Summary Of Conclusions

Perpetual change is the conspicuous fact of modern life. So

revolutionary are the alterations which a few decades make in the

industrial world as to raise the question whether there are economic

laws which retain their validity for any length of time. If there are

not, we have one economic science now, and shall have a different one

ten years hence and a widely dissimilar one a century later. Of

Descriptive Economics t
is is true, since it changes with the world it

describes; but it is not true of Economic Theory. There are certain

principles which are equally valid in all times and places. They were

true in the beginnings of industry, are true now, and will remain so

as long as men shall create and use wealth. They are not made

antiquated either by technical progress or by social evolution. We

have at the outset stated some of these truths. They have reference to

man, to his natural environment, and to the interactions of the two,

and they do not depend on the relations of man to man. We have also

stated other economic truths which apply only to man in a social

state. They are not universal, but are so general that they are

exemplified in the economic life of every society, from the most

primitive to the most highly civilized. They are the principles of

Social Economic Statics, and in order to have them distinctly before

us we have created in imagination a society which is changeless in

size, in form, and in mode of economic action. In such a condition

the wages of labor would remain fixed, as would also the interest on

capital. Wages and interest would absorb the whole product of social

industry; for the static condition, as we have thus created it,

excludes profits of the entrepreneur. In broad outline this

describes the condition toward which certain economic forces are

continually impelling the actual world.

There is at each period a standard shape and mode of action to which

static laws acting by themselves would bring economic society. This

social norm, however, is not the same at any two periods. The static

laws remain unchanged, but they act in changing conditions, and if

they were left alone and undisturbed, would give one result in 1907

and another in 2007. The changes which a century will bring should

make society larger and richer, the mode of production more effective,

and the returns for all classes greater. The laws which set the

standard of wages and interest will remain the same, but if the

tendencies now at work have their natural effect, all these incomes

will be larger. It is as though great quantities of water were rushing

into a lake and causing disturbances and upheavals of the surface. If

the inflow should now stop, the surface would subside to a general

level. If the inflow should recommence, go on for a hundred years, and

then stop, the surface would again subside to a level, but it would be

higher than the former one. Yet the laws of equilibrium which

produced the first static level would be identically the same as those

which produced the second. Social Economic Statics is a body of

principles which act in every stage of civilization and draw society

at every separate period toward a static norm, though they do not at

any two periods draw it toward the same norm. They make actual society

hover forever about a changing standard shape.

The laws which govern progress--which cause the social norm to take a

different character from decade to decade, and cause actual society to

hover near it in its changes--are the subject of Social Economic

Dynamics. We have made a study of the more general economic changes

which affect the social structure, and they stand in this order:--

(1) Increase of population, involving increase in the supply of labor.

(2) Increase in the stock of productive wealth.

(3) Improvements in method.

(4) Improvements in organization.

All these things affect the productive power of society, and

correlated with them and standing over against them is a fifth type of

change, which affects consumers' wants and determines how productive

power shall be used.

We have examined each single change by itself and have then endeavored

to combine them and get the grand resultant of all. Beginning with the

increase of population, we have traced its effects on wages, on

interest, and on the values of goods. We have made a similar study of

the growth of capital, the progress of technical method, and the

organization of industry.

The variation of economic society from its static standard offers a

problem for solution, and in this connection the type of change in

which the most serious evils inhere is that which discards old

technical methods and ushers in new ones. The question whether these

evils are destined to increase or to diminish we have answered

conditionally on the basis of past experience and present tendencies.

If competition continues and labor retains its mobility, the evils

will naturally grow less. The grand resultant of all the forces of

progress is an upward movement in the standard of economic life

gained, not without cost, but at a diminishing cost.

A vital question is that of the continuance of the movements now in

progress. Do any of them tend to bring themselves to a halt? Is any

change on which we rely for the hopeful outlook we have taken

self-terminating? We have found that the growth of population tends to

go on more slowly as the world becomes crowded, while the motives for

an increase of productive wealth grow stronger rather than weaker.

Technical progress gives no hint of coming to an end, and improvements

in organization may go on indefinitely, though they will naturally go

on more slowly as the modes of marshaling the agents of production are

brought nearer to perfection. Knowledge of the causes of economic

change is at best incomplete, and enlarging it by the statistical

method of study will be a chief work for the economists of the future.

Analytical study points distinctly to a coming time of increased

comfort for working humanity. Progress gives no sign of being

self-terminating, so long as the force which has been the mainspring

of it, namely, competition, shall continue to act.

The suspicious element in the general dynamic movement is progress in

organization. That which we have primarily studied is the marshaling

of forces for mere production--the creation of efficient mills, shops,

railroads, etc. This, however, carries with it a tendency to create

large mills, shops, and railroad systems, and, in the end, to combine

those which begin as rivals in a consolidation in which their rivalry

with each other ceases. This means a danger of monopoly, and is the

gravest menace which hangs over the future of economic society.

If anything should definitely end competition, it would check

invention, pervert distribution, and lead to evils from which only

state socialism would offer a way of escape. Monopoly is not a mere

bit of friction which interferes with the perfect working of economic

laws. It is a definite perversion of the laws themselves. It is one

thing to obstruct a force and another to supplant it and introduce a

different one; and that is what monopoly would do. We have inquired

whether it is necessary to let monopoly have its way, and have been

able to answer the question with a decided No. It grows up in

consequence of certain practices which an efficient government can

stop. Favoritism in the charges for carrying goods is one of these

practices. Railroads have become both monopolies and builders of other

monopolies. Certain principles, which we have briefly outlined, govern

their policy, and the natural outcome of their working is

consolidation. This creates the necessity for a type of public action

which is new in America--the regulation of freight charges.

Akin to this is the necessity for keeping alive competition in the

field of general industry by an effective prohibition of various

measures by which the great corporations are able to destroy it. The

dynamic element in economic life depends on competition, which at

important points is vanishing, but can, by the power of the state, be

restored and preserved, in a new form, indeed, but in all needed

vigor. With that accomplished we can enjoy the full productive effect

of consolidation without sacrificing the progress which the older type

of industry insured.

The organization of labor, its motives, its measures, and its

tendencies,--including a tendency toward monopoly,--we have examined.

Through all the wastes and disturbances which the struggle over wages

occasions we have discovered a certain action of natural economic law,

and have seen what type of measures, on the part of the state, will

remove impediments in the way of that law and enable it to act in

greater perfection.

Connected with the dynamic movement on which the future of society

depends are the policies of the government in connection with currency

and with protective duties. Here, less action, rather than more, is

demanded on the part of the state. While no renewal of a

laissez-faire policy is possible, a reduction of the duties which

now play into the hands of monopoly is distinctly called for. In

connection with currency a greater trust in nature and a smaller

reliance on governments will give the best results.

Our studies have included, not the activities of the whole world,

but those of that central part of it which is highly sensitive to

economic influences. The whole producing mechanism here responds

comparatively quickly to any force which makes for change. This

society par excellence is extending its boundaries and annexing

successive belts of outlying territory; and as this shall go on, it

must bring the world as a whole more and more nearly into the shape of

a single economic organism. The relations of the central society to

the unannexed zones are attaining transcendent importance, and a

fuller treatment of Economic Dynamics than is possible within the

limits of the present work would give much space to such subjects as

the transformation of Asia and the resulting changes in the economic

life of Europe and America. Here again the conscious action of the

people determines the economic outcome. In the main we can still leave

the natural forces of industry to work automatically; but we have

passed the point where we can safely leave to self-regulation the

charges of the common carrier, the conduct of monopolistic

corporations, or certain parts of the policy of organized labor.

Foreign relations are, of course, a subject for public control, and

they are coming to affect in a most intimate way our own economic

life. Everywhere our future is put into our own hands and will develop

the better the more we know of economic laws and the more energy we

show in applying them. The surrendering of industries generally to the

state may be avoided, and the essential features of the system of

business which evolution has created may be preserved; but to keep

this system free from unendurable evils will require, on the part of

the people, a rare combination of intelligence and determination. It

will require a public policy that shall neither be hampered by

prejudice nor incited by ebullitions of popular feeling, but shall be

guided through a course of difficult action by a knowledge of economic