This section is from the "Economics In Two Volumes: Volume I. Economic Principles" book, by Frank A. Fetter. Also available from Amazon: Economic
§ 1. Man and wealth as economic agents. § 2. Labor as contributing to income. § 3. Psychic income gained in play. § 4. Play- and labor-motives mingled. § 5. Disagreeable labor. § 6. Physical differences among men. § 7. Comparative strength of men and women. § 8. Differences in natural intelligence. § 9. Talent and training as factors of efficiency. § 10. Moral qualities required in industry. § 11. Necessary combination of qualities. § 12. Inequality of talents shown by biologic studies.
§ 1. Man and wealth as economic agents. The whole slock of economic agents in a community at any moment may be classified as wealth and men, objective goods and human beings. In our study thus far of value and price, we have limited our illustrations to objective commodities, and to the uses of the objective (non-human) agencies of production. Little has been said about the other great class of economic agents, human beings. Yet everything that has been said as to the fundamental principles of value and price, applies fully to the uses (services) of men. Indeed it is only by an abstract method of treatment of wealth that the services of men have appeared to be left out of consideration. In truth the presence of men is always, and must always be, implied and understood in any study of the value of wealth. This means not merely that man is the evaluater, the chooser of goods (for of course a world without mankind would be a world where value was nonexistent) ; this means also that man is the doer of acts that themselves have value and the doing of which profoundly affects the whole economic situation in which objective goods are valued. Labor is a complementary agent, some portion of which is indispensable to the use of wealth. Within limits man's efforts and goods may be mutually substituted. Each act a man performs, expressing, as it does, a choice, implies some economic valuation in relation to his other acts and to wealth. In applying his own labor to producing goods for his own use, or in selling his goods or his labor to others, his labor is being constantly valued and, only less often, priced.
Man's labor is valued or priced because, like other agents (non-human agents), it is serving for the gratification of desires. In the process of gratifying human desires the man is correlative with the machine. Both have within them the capacity of yielding services or uses, and the services of the man are valued in the same way as the uses of the machine. The labors of the physician, of the blacksmith, or of the day laborer are bought just as is the use of the rented house or of the hired taxicab. This parallelism is somewhat obscured by the ambiguity of the term "labor" which is used to mean not merely the service (labor), but the people (laborers) who render the service. In such phrases, for example, as "labor and capital," or "land and labor," the term "labor" is used of the persons who perform the labor.
§ 2. Labor as contributing to income. In the processes of production and of valuation man plays a dual role. He is first the economic subject - the being who has desires and makes choices - but also he is an economic agent, an instrumentality in the gratification of desires - his own as well as those of other people. This is quite simple in the case of chattel slavery. To the master, his slave is on the same economic plane with his horse, his machinery, or his land - each is valued simply for the use it yields. The free man, however, is his own master, a person whose desires and choices are the starting point in the study of value; and at the same time he is an agent in the gratification of his own desires, directly and indirectly. Not only do other people by their services contribute toward the gratification of our desires, but we actually render many services to ourselves in such acts as dressing, shaving, polishing shoes, cooking, making clothes, etc., which form a very considerable part of most persons' incomes.
Human efforts have the same relation to desires that the uses of material goods have. Labor contributes to income either directly (psychic) or indirectly in the changes it causes in material goods. To be an economic good human effort must meet either a desire in the laborer himself, or a demand from some other person. Many services afford an income directly which is immediately enjoyed. A tropical potentate has an attendant to fan him, another to carry an umbrella, and a third to beat a tom-tom; a humble American citizen is shaved, doctored, sung to and played for, or is his own barber, doctor, and entertainer. The income in such cases is directly enjoyed in personal comfort, in the consciousness of heightened beauty, in the feeling of self-esteem. Something of value is thus created but takes no material form apart from the consumer (who may be the laborer himself).
But the results of most labor may be seen to rest, at least temporarily, in some material form. Effort is put upon a material thing to be used later. The work of the waiter in spreading and arranging the table is not an immediate service, for it is embodied in material form an hour or two before the meal. The service of cook, no less than that of gardener and butcher, is put into material form before it comes to the consumer. The woodman fells, cuts up, and splits a tree, and piles it at the door, putting his labor into a good to be consumed months afterward. But whether labor is embodied or is not embodied in material form, its economic significance lies in the fact that, like wealth, it provides valuable uses (services) to men; that is, it contributes to income.1
1 Formerly the productiveness of labor was said to depend upon this condition of embodiment in abiding material form. According to the view in question, the bartender mixing drinks which would be quaffed a moment later was to be called a productive laborer because his services were embodied in material form; whereas the lecturer, the singer, the teacher, and the judge were regarded as unproductive laborers because the results of their labors were not embodied in material form, but went at once into psychic income. Whether or not the service has for a moment embodied itself in material form is not of the most essential economic import. The presence of the waiter is as essential to the well-served dinner as are the polished silver and china, or as the well-cooked food. The distinction in question is not now made by most economists. But a similar distinction is inconsistently preserved by many writers who call unproductive the goods yielding direct enjoyment (houses, carriages, etc.) and call only those material agents productive (as tools, machines, etc.) whose product is embodied for a time in material form. If a distinction is to be made between productive and unproductive labor it will have to be found in the occasional contradiction between value and utility; that is, in the result of labor as regards social welfare. (See ch. 39.)