and consumption, and study means whereby the abuses might be minimised, if not altogether eliminated. A further consideration has to be noted. It is not only a question of whether the commodity is harmful or otherwise, but whether its production prevents some other commodity of greater social advantage from being produced. The community's stock of labour and material is not unlimited, and the production of an article of luxury means that the resources for supplying necessities of life have been thereby reduced. While there is no objection to the making of luxuries as such, many would maintain that the elementary needs of the community should have first claim on the resources and means of production. But this condition is not necessarily found in a system where the money value of a commodity is practically the only indicator for production to follow. If a greater profit is made from manufacturing luxuriously equipped motor-cars than from growing wheat, there is a drift of labour and capital to the more profitable enterprise. Similarly in the case of house building; since the number of bricks available at a given time is limited, the person who offers the best price gets them-though the bricks may go to build a country mansion or licensed premises instead of workmen's cottages. Here again, Social Economics cannot ignore the moral implications. In the computation of the total production of a community, however, a mansion costing £10,000 would rank equal to twenty cottages costing £500 each. Few would contend that the mansion gives as much social benefit as the score of cottages. The term " production," therefore, may be interpreted either from the point of view of money value or from that of social service. What exactly is production, and arising out of this question, what is productive labour? Money as a These questions are easily answered in pure economic theory. Production is the creation of utilities. Fashioning a piece of wood into a walking stick adds a utility of form. Storing water from a period of heavy rains to one of drought gives a utility of time. Transporting timber from the forest to the factory imparts a utility of place. Utility of a personal character would be rendered by the direct services of professional men and civil servants. Labour that provided any of these utilities would, strictly speaking, be" productive." So would all the efforts that were indirectly involved. Thus in the narrow sense any individual who satisfied a want, whether this want were good or bad, constructive or destructive, would technically be a producer. But the preceding definition hardly satisfies the student who takes a wider view than the merely economic. Is a bookmaker at the race-course productive? In the restricted sense of the term he is, since he provides a service that people require and for which they are willing to pay. But if one adopts the broader and more reasonable meaning of the word, his "productivity" is a very uncertain quantity. And if one takes the money measure of the bookmaker's "productivity" and compares it with that of (say) the agricultural labourer's "productivity," the result is very incongruous. The one may gain £20 a week for performing a service, without which the world would go on just as well, if not better. The other may get 30s. a week for producing commodities without which the world would be in a poor way. Again, a writer of trashy stories or revues may have an income running into thousands whereas the artist who composes good novels or plays may be unable to make a living. Thus the money value of a man's service cannot be regarded as an adequate measure of his real contribution to society. Yet the money value is the least imperfect measure that the economist possesses. Evidently, therefore, the study of Social Economics must be accompanied by a broader outlook which takes note of influences and factors that do not figure in the ordinary economic formulae (unless they are covered by the oft-recurring phrase "other things being equal ") if the science is to be applied to the facts of everyday life. Economic Freedom. In the formulation of economic laws, or statements of tendency, perfect competition is usually Limitations of specified or tacitly assumed as the normal condition. Anything which prevents an economic law from operating is regarded as economic friction." Many works on economics are apt to give one the impression that competition is the rule, and that "friction," while not uncommon, is a disturbing influence of secondary importance. In actual life, however, free competition is the exception, the implied perfection of knowledge and freedom of movement being seldom found. Ignorance on the part of producers as to what and how much their rivals are turning out, ignorance on the part of consumers as to the demand of and the prices offered by other consumers, both serve to prevent the realisation of a perfect competitive price. The immobility of labour and, to a less extent, of capital hinders an easy flow of resources into those channels where the greatest economic advantage is to be obtained. Non-economic motives such as family affection and local ties frequently prevent the exact adjustment of supply of and demand for labour that is assumed in pure economic theory. Public policy may deem it necessay deliberately to impede, and even to nullify, the tendencies laid down in economic laws. For example, had the laws of supply and demand worked without hindrance during the Great War, the prices of important necessities of life would have soared to such limits as to cause great hardship to the poorer classes. The Government wisely fixed maximum prices for certain articles, despite the protests of those who considered it almost sacrilegious to interfere with the laws of supply and demand. In the same way, the State interferes with the so-called economic freedom existing between employers and employed by insisting to an increasing degree on the provision of a minimum wage. Even if the competitive system were nearer the ideal, and every person had an equal opportunity from the start, there would still be need of intervention, for the employer has by his very position a distinct advantage in bargaining power over the men he employs. A very desirable" economic friction" may be exercised by the State and the trade union. Considerations such as these help to determine the scope The Scope of Social Economics. of Social Economics. The subjects to be studied in these chapters are fewer than those found in the ordinary work on general Economics. Attention is directed only to those questions that concern the mass of the people in their every-day lives. The teachings of the pure science of Economics are taken largely for granted, except in those departments where some analysis is specially desirable. On the other hand, Social Economics is more inclusive than Economics as usually understood in that it takes into account the many non-economic influences bearing on man's welfare. Social Economics recognises that money value is not always a true index of real social utility, that while it may indicate the extent of economic wealth it is not necessarily a measure of social wellbeing. The treatment in the following pages is as much descriptive as analytical, and, where a knowledge of the evolution of a particular movement or scheme is deemed necessary to a more complete understanding, a short historical account is introduced. Thus, in dealing with trade unionism, co-operation, poor relief, housing and similar questions, the main stages in their development are briefly outlined with a view to affording a fuller comprehension of the position as it is to-day. The actual arrangement of the several subjects is somewhat arbitrary. It has been thought advisable to commence with a descriptive account of povery, partly because it is the most obvious problem confronting the social reformer, partly because the various investigations on the matter afford a basis for discussion. The wages system in its manifold aspects is next examined, and then the question of hours and working conditions. Though a separate chapter is devoted to the problem of the woman worker, it should be regarded as contributing to the general discussion affecting all work and wages, for the economic interests of men and women workers are closely interwoven, and are dependent upon the same ultimate factors. The succeeding chapters deal with the workers' unrest, with their organisations, and with the plans and movements adopted or proposed for securing better conditions. The objects and functions of trade unionism and co-operation are briefly reviewed. Unemployment, one of the most pressing of all social questions, calls for a somewhat more detailed study, and, though it is impossible to do justice to the problem in two or three chapters, an attempt is made to indicate the more outstanding causes, and the principal suggestions for remedying or mitigating the evil. The distress caused by unemployment and other factors calls for a survey of the system of public aid. Following a description of the Poor Law, the principles and methods of social insurance in its various forms are examined. Finally, the housing of the working classes is discussed, |