Chapter XIV CONTEMPORARY ECONOMIC LIFE Purpose of this Part It may be well, before attention shifts to a new phase of our subject, to survey the ground already covered. Our analysis began by tracing the consequences of the fact that human beings are biological organisms living in close dependence on a culture pattern. Our own culture system— western civilization-was then summarily described and placed in relation to other cultures. Into this social world we are born, and by it we are shaped in the course of our growth to maturity. The ways of our group lead us to fall into its characteristic routines, to become acquainted with its simple tools and to be influenced by its more complex mechanical apparatus, to gain a working knowledge of the idioms of its language and its store of thought patterns, to become indoctrinated with its everyday techniques, opinions and values, and perhaps to reach the point of criticizing or changing the existing arrangements and conceptions. In the discussion of routines, tools, language, values, common sense, and innovation, attention centered on a few of the more general aspects of the total culture complex. Our relations to our culture can also be studied, however, from the institutional point of view-through an analytical survey, that is to say, of the institutions or social forms in which (and through which) we live. A thorough analysis of all existing institutions is beyond the scope of this book, but in this and the following chapters contemporary economic institutions, the family, art, science, and religion will be discussed, since they are among the more representative and significant of contemporary social patterns. The primary aim will be to view these great organizations of human aspiration and effort not so much in their general and cosmic perspectives as in relation to the life of today. Basic factors in economic life Economic life centers around the existence of needs and desires for commodities and services which, though attainable, are scarce and are not under the control of the persons who would like to have them. Lacking these things and wanting them, human beings are led to offer other things in exchange, and an economic transaction is thus initiated. The following features, accordingly, are fundamental to even the simplest economic situation: (1) Existence of economic goods—desired items which are not to be had for the asking. Daisies in an open field where all are free to come and pick have no economic value, be they ever so beautiful; while the most worthless gew-gaw is an economic good if people would like to have it and cannot get it for nothing. Daisies which have been brought into a city, where they are not grown, will have economic value if the people who live there would like to have them, and are willing to give something in exchange. Commodities which are needed or desired but which are not scarce are not economic goods (e.g., the air we breathe or the light from the sun); nor are commodities economic goods if they are scarce but undesired (as the only existing autograph of a nobody, or the last rose of summer); but anything which is both scarce and wanted is of economic importance, whether it be of genuine value or not (as the song of a grand opera tenor, the skill of a physician, a favorable location for a store, or the ability to entice people to buy fake oil stocks). (2) Some form of differential advantage, involving control or ownership of an economic good. One person must have what another person lacks; the economic goods mentioned in the preceding paragraph rest in the hands of specific individuals, who stand in a position of economic advantage because they possess them. This advantage may be of any kind. A thing may be possessed, a service controlled, a valuable process monopolized, prestige be guaranteed, or customers' habits formed; one may be first in the field, near to the market, far from competitors, close to the raw materials, or otherwise favorably placed-if only for some reason a differential advantage exists favoring those who are in a position to provide the desired good. The term differential advantage covers a somewhat wider field than the concept of private property, since nothing need actually be owned where an economic advantage exists. Of two boys selling peanuts on the street, one may hold an advantage over the other because he stands where people must pass, although he does not own the right to stand there he simply happens to be there rather than somewhere else. All cases of private ownership of course confer an economic advantage, but not all differential advantages are owned. We sometimes hear "the principle of private property" spoken of as if ownership or control always occurred according to a single well-defined rule. A precise enumeration of the privileges and obligations of ownership or control in any given instance usually depends, however, upon the close analysis of a fairly large number of customs and conventions. Ownership of a toothbrush confers different economic and legal privileges than ownership of stock in a railroad, as do the conditions under which an inventor controls his patent rights, a plumber his services, a landlord his apartment house, a mine-owner his coal mine, a partner in a corporation the policies of the concern, a banker the money he has loaned, an author the royalties on his books, a railroad its right to carry passengers, a lawyer his fees, or a wife a share in the income of her husband. Some restrictions upon the activity of certain people in favor of others with respect to things that are scarce, however, must exist before economic life can make its appearance. The differential advantage, it should be clear, need not consist in the control of material things; it may arise because you are physically able to do certain things that I cannot, but that I should nevertheless like to have doneor I may even be able to do these things, but may prefer to have others do them for me, as when I employ some one to cut the lawn. (3) Division of labor. Economic transactions cannot take place when all men are engaged in the same tasks. This is one of the fallacies involved in the old remark that the women of the Channel Islands make their living by taking in one another's washing. For trade to occur, the traders must each have something that the others want; and this means that they cannot have the same things. There must be some degree of differentiation and at least the beginnings of specialization in men's pursuits before economic relations can occur. But the importance of a fairly complex division of labor as a basis for civilized life has already been discussed. (4) Exchange. It is also obvious that something must be given for something in all economic transactions. Giftgiving acquires an economic significance only when the necessity of an interchange is recognized, as it is among many primitive peoples, where much trading goes on under the guise of the giving and receiving of presents. Exchange is never carried very far before it involves the use of money-of some commodity which, because of its ready exchangeability, is accepted by the members of a group with little regard to their present consumption needs or the economic status of the person who offers it. We accept money tokens so readily because they constitute a medium of exchange-that is to say, because everyone else is also ready to accept them for their products—and anything of which this is true by that fact becomes money, whether it be cattle or bars of metal or coins or pieces of paper. The tokens used need have no value apart from their monetary uses, if only they continue to be exchangeable. In this respect, however, money tokens are like all economic goods. (5) Standard of living. Behind all economic transactions, finally, there stand certain consumption habits or accredited ways of utilizing material goods and services. Thus in our culture, although we eat the flesh of many animals, we do not wittingly consume that of horses and dogs, although these animals are highly regarded as food by other peoples. Certain things are desired, while other things which may be just as good for the purpose are ignored or treated with contempt. Within every culture, as a matter of fact, there usually exist not one but several standards of living, each functioning as an economic ideal of a social class. Many of the economic problems faced by the members of every culture arise from the effort to live according to the conventional requirements of their class. It is a little like belonging to a club-every member of the group is expected to spend a certain amount to maintain the standards of the organization. This is true even of the very poor; they must do what the others do, and spend what the others spend, or they are looked upon as skinflints, or pitied as being less well off than their fellows. A classic description of the most important standard of living in our own culture is to be found in Veblen's The Theory of the Leisure Class. It must not be thought, however, that the phenomenon of an accredited standard of consumption is peculiar to western civilization. It occurs in aggravated form, for example, among the Indians of the Pacific Northwest in the institution known as the potlatch, which is a feast or celebration in which expensive presents are given to the guests and much property destroyed. Those who have been honored in this fashion can regain their lost prestige only by giving a yet more extravagant potlatch, in which the gifts they have received are returned with interest." But we do not need to go far afield for examples of the influence of standards of living upon men's lives, since nearly all of our desires and not a few of our needs were developed in the light of conventional standards as to what is fitting for persons in our station. Our inheritance of economic ideas from the past The precise forms taken by the features named above as basic to economic life clearly depend in large measure upon the other items in the specific culture complexes to which they belong. The existing economic arrangements always gain a good part of their validity and stability from their connections with the other aspects of the culture pattern. Thus it is not written in the nature of things, apart from the estimates appropriate to a given culture pattern, that so many units of one commodity shall exchange for so many units of another. Some little investigation into |