58 ECONOMIC ESSAYS IN HONOR OF JOHN BATES CLARK 
This is true also of differences in temperament producing biases 
of judgment and susceptibility to different types of biased 
appeal. Wherever such susceptibilities exist in considerable 
numbers, people will find a profit in catering to them or exploit- 
ing them, and this is one of the essential facts of a dynamic 
economy. 
Then there are more external differences, not of temperament 
and capacity but of available knowledge and information; and 
this raises the further question of methods of putting the available 
knowledge and information at the service of the unspecialized 
citizen, that he may be able more successfully to cope with the 
interested parties with whom he has to deal, who have specialists 
at their service. In these respects the actual economic system 
works far better than it would if it were really one of pure and 
unmitigated individualism—which would be clearly intolerable— 
and this means that to understand the system we must interpret 
it as containing a large admixture of non-individualistic action, 
both public and private, and action governed by incentives and 
motives other than material self-interest. These cannot now be 
dismissed as non-economic, for they are necessary parts of the 
explanation of how the business system actually works, as well 
as of plans to make it work better. 
It is obvious that the varied and complex human nature which 
has been roughly sketched does not lend itself to much definite 
and simple deduction. A realistic view of man is sufficient in 
itself to make dynamics largely an inductive inquiry. Further 
significances of this will appear as we glance at certain of the 
other premises of dynamics, dealing with a few of the institutions 
and conditions under which human nature works out its economic 
destiny. 
5. The Dynamic Concept of a Transaction 
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.” Freedom implies that 
neither party is dependent on relations with the other, and that a 
refusal to accept a given offer will leave tolerable alternatives 
open.’ But as such relations become habitual people become in a 
1 The writer has developed this point elsewhere. See Social Control of 
Business, pp. 37-8.