CONTENTS
PART I
PAGE
The Value of Material Things [1]-169
DIVISION A—WANTS AND PRESENT GOODS
CHAPTER
1 The Nature and Purpose of Political Economy: Name and Definition; Place of Economics Among the
Social Sciences; The Relation of Economics to Practical Affairs [3]
2 Economic Motives: Material Wants, The Primary Economic Motives; Desires for Non-material Ends,
as Secondary Economic Motives [9]
3 Wealth and Welfare: The Relation of Men and Material Things to Economic Welfare; Some Important
Economic Concepts Connected with Wealth and Welfare [15]
4 The Nature of Demand: The Comparison of Goods in Man's Thought; Demand for Goods Grows Out
of Subjective Comparisons [21]
5 Exchange in a Market: Exchange of Goods Resulting from Demand; Barter Under Simple Conditions;
Price in a Market [30]
6 Psychic Income: Income as a Flow of Goods; Income as a Series of Gratifications [39]
DIVISION B—WEALTH AND RENT
7 Wealth and Its Direct Uses: The Grades of Relation of Indirect Goods to Gratification; Conditions of
Economic Wealth [46]
8 The Renting Contract: Nature and Definition of Rent; The History of Contract Rent and Changes
in It [53]
9 The Law of Diminishing Returns: Definition of the Concept of (Economic) Diminishing Returns; Other
Meanings of the Phrase "Diminishing Returns"; Development of the Concept of Diminishing Returns [61]
10 The Theory of Rent: The Market Value of the Usufruct: Differential Advantages in Consumption
Goods; Differential Advantages in Indirect Goods [73]
11 Repair, Depreciation, and Destruction of Wealth: Relation to its Sale and Rent: Repair of Rent-bearing
Agents; Depreciation in Rent-earning Power of Agents Kept in Repair; Destruction of
Natural Stores of Material [81]
12 Increase of Rent-bearers and of Rents: Efforts of Men to Increase Products and Rent-bearers;
Effects of Social Changes in Raising the Rents of Indirect Agents [90]
DIVISION C—CAPITALIZATION AND TIME-VALUE
13 Money as a Tool in Exchange: Origin of the Use of Money; Nature of the Use of Money; The Value of
Typical Money [98]
14 The Money Economy and the Concept of Capital: The Barter Economy and its Decline; The Concept of
Capital in Modern Business [108]
15 The Capitalization of All Forms of Rent: The Purchase of Rent-charges as an Example of Capitalization;
Capitalization Involved in the Evaluating of Indirect Agents; The Increasing Role of Capitalization
in Modern Industry [118]
16 Interest on Money Loans: Various Forms of Contract Interest; The Motive for Paying Interest [131]
17 The Theory of Time-value: Definition and Scope of Time-value; The Adjustment of the Rate of Time-discount [141]
18 Relatively Fixed and Relatively Increasable Forms of Capital: How Various Forms of Capital May
Be Increased; Social Significance of These Differences [152]
19 Saving and Production as Affected by the Rate of Interest: Saving as Affected by the Interest Rate;
Conditions Favorable to Saving; Influence of the Interest Rate on Methods of Production [159]
PART II
The Value of Human Services [171]-355
DIVISION A—LABOR AND WAGES
20 Labor and Classes of Laborers: Relation of Labor to Wealth; Varieties of Talents and of Abilities
in Men [173]
21 The Supply of Labor: What Is a Doctrine of Population? Population in Human Society; Current Aspect
of the Population Problem [184]
22 Conditions for Efficient Labor: Objective Physical Conditions; Social Conditions Favoring Efficiency;
Division of Labor [195]
23 The Law of Wages: Nature of Wages and the Wages Problem; The Different Modes of Earning Wages;
Wages as Exemplifying the General Law of Value [205]
24 The Relation of Labor to Value: Relation of Rent to Wages, Relation of Time-value to Wages; The
Relation of Labor to Value [215]
25 The Wage System and its Results: Systems of Labor; The Wage System as it Is; Progress of the Masses
Under the Wage System [226]
26 Machinery and Labor: Extent of the Use of Machinery; Effect of Machinery on the Welfare and Wages
of the Masses [236]
27 Trade-unions: The Objects of Trade-unions; The Methods of Trade-unions; Combination and Wages [245]
DIVISION B—ENTERPRISE AND PROFITS
28 Production and the Combination of the Factors: The Nature of Production; Combination of the Factors [257]
29 Business Organization and the Enterpriser's Function: The Direction of Industry; Qualities of a Business
Organizer; The Selection of Ability [265]
30 Cost of Production: Cost of Production from the Enterpriser's Point of View; Cost of Production from
the Economist's Standpoint [273]
31 The Law of Profits: Meaning of Terms; The Typical Enterpriser's Services Reviewed; Statement of the
Law of Profits [282]
32 Profit-sharing, Producers' and Consumers' Coöperation: Profit-sharing; Producers' Coöperation; Consumers'
Coöperation [292]
33 Monopoly Profits: Nature of Monopoly; Kinds of Monopoly; The Fixing of a Monopoly Price [302]
34 Growth of Trusts and Combinations in the United States: Growth of Large Industry in the United
States; Advantages of Large Production; Causes of Industrial Combinations [312]
35 Effect of Trusts on Prices: How Trusts Might Affect Prices; How Trusts Have Affected Prices [323]
36 Gambling, Speculation, and Promoters' Profits: Gambling vs. Insurance; The Speculator as a Risk taker;
Promoter's and Trustee's Profits [333]
37 Crises and Industrial Depressions: Definition and Description of Crises; Crises in the Nineteenth
Century; Various Explanations of Crises [345]
PART III
The Social Aspects of Value [357]-563
DIVISION A—RELATION OF PRIVATE INCOME TO SOCIAL WELFARE
38 Private Property and Inheritance: Impersonal and Personal Shares of Income; The Origin of Private
Property; Limitations of the Right of Private Property [359]
39 Income and Social Service: Income from Property; Income from Personal Services [370]
40 Waste and Luxury: Waste of Wealth; Luxury [381]
41 Reaction of Consumption on Production: Reaction upon Material Productive Agents; Reaction upon
the Efficiency of the Workers; Effects on the Abiding Welfare of the Consumer [392]
42 Distribution of the Social Income: The Nature of Personal Distribution; Methods of Personal Distribution [402]
43 Survey of the Theory of Value: Review of the Plan Followed; Relation of Value Theories to Social
Reforms; Interrelation of Economic Agents [412]
DIVISION B—RELATION OF THE STATE TO INDUSTRY
44 Free Competition and State Action: Competition and Custom; Economic Harmony through Competition;
Social Limiting of Competition [422]
45 Use, Coinage, and Value of Money: The Precious Metals as Money; The Quantity Theory of Money [431]
46 Token Coinage and Government Paper Money: Light-Weight Coins; Paper Money Experiments; Theories
of Political Money [443]
47 The Standard of Deferred Payments: Function of the Standard; International Bimetallism; The Free-silver
Movement in America [453]
48 Banking and Credit: Functions of a Bank; Typical Bank Money; Banks of the United States To-day [462]
49 Taxation in its Relation to Value: Purposes of Taxation; Forms of Taxation; Principles and Practice [471]
50 The General Theory of International Trade: International Trade as a Case of Exchange; Theory of
Foreign Exchanges of Money; Real Benefits of Foreign Trade [480]
51 The Protective Tariff: The Nature and Claims of Protection; The Reasonable Measure of Justification
of Protection; Values as Affected by Protection [491]
52 Other Protective Social and Labor Legislation: Social Legislation; Labor Legislation [504]
53 Public Ownership of Industry: Examples of Public Ownership; Economic Aspects of Public Ownership [514]
54 Railroads and Industry: Transportation as a Form of Production; The Railroad as a Carrier; Discrimination
in Rates on Railroads [525]
55 The Public Nature of Railroads: Public Privileges of Railroad Corporations; Political and Economic
Power of Railroad Managers; Commissions to Control Railroads [534]
56 Public Policy as to Control of Industry: State Regulation of Corporate Industry; Difficulties of
Public Control of Industry; Trend of Policy as to Public Industrial Activity [544]
57 Future Trend of Values: Past and Present of Economic Society; The Economic Future of Society [555]
Questions and Critical Notes [565]
Index [595]
PREFACE
This book had its beginning ten years ago in a series of brief discussions supplementing a text used in the class-room. Their purpose was to amend certain theoretical views even then generally questioned by economists, and to present most recent opinions on some other questions. These critical comments evolved into a course of lectures following an original outline, and were at length reduced to manuscript in the form of a stenographic report made from day to day in the class-room. The propositions printed in italics were dictated to the class, to give the key-note to the main divisions of the argument. Repeated revisions have shortened the text, cut out many digressions and illustrations, and remedied many of the faults both of thought and of expression; but no effort has been made to conceal or alter the original and essential character of the simple, informal, class-room talks by teacher to student. To this origin are traceable many conversational phrases and local illustrations, and the occasional use of the personal form of address.
The lectures, at the outset, sought to give merely a summary of widely accepted economic theory, not to offer any contribution to the subject. While they were in progress, however, special studies in the evolution of the economic concepts were pursued, and the manuscript of a book on that more special subject was carried well toward completion. That work, which it is hoped some time to complete, was, for several reasons, put aside while the present text was preparing for publication. The economic theories of the present transition period show many discordant elements, yet the author felt that his attempt to unify the statement of principles, in an elementary text explaining modern problems, and consistent in its various parts, helped to reveal to him both difficulties and possible solutions in the more special theoretical field. The unforeseen outcome of these varied studies is an elementary text embodying a new conception of the theory of distribution, an outline of which will be found in Chapter Forty-three. It is, in brief, a consistently subjective analysis of the relations of goods to wants, in place of the admixture of objective and subjective distinctions found in the traditional conceptions of rent, interest, and price.
The beginning of the systematic study of economics, like the first steps in a language, is difficult because of the entire strangeness of the thought, and it is not to be hoped that any pedagogic device can do away with the need of strenuous thinking by the student. The aim, however, in the development of this theory of distribution, has been to proceed by gradual steps, as in a series of geometrical propositions, from the simple and familiar acts and experiences of the individual's every-day life, through the more complex relations, to the most complex, practical, economic problems of the day. The hope has long been entertained by economists that a conception of the whole problem of value would be attained that would coördinate and unify the various "laws,"—those of rent, wages, interest, etc. This solution has here been sought by a development of recent theories, the unit of the complex problem of value being the simplest, immediate, temporary gratification.
Possibly some teachers will observe and regret the almost entire absence of critical discussions of controverted points in theory, which make up so large a part of some of the older texts. The more positive manner of presentation has been purposely adopted, and only such reference is made to conflicting views as is needed to guard the student against misunderstanding in his further reading. The author would not have it thought that he doubts the disciplinary value of economic theory or its scientific worth for more advanced students, for, on the contrary, he believes in it, perhaps to an extreme degree; but, for his own part, he has become convinced of the unwisdom of carrying on these subtle controversies in classes of beginners. The inherent difficulties of the subject are great enough, without the creation of new ones.