ECON’OMY, noun [Latin oeconomia; Gr. house, and law, rule.]
1. Primarily, the management, regulation and government of a family or the concerns of a household.
Other, philosophers were more realistic. They did not try to guess the designs of Nature or God. They looked at human things from the viewpoint of government. They w’ere intent upon establishing rules of political action, a technique, as it were, of government and statesmanship. Speculative minds drew ambitious plans for a thorough reform and reconstruction of society. The more modest were satisfied with a collection and systematization of the data of historical experience. But all were fully convinced that there was in the course of social events no such regularity and in variance of phenomena as had already been found in the operation of human reasoning and in the sequence of natural phenomena. They did not search for the laws of social cooperation because they’ thought that man could organize society as he pleased. If social conditions did not fulfill the wishes of the reformers, if their utopias proved realizable, the fault W’as seen in the moral failure of man. Social problems were considered ethical problems. What was needed in order to construct the ideal society’, they’ thought, was good princes and virtuous citizens. With righteous men any utopia might be realized. The discovery of the inescapable interdependence of market phenomena overthrew this opinion.
Bewildered, people had to face a new view of society. They learned with stupefaction that there is another aspect, from which human action might be viewed than that of good and bad, of fair and unfair, of just and unjust. In the course of social events there prevails a regularity of phenomena to which man must adjust his action if he wishes to succeed. It is futile to approach social facts with the attitude of a censor who approves or dis- approves from the point of view of quite arbitrary’ standards and subjective judgments of value. One must study the laws of human action and social cooperation as the physicist studies the laws of nature. Human action and social cooperation seen as the object of a science of given relations, no longer as a normative discipline of things that ought to be this was a revolution of tremendous consequences for knowledge and philosophy as well as for social action. For more than a hundred years, however, the effects of this radical change in the methods of reasoning were greatly restricted because people believed that they referred only to a narrow segment of the total field of human action, namely, to market phenomena.
The classical economists met in the pursuit of their investigations an obstacle which they’ failed to remove, the apparent antimony of value. Their theory of value was defective, and forced them to restrict the scope of their science. Until the late nineteenth century political economy remained a science of the “economic” aspects of human action, a Introduction 3 theory of wealth and selfishness. It dealt with human action only to the extent that it is actuated by what was— very unsatisfactorily- described as the profit motive, and it asserted that there is in addition other human action whose treatment is the task of other disciplines. The transformation of thought which the classical economists had initiated vistas brought to its consummation only by modem subjectivist economics, which converted the theory of market prices into a general theory of human choice. “