ABSTRACT
In examining the assumptions proper to dynamics, these are found in many cases to differ from static premises in qualitative or "chemical" ways; including the dynamic character of human nature and the evolution of institutions. The relation of statics to the scope of economic problems can be seen by a consideration of its origin. The basic element of economic life–a transaction of exchange–is so complex and varied as to be inadequately represented by any simple stereotype of "free exchange." Modern business is carried on, not by individuals, but by vast collective organizations, to which the classical economists did not apply their individualistic principles. The shift from the static to the dynamic point of view has quite far-reaching effects on many of the fundamental concepts, as example, the concepts of capital and of production. The static problem and static assumptions make it possible to treat production as a quantitative addition to human gratifications, or at least to the means of gratification.
