An introduction to political economy

Front matter

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ml ill

Preface

In offering to the reader this revision of the Introduction, to Political Economy, it seems advisable to explain some of the circumstances which have called it forth, and which have consequently determined its character. In particular is it important to explain its relation to the author's Outlines of Economics, in order to avoid confusion and possible inconvenience.

The "Introduction" was first published in 1889, and has since then without change passed through many editions. The "Outlines," which appeared in 1893, was originally intended to be simply a revised edition of the "Introduction," but finally grew into something quite different. It was therefore decided not to withdraw the earlier work, and in the preface to the "Outlines" it was stated that "in any future revisions of the two books an effort will be made to develop still further the peculiarities of each; the aim of the 'Introduction' being to furnish chiefly historical and descriptive material; the aim of the 'Outlines' being to give a systematic sketch of theory." Since the appearance of the "Outlines" the author has been gratified to learn from many sources that his course at that time has met with approval ; and in this revision he seeks to carry out the intention to which reference has just been made. It has not been attempted, however, to make the revision in any way a new book, but rather to keep it essentially the same book while developing it in the direction indicated. The chief purpose of the revision has been to remove obvious defects, to bring statistical statements down to date, and to change theoretical expositions, so far as the advance of economic thought clearly requires that this should be done. On the other hand, it is altogether foreign to the purpose of this work to enter into theoretical controversies.

Another consideration should be mentioned in this convi Preface

nection. The book has been used by various organizations. Eight years ago the Bishops of the Methodist Episcopal Church adopted it as a part of the preachers' reading course, which they had laid out for candidates for the ministry in their Church. They have this year asked that the book be revised, but with the understanding that after revision it must be essentially the same book. The author has felt the responsibility thus imposed upon him as keenly as he has realized the compliment paid him by this distinguished body.

The spirit and purpose of this book are then sufficiently apparent. It aims to present what the intelligent citizen ought to know in regard to political economy, and to do so with scientific accuracy. On the other hand, it does not aim to be a contribution to the knowledge of the specialist, and there has been no attempt to give exhaustive classifications and sub-classifications. Moreover, the present book aims to help those who wish practical guidance in the solution of the puzzling economic questions which come to them in the various relations of life, and, therefore, gives special attention to the ethical side of political economy. After all, what the so-called "plain man" wishes chiefly to know is what is right and wrong in those problems which confront him as he seeks to gain his daily bread.

It has seemed to the author that one difficulty with many economic treatises is that they have no one clear aim, that they are, so to speak, "straddles." This difficulty he is seeking to avoid, and consequently he has had only one class in mind in this revision. It is first of all the general reader for whom the book is designed, and it is the general reader whose needs have been kept constantly in view. For him it primarily exists, and to his requirements have been entirely subordinated all considerations based on its possible use as a text-book.

It only remains to make acknowledgment of the very efficient assistance which the author has received in this revision from his friend, Dr. George Eay Wicker, of Dartmouth College. Kichard T. Ely.

Madison, Wis., March, 1901.

Contents

]Part I

THE GROWTH AND CHARACTERISTICS OF INDUSTRIAL SOCIETY, AND THE NATURE OF POLITICAL ECONOMY

PAGE CHAPTER I

Preliminary Remarks on Political Economy as a Social Science 1

chapter ii The Economic Life of Man 7 chapter iv Evolution of Economic Civilization 23

Economic Progress Viewed from the Standpoint of Production AND FROM THE STANDPOINT OF TRANSFERS 29

chapter vi

The Present Status of Economic Society and of Economic Problems 42

chapter vii

Some General Features of the Economy of the Modern

Nation 61

vii viii Contents

PAGE CHAPTER VIII

CHAPTER IX

CHAPTER X

CHAPTER XI

A Few Remarks on the Utility op Political Economy, with some General Considerations on the Relation of Political Economy to Other Sciences 114

Fart II

PRODUCTION

F>art III

TRANSFERS OF GOODS

Contents ix

PAGE

Credit and the Instruments op Credit : Banks and Clearing Houses 194

chapter iv The Regulation op International Commerce 201 F>art IV

DISTRIBUTION

Rent 214

Interest 218

chapter iv Profits 221

CHAPTER VI chapter vii Profit-Sharing and Cooperation 243

CHAPTER VIII x Contents

PAGE CHAPTER IX

CHAPTER X

Additional Remarks on Social Problems and Remedies for Social Evils 270

F>art V

Part VI PUBLIC FINANCE