ITALY
It is to be regretted that but little is known in England and America of the writings of the recent Italian economists. Luigi Cossa's Guida, which was translated at the suggestion of Jevons,(8) has given us some notion of the character and importance of their labours. The urgency of questions of finance in Italy since its political renascence has turned their researches for the most part into practical channels, and they have produced numerous monographs on statistical and administrative questions. But they have also dealt ably with the general doctrines of the science. Cossa pronounces Angelo Messedaglia (b. 1820), professor at Padna, to be the foremost of the Italian economists of his time; he has written on public loans (1850) and on population (i858), and is regarded as a master of the subjects of money and credit. His pupil Fedele Lampertico (b. 1833) is author of many writings, among which the most systematic and complete is his Economia dei popoli e degli stati (18741884). Marco Miughetti (18181886), distinguished as a minister, was author, besides other writings, of Economza pubblica e le sue attinenze colla morale e col diritto (1859). Luigi Luzzatti, also known as an able administrator, has by several publications sought to prepare the way for reforms. The Sicilians Vito Cusumano and Giuseppe Ricca Salerno have produced excellent works:the former on the history of political economy in the Middle Ages (1876), and on the economic schools of Germany in their relation to the social question (1875) ; the latter on the theories of capital, wages, and public loans (187789). G. Toniolo, E. Nazzani,(9) and A. Loria have also ably discussed the theories of rent and profit, as well as some of the most important practical questions of the day. Cossa, to whom we are indebted for most of these particulars, is himself author of several works which have established for him a high reputation, as his Scienza delle Finanze (1875; 4th ed., 1887), and his Primi Elementi di Economia Politica (1875; 8th ed., 1888), which latter has been translated into several European languages.
Of greater interest than such an imperfect catalogue of writers is the fact of the appearance in Italy of the economic dualism to which we have referred as characterising our time. There also the two schoolsthe old or so-called orthodox and the new or historicalwith their respective modified forms, are found face to face. Cossa tells us that the instructors of the younger economists in northern Italy were publicly denounced in 1874 as Germanists, socialists, and corrupters of the Italian youth. In reply to this charge Luzzatti, Lampertico, and Scialoja convoked in Milan the first congress of economists (1875) with the object of proclaiming their resistance to the idea which was sought to be imposed on them "that the science was born and died with Adam Smith and his commentators." M. Émile de Laveleye's interesting Lettres d'Italie (187879) throw light on the state of economic studies in that country in still more recent years. Minghetti, presiding at the banquet at which M. de Laveleye was entertained by his Italian brethren, spoke of the" two tendencies "which had manifested themselves, and implied his own inclination to the new views. Carlo Ferraris, a pupil of Wagner, follows the same direction. Formal expositions and defences of the historical method have been produced by R. Schiattarella (Del metodo in Economia Sociale, 1875) and S. Cognetti de Martiis (Delle attinenze tra l'Economia Sociale e la Storia, 1865). A large measure of acceptance has also been given to the historical method in learned and judicious monographs by Ricca Salerno (see especially his essay Del metodo in Econ. Pot., 1878). Luzzatti and Forti for some time edited a periodical, the Giornale degli Economisti, which was the organ of the new school, but which, when Cossa wrote, had ceased to appear. Cossa himself, whilst refusing his adhesion to this school on the ground that it reduces political economy to a mere narrative of facts,an observation which, we must be permitted to say, betrays an entire misconception of its true principles,admits that it has been most useful in several ways, and especially as having given the signal for a salutary, though, as he thinks, an excessive, reaction against the doctrinaire exaggerations of the older theorists.
FRANCE
In France the historical school has not made so strong an impression,partly, no doubt, because the extreme doctrines of the Ricardian system never obtained much hold there. It was by his recognition of its freedom from those exaggerations that Jevons was led to declare that" the truth is with the French school," whilst he pronounced our English economists to have been "living in a fool's paradise." National prejudice may also have contributed to the result referred to, the ordinary Frenchman being at present disposed to ask whether any good thing can come out of Germany. But, as we have shown, the philosophic doctrines on which the whole proceeding of the historical school is founded were first enunciated by a great French thinker, whose splendid services most of his fellow-countrymen seem, as yet, very inadequately to appreciate. Perhaps another determining cause is to be looked for in official influences, which in France, by their action on the higher education, impede the free movement of independent conviction, as was seen notably in the temporary éclat they gave on the wider philosophic stage to the shallow eclecticism of Cousin. The tendency to the historical point of view has appeared in France, as elsewhere; but it has shown itself not so much in modifying general doctrine as in leading to a more careful study of the economic opinions and institutions of the past.
Much useful work has been done by Frenchmen (with whom Belgians may here be associated) in the history of political economy, regarded either as a body of theory or as a systemor series of systemsof policy. Blanqui's history (183738) is not, indeed, entitled to a very high rank, but it was serviceable as a first general draft. That of Villeneuve-Bargemont (1839) was also interesting and useful, as presenting the Catholic view of the development and tendencies of the science. C. Perin's Les doctrines économiques depuis un siècle (1880) is written from the same point of view. A number of valuable monographs on particular statesmen or thinkers has also been produced by Frenchmen,as, for example, that of A. Batbie on Turgot (Turgot Philosophe, Économiste, et Administrateur, 1861); of A. Neymarck on the same statesman (Turgot et ses doctrines, 1885); of Pierre Clement on Colbert (Histoire de Colbert et de son Administration, 2d ed., 1875) ; of H. Baudrillart on Bodin J. Bodin et son Temps; Tableau des Theories politiques et des Idles économiques au 16 siècle, 1853)', of Léonce de Lavergne on the physiocrats (Les Éconornistes Français du 18 siècle, 1870). The treatise of M. de Laveleye, De la Proprieté et de ses formes primitives (1874; Eng. trans. by G. R. Marriott, 1878), is specially worthy of action, not merely for its array of facts respecting the early forms of property, but because it co-operates strongly with the tendency of the new school to regard each stage of economic life from the relative point of view, as resulting from an historic past, harmonising with the entire body of contemporary social conditions, and bearing in its bosom the germs of a future, predetermined in its essential character, though modifiable in its secondary dispositions.
M. de Laveleye has done much to call attention to the general principles of the historical school, acting in this way most usefully as an interpreter between Germany and France. But he appears in his latest manifesto (Les Lois naturelles et l'objet de l'économie Politique, 1883) to separate himself from the best members of that school, and to fall into positive error, when he refuses to economics the character of a true science (or department of a science) as distinguished from an art, and denies the existence of economic laws or tendencies independent of individual wills. Such a denial seems to involve that of social laws generally, which is a singularly retrograde attitude for a thinker of our time to take up, and one which cannot be excused since the appearance of the Philosophic Positive. The use of the metaphysical phrase "necessary laws " obscures the question; it suffices to speak of laws which do in fact prevail. M. de Laveleye relies on morals as supplying a parallel case, where we deal, not with natural laws, but with "imperative prescriptions," as if these prescriptions did not imply, as their basis, observed coexistences and sequences, and as if there were no such thing as moral evolution. He seems to be as far from the right point of view in one direction as his opponents of the old school in another. All that his arguments have really any tendency to prove is the proposition, undoubtedly a true one, that economic facts cannot be explained by a theory which leaves out of account the other social aspects, and therefore that our studies and expositions of economic phenomena must be kept in close relation with the conclusions of the larger science of society.
We cannot do more than notice in a general way some of the expository treatises of which there has been an almost continuous series from the time of Say downwards, or indeed from the date of Germain Gamier's Abégé des Principes de l'économie Politique (1796). That of Destutt de Tracy forms a portion of his Éléments d'Ideéologie (1823). Droz brought out especially the relations of economics to morals and of wealth to human happiness (Économie Politique, 1829). Pellegrino Rossi,an Italian, formed, however, as an economist by studies in Switzerland, professing the science in Paris, and writing in French (Cours d'économie Politique, 183854),gave in classic form an exposition of the doctrines of Say, Malthus, and Ricardo. Michel Chevalier (18061879), specially known in England by his tract, translated by Cobden, on the fall in the value of gold (La Baisse d'Or, 1858), gives in his Cours d'économie Politique (184550) particularly valuable matter on the most recent industrial phenomena, and on money and the production of the precious metals. Henri Baudrillart, author of Les Rapports de la Morale et de l'économie Politique (1860; 2d ed., 1883), and of Histoire du Luxe (1878), published in 1857 a Manuel d'économie Politique (3d ed., 1872), which Cossa calls an "admirable compendium." Joseph Gamier (Traits de l'économie Politique, 1860; 8th ed., 1880) in some respects follows Dunoyer. J. G. Courcelle-Senenil, the translator of J. S. Mill, whom Prof. F. A. Walker regards as "perhaps the ablest economist writing in the French language since J. B. Say," besides a Traité théorique et pratique des opérations de Banque and Théorie des Enterprises Industrielles (1856), wrote a Traité d'économic Politique (185859; 2d ed., 1867), which is held in much esteem. Finally, the Genevese, Antoine Élise Cherbuliez (d. 1869), was author of what Cossa pronounces to be the best treatise on the science in the French language (Précis de la Science économique, 1862). L. Walras, in Éléments d'économie Politique pure (187477), and Théorie Mathematique de la Richesse Sociale (1883), has followed the example of Cournot in attempting a mathematical treatment of the subject.
ENGLAND
Sacrificing the strict chronological order of the history of economics to deeper considerations, we have already spoken of Cairnes, describing him as the last original English writer who was an adherent of the old school pure and simple. Both in method and doctrine he was essentially Ricardian; though professing and really feeling profound respect for Mill, he was disposed to go behind him and attach himself rather to their common master. Mr. Sidgwick is doubtless right in believing that his Leading Principles did much to shake "the unique prestige which Mill's exposition had enjoyed for nearly half a generation," and in this, as in some other ways, Cairnes may have been a dissolving force, and tended towards radical change; but, if he exercised this influence, he did so unconsciously and involuntarily. Many influences had, however, for some time been silently sapping the foundations of the old system. The students of Comte had seen that its method was an erroneous one. The elevated moral teaching of Carlyle had disgusted the best minds with the low maxims of the Manchester school. Ruskin had not merely protested against the egoistic spirit of the prevalent doctrine, but had pointed to some of its real weaknesses as a scientific theory.(10) It began to be felt, and even its warmest partisans sometimes admitted, that it had done all the work, mainly a destructive one, of which it was capable. Cairnes himself declared that, whilst most educated people believed it doomed to sterility for the future, some energetic minds thought it likely to be a positive obstruction in the way of useful reform. Miss Martineau, who had in earlier life been a thorough Ricardian, came to think that political economy, as it had been elaborated by her contemporaries, was, strictly speaking, no science at all, and must undergo such essential change that future generations would owe little to it beyond the establishment of the existence of general laws in one department of human affairs.(11) The instinctive repugnance of the working classes had continued, in spite of the efforts of their superiors to recommend its lessons to themefforts which were perhaps not unfrequently dictated rather by class interest than by public spirit. All the symptoms boded impending change, but they were visible rather in general literature and in the atmosphere of social opinion than within the economic circle.(12) But when it became known that a great movement had taken place, especially in Germany, on new and more hopeful lines, the English economists themselves began to recognize the necessity of a reform and even to further its advent. The principal agencies of this kind, in marshalling the way to a renovation of the science, have been those of Bagehot, Leslie, and Jevons,the first limiting the sphere of the dominant system, while seeking to conserve it within narrower bounds; the second directly assailing it and setting up the new method as the rival and destined successor of the old; and the third acknowledging the col. lapse of the hitherto reigning dynasty, proclaiming the necessity of an altered regime, and admitting the younger claimant as joint possessor in the future. Thus, in England too, the dualism which exists on the Continent has been established; and there is reason to expect that here more speedily and decisively than in France or Italy the historical school will displace its antagonist. It is certainly in England next after Germany that the preaching of the new views has been most vigorously and effectively begun.
Walter Bagehot (18261877) was author of an excellent work on the English money market and the circumstances which have determined its peculiar character (Lombard Street, 1873; 8th ed., 1882), and of several monographs on particular monetary questions, which his practical experience, combined with his scientific habits of thought, eminently fitted him to handle. On the general principles of economics he wrote some highly important essays collected in Economic Studies (edited by R. H. Hutton, 1880), the object of which was to show that the traditional system of political economythe system of Ricardo and J. S. Mill rested on certain fundamental assumptions, which, instead of being universally true in fact, were only realised within very narrow limits of time and space. Instead of being applicable to all states of society, it holds only in relation to those "in which commerce has largely developed, and where it has taken the form of development, or something like the form, which it has taken in England." It is "the science of business such as business is in large and trading communitiesan analysis of the great commerce by which England has become rich." But more than this it is not; it will not explain the economic life of earlier times, nor even of other communities in our own time; and for the latter reason it has remained insular; it has never been fully accepted in other countries as it has been at home. It is, in fact, a sort of ready reckoner, enabling us to calculate roughly what will happen under given conditions in Lombard Street, on the Stock Exchange, and in the great markets of the world. It is a " convenient series of deductions from assumed axioms which are never quite true, which in many times and countries would be utterly untrue, but which are sufficiently near to the principal conditions of the modern " English" world to make it useful to consider them by themselves."
Mill and Cairnes had already shown that the science they taught was a hypothetic one, in the sense that it dealt not with real but with imaginary men"economic men" who were conceived as simply "money-making animals." But Bagehot went further: he showed what those writers may have indicated, but had not clearly brought out,(13) that the world in which these men were supposed to act is also "a very limited and peculiar world." What marks off this special world, he tells us, is the promptness of transfer of capital and labour from one employment to another, as determined by differences in the remuneration of those several employments-a promptness about the actual existence of which in the contemporary English world he fluctuates a good deal, but which on the whole he recognizes as substantially realised.
Bagehot described himself as "the last man of the ante-Mill period," having learned his economics from Ricardo; and the latter writer he appears to have to the end greatly over-estimated. But he lived long enough to gain some knowledge of the historical method, and with it he had "no quarrel but rather much sympathy." "Rightly conceived," he said, "it is no rival to the abstract method rightly conceived." We will not stop to criticise a second time the term "abstract method" here applied to that of the old school, or to insist on the truth that all science is necessarily abstract, the only question that can arise being as to the just degree of abstraction, or, in general, as to the right constitution of the relation between the abstract and the concrete. It is more apposite to remark that Bagehot's view of the reconciliation of the two methods is quite different from that of most "orthodox" economists. They commonly treat the historical method with a sort of patronising toleration as affording useful exemplifications or illustrations of their theorems. But, according to him, the two methods are applicable in quite different fields. For what he calls the " abstract " method he reserves the narrow, but most immediately interesting, province of modern advanced industrial life, and hands over to the historical the economic phenomena of all the human past and all the rest of the human present. He himself exhibits much capacity for such historical research, and in particular has thrown real light on the less-noticed economic and social effects of the institution of money, and on the creation of capital in the earlier stages of society. But his principal efficacy has been in reducing, by the considerations we have mentioned, still further than his predecessors had done, our conceptions of the work which the a priori method can do. He in fact dispelled the idea that it can ever supply the branch of general Sociology which deals with wealth. As to the relations of economics to the other sides of Sociology, he holds that the "abstract" science rightly ignores them. It does not consider the differences of human wants, or the social results of their several gratifications, except so far as these affect the production of wealth. In its view "a pot of beer and a picturea book of religion and a pack of cardsare equally worthy of regard." It therefore leaves the ground open for a science which will, on the one hand, study wealth as a social fact in all its successive forms and phases, and, on the other, will regard it in its true light as an instrument for the conservation and evolutionmoral as well as materialof human societies.
Though it will involve a slight digression, it is desirable here to notice a further attenuation of the functions of the deductive method, which is well pointed out in Mr. Sidgwick's remarkable work on political economy. He observes that, whilst J. S. Mill declares that the method a priori is the true method of the science, and that "it has been so understood and taught by all its most distinguished teachers," he yet himself in the treatment of production followed an inductive method (or at least one essentially different from the deductive), obtaining his results by "merely analysing and systematising our common empirical knowledge of the facts of industry." To explain this characteristic inconsistency, Mr. Sidgwick suggests that Mill, in making his general statement as to method, had in contemplation only the statics of distribution and exchange. And in this latter field Mr. Sidgwick holds that the a priori method, if it be pursued with caution, if the simplified premises be well devised and the conclusions "modified by a rough conjectural allowance" for the elements omitted in the premises, is not, for the case of a developed industrial society, "essentially false or misleading." Its conclusions are hypothetically valid, though "its utility as a means of interpreting and explaining concrete facts depends on its being used with as full a knowledge as possible of the results of observation and induction." We do not think this statement need be objected to, though we should prefer to regard deduction from hypothesis as a useful occasional logical artifice, and, as such, perfectly legitimate in this as in other fields of inquiry, rather than as the main form of method in any department of economics. Mr. Sidgwick, by his limitation of deduction in distributional questions to "a state of things taken as the type to which civilized society generally approximates," seems to agree with Bagehot that for times and places which do not correspond to this type the historical method must be used a method which, be it observed, does not exclude, but positively implies, " reflective analysis " of the facts, and their interpretation from "the motives of human agents" as well as from other determining conditions. In the dynamical study of wealthof the changes in its distribution no less than its productionMr. Sidgwick admits that the method a priori "can occupy but a very subordinate place." We should say that here also, though to a less extent, as a logical artifice it may sometimes be useful, though the hypotheses assumed ought not to be the same that are adapted to a mature industrial stage. But the essential organ must be the historical method, studying comparatively the different phases of social evolution.
Connected with the theory of modern industry is one subject which Bagehot treated, though only in an incidental way, much more satisfactorily than his predecessors, namely, the function of the entrepreneur, who in Mill and Cairnes is scarcely recognized except as the owner of capital. It is quite singular how little, in the Leading Principles of the latter, his active co-operation is taken into account. Bagehot objects to the phrase "wages of superintendence," commonly used to express his "reward," as suggesting altogether erroneous ideas of the nature of his work, and well describes the large and varied range of his activity and usefulness, and the rare combination of gifts and acquirements which go to make up the perfection of his equipment. It can scarcely be doubted that a foregone conclusion in favour of the system of (so-called) co-operation has sometimes led economists to keep these important considerations in the background. They have been brought into due prominence of late in the treatises of Profs. Marshall and F. A. Walker, who, however, have scarcely made clear, and certainly have not justified, the principle on which the amount of the remuneration of the entrepreneur is determined.
We have seen that Jones had in his dogmatic teaching anticipated in some degree the attitude of the new school; important works had also been produced, notably by Thomas Tooke and William Newmarch (History of Prices, 18381857), and by James E. Thorold Rogers (History of Agriculture and Prices in England, 186682),(14) on the course of English economic history. But the first systematic statement by an English writer of the philosophic foundation of the historical method, as the appropriate organ of economic research, is to be found in an essay by T. E. Cliffe Leslie (printed in the Dublin University periodical, Hermathena, 1876; since included in his Essays Moral and Political, 1879). This essay was the most important publication on the logical aspect of economic science which had appeared since Mill's essay in his Unsettled Questions; though Cairnes had expanded and illustrated the views of Mill, he had really added little to their substance. Leslie takes up a position directly opposed to theirs. He criticises with much force and verve the principles and practice of the "orthodox" school. Those who are acquainted with what has been written on this subject by Knies and other Germans will appreciate the freshness and originality of Leslie's treatment. He points out the loose and vague character of the principle to which the classical economists profess to trace back all the phenomena with which they dealnamely, the "desire of wealth." This phrase really stands for a variety of wants, desires, and sentiments, widely different in their nature and economic effects, and undergoing important changes (as, indeed, the component elements of wealth itself also do) in the several successive stages of the social movement. The truth is that there are many "different economic motors, altruistic as well as egoistic; and they cannot all be lumped together by such a coarse generalisation. The a priori and purely deductive method cannot yield an explanation of the causes which regulate either the nature or the amount of wealth, nor of the varieties of distribution in different social systems, as, for example, in those of France and England. "The whole economy of every nation is the result of a long evolution in which there has been both continuity and change, and of which the economical side is only a particular aspect. And the laws of which it is the result must be sought in history and the general laws of society and social evolution." The intellectual, moral, legal, political, and economic sides of social progress are indissolubly connected. Thus, juridical facts relating to property, occupation, and trade, thrown up by the social movement, are also economic facts. And, more generally, "the economic condition of English" or any other "society at this day is the outcome of the entire movement which has evolved the political constitution, the structure of the family, the forms of religion, the learned professions, the arts and sciences, the state of agriculture, manufactures, and commerce." To understand existing economic relations we must trace their historical evolution; and "the philosophical method of political economy must be one which expounds that evolution." This essay was a distinct challenge addressed to the ideas of the old school on method, and, though its conclusions have been protested against, the arguments on which they are founded have never been answered.
With respect to the dogmatic generalisations of the "orthodox" economists, Leslie thought some of them were false, and all of them required careful limitation. Early in his career he had shown the hollowness of the wage-fund theory, though he was not the first to repudiate it.(15) The doctrine of an average rate of wages and an average rate of profits he rejected except under the restrictions stated by Adam Smith, which imply a "simple and almost stationary condition" of the industrial world. He thought the glib assumption of an average rate of wages, as well as of a wage-fund, had done much harm "by hiding the real rates of wages, the real causes which govern them, and the real sources from which wages proceed." The facts, which he laboriously collected, he found to be everywhere against the theory. In every country there is really "a great number of rates; and the real problem is, What are the causes which produce these different rates?" As to profits, he denies that there are any means of knowing the gain; and prospects of all the investments of capital, and declares it to be a mere fiction that any capitalist surveys the whole field. Bagehot, as we saw, gave up the doctrine of a national level of wages and profits except in the peculiar case of an industrial society of the contemporary English type; Leslie denies it even for such a society. With this doctrine, that of cost of production as determining price collapses, and the principle emerges that it is not cost of production, but demand and supply, on which domestic, no less than international, values depend,though this formula will require much interpretation before it can be used safely and with advantage. Thus Leslie extends to the whole of the national industry the partial negation of the older dogma introduced by Cairnes through the idea of non-competing groups. He does not, of course, dispute the real operation of cost of production on price in the limited area within which rates of profit and wages are determinate and known; but he maintains that its action on the large scale is too remote and uncertain to justify our treating it as regulator of price. Now, if this be so, the entire edifice which Ricardo reared on the basis of the identity of cost of production and price, with its apparent but unreal simplicity, symmetry, and completeness, disappears; and the ground is cleared for the new structure which must take its place. Leslie predicts that, if political economy, under that name, does not bend itself to the task of rearing such a structure, the office will speedily be taken out of its hands by Sociology.
Leslie was a successful student of several special economic subjectsof agricultural economy, of taxation, of the distribution of the precious metals and the history of prices, and, as has been indicated, of the movements of wages. But it is in relation to the method and fundamental doctrines of the science that he did the most important, because the most opportune and needful work. And, though his course was closed too early for the interests of knowledge, and much of what he produced was merely occasional and fragmentary, his services will be found to have been greater than those of many who have left behind them more systematic, elaborate, and pretentious writings.
One of the most original of recent English writers on Political Economy was W. Stanley Jevons (18351882). The combination which he presented of a predilection and aptitude for exact statistical inquiry with sagacity and ingenuity in the interpretation of the results was such as might remind us of Petty. He tended strongly to bring economics into close relation with physical science. He made a marked impression on the public mind by his attempt to take stock of our resources in the article of coal. His idea of a relation between the recurrences of commercial crises and the period of the sun-spots gave evidence of a fertile and bold scientific imagination, though he cannot be said to have succeeded in establishing such a relation. He was author of an excellent treatise on Money and the Mechanism of Exchange (1875), and of various essays on currency and finance, which have been collected since his death, and contain vigorous discussions on subjects of this nature, as on bimetallism (with a decided tendency in favour of the single gold standard), and several valuable suggestions, as with respect to the most perfect system of currency, domestic and international, and in particular the extension of the paper currency in England to smaller denominations. He proposed in other writings (collected in Methods of Social Reform, 1883) a variety of measures, only partly economic in their character, directed especially to the elevation of the working classes, one of the most important being in relation to the conditions of the labour of married women in factories. This was one of several instances in which he repudiated the laisser faire principle, which, indeed, in his book on The State in Relation to Labour (1882), he refuted in the clearest and most convincing way, without changing the position he had always maintained as an advocate of free trade. Towards the end of his career, which was prematurely terminated, he was more and more throwing off "the incubus of metaphysical ideas and expressions "which still impeded the recognition or confused the appreciation of social facts. He was, in his own words, ever more distinctly coming to the conclusion " that the only hope of attaining a true system of economics is to fling aside, once and for ever, the mazy and preposterous assumptions of the Ricardian school." With respect to method, though he declares it to be his aim to "investigate inductively the intricate phenomena of trade and industry," his views had not perhaps assumed a definitive shape. The editor of some of his remains declines to undertake the determination of his exact position with respect to the historical school. The fullest indications we possess on that subject are to be found in a lecture of 1876, On the Future of Political Economy. He saw the importance and necessity in economics of historical investigation, a line of study which he himself was led by native bent to prosecute in some directions. But he scarcely apprehended the full meaning of the historical method, which he erroneously contrasted with the "theoretical," and apparently supposed to be concerned only with verifying and illustrating certain abstract doctrines resting on independent bases. Hence, whilst he declared himself in favour of "thorough reform and reconstruction," he sought to preserve the a priori mode of proceeding alongside of, and concurrently with, the historical. Political economy, in fact, he thought was breaking up and falling into several, probably into many, different branches of inquiry, prominent amongst which would be the "theory" as it had descended from his best predecessors, especially those of the French school, whilst another would be the "historical study," as it was followed in England by Jones, Rogers, and others, and as it had been proclaimed in general principle by his contemporary Cliffe Leslie. This was one of those eclectic views which have no permanent validity, but are useful in facilitating a transition. The two methods will doubtless for a time coexist, but the historical will inevitably supplant its rival. What Jevons meant as the "theory" he wished to treat by mathematical methods (see his Theory of Political Economy, 1871; 2d ed., 1879). This project had, as we have seen, been entertained and partially carried into effect by others before him, though he unduly multiplies the number of such earlier essays when, for example, he mentions Ricardo and J. S. Mill as writing mathematically because they sometimes illustrated the meaning of their propositions by dealing with definite arithmetical quantities. Such illustrations, of which a specimen is supplied by Mill's treatment of the subject of international trade, have really nothing to do with the use of mathematics as an instrument for economic research, or even for the co-ordination of economic truths. We have already, in speaking of Cournot, explained why, as it seems to us, the application of mathematics in the higher sense to economics must necessarily fail, and we do not think that it succeeded in Jevons's hands. His conception of "final utility" is ingenious. But it is no more than a mode of presenting the notion of price in the case of commodities homogeneous in quality and admitting of increase by infinitestimal additions; and the expectation of being able by means of it to subject economic doctrine to a mathematical method will be found illusory. He offers(16) as the result of a hundred pages of mathematical reasoning what he calls a "curious conclusion,"(17) in which "the keystone of the whole theory of exchange and of the principal problems of economics lies." This is the proposition that "the ratio of exchange of any two commodities will be the reciprocal of the ratio of the final degrees of utility of the quantities of commodity available for consumption after the exchange is completed." Now as long as we remain in the region of the metaphysical entities termed utilities, this theorem is unverifiable and indeed unintelligible, because we have no means of estimating quantitatively the mental impression of final, or any other, utility. But when we translate it into the language of real life, measuring the "utility" of anything to a man by what he will give for it, the proposition is at once seen to be a truism. What Jevons calls "final utility" being simply the price per unit of quantity, the theorem states that, in an act of exchange, the product of the quantity of the commodity given by its price per unit of quantity (estimated in a third article) is the same as the corresponding product for the commodity receiveda truth so obvious as to require no application of the higher mathematics to discover it. If we cannot look for results more substantial than this, there is not much encouragement to pursue such researches, which will in fact never be anything more than academic playthings, and which involve the very real evil of restoring the "metaphysical ideas and expressions previously discarded. The reputation of Jevons as an acute and vigorous thinker, inspired with noble popular sympathies, is sufficiently established. But the attempt to represent him, in spite of himself, as a follower and continuator of Ricardo, and as one of the principal authors of the development of economic theory (meaning by "theory" the old a priori doctrine) can only lower him in estimation by placing his services on grounds which will not bear criticism. His name will survive m connection, not with new theoretical constructions, but with his treatment of practical problems, his fresh and lively expositions, and, as we have shown, his energetic tendency to a renovation of economic method.
Arnold Toynbee (18521883), who left behind him a beautiful memory, filled as he was with the love of truth and an ardent and active zeal for the public good, was author of some fragmentary or unfinished pieces, which yet well deserve attention both for their intrinsic merit and as indicating the present drift of all the highest natures, especially amongst our younger men, in the treatment of economic questions.(18) He had a belief in the organizing power of democracy which it is not easy to share, and some strange ideas due to youthful enthusiasm, such as, for example, that Mazzini is "the true teacher of our age;" and he fluctuates considerably in his opinion of the Ricardian political economy, in one place declaring it to be a detected "intellectual imposture," whilst elsewhere, apparently under the influence of Bagehot, he speaks of it as having been in recent times "only corrected, re-stated, and put into the proper relation to the science of life," meaning apparently, by this last, general sociology. He saw, however, that our great help in the future must come, as much had already come, from the historical method, to which in his own researches he gave preponderant weight. Its true character, too, he understood better than many even of those who have commended it; for he perceived that it not merely explains the action of special local or temporary conditions or economic phenomena, but seeks, by comparing the stages of social development in different countries and times, to "discover laws of universal application." If, as we are told, there exists at Oxford a rising group of men who occupy a position in regard to economic thought substantially identical with that of Toynbee, the fact is one of good omen for the future of the science.
AMERICA
For a long time, as we have already observed, little was done by America in the field of Economics. The most obvious explanation of this fact, which holds with respect to philosophical studies generally, is the absorption of the energies of the nation in practical pursuits. Further reasons are suggested in two instructive Essaysone by Professor Charles F. Dunbar in the North American Review, 1876, the other by Cliffe Leslie in the Fortnightly Review for October 1880.
We have already referred to the Report on Manufactures by Alexander Hamilton; and the memorial drawn up by Albert Gallatin (1832), and presented to Congress from the Philadelphia Convention in favour of Tariff reform, deserves to be mentioned as an able statement of the arguments against protection. Three editions of the Wealth of Nations appeared in America, in 1789, 1811, and 1818, and Ricardo's principal work was reprinted there in 1819. The treatises of Daniel Raymond (1820), Thomas Cooper (1826), Willard Phillips (1828), Francis Wayland (1837), and Henry Vethake (1838) made known the principles arrived at by Adam Smith and some of his successors. Rae, a Scotchman settled in Canada, published (1834) a book entitled New Principles of Political Economy, which has been highly praised by J. S. Mill (bk. i. chap. ii), especially for its treatment of the causes which determine the accumulation of capital. The principal works which afterwards appeared down to the time of the Civil War were Francis Bowen's Principles of Political Economy, 1856, afterwards entitled American Political Economy, 1870; John Bascom's Political Economy, 1859; and Stephen Colwell's Ways and Means of Payment, 1859. In the period including and following the war appeared Amasa Walker's Science of Wealth, 1866; i8th ed., 1883, and A. L. Perry's Elements of Political Economy, 1866. A. Walker and Perry are free-traders; Perry is a disciple of Bastiat. Of Carey we have already spoken at some length ; his American followers are E. Peshine Smith (A Manual of Political Economy, 1853), William Elder (Questions of the Day, 1871), and Robert E. Thompson (Social Science, 1875). The name of no American economist stands higher than that of General Francis A Walker (son of Amasa Walker), author of special works on the Wages Question (1876) and on Money (1878), as well as of an excellent general treatise on Political Economy (1883; 2d ed. 1887). Early works on American economic history are those of A. S. Bolles, entitled Industrial History of the United States (1878), and Financial History of the United States, 17741885, published in 1879 and later years.
The deeper and more comprehensive study of the subject which has of late years prevailed in America, added to influences from abroad, has given rise, there also, to a division of economists into two schoolsan old and a new similar to those which we have found confronting each other elsewhere. A meeting was held at Saratoga in September 1885, at which a society was founded, called the American Economic Association. The object of this movement was to oppose the idea that the field of economic research was closed, and to promote a larger and more fruitful study of economic questions. The same spirit led to the establishment of the Quarterly Journal of Economics, published at Boston for Harvard University. The first article in this Journal was by C. F. Dunbar, whose review of a Century of American Political Economy we have already noticed; and in this article he set out, in the interest of conciliation, the tendencies of the two schools.
This division of opinion was manifested in a striking way by a discussion on the method and fundamental principles of Economics, which was conducted in the pages of the periodical entitled Science, and has since been reproduced in a separate form (Science Economic Discussion, New York, 1886). In this controversy the views of the new school were expounded and advocated with great ability. The true nature of economic method, the relativity both of economic institutions and of economic thought, arising from their dependence on varying social conditions, the close connection of economic doctrine with contemporary jurisprudence, the necessity of keeping economics in harmony with social ethics, and the importance of a study of consumption (denied by J. S. Mill and others) were all exhibited with remarkable clearness and force.(19) There is every reason to believe with Leslie that America will take an active part both in bringing to light the economic problems of the future and in working out their solution.
NOTES:
1. It would be a grave error to suppose that the subjection of social phenomena to natural laws affords any encouragement to a spirit of fatalistic quietism. On the contrary, it is the existence of such laws that is the necessary basis of all systematic action for the improvement either of our condition or of our nature, as may be seen by considering the parallel case of hygienic and thereapeutic agencies. And, since the different orders of phenomena are more modifiable in proportion to their greater complexity, the social field admits of more extensive and efficacious human intervention than the inorganic or vital domain. In relation to the dynamical side of Sociology, whilst the direction and essential character of the evolution are predetermined, its rate and secondary features are capable of modification.
2. He had already in 1822 stated his fundamental principles in an epuscule which is reproduced in the Appendix to his Politique Positive.
3. Under the influence of these views of Comte, J. S. Mill attempted in Book IV. of his Political Economy a treatment of Economic Dynamics; but that appears to us one of the least satisfactory portions of his work.
4. This phraseology was probably borrowed from the controversy on the method of jurisprudence between Thibaut on the one hand and Savigny and the school of Hugo on the other.
5. It will in each case be necessary to examine whether the action can best be taken by the central, or by the local, government.
6. This should be remembered by readers of M. Leroy-Beaulieu's work on Collectivism (1884), in which be treats Schäffle as the principal theoretic representative of that form of socialism.
7. By the present writer; being an Address to the Section of Economic Science and Statistics of the British Association at its meeting in Dublin in 1878.
8. Guide to the Study of Political Economy, 1880. See also the Bibliographical matter in his Primi Elementi di E. P., vol. i, 8th ed., 1888.
9. See his Saggi di Economia Politica. 1881
10. The remarkable book Money and Morals, by John Lalor, 1852. was written partly under the influence of Carlyle. There is a good monograph entitled John Ruskin's, Economist, by P. Geddes, 1884.
11. See her Autobiogaphy. 2d ed., vol. ii, p. 244.
12. A vigorous attack on the received system was made by David Syme in his Outlines of an Industrial Science, 1876.
13. Jones, whose writings were apparently unknown to Bagehot, had. as we have seen, in some degree anticipated him in his exposition.
14. Mr Rogers has since continued this work, and has also published The First Nine Years of the Bank of England, 1887.
15. That service was due to F. D. Lange (Refutation of the Wage-Fund Theory of Modern Political Economy, 1866). Leslie's treatment of the subject was contained in an article of Fraser's Magazine for July 1868. reprinted as an appendix to his Land-Systems and Industrial Economy of Ireland. England, and Continental Countries, 1870.
16. Theory of Political Economy. 2d ed., p. 103.
17. Fortnightly Review for November 1876, p. 617.
18. See his Lectures on The Industrial Revolution in England, with Memoir by the Master of Balliol, 1884; 2d ed., 1887.
19. The contributors on the side of the new school were Dr. Edwin R. A. Seligman, Professor E. J. James, Professor Richard T. Ely, Henry C. Adams, Richmond Mayo Smith, and Simon N. Patten. The representatives of the old school were Professor Simon Newcomb, F. W. Taussig, and Arthur T. Hadley.
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