answer is easy and certain and unevadible. _The Value is in the
Renderings, and nowhere else._ The value of the trowel is the wheat,
that is actually given in exchange for it; and the value of the wheat
is equally the trowel, for the sake of getting which the wheat was
rendered. What was the Value of King Hiram's cedar-timbers? The oil
and wheat actually returned in pay for them. What was the Value of the
oil and wheat sent northward by King Solomon? The timbers rendered in
direct exchange for the same. This is not merely the only possible
answer to the question, _What is Value?_ but it is also a perfectly
complete and satisfactory answer. Common language here corresponds
exactly with scientific language. "How much did the horse cost?" "One
hundred dollars." The dollars have nothing whatever in common with the
horse, except that they express his Value at the time; the horse has
nothing in common with the dollars, except that it expresses the Value
of the dollars at the time. It is just as exact to say, it means
precisely the same thing to say, the dollars are worth the horse, as
to say, the horse is worth the dollars.
In general terms, the Value of anything is something else received in
return for it, when each owner renders the one _for the sake of_
getting the other. This is the whole of it, so far as any specific
valuable thing is concerned. We shall indeed need after a little, and
shall have no trouble in finding, an abstract and universal definition
of "_Value_," as an abstract and scientific term perfectly
circumscribing the field of Economics. Here and now we are dealing
with the simpler concrete question, What is the value of any specific
valuable thing? The unvarying answer is, Some other specific valuable
thing already exchanged for the first! There may be expected value,
estimated value, but actual value there is none, until a real exchange
has settled how much the value is. The value of anything is something
else already exchanged for it. Value is not simply a relation
subsisting between two things, the result of a careful comparison
between them, but rather an actual fact established in connection with
them. The universal formula of Value is _quid pro quo_, in which
formula _quid_ stands for one of the valuables and _quo_ for the
other, and _pro_ unfolds the motive of each owner for the reciprocal
receiving and rendering.
Here a caution is needful. Because nobody can tell what the value of
anything is until something else has been put over against it in order
to get it and actually received therefor, and because the only
possible way to express the value of either is in the terms of the
other,--the trowel is worth the wheat and the wheat is worth the
trowel,--one must not therefore jump to the conclusion that the value
of either is settled for all time or even for any future time. It is
only settled for _this_ time. In Economics as in Christianity, Now is
the accepted time. There is nothing fixed in Values, and never can be
from the nature of the case, because Desires are personal to
individuals, and Efforts fluctuate with times and persons, and
Estimates that wait on these vary from necessity, and the Renderings
of to-day may not be the chosen renderings of other persons in the
same articles to-morrow. Value is not a quality at all, still less is
it a permanent quality, of anything; it is a relation established
between two things when these are in the hands of two given persons;
but now when these are in the hands of two different persons, whose
views are pretty sure to differ from the former, and a new relation is
sought to be established between these in the old way of Estimates,
is it strange that a new balance is struck, and Value is expressed in
quite different terms?
One of the chief charms of Political Economy is the open secret, that
it deals not with rigidities and inflexible qualities and mathematical
quantities and the unchanging laws of matter, but with the billowy
play of desires and estimates and purposes and satisfactions, all of
which are mental states, and all of which are subject in the general
to ascertainable laws, though laws of a quite different kind from
those of Mechanics. Values come and they go. Within certain limits and
under certain conditions they may be anticipated and even predicted,
but never with the precision of an eclipse or the result of a known
chemical combination. There is a useful and fascinating Science of
Value, as we shall see indubitably by and by in the present chapter;
but it is a science that deals primarily with _persons_ and only
secondarily with _things_, with mind and not with matter, with the
general undulations of the sea and not with the crests of the waves.
And all this is so, because Values are relative, because the
announcements in the market-place to-day may stand listed differently
to-morrow and very differently next year, and because old values may
disappear altogether and many new ones come in, all in accordance with
the incessant changes in the wants and labors and fashions and
projects of men.
We are now in a good place to see once for all the sharp distinction
there is between Utility and Value. These two are often confounded to
the deep detriment of our Science; and no clear thinking is possible
in Economics without drawing this line sharp, and then holding it
fast; for the hazard of this confusion is all the greater, because
Utility is always connected with Value, although it is a totally
different thing from Value. We will see. Utility is the simple
capacity of anything to gratify the desire of anybody. This is at
once the etymological as well as the popular signification of the
word. It is derived from the Latin _utor_, to make use of, a word that
is often conjoined in Latin with _fruor_, to enjoy; so much so, that
the two verbs are often put together, _utor et fruor_, and also often
without the conjunctive, _utor fruor_. Utility, then, is a quality of
innumerable things. Anything that is _good for_ anything, anything
_useful_, anything that has the power to still _the desires_ of any
person, has Utility. But multitudes of things that have this capacity
to gratify human desires are never bought and sold, and therefore can
have no Value, since nobody will give anything for them. The air we
breathe, the water we refresh ourselves with from spring or brook, the
light of the sun and moon and stars, the fragrance of the flowers, the
mountain prospect that delights the eye,--all these, and thousands
more, possess the highest utility, but no value whatsoever. They are
free. They are the bounty of God. They are never bought and sold. They
are a vast class of things by themselves, with which Political Economy
as such has nothing to do.
Nevertheless the element of Utility comes into every case of Value,
because the element of Desire comes into every case of Value, and
whatever merely satisfies the Desire of any person is Utility, whether
that capacity be the direct gift of God or whether the Efforts of men
have been employed to bring it about. It is just here that we see the
precise function of our "two efforts" in each case of Value, in
distinction from mere Utility in all cases: much of utility is
absolutely free, no effort of men having been put forth to secure it,
for example, the fragrance of the wild rose; much more of utility is
the commingled bounty of Nature and the gratuitous effort of men, for
example, the fragrance of the domestic rose brought by the householder
himself into his own yard for the gratification of his own family;
while by much the most of utility is commingled free gift of God and
the compensated efforts of men, for example, the fragrance of the bank
of roses cultivated and cared for by the hired gardener. It is
important for our purposes to discriminate carefully the three kinds
of Utility: (1) what is wholly disconnected from the efforts of men,
and comes freely from the hand of God; (2) what is mingled with the
unpaid efforts of men, so that the satisfaction of the desire comes
partly from Nature and partly from unbought effort; and (3) the
compound utility that is partly free gift and partly the result of
compensated labor. The last is the only kind of Utility that stands in
any connection with Value.
And even this is very different from Value. Utility in all three of
its forms--now free, now onerous, now partly bought--is always a
quality of one thing by itself, going straight to the satisfaction of
some desire, and there an end. It is simplicity itself compared with
Value, which is always a resultant of several things, and is
specifically a relation of mutual purchase established between two
"renderings," each of which expresses the value of the other, in each
of which is embodied an "effort" made by each of the two "persons"
rendering, and each of which excites a "desire" and an "estimate"
before being passed over in ownership to another, and a "satisfaction"
afterwards.
The utility in every valuable rendering comes partly from free Nature
and partly from compensated effort, but it is remarkable, that a
principle, with which we are to become very familiar later on, namely,
Competition, eliminates for the most part from all influence upon
Value that portion of the Utility that is the free gift of God. The
great Father never takes pay for anything, and never authorizes
anybody to take pay in his behalf; and, moreover, has arranged things
so, that it is exceedingly difficult for any person to extort anything
from another person on the strength of anything that God has made, and
man has not improved. Take, for example, ten horses of any general
grade, brought into the same market by their ten owners for sale.
These men did not make these horses, but they have cared for and
trained them, or at least have become proprietors by purchase or
otherwise of the results of such care and training. The Utility in
each horse is compound, consisting partly of what God has done for him
and partly of what man has done for him,--the two parts inextricably
interwoven,--and all ten are offered now for sale. Each of the owners
would indeed be glad to get something for his horse on the ground of
what God has done to make him sound and strong and fleet, in addition
to a fair compensation for what he (and his predecessors) has done in
raising and breaking him; but the cupidity of all is likely to be
thwarted by the ultimate willingness of some to sell their horses for
a price covering the element of human "efforts" involved, and the
action of these tends to fix a general rate for the whole ten, and
thus the gratuitous element is eliminated from influence on Value.
Even if the ten owners should combine for a higher price, there are
doubtless a plenty of horses of that general grade elsewhere, some of
whose owners are content to get back an equivalent for their own and
others' "efforts" expended on their horses; and so the action of these
tends to fix the general price for horses of that kind for that time
and place at a point not above a fair estimate of the onerous human
elements involved; thus throwing out by the action of competition all
effect of natural Utility upon the Value of horses then and there. So
of all other products of that kind.
It is true, that in certain unique cases, in which competition has
little or no play, because there is only one or a very few owners of
such unique products, one cannot certainly say that free Utility may
_not_ influence the Value to lift it above the gauge of human efforts
involved; but such cases are rare, and relatively unimportant; and the
tendency is immensely strong, under the natural and beneficial
condition of things, for Values to graduate themselves through the
reciprocal estimates and renderings of commerce, down to the actual
and onerous contribution of _men_ to that Utility that underlies
Value.
Thus we are brought again and again from differing points of view to
the "two renderings" as central and determinative in Value, and also
more specifically to the "two efforts" of persons rather than any free
contribution of Nature as constituting that portion of the compound
Utility, whose function it is to gratify the "two desires" that
precede the realization of Value,--that portion of the utility in any
rendering that must be _compensated for_ by the other rendering. Now
in order to reach in a moment more our final definition of "Value," a
definition, it is believed, that will cover all the cases and take the
life out of endless disputes, we need a scientific term to carry
easily and exactly the meaning of any economic _rendering_. Let that
word be SERVICE. We must have it in its generalized meaning, to cover
the renderings of all the three kinds, in distinction from the term
"personal services," which we have already used and shall continue to
use to designate one class only of things exchanged, in
contradistinction to "commodities" and to "credits," the other two
classes.
VALUE IS THE RELATION OF MUTUAL PURCHASE ESTABLISHED BETWEEN TWO
SERVICES BY THEIR EXCHANGE.
We offer this definition of "Value" to our readers in much confidence,
that they will find it exact and adequate and altogether trustworthy.
No one of them, however, is precluded from attempts to improve it in
breadth and brevity and beauty; and all are invited to pick logical
flaws in it, whether of ambiguity or superfluity or deficiency. Many
minds and many hands in many lands have left their impress on parts of
this definition, for example, Aristotle in Greece and Bastiat in
France and Macleod in Great Britain; the present writer thinks, that
he has bettered the definition of Bastiat, namely, "_Value is the
relation of two services exchanged_," by precisely _defining_ the
relation as one of mutual purchase; and he is sure, that he has
improved the definition of Macleod, namely, "_The value of any
economic quantity is any other economic quantity for which it can be
exchanged_," by making his definition at once more abstract and more
general and more definite, and also by escaping the slight implication
in the word, "quantity," that only material things are exchanged in
economics.
The immense importance of securing _first_ a clear and correct
Definition of "Value," which is the foundation-word and the
circumference-word of Political Economy, and _then_ of using that term
and all other scientific terms in the Science in their defined senses
only, will certainly be appreciated by those who have wandered in the
wide wilderness of the discussions on the undefinable word, "Wealth,"
and especially by those who have reflected most upon the vast and
illimitable significance of economic Exchanges on the welfare of
mankind. Associate Justice Miller of the Supreme Court of the United
States, not an Economist in the technical sense, referred in 1888, in
words that are worth remembering, to "_the philosophical maxim of
modern times, that of all the agencies of civilization and progress of
the human race commerce is the most efficient_." In August of that
year John Sherman of Ohio, a man far enough from being a technical
Economist, said in the Senate of the United States, that "_it is
almost a crime against civilization_" to maintain commercial barriers
between Canada and the United States.
There were tokens a plenty in the year of Grace just referred to, that
the Science of Value in all the lands of the civilized world, and
particularly in the United States, was drawing to itself a new and
more popular esteem. It was seen more clearly and felt more deeply
than ever before, that this science has a weighty word for every man
and woman and child in the world; that there are certain Rights in
every one inherent and inalienable to buy and sell for his own
advantage; that most if not all of the Governments, under the lead of
comparatively few selfish and powerful men, were infringing upon these
Rights, and robbing under the forms of Law the masses of their
citizens to immense amounts for the special benefit of these very men;
that the only sure defences of the people against these abuses of all
kinds were in the maintenance and diffusion of the scientific and
consequently disinterested principles and maxims of a sound Political
Economy; that such a science was only friendly to the broadest rights,
to universal gains, to illimitable increase in human comforts and
powers, to international fellowship, to peace on earth and good-will
among men; that, accordingly, a science of such scope and tendencies
must be encouraged and cultivated and improved; that what had been
crude in it, and narrow, and merely national, must be sloughed off;
that the English and insular and special speculations of a century
ago, which regarded "Wealth" as consisting of material things only,
excepting however considerable portions of Adam Smith's immortal book,
were antiquated and unusable; that the Science had really moved into a
broader and still a well-circumscribed field, new and more permanent
foundations were being laid, and fresh contributions from all
countries should be welcomed; and that the time had fully come, when
the accepted truths of this Science, like those of the other developed
sciences, should be practically and steadily applied to the betterment
of mankind. Under these broadening and inspiriting and uplifting
conditions Political Economy, as never before, thanked God and took
courage.
3. Having now a satisfactory definition of Value, and knowing
accordingly just what Valuables are in clear distinction from all
other things in the world, we must examine with some care two or three
of the most general facts and laws and limits of Value, before we pass
in the next following chapters to study in detail each of the three
kinds of Valuables, namely, material Commodities, personal Services,
commercial Credits.
(a) Since Value in general is the relation of mutual purchase between
two Services, and consequently the specific value of either can only
be expressed by the other,--one Valuable being always measured by the
Valuable exchanged against it,--it follows as a matter of course that
such a thing as a general Rise or Fall of Valuables is an
impossibility. The rise of one valuable involves of necessity a fall
in the other, as the fall of one implies the rise of the other. If the
articles exchanged be bushels of wheat and dollars of silver, and if a
bushel buys a dollar to-day, then wheat is worth a dollar a bushel;
but if wheat rises next week, so that a dollar will not buy a full
bushel, that is precisely the same thing as saying, that the dollar
has fallen in its purchasing-power as compared with the wheat. Such
specific changes in the purchasing-power of one Valuable over another
are incessant throughout the commercial world, and a merchant's
sagacity consists in anticipating these so far as possible and in
availing himself of them alertly and prudently; but each one of us
must needs see clearly and hold firmly in mind, that each fall in the
purchasing-power of a Valuable means a corresponding rise of power in
the other Valuable,--if the first buys more of the second than before,
then the second must buy less than before of the first; and,
consequently, a general rise of Valuables is a contradiction in terms,
and so of course is a general fall of Valuables.
This brings us to _Price_. Price is Value reckoned in money; and this
is the only difference in the meaning of the two terms. When one
valuable is sold against another, even when one of the two is money,
each is the _Value_ of the other: Value is the general and universal
term in Economics. When any other valuable is sold against money, the
amount of money it buys is called its _Price_: Price is a specific and
restricted term in Economics. Since we shall study Money thoroughly in
a later chapter, and there explain the origin and extent of its
functions throughout, it is only in order to remark here, that it is
for convenience' sake, that is, to make easy the comparison of
valuables one with another, that Value in commerce is commonly reduced
to Price. Money becomes a sort of measure, by means of which to
compare all other valuables with each other. In order to ascertain the
Price of a Valuable, it only needs to be sold once against money; but
in order to ascertain the Value of a Valuable, it would need to be
sold once against all other valuables whatsoever. This last is clearly
impracticable; and so Value for practical purposes is reduced to
Price. The General is made Particular for convenience. Hence we have
"Prices current," but never Values current.
Now it will be plain to all, how there may easily be and often is a
general rise or fall of Prices while a rise or fall of Values is
impossible. Price is a relative word as much as Value is, but it does
not relate to so many things. Price is specific, and Value universal.
Both equally involve buying and selling, but one sale of a single
valuable against money leads to Price, while ten thousand sales of the
same valuable against other than money would not conduct to complete
Value. That would require a sale of this valuable against all other
valuables in the world, and a complete statement of the comparative
results.
General, or at least universal, changes of Prices in rise or fall in
any given country are due to general and great changes in the Money
current there. Subordinate changes in other valuables, money being
supposed to remain uniform, will of course vary their Prices; but it
is impossible that such changes should affect equally or even
generally all the various and numberless valuables of a whole country;
while some are coming easier, others are coming harder, while some are
more desired than formerly others are less desired, and this will
bring in of course altered prices, some higher and some lower; but a
general rise of all prices, or a general fall in the same, can only
come about by great changes of some kind in the circulating medium,
that is, the money, of the country. For example, in the United States,
between 1862 and 1878 inclusive, a government paper promise, called
_greenbacks_, was the current money of the country; owing to its
excessive issue, and to some doubt in the minds of the people whether
the paper would ever be redeemed in gold, it soon became depreciated
as compared with gold, the premium on which over the paper money
varied at different times from 1 to 185 _per centum_; as all other
valuables were then sold against greenback money, which had declined,
their prices naturally rose in some sort of proportion as the medium
fell; general _values_ remained much as before, but general _prices_
were much enhanced; and when, after the resumption of specie payments
in January, 1879, gold became again the standard medium, general
prices declined in full accordance with the same universal principle
reversed.
(b) Prices, as we have now seen, are only a subordinate form of
Values: the universal law that regulates all the variations of them
both, within certain fixed limits to be examined shortly, is called
the LAW OF SUPPLY AND DEMAND. This is perhaps the most comprehensive
and beautiful law in Political Economy. We shall look at it now only
in outline: the filling in will be the pastime and profit of all that
is to come.
"Demand" is a technical term in Economics, and accordingly needs to be
defined, and then always used in its defined sense. So is "Supply."
_Demand is the "desire" of a "person" for something in the hands of
another person, coupled with the possession of something else capable
of buying that something._ Mere desire has no function in Political
Economy: hungry and penniless children passing by the stalls of a
great market, have no influence on the prices or values of the viands,
on which they cast their eager glances: only desires accompanied by
"efforts" competent to excite the desires and to pay for the efforts
of another are a Demand. Supply is the same thing as Demand looked at
from the other side. Supply is the correlative of Demand. The Supplyer
is a person, who has in his possession something desired by the
Demander, and who in turn desires something in the hands of the
Demander, when both are willing to exchange their "renderings." There
is no economical difference in the position of the Demander and the
Supplyer. Each is equally a Demand and a Supply with reference to the
other. It is the old and ever-recurring case of Value, the
propositions being here stated in their most universal terms.
For simplicity's sake, however, and for convenience, without altering
the substance of the definitions a particle, the valuables when looked
at as a Demand are practically reduced in all markets to their
equivalent in Money, so that Money offered or ready to be offered
against any other exchangeable thing constitutes what is called in
commercial language a Demand; and this is sufficiently accurate as
well as current, although it must always be remembered that each
valuable in any market in reality constitutes a Demand for another,
and is equally a Supply in reference to that other. _Supply is any
exchangeable thing offered for sale against any other exchangeable
thing._ For example, corn in any market is at bottom a Demand and a
Supply at once for every valuable offered in that market at that time,
say, ploughs for one thing; but in the talk of the market, the
presence of corn there, or its being ready to be immediately brought
there and offered in exchange for money, constitutes what is called a
Supply of corn; money offered, or ready to be offered, in exchange for
corn, constitutes what is called a Demand.
On this account Money seems to play a much more important part in
trade than it actually does play; the corn is sold in the terms of
money, that is, for dollars and cents as denominations of Value;
convenience dictates such a reduction of general Value to this
particular form of it, because this is found to make easier the
ultimate exchange; but there is not one chance in a hundred, as trade
runs nowadays in the larger markets, that this seller of corn will
take his pay for it in actual money whether metallic or paper; money
is never an ultimate product, but only an intermediate one; this
seller of corn wants perhaps a plough or some other farming implement,
and ten to one he will take for his corn a bill or order in some form
on the seller of ploughs, and it will be corn for a plough, each
becoming a Demand and a Supply for the other, though money or rather
its denominations has acted as an agent in bringing about the final
trade; the details of all this in manner and result will be as plain
as day when we come to study "Money" and "Credits" in following
chapters; while the essential point to be noted here is, that all
Valuables are a Demand and Supply as towards one another. In other
words, the world over, A MARKET FOR PRODUCTS IS PRODUCTS IN MARKET.
What, then, is Market-Value returned in the terms of Money? And what
is the universal Law of it?
Market-value is the present rate of exchange between dollars and cents
and any other valuable, that can be fairly graded in a class made up
of valuables similar to itself; and the law of market-value is the
equation of Supply and Demand, that is, the current rate is adjusted
when money enough is offered to take off within the usual times the
valuables on hand and offered for sale. If Demand for any reason
become quickened, and the Supply be not increased, there is
competition among buyers for the stock in market, and the market-rate
rises or tends to rise. If, on the other hand, Demand become sluggish,
the Supply remaining the same, there is a like competition among the
sellers to dispose of their stock, and market-value sinks or tends to
sink. So far it is the simple action on Value of the element of one
"desire" expressing itself through a money-demand, the elements of
"desire" and of "efforts" expressing themselves through Supply being
supposed to remain stable, and the pulsations in the market-rate
follow accordingly.
How far can this simple action go? Demand increasing, Supply remaining
as before, market-rate rises: how far can it rise from this cause?
Here we must remember that Demand not only acts upon Value, but also
Value reacts upon Demand. As Value rises, the number of those whose
means or inclinations enable them to purchase at the new rate is
constantly diminished: there are ten persons who may wish an article
at one dollar, of whom not over four will wish it at two dollars, and
perhaps only one at three dollars. Every rise in market-rate then,
under the impulse of enlarged Demand, tends to cut off a part of that
Demand, that is, to lessen the number of those who will purchase at
the increased price; and the rate consequently can only rise to that
point, whatever it be, where an equalization takes place between the
Supply and Demand, between the quantity of flour, for example, offered
at the enhanced rate, and the quantity of money in the hands of those
willing to exchange it for flour at the higher rate.
Just so in the reverse way, when Demand is slackened, Supply
continuing as before, the market-rate is sure to decline; but
declining rates tend strongly in turn to increase the demand by
bringing the article within the range of a larger number of
purchasers; Society is like a pyramid, each lower stratum is broader
than the one above; and so the decline of rates under a weaker Demand
is arrested by a stronger Demand coming from a wider circle of buyers,
and a new market-rate is determined at the point of equalization
between the new Demand and the old Supply. Thus every rise or fall of
Demand tends to check itself, and will check itself in all the great
classes of valuables, even without any variations in the Supply;
everything oscillates under the variations of Demand; while the point
of stable equilibrium, if we may use the expression of anything so
unstable as Market-value, is always the equation of Supply and Demand.
But all considerable variations of market-rate are commonly checked at
an earlier point than the one just indicated by variations in the
Supply. A sharper Demand carries up the market-rate, and a higher
market-rate commonly acts upon Supply to enlarge it, and an increased
Supply too checks the rise of market-rate. _Per contra_, a slacker
Demand lowers market-rates, and lowered rates often lessen the Supply
by the action of holders and speculators,--holders withdrawing their
stock for a better market, and speculators buying now when the article
is cheap to store away until it shall be dearer. Thus rise of
market-rate from Demand growing stronger is checked doubly; first, by
curtailing the number of would-be buyers, and second, by enlarging the
Supply: the fall of market-rate from Demand growing weaker is checked
doubly; first, by increasing the number of consumers of a now cheaper
article, and second, by a diminution of Supply by the action of
holders and speculators. This double and harmonious working of the law
of the Equalization of Demand and Supply is one of the most
comprehensive and beautiful laws in Political Economy.
Besides this, we must note the effect on Value of conditions in Supply
only, Demand being supposed to continue steady. There are three
classes of valuables in respect to the law of their Supply. (1) When
the Supply is scant, and cannot be increased at all, as is the case
with choice antiques and certain gems and paintings by the old
masters, their value may rise to any point under the action of Demand,
there is and can be in such cases no market-rate, and the individual
value will be struck at the point of equalization of the demand then
existing with the supply there offered. For instance, the French
Government paid, in 1852, 615,300 francs for a painting by Murillo,
which had belonged to Marshal Soult. The genuine Murillos are
comparatively few, and their number cannot be increased, and their
merit causes a strong "desire" to possess them, and their value rises
in connection with the limitation of Supply to a point beyond which no
one purchaser can be found. When this painting was offered in Paris
for sale, many "persons" of course were anxious to buy it, there was
but one painting, there could be but one purchaser, value rose under
the influence of a sharp Demand, the rise could not be checked by any
duplication of the Supply, and the equation was complete and the value
for that sale determined when one party distanced all other
competitors and offered a sum greater than any one else would give.
The same principle controls all sales of this sort, and is practically
the principle of the _Auction_, whose very name indicates its nature
in this regard, that Demand becomes restricted to one party, and that
the highest bidder.
(2) When the Supply, instead of being absolutely limited, can only be
increased with difficulty or after the lapse of time, similar but less
extreme results will be observed. Let us suppose, that pianos are
selling in some rural community at $300 each, that there are twenty
persons in the place who want a piano immediately, that there are but
fifteen pianos on hand, and that the number cannot be increased for
half a year. The market-rate will certainly rise above $300. How much
above? To that point, at which only fifteen of the twenty will be
willing to purchase at the new rate. The equation of Supply and Demand
will be reached by a rising rate which cuts off five competitors. This
is the principle, working only roughly in practice through the
estimates and good judgment of dealers and purchasers. A better
illustration of this second class of cases is, perhaps, the Grains and
other agricultural products. When these have been gathered, there is
no more home supply for a year; and any deficiency in the crops will
raise their market-rate, not at all in the ratio of the deficiency,
but according to the relations of the diminished Supply to a new
Demand. Since the abolition of the Corn-Laws in England in 1846, and
the resulting ease of grain-imports from abroad, a deficiency of home
crops has no such effect on the price of cereals as it had before that
time; when, according to Tooke's History of Prices, an expected
falling-off of one third in the crops often doubled and sometimes
quadrupled the usual prices; which shows that the world ought to
become one country in respect to all food supplies, as indeed happily
it is now for the most part, each country allowing them to be
distributed freely everywhere in accordance with this law of Demand
and Supply. Speculation is more busy in grain, in cotton, and in such
things generally, because a new Supply can only be had once a year;
early information is eagerly sought at the trade centres in regard to
the prospects of the growing crops, and has its influence one way or
the other on current prices; but the world is so wide and all the
parts of it now so closely connected together by steamship and
telegraph, that the prices of the great food staples are remarkably
uniform over the earth, and Speculation has not the chance it once had
to count and "corner."
(3) In the only remaining and by far most comprehensive class of
cases, in which the Supply of Commodities and Services and Credits can
be readily and indefinitely increased to meet enhanced Demand, and
easily withdrawn from market and stored when Demand declines, each
rise and fall of market-rate tends to be speedily checked through the
mere action of Supply; and the doubly and harmoniously working Law but
just now referred to keeps Value in this class of cases comparatively
steady all over the world.
(c) It only remains in this branch of the general discussion on Value,
to indicate the Limits, within which all oscillations of Value are
contained. These extreme limits are specially to be found in the
element of Value which we have called "Efforts." We have clearly seen
already, that "efforts" (or Labor) are not, as has been often
asserted, the cause of Value, but only one of several constituent
causes; if Labor be asserted to be the sole cause of Value, the
inquiry becomes instantly pertinent, what is the cause of the value of
Labor; yet we know, that "efforts" always stand in preconnection with
value, and, the mutual "desires" being presupposed, there must always
be Limitations of Value lying partly in the efforts made by the person
serving and partly in the efforts saved to the person served. In every
valuable transaction, each of the parties is reciprocally serving and
served, and it is clear, that the two would not exchange "renderings"
unless the service which each renders to the other is less onerous
than the "efforts" which each would have to make if each served
himself directly. For example, it takes a certain effort for me to
bring water from the spring for the use of my family; I am willing to
pay a neighbor for bringing it for me, but I should not be willing to
make a greater effort for him in return than the effort is to bring it
myself; neither should I be willing to make an effort for him in
return which I regarded just as onerous as the bringing the water
myself; and unless there is some service which he will accept less
onerous to me than that, I shall continue to bring the water. On the
other hand, he will surely not render the service to me of bringing
the water, unless it be less onerous to him to do so than the doing
that for himself which I am ready to do for him.
This principle, applicable to all exchanges whatsoever, draws on the
one side the outermost line, beyond which Value never can pass. It may
be asserted with confidence, that no person will ever knowingly make a
greater effort to satisfy a desire through exchange, than the effort
needful to satisfy it without an exchange. Therefore, it follows,
that all exchanges lessen onerous efforts among men relatively to the
satisfaction of their desires, and tend to lessen these more and more
as exchanges multiply in number and variety, otherwise the exchanges
would not take place.
Moreover, within this outermost Limit of Value, which is made by the
comparative onerousness of the respective "efforts," there is a second
limitation of a similar kind to be found specially in the element
which we have called "estimates." The estimate of each exchanger is
based at once on his own effort about to be rendered and on his desire
for the return service offered: the element of effort in the case of
both being considered for the time as fixed, Value will vary according
to the varying desire of each for the return service of the other,
affecting of course the "estimate" of each, and furnishing also a
secondary Limit of Value. To pursue the same illustration, suppose I
regard the effort required to bring the water myself as 10; that there
are several persons, who would be glad to do that service for me at a
return service which I consider as 8; that there are two persons, who
are willing to do it for something which I estimate at 6; and that
there is only one person, who will do it for a return service which I
regard as 5. It is evident, that the extreme limits of that service to
me are 10 and 5. Higher than 10 it cannot go, lower than 5 it cannot
sink. But why have I before me three possible classes of renderers?
Because the persons in each class, while estimating their own efforts
alike in the proposed rendering to me, have varying "desires" as
towards a possible rendering from me to them, and consequently put
differing "estimates" upon the possible transactions. The man who will
bring the water for 5 has for some reason (no matter what) a stronger
desire for the return than anybody else, and I should of course
employ him so long as he would serve me on those terms; if he decline
the exchange, I fall back on one of the two persons in the class above
him, and Value rises now from 5 to 6, and will be steadier there than
it was before; if each of these in turn should give out, I should fall
back upon the larger class ready to serve me at 8, and Value would be
very steady at that rate, because there are numerous competitors; and
by no possibility could it rise above 10. Between 10 and 5 the value
may fluctuate, but it cannot overpass these Limits in either direction
under existing circumstances.
Therefore we may conclude, that the _maximum_ Value of any Service in
exchange will be struck at the point where the recipient will prefer
to serve himself, or go without the satisfaction, rather than make the
exchange; and the _minimum_ Value of any Service in exchange is struck
at the point below which the recipient cannot get himself served even
by him who most highly estimates the return service offered.
(4) We come now to the last and most important Inquiry in this initial
chapter, namely this, _Can there be, and is there, a strict Science of
Buying and Selling? Is there a Science by itself, clear and certain,
that covers and controls Valuables?_
Here we must go slowly, if we would go surely. We must first find out
exactly what a Science is in general, and then ascertain in particular
whether Political Economy bears all the marks and stands all the tests
of the other genuine Sciences. What is a Science?
_A Science is the body of exact definitions and sound principles
educed from and applied to a single class of facts or phenomena._
The very first condition, accordingly, of any science is, that there
be a single class of facts, objective or subjective, that can be
separated from all other classes of facts, in the mind by a
generalization and in words by a definition, and that such
generalization and definition be clearly made and held; the second
condition is, that the class of facts so circumscribed and defined be
open to some or all of the logical processes of construction, of which
the most important are Induction and Deduction; the third condition
is, that the subordinate definitions and working principles within the
inchoate Science be all educed from and applied to these circumscribed
facts in strict accordance with these well-known logical processes;
and the last condition is, that these definitions and principles have
gradually become "_a body_," in which there is an organic arrangement
of parts, all being placed in a just order and mutual interdependence.
There is no old Science, and there can be no new Science, in which
these four conditions do not meet and become blended; and the beauty
of it is, that this Definition applies to any Science in all stages of
its growth. No one of all the Sciences is as yet completed; but just
so soon as any correct definitions and principles are drawn from and
applied to any _class_ of things clearly circumscribed as such, and
these definitions and principles are orderly arranged in a _body_,
there is an incipient Science; and its progress towards perfection
will proceed in precisely the same manner in which its foundations
have been laid; new facts and principles and definitions will
gradually be discovered, and these when reapplied to the class of
things out of which they have sprung, will lead to corrections and
adjustments and enlargements of the Science; and no matter how far
these logical processes may be carried, the general Definition with
which we start will also be found ample at the end of the journey.
All of the Sciences without exception have been developed into their
present position in just this manner; and they fall easily into three
great classes, namely, the Exact, the Physical, and the Moral
Sciences. The ground of this triple classification is partly the
distinct subject-matter in the three classes of Sciences, and partly
the distinctive prominence of one or more of the logical processes of
construction in each.
Thus, the class of the Exact Sciences consists only of the formal
Logic, and pure Mathematics. These two are distinct from all other
sciences, because their logical method of procedure is wholly
Deductive. Deduction is the process of the mind, by which we pass from
a _general_ truth to a _particular_ case under it, that is to say,
from _more_ to _less_ inclusive propositions. Stuart Mill argues at
much length in his book on Logic, that even the axioms of pure
Mathematics are originally gained by Induction, while others claim
that the truth of these axioms is perceived _intuitively_, but no
matter how this point is decided, the construction process of the Pure
Mathematics is from the General to the Particular. So it is also with
the Aristotelian logic, whose Major Premise, whether only _supposed_
to be true or intuitively _perceived_ or inductively _proved_ is
always General in its terms. This is the form of Aristotle's
Syllogism:--All sinners deserve to be punished; John is a sinner; and
therefore, John deserves punishment.
Physical Sciences are those concerned with the classifications and
laws of action belonging to material substances. There are a great
circle of these, of which Astronomy, Botany, and Chemistry, may serve
as examples. They have been mostly developed since the time, and in
accordance with the methods, of Lord Bacon; who, in strong reaction
against the Deductive logic of Aristotle, exalted Induction or the
mode of generalizing from _particulars_, as the true way of building
up Sciences; and, as the subject-matter of each of the physical
sciences is well open to observation and experiment, to Induction and
Deduction, and to corrective verifications, both inductive and
deductive, the new method proved remarkably pregnant and successful.
Each of these sciences has a distinct _Class_ of objects or phenomena
to which its attention is directed; the class is circumscribed by the
scientific Conception and Definition; its devotees as a rule are
skilled in using the Baconian tools; and consequently, its conclusions
receive the confidence and control the action of men. All of the
Physical Sciences are constantly enlarging "the body of exact
definitions and sound principles" connected with their several classes
"of facts or phenomena."
Moral Sciences are those concerned with the classifications and laws
of action belonging to beings having Thoughts and Desires and Will.
The most developed of these sciences at present are Metaphysics,
Ethics, and Economics. Each of these is concerned with a single class
of phenomena, which may be exactly conceived of and defined, and is
open to the logical processes by which alone Sciences can be built up.
But Induction cannot march up with quite so sure a stride, nor
Deduction descend with so large degrees of certainty, in relation to
_persons_ endowed with free-will, as in relation to physical
substances held firm in the grip of unvaried law. Still, the doubt
always attaches far more to the actions of an _individual_ than to the
actions of the _masses_ of men. It is much easier to know human nature
in general, than one man in particular, because many Inductions guided
by observation and History make it almost certain how masses of men
will act under a given set of conditions, while any one _may_ act in a
contrary way. Deduction, accordingly, cannot hold quite the same place
in the Moral Sciences so far as individuals are concerned, as it holds
in the Physical and Exact Sciences; but this lack is perhaps more
than made up by other advantages. _Experience_ in the moral sciences
corresponds to _Experiments_ in the physical sciences. Then there is
the great advantage of _Introspection_; since each man has within
himself the means of interpreting and testing the inductions of
Metaphysics, Ethics, and Economics. Then also there is the great
resource of _Feigned Cases_, which, provided only they be cases
possible to occur, open up to Reasoning a new means of proving and
correcting. Besides these, which it enjoys in common with them,
Economics, as we shall soon see, possesses one other great advantage
over and above the rest of the Moral Sciences.
Since, then, Political Economy deals primarily with Persons, and only
quite secondarily with Things, it is, under the definition and on
every ground, a "moral science"; yet it must not be confounded in the
least with what is sometimes called the science of Morals, or Ethics.
There is one word that marks and circumscribes the field of Ethics,
and that word is _Ought_; there is one word also that marks and
circumscribes the field of Economics, and that word is _Value_. Now,
the idea of _obligation_, on which ethical science is founded, and the
idea of _gainful exchange_, on which economical science is founded,
are totally distinct ideas. The imperatives of ethical obligation rest
upon the consciences of men, and Duty is to be done at all hazards;
guilt is incurred if it be neglected; while pecuniary gains and
losses, however large, do not, or at least ought not, weigh a feather
against an intuition of Right and Wrong. Economics, on the other hand,
does not aspire to place its feet upon this lofty ethical ground; no
man is ever under any moral obligation to make a trade; he properly
makes it or not, according to his present sense of its gainfulness to
himself; and so economic science finds a solid and adequate footing
upon the expedient and the useful. Ethics appeals only to an
enlightened conscience, and certain conduct is approved because it is
Right, and for no other reason; Economics appeals only to an
enlightened self-interest, and exchanges are made because they are
mutually Advantageous, and for no other reason; each of the two
Sciences, therefore, has a basis and sphere of its own, and the
grounds of the two are not only independent, but also incommensurable.
We will now apply _seriatim_ to Political Economy the four fundamental
conditions belonging to all recognized Sciences, and so determine for
ourselves whether it be not a strict science, and thus worthy in its
leading propositions of all acceptation.
(a) Every science must have to begin with a definite Class of facts,
which lie in an easily circumscribable field, and which are not likely
to be confounded with other facts of a differing nature. Economy has
such a class of facts, that lie in such a field, and that cut
themselves off by sharp lines from all other things. _Valuables_ is
its class of things. It has nothing to do with any other class of
things. Its field is Value, or Sales, or Exchanges. This field is
perfectly definite. Sales are never confounded with gifts, and are
never confounded with thefts. They have a distinctive character of
their own. They have always been in the world, will always be in the
world in ever-multiplying volume, and no one ever mistakes their main
features for anything else. Anything whatsoever that is salable, or is
about to be made so, comes within the view of Economics, and
scientifically it cares for nothing else. While it finds its field
definite, it also finds it broad. It has no wish to encroach on other
sciences, nor will it tolerate any encroachments on its own. Before
anything is sold, or is being made ready to sell, it cares nothing
what other science employs itself upon that thing; after the thing is
sold, Economy loses its interest in it, and other sciences may take it
up if they choose. Valuableness is the one quality that constitutes
the Class of things with which the Science is conversant, and it
claims complete jurisdiction over all things just so far forth as they
have this one quality, and no farther. Now there _is_ in the actual
world such a Class of things; its exterior boundaries have been
exactly ascertained by a long series of Inductions and Deductions,
tentative, corrective, and confirmatory; and accordingly, Political
Economy has now in full possession the first grand condition of a
Science.
(b) This great class of facts, thus reached by logical Generalization
and grasped and held by a mental Conception and fixed by an adequate
verbal Definition, is remarkably open to all the logical processes of
reasoning, by which alone sciences are constructed, and thus possesses
in full measure the second grand condition of the Sciences. Not one
logical resource is denied to the economists: all the tools of the
scientific workshop are at their hands. Let us now catalogue these in
their order.
(1) _Induction._ This is the logical and universal process, by which
the mind naturally passes up from a certain number of observed cases,
in which a certain quality appears, to a Generalization, which is a
conception of the mind followed by a statement in words to the effect,
that _all possible cases_ of that kind will exhibit the quality
already observed in _the few cases_. It has as its basis a confidence
in the resemblances and uniformities of Nature; it proceeds upon the
axiom that Nature throughout is consistent with herself; and this
confidence has been ten thousand times justified in the issue, when it
is found that Nature preordained the Sciences by causing grand
analogies to run through each department of her works, including man
and his works. The structure of the human mind corresponds with these
objective resemblances; it seizes upon them, and delights in them, and
naturally and joyfully infers and concludes that what has been
observed of _a part_ may be safely affirmed of _the whole_ of that
kind; accordingly, the world over, when certain things are found to be
true in a considerable number of cases, the mind leaps over space and
time to a whole class, and frames for itself a general rule or
principle, which binds all the cases into one bundle, and thereafter
confidently affirms what is known to be true of some to be probably
true of all. This is inductive Generalization; and the strength and
the joy of it is well expressed by Descartes: "_I have thought that I
could take as a just generalization that which I very clearly and
vividly conceived to be true._"
Experience in Economics corresponds to Experiment in the Physical
Sciences, and furnishes to Induction all the fuel it can ask for to
feed its logical furnace and to forge the chains that bind the Cases
to the Classes. Personal experience in buying and selling, local
experience in buying and selling, and national experience in buying
and selling, with all that belongs to these, the records of which are
full to overflowing, afford to the inductive inquirer in Economics an
inexhaustible supply of material. Instances abound. Particulars may be
gathered up one by one on every hand and linked into the inductive
chain. If any doubt be felt about the strength of any one of these
chains, another one may at once be linked in terms drawn from another
field of Experience with a view to test the strength of the first.
Most fortunate from this point of view is the United States, because
here there are States with substantive powers of control over most
matters of trade within their borders, as well as a Nation with
sovereign powers of control over some points of trade within the
country as a whole. This feature has given birth to commercial
experiments as well as commercial experience of all kinds; and
Induction rejoices in all these abundant materials for generalization
thus furnished free of cost to Science, though unfortunately not free
of cost to the People.
(2) _Deduction._ This is a logical process exactly the reverse of the
first, in that it descends from a generalized statement reached by the
inductive process to some particular, or subordinate class of
particulars, ostensibly covered by the general maxim. Induction
examines a number of particulars, and then makes a leap, it may be a
long leap, over all intervening particulars, to its Generalization
clamping them. The main use of Deduction is to make sure of any one of
these overleaped particulars, which may come into importance, and thus
confirm the generalization, or correct it. It is not strictly true,
what is often alleged against deductive reasoning, that there is
nothing _new_ in its result, that the Induction had already passed
through that particular in rising to its Generalization, and therefore
to descend to any particular link to examine that, is something
useless. The exact truth is, that it _is_ useless to examine again
deductively the very particulars that were carefully studied
inductively, but on the other hand there is always much actually
untraversed territory between these already examined particulars and
the inductive generalization, and Deduction is often very useful in
carrying us down to questionable points in this territory. Even Lord
Bacon, who scorned the syllogism, admits this: "_Axioms duly and
orderly formed from particulars easily discover the way to new
particulars, and thus render sciences active._"
We will illustrate this by a reference to Franklin's famous induction
to prove the identity of lightning with electricity. Only one
experiment, and that a very rude one, was needful in this case;
although usually many experiments, or the careful observation of many
particulars, are necessary in inductions; but the generalization
having been gained, Deduction had a chance to try its hand; it had
long been observed that electricity could be conducted from point to
point, and if electricity and lightning be identical, then lightning
can be so conducted; therefore, deduced Franklin, a pointed iron rod
elevated above buildings will harmlessly conduct lightning from the
clouds into the ground. Deduction gave mankind the lightning-rod, and
so made one point of science "_active_," as Bacon phrased it; and it
is noticeable, that Turgot's felicitous epigram turns on the deductive
rather than the inductive side of Franklin's experiment: _Eripuit
coelo fulmen sceptrumque tyrannis._
Let us catch up another illustration from the science of Botany, to
show how Deduction may strengthen and sharpen an inductive result. The
botanists say, that apple-tree blossoms are always five-petaled,
because blossoms from a large number of apple-trees in various
localities have been observed to have just five petals to the blossom;
so far, they affirm inductively, and indeed securely; but they have
also reached by means of another induction a much broader law of
plant-life, namely, that outside-growers, when they have petaled
flowers at all, always have them five-fold; now apple-trees are
outside-growers; and therefore, deductively also, and conclusively
beyond shadow of question, apple-tree blossoms are five-petaled.
Political Economy is just as open to Deduction as it is to Induction,
and the two continually are reaching each other the hands of
economical reasoning, not always indeed pursuing each a separate and
distinct path to the end, as in the botanical instance just adduced;
because in practice the two processes mingle constantly, and neither
is carried out in full and due form, since premises used by the mind
are often dropped in the statement, and shortened forms of expression
take the place of long-drawn-out formulas. But all good reasoning in
Economics, as in all other sciences, is analyzable into one or other
of these two processes, both based alike on the uniformities of Nature
and the structure of the human mind.
Deduction has not quite the same scope and certainty in Economics as
in the Physical Sciences, because any one _may_ act contrary to the
vastly probable action of many individuals; still, it is a safe and
potent process in economics, since it may descend securely from the
larger masses to the smaller, even though perchance the individual
escape, because of the simplicity and universality and certainty of
the impulses that lead men to exchange. John Bascom gives the reason
well, why both Induction and Deduction have so firm a grasp upon this
science: "_Between one dollar and two dollars a man has no choice, he
must take the greater; between one day and two days of labor he must
take the less; between the present and the future he must take the
present. This is not a sphere of caprice, nor scarcely even of
liberty; the actions themselves present no alternative, and, if an
alternative giving an opportunity for choice does arise, it arises
from some partial or individual impulse, from some one of those
transitory and foreign influences, which, while rippling the surface,
neither belong to nor affect the current of the stream._"
(3) _Introspection._ Everybody buys and sells, and almost everybody
watches the action of his own mind enough to see what are his
_motives_ in buying and selling, and soon comes to know also that the
other party has corresponding motives. Even the child knows perfectly,
that it takes two to make a bargain, that each party renders
something to the other, that each is glad to part with something for
the sake of receiving something from the other, and that this higher
esteem put by each on what is taken from the other makes for each the
gain of the trade. A very little introspection tells anybody, that
were this higher esteem wanting in the minds of either of the two, the
trade would not take place at all. Everybody within the pale of
_compos mentis_ knows, that, were his own desire for the rendering of
another to increase, he himself would offer more of his own rendering
rather than forego the trade; and he rightly infers, that what is true
of himself is true of all other men; and so, every seller rightly
tries to display his wares in such a way as to increase the desire of
buyers for them; knowing full well from his own experience in buying
that, other things being equal, they will be willing to render him
more for them in consequence.
The phrase above, "rightly infers," is based upon the truth, that all
men are remarkably alike in certain great departments of action; and
that, in no department are they so nearly alike as in this of buying
and selling. Introspection, therefore, an easy self-knowledge open to
all persons alike, and a personal experience in these matters that
everybody gains, give most trustworthy answers to Inductive inquiry
along these lines. Trade is natural and gainful, as any person can
see, who stops to ask himself why he has made, or is about to make, a
given trade; and if natural and gainful to _him_, equally so for
precisely the same reasons to the party of the other part; hence no
law or encouragement is needed to induce any persons to enter upon
traffic; and any law, or artificial obstacle, that hinders any two
persons from trading, who would otherwise trade, not only interferes
with an inalienable right that belongs to both, but also destroys an
inevitable gain that would otherwise accrue to both. Political
economy is very fortunate, accordingly, in being able to make its
appeal to the common sense of all men, giving sound starting-points
through self-knowledge possessed by all men, guiding to safe steps by
means of Induction all who like to generalize and prove, and
especially breaking up current fallacies by asking the potent
question, "How would you like it yourself?"
(4) _Feigned Cases._ There are two kinds of these, namely, those which
might be realized in actual fact, and those which never can be so
realized. The acute mind of the Greeks marked in their flexible
language a decided difference between the class of suppositions that
might possibly become facts, and another class of suppositions
impossible to become facts, by developing a distinct form of expression
for each. This distinction must always be borne in mind by those who
use or note in economical discussions the expedient of Feigned Cases.
Reasoning is always legitimate and often pregnant from suppositions,
whenever these are such as might readily become facts of experience,
because in that case the argument proceeds upon recognized and
inductive resemblances; but otherwise, no inference at all can be drawn
from them, because it is an universal truth in Nature and in Logic, _ex
nihilo nihil fit_, out of nothing nothing can come. In plausible
suppositions impossible to become facts is a nest of logical fallacies,
that need to be watched. A good illustration may be found in the
Monetary Conference at Paris in 1881. Delegates were there from all the
nations of Europe, from the United States, and even the distant India.
Some of these in their eagerness for a factitious ratio of value
between gold and silver forgot the important distinction now in hand,
and argued of the good results to flow from the realization of a
supposition, _which in fact never could be realized_. Mr. Evarts voiced
the French and American delegates in this declaration: "_Any ratio now
or of late in use by any commercial nation, if adopted by an important
group of states, could be maintained; but the adoption of a ratio of
15-1/2 silver to 1 of gold would accomplish the principal object with
less disturbance in the monetary systems to be affected by it than any
other ratio._" The fallacy in this passage is in the words, "could be
maintained," which are a supposition, and what is much worse, a
supposition contrary to fact, from which all arguing is nugatory. Why
it is contrary to fact will be seen at length in the following chapter
on Money.
On the other hand, a supposition that may clearly become a fact is a
substantive thing, and logical inferences may be drawn from it, just
as geometrical inferences may be drawn from a _supposed_ circle: the
circle on the page is not a _perfect_ circle--no such circle was ever
drawn--but _suppose_ it perfect, as it might possibly be, and argument
becomes at once valid. Let us take another Monetary Conference at
Paris in 1867 as an illustration: its judgment as voiced by Mr.
Ruggles of New York was taken with logical propriety, when the great
benefits of an international coinage of gold alone were argued and
announced, because, while that was then a mere conjectural project, it
was possible any day by mutual agreement among the nations to become a
reality. An international coinage of gold is a simple question of
equivalence of _weights_ in the coins of different countries: an
equivalence of _values_ as between gold and silver coins for any great
length of time is neither simple nor possible.
(5) _Results measurable in numbers._ The four preceding logical
processes of proof and construction Political Economy is glad to share
with the other Moral Sciences, but this fifth and last one it has to
itself alone, and this is its chief scientific advantage over them,
and is consequently the main reason why it is already more advanced
and more symmetrically developed than any of them. In common with them
it has important subjective elements, such as Desires, Estimates, and
Satisfactions; in marked advantage over them it has also objective
elements, that can be weighed and measured and even hardened into
statistics. Economics has an ever ready objective test, which mere
mental and ethical and other moral processes never can have from their
very nature. The _result_ of each and of all economic transactions may
be measured by money, and put down in a ledger, and published to the
world in the form of statistics. An economic blunder, whether in
legislation or in private action, pretty soon proves itself to be such
by the lessened gains of somebody, and these losses can be stated
arithmetically; and similarly, an economic improvement evidences
itself at once by increased gains coming to somebody; while it may
take years and years to work out the results of an ethical mistake,
and even then their amount can only be guessed at.
Theories in metaphysics can only be tested by the _Reason_ of men, and
reasonable men without apparent bias of motive take opposite views of
Sensations and Intuitions and Volitions; while theories in economics,
which can be even better tested by the _Reason_, have an additional
and almost immediate and constantly recurring test through men's
pockets and the tables of the Census. The people indeed sometimes
deceive themselves, and are also too often deceived by others, in
these matters of buying and selling; but it is none the less of the
utmost consequence to this Science, that all the results of good and
bad practice in Economics work themselves at last into a definite
shape, into facts and figures that cannot lie. It is not, as in Ethics
and Metaphysics, that tendencies and potencies only are ascertained,
but everything speedily drifts into results measurable in numbers,
which stand out like landmarks against the sky. It is just for this
reason, as both the schools of the Roman lawyers admitted, namely,
that we have in all cases the Return-Service as the outward expression
and measure of the Desire and Effort of him who renders the service,
and because it makes no difference which of two services exchanged be
regarded as the return-service, that our Science is reared on the firm
ground of objective realities, notwithstanding the strong subjective
elements that have a constant part in it.
(c) The third condition of a recognized Science is, that the logical
processes appropriate to its class of facts have been already
carefully applied to them and a certain number of "exact definitions
and sound principles" have been already "educed from and applied to"
them. We do not hesitate a moment to claim, that this condition also
is fairly and fully met by Political Economy, and that this is a
"Science" under the definition from every point of view, and
particularly from this third point of view; and a few examples will
now be given as a specimen merely of the logical work already achieved
in Economics. First, Induction more or less busy for two thousand
years has given at last an exact and acceptable definition of the
Science, and impliedly an exact description of the class of facts with
which it is conversant, namely, the Science of Sales, or what is
exactly equivalent, the Science of Value; and Deduction at all points
along this slow road has helped to correct and to broaden successive
imperfect inductions, which an inquisitive and tentative and cautious
spirit--the mainspring of Constructive Science--has instituted from
time to time.
Second, precisely the same processes often repeated have ascertained
beyond question, that there are only three classes of Valuables and
the exact differences between them, and that, consequently, only six
cases of Value are possible to happen.
Third, so many nations at different times in all ages have lowered the
standard of their Money under a misapprehension of its nature and in a
vain hope of profit, and a general scale of rising prices following
each attempt of this kind having been several times observed and no
instance to the contrary, Economists came by Induction to assert the
proposition, that falling Moneys cause rising Prices; the proposition
stood secure on inductive grounds alone; but so soon as a perfect
definition of Money, namely, a Measure of Services, had at last been
reached both inductively and deductively, it became at once a safe
Deduction from the definition, that rising Prices must succeed a
falling Measure. Thus assurance became doubly sure.
Fourth, Introspection gives each buyer and seller such firm possession
of _his own motive_ in buying and selling, that he naturally and
inductively concludes on the ground that men are substantially alike,
that the _motive is similar_ in the party of the other part; each
further step of experience in traffic assures him of this beyond a
doubt,--each wants to get and does get something from the other of
more consequence to him than what he gives; every attempted deviation
from rectitude in trade so far forth throws the trader out from
opportunity to trade; opportunity to trade is nothing in the world but
_a market_; a market is nothing in the world but men with products in
their hands, desiring to buy other products with these; the more men
anywhere with the more products in their hands of all sorts to buy
with, the better market everywhere for other men (the more the better)
with other products of all kinds to buy with; all the appropriate
logical processes in action and reaction, all the commercial
experience of all men everywhere, and all the true statistics of
traffic ever gathered, do but assure the inductive assent to one of
the best and broadest of all the Generalizations in Economics, namely
this: _A market for products is products in market._
(d) Are the definitions and principles already logically educed from
and applied to the great class of Valuables orderly arranged in "_a
body_"? This is the only inquiry that remains, in order to determine
whether Political Economy is already a "Science" in the strictest
sense of that term. It is admitted, that a jumble of even just
definitions and principles do not constitute a science, but only these
when placed in a just order and interdependence. A "body" implies an
organic arrangement of parts. It has been well said of the human body,
that all its parts are reciprocally means and ends; the same may be
said of every living organic body, whether vegetable or animal; and
the same may be said in the way of analogy of every developed and
recognized Science. All the definitions and propositions and
illustrations in any science should be so arranged, as to show the
mutual relations and reciprocal dependence of all the parts, and as to
display the whole in harmony and symmetry.
It is as certain as anything in the future can be in science, that new
principles will be discovered in Economics as Time and Inquiry go on,
and that these will find their place little by little in a fuller and
more rounded "body" than is at present possible; while it is also as
certain as anything in the future of science can be, that the Outline
of economics is already perfectly drawn, that the great class of
Valuables will never be enlarged nor be better described, that the
category of Commodities, Services, Credits, is completed for all time,
and that the analysis of each act of trade into two Desires and two
Efforts and two Estimates and two Renderings and two Satisfactions
will never yield additional elements. Political Economy is already a
body of exact definitions and sound principles educed from and
applied to a single class of facts. This body will indeed be enlarged
by a future and finer scientific construction, the arrangement and
interdependence of its parts will be better exhibited, the form and
filling up of the Science within the outline already determined is
sure to become more compact, more robust, and more beautiful, as the
decades and centuries go by; while, as in the human body throughout
all the changes of its growth and mature life, that future body of
economic science in all its stages towards perfection will be but the
continuation and fuller development of the present "body" of Political
Economy.
FOOTNOTES:
[1] Green's Short History of the English People, p. 591.
[2] See on this general topic, Mommsen's Provinces of the Roman
Empire, _passim._