In the following Lecture I shall consider whether Political Economy may
be better treated as a science or as an art.
If Political Economy is to be treated as a science, it may be defined
as “the science which states the laws regulating the production and
distribution of wealth, so far as they depend on the action of the
human mind.”
If it be treated as an art, it may be defined as “the art which points
out the institutions and habits most conducive to the production and
accumulation of wealth.” Or if the teacher venture to take a wider
view, as “the art which points out the institutions and habits most
conducive to that production, accumulation, and distribution of wealth,
which is most favourable to the happiness of mankind.”
According to the law which I have already mentioned, as regulating
the progress of knowledge, Political Economy, when, in the 17th
century, it first attracted notice as a subject of separate study,
was treated as an art. At that time human happiness was considered
as dependent chiefly on wealth, and wealth, as I have previously
remarked, was supposed to consist of gold and silver. The object which
the political economist proposed to himself and to his reader, was
the accumulation within his own country of the utmost possible amount
of the precious metals. The questions which now agitate society, as
to the distribution of wealth, were unregarded. All that was aimed
at, was its acquisition and retention in a metallic form. As respects
the countries possessing native deposits of the precious metals, the
means of effecting this were supposed to be obvious and easy. They had
only to promote the extraction of silver from mines, and that of gold
from auriferous sands, and to prohibit the exportation of either. This
was the policy of Spain and Portugal. The countries not possessing a
native supply, could obtain it only by what was called a favourable
balance of trade, that is to say, by exporting to a value exceeding
that of their imports, and receiving the difference in money. And
the money so acquired, they were taught to retain, by prohibiting
its exportation. The prevailing opinion shows itself in the preamble
of the 5 Rich. II. stat. 1. cap. 2., one among the many statutes and
proclamations by which this prohibition was for centuries enforced.
“For the great mischief which this realm suffereth, and long hath done,
for that gold and silver are carried out of the realm, so that, in
effect, there is none thereof left, which thing, if it should longer be
suffered, would shortly be the destruction of the same realm, which
God prohibit;” and the statute proceeds to forbid such exportation on
pain of forfeiture. The merchants, however, who were necessarily the
first to test the effects of this prohibition, found it inconvenient.
Some trades, particularly those with the East, could be carried on
only by the constant exportation of gold or silver, and in all others
it was occasionally useful. They did not venture to attack the theory
that the prosperity of a country depends on its accumulation of money.
Few of them, probably, doubted its truth. But they maintained that the
means by which the legislature endeavoured to promote this excellent
result, in fact defeated it. “Allow us,” they said, “to send out
silver to Asia, and we will bring back silks and calicos, not for our
own consumption, which of course would be a loss, but to sell on the
Continent for more silver than they cost, and we shall add annually to
the national treasure.” This was assented to, and after more than four
centuries of prohibition, the export of bullion was allowed by the 15
Car. II. cap. 17. “Forasmuch,” says the act, “as several considerable
foreign trades cannot be conveniently driven without the species of
money and bullion, and that it is found, by experience, that the
species of money and bullion are carried in greatest abundance, as to
a common market, to such places as give free liberty of exporting the
same, _and the better to keep in and increase the current coins of this
kingdom_, be it enacted, that it shall be lawful to export all sorts of
foreign coin and bullion, first entering the same at the custom-house.”
The art of Political Economy now became more complex. Its object,
indeed, was a very simple one, merely to increase the current coin of
the country; but this was to be effected, not by restraining every
trade which carried out bullion, but only those which carried out more
than they brought in. But how were such trades to be detected? A test
was supposed to be applied, by ascertaining whether their imports
were intended for home consumption, or for re-exportation. In the
former case, the trade, whether profitable or not to the merchant, was
obviously mischievous to the country.
In the second case the trade, if profitable to the merchant, must also
benefit the country, as it would receive more money than it sent out.
“It is not,” says Sir James Stewart[B], “by the importation of foreign
commodities, and by the exportation of gold and silver, that a nation
becomes poor; it is by consuming those commodities when imported. The
moment the consumption begins, the balance turns. Nations which trade
to India by sending out gold and silver for a return of superfluities
of a most consumable nature, the consumption of which they prohibit at
home, do not spend their own specie, but that of their neighbours, who
purchase the returns of it for their own consumption. Consequently a
nation may become immensely rich by the constant exportation of specie
and importation of consumable commodities. But she would do well to
beware not to resemble the milliner who took it into her head to wear
the fine laces which she used to make up for her customers. While a
favourable balance is preserved upon foreign trade, a nation grows
richer daily; and when one nation grows richer, others must be growing
poorer.”
[B] An Inquiry into the Principles of Political Economy, book
ii. ch. xxix. pp. 418, 419, and 422.
Sir James Stewart’s work was published in 1767, and as he says that it
was the work of eighteen years, it must have been written between that
year and the year 1749. Though he calls Political Economy a science,
he treats it as an art, and has the merit of having first given to it
limits clearly separating it from the other moral and political arts.
“Its object is,” he says, “to secure a certain fund of subsistence for
all the inhabitants, to obviate every circumstance which may render
it precarious, to provide every thing necessary for supplying the
wants of the society, and to employ the inhabitants in such a manner
as naturally to create reciprocal relations and dependencies between
them, so as to make their several interests lead them to supply one
another with their reciprocal wants.”[C] This agrees with my second
proposal, namely, to define Political Economy as “the art which points
out the institutions and habits most conducive to the production and
accumulation of wealth.” As incidental to the art, he was forced to
examine the science, and a considerable portion of his work consists of
inquiries into the laws which regulate the production and distribution
of wealth. The extracts which I have read, show that he did not escape
the prevalent errors of his times. And these errors were so grave, as
to render the practical portion of his treatise not merely useless
for its intended purposes, but positively injurious. A legislator
following his precepts, would waste the wealth of the richest country,
and destroy the diligence of the most industrious. But the scientific
part of the work, particularly the chapters on population, and on the
influence of taxation on wages, contains truths of great importance,
which were unknown to his contemporaries, and cannot be said to be
generally recognised even now.
[C] Book I. Introduction.
Among the contemporaries of Stewart were the French Economists, or,
as they have lately been called, the Physiocrats, forming the school
founded by Quesnay. With the exception, however, of Turgot, they wrote
on the whole art of government. Their works, indeed, contain treatises
on Political Economy according to my third proposed definition, that
is to say, “on the institutions and habits most conducive to that
production, accumulation, and distribution of wealth, which is most
favourable to the happiness of mankind;” but they contain much more.
Quesnay and his followers lived in a country subject to political
institutions, of which many were mischievous, more were imperfect,
and all were unsettled. That the existing system of government was
bad, every one acknowledged. The economists believed that they had
discovered why it was bad. They believed that they had discovered that
agriculture is the only source of wealth, and rent the only legitimate
source of public revenue. And they proposed, therefore, to substitute
for the innumerable taxes on importation, on exportation, on transit,
on production, on sale, on consumption, and on the person of man, which
then formed the fiscal system of France, a single tax on the rent of
land. So far their precepts were founded on the science of Political
Economy. But when they proposed the separation of legislative and
judicial functions, and required the whole legislative power to center
in an absolute hereditary monarch, they drew their premises from other
branches of mental science. I have said that Turgot was an exception;
and it is remarkable, that the only man among the disciples of Quesnay
who was actually practising Political Economy as an art, is the only
one who treated its principles as a science. His “Réflexions sur la
Formation, et la Distribution des Richesses,” published in 1771, is
a purely scientific treatise. It contains not a word of precept; and
might have been written by an ascetic, who believed wealth to be an
evil.
We now come to Adam Smith, the founder of modern Political Economy,
whether it be treated as a science or as an art. He considered it as an
art. “Political Economy,” he says, in the introduction to the fourth
book, “proposes two distinct objects: first, to provide a plentiful
revenue or subsistence for the people, or, more properly, to enable
them to provide such a revenue or subsistence for themselves; and,
secondly, to supply the state or common weal with a revenue sufficient
for the public service. It proposes to enrich both the people and
the sovereign.” The principal purpose of his work was to show the
erroneousness of the means by which political economists had proposed
to attain these two great objects. And in the then state of knowledge,
this could be done only by proving that many of them mistook the nature
of wealth, and all of them the laws according to which it is produced
and distributed. The scientific portion of his work is merely an
introduction to that which is practical.
Of the five books into which the work is divided, it occupies only the
first and second. The third is an historical sketch of the progress of
national opulence. The fourth, the longest in the whole work, considers
the direct interferences by which governments have attempted to lead or
force their subjects to become rich; and decides, “that every system
which endeavours, either by extraordinary encouragements, to draw
towards a particular species of industry a greater share of the capital
of the society than would naturally go to it, or, by extraordinary
restraints, to force from a particular species of industry some share
of the capital which would otherwise be employed in it, is in reality
subversive of the great purpose which it means to promote. It retards,
instead of accelerating, the progress of the society towards real
wealth and greatness; and diminishes, instead of increasing, the real
value of the annual produce of its land and labour.”
“All systems,” he adds, “either of preference or of restraint,
therefore, being thus completely taken away, the obvious and simple
system of natural liberty establishes itself of its own accord.
According to that system, the sovereign has only three duties to
attend to: first, the duty of protecting the society from the violence
and invasion of other independent societies; secondly, the duty of
protecting, as far as possible, every member of the society from the
injustice or oppression of every other member of it, or the duty of
establishing an exact administration of justice; and, thirdly, the duty
of erecting and maintaining certain public works and certain public
institutions, which it can never be for the interest of any individual,
or small number of individuals, to erect and maintain.”
The fifth book, which points out the means by which the duties of the
sovereign may best be performed, and the necessary public revenue
provided, is, in fact, a treatise on the art of government. It treats
of the subsidiary arts of war, of jurisprudence, and of education. It
considers the advantages and disadvantages of religious endowments,
and even the details of the opposed systems of patronage and popular
election, and of equality and inequality of benefices. It considers at
great length the modes and effects of taxation and of public loans, and
concludes by an elaborate plan for diminishing the taxation of Great
Britain, by requiring all the British dependencies, of which Ireland
and North America then formed part, to contribute directly to the
imperial treasury.
I have often doubted whether we ought not to wish that Adam Smith had
published his fifth book as a separate treatise with an appropriate
title. It is by far the most amusing and the easiest portion of the
“Wealth of Nations,” and must have attracted many readers whom the
abstractions of the first and second books, if they had formed a
separate work, would have repelled. On the other hand, the including
by so great an authority, in one treatise, and under one name, many
subjects belonging to different arts, has certainly contributed to the
indistinct views as to the nature and subjects of Political Economy,
which appear still to prevail.
The English writers who have succeeded Adam Smith, have generally set
out by defining Political Economy as a science, and proceeded to treat
it as an art.
Thus Mr. M‘Culloch states, as the proper subjects of Political Economy,
“the laws which regulate the production, accumulation, distribution,
and consumption of the articles or products possessing exchangeable
value.” Political Economy, then, is a science. But he goes on to say,
that “the object of Political Economy is to point out the means by
which the industry of man may be rendered most productive of wealth,
the circumstances most favourable to its accumulation, and the mode in
which it may be most advantageously consumed.” So defined, Political
Economy is an art,--a branch, in fact the principal branch, of the art
of government.
Mr. James Mill says that he has in view merely to ascertain the laws
of production, distribution, and consumption. His treatise, therefore,
ought to be merely scientific. But when he says that Political Economy
ought to be to the state what domestic economy is to the family, and
that its object is to ascertain the means of multiplying the objects
of desire, and to frame a system of rules for applying them with the
greatest advantage to that end, he turns it into an art.
Mr. Ricardo is, however, an exception. His great work is little less
scientific than that of Turgot. His abstinence from precept, and even
from illustrations drawn from real life, is the more remarkable, as
the subject of his treatise is distribution, the most practical branch
of Political Economy, and taxation, the most practical branch of
distribution.
The modern economists of France, Germany, Spain, Italy, and America, so
far as I am acquainted with their works, all treat Political Economy as
an art.
Many of them complain of what they call the abstractions of the English
school, and others accuse it of narrow views, and of an exclusive
attention to wealth; criticisms which must arise from an opinion that
Political Economy is a branch of the art of government, and that its
business is to influence the conduct of a statesman, rather than to
extend the knowledge of a philosopher.
It appears, from this hasty sketch, that the term Political Economy has
not yet acquired a definite meaning, and that, whichever of the three
definitions I adopt, I shall be free from the accusation of having
unduly extended or narrowed the field of inquiry which the statute
founding this professorship has laid open to me.
There is much in favour of the third definition, that which defines
Political Economy as the art which teaches what production, distribution,
accumulation, and consumption of wealth is most conducive to the
happiness of mankind, and what are the habits and institutions most
favourable to that production, distribution, accumulation, and
consumption.
It raises the political economist to a commanding eminence. The most
extensive, though perhaps not the most important, portion of human
nature, lies within his horizon.
The possession of wealth is the great object of human desire, its
production is the great purpose of human exertion. The modes and the
degree in which it is distributed, accumulated, and consumed, occasion
the principal differences between nations. The philosopher who could
teach such an art, would stand at the head of the benefactors of
mankind.
But the subject is too vast for a single treatise, or indeed for a
single mind. This will be evident if we consider the extent of one
of its subordinate branches, the limits to be assigned to posthumous
power. On the death of a proprietor, ought his property to revert to
the state, as it does in Turkey, or to go to his children, as it does
in France, or to be subject to his disposition by deed or by will? If
it be subjected to his disposition, ought he to have merely the power
of appointing his immediate successors, or of entailing it for one
generation, or for two, or for ever? Is it advisable that he should
have the power, not only of appointing a successor to his property,
but of directing how that successor shall employ it? And ought such a
power to be unlimited, or to be confined to certain purposes, or within
a certain period? Ought the laws of succession and of testamentary
power to be the same as respects land and movables, or to differ
totally, or in any, or what, particulars? Ought these questions to be
resolved differently in an old country and in a colony, in a monarchy,
in an aristocracy, and in a republic? If Political Economy be a branch
of the art of government, these inquiries form a branch, though a very
small one, of Political Economy.
But there is scarcely any one of them which it would not require a
long treatise to answer satisfactorily. How many, for instance, are
the considerations which must be attended to in a discussion as to the
propriety of enabling individuals to found permanent institutions for
the purposes of religion, of education, and of charity, and as to the
period for which they ought to be allowed to govern them from the grave?
It is almost impossible to overrate the importance of the art of
government. With the exception, perhaps, of morality, it is the most
useful of the mental arts; but, with no exception whatever, it is the
most extensive. Too much attention cannot be given to it; but that
attention should be subdivided. Too many minds cannot be employed on
it, but each should select a single province; and the narrower the
province, of course the more completely is it likely to be mastered.
My second definition, that which defines Political Economy as the art
which teaches what are the institutions and habits most favourable to
the production and accumulation of wealth, is not liable to similar
objections. It opens a field of inquiry, positively indeed wide, but
comparatively narrow. The object proposed by the political economist is
no longer human happiness, but the attainment of one of the means of
human happiness, wealth.
To recur to my former illustrations, he must, as in the former case,
inquire whether, according to the principles of Political Economy,
individuals ought to be enabled to direct how the property which
they have acquired in life shall be employed after their deaths, in
providing religious teaching, and to what extent, and for what periods,
their posthumous legislation ought to be enforced; but he must stop far
short of the point to which his inquiries, if he had adopted the former
definition, would have extended. He must confine himself to the effect
of such institutions on the production and accumulation of wealth.
He has now no business to inquire whether endowments imply articles
of faith, and articles of faith produce indifference or hypocrisy;
whether the servility of a hierarchy be compensated by its loyalty, or
the turbulence of sectarianism by its independence of thought. He has
no longer to compare the moral and religious influence of an endowed,
with that of an unendowed clergy. He does not inquire whether the
morality of the one is likely to be ascetic, and that of the other
latitudinarian; whether the one will have more influence over the bulk
of the people, and the other over the educated classes; whether the
one is likely to produce numerous contending sects, animated by zeal,
but inflamed by intolerance, and the other an unreflecting apathetic
conformity. These are matters beyond his jurisdiction. But he assumes,
on the general principles of human nature, that every civilised society
requires teachers of religion, and that these teachers must be paid
for their services. He shows, on the principles of Political Economy,
that in every such society there are revenues derived from land or
from capital, which are consumed by a class not forced to take an
active part in producing them, and enjoying, therefore, a leisure which
they are tempted to waste in indolence or in frivolous occupation.
He shows that to dedicate a portion of these revenues to the payment
of the teachers of religion, is merely to substitute for a certain
number of lay landlords, or lay fundholders, bound to the performance
of no public duty, ecclesiastical fundholders, or ecclesiastical
landlords, rendering, in return for their incomes, services which,
under what is called the voluntary system, must be purchased by those
who require them. He shows that such a dedication must diminish the
number of idle persons, and therefore increase the productive activity
of the community and diminish the subjects of necessary expenditure,
and therefore increase its disposable income; and he infers that the
wealth of a society may be augmented by allowing such endowments to
be created. He may go on to show that such endowments may cease to be
favourable to wealth, if the founder’s legislative power be unlimited,
since the doctrines of which he has ordered the dissemination may have
been originally unpopular, or may become so as knowledge advances.
The political economist, therefore, may recommend that all such
institutions be subjected to the control of the legislature, in order
to prevent endowments from being wasted by providing teachers for
whom there are no congregations, and that they be also subjected to
periodical revision, in order to accommodate the supply of instruction
to the demand.
He may proceed to consider the different forms of endowments, by
tithes, by land, by rent-charges, and by the investment of money. He
may show how the first is an obstacle to all improvement, and the
second to improvement by the landlord; how the third diminishes with
the progress of wealth, and the fourth may perish with the fund on
which it is secured. And he may propose remedies for these different
inconveniences. If he go further than this, he wanders from the art of
wealth into the art of government.
I have introduced this rather long illustration, not only as an example
of the different modes in which the _art_ of Political Economy must be
treated, according to the definition with which the teacher sets out,
but also as a specimen of the extent and variety of the details into
which he must enter, even if he adopt the less extensive definition.
But this is not all. I have already remarked that all the practical
arts draw their principles from sciences. If, however, the teacher
of an art were to attempt to teach also the different sciences on
which it is founded, his treatise would want unity of subject, and be
inconveniently long. He generally, therefore, assumes his scientific
principles as established, and refers to them as well known. The
teacher of the art of medicine merely alludes to the facts which form
the sciences of anatomy and chemistry; the teacher of rhetoric assumes
that his pupil is acquainted with the science of logic and with that
of grammar. Many of the sciences and of the arts which are subservient
to the art of Political Economy, may be thus treated. The political
economist, for instance, assumes that protection from domestic or
foreign violence or fraud, is essential to any considerable production
or accumulation of wealth, and he considers the means by which the
expense of providing this protection may be best supported; but he does
not inquire what are the necessary legal and military institutions.
He leaves these to be pointed out by the arts of war and of penal and
civil jurisprudence, and by the sciences on which those arts depend.
There is one science, however, to which this treatment cannot as yet be
applied, and it is the science most intimately connected with the art
of Political Economy, that is to say, the science which states the laws
regulating the production, accumulation, and distribution of wealth,
or, in other words, the science (as distinguished from the art) of
Political Economy itself. The time I trust will come, perhaps within
the lives of some of us, when the outline of this science will be
clearly made out and generally recognised, when its nomenclature will
be fixed, and its principles form a part of elementary instruction.
A teacher of the art of Political Economy will then be able to refer
to the principles of the science as familiar and admitted truths. I
scarcely need repeat how far this is from being the case at present.
Without doubt, many of the laws of the science have been discovered,
and a few of them are generally acknowledged; and some of its terms
have been defined, and the definitions accepted. Still, however,
there remains, as I remarked in the first Lecture, much to explore
and much to explain. We are still far from the bounds of what is to
be known, and further still from any general agreement as to what is
known. Every writer, therefore, on the art of Political Economy, is
forced to prefix, or to interweave among his precepts, his own views
of the science, and thus to add to the practical portion of his work a
scientific portion of perhaps equal length. It appears to me, that the
five years during which this professorship is tenable, is too short a
period for so vast an undertaking. I propose, therefore, to take as my
subject, not the art, but the much narrower province, the science; and
to explain, in the following Lectures, the general laws which regulate
the production, accumulation, and distribution of wealth, leaving it to
writers with more leisure to point out what are the institutions most
favourable to its production and accumulation, and to speculators of
still wider views to say what production, accumulation, distribution,
and consumption are most favourable to human happiness.
But though I follow substantially the example of Turgot and Ricardo,
I do not propose to follow it implicitly. Though I profess to teach
only the theory of wealth, I do not refuse the right to consider
its practical application. There is, indeed, something imposing and
almost seductive in a work of pure science, especially if it be a
science connected with human affairs. We admire the impartiality of
the philosopher who discusses matters that agitate nations without
mixing in the strife, or noticing the use that may be made of the
truths which he scatters. And we admit, with comparative readiness,
conclusions which do not appear to have been influenced by passion, the
great disturber of observation and of reasoning. This was one of the
great causes of the popularity of Ricardo. He was the first English
writer who produced Political Economy in a purely scientific form. He
is usually a logical reasoner, so that his conclusions can seldom be
denied if his premises are conceded, and his premises must usually be
conceded, for they are usually hypothetical. Men were delighted to find
what appeared to be firm footing, in a new and apparently unstable
science, and readily gave their assent to theories which did not
obviously lead to practice. But though it be desirable that from time
to time a writer should arise able and willing to treat the science in
this severe and abstract manner, his treatise will be more serviceable
to masters than to students. To those who are already familiar with the
subject, to those who have already perceived how deeply mankind are
interested in obtaining correct views as to the laws which regulate the
production and distribution of wealth, a naked statement of those laws,
though it should not possess the elegance of Turgot, or the originality
of Ricardo, must still be useful, and even agreeable. A mere student
would find it repulsive. He ought to be attracted to Political Economy
by seeing from time to time its practical application. He should be
taught that he is studying a science composed of principles which no
statesman, no legislator, no magistrate, no member even of a board
of guardians can safely disregard. And this will be best effected
by putting before him examples of the good which has been done by
adhering to those principles, and of the evil which has punished their
neglect. These examples, therefore, I shall think myself at liberty
to give. I shall think myself justified, for instance, in showing how
the natural distribution of wealth may be affected by the institution
of poor-laws. And I shall not confine myself to their effects upon
wealth. I shall consider how far a well-framed poor-law may promote the
moral as well as the material welfare of the labouring classes, and an
ill-administered poor-law may produce moral, intellectual, and physical
degradation. But these discussions must be considered as episodes. They
form no part of the science which I profess. I shall enter into them,
not as a political economist, but as a statesman or a moralist; and
I shall expect from those who do me the honour of listening to them,
not the full conviction which follows scientific reasoning, but the
qualified assent which is given to the precepts of an art.
In the next Lecture I shall consider whether the science of Political
Economy may be more conveniently based on positive or on hypothetical
principles.