labor which contributes to the well-being, prosperity, and greatness of the nation and that which does not. Labor may produce a commodity which sells for a high price on the market, — which satisfies an intense desire which people will pay a high price to have gratified; and yet, if the desire is a vicious one, if its gratification weakens in mind or body those who buy it, or if it merely incapacitates them temporarily for useful work, that labor would have to be classed as unproductive. On the other hand, the labor of the musician, the poet, or the preacher, if it does not tend to produce softness, but inspires to strenuosity and productivity, if it rationalizes the consumption of wealth, if it makes people desire the right things, would have to be classified as highly productive. To be sure, a book, a poem, or a picture is a vendible commodity, and its producer would be called a productive laborer under the classic definition. If one wanted to insist upon it, one might go so far as to say that the sound waves produced by the musician or the talker are also material things and vendible, but it is not necessary to go so far as that.

This distinction not so clear as the other. One disadvantage in the position which we are taking in favor of the view that the important distinction is that between labor which adds to the well-being of the nation and labor which does not, is that it leaves a great deal to the opinion of the student. Whether labor produces a vendible commodity or not is generally a question of ascertainable fact. Whether it is good for the nation or not is sometimes a matter of opinion. There could scarcely be any denial, for example, that a distillery produced a vendible commodity, but there has been a great deal of difference of opinion as to whether it was a benefit or an injury to the nation. On the other hand, it could scarcely be claimed that a moral leader who persuaded people to become total abstainers was producing vendible commodities, but there are those who hold to the opinion that he is contributing to the general well-being of the nation.

Granting the advantage, from the standpoint of clearness, of the classical distinction between productive and unproductive labor, the present writer nevertheless contends that the distinction between that labor which is beneficial and that which is not is much more important. Probably as large a proportion of the labor which is engaged in producing material commodities for the market is wasted as of the labor which is not so engaged. Probably as large a proportion of that labor which is ✔ not engaged in producing material commodities is advantageous to the nation as of that which is so engaged. The prosperity and well-being of the nation will depend upon the proportion of the people who are doing useful work rather than upon the proportion that are producing material commodities.

All labor which is not engaged in the production or handling of material commodities which are bought and sold on the market is grouped, not only in this chapter but in various census reports and other public documents, as professional and personal service. Professional service is limited to a few learned or highly skilled occupations such as law, medicine, theology, teaching, governing, acting, etc. Personal service includes such a multitude of occupations as would fill a small catalogue. Barbers, bootblacks, valets, domestic servants, who render their service directly rather than indirectly through the medium of a material product, may be said to render personal service. If it is genuine service, whether it is professional or personal, it is a factor in the prosperity, power, and greatness of the nation.

PART THREE

EXCHANGE

Which has to do with the buying and selling of commodities

CHAPTER XXII

VALUE

Exchange a part of the division of labor. In the chapter on the Division of Labor it was pointed out that there is a great advantage to be gained from specialization. When the whole industrial society is so organized that each person can \do that for which he is best fitted by nature, training, inclination, and location, the general quality of the work is better than it would be if everyone had to learn a great many things. It was also pointed out that the division of labor necessitates the exchange of products and services. In the economics of the private family the subject of exchange is so unimportant as to be ignored altogether. Within the family a sort of primitive communism exists, so that even though there may be a division of labor among the members, there is practically no trading or bartering among them. In the larger industrial society, however, unless it is organized also on a communistic basis, there is a great deal of trading, bartering, and exchanging. Therefore exchange has come to be one of the most important departments of the subject of public economics, or political economy. Our whole system of trading, transporting, and merchandising is a necessary part of an industrial system which is characterized by the division and specialization of labor.

Valuation a part of exchange. An important part of this intricate system of exchanges is the process of valuation, or the evaluating of goods and services. It would be difficult to do very much exchanging without beginning to think in terms of value. In fact, even in the simplest case of barter, as when boys swap marbles, each barterer in his mind compares the desirability of the objects that are to be exchanged. To compare