The Mecca of the economist lies in economic biology rather than in economic dynamics. But biological conceptions are more complex than those of mechanics; a volume on Foundations must therefore give a relatively large place to mechanical analogies; and frequent use is made of the term “equilibrium,” which suggests something of statical analogy. This fact, combined with the predominant attention paid in the present volume to the normal conditions of life in the modern age, has suggested the notion that its central idea is “statical,” rather than “dynamical.” But in fact it is concerned throughout with the forces that cause movement: and its key-note is that of dynamics, rather than statics.
The forces to be dealt with are however so numerous, that it is best to take a few at a time; and to work out a number of partial solutions as auxiliaries to our main study. Thus we begin by isolating the primary relations of supply, demand and price in regard to a particular commodity. We reduce to inaction all other forces by the phrase “other things being equal”: we do not suppose that they are inert, but for the time we ignore their activity. This scientific device is a great deal older than science: it is the method by which, consciously or unconsciously, sensible men have dealt from time immemorial with every difficult problem of ordinary life.
In the second stage more forces are released from the hypothetical slumber that had been imposed on them: changes in the conditions of demand for and supply of particular groups of commodities come into play; and their complex mutual interactions begin to be observed. Gradually the area of the dynamical problem becomes larger; the area covered by provisional statical assumptions becomes smaller; and at last is reached the great central problem of the Distribution of the National Dividend among a vast number of different agents of production. Meanwhile the dynamical principle of “Substitution” is seen ever at work, causing the demand for, and the supply of, any one set of agents of production to be influenced through indirect channels by the movements of demand and supply in relation to other agents, even though situated in far remote fields of industry.
The main concern of economics is thus with human beings who are impelled, for good and evil, to change and progress. Fragmentary statical hypotheses are used as temporary auxiliaries to dynamical—or rather biological—conceptions: but the central idea of economics, even when its Foundations alone are under discussion, must be that of living force and movement.
- Preface to the 8th edition of Principles of Economics