The basic facts of economics

by Louis F. Post

The “enterpriser” is a worker whose compensation for service is not fixed but depends upon the profitableness of the enterprise he pursues, which may be any business venture from mining or manufacturing to merchandizing, and in any capacity from employer seeking “profits” to salesman on “commission.” To eliminate this type of Economic service from the fundamental Labor category in Economic science is not only useless and misleading but also absurd. The fact that the “enterpreneur’s” service may or may not prove profitable to himself—the fact, in other words, that when he enters upon an enterprise he “takes chances” as to compensation—does not alter the Economic character of his functioning. He is none the less nor any the more in the Man category of Economics in contradistinction to the Natural Resource category and the Artificial Objects category. The only Economic difference, essentially, between him and the “common laborer” or “wage-worker”—except that one may be more serviceable than the other, individual for individual—is that the compensation of the “common laborer” or “wage-worker” is nominally secured by contract, whereas the “enterpriser’s” is contingent; and this difference is not fundamental. To take the “enterpriser” out of the Labor category in Economics by assigning him to a fourth fundamental category, is to trifle with Economic classifications. Why extend the basic categories of Economics from Natural Resources, Artificial Objects and Man, to Natural Resources, Artificial Objects, Man and Enterprisers?

A similar classification of Business itself—which, by the way, is usually managed by “enterprisers”—would likewise be absurd and trifling as well as confusing. What is legitimate Business but human service? And what else in Economic classification fundamentally can human service be but Labor? Business is in the Man class of Economics in contradistinction to the Natural Resource class and the Artificial Objects class. No other fundamental classifications are possible. Consequently, the activities of Business classify themselves naturally in the domain of Economics as Labor.

And so of the professions.

So, too, of every other kind of human service in the Productive Process, whether the service take on such direct forms of Production as making Artificial Objects and such as delivering them from hand to hand or place to place, or such indirect forms as promoting the comfort, the enjoyment, the health, the education, the cleanliness or what not (provided it be Economically legitimate), of such human workers as literally do make or deliver Artificial Objects. All are in the Labor category.

Labor comprises, too, the serviceable operations of partnerships as such; also of corporations, of chambers of commerce, of labor unions; the services of schools and churches and theaters and social clubs; of political parties and religious societies—every kind of corporate service, in short, including the service of governments—to the extent that such service contributes, in addition to the contributions of its constituents in their individual capacities, to the production of Artificial Objects.

And Production—let the reference to this fact be not overlooked—comprises Delivery throughout the whole Productive Process to and including its termination in delivery to ultimate consumers. Railway workers and sailors and storekeepers and household servants and waiters at hotels and restaurants and all their Economic associates from employer to “menial,” are producers as truly as are farmers, mechanics or manufacturers.

Human services of the corporate type, as well as those of the individual distinctively, are too numerous and too intricately woven together to permit of detailed consideration here. It is enough to note that far and away as some of them may at a glance seem to be from the Productive Process in Economics, they will be found upon intelligent inquiry—except as they may be more or less perverted in operation—to be in the Economic category of Labor. That is to say, they are human factors in the Production of Artificial Objects from and upon Natural Resources.

One kind of corporate service, a comprehensive kind, should perhaps be given brief special consideration for the double purpose of illustrating the Productive functions of every variety of corporate service and of explaining the Economic characteristics of that outstanding one of all. This particular kind is Government.

The “business” of Government, to use a colloquialism, the Labor of Government, to use the technical Economic term, is comprehensive and effective in the Productive Process to the degree—a reservation that applies to all other subclassifications of Labor, from the lowest grade of “hired man” to the most powerful partnership or corporation, from the most awkward apprentice to the shrewdest business “enterpriser,”—that its functions are wisely and fairly devoted to the task.

Governments are legislative, executive and judicial agencies of social wholes. It is their function to contribute service to the production of Artificial Objects by preserving public order, defining and protecting private rights, distinguishing and conserving common rights, and managing or providing for the management of common affairs. To the degree that governments faithfully exercise their legitimate public functions and refrain from interfering with legitimate private functions, they contribute to the Productive Process. This is demonstrated by observable Economic results. Wherever Government approximates a realization of its functions, Economic conditions are manifestly better than where it neglects or abuses them. Evidently, then, Government is a form of human service which, like all other human service forms, belongs as an Economic factor in the Labor category.