of distribution. During the last fifty years, it is fair to say, more emphasis has been laid upon the subject of distribution than upon either production or exchange. The utilization of the social income. While the consumption of the people has been recognized as the utilization of the social income, and therefore as a thing important in itself, yet students have almost ignored it as a branch of the science of economics. One reason has doubtless been the feeling that every individual would better be left to consume his income as he liked, whether he did it wisely or foolishly, beneficially or harmfully. Attempts to control or direct his consumption have been called sumptuary laws. By pronouncing these words with a wry face such attempts may be discredited, that is, for a time. Meanwhile, however, every progressive community has gone right on passing sumptuary laws, in one form or another, sometimes to the great advantage of the people, sometimes to their disadvantage. Students are therefore becoming convinced that the consumption of wealth merits a great deal of study, that it is going to be controlled and directed by the State whether we like it or not, and that whether it is controlled and directed wisely or unwisely will depend upon how carefully and intelligently it is studied. In fact, a few are already beginning to discover that consumption is more important than production, exchange, or distribution,— possibly more important than all three combined. CHAPTER II WEALTH AND WELL-BEING What are economic goods? Before we can go very far in our study of income and expenditure, or of production and consumption, we must get a fairly clear idea as to the sort of things that make up income, or the sort of things that men try to produce. When it was stated in the last chapter that the necessity for economy arose out of the fact of scarcity, it might have been guessed at once that the things that make up one's income in a strictly economic sense are the things that are scarce. More accurately, perhaps, we should say that the only things we try to produce are the things of which we do not have enough. It may sound a little queer at first for one to say that his income consists of things that are scarce, or things of which he does not have enough. It will therefore be necessary to spend some time in making this point absolutely clear; otherwise we shall never be free from error and confusion. As a matter of fact, the very first step toward a true understanding of the nature of wealth is a clear perception that wealth in the economic sense consists of things that are scarce and so need to be economized. When it is said that the necessity for economy grows out of scarcity, and that we only try to produce the things that are scarce, we do not imply that everything is scarce. Some very useful things are very abundant, so abundant that everyone can have all he wants; and when he gets all he wants, no one else is deprived of anything that he wants. Such things do not have to be economized; hence they are not economic goods. In fact, so long as they are sufficiently abundant, they give us no concern; but when they become scarce, we spend our time in trying to get more. Only those things are economic goods which have to be economized, that is, which are scarce, or of which we do not have as much as we should like to have. Two meanings of wealth. Now the word wealth has two meanings. In the first place, it is the collective name for all economic goods, or for all goods that have to be economized, - that is, for goods that are scarce. In the second place, it is the name of a condition or state of being. It comes from the older word weal, which means very much the same as well-being. These two meanings, while apparently different, are yet very closely related. The condition of well-being which we call wealth depends upon the possession of an adequate supply of those things which we call wealth, that is, the things which are ordinarily scarce and which have to be economized. He who lacks an adequate supply is poor; he who possesses an adequate supply is rich or in a state of wealth. In short, those economic goods called wealth are the goods upon which weal, or well-being, depends. Well-being is increased when these goods are increased or economized; well-being is decreased when these goods are decreased or wasted. How well-being depends upon wealth. This could not be said of anything which is not scarce. There is such an abundance of air, for example, under ordinary circumstances, that no one would be any better off than he is now if the supply of air could be increased, nor would anyone be any worse off if the supply of air were slightly decreased. In other words, no one's well-being depends upon more air, even if it could be produced. If, however, air were so scarce that there was not enough to go around, then not only would it need to be economized very carefully, but there would be some advantage in producing more of it. The weal, or well-being, of mankind would be improved in proportion as more air could be produced; mankind would be injured in proportion as air was wasted or destroyed. While, therefore, we can say that air is a necessity in a certain absolute sense, yet in a practical economic sense we cannot say that anyone would be better off if more air were produced or if it were even wisely economized; nor can we say that anyone would be worse off if a little air were destroyed or wasted. There would still be enough to satisfy everybody. That is why air, though an absolute necessity, is not an economic good. We should gain nothing by trying to increase the supply or to economize in the use of the existing supply. Since we do not gain anything by economizing it, it is not an economic good. Where abnormal circumstances arise, in which there is not enough air, then it has to be economized and becomes at that particular time and place an economic good. If such circumstances could last, air would become wealth in the same sense that food, clothing, fuel, and certain other things are now wealth. It would then be true of air, as of these other things, that well-being could be increased by producing or economizing air and decreased by destroying it, wasting it, or otherwise making it scarcer. The question of having more or having less. Water is another illustration, perhaps a better one because there are many places where water is so abundant that it does not have to be economized at all, while there are other places where it is so scarce that it has to be economized very carefully indeed. In the former places water is not wealth; in the latter it is. In the former no one labors to secure any more; in the latter they do. In the former no one would be better off if there were more water; in the latter some people would be better off. In the former, well-being does not depend upon a little more or a little less water; in the latter it does. In the former class of cases there is no occasion for economizing water; in the latter it is very important that it be economized and made to go as far as possible. In the former class of cases the formula more water, greater well-being; less water, less well-being" is not true; in the latter it is true. This is the test in every time and place as to whether water is wealth or not. All that has been said of water may be said of anything else. The same test must be applied to determine whether it is wealth or not. As a matter of fact, water, like a great many other things, is sometimes too abundant, so abundant that men find it to their advantage to go to considerable pains in order to get rid of some of it or to lessen the supply. In such cases it may be called illth. In the diagram on page 16 is a classification of all tangible objects with which it would be possible for man to concern himself. Those which are harmful to him he must try to exterminate. Toward those which are useless without being in the way or being otherwise harmful he is indifferent. Those which are useful to him, called goods, concern him most. Of these, some are too abundant at certain times and places. In such times and places his attitude toward them must be very much the same as that toward those which are positively harmful. Yet when they exist in smaller quantities, that is, in quantities less than he needs, he will strive as hard to get more as he will strive to reduce the supply when it is too abundant. Water in swampy land is an example of overabundance; in desert land, of underabundance. Manure in a city livery stable is an equally good example of overabundance; in a sterile field, of underabundance. If the owner of the stable could not sell the manure, or induce someone to take away, he would be willing to pay someone to remove it. To the market gardener it is wealth; and if he cannot otherwise secure it, he will pay the owner of the stable for it. In that case it is scarce from the standpoint of the whole community, and is therefore social wealth. If, however, there is more than even the market gardeners and farmers can use, they would be paid for hauling it away instead of having to pay for the privilege. Such goods, when they are overabundant, may, as suggested above, be called illth, to distinguish them from those which are underabundant and called wealth. it Relation of value to economic goods. We have gone to considerable pains to point out that one characteristic of economic goods is that they are always scarce. It is this which gives |