People work upon nature and gain a large variety of living necessaries from it. They spend them for their daily life and for their own reproduction. It is the process by which human beings bring new individuals into existence. The older generations finally die and return to nature. It is the strict law of nature in itself. Our economics consider it as a kind of metabolic or cyclic process. We call it as “the principle of economy”. This metabolic process is the law of nature that the old give place to the new and the new take the place of the old. The process lasts forever. In contrast to “the principle of economy”, I use the expression, “the rule of economy” in this paper. This is the rule of society-wide arrangement of capital and labor through the price mechanism on the market. The rule of economy is the historical phenomenon embodying the principle of economy. The rule of economy appears in the modern capitalistic society for the first time in history.
　　　　A community, which, here in this paper, means a unified body of many residential units, has a long history from the primitive age. From another viewpoint, a community is a social unit embodying the above-mentioned principle of economy. People in earlier ages could not live independently, separated from their communities. A community, then, was an indivisible organization for people’s life, as the original sense of the word shows.
　　　　By the division of labor, various sorts of work for a community were brought into existence, forming strata of people engaging in various kinds of works. And this specialization of work came to be fixed and brought about the social system with control and subordination, which became characteristic of communities preceding those of the modern times. This social system lasted up to the modern times. When the history of community came to an end, the modern times started. The end of the history of community went side by side with the appearance of the above-mentioned rule of economy.
　　　　People in a modern society are different from those in earlier communities who could not stand by themselves. Unlike them, they stand on their own feet. They are no longer bound by the indivisible organization of old communities. It is at this stage that the rule of economy works well for the first time in the human society. I have been taking part in the research activities of the Association for Rural Studies from the viewpoint of economics. The subject of the studies of the Association is the rural communities in general, namely, agricultural communities or village communities. Of course, these communities are not the same as those former communities which were indivisible bodies. These communities which we study are modern ones under the above-mentioned rule of economy.
　　　　A unit of economic organization or economic activity of manufacturing industry in the advanced countries generally assumes the form of enterprise. Those who work there are manual laborers and white-collar workers. They sell their own human activities that provide goods and services to their employers and gain the wages as the prices for their labor. Here, capital and labor are clearly separated.
　　　　A unit of economic organization or economic activity of agriculture does not assume the same form as that of the modern industry. The unit is the house of farmer as a private individual. It is the equivalent of “nohka” in Japanese, which, literally translated, means “a farmer’s house”. The house in the farm is a single unit for the life of the farmer and his family members who are consumers as well as producers. On the other hand, the farm, by which or on which the farmer’s house stands, is an area of land for agriculture, though an average Japanese farm is much smaller than those in Western countries. ………