Bacon's grand sententious phrase, to command nature by obeying. We
learn what are the laws of social growth by living them. The great
difficulty of the interrogation is to know what questions we are to
put. Under the guidance of metaphysicians, we have too often asked
questions to which no answer is conceivable, like children, who in
first trying to think, ask, why are we living in the nineteenth
century, why is England an island, or why does pain hurt, or why do two
and two make four? The only answer is by giving the same facts in a
different set of words, and that is a kind of answer to which
metaphysical dexterity sometimes gives an air of plausibility. More
frequently our ingenuity takes the form of sanctioning preconceived
prejudices, by wrapping up our conclusion in our premisses, and then
bringing it out triumphantly with the air of a rigorous deduction. The
progress of social science implies, in the first place, the abandonment
of the weary system of hunting for fruitful truths in the region of
chimeras, and trying to make empty logical concepts do the work of
observation of facts. It involves, again, a clear perception of the
kind of questions which can be profitably asked, and the limits within
which an answer, not of the illusory kind, can really be expected. And
then we may come to see that, without knowing it, we have really been
trying a vast and continuous experiment, since the race first began to
be human. We have, blindly and unconsciously, constructed a huge
organism which does, somehow or other, provide a great many millions of
people with a tolerable amount of food and comfort. We have
accomplished this, I say, unconsciously; for each man, limited to his
own little sphere, and limited to his own interests, and guided by his
own prejudices and passions, has been as ignorant of more general
tendencies as the coral insect of the reef which it has helped to
build. To become distinctly conscious of what it is that we have all
been doing all this time, is one step in advance. We have obeyed in
ignorance; and as obedience becomes conscious, we may hope, within
certain narrow limits, to command, or, at least, to direct. An enlarged
perception of what have been the previous results may enable us to see
what results are possible, and among them to select what may be worthy
ends. It is not to be supposed that we shall ever get beyond the need
of constant and careful experiment. But, in proportion as we can
cultivate the right frame of mind, as each member of society requires
wider sympathies and a larger horizon, it is permissible to hope that
the experiments may become more intelligent; that we shall not, as has
so often been done, increase poverty by the very remedies which are
intended to remove it, or diverge from the path of steady progressive
development, into the chase of some wild chimera, which requires for
its achievement only the radical alteration of all the data of
experience. "Annihilate space and time, and make two lovers happy," was
the modest petition of an enthusiast; and he would probably have been
ready to join in the prayer, "make all men angels, and then we shall
have a model society". Although in saying this my immediate moral is to
preach sobriety, I do not intend to denounce enthusiasm, but to urge a
necessity of organising enthusiasm. I only recommend people not to
venture upon flying machines before they have studied the laws of
mechanics; but I earnestly hope that some day we may be able to call a
balloon as we now call a cab. To point out the method, and to admit
that it is not laborious, is not to discourage aspiration, but to look
facts in the face: not to preach abandonment of enthusiasm, but to urge
that enthusiasm should be systematic, should lead men to study the
conditions of success, and to make a bridge before they leap the gulf.
THE SPHERE OF POLITICAL ECONOMY.
There seem to be at present many conflicting views as to the nature of
Political Economy. There is a popular impression that Political
Economy, or, at any rate, the so-called "classical" doctrine, the
doctrine which was made most definite by Ricardo, and accepted with
modifications by J. S. Mill, is altogether exploded. Their main
doctrines, it is suggested, were little better than mares' nests, and
we may set aside their pretensions to have founded an exact science.
What, then, is to come in its place? Are we simply to admit that there
is no certainty about economical problems, and to fall back upon mere
empiricism? Everything,--shall we say?--is to be regarded as an open
question. That is, perhaps, a common impression in the popular mind.
Yet, on the other hand, we may find some very able thinkers applying
mathematical formulæ to economics; and that seems to suppose, that
within a certain region they obtain results comparable in precision and
accuracy to those of the great physical sciences. The topic is a very
wide one; and it would be presumptuous in me to speak dogmatically. I
wish, however, to suggest certain considerations which may, perhaps, be
worth taking into account; and, as I must speak briefly, I must not
attempt to supply all the necessary qualifications. I can only attempt
to indicate what seems to me to be the correct point of view, and
apologise if I appear to speak too dogmatically, simply because I
cannot waste time by expressions of diffidence, by reference to
probable criticisms, or even by a full statement of my own reasons.
A full exposition would have to define the sphere of Political Economy
by describing its data and its methods. What do we assume, and how do
we reason? A complete answer to these questions would indicate the
limits within which we can hope for valid conclusions. I will first
refer, briefly, to a common statement of one theory advocated by the
old-fashioned or classical school. Economic doctrine, they have said,
supposes a certain process of abstraction. We have to do with what has
been called the "economic man". He is not, happily, the real man. He is
an imaginary being, whose sole principle of action is to buy in the
cheapest and sell in the dearest market: a man, more briefly, who
always prefers a guinea--even a dirty guinea--to a pound of the
cleanest. Economists reply to the remonstrances of those who deny the
existence of such a monster, by adding that they do not for a moment
suppose that men in general, or even tradesmen or stockbrokers, are in
reality such beings,--mere money-making machines, stripped bare of all
generous or altruistic sentiment--but simply that, as a matter of fact,
most people do, _ceteris paribus_, prefer a guinea to a pound; and
that so large a part of our industrial activity is carried on from
motives of this kind, that we may obtain a fair approximation to the
actual course of affairs by considering them as the sole motives. We
shall not go wrong, for example, in financial questions, by assuming
that the sole motive of speculators in the Stock Exchange is the desire
to make money. Now, it is possible, perhaps, to justify this way of
putting the case, by certain qualifications. I think, however, that, if
strictly interpreted, it is apt to cover a serious fallacy. The
"economic man" theory, we may say, assumes too much in one direction,
and too little in another. It assumes too much if it is understood as
implying that the desire for wealth is a purely selfish desire. A man
may desire to make money in order simply to gratify his own sensual
appetites. But he may also desire to be independent; and that may
include a desire to do his part in the work of society, and probably
does include some desire to relieve others of a burden. The wish to be
self-supporting is not necessarily or purely "selfish". And obviously,
too, one great motive in all such occupations is the desire to support
a family, and one main inducement to saving is the desire to support it
after your own death. Remove such motives, and half the impulses to
regular industrial energy of all kinds would be destroyed. We must,
therefore, give our "economic man" credit for motives referring to many
interests besides those which he buttons into his own waistcoat. And
therefore, too, as I have said, the assumption is insufficient. The
very conception of economic science supposes all that is supposed, in
the growth of a settled order of society. The purest type of the
"economic man," as he is sometimes described, would be realised in the
lowest savage, as sometimes described, who is absolutely selfish, who
knocks his child on the head because it cries, and eats his aged parent
if he cannot find a supply of roots. But such a being could only form
herds, not societies. Political Economy only becomes conceivable when
we suppose certain institutions to have been developed. It assumes,
obviously, and in the first place, the institution of property; it
becomes applicable, with less qualification, in proportion to the
growth of the corresponding sentiments; it takes for granted all that
highly elaborate set of instincts which induce me, when I want
something, to produce an equivalent in exchange for it, instead of
going out to take it by force. The more thorough the respect for
property, the more applicable are rules of economics; and that respect
implies a long training in that sense of other people's rights, which,
unfortunately, is by no means so perfect as might be desired.
It follows, then, that the economist really assumes more--and rightly
assumes more--than he sometimes claims. He assumes what Adam Smith
assumed at the opening of his great treatise: that is, the division of
labour. But the division of labour implies the organisation of society.
It implies that one man is growing corn while another is digging gold,
because each is confident that he will be able to exchange the products
of his own labour for the products of the other man's labour. This, of
course, implies settled order, respect for contracts, the preservation
of peace, and the abolition of force throughout the area occupied by
the society. And this, again, is only possible in so far as certain
political and ecclesiastical and military institutions have been
definitely constructed. The economic assumption is really an
assumption--not of a certain psychological condition of the average
man, but--of the existence of a certain social mechanism. A complete
science would clear up fully a problem which must occur often to all of
us: How do you account for London? How is it that four or five millions
of people manage to subsist on an area of a few square miles, which
itself produces nothing? that other millions all over the world are
engaged in providing for their wants? that food and clothes and fuel,
in sufficient quantities to preserve life, are being distributed with
tolerable regularity to each unit in this vast and apparently chaotic
crowd? and that, somehow or other, we struggle on, well or ill, by the
help of a gigantic commissariat, performing functions incomparably more
complex than were ever needed for military purposes? The answer
supposes that there is, as a matter of fact, a great industrial
organisation which discharges the various functions of producing,
exchanging, distributing, and so forth; and that its mutual relations
are just as capable of being investigated and stated as the relations
between different parts of an army. The men and officers do not wear
uniforms; they are not explicitly drilled or subject to a definite code
of discipline; and their rates of pay are not settled by any central
authority. But there are capitalists, "undertakers" and labourers,
merchants and retail dealers and contractors, and so forth, just as
certainly as there are generals and privates, horse, foot, and
artillery; and their mutual relations are equally definable. The
economist has to explain the working of this industrial mechanism; and
the thought may sometimes occur to us, that it is strange that he
should find the task so difficult. Since we ourselves have made, or at
any rate constitute, the mechanism, why should it be so puzzling to
find out what it is? We are cooperating in a systematic production and
distribution of wealth, and we surely ought not to find any
impenetrable mystery in discovering what it is that we are doing every
day of our lives. Certain economists writing within this century have
often been credited with the discovery of the true theory of rent, or,
which is equally good for my purpose, of starting a false theory. Yet
landowners and agents had been letting farms and houses for
generations; and surely they ought to have known what it was that they
were themselves doing. One explanation of the difficulty is, that
whereas an army is constituted by certain regulations of a central
authority, the industrial army has grown up unconsciously and
spontaneously. Its multitudinous members have only looked each at his
own little circle; the labourer only thinks of his wages, and the
capitalist of his profits, without considering his relations to the
whole system of which he forms a part. The peasant drives his plough
for wages, and buys his tea as if the tea fell like manna from the
skies, without thinking of the curious relation into which he is thus
brought with the natives of another hemisphere. The order which results
from all these independent activities appeared to the older economists
as an illustration of the doctrine of Final Causes. Providence had so
ordered things that each man, by pursuing his own interests, pursued
the interests of all. To a later school it appears rather as an
illustration of the doctrine by which organisms are constructed through
the struggle for existence and the survival of the fittest. In either
case, it seems as though the mechanism were made rather for us than by
us; that it is the product of conditions which we cannot control,
instead of being an arrangement put together by conscious volitions.
And, therefore, when the economist shows us what in fact are the
existing arrangements and their mutual relations, he appears to be
making a discovery of a scientific fact as much as if he were
describing the anatomy of some newly-discovered animal or plant.
The real assumption of the economist therefore is, as I think, simply
the existence of a certain industrial organisation, which has a real
existence as much as an army or a church; and there is no reason why
his description should not be as accurate as the complexity of the
facts allows. He is giving us the anatomy of society considered as a
huge mechanism for producing and distributing wealth, and he makes an
abstraction only in the sense that he is considering one set of facts
at a time. The military writer would describe the constitution of an
army without going into the psychological or political conditions which
are of course implied, and without considering the soldiers in any
other relations than those implied in their military services. In the
same way, the economist describes the army of industry, and classifies
its constituent parts. In order to explain their mutual relations, he
has to make certain further assumptions, of which it would be rash to
attempt a precise summary. He assumes as a fact, what has of course
always been known, that scarcity implies dearness and plenty cheapness;
that commodities flow to the markets where they will fetch the highest
prices; that there is a certain gravitation towards equalisation of
profits among capitalists, and of wages among labourers; so that
capital or labour will flow towards the employments in which they will
secure the highest reward. He endeavours to give the greatest accuracy
to such formulæ, of which nobody, so far as I know, denies a certain
approximate truth. So long as they hold good, his inferences, if
logically drawn, will also hold good. They take for granted certain
psychological facts, such as are implied in all statements about human
nature. But the economist, as an economist, is content to take them for
granted without investigating the ultimate psychological laws upon
which they depend. Those laws, or rather their results, are a part of
his primary data, although he may go so far into psychological problems
as to try to state them more accurately. The selfishness or
unselfishness of the economic man has to be considered by the
psychologist or by the moralist; but the economist has only to consider
their conclusions so far as they affect the facts. So long as it is
true, for example, that scarcity causes dearness, that profits attract
capital, that demand and supply tend to equalise each other, and so
forth, his reasonings are justified; and the further questions of the
ethical and psychological implications of these facts must be treated
by a different science. The question of the play of economic forces
thus generally reduces itself to a problem which may be thus stated:
What are the conditions of industrial equilibrium? How must prices,
rates of wages, and profit be related in order that the various classes
concerned may receive such proportions of produce as are compatible
with the maintenance of the existing system of organisation? If any
specified change occurs, if production becomes easier or more
difficult, if a tax be imposed, or a regulation of any kind affects
previous conditions, what changes will be necessary to restore the
equilibrium? These are the main problems of Political Economy. To
solve, or attempt to solve them, we have to describe accurately the
existing mechanism, and to suppose that it will regulate itself on the
assumption which I have indicated as to demand and supply, the flow of
capital and labour, and so forth. To go beyond these assumptions, and
to justify them by psychological and other considerations, may be and
is a most interesting task, but it takes us beyond the sphere of
Economics proper.
I must here diverge for a little, to notice the view of the school of
economists which seems to regard scientific accuracy as attainable by a
different path. Jevons, its most distinguished leader in England, says
roundly, that political science must be a "mathematical science,"
because "it deals throughout with quantities"; and we have been since
provided with a number of formulæ, corresponding to this doctrine. The
obvious general reply would be, that Political Economy cannot be an
exact science because it also deals throughout with human desires. The
objection is not simply that our data are too vague. That objection, as
Jevons says, would, perhaps, apply to meteorology, of which nobody
doubts that it is capable of being made an exact science. But why does
nobody doubt that meteorology might become an exact science? Because we
are convinced that all the data which would be needed are expressible
in precise terms of time and space; we have to do with volumes, and
masses, and weights, and forces which can be exactly measured by lines;
and, in short, with things which could be exactly measured and counted.
The data are, at present, insufficiently known, and possibly the
problems which would result might be too complex for our powers of
calculation. Still, if we could once get the data, we could express all
relevant considerations by precise figures and numbers.
Now, is this true of economic science? Within certain limits, it is
apparently true: Ricardo used mathematical formulæ, though he kept to
arithmetic, instead of algebra. When Malthus spoke of arithmetical and
geometrical ratios, the statement, true or false, was, of course,
capable of precise numerical expression, so soon as the ratios were
assigned. So there was the famous formula proving a relation between
the number of quarters of corn produced by a given harvest, and the
number of shillings that would be given for a quarter of corn. If,
again, we took the number of marriages corresponding to a given price
of corn, we should obtain a formula connecting the number of marriages
with the number of quarters of corn produced. The utility of
statistics, of course, depends upon the fact that we do empirically
discover some tolerably constant and simple numerical formulæ. Such
statistical statements are useful, indeed, not only in economical, but
in other inquiries, which are clearly beyond the reach of mathematics.
The proportion of criminals in a given population, the number of
suicides, or of illegitimate births, may throw some light upon judicial
and political, and even religious or ethical problems. Nor are such
formulæ useless simply because empirical. The law of gravitation, for
example, is empirical. Nobody knows the cause of the observed tendency
of bodies to gravitate to each other, and therefore no one can say how
far the law which represents the tendency must be universal. Still, the
fact that, so far as we have observed, it is invariably verified, and
that calculations founded upon it enable us to bring a vast variety of
phenomena under a single rule, is quite enough to justify astronomical
calculation.
If, therefore, we could find a mathematical formula which was, as a
matter of fact, verifiable in economical problems about prices, and so
forth, we should rightly apply to mathematicians to help us with their
methods. But, not only do we not find any such simple relations, but we
can see conclusive reasons for being sure that we can never find them.
Take, for example, the case of the number of marriages under given
conditions. I need hardly say that it is impossible for the ablest
mathematician to calculate whether the individual A will marry the
individual B. But, by taking averages, and so eliminating individual
eccentricities, he might discover that, in a given country and at a
given time, a rise of prices will diminish marriages in certain
proportion. Our knowledge of human nature is sufficient to make that
highly probable. But our knowledge also shows that such a change will
act differently in different cases: there will be one formula for
France, and another for England; one for Lancashire, and another for
Cornwall; one for the rich, and another for the poor; and both the
total wealth of a country and its distribution will affect the rule.
Differences of national temperament, of political and social
constitution, of religion and ecclesiastical organisation, will all
have an effect; and, therefore, a formula true here and now must, in
all probability, fail altogether elsewhere. The formula is, in the
mathematical phrase, a function of so many independent variables, that
it must be complex beyond all conception, if it takes them all into
account; while it must yet be necessarily inaccurate if it does not take
them into account. But, besides this, the conditions upon which the law
obviously depends are not themselves capable of being accurately
defined, and still less of being numerically stated. Ingenious thinkers
have, indeed, tried to apply mathematical formulæ to psychology; but
they have not got very far; and it may, I think, be assumed, without
further argument, that while you have to deal both with psychological
and sociological elements, with human desires, and with those desires
modified by social relations, it is impossible to find any data which
can be mathematically stated. There is no arithmetical measure of the
forces of love, or hunger, or avarice, by which (among others) the whole
problem is worked out.