By G. M. STEELE, D.D.

I.

I. DEFINITIONS—UTILITY OF THE SUBJECT.

1. Social science comprises the statement and explanation of the natural laws which govern men in their mutual relations. Political economy is the application of that portion of those laws which pertain to the production and distribution of wealth. Now we are not to be discouraged by this term wealth, as though the subject were one which concerns only rich men, and in which a poor man could have no interest. The man who has a little property, worth only one or two hundred dollars, is just as really a possessor of wealth as one who has one or two millions; and to be able to acquire and rightly use these small fortunes is, in the aggregate, of more importance than the acquisition and management of the greater riches of the few.

2. But what is meant by wealth? For the present it is enough to say that it comprises all things which have value. A more complete definition will follow by and by. What, then, do we mean by value? This, too, has many forms of definition, but they for the most part have one element in common. The general notion concerning it is that it has reference to the amount of one commodity that may be equitably given in exchange for a designated amount of another; this is a correct notion. Thus a bushel of wheat may be exchanged for two bushels of oats, or a cord of wood for twenty yards of cloth. That is, the value of a bushel of wheat is that of two bushels of oats, and the value of twenty yards of cloth is the same as that of a cord of wood. It is thus seen to be a relative term, and not indicative of any quality of any one thing considered by itself. But in all instances of relationship there must be some ground of the relation. Let us try to determine what it is in this case. A superficial thinker might decide that it is money, from the fact that value is generally estimated in money. But money is itself in the same relation to all other commodities in this respect as they are to one another, and its value rests upon the same basis.

3. The chief element in value, and that constitutes its original standard, is the cost of production; and by cost is meant the amount of labor involved. Labor is the voluntary effort put forth by man to secure some desired object. But when we say this, a little caution is needed. We are not to infer that the present value of an article is estimated by the amount of labor required at the time of its production, especially if that was a long time ago. A hundred years since, it required the labor of a man for days to produce a yard of cotton cloth. A dozen yards of better cloth can now be produced by the same amount of labor; of course the present value of the latter is superior to the present value of the former, even if this were as good as new. It is the labor that would be required to reproduce or replace an article which determines its value.

4. But there is another element which is essential to value; this is utility. It comprises all those qualities in an object which make it available to gratify any desire. It will readily be seen that there are objects which have utility and at the same time are without value. They are such objects as cost nothing; that is, such as involve no labor in their acquisition. Thus air, and sunshine, and rain, have no value; but they are of immeasurable utility. Value is often in the inverse ratio of utility. Iron is a far more useful metal than gold, but gold is vastly more valuable than iron. Still, though utility may exist where there is no value, there can be no value where there is no utility; because no one would put forth effort for that which could not gratify any desire, and it is the ability to gratify desire that constitutes utility. Sometimes utility becomes the paramount element in determining value; but ordinarily it is subordinate to the cost of production. When the article is one for which there is a very great demand, and of which there is a great scarcity, the value may increase many times beyond the cost. In such case the utility rather than cost rules. But where the demand is readily and fully met by the supply, the cost controls.

5. But valuable things can not be produced very largely without tools, implements, and various contrivances. These constitute capital. Capital is the result of previous labor reserved and employed in further production. This implies self-denial. A man can not consume what he has secured by labor and at the same time preserve it to aid in additional production. Hence he must restrain his desires if he would save something for this purpose. This capital is sometimes called pre-existent labor. The point to be observed is that its existence is due, not to labor alone, but to abstinence as well. The two elements in the cost of production are labor and abstinence, and we may combine these in the one term, sacrifice. Sacrifice and utility, then, are the two essential conditions of value; and we may complete our definition of value by saying that value is man’s estimate of the amount of sacrifice requisite to the attainment of a desired object.

6. Hence, if wealth comprises all valuable objects, and if every desirable object which involves sacrifice has value, it would be a proper definition to say that wealth consists of all those objects and qualities useful to man, the attainment of which involves sacrifice. This includes not only material objects and qualities, but also all those human powers acquired by sacrifice, which enable man to master nature. This is not admitted by many writers. But Mr. Carey states, in a broad way, that “Wealth is the power to command the always gratuitous services of nature.” When man is at his weakest nature does nothing for him. Every infant, if dependent on nature alone, would inevitably perish. So in the infancy of society, it is only by the most strenuous exertion that a precarious existence is secured. But with every increment of power in man, nature multiplies her services. They are not bought but freely given, and given as soon as man is able to command them. In the most advanced civilization the forces of nature have become so subservient to man that in thousands of cases one can accomplish what a score, or sometimes even a hundred, could not formerly have done. It is this increase of power more than that of material commodities which constitutes the real wealth of the world.

7. From this it follows that the proper subject of political economy is MAN. The laws pertaining to the underlying science are found in the nature and character of man—in his tastes, his desires, in the motives influencing him and in the limitations to which he is subject. The results to be achieved are his prosperity and freedom, his mastery over nature, and his happiness. Here, then, is the prime reason why every person who aspires to any intelligence at all should have some acquaintance with this subject. It has to do more than any other study with his temporal welfare, and with the welfare of society, without the prosperity of which his individual prosperity will suffer.

8. A second reason is implied in the meaning of the terms used. Economy is from a Greek compound signifying husbandry. It has reference to the prudent management by a householder of his means so as to secure the largest measure of prosperity for his family. It does not mean parsimony, nor even mere frugality; that is, it does not consist in mere abstinence for the sake of saving. It is rather a wise use of means and forces, so as to make them as effective as possible. There is an old proverb which says, “There is more in calculation than in hard work,” and though sometimes perverted in the interest of human laziness, it is nevertheless full of philosophy. It is this “calculation” which such a study greatly aids.

9. Political economy, as the term implies, has reference to man in society,—to “the body politic.” The social element in man is as imperative as any part of his constitution. Man’s greatest need is association. The solitary individual is only a minute constituent of man in man’s relation to the main purposes of life. No man is complete in himself. He must be supplemented by others, generally by many others, and he must find a large part of his own completeness in this association. Each has something that others lack, and we are designed to be sources of mutual supply to our several wants.

Here emerges another vital fact. Individuality is as indispensable as association. A superficial thinker might regard these characteristics as antagonistic. The fact is so far otherwise that each is really dependent on the other. Men must differ in order to be of any use to one another. It is the difference that makes the individuality. Mutual aid is the object of association. Hence the greater the difference, the greater the individuality; and the greater the individuality, the greater the association. No man would associate with another unless the one had something which the other lacked. But for this there would be no commerce. Two farmers producing nothing but wheat would have nothing to exchange with each other. Two men of precisely the same mental possessions, habits and aptitudes, would never be companions for each other.

On the other hand it is only by association that individuality becomes the most highly developed. Only by such development do the differences among men become great and numerous. In the lower grades of humanity there is comparatively little difference between individuals, and there is little association. It is only in advanced civilization that a strongly marked individuality exists, and that we find those numerous differences which make the mutual dependence the greatest. Here is a potent reason for the study of this subject. It is impossible to estimate the power of association in production alone. It is known in a general way that the combination of men gives greatly increased results as compared with those of men working separately. Yet it is not nearly realized that a hundred men properly associated in an industrial enterprise will often effect two or three hundred times as much as all the very same men working separately.

10. Again, this subject intimately concerns man in his governmental relations. For governments must furnish many of the conditions for the best economical results. Then, too, the great moral enterprises of the age, and of all ages, have to do with the principles here involved; education, pauperism, vicious social usages, the dangerous classes, have to be considered, and can only rightly be considered in the light of these truths. It is wonderful how closely this study is connected with all the great interests of humanity. Whole communities which have been impoverished and demoralized by neglecting some of the obvious principles of political economy, have revived and prospered under their application. Portions of our own country are examples of both these kinds of effects, and that, too, within the memory of men now living.

We shall follow the usual plan of the division of the subject under the heads of production, consumption, exchange and distribution.

II. PRODUCTION—LABOR.

1. Production is the creation of value by rendering the utilities of nature available to man. The creation, it will be noticed, is not of matter but of value. There are two great agencies which must co-operate in production—nature and man. Man furnishes labor; nature furnishes materials and forces. The former would be useless without the latter. There must be soils, and mines, and trees, and animals, or no matter how much labor there may be, there can be no grain, nor fruit, nor metals, nor lumber; no houses and no meat, nor hides nor leather. So also there may be all kinds of material, but without labor they are of no available service to man.

2. But nature furnishes not only materials but also forces to aid man in his productive efforts. The more obvious and palpable of these are gravitation, especially in falling water, wind, the explosive property of gunpowder and dynamite, the expansive power of steam, magnetism, electricity, and the forces of vegetation. There are also numerous passive powers, or properties of matter which, when adapted by man, give him much advantage; such are the mechanical powers of the lever, inclined plane, wheel and axle, pulley and wedge, and those qualities of the metals which render them capable of taking an edge for cutting purposes, as also malleability, ductility, elasticity, etc. It is a beneficent fact of nature that she furnishes these materials and forces gratuitously. She is not churlish nor parsimonious in this respect. The more we avail ourselves of her help, the more ready she is to help us; and the greater the advantage we obtain, the more lavishly she bestows her gifts upon us.

It is thus seen that labor consists not in creating things but in moving them; that is, in effecting changes. It directs the natural forces to the service of man, and it is in this that production consists. It can move materials into position where these forces can act upon them with the desired effect. Thus an agricultural laborer can effect such changes in the soil as are requisite to the growth of corn; he can place the seed in the ground, but he can not make the crop. It is as impossible for him to create a kernel of grain as to create a planet. Labor may move the fuel to the fire-place and properly dispose it for kindling. It may move a match, which by a previous movement has taken fire, to the prepared fuel; but all this would be useless but for the conditions and forces which nature furnishes.

3. The application of labor to production is of two kinds, direct and indirect. The direct changes effected by labor may be embraced under the three heads of transmutation, transformation, and transportation. The first comprises elementary changes, as when under required conditions ingredients of the soil and of the atmosphere are changed into grain and vegetables, and fruit. The second is where there is simply a change in the form of the material, as when boards are made into a table, or leather into shoes. The third implies merely a change of place, as when coal in a mine, where it has no value, becomes valuable by being brought within reach of those who desire it for fuel.

4. The greater part of labor is indirect; in some cases so much so that its relation to the product is unseen. For instance, the man who makes your shoes is not the only laborer concerned in that product. Some previous labor produced the leather, and before that some labor produced the hide from which the leather was made; some persons made the tools, some the house or shop, and some provided sustenance for the shoemaker. All these are conditions, without which no shoes can be made, and all who provide them furnish a part of the labor on which the product of the shoes depends.

Of this indirect labor there are several kinds. (1) Those who provide the materials, and there may be many grades of these; (2) those who furnish the implements and the machinery; (3) those who supply the sustenance and shelter, and raiment for the laborers; (4) the government agencies for protecting the workman; (5) organizers and managers of business enterprises, without whom production would often fall far short of what it now accomplishes; (6) the labor of raising children who are subsequently to become laborers; (7) all those engaged in the work of education, by which men are prepared for the most efficient work—this includes not only teachers, but writers, clergymen, etc.; (8) professional men, who devote themselves to matters essential to the interests of the community and thus not only save the time of the laborers, but often their property and their health, and their lives; (9) inventors and discoverers, who ascertain new conditions of more efficient production. These are the principal, though there are also others.