Note: Emerson's insight on political economy

Below is an excerpt from Ralph Waldo Emerson's essay Wealth. It broadly describes the nature of an economy in a way that you won't find in modern text books. In just two paragraphs, Emerson draws a clear link between morality and money (it's no wonder that Adam Smith's other great work, beside Wealth of Nations, was his Theory of Moral Sentiments). He demonstrates the deep inter-connectivity between different aspects of an economic system, the hidden causal links, which make the whole system function.

I believe the insight underlying this passage, of inexorable inter-connectedness, is crucial for anyone who wishes to understand economics at scale. If you can really absorb what Emerson is trying to say, you'll start to see how the miniature decisions that we make in our day to day lives - our attitude in dealing with other people, whether we take that extra effort to improve the quality of our deliverable, whether we decide to learn a new skill, how we treat our friends - are all deposited into the great cauldron of The Economy and either add or subtract from the collective wealth of society.

Every step of civil advancement makes every man's dollar worth more. In California, the country where [the farmer's produce] grew, — what would it buy? A few years since, it would buy a shanty, dysentery, hunger, bad company, and crime. There are wide countries, like Siberia, where it would buy little else to-day, than some petty mitigation of suffering. In Rome, it will buy beauty and magnificence. Forty years ago, a dollar would not buy much in Boston. Now it will buy a great deal more in our old town, thanks to railroads, telegraphs, steamers, and the contemporaneous growth of New York, and the whole country. Yet there are many goods appertaining to a capital city, which are not yet purchasable here, no, not with a mountain of dollars. A dollar in Florida is not worth a dollar in Massachusetts. A dollar is not value, but representative of value, and, at last, of moral values. A dollar is rated for the corn it will buy, or to speak strictly, not for the corn or house-room, but for Athenian corn, and Roman house-room, — for the wit, probity, and power, which we eat bread and dwell in houses to share and exert. Wealth is mental; wealth is moral. The value of a dollar is, to buy just things: a dollar goes on increasing in value with all the genius, and all the virtue of the world. A dollar in a university, is worth more than a dollar in a jail; in a temperate, schooled, law-abiding community, than in some sink of crime, where dice, knives, and arsenic, are in constant play.

The "Bank-Note Detector" is a useful publication. But the current dollar, silver or paper, is itself the detector of the right and wrong where it circulates. Is it not instantly enhanced by the increase of equity? If a trader refuses to sell his vote, or adheres to some odious right, he makes so much more equity in Massachusetts; and every acre in the State is more worth, in the hour of his action. If you take out of State-street the ten honestest merchants, and put in ten roguish persons, controlling the same amount of capital, — the rates of insurance will indicate it; the soundness of banks will show it: the highways will be less secure: the schools will feel it; the children will bring home their little dose of the poison: the judge will sit less firmly on the bench, and his decisions be less upright; he has lost so much support and constraint, — which all need; and the pulpit will betray it, in a laxer rule of life. An apple-tree, if you take out every day for a number of days, a load of loam, and put in a load of sand about its roots, — will find it out. An apple-tree is a stupid kind of creature, but if this treatment be pursued for a short time, I think it would begin to mistrust something. And if you should take out of the powerful class engaged in trade a hundred good men, and put in a hundred bad, or, what is just the same thing, introduce a demoralizing institution, would not the dollar, which is not much stupider than an apple-tree, presently find it out? The value of a dollar is social, as it is created by society. Every man who removes into this city, with any purchasable talent or skill in him, gives to every man's labor in the city, a new worth. If a talent is anywhere born into the world, the community of nations is enriched; and, much more, with a new degree of probity.

-Wealth, by Ralph Waldo Emerson