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• Preface to the First Edition (1871)
• Preface to the Second Edition (1879)
• Preface to the Third Edition By Harriet Jevons
• Errata
• Chapter I: Introduction
• Mathematical Character of the Science.
• Confusion Between Mathematical and Exact Sciences.
• Capability of Exact Measurement.
• Measurement of Feeling and Motives.
• Logical Method of Economics.
• Relation of Economics to Ethics.
• Chapter II: Theory of Pleasure and Pain
• Pleasure and Pain As Quantities.
• Pain the Negative of Pleasure.
• Anticipated Feeling.
• Uncertainty of Future Events.
• Chapter III: Theory of Utility
• Definition of Terms.
• The Laws of Human Want.
• Utility Is Not an Intrinsic Quality.
• Law of the Variation of Utility.
• Total Utility and Degree of Utility.
• Variation of the Final Degree of Utility.
• Disutility and Discommodity.
• Distribution of Commodity In Different Uses.
• Theory of Dimensions of Economic Quantities.
• Actual, Prospective, and Potential Utility.
• Distribution of a Commodity In Time.
• Chapter IV: Theory of Exchange
• Importance of Exchange In Economics.
• Ambiguity of the Term Value.
• Value Expresses Ratio of Exchange.
• Popular Use of the Term Value.
• Dimension of Value.
• Definition of Market.
• Definition of Trading Body.
• The Law of Indifference.
• The Theory of Exchange.
• Symbolic Statement of the Theory.
• Analogy to the Theory of the Lever.
• Impediments to Exchange.
• Illustrations of the Theory of Exchange.
• Problems In the Theory of Exchange.
• Complex Cases of the Theory.
• Competition In Exchange.
• Failure of the Equations of Exchange.
• Negative and Zero Value.
• Equivalence of Commodities.
• Acquired Utility of Commodities.
• The Gain By Exchange.
• Numerical Determination of the Laws of Utility.
• Opinions As to the Variation of Price.
• Variation of the Price of Corn.
• The Origin of Value.
• Chapter V: Theory of Labour
• Definition of Labour.
• Quantitative Notions of Labour.
• Symbolic Statement of the Theory.
• Dimensions of Labour.
• Balance Between Need and Labour.
• Distribution of Labour.
• Relation of the Theories of Labour and Exchange.
• Relations of Economic Quantities.
• Various Cases of the Theory.
• Joint Production.
• Over-production.
• Limits to the Intensity of Labour.
• Chapter VI: Theory of Rent
• Accepted Opinions Concerning Rent.
• Symbolic Statement of the Theory.
• Illustrations of the Theory.
• Chapter VII: Theory of Capital
• The Function of Capital.
• Capital Is Concerned With Time.
• Quantitative Notions Concerning Capital.
• Expression For Amount of Investment.
• Dimensions of Capital, Credit and Debit.
• Effect of the Duration of Work.
• Illustrations of the Investment of Capital.
• Fixed and Circulating Capital.
• Free and Invested Capital.
• Uniformity of the Rate of Interest.
• General Expression For the Rate of Interest.
• Dimension of Interest.
• Peacock On the Dimensions of Interest.
• Tendency of Profits to a Minimum.
• Advantage of Capital to Industry.
• Are Articles In the Consumers' Hands Capital?
• Chapter VIII: Concluding Remarks
• The Doctrine of Population.
• Relation of Wages and Profit.
• Professor Hearn's Views.
• The Noxious Influence of Authority.
• Appendix I
• Appendix Ii

Logical Method of Economics.

The logical method of Economics as a branch of the social sciences is a subject on which much might be written, and on which very diverse opinions are held at the present day (1879). In this place I can only make a few brief remarks. I think that John Stuart Mill is substantially correct in considering our science to be a case of what he calls2 the Physical or Concrete Deductive Method; he considers that we may start from some obvious psychological law, as for instance, that a greater gain is preferred to a smaller one, and we may then reason downwards, and predict the phenomena which will be produced in society by such a law. The causes in action in any community are, indeed, so complicated that we shall seldom be able to discover the undisturbed effects of any one law, but, so far as we can analyse the statistical phenomena observed, we obtain a verification of our reasoning. This view of the matter is almost identical with that adopted by the late Professor Cairnes in his lectures on " The Character and Logical Method of Political Economy."1

The principal objection to be urged against this treatment of the subject, is that Mill has described the Concrete Deductive Method as if it were one of many inductive methods. In my Elementary Lessons in Logic (p. 258), I proposed to call the method the Complete Method, as implying that it combines observation, deduction, and induction in the most complete and perfect way. But I subsequently arrived at the conclusion that this so-called Deductive Method is no special method at all, but simply induction itself in its essential form. As I have fully explained,2 Induction is an inverse operation, the inverse of Deduction, and can only be performed by the use of deduction. Possessing certain facts of observation, we frame an hypothesis as to the laws governing those facts; we reason from the hypothesis deductively to the results to be expected; and we then examine these results in connection with the facts in question; coincidence confirms the whole reasoning; conflict obliges us either to seek for disturbing causes, or else to abandon our hypothesis. In this procedure there is nothing peculiar; when properly understood it is found to be the method of all the inductive sciences.

The science of Economics, however, is in some degree peculiar, owing to the fact, pointed out by J. S. Mill and Cairnes, that its ultimate laws are known to us immediately by intuition, or, at any rate, they are furnished to us ready made by other mental or physical sciences. That every person will choose the greater apparent good; that human wants are more or less quickly satiated; that prolonged labour becomes more and more painful, are a few of the simple inductions on which we can proceed to reason deductively with great confidence. From these axioms we can deduce the laws of supply and demand, the laws of that difficult conception, value, and all the intricate results of commerce, so far as data are available. The final agreement of our inferences with à posteriori observations ratifies our method. But unfortunately this verification is often the least satisfactory part of the process, because, as J. S. Mill has fully explained, the circumstances of a nation are infinitely complicated, and we seldom get two or more instances which are comparable. To fulfil the conditions of inductive inquiry, we ought to be able to observe the effects of a cause coming singly into action, while all other causes remain unaltered. Entirely to prove the good effects of Free Trade in England, for example, we ought to have the nation unaltered in every circumstance except the abolition of burdens and restrictions on trade.1 But it is obvious that while Free Trade was being introduced into England, many other causes of prosperity were also coming into action—the progress of invention, the construction of railways, the profuse consumption of coal, the extension of the colonies, etc. etc. Although, then, the beneficent results of Free Trade are great and unquestionable, they could hardly be proved to exist à posteriori; they are to be believed because deductive reasoning from premises of almost certain truth leads us confidently to expect such results, and there is nothing in experience which in the least conflicts with our expectations. In spite of occasional revulsions, due to periodical fluctuations depending on physical causes, the immense prosperity of the country since the adoption of Free Trade confirms our anticipations as far as, under complex circumstances, facts are capable of doing so. It will thus be seen that Political Economy tends to be more deductive than many of the physical sciences, in which closely approximate verification is often possible; but, even so far as the science is inductive, it involves the use of deductive reasoning, as already explained.

Within the last year or two, much discussion has been raised concerning the Philosophical Method of Political Economy, by Mr. T. E. Cliffe Leslie's interesting Essay on that subject,1 as also by the recent address of Dr. Ingram at the Dublin Meeting of the British Association.1 I quite concur with these able and eminent economists so far as to allow that historical investigation is of great importance in Social Science. But, instead of converting our present science of economics into an historical science, utterly destroying it in the process, I would perfect and develop what we already possess, and at the same time erect a new branch of social science on an historical foundation. This new branch of science, on which many learned men, such as Richard Jones, De Laveleye, Lavergne, Cliffe Leslie, Sir Henry Maine, Thorold Rogers, have already laboured, is doubtless a portion of what Herbert Spencer calls Sociology, the Science of the Evolution of Social Relations. Political Economy is in a chaotic state at present, because there is need of subdividing a too extensive sphere of knowledge. Quesnay, Sir James Steuart, Baudeau, Le Trosne, and Condillac first differentiated Economics sufficiently to lead it to be regarded as a distinct science; it has since been loaded with great accretions due to the progress of investigation. It is only by subdivision, by recognising a branch of Economic Sociology, together possibly with two or three other branches of statistical, jural, or social science, that we can rescue our science from its confused state. I have already endeavoured to show the need of this step in a lecture delivered at the University College, in October 1876,2 and I shall perhaps have a future opportunity of enlarging more upon the subject.

To return, however, to the topic of the present work, the theory here given may be described as the mechanics of utility and self-interest. Oversights may have been committed in tracing out its details, but in its main features this theory must be the true one. Its method is as sure and demonstrative as that of kinematics or statics, nay, almost as self-evident as are the elements of Euclid, when the real meaning of the formulæ is fully seized.

I do not hesitate to say, too, that Economics might be gradually erected into an exact science, if only commercial statistics were far more complete and accurate than they are at present, so that the formulae could be endowed with exact meaning by the aid of numerical data. These data would consist chiefly in accurate accounts of the quantities of goods possessed and consumed by the community, and the prices at which they are exchanged. There is no reason whatever why we should not have those statistics, except the cost and trouble of collecting them, and the unwillingness of persons to afford information. The quantities themselves to be measured and registered are most concrete and precise. In a few cases we already have information approximating to completeness, as when a commodity like tea, sugar, coffee, or tobacco is wholly imported. But when articles are untaxed, and partly produced within the country, we have yet the vaguest notions of the quantities consumed. Some slight success is now, at last, attending the efforts to gather agricultural statistics; and the great need felt by men engaged in the cotton and other trades to obtain accurate accounts of stocks, imports, and consumption, will probably lead to the publication of far more complete information than we have hitherto enjoyed.

The deductive science of Economics must be verified and rendered useful by the purely empirical science of Statistics. Theory must be invested with the reality and life of fact. But the difficulties of this union are immensely great, and I appreciate them quite as much as does Cairnes in his admirable lectures "On the Character and Logical Method of Political Economy." I make hardly any attempt to employ statistics in this work, and thus I do not pretend to any numerical precision. But, before we attempt any investigation of facts, we must have correct theoretical notions; and of what are here presented, I would say, in the words of Hume, in his Essay on Commerce, "If false, let them be rejected: but no one has a right to entertain a prejudice against them merely because they are out of the common road."

[[2]]System of Logic, book vi., chap. ix. sec. 3.

[[1]]2d ed. (Macmillan), 1875.

[[2]]Principles of Science, chaps. vii., ix., xii., etc.

[[1]]Principles of Science, chap. xix., on "Experiment."

[[1]]Hermathena, No. iv., Dublin, 1876, p. 1.

[[2]]Statistical Journal, January 1879, vol. xli. p. 602. Also reprint by Longmans, 1878.

[[2]]Fortnightly Review, December 1876; "The Future of Political Economy."