ELEMENTS OF POLITICAL ECONOMY

Otago Witness, Issue 2862, 20 January 1909, Page 74

ELEMENTS OF POLITICAL ECONOMY

No. I. By H. D. Bedford, M.A. (Lecturer on Political Economy, Otago University). The object of these articles is to give a brief popular statement of the principles of political economy as taught in our universities. Ihe writer will not obtrude hie own peculiar opinions or attempt to win support for any eocial reforms he may oheriah. That ho has already done in "Political Fingerposts." The present purpeso is to ascortain the pronouncements of orthodox economics upon our industrial and commercial sjstem. The mat essential is to define the scope of the subject. It is the science which tells us how we get our material wealth. It explains that wonderful organisation of industry and commerce by which one man can devote all his energies and time throughout life to the making of boots or coats or houses and yet consume a multitude of different commodities in tho production of which he has played no parr. The whole people of a nation, nay, of tho world, are really 00-operating to produce wealth to satisfy man's material wants. Adam Smith, the founder of political economy, furnishes us with an eloquent passage descriptive of the nature of this process of co-operation in the simple ca-se of the making of a labourer's coat : *' Observe the accommodation of the most common artificer or day labourer in a .civilised and thriving country, and you will perceive that the number of people, of whose industry a part, though but a small part, has been employed in procuring him this accommodation- exceeds all computation. The woollen coat, for example, which covers the day labourer, as coarse and rough as it may appear, is the produce of the joint labour of & great multitude of workmen. The shepherd, the sorter of the wool, the woolcomber or carder, the dyer, the ecribbler, the spinner, the wea\er, the fuller, the dresser, with many others, must all join their different .arts in order to complete even the homely production. How many merchants and carriers, besides, must have been employed in transporting the materials from some of those worKmen to others who often live in a distant part of the country ? How much commerce a.n<l navigation, in particular, how many shipbuilders, sailors, sailmakers, ropemakers, must have been employed in order to bring together the different drugs made use of by the dyer which often come from the remotest corners of the world? What a variety of labour, too, is necessary in order to produce the tools of the meanest of these workmen ! To saj nothing of such complicated machines as the ship of th« sailor, the mill of the fuller, or even th« loom of the weaver, let us consider only what a variety of labour ie requisite in order to form that very simple machine, the shears with which the shepherd clips ihe wool. The miner, the builder of the furnace for smelting the ore, the feller of the timber, the burner of the charcoal to be made use of in the srnelting-house, the briekmaker, the bricklayer, the workmen who attend the furnace, the millwright, the forger ? the smith must »11 of them join their different arts in order to produce them. Were we to examine, in the same manner, all the different parts of his dress and household furniture, the ooarse linen 6hirt which he wears next hi& skin, the shoes which cover his feet, the bed which he lies on, and all the dilierent parts which compose it, the kitchen grate at which he prepares his victuals, the coal which he makes use of for that purpose, dug from the bowels of the earth, and brought to him, perhaps, by a long sea and a long landccrriage, all the other utensils of his kitchen, all the furniture of his table, the knives and forks, the earthern or pewter Elates upon which he serves up and divides is victuals, the different hands employed in preparing his bread and his beer, the glass window which lets 'in the heat and the light and keeps out the wind and the rain, with all the knowledge and art requisite for preparing that beautiful and happy invention, without which these northern parts of the world could scarce have afforded a very comfortable habitation, together with the tools of all the different workmen employed in producing those different conveniences; if we examine, I say, all these things and consider what a variety of labour is employed about eaoh of them we shall be sensible that, without the assistance and co-operation of many thousands, the very meanest person in a civilised country could not be provided for even according to, what we very falsely imagine, the easy and simple manner in which he is commonly accommodated. Compared indeed with the more extravagant luxury of the great, his accommodation must no doubt appear extremely simple and easy ; and yet it may be true that the accommodation of a European prince does not always so much exceed that of an industrious and frugal peasant as the accommodation of the latter exceeds that of many an African king, the absolute master of the lives and liberties of ten [ thousand naked savages." ! The complexity of the industrial organisation is still more wonderful in the life of a great City like i London. It grows nothing for its own consumption; it uses coal which comes from the Midlands, wheat from America or Australia, frozen mutton from New Zealand. tea from China, and so on. London could not live on its own resources for a day. yet no community is more amply furnißhed 1 "with the things Oiat contribute to maintenance, wellbeing, and comfort. All this could not take place without some machinery or organisation which is so stable as hardly ever to break down, and so nicely adapted to the need as almost to eliminate waste and secure that just so much as is required, and no more, shall be supplied to each household. Political economy explains how this vast organisation works, by what motive forces it is kept going, how each person obtains the means of satisfying his wants, and how he induces others to supply him with those means. In short, it investigates and analyses the laws which govern the production, distribution, exchange, and consumption of wealth. It. has often been matter of complaint <.n the part of ardent social reformers that the scope of tho subject is not enlarged. They make it a reproach against the ecienco that it does not advocate Socialism or single tax or bimetalism or other proposed remedies for our social jHs. Specialisation^ however, is essential to thorough treatment, and some scifnre is required i\ hose scope 16 as limited ac that <j{ political economy

Its province is to prepare for the consideration of social remedies by a scientific analysis of the existing industrial system. It deals with facts, not ideals. It ascertains the laws which actually do control the production and distribution of wealth without expressing approval or disapproval of the results. It indicates the evils as well as the benefits of free competition, leaving the reformer to devise a remedy. It does not lay down ethical precepts, but gives us a systematised knowledge of what it, not of what ought to be. The science is not, therefore, barren, as 4b few examples will show. It neither pronounces for nor against a State Bank, but it does give an exhaustive analysis or ih» functions of money, without a knowl<*dge of which no man can intelligently discus* the proposal of a State Bank. So without telling the statesman what kind of tax to adopt, it shows him what is the effect of different taxes on the production and distribution of wealth. Its treatment of trades unionism, Socialism, etc., is in the same) spirit. It traces their effects and. fearlessly sets them down, -whether they be good or ill. It informs the advocate or opponent of Socialism whether the tendency of the reform will be to diminish or augment wealth, to foster or discourage the spirit of enterprise. It analyses its claims to enrich the labourer, to eliminate the wast© of competition, and to deetroT privilege. But it dors so quite impartially. It serves the reformer in precisely the same way as ma-th-enjatics serve the en-^ineer, as geology serves -the miner, and astronomy the na\ig«.tor. It does not solve the pressing problems of democracies, but provides the equipment for their solution. No legitlator or elector can with adequate understanding approach a social difficulty without a knowledge of the fundamental pciioiple* of economics.