Part 8

... “effect proceeds from cause, Ye know why the forms are fair, ye hear how the tale is told; It is all triumphant art, but art in obedience to laws.”

If any Economic experiment “works” (as a pragmatist might say of it), why does it work? What other explanation can there be than that it “works” because it is a correct adaptation of cause to effect in obedience to mandates of natural Economic law.

Consumption of food is a natural effect of the natural necessity for food--a natural law. Production of food is a natural effect of the natural need of food for consumption--a natural law. Resort to Natural Resources as the sole source and foundation from and upon which to produce food is a natural effect caused by the natural need for food--a natural law.

Nor can natural law be limited to the individual man any more than it is to trees. Associated man also is governed by it. It is the latter relation that distinguishes it as Economic. From the natural desire of individual man for production from and upon Natural Resources, social Trade develops, not arbitrarily but as a natural consequence of a related natural cause. Let thoughtless students and professors of Economics who deny natural Economic law--the normal conditions of cause and effect that govern cooperative mankind in making a living--explain Economic phenomena, if they can, without reference to Economic cause and effect, or Economic cause and effect with natural Economic law left out.

Natural Economic law might, perhaps, be given another and more accurately descriptive name. Yet its existence and its potency for good results or bad, according to obedience or indifference to it, are beyond all possibility of denial by any Economic student who knows what it means and who, thinking with clarity, speaks with a sense of responsibility. Its name, “natural law,” is simply a common and convenient term, whether truly descriptive or not, for indicating the undeniable fact that in Economics as in every other science, identical effects invariably proceed from identical causes.

Most plainly and incontestably is that observation true with reference to the three Basic Facts in Economics. That they are no haphazard phenomena in their mutual relations or otherwise must be inferred from universal experience. Artificial Objects for human use are produced by Man, and only by Man, from and upon and only from and upon Natural Resources. Man does not create. He produces, which means that he adapts. And in his processes of adaptation or production, he succeeds to the degree that he conforms to natural conditions over which he has no control except by conformity. Call those conditions by whatever name we may, they have all the characteristics of natural law, or natural orderliness, over which Man has no other powers of command than by adaptation of natural means to artificial ends. Natural law would therefore seem to be the most appropriate name--law beyond the control of Man except by his adaptation of natural resources to artificial effects.

Questions of natural law or no natural law in Economics aside, however, we are confronted by facts which common-sense minds cannot escape. Even if there be no natural laws of Economics--a contention that would seem to demand more imagination than thought,--it is none the less a fact that Artificial Objects never have been produced, are not produced now, and in all probability never will be produced on our revolving globe, except by Man and from and upon Natural Resources. Also it is a fact, whether subject to Natural Law or not, that Man cannot live without Artificial Objects, nor without Natural Resources from and upon which to produce and consume those objects. These facts recognized, disputes over the existence or non-existence of natural law in economics are mere mental gymnastics which may be ignored without prejudice to the essentials of any contention in these pages.

The process of human adaptation of Natural Resources to Artificial effects--or, to use the Economic term, the process of Production,--no matter how complex, is continuous from original conceptions in the human mind to completion and delivery of products to ultimate consumers by the human mind and hand.

FIFTH LESSON

THE PRODUCTIVE PROCESS

The Productive Process in Economics is a complicated sequence of activities in the bringing forth by Man, from and upon Natural Resources, of Artificial Objects. It begins with initiatory adaptations of natural raw materials; it ends with deliveries of finished products to ultimate consumers, in accordance with their demands.

Finished products may be catalogued in general terms as food, clothing, dwellings, luxuries and other Artificial Objects which have come into the possession of ultimate consumers for the satisfaction of their wants. Drawn from Natural Resources, these products return to Natural Resources in the course of their consumption, though not necessarily to the identical places from which they were drawn.

Their substance is indestructible. Man can no more destroy an atom of the physical universe than he can create one. His powers in Consumption as in Production are limited to altering Natural Resources in location and form. The essential Economic difference between Production and Consumption is that Production alters natural objects so as to adapt them to the satisfaction of human wants, whereas Consumption alters Artificial Objects in the process of satisfying those wants. Production is the drawing forth by Man of Artificial Objects from and upon Natural Resources; Consumption is the passing back by Man of Artificial Objects to Natural Resources.

With the processes of Consumption the science of Economics has nothing to do. Its functions end with delivery to final consumers. Whenever Consumption is declared to be a phase of Economics, thoughtful consideration will ascribe the declaration, not to the processes of Consumption but to the preceding demand for Artificial Objects to consume.

The human demand for Artificial Objects to consume is the incentive to the Productive Process. Production, therefore, and demand for Consumption, are Economic correlatives, Production having Consumption for its object, demand for Consumption depending upon Production for satisfaction. Without Production by Man, there could be no Artificial Objects to consume; without Consumption by Man, there would be no incentive to produce.

Production must, of course, precede Consumption. No Artificial Object can be consumed before it has been produced. But demand for Consumption as certainly precedes Production. An opposite inference might be drawn from the fact that particular Artificial Objects are often produced in advance of specific demand for them. In fact, however, the output is always in response to demand, either actual or probable--like the outflow from a reservoir of water which follows the inflow but to which there would be no inflow were it not for anticipated demand. Production in advance of actual demand indicates nothing more than that the producers are confident that such demand exists in embryo. If they err, the Products have no market; if they have guessed aright, the volume of Products increases to meet the demand. By and large, then, demand for Consumption regulates Production; or, in Economic phrasing, supply in Production is determined by demand for Consumption.

Being continuous, the human demand for Artificial Objects to consume stimulates continuous Production; being progressive, it promotes improvement in Productive methods and accomplishments.

I. HUMAN FACTORS

The Productive Process is accomplished by Man’s exertions, mental and physical, each of those forms of exertion being dependent upon the other.

In that connection Man is governed by natural law, a manifest law of human nature. It resembles the familiar law of external nature in obedience to which physical force advances along the line of least resistance. The former, the Economic law, may be concisely, accurately and indisputably expressed in these terms: Men seek to satisfy their Economic desires with the least exertion.

The validity of that generalization is sometimes questioned on the basis of the fact that men often seek to satisfy their desires with excessive exertion. But is that true? Is it not at best only apparently true? Although for the purpose of satisfying a desire for something, one were to walk three miles when he might reach his goal and satisfy his desire by a shortcut only one mile long, but which is unknown to him or is haunted by a dreadful ghost or infested with predatory men or savage animals, or so reputed to be, he would nevertheless be seeking to satisfy his desire with the least exertion. To risk contact with a ghost or a robber or savage beasts would add much more to his exertion mental and physical, than a walk of three miles for the satisfaction of a desire that might be satisfied by a walk of one. The statement that men seek to satisfy their desires with least exertion is to be read with the interpretation that they do so with the least known and the least dreaded exertion; also that the desire may include effort for the sake of effort, for effort desired as in exercise for health’s sake or exertion for the sake of play.

The Economic principle that men seek to satisfy their desires with least exertion does not imply that all men, or any of them know what the least possible exertion is. It is least only in their more or less biased or ignorant judgment. There is no contention that they do satisfy their desires with least exertion. The contention is that they naturally seek to do so. Critics of this natural law of Economics should have a care lest they fail to “see the forest for the trees.”

Like the principle in physics to which it is analogous this law of Economics involves the element of least resistance. As in physics the line of least resistance may not be a straight line, although that is its tendency, so in Economics it may not be a direct line. Nor may it be the same line from generation to generation. Precisely as in physics physical obstacles may divert a line from direct to crooked, so in Economics such obstacles as customs, habits, superstitions and ignorance may cause analogous diversions. But as the physical line of least resistance, though not always the shortest by foot rule measurement, is the shortest considering obstacles, so the Economic line of least exertion is as straight as habit, custom, superstition, advice, ignorance, and other obstacles permit.

Let the principle be tested by Money measurements. Will any sane man pay $100 to satisfy any Economic desire of his which he knows he can satisfy as perfectly for $75, or $80, or $90, or even more than $90 so it be less than $100? Certainly not. Then the Economic law in question may be expressed in terms of Money. Instead of saying that men seek to satisfy their Economic desires with least exertion, we may express the same natural law by saying that men seek to satisfy their Economic desires at the lowest Money cost. Both statements have the same meaning. The only difference between them is that the latter is expressed in terms of Money measurement whereas the former is expressed in terms of human effort.

Another familiar demonstration of this natural Economic law that men both individually and in the mass seek to satisfy their Economic desires with least exertion, is the human craving for Labor-saving invention. Could any more comprehensive exemplification of the natural law in question be demanded? Why does mankind crave Labor-saving methods for producing Artificial Objects from and upon Natural Resources, if there be no law of human nature which impels mankind to seek satisfaction of Economic desires with least exertion? John Orr concisely sums up this Economic law in these words: “Very strong and deep is the desire of men to find the easiest way of doing things.”

“Short History of British Agriculture,” By John Orr. Oxford University Press, 1922.

The earliest expression of this principle was by Henry George in 1879. Alluding to Political Economy, the term by which Economics was then identified, he wrote: “It lays its foundations upon firm ground. The premises from which it makes its deductions are truths which have the highest sanction; axioms which we all recognize; upon which we safely base the reasoning and actions of every-day life, and which may be reduced to the metaphysical expression of the physical law that motion seeks the line of least resistance--viz., that men seek to gratify their desires with the least exertion.”

“Progress and Poverty: An Inquiry into the Cause of Industrial Depressions, and of Increase of Want With Increase of Wealth. The Remedy.” By Henry George. New York: D. Appleton and Company. 1883.