The basic facts of economics

by Louis F. Post

The second Basic Fact is Natural Resources, without which Man could not exist. Natural Resources comprise the surface of our globe, together with all natural objects external to Man and in their natural condition, upon the surface, under the surface, and above the surface, including the air surrounding the surface.

Through applications of the energies of the first to the offerings of the second, Artificial Objects are produced, and these constitute the third of the three.

To one or another of those three natural categories every variety of detail that may be involved in any Economic problem must be assigned. Not so to assign those details to their appropriate categories is to invite confusion of thought and to risk arriving at false and socially dangerous conclusions.

The Economic student who mixes such Natural Resources as building sites with such Artificial Objects as buildings, or natural deposits of minerals with mining machinery, or natural surfaces with railway roadbeds and tracks and equipment, or farming tracts with farm improvements, or human slaves with real estate or stocks of merchandize or factory mechanisms, makes an inexcusable blunder.

Such mixtures may be unobjectionable in accountings of the assets of a private business for private purposes; but in general Economics they are perplexing and misleading. In this comprehensive social science every Economic detail must be classified in harmony with the three Basic Facts—Man, Natural Resources and Artificial Objects,—or confused thinking will result. To make those classifications, however, is to lay a firm foundation for correctly estimating Economic phenomena of all possible kinds and in all their relations.

The human factor, Man—an impossibility without Natural Resources in the comprehensive sense of that term,—applies his energies of mind and body to the Natural Resources of our terrestrial globe and its enveloping atmospheres, thereby producing and for his satisfaction consequently consuming every variety of Artificial object within the range of his Economic desires and his Economic capabilities. This is true of Man and of Man only.

Lower animals do not produce Artificial Objects. Do they cultivate? No. Do they design or invent? No. Do they Trade? No. Do they in any way improve? No. As was eloquently said by a distinguished Economist of the last century, “the sea-gull of the English Channel who poises himself above the swift steamer, wants no better food or lodging than the gulls who circled round as the keels of Caesar’s galleys first grated on a British beach.”

If wild birds make nests and wild animals make burrows or build dams, and wild bees make honey, so do wild berry bushes grow berries and wild apple trees bear apples; yet who would think of classifying wild fruits as Artificial Objects? Manifestly, uncultivated fruit is as truly in the category of Natural Resources as is the wild tree or bush that bears it. And how do wild animals and their characteristic products differ in that respect from wild fruit bushes and wild fruit trees? Evidently in no wise at all. Their products of nest and burrow and water-dam and all the rest, like the leafing and the fruitage of the tree and the bush, are natural objects. They are not artificial. An Artificial Object is a product of human invention and construction. For every purpose of Economic classification, wild animals, like wild trees and wild bushes and wild Nature in all its varieties, belong in the category of Natural Resources. When the wild trees or the wild bushes are cultivated, or the wild animals are domesticated, they pass into the category—as manifestly as buildings and farm produce do—of Artificial Objects drawn forth from and upon Natural Resources by Man.

If now we unravel the countless and confusing Economic phenomena of our world by assigning each miscellaneous fact as it faces us to its natural place in the three categories or Basic Facts, and then observe with common-sense acuteness the natural laws of cause and effect that govern the mutual relations of those Basic Facts, we put ourselves in position to solve correctly every Economic problem that can challenge solution. Not to do so is to invite confusion of thought and false conclusions. Those Basic Facts are the “Big Three” of the Economic universe.

Hints at all this came to us in passing through our Lesson on Economics, our Lesson on Money, and our Lesson on Trade. For confirmation of those hints and of the generalizations of the present Lesson, let us with Money in hand and Trade in mind visit one of the Trade terminals which are known in every-day speech as “retail stores.”