Introductory1.We have seen that economics is, on the one side, a Science of Wealth; and, on the other, that part of the Social Science of man's action in society, which deals with his Efforts to satisfy his Wants, in so far as the efforts and wants are capable of being measured in terms of wealth, or its general representative, i.e.money.We shall be occupied during the greater part of this volume with these wants and efforts; and with the causes by which the prices that measure the wants are brought into equilibrium with those that measure the efforts.For this purpose we shall have to study in Book III wealth in relation to the diversity of man's wants, which it has to satisfy; and in Book IV wealth in relation to the diversity of man's efforts by which it is produced.
But in the present Book, we have to inquire which of all the things that are the result of man's efforts, and are capable of satisfying man's wants, are to be counted as Wealth; and into what groups or classes these are to be divided.For there is a compact group of terms connected with Wealth itself, and with Capital, the study of each of which throws light on the others;while the study of the whole together is a direct continuation, and in some respects a completion, of that inquiry as to the scope and methods of economics on which we have just been engaged.And, therefore, instead of taking what may seem the more natural course of starting with an analysis of wants, and of wealth in direct relation to them, it seems on the whole best to deal with this group of terms at once.
In doing this we shall of course have to take some account of the variety of wants and efforts; but we shall not want to assume anything that is not obvious and a matter of common knowledge.
The real difficulty of our task lies in another direction; being the result of the need under which economics, alone among sciences, lies of making shift with a few terms in common use to express a great number of subtle distinctions.
2.As Mill says:(1*) - "The ends of scientific classification are best answered when the obj ects are formed into groups respecting which a greater number of general propositions can be made, and those propositions more important, than those which could be made respecting any other groups into which the same things could be distributed." But we meet at starting with the difficulty that those propositions which are the most important in one stage of economic development, are not unlikely to be among the least important in another, if indeed they apply at all.
In this matter economists have much to learn from the recent experiences of biology: and Darwin's profound discussion of the question(2*) throws a strong light on the difficulties before us.
He points out that those parts of the structure which determine the habits of life and the general place of each being in the economy of nature, are as a rule not those which throw most light on its origin, but those which throw least.The qualities which a breeder or a gardener notices as eminently adapted to enable an animal or a plant to thrive in its environment, are for that very reason likely to have been developed in comparatively recent times.And in like manner those properties of an economic institution which play the most important part in fitting it for the work which it has to do now, are for that very reason likely to be in a great measure of recent growth.
Instances are found in many of the relations between employer and employed, between middleman and producer, between bankers and their two classes of clients, those from whom they borrow and those to whom they lend.The substitution of the term "interest"for "usury" corresponds to a general change in the character of loans, which has given an entirely new key-note to our analysis and classification of the different elements into which the cost of production of a commodity may be resolved.Again, the general scheme of division of labour into skilled and unskilled is undergoing a gradual change; the scope of the term "rent" is being broadened in some directions and narrowed in others; and so on.
But on the other hand we must keep constantly in mind the history of the terms which we use.For, to begin with, this history is important for its own sake; and because it throws side lights on the history of the economic development of society.And further, even if the sole purpose of our study of economics were to obtain knowledge that would guide us in the attainment of immediate practical ends, we should yet be bound to keep our use of terms as much as possible in harmony with the traditions of the past; in order that we might be quick to perceive the indirect hints and the subtle and subdued warnings, which the experiences of our ancestors offer for our instruction.
3.Our task is difficult.In physical sciences indeed, whenever it is seen that a group of things have a certain set of qualities in common, and will often be spoken of together, they are formed into a class with a special name; and as soon as a new notion emerges, a new technical term is invented to represent it.
But economics cannot venture to follow this example.Its reasonings must be expressed in language that is intelligible to the general public; it must therefore endeavour to conform itself to the familiar terms of everyday life, and so far as possible must use them as they are commonly used.
