POLITICAL ECONOMY.
Do not suppose, my Friend, that I am opposed to _political
economy_; I am simply opposed to _your application of its
principles_.
Let me illustrate my meaning by a comparison between Mathematics
and Political Economy:--
Mathematics may be divided into two classes--“pure” and “applied.”
Political economy may be divided into two similar classes--“pure”
and “applied.”
_Pure_ Mathematics, being an exact science, is infallible.
_Pure_ Political economy, being a matter of opinion, is not
infallible; but let us for the moment suppose it to be so.[14]
_Applied_ mathematics are not always sound; for example, in
applying mathematics to Engineering problems, it is by no means
uncommon to find that they appear to err most egregiously; so
much so, as to give rise to the saying, that “theory and practice
contradict one another.” The fact, in reality, being that theory
has not been correctly applied; that innumerable small factors,
which can only be ascertained by practice and experience, have been
neglected in the application of theory; and even practice often
fails to supply these factors.
_Applied_ Political Economy is under similar conditions, but with
this difference: _1st_, that _pure_ Political Economy is not
infallible; _2nd_, that the application of Political Economy is
affected by a greater number of intricate factors than any ordinary
problem in Engineering; _3rd_, that the observation of results in a
complex question of Applied Political Economy is far more difficult
than in the case of those simple materials which are dealt with in
Engineering problems.
The eminent Italian Political Economist, Luigi Cossa, warns the
student of this difficulty; but free-trading “fools rush in where
angels fear to tread.”
He says:--
“It is needful to hold ourselves aloof equally from the so-called
Doctrinaires who refuse the assistance of practice, and from the
Empiricists who obstinately close their eyes to the light of
theory.
_The Pure science_ explains phenomena and determines laws; the
_Applied_ science gives guiding principles, which practice brings
into conformity with the innumerable varieties of individual
cases.”[15]
Mill also says:--
“One of the peculiarities of modern times,--the separation
of theory from practice,--of the studies of the closet from
the outward business of the world,--has given a wrong bias to
the ideas and feelings both of the student and of the man of
business.[16] ... There is almost always room for a modest doubt
as to our practical conclusions.”
Let us take an example of pure and applied science.
You, my Friend, quote an axiom of Pure Political Economy when you
say:--
“It is unjust to tax all for the benefit of _one class_” So far I
quite agree with you;--it is to your _application_ of the _axiom_
that I object, when you go on to say--“therefore protection in any
shape is wrong.” Your application of pure science to the complex
question of free trade is quite incorrect.
I say “_it is just and expedient to tax all for the benefit of
all_.” I hold that the employment of home and colonial labour, and
the development of home and colonial produce and industries, is for
the benefit of the community as a whole; and that, consequently,
protection, if _carried only to the extent necessary to secure
this, and no further_, is just and expedient.
The Corn Laws, as existing in 1846, went beyond this: and their
_alteration_, not their _abolition_, was needed. Your free-trader’s
argument is like that of a man who has discovered that too much
water will drown, and proceeds at once to the other extreme of
killing by thirst.
_All extremes are bad._ Free trade is an _extreme_. Want of
competition is bad. Extreme competition is bad. _Healthy_
competition is that which is wanted.
Unlimited competition defeats its own purpose by crushing out
weaker industries, diminishing the supply, and enabling the
successful competitors to raise their prices as soon as the rival
industry has been extinguished.
Even Mill admits that protection may
“be defensible when imposed temporarily ... in hopes of
naturalizing a foreign industry.”[17]
And Cossa allows that--
“At certain times, and under certain conditions, protection
has given notable advantages to industrial organization and
progress.... Colbert’s system and Cromwell’s Navigation Act,
contributed not a little to the economic greatness of France and
England.”[18]
There seems to be but little doubt that the political economist
of the future will hold up England as an awful warning, but
an instructive example, of a country ruined by the persistent
misapplication of the principles of political economy.
Alexr. Hamilton, the greatest statesman America ever produced,
says:--
Though it were true that the immediate and certain effect of
regulations controlling the competition of foreign and domestic
fabrics was an increase of price, it is universally true that
the contrary is the ultimate effect with every successful
manufacture. When a domestic manufacture has been brought to
perfection and has engaged in the prosecution of it a competent
number of persons it invariably becomes cheaper. * * * The
internal competition which takes place soon does away with
anything like monopoly, and by degrees reduces the price of the
article to the minimum of reasonable profit on the capital.
(Treasury Report Dec. 1791.)--_Fortnightly Review_, 1873.
It is not merely your misapplication of the principles of political
economy to which I object; I also object to the over-bearing way in
which you thrust down the throat of your opponent the opinions of
your favourite political economists, as if they were infallible and
settled the question beyond all possibility of further argument.
This is especially the case when you quote Mill. Now Mill is no
doubt an eminently able and powerful writer; but he is deplorably
subject to mistakes. He constantly contradicts himself, and is
contradicted by political economists equally able and more reliable
than himself. For example, Professor Bonamy Price[19] accuses Mill
of introducing _utter confusion_ into the topic of Wages.
Cossa speaks of Mill’s “ardent concessions to socialism more
apparent than real;” of his “_narrow philosophic utilitarianism_.”
Also, speaking of Thornton, Cossa says:[20]--
“His book on labour is an excellent one; it made a great
impression on Mill, and caused him to _abandon his theory of
wages fund_; which has also been opposed by Lange, by the
American Economist Walker, and by Bretano.”
Many of the inaccuracies of Mill have been exposed by Professor
Cairnes.[21]
Mr. Cook says:--
“Mill, however, is said to have _abandoned the seesaw theory_ in
his latest and yet unpublished essays.”[22]
Macleod also, in writing on the question of rent says:--
“This does not exhaust the _absurdity_ of the Ricardo-Mill theory
of rent ... but in fact _Mill himself has completely overthrown_
this theory of rent.”[23]
Anyone who has carefully studied the writings of Mill cannot fail
to be struck with the manner in which he allows that which Herbert
Spencer terms “Political Bias,” and which Cossa terms Mill’s
“narrow philosophic utilitarianism,” to affect his opinion, and
warp his better judgment; and when this is the case, he is guilty
of absurdities, inconsistencies, and illogical reasoning that would
disgrace a school-boy.[24]
FOOTNOTES:
[14] I venture to maintain that political economy is not a body
of natural laws in the true sense, or of universal and immutable
truths, but an assemblage of speculations and doctrines which are
the result of a particular history coloured even by the history and
character of the chief writers.--T. Cliffe Leslie, _Fortnightly
Review_, Oct. 1870.
[15] Guida Allo Studio dell’Economio Politico.--L. Cossa.
[16] Some Unsettled Questions of Political Economy, J. S. Mill, p. 156.
[17] Mill’s Political Economy, Bk. V. Chap. X.
[18] Cossa’s Political Economy, Bk. II. Chap. III.
[19] Practical Political Economy, by Profr. Bonamy Price.
[20] Cossa’s Political Economy, Bk. II. Chap. III.
[21] Some Leading Principles of Political Economy newly expounded
by Professor Cairnes. 1874.
[22] Labour. Joseph Cook, p. 179.
[23] Macleod’s Economics, p. 116.
[24] An illustration of this is given in Chap. XV.