansofproduction，andofdurablesourcesofenjoyment。Butitisaslipperyterm，andshouldnotbeusedwhereprecisionisneeded。(7*)

Ifeverwewanttouseitinadifferentsense，wemustsayso：forinstancewemayspeakoflabourasproductiveofnecessaries，etc。

Productiveconsumption，whenemployedasatechnicalterm，iscommonlydefinedastheuseofwealthintheproductionoffurtherwealth。anditshouldproperlyincludenotalltheconsumptionofproductiveworkers，butonlythatwhichisnecessaryfortheirefficiency。Thetermmayperhapsbeusefulinstudiesoftheaccumulationofmaterialwealth。Butitisapttomislead。Forconsumptionistheendofproduction。andallwholesomeconsumptionisproductiveofbenefits，manyofthemostworthyofwhichdonotdirectlycontributetotheproductionofmaterialwealth。(8*)

3。ThisbringsustoconsiderthetermNecessaries。Itiscommontodistinguishnecessaries，comforts，andluxuries。thefirstclassincludingallthingsrequiredtomeetwantswhichmustbesatisfied，whilethelatterconsistofthingsthatmeetwantsofalessurgentcharacter。Buthereagainthereisatroublesomeambiguity。Whenwesaythatawantmustbesatisfied，whataretheconsequenceswhichwehaveinviewifitisnotsatisfied？Dotheyincludedeath？Ordotheyextendonlytothelossofstrengthandvigour？Inotherwords，arenecessariesthethingswhicharenecessaryforlife，orthosewhicharenecessaryforefficiency？

ThetermNecessaries，likethetermProductive，hasbeenusedelliptically，thesubjecttowhichitrefersbeinglefttobesuppliedbythereader。andsincetheimpliedsubjecthasvaried，thereaderhasoftensuppliedonewhichthewriterdidnotintend，andthusmisunderstoodhisdrift。Inthis，asintheprecedingcase，thechiefsourceofconfusioncanberemovedbysupplyingexplicitlyineverycriticalplacethatwhichthereaderisintendedtoundsertand。

TheolderuseofthetermNecessarieswaslimitedtothosethingswhichweresufficienttoenablethelabourers，takenonewithanother，tosupportthemselvesandtheirfamilies。AdamSmithandthemorecarefulofhisfollowersobservedindeedvariationsinthestandardofcomfortanddecency。andtheyrecognizedthatdifferencesofclimateanddifferencesofcustommakethingsnecessaryinsomecases，whicharesuperfluousinothers。(9*)ButAdamSmithwasinfluencedbyreasoningsofthePhysiocrats：theywerebasedontheconditionoftheFrenchpeopleintheeighteenthcentury，mostofwhomhadnonotionofanynecessariesbeyondthosewhichwererequiredformereexistence。

Inhappiertimes，however，amorecarefulanalysishasmadeitevidentthatthereisforeachrankofindustry，atanytimeandplace，amoreorlessclearlydefinedincomewhichisnecessaryformerelysustainingitsmembers。whilethereisanotherandlargerincomewhichisnecessaryforkeepingitinfullefficiency。(10*)

Itmaybetruethatthewagesofanyindustrialclassmighthavesufficedtomaintainahigherefficiency，iftheyhadbeenspentwithperfectwisdom。Buteveryestimateofnecessariesmustberelativetoagivenplaceandtime。andunlesstherebeaspecialinterpretationclausetothecontrary，itmaybeassumedthatthewageswillbespentwithjustthatamountofwisdom，forethought，andunselfishness，whichprevailsinfactamongtheindustrialclassunderdiscussion。Withthisunderstandingwemaysaythattheincomeofanyclassintheranksofindustryisbelowitsnecessarylevel，whenanyincreaseintheirincomewouldinthecourseoftimeproduceamorethanproportionateincreaseintheirefficiency。Consumptionmaybeeconomizedbyachangeofhabits，butanystintingofnecessariesiswasteful。(11*)

4。Somedetailedstudyofthenecessariesforefficiencyofdifferentclassesofworkerswillhavetobemade，whenwecometoinquireintothecausesthatdeterminethesupplyofefficientlabour。Butitwillservetogivesomedefinitenesstoourideas，ifweconsiderherewhatarethenecessariesfortheefficiencyofanordinaryagriculturalorofanunskilledtownlabourerandhisfamily，inEngland，inthisgeneration。Theymaybesaidtoconsistofawell-draineddwellingwithseveralrooms，warmclothing，withsomechangesofunderclothing，purewater，aplentifulsupplyofcerealfood，withamoderateallowanceofmeatandmilk，andalittletea，etc。，someeducationandsomerecreation，andlastly，sufficientfreedomforhiswifefromotherworktoenablehertoperformproperlyhermaternalandherhouseholdduties。Ifinanydistrictunskilledlabourisdeprivedofanyofthesethings，itsefficiencywillsufferinthesamewayasthatofahorsethatisnotproperlytended，orasteam-enginethathasaninadequatesupplyofcoals。Allconsumptionuptothislimitisstrictlyproductiveconsumption：

anystintingofthisconsumptionisnoteconomical，butwasteful。

Inaddition，perhaps，someconsumptionofalcoholandtobacco，andsomeindulgenceinfashionabledressareinmanyplacessohabitual，thattheymaybesaidtobeconventionallynecessary，sinceinordertoobtainthemtheaveragemanandwomanwillsacrificesomethingswhicharenecessaryforefficiency。Theirwagesarethereforelessthanarepracticallynecessaryforefficiency，unlesstheyprovidenotonlyforwhatisstrictlynecessaryconsumption，butincludealsoacertainamountofconventionalnecessaries。(12*)

Theconsumptionofconventionalnecessariesbyproductiveworkersiscommonlyclassedasproductiveconsumption。butstrictlyspeakingitoughtnottobe。andincriticalpassagesaspecialinterpretationclauseshouldbeaddedtosaywhetherornottheyareincluded。

Itshouldhoweverbenoticedthatmanythingswhicharerightlydescribedassuperfluousluxuries，doyet，tosomeextent，taketheplaceofnecessaries。andtothatextenttheirconsumptionisproductivewhentheyareconsumedbyproducers。(13*)

【推荐阅读】幽幽深宫，醒来一梦似千年，重生于下堂妃身躯中的她，将如何手刃仇人? 点击阅读