The Supreme Tragedy
of American Economic Education
Noah D. Alper
[From a pamphlet published by the Public Revenue
Council, St. Louis, Missouri, 1952]
Careful classification and identification of the factors or elements,
and in the development of principles is the first requirement of a
science. If XYZ-1200 is a symbol of one thing, the symbol XYZ-1201 is
the symbol of another; and scientists universally respect the
difference and act accordingly. But does such a scientific attitude
dominate the teaching and use of the fundamental factors and
principles of Economics today?
If you were asked to classify these items scientifically - a),
prairie land; b). man; and c). automobile - would you place all in one
class, one of the three in one class and two in another, or each one
is a separate class? (Please answer in your own mind before
Economics is the science that deals with wealth - its nature, its
production and distribution. Wealth, the basic thing produced and
distributed, is a vital term in economic science and, when defined so
as to cover what are truly different classes of things, it can be
dangerous to man and to his free institutions. Our object here is to
inquire into the definitions of wealth generally used by economists
rather than to define the term. Our present effort will be limited to
a few examples of well known economists and authors of textbooks.
In a book, Understanding Our Free Economy, written by Dr. Fred
Rogers Fairchild, Knox Professor Emeritus of Economics, Yale
University, with Thomas J. Shelly as collaborator, we find this
definition: "Wealth consists of all useful material things owned
by human beings." Each of the items mentioned above - prairie
land, man, and automobile - is useful, is material, and can be owned.
Therefore, in accordance with Dr. Fairchild's definition, they are
basically the same thing and so all are wealth.
To show that men can be wealth, Dr. Fairchild says: "But are
human beings owned? The slave is; there is no doubt that he is wealth.
The Science of Economics therefore considers that free human
beings are not owned, and so are not wealth." But can an
impersonal Science of Economics have an opinion of this nature?
Obviously, it cannot; it is Dr. Fairchild himself, who says a slave is
wealth. If there is a scientific basis for a Science of Economics then
he has made a most grievous educational error in his definition of
wealth, and in his conclusion that such diverse things as prairie
land, man (labor), and automobiles (products of man) are so alike that
all can be, scientifically, termed wealth.
Another example of a lack of science in definition is found in "Economics,
a textbook written by Bruce Winton Knight and Lawrence Gregory Hines,
of Dartmouth College. In this book we find the following remarks on
Capital, wealth used for production for exchange or for income. "Economists
are agreed in treating labor as a factor of production distinct from
In a slave economy laborers would be regarded as
capital by their owners, just as horses and mules are considered
capital in our society. From the point of view of a society of free
men, however,_where_laborers are of the society itself and not merely
means of somebody else's satisfactions, laborers are not capital. On
the question of whether "land" or so-called "natural
resources" constitute capital, there is some difference of
opinion . ... This book, however, follows the more general
practice of treating land as part of the total capital."
The authors consider a man, when a slave, to be like a horse or mule
- and so as property or, wealth or capital. They ignore the nature of
man and his function as Labor in economic science - his function being
a producer of wealth. They ignore this vital fact in their effort to
distort economic science so as to make it conform to traditional
concepts and customs of property; that, although socially and
politically a slave, man, so far as economic science is or can be
concerned, is in the category of the factor, Labor. A slave
(man-labor) can produce things (wealth and services) exactly as can
men now recognized by economic science as being free.
No horse or mule has ever created or produced wealth except through
man's use of them. When a horse or mule is used by man as an aid to
production they are used in the same sense and in the same way as a
tractor, lathe, or as any other material or tool properly called
wealth or capital.
In considering the factors of economics professors Knight and Hines
say: "In economic classifications, however, agents of production
are typically resolved into a few underlying "factors" of
production on which all concrete agents are based. Thus, there are "labor,"
"capital" (including "land") and "entrepreneurship."
It should, of course, be realized that "entrepreneurship"
(management) is only a job classification; it is no more a factor
of production than the job classification janitor, albeit of a higher
category. In economic science, entrepreneurs are Labor, and must be so
classified if science is to be respected. Can man, as an economist, by
mere decree alone, inflate a job classification into a science factor?
(The fact that they have logically accommodated certain
information and theory to make management into a factor is not
While economists may, if they wish, concern themselves with such
things as a "point of view," "laws and customs,"
and assorted "differences of opinion," they do so not as
economists but as men also involved in other categories of studies and
human experience. As economists, they should have a scientific
objectivity which confines them to "cause-effect-predictability"
patterns of thinking and inquiry. Economic science, as such, is no
more involved with man's color, creed, condition of servitude,
ideological considerations, prejudices or wishes, than are the
sciences of physics. Chemistry, biology and the like. How, within the
framework or scientific discrimination, can things as different as man
-- even when politically and socially enslaved to deny him free
opportunity to produce and to rob him of his production - and land- an
element whose existence is natural and prior to man - and products -
artificial creations of man - be classified in one and the same
category as either wealth or capital?
If, to meet the exacting requirements of science, we consider land
(including natural resources), Labor (man), and Products (Capital or
consumer wealth) as belonging properly in different science
categories, we must consider that the shares of production allocated
to these factors are also in different categories or classifications.
Many economists seem to think that economic words can be made to mean
anything we wish so long as we agree to accept the meaning given the
words. Of course, if such an arrangement is followed, it may sound
logical to say that Land, Labor, Capital (or consumer wealth) can all
be Wealth, Capital, or, for that matter, a cat or a dog. Unfortunately
for such misconceptions or unscientific assumptions a "cause-effect-predictability"
pattern is involved in economic science which pays no attention to
such scholastic nonsense.
Hard facts, such as these, remain: Land is our standing and working
room area and the "mother" source of matter which is used in
making products (wealth or capital); and man, even when a slave, is
the producer and not the thing produced. When subjected to a tax on
their value and under given conditions, the market price of land goes
down while the market price of products goes up; whereas, if they were
of the same science nature the prices of both would tend to go up or
down together when taxed on their value. Under some taxes man is
encouraged to speculate in and to hold valuable land out of use, while
under other taxes he is encouraged not to seek to possess land which
he cannot or will not develop well. When economists miss or ignore
such facts as these, or present them in such a confused or disjointed
and spread-out way as not to be considered, let alone understood by
students, should men who have a sense of appreciation for science and
scientific methods in other fields be surprised at the failure of so
many economic scientists to better serve Man, Free Enterprise or the
The following is found as a footnote in the book, "Economic
Analysis and Public Policy", by Mary Jean Bowman of the
University of California, and George Leland Bach, of Carnegie
Institution of Technology.
"Economic rent is simply a different way of
looking at all income shares. All "economic rents"
are included under the headings of labor, profit, or interest
incomes. Roughly, economic rent is simply the return received from
property or a service that cannot be duplicated. Thus profits of
exclusive position are a type of "rent" The difference
between the income a worker receives in his most advantageous
employment and what he could get in alternatives is a form of "rent."
The difference between the returns to poor and to good land is
sometimes termed the "economic rent" on the good land. The
economic rent concept is thus to be distinguished from "rental
income" in the statistics of income; such incomes commonly
include some "economic rent," but the two are not the
same... Since economic rent is included as an aspect of
three other types of income, it is not considered in detail
If these forms of income are different why this unscientific
attempt to consider them as one and the same thing? If "economic
rent" is different from other "rents" how does it
help education or help student understanding to ignore such vital
One of our greatest problems, if Free Enterprise is ever to capture
the respect and favor of mankind, is to achieve not only additional
production per unit of labor, mental and physical, but also a just
distribution of wealth as well. The more just the basic and original
distribution of wealth the less likely are people to accept
unfortunate political and socialistic schemes for its "redistribution"
via a paternalistic government using a "taxing across the board"
RENT, called "Economic Rent," is generally recognized as
the return to land having natural or man-made advantages over the
poorest land in use, identified as marginal or "no rent"
land. It is one of the most vital terms of the Science of Economics.
The "old fashioned" economists, who thought more of the
distinctions between things that are different and of the meanings
of the words they used, sought to keep this word from confusing
people by conveying images to them of meanings associated with the
word rent as used in daily living - such as renting a car, a tool,
or a suit, etc. That is why the term "Economic Rent" was
originated and generally accepted.
RENT-of-land (Economic Rent) is directly associated with the Law of
Rent, one of the most basic and significant laws of the Science of
Economics so far as the potential good of mankind, of the Free
Enterprise economy and fair play is concerned. This Law is often
referred to as Ricardo's Law of Rent. It is through understanding
this Law that we are able to make a clean identification and
separation of incomes of Wages and Interest, from RENT-of-land. A
detailed understanding of RENT-of-land and the Law of Rent is of the
greatest importance in matters of public and private revenue,
especially in determining which source of possible public revenue,
RENT-of-land or the Rewards of human effort, we should use or use
first so as to insure the greatest possible production and the
utmost justice in distribution. However, when we "collectivize"
the different economic science factors and the shares of
distribution allocated by competition to these factors by tricks of
definition, we are assured a confused citizenry.
A scientific inquiry into economic education today will show why,
even if Johnny can read fairly well in college, he still will come
out a mighty confused citizen so far as scientific knowledge of
public and private revenue is concerned. Also, when we use "collectivist"
type of definitions we lower ourselves to the kind of logic used by
Marxist economists. Since Marxism, whether Communist or Socialist
types, is a scheme, Marxists have no need for more precise or
economic science definitions. The Marxist equivalent of the
collectivist definitions of most of our American economists is the
fabulous expression, the "Implements of Production." This
type of definition also suits far too many Americans who would
encourage and defend as private income that which arises, not from
true capital or management (in production), but from privilege as
rank (as to class favoritism) as any recorded in the history of
Rome, England or the United States. By the use of such hash-like
definitions defenders of Free Enterprise or Capitalism must operate
on a "love me, love my dog" basis - on a basis of defense
of the "weeds" as well as the "vegetables" in
our economic garden. However such definitions may serve Socialism or
other forms of collectivism, they cannot meet the need of Free
Enterprise with its basic control through natural laws and by
Since the power of scientific discrimination exists in economic
science as certainly as it does in other science fields, we can
achieve one class of results, or another - good or bad, as certainly
as engineers can design engines for power, speed, or for dual
purposes by the use of the science of physics and related sciences.
The great social and moral question is, of course, which economic
and social conditions we wish to produce for our people and our
nation? Do we want steadily increasing and naturally stabilized
prosperity, or constant repetition of the "boom and bust"
type of experiences of the past 100 years? Do we want high or low
prices (or wages), slum and semi-slum or well improved housing, a
trend towards Socialism or Freedom, or towards war or peace, etc.?
Isn't it possible that the many serious and seemingly isolated
social, economic and political problems we witness are the result of
a type of economic education seriously defective in basic and
discriminating science? Might not the confusion and the unfortunate
and needless bad results we experience be largely due to a failure
'to establish in economic education a true "cause-effect-predictability"
pattern, and so make such education useful rather than harmful to
man? We believe that the sad attempts to use forms of "logic"
that smack of Marxists ideology as a substitute for true science
factors and principles (natural laws), and to make the economics
studied in colleges and universities conform to laws and customs
rather than making our laws and customs conform to natural economic
principles, is the root cause of our widening and deepening troubles
Economic science is the "key-log" science by which great
and happy accomplishments can be ours if we approach it as truth
seekers and with the reverence due truth. Economic science is the
science grossly ignored in this day of Space and Sputniks, of power
conflicts between nations of different ideologies, between men
called Labor (Organized), and men termed capital-owners and
management; yet it is the science which has in it the potential to
condition our economic and social environment for a more noble use
of all other sciences, some of which we now fear in one way or
another. Economic science is the one which, by revealing to us how
to eliminate the basic wrongs now endured and defended by a few who
profit from a capitalization of these wrongs, and by cultivating and
encouraging the proven good in our system, will help us evolve our
Free Enterprise system to a point where we will be freed of the
endless symptoms of evil of economic and social nature we now treat
in vain by Socialistic type laws which only tend to compound our
 D. Van Nostrand Co. (1952) -pp
 Alfred A. Knopf (1952) - pp 19-24-25.
 Prentice-Hall. Inc. (1949) - p. 541.