Chapter 7 Chapter One Introduction

Section 1 Economics sees wealth as something that satisfies desire and the result of effort. We have seen that economics, on the one hand, is a science that studies wealth; on the other hand, it is also a part of social science that studies the activities of human beings in society. Effort and desire can only be measured in terms of wealth or its common representative, that is, money.In the greater part of this book we shall study this desire and effort; and the reasons why the price of desire is balanced with the price of effort.To this end we must study in Book III wealth in relation to the various human desires which it must satisfy; in Book IV wealth in relation to the various human endeavors which produce it.

But in this chapter we must examine what counts as wealth among all the things that are the result of human effort and satisfy human desires, and how they are classified.Because, there is a group of nouns that are related to wealth itself and capital, and the study of each noun can explain the other nouns; And the study of all terms together is a direct continuation, and in some respects the completion, of the study of the scope and method of economics which we have just undertaken above.It therefore seems on the whole most prudent to study such terms at once, rather than take what may seem the more natural course, and begin with an analysis of the immediate relation of desire and wealth to desire.

In doing so, we must of course take into account various desires and endeavors; but none of us have to take into account what is not obvious and is not a matter of common sense.The real difficulty of our work lies on the other hand; namely, that economics alone, of the sciences, has to manage to express many nuances in a few commonly used terms. Section II Difficulties in classifying things that vary in nature and use. As Mill said: "If the objects of study are classified into different classes, many general propositions can be made about these classes, and these propositions are more important than those that can be made in other classes into which these objects can also be classified. scientific classification.” But we encounter the difficulty at the outset that the propositions that are most important at one stage of economic development may be least important at another, if they do is applicable.

At this point, economists have much to learn from the recent experience of biology: Darwin's profound study of the problem powerfully explains our present difficulties.He pointed out that those parts of the organization of nature which determine the habits and general position of each being are generally not those parts of its constitution which are the most telling of its origin, but those which are the least.Qualities that an animal breeder or a gardener consider eminently suitable for an animal or plant to flourish in its environment may have been developed in relatively recent times for precisely this reason.Likewise, among the properties of an economic system, those properties which best suit it for the work which it now has to do may, for this very reason, be largely recent developments.

We find examples in the many relations between employer and employee, middleman and producer, banker and his two kinds of customers, those who lend to him and those who borrow from him. The replacement of the term "usury" by the term "interest" corresponds to the general change in the nature of credit which has given us a completely new subject for the analysis and classification of the cost of production of commodities into various factors.Again, the general method of dividing labor into skilled and unskilled labor is gradually changing; the term "rent" is expanding in some respects and narrowing in others; etc.

But, on the other hand, we must always remember the history of the nouns we use.Because, first of all, this history itself is important; and it indirectly explains the history of social and economic development.Secondly, even if our sole object in the study of economics was to acquire knowledge to guide us to our present practical ends, we should still try to conform our usage of terms to past traditions, so as to be quick to understand the indirect hints of previous experience. and careful and gentle admonitions for our instruction. Section 3 Economics must follow the practice of everyday life.

Our job is hard.Indeed, in natural science, when we see a group of things having a certain kind of common characteristics and often put them together, we can classify these things into one category and add a special name; And as soon as a new concept occurs, we immediately create a new term to represent it.However, economics dare not do this.The theory of economics must be expressed in a language that everyone understands; therefore, economics must try to fit itself into the terms that are used in everyday life and, so far as possible, must use these terms as they are commonly used. Almost every word has many different meanings in common usage, so must be interpreted according to the context.As Bagehot points out, even the most formal economics writers have to do this, or they will run out of words.But, unfortunately, they never admit that they use words freely, and sometimes they don't even feel that they use words freely.The bold and rigorous definitions with which they begin their account of economics trade the reader's reassurance.Because they do not warn readers that they must always look for special interpretation sentences from the context, readers cannot understand the original meaning of the author from the work; they may even misunderstand the author and blame them.

Secondly, most of the main differences denoted by economic terms are not differences of kind, but differences of degree.At first sight these distinctions appear to be differences of kind, and to be clearly delineated; but closer examination shows that there is no real break in continuity.It is a remarkable fact that the progress of economics has not discovered any new real differences of kind, but has continually reduced apparent differences of kind to differences of degree.We shall meet many instances of the evils which would be caused by the attempt to draw a sharp and rigid line of division between things which nature does not naturally draw a line of division.

Section IV makes it clear that concepts are necessary, but fixed usage of nouns is not. We must, therefore, carefully analyze the true character of the various things we are to study; and we shall generally feel that one use of each noun is more justly called its principal use than the other, because It represents a property which is more suitable for the purposes of modern science than any other which is consistent with ordinary usage.When the context does not indicate or imply a contrary meaning, this use is taken as the meaning of the noun, and if the noun is to be used in any other sense—whether broader or narrower—the change must be accounted for.

Even among the most careful thinkers there are often differences of opinion as to where at least some of the lines of demarcation should be drawn.Questions of this kind must generally be settled by judgments of the practical convenience of different processes; and such judgments cannot always be established or refuted by scientific reasoning: there must be room for debate.But there is no such room in the analysis itself: if two people disagree about the analysis, they cannot both be right.We may expect that progress in economics will gradually put this analysis on firm ground.