Purpose and Scope of Economics 1

income, money, word, business, wealth, idea and labor

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The so-called historical school of economists de serves a word. It has flourished principally in Ger many and was the outgrowth of a revolt against the ultra deductive method of the English classical school, its supporters holding that induction was the proper logical method. Only by a thoro study of the facts and statistics of the past, they claim, can we arrive at a scientific understanding of the laws governing the production and distribution of wealth.

Economists today are endeavoring to utilize as far as possible the advantages of the methods employed by the different schools.

6. Relation of economics to is chiefly concerned with the phenomena of the business world, with facts as they are, with what is, rather than with what ought to be. It is not the economist's primary purpose to defend or justify any existing industrial methods or policies.

Yet many ethical questions arise which he of all men is best fitted to answer. For example, he is able to show most clearly that employers who are indif ferent about the health and welfare of their employes are at fault economically as well as ethically, that in the long run a country cannot greatly prosper if pub lic sentiment tolerates injustice to the working classes, or if the rich are unwilling to make sacrifices in order that the condition of the poor and ignorant may be bettered.

In economics the word "ought" always connotes an increase in the productive power and welfare of the people. Should there be a minimum wage law? No economist will answer that question until he has carefully considered the probable effects of such a law, not merely upon the condition of the compara tively few laborers for whose special benefit it is to be enacted, but also upon the productive power of all the people, now and hereafter.

Hence it is wrong to say that economics is as in dependent of ethics as is a physical science. It deals with most important human activities. If it finds that some of these activities are illegal, or are in viola tion of the moral law, or that they involve manifest injustice to certain classes of society, it cannot and does not hesitate to say so.

7. is well for the reader at the outset to get a clear idea of tbe full meaning of the word income, for it embodies the entire subject matter of economics. The purpose of all human labor is in

come.

In the last analysis all income is psychical or men tal. It is the pleasure or satisfaction we get out of the consumption of material goods, out of our food and clothing, out of the comfort of mu. homes, out of our enjoyment of music, out of the wondrous beauties of nature, out of the charm of an oil painting, or even out of the very joy of living if we are in good health and have friends.

Much of this psvcilicaliacome_orsatisfaction we get without labor thru the abundant generosity of nature, but -with income of this sort the economist is not con cerned except in so far as men labor and save that they may be in a position to enjoy it later in life undistracted by business cares. For example, a man and his wife may work diligently and live most eco nomically until they are fifty years old, saving every possible dollar in order that they may spend their remaining .2,--ears in a beautiful country home where their most 'prized income will not be in the form of money or material wealth, but in books, music, health ful exercise and the society of their children and grandchildren. All thoughtful men realize that things of this sort are generally worth working for far more than the ownership of any amount of mater ial wealth -Which can be measured in terms of money.

8. Money income.—Nevertheless in business, the word income is always thought of in connection with money. If you ask what a man's income is you will be told it is so many thousand dollars a year. Nobody will undertake to describe his psychic income. That is the ultimate thing for which he works, yet it is im ponderable and not even he himself can give you much idea of its extent or amount. The economist merely knows that a dollar means much more to one man than it does to another. He knows that some men waste money, that they do not get out of it the satisfaction or psychical income which they might obtain. He knows also that the man with the large money income is liable to .squeeze less satisfaction out of a dollar than the man with a small one. It is sufficient for us now to know that in business the word income ordinarily implies the idea of money.

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