The basic facts of economics

by Louis F. Post

In other phrasing, Money is that secondary category in Economics which comprehends every kind and form of medium for trading commodities in the world-wide process that we descriptively characterize as “mankind making a living.” Mankind being a basic Economic category, and the process of making a living being the Economic human necessity and purpose, Money can have but one comprehensive significance in Economics. Be it in the form of coin, or in the form of paper currency, or in the form of entries in books of account (where it appears only in name and arithmetical denominations), it is the universal medium and Economic measuring rod of exchanges or trade.

Whether one makes Money or not depends, as a rule, upon which side of his accounts in ledgers the Money balance appears at final accountings. It is Money in this sense that goes farthest to justify the superficial definition of Economics as the science of making money.

We only skim the surface of Economic phenomena, however, by coming to an understanding of the nature and the function of Money. Money is only one of the secondary categories which must be identified and properly related in any thoughtful study of Economic science. Below that financial surface are phenomena which Money merely measures and compares. The first of those underlying phenomena is Trade, for which Money is the medium and upon which our attention must next be concentrated.

THIRD LESSON
TRADE

Trade, for which Money is the Economic medium and Money-terms the Economic language, consists superficially in interchanges of tangible commodities, but essentially in interchanges of human service.

Tangible commodities, with a semi-exception as to real estate, are produced by interchanges of human service from the very extreme of the primary production of those commodities to and including their final delivery for ultimate consumption. Real estate, too, is thus produced in so far as it consists of structures, of soil cultivation, of mining mechanisms, of excavations, or of any other kind of artificial alteration.

All commodities are subjects of Trade. Artificial commodities, such as depend upon human service for production, are not only subjects of Trade but are also its products. This is absolutely true of every kind of artificial commodity that is produced to completion, inclusive of final delivery, by means of Economic specializations—specializations in human service. The primary materials and the unfinished parts are gathered together and delivered, both in the intricate process and finally, by means of Trade.

A loaf of bread, for example, is brought to completion from harvest-field to bakery, and thence as a finished product, through many deliveries (including delivery to its ultimate consumer) by means of Trade. So is the implement with which it is cut at the consumer’s table, and the plate on which it rests, the table at which it is served, the cloth which covers the table, the chair in which the consumer sits at the table, and the dining room floor beneath them all.

Of the vast variety of such commodities as loaves of bread and knives for cutting them and plates and tables and tablecloths by means of which they are served for ultimate consumption, very few if any at all of that variety of commodities—whether finished, as a loaf of bread on the consumer’s table, or unfinished, as the growing grain or the flour of which the loaf is composed, or the fuel that bakes it, or the bricks or the metal of the baker’s oven, or the finished oven itself—give distinctive expression to all the human services they embody.

That fact could be further illustrated with any artificial commodity in course of Trade. A hogshead of molasses on a wharf would answer the purpose. To thoughtless observation this commodity might seem to embody no other human service than work on a sugar plantation and by barrel-makers in a coopering shop. But if we think about it with penetration and clarity, we readily realize that it embodies the services also of lumbermen, of miners, of railway workers, of bankers, possibly of importers and mariners, probably of exporters and their assistants, certainly of draymen, of wharfmen, of merchants, of book-keepers and other accountants—a veritable host of specialists whose contributory services are not emphasized by the tangible commodity (a hogshead of molasses on a wharf) as are the services of plantation-hands and barrel-makers. Multitudes of human services in distracting variety are concealed in that familiar commodity from the vision of all but specialists; perhaps from their vision too in so far as the services are outside of their respective specialties. And if we were to follow that hogshead of molasses to its Economic destination, we might perceive many an additional human service embodied and concealed in commodities of Trade for which the material would have been supplied in part by molasses from the hogshead and probably in part by the hogshead itself.