A Talk on Economics

New Zealand Tablet, 10 November 1921, Page 9

A Talk on Economics

(By M. P. Connery, in America.) "What is now commonly called economics was up to recent years known as political economy. For less than two hundred years the study of the business of nations has been somewhat systematised, and political economy or economics.is now classed as a science, "the dismal science." Because it is taught and studied in the higher schools, the . common man and woman hesitate to give even the slightest attention to it. Yet it is the problem the current expression of which most affects the material welfare of all peoples. It y is not economics, which is the presentation of the correct practices in the affairs of the public, that is difficult to understand or uninteresting to study; the cause of the confusion is in the intricacies that are woven into the arguments of men who are influenced in advocating measures that favor, not the whole people of a community or the world in general, but the interests towards which they have a more or less unconscious, if not occasionally a wilful, leaning. For example, it is common even for those who think themselves democratic, to ask "Who will dig our. sewers and clean our streets if we do not have low-grade labor?" Such men, and they are legion, will then taint their economics with such principles as bring about the welfare of some at the expense of others. General Considerations True economics considers the due and proper welfare of all people in all lands; and the handicap to its simple explanation lies in disentangling the deceptive practices and teachings that are prompted by selfish interests. Let us conceive of a complete though primitive social unit, that is, a body of people that form a, society or State or nation that have a common language. And a language that is common to a body of people will tenet to indicate the compass, the- extent, of each complete social unit. Just as even in the United States, despite the oneness of the Union in education, laws, and institutions, in a few generations there have been developed in various sections dialects not readily understood by the mass ft the people in other sections of the country. ■ So, too, would the Test of the world, but to a much greater extent, though starting with the same language, deviate from if, in various territories; and the proper size of social vnit would be indicated by the uniformity of the language used by the people. That sameness of language would be evidence 4 of the general intermingling of the people in industry, trade, and social relations.

For convenience in the discussion let us consider the division of the world into small social and industrial units, and have in mind a primitive condition of industry, commerce, and agriculture. In such a community there would be no labor-saving devices as are now known. Men would work for the owners of land and the directors or bosses of work required for the support of the community. There would be money in the community to make easy the exchange, or buying and selling, of goods and services. Some men would be servants and would receive money in pay for services.

Gold as Money Among the first considerations that confront us in the study of economics is the purchasing power of gold and the reason for the choice of gold for use as money. Gold is used as money because it has a special appeal to people as a. precious metal and is convenient to handle as a medium of exchange. If copper were as difficult as gold to produce, it would not he produced at all, because it would cost as much labor as gold, but it would not have the quality of appealing to the desires of people to «-i sufficient extent to cause them to expend the amount of labor needed for its production. Tt is not the fact that gold is used as money that gives it its value. Rather it is used as money because the people set a value upon it apart from its use as money. If there is relatively much gold being produced at any one time, it may bo evidence of general prosperity; because its production represents the number of workers producing that luxurious commodity that are spared from producing such necessary articles as compose food and clothing. Gold is destroyed or lost, and nearly all that has'been produced is in existence. And just as a pair of shoes already in the stores is affected in price, by the cost of the shoes being produced at that same time in the factory, so does all existing gold get its value fixed by the price that is paid for new gold. There is no difference between old gold and new gold; hence the price is the same. If a season of poor crops or some other calamity befalls a community, the people then have an increased appreciation of food or other necessaries, and a less desire for gold

as compared with food. The production of gold will then tend to cease, because it requires as much labor as ever to procure it; and because of adverse conditions in the productions of necessaries, the people, must expend more labor for the production of each unit of the product that has been injuriously affected by the industrial misfortune. The producers of necessaries will then demand a greater quantity of gold for their products than they did before. The value of gold is then said to have depreciated and prices are called high. The depreciation is because it requires as much labor as ever to produce gold, and more labor than is commonly needed to produce necessaries. In other words, the depreciation is relative between commodities, and gold is a commodity as well as money. Increased Production and Prices What effect has the increased production of gold on prices? The increased production is occasioned by easier means of production, that is, if it requires less labor, the value or purchasing power of the gold will fall, assuming the production of necessaries to be normal. But if the increased production of gold is the expression of the extravagance of the few, there is a shortage of laborproducing goods for the many. The total product of a community represents its total effort, its total expenditure of labor, and if there -is too much of one thing there must be too little of something else. The community can easily utilise all that is produced, if the product is the kind the community wants. What is not wanted should not have been produced and represents wasted labor. If the extra number of producers of gold were, instead, producing even a modicum of other goods, the community's wants would be much more satisfied. If the increased production of gold is because of general prosperity, and not because of the lessened labor repuired to produce gold, the prices of goods would tend to lessen, because the increase in gold would mean a lessened appreciation of goods by the people as compared with their desire for gold. The increased desire for gold would can*? the development of low-grade mines or sources of gold, which would require a greater expenditure of labor, causing greater price to that product. Or, the greater value, or desire of the people for gold, would warrant the expenditure of extra labor in its production. What Causes Value ? Right at the beginning Ave have to answer the question as to what causes value, the labor cost entailed in the production of gold or other commodity, or the desire of the people for a commodity? Well, the desire for anything differs in each individual, but all pay the same price. And that price must be at least the cost of production. No matter how greatly one desires any commodity ho will not pay more than its price. But no commodity will be produced unless it has a selling value equal to the value the producer sets upon Jus labor. No one needs to pay more. Hence it is accurate, as well as convenient, to hold that labor, or the cost of labor, is or should be the measure of value or price. 'Value," though not really synonymous with "price," may for convenience be considered so. It does "accidentally'/ happen that goods of one dollar's value are sold for the price of ninety cents or perhaps 110 cents. But, particularly in the industrial unit it is purposed to consider, "value" would approximate "price." An, appreciation of "value" and "price", is fundamental to., an understanding of economics, and that is why it is considered, in this preliminary discussion.

Ash burton October 30. The weekly meeting of the Ashburton Catholic Club was held last Wednesday evening, the president (Mr. » L. T. J. Ryan) presiding over a large attendance of members (writes a correspondent).) One new member was elected and two were proposed for membership. The programme for the evening was a debate on the subject of the "Extension of State control in New Zealand as regards shipping industry and banking." The affirmative was taken by Mr. L. M. Steegin (leader) and Mr. F. K. Cooper, and the negative by Mr. Val Cullen (leader) and Mr. M. J. Burgess. After the speakers had addressed the meeting, a general discussion took place, followed by a vote, resulting in the negative side being declared victors by one vote. t ' ,

A mission conducted by the Redemptorist Fathers is to begin in Ashburton on Wednesday, November 23, and extend to Sunday, December 4.