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THE PLACE OF SCIENCE
IN MODERN CIVILISATION
BOOKS BY THORSTEIN VEBLEN
THE THEORY OF THE LEISURE CLASS
THE THEORY OF BUSINESS ENTERPRISE
THE INSTINCT OF WORKMANSHIP
IMPERIAL GERMANY AND THE INDUSTRIAL REVOLUTION
THE NATURE OF PEACE AND THE TERMS OF ITS PERPETUATION
THE HIGHER LEARNING IN AMERICA
THE VESTED INTERESTS AND THE STATE OF THE INDUSTRIAL ARTS
THE PLACE OF SCIENCE IN MODERN CIVILISATION
THE PLACE OF SCIENCE
IN
MODERN CIVILISATION
AND OTHER ESSAYS
_by_
THORSTEIN VEBLEN
_New York_
B. W. HUEBSCH
_Mcmxix_
COPYRIGHT, 1919
BY B. W. HUEBSCH
PRINTED IN THE UNITED STATES OF AMERICA
PUBLISHER'S NOTE
These essays are here reprinted from various periodicals, running over
a period of about twenty years. The selection is due to Messrs. Leon
Ardzrooni, Wesley C. Mitchell and Walter W. Stewart.
It is unlikely that more than a few public libraries possess files so
complete as to give access to all of these essays, and even if the
magazines were readily obtainable at libraries they would almost
certainly have to be read in those institutions. The nature of the
material, its timeliness (Mr. Veblen deals with ideas in such a manner
as to give the date of composition a secondary importance), and the fact
that it would otherwise be lost to all save diligent excavators, explain
its preservation in this form.
The courtesy of the periodicals in which the papers first appeared, in
permitting their reproduction, is gratefully acknowledged.
CONTENTS
PAGE
THE PLACE OF SCIENCE IN MODERN CIVILISATION 1
THE EVOLUTION OF THE SCIENTIFIC POINT OF VIEW 32
WHY IS ECONOMICS NOT AN EVOLUTIONARY SCIENCE? 56
THE PRECONCEPTIONS OF ECONOMIC SCIENCE. I. 82
" " " " " II. 114
" " " " " III. 148
PROFESSOR CLARK'S ECONOMICS 180
THE LIMITATIONS OF MARGINAL UTILITY 231
GUSTAV SCHMOLLER'S ECONOMICS 252
INDUSTRIAL AND PECUNIARY EMPLOYMENTS 279
ON THE NATURE OF CAPITAL. I. 324
" " " " " II. 352
SOME NEGLECTED POINTS IN THE THEORY OF SOCIALISM 387
THE SOCIALIST ECONOMICS OF KARL MARX. I. 409
" " " " " " II. 431
THE MUTATION THEORY AND THE BLOND RACE 457
THE BLOND RACE AND THE ARYAN CULTURE 477
AN EARLY EXPERIMENT IN TRUSTS 497
THE PLACE OF SCIENCE IN MODERN CIVILISATION[1]
It is commonly held that modern Christendom is superior to any and all
other systems of civilised life. Other ages and other cultural regions
are by contrast spoken of as lower, or more archaic, or less mature. The
claim is that the modern culture is superior on the whole, not that it
is the best or highest in all respects and at every point. It has, in
fact, not an all-around superiority, but a superiority within a closely
limited range of intellectual activities, while outside this range many
other civilisations surpass that of the modern occidental peoples. But
the peculiar excellence of the modern culture is of such a nature as to
give it a decisive practical advantage over all other cultural schemes
that have gone before or that have come into competition with it. It has
proved itself fit to survive in a struggle for existence as against
those civilisations which differ from it in respect of its distinctive
traits.
Modern civilisation is peculiarly matter-of-fact. It contains many
elements that are not of this character, but these other elements do not
belong exclusively or characteristically to it. The modern civilised
peoples are in a peculiar degree capable of an impersonal, dispassionate
insight into the material facts with which mankind has to deal. The apex
of cultural growth is at this point. Compared with this trait the rest
of what is comprised in the cultural scheme is adventitious, or at the
best it is a by-product of this hard-headed apprehension of facts. This
quality may be a matter of habit or of racial endowment, or it may be an
outcome of both; but whatever be the explanation of its prevalence, the
immediate consequence is much the same for the growth of civilisation. A
civilisation which is dominated by this matter-of-fact insight must
prevail against any cultural scheme that lacks this element. This
characteristic of western civilisation comes to a head in modern
science, and it finds its highest material expression in the technology
of the machine industry. In these things modern culture is creative and
self-sufficient; and these being given, the rest of what may seem
characteristic in western civilisation follows by easy consequence. The
cultural structure clusters about this body of matter-of-fact knowledge
as its substantial core. Whatever is not consonant with these opaque
creations of science is an intrusive feature in the modern scheme,
borrowed or standing over from the barbarian past.
Other ages and other peoples excel in other things and are known by
other virtues. In creative art, as well as in critical taste, the
faltering talent of Christendom can at the best follow the lead of the
ancient Greeks and the Chinese. In deft workmanship the handicraftsmen
of the middle Orient, as well as of the Far East, stand on a level
securely above the highest European achievement, old or new. In
myth-making, folklore, and occult symbolism many of the lower barbarians
have achieved things beyond what the latter-day priests and poets know
how to propose. In metaphysical insight and dialectical versatility many
orientals, as well as the Schoolmen of the Middle Ages, easily surpass
the highest reaches of the New Thought and the Higher Criticism. In a
shrewd sense of the religious verities, as well as in an unsparing faith
in devout observances, the people of India or Thibet, or even the
mediaeval Christians, are past-masters in comparison even with the select
of the faith of modern times. In political finesse, as well as in
unreasoning, brute loyalty, more than one of the ancient peoples give
evidence of a capacity to which no modern civilised nation may aspire.
In warlike malevolence and abandon, the hosts of Islam, the Sioux
Indian, and the "heathen of the northern sea" have set the mark above
the reach of the most strenuous civilised warlord.
To modern civilised men, especially in their intervals of sober
reflection, all these things that distinguish the barbarian
civilisations seem of dubious value and are required to show cause why
they should not be slighted. It is not so with the knowledge of facts.
The making of states and dynasties, the founding of families, the
prosecution of feuds, the propagation of creeds and the creation of
sects, the accumulation of fortunes, the consumption of
superfluities--these have all in their time been felt to justify
themselves as an end of endeavor; but in the eyes of modern civilised
men all these things seem futile in comparison with the achievements of
science. They dwindle in men's esteem as time passes, while the
achievements of science are held higher as time passes. This is the one
secure holding-ground of latter-day conviction, that "the increase and
diffusion of knowledge among men" is indefeasibly right and good. When
seen in such perspective as will clear it of the trivial perplexities of
workday life, this proposition is not questioned within the horizon of
the western culture, and no other cultural ideal holds a similar
unquestioned place in the convictions of civilised mankind.
On any large question which is to be disposed of for good and all the
final appeal is by common consent taken to the scientist. The solution
offered in the name of science is decisive so long as it is not set
aside by a still more searching scientific inquiry. This state of things
may not be altogether fortunate, but such is the fact. There are other,
older grounds of finality that may conceivably be better, nobler,
worthier, more profound, more beautiful. It might conceivably be
preferable, as a matter of cultural ideals, to leave the last word with
the lawyer, the duelist, the priest, the moralist, or the college of
heraldry. In past times people have been content to leave their
weightiest questions to the decision of some one or other of these
tribunals, and, it cannot be denied, with very happy results in those
respects that were then looked to with the greatest solicitude. But
whatever the common-sense of earlier generations may have held in this
respect, modern common-sense holds that the scientist's answer is the
only ultimately true one. In the last resort enlightened common-sense
sticks by the opaque truth and refuses to go behind the returns given by
the tangible facts.
_Quasi lignum vitae in paradiso Dei, et quasi lucerna fulgoris in domo
Domini_, such is the place of science in modern civilisation. This
latterday faith in matter-of-fact knowledge may be well grounded or it
may not. It has come about that men assign it this high place, perhaps
idolatrously, perhaps to the detriment of the best and most intimate
interests of the race. There is room for much more than a vague doubt
that this cult of science is not altogether a wholesome growth--that the
unmitigated quest of knowledge, of this matter-of-fact kind, makes for
race-deterioration and discomfort on the whole, both in its immediate
effects upon the spiritual life of mankind, and in the material
consequences that follow from a great advance in matter-of-fact
knowledge.
But we are not here concerned with the merits of the case. The question
here is: How has this cult of science arisen? What are its cultural
antecedents? How far is it in consonance with hereditary human nature?
and, What is the nature of its hold on the convictions of civilised men?
* * * * *
In dealing with pedagogical problems and the theory of education,
current psychology is nearly at one in saying that all learning is of a
"pragmatic" character; that knowledge is inchoate action inchoately
directed to an end; that all knowledge is "functional"; that it is of
the nature of use. This, of course, is only a corollary under the main
postulate of the latter-day psychologists, whose catchword is that The
Idea is essentially active. There is no need of quarreling with this
"pragmatic" school of psychologists. Their aphorism may not contain the
whole truth, perhaps, but at least it goes nearer to the heart of the
epistemological problem than any earlier formulation. It may confidently
be said to do so because, for one thing, its argument meets the
requirements of modern science. It is such a concept as matter-of-fact
science can make effective use of; it is drawn in terms which are, in
the last analysis, of an impersonal, not to say tropismatic, character;
such as is demanded by science, with its insistence on opaque cause and
effect. While knowledge is construed in teleological terms, in terms of
personal interest and attention, this teleological aptitude is itself
reducible to a product of unteleological natural selection. The
teleological bent of intelligence is an hereditary trait settled upon
the race by the selective action of forces that look to no end. The
foundations of pragmatic intelligence are not pragmatic, nor even
personal or sensible.
This impersonal character of intelligence is, of course, most evident on
the lower levels of life. If we follow Mr. Loeb, e.g., in his inquiries
into the psychology of that life that lies below the threshold of
intelligence, what we meet with is an aimless but unwavering motor
response to stimulus.[2] The response is of the nature of motor impulse,
and in so far it is "pragmatic," if that term may fairly be applied to
so rudimentary a phase of sensibility. The responding organism may be
called an "agent" in so far. It is only by a figure of speech that these
terms are made to apply to tropismatic reactions. Higher in the scale of
sensibility and nervous complication instincts work to a somewhat
similar outcome. On the human plane, intelligence (the selective effect
of inhibitive complication) may throw the response into the form of a
reasoned line of conduct looking to an outcome that shall be expedient
for the agent. This is naive pragmatism of the developed kind. There is
no longer a question but that the responding organism is an "agent" and
that his intelligent response to stimulus is of a teleological
character. But that is not all. The inhibitive nervous complication may
also detach another chain of response to the given stimulus, which does
not spend itself in a line of motor conduct and does not fall into a
system of uses. Pragmatically speaking, this outlying chain of response
is unintended and irrelevant. Except in urgent cases, such an idle
response seems commonly to be present as a subsidiary phenomenon. If
credence is given to the view that intelligence is, in its elements, of
the nature of an inhibitive selection, it seems necessary to assume some
such chain of idle and irrelevant response to account for the further
course of the elements eliminated in giving the motor response the
character of a reasoned line of conduct. So that associated with the
pragmatic attention there is found more or less of an irrelevant
attention, or idle curiosity. This is more particularly the case where
a higher range of intelligence is present. This idle curiosity is,
perhaps, closely related to the aptitude for play, observed both in man
and in the lower animals.[3] The aptitude for play, as well as the
functioning of idle curiosity, seems peculiarly lively in the young,
whose aptitude for sustained pragmatism is at the same time relatively
vague and unreliable.
This idle curiosity formulates its response to stimulus, not in terms of
an expedient line of conduct, nor even necessarily in a chain of motor
activity, but in terms of the sequence of activities going on in the
observed phenomena. The "interpretation" of the facts under the guidance
of this idle curiosity may take the form of anthropomorphic or animistic
explanations of the "conduct" of the objects observed. The
interpretation of the facts takes a dramatic form. The facts are
conceived in an animistic way, and a pragmatic animus is imputed to
them. Their behavior is construed as a reasoned procedure on their part
looking to the advantage of these animistically conceived objects, or
looking to the achievement of some end which these objects are conceived
to have at heart for reasons of their own.
Among the savage and lower barbarian peoples there is commonly current a
large body of knowledge organised in this way into myths and legends,
which need have no pragmatic value for the learner of them and no
intended bearing on his conduct of practical affairs. They may come to
have a practical value imputed to them as a ground of superstitious
observances, but they may also not.[4] All students of the lower
cultures are aware of the dramatic character of the myths current among
these peoples, and they are also aware that, particularly among the
peaceable communities, the great body of mythical lore is of an idle
kind, as having very little intended bearing on the practical conduct of
those who believe in these myth-dramas. The myths on the one hand, and
the workday knowledge of uses, materials, appliances, and expedients on
the other hand, may be nearly independent of one another. Such is the
case in an especial degree among those peoples who are prevailingly of a
peaceable habit of life, among whom the myths have not in any great
measure been canonised into precedents of divine malevolence.
The lower barbarian's knowledge of the phenomena of nature, in so far as
they are made the subject of deliberate speculation and are organised
into a consistent body, is of the nature of life-histories. This body of
knowledge is in the main organised under the guidance of an idle
curiosity. In so far as it is systematised under the canons of curiosity
rather than of expediency, the test of truth applied throughout this
body of barbarian knowledge is the test of dramatic consistency. In
addition to their dramatic cosmology and folk legends, it is needless to
say, these peoples have also a considerable body of worldly wisdom in a
more or less systematic form. In this the test of validity is
usefulness.[5]
The pragmatic knowledge of the early days differs scarcely at all in
character from that of the maturest phases of culture. Its highest
achievements in the direction of systematic formulation consist of
didactic exhortations to thrift, prudence, equanimity, and shrewd
management--a body of maxims of expedient conduct. In this field there
is scarcely a degree of advance from Confucius to Samuel Smiles. Under
the guidance of the idle curiosity, on the other hand, there has been a
continued advance toward a more and more comprehensive system of
knowledge. With the advance in intelligence and experience there come
closer observation and more detailed analysis of facts.[6] The
dramatisation of the sequence of phenomena may then fall into somewhat
less personal, less anthropomorphic formulations of the processes
observed; but at no stage of its growth--at least at no stage hitherto
reached--does the output of this work of the idle curiosity lose its
dramatic character. Comprehensive generalisations are made and
cosmologies are built up, but always in dramatic form. General
principles of explanation are settled on, which in the earlier days of
theoretical speculation seem invariably to run back to the broad vital
principle of generation. Procreation, birth, growth, and decay
constitute the cycle of postulates within which the dramatised processes
of natural phenomena run their course. Creation is procreation in these
archaic theoretical systems, and causation is gestation and birth. The
archaic cosmological schemes of Greece, India, Japan, China, Polynesia,
and America, all run to the same general effect on this head.[7] The
like seems true for the Elohistic elements in the Hebrew scriptures.
Throughout this biological speculation there is present, obscurely in
the background, the tacit recognition of a material causation, such as
conditions the vulgar operations of workday life from hour to hour. But
this causal relation between vulgar work and product is vaguely taken
for granted and not made a principle for comprehensive generalisations.
It is overlooked as a trivial matter of course. The higher
generalisations take their color from the broader features of the
current scheme of life. The habits of thought that rule in the
working-out of a system of knowledge are such as are fostered by the
more impressive affairs of life, by the institutional structure under
which the community lives. So long as the ruling institutions are those
of blood-relationship, descent, and clannish discrimination, so long the
canons of knowledge are of the same complexion.
When presently a transformation is made in the scheme of culture from
peaceable life with sporadic predation to a settled scheme of predaceous
life, involving mastery and servitude, gradations of privilege and
honor, coercion and personal dependence, then the scheme of knowledge
undergoes an analogous change. The predaceous, or higher barbarian,
culture is, for the present purpose, peculiar in that it is ruled by an
accentuated pragmatism. The institutions of this cultural phase are
conventionalised relations of force and fraud. The questions of life are
questions of expedient conduct as carried on under the current relations
of mastery and subservience. The habitual distinctions are distinctions
of personal force, advantage, precedence, and authority. A shrewd
adaptation to this system of graded dignity and servitude becomes a
matter of life and death, and men learn to think in these terms as
ultimate and definitive. The system of knowledge, even in so far as its
motives are of a dispassionate or idle kind, falls into the like terms,
because such are the habits of thought and the standards of
discrimination enforced by daily life.[8]
The theoretical work of such a cultural era, as, for instance, the
Middle Ages, still takes the general shape of dramatisation, but the
postulates of the dramaturgic theories and the tests of theoretic
validity are no longer the same as before the scheme of graded servitude
came to occupy the field. The canons which guide the work of the idle
curiosity are no longer those of generation, blood-relationship, and
homely life, but rather those of graded dignity, authenticity, and
dependence. The higher generalisations take on a new complexion, it may
be without formally discarding the older articles of belief. The
cosmologies of these higher barbarians are cast in terms of a
feudalistic hierarchy of agents and elements, and the causal nexus
between phenomena is conceived animistically after the manner of
sympathetic magic. The laws that are sought to be discovered in the
natural universe are sought in terms of authoritative enactment. The
relation in which the deity, or deities, are conceived to stand to facts
is no longer the relation of progenitor, so much as that of suzerainty.
Natural laws are corollaries under the arbitrary rules of status imposed
on the natural universe by an all-powerful Providence with a view to the
maintenance of his own prestige. The science that grows in such a
spiritual environment is of the class represented by alchemy and
astrology, in which the imputed degree of nobility and prepotency of the
objects and the symbolic force of their names are looked to for an
explanation of what takes place.
The theoretical output of the Schoolmen has necessarily an accentuated
pragmatic complexion, since the whole cultural scheme under which they
lived and worked was of a strenuously pragmatic character. The current
concepts of things were then drawn in terms of expediency, personal
force, exploit, prescriptive authority, and the like, and this range of
concepts was by force of habit employed in the correlation of facts for
purposes of knowledge even where no immediate practical use of the
knowledge so gained was had in view. At the same time a very large
proportion of the scholastic researches and speculations aimed directly
at rules of expedient conduct, whether it took the form of a philosophy
of life under temporal law and custom, or of a scheme of salvation under
the decrees of an autocratic Providence. A naive apprehension of the
dictum that all knowledge is pragmatic would find more satisfactory
corroboration in the intellectual output of scholasticism than in any
system of knowledge of an older or a later date.
With the advent of modern times a change comes over the nature of the
inquiries and formulations worked out under the guidance of the idle
curiosity--which from this epoch is often spoken of as the scientific
spirit. The change in question is closely correlated with an analogous
change in institutions and habits of life, particularly with the changes
which the modern era brings in industry and in the economic organisation
of society. It is doubtful whether the characteristic intellectual
interests and teachings of the new era can properly be spoken of as less
"pragmatic," as that term is sometimes understood, than those of the
scholastic times; but they are of another kind, being conditioned by a
different cultural and industrial situation.[9] In the life of the new
era conceptions of authentic rank and differential dignity have grown
weaker in practical affairs, and notions of preferential reality and
authentic tradition similarly count for less in the new science. The
forces at work in the external world are conceived in a less animistic
manner, although anthropomorphism still prevails, at least to the degree
required in order to give a dramatic interpretation of the sequence of
phenomena.
The changes in the cultural situation which seem to have had the most
serious consequences for the methods and animus of scientific inquiry
are those changes that took place in the field of industry. Industry in
early modern times is a fact of relatively greater preponderance, more
of a tone-giving factor, than it was under the regime of feudal status.
It is the characteristic trait of the modern culture, very much as
exploit and fealty were the characteristic cultural traits of the
earlier time. This early-modern industry is, in an obvious and
convincing degree, a matter of workmanship. The same has not been true
in the same degree either before or since. The workman, more or less
skilled and with more or less specialised efficiency, was the central
figure in the cultural situation of the time; and so the concepts of the
scientists came to be drawn in the image of the workman. The
dramatisations of the sequence of external phenomena worked out under
the impulse of the idle curiosity were then conceived in terms of
workmanship. Workmanship gradually supplanted differential dignity as
the authoritative canon of scientific truth, even on the higher levels
of speculation and research. This, of course, amounts to saying in other
words that the law of cause and effect was given the first place, as
contrasted with dialectical consistency and authentic tradition. But
this early-modern law of cause and effect--the law of efficient
causes--is of an anthropomorphic kind. "Like causes produce like
effects," in much the same sense as the skilled workman's product is
like the workman; "nothing is found in the effect that was not contained
in the cause," in much the same manner.
These dicta are, of course, older than modern science, but it is only in
the early days of modern science that they come to rule the field with
an unquestioned sway and to push the higher grounds of dialectical
validity to one side. They invade even the highest and most recondite
fields of speculation, so that at the approach to the transition from
the early-modern to the late-modern period, in the eighteenth century,
they determine the outcome even in the counsels of the theologians. The
deity, from having been in mediaeval times primarily a suzerain concerned
with the maintenance of his own prestige, becomes primarily a creator
engaged in the workmanlike occupation of making things useful for man.
His relation to man and the natural universe is no longer primarily that
of a progenitor, as it is in the lower barbarian culture, but rather
that of a talented mechanic. The "natural laws" which the scientists of
that era make so much of are no longer decrees of a preternatural
legislative authority, but rather details of the workshop specifications
handed down by the master-craftsman for the guidance of handicraftsmen
working out his designs. In the eighteenth-century science these natural
laws are laws specifying the sequence of cause and effect, and will bear
characterisation as a dramatic interpretation of the activity of the
causes at work, and these causes are conceived in a quasi-personal
manner. In later modern times the formulations of causal sequence grow
more impersonal and more objective, more matter-of-fact; but the
imputation of activity to the observed objects never ceases, and even in
the latest and maturest formulations of scientific research the dramatic
tone is not wholly lost. The causes at work are conceived in a highly
impersonal way, but hitherto no science (except ostensibly mathematics)
has been content to do its theoretical work in terms of inert magnitude
alone. Activity continues to be imputed to the phenomena with which
science deals; and activity is, of course, not a fact of observation,
but is imputed to the phenomena by the observer.[10] This is, also of
course, denied by those who insist on a purely mathematical formulation
of scientific theories, but the denial is maintained only at the cost of
consistency. Those eminent authorities who speak for a colorless
mathematical formulation invariably and necessarily fall back on the
(essentially metaphysical) preconception of causation as soon as they go
into the actual work of scientific inquiry.[11]
Since the machine technology has made great advances, during the
nineteenth century, and has become a cultural force of wide-reaching
consequence, the formulations of science have made another move in the
direction of impersonal matter-of-fact. The machine process has
displaced the workman as the archetype in whose image causation is
conceived by the scientific investigators. The dramatic interpretation
of natural phenomena has thereby become less anthropomorphic; it no
longer constructs the life-history of a cause working to produce a given
effect--after the manner of a skilled workman producing a piece of
wrought goods--but it constructs the life-history of a process in which
the distinction between cause and effect need scarcely be observed in an
itemised and specific way, but in which the run of causation unfolds
itself in an unbroken sequence of cumulative change. By contrast with
the pragmatic formulations of worldly wisdom these latter-day theories
of the scientists appear highly opaque, impersonal, and matter-of-fact;
but taken by themselves they must be admitted still to show the
constraint of the dramatic prepossessions that once guided the savage
myth-makers.
In so far as touches the aims and the animus of scientific inquiry, as
seen from the point of view of the scientist, it is a wholly fortuitous
and insubstantial coincidence that much of the knowledge gained under
machine-made canons of research can be turned to practical account. Much
of this knowledge is useful, or may be made so, by applying it to the
control of the processes in which natural forces are engaged. This
employment of scientific knowledge for useful ends is technology, in the
broad sense in which the term includes, besides the machine industry
proper, such branches of practice as engineering, agriculture, medicine,
sanitation, and economic reforms. The reason why scientific theories can
be turned to account for these practical ends is not that these ends are
included in the scope of scientific inquiry. These useful purposes lie
outside the scientist's interest. It is not that he aims, or can aim, at
technological improvements. His inquiry is as "idle" as that of the
Pueblo myth-maker. But the canons of validity under whose guidance he
works are those imposed by the modern technology, through habituation to
its requirements; and therefore his results are available for the
technological purpose. His canons of validity are made for him by the
cultural situation; they are habits of thought imposed on him by the
scheme of life current in the community in which he lives; and under
modern conditions this scheme of life is largely machine-made. In the
modern culture, industry, industrial processes, and industrial products
have progressively gained upon humanity, until these creations of man's
ingenuity have latterly come to take the dominant place in the cultural
scheme; and it is not too much to say that they have become the chief
force in shaping men's daily life, and therefore the chief factor in
shaping men's habits of thought. Hence men have learned to think in the
terms in which the technological processes act. This is particularly
true of those men who by virtue of a peculiarly strong susceptibility in
this direction become addicted to that habit of matter-of-fact inquiry
that constitutes scientific research.
Modern technology makes use of the same range of concepts, thinks in the
same terms, and applies the same tests of validity as modern science. In
both, the terms of standardisation, validity, and finality are always
terms of impersonal sequence, not terms of human nature or of
preternatural agencies. Hence the easy copartnership between the two.
Science and technology play into one another's hands. The processes of
nature with which science deals and which technology turns to account,
the sequence of changes in the external world, animate and inanimate,
run in terms of brute causation, as do the theories of science. These
processes take no thought of human expediency or inexpediency. To make
use of them they must be taken as they are, opaque and unsympathetic.
Technology, therefore, has come to proceed on an interpretation of these
phenomena in mechanical terms, not in terms of imputed personality nor
even of workmanship. Modern science, deriving its concepts from the same
source, carries on its inquiries and states its conclusions in terms of
the same objective character as those employed by the mechanical
engineer.
So it has come about, through the progressive change of the ruling
habits of thought in the community, that the theories of science have
progressively diverged from the formulations of pragmatism, ever since
the modern era set in. From an organisation of knowledge on the basis of
imputed personal or animistic propensity the theory has changed its base
to an imputation of brute activity only, and this latter is conceived in
an increasingly matter-of-fact manner; until, latterly, the pragmatic
range of knowledge and the scientific are more widely out of touch than
ever, differing not only in aim, but in matter as well. In both domains
knowledge runs in terms of activity, but it is on the one hand knowledge
of what had best be done, and on the other hand knowledge of what takes
place; on the one hand knowledge of ways and means, on the other hand
knowledge without any ulterior purpose. The latter range of knowledge
may serve the ends of the former, but the converse does not hold true.
These two divergent ranges of inquiry are to be found together in all
phases of human culture. What distinguishes the present phase is that
the discrepancy between the two is now wider than ever before. The
present is nowise distinguished above other cultural eras by any
exceptional urgency or acumen in the search for pragmatic expedients.
Neither is it safe to assert that the present excels all other
civilisations in the volume or the workmanship of that body of knowledge
that is to be credited to the idle curiosity. What distinguishes the
present in these premises is (1) that the primacy in the cultural scheme
has passed from pragmatism to a disinterested inquiry whose motive is
idle curiosity, and (2) that in the domain of the latter the making of
myths and legends in terms of imputed personality, as well as the
construction of dialectical systems in terms of differential reality,
has yielded the first place to the making of theories in terms of
matter-of-fact sequence.[12]
Pragmatism creates nothing but maxims of expedient conduct. Science
creates nothing but theories.[13] It knows nothing of policy or utility,
of better or worse. None of all that is comprised in what is to-day
accounted scientific knowledge. Wisdom and proficiency of the pragmatic
sort does not contribute to the advance of a knowledge of fact. It has
only an incidental bearing on scientific research, and its bearing is
chiefly that of inhibition and misdirection. Wherever canons of
expediency are intruded into or are attempted to be incorporated in the
inquiry, the consequence is an unhappy one for science, however happy it
may be for some other purpose extraneous to science. The mental attitude
of worldly wisdom is at cross-purposes with the disinterested scientific
spirit, and the pursuit of it induces an intellectual bias that is
incompatible with scientific insight. Its intellectual output is a body
of shrewd rules of conduct, in great part designed to take advantage of
human infirmity. Its habitual terms of standardisation and validity are
terms of human nature, of human preference, prejudice, aspiration,
endeavor, and disability, and the habit of mind that goes with it is
such as is consonant with these terms. No doubt, the all-pervading
pragmatic animus of the older and non-European civilisations has had
more than anything else to do with their relatively slight and slow
advance in scientific knowledge. In the modern scheme of knowledge it
holds true, in a similar manner and with analogous effect, that training
in divinity, in law, and in the related branches of diplomacy, business
tactics, military affairs, and political theory, is alien to the
skeptical scientific spirit and subversive of it.
The modern scheme of culture comprises a large body of worldly wisdom,
as well as of science. This pragmatic lore stands over against science
with something of a jealous reserve. The pragmatists value themselves
somewhat on being useful as well as being efficient for good and evil.
They feel the inherent antagonism between themselves and the scientists,
and look with some doubt on the latter as being merely decorative
triflers, although they sometimes borrow the prestige of the name of
science--as is only good and well, since it is of the essence of worldly
wisdom to borrow anything that can be turned to account. The reasoning
in these fields turns about questions of personal advantage of one kind
or another, and the merits of the claims canvassed in these discussions
are decided on grounds of authenticity. Personal claims make up the
subject of the inquiry, and these claims are construed and decided in
terms of precedent and choice, use and wont, prescriptive authority, and
the like. The higher reaches of generalisation in these pragmatic
inquiries are of the nature of deductions from authentic tradition, and
the training in this class of reasoning gives discrimination in respect
of authenticity and expediency. The resulting habit of mind is a bias
for substituting dialectical distinctions and decisions _de jure_ in the
place of explanations _de facto_. The so-called "sciences" associated
with these pragmatic disciplines, such as jurisprudence, political
science, and the like, are a taxonomy of credenda. Of this character was
the greater part of the "science" cultivated by the Schoolmen, and large
remnants of the same kind of authentic convictions are, of course, still
found among the tenets of the scientists, particularly in the social
sciences, and no small solicitude is still given to their cultivation.
Substantially the same value as that of the temporal pragmatic inquiries
belongs also, of course, to the "science" of divinity. Here the
questions to which an answer is sought, as well as the aim and method of
inquiry, are of the same pragmatic character, although the argument runs
on a higher plane of personality, and seeks a solution in terms of a
remoter and more metaphysical expediency.
* * * * *
In the light of what has been said above, the questions recur: How far
is the scientific quest of matter-of-fact knowledge consonant with the
inherited intellectual aptitudes and propensities of the normal man?
and, What foothold has science in the modern culture? The former is a
question of the temperamental heritage of civilised mankind, and
therefore it is in large part a question of the circumstances which have
in the past selectively shaped the human nature of civilised mankind.
Under the barbarian culture, as well as on the lower levels of what is
currently called civilised life, the dominant note has been that of
competitive expediency for the individual or the group, great or small,
in an avowed struggle for the means of life. Such is still the ideal of
the politician and business man, as well as of other classes whose
habits of life lead them to cling to the inherited barbarian traditions.
The upper-barbarian and lower-civilised culture, as has already been
indicated, is pragmatic, with a thoroughness that nearly bars out any
non-pragmatic ideal of life or of knowledge. Where this tradition is
strong there is but a precarious chance for any consistent effort to
formulate knowledge in other terms than those drawn from the prevalent
relations of personal mastery and subservience and the ideals of
personal gain.
During the Dark and Middle Ages, for instance, it is true in the main
that any movement of thought not controlled by considerations of
expediency and conventions of status are to be found only in the obscure
depths of vulgar life, among those neglected elements of the population
that lived below the reach of the active class struggle. What there is
surviving of this vulgar, non-pragmatic intellectual output takes the
form of legends and folk-tales, often embroidered on the authentic
documents of the Faith. These are less alien to the latest and highest
culture of Christendom than are the dogmatic, dialectical, and chivalric
productions that occupied the attention of the upper classes in mediaeval
times. It may seem a curious paradox that the latest and most perfect
flower of the western civilisation is more nearly akin to the spiritual
life of the serfs and villeins than it is to that of the grange or the
abbey. The courtly life and the chivalric habits of thought of that past
phase of culture have left as nearly no trace in the cultural scheme of
later modern times as could well be. Even the romancers who ostensibly
rehearse the phenomena of chivalry, unavoidably make their knights and
ladies speak the language and the sentiments of the slums of that time,
tempered with certain schematised modern reflections and speculations.
The gallantries, the genteel inanities and devout imbecilities of
mediaeval high-life would be insufferable even to the meanest and most
romantic modern intelligence. So that in a later, less barbarian age the
precarious remnants of folklore that have come down through that vulgar
channel--half savage and more than half pagan--are treasured as
containing the largest spiritual gains which the barbarian ages of
Europe have to offer.
The sway of barbarian pragmatism has, everywhere in the western world,
been relatively brief and relatively light; the only exceptions would be
found in certain parts of the Mediterranean seaboard. But wherever the
barbarian culture has been sufficiently long-lived and unmitigated to
work out a thoroughly selective effect in the human material subjected
to it, there the pragmatic animus may be expected to have become supreme
and to inhibit all movement in the direction of scientific inquiry and
eliminate all effective aptitude for other than worldly wisdom. What the
selective consequences of such a protracted regime of pragmatism would
be for the temper of the race may be seen in the human flotsam left by
the great civilisations of antiquity, such as Egypt, India, and Persia.
Science is not at home among these leavings of barbarism. In these
instances of its long and unmitigated dominion the barbarian culture has
selectively worked out a temperamental bias and a scheme of life from
which objective, matter-of-fact knowledge is virtually excluded in favor
of pragmatism, secular and religious. But for the greater part of the
race, at least for the greater part of civilised mankind, the regime of
the mature barbarian culture has been of relatively short duration, and
has had a correspondingly superficial and transient selective effect. It
has not had force and time to eliminate certain elements of human nature
handed down from an earlier phase of life, which are not in full
consonance with the barbarian animus or with the demands of the
pragmatic scheme of thought. The barbarian-pragmatic habit of mind,
therefore, is not properly speaking a temperamental trait of the
civilised peoples, except possibly within certain class limits (as,
_e.g._, the German nobility). It is rather a tradition, and it does not
constitute so tenacious a bias as to make head against the strongly
materialistic drift of modern conditions and set aside that increasingly
urgent resort to matter-of-fact conceptions that makes for the primacy
of science. Civilised mankind does not in any great measure take back
atavistically to the upper-barbarian habit of mind. Barbarism covers too
small a segment of the life-history of the race to have given an
enduring temperamental result. The unmitigated discipline of the higher
barbarism in Europe fell on a relatively small proportion of the
population, and in the course of time this select element of the
population was crossed and blended with the blood of the lower elements
whose life always continued to run in the ruts of savagery rather than
in those of the high-strung, finished barbarian culture that gave rise
to the chivalric scheme of life.
Of the several phases of human culture the most protracted, and the one
which has counted for most in shaping the abiding traits of the race, is
unquestionably that of savagery. With savagery, for the purpose in hand,
is to be classed that lower, relatively peaceable barbarism that is not
characterised by wide and sharp class discrepancies or by an unremitting
endeavor of one individual or group to get the better of another. Even
under the full-grown barbarian culture--as, for instance, during the
Middle Ages--the habits of life and the spiritual interests of the great
body of the population continue in large measure to bear the character
of savagery. The savage phase of culture accounts for by far the greater
portion of the life-history of mankind, particularly if the lower
barbarism and the vulgar life of later barbarism be counted in with
savagery, as in a measure they properly should. This is particularly
true of those racial elements that have entered into the composition of
the leading peoples of Christendom.
The savage culture is characterised by the relative absence of
pragmatism from the higher generalisations of its knowledge and beliefs.
As has been noted above, its theoretical creations are chiefly of the
nature of mythology shading off into folklore. This genial spinning of
apocryphal yarns is, at its best, an amiably inefficient formulation of
experiences and observations in terms of something like a life-history
of the phenomena observed. It has, on the one hand, little value, and
little purpose, in the way of pragmatic expediency, and so it is not
closely akin to the pragmatic-barbarian scheme of life; while, on the
other hand, it is also ineffectual as a systematic knowledge of
matter-of-fact. It is a quest of knowledge, perhaps of systematic
knowledge, and it is carried on under the incentive of the idle
curiosity. In this respect it falls in the same class with the civilised
man's science; but it seeks knowledge not in terms of opaque
matter-of-fact, but in terms of some sort of spiritual life imputed to
the facts. It is romantic and Hegelian rather than realistic and
Darwinian. The logical necessities of its scheme of thought are
necessities of spiritual consistency rather than of quantitative
equivalence. It is like science in that it has no ulterior motive beyond
the idle craving for a systematic correlation of data; but it is unlike
science in that its standardisation and correlation of data run in terms
of the free play of imputed personal initiative rather than in terms of
the constraint of objective cause and effect.
By force of the protracted selective discipline of this past phase of
culture, the human nature of civilised mankind is still substantially
the human nature of savage man. The ancient equipment of congenital
aptitudes and propensities stands over substantially unchanged, though
overlaid with barbarian traditions and conventionalities and readjusted
by habituation to the exigencies of civilised life. In a measure,
therefore, but by no means altogether, scientific inquiry is native to
civilised man with his savage heritage, since scientific inquiry
proceeds on the same general motive of idle curiosity as guided the
savage myth-makers, though it makes use of concepts and standards in
great measure alien to the myth-makers' habit of mind. The ancient human
predilection for discovering a dramatic play of passion and intrigue in
the phenomena of nature still asserts itself. In the most advanced
communities, and even among the adepts of modern science, there comes up
persistently the revulsion of the native savage against the inhumanly
dispassionate sweep of the scientific quest, as well as against the
inhumanly ruthless fabric of technological processes that have come out
of this search for matter-of-fact knowledge. Very often the savage need
of a spiritual interpretation (dramatisation) of phenomena breaks
through the crust of acquired materialistic habits of thought, to find
such refuge as may be had in articles of faith seized on and held by
sheer force of instinctive conviction. Science and its creations are
more or less uncanny, more or less alien, to that fashion of craving for
knowledge that by ancient inheritance animates mankind. Furtively or by
an overt breach of consistency, men still seek comfort in marvelous
articles of savage-born lore, which contradict the truths of that
modern science whose dominion they dare not question, but whose findings
at the same time go beyond the breaking point of their jungle-fed
spiritual sensibilities.
The ancient ruts of savage thought and conviction are smooth and easy;
but however sweet and indispensable the archaic ways of thinking may be
to the civilised man's peace of mind, yet such is the binding force of
matter-of-fact analysis and inference under modern conditions that the
findings of science are not questioned on the whole. The name of science
is after all a word to conjure with. So much so that the name and the
mannerisms, at least, if nothing more of science, have invaded all
fields of learning and have even overrun territory that belongs to the
enemy. So there are "sciences" of theology, law, and medicine, as has
already been noted above. And there are such things as Christian
Science, and "scientific" astrology, palmistry, and the like. But within
the field of learning proper there is a similar predilection for an air
of scientific acumen and precision where science does not belong. So
that even that large range of knowledge that has to do with general
information rather than with theory--what is loosely termed
scholarship--tends strongly to take on the name and forms of theoretical
statement. However decided the contrast between these branches of
knowledge on the one hand, and science properly so called on the other
hand, yet even the classical learning, and the humanities generally,
fall in with this predilection more and more with each succeeding
generation of students. The students of literature, for instance, are
more and more prone to substitute critical analysis and linguistic
speculation, as the end of their endeavors, in the place of that
discipline of taste and that cultivated sense of literary form and
literary feeling that must always remain the chief end of literary
training, as distinct from philology and the social sciences. There is,
of course, no intention to question the legitimacy of a science of
philology or of the analytical study of literature as a fact in cultural
history, but these things do not constitute training in literary taste,
nor can they take the place of it. The effect of this straining after
scientific formulations in a field alien to the scientific spirit is as
curious as it is wasteful. Scientifically speaking, these
quasi-scientific inquiries necessarily begin nowhere and end in the same
place; while in point of cultural gain they commonly come to nothing
better than spiritual abnegation. But these blindfold endeavors to
conform to the canons of science serve to show how wide and unmitigated
the sway of science is in the modern community.
Scholarship--that is to say an intimate and systematic familiarity with
past cultural achievements--still holds its place in the scheme of
learning, in spite of the unadvised efforts of the short-sighted to
blend it with the work of science, for it affords play for the ancient
genial propensities that ruled men's quest of knowledge before the
coming of science or of the outspoken pragmatic barbarism. Its place may
not be so large in proportion to the entire field of learning as it was
before the scientific era got fully under way. But there is no intrinsic
antagonism between science and scholarship, as there is between
pragmatic training and scientific inquiry. Modern scholarship shares
with modern science the quality of not being pragmatic in its aim. Like
science it has no ulterior end. It may be difficult here and there to
draw the line between science and scholarship, and it may even more be
unnecessary to draw such a line; yet while the two ranges of discipline
belong together in many ways, and while there are many points of contact
and sympathy between the two; while the two together make up the modern
scheme of learning; yet there is no need of confounding the one with the
other, nor can the one do the work of the other. The scheme of learning
has changed in such manner as to give science the more commanding place,
but the scholar's domain has not thereby been invaded, nor has it
suffered contraction at the hands of science, whatever may be said of
the weak-kneed abnegation of some whose place, if they have one, is in
the field of scholarship rather than of science.
* * * * *
All that has been said above has of course nothing to say as to the
intrinsic merits of this quest of matter-of-fact knowledge. In point of
fact, science gives its tone to modern culture. One may approve or one
may deprecate the fact that this opaque, materialistic interpretation of
things pervades modern thinking. That is a question of taste, about
which there is no disputing. The prevalence of this matter-of-fact
inquiry is a feature of modern culture, and the attitude which critics
take toward this phenomenon is chiefly significant as indicating how far
their own habit of mind coincides with the enlightened common-sense of
civilised mankind. It shows in what degree they are abreast of the
advance of culture. Those in whom the savage predilection or the
barbarian tradition is stronger than their habituation to civilised life
will find that this dominant factor of modern life is perverse, if not
calamitous; those whose habits of thought have been fully shaped by the
machine process and scientific inquiry are likely to find it good. The
modern western culture, with its core of matter-of-fact knowledge, may
be better or worse than some other cultural scheme, such as the classic
Greek, the mediaeval Christian, the Hindu, or the Pueblo Indian. Seen in
certain lights, tested by certain standards, it is doubtless better; by
other standards, worse. But the fact remains that the current cultural
scheme, in its maturest growth, is of that complexion; its
characteristic force lies in this matter-of-fact insight; its highest
discipline and its maturest aspirations are these.
In point of fact, the sober common-sense of civilised mankind accepts no
other end of endeavor as self-sufficient and ultimate. That such is the
case seems to be due chiefly to the ubiquitous presence of the machine
technology and its creations in the life of modern communities. And so
long as the machine process continues to hold its dominant place as a
disciplinary factor in modern culture, so long must the spiritual and
intellectual life of this cultural era maintain the character which the
machine process gives it.
But while the scientist's spirit and his achievements stir an
unqualified admiration in modern men, and while his discoveries carry
conviction as nothing else does, it does not follow that the manner of
man which this quest of knowledge produces or requires comes near
answering to the current ideal of manhood, or that his conclusions are
felt to be as good and beautiful as they are true. The ideal man, and
the ideal of human life, even in the apprehension of those who most
rejoice in the advances of science, is neither the finikin skeptic in
the laboratory nor the animated slide-rule. The quest of science is
relatively new. It is a cultural factor not comprised, in anything like
its modern force, among those circumstances whose selective action in
the far past has given to the race the human nature which it now has.
The race reached the human plane with little of this searching knowledge
of facts; and throughout the greater part of its life-history on the
human plane it has been accustomed to make its higher generalisations
and to formulate its larger principles of life in other terms than those
of passionless matter-of-fact. This manner of knowledge has occupied an
increasing share of men's attention in the past, since it bears in a
decisive way upon the minor affairs of workday life; but it has never
until now been put in the first place, as the dominant note of human
culture. The normal man, such as his inheritance has made him, has
therefore good cause to be restive under its dominion.
FOOTNOTES:
[1] Reprinted by permission from _The American Journal of Sociology_,
Vol. XI, March, 1906.
[2] Jacques Loeb, _Heliotropismus der Thiere_, and _Comparative
Psychology and Physiology of the Brain_.
[3] Cf. Gross, _Spiele der Thiere_, chap. 2 (esp. pp. 65-76), and chap.
5; _The Play of Man_, Part III, sec. 3; Spencer, _Principles of
Psychology_, secs. 533-35.
[4] The myths and legendary lore of the Eskimo, the Pueblo Indians, and
some tribes of the northwest coast afford good instances of such idle
creations. Cf. various _Reports_ of the Bureau of American Ethnology;
also, e.g., Tylor, _Primitive Culture_, esp. the chapters on "Mythology"
and "Animism."
[5] "Pragmatic" is here used in a more restricted sense than the
distinctively pragmatic school of modern psychologists would commonly
assign the term. "Pragmatic," "teleological," and the like terms have
been extended to cover imputation of purpose as well as conversion to
use. It is not intended to criticise this ambiguous use of terms, nor to
correct it; but the terms are here used only in the latter sense, which
alone belongs to them by force of early usage and etymology. "Pragmatic"
knowledge, therefore, is such as is designed to serve an expedient end
for the knower, and is here contrasted with the imputation of expedient
conduct to the facts observed. The reason for preserving this
distinction is simply the present need of a simple term by which to mark
the distinction between worldly wisdom and idle learning.
[6] Cf. Ward, _Pure Sociology_, esp. pp. 437-48.
[7] Cf., e.g., Tylor, _Primitive Culture_, chap. 8.
[8] Cf. James, _Psychology_, chap. 9, esp. sec. 5.
[9] As currently employed, the term "pragmatic" is made to cover both
conduct looking to the agent's preferential advantage, expedient
conduct, and workmanship directed to the production of things that may
or may not be of advantage to the agent. If the term be taken in the
latter meaning, the culture of modern times is no less "pragmatic" than
that of the Middle Ages. It is here intended to be used in the former
sense.
[10] Epistemologically speaking, activity is imputed to phenomena for
the purpose of organising them into a dramatically consistent system.
[11] Cf., e.g., Karl Pearson, _Grammar of Science_, and compare his
ideal of inert magnitudes as set forth in his exposition with his actual
work as shown in chaps. 9, 10, and 12, and more particularly in his
discussions of "Mother Right" and related topics in _The Chances of
Death_.
[12] Cf. James, _Psychology_, Vol. II, chap. 28, pp. 633-71, esp. p. 640
note.
[13] Cf. Ward, _Principles of Psychology_, pp. 439-43.
THE EVOLUTION OF THE SCIENTIFIC POINT OF VIEW[1]
A discussion of the scientific point of view which avowedly proceeds
from this point of view itself has necessarily the appearance of an
argument in a circle; and such in great part is the character of what
here follows. It is in large part an attempt to explain the scientific
point of view in terms of itself, but not altogether. This inquiry does
not presume to deal with the origin or the legitimation of the
postulates of science, but only with the growth of the habitual use of
these postulates, and the manner of using them. The point of inquiry is
the changes which have taken place in the secondary postulates involved
in the scientific point of view--in great part a question of the
progressive redistribution of emphasis among the preconceptions under
whose guidance successive generations of scientists have gone to their
work.
* * * * *
The sciences which are in any peculiar sense modern take as an
(unavowed) postulate the fact of consecutive change. Their inquiry
always centers upon some manner of process. This notion of process about
which the researches of modern science cluster, is a notion of a
sequence, or complex, of consecutive change in which the _nexus_ of the
sequence, that by virtue of which the change inquired into is
consecutive, is the relation of cause and effect. The consecution,
moreover, runs in terms of persistence of quantity or of force. In so
far as the science is of a modern complexion, in so far as it is not of
the nature of taxonomy simply, the inquiry converges upon a matter of
process; and it comes to rest, provisionally, when it has disposed of
its facts in terms of process. But modern scientific inquiry in any case
comes to rest only provisionally; because its prime postulate is that of
consecutive change, and consecutive change can, of course, not come to
rest except provisionally. By its own nature the inquiry cannot reach a
final term in any direction. So it is something of a homiletical
commonplace to say that the outcome of any serious research can only be
to make two questions grow where one question grew before. Such is
necessarily the case because the postulate of the scientist is that
things change consecutively. It is an unproven and unprovable
postulate--that is to say, it is a metaphysical preconception--but it
gives the outcome that every goal of research is necessarily a point of
departure; every term is transitional.[2]
A hundred years ago, or even fifty years ago, scientific men were not in
the habit of looking at the matter in this way. At least it did not
then seem a matter of course, lying in the nature of things, that
scientific inquiry could not reach a final term in any direction.
To-day it is a matter of course, and will be so avowed without argument.
Stated in the broadest terms, this is the substantial outcome of that
nineteenth-century movement in science with which the name of Darwin is
associated as a catch-word.
This use of Darwin's name does not imply that this epoch of science is
mainly Darwin's work. What merit may belong to Darwin, specifically, in
these premises, is a question which need not detain the argument. He
may, by way of creative initiative, have had more or less to do with
shaping the course of things scientific. Or, if you choose, his voice
may even be taken as only one of the noises which the wheels of
civilisation make when they go round. But by scientifically colloquial
usage we have come to speak of pre-Darwinian and post-Darwinian science,
and to appreciate that there is a significant difference in the point of
view between the scientific era which preceded and that which followed
the epoch to which his name belongs.
Before that epoch the animus of a science was, on the whole, the animus
of taxonomy; the consistent end of scientific inquiry was definition and
classification,--as it still continues to be in such fields of science
as have not been affected by the modern notion of consecutive change.
The scientists of that era looked to a final term, a consummation of the
changes which provoked their inquiry, as well as to a first beginning of
the matters with which their researches were concerned. The questions of
science were directed to the problem, essentially classificatory, of
how things had been in the presumed primordial stable equilibrium out of
which they, putatively, had come, and how they should be in the
definitive state of settlement into which things were to fall as the
outcome of the play of forces which intervened between this primordial
and the definitive stable equilibrium. To the pre-Darwinian taxonomists
the center of interest and attention, to which all scientific inquiry
must legitimately converge, was the body of natural laws governing
phenomena under the rule of causation. These natural laws were of the
nature of rules of the game of causation. They formulated the immutable
relations in which things "naturally" stood to one another before causal
disturbance took place between them, the orderly unfolding of the
complement of causes involved in the transition over this interval of
transient activity, and the settled relations that would supervene when
the disturbance had passed and the transition from cause to effect had
been consummated,--the emphasis falling on the consummation.
The characteristic feature by which post-Darwinian science is contrasted
with what went before is a new distribution of emphasis, whereby the
process of causation, the interval of instability and transition between
initial cause and definitive effect, has come to take the first place in
the inquiry; instead of that consummation in which causal effect was
once presumed to come to rest. This change of the point of view was, of
course, not abrupt or catastrophic. But it has latterly gone so far that
modern science is becoming substantially a theory of the process of
consecutive change, which is taken as a sequence of cumulative change,
realized to be self-continuing or self-propagating and to have no final
term. Questions of a primordial beginning and a definitive outcome have
fallen into abeyance within the modern sciences, and such questions are
in a fair way to lose all claim to consideration at the hands of the
scientists. Modern science is ceasing to occupy itself with the natural
laws--the codified rules of the game of causation--and is concerning
itself wholly with what has taken place and what is taking place.
* * * * *
Rightly seen from this ultra-modern point of view, this modern science
and this point of view which it affects are, of course, a feature of the
current cultural situation,--of the process of life as it runs along
under our eyes. So also, when seen from this scientific point of view,
it is a matter of course that any marked cultural era will have its own
characteristic attitude and animus toward matters of knowledge, will
bring under inquiry such questions of knowledge as lie within its
peculiar range of interest, and will seek answers to these questions
only in terms that are consonant with the habits of thought current at
the time. That is to say, science and the scientific point of view will
vary characteristically in response to those variations in the prevalent
habits of thought which constitute the sequence of cultural development;
the current science and the current scientific point of view, the
knowledge sought and the manner of seeking it, are a product of the
cultural growth. Perhaps it would all be better characterised as a
by-product of the cultured growth.
* * * * *
This question of a scientific point of view, of a particular attitude
and animus in matters of knowledge, is a question of the formation of
habits of thought; and habits of thought are an outcome of habits of
life. A scientific point of view is a consensus of habits of thought
current in the community, and the scientist is constrained to believe
that this consensus is formed in response to a more or less consistent
discipline of habituation to which the community is subjected, and that
the consensus can extend only so far and maintain its force only so long
as the discipline of habituation exercised by the circumstances of life
enforces it and backs it up. The scheme of life, within which lies the
scheme of knowledge, is a consensus of habits in the individuals which
make up the community. The individual subjected to habituation is each a
single individual agent, and whatever affects him in any one line of
activity, therefore, necessarily affects him in some degree in all his
various activities. The cultural scheme of any community is a complex of
the habits of life and of thought prevalent among the members of the
community. It makes up a more or less congruous and balanced whole, and
carries within it a more or less consistent habitual attitude toward
matters of knowledge--more or less consistent according as the
community's cultural scheme is more or less congruous throughout the
body of the population; and this in its turn is in the main a question
of how nearly uniform or consonant are the circumstances of experience
and tradition to which the several classes and members of the community
are subject.
So, then, the change which has come over the scientific point of view
between pre-Darwinian and post-Darwinian times is to be explained, at
least in great part, by the changing circumstances of life, and
therefore of habituation, among the people of Christendom during the
life-history of modern science. But the growth of a scientific point of
view begins farther back than modern Christendom, and a record of its
growth would be a record of the growth of human culture. Modern science
demands a genetic account of the phenomena with which it deals, and a
genetic inquiry into the scientific point of view necessarily will have
to make up its account with the earlier phases of cultural growth. A
life-history of human culture is a large topic, not to be attempted here
even in the sketchiest outline. The most that can be attempted is a
hasty review of certain scattered questions and salient points in this
life-history.
* * * * *
In what manner and with what effect the idle curiosity of mankind first
began to tame the facts thrown in its way, far back in the night of
time, and to break them in under a scheme of habitual interpretation;
what may have been the earliest norms of systematic knowledge, such as
would serve the curiosity of the earliest generations of men in a way
analogous to the service rendered the curiosity of later generations by
scientific inquiry--all that is, of course, a matter of long-range
conjecture, more or less wild, which cannot be gone into here. But among
such peoples of the lower cultures as have been consistently observed,
norms of knowledge and schemes for its systematization are always found.
These norms and systems of knowledge are naive and crude, perhaps, but
there is fair ground for presuming that out of the like norms and
systems in the remoter ages of our own antecedents have grown up the
systems of knowledge cultivated by the peoples of history and by their
representatives now living.
It is not unusual to say that the primitive systems of knowledge are
constructed on animistic lines; that animistic sequence is the rule to
which the facts are broken in. This seems to be true, if "animism" be
construed in a sufficiently naive and inchoate sense. But this is not
the whole case. In their higher generalisations, in what Powell calls
their "sophiology," it appears that the primitive peoples are guided by
animistic norms; they make up their cosmological schemes, and the like,
in terms of personal or quasi-personal activity, and the whole is thrown
into something of a dramatic form. Through the early cosmological lore
runs a dramatic consistency which imputes something in the way of
initiative and propensity to the phenomena that are to be accounted for.
But this dramatisation of the facts, the accounting for phenomena in
terms of spiritual or quasi-spiritual initiative, is by no means the
whole case of primitive men's systematic knowledge of facts. Their
theories are not all of the nature of dramatic legend, myth, or
animistic life-history, although the broader and more picturesque
generalisations may take that form. There always runs along by the side
of these dramaturgic life-histories, and underlying them, an obscure
system of generalisations in terms of matter-of-fact. The system of
matter-of-fact generalisations, or theories, is obscurer than the
dramatic generalisations only in the sense that it is left in the
background as being less picturesque and of less vital interest, not in
the sense of being less familiar, less adequately apprehended, or less
secure. The peoples of the lower cultures "know" that the broad scheme
of things is to be explained in terms of creation, perhaps of
procreation, gestation, birth, growth, life and initiative; and these
matters engross the attention and stimulate speculation. But they know
equally well the matter of fact that water will run down hill, that two
stones are heavier than one of them, that an edge-tool will cut softer
substances, that two things may be tied together with a string, that a
pointed stick may be stuck in the ground, and the like. There is no
range of knowledge that is held more securely by any people than such
matters of fact; and these are generalisations from experience; they are
theoretical knowledge, and they are a matter of course. They underlie
the dramatical generalisations of the broad scheme of things, and are so
employed in the speculations of the myth-makers and the learned.
It may be that the exceptional efficiency of a given edge-tool, _e.g._,
will be accounted for on animistic or quasi-personal grounds,--grounds
of magical efficacy; but it is the exceptional behavior of such a tool
that calls for explanation on the higher ground of animistic potency,
not its work-day performance of common work. So also if an edge-tool
should fail to do what is expected of it as a matter of course, its
failure may require an explanation in other terms than matter-of-fact.
But all that only serves to bring into evidence the fact that a scheme
of generalisations in terms of matter-of-fact is securely held and is
made use of as a sufficient and ultimate explanation of the more
familiar phenomena of experience. These commonplace matter-of-fact
generalisations are not questioned and do not clash with the higher
scheme of things.
All this may seem like taking pains about trivialities. But the data
with which any scientific inquiry has to do are trivialities in some
other bearing than that one in which they are of account.
In all succeeding phases of culture, developmentally subsequent to the
primitive phase supposed above, there is found a similar or analogous
division of knowledge between a higher range of theoretical explanations
of phenomena, an ornate scheme of things, on the one hand, and such an
obscure range of matter-of-fact generalisations as is here spoken of, on
the other hand. And the evolution of the scientific point of view is a
matter of the shifting fortunes which have in the course of cultural
growth overtaken the one and the other of these two divergent methods
of apprehending and systematising the facts of experience.
The historians of human culture have, no doubt justly, commonly dealt
with the mutations that have occurred on the higher levels of
intellectual enterprise, in the more ambitious, more picturesque, and
less secure of these two contrasted ranges of theoretical knowledge;
while the lower range of generalisations, which has to do with work-day
experience, has in great part been passed over with scant ceremony as
lying outside the current of ideas, and as belonging rather among the
things which engage the attention than among the modes, expedients and
creations of this attention itself. There is good reason for this
relative neglect of the work-day matters of fact. It is on the higher
levels of speculative generalisation that the impressive mutations in
the development of thought have taken place, and that the shifting of
points of view and the clashing of convictions have drawn men into
controversy and analysis of their ideas and have given rise to schools
of thought. The matter-of-fact generalisations have met with relatively
few adventures and have afforded little scope for intellectual
initiative and profoundly picturesque speculation. On the higher levels
speculation is freer, the creative spirit has some scope, because its
excursions are not so immediately and harshly checked by material facts.
In these speculative ranges of knowledge it is possible to form and to
maintain habits of thought which shall be consistent with themselves and
with the habit of mind and run of tradition prevalent in the community
at the time, though not thereby consistent with the material actualities
of life in the community. Yet this range of speculative generalisation,
which makes up the higher learning of the barbarian culture, is also
controlled, checked, and guided by the community's habits of life; it,
too, is an integral part of the scheme of life and is an outcome of the
habituation enforced by experience. But it does not rest immediately on
men's dealings with the refractory phenomena of brute creation, nor is
it guided, undisguised and directly, by the habitual material
(industrial) occupations. The fabric of institutions intervenes between
the material exigencies of life and the speculative scheme of things.
The higher theoretical knowledge, that body of tenets which rises to the
dignity of a philosophical or scientific system, in the early culture,
is a complex of habits of thought which reflect the habits of life
embodied in the institutional structure of society; while the lower,
matter-of-fact generalisations of work-day efficiency--the trivial
matters of course--reflect the workmanlike habits of life enforced by
the commonplace material exigencies under which men live. The
distinction is analogous, and indeed, closely related, to the
distinction between "intangible" and "tangible" assets. And the
institutions are more flexible, they involve or admit a larger margin of
error, or of tolerance, than the material exigencies. The latter are
systematised into what economists have called "the state of the
industrial arts," which enforce a somewhat rigorous standardisation of
whatever knowledge falls within their scope; whereas the institutional
scheme is a matter of law and custom, politics and religion, taste and
morals, on all of which matters men have opinions and convictions, and
on which all men "have a right to their own opinions." The scheme of
institutions is also not necessarily uniform throughout the several
classes of society; and the same institution (as, _e.g._, slavery,
ownership, or royalty) does not impinge with the same effect on all
parties touched by it. The discipline of any institution of servitude,
_e.g._, is not the same for the master as for the serf, etc. If there is
a considerable institutional discrepancy between an upper and a lower
class in the community, leading to divergent lines of habitual interest
or discipline; if by force of the cultural scheme the institutions of
society are chiefly in the keeping of one class, whose attention is then
largely engrossed with the maintenance of the scheme of law and order;
while the workmanlike activities are chiefly in the hands of another
class, in whose apprehension the maintenance of law and order is at the
best a wearisome tribulation, there is likely to be a similarly
considerable divergence or discrepancy between the speculative
knowledge, cultivated primarily by the upper class, and the work-day
knowledge which is primarily in the keeping of the lower class. Such, in
particular, will be the case if the community is organised on a coercive
plan, with well-marked ruling and subject classes. The important and
interesting institutions in such a case, those institutions which fill a
large angle in men's vision and carry a great force of authenticity, are
the institutions of coercive control, differential authority and
subjection, personal dignity and consequence; and the speculative
generalisations, the institutions of the realm of knowledge, are created
in the image of these social institutions of status and personal force,
and fall into a scheme drawn after the plan of the code of honor. The
work-day generalisations, which emerge from the state of the industrial
arts, concomitantly fall into a deeper obscurity, answering to the depth
of indignity to which workmanlike efficiency sinks under such a cultural
scheme; and they can touch and check the current speculative knowledge
only remotely and incidentally. Under such a bifurcate scheme of
culture, with its concomitant two-cleft systematisation of knowledge,
"reality" is likely to be widely dissociated from fact--that is to say,
the realities and verities which are accepted as authentic and
convincing on the plane of speculative generalisation; while science has
no show--that is to say, science in that modern sense of the term which
implies a close contact, if not a coincidence, of reality with fact.
Whereas, if the institutional fabric, the community's scheme of life,
changes in such a manner as to throw the work-day experience into the
foreground of attention and to center the habitual interest of the
people on the immediate material relations of men to the brute
actualities, then the interval between the speculative realm of
knowledge, on the one hand, and the work-day generalisations of fact, on
the other hand, is likely to lessen, and the two ranges of knowledge are
likely to converge more or less effectually upon a common ground. When
the growth of culture falls into such lines, these two methods and norms
of theoretical formulation may presently come to further and fortify one
another, and something in the way of science has at least a chance to
arise.
* * * * *
On this view there is a degree of interdependence between the cultural
situation and the state of theoretical inquiry. To illustrate this
interdependence, or the concomitance between the cultural scheme and the
character of theoretical speculation, it may be in place to call to mind
certain concomitant variations of a general character which occur in the
lower cultures between the scheme of life and the scheme of knowledge.
In this tentative and fragmentary presentation of evidence there is
nothing novel to be brought forward; still less is there anything to be
offered which carries the weight of authority.
On the lower levels of culture, even more decidedly than on the higher,
the speculative systematisation of knowledge is prone to take the form
of theology (mythology) and cosmology. This theological and cosmological
lore serves the savage and barbaric peoples as a theoretical account of
the scheme of things, and its characteristic traits vary in response to
the variations of the institutional scheme under which the community
lives. In a prevailingly peaceable agricultural community, such, _e.g._,
as the more peaceable Pueblo Indians or the more settled Indians of the
Middle West, there is little coercive authority, few and slight class
distinctions involving superiority and inferiority; property rights are
few, slight and unstable; relationship is likely to be counted in the
female line. In such a culture the cosmological lore is likely to offer
explanations of the scheme of things in terms of generation or
germination and growth. Creation by fiat is not obtrusively or
characteristically present. The laws of nature bear the character of an
habitual behavior of things, rather than that of an authoritative code
of ordinances imposed by an overruling providence. The theology is
likely to be polytheistic in an extreme degree and in an extremely loose
sense of the term, embodying relatively little of the suzerainty of God.
The relation of the deities to mankind is likely to be that of
consanguinity, and as if to emphasise the peaceable, non-coercive
character of the divine order of things, the deities are, in the main,
very apt to be females. The matters of interest dealt with in the
cosmological theories are chiefly matters of the livelihood of the
people, the growth and care of the crops, and the promotion of
industrial ways and means.
With these phenomena of the peaceable culture may be contrasted the
order of things found among a predatory pastoral people--and pastoral
peoples tend strongly to take on a predatory cultural scheme. Such a
people will adopt male deities, in the main, and will impute to them a
coercive, imperious, arbitrary animus and a degree of princely dignity.
They will also tend strongly to a monotheistic, patriarchal scheme of
divine government; to explain things in terms of creative fiat; and to a
belief in the control of the natural universe by rules imposed by divine
ordinance. The matters of prime consequence in this theology are matters
of the servile relation of man to God, rather than the details of the
quest of a livelihood. The emphasis falls on the glory of God rather
than on the good of man. The Hebrew scriptures, particularly the
Jahvistic elements, show such a scheme of pastoral cultural and
predatory theoretical generalisations.
The learning cultivated on the lower levels of culture might be gone
into at some length if space and time permitted, but even what has been
said may serve to show, in the most general way, what are the
characteristic marks of this savage and barbarian lore. A similarly
summary characterisation of a cultural situation nearer home will bear
more directly on the immediate topic of inquiry. The learning of
mediaeval Christendom shows such a concomitance between the scheme of
knowledge and the scheme of institutions, somewhat analogous to the
barbaric Hebrew situation. The mediaeval scheme of institutions was of a
coercive, authoritative character, essentially a scheme of graded
mastery and graded servitude, in which a code of honor and a bill of
differential dignity held the most important place. The theology of that
time was of a like character. It was a monotheistic, or rather a
monarchical system, and of a despotic complexion. The cosmological
scheme was drawn in terms of fiat; and the natural philosophy was
occupied, in the main and in its most solemn endeavors, with the
corollaries to be subsumed under the divine fiat. When the philosophical
speculation dealt with facts it aimed to interpret them into systematic
consistency with the glory of God and the divine purpose. The
"realities" of the scholastic lore were spiritual, quasi-personal,
intangible, and fell into a scale of differential dignity and
prepotency. Matter-of-fact knowledge and work-day information were not
then fit topics of dignified inquiry. The interval, or discrepancy,
between reality and actuality was fairly wide. Throughout that era, of
course, work-day knowledge also continually increased in volume and
consistency; technological proficiency was gaining; the effective
control of natural processes was growing larger and more secure; showing
that matter-of-fact theories drawn from experience were being extended
and were made increasing use of. But all this went on in the field of
industry; the matter-of-fact theories were accepted as substantial and
ultimate only for the purposes of industry, only as technological
maxims, and were beneath the dignity of science.
With the transition to modern times industry comes into the foreground
in the west-European scheme of life, and the institutions of European
civilisation fall into a more intimate relation with the exigencies of
industry and technology. The technological range of habituation
progressively counts for more in the cultural complex, and the
discrepancy between the technological discipline and the discipline of
law and order under the institutions then in force grows progressively
less. The institutions of law and order take on a more impersonal, less
coercive character. Differential dignity and invidious discriminations
between classes gradually lose force.
The industry which so comes into the foreground and so affects the
scheme of institutions is peculiar in that its most obvious and
characteristic trait is the workmanlike initiative and efficiency of the
individual handicraftsman and the individual enterprise of the petty
trader. The technology which embodies the theoretical substance of this
industry is a technology of workmanship, in which the salient factors
are personal skill, force and diligence. Such a technology, running as
it does in great part on personal initiative, capacity, and application,
approaches nearer to the commonplace features of the institutional
fabric than many another technological system might; and its
disciplinary effects in some considerable measure blend with those of
the institutional discipline. The two lines of habituation, in the great
era of handicraft and petty trade, even came to coalesce and fortify one
another; as in the organisation of the craft gilds and of the industrial
towns. Industrial life and usage came to intrude creatively into the
cultural scheme on the one hand and into the scheme of authentic
knowledge on the other hand. So the body of matter-of-fact knowledge, in
modern times, is more and more drawn into the compass of theoretical
inquiry; and theoretical inquiry takes on more and more of the animus
and method of technological generalisation. But the matter-of-fact
elements so drawn in are construed in terms of workmanlike initiative
and efficiency, as required by the technological preconceptions of the
era of handicraft.
In this way, it may be conceived, modern science comes into the field
under the cloak of technology and gradually encroaches on the domain of
authentic theory previously held by other, higher, nobler, more
profound, more spiritual, more intangible conceptions and systems of
knowledge. In this early phase of modern science its central norm and
universal solvent is the concept of workmanlike initiative and
efficiency. This is the new organon. Whatever is to be explained must
be reduced to this notation and explained in these terms; otherwise the
inquiry does not come to rest. But when the requirements of this
notation in terms of workmanship have been duly fulfilled the inquiry
does come to rest.
By the early decades of the nineteenth century, with a passable degree
of thoroughness, other grounds of validity and other interpretations of
phenomena, other vouchers for truth and reality, had been eliminated
from the quest of authentic knowledge and from the terms in which
theoretical results were conceived or expressed. The new organon had
made good its pretensions. In this movement to establish the hegemony of
workmanlike efficiency--under the style and title of the "law of
causation," or of "efficient cause"--in the realm of knowledge, the
English-speaking communities took the lead after the earlier scientific
onset of the south-European communities had gone up in the smoke of war,
politics and religion during the great era of state-making. The ground
of this British lead in science is apparently the same as that of the
British lead in technology which came to a head in the Industrial
Revolution; and these two associated episodes of European civilisation
are apparently both traceable to the relatively peaceable run of life,
and so of habituation, in the English-speaking communities, as
contrasted with the communities of the continent.[3]
Along with the habits of thought peculiar to the technology of
handicraft, modern science also took over and assimilated much of the
institutional preconceptions of the era of handicraft and petty trade.
The "natural laws," with the formulation of which this early modern
science is occupied, are the rules governing natural "uniformities of
sequence"; and they punctiliously formulate the due procedure of any
given cause creatively working out the achievement of a given effect,
very much as the craft rules sagaciously specified the due routine for
turning out a staple article of merchantable goods. But these "natural
laws" of science are also felt to have something of that integrity and
prescriptive moral force that belongs to the principles of the system of
"natural rights" which the era of handicraft has contributed to the
institutional scheme of later times. The natural laws were not only held
to be true to fact, but they were also felt to be right and good. They
were looked upon as intrinsically meritorious and beneficent, and were
held to carry a sanction of their own. This habit of uncritically
imputing merit and equity to the "natural laws" of science continued in
force through much of the nineteenth century; very much as the habitual
acceptance of the principles of "natural rights" has held on by force of
tradition long after the exigencies of experience out of which these
"rights" sprang ceased to shape men's habits of life.[4] This
traditional attitude of submissive approval toward the "natural laws" of
science has not yet been wholly lost, even among the scientists of the
passing generation, many of whom have uncritically invested these "laws"
with a prescriptive rectitude and excellence; but so far, at least, has
this animus progressed toward disuse that it is now chiefly a matter for
expatiation in the pulpit, the accredited vent for the exudation of
effete matter from the cultural organism.
The traditions of the handicraft technology lasted over as a commonplace
habit of thought in science long after that technology had ceased to be
the decisive element in the industrial situation; while a new
technology, with its inculcation of new habits of thought, new
preconceptions, gradually made its way among the remnants of the old,
altering them, blending with them, and little by little superseding
them. The new technological departure, which made its first great epoch
in the so-called industrial revolution, in the technological ascendancy
of the machine-process, brought a new and characteristic discipline into
the cultural situation. The beginnings of the machine-era lie far back,
no doubt; but it is only of late, during the past century at the most,
that the machine-process can be said to have come into the dominant
place in the technological scheme; and it is only later still that its
discipline has, even in great part, remodeled the current preconceptions
as to the substantial nature of what goes on in the current of phenomena
whose changes excite the scientific curiosity. It is only relatively
very lately, whether in technological work or in scientific inquiry,
that men have fallen into the habit of thinking in terms of process
rather than in terms of the workmanlike efficiency of a given cause
working to a given effect.
These machine-made preconceptions of modern science, being habits of
thought induced by the machine technology in industry and in daily life,
have of course first and most consistently affected the character of
those sciences whose subject matter lies nearest to the technological
field of the machine-process; and in these material sciences the
shifting to the machine-made point of view has been relatively very
consistent, giving a highly impersonal interpretation of phenomena in
terms of consecutive change, and leaving little of the ancient
preconceptions of differential reality or creative causation. In such a
science as physics or chemistry, _e.g._, we are threatened with the
disappearance or dissipation of all stable and efficient substances;
their place being supplied, or their phenomena being theoretically
explained, by appeal to unremitting processes of inconceivably
high-pitched consecutive change.
In the sciences which lie farther afield from the technological domain,
and which, therefore, in point of habituation, are remoter from the
center of disturbance, the effect of the machine discipline may even yet
be scarcely appreciable. In such lore as ethics, _e.g._, or political
theory, or even economics, much of the norms of the regime of handicraft
still stands over; and very much of the institutional preconceptions of
natural rights, associated with the regime of handicraft in point of
genesis, growth and content, is not only still intact in this field of
inquiry, but it can scarcely even be claimed that there is ground for
serious apprehension of its prospective obsolescence. Indeed, something
even more ancient than handicraft and natural rights may be found
surviving in good vigor in this "moral" field of inquiry, where tests of
authenticity and reality are still sought and found by those who
cultivate these lines of inquiry that lie beyond the immediate sweep of
the machine's discipline. Even the evolutionary process of cumulative
causation as conceived by the adepts of these sciences is infused with a
preternatural, beneficent trend; so that "evolution" is conceived to
mean amelioration or "improvement." The metaphysics of the machine
technology has not yet wholly, perhaps not mainly, superseded the
metaphysics of the code of honor in those lines of inquiry that have to
do with human initiative and aspiration. Whether such a shifting of the
point of view in these sciences shall ever be effected is still an open
question. Here there still are spiritual verities which transcend the
sweep of consecutive change. That is to say, there are still current
habits of thought which definitively predispose their bearers to bring
their inquiries to rest on grounds of differential reality and invidious
merit.
FOOTNOTES:
[1] Read before the Kosmos Club, at the University of California, May 4,
1908. Reprinted by permission from the _University of California
Chronicle_, Vol. X, No. 4.
[2] It is by no means unusual for modern scientists to deny the truth of
this characterization, so far as regards this alleged recourse to the
concept of causation. They deny that such a concept--of efficiency,
activity, and the like--enters, or can legitimately enter, into their
work, whether as an instrument of research or as a means or guide to
theoretical formulation. They even deny the substantial continuity of
the sequence of changes that excite their scientific attention. This
attitude seems particularly to commend itself to those who by preference
attend to the mathematical formulations of theory and who are chiefly
occupied with proving up and working out details of the system of theory
which have previously been left unsettled or uncovered. The concept of
causation is recognized to be a metaphysical postulate, a matter of
imputation, not of observation; whereas it is claimed that scientific
inquiry neither does nor can legitimately, nor, indeed, currently, make
use of a postulate more metaphysical than the concept of an idle
concomitance of variation, such as is adequately expressed in terms of
mathematical function.
The contention seems sound, to the extent that the
materials--essentially statistical materials--with which scientific
inquiry is occupied are of this non-committal character, and that the
mathematical formulations of theory include no further element than that
of idle variation. Such is necessarily the case because causation is a
fact of imputation, not of observation, and so cannot be included among
the data; and because nothing further than non-committal variation can
be expressed in mathematical terms. A bare notation of quantity can
convey nothing further.
If it were the intention to claim only that the conclusions of the
scientists are, or should be, as a matter of conservative caution,
overtly stated in terms of function alone, then the contention might
well be allowed. Causal sequence, efficiency or continuity is, of
course, a matter of metaphysical imputation. It is not a fact of
observation, and cannot be asserted of the facts of observation except
as a trait imputed to them. It is so imputed, by scientists and others,
as a matter of logical necessity, as a basis of a systematic knowledge
of the facts of observation.
Beyond this, in their exercise of scientific initiative, as well as in
the norms which guide the systematisation of scientific results, the
contention will not be made good--at least not for the current phase of
scientific knowledge. The claim, indeed, carries its own refutation. In
making such a claim, both in rejecting the imputation of metaphysical
postulates and in defending their position against their critics, the
arguments put forward by the scientists run in causal terms. For the
polemical purposes, where their antagonists are to be scientifically
confuted, the defenders of the non-committal postulate of concomitance
find that postulate inadequate. They are not content, in this precarious
conjuncture, simply to attest a relation of idle quantitative
concomitance (mathematical function) between the allegations of their
critics, on the one hand, and their own controversial exposition of
these matters on the other hand. They argue that they do not "make use
of" such a postulate as "efficiency," whereas they claim to "make use
of" the concept of function. But "make use of" is not a notion of
functional variation but of causal efficiency in a somewhat gross and
highly anthropomorphic form. The relation between their own thinking and
the "principles" which they "apply" or the experiments and calculations
which they "institute" in their "search" for facts, is not held to be of
this non-committal kind. It will not be claimed that the shrewd insight
and the bold initiative of a man eminent in the empirical sciences bear
no more efficient or consequential a relation than that of mathematical
function to the ingenious experiments by which he tests his hypotheses
and extends the secure bounds of human knowledge. Least of all is the
masterly experimentalist himself in a position to deny that his
intelligence counts for something more efficient than idle concomitance
in such a case. The connection between his premises, hypotheses, and
experiments, on the one hand, and his theoretical results, on the other
hand, is not felt to be of the nature of mathematical function.
Consistently adhered to, the principle of "function" or concomitant
variation precludes recourse to experiment, hypotheses or
inquiry--indeed, it precludes "recourse" to anything whatever. Its
notation does not comprise anything so anthropomorphic.
The case is illustrated by the latter-day history of theoretical
physics. Of the sciences which affect a non-committal attitude in
respect of the concept of efficiency and which claim to get along with
the notion of mathematical function alone, physics is the most outspoken
and the one in which the claim has the best _prima facie_ validity. At
the same time, latter-day physicists, for a hundred years or more, have
been much occupied with explaining how phenomena which to all appearance
involve action at a distance do not involve action at a distance at all.
The greater theoretical achievements of physics during the past century
lie within the sweep of this (metaphysical) principle that action at a
distance does not take place, that apparent action at a distance must be
explained by effective contact, through a continuum, or by a material
transference. But this principle is nothing better than an unreasoning
repugnance on the part of the physicists to admitting action at a
distance. The requirement of a continuum involves a gross form of the
concept of efficient causation. The "functional" concept, concomitant
variation, requires no contact and no continuum. Concomitance at a
distance is quite as simple and convincing a notion as concomitance
within contact or by the intervention of a continuum, if not more so.
What stands in the way of its acceptance is the irrepressible
anthropomorphism of the physicists. And yet the great achievements of
physics are due to the initiative of men animated with this
anthropomorphic repugnance to the notion of concomitant variation at a
distance. All the generalisations on undulatory motion and translation
belong here. The latter-day researches in light, electrical
transmission, the theory of ions, together with what is known of the
obscure and late-found radiations and emanations, are to be credited to
the same metaphysical preconception, which is never absent in any
"scientific" inquiry in the field of physical science. It is only the
"occult" and "Christian" "Sciences" that can dispense with this
metaphysical postulate and take recourse to "absent treatment."
[3] A broad exception may perhaps be taken at this point, to the effect
that this sketch of the growth of the scientific animus overlooks the
science of the Ancients. The scientific achievements of classical
antiquity are a less obscure topic to-day than ever before during modern
times, and the more there is known of them the larger is the credit
given them. But it is to be noted that, (_a_) the relatively large and
free growth of scientific inquiry in classical antiquity is to be found
in the relatively peaceable and industrial Greek communities (with an
industrial culture of unknown pre-Hellenic antiquity), and (_b_) that
the sciences best and chiefly cultivated were those which rest on a
mathematical basis, if not mathematical sciences in the simpler sense of
the term. Now, mathematics occupies a singular place among the sciences,
in that it is, in its pure form, a logical discipline simply; its
subject matter being the logic of quantity, and its researches being of
the nature of an analysis of the intellect's modes of dealing with
matters of quantity. Its generalisations are generalisations of logical
procedure, which are tested and verified by immediate self-observation.
Such a science is in a peculiar degree, but only in a peculiar degree,
independent of the detail-discipline of daily life, whether
technological or institutional; and, given the propensity--the
intellectual enterprise, or "idle curiosity"--to go into speculation in
such a field, the results can scarcely vary in a manner to make the
variants inconsistent among themselves; nor need the state of
institutions or the state of the industrial arts seriously color or
distort such analytical work in such a field. Mathematics is peculiarly
independent of cultural circumstances, since it deals analytically with
mankind's native gifts of logic, not with the ephemeral traits acquired
by habituation.
[4] "Natural laws," which are held to be not only correct formulations
of the sequence of cause and effect in a given situation but also
meritoriously right and equitable rules governing the run of events,
necessarily impute to the facts and events in question a tendency to a
good and equitable, if not beneficent, consummation; since it is
necessarily the consummation, the effect considered as an accomplished
outcome, that is to be adjudged good and equitable, if anything. Hence
these "natural laws," as traditionally conceived, are laws governing the
accomplishment of an end--that is to say, laws as to how a sequence of
cause and effect comes to rest in a final term.
WHY IS ECONOMICS NOT AN EVOLUTIONARY SCIENCE?[1]
M. G. De Lapouge recently said, "Anthropology is destined to
revolutionise the political and the social sciences as radically as
bacteriology has revolutionised the science of medicine."[2] In so far
as he speaks of economics, the eminent anthropologist is not alone in
his conviction that the science stands in need of rehabilitation. His
words convey a rebuke and an admonition, and in both respects he speaks
the sense of many scientists in his own and related lines of inquiry. It
may be taken as the consensus of those men who are doing the serious
work of modern anthropology, ethnology, and psychology, as well as of
those in the biological sciences proper, that economics is helplessly
behind the times, and unable to handle its subject-matter in a way to
entitle it to standing as a modern science. The other political and
social sciences come in for their share of this obloquy, and perhaps on
equally cogent grounds. Nor are the economists themselves buoyantly
indifferent to the rebuke. Probably no economist to-day has either the
hardihood or the inclination to say that the science has now reached a
definitive formulation, either in the detail of results or as regards
the fundamental features of theory. The nearest recent approach to such
a position on the part of an economist of accredited standing is
perhaps to be found in Professor Marshall's Cambridge address of a year
and a half ago.[3] But these utterances are so far from the jaunty
confidence shown by the classical economists of half a century ago that
what most forcibly strikes the reader of Professor Marshall's address is
the exceeding modesty and the uncalled-for humility of the spokesman for
the "old generation." With the economists who are most attentively
looked to for guidance, uncertainty as to the definitive value of what
has been and is being done, and as to what we may, with effect, take to
next, is so common as to suggest that indecision is a meritorious work.
Even the Historical School, who made their innovation with so much
home-grown applause some time back, have been unable to settle down
contentedly to the pace which they set themselves.
The men of the sciences that are proud to own themselves "modern" find
fault with the economists for being still content to occupy themselves
with repairing a structure and doctrines and maxims resting on natural
rights, utilitarianism, and administrative expediency. This aspersion is
not altogether merited, but is near enough to the mark to carry a sting.
These modern sciences are evolutionary sciences, and their adepts
contemplate that characteristic of their work with some complacency.
Economics is not an evolutionary science--by the confession of its
spokesmen; and the economists turn their eyes with something of envy and
some sense of baffled emulation to these rivals that make broad their
phylacteries with the legend, "Up to date."
Precisely wherein the social and political sciences, including
economics, fall short of being evolutionary sciences, is not so plain.
At least, it has not been satisfactorily pointed out by their critics.
Their successful rivals in this matter--the sciences that deal with
human nature among the rest--claim as their substantial distinction that
they are realistic: they deal with facts. But economics, too, is
realistic in this sense: it deals with facts, often in the most
painstaking way, and latterly with an increasingly strenuous insistence
on the sole efficacy of data. But this "realism" does not make economics
an evolutionary science. The insistence on data could scarcely be
carried to a higher pitch than it was carried by the first generation of
the Historical School; and yet no economics is farther from being an
evolutionary science than the received economics of the Historical
School. The whole broad range of erudition and research that engaged the
energies of that school commonly falls short of being science, in that,
when consistent, they have contented themselves with an enumeration of
data and a narrative account of industrial development, and have not
presumed to offer a theory of anything or to elaborate their results
into a consistent body of knowledge.
Any evolutionary science, on the other hand, is a close-knit body of
theory. It is a theory of a process, of an unfolding sequence. But here,
again, economics seems to meet the test in a fair measure, without
satisfying its critics that its credentials are good. It must be
admitted, _e.g._, that J. S. Mill's doctrines of production,
distribution, and exchange, are a theory of certain economic processes,
and that he deals in a consistent and effective fashion with the
sequences of fact that make up his subject-matter. So, also, Cairnes's
discussion of normal value, of the rate of wages, and of international
trade, are excellent instances of a theoretical handling of economic
processes of sequence and the orderly unfolding development of fact.
But an attempt to cite Mill and Cairnes as exponents of an evolutionary
economics will produce no better effect than perplexity, and not a great
deal of that. Very much of monetary theory might be cited to the same
purpose and with the like effect. Something similar is true even of late
writers who have avowed some penchant for the evolutionary point of
view; as, _e.g._, Professor Hadley,--to cite a work of unquestioned
merit and unusual reach. Measurably, he keeps the word of promise to the
ear; but any one who may cite his _Economics_ as having brought
political economy into line as an evolutionary science will convince
neither himself nor his interlocutor. Something to the like effect may
fairly be said of the published work of that later English strain of
economists represented by Professors Cunningham and Ashley, and Mr.
Cannan, to name but a few of the more eminent figures in the group.
Of the achievements of the classical economists, recent and living, the
science may justly be proud; but they fall short of the evolutionist's
standard of adequacy, not in failing to offer a theory of a process or
of a developmental relation, but through conceiving their theory in
terms alien to the evolutionist's habits of thought. The difference
between the evolutionary and the pre-evolutionary sciences lies not in
the insistence on facts. There was a great and fruitful activity in the
natural sciences in collecting and collating facts before these sciences
took on the character which marks them as evolutionary. Nor does the
difference lie in the absence of efforts to formulate and explain
schemes of process, sequence, growth, and development in the
pre-evolutionary days. Efforts of this kind abounded, in number and
diversity; and many schemes of development, of great subtlety and
beauty, gained a vogue both as theories of organic and inorganic
development and as schemes of the life history of nations and societies.
It will not even hold true that our elders overlooked the presence of
cause and effect in formulating their theories and reducing their data
to a body of knowledge. But the terms which were accepted as the
definitive terms of knowledge were in some degree different in the early
days from what they are now. The terms of thought in which the
investigators of some two or three generations back definitively
formulated their knowledge of facts, in their last analyses, were
different in kind from the terms in which the modern evolutionist is
content to formulate his results. The analysis does not run back to the
same ground, or appeal to the same standard of finality or adequacy, in
the one case as in the other.
The difference is a difference of spiritual attitude or point of view in
the two contrasted generations of scientists. To put the matter in other
words, it is a difference in the basis of valuation of the facts for the
scientific purpose, or in the interest from which the facts are
appreciated. With the earlier as with the later generation the basis of
valuation of the facts handled is, in matters of detail, the causal
relation which is apprehended to subsist between them. This is true to
the greatest extent for the natural sciences. But in their handling of
the more comprehensive schemes of sequence and relation--in their
definitive formulation of the results--the two generations differ. The
modern scientist is unwilling to depart from the test of causal relation
or quantitative sequence. When he asks the question, Why? he insists on
an answer in terms of cause and effect. He wants to reduce his solution
of all problems to terms of the conservation of energy or the
persistence of quantity. This is his last recourse. And this last
recourse has in our time been made available for the handling of schemes
of development and theories of a comprehensive process by the notion of
a cumulative causation. The great deserts of the evolutionist
leaders--if they have great deserts as leaders--lie, on the one hand, in
their refusal to go back of the colorless sequence of phenomena and seek
higher ground for their ultimate syntheses, and, on the other hand, in
their having shown how this colorless impersonal sequence of cause and
effect can be made use of for theory proper, by virtue of its cumulative
character.
For the earlier natural scientists, as for the classical economists,
this ground of cause and effect is not definitive. Their sense of truth
and substantiality is not satisfied with a formulation of mechanical
sequence. The ultimate term in their systematisation of knowledge is a
"natural law." This natural law is felt to exercise some sort of a
coercive surveillance over the sequence of events, and to give a
spiritual stability and consistence to the causal relation at any given
juncture. To meet the high classical requirement, a sequence--and a
developmental process especially--must be apprehended in terms of a
consistent propensity tending to some spiritually legitimate end. When
facts and events have been reduced to these terms of fundamental truth
and have been made to square with the requirements of definitive
normality, the investigator rests his case. Any causal sequence which is
apprehended to traverse the imputed propensity in events is a
"disturbing factor." Logical congruity with the apprehended propensity
is, in this view, adequate ground of procedure in building up a scheme
of knowledge or of development. The objective point of the efforts of
the scientists working under the guidance of this classical tradition,
is to formulate knowledge in terms of absolute truth; and this absolute
truth is a spiritual fact. It means a coincidence of facts with the
deliverances of an enlightened and deliberate common sense.
The development and the attenuation of this preconception of normality
or of a propensity in events might be traced in detail from primitive
animism down through the elaborate discipline of faith and metaphysics,
overruling Providence, order of nature, natural rights, natural law,
underlying principles. But all that may be necessary here is to point
out that, by descent and by psychological content, this constraining
normality is of a spiritual kind. It is for the scientific purpose an
imputation of spiritual coherence to the facts dealt with. The question
of interest is how this preconception of normality has fared at the
hands of modern science, and how it has come to be superseded in the
intellectual primacy by the latter-day preconception of a non-spiritual
sequence. This question is of interest because its answer may throw
light on the question as to what chance there is for the indefinite
persistence of this archaic habit of thought in the methods of economic
science.
* * * * *
Under primitive conditions, men stand in immediate personal contact with
the material facts of the environment; and the force and discretion of
the individual in shaping the facts of the environment count obviously,
and to all appearance solely, in working out the conditions of life.
There is little of impersonal or mechanical sequence visible to
primitive men in their every-day life; and what there is of this kind in
the processes of brute nature about them is in large part inexplicable
and passes for inscrutable. It is accepted as malignant or beneficent,
and is construed in the terms of personality that are familiar to all
men at first hand,--the terms known to all men by first-hand knowledge
of their own acts. The inscrutable movements of the seasons and of the
natural forces are apprehended as actions guided by discretion, will
power, or propensity looking to an end, much as human actions are. The
processes of inanimate nature are agencies whose habits of life are to
be learned, and who are to be coerced, outwitted, circumvented, and
turned to account, much as the beasts are. At the same time the
community is small, and the human contact of the individual is not wide.
Neither the industrial life nor the non-industrial social life forces
upon men's attention the ruthless impersonal sweep of events that no man
can withstand or deflect, such as becomes visible in the more complex
and comprehensive life process of the larger community of a later day.
There is nothing decisive to hinder men's knowledge of facts and events
being formulated in terms of personality--in terms of habit and
propensity and will power.
As time goes on and as the situation departs from this archaic
character,--where it does depart from it,--the circumstances which
condition men's systematisation of facts change in such a way as to
throw the impersonal character of the sequence of events more and more
into the foreground. The penalties for failure to apprehend facts in
dispassionate terms fall surer and swifter. The sweep of events is
forced home more consistently on men's minds. The guiding hand of a
spiritual agency or a propensity in events becomes less readily
traceable as men's knowledge of things grows ampler and more searching.
In modern times, and particularly in the industrial countries, this
coercive guidance of men's habits of thought in the realistic direction
has been especially pronounced; and the effect shows itself in a
somewhat reluctant but cumulative departure from the archaic point of
view. The departure is most visible and has gone farthest in those
homely branches of knowledge that have to do immediately with modern
mechanical processes, such as engineering designs and technological
contrivances generally. Of the sciences, those have wandered farthest on
this way (of integration or disintegration, according as one may choose
to view it) that have to do with mechanical sequence and process; and
those have best and longest retained the archaic point of view intact
which--like the moral, social, or spiritual sciences--have to do with
process and sequence that is less tangible, less traceable by the use of
the senses, and that therefore less immediately forces upon the
attention the phenomenon of sequence as contrasted with that of
propensity.
There is no abrupt transition from the pre-evolutionary to the
post-evolutionary standpoint. Even in those natural sciences which deal
with the processes of life and the evolutionary sequence of events the
concept of dispassionate cumulative causation has often and effectively
been helped out by the notion that there is in all this some sort of a
meliorative trend that exercises a constraining guidance over the course
of causes and effects. The faith in this meliorative trend as a concept
useful to the science has gradually weakened, and it has repeatedly been
disavowed; but it can scarcely be said to have yet disappeared from the
field.
The process of change in the point of view, or in the terms of
definitive formulation of knowledge, is a gradual one; and all the
sciences have shared, though in an unequal degree, in the change that is
going forward. Economics is not an exception to the rule, but it still
shows too many reminiscences of the "natural" and the "normal," of
"verities" and "tendencies," of "controlling principles" and "disturbing
causes" to be classed as an evolutionary science. This history of the
science shows a long and devious course of disintegrating
animism,--from the days of the scholastic writers, who discussed usury
from the point of view of its relation to the divine suzerainty, to the
Physiocrats, who rested their case on an "_ordre naturel_" and a "_loi
naturelle_" that decides what is substantially true and, in a general
way, guides the course of events by the constraint of logical
congruence. There has been something of a change from Adam Smith, whose
recourse in perplexity was to the guidance of "an unseen hand," to Mill
and Cairnes, who formulated the laws of "natural" wages and "normal"
value, and the former of whom was so well content with his work as to
say, "Happily, there is nothing in the laws of Value which remains for
the present or any future writer to clear up: the theory of the subject
is complete."[4] But the difference between the earlier and the later
point of view is a difference of degree rather than of kind.
The standpoint of the classical economists, in their higher or
definitive syntheses and generalisations, may not inaptly be called the
standpoint of ceremonial adequacy. The ultimate laws and principles
which they formulated were laws of the normal or the natural, according
to a preconception regarding the ends to which, in the nature of things,
all things tend. In effect, this preconception imputes to things a
tendency to work out what the instructed common sense of the time
accepts as the adequate or worthy end of human effort. It is a
projection of the accepted ideal of conduct. This ideal of conduct is
made to serve as a canon of truth, to the extent that the investigator
contents himself with an appeal to its legitimation for premises that
run back of the facts with which he is immediately dealing, for the
"controlling principles" that are conceived intangibly to underlie the
process discussed, and for the "tendencies" that run beyond the
situation as it lies before him. As instances of the use of this
ceremonial canon of knowledge may be cited the "conjectural history"
that plays so large a part in the classical treatment of economic
institutions, such as the normalized accounts of the beginnings of
barter in the transactions of the putative hunter, fisherman, and
boat-builder, or the man with the plane and the two planks, or the two
men with the basket of apples and the basket of nuts.[5] Of a similar
import is the characterisation of money as "the great wheel of
circulation"[6] or as "the medium of exchange." Money is here discussed
in terms of the end which, "in the normal case," it should work out
according to the given writer's ideal of economic life, rather than in
terms of causal relation.
With later writers especially, this terminology is no doubt to be
commonly taken as a convenient use of metaphor, in which the concept of
normality and propensity to an end has reached an extreme attenuation.
But it is precisely in this use of figurative terms for the formulation
of theory that the classical normality still lives its attenuated life
in modern economics; and it is this facile recourse to inscrutable
figures of speech as the ultimate terms of theory that has saved the
economists from being dragooned into the ranks of modern science. The
metaphors are effective, both in their homiletical use and as a
labor-saving device,--more effective than their user designs them to be.
By their use the theorist is enabled serenely to enjoin himself from
following out an elusive train of causal sequence. He is also enabled,
without misgivings, to construct a theory of such an institution as
money or wages or land-ownership without descending to a consideration
of the living items concerned, except for convenient corroboration of
his normalised scheme of symptoms. By this method the theory of an
institution or a phase of life may be stated in conventionalised terms
of the apparatus whereby life is carried on, the apparatus being
invested with a tendency to an equilibrium at the normal, and the theory
being a formulation of the conditions under which this putative
equilibrium supervenes. In this way we have come into the usufruct of a
cost-of-production theory of value which is pungently reminiscent of the
time when Nature abhorred a vacuum. The ways and means and the
mechanical structure of industry are formulated in a conventionalised
nomenclature, and the observed motions of this mechanical apparatus are
then reduced to a normalised scheme of relations. The scheme so arrived
at is spiritually binding on the behavior of the phenomena contemplated.
With this normalised scheme as a guide, the permutations of a given
segment of the apparatus are worked out according to the values assigned
the several items and features comprised in the calculation; and a
ceremonially consistent formula is constructed to cover that much of the
industrial field. This is the deductive method. The formula is then
tested by comparison with observed permutations, by the polariscopic use
of the "normal case"; and the results arrived at are thus authenticated
by induction. Features of the process that do not lend themselves to
interpretation in the terms of the formula are abnormal cases and are
due to disturbing causes. In all this the agencies or forces causally at
work in the economic life process are neatly avoided. The outcome of the
method, at its best, is a body of logically consistent propositions
concerning the normal relations of things--a system of economic
taxonomy. At its worst, it is a body of maxims for the conduct of
business and a polemical discussion of disputed points of policy.
In all this, economic science is living over again in its turn the
experiences which the natural sciences passed through some time back. In
the natural sciences the work of the taxonomist was and continues to be
of great value, but the scientists grew restless under the regime of
symmetry and system-making. They took to asking why, and so shifted
their inquiries from the structure of the coral reefs to the structure
and habits of life of the polyp that lives in and by them. In the
science of plants, systematic botany has not ceased to be of service;
but the stress of investigation and discussion among the botanists
to-day falls on the biological value of any given feature of structure,
function, or tissue rather than on its taxonomic bearing. All the talk
about cytoplasm, centrosomes, and karyokinetic process, means that the
inquiry now looks consistently to the life process, and aims to explain
it in terms of cumulative causation.
What may be done in economic science of the taxonomic kind is shown at
its best in Cairnes's work, where the method is well conceived and the
results effectively formulated and applied. Cairnes handles the theory
of the normal case in economic life with a master hand. In his
discussion the metaphysics of propensity and tendencies no longer
avowedly rules the formulation of theory, nor is the inscrutable
meliorative trend of a harmony of interests confidently appealed to as
an engine of definitive use in giving legitimacy to the economic
situation at a given time. There is less of an exercise of faith in
Cairnes's economic discussions than in those of the writers that went
before him. The definitive terms of the formulation are still the terms
of normality and natural law, but the metaphysics underlying this
appeal to normality is so far removed from the ancient ground of the
beneficent "order of nature" as to have become at least nominally
impersonal and to proceed without a constant regard to the humanitarian
bearing of the "tendencies" which it formulates. The metaphysics has
been attenuated to something approaching in colorlessness the
naturalist's conception of natural law. It is a natural law which, in
the guise of "controlling principles," exercises a constraining
surveillance over the trend of things; but it is no longer conceived to
exercise its constraint in the interest of certain ulterior human
purposes. The element of beneficence has been well-nigh eliminated, and
the system is formulated in terms of the system itself. Economics as it
left Cairnes's hand, so far as his theoretical work is concerned, comes
near being taxonomy for taxonomy's sake.
No equally capable writer has come as near making economics the ideal
"dismal" science as Cairnes in his discussion of pure theory. In the
days of the early classical writers economics had a vital interest for
the laymen of the time, because it formulated the common sense
metaphysics of the time in its application to a department of human
life. But in the hands of the later classical writers the science lost
much of its charm in this regard. It was no longer a definition and
authentication of the deliverances of current common sense as to what
ought to come to pass; and it, therefore, in large measure lost the
support of the people out of doors, who were unable to take an interest
in what did not concern them; and it was also out of touch with that
realistic or evolutionary habit of mind which got under way about the
middle of the century in the natural sciences. It was neither vitally
metaphysical nor matter-of-fact, and it found comfort with very few
outside of its own ranks. Only for those who by the fortunate accident
of birth or education have been able to conserve the taxonomic animus
has the science during the last third of a century continued to be of
absorbing interest. The result has been that from the time when the
taxonomic structure stood forth as a completed whole in its symmetry and
stability the economists themselves, beginning with Cairnes, have been
growing restive under its discipline of stability, and have made many
efforts, more or less sustained, to galvanise it into movement. At the
hands of the writers of the classical line these excursions have chiefly
aimed at a more complete and comprehensive taxonomic scheme of
permutations; while the historical departure threw away the taxonomic
ideal without getting rid of the preconceptions on which it is based;
and the later Austrian group struck out on a theory of process, but
presently came to a full stop because the process about which they
busied themselves was not, in their apprehension of it, a cumulative or
unfolding sequence.
* * * * *
But what does all this signify? If we are getting restless under the
taxonomy of a monocotyledonous wage doctrine and a cryptogamic theory of
interest, with involute, loculicidal, tomentous and moniliform variants,
what is the cytoplasm, centrosome, or karyokinetic process to which we
may turn, and in which we may find surcease from the metaphysics of
normality and controlling principles? What are we going to do about it?
The question is rather, What are we doing about it? There is the
economic life process still in great measure awaiting theoretical
formulation. The active material in which the economic process goes on
is the human material of the industrial community. For the purpose of
economic science the process of cumulative change that is to be
accounted for is the sequence of change in the methods of doing
things,--the methods of dealing with the material means of life.
What has been done in the way of inquiry into this economic life
process? The ways and means of turning material objects and
circumstances to account lie before the investigator at any given point
of time in the form of mechanical contrivances and arrangements for
compassing certain mechanical ends. It has therefore been easy to accept
these ways and means as items of inert matter having a given mechanical
structure and thereby serving the material ends of man. As such, they
have been scheduled and graded by the economists under the head of
capital, this capital being conceived as a mass of material objects
serviceable for human use. This is well enough for the purposes of
taxonomy; but it is not an effective method of conceiving the matter for
the purpose of a theory of the developmental process. For the latter
purpose, when taken as items in a process of cumulative change or as
items in the scheme of life, these productive goods are facts of human
knowledge, skill, and predilection; that is to say, they are,
substantially, prevalent habits of thought, and it is as such that they
enter into the process of industrial development. The physical
properties of the materials accessible to man are constants: it is the
human agent that changes,--his insight and his appreciation of what
these things can be used for is what develops. The accumulation of goods
already on hand conditions his handling and utilisation of the materials
offered, but even on this side--the "limitation of industry by
capital"--the limitation imposed is on what men can do and on the
methods of doing it. The changes that take place in the mechanical
contrivances are an expression of changes in the human factor. Changes
in the material facts breed further change only through the human
factor. It is in the human material that the continuity of development
is to be looked for; and it is here, therefore, that the motor forces of
the process of economic development must be studied if they are to be
studied in action at all. Economic action must be the subject-matter of
the science if the science is to fall into line as an evolutionary
science.
Nothing new has been said in all this. But the fact is all the more
significant for being a familiar fact. It is a fact recognised by common
consent throughout much of the later economic discussion, and this
current recognition of the fact is a long step towards centering
discussion and inquiry upon it. If economics is to follow the lead or
the analogy of the other sciences that have to do with a life process,
the way is plain so far as regards the general direction in which the
move will be made.
The economists of the classical trend have made no serious attempt to
depart from the standpoint of taxonomy and make their science a genetic
account of the economic life process. As has just been said, much the
same is true for the Historical School. The latter have attempted an
account of developmental sequence, but they have followed the lines of
pre-Darwinian speculations on development rather than lines which modern
science would recognise as evolutionary. They have given a narrative
survey of phenomena, not a genetic account of an unfolding process. In
this work they have, no doubt, achieved results of permanent value; but
the results achieved are scarcely to be classed as economic theory. On
the other hand, the Austrians and their precursors and their coadjutors
in the value discussion have taken up a detached portion of economic
theory, and have inquired with great nicety into the process by which
the phenomena within their limited field are worked out. The entire
discussion of marginal utility and subjective value as the outcome of a
valuation process must be taken as a genetic study of this range of
facts. But here, again, nothing further has come of the inquiry, so far
as regards a rehabilitation of economic theory as a whole. Accepting
Menger as their spokesman on this head, it must be said that the
Austrians have on the whole showed themselves unable to break with the
classical tradition that economics is a taxonomic science.
The reason for the Austrian failure seems to lie in a faulty conception
of human nature,--faulty for the present purpose, however adequate it
may be for any other. In all the received formulations of economic
theory, whether at the hands of English economists or those of the
Continent, the human material with which the inquiry is concerned is
conceived in hedonistic terms; that is to say, in terms of a passive and
substantially inert and immutably given human nature. The psychological
and anthropological preconceptions of the economists have been those
which were accepted by the psychological and social sciences some
generations ago. The hedonistic conception of man is that of a lightning
calculator of pleasures and pains, who oscillates like a homogeneous
globule of desire of happiness under the impulse of stimuli that shift
him about the area, but leave him intact. He has neither antecedent nor
consequent. He is an isolated, definitive human datum, in stable
equilibrium except for the buffets of the impinging forces that displace
him in one direction or another. Self-imposed in elemental space, he
spins symmetrically about his own spiritual axis until the parallelogram
of forces bears down upon him, whereupon he follows the line of the
resultant. When the force of the impact is spent, he comes to rest, a
self-contained globule of desire as before. Spiritually, the hedonistic
man is not a prime mover. He is not the seat of a process of living,
except in the sense that he is subject to a series of permutations
enforced upon him by circumstances external and alien to him.
The later psychology, reenforced by modern anthropological research,
gives a different conception of human nature. According to this
conception, it is the characteristic of man to do something, not simply
to suffer pleasures and pains through the impact of suitable forces. He
is not simply a bundle of desires that are to be saturated by being
placed in the path of the forces of the environment, but rather a
coherent structure of propensities and habits which seeks realisation
and expression in an unfolding activity. According to this view, human
activity, and economic activity among the rest, is not apprehended as
something incidental to the process of saturating given desires. The
activity is itself the substantial fact of the process, and the desires
under whose guidance the action takes place are circumstances of
temperament which determine the specific direction in which the activity
will unfold itself in the given case. These circumstances of temperament
are ultimate and definitive for the individual who acts under them, so
far as regards his attitude as agent in the particular action in which
he is engaged. But, in the view of the science, they are elements of the
existing frame of mind of the agent, and are the outcome of his
antecedents and his life up to the point at which he stands. They are
the products of his hereditary traits and his past experience,
cumulatively wrought out under a given body of traditions,
conventionalities, and material circumstances; and they afford the point
of departure for the next step in the process. The economic life history
of the individual is a cumulative process of adaptation of means to
ends that cumulatively change as the process goes on, both the agent and
his environment being at any point the outcome of the last process. His
methods of life to-day are enforced upon him by his habits of life
carried over from yesterday and by the circumstances left as the
mechanical residue of the life of yesterday.
What is true of the individual in this respect is true of the group in
which he lives. All economic change is a change in the economic
community,--a change in the community's methods of turning material
things to account. The change is always in the last resort a change in
habits of thought. This is true even of changes in the mechanical
processes of industry. A given contrivance for effecting certain
material ends becomes a circumstance which affects the further growth of
habits of thought--habitual methods of procedure--and so becomes a point
of departure for further development of the methods of compassing the
ends sought and for the further variation of ends that are sought to be
compassed. In all this flux there is no definitively adequate method of
life and no definitive or absolutely worthy end of action, so far as
concerns the science which sets out to formulate a theory of the process
of economic life. What remains as a hard and fast residue is the fact of
activity directed to an objective end. Economic action is teleological,
in the sense that men always and everywhere seek to do something. What,
in specific detail, they seek, is not to be answered except by a
scrutiny of the details of their activity; but, so long as we have to do
with their life as members of the economic community, there remains the
generic fact that their life is an unfolding activity of a teleological
kind.
It may or may not be a teleological process in the sense that it tends
or should tend to any end that is conceived to be worthy or adequate by
the inquirer or by the consensus of inquirers. Whether it is or is not,
is a question with which the present inquiry is not concerned; and it is
also a question of which an evolutionary economics need take no account.
The question of a tendency in events can evidently not come up except on
the ground of some preconception or prepossession on the part of the
person looking for the tendency. In order to search for a tendency, we
must be possessed of some notion of a definitive end to be sought, or
some notion as to what is the legitimate trend of events. The notion of
a legitimate trend in a course of events is an extra-evolutionary
preconception, and lies outside the scope of an inquiry into the causal
sequence in any process. The evolutionary point of view, therefore,
leaves no place for a formulation of natural laws in terms of definitive
normality, whether in economics or in any other branch of inquiry.
Neither does it leave room for that other question of normality, What
should be the end of the developmental process under discussion?
The economic life history of any community is its life history in so far
as it is shaped by men's interest in the material means of life. This
economic interest has counted for much in shaping the cultural growth of
all communities. Primarily and most obviously, it has guided the
formation, the cumulative growth, of that range of conventionalities and
methods of life that are currently recognized as economic institutions;
but the same interest has also pervaded the community's life and its
cultural growth at points where the resulting structural features are
not chiefly and most immediately of an economic bearing. The economic
interest goes with men through life, and it goes with the race
throughout its process of cultural development. It affects the cultural
structure at all points, so that all institutions may be said to be in
some measure economic institutions. This is necessarily the case, since
the base of action--the point of departure--at any step in the process
is the entire organic complex of habits of thought that have been shaped
by the past process. The economic interest does not act in isolation,
for it is but one of several vaguely isolable interests on which the
complex of teleological activity carried out by the individual proceeds.
The individual is but a single agent in each case; and he enters into
each successive action as a whole, although the specific end sought in a
given action may be sought avowedly on the basis of a particular
interest; as _e.g._, the economic, aesthetic, sexual, humanitarian,
devotional interests. Since each of these passably isolable interests is
a propensity of the organic agent man, with his complex of habits of
thought, the expression of each is affected by habits of life formed
under the guidance of all the rest. There is, therefore, no neatly
isolable range of cultural phenomena that can be rigorously set apart
under the head of economic institutions, although a category of
"economic institutions" may be of service as a convenient caption,
comprising those institutions in which the economic interest most
immediately and consistently finds expression, and which most
immediately and with the least limitation are of an economic bearing.
From what has been said it appears that an evolutionary economics must
be the theory of a process of cultural growth as determined by the
economic interest, a theory of a cumulative sequence of economic
institutions stated in terms of the process itself. Except for the want
of space to do here what should be done in some detail if it is done at
all, many efforts by the later economists in this direction might be
cited to show the trend of economic discussion in this direction. There
is not a little evidence to this effect, and much of the work done must
be rated as effective work for this purpose. Much of the work of the
Historical School, for instance, and that of its later exponents
especially, is too noteworthy to be passed over in silence, even with
all due regard to the limitations of space.
We are now ready to return to the question why economics is not an
evolutionary science. It is necessarily the aim of such an economics to
trace the cumulative working-out of the economic interest in the
cultural sequence. It must be a theory of the economic life process of
the race or the community. The economists have accepted the hedonistic
preconceptions concerning human nature and human action, and the
conception of the economic interest which a hedonistic psychology gives
does not afford material for a theory of the development of human
nature. Under hedonism the economic interest is not conceived in terms
of action. It is therefore not readily apprehended or appreciated in
terms of a cumulative growth of habits of thought, and does not provoke,
even if it did lend itself to, treatment by the evolutionary method.
At the same time the anthropological preconceptions current in that
common-sense apprehension of human nature to which economists have
habitually turned has not enforced the formulation of human nature
in terms of a cumulative growth of habits of life. These received
anthropological preconceptions are such as have made possible the
normalized conjectural accounts of primitive barter with which
all economic readers are familiar, and the no less normalized
conventional derivation of landed property and its rent, or the
sociologico-philosophical discussions of the "function" of this or
that class in the life of society or of the nation.
The premises and the point of view required for an evolutionary
economics have been wanting. The economists have not had the materials
for such a science ready to their hand, and the provocation to strike
out in such a direction has been absent. Even if it has been possible at
any time to turn to the evolutionary line of speculation in economics,
the possibility of a departure is not enough to bring it about. So long
as the habitual view taken of a given range of facts is of the taxonomic
kind and the material lends itself to treatment by that method, the
taxonomic method is the easiest, gives the most gratifying immediate
results, and best fits into the accepted body of knowledge of the range
of facts in question. This has been the situation in economics. The
other sciences of its group have likewise been a body of taxonomic
discipline, and departures from the accredited method have lain under
the odium of being meretricious innovations. The well-worn paths are
easy to follow and lead into good company. Advance along them visibly
furthers the accredited work which the science has in hand. Divergence
from the paths means tentative work, which is necessarily slow and
fragmentary and of uncertain value.
It is only when the methods of the science and the syntheses resulting
from their use come to be out of line with habits of thought that
prevail in other matters that the scientist grows restive under the
guidance of the received methods and standpoints, and seeks a way out.
Like other men, the economist is an individual with but one
intelligence. He is a creature of habits and propensities given through
the antecedents, hereditary and cultural, of which he is an outcome; and
the habits of thought formed in any one line of experience affect his
thinking in any other. Methods of observation and of handling facts
that are familiar through habitual use in the general range of
knowledge, gradually assert themselves in any given special range of
knowledge. They may be accepted slowly and with reluctance where their
acceptance involves innovation; but, if they have the continued backing
of the general body of experience, it is only a question of time when
they shall come into dominance in the special field. The intellectual
attitude and the method of correlation enforced upon us in the
apprehension and assimilation of facts in the more elementary ranges of
knowledge that have to do with brute facts assert themselves also when
the attention is directed to those phenomena of the life process with
which economics has to do; and the range of facts which are habitually
handled by other methods than that in traditional vogue in economics has
now become so large and so insistently present at every turn that we are
left restless, if the new body of facts cannot be handled according to
the method of mental procedure which is in this way becoming habitual.
In the general body of knowledge in modern times the facts are
apprehended in terms of causal sequence. This is especially true of that
knowledge of brute facts which is shaped by the exigencies of the modern
mechanical industry. To men thoroughly imbued with this matter-of-fact
habit of mind the laws and theorems of economics, and of the other
sciences that treat of the normal course of things, have a character of
"unreality" and futility that bars out any serious interest in their
discussion. The laws and theorems are "unreal" to them because they are
not to be apprehended in the terms which these men make use of in
handling the facts with which they are perforce habitually occupied. The
same matter-of-fact spiritual attitude and mode of procedure have now
made their way well up into the higher levels of scientific knowledge,
even in the sciences which deal in a more elementary way with the same
human material that makes the subject-matter of economics, and the
economists themselves are beginning to feel the unreality of their
theorems about "normal" cases. Provided the practical exigencies of
modern industrial life continue of the same character as they now are,
and so continue to enforce the impersonal method of knowledge, it is
only a question of time when that (substantially animistic) habit of
mind which proceeds on the notion of a definitive normality shall be
displaced in the field of economic inquiry by that (substantially
materialistic) habit of mind which seeks a comprehension of facts in
terms of a cumulative sequence.
The later method of apprehending and assimilating facts and handling
them for the purposes of knowledge may be better or worse, more or less
worthy or adequate, than the earlier; it may be of greater or less
ceremonial or aesthetic effect; we may be moved to regret the incursion
of underbred habits of thought into the scholar's domain. But all that
is beside the present point. Under the stress of modern technological
exigencies, men's every-day habits of thought are falling into the lines
that in the sciences constitute the evolutionary method; and knowledge
which proceeds on a higher, more archaic plane is becoming alien and
meaningless to them. The social and political sciences must follow the
drift, for they are already caught in it.
FOOTNOTES:
[1] Reprinted by permission from _The Quarterly Journal of Economics_,
vol. xii, July, 1898.
[2] "The Fundamental Laws of Anthropo-sociology," _Journal of Political
Economy_, December, 1897, p. 54. The same paper, in substance, appears
in the _Rivista Italiana di Sociologia_ for November, 1897.
[3] "The Old Generation of Economists and the New," _Quarterly Journal
of Economics_, January, 1897, p. 133.
[4] _Political Economy_, Book III, chap. i.
[5] Marshall, _Principles of Economics_ (2d ed.), Book V, chap. ii, p.
395, note.
[6] Adam Smith, _Wealth of Nations_ (Bohn ed.), Book II, chap. ii, p.
289.
THE PRECONCEPTIONS OF ECONOMIC SCIENCE[1]
I
In an earlier paper[2] the view has been expressed that the economics
handed down by the great writers of a past generation is substantially a
taxonomic science. A view of much the same purport, so far as concerns
the point here immediately in question, is presented in an admirably
lucid and cogent way by Professor Clark in a recent number of this
journal.[3] There is no wish hereby to burden Professor Clark with a
putative sponsorship of any ungraceful or questionable generalisations
reached in working outward from this main position, but expression may
not be denied the comfort which his unintended authentication of the
main position affords. It is true, Professor Clark does not speak of
taxonomy, but employs the term "statics," which is perhaps better suited
to his immediate purpose. Nevertheless, in spite of the high authority
given the term "statics," in this connection, through its use by
Professor Clark and by other writers eminent in the science, it is
fairly to be questioned whether the term can legitimately be used to
characterize the received economic theories. The word is borrowed from
the jargon of physics, where it is used to designate the theory of
bodies at rest or of forces in equilibrium. But there is much in the
received economic theories to which the analogy of bodies at rest or of
forces in equilibrium will not apply. It is perhaps not too much to say
that those articles of economic theory that do not lend themselves to
this analogy make up the major portion of the received doctrines. So,
for instance, it seems scarcely to the point to speak of the statics of
production, exchange, consumption, circulation. There are, no doubt,
appreciable elements in the theory of these several processes that may
fairly be characterized as statical features of the theory; but the
doctrines handed down are after all, in the main, theories of the
process discussed under each head, and the theory of a process does not
belong in statics. The epithet "statical" would, for instance, have to
be wrenched somewhat ungently to make it apply to Quesnay's classic
_Tableau Economique_ or to the great body of Physiocratic speculations
that take their rise from it The like is true for Books II. and III. of
Adam Smith's _Wealth of Nations_, as also for considerable portions of
Ricardo's work, or, to come down to the present generation, for much of
Marshall's _Principles_, and for such a modern discussion as Smart's
_Studies in Economics_, as well as for the fruitful activity of the
Austrians and of the later representatives of the Historical School.
But to return from this terminological digression. While economic
science in the remoter past of its history has been mainly of a
taxonomic character, later writers of all schools show something of a
divergence from the taxonomic line and an inclination to make the
science a genetic account of the economic life process, sometimes even
without an ulterior view to the taxonomic value of the results obtained.
This divergence from the ancient canons of theoretical formulation is to
be taken as an episode of the movement that is going forward in
latter-day science generally; and the progressive change which thus
affects the ideals and the objective point of the modern sciences seems
in its turn to be an expression of that matter-of-fact habit of mind
which the prosy but exacting exigencies of life in a modern industrial
community breed in men exposed to their unmitigated impact.
In speaking of this matter-of-fact character of the modern sciences it
has been broadly characterized as "evolutionary"; and the evolutionary
method and the evolutionary ideals have been placed in antithesis to the
taxonomic methods and ideals of pre-evolutionary days. But the
characteristic attitude, aims, and ideals which are so designated here
are by no means peculiar to the group of sciences that are professedly
occupied with a process of development, taking that term in its most
widely accepted meaning. The latter-day inorganic sciences are in this
respect like the organic. They occupy themselves with "dynamic"
relations and sequences. The question which they ask is always, What
takes place next, and why? Given a situation wrought out by the forces
under inquiry, what follows as the consequence of the situation so
wrought out? or what follows upon the accession of a further element of
force? Even in so non-evolutionary a science as inorganic chemistry the
inquiry consistently runs on a process, an active sequence, and the
value of the resulting situation as a point of departure for the next
step in an interminable cumulative sequence. The last step in the
chemist's experimental inquiry into any substance is, What comes of the
substance determined? What will it do? What will it lead to, when it is
made the point of departure in further chemical action? There is no
ultimate term, and no definitive solution except in terms of further
action. The theory worked out is always a theory of a genetic
succession of phenomena, and the relations determined and elaborated
into a body of doctrine are always genetic relations. In modern
chemistry no cognisance is taken of the honorific bearing of reactions
or molecular formulae. The modern chemist, as contrasted with his ancient
congener, knows nothing of the worth, elegance, or cogency of the
relations that may subsist between the particles of matter with which he
busies himself, for any other than the genetic purpose. The spiritual
element and the elements of worth and propensity no longer count.
Alchemic symbolism and the hierarchical glamour and virtue that once
hedged about the nobler and more potent elements and reagents are almost
altogether a departed glory of the science. Even the modest imputation
of propensity involved in the construction of a scheme of coercive
normality, for the putative guidance of reactions, finds little
countenance with the later adepts of chemical science. The science has
outlived that phase of its development at which the taxonomic feature
was the dominant one.
In the modern sciences, of which chemistry is one, there has been a
gradual shifting of the point of view from which the phenomena which the
science treats of are apprehended and passed upon; and to the historian
of chemical science this shifting of the point of view must be a factor
of great weight in the development of chemical knowledge. Something of a
like nature is true for economic science; and it is the aim here to
present, in outline, some of the successive phases that have passed over
the spiritual attitude of the adepts of the science, and to point out
the manner in which the transition from one point of view to the next
has been made.
* * * * *
As has been suggested in the paper already referred to, the
characteristic spiritual attitude or point of view of a given generation
or group of economists is shown not so much in their detail work as in
their higher syntheses--the terms of their definitive formulations--the
grounds of their final valuation of the facts handled for purpose of
theory. This line of recondite inquiry into the spiritual past and
antecedents of the science has not often been pursued seriously or with
singleness of purpose, perhaps because it is, after all, of but slight
consequence to the practical efficiency of the present-day science.
Still, not a little substantial work has been done towards this end by
such writers as Hasbach, Oncken, Bonar, Cannan, and Marshall. And much
that is to the purpose is also due to writers outside of economics, for
the aims of economic speculation have never been insulated from the work
going forward in other lines of inquiry. As would necessarily be the
case, the point of view of economists has always been in large part the
point of view of the enlightened common sense of their time. The
spiritual attitude of a given generation of economists is therefore in
good part a special outgrowth of the ideals and preconceptions current
in the world about them.
So, for instance, it is quite the conventional thing to say that the
speculations of the Physiocrats were dominated and shaped by the
preconception of Natural Rights. Account has been taken of the effect of
natural-rights preconceptions upon the Physiocratic schemes of policy
and economic reform as well as upon the details of their doctrines.[4]
But little has been said of the significance of these preconceptions for
the lower courses of the Physiocrats' theoretical structure. And yet
that habit of mind to which the natural-rights view is wholesome and
adequate is answerable both for the point of departure and for the
objective point of the Physiocratic theories, both for the range of
facts to which they turned and for the terms in which they were content
to formulate their knowledge of the facts which they handled. The
failure of their critics to place themselves at the Physiocratic point
of view has led to much destructive criticism of their work; whereas,
when seen through Physiocratic eyes, such doctrines as those of the net
product and of the barrenness of the artisan class appear to be
substantially true.
The speculations of the Physiocrats are commonly accounted the first
articulate and comprehensive presentation of economic theory that is in
line with later theoretical work. The Physiocratic point of view may,
therefore, well be taken as the point of departure in an attempt to
trace that shifting of aims and norms of procedure that comes into view
in the work of later economists when compared with earlier writers.
Physiocratic economics is a theory of the working-out of the Law of
Nature (_loi naturelle_) in its economic bearing, and this Law of Nature
is a very simple matter.
Les lois naturelles sont ou physiques ou morales.
On entend ici, par loi physique, _le cours regle de tout
evenement physique de l'ordre naturel, evidemment le plus
avantageux au genre humain_.
On entend ici, par loi morale, _la regle de toute action
humaine de l'ordre morale, conforme a l'ordre physique
evidemment le plus avantageux au genre humain_.
Ces lois forment ensemble ce qu'on appelle la _loi
naturelle_. Tous les hommes et toutes les puissances humaines
doivent etre soumis a ces lois souveraines, instituees par
l'Etre-Supreme: elles sont immuables et irrefragables, et les
meilleures lois possible.[5]
The settled course of material facts tending beneficently to the highest
welfare of the human race,--this is the final term in the Physiocratic
speculations. This is the touchstone of substantiality. Conformity to
these "immutable and unerring" laws of nature is the test of economic
truth. The laws are immutable and unerring, but that does not mean that
they rule the course of events with a blind fatality that admits of no
exception and no divergence from the direct line. Human nature may,
through infirmity or perversity, willfully break over the beneficent
trend of the laws of nature; but to the Physiocrat's sense of the matter
the laws are none the less immutable and irrefragable on that account.
They are not empirical generalisations on the course of phenomena, like
the law of falling bodies or of the angle of reflection; although many
of the details of their action are to be determined only by observation
and experience, helped out, of course, by interpretation of the facts of
observation under the light of reason. So, for instance, Turgot, in his
_Reflections_, empirically works out a doctrine of the reasonable course
of development through which wealth is accumulated and reaches the
existing state of unequal distribution; so also his doctrines of
interest and of money. The immutable natural laws are rather of the
nature of canons of conduct governing nature than generalisations of
mechanical sequence, although in a general way the phenomena of
mechanical sequence are details of the conduct of nature working
according to these canons of conduct. The great law of the order of
nature is of the character of a propensity working to an end, to the
accomplishment of a purpose. The processes of nature working under the
quasi-spiritual stress of this immanent propensity may be characterised
as nature's habits of life. Not that nature is conscious of its travail,
and knows and desires the worthy end of its endeavors; but for all that
there is a quasi-spiritual nexus between antecedent and consequent in
the scheme of operation in which nature is engaged. Nature is not uneasy
about interruptions of its course or occasional deflections from the
direct line through an untoward conjunction of mechanical causes, nor
does the validity of the great overruling law suffer through such an
episode. The introduction of a mere mechanically effective causal factor
cannot thwart the course of Nature from reaching the goal to which she
animistically tends. Nothing can thwart this teleological propensity of
nature except counter-activity or divergent activity of a similarly
teleological kind. Men can break over the law, and have short-sightedly
and willfully done so; for men are also agents who guide their actions
by an end to be achieved. Human conduct is activity of the same kind--on
the same plane of spiritual reality or competency--as the course
of Nature, and it may therefore traverse the latter. The remedy
for this short-sighted traffic of misguided human nature is
enlightenment,--"instruction publique et privee des lois de l'ordre
naturel."[6]
The nature in terms of which all knowledge of phenomena--for the present
purpose economic phenomena--is to be finally synthesised is, therefore,
substantially of a quasi-spiritual or animistic character. The laws of
nature are in the last resort teleological: they are of the nature of a
propensity. The substantial fact in all the sequences of nature is the
end to which the sequence naturally tends, not the brute fact of
mechanical compulsion or causally effective forces. Economic theory is
accordingly the theory (1) of how the efficient causes of the _ordre
naturel_ work in an orderly unfolding sequence, guided by the
underlying natural laws--the propensity immanent in nature to establish
the highest well-being of mankind, and (2) of the conditions imposed
upon human conduct by these natural laws in order to reach the ordained
goal of supreme human welfare. The conditions so imposed on human
conduct are as definitive as the laws and the order by force of which
they are imposed; and the theoretical conclusions reached, when these
laws and this order are known, are therefore expressions of absolute
economic truth. Such conclusions are an expression of reality, but not
necessarily of fact.
Now, the objective end of this propensity that determines the course of
nature is human well-being. But economic speculation has to do with the
workings of nature only so far as regards the _ordre physique_. And the
laws of nature in the _ordre physique_, working through mechanical
sequence, can only work out the physical well-being of man, not
necessarily the spiritual. This propensity to the physical well-being of
man is therefore the law of nature to which economic science must bring
its generalisations, and this law of physical beneficence is the
substantial ground of economic truth. Wanting this, all our speculations
are vain; but having its authentication they are definitive. The great,
typical function, to which all the other functioning of nature is
incidental if not subsidiary, is accordingly that of the alimentation,
nutrition of mankind. In so far, and only in so far as the physical
processes contribute to human sustenance and fullness of life, can they,
therefore, further the great work of nature. Whatever processes
contribute to human sustenance by adding to the material available for
human assimilation and nutrition, by increasing the substance disposable
for human comfort, therefore count towards the substantial end. All
other processes, however serviceable in other than this physiological
respect, lack the substance of economic reality. Accordingly, human
industry is productive, economically speaking, if it heightens the
effectiveness of the natural processes out of which the material of
human sustenance emerges; otherwise not. The test of productivity, of
economic reality in material facts, is the increase of nutritive
material. Whatever employment of time or effort does not afford an
increase of such material is unproductive, however profitable it may be
to the person employed, and however useful or indispensable it may be to
the community. The type of such productive industry is the husbandman's
employment, which yields a substantial (nutritive) gain. The artisan's
work may be useful to the community and profitable to himself, but its
economic effect does not extend beyond an alteration of the form in
which the material afforded by nature already lies at hand. It is
formally productive only, not really productive. It bears no part in the
creative or generative work of nature; and therefore it lacks the
character of economic substantiality. It does not enhance nature's
output of vital force. The artisan's labors, therefore, yield no net
product, whereas the husbandman's labors do.
Whatever constitutes a material increment of this output of vital force
is wealth, and nothing else is. The theory of value contained in this
position has not to do with value according to men's appraisement of the
valuable article. Given items of wealth may have assigned to them
certain relative values at which they exchange, and these conventional
values may differ more or less widely from the natural or intrinsic
value of the goods in question; but all that is beside the substantial
point. The point in question is not the degree of predilection shown by
certain individuals or bodies of men for certain goods. That is a matter
of caprice and convention, and it does not directly touch the
substantial ground of the economic life. The question of value is a
question of the extent to which the given item of wealth forwards the
end of nature's unfolding process. It is valuable, intrinsically and
really, in so far as it avails the great work which nature has in hand.
Nature, then, is the final term in the Physiocratic speculations. Nature
works by impulse and in an unfolding process, under the stress of a
propensity to the accomplishment of a given end. This propensity, taken
as the final cause that is operative in any situation, furnishes the
basis on which to cooerdinate all our knowledge of those efficient causes
through which Nature works to her ends. For the purpose of economic
theory proper, this is the ultimate ground of reality to which our quest
of economic truth must penetrate. But back of Nature and her works there
is, in the Physiocratic scheme of the universe, the Creator, by whose
all-wise and benevolent power the order of nature has been established
in all the strength and beauty of its inviolate and immutable
perfection. But the Physiocratic conception of the Creator is
essentially a deistic one: he stands apart from the course of nature
which he has established, and keeps his hands off. In the last resort,
of course, "Dieu seul est producteur. Les hommes travaillent,
receuillent, economisent, conservent; mais _economiser_ n'est pas
_produire_."[7] But this last resort does not bring the Creator into
economic theory as a fact to be counted with in formulating economic
laws. He serves a homiletical purpose in the Physiocratic speculations
rather than fills an office essential to the theory. He comes within the
purview of the theory by way of authentication rather than as a subject
of inquiry or a term in the formulation of economic knowledge. The
Physiocratic God can scarcely be said to be an economic fact, but it is
otherwise with that Nature whose ways and means constitute the
subject-matter of the Physiocratic inquiry.
When this natural system of the Physiocratic speculation is looked at
from the side of the psychology of the investigators, or from that of
the logical premises employed, it is immediately recognised as
essentially animistic. It runs consistently on animistic ground; but it
is animism of a high grade,--highly integrated and enlightened, but,
after all, retaining very much of that primitive force and naivete which
characterise the animistic explanations of phenomena in vogue among the
untroubled barbarians. It is not the disjected animism of the vulgar,
who see a willful propensity--often a willful perversity--in given
objects or situations to work towards a given outcome, good or bad. It
is not the gambler's haphazard sense of fortuitous necessity or the
housewife's belief in lucky days, numbers or phases of the moon. The
Physiocrat's animism rests on a broader outlook, and does not proceed by
such an immediately impulsive imputation of propensity. The teleological
element--the element of propensity--is conceived in a large way, unified
and harmonised, as a comprehensive order of nature as a whole. But it
vindicates its standing as a true animism by never becoming fatalistic
and never being confused or confounded with the sequence of cause and
effect. It has reached the last stage of integration and definition,
beyond which the way lies downward from the high, quasi-spiritual ground
of animism to the tamer levels of normality and causal uniformities.
There is already discernible a tone of dispassionate and colorless
"tendency" about the Physiocratic animism, such as to suggest a
wavering towards the side of normality. This is especially visible in
such writers as the half-protestant Turgot. In his discussion of the
development of farming, for instance, Turgot speaks almost entirely of
human motives and the material conditions under which the growth takes
place. There is little metaphysics in it, and that little does not
express the law of nature in an adequate form. But, after all has been
said, it remains true that the Physiocrat's sense of substantiality is
not satisfied until he reaches the animistic ground; and it remains true
also that the arguments of their opponents made little impression on the
Physiocrats so long as they were directed to other than this animistic
ground of their doctrine. This is true in great measure even of Turgot,
as witness his controversy with Hume. Whatever criticism is directed
against them on other grounds is met with impatience, as being
inconsequential, if not disingenuous.[8]
To an historian of economic theory the source and the line of derivation
whereby this precise form of the order-of-nature preconception reached
the Physiocrats are of first-rate importance; but it is scarcely a
question to be taken up here,--in part because it is too large a
question to be handled here, in part because it has met with adequate
treatment at more competent hands,[9] and in part because it is somewhat
beside the immediate point under discussion. This point is the logical,
or perhaps better the psychological, value of the Physiocrats'
preconception, as a factor in shaping their point of view and the terms
of their definitive formulation of economic knowledge. For this purpose
it may be sufficient to point out that the preconception in question
belongs to the generation in which the Physiocrats lived, and that it is
the guiding norm of all serious thought that found ready assimilation
into the common-sense views of that time. It is the characteristic and
controlling feature of what may be called the common-sense metaphysics
of the eighteenth century, especially so far as concerns the enlightened
French community.
It is to be noted as a point bearing more immediately on the question in
hand that this imputation of final causes to the course of phenomena
expresses a spiritual attitude which has prevailed, one might almost
say, always and everywhere, but which reached its finest, most effective
development, and found its most finished expression, in the
eighteenth-century metaphysics. It is nothing recondite; for it meets us
at every turn, as a matter of course, in the vulgar thinking of
to-day,--in the pulpit and in the market place,--although it is not so
ingenuous, nor does it so unquestionedly hold the primacy in the
thinking of any class to-day as it once did. It meets us likewise, with
but little change of features, at all past stages of culture, late or
early. Indeed, it is the most generic feature of human thinking, so far
as regards a theoretical or speculative formulation of knowledge.
Accordingly, it seems scarcely necessary to trace the lineage of this
characteristic preconception of the era of enlightenment, through
specific channels, back to the ancient philosophers or jurists of the
empire. Some of the specific forms of its expression--as, for instance,
the doctrine of Natural Rights--are no doubt traceable through mediaeval
channels to the teachings of the ancients; but there is no need of going
over the brook for water, and tracing back to specific teachings the
main features of that habit of mind or spiritual attitude of which the
doctrines of Natural Rights and the Order of Nature are specific
elaborations only. This dominant habit of mind came to the generation of
the Physiocrats on the broad ground of group inheritance, not by lineal
devolution from any one of the great thinkers of past ages who had
thrown its deliverances into a similarly competent form for the use of
his own generation.
* * * * *
In leaving the Physiocratic discipline and the immediate sphere of
Physiocratic influence for British ground, we are met by the figure of
Hume. Here, also, it will be impracticable to go into details as to the
remoter line of derivation of the specific point of view that we come
upon on making the transition, for reasons similar to those already
given as excuse for passing over the similar question with regard to the
Physiocratic point of view. Hume is, of course, not primarily an
economist; but that placid unbeliever is none the less a large item in
any inventory of eighteenth-century economic thought. Hume was not
gifted with a facile acceptance of the group inheritance that made the
habit of mind of his generation. Indeed, he was gifted with an alert,
though somewhat histrionic, skepticism touching everything that was well
received. It is his office to prove all things, though not necessarily
to hold fast that which is good.
Aside from the strain of affectation discernible in Hume's skepticism,
he may be taken as an accentuated expression of that characteristic bent
which distinguishes British thinking in his time from the thinking of
the Continent, and more particularly of the French. There is in Hume,
and in the British community, an insistence on the prosy, not to say the
seamy, side of human affairs. He is not content with formulating his
knowledge of things in terms of what ought to be or in terms of the
objective point of the course of things. He is not even content with
adding to the teleological account of phenomena a chain of empirical,
narrative generalisations as to the usual course of things. He insists,
in season and out of season, on an exhibition of the efficient causes
engaged in any sequence of phenomena; and he is skeptical--irreverently
skeptical--as to the need or the use of any formulation of knowledge
that outruns the reach of his own matter-of-fact, step-by-step argument
from cause to effect.
In short, he is too modern to be wholly intelligible to those of his
contemporaries who are most neatly abreast of their time. He
out-Britishes the British; and, in his footsore quest for a perfectly
tame explanation of things, he finds little comfort, and indeed scant
courtesy, at the hands of his own generation. He is not in sufficiently
naive accord with the range of preconceptions then in vogue.
But, while Hume may be an accentuated expression of a national
characteristic, he is not therefore an untrue expression of this phase
of British eighteenth-century thinking. The peculiarity of point of view
and of method for which he stands has sometimes been called the critical
attitude, sometimes the inductive method, sometimes the materialistic or
mechanical, and again, though less aptly, the historical method. Its
characteristic is an insistence on matter of fact.
This matter-of-fact animus that meets any historian of economic doctrine
on his introduction to British economics is a large, but not the
largest, feature of the British scheme of early economic thought. It
strikes the attention because it stands in contrast with the relative
absence of this feature in the contemporary speculations of the
Continent. The most potent, most formative habit of thought concerned
in the early development of economic teaching on British ground is best
seen in the broader generalisations of Adam Smith, and this more potent
factor in Smith is a bent that is substantially identical with that
which gives consistency to the speculations of the Physiocrats. In Adam
Smith the two are happily combined, not to say blended; but the
animistic habit still holds the primacy, with the matter-of-fact as a
subsidiary though powerful factor. He is said to have combined deduction
with induction. The relatively great prominence given the latter marks
the line of divergence of British from French economics, not the line of
coincidence; and on this account it may not be out of place to look more
narrowly into the circumstances to which the emergence of this
relatively greater penchant for a matter-of-fact explanation of things
in the British community is due.
To explain the characteristic animus for which Hume stands, on grounds
that might appeal to Hume, we should have to inquire into the peculiar
circumstances--ultimately material circumstances--that have gone to
shape the habitual view of things within the British community, and that
so have acted to differentiate the British preconceptions from the
French, or from the general range of preconceptions prevalent on the
Continent. These peculiar formative circumstances are no doubt to some
extent racial peculiarities; but the racial complexion of the British
community is not widely different from the French, and especially not
widely different from certain other Continental communities which are
for the present purpose roughly classed with the French. Race difference
can therefore not wholly, nor indeed for the greater part, account for
the cultural difference of which this difference in preconceptions is an
outcome. Through its cumulative effect on institutions the race
difference must be held to have had a considerable effect on the habit
of mind of the community; but, if the race difference is in this way
taken as the remoter ground of an institutional peculiarity, which in
its turn has shaped prevalent habits of thought, then the attention may
be directed to the proximate causes, the concrete circumstances, through
which this race difference has acted, in conjunction with other ulterior
circumstances, to work out the psychological phenomena observed. Race
differences, it may be remarked, do not so nearly coincide with national
lines of demarcation as differences in the point of view from which
things are habitually apprehended or differences in the standards
according to which facts are rated.
If the element of race difference be not allowed definitive weight in
discussing national peculiarities that underlie the deliverances of
common sense, neither can these national peculiarities be confidently
traced to a national difference in the transmitted learning that enters
into the common-sense view of things. So far as concerns the concrete
facts embodied in the learning of the various nations within the
European culture, these nations make up but a single community. What
divergence is visible does not touch the character of the positive
information with which the learning of the various nations is occupied.
Divergence is visible in the higher syntheses, the methods of handling
the material of knowledge, the basis of valuation of the facts taken up,
rather than in the material of knowledge. But this divergence must be
set down to a cultural difference, a difference of point of view, not to
a difference in inherited information. When a given body of information
passes the national frontiers it acquires a new complexion, a new
national, cultural physiognomy. It is this cultural physiognomy of
learning that is here under inquiry, and a comparison of early French
economics (the Physiocrats) with early British economics (Adam Smith) is
here entered upon merely with a view to making out what significance
this cultural physiognomy of the science has for the past progress of
economic speculation.
The broad features of economic speculation, as it stood at the period
under consideration, may be briefly summed up, disregarding the element
of policy, or expediency, which is common to both groups of economists,
and attending to their theoretical work alone. With the Physiocrats, as
with Adam Smith, there are two main points of view from which economic
phenomena are treated: (_a_) the matter-of-fact point of view or
preconception, which yields a discussion of causal sequences and
correlations; and (_b_) what, for want of a more expressive word, is
here called the animistic point of view or preconception, which yields a
discussion of teleological sequences and correlations,--a discussion of
the function of this and that "organ," of the legitimacy of this or the
other range of facts. The former preconception is allowed a larger scope
in the British than in the French economics: there is more of
"induction" in the British. The latter preconception is present in both,
and is the definitive element in both; but the animistic element is more
colorless in the British, it is less constantly in evidence, and less
able to stand alone without the support of arguments from cause to
effect. Still, the animistic element is the controlling factor in the
higher syntheses of both; and for both alike it affords the definitive
ground on which the argument finally comes to rest. In neither group of
thinkers is the sense of substantiality appeased until this
quasi-spiritual ground, given by the natural propensity of the course of
events, is reached. But the propensity in events, the natural or normal
course of things, as appealed to by the British speculators, suggests
less of an imputation of will-power, or personal force, to the
propensity in question. It may be added, as has already been said in
another place, that the tacit imputation of will-power or spiritual
consistency to the natural or normal course of events has progressively
weakened in the later course of economic speculation, so that in this
respect, the British economists of the eighteenth century may be said to
represent a later phase of economic inquiry than the Physiocrats.
* * * * *
Unfortunately, but unavoidably, if this question as to the cultural
shifting of the point of view in economic science is taken up from the
side of the causes to which the shifting is traceable, it will take the
discussion back to ground on which an economist must at best feel
himself to be but a raw layman, with all a layman's limitations and
ineptitude, and with the certainty of doing badly what might be done
well by more competent hands. But, with a reliance on charity where
charity is most needed, it is necessary to recite summarily what seems
to be the psychological bearing of certain cultural facts.
A cursory acquaintance with any of the more archaic phases of human
culture enforces the recognition of this fact,--that the habit of
construing the phenomena of the inanimate world in animistic terms
prevails pretty much universally on these lower levels. Inanimate
phenomena are apprehended to work out a propensity to an end; the
movements of the elements are construed in terms of quasi-personal
force. So much is well authenticated by the observations on which
anthropologists and ethnologists draw for their materials. This
animistic habit, it may be said, seems to be more effectual and
far-reaching among those primitive communities that lead a predatory
life.
But along with this feature of archaic methods of thought or of
knowledge, the picturesqueness of which has drawn the attention of all
observers, there goes a second feature, no less important for the
purpose in hand, though less obtrusive. The latter is of less interest
to the men who have to do with the theory of cultural development,
because it is a matter of course. This second feature of archaic thought
is the habit of also apprehending facts in non-animistic, or impersonal,
terms. The imputation of propensity in no case extends to all the
mechanical facts in the case. There is always a substratum of matter of
fact, which is the outcome of an habitual imputation of causal sequence,
or, perhaps better, an imputation of mechanical continuity, if a new
term be permitted. The agent, thing, fact, event, or phenomenon, to
which propensity, will-power, or purpose, is imputed, is always
apprehended to act in an environment which is accepted as spiritually
inert. There are always opaque facts as well as self-directing agents.
Any agent acts through means which lend themselves to his use on other
grounds than that of spiritual compulsion, although spiritual compulsion
may be a large feature in any given case.
The same features of human thinking, the same two complementary methods
of correlating facts and handling them for the purposes of knowledge,
are similarly in constant evidence in the daily life of men in our own
community. The question is, in great part, which of the two bears the
greater part in shaping human knowledge at any given time and within any
given range of knowledge or of facts.
Other features of the growth of knowledge, which are remoter from the
point under inquiry, may be of no less consequence to a comprehensive
theory of the development of culture and of thought; but it is of course
out of the question here to go farther afield. The present inquiry will
have enough to do with these two. No other features are correlative with
these, and these merit discussion on account of their intimate bearing
on the point of view of economics. The point of interest with respect to
these two correlative and complementary habits of thought is the
question of how they have fared under the changing exigencies of human
culture; in what manner they come, under given cultural circumstances,
to share the field of knowledge between them; what is the relative part
of each in the composite point of view in which the two habits of
thought express themselves at any given cultural stage.
The animistic preconception enforces the apprehension of phenomena in
terms generically identical with the terms of personality or
individuality. As a certain modern group of psychologists would say, it
imputes to objects and sequences an element of habit and attention
similar in kind, though not necessarily in degree, to the like spiritual
attitude present in the activities of a personal agent. The
matter-of-fact preconception, on the other hand, enforces a handling of
facts without imputation of personal force or attention, but with an
imputation of mechanical continuity, substantially the preconception
which has reached a formulation at the hands of scientists under the
name of conservation of energy or persistence of quantity. Some
appreciable resort to the latter method of knowledge is unavoidable at
any cultural stage, for it is indispensable to all industrial
efficiency. All technological processes and all mechanical contrivances
rest, psychologically speaking, on this ground. This habit of thought is
a selectively necessary consequence of industrial life, and, indeed, of
all human experience in making use of the material means of life. It
should therefore follow that, in a general way, the higher the culture,
the greater the share of the mechanical preconception in shaping human
thought and knowledge, since, in a general way, the stage of culture
attained depends on the efficiency of industry. The rule, while it does
not hold with anything like extreme generality, must be admitted to hold
to a good extent; and to that extent it should hold also that, by a
selective adaptation of men's habits of thought to the exigencies of
those cultural phases that have actually supervened, the mechanical
method of knowledge should have gained in scope and range. Something of
the sort is borne out by observation.
A further consideration enforces the like view. As the community
increases in size, the range of observation of the individuals in the
community also increases; and continually wider and more far-reaching
sequences of a mechanical kind have to be taken account of. Men have to
adapt their own motives to industrial processes that are not safely to
be construed in terms of propensity, predilection, or passion. Life in
an advanced industrial community does not tolerate a neglect of
mechanical fact; for the mechanical sequences through which men, at an
appreciable degree of culture, work out their livelihood, are no
respecters of persons or of will-power. Still, on all but the higher
industrial stages, the coercive discipline of industrial life, and of
the scheme of life that inculcates regard for the mechanical facts of
industry, is greatly mitigated by the largely haphazard character of
industry, and by the great extent to which man continues to be the prime
mover in industry. So long as industrial efficiency is chiefly a matter
of the handicraftsman's skill, dexterity, and diligence, the attention
of men in looking to the industrial process is met by the figure of the
workman, as the chief and characteristic factor; and thereby it comes to
run on the personal element in industry.
But, with or without mitigation, the scheme of life which men perforce
adopt under exigencies of an advanced industrial situation shapes their
habits of thought on the side of their behavior, and thereby shapes
their habits of thought to some extent for all purposes. Each individual
is but a single complex of habits of thought, and the same psychical
mechanism that expresses itself in one direction as conduct expresses
itself in another direction as knowledge. The habits of thought formed
in the one connection, in response to stimuli that call for a response
in terms of conduct, must, therefore, have their effect when the same
individual comes to respond to stimuli that call for a response in terms
of knowledge. The scheme of thought or of knowledge is in good part a
reverberation of the scheme of life. So that, after all has been said,
it remains true that with the growth of industrial organization and
efficiency there must, by selection and by adaptation, supervene a
greater resort to the mechanical or dispassionate method of apprehending
facts.
But the industrial side of life is not the whole of it, nor does the
scheme of life in vogue in any community or at any cultural stage
comprise industrial conduct alone. The social, civic, military, and
religious interests come in for their share of attention, and between
them they commonly take up by far the larger share of it. Especially is
this true so far as concerns those classes among whom we commonly look
for a cultivation of knowledge for knowledge's sake. The discipline
which these several interests exert does not commonly coincide with the
training given by industry. So the religious interest, with its canons
of truth and of right living, runs exclusively on personal relations and
the adaptation of conduct to the predilections of a superior personal
agent. The weight of its discipline, therefore, falls wholly on the
animistic side. It acts to heighten our appreciation of the spiritual
bearing of phenomena and to discountenance a matter-of-fact apprehension
of things. The skeptic of the type of Hume has never been in good repute
with those who stand closest to the accepted religious truths. The
bearing of this side of our culture upon the development of economics is
shown by what the mediaeval scholars had to say on economic topics.
The disciplinary effects of other phases of life, outside of the
industrial and the religious, is not so simple a matter; but the
discussion here approaches nearer to the point of immediate
inquiry,--namely, the cultural situation in the eighteenth century, and
its relation to economic speculation,--and this ground of interest in
the question may help to relieve the topic of the tedium that of right
belongs to it.
In the remoter past of which we have records, and even in the more
recent past, Occidental man, as well as man elsewhere, has eminently
been a respecter of persons. Wherever the warlike activity has been a
large feature of the community's life, much of human conduct in society
has proceeded on a regard for personal force. The scheme of life has
been a scheme of personal aggression and subservience, partly in the
naive form, partly conventionalised in a system of status. The
discipline of social life for the present purpose, in so far as its
canons of conduct rest on this element of personal force in the
unconventionalised form, plainly tends to the formation of a habit of
apprehending and cooerdinating facts from the animistic point of view. So
far as we have to do with life under a system of status, the like
remains true, but with a difference. The regime of status inculcates an
unremitting and very nice discrimination and observance of distinctions
of personal superiority and inferiority. To the criterion of personal
force, or will-power, taken in its immediate bearing on conduct, is
added the criterion of personal excellence-in-general, regardless of the
first-hand potency of the given person as an agent. This criterion of
conduct requires a constant and painstaking imputation of personal
value, regardless of fact. The discrimination enjoined by the canons of
status proceeds on an invidious comparison of persons in respect of
worth, value, potency, virtue, which must, for the present purpose, be
taken as putative. The greater or less personal value assigned a given
individual or a given class under the canons of status is not assigned
on the ground of visible efficiency, but on the ground of a dogmatic
allegation accepted on the strength of an uncontradicted categorical
affirmation simply. The canons of status hold their ground by force of
preemption. Where distinctions of status are based on a putative worth
transmitted by descent from honorable antecedents, the sequence of
transmission to which appeal is taken as the arbiter of honor is of a
putative and animistic character rather than a visible mechanical
continuity. The habit of accepting as final what is prescriptively right
in the affairs of life has as its reflex in the affairs of knowledge the
formula, _Quid ab omnibus, quid ubique creditur credendum est_.
Even this meager account of the scheme of life that characterises a
regime of status should serve to indicate what is its disciplinary
effect in shaping habits of thought, and therefore in shaping the
habitual criteria of knowledge and of reality. A culture whose
institutions are a framework of invidious comparisons implies, or rather
involves and comprises, a scheme of knowledge whose definitive standards
of truth and substantiality are of an animistic character; and, the more
undividedly the canons of status and ceremonial honor govern the conduct
of the community, the greater the facility with which the sequence of
cause and effect is made to yield before the higher claims of a
spiritual sequence or guidance in the course of events. Men consistently
trained to an unremitting discrimination of honor, worth, and personal
force in their daily conduct, and to whom these criteria afford the
definitive ground of sufficiency in cooerdinating facts for the purposes
of life, will not be satisfied to fall short of the like definitive
ground of sufficiency when they come to cooerdinate facts for the
purposes of knowledge simply. The habits formed in unfolding his
activity in one direction, under the impulse of a given interest, assert
themselves when the individual comes to unfold his activity in any other
direction, under the impulse of any other interest. If his last resort
and highest criterion of truth in conduct is afforded by the element of
personal force and invidious comparison, his sense of substantiality or
truth in the quest of knowledge will be satisfied only when a like
definitive ground of animistic force and invidious comparison is
reached. But when such ground is reached he rests content and pushes the
inquiry no farther. In his practical life he has acquired the habit of
resting his case on an authentic deliverance as to what is absolutely
right. This absolutely right and good final term in conduct has the
character of finality only when conduct is construed in a ceremonial
sense; that is to say, only when life is conceived as a scheme of
conformity to a purpose outside and beyond the process of living. Under
the regime of status this ceremonial finality is found in the concept of
worth or honor. In the religious domain it is the concept of virtue,
sanctity, or tabu. Merit lies in what one is, not in what one does. The
habit of appeal to ceremonial finality, formed in the school of status,
goes with the individual in his quest of knowledge, as a dependence upon
a similarly authentic norm of absolute truth,--a similar seeking of a
final term outside and beyond the range of knowledge.
The discipline of social and civic life under a regime of status, then,
reenforces the discipline of the religious life; and the outcome of the
resulting habituation is that the canons of knowledge are cast in the
animistic mold and converge to a ground of absolute truth, and this
absolute truth is of a ceremonial nature. Its subject-matter is a
reality regardless of fact.
The outcome, for science, of the religious and social life of the
civilisation of status, in Occidental culture, was a structure of
quasi-spiritual appreciations and explanations, of which astrology,
alchemy, and mediaeval theology and metaphysics are competent, though
somewhat one-sided, exponents. Throughout the range of this early
learning the ground of correlation of phenomena is in part the supposed
relative potency of the facts correlated; but it is also in part a
scheme of status, in which facts are scheduled according to a
hierarchical gradation of worth or merit, having only a ceremonial
relation to the observed phenomena. Some elements (some metals, for
instance) are noble, others base; some planets, on grounds of ceremonial
efficacy, have a sinister influence, others a beneficent one; and it is
a matter of serious consequence whether they are in the ascendant, and
so on.
The body of learning through which the discipline of animism and
invidious comparison transmitted its effects to the science of economics
was what is known as natural theology, natural rights, moral philosophy,
and natural law. These several disciplines or bodies of knowledge had
wandered far from the naive animistic standpoint at the time when
economic science emerged, and much the same is true as regards the time
of the emergence of other modern sciences. But the discipline which
makes for an animistic formulation of knowledge continued to hold the
primacy in modern culture, although its dominion was never altogether
undivided or unmitigated. Occidental culture has long been largely an
industrial culture; and, as already pointed out, the discipline of
industry, and of life in an industrial community, does not favor the
animistic preconception. This is especially true as regards industry
which makes large use of mechanical contrivances. The difference in
these respects between Occidental industry and science, on the one hand,
and the industry and science of other cultural regions, on the other
hand, is worth noting in this connection. The result has been that the
sciences, as that word is understood in later usage, have come forward
gradually, and in a certain rough parallelism with the development of
industrial processes and industrial organisation. It is possible to hold
that both modern industry (of the mechanical sort) and modern science
center about the region of the North Sea. It is still more palpably true
that within this general area the sciences, in the recent past, show a
family likeness to the civil and social institutions of the communities
in which they have been cultivated, this being true to the greatest
extent of the higher or speculative sciences; that is, in that range of
knowledge in which the animistic preconception can chiefly and most
effectively find application. There is, for instance, in the eighteenth
century a perceptible parallelism between the divergent character of
British and Continental culture and institutions, on the one hand, and
the dissimilar aims of British and Continental speculation, on the other
hand.
Something has already been said of the difference in preconceptions
between the French and the British economists of the eighteenth century.
It remains to point out the correlative cultural difference between the
two communities, to which it is conceived that the difference in
scientific animus is in great measure due. It is, of course, only the
general features, the general attitude of the speculators, that can be
credited to the difference in culture. Differences of detail in the
specific doctrines held could be explained only on a much more detailed
analysis than can be entered on here, and after taking account of facts
which cannot here be even allowed for in detail.
Aside from the greater resort to mechanical contrivances and the larger
scale of organisation in British industry, the further cultural
peculiarities of the British community run in the same general
direction. British religious life and beliefs had less of the element of
fealty--personal or discretionary mastery and subservience--and more of
a tone of fatalism. The civil institutions of the British had not the
same rich personal content as those of the French. The British subject
owned allegiance to an impersonal law rather than to the person of a
superior. Relatively, it may be said that the sense of status, as a
coercive factor, was in abeyance in the British community. Even in the
warlike enterprise of the British community a similar characteristic is
traceable. Warfare is, of course, a matter of personal assertion.
Warlike communities and classes are necessarily given to construing
facts in terms of personal force and personal ends. They are always
superstitious. They are great sticklers for rank and precedent, and
zealously cultivate those distinctions and ceremonial observances in
which a system of status expresses itself. But, while warlike enterprise
has by no means been absent from the British scheme of life, the
geographical and strategic isolation of the British community has given
a characteristic turn to their military relations. In recent times
British warlike operations have been conducted abroad. The military
class has consequently in great measure been segregated out from the
body of the community, and the ideals and prejudices of the class have
not been transfused through the general body with the same facility and
effect that they might otherwise have had. The British community at home
has seen the campaign in great part from the standpoint of the "sinews
of war."
The outcome of all these national peculiarities of circumstance and
culture has been that a different scheme of life has been current in the
British community from what has prevailed on the Continent. There has
resulted the formation of a different body of habits of thought and a
different animus in their handling of facts. The preconception of causal
sequence has been allowed larger scope in the correlation of facts for
purposes of knowledge; and, where the animistic preconception has been
resorted to, as it always has in the profounder reaches of learning, it
has commonly been an animism of a tamer kind.
Taking Adam Smith as an exponent of this British attitude in theoretical
knowledge, it is to be noted that, while he formulates his knowledge in
terms of a propensity (natural laws) working teleologically to an end,
the end or objective point which controls the formulation has not the
same rich content of vital human interest or advantage as is met with in
the Physiocratic speculations. There is perceptibly less of an imperious
tone in Adam Smith's natural laws than in those of the contemporary
French economists. It is true, he sums up the institutions with which he
deals in terms of the ends which they should subserve, rather than in
terms of the exigencies and habits of life out of which they have
arisen; but he does not with the same tone of finality appeal to the end
subserved as a final cause through whose coercive guidance the complex
of phenomena is kept to its appointed task. Under his hands the
restraining, compelling agency retires farther into the background, and
appeal is taken to it neither so directly nor on so slight provocation.
But Adam Smith is too large a figure to be disposed of in a couple of
concluding paragraphs. At the same time his work and the bent which he
gave to economic speculation are so intimately bound up with the aims
and bias that characterise economics in its next stage of development
that he is best dealt with as the point of departure for the Classical
School rather than merely as a British counterpart of Physiocracy. Adam
Smith will accordingly be considered in immediate connection with the
bias of the classical school and the incursion of utilitarianism into
economics.
FOOTNOTES:
[1] Reprinted by permission from _The Quarterly Journal of Economics_,
vol. xiii, Jan., 1899.
[2] "Why is Economics not an Evolutionary Science?" _Quarterly Journal
of Economics_, July, 1898.
[3] "The Future of Economic Theory," _ibid._, October, 1898.
[4] See, for instance, Hasbach, _Allgemeine philosophische Grundlagen
der von Francois Quesnay und Adam Smith begruendeten politischen
Oekonomie_.
[5] Quesnay, _Droit Naturel_, ch. v. (Ed. Daire, _Physiocrates_, pp.
52-53).
[6] Quesnay, _Droit Naturel_, ch. v (Ed. Daire, _Physiocrates_, p. 53).
[7] Dupont de Nemours, _Correspondance avec J.-B. Say_ (Ed. Daire,
_Physiocrates_, premiere partie, p. 399).
[8] See, for instance, the concluding chapters of La Riviere's _Ordre
Naturel des Societes Politiques_.
[9] E.g., Hasbach, _loc. cit._; Bonar, _Philosophy and Political
Economy_, Book II; Ritchie, _Natural Rights_.
THE PRECONCEPTIONS OF ECONOMIC SCIENCE[1]
II
Adam Smith's animistic bent asserts itself more plainly and more
effectually in the general trend and aim of his discussion than in the
details of theory. "Adam Smith's _Wealth of Nations_ is, in fact, so far
as it has one single purpose, a vindication of the unconscious law
present in the separate actions of men when these actions are directed
by a certain strong personal motive."[2] Both in the _Theory of the
Moral Sentiments_ and in the _Wealth of Nations_ there are many passages
that testify to his abiding conviction that there is a wholesome trend
in the natural course of things, and the characteristically optimistic
tone in which he speaks for natural liberty is but an expression of this
conviction. An extreme resort to this animistic ground occurs in his
plea for freedom of investment.[3]
In the proposition that men are "led by an invisible hand," Smith does
not fall back on a meddling Providence who is to set human affairs
straight when they are in danger of going askew. He conceives the
Creator to be very continent in the matter of interference with the
natural course of things. The Creator has established the natural order
to serve the ends of human welfare; and he has very nicely adjusted the
efficient causes comprised in the natural order, including human aims
and motives, to this work that they are to accomplish. The guidance of
the invisible hand takes place not by way of interposition, but through
a comprehensive scheme of contrivances established from the beginning.
For the purpose of economic theory, man is conceived to be consistently
self-seeking; but this economic man is a part of the mechanism of
nature, and his self-seeking traffic is but a means whereby, in the
natural course of things, the general welfare is worked out. The scheme
as a whole is guided by the end to be reached, but the sequence of
events through which the end is reached is a causal sequence which is
not broken into episodically. The benevolent work of guidance was
performed in first establishing an ingenious mechanism of forces and
motives capable of accomplishing an ordained result, and nothing beyond
the enduring constraint of an established trend remains to enforce the
divine purpose in the resulting natural course of things.
The sequence of events, including human motives and human conduct, is a
causal sequence; but it is also something more, or, rather, there is
also another element of continuity besides that of brute cause and
effect, present even in the step-by-step process whereby the natural
course of things reaches its final term. The presence of such a
quasi-spiritual or non-causal element is evident from two (alleged)
facts. (1) The course of things may be deflected from the direct line of
approach to that consummate human welfare which is its legitimate end.
The natural trend of things may be overborne by an untoward conjuncture
of causes. There is a distinction, often distressingly actual and
persistent, between the legitimate and the observed course of things. If
"natural," in Adam Smith's use, meant necessary, in the sense of
causally determined, no divergence of events from the natural or
legitimate course of things would be possible. If the mechanism of
nature, including man, were a mechanically competent contrivance for
achieving the great artificer's design, there could be no such episodes
of blundering and perverse departure from the direct path as Adam Smith
finds in nearly all existing arrangements. Institutional facts would
then be "natural."[4] (2) When things have gone wrong, they will right
themselves if interference with the natural course ceases; whereas, in
the case of a causal sequence simply, the mere cessation of interference
will not leave the outcome the same as if no interference had taken
place. This recuperative power of nature is of an extra-mechanical
character. The continuity of sequence by force of which the natural
course of things prevails is, therefore, not of the nature of cause and
effect, since it bridges intervals and interruptions in the causal
sequence.[5] Adam Smith's use of the term "real" in statements of
theory--as, for example, "real value," "real price"[6]--is evidence to
this effect. "Natural" commonly has the same meaning as "real" in this
connection.[7] Both "natural" and "real" are placed in contrast with the
actual; and, in Adam Smith's apprehension, both have a substantiality
different from and superior to facts. The view involves a distinction
between reality and fact, which survives in a weakened form in the
theories of "normal" prices, wages, profits, costs, in Adam Smith's
successors.
This animistic prepossession seems to pervade the earlier of his two
monumental works in a greater degree than the later. In the _Moral
Sentiments_ recourse is had to the teleological ground of the natural
order more freely and with perceptibly greater insistence. There seems
to be reason for holding that the animistic preconception weakened or,
at any rate, fell more into the background as his later work of
speculation and investigation proceeded. The change shows itself also in
some details of his economic theory, as first set forth in the
_Lectures_, and afterwards more fully developed in the _Wealth of
Nations_. So, for instance, in the earlier presentation of the matter,
"the division of labor is the immediate cause of opulence"; and this
division of labor, which is the chief condition of economic well-being,
"flows from a direct propensity in human nature for one man to barter
with another."[8] The "propensity" in question is here appealed to as a
natural endowment immediately given to man with a view to the welfare of
human society, and without any attempt at further explanation of how man
has come by it. No causal explanation of its presence or character is
offered. But the corresponding passage of the _Wealth of Nations_
handles the question more cautiously.[9] Other parallel passages might
be compared, with much the same effect. The guiding hand has withdrawn
farther from the range of human vision.
However, these and other like filial expressions of a devout optimism
need, perhaps, not be taken as integral features of Adam Smith's
economic theory, or as seriously affecting the character of his work as
an economist. They are the expression of his general philosophical and
theological views, and are significant for the present purpose chiefly
as evidences of an animistic and optimistic bent. They go to show what
is Adam Smith's accepted ground of finality,--the ground to which all
his speculations on human affairs converge; but they do not in any
great degree show the teleological bias guiding his formulation of
economic theory in detail.
The effective working of the teleological bias is best seen in Smith's
more detailed handling of economic phenomena--in his discussion of what
may loosely be called economic institutions--and in the criteria and
principles of procedure by which he is guided in incorporating these
features of economic life into the general structure of his theory. A
fair instance, though perhaps not the most telling one, is the
discussion of the "real and nominal price," and of the "natural and
market price" of commodities, already referred to above.[10] The "real"
price of commodities is their value in terms of human life. At this
point Smith differs from the Physiocrats, with whom the ultimate terms
of value are afforded by human sustenance taken as a product of the
functioning of brute nature; the cause of the difference being that the
Physiocrats conceived the natural order which works towards the material
well-being of man to comprise the non-human environment only, whereas
Adam Smith includes man in this concept of the natural order, and,
indeed, makes him the central figure in the process of production. With
the Physiocrats, production is the work of nature: with Adam Smith, it
is the work of man and nature, with man in the foreground. In Adam
Smith, therefore, labor is the final term in valuation. This "real"
value of commodities is the value imputed to them by the economist under
the stress of his teleological preconception. It has little, if any,
place in the course of economic events, and no bearing on human affairs,
apart from the sentimental influence which such a preconception in favor
of a "real value" in things may exert upon men's notions of what is the
good and equitable course to pursue in their transactions. It is
impossible to gauge this real value of goods; it cannot be measured or
expressed in concrete terms. Still, if labor exchanges for a varying
quantity of goods, "it is their value which varies, not that of the
labor which purchases them."[11] The values which practically attach to
goods in men's handling of them are conceived to be determined without
regard to the real value which Adam Smith imputes to the goods; but, for
all that, the substantial fact with respect to these market values is
their presumed approximation to the real values teleologically imputed
to the goods under the guidance of inviolate natural laws. The real, or
natural, value of articles has no causal relation to the value at which
they exchange. The discussion of how values are determined in practice
runs on the motives of the buyers and sellers, and the relative
advantage enjoyed by the parties to the transaction.[12] It is a
discussion of a process of valuation, quite unrelated to the "real," or
"natural," price of things, and quite unrelated to the grounds on which
things are held to come by their real, or natural, price; and yet, when
the complex process of valuation has been traced out in terms of human
motives and the exigencies of the market, Adam Smith feels that he has
only cleared the ground. He then turns to the serious business of
accounting for value and price theoretically, and making the ascertained
facts articulate with his teleological theory of economic life.[13]
The occurrence of the words "ordinary" and "average" in this connection
need not be taken too seriously. The context makes it plain that the
equality which commonly subsists between the ordinary or average rates,
and the natural rates, is a matter of coincidence, not of identity. Not
only are there temporary deviations, but there may be a permanent
divergence between the ordinary and the natural price of a commodity; as
in case of a monopoly or of produce grown under peculiar circumstances
of soil or climate.[14]
The natural price coincides with the price fixed by competition, because
competition means the unimpeded play of those efficient forces through
which the nicely adjusted mechanism of nature works out the design to
accomplish which it was contrived. The natural price is reached through
the free interplay of the factors of production, and it is itself an
outcome of production. Nature, including the human factor, works to turn
out the goods; and the natural value of the goods is their appraisement
from the standpoint of this productive process of nature. Natural value
is a category of production: whereas, notoriously exchange value or
market price is a category of distribution. And Adam Smith's theoretical
handling of market price aims to show how the factors of human
predilection and human wants at work in the higgling of the market
bring about a result in passable consonance with the natural laws that
are conceived to govern production.
The natural price is a composite result of the blending of the three
"component parts of the price of commodities,"--the natural wages of
laborer, the natural profits of stock, and the natural rent of land; and
each of these three components is in its turn the measure of the
productive effect of the factor to which it pertains. The further
discussion of these shares in distribution aims to account for the facts
of distribution on the ground of the productivity of the factors which
are held to share the product between them. That is to say, Adam Smith's
preconception of a productive natural process as the basis of his
economic theory dominates his aims and procedure, when he comes to deal
with phenomena that cannot be stated in terms of production. The causal
sequence in the process of distribution is, by Adam Smith's own showing,
unrelated to the causal sequence in the process of production; but,
since the latter is the substantial fact, as viewed from the standpoint
of a teleological natural order, the former must be stated in terms of
the latter before Adam Smith's sense of substantiality, or "reality," is
satisfied. Something of the same kind is, of course, visible in the
Physiocrats and in Cantillon. It amounts to an extension of the
natural-rights preconception to economic theory. Adam Smith's discussion
of distribution as a function of productivity might be traced in detail
through his handling of Wages, Profits, and Rent; but, since the aim
here is a brief characterisation only, and not an exposition, no farther
pursuit of this point seems feasible.
It may, however, be worth while to point out another line of influence
along which the dominance of the teleological preconception shows itself
in Adam Smith. This is the normalisation of data, in order to bring them
into consonance with an orderly course of approach to the putative
natural end of economic life and development. The result of this
normalisation of data is, on the one hand, the use of what James Steuart
calls "conjectural history" in dealing with past phases of economic
life, and, on the other hand, a statement of present-day phenomena in
terms of what legitimately ought to be according to the God-given end of
life rather than in terms of unconstrued observation. Account is taken
of the facts (supposed or observed) ostensibly in terms of causal
sequence, but the imputed causal sequence is construed to run on lines
of teleological legitimacy.
A familiar instance of this "conjectural history," in a highly and
effectively normalized form, is the account of "that early and rude
state of society which precedes both the accumulation of stock and the
appropriation of land."[15] It is needless at this day to point out that
this "early and rude state," in which "the whole produce of labor
belongs to the laborer," is altogether a figment. The whole narrative,
from the putative origin down, is not only supposititious, but it is
merely a schematic presentation of what should have been the course of
past development, in order to lead up to that ideal economic situation
which would satisfy Adam Smith's preconception.[16] As the narrative
comes nearer the region of known latter-day facts, the normalisation of
the data becomes more difficult and receives more detailed attention;
but the change in method is a change of degree rather than of kind. In
the "early and rude state" the coincidence of the "natural" and the
actual course of events is immediate and undisturbed, there being no
refractory data at hand; but in the later stages and in the present
situation, where refractory facts abound, the cooerdination is difficult,
and the coincidence can be shown only by a free abstraction from
phenomena that are irrelevant to the teleological trend and by a
laborious interpretation of the rest. The facts of modern life are
intricate, and lend themselves to statement in the terms of the theory
only after they have been subjected to a "higher criticism."
The chapter "Of the Origin and Use of Money"[17] is an elegantly
normalised account of the origin and nature of an economic institution,
and Adam Smith's further discussion of money runs on the same lines. The
origin of money is stated in terms of the purpose which money should
legitimately serve in such a community as Adam Smith considered right
and good, not in terms of the motives and exigencies which have resulted
in the use of money and in the gradual rise of the existing method of
payment and accounts. Money is "the great wheel of circulation," which
effects the transfer of goods in process of production and the
distribution of the finished goods to the consumers. It is an organ of
the economic commonwealth rather than an expedient of accounting and a
conventional repository of wealth.
It is perhaps superfluous to remark that to the "plain man," who is not
concerned with the "natural course of things" in a consummate
_Geldwirtschaft_, the money that passes his hand is not a "great wheel
of circulation." To the Samoyed, for instance, the reindeer which serves
him as unit of value is wealth in the most concrete and tangible form.
Much the same is true of coin, or even of bank-notes, in the
apprehension of unsophisticated people among ourselves to-day. And yet
it is in terms of the habits and conditions of life of these "plain
people" that the development of money will have to be accounted for if
it is to be stated in terms of cause and effect.
* * * * *
The few scattered passages already cited may serve to illustrate how
Adam Smith's animistic or teleological bent shapes the general structure
of his theory and gives it consistency. The principle of definitive
formulation in Adam Smith's economic knowledge is afforded by a putative
purpose that does not at any point enter causally into the economic life
process which he seeks to know. This formative or normative purpose or
end is not freely conceived to enter as an efficient agent in the events
discussed, or to be in any way consciously present in the process. It
can scarcely be taken as an animistic agency engaged in the process. It
sanctions the course of things, and gives legitimacy and substance to
the sequence of events, so far as this sequence may be made to square
with the requirements of the imputed end. It has therefore a ceremonial
or symbolical force only, and lends the discussion a ceremonial
competency; although with economists who have been in passable agreement
with Adam Smith as regards the legitimate end of economic life this
ceremonial consistency, or consistency _de jure_ has for many purposes
been accepted as the formulation of a causal continuity in the phenomena
that have been interpreted in its terms. Elucidations of what normally
ought to happen, as a matter of ceremonial necessity, have in this way
come to pass for an account of matters of fact.
But, as has already been pointed out, there is much more to Adam Smith's
exposition of theory than a formulation of what ought to be. Much of the
advance he achieved over his predecessors consists in a larger and more
painstaking scrutiny of facts, and a more consistent tracing out of
causal continuity in the facts handled. No doubt, his superiority over
the Physiocrats, that characteristic of his work by virtue of which it
superseded theirs in the farther growth of economic science, lies to
some extent in his recourse to a different, more modern ground of
normality,--a ground more in consonance with the body of preconceptions
that have had the vogue in later generations. It is a shifting of the
point of view from which the facts are handled; but it comes in great
part to a substitution of a new body of preconceptions for the old, or a
new adaptation of the old ground of finality, rather than an elimination
of all metaphysical or animistic norms of valuation. With Adam Smith, as
with the Physiocrats, the fundamental question, the answer to which
affords the point of departure and the norm of procedure, is a question
of substantiality or economic "reality." With both, the answer to this
question is given naively, as a deliverance of common sense. Neither is
disturbed by doubts as to this deliverance of common sense or by any
need of scrutinising it. To the Physiocrats this substantial ground of
economic reality is the nutritive process of Nature. To Adam Smith it is
Labor. His reality has the advantage of being the deliverance of the
common sense of a more modern community, and one that has maintained
itself in force more widely and in better consonance with the facts of
latter-day industry. The Physiocrats owe their preconception of the
productiveness of nature to the habits of thought of a community in
whose economic life the dominant phenomenon was the owner of
agricultural land. Adam Smith owes his preconception in favor of labor
to a community in which the obtrusive economic feature of the immediate
past was handicraft and agriculture, with commerce as a scarcely
secondary phenomenon.
So far as Adam Smith's economic theories are a tracing out of the causal
sequence in economic phenomena, they are worked out in terms given by
these two main directions of activity,--human effort directed to the
shaping of the material means of life, and human effort and discretion
directed to a pecuniary gain. The former is the great, substantial
productive force: the latter is not immediately, or proximately,
productive.[18] Adam Smith still has too lively a sense of the nutritive
purpose of the order of nature freely to extend the concept of
productiveness to any activity that does not yield a material increase
of the creature comforts. His instinctive appreciation of the
substantial virtue of whatever effectually furthers nutrition, even
leads him into the concession that "in agriculture nature labors along
with man," although the general tenor of his argument is that the
productive force with which the economist always has to count is human
labor. This recognised substantiality of labor as productive is, as has
already been remarked, accountable for his effort to reduce to terms of
productive labor such a category of distribution as exchange value.
With but slight qualification, it will hold that, in the causal sequence
which Adam Smith traces out in his economic theories proper (contained
in the first three books of the _Wealth of Nations_), the causally
efficient factor is conceived to be human nature in these two
relations,--of productive efficiency and pecuniary gain through
exchange. Pecuniary gain--gain in the material means of life through
barter--furnishes the motive force to the economic activity of the
individual; although productive efficiency is the legitimate, normal end
of the community's economic life. To such an extent does this concept
of man's seeking his ends through "truck, barter, and exchange" pervade
Adam Smith's treatment of economic processes that he even states
production in its terms, and says that "labor was the first price, the
original purchase-money, that was paid for all things."[19] The human
nature engaged in this pecuniary traffic is conceived in somewhat
hedonistic terms, and the motives and movements of men are normalised to
fit the requirements of a hedonistically conceived order of nature. Men
are very much alike in their native aptitudes and propensities;[20] and,
so far as economic theory need take account of these aptitudes and
propensities, they are aptitudes for the production of the "necessaries
and conveniences of life," and propensities to secure as great a share
of these creature comforts as may be.
Adam Smith's conception of normal human nature--that is to say, the
human factor which enters causally in the process which economic theory
discusses--comes, on the whole, to this: Men exert their force and skill
in a mechanical process of production, and their pecuniary sagacity in a
competitive process of distribution, with a view to individual gain in
the material means of life. These material means are sought in order to
the satisfaction of men's natural wants through their consumption. It is
true, much else enters into men's endeavors in the struggle for wealth,
as Adam Smith points out; but this consumption comprises the legitimate
range of incentives, and a theory which concerns itself with the
natural course of things need take but incidental account of what does
not come legitimately in the natural course. In point of fact, there are
appreciable "actual," though scarcely "real," departures from this rule.
They are spurious and insubstantial departures, and do not properly come
within the purview of the stricter theory. And, since human nature is
strikingly uniform, in Adam Smith's apprehension, both the efforts put
forth and the consumptive effect accomplished may be put in quantitative
terms and treated algebraically, with the result that the entire range
of phenomena comprised under the head of consumption need be but
incidentally considered; and the theory of production and distribution
is complete when the goods or the values have been traced to their
disappearance in the hands of their ultimate owners. The reflex effect
of consumption upon production and distribution is, on the whole,
quantitative only.
Adam Smith's preconception of a normal teleological order of procedure
in the natural course, therefore, affects not only those features of
theory where he is avowedly concerned with building up a normal scheme
of the economic process. Through his normalising the chief causal factor
engaged in the process, it affects also his arguments from cause to
effect.[21] What makes this latter feature worth particular attention
is the fact that his successors carried this normalisation farther, and
employed it with less frequent reference to the mitigating exceptions
which Adam Smith notices by the way.
The reason for that farther and more consistent normalisation of human
nature which gives us the "economic man" at the hands of Adam Smith's
successors lies, in great part, in the utilitarian philosophy that
entered in force and in consummate form at about the turning of the
century. Some credit in the work of normalisation is due also to the
farther supersession of handicraft by the "capitalistic" industry that
came in at the same time and in pretty close relation with the
utilitarian views.
* * * * *
After Adam Smith's day, economics fell into profane hands. Apart from
Malthus, who, of all the greater economists, stands nearest to Adam
Smith on such metaphysical heads as have an immediate bearing upon the
premises of economic science, the next generation do not approach their
subject from the point of view of a divinely instituted order; nor do
they discuss human interests with that gently optimistic spirit of
submission that belongs to the economist who goes to his work with the
fear of God before his eyes. Even with Malthus the recourse to the
divinely sanctioned order of nature is somewhat sparing and temperate.
But it is significant for the later course of economic theory that,
while Malthus may well be accounted the truest continuer of Adam Smith,
it was the undevout utilitarians that became the spokesmen of the
science after Adam Smith's time.
There is no wide breach between Adam Smith and the utilitarians, either
in details of doctrine or in the concrete conclusions arrived at as
regards questions of policy. On these heads Adam Smith might well be
classed as a moderate utilitarian, particularly so far as regards his
economic work. Malthus has still more of a utilitarian air,--so much so,
indeed, that he is not infrequently spoken of as a utilitarian. This
view, convincingly set forth by Mr. Bonar,[22] is no doubt well borne
out by a detailed scrutiny of Malthus's economic doctrines. His
humanitarian bias is evident throughout, and his weakness for
considerations of expediency is the great blemish of his scientific
work. But, for all that, in order to an appreciation of the change that
came over classical economics with the rise of Benthamism, it is
necessary to note that the agreement in this matter between Adam Smith
and the disciples of Bentham, and less decidedly that between Malthus
and the latter, is a coincidence of conclusions rather than an identity
of preconceptions.[23]
With Adam Smith the ultimate ground of economic reality is the design of
God, the teleological order; and his utilitarian generalisations, as
well as the hedonistic character of his economic man, are but methods of
the working out of this natural order, not the substantial and
self-legitimating ground. Shifty as Malthus's metaphysics are, much the
same is to be said for him.[24] Of the utilitarians proper the converse
is true, although here, again, there is by no means utter consistency.
The substantial economic ground is pleasure and pain: the teleological
order (even the design of God, where that is admitted) is the method of
its working-out.
It may be unnecessary here to go into the farther implications,
psychological and ethical, which this preconception of the utilitarians
involves. And even this much may seem a taking of excessive pains with a
distinction that marks no tangible difference. But a reading of the
classical doctrines, with something of this metaphysics of political
economy in mind, will show how, and in great part why, the later
economists of the classical line diverged from Adam Smith's tenets in
the early years of the century, until it has been necessary to interpret
Adam Smith somewhat shrewdly in order to save him from heresy.
The post-Bentham economics is substantially a theory of value. This is
altogether the dominant feature of the body of doctrines; the rest
follows from, or is adapted to, this central discipline. The doctrine of
value is of very great importance also in Adam Smith; but Adam Smith's
economics is a theory of the production and apportionment of the
material means of life.[25] With Adam Smith, value is discussed from the
point of view of production. With the utilitarians, production is
discussed from the point of view of value. The former makes value an
outcome of the process of production: the latter make production the
outcome of a valuation process.
The point of departure with Adam Smith is the "productive power of
labor."[26] With Ricardo it is a pecuniary problem concerned in the
distribution of ownership;[27] but the classical writers are followers
of Adam Smith, and improve upon and correct the results arrived at by
him, and the difference of point of view, therefore, becomes evident in
their divergence from him, and the different distribution of emphasis,
rather than in a new and antagonistic departure.
The reason for this shifting of the center of gravity from production to
valuation lies, proximately, in Bentham's revision of the "principles"
of morals. Bentham's philosophical position is, of course, not a
self-explanatory phenomenon, nor does the effect of Benthamism extend
only to those who are avowed followers of Bentham; for Bentham is the
exponent of a cultural change that affects the habits of thought of the
entire community. The immediate point of Bentham's work, as affecting
the habits of thought of the educated community, is the substitution of
hedonism (utility) in place of achievement of purpose, as a ground of
legitimacy and a guide in the normalisation of knowledge. Its effect is
most patent in speculations on morals, where it inculcates determinism.
Its close connection with determinism in ethics points the way to what
may be expected of its working in economics. In both cases the result is
that human action is construed in terms of the causal forces of the
environment, the human agent being, at the best, taken as a mechanism of
commutation, through the workings of which the sensuous effects wrought
by the impinging forces of the environment are, by an enforced process
of valuation, transmuted without quantitative discrepancy into moral or
economic conduct, as the case may be. In ethics and economics alike the
subject-matter of the theory is this valuation process that expresses
itself in conduct, resulting, in the case of economic conduct, in the
pursuit of the greatest gain or least sacrifice.
Metaphysically or cosmologically considered, the human nature into the
motions of which hedonistic ethics and economics inquire is an
intermediate term in a causal sequence, of which the initial and the
terminal members are sensuous impressions and the details of conduct.
This intermediate term conveys the sensuous impulse without loss of
force to its eventuation in conduct. For the purpose of the valuation
process through which the impulse is so conveyed, human nature may,
therefore, be accepted as uniform; and the theory of the valuation
process may be formulated quantitatively, in terms of the material
forces affecting the human sensory and of their equivalents in the
resulting activity. In the language of economics, the theory of value
may be stated in terms of the consumable goods that afford the incentive
to effort and the expenditure undergone in order to procure them.
Between these two there subsists a necessary equality; but the
magnitudes between which the equality subsists are hedonistic
magnitudes, not magnitudes of kinetic energy nor of vital force, for the
terms handled are sensuous terms. It is true, since human nature is
substantially uniform, passive, and unalterable in respect of men's
capacity for sensuous affection, there may also be presumed to subsist a
substantial equality between the psychological effect to be wrought by
the consumption of goods, on the one side, and the resulting expenditure
of kinetic or vital force, on the other side; but such an equality is,
after all, of the nature of a coincidence, although there should be a
strong presumption in favor of its prevailing on an average and in the
common run of cases. Hedonism, however, does not postulate uniformity
between men except in the respect of sensuous cause and effect.
The theory of value which hedonism gives is, therefore, a theory of cost
in terms of discomfort. By virtue of the hedonistic equilibrium reached
through the valuation process, the sacrifice or expenditure of sensuous
reality involved in acquisition is the equivalent of the sensuous gain
secured. An alternative statement might perhaps be made, to the effect
that the measure of the value of goods is not the sacrifice or
discomfort undergone, but the sensuous gain that accrues from the
acquisition of the goods; but this is plainly only an alternative
statement, and there are special reasons in the economic life of the
time why the statement in terms of cost, rather than in terms of
"utility," should commend itself to the earlier classical economists.
On comparing the utilitarian doctrine of value with earlier theories,
then, the case stands somewhat as follows. The Physiocrats and Adam
Smith contemplate value as a measure of the productive force that
realises itself in the valuable article. With the Physiocrats this
productive force is the "anabolism" of Nature (to resort to a
physiological term): with Adam Smith it is chiefly human labor directed
to heightening the serviceability of the materials with which it is
occupied. Production causes value in either case. The post-Bentham
economics contemplates value as a measure of, or as measured by, the
irksomeness of the effort involved in procuring the valuable goods. As
Mr. E. C. K. Gonner has admirably pointed out,[28] Ricardo--and the
like holds true of classical economics generally--makes cost the
foundation of value, not its cause. This resting of value on cost takes
place through a valuation. Any one who will read Adam Smith's
theoretical exposition to as good purpose as Mr. Gonner has read Ricardo
will scarcely fail to find that the converse is true in Adam Smith's
case. But the causal relation of cost to value holds only as regards
"natural" or "real" value in Adam Smith's doctrine. As regards market
price, Adam Smith's theory does not differ greatly from that of Ricardo
on this head. He does not overlook the valuation process by which market
price is adjusted and the course of investment is guided, and his
discussion of this process runs in terms that should be acceptable to
any hedonist.
* * * * *
The shifting of the point of view that comes into economics with the
acceptance of utilitarian ethics and its correlate, the associationist
psychology, is in great part a shifting to the ground of causal sequence
as contrasted with that of serviceability to a preconceived end. This is
indicated even by the main fact already cited,--that the utilitarian
economists make exchange value the central feature of their theories,
rather than the conduciveness of industry to the community's material
welfare. Hedonistic exchange value is the outcome of a valuation process
enforced by the apprehended pleasure-giving capacities of the items
valued. And in the utilitarian theories of production, arrived at from
the standpoint so given by exchange value, the conduciveness to welfare
is not the objective point of the argument. This objective point is
rather the bearing of productive enterprise upon the individual
fortunes of the agents engaged, or upon the fortunes of the several
distinguishable classes of beneficiaries comprised in the industrial
community; for the great immediate bearing of exchange values upon the
life of the collectivity is their bearing upon the distribution of
wealth. Value is a category of distribution. The result is that, as is
well shown by Mr. Cannan's discussion,[29] the theories of production
offered by the classical economists have been sensibly scant, and have
been carried out with a constant view to the doctrines on distribution.
An incidental but telling demonstration of the same facts is given, by
Professor Buecher;[30] and in illustration may be cited Torrens's _Essay
on the Production of Wealth_, which is to a good extent occupied with
discussions of value and distribution. The classical theories of
production have been theories of the production of "wealth"; and
"wealth," in classical usage, consists of material things having
exchange value. During the vogue of the classical economics the accepted
characteristic by which "wealth" has been defined has been its
amenability to ownership. Neither in Adam Smith nor in the Physiocrats
is this amenability to ownership made so much of, nor is it in a similar
degree accepted as a definite mark of the subject-matter of the science.
As their hedonistic preconception would require, then, it is to the
pecuniary side of life that the classical economists give their most
serious attention, and it is the pecuniary bearing of any given
phenomenon or of any institution that commonly shapes the issue of the
argument. The causal sequence about which the discussion centers is a
process of pecuniary valuation. It runs on distribution, ownership,
acquisition, gain, investment, exchange.[31] In this way the doctrines
on production come to take a pecuniary coloring; as is seen in a less
degree also in Adam Smith, and even in the Physiocrats, although these
earlier economists very rarely, if ever, lose touch with the concept of
generic serviceability as the characteristic feature of production. The
tradition derived from Adam Smith, which made productivity and
serviceability the substantial features of economic life, was not
abruptly put aside by his successors, though the emphasis was
differently distributed by them in following out the line of
investigation to which the tradition pointed the way. In the classical
economics the ideas of production and of acquisition are not commonly
held apart, and very much of what passes for a theory of production is
occupied with phenomena of investment and acquisition. Torrens's _Essay_
is a case in point, though by no means an extreme case.
This is as it should be; for to the consistent hedonist the sole motive
force concerned in the industrial process is the self-regarding motive
of pecuniary gain, and industrial activity is but an intermediate term
between the expenditure or discomfort undergone and the pecuniary gain
sought. Whether the end and outcome is an invidious gain for the
individual (in contrast with or at the cost of his neighbors), or an
enhancement of the facility of human life on the whole, is altogether a
by-question in any discussion of the range of incentives by which men
are prompted to their work or the direction which their efforts take.
The serviceability of the given line of activity, for the life purposes
of the community or for one's neighbors, "is not of the essence of this
contract." These features of serviceability come into the account
chiefly as affecting the vendibility of what the given individual has to
offer in seeking gain through a bargain.[32]
In hedonistic theory the substantial end of economic life is individual
gain; and for this purpose production and acquisition may be taken as
fairly coincident, if not identical. Moreover, society, in the
utilitarian philosophy, is the algebraic sum of the individuals; and the
interest of the society is the sum of the interests of the individuals.
It follows by easy consequence, whether strictly true or not, that the
sum of individual gains is the gain of the society, and that, in serving
his own interest in the way of acquisition, the individual serves the
collective interest of the community. Productivity or serviceability is,
therefore, to be presumed of any occupation or enterprise that looks to
a pecuniary gain; and so, by a roundabout path, we get back to the
ancient conclusion of Adam Smith, that the remuneration of classes or
persons engaged in industry coincides with their productive contribution
to the output of services and consumable goods.
A felicitous illustration of the working of this hedonistic norm in
classical economic doctrine is afforded by the theory of the wages of
superintendence,--an element in distribution which is not much more than
suggested in Adam Smith, but which receives ampler and more painstaking
attention as the classical body of doctrines reaches a fuller
development. The "wages of superintendence" are the gains due to
pecuniary management. They are the gains that come to the director of
the "business,"--not those that go to the director of the mechanical
process or to the foreman of the shop. The latter are wages simply. This
distinction is not altogether clear in the earlier writers, but it is
clearly enough contained in the fuller development of the theory.
The undertaker's work is the management of investment. It is altogether
of a pecuniary character, and its proximate aim is "the main chance." If
it leads, indirectly, to an enhancement of serviceability or a
heightened aggregate output of consumable goods, that is a fortuitous
circumstance incident to that heightened vendibility on which the
investor's gain depends. Yet the classical doctrine says frankly that
the wages of superintendence are the remuneration of superior
productivity,[33] and the classical theory of production is in good part
a doctrine of investment in which the identity of production and
pecuniary gain is taken for granted.
The substitution of investment in the place of industry as the central
and substantial fact in the process of production is due not to the
acceptance of hedonism simply, but rather to the conjunction of hedonism
with an economic situation of which the investment of capital and its
management for gain was the most obvious feature. The situation which
shaped the common-sense apprehension of economic facts at the time was
what has since been called a capitalistic system, in which pecuniary
enterprise and the phenomena of the market were the dominant and
tone-giving facts. But this economic situation was also the chief ground
for the vogue of hedonism in economics; so that hedonistic economics may
be taken as an interpretation of human nature in terms of the
market-place. The market and the "business world," to which the business
man in his pursuit of gain was required to adapt his motives, had by
this time grown so large that the course of business events was beyond
the control of any one person; and at the same time those far-reaching
organisations of invested wealth which have latterly come to prevail and
to coerce the market were not then in the foreground. The course of
market events took its passionless way without traceable relation or
deference to any man's convenience and without traceable guidance
towards an ulterior end. Man's part in this pecuniary world was to
respond with alacrity to the situation, and so adapt his vendible
effects to the shifting demand as to realise something in the outcome.
What he gained in his traffic was gained without loss to those with whom
he dealt, for they paid no more than the goods were worth to them. One
man's gain need not be another's loss; and, if it is not, then it is net
gain to the community.
Among the striking remoter effects of the hedonistic preconception, and
its working out in terms of pecuniary gain, is the classical failure to
discriminate between capital as investment and capital as industrial
appliances. This is, of course, closely related to the point already
spoken of. The appliances of industry further the production of goods,
therefore capital (invested wealth) is productive; and the rate of its
average remuneration marks the degree of its productiveness.[34] The
most obvious fact limiting the pecuniary gain secured by means of
invested wealth is the sum invested. Therefore, capital limits the
productiveness of industry; and the chief and indispensable condition to
an advance in material well-being is the accumulation of invested
wealth. In discussing the conditions of industrial improvement, it is
usual to assume that "the state of the arts remains unchanged," which
is, for all purposes but that of a doctrine of profits per cent., an
exclusion of the main fact. Investments may, further, be transferred
from one enterprise to another. Therefore, and in that degree, the means
of production are "mobile."
* * * * *
Under the hands of the great utilitarian writers, therefore, political
economy is developed into a science of wealth, taking that term in the
pecuniary sense, as things amenable to ownership. The course of things
in economic life is treated as a sequence of pecuniary events, and
economic theory becomes a theory of what should happen in that
consummate situation where the permutation of pecuniary magnitudes takes
place without disturbance and without retardation. In this consummate
situation the pecuniary motive has its perfect work, and guides all the
acts of economic man in a guileless, colorless, unswerving quest of the
greatest gain at the least sacrifice. Of course, this perfect
competitive system, with its untainted "economic man," is a feat of the
scientific imagination, and is not intended as a competent expression of
fact. It is an expedient of abstract reasoning; and its avowed
competency extends only to the abstract principles, the fundamental laws
of the science, which hold only so far as the abstraction holds. But, as
happens in such cases, having once been accepted and assimilated as
real, though perhaps not as actual, it becomes an effective constituent
in the inquirer's habits of thought, and goes to shape his knowledge of
facts. It comes to serve as a norm of substantiality or legitimacy; and
facts in some degree fall under its constraint, as is exemplified by
many allegations regarding the "tendency" of things.
To this consummation, which Senior speaks of as "the natural state of
man,"[35] human development tends by force of the hedonistic character
of human nature; and in terms of its approximation to this natural
state, therefore, the immature actual situation had best be stated. The
pure theory, the "hypothetical science" of Cairnes, "traces the
phenomena of the production and distribution of wealth up to their
causes, in the principles of human nature and the laws and
events--physical, political, and social--of the external world."[36] But
since the principles of human nature that give the outcome in men's
economic conduct, so far as it touches the production and distribution
of wealth, are but the simple and constant sequence of hedonistic cause
and effect, the element of human nature may fairly be eliminated from
the problem, with great gain in simplicity and expedition. Human nature
being eliminated, as being a constant intermediate term, and all
institutional features of the situation being also eliminated (as being
similar constants under that natural or consummate pecuniary _regime_
with which the pure theory is concerned), the laws of the phenomena of
wealth may be formulated in terms of the remaining factors. These
factors are the vendible items that men handle in these processes of
production and distribution; and economic laws come, therefore, to be
expressions of the algebraic relations subsisting between the various
elements of wealth and investment,--capital, labor, land, supply and
demand of one and the other, profits, interest, wages. Even such items
as credit and population become dissociated from the personal factor,
and figure in the computation as elemental factors acting and reacting
though a permutation of values over the heads of the good people whose
welfare they are working out.
* * * * *
To sum up: the classical economics, having primarily to do with the
pecuniary side of life, is a theory of a process of valuation. But since
the human nature at whose hands and for whose behoof the valuation takes
place is simple and constant in its reaction to pecuniary stimulus, and
since no other feature of human nature is legitimately present in
economic phenomena than this reaction to pecuniary stimulus, the valuer
concerned in the matter is to be overlooked or eliminated; and the
theory of the valuation process then becomes a theory of the pecuniary
interaction of the facts valued. It is a theory of valuation with the
element of valuation left out,--a theory of life stated in terms of the
normal paraphernalia of life.
In the preconceptions with which classical economics set out were
comprised the remnants of natural rights and of the order of nature,
infused with that peculiarly mechanical natural theology that made its
way into popular vogue on British ground during the eighteenth century
and was reduced to a neutral tone by the British penchant for the
commonplace--stronger at this time than at any earlier period. The
reason for this growing penchant for the commonplace, for the
explanation of things in causal terms, lies partly in the growing resort
to mechanical processes and mechanical prime movers in industry, partly
in the (consequent) continued decline of the aristocracy and the
priesthood, and partly in the growing density of population and the
consequent greater specialisation and wider organisation of trade and
business. The spread of the discipline of the natural sciences, largely
incident to the mechanical industry, counts in the same direction; and
obscurer factors in modern culture may have had their share.
The animistic preconception was not lost, but it lost tone; and it
partly fell into abeyance, particularly so far as regards its avowal. It
is visible chiefly in the unavowed readiness of the classical writers to
accept as imminent and definitive any possible outcome which the
writer's habit or temperament inclined him to accept as right and good.
Hence the visible inclination of classical economists to a doctrine of
the harmony of interests, and their somewhat uncircumspect readiness to
state their generalisations in terms of what ought to happen according
to the ideal requirements of that consummate _Geldwirtschaft_ to which
men "are impelled by the provisions of nature."[37] By virtue of their
hedonistic preconceptions, their habituation to the ways of a pecuniary
culture, and their unavowed animistic faith that nature is in the right,
the classical economists knew that the consummation to which, in the
nature of things, all things tend, is the frictionless and beneficent
competitive system. This competitive ideal, therefore, affords the
normal, and conformity to its requirements affords the test of absolute
economic truth. The standpoint so gained selectively guides the
attention of the classical writers in their observation and apprehension
of facts, and they come to see evidence of conformity or approach to the
normal in the most unlikely places. Their observation is, in great part,
interpretative, as observation commonly is. What is peculiar to the
classical economists in this respect is their particular norm of
procedure in the work of interpretation. And, by virtue of having
achieved a standpoint of absolute economic normality, they became a
"deductive" school, so called, in spite of the patent fact that they
were pretty consistently employed with an inquiry into the causal
sequence of economic phenomena.
The generalisation of observed facts becomes a normalisation of them, a
statement of the phenomena in terms of their coincidence with, or
divergence from, that normal tendency that makes for the actualisation
of the absolute economic reality. This absolute or definitive ground of
economic legitimacy lies beyond the causal sequence in which the
observed phenomena are conceived to be interlinked. It is related to the
concrete facts neither as cause nor as effect in any such way that the
causal relation may be traced in a concrete instance. It has little
causally to do either with the "mental" or with the "physical" data with
which the classical economist is avowedly employed. Its relation to the
process under discussion is that of an extraneous--that is to say, a
ceremonial--legitimation. The body of knowledge gained by its help and
under its guidance is, therefore, a taxonomic science.
So, by way of a concluding illustration, it may be pointed out that
money, for instance, is normalised in terms of the legitimate economic
tendency. It becomes a measure of value and a medium of exchange. It has
become primarily an instrument of pecuniary commutation, instead of
being, as under the earlier normalisation of Adam Smith, primarily a
great wheel of circulation for the diffusion of consumable goods. The
terms in which the laws of money, as of the other phenomena of pecuniary
life, are formulated, are terms which connote its normal function in the
life history of objective values as they live and move and have their
being in the consummate pecuniary situation of the "natural" state. To a
similar work of normalisation we owe those creatures of the myth-maker,
the quantity theory and the wages-fund.
FOOTNOTES:
[1] Reprinted by permission from _The Quarterly Journal of Economics_,
Vol. XIII, July. 1899.
[2] Bonar, _Philosophy and Political Economy_, pp. 177, 178.
[3] "Every individual is continually exerting himself to find out the
most advantageous employment for whatever capital he can command. It is
his own advantage, and not that of the society, which he has in view.
But the study of his own advantage naturally, or rather necessarily,
leads him to prefer that employment which is most advantageous to the
society.... By directing that industry in such a manner as its produce
may be of the greatest value, he intends only his own gain; and he is in
this, as in many other cases, led by an invisible hand to promote an end
which was no part of his intention. Nor is it always the worse for
society that it was no part of it. By pursuing his own interest he
frequently promotes that of the society more effectually than when he
really intends to promote it." _Wealth of Nations_, Book IV, chap. ii.
[4] The discrepancy between the actual, causally determined situation
and the divinely intended consummation is the metaphysical ground of all
that inculcation of morality and enlightened policy that makes up so
large a part of Adam Smith's work. The like, of course, holds true for
all moralists and reformers who proceed on the assumption of a
providential order.
[5] "In the political body, however, the wisdom of nature has
fortunately made ample provision for remedying many of the bad effects
of the folly and injustice of man; in the same manner as it has done in
the natural body, for remedying those of his sloth and intemperance."
_Wealth of Nations_, Book IV, chap. ix.
[6] _E.g._, "the real measure of the exchangeable value of all
commodities." _Wealth of Nations_, Book I, chap, v, and repeatedly in
the like connection.
[7] _E.g._, Book I, chap. vii: "When the price of any commodity is
neither more nor less than what is sufficient to pay the rent of the
land, the wages of the labor, and the profits of the stock employed in
raising, preparing, and bringing it to market, according to their
_natural_ rates, the commodity is then sold for what may be called its
_natural_ price." "The actual price at which any commodity is commonly
sold is called its market price. It may be either above, or below or
exactly the same with its natural price."
[8] _Lectures of Adam Smith_ (Ed. Cannan, 1896), p. 169.
[9] "This division of labor, from which so many advantages are derived,
is not originally the effect of any human wisdom, which foresees and
intends that general opulence to which it gives occasion. It is the
necessary though very slow and gradual consequence of a certain
propensity in human nature which has in view no such extensive
utility,--the propensity to truck, barter, and exchange one thing for
another. Whether this propensity be one of those original principles in
human nature of which no further account can be given, or whether, as
seems more probable, it be the necessary consequence of the faculties of
reason and speech, it belongs not to our present subject to inquire."
_Wealth of Nations_, Book I, chap. ii.
[10] _Wealth of Nations_, Book I, chaps, v.-vii.
[11] _Wealth of Nations_, Book I, chap. v.
[12] As, _e.g._, the entire discussion of the determination of Wages,
Profits and Rent, in Book I, chaps, viii.-xi.
[13] "There is in every society or neighborhood an ordinary or average
rate both of wages and profit in every different employment of labor and
stock. This rate is naturally regulated, ... partly by the general
circumstances of the society.... There is, likewise, in every society or
neighborhood an ordinary or average rate of rent, which is regulated,
too.... These ordinary or average rates may be called the natural rates
of wages, profit, and rent, at the time and place in which they commonly
prevail. When the price of any commodity is neither more nor less than
what is sufficient to pay the rent of the land, the wages of the labor,
and the profits of the stock employed in raising, preparing, and
bringing it to market, according to their natural rates, the commodity
is then sold for what may be called its natural price." _Wealth of
Nations_, Book I, chap. vii.
[14] "Such commodities may continue for whole centuries together to be
sold at this high price; and that part of it which resolves itself into
the rent of land is, in this case, the part which is generally paid
above its natural rate." Book I, chap. vii.
[15] _Wealth of Nations_, Book I, chap, vi; also chap. viii.
[16] For an instance of how these early phases of industrial development
appear, when not seen in the light of Adam Smith's preconception, see,
among others, Buecher, _Entstchung der Volkswirtschaft_.
[17] Book I, chap. iv.
[18] See _Wealth of Nations_, Book II, chap. v, "Of the Different
Employment of Capitals."
[19] _Wealth of Nations_, Book I, chap. v. See also the plea for free
trade, Book IV, chap. ii: "But the annual revenue of every society is
always precisely equal to the exchangeable value of the whole annual
produce of its industry, or, rather, is precisely the same thing with
that exchangeable value."
[20] "The difference of natural talents in different men is in reality
much less than we are aware of." _Wealth of Nations_, Book I, chap. ii.
[21] "Mit diesen philosophischen Ueberzeugungen tritt nun Adam Smith an
die Welt der Enfahrung heran, und es ergiebt sich ihm die Richtigkeit
der Principien. Der Reiz der Smith'schen Schriften beruht zum grossen
Teile darauf, dass Smith die Principien in so innige Verbindung mit dem
Thatsaechlichen gebracht. Hie und da werden dann auch die Principien, was
durch diese Verbindung veranlasst wird, an ihren Spitzen etwas
abgeschliffen, ihre allzuscharfe Auspraegung dadurch vermieden.
Nichtsdestoweniger aber bleiben sie stets die leitenden Grundgedanken."
Richard Zeyss, _Adam Smith und der Eigennutz_ (Tuebingen, 1889), p. 110.
[22] See, _e.g._, _Malthus and his Work_, especially Book III, as also
the chapter on Malthus in _Philosophy and Political Economy_, Book III,
Modern Philosophy: Utilitarian Economics, chap. i, "Malthus."
[23] Ricardo is here taken as a utilitarian of the Benthamite color,
although he cannot be classed as a disciple of Bentham. His hedonism is
but the uncritically accepted metaphysics comprised in the common sense
of his time, and his substantial coincidence with Bentham goes to show
how well diffused the hedonist preconception was at the time.
[24] _Cf._ Bonar, _Malthus and his Work_, pp. 323-336.
[25] His work is an inquiry into "the Nature and Causes of the Wealth of
Nations."
[26] "The annual labor of every nation is the fund which originally
supplies it with all the necessaries and conveniences of life which it
annually consumes, and which consist always either in the immediate
produce of that labor or in what is purchased with that produce from
other nations." _Wealth of Nations_, "Introduction and Plan," opening
paragraph.
[27] "The produce of the earth--all that is derived from its surface by
the united application of labor, machinery, and capital--is divided
among three classes of the community.... To determine the laws which
regulate this distribution, is the principal problem of political
economy." _Political Economy_, Preface.
[28] In the introductory essay to his edition of Ricardo's _Political
Economy_. See, _e.g._, paragraphs 9 and 24.
[29] _Theories of Production and Distribution_, 1776-1848.
[30] _Entstehung der Volkswirtschaft_ (second edition). _Cf._ especially
chaps. ii, iii, vi, and vii.
[31] "Even if we put aside all questions which involve a consideration
of the effects of industrial institutions in modifying the habits and
character of the classes of the community, ... that enough still remains
to constitute a separate science, the mere enumeration of the chief
terms of economics--wealth, value, exchange, credit, money, capital, and
commodity--will suffice to show." Shirres, _Analysis of the Ideas of
Economics_ (London, 1893), pp. 8 and 9.
[32] "If a commodity were in no way useful, ... it would be destitute of
exchangeable value; ... (but), possessing utility, commodities derive
their exchangeable value from two sources," etc. Ricardo, _Political
Economy_, chap, i, sect. I.
[33] _Cf._, for instance, Senior, _Political Economy_ (London, 1872),
particularly pp. 88, 89, and 130-135, where the wages of superintendence
are, somewhat reluctantly, classed under profits; and the work of
superintendence is thereupon conceived as being, immediately or
remotely, an exercise of "abstinence" and a productive work. The
illustration of the bill-broker is particularly apt. The like view of
the wages of superintendence is an article of theory with more than one
of the later descendants of the classical line.
[34] _Cf._ Boehm-Bawerk, _Capital and Interest_, Books II and IV, as well
as the Introduction and chaps. iv and v of Book I. Boehm-Bawerk's
discussion bears less immediately on the present point than the
similarity of the terms employed would suggest.
[35] _Political Economy_, p. 87.
[36] _Character and Logical Method of Political Economy_ (New York,
1875), p. 71. Cairnes may not be altogether representative of the high
tide of classicism, but his characterisation of the science is none the
less to the point.
[37] Senior, _Political Economy_, p. 87.
THE PRECONCEPTIONS OF ECONOMIC SCIENCE[1]
III
In what has already been said, it has appeared that the changes which
have supervened in the preconceptions of the earlier economists
constitute a somewhat orderly succession. The feature of chief interest
in this development has been a gradual change in the received grounds of
finality to which the successive generations of economists have brought
their theoretical output, on which they have been content to rest their
conclusions, and beyond which they have not been moved to push their
analysis of events or their scrutiny of phenomena. There has been a
fairly unbroken sequence of development in what may be called the canons
of economic reality; or, to put it in other words, there has been a
precession of the point of view from which facts have been handled and
valued for the purpose of economic science.
The notion which has in its time prevailed so widely, that there is in
the sequence of events a consistent trend which it is the office of the
science to ascertain and turn to account,--this notion may be well
founded or not. But that there is something of such a consistent trend
in the sequence of the canons of knowledge under whose guidance the
scientist works is not only a generalisation from the past course of
things, but lies in the nature of the case; for the canons of knowledge
are of the nature of habits of thought, and habit does not break with
the past, nor do the hereditary aptitudes that find expression in habit
vary gratuitously with the mere lapse of time. What is true in this
respect, for instance, in the domain of law and institutions is true,
likewise, in the domain of science. What men have learned to accept as
good and definitive for the guidance of conduct and of human relations
remains true and definitive and unimpeachable until the exigencies of a
later, altered situation enforce a variation from the norms and canons
of the past, and so give rise to a modification of the habits of thought
that decide what is, for the time, right in human conduct. So in science
the ancient ground of finality remains a good and valid test of
scientific truth until the altered exigencies of later life enforce
habits of thought that are not wholly in consonance with the received
notions as to what constitutes the ultimate, self-legitimating term--the
substantial reality--to which knowledge in any given case must
penetrate.
This ultimate term or ground of knowledge is always of a metaphysical
character. It is something in the way of a preconception, accepted
uncritically, but applied in criticism and demonstration of all else
with which the science is concerned. So soon as it comes to be
criticised, it is in a way to be superseded by a new, more or less
altered formulation; for criticism of it means that it is no longer fit
to survive unaltered in the altered complex of habits of thought to
which it is called upon to serve as fundamental principle. It is subject
to natural selection and selective adaptation, as are other conventions.
The underlying metaphysics of scientific research and purpose,
therefore, changes gradually and, of course, incompletely, much as is
the case with the metaphysics underlying the common law and the schedule
of civil rights. As in the legal framework the now avowedly useless and
meaningless preconceptions of status and caste and precedent are even
yet at the most metamorphosed and obsolescent rather than
overpassed,--witness the facts of inheritance, vested interests, the
outlawry of debts through lapse of time, the competence of the State to
coerce individuals into support of a given policy,--so in the science
the living generation has not seen an abrupt and traceless disappearance
of the metaphysics that fixed the point of view of the early classical
political economy. This is true even for those groups of economists who
have most incontinently protested against the absurdity of the classical
doctrines and methods. In Professor Marshall's words, "There has been no
real breach of continuity in the development of the science."
But, while there has been no breach, there has none the less been
change,--more far-reaching change than some of us are glad to recognise;
for who would not be glad to read his own modern views into the
convincing words of the great masters?
Seen through modern eyes and without effort to turn past gains to modern
account, the metaphysical or preconceptional furniture of political
economy as it stood about the middle of this century may come to look
quite curious. The two main canons of truth on which the science
proceeded, and with which the inquiry is here concerned, were: (_a_) a
hedonistic-associational psychology, and (_b_) an uncritical conviction
that there is a meliorative trend in the course of events, apart from
the conscious ends of the individual members of the community. This
axiom of a meliorative developmental trend fell into shape as a belief
in an organic or quasi-organic (physiological)[2] life process on the
part of the economic community or of the nation; and this belief carried
with it something of a constraining sense of self-realising cycles of
growth, maturity and decay in the life history of nations or
communities.
Neglecting what may for the immediate purpose be negligible in this
outline of fundamental tenets, it will bear the following construction.
(_a_) On the ground of the hedonistic or associational psychology, all
spiritual continuity and any consequent teleological trend is tacitly
denied so far as regards individual conduct, where the later psychology,
and the sciences which build on this later psychology, insist upon and
find such a teleological trend at every turn. (_b_) Such a spiritual or
quasi-spiritual continuity and teleological trend is uncritically
affirmed as regards the non-human sequence or the sequence of events in
the affairs of collective life, where the modern sciences diligently
assert that nothing of the kind is discernible, or that, if it is
discernible, its recognition is beside the point, so far as concerns the
purposes of the science.
This position, here outlined with as little qualification as may be
admissible, embodies the general metaphysical ground of that classical
political economy that affords the point of departure for Mill and
Cairnes, and also for Jevons. And what is to be said of Mill and Cairnes
in this connection will apply to the later course of the science, though
with a gradually lessening force.
By the middle of the century the psychological premises of the science
are no longer so neat and succinct as they were in the days of Bentham
and James Mill. At J. S. Mill's hands, for instance, the naively
quantitative hedonism of Bentham is being supplanted by a sophisticated
hedonism, which makes much of an assumed qualitative divergence between
the different kinds of pleasures that afford the motives of conduct.
This revision of hedonistic dogma, of course, means a departure from the
strict hedonistic ground. Correlated with this advance more closely in
the substance of the change than in the assignable dates, is a
concomitant improvement--at least, set forth as an improvement--upon the
received associational psychology, whereby "similarity" is brought in to
supplement "contiguity" as a ground of connection between ideas. This
change is well shown in the work of J. S. Mill and Bain. In spite of all
the ingenuity spent in maintaining the associational legitimacy of this
new article of theory, it remains a patent innovation and a departure
from the ancient standpoint. As is true of the improved hedonism, so it
is true of the new theory of association that it is no longer able to
construe the process which it discusses as a purely mechanical process,
a concatenation of items simply. Similarity of impressions implies a
comparison of impressions by the mind in which the association takes
place, and thereby it implies some degree of constructive work on the
part of the perceiving subject. The perceiver is thereby construed to be
an agent in the work of perception; therefore, he must be possessed of a
point of view and an end dominating the perceptive process. To perceive
the similarity, he must be guided by an interest in the outcome, and
must "attend." The like applies to the introduction of qualitative
distinctions into the hedonistic theory of conduct. Apperception in the
one case and discretion in the other cease to be the mere registration
of a simple and personally uncolored sequence of permutations enforced
by the factors of the external world. There is implied a spiritual--that
is to say, active--"teleological" continuity of process on the part of
the perceiving or of the discretionary agent, as the case may be.
It is on the ground of their departure from the stricter hedonistic
premises that Mill and, after him, Cairnes are able, for instance, to
offer their improvement upon the earlier doctrine of cost of production
as determining value. Since it is conceived that the motives which guide
men in their choice of employments and of domicile differ from man to
man and from class to class, not only in degree, but in kind, and since
varying antecedents, of heredity and of habit, variously influence men
in their choice of a manner of life, therefore the mere quantitative
pecuniary stimulus cannot be depended on to decide the outcome without
recourse. There are determinable variations in the alacrity with which
different classes or communities respond to the pecuniary stimulus; and
in so far as this condition prevails, the classes or communities in
question are non-competing. Between such non-competing groups the norm
that determines values is not the unmitigated norm of cost of production
taken absolutely, but only taken relatively. The formula of cost of
production is therefore modified into a formula of reciprocal demand.
This revision of the cost-of-production doctrine is extended only
sparingly, and the emphasis is thrown on the pecuniary circumstances on
which depend the formation and maintenance of non-competing groups.
Consistency with the earlier teaching is carefully maintained, so far as
may be; but extra-pecuniary factors are, after all, even if reluctantly,
admitted into the body of the theory. So also, since there are higher
and lower motives, higher and lower pleasures,--as well as motives
differing in degree,--it follows that an unguided response even to the
mere quantitative pecuniary stimuli may take different directions, and
so may result in activities of widely differing outcome. Since
activities set up in this way through appeal to higher and lower motives
are no longer conceived to represent simply a mechanically adequate
effect of the stimuli, working under the control of natural laws that
tend to one beneficent consummation, therefore the outcome of activity
set up even by the normal pecuniary stimuli may take a form that may or
may not be serviceable to the community. Hence _laissez-faire_ ceases to
be a sure remedy for the ills of society. Human interests are still
conceived normally to be at one; but the detail of individual conduct
need not, therefore, necessarily serve these generic human interests.[3]
Therefore, other inducements than the unmitigated impact of pecuniary
exigencies may be necessary to bring about a coincidence of class or
individual endeavor with the interests of the community. It becomes
incumbent on the advocate of _laissez-faire_ to "prove his minor
premise." It is no longer self-evident that: "Interests left to
themselves tend to harmonious combinations, and to the progressive
preponderance of the general good."[4]
The natural-rights preconception begins to fall away as soon as the
hedonistic mechanics have been seriously tampered with. Fact and right
cease to coincide, because the individual in whom the rights are
conceived to inhere has come to be something more than the field of
intersection of natural forces that work out in human conduct. The
mechanics of natural liberty--that assumed constitution of things by
force of which the free hedonistic play of the laws of nature across the
open field of individual choice is sure to reach the right outcome--is
the hedonistic psychology; and the passing of the doctrine of natural
rights and natural liberty, whether as a premise or as a dogma,
therefore coincides with the passing of that mechanics of conduct on the
validity of which the theoretical acceptance of the dogma depends. It
is, therefore, something more than a coincidence that the half-century
which has seen the disintegration of the hedonistic faith and of the
associational psychology has also seen the dissipation, in scientific
speculations, of the concomitant faith in natural rights and in that
benign order of nature of which the natural-rights dogma is a corollary.
It is, of course, not hereby intended to say that the later
psychological views and premises imply a less close dependence of
conduct on environment than do the earlier ones. Indeed, the reverse may
well be held to be true. The pervading characteristic of later thinking
is the constant recourse to a detailed analysis of phenomena in causal
terms. The modern catchword, in the present connection, is "response to
stimulus"; but the manner in which this response is conceived has
changed. The fact, and ultimately the amplitude, at least in great part,
of the reaction to stimulus, is conditioned by the forces in impact; but
the constitution of the organism, as well as its attitude at the moment
of impact, in great part decides what will serve as a stimulus, as well
as what the manner and direction of the response will be.
The later psychology is biological, as contrasted with the metaphysical
psychology of hedonism. It does not conceive the organism as a causal
hiatus. The causal sequence in the "reflex arc" is, no doubt,
continuous; but the continuity is not, as formerly, conceived in terms
of spiritual substance transmitting a shock: it is conceived in terms of
the life activity of the organism. Human conduct, taken as the reaction
of such an organism under stimulus, may be stated in terms of tropism,
involving, of course, a very close-knit causal sequence between the
impact and the response, but at the same time imputing to the organism a
habit of life and a self-directing and selective attention in meeting
the complex of forces that make up its environment. The selective play
of this tropismatic complex that constitutes the organism's habit of
life under the impact of the forces of the environment counts as
discretion.
So far, therefore, as it is to be placed in contrast with the hedonistic
phase of the older psychological doctrines, the characteristic feature
of the newer conception is the recognition of a selectively
self-directing life process in the agent. While hedonism seeks the
causal determinant of conduct in the (probable) outcome of action, the
later conception seeks this determinant in the complex of propensities
that constitutes man a functioning agent, that is to say, a personality.
Instead of pleasure ultimately determining what human conduct shall be,
the tropismatic propensities that eventuate in conduct ultimately
determine what shall be pleasurable. For the purpose in hand, the
consequence of the transition to the altered conception of human nature
and its relation to the environment is that the newer view formulates
conduct in terms of personality, whereas the earlier view was content to
formulate it in terms of its provocation and its by-product. Therefore,
for the sake of brevity, the older preconceptions of the science are
here spoken of as construing human nature in inert terms, as contrasted
with the newer, which construes it in terms of functioning.
It has already appeared above that the second great article of the
metaphysics of classical political economy--the belief in a meliorative
trend or a benign order of nature--is closely connected with the
hedonistic conception of human nature; but this connection is more
intimate and organic than appears from what has been said above. The two
are so related as to stand or fall together, for the latter is but the
obverse of the former. The doctrine of a trend in events imputes purpose
to the sequence of events; that is, it invests this sequence with a
discretionary, teleological character, which asserts itself in a
constraint over all the steps in the sequence by which the supposed
objective point is reached. But discretion touching a given end must be
single, and must alone cover all the acts by which the end is to be
reached. Therefore, no discretion resides in the intermediate terms
through which the end is worked out. Therefore, man being such an
intermediate term, discretion cannot be imputed to him without violating
the supposition. Therefore, given an indefeasible meliorative trend in
events, man is but a mechanical intermediary in the sequence. It is as
such a mechanical intermediate term that the stricter hedonism construes
human nature.[5] Accordingly, when more of teleological activity came to
be imputed to man, less was thereby allowed to the complex of events. Or
it may be put in the converse form: When less of a teleological
continuity came to be imputed to the course of events, more was thereby
imputed to man's life process. The latter form of statement probably
suggests the direction in which the causal relation runs, more nearly
than the former. The change whereby the two metaphysical premises in
question have lost their earlier force and symmetry, therefore, amounts
to a (partial) shifting of the seat of putative personality from
inanimate phenomena to man.
It may be mentioned in passing, as a detail lying perhaps afield, yet
not devoid of significance for latter-day economic speculation, that
this elimination of personality, and so of teleological content, from
the sequence of events, and its increasing imputation to the conduct of
the human agent, is incident to a growing resort to an apprehension of
phenomena in terms of process rather than in terms of outcome, as was
the habit in earlier schemes of knowledge. On this account the
categories employed are, in a gradually increasing degree, categories of
process,--"dynamic" categories. But categories of process applied to
conduct, to discretionary action, are teleological categories: whereas
categories of process applied in the case of a sequence where the
members of the sequence are not conceived to be charged with discretion,
are, by the force of this conception itself, non-teleological,
quantitative categories. The continuity comprised in the concept of
process as applied to conduct is consequently a spiritual, teleological
continuity: whereas the concept of process under the second head, the
non-teleological sequence, comprises a continuity of a quantitative,
causal kind, substantially the conservation of energy. In its turn the
growing resort to categories of process in the formulation of knowledge
is probably due to the epistemological discipline of modern mechanical
industry, the technological exigencies of which enforce a constant
recourse to the apprehension of phenomena in terms of process, differing
therein from the earlier forms of industry, which neither obtruded
visible mechanical process so constantly upon the apprehension nor so
imperatively demanded an articulate recognition of continuity in the
processes actually involved. The contrast in this respect is still more
pronounced between the discipline of modern life in an industrial
community and the discipline of life under the conventions of status and
exploit that formerly prevailed.
To return to the benign order of nature, or the meliorative trend,--its
passing, as an article of economic faith, was not due to criticism
leveled against it by the later classical economists on grounds of its
epistemological incongruity. It was tried on its merits, as an alleged
account of facts; and the weight of evidence went against it. The belief
in a self-realising trend had no sooner reached a competent and
exhaustive statement--_e.g._, at Bastiat's hands, as a dogma of the
harmony of interests specifically applicable to the details of economic
life--than it began to lose ground. With his usual concision and
incisiveness, Cairnes completed the destruction of Bastiat's special
dogma, and put it forever beyond a rehearing. But Cairnes is not a
destructive critic of the classical political economy, at least not in
intention: he is an interpreter and continuer--perhaps altogether the
clearest and truest continuer--of the classical teaching. While he
confuted Bastiat and discredited Bastiat's peculiar dogma, he did not
thereby put the order of nature bodily out of the science. He qualified
and improved it, very much as Mill qualified and improved the tenets of
the hedonistic psychology. As Mill and the ethical speculation of his
generation threw more of personality into the hedonistic psychology, so
Cairnes and the speculators on scientific method (such as Mill and
Jevons) attenuated the imputation of personality or teleological content
to the process of material cause and effect. The work is of course, by
no means, an achievement of Cairnes alone; but he is, perhaps, the best
exponent of this advance in economic theory. In Cairnes's redaction this
foundation of the science became the concept of a colorless normality.
It was in Cairnes's time the fashion for speculators in other fields
than the physical sciences to look to those sciences for guidance in
method and for legitimation of the ideals of scientific theory which
they were at work to realize. More than that, the large and fruitful
achievements of the physical sciences had so far taken men's attention
captive as to give an almost instinctive predilection for the methods
that had approved themselves in that field. The ways of thinking which
had on this ground become familiar to all scholars occupied with any
scientific inquiry, had permeated their thinking on any subject
whatever. This is eminently true of British thinking.
It had come to be a commonplace of the physical sciences that "natural
laws" are of the nature of empirical generalisations simply, or even of
the nature of arithmetical averages. Even the underlying preconception
of the modern physical sciences--the law of the conservation of energy,
or persistence of quantity--was claimed to be an empirical
generalisation, arrived at inductively and verified by experiment. It is
true the alleged proof of the law took the whole conclusion for granted
at the start, and used it constantly as a tacit axiom at every step in
the argument which was to establish its truth; but that fact serves
rather to emphasise than to call in question the abiding faith which
these empiricists had in the sole efficacy of empirical generalisation.
Had they been able overtly to admit any other than an associational
origin of knowledge, they would have seen the impossibility of
accounting on the mechanical grounds of association for the premise on
which all experience of mechanical fact rests. That any other than a
mechanical origin should be assigned to experience, or that any other
than a so-conceived empirical ground was to be admitted for any general
principle, was incompatible with the prejudices of men trained in the
school of the associational psychology, however widely they perforce
departed from this ideal in practice. Nothing of the nature of a
personal element was to be admitted into these fundamental empirical
generalisations; and nothing, therefore, of the nature of a
discretionary or teleological movement was to be comprised in the
generalisations to be accepted as "natural laws." Natural laws must in
no degree be imbued with personality, must say nothing of an ulterior
end; but for all that they remained "laws" of the sequences subsumed
under them. So far is the reduction to colorless terms carried by Mill,
for instance, that he formulates the natural laws as empirically
ascertained sequences simply, even excluding or avoiding all imputation
of causal continuity, as that term is commonly understood by the
unsophisticated. In Mill's ideal no more of organic connection or
continuity between the members of a sequence is implied in subsuming
them under a law of causal relationship than is given by the ampersand.
He is busied with dynamic sequences, but he persistently confines
himself to static terms.
Under the guidance of the associational psychology, therefore, the
extreme of discontinuity in the deliverances of inductive research is
aimed at by those economists--Mill and Cairnes being taken as
typical--whose names have been associated with deductive methods in
modern science. With a fine sense of truth they saw that the notion of
causal continuity, as a premise of scientific generalisation, is an
essentially metaphysical postulate; and they avoided its treacherous
ground by denying it, and construing causal sequence to mean a
uniformity of coexistences and successions simply. But, since a strict
uniformity is nowhere to be observed at first hand in the phenomena with
which the investigator is occupied, it has to be found by a laborious
interpretation of the phenomena and a diligent abstraction and allowance
for disturbing circumstances, whatever may be the meaning of a
disturbing circumstance where causal continuity is denied. In this work
of interpretation and expurgation the investigator proceeds on a
conviction of the orderliness of the natural sequence. "Natura non facit
saltum": a maxim which has no meaning within the stricter limits of the
associational theory of knowledge.
Before anything can be said as to the orderliness of the sequence, a
point of view must be chosen by the speculator, with respect to which
the sequence in question does or does not fulfill this condition of
orderliness; that is to say, with respect to which it is a sequence. The
endeavor to avoid all metaphysical premises fails here as everywhere.
The associationists, to whom economics owes its transition from the
older classical phase to the modern or quasi-classical, chose as their
guiding point of view the metaphysical postulate of congruity,--in
substance, the "similarity" of the associationist theory of knowledge.
This must be called their _proton pseudos_, if associationism pure and
simple is to be accepted. The notion of congruity works out in laws of
resemblance and equivalence, in both of which it is plain to the modern
psychologist that a metaphysical ground of truth, antecedent to and
controlling empirical data, is assumed. But the use of the postulate of
congruence as a test of scientific truth has the merit of avoiding all
open dealing with an imputed substantiality of the data handled, such as
would be involved in the overt use of the concept of causation. The
data are congruous among themselves, as items of knowledge; and they may
therefore be handled in a logical synthesis and concatenation on the
basis of this congruence alone, without committing the scientist to an
imputation of a kinetic or motor relation between them. The metaphysics
of process is thereby avoided, in appearance. The sequences are uniform
or consistent with one another, taken as articles of theoretical
synthesis simply; and so they become elements of a system or discipline
of knowledge in which the test of theoretical truth is the congruence of
the system with its premises.
In all this there is a high-wrought appearance of matter-of-fact, and
all metaphysical subreption of a non-empirical or non-mechanical
standard of reality or substantiality is avoided in appearance. The
generalisations which make up such a system of knowledge are, in this
way, stated in terms of the system itself; and when a competent
formulation of the alleged uniformities has been so made in terms of
their congruity or equivalence with the prime postulates of the system,
the work of theoretical inquiry is done.
The concrete premises from which proceeds the systematic knowledge of
this generation of economists are certain very concise assumptions
concerning human nature, and certain slightly less concise
generalisations of physical fact,[6] presumed to be mechanically
empirical generalisations. These postulates afford the standard of
normality. Whatever situation or course of events can be shown to
express these postulates without mitigation is normal; and wherever a
departure from this normal course of things occurs, it is due to
disturbing causes,--that is to say, to causes not comprised in the main
premises of the science,--and such departures are to be taken account
of by way of qualification. Such departures and such qualification are
constantly present in the facts to be handled by the science; but, being
not congruous with the underlying postulates, they have no place in the
body of the science. The laws of the science, that which makes up the
economist's theoretical knowledge, are laws of the normal case. The
normal case does not occur in concrete fact. These laws are, therefore,
in Cairnes's terminology, "hypothetical" truths; and the science is a
"hypothetical" science. They apply to concrete facts only as the facts
are interpreted and abstracted from, in the light of the underlying
postulates. The science is, therefore, a theory of the normal case, a
discussion of the concrete facts of life in respect of their degree of
approximation to the normal case. That is to say, it is a taxonomic
science.
Of course, in the work actually done by these economists this standpoint
of rigorous normality is not consistently maintained; nor is the
unsophisticated imputation of causality to the facts under discussion
consistently avoided. The associationist postulate, that causal sequence
means empirical uniformity simply, is in great measure forgotten when
the subject-matter of the science is handled in detail. Especially is it
true that in Mill the dry light of normality is greatly relieved by a
strong common sense. But the great truths or laws of the science remain
hypothetical laws; and the test of scientific reality is congruence with
the hypothetical laws, not coincidence with matter-of-fact events.
The earlier, more archaic metaphysics of the science, which saw in the
orderly correlation and sequence of events a constraining guidance of an
extra-causal, teleological kind, in this way becomes a metaphysics of
normality which asserts no extra-causal constraint over events, but
contents itself with establishing correlations, equivalencies,
homologies, and theories concerning the conditions of an economic
equilibrium. The movement, the process of economic life, is not
overlooked, and it may even be said that it is not neglected; but the
pure theory, in its final deliverances, deals not with the dynamics, but
with the statics of the case. The concrete subject-matter of the science
is, of course, the process of economic life,--that is unavoidably the
case,--and in so far the discussion must be accepted as work bearing on
the dynamics of the phenomena discussed; but even then it remains true
that the aim of this work in dynamics is a determination and taxis of
the outcome of the process under discussion rather than a theory of the
process as such. The process is rated in terms of the equilibrium to
which it tends or should tend, not conversely. The outcome of the
process, taken in its relation of equivalence within the system, is the
point at which the inquiry comes to rest. It is not primarily the point
of departure for an inquiry into what may follow. The science treats of
a balanced system rather than of a proliferation. In this lies its
characteristic difference from the later evolutionary sciences. It is
this characteristic bent of the science that leads its spokesman,
Cairnes, to turn so kindly to chemistry rather than to the organic
sciences, when he seeks an analogy to economics among the physical
sciences.[7] What Cairnes has in mind in his appeal to chemistry is, of
course, the received, extremely taxonomic (systematic) chemistry of his
own time, not the tentatively genetic theories of a slightly later day.
* * * * *
It may seem that in the characterisation just offered of the standpoint
of normality in economics there is too strong an implication of
colorlessness and impartiality. The objection holds as regards much of
the work of the modern economists of the classical line. It will hold
true even as to much of Cairnes's work; but it cannot be admitted as
regards Cairnes's ideal of scientific aim and methods. The economists
whose theories Cairnes received and developed, assuredly did not pursue
the discussion of the normal case with an utterly dispassionate animus.
They had still enough of the older teleological metaphysics left to give
color to the accusation brought against them that they were advocates of
_laissez-faire_. The preconception of the utilitarians,--in substance
the natural-rights preconception,--that unrestrained human conduct will
result in the greatest human happiness, retains so much of its force in
Cairnes's time as is implied in the then current assumption that what is
normal is also right. The economists, and Cairnes among them, not only
are concerned to find out what is normal and to determine what
consummation answers to the normal, but they also are at pains to
approve that consummation. It is this somewhat uncritical and often
unavowed identification of the normal with the right that gives
colorable ground for the widespread vulgar prejudice, to which Cairnes
draws attention,[8] that political economy "sanctions" one social
arrangement and "condemns" another. And it is against this uncritical
identification of two essentially unrelated principles or categories
that Cairnes's essay on "Political Economy and Laissez-faire," and in
good part also that on Bastiat, are directed. But, while this is one of
the many points at which Cairnes has substantially advanced the ideals
of the science, his own concluding argument shows him to have been but
half-way emancipated from the prejudice, even while most effectively
combating it.[9] It is needless to point out that the like prejudice is
still present in good vigor in many later economists who have had the
full benefit of Cairnes's teachings on this head.[10] Considerable as
Cairnes's achievement in this matter undoubtedly was, it effected a
mitigation rather than an elimination of the untenable metaphysics
against which he contended.
The advance in the general point of view from animistic teleology to
taxonomy is shown in a curiously succinct manner in a parenthetical
clause of Cairnes's in the chapter on Normal Value.[11] With his
acceptance of the later point of view involved in the use of the new
term, Cairnes becomes the interpreter of the received theoretical
results. The received positions are not subjected to a destructive
criticism. The aim is to complete them where they fall short and to cut
off what may be needless or what may run beyond the safe ground of
scientific generalisation. In his work of redaction, Cairnes does not
avow--probably he is not sensible of--any substantial shifting of the
point of view or any change in the accepted ground of theoretic reality.
But his advance to an unteleological taxonomy none the less changes the
scope and aim of his theoretical discussion. The discussion of Normal
Value may be taken in illustration.
Cairnes is not content to find (with Adam Smith) that value will
"naturally" coincide with or be measured by cost of production, or even
(with Mill) that cost of production must, in the long run, "necessarily"
determine value. "This ... is to take a much too limited view of the
range of this phenomenon."[12] He is concerned to determine not only
this general tendency of values to a normal, but all those
characteristic circumstances as well which condition this tendency and
which determine the normal to which values tend. His inquiry pursues the
phenomena of value in a normal economic system rather than the manner
and rate of approach of value relations to a teleologically or
hedonistically defensible consummation. It therefore becomes an
exhaustive but very discriminating analysis of the circumstances that
bear upon market values, with a view to determine what circumstances are
normally present; that is to say, what circumstances conditioning value
are commonly effective and at the same time in consonance with the
premises of economic theory. These effective conditions, in so far as
they are not counted anomalous and, therefore, to be set aside in the
theoretical discussion, are the circumstances under which a hedonistic
valuation process in any modern industrial community is held perforce to
take place,--the circumstances which are held to enforce a recognition
and rating of the pleasure-bearing capacity of facts. They are not, as
under the earlier cost-of-production doctrines, the circumstances which
determine the magnitude of the forces spent in the production of the
valuable article. Therefore, the normal (natural) value is no longer (as
with Adam Smith, and even to some extent with his classical successors)
the primary or initial fact in value theory, the substantial fact of
which the market value is an approximate expression and by which the
latter is controlled. The argument does not, as formerly, set out from
that expenditure of personal force which was once conceived to
constitute the substantial value of goods, and then construe market
value to be an approximate and uncertain expression of this substantial
fact. The direction in which the argument runs is rather the reverse of
this. The point of departure is taken from the range of market values
and the process of bargaining by which these values are determined. This
latter is taken to be a process of discrimination between various kinds
and degrees of discomfort, and the average or consistent outcome of such
a process of bargaining constitutes normal value. It is only by virtue
of a presumed equivalence between the discomfort undergone and the
concomitant expenditure, whether of labor or of wealth, that the normal
value so determined is conceived to be an expression of the productive
force that goes into the creation of the valuable goods. Cost being only
in uncertain equivalence with sacrifice or discomfort, as between
different persons, the factor of cost falls into the background; and the
process of bargaining, which is in the foreground, being a process of
valuation, a balancing of individual demand and supply, it follows that
a law of reciprocal demand comes in to supplant the law of cost. In all
this the proximate causes at work in the determination of values are
plainly taken account of more adequately than in earlier
cost-of-production doctrines; but they are taken account of with a view
to explaining the mutual adjustment and interrelation of elements in a
system rather than to explain either a developmental sequence or the
working out of a foreordained end.
This revision of the cost-of-production doctrine, whereby it takes the
form of a law of reciprocal demand, is in good part effected by a
consistent reduction of cost to terms of sacrifice,--a reduction more
consistently carried through by Cairnes than it had been by earlier
hedonists, and extended by Cairnes's successors with even more
far-reaching results. By this step the doctrine of cost is not only
brought into closer accord with the neo-hedonistic premises, in that it
in a greater degree throws the stress upon the factor of personal
discrimination, but it also gives the doctrine a more general bearing
upon economic conduct and increases its serviceability as a
comprehensive principle for the classification of economic phenomena. In
the further elaboration of the hedonistic theory of value at the hands
of Jevons and the Austrians the same principle of sacrifice comes to
serve as the chief ground of procedure.
* * * * *
Of the foundations of later theory, in so far as the postulates of later
economists differ characteristically from those of Mill and Cairnes,
little can be said in this place. Nothing but the very general features
of the later development can be taken up; and even these general
features of the existing theoretic situation can not be handled with the
same confidence as the corresponding features of a past phase of
speculation. With respect to writers of the present or the more recent
past the work of natural selection, as between variants of scientific
aim and animus and between more or less divergent points of view, has
not yet taken effect; and it would be over-hazardous to attempt an
anticipation of the results of the selection that lies in great part yet
in the future. As regards the directions of theoretical work suggested
by the names of Professor Marshall, Mr. Cannan, Professor Clark, Mr.
Pierson, Professor Loria, Professor Schmoller, the Austrian group,--no
off-hand decision is admissible as between these candidates for the
honor, or, better, for the work, of continuing the main current of
economic speculation and inquiry. No attempt will here be made even to
pass a verdict on the relative claims of the recognised two or three
main "schools" of theory, beyond the somewhat obvious finding that, for
the purpose in hand, the so-called Austrian school is scarcely
distinguishable from the neo-classical, unless it be in the different
distribution of emphasis. The divergence between the modernised
classical views, on the one hand, and the historical and Marxist
schools, on the other hand, is wider,--so much so, indeed, as to bar out
a consideration of the postulates of the latter under the same head of
inquiry with the former. The inquiry, therefore, confines itself to the
one line standing most obviously in unbroken continuity with that body
of classical economics whose life history has been traced in outline
above. And, even for this phase of modernised classical economics, it
seems necessary to limit discussion, for the present, to a single
strain, selected as standing peculiarly close to the classical source,
at the same time that it shows unmistakable adaptation to the later
habits of thought and methods of knowledge.
For this later development in the classical line of political economy,
Mr. Keynes's book may fairly be taken as the maturest exposition of the
aims and ideals of the science; while Professor Marshall excellently
exemplifies the best work that is being done under the guidance of the
classical antecedents. As, after a lapse of a dozen or fifteen years
from Cairnes's days of full conviction, Mr. Keynes interprets the aims
of modern economic science, it has less of the "hypothetical" character
assigned it by Cairnes; that is to say, it confines its inquiry less
closely to the ascertainment of the normal case and the interpretative
subsumption of facts under the normal. It takes fuller account of the
genesis and developmental continuity of all features of modern economic
life, gives more and closer attention to institutions and their history.
This is, no doubt, due, in part at least, to impulse received from
German economists; and in so far it also reflects the peculiarly vague
and bewildered attitude of protest that characterises the earlier
expositions of the historical school. To the same essentially extraneous
source is traceable the theoretic blur embodied in Mr. Keynes's attitude
of tolerance towards the conception of economics as a "normative"
science having to do with "economic ideals," or an "applied economics"
having to do with "economic precepts."[13] An inchoate departure from
the consistent taxonomic ideals shows itself in the tentative resort to
historical and genetic formulations, as well as in Mr. Keynes's
pervading inclination to define the scope of the science, not by
exclusion of what are conceived to be non-economic phenomena, but by
disclosing a point of view from which all phenomena are seen to be
economic facts. The science comes to be characterised not by the
delimitation of a range of facts, as in Cairnes,[14] but as an inquiry
into the bearing which all facts have upon men's economic activity. It
is no longer that certain phenomena belong within the science, but
rather that the science is concerned with any and all phenomena as seen
from the point of view of the economic interest. Mr. Keynes does not go
fully to the length which this last proposition indicates. He finds[15]
that political economy "treats of the phenomena arising out of the
economic activities of mankind in society"; but, while the discussion by
which he leads up to this definition might be construed to say that all
the activities of mankind in society have an economic bearing, and
should therefore come within the view of the science, Mr. Keynes does
not carry out his elucidation of the matter to that broad conclusion.
Neither can it be said that modern political economy has, in practice,
taken on the scope and character which this extreme position would
assign it.
The passage from which the above citation is taken is highly significant
also in another and related bearing, and it is at the same time highly
characteristic of the most effective modernised classical economics. The
subject-matter of the science has come to be the "economic activities"
of mankind, and the phenomena in which these activities manifest
themselves. So Professor Marshall's work, for instance, is, in aim, even
if not always in achievement, a theoretical handling of human activity
in its economic bearing,--an inquiry into the multiform phases and
ramifications of that process of valuation of the material means of life
by virtue of which man is an economic agent. And still it remains an
inquiry directed to the determination of the conditions of an
equilibrium of activities and a quiescent normal situation. It is not in
any eminent degree an inquiry into cultural or institutional development
as affected by economic exigencies or by the economic interest of the
men whose activities are analysed and portrayed. Any sympathetic reader
of Professor Marshall's great work--and that must mean every
reader--comes away with a sense of swift and smooth movement and
interaction of parts; but it is the movement of a consummately conceived
and self-balanced mechanism, not that of a cumulatively unfolding
process or an institutional adaptation to cumulatively unfolding
exigencies. The taxonomic bearing is, after all, the dominant feature.
It is significant of the same point that even in his discussion of such
vitally dynamic features of the economic process as the differential
effectiveness of different laborers or of different industrial plants,
as well as of the differential advantages of consumers, Professor
Marshall resorts to an adaptation of so essentially taxonomic a category
as the received concept of rent. Rent is a pecuniary category, a
category of income, which is essentially a final term, not a category of
the motor term, work or interest.[16] It is not a factor or a feature of
the process of industrial life, but a phenomenon of the pecuniary
situation which emerges from this process under given conventional
circumstances. However far-reaching and various the employment of the
rent concept in economic theory has been, it has through all
permutations remained, what it was to begin with, a rubric in the
classification of incomes. It is a pecuniary, not an industrial
category. In so far as resort is had to the rent concept in the
formulation of a theory of the industrial process,--as in Professor
Marshall's work,--it comes to a statement of the process in terms of its
residue. Let it not seem presumptuous to say that, great and permanent
as is the value of Professor Marshall's exposition of quasi-rents and
the like, the endeavor which it involves to present in terms of a
concluded system what is of the nature of a fluent process has made the
exposition unduly bulky, unwieldy, and inconsequent.
There is a curious reminiscence of the perfect taxonomic day in Mr.
Keynes's characterisation of political economy as a "positive science,"
"the sole province of which is to establish economic uniformities";[17]
and, in this resort to the associationist expedient of defining a
natural law as a "uniformity," Mr. Keynes is also borne out by Professor
Marshall.[18] But this and other survivals of the taxonomic terminology,
or even of the taxonomic canons of procedure, do not hinder the
economists of the modern school from doing effective work of a character
that must be rated as genetic rather than taxonomic. Professor
Marshall's work in economics is not unlike that of Asa Gray in botany,
who, while working in great part within the lines of "systematic botany"
and adhering to its terminology, and on the whole also to its point of
view, very materially furthered the advance of the science outside the
scope of taxonomy.
Professor Marshall shows an aspiration to treat economic life as a
development; and, at least superficially, much of his work bears the
appearance of being a discussion of this kind. In this endeavor his work
is typical of what is aimed at by many of the later economists. The aim
shows itself with a persistent recurrence in his _Principles_. His
chosen maxim is, "Natura non facit saltum,"--a maxim that might well
serve to designate the prevailing attitude of modern economists towards
questions of economic development as well as towards questions of
classification or of economic policy. His insistence on the continuity
of development and of the economic structure of communities is a
characteristic of the best work along the later line of classical
political economy. All this gives an air of evolutionism to the work.
Indeed, the work of the neo-classical economics might be compared,
probably without offending any of its adepts, with that of the early
generation of Darwinians, though such a comparison might somewhat
shrewdly have to avoid any but superficial features. Economists of the
present day are commonly evolutionists, in a general way. They commonly
accept, as other men do, the general results of the evolutionary
speculation in those directions in which the evolutionary method has
made its way. But the habit of handling by evolutionist methods the
facts with which their own science is concerned has made its way among
the economists to but a very uncertain degree.
The prime postulate of evolutionary science, the preconception
constantly underlying the inquiry, is the notion of a cumulative causal
sequence; and writers on economics are in the habit of recognising that
the phenomena with which they are occupied are subject to such a law of
development. Expressions of assent to this proposition abound. But the
economists have not worked out or hit upon a method by which the inquiry
in economics may consistently be conducted under the guidance of this
postulate. Taking Professor Marshall as exponent, it appears that, while
the formulations of economic theory are not conceived to be arrived at
by way of an inquiry into the developmental variation of economic
institutions and the like, the theorems arrived at are held, and no
doubt legitimately, to apply to the past,[19] and with due reserve also
to the future, phases of the development. But these theorems apply to
the various phases of the development not as accounting for the
developmental sequence, but as limiting the range of variation. They say
little, if anything, as to the order of succession, as to the derivation
and the outcome of any given phase, or as to the causal relation of one
phase of any given economic convention or scheme of relations to any
other. They indicate the conditions of survival to which any innovation
is subject, supposing the innovation to have taken place, not the
conditions of variational growth. The economic laws, the "statements of
uniformity," are therefore, when construed in an evolutionary bearing,
theorems concerning the superior or the inferior limit of persistent
innovations, as the case may be.[20] It is only in this negative,
selective bearing that the current economic laws are held to be laws of
developmental continuity; and it should be added that they have hitherto
found but relatively scant application at the hands of the economists,
even for this purpose.
Again, as applied to economic activities under a given situation, as
laws governing activities in equilibrium, the economic laws are, in the
main, laws of the limits within which economic action of a given purpose
runs. They are theorems as to the limits which the economic (commonly
the pecuniary) interest imposes upon the range of activities to which
the other life interests of men incite, rather than theorems as to the
manner and degree in which the economic interest creatively shapes the
general scheme of life. In great part they formulate the normal
inhibitory effect of economic exigencies rather than the cumulative
modification and diversification of human activities through the
economic interest, by initiating and guiding habits of life and of
thought. This, of course, does not go to say that economists are at all
slow to credit the economic exigencies with a large share in the growth
of culture; but, while claims of this kind are large and recurrent, it
remains true that the laws which make up the framework of economic
doctrine are, when construed as generalisations of causal relation, laws
of conservation and selection, not of genesis and proliferation. The
truth of this, which is but a commonplace generalisation, might be
shown in detail with respect to such fundamental theorems as the laws of
rent, of profits, of wages, of the increasing or diminishing returns of
industry, of population, of competitive prices, of cost of production.
In consonance with this quasi-evolutionary tone of the neo-classical
political economy, or as an expression of it, comes the further
clarified sense that nowadays attaches to the terms "normal" and
economic "laws." The laws have gained in colorlessness, until it can no
longer be said that the concept of normality implies approval of the
phenomena to which it is applied.[21] They are in an increasing degree
laws of conduct, though they still continue to formulate conduct in
hedonistic terms; that is to say, conduct is construed in terms of its
sensuous effect, not in terms of its teleological content. The light of
the science is a drier light than it was, but it continues to be shed
upon the accessories of human action rather than upon the process
itself. The categories employed for the purpose of knowing this economic
conduct with which the scientists occupy themselves are not the
categories under which the men at whose hands the action takes place
themselves apprehend their own action at the instant of acting.
Therefore, economic conduct still continues to be somewhat mysterious to
the economists; and they are forced to content themselves with
adumbrations whenever the discussion touches this central, substantial
fact.
All this, of course, is intended to convey no dispraise of the work
done, nor in any way to disparage the theories which the passing
generation of economists have elaborated, or the really great and
admirable body of knowledge which they have brought under the hand of
the science; but only to indicate the direction in which the inquiry in
its later phases--not always with full consciousness--is shifting as
regards its categories and its point of view. The discipline of life in
a modern community, particularly the industrial life, strongly
reenforced by the modern sciences, has divested our knowledge of
non-human phenomena of that fullness of self-directing life that was
once imputed to them, and has reduced this knowledge to terms of opaque
causal sequence. It has thereby narrowed the range of discretionary,
teleological action to the human agent alone; and so it is compelling
our knowledge of human conduct, in so far as it is distinguished from
the non-human, to fall into teleological terms. Foot-pounds, calories,
geometrically progressive procreation, and doses of capital, have not
been supplanted by the equally uncouth denominations of habits,
propensities, aptitudes, and conventions, nor does there seem to be any
probability that they will be; but the discussion which continues to run
in terms of the former class of concepts is in an increasing degree
seeking support in concepts of the latter class.
FOOTNOTES:
[1] Reprinted by permission from _The Quarterly Journal of Economics_.
Vol. XIV, Feb., 1900.
[2] So, _e.g._, Roscher, Comte, the early socialists, J. S. Mill, and
later Spencer, Schaeffle, Wagner.
[3] "Let us not confound the statement that _human_ interests are at one
with the statement that _class_ interests are at one. The latter I
believe to be as false as the former is true.... But accepting the major
premises of the syllogism, that the interests of human beings are
fundamentally the same, how as to the minor?--how as to the assumption
that people know their interests in the sense in which they are
identical with the interests of others, and that they spontaneously
follow them _in this sense_?"--Cairnes, Essays in Political Economy
(London, 1873), p. 245. This question cannot consistently be asked by an
adherent of the stricter hedonism.
[4] Bastiat, quoted by Cairnes, _Essays_, p. 319.
[5] It may be remarked, by the way, that the use of the differential
calculus and similar mathematical expedients in the discussion of
marginal utility and the like, proceeds on this psychological ground,
and that the theoretical results so arrived at are valid to the full
extent only if this hedonistic psychology is accepted.
[6] See, _e.g._, Cairnes, _Character and Logical Method_ (New York), p.
71.
[7] _Character and Logical Method_, p. 62.
[8] _Essays in Political Economy_, pp. 260-264.
[9] See especially _Essays_, pp. 263, 264.
[10] It may be interesting to point out that the like identification of
the categories of normality and right gives the dominant note of Mr.
Spencer's ethical and social philosophy, and that later economists of
the classical line are prone to be Spencerians.
[11] "Normal value (called by Adam Smith and Ricardo 'natural value,'
and by Mill 'necessary value,' but best expressed, it seems to me, by
the term which I have used)." _Leading Principles_ (New York), p. 45.
[12] _Leading Principles_, p. 45.
[13] _Scope and Method of Political Economy_ (London, 1891), chaps. i
and ii.
[14] _Character and Logical Method_; _e.g._, Lecture II, especially pp.
53, 54, and 71.
[15] _Scope and Method of Political Economy_, chap. iii, particularly p.
97.
[16] "Interest" is, of course, here used in the sense which it has in
modern psychological discussion.
[17] _Scope and Method of Political Economy_, p. 46.
[18] _Principles of Economics_, Vol. I, Book I, chap, vi, sect. 6,
especially p. 105 (3d edition).
[19] See, _e.g._, Professor Marshall's "Reply" to Professor Cunningham
in the _Economic Journal_ for 1892, pp. 508-113.
[20] This is well illustrated by what Professor Marshall says of the
Ricardian law of rent in his "Reply," cited above.
[21] See, _e.g._, Marshall, _Principles_, Book I, chap, vi, sect. 6, pp.
105-108. The like dispassionateness is visible in most other modern
writers on theory; as, _e.g._, Clark, Cannan, and the Austrians.
PROFESSOR CLARK'S ECONOMICS[1]
For some time past economists have been looking with lively anticipation
for such a comprehensive statement of Mr. Clark's doctrines as is now
offered. The leading purpose of the present volume[2] is "to offer a
brief and provisional statement of the more general laws of progress";
although it also comprises a more abridged restatement of the laws of
"Economic Statics" already set forth in fuller form in his _Distribution
of Wealth_. Though brief, this treatise is to be taken as systematically
complete, as including in due correlation all the "essentials" of Mr.
Clark's theoretical system. As such, its publication is an event of
unusual interest and consequence.
Mr. Clark's position among this generation of economists is a notable
and commanding one. No serious student of economic theory will, or can
afford to, forego a pretty full acquaintance with his development of
doctrines. Nor will any such student avoid being greatly influenced by
the position which Mr. Clark takes on any point of theory on which he
may speak, and many look confidently to him for guidance where it is
most needed. Very few of those interested in modern theory are under no
obligations to him. He has, at the same time, in a singular degree the
gift of engaging the affections as well as the attention of students in
his field. Yet the critic is required to speak impersonally of Mr.
Clark's work as a phase of current economic theory.
In more than one respect Mr. Clark's position among economists recalls
the great figures in the science a hundred years ago. There is the same
rigid grasp of the principles, the "essentials," out of which the broad
theorems of the system follow in due sequence and correlation; and like
the leaders of the classical era, while Mr. Clark is always a
theoretician, never to be diverted into an inconsistent makeshift, he is
moved by an alert and sympathetic interest in current practical
problems. While his aim is a theoretical one, it is always with a view
to the theory of current affairs; and his speculations are animated with
a large sympathy and an aggressive interest in the amelioration of the
lot of man.
His relation to the ancient adepts of the science, however, is something
more substantial than a resemblance only. He is, by spiritual
consanguinity, a representative of that classical school of thought that
dominated the science through the better part of the nineteenth century.
This is peculiarly true of Mr. Clark, as contrasted with many of those
contemporaries who have fought for the marginal-utility doctrines.
Unlike these spokesmen of the Austrian wing, he has had the insight and
courage to see the continuity between the classical position and his
own, even where he advocates drastic changes in the classical body of
doctrines. And although his system of theory embodies substantially all
that the consensus of theorists approves in the Austrian contributions
to the science, yet he has arrived at his position on these heads not
under the guidance of the Austrian school, but, avowedly, by an unbroken
development out of the position given by the older generation of
economists.[3] Again, in the matter of the psychological postulates of
the science, he accepts a hedonism as simple, unaffected, and uncritical
as that of Jevons or of James Mill. In this respect his work is as true
to the canons of the classical school as the best work of the
theoreticians of the Austrian observance. There is the like unhesitating
appeal to the calculus of pleasure and pain as the indefeasible ground
of action and solvent of perplexities, and there is the like readiness
to reduce all phenomena to terms of a "normal," or "natural," scheme of
life constructed on the basis of this hedonistic calculus. Even in the
ready recourse to "conjectural history," to use Steuart's phrase, Mr.
Clark's work is at one with both the early classical and the late
(Jevons-Austrian) marginal-utility school. It has the virtues of both,
coupled with the graver shortcomings of both. But, as his view exceeds
theirs in breadth and generosity, so his system of theory is a more
competent expression of current economic science than what is offered by
the spokesmen of the Jevons-Austrian wing. It is as such, as a competent
and consistent system of current economic theory, that it is here
intended to discuss Mr. Clark's work, not as a body of doctrines
peculiar to Mr. Clark or divergent from the main current.
* * * * *
Since hedonism came to rule economic science, the science has been in
the main a theory of distribution,--distribution of ownership and of
income. This is true both of the classical school and of those theorists
who have taken an attitude of ostensible antagonism to the classical
school. The exceptions to the rule are late and comparatively few, and
they are not found among the economists who accept the hedonistic
postulate as their point of departure. And, consistently with the spirit
of hedonism, this theory of distribution has centered about a doctrine
of exchange value (or price) and has worked out its scheme of (normal)
distribution in terms of (normal) price. The normal economic community,
upon which theoretical interest has converged, is a business community,
which centers about the market, and whose scheme of life is a scheme of
profit and loss. Even when some considerable attention is ostensibly
devoted to theories of consumption and production, in these systems of
doctrine the theories are constructed in terms of ownership, price, and
acquisition, and so reduce themselves in substance to doctrines of
distributive acquisition.[4] In this respect Mr. Clark's work is true to
the received canons. The "Essentials of Economic Theory" are the
essentials of the hedonistic theory of distribution, with sundry
reflections on related topics. The scope of Mr. Clark's economics,
indeed, is even more closely limited by concepts of distribution than
many others, since he persistently analyses production in terms of
value, and value is a concept of distribution.
* * * * *
As Mr. Clark justly observes (p. 4), "The primitive and general facts
concerning industry ... need to be known before the social facts can
profitably be studied." In these early pages of the treatise, as in
other works of its class, there is repeated reference to that more
primitive and simple scheme of economic life out of which the modern
complex scheme has developed, and it is repeatedly indicated that in
order to an understanding of the play of forces in the more advanced
stages of economic development and complication, it is necessary to
apprehend these forces in their unsophisticated form as they work out in
the simple scheme prevalent on the plane of primitive life. Indeed, to
a reader not well acquainted with Mr. Clark's scope and method of
economic theorising, these early pages would suggest that he is
preparing for something in the way of a genetic study,--a study of
economic institutions approached from the side of their origins. It
looks as if the intended line of approach to the modern situation might
be such as an evolutionist would choose, who would set out with showing
what forces are at work in the primitive economic community, and then
trace the cumulative growth and complication of these factors as they
presently take form in the institutions of a later phase of the
development. Such, however, is not Mr. Clark's intention. The effect of
his recourse to "primitive life" is simply to throw into the foreground,
in a highly unreal perspective, those features which lend themselves to
interpretation in terms of the normalised competitive system. The best
excuse that can be offered for these excursions into "primitive life" is
that they have substantially nothing to do with the main argument of the
book, being of the nature of harmless and graceful misinformation.
In the primitive economic situation--that is to say, in savagery and the
lower barbarism--there is, of course, no "solitary hunter," living
either in a cave or otherwise, and there is no man who "makes by his own
labor all the goods that he uses," etc. It is, in effect, a highly
meretricious misrepresentation to speak in this connection of "the
economy of a man who works only for himself," and say that "the inherent
productive power of labor and capital is of vital concern to him,"
because such a presentation of the matter overlooks the main facts in
the case in order to put the emphasis on a feature which is of
negligible consequence. There is no reasonable doubt but that, at least
since mankind reached the human plane, the economic unit has been not a
"solitary hunter," but a community of some kind; in which, by the way,
women seem in the early stages to have been the most consequential
factor instead of the man who works for himself. The "capital" possessed
by such a community--as, _e.g._, a band of California "Digger"
Indians--was a negligible quantity, more valuable to a collector of
curios than to any one else, and the loss of which to the "Digger"
squaws would mean very little. What was of "vital concern" to them,
indeed, what the life of the group depended on absolutely, was the
accumulated wisdom of the squaws, the technology of their economic
situation.[5] The loss of the basket, digging-stick, and mortar, simply
as physical objects, would have signified little, but the conceivable
loss of the squaw's knowledge of the soil and seasons, of food and fiber
plants, and of mechanical expedients, would have meant the present
dispersal and starvation of the community.
This may seem like taking Mr. Clark to task for an inconsequential gap
in his general information on Digger Indians, Eskimos, and palaeolithic
society at large. But the point raised is not of negligible consequence
for economic theory, particularly not for any theory of "economic
dynamics" that turns in great part about questions of capital and its
uses at different stages of economic development. In the primitive
culture the quantity and the value of mechanical appliances is
relatively slight; and whether the group is actually possessed of more
or less of such appliances at a given time is not a question of
first-rate importance. The loss of these objects--tangible assets--would
entail a transient inconvenience. But the accumulated, habitual
knowledge of the ways and means involved in the production and use of
these appliances is the outcome of long experience and experimentation;
and, given this body of commonplace technological information, the
acquisition and employment of the suitable apparatus is easily arranged.
The great body of commonplace knowledge made use of in industry is the
product and heritage of the group. In its essentials it is known by
common notoriety, and the "capital goods" needed for putting this
commonplace technological knowledge to use are a slight
matter,--practically within the reach of every one. Under these
circumstances the ownership of "capital-goods" has no great
significance, and, as a practical fact, interest and wages are unknown,
and the "earning power of capital" is not seen to be "governed by a
specific power of productivity which resides in capital-goods." But the
situation changes, presently, by what is called an advance "in the
industrial arts." The "capital" required to put the commonplace
knowledge to effect grows larger, and so its acquisition becomes an
increasingly difficult matter. Through "difficulty of attainment" in
adequate quantities, the apparatus and its ownership become a matter of
consequence; increasingly so, until presently the equipment required for
an effective pursuit of industry comes to be greater than the common man
can hope to acquire in a lifetime. The commonplace knowledge of ways and
means, the accumulated experience of mankind, is still transmitted in
and by the body of the community at large; but, for practical purposes,
the advanced "state of the industrial arts" has enabled the owners of
goods to corner the wisdom of the ancients and the accumulated
experience of the race. Hence "capital," as it stands at that phase of
the institution's growth contemplated by Mr. Clark.
The "natural" system of free competition, or, as it was once called,
"the obvious and simple system of natural liberty," is accordingly a
phase of the development of the institution of capital; and its claim to
immutable dominion is evidently as good as the like claim of any other
phase of cultural growth. The equity, or "natural justice," claimed for
it is evidently just and equitable only in so far as the conventions of
ownership on which it rests continue to be a secure integral part of the
institutional furniture of the community; that is to say, so long as
these conventions are part and parcel of the habits of thought of the
community; that is to say, so long as these things are currently held to
be just and equitable. This normalised present, or "natural," state of
Mr. Clark, is, as near as may be, Senior's "Natural State of Man,"--the
hypothetically perfect competitive system; and economic theory consists
in the definition and classification of the phenomena of economic life
in terms of this hypothetical competitive system.
Taken by itself, Mr. Clark's dealing with the past development might be
passed over with slight comment, except for its negative significance,
since it has no theoretical connection with the present, or even with
the "natural" state in which the phenomena of economic life are assumed
to arrange themselves in a stable, normal scheme. But his dealings with
the future, and with the present in so far as the present situation is
conceived to comprise "dynamic" factors, is of substantially the same
kind. With Senior's "natural state of man" as the base-line of normality
in things economic, questions of present and future development are
treated as questions of departure from the normal, aberrations and
excesses which the theory does not aim even to account for. What is
offered in place of theoretical inquiry when these "positive perversions
of the natural forces themselves" are taken up (_e.g._, in chapters
xxii.-xxix.) is an exposition of the corrections that must be made to
bring the situation back to the normal static state, and solicitous
advice as to what measures are to be taken with a view to this
beneficent end. The problem presented to Mr. Clark by the current
phenomena of economic development is: how can it be stopped? or, failing
that, how can it be guided and minimised? Nowhere is there a sustained
inquiry into the dynamic character of the changes that have brought the
present (deplorable) situation to pass, nor into the nature and trend of
the forces at work in the development that is going forward in this
situation. None of this is covered by Mr. Clark's use of the word
"dynamic." All that it covers in the way of theory (chapters xii.-xxi.)
is a speculative inquiry as to how the equilibrium reestablished itself
when one or more of the quantities involved increases or decreases.
Other than quantitive changes are not noticed, except as provocations to
homiletic discourse. Not even the causes and the scope of the quantitive
changes that may take place in the variables are allowed to fall within
the scope of the theory of economic dynamics.
So much of the volume, then, and of the system of doctrines of which the
volume is an exposition, as is comprised in the later eight chapters
(pp. 372-554), is an exposition of grievances and remedies, with only
sporadic intrusions of theoretical matter, and does not properly
constitute a part of the theory, whether static or dynamic. There is no
intention here to take exception to Mr. Clark's outspoken attitude of
disapproval toward certain features of the current business situation or
to quarrel with the remedial measures which he thinks proper and
necessary. This phase of his work is spoken of here rather to call
attention to the temperate but uncompromising tone of Mr. Clark's
writings as a spokesman for the competitive system, considered as an
element in the Order of Nature, and to note the fact that this is not
economic theory.[6]
The theoretical section specifically scheduled as Economic Dynamics
(chapters xii.-xxi.), on the other hand, is properly to be included
under the caption of Statics. As already remarked above, it presents a
theory of equilibrium between variables. Mr. Clark is, indeed, barred
out by his premises from any but a statical development of theory. To
realise the substantially statical character of his Dynamics, it is only
necessary to turn to his chapter xii. (Economic Dynamics). "A highly
dynamic condition, then, is one in which the economic organism changes
rapidly and yet, at any time in the course of its changes, is relatively
near to a certain static model" (p. 196). "The actual shape of society
at any one time is not the static model of that time; but it tends to
conform to it; and in a very dynamic society is more nearly like it than
it would be in one in which the forces of change are less active" (p.
197). The more "dynamic" the society, the nearer it is to the static
model; until in an ideally dynamic society, with a frictionless
competitive system, to use Mr. Clark's figure, the static state would be
attained, except for an increase in size,--that is to say, the ideally
perfect "dynamic" state would coincide with the "static" state. Mr.
Clark's conception of a dynamic state reduces itself to a conception of
an imperfectly static state, but in such a sense that the more highly
and truly "dynamic" condition is thereby the nearer to a static
condition. Neither the static nor the dynamic state, in Mr. Clark's
view, it should be remarked, is a state of quiescence. Both are states
of more or less intense activity, the essential difference being that in
the static state the activity goes on in perfection, without lag, leak,
or friction; the movement of parts being so perfect as not to disturb
the equilibrium. The static state is the more "dynamic" of the two. The
"dynamic" condition is essentially a deranged static condition: whereas
the static state is the absolute perfect, "natural" taxonomic norm of
competitive life. This dynamic-static state may vary in respect of the
magnitude of the several factors which hold one another in equilibrium,
but these are none other than quantitive variations. The changes which
Mr. Clark discusses under the head of dynamics are all of this
character,--changes in absolute or relative magnitude of the several
factors comprised in the equation.
* * * * *
But, not to quarrel with Mr. Clark's use of the terms "static" and
"dynamic," it is in place to inquire into the merits of this class of
economic science apart from any adventitious shortcomings. For such an
inquiry Mr. Clark's work offers peculiar advantages. It is lucid,
concise, and unequivocal, with no temporising euphemisms and no politic
affectations of sentiment. Mr. Clark's premises, and therewith the aim
of his inquiry, are the standard ones of the classical English school
(including the Jevons-Austrian wing). This school of economics stands
on the pre-evolutionary ground of normality and "natural law," which the
great body of theoretical science occupied in the early nineteenth
century. It is like the other theoretical sciences that grew out of
the rationalistic and humanitarian conceptions of the eighteenth
century in that its theoretical aim is taxonomy--definition and
classification--with the purpose of subsuming its data under a rational
scheme of categories which are presumed to make up the Order of Nature.
This Order of Nature, or realm of Natural Law, is not the actual run of
material facts, but the facts so interpreted as to meet the needs of the
taxonomist in point of taste, logical consistency, and sense of justice.
The question of the truth and adequacy of the categories is a question
as to the consensus of taste and predilection among the taxonomists;
_i.e._, they are an expression of trained human nature touching the
matter of what ought to be. The facts so interpreted make up the
"normal," or "natural," scheme of things, with which the theorist has to
do. His task is to bring facts within the framework of this scheme of
"natural" categories. Coupled with this scientific purpose of the
taxonomic economist is the pragmatic purpose of finding and advocating
the expedient course of policy. On this latter head, again, Mr. Clark is
true to the animus of the school.
The classical school, including Mr. Clark and his contemporary
associates in the science, is hedonistic and utilitarian,--hedonistic in
its theory and utilitarian in its pragmatic ideals and endeavors. The
hedonistic postulates on which this line of economic theory is built up
are of a statical scope and character, and nothing but statical theory
(taxonomy) comes out of their development.[7] These postulates, and the
theorems drawn from them, take account of none but quantitive
variations, and quantitive variation alone does not give rise to
cumulative change, which proceeds on changes in kind.
Economics of the line represented at its best by Mr. Clark has never
entered this field of cumulative change. It does not approach questions
of the class which occupy the modern sciences,--that is to say,
questions of genesis, growth, variation, process (in short, questions of
a dynamic import),--but confines its interest to the definition and
classification of a mechanically limited range of phenomena. Like other
taxonomic sciences, hedonistic economics does not, and cannot, deal with
phenomena of growth except so far as growth is taken in the quantitative
sense of a variation in magnitude, bulk, mass, number, frequency. In its
work of taxonomy this economics has consistently bound itself, as Mr.
Clark does, by distinctions of a mechanical, statistical nature, and has
drawn its categories of classification on those grounds. Concretely, it
is confined, in substance, to the determination of and refinements upon
the concepts of land, labor, and capital, as handed down by the great
economists of the classical era, and the correlate concepts of rent,
wages, interest and profits. Solicitously, with a painfully meticulous
circumspection, the normal, mechanical metes and bounds of these several
concepts are worked out, the touchstone of the absolute truth aimed at
being the hedonistic calculus. The facts of use and wont are not of the
essence of this mechanical refinement. These several categories are
mutually exclusive categories, mechanically speaking. The circumstance
that the phenomena covered by them are not mechanical facts is not
allowed to disturb the pursuit of mechanical distinctions among them.
They nowhere overlap, and at the same time between them they cover all
the facts with which this economic taxonomy is concerned. Indeed, they
are in logical consistency, required to cover them. They are
hedonistically "natural" categories of such taxonomic force that their
elemental lines of cleavage run through the facts of any given economic
situation, regardless of use and wont, even where the situation does not
permit these lines of cleavage to be seen by men and recognised by use
and wont; so that, _e.g._, a gang of Aleutian Islanders slushing about
in the wrack and surf with rakes and magical incantations for the
capture of shell-fish are held, in point of taxonomic reality, to be
engaged on a feat of hedonistic equilibration in rent, wages, and
interest. And that is all there is to it. Indeed, for economic theory of
this kind, that is all there is to any economic situation. The
hedonistic magnitudes vary from one situation to another, but, except
for variations in the arithmetical details of the hedonistic balance,
all situations are, in point of economic theory, substantially alike.[8]
Taking this unfaltering taxonomy on its own recognisances, let us follow
the trail somewhat more into the arithmetical details, as it leads
along the narrow ridge of rational calculation, above the tree-tops, on
the levels of clear sunlight and moonshine. For the purpose in hand--to
bring out the character of this current economic science as a working
theory of current facts, and more particularly "as applied to modern
problems of industry and public policy" (title-page)--the sequence to be
observed in questioning the several sections into which the theoretical
structure falls is not essential. The structure of classical theory is
familiar to all students, and Mr. Clark's redaction offers no serious
departure from the conventional lines. Such divergence from conventional
lines as may occur is a matter of details, commonly of improvements in
detail; and the revisions of detail do not stand in such an organic
relation to one another, nor do they support and strengthen one another
in such a manner, as to suggest anything like a revolutionary trend or a
breaking away from the conventional lines.
So as regards Mr. Clark's doctrine of Capital. It does not differ
substantially from the doctrines which are gaining currency at the hands
of such writers as Mr. Fisher or Mr. Fetter; although there are certain
formal distinctions peculiar to Mr. Clark's exposition of the "Capital
Concept." But these peculiarities are peculiarities of the method of
arriving at the concept rather than peculiarities substantial to the
concept itself. The main discussion of the nature of capital is
contained in chapter ii. (Varieties of Economic Goods). The conception
of capital here set forth is of fundamental consequence to the system,
partly because of the important place assigned capital in this system of
theory, partly because of the importance which the conception of capital
must have in any theory that is to deal with problems of the current
(capitalistic) situation. Several classes of capital-goods are
enumerated, but it appears that in Mr. Clark's apprehension--at variance
with Mr. Fisher's view--persons are not to be included among the items
of capital. It is also clear from the run of the argument, though not
explicitly stated, that only material, tangible, mechanically definable
articles of wealth go to make up capital. In current usage, in the
business community, "capital" is a pecuniary concept, of course, and is
not definable in mechanical terms; but Mr. Clark, true to the hedonistic
taxonomy, sticks by the test of mechanical demarcation and draws the
lines of his category on physical grounds; whereby it happens that any
pecuniary conception of capital is out of the question. Intangible
assets, or immaterial wealth, have no place in the theory; and Mr. Clark
is exceptionally subtle and consistent in avoiding such modern notions.
One gets the impression that such a notion as intangible assets is
conceived to be too chimerical to merit attention, even by way of
protest or refutation.
Here, as elsewhere in Mr. Clark's writings, much is made of the doctrine
that the two facts of "capital" and "capital-goods" are conceptually
distinct, though substantially identical. The two terms cover virtually
the same facts as would be covered by the terms "pecuniary capital" and
"industrial equipment." They are for all ordinary purposes coincident
with Mr. Fisher's terms, "capital value" and "capital," although Mr.
Clark might enter a technical protest against identifying his categories
with those employed by Mr. Fisher.[9] "Capital is this permanent fund of
productive goods, the identity of whose component elements is forever
changing. Capital-goods are the shifting component parts of this
permanent aggregate" (p. 29). Mr. Clark admits (pp. 29-33) that capital
is colloquially spoken and thought of in terms of value, but he insists
that in point of substantial fact the working concept of capital is
(should be) that of "a fund of productive goods," considered as an
"abiding entity." The phrase itself, "a fund of productive goods," is a
curiously confusing mixture of pecuniary and mechanical terms, though
the pecuniary expression, "a fund," is probably to be taken in this
connection as a permissible metaphor.
This conception of capital, as a physically "abiding entity" constituted
by the succession of productive goods that make up the industrial
equipment, breaks down in Mr. Clark's own use of it when he comes (pp.
37-38) to speak of the mobility of capital; that is to say, so soon as
he makes use of it. A single illustration of this will have to suffice,
though there are several points in his argument where the frailty of the
conception is patent enough. "The transfer of capital from one industry
to another is a dynamic phenomenon which is later to be considered. What
is here important is the fact that it is in the main accomplished
without entailing transfers of capital-goods. An instrument wears itself
out in one industry, and instead of being succeeded by a like instrument
in the same industry, it is succeeded by one of a different kind which
is used in a different branch of production" (p. 38),--illustrated on
the preceding page by a shifting of investment from a whaling-ship to a
cotton-mill. In all this it is plain that the "transfer of capital"
contemplated is a shifting of investment, and that it is, as indeed Mr.
Clark indicates, not a matter of the mechanical shifting of physical
bodies from one industry to the other. To speak of a transfer of
"capital" which does not involve a transfer of "capital-goods" is a
contradiction of the main position, that "capital" is made up of
"capital-goods." The continuum in which the "abiding entity" of capital
resides is a continuity of ownership, not a physical fact. The
continuity, in fact, is of an immaterial nature, a matter of legal
rights, of contract, of purchase and sale. Just why this patent state of
the case is overlooked, as it somewhat elaborately is, is not easily
seen. But it is plain that, if the concept of capital were elaborated
from observation of current business practice, it would be found that
"capital" is a pecuniary fact, not a mechanical one; that it is an
outcome of a valuation, depending immediately on the state of mind of
the valuers; and that the specific marks of capital, by which it is
distinguishable from other facts, are of an immaterial character. This
would, of course, lead, directly, to the admission of intangible assets;
and this, in turn, would upset the law of the "natural" remuneration of
labor and capital to which Mr. Clark's argument looks forward from the
start. It would also bring in the "unnatural" phenomena of monopoly as a
normal outgrowth of business enterprise.
There is a further logical discrepancy avoided by resorting to the
alleged facts of primitive industry, when there was no capital, for the
elements out of which to construct a capital concept, instead of going
to the current business situation. In a hedonistic-utilitarian scheme of
economic doctrine, such as Mr. Clark's, only physically productive
agencies can be admitted as efficient factors in production or as
legitimate claimants to a share in distribution. Hence capital, one of
the prime factors in production and the central claimant in the current
scheme of distribution, must be defined in physical terms and delimited
by mechanical distinctions. This is necessary for reasons which appear
in the succeeding chapter, on The Measure of Consumers' Wealth.
On the same page (38), and elsewhere, it is remarked that "business
disasters" destroy capital in part. The destruction in question is a
matter of values; that is to say, a lowering of valuation, not in any
appreciable degree a destruction of material goods. Taken as a physical
aggregate, capital does not appreciably decrease through business
disasters, but, taken as a fact of ownership and counted in standard
units of value, it decreases; there is a destruction of values and a
shifting of ownership, a loss of ownership perhaps; but these are
pecuniary phenomena, of an immaterial character, and so do not directly
affect the material aggregate of the industrial equipment. Similarly,
the discussion (pp. 301-314) of how changes of method, as, _e.g._,
labor-saving devices, "liberate capital," and at times "destroy"
capital, is intelligible only on the admission that "capital" here is a
matter of values owned by investors and is not employed as a synonym for
industrial appliances. The appliances in question are neither liberated
nor destroyed in the changes contemplated. And it will not do to say
that the aggregate of "productive goods" suffers a diminution by a
substitution of devices which increases its aggregate productiveness, as
is implied, _e.g._, by the passage on page 307,[10] if Mr. Clark's
definition of capital is strictly adhered to. This very singular
passage (pp. 306-311, under the captions, Hardships entailed on
Capitalists by Progress, and the Offset for Capital destroyed by Changes
of Method) implies that the aggregate of appliances of production is
decreased by a change which increases the aggregate of these articles in
that respect (productivity) by virtue of which they are counted in the
aggregate. The argument will hold good if "productive goods" are rated
by bulk, weight, number, or some such irrelevant test, instead of by
their productivity or by their consequent capitalised value. On such a
showing it should be proper to say that the polishing of plowshares
before they are sent out from the factory diminishes the amount of
capital embodied in plowshares by as much as the weight or bulk of the
waste material removed from the shares in polishing them.
Several things may be said of the facts discussed in this passage. There
is, presumably, a decrease, in bulk, weight, or number, of the
appliances that make up the industrial equipment at the time when such a
technological change as is contemplated takes place. This change,
presumably, increases the productive efficiency of the equipment as a
whole, and so may be said without hesitation to increase the equipment
as a factor of production, while it may decrease it, considered as a
mechanical magnitude. The owners of the obsolete or obsolescent
appliances presumably suffer a diminution of their capital, whether they
discard the obsolete appliances or not. The owners of the new
appliances, or rather those who own and are able to capitalise the new
technological expedients, presumably gain a corresponding advantage,
which may take the form of an increase of the effective capitalisation
of their outfit, as would then be shown by an increased market value of
their plant. The largest theoretical outcome of the supposed changes,
for an economist not bound by Mr. Clark's conception of capital, should
be the generalisation that industrial capital--capital considered as a
productive agent--is substantially a capitalisation of technological
expedients, and that a given capital invested in industrial equipment is
measured by the portion of technological expedients whose usufruct the
investment appropriates. It would accordingly appear that the
substantial core of all capital is immaterial wealth, and that the
material objects which are formally the subject of the capitalist's
ownership are, by comparison, a transient and adventitious matter. But
if such a view were accepted, even with extreme reservations, Mr.
Clark's scheme of the "natural" distribution of incomes between capital
and labor would "go up in the air," as the colloquial phrase has it. It
would be extremely difficult to determine what share of the value of the
joint product of capital and labor should, under a rule of "natural"
equity, go to the capitalist as an equitable return for his
monopolisation of a given portion of the intangible assets of the
community at large.[11] The returns actually accruing to him under
competitive conditions would be a measure of the differential advantage
held by him by virtue of his having become legally seized of the
material contrivances by which the technological achievements of the
community are put into effect.
Yet, if in this way capital were apprehended as "an historical
category," as Rodbertus would say, there is at least the comfort in it
all that it should leave a free field for Mr. Clark's measures of
repression as applied to the discretionary management of capital by the
makers of trusts. And yet, again, this comforting reflection is coupled
with the ugly accompaniment that by the same move the field would be
left equally free of moral obstructions to the extreme proposals of the
socialists. A safe and sane course for the quietist in these premises
should apparently be to discard the equivocal doctrines of the passage
(pp. 306-311) from which this train of questions arises, and hold fast
to the received dogma, however unworkable, that "capital" is a congeries
of physical objects with no ramifications or complications of an
immaterial kind, and to avoid all recourse to the concept of value, or
price, in discussing matters of modern business.
* * * * *
The center of interest and of theoretical force and validity in Mr.
Clark's work is his law of "natural" distribution. Upon this law hangs
very much of the rest, if not substantially the whole structure of
theory. To this law of distribution the earlier portions of the
theoretical development look forward, and this the succeeding portions
of the treatise take as their point of departure. The law of "natural"
distribution says that any productive agent "naturally" gets what
it produces. Under ideally free competitive conditions--such as
prevail in the "static" state, and to which the current situation
approximates--each unit of each productive factor unavoidably gets
the amount of wealth which it creates,--its "virtual product,"
as it is sometimes expressed. This law rests, for its theoretical
validity, on the doctrine of "final productivity," set forth in
full in the _Distribution of Wealth_, and more concisely in the
_Essentials_[12]--"one of those universal principles which govern
economic life in all its stages of evolution."[13]
In combination with a given amount of capital, it is held, each
succeeding unit of added labor adds a less than proportionate increment
to the product. The total product created by the labor so engaged is at
the same time the distributive share received by such labor as wages;
and it equals the increment of product added by the "final" unit of
labor, multiplied by the number of such units engaged. The law of
"natural" interest is the same as this law of wages, with a change of
terms. The product of each unit of labor or capital being measured by
the product of the "final" unit, each gets the amount of its own
product.
In all of this the argument runs in terms of value; but it is Mr.
Clark's view, backed by an elaborate exposition of the grounds of his
contention,[14] that the use of these terms of value is merely a matter
of convenience for the argument, and that the conclusions so
reached--the equality so established between productivity and
remuneration--may be converted to terms of goods, or "effective
utility," without abating their validity.
Without recourse to some such common denominator as value the outcome of
the argument would, as Mr. Clark indicates, be something resembling the
Ricardian law of differential rent instead of a law drawn in homogeneous
terms of "final productivity"; and the law of "natural" distribution
would then, at the best, fall short of a general formula. But the
recourse to terms of value does not, as Mr. Clark recognises, dispose of
the question without more ado. It smooths the way for the argument, but,
unaided, it leaves it nugatory. According to Hudibras, "The value of a
thing Is just as much as it will bring," and the later refinements on
the theory of value have not set aside this dictum of the ancient
authority. It answers no pertinent question of equity to say that the
wages paid for labor are as much as it will bring. And Mr. Clark's
chapter (xxiv.) on "The Unit for Measuring Industrial Agents and their
Products" is designed to show how this tautological statement in terms
of market value converts itself, under competitive conditions, into a
competent formula of distributive justice. It does not conduce to
intelligibility to say that the wages of labor are just and fair because
they are all that is paid to labor as wages. What further value Mr.
Clark's extended discussion of this matter may have will lie in his
exposition of how competition converts the proposition that "the value
of a thing is just as much as it will bring" into the proposition that
"the market rate of wages (or interest) gives to labor (or capital) the
full product of labor (or capital)."
In following up the theory at this critical point, it is necessary to
resort to the fuller statement of the _Distribution of Wealth_,[15] the
point being not so adequately covered in the _Essentials_. Consistently
hedonistic, Mr. Clark recognises that his law of natural justice must be
reduced to elementary hedonistic terms, if it is to make good its claim
to stand as a fundamental principle of theory. In hedonistic theory,
production of course means the production of utilities, and utility is
of course utility to the consumer.[16] A product is such by virtue of
and to the amount of the utility which it has for a consumer. This
utility of the goods is measured, as value, by the sacrifice
(disutility) which the consumer is willing to undergo in order to get
the utility which the consumption of the goods yields him. The unit and
measure of productive labor is in the last analysis also a unit of
disutility; but it is disutility to the productive laborer, not to the
consumer. The balance which establishes itself under competitive
conditions is a compound balance, being a balance between the utility of
the goods to the consumer and the disutility (cost) which he is willing
to undergo for it, on the one hand, and, on the other hand, a balance
between the disutility of the unit of labor and the utility for which
the laborer is willing to undergo this disutility. It is evident, and
admitted, that there can be no balance, and no commensurability, between
the laborer's disutility (pain) in producing the goods and the
consumer's utility (pleasure) in consuming them, inasmuch as these two
hedonistic phenomena lie each within the consciousness of a distinct
person. There is, in fact, no continuity of nervous tissue over the
interval between consumer and producer, and a direct comparison,
equilibrium, equality, or discrepancy in respect of pleasure and pain
can, of course, not be sought except within each self-balanced
individual complex of nervous tissue.[17] The wages of labor (_i.e._,
the utility of the goods received by the laborer) is not equal to the
disutility undergone by him, except in the sense that he is
competitively willing to accept it; nor are these wages equal to the
utility got by the consumer of the goods, except in the sense that he
is competitively willing to pay them. This point is covered by the
current diagrammatic arguments of marginal-utility theory as to the
determination of competitive prices.
But, while the wages are not equal to or directly comparable with the
disutility of the productive labor engaged, they are, in Mr. Clark's
view, equal to the "productive efficiency" of that labor.[18]
"Efficiency in a worker is, in reality, power to draw out labor on the
part of society. It is capacity to offer that for which society will
work in return." By the mediation of market price, under competitive
conditions, it is held, the laborer gets, in his wages, a valid claim on
the labor of other men (society) as large as they are competitively
willing to allow him for the services for which he is paid his wages.
The equitable balance between work and pay contemplated by the "natural"
law is a balance between wages and "efficiency," as above defined; that
is to say, between the wages of labor and the capacity of labor to get
wages. So far, the whole matter might evidently have been left as
Bastiat left it. It amounts to saying that the laborer gets what he is
willing to accept and the consumers give what they are willing to pay.
And this is true, of course, whether competition prevails or not.
What makes this arrangement just and right under competitive conditions,
in Mr. Clark's view, lies in his further doctrine that under such
conditions of unobstructed competition the prices of goods, and
therefore the wages of labor, are determined, within the scope of the
given market, by a quasi-consensus of all the parties in interest. There
is of course no formal consensus, but what there is of the kind is
implied in the fact that bargains are made, and this is taken as an
appraisement by "society" at large. The (quasi-) consensus of buyers is
held to embody the righteous (quasi-) appraisement of society in the
premises, and the resulting rate of wages is therefore a (quasi-) just
return to the laborer.[19] "Each man accordingly is paid an amount that
equals the total product that he personally creates."[20] If competitive
conditions are in any degree disturbed, the equitable balance of prices
and wages is disturbed by that much. All this holds true for the
interest of capital, with a change of terms.
The equity and binding force of this finding is evidently bound up with
that common-sense presumption on which it rests; namely, that it is
right and good that all men should get what they can without force or
fraud and without disturbing existing property relations. It springs
from this presumption, and, whether in point of equity or of expediency,
it rises no higher than its source. It does not touch questions of
equity beyond this, nor does it touch questions of the expediency or
probable advent of any contemplated change in the existing conventions
as to rights of ownership and initiative. It affords a basis for those
who believe in the old order--without which belief this whole structure
of opinions collapses--to argue questions of wages and profits in a
manner convincing to themselves, and to confirm in the faith those who
already believe in the old order. But it is not easy to see that some
hundreds of pages of apparatus should be required to find one's way back
to these time-worn commonplaces of Manchester.
In effect, this law of "natural" distribution says that whatever men
acquire without force or fraud under competitive conditions is their
equitable due, no more and no less, assuming that the competitive
system, with its underlying institution of ownership, is equitable and
"natural." In point of economic theory the law appears on examination to
be of slight consequence, but it merits further attention for the
gravity of its purport. It is offered as a definitive law of equitable
distribution comprised in a system of hedonistic economics which is in
the main a theory of distributive acquisition only. It is worth while to
compare the law with its setting, with a view to seeing how its broad
declarations of economic justice shows up in contrast with the elements
out of which it is constructed and among which it lies.
Among the notable chapters of the _Essentials_ is one (vi.) on Value and
its Relation to Different Incomes, which is not only a very substantial
section of Mr. Clark's economic theory, but at the same time a type of
the achievements of the latter-day hedonistic school. Certain features
of this chapter alone can be taken up here. The rest may be equally
worthy the student's attention, but it is the intention here not to go
into the general substance of the theory of marginal utility and value,
to which the chapter is devoted, but to confine attention to such
elements of it as bear somewhat directly on the question of equitable
distribution already spoken of. Among these latter is the doctrine of
the "consumer's surplus,"--virtually the same as what is spoken of by
other writers as "consumer's rent."[21] "Consumer's surplus" is the
surplus of utility (pleasure) derived by the consumer of goods above the
(pain) cost of the goods to him. This is held to be a very generally
prevalent phenomenon. Indeed, it is held to be all but universally
present in the field of consumption. It might, in fact, be effectively
argued that even Mr. Clark's admitted exception[22] is very doubtfully
to be allowed, on his own showing. Correlated with this element of
utility on the consumer's side is a similar volume of disutility on the
producer's side, which may be called "producer's abatement," or
"producer's rent": it is the amount of disutility by which the
disutility-cost of a given article to any given producer (laborer) falls
short of (or conceivably exceeds) the disutility incurred by the
marginal producer. Marginal buyers or consumers and marginal sellers or
producers are relatively few: the great body on both sides come in for
something in the way of a "surplus" of utility or disutility.
All this bears on the law of "natural" wages and interest as follows,
taking that law of just remuneration at Mr. Clark's rating of it. The
law works out through the mediation of price. Price is determined,
competitively, by marginal producers or sellers and marginal consumers
or purchasers: the latter alone on the one side get the precise
price-equivalent of the disutility incurred by them, and the latter
alone on the other side pay the full price-equivalent of the utilities
derived by them from the goods purchased.[23] Hence the competitive
price--covering competitive wages and interest--does not reflect the
consensus of all parties concerned as to the "effective utility" of the
goods, on the one hand, or as to their effective (disutility) cost, on
the other hand. It reflects instead, if anything of this kind, the
valuations which the marginal unfortunates on each side concede under
stress of competition; and it leaves on each side of the bargain
relation an uncovered "surplus," which marks the (variable) interval by
which price fails to cover "effective utility." The excess utility--and
the conceivable excess cost--does not appear in the market transactions
that mediate between consumer and producer.[24] In the balance,
therefore, which establishes itself in terms of value between the social
utility of the product and the remuneration of the producer's
"efficiency," the margin of utility represented by the aggregate
"consumer's surplus" and like elements is not accounted for. It follows,
when the argument is in this way reduced to its hedonistic elements,
that no man "is paid an amount that equals the amount of the total
product that he personally creates."
Supposing the marginal-utility (final-utility) theories of objective
value to be true, there is no consensus, actual or constructive, as to
the "effective utility" of the goods produced: there is no "social"
decision in the case beyond what may be implied in the readiness of
buyers to profit as much as may be by the necessities of the marginal
buyer and seller. It appears that there is warrant, within these
premises, for the formula: Remuneration <> than Product. Only by
an infinitesimal chance would it hold true in any given case that,
hedonistically, Remuneration = Product; and, if it should ever happen to
be true, there would be no finding it out.
The (hedonistic) discrepancy which so appears between remuneration and
product affects both wages and interest in the same manner, but there is
some (hedonistic) ground in Mr. Clark's doctrines for holding that the
discrepancy does not strike both in the same degree. There is indeed no
warrant for holding that there is anything like an equable distribution
of this discrepancy among the several industries or the several
industrial concerns; but there appears to be some warrant, on Mr.
Clark's argument, for thinking that the discrepancy is perhaps slighter
in those branches of industry which produce the prime necessaries of
life.[25] This point of doctrine throws also a faint (metaphysical)
light on a, possibly generic, discrepancy between the remuneration of
capitalists and that of laborers: the latter are, relatively, more
addicted to consuming the necessaries of life, and it may be that they
thereby gain less in the way of a consumer's surplus.
All the analysis and reasoning here set forth has an air of undue
tenuity; but in extenuation of this fault it should be noted that this
reasoning is made up of such matter as goes to make up the theory under
review, and the fault, therefore, is not to be charged to the critic.
The manner of argument required to meet this theory of the "natural law
of final productivity" on its own ground is itself a sufficiently
tedious proof of the futility of the whole matter in dispute. Yet it
seems necessary to beg further indulgence for more of the same kind. As
a needed excuse, it may be added that what immediately follows bears on
Mr. Clark's application of the law of "natural distribution" to modern
problems of industry and public policy, in the matter of curbing
monopolies.
* * * * *
Accepting, again, Mr. Clark's general postulates--the postulates of
current hedonistic economics--and applying the fundamental concepts,
instead of their corollaries, to his scheme of final productivity, it
can be shown to fail on grounds even more tenuous and hedonistically
more fundamental than those already passed in review. In all
final-utility (marginal-utility) theory it is of the essence of the
scheme of things that successive increments of a "good" have
progressively less than proportionate utility. In fact, the coefficient
of decrease of utility is greater than the coefficient of increase of
the stock of goods. The solitary "first loaf" is exorbitantly useful. As
more loaves are successively added to the stock, the utility of each
grows small by degrees and incontinently less, until, in the end, the
state of the "marginal" or "final" loaf is, in respect of utility,
shameful to relate. So, with a change of phrase, it fares with
successive increments of a given productive factor--labor or capital--in
Mr. Clark's scheme of final productivity. And so, of course, it also
fares with the utility of successive increments of product created by
successively adding unit after unit to the complement of a given
productive factor engaged in the case. If we attend to this matter of
final productivity in consistently hedonistic terms, a curious result
appears.
A larger complement of the productive agent, counted by weight and tale,
will, it is commonly held, create a larger output of goods, counted by
weight and tale;[26] but these are not hedonistic terms and should not
be allowed to cloud the argument. In the hedonistic scheme the magnitude
of goods, in all the dimensions to be taken account of, is measured in
terms of utility, which is a different matter from weight and tale. It
is by virtue of their utility that they are "goods," not by virtue of
their physical dimensions, number and the like; and utility is a matter
of the production of pleasure and the prevention of pain. Hedonistically
speaking, the amount of the goods, the magnitude of the output, is the
quantity of utility derivable from their consumption; and the utility
per unit decreases faster than the number of units increases.[27] It
follows that in the typical or undifferentiated case an increase of the
number of units beyond a certain critical point entails a decrease of
the "total effective utility" of the supply.[28] This critical point
seems ordinarily to be very near the point of departure of the curve of
declining utility, perhaps it frequently coincides with the latter. On
the curve of declining final utility, at any point whose tangent cuts
the axis of ordinates at an angle of less than 45 degrees, an increase
of the number of units entails a decrease of the "total effective
utility of the supply,"[29] so that a gain in physical productivity is
a loss as counted in "total effective utility." Hedonistically,
therefore, the productivity in such a case diminishes, not only
relatively to the (physical) magnitude of the productive agents, but
absolutely. This critical point, of maximum "total effective utility,"
is, if the practice of shrewd business men is at all significant,
commonly somewhat short of the point of maximum physical productivity,
at least in modern industry and in a modern community.
The "total effective utility" may commonly be increased by decreasing
the output of goods. The "total effective utility" of wages may often be
increased by decreasing the amount (value) of the wages per man,
particularly if such a decrease is accompanied by a rise in the price of
articles to be bought with the wages. Hedonistically speaking, it is
evident that the point of maximum net productivity is the point at which
a perfectly shrewd business management of a perfect monopoly would limit
the supply; and the point of maximum (hedonistic) remuneration (wages
and interest) is the point which such a management would fix on in
dealing with a wholly free, perfectly competitive supply of labor and
capital.
Such a monopolistic state of things, it is true, would not answer to Mr.
Clark's ideal. Each man would not be "paid an amount that equals the
amount of the total product that he personally creates," but he would
commonly be paid an amount that (hedonistically, in point of "effective
utility") exceeds what he personally creates, because of the high final
utility of what he receives. This is easily proven. Under the
monopolistic conditions supposed, the laborers would, it is safe to
assume, not be fully employed all the time; that is to say, they would
be willing to work some more in order to get some more articles of
consumption; that is to say, the articles of consumption which their
wages offer them have so high a utility as to afford them a consumer's
surplus,--the articles are worth more than they cost:[30] Q. E. D.
The initiated may fairly doubt the soundness of the chain of argument by
which these heterodox theoretical results are derived from Mr. Clark's
hedonistic postulates, more particularly since the adepts of the school,
including Mr. Clark, are not accustomed to draw conclusions to this
effect from these premises. Yet the argument proceeds according to the
rules of marginal-utility permutations. In view of this scarcely
avoidable doubt, it may be permitted, even at the risk of some tedium,
to show how the facts of every-day life bear out this unexpected turn of
the law of natural distribution, as briefly traced above. The principle
involved is well and widely accepted. The familiar practical maxim of
"charging what the traffic will bear" rests on a principle of this kind,
and affords one of the readiest practical illustrations of the working
of the hedonistic calculus. The principle involved is that a larger
aggregate return (value) may be had by raising the return per unit to
such a point as to somewhat curtail the demand. In practice it is
recognised, in other words, that there is a critical point at which the
value obtainable per unit, multiplied by the number of units that will
be taken off at that price, will give the largest net aggregate result
(in value to the seller) obtainable under the given conditions. A
calculus involving the same principle is, of course, the guiding
consideration in all monopolistic buying and selling; but a moment's
reflection will show that it is, in fact, the ruling principle in all
commercial transactions and, indeed, in all business. The maxim of
"charging what the traffic will bear" is only a special formulation of
the generic principle of business enterprise. Business initiative, the
function of the entrepreneur (business man) is comprehended under this
principle taken in its most general sense.[31] In business the buyer, it
is held by the theorists, bids up to the point of greatest obtainable
advantage to himself under the conditions prevailing, and the seller
similarly bids down to the point of greatest obtainable net aggregate
gain. For the trader (business man, entrepreneur) doing business in the
open (competitive) market or for the business concern with a partial or
limited monopoly, the critical point above referred to is, of course,
reached at a lower point on the curve of price than would be the case
under a perfect and unlimited monopoly, such as was supposed above; but
the principle of charging what the traffic will bear remains intact,
although the traffic will not bear the same in the one case as in the
other.
Now, in the theories based on marginal (or "final") utility, value is an
expression or measure of "effective utility"--or whatever equivalent
term may be preferred. In operating on values, therefore, under the rule
of charging what the traffic will bear, the sellers of a monopolised
supply, _e.g._, must operate through the valuations of the buyers; that
is to say, they must influence the final utility of the goods or
services to such effect that the "total effective utility" of the
limited supply to the consumers will be greater than would be the "total
effective utility" of a larger supply, which is the point in question.
The emphasis falls still more strongly on this illustration of the
hedonistic calculus, if it is called to mind that in the common run of
such limitations of supply by a monopolistic business management the
management would be able to increase the supply at a progressively
declining cost beyond the critical point by virtue of the well-known
principle of increasing returns from industry. It is also to be added
that, since the monopolistic business gets its enhanced return from the
margin by which the "total effective utility" of the limited supply
exceeds that of a supply not so limited, and since there is to be
deducted from this margin the costs of monopolistic management in
addition to other costs, therefore the enhancement of the "total
effective utility" of the goods to the consumer in the case must be
appreciably larger than the resulting net gains to the monopoly.
By a bold metaphor--a metaphor sufficiently bold to take it out of the
region of legitimate figures of speech--the gains that come to
enterprising business concerns by such monopolistic enhancement of the
"total effective utility" of their products are spoken of as "robbery,"
"extortion," "plunder"; but the theoretical complexion of the case
should not be overlooked by the hedonistic theorist in the heat of
outraged sentiment. The monopolist is only pushing the principle of all
business enterprise (free competition) to its logical conclusion; and,
in point of hedonistic theory, such monopolistic gains are to be
accounted the "natural" remuneration of the monopolist for his
"productive" service to the community in enhancing their enjoyment per
unit of consumable goods to such point as to swell their net aggregate
enjoyment to a maximum.
This intricate web of hedonistic calculations might be pursued further,
with the result of showing that, while the consumers of the monopolised
supply of goods are gainers by virtue of the enhanced "total effective
utility" of the goods, the monopolists who bring about this result do so
in great part at their own cost, counting cost in terms of a reduction
of "total effective utility." By injudiciously increasing their own
share of goods, they lower the marginal and effective utility of their
wealth to such a point as, probably, to entail a considerable
(hedonistic) privation in the shrinkage of their enjoyment per unit. But
it is not the custom of economists, nor does Mr. Clark depart from this
custom, to dwell on the hardships of the monopolists. This much may be
added, however, that this hedonistically consistent exposition of the
"natural law of final productivity" shows it to be "one of those
universal principles which govern economic life in all its stages of
evolution," even when that evolution enters the phase of monopolistic
business enterprise,--granting always the sufficiency of the hedonistic
postulates from which the law is derived. Further, the considerations
reviewed above go to show that, on two counts, Mr. Clark's crusade
against monopoly in the later portion of his treatise is out of touch
with the larger theoretical speculations of the earlier portions: (_a_)
it runs counter to the hedonistic law of "natural" distribution; and
(_b_) the monopolistic business against which Mr. Clark speaks is but
the higher and more perfect development of that competitive business
enterprise which he wishes to reinstate,--competitive business, so
called, being incipiently monopolistic enterprise.
Apart from this theoretical bearing, the measures which Mr. Clark
advocates for the repression of monopoly, under the head of applications
"to modern problems of industry and public policy," may be good economic
policy or they may not,--they are the expression of a sound common
sense, an unvitiated solicitude for the welfare of mankind, and a wide
information as to the facts of the situation. The merits of this policy
of repression, as such, cannot be discussed here. On the other hand, the
relation of this policy to the theoretical groundwork of the treatise
needs also not be discussed here, inasmuch as it has substantially no
relation to the theory. In this later portion of the volume Mr. Clark
does not lean on doctrines of "final utility," "final productivity," or,
indeed, on hedonistic economics at large. He speaks eloquently for the
material and cultural interests of the community, and the references to
his law of "natural distribution" might be cut bodily out of the
discussion without lessening the cogency of his appeal or exposing any
weakness in his position. Indeed, it is by no means certain that such an
excision would not strengthen his appeal to men's sense of justice by
eliminating irrelevant matter.
Certain points in this later portion of the volume, however, where the
argument is at variance with specific articles of theory professed by
Mr. Clark, may be taken up, mainly to elucidate the weakness of his
theoretical position at the points in question. He recognises with more
than the current degree of freedom that the growth and practicability of
monopolies under modern conditions is chiefly due to the negotiability
of securities representing capital, coupled with the joint-stock
character of modern business concerns.[32] These features of the modern
(capitalistic) business situation enable a sufficiently few men to
control a section of the community sufficiently large to make an
effective monopoly. The most effective known form of organisation for
purposes of monopoly, according to Mr. Clark, is that of the holding
company, and the ordinary corporation follows it closely in
effectiveness in this respect. The monopolistic control is effected by
means of the vendible securities covering the capital engaged. To meet
the specifications of Mr. Clark's theory of capital, these vendible
securities--as _e.g._, the securities (common stock) of a holding
company--should be simply the formal evidence of the ownership of
certain productive goods and the like. Yet, by his own showing, the
ownership of a share of productive goods proportionate to the face
value, or the market value, of the securities is by no means the chief
consequence of such an issue of securities.[33] One of the consequences,
and for the purposes of Mr. Clark's argument the gravest consequence, of
the employment of such securities, is the dissociation of ownership from
the control of the industrial equipment, whereby the owners of certain
securities, which stand in certain immaterial, technical relations to
certain other securities, are enabled arbitrarily to control the use of
the industrial equipment covered by the latter. These are facts of the
modern organisation of capital, affecting the productivity of the
industrial equipment and its serviceability both to its owners and to
the community. They are facts, though not physically tangible objects;
and they have an effect on the serviceability of industry no less
decisive than the effect which any group of physically tangible objects
of equal market value have. They are, moreover, facts which are bought
and sold in the purchase and sale of these securities, as, _e.g._, the
common stock of a holding company. They have a value, and therefore they
have a "total effective utility."
In short, these facts are intangible assets, which are the most
consequential element in modern capital, but which have no existence in
the theory of capital by which Mr. Clark aims to deal with "modern
problems of industry." Yet, when he comes to deal with these problems,
it is, of necessity, these intangible assets that immediately engage his
attention. These intangible assets are an outgrowth of the freedom of
contract under the conditions imposed by the machine industry; yet Mr.
Clark proposes to suppress this category of intangible assets without
prejudice to freedom of contract or to the machine industry, apparently
without having taken thought of the lesson which he rehearses (pp.
390-391) from the introduction of the holding company, with its
"sinister perfection," to take the place of the (less efficient) "trust"
when the latter was dealt with somewhat as it is now proposed to deal
with the holding company. One is tempted to remark that a more naive
apprehension of the facts of modern capital would have afforded a more
competent realisation of the problems of monopoly.
* * * * *
It appears from what has just been said of Mr. Clark's "natural"
distribution and of his dealing with the problems of modern industry
that the logic of hedonism is of no avail for the theory of business
affairs. Yet it is held, perhaps justly, that the hedonistic
interpretation may be of great avail in analysing the industrial
functions of the community, in their broad, generic character, even if
it should not serve so well for the intricate details of the modern
business situation. It may be at least a serviceable hypothesis for the
outlines of economic theory, for the first approximations to the
"economic laws" sought by taxonomists. To be serviceable for this
purpose, the hypothesis need perhaps not be true to fact, at least not
in the final details of the community's life or without material
qualification;[34] but it must at least have that ghost of actuality
that is implied in consistency with its own corollaries and
ramifications.
As has been suggested in an earlier paragraph, it is characteristic of
hedonistic economics that the large and central element in its
theoretical structure is the doctrine of distribution. Consumption being
taken for granted as a quantitive matter simply,--essentially a matter
of an insatiable appetite,--economics becomes a theory of acquisition;
production is, theoretically, a process of acquisition, and distribution
a process of distributive acquisition. The theory of production is drawn
in terms of the gains to be acquired by production; and under
competitive conditions this means necessarily the acquisition of a
distributive share of what is available. The rest of what the facts of
productive industry include, as, _e.g._, the facts of workmanship or the
" state of the industrial arts," gets but a scant and perfunctory
attention. Those matters are not of the theoretical essence of the
scheme. Mr. Clark's general theory of production does not differ
substantially from that commonly professed by the marginal-utility
school. It is a theory of competitive acquisition. An inquiry into the
principles of his doctrine, therefore, as they appear, _e.g._, in the
early chapters of the _Essentials_, is, in effect, an inquiry into the
competence of the main theorems of modern hedonistic economics.
"All men seek to get as much net service from material wealth as they
can." "Some of the benefit received is neutralised by the sacrifice
incurred; but there is a net surplus of gains not thus canceled by
sacrifices, and the generic motive which may properly be called
economic is the desire to make this surplus large."[35] It is of the
essence of the scheme that the acquisitive activities of mankind afford
a net balance of pleasure. It is out of this net balance, presumably,
that "the consumer's surpluses" arise, or it is in this that they merge.
This optimistic conviction is a matter of presumption, of course; but it
is universally held to be true by hedonistic economists, particularly by
those who cultivate the doctrines of marginal utility. It is not
questioned and not proven. It seems to be a surviving remnant of the
eighteenth-century faith in a benevolent Order of Nature; that is to
say, it is a rationalistic metaphysical postulate. It may be true or
not, as matter of fact; but it is a postulate of the school, and its
optimistic bias runs like a red thread through all the web of argument
that envelops the "normal" competitive system. A surplus of gain is
normal to the theoretical scheme.
The next great theorem of this theory of acquisition is at
cross-purposes with this one. Men get useful goods only at the cost of
producing them, and production is irksome, painful, as has been
recounted above. They go on producing utilities until, at the margin,
the last increment of utility in the product is balanced by the
concomitant increment of disutility in the way of irksome productive
effort,--labor or abstinence. At the margin, pleasure-gain is balanced
by pain-cost. But the "effective utility" of the total product is
measured by that of the final unit; the effective utility of the whole
is given by the number of units of product multiplied by the effective
utility of the final unit; while the effective disutility (pain-cost) of
the whole is similarly measured by the pain-cost of the final unit. The
"total effective utility" of the producer's product equals the "total
effective disutility" of his pains of acquisition. Hence there is no net
surplus of utility in the outcome.
The corrective objection is ready to hand,[36] that, while the balance
of utility and disutility holds at the margin, it does not hold for the
earlier units of the product, these earlier units having a larger
utility and a lower cost, and so leaving a large net surplus of utility,
which gradually declines as the margin is approached. But this attempted
correction evades the hedonistic test. It shifts the ground from the
calculus to the objects which provoke the calculation. Utility is a
psychological matter, a matter of pleasurable appreciation, just as
disutility, conversely, is a matter of painful appreciation. The
individual who is held to count the costs and the gain in this
hedonistic calculus is, by supposition, a highly reasonable person. He
counts the cost to him as an individual against the gain to him as an
individual. He looks before and after, and sizes the whole thing up in a
reasonable course of conduct. The "absolute utility" would exceed the
"effective utility" only on the supposition that the "producer" is an
unreflecting sensory apparatus, such as the beasts of the field are
supposed to be, devoid of that gift of appraisement and calculation
which is the hypothetical hedonist's only human trait. There might on
such a supposition--if the producer were an intelligent sensitive
organism simply--emerge an excess of total pleasure over total pain, but
there could then be no talk of utility or of disutility, since these
terms imply intelligent reflection, and they are employed because they
do so. The hedonistic producer looks to his own cost and gain, as an
intelligent pleasure-seeker whose consciousness compasses the contrasted
elements as wholes. He does not contrast the balance of pain and
pleasure in the morning with the balance of pain and pleasure in the
afternoon, and say that there is so much to the good because he was not
so tired in the morning. Indeed, by hypothesis, the pleasure to be
derived from the consumption of the product is a future, or expected,
pleasure, and can be said to be present, at the point of time at which a
given unit of pain-cost is incurred, only in anticipation; and it cannot
be said that the anticipated pleasure attaching to a unit of product
which emerges from the effort of the producer during the relatively
painless first hour's work exceeds the anticipated pleasure attaching to
a similar unit emerging from the second hour's work. Mr. Clark has, in
effect, explained this matter in substantially the same way in another
connection (_e.g._, p. 42), where he shows that the magnitude on which
the question of utility and cost hinges is the "total effective
utility," and that the "total absolute utility" is a matter not of what
hedonistically is, in respect of utility as an outcome of production,
but of what might have been under different circumstances.
An equally unprofitable result may be reached from the same point of
departure along a different line of argument. Granting that increments
of product should be measured, in respect of utility, by comparison with
the disutility of the concomitant increment of cost, then the
diagrammatic arguments commonly employed are inadequate, in that the
diagrams are necessarily drawn in two dimensions only,--length and
breadth: whereas they should be drawn in three dimensions, so as to take
account of the intensity of application as well as of its duration.[37]
Apparently, the exigencies of graphic representation, fortified by the
presumption that there always emerges a surplus of utility, have led
marginal-utility theorists, in effect, to overlook this matter of
intensity of application.
When this element is brought in with the same freedom as the other two
dimensions engaged, the argument will, in hedonistic consistency, run
somewhat as follows,--the run of the facts being what it may. The
producer, setting out on this irksome business, and beginning with the
production of the exorbitantly useful initial unit of product, will, by
hedonistic necessity, apply himself to the task with a correspondingly
extravagant intensity, the irksomeness (disutility) of which necessarily
rises to such a pitch as to leave no excess of utility in this initial
unit of product above the concomitant disutility of the initial unit of
productive effort.[38] As the utility of subsequent units of product
progressively declines, so will the producer's intensity of irksome
application concomitantly decline, maintaining a nice balance between
utility and disutility throughout. There is, therefore, no excess of
"absolute utility" above "effective utility" at any point on the curve,
and no excess of "total absolute utility" above "total effective
utility" of the product as a whole, nor above the "total absolute
disutility" or the "total effective disutility" of the pain-cost.
A transient evasion of this outcome may perhaps be sought by saying that
the producer will act wisely, as a good hedonist should, and save his
energies during the earlier moments of the productive period in order to
get the best aggregate result from his day's labor, instead of spending
himself in ill-advised excesses at the outset. Such seems to be the fact
of the matter, so far as the facts wear a hedonistic complexion; but
this correction simply throws the argument back on the previous position
and concedes the force of what was there claimed. It amounts to saying
that, instead of appreciating each successive unit of product in
isolated contrast with its concomitant unit of irksome productive
effort, the producer, being human, wisely looks forward to his total
product and rates it by contrast with his total pain-cost. Whereupon, as
before, no net surplus of utility emerges, under the rule which says
that irksome production of utilities goes on until utility and
disutility balance.
But this revision of "final productivity" has further consequences for
the optimistic doctrines of hedonism. Evidently, by a somewhat similar
line of argument the "consumer's surplus" will be made to disappear,
even as this that may be called the "producer's surplus" has
disappeared. Production being acquisition, and the consumer's cost being
cost of acquisition, the argument above should apply to the consumer's
case without abatement. On considering this matter in terms of the
hedonistically responsive individual concerned, with a view to
determining whether there is, in his calculus of utilities and costs,
any margin of uncovered utilities left over after he has incurred all
the disutilities that are worth while to him,--instead of proceeding on
a comparison between the pleasure-giving capacity of a given article and
the market price of the article, all such alleged differential
advantages within the scope of a single sensory are seen to be nothing
better than an illusory diffractive effect due to a faulty instrument.
But the trouble does not end here. The equality: pain-cost =
pleasure-gain, is not a competent formula. It should be: pain-cost
incurred = pleasure-gain anticipated. And between these two formulas
lies the old adage, "there's many a slip 'twixt the cup and the lip." In
an appreciable proportion of ventures, endeavors, and enterprises, men's
expectations of pleasure-gain are in some degree disappointed,--through
miscalculation, through disserviceable secondary effects of their
productive efforts, by "the act of God," by "fire, flood, and
pestilence." In the nature of things these discrepancies fall out on the
side of loss more frequently than on that of gain. After all allowance
has been made for what may be called serviceable errors, there remains a
margin of disserviceable error, so that pain-cost > eventual
pleasure-gain = anticipated pleasure-gain--_n._ Hence, in general,
pain-cost > pleasure-gain. Hence it appears that, in the nature of
things, men's pains of production are underpaid by that much; although
it may, of course, be held that the nature of things at this point is
not "natural" or "normal."
To this it may be objected that the risk is discounted. Insurance is a
practical discounting of risk; but insurance is resorted to only to
cover risk that is appreciated by the person exposed to it, and it is
such risks as are not appreciated by those who incur them that are
chiefly in question here. And it may be added that insurance has
hitherto not availed to equalise and distribute the chances of success
and failure. Business gains--entrepreneur's gains, the rewards of
initiative and enterprise--come out of this uncovered margin of
adventure, and the losses of initiative and enterprise are to be set
down to the same account. In some measure this element of initiative and
enterprise enters into all economic endeavor. And it is not unusual for
economists to remark that the volume of unsuccessful or only partly
successful enterprise is very large. There are some lines of enterprise
that are, as one might say, extra hazardous, in which the average falls
out habitually on the wrong side of the account. Typical of this class
is the production of the precious metals, particularly as conducted
under that regime of free competition for which Mr. Clark speaks. It has
been the opinion, quite advisedly, of such economists of the classic age
of competition as J. S. Mill and Cairnes, _e.g._, that the world's
supply of the precious metals has been got at an average or total cost
exceeding their value by several fold. The producers, under free
competition at least, are over-sanguine of results.
But, in strict consistency, the hedonistic theory of human conduct does
not allow men to be guided in their calculation of cost and gain, when
they have to do with the precious metals, by different norms from those
which rule their conduct in the general quest of gain. The visible
difference in this respect between the production of the precious metals
and production generally should be due to the larger proportions and
greater notoriety of the risks in this field rather than to a difference
in the manner of response to the stimulus of expected gain. The canons
of hedonistic calculus permit none but a quantitative difference in the
response. What happens in the production of the precious metals is
typical of what happens in a measure and more obscurely throughout the
field of productive effort.
Instead of a surplus of utility of product above the disutility of
acquisition, therefore, there emerges an average or aggregate net
hedonistic deficit. On a consistent marginal-utility theory, all
production is a losing game. The fact that Nature keeps the bank, it
appears, does not take the hedonistic game of production out of the
general category known of old to that class of sanguine hedonistic
calculators whose day-dreams are filled with safe and sane schemes for
breaking the bank. "Hope springs eternal in the human breast." Men are
congenitally over-sanguine, it appears; and the production of utilities
is, mathematically speaking, a function of the pig-headed optimism of
mankind. It turns out that the laws of (human) nature malevolently grind
out vexation for men instead of benevolently furthering the greatest
happiness of the greatest number. The sooner the whole traffic ceases,
the better,--the smaller will be the net balance of pain. The great
hedonistic Law of Nature turns out to be simply the curse of Adam,
backed by the even more sinister curse of Eve.
* * * * *
The remark was made in an earlier paragraph that Mr. Clark's theories
have substantially no relation to his practical proposals. This broad
declaration requires an equally broad qualification. While the positions
reached in his theoretical development count for nothing in making or
fortifying the positions taken on "problems of modern industry and
public policy," the two phases of the discussion--the theoretical and
the pragmatic--are the outgrowth of the same range of preconceptions and
run back to the same metaphysical ground. The present canvass of items
in the doctrinal system has already far overpassed reasonable limits,
and it is out of the question here to pursue the exfoliation of ideas
through Mr. Clark's discussion of public questions, even in the
fragmentary fashion in which scattered items of the theoretical portion
of his treatise have been passed in review. But a broad and rudely drawn
characterisation may yet be permissible. This latter portion of the
volume has the general complexion of a Bill of Rights. This is said, of
course, with no intention of imputing a fault. It implies that the scope
and method of the discussion is governed by the preconception that there
is one right and beautiful definitive scheme of economic life, "to which
the whole creation tends." Whenever and in so far as current phenomena
depart or diverge from this definitive "natural" scheme or from the
straight and narrow path that leads to its consummation, there is a
grievance to be remedied by putting the wheels back into the rut. The
future, such as it ought to be,--the only normally possible, natural
future scheme of life,--is known by the light of this preconception; and
men have an indefeasible right to the installation and maintenance of
those specific economic relations, expedients, institutions, which this
"natural" scheme comprises, and to no others. The consummation is
presumed to dominate the course of things which is presumed to lead up
to the consummation. The measures of redress whereby the economic Order
of Nature is to renew its youth are simple, direct, and short-sighted,
as becomes the proposals of pre-Darwinian hedonism, which is not
troubled about the exuberant uncertainties of cumulative change. No
doubt presents itself but that the community's code of right and equity
in economic matters will remain unchanged under changing conditions of
economic life.
FOOTNOTES:
[1] Reprinted by permission from _The Quarterly Journal of Economics_,
Vol. XXII, Feb., 1908.
[2] _The Essentials of Economic Theory, as Applied to Modern Problems of
Industry and Public Policy._ By John Bates Clark. New York: The
Macmillan Company. 1907.
[3] _Cf._, _e.g. The Distribution of Wealth_, p. 376, note.
[4] See, _e.g._, J. S. Mill, _Political Economy_, Book I; Marshall,
_Principles of Economics_, Vol. I, Books II-V.
[5] _Cf._, _e.g._, such an account as Barrows, _Ethno-botany of the
Coahuilla Indians_.
[6] What would be the scientific rating of the work of a botanist who
should spend his energy in devising ways and means to neutralize the
ecological variability of plants, or of a physiologist who conceived it
the end of his scientific endeavors to rehabilitate the vermiform
appendix or the pineal eye, or to denounce and penalize the imitative
coloring of the Viceroy butterfly? What scientific interest would attach
to the matter if Mr. Loeb, _e.g._, should devote a few score pages to
canvassing the moral responsibilities incurred by him in his parental
relation to his parthenogenetically developed sea-urchin eggs?
Those phenomena which Mr. Clark characterizes as "positive perversions"
may be distasteful and troublesome, perhaps, but "the economic necessity
of doing what is legally difficult" is not of the "essentials of
theory."
[7] It is a notable fact that even the genius of Herbert Spencer could
extract nothing but taxonomy from his hedonistic postulates; _e.g._,
_his Social Statics_. Spencer is both evolutionist and hedonist, but it
is only by recourse to other factors, alien to the rational hedonistic
scheme, such as habit, delusions, use and disuse, sporadic variation,
environmental forces, that he is able to achieve anything in the way of
genetic science, since it is only by this recourse that he is enabled to
enter the field of cumulative change within which the modern
post-Darwinian sciences live and move and have their being.
[8] "The capital-goods have to be taken unit by unit if their value for
productive purposes is to be rightly gauged. A part of a supply of
potatoes is traceable to the hoes that dig them.... We endeavor simply
to ascertain how badly the loss of one hoe would affect us or how much
good the restoration of it would do us. This truth, like the foregoing
ones, has a universal application in economics; for primitive men as
well as civilized ones must estimate the specific productivity of the
tools that they use," etc. Page 43.
[9] _Cf._ a criticism of Mr. Fisher's conception in the _Political
Science Quarterly_ for February, 1908.
[10] "The machine itself is often a hopeless specialist. It can do one
minute thing and that only, and when a new and better device appears for
doing that one thing, the machine has to go, and not to some new
employment, but to the junk heap. There is thus taking place a
considerable waste of capital in consequence of mechanical and other
progress." "Indeed, a quick throwing away of instruments which have
barely begun to do their work is often the secret of the success of an
enterprising manager, but it entails a destruction of capital."
[11] The position of the laborer and his wages, in this light, would not
be substantially different from that of the capitalist and his interest.
Labor is no more possible, as a fact of industry, without the
community's accumulated technological knowledge than is the use of
"productive goods."
[12] _Cf. Distribution of Wealth_, chaps, xii, xiii, vii, viii;
_Essentials_, chaps, v-x.
[13] _Essentials_, p. 158.
[14] _Distribution_, chap. xxiv.
[15] Chap. xxiv.
[16] _Essentials_, p. 40.
[17] Among modern economic hedonists, including Mr. Clark, there stands
over from the better days of the order of nature a presumption,
disavowed, but often decisive, that the sensational response to the like
mechanical impact of the stimulating body is the same in different
individuals. But, while this presumption stands ever in the background,
and helps to many important conclusions, as in the case under
discussion, few modern hedonists would question the statement in the
text.
[18] _Distribution_, p. 394.
[19] In Mr. Clark's discussion, elsewhere, the "quasi"-character of the
productive share of the laborer is indicated by saying that it is the
product "imputed" or "imputable" to him.
[20] _Essentials_, p. 92. Et si sensus deficit, ad firmandum cor
sincerum sola fides sufficit.
[21] See pp. 102-113; also p. 172, note.
[22] "The cheapest and poorest grades of articles." Page 113.
[23] See p. 113.
[24] The disappearance, and the method of disappearance, of such
elements of differential utility and disutility occupies a very
important place in all marginal-utility ("final-utility") theories of
market value, or "objective value."
[25] "Only the simplest and cheapest things that are sold in the market
at all bring just what they are worth to the buyers." Page 113.
[26] It is, _e.g._, open to serious question whether Mr. Clark's curves
of final productivity (pp. 139, 148), showing a declining output per
unit in response to an increase of one of the complementary agents of
production, will fit the common run of industry in case the output be
counted by weight and tale. In many cases they will, no doubt; in many
other cases they will not. But this is no criticism of the curves in
question, since they do not, or at least should not, purport to
represent the product in such terms, but in terms of utility.
[27] To resort to an approximation after the manner of Malthus, if the
supply of goods be supposed to increase by arithmetical progression,
their final utility may be said concomitantly to decrease by geometrical
progression.
[28] _Cf. Essentials_, chap. iii, especially pp. 40-41.
[29] The current marginal-utility diagrams are not of much use in this
connection, because the angle of the tangent with the axis of ordinates,
at any point, is largely a matter of the draftsman's taste. The abscissa
and the ordinate do not measure commensurable units. The units on the
abscissa are units of frequency, while those on the ordinate are units
of amplitude; and the greater or less segment of line allowed per unit
on either axis is a matter of independently arbitrary choice. Yet the
proposition in the text remains true,--as true as hedonistic
propositions commonly are. The magnitude of the angle of the tangent
with the axis of ordinates decides whether the total (hedonistic)
productivity at a given point in the curve increases or decreases with a
(mechanical) increase of the productive agent,--no student at all
familiar with marginal-utility arguments will question that patent fact.
But the angle of the tangent depends on the fancy of the draftsman,--no
one possessed of the elemental mathematical notions will question that
equally patent fact.
[30] A similar line of argument has been followed up by Mr. Clark for
capital and interest, in a different connection. See _Essentials_, pp.
340-345, 356.
[31] _Cf. Essentials_, pp. 83-90, 118-120.
[32] _Cf._ chap. xxii, especially pp. 378-392.
[33] _Cf._ p. 391.
[34] _Cf. Essentials_, p. 39.
[35] _Essentials_, p. 39.
[36] _Cf. Essentials_, chap. iii, especially pp. 51-56.
[37] This difficulty is recognized by the current marginal-utility
arguments, and an allowance for intensity is made or presumed. But the
allowance admitted is invariably insufficient. It might be said to be
insufficient by hypothesis, since it is by hypothesis too small to
offset the factor which it is admitted to modify.
[38] The limit to which the intensity rises is a margin of the same kind
as that which limits the duration. This supposition, that the intensity
of application necessarily rises to such a pitch that its disutility
overtakes and offsets the utility of the product, may be objected to as
a bit of puerile absurdity; but it is a long time since puerility or
absurdity has been a bar to any supposition in arguments on marginal
utility.
THE LIMITATIONS OF MARGINAL UTILITY[1]
The limitations of the marginal-utility economics are sharp and
characteristic. It is from first to last a doctrine of value, and in
point of form and method it is a theory of valuation. The whole system,
therefore, lies within the theoretical field of distribution, and it has
but a secondary bearing on any other economic phenomena than those of
distribution--the term being taken in its accepted sense of pecuniary
distribution, or distribution in point of ownership. Now and again an
attempt is made to extend the use of the principle of marginal utility
beyond this range, so as to apply it to questions of production, but
hitherto without sensible effect, and necessarily so. The most ingenious
and the most promising of such attempts have been those of Mr. Clark,
whose work marks the extreme range of endeavor and the extreme degree of
success in so seeking to turn a postulate of distribution to account for
a theory of production. But the outcome has been a doctrine of the
production of values, and value, in Mr. Clark's as in other utility
systems, is a matter of valuation; which throws the whole excursion back
into the field of distribution. Similarly, as regards attempts to make
use of this principle in an analysis of the phenomena of consumption,
the best results arrived at are some formulation of the pecuniary
distribution of consumption goods.
Within this limited range marginal-utility theory is of a wholly
statical character. It offers no theory of a movement of any kind, being
occupied with the adjustment of values to a given situation. Of this,
again, no more convincing illustration need be had than is afforded by
the work of Mr. Clark, which is not excelled in point of earnestness,
perseverance, or insight. For all their use of the term "dynamic,"
neither Mr. Clark nor any of his associates in this line of research
have yet contributed anything at all appreciable to a theory of genesis,
growth, sequence, change, process, or the like, in economic life. They
have had something to say as to the bearing which given economic
changes, accepted as premises, may have on valuation, and so on
distribution; but as to the causes of change or the unfolding sequence
of the phenomena of economic life they have had nothing to say hitherto;
nor can they, since their theory is not drawn in causal terms but in
terms of teleology.
In all this the marginal-utility school is substantially at one with the
classical economics of the nineteenth century, the difference between
the two being that the former is confined within narrower limits and
sticks more consistently to its teleological premises. Both are
teleological, and neither can consistently admit arguments from cause to
effect in the formulation of their main articles of theory. Neither can
deal theoretically with phenomena of change, but at the most only with
rational adjustment to change which may be supposed to have supervened.
To the modern scientist the phenomena of growth and change are the most
obtrusive and most consequential facts observable in economic life. For
an understanding of modern economic life the technological advance of
the past two centuries--_e.g._, the growth of the industrial arts--is of
the first importance; but marginal-utility theory does not bear on this
matter, nor does this matter bear on marginal-utility theory. As a means
of theoretically accounting for this technological movement in the past
or in the present, or even as a means of formally, technically stating
it as an element in the current economic situation, that doctrine and
all its works are altogether idle. The like is true for the sequence of
change that is going forward in the pecuniary relations of modern life;
the hedonistic postulate and its propositions of differential utility
neither have served nor can serve an inquiry into these phenomena of
growth, although the whole body of marginal-utility economics lies
within the range of these pecuniary phenomena. It has nothing to say to
the growth of business usages and expedients or to the concomitant
changes in the principles of conduct which govern the pecuniary
relations of men, which condition and are conditioned by these altered
relations of business life or which bring them to pass.
It is characteristic of the school that wherever an element of the
cultural fabric, an institution or any institutional phenomenon, is
involved in the facts with which the theory is occupied, such
institutional facts are taken for granted, denied, or explained away. If
it is a question of price, there is offered an explanation of how
exchanges may take place with such effect as to leave money and price
out of the account. If it is a question of credit, the effect of credit
extension on business traffic is left on one side and there is an
explanation of how the borrower and lender cooeperate to smooth out their
respective income streams of consumable goods or sensations of
consumption. The failure of the school in this respect is consistent and
comprehensive. And yet these economists are lacking neither in
intelligence nor in information. They are, indeed, to be credited,
commonly, with a wide range of information and an exact control of
materials, as well as with a very alert interest in what is going on;
and apart from their theoretical pronouncements the members of the
school habitually profess the sanest and most intelligent views of
current practical questions, even when these questions touch matters of
institutional growth and decay.
The infirmity of this theoretical scheme lies in its postulates, which
confine the inquiry to generalisations of the teleological or
"deductive" order. These postulates, together with the point of view and
logical method that follow from them, the marginal-utility school shares
with other economists of the classical line--for this school is but a
branch or derivative of the English classical economists of the
nineteenth century. The substantial difference between this school and
the generality of classical economists lies mainly in the fact that in
the marginal-utility economics the common postulates are more
consistently adhered to at the same time that they are more neatly
defined and their limitations are more adequately realized. Both the
classical school in general and its specialized variant, the
marginal-utility school, in particular, take as their common point of
departure the traditional psychology of the early nineteenth-century
hedonists, which is accepted as a matter of course or of common
notoriety and is held quite uncritically. The central and well-defined
tenet so held is that of the hedonistic calculus. Under the guidance of
this tenet and of the other psychological conceptions associated and
consonant with it, human conduct is conceived of and interpreted as a
rational response to the exigencies of the situation in which mankind is
placed; as regards economic conduct it is such a rational and
unprejudiced response to the stimulus of anticipated pleasure and
pain--being, typically and in the main, a response to the promptings of
anticipated pleasure, for the hedonists of the nineteenth century and of
the marginal-utility school are in the main of an optimistic temper.[2]
Mankind is, on the whole and normally, (conceived to be) clearsighted
and farsighted in its appreciation of future sensuous gains and losses,
although there may be some (inconsiderable) difference between men in
this respect. Men's activities differ, therefore, (inconsiderably) in
respect of the alertness of the response and the nicety of adjustment of
irksome pain-cost to apprehended future sensuous gain; but, on the
whole, no other ground or line or guidance of conduct than this
rationalistic calculus falls properly within the cognizance of the
economic hedonists. Such a theory can take account of conduct only in so
far as it is rational conduct, guided by deliberate and exhaustively
intelligent choice--wise adaptation to the demands of the main chance.
The external circumstances which condition conduct are variable, of
course, and so they will have a varying effect upon conduct; but their
variation is, in effect, construed to be of such a character only as to
vary the degree of strain to which the human agent is subject by contact
with these external circumstances. The cultural elements involved in the
theoretical scheme, elements that are of the nature of institutions,
human relations governed by use and wont in whatever kind and
connection, are not subject to inquiry but are taken for granted as
pre-existing in a finished, typical form and as making up a normal and
definitive economic situation, under which and in terms of which human
intercourse is necessarily carried on. This cultural situation comprises
a few large and simple articles of institutional furniture, together
with their logical implications or corollaries; but it includes nothing
of the consequences or effects caused by these institutional elements.
The cultural elements so tacitly postulated as immutable conditions
precedent to economic life are ownership and free contract, together
with such other features of the scheme of natural rights as are implied
in the exercise of these. These cultural products are, for the purpose
of the theory, conceived to be given a priori in unmitigated force. They
are part of the nature of things; so that there is no need of accounting
for them or inquiring into them, as to how they have come to be such as
they are, or how and why they have changed and are changing, or what
effect all this may have on the relations of men who live by or under
this cultural situation.
Evidently the acceptance of these immutable premises, tacitly, because
uncritically and as a matter of course, by hedonistic economics gives
the science a distinctive character and places it in contrast with other
sciences whose premises are of a different order. As has already been
indicated, the premises in question, so far as they are peculiar to the
hedonistic economics, are (_a_) a certain institutional situation, the
substantial feature of which is the natural right of ownership, and
(_b_) the hedonistic calculus. The distinctive character given to this
system of theory by these postulates and by the point of view resulting
from their acceptance may be summed up broadly and concisely in saying
that the theory is confined to the ground of sufficient reason instead
of proceeding on the ground of efficient cause. The contrary is true of
modern science, generally (except mathematics), particularly of such
sciences as have to do with the phenomena of life and growth. The
difference may seem trivial. It is serious only in its consequences. The
two methods of inference--from sufficient reason and from efficient
cause--are out of touch with one another and there is no transition from
one to the other: no method of converting the procedure or the results
of the one into those of the other. The immediate consequence
is that the resulting economic theory is of a teleological
character--"deductive" or "a priori" as it is often called--instead of
being drawn in terms of cause and effect. The relation sought by this
theory among the facts with which it is occupied is the control
exercised by future (apprehended) events over present conduct. Current
phenomena are dealt with as conditioned by their future consequences;
and in strict marginal-utility theory they can be dealt with only in
respect of their control of the present by consideration of the future.
Such a (logical) relation of control or guidance between the future and
the present of course involves an exercise of intelligence, a taking
thought, and hence an intelligent agent through whose discriminating
forethought the apprehended future may affect the current course of
events; unless, indeed, one were to admit something in the way of a
providential order of nature or some occult line of stress of the nature
of sympathetic magic. Barring magical and providential elements, the
relation of sufficient reason runs by way of the interested
discrimination, the forethought, of an agent who takes thought of the
future and guides his present activity by regard for this future. The
relation of sufficient reason runs only from the (apprehended) future
into the present, and it is solely of an intellectual, subjective,
personal, teleological character and force; while the relation of cause
and effect runs only in the contrary direction, and it is solely of an
objective, impersonal, materialistic character and force. The modern
scheme of knowledge, on the whole, rests, for its definitive ground, on
the relation of cause and effect; the relation of sufficient reason
being admitted only provisionally and as a proximate factor in the
analysis, always with the unambiguous reservation that the analysis must
ultimately come to rest in terms of cause and effect. The merits of this
scientific animus, of course, do not concern the present argument.
Now, it happens that the relation of sufficient reason enters very
substantially into human conduct. It is this element of discriminating
forethought that distinguishes human conduct from brute behavior. And
since the economist's subject of inquiry is this human conduct, that
relation necessarily comes in for a large share of his attention in any
theoretical formulation of economic phenomena, whether hedonistic or
otherwise. But while modern science at large has made the causal
relation the sole ultimate ground of theoretical formulation; and while
the other sciences that deal with human life admit the relation of
sufficient reason as a proximate, supplementary, or intermediate ground,
subsidiary, and subservient to the argument from cause to effect;
economics has had the misfortune--as seen from the scientific point of
view--to let the former supplant the latter. It is, of course, true that
human conduct is distinguished from other natural phenomena by the human
faculty for taking thought, and any science that has to do with human
conduct must face the patent fact that the details of such conduct
consequently fall into the teleological form; but it is the peculiarity
of the hedonistic economics that by force of its postulates its
attention is confined to this teleological bearing of conduct alone. It
deals with this conduct only in so far as it may be construed in
rationalistic, teleological terms of calculation and choice. But it is
at the same time no less true that human conduct, economic or otherwise,
is subject to the sequence of cause and effect, by force of such
elements as habituation and conventional requirements. But facts of this
order, which are to modern science of graver interest than the
teleological details of conduct, necessarily fall outside the attention
of the hedonistic economist, because they cannot be construed in terms
of sufficient reason, such as his postulates demand, or be fitted into a
scheme of teleological doctrines.
There is, therefore, no call to impugn these premises of the
marginal-utility economics within their field. They commend themselves
to all serious and uncritical persons at the first glance. They are
principles of action which underlie the current, business-like scheme of
economic life, and as such, as practical grounds of conduct, they are
not to be called in question without questioning the existing law and
order. As a matter of course, men order their lives by these principles
and, practically, entertain no question of their stability and finality.
That is what is meant by calling them institutions; they are settled
habits of thought common to the generality of men. But it would be mere
absentmindedness in any student of civilization therefore to admit that
these or any other human institutions have this stability which is
currently imputed to them or that they are in this way intrinsic to the
nature of things. The acceptance by the economists of these or other
institutional elements as given and immutable limits their inquiry in a
particular and decisive way. It shuts off the inquiry at the point where
the modern scientific interest sets in. The institutions in question are
no doubt good for their purpose as institutions, but they are not good
as premises for a scientific inquiry into the nature, origin, growth,
and effects of these institutions and of the mutations which they
undergo and which they bring to pass in the community's scheme of life.
To any modern scientist interested in economic phenomena, the chain of
cause and effect in which any given phase of human culture is involved,
as well as the cumulative changes wrought in the fabric of human conduct
itself by the habitual activity of mankind, are matters of more
engrossing and more abiding interest than the method of inference by
which an individual is presumed invariably to balance pleasure and pain
under given conditions that are presumed to be normal and invariable.
The former are questions of the life-history of the race or the
community, questions of cultural growth and of the fortunes of
generations; while the latter is a question of individual casuistry in
the face of a given situation that may arise in the course of this
cultural growth. The former bear on the continuity and mutations of that
scheme of conduct whereby mankind deals with its material means of life;
the latter, if it is conceived in hedonistic terms, concerns a
disconnected episode in the sensuous experience of an individual member
of such a community.
In so far as modern science inquires into the phenomena of life, whether
inanimate, brute, or human, it is occupied about questions of genesis
and cumulative change, and it converges upon a theoretical formulation
in the shape of a life-history drawn in causal terms. In so far as it
is a science in the current sense of the term, any science, such as
economics, which has to do with human conduct, becomes a genetic inquiry
into the human scheme of life; and where, as in economics, the subject
of inquiry is the conduct of man in his dealings with the material means
of life, the science is necessarily an inquiry into the life-history of
material civilization, on a more or less extended or restricted plan.
Not that the economist's inquiry isolates material civilization from all
other phases and bearings of human culture, and so studies the motions
of an abstractly conceived "economic man." On the contrary, no
theoretical inquiry into this material civilization that shall be at all
adequate to any scientific purpose can be carried out without taking
this material civilization in its causal, that is to say, its genetic,
relations to other phases and bearings of the cultural complex; without
studying it as it is wrought upon by other lines of cultural growth and
as working its effects in these other lines. But in so far as the
inquiry is economic science, specifically, the attention will converge
upon the scheme of material life and will take in other phases of
civilization only in their correlation with the scheme of material
civilization.
Like all human culture this material civilization is a scheme of
institutions--institutional fabric and institutional growth. But
institutions are an outgrowth of habit. The growth of culture is a
cumulative sequence of habituation, and the ways and means of it are the
habitual response of human nature to exigencies that vary incontinently,
cumulatively, but with something of a consistent sequence in the
cumulative variations that so go forward,--incontinently, because each
new move creates a new situation which induces a further new variation
in the habitual manner of response; cumulatively, because each new
situation is a variation of what has gone before it and embodies as
causal factors all that has been effected by what went before;
consistently, because the underlying traits of human nature
(propensities, aptitudes, and what not) by force of which the response
takes place, and on the ground of which the habituation takes effect,
remain substantially unchanged.
Evidently an economic inquiry which occupies itself exclusively with the
movements of this consistent, elemental human nature under given, stable
institutional conditions--such as is the case with the current
hedonistic economics--can reach statical results alone; since it makes
abstraction from those elements that make for anything but a statical
result. On the other hand an adequate theory of economic conduct, even
for statical purposes, cannot be drawn in terms of the individual
simply--as is the case in the marginal-utility economics--because it
cannot be drawn in terms of the underlying traits of human nature
simply; since the response that goes to make up human conduct takes
place under institutional norms and only under stimuli that have an
institutional bearing; for the situation that provokes and inhibits
action in any given case is itself in great part of institutional,
cultural derivation. Then, too, the phenomena of human life occur only
as phenomena of the life of a group or community: only under stimuli due
to contact with the group and only under the (habitual) control
exercised by canons of conduct imposed by the group's scheme of life.
Not only is the individual's conduct hedged about and directed by his
habitual relations to his fellows in the group, but these relations,
being of an institutional character, vary as the institutional scheme
varies. The wants and desires, the end and aim, the ways and means, the
amplitude and drift of the individual's conduct are functions of an
institutional variable that is of a highly complex and wholly unstable
character.
The growth and mutations of the institutional fabric are an outcome of
the conduct of the individual members of the group, since it is out of
the experience of the individuals, through the habituation of
individuals, that institutions arise; and it is in this same experience
that these institutions act to direct and define the aims and end of
conduct. It is, of course, on individuals that the system of
institutions imposes those conventional standards, ideals, and canons of
conduct that make up the community's scheme of life. Scientific inquiry
in this field, therefore, must deal with individual conduct and must
formulate its theoretical results in terms of individual conduct. But
such an inquiry can serve the purposes of a genetic theory only if and
in so far as this individual conduct is attended to in those respects in
which it counts toward habituation, and so toward change (or stability)
of the institutional fabric, on the one hand, and in those respects in
which it is prompted and guided by the received institutional
conceptions and ideals on the other hand. The postulates of marginal
utility, and the hedonistic preconceptions generally, fail at this point
in that they confine the attention to such bearings of economic conduct
as are conceived not to be conditioned by habitual standards and ideals
and to have no effect in the way of habituation. They disregard or
abstract from the causal sequence of propensity and habituation in
economic life and exclude from theoretical inquiry all such interest in
the facts of cultural growth, in order to attend to those features of
the case that are conceived to be idle in this respect. All such facts
of institutional force and growth are put on one side as not being
germane to pure theory; they are to be taken account of, if at all, by
afterthought, by a more or less vague and general allowance for
inconsequential disturbances due to occasional human infirmity. Certain
institutional phenomena, it is true, are comprised among the premises of
the hedonists, as has been noted above; but they are included as
postulates a priori. So the institution of ownership is taken into the
inquiry not as a factor of growth or an element subject to change, but
as one of the primordial and immutable facts of the order of nature,
underlying the hedonistic calculus. Property, ownership, is presumed as
the basis of hedonistic discrimination and it is conceived to be given
in its finished (nineteenth-century) scope and force. There is no
thought either of a conceivable growth of this definitive
nineteenth-century institution out of a cruder past or of any
conceivable cumulative change in the scope and force of ownership in the
present or future. Nor is it conceived that the presence of this
institutional element in men's economic relations in any degree affects
or disguises the hedonistic calculus, or that its pecuniary conceptions
and standards in any degree standardize, color, mitigate, or divert the
hedonistic calculator from the direct and unhampered quest of the net
sensuous gain. While the institution of property is included in this way
among the postulates of the theory, and is even presumed to be
ever-present in the economic situation, it is allowed to have no force
in shaping economic conduct, which is conceived to run its course to its
hedonistic outcome as if no such institutional factor intervened between
the impulse and its realization. The institution of property, together
with all the range of pecuniary conceptions that belong under it and
that cluster about it, are presumed to give rise to no habitual or
conventional canons of conduct or standards of valuation, no proximate
ends, ideals, or aspirations. All pecuniary notions arising from
ownership are treated simply as expedients of computation which mediate
between the pain-cost and the pleasure-gain of hedonistic choice,
without lag, leak, or friction; they are conceived simply as the
immutably correct, God-given notation of the hedonistic calculus.
The modern economic situation is a business situation, in that economic
activity of all kinds is commonly controlled by business considerations.
The exigencies of modern life are commonly pecuniary exigencies. That is
to say they are exigencies of the ownership of property. Productive
efficiency and distributive gain are both rated in terms of price.
Business considerations are considerations of price, and pecuniary
exigencies of whatever kind in the modern communities are exigencies of
price. The current economic situation is a price system. Economic
institutions in the modern civilized scheme of life are (prevailingly)
institutions of the price system. The accountancy to which all phenomena
of modern economic life are amenable is an accountancy in terms of
price; and by the current convention there is no other recognized scheme
of accountancy, no other rating, either in law or in fact, to which the
facts of modern life are held amenable. Indeed, so great and pervading a
force has this habit (institution) of pecuniary accountancy become that
it extends, often as a matter of course, to many facts which properly
have no pecuniary bearing and no pecuniary magnitude, as, _e.g._, works
of art, science, scholarship, and religion. More or less freely and
fully, the price system dominates the current commonsense in its
appreciation and rating of these non-pecuniary ramifications of modern
culture; and this in spite of the fact that, on reflection, all men of
normal intelligence will freely admit that these matters lie outside the
scope of pecuniary valuation.
Current popular taste and the popular sense of merit and demerit are
notoriously affected in some degree by pecuniary considerations. It is a
matter of common notoriety, not to be denied or explained away, that
pecuniary ("commercial ") tests and standards are habitually made use of
outside of commercial interests proper. Precious stones, it is admitted,
even by hedonistic economists, are more esteemed than they would be if
they were more plentiful and cheaper. A wealthy person meets with more
consideration and enjoys a larger measure of good repute than would fall
to the share of the same person with the same habit of mind and body and
the same record of good and evil deeds if he were poorer. It may well be
that this current "commercialisation" of taste and appreciation has been
overstated by superficial and hasty critics of contemporary life, but it
will not be denied that there is a modicum of truth in the allegation.
Whatever substance it has, much or little, is due to carrying over into
other fields of interest the habitual conceptions induced by dealing
with and thinking of pecuniary matters. These "commercial" conceptions
of merit and demerit are derived from business experience. The pecuniary
tests and standards so applied outside of business transactions and
relations are not reducible to sensuous terms of pleasure and pain.
Indeed, it may, _e.g._, be true, as is commonly believed, that the
contemplation of a wealthy neighbor's pecuniary superiority yields
painful rather than pleasurable sensations as an immediate result; but
it is equally true that such a wealthy neighbor is, on the whole, more
highly regarded and more considerately treated than another neighbor who
differs from the former only in being less enviable in respect of
wealth.
It is the institution of property that gives rise to these habitual
grounds of discrimination, and in modern times, when wealth is counted
in terms of money, it is in terms of money value that these tests and
standards of pecuniary excellence are applied. This much will be
admitted. Pecuniary institutions induce pecuniary habits of thought
which affect men's discrimination outside of pecuniary matters; but the
hedonistic interpretation alleges that such pecuniary habits of thought
do not affect men's discrimination in pecuniary matters. Although the
institutional scheme of the price system visibly dominates the modern
community's thinking in matters that lie outside the economic interest,
the hedonistic economists insist, in effect, that this institutional
scheme must be accounted of no effect within that range of activity to
which it owes its genesis, growth, and persistence. The phenomena of
business, which are peculiarly and uniformly phenomena of price, are in
the scheme of the hedonistic theory reduced to non-pecuniary hedonistic
terms and the theoretical formulation is carried out as if pecuniary
conceptions had no force within the traffic in which such conceptions
originate. It is admitted that preoccupation with commercial
interests has "commercialised" the rest of modern life, but the
"commercialisation" of commerce is not admitted. Business transactions
and computations in pecuniary terms, such as loans, discounts, and
capitalisation, are without hesitation or abatement converted into terms
of hedonistic utility, and conversely.
It may be needless to take exception to such conversion from pecuniary
into sensuous terms, for the theoretical purpose for which it is
habitually made; although, if need were, it might not be excessively
difficult to show that the whole hedonistic basis of such a conversion
is a psychological misconception. But it is to the remoter theoretical
consequences of such a conversion that exception is to be taken. In
making the conversion abstraction is made from whatever elements do not
lend themselves to its terms; which amounts to abstracting from
precisely those elements of business that have an institutional force
and that therefore would lend themselves to scientific inquiry of the
modern kind--those (institutional) elements whose analysis might
contribute to an understanding of modern business and of the life of the
modern business community as contrasted with the assumed primordial
hedonistic calculus.
The point may perhaps be made clearer. Money and the habitual resort to
its use are conceived to be simply the ways and means by which
consumable goods are acquired, and therefore simply a convenient method
by which to procure the pleasurable sensations of consumption; these
latter being in hedonistic theory the sole and overt end of all economic
endeavor. Money values have therefore no other significance than that of
purchasing power over consumable goods, and money is simply an expedient
of computation. Investment, credit extensions, loans of all kinds and
degrees, with payment of interest and the rest, are likewise taken
simply as intermediate steps between the pleasurable sensations of
consumption and the efforts induced by the anticipation of these
sensations, other bearings of the case being disregarded. The balance
being kept in terms of the hedonistic consumption, no disturbance arises
in this pecuniary traffic so long as the extreme terms of this extended
hedonistic equation--pain-cost and pleasure-gain--are not altered, what
lies between these extreme terms being merely algebraic notation
employed for convenience of accountancy. But such is not the run of the
facts in modern business. Variations of capitalization, _e.g._, occur
without its being practicable to refer them to visibly equivalent
variations either in the state of the industrial arts or in the
sensations of consumption. Credit extensions tend to inflation of
credit, rising prices, overstocking of markets, etc., likewise without a
visible or securely traceable correlation in the state of the industrial
arts or in the pleasures of consumption; that is to say, without a
visible basis in those material elements to which the hedonistic theory
reduces all economic phenomena. Hence the run of the facts, in so far,
must be thrown out of the theoretical formulation. The hedonistically
presumed final purchase of consumable goods is habitually not
contemplated in the pursuit of business enterprise. Business men
habitually aspire to accumulate wealth in excess of the limits of
practicable consumption, and the wealth so accumulated is not intended
to be converted by a final transaction of purchase into consumable goods
or sensations of consumption. Such commonplace facts as these, together
with the endless web of business detail of a like pecuniary character,
do not in hedonistic theory raise a question as to how these
conventional aims, ideals, aspirations, and standards have come into
force or how they affect the scheme of life in business or outside of
it; they do not raise those questions because such questions cannot be
answered in the terms which the hedonistic economists are content to
use, or, indeed, which their premises permit them to use. The question
which arises is how to explain the facts away: how theoretically to
neutralize them so that they will not have to appear in the theory,
which can then be drawn in direct and unambiguous terms of rational
hedonistic calculation. They are explained away as being aberrations due
to oversight or lapse of memory on the part of business men, or to some
failure of logic or insight. Or they are construed and interpreted into
the rationalistic terms of the hedonistic calculus by resort to an
ambiguous use of the hedonistic concepts. So that the whole "money
economy," with all the machinery of credit and the rest, disappears in a
tissue of metaphors to reappear theoretically expurgated, sterilized,
and simplified into a "refined system of barter," culminating in a net
aggregate maximum of pleasurable sensations of consumption.
But since it is in just this unhedonistic, unrationalistic pecuniary
traffic that the tissue of business life consists; since it is this
peculiar conventionalism of aims and standards that differentiates the
life of the modern business community from any conceivable earlier or
cruder phase of economic life; since it is in this tissue of pecuniary
intercourse and pecuniary concepts, ideals, expedients, and aspirations
that the conjunctures of business life arise and run their course of
felicity and devastation; since it is here that those institutional
changes take place which distinguish one phase or era of the business
community's life from any other; since the growth and change of these
habitual, conventional elements make the growth and character of any
business era or business community; any theory of business which sets
these elements aside or explains them away misses the main facts which
it has gone out to seek. Life and its conjunctures and institutions
being of this complexion, however much that state of the case may be
deprecated, a theoretical account of the phenomena of this life must be
drawn in these terms in which the phenomena occur. It is not simply that
the hedonistic interpretation of modern economic phenomena is inadequate
or misleading; if the phenomena are subjected to the hedonistic
interpretation in the theoretical analysis they disappear from the
theory; and if they would bear the interpretation in fact they would
disappear in fact. If, in fact, all the conventional relations and
principles of pecuniary intercourse were subject to such a perpetual
rationalized, calculating revision, so that each article of usage,
appreciation, or procedure must approve itself _de novo_ on hedonistic
grounds of sensuous expediency to all concerned at every move, it is not
conceivable that the institutional fabric would last over night.
FOOTNOTES:
[1] Reprinted by permission from the _Journal of Political Economy_,
Vol. XVII, No. 9 November 1909.
[2] The conduct of mankind differs from that of the brutes in being
determined by anticipated sensations of pleasure and pain, instead of
actual sensations. Hereby, in so far, human conduct is taken out of the
sequence of cause and effect and falls instead under the rule of
sufficient reason. By virtue of this rational faculty in man the
connection between stimulus and response is teleological instead of
causal.
The reason for assigning the first and decisive place to pleasure,
rather than to pain, in the determination of human conduct, appears to
be the (tacit) acceptance of that optimistic doctrine of a beneficent
order of nature which the nineteenth century inherited from the
eighteenth.
GUSTAV SCHMOLLER'S ECONOMICS[1]
Professor Schmoller's _Grundriss_[2] is an event of the first importance
in economic literature. It appears from later advices that the second
and concluding volume of the work is hardly to be looked for at as early
a date as the author's expressions in his preface had led us to
anticipate. What lies before Professor Schmoller's readers, therefore,
in this first volume of the _Outlines_ is but one-half of the
compendious statement which he here purposes making of his theoretical
position and of his views and exemplification of the scope and method of
economic science. It may accordingly seem adventurous to attempt a
characterisation of his economic system on the basis of this avowedly
incomplete statement. And yet such an endeavor is not altogether
gratuitous, nor need it in any great measure proceed on hypothetical
grounds. The introduction comprised in the present volume sketches the
author's aim in an outline sufficiently full to afford a convincing view
of the "system" of science for which he speaks; and the two books by
which the introduction is followed show Professor Schmoller's method of
inquiry consistently carried out, as well as the reach and nature of the
theoretical conclusions which he considers to lie within the competency
of economic science. And with regard to an economist who is so much of
an innovator,--not to say so much of an iconoclast,--and whose work
touches the foundations of the science so intimately and profoundly, the
interest of his critics and associates must, at least for the present,
center chiefly about these questions as to the scope and nature assigned
to the theory by his discussion, as to the range and character of the
material of which he makes use, and as to the methods of inquiry which
his sagacity and experience commend. So, therefore, while the _Outlines_
is yet incomplete, considered as a compendium of details of doctrine,
the work in its unfinished state need not thereby be an inadequate
expression of Professor Schmoller's relation to economic science.
Herewith for the first time economic readers are put in possession of a
fully advised deliverance on economic science at large as seen and
cultivated by that modernised historical school of which Professor
Schmoller is the authoritative exponent. Valuable and characteristic as
his earlier discussions on the scope and method of the science are, they
are but preliminary studies and tentative formulations as compared with
this maturer work, which not only avows itself a definitive formulation,
but has about it an air of finality perceptible at every turn. But this
comes near saying that it embodies the sole comprehensive working-out of
the scientific aims of the historical school. Discussions partially
covering the field, monographs and sketches there are in great number,
showing the manner of economic theory that was to be looked for as an
outcome of the "historical diversion." Some of these, especially some of
the later ones, are extremely valuable in the results they offer, as
well as significant of the trend which the science is taking under the
hands of the German students.[3] But a comprehensive work, aiming to
formulate a body of economic theory on the basis afforded by the
"historical method," has not hitherto been seriously attempted.
To the broad statement just made exception might perhaps be taken in
favor of Schaeffle's half-forgotten work of the seventies, together
possibly with several other less notable and less consistent endeavors
of a similar kind, dating back to the early decades of the school.
Probably none of the younger generation of economists would be tempted
to cite Roscher's work as invalidating such a statement as the one made
above. Although time has been allowed for the acceptance and
authentication of these endeavors of the earlier historical economists
in the direction of a system of economic theory,--that is to say, of an
economic science,--they have failed of authentication at the hands of
the students of the science; and there seems no reason to regard this
failure as less than definitive.
During the last two decades the historical school has branched into two
main directions of growth, somewhat divergent, so that broad general
statements regarding the historical economists can be less confidently
made to-day than perhaps at any earlier time. Now, as regards the more
conservative branch, the historical economists of the stricter
observance,--these modern continuers of what may be called the elder
line of the historical school can scarcely be said to cultivate a
science at all, their aim being not theoretical work. Assuredly, the
work of this elder line, of which Professor Wagner is the unquestioned
head, is by no means idle. It is work of a sufficiently important and
valuable order, perhaps it is indispensable to the task which the
science has in hand, but, broadly speaking, it need not be counted with
in so far as it touches directly upon economic theory. This elder line
of German economics, in its numerous modern representatives, shows both
insight and impartiality; but as regards economic theory their work
bears the character of eclecticism rather than that of a constructive
advance. Frequent and peremptory as their utterances commonly are on
points of doctrine, it is only very rarely that these utterances embody
theoretical views arrived at or verified by the economists who make them
or by such methods of inquiry as are characteristic of these economists.
Where these expressions of doctrine are not of the nature of maxims of
expediency, they are, as is well known, commonly borrowed somewhat
uncritically from classical sources. Of constructive scientific
work--that is to say, of theory--this elder line of German economics is
innocent; nor does there seem to be any prospect of an eventual output
of theory on the part of that branch of the historical school, unless
they should unexpectedly take advice, and make the scope, and therefore
the method, of their inquiry something more than historical in the sense
in which that term is currently accepted. The historical economics of
the conservative kind seems to be a barren field in the theoretical
respect.
So that whatever characteristic articles of general theory the
historical school may enrich the science with are to be looked for at
the hands of those men who, like Professor Schmoller, have departed from
the strict observance of the historical method. A peculiar interest,
therefore, attaches to his work as the best accepted and most
authoritative spokesman of that branch of historical economics which
professes to cultivate theoretical inquiry. It serves to show in what
manner and degree this more scientific wing of the historical school
have outgrown the original "historical" standpoint and range of
conceptions, and how they have passed from a distrust of all economic
theory to an eager quest of theoretical formulations that shall cover
all phenomena of economic life to better purpose than the body of
doctrine received from the classical writers and more in consonance with
the canons of contemporary science at large. That this should have been
the outcome of the half-century of development through which the school
has now passed might well seem unexpected, if not incredible, to any who
saw the beginning of that divergence within the school, a generation
ago, out of which this modernised, theoretical historical economics has
arisen.
Professor Schmoller entered the field early, in the sixties, as a
protestant against the aims and ideals then in vogue in economics. His
protest ran not only against the methods and results of the classical
writers, but also against the views professed by the leaders of the
historical school, both as regards the scope of the science and as
regards the character of the laws or generalisations sought by the
science. His early work, in so far as he was at variance with his
colleagues, was chiefly critical; and there is no good evidence that he
then had a clear conception of the character of that constructive work
to which it has been his persistent aim to turn the science. Hence he
came to figure in common repute as an iconoclast and an extreme exponent
of the historical school, in that he was held practically to deny the
feasibility of a scientific treatment of economic matters and to aim at
confining economics to narrative, statistics, and description. This
iconoclastic or critical phase of his economic discussion is now past,
and with it the uncertainty as to the trend and outcome of his
scientific activity.
To understand the significance of the diversion created by Professor
Schmoller as regards the scope and method of economics, it is necessary,
very briefly, to indicate the position occupied by that early generation
of historical economists from which his teaching diverged, and more
particularly those points of the older canon at which he has come to
differ characteristically from the views previously in vogue.
As regards the situation in which the historical school, as exemplified
by its leaders, was then placed, it is, of course, something of a
commonplace that by the end of its first twenty years of endeavor in the
reform of economic science the school had, in point of systematic
results, scarcely got beyond preliminaries. And even these preliminaries
were not in all respects obviously to the purpose. A new and wider scope
had been indicated for economic inquiry, as well as a new aim and method
for theoretical discussion. But the new ideals of theoretical advance,
as well as the ways and means indicated for their attainment, still had
mainly a speculative interest. Nothing substantial had been done towards
the realisation of the former or the _mise en oeuvre_ of the latter.
The historical economists can scarcely be said at that time to have put
their hand to the new engines which they professed to house in their
workshop. Apart from polemics and speculation concerning ideals, the
serious interest and endeavors of the school had up to that time been in
the field of history rather than in that of economics, except so far as
the adepts of the new school continued in a fragmentary way to inculcate
and, in some slight and uncertain degree, to elaborate the dogmas of the
classical writers whom they sought to discredit.
The character of historical economics at the time when Professor
Schmoller entered on his work of criticism and revision is fairly shown
by Roscher's writings. Whatever may be thought to-day of Roscher's rank
as an economist, in contrast with Knies and Hildebrand, it will scarcely
be questioned that at the close of the first quarter-century of the life
history of the historical school it was Roscher's conception of the
scope and method of economics that found the widest acceptance and that
best expressed the animus of that body of students who professed to
cultivate economics by the historical method. For the purpose in hand
Roscher's views may, therefore, be taken as typical, all the more
readily since for the very general purpose here intended there are no
serious discrepancies between Roscher and his two illustrious
contemporaries. The chief difference is that Roscher is more naive and
more specific. He has also left a more considerable volume of results
achieved by the professed use of his method.
Roscher's professed method was what he calls the
"historico-physiological" method. This he contrasts with the
"philosophical" or "idealistic" method. But his air of depreciation as
regards "philosophical" methods in economics must not be taken to mean
that Roscher's own economic speculations were devoid of all
philosophical or metaphysical basis. It only means that his
philosophical postulates were different from those of the economists
whom he discredits, and that they were regarded by him as self-evident.
As must necessarily be the case with a writer who had neither a special
aptitude for nor special training in philosophical inquiries, Roscher's
metaphysical postulates are, of course, chiefly tacit. They are the
common-sense, commonplace metaphysics afloat in educated German circles
in the time of Roscher's youth,--during the period when his growth and
education gave him his outlook on life and knowledge and laid the basis
of his intellectual habits; which means that these postulates belong to
what Hoeffding has called the "Romantic" school of thought, and are of a
Hegelian complexion. Roscher being not a professed philosophical
student, it is neither easy nor safe to particularise closely as regards
his fundamental metaphysical tenets; but, as near as so specific an
identification of his philosophical outlook is practicable, he must be
classed with the Hegelian "Right." But since the Hegelian metaphysics
had in Roscher's youth an unbroken vogue in reputable German circles,
especially in those ultra-reputable circles within which lay the
gentlemanly life and human contact of Roscher, the postulates afforded
by the Hegelian metaphysics were accepted simply as a matter of course,
and were not recognised as metaphysical at all. And in this his
metaphysical affiliation Roscher is fairly typical of the early
historical school of economics.
The Hegelian metaphysics, in so far as bears upon the matter in hand, is
a metaphysics of a self-realising life process. This life process, which
is the central and substantial fact of the universe, is of a spiritual
nature,--"spiritual," of course, being here not contrasted with
"material." The life process is essentially active, self-determining,
and unfolds by inner necessity,--by necessity of its own substantially
active nature. The course of culture, in this view, is an unfolding
(exfoliation) of the human spirit; and the task which economic science
has in hand is to determine the laws of this cultural exfoliation in its
economic aspect. But the laws of the cultural development with which the
social sciences, in the Hegelian view, have to do are at one with the
laws of the processes of the universe at large; and, more immediately,
they are at one with the laws of the life process at large. For the
universe at large is itself a self-unfolding life process, substantially
of a spiritual character, of which the economic life process which
occupies the interest of the economist is but a phase and an aspect.
Now, the course of the processes of unfolding life in organic nature has
been fairly well ascertained by the students of natural history and the
like; and this, in the nature of the case, must afford a clew to the
laws of cultural development, in its economic as well as in any other of
its aspects or bearings,--the laws of life in the universe being all
substantially spiritual and substantially at one. So we arrive at a
physiological conception of culture after the analogy of the ascertained
physiological processes seen in the biological domain. It is conceived
to be physiological after the Hegelian manner of conceiving a
physiological process, which is, however, not the same as the modern
scientific conception of a physiological process.[4]
Since this quasi-physiological process of cultural development is
conceived to be an unfolding of the self-realising human spirit, whose
life history it is, it is of the nature of the case that the cultural
process should run through a certain sequence of phases--a certain life
history prescribed by the nature of the active, unfolding spiritual
substance. The sequence is determined on the whole, as regards the
general features of the development, by the nature of life on the human
plane. The history of cultural growth and decline necessarily repeats
itself, since it is substantially the same human spirit that seeks to
realise itself in every comprehensive sequence of cultural development,
and since this human spirit is the only factor in the case that has
substantial force. In its generic features the history of past cultural
cycles is, therefore, the history of the future. Hence the importance,
not to say the sole efficacy for economic science, of an historical
scrutiny of culture. A well-authenticated sequence of cultural phenomena
in the history of the past is conceived to have much the same binding
force for the sequence of cultural phenomena in the future as a "natural
law," as the term has been understood in physics or physiology, is
conceived to have as regards the course of phenomena in the life history
of the human body; for the onward cultural course of the human spirit,
actively unfolding by inner necessity, is an organic process, following
logically from the nature of this self-realising spirit. If the process
is conceived to meet with obstacles or varying conditions, it adapts
itself to the circumstances in any given case, and it then goes on along
the line of its own logical bent until it eventuates in the consummation
given by its own nature. The environment, in this view, if it is not to
be conceived simply as a function of the spiritual force at work, is, at
the most, of subsidiary and transient consequence only. Environmental
conditions can at best give rise to minor perturbations; they do not
initiate a cumulative sequence which can profoundly affect the outcome
or the ulterior course of the cultural process. Hence the sole, or
almost sole, importance of historical inquiry in determining the laws of
cultural development, economic or other.
The working conception which this romantic-historical school had of
economic life, therefore, is, in its way, a conception of development,
or evolution; but it is not to be confused with Darwinism or
Spencerianism. Inquiry into the cultural development under the guidance
of such preconceptions as these has led to generalisations, more or less
arbitrary, regarding uniformities of sequence in phenomena, while the
causes which determine the course of events, and which make the
uniformity or variation of the sequence, have received but scant
attention. The "natural laws" found by this means are necessarily of the
nature of empiricism, colored by the bias or ideals of the investigator.
The outcome is a body of aphoristic wisdom, perhaps beautiful and
valuable after its kind, but quite fatuous when measured by the
standards and aims of modern science. As is well known, no substantial
theoretical gain was made along this romantic-historical line of inquiry
and speculation, for the reason, apparently, that there are no cultural
laws of the kind aimed at, beyond the unprecise generalities that are
sufficiently familiar beforehand to all passably intelligent adults.
* * * * *
It has seemed necessary to offer this much in characterisation of that
"historical" aim and method which afforded a point of departure for
Professor Schmoller's work of revision. When he first raised his protest
against the prevailing ideals and methods, as being ill-advised and not
thorough-going, he does not seem himself to have been entirely free from
this Romantic, or Hegelian, bias. There is evidence to the contrary in
his early writings.[5] It cannot even be said that his later theoretical
work does not show something of the same animus, as, _e.g._, when he
assumes that there is a meliorative trend in the course of cultural
events.[6] What has differentiated his work from that of the group of
writers which has above been called the elder line of historical
economics is the weakness or relative absence of this bias in his
theoretical work. Particularly, he has refused to bring his researches
in the field of theory definitely to rest on ground given by the
Hegelian, or Romantic, school of thought. He was from the first
unwilling to accept classificatory statements of uniformity or of
normality as an adequate answer to questions of scientific theory. He
does not commonly deny the truth or the importance of the empirical
generalisations aimed at by the early historical economists. Indeed, he
makes much of them and has been notoriously urgent for a full survey of
historical data and a painstaking digestion of materials with a view to
a comprehensive work of empirical generalisation. As is well known, in
his earlier work of criticism and methodological controversy he was led
to contend that for at least one generation economists must be content
to spend their energies on descriptive work of this kind; and he thereby
earned the reputation of aiming to reduce economics to a descriptive
knowledge of details and to confine its method to the Baconian ground of
generalisation by simple enumeration. But this exhaustive historical
scrutiny and description of detail has always, in Professor Schmoller's
view, been preliminary to an eventual theory of economic life. The
survey of details and the empirical generalisations reached by its help
are useful for the scientific purpose only as they serve the end of an
eventual formulation of the laws of causation that work out in the
process of economic life. The ulterior question, to which all else is
subsidiary, is a question of the causes at work rather than a question
of the historical uniformities observable in the sequence of phenomena.
The scrutiny of historical details serves this end by defining the scope
and character of the several factors causally at work in the growth of
culture, and, what is of more immediate consequence, as they are at work
in the shaping of the economic activities and the economic aims of men
engaged in this unfolding cultural process as it lies before the
investigator in the existing situation.
In the preliminary work, then, of defining and characterising the causes
or factors of economic life, historical investigation plays a large, if
not the largest, part; but it is by no means the sole line of inquiry to
which recourse is had for this purpose. Nor, it may be added, is this
the sole use of historical inquiry. To the like end a comparative study
of the climatic, geographical, and geological features of the
community's environment is drawn into the inquiry; and more particularly
there is a careful study of ethnographic parallels and a scrutiny of the
psychological foundations of culture and the psychological factors
involved in cultural change.
Hence it appears that Professor Schmoller's work differs from that of
the elder line of historical economics in respect of the scope and
character of the preliminaries of economic theory no less than in the
ulterior aim which he assigns the science. It is only by giving a very
broad meaning to the term that this latest development of the science
can be called an "historical" economics. It is Darwinian rather than
Hegelian, although with the earmarks of Hegelian affiliation visible now
and again; and it is "historical" only in a sense similar to that in
which a Darwinian account of the evolution of economic institutions
might be called historical. For the distinguishing characteristic of
Professor Schmoller's work, that wherein it differs from the earlier
work of the economists of his general class, is that it aims at a
Darwinistic account of the origin, growth, persistence, and variation of
institutions, in so far as these institutions have to do with the
economic aspect of life either as cause or as effect. In much of what he
has to say, he is at one with his contemporaries and predecessors within
the historical school; and he shows at many points both the excellences
and weaknesses due to his "historical" antecedents. But his striking and
characteristic merits lie in the direction of a post-Darwinian, causal
theory of the origin and growth of species in institutions. In this line
of theoretical inquiry Professor Schmoller is not alone, nor does he,
perhaps, go so far or with such singleness of purpose in this direction
as some others do at given points; but the seniority belongs to him, and
he is also in the lead as regards the comprehensiveness of his work.
* * * * *
But to return to the _Grundriss_, to which recourse must be had to
substantiate the characterisation here offered. The entire work as
projected comprises an Introduction and four Books, of which the
introduction and the first two books are contained in the volume already
published. The two books yet to be published, in a second volume,
promise to be of a length corresponding to the first two. The present
volume should accordingly contain approximately three-fifths of the
whole, counted by bulk. The scheme of the work is as follows: An
Introduction (pp. 1-124) treats of (1) the Concept of Economics, (2) the
Psychical, Ethical (or Conventional, _sittliche_), and Legal Foundations
of Economic Life and of Culture, and (3) the Literature and Method of
the Science. This is followed by Book I. (pp. 125-228) on Land,
Population, and the Industrial Arts, considered as collective phenomena
and factors in economic life, and Book II. (pp. 229-457), on the
Constitution of Economic Society, its chief organs and the causal
factors to which they are due. Books III. and IV. are to deal with the
Circulation of Goods and the Distribution of Income, and to give a
genetic account of the Development of Economic Society.
The course outlined differs noticeably from what has been customary in
treatises on economics. The point of departure is a comprehensive
general survey of the factors which enter into the growth of culture,
with special reference to their economic bearing. This survey runs
chiefly on psychological and ethnographic ground, historical inquiry in
the stricter sense being relatively scant and obviously of secondary
consequence. It is followed up with a more detailed and searching
discussion of the factors engaged in the economic process in any given
situation. The factors, or "collective phenomena," in question are not
the time-honored Land, Labor, and Capital, but rather population,
material environment, and technological conditions. Here, too, the
discussion has to do with ethnographic rather than with properly
historical material. The question of population concerns not the
numerical force of laborers, but rather the diversity of race
characteristics and the bearing of race endowment upon the growth of
economic institutions. The discussion of the material environment,
again, has relatively little to say of the fertility of the soil, and
gives much attention to diversities of climate, geographical situation,
and geological and biological conditions. And this first book closes
with a survey of the growth of technological knowledge and the
industrial arts.
In all this the significant innovation lies not so much in the character
of the details. They are for the most part commonplace enough as details
of the sciences from which they are borrowed. They are shrewdly chosen
and handled in such a way as to bring out their bearing upon the
ulterior questions about which the economist's interest centers; but
there is, as might be expected, little attempt to go back of the returns
given by specialists in the several lines of research that are laid
under contribution. But the significance of it all lies rather in the
fact that material of this kind should have been drawn upon for a
foundation for economic theory, and that it should have seemed necessary
to Professor Schmoller to make this introductory survey so comprehensive
and so painstaking as it is. Its meaning is that these features of human
nature and these forces of nature and circumstances of environment are
the agencies out of whose interaction the economic situation has arisen
by a cumulative process of change, and that it is this cumulative
process of development, and its complex and unstable outcome, that are
to be the economist's subject-matter. The theoretical outcome for which
such a foundation is prepared is necessarily of a genetic kind. It
necessarily seeks to know and explain the structure and functions of
economic society in terms of how and why they have come to be what they
are, not, as so many economic writers have explained them, in terms of
what they are good for and what they ought to be. It means, in other
words, a deliberate attempt to substitute an inquiry into the efficient
causes of economic life in the place of empirical generalisations, on
the one hand, and speculations as to the eternal fitness of things, on
the other hand.
It follows from the nature of the case that an economics of this genetic
character, working on grounds of the kind indicated, comprises nothing
in the way of advice or admonition, no maxims of expediency, and no
economic, political, or cultural creed. How nearly Professor Schmoller
conforms to this canon of continence is another question. The above
indicates the scope of such doctrines as are consistently derivable from
the premises with which the work under review starts out, not the scope
of its writer's speculations on economic matters.
The second book, by the help of prehistoric and ethnographic material as
well as history, deals with the evolution of the methods of social
organisation,--the growth of institutions in so far as this growth
shapes or is shaped by the exigencies of economic life. The "organs," or
social-economic institutions, whose life history is passed in review
are: the family; the methods of settlement and domicile, in town and
country; the political units of control and administration;
differentiation of functions between industrial and other classes and
groups; ownership, its growth and distribution; social classes and
associations; business enterprise, industrial organisations and
corporations.
As regards the singleness of purpose with which Professor Schmoller has
carried out the scheme of economic theory for which he has sketched the
outlines and pointed the way, it is not possible to speak with the same
confidence as of his preliminary work. It goes without saying that this
further work of elaboration is excellent after its kind; and this
excellence, which was to be looked for at Professor Schmoller's hands,
may easily divert the reader's attention from the shortcomings of the
work in respect of kind rather than of quality. Now, while a broad
generalisation on this head may be hazardous and is to be taken with a
large margin, still, with due allowance, the following generalisation
will probably stand, so far as regards this first volume. So long as the
author is occupied with the life-history of institutions down to
contemporary developments, so long his discussion proceeds by the dry
light of the scientific interest, simply, as the term "scientific" is
understood among the modern adepts of the natural sciences; but so soon
as he comes to close quarters with the situation of to-day, and reaches
the point where a dispassionate analysis and exposition of the causal
complex at work in contemporary institutional changes should begin, so
soon the scientific light breaks up into all the colors of the rainbow,
and the author becomes an eager and eloquent counselor, and argues the
question of what ought to be and what modern society must do to be
saved. The argument at this point loses the character of a genetic
explanation of phenomena, and takes on the character of appeal and
admonition, urged on grounds of expediency, of morality, of good taste,
of hygiene, of political ends, and even of religion. All this, of
course, is what we are used to in the common run of writers of the
historical school; but those students whose interest centers in the
science rather than in the ways and means of maintaining the received
cultural forms of German society have long fancied they had ground to
hope for something more to the purpose when Professor Schmoller came to
put forth his great systematic work. Brilliant and no doubt valuable in
its way and for its end, this digression into homiletics and reformatory
advice means that the argument is running into the sands just at the
stage where the science can least afford it. It is precisely at this
point, where men of less years and breadth and weight would find it
difficult to hold tenaciously to the course of cause and effect through
the maze of jarring interests and sentiments that make up the
contemporary situation,--it is precisely at this point that a genetic
theory of economic life most needs the guidance of the firm, trained,
dispassionate hand of the master. And at this point his guidance all but
fails us.
What has just been said applies generally to Professor Schmoller's
treatment of contemporary economic development, and it should be added
that it applies at nearly all points with more or less of qualification.
But the qualifications required are not large enough to belie the
general characterisation just offered. It would be asking too large an
indulgence to follow the point up in this place through all the
discussions of the volume that fairly come under this criticism. The
most that may be done is to point for illustration to the handling which
two or three of the social-economic "organs" receive. So, for instance,
Book II. opens with an account of the family and its place and function
in the structure of economic society. The discussion proceeds along the
beaten paths of ethnographic research, with repeated and well-directed
recourse to the psychological knowledge that Professor Schmoller always
has well in hand. Coming down into recent times, the discussion still
proceeds to show how the large economic changes of late mediaeval and
early modern times acted to break down the patriarchal regime of the
earlier culture; but at the same time there comes into sight (pp.
245-249) a bias in favor of the recent as against the earlier form of
the household. The author is no longer content to show the exigencies
which set the earlier patriarchal household aside in favor of the
modified patriarchal household of more recent times. He also offers
reasons why the later, modified form is intrinsically the more
desirable; reasons, it should perhaps be said, which may be well taken,
but which are beside the point so far as regards a scientific
explanation of the changes under discussion.
The closing paragraphs of the section (91) dwell with a kindly
insistence on the many elements of strength and beauty possessed by the
form of household organisation handed down from the past generation to
the present. The facts herewith recited by the author are, no doubt, of
weight, and must be duly taken account of by any economist who ventures
on a genetic discussion of the present situation and the changing
fortunes of the received household. But Professor Schmoller has failed
even to point out in what manner these elements of strength and beauty
have in the recent past or may in the present and immediate future
causally affect the fortunes of the institution. The failure to turn the
material in question to scientific account becomes almost culpable in
Professor Schmoller, since there are few, if any, who are in so
favorable a position to outline the argument which a theoretical account
of the situation at this point must take. Plainly, as shown by Professor
Schmoller's argument, economic exigencies are working an incessant
cumulative change in the form of organisation of the modern household;
but he has done little towards pointing out in what manner and with what
effect these exigencies come into play. Neither has he gone at all into
the converse question, equally grave as a question of economic theory,
of how the persistence, even though qualified, of the patriarchal family
has modified and is modifying economic structure and function at other
points and qualifying or accentuating the very exigencies themselves to
which the changes wrought in the institution are to be traced. Plainly,
too, the strength and beauty of the traditionally received form of the
household--that is to say, the habits of life and of complacency which
are bound up with this household--are elements of importance in the
modern situation as affects the degree of persistence and the direction
of change which this institution shows under modern circumstances. They
are psychological facts, facts of habit and propensity and spiritual
fitness, the efficiency of which as live forces making for survival or
variation is in this connection probably second to that of no other
factors that could be named. We had, therefore, almost a right to expect
that Professor Schmoller's profound and comprehensive erudition in the
fields of psychology and cultural growth should turn these facts to
better ends than a preachment concerning an intrinsically desirable
consummation.
Regarding the present visible disintegration of the family, and the
closely related "woman question," Professor Schmoller's observations are
of much the same texture. He notes the growing disinclination to the
old-fashioned family life on the part of the working population, and
shows that there are certain economic causes for this growth or
deterioration of sentiment. What he has to offer is made up of the
commonplaces of latter-day social-economic discussion, and is charged
with a strong undertone of deprecation. What the trend of the causes at
work to alter or fortify this body of sentiment may be, counts for very
little in what he says on the present movement or on the immediate
future of the institution. The best he has to offer on the "woman
question" is an off-hand reference of the ground of sentiment on which
it rests to a recrudescence of the eighteenth century spirit of
_egalite_. This notion of the equality of the sexes he refutes in
graceful and affecting terms, and he pleads for the unbroken
preservation of woman's sphere and man's primacy; as if the matter of
superiority or inferiority between the sexes could conceivably be
anything more than a conventional outcome of the habits of life imposed
upon the community by the circumstances under which they live. How it
has come to pass that under the economic exigencies of the past the
physical and temperamental diversity between the sexes has been
conventionally construed into a superiority of the man and an
inferiority of the woman,--on this head he has no more to say or to
suggest than on the correlate question of why this conventional
interpretation of the facts has latterly not been holding its ancient
ground. The discussion of the family and of the relation of the sexes,
in modern culture, is marked throughout by unwillingness or inability to
penetrate behind the barrier of conventional finality.
The discussion of the family just cited occupies the opening chapter of