from Latin or Greek roots. This method is largely followed by biologists, who replace or supplement such vague general words as fly, spider, etc. by the more precise terms musca domestica, araneida, and so on. The other way is to select common words to which more precise, technical meanings are given than belong to them in everyday language. Such a method is largely followed in physics, where such terms as mass, energy, volume, etc. are defined somewhat differently from common usage. Economics, probably because of its non-technical origin, has adopted this latter method, beginning with everyday words vaguely defined, and gradually narrowing and sharpening their meaning. There is much to be said in favor of newly-invented terms, since they are less likely to be confused with popular language, and it is possible that economic reasoning could be more easily handled by the introduction of some words of this sort. The complete adoption of such a terminology, however, would be too much of a break with established usage to stand a chance of success. It may be taken for granted, therefore, that popular words with technical meanings must continue to supply the bulk of the economist's vocabulary. Upon this basis any attempt to straighten out the present confusion must be made.

A first essential to bringing order out of chaos in this matter is a clear recognition by economists of the distinction between differences in underlying ideas and differences in terms. Failure to recognize this distinction has been responsible for many a fruitless controversy. The importance of the distinction is well brought out by the current disagreement concerning the things to be included under the term capital, in the discussion of which two quite different issues have been hopelessly confused. One has to do with whether or not land possesses economic characteristics essentially unlike those of artificial wealth. The dispute on this point hinges upon a fundamental difference in underlying concepts. The other has to do with what usage of the word capital is most convenient, and is purely a question of terminology. Whether land differs from other kinds of wealth is one question: whether capital should include both land and other kinds of wealth is a quite separate question; yet few discussions of the matter show an appreciation of this fact. Those who favor the broader use of the term capital, for the most part, have appeared to feel it necessary to attempt to overthrow all the older teachings regarding the peculiar nature of land, and have thereby weakened a good argument in favor of their terminology; while those who recognize the unique position of land in economic affairs have erroneously concluded that in demonstrating this they have disposed

of the argument in favor of a new use of the word capital. The truth is that if there are good reasons for including all kinds of wealth under the term capital, it is still possible to give recognition to differences between various kinds of wealth by classifying capital into as many varieties as may be necessary. Thus a separation of questions of underlying ideas from questions of the mere use of words can help to clear up a difficult issue. A similar confusion of these two questions is illustrated by the historical controversy concerning what is productive and what unproductive labor; it is also found to-day in the disagreements concerning the use of the terms value and price, rent and interest, costs, and so on. In arriving at a more satisfactory terminology, therefore, economists will need to avoid this confusion by considering first, entirely apart from the question of terms, what are the fundamental economic concepts for which terms are needed? When this is settled-and not until then-it remains to be decided what words are best suited to express these concepts.

In considering the latter question, the rule should be adopted that, so far as is possible, words should be used in their popular meanings. Since economics is practically committed to a vocabulary made up of everyday words, it is desirable to distort their everyday significance no more than is absolutely required in the interests of scientific precision. In sciences with which the layman is little concerned, such as physics, it matters little if common words are used in a technical sense which is greatly different from ordinary language. But every business man, every legislator, and even every newspaper reader is perforce something of an economist. He is bound to have economic concepts continually brought to his attention; and since it is hopeless to expect that he will master the science in a technical way, if he continually meets with terms into which he reads a different meaning from that which prevails among economists, serious confusion and error is inevitable. If the business man reads economic writings which discuss such things as capital, profits, rent, and so on, these terms being employed with meanings entirely different from those to which he is accustomed, he will either fail to recognize this and be led thereby into error; or, recognizing it, he will throw the book away in disgust, regarding it as one more evidence of the hopelessness and impracticability of theory. The tendency now manifest on the part of some economists to bring the terminology of the subject into harmony with the language of business men is therefore a mark of progress. Examples of this are the definition of capital as a stock of wealth of any kind instead of intermediate wealth only, the

use of costs in the sense of enterprisers' outlays instead of disutility, the employment of the terms rent and interest as two different ways of viewing the income from capital instead of confining the first to land and the second to artificial instruments of production, and similar innovations. The conservative inertia of economists who have been brought up on a diet of other definitions makes the new uses unpopular and slow of adoption; yet their acceptance would improve the science, and help to make it more intelligible to the layman.

It is time to consider whether or not some concerted action by economists looking toward the standardization of our terminology cannot be undertaken. If a committee of the American Economic Association, preferably in collaboration with a similar committee from our British colleagues, were to overhaul the entire vocabulary of economics and adopt a standard set of definitions for terms, the present confusion would be replaced by order. The committee should be guided by some uniform general principles, such as those set forth in the above paragraphs; and on this basis could work out a satisfactory terminology. No doubt the definitions adopted would not be entirely pleasing to anyone, but they would have the advantage of uniformity and when economists once became used to them, they would be found to serve our needs well enough. If the definition of capital was too all-inclusive for one writer, he could sub-divide it into classes that suited his purpose, but he would no longer use that word in a sense different from that of other writers. In this there would be a distinct gain. Writers who were not agreed on fundamental concepts would find a way to express their ideas without twisting terms away from their common meanings, and controversies would no longer be mere wars of words, but would be confined, as they should be, to more fundamental things. It is time that economists recognized the profound truth of Shakespeare's familiar saying that "a rose by any other name would smell as sweet."

8. SOME PRACTICAL APPLICATIONS OF ECONOMIC THEORY Has economic theory made any definite contributions to the solution of the many pressing problems of economic life, or is it, as its critics maintain, a mere academic intellectual game-a cloistered scholastic exercise carried on for the amusement of its initiates ? The present writer believes that the great body of economic doctrines now currently taught is a fairly true and illuminating explanation of how our economic organization is constructed and of how it functions-an explanation imperfect and incomplete, no doubt, but on the whole very useful. It should, therefore, be capable of making,

and should have made, important contributions to the meeting of economic problems. It should be pointed out, however, that economics is a general, rather than a particular science. It seeks to find the broadest underlying principles of the industrial process, rather than to describe it in its minute details. Hence it is not always to be expected that an immediate, practical application can be found for every economic law or theory. Failure to find such an application does not condemn as futile the search for such fundamental principles in economics, any more than it condemns the efforts of chemists and physicists to fathom the ultimate constitution of matter, or of astronomers to solve the riddles of the stars. No one can say at what moment the most remote and apparently inapplicable bit of knowledge may not prove of inestimable usefulness to man. Notwithstanding the general nature of economic theory, however, it has many practical applications.

In the field of production the principle of division of labor has important applications. Doubtless much of the development of specialization would have come had there been no economists, but it is quite possible that the emphasis placed upon this principle by generations of economic writers has helped to spread its application in such movements as that of scientific management. The principle of diminishing returns has important applications in agriculture and industry generally, and a clearer recognition of its significance by both national and international statesmen would help to correct many a mistaken political policy. This is true also of the law of population. Economic theory, by calling attention to the advantages of large scale production, is helping to bring about a more intelligent attitude toward big business and is instrumental in correcting an unintelligent governmental policy of indiscriminate trust-busting by the substitution of well-advised regulation. With the growth of nationalized industry that seems to be under way, economic teachings concerning the guidance of production by demand in competitive society are sure to shed light upon the problem of intelligent direction of industry.

In the field of money and credit economic theory has achieved gratifying results. Whether the quantity theory is true or false, we know a great deal to-day about the ways of money, bank deposits and their accompanying institutions that is of immense value to the banker and statesman. The employment of trained economists by so many banks in recent years is sufficient evidence of this. Economists assisted in the devising of the Federal Reserve banking system and in the financial stabilization of other nations. If there

are monetary troubles in the world to-day they are partly because statesmen disregarded the warnings of economists; and the economist alone is ready to show how they may be solved when the politicians are willing to listen to his advice. We have not yet solved the problem of the business cycle, but even here important progress has already been made; and when this difficult phenomenon is under complete control, as some day it surely will be, much of the credit for it can be given to economic theory.

The much-maligned theory of value gives us an understanding of the mechanism of prices whose correctness was well demonstrated by war experience with price control. Economic theory has emphasized the interdependence of prices and the nicely adjusted balance between supplies and demands that is maintained by market adjustments. Attempts at piece-meal price fixation during the war proved how intricate this interdependence is, and how difficult it is to control prices without extending regulation throughout the whole range of prices from first producer to ultimate consumer, and extending it also to the direction of production and distribution as well. Wartime price control confirmed in general also the teachings of economists regarding the relation between values and costs. Society has scarcely begun yet to attempt any regulation of the price system; it is likely to do so more extensively in the future, and if we ever adopt socialism an entire new price mechanism may be set up. In this development, the economic theory of value may serve as a useful guide. The theory also is now adequate to solve many an individual price problem and to predict changes of prices, provided the facts necessary thereto are available. That they are not available is not the fault of the theory. They will become more available with the development of statistics, and then the theory of value will find useful applications that are not now possible.

The field of distribution presents some of the most pressing economic problems, inasmuch as inequality of incomes is one of the greatest sources of social unrest. Society has not begun intelligently to cope with the situation. Trade unions have sought to raise the wages of labor by a process similar to lifting themselves by their bootstraps. It is doubtful whether they have had any appreciable effect upon wages in general. A better knowledge of economic theory would have prevented many a trade union abuse and pointed out the path to real wage increases. Economics teaches that under a system of free enterprise there are two possible sources of wage increase increased general production and greater scarcity of labor relative to the other agents of production. It does not teach that