The Online Library of Liberty

A project of Liberty Fund, Inc.

• Political Economy
• Part I.: Character and Logical Method of Political Economy.
• Part II.: Production.
• Chapter I.: Land and Natural Agents.
• Chapter II.: Labor.
• Chapter III.: Capital: Its Origin and Office.
• Chapter IV.: The Productive Capability of a Community.
• Part III.: Exchange.
• Chapter I.: The Theory of Value.
• Chapter II.: The Theory of International Exchanges.
• Chapter III.: Money and Its Value.
• Chapter IV.: Money and Its Value—continued—debased Coin: Seigniorage.
• Chapter V.: Inconvertible Paper Money.
• Chapter VI.: Bank Money.
• Chapter VII.: The Reaction of Exchange Upon Production.
• Part IV.: Distribution.
• Chapter I.: The Parties to the Distribution of Wealth.
• Chapter II.: Rent.
• Chapter III.: Interest.
• Chapter IV.: Profits.
• Chapter V.: Wages.
• Chapter VI.: Wages.—continued.
• Chapter VII.: Two Other Shares In Distribution.
• Chapter VIII.: The Reaction of Distribution Upon Production.
• Part V.: Consumption.
• Chapter I.: Subsistence: Population.
• Chapter II.: The Appearance of New Economic Wants.
• Chapter III.: Consumption: the Dynamics of Wealth.
• Part VI.: Some Applications of Economic Principles.
• I.: Usury Laws.
• II.: Industrial Co-operation.
• III.: Political Money.
• IV.: Pauperism.
• V.: The Doctrine of the Wage-fund.
• VI.: The Multiple Or Tabular Standard of Deferred Payments.
• VII.: Trade Unions and Strikes.
• VIII.: The Knights of Labor.
• IX.: Attacks On the Doctrine of Rent.
• X.: The Nationalization of the Land.
• XI.: The Banking Functions.
• XII.: The Present Banking System of the United States.
• XIII.: Foreign Exchanges.
• XIV.: Bi-metallism.
• XV.: The Revenue of the State.
• XVI.: The Principles of Taxation.
• XVII.: Protection Vs. Freedom of Production.
• XVIII.: Socialism.

PART I.

CHARACTER AND LOGICAL METHOD OF POLITICAL ECONOMY.

1. What Political Economy is.—Political Economy, or Economics, is the name of that body of knowledge which relates to wealth.

Political Economy has to do with no other subject, whatsoever, than wealth. Especially should the student of economics take care not to allow any purely political, ethical or social considerations to influence him in his investigations. All that he has, as an economist, to do is to find out how wealth is produced, exchanged, distributed and consumed. It will remain for the social philosopher, the moralist, or the statesman, to decide how far the pursuit of wealth, according to the laws discovered by the economist, should be subordinated to other, let us say, higher, considerations. The more strictly the several branches of inquiry are kept apart, the better it will be for each and for all.

The economist may also be a social philosopher, a moralist, or a statesman, just as the mathematician may also be a chemist or a mechanician; but not, on that account, should the several subjects be confounded.

2. Political Economy does not Inculcate Love of Wealth.—Because political economy confines itself to discovering the laws of wealth, it has by some been called, derisively, the Gospel of Mammon. In reply to this sneer it would be enough to say that, while wealth is not the sole interest of mankind, it is yet of vast concern, of vital concern, to individuals and to communities. As such, it deserves to be studied. Now, if it is to be studied at all, it will best be studied by itself. The easiest and surest way to increase our knowledge of any subject is to isolate it, and investigate it, to the strict exclusion, for the time, of all other subjects.

But more may be said. Political Economy does not inculcate love of wealth. It simply inquires how that passion, or propensity, in the degree in which it exists, does, in fact, influence the actions of men. Political Economy has no quarrel with passions or propensities which may, in a greater or less degree, supplant the love of wealth. It does not assume to sit in judgment on human conduct; It exercises no choice among human motives; It simply undertakes to follow causes to their effects in one single department of human activity, viz., the pursuit of wealth.

3. Political Economy Tempers the Passion for Wealth.—So far from ministering to greed, it would be easy to prove that the study of Political Economy has tended, by showing how wealth is really best gained and kept, to banish a ravening, ferocious greed which seeks to snatch its objects of desire by brutal violence, at whatever cost of misery to others, and to replace this by an enlightened sense of self-interest, which seeks its objects through exchanges mutually beneficial, and which supports social order and international peace as the conditions of general well-being.

Political Economy does not plant the love of wealth in human minds. It finds it there, a strong, native passion, which, but for enlightened views, is likely to break out into private rapine and public war. A little more than one hundred years ago, before Adam Smith published his great work, “The Wealth of Nations,” it was a maxim of public policy, that only one party to trade could profit by a transaction, and that all which one party might gain, the other must lose. Out of this root grew wars and commercial restrictions which set man against man, and nation against nation, making the intercourse of even the most civilized states a game of deceit and violence. Adam Smith left the love of wealth in human minds, not rebuked but enlightened. Little more than a century has elapsed, yet mankind have made greater progress toward humane and mutually advantageous international relations in that time than during all the other centuries of human history.

4. But What is Wealth?—Economists have found much difficulty in defining Wealth; and not a few writers, especially of late, have chosen to abandon the word altogether.

Several of these have called Political Economy the Science of Exchanges. But the use of this term only removes the essential difficulty of the subject one stage further away. Exchanges of what? All human life, in society, is made up of exchanges, in feeling, word and act. The family relation, the neighborhood, the State, the Church, imply an unceasing exchange of sympathies, activities and incentives, only a portion of which are within the view of the economist.

If we say exchanges of wealth, we have not escaped the difficulty of defining Political Economy, since we have, all the same, to tell what wealth is. If we say exchanges of services, we must further explain what sort of services we mean, since there is an infinitude of services of man to man, in a great variety of relations, with which Political Economy can claim to have nothing to do. The services of parents to children, of children to parents, of children to each other, of friend to friend, do not form any part of the subject matter of Political Economy.

If we say economic services, we have still to define the scope of the word economic: that is, we are back again at the point from which we started.

5. The Term a Popular One.—The substitute offered for the term wealth, in describing the field of Political Economy, proving thus defective, let us see what we can do with the word so long in use.

Wealth is, as Prof. Price justly observes, “the word which belongs to the world which Political Economy addresses.” It would, therefore, be a matter of regret, were it to be abandoned unnecessarily. When the man of business, the laboring man, even the man of leisure, is told that Political Economy is the science of wealth, he at once feels drawn to the subject. No one is above, few are below, an interest in the subject. But the term, science of exchanges, is not especially attractive. A banker, deeming that “foreign exchanges” are meant, may at first think himself concerned; but will discover his misapprehension when he opens the book. The great majority of people will doubt, on hearing the title, whether they care much or any thing about the science of exchanges.

Since, then, so great popular interest attaches to the word, wealth, it would be a pity to lose the use of it without good reason.

6. Yet Subject to Scientific Uses.—And we note that the conception of wealth formed by men who are not students of Political Economy, is clear and well-defined. It is only scholars, when they begin to talk and write about wealth, who find any difficulty in the use of the word. Stop a dozen men in succession, and ask them what constitutes wealth, and you will find an almost perfect agreement. “Every one,” says Mr. John Stuart Mill, “has a notion sufficiently correct for common purposes of what is meant by wealth. The inquiries which relate to it are in no danger of being confounded with those relating to any other of the great human interests.”

Moreover, if we inquire what is the difficulty attributed to the use of the term, we find that it relates, not so much to the definition of wealth, as to the formation of a catalogue of the articles which make up the wealth of an individual or community.

Now, it is not important that such a catalogue should be formed. It would not even be fatal to a definition of wealth that certain objects should be found which seemed to fall across the line of demarkation. All definitions in Political Economy, as, indeed, in the natural sciences, are subject to this condition. Few naturalists will presume to say just where the vegetable kingdom ends and the animal kingdom begins. There are objects in nature concerning which it would puzzle the most learned scholar to say whether they are animal or vegetable. Yet we do not, on that account, hesitate to say that a tree belongs to the vegetable, and an elephant to the animal kingdom.

7. Relation of Wealth to Value.—Wealth comprises all articles of value and nothing else. If any thing have not value, it does not belong to this category. It may conceivably be better than wealth; but it certainly is other than wealth. It may become a means of acquiring wealth; but it is not wealth itself. In the language of Prof. N. W. Senior, “the words wealth and value differ as substance and attribute. All those things, and those only, which constitute wealth, are valuable.”

8. But What is Value?—Value is the power which an article confers upon its possessor, irrespective of legal authority or personal sentiments, of commanding, in exchange for itself, the labor, or the products of the labor, of others. Briefly and somewhat elliptically speaking: Value is power in exchange.

We say: irrespective of legal authority. The Emperor of Germany can, by a word, call two millions of men from their homes and send them to distant fields, even to foreign lands, to work, to watch, to march, to fight and to die. Yet these services are not economic, because not voluntary. On the other hand, the services of a soldier in the British army are economic, as they are rendered under the terms of a voluntary enlistment, the result of a fair and open bargain between the crown and the subject.

We say also: irrespective of personal sentiments. The mother hangs over the sick bed, day and night, draining her very life blood to save her child. Her services are not economic, because dictated by a purely personal sentiment. On the other hand, the work of the hired nurse and of the feed physician comes fairly within the view of the economist.

9. Transferability Essential to Value.—We note that exchange implies two exchangers. Value is, then, a social phenomenon.

But exchange implies, also, the capability of detaching from the present possessor the articles to be exchanged, and making them over to another.

Do health, strength, intelligence, skill, possess this capability? Are they wealth? Have they value?

Not a little of the difficulty which has attended the use, in economics, of the word wealth, has arisen from attributing value to such properties or possessions as these. Prof. Alfred Marshall, in his admirable work, “The Economics of Industry,” even includes honesty in the “personal wealth” of a country.

But let us apply the test of our definition. Can these possessions or properties be exchanged? Can health, strength, intelligence, skill, be detached and become the property of another? No; they can be taken away from one, as by sickness or death; but they can not be made over to any one else. The gouty millionaire can not, with all that he has, purchase the robust health of the laborer by the wayside, or buy for his empty-headed son the learning or the trained faculties of the humblest scholar. Hence, all that which some economists have called intellectual capital, and all that which, by analogy, might be called physical capital, are to be excluded from the category of wealth.

10. Better than Wealth, but not Wealth.— Those possessions or properties have seemed to be things so desirable in themselves, so much to be preferred, in any right view of human welfare, that excellent writers have not been able to bring themselves to leave them out of the field of economics. But Political Economy is the science, not of welfare, but of wealth. There may be many things which are better than wealth, which are yet not to be called wealth. A good name is rather to be chosen than riches, and loving favor than silver and gold; yet a good name is not riches, and loving favor is neither silver nor gold.

Here the popular understanding of the word coincides with the definition given for scientific purposes. Plain men do not speak of such qualities, or endowments, as being wealth. No merchant or manufacturer or laboring man would include any one of these items in an account of his wealth, however precious he might esteem them.

And it is to be noted that it does not matter whether the incapacity to detach and make over a possession to another, arises from the nature of things, as in the case of personal health and strength, skill and intelligence, or from the constraints of law or public opinion. In Circassia, a beautiful daughter is wealth, and is popularly so accounted. No one in making up the list of his wealth would omit this item, any more than he would leave out his horses or his fields. In Christian countries, a daughter is not wealth, though she is far better than wealth. The Proclamation of Emancipation, in the United States and in Russia, annihilated a vast mass of wealth; it created what was better than much wealth—a body of free men.

But while strength, skill and intelligence can not be detached, and transferred, and thus can not be said to be wealth, the present use of them can be assigned to another, and hence may become the subject of exchange. The rich valetudinarian may command the services of the robust laborer, in waiting on his person; he may hire the poor scholar to be tutor to his son. The usufruct of all such qualities and endowments, therefore, properly constitutes an item of wealth, and, by the force of contract, the capability of transferring this species of wealth may be extended beyond the present moment to considerable periods of time, as when a man is hired by the month or year.

11. Relation of Wealth to Community of Goods.—But it may be objected that, inasmuch as exchange implies a present individual possessor, were community of goods or of labor to be universally established, there would no longer be such a thing as wealth, or such a department of human inquiry as Political Economy.

To this it is sufficient to reply, that community of labor or of enjoyment is simply impossible, from the very nature of mankind.

Were a hundred persons to unite in such a society, each would have to work by himself: the exertion must be his; the pain and weariness would be all his. On the other hand, what he received from the common stock, would be his own; the food would nourish him alone; the clothing and the food would warm only him; none of his fellows would share in the pleasure or the benefit of what he consumed.

The so-called community of labor and of goods, then, amounts simply to a mode of roughly apportioning exertion and enjoyment, on the basis of an assumed equality of abilities and of needs. Subject to all the injustice involved in such an assumption, each one of the hundred members would still part with his services to his fellows, and receive from them his remuneration, in the form of food, clothing, fuel and shelter.

12. Relation of Value to Gratuity.—It will have been gathered from what has been said respecting value, that wealth and well-being are not synonymous. Much which is essential to the latter is no element of the former. Wealth may be increased at the expense of well-being, as in the case of the reduction of free laborers to the grade of chattel slavery. Wealth may be diminished temporarily by causes which minister to the advancement of the community and the State, as in the case of inventions which throw out of use large amounts of material and apparatus, or of ameliorating changes in nature which allow costly contrivances to be dispensed with.

“If,” wrote Prof. Senior, “the climate of England could suddenly be changed to that of Bogota, and the warmth which we extract imperfectly and expensively from fuel were supplied by the sun, fuel would cease to be useful, except as one of the productive instruments employed by art; we should want no more grates or chimney-pieces in our sitting-rooms; what had previously been a considerable amount of property, in the fixtures of houses, in stock in trade and materials, would become valueless; coals would sink in price; the most expensive mines would be abandoned; those which were retained would command smaller rents.”

13. Continuous Displacement of Value by Gratuity.—We are now called further to notice that there is a constant tendency to this diminution of the sum of wealth, and even to the annihilation of individual items, from age to age. So rapid and persistent is that tendency that, but for the increase of population, and the multiplication and diversification of human desires, due to increasing civilization and refinement, the subject matter with which Political Economy has to deal would be continually diminishing.

How small the sum of wealth which would suffice for a community, in our stage of knowledge and skill, which should aspire to live only as well as a tribe of savages! The boats, the nets, the huts, the clothing and the domestic utensils of a primitive community represent an incredible amount of exertion and sacrifice; possess a vast amount of purchasing power. A like outfit would require but an insignificant part of the labor power of a modern community, and would have but little purchasing power.

The tendency which has been noted arises out of the progress of mankind in the chemical and mechanic arts, by which operations formerly difficult are made easy; by which materials naturally scarce are made plentiful; by which human necessities once urgently felt are wholly obviated, and, finally, by which things once costing labor are made to produce themselves spontaneously.

14. Growth of Human Wants.—In fact, however, while, in any community, this displacement of value by gratuity is continually in progress, the increase of population and the multiplication and diversification of human wants may be operating as steadily and strongly in the other direction. The labor that is made free by discoveries and inventions is applied to overcome the difficulties which withstand the gratification of newly-felt desires. The hut is pulled down to make room for the cottage; the cottage gives way to the mansion; the mansion to the palace. The rude covering of skins is replaced by the comely garment of woven stuffs; and these, in the progress of luxury, by the most splendid fabrics of human skill. In a thousand forms wealth is created by the whole energy of the community, quickened by a zeal greater than that which animated the exertions of their rude forefathers to obtain a scanty and squalid subsistence.

15. Distinction between Wealth and Property.—A further distinction is that between wealth and property. The neglect of this has caused great confusion, especially in discussions of the principles and methods of taxation.

Mr. J. S. Mill affords an example of the confusion of these terms when he says, respecting a mortgage on a landed estate, “this is wealth to the person to whom it brings in a revenue, and who could, perhaps, sell it in the market for the full amount of the debt. But it is not wealth to the country; if the engagement were annulled, the country would be neither poorer nor richer.”

A more accurate statement of the case would be this: The landed estate is wealth, that is, possesses value; that is, confers upon its possessor the power of commanding, in exchange for itself, the labor, or the products of the labor, of others. The mortgage is property, or a right to wealth; in this case, a right to an undivided portion of the landed estate. The amount of the property of the owner of the estate is the value of the estate less the mortgage. There is but one body of wealth; there are two properties, that of the owner, and that of the mortgagee. The wealth of the community is no greater and no less, whether the ownership of the estate be entire, or divided into two or half a dozen properties.

Indeed, we might say that “property” is not a word with which the political economist has any thing to do. It is legal, not economic, in its significance.

“The wealth,” says Prof. Senior, “which consists merely of a right or credit, on the part of A., with a corresponding duty or debt on the part of B., is not considered by the Political Economist. He deals with the things which are the subjects of the right, or the credit, not with the claims or liabilities which may affect them. In fact, the credit amounts merely to this: that B. has in his hands a part of the property of A.”

16. The Premises of Political Economy.—What are the proper premises of Political Economy? that is, what facts and principles should the economist take to reason from? Are they many or few? Shall the economist take into account all the facts, mental or physical, which influence the phenomena of wealth; or shall he confine himself to certain principal facts?

Shall we take man, for the purpose of economic reasoning, precisely as he is found to be, with all his appetencies and characteristics, so far as they affect the power and the disposition to labor, or so far as they increase or impair the ability of individuals to secure their share in the distribution of the product of industry? or shall we create, for the purposes of our reasoning, an economic man, assumed to be impelled by certain motives in respect to wealth, from whose actions men in general, knowing themselves to be more or less fully controlled by similar motives, may derive instruction?

Instead of seeking to extend our knowledge of the actual conditions under which wealth is produced by man, shall we content ourselves with certain leading conditions, such as that food is produced without human labor only in small quantities and very precariously; that the soils of every country vary widely in fertility; and that of no soil can the produce be increased indefinitely without a more than proportional expenditure of labor and capital?

Shall we take account of the various endowments, in the way of soil and climate, mineral resources and water power, of different countries? Shall we study their institutions and the predominant traits of character manifested by their people, so far as these appear to influence their actions in respect to wealth? Or shall we, on the other hand, disregard all that makes one nation to differ from another, caring to learn nothing of any which would not hold good of all.

Upon the answer to these questions depends the character and logical method of Political Economy. Upon that answer depends also much of the usefulness of this department of inquiry and the interest it may be expected to arouse in the public mind.

17. Two Schools of Political Economy.—The differences of opinion which exist regarding the proper extent of the premises of Political Economy have given rise to two schools which are commonly called the English and the German school.

The economists of the former school insist that the proper premises of pure Political Economy consist of a few certain facts of human nature, of human society, and of the physical constitution of the earth. That these, not more than five or six in number, constitute all the premises proper to the inquiry. That the scope of economic reasoning can not be extended beyond these without destroying the purity and simplicity of the science, and introducing error and confusion.

The economists of the latter school hold that it is the province of Political Economy to explain the phenomena of wealth. That, in order to do this, the economist must inquire how men do, in fact, behave in regard to wealth, constituted as they are, and under the conditions and circumstances in which they are placed.

In this view, nothing that importantly influences the production and distribution of wealth can be neglected by the economist. All human history becomes his domain. The other sciences, alike the physical and the moral, become tributary to the science he cultivates.

With its premises thus enlarged, Political Economy ceases to be something which one man of superior intellect could, with a definite exertion of his faculties, work completely out at a sitting, as Beckford wrote “Vathek”; and that too without having visited any community beyond the one in which he was born, or knowing a page of history. Political Economy, as thus comprehended, becomes a work to which many men and successive ages must contribute; the material of which is accumulated in human experience, and is thus continually on the increase. It becomes a work which never is, but is always to be done, growing with the growing knowledge of the race.

18. Prof. Cairnes' Statement.—It has been said that the two schools of Political Economy are known as the English and the German school. The terms are not fortunate, inasmuch as some of the economists who have labored most fully in the spirit of the so-called German school, have been natives of the British Isles. The best statement known to me of the true scope of economic inquiry is that given by Prof. Cairnes, from whose admirable lectures∗ I abridge the following paragraphs, preserving the author's phraseology:

The desires, passions and propensities which influence mankind in the pursuit of wealth are almost infinite. Yet among these are some principles of so marked and paramount a character as both to admit of being ascertained, and when ascertained, to afford the data for determining the most important laws of the production and distribution of wealth. To possess himself of these is the first business of the political economist. He has then to take account of some leading physiological facts connected with human nature; and, lastly, to ascertain the principal physical characteristics of those natural agents of production on which human industry is exercised.

But it must not be thought that when these cardinal facts have been ascertained, and their consequences duly developed, the labors of the political economist are at an end. Many subordinate influences will intervene to disturb, and occasionally to reverse, the operation of the more powerful principles, and thus to modify the resulting phenomena.

19. Subordinate Causes in Economics.—The next step, therefore, in his investigations will be to endeavor to ascertain the character of those subordinate causes, whether mental or physical, political or social, which influence human conduct in the pursuit of wealth. These, when he has found them, and is enabled to appreciate them with sufficient accuracy, he will incorporate among the premises of the science.

Thus, the political and social institutions of a country, in particular, the laws affecting the tenure of land, will be included among such subordinate agencies. It will be for the political economist to show in what way causes of this kind modify the operation of more fundamental principles. Again, any great discovery in the arts of production, such, e. g., as the steam engine, will be a new fact for the consideration of the political economist. It will be like the discovery of a new planet, the attraction of which, operating on all the heavenly bodies within the sphere of its influence, will cause them more or less to deviate from the path which had been previously calculated for them.

In the same way, also, those motives and principles of action which may be developed in the progress of society, so far as they may be found to affect the phenomena of wealth, will also be taken account of by the political economist. He will consider, e. g., the influence of custom in modifying human conduct in the pursuit of wealth. He will consider how, as civilization advances, the estimation of the future in relation to the present is enhanced, and the desire for immediate enjoyment is controlled by the increasing efficacy of prudential restraint. He will also observe how ideas of decency, comfort and luxury are developed as society progresses, modifying the natural force of the principle of population, influencing the mode of expenditure of different classes, and affecting thereby the distribution of industrial products. Even moral and religious considerations are to be taken account of by the economist precisely in so far as they are found, in fact, to affect the conduct of men in the pursuit of wealth.

20. Remarks on Prof. Cairnes' Statement.—Nothing could be added to this statement of the logical method of Political Economy, as it is pursued by those who hold that it is the province of the science to explain the phenomena of wealth; and that, to this end, all causes which, whether primarily, or principally social, ethical, physical or physiological, do, in fact, enter to affect the actions of men respecting wealth, should be identified and determined, so far as may be, both in their direction and in the degree of their influence.

In this view the economist who omits any cause, structural or dynamic, physical or moral, which affects the production, exchange, distribution or consumption of wealth, must justify himself, not by the plea that such a cause has no relevancy to his investigation, but by some plea which would excuse an admittedly less than complete treatment of the subject, e. g., the lack of information, the limitations of the human faculties, or the need, for popular instruction, of very brief and very general statements of principle.

21. Mr. Mill on the Economic Man.—On the other hand, perhaps the best statement of the view taken by the economists of the so-called English school, as to the proper premises of Political Economy, is that given by Mr. J. S. Mill, in his work published in 1844.

“Political Economy,” says Mr. Mill, “is concerned with man solely as a being who desires to possess wealth and who is capable of judging of the comparative efficacy of means to that end. ∗ ∗ ∗ It makes entire abstraction of every other human passion or motive, except those which may be regarded as perpetually antagonizing principles to the desire of wealth, namely, aversion to labor and desire of the present enjoyment of costly indulgences. These it takes, to a certain extent, into its calculations, because these do not merely, like other desires, occasionally conflict with the pursuit of wealth, but accompany it always, as a drag or impediment, and are, therefore, inseparably mixed up in the consideration of it. Political Economy considers mankind as occupied solely in acquiring and consuming wealth.”∗

We have here all the elements of the economic man. He is taken as a being perfectly capable of judging of the comparative efficacy of means to the end of wealth. That is, he will never fail, whoever he may be, or wherever he may live, whether a capitalist or a laborer, rich or poor, taught or untaught, to know exactly what course will secure his highest economic interest, that is, bring him the largest amount of wealth.

Moreover, that end of wealth he never fails to desire, with a steady, uniform, constant passion. Of every other human passion or motive, Political Economy “makes entire abstraction.” Love of country, love of honor, love of friends, love of learning, love of art, pity, shame, religion, charity, will never, so far as Political Economy cares to take account, withstand the effort of the economic man to amass wealth.

There are, however, two human passions and motives, of which Political Economy takes account, as “perpetually antagonizing principles to the desire of wealth,” namely, “aversion to labor and desire of the present enjoyment of costly indulgences,” that is, indolence and gluttony.

As by this view of Political Economy all men are taken as equally absorbed in the passion for wealth, so all men are taken as equally lazy and self-indulgent. The South Sea Islander and the large-brained European are equally averse to exertion; equally subject to the impulses of immediate appetite.

22. Ricardo the Master of the English School.—Such are the features of the economic man, as delineated by Mr. Mill. Not a few treatises have been written mainly according to this method. The ablest body of doctrine ever composed from this point of view is that of David Ricardo. Hence this school of Political Economy may not inaptly be called the Ricardian. Mr. Ricardo, indeed, modified those assumptions so far as to recognize the difference in economic quality existing between men of different countries, not only between the East Indian and the Englishman, but also between the Englishman and the Portuguese. Within the same country, however, he recognized no such differences; but held rigorously to the few and simple postulates which have been stated. The acuteness of his intellect, the tenacity of his logical grasp, make him easily the master of all the economists of this school.

23. Relations of the Two Schools.—It need not be a matter of surprise that so wide a difference of opinion as to the proper scope of economic inquiry should have led to much passionate controversy. The economists of the so-called German school have been disposed to deny, not only the universality of principles deduced from assumptions so arbitrary and falling so far short of the real facts of life and society, but also the significance, for any purpose whatever, of conclusions thus obtained. The economists of the so-called English, or Ricardian school, have treated the method of their opponents as unscientific, giving scope to charlatanry, and at the best tending to mere sentimentality.

The mutual contempt entertained by the two schools is not justified by a large view of the progress of economics in the past, or by a consideration of the history of other social sciences. Political Economy should begin with the Ricardian method. A few simple assumptions being made, the processes of the production, exchange and distribution of wealth should be traced out and be brought together into a complete system, which may be called pure Political Economy, or arbitrary Political Economy, or, a priori Political Economy, or by the name of its greatest teacher, Ricardian Political Economy. Such a scheme should constitute the skeleton of all economic reasoning; but upon this ghastly frame-work should be imposed the flesh and blood of an actual, vital Political Economy, which takes account of men and societies as they are, with all their sympathies, apathies, and antipathies; with every organ developed, as in life; every nerve of motion or of sensibility in full play.

24. The True Labor of Philosophy.—On this subject what could be more pregnant with meaning than the aphorism of Bacon, “Those who have treated of the sciences have been either empirics or dogmatical.

“The former, like ants, only heap up and use their store; the latter, like spiders, spin out their own web.

“The bee, as a mean between both, extracts matter from the flowers of the garden and the field; but works and fashions it by its own efforts.

“The true labor of philosophy resembles hers; for it neither relies entirely or principally on the powers of the mind, nor yet lays up in the memory the matter afforded by the experiments of natural history and mechanics, in its raw state, but changes and works it in the understanding.”

25. Is Political Economy indeed a Science?—The answer to this question depends rather upon the definition imposed on the word science, than upon the view we take of Political Economy itself. If we give the word no wider extension than Dr. Whewell gave it, when he spoke of “those bodies of knowledge which we call sciences,” Political Economy indubitably ranks as a science. It forms a body of knowledge, constantly growing, it is true, from the outside, and undergoing not a little change from time to time within, yet still embracing, in the present, a vast collection of related facts, with the reason of their succession, one to another, more or less clearly seen, and allowing many practical rules and precepts of great importance in determining human conduct to be deduced with all needed assurance. In this sense, then, Political Economy is a science.

Whether it be a science in the highest sense given that word, may be disputed. M. Comte, the great positivist philosopher, denied the claim of Political Economy to this title. In his view, it is an attribute of a true social science that it results in establishing a rational filiation between events, so as to allow of systematic prevision respecting their occurrence in a certain succession. Prediction—forecast of the future—is, according to M. Comte, the fruit of all true science. Of this, he asserts, political economy has not shown itself capable.

Prof. Cairnes rejoins that the economic prevision is a prevision not of events, but of tendencies. Admitting the incapacity of forecasting events, Prof. Cairnes urges that “it argues no imperfection in economic science. The imperfection is not here, but in those other cognate sciences, to which belongs the determination of the non-economic quàntities in the problem, etc. ∗ ∗ Meanwhile it is no slight gain, in speculating on the future of society, to have it in our power to determine the direction of an order of tendencies exercising so wide, constant and potent an influence on the course of human development, as the conditions of wealth. ∗ ∗ ∗ So much for the highest form of scientific fruit, ‘forecast of the future.’ The principle, however, of establishing a filiation in events may take the more modest form of explaining the past. ∗ ∗ That political economy, assuming that it fulfills its limited purpose of unfolding the natural laws of wealth, is capable of throwing light on the evolutions of history, will scarcely be denied.”

26. The Practical Importance of Political Economy.—We can not stay to discuss the question. Whether Political Economy be or be not a science in the high sense attributed to that word by M. Comte, it assuredly is, as a branch of social inquiry, worthy the earnest attention of every publicist and every citizen. It deals with some of the most important subjects which concern society. Whether the degree of assurance that may be attained in the study of these questions be higher or be lower, the questions can not but be more justly decided by reason of such study.

If Political Economy have not yet reached the standing of a true science, in the high sense in which that word is used by M. Comte; if political economists are still at disagreement on many points of theoretical or practical importance, it can not be denied that the investigation of the conditions of wealth by Adam Smith and his successors has already resulted in the removal of monstrous delusions which a century ago profoundly affected the legislation of every civilized country, to the inexpressible injury of the commonwealth of nations. The first fruits of Political Economy have been worth a million times the intellectual effort that has been bestowed upon the subject.

27. Distinction between a Science and an Art.—Before proceeding to inquire whether Political Economy should be dealt with as a science or as an art, it seems desirable strongly to emphasize the distinction between a science and an art. This is the more needed because of the strangely persistent habit of economic writers in confusing these two things, which should be kept clearly distinct.

A science, whether the science of mathematics, or physics, or mechanics, or chemistry, or geology, or physiology, or economics, deals only with the relations of cause and effect within its own field. It assumes nothing to be a good and nothing to be an evil. It does not start with the notion that something is desirable or undesirable; nor does it arrive at any such conclusion as its result. It has no business to offer precepts or prescriptions. Its sole single concern is to trace effects back to their causes; to project causes forward to their effects.

An art, on the other hand, starts with the assumption that a certain thing is desirable or that a certain other thing is undesirable; that something is a good or that something is an evil. The object it seeks is to ascertain how the good may be attained, or the evil avoided. In pursuing this inquiry, it makes use of the principles, or laws, governing the relations of cause and effect, which have been ascertained in the cultivation of any and all sciences that have in any way to do with its own subject matter. As a result, it issues with certain precepts and prescriptions for the guidance and assistance of those who would gain the good or avoid the evil which that particular art has in contemplation, whether it be the art of navigation, or of cookery, of painting, of gunnery, of architecture, of mining, or of weaving.

28. The Distinction Illustrated.—This distinction between a science and an art ought to be sufficiently clear; but the inveterate disposition of economic writers, which has been referred to, will perhaps justify an illustration which I shall make familiar, even at the risk of appearing coarse.

Suppose I am in my laboratory and a man enters who says that he desires to consult me, as a professor of chemistry, as to whether he had better swallow the contents of a vial which he holds in his hand. I reply to him: “Sir, I have no advice, as a professor of chemistry, to offer you as to what you shall swallow or refrain from swallowing. I perceive that the liquid contained in your vial is prussic acid. I will cheerfully state to you the action of prussic acid on any substance about which you may choose to inquire; but probably you had better, for your apparent purpose, go to Prof. S., the physiologist, who can more fully and readily than myself explain the precise action of prussic acid when taken into the stomach of a living being.”

The inquirer now goes to Prof. S., and says that he desires to consult him, as a professor of physiology, as to whether he had better swallow the liquid which the chemist has told him is undilute prussic acid. Prof. S. replies: “Sir, should you consult me as a fellow being, I would not stand on ceremony, but frankly advise you to empty the contents of your vial into the sink. But if you insist on consulting me as a professor of physiology, I must reply that I have no advice to give. Physiology, sir, is a science; as such, it has nothing to do with precepts or prescriptions, but only with the relations of cause and effect within the field of animal life. As a student of that science, I inform you that, if you swallow the liquid, you will experience such and such sensations, and, at about such a time, you will be dead. Since you still insist upon having advice as to whether you had better do this or not, I refer you to my neighbor, Dr. G., who is the professor, not of a science, but of an art. As such, it is his business to give advice regarding conduct. As such, he has a right to entertain the notion that certain things are good, and certain things evil; that the means calculated (as shown by the appropriate science or sciences) to bring about the good, are desirable; that the courses which (as shown by the appropriate science or sciences) lead to the evil, are undesirable. He would not be a physician unless he held that pain and death were evil; life and the absence of pain, good. What he is a physician for is to help his patients to avoid the evil and obtain the good. In doing this he will naturally seek to apply the largest and latest results of the science of physiology to the art of healing.”

29. Distinction between Political Economy as a Science and as an Art.—“If,” says Prof. Senior, “Political Economy is to be treated as a science, it may be defined as the science which states the laws regulating the production and distribution of wealth, so far as they depend on the action of the human mind. If it be treated as an art, it may be defined as the art which points out the institutions and habits most conducive to the production and accumulation of wealth; or, if the teacher ventures to take a wider view, as the art which points out the institutions and habits most conducive to that production, accumulation and distribution of wealth which is most favorable to the happiness of mankind.”

30. Prof. Senior goes on to remark that, in the eighteenth century, political economy was treated as an art, a branch of statesmanship. Sir James Steuart so treated it. The French Physiocrats so regarded it. Even with Adam Smith, “the scientific portion of his work is merely an introduction to that which is practical.”

Oddly enough, the statesman Turgot must be made an exception to the remark respecting the French Physiocrats. “It is remarkable,” says Prof. Senior, “that the only man among the disciples of Quesnay∗ who was actually practicing political economy as an art, is the only one who treated its principles as a science. His ‘Réflexions sur la formation et la distribution des richesses,’ published in 1774, is a purely scientific treatise. It contains not a word of precept, and might have been written by an ascetic, who believed wealth to be an evil.”

Prof. Senior continues: “The English writers who have succeeded Adam Smith have generally set out by defining political economy as a science, and proceeded to treat it as an art. Mr. Ricardo is, however, an exception. His great work is little less scientific than that of Turgot. His abstinence from precept, and even from illustrations drawn from real life, is the more remarkable, as the subject of his treatise is ‘Distribution,’ the most practical branch of political economy, and ‘Taxation,’ the most practical branch of Distribution. The modern economists of France, Germany, Spain, Italy and America, so far as I am acquainted with their works, all treat political economy as an art.”

31. We shall deal with Political Economy as a Science.—The inveterate disposition, which Prof. Senior thus notes, to abandon the investigation of principles for the formulation of precepts, has doubtless retarded greatly the progress of political economy. It can not be too strongly insisted on, that the economist, as such, has nothing to do with the questions, what men had better do; how nations should be governed; or what regulations should be made for their mutual intercourse. His business simply is to trace economic effects to their causes, leaving it to the philosopher of everyday life, to the moralist or the statesman, to teach how men and nations should act in view of the principles so established. The political economist,∗ for example, has no more call to preach free trade, as the policy of nations, than the physiologist to advocate monogamy as a legal institution.

Throughout this work until we reach Part VI, which will be in terms devoted to Some Applications of Economic Principles, the effort will be made to treat political economy strictly as a science. If at any point the writer lapses into expressions only suitable to the teacher of an art, it will be partly because of that strong predisposition which has been noted in almost all writers on this subject, and partly to the influence of example.

32. Is There a National Political Economy?—This is a question which has been much debated. The so-called protectionists have favored the view that each country has a political economy of its own. One writer of our own country has entitled his work “American Political Economy.”

The controversy over this question arises out of the confusion produced, first, by the failure to distinguish between the science of political economy and the use of political economy in the art of statesmanship; secondly, by the different views taken of the proper premises of the science of political economy by the two schools (Par. 17) before referred to.

Those who say that there is an American Political Economy, for example, mean that the precepts derived from political economy, whether addressed to the legislator, or to the body of the people, should not be applied to America without reference to the peculiar constitution, conditions and needs of America. But a science has nothing to do with precepts or prescriptions. Rules of conduct belong to an art.

33. National and Race Characteristics.—Moreover, the notion that there is a political economy for each race of men, and even for each nation, has been fostered by the arbitrary character of the assumptions of what we have called the Ricardian school, and by the refusal to pay a reasonable regard to some of the most characteristic features of human nature and some of the most prominent facts of industrial society, embracing institutions and laws which vitally affect the production and distribution of wealth.

Thus, the à priori economist, in discussing the question of wages, assumes, for the purposes of his reasoning, a body of laborers who are wholly intent on getting the largest remuneration; who will, for any advantage, however slight, change their occupation, and with equal readiness their place of abode, at least within their own country; who, moreover, are so intelligent and well-informed that no preference, economically, can exist on behalf of any other occupation or place of abode, without their knowing it, and, of course, acting at once upon it. The economist having created such a race of beings, whose likeness is found nowhere upon earth, proceeds to point out,’ it may be with great acuteness and accuracy, what the individual members thereof would do in various supposed cases, under the impulse of this or that economic force. His conclusions are put forth as “laws” of political economy.

Is it strange that an intelligent East Indian, reading these conclusions, should say, if this is political economy, it must be European political economy, and there should be a separate political economy for the East, since here, over vast regions, social and religious feelings absolutely prohibit multitudes of workmen from changing their occupation, for any reason; while the almost uniform penury of the laboring class, their ignorance, superstition, and fear of change, combine to render movement from place to place tardy and difficult, if not, as in most cases, practically impossible?

34. Relation of Political Economy to other Sciences.—Political Economy does not ascertain for itself a single one of the facts which form the premises of the economist. These are all derived from other sciences as data, i. e., things given. From the physiologist, for instance, is obtained the fact of man's need of food to sustain life, from which is deduced the economic doctrine of minimum wages. From the physiologist, again, is obtained the fact of a strong disposition, arising from the sexual passion, to carry population beyond the limits of decent or comfortable subsistence, from which is deduced the much-abused doctrine known as Malthusianism. From the agricultural chemist is obtained the fact that, beyond a certain point, the application of capital and labor to land yields a continually diminishing return, from which is deduced the doctrine of Rent. None of these facts does the economist ascertain for himself. He takes them, as the realized results of other sciences, and makes them the premises, the starting point, of his own.

Even the fact of the indisposition of men to strenuous exertion, from which is deduced the principle that they will, so far as they are intelligent and are left free to act, always buy in the cheapest market, is not found by the economist. It is furnished, ready to his hand, by the moral philosopher. The economist takes from all sciences, by turns, all facts which bear upon the one subject, wealth; considers them only so far as they bear thereon; and puts them together and builds them up into a “body of knowledge” which he calls the Science of Wealth, or Political Economy. Even in the field of prices and wages, the distinction should always be observed between the economic statistician, who finds the facts, and the economist, who puts the facts into their place in the industrial system.

35. Political Economy and Natural Theology.—Prof. Cliffe Leslie has shown the powerful influence exerted upon the economic views of Adam Smith, who, as Professor of Moral Philosophy in the University of Glasgow, had occasion to teach both Political Economy and Natural Theology, by the assumption of a beneficent natural order of society, to the disturbance of which by human institutions are due all the economic evils that afflict mankind. To this order-of-nature it should, according to Dr. Smith, be the unceasing effort of mankind to return; and the political economist will fully discharge himself of his mission as an investigator and teacher when he points out the path by which mankind may make their way back to that state in which all things economic will work together for the good of the race.

Now, this subjection of political economy to the interests of natural theology is wrong. I do not say that good natural theology will make bad political economy. I content myself with asserting that political economy has just as much right to be independent of natural theology, as have astronomy and geology. There was a time when the students of those sciences were deemed to be bound to restrain themselves within the supposed requirements not only of natural theology, but also of revealed religion. We know how mischievous were the consequences of that subjection.

Political economy owes nothing to natural theology. The economist is under no obligation to any assumptions derived from that source. He has no more right to start with the theory of an order of nature which is purely beneficent, than he would have to start with the opposite theory of an order of nature wholly maleficent. As economist, he has no mission to “vindicate the ways of God to man.” He is to investigate the laws of wealth. That duty he will best discharge by reasoning as justly as his mental powers enable him to do, from economic premises which have been established by adequate induction, and from such only.

36. Political Economy and Political Equity.—The boundary line between ethical and economic inquiry is perfectly clear, if one will but regard it. Great confusion has been engendered by writers in economics wandering off into discussions of political equity. The economist, as such, has nothing to do with the question whether existing institutions, or laws, or customs, are right or wrong: why right, or how far right: why wrong, or how far wrong. His only concern with them is to ascertain how they do, in fact, affect the production and distribution of wealth.

It is true that if the sense of injustice be awakened in the mass of the people, or in any considerable class in the community, industry, frugality, and sobriety are likely to be in a greater or less degree impaired, and thus the production and distribution of wealth will be affected. But it is wholly because of the effect last indicated, and not at all because of its ethical character, that any social arrangement or political institution comes within the consideration of the economist.

Indeed there is reason to believe that such arrangements and institutions do not necessarily produce economic evils in proportion to the degree in which they violate political equity. A custom or law might conceivably be inequitable in the degree to be flagrantly iniquitous, yet exert only a slight influence upon the production or distribution of wealth. Another, presenting so great an array of reasons in its favor that many ethical writers would strongly approve it, might, by crossing popular prejudices, or through some wholly adventitious feature of its own, become a mighty economic force for mischief. Indeed, it is not at all because a social arrangement or political institution is wrong, but because people think it wrong, that it does harm in the domain of wealth. The system of land tenure against which the peasantry of Ireland are so largely in revolt does an amount of mischief which is wholly independent of the consideration whether the Irish people or the English Parliament be at fault in the matter.

37. Respect the Limits of Economic Inquiry.—Hence we say that the limits of strictly economic inquiry should be scrupulously respected. The writer on ethics who deems the greatest good of the greatest number the ultimate rule of right, may make excursions into economics, in order to judge of the moral quality of an act, or a system, by its effects on the production and distribution of wealth; but the economist, on his part, has no occasion to cross the boundary line. The French writers, who have, in general, been singularly just in their apprehension of the character and logical method of political economy, have, more than all others, erred on this side. Many of them write throughout with a side glance at the existing social system. They profess to be intent on the solution of economic problems, while directing their efforts toward the vindication of political arrangements. The writings of the admirable Frederic Bastiat are deeply infected with this error. He strives incessantly to prove that the institution of property is just; whereas the only concern which, as an economist, he has with that institution, is to inquire how it influences the action of mankind in respect to wealth.

38. Sentiment and Political Economy.—Holding rigidly to the same view of the nature and scope of economic inquiry, we see that those who allow their opinions to be in any degree shaped by what is called sentiment, are equally wrong with those who sneer at any recognition of sentiment by the economist. The economist's own sentiments should be put completely out of sight; he has only to do with the sentiments of others, and with these only so far as they affect the actions of men in respect to wealth.

We shall have occasion to observe that feelings of justice, of compassion, of respect, of kindly regard, may greatly influence the rents paid in any country, by tenants to landlords, or the wages paid by employers to workingmen or working-women. So far as such sentiments produce these effects, they require to be recognized as economic forces.

39. Relation of Political Economy to Sociology.—M. Comte, whom we have already quoted, as denying to political economy the character of a true science, because its history did not, as he esteemed it, bear the tests of continuity and fecundity, also held that the phenomena of wealth should not, and could not advantageously, be considered apart from the facts of the intellectual, moral and political order with which they are closely interwoven. Society, he held, must be considered in the totality of its elements. All isolated theory of a particular aspect of social life, such as wealth, or of a single order of relations, e. g., the economic, he regarded as essentially vicious. The laws and conditions of wealth, in the view of this writer, are a single thread in a closely knit web of social interests and concerns, from which no one can be disconnected, to be contemplated by itself alone.

To this opinion, Mr. J. S. Mill has made what seems to be a conclusive reply:

“Notwithstanding,” he says, “the universal consensus of the social phenomena, whereby nothing which takes place in any part of the operations of society, is without its share of influence on every other part, and notwithstanding the paramount ascendency which the general state of civilization and social progress in any given society must hence exercise over all the partial and subordinate phenomena, it is not the less true that different species of social facts are, in the main, dependent, immediately, and in the first resort, on different kinds of causes, and, therefore, not only may with advantage, but must be studied apart, just as, in the natural body, we study separately the physiology and pathology of each of the principal organs and tissues, though every one is acted on by the state of all the others, and though the peculiar conditions and general health of the organism co-operate with and often predominate over, the local causes, in determining the state of any particular organ.”

40. Obstacles which Political Economy Encounters.—It is worth while to note certain obstacles which the economist encounters in his efforts to secure the popular recognition and acceptance of the laws of wealth, as he discerns them in his study of man and society. Two of these may be regarded as wholly peculiar in kind, or highly peculiar in the degree in which political economy encounters them.

The first is well expressed by Prof. Cairnes: “Its close affinity to the moral sciences brings it constantly into collision with moral feelings and prepossessions, which can not fail to make themselves felt in the discussion of its principles; while its conclusions, intimately connected as they are with the art of government, have a direct and visible bearing upon human conduct, in some of the most exciting pursuits of life.” Archbishop Whately had the same in view when he remarked that the demonstrations of Euclid would not have commanded universal assent had they been applicable to the pursuits and fortunes of individuals.

41. Another of the obstacles referred to is found in the fact that political economy has to do with affairs so ordinary and familiar that men, in general, feel themselves competent, irrespective of study or of special experience, to form opinions regarding them. The more closely men are concerned with any matter, the harder it is to maintain the authority of the learned body which assumes to engross scientific knowledge on the subject.

Few are presumptuous enough to dispute with the chemist or mechanician upon points connected with the studies and labors of his life; but almost any man who can read and write feels at liberty to form and maintain opinions of his own upon trade and money.

Now, this is not wholly of evil. The plain common-sense of unlettered men has not infrequently served as a corrective to economic doctrines too finely drawn for the purposes of legislation, perhaps based upon a partial and disparaging view of human nature. But while thus, in the application of political economy to the art of statesmanship, the self-assertion of the uninstructed mind has not been without its advantages, this disposition has certainly hindered the development of political economy as a science. The economic literature of every succeeding year embraces works conceived in the true scientific spirit, and works exhibiting the most vulgar ignorance of history and the most flagrant contempt for the conditions of economic investigation. It is much as if astrology were being pursued side by side with astronomy, or alchemy with chemistry.

42. A third obstacle which political economy encounters arises from the use of terms derived from the vocabulary of every-day life, such as value, exchange, wealth, rent, profits—with some of which are associated in the popular mind conceptions inconsistent with, or, at times, perhaps antagonistic to, those which are in the view of the writer on economics. Thus, as we have seen, the economist uses the word, value, in the single sense of power-in-exchange. Common speech makes every thing valuable which is useful, desirable or meritorious, irrespective of the consideration whether, by reason of its scarcity or the difficulty of securing it, this or that article so spoken of confers upon its possessor the power of commanding in exchange the labor, or the products of the labor, of others.

The chemist, the geologist, the botanist, on the other hand, invents terms for the classes of objects or the classes of phenomena which he is to discuss. The reader carries with him into the discussion only the idea of the thing which the author has created for the purpose. If the writer be clear, and the reader be careful, there is no danger of a failure of understanding. But, no matter how precise the one may be in definition, or how close the attention of the other, it is inevitable that the use, in economic discussion, of terms taken from the vocabulary of common life, should engender confusion, from the practically irresistible tendency of the mind of the reader, and even, in a degree, of the writer, to slip back to the habitual meanings of the words employed.

43. So strongly has this last disadvantage pressed upon some writers, that they have been impelled to resort to strange and foreign terms to obviate the difficulty. Thus, Archbishop Whately, treating political economy as the science of exchange, introduced the Greek word, Catallactics, to express the scope of his inquiry; and Prof. Hearn has given to his admirable book the name, Plutology, to escape the vagueness of meaning which he thought he saw in the popular use of the word wealth.

44. The Departments of Political Economy.—All the questions of political economy are both conveniently and appropriately discussed under four titles: Production, Exchange, Distribution and Consumption.

Of late, a disposition has been manifested, on the part of many writers, in England and America, to drop these familiar titles; to decline to admit any departments in political economy; and to treat of production and distribution, e. g., as not separable in economic discussion.

This has unquestionably been stimulated, if, indeed, it has not been generated, by the wish to bring political economy into a strictly scientific form, with which the recognition of distinct departments has been deemed incompatible. It may be doubted whether our knowledge of the laws of wealth has yet reached the degree of completeness and assurance which would allow a science to be constituted after the lofty ideal of these writers. Meanwhile there seems reason to believe that the abandonment of the familiar and useful terms, production, exchange, distribution and consumption, has caused some very important considerations to be overlooked. “Nothing,” said Edmund Burke, “is so great an enemy to accuracy of judgment as a coarse discrimination; a want of such classification and distribution as the subject admits of.”

Now, clearly the subject, wealth, admits of being considered, first, with respect to the motives which lead to its production and the conditions under which production takes place; secondly, with respect to the laws which govern the exchange of products in the market; thirdly, with respect to the forces which distribute the product of industry, in larger or smaller shares, among the several classes of persons who take part in production; fourthly, with respect to the influences which the different modes of consumption exert upon the disposition and the ability to take part in the future production of wealth.

And if wealth admits of being considered in these several aspects, it seems to me clear that such a classification will conduce both to completeness of view and to accuracy of judgment. We shall have occasion to note (Pars. 247–249), a very striking instance of the mischief that has arisen from the neglect of this classification by recent writers in economics.

[∗]“On the Character and Logical Method of Political Economy,” first published in 1857; reprinted, revised and enlarged in 1875, just before the lamented author's death.

[∗]In his great work, subsequently published, Mr. Mill did not confine himself to the method here described; but professedly dealt with Political Economy in many of its “Applications to Social Philosophy.”

[∗]See paragraph 48.

[∗]A distinguished English Economist, quoting this remark, in the Contemporary Review, asks with some asperity, “What, then, should the political economist preach?” I answer, nothing. His business is to teach and not to preach. He acquits himself of his duty when he shows the relations of cause and effect within the field of industry, leaving it to statesmen, moralists and men of affairs to act for themselves, or to preach to others, with reference to what the political economist teaches.