Examination texts (Groups 113, 116)

№ 1

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The 19th-century British writer Thomas Carlyle called economics the “pig philosophy.” He held this unfavorable view because he regarded the businessman's quest for profits as mere greed. He also called economics the “dismal science” because the matters it deals with at such length are so ordinary. Carlyle lived at the time when the Industrial Revolution was still new and the modern economic system was in process of formation. His attitudes represented the way people for centuries past had thought about economic functions. More recent writers have taken a much more realistic view of economics. The management consultant Earl Bunting stated that: “The goals of business are inseparable from the goals of the whole community.” And the noted economist John Kenneth Galbraith made much the same point: “Economics deals with matters which men consider very close to their lives.”

№ 2

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No matter where people in the civilized world live, they are part of an economic system. To speak of a developed society is to speak of a society that has been built through vigorous economic functioning. Without economies there is no prosperity. Since the ancient world, civilization itself has been built upon economic growth. When the growth stopped, as it did at the end of the Roman Empire, civilization went into a long decline. What brought it back was the painstakingly slow emergence of workable economies. The word economy originally referred to household management—from the Greek oikos, meaning “household,” and nomos, meaning “rule,” or “governance.” Economics is the social science that studies how economies operate.

№ 3

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An economy is the wealth-producing segment of society. Wealth is defined as the total produce of agriculture and manufacturing. Without products there can be no wealth. This means, of course, that money is not wealth. Money is a means of exchange and may be called the economic equivalent of wealth. Economies exist because all human beings have needs and desires. All human physical needs are the same: food, clothing, and shelter. Desires, on the other hand, are virtually infinite. No one actually needs a television set, automobile, stereo set, or microwave oven. But such commodities have become so common in modern industrialized societies that few people would be without them.

№ 4

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The needs of society are satisfied by the production of goods—society's wealth. The desires are satisfied in the same way. Societies that cannot feed, shelter, and clothe themselves are poor. They have few products to satisfy basic needs and cannot even think of desires. In the United States, by contrast, there is a great abundance of products for most people. Needs and desires can both be satisfied. Wealth—all products taken together—is produced by labor. This type of labor can therefore be called productive labor. Much of society's labor does not create wealth. It is thus called nonproductive labor. To say that it is nonproductive is not to say something negative about it. Most forms of nonproductive labor are necessary in civilized societies. The labor of those who work in government, education, religion, athletics, some of the arts, and the military does not produce products. Therefore it does not create wealth to add to the prosperity of a nation. But these services are needed because no society is entirely economic in its nature, though most modern societies are basically economic units or collections of such units.

№ 5