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Fundamental Concepts

FUNDAMENTAL CONCEPTS Economics is the study of man's use of scarce resources in achieving the satisfaction of his wants, both individual and community. Alfred Marshall, famous English economist at the turn of the century, explored the nature and scope of the subject in his great work Principles of Economics, from which appropriate excerpts have been taken.

A subject which deals with human wants is inescapably intertwined with human behavior, and all it implies in terms of emotion, biases, and motivations. It is no wonder, therefore, that many people have questioned whether economics could ever be a science. Henry C. Wallich, Professor of Economics at Yale University, discusses this question in "Is Economics a Science? And Can It Be?" American economic "scientists" have, in the past three decades, become very active in applying economic ideas to problems of government, business, labor, and, indeed, society at large. Arthur F. Burns, an eminent contemporary economist, discusses his experience as Chairman of the Council of Economic Advisers in "An Economist in Government." Recognizing the huge diversity and limitlessness of human wants as well as the scarcity of both human and natural resources, Ben W. Lewis, Professor of Economics at Oberlin College, discusses the resultant core economic problem of every society. His Economic Understanding: Why and What identifies and explores the resource allocation and distribution aspects of this key problem.

To advance his well-being, while facing resource scarcity and limitless wants, man has developed two outstanding techniques for achieving greater output with any given use of resources. These techniques are: (1) specialization, and (2) the use of capital. Classical statements of the importance of these techniques were made by Adam Smith, father of modern Political Economy, in his famous Wealth of Nations, and by Eugen von Bohm-Bawerk, noted Austrian economist, in his esteemed work Positive Theory of Capital.

One of the most persistent problems of human existence, challenging to man's efforts to advance his well-being, is that of population pressure on man's capacity to produce. An historic statement of the problem was 1 made by Thomas Robert Malthus, English minister whose ideas contributed to the early nineteenth century designation of economics as the "dismal" science. Kingsley Davis, a contemporary population expert who is Professor of Sociology at the University of California and U.S. representative on the U.N. Population Commission, analyzes the current population problem in his "Analysis of the Population Explosion."