Chapter 4 Chapter 2 The Essence of Economics

The first section of economics mainly studies the driving force and resistance to activities. The quantity of such driving force and resistance can be roughly measured by money.This measurement refers only to their numbers.The quality of motives, whether noble or base, is qualitatively immeasurable. Economics is the study of people who live, act and think in the affairs of everyday life.But it is chiefly the study of those motives which most powerfully and most firmly influence human conduct in the affairs of its daily life.Every man of any merit has, in business, a higher character; and in business, as elsewhere, he is influenced by personal sentiments, sense of duty, and worship of higher ideals.Indeed, the most capable inventors, and organizers of progressive methods and instruments, bring out their best energies from a noble emulation, not merely from a love of wealth.Having said that, however, the most steadfast motive for ordinary business work is the desire for wages, which are the material rewards of work.In its employment wages may be employed egoistically or others, for noble or ignoble purposes, and at this point changes in human nature come into play.But this motive is induced by a definite amount of money, and it is this definite and correct monetary measurement of the most steadfast motives of business life that gives economics so much superiority to other studies of men.Just as the fine balance of the chemist makes chemistry more precise than most other natural sciences, so the economist's balance, crude and imperfect as it is now, makes economics more precise than any other social science. accurate.But economics, of course, cannot be compared with the exact sciences of science: for it is the study of the ever-changing and subtle forces of human nature.

The advantage of economics over the other social sciences seems to arise from the fact that its peculiar scope of work affords it a greater opportunity than any other to employ sophisticated methods.It is chiefly the study of those desires, longings, and other passions of human nature, whose external manifestations are the motive forces of action in such a form that the force or quantity of these motive forces can be estimated and measured with considerable accuracy; therefore, These dynamics can be studied with scientific methods.When the strength of a man's motives—not the motives themselves—can be approximated by the amount of money he is about to give up in order to obtain some satisfaction, or by the amount of money required to just endure a certain fatigue Then the scientific method and experiment became possible.

It is important to point out that the economist cannot measure any emotion in the mind itself, that is, not directly, but only indirectly through its consequences.Even if a person's own mood at different times, he cannot accurately compare and measure each other.As for the mood of another, no one can measure it except indirectly and speculatively from its consequences.Of course, some emotions belong to the higher nature of human beings, while others belong to the lower nature, so there are different kinds.But even if we fix our attention to material pleasures and pains of merely the same kind, we feel that comparisons can only be made indirectly from their consequences.Indeed, unless the pleasure and pain occur at the same time in the same person, even such a comparison must be to some extent speculative.

For example, the pleasure two people derive from smoking cannot be directly compared; Even if the same person gets pleasure from smoking at different times, it cannot be directly compared.But if we see a man hesitating whether to spend the few pennies he has on a cigar, a cup of tea, or a ride home, we may say, as a rule, that he made a fortune out of these three things. The same pleasure can be obtained in the matter. Therefore, if we want to compare even material satisfactions, we cannot do so directly, but must do so indirectly, in terms of the impetus this satisfaction provides for activity.The desire to obtain either of the two pleasures induces persons in the same circumstances to each do exactly one hour's extra work, or induces persons of the same status and property to each work for that hour. At the expense of a shilling, we may say that, for the purposes of our investigations, the two pleasures are equal, since the desire for pleasure is an equally powerful motive to action in persons in similar circumstances.

Thus, as men do in everyday life, we measure a mood by the motive force or stimulant which provokes the action, although some of the motives we have to consider belong to the higher nature of man, and some belong to the higher nature of man. Low nature, but also does not cause new difficulties. For if we see a man hesitating between several small gratifications, and after a while it occurs to him that he will meet a poor sick man on his way home; Whether to choose a kind of material satisfaction for oneself, or to do a good deed and take pleasure in the happiness of others.Because his desires are now this way and now that way, the nature of his mood changes; the philosopher must study the nature of this change.

But the economist studies moods through their manifestations, not the moods themselves; and if he feels that different moods provide equal impetus to activity, he treats them for the purposes of his study as apparently are equal.In fact, the method he uses is the same as what everyone often does in daily life, but with more patience, thought, and caution.He does not intend to measure the true value of the higher and lower passions of human nature, nor to compare the love of virtue with the desire for good food.From the results he estimated the impetus for motivating an activity, just as people do in everyday life.He follows the course of ordinary conversation, except that, in his researches, he is more cautious in ascertaining the extent of his knowledge.He draws his provisional conclusions from observations of ordinary people under certain circumstances, and does not intend to search for the psychological and spiritual characteristics of individuals.However, he also does not neglect the psychological and spiritual aspects of life.On the contrary, even in the narrower uses of economic research, it is important to know whether the desire for dominance contributes to a strong and upright character.In the wider uses of economic research, when this research is applied to practical problems, economists, like others, must be concerned with the ultimate ends of human beings, and take account of differences in the real value of various satisfactions, which Satisfaction is an equally powerful motivator to activity because of equal economic value.The study of these values ​​is only the starting point for economics.But such research is a starting point.

Section 2. Calculations of dynamics measured by the same shilling are greater for the poor than for the rich: But economics generally seeks broad results independent of individual idiosyncrasies. There are several other limitations to the monetary measure of motivation that need to be investigated. The first limitation arises because it must be considered that the same amount of money represents a different amount of pleasure or other satisfaction for different people under different circumstances. Even for the same person, the pleasure (or other satisfaction) measured by a shilling may be greater at one time than at another; because of all his money, which may be more or less at times, or because his feelings may occur The reason for the change①.The same event often has different effects on people who have experienced the same experience and have similar appearances.For example, when a group of schoolchildren in a city go to the country for a day's holiday, I am afraid that no two of them will get pleasure of the same kind and intensity from it.Likewise, surgery is performed on different people, causing different degrees of pain.Parents are equally loving, so far as we can say, to their children, but they grieve very differently when their beloved son dies.

There are persons who are not generally very sensitive, but are especially susceptible to particular kinds of pleasures and pains; and at the same time, differences in nature and education may make one person's total susceptibility to pain and pleasure much greater than others. It would therefore not be fair to say that any two persons having the same income should derive the same benefit from its use, or that their income should be equally reduced, that they should suffer alike.When a tax of £1 is levied each from two persons each earning £300 a year, although each has to give up £1 worth of pleasure (or other satisfaction), this is the easiest he can give up, that is, Each will give up exactly what a pound weighs on him; but the intensity of satisfaction each will give up will not necessarily be equal.

Nevertheless, if the averages we take are so wide that the individual characteristics of the individuals cancel each other out, the amount of money that persons with the same income will have to pay in order to obtain a benefit or to avoid a harm is exactly this A good measure of benefit or harm.Suppose a thousand persons in Sheffield, and a thousand in Leeds, each having an income of about one hundred pounds a year, were all taxed at one pound; The loss of pleasure, or other injury, which the tax would do in Sheffield, would be of about the same importance as it would in Leeds: raise their income by a pound, and both places would receive equal pleasure or other benefit.The probability is still greater if they are all grown men, employed in the same trade, as it may be presumed to be about the same in their sensibility and disposition, interests and education.If we take the family as a unit, and compare the loss of pleasure caused by a reduction of income of one pound to each of a thousand families with an income of one hundred pounds a year in the two places, the probability of this Sex is no less.

Second, we must consider the fact that making a poor man pay a certain price for anything requires a stronger incentive than making a rich man.A shilling measures less pleasure, or any satisfaction, to a rich man than to a poor man.A rich man who is hesitating about spending a shilling on just one cigar has fewer pleasures in his mind than a poor man who is considering whether to spend a shilling on what he can afford for a month. required tobacco.A clerk with an income of £300 a year goes to work by car when it rains, while a clerk with an income of £100 a year still goes to work on foot when it rains harder; The benefits are greater for the poor than for the rich.If the poor man spends that fare, he will later suffer more from want of it than the rich will.In the eyes of the poor, fares measure a greater benefit than in the eyes of the rich.

But the sources of this error are reduced when we take into account the activities and motives of the majority of people.For instance, if we know that the failure of a bank has cost the inhabitants of Leeds £200,000, and that of Sheffield £100,000, we may well believe that the loss caused in Leeds is greater than that in Sheffield. Sheffield is twice as large; unless we have some special reason for believing that the shareholders of the banks in one city are a wealthier class than those in the other; This is not the case with different proportions of unemployment. The vast majority of the events studied by economics affect all the different classes of society in about the same proportion; therefore, the pleasure of two events is considered to be The same amount is reasonable and in line with usual habits.Furthermore, if two large groups of people were taken without prejudice from any two parts of the Western world, they would use money in about equal proportions to the nobler uses of life, so that there would even be such an apparent the possibility that for an equal increase in their material resources there would be an approximately equal increase in the well-being of their lives and in the real progress of mankind. Section 3 Habits themselves are largely based on conscious choice. To add another point, when we measure our desires by our activities, and desires become the motivators of our activities, it does not mean that we consider all activities to be conscious and deliberate.For, in this, as in other respects, economics regards man just as he does in everyday life: in which he does not anticipate the result of every action, regardless of its impetus. Whether it comes from the higher or lower nature of people. Now, that side of life with which economics is particularly concerned is that which is the most deliberate aspect of man's action, and which always considers its advantages and disadvantages before he does anything.And, on this side of his life, when he does act according to custom, for the time being, without thinking about it, custom itself almost must be a close and careful observation of the pros and cons of different courses of action. product of.Usually there isn't any formal calculation like the borrower and lender on the balance sheet: but when people come home from work for the day, or in social situations, they say to each other, "This isn't right, that's fine. already", and so on.To make one thing more suitable than another, not necessarily for selfish gain, not necessarily for material gain; , but is unfair to others", and "it makes people look mean" or "it makes people feel mean". Indeed, when a habit or custom which arises in one case affects activity in another, there has as yet been no definite relation between effort and the end attained by it.In backward countries there are still many customs, like that of making the sea-otter in captivity build his own embankment; these customs are full of significance in the eyes of the historian, and must be taken into account by the legislator.But in the business affairs of modern times, this habit soon disappears. Thus, the most systematic part of people's lives is usually the part in which they earn a living.The work of all men engaged in any kind of occupation can be carefully observed; so that a general description can be made of it, and the truth of the description can be tested by comparison with the results of other observations. ; Numerical estimates can also be made as to the amount of money or general purchasing power required to provide a sufficient incentive to these persons. The reluctance to delay gratification for future use is measured by the interest accruing on accumulated wealth, which provides sufficient incentive for future use.However, this measurement presents certain special difficulties which must be studied later. Section 4. Economic motives are not all self-interested.The desire for money is not tied to influences other than money, and the desire itself may be motivated by noble motives.The scope of economic measurement can gradually be expanded to include many beneficial activities. Here, as elsewhere, we must remember that the desire to earn money is not necessarily an inferior motive in itself, even when the money earned is spent on oneself.Money is a means to an end, and if the end is noble, the desire for the means is not base.If a young man works hard and saves as much as possible, he is eager for money so that he can afford to go to college later; but this desire is not despicable.In short, money is general purchasing power, and is conceived as a means to ends—high and low, spiritual and material. Thus it is true that "money" or "purchasing power in general" or the "mastery of material wealth" is the central problem studied by economics, but not because money or material wealth are regarded as the main objects of human endeavour. not even because it is considered to provide the main subject for the study of economists, but because it is the only convenient way of measuring human motivation on a large scale in our world.Had this been clear to the economists of the past, they would have avoided many sad misunderstandings; Carlyle's and Ruskin's clear lessons about the right end of human endeavor and the right use of wealth would not have been lost because of them. economics has been tempered by an attack based on the mistaken opinion that economics has nothing to do with any motive other than the study of the self-interested desire for wealth, or even that economics emphasizes a A despicable policy of self-interest. Again, when we say that a man's activities are motivated by the money he can earn, this does not mean that he has no other considerations in his mind than the idea of ​​mercenary.For even the purest business relations of life are ones of honesty and credit; many of them are free, if not of generosity, at least of baseness, and have all the self-respect which every honest man possesses in order to keep himself clean.Second, many of the jobs people do for a living are pleasurable in themselves; socialists are right to think that more work can be made pleasurable.Indeed, even business work, which at first seems uninteresting, often yields great pleasure because it affords an opportunity for the exercise of human talents and instincts for victory and power.For just as a horse in a race, or an athlete, strives to outdo his competitor, and takes pleasure in the tension, so a manufacturer or a merchant is animated by the hope of outdoing his competitor. , is often much greater than being animated by the desire to increase his property. The fifth section continues. The work of an economist is indeed always a matter of careful consideration, attracting men to all the advantages of a profession, whether they take the form of money or not. Other things being equal, people will prefer a career in which they don't have to get their hands dirty, enjoy a good social position, etc.; these benefits do not affect everyone exactly the same, but affect most people more or less the same are the same, and therefore the attractiveness of these interests can be estimated and measured in terms of money-wages, and they are regarded as being equal to money-wages. Second, the desire to be admired by those around you, and to avoid their contempt, is also a stimulus to activity.Such stimuli tend to have about the same effect on any class of persons at a given time and place; though local and temporary circumstances have a great influence not only on the intensity of this desire to Type also plays a big role.For example, a freelancer or a skilled worker will be very sensitive to the bad reputation of people from the same trade, but not so much to the bad reputation of others; if we do not pay attention to this type of motive If the direction of economics is not determined, and its strength is carefully estimated, the study of many economic problems will become completely unreal. There may perhaps be a little self-interest in a man's desire to do what seems to be beneficial to his fellow-workers, and so also in his desire that his family prosper both during his lifetime and after his death. There will be an element of personal self-esteem involved.However, family affection is generally still a pure form of altruism, and if it were not for the consistency of family relations, the role of family affection may not show any regularity.In fact, the role of family affection is quite regular; economists always give full consideration to this role, especially with regard to the distribution of family income among the family, the preparation of children for future career expenses, and the accumulation of his earned Issues such as leaving wealth behind. It is therefore not a want of will but a want of strength that prevents economists from taking account of the role of such motives, and certain kinds of benevolence can be accounted for by statistical tables if wide averages are taken, and in certain cases Economists welcome the degree to which it can be generalized into laws.For motives so capricious and irregular as this are rare indeed, but with the aid of extensive and patient observation a certain law of them can be discovered. Even now it may be possible to predict with considerable accuracy the amount that a hundred thousand well-to-do British inhabitants will give to hospitals and churches and missions; There is a basis for doing economic research on the supply and demand of China.It may, however, often be true, that most of those activities inspired by a sense of duty and love of neighbor cannot be classified, reduced to laws, and measured; For the sake of the heart—the method of economics cannot be applied to these activities. SECTION 6 Motives for common activity are of enormous and growing importance to economists. Previous British economists may have paid too much attention to the motivation of individual activities.But in fact, economists, like scholars of all other social sciences, study the individual primarily as a member of a social organization.Just as a church is more than the stones of which it is built, and a man is more than a series of thoughts and feelings, so the life of a society is more than the sum of the lives of its individual members.The whole of activity is indeed composed of its constituent parts; and the best point of departure in the study of most economic problems is indeed those motives which affect the individual, who is not regarded as an isolated element, but is as a member of a particular trade or group of industries; but, as German scholars have strongly maintained, economics pays significant and growing attention to matters of common ownership of property, and motives for the common pursuit of important ends, It is also true.The growing zeal of the present age, the growing wisdom of the majority, and the growing power of the telegraph, printed matter, and other means of communication, continually enlarge the range of common activities for the public good; these changes, along with the extension of the cooperative movement and other Societies of voluntary organization are developing under the influence of motives other than pecuniary interest: they often open up constantly new opportunities for economists to measure motives whose operation does not seem to be reducible to any law. of. But in fact the variety of motives, the difficulty of measuring them and the means of overcoming them, is one of the main subjects of our study in this book. Almost every point mentioned in this chapter will require a more detailed discussion later on when some of the main problems of economics related to it are dealt with. Section 7 Economists mainly study one aspect of human life, but this life is the life of a real person, not the life of a fictional person.See Appendix III. We tentatively conclude as follows: The economist studies the activities of individuals, but he studies them in relation to social life and not to personal life; he therefore pays little attention to the peculiarities of individual temperament and character.Economists look closely at the behavior of a whole class of people, sometimes of a whole nation, sometimes of just those who live in a certain area, and more often of a particular trade at a certain time and place. Behavior of human beings: with the aid of statistics, or otherwise, the economist knows exactly how much the members of the group he observes are willing to pay on average, as a price for a certain good they want, or must How much is paid to the members of the group to make them make an effort or sacrifice they are unwilling to make.The measure of motivation thus obtained is certainly not quite correct; for if it had been quite correct, economics would have long ago ranked with the most advanced natural sciences; not with the least advanced as it is now. Still, the measure is accurate enough to enable experienced economists to predict with considerable accuracy the magnitude of the consequences of changes which are chiefly concerned with such motives.For example, in any place where a new trade is to be established, they can estimate with great accuracy what wages will be paid to obtain the supply of laborers of any rank, from the lowest to the highest. .When they visit a factory which they have never seen before, they only need to observe the degree to which a certain occupation of the worker requires skill, and the physical, mental and moral effects of this occupation on the worker. How strained their capacity is, they can tell what such a workman earns within a shilling or two a week of the actual wages.Moreover, they can predict with considerable accuracy how much a reduction in the supply of a given good will cause a rise in price, and what effect this rise in price will have on supply. From this simple investigation, economists can go on to analyze the causes which determine the geographical distribution of various industries, the conditions under which people living in distant places exchange goods with each other, etc.: they can explain and predict how changes in credit will Affecting foreign trade; or, the extent to which the burden of a tax will be passed on from those originally levied to the direct consumers, etc. In all this, the economist is dealing with an actual human being: Not an abstract or "economic" man, but a man of flesh and blood.The man they studied was greatly influenced in his business life by self-interested motives, and was therefore largely connected with them; but the man was neither without vanity and sloppiness, nor Good work for good work, or unwillingness to sacrifice himself for his family, neighbor, or country; in short, he is a man who loves a good life for his love of a good life.Economists deal with an actual human being: but chiefly those aspects of life in which the operation of motives is so regular that it can be predicted, and the estimates of motives can be estimated by means of consequences. To prove that, in this way, economists have based their work on a scientific basis. For, first, the facts they study can be observed, and the quantities they study can be measured and recorded; therefore, when there is disagreement about such facts and quantities, this difference can Let an open and reliable record be used to determine right from wrong; thus, economics can go on working on a firm footing.The second point, the problems included in economics, constitutes a class of problems of a rather similar nature, since they are particularly concerned with human behavior under the influence of motives which can be measured in terms of money prices.Of course, such questions share many of the same themes: this is evident in their nature.But it is true, if not so deductively, that there is, first, a fundamental unity of form that runs through all the main problems of this class; , would save trouble, just as it would save trouble to have one postman deliver all the letters in one street, instead of each man handing his letters to each postman.For the methods of analysis and organized reasoning required for any one class of problems are generally useful for other classes as well. So the less we engage in pedantic studies of whether a question falls within the purview of economics, the better.If something is important, let us study it as best we can.If it is a matter of disagreement which cannot yet be resolved by correct and sound knowledge; if it is a problem which cannot yet be resolved by the general methods of economic analysis and reasoning, then, in our purely economic studies, it is Put it aside.But we do this only because, if we were to include such questions in our studies, we would gain nothing by reducing the accuracy and precision of our economic knowledge; we must always remember that we must use our We approach such questions with our ethical instincts and common sense, which, as the final arbiter, will apply to practical problems the acquired and codified knowledge gained from economics and other sciences.