Economical Election

As soon as a society reaches a certain level of civilization, the growing division of labor causes the development of a special professional class which operates as an intermediary in exchanges and
performs for the other members of society not only the mechanical part of trading operations (shipping, distribution, the storing of goods, etc.), but also the task of keeping records of the available quantities.

Thus we observe that a specific class of people has a special professional interest in compiling data about the quantities of goods, so-called stocks in the widest sense of the word, currently at the disposal of the various peoples and nations whose trade they mediate. The data they compile cover trading regions that are smaller or larger (single counties, provinces, or even entire countries or continents) according to the position the intermediaries in question occupy in commercial life. They have, moreover, an interestin many other general kinds of information, but we will have occasion to discuss this at a later point.
The keeping of such statistical records, insofar as they relate to the quantities of goods currently at the disposal of sizeable groups of individuals, or even at the disposal of whole nations or groups of nations, meets, however, with not inconsiderable difficulties, since the exact determination of these stocks can be made only by means of a census. The procedure of a census presupposes a complicated apparatus of public officials, covering an entire trading area and equipped with the necessary powers. Such an apparatus can be supplied only by national governments, and by these only within their own territories. Moreover, a census fails to be efficient even within these limits, as is known to every expert, when it deals
with goods whose available quantities are not easily accessible to official enumeration. Read the rest of this entry »

If it is generally correct that clarity about the objective of their endeavors is an essential factor in the success of every activity of men, it is also certain that knowledge of requirements for goods in future time periods is the first prerequisite for the planning of all human activity directed to the satisfaction of needs. Whatever may be the external conditions, therefore, under which this activity of men develops, its success will be dependent principally upon correct foresight of the quantities of goods they will find necessary in
future time periods-that is, upon correct advance formulation of their requirements. It is clear also that a complete lack of foresight would make any planning of activity directed to the satisfaction of human needs completely impossible.

The second factor that determines the success of human activity is the knowledge gained by men of the means available to them for the attainment of the desired ends. Wherever, therefore, men may be observed in activities directed to the satisfaction of their needs, they are seen to be seriously concerned to obtain as exact a knowledge as possible of the quantities of goods available to them for this purpose. How they proceed to do so is the subject that will occupy us in this section.

The quantities of goods available, at any time, to the various members of a society are set by existing circumstances, and in determining these quantities the only problems they have are to measure and take inventory of the goods at their disposal. The ideal result of these two varieties of provident human activity is the complete enumeration of the goods available to them at a givenpoint in time, their classification into perfectly homogeneous categories, and the exact determination of the number of items in each
category. In practical life, however, far from pursuing this ideal, men customarily do not even attempt to obtain results as fully exact as is possible in the existing state of the arts of measuring and taking inventory, but are satisfied with just the degree of exactness that is necessary for practical purposes. Yet it is significant evidence of the great practical importance that exact knowledge of the existing quantities of goods available to them has for many people that we find a quite exceptional degree of exactness of this knowledge among merchants, industrialists, and such persons generally as have developed a high degree of provident activity. But even at the lowest levels of civilization we encounter a certain amount of
knowledge of the available quantities of goods, since it is evident that a complete lack of this knowledge would make impossible any provident activity of men directed to the satisfaction of their needs. Read the rest of this entry »

In our present investigation, the only topic still remaining to be taken into consideration is the problem of time, and we must demonstrate for what time periods men actually plan their requirements.

On this question, it is clear, in the first place, that our requirements for goods of first order appear to be met, with reference to a given future time period, if, within this time period, we will be in the position of having directly at our disposal the quantities of goods of first order that we require. It is different if we must meet our requirements for goods of first or, in general, of lower order indirectly (that is, by means of quantities of the corresponding goods of higher order), because of the lapse of time that is inevitable in any production process. Let us designate as Period I the time period that begins now and extends to the
point in time when a good of first order can be produced from the corresponding goods of second order now at our disposal. Let us call Period II the time period following Period I and extending to the point in time when a good of first order can be produced from the goods of third order now available to us. And similarly, let us designate the following time periods III, IV, and so on. A sequence of time periods is thus defined for each particular kind of good. For each of these time periods we have immediate and direct
requirements for the good of first order, and these requirements are actually met since, during these time periods, we come to have direct command of the necessary quantities of the good of first order. Read the rest of this entry »

From what has been said, we derive the principle that, with respect to given future time periods, our effective requirements for particular goods of higher order are dependent upon the availability of complementary quantities of the corresponding goods of higher order.

When cotton imports to Europe declined considerably because of the American Civil War, requirements for cotton piece goods remained evidently quite unaffected since that war could not change the needs for these goods significantly. To the extent to which there were future requirements for cotton piece goods that were not already met by finished manufactured products, there were also, as a result, requirements for the corresponding quantities of goods of higher order necessary for the production of cotton cloth. Hence these requirements also could not, on the whole, be altered significantly in any way by the civil war. But since the available quantity of one of the necessary goods of higher order, namely raw cotton, declined considerably, the natural consequence was that a part of the previous requirements for goods complementary to raw cotton with respect to the production of cotton cloth (labor services, machines, etc.) became latent, and the effective requirements for them diminished to such quantities as were necessary for processing the available quantities of raw cotton. As soon, however, as imports of raw cotton revived again, the effective requirements for these goods also experienced an increase-to the exact extent, of course, that the latent requirements diminished. Read the rest of this entry »

If our requirements for goods of first order for a coming time period are already directly met by existing quantities of these goods, there can be no question of a further provision for these same requirements by means of goods of higher order. But if these requirements are not met, or are not completely met, by  existing goods of first order (that is, if they are not met directly), requirements for goods of higher order for the time period in question do arise. These requirements are the quantities of goods of higher order that are necessary, in the existing state of technology of the relevant branches of production, for supplying our full requirements for goods of first order.

The simple relationship just presented with respect to our requirements for the means of production is to be observed, however, as we shall see in what follows, only in rare cases. An important modification of this principle arises from the causal interrelationships between goods. Read the rest of this entry »

The circumstance that it is uncertain whether a need for a good will be felt during the period of our plans does not, therefore, exclude the possibility that we will provide for its eventual satisfaction, and hence does not cause the reality of our requirements for goods necessary to satisfy such needs to be in question. On the contrary, men provide in advance, and as far as their means permit, for the eventual satisfaction of these needs also, and include the goods necessary for their satisfaction in their calculations whenever they determine their requirements as a whole.5

But what has been said here of needs whose appearance is altogether uncertain is fully as true where there is no doubt that a need for a good will arise but only uncertainty as to the intensity with which it will be felt, since in this case also men correctly consider their requirements to be fully met when they are able to have at their disposal quantities of goods sufficient for all anticipated eventualities.

A further point that must be taken into consideration here is the capacity of human needs to grow. If  human needs are capable of growth and, as is sometimes maintained, capable of infinite growth, it could appear as if this growth would extend the limits of the quantities of goods necessary for the satisfaction of human needs continually, indeed even to complete infinitely, and that therefore any advance provision by men with respect to their requirements would be made utterly impossible. Read the rest of this entry »

A. Requirements for goods of first order (consumption goods).

Human beings experience directly and immediately only needs for goods of first order-that is, for goods that can be used directly for the satisfaction of their needs (p. 56). If no requirements for these goods existed, none for goods of higher order could arise. Requirements for goods of higher order are thus
dependent upon requirements for goods of first order, and an investigation of the latter constitutes the necessary foundation for the investigation of human requirements in general. We shall first, accordingly, be occupied with human requirements for goods of first order, and then with an exposition of the principles according to which human requirements for goods of higher order are regulated.

The quantity of a good of first order necessary to satisfy a concrete human need4 (and hence also the quantity necessary to satisfy all the needs for a good of first order arising in a certain period of time) is determined directly by the need itself (by the needs themselves) and bears a direct quantitative relationship to it (them). If, therefore, men were always correctly and completely informed, as a result of previous experience, about the concrete needs they will have, and about the intensity with which these
needs will be experienced during the time period for which they plan, they could never be in doubt about the quantities of goods necessary for the satisfaction of their needs-that is, about the magnitude of their requirements for goods of first order. Read the rest of this entry »

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Needs arise from our drives and the drives are imbedded in our nature. An imperfect satisfaction of needs leads to the stunting of our nature. Failure to satisfy them brings about our destruction. But to satisfy our needs is to live and prosper. Thus the attempt to provide for the satisfaction of our needs is synonymous with the attempt to provide for our lives and well-being. It is the most important of all human endeavors, since it is the prerequisite and foundation of all others.

In practice, the concern of men for the satisfaction of their needs is expressed as an attempt to attain command of all the things on which the satisfaction of their needs depends. If a person has command of all the consumption goods necessary to satisfy his needs, their actual satisfaction depends only on hiswill. We may thus consider his objective as having been attained when he is in possession of these goods, since his life and wellbeing are then in his own hands. The quantities of consumption goods a person must have to satisfy his needs may be termed his requirements.1 The concern of men for the maintenance of their lives and well-being becomes, therefore, an attempt to provide themselves with their requirements. Read the rest of this entry »

The needs of men are manifold, and their lives and welfare are not assured if they have at their disposal only the means, however ample, for the satisfaction of but one of these needs. Although the manner, and the degree of completeness, of satisfaction of the needs of men can display an almost unlimited variety, a certain harmony in the satisfaction of their needs is nevertheless, up to a certain point, indispensable for the preservation of their lives and welfare. One man may live in a palace, consume the choicest foods, and dress in the most costly garments. Another may find his resting place in the dark corner of a miserable hut, feed on leftovers, and cover himself with rags. But each of them must try to satisfy his needs for shelter and clothing as well as his need for food. It is clear that even the most complete satisfaction of a single need cannot maintain life and welfare.

In this sense, it is not improper to say that all the goods an economizing individual has at his command are mutually interdependent with respect to their goods-character, since each particular good can achieve the end they all serve, the preservation of life and well-being, not by itself, but only in combination with the  other goods.

In an isolated household economy, and even when but little trade exists between men, this joint purpose of the goods necessary for the preservation of human life and welfare is apparent, since all of them are at the disposal of a single economizing individual. The harmony of the needs that the individual households attempt to satisfy is reflected in their property.12 At a higher stage of civilization, and particularly in our highly developed exchange economy, where possession of a substantial quantity of any one economic
good gives command of corresponding quantities of all other goods, the interdependence of goods is seen less clearly in the economy of the individual members of society, but appears much more distinctly if the economic system as a whole is considered.

We see everywhere that not single goods but combinations of goods of different kinds serve the purposes of economizing men. These combinations of goods are at the command of individuals either directly, as is the case in the isolated household economy, or in part directly and in part indirectly, as is the case in our developed exchange economy. Only in their entirety do these goods bring about the effect that we call the satisfaction of our requirements, and in consequence, the assurance of our lives and welfare.

The entire sum of goods at an economizing individual’s command for the satisfaction of his needs, we call his property. His property is not, however, an arbitrarily combined quantity of goods, but a direct reflection of his needs, an integrated whole, no essential part of which can be diminished or increased without affecting realization of the end it serves.

Taken From : PRINCIPLES OF ECONOMICS