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DISTURBING ELEMENTS IN THE STUDY 
 
 AND TEACHING OF POLITICAL 
 
 ECONOMY 
 
DISTURBING ELEMENTS IN 
 THE STUDY AND TEACH- 
 ING OF POLITICAL 
 ECONOMY 
 
 BY 
 
 JAMES BONAR 
 
 M.A. (Oxford), lI.D. (Glasgow) 
 
 BALTIMORE 
 1911 
 
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 Copyright igii by 
 THE JOHNS HOPKINS PRESS 
 
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 ■WILLIAMS * WILBJNS COMPANY 
 BALXIUOKE 
 
 ©GLA;^tu;G?3 
 
TO 
 
 J. H. H. 
 
PREFACE 
 
 The following lectures were delivered in the 
 Johns Hopkins University, Baltimore, April 25- 
 29, 1910, to the Economic Seminary, at whose 
 desire, by the courtesy of the University, they 
 are now printed. 
 
 As the title suggests, they are discourses not 
 on economic error in general, but on the more 
 subtle fallacies which are apt to invade the rea- 
 soning of trained economists in spite of learning 
 and discipline. 
 
 Such errors creep in from a popular political 
 philosophy (Lecture I), from want of any political 
 philosophy (II), from mistaken aversion to theory 
 (III), from the shortcomings of common or tech- 
 nical language (IV), and from the wrong handling 
 of distinctions of time (V). 
 
 That the course of the reader may be smoother, 
 the needful notes are confined to an Appendix. 
 
 Ottawa, December, 1910. 
 
CONTENTS 
 
 PAGE 
 PREFACE vii 
 
 Lecture I 
 
 ''Liberty, Equality, Fraternity" 1 
 
 Lecture II 
 
 ''Government is Founded on Opinion" . . 30 
 
 Lecture III 
 
 "It may be so in Theory" 58 
 
 Lecture IV 
 
 "Figures can Prove Anything" 83 
 
 Lecture V 
 
 "In the Long Run" 104 
 
 NOTES 133 
 
 index 141 
 
Lecture I 
 '' LIBERTY, EQUALITY, FRATERNITY" 
 
 All of us have been students; many of us will 
 be teachers, in the narrow sense; all of us, we may- 
 hope, in the wide sense. The subject before us 
 is therefore in a fair way to be familiar. 
 
 Certain aids in study and teaching are apt to 
 become hindrances when tenderly fondled. In 
 order, for example, to overcome our own bias 
 in thinking, we may adopt another man's bias, 
 as a too conscientious judge on the bench may 
 be unduly severe to his own kith and kin. It is as 
 if we compound for sins we're not inclined to by 
 damning those we have a mind to. It is a failing 
 that besets students j^oung and old, and it may 
 appear, mutatis mutandis, even in teaching. 
 
 Then there is a pitfall more especially for teachers 
 in John Mill's plan of ''saying more than the 
 truth in one sentence and correcting it in the next." 
 There is a risk that the first sentence may hold the 
 field, and the listener forget the warnings with 
 which the utterance of it was accompanied. 
 
 Such risks occur in all studies dealing with 
 human society if not in all studies whatsoever. 
 One of the most common of other temptations is 
 
2 DISTURBING ELEMENTS 
 
 the temptation to hold fast to an opinion simply 
 because we have begun holding it; it is "our own," 
 and we should seem weak to give it up. A more 
 vulgar fault is to reject an opinion because we dis- 
 like the holders of it, and would rather ''err with 
 Plato" than be right with them. 
 
 An exhaustive list of such besetting sins would 
 be so sad a catalogue of mental infirmities that we 
 might well be scared away from study altogether. 
 But there is a difference between consciousness 
 of fallibility, in ourselves and others, and des- 
 pair of all knowledge. Even political economy 
 has made visible progress in the last hundred 
 and fifty years, in spite of disturbing elements 
 that the later economists have duly perceived in 
 the earliest, and the latest as duly in the later. 
 To look at one or two of these elements may help 
 us to enter into the difficulties of the subject 
 itself, and may show us how they have in some 
 degree been overcome. 
 
 The first that presents itself may be described 
 roughly (on Mill's plan of an economy of truth) 
 as Watchwords. 
 
 Are there such things as 'watchwords' in politi- 
 cal economy? We are familiar with them in poli- 
 tics and social reform: ''Liberty, equality, fra- 
 ternity," "No taxation without representation," 
 "Peace, retrenchment, and reform," "The land 
 for the people;" and, if we are worthy hearers, 
 the words stir the blood; they keep us awake 
 and watchful; and we think we know what they 
 
LIBERTY, EQUALITY, FRATERNITY 3 
 
 mean. Men have tried to sum up religion in the 
 same way, as 'faith, hope, and charity' or 'love, 
 order, and progress.' It seems a natural tendency. 
 But a watchword is a detached phrase that has 
 taken the place of an argument. It is even, with 
 sluggish minds, the substitute for an argument, a 
 catch-word. Of course it need not always be the 
 sign of a sluggish mind; it may mark the pecu- 
 liarity of a strong mind. Our intellectual leaders 
 may be divided, in the formula of the old logical 
 books, into men of terms, men of judgments, and 
 men of arguments, to be called, in the profounder 
 cases, men of ideas, men of principles, men of 
 reasonings. Some writers are remembered by their 
 happy epithets, as Cobbett by "the old lady of 
 Threadneedle Street," Sydney Smith by ''a book 
 in breeches"; some by their apothegms and 
 epigrams as Bacon by ''Nature is not conquered 
 except by obeying her," Bentley by "No man 
 was ever written down except by himself, "Schiller 
 by "The history of the world is the judgment of 
 the world." This second class (men of judgments) 
 even more than the first contains the poets, and 
 writers like Carlyle and Ruskin who are near 
 kin to the poets. The third class is the class of 
 scientific men and philosophers, and let us hope 
 political economists, men who are celebrated for 
 their disentangling of fallacies and demonstration 
 of the truth, the truth as the conclusion of an 
 argument, not as asserted in a dictum from intui- 
 tion, men who test all things before holding 
 
4 DISTURBING ELEMENTS 
 
 fast to that which is good. It may happen that 
 men mainly belonging to this third class have the 
 powers of the others also. Reaching a principle 
 by reasoning they may bring it home to others 
 by epigram or epithet, which makes sleepers 
 wake up and ask themselves whether truth may 
 not lie in this novelty rather than in their old 
 common places. A watchword, too, may revive 
 a reasoned faith as well as an unreasoned. It 
 is quite impossible for us to run over our reason- 
 ings every time a controverted subject is started; 
 we should have no time to take further steps. 
 The important condition justifying our assumption 
 of a principle is that we have at one time fully 
 reasoned it out and could on occasion do it again. 
 This is what my old master in philosophy would 
 have called the ''relative vindication" of watch- 
 words. But, though the influence of them forms 
 an interesting study for the historian, they are 
 hardly an aid to the serious student of political 
 philosophy, still less of political economy. They 
 are almost indispensable to the agitator; but the 
 agitator is seldom looking for truth; he thinks 
 he has already arrived at it . When watchwords are 
 sufficiently full to convey a proposition (as ''Peace, 
 retrenchment, and reform" may do), it is a pro- 
 position seldom quite true or helpful, seldom more 
 than a half-truth. In political economy especially, 
 we may almost say roundly that you cannot put 
 arguments into few words, still less convey their 
 whole result into a detached phrase like a watch- 
 
LIBERTY, EQUALITY, FRATERNITY 5 
 
 word. A legal friend of mine was once reproached 
 for the long sentences of lawyers' documents. 
 He answered that if we could tell him any other 
 way than long sentences to make the meaning 
 of a document quite clear he would admit the re- 
 proach, but not till then. Even as it is, in English 
 law, the discovery of ambiguities is not infre- 
 quent. Conceive what a chaos there would be if 
 less pains were taken. 
 
 Since it has been acknowledged that watch- 
 words are of little help in political economy, it 
 may be asked: why should this subject be chosen 
 here? 
 
 The answer is that the existence and prevalence 
 of such watchwords will sometimes account for 
 an otherwise unaccountable bias in the reasoning 
 even of strong men (of the reasoning class). The 
 watchword is often a walking prejudice; its famil- 
 iarity keeps alive conclusions inconsistent with the 
 strong man's own reasonings. It does not belong 
 to his own particular range of study but comes 
 from the street into his room, like the notes of a 
 passing band of music, awaking old memories and 
 associations. Sometimes it is a political watch- 
 word that influences the economist, or a maxim of 
 journalism that influences the statesman. Of the 
 last kind is the saying, ''Statistics can prove any- 
 thing"; of the first is the watchword "Liberty and 
 Equality." The full French formula, ''Liberty, 
 Equality, Fraternity," has probably affected eco- 
 nomics less than the shorter American "Free and 
 
6 DISTURBING ELEMENTS 
 
 Equal." Still it has had its share of influence, and 
 (we might agree) in a right direction. 
 
 But, where there is a latent principle at work, 
 it should be made patent ; it should be either vindi- 
 cated or else frankly postulated, that it may be 
 contradicted by those (in this case, say Fitzjames 
 Stephen) who do not believe in it. Some such work 
 needs to be done for economics as was done by 
 Cornewall Lewis for politics in his Use and Abuse 
 of Political Terms. Ambiguity of terms often 
 involves covert assumption founded on the ambi- 
 guity; and it is one of the tasks of the economic 
 student to get rid of ambiguity as far as he can. 
 One of the causes of it undoubtedly is that a 
 non-economic meaning lingers in the mind of the 
 economist in spite of his own economic defini- 
 tions; and perhaps this has been so in the case 
 of the word ''liberty." All through the Wealth 
 of Nations some of us think we see the influence 
 on the writer's mind of the idea of political 
 liberty. His notion of economic liberty is the re- 
 moval of all restraints that prevent the com- 
 mercial ambition of individuals from realizing 
 itself according to the lights of the individuals. 
 Such a removal of restraints he calls a "simple 
 system of natural liberty." He thinks that its 
 establishment (or, if the term ''natural" implies 
 an "original state of things," the re-establishment 
 of it) would increase the wealth of nations greatly. 
 It is not, indeed, essential to the commercial ambi- 
 tion or to the increase of wealth through it; in spite 
 
LIBERTY, EQUALITY, FRATERNITY 7 
 
 of the restraints, progress has been made; in fact 
 the results of the commercial ambition itself have 
 often been the means of removing the restraints 
 on it. Adam Smith differs from Quesnay on this 
 point. And it is not anarchy, either in a good 
 sense or a bad, that he desires; he retains the re- 
 straints of law and order. He even wants a strong 
 government to make rights secure. If the ''poli- 
 tician" is his enemy, associations and companies 
 are so also. Both of them seem to him to have 
 taken away the rights of the individual man. His 
 claim for "natural liberty" is a sort of Declara- 
 ration of Independence in industry, and the poli- 
 tical analogy is not far from his mind ; he speaks 
 of ''the great mercantile republic" and of the va- 
 rious countries under his system as resembling ''the 
 different provinces of a great Empire." His units 
 are by preference individual citizens of such an 
 empire, well established in their legal rights and 
 equal in their privileges. Plenty of good land, and 
 liberty to manage their own affairs seem to him the 
 great causes of progress in all new colonies, and 
 of course he had the United States most in mind. 
 You will observe that equality is also regarded, in 
 this statement. The liberty, however, in industry 
 would, he says, procure equality of remuneration 
 if there were no interference from institutions. 
 Where institutions (and conquest) have already 
 supplied a man with privileges, it is not the case 
 that equality results; witness the rents of land. 
 But the interference is more easily taken away in 
 
8 DISTURBING ELEMENTS 
 
 the case of capital and enterprise; there, therefore, 
 equaUty of rate of profit will result, from liberty. 
 There may not be equality of advantage in all 
 bargains, but the sense of injustice will be re- 
 moved. 
 
 We may be far from denying those propositions; 
 but we should probably alter the emphasis, the 
 insistence on liberty. We should try to range the 
 conditions coordinately. But due coordination 
 is hard even for a modern economist who thinks 
 abstractly. It was hard for a metaphysician like 
 Descartes, after he had set up his Cogito, ergo sum, 
 and was trying to come down again to the concrete 
 world. The age you live in is apt to fix the empha- 
 sis for you. 
 
 An English writer says that men become more 
 discontented the more freedom they have. This, 
 translated into the language of economic psycho- 
 logy, means that men's wants are enlarged with 
 every fresh degree of liberty allowing develop- 
 ment of them. But an age in which there is little 
 liberty is likely to be more optimistic than our own 
 age, because progress in mere liberty, in the sense 
 of removal of restraints, is more gross and pal- 
 pable than progress in other directions, say 
 equality of opportunity. The optimism of Adam 
 Smith sometimes astonishes us. He is quite sure 
 he is living in a progressive age. Yet the condi- 
 tion of England then seems to us now far from 
 admirable. Thorold Rogers put the Golden Age 
 in the fifteenth century. But the actual increase 
 
LIBERTY, EQUALITY, FRATERNITY 9 
 
 in the eighteenth century of poHtical liberty was 
 not doubtful, and the steps to be taken toward it 
 were tangible and evident. Our faith in progress 
 now is more worthy of being described as a faith. 
 There is much truth in Ruskin's dictum ''Our 
 efforts are inconstant almost in proportion to 
 their nobleness," though it is well for us to forget 
 the instability on most occasions or at least during 
 the battle. The obtaining of something more 
 than political liberty is our own problem. A 
 great many chains have been knocked off since 
 1776; we have to see what can be made of the hu- 
 man beings thus enfranchised. Their enfranchise- 
 ment pre-occupied Adam Smith. 
 
 His ''classical" successors seem at first to have 
 no political preoccupations. They are often de- 
 scribed as abstract economists. Nevertheless 
 their emphasis was determined for them by 
 Bentham's political maxims; and the effect was 
 that they assumed an equality of units where it 
 did not exist and was not very evidently coming. 
 Equality in fact was their preoccupation. It was 
 not Bentham that gave to this idea its importance. 
 As the course of events in America led to the pro- 
 minence of the watchword of ''liberty" in Adam 
 Smith's days, so twenty years afterwards the course 
 of events in France did the same for "equality." 
 The attainment of equality (except so much of 
 it as is involved in liberty) was far harder; but there 
 is no doubt of the existence of an endeavour after 
 it on the part of all sympathizers with the ideas 
 of the Revolution. 
 
10 DISTUEBING ELEMENTS 
 
 Bentham formulated this idea of equality in 
 legal language, and from legal language and the 
 language of his utilitarian philosophy it passed 
 into economics. This is a commonplace; but per- 
 haps the whole consequences of this fusion or dif- 
 fusion have not been drawn out. Adam Smith's 
 aversion to associations was perhaps due to practi- 
 cal experience, or observation, of unfortunate asso- 
 ciations in his own day rather than to his principles. 
 But Bentham may be said to have supplied a basis 
 for the aversion. It is not that all utilitarianism 
 involves it; Malthus was a utilitarian, and he 
 shows little of it. But it is involved in the notion of 
 the Greatest Happiness of the Greatest Number 
 interpreted as Bentham interpreted it; — each 
 human being is a unit, and society is simply the 
 addition of such units. In our time the family 
 is more often taken as the unit. But essentially, 
 to Bentham, every man is for himself; he pursues 
 his own pleasure, and his is worth as much as 
 another's. It was as if Bentham had said that, to 
 be really free each man must stand alone; and, he 
 would like to have added, each woman also. 
 
 Ratification of things as they are is hard 
 indeed when equality is the requisite regarded. 
 But it was thought possible in a measure, because 
 it was possible to abstract from all differences. 
 Bargainers may not be equal otherwise, but in 
 being bargainers they are alike; they are equally 
 alert to their interest or must be presumed to be so. 
 The economic man in all countries is in this re- 
 
LIBERTY, EQUALITY, FRATERNITY 11 
 
 spect supposed to be the same. There is a maxim 
 of the school of Bentham, ''Every one to count 
 as one, and no one as more than one" — made 
 current by John Mill. Like a saying to which 
 T. H. Green gave currency as from Kant (''The 
 Understanding makes nature, but does not create 
 it"), the quotation has not been traced to the ear- 
 lier author; but in both instances the maxim seems 
 pithily and truly to represent the mind of the head 
 of the school expressed by a disciple. 
 
 It is the atomic theory in political economy. 
 The atomic theory in physics is now in danger; 
 perhaps in social philosophy it is nearly dead now. 
 But to Bentham and Ricardo and James Mill it 
 was by no means dead. The rule of the majority 
 as ascertained by addition of units seemed jus- 
 tice, and the competition of economic atoms gave 
 the economic situation. The same idea is put 
 forward, in very old-fashioned dress, by some of 
 those who would break up trades unions; they in- 
 sist that enlightened persons recognize only the se- 
 parate atoms, their bargain is always with the 
 separate men. 
 
 Economically, Ricardo, James Mill, and J. R. 
 Macculloch are representatives of this school of 
 economists. Their emphasis lies on the equality 
 (or identity) of the economic units. Of course 
 in any profitable sense equality takes liberty for 
 granted. An equality of slavery would not be of 
 much economical value. Those men undoubtedly 
 include in their programme the liberty advocated 
 
12 DISTURBING ELEMENTS 
 
 by Adam Smith; they are political reformers in 
 this sense also. But the claim for equality was 
 less generally conceded, and therefore they insist 
 on it more. The equality is like Adam Smith's 
 liberty, negative in character. Remove obstruc- 
 tions and men are free; remove their differences 
 they are equal. Unfortunately, though you can 
 do both in thought, it is even less easy to do the 
 latter mfactthsm the former; and, though the politi- 
 cal effect of Bentham's teaching was of a levelling 
 character, the economical was sometimes quite 
 otherwise. It meant the survival of the econom- 
 ically strongest among those all equally compet- 
 itors but not at all equal in the competition. 
 This would be true even where the liberty in the 
 negative sense was perfect, a state of things never 
 realized, though more nearly approached now 
 than formerly. 
 
 The men who from the first felt the inadequacy 
 of the negative idea both of liberty and equality 
 were the social reformers. Malthus himself was 
 one of these. Adam Smith, though he is said to 
 have taken an interest in Sunday schools, had no 
 passion for social reformation, but rather the 
 intellectual interest of the philosopher and observer. 
 That he was a respectable patriot and took great 
 interest in la haute politique by no means disproves 
 the general contention. Malthus, on the contrary, 
 had a touch of the enthusiasm of humanity, and the 
 distresses of the poor haunted him. Hence his 
 efforts to find a way of escape from the appar- 
 
LIBERTY, EQUALITY, FRATERNITY 13 
 
 ent consequences of his own theory of population, 
 efforts not entirely unsuccessful. He broke away 
 from what he called the New School of Political 
 Economy for adequate reasons given, affecting 
 cost, supply and demand, and rate of profits; 
 but it is possible there was a half-conscious revolt 
 in his mind against principles more fundamental. 
 His unit was rather the family than the individual, 
 though he never confessedly broke with the older 
 principle of individual liberty as Adam Smith 
 stated it. 
 
 The school of Bentham, we are told, put "Mal- 
 thus on population" in the forefront. But here 
 again their idea was negative. Population must be 
 restricted. The improvement of the standard of 
 living is the positive side of the matter, and it is the 
 side preferred by the maturer Malthus. It means 
 more than restriction, though restriction is involved 
 in it. But the idea of the Benthamites was that, 
 by keeping down the number of units you increased 
 their value and ability to find food. They laid 
 the emphasis on restriction. The followers of 
 Owen and of St. Simon were led away from the 
 individual to magnify, perhaps unduly and pre- 
 maturely, the virtues of association. It is curious 
 that Malthus, Ricardo and Bentham himself are 
 all found among the patrons of Robert Owen, and 
 not only of Robert Owen the benevolent despot 
 and employer and capitalist of New Lanark, but 
 of Owen when he was beginning to develope his 
 New View and new views. That they dropped 
 
14 DISTURBING ELEMENTS 
 
 him is not unnatural; many reasons could be found 
 for dropping the full-fledged Robert Owen; — 
 but they may have had an inkling that this man 
 had something which their own theories wanted. 
 
 The course of economics, however, was not di- 
 rectly influenced either by Owen or the French 
 speculators. John Stuart Mill was the writer who 
 induced economists to recognize that more than 
 their bare liberty and equality was needed, not 
 only to rejuvenate society, but even to give a 
 full account of the economic situation. If we are 
 right in speaking of liberty and equality as the two 
 watchwords that had most influence in the two 
 first stages of economic doctrine, then fraternity 
 must be recognized as having a great share in the 
 moulding of the doctrine in its third stage. 
 
 Even if John Stuart Mill keeps the main features 
 of the classical economists in his political economy, 
 he does not, like his father, erect political economy 
 into a political philosophy. He sees the very 
 different features of society that modify the con- 
 clusions of economics as soon as concrete applica- 
 tion is attempted. Political economy is to him 
 part of a sovereign social science, but it is not itself 
 the social science. If the laws of production 
 seem to him little affected by human will, the 
 laws of distribution seem very much so affected. 
 Even population which comes under the head of 
 production is not left unmodified by human will; 
 Malthus (Mill said), instead of shutting the door 
 to human progress, had really for the first time 
 
LIBERTY, EQUALITY, FRATERNITY 15 
 
 opened it. But the idea of fraternity appears 
 to sway Mill most in his dealings with distribution 
 and especially the various schemes for a better 
 distribution than the present. Those schemes with 
 which he is most in sympathy involve association 
 in one shape or another. There are no doubt 
 two apparently conflicting tendencies at work in his 
 mind, his father's views and the new views he had 
 learned from the French writers of his early man- 
 hood, not only Utopians like St. Simon and sociolo- 
 gists like Comte, but historians like Guizot and 
 De Tocqueville. The historical method was grow- 
 ing up and Mill's mind leaped to it. It is curious 
 that it plays so small a part in his Representa- 
 tive Government. The E-says on Liberty and on the 
 Subjection of Women also stand out by themselves, 
 unaffected by this change in his thought. He sel- 
 dom tried to rewrite his old books when he made 
 new discoveries or advanced from one thought to 
 another. Perhaps, like Ricardo, he found the 
 publishers a formidable obstacle to the rewriting 
 of first books. His changed views on the wages 
 fund, expressed in a magazine article, are withheld 
 from the readers of the Political Economy. Some of 
 his later books could almost be taken as criticisms 
 of the earlier. His socialistic leanings and his 
 homage to the historical method are hardly to be 
 traced at all in the essay on Liberty. In that essay 
 the evil in the domination of public opinion is 
 brought out far more emphatically than the good in 
 it. It may have been that the two tendencies were 
 
16 DISTURBING ELEMENTS 
 
 equally balanced in his own mind, towards ortho- 
 doxy and towards revolution . We hear from him in 
 the Political Economy that the classical economists 
 have not allowed enough force to the socialistic 
 criticisms of competitive commerce and also that 
 the socialists have never fully understood the vir- 
 tues of competition. 
 
 Yet as economists we must judge him by his 
 whole Political Economy; and, coming where it 
 does in the Political Economy, the indulgent view 
 of Utopian schemes shows distinctly that he wished 
 to introduce their associative principles into the 
 body of economic doctrine. He has so persuasively 
 introduced them that they cannot now be dislodged. 
 No economic students would now be satisfied with 
 a text book that said nothing of socialism or co- 
 operation. Small wonder that Mill should have 
 done this service, seeing in his view the pro- 
 blem of the future was "how to unite the greatest 
 individual liberty of action with a common owner- 
 ship in the raw material of the globe and an equal 
 participation of all in the benefits of combined 
 labour." These were his and Mrs. Taylor's opin- 
 ions, and we know how that lady seemed to him to 
 mould his thoughts. 
 
 It is a fairly safe conclusion that the ideas not 
 only of liberty and equality, but of fraternity, will 
 always be with us, and we may thank Mill for 
 securing to the last its entree into the good society 
 of political economists. 
 
 This may be as it ought to be. Yet the idea 
 
LIBERTY, EQUALITY, FRATERNITY 17 
 
 of fraternity is not even so clear as the other two 
 ideas, liberty and equality. Our present notion of 
 liberty, that has been gradually forming itself 
 in the last twenty-five years, is of the command of 
 opportunity for development rather than the con- 
 fronting of a cleared course where all obstacles 
 are removed. It is positive, not simply negative. 
 In the same way our notion of equality is of equal 
 opportunity. Is our notion of fraternity to be that 
 of mutual aid in self-development as well as mutual 
 aid in the development of material resources? 
 Instead of answering this question directly, we 
 may look for a moment at the rejoinder to Mill's 
 Liberty put forward by James Fitzjames Stephen 
 under the title of ^Liberty, Equality, Fraternity^ 
 (1873). The preface is dated March thirty-first 
 and Mill may never have read it, as he died on 
 May eighth of the same year. The book is 
 written rapidly in a conversational style; but it 
 is the style of the conversation of a great lawyer 
 accustomed to weigh his words even when utter- 
 ing them rapidly, and well equipped by a busy 
 life and large experience with facts and princi- 
 ples. Mill had known India only by being in 
 the India Office; Stephen had taken part in the 
 actual government of India on the spot. Stephen 
 may be conceived, just on that account, to have 
 a slight bias towards Satrapian heresies in poli- 
 tics, especially towards '^a policy of resolute coer- 
 cion." But he knew England also; and we must 
 take his arguments as we find them. 
 
18 DISTURBING ELEMENTS 
 
 Mill had not been content with such ''liberty" 
 as would have satisfied Adam Smith and Bentham. 
 He has still a negative notion, removal of coer- 
 cion; but it goes farther than theirs. The public 
 authorities (he says) must not only secure to a 
 man his property and his vote, but they must 
 take care not to control the individual at all except 
 where his actions restrict or injure others; they 
 must not control him for his own good. Self- 
 protection is to be the only ground of interference. 
 Public opinio7i, too, should recognize its limita- 
 tions and the virtue of free discussion for the at- 
 tainment of truth. Without discussion actual or 
 possible there is no assured truth, in Mill's judg- 
 ment. At present "custom lies upon us with a 
 weight heavy as frost and deep almost as life." 
 Public opinion depresses originality by condemning 
 eccentricity. But for the sake of its own pro- 
 gress society should leave the individual free and 
 rather encourage eccentricity than hinder it. The 
 same claim is to be made for combinations of men; 
 they should have the same liberty, liberty especi- 
 ally to innovate. 
 
 Now the essay on Liberty is not an economic 
 treatise, and its economic examples are few. 
 Much of the essay deals with subjects not open to 
 our discussion here. The virtue of free discussion 
 is at least as undoubted by the wise in regard to 
 economic subjects as anywhere else; and persecu- 
 tion is not unknown in this region. The opposition 
 to innovations in matters economical has come 
 
LIBERTY, EQUALITY, FRATERNITY 19 
 
 perhaps rather more from vested interests than 
 from the weight of custom, though in old countries 
 the cultivators are notoriously slow to listen to im- 
 provements. Modern civilized nations, say, the 
 United States, England, Germany, have taken 
 keen interest in novelties like marconigrams, auto- 
 mobiles, and air-ships. The greatest difficulty has 
 not been in public opinion. The desire to hear and 
 to tell "some new thing" is not peculiar to the 
 Athens of Paul and Demosthenes. Mill rather 
 exaggerates the opposition of public opinion to 
 innovation. 
 
 Stephen makes light of this aspect of Mill's 
 view, and concentrates his fire on the definition. 
 Freedom, to Mill, is the removal of coercion; but 
 in Stephen's opinion the removal of obstacles 
 (which he is inclined to treat as the same thing) 
 does not encourage originality; (as Malthus said) 
 it is difficulties that generate talents, and a disci- 
 plined youth is likely to be more original than a 
 youth never subjected to tutors and governors. 
 Economically we should not care to push this 
 doctrine far, so far at least as deliberately to leave 
 difficulties in the way. Nature will provide and 
 leave plenty of them; and we must not become 
 Luddites in spirit and leave evil standing that good 
 may come of it. On the other hand, we may 
 agree with Mill that freedom must be left to com- 
 binations of men where they are not injuring the 
 public; j''et must remember that there may be no 
 more mischievous coercion than that exercised by 
 
20 DISTURBING ELEMENTS 
 
 a successful combination, a coercion not physical 
 merely but ''moral " or of the spirits of men. The 
 question is whether their coercion of the individual 
 is a greater evil than the freedom of the combina- 
 tions is good, good from the point of view not of 
 the sectional interest of the combination, or of the 
 single interest of the individual, but of the whole 
 community represented in the State. The answer 
 may be made that the best general rule for the 
 State is not to restrict the action of the combina- 
 tions where physical compulsion is not used; and 
 yet that general principle must give way to obvious 
 general benefit, even at the sacrifice of the ''liberty 
 of the subject" to do himself harm. Prohibition 
 and local option are certainly against Mill's prin- 
 ciples, and so is the punishment of would-be sui- 
 cides. 
 
 Stephen's position is "that the essence of life is 
 force, and force is the negation of liberty" (as if 
 the force could not be asserted against material 
 nature). It is that "the rule of the strongest" is 
 always a correct description of government even 
 now, however veiled the pressure of the strength 
 may be; and every government believes itself wiser 
 than the governed and rightly imposes its wisdom 
 on them; in fact, that at the back of all individual 
 liberty is the coercion of Government; and (he 
 goes on) the test of the goodness of its policy in a 
 given case is not to be any abstract principle of 
 liberty but a proved advantage or disadvantage 
 of the course pursued and the probability or im- 
 
LIBERTY, EQUALITY, FRATERNITY 21 
 
 probability of successfully pursuing it. The last 
 item, perhaps, saves the situation for us. Sump- 
 tuary laws have a good object, but they cannot be 
 carried out. Morality cannot be forced on a peo- 
 ple, though outward conformity may (and may 
 rightly) be. Provost Keate's saying, ''Boys, if you 
 are not pure in heart, I'll flog you," is laughable 
 wherever understood. Most of all this is com- 
 monplace to us now; but some of us will think that, 
 by advancing it, Stephen, if he refuted Mill, did 
 not refute those who contend for a liberty that 
 means access to opportunity for self-development. 
 The next question is really that of Equality. 
 For whom did Mill claim that liberty? He claimed 
 it for all human beings, mature, and sane, and 
 civilized. There was to be no distinction of rank, 
 property, colour, or sex. Here his essay on the 
 Subjection of Women supplements his essay on 
 Liberty. There is an extension of the equality 
 preached by Bentham. Bentham himself held 
 the same view, but never brought it into the fore- 
 ground. As we all know, it is coming into the 
 foreground now. Economically the question is 
 not to be taken as settled by the circumstance that 
 factory acts take not only children but women 
 under their protection. It might quite well be 
 held that if women had had the making of the 
 laws the protection might have been secured bet- 
 ter, or at least otherwise. Stephen's attitude 
 is again hostile, but on grounds that do not con- 
 cern us here, of physical weakness mainly. The 
 
22 DISTURBING ELEMENTS 
 
 success of women in their present agitation is 
 likely to have appreciable effects on industrial 
 economy. It would seem as if the watchword 
 '^ equality" had not spent its force altogether, 
 in those quarters. 
 
 Much commonplace exists on ''equality"; it 
 is easy to prove that men are not equal, in what 
 is called the plain meaning of the word. If equ- 
 ality means sameness or identity, absence of differ- 
 ence or of superiority or inferiority, then we all 
 know it does not prevail. Economically such an 
 equality would deprive the modern doctrine of value 
 of a great deal of its point. Exchange could hardly 
 be what it now is, nor could interest on capital. 
 But the matter is not worth an argument. Those 
 to whom ''equality" was a watchword never 
 meant that all for whom they claimed it should 
 be held alike in every particular. What was most 
 in the minds of the American patriots and French 
 Revolutionaries was social equality. So far as it 
 now means anything but impartial treatment in 
 the laws and by the administrators of the law, it is 
 bound up with "liberty." Whatever be our 
 notion of liberty, the said liberty is usually claimed 
 by us as a boon to be extended to all citizens im- 
 partially, liberty involving in the first place that 
 all subjects should be citizens. 
 
 A large part of the civilized world has withheld 
 this privilege from certain men because of their 
 colour. The negro, the American Indian, the East 
 Indian, the Chinese, the Kaffir, may be subjects 
 
LIBERTY, EQUALITY, FRATERNITY 23 
 
 without being citizens, really or nominally. Eco- 
 nomically the position of those men in our several 
 countries is very different when equality and lib- 
 erty are conceded and when they are withheld. 
 They are withheld really if not nominally by all 
 the white races except the English and given by 
 the English only where the coloured people are a 
 tiny fraction of the whole people, chiefly in Eng- 
 land itself. Can we say it is because they are not 
 mature or civilized? 
 
 Mill's reservation is quite sound, but we should 
 all see to it that when the coloured people are 
 mature and civilized they should have the rights, 
 now accrued. The general dictum 'liberty and 
 equality" has not led many of us in this direc- 
 tion, and my bwn countrymen have been no ex- 
 ception to the rule. 
 
 It might conceivably be replied that the three 
 watchwords go together, and we give liberty and 
 equality to men with whom we can have fraternity. 
 Stephen sums up very well what appears to be 
 Mill's view: ''If men are all freed from restraints 
 and put as far as possible on an equal footing, they 
 will naturally treat each other as brothers and 
 work together harmoniously for their common 
 good." It is easy with Stephen to give this a 
 direct negative; but Mill's view applies not to 
 savages or even to the Philistine world of a money- 
 getting bourgeoisie but to the new world of modern 
 civilization. Is it not the case on the whole that 
 public spirit is found oftener and that men are, 
 
24 DISTURBING ELEMENTS 
 
 more of them, more willing and even anxious to 
 do something for their neighbours now than for- 
 merly? Stephen mocks at the idea that we can, 
 in the full sentimental sense, love our neighbour, or 
 that it is good we should do so. It is unlikely 
 that the sentiment was in Mill's mind, but rather 
 the good-will, which means the will to do good 
 to others. In this sense, fraternity increases with 
 all true civilization. 
 
 Elsewhere in human affairs we have often to 
 work not upwards from the less to the greater but 
 downwards from the greater to the less; we have 
 first to secure the greater which includes the less. 
 It is the way of the best religions and of many 
 political and social movements besides. It was 
 the supposed condition on which * natives might 
 receive the franchise in Cape Colony that they were 
 found on due scrutiny to be ''civilized," e.g., in 
 house and household ways. The same idea can be 
 carried out in various directions. This is one — 
 that the appeal to common sympathy is a claim for 
 a union of men in which as of course every one has 
 his liberty and equal treatment. The ''frater- 
 nity" need not be a religion of humanity. That 
 we are fellow members need not involve the feel- 
 ing that we are members one of another. The 
 French Revolutionaries were not very successful 
 in appealing in their way to a common humanity 
 and furthering fraternity by force. But in our 
 own time social bonds are becoming tighter, and in 
 a very large proportion of social problems groups 
 
LIBERTY, EQUALITY, FRATERNITY 25 
 
 are becoming more important than individuals. 
 Stephen says: ''Whoever first gave the command 
 or uttered the maxim, ' Honour thy father and thy 
 mother, that thy days may be long in the land,'" 
 had a far better conception of the essential con- 
 ditions of permanent national existence and pros- 
 perity than the author of the motto, 'Liberty, 
 equality, and fraternity.' " This is fine, but not 
 fair to the motto. Fraternity and the family are 
 not exclusive of one another. Stephen's mot 
 reminds us of the kindred exaggeration in Gulli- 
 ver's Travels: ''The King of Brobdingnag gave 
 it for his opinion that whoever could make two 
 ears of corn or two blades of grass to grow upon a 
 spot of ground where only one grew before would 
 deserve better of mankind and do more essential 
 service to his country than the whole race of poli- 
 ticians put together." We are forty years away 
 from those worthies, J. S. Mill and James Fitzjames 
 Stephen, and the perspective has shifted a little. 
 We do not now regard J. S. Mill's as the last word 
 on economics, perhaps not even the best that 
 could be yielded by the old premises. The 
 classical school laid the foundations and other men 
 have builded on them, buildings that would some- 
 times have surprised them very much. How far 
 do they seem to have built to the music of the 
 three watchwords? 
 
 The answer will be different according as we 
 understand by Economics an analysis or a policy. 
 It might be thought that economic analysis has 
 
26 DISTUEBING ELEMENTS 
 
 done best when it has tried to be deaf to such 
 music. The analysis of Marx is hardly deaf to it 
 or Marx would have been more critical in his 
 acceptance of certain doctrines of Ricardo. If a 
 man shows an interested motive for his conclu- 
 sions, you cannot have whole-hearted confidence 
 in his reasonings ; in fact you will have an interested 
 motive for doubting them. The analysis of value, 
 the terminal workman ('terminal Bill" as the 
 Cambridge students call him), final utility in gen- 
 eral, exchange of present for future goods, would 
 seem to have nothing to do with what ought to be, 
 but simply with what is. This is true; but the 
 watchwords are of service to us in reminding us 
 that we are every day dealing with distinctions 
 that may possibly shift. It matters a great deal 
 even for victorious analysis whether the human 
 agents on the economic field are free and in what 
 degree they are so, how many and how great 
 restrictions have hampered their economic action 
 and how few and how small. It matters also 
 whether the groups of men are groups of units 
 equally hampered or not equally. It matters 
 finally whether they are deliberate in combination 
 or not, and in what closeness of combination, in- 
 terfering perhaps with freedom while it increases 
 power. This is true even of theoretical econo- 
 mics, which can never be so abstractly theo- 
 retical as not to include in its theory the differ- 
 ences of typical groups actually found in indus- 
 trial society. We are, after all, analysing indus- 
 
LIBERTY, EQUALITY, FRATERNITY 27 
 
 trial society as we find it, not as we might conceive 
 it to be; the motives we detach in the first instance 
 in our abstract theory are actually present, 
 though not in detachment. The analysis of "col- 
 lective bargaining," and of the kind of bargains 
 resulting from monopolies founded on "nature" 
 and monopolies created by such associations as 
 Trusts or such proceedings as "cornering," may 
 perhaps proceed more carefully if the three watch- 
 words are kept in mind, kept in mind however, as 
 categories, not employed as categorical imperatives. 
 Economic policy, on the other hand, proceeds 
 by them largely, even without our knowledge. 
 On the American continent including Canada, 
 economic policy goes on its way somewhat fitfully 
 with occasional interruptions from within, not 
 many from without. In the old world there is a 
 perpetual interruption from without, in the panic 
 fear of war and the real or supposed need of pre- 
 parations for defence. This involves a taxation 
 of which America has no experience as yet. The 
 taxation if not haphazard must try to be eco- 
 nomically directed. It will then be directed by 
 principles not altogether alien to those three 
 watchwords; we should interfere as little as may 
 be with the liberty and equality of our citizens and 
 disturb as little as may be their sense of political 
 union and unity. The canons of taxation must not 
 be considered at this point. What is to be con- 
 sidered now is rather more general; we must not 
 by taxes cause political oppression and disturb- 
 
28 DISTURBING ELEMENTS 
 
 ance of the political balance, though we must try- 
 to put the burden on the strongest back. The 
 watchword of fraternity may perhaps specially 
 remind us that legislation affects groups as well as 
 individuals, and in certain cases the legislator 
 ought to do what he can to organize the groups. In 
 any case the sense of political unity must be rein- 
 forced. 
 
 Economic fraternity, a cosmopolitan union of 
 industries, is an idea peculiarly modern. It 
 would apply specially to the international char- 
 acter of certain great trades, and an increasing 
 number of them. All foreign trade may seem to 
 make for fraternity; but some foreign trades have 
 already become international. The money mar- 
 ket is quite as much international as national. 
 On the whole economic interests tend to make all 
 trades so, although protectionism puts obstacles 
 in the way. More than the money market is 
 now international. The trade in grain and in the 
 precious metals and even all minerals has become 
 so, or at least far more so than in the days of Mill, 
 to say nothing of Ricardo and Adam Smith. It 
 is a sort of fraternity, and implies a liberty and 
 equality of its own. As love laughs at locksmiths, 
 so has the trading interest overleaped barriers. 
 The entire disappearance of protection will prob- 
 ably be caused by the sense of fraternity or desire 
 for universal peace, rather than the peace be intro- 
 duced by the free trade. This is another instance 
 of what was mentioned before, the adoption of the 
 
LIBERTY, EQUALITY, FRATERNITY 29 
 
 greater change bringing with it the adoption of the 
 less. 
 
 Without fraternity in the form of organization 
 of smaller groups than nations, it will be difficult 
 to preserve what was long the most precious fea- 
 ture of the economic world in English-speaking 
 America, — the independent labourer. There is 
 some sacrifice of individual self-reliance in the 
 older countries. In the new, the access to fertile 
 land and homesteads . may keep up the individual 
 self-reliance for sometime yet. It means a stronger 
 sense of liberty and equality, perhaps a little less 
 of the fraternity; yet, for full use of modern appli- 
 ances even by the farmer, a conscious union with 
 his fellow citizens and with the State that is over 
 them and him must be present too. What is most 
 earnestly to be desired for both of you, both Can- 
 ada and the United States, if it is not too late for 
 the latter, is that the independent worker should 
 remain the typical figure in the Nation. With 
 due care and pains on the part of both of you there 
 need not be any proletariate at all. Without the 
 due care and pains that proletariate will come. 
 In a proletariate there is little liberty and little 
 true fraternity; there is something like an equality 
 of suffering and degradation. If the watchwords 
 would keep us mindful of this great duty, it 
 would be well to hear their music every day, even 
 in our study. 
 
Lectuee II 
 
 "GOVERNMENT IS FOUNDED ON 
 OPINION" 
 
 It has appeared that even the watchwords of 
 agitators may sometimes serve the economist 
 pathologically in good stead. He may use them, 
 as reminders to himself that his bow needs to be 
 bent the opposite way; he may repeat the watch- 
 word that suggests that way. No one watchword 
 can guide us in all cases, unless it is a uselessly 
 broad truism hke "duty before pleasure," which 
 admits of almost any interpretation we like to 
 put upon it. 
 
 There are maxims of another kind that are of 
 no private interpretation and make no appeal to 
 the emotions. They are the more useful on that 
 account. Sach are the sayings of authors half 
 forgotten, or (which is not the same thing) whose 
 works are half forgotten. One of these sayings 
 is that of David Hume that ''Government is 
 founded on Opinion." ''Nothing (he says) is 
 more wonderful than the ease with which the many 
 are governed by the few, and, as force is always 
 on the side of the governed, the governors have 
 nothing to support them but opinion, even under 
 a despotism," We need not confine ourselves to 
 
GOVERNMENT IS FOUNDED ON OPINION 31 
 
 Hume's analysis of this opinion (it is to him an 
 opinion of self interest, an opinion of rightfulness, 
 right to power and right to property). The gen- 
 eral position is enough. People saj^ all Government 
 depends on Force, but this Force will be found to 
 depend on Opinion, on the Mind of the Governed. 
 In this sense all government is democratic. 
 
 This is Political Philosophy, not Political Econo- 
 my, but the dictum will be found to have some 
 meaning in regard to the economical system. 
 The economical system of any people (and the 
 system of the civilized peoples now, regarded as 
 one) is founded not frankly on physical force but 
 in great part on the assent or consent of the gov- 
 erned. To use an expression of commercial law 
 there are implied warranties; and the economic 
 opinion on which the economic system is founded is 
 the total of the implied warranties. You remem- 
 ber the struggle of John S. Mill to reach a defini- 
 tion of Political Economy. He at last defines it as 
 'Hhe science which traces the laws of such of the 
 phenomena of society as arise from the combined 
 operations of mankind for the production of wealth 
 in so far as those phenomena are not modified by 
 the pursuit of any other object." This means 
 that the distinctive character of the subject 
 involves a social element. Not only some but all 
 of its categories are in a sense social. So too an 
 economic system implies a society of some kind; 
 and a society, as such, is not held together by brass 
 collars but by spiritual bonds going beyond con- 
 
32 DISTURBING ELEMENTS 
 
 tracts written or verbal. A group of convicts is 
 not a society; and the intellectual element is essen- 
 tial. There is nothing good or bad in social union 
 but thinking makes it so. 
 
 Some of the bonds are evident and familiar. 
 It is, or ought to be, a commonplace that without 
 honesty there is no sound economy. There must 
 be mutual trust to hold even a band of robbers 
 together. Without adhesion to the general will 
 there is no cohesion of the economic system; 
 with it; even a bad economic system may last a 
 provokingly long time. The two extremes may 
 be (a) absolute trust without book, record, or 
 witness; — there is still a store of the Hudson's 
 hay Company north of Winnipeg where the In- 
 dians are said to help themselves, leaving the right 
 furs in exchange, neither deceiving nor deceived; 
 —and (b) absolute distrust as of Ishmael, in the 
 state of barbarism described by Hobbes in the 
 phrase helium omnium contra omnes. Though 
 Hobbes makes this state of things the starting 
 point of human politics, it is really harder to find 
 than the other, its opposite. 
 
 Though a few cynics say that seeing is believing, 
 and all men are liars and would all be thieves if they 
 dared, we all every day trust each other beyond 
 limits of recovery at law. A neighbour who pushes 
 his abstract rights to the full is a bad neighbour, 
 and is happily always in a minority. Credit in the 
 wide sense of the trust of one trader in another ex- 
 tends far beyond the lending of money under secur- 
 
GOVERNMENT IS FOUNDED ON OPINION 33 
 
 ity. There is a simple trust of native primitive men 
 (like those Indians) which disappears with civi- 
 lization, but there is also a trust first created and 
 upheld by civilization. Civilization among other 
 things means this very disciphne. "Do to others 
 as you would that they should do unto you" is 
 a working maxim even in the economic region. 
 "Honesty is the best policy" stands in close rela- 
 tion to it. In this sense, as has been already hinted, 
 it may be true that "whatever is best administered 
 is best;" a nation of honest men might succeed, 
 might prosper industrially, under a relatively 
 inferior economic system. 
 
 The "opinion" on which Hume said government 
 was founded has been already spoken of as the 
 assent or consent of the governed. Like other 
 synonyms these two words are sometimes used 
 indifferently; but taken strictly o-ssent is a passive 
 adhesion, consent an active, involving conscious 
 will. Now in the economic system, in analogy with 
 the body politic, there is a body of customs un- 
 written and yet generally obeyed; and there is a 
 body of customs to which the nation has given 
 its consent deliberately by turning them into laws 
 backed expressly by pubhc force. Both are forms 
 of the opinion on which government is founded. 
 We may look at both separately and then con- 
 sider whether there is anything beyond both, and 
 whether this thing beyond is opinion or not opinion. 
 
 There is a passage in Adam Smith's Lectures 
 that may serve as a starting point for this part 
 
34 DISTURBING ELEMENTS 
 
 of the discussion. He says (somewhat too broadly) 
 ''Whenever commerce is introduced into a 
 country probity and punctuality always accom- 
 pany it. These virtues in a rude and barbarous 
 country are almost unknown. Of all the nations 
 in Europe the Dutch, the most commercial, are 
 the most faithful to their word. The English are 
 more so than the Scotch but much inferior to the 
 Dutch and in remote parts of this country they are 
 far less so than in the commercial parts of it. 
 This is not at all to be imputed to national char- 
 acter, as some pretend. There is no natural 
 reason why an Englishman or a Scotchman should 
 not be as punctual in performing agreements as 
 a Dutchman." He explains it by "self interest," 
 which is common to all men. ''A dealer is afraid 
 of losing his character and is scrupulous in observ- 
 ing every engagement. When a person makes 
 perhaps twenty contracts in a day he cannot gain 
 so much by endeavouring to impose on his neigh- 
 bours as the very appearance of a cheat would make 
 him lose. When people seldom deal with one 
 another, we find that they are somewhat disposed 
 to cheat because they can gain more by a smart 
 trick than they can lose by the injury which it 
 does their character." As Prof. Cannan points out, 
 Sir William Temple's Observations upon the United 
 Provinces had described the Dutch in the same 
 terms and had drawn the same conclusion. 
 
 This is Temple's conclusion: ''Trade depends as 
 much upon common honesty as war does upon 
 
GOVERNMENT IS FOUNDED ON OPINION 35 
 
 discipline." Temple adds ''As trade cannot live 
 without mutual trust among private men so it 
 cannot grow or thrive to any great degree with- 
 out a confidence both of public and private safety 
 and consequently a trust in the Government from 
 an opinion of its strength, wisdom, and justice." 
 It might be thought that the sentence which I 
 quoted from Hume was really borrowed from 
 Temple; but the difference appears in Temple's 
 essay On the Origin and Nature of Government: 
 "Power arising from strength is always in those 
 that are governed who are many, but authority 
 arising from opinion is in those that govern who 
 are few." This is just the distinction which Hume 
 went beyond or explained away. Government may 
 be founded on the opinion of those who singly are 
 weak but collectively are strong, tho' they do not 
 know it. 
 
 We may paraphrase Temple's saying and pro- 
 nounce that, as an army depends upon habits of 
 discipline, a commercial society depends upon 
 habits of trust. To us in a fully developed com- 
 mercial society this means habits of credit. Either 
 word, trust or credit brings us into the region of 
 probabilities as distinguished from demonstration. 
 It involves that something is coming which has 
 not yet come and which has the usual chapter of 
 accidents against it but no more than the usual. 
 It is faith as opposed to sight. 
 
 Now in the world we are surrounded with prob- 
 abihties and '' probability is the guide of life." 
 
36 DISTURBING ELEMENTS 
 
 Probability in the life of the man of business 
 has credit as one of its chief forms. His own credit 
 is the probability that he will be able to meet his 
 obligations; his neighbour's that his neighbour will 
 meet his. The art of life has made progress; and 
 one sign of it is that the array of probabilities have 
 become known in all their degrees of nearness and 
 farness, human enterprise and human honesty being 
 as much reckoned among them as natural resources 
 and the likelihood of overcoming material diffi- 
 culties. It is one possible description of the 
 'speculator' that he is willing to run unusual 
 risks of both kinds, human and physical, for the 
 chance of unusual gain. His is a form of trust 
 that is barely if at all warranted by probabilities. 
 The ordinary man is one who trusts to probabili- 
 ties no more or less than his fellows. 
 
 Confining ourselves to the human element, we 
 may consider what the extent of trust usually is 
 in a commercial society. Adam Smith speaks as if 
 it were only considerable among those who had fre- 
 quent dealings with each other. Merchants, we 
 are told, are more honest to merchants than to the 
 public. The principle is a wider one. It would 
 seem that all society is divided into groups, and 
 within the groups, between members of the groups, 
 the trust is greater than between those not so 
 banded together. 
 
 As a general rule, men trust their own families 
 or relatives, or members of the same club, more 
 than those that are without; they may in certain 
 
GOVEKNMENT IS FOUNDED ON OPINION 37 
 
 cases trust those that are of the same town or of 
 the same country or even of the same race. This 
 seems due not to frequency of deaUngs but to real 
 or supposed knowledge of character; we form a 
 presumption of trustworthiness in regard to those 
 whom we know, and the presumption is less 
 (or vanishes) in regard to strangers and foreigners. 
 Adam Smith's idea is of course perfectly correct for 
 small commercial groups; members of the Stock 
 Exchange trust to pieces of paper, sometimes 
 thrown from the windows down into the street, of 
 the most informal character, in transactions in- 
 volving large sums of money. But the principle is 
 the same as for the Hudson's Bay Indians, and 
 the feeling is the same: that any one on either 
 side who is false to his bargain is a public enemy. 
 Besides a presumption of common honesty, com- 
 mercial credit involves a presumption of success or 
 failure in regard to those trusted ; and this depends 
 on knowledge of capacity and of circumstances 
 as well as character. The probability that a man 
 will meet his obligations is not an affair of his 
 integrity alone. We must have local knowledge to 
 judge how far he is likely to succeed. Yet, if 
 transactions are widespread, we need to depend 
 on the integrity of those who have the local know- 
 ledge to give us a faithful account of the matter. 
 The farther away we go from the simple exchange 
 between man and man, the harder it becomes to 
 proceed by 'common honesty' alone. Human 
 frailties that are negligible in small quantities at 
 
38 DISTURBING ELEMENTS 
 
 close distance become appreciable when transac- 
 tions are indirect and the two ends of the chain 
 become farther and farther removed. The need 
 for something more definite and tangible than 
 customs of trade becomes felt, and customs be- 
 come laws, for the protection of the distant ex- 
 tremities. 
 
 There are no doubt some economic principles 
 that do not need assent or consent still less the 
 statute book to enforce them. There is the prin- 
 ciple that the cheaper article will drive out the 
 dearer. There is Gresham's law of the coinage; 
 the bad pieces, if put on the same footing as the 
 good, will drive the good out of circulation, the 
 bad being the cheaper tool of trade. This is a 
 consequence of the very idea of economy, and 
 that idea is no creation of law. Then there is 
 the so-called Malthusian principle that population 
 tends to increase pari passu with the means of 
 living. This is no creation of law, but is most 
 evident in the most lawless and barbarous nations. 
 Such principles are, as it were, prior to customs, 
 and do not become 'laws'. They are really limits 
 of legislation. If legislation does not keep them in 
 mind, laws will be passed that a*re inoperative, to 
 the confusion of the legislators. Laws may be 
 inoperative also when they do not regard suffi- 
 ciently the limitations of the average man due to 
 his imperfect civilization. We say in such cases 
 that the people were not ripe for such a law. We 
 do not simply say that the law went beyond pub- 
 
GOVERNMENT IS FOUNDED ON OPINION 39 
 
 lie opinion, for it may concern a matter about 
 which there is no pubUc opinion possible, say a 
 public library or post-office among savages or 
 municipal government among those that have 
 never known any representative government at all. 
 They are not hostile to it; they do not take sides 
 about it; they simply do not understand what it 
 is. To take a less extreme case, many of us 
 believe the ideal industrial system both for manu- 
 facture and agriculture to be a form of coopera- 
 tion and co-partnership. But there is probably 
 no nation however small where cooperation could 
 be established by law without the discovery that 
 the sentiments, theory, and practice of the aver- 
 age man made him unfit to understand such a 
 system, still less to work under it with as compar- 
 atively little friction as under the competitive re- 
 gime of the present day. Our friends who would 
 establish a cooperative commonwealth by a politi- 
 cal revolution need to remember that govern- 
 ment is founded on opinion in this sense also. 
 
 Laws growing out of customs are of course most 
 likely to hold their ground. The dollar was made 
 by law the currency when custom had made it so 
 de iacto, on the American Continent. The Irish 
 Land Laws grew out of Ulster Tenant Right 
 which was custom first and law afterwards; no 
 doubt the land laws have since then developed 
 into a system of full ownership of the occupier 
 to which there was no antecedent custom. The 
 long leases of the Scotch farmer which (according 
 
40 DISTURBING ELEMENTS 
 
 to Adam Smith) so benefited Scotch agriculture 
 seem to have grown out of a custom. The French 
 peasant properties existed before the Revolution 
 and before the Code which encouraged subdi- 
 vision. 
 
 From some of those instances it appears that, be- 
 sides growing out of custom, law grows beyond 
 custom. This happens; but modern legislation, 
 especially of an economical character, is passed 
 largely to prevent arbitrary infraction of a gen- 
 eral custom by individual 'bad neighbours.' We 
 need besides, to distinguish the laws of free self- 
 governing nations and the laws of those less free. 
 The less free, under mere 'virtual' representation, 
 may be content to obey the laws though not fully 
 their own. Government, where the governed do 
 not consciously share in it, may well be said to be 
 founded on a stupid opinion, and it may be pedan- 
 tic to call it democratic. Such modern nations as 
 have representative government are impatient of 
 laws that are not their own ; and, if their existing 
 laws represent customs that are ceasing to pre- 
 vail, it is a matter of time for the laws to be 
 abrogated in order that modern customs may be 
 represented by modern legislation. 
 
 Except in the lowest stages of civilization, it would 
 seem that more initiative is left to the people and 
 their rulers than is implied in a well known theory, 
 sometimes called the ''Materialistic view of his- 
 tory." According to Marx and Professor Loria the 
 economic system is the maker of the political, 
 
GOVERNMENT IS FOUNDED ON OPINION 41 
 
 and men can do little with their system of produc- 
 tion and distribution except live under it. Tt is 
 hard to believe this true even of early times. Con- 
 quest depended on generalship as well as on the 
 sinews of war. Economic causes count for more now 
 than they ever did, but even now we see them 
 thwarted, controlled, and counteracted by the 
 political and other non-economic forces of civili- 
 zation. There were long ago more customs and 
 laws of an anti-economic character than we have 
 now; but there are some still. And the deliberate 
 will of the people counts for much more. How 
 merely economic causes and motives could account 
 for Factory Acts, is hard to see. If the answer is 
 that in 'the long run' Factory Acts benefit a people 
 even economically, this may be granted; but the 
 foresight implied here is very much beyond the 
 passive receiving of the influence of economic causes. 
 If we are to include a political philosophy 
 among economic causes, the materialistic view of 
 history implies a great deal of human will and judg- 
 ment, and would hardly be materialistic at all. 
 Such a will and judgment have been exercised 
 more or less through all the ages; and they are 
 not likely to prevail less in our own day. The eco- 
 nomic system may be modified by laws, for the 
 better by good laws, for the worse by bad. Brit- 
 ain owed a great deal to Acts providing for Joint 
 Stock Companies and for Industrial and Benefit 
 Societies. Canada owes a great deal to a sound 
 system of Banks by law established, in keeping 
 
42 DISTURBING ELEMENTS 
 
 no doubt with the customs of the Scotch settlers 
 but going beyond them. 
 
 There is no need to multiply examples. The 
 economic system is doubtless modified chiefly 
 from within itself, but it can be modified a little 
 from without. We do not simply stand still and 
 see it go. Herbert Spencer, with all his philoso- 
 phical anarchism, desires the State to enforce 
 contracts and keep their conditions just. If vol- 
 untary association which he extols can do so much 
 else, it might have been expected to be equal to 
 that duty also. But two maxims drawn from 
 Henry Maine become an answer to Spencer as 
 soon as they are comprehended: ''Society de- 
 velopes from the family to the tribe and from the 
 tribe to the State." ''Society developes from status 
 to contract." The functions of the State seem 
 as rational and as necessary to civilization as the 
 functions of tribe and family. The more civi- 
 lized a people, the greater is their tendency to 
 translate indefinite custom into definite law. The 
 State is as truly founded on Opinion as is Society, 
 and a people finds in its State what it can find no- 
 where else. In a modern State the strong majority 
 protects the weak individual against the strong 
 individuals. In this sense it is true that the State 
 so far from making laws for the strongest makes 
 them for the weakest. Justice is or ought to be 
 rather the ' interest of the weak ' than of the strong. 
 
 What bearing has this on economics? The State 
 is certainly not a mere economic body. A com- 
 
GOVERNMENT IS FOUNDED ON OPINION 43 
 
 munity of bargain drivers would not vi terminorum 
 imply sheltering of the weak ; yet in civilized coun- 
 tries we are all agreed about this duty, differing 
 only in our views of the best way of doing it. 
 The State is or ought to be something higher than 
 the economic system of a country. The opinion 
 on which the economic system depends is not 
 identical with the opinion on which the State is 
 founded. It is a system within a system. We may 
 agree with the historical theorists that the body 
 economic is in a sense part and parcel of a nation's 
 whole life; but it is within everyone's experience 
 that such spheres of human activity are also in a 
 real sense a world by themselves. A man is said 
 to ''do things in business which he would never 
 do in private life." In politics the disregard of re- 
 straints is still more evident and our admiration of 
 the great machine, the State, is often equalled by 
 our surprise at the littleness of the men who con- 
 trol it. The same may sometimes be said of the 
 economic world ; a man may be honest in business 
 who is not a model of truthfulness in private life. 
 Men, also, are accused (as if it were a fault) of 
 introducing the methods of business into litera- 
 ture, politics, or religion. It is true that no one of 
 these spheres of human activity really make our 
 whole world ; we need the union of them. But there 
 has been an exaggeration of their solidarity, as 
 conceived to exist in the national life of our own 
 time. Precisely in our own times the theory of soli- 
 darity has been started and precisely in our own 
 
44 DISTURBING ELEMENTS 
 
 times has the solidarity been less marked. Most 
 of the spheres of human activity have international 
 as well as national attachments, and the opinion 
 on which they rest is that of a wider circle than 
 a nation. 
 
 The foundation still remains opinion, but it is 
 of men in general or at least of civilized men. True, 
 the economic system implies in any case more than 
 'opinion' or any assent or consent to certain 
 rules whether customs or laws; it implies also an 
 agreement in action of men, founded on their 
 common human nature or reason. The idea of 
 Economy itself implies a rational creature, pre- 
 ferring, say, a less cost to a greater, or division of 
 labour to individual self sufficiency, or money to 
 barter, etc., — to whatever nation he belongs. 
 Men have been controlled by a reason of which 
 they have only in these latter days tried to give 
 a full account. All nations have more or less 
 practised economy; but Political Economy is 
 a late study. 
 
 We can say that comparing the economic sys- 
 tem with the political we find a certain analogy, 
 something in the economic body corresponding 
 to the 'opinion' on which the political body de- 
 pends; we can say that the analogous element 
 is the honesty and trust that make so many more 
 economies possible than would be possible with- 
 out them; — also that, as other customs become laws 
 of the State, economic customs may do so, with 
 advantage, or sometimes (owing to human falli- 
 
GOVERNMENT IS FOUNDED ON OPINION 45 
 
 bility) with disadvantage. There is a residual 
 element which is not quite analogous. 
 
 We may now go on to ask whether the more 
 familiar ''public opinion" that does so much good, 
 or according to the Essay on Liberty so much 
 harm, has any such weight in the economic system. 
 Does it contain the promise or potency of all pro- 
 gress, or is it an opposing force, hindering the 
 progress which might come from the originality 
 of individuals? 
 
 The question may be also put positively: If 
 honesty or faith in one another secures order in 
 the industrial world, what secures progress there? 
 
 If the progress is to be in material wealth, the 
 answer is commercial enterprise, with originality 
 and invention. We might have a well-ordered 
 community with every quiet virtue, and with 
 liberty, equality, and fraternity, but with no move- 
 ment forward, for better production and distribu- 
 tion. What then produces the forward move- 
 ments? What makes a "dynamic" state of society, 
 to use Professor Patten's language? 
 
 Adam Smith was content to assume as an ac- 
 knowledged fact the "constant desire of every man 
 to better his own condition." The desire does 
 not exist in uncivilized man or even always in the 
 civilized. The native of Bengal who represents 
 a very old civilization does not have this desire. 
 The root of ''statics" and the root of "dynamics" 
 do not lie so near each other. Men might live as 
 industriously and parsimoniously as ants, and, like 
 
46 DISTURBING ELEMENTS 
 
 them, be no better equipped in the later generations 
 than in the earlier. The mere fact that with mod- 
 ern science men have more certainties and more 
 or at least more rational probabilities would not 
 neccessarily convert a stationary State into a pro- 
 gressive one. We may stand and consider the 
 old paths, "vias antiquas," without doing what 
 Bacon told us and making them a fresh starting 
 point. The Chinese long stood still in this manner. 
 
 We need not attempt to follow the course of a 
 progress resulting from what people call purely 
 economic motives, for (the miser's case excepted) 
 it may be doubted if there is such a thing. It 
 may be doubted if there is enterprise or invention 
 aimed at wealth for wealth's sake apart from the 
 glory and especially the power that wealth gives, 
 whether it be the power over others generally or 
 the power to serve children and friends or favourite 
 ''causes," all in fact that is our larger self. In this 
 respect the economic body is bound up with the 
 extra-economic. Our whole economic system is 
 a means, not an end in itself. But, for all that, 
 given that wealth is not (rationally) desired for its 
 own sake, the machinery of its getting may still 
 be studied by itself; and we are not freed from the 
 question — whence comes enterprise. 
 
 Enterprise may be distinguished from invention. 
 Invention is a form of enterprise, but the latter 
 suggests something more. Invention might be 
 used to keep up the comforts of a State that was 
 little more than stationary. They are however 
 
GOVERNMENT IS FOUNDED ON OPINION 47 
 
 very near. On the whole it is true now at least 
 that invention prompts enterprise, and of course 
 may be itself a form of it. 
 
 The competition which is the feature of modern 
 business prompts both. Profit, as distinguished 
 from interest, is not now secured so much by 
 'exploitation' of the workers as by real economy 
 or real economies, in all but the marginal case. 
 Competition by prompting enterprise increases 
 economy. No doubt there is still some ''exploita- 
 tion;" and there are profits due to the unearned 
 possession of natural advantages, of the nature of 
 rent. But there is, above all, the "rent of ability," 
 tho' ability is often without its rent because mis- 
 placed. Part of the economy truly described as 
 political would consist in putting men of ability in 
 their right place. They very often go there as it is ; 
 but it often happens otherwise; and, wherever 
 otherwise, there is waste or defective economy. 
 Progress pro tanto is slackened. Perhaps 'a supe- 
 rior genius,' as Ricardo said, or (as others might 
 say) an Economist King would so arrange the eco- 
 nomic functions of men that every one had his 
 best place. But it would need a divine wisdom in 
 our rulers such as we have not yet seen. 
 
 It would not perhaps be so hard to hire the 
 ability and tax the unearned increment of it, the 
 unearned difference between a clever man and a 
 fool, the cleverness being the gift of nature like the 
 fertility of a soil. But, so far from taxing clever- 
 ness, as was proposed by the wiseacre to the finance 
 
48 DISTURBING ELEMENTS 
 
 minister in Voltaire's Homme aux quarante ecus, 
 we should rather give it a bounty. How then 
 can we so reward the clever men as to ensure 
 their services? Earth cannot refuse its services 
 to us; but men are less tractable, and they need 
 to be coaxed in a very different way. The best 
 way, in view of the whole facts, seems to be the 
 old way of education; educate the clever men 
 and let them reward themselves by worldly gains. 
 'But let us not give them a double advantage, that 
 of nature and that of legal privileges; nature has 
 made it only too true that to him that hath shall 
 be given. We need not magnify the influence of 
 this ordinance of nature. 
 
 Educate public opinion, some will say, and then 
 the deterrent effects of it on originality, the effects 
 described by the Essay on Liberty, will be less. 
 
 It is improbable that any education will do this; 
 the really original man will always have to struggle 
 against the crowd. It is the penalty he pays for 
 his superiority, in industry as elsewhere. The 
 present world indeed is so imperfect that in order 
 to succeed in it at all the original man is often 
 forced to depend on his second best faculty rather 
 than his best. It is a good saying of Mill's that 
 every society can train up the next generation to 
 be at least as good as itself or a little better. 
 The phrase "a little better" may point us to a 
 phenomenon on which Mill himself laid too little 
 stress, the tendency of ordinary folk to be influ- 
 enced by strong personalities, the tendency to hero 
 
GOVERNMENT IS FOUNDED ON OPINION 49 
 
 worship. The day of masters is over, but there 
 will always be leaders. One feature of a modern 
 democratic society is its extreme respect for any 
 one only a little taller intellectually than his fellows. 
 In matters economical, the leaders are the men of 
 enterprise and invention. It is hardly true now 
 that inventions spread slowly. Invention is not 
 economically very valuable till enterprise makes it 
 so. The mere embodiment of inventions in a sale- 
 able object does not bring them into economic dy- 
 namics. A microscope or spectroscope is not an 
 economic power because expensive. Inventions 
 must be or become of direct influence on production 
 or distribution, and the economist can take no 
 account of them till they are so. But it is a feature 
 of our own age that the applications of invention 
 are quickly seen and hard to hide. The keenness of 
 competition leads the enterprising men of business 
 to look on all sides for aids from invention. The 
 applications of electricity for example have been 
 very rapid in the countries where competition is 
 keenest. As long as men remain capable of inven- 
 tions, the rate of profits will not go down to zero. 
 There is no sign of flagging at present. There are 
 few businesses where the old conservative methods 
 are still enough to maintain profit. Efficiency has 
 been increased even where the profitableness is a 
 subordinate consideration, in public works. Coin- 
 ing of money, which might have remained station- 
 ary in its methods as being sheltered from competi- 
 tion, has shared in the progress round it; and our 
 
50 DISTURBING ELEMENTS 
 
 Mints have been introducing oil furnaces, electric 
 motors, automatic weighing machines, electrolytic 
 refining, each and all of which improvements would 
 have seemed a wonder to our forefathers. The pro- 
 ducers sheltered from competition have learned 
 lessons from producers not so sheltered. If all 
 were sheltered, there would be none from whom 
 to learn. There would certainly be fewer inven- 
 tions, or applications of invention to the arts. 
 
 Besides inventions that may, if applied, facilitate 
 production, or are even directly made (like the 
 power loom or cotton-gin or sewing machine) to 
 that very end, there are inventions that play an 
 even more obvious part in modifying the economic 
 system — the inventions that facilitate exchanges. 
 Such are the Exchequer bills (of Montague), 
 Treasury bills (of Bagehot), money itself, banks 
 and clearing houses. Finally there are inventions 
 in distribution, companies and cooperative societies 
 being examples. 
 
 We feel the distinction between the possibly 
 economical and the necessarily economical in 
 comparing inventions of production with inventions 
 of exchange, more particularly. Money as the 
 general tool of trade has more close connection with 
 the economical system than a steam engine. 
 The waggon way on the earth is more of a mechan- 
 ical invention and less necessarily an economical 
 one than the waggon way through the air of which 
 Adam Smith speaks. All the modern forms of 
 credit described in such a book as Hartley Withers' 
 
GOVERNMENT IS FOUNDED ON OPINION 51 
 
 Meaning of Money are almost directly economical. 
 They are also (be it observed) almost directly in- 
 ternational . They depend for their chief and most 
 living applications on the Great Intercourse of 
 nations. Of course the others (inventions of pro- 
 duction and inventions of distribution) are possibly 
 so too, and those of production at least easily 
 become so. It is not the' opinion' of a nation or 
 even of many nations that puts them in force but 
 their economy, as discerned by those actually en- 
 gaged in business, discerned far more easily than 
 the wisdom of a political expedient is discerned 
 by the people or the statesmen. 
 
 What part is played by 'pubUc opinion,' in 
 distinction from the 'opinion' of Hume's dictum? 
 
 As the form of government is based on opinion 
 in the sense of the general will, the governing from 
 day to day depends on public opinion, a sum 
 of particular wills, and not the whole but a majority 
 of them. 
 
 'Public opinion' is a familiar idea, as ill defined 
 as most of our familiar ideas like 'matters of com- 
 mon knowledge,' 'what every schoolboy knows.' 
 It is not latent; yet it is not embodied in cus- 
 toms and laws. It is supposed to utter itself 
 and it has many voices, of which the newspaper 
 is the loudest. It is not always the loudest voice 
 that speaks for the largest number. Where else 
 is it expressed? Sometimes at the polls, in the 
 churches, at public meetings, in subscription 
 lists, in the sale of books. It is mainly national 
 
52 DISTURBING ELEMENTS 
 
 and chauvinistic rather than patriotic, and it is 
 very hard for a foreigner to understand. It is 
 sometimes voluble in private conversation, say 
 against Trusts, but timid in 'public' action. A 
 plebiscite is often urged as the best way of ascer- 
 taining it when legislation fears to depend on ordi- 
 nary representative methods. We are told to as- 
 certain it in this way before adopting Prohibition 
 of the sale of strong drinks. Politically it is the 
 strong feeling of the great mass of the people, no t 
 necessarily arrived at articulate expression but 
 rather failing in clearness than in energy. 
 
 Now even the joint feeling oi the great body of the 
 the people may be higher than the feeling of the 
 separate members ; there is a truth in the idea of a 
 collective wisdom; the view of Aristotle may be 
 well set against Carlyle's. It is a force to be 
 recognized, even if we cannot see in it the promise 
 and potency of all national development. Even 
 the heroes can only have their way if they get 
 'public opinion' on their side. But it is hardly 
 a vox Dei any more than it is the animal cry 
 of a many headed monster or the artful voice of 
 a ''great sophist." It is the voice of one who has 
 as much to learn as to teach, whether in morality 
 or in enlightenment. The statesman who uses 
 it, if he is of the highest rank, always goes a 
 little beyond it ; and if he and his like are followed 
 we have a progress that has some guidance in it. 
 It is not Anarchism. Mill saw little but evil in it 
 because he was impatient at the slowness of the 
 
GOVERNMENT IS FOUNDED ON OPINION 53 
 
 guidance. But a nation composed of such origi- 
 nal persons as he describes for us in the Essay 
 on Liberty would not have been guided at all; and 
 it is doubtful if we can dispense with leaders in 
 any period within the range of practical politics. 
 The negative or repressive or even oppressive 
 action of public opinion is certainly one salient 
 feature; but the other is there, and in civilized 
 countries it is a tolerably sure ground for hope in 
 the future. 
 
 How apply all this to the economic system? 
 
 The answer may be as follows: There are 
 parts of the economic system hardly now to be 
 influenced by public opinion because not absent 
 without disorder and disappointment and a nega- 
 tion of all economy as we in civilized times con- 
 ceive it. They might be rudely disturbed by 
 superstition and savagery. Such are the princi- 
 ples of exchange and division of labour, value 
 currency, and credit. To that extent economic 
 theory is also superior, or if you like anterior, 
 to public opinion. But economic policy depends 
 as we all know very largely on public opinion; 
 and, as theorists are human, and even man is 
 influenced by his atmosphere, economic theory 
 is influenced by it too, as soon as the first ele- 
 mentary principles are passed and the question 
 is of their further apphcations. Thus, no econo- 
 mist would repudiate the principle of division 
 of labor, and economists would hardly be biassed 
 in their general theory of value, at least in its 
 
54 DISTURBING ELEMENTS 
 
 simplest form. But when free trade is alleged to 
 be a development of division of labor there may- 
 be a bias in our attitude, hostile or favourable, 
 towards the allegation; and, when profits are 
 described as simply the robbery of the workman, 
 as unpaid labor, or confiscated product of labor, 
 the analysis (it may be suspected) has been tinged 
 with the passion of the social reformer. The 
 pages of an economic writing may have some- 
 times too close a likeness to a speech at a public 
 meeting. We have this advantage that our 
 first principles are far more a subject of gen- 
 eral agreement and popular acceptance than say 
 the first principles of any general Social Philoso- 
 phy or even of Education. So much is this so 
 that people complain of the ''truisms" and ''com- 
 monplaces" filling economic text books. They 
 are there as the necessary foundations; all the rest 
 is built on them; but people do not accept the 
 building with the same readiness, and our task is 
 largely to show how such first principles lead to our 
 further conclusions. In politics there is less of 
 such deduction possible. The general basis of a 
 system of representative government is doubtless 
 the same for all nations capable of it ; but a deduc- 
 tive politics is of far narrower scope than a deduc- 
 tive economics. This is an advantage of which 
 public opinion cannot entirely deprive us. 
 
 We need all the advantages we can get, because, 
 even where our theory springs from a strict an- 
 alysis of practice, we may find apparently the 
 
GOVERNMENT IS FOUNDED ON OPINION 55 
 
 whole nation incredulous of it as contradicting 
 practice. People still insist in believing the weather 
 influenced by the phases of the moon, though 
 scientific men are agreed on the contrary. Where 
 economic theory seems to point one way and 
 'public opinion' decides for an economic policy 
 pointing the contrary way, are we to say with 
 Edmund Burke that we 'do not know the method 
 of drawing up an indictment against a whole 
 people?' If we obeyed the splendid appeal, we 
 should be giving up our effort to make economics 
 scientific. The dictum is, in this region if not 
 elsewhere, of very doubtful value. Collective 
 wisdom is a reality, but it does not mean infalli- 
 bility. If a country parish may err, so may a 
 county, and if a county so may a country. The 
 larger the numbers believing in any view the more 
 probability there may be that there is a good 
 reason to account for the holding of the view. 
 But the popular statement of a widely popular 
 view is as likely to be inexact as the view itself 
 is likely to contain some truth. It will be right 
 in substance and almost certainly wrong in form. 
 The formulas in which it is stated are almost cer- 
 tainly such as are adapted to the easy comprehen- 
 sion of the less intelligent citizens; the statement 
 is in terms of the '^ marginal intellect." The econ- 
 omist is bound to state the whole truth so far as 
 he can ; and that can seldom be done in one proposi- 
 tion or two but only in at least three, the two prem- 
 ises and the conclusion of a syllogism, or the same 
 
56 DISTURBING ELEMENTS 
 
 multiplied many times. It is not our ambition 
 to end our economic inquiries soon and with an 
 epigram, but to end them with the discovery of 
 the object of our search, whether that be soon or 
 late. It is to be feared that public opinion puts 
 a premium on premature discoveries by its want 
 of sympathy with long investigations, and its 
 fondness for watchwords and short formulas. 
 But all economists should work for more than the 
 remuneration of the marginal intellect. Political 
 Economy is indeed, like Politics, founded on opin- 
 ion; but it is not founded or dependent on 'public 
 opinion. ' 
 
 The "materialistic" view of history, turning 
 economics into a whole Political Philosophy, might 
 be expected to find the vox Dei in every public 
 opinion, or else it too must recognize that an edu- 
 cation of it is possible, i.e., that it is in some de- 
 gree modifiable by the will of man. The holders 
 of this view seem to differ little from others in their 
 attitude to public opinion. They are content to 
 go one step farther than Adam Smith. As dis- 
 tinguished from Quesnay and other Physiocrats, 
 Adam Smith believed that the most important 
 economic principles were actually realized in spite 
 of political hindrances. He recognized also that 
 the political system had a life of its own and was 
 not simply as it were a free translation from 
 economics. He even spoke sometimes as if the 
 two systems, economic and political, ran best 
 separately. Yet he could not even foresee the 
 
GOVERNMENT IS FOUNDED ON OPINION 57 
 
 amount of successful independence secured in 
 his own country some fifty years after his death. 
 There was not to his mind any omnipotence in 
 economic tendencies beyond the few elementary 
 ones. Their benefit was extended to ''the public" 
 without any thought of it on the part of the 
 public ; it did not proceed from collective wisdom ; 
 and on the contrary 'collective wisdom' often 
 lessened the benefit by interference. He wrote his 
 book to persuade collective wisdom to stand aside. 
 It stands aside in many cases now where it inter- 
 fered then; but especially for the best economic 
 policy in distribution we should want it to be more 
 than neutral now. If the economist should not 
 be guided by public opinion, he should try to 
 guide it, recognizing that error is possible which 
 he must help to remove. Belief in the progress 
 of humanity and ' evolution of society' must not 
 involve the giving up of individual effort to im- 
 prove society; and one of the best fields for such 
 effort is the enlightenment of public opinion con- 
 cerning the limits, method, and results of econo- 
 mic study. It is not difficult to find 'maxims' and 
 'watch-words' in use which show the darkness now 
 prevailing in this regard. We are told for exam- 
 ple that we need not study any more because our 
 conclusions hold in theory but not in practice. The 
 phrase thus used only shows, like many others, 
 the need of more light; but there is perhaps 
 none in which public opinion is more nearly unan- 
 imous, — against us. 
 
Lecture III 
 ''IT MAY BE SO IN THEORY" 
 
 It has already been remarked that public opinion 
 is suspicious of economic theory as contradicting 
 practice. In the early years of the 18th century in 
 England public opinion was shocked by the "Fable 
 of the Bees" in which Bernard Mandeville pro- 
 fessed to show that private vices were public 
 benefits. Public opinion was shocked; and yet 
 Mandeville did no more than array in an appear- 
 ance of logic whole groups of fallacies that were 
 popular then and are popular now. They included 
 the fallacies attacked so wittily by Bastiat in his 
 Sophismes Economiques, especially under the head- 
 ing "Things that are seen and things that are not 
 seen." How many have said in their hearts after 
 reading Bastiat's chapters on the subject: "All 
 Jhis is very well in theory, but in practice I find 
 every day that to break windows is good for trade 
 and the invention of machines is bad for it?" 
 Their name is legion. 
 
 This is the naive scepticism of the man in the 
 street; but there is a scepticism of men in the study 
 which we cannot put aside by recommending a 
 course of Bastiat. There are certain theorists 
 
IT MAY BE SO IN THEORY 59 
 
 who tell US that economic theories founded on ab- 
 stractions cannot be true theories, and that the 
 true must be drawn from practice in the sense of 
 copying or reflecting it as it is. There is a cer- 
 tain analogy here to Pragmatism in Philosophy, 
 now so confidently taught in many quarters. To 
 Pragmatism that is the true theory which serves 
 us in practice and verifies the practice. Its motto 
 is 'Prove by practice' or even in more homely 
 terms 'The proof of the pudding is in the eating 
 of it;' — all our postulates are to be working pos- 
 tulates. This is likely to be a popular philosophy. 
 But there are limits even to the popular disbelief 
 in abstractions, for common logic above all things 
 is founded on professedly general principles, and 
 yet every one in 'practice' trusts to it. In 
 Arithmetic, and broadly all Mathematics, there is 
 a testing of practice by principles and not vice 
 versa. Art is allowed a liberty of selection 
 even in Impressionism. It is mainly when the 
 abstraction relates to action that the doubt comes 
 up. Yet an Ethics that simply in an uncritical 
 way reflected popular conduct would hardly yield 
 us a conception of Duty; and the chief part of any 
 Religion is the controlling idea of a highest object 
 of worship or regard, which is in every case ideal. 
 The rule ''prove by practice" or "verify by 
 experience" needs careful interpretation. Like 
 other ma\ims, it turns out to be false in some cases 
 true in others, and therefore likely to be no better 
 guide in Economics than "Liberty, Equality, 
 
60 DISTURBING ELEMENTS 
 
 Fraternitj\" We might quite fairly reply to it by 
 Hesiod's old proverb "The half is more than the 
 whole" or the modern adage 'The onlooker sees 
 more of the game than the players.' 
 
 The notion at the bottom of sdch an exclama- 
 tion as " All very well in theory" is of a piece with 
 the distinction of men of practice and men of 
 theory, and with the view that the practical men 
 approaching (though seldom or never reaching) 
 ''rule of thumb" are superior to the men of theory 
 who (it is said) form preconceived views of a case 
 before they deal with it. The last are like jury- 
 men who have made up their minds before they 
 enter the box to hear the evidence. We should 
 certainly reject such jurymen, without a first or 
 second admonition. But they are hardly in ques- 
 tion. They would not be "onlookers" but would 
 have their eyes away in the clouds. Are the 
 onlookers to have no general principles? If Kep- 
 ler had held none, he would not have discovered 
 the orbit of the planets. He had a preconception, 
 though he was a genuine onlooker. Aristotle is 
 sometimes opposed to Plato as Realist to Idealist; 
 but, though Aristotle is in close touch with prac- 
 tice, he never moves a step without general princi- 
 ples. The deductive element enters into all pro- 
 gressive science ; it is only wanting in Natural His- 
 tory, and this is a register of facts without theory. 
 Deduction is specially necessary where (as in 
 Astronomy and largely in Political Philosophy 
 and all its branches) experiment is impossible. 
 
IT MAY BE SO IN THEORY 61 
 
 In Political Economy we are making an endeav- 
 our after a Science. Is our endeavour fruitless? 
 Must we be content with a register of facts? 
 
 The right answer seems to be that the motives 
 and actions of men in regard to economy in society 
 undoubtedly yield general principles ; they present 
 certain broad uniformities that have a greater 
 persistence and regularity than exist in any other 
 group of social facts. This is proved by practice 
 in the sense of being inferred from the known char- 
 acter of the great masses of civilized men. The on- 
 looker sees these uniformities; to be an economist, 
 he takes permission to look at them (in the first 
 place) separately as if they were the only causes at 
 work. This detachment of them is his offence in 
 the eyes of the 'practical' men. It is the method 
 described as essential to economic investigation by 
 J. S. Mill, Senior, Cairnes, Bagehot, and Keynes, 
 the last summing up the whole case sanely and 
 wisely. It is the method dictated (to use a 
 figure) by the facts of human nature. A mere 
 record of economic facts for generation after gen- 
 eration, century after century, is a natural history 
 of them, leaving us with the barren result : What 
 is, is. What was, was. As Bagehot says, the 
 'Whole Case method' presenting all facts means 
 a bewildering accumulation. We shall have no 
 light till we are allowed to detach and select. 
 
 Now detachment and selection mean abstrac- 
 tion. There may be unwise selection and unwise 
 treatment of what is selected. But the right to 
 
62 DISTURBING ELEMENTS 
 
 select must be conceded; and it involves the right 
 to abstract and, on abstraction, generalize. The 
 facts do not detach themselves, and he who de- 
 taches and selects is no longer the merely prac- 
 tical man but has begun to be a man of science. 
 It is true that the theory which adds to practice 
 is a theory that practice makes, or else we live in 
 cloudland. The proper contrast however is not 
 between theory and no theory but between wrong 
 and right theory. The thesis of ''historical real- 
 ists" is itself a theory. 
 
 Ricardo is often taken as the typical abstract 
 theorist among economists. He allows the accus- 
 ation himself; he 'really believes' he is too theo- 
 retical; but, he adds, his friend Malthus is " too 
 practical" looking at temporary effects while 
 Ricardo looked at permanent ones. Ricardo's 
 aim was "to elucidate principles" and therefore 
 he "imagined strong cases." In the popular 
 conception, too, Malthus was the practical man. 
 Remember out of what antecedents those two men 
 were made. Ricardo had passed a lifetime in bus- 
 iness before he began to theorize, that is to reflect, 
 about it, and Malthus who began his economic 
 writing with (by his own admission) too abstract 
 a theory had had no further acquaintance with 
 business than the fellow of a college and curate 
 of a country parish could acquire from somewhat 
 slender opportunities . in that regard. Prof. Hol- 
 lander once described a theory of wages as "meta- 
 physical" because it relied on extended appli- 
 
IT MAY BE SO IN THEORY 63 
 
 cations of the theory of final utility. In that sense 
 Ricardo was metaphysical ; he pushed abstract the- 
 ories of value, cost, and currency, to a point where 
 his more academical friend showed him he was 
 out of touch with actual experience. His remedy, 
 however, was not to give up theory but to make 
 a theory that embraced more of the facts, to pull 
 down his barns and build greater, and be more 
 concrete. 
 
 On certain strata of economic theory, both of 
 those economists agreed. The first principles on 
 which Adam Smith proceeds, duly followed by his 
 successors, are abstracted from human nature and 
 are part of experience. The 'constant uninter- 
 rupted desire of every man' (in civilized society) 
 to better his own condition is a fact of general 
 observation; it is only too abstract if there is a 
 denial of conflicting motives and an assertion of 
 the omnipotence of this one. Wide influence and 
 high probability are quite a good enough founda- 
 tion for economics. This principle of commercial 
 ambition seems wider and more uniform in its 
 sweep than any other single principle in civilized 
 societies, say military, social, parliamentary am- 
 bition. Provision for a family and desire of mar- 
 riage have almost similar sweep, along similar 
 ground,and are accordingly taken up into econo- 
 mic science alongside of commercial ambition. 
 The two together cover a great part of human life. 
 They are without rivals in extent of influence. 
 They bear the test of the '4aw of averages" and 
 
64 DISTURBING ELEMENTS 
 
 form the basis of predictions, of high probability. 
 No other motives are (in a better sense than the 
 old) ''ruling motives" of whole societies. 
 
 If the practical man is one who refuses all gen- 
 eralizations even of this character, he is one who 
 refuses all illumination but that of the moment; 
 he is intellectually what the Cyrenaic philosopher 
 was ethically, the one living by the light of the 
 moment as the other on the feeling of the moment. 
 If it is answered: ''No one does this" then the 
 practical man is granted to be only a kind of 
 theoretical man. We all know that it is precisely 
 those immersed in business that are liable to form 
 the most extravagant theories of business as a 
 whole, and not only more extravagant but less 
 concrete than those of the modern economist, in 
 the true sense of concrete. 
 
 It is not desirable to settle the dispute by the 
 familiar compromise and say both are right, the 
 practical man and the man of theory. The truth 
 does not always lie in a compromise. The practi- 
 cal man thinks he is right because in the end we 
 need to make our theories concrete if we can. 
 But he does not readily see that the endeavour after 
 science is an endeavour after theories, general 
 principles, on the strength of which posterity may 
 be expected to make more progress than we have 
 done. If the theories are true, they are in the 
 facts, and thereby (if you like) the man of theory 
 and the man of practice are proved to be at one. 
 But the contention that we should form no theo- 
 
IT MAY BE SO IN THEORY 65 
 
 ries is not to be conceded under any pretence. The 
 practical man himself abandons it in his domestic 
 economy; he has practical rules, and all rules 
 (even of thumb) have a certain generality. He is 
 constantly telling us that ''he makes it a rule" 
 to do this or that. In so far as his ''rule" is not 
 arbitrary, it is founded on abstractions, drawn from 
 life, on the assumption that the course of life 
 will be influenced throughout by much the same 
 causes as hitherto, acting with much the same 
 energy, and that other men are very much like 
 himself and what he is likely to do they are likely 
 to do. As a rule he is sufficiently right for his 
 limited purposes. Most men succeed in making 
 a living and keeping their house together and 
 providing for the future. 
 
 What this practical man does for himself when 
 he makes his rules, the economist tries to do with 
 a wider purpose, for the great body of "practical 
 men" including his own critics. He may have 
 greater difficulties ; but his problem does not seem 
 irrational. 
 
 Sometimes the antipathy to general theories in 
 economics rests on the notion that when you re- 
 duce the present system to general principles you 
 are giving to it a sort of approval and vindication. 
 You are certainly showing it to be rational enough 
 to hold itself together. But it seems clearly to 
 appear that the sufferings and drawbacks of large 
 masses of individuals (to put the strongest case) 
 are independent of the principles themselves and 
 
66 DISTURBING ELEMENTS 
 
 are part of the polity and policy of nations rather 
 than of their economy; and in vindicating the 
 principles you are not vindicating the violence. 
 
 We can point in our own time to economists who 
 agree in accepting the name and who belong to the 
 most widely differing political classes, Conserva- 
 tives, Democrats, Socialists, Anarchists. This 
 agreement shows that the method of general prin- 
 ciples common to them all is in intention a really 
 scientific one, not a contrivance of the special 
 pleader. It is sometimes said that the sceptic 
 makes the best historian. It may be doubted if 
 the sceptic ever finds his way to the depths of 
 human nature. But what is meant by the dic- 
 tum is sound. It is true for economics as well as 
 history. In economics, too, the best student 
 abstracts from his creed of social reform when he is 
 working out his economic problems; he must 
 study them without passion or prejudice, sine 
 ira et studio, let us hope with better success than 
 the immortal author of that phrase. 
 
 The late Henry Sidgwick showed as in his own 
 person that to be a good economist a man did 
 well to be more than an economist. This is not 
 inconsistent with belief in the virtue of unbiassed 
 abstraction, for we only begin with the abstraction, 
 and after we have formulated our general principles 
 we have to see whether, or how far, they are af- 
 fected in ordinary life by quite other principles, 
 whether for example commercial ambition is 
 crossed by other motives, extra-economic or anti- 
 
IT MAY BE SO IN THEORY 67 
 
 economic. Some of the most elementary (say of 
 value or the currency) are hardly modified at all. 
 Many others are gravely modified. If we have no 
 familiarity with the non-economic principles, we 
 cannot judge fairly of the effect they are likely 
 to produce. Some of us are skilful in dealing with 
 the economic principles, and less skilful in track- 
 ing out their modifications in concrete human life. 
 
 In any case our task is a twofold task; and 
 to make it only onefold is either to have the con- 
 crete unillumined by principles or the principles 
 un-fructified by application. 'Right in theory, 
 wrong in practice' would at the worst, mean that 
 the principles are destroyed when applied and were 
 better not made; at best it would mean that they 
 look exceedingly well on paper and it were a pity 
 to spoil them by application. If, however, they 
 are right (or correct) as theories, they represent 
 an actual element in the facts. They point to one 
 ascertained body of true causes at work in human 
 societies. It may be a harder problem to find the 
 others. We need not despair of the microcosm of 
 human society, in this regard, as we do not de- 
 spair of the greater world. What we reduce to 
 principles is a very small part of the whole in both 
 cases, but not any smaller in the human microcosm 
 than in the material macrocosm, and at least as 
 much within our ken. 
 
 What is the relation of the various other influ- 
 ences and elements in human society to the eco- 
 nomical element? They all touch it even if they 
 
68 DISTURBING ELEMENTS 
 
 do not (as in the Materialistic view of history) 
 all spring from it. Are they as much a condition 
 of it as it is of them? 
 
 It was Comte's view that the elements of Society 
 were so commingled that they could not be stud- 
 ied separately. Therefore he rejected Political 
 Economy and Psychology as separate studies. 
 But, if you refuse the separate study, you cannot 
 see the wood for the trees. We may admit the 
 closeness of the social bonds, and admit that in 
 dealing with them we find the categories not only 
 of Physics ('dynamics' and ^statics') but even of 
 Biology not quite adequate. The organization of 
 bees and ants is more easily reduced to rule than 
 the organization of human society. The kind of 
 development shown by human history, the kind 
 of progress there shown, cannot be paralleled in 
 any natural history of animals. Yet human 
 thought and will are not simply varium et mu- 
 tahile semper; the resulting actions show uniform- 
 ities not planned out but not irrational, tenden- 
 cies not predictable a priori but discoverable and 
 recognizable when the facts are scrutinized. It 
 is surely well for us to subject the most uniform of 
 the uniformities to a closer scrutiny than the rest 
 and be thankful we have any such to scrutinize. 
 Economic causes may not be the key of all human 
 progress ; but they may help us to find the key. 
 We may well try, then, to reduce them to order 
 first. 
 
 It was said in relation to Ricardo, and Malthus, 
 
IT MAY BE SO IN THEORY 69 
 
 that abstract principles might be too abstract to 
 be in touch with practical life and might need to 
 be made more concrete. Interpret the 'practical 
 man's ' protest in this sense, and it is not deserv- 
 ing of complete rejection. To make this conces- 
 sion does not destroy the contrast between un- 
 generalized and generalized practice, but it lessens 
 the distance between the disputants and represents 
 the best we can offer in the way of an eirenicon. 
 To make a principle more practical is sometimes 
 (paradoxically) to make it wider, — to make it 
 embrace more cases in concrete human life. 
 When Ricardo spoke of all value as depending 
 ing on cost he explained that he was knowingly 
 neglecting cases where it had nothing to do with 
 cost. His friend's generalization, limitation of 
 supply, embraced all the cases and was more 
 ''practical." Ricardo's principle embraced fewer 
 cases, even if they were the more complicated 
 ones, and the more characteristic of the practical 
 life he knew best. This was perhaps his infirmity 
 rather than the tendency to be 'too abstract.' 
 His theory of value applied to articles freely 
 produced; and Marx has applied it so with much 
 less 'regard than Ricardo for any other cases of 
 value. But the other cases remain with us. There 
 are things such as gold, to say nothing of land 
 itself, where the cost does not play the controlling 
 part in the extension or limitation of supply; 
 and there are no signs of the disappearance 
 of such cases from our civilization; they will 
 
70 DISTURBING ELEMENTS 
 
 stand alongside the others while the moon en- 
 dureth. We must at least therefore begin with 
 the wider notion and it will be the more widely 
 true for being more '' abstract." What then is 
 the more concrete? We may answer that, of two 
 general principles the more abstract has more 
 individuals under it but fewer of their qualities; 
 the more concrete has the converse. It is as in the 
 logical distinction of generic and specific. To say 
 of things that they '^are" is to use the widest 
 abstraction and specify the fewest qualities. The 
 more qualities are taken up into a generalization, 
 the more concrete it is. But, if a generalization 
 embraces the greatest number of qualities and the 
 fewest individuals, its concreteness will not save 
 it from being useless. In regard to human beings, 
 especially, we desire to know first of all the quali- 
 ties in which they agree rather than differ, — 
 including those in which they agree to differ, the 
 foundation of exchanges. 
 
 If the propounder of the wider generalization 
 is to be the "more abstract thinker," it appears 
 that Malthus is so, and not Ricardo, in their re- 
 spective theories of value. It appears also that 
 popular usage, not condemning generality, visits 
 with opprobrium the abstraction necessary to the 
 making of it. 
 
 Observe what Ricardo says about himself, as 
 already quoted. He means to elucidate prin- 
 ciples and therefore he imagines strong cases. We 
 infer that the contrast between him and his friend 
 
IT MAY BE SO IN THEORY 71 
 
 was not in their acceptance or rejection of general 
 principles but in their habits of mind. Malthus 
 was careful and troubled about the applications, 
 and (according to his friend) was in too great haste 
 to see how much or little the principles were modi- 
 j&ed by the other facts of life and business. It 
 seems as if Ricardo was content to leave to others 
 the question of modification. Though he was a 
 public man, he was more at home in the study than 
 in public meetings and committees. He fought 
 against this very virtuous failing; he spoke in 
 Parliament, sat on Committees, subscribed to 
 Robert Owen's schemes and made himself useful 
 in promoting Savings Banks. This effort gives us 
 greater respect for his character. But except in his 
 view of machinery it led to little change in his 
 theorizing and it was probably better so. There 
 are few who are capable of such theorizing, and 
 many who can 'serve tables.' For the building 
 up of a complete Political Economy we need 
 both kinds of men. They do their work best when 
 they divide the labour, taking care to learn results 
 from each other. 
 
 In the days of Ricardo, and Malthus there was 
 a great deal less of this cooperation than there is 
 now, largely because there were fewer ''hod-men" 
 then for the economist to use, systematic statis- 
 tics being a phenomenon of later origin. The re- 
 sult was that the economist was always more or 
 less closely joined to his abstractions. James 
 Mill is counted the most abstract of all, and 
 
72 DISTURBING ELEMENTS 
 
 MacCulloch next unto him, both of them disciples 
 of Ricardo. But even Malthus has the character- 
 istic. His name is associated not only with the 
 theory of Population but with that of Rent and 
 (indirectly) of Wages. In what degree were those 
 unduly abstract? 
 
 The first as you know was the statement of 
 a tendency of human nature limited by condi- 
 tions of physical nature and also by conditions of 
 human nature not apart from human will. In this 
 respect it was one of the most practical of eco- 
 nomic theories; its conditions were realized tho' in 
 widely different degrees, among barbarous peoples 
 and civilized alike. It was not a generalization 
 confined, in Bagehot's fashion, to modern com- 
 mercial peoples; indeed many tell us it has no 
 place with them. In this respect it is a wider 
 generalization than Adam Smith's of commercial 
 ambition. As fully stated, checks and all, it not 
 only comprehends more of the units but also more 
 of their qualities. It is in this sense more con- 
 crete. It need not be held that the statement as 
 Malthus gave it was quite exhaustive. The notion 
 of voluntary restraint, for example, must take the 
 place of moral restraint ; and there are cases where 
 physical and physiological causes are at work 
 that escape his formula. But, broadly speaking, 
 it has been a successful theory. 
 
 The fortunes of the theory of Rent have been 
 different. The theory itself was not at first of 
 the same comprehensive character. It was sug- 
 
IT MAY BE SO IN THEOEY 73 
 
 gested to others besides Malthus and Ricardo by 
 the conditions of farming in Scotland and Eng- 
 land at the end of the 18th and beginning of the 
 19th century; and the formula dealt with the land 
 last taken into cultivation, at a time when the 
 variations of corn prices made lands go out of cul- 
 tivation and come back into it in a startling way 
 that impressed all observers. The land on the 
 margin that was just barely profitable was taken 
 as the measure of the profitableness of all those 
 above; what they could yield as rent was the dif- 
 ference between their profitableness and the pro- 
 fitableness of this lowest. Professor Hollander 
 shows us how the theorem was gradually cleared 
 of its first narrowness. In intensive cultivation 
 the last dose of capital, profitably applied at all, was 
 the measure of the profitableness of the other do- 
 ses. It is of course a question not merely of prices 
 but of fertilities, and not merely of fertilities and 
 agricultural purposes, but of net advantages for 
 all purposes. The formula holds even where there 
 is no private ownership, no landlord standing 
 over a tenant. But at first it appeared as a con- 
 sequence of the growth of population pushing 
 forward the extensive cultivation of inferior lands 
 or the intensive cultivation, at greater cost, of the 
 superior lands. It was prejudiced and encumbered 
 by a quite unnecessary appearance of history and 
 by superfluous positive prediction. In the main 
 (as we often hear in our time, from nationalizers 
 of the land) it is a theory that tells against land- 
 
74 DISTURBING ELEMENTS 
 
 lords, whereas the theory of the wages fund told 
 in favour of the employers. The economic impor- 
 tance of the theory lies partly in its essential 
 identity with the theory of final utihty. Rent is 
 measured by final fertility; and in the more gen- 
 eral theory, too, we measure from a lowest item 
 upwards. Prof. Hollander reminds us that we may 
 reach the agricultural margin of rent without 
 reaching the margin of profitableness depending 
 on other uses than agriculture; we may not have 
 reached the really lowest item from which to 
 measure the others. This consideration simply 
 shifts the application of the differential theory 
 from agricultural uses to profitable uses in gen- 
 eral. The theory becomes in this way broader and 
 really more effectively 'practical;' it covers more 
 of the actual cases of ordinary experience. The 
 limits of its usefulness are the limits of the useful- 
 ness of the theory of final utility in general. The 
 marginal item or the 'final' utility or lowest 
 use is often regarded as being what it is not. It 
 is not a cause but a measure; and 'determining' 
 means only defining. Until we go on to the 
 cause, we have a sense of incompleteness, as if we 
 had only half of the case before us. 
 
 While in this way we can regard the theory of 
 Rent as only an instance of a broader principle, it 
 is also true that the other instances of the broader 
 principle may be described as analogous to 
 Rent, wherever the positing of the lowest item 
 results in a graduated series of items rising 
 
IT MAY BE SO IN THEORY 75 
 
 above it. Logically or pedagogieally it may be 
 useful to speak of a rent of ability or a consumer's 
 rent. By long usage, however, rent has become 
 associated with facts given by nature and unalter- 
 able by human will, and we should be careful to 
 relegate as few phenomena as possible to this in- 
 exorable fate. It would be ''wrong in practice" 
 to do otherwise. As it is, the practical man might 
 find advantage in keeping this economic notion 
 of rent in his mind when dealing with many aspects 
 even of modern city life. It is essentially as true 
 now as in the days of the Classical Economists; 
 and many seem to find it easier to grasp than the 
 wider notion of final utility, a perfectly true 
 abstraction but more abstract and therefore more 
 troublesome to the man in the street. 
 
 The fortunes of the theory of the Wages Fund 
 have been very different. It is the crowning in- 
 stance of an untrue abstraction; but it was not 
 from being an abstraction that it was untrue. It 
 was ''wrong in practice" just because it was not 
 "very well in theory"; and it has probably done 
 more injury to the reputation of economic theory 
 than any other generalization ever received into 
 economic textbooks and then expunged from them. 
 
 The theory of Rent began by a deduction from 
 the Malthusian principle ; the theory of the Wages 
 Fund makes appeal to that principle also. It runs 
 as follows: Average wages depend on the pro- 
 portion between the total numbers of the labour- 
 ing population and the total capital devoted to the 
 
76 DISTURBING ELEMENTS 
 
 employment of labour. This is a fairer statement 
 than the abbreviation which runs so: Wages 
 depend on the ratio of population to capital, — for it 
 is not all the population that is taken, nor all the 
 capital. But, while every one would doubt the 
 short statement, most of us would only believe 
 the long one as we believe an arithmetical truism. 
 Divide the total wages paid to the wages-earners 
 by the number of the wages-earners, and you get 
 a figure that contains no more than you knew im- 
 plicitly already. There is a further interpreta- 
 tion however; and the interpretation is part of 
 the theorem; the total of the capital that pays 
 wages is a fund that at any given time could not 
 be more or less than the figure found. It is a sum 
 not modifiable by the parties concerned; and there- 
 fore wages can only be raised by the reduction of 
 the population or the increase of the capital. That 
 part of the total capital devoted to wages remains 
 the same proportion of the whole; if it is to be 
 increased the whole must be increased first. Hu- 
 man will does not enter, appearances notwith- 
 standing. It has entered, in the increase or de- 
 crease of population and increase or decrease of 
 capital, but it does not enter in the determination 
 of wages at any given time; that comes not from 
 the will of man, but from the ratio between two 
 quantities, and the ratio is a fixed datum. 
 
 Put in this way the theory is to us unbelievable, 
 and we can hardly conceive how it lived forty 
 years. The rigidity, the fixed character of the 
 
IT MAY BE SO IN THEORY 77 
 
 fund, is the chief stumbling block. But, so far 
 as we can ever be sure of a bias, we may see here 
 the bias of a desire to be very practical indeed. 
 Without the rigidity the theory was of no de- 
 cisive use in the dispute between labour and cap- 
 ital. We must not say of no use at all to any 
 body. The re- statement of Cairnes is useful 
 to an economist. Since Mill gave up the theory, 
 after stating it in more absolute terms than its 
 authors, economists have been gathering up the 
 fragments that remain, that nothing be lost. 
 Even Professor Taussig and Professor Bohm 
 Bawerk may be seen gleaning in that field. But 
 the old unrevised theory of a Wages Fund was one 
 of the rare instances where the practical men had 
 a good case against the theorists. So far as the 
 working classes found articulate voice at that date, 
 they protested: ''If Political Economy is against 
 us, so much the worse for Political Economy." 
 The employing class were the articulate practical 
 men, and they naturally thought that a Daniel 
 had come to judgment, that the economists had 
 found a really practical principle at last, and at 
 last were talking "sense, absolute sense." 
 
 The principle was indeed too hastily practical. 
 The major as distinguished from the minor eco- 
 nomists had been content even in those forty 
 years with a more general theory of the relation of 
 wages to capital. They believed in a dependence 
 but within limits hard to define. Wages is a par- 
 ticularly concrete problem. A theory of it could 
 
78 DISTUKBING ELEMENTS 
 
 scarcely be formulated to advantage till labour 
 had shown all that was in it by becoming organized 
 and beginning collective bargaining. But the 
 Wages Fund theory was brought forward in la- 
 bour's most chaotic days. Even now, when the- 
 ories of wages have succeeded each other, tried 
 and found wanting, in a not unfruitful tentative 
 manner, we are finding it better to clear the 
 ground by theories of interest and profits than to 
 take this hardest of problems first. 
 
 We have not dwelt on the theory of a Wages 
 Fund in order to discuss the merits of it but in 
 order to illustrate the relation of theory and prac- 
 tice. The opposition to such a theory on the ground 
 of a variance between theory and practice is not 
 the same as an objection to it on the ground of 
 excessive abstractness. The remedy was not to 
 make it more concrete; it was too concrete; as a 
 theory, it tried to cover more details than the theo- 
 rist was competent at that time to cover with any 
 theory. The application to concrete facts may 
 show the defects in an abstract theory, but the 
 right \.heory is not necessarily itself more concrete, 
 only more in accordance or harmony with the con- 
 crete facts when it is placed among them. In this 
 case it was made to include concrete facts that 
 were not as stated. The proper opposition is thus 
 between a theory which as such is more or less 
 abstract and the successful or unsuccessful ap- 
 plication of such a theory to the concrete facts of 
 life; it is not properly an opposition between an 
 
IT MAY BE SO IN THEORY 79 
 
 abstract theory and a concrete one. A right 
 theory fits the concrete facts better than a wrong 
 one, whether it is itself concrete or not. If it 
 came out of them or was suggested by them, it 
 ought to be replaceable among them with the least 
 possible injury of either party. 
 
 As an engine of public debate (always a delicate 
 position for an economic theory) the theory of a 
 Wages Fund was misused because like some other 
 economic generalizations it involved the hypoth- 
 esis of too nice an equilibrium of the forces re- 
 sulting from commercial ambition and the strug- 
 gle for existence. To say positively that such a 
 nice balance must always exist and exists now, is 
 to neglect the hypothetical character of economic 
 theories; they assert tendencies, and their holders 
 are (or ought to be) aware of the plurality of ten- 
 dencies. Economic tendencies are not omnipotent 
 though they are likely on the whole to be stronger 
 than any others; but assuming that MacCuUoch 
 and Fawcett were satisfied with the correctness 
 of their formula they were not justified in more 
 than a warning to the workmen, — say to this effect: 
 ''You are taking action w^hich will be more or 
 less directly in the face of certain economic ten- 
 dencies, and your course is not likely to be smooth." 
 The men might have answered: "We accept your 
 warning, but we take the risk." In adopting such 
 an attitude both the disputants would have been 
 within their rights. 
 
 When the economist is led to turn his principles 
 nto practical maxims of conduct, he is tempted 
 
80 DISTURBING ELEMENTS 
 
 into that dogmatism which is the usual charac- 
 teristic of the utterers of practical maxims. 
 
 Take the question of Free Trade, one of the 
 most troublesome in practice, as the question of 
 wages is in theory. The economist can only warn the 
 practical men, politicians or otherwise, that Pro- 
 tection tends to penury, that there are certain 
 economic tendencies at work which will fight against 
 the enrichment of a country under Protection. 
 The practical men may answer that there are 
 many other principles at work in the world besides 
 the economic and that the sacrifice of wealth is 
 worth making. The most orthodox economists 
 cannot silence the practical men who admit the 
 sacrifice and choose it rather. Whether the sacri- 
 fice is really worth making is a matter of opinion, 
 and at that point the discussion ceases to be 
 academical. On the other hand if the practical 
 man denies the existence of the sacrifice he must 
 give economic reasons or he can have no quarter. 
 Of the two it is perhaps more often the practical 
 man that magnifies his office; but that too is a 
 matter of opinion. 
 
 Some practical men, not the most thoughtless 
 by any means, will tell us that it is all a matter of 
 common sense and our differences from them are 
 chieflj^ about words. No doubt it is all a matter 
 of common sense; all science is common sense, 
 made a little more exact than it is on the street. 
 But, in regard to verbal disputes, appearances are 
 deceitful. John Mill remarks somewhere that dis- 
 
IT MAY BE SO IN THEORY 81 
 
 putes about words are usually found to be about 
 things. If the reference of the aforesaid practical 
 men is to our disputes about definitions, the prac- 
 tical men will discover that such disputes come at 
 the end of a long debate on more vital matters. 
 Definitions are oftener perfected as the result of a 
 true theory than as a condition of it; and the occa- 
 sional assistance given towards the clearness of a 
 theory by a clear definition does not make the 
 definition equivalent to the theory or superior to 
 it. Were it not so, we might have rules for the 
 attainment of right theories. But to light upon 
 right theories is as much the reward of high talent 
 in economics as anywhere else. The question of 
 method in a sense settles itself for each serious 
 student. It is possible to give rules for testing 
 the generalization once made, but not so easy (if 
 at all possible) to give rules for the finding of it in 
 the first instance. How you get it will in the end 
 depend on the manner of man you are. It may 
 come into your mind as an inspiration. It is an 
 inspiration more likely to occur to a practised 
 than to an unpractised mind ; but it is not given 
 to every economist, any more than to every prac- 
 tical man, to put two and two together. 
 
 The conclusion of the whole matter may be so 
 described. The gibe of the practical man ''It is 
 all very well in theory" may be taken up in earnest 
 as an exhortation to the theorist to test his theory 
 and apply it, and trace the modifications of it in 
 the coinplications of the world we live in. This 
 
82 DISTURBING ELEMENTS 
 
 was done both by Malthus and by Darwin. The 
 strength of both men was shown in the appHcation 
 as well as in the theory; but what gives them their 
 high place, in successful speculation of the scien- 
 tific sort, was not simply their mastery of details ; 
 it was the light they threw on the details by their 
 master principle itself. In regard to the neces- 
 sity of theory there can be no compromise what- 
 ever. 
 
Lecture IV 
 "FIGURES CAN PROVE ANYTHING" 
 
 The discussions of economists are not merely 
 verbal. Still, since language is as helpful to 
 thought as the body to the mind, we have to use 
 it ; and we are as liable as other people to be led in 
 triumph by our own figures of speech. In this 
 sense as well as the statistical, ''figures can prove 
 anything." Metaphors are so convenient for 
 purposes of exposition that we may now and again 
 forget that a metaphor, conveying to ourselves 
 no profounder analogy than the more modest 
 simile, usuallj'- counts for more with our hearers; 
 its figurativeness does not stand confessed on the 
 face of it. 
 
 We need not make a vow to avoid all metaphors. 
 We could not keep such a vow. Language is full 
 of them; human speech is a mass of mixed meta- 
 phors. Examine any sentence philologically and 
 this appears. Moreover language proceeds from 
 the lower to the higher (the spirit was the breath, 
 a corporation is from corpus, a material body), 
 it passes from the well known to the dimly known, 
 from the easy to the hard. To interpret the hard 
 by the easy does not mean to reduce it to the 
 
84 DISTUEBING ELEMENTS 
 
 easy, or it would not be worth the doing. We 
 do not want to explain away but to express our 
 difficulties. Hence we are engaged in a perpet- 
 ual struggle with the imperfections of language, 
 from the nature of the case never to be removed 
 if sometimes to be overcome. 
 
 How has Political Economy fared in this strug- 
 gle? Every discussion exemplifies it, the pre- 
 sent included. The invention in economics 
 of technical terms depends for its success on a 
 general agreement to use them, and they must 
 first be defined in terms of ordinary speech present- 
 ing the ordinary difficulties. The technical terms 
 of other studies stand temptingly near. Scien- 
 tific metaphors in particular have exerted no little 
 influence on economic doctrine. 
 
 It was not surprising that in the beginning of 
 a new science all possible aids should be borrowed 
 from the sciences already existing; and yet, as 
 few of these in the 18th century related to man, their 
 terms were not likely to be adequate. In the 
 Physiocratic conception of it. Political Economy 
 was almost a branch of agriculture, or at least 
 ''modelled on the physical sciences" concerned 
 therewith. The idea was that man in society 
 should conform to the physical conditions neces- 
 sary to secure the building up of the ideally best 
 society, VOrdre Naturel, just as in navigation he 
 needs to employ such laws of nature as are a con- 
 dition of sound navigation. The ''natural order" 
 of society is a conception founded, like natural 
 
FIGUKES CAN PROVE ANYTHING 85 
 
 right, on the ''law of nature," which is rather a 
 metaphysical than a physical conception. Tt is 
 abstract and a priori if any conception in social 
 philosophy ever was such; and the conception 
 clung affectionately to political philosophy till 
 the beginning of the 19th century. The presence 
 of it in the economics of Adam Smith, Burke, etc., 
 has been often remarked. "Natural liberty," 
 for example, implies some such conception. But 
 the ''natural laws" of the Physiocrats may be said 
 to have stolen the advantage of two metaphors 
 in one, for the "nature" was a philosophical figure 
 and the term "laws" owed part of its impressive- 
 ness to the suggested analogy of the physical 
 sciences. It perhaps suggested most typicallj^ the 
 law of gravitation as more obvious and irresistible 
 than any other. The Physiocrats liked to convey 
 the notion that their economic principles were 
 also irresistible. Also, however, is not likewise. 
 "Your father, my lord, was a judge; you are a 
 judge also, but not likewise." It may be doubted 
 if we should call economic principles laws, (a) 
 not laws of nature in the metaphysical sense, for 
 the truth in that notion of nature is better ex- 
 pressed otherwise, (b) not scientific laws, for that 
 suggests physical science and (c) not laws sim- 
 pliciter for that might suggest a prescription of 
 the legislature or the statute book. Where the 
 binding force is spiritual, it cannot safely be com- 
 pared to the attraction of particles or to the path 
 of a projectile through space, nor can the resulting 
 
86 DISTURBING ELEMENTS 
 
 social order be properly compared with the contri- 
 vances of mechanical art. Of course we need not 
 blame our economic authors for using any and 
 every scientific metaphor. There is no harm in 
 speaking with Malthus of a ruling motive as 'Hhe 
 mainspring of the great machine" or with Casaux 
 of the "mechanism of societies." Adam Smith 
 says that a philosophical system is an imaginary 
 machine that endeavours in fancy to connect 
 movements already existing in reality. He speaks 
 of the Machine of the Universe. Such metaphors 
 are like the Apocryphal writings as distinguished 
 from the Canon; they may be used for example 
 or instruction, but we are not to apply them to 
 establish any doctrine. 
 
 They have been freely used from the first. 
 One of the oldest of economic metaphors is that of 
 the balance of trade. It should have the benefit 
 of the doubt ; it may be simply the term of book- 
 keeping, which is a phase of economic life itself. 
 But ''conflicting forces" could hardly be other 
 than a physical metaphor. ''Equilibrium" seems 
 harmless, but it suggests "brought to rest," 
 while '^tending to equilibrium," as was long ago 
 remarked, brings up the notion of storm instead 
 of rest, a group of physical elements in con- 
 flict. A social equilibrium is a rare occurrence if 
 it means absolute rest, and tendency towards it 
 is a storm of much more confused elements, 
 higher and lower, than the purely physical. ''Dyna- 
 mical" and "statical" economics would come un- 
 
FIGURES CAN PROVE ANYTHING 87 
 
 der the ban; and the expression "disturbing ele- 
 ments" in political economy must also be recog- 
 nized as no more than a metaphor. Finally, when 
 it is said that even the favourite, old fashioned, 
 harmless, financial phrase "fund" has been con- 
 verted into a physical metaphor by being brought 
 into a new contrast, "not a fund, but a flow," 
 it may occur to some of us that we are nearing a 
 reductio ad ahsurdum. If we excluded such phrases 
 we should have hardly any language left to us to 
 think with. 
 
 But this is not the conclusion of the whole mat- 
 ter. The predominance of a certain class of meta- 
 phors may show a real bias of thought, whereas 
 there are parts of the economic subject where a 
 predominance of physical or even mathematical 
 metaphors may be quite suitable. Few of us would 
 think of excluding human society from the "law 
 of Probabilities" on the field of Statistics. 
 
 The much-reviled phrase of Malthus, geometri- 
 cal and arithmetical ratio, was not so much in- 
 applicable as empirically inexact. He was deal- 
 ing with the animal side of human nature, which 
 is undoubtedly a real part of it, and the question 
 of the tendency to increase in men and in food could 
 be considered apart by biology with the aid of the 
 physical sciences. Quesnay and Adam Smith 
 had both drawn similes from physiology. Ques- 
 nay was a doctor. You will find the analogy of 
 the human body to the body economic remarked by 
 Hegel and Herbert Spencer. It was a very old 
 
88 DISTUEBING ELEMENTS 
 
 parallel — we may find it in the fable of the belly 
 and the members — and seems in all ages to have 
 been a comfort to politicians and political phil- 
 osophers. ''You want to know how this scheme 
 works? Well, it works in the same way as the act 
 of breathing in the body through the lungs" and 
 so on. Similes from the doctor's knowledge of 
 the body are less ambitious than metaphors from 
 Biology, the separate study of all animal life. 
 It has claims on us, beyond the physical sciences, 
 for man's animal properties are a step nearer to 
 his distinctively human nature than his material 
 properties or chemical composition. There is all 
 the greater risk that part of the truth may be 
 mistaken for the whole in biological metaphor, 
 for biology is nearer the whole than physical 
 science. 
 
 Both the biological study of man, followed by 
 Malthus and Darwin, and the statistical study of 
 him based on the Theory of ProbabiHties, fail to 
 give us the whole man, or even as much of him as 
 we need in Political Economy. The man of statis- 
 tics is an item whose humanity does not matter 
 for the purpose of the statistical inquiry; we might 
 call him live stock without affecting the results. 
 But the witty saying is no more than a sally: 
 "Civilization is that progress which can be verified 
 by statistics, as education is that knowledge which 
 can be tested by examinations." Statistical study 
 is the handmaid of all social sciences but not itself 
 identical with any one of them. It deals with 
 
FIGURES CAN PROVE ANYTHING 89 
 
 such bodies of social facts as are expressible 
 not merely in nambers but in large numbers. It 
 investigates the truth that there is in averages; 
 though its perfection of method is of very recent 
 date, the facts on which it is founded have been 
 observed for two centuries. Long before that 
 time, Aristotle noticed that there is greater wisdom 
 in a large assembly than in the separate members of 
 it ; but he did not notice that there is a greater con- 
 stancy or uniformity in the proceedings of large 
 groups than of small or of individuals. This has 
 been well illustrated in the brilliant book by Her- 
 bert Spencer on The Study of Sociology. He 
 shows for example, that statute law may pro- 
 duce no predictable effect on an individual but 
 a very distinct one on the general mass of men. 
 This is true too of such economic principles as 
 that the greater gain will be preferred to the less. 
 But it also applies to cases where deliberate will 
 does not enter. The uniformity of a death rate 
 and even a rate of accident has been long observed. 
 Mr. Bowley duly notes how Biology in the hands 
 of Karl Pearson and others has been verifying 
 itself by statistics, especially in regard to the theory 
 of evolution and inheritance. But neither Biology 
 nor Political Economy is identical with Statistics; 
 nor are the first two identical with each other. 
 Biology in the largest sense includes all that per- 
 tains to the scientific study of living things, includ- 
 ing physiology, zoology, morphology. Since ever 
 the two, Biology and Political Economy, have been 
 
90 DISTURBING ELEMENTS 
 
 recognized, they have mutually influenced each 
 other. The most brilliant instance is the genesis 
 of the Darwinian theory out of the Malthusian; 
 but there have been many services of one to the 
 other in less broad generalizations. The growth, 
 structure, and functions of an economic body, more 
 especially in the division of labour there, appear 
 analogically in all living things. Physiology is 
 said by Spencer to have learned the idea of division 
 of labour from Economics as (according to the 
 same writer) Biology owes the idea of development 
 to Sociology. In dealing with things economic 
 and things biological we find that the prop- 
 erties of the units determine the character of the 
 groups ; societies of men have characteristics broadly 
 depending on the characteristics of the individual 
 members. As a group of dogs would bear distinc- 
 tively canine characteristics, a group of men would 
 bear human. They would show, for example, a 
 social sympathy and power to act together, as 
 well as general cleverness and power to outwit 
 other animals. A group of Russians, too, or Ameri- 
 can-Indians, would bear Russian or American- 
 Indian characteristics, evident on close study. 
 All this without disparagement of the principle 
 that uniformities of the mass are calculable while 
 they are not rules in detail for the individual. 
 This only means that the root of the uniformity is 
 in each individual and that it usually grows 
 but not invariably. Usual growth is enough for 
 a generalization, whether biological or economic. 
 
FIGURES CAN PROVE ANYTHING 91 
 
 The parallel is still mainly true when the evolution 
 from the simpler to the more complex organiiia- 
 tion is concerned. The greater specialization of 
 the more developed society means among other 
 things economic specialization; it means more 
 perfectly developed trading-organization, func- 
 tion and structure reacting on one another. 
 
 But the human groups differ from one another 
 so much more than groups of animals from groups 
 of like animals, that the lessons we draw from 
 groups of animals soon fail us when we deal with 
 man, even if we do not go so far as to say with 
 Spencer that each human society is a species by 
 itself. Biology has so far influenced us that we 
 all talk of the State as an Organism; and we are 
 tempted to consider the Struggle for Existence 
 and Survival of the Fittest as the unavoidable 
 way of procuring the development of the higher 
 organization. These formulae however are not 
 the last word of science on the development of 
 man. If they were so, political organization 
 must be defeating itself, for it consciously does 
 much in our time to put in place of the struggle for 
 existence the aspiration after well-being for our- 
 selves and others. We do not seek to attain a 
 Super-Man, but we do not, even in our economic 
 system, take stock of man as simply animal any 
 more than as simply tool. 
 
 If there was a Sociology full formed, it would 
 help us much more to express ourselves by 
 Sociological metaphors than by Biological, for 
 
92 DISTURBING ELEMENTS 
 
 Sociology goes beyond Economics whereas Biology 
 lags behind it. But Sociology is even more of a 
 mere endeavour after science than Economics, and 
 in any case human language uses by preference 
 the lower to express the higher, rather than the 
 converse. 
 
 There is another aspect of the same subject 
 worth regarding in this contest. Biology takes 
 a given life as determined by environment and 
 heredity. Some biologists will even refuse to 
 allow that human life itself is ever otherwise deter- 
 mined. In physical and physiological stuff and 
 capabilities it may be so ; the environment and the 
 germ-plasm may give us all the essence of a man. 
 If this is the whole story however, then the his- 
 torical economists may be right in saying that 
 every political economy is a political economy of 
 a certain epoch, entirely relative and confined to 
 that epoch, environment being always the pre- 
 dominant partner. But, if we yield here, we are 
 allowing biological metaphors to run away with 
 our logic. Too much would be proved. If no 
 knowledge can overcome environment, there 
 could be no science extending beyond the moment, 
 and therefore no real science at all. The environ- 
 ment may be taken so widely as to include the 
 environed intellect that surveys it; but in this 
 case the word has been strained till it has burst 
 through its biological meaning altogether. 
 
 The drift of this reasoning is that, while all the 
 sciences, especially those touching subjects nearest 
 
FIGURES CAN PROVE ANYTHING 93 
 
 society, may be used in illustration of economic 
 reasoning and as an aid to the understanding 
 of economic principles, we must never forget that 
 they cannot yield us more than metaphors. There 
 is danger lest we use the metaphor for the principle 
 itself. It is not long ago since we used to hear of 
 society as an organism, frankly in the biological 
 sense, and of its evolution as simply biological, a 
 case simply of the evolution of animal life, man 
 being obviously an animal. 
 
 There is more reserve now. Organism is now 
 seen to have been a metaphor. Perhaps the term 
 organism was never applied to a group at all except 
 in the case of men, though the metaphor might 
 have suited bees and ants in their united action. 
 In their case one feature appears that is supposed 
 to justify the metaphor in the human instance; 
 when the one member suffers, the others suffer 
 with it. This is true too of the mare and the foal, 
 the cow and the calf. The growth of this close 
 fellow-ship and fellow-feeling is due in those cases, 
 also, not to a deliberate aim or will of the members 
 of the group but to a "natural process" not willed 
 by them. But even in regard to bees and ants the 
 expression would be of little help; the whole body 
 of ants or bees does not feel in its members as an 
 individual ant or bee in its limbs. Nor does the 
 human society, still less the human State. The 
 State is the supreme public authority with the 
 public force behind it. The State is in one sense 
 the highest organization of all; but it has less of the 
 
94 DISTURBING ELEMENTS 
 
 orgamc feeling than the society, of which it is the 
 expression. There is a State where there is a com- 
 mon government, though a community is not a 
 State, nor a government a State; it is the unity 
 of a nation expressed in a government. There is 
 Uttle help to us from caUing the State an organism 
 in the biological sense, since a nation is not an ani- 
 mal or definable in terms of zoology; and it is delib- 
 erate and not instinctive in committing power to 
 its government. Society has more of the instinc- 
 tive element; it is not made but grows; but just 
 for that reason, in its most instinctive condition, 
 it is called unorganized. The separate wills and 
 intellects of human beings, however frozen by 
 custom, are enough to forbid analogy with limbs 
 absorbed in a body. If it be answered that there 
 are living creatures with limbs that can be de- 
 tached and made to form separate bodies, it will 
 surely be allowed that those are the last creatures 
 likely to serve as a good illustration of the close 
 union of society. The peculiarity is that the close 
 union and detachment are consistent in the human 
 beings: they exist at one and the same time. 
 They are consistent because the bond is a spirit- 
 ual bond; it is a bond of intellect and s3^npathJ^ 
 If ants and bees have this too, we need not be 
 offended. All we can say then is that in their case 
 too there is no special help given by the compari- 
 son of the union of them in their groups with the 
 union of the limbs with the body; in the one case 
 he members are discrete, in the other continuous. 
 
FIGURES CAN PROVE ANYTHING 95 
 
 It is true on the contrary that organism is an 
 expression that need not be confined to biology; 
 and in using '' organism" and ''organic" we are 
 not necessarily relying on a supposed analogy of 
 the kind just rejected. Philosophers have been 
 inclined to -say that society gives a new meaning 
 to those words. An organon is an instrument, a 
 means to an end; and in human society, the nearer 
 it is to perfection, the whole and the parts, the 
 body and the members are the more truly means 
 and end to each other. The union thus formed is 
 a higher type of organic union than the biological. 
 As the economist has to deal with human socie- 
 ties (were they only of ''economic men" and there- 
 fore to some of our friends hardly human) he will 
 do well to follow the philosophers, and when he 
 speaks of the social organism think of something 
 of considerably higher type than even the human 
 body. 
 
 Has Philosophy itself any other help to give us 
 in Economics, and may it also prove occasionally 
 a "disturbing element?" 
 
 We have already seen that mistaken ideas of a 
 social philosophy (on natural right, more especially) 
 have had their influence. A mature social philos- 
 phy could hardly fail to help us, but at present as 
 was said Political Economy is the more mature of 
 the two. There are two departments of philoso- 
 phy, viz., Psychology and Ethics, in which in our 
 own time economists have trespassed with peculiar 
 alacrity; and we may also say there has been intru- 
 
96 DISTURBING ELEMENTS 
 
 sion of these two in particular into Political Econo- 
 my. The intrusion is hard to prevent. Some econ- 
 omists have climbed over (or down) into their 
 Economics from their Moral Philosophy, and now- 
 a-days every economist seems to find it necessary 
 to begin with a discussion of Subjective Value, 
 (''Value in use.")> which is very near Psychology. 
 To take Ethics first, it may be quite harmless 
 to introduce ethical principles so long as we our 
 selves know what we are doing and give fair 
 warning to others. Otherwise we may give the 
 impression that our economic argument is not 
 strong enough to stand alone. When Adam Smith 
 declared certain kinds of interference (e.g., laws of 
 apprenticeship, of settlement, and even of the fis- 
 cally Protective sort) to be violations of justice and 
 of the rights of men to unfettered disposal of them- 
 selves and the fruits of their labor, he was import- 
 ing ethics, and it might quite well have been 
 answered that the question of economy ought to be 
 considered by itself. Possibly every injustice is 
 bad economy for a nation; it is so for the common- 
 wealth of nations; it may or may not be for small 
 groups or for individuals. Slavery is now regarded 
 as a kind of robbery and is, economically speaking, 
 out of court. It was not always so regarded, 
 and the economic truth about it was not only worth 
 stating but is really a powerful force against it in 
 the minds of statesmen. Adam Smith must have 
 felt that Political Economy had no meaning for 
 slaves, since these were allowed little or no scope 
 
FIGURES CAN PROVE ANYTHING 97 
 
 for the ''constant and uninterrupted desire to 
 better their own condition," but that did not 
 prevent him from showing the economic defects of 
 slavery as an institution. Something similar is 
 done by economists now in the case of ''Sweating." 
 The appeal, also to the economy of the Nation as 
 against that of smaller groups or individuals is a • 
 sound economic appeal, and imports no ethics into 
 the matter. Economy w men is not so much one 
 of many considerations, in the economic argument 
 pushed in this direction, as one of the fundamental 
 assumptions on which political economy is founded, 
 and quite paramount. A society which did not 
 economize its men would be self-destructive; it 
 would be a group that did not preserve its own 
 units. This claim of preeminence for human life 
 is no doubt a point of contact with Ethics; but 
 the claim of Economics is not that the human life 
 in question be of any specific moral quality; it is 
 simply that the men be there, and that those who 
 are there shall be really men, agreeing widely and 
 differing infinitely. 
 
 It is the wide agreement and infinite difference 
 that have led to the existence of exchanges and 
 values and other economic phenomena. Here it is 
 that we are most liable to the intrusion of Psychol- 
 ogy. Hedonism or Utilitarianism, a theory of 
 Ethics resting on a Psychological analysis of feeling, 
 desire and will, have often been made the founda- 
 tion of Economics. Bentham's Utilitarianism 
 appears in Ricardian economics, and Jevons em- 
 
98 DISTURBING ELEMENTS 
 
 ployed Utilitarian psychology in his theory of 
 consumption. Utilitarianism, thus entering, pre- 
 judiced large bodies of thoughtful men against 
 economics without really helping economics itself. 
 We must face prejudice if we have the truth on 
 oar side; but, if it is not, even to ourselves, certainly 
 truth but only a useful assumption, our proceeding 
 is not heroic but Quixotic. Now Don Quixote was 
 not in his perfect mind. 
 
 The attempt of modern economists to make the 
 Consumption of wealth their starting point re- 
 quires that they shall either use the most general 
 language about human wants and feelings and 
 motives, in order to suit any and every psychol- 
 ogy, or else that they shall have a psychology of 
 their own and face the usual philosophical diffi- 
 culties. To most economists it will be enough to 
 assume that men have wants and that they deliber- 
 ately satisfy them by labour applied directly or 
 indirectly to external goods. There is a reckoning 
 also of comfort sacrificed against comfort gained, 
 and there is a mental process carrying us toward 
 the decision whether this or that sacrifice is ''worth 
 while" or not. All such matters have a psycholo- 
 gical aspect. But whether pleasure and pain be 
 our absolute masters or not may be left an 
 unsettled question by the economist if he chooses 
 so to leave it. The psychology of wants and of 
 toil goes farther than the economic treatment of 
 them. Enough ground is cleared without it for 
 the making of a theory of Subjective Value. 
 
FIGUBES CAN PKOVE ANYTHING 99 
 
 Some of our friends doubt if it is worth while 
 to elaborate such a theory as this last at all, in view 
 of the fact that our study is of social not of domes- 
 tic or personal economy. But to know the group 
 we must know the common and dominant charac- 
 teristics of the units that form the group, and the 
 idea of subjective value seems to be one of these 
 characteristics. Even Adam Smith, dealing with 
 the Wealth of Nations, starts really from the units : 
 ''the constant desire of every man to better his 
 own condition." And it throws light on exchange, 
 to recognize how the infinite differences and pre- 
 ferences of individuals enable both exchangers to 
 gain because the final utilities differ for them of 
 goods materially the same. 
 
 There might be more doubt as to the degree of 
 importance of this branch of economics relatively 
 to others. There is a fitness perhaps in putting 
 the theory of Consumption first in our text books 
 because consumption on the whole is first in nature ; 
 the intention to consume is certainly first. But 
 in our teaching it might come later as it has done 
 (significantly) in the history of economics. When 
 the student plunges into that wood, he seems often 
 to find diflSculty in emerging from it, so tempting 
 are the psychological problems that strew his 
 path there. It is perhaps well to place him there 
 late and then let him stay as long or short as he 
 chooses. 
 
 We need not as economists find more than a 
 proximate beginning, any more than physical 
 
100 DISTURBING ELEMENTS 
 
 science needs to go back to metaphysics, or to the 
 first creation of the material world; and even in 
 physics the light now dawning on scientific men in 
 regard to the origins of things is hardly of the sort 
 to give much illumination to neophytes. It is 
 better sometimes, in teaching, to take up present 
 problems, than 'naked in the air of heaven ride.' 
 The philosopher may be denied assumptions ; it is 
 his function to go behind them; but the economist 
 must allow himself nearly as many as ordinary 
 folk, in regard to first beginnings. 
 
 When we cross over from Subjective Value 
 into Objective or rather that kind of it which 
 concerns the economist during the largest part of 
 his time, namely, Value in Exchange, the disturbing 
 element is not philosophy but Law. Exchange is of 
 possessions. Exchange is of property. Exchange is 
 matter of contract. Property is not strictly speak- 
 ing an economic category, neither is contract ; but 
 the legal categories are always with us, and there 
 is a tendency in some economic writings to slip into 
 an economic conclusion from legal premises. What- 
 ever has its price is supposed to have an economic 
 standing, and sometimes it is suggested that noth- 
 ing else has it. H. D. Macleod is perhaps the great- 
 est offender in this direction. A man does not 
 always know his own bias. Macleod thinks his bias 
 is towards physics and he begins by saying that 
 economics is a physical science ; but he is guided 
 by law throughout, and includes rights of action 
 to goods and services as distinguished from the 
 
FIGURES CAN PROVE ANYTHING 101 
 
 goods and services themselves under ''wealth." 
 Credit to him is capital. There is much more 
 to the same purpose. Most of us would admit 
 that Macleod goes too far; but some would say 
 that his direction was not a wrong direction. The 
 other "disturbing elements," they would say, are 
 on a different plane from Law. They were theories, 
 but law is among the facts, the hard facts, of life, 
 no doubt partly shaped by the rest but also shaping 
 them. 
 
 This is so. As we saw at first, law is usually 
 a defined and rationalized custom and that is a 
 fact of life, industrial life included. But so are 
 religion, morals, and politics. Such facts help to 
 make up the concrete world into which our ab- 
 stract theories must be fitted. But they are not to 
 make our theories or (if we can avoid it) help to 
 make them, any more tnan theories from other 
 studies (if we may distinguish them from the facts 
 of life) are to be allowed to intrude. Call law 
 fact or theory, it is separable from pure economics. 
 
 The materialistic view of history represented 
 law as the result or creature of industrial condi- 
 tions. Professor Stammler went so far in the con- 
 tary way as to say that social economy implied and 
 depended on Law. In modern times and for full 
 maturity this is nearer the truth; but, though not 
 separated in the concrete, economics and law are 
 separable in the abstract, and perhaps desirably 
 separated for unprejudiced economic theory. Prof. 
 Stammler himself would be the last to approve any 
 
102 DISTUBBING ELEMENTS 
 
 confusion of economic principles with statute laws; 
 and yet such confusion will arise if we do not some- 
 what sharply distinguish law and economics. 
 
 The relation of economics to Jurisprudence or 
 the science of the first principles of lawmaking is 
 of course even less close than the relation of econo- 
 mics or even the industrial system to the actual 
 laws of a given nation. It is no nearer us, to say 
 the least of it, than moral philosophy. 
 
 We cannot ride over all the objections to the 
 disturbing elements by saying: ''Why! what 
 you call disturbing elements are simply the other 
 elements of the concrete life which you left out in 
 your abstraction!" — Bacon has, grandiosely or 
 majestically, described the idola theatri, figures of 
 the stage, or theories of speculators, as disturbing 
 science in a different way from the idola fori, 
 figures of the market place, or ambiguities of 
 human speech, and the idola specus, figures of 
 the cave, the personal bias and peculiarities of the 
 individual man, and idola trihus, the limitations of 
 man's senses common to all humanity. All 
 such figures affect us. The personal bias is perhaps 
 worst of all, but our critics seldom fail to discover 
 it for us, sooner or later. All the idola affect us. 
 But the idola theatri are not so nearly a part of 
 human life as the rest. When our economic ab- 
 stractions are put back into the concrete world 
 they are to fit into human life, but not necessarily 
 into human theories. At least it is probably not 
 within the power of ordinary economists so to test 
 
FIGURES CAN PROVE ANYTHING 103 
 
 an encyclopaedia of theories. Human life is not our 
 rival, but the theories may possibly be so. They 
 are attempts like our own to explain human life 
 in part or in whole. The old question recurs if 
 abstraction is desirable. First is it desirable to 
 make preliminary and temporary abstraction from 
 the concrete industrial state of man which con- 
 tains so much more than is industrial; second is it 
 desirable to abstract altogether from the world's 
 theories even when you are coming down into the 
 world again from the height of your first economic 
 abstraction? Perhaps not altogether. Theories 
 cannot be quite disregarded; but they are objects 
 of criticism (Utopian Commonwealths among 
 them) rather than aids to reflection. 
 
 If we have been bred on German Philosophy 
 we may have a ''philosophic faith" that there is 
 a logic not only in human history generally but 
 even in the succession of human theories, and they 
 are not misleading idvla theatri unless we take them 
 out of their context. All that need be said is that 
 their context, unless they are economic theories, 
 is not ours. If they are economic theories and 
 their context therefore is ours, it is not for sane 
 men to suppose that such theories survive the time 
 of their own superseding, and continue to reckon 
 among the facts of life. On the other hand, 
 verum index sui et falsi; the true theory read with 
 full intelligence will be found to include what was 
 true in predecessors and contemporaries alike. 
 
Lecture V 
 "IN THE LONG RUN" 
 
 Certain disturbing elements or alien influences 
 have in time past prevented economic reasoning 
 from being quite pure. Not even the youngest 
 of us escapes them entirely. What must not be 
 taken for granted lies along-side of what must 
 be taken for granted. For example we must not 
 take for granted that the economic man has every 
 intellectual and moral virtue, but we must take 
 for granted that he is a social being with common 
 honesty, a normal man. We must study his com- 
 mercial ambition and the general tendencies 
 resulting from it, separately, not allowing other 
 kinds of study to thrust their methods and their 
 metaphors upon us. When we have thus formed 
 our principles without prejudice, we jnust come 
 down into the world of experience again and test 
 for ourselves how far they are at work there. 
 
 It is always with us a question of tendencies. 
 Economic tendencies are, we believe, more uni- 
 form than any others; and we may expect to see 
 them persistent, not only simpliciter in theory with 
 all obstacles thought cleared away but in the com- 
 plexity of human society. In the modern industrial 
 
IN THE LONG RUN 105 
 
 world the primacy seems accorded to them by 
 society itself, for almost the first time in history. 
 Yet we do not as a matter of fact find absolute 
 domination. Commercial ambition may be the 
 predominant partner, bat there are many part- 
 ners. The few elementary general principles, of 
 currency, of division of labour, may rale unques- 
 tioned in progressive nations. There is doubt if 
 they can be said to do so in the unprogressive, 
 though Marshall has made an ingenious attempt 
 to prove it true of them. Prices and wages do not, 
 in the East, bound up witn alacrity in response 
 to the fall in silver; they have tended upwards 
 elsewhere even in response to the fall in gold, a 
 harder matter to prove. 
 
 But in the industrial commonwealth of the 
 great modern trading nations the primacy is largely 
 confessed. For example, the economic phenomena 
 which economists have pointed out as necessarily 
 occurring in countries extracting the precious 
 metals have duly occurred there, perhaps without 
 any exception. They are uniformities that affect 
 all equally. 
 
 It is harder to show the working of tendencies 
 where the whole society is not affected but only cer- 
 tain groups. It is not easy to show that the inven- 
 tion of new machines will tend to increase wages. 
 This was the tendency first supposed by Ricardo ; 
 but he changed his mind and wrote: ''The same 
 cause which may increase the net revenue of the 
 country may at the same time render the popula- 
 
106 DISTTJKBING ELEMENTS 
 
 tion redundant and deteriorate the condition of the 
 labourer." It was this change of view that made 
 MacCulloch doubt the infallibility of Ricardo. The 
 more orthodox position (if we allow that any posi- 
 tion of Ricardo's could be heretical) was that 
 machinery tends in the long run to employ more 
 labour than it has displaced; this was to be the 
 consolation of the hand-loom weaver, thrown out 
 of work by the factory system. It was to be 
 a sufficient vindication of an economic principle, 
 that, if it did not fit the facts now, it would fit 
 them at some time in the future. But in the 
 case of machinery there were more economic 
 principles asserted than one. One seems quite to fit 
 the facts : that there is a tendency under the regime 
 of machinery towards a greatly increased produc- 
 tion at less cost. It was a different proposition 
 that the increased product tends to be equally 
 shared. The economist has no warrant for say- 
 ing that any economic tendency exists which by 
 itself brings about good distribution. The sharing 
 of property was matter of law and political insti- 
 tutions, in some countries religious prejudices; 
 and the conditions so established might prevent 
 any such consummation. It does not seem true 
 that economic tendencies are all made beneficial 
 by length of time any more than a man is neces- 
 sarily made better by growing old. There is no 
 saving virtue in the '4ong run." 
 
 But there is also no necessary fallacy in the 
 phrase. The element of time enters into economic 
 
IN THE LONG RUN 107 
 
 tendencies unavoidably and by the very notion of 
 " tendency" itself . Tendency is a process, not a 
 point or a fait accompli. If we may use a meta- 
 phor, it is a force not a quantity. 
 
 Take another example of it. The tendency of 
 profits to a minimum has often a positive forecast 
 of the future based on it; it is read as a prediction. 
 But there is a rival economic tendency alongside, 
 namely the postponement of such an evil day 
 (if it be one) by invention. The economic man is 
 not always aninventive; as an average man, he 
 occasionally invents; and his occasional inven- 
 tions, whether they be of new implements or of 
 new economies in the use of the old implements, 
 arrest the downward movement, or tend to do so. 
 Where there are two economic tendencies involved, 
 we must not base a prediction on only one of them. 
 
 Is time itself then a disturbing element? It is 
 the common element in which all experience moves; 
 it is not disturbing unless we think with Schopen- 
 hauer that life itself is so. We are hereto make the 
 best of both of them, and to understand them so 
 far as we can. Now, time plays a part in the sim- 
 plest economic act. The very idea of economy 
 involves it; it looks before and after. In what 
 we call a ''hand to mouth existence" there is 
 no true economy. Adaptation of means to ends, 
 of tools to production, involves the interval 
 (however short) between now and then. Still 
 more clearly is time involved in such production 
 as involves employment of wages-earners, and 
 
108 DISTURBING ELEMENTS 
 
 advances to them, even if the product is meant as 
 soon as possible to repay the advances. It is 
 involved in the later form of the distinction 
 between fixed and circulating capital, between 
 what wears out sooner and what wears out later. 
 The distinction so well brought out by some of 
 our friends between present and future goods, as 
 the basis of an economic theory of interest, comes 
 in here. The distinction too between long and 
 short periods of production, emphasized by others, 
 is not only a distinction of time, but one peculiarly 
 relevant to the question of the efficacy of the 
 "long run." Marshall's exposition of the long 
 period's supply price and the short period's sup- 
 ply price is classical. Here is a quotation from 
 it bearing on the matter in hand: "When it is 
 said that thougn the price of wool on a certain 
 day was abnormally high, though the average 
 price for the year was abnormally low, that the 
 wages of coalminers were abnormally high in 
 1872 and abnormally low in 1879, that the real 
 wages of labour were abnormally high at the end 
 of the 14th century, and abnormally low in the 
 middle of the 16th, every one understands that 
 the scope of the term normal is not the same in these 
 various cases." Marshall uses "normal" where 
 Adam Smith uses "natural" (as in 'natural price' 
 and wages). It describes the result of economic 
 tendencies working unimpeded. In the passage 
 quoted, it has three meanings according to the 
 three periods chosen; but Marshall contents him- 
 
IN THE LONG RUN 109 
 
 self with a broad distinction of two classes, the 
 first in which there is time for supply to adapt 
 itself to the demand and the second where there 
 is not time. 
 
 The important point for us at this stage is that, 
 though Marshall's cardinal doctrine is that mutual 
 determination is nearer economic truth than a 
 succession of causes in time, he here conveys that 
 economic processes have a different character 
 according as they are long or short, slow moving 
 or quick. Some would tell us that all distinctions 
 of time are relative; suh specie ceternitatis a long 
 period and a short one are alike short, a thousand 
 years as one day, and vice versa. But the econo- 
 mist is not a metaphysician; he works suh specie 
 hujus sceculi. The distinction of times long and 
 short is not futile. We may measure, as Marshall 
 does in the case quoted, by the length of the ordi- 
 nary processes of production; and, if you ask what 
 latitude we are to have in reckoning ordinary 
 processes, it may be answered that we measure bj^ 
 the days, years, and generations of working human 
 life. Provisionally, we may say that there is a 
 presumption against that economy of which the 
 results are deferred beyond the measure of a gen- 
 eration. There may be a doubt of it before that. 
 When it is said of any transaction that ''time is of 
 the essence of the bargain" we know that the limits 
 are narrow. There is nothing which it is worse to 
 waste than time. Yet you do not necessarily 
 waste it by spending much of it; and, whatever 
 
110 DISTURBING ELEMENTS 
 
 was done in the days of the making of the pyra- 
 mids, much of the characteristic work of modern 
 industry is done over long periods. Transconti- 
 nental railways and Panama Canals and Nile 
 Barrages cannot be made in short periods; they 
 may take what is a great fraction of an ordinary 
 man's working life, perhaps even a generation. 
 Equally characteristic of modern industry is 
 the continuous process of production and reproduc- 
 tion. Day by day the supplies for large cities are 
 pouring into them; and, if the fresh production 
 of wealth or fresh transference of it ceased for a 
 week, we should find out how much we depend 
 for our comfort or even our life on this continuity. 
 This is what is reasonably meant by national 
 income being not a fund but a flow; and it implies 
 an economy of time within periods of production 
 which we try to make as short as possible. The 
 modern economic system economizes time at 
 both ends, and it uses the long period for the 
 sake of the short. Production is carried out in 
 the long period in order to enable the production 
 in the continuous short periods to be done more 
 fruitfully. Once finished, the railway and canal 
 and barrage secure that for us. The commercial 
 ambition and private interest of individuals 
 tend to make them prefer the short periods. 
 Shortening of time is certainly of the essence of the 
 bargain where wages are concerned, and where 
 livelihood rather than affluence depends on the 
 venture. Livelihood always does depend so much 
 
IN THE LONG RUN 111 
 
 on all industrial ventures that wherever the period 
 can be shortened it is economy of human life to 
 shorten it; and a heavy responsibility rests on 
 statesmen who lengthen it where the obstacle is 
 only political, as in the case of the old English 
 Corn Laws. Where material obstacles stand in 
 the way of a beneficial change, needing a calculable 
 irreducible time for removal, it is economy in the 
 long run to undertake the removal. The cost can 
 be counted and the return anticipated with greater 
 certainty than where the obstacles are human wills. 
 The experiment of encouraging Infant Industries 
 might have been safer if the presumption had been 
 adopted that a generation is an amply long enough 
 period to test the vitality of an industry and amply 
 long enough for tne great body of the people to 
 be taxed for the benefit of a few. The only long 
 periods that are really economical are those that 
 are necessarily long. It is true economy to make 
 your periods as short as possible, and only to make 
 them long where you cannot make them short. 
 
 Some one may say that the distinction in time of 
 long and short periods is analogous to the distinc- 
 tion in space and extent of great and small pro- 
 duction and even of large and small communities. 
 Neither of these is a futile distinction any more 
 than the distinction in time. The measure of a 
 large and a small business is a man's abihty to 
 overtake the whole management of it with or 
 without assistance; it is the extent of his single 
 powers, as the distinction in time related to the 
 
112 DISTURBING ELEMENTS 
 
 prolongation of these powers in an ordinary life- 
 time. The measure of a large or a small community 
 is even more definite. A community is too small 
 to be reckoned "large" if its numbers are too small 
 to yield trustworthy statistical results. Results 
 in Holland, New Zealand or Switzerland are less 
 valuable than in larger countries. The analogy 
 may be especially pressed from the instance of 
 communities; and it may be urged that an econo- 
 mic principle (like a statistical) must be tested 
 over an adequate number of cases, and this may 
 involve a time that is long, relatively to human 
 life. In this amount of "long run" it may justify 
 itself. It may prove itself to be a real economy, 
 alike of men and of resources, as in the case of 
 machinery, of which Ricardo lamented the pres- 
 ent unhappy consequences. 
 
 It does not seem clear how Ricardo proposed to 
 deal with the distress he deplored. Perhaps "as 
 a gentleman" he went on, for his own part, paying 
 the same wages as before; but he does not appeal 
 to others to do the same. He does not propose to 
 join with the Luddites in suppressing machines. 
 It is of course not always impossible to arrest an 
 economy. Religious persecution has been success- 
 ful where it has been sufficiently thorough; and 
 economic changes have been hindered with very 
 fair success by nearly every known government 
 in the world. The drawback is that the hindering 
 of them injures a larger number than it helps, 
 not only ''in the long run" but in the present. On 
 
IN THE LONG RUN 113 
 
 the other side it is a fact that in the present the 
 sufferings of the few may be more acute than the 
 increased comforts of the many. No economic 
 ingenuity will prove that the invention of machines 
 has not often permanently injured individuals, 
 in property and even in life itself. 
 
 The proper consolation seems to be that such 
 inventions are a greater economy for the whole 
 community than for any individuals who gain by 
 them. The gains of private people bulked more 
 largely in Ricardo's time. These private gains 
 seemed the chief item to be set against the losses 
 of the poor weavers. But it was not so. What 
 Adam Smith calls the interest of the consumer 
 meant really the interest of the community; and 
 here we are introducing a consideration which 
 takes us beyond the narrower limit of time, the 
 single human life. 
 
 Time may be measured in at least four different 
 ways in the economy of human beings : 
 
 1. For the individual, by his own expectation 
 (or expectations) of life and the return to his out- 
 lay within it. 
 
 2. For the household, by the householder's 
 grasp of the situation on its behalf and the degree 
 of his unselfish love of his offspring or remoter kith 
 and kin; it may mean a far range of provision. 
 
 3. For associations of men, by the interest of 
 all jointly and severally, not only severally and not 
 only jointly, but witu a range wider than the 
 individual life or single households. Where the 
 
114 DISTURBING ELEMENTS 
 
 associations are not purely commercial^ they ap- 
 proach in range the public bodies. 
 
 4. For public bodies, by an indefinite period, 
 depending on the expectation of the life of the com- 
 munity. This last has a large economic element. 
 Among the concerns described even by orthodox 
 economists as everybody's business and nobody's 
 business, and for that reason as public business, 
 there are many economic concerns, say, currency, 
 taxation, great enterprises requiring more capital 
 than even associations can provide, economy of 
 men, involving their education and provision for 
 the general health, as well as economy of forests 
 and other national resources. 
 
 The classical economists were too near the idea 
 of the State as a "Police Office" to take full account 
 of this view; and it is this view of the national 
 economy that sometimes justifies a "long run" 
 from a purely economic point of view. A 
 sacrifice of private profits may be necessary unto 
 this end of national economy. "The mischief will 
 cure itself" may bear a true interpretation. On 
 the other hand profitableness even at a low rate of 
 profit is as much a condition of economy in the 
 State as in the individual. A low rate of profit- 
 ableness will yield a total in course of time; but 
 unprofitableness continued for a century will 
 remain unprofitable still. 
 
 There is another sense in which faith in the long 
 run may be worthy of some acceptation. It 
 may be simply the belief that as time goes on an 
 
IN THE LONG KUN 115 
 
 economic tendency becomes a stronger and strong- 
 er power in society, and other tendencies, other 
 kinds of ambitions, become relatively weaker, — 
 in fact that the course of events is fighting for the 
 greater predominance of the economic factor in 
 events. 
 
 This is not absolutely self evident, for the control 
 and regulation have grown too ; but it seems proba- 
 ble to a very great degree. It means among other 
 things, that political power will be mainly de- 
 termined by economic conditions, just as cer- 
 tain economists (especially the first Social Demo- 
 crats) believed it to be in all periods of history. 
 It is hard to believe it was always so, — that we might 
 have said ''Tell me your industries and I can tell 
 you your institutions." Even modern industry 
 subsists alongside of the most curiously different 
 institutions. But it is perhaps becoming true now. 
 
 Fortunately the regard for the public economy 
 and public welfare in general seems to be becom- 
 ing a little stronger also. There is on the whole a 
 tendency (not economic though not alien to econ- 
 omy) on the part of men in civilized countries to 
 seek the public good. It is not very pronounced; 
 but it is discernible. In some countries, as Eng- 
 land and perhaps the United States, it is actually 
 more pronounced than the tendency to provide for 
 the future of the individual. These two countries 
 are not the countries where men save most, but 
 they have perhaps most public spirit. There seems 
 really to be a clearer vision than formerly of the 
 
116 DISTURBING ELEMENTS 
 
 fact that the Ufe of the community is more sub- 
 stantial on this earth than the Hf e of the individual. 
 The increase of public spirit may have far reach- 
 ing economic effects. They would not be merely 
 the effects of the saving habits of the prudent man. 
 It is beginning to be recognized that 'After me the 
 deluge" is no motto for a civilized man, nor even 
 ' After me and my family and kin and clan.' There 
 seems no sufficient ground for supposing that in 
 the many modern instances of a public spirited 
 use of wealth the public spirit is superficial and 
 the private vanity dominant; it is rather the vanity 
 that is superficial. 
 
 After all those wide concessions, it may still 
 seem that the term economic cannot quite fairly 
 be used in such cases without explanation. When 
 the expression "economic considerations" or "eco- 
 nomic point of view" is used, without doubt it is 
 the economy of commercial society and not of 
 the State that is suggested. When we exchanged 
 the old name political economy for economics, by 
 general agreement, a generation ago, it was to 
 enable us to discuss any and every kind of economy, 
 domestic and national included. Perhaps it might 
 be well to keep the old name for the old study in 
 the narrower limits, in spite of the awkwardness of 
 the adjective political. In any case it will probably 
 be admitted that, if we used economic considera- 
 tions without explanation for what served the 
 State's economy though unprofitable to the private 
 citizens, we should be using it in a figurative sense, 
 
IN THE L-ONG RUN 117 
 
 just as if, to take the opposite case, we were to 
 speak of financial considerations for what affected 
 the income of private citizens. Finance is asso- 
 ciated with the State. We associate economics 
 with the region of commercial ambition, where 
 there is regard not to long periods of public benefit 
 but to the main chance in short periods. The 
 dominating tendencies are not yet very seriously 
 if at all altered by any trading for the public good 
 such as Adam Smith set down as hypocrisy in 
 his day. The uniformities we study are those of 
 trading for private advantage. Indeed we can 
 hardly imagine yet what uniformities would be 
 yielded by a philanthropic trade and commerce. 
 Perhaps they may show themselves by and by. 
 
 The economy of the State is of course meant to 
 be patriotic, which is a nearer approach to philan- 
 thropic than the ordinary economy of commercial 
 competition. But it is just this economy of the 
 State that has varied most in history, each patria 
 having different needs and policies at different 
 times. It is this that changes its complexion 
 with changes in national character and political 
 events, for these affect the positive laws, the "his- 
 torical categories" of some of our friends. 
 
 The elementary economic principles to which 
 reference has so often been made, can be traced 
 through many historical periods and in the most 
 diverse nations; and essentially they can be de- 
 scribed as the development of division of labour 
 and commercial ambition working together. Even 
 
118 DISTURBING ELEMENTS 
 
 Gresham's law that the cheaper money drives 
 the dearer out of circulation, and the often verified 
 impossibility of preventing exportation of the 
 precious metals under a so-called unfavourable 
 balance of trade are of this origin in the end. Such 
 economic principles do not much depend on 
 institutions; they tend to break down the institu- 
 tions that resist them. It is of their nature too 
 that they affect not production only but exchange, 
 and not only exchange but consumption, so far 
 as the principle of subjective value is allowed 
 recognition. 
 
 We ought not therefore to allow the cry of 
 "national" versus "commercial" economy to dis- 
 turb our studies, till we cannot help ourselves. 
 There is one case in which we cannot help ourselves 
 Among the obstacles that encumber the path of 
 individual economy and commercial ambition in 
 all civilized countries, replacing the much fiercer 
 and ruder obstruction of uncivilized times and 
 countries, there stands out one conspicuous, 
 taxation. 
 
 Is taxation in any sense a form of economy? 
 It was not so taken by Ricardo when he wrote 
 of the 'Principles of Political Economy and 
 Taxation.' It is a stretch of charity to speak of it 
 as a blessing, though of course it may be the 
 'price of a blessing. We try to reduce the cost of 
 all blessings to a minimum, and if we could get 
 those of the State without paying for them we 
 should certainly do so. As one of your own poets 
 
IN THE LONG RUN 119 
 
 has said, "no price is set on the lavish summer;" 
 and we do not prize it the less. The State, however 
 exacts a price and that price (or one of the prices) 
 is taxation. 
 
 It is not true that taxation is a sort of "robbery 
 under arms." It is certainly a disturbing element 
 in the private economy. But a well ordered society 
 is only conceivable nowadays under the shelter of 
 a well ordered State, and therefore the economy of 
 the State is a condition of the economy of the indi- 
 vidual, disturbing it for its own good, or so intended . 
 In paying for it the individual is no more suffering 
 outrage than when he pays for the other neces- 
 saries of his life, few of which can be had at the 
 price of the lavish summer. He suffers hardship 
 only if the economy of the State is not so well 
 ordered that the steps involved in it, say for 
 Defence, Justice, and Public Works, disturb his 
 private economy as little as may be and are there- 
 fore for their purpose as eflScient as they may be. 
 
 Political Economy may have some light to 
 throw on the extent of the disturbance and on the 
 possible minimum of disturbance and the way of 
 securing it. What are called the Canons of taxa- 
 tion (equality, certainty, convenience, and econo- 
 my) are perhaps all reducible to one, economy; 
 they are the rules laid down by economists for the 
 guidance of statesmen who wish to enable the 
 economic tendencies of commercial ambition to 
 make their way through necessary obstacles with 
 least friction, if the metaphor be allowed. 
 
120 DISTURBING ELEMENTS 
 
 Except Cantillon perhaps all economists of the 
 earlier period had taxation either frankly in their 
 text or else constantly in their minds and peeping 
 out in the text. One main object of Adam Smith 
 was to wage war against bad taxes, not simply to 
 work out an economic system. As the theology of 
 the church would hardly have been defined but for 
 the heretics, the doctrines of political economy 
 might have lain longer undefined but for the mis- 
 takes of finance ministers, the practical men who 
 were too often poor in theory or without it alto- 
 gether. We need not have gone to theology; 
 Malthus was roused to think out a true theory by 
 the heretical speculations of Godwin. 
 
 The financial heresies, however, although un- 
 consciously built on false theories, do not come 
 down upon us as speculations but as claimants for 
 our contributions. The most insidious disturbing 
 element to the student of taxation is his private 
 interest as regards the tax gatherer. Other obsta- 
 cles or burdens in the way of our private prosper- 
 ity may seem to have been put there by nature or 
 providence; but here is one that comes from a cause 
 operating by human will and modifiable conceiv- 
 ably by our own will or powers of persuasion. Like 
 other people the economist may have a bias of 
 self interest. One of the few virtues which the 
 modest Ricardo believed himself to possess was 
 indifference to his self interest. No doubt this 
 impartiality was made easier by his wealth and the 
 subdivision of his investments. But with an effort 
 
IN THE LONG RUN 121 
 
 even the poorest of us may be as impartial as David 
 Ricardo; and to be genuine political economists 
 we must make the effort. Suppose we succeed 
 we have still other disturbing elements. As the 
 theory of taxation is more personally interesting 
 to the public than, say, the theory of subjective 
 value (value in use), the air is full of maxims about 
 it. There seems to be a special temptation here 
 to be led by one plain simple rule as it will be called 
 — a rule of which the simplicity is greater than the 
 simplicity of nature. Never was there a case 
 where in all civilized countries of the modern type 
 it was more evidently impossible to put the whole 
 truth into a short sentence. If we try to do it, 
 the maxim becomes at once a disturbing element. 
 It needs courage to say ''I cannot put the whole 
 truth in a nutshell"; but there never was a nut- 
 shell big enough to hold the entire truth. We 
 must deny ourselves the popularity of the dema- 
 gogue, which in such matters proceeds from an 
 inglorious ease in theorizing. 
 
 We must not even be tempted by dicta of econo- 
 mic writers. There is an optimistic dictum "All 
 taxes are so shifted that nobody bears any burden," 
 — with or without the reservation ''in the long 
 run," which is supposed to make any paradox 
 true. There are contrary dicta "All taxes fall on 
 the land" — "All taxes ought to fall on the land" — 
 "All taxes tend to stay where they are put." Of 
 these four the last is nearly as optimistic as the 
 first (or diffusion theory) though asserting the 
 
122 DISTURBING ELEMENTS 
 
 polar opposite, and precluded from appeal to the 
 long run. 
 
 From the diversity of occupations, division of 
 labour, and increasingly complicated forms of the 
 industrial system, it has followed in fact, even 
 without the disturbance of law and politics, that 
 civilized nations require not one tax but a system 
 of taxes. It may or may not be right to add that 
 the load of taxation should be distributed over 
 the economic faculty of the society or even of the 
 individual, as a physical burden is adjusted to 
 the back and muscles; this is a flagrant figure of 
 speech and may justly, therefore, be suspected. 
 The maxim of equality though it suggests the 
 political motto already considered has little to do 
 with it but in name. If ''final utility" has taught 
 us less than was expected elsewhere, it has been 
 a distinct help in the theory of taxation. An equal 
 levy, say a poll tax of $100, is not equal in burden- 
 someness to all citizens; nor is an equal rate, say 
 10 per cent of income, even of net income. The 
 poor man misses his 10 per cent more than the rich 
 and more surely lives the worse for it. This truth 
 well understood helps us to the conclusion that the 
 economically strongest should bear the weight of 
 taxation. All taxation is an evil; the question is, 
 since taxation is inevitable, who should bear it and 
 who can bear it most easily. The diminution of the 
 rich man's economic faculty will be less in propor- 
 tion though the apparent burden thrown on him 
 be greater than oh the poor man; and this means 
 
IN THE LONG RUN 123 
 
 that the drawback of taxation to economy all the 
 nation over, and therefore to the national economy, 
 will be at its minimum when the heaviest burden 
 is borne by the economically strongest. 
 
 In the same way we need not be turned from a 
 tax by being told it is 'robbing Peter to pay Paul." 
 It may be absolutely necessary to pay Paul (as 
 in England we pay him an Old Age Pension) , and 
 Peter may be well able to help Paul, and not at 
 all unwilling. 
 
 Perhaps you say unwillingness has nothing to 
 do with an economic argument. But absence of 
 unwillingness means that the tax is not odious, and 
 an odious tax is likely either to be evaded or to 
 produce an uneconomic course of action. 
 
 There is a breaking point in the strain (if we 
 may use a scientific figure with our owncaveat in our 
 minds), even when the strain is put on those best 
 able to bear it. It may be true that taxation puts 
 no obstacles in the way of the economic man 
 greater than nature has in most cases put already; 
 but we must remember that nature sometimes 
 makes them too great for endurance, and the 
 taxing authority may conceivably do the same. 
 This leads to a larger question, of what is called 
 State Interference. Taxation (except to those who 
 say that not only fees but all taxes are a quid pro 
 quo) is a case of very decided interference. There 
 can hardly be "laisser faire, laisser passer'^ with 
 ''that two handed engine at the door.'' 
 
 The Socialistic State of the popular imagination 
 
124 DISTURBING ELEMENTS 
 
 would convert all economy into public economy; 
 and there would be no economic activity in the 
 old sense of the term. But there are not many 
 socialists of this type. The ideal of reformers 
 not averse from the name socialistic is more often 
 a State that carries regulation farther than at 
 present, but retains commercial ambition with 
 its claws cut. It is simply more of what we now 
 have to a smaller extent. Within the great civil- 
 ized countries (though hardly hekveen them) there 
 is not in most cases a regulation so severe that it 
 prevents us from saying that laisser faire is the 
 general rule ; the economist need not fear that the 
 economic tendencies which he traces out as result- 
 ing from commercial ambition will all be stopped 
 by the State; there is usually scope somewhere for 
 a true economic tendency, if not with us, as Plato 
 would say "somewhere among the barbarians." 
 It is not the ''liberty" of the political motto we 
 considered at first; but perhaps on that account 
 it is nearer true freedom. That we are not allowed 
 to trade in men or to treat men as tools or mere 
 animals is not even an economic hardship. Laisser 
 faire carried to that extremity would not justify 
 itself even in the long run. 
 
 If an appeal for unlimited commercial compe- 
 tition is examined it will probably be found to mean 
 either that we are asked to begin with a tabula 
 rasa and mere struggle for existence, which we can- 
 not do without ceasing to be civilized, — or else 
 that the existing legal distribution of property, 
 
IN THE LONG RUN 125 
 
 resulting from a history in which there was httle 
 laisser faire and every kind of interference, is to 
 be taken as it is, undisturbed, and the very un- 
 equally equipped competitors are to pursue their 
 careers in business without any new interference. 
 If one of the less fortunate in the distribution were 
 to protest that his economic activity could not 
 be the best possible if the results of the old inter- 
 ference remained to his disadvantage, the best 
 answer seems to be that to accept the situation 
 as it stands is likely to produce less waste than to 
 "shatter it in bits and then remould it nearer to 
 the heart's desire." It seems the right answer. 
 But it means that we know we have two evils be- 
 fore us and are choosing the less ; and from the less 
 which we allow to remain we are bound to clear 
 away, from time to time, what ingredients of evil 
 can be reached and expelled, even by interference 
 of the State. Prof. Foxwell's wise advice is not 
 to be forgotten; it is more important to see that 
 the acquisition of new wealth proceeds justly than 
 to try to redistribute wealth already acquired. 
 But we need not concede more than his concession, 
 that it is ''more important and more practicable." 
 Of course countries differ greatly from one an- 
 other in their "existing situation." The distribu- 
 tion of property in England was probably one of 
 the worst among the trading nations at the time 
 laisser faire was most loudly demanded by certain 
 writers; it is even a point in favour of the more 
 rigid view of laisser faire that on the whole so 
 
126 DISTURBING ELEMENTS 
 
 much progress in better distribution has been made 
 under an approach to laisser faire in England since 
 that time. The United States, on the other hand 
 had at that time a position among the best, and 
 if laisser faire had begun then (it might be argued) 
 it might best have secured economic prosperity 
 for all. There was a wider equality of fortunes 
 from which to start. 
 
 The wisdom of governments, however, has de- 
 creed that in any case no such experiment should 
 be tried between nations, say, between the United 
 States and Canada; and now the effects, especially 
 in the States, of one kind of interference need to be 
 counteracted by means of another kind of inter- 
 ference; the tariffs make the trusts possible and 
 then laws are passed to keep the trusts in check. 
 The resources of America are so vast that effects 
 of mistakes of this kind (for so they seem to many 
 of us outside) are less serious than elsewhere. 
 There is perhaps at this moment no single state 
 of the Union and no province of Canada, perhaps 
 there is not even one county of either, that could 
 faithfully be described as impoverished. If lais- 
 ser faire in England means 'plague take the 
 hindmost," in the United States the hindmost 
 escapes the plague, and has such tolerable pros- 
 perity himself, outside of the great cities, that he 
 can afford to tolerate the millionaire. But it 
 seems possible that, if the States had been thorough 
 going in their laisser faire, they would not have 
 seen such a phenomenon as a miUionaire or a 
 
IN THE LONG RUN 127 
 
 proletaire at all. The enthusiastic writings of 
 Richard Cobden about America read a little 
 sadly now, however much of the praise is still 
 due. 
 
 The civilized nations of the world are now a 
 group of great empires, of which the United States 
 are one. Are these to be a nightmare to us? 
 They have one advantage from the economist's 
 point of view, their sheltering power. Within 
 them trade and commerce have peace and within 
 many of them not only peace but freedom. The 
 sheltering power is a priceless advantage. A 
 countrj^ like Canada under the shelter of the Brit- 
 ish Empire can go forward in its economical de- 
 velopment without more than a sentimental 
 participation in the care of defence, which vexes 
 public men in the parent country quite as much 
 as the "eternal want of pence" in Tennyson's 
 Monologue. It is unlike a state of the German 
 empire, in escaping the military corvee and in 
 having the privilege of a tariff of its own making 
 and a real self govermnent of a highly democratic 
 character. In the United States you have, quite 
 apart from the new conquests, what is really an 
 Empire of States, giving to all of them shelter and 
 peace within its borders, states, little less in 
 population than Canada and yet economically 
 one with their sheltering power. Over your vast 
 area, teeming with men and with every variety 
 of competitive industry, economic tendencies 
 have little hindrance. The friction begins on the 
 
128 DISTURBING ELEMENTS 
 
 frontier. Elsewhere there is an abnost ideal sit- 
 uation for the student of political economy to 
 studj''. No doubt there is waste, not the huge 
 waste of the warlike communities of Europe, per- 
 haps in a sense more culpable than theirs for it is 
 the waste of wanton strength ; but its consequences 
 are not so wide spread over the nation, the strength 
 of the whole nation being so great. 
 
 Englishmen are sometimes surprised that polit- 
 ical economy is so much studied in the States; but 
 it would be strange if it were not so. Almost 
 every conceivable phase of economic tendency 
 finds scope in one or other state of the Union. 
 This very University has produced a work show- 
 ing the extraordinary diversity in taxation alone 
 between the members of a small group of states. 
 The diversities not yet described must be legion. 
 
 It is true that there is still economic friction 
 created on the frontier by the economic policy of 
 the ruling body. The day has not come when (as 
 Adam Smith suggested) the different countries 
 have a system of free imports and are related 
 to each other commercially as different parts 
 of the same country, say different states of the 
 same Union. To the economist there are strictly 
 speaking no principles of international trade, none 
 differing economically because nations differ po- 
 litically. There are principles of trade modified 
 by distance, unlike habits, and difficult communica- 
 tion; but those are illustrated by New Orleans and 
 New York quite as well as by New York and 
 
IN THE LONG RUN 129 
 
 Toronto. The superadded questions, superadded 
 by difference of nationality, are mainly those of 
 taxation. 
 
 Such as they are, it is only too probable that 
 they will need to be considered by economists 
 for some time to come. Economists will have the 
 task of reading out of and through those obstacles 
 the perturbed course of economic tendencies, be- 
 fore which they would like to see spread a fairer 
 field. Just as we might wish to economize legal 
 intellect in the Old Country by the removal of anti- 
 quated subtleties of the law, so we might wish 
 to economize economic intellect in the New Coun- 
 try by the removal of fiscal subtleties that shed no 
 light on economic principles but reflect, instead, 
 the workings of vested interests and international 
 jealousy. It is not only the modest talent of the 
 economist but the commanding genius of the states- 
 man that would benefit by the removal. It has 
 been already remarked that Protection would dis- 
 appear with international jealousy. Its disap- 
 pearance might be hastened if the ordinary ideal of 
 the State (supposing that there is any articulate 
 and conscious ideal of it in the average citizen) 
 were higher than it seems to be. Economists were 
 once accused of a desire to undervalue the State and 
 lower its functions. The assertion may be haz- 
 arded that modern economists are desiring to 
 magnify the State when and because they would 
 confine the action of the State to the great en- 
 deavours that alone seem worthy of it. 
 
130 DISTURBING ELEME3NTS 
 
 American statesmen are free from some of the 
 hard problems at present absorbing the best in- 
 tellects of England. They do not on this Conti- 
 nent discuss Home Rule and Church Establish- 
 ment; the problems are solved; and there is little 
 or nothing of the "Land Question." There is no 
 trouble about a hereditary Chamber of Peers. 
 You have already Payment of Members. Na- 
 tional Defence sits easily on you all. But you 
 have retained the many-headed fiscal problem of 
 which English statesmen rid themselves sixty years 
 ago ; and you have still a Civil Service of the old 
 rather than the new English pattern. 
 
 The heavy-laden English Parliament, with your 
 solved problems on its hands unsolved, would have 
 little hope of solving them if it needed, in addition, 
 to help all classes of English tradesmen to carry 
 on their business, and provide political friends 
 of the ruling party with posts in the public 
 service. America has the large problem of Race 
 to solve. But a continent saved by its position 
 in nature and by its fortune in history from vexa- 
 tions bequeathed to Europe by the middle ages 
 might seem to have a larger hope than Europe 
 can ever cherish. It may well hold it, so long as it 
 enforces a Munroe doctrine against invading 
 germs of European distress and poverty and wrong. 
 Unless it keeps before it the end of securing and 
 preserving the highest possible type of citizen- 
 ship, the State, even though democratic, may 
 realize the fears of the 18th century philosophers 
 
IN THE LONG RUN 131 
 
 who had some share in the founding of this Ameri- 
 can Commonwealth; it may cause more evils 
 than it can cure. 
 
 Such as it is, the State is indispensable, and each 
 private citizen must do his best to cure its evils. 
 Perhaps the greatest danger in a prosperous dem- 
 ocracy is the political apathy of the ''respectable 
 classes." Educated men should take to heart 
 Plato's old warning that the hardest of punishments 
 is to be governed by a worse man than yourself. 
 
 From all experience, none are likely to do their 
 part more loyally than students of political econ- 
 omy. Reflection does not lead to inactivity; it 
 only makes the action itself more wise when the 
 reason for action is brought home. Meet the 
 malady in its first stage : 
 
 "Venienti occurrite morbo: 
 With which moral I drop my theorbo." 
 
NOTES 
 
 1. 'Conscientious judge.' They say in Canada: "So 
 upright that he leans over backwards." 
 'Mill's Plan,' Dissertations, Vol. I, Bentham, p. 391. 
 
 3. 'Book in breeches,' a description of Macaulay. 
 
 4. 'Relative vindication,' a favourite phrase of Prof. 
 
 Edward Caird. 
 
 5. 'Legal friend,' Sir Thomas Raleigh, the most recent 
 
 editor of Cornewall Lewis's Political Terms. 
 
 7. 'To make rights secure.' Wealth of Nations, IV, v, 
 
 sect. iv. So in the Lectures, edited by Dr. 
 Cannan, p. 160, he says the end of law is security 
 from injury, and the establishment of laws and 
 government is the highest effort of human 
 wisdom. 
 
 'Mercantile republic,' IV, i. 
 
 'Different provinces,' IV, v, sect. iii. 
 
 'New colonies,' IV, vii. 
 
 'Equality of remuneration,' I, x. 
 
 'Equality of advantage,' IV, iii, vi (second para- 
 graph). 
 
 8. 'An English writer.' F. C. Montague, Limits of 
 
 Individual Liberty, Rivingtons, London, 1885, 
 
 p. 6. 
 Thorold Rogers, Six Centuries of Work and Wages, 
 
 Sonnenschein, London, 1884, e.g., p. 326 (ch. xii). 
 10. 'Simply the addition of such units.' James Fitzjames 
 
 Stephen, Liberty, Equality and Fraternity, Smith 
 
 Elder, London, 1873, p. 190. 
 'Each woman also,' Bentham, Reform Catechism 
 
 (1818), p. 35, 36, and note. 
 
134 NOTES 
 
 13. 'Population in the forefront.' See J. S. Mill, Auto- 
 biography, published 1873, p. 105, etc. 
 
 16. 'Small wonder.' See Autobiography, p. 232. The 
 date is 1841 and afterwards. 
 
 23. 'Stephen sums up.' Liberty, Equality and Frater- 
 
 nity, p. 263. 
 
 24. 'Increases with all true civilization.' The Japanese 
 
 during the late war with Russia are said to have 
 taught many of their illiterate prisoners to read 
 and write Russian. 
 
 25. 'Honour thy father,' etc. Stephen, ib., pp. 211-2, 
 27. 'Categorical imperatives.' At Baltimore, time ended 
 
 the lecture at this point, but the following pas- 
 sage is given as originally written. 
 
 II 
 
 PAGE 
 
 30. 'David Hume.' First Principles of Government, 1741. 
 
 31. 'Struggle of J. S. Mill.' Unsettled Questions, last 
 
 esssay, on Definition and Method (dating from 
 1836). 
 
 33. 'Used indifferently' — like the words habit and cus- 
 
 tom; the former strictly of the individual, the 
 latter of the group. 
 
 34. Sir William Temple's Works, 4th ed., 1720, Vol. I, 
 
 pp. 47, 61, and 97. 
 
 45. 'Professor Patten's language.' Dynamic Economics, 
 
 1892. Social Statics is the name of a book by 
 Herbert Spencer (1850), and the term occurs in 
 Comte's Philosophie Positive, 1839. See J. S. 
 Mill, Pol. Ec. IV, I. 
 
 46. 'Without doing what Bacon told us.' 'State super 
 
 vias anfciquas', De Augmentis Scientiarum, Book I 
 (p. 458 Vol. I in the edition of Bacon's Works, by 
 Ellis and Spedding, Longmans, 1872). "Quum 
 autem de via bene constiterit, tunc demum non 
 restitandum sed alacriter progrediendum." The 
 reference is to Jeremiah, vi, 16. 
 
NOTES 135 
 
 48. 'L'homme aux quarante 6cus.' The minister's an- 
 swer to the wiseacre was : 'I declare you exempt 
 from the tax.' 
 'Second best faculty.' So Mill says in his Autobi- 
 ography (p. 82) : "The writings by which one can 
 live are not the writings which themselves live 
 and are never those in which the writer does his 
 best." 
 ' A good saying of Mill's, ' Liberty, p. 148. 
 
 52. 'Collective wisdom,' Aristotle, Politics, III, 6. Car- 
 lyle. Latter Day Pamphlets, e.g., I and VI. 
 
 Ill 
 
 PAGE 
 
 59. 'The proof of the pudding.' Professor Stout's words 
 in Mind, 1907, p. 581. 
 
 61. 'Sanely and wisely,' J. N. Keynes: Scope and 
 
 Method of Political Economy, Macmillans, 1891. 
 
 62. 'Too practical,' Ricardo's Letters to Malthus, p. 96, 
 
 compare 126, 167. 
 
 66. "The late Henry Sidgwick." The writer had the 
 privilege of publicly expressing this obligation 
 to Mr. Sidgwick himself at the Banquet of the 
 British Economic Association, 28th March, 1900. 
 
 74. ' Professor Hollander, ' Quarterly Journal of Economics 
 (Harvard), January, 1895. 
 
 77. 'Minor economists,' J. R. McCulloch, Henry Fawcett. 
 In this case W. N. Senior takes side with Ricardo 
 and Malthus, the major economists. 
 
 IV 
 
 PAGE 
 
 84. 'Modelled on the physical sciences.' Prof. S. Patten: 
 Dynamic Economics, page 12. 
 'Condition of sound navigation.' Queanay apud Daire, 
 Physiocrates, I, 52. 
 
136 NOTES 
 
 86. 'Imaginary machine/ Adam Smith, Assays, History 
 
 and Astronomy, 4to ed., 1795, p. 44. Cf. Mor. 
 Sent., Vol. I, Part iv, ch. i, p. 455 (6th ed.). 
 Himae was perhaps the worst ojEfender, comparing 
 the attraction of the sexes among savages with 
 the attraction of two flat pieces of marble. Hum. 
 Nat., Book II, Of the Passions. Part iii, sect, i, 
 Of Liberty and Necessity, Vol. II, p. 224, ed. 1739. 
 
 87. 'Similes from Physiology,' e.g., Wealth of Nations, 
 
 IV, VII. Colonial Policy. 'In her present con- 
 dition [1776] Great Britain resembles one of those 
 unwholesome bodies in which some of the vital 
 parts are overgrown and which upon that account 
 are liable to many dangerous disorders,' etc. 
 (McCulloch's edition, p. 272). So IV, ix. 304. 
 Agricultural Systems. The 'unknown principle 
 of preservation' contained in every healthy 
 human body has its counterpart in the 'natural 
 effort which every man is continually making 
 to better his own condition.' The former corrects 
 a faulty regimen and the latter a bad economic 
 policy. 
 
 Quesnay apud Daire, I, 54; Droit naturel. Reason 
 is to the mind what the eyes are to the body. 
 
 Hegel and Herbert Spencer. Philosophy of Right, p- 
 319, §263, Zusatz;§269, Zusatz, Study of Sociology, 
 ch. XIV. Preparation in Biology, p. 335. 
 
 88. 'Less ambitious.' There is an evident analogy; but it 
 
 may not be right to argue, for example, that, be- 
 cause a substance which could neither be assimi- 
 lated nor thrown off would be fatal to the 
 body of flesh and blood, therefore the Chinese 
 and Japanese will be fatal to the body politic in 
 North America. 
 'Witty saying,' of Mr. W. H. Mallock in the New 
 Republic (1877). 
 
NOTES 137 
 
 PAGE 
 
 89. 'Aristotle noticed' Politics, iii. 6. For statistical 
 
 uniformity see A. L. Bowley's Elements of Stat- 
 istics, 2d ed., 1902, p. 7. The reference to Mr. 
 Karl Pearson is on p. 5. 
 
 90. 'Physiology is said' etc. See Spencer, Study of 
 
 Sociology, pp. 334-5. Milne Edwards is, there, 
 said to have first reached the idea of a 'physio- 
 logical division of labour.' 
 
 91. 'Species by itself,' loc. cit., p. 101. 
 
 'The State as an organism,' see Hegel, Philosophy 
 of Right, §§46, 258 (Zusatz), 259. The book dates 
 from 1820. 
 
 'A Super-Man.* " Ich lehre Euch denUebermenschen. 
 Der Mensch ist etwas das iiberwunden werden 
 soil." Nietzsche, 'Also sprach Zarathustra.' 
 Vorrede, 3d ed., 1894, p. 8. 
 93. 'More reserve now.' Prof. Carl Menger: Methode 
 der Socialimssenschaften, 1883, pp. 139 seq., is 
 discriminating. Even in a popular book like 
 J. R. Macdonald's Socialism and Society, 1905, 
 the limitations are acknowledged. 
 
 96. 'Violations of justice.' SeeWealth of Nations, I x, 65 
 
 (near end of ch.) , iv, v, 236 (Digression, section i). 
 
 97. 'Defects of slavery.' See Wealth of Nations I, viii, 
 
 36, 37; IV, vii, 263; iv, ix, 309. 
 
 100. 'H. D. Macleod.' Economics for Beginners, 1878, pp- 
 
 2, 3, 21, 76. 
 
 101. 'Professor Stammler,' Prof. Rudolf Stammler of 
 
 Halle, Wirtschaft und Recht nach der Materia- 
 listischen Geschichtsauffassung, 1896, 213 et seq. 
 
 102. 'Bacon,' Novum Organum, i.. Aphorisms, xxxviii to 
 
 xliv. 
 'The personal bias.' 'Never let yourself go wrong 
 in your logic;' said the old lawyer to the young, 
 'you are sure to be found out; the facts are at 
 your disposal.' 
 
138 NOTES 
 
 105. 'Professor Marshall/ Principles, 1890, 1st ed., Book I, 
 ch. iv, §1. 'Custom is a disguised form of slow- 
 moving competition' and with an effort we may 
 penetrate the disguise. The passage has been 
 modified in the later editions. 
 'Countries extracting the precious metals.' See 
 Cairnes on 'The Australian Episode,' in his 
 Essays on Political Economy. 
 
 105. Ricardo, 3d ed., 1821, of his Political Economy and 
 
 Taxation, p. 469. 
 
 106. 'In the long run.' The phrase has a sensible advan- 
 
 tage over 'In the end.' Economic facts are 
 better described as in motion than as at rest. 
 Rest is in any case only a mode of motion. 
 108. 'Marshall.' Principles, 1st ed., 1890, v, iv, 411. 
 Economics of Industry, 1892, pp. 228 seq. 
 
 112. 'Religious persecution.' See Fitzjames Stephen: 
 
 Liberty, Equality and Fraternity, pp. 87, 95, 96. 
 
 113. 'Time may be measured.' This is an affair of prosaic 
 
 calculation. It is not the affair of sentiment 
 described in "As you Like It" (iii, ii): 'Time 
 travels in divers paces with divers persons. I'll 
 tell you who time ambles withal, who time trots 
 withal, who time gallops withal, and who he 
 stands still withal.' 
 
 117. 'Meant to be patriotic' Men "learn for example to 
 
 love their country, though it surprises that such 
 an abstraction should excite so much interest." 
 J. R. Seeley, Ecce Homo, pop. ed., p. 143, ch. xiii. 
 
 118. 'One of your own poets.' J.R.Lowell. Sir Launfal. 
 
 119. 'Robbery under arms.' Cf. Whately: Pol. Ec, 24 
 
 ed., 1832, lect. i, pp. 10, 11. Unless taxation is 
 a just (though involuntary) exchange, it is (he 
 says) avowed robbery. 
 
NOTES 139 
 
 PAGE 
 
 120. 'Except Cantillon.' A large exception if it is to Can- 
 
 tillon we are to ' go back' in Economics as to Kant 
 in Philosophy. More have told us to 'go back' 
 to Adam Smith. 'Going back' may sometimes 
 perhaps be a cautious way of going forwards — 
 reculer pour mieux sauter. But it has its pitfalls. 
 'Indifference to his self-interest.' Letters to Malthus, 
 Preface, xiv. 
 
 121. 'Of which the simplicity is greater than that of nature.' 
 
 Cf. Bacon, Nov. Org. I, XLv: 'Intellectus huma- 
 nus ex proprietate su4 facile supponit majorem 
 ordinem et aequalitatem in rebus quam invenit.' 
 'Dicta of economic writers.' (1) Verri and Canard, 
 (2) Physiocrates, (3) Henry George, (4) Thorold 
 Rogers. See A. R. Seligman: Shifting and Inci- 
 dence of Taxation, 1S92, p. 39; and Cobden's re- 
 marks on the idea that a national debt is whole- 
 some because 'in the system.' England, Ireland, 
 America, iii (1835). 
 125. 'Professor Foxwell.' Preface to the English trans- 
 lation of Anton Menger's Whole Produce of La- 
 bour, ex, (1899). The dictum wins assent (it may 
 be suspected) because we take for granted that, 
 since redistribution is always going on, the new 
 and better distribution will under this super- 
 vision 'in the long run' supplant the old unsatis- 
 factory one; and this consummation seems likely 
 to be secured, if the supervision is strict and 
 vigilant. 
 
 127. 'Richard Cobden,' England, Ireland and America, 
 
 1835. 
 
 128. 'Different parts of the same country,' Wealth of Na- 
 
 tions, IV, V, 240.2. 
 131. 'Hardest of punishments.' Republic, I, 347. C. 
 131. 'I drop my theorbo.' Browning, Dramatic Romances, 
 
 'The Glove.' Works, 1868, Vol. IV, 178. 
 
INDEX 
 
 Ability, rent of, 47. 
 
 Also and Likewise, 85. 
 
 Anarchism, 7, 42, 52, 66. 
 
 Aristotle, on collective wisdom, 
 52,89; his use of general prin- 
 ciples, 60. 
 
 Art, selective, 59. 
 
 Assent and Consent, 33. 
 
 Association and Combination, 
 13 seq., 18, 19, 26. 
 
 Averages, 63, 89. 
 
 Bacon (Francis), 3, 46; idola, 
 
 102. See also Notes. 
 Bagehot (Walter), 50, 61, 72. 
 Balance of trade, 86. 
 Bastiat (Fr^d^ric), 58. 
 Bentham (Jeremy), 9 seq., 97. 
 Bentley (Richard), 3. 
 Bias, personal, 5, 30, 53, 66, 77, 
 
 100, 102, 120. 
 Biology and economics, 87 seq. 
 Bohm Bawerk (Prof. Eugen 
 
 von), 77, 108. 
 Bowley (Prof. A. L.), 89. 
 Browning (Robert), 131 and 
 
 Notes. 
 Burke (Edmund), 55, 85. 
 Butler (Joseph), 35 (foot). 
 
 Caird (Edward), 4 and Notes. 
 Cairnes (J. E. ), 61, 77 and 
 
 Notes. 
 Canada, 27, 29; Indians, 32, 37; 
 
 banking, 41; relation to U. 
 
 S., 126, 129. 
 Cannan (Prof. Edwin), 34. 
 Cantillon (Richard), 120 and 
 
 Notes. 
 Carlyle (Thomas), 3, 52 and 
 
 Notes. 
 Casaux (Marquis de), 86. 
 Chinese, 46 and Notes. 
 Civilization, 33, 53, 61, 63, 88, 
 
 116, 118, 122. 
 Classical Economists, 16,. 75. 
 Cobbett (William), 3. 
 Cobden (Richard), 127, 138. 
 Collective bargaining, 78; 
 
 wisdom, 52, 55, 56, 57. 
 Coloured races, their rights, 
 
 22, 23; in Cape Colony, 24. 
 Competition, 46 seq. 
 Comte (Auguste), 15, 68. 
 Consumption of wealth, 98 seq. 
 Cooperation, 16, 39. 
 Corn Laws, 111. 
 Cosmopolitanism, 28, 44. 
 Cost, 69, 73, 118. 
 Credit, 32 seq., 101. 
 Currency and Money, 38, 39, 
 
 49, 67, 118. 
 Custom, in relation to law, 
 
 33 seq. 
 Cyrenaic philosophy, 64. 
 
 Darwin (Charles), 81, 88,91. 
 Deduction, 60. 
 Definitions, 31, 57, 81. 
 Descartes (Rend), 8. 
 
142 
 
 INDEX 
 
 De Tocqueville (Alexis), 15. 
 Development, 57, 90 eeq. 
 Distribution, 57, 124, 125. 
 Domestic Economy, 99, 113. 
 Dutch honesty, 34. 
 Dynamic state of society, 45. 
 See Notes. 
 
 Economic, senses of the word, 
 
 116 seq. 
 Economic system, 43 seq. 
 Economist King, 47. 
 Education, 48, 54. 
 England, 17, 19, 23, 34, 41, 58, 
 
 72, 73; public spirit, 115; 
 
 laisser faire, 125; compared 
 
 with U. S., 130. 
 Enterprise and Invention, 46 
 
 seq., 105 seq. 
 Environment, 92. 
 Ethics, 59, 64, 95, 102. 
 Exploitation of the workers, 
 
 47, 54. 
 
 Factory Acts, 21, 41. 
 
 Fawcett (Henry), 79. 
 
 Final utility, 26, 74, 122; fer- 
 tility, 74. 
 
 Finance, 117, 120. 
 
 Foxwell (Prof. H. S.), 125 and 
 Notes. 
 
 Free Trade, 6, 80, 128, 129. 
 
 French political watchword, 5, 
 6, 9; equality in particular, 
 22; Revolution, 9, 24, 40; 
 Code, 40. 
 
 Fund and Flow, 87, 110. 
 
 Generalization, 62 seq., 90. 
 Germany, 19. 
 
 Godwin (William), 120. 
 Government, 30 seq. 
 Greatest Happiness, 10. 
 Greece, 19. 
 
 Green (Thomas Hill), 11. 
 Gresham (Sir Thomas) , law of 
 
 the coinage, 38, 118. 
 Guizot (F. P. G.), 15. 
 
 Hegel (G. W. F.), 87. 
 
 Hesiod, 60. 
 
 History, realistic view, 62; 
 logic in history, 103; histo- 
 rical categories, 117; materi- 
 alistic view, 40, 56, 68, 92, 
 101, 115. 
 
 Hobbes (Thomas), 32. 
 
 Hollander (Prof. J. H.), 62, 73, 
 74. 
 
 Honesty an implied warranty 
 in economics, 32, 33. 
 
 Hume (David), 30 seq. and 
 Notes. 
 
 Impressionism, 59. 
 India, 17, 45, 105. 
 Infant Industries, 111. 
 Irish Land Laws, 39. 
 
 Jevons (W. S.), 97, 98. 
 
 Johns Hopkins University, 
 
 128 and Preface. 
 Jurisprudence, 102. 
 Justice, interest of the weak, 
 
 42; relation to economics, 
 
 96. 
 
 Kant (Immanuel), 11. 
 Keate (of Eton), 21. 
 Kepler (Johann), 60. 
 
INDEX 
 
 143 
 
 Keynes (J. N.), on method, 
 61. 
 
 Laisser Faire, 123 seq. 
 
 Language, 83 seq. 
 
 Law, English, 5; commercial, 
 
 relation to custom, 33 seq. ; 
 
 its power, 41; in physics, 84 
 
 seq. ; of property, 100 seq. ; 
 
 its demands on intellect, 129. 
 Lewis (George Cornewall), 6 
 
 and Notes. 
 Loria (Prof. A.), 40. 
 Lowell (James Russell), 119 
 
 and Notes. 
 
 MacCulloch (J. R.), 11, 71, 79, 
 
 106. 
 Macdonald (J. R.), Notes. 
 Macleod (Henry Dunning), 
 
 100, 101. 
 Maine (Henry Sumner), 42. 
 Majority, rule of, 11, 42. 
 Mallock (W. H.), 88 and Notes. 
 Malthus (T. R.), 10, 12, 38, 62, 
 
 68 seq., 81, 86, 87, 120. 
 Mandeville (Bernard), 58. 
 Marshall (Prof. Alfred), 105, 
 
 108, 109 and Notes. 
 Marx (Karl), 26, 40, 69, 115. 
 Mathematics, 59. 
 Menger (Anton) and (Carl), 
 
 Notes. 
 Mill (James), 11, 71. 
 Mill (J. S.), on the method of 
 
 teaching, 1, 2; on Bentham, 
 
 11 ; on place of political econ- 
 
 omy,13seq.,31;on liberty, 15 
 
 seq., 45; education, 48; 
 
 public opinion, 52; method, 
 
 61 ; verbal disputes, 80. See 
 
 also Notes. 
 Montague (Charles), 50. 
 Montague (F. C), 8 and Notes. 
 
 Nation, 29, 96, 97, 99, 127. 
 Nationalization of the Land 
 
 73. 
 New and Old World, 27, 129, 
 
 130, 131. 
 Nietzsche (F.), 91 and Notes. 
 
 Organism, 91 seq. 
 Originality, 18 seq,. 52, 53. 
 Owen (Robert), 13, 71. 
 
 Patriotism, 117. 
 
 Patten (Prof. S. N), 45. 
 
 Pearson (Prof. Karl), 89. 
 
 Persecution, 18, 112. 
 
 Philosophy, 95 seq. 
 
 Physiocrats, 84, 85. 
 
 Physiology, 89, 90. 
 
 Plato, 2, 60, 124, 131 and Notes. 
 
 Political Economy, progress, 
 2; analysis or policy, 25 seq., 
 53 seq., 128; definition, 31; 
 alatecomer,44; pragmatism 
 in, 59; method, III passim; 
 so-called laws, 85; relation 
 to biology, 89; how called 
 Economics, 116; study in the 
 U. S., 128. 
 
 Political Philosophy, 31, 41, 
 54, 56. 
 
 Population, 38, 72, 87. 
 
 Pragmatism, 59. 
 
 Probability, 35, 63, 87. 
 
 Profits, 49 seq. 
 
144 
 
 INDEX 
 
 Prohibition of the sale of 
 strong drinks, 20, 52. 
 
 Proletariate, 29, 127. 
 
 Protection, 28, 80, 126, 129. 
 
 Psychology, 8, 95 seq. 
 
 Public business, 114; debate, 
 79; opinion, 51; spirit, 23, 
 115, 116, 131. 
 
 Quesnay (Frangois), 7, 84, 87. 
 
 Raleigh (Sir Thomas), 5 and 
 Notes. 
 
 Religion, watchwords, 3; pro- 
 ceeds from greater to less,24; 
 methods of business intrud- 
 ing into it, 43; its object of 
 worship, 59; a fact of life, 101; 
 prejudices, 106. 
 
 Rent, 47, 72 seq. 
 
 Ricardo (D.), 11, 15, 28, 47, 62, 
 63, 68 seq., 97, 105, 106, 112, 
 113, 118, 120, 121 and Notes. 
 
 Rogers (J. E. Thorold), 8. 
 
 Ruskin (John), 3, 9. 
 
 St. Simon (Henri), 13, 15. 
 Saving in England and U. S., 
 
 115. 
 Schiller (Friedrich), 3. 
 Schopenhauer (Arthur), 107. 
 Scotland, 34, 39, 42. 
 Seeley (J. R.), 117 and Notes. 
 Seligman (Prof. E. R. A.), 
 
 Notes. 
 Sidgwick (Henry), 66 and 
 
 Notes. 
 Slavery, 11, 96, 97. 
 Smith (Adam), on liberty, 6 
 
 seq.; optimism, 8; commer- 
 
 cial honesty, 34; commercial 
 ambition, 45, 63, 72; waggon 
 way, 50; politics and econom- 
 ics, 56; natural law, 85,108; 
 his metaphors, 86, 87; on 
 slavery, 96; individualism, 
 99; consumer, 113; hypocriti- 
 cal trading, 117; taxation, 
 119; free trade, 6, 128. 
 
 Smith (Sydney), 3. 
 
 Socialism, 15, 16, 39, 66, 123, 
 124. 
 
 Social Philosophy, 54, 89, 91, 
 92, 95. 
 
 Society, 43, 67, 87, 93 seq. 
 
 Solidarity, 43, 93, 94. 
 
 Speculation in trade, 36; in 
 philosophy, 102. 
 
 Spencer (Herbert), 42, 87, 89, 
 90, 91 and Notes. 
 
 Stammler (Prof. Rudolf), 101 
 and Notes. 
 
 State, 20, 29, 42 seq., 91 seq., 
 114, 116 seq. 
 
 Statistics, 5, 87, 88 seq., 112. 
 
 Stephen (J. Fitzjames), 6; 
 reply to Mill, 17 seq. 
 
 Stock Exchange, 37. 
 
 Sweating, 97. 
 
 Swift (Jonathan), 25. 
 
 Tacitus, 66. 
 
 Taussig (Prof. F. W.), 77. 
 
 Taxation, 2, 27, 111, 118 seq. 
 
 Taylor (Mrs.), 16. 
 
 Temple (Sir William), 34 seq. 
 
 Tendency, 105 seq. 
 
 Tennyson (Alfred), 127. 
 
 Time in economics, 106 seq. 
 
INDEX 
 
 145 
 
 United States of America, 
 political watchword, 5, 6, 9; 
 land and liberty, 7; public 
 opinion, 19; equality, 22; 
 independent labourer, 29; 
 dollar currency, 39; Indians, 
 90; public spirit, 115, 131; 
 laisserfaire, 126 seq.; politi- 
 cal economy, 128; present 
 position, 130. 
 
 Utilitarianism, 10, 97, 98. 
 
 Value, 69, 96, 98, 121. 
 Verbal disputes, 80, 83 seq. 
 Voltaire (Arouet de), 48. 
 
 Wages Fund, 73, 75 seq. 
 Warranties, implied, 31. 
 Watchwords, 2 seq. 
 Whately (Richard), Notes. 
 Withers (Hartley), 50, 51. 
 Women, rights, 10, 21. 
 
H2ib5 83 **i 
 

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