Set up and electrotyped. Published October, 1907. ReprintedJuly, 1909; July, 1915.
In a work on the "Distribution of Wealth," which was published in1899, I expressed an intention of offering later to my readers avolume on "Economic Dynamics, or The Laws of Industrial Progress."Though eight years have since passed, that purpose is stillunexecuted, and it has become apparent that any adequate treatment ofEconomic Dynamics will require more than one volume of the size of thepresent one. In the meanwhile it is possible to offer a brief andprovisional statement of the more general laws of progress.
Industrial society is going through an evolution which is transformingits structure and all its activities. Four general changes are goingon within the producing organization, and the resultant of them, underfavorable conditions, should be an enrichment in which all classeswould share. Population is increasing, capital is accumulating,technical methods are improving, and the organization of productiveestablishments is perfecting itself; while over against these changesin industry is an evolution in the wants of the individual consumer,whom industry has to serve. The nature, the causes, and the effects ofthese changes are among the subjects treated in this volume.
The Political Economy of the century following the publication of the"Wealth of Nations" dealt more with static problems than with dynamic ones.[Pg vi]It sought to obtain laws which fixed the "natural" prices ofgoods and those which, in a like way, governed the natural wages oflabor and the interest on capital. This term natural as thus used,was equivalent to static. If the laws of value, wages, and interesthad at this time been correctly stated, they would have furnishedstandards to which, in the absence of all change and disturbance,actual values, wages, and interest would ultimately have conformed.The economic theory of this time succeeded in formulating, correctlyor otherwise, principles of economic statics and a fragment or two ofa science of economic dynamics, although the distinction between thetwo divisions of the science was not clearly before the writers' eyes.The law of population contained in the work of Malthus is the onlysystematic statement then made of a general law of economic change.Though histories of wages, prices, etc., furnished some material for ascience of Economic Dynamics, none of them attained the dignity of apresentation of law or merited a place in Economic Theory. Students ofPolitical Economy were at that date scarcely awakened to theperception of laws of dynamics, and still less were they conscious ofthe need of a systematic statement of them. A modest beginning in theway of formulating such laws the present work endeavors to make.
The first fact which becomes apparent when economic progress is studied,is that static laws have a general application and are as efficient in asociety which is undergoing rapid transformation as in one that is altogetherchangeless. Water in a tranquil pool is affected by