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hence, or in the year 2001— all landed property, both in country
and town, shall revert to the State. At that period legislators
could decide, with better lights than we now possess, how to
•dispose of the vast accession to its resom'ces. It would in any
case come into a fund which would enable it to extinguisli all
taxes, and the restrictions to production and commerce they
cause. Unhappily, existing generations care little for a distant
posterity, and would be too apt, were the project under
discussion, to convert it into one for immediate and uncom-
pensated confiscation, such as Mr. George urges with a harshness
that might justify a harsher name. His theory bears decisive
marks of its growth out of tlie anomalous history of the
marvellous region in which it was published, from the first
occupation of the Gold Fields by strangers from every quarter
of the globe, down to the sudden impoverishment of San
Francisco in recent years by the fall in mining stocks and land
values, consequent on rash speculation and imprudent invest-
ments. As Carey's system was a product of the mines of
Pennsylvania, so is Mr. George's of those of California.

The prospects of political economy in the United States
should be augm-ed rather from the capacity shown than from
what has been actually done, and in that sense the works of
both the writers just referred to afford favourable indications.



154 Political Economy in the United States.

Speaking generally, however, the men best qualified to stand in
the front rank of American economists are not the authors of
systems or general theories, or text-books of principles, but
writers on special subjects — David Wells, William M. Grrosvenor,
Albert S. Bolles, Francis A.Walker, Edward Atkinson, William
G. Sumner, 0. F. Dunbar, and Simon Newcomb. Only since
the Civil War has America begun seriously to apply its mind to
economic questions, and the number of powerful intellects it has
brought to bear on them is a remarkable phenomenon in the
history of philosophy. Many of the best economic essays the
last decade has produced will be found in the pages of American
periodicals — the * North American Eeview,' the ' International
Eeview,' the ' Atlantic Monthly,' the ' Penn Monthly,' the
' Princeton Review,' ' Scribuer's Magazine.' Joui-nals like the
' Nation ' and the ' Public ' discuss economic questions with
consummate skill. In the translation of Roscher and Blanqui
work has been done by America which England ought not to
have left it to do. Two considerable contributions to economic
history were made last year in the ' Industrial History of the
United States,' and the ' Financial History of the United
States, 1774-1789,' by Mr. Bolles. In the perfection of its
economic statistics America leaves England behind.

Were we surveying the entire field of political economy, so
far as it has been cultivated in both the old and the new world,
the question would arise : — How much, beneath what can claim
only a local or a temporary importance, possesses universal and
permanent value? What problems have been solved for all
time ? What universal truths have been discovered ? How
much of the work of Adam Smith, Malthus, John Stuart Mill,
Eoscher, Knies, Bastiat, Chevalier, Wayland, Walker, Perry,
Carey, will remain standing and solid a hundred years hence ?'
The subject of this Essay raises a still more important question :
What new economic problems remain ? Among them are some,
it may confidently be affirmed, which the chief economists of
both worlds have never yet raised, and of which they have not
dreamt. There is reason to believe that America will take an
active part both in bringing them to light and in their solution.



XIV.

ECONOMIC SCIENCE AND STATISTICS.*

Economic Science was not formally included within tlie
Statistical Section of the British Association until 1856 ; and,
even since then, addresses of distinguished Presidents of the
Section have turned mainly on its statistical functions, and
have been devoted principally to an inquiry into the nature and
province of statistics. That the inquiry is neither so superfluous
nor so easy as might at first appear is sufficiently shown by the
fact that there are, according to the great German statist, Dr.
Engel, no less than 180 definitions of the term to be met with
in the works of different authors. These various definitions
may, however, be said to group themselves round one or other
of three conceptions, of which one follows the popular view of
statistics ; the etymological and original meaning almost
disappearing in the notion merely of tables of figures, or
numbers of facts, of which the chief significance lies in their
numerical statement. According to another conception, statis-
tics, following etymology and the siguification given to Statistik
by the famous Gottingen school, should be regarded as equivalent
to the science of States, or political science, but, nevertheless,
as confining itself to the ascertainment and collection of facts
indicative of the condition and prospects of society, without
inquiring into causes or reasoning on probable effects, and
carefully discarding hypothesis, theory, and speculation in its
investigations. A third conception is, that statistical science
aims at the discovery, not only of the phenomena of society,
but also of their laws, and by no means discards either inquiry
into causes and effects or theoretical reasoning.



* Athenmnm, September 27, 1873.— "Written on the meeting of Section Y of
the British Association for the Advancement of Science, September, 1873.



156 Economic Science and Statistics.

It is curious that some who give to statistics the first of
these three meanings, and who regard the numerical statement
of facts, and the marshalling of tables of figures, as the proper
business of the statistician, nevertheless speak of statistics as a
science. But, as the eminent economist Roscher has observed,
numbering or numerical statement is only an instrument of
which any branch of science may avail itself, and can never,
in itself, constitute a science. No one, as he says, would dream
of making a science of microscopies, or observations made
through the microscope. The distinguished English statistician
and economist, Mr. Jevons, has likewise condemned the miscon-
ception of statistics and the misuse of the term we refer to in
language worth recalling : — ' Many persons now use the word
statistical as if it were synonymous with numerical ; but it is a
mere accident of the information with which we deal that it is
often expressed in a numerical or tabular form. As other
sciences progress, they become more and more a matter of
quantity and number, and so does statistical science ; but we
must not suppose that the occurrence of numerical statement is
the mark of statistical information.'

The doctrine that the consideration of causes and probable
reasoning are excluded from the province of statistics, and that
statisticians should confine themselves to the ascertainment of
facts, is hardly more satisfactory. No branch of science, no
scientific body, confines itself to the observation of phenomena
without seeking to interpret them or to ascertain their laws.
It is not, indeed, possible, at present, to explain all the
phenomena which come within the observation of the statist,
or to connect them with any law of causation ; and even naked
collections of statistical facts may be useful as aids to further
inquiry, or as supplying links in the chain of observed effects.
But serious error, and even practical mischief, have followed
from attention merely to the recuiTcnce of statistical facts
without inquiry into their causes. A theory of a decennial
recurrence of commercial ciises, for example, was based on the
occurrence of crises in 1837, 1847, and 1857. Had the causes
of commercial crises been examined, it would have been



Economic Science and Statistics. 157

discovered that they are extremely various and uncertain in their
occurrence ; that a war, a bad harvest, a drain of the precious
metals, anything, in short, which produces a panic, may cause
a crisis ; and as there is no decennial periodicity in the causes
there can be none in the effects.

These considerations lead us to adopt the third conception
noticed above, namely, that statistical science investigates the
laws of social phenomena as well as the phenomena themselves ;.
and, if not co-extensive with sociology, or the science of
society — because not going so far back in its researches, and
confining itself to the phenomena of modern society — yet
employs all available methods, inquiry into causes, theory, and
probable reasoning for the interpretation of the facts it discovers.
But it is not easy to give to a word a signification other than
the one which long usage has put upon it; and, unfortunately,
to the majority of persons the term statistics denotes simply
dry figures and tabulated facts. The Statistical Section of the
British Association has found a means to escape from the
difficulty, in a great measure, by allying itself formally to
Economic Science. It thus embraces definitely and expressly
the whole economic side of the science of society, including the
investigation of laws of causation, as well as the observation of
facts, and employing all the methods of scientific investigation
and reasoning. But if it deals in this manner with economic
facts, it can hardly fail to do so likewise with the other classes
of social phenomena which it approaches. And thus, however
narrow may be the sense in which the term statistics may be
elsewhere employed, the Statistical Section of the British
Association is free from all trammel, and unfettered by any
exclusion of theory, or even speculation, in its investigation of
political and social problems.

The formal incorporation of economic science with statistics
has another great advantage : it tends to correct the error to
which economists as well as that to wliich statisticians are
specially prone. If the latter have been apt to think only of
facts, it has been the besetting sin of the former to neglect facts
altogether ; if statisticians have often been content to collect



158 Economic Science and Statistics.

phenomena without heed to their laws, economists more often
still have jumped to the laws without heed to the phenomena ;
if statistics have lain chiefly in the region of dry figures and
numerical tables, economics have dwelt chiefly in that region of
assumption, conjecture, and provisional generalization, which
other sciences, indeed — geology to witness — have not escaped,
but from which they are triumphantly emerging by combining
the closest observation of phenomena with the boldest use of
speculation and scientific hypothesis.

We may thus look for considerable benefit to both political
economy and statistics from the combination of the methods to
which the followers of each have been specially addicted.
The subjects which occupied the principal place in Mr. Forster's
address, and in the attention of the Section, conspicuously
illustrate the importance of combining statistical with economic
inquiry, and the characteristic defects of the economic and
statistical methods hitherto commonly followed. Take, for
example, the question of wages. The relations of capital and
labour, and the causes determining the rates of wages, are not
to be summed up or disposed of in any brief formula or so-called
' economic law.' But much might have been done, by the
collection of statistics and careful inquiry into facts, towards
obtaining much closer approximations to truth than the
generalizations which take the name of ' the wages fund,' ' the
equality of profits,' ' the average rate of wages ' — generalizations
of which the world generally has grown a little doubtful and
not a little weary.

Economists have been accustomed to assume that wages on
the one hand and profits on the other are, allowing for differences
in skill and soforth, equalized by competition, and that neither
wages nor profits can anywhere rise above ' the average rate,'
without a consequent influx of labour or of capital bringing
things to a level. Had economists, however, in place of
reasoning from an assumption, examined the facts connected
with the rate of wages, they would have found, from authentic
statistics, the actual differences so great, even in the same
occupation, that they are double in one place what they are in



Economic Science and Statistics. 159

another. Statistics of profits are not, indeed, obtainable like
statistics of wages ; and the fact that they are not so, that the actual
profits are kept a profound secret in some of the most prominent
trades, is itself enough to deprive the theory of equal profits of
its base. Enough, however, is known or discovered from time
to time, by the working men in particular trades, to justify them
in the conclusion, on the one hand, that profits will bear a reduc-
tion, and that wages may consequently receive an augmentation;
and, on the other hand, that competition has not produced, and
will not produce, those results. When, therefore, Mr. Forster
assumes that the majority of working men are now disposed
to admit, as fundamental truths of economic science, that the
remuneration of labour can be raised only in three ways — by
the increase of capital, the diminution of the whole labouring
population, or the participation of labourers in capital — we are
reminded that not a few working men in certain trades believe
there is another mode by which their remuneration might be
raised, namely, by a participation in profits, which are
enormously high ; and that they believe, too, that this partici-
pation can be secured only by combination, not by competition.
Not quite consistently with his own statement, that one of the
methods by which wages may be raised is a diminution of
population, Mr. Forster pointed to the increase in the population
of England and Wales from I65 millions in 1831 to 21^ millions
in 1871, simultaneously with an increase of general prosperity,
as militating against the theory of population advocated by
Malthus and Mr. Mill, and the necessity those great writers
contended for, of a prudential check to the potential rate of
births. An unrestrained potential increase would have doubled
the 16| millions about 1856 ; at the present time there would,
at the same rate, be about 50 millions of people in England and
Wales ; and, before the end of the century, the population of
that part of the United Kingdom would exceed 100 millions.
Either, therefore, the prudential check has been firmly opposed
by some classes of the population to the potential increase, and
has permitted that increase of prosperity which Mr. Forster
assumes ; or other checks, in the shape of death and infirmity,



160 Economic Science and Statistics,

have acted instead of the prudential check, and demonstrated
the urgent necessity for it. Another point, in connexion with
wages, on which Mr. Forster's reasoning seems to need some
explanation, relates to the agricultural labourers. He seems to
throw out an opinion that there is yet another source, besides
those which have been named, from which the wages of labour
may be raised, namely, rent ; but his language on the subject
leaves much to be desired, to use a Gallicism, on the head of
clearness. He says it is well there is here ' a third class, namely,
the landlords, who are able to entc^r into the question, and to act
as mediators.' But then he adds that a Paper might well be
devoted in the Section to the question, how far the rent paid
for land affects the question of wages. The innuendo would
appear to be that an increase of rural wages may be brought
about by an abatement of rent ; and we fail to see how that
prospect places the landlords in a position to qualify them for
the position of impartial mediators between farmers and men.
Another important subject discussed in the Section, the treat-
ment of which was not exhaustive in respect of either the
economic or the statistical methods employed, was that of prices,
and the rise in the cost of living. Mr. Levi took the prices of
the Metropolitan Meat Market for his measure with respect to
that article, adding, indeed, the expression of an opinion, that
the rise has been greater in the chief towns than in other parts
of the kingdom. The fact is, that the diffusion of steam com-
munication in the last twenty-five years has raised the price of
meat in country places and remote parts of the kingdom much
more than in the chief towns, because it has raised it from a much
lower point in the former to something like the same price as
in the latter localities. In many parts of Ireland and Scotland,
where, thirty years ago, the price of butcher's meat averaged
2>d. a pound, it is now not much below the London price ; and
this equalization of prices, where the means of communication
have been equalized, is connected with the distribution of
money over the world, in a manner very necessary to be borne
in mind in estimate both of past and probable future changes
in the cost of living. The prices of the Metropolitan Meat



Economic Science and Statistics. 161

Market afford, for another reason, insufficient indications of
what has actually taken place in respect of the purchasing
power of money. The price of mutton per pound in that
market has risen from 6'37, in 1863-7, to 7-62, in 1873. But
in the same period the price of a mutton chop in a London
railway refreshment-room has risen from Qd. to l.s. ; and, in
fact, the rise in retail prices, on which the cost of living really
depends, is more accurately indicated by the latter figures than
by those which Mr. Levi has cited. It is obvious, too, that the
rise in wages is to a very large class, who have to pay servants'
wages — an addition, and not a counterpoise, to the increased cost
of living arising from the rise of commodities. Mr. Levi, we
might add, seems to have caused some confusion of ideas, if he
did not fall into it himself, with respect to the effect on the price
of necessaries and ordinary comforts of an increased expenditure
on luxuries. The consumption of better qualities of food and
clothing would naturally tend to raise the cost of the particular
articles on which the increased outlay took place. But an
increased expenditure on luxuries, such as seal-skin jackets,
carriages, wine, tobacco, would, cceteris paribus, diminish the
outlay on other things, and would tend to a corresponding fall
in the prices of the latter. Had we, however, much fuller
fitatistics than are forthcoming respecting the changes in prices
throughout the United Kingdom, we should still be unable to
form a sound judgment respecting the most important part of
the question, namely, the probable future range of prices,
without a mass of additional information respecting the causes
which have acted on the supply of each article, and on the
distribution of money as well as on its amount. And we have
in this matter an illustration of the defective character of that
kind of statistical inquiry which confines itself to the collection
of a multitude of instances of facts, without reference to causes.
It must be allowed that the principles laid down by the
illustrious Quetelet rather tend to foster the error to which we
advert. He assumed that by enlarging the number of instances
we eliminate chance, and arrive at general and stable laws or
conditions. But a great number of instances does not give us

M



162



Economic Science and Statistics.



their law, or justify us in any positive conclusion respecting the
future. New conditions, for example, have been acting on
prices during the last two years, and mere tables of prices for
the last twenty or ten years confound years in which those
causes were in operation with years in which they were not.

We cannot close these few remarks and suggestions without
thanking Mr. Forster, the eminent President of Section F, for
the just, but not the less generous, tribute which he paid to the
great leader of economic science, whom the world has lately lost
in Mr. John Stuart Mill.



XV.

ON THE PHILOSOPHICAL METHOD OF POLITICAL
ECONOMY.*

Adam Smith called liis famous treatise an inquiry into the
nature and causes of the wealth of nations. Mr. Senior defines
political economy as the science which treats of the nature, the
production, and the distribution of wealth. The definition
in Mr. Mill's ' Principles of Political Economy ' is similar,
though broader : ' Writers on political economy profess to
teach or to investigate the nature of wealth and the laws of
its production and distribution, including, directly or remotely,
the operation of all the causes by which the condition of
mankind, or of any society of human beings in respect to this
universal object of desire, is made prosperous, or the reverse.'

These definitions suflSciently indicate the character of the
problem of political economy, namely, to investigate the
nature, the amount, and the distribution of wealth in human
society, and the laws of co-existence and sequence discoverable
in this class of social phenomena. The solution offered by the
method hitherto chiefly followed by English economists — known
as the abstract, a priori, and deductive method — may be briefly
stated as follows : — The nature of wealth is explained by
defining it as comprising all things which are objects of
human desire, limited in supply, and valuable in exchange. Of
the causes governing its amount and distribution, the chief
exposition is, that the desire of wealth naturally leads, where
security and liberty exist, to labour, accumulation of capital,
appropriation of land, separation of employments, commerce,

* Hermathena, vol. ii., 1876.
M 2



164 On the Philosophical Ifethod of Political Economy.

and the use of money ; whence a continual increase in the total
stock of wealth, and its distribution in wages, profit, rent, and
the prices of products, in proportion to the labour, sacrifice,
amount of capital, and quantity and quality of land, contri-
buted by each individual to production. It is added that,
inasmuch as human fecundity tends to augment population in a
geometrical ratio, while the productiveness of the soil is limited,
the proportion of rent to wages and profit tends to increase in
the progress of society.

This theory, it is here submitted, is iUusory, as a solution of
the problem. It throws, in the first place, hardly any light on
the nature of wealth. There is a multitude of different kinds
of wealth, differing widely in their economic effects. Land,
houses, furniture, clothing, implements, arms, ornaments, ani-
mals, corn, wine, money, pictures, statues, books, are but a few
of the different kinds of wealth ; and of each kind there are
various species. No inconsiderable part of the present wealth
of the United Kingdom consists of intoxicating drink. Wealth,
moreover, undergoes great changes in kind in different states of
society, and one of the most important features of economical
history is the evolution of new kinds, profoundly affecting the
material as well as the moral condition of nations. The wealth
of Rome under the Csesars differed from its wealth in the first
age of the Republic, in quality as well as quantity ; and there
are essential differences, as well as resemblances and historical
relations, between the constituents of mediaeval and modern
wealth. Some of the fundamental distinctions between Oriental
and European wealth have been vividly brought before us in
the last few months. One of these is, that the movable wealth
of rich men in the East consists chiefly of precious stones, gold
and silver ornaments, and splendid apparel. An English writer
long ago described a religious ceremony in Turkey, at which a
prince of eleven years old ' was so overloaded with jewels, both
on himself and his horse, that one might say that he carried the
value of an empire about him.' That is to say, the wealth
that might have made a territory prosperous, and been dis-
tributed in wages through many hundreds of families, was



On the Philosophical Method of Political Economy. 165

ooncentrated on the bodies of a child and a horse. Tlie



Online LibraryT. E. Cliffe (Thomas Edward Cliffe) LeslieEssays in political economy → online text (page 15 of 41)