We now seem able to get a more accurate understanding of what a scientific calculus can do for the assistance of the art of social welfare.It can do for that art what it can do for every other art, viz., furnish rules for the regular.So far as the stuff which constitutes or composes human welfare is uniform, i.e., so far as men are alike in their needs, and the material for the satisfaction of these needs is similar, it can supply rules of social economy which will have a high degree of validity.Though no two human organisms are identical in structure, all human organisms within a wide range of environment are so similar in the kinds of food, air and other material goods which they require, that it is sound 'social policy' to ignore their differences and to treat them as identical in the qualities of their demands and dissimilar only in the quantities.The practical economy of 'markets' stands upon this basis, and the quantitative treatment finds its true justification in the utility of markets.There can be no market for the single or 'singular' consumer.A market, i.e., a practical instrument for measurement of economic wants, implies a standardisation of the desires of buyers and sellers.Just so far as the members of an economic community are thus standardised in their preferences, are economic laws applicable.Thus, for the scientific interpretation of such a community, much depends upon the relative strength and importance of the standardising and the individualising forces.In a society where the so-called 'arts'
of industry and of consumption have alike passed by imitation or tradition into firm conventions from which the least transgression is branded as an impiety or a wickedness, economic laws, based upon a sufficient study of the past and present, will enable one to predict the future with considerable accuracy.Primitive or backward communities are usually in this conservative condition.Moreover, as they advance and become economically progressive, it is observable that the most conservative and most calculable wants and activities are those relating to the satisfaction of the primary material needs.Hence it is evident that scientific predictions, based either upon general considerations of human nature or upon past measurements, will come nearest to fulfilment, according as they relate to the production and consumption of those articles most deeply embedded in the standard of living.Conveniences and comforts are more changeable than necessaries, and luxuries most changeable of all.Now the marginal or least useful portion of those supplies, which in the earlier or most useful increments satisfy some prime need, are often luxuries.The marginal portion of the wheat supply goes for cakes, or is thrown into the dust-bin as waste bread: the marginal oil goes into motor rides.Taking expenditure in general, we find the last ten per cent of every income most incalculable in its outlay, because it represents those purchases in which custom is weakest and individual taste or opportunity the strongest.In a word, it is precisely in those economic actions which express marginal preferences, the pivot of the mechanical calculus, that we find the maximum of instability and incalculability.
For each of these nice marginal preferences proceeds directly from the changing nature of the organic personality.Whereas fifty per cent of a man's expenditure may express the common satisfaction of the fixed physical needs which custom has embedded in a standard of subsistence, thirty per cent the lighter but fairly stable comforts belonging to his class, the last twenty per cent is the part in which he expresses his individual character and his cravings for personal distinction and variety of enjoyment.
The formal invalidity of the 'marginalist' method has already been disclosed.The considerations just adduced indicate its practical futility as a means of guidance for economic art.Neither as a deductive nor as an inductive science can Economics furnish accurate rules for calculating or directing future economic events.It can only prophesy within such limits as are set by the assumptions of the stability of human nature and of its environment.Its rules or 'laws' will best interpret and predict those economic actions which are most remote from the margin, i.e., those which are most conservative or regular.Marginal preferences will therefore be precisely those which it is precluded from interpreting or predicting by the necessary defect of the intellectual instrument.
§12.Thus the final futility of the mechanical method of marginalism lies in its insistence upon applying a quantitative method of interpretation to the most qualitative portion of the subject-matter, that portion where the organic conditions of personality and novelty are of paramount significance.
Indeed, it is for this reason that economic science, though able to supply relevant and important evidence, can never solve conclusively any social-economic problem, even in that field of action where her authority is most strongly asserted.A given rise or fall of price can never produce the same effect upon demand twice running.Why? Because the desires and beliefs of the more unsettled section of buyers, the 'marginal' buyers, will have changed.Nor can this alteration in effect upon demand be calculated.
Why not? Because the changes in desires and beliefs are organic qualitative changes.Observations of past price movements and laws based upon them are not thereby rendered useless.For these organic changes will often be negligible so far as the bulk of the market is concerned.But they negate the possibilities of exact prediction, and often of approximate predictions on the margin.
