chapter  78
6 Pages

THE PUBLIC ECONOMIC PROCESS

The economy of the state is often popularly characterized as the "state 's housekeeping." By this term we apply to the whole of the public economy a manner of thought derived from a single part of the private economy. In the same way, nearly all scientific attempts

420 S O C I A L E C O N O M I C S

to explain the nature of the public economy start from a method of observation which reduces the phenomena to the familiar ideas of private economy. In the classical theory, the economic relation of the state to its citizens was regarded as that of an exchange in which taxes are paid as a remuneration for administrative services. Modern theories look upon the activities of the state as a special sort of production, an immaterial kind, which is aided by impalpable capital funds to call into being the intangible products of peace and legal security.