Marlo and Rodbertus are sometimes spoken of as the precursors of German socialism. This, however, is a mistake. The socialism which now exists appeared in Germany among the Young Hegelians forty years ago, before the writings of either of these economists were published, and their writings have had very little influence on the present movement. Rodbertus, it is true, communicated a decided impulse to Lassalle, both by his published letter to Von Kirchmann in 1853, and by personal correspondence subsequently. He was a landed proprietor of strongly liberal opinions, who was appointed Minister of Agriculture in Prussia in 1848, but after a brief period of office retired to his estates, and devoted himself to economic and historical study. He took a very decided view of the defects of the existing industrial system, and held in particular that, in accordance with Ricardo's law of necessary wages, the labourer's income could never rise permanently above the level of supplying him with a bare subsistence, and consequently that, while his labour was always increasing in productivity, through mechanical inventions and other means, the share which he obtained of the product was always decreasing. What was required was simply to get this tendency counteracted, and to devise arrangements by which the labourer's share in the product might increase proportionally with the product itself, for otherwise the whole working population would be left behind by the general advancement of society. The remedy, he conceives, must lie in the line of a fresh contraction of the sphere of private property. That sphere had been again and again contracted in the interests of personal development, and it must be so once more. And the contraction that was now necessary was to leave nothing whatever in the nature of private property except income. This proposal is substantially identical with the scheme of the socialists; it is just the nationalization of all permanent stock; but then he holds that it could not be satisfactorily carried out in less than five hundred years. Rodbertus's writings have never been widely known, but they attracted some attention among the German working class, and he was invited, along with Lassalle and Lothar Bucher, to address the Working Men's Congress in Leipzig in 1863. He promised to come and speak on the law of necessary wages, but the Congress was never held in consequence of the action of Lassalle in precipitating his own movement, and from that movement Rodbertus held entirely aloof. He agreed with Lassalle's complaints against the present order of things, but he disapproved of his plan of reform. He did not think the scheme of founding productive associations on State credit either feasible or desirable, and he would still retain the system of wages, though with certain improvements introduced by law. He thought, moreover, that Lassalle erred gravely in making the socialists a political party, and that they should have remained a purely economic one. Besides, he looked on it as mere folly to expect, with Lassalle, the accomplishment in thirty years of changes which, as we have seen, he believed five centuries little enough time to evolve.
Rodbertus may thus be said to have had some relations with the present movement, but Marlo stands completely apart from it: and his large and important work, "Untersuchungen über die Organization der Arbeit, oder System der Weltökonomie," published at Kassel in 1850-5—though original, learned, and lucid—remained so absolutely unknown that none of the lexicons mention his name, and even an economist like Schaeffle—who was the first to draw public attention to it, and has evidently been considerably influenced by it himself—had never read it till he was writing his own work on socialism (1870). But though Marlo cannot be said to have contributed in any respect to the present socialistic movement, his work deserves attentive consideration as a plea for fundamental social reform, advanced by a detached and independent thinker, who has given years of patient study to the phenomena of modern economic life, and holds them to indicate the presence of a deep-seated and widespread social disease. Carl Marlo is the nom de plume of a German professor of chemistry named Winkelblech, and he gives us in the preface to his second volume a touching account of how he came to apply himself to social questions. In 1843 he made a tour of investigation through Northern Europe in connection with a technological work he was engaged in writing, and visited among other places the blue factory of Modum, in Norway, where he remained some days, charmed with the scenery, which he thought equal to that of the finest valleys of the Alps. One morning he went up to a neighbouring height, whence he could see the whole valley, and was calmly enjoying the view when a German artisan came to ask him to undertake some commission to friends in the fatherland. They engaged in conversation. The artisan went over his experiences, and repeated all the privations he and his fellows had to endure. His tale of sorrow, so alien apparently to the ravishing beauty around, made a profound impression on Winkelblech, and altered the purpose and work of his life. "What is the reason," he asked himself, "that the paradise before my eyes conceals so much misery? Is nature the source of all this suffering, or is it man that is to blame for it? I had before, like so many men of science, looked, while in workshops, only on the forges and the machinery, not on the men—on the products of human industry, and not on the producers, and I was quite a stranger to this great empire of misery that lies at the foundation of our boasted civilization. The touching words of the artisan made me feel the nullity of my scientific work and life in its whole extent, and from that moment I resolved to make the sufferings of our race, with their causes and remedies, the subject of my studies." He pursued these studies with the greatest industry for several years, and found the extent of men's sufferings to be greatly beyond his expectation. Poverty prevailed everywhere—among labourers and among employers, too—with peoples of the highest industrial development, and with peoples of the lowest—in luxurious cities, and in the huts of villagers—in the rich plains of Lombardy, no less than the sterile wilds of Scandinavia. He arrived at the conclusion that the causes of all this lay not in nature, but in the fact that human institutions rested on false economic foundations, and he held the only possible remedy to consist in improving these institutions. He became convinced that technical perfection of production, however great, would never be able to extinguish poverty or lead to the diffusion of general comfort, and that civilization was now come to a stage in its development at which further progress depended entirely on the advancement of political economy. Political economy was, therefore, for our time the most important of all sciences, and Winkelblech now determined to give himself thoroughly to its study. Hitherto he had not done so. "During the progress of my investigations," he says, "the doctrines of economists, as well as the theories of socialists, remained almost unknown to me except in name, for I intentionally abstained from seeking any knowledge of either, in order that I might keep myself as free as possible from extraneous influences. It was only after I arrived at the results described that I set myself to a study of economic literature, and came to perceive that the substance of my thoughts, though many of them were not new, and stood in need of correction, departed completely from the accepted principles of the science." He reached the conclusion that there prevailed everywhere the symptoms of a universal social disease, and that political economy was the only physician that could cure it; but that the prevailing system of economy was quite incompetent for that task, and that a new system was urgently and indispensably required. To set forth such a system is the aim of his book. He derides Proudhon's idea of social reforms coming of themselves without design, and argues strongly that no reform worthy the name can ever be expected except as the fruit of economic researches. He agrees with the Socialists in so far as they seek to devise a new economic system, but he thinks they make a defective diagnosis of the disease, and propose an utterly inadequate remedy. He counts them entirely mistaken in attributing all existing evils to the unequal distribution of wealth, a deficiency of production being, in his opinion, a much more important source of misery than any error of distribution. In fact, his fundamental objection to the existing distribution is that it is not the distribution which conduces to the highest production, or to the most fruitful use of the natural resources at the command of society. He differs from the German socialists in always looking at the question from the standpoint of society in general, rather than from that of the proletariat alone, and he maintains that a new organization of labour is even more necessary for the interest of the capitalists than for that of the labourers, because he believes the present system will infallibly lead, unless amended, to the overthrow of the capitalist class, and the introduction of communism. His point of view is moreover purely economic and scientific, entirely free from all partizan admixture, and while he declares himself to be a zealous member of the republican party, he says that he purposely abstains from intervention in politics because he regards the political question as one of very minor rank, and holds that, with sound social arrangements, people could live more happily under the Russian autocracy than, with unsound ones, they could do under the French republic. The organization of labour is, in his opinion, something quite independent of the form of the State, and its final aim ought to be to produce the amount of wealth necessary to diffuse universal comfort among the whole population without robbing the middle classes. These characteristics sufficiently separate him from the socialist democrats of the present day.
His book was published gradually in parts, sometimes after long intervals, between 1848 and 1856, and it was finally interrupted by his death in 1865. A second edition appeared in 1885, containing some additions from his manuscripts, but the work remains incomplete. It was to have consisted of three parts; 1st, a historical part, containing an exposition and estimate of the various economic systems; 2nd, an elementary or doctrinal part, containing an exposition of the principles of economic science; and, 3rd, a practical part, explaining his plan for the organization of labour. The first two parts are all we possess; the third, and most important, never appeared, which must be regretted by all who recognise the evidences of original power and singular candour that the other parts present.
Marlo's account of the social problem is that it arises from the fact that our present industrial organization is not in correspondence with the idea of right which is recognised by the public opinion of the time. That idea of right is the Christian one, which takes its stand on the dignity of manhood, and declares that all men, simply because they are men, have equal rights to the greatest possible happiness. Up till the French Revolution, the idea of right that prevailed was the heathen one, which might be called the divine right of the stronger. The weak might be made a slave without wrong. He might be treated as a thing and not as a person or an equal, who had the same right with his master or his feudal superior to the greatest possible enjoyment. Nature belonged to the conqueror, and his dominion was transmitted by privilege. Inequality of right was therefore the characteristic of this period; Marlo calls it monopolism. But at the French Revolution the Christian idea of right rose to its due ascendancy over opinion, and the sentiments of love and justice began to assume a control over public arrangements. Do as you would be done by, became a rule for politics as well as for private life, and the weak were supported against the strong. Equality of right was the mark of the new period; Marlo calls it panpolism. This idea could not be realized before the present day, because it had never before taken possession of the public mind, but it has done this now so thoroughly that it cannot be expected to rest till it has realized itself in every direction in all the practical applications of which it is susceptible. The final arbiter of institutions is always the conception of right prevailing at the time; contemporary industrial arrangements are out of harmony with the contemporary conception of right; and stability cannot be looked for until this disturbance is completely adjusted.
Now the first attempts that society made to effect this adjustment were not unnaturally attended with imperfection. In the warmth of their recoil from the evils of monopolism, men ran into extreme and distorted embodiments of the opposite principle, and they ran contrary ways. These contrary ways are Liberalism and Communism. Liberalism fixed its attention mainly on the artificial restrictions, the privileges, the services, the legal bonds by which monopoly and inequality were kept up, and it thought a perfect state of society would be brought about if only every chain were snapped and every fetter stripped away. It conceived the road to the greatest possible happiness for every man was the greatest possible freedom; it idolized the principle of abstract liberty, and it fancied if evil did not disappear, it was always because something still remained that needed emancipation. Communism, on the other hand, kept its eyes on the inequalities of monopolistic society; imagined the true road to the greatest possible happiness was the greatest possible equality; that all ills would vanish as soon as things were levelled enough; in short, it idolized the principle of abstract equality. Modern Liberalism and modern Communism are therefore of equal birth; they have the same historical origin in the triumph of the principle of equality of right in 1789; they are only different modes of attempting to reduce that principle to practice; and Liberalism happens to be the more widely disseminated of the two, not because it represents that principle better, but merely because being more purely negative than the other, it was easier of introduction, and so got the start of Communism in the struggle of existence. According to Marlo, they are both equally bad representatives of the principle, and their chief good lies in their mutual criticism, by means of which they prepare the way for the true system, the system of Federalism, which will be presently explained. The history of revolution, he says, begins in the victory of Liberalism and Communism together over Monopolism; it proceeds by the conflict of the victors with one another, and it ends in the final triumph of Federalism over both.
Marlo next criticises the two systems of Liberalism and Communism with considerable acuteness. Both the one and the other are utopias; they are absorbed in realizing an abstract principle, and they, as a matter of fact, produce exactly the opposite of what they aim at. Communism seeks to reach the greatest possible happiness by introducing first the greatest possible equality. But what is equality? Is it equality when each man gets a coat of the same size, or is it not rather when each man gets a coat that fits him? Some communists would accept the former alternative. They would measure off the same length to the dwarf and the giant, to the ploughman and the judge, to the family of three and the family of thirteen. But this would be clearly not equality, but only inequality of a more vicious and vexatious kind. Most communists, however, prefer the second alternative, and assign to every man according to his needs, to every man the coat that fits him. But then we must first have the cloth, and that is only got by labour, and every labourer ought if possible to produce his own coat. The motive to labour, however, is weakened on the communistic system; and if those who work less are to be treated exactly like those who work more, then that would be no abolition of monopoly, but merely the invention of a new monopoly, the monopoly of indolence and incapacity. The skilful and industrious would be exploited by the stupid and lazy. Besides, production would for the same reason, insufficient inducement to labour, be diminished, progress would be stopped, and therefore the average of human happiness would decline. Communism thus conducts to the opposite of everything it seeks. It seeks equality, it ends in inequality; it seeks the abolition of monopoly, it creates a new monopoly; it seeks to increase happiness, it actually diminishes it. It is a pure utopia, and why? Because it misunderstands its own principle. Equality does not mean giving equal things to every man; it means merely affording the greatest possible playroom for the development of every personality, and that is exactly the principle of freedom. The greatest possible equality and the greatest possible freedom can only be realized together; they must spring out of the same conditions, and a system of right which shall adjust these conditions is just what is now wanted.
Liberalism is a failure from like causes. It seeks to realize happiness by freedom; it realizes neither. For it mistakes the nature of freedom, as the Communists mistake the nature of equality. It takes freedom to be the power of doing what one likes, instead of being the power of doing what is right. Its whole bent is to exempt as much as possible of life from authoritative restraint, and to give as much scope as exigencies will allow to the play of individuality. It is based on no positive conception of right whatever, and looks on the State as an alien whose interference is something exceptional, only justified on occasional grounds of public necessity or general utility. It fails to see that there are really no affairs in a community which are out of relation to the general wellbeing, and destitute of political significance. Nothing demonstrates the error of this better than the effects of the Liberal régime itself. For half a century the industrial concerns of the people have been treated as matters of purely private interest, and this policy has resulted in a political as well as economical revolution. Industrial freedom, which has produced capitalism in the economic field, has resulted in political life in the ascendancy of a new class, a plutocracy, "the worst masters," said De Tocqueville, "the world has yet seen, though their reign will be short." The change which was effected by the legislation of the Revolution was not a development of a fourth estate, as is sometimes said; it was really nothing more than the creation of a money aristocracy, and the putting of them in the place of the old hereditary nobility. The system of industrial right that happens to prevail, therefore, so far from being, as Liberals fancy, outside the sphere of political interest, is in truth the very element on which the distribution of political power, in the last analysis, depends. Nothing is more political than the social question. Liberals think slight of that question, but it is, says Marlo, the real question of the day, and it is neither more nor less than the question of the existence or abolition of Liberalism, the question of the maintenance or subversion of the principle of industrial freedom, the question of the ascendancy or overthrow of a money aristocracy. The fight of our age is a fight against a plutocracy bred of Liberalism. It is not, as some represent it, a struggle of labourers against employers; it is a joint struggle of labourers and lower bourgeoisie against the higher bourgeoisie, a struggle of those who work and produce against those who luxuriate idly on the fruits of others' labour. As compared with this question, constitutional questions are of very minor importance, for no matter whether the State be monarchy or republic, if the system of industrial right that prevails in it be the system of industrial freedom, the real power of the country will be in the hands of the capitalist class. He who fails to see this, says Marlo, fails to understand the spirit of his time. It is always the national idea of right that governs both in social and political relations, and as long as the national idea of right is that of Liberalism, we shall continue to have capitalism and a plutocracy. It is the mind that builds the body up, and it is only when a new system of right has taken as complete possession of the national consciousness as Liberalism did in 1789, that the present social conflict will cease and a better order of things come in.
From want of such a system of right—from want even of seeing the necessity for it, Liberalism has defeated its own purpose. It sought to abolish monopoly; it has only substituted for the old monopoly of birth the more grievous monopoly of wealth. It sought to establish freedom; it has only established plutocratic tyranny. It has erred because it took for freedom an abstraction of its own and tried to realize that, just as Communism erred by taking for equality an abstraction of its own and trying to realize that. The most perfect state of freedom is not reached when every man has the power of doing what he likes, any more than the most perfect state of equality is reached when every man has equal things with every other; but the greatest possible freedom is attained in a condition of society where every man has the greatest possible play-room for the development of his personality, and the greatest possible equality is attained in exactly the same state of things. Real freedom and real equality are in fact identical. Every right contains from the first a social element as well as an individual element, and it cannot be realized in the actual world without observing a due adjustment between these two elements. Such an adjustment can only be discovered by a critical examination of the economic constitution of society, and must then be expressed in a distinct system of industrial right, which imposes on individual action its just limits. True liberty is liberty within these limits; and the true right of property is a right of property under the same conditions. The fundamental fault of Liberalism, the cause of its failure, is simply that it goes to work without a sound theory of right, or rather perhaps without any clear theory at all, and merely aims at letting every one do as he likes, with the understanding that the State can always be called in to correct accidents and excesses.
This defect is what Federalism claims to supply. It claims to be the only theory that abandons abstractions and keeps closely to the nature of things, and therefore to be the only theory that is able to realize even approximately the Christian principle of equality of right. The name furnishes no very precise clue to the conclusion it designates, and it has no reference to the federative form of State, for which Marlo expressly disavows having any partiality. He has chosen the word merely to indicate the fact that society is an organic confederation of many different kinds of associations—families, churches, academies, mercantile companies, and so on; that association is not only a natural form, but the natural form in which man's activity tends to be carried on; and that in any sound system of industrial right this must be recognised by an extension of the collective form of property and the co-operative form of production. Communism, says Marlo, is mechanical, Liberalism is atomistic, but Federalism is organic. When he distinguishes his theory from communism, it must be remembered that it is from the communism which he has criticised, and which he would prefer to denominate Equalism; it is from the communism of Baboeuf, which would out of hand give every man according to his needs, and would consequently, through impairing the motives to industry, leave those needs themselves in the long run less satisfactorily provided for than they are now. But his system is nearly identical with the communism of the Young Hegelians of his own time—that is, with the German socialism of the present day—although he arrived at it in entire independence of their agitations, and builds it on deductions peculiar to himself. Like them, he asks for the compulsory transformation of land and the instruments of production from private property into collective property; like them, he asks for this on grounds of social justice, as the necessary mechanism for giving effect to positive rights that are set aside under the present system; and he says himself, "If you ask the question, how is the democratic social republic related to Federalism, the most suitable answer is, as the riddle to its solution."
He starts from the position that all men have equally the right to property. Not merely in the sense, which is commonly acknowledged, that they have the right to property if they have the opportunity of acquiring it; but in the further significance, that they have a right to the opportunity. They are in fact born proprietors—de jure at least, and they are so for two reasons. First, God has made them persons, and not things, and they have, therefore, all equally a natural right to their amplest personal development. If society interferes with this liberty of personal development—if it suffers any of its members to become the slaves of others, for example—it robs them of original rights which belong to them by the mere fact of their manhood. But, secondly, property, resources of some sort, being indispensable means of personal development, God, who has imposed the end, has supplied the means. He has given nature, the earth and the lower creation, into the dominion of man, not of this or that man, or class of men, but of mankind, and consequently every man has, equally with every other, a right to participate in the dominion of nature, a right to use its bounty to the extent required for his personal development. No appropriation of nature can be just which excludes this possibility and robs any man of this natural right. It is, therefore, wrong to allow to any single person, or to any limited number of persons, an absolute dominion over natural resources in which everybody else has, by nature, a right to some extent to share. He who should have complete and exclusive lordship over all nature, would be lord and master of all his fellow-men, and in a period after natural agents are all appropriated the system of complete and absolute property leaves the new-comers at the mercy of those who are already in possession. They can only work if the latter give them the productive instruments; they can only reap from their work so much of its fruits as the latter are pleased to leave with them; and they must perish altogether unless the latter employ them. They are slaves, they are beggars; and yet they came into the world with the rights of a proprietor, of which they can never be divested. Nature laid covers for them as well as for the rest, and a system of property is essentially unjust which ousts them from their seat at her table. The common theory of property starts from the premiss, that all men have the right to property, and draws the conclusion, that, therefore, some men have the right to monopolize it. As usually understood, the proprietary right is as much a right of robbery as a right of property, and Proudhon would have been quite correct in describing property as theft, if no better system of property could be devised than the present.
But such a system can be devised; one under which the right of new-comers may be respected without disturbing those of possessors. This can only be done by putting entirely aside the complete and absolute form of property which is in so much favour with Liberalism, and by making the right of property in any actual possession a strictly limited and circumscribed right from the first—the right not to an arbitrary control over a thing, but to a just control over it. So long as property is always thought of as an arbitrary and absolute dominion over a thing, the proprietary right cannot possibly be explained in a way that does not make it a right given to some to rob others. Why not, therefore, define property from the beginning as subject to limitations, and contrive a new form or system of it, in which these limitations shall for ever receive due recognition, and no man be thereafter denied the opportunity of acquiring as much of the bounty of nature as is necessary for him to carry out his personal development?
That is Marlo's task, and it would have been an easy one, if all goods, if everything that satisfies a human want, had been supplied directly by nature, as air is supplied, without the need of industry to procure it or the power of industry to multiply it. Then the problem would be solved very simply as the earlier communists desired to solve it. Every member of society would be entitled to partake of nature's supplies, as he now does of air, in the measure of his need, and when those supplies ran exhausted, just as when the air became vitiated, society would be entitled, nay obliged, to suppress further propagation. But the question is far from being so simple. Nature only yields her bounties to us after labour; they are only converted into means of life by labour; and they are capable of being vastly multiplied by labour. This element of labour changes the situation of things considerably, and must be allowed a leading rôle in determining a just right and system of property. The only case where a proprietary right can be recognised which is unmodified by this consideration, is the case of those who are unable to labour. They fall back on their original right to a share in the bounty of nature in the measure that their personal development requires; in other words, according to their needs. Their share does not lie waste, though they are unable to work it themselves, and their share belongs to them immediately because they are persons, and not because they may afterwards become labourers. Marlo recognises, therefore, antecedently to labour the right to existence, and this right he proposes to realize for the weak and disabled by means of a compulsory system of national insurance.
The other natural proprietary rights are consequent in one way or another upon labour. First, there is the right to labour. If every man has a right to a share in the dominion of nature, then every man who is able to labour has a right to obtain the natural resources that are necessary to give him employment according to capacity and trade. No private appropriation of these resources can divest him of his title to get access to them, and if he cannot find work himself, the State is bound to provide it for him in public workshops. Second, every man has a right to the most profitable possible application of labour to natural resources. He has an interest in seeing the common stock put to the best account, and he is wronged in this interest when waste is permitted, when inferior methods are resorted to, or when the distribution of work and materials is ill arranged. Now the best arrangement is when each man is equipped according to the measure and quality of his powers. Nature will be then best worked, and man's personal development will then be best furthered. If such an arrangement cannot be effected on the system of property now in vogue, while it may be under another, it is every man's right to have the former system supplanted by the latter. The most economical form of property is the most just. Third, the next right is a right to an almost unlimited control over the fruits of one's own labour. Not over the means of labour; these can only be justly or economically held by a circumscribed control; but over the fruits of labour. These ought to be retained as exclusive property, for the simple reason that the natural resources will be so turned to the best account. On any other system of payment the motive to labour is impaired, and the amount of its produce diminished. Distribution by need defeats its own end; the very needs of the community would be less amply satisfied after it than before it. Distribution according to work is the sound economic principle, and therefore the just one. Marlo here leaves room for the play of the hereditary principle and of competition to some extent, and he allows the free choice of occupation on similar grounds. Men will work best in lines their own tastes and powers lead them to. Everything is determined by economic utility, and economic utility is supposed to be at its height when the natural resources of a country are distributed among its inhabitants according to the requirements of their labouring powers.
This condition of things can only be realized, first, if population is regulated; second, if unproductive labour is suppressed; and third, if the means of labour are made common property. The necessity for regulating population comes, of course, from the limitation of the natural resources at society's command. In any community there is a certain normal limit of population—the limit at which all the natural resources are distributed among all the inhabitants according to their powers—and the community will learn when this limit is reached from the number of workmen who are unable to obtain private employment, and are obliged to seek work from the State. Then it can regulate population by various expedients. It may require the possession of a certain amount of fortune as a preliminary condition to marriage, and raise this amount according to necessity. It may encourage emigration. It may forbid marriages under a fixed age, and to prevent illegitimacy, it might give natural children the same rights as legitimate ones. But Marlo trusts most to the strong preventive check that would be supplied by the power imparted to working men under the Federal régime of improving their position.
The same necessity that makes it legitimate, and, indeed, imperative to regulate population, makes it legitimate and imperative also to suppress what Marlo calls unproductive acquisition, i.e., the acquisition by persons who are able to work of any other property than they earn as the fruit of their work; and to suppress likewise all waste of the means of life and enjoyment, such, for example, as is involved in the maintenance of unnecessary horses, dogs, or other animals that only eat up the products of the soil. The obligation to labour and the curtailment of luxury would come into exercise before the restrictions on population, and be more and more rigorously enforced as the normal limit of population was approximated.
But the most important and the most necessary innovation is the conversion of land and the instruments of production into the form of collective property. The form in which property should be held ought to be strictly determined by considerations of economic utility. From such considerations the Liberals themselves have introduced important changes into the system of property; they have abolished fiefs, hereditary tenancies, entail, servitudes, church and village lands, all the peculiarities of monopolistic society, because, as they said, they wished to substitute a good form of property for a bad; and they at least have no right, Marlo thinks, to turn round now on Communists or Federalists for proposing to supersede this good form of property by a better. They have themselves transformed property by law, and they have transformed it on grounds of economic advantage; they have owned that the economic superiority of a particular form of property imposes a public obligation for its compulsory introduction. They asserted the competency of the State against the monopolists, and they cannot now deny it against the socialists. If the private form of property is best, then let the State maintain it; but if the collective form is best, then the State is bound, even on the principles of Liberals themselves, to introduce it. The question can only be determined by experience of the comparative economic utility of the two. Without offering any detailed proof of his proposition from experience Marlo then affirms that the most advantageous form of property is reached when the instruments of production are the collective property of associations, and the instruments of enjoyment (except wells, bridges, and the like) are the property of individuals. Each man's house would still be his castle; his house and the fulness thereof would still belong to him; but outside of it he could acquire no individual possessions. Of land and the means of labour, he should be joint-proprietor with others, or rather joint-tenant with them under the Crown. Industrial property would be held in common by the associations that worked it, and these associations would be organized by authority with distinct charters of powers and functions.
Marlo thus arrives at the same practical scheme as Marx, though by a slightly different road. Marx builds his claim on Ricardo's theory of value and Ricardo's law of necessary wages. Marlo builds his on man's natural right, as a sharer in the dominion of nature, to the most advantageous exercise of that dominion.
The Socialists of the Chair have done themselves injustice and sown their course with embarrassing misconceptions by adopting too hastily an infelicitous name. It is more descriptive than most political nicknames, and therefore more liable to mislead. It was first used in 1872 in a pamphlet by Oppenheim, then one of the leaders of the National Liberals, to ridicule a group of young professors of political economy who had begun to show a certain undefined sympathy with the socialist agitations of Lassalle and Von Schweitzer, and to write of the wrongs of the labouring classes and the evils of the existing industrial system with a flow of emotion which was thought to befit their years better than their position. A few months later these young professors called together at Eisenach a Congress of all who shared their general attitude towards that class of questions. In opening this Congress—which was attended by almost every economist of note in Germany, and by a number of the weightiest and most distinguished Liberal politicians—Professor Schmoller employed the name "Socialists of the Chair" to describe himself and those present, without adding a single qualifying remark, just as if it had been their natural and chosen designation. The nickname was no doubt accepted so readily, partly from a desire to take the edge off the sneer it was meant to convey, but partly also from the nobler feeling which makes men stand by a truth that is out of favour. Not that they approved of the contentions of social democracy out and out, but they believed there was more basis of truth in them than persons in authority were inclined to allow, and besides that the truth they contained was of special and even pressing importance. They held, as Schmoller said, that "Social Democracy was itself a consequence of the sins of modern Liberalism." They went entirely with the Social Democrats in maintaining both that a grave social crisis had arisen, and that it had been largely brought about by an irrational devotion on the part of the Liberals to the economic doctrine of laissez-faire. But they went further with them. They believed that the salvation of modern society was to come, not indeed from the particular scheme of reconstruction advocated by the Social Democrats, but still from applications in one form or another of their fundamental principle, the principle of association. And it was for that reason—it was for the purpose of marking the value they set upon the associative principle as the chief source of healing for the existing ills of the nations—that they chose to risk misunderstanding and obloquy by accepting the nickname put upon them by their adversaries. The late Professor Held, who claims as a merit that he was the first to do so, explains very clearly what he meant by calling himself a socialist. Socialism may signify many different things, but, as he uses the word, it denotes not any definite system of opinions or any particular plan of social reform, but only a general method which may guide various systems, and may be employed more or less according to circumstances in directing many different reforms. He is a socialist because he would give much more place than obtains at present to the associative principle in the arrangements of economic life, and because he cannot share in the admiration many economists express for the purely individualistic basis on which these arrangements have come to stand. A socialist is simply the opposite of an individualist. The individualist considers that the perfection of an industrial economy consists in giving to the principles of self-interest, private property, and free competition, on which the present order of things is founded, the amplest scope they are capable of receiving, and that all existing economic evils are due, not to the operation of these principles, but only to their obstruction, and will gradually disappear when self-interest comes to be better understood, when competition is facilitated by easier inter-communication, and when the law has ceased from troubling and left industry at rest. The socialist, in Held's sense, is, on the other hand, one who rejects the comfortable theory of the natural harmony of individual interests, and instead of deploring the obstructions which embarrass the operations of the principles of competition, self-interest, and private property, thinks that it is precisely in consequence of these obstructions that industrial society contrives to exist at all. Strip these principles, he argues, of the restraints put upon them now by custom, by conscience, by public opinion, by a sense of fairness and kind feeling, and the inequalities of wealth would be immensely aggravated, and the labouring classes would be unavoidably ground to misery. Industrial society would fall into general anarchy, into a bellum omnium contra omnes, in which they that have would have more abundantly, and they that have not would lose even what they have. Held declines to join in the admiration bestowed by many scientific economists upon this state of war, in which the battle is always to the rich. He counts it neither the state of nature, nor the state of perfection, of economic society, but simply an unhappy play of selfish and opposing forces, which it ought to be one of the distinct aims of political economy to mitigate and counteract. Individualism has already had too free a course, and especially in the immediate past has enjoyed too sovereign a reign. The work of the world cannot be carried on by a fortuitous concourse of hostile atoms, moving continually in a strained state of suspended social war, and therefore, for the very safety of industrial society, we must needs now change our tack, give up our individualism, and sail in the line of the more positive and constructive tendencies of socialism. To Held's thinking accordingly, socialism and individualism are merely two contrary general principles, ideals, or methods, which may be employed to regulate the constitution of economic society, and he declares himself a socialist because he believes that society suffers at present from an excessive application of the individualistic principle, and can only be cured by an extensive employment of the socialistic one.
This is all clear enough, but it is simply giving to the word socialism another new meaning, and creating a fresh source of ambiguity. That term has already contracted definite associations which it is impossible to dispel by mere word of mouth, and which constitute a refracting medium through which the principles of the Socialists of the Chair cannot fail to be presented in a very misleading form. These writers assume a special position in two relations—first, as theoretical economists; and, second, as practical politicians or social reformers; and in both respects alike the term socialism is peculiarly inappropriate to describe their views. In regard to the first point, by adopting that name they have done what they could to "Nicodemus" themselves into a sect, whereas they might have claimed, if they chose, to be better exponents of the catholic tradition of the science than those who found fault with them. This is a claim, however, which they would be shocked indeed to think of presenting. With a natural partiality for their own opinions, they exaggerated immensely the extent and also the value of their divergence from the traditional or, as it is sometimes called, the classical economics. In the energy of their recoil from the dogmatism which had for a generation usurped an excessive sway over economic science, they were carried too far in the opposite direction, but they had in their own minds the sensation that they were carried a great deal farther than they really were. They liked to think of their historical method as constituting a new epoch, and effecting a complete revolution in political economy, but, as will subsequently appear, that method, when reduced to its real worth, amounts to no more than an application, with somewhat distincter purpose and wider reach, of the method which Smith himself followed. Of this they are in some degree conscious. Brentano, who belongs to the extreme right of the school, says that Smith would have been a Socialist of the Chair to-day if he were alive; and Samter, who belongs to the extreme left, though he is doubtful regarding Smith, has no hesitation in claiming Mill, whom he looks upon as standing more outside than inside the school of Smith. Their position is, therefore, not the new departure which many of them would fain represent it to be. They are really as natural and as legitimate a line of descent from Adam Smith as their adversaries the German Manchester Party who claimed the authority of his name. Perhaps they are even more so, for in science the true succession lies with those who carry the principles of the master to a more fruitful development, and not with those who embalm them as sacred but sterile simulacra.
But it is as practical reformers that the Socialists of the Chair suffer most injustice from their name. Since the word socialism was first used by Reybaud fifty years ago, it has always been connected with utopian or revolutionary ideas. Now the Socialists of the Chair are the very opposite of revolutionaries both by creed and practice. None of the various parties which occupy themselves with the social problem in Germany is so eminently and advisedly practical. Their very historical method, apart from anything else, makes them so. It gives them a special aversion to political and social experiments, for it requires as the first essential of any project of reform that it shall issue naturally and easily out of—or at least be harmonious with—the historical conditions of the time and place to which it is to be applied. Roscher, who may be regarded as the founder of the school, says that reformers ought to take for their model Time, whose reforms are the surest and most irresistible of all, but yet so gradual that they cannot be observed at any given moment. They make, therefore, on the whole a very sparing use of the socialistic principle they invoke. Certainly the world, in their eyes, is largely out of joint, but its restoration is to proceed gently, like Solomon's temple, without sound of hammer. Some of them of course go farther than others, but they would all still leave us rent, wages, and profits, the three main stems of individualism. They struck the idea of taxing speculative profits out of their programme, and so far from having any socialistic thought of abolishing inheritance, none of them except Von Scheel would even tax it exceptionally. Samter stands alone in urging the nationalization of the land; and Wagner stands alone in desiring the abolition of private property in ground-rents in towns; the other members cannot agree even about the expediency of nationalizing the railways. They work of set purpose for a better distribution of wealth—for what Schmoller calls a progressive equalization of the excessive and even dangerous differences of culture that exist at present—but they recoil from all suggestion of schemes of repartition, and they have no fault to find with inequality in itself. On the contrary they regard inequality as being not merely an unavoidable result of men's natural endowments, but an indispensable instrument of their progress and civilization. Schmoller explains that their political principles are those of Radical Toryism, as portrayed in Lord Beaconsfield's novels; and he means that they rest on the same active sympathy with the ripening aspirations of the labouring classes, and the same zealous confidence in the authority of the State, and in these respects are distinguished from modern Liberalism, whose governing sympathies are with the interests and ideas of the bourgeoisie, and which entertains a positive jealousy of the action of the State. The actual reforms which the Socialists of the Chair have hitherto promoted have been in the main copied from our own English legislation—our Factory Acts, our legalization of Trade Unions, our Savings Banks, our registration of Friendly Societies, our sanitary legislation, etc., etc.—measures which have been passed, with the concurrence of men of opposite shades of opinion, out of no social theory but from a plain regard to the obvious necessities of the hour. So that we have been simply Socialists of the Chair for a generation without knowing it, doing from a happy political instinct the works which they deduce out of an elaborate theory of economic politics. Part of their theory, however, is, that in practical questions they are not to go by theory, and the consequence is that while they sometimes lay down general principles in which communism might steal a shelter, they control these principles so much in their application by considerations of expediency, that the measures they end in proposing differ little from such as commend themselves to the common sense and public spirit of middle-class Englishmen.
Their general theory had been taught in Germany for twenty years before it was forced into importance by the policy it suggested and the controversies it excited in connection with the socialist movement which began in 1863. Wilhelm Roscher, the lately deceased professor of economics in Leipzig, first propounded the historical method in his "Grundriss zu Vorlesungen über die Staatswirthschaft nach geschichtlicher Methode," published in 1843, though it deserves to be noticed that in this work he spoke of the historical method as being the ordinary inductive method of scientific economists, and distinguished it from the idealistic method proceeding by deduction from preconceived ideas, which he said was the method of the socialists. He had no thought as yet of representing his method as diverging from that of his predecessors, even in detail, much less as being essentially different in principle. Then the late Bruno Hildebrand, professor of political science at Jena, in his work on the "National Economy of the Present and the Future," published in 1847, proclaimed the historical method as the harbinger and instrument of a new era in the science, but he speaks of it only as a restoration of the method of diligent observation which Adam Smith practised, but which his disciples deserted for pure abstractions. In 1853, a more elaborate defence and exposition of the historical method appeared in a work on "Political Economy from the Standpoint of the Historical Method," by Carl G. A. Knies, professor of national economics at Heidelberg. But it was never dreamt that the ideas broached in these works had spread beyond the few solitary thinkers who issued them. The Free Traders were still seen ruling everything in the high places of the land in the name of political economy, and they were everywhere apparently accepted as authorized interpreters of the mysteries of that, to the ordinary public, somewhat occult science. They preached the freedom of exchange like a religion which contained at once all they were required to believe in economic matters, and all they were required to do. There was ground for Lassalle's well-known taunt: "Get a starling, Herr Schultze, teach it to pronounce the word 'exchange,' 'exchange,' 'exchange,' and you have produced a very good modern economist." The German Manchester Party certainly gave to the principle of laissez-faire, laissez-aller, a much more unconditional and universal application than any party in this country thought of according to it. They looked on it as a kind of orthodoxy which it had come to be almost impious to challenge. It had been hallowed by the consensus of the primitive fathers of the science, and it seemed now to be confirmed beyond question experimentally by the success of the practical legislation in which it had been exemplified during the previous quarter of a century. The adherents of the new school never raised a murmur against all this up till the eventful time of the socialist agitation and the formation of the new German Empire, and the reason is very plain. On the economic questions which came up before that period, they were entirely at one with the Free Traders, and gave a hearty support to their energetic lead. They were, for example, as strenuously opposed to protective duties and to restrictions upon liberty of migration, settlement, and trading, as Manchester itself. But with the socialist agitation of 1863, a new class of economic questions came to the front—questions respecting the condition of the working classes, the relations of capital and labour, the distribution of national wealth, and the like—and on these new questions they could not join the Free Traders in saying "Hands off!" They did not believe with the Manchester school that the existing distribution of wealth was the best of all possible distributions, because it was the distribution which Nature herself produced. They thought, on the contrary, that Nature had little to do with the matter; but even if it had more, there was only too good cause for applying strong corrections by art. They said it was vain for the Manchester party to deny that a social question existed, and to maintain that the working classes were as well off as it was practical for economic arrangements to make them. They declared there was much truth in the charges which socialists were bringing against the existing order of things, and that there was a decided call upon all the powers of society, and, among others, especially upon the State, to intervene with some remedial measures. A good opportunity for concerted and successful action seemed to be afforded when the German Empire was established, and this led to the convening of the Eisenach Congress in 1872, and the organization of the Society for Social Politics in the following year.
Men of all shades of opinion were invited to that Congress, provided they agreed on two points, which were expressly mentioned in the invitation: 1st, in entertaining an earnest sense of the gravity of the social crisis which existed; and 2nd, in renouncing the principle of laissez-faire and all its works. The Congress was attended by 150 members, including many leading politicians and most of the professors of political economy at the Universities. Roscher, Knies, and Hildebrand were there, with their younger disciples Schmoller, professor at Strasburg and author of the "History of the Small Industries"; Lujo Brentano, professor at Breslau, well known in this country by his book on "English Gilds" and his larger work on "English Trade Unions"; Professors A. Wagner of Berlin and Schönberg of Tübingen. Then there were men like Max Hirsch and Duncker the publisher, both members of the Imperial Diet, and the founders of the Hirsch-Duncker Trade Unions; Dr. Engel, director of the statistical bureau at Berlin; Professor von Holtzendorff, the criminal jurist; and Professor Gneist, historian of the English Constitution, who was chosen to preside. After an opening address by Schmoller, three papers were read and amply discussed, one on Factory Legislation by Brentano, a second on trade Unions and Strikes by Schmoller, and a third on Labourers' Dwellings by Engel. This Congress first gave the German public an idea of the strength of the new movement; and the Free Trade party were completely, and somewhat bitterly, disenchanted, when they found themselves deserted, not as they fancied merely by a few effusive young men, but by almost every economist of established reputation in the country. A sharp controversy ensued. The newspapers, with scarcely an exception, attacked the Socialists of the Chair tooth and nail, and leading members of the Manchester party, such as Treitschke the historian, Bamberger the Liberal politician, and others, rushed eagerly into the fray. They were met with spirit by Schmoller, Held, Von Scheel, Brentano, and other spokesmen of the Eisenach position, and one result of the polemic is, that some of the misunderstandings which naturally enough clouded that position at the beginning have been cleared away, and it is now admitted by both sides that they are really much nearer one another than either at first supposed. The Socialists of the Chair did not confine their labours to controversial pamphlets. They published newspapers, periodicals, elaborate works of economic investigation; they held meetings, promoted trade unions, insurance societies, savings banks; they brought the hours of labour, the workmen's houses, the effects of speculation and crises, all within the sphere of legislative consideration. The moderation of their proposals of change has conciliated to a great extent their Manchester opponents. Even Oppenheim, the inventor of their nickname, laid aside his scoffing, and seconded some of their measures energetically. Indeed, their chief adversaries are now the socialists, who cannot forgive them for going one mile with them and yet refusing to go twain—for adopting their diagnosis and yet rejecting their prescription. Brentano, who is one of the most moderate, as well as one of the ablest of them, takes nearly as grave a view of the state of modern industrial society as the socialists themselves do; and he says that if the evils from which it suffers could not be removed otherwise, it would be impossible to avoid much longer a socialistic experiment. But then he maintains that they can be removed otherwise, and one of the chief motives of himself and his allies in their practical work is to put an end to socialistic agitation by curing the ills which have excited it.
The key to the position of the Socialists of the Chair lies in their historical method. This method has nothing to do with the question sometimes discussed whether the proper method of political economy is the inductive or the deductive. On that question the historical school of economists are entirely agreed with the classical school. Roscher, for example, adopts Mill's description of political economy as a concrete deductive science, whose à priori conclusions, based on laws of human nature, must be tested by experience, and says that an economic fact can be said to have received a scientific explanation only when its inductive and deductive explanations have met and agreed. He makes, indeed, two qualifying remarks. One is, that it ought to be remembered that even the deductive explanation is based on observation, on the self-observation of the person who offers it. This will be admitted by all. The other is, that every explanation is only provisional, and liable to be superseded in the course of the progress of knowledge, and of the historical growth of social and economic structure. This will also be admitted, and it is no peculiarity of political economy. There is no science whose conclusions are not modified by the advance of knowledge; and there are many sciences besides political economy whose phenomena change their type in lapse of time. Roscher's proviso, therefore, amounts to nothing more than a caution to economic investigators to build their explanations scrupulously on the facts, the whole facts, and nothing but the facts, and to be specially on their guard against applying to the circumstances of one period or nation explanations and recommendations which are only just regarding another. The same disease may have different symptoms in a child from what it has in a man, and a somewhat different type at the present day from what it had some centuries ago; and it may therefore require a quite different treatment. That is a very sound principle and a very self-evident one, and it contains the whole essence of the historical method, which, so far as it is a method of investigation at all, is simply that of other economists applied under a more dominating sense of the complexity and diversity of the phenomena which are subjected to it. There is consequently with the historical school more rigour of observation and less rigour of theory, and this peculiarity leads to practical results of considerable importance, but it has no just pretensions to assume the dignity of a new economic method, and it is made to appear much bigger than it is by looming through the scholastic distinctions in which it is usually set forth.
The historical school sometimes call their method the realistic and ethical method, to distinguish it from what they are pleased to term the idealistic, and selfish or materialistic method of the earlier economists. They are realists because they cannot agree with the majority of economists who have gone before them in believing there is one, and only one, ideal of the best economic system. There are, says Roscher, as many different ideals as there are different types of peoples, and he completely casts aside the notion, which had generally prevailed before him, that there is a single normal system of economic arrangements, which is built on the natural laws of economic life, and to which all nations may at all times with advantage conform. It is against this notion that the historical school has revolted with so much energy that they wish to make their opposition to it the flag and symbol of a schism. They deny that there are any natural laws in political economy; they deny that there is any economic solution absolutely valid, or capable of answering in one economic situation because it has answered in another. Roscher, Knies, and the older members of the school make most of the latter point; but Hildebrand, Schönberg, Schmoller, Brentano, and the younger spirits among them, direct against the former some of their keenest attacks. They declare it to be a survival from the exploded metaphysics of the much-abused Aufklärung of last century. They argue that just as the economists of that period took self-interest to be the only economic motive, because the then dominant psychology—that of the selfish or sensual school—represented it as the only real motive of human action, of which the other motives were merely modifications; so did they come to count the reciprocal action and reaction of the self-interest of different individuals to be a system of natural forces, working according to natural laws, because they found the whole intellectual air they breathed at the time filled with the idea that all error in poetry, art, ethics, and therefore also economics, had come through departing from nature, and that the true course in everything lay in giving the supremacy to the nature of things. We need not stop to discuss this historical question as to the origin of the idea; it is enough here to say that the Socialists of the Chair maintain that in economic affairs it is impossible to make any such distinction between what is natural and what is not so. Everything results from nature, and everything results from positive institution too. There is in economics either no nature at all, or there is nothing else. Human will effects or affects all; and human will is itself influenced, of course, by human nature and human condition. Roscher says that it is a mistake to speak of industry being forced into "unnatural" courses by priests or tyrants, for the priests and tyrants are part and parcel of the people themselves, deriving all their resources from the people, and in no respect Archimedeses standing outside of their own world. The action of the State in economic affairs is just as natural as the action of the farmer or the manufacturer; and the latter is as much matter of positive institution as the former. But while Roscher condemns this distinction, he does not go the length his disciples have gone, and reject the whole idea of natural law in the sphere of political economy. On the contrary, he actually makes use of the expression, "the natural laws of political economy," and asserts that, when they are once sufficiently known, all that is then needed to guide economic politics is to obtain exact and reliable statistics of the situation to which they are to be applied. Now that statement is exactly the position of the classical school on the subject. Economic politics is, of course, like all other politics, an affair of times and nations; but economic science belongs to mankind, and contains principles which may be accurately enough termed, as Roscher terms them, natural laws, and which may be applied, as he would apply them, to the improvement of particular economic situations, on condition that sufficiently complete and correct statistics are obtained beforehand of the whole actual circumstances. Economic laws are, of course, of the nature of ethical laws, and not of physical; but they are none the less on that account natural laws, and the polemic instituted by the Socialists of the Chair to expel the notion of natural law from the entire territory of political economy is unjustifiable. Phenomena which are the result of human action will always exhibit regularities while human character remains the same; and, moreover, they often exhibit undesigned regularities which, not being imposed upon them by man, must be imposed upon them by Nature. While, therefore, the Socialists of the Chair have made a certain point against the older economists by showing the futility and mischief of distinguishing between what is natural in economics and what is not, they have erred in seeking to convert that point into an argument against the validity of economic principles and the existence of economic laws. At the same time their position constitutes a wholesome protest against the tendency to exaggerate the completeness or finality of current doctrines, and gives economic investigation a beneficial direction by setting it upon a more thorough and all-sided observation of facts.
But when they complain of the earlier economists being so wedded to abstractions, the fault they chiefly mean to censure is the habit of solving practical economic problems by the unconditional application of certain abstract principles. It is the "absolutism of solutions" they condemn. They think economists were used to act like doctors who had learnt the principles of medicine by rote and applied them without the least discrimination of the peculiarities of individual constitutions. With them the individual peculiarities are everything, and the principles are too much thrown into the shade. Economic phenomena, they hold, constitute only one phase of the general life of the particular nations in which they appear. They are part and parcel of a special concrete social organism. They are influenced—they are to a great extent made what they are—by the whole ethos of the people they pertain to, by their national character, their state of culture, their habits, customs, laws. Economic problems are consequently always of necessity problems of the time, and can only be solved for the period that raises them. Their very nature alters under other skies and in other ages. They neither appear everywhere in the same shape, nor admit everywhere of the same answer. They must therefore be treated historically and empirically, and political economy is always an affair for the nation and never for the world. The historical school inveigh against the cosmopolitanism of the current economic theories, and declare warmly in favour of nationalism; according to which every nation has its own political economy just as it has its own constitution and its own character. Now here they are right in what they affirm, wrong in what they deny. They are right in affirming that economic politics is national, wrong in denying that economic science is cosmopolitan. In German the word economy denotes the concrete industrial system as well as the abstract science of industrial systems, and one therefore readily falls into the error of applying to the latter what is only true of the former. There may be general principles of engineering, though every particular project can only be successfully accomplished by a close regard to its particular conditions. In claiming a cosmopolitan validity for their principles, economists do not overlook their essential relativity. On the contrary, they describe their economic laws as being in reality nothing more than tendencies, which are not even strictly true as scientific explanations, and are never for a moment contemplated as unconditional solutions for practical situations. Moreover Roscher, in defining his task as an economist, virtually takes up the cosmopolitan standpoint and virtually rejects the national. He says a political economist has to explain what is or has been, and not to show what ought to be; he quotes the saying of Dunoyer, Je n'impose rien, je ne propose même rien, j'expose; and states that what he has to do is to unfold the anatomy and physiology of social and national economy. He is a scientific man, and not an economic politician, and naturally assumes the position of science, which is cosmopolitan, and not that of politics, which is national and even opportunist.
I pass now to a perhaps more important point, from which it will be seen that the Socialists of the Chair are far from thinking that political economy has nothing to do with what ought to be. Next to the realistic school, the name they prefer to describe themselves by is the ethical school. By this they mean two things, and some of them lay the stress on the one and some on the other. They mean, first, to repudiate the idea of self-interest being the sole economic motive or force. They do not deny it to be a leading motive in industrial transactions, and they do not, like some of the earlier socialists, aim at its extinction or replacement by a social or generous principle of action. But they maintain that the course of industry never has been and never will be left to its guidance alone. Many other social forces, national character, ideas, customs—the whole inherited ethos of the people—individual peculiarities, love of power, sense of fair dealing, public opinion, conscience, local ties, family connections, civil legislation—all exercise upon industrial affairs as real an influence as personal interest, and, furthermore, they exercise an influence of precisely the same kind. They all operate ethically, through human will, judgment, motives, and in this respect one of them has no advantage over another. It cannot be said, except in a very limited sense, that self-interest is an essential and abiding economic force and the others only accidental and passing. For while customs perish, custom remains; opinions come and go, but opinion abides; and though any particular act of the State's intervention may be abolished, State intervention itself cannot possibly be dispensed with. It is all a matter of more or less, of here or there. The State is not the intruder in industry it is represented to be. It is planted in the heart of the industrial organism from the beginning, and constitutes in fact part of the nature of things from which it is sought to distinguish it. It is not unnatural for us to wear clothes because we happen to be born naked, for Nature has given us a principle which guides us to adapt our dress to our climate and circumstances. Reason is as natural as passion, and the economists who repel the State's intrusion and think they are thus leaving industry to take its natural course, commit the same absurdity as the moralist who recommends men to live according to Nature, and explains living according to Nature to mean the gratification as much as possible of his desires, and his abandonment as much as possible of rational and, as he conceives, artificial plan. The State cannot observe an absolute neutrality if it would. Non-intervention is only a particular kind of intervention. There must be laws of property, succession, and the like, and the influence of these spreads over the whole industrial system, and affects both the character of its production and the incidence of its distribution of wealth.
But, second, by calling their method the ethical method, the historical school desire to repudiate the idea that in dealing with economic phenomena they are dealing with things which are morally indifferent, like the phenomena of physics, and that science has nothing to do with them but to explain them. They have certainly reason to complain that the operation of the laws of political economy is sometimes represented as if it were morally as neutral as the operation of the law of gravitation, and it is in this conception that they think the materialism of the dominant economic school to be practically most offensively exhibited. Economic phenomena are not morally indifferent; they are ethical in their very being, and ought to be treated as such. Take, for example, the labour contract. To treat it as a simple exchange between equals is absurd. The labourer must sell his labour or starve, and may be obliged to take such terms for it as leave him without the means of enjoying the rights which society awards him, and discharging the duties which society claims from him. Look on him as a ware, if you will, but remember he is a ware that has life, that has connections, responsibilities, expectations, domestic, social, political. To get his bread he might sell his freedom, but society will not permit him; he may sell his health, he may sell his character, for society permits that; he may go to sea in rotten ships, and be sent to work in unwholesome workshops; he may be herded in farm bothies where the commonest decencies of life cannot be observed; and he may suck the strength out of posterity by putting his children to premature toil to eke out his precarious living. Transactions which have such direct bearings on freedom, on health, on morals, on the permanent well-being of the nation, can never be morally indifferent. They are necessarily within the sphere of ends and ideals. Their ethical side is one of their most important ones, and the science that deals with them is therefore ethical. For the same reason they come within the province of the State, which is the normal guardian of the general and permanent interests, moral and economic, of the community. The State does not stand to industry like a watchman who guards from the outside property in which he has himself no personal concern. It has a positive industrial office. It is, says Schmoller, the great educational institute of the human race, and there is no sense in suspiciously seeking to reduce its action in industrial affairs to a minimum. His theory of the State is that of the Cultur-Staat, in distinction from the Polizei-Staat, and the Rechts-Staat. The State can no longer be regarded as merely an omnipotent instrument for the maintenance of tranquillity and order in the name of Heaven; nor even as a constitutional organ of the collective national authority for securing to all individuals and classes in the nation, without exception, the rights and privileges which they are legally recognised to possess; but it must be henceforth looked upon as a positive agency for the spread of universal culture within its geographical territory.