Economical Election

In the two preceding sections we examined the nature and origin of human economy, and demonstrated that the difference between economic and non-economic goods is ultimately founded on a difference, capable of exact determination, in the relationship between requirements for and available quantities of these goods.

But if this has been established, it is also evident that the economic or non-economic character of goods is nothing inherent in them nor any property of them, and that therefore every good, without regard to its internal properties or its external attributes, attains economic character when it enters into the quantitative
relationship explained above, and loses it when this relationship is reversed.10

Economic character is by no means restricted to goods that are the objects of human economy in a social context. If an isolated individual’s requirements for a good are greater than the quantity of the good available to him, we will observe him retaining possession of every unit at his command, conserving it for employment in the manner best suited to the satisfaction of his needs, and making a choice between needs that he will satisfy with the quantity available to him and needs that he will leave unsatisfied. We will also find that the same individual has no reason to engage in this activity with respect to goods that are available to him in quantities exceeding his requirements. Hence economic and noneconomic goods also exist for an isolated individual. The cause of the economic character of a good cannot therefore be the fact that it is either an “object of exchange” or an “object of property.” Nor can the fact that some goods are products of labor while others are given us by nature without labor be represented with any greater justice as the criterion for distinguishing economic from non-economic character, in spite of the fact that a great deal of clever reasoning has been devoted to attempting to interpret actual phe- nomena that contradict this view in a sense that does not. For experience tells us that many goods on which no labor was expended (alluvial land, water power, etc.) display economic character whenever they are available in quantities that do not meet our requirements. Nor does the fact that a thing is a product of labor by itself necessarily result in its having goods-character, let alone economic character. Hence the labor expended in the production of a good cannot be the criterion of economic character. On the contrary, it is evident that this criterion must be sought exclusively in the relationship between requirements for and available quantities of goods.

Experience, moreover, teaches us that goods of the same kind do not show economic character in some places but are economic goods in other places, and that goods of the same kind and in the same place attain and lose their economic character with changing circumstances.

While quantities of fresh drinking water in regions abounding in springs, raw timber in virgin forests, and in some countries even land, do not have economic character, these same goods exhibit economic character in other places at the same time. Examples are no less numerous of goods that do not have economic character at a particular time and place but which, at this same place, attain economic character at another time. These differences between goods and their changeability cannot, therefore, be based on the properties of the  goods. On the contrary, one can, if in doubt, convince oneself in all cases, by an exact and careful examination of these relationships, that when goods of the same kind have a different character in two different places at the same time, the relationship between requirements and available quantities is different
in these two places, and that wherever, in one place, goods that originally had non-economic character become economic goods, or where the opposite takes place, a change has occurred in this quantitative
relationship.

According to our analysis, there can be only two kinds of reasons why a non-economic good becomes an economic good: an increase in human requirements or a diminution of the available quantity.

The chief causes of an increase in requirements are: (1)
growth of population, especially if it occurs in a limited area, (2)
growth of human needs, as the result of which the requirements of any given population increase, and (3) advances in the knowledge men have of the causal connection between things and their welfare, as the result of which new useful purposes for goods arise.

Taken From : PRINCIPLES OF ECONOMICS