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302 Economics
mon denominator. The division of economic activity into gainful activities and
household activities which resulted from the extension of a marketing andmoney
economy alone produced a general objective for economic activity which dom-
inates all the others: profit, supreme object in the capital enterprise, deciding
how all the resources shall be utilized. Ends and means can be expressed in
monetary terms and thus become fully comparable. Only then can rules of eco-
nomic calculation be strictly applied.
Competition makes strict economic calculation indispensable, protecting
against bankruptcy as well as permitting themaximization ofprofit. The triumph
of this principle of rationality in the capitalist enterprise was responsible for a
vigorous development of productive forces.
The principle in turn became a point of criticism in capitalism, the advocates
of planned economy arguing that, under the conditions of capitalist production,
economic rationality is limited to the enterprise. Because of private ownership
of the means of production, maximum production efficiency at enterprise level
is accompanied by waste at national level (unemployment, economic crises,
dilapidation of natural resources). The waste is still greater when enormous
corporations limit production in order to secure monopolistic profits.
In short, economics can be reduced neither to economic history nor to prax-
iology. But in studying the human relations which arise in the course of produc-
tion of material goods (i.e. as society harnesses the forces of nature), economics
undoubtedly retains the character of a historical science, since these relations
change in time; moreover, these changes can be scientifically codified provided
that men always act rationally in their effort to secure a satisfactory material
existence i.e., that they try to maximize the returns from the expenditure of given
means, or minimize the outlay necessary to attain specific aims. It is clear that
praxiology must frequently enter into economic considerations - increasingly
so as the preoccupations of economists become increasingly practical. In the
view of the present authors, economics (political economy) should be considered
as the study of the historically varying social conditions of the allocation, utili-
zation and development of resources.
II. ECONOMIC THINKING, MODELS AND METHODS
Introductory
It is not the purpose of this study to stocktake, to describe the methods now
being applied in the various sectors of economics, or to deal with problems that
await solution. Nor is its aim to make a systematic comparative analysis of the
different theories and schools of thought. As stated in ;the introduction, atten-
tion is concentrated on the economist’s workshop and his ways of thinking, so
that the reader of the report on the main trends of research in the human sciences
can see where economics stands in this regard, and what features it holds in
common with the others. Selectivity of course enters in. It is hardly possible to
talk as if one general method applied to political economy, and disregard the