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  The Principles of Economicsby Alfred MarshallBook IISome Fundamental NotionsChapter Introductory ! e ha#e seen that economics is$ on the one side$ a Scienceof ealth% and$ on the other$ that part of the Social Science ofman&s action in society$ 'hich deals 'ith his Efforts to satisfyhis ants$ in so far as the efforts and 'ants are capable ofbein( measured in terms of 'ealth$ or its (eneral representati#e$i!e! money! e shall be occupied durin( the (reater part of this#olume 'ith these 'ants and efforts% and 'ith the causes by 'hichthe prices that measure the 'ants are brou(ht into e)uilibrium'ith those that measure the efforts! For this purpose 'e shallha#e to study in Book III 'ealth in relation to the di#ersity ofman&s 'ants$ 'hich it has to satisfy% and in Book I* 'ealth inrelation to the di#ersity of man&s efforts by 'hich it isproduced! But in the present Book$ 'e ha#e to in)uire 'hich of all thethin(s that are the result of man&s efforts$ and are capable ofsatisfyin( man&s 'ants$ are to be counted as ealth% and into'hat (roups or classes these are to be di#ided! For there is acompact (roup of terms connected 'ith ealth itself$ and 'ithCapital$ the study of each of 'hich thro's li(ht on the others%'hile the study of the 'hole to(ether is a direct continuation$and in some respects a completion$ of that in)uiry as to thescope and methods of economics on 'hich 'e ha#e +ust beenen(a(ed! And$ therefore$ instead of takin( 'hat may seem the morenatural course of startin( 'ith an analysis of 'ants$ and of'ealth in direct relation to them$ it seems on the 'hole best todeal 'ith this (roup of terms at once! In doin( this 'e shall of course ha#e to take some account ofthe #ariety of 'ants and efforts% but 'e shall not 'ant to assumeanythin( that is not ob#ious and a matter of common kno'led(e!The real difficulty of our task lies in another direction% bein(the result of the need under 'hich economics$ alone amon(sciences$ lies of makin( shift 'ith a fe' terms in common use toe,press a (reat number of subtle distinctions! -! As Mill says./01 2 3The ends of scientific classificationare best ans'ered 'hen the ob+ ects are formed into (roupsrespectin( 'hich a (reater number of (eneral propositions can bemade$ and those propositions more important$ than those 'hichcould be made respectin( any other (roups into 'hich the samethin(s could be distributed!3 But 'e meet at startin( 'ith thedifficulty that those propositions 'hich are the most importantin one sta(e of economic de#elopment$ are not unlikely to beamon( the least important in another$ if indeed they apply atall! In this matter economists ha#e much to learn from the recente,periences of biolo(y. and 4ar'in&s profound discussion of the)uestion/-01 thro's a stron( li(ht on the difficulties before us!5e points out that those parts of the structure 'hich determinethe habits of life and the (eneral place of each bein( in theeconomy of nature$ are as a rule not those 'hich thro' most li(hton its ori(in$ but those 'hich thro' least! The )ualities 'hich a  breeder or a (ardener notices as eminently adapted to enable ananimal or a plant to thri#e in its en#ironment$ are for that #eryreason likely to ha#e been de#eloped in comparati#ely recenttimes! And in like manner those properties of an economicinstitution 'hich play the most important part in fittin( it forthe 'ork 'hich it has to do no'$ are for that #ery reason likelyto be in a (reat measure of recent (ro'th! Instances are found in many of the relations bet'een employerand employed$ bet'een middleman and producer$ bet'een bankers andtheir t'o classes of clients$ those from 'hom they borro' andthose to 'hom they lend! The substitution of the term 3interest3for 3usury3 corresponds to a (eneral chan(e in the character ofloans$ 'hich has (i#en an entirely ne' key2note to our analysisand classification of the different elements into 'hich the costof production of a commodity may be resol#ed! A(ain$ the (eneralscheme of di#ision of labour into skilled and unskilled isunder(oin( a (radual chan(e% the scope of the term 3rent3 isbein( broadened in some directions and narro'ed in others% and soon! But on the other hand 'e must keep constantly in mind thehistory of the terms 'hich 'e use! For$ to be(in 'ith$ thishistory is important for its o'n sake% and because it thro's sideli(hts on the history of the economic de#elopment of society! Andfurther$ e#en if the sole purpose of our study of economics 'ereto obtain kno'led(e that 'ould (uide us in the attainment ofimmediate practical ends$ 'e should yet be bound to keep our useof terms as much as possible in harmony 'ith the traditions ofthe past% in order that 'e mi(ht be )uick to percei#e theindirect hints and the subtle and subdued 'arnin(s$ 'hich thee,periences of our ancestors offer for our instruction! 6! 7ur task is difficult! In physical sciences indeed$'hene#er it is seen that a (roup of thin(s ha#e a certain set of)ualities in common$ and 'ill often be spoken of to(ether$ theyare formed into a class 'ith a special name% and as soon as a ne'notion emer(es$ a ne' technical term is in#ented to represent it!But economics cannot #enture to follo' this e,ample! Itsreasonin(s must be e,pressed in lan(ua(e that is intelli(ible tothe (eneral public% it must therefore endea#our to conform itselfto the familiar terms of e#eryday life$ and so far as possiblemust use them as they are commonly used! In common use almost e#ery 'ord has many shades of meanin($and therefore needs to be interpreted by the conte,t! And$ asBa(ehot has pointed out$ e#en the most formal 'riters on economicscience are compelled to follo' this course% for other'ise they'ould not ha#e enou(h 'ords at their disposal! But unfortunatelythey do not al'ays a#o' that they are takin( this freedom%sometimes perhaps they are scarcely e#en a'are of the factthemsel#es! The bold and ri(id definitions$ 'ith 'hich theire,positions of the science be(in$ lull the reader into a falsesecurity! Not bein( 'arned that he must often look to the conte,tfor a special interpretation clause$ he ascribes to 'hat he readsa meanin( different from that 'hich the 'riters had in their o'nminds% and perhaps misinterprets them and accuses them of follyof 'hich they had not been (uilty!/601 A(ain$ most of the chief distinctions marked by economicterms are differences not of kind but of de(ree! At first si(htthey appear to be differences of kind$ and to ha#e sharp outlines'hich can be clearly marked out% but a more careful study hassho'n that there is no real breach of continuity! It is aremarkable fact that the pro(ress of economics has disco#eredhardly any ne' real differences in kind$ 'hile it is continually  resol#in( apparent differences in kind into differences inde(ree! e shall meet 'ith many instances of the e#il that may bedone by attemptin( to dra' broad$ hard and fast lines ofdi#ision$ and to formulate definite propositions 'ith re(ard todifferences bet'een thin(s 'hich nature has not separated by anysuch lines! 8! e must then analy9e carefully the real characteristics ofthe #arious thin(s 'ith 'hich 'e ha#e to deal% and 'e shall thus(enerally find that there is some use of each term 'hich hasdistinctly (reater claims than any other to be called its leadin(use$ on the (round that it represents a distinction that is moreimportant for the purposes of modern science than any other thatis in harmony 'ith ordinary usa(e! This may be laid do'n as themeanin( to be (i#en to the term 'hene#er nothin( to the contraryis stated or implied by the conte,t! hen the term is 'anted tobe used in any other sense$ 'hether broader or narro'er$ thechan(e must be indicated! E#en amon( the most careful thinkers there 'ill al'ays remaindifferences of opinion as to the e,act places in 'hich some atleast of the lines of definition should be dra'n! The )uestionsat issue must in (eneral be sol#ed by +ud(ments as to thepractical con#enience of different courses% and such +ud(mentscannot al'ays be established or o#erthro'n by scientificreasonin(. there must remain a mar(in of debatable (round! Butthere is no such mar(in in the analysis itself. if t'o peoplediffer 'ith re(ard to that$ they cannot both be ri(ht! And thepro(ress of the science may be e,pected (radually to establishthis analysis on an impre(nable basis!/801N7TES.! :o(ic$ Bk! I*$ ch! *II$ Par! -!-! 7ri(in of Species$ ch! ;I*!6! e ou(ht 3to 'rite more as 'e do in common life$ 'here theconte,t is a sort of une,pressed &interpretation clause&% only asin Political Economy 'e ha#e more difficult thin(s to speak ofthan in ordinary con#ersation$ 'e must take more care$ (i#e more'arnin( of any chan(e% and at times 'rite out &the interpretationclause& for that pa(e or discussion lest there should be anymistake! I kno' that this is difficult and delicate 'ork% and allthat I ha#e to say in defence of it is that in practice it issafer than the competin( plan of infle,ible definitions! Any one'ho tries to e,press #arious meanin(s on comple, thin(s 'ith ascanty #ocabulary of fastened senses$ 'ill find that his style(ro's cumbrous 'ithout bein( accurate$ that he has to <se lon(periphrases for common thou(hts$ and that after all he does notcome out ri(ht$ for he is half the time fallin( back into thesenses 'hich fit the case in hand best$ and these are sometimesone$ sometimes another$ and almost al'ays different from his&hard and fast& sense! In such discussions 'e should learn to#ary our definitions as 'e 'ant$ +ust as 'e say &let ,$ y$ 9$mean& no' this$ and no' that$ in different problems% and this$thou(h they do not al'ays a#o' it$ is really the practice of theclearest and most effecti#e 'riters!3 /Ba(ehot&s Postulates ofEn(lish Political Economy$ pp! =>2?!1 Cairnes also /:o(icalMethod of Political Economy$ :ect! *I1 combats 3the assumptionthat the attribute on 'hich a definition turns ou(ht to be one'hich does not admit of de(rees3% and ar(ues that 3to admit ofde(rees is the character of all natural facts!3  8! hen it is 'anted to narro' the meanin( of a term /that is$ inlo(ical lan(ua(e$ to diminish its e,tension by increasin( itsintension1$ a )ualifyin( ad+ecti#e 'ill (enerally suffice$ but achan(e in the opposite direction cannot as a rule be so simplymade! Contests as to definitions are often of this kind. 2 A andB are )ualities common to a (reat number of thin(s$ many of thesethin(s ha#e in addition the )uality C$ and a(ain many the )uality4$ 'hilst some ha#e both C and 4! It may then be ar(ued that onthe 'hole it 'ill be best to define a term so as to include allthin(s 'hich ha#e the )ualities A and B$ or only those 'hich ha#ethe )ualities A$ B$ C$ or only those 'hich ha#e the )ualities A$B$ 4% or only those 'hich ha#e A$ B$ C$ 4! The decision bet'eenthese #arious courses must rest on considerations of practicalcon#enience$ and is a matter of far less importance than acareful study of the )ualities A$ B$ C$ 4$ and of their mutualrelations! But unfortunately this study has occupied a muchsmaller space in En(lish economics than contro#ersies as todefinitions% 'hich ha#e indeed occasionally led indirectly to thedisco#ery of scientific truth$ but al'ays by roundabout routes$and 'ith much 'aste of time and labour!Chapter - ealth! All 'ealth consists of desirable thin(s% that is$ thin(s 'hichsatisfy human 'ants directly or indirectly. but not all desirablethin(s are reckoned as 'ealth! The affection of friends$ forinstance$ is an important element of 'ellbein($ but it is notreckoned as 'ealth$ e,cept by a poetic licence! :et us then be(inby classifyin( desirable thin(s$ and then consider 'hich of themshould be accounted as elements of 'ealth! In the absence of any short term in common use to representall desirable thin(s$ or thin(s that satisfy human 'ants$ 'e mayuse the term @oods for that purpose! 4esirable thin(s or (oods are Material$ or Personal andImmaterial! Material (oods consist of useful material thin(s$ andof all ri(hts to hold$ or use$ or deri#e benefits from materialthin(s$ or to recei#e them at a future time! Thus they includethe physical (ifts of nature$ land and 'ater$ air and climate%the products of a(riculture$ minin($ fishin($ and manufacture%buildin(s$ machinery$ and implements% mort(a(es and other bonds%shares in public and pri#ate companies$ all kinds of monopolies$patent2ri(hts$ copyri(hts% also ri(hts of 'ay and other ri(hts ofusa(e! :astly$ opportunities of tra#el$ access to (ood scenery$museums$ etc! are the embodiment of material facilities$ e,ternalto a man% thou(h the faculty of appreciatin( them is internal andpersonal! A man&s non2material (oods fall into t'o classes! 7neconsists of his o'n )ualities and faculties for action and foren+oyment% such for instance as business ability$ professionalskill$ or the faculty of deri#in( recreation from readin( ormusic! All these lie 'ithin himself and are called internal! Thesecond class are called e,ternal because they consist ofrelations beneficial to him 'ith other people! Such$ forinstance$ 'ere the labour dues and personal ser#ices of #ariouskinds 'hich the rulin( classes used to re)uire from their serfsand other dependents! But these ha#e passed a'ay% and the chiefinstances of such relations beneficial to their o'ner no'2a2daysare to be found in the (ood 'ill and business connection of
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