DIFFICULTIES OF ECONOMIC NOMENCLATURE. 103 CH. I. But on the other hand we must keep constantly in mind BOOK II. the history of the terms which we use. For, to begin with, this history is important for its own sake; and because it throws side lights on the history of the economic development of society. And further, even if the sole purpose of our study of economics were to obtain knowledge that would guide us in the attainment of immediate practical ends, we should yet be bound to keep our use of terms as much as possible in harmony with the traditions of the past; in order that we might be quick to perceive the indirect hints and the subtle and subdued warnings, which the experiences of our ancestors offer for our instruction. of terms must fol closely as tice of § 3. Our task is difficult. In physical sciences indeed, In its use whenever it is seen that a group of things have a certain set economics of qualities in common, and will often be spoken of together, they are formed into a class with a special name; and as soon possible as a new notion emerges, a new technical term is invented the practo represent it. But economics cannot venture to follow this example. Its reasonings must be expressed in language that is intelligible to the general public; it must therefore endeavour to conform itself to the familiar terms of every-day life, and so far as possible must use them as they are commonly used. every-day life. not always consistent; In common use almost every word has many shades of But that is meaning, and therefore needs to be interpreted by the con- definite or text. And, as Bagehot has pointed out, even the most formal writers on economic science are compelled to follow this course; for otherwise they would not have enough words at their disposal. But unfortunately they do not always avow that they are taking this freedom; sometimes perhaps they are scarcely even aware of the fact themselves. The bold and rigid definitions, with which their expositions of the science begin, lull the reader into a false security. Not being warned that he must often look to the context for a The substitution of the term "interest" for "usury" corresponds to a general change in the character of loans, which has given an entirely new key-note to our analysis and classification of the different elements into which the cost of production of a commodity may be resolved. Again, the general scheme of division of labour into skilled and unskilled is undergoing a gradual change; the scope of the term "rent" is being broadened in some directions and narrowed in others; and so on. CH. I. BOOK II. special interpretation clause, he ascribes to what he reads a meaning different from that which the writers had in their own minds; and perhaps misrepresents them and accuses them of folly of which they had not been guilty. Misunderstandings of this kind have been a frequent source of controversies that have diverted energy from constructive work, and have hindered the progress of the science1. different classes of things shade off imper wards one another; there are but few hard and Again, most of the chief distinctions marked by economic terms are differences not of kind but of degree. At first sight they appear to be differences of kind, and to have sharp outceptibly to- lines which can be clearly marked out; but a more careful study has shown that there is no real breach of continuity. It is a remarkable fact that the progress of economics has discovered sharp lines hardly any new real differences in kind, while it is continuof division. ally resolving apparent differences in kind into differences in degree. We shall meet with many instances of the evil that may be done by attempting to draw broad, hard and fast lines of division, and to formulate definite propositions with regard to differences between things which nature has not separated by any such lines. Each term must have § 4. We must then analyse carefully the real charactera definition istics of the various things with which we have to deal; and sponding to we shall thus generally find that there is some use of each corre 1 We ought "to write more as we do in common life, where the context is a sort of unexpressed 'interpretation clause; only as in Political Economy we have more difficult things to speak of than in ordinary conversation, we must take more care, give more warning of any change; and at times write out the interpretation clause' for that page or discussion lest there should be any mistake. I know that this is difficult and delicate work; and all that I have to say in defence of it is that in practice it is safer than the competing plan of inflexible definitions. Anyone who tries to express various meanings on complex things with a scanty vocabulary of fastened senses, will find that his style grows cum. brous without being accurate, that he has to use long periphrases for common thoughts, and that after all he does not come out right, for he is half the time falling back into the senses which fit the case in hand best, and these are some. times one, sometimes another, and almost always different from his hard and fast' sense. In such discussions we should learn to vary our definitions as we want, just as we say 'let x, y, z, mean now this, and now that, in different problems; and this, though they do not always avow it, is really the practice of the clearest and most effective writers." (Bagehot's Postulates of English Political Economy, pp. 78, 9.) Cairnes also (Logical Method of Political Economy, Lect. VI.) combats "the assumption that the attribute on which a definition turns ought to be one which does not admit of degrees;" and argues that "to admit of degrees is the character of all natural facts." DIFFICULTIES OF ECONOMIC NOMENCLATURE. 105 CH. I. to be its use: and be supplemented by term which has distinctly greater claims than any other to BOOK II. be called its leading use, on the ground that it represents a distinction that is more important for the purposes of modern what seems science than any other that is in harmony with ordinary leading usage. This may be laid down as the meaning to be given this must to the term whenever nothing to the contrary is stated implied by the context'. When the term is wanted to used in any other sense, whether broader or narrower, the clause change must be indicated; and a formal interpretation clause cessary. must be supplied, if there is the slightest danger of a misunderstanding'. or be an inter 1 Even among the most careful thinkers there will always remain differences of opinion as to the exact places in which some at least of the lines of definition should be drawn. The questions at issue must in general be solved by judgments as to the practical convenience of different courses; and such judgments cannot always be established or overthrown by scientific reasoning: there must remain a margin of debateable ground. But there is no such margin in the analysis itself: if two people differ with regard to that, they cannot both be right. And the progress of the science may be expected gradually to establish this analysis on an impregnable basis. 2 When it is wanted to narrow the meaning of a term (that is, in logical language, to diminish its extension by increasing its intension) a qualifying adjective will generally suffice, but a change in the opposite direction cannot as a rule be so simply made. Contests as to definitions are often of this kind:-A and B are qualities common to a great number of things, many of these things have in addition the quality C, and again many the quality D, while some have both C and D. It may then be argued that on the whole it will be best to define a term so as to include all things which have the qualities A and B, or only those which have the qualities A, B, C, or only those which have the qualities A, B, D; or only those which have A, B, C, D. The decision between these various courses must rest on considerations of practical convenience, and is a matter of far less importance than a careful study of the qualities A, B, C, D, and of their mutual relations. But unfortunately this study has occupied a much smaller space in English economics than controversies as to definitions; which have indeed occasionally led indirectly to the discovery of scientific truth, but always by roundabout routes, and with much waste of time and labour. pretation when ne CHAPTER II. BOOK II. The technical use of the term Goods. Material goods. Personal WEALTH. § 1. IN the absence of any term in common use to represent all desirable things, or things that satisfy human wants, we may adopt the term GOODS for that purpose'. All wealth consists of things that satisfy wants, directly or indirectly. All wealth therefore consists of Goods; but not all kinds of Goods are reckoned as wealth. The affection of friends, for instance, is a Good; it is a very important element of well-being, but it is not ever reckoned as wealth, except by a poetic licence. Let us then begin by classifying desirable things or Goods, and then consider which of them should be accounted as elements of wealth. MA Goods are Material, or Personal and Immaterial. TERIAL Goods consist of useful material things, and of all rights to hold, or use, or derive benefits from material things, or to receive them at a future time. Thus they include the physical gifts of nature, land and water, air and climate; the products of agriculture, mining, fishing, and manufacture; buildings, machinery, and implements; mortgages and other bonds; shares in public and private companies, all kinds of monopolies, patent-rights, copy-rights; also rights of way and other rights of usage. Lastly, opportunities of travel, access to good scenery, museums, etc. ought, strictly speaking to be reckoned under this head. A man's PERSONAL Goods fall into two classes. Under the first come the benefits he derives from other persons, such as labour dues and personal services of all kinds, property 1 The term Commodity has also been used for it; but Good is shorter, and is in correspondence with the German Gut. CLASSIFICATION OF GOODS. 107 CH. II. in slaves, the organization of his business, and his business BOOK II. connection generally. The second class consists of his own qualities and faculties for action and for enjoyment. The former of these two classes is to be classed as EX- External and TERNAL, and the latter INTERNAL'. Internal. able and Goods. Again, Goods may be TRANSFERABLE or NON-TRANSFER- TransferABLE. Among the latter are to be classed the whole of non-transa person's Internal Goods (i.e. his qualities and faculties ferable for action and enjoyment); also such part of his business connection as depends on personal trust in him, and cannot be transferred as part of his vendible good will; also the advantages of climate, light, air, and his privileges of citizenship and rights and opportunities of making use of public property. Those Goods are FREE, which are not appropriated and Free goods. 1 For, in the words in which Hermann begins his masterly analysis of wealth, "Some Goods are internal, others external, to the individual. An internal good is that which he finds in himself given to him by nature, or which he educates in himself by his own free action, such as muscular strength, health, mental attainments. Everything that the outer world offers for the satisfaction of his wants is an external good to him." 2 The above classification of Goods may be expressed thus: Or to adopt another arrangement which is more convenient for some purposes, thus: The land in its original state was a free gift of nature. But in settled countries it is not a free good from the point of view of the individual. Wood is still free in some Brazilian forests: the fish of the sea are free generally: but some sea fisheries are jealously guarded for the exclusive use of members of a certain nation, and may be classed as national property. Oyster beds that have been planted by man are not free in any sense; those that have grown naturally are free in every sense if they are not appropriated; if they are private property they are still free gifts from the point of view of the nation, but since the nation has allowed its rights in them to become vested in individuals they are not free from the point of view of the individual, and the same is true of private rights of fishing in many rivers. But the wheat grown on free land and the fish caught in free fisheries are not free: for they have been acquired by labour. |