The Order and Aims of Economic Studies1.We have seen that the economist must be greedy of facts;but that facts by themselves teach nothing.History tells of sequences and coincidences; but reason alone can interpret and draw lessons from them.The work to be done is so various that much of it must be left to be dealt with by trained common sense, which is the ultimate arbiter in every practical problem.
Economic science is but the working of common sense aided by appliances of organized analysis and general reasoning, which facilitate the task of collecting, arranging, and drawing inferences from particular facts.Though its scope is always limited, though its work without the aid of common sense is vain, yet it enables common sense to go further in difficult problems than would otherwise be possible.
Economic laws are statements with regard to the tendencies of man's action under certain conditions.They are hypothetical only in the same sense as are the laws of the physical sciences: for those laws also contain or imply conditions.But there is more difficulty in making the conditions clear, and more danger in any failure to do so, in economics than in physics.The laws of human action are not indeed as simple, as definite or as clearly ascertainable as the law of gravitation; but many of them may rank with the laws of those natural sciences which deal with complex subject-matter.
The raison d'etre of economics as a separate science is that it deals chiefly with that part of man's action which is most under the control of measurable motives; and which therefore lends itself better than any other to systematic reasoning and analysis.We cannot indeed measure motives of any kind, whether high or low, as they are in themselves: we can measure only their moving force.Money is never a perfect measure of that force; and it is not even a tolerably good measure unless careful account is taken of the general conditions under which it works, and especially of the riches or poverty of those whose action is under discussion.But with careful precautions money affords a fairly good measure of the moving force of a great part of the motives by which men's lives are fashioned.
The study of theory must go hand in hand with that of facts:
and for dealing with most modern problems it is modern facts that are of the greatest use.For the economic records of the distant past are in some respects slight and untrustworthy; and the economic conditions of early times are wholly unlike those of the modern age of free enterprise, of general education, of true democracy, of steam, of the cheap press and the telegraph.
2.Economics has then as its purpose firstly to acquire knowledge for its own sake, and secondly to throw light on practical issues.But though we are bound, before entering on any study, to consider carefully what are its uses, we should not plan out our work with direct reference to them.For by so doing we are tempted to break off each line of thought as soon as it ceases to have an immediate bearing on that particular aim which we have in view at the time: the direct pursuit of practical aims leads us to group together bits of all sorts of knowledge, which have no connection with one another except for the immediate purposes of the moment; and which throw but little light on one another.Our mental energy is spent in going from one to another;nothing is thoroughly thought out; no real progress is made.
The best grouping, therefore, for the purposes of science is that which collects together all those facts and reasonings which are similar to one another in nature: so that the study of each may throw light on its neighbour.By working thus for a long time at one set of considerations, we get gradually nearer to those fundamental unities which are called nature's laws: we trace their action first singly, and then in combination; and thus make progress slowly but surely.The practical uses of economic studies should never be out of the mind of the economist, but his special business is to study and interpret facts and to find out what are the effects of different causes acting singly and in combination.
3.This may be illustrated by enumerating some of the chief questions to which the economist addresses himself.He inquires:
What are the causes which, especially in the modern world, affect the consumption and production, the distribution and exchange of wealth; the organization of industry and trade; the money market; wholesale and retail dealing; foreign trade, and the relations between employers and employed? How do all these movements act and react upon one another? How do their ultimate differ from their immediate tendencies?
Subject to what limitations is the price of anything a measure of its desirability? What increase of wellbeing is prima facie likely to result from a given increase in the wealth of any class of society? How far is the industrial efficiency of any class impaired by the insufficiency of its income? How far would an increase of the income of any class, if once effected, be likely to sustain itself through its effects in increasing their efficiency and earning power?
