[4] “Short History of British Agriculture,” By John Orr. Oxford University Press, 1922.
The earliest expression of this principle was by Henry George in 1879. Alluding to Political Economy, the term by which Economics was then identified, he wrote: “It lays its foundations upon firm ground. The premises from which it makes its deductions are truths which have the highest sanction; axioms which we all recognize; upon which we safely base the reasoning and actions of every-day life, and which may be reduced to the metaphysical expression of the physical law that motion seeks the line of least resistance—viz., that men seek to gratify their desires with the least exertion.”[5]
[5] “Progress and Poverty: An Inquiry into the Cause of Industrial Depressions, and of Increase of Want With Increase of Wealth. The Remedy.” By Henry George. New York: D. Appleton and Company. 1883.
In the Economic realm all human exertion is usually and appropriately distinguished by the technical term “Labor.” This Economic term for human exertion in the production of satisfactions for human wants has been much abused by colloquial interpretations. So interpreted, Labor is often limited in meaning to the exertions of persons hired in “lower class” pursuits for fixed “wages.” For somewhat “higher” grades of service, “salaries” instead of “wages” are paid. For self-employers still other terms are colloquially used, such as “profits” for the services of merchants and manufacturers and contractors; “fees” for the services of lawyers and physicians; “commissions” for the services of salesmen and brokers; and “discounts” for the services of bankers. Those verbal variations are of course admissible for such secondary purposes as private business may require; but for fundamental or general Economic distinctions which concern the whole human family, they are recklessly undiscriminative and hopelessly confusing. This lack of discrimination is attributable to a tendency in Economic study toward devotion to infinite detail regardless of precise generalization.
The result is a confusion of fundamentally different objects in messy categories, such as Labor with Labor-products; such as Labor-products with Natural Resources; such as income from Natural Resources with income from Labor—as, for instance, “Land” (Natural Resources) with “Capital” (Artificial Objects). It is like thinking of oil and water as a chemical compound when they happen to be in the same receptacle.
Fundamental conclusions in Economics cannot be based upon unassorted details. Students must concentrate their study upon the big facts, the Basic Facts, those primary categories which distinctively classify the whole swarm of secondary facts. Well enough it may be not to start out with assumed principles, nor with the scientific substitute known as “hypotheses;” but all rational study of Economics must begin with the Basic Facts and proceed thence to a consideration of details with reference to their basic relations.
The distinctive phase of the present Lesson with reference to human exertion is exertion of the Economic type. Whatever its kind as matter of secondary classification, all human exertion comes within the meaning of the comprehensive Economic term for human service, which, as already stated, is Labor.
No more truly in the Labor category are the services of “wage-workers” than are those of farmers, of manufacturers, of merchants, of brokers, of bankers, of architects, of lawyers, of physicians, of engineers, of authors, publishers, teachers, or the services of any other useful workers who participate in the intricate processes of Economic production. All are within the Labor category. Be the Economic service whatever it may which any human being—from inventor to chattel slave—contributes to the satisfaction of human wants, such service belongs in the same basic category with every other Economic service. Consequently, it must be identified in fundamental Economic classification by the same technical term.
What term may be best for that purpose is of minor importance, if of any importance at all, since names are for identification rather than description. Consequently, the technical term Labor, adopted long ago by Economists of the highest rank to identify human service in Economics, is fully justified regardless of its descriptive qualities. Even as a descriptive term, what other word could better identify human service as a whole?
Among the outstanding minor classifications of Labor is Business, and to this another attaches which some advanced students in Economics classify by itself fundamentally. The latter is the service of the “entrepreneur” or “enterpriser.” As a secondary classification this distinction is probably useful; but for comprehensive Economic study it is as useless as “carpenter” or “bricklayer” would be. Worse yet, it is misleading.