Tuesday, September 11, 2012


Principles of Economics
Needs arise from our drives and the drives are imbedded in our nature. An imperfect satisfaction of needs leads to the stunting of our nature. Failure to satisfy them brings about our destruction. But to satisfy our needs is to live and prosper. Thus the attempt to provide for the satisfaction of our needs is synonymous with the attempt to provide for our lives and well-being. It is the most important of all human endeavors, since it is the prerequisite and foundation of all others.
In practice, the concern of men for the satisfaction of their needs is expressed as an attempt to attain command of all the things on which the satisfaction of their needs depends. If a person has command of all the consumption goods necessary to satisfy his needs, their actual satisfaction depends only on his will. We may thus consider his objective as having been attained when he is in possession of these goods, since his life and wellbeing are then in his own hands. The quantities of consumption goods a person must have to satisfy his needs may be termed his requirements.1 The concern of men for the maintenance of their lives and well-being becomes, therefore, an attempt to provide themselves with their requirements.
But if men were concerned about providing themselves with their requirements for goods only when they experienced an immediate need of them, the satisfaction of their needs, and hence their lives and well-being, would be very inadequately assured.
If we suppose the inhabitants of a country to be entirely without stocks of foodstuffs and clothing at the beginning of winter, there can be no doubt that the majority of them would be unable to save themselves from destruction, even by the most desperate efforts directed to the satisfaction of their needs. But the further civilization advances, and the more men come to depend upon procuring the goods necessary for the satisfaction of their needs by a long process of production (pp. 67 ff.), the more compelling becomes the necessity of arranging in advance for the satisfaction of their needs—that is, of providing their requirements for future time periods.
Even an Australian savage does not postpone hunting until he actually experiences hunger. Nor does he postpone building his shelter until inclement weather has begun and he is already exposed to its harmful effects.2 But men in civilized societies alone among economizing individuals plan for the satisfaction of their needs, not for a short period only, but for much longer periods of time. Civilized men strive to ensure the satisfaction of their needs for many years to come. Indeed, they not only plan for their entire lives, but as a rule, extend their plans still further in their concern that even their descendants shall not lack means for the satisfaction of their needs.
Wherever we turn among civilized peoples we find a system of large-scale advance provision for the satisfaction of human needs. When we are still wearing our heavy clothes for protection against the cold of winter, not only are ready-made spring clothes already on the way to retail stores, but in factories light cloths are being woven which we will wear next summer, while yarns are being spun for the heavy clothing we will use the following winter. When we fall ill we need the services of a physician. In legal disputes we require the advice of a lawyer. But it would be much too late, for a person in either contingency to meet his need, if he should only then attempt to acquire the medical or legal knowledge and skills himself, or attempt to arrange the special training of other persons for his service, even though he might possess the necessary means. In civilized countries, the needs of society for these and similar services are provided for in good time, since experienced and proven men, having prepared themselves for their professions many years ago, and having since collected rich experiences from their practices, place their services at the disposal of society. And while we enjoy the fruits of the foresight of past times in this way, many men are being trained in our universities to meet the needs of society for similar services in the future.
The concern of men for the satisfaction of theirs needs thus becomes an attempt to provide in advance for meeting their requirements in the future, and we shall therefore call a person’s requirements those quantities of goods that are necessary to satisfy his needs within the time period covered by his plans.3
There are two kinds of knowledge that men must possess as a prerequisite for any successful attempt to provide in advance for the satisfaction of their needs. They must become clear: (a) about their requirements—that is, about the quantities of goods they will need to satisfy their needs during the time period over which their plans extend, and (b) about the quantities of goods at their disposal for the purpose of meeting these requirements.
All provident activity directed to the satisfaction of human needs is based on knowledge of these two classes of quantities. Lacking knowledge of the first, the activity of men would be conducted blindly, for they would be ignorant of their objective. Lacking knowledge of the second, their activity would be planless, for they would have no conception of the available means.
In what follows, it will first be shown how men arrive at a knowledge of their requirements for future time periods; it will then be shown how they estimate the quantities of goods that will be at their disposal during these time periods; and finally a description will be given of the activity by which men endeavor to direct the quantities of goods (consumption goods and means of production) at their disposal to the most effective satisfaction of their needs.

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