Purpose and Scope of Economics 1

system, science, forces, business, laws, wealth and economic

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12. Origin of the present economic present system of production is sometimes called the competitive system because of the part which com petition plays, and sometimes the capitalistic system because of the great importance of capital as a factor of production.

Two thousand years ago economic goods were pro duced in the main by slaves. During the Middle Ages slavery in Europe gave way to what is known as the feudal system, under which men had certain property rights but little choice of occupation. In towns and cities arose the guild system, in which men employed in particular industry were organized with power to prevent outsiders from entering the industiy except by permission of the guild or organization. With the development of the spirit of democracy, especially after the French Revolution, the economic as well as the political rights of the individual gradually received greater recognition, and the competitive regime began.

The reader should note that all these changes in the industrial structure have taken place as the result of forces in society itself and that they were not planned in advance by any great leader or by any group of men. Unthinking men sometimes speak of the exist ing order as if it had been deliberately created by the rich and strong for their own benefit in order that they might take advantage of the weak and poor. This is an entirely baseless assumption. The world's rich and great men are no more responsible for the exist ence or continuance of the present order than are the poor and weak. They do not have under their control the forces which are, so to speak, the seeds or germs of the future. No man knows today how men will make their living one hundred years hence, what they will produce and consume, or how they will be organized and captained.

All social institutions are the products of an evolu tion, in the development of which most men are as unconscious of the part they play as is the ant in the building of an ant hill or the bee in the construction of a honey comb. The greatest force making for change or progress is not material and is in no way related to wealth. It is the brain of the thinker, the scientist, the philosopher. A new idea, or an old idea given new expression, is the kind of force, and the only kind, that causes new shape and form to be given to human institutions.

13. Importance of economics to the business Physics is a science concerned with the laws governing the forces of nature. Engineering is a technical art aiming to utilize those forces to the advantage of man. Men built bridges, towers and roads long before they had mastered the science of physics. They worked by what is known as the rule of thumb, guessing and experimenting until they arrived at a satisfactory method, but they never could have con structed the marvelous machines and towering struc tures of „today. The modern engineer must know physics as well as mathematics.

In the same way, the science of economics is essen tial to the training of any man who wants to give his business talent the greatest possible opportunity for achievement. Business is the art whereby man pro duces wealth for the gratification of his wants ; economics is the science which studies the laws and conditions under which wealth is and must be pro duced. A man unfamiliar with the principles of this science, unless he has most extraordinary ability, is at a disadvantage in modern competition and will have to be satisfied with small business affairs and small results.

Economics is primarily concerned with the values of things and services. It seeks to explain the causes of existing prices of goods and to discover the forces or conditions which indicate or precede an advance or ;_j. decline of prices. In the same way it studies rent, the price paid for the use of land and buildings ; irwages, the price paid for human services; and :1'1w -est, the irice paid for the use of capital. Is it not -rent tliat the business man whiirnows something about the laws that determine these various prices occupies a position of advantage over the ig norant man. who works, as it were, in the dark? The one is like the trained chauffeur who knows his engine intimately, detects the first symptoms of trouble, and makes real repairs in case of unavoidable accident ; the other is like the unskilled driver who has learned by practice merely how to push buttons, press pedals and turn a wheel, but is stumped when his engine stalls.

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