The Online Library of Liberty

A project of Liberty Fund, Inc.

• Preface
• Note.
• Wealth
• Chapter I: The Subject-matter of Economics
• Chapter II: The Fundamental Conditions of Wealth For Isolated Man and For Society
• Chapter III: Co-operation, Or Combination and Division of Labour
• Chapter IV: Population
• Chapter V: The Social Order
• Chapter VI: The Controlling Power of Demand
• Chapter VII: The Control of Provision For the Future
• Chapter VIII: Continuous Power to Demand, Or Income
• Chapter IX: The Classification of Incomes
• Chapter X: The Division of Income Between Owners and Workers
• Chapter XI: Incomes From Ownership of Property
• Chapter XII: Incomes From Work
• Chapter XIII: The Relation Between Individual Income and Individual Wealth
• Chapter XIV: The Wealth of Nations

PREFACE

The really fundamental questions of economics are why all of US, taken together, are as well off—or as ill off, if that way of putting it be preferred—as we are, and why some of us are much better off and others much worse off than the average.

I am convinced that immense harm is done by the common assumption that the answers to these questions are so obvious and easy that no general treatment of them is necessary. We should not tolerate a person who professed to explain the inefficiency of some locomotive and to provide a remedy for it, if we knew that he had never studied mechanics and was quite ignorant of the construction and working of locomotives. The existing economic organization is a much more complicated and delicate piece of machinery than a locomotive, and yet, whenever some imperfection in the work done becomes particularly prominent, we are overwhelmed with suggestions about causes and remedies by persons who have not the smallest general knowledge of the reasons why the machinery works at all. It often happens that a man of considerable eminence in his own profession, but without the smallest acquaintance with the fundamentals of economics, will make a suggestion which is precisely on a level with the proposition that the locomotive would be much more efficient if its weight were taken off the driving wheels so that they could revolve more easily. The editor of an important magazine accepts with joy the contribution in which he develops his idea, and the public feebly thinks there may be something in it, and is confirmed in this view by the fact that professional economists are as disinclined to publish a refutation of it as the Astronomer Royal is to answer the theorists who declare that the world is flat.

It is not refutation of ridiculous suggestions which is required, but their non-appearance in consequence of there being no possibility of their gaining acceptance in minds already occupied by a knowledge of the actual nature and working of the economic machine. When, therefore, I tire the reader with insistence on something which appears to him too obvious to need mention, I hope he will ask himself whether he does not know of some important propaganda, or of some opposition to some important reform, which is based on a doctrine incompatible with the acceptance of that which seems to him to be obvious. I refrain from giving examples, because I would rather that all the various propagandists and their opponents should read the book than that some of them should be warned off it as dangerous to their faith.

Experienced teachers, in search, as usual, of the heaven-sent book to use in their classes, are not likely to complain of obviousness. They are much more likely to say that much of my matter is too difficult for beginners. But I doubt the policy of trying to teach beginners only what is easy. We must take things as they come, and if in economics, as in some other things, we find that the foundations are the most difficult part of the work, that is no reason for trying to build a superstructure without any foundations at all I hope, therefore, that the book may be round useful by academic teachers and students as well as by readers who wish to improve their capacity for dealing with practical economic problems without attendance at lectures and classes. It has, at any rate, been evolved gradually out of the annual course of lectures which I have given for first-year students at the London School of Economics since 1898, during which period I do not think a year has passed without considerable changes in the matter or the arrangement of the exposition.

Having acute sympathy with those who dislike ponderous tomes, I have tried to keep the book as short as possible. A great deal of the discussion of wages, profits, and rent which had some local importance a hundred years ago is now obsolete, and should be relegated to the works which deal with the history of theory. By omitting this and other obsolete matter, by excluding special subjects like currency and taxation, which are better considered in special treatises, and by forgoing detail and picturesque illustration, I have managed to make room for some very fundamental matters which are often ignored in general treatises of moderate length. I refer especially to the hereditary character of inequalities of income, the inferiority of women's earnings, and the differences in the wealth of different “countries” or “nations.”

EDWIN CANNAN.

London SchoolofEconomicsandPolitical Science.November, 1913.