only mentioned to be repudiated by Jevons, namely, that Political
Economy, if not a "mathematical science," must be part of sociology. I
should say that it clearly is so; for if we wish to investigate the
cause of any of the phenomena concerned, and not simply to tabulate from
observations, we are at once concerned with the social structure and
with the underlying psychology. The mathematical methods are quite in
their place when dealing with statistics. The rise and fall of prices,
and so forth, can be stated precisely in figures; and, whenever we can
discover some approximation to a mathematical law (as in the cases I
have noticed) we may work out the results. If, for example, the price of
a commodity under certain conditions bears a certain relation to its
scarcity, we can discover the one fact when the other fact is given,
remembering only that our conclusions are not more certain than our
premisses, and that the observed law depends upon unknown and most
imperfectly knowable conditions. Such results, again, may be very useful
in various ways, as illustrative of the way in which certain laws will
work if they hold good; and, again, as testing many of our general
theories. If you have argued that the price of gold or silver cannot be
fixed, the fact that it has been fixed under certain conditions will of
course lead to a revision of your arguments. But I cannot help thinking
that it is an illusion to suppose that such methods can justify the
assertion that the science as a whole is "mathematical". Nothing,
indeed, is easier than to speak as if you had got a mathematical theory.
Let _x_ mean the desire for marriage and _y_ the fear of want, then
the number of marriages is a function of _x_ and _y_, and I can
express this by symbols as well as by ordinary words. But there is no
magic about the use of symbols. Mathematical inquiries are not fruitful
because symbols are used, but because the symbols represent something
absolutely precise and assignable. The highest mathematical inquiries
are simply ingenious methods of counting; and till you have got
something precise to count, they can take you no further. I cannot help
thinking that this fallacy imposes upon some modern reasoners; that they
assume that they have got the data because they have put together the
formulæ which would be useful if they had the data; and, in short, that
you can get more out of a mill than you put into it; or, in other words,
that more conclusions than really follow can be got out of premisses,
simply because you show what would follow if you had the required
knowledge. When the attempt is made, as it seems to me to be made
sometimes, to deduce economical laws from some law of human desire--as
from the simple theorem that equal increments of a commodity imply
diminishing amounts of utility--I should reply not only that the
numerical data are vaguely defined and incapable of being accurately
stated, but that the attempt must be illusory because the conclusions
are not determinable from the premisses. The economic laws do not follow
from any simple rule about human desires, because they vary according to
the varying constitution of human society; and any conclusion which you
could obtain would be necessarily confined to the abstract man of whom
the law is supposed to hold good. Every such method, therefore, if it
could be successful, could only lead to conclusions about human desire
in general, and could throw no light upon the special problems of
political economy, which essentially depend upon varying industrial
organisation.
I will not, however, go further. You must either, I hold, limit
Political Economy to the field of statistical inquiry, or admit that,
as a part of sociology, it deals with questions altogether beyond the
reach of mathematics. Like physiology, it is concerned with results
capable of numerical statement. The number of beats of the pulse, or
the number of degrees of temperature of the body, are important data in
physiological problems. They may be counted, and may give rise to
mathematically expressible formulæ. But the fact does not excuse us
from considering the physical conditions of the organs which are in
some way correlated with these observed phenomena; and, in the case of
Political Economy, we have to do with the social structure, which is
dependent upon forces altogether incapable of precise numerical
estimates. That, at least, is my view; and I shall apply it to
illustrate one remark, which must, I think, have often occurred to us.
Political Economy, that is, often appears to have a negative rather
than a positive value. It is exceedingly potent--so, at least, I
think--in dispersing certain popular fallacies; but it fails when we
regard it as a science which can give us positive concrete "laws". The
general reason is, I should say, that although its first principles may
be true descriptions of facts, and any denial of them, or any
inconsistent applications of them, may lead us into error, they are yet
far from sufficient descriptions. They omit some considerations which
are relevant in any concrete case; and the facts which they describe
are so complex that, even when we look at them consistently and follow
the right clue, we cannot solve the complicated problems which occur.
It may be worth while to insist a little upon this, and to apply it to
one or two peculiar problems.
Let me start from the ordinary analogy. Economic inquiry, I have
suggested, describes a certain existing mechanism, which exists as
really as the physical structure described by an anatomist. The
industrial organism has, of course, many properties of which the
economist, as such, does not take account. The labourer has affections,
and imaginations, and opinions outside of his occupation as labourer;
he belongs to a state, a church, a family, and so forth, which affect
his whole life, including his industrial life. Is it therefore
impossible to consider the industrial organisation separately? Not more
impossible, I should reply, than to apply the same method in regard to
the individual body. Were I to regard my stomach simply as a bag into
which I put my food, I should learn very little about the process of
digestion. Still, it is such a bag, and it is important to know where
it is, and what are its purely mechanical relations to other parts of
the body. My arms and legs are levers, and I can calculate the pressure
necessary to support a weight on the hand, as though my bones and
muscles were made of iron and whipcord. I am a piece of mechanism,
though I am more, and all the principles of simple mechanics apply to
my actions, though they do not, by themselves, suffice to explain the
actions. The discovery of the circulation of the blood explained, as I
understand, my structure as a hydraulic apparatus; and it was of vast
importance, even though it told us nothing directly of the other
processes necessarily involved. In this case, therefore, we have an
instance of the way in which a set of perfectly true propositions may,
so to speak, be imbedded in a larger theory, and may be of the highest
importance, though they are not by themselves sufficient to solve any
concrete problem. We cannot, that is, deduce the physiological
principles from the mechanical principles, although they are throughout
implied. But those principles are not the less true and useful in the
detection of fallacies. They may enable us to show that an argument
supposes facts which do not exist; or, perhaps, that it is, at any
rate, inconsistent because it assumes one structure in its premisses,
and another in its conclusions.
I state this by way of illustration: but the value of the remark may be
best tested by applying it to some economical doctrines. Let us take,
for example, the famous argument of Adam Smith against what he called
the mercantile theory. That theory, according to him, supposed that the
wealth of nations, like the wealth of an individual, was in proportion
to the amount of money in their possession. He insisted upon the theory
that money, as it is useful solely for exchange, cannot be, in itself,
wealth; that its absolute amount is a matter of indifference, because
if every coin in existence were halved or doubled, it would discharge
precisely the same function; and he inferred that the doctrine which
tested the advantages of foreign commerce by the balance of trade or
the net return of money, was altogether illusory. His theory is
expounded in every elementary treatise on the subject. It may be urged
that it was a mere truism, and therefore useless; or, again, that it
does not enable us to deduce a complete theory of the functions of
money. In regard to the first statement, I should reply that, although
Smith probably misrepresented some of his antagonists, the fallacy
which he exposed was not only current at the time, but is still
constantly cropping up in modern controversies. So long as arguments
are put forward which implicitly involve an erroneous, because
self-contradictory, conception of the true functions of money, it is
essential to keep in mind these first principles, however obvious they
may be in an abstract statement. Euclid's axioms are useful because
they are self-evident; and so long as people make mistakes in geometry,
it will be necessary to expose their blundering by bringing out the
contradictions involved. As Hobbes observed, people would dispute even
geometrical axioms if they had an interest in doing so; and, certainly,
they are ready to dispute the plainest doctrines about money. The other
remark, that we cannot deduce a complete theory from the axiom is, of
course, true. Thus, for example, although the doctrine may be
unimpeachable, there is a difficulty in applying it to the facts. As
gold has other uses besides its use as money, its value is not
regulated exclusively by the principle assigned; as other things,
again, such as bank-notes and cheques, discharge some of the functions
of money, we have all manner of difficult problems as to what money
precisely is, and how the most elementary principles will apply to the
concrete facts. A very shrewd economist once remarked, listening to a
metaphysical argument, "If there had been any money to be made out of
it, we should have solved that question in the city long ago". Yet,
there is surely money to be made out of a correct theory of the
currency; and people in the city do not seem to have arrived at a
complete agreement. In fact, such controversies illustrate the extreme
difficulty which arises out of the complexity of the phenomena, even
where the economic assumption of the action of purely money-loving
activity is most nearly verified. The moral is, I fancy, that while
inaccurate conclusions are extremely difficult, we can only hope to
approach them by a firm grasp of the first principles revealed in the
simplest cases.
Even in such a case, we have also to notice how we have to make
allowance for the intrusion of other than purely economic cases. The
doctrine just noticed is, of course, closely connected with the theory
of free trade. The free trade argument is, I should mention, perfectly
conclusive in a negative sense. It demonstrates, that is, the fallacy
which lurks in the popular argument for protection. That argument
belongs to the commonest class of economic fallacies, which consists in
looking at one particular result without considering the necessary
implications. The great advantage of any rational theory is, that it
forces us to look upon the industrial mechanism as a whole, and to
trace out the correlative changes involved in any particular operation.
It disposes of the theories which virtually propose to improve our
supply of water by pouring a cup out of one vessel into another; and
such theories have had considerable success in economy. So far, in
short, as a protectionist really maintains that the advantage consists
in accumulating money, without asking what will be the effect upon the
value of money, or that it consists in telling people to make for
themselves what they could get on better terms by producing something
to exchange for it, his arguments may be conclusively shown to be
contradictory. Such arguments, at least, cannot be worth considering.
But, to say nothing of cases which may be put by an ingenious disputant
in which this may not quite apply, we have to consider reasons which
may be extra-economical. When it is suggested, for example, that the
economic disadvantage is a fair price for political independence; or,
on the other hand, that the stimulus of competition is actually good
for the trade affected; or, again, that protection tends naturally to
corruption; we have arguments which, good or bad, are outside the
sphere of economics proper. To answer them we have to enter the field
of political or ethical inquiry, where we have to take leave of
tangible facts and precise measures.
This is a more prominent element as we approach the more human side (if
I may so call it) of Political Economy. Consider, for example, the
doctrine which made so profound an impression upon the old
school--Malthus's theory of population. It was summed up in the
famous--though admittedly inaccurate--phrase, that population had a
tendency to increase in a geometrical ratio, while the means of
subsistence increased only in an arithmetical ratio. The food available
for each unit would therefore diminish as the population increased. The
so-called law obviously states only a possibility. It describes a
"tendency," or, in other words, only describes what would happen under
certain, admittedly variable, conditions. It showed how, in a limited
area and with the efficiency of industry remaining unaltered, the
necessary limits upon the numbers of the population would come into
play. If, then, the law were taken, or in so far as it was taken, to
assert that, in point of fact, the population must always be increasing
in civilised countries to the stage at which the lowest class would be
at starvation level, it was certainly erroneous. There are cases in
which statesmen are alarmed by the failure of population to show its old
elasticity, and beginning to revert to the view that an increased rate
is desirable. It cannot be said to be even necessarily true that in all
cases an increased population implies, of necessity, increased
difficulty of support. There are countries which are inadequately
peopled, and where greater numbers would be able to support themselves
more efficiently because they could adopt a more elaborate organisation.
Nor can it be said with certainty that some pressure may not, within
limits, be favourable to ultimate progress by stimulating the energies
of the people. In a purely stationary state people might be too content
with a certain stage of comfort to develop their resources and attain a
permanently higher stage. Whatever the importance of such qualifications
of the principle, there is a most important conclusion to be drawn.
Malthus or his more rigid followers summed up their teaching by one
practical moral. The essential condition of progress was, according to
them, the discouragement of early marriages. If, they held, people could
only be persuaded not to produce families until they had an adequate
prospect of supporting their families, everything would go right. We
shall not, I imagine, be inclined to dispute the proposition, that a
certain degree of prudence and foresight is a quality of enormous value;
and that such a quality will manifest itself by greater caution in
taking the most important step in life. What such reasoners do not
appear to have appreciated was, the immense complexity and difficulty of
the demand which they were making. They seem to have fancied that it was
possible simply to add another clause--the clause "Thou shalt not
marry"--to the accepted code of morals; and that, as soon as the evil
consequences of the condemned behaviour were understood,--properly
expounded, for example, in little manuals for the use of school
children,--obedience to the new regulation would spontaneously follow.
What they did not see, or did not fully appreciate, was the enormous
series of other things--religious, moral, and intellectual--which are
necessarily implied in altering the relation of the strongest human
passion to the general constitution, and the impossibility of bringing
home such an alteration, either by an act of legislation or by pointing
out the bearing of a particular set of prudential considerations.
Political Economy might be a very good thing; but its expositors were
certainly too apt to think that it could by itself at once become a new
gospel for mankind. Should we then infer from such criticisms that the
doctrine of Malthus was false, or was of no importance? Nothing would be
further from my opinion. I hold, on the contrary, that it was of the
highest importance, because it drew attention to a fact, the recognition
of which was essential to all sound reasoning on social questions. The
fact is, that population is not to be treated as a fixed quantity, but
as capable of rapid expansion; and that this elasticity may at any
moment require consideration, and does in fact give the explanation of
many important phenomena. The main fact which gave importance to
Malthus's writings was the rapid and enormous increase of pauperism
during the first quarter of this century. The charitable and sentimental
writers of the day were alarmed, but proposed to meet the evil by a
reckless increase of charity, either of the official or the private
variety. Pitt, we know, declared (though he qualified the statement)
that to be the father of a large family should be a source of honour,
not of obloquy; and the measures adopted under the influence of such
notions did in fact tend to diminish all sense of responsibility,
encouraged people to rely upon the parish for the support of their
children, and brought about a state of things which alarmed all
intelligent observers. The greatest check to the evil was given by the
new Poor-law, adopted under the influence of the principles advocated by
Malthus and his friends. His achievement, then, was not that he laid
down any absolutely correct scientific truth, or even said anything
which had not been more or less said by many judicious people before his
time; but that he encouraged the application of a more systematic method
of reasoning upon the great problem of the time. Instead of simply
giving way to the first kindly impulse, abolishing a hardship here and
distributing alms elsewhere, he substantially argued that society formed
a complex organism, whose diseases should be considered physiologically,
their causes explained, and the appropriate remedies considered in all
their bearings. We must not ask simply whether we were giving a loaf to
this or that starving man, or indulge in _à priori_ reasoning as to the
right of every human being to be supported by others; but treat the
question as a physician should treat a disease, and consider whether, on
the whole, the new regulations would increase or diminish the causes of
the existing evils. He did not, therefore, so much proclaim a new truth,
as induce reformers to place themselves at a new and a more rational
point of view. The so-called law of population which he announced might
be in various ways inaccurate, but the announcement made it necessary
for rational thinkers to take constantly into account considerations
which are essential in any satisfactory treatment of the great problems.
If it were right to consider pauperism as a gulf of fixed dimensions, we
might hope to fill it by simply taking a sufficient quantity of wealth
from the richer classes. If, as Malthus urged, this process had a
tendency to enlarge the dimensions of the gulf itself, it was obvious
that the whole problem required a more elaborate treatment. By
impressing people with this truth, and by showing how, in a great
variety of cases, the elasticity of the population was a most important
factor in determining the condition of the people, Malthus did a great
service, and introduced a more systematic and scientific method of
discussing the immensely important questions involved.
I will very briefly try to indicate one further application of economic
principles. A critical point in the modern development of the study was
marked by Mill's abandonment of the so-called "wage fund theory". That
doctrine is now generally mentioned with contempt, as the most
conspicuous instance of an entirely exploded theory. It is often said
that it is either a falsity, or a barren truism. I am not about to
argue the point, observing only that some very eminent Economists
consider that it was rather inadequate than fallacious; and that to me
it has always seemed that the theory which has really been confuted is
not so much a theory which was ever actually held by Economists, as a
formula into which they blundered when they tried to give a
quasi-scientific definition of their meaning. It is common enough for
people to argue sensibly, when the explicit statements of their
argument may be altogether erroneous. At any rate, I think it has been
a misfortune that a good phrase has been discredited; and that Mill's
assailants, in exposing the errors of that particular theory of a "wage
fund," seemed to imply that the whole conception of a "wage fund" was a
mistake. For the result has been, that the popular mind seems to regard
the amount spent in wages as an arbitrary quantity; as something which,
as Malthus put it, might be fixed at pleasure by her Majesty's justices
of the peace. Because the law was inaccurately stated, it is assumed
that there is no law at all, and that the share of the labourers in the
total product of industry might be fixed without reference to the
effect of a change upon the general organisation. Now, if the wage fund
means the share which, under existing circumstances, actually goes to
the class dependent upon wages, it is of the highest importance to
discover how that share is actually determined; and it does not even
follow that a doctrine which is in some sense a truism may not be a
highly important doctrine. One of the ablest of the old Economists,
Nassan Senior, after laying down his version of the theory, observes
that it is "so nearly self-evident" that if Political Economy were a
new science, it might be taken for granted. But he proceeds to
enumerate seven different opinions, some of them held by many people,
and others by writers of authority, with which it is inconsistent. And,
without following his arguments, this statement suggests what I take to
be a really relevant defence of his reasons. At the time when the
theory was first formulated, there were many current doctrines which
were self-contradictory, and which could, therefore, best be met by the
assertion of a truism. When the peace of 1815 brought distress instead
of plenty, some people, such as Southey, thought it a sufficient
explanation to say that the manufacturer had lost his best customer,
because the Government wanted fewer guns and less powder. They chose to
overlook the obvious fact that a customer who pays for his goods by
taking money out of the pockets of the seller, is not an unmixed
blessing. Then, there was the theory of general "gluts," and of what is
still denounced as over-production. The best cure for commercial
distress would be, as one disputant asserted, to burn all the goods in
our warehouses. It was necessary to point out that this theory (when
stated in superficial terms) regarded superabundance of wealth as the
cause of universal poverty. Another common theory was the evil effect
of manufacturers in displacing work. The excellent Robert Owen stated
it as an appalling fact, that the cotton manufacture supplanted the
labour of a hundred (perhaps it was two hundred) millions of men. He
seems to assume that, if the machinery had not been there, there would
still have been wages for the hundred millions. The curious confusion,
indeed, which leads us to speak of men wanting work, when what we
really mean is that they want wages, shows the tenacity of an old
fallacy. Mandeville argued long ago that the fire of London was a
blessing, because it set at work so many carpenters, plumbers, and
glaziers. The Protestant Reformation had done less good than the
invention of hooped petticoats, which had provided employment for so
many milliners. I shall not insult you by exposing fallacies; and yet,
so long as they survive, they have to be met by truisms. While people
are proposing to lengthen their blankets by cutting off one end to sew
upon the other, one has to point out that the total length remains
constant. Now, I fancy that, in point of fact, these fallacies are
often to be found in modern times. I read, the other day, in the
papers, an argument, adduced by some advocate, on behalf of the Eight
Hours Bill. He wished, he said, to make labour dear, and would
therefore make it scarce. This apparently leads to the conclusion that
the less people work the more they will get, which I take to be a
fallacy. So, to mention nothing else, it is still apparently a common
argument in favour of protection in America, that the native labourer
requires to be supported against the pauperised labour of Europe.
Americans in general are to be made richer by paying higher prices, and
by being forced to produce commodities which they could get with less
labour employed on the production of other things in exchange. I will
not go further; for I think that no one who reads the common arguments
can be in want of sufficient illustrations of popular fallacies. This,
I say, is some justification for dwelling upon the contrary truisms. I
admit, indeed, that even these fallacies may apply to particular cases
in which they may represent partial truths; and I also agree that, as
sometimes stated, the wage fund theory was not only a truism, but a
fruitless truism. It was, however, as I believe, an attempt to
generalise a very pertinent and important doctrine, as to the way in
which the actual competition in which labourers and employers are
involved, actually operates. If so, it requires rather modification
than indiscriminate denunciation; and it is, I believe, so treated by
the best modern Economists.