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Collection: IHS Studies in Economic Theory
Subject Area: Economics

The Science of Subsistence - Israel M. Kirzner, The Economic Point of View [1960]

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The Economic Point of View: An Essay in the History of Economic Thought, ed. with an Introduction by Laurence S. Moss (Kansas City: Sheed Andrews McMeel, 1976).

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The Science of Subsistence

Thus far the account of what the economic point of view has meant to economists has treated of the classical conception of it as a science of wealth, with special reference to the restriction of the latter concept to that of material goods. The account of the gradual advance of economics from a science of wealth to one of welfare will be resumed later in the chapter, with special attention to those elements of the earlier “material” conception of wealth that continued to be retained. At this point a discussion is in order of a special case of this “material” approach to economics, which seems to have held a fascination for a number of economists over an extended period of time, viz., the view that saw economics as essentially concerned with the goods necessary to ensure the physical subsistence of mankind.

This view seems to be the most extreme form of the materialistic outlook on economic affairs. The distinctive feature of all conceptions of economics as a science of wealth or of material goods, as against alternative conceptions of the discipline, consists in their identification of economics with some special end of human action. Not all action is subject to economic law, but only such action as is directed towards a more or less well–defined class of objects, viz., wealth or material goods. Most of the definitions advanced during the greater part of the nineteenth century can be considered as variants of this view. The earlier ones saw economics as concerned with the results achieved with regard to these ends themselves, its enquiries being directed at describing the phenomena of this desired wealth. The later, less objectivistic definitions looked at economics, as will be seen in subsequent chapters, as a description of man in one department of his activities—that directed towards, or pertaining to, the desired wealth.

When economics is narrowed down still further by restricting it to the study of the goods necessary for human survival, the relevant range of human ends is contracted to the point where the term “end” begins to lose its meaning. No matter how objective a view one had of the wealth around which political economy was supposed to revolve, it was extremely difficult to close one’s eyes to the fact that wealth is wealth only because it is desired by human beings, i.e., that it is an end of human endeavor. But when the only parts of wealth permitted to come into consideration are biological necessities, then it is dangerously tempting to consider these necessities as not being the ends of human desire at all. Instead of being goods brought under the play of market forces by being the goals of human aspirations, these necessities gain their economic relevance purely objectively, by being the physiologically determined causes of quasi–biological tropisms. And this, indeed, is the direction towards which a number of “subsistence” definitions of economic phenomena have tended.

There had been discussions for a long time concerning the question whether wealth should properly include luxuries as well as “necessaries.”26 Steuart had seen the goal of his subject as being “to secure a certain fund of subsistence for all the inhabitants.27 It is noteworthy that during the period of the classical economists most writers did not embrace this “subsistence” approach. As a matter of fact several writers explicitly took a view diametrically opposed to the “subsistence” criterion. So far from confining wealth to necessities, these writers defined wealth as excluding necessaries.28 Wealth was the surplus, often the surplus after all expenditures. Political economy was exclusively the science of great riches, of luxury phenomena. (Both Bentham and Malthus found it necessary to reject this view of economics and attempted to make it absolutely clear that their political economy was concerned with the poverty of nations quite as much as with their wealth.)29

Despite the general absence of the subsistence view in classical economics, there appears to be at least one sturdy offspring of the classical school to which this view is central. This is to be seen in the work of the Marxist writers in developing the thesis of the economic, or materialist, interpretation of history. The significance of the materialist interpretation in Marxist thought lies, of course, in its consequences for the “noneconomic” aspects of history. For the purposes of the present account, however, the Marx–Engels approach to history yields a fresh view of the scope of economic affairs. Superficially one might be content to explain the fact that Marx and his followers equated the “economic” with the “materialist” interpretation of history as deriving merely from the classical economists’ stress on material wealth. An examination of Marx’s writings, however, reveals his conception of political economy to have been even narrower. Professor Knight seems to have put his finger on the essential point when he writes: “The socialistic popularisers of [the economic interpretation of history] have leaned toward the narrower and more definite...conception of downright necessities.”30

This view of the economic interpretation of history seems to be expressed in Marx’s own writings. In a note in which he compares his conception of history to the doctrines of Darwin, Marx writes: “Technology discloses man’s mode of dealing with Nature—the process of production by which he sustains his life, and thereby lays bare the mode of formation of his social relations, and of the mental conceptions that flow from them.”31 In the passage that Kautsky considered the classic formulation of the economic interpretation, Marx explains:

In the social production which men carry on they enter into definite relations; these relations of production correspond to a definite stage of development of their material powers of production...The mode of production in material life determines the general character of the social, political, and spiritual processes of life.32

It is of interest to note that the words which in this extract (from Stone’s translation of Marx’s preface to his Critique of Political Economy) are rendered “...in the social production which men carry on...” are in the German original:...in in der gesellschaftlichen Produktion ihres Lebens...Other translators of Marx have rendered this phrase: “...in the social production of their every–day existence”33 and “...in the social production of their subsistence...”34

Engels too made this subsistence approach very clear. “According to the materialist conception,” he wrote, “the decisive factor in history, is, in the last resort, the production and reproduction of immediate life.”35 And again, “We understand by the economic relations, which we regard as the determining basis of the history of society, the methods by which the members of a given society produce their means of support...”36

Clearly, then, there emerges from the various formulations of the materialist interpretation of history a conception of economic affairs that centers about biological survival. Not the provision of wealth, but the provision of bare life is the realm of economics. Nor is it that life referred to in Ruskin’s phrase, “There is no wealth but life” (in which life includes “all its powers of love, of joy, and of admiration”), but the elemental existence that is the subject of biology. Not “wants,” in the sense of the reflections of standards of ultimate values, but rather the inexorable, objective requisites of survival—“needs”—are the data of economics.

In such a scheme, in which the relationship between ends and means as arranged by rational action is completely obliterated, economics and economic affairs clearly take their place as part of biology. Kautsky is easily understood when he insists that the materialist conception of history does not postulate the dominance of economic motives. We must, we are told, sharply distinguish between economic motives and economic conditions. It is only the latter that are assigned the decisive role in the Marxist scheme of history.37

It is not clear whether economists in general were greatly influenced by this idea. The literature yields very scanty traces of any school of economic thought that placed human survival at the center of their subject.38 Yet it is of interest to notice passages in American economic and sociological literature at the turn of the century that do have a pronounced relevance to this general conception of the economic domain. It is, perhaps, not a complete surprise to find that it is Veblen who seems to approach most closely to the “biological” outlook on economics. Veblen explicitly points out that in the earlier stages of industry the “struggle for wealth” meant “a struggle for subsistence.”39 He considered the essence of the physiocratic system to consist in the fact that it saw “economic reality” in “the increase of nutritive material.”40 Again and again in his writings the phrase “the material means of life” is used as the criterion for distinguishing economic activity. “In economics, the subject of inquiry is the conduct of man in his dealings with the material means of life.” This is a typical Veblenian sentence in this respect.41

We must probably see in this Veblenian tendency to identify economics with the maintenance of life a reflection of a fashionable pastime of applying biological analogies to the phenomena of the social sciences. The terminology of biologists seems to have strengthened this tendency. Franklin Giddings drew attention to the different meanings that the word “economy” had for economists and for biologists. Inherent in the economists’ use of the term is the presumption of “a conscious being, endowed with the capacity for pain and for pleasure, to plan and direct the economy and to profit by it.” The biologists, on the other hand, use “the highly general notion of economy as any system of activities and relations which furthered the well–being of any class or species of living things.” It is this concept that produces such phrases as “the economy of the animal kingdom” and the “economy of nature.” “In these notions there is no implication of consciousness, of pleasure or of pain, and no presumption of intelligent planning or management on the part of the organisms that are benefited by their economy. The thought is altogether objective.”42

The same explicit warning against the biological view of economic affairs was sounded by Sherwood.

In applying the physical formulae of evolution to psychical phenomena, sociologists are guilty of unscientific procedure...The physical formulae of evolution are statements of unexplained fortuitous change. The “fitness” which survives is an unforeseen fitness, an adjustment wrought out in consequence of the struggle. Psychical activities, on the contrary, are essentially teleological. They are directed to ends. The “fitness” in social adjustments is foreseeable, prearranged. Further than that, this fitness is nothing other than “utility” to the individual.43

This statement formulates the issue precisely. The imposition of “subsistence” as the goal of economic activity sets up a value involving among all others the least troublesome subjective differences between individuals. The only area of choice left to human intelligence is in the means objectively best suited to attain this one end. Once man’s power to select his own ends is prescinded from economics, the subject is at once reduced to an only slightly more involved version of biology.

[[26]]On Hume's views in this regard, see J. Bonar, Philosophy and Political Economy, p. 107.

[[27]]See above n. 7.

[[28]]Ganilh in his Inquiry into the Various Systems of Political Economy (English ed.; New York, 1812), pp. 2–4, cites Palmieri's Pubblica felicità (1787) and Canard's Principesd'économie politique (1801) for the view that wealth is superfluous. Boileau (An Introduction to Political Economy [London, 1811], Ganilh himself (op. cit. p. 22) and the American economist Raymond (The Elements of Political Economy, [2nd ed.; Baltimore, 1823], p. 40) all defined wealth as surplus over current expenditure for “wants.” This position seems to have considerable bearing on the classical attitude towards the consumption of wealth. (On this see J. N. Keynes, Scope and Method of Political Economy, [4th ed.; London, 1930], pp. 105 f; L. Robbins, The Theory of Economic Policy, p. 7.) The conception of wealth as surplus after expenditure implies a finite area of human “needs” which are objectively fixed. This conception led to the view that the consumption of wealth is the destruction of wealth rather than the consummation of the process of production. One recalls J. S. Mill's unhappy description of the desire for present enjoyment of goods as being antagonistic to the desire for wealth (Essays on Some Unsettled Questions of Political Economy, London reprint, p. 138).

[[29]]Bentham recommended the use of the term “matter of wealth” in place of “wealth” to make it absolutely clear that political economy was not confined to the treatment of great riches. Malthus in a letter to Ricardo in 1817 explicitly included the poverty of nations in the scope of economics (Sraffa ed., Vol. VII, Letter No. 200). Samuel Bailey, celebrated critic of Ricardian value theory, ascribed the popular view of political economy as a “degrading” inquiry to the mistaken belief that it treats only of excessive wealth. S. Bailey, Discourses on Various Subjects Read Before Literary and Philosophical Societies (London, 1852), p. 125. For examples of later writers clinging to the “surplus” view of wealth, see Sargent, Science of Social Opulence (London, 1856); M. Liberatore, Principles of Political Economy (English ed.; London, 1891).

[[30]]F. H. Knight, The Ethics of Competition (Harper & Bros.), p. 24. See also on this point K. Mannheim, Essays on the Sociology of Culture (New York, 1956), p. 35. For bibliography on the materialist interpretation of history, see W. J. Blake, Elements of Marxian Economic Theory and Its Criticism (New York, 1939), pp. 686–691. See also T. Parsons, “Some Reflections on ‘The Nature and Significance of Economics,’” Quarterly Journal of Economics, May, 1934, p. 534, n. 4.

[[31]]K. Marx, Capital (English ed.; Ch. Kerr & Co., Chicago, 1915), I, 406, n. 2. See, however, the significantly different translation of this note by E. and C. Paul (Everyman's ed.; 1930), p. 393 n.

[[32]]K. Marx, A Contribution to the Critique of Political Economy (translated by N. Stone, Chicago, 1904), pp. 10–11.

[[33]]See E. R. A. Seligman, The Economic Interpretation of History (New York: Columbia University Press, 1902), p. 43.

[[34]]See Eastman's edition of selections from Marx (Modern Library), p. 10.

[[35]]F. Engels, The Origin of the Family, Private Property, and the State (English translation, Moscow, 1940), p. 5. For another statement by Engels in virtually the same words, see Knight, Ethics and Competition, p. 24 n.

[[36]]From a letter by Engels to Der sozialistische Akademiker (1895), quoted in Seligman, The Economic Interpretation of History, pp. 58–59.

[[37]]Karl Kautsky, Die materialistische Geschichtsauffassung (Berlin, 1927), I, 3–6.

[[38]]The following references are to later writers who seem to have formulated their definitions with stress on “subsistence”: B. Hildebrand, Die Nationalökonomie der Gegenwart und Zukunft, ed. by Gehrig (Jena, 1922), p. 305: E. Sax, Das Wesen und die Aufgaben der Nationalökonomie (Vienna, 1884), p. 12; P. Leroy–Beaulieu, Précisd'économie politique (Paris, 1888), p. 1; C. Perin, Premiers principesd'économie politique (Paris, 1896), p. 2.

[[39]]Thorstein Veblen, The Theory of the Leisure Class (Modern Library, 1934), p. 24.

[[40]]T. Veblen, The Place of Science in Modern Civilization and Other Essays, (New York: Viking Press, 1919), p. 91.

[[41]]T. Veblen, “The Limitations of Marginal Utility,” Journal of Political Economy, 1909; reprinted in The Place of Science in Modern Civilization, p. 241. A list of passages in Veblen's writings in which the material–means–of–life criterion is used would include: T. Veblen, “Why Is Economics Not an Evolutionary Science?” Quarterly Journal of Economics, 1895, reprinted in The Place of Science in Modern Civilization, pp. 71, 76; T. Veblen, “Mr. Cummings' Strictures on ‘The Theory of the Leisure Class.’” Journal of Political Economy, 1899, and “The Instinct for Workmanship and the Irksomeness of Labor,” American Journal of Sociology, 1898, both reprinted in Essays in Our Changing Order (New York, 1943), pp. 27, 78, 80. It is of special interest to note that Veblen uses the phrase “material means of life” as synonymous with the object of Marx's materialism. (See his “The Socialist Economics of Karl Marx and His Followers,” Quarterly Journal of Economics, 1906, reprinted in The Place of Science in Modern Civilization, p. 415.)

[[42]]Franklin Giddings, “The Economic Ages,” Political Science Quarterly, June, 1901, p. 195. For a similar distinction between human economy and its biological analogues, see Lester F. Ward, “Psychological Basis of Social Economics,” Annals of the American Academy of Political and Social Science, 1893, pp. 464–465.

[[43]]S. Sherwood, “The Philosophical Basis of Economics,” Publications of the American Academy of Political and Social Science (October 5, 1897), p. 71.