The Online Library of Liberty

A project of Liberty Fund, Inc.

• Foreword
• Economic Liberalism the Classical View
• 1: The Classical Psychology of Liberalism
• 1: The Theory of Moral Sentiments
• 2: The Lectures
• 3: The Wealth of Nations
• 4: The Achievement of Smith
• 2: The Political Ideas of the Classical Economists
• 1: The Political Philosophy of Hume and Smith
• 2: The Paradox of Economic and Political Freedom
• 3: Human Nature, History, and Government
• 4: The Nationalism of the Economists
• 5: The Structure of Government
• 6: Economic Improvement and Social Progress
• 3: Liberalism In the Great Century
• 1: The Importance of the Nineteenth Century
• 2: The Practice of Policy
• 3: The Meaning of Economic Liberalism
• 4: The Ideas of Policy
• 5: The Theory of Policy In Mill

4

The Ideas of Policy

The writings of the nineteenth century reveal how frequently the liberal economists were guided by their appraisal of the popular will. By this principle the writings became intelligible; and although it does not make them consistent, it does reveal the intent that directed them. If on the other hand the writings are studied for their consistency with laisser faire they disclose as much ambiguity and lack of direction as the practice of policy does. The economists wrote both for and against free markets, and it was not unusual for a single writer to do both. They could be explicit about some measures of policy and obscure about others. On particular problems they could be clear and cogent, while about the principle from which they derived their position they could be superficial, indistinct, or simply silent. They would conform to our notions of British pragmatism if they always had been this way, i.e., attentive to specific solutions and indifferent to the principles they imply. They usually were so about the Factory Acts, declaring themselves for or against a particular act, but not for or against the principle of regulating working conditions. Pragmatism, in this rough and ready sense, is popular among economists today, particularly among those who refuse to commit themselves either to the principle of a free market or to its opposite, and who judge a measure of policy by whether or not it solves the problem to which it is addressed. They do not really believe one solution is as good as another—that, for example, eliminating unemployment by fiscal measures is no better or worse than by forced-labor camps. What they believe is that neither laisser faire nor its opposite is a helpful guide to policy. They believe just what the nineteenth century economists implied that they, too, believed. Unfortunately, neither has been clear about what other principle should guide policy, and the writings of today like those of a century ago often imply there are no other principles.

THE UNCERTAINTY ABOUT PRINCIPLES

In the nineteenth century there was uncertainty about the principles of policy. The reason was not pragmatism. The classicists did not ignore principles. They did not attend only to particular problems. They are, in fact, known—and properly so—for doing just the opposite. They wrote of the principle of free foreign trade and usually declared themselves for it. They also wrote about other principles—about what should govern poor relief, the supply of money, the fixing of prices, etc. Beyond this they wrote about the most general of all principles—that which should direct the state in its relation to the economy. What they did not do was to explain how the principles were related to each other and to the measures of policy that were derived from them. What they especially failed to do was to explain adequately the most general of the principles, namely the principle on which the state should base its economic policy.

The uncertainty was the signal feature of nineteenth-century liberalism until Mill wrote his Principles. It was not, however, a unique feature. It was inherited from the eighteenth century and particularly from Smith. To illustrate the uncertainty, I should like to return to him briefly and to the idea for which he is best known and most misunderstood: the invisible hand. What the idea actually means is, I believe, this: if an individual acts only for himself he may do more for others than if he tries to help them or is compelled to help them by the state. I do not take the idea to mean that selfishness always increases the national wealth, or that individuals always are selfish, or that the state never should tell them what to do. It usually is interpreted to mean one or all of these things. But consider its context and the language in which it is stated. It is in Book IV, “Of Systems of political Oeconomy,” in Chapter 2, “Of Restraints upon the Importation from foreign Countries of such Goods as can be produced at Home.” It follows an examination of the idea that the protection of domestic industries will increase the employment and output of the nation. Smith states that protection “frequently” increases employment in the protected industry. “But whether it tends either to increase the general industry of the society, or to give it the most advantageous direction, is not, perhaps, altogether so evident.” It will be noted that Smith did not unequivocally oppose protection; indeed elsewhere in The Wealth of Nations he stated he favored it under certain circumstances.

The argument continues that total employment depends on total capital and that total output depends on the efficiency with which capital is used. Efficiency is measured by profit, and a large profit indicates that output is large. Smith assumes here (as he does not everywhere) that every man tries to increase his profit. It follows that every man works to increase total output even though to increase it is no part of his purpose. Whatever the rate of profit is, it is more certain in a domestic than in a foreign enterprise because the businessman can attend more carefully to the capital he has at home. If the two rates are about equal, he will use his capital at home and in a way that seems most profitable to him. If he succeeds, employment will increase at home and output will also, even though his private and exclusive purpose had been to increase profit. Then follows the paragraph in which the famous phrase appears:

The italics I have added are meant to draw attention to the qualifications. Smith stated that everyone “endeavours” to increase profit; he did not say everyone always does increase it. He did not say that the search for profit necessarily increased employment and output, but that it necessarily is an effort to do so. He said men “generally” do not act in the public interest; he did not say they never do. He said that selfishness is “frequently” more beneficial than altruism; he did not say it always is. The context and language make the statement about the invisible hand a statement that expresses qualified opposition to protection. It certainly does not say that laisser faire should be the principle of policy, because it is not even a statement in favor of complete free trade. When it is related to other ideas of policy in the Wealth of Nations, it is terribly confusing. Elsewhere the opposition to protective duties is qualified even more. As the reader knows from Chapter 1 in this volume, Smith qualified the idea that individuals try to increase profit and also the idea that when they do they act in the public interest.

With so much ambiguity in The Wealth of Nations, the lack of clarity is not surprising in the economists of the nineteenth century. They looked to Smith for direction about policy as they looked to Ricardo for their positive economics.

ON THE PRINCIPLE OF NONINTERFERENCE

The ambiguity was most noticeable in the statements of M’Culloch, whose literal manner revealed aspects of classical economics which the greater minds kept obscure. He was the first professor of political economy at University College of the University of London, a project of the radical Benthamites by which they meant to combat the influence of Oxford and Cambridge. He gave his first two lectures in 1829 and said he proposed “to inquire into the proper bounds of legislative interference with property and trade.” The Morning Chronicle reported: “The laws, he said, which regulated the prosperity and decay of nations, were as certain as those which govern the celestial bodies; but more interesting, inasmuch as man might modify them by his interferences.”

Nevertheless he wrote in his Principles that noninterference should be the guide to policy and that exceptions were permissible only when they clearly could be shown to be of public advantage. The control of child labor was one exception, he believed. He was impressed by the testimony against child labor given before the Sadler committee of 1832 (the same Sadler who called the economists the persecutors of the poor) and he supported the Factory Act proposed in 1833. His support is notable because that bill substantially increased the extent of control. He wrote to Lord Ashley, its original sponsor: “I hope your factory bill will prosper and I am glad it is in such good hands. Had I a seat in the House it should assuredly have my vote. A notion is entertained that Political Economists are, in all cases, enemies to all sorts of interference, but I assure you that I am not one of those who entertain such an opinion.” He made it plain, however, that he did not approve of the control of adult labor, which some of the bill’s supporters hoped would be its eventual outcome. His reason seems to have been the principle of the free agent, which is that individuals should be free to work under whatever conditions they choose. He did not apply it to children, because they do not have “the power to judge for themselves in such a matter.” The principle suggests that M’Culloch believed freedom was the major goal of policy. But he wrote again in the Principles: “Freedom is not, as some appear to think, the end of government.” The end is public prosperity and happiness, and freedom is a means to it and not the only means.8 Just what was the relationship among the alternative means, and how the means were to be selected to serve the end—he did not make clear, no more than Smith had done before him.

Until 1848 most economists viewed the Factory Acts in the way M’Culloch did. They approved of the control of child labor but not of that of adults. The apparent reason for the distinction was that a child cannot make sensible choices. But I do not believe that was the actual reason. They did not consistently make the distinction and initially did not make it at all. In 1818 Lauderdale in the House of Lords had single-handedly secured the withdrawal of an act regulating child labor on the grounds that “the great principle of Political Economy [is] that labour ought to be left free”9 —meaning all labor, not just that of adults. As successive acts raised the age at which children could be employed, more and more exceptions were taken to the great principle. When women were brought within the acts the principle was weakened even more. Eventually the acts covered men also, and by that time the principle (in its application to factory legislation) had been completely repudiated. The economists also repudiated other putative principles. Nevertheless the public continued to entertain what M’Culloch called the notion that political economy meant noninterference.

THE REPUTATION FOR PESSIMISM

The notion the public got from Chadwick and Senior was distinctive and deeply felt. It also was wrong. Chadwick, who had been secretary to Bentham, joined Senior in writing the Poor Law in 1834. More than any other measure of policy it gave economics the name of the dismal science. The law prohibited the use of relief funds to supplement the wages of farm laborers (which were pitifully low because agriculture was comparatively inefficient) and it prohibited relief payments to the poor. They could get help only if they entered a workhouse, where they labored at something or other. There, husbands were separated from wives, and both separated from their children. The law certainly was harsh. However, it was not the work of men dedicated to laisser faire. Wage subsidies caused labor to be misallocated, and relief caused idleness—so it was said—and these were the evils the act was meant to eliminate. But it was never completely enforced, and its objects in time were attained by rising employment. Chadwick became secretary of the enforcing agency and, to everyone’s astonishment, used his authority to increase the welfare activities of the government. That was the finest irony of the period. For writing the law he was called heartless, and for administering it, sentimental; condemned at first for wanting to do too little for the poor, he later was condemned for wanting to do too much. There are several explanations of the episode. One is that Chadwick changed his mind when he got to know the poor, sloughed off his laisser faire notions and allowed his natural humanity to express itself. Another explanation is that the doctrine of Bentham, his mentor, does not imply laisser faire at all, but its very opposite. I suggest the explanation is that Chadwick, like other liberals, did what he believed society wanted done—that, in other words, he acted on the liberal principle.

The explanation applies to Senior also. He wanted the state to do little, while Chadwick wanted it to do much. But they differed over what the state was able to do and what it was wise in doing, not over what it had the right to do. Senior was on the Royal Commission appointed in 1837 to study the condition of the handloom weavers. They were being displaced by power looms and becoming impoverished. The weavers’ distress was brought on by the decline in the demand for their labor, the Commission reported, and went on to advise them to move to other occupations. Except by assisting in their education, there was little, the report stated, the government could do. The report fortified those who believed that political economy when confronted with human distress made a sad face, folded its arms, and explained tendentiously that any effort to improve conditions must make them worse. “Not an amiable faith,” Carlyle remarked, and in the same spirit someone a century later said, “To hell with economics—let’s build a better world.” The remarks are really beside the point. The issue is the factual one of whether or not the state is able to solve certain problems, not whether it has the right to do so. The state probably was able to do something for the weavers, just as in fact it did do something for distressed employers at about the same time.

THE FACTUAL ELEMENT IN POLICY

On factual matters the economists were more often wrong than right, and it makes one uncomfortable to notice that the greater mistakes were made over the problems of the poor. The reason was not that their sympathies were with the rich and the well born—it was that they were still in the coils of the reaction to the optimism of the eighteenth century, to Godwin and Condorcet and the vision of a new Eden. Malthus was the first to react, and his pessimism was shared by others, all of them infusing it with the skepticism inherited from Hume and Smith. Malthus was wrong about the population of England, Ricardo was wrong in much the same way in his iron law of wages, and John Stuart Mill was wrong about the national debt (it must be paid before the coal reserves were exhausted, he warned10 ). Nearly everyone was wrong in believing that a generous treatment of the poor would make them lazy. One could compile an impressive catalog of the mistakes of the nineteenth-century economics (though the catalog need not be confined to that period). If they dwell on error, the histories of economics show where it went wrong on points of theory. The two—theory and policy—are related. The economists were mistaken about policy when their theory was wrong or incomplete or just didn’t exist. The mistakes came from their science, the positive side of theory and not from their politics or their ethics which is the normative side. Most commentaries suppose classical economic policy was determined by the normative side, or that the two are inseparable. Thus we are told that Senior was an enemy of factory legislation because he, like others, was dedicated to the principle of noninterference.

Not so. Senior was mistaken on a point of positive economics in his celebrated Letters on the Factory Act, written about the ten-hour bill that was proposed in 1837 (but passed in a much weakened form). He stated that hourly wages would rise and that output per man-hour would not, that profits would fall and so would employment or real wages. “I have no doubt, therefore, that a ten hours’ bill would be utterly ruinous.”11 The argument is much like that of today’s opponents of wage-and-hour laws. He certainly was right that hourly wages would rise—because he assumed weekly wages would be constant—but he was not right in stating that output would be constant. It could have increased simply because fewer hours were worked and the workers could put more into each hour. It also could have increased by increasing or improving the capital with which each worker was employed (although that is more an argument for increasing investment than for reducing hours). Both did happen during the century, and they have been harsh on Senior’s judgment. But, to repeat, the judgment was factual. It was not a declaration against the right of the state to interfere. Had he thought the facts were otherwise, he undoubtedly would have supported the act of 1837. A few years earlier, before he wrote his unfortunate letters, he had approved of the very important act of 1833. When the letters were put in a second edition he approved of the proposal made in 1841 to restrict child labor still more, and in 1847 he himself proposed still another limitation.

“It is the duty of a Government to do whatever is conducive to the welfare of the governed,” he said in his second Oxford lectures, given between 1847 and 1852. “The only limit to this duty is its power. And as the supreme Government of an independent State is necessarily absolute, the only limit to its power is its moral or physical inability. And whatever it is its duty to do it must necessarily have a right to do.” This expresses Senior’s policy more clearly than his Letters do, and the policy was not laisser faire. Indeed, he said, that was “the most fatal of all errors.”12

Cairnes also believed it to be a great error. His denunciation of it was quoted some pages back. Laisser faire, he said, “must never for a moment be allowed to stand in the way of the candid consideration of any promising proposal of social or industrial reform.” It had done just that, and he, of all the classical economists, was the most scornful. Laisser faire is “totally destitute of all scientific authority” and has no place in economics, no more than communism has. That is so because economics, he said, and thousands have repeated, “pronounces no judgement on the worthiness or desirableness of the ends aimed at in such systems.” Such judgments were more than wrong—they were harmful. “Decrees which are ordinarily given to the world in the name of Political Economy . . . in the main amount to a handsome ratification of the existing form of society as approximately perfect.”13

His scientific detachment did not however prevent him from examining the idea, and its ethical assumptions particularly, more carefully than most others had done. Laisser faire, he said, assumes (a) that the interests of all men are harmonious, and (b) that all men understand and are able to advance their interests. He acknowledged that interests are in fact harmonious but only when they are “well understood.” But, he said, it is not true that men understand their interests properly and are able to advance them. To suppose otherwise is to commit the “fatal” error of which the champions of laisser faire were forever guilty. Actually he did not accept the first assumption any more than the second. By declaring that interests are harmonious when well understood, he implied that only interests which are harmonious are genuine. That in turn implies that something other than interests (or other than “true” interests) is the cause of conflict. His explanation of these points was, it must be said, confusing. Nonetheless a summary statement of it is in order, because it has been repeated many times. It is indeed the model of most refutations of laisser faire.

Another feature of Cairne’s lecture is the relationship he implied between policy and the positive side of economics. The latter, he said, established “natural laws.” They are generalizations from the facts of economic behavior and they are unalterable in the same sense that facts themselves are unalterable. To say the economy is governed by natural law is then to say it is governed by facts. Unfortunately, he continued, the statement has been enlarged to mean the economy is not only governed by facts but that the facts are good and that the economy is therefore good. But for an economist to pass judgment on them is wholly mistaken. The business of the economist is to explain the facts, not to justify (or deplore) them. The economist who champions noninterference (or its opposite) does not understand his job, Cairnes said.

Had Cairnes taken one more step he would have shown that policy is related to science in the sense of being limited by the realities, that is, by the facts, of the economy. (To have done so would have contradicted his assertion that the positive and normative sides of economics are entirely separate; but one more inconsistency would not have mattered.) Had Cairnes taken that step he would have shown that a government, given the popular will, may do only what the facts allow it to do. If he had said that, he would have made explicit the principle on which the policy of the century was based. As it was, he came very near to saying it.

But then he said many other things as well, and they clouded over what I believe was his intention. We know that he denounced laisser faire, that he dismissed policy altogether from scientific economics, that he then recalled it in its factual aspect. In looking for a clear rule to guide the economy, what was the public to make of all this? Actually it did get some plain advice from him. After all of his denunciation of laisser faire, he concluded that it should be the “practical rule” of policy. What is singular is that the advice was not given absent-mindedly, casually, or without enthusiasm. On the contrary. He said that when set against the principle of interference, and when interference is looked at in all of its implications, laisser faire is “incomparably the safer guide.”14

The men whose writing has been examined so far were none of them consistent. Nor were others of the classical school, not even Mill himself although he tried very hard to be. Of all of them, the most ruthless logician was Mill’s father, but James was that way about a theory of government rather than about economic policy. Ricardo, who made more use of the analytical method than others, was not interested in the conceptual side of policy, although he was very attentive to the practice of it. Consistency was not an important element in the classical tradition. It was not disparaged in an overt way, and there certainly were many debates that turned on definition and deduction (like those over the labor theory of value and the theory of rent). But what seems to have mattered more in classical economics is that its ideas should be cogent and relevant than that they should be consistent.

The example of M’Culloch is informative. He is an amusing figure in the history of British economics because of his wooden consistency, his vast solemnity, his reverence for the ideas of Ricardo, and his proprietary manner with them. Taken all together, his qualities made him the archetype of the economist, and he is one of the few ever to be commemorated in a novel. It is Crochet Castle by Thomas Love Peacock, who as a member of the East India Office at the time of the Mills came to know them. Lady Clarinda says: “Well next to him sits Mr. MacQuedy, the Modern Athenian, who lays down the law about everything, and therefore may be taken to understand everything. He turns all the affairs of the world into questions of buying and selling. He is the Spirit of the Frozen Ocean to everything like romance and sentiment. He condenses their volume of steam into a drop of cold water in a moment. He has satisfied me that I am a commodity on the market, and that I ought to set myself at a high price.” Still, when one compares him with the Rev. Dr. Folliott, a bluff, beefy clergyman whom Peacock wanted us to admire, MacQuedy does not come off badly at all. Right or wrong, he did respect ideas and didn’t think that by using his mind he endangered his well-being or committed a social blunder.

One reason why the nineteenth century’s ideas of policy were inconsistent is that policy is a difficult subject. “The manner, occasion, and degree in which the State may interfere with the industrial freedom of its citizens is one of the most debatable and difficult questions of social science,” Jevons said in 1882.15 The question called for more knowledge and a more comprehensive view than positive economics did, and the economist who addressed himself to it needed a philosophic mind or at least would have found such a mind helpful. Not many had it in the century. Bentham did, but his influence was less than that of Ricardo, who did not. When the Ricardians wrote of policy, they necessarily had to consider political values and related issues. But either they did so in a rather superficial way, an instance being Senior’s speculations about the power of government (described in the preceding chapter). Or more commonly they made what Mill called a flying excursion into the field of ethics and a swift return, instances of which are noticeable even today.

SPENCER AND THE PURE THEORY OF LAISSER FAIRE

It is helpful at this point to examine Herbert Spencer’s ideas of economic policy. He usually is not thought of as an economist. Actually he was much more—a philosopher who tried to synthesize all knowledge. In his comprehensive scheme of things, economics was one element, and he knew it very well. In The Man versus the State he set forth his policy, which is significant for several reasons. It is more carefully reasoned than any of the writings of the recognized economists, including even the writing of Mill; it shows that consistency does not necessarily bring with it cogency, but in itself can be an alarming quality; and his policy shows what the liberalism of the classical economists was not.

What was most important to Spencer was the absence of restraint on the individual. That was the meaning he gave to freedom, and his policy was meant to provide freedom of that kind. It was a policy of pure laisser faire, or as pure as it ever is likely to be. Its singular feature was its being derived so closely from empirical psychology or what he called “the science of life.” Its content is the nature of men, in their physical and, especially, in their psychological constitution. Both aspects of their nature are factual. Just as it is the nature of men to respond to their environment physically, so it is their nature to respond psychologically. The responses show a regularity from which generalizations can be made. The idea was not new, although Spencer’s statement of it was. Smith had intimated it in his remarks about natural behavior, like those in the invisible hand passage above. He had gotten it from the natural rights philosophers of the seventeenth century. What all of them wanted to prove (or believe) was that freedom is something which men must have and that to deprive them of it is as unnatural as to deprive them of their physical sustenance. None carried the idea as far as Spencer did. He was a relentless logician, as they were not; he was prepared to accept every implication, however preposterous, so long as it was deducible, but they were not; and living in the age of Darwin, he called on the authority of the new science of life (which in fact he had anticipated) to support his findings about natural rights. It proved their existence. He reasoned that to survive, an organism must have freedom of movement and the power to do those things necessary for its survival. Since the right to survival is indisputable, the right to the means of survival must be also. To deprive an organism of freedom and power is to try to alter the fundamental conditions of its life (and of all life). Such an alteration was indeed possible, he suggested, because by changing the environment of an organism, its nature can be changed. But the new being will be inferior to the old, and hence changing it is an assault on the worth of nature. The great sin of legislators is to worsen the nature of man by restricting his freedom.

There are two difficulties in Spencer’s conception of freedom, and the reader probably has noticed them. The more obvious is that unrestrained freedom is destructive. It is destructive whether all men are equally capable of exercising it or whether they are not. Indeed, the more nearly equal men are, the more protracted their conflict will be—and the more destructive its outcome. Spencer acknowledged the difficulty and granted that some restraint is necessary when men act in groups. When they do, a distinction is made between the positive, or factual, character of their rights, and their ethical character—the distinction being between what they can do and what they may do. He implied, however, that the distinction is something natural to men, citing the ways that primitive groups, without benefit of acknowledged law, impose restraints upon behavior. In this way he tried to give the ethical distinction a positive quality. The reasoning suggests that society does not have to restrain individuals by law, that they themselves can manage transgressions without the aid of a coercive agency, the government. The second of the two difficulties is the inclusion of power in the definition of freedom, so that freedom denotes the possession of means to achieve an end as well as the absence of restraint on the use of them. Spencer used freedom in this sense when he said the individual not only has the right to survive but also the right to the means of survival. Yet in examining specific measures of policy, he used freedom to mean only the absence of restraint—which was the meaning he gave to it at the start of his book.

A legislator who went to Spencer for guidance would come away with laisser faire in the purest form in which it ever has been proposed. Consider Spencer’s enumeration of the laws that he believed restricted the liberty of the individual. Some are what one would expect to find: factory legislation, the provision of direct relief, public ownership of utilities, the subsidizing of rail fares, and such. But the list includes much more. Everything in it is, to be sure, an instance of restraint. But the instances are so unequally important that they could be brought together only by a mind that was dedicated to the policy, a mind that was meticulous and ruthlessly consistent. Included in the list are the regulating of the sale of beer in Ireland and Wales, the inspection of cattle in Scotland, the setting of cab fares in London, the empowering of local boards everywhere to set rates for the hire of horses, ponies, mules, and asses, a bill for the preservation of sea birds (“ensuring greater mortality of fish,” he remarked with ambiguous humor), and so on—a wide net from which nothing escaped. Even the advocates of laisser faire must have had difficulty in getting exercised over every one of these restraints and they must have felt their case could have been strengthened by a shortening of the bill of particulars. Actually the bill had still more in it, and the addition suggests why Spencer’s policy was not the received policy—why, in fact, he had little influence, although in the common interpretation his should have been the prevailing view of the century. His list of restraints included the laws that established free schools, compelled school attendance, made vaccination compulsory, and established public libraries. He did wish it known, he said, that in enumerating the ways in which the state deprived the individual of liberty, “no reflections are intended on the motives” of those who sponsored them.

He said the laws were wrong because they were enacted on the erroneous assumption that all social distress is remediable and that the state is responsible for remedying it. The assumption defied the facts of the science of life. “Reduced to its lowest terms, every proposal to interfere with citizens’ activities further than by enforcing their mutual limitations, is a proposal to improve life by breaking through the fundamental conditions of life,” he said. Liberalism, he contended, means limitation: “the liberty which a citizen enjoys is to be measured, not by the nature of the governmental machinery he lives under, whether representative or other, but by the relative paucity of the restraints it imposes on him.”16 All the state legitimately may do is to prevent the individual from invading the liberty of others. The state may coerce him negatively, but never positively. These ideas set Spencer quite apart from the classical economists. To them a measure of policy was liberal if it was consistent with the popular will. To him a measure was liberal if it was only negatively coercive. For a time Spencer was associated with TheEconomist, and from it more than from any other source the public obtained the idea that liberalism meant laisser faire. But even The Economist never went so far as Spencer did.

An interesting byway in his intellectual history is the influence he had in Japan. His “synthetic philosophy,” as the doctrine in its entirety is called, is said to be closer to Zen Buddhism than any other Western philosophy is. When Japan was opened to the world, he was asked by some Japanese leaders which Western institutions they would be wise to adopt. As few as possible, he told them. There have been even more notable examples of philosophers being called upon to lay down the first principles of practical government. Locke wrote a constitution for the colony of Carolina, and John Adams later said it showed how mistaken even the greatest minds could be about the practice of government. Rousseau wrote a constitution for Corsica, and it was another bad piece of work, although no more reactionary than The Social Contract, of which it was a careful application. In the application of economic ideas, there is a curious episode involving Smith. He is known to have worked in the study of the Chancellor of the Exchequer in London when the budget of 1767 was prepared and he may have had a hand in it. It provoked massive opposition from the merchants in the American colonies and revived the nonimportation agreements that were a step on the way to the Revolution. Actually, the budget reduced some levies on the colonies, but it was accompanied by the Townshend Acts, which provided for its strict enforcement. Among the philosophers and economists who spoke to kings, Spencer was unique. He did not prescribe a course for the Japanese, he proscribed one. Consistent with his doctrine, he was negatively coercive.17

[7] Adam Smith, The Wealth of Nations, ed. Edwin Cannan (New York, 1937), p. 423.

[8] J. R. M’Culloch, The Principles of Political Economy, etc. (2nd ed., London, 1830), p. 249.

[9] William Smart, Economic Annals of the Nineteenth Century (London, 1910), I, 668.

[10] Speech on the malt duty before the House of Commons, Parliamentary Debates, Vol. 182 (April 17, 1866), p. 1524.

[11] Nassau W. Senior, Letters on the Factory Act, etc. (2nd ed., London, 1844), p. 10.

[12] Quoted by Marian Bowley, Nassau Senior and Classical Economics (London, 1937), p. 265.

[13] Cairnes, op. cit., pp. 251, 244, 256, 260.

[14]Ibid., p. 251.

[15] W. S. Jevons, The State in Relation to Labour (London, 1882), p. 33.

[16] Spencer, op. cit., pp. 105, 15-16.

[17] On Spencer, see David Duncan, The Life and Letters of Herbert Spencer (London, 1908), pp. 319-320.

On Locke, see John Adams, A Defense of the Constitutions of Government of the United States, etc. (London, 1794), I, 365.

On Rousseau, see Kingsley Martin, The Rise of French Liberal Thought, ed. J. P. Mayer (New York, 1954), pp. 209-210.

On Smith, see W. R. Scott, “New Light on Adam Smith,” Economic Journal, XLVI (1936), 404.