Essentials of Economic Theory: As Applied to Modern Problems of Industry and Public PolicyClark, John Bates
General
Essentials of Economic Theory: As Applied to Modern Problems of Industry and Public Policy
Clark, John Bates
Economics
_How we may get Valid Results by Studying only a Part of the
World._--It is entirely possible to study by themselves the activities
of such a part of the world, and we will therefore draw a line of
demarcation about the countries which constitute the economic center
of it, and thus include an area within which economic causes produce
speedy effects. Each part of this area quickly responds to influences
that originate in any other part. If the steel mills in America make
radical improvements in their machinery, this change should, in the
absence of a strong monopoly, affect the price of rails in England,
Germany, etc. Within the central region wages and interest tend toward
uniformity, though, as we have seen, they do not attain it. Across the
boundary which separates this center from the outer zone, economic
influences act in a more feeble way and are unable to bring rates of
wages and interest even to an approximate equality. Western Europe,
America, and whatever regions are in very close connection with them,
we treat as a society, with the remainder of the world as its
environment. This center trades with the environing region, sends some
capital and labor thither, and draws some of each thence to the home
countries. Willingly or otherwise, it instructs the people of the
outer region in modern methods of industry, and thus causes what we
may regard as a slow annexation of a part of the outer zone to the
economic center and a modification of the character of industries at
home and abroad. The principal movement of labor is in an inward
direction, and from our point of view it is immigration not into one
country merely but into all economic society. The predominant movement
of capital has been outward.
_Mode of Studying Interchanges between Center and Environing
Zone._--All these movements have to be recognized in a study of the
economic life of the central society. How, for example, is commerce
with undeveloped regions to be regarded if we have the center only in
view? It is simply one of two possible ways of getting goods. The
people of the center can make a commodity that they use, or they can
make something to send into the outlying countries in exchange for it.
In the latter case they acquire it indirectly rather than directly,
but they acquire it by their own industry in the one case as well as
in the other.
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