Part 5

Not to make those identifications and differentiations is to turn Economics into the hopeless mixture of “masses of particular unexplained facts” which John Morley deplored as characteristic of a certain type of Economic science. “Scraps and pickings of reality” are worse than useless in any study of Economic science unless harmoniously classified according to their respective fundamental characteristics.

This comment does not mean that Economic details are to be ignored except for classification, even by non-specialists. Far from that. It means that they are to be thoughtfully considered and accurately classified for further and comparative consideration. To illustrate: Mankind must be regarded as a class or category in Economics; but not according to personal or individual capabilities, idiosyncracies, or social, business, or legal status. To the business specialist, the personal qualities of an associate or assistant are important; but Economics as a comprehensive science, the science of all “mankind making a living,” knows those special distinctions only in a secondary sense. It is concerned primarily with the individual man only as a unit in the human mass--only from the fact that he is in the human category and not in one or more other Economic categories. So of all Economic facts. To study Economic details without reference to Economic generalizations might be likened to studying an alphabet without reference to language, or numerals without reference to mathematics. Economic problems are not problems of how one individual may make a living at the expense of others. Such problems belong in the plundering pursuits. In Economics the basic problem is how all may make a living at the expense of none.

To that problem business details give no clew, unless the details be assigned to fundamental Economic categories. Piling up details without assigning them is, as Henry James the Elder wisely expressed it, to “sink the truth in endless confusion.” The last person in all the world from whom to get the basic facts of Economics is the business specialist, for he habitually limits his observations to his own specialty. Perhaps, however, a certain type of Economic teacher may be equally untrustworthy in that respect--the teacher who, though he imitates the physical scientist in devotion to details, disregards the physical scientist’s fidelity to the relations of cause and effect.

On the Economic surface we have the category of Money. To the wage-worker Money is the medium for trading the commodities he helps to produce for those he wishes to consume. To the merchant, however, or the manufacturer, or other Economic specializer, Money presents also a variety of minute details for expert study. The business accountant, for example, must familiarize himself with numerous details in connection with Money in its minute relationships to his specialty. He might very likely confuse facts Economically different, yet as a special business matter practically identical--the Money measurement of a natural mineral deposit, for instance, with the Money measurement of its artificial equipment. As an accountant in that specialty he would be right in doing so. Or, in slavery days, for another instance, an accountant might properly have classified the Money measurement of a human chattel with that of a domesticated horse or a constructed house. He also would have been right; for, as an accountant, he would have been dealing with a customary classification of private property; and not with Economic science comprehensively. It is doubtless specialty work of such kinds that has involved the science of Economics in so much confusion, especially among advanced students who are prone to identify business conventionalities with Economic normalities.

As a science, Economics cannot make its categories according to conventional maladjustments. It must make them according to essential differences. These admit of no categorical identification of mineral deposits with mining machinery, or of human beings with domesticated animals or buildings. Such classifications are as absurd in Economics as identifying sun and earth would be in astronomy, or bone with brain in anatomy.

The science of Economics--that is to say, the science of Business in the broad social sense in contradistinction to the narrow private sense--neither requires nor permits such classifications as slaves with domesticated animals, or mining machinery with natural mineral deposits. It is obedient to the ancient but still vital maxim of philosophy that things which are essentially different must not be mixed nor things that are essentially the same be separated.

Essentially different things in Economics are indeed confused by Money, which knows no difference, except in degree of Money measurement, between slaves and cattle, or mineral deposits and mining machinery. As the medium of trade, Money must measure the values of everything tradable; and custom may make tradable objects--human beings, for instance,--which in the science of Economics are no more within the normal boundaries of trade than are transfers by theft.

Whether we think of Money as tangible coin, or only as the Money signs and symbols of account books, Money is not a basic fact in Economics. Mankind cannot live upon Money. It is neither eatable nor wearable. Nor is it shelter. Likewise of Money terms. Money is a secondary Economic factor--a representative of value, whereby the relative desirability of commodities is measured and expressed in trade. It is therefore the comprehensive surface-fact of Economics beneath which the basic facts must be sought.

In other phrasing, Money is that secondary category in Economics which comprehends every kind and form of medium for trading commodities in the world-wide process that we descriptively characterize as “mankind making a living.” Mankind being a basic Economic category, and the process of making a living being the Economic human necessity and purpose, Money can have but one comprehensive significance in Economics. Be it in the form of coin, or in the form of paper currency, or in the form of entries in books of account (where it appears only in name and arithmetical denominations), it is the universal medium and Economic measuring rod of exchanges or trade.

Whether one makes Money or not depends, as a rule, upon which side of his accounts in ledgers the Money balance appears at final accountings. It is Money in this sense that goes farthest to justify the superficial definition of Economics as the science of making money.

We only skim the surface of Economic phenomena, however, by coming to an understanding of the nature and the function of Money. Money is only one of the secondary categories which must be identified and properly related in any thoughtful study of Economic science. Below that financial surface are phenomena which Money merely measures and compares. The first of those underlying phenomena is Trade, for which Money is the medium and upon which our attention must next be concentrated.

THIRD LESSON

TRADE

Trade, for which Money is the Economic medium and Money-terms the Economic language, consists superficially in interchanges of tangible commodities, but essentially in interchanges of human service.

Tangible commodities, with a semi-exception as to real estate, are produced by interchanges of human service from the very extreme of the primary production of those commodities to and including their final delivery for ultimate consumption. Real estate, too, is thus produced in so far as it consists of structures, of soil cultivation, of mining mechanisms, of excavations, or of any other kind of artificial alteration.

All commodities are subjects of Trade. Artificial commodities, such as depend upon human service for production, are not only subjects of Trade but are also its products. This is absolutely true of every kind of artificial commodity that is produced to completion, inclusive of final delivery, by means of Economic specializations--specializations in human service. The primary materials and the unfinished parts are gathered together and delivered, both in the intricate process and finally, by means of Trade.

A loaf of bread, for example, is brought to completion from harvest-field to bakery, and thence as a finished product, through many deliveries (including delivery to its ultimate consumer) by means of Trade. So is the implement with which it is cut at the consumer’s table, and the plate on which it rests, the table at which it is served, the cloth which covers the table, the chair in which the consumer sits at the table, and the dining room floor beneath them all.

Of the vast variety of such commodities as loaves of bread and knives for cutting them and plates and tables and tablecloths by means of which they are served for ultimate consumption, very few if any at all of that variety of commodities--whether finished, as a loaf of bread on the consumer’s table, or unfinished, as the growing grain or the flour of which the loaf is composed, or the fuel that bakes it, or the bricks or the metal of the baker’s oven, or the finished oven itself--give distinctive expression to all the human services they embody.

That fact could be further illustrated with any artificial commodity in course of Trade. A hogshead of molasses on a wharf would answer the purpose. To thoughtless observation this commodity might seem to embody no other human service than work on a sugar plantation and by barrel-makers in a coopering shop. But if we think about it with penetration and clarity, we readily realize that it embodies the services also of lumbermen, of miners, of railway workers, of bankers, possibly of importers and mariners, probably of exporters and their assistants, certainly of draymen, of wharfmen, of merchants, of book-keepers and other accountants--a veritable host of specialists whose contributory services are not emphasized by the tangible commodity (a hogshead of molasses on a wharf) as are the services of plantation-hands and barrel-makers. Multitudes of human services in distracting variety are concealed in that familiar commodity from the vision of all but specialists; perhaps from their vision too in so far as the services are outside of their respective specialties. And if we were to follow that hogshead of molasses to its Economic destination, we might perceive many an additional human service embodied and concealed in commodities of Trade for which the material would have been supplied in part by molasses from the hogshead and probably in part by the hogshead itself.

Trade is not a mere business custom, as is sometimes carelessly supposed. Only to the extent that they conform to natural Economic law can trading customs be socially beneficial or continue without developing social disaster.

Many customs do enter into Trade, even as habits enter into the life of individuals--some beneficial and some vicious, some in harmony with natural law and some defiant or evasive of it. But essentially Trade is a natural expression of Economic relationships. It is consequently as dependent upon conformity to natural laws as are the physical functions of individuals. Drawing inspiration continuously from natural human impulses, giving constant and increasing satisfaction to natural human needs, bringing natural human units ever closer into a natural social whole, contributing one of the two indispensable and fundamentally effective as well as obvious natural powers and facilities for the continuous and increasing production of human satisfactions, Trade is evidently as natural to the social whole as is breathing or eating to the individual. It must therefore be as completely subject to natural law.

By nature man is “a trading animal.” So it has often been said, and the saying is manifestly true. There is, however, no implication here that man is an animal only. The suggestion is that, although an animal, he is more than an animal, and that Trade develops phenomena which go to prove it.

Of all animals, man only is within the jurisdiction of the natural Economic laws of Trade. What other animal than man could be correctly described, in a comprehensive sense, as “a trading animal”? Not only is this characteristic distinctive. Not only is it peculiarly human. But also, and by force of natural Economic law--not commercial custom, but those natural sequences of effect from cause to which arbitrary commercial customs must yield or come to grief,--it enables mankind, the larger man, the social man, to multiply the Economic powers of each individual of the human race.

Primary among those natural laws of Trade is the thoroughly tested sequence alluded to above, that Trade multiplies productive power. It does so by inviting, requiring and developing that characteristic phenomenon of Trade which is commonly called “division of labor,” but may be distinguished best as Economic specialization. This phenomenon gives to the world, gives to it as a natural effect of Trade, a productive power per capita far and away beyond the productive power of any isolated individual.

The principle of Economic specialization could hardly be better illustrated than by the reply of an old-time compositor in a printing establishment who contemplated making a contract for the erection of a cottage home for himself and his family, when a friend suggested that he might save money by digging the cellar himself between working hours at the case. He replied: “I can dig a better cellar and more easily at the case with a composing-stick than on the spot with a pick and shovel.”

By means of a vast variety of Economic specialties--such for illustration as farming, engineering, mining, lumbering and their respective and numerous subdivisions, through a vast variety of other Economic specialties, such as transporting and manufacturing and merchandizing, along with their respective and multitudinous subdivisions, all supplemented by such other Economic specialties as banking, teaching, preaching, adjudicating, writing, acting, and the fine arts--the necessaries for individual sustenance and the luxuries for individual enjoyment are produced and delivered in quantity, variety and perfection which, when calculated per capita, rise far above and extend far beyond all the possibilities of isolated individual life, far above and beyond the possibilities of community life in narrow environments.

Were there but one individual to be considered, the natural advantages of Trade would seem as fanciful as a fairy story. Were there only a small group, the natural advantages of Trade, though manifest, would be too few and too primitive to disclose its wondrous powers of production. But when millions of individuals cooperate, some serving all and all serving each through the intricacies of worldwide Trade, mankind is welded into an Economic unity, a gigantic oneness--a larger human being, “the social man” as this social organism is sometimes not inaptly called--an organism composed of individuals who give it vitality and whom in consequence it serves as a beneficent giant might serve a cooperating pigmy.

Involving the production of commodities by individual contributors of human service through an infinity of specializations, and their assignment to individuals by the intricate processes of service for service, Trade tends not only to increase the per capita supply of commodities, but also to effect their fair per capita assignment in proportions corresponding to the relative desirability of the numerous and various contributions of individual service to their production.