Subordination, submission. In contrast to leadership man longs at times to follow a fit leader. Soldiers joy in a firm captain, workmen will quit a lax though philanthropic employer, instructors thresh under an inefficient though indulgent department head. Eternal independence and its necessary strife are too wearing on the common man, and he longs for peace and protection in the shadow of a trustinspiring leader. To "submit" under right conditions is not only psychically pleasant, but much of the time to be leaderless is definitely distressing. Display, vanity, ostentation. This odd disposition gives the basic concept for Veblen's remarkable analysis of the economic activities of America's leisure class. The particular state of the industrial arts with its trust control and divorce of producer and consumer plus political peace has taken from man his ancient opportunity to show his unique gifts in ownership of economic goods and in valor, so he is driven, in his yearning for attention, to perverted activities. He lives to waste conspicuously, wantonly, originally, and by the refined uselessness of his wasting show to the gaping world what an extraordinary person he is. The sensitiveness of social matrons to mention in the society columns, the hysteria to be identified with the changing vagaries of the style, the fear of identification with drab and useful livelihoods offer in their infinite varieties a multitude of important economic phenomena. Sex. Of the subjects vital to an analysis of life, be it aesthetic or economic, sex has suffered most from revulsion taboos. Manifestly an instinct which molds behavior and purposeful planning profoundly, sex as a motive concept is barred from the economic door. Despite the proven moral and efficiency problems which arise with the postponement of marriage due to modern economic conditions, conventional morality meets the situation literally by denying the sex instinct. A consideration of such factors as suggested in the foregoing list will make possible a healthful revamping of theories of value, of efficiency, of labor peace. Things will have value to man according as they contribute to his full psychological life, as they promote the expression of his instinct potentialities. Price will with justice, be relegated to its place as the football of market vagaries, of changing fads, of folkway convenience. Pecuniary civilization will rank with, and as no more important than, the cruder civilizations which dot the paleolithic and neolithic human eras. The evolutionary concept will replace the odd faith in the permanency of the capitalistic order which radiates from modern conventional economics. 104. SOME SHORTCOMINGS OF SELF-INTEREST' Assuming as universal an intelligent and alert pursuit of the interest of self and family, it is argued that wealth and other purchasable commodities will be produced in the most economic way if every member of society is left free to produce and transfer to others whatever utilities he can, on any terms that may be freely arranged. For the regard for self-interest on the part of consumers will lead always to the effectual demand of things that are most useful; and regard for self-interest on the part of producers will lead to their production at the least cost. That is, the production of each commodity will stop at the point at which an extra quantum would be socially estimated as less useful than something else that could be produced at the same cost. This conception of the single force of self-interest, creating and keeping in true economic order the vast and complete fabric of social industry, is very fascinating; and it is not surprising that, in the first glow of the enthusiasm excited by its revelation, it should have been unhesitatingly accepted as presenting the ideal condition of social relations, and final goal of political progress. And I believe that the conception contains a very large element of truth; the motive of self-interest does work powerfully and continually in the manner above indicated; and the difficulty of finding any adequate substitute for it, either as an impulsive or as a regulating force, is an almost invincible obstacle in the way of reconstructing society on any but its present individualistic bases. We have still to observe that men may prefer repose, leisure, reputation, etc., to any utilities whatever that they could obtain by labouring. Thus the freeing of a servile population may cause a large diminution of production (in the widest sense of the term), because the freedmen are content with what they can get by a much smaller amount of labour than their masters forced them to perform. In short, "natural liberty" can only tend to the production of maximum wealth, so far as this gives more satisfaction on the whole than any other employment of time. 'Adapted by permission from Henry Sidgwick, Principles of Political Economy, pp. 401-13. (Macmillan & Co., Ltd., 1887.) The importance of this qualification becomes more clear when it is viewed in connection with another. In the abstract argument, by which the system of natural liberty is shown to lead to the most economic production, it has to be implicitly assumed that all the different parts of produce are to be measured, at any one time and place, by their exchange value. There is no reason why, even in a community of most perfectly economic men, a few wealthy landowners, fond of solitude, scenery, or sport, should not find an interest in keeping from cultivation large tracts of land naturally fit for the plough or for pasture; or why large capitalists generally should not prefer to live on the interest of their capital, without producing personally any utilities whatsoever. The waste of social resources that might result in this way is likely to be greater the nearer a man approaches the close of life, so far as we suppose self-interest to be his governing principle of action. Unless he is sympathetic enough to find his greatest happiness in beneficence, it may clearly be his interest, as his end draws near, to spend larger and larger sums on smaller and smaller enjoyments. So far, indeed, as a man has any descendants to inherit from him, it is perhaps legitimate to assume, as political economists generally do, that he will generally wish to keep at least his capital intact for the sake of his heirs; but it is difficult to see what ground there is for making any such assumption in the case of persons unmarried or childless. On similar grounds it may not be A's interest to expend wealth or labour in increasing the efficiency of B, even when such outlay would be socially most remunerative, if it is either impossible, or at any rate a difficult and hazardous business, for A to appropriate an adequate share of the resulting increment of utility. There is a large and varied class of cases in which private interest cannot be relied upon as a sufficient stimulus to the performance of the most socially useful services, because such services are incapable of being appropriated by those who produce them or who would otherwise be willing to purchase them. For instance, it may easily happen that the benefits of a well-placed lighthouse must be largely enjoyed by ships on which no toll could be conveniently imposed. So, again, if it is economically advantageous to a nation to keep up forests, on account of their beneficial effects in moderating and equalizing rainfall, the advantage is one which private enterprise has no tendency to provide, since no one could appropriate and sell improvements in climate. Scientific discoveries, again, however ultimately profitable to industry, have not, generally speaking, a market value on the same ground; the inventions in which the discovery is applied can be protected by patents; but the extent to which any given discovery will aid invention is mostly so uncertain that, even if the secret of a law of nature could be conveniently kept it would not be worth an inventor's while to buy it in the hope of being able to make something of it. There are other cases, again, in which there would be no difficulty in appropriating and selling a commodity, but in which the waste of time, trouble, and expense involved in such sale would render it on the whole a less economical arrangement for the community than the alternative of providing the commodity out of public funds. For instance, this is likely to be the case with much-frequented roads, such as streets and bridges in a town. On the other hand, private enterprise may sometimes be socially uneconomical because the undertaker is able to appropriate, not less, but more, than the whole net gain of his enterprise to the community; for he may be able to appropriate the main part of the gain of a change causing both gain and loss, while the concomitant loss falls entirely upon others. But, again, the importance to each individual of finding purchasers for his commodity also leads to a further waste, socially speaking, in the expenditure incurred for the sole purpose of attaining this result. A large part of the cost of advertisements, of agents and "travellers," of attractive shop fronts, etc., comes under this head. Hitherto we have not made any distinction between the interests of living men and those of remote generations. But if we are examining the merits and demerits of the purely individualistic or competitive organization of society from the point of view of universal humanity it should be observed that it does not necessarily provide to an adequate extent for utilities distant in time. So far I have left unquestioned the assumption-fundamental in the system of natural liberty-that individuals are the best judges of the commodities that they require, and of the sources from which they should be obtained, provided that no wilful deception is practiced. [NOTE. The discussion of the rôle of the individual in our economic activities should not blind us to the importance of association both as an agency of control and as an agency of direct activity.] See 138. Classes of Corporations. 290. Trade Associations. 293. Forces Making for Combination. 325. Some Responsible Agents (especially section 4). F. The Apportionment of Productive Energy 105. PRODUCTIVE ENERGY AND ITS APPORTIONMENT Let us use the long-established terms, land, labor, capital, and organization, to express in a generalized way the elements of productive energy. Beyond stating that they are the results of generations of development, let us not consider how the present amounts of these elements came into existence or why they happen to have their present proportions to each other. In any given year, say 1917, the total product of the community will be the result of land, labor, and capital organized in industrial and commercial processes. Land Labor Organization Product Capital So much for 1917. But what of 1918, 1919, and all the following years? Will the product of 1918 be equal to that of 1917? Will it be smaller? Will it be greater? There can be no doubt that the issue is one of physical fact and not of good intentions or of legerdemain. If the productive agents, land, labor, and capital, are in better condition and are better organized, the product will be greater; if not, the product will be less. Will land be more efficient as a productive force in 1918 than in 1917? The answer will depend upon many factors. Has new and |