CONTINUED FROM LAST WEEK
In Chapter 9, we shall be dealing with that form of education which will make a man live a happy and full life irrespective of his vocation, occupation, profession, or career. Secondly, the supreme importance of land and labour must be stressed at this juncture. As Marx rightly declared, “Land is the mother and labour the father of all wealth”. All wealth, of course, includes all that we consume plus all that we save or invest for the purpose of producing further wealth. Thirdly, we would like to stress the point that we can only get the best out of land by a judiciously selective utilisation of it, and the best out of a worker by a skilful division of labour.
In order to produce further wealth, something must be set aside from present output for the purpose. Even a static economy or society would require capital. A community which does not want to starve and suffer extinction must set aside part of its present output for the purpose of future production. In order to maintain continuous progress, however, there must be an ever-increasing capital formation. What is set aside this year as capital must be more than what was set aside as capital last year. In other words, each year must witness a rising net capital formation. This objective may be achieved by either consuming less this year than we consumed last year, provided output this year is the same as last year’s; or by producing so much more this year that after consuming more than we did last year we are still able to save more this year than we did last year. In other words, efficient and optimum capital formation does mean producing so much more than is consumed that the difference between output and consumption in each succeeding year is greater than in the year before. Whatever happens, enough must be consumed to ensure that the goose that lays the golden egg is healthy and strong enough to continue to play its part. That is to say, the worker must have enough of necessaries to consume compatible with his health and happiness, while at the same time enough is set aside to ensure an ever-increasing output On the other hand, if the output is meagre, consumption will either account for all that is produced leading eventually to death by starvation, or be at subsistence-starvation level in order to leave anything at all for capital formation.
Since the entrepreneur is the initiator of enterprises as well as the co-ordinator of the other three factors, he must possess exceptional ability and skill. He must be able to select men and materials, and organize them for the successful achievement of the end he has in view. He must be able to assess and appraise the market, and forecast the state of demands including probable changes in the tastes, whims and caprices of consumers, in order that he may be able to match supply with demand. In other words, he must have the gift of foresight, reinforced by the ability to collect statistical data and correctly interpret them. There are very few commodities whose raw materials can be produced immediately the final products are demanded. There are indeed many final products which take a very long time to produce to meet demand. It follows, therefore, that the entrepreneur must produce in anticipation of demand. This is a grave
responsibility. Because there is always the chance that between the initiation of the processes of production to meet anticipated demand there might be a change in tastes, etc., which may falsify the anticipation, so that at that time in the future when the goods are actually and physically ready for consumption, they are no longer in demand. Sometimes, however, he anticipates new tastes, and he produces what he thinks the consumers want for the satisfaction of such tastes, and then induces them by advertisement to consume his products.
It must be noted, however, that the entrepreneur’s exceptional ability is partly inborn, but chiefly the result of intensive and prolonged general and specialised education, together with long experience in administration and management.
In order to cope successfully with changing situations in his chosen field, he must ceaselessly and tirelessly seek to improve his professional abilities.
The problems of exchange arise simply because no one man, family, partnership, or joint-stock company can produce everything it wants for itself or for the satisfaction of other people’s wants. Besides, as we shall see, experience shows that greater efficiency and productivity result from specialisation or division of labour amongst individuals in a society or firm, amongst firms in an industry, between one territory and another in a State, or amongst different sovereign States by means Of unrestricted
international trade. Hence there must be exchange if all of us are to have the quantity and quality of goods which we all desire and want for a full and happy life. Furthermore, exchange of goods becomes necessary when one of two individuals, territories or countries prefers what the other produces to what it produces itself.
CONTINUES NEXT WEEK
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