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dictions, can be drawn from this abstract principle. That the
a jpriori method in political economy renders positive prediction
possible is indeed contrary to the doctrine of its most eminent



198 Political Economy and Sociology.

expositors. Mr. Mill, though he subsequently much enlarged
the scope and system of economic investigation, was in his earlier
years an advocate of the a priori method ; yet in the well-known
essay in support of it he emphatically insisted that the con-
clusions deduced from it are ' true only in the abstract,' and
' would be true without qualification only in purely imaginary
cases.' Mr. Cairnes, in like manner, says, ' it is evident that an
economist arguing from the desire of wealth and the aversion to
labour with strict logical accuracy may be landed in conclusions
that have no resemblance to existing realities' ; adding that ' the
economist can never be certain that he does not omit some
essential circumstance, and it is indeed scarcely possible to
include all ; therefore his conclusions correspond with facts only
in the absence of disturbing causes, and represent not positive
but hypothetic truths.'*

The more sagacious adherents to the mere deductive method
will therefore probably decline to accept Mr. Lowe as their
representative, but his exposition is a reductio ad absurdum of
their own system. He is only more thoroughgoing — one cannot
say more consistent or logical, for he sometimes includes and
sometimes discards the dislike of labour — in his elimination
of all principles save the desire of wealth, which is the real
backbone of their theory as well as his. The other motives
and forces to which they nominally concede a place are only
admitted at the outset for form's sake, to be afterwards set
aside as ' disturbing causes ' in a manner without precedent or
analogy in physical science. The last thing an astronomer
would dream of is, that having admitted in general terms the
existence of other forces besides those that were taken account
of by the earliest observers, he need not concern himself with
them further, and may calculate the movements of the hea-
venly bodies without reference to them. Nor is this the only
fundamental objection. No such principle as 'the desire of
wealth,' in the sense of a single, universal motive, whose
consequences are uniform and can be foreseen, really exists.

* Logical Method of Political Eco7iomy, p. 49.



Political Economy and Sociology. 199

Adam Smith does not use the phrase, and his doctrine respect-
ing the nature of wealth shows the impossibility of using it
as a key to the movements of the economic world. Wealth, he
says, ' consists not in the inconsumable riches of money, but in
the consumable goods annually reproduced by the labour of the
society.' It includes therefore food, drink, clothing, houses, furni-
ture, plate, ornaments, books, works of art ; in short, necessaries,
comforts, luxuries, in all their varieties, and all the productions
of nature or of human exertion and skill to be had in the
market. It includes things which vary in different countries
and different ages, and have very different economic effects ;
and which are objects not only of different but of antagonistic
desires. The love of gin is the love of one kind of wealth
which too often competes in the mind of a poor man with the
love of a decent dwelling. There is a saying about a four-
footed animal not without firmness of character but of limited
ideas, between two bundles of hay both soliciting his choice.
The decalogue shows that this animal was one of divers things
which the Israelites were prone to covet. The ox, to which
allusion is also made, in the commandment, was, as Sir Henry
Maine has explained, the kind of wealth most valued by early
agricultural communities ; yet even they desired some other
kinds, and sometimes the reason why a man was without an ox
for his plough, was that he was too fond of strong drink. In
modern society there are countless varieties of wealth. Adam
Smith has made some excellent remarks on the difference, in
respect both of its amount and its distribution, of expenditure
on different sorts. But expenditure is simply the method of
acquisition by which, under a division of labour, the desires of
men for different things are satisfied. Were there no such
division, some would build houses and make clothes for them-
selves, while others in nakedness or rags distilled spirits or
brewed ale in mud hovels or caves.

One of the most important economic inquiries relates to the
changes which take place in the direction of the chief wants of
mankind, and the species of wealth which they call into exist-
ence. The main object of industry and accumulation on the



200 Political Economtj and Sociology.

part of the Frencli nation is landed projoerty ; the chief impulse
determining the national economy ,is the desire of it ; in England
this desire is absent among the nation at large, and the one
which takes its place with no small number of Englishmen is the
love of beer. Happily in England there is a still more general
object of desire in the house, and the house owes its structure,
perhaps its very existence, to the institution of the family.
Even in the matter of dress, the changes in the nature of the
things constituting wealth deeply affect its economic condition.
Richard II. wore a coat which cost more than £20,000 in modern
money ; the Prince of Wales would not take £20,000 to wear
it. The stronger passion of women than men in our time for
personal decoration is the result not of an original difference
in the mental constitution of the two sexes, but of a dif-
ferent social and political history. The formula of demand and
supply is still supposed by some economists to explain every-
thing fully, but both demand and supply have in every case
a long history. The demand for duelling swords and pistols
in France is such that the supply makes no inconsiderable
figure in the inventory of French wealth. Were they used
only in duels, there would probably not be two swords or
a brace of pistols in England. It is a misrepresentation of
the Mercantile System that its adherents considered nothing
but money as wealth, still they did attach undue importance to
it ; and the consequence of the excessive estimation in which
they held it demonstrates the absurdity of basing either the
economic prosjoerity of nations or economic science on the
abstraction which is the corner-stone of both in the deductive
sj^stem. The other princijole which Mr. Lowe associates with it,
the dislike of labour, involves an equal confusion. One might
ask, when it is maintained that we can predict the conduct of
mankind from these two principles, in what proportion are we
to mix them for the purpose ? The Jews were always a wealth-
loving nation, and many of them industrious, yet there seem
to have been not a few sluggards in Solomon's time who would
go to no trouble to get it. Can employers tell whether higher
weekly earnings or fewer hours of work will be the principal



Poll Ileal Econom>j and Sociology. 201

object of their workmen a j'ear hence ? The savage has a
dislike for regular labour which only some form of slavery can
•overcome, but with the progress of civilization a love of exertion
for its own sake grows up, and employment becomes necessary
to the happiness of a great number of men. We are told
somewhat abruptly in the Psalms that a man was famous
according as he had lifted up axes on the thick trees, yet the
most celebrated woodcutter of that period perhaps felled no
more trees in a week than Mr. Gladstone will do for mere
recreation. The German emperor replied to a deputation that
he had felt the pain of his wounds less than the abstinence from
his ordinary activity which they compelled. The love of several
occupations for their own sake is one of the causes by which
Adam Smith explains the small profit to be made in them.
Had Mr. Lowe ever watched a French peasant at work in his
vineyard, he could hardly have made a universal dislike of toil
one of the two pillars of political economy.

Other motives, which eminent advocates of the deductive
system propose to take into account, vary in like manner in
force, direction, and consequence. Mr. Cairnes refers to the
love of men for their own country as the main cause of the
diversity of the rates of wages and profit in different countries,
and it is a highly complex feeling, varying greatly in strength
in different nations and ages. The Fleming was the great
emigrant of the middle ages ; now he can hardly be got to
migrate to an adjoining province for double wages. Patriotism
did not exist in England some centuries ago. Different races,
nations, and clans had been too recently blended under one
government for a strong feeling of nationality ; a man belonged
to his township, his borough, his guild, not to his country.
Had Englishmen been as patriotic as they were brave, William
of Normandy might never have got the title of Conqueror.
The Germans when they invaded the Eoman Empire knew no
common fatherland. In 1870 they left lucrative employments
in all parts of the world for a soldier's perils and pay, in a manner
that shows how much there is on earth that is not dreamt of in
Mr. Lowe's philosophy. And this is far from exhausting the



202 Political Economy and Sociology.

principles entitled, even on the admission of distinguished
adherents of the deductive method, to a place in the science of
wealth. Mr. Cairnes asks, for example, * How far should religious
and moral considerations be admitted as coming within the
province of political economy ? ' His answer is that ' They are
to be taken account of precisely in so far as they are found, in
fact, to affect the conduct of men in the pursuit of wealth ' ;
and one need only allude to the influence of mediteval religion
on both the forms and the distribution of the wealth of the
community, the changes in both with the change in religion
after the Reformation, in proof of the impotence of the a priori
method to guide the economist in relation to this class of
agencies. Yet a few pages after recognising their title to
investigation, Mr. Cairnes argues that induction, though in-
dispensable in physical, is needless in economic science, on the
ground that ' the economist starts with a knowledge of ultimate
causes,' and * is already, at the outset of his enterprise, in the
position which the physicist only attains after ages of laborious
research'.* The followers of the deductive method are, in fact, on
the horns of a dilemma. They must either follow Mr. Lowe's
narrow path, and reason strictly from the assumption that men
are actuated by no motive save the desire of pecuniary gain,
or they must contend that they have an intuitive knowledge of
all the moral, religious, political, and other motives influencing
human conduct, and of all the changes they undergo in different
countries and periods.

Shut out by their own method from the investigation of
the true problems of political economy, the deductive school
have devoted themselves to a fictitious solution of others
which the ablest among them have nevertheless admitted to
be insoluble. 'If you place a man's ear within the ring of
pounds, shillings, and pence, his conduct can be counted on
to the greatest nicety,' according to Mr. Lowe. Mr. Cairnes
on the other hand, as we have seen, concurs with Mr. Mill
that positive, unconditional conclusions are beyond the reach

* Logical Method of Political Economy, p. 75.



Political Econonif/ and Sociologij. 203

of tlie economist, since tie does not take into account, or even
know, all the forces at work, much less can measure them with
precision. An entire lecture in Mr. Cairnes' ' Logical Method
of Political Economy' is devoted to proof that quantitative
exactness is unattainable in the science, and that its conclusions
being only hypothetically true, and representing only several
tendencies 'in the absence of disturbing causes,' ought not
to affect the semblance of numerical exactness. Mr. Lowe's
proposition is nevertheless true in the sense that the deductive
system does affect the power not only of absolute prediction
but of prediction with mathematical accuracy. Take any
treatise following the deductive method, and it will be found
to consist mainly of propositions respecting wages, profit,
prices, rent, and taxation, which profess to determine with
arithmetical exactness on whom a given tax, say on a box of
lucifer matches, will fall, how much it will add to the price of
the box, and what profit both the manufacturer and the retailer
will net on its advance. In a previous article* the present
writer has exposed the fallacies involved in the whole chain
of reasoning, and shown that it cannot be foreseen whether a
trader will ever recover a so-called indirect tax at all ; that
it may be a direct tax on himself, may drive him and all
other small capitalists from the business, and ultimately give
a lucrative monopoly instead of ' average profit ' to a few great
capitalists — half-a-dozen distillers and brewers, for example.
The deductive theory of wages, profits, prices, rent, and
taxation, is substantially a set of predictions respecting the
distribution of wealth, which affect to foretell exactly the
gain in every business, and the rates at which goods of every
kind may be sold. It has been well said that before predicting
the future, we must learn to predict the past; and before
predicting the past, it might be added, we should learn to
predict the present, by studying the forces at work in the
world around us, the conditions under which they operate,
and their actual results. A striking instance of the failure of

* ' The Incidence of Imperial and Local Taxation on the "Working Classes.*
Fortnightly Ecvieiv, February 1st, 1874. (Reprinted in the present volume.)



SOi Political Economy and Sociology.

the deductive economist to predict even the present, is Mr.
M'Culloch's assertion in several editions of the ' Wealth of
Nations' that the local inequalities of wages, of which Adam
Smith spoke, had almost disappeared with the improvement
in the means of communication. In point of fact, they had
greatly increased ; agricultural wages varying from 6s. to 16s.
a- week when his first edition was published, and from 9s. to
22s. at the date of the last, varying, too, from causes which
inductive investigation had enabled Adam Smith to discover,
namely, the unequal local development of manufactures,
commerce, the greater demand and competition for labour in
some places than in others, and the obstacles to its migration.
The history of the last few years gives disastrous proof
■of the falsity of the predictions of both present and future
involved in the theory of the equality of profits, which assumes
that the gains in different employments can be foreseen with
a close approximation to accuracy, and that competition
accordingly keeps them nearly at a level. If there was a
man in the country who might have been supposed capable of
foresight in such matters, by reason of the widest information
and great financial skill, it was Mr. Gladstone, when a few
years ago he described the trade of the country as advancing by
leaps and bounds. Did he see that they were leaps in the dark ?
Did the capitalists who rushed into the businesses in which
prices and profits were trebling see that they were bounds
that would end in a fail on the other side ? Have the capitalists
in other businesses, who were heavily mulcted by the rise of
coal and iron, recovered their losses ' with average profit ' ?
Adam Smith, reasoning from observation, rigorously and
emphatically confined the tendency of profits to equality to
long- established well-known trades in the same neighbourhood,
unaffected by new discoveries, by speculation, fluctuations
of credit, accident, or political events, carried on, not by
directors and shareholders with other business to mind, but
by persons whose sole occupations they were. In other words,
from an induction he predicted inequality where the deductive
■economist predicts equality. Mr. Cairnes, indeed, though



Political Economy and Sociology/. 205

adhering to the general truth of the doctrine of equality, was of
opinion that the new gold would, by its unequal distribution
over different trades, disturb the level of profits for many years.
The actual course of the distribution was, however, very different
from that which a 2)n'ori reasoning led him to predict, the
chief rise of prices being in foreign countries, where railways, in-
dustrial progress, and the opening of the English market raised
them suddenly from a low scale towards the English range.*
The new gold was only one of many new conditions of modern
trade. In an age of companies there is a very imperfect divi-
sion of labour : credit and speculation have made trade a lottery,
in which 'the absurd presumption of every man in his own
abilities, and the still more absurd presumption in his own good
fortune,' of which Adam Smith speaks, have full play.

The recurrence of commercial crises alone defeats all
attempts to predict the course of prices and profits, and would
do so even if the doctrine of decennial cycles had a solid
foundation ; for if the periods of inflation and depression could
be foretold, and the occurrence of each crisis timed with
precision, the particular movements of credit, speculation, and
prices, and the gains and losses in each business, could not.
The theory of a decennial cycle, like that of the equality of
profits, and the whole a priori system, with its seeming
simplicity, symmetry, and roundness, owes its attractions to
that idol of the tribe which, as Bacon says, leads the spirit
of man to suppose and feign in nature a greater equality and
uniformity than is in truth, and to mark the hits of his system,
but not the misses. An ingenious attempt has lately been
made to account for the imaginary decennial cycle by the
supposition that about every ten years there is a change in
the management of business through a younger generation
taking the place of the older, as though the commercial world



* An example of this was cited lately by the eminent French economist,
M. Leroy-Beaulieu, in the Economisfe Fran^-ais, from statistics compiled by
Mr. Newmarch, showing that between 1830 and 1870 the price of corn fell 14
per cent, in England, while it rose 17 per cent, in France, 88 per cent, in Belgium,
133 per cent, in Hungary, 142 per cent, in Austria.



206 Political Economy and Sociology.

were composed of successive ranks of men born together at the
beginning of successive decades, and all in each rank reaching
sixty, and retiring together. But the commercial class, like the
army, the bar, and the whole nation, is recruited with fresh
blood every year, not only every tenth year. Lord Bacon
himself showed a strong tendency to believe in both a political
and an economical cycle, and supposed his own age of the
world on the descent of the wheel, though he judiciously
thought it ' not good to look too long on these turning wheels
of vicissitude, lest we become giddy.' Adam Smith, too, leaned
to the notion of a code of nature regulating the movement of
the economic world with perfect equality and uniformity.
Perhaps, therefore, one need not wonder that Mr. Jevous, whose
philosophical powers have enabled him to make real discoveries,
should be fascinated by the idea of commercial cycles recurring
with the regularity of astronomical phenomena, and traceable
to astronomical causes. But one is driven to suspect that Mr.
Lowe can never have made a discovery, when he argues that
Adam Smith's method was wholly deductive, because in the
* Wealth of Nations ' he puts his conclusions first ; supporting
them afterwards by the instances which he deems most con-
vincing, instead of setting before his readers a vast number of
historical and statistical facts, and working out the principle
which they establish under their eyes. A library would not
contain the books he would have written, had he attempted to
convey to other minds by such a method the knowledge he
had himself reached by long and laborious investigation. A
discoverer would be avoided like a pestilence or the ancient
mariner, were he to relate all the steps by which he got to his
journey's end, after many misfortunes and failures, it may be,
and often burning his fingers in the crucible. Results, it is
well said, not processes, are for the public eye. How little
Adam Smith was disposed to publish all his processes appears
from his direction to Hume, in 1773, to burn all the papers,
with one exception, found in his house at his death, and from
his own destruction of them a few days before his end. The
advantage of the division of labour — to which Mr. Lowe refers



Political Economy and Sociology. 207

as a proof that he proceeded by assumption, because the number
of examples he gives is small — was not a new doctrine ; but
his chapter on its limitation by the extent of the market bears
all the marks of wide research and induction. The work of
induction in relation to the division of labour is, moreover, by
no means complete. There are plain symptoms in modern eco-
nomy of tendencies to an amalgamation, instead of a division,
of occupations. And the most arduous problem respecting the
separation of occupations has never even occurred to the deduc-
tive school — namely. What are the causes governing its actual
course, determining the directions of the national energies, the
employments of different classes and of both sexes, in different
•countries and ages ?

The human being or ' individual ' from whose assumed
tendencies the conclusions of the deductive system are drawn,
and its predictions made, is a fiction, not a reality — a personi-
fication of two abstractions, the desire of wealth and aversion
for labour — feelings differing, as has been shown, in different
countries, ages, and persons — differing much, for example, in
men and women, Mr. Bagehot felt so strongly the inapplica-
bility of the assumptions of the system to the greater part of
the world, that he actually limited political economy to England
at its present state of commercial development, and to the
male sex in England. Such a limitation involves a complete
surrender of the position that the system is based on universal
laws or principles of human nature ; it involves also an ad-
mission that it is only by inductive investigation that we can
determine what the actual economy of society is, and what the
oauses that govern its structure and movement. Enough has
been said, too, to show that the fundamental assumptions of
the deductive economist are really aa fallacious in reference to
modern Englishmen as to Frenchmen, Germans, Asiatics, or
Africans. The economy of English society can, no more than
that of any other nation, be explained by assuming that English-
men are personifications of the love of wealth and ease. But
this is only one of the fundamental shortcomings of the system.
Looking only to the assumed motives of individuals, it ignores



208 Political Economy and Sociology .

altogether the collective agency of the community, through its
positive institutions as an organized political body or state, its-
history and traditions, and the social environment with which
it encompasses every man and woman within it, from the cradle
to the grave.

Adam Smith's philosophy was not, like the little system that
pleases some of his successors, if I may use a Horatian phrase,
' complete in itself, smooth, and round.'* There was, it is true,
in his mind an ideal order of things which he called ' natural,*
as being that which would take place if certain tendencies of
human nature were allowed to operate without interference.
Even in this ideal world, however, he saw that there must be
laws relating to property, succession, tenure, and other sub-
jects, although, in accordance with both the political and the
theological philosophy of his time, there was a * natural ' type
to which these institutions ought to conform. Mr. Macleod has
urged, on behalf of confining the scope of political economy
to commercial exchange, that the ' distribution ' of wealth con-
templated by the French Physioerates was that effected by
exchange, or by the process of distribution as distinguished
from that of production. The Physioerates, it may be observed,
were not the first to use the term in this sense ; it was so
employed by English writers on commerce a hundred years
earlier. But one might as reasonably exclude all agencies



Online LibraryT. E. Cliffe (Thomas Edward Cliffe) LeslieEssays in political economy → online text (page 19 of 41)