Though Nathaniel Hawthorne contributed much to the fiction of America, he is remembered today mainly as the author of The Scarlet Letter. This book has had so great an impact on the world of literature that it has some times been described as the ‘greatest book ever written in the Western Hemisphere’.

Hawthorne’s imagination brooded over the past and the figures that appeared in puritan America. He was quite good at recapturing the atmosphere of the period which he chose as the setting for his novels. But it is not as a historical novel that we remember The Scarlet Letter today: we cherish it rather as a brilliant psychological novel, unrivalled in its penetrating study of the human mind. When Hawthorne started writing, the popular taste was all for romantic histories and grand epics which offered heroic characters in splendid scenes. The historical romances of Sir Walter Scott and James Fennimore Cooper had won the reading public entirely. These novels satisfied the public not so much by convincing characterization, as by spectacular elements and melodramatic situations. There was no subtlety in character-delineation for characters were merely stereotypes, the gallant, brave dashing hero fighting against thaw all black villains. The heroine was all sweetness and purity and very often the perfect damsel in distress. Hawthorne was well acquainted with these characters for he was familiar with the literature of his time. He did not entirely discard these conventional figures of fiction; rather he accepted such conventions and transformed them. Hawthorne preferred for his book the term ‘romances’ to ‘novels’. He called his books psychological romance and proclaimed that what he aimed at doing was to “borrow into the depths of our common nature.” Hence he was given to the characters a depth and psychological intensity undreamt of in the fiction before him.

Hawthorne displays a deep psychological insight into the accumulation of details about various characters in the pages of The Scarlet Letter. In this book he minutely analyses the inner workings in the minds of main characters, and their impact upon their deeds and personalities. It is here again that the internal working of the minds of main characters is shown. Now we shall discuss the internal working of the minds of the characters individually:-

Hester Prynne and the Working of Her MindIt is not the purpose of the novelist to depict the custom-ridden society which crushes the physical weight of Hester Prynne. That is the external aspect of her suffering. What is more important is her strong will and passion. According to David Levin; “She is a complex figure and Hawthorne sees that her natural vigor must also lead her into further trouble. In being faithful to what he called the truth of the human heart. Hawthorne had to see that the most interesting battle was not between the heart itself. Hester is not properly penitent. She compounds the sin of passion with the sin of pride. She embroiders the scarlet letter as an elaborate expression of ambiguous defiance and guilt, and she dresses he daughter in equally flamboyant colours.”

She has been psychologically treated. She recalls the memories of past life while standing at the scaffold. This is a view of her past when compared to her present. The pictures of her parents, of the Old World, and of her England village come up before her eyes at a time of harsh punishment. Taken back to prison, she suffers a nervous breakdown which should be viewed as a reaction of her calm and serene endurance of disgrance on the scaffold.

After her return from Boston she is full of repentance. This too is a self-realization prompted by the dictates of her own mind. The novelist has also shown her inner conflict. For example, “Thus, Hester Prynne, whose heart had lost its regular and healthy throb, wandered without a clue in the dark labyrinth of mind.”

Arthur Dimmesdale and the Working of His MindIn the delineation of Dimmesdale too Hawthorne shows his deep psychological knowledge and interest. His psychology is the best example of his being the founder of the psychological novel. He is a remarkable study in psychology. The secret of his sin burns within him prompting him to confess. Yet Dimmesdale is afraid to reveal himself for what he is. Hence his attempts at confession remain as veiled suggestion of his own unworthiness which really win for him greater admiration. Thus he goes deeper and deeper into the pit of sin for he violates the Puritan belief that a man must be a true confessor. As in the case of Hester, we find that Dimmesdale’s sin is not the simple one of adultery, but a more complex one. But sin eats into him and as an outward symbol he is forced to seer the letter into his flesh. He has taken thirst for self-torture, both physical and mental, as he is goaded on by an impulse for self torture. The sure way in which Hawthorne goes on exploring the soul this young minister is unparallel in all literature for psychological interest, except in the work of Dostoevsky whom Hawthorne resembles.

The depiction of Dimmesdale’s self-agony, self torture, inner conflict to confess or not to confess his sin publicly, his Hamlet-like delay in confessing his acts, his remorse, his penance and penitence, his behaviour on the scaffold, his constant introspection make the novel a fine psychological study of human mind. In the first part of the novel he is coward, weak, infirm, indecisive, tormented, haunted, and hypocritical, but in the second part (if the novel is to be divided into two equal parts) he becomes self-conscious, retributive, determined, brave, bold, unpretentious, and truly penitent. This mental development is to be traced along the psychological borders, as Hawthorne has explained in the quoted passage.

The two chapters- “The Interior of a Heart” and “The Minister’s Vigil”. That is Chapters XI and XII - of the novel is indeed very pertinent psychological study of a character unknown in America of the days of Hawthorne.

Roger Chillingworth is the worst sinner in The Scarlet Letter. He is a hypocrite and a conceited fellow. He is a cunning man who has sold his soul to dogs. He is an unpardonable sinner of Hawthorne. He is full of revenge and is malicious. He himself is a psychologist. He confesses his sense of wrong to Hester in the prison. It was a mistake on his part to have induced a young girl to marry him in his old age. The analysis of his own self given by him is the best example of a psychological portraiture: “I, a man of thought, the book-worm of great libraries, a man already in decay, having given my best years to feed the hungry dream of knowledge, what had I to do with youth and beauty like thine own; misshapen from my birth-hour, how could I delude myself with the idea that intellectual gifts might veil physical deformity in a younger girl’s fantasy! Men call me wise. If sages were even wise in their own behoof, I might have foreseen all this.”

“The character of Chillingworth is made all the more sinister by making him dabble in black magic. He collects herbs and roots to give them a touch or spell. His fame as a doctor is partly accountable to his power of working wonders over his medicines and patients. On the whole, Chillingworth is a searching type of character, even though it means his own isolation and destruction.”

Even in the depiction of little Pearl, Hawthorne gives evidence of his deep grasp of human nature. He calls her “a born misfit of the infantile world.” All the factors should be what according to modern psychology is a problem child. Pearl is pictured as an abnormal girl. She is extra-ordinary sportive, brisk, witty, oracular and taxing. Even her mother feels irritated and nervous at her persistent questionings. She is not amenable to any discipline or rule. She is influenced by heredity, by her parents who are both sinners. She is a constant tormentor to her mother by reminding her of the flaney letter on her gown. She often tasks her about its meaning. She also wants to know if her mother had ever met the Black Man in the wood. She consciously tells nothing about her maker when Mr. Wilson examines her in Bellingham’s hall. In a nutshell, Hawthorne has shown remarkable subtlety in portraying Pearl and in studying the case of an abnormal child.

Thus we find that the entire edifice of the novel rests on sure foundations of human psychology. Even the introduction of symbols in the novel enhances its psychological effect, for it is based on the Puritan’s habit of interpreting every natural phenomenon as an expression of God’s will. About Hawthorne’s achievement in “The Scarlet Letter” David Levin Writes: “Hawthorne brought to the American novel an admirable talent for symbolism and a serious interest in historical fidelity, psychological truth, and social order. No English or American novelist before him had been able to represent so convincingly the feelings and thoughts of a passionate woman and scarcely any American novelist, had posed such forcefully critical question for prevailing 19th century beliefs. It is easy to understand therefore, why Herman Melville greeted Hawthorne’s work with a “shock of recognition.” Also in many other stories of his, like “The House of Seven Gables” and “The Minister’s Black Veil,” etc we see works (Twice-Told Tales. 1837, Mosses from an Old Manse’ 1846, The House of the Seven Gables 1851, The Marble Faun etc.) reveals the fact that Hawthorne’s great subject was the human soul. Occasionally his books deal with sensational material like poisoning, murder and adultery but the violence is always subdued or remote and the sensational note is always turned down. The psychological and moral tones remain dominant. This is best illustrated in “The Scarlet Letter” which though based on an act of carnal love, is singularly free from erotic or passionate elements. In this novel Hawthorne was particularly interested in exploring the result of sin, the effect on the human conscience of guilt, pride egotism and isolation. The effect of sin on four different persons is traced with great dexterity. An interpretation of the characters placed in such unfortunate circumstance would not be possible for Hawthorne if he did not have a sure grasp of the Puritan morality and the Puritan way of life. T.S. Eliot has said about Hawthorne: “Hawthorne had…….the firmness, the true coldness, the hard coldness of the genuine artist. In consequence, the observation of moral life in The Scarlet Letter, in the House of the Seven Gables, and even in some of the tales and sketches has solidify, has permanence of art. It will always be use. The work of Hawthorne is truly a criticism……..of the Puritan morality of the Transcendentalist morality and of the world which Hawthorne knew. It is a criticism as Henry James's work is a criticism of the America of his times and as the work of Turgeney and Flaubert is a criticism of the Russia and the France of theirs."

This will certainly be a long answers. You see the taxes can generally be classified into two groups’ i.e.
(1) Direct and Indirect Tax.
(2) Proportional, Progressive and Regressive Tax.

Direct taxes are those kinds of tax whose incidence cannot be shifted to anyone else. Such a tax is to be borne by the tax-payer himself. The word incidence represents the burden to be borne by the tax-payer and shifting means the process of transferring the tax. An example of direct tax would be income tax. On the other hand, indirect taxes are those kinds of tax whose incidence is actually being shifted on the ultimate consumer. Thus, here we can see that the transferring process takes place from the entrepreneur right down to the ultimate consumer. An example of indirect tax would be the tax on daily commodities e.g. food, clothing etc. The kind of taxes imposed are excise tax, sales tax etc.

A proportional tax is one that is to be paid at a fixed rate i.e. to say it is a fixed rate of everyone. Thus, if the rate of taxation as income tax is 5%, then it is said to be a proportional tax i.e. no matter how much the income is, the same rate is imposed. However, a progressive tax is a kind of tax which depends upon the level of income i.e. the higher it is the more he is taxed and vice versa. As we mentioned earlier in proportional tax, the tax payer with a higher income will naturally pay more but in the case of progressive tax, he will be paying even higher amount of income tax. On the other hand, regressive tax, in fact means that with an increase the tax burden is reduced and vice versa. Such a tax is said to be cruel in the sense that the burden is felt a lot more by the poor than the rich. Generally a government would not impose such a tax but nevertheless it does happen.

Merits of Direct Tax: Here are some advantages of direct taxes.
They are Progressive: Direct taxes are said to be progressive as they lead to more or less equal distribution of wealth. The rich pay more and poor pay less.

In Accordance with Canon of Economy: In an efficient country where almost everything is advanced proper methods are organized to collect the tax. Thus, there is no wastage of resources and hence it is in accordance with canon of economy.

In Accordance with Canon of Certainty: Direct tax is fixed at a certain rate so that people should know what they are paying and for what they are paying. Thus, this avoids any signs of corruption.

In Accordance with Canon of Simplicity: Usually direct taxation is made certain as well as simple for the people to understand simply for the same reason as above. It is direct and plain and not confusing or complicated.

Productive: Direct tax is said to be productive in the sense that the tax revenue collected is mainly used by the Government in the public interest e.g. building hospitals, schools etc.

Equal Distribution of Wealth: As we mentioned in the first point that direct taxed lead to an equal distribution of wealth, they are rather automatic stabilizers. The whole society makes an equal sacrifice to promote the national interest.

Elastic: Direct tax is elastic in the sense that if there were to be an increase in the tax rate, more revenue would be collected. Thus, the actual rate is for the Government to decide.

Automatic Stabilizers: Direct tax or rather income tax is a perfect stabilizer e.g. during the boom period more people would fall in the tax bracket and otherwise some, people would be left in the tax bracket to stabilize the economy.

Demerits of Direct Tax: Of course there are some disadvantages also.
Painful: Although it promotes the national interest, such a tax is said to be painful because the feeling of parting with hard-earned money is a rather tall sacrifice.

Dishonesty Arise: As a result of bearing the thought of parting with their income some people would resort to various tactics in, avoiding paying the income tax particularly. As a result only a certain part of their income is declared or worse still, tax collectors/ officials, are bribed and thus the national interest is rather demoted.

Inconvenience: In some countries the taxing procedure is so complicated that the technical procedure has got to be improved so that it does not result in the laymen being confused. Otherwise the laymen would have to employ a: qualified personal to look into the matter. In the end the tax payer has to pay more than the Government had bargained for.

Savings and Investments are adversely affected: Entrepreneurs particularly would be reluctant to make investment as they know that the more they invest the more tax will they have to pay. Thus, their savings for investment would also be affected.

Merits of Indirect Taxation:
Imperceptible: Indirect taxation is imperceptible because we are paying indirect taxes every other day if not everyday, through the commodities that we purchase in the market, but we never feel it.

Promotes National Interest: Indirect taxation promotes national interest because practically every one participates in promoting it. Whether rich or poor, man or woman, boy or girl, almost every body is involved.

Broad Based Tax: It is a broad based tax because it is not constrained, on a particular commodity. It covers all items right down from sweets straight up to valuable items.

Tax Revenue May easily be Increased: This is particularly true in the case of inelastic products. Since the demand for them is inelastic no matter how high the price, the commodity will still be purchased e.g. cigarettes. Thus, by increasing the price level of the inelastic commodity, government revenue will go up.

Desired Level of Consumption May easily be Obtained: Such a level can easily be attained if the Government were to impose a heavy duty on products whose consumption is intended to be reduced and similarly reduce the duty on items for which the consumption level should increase.

No Tax Evasion: Tax evasion cannot take place unless one is prepared to stop consuming. This is so because indirect tax is included in the price of the commodity i.e. sales tax, excise tax etc.

Demerits of Indirect Taxation:
Against Canon of Equity: In the canon of equity or rather equality we mentioned that the persons of the state ought to contribute a certain portion of their income in tax in accordance with their abilities. Thus, the rich pay more and the poor pay less. However, in the case of indirect taxation the rate is already fixed, rich or poor have got to pay the same. Thus, an unjust situation is created e.g. on cigarettes.

Against Canon of Economy: Relatively speaking, particularly in third world countries, the expenditure incurred on tax collection is quite high. The personal equipment etc. have got to be provided by the government practically everywhere so that every area is covered. Thus, in the end not much revenue is actually collected; not to mention the ‘leakage’ which may well arise along the way.

Inflationary in Nature: Since indirect taxes are a part of price, there is a natural tendency for inflation to take place. This is due to the fact that prices of commodities are high whereas demand for them is generally low and thus surplus product lies in the market; entrepreneurs will suffer losses and stop further investments and thus inflation takes place.

Merits of Progressive Taxation:
Equality of Sacrifice: As we mentioned in the very beginning a person with a higher income pays more tax than the person with low income because marginal utility of income decreases with every increase in it (income). Thus, even though a richer may pays more and a poor man pays less, the fact remains that both parties share the same amount of burden in terms of sacrifice.

Higher Government Revenue: In proportional taxation we mentioned that there is a fixed rate of income tax (e.g.) so that the rich pay so much and the poor pay the same and thus the Government only obtains that much revenue. However, in progressive taxation higher the income, more is the tax and thus the total tax revenue collected would be increased.

Equal Distribution of Wealth: Once again there is an equal distribution of wealth. This is so because billionaires will pay more than billionaires who pay more than the common man, who pays less than these tow elite classes. Thus, there is more or less equal distribution of wealth.

Canon of Economy is retained: Although expenditure incurred on tax collecting may already be high, but in progressive taxation higher the income, higher is the tax paid, but the expenditure incurred in collecting it does not go up or down. If it does, it will not be at the same ratio.

Demerits of Progressive Taxation:
Retards Savings and Investment: Assuming that rate of progressive is very high, this discourages saving and as a result there is retardation in investment. Hence, economic development is also retarded.

Tax Evasion: Since people know that the higher their incomes the more tax they have to pay, some pay resort to tactics in avoiding payment by presenting false statements of actual income or ever turn to bribery.

Canon of Equity: Based on this canon, the marginal utility of the last rupee as tax must be equal to both classes of the society. However, such a requirement is rather impossible to achieve as the marginal utility of the last and to the poor class will always be higher than that to the high class.

Merits of Proportional Taxation:
In Accordance with Canon of Simplicity: With proportional taxation, the tax rate is fixed to all. This simplifies matters for calculation and so on. For example, the tax is fixed at 3%. Thus, all the individuals have to do is just to deduct 3% from their annual income as income tax.

Savings and Investment are partially affected: In spite of having to pay tax, entrepreneurs will not be much discouraged because they know that this is a fixed tax and thus, to increase their profits, they can increase their saving and investment, so that more goods and services are available.

In Accordance with Canon of Certainty: Just as it is simple it is also certain. Most government have devised methods in making the public aware of the amount, purpose etc. that they are paying.

Demerits of Proportional Taxation:
Against Canon of Equality of Sacrifice: This method of taxation is rather unjust. This is because at a fixed rate the burden is felt more by the lower income group whereas the higher income group, is less affected.

Loss of Government Revenue: Through proportional taxation the total revenue collected by the Government will be much less than through progressive taxation. Furthermore, after having deducted the expenditure on collecting tax the government is left with only a small amount of revenue.

Inelastic Tax: This tax is rather a rigid one and it would be a problem particularly during crisis periods and thus the government is unable to increase or even decrease the tax rate satisfactory.

Merits of Regressive Taxation:
Promotes Investment: Regressive taxation puts the burden heavily on the poor section of the economy but the high class is not really affected. Henceforth, the rich class is able to save a lot more in the banks and this enables the banks to make investment.

Demerits of Regressive Taxation:
Unequal Distribution of Wealth: This method of taxation is unjust because the poor suffer more than the rich as with an increase in income the tax rate is lowered and vice versa.

Non Productive: Such a method of taxation is not productive and does not promote national interest. It rather makes the economy suffer i.e. the poorer section of the economy suffers. Furthermore, regressive taxes cannot be implemented on valuable commodities and are usually implemented on cheap or low price commodities such as cigarettes.

To begin with, I will elaborate on Adam Smith’s canons which are still used as the foundation of discussion on the principles of taxation. His canons are four altogether and the remaining five have been developed with the passage of time.

Canon of Equality: The word equality here does not mean that everyone should pay the equal amount of tax. That would be unjust. Generally it would benefit the economy if all the inhabitants could pay taxes i.e. apart from the indirect taxes. However, this is not possible as everybody does not fall within the tax-payers category. What equality really means is that sacrifice of energy body has got to be equal so that the rich pay more and the poor pay less. The amount of tax paid has to be in proportion to the abilities of the tax-payers.

Canon of Certainty: Tax-payers ought to be aware of the purpose, amount and manner of payment. They should not be misled by tax-collections as this would lead to aggravation and arbitrariness. Everything should be made clear and simple for the benefit of the tax payers, uncertainty leads to corruption. Hence, publicity is usually given to budget proposals for discussion as well as criticism. Certainly the Government wants to be accurate so that estimates of taxes to be levied and expected return is properly calculated.

Canon of Convenience: In the canon of certainty we maintained that there ought to be certainty in the time and manner of payment. However, in this canon we say that both elements i.e. time and manner of payment must be convenient for the tax-payers so that he is able to pay his taxes in due time e.g. if farmers were to pay taxes on their crops before they were harvested, naturally they would not be able to do so. Consumers find it convenient in paying their taxes as such taxes are already included in the price of the commodity and unless they are purchased they would not have to pay the tax.

Canon of Economy: What this canon means is that tax would be economical if the cost of collecting it is very small. The whole amount taken out of people pockets should go directly to the Treasury. There should not be any leakage in the way i.e. to say any form of corruption. This canon also means to say that the expenditure on tax collecting should be kept as low as possible and maximize the tax return. In another sense a tax would be economical if it does not hamper the economic progress.

The following canons of taxation have come into existence with the passage of time through modern economists.

Canon of Productivity: This canon means that production should be encouraged rather than otherwise. The productive capacity of the community should not be crippled or impaired. The Government should avoid running into a deficit whenever possible. However, as we mentioned in an earlier chapter, deficit budgeting is not a bad phenomenon, it merely reflects that the Government is in debt. Through canon of productivity it is better to have fewer taxes with large revenue rather than more taxes with less revenue.

Canon of Elasticity: This would depend upon the state of affairs prevailing in a country. As a country’s needs arise, likewise revenue should also be increased otherwise it (i.e. revenue) will be inadequate. e.g. during the phase of war, Government expenditure must be increased and likewise its revenue. That is why during war periods countries tend to suffer. A classic example of elastic tax is income tax. Raising the rate up to small extent yields greater revenue.

Canon of Simplicity: This canon emphasizes that method of taxation should be made a simple procedure for the laymen to understand. It should be plain, non-technical and straightforward. This will allow the layman to understand why he is paying tax. More important is that simplicity will avoid corruption which would take place if procedures were complicated. The amount and the purpose of taxation should be made clear.

Canon of Diversity: According to this canon, taxation should be broad based i.e. to say there should be taxes of all kinds so that the whole community shares the burden. There should be variety of direct and indirect taxes (for at least all those who are able to pay).

Canon of Economic Development: Productive resources should be fully utilized in the private sector and they should be allowed; if the sources are being wasted it ought to be shifted to the Government through taxation. The effects of taxation should be compatible with the social-economic objectives of the government.

Fiscal policy is a policy of the government regarding its revenue, expenditure, debt and its management. Fiscal policy is commonly known as the budgetary police as the government budget is prepared on the basis of this policy. Let me explain the full behavior of this policy in different scenarios. During the expansion period it would be prudential for the government to have surplus budget in order to control the upward trend of the economy because by this measure the government will be able to take way a part of the money supply from circulation. However, during a contraction period of the economy, it would be suitable for the government to make a deficit budget so that excess expenditure may raise the level of income and employment in the country and thus, the tendency towards depression is controlled.

The unbalance budget policy to control the business fluctuations is an economy is highly suitable for economic stability of a country. Keynes attached a great deal of importance to this policy as his suggestions for controlling the depression of the 1930s. On the other hand, this policy is clearly against the classical theory of balanced budget, in which the government is to make sure that the budget is limited in expenditure and as balanced as possible. This policy clearly failed to help the world out of the depression of the 1930s where their principle of limited expenditure tended to deepen the slump rather than bringing back economic stability.

There are various tools of fiscal policy to control the business fluctuations. I will briefly touch some of them. You can read about the others in your own time.

Taxation
Various forms of taxes levied on the people by government would result in the purchasing power of resources of the people to be shifted from the private sector to the public sector. In the Words of Edwin Cannon, “Every tax discourages some kind of production; because the aim of taxation is to divert a portion of the productive force of the community from producing what the inviduals desire as individuals, to producing something else they desire in their corporate capacity.”

Progressive taxes play a vital role in the stabilization of an economy; therefore, taxation policy must aim at imposing more progressive taxes to overcome cyclical fluctuations. These taxes act as an automatic stabilizer of the economy. Several kinds of taxes are levied by the government.

Personal Income Tax
This is a progressive tax as the tax rate increases with the higher level of income and vice versa. During the phase of an expansion the incomes of the people increase rapidly. As a result, more and more people fall in the category of tax payers and thus a greater amount of money in the form of tax is collected. Conversely during the phase of economic contraction, the income level of the people in general falls and therefore more and more people fall out of the income tax bracket and, thus, tax revenue collected there of becomes less. Hence, this form of tax is an automatic stabilizer for the economy as it lowers the purchasing power of the people during the phase of an expansion and vice versa during the contraction period.

Corporate Profit Tax

This is also another form of progressive tax. This form of taxing is rather a built-in stabilizer of the economy. During the phase of contraction the tax rate is kept very low as the incomes of the corporations are low and also to give them the opportunity to promote investment. On the other hand, during the expansion phase, the rate of the tax is higher as the incomes of the corporations are on the rise.

Excise Tax

This is rather an indirect form of taxation, the burden of which the consumer ultimately bears, as the initial amount of tax on a particular product is usually wholly included in its market price. During the phase of expansion the rate of excise tax is increased in order to lower the demand of the consumer for consumer good, or rather the excise tax rate is increased in order to lower the consumers saving capacity and thus an either/both the cases mentioned the investment level is adversely affected and the expansion is controlled. Conversely, during the contraction period the rate of excise tax is lowered down in order to encourage investment to take place.

Tariffs
Contrary to the above taxes, the tariffs rate is lowered during the expansion phase as this will allow more import to take place and the expansion tendencies are controlled. Conversely, during the contraction phase the tariff rate is increased in order to stabilize the economy.

Government Expenditure
Basically government expenditure can be classified into two categories i.e. non-development expenditure and development expenditure.

Keynes has laid a great deal of emphasis on the role government in stabilizing the economy. According to him, during the phase of expansion, government expenditure must be reduced which would result in a multiple decrease in the National Income. Such a measure is necessary as this would stabilize the economy in the sense that the expansion phase would be controlled. On the other hand, during the phase of contraction, government expenditure must be increased so that it results in a multiple increase in the National Income and thus the contraction is controlled. The amount of both types of expenditure has to be adequate to effectively influence the consumption and investment level.

Government expenditure is normally incurred on capital goods e.g. roads, buildings, irrigation projects, low cost houses etc. Therefore, there must be a administrative body to control and regulate government spending under sound planning, during the upward and downward trends of the economy.

Government debt and its management can also play a vital role in the stabilization of an economy. During the revival phase it is advisable that a government ought to start playing back the loans (against order of people) to the people because money starts losing its purchasing power during the phase. Then, during the phase of expansion repayment of the mentioned loans must be completed. These loans are to be paid out of government saving incurred through surplus budget. Conversely during the contraction phase government may obtain loans in order to start development projects or to increase spending to overcome economic depression.

Economics generally believe that there must be flexibility in wages in order to overcome cyclical fluctuations. During the expansion phase, wage rates must be increased so that the entrepreneurs profits are cut down; this stops them from making further investment. Thus, expansion is controlled and the economy is in a stable condition. During the contraction phase, wage rates have got to be lowered so that it results in lower cost of production, and with that the rate of return for the entrepreneurs is increased. This encourages investment and the contraction phase is overcome.

Over the years, it has been observed that price control and rationing can help overcome expansion while support price would combat contraction. During the phase of an expansion government should fix a price-ceiling and strict administrative measures should be adopted against violations of the measure.

The government should also be vigilant against black marketing of goods in this connection. On the other hand, the support price policy should be implemented by the government during the contraction phase. Support price policy should be implemented in the agricultural so that entrepreneurs are given the necessary incentive to produce more and so on. Thus, contraction of the economy is overcome.

In one of the publications of the League of Nations it was stated that: “Cyclical fluctuations in business activity in an economically integrated world are not a national but international phenomenon and require not only national but international action.” This statement shows that government measures at a national level, to control cyclical fluctuations, are always inadequate, simply because the whole world is integrated through trade.

Cycles and International Trade
When cyclical fluctuations occur in some part of the world all the countries of the world are affected through trade relations. For example, during the phase of an expansion, developed countries demand more raw materials from the developing countries. This would increase the exports of developing countries and the developing and services from the developed countries and thus incomes, employment and output in developing and output in development countries would increase and they too would be in the expansion phase.

In the case of contraction period the opposite situation would arise e.g. the great depression of the 1930s has been a witness to this. During that particular period, depression actually took place in U.S.A. Income and employment of the country was so low that it has to tremendously cut down the imports from third countries. As result of this phenomenon, third world countries suffered in the sense that their purchasing power was tremendously cut down and so their income and output level was also reduced and they too were in the depression period. In order to control cyclical fluctuations, international measures were introduced.

International Bank for Reconstruction and Development (IBRD)/World Bank
This body was set up in 1944 and started off with a total capital of $8 billion. Its main function is to give long term loans to member countries in order to enable them to increase their investment level. Before doing so, it wants them to have an access to the feasibility reports on projects intended, particularly where the world countries are concerned, to sanction loans for them. By regulating such measures, it helps the countries to stabilize their economies.

International Monetary Fund (IMF)
This body was also establishes in 1944 at Bretton Wood (USA) Conference. Its main function is to give short term loans to member countries. This would help rectify the countries adverse balance of payment position. The fund has a total capital of $9 billion out of which member countries obtain loans for a period of 5 years for the mentioned purpose. Each member country may depreciate/devalue its currency by 10% at its own choice. However, if devaluation intended is more than 10%, permission is sought from the IMF. This would create a stable exchange rate between member countries and helps in stabilizing the economies of different countries of the world.

General Agreement on Trade and Tariff (GATT)
An Agreement to reduce the tariff rates in order to promote international trade was reached between a large numbers of member countries of the UNO including developed countries. Tariff rates are reduced by negotiations for the mentioned purpose of promoting international trade which is a requirement for stabilizing each and every economy.

International Finance Corporation (IFC)
This body was established in 1956 and started off with a total capital of U.S. $ 100 million.
This main function of this body is to encourage investment in the private sector and also to assist in developing under-developed regions.

European Payment Union
This union was formed by West European Countries in 1950. Its main duty is to settle deficits/surplus of balance of payments multilaterally rather than bilaterally. This union has played a vital role in controlling restrictions in foreign exchange transactions thus; it is another step towards stabilizing the economies.

International Buffer Stock Scheme
The main purpose of this scheme is to stabilize the prices of agriculture commodities. Particularly of those coming from the underdeveloped countries in the international market because the prices of these commodities fluctuate due to the rise and fall in the supply of the commodities. Thus, such an organization is needed so that it may stock the raw materials of the LDCs when prices of the commodities fall. On the other hand, when the prices of such commodities are unnecessarily rising the organization would then release the stock. Hence, prices would only fluctuate within a specific range.

Multilateral Commodity Agreement
There should be a multilateral commodity agreement between different countries of the world which are the main suppliers of the material. The member countries would decide among themselves the range of the price fluctuation, a phenomenon which should be allowed. When the price level reaches the upper limit, exporters should continue supplying at that price. When the price comes down to the lower limit importers would/should continue import at that price.

International Loans
There should be an organization specifically meant for aiding the developing countries. Loans should be given to such countries when they are facing a deficit in their balance of payment due to the fall in the prices of their exports. The recipient countries should make the repayments of the loans when prices of their commodities are stabilized once again in the international market.

Nelson Mandela was born on 18 July of 1918. He was South Africa’s eleventh president. He is called Mukluk by South Africans which means grandfather. Mandela’s actual name is Rolihlahla. Nelson Mandela is the name given to him by his school teacher because she had trouble in calling his actual name. Mandela start going to school at the age of 7. He was the first one of his family who went to school. He got his primary education from the local Missionary school. He matriculated from a Wesleyan secondary school. After completing his matriculation he then got enrolled in University College of Fort Hare for his Bachelors of Arts degree. Later on he went to Johannesburg for LLB. He joined African National Congress in 1942 while studying at Johannesburg. At the time of the Second World War a small group of young members of African National Congress banded together. Nelson Mandela was one of those young people. They started a dreadful struggle of transforming the ANC into a mass movement. Their main conflict was that the political strategies of the leaders of the ANC are inadequate for the national liberation. Mandela impressed his group fellows by his efforts and work and was elected as a Secretary of Youth League in 1947. In early 50s he played a vital role in the introduction of Bantu education. Mandela played very important part in popularizing the freedom charter that is adopted by congress in 1950. Mandela put a lot of effort in the struggle against the labor exploitation. During the whole of the fifties, Mandela had to face various forms of repression. He was banned, arrested and imprisoned several times.

Nelson Mandela spent a long time period of his life behind the bars. During his years in prison his reputation grew widely. He became the most significant black leader in South Africa with time. He always refused to compromise his political position for obtaining freedom. He has being forced to remain away from his family; he has to move place to place in order to evade detection by government. But he didn’t step back in spite of all these troubles. Nelson Mandela has never fluttered in his devotion to democracy, equality and learning. He never answered racial discrimination with racism. His life has been a source of inspiration, in South Africa as well as throughout the world.

Government expenditures are the expenditures incurred by the Government for development of the country and also on non-development objectives in view. Government revenue comes from taxation i.e. direct taxation and indirect taxation. Government ‘debt is obtained from internal and external sources. Loans from internal sources are obtained by selling Government securities to the people whereas external sources are those such as the World Bank, IMF etc.

Public finance is for the benefit of the people in general unlike private financing which is confined to a particular purpose i.e. family matter only. We shall now take up the difference between the two.

The basic difference between public and private financing is that an individual adjusts his expenditure in accordance with the given income. On the other hand, the Government relatively speaking adjusts its income in accordance with its expenditure. Thus, the individual is only able to spend so much but the government may spend as much as it likes and then care of the income. Relatively speaking the Government prepares its expenditure first or rather it estimates expenditure, and only then devises ways and means to obtain the amount required. However, sometimes the individual also does the same thing as the Government and vice versa. i.e. when the Government realizes a surplus budget it would increase expenditure in specific areas and when the public revenue is declining the Government brings about a corresponding reduction in its expenditure through a policy of retrenchment.

In the case of public finance the, Government declares its expenditure for a certain period usually one year and meets the required limit within the stipulated time. However, the individual is not bound to such a requirement. He may plan his expenditure for a day, week or even for a month. Short private finance is flexible and, depends entirely upon the individual.

Methods for obtaining financial resources differ between the two parties particularly when both parties are facing a tight situation. When such a situation arises the Government may obtain resources internally and externally i.e. from foreign bodies e.g. World Bank, IMF etc and internally by selling Government securities to the people. However, the individual will not be as fortunate, rather the only visual possibility of him obtaining resources in such a period is from state welfare department and this also is only possible in developed countries, otherwise they would have to turn to the streets!

Public finance to a great extent depends upon the type of Government. A Socialist Government would presumably increase expenditure for welfare purposes to a great extent, but a Capitalist Government is less spendthrift and tends to reduce expenditure in various sectors. An individual has no choice, whether he is a socialist or capitalist, he can still only spend within his limit.

Generally speaking, a Government as the representative of the people in general will do its utmost best to ensure that the future to come will be a prosperous one for those to live. In government planning such as the five year plan for Commercial or agricultural products or even planning for future industrial changes in the society, the return is not the concern of the Government as it may take some time until profits are realized. On the other hand individuals are more optimistic and would only invest when immediate returns are likely.

A government surplus budget reflects a bad image on itself to the people in general. It creates the impression that the Government is purposely increasing taxes and thus if there were to be such a surplus budget the Government devises ways to increase expenditure in certain areas. However, a surplus budget for the individual is better in the sense that surplus money can be used for purpose e.g. holidays etc.

As a result of deficit financing, the Government can print more money. Usually the Government prints more money when it feels that the nation has been over burdened with tax and that they (the nation) are starting to be pessimistic about the government of the day. An individual can not do so as it is a crime and would result in him going serving a sentence.

The annual budget or rather public finance is made known, to all. It is declared by the Minister of Finance through the media. Such a mean strengthens rather than weakens the public credit. On the other hand, individuals are generally more secretive about their budget. The situation is generally that they either want to create an impression that they are not so fortunate or may be even otherwise, but the answer lies between God and himself?

The Government usually keeps records of its budgets i.e. of previous years. This would provide the incoming Government to ensure that the money spent is put to good use and that these records will serve as a guidance to prevent misgivings. However, the individual is less likely to do so and would spend at his own with regardless to what has happened or what may even happen.

As mentioned earlier, the Government may obtain external loans from the World Bank, IMF etc. The individual on the other hand is not as fortunate as such. Generally, developed countries lend a helping hand through grants and foreign aid e.g. for countries like Bangladesh, etc.

Keynes believed that liquidity preference or demand for money is due to the following three motives.

Transaction Motive
Individuals, households and firms want to hold cash in hand or prefer liquidity for transaction purpose. For example, individuals hold cash to purchase goods for their daily needs, for example, cigarettes, snacks etc. Households also hold cash to meet their daily needs. For example, they purchase meat, vegetables eggs etc; with the cash they hold. Similarly firms also hold cash transaction purpose. Firms hold cash to purchase raw material, pay wages to laborer etc. Thus, total amount of money which is held by individuals, households and firms for transaction purpose is called “demand for money for money for transaction motive”.

Demand for money for transaction motion related with the length of time between income and expenditure. The more the length of time is between income and expenditure the more will be the demand for money for transaction motive and vice-versa. For example, demand for money for transaction motive is more for a govt. servant on the first of each month and as the length of time gets shorter and shorter the demand for money keeps on falling.

Demand for money for transaction motive in aggregate is a function of national income. The higher the level of national income more will be the money demanded for transaction motive and vice-versa.

Precautionary Motive
Individuals, households and firms hold cash to meet their emergent needs. Individuals’ demand for money for precautionary motive is for shopping in emergency. Households also cash to meet their unforeseen needs, for example, medical treatment, repair of the house etc. Likewise firms hold cash for emergency because they can face windfall losses or there can be sudden break-down of machinery in future.

Total amount of money demanded by individual’s households and firms for precautionary motive is a function of national income. If the level of national income in a country is high demand for money precautionary motive will increase and vice-versa.

Speculative Motive
Investors demand money for speculative motive. They need cash in hand to invest in bonds and other securities to make profit. When investors speculate that rate of interest will fall in future due to which bond prices are likely to increase, they purchase bonds now to sell them at higher prices in future. In this way they make profit if their speculation proves to be true. Conversely, if they expect that rate of interest will rise in future due to which bond prices will fall, they sell bonds now to protect themselves from losses in future. Thus, liquidity preference or demand for money for speculative motive is a function of rate of interest. There is negative correlation between the two i.e. if current rate of interest is high (due to which bond prices are low) demand for money for speculative motive remains low and vice versa.

Transaction and precautionary motives are functions of national income and therefore they do not play any role in the determination of rate of interest. Only speculative motive plays its role in the determination of rate of interest. Liquidity preference curve slope down from left to right Since there is negative co-relationship between the two.

Neurons are basically the nerve cells that form the nervous system. They are basically the building blocks of nervous system. Neurons can be called as information processing units. The function of the neuron is to receive and carry message from the brain. Each part of neuron is important for communication the response. There are stem like branches at the tip of each neuron. They are called Dendrites. The dendrites are the components which basically transmit the message to the other cells of the body. Message from the dendrites is transmitted to soma. Soma basic function is to keep the neuron functional. At the end of the soma there is Axon Hillock which basically controls the firing of the neurons. At the end of neuron there is an elongated fiber. This elongated fiber is called Axon. It is axon which transfers the neural message to other parts of the body. The larger the axon, faster will be the transmission of the message.

Neurons have different types depending upon the function they perform.

Sensory Neurons
There are sensory receptor cell in the body. Neurons which carry message from these cells to the brain are called sensory neurons.

Motor Neuron
The neurons which carry message from the brain to the different muscles of the body are called Motor Neuron.

Interneuron
Neurons which function to transmit message between the different neurons present in the body are called Interneuron’s.

The neurons work just like an electric signals. The dendrites receive message from the sensory cell. The information is passed to the soma. Soma transmits it to Axon. Once the message reach the Axon it travel down and transmit just like an electrical signal.

Some parts of the brain possess more neurons as compare to the other. The reason behind this is that neuron stop reproducing shortly after the birth. Neurons cannot be reproduce. They have prime importance in functionality of nervous system. Human brain contains more than 100 billion neuron. The function of the neuron in human body depends on several regulatory genes and certain cue that take place during development. Neurons are very important for human body working. It is neuron which keeps the human body balance. If neurons do not work properly it will cause many abnormalities in the body.

There are about 30 million species of animals on our planet. Animals are classified on the basis of their similarities and differences. Animals are divided into six basic groups. These six groups help us in understanding the basic classification of animals. But the most basic criteria by which animals are classified are that whether they posses backbone or not. There are two main groups of animals.

Vertebrates
The animals having skeletons inside their bodies are called vertebrates. Homo Sapiens (read we) are also included in this group of classification. History of vertebrates on earth is very old. The very first type of vertebrates lack jaws. Examples are hagfish and lampreys. Vertebrates with jaws appear in animal’s generation around 100 million years before. Human beings have a long biological. Social and cultural bound with vertebrates. Man kept using horse as a mean of transportation. Beside that some other vertebrates like birds, casts and dogs are domesticated by human being. Pigeons were also used in past as a way of communication. The vertebrates possess the resemblance with the chordates but some of their characteristics make them unique. In vertebrates there is present a set of cells called neural crest cells. Basically these cells are responsible for developing characteristics which make vertebrates different from others.

Some examples of vertebrates are humans, dogs, birds, cats, crocodile etc.

Invertebrates
Animals that lack internal skeletal system is called Invertebrates.98% of the animals on earth are invertebrates. Invertebrates have the quality to survive in verity of environment. They can survive at hot and unbearable temperature. And they can also be found at unbearable temperature of polar region. Invertebrates are found in different shapes and colors. The production rate of invertebrate is fast as compare to vertebrates. That’s why Invertebrates are used in science as model organism. Invertebrates possess one cluster of hog genes. And this characteristic of invertebrates differentiates them from vertebrates. Invertebrates are found in different shapes and color. For good understating about invertebrates scientist have divide them in eight groups i-e Arthropods, Sponges, Cnidarians, Segmented worms, Flat worms, Round worms, Mollusks, Echinoderms. Some invertebrates possess hard shells these shell are basically for their protection.

Examples of Invertebrates include sponges, jellyfish, sea anemones, tapeworms, liver flukes, snails, oysters, octopuses, earthworms, leeches, crabs, spiders, ticks, scorpions, centipedes, lobsters, prawns, flies, lice, cicadas, beetles, weevils, moths, starfish and sea urchins.

Communism has been subjected to bitter criticism by various writers on the following basis:

1. The labor theory of value, on which it based the doctrine of surplus value, is an inadequate explanation; other factors, such as the relation of supply to demand and the existence of competition or monopoly must be taken into consideration.




2. Ideas and ideals formulated by versatile reformers about the flawless type of society, have always appeared before the actual transformation took place.




3. The acceptance of materialistic conception of history, would mean the unending subjection of men to the bonds of economic conditions, without any cognition, sense of faculty of his own.




4. It greatly minimizes the importance of accidents, great personages, religion and geography which have all played their significant roles in reshaping, recasting, reforming and recreating the social order of the day.




5. Karl supposes that different classes in the state; the laborers and the capitalist were fully conscious of their class entity which is not true. This consciousness was never known to have existed, during the period of the ancient Greek and Roman civilization; slave did not think themselves as slaves but a class by themselves; and the masters did not think themselves as a class owing to slaves.




6. Moreover, the idea of a class war, denying as it does the possibility of a common civic consciousness, is unduly pessimistic.




7. A social revolution of the kind predicted by Marx is not inevitable. Recent economic history shows that social thought and foresight have brought a gradual betterment of the workers. Moreover the first socialist revolution did not come due to the concentration of wealth in the capitalist system of the west but out of the pre-capitalist system in Russia.




8. The dictatorship of the proletariat envisaged during the transition period is clearly undesirable, because we have no assurance that the interests of the dictators will always coincide with the interest of community.




9. Communists constantly emphasizes the evils of the concentration of wealth, but they totally ignore the concentration of absolute power. Even if the first dictators are of milder attitude, we have no certainty that their successors will follow the policies of high-mindedness.




10. Dictatorship is incapable of voluntary abdication, the state will not vanish. After the withering sway of the state, one cannot imagine the incredible violence and chaos in the society on the persistent cry of ‘mine and thine’ and theory of survival of the fittest will again revive an age of barbarism.
    
    




11. The communist goal is not possible of realization, for it demands a revolution in human nature. A social ideal which assumes such basic change in nature and habits is by the very essence incapable of any achievement.
    
    




12. The passionate advocates of communism lay emphasis on equality and justice, but we fail to understand as to how these are to be attained and maintained between different types of producers, between the skilled and the unskilled, between the strong and the weak and between the industrious and the lazy? The communists may ultimately have to choose between efficiency and equality.