§ 6. Main factors in economic problems. The particular economic problems in America at this time are determined by the whole complex economic and social situation. Two main factors in this may be distinguished: the objective and the subjective, or the material environment and the people composing the nation. The one is what we have, the other is what we are. These factors are closely related: for what we are as a people (our tastes, interests, capacities, achievements) depends largely on what we have, and what we have (our wealth and incomes) depends largely on what we are.
I. The objective factor presents two phases: (a) The basic material resources, consisting of the mate rials of the earth's surface and the natural climatic condi tions which together provide the physical conditions neces sary for human existence, and which furnish the stuff out of which men can create new forms of wealth.
(b) The industrial equipment, consisting of all those arti ficial adaptations and improvements of the original resources by which men fit nature better to do their will. These two (a and b) become more and more difficult to distinguish in settled and civilized communities, and become blended into one mass of valuable objects, the wealth of the nation.
II. The subjective factor presents two phases: (a) The people, considered with reference to their num ber, race, intelligence, education, and moral, political, and economic capacity.
(b) The social system under which men live together, make use of wealth and of their own services, and exchange economic goods.
The particular economic problems that are presented to each generation of people are the resultant of all these factors taken together. A change in any one of them alters to some extent the nature of the problem. The problems change, for example, (I a) with the discovery or the exhaustion (or the increase or decrease) of any kind of basic material resources; (I b) with the multiplication or the improvement of tools and machinery or the invention of better industrial equipment; (II a) with the increase or decrease of the total number of people, and the consequent shift in the relation of popula tion to resources; (II b) with changes in the ideals, educa tion, and capacities of any portion of the people whether or not due to changes in the race composition of the population.
Many examples of these various changes may be found in American history, and some knowledge of them is necessary for an appreciation of the genesis and true relation of our present-day problems.
§ 7. Range of economic problems treated. Of number less economic problems that are calling for solution in a modern nation like the United States of America, only the more important in relation to present needs can be discussed in their main aspects within the limits of a single volume.
The ones here chosen, as may be seen by referring to the table of contents, include a wide range, from the more inpersonal financial questions connected with money and the medium of exchange, to the most burning issues of class interests and conflicts; and from those that seem to do merely with the individual (as incomes or wages or taxes) to the most funda mental questions of the form of economic organization and the displacement of private property by communism. In truth, these contrasts are often misleading ; for the welfare of individuals is affected in many ways, often remote and unsuspected, on the one hand by impersonal factors such as the production of gold or the invention of machinery, and on the other hand by the form and function of the social organi zation of which each of us is a part.
Some conceive of the economist's task narrowly as being merely the study of market prices; others broaden the field to include the study of individual valuations and gratifications; and still others make it include the solution of all problems of economic legislation affecting the general welfare of society. No practical problem in the field of economics can be rightly solved as if it were an economic problem in any narrow sense untouched by political, moral, and social considerations. In this volume the broadest of these conceptions is taken, prices and values being studied because of their bearing upon social welfare. Welfare economics rather than price economics is our ideal.
The titles of the chief encyclopedias of economics and of several good collections of general readings are given in the Manual of references and exercises in economics, -for use with the author's E GYMOM40 Principles, published by the Century Co., New York. (Ref erences to the author's Source Book in Economics [1912] have been dropped in this edition, as that work is now out of print.) Several American general texts on political economy treat more or less fully the questions taken up in the present volume. Some of the texts are listed here, and are not referred to specifically in connection with the various chapters following.
Fisher, Irving, Elementary principles of economics. New York. Macmillan. 1912.
Ely, R. T., Outlines of economics. Rev. Ed. New York. Macmillan. 1908. ' Clay, H. Economics. (American Revision.) New York. Macmillan. 1918.
Taussig, F. W., Principles of economics. 2 vols. New York. Mac millan. 1911.
Turner, J. R., Introduction to economics. New York. Scribners. 1919.