[787] See Autobiography, p. 133 (“Popular” edition).

[788] “If the improvement which even triumphant military despotism has only retarded, not stopped, shall continue its course there can be little doubt that the status of hired labourers will gradually tend to confine itself to the description of workpeople whose low moral qualities render them unfit for anything more independent, and that the relation of masters and workpeople will be gradually superseded by partnership in one of two forms: in some cases, association of the labourers with the capitalist; in others, and perhaps finally in all, association of labourers among themselves.” (Principles, Book IV, chap. 7, § 4.)

“In this or some such mode, the existing accumulations of capital might honestly and by a kind of spontaneous process become in the end the joint property of all who participate in their productive employment—a transformation which, thus effected, would be the nearest approach to social justice and the most beneficial ordering of industrial affairs for the universal good which it is possible at present to foresee.” (Ibid., Book IV, chap. 7, § 6.)

[789] The co-operative movement probably suggested this idea to him. He several times expresses the opinion that middlemen’s profits exceed those of the capitalists, and that the working class would gain more by the removal of the former than they would by the extinction of the latter.

[790] But Young remained a champion of grande culture, while Mill was a complete convert to peasant proprietorship. But peasant proprietorship is proposed simply as a step towards association.

“The opinion expressed in a former part of this treatise respecting small landed properties and peasant proprietors may have made the reader anticipate that a wide diffusion of property in land is the resource on which I rely for exempting at least the agricultural labourers from exclusive dependence on labour for hire. Such, however, is not my opinion. I indeed deem that form of agricultural economy to be most groundlessly cried down, and to be greatly preferable in its aggregate effects on human happiness to hired labour in any form in which it exists at present. But the aim of improvement should be not solely to place human beings in a condition in which they will be able to do without one another, but to enable them to work with or for one another in relations not involving dependence.” (Principles, Book IV, chap. 7, § 4.)

Mill was not the only one who looked to peasant proprietorship partly to solve the social problem. Not to mention Sismondi, who was very much taken up with the idea, we have Thornton in England in his Plea for Peasant Proprietors (1848) and Hippolyte Passy in France in his excellent little volume Des Systèmes de Culture (1852) strongly advocating it. The Classical economists for the most part took the opposite point of view, especially Lavergne in his Essai sur l’Économie rurale de l’Angleterre.

[791] “Were I framing a code of laws according to what seems to me best in itself, without regard to existing opinions and sentiments, I should prefer to restrict, not what anyone might bequeath, but what anyone should be permitted to acquire by bequest or inheritance. Each person should have power to dispose by will of his or her whole property; but not to lavish it in enriching some one individual beyond a certain maximum.” (Principles, Book II, chap. 2, § 4.)

It is hardly necessary to say that this limitation of the right of inheritance is a purely personal opinion of Mill, and that it is rejected along with his other solutions by most individualists. It is not quite correct to say then, as Schatz has said in his Individualism, that Stuart Mill is “the very incarnation of the individualistic spirit.” He was really a somewhat sceptical disciple of the school, and his frequent change of opinion was very embarrassing!

[792] Principles, Book II, chap. 6, § 2.

[793] “There is at every time and place some particular rate of profit, which is the lowest that will induce the people of that country and time to accumulate savings.… But though the minimum rate of profit is thus liable to vary, and though to specify exactly what it is would at any given time be impossible, such a minimum always exists; and whether it be high or low, when once it is reached no further increase of capital can for the present take place. The country has then attained what is known to political economists under the name of the Stationary State.” (Ibid., Book IV, chap. 4, § 3.)

Mill indicates the causes that contribute to a fall in the rate of profits as well as the causes that arrest that fall, such as the progress of production and the destruction of wealth by wars and crises.

It may be worth while pointing out that the word profit as employed by the English economists, and especially by Mill, has not the same meaning as it has with the French writers. French economists since the time of Say have employed the term profit to denote the earnings of the entrepreneur, the capitalist’s income being designated interest. The English economists do not distinguish between the work of the entrepreneur and that of the capitalist, and the term profit covers them both. The result is that the French Hedonistic economists can say that under a régime of absolutely free competition profit would fall to zero, while the English economists cannot accept their thesis because profits include interest, which will always remain as the reward of waiting.

The French point of view is more generally adopted to-day.

[794] In a letter to Gustave d’Eichthal, recently published, speaking of Auguste Comte, he writes as follows: “How ridiculous to think that this law of civilisation requires as its correlative constant progress! Why not admit that as humanity advances in certain respects it degenerates in others?”

[795] On the question of co-operation as a method of social reform, Cairnes, who simply refers to it as a possible alternative, may have owed something to Mill.

[796] Essays, p. 281.

[797] Since 1830 there have only been four professors.—J. B. Say, Rossi, Michel Chevalier, and Chevalier’s son-in-law, M. Paul Leroy-Beaulieu. The history of the chair is a fair summary of the history of French economics.

[798]His most curious book, perhaps, was De la Baisse probable de l’Or, a title that caused a good deal of amusement during the latter half of the nineteenth century, but which proved somewhat of a prophecy after all.

[799] Joseph Garnier, who must not be confused with Germain Garnier, the translator of Smith’s works, published the first edition of his Éléments d’Économie politique in 1845. From 1848 up to his death in 1881 he was chief editor of the Journal des Économistes.

[800] G. Schmoller, Zur Litteraturgeschichte der Staats- und Sozialwissenschaften (Leipzig, 1888). The expression will be found in his study of Roscher.

[801] A. Toynbee, The Industrial Revolution.

[802] It is curious that the Historians never refer to Sismondi as one of the pioneers of historical study. Roscher and Hildebrand never mention him at all, and Knies only thinks of him as a socialist (cf. Die Nationalökonomie vom historischen Standpunkt, 2nd ed., p. 322).

[803] Even List did not escape criticism at their hands. Hildebrand thinks that he was infected with the atomic views of Adam Smith and never showed himself sufficiently conscious of the ethical nature of society. “List seems to think that the entire subordination of private interest to public utility is dictated by custom, and even by private interest when properly understood, but he never regards it as a public duty rising out of the very nature of society itself.” (Hildebrand, Die Nationalökonomie der Gegenwart und Zukunft, p. 73.) Note the ethical standpoint of the school.

[804] See, among others, Max Weber’s articles in Schmoller’s Jahrbuch for 1903, p. 1881, and 1905, p. 1323. The methodological errors of Roscher, Knies, and Hildebrand get their due meed of criticism.

[805] Grundriss, preface.

[806] Knies is of the same opinion. He remarks that Roscher’s work simply means “a completion of historiography rather than a correction of political economy.” (Die Nationalökonomie vom geschichtlichen Standpunkte, p. 35.)

[807] Grundriss, preface, pp. iv-v.

[808] Untersuchungen über die Methode der Sozialwissenschaften und der Politischen Oekonomie insbesondere. (Leipzig, 1883.)

[809] Schmoller, loc. cit. For further information concerning the Cameralists see Geschichte der Nationalökonomie, by M. Oncken. Menger and Schmoller also connect Roscher with Heeren, Gervinus, and the other historians of Göttingen who during the first quarter of the nineteenth century tried to found a science of politics upon a general study of history. Roscher had studied history under them, and his aim is in every respect similar to theirs.

[810] In the introduction, p. v, he declares that the object of his work is “to open a way for an essentially historical standpoint in political economy and to transform the science of political economy into a body of doctrines dealing with the economic development of nations.”

[811] Even Roscher had ventured to say that they partook of a mathematical nature. This is how he expresses his views as against those of Hildebrand on the real aim of political economy in the Jahrbücher für Nationalökonomie und Statistik, vol. i, p. 145: “Economic science need not attempt to find the unchangeable, identical laws amid the multiplicity of economic phenomena. Its task is to show how humanity has progressed despite all the transformations of economic life, and how this economic life has contributed to the perfection of mankind. Its task is to follow the economic evolution of nations as well as of humanity as a whole, and to discover the bases of the present economic civilisation as well as of the problems that now await solution.”

[812] The exact title of the first edition was Die Politische Oekonomie vom Standpunkte der geschichtlichen Methode. A second edition appeared in 1883 with a slightly different title. Our quotations are taken from the second edition.

[813] Schmoller, Grundriss der Volkswirtschaftslehre, vol. i, p. 107 (1904).

[814] Ibid., vol. i, p. 108.

[815] Ibid., vol. ii, p. 653.

[816] All historians, however, are not equally sceptical. Ashley in his preface to English Economic History and Theory writes as follows: “Just as the history of society, in spite of apparent retrogressions, reveals an orderly development, so there has been an orderly development in the history of what men have thought, and therefore in what they have thought concerning the economic side of life.” And Ingram, in his History of Political Economy, points out that “As we have more than once indicated, an essential part of the idea of life is that of development—in other words, of ordered change. And that such a development takes place in the constitution and working of society in all its elements is a fact which cannot be doubted.… That there exist between the several social elements such relations as make the change of one element involve or determine the change of another is equally plain; and why the name of natural laws should be denied to such constant relations of coexistence and succession it is not easy to see. These laws being universal admit of the construction of an abstract theory of economic development.” (P. 205.)

[817] Schmoller thinks that the science in the present stage of development, while it cannot be prevented from attempting a philosophy of history, is much better employed in building up simple scientific hypotheses with a view to gauging the future course of development than in getting hold of “absolute truths.”

[818] Marshall, Principles, Appendix A.

[819] Its influence has been noted by Toynbee in his article on Ricardo and the Old Political Economy. “It was the labour question, unsolved by that removal of restrictions which was all deductive political economy had to offer, that revived the method of observation. Political economy was transformed by the working classes.” Elsewhere he adds: “The Historical method is often deemed conservative, because it traces the gradual and stately growth of our venerable institutions; but it may exercise a precisely opposite influence by showing the gross injustice which was blindly perpetrated during this growth.” (Industrial Revolution, p. 58.)

[820] The first edition appeared in 1857.

[821] We would specially mention Levasseur’s excellent work, Histoire des Classes ouvrières en France (first edition, 1867).

[822] More especially we must mention the group of workers associated with M. Durkheim and the Anné sociologique. But it would be a great mistake to confuse the two methods, the Historical and the Sociological. See Simiand, Méthode historique et Science sociale, in the Revue de Synthèse historique, 1903. See also La Méthode positive en Science économique (Paris, 1912), which contains a study of the methodological problems presented by political economy.

[823] There is one aspect of the critical work of the German school with which we have not dealt in this book—namely, the criticism of laissez-faire. Some of the members, e.g. Hildebrand, have insisted on the ethical criterion, but none of them share in the optimism of either Smith or Bastiat. The emphasis laid upon relativity made this quite impossible. But all the more eminent writers have remained faithful to the Liberal teaching of the founders. See Hildebrand’s confession of faith at the beginning of vol. i of the Jahrbücher für Nationalökonomie, 1863, vol. i, p. 3. And although some of them, e.g. Brentano and Schmoller, seem to be connected with the new current of ideas that gave rise to State Socialism, the association was quite accidental. They never considered it an organic part of their teaching, and they made no very original contribution to that part of the study. Their connection with economics must always depend upon the light which they have thrown upon the question of method.

[824] Cf. Schmoller’s account of Menger’s work published in the Jahrbuch in 1884. The article appears also in the volume entitled Zur Litteraturgeschichte der Staats- und Sozialwissenschaften (1888).

[825] Cf. Menger, loc. cit., pp. 130 et seq. Marshall’s ironical remark is very apposite here: “German economists have done good service by insisting on this class of consideration, but they seem to be mistaken in supposing that it was overlooked by the older English economists.” (Principles, Book I, chap. 6, note.)

[826] Knies, loc. cit., pp. 24-25. Ashley gives an unmistakable expression to the same opinion in his History. “Political economy is not a body of absolutely true doctrines, revealed to the world at the end of the last and the beginning of the present century, but a number of more or less valuable theories and generalisations.… Modern economic theories, therefore, are not universally true; they are true neither for the past, when the conditions they postulate did not exist, nor for the future, when, unless society becomes stationary, the conditions will have changed.” (Preface.)

[827] See Karl Pearson, The Grammar of Science.

[828] Marshall, Principles, 4th ed., Book I, chap. 6, § 6.

What we say about the mathematical method does not imply any criticism of the Mathematical method in political economy. To establish mathematical relations between economic phenomena, as Walras and his school did, and to deduce economic conclusions from general mathematical theories are two different things.

[829] Knies employs the differences there set up in order to deny that economic laws have even the character of national laws. The new Historical school does not go quite so far, as we shall see presently.

[830] Chap. 4, “Of the Logic of the Moral Sciences.”

[831] Principles, Book I, chap. 6, § 6.

[832] Walras, Economie politique pure.

[833] Some authors would not admit complete assimilation; e.g. Wagner (Grundlegung, vol. i, p. 335).

[834] Schmoller especially insists on this point.

[835] Knies, op. cit., p. 23.

[836] A. Wagner, Grundlegung, § 67.

[837] Vol. ii, p. 502.

[838] Logic, vol. ii, p. 497.

[839] Principles, Book I, chap. 5, § 9.

[840] Marshall, Principles, Book I, chap. 5, § 7.

[841] Zur Litteraturgeschichte, p. 279.

[842] Untersuchungen über die Methode, p. 279.

[843] The English economists, even the most eminent, are often mistaken, says Wagner (Grundlegung, chap. 4, § 4), but their errors are not to be imputed to their method so much as to the use they make of it. And Menger, who so energetically undertook the defence of deduction, further undertakes to renew the Classical theories. Economic theory, says he, as constituted by the English Classical school, has not succeeded in giving us a satisfactory science of economic laws (Menger, loc. cit., p. 15).

[844] Cf. Menger, loc. cit., p. 79: “The student of pure mechanics does not deny the existence of air or friction, any more than the student of pure mathematics denies the existence of real bodies, of surfaces, and lines, or the student of pure chemistry denies the influence of physical forces or the physicist the presence of chemical factors in actual phenomena, although each of these sciences only considers one side of the real world, making an abstraction of every other aspect of it. Nor does the economist pretend that men are only moved by egoism or that they are infallible and omniscient because they envisage social life from the point of view of the free play of individual interest uninfluenced by other considerations, by sin or ignorance.” Wagner and Marshall take the same view.

[845] So great is the respect for psychology among the deductive writers of to-day that it has been suggested that the Austrian school should be known as the Psychological school. We can say that they have done much more in this direction than the Historical school.

[846] Manuale di Economia politica, p. 24 (Milan, 1906).

[847] Principles, 4th ed., Book I, chap. 3.

[848] Handwörterbuch der Staatswissenschaften. In his Grundriss we read: “The writers who figure as representatives of inductive research in recent German economics are not opposed to the practice of deduction as such, but they do believe that it is too often based upon superficial and insufficient principles and that other principles derived from a more exact observation of facts might very well be substituted for these.” Everyone would subscribe to this view.

[849] Die Entstehung der Volkswirtschaft, Dr. Wickett’s translation.

[850] “National life, like every other form of existence, forms a whole of which the different parts are very intimately connected. Complete understanding even of a single aspect of it requires a careful study of the whole. Language, religion, arts and sciences, law, politics and economics must all be laid under tribute.” (Roscher, Principles.) Cf. also Hildebrand, Die Nationalökonomie der Gegenwart und Zukunft, p. 29. This is also Knies’s thought.

[851] Die Nationalökonomie der Gegenwart und Zukunft, p. 29.

[852] Principles, Book I, chap. 4, § 1. “History,” says Wagner (Grundlegung, § 83), “may well affirm the existence of causal or conditional relations, but it can never prove it.”

[853] History may, as a matter of fact, become explanatory, but only in a particular sense. In other words, although it cannot discover the general laws regulating phenomena, it may show what special circumstances (whose general laws are already supposed to be known) have given rise to some event equally specialised in character. But every honest historian has to admit that such explanations are definitely personal and subjective in character. For a recent examination of these ideas from the pen of a historian see the profound yet charming introduction contributed by Meyer to the second edition of his Geschichte des Alterthums. Cf. also Simiand, pp. 14-16.

[854] Cf. Marshall, Principles, Book I, chap. 6, § 4, and especially Menger, Untersuchungen, pp. 15-17: “We may be said to have historical knowledge of a particular phenomenon when we have traced its individual genesis, i.e. when we have succeeded in representing to ourselves the concrete circumstances among which it came into being, with their proper qualifications, etc. We may be said to have a theoretical knowledge of some concrete phenomenon when we are enabled to envisage it as a particular instance of a certain law or regularity of sequence or coexistence, i.e. when we are able to give an account of the raison d’être and the nature of its existence as an exemplification of some general law.”

[855] A full exposition of this idea is given in his Grundriss, but Knies, in the name of the conception of a unique evolution, contests the view.

[856] This is what M. Renouvier thinks of this conception: “If we proceed to ask another question in addition to the difficult one already asked and inquire as to the circumstances under which different nations have advanced or declined in the path of goodness and of truth and transmitted their triumphs or their defeats to the next generations, and if we support ourselves in the quest by the belief that we already have some knowledge of a scientific law and consequently of the aim of human society (this kind of knowledge generally begins with formulating such aims), we shall find ourselves in the position of a religious prophet who, not merely content with an inspired version of the truth, and of the destiny of mankind, proceeds to expound to his auditors the necessity under which both preacher and auditors are compelled to believe and to act in accordance with what will undoubtedly come to pass. Philosophical and religious imagination seeks in external observation the elements of a confidence which it can no longer place in itself. History becomes a kind of inspiring divinity. But although the object of the illusion is different its nature is still the same, for the new deity is as little effective as were the ancient ones in the opinion of those who have no faith in it, and it only inspires those who already believe.” (Introduction à la Philosophie analytique de l’Histoire, 2nd ed., vol. i, p. 121.) Bergson’s philosophy also contests the possibility of guessing what the future may be like from the character of the present. See especially Creative Evolution.

[857] Grundlegung, p. 342.

[858] Cf. Ingram, History of Political Economy, and Denis, Histoire des Systèmes.

[859] A. Comte, Cours, vol. iv, p. 198.

[860] Cours, vol. iv, p. 328.

[861] It is interesting to learn the views of historians on this point. Meyer thinks that the object of history is not to discover the general laws of development, but to describe and explain particular concrete events as they succeed one another. Such descriptions can only be made in accordance with the rules of historical criticism, but explanation is only possible with the aid of analogy. “It is only by the use of analogy that the historian can explain past events, especially where there are psychological motives that require analysis. The explanation thus given will necessarily be of a subjective character, and from its very nature somewhat problematic.” Cf. Ed. Meyer, Geschichte des Alterthums, Introduction, 2nd ed. §§ 112 et seq. There does not seem to be any connection between this method and that of Aug. Comte. One becomes still more convinced of this after reading Langlois and Seignobos’s Introduction aux Études historiques or G. Monod’s study in historical method in De la Méthode dans les Sciences (Paris, 1909), or, finally, the numerous articles dealing with this question of method which have appeared in the Revue de Synthèse historique.

[862] Theory of Political Economy, preface to the second edition, 1879.

[863] Schmoller’s Jahrbuch contains descriptive studies of present-day commercial and industrial undertakings which are veritable models.

[864] The Present Position of Political Economy, in the Economic Journal, 1907, p. 481.

[865] We have not the necessary space in this volume to refer to the history of statistics. This science, though independent of political economy, is, however, such a powerful auxiliary that its progress has to some extent been parallel with the growth of economics. During the last twenty years the methods of interpreting statistics (we are speaking merely of observation) have been very considerably improved. The logical problems involved have been studied with much care, and the application of mathematics to these problems has proved very fruitful. No student of the social sciences can afford to neglect such mathematical theories as those of combination, correlation, degree of error, etc. The history of statistics, which contains many eminent names, from Quetelet to Karl Pearson, would certainly deserve a chapter in a book dealing with method, although there would be some risk of giving it too statistical a bias. We must rest content with referring the reader to Udny Yule’s Introduction to the Theory of Statistics, which constitutes what is perhaps the best recent introduction to the discussion concerning the method to be employed in this social science, and forms an indispensable complement to the study of the problems examined in this chapter.

[866] Dupont-White makes the remark somewhere that the State, strictly speaking, has only existed since 1789. It appears, then, that a State which is not constitutional, democratic, and liberal has none of the virtues of the true State. Such exclusion, although permissible in the publicist, is indefensible in the theorist or historian.

[867] “The distinctive character of the State merely consists in this necessity to have recourse to force, which also helps to indicate the extent and the proper limits of its action. Government is only possible through the intervention of force, and its action is only legitimate when the intervention of force can be shown to be justifiable.” (Harmonies, 10th ed., pp. 552-553.)

[868] Wealth of Nations, Book IV, chap. 9; Cannan’s ed., vol. ii, p. 185.

[869] Harmonies, 10th ed., p. 556.

[870] Hermann, Staatswirtschaftliche Untersuchungen, 1st ed., pp. 12-18.

[871] A similar idea is contained in Liberty, where it is stated that “trade is a social act,” that the conduct of every merchant “comes within the jurisdiction of society,” and that “as the principle of individual liberty is not involved in the doctrine of Free Trade, so neither is it in most of the questions which arise respecting the limits of that doctrine; as, for example, what amount of public control is admissible for the prevention of fraud by adulteration; how far sanitary precautions, or arrangements to protect workpeople employed in dangerous occupations, should be enforced on employers.… But that they [people] may be legitimately controlled for these ends is in principle undeniable.” (Chap. 5.)

[872] Michel Chevalier, Introductory Lectures, No. 10, in Cours, vol. i, p. 221.

[873] Cours, vol. i, pp. 211, 214; vol. ii, pp. 38, 115.

[874] Pareto, Cours d’Économie politique, vol. ii, § 656 (1897).

[875] Principes, p. 422.

[876] Ibid., pp. 444, 462, 521.

[877] Stuart Mill has tried to do so in a formula that is not very illuminating: “To individuality should belong the part of life in which it is chiefly the individual that is interested; to society, the part which chiefly interests society.” (Liberty, chap. 4.)

[878] Republished in his Études d’Économie sociale, 1896. See a brief résumé in our chapter on Rent.

[879] For a general account of Lassalle’s life, and especially his relations with Bismarck, see Hermann Oncken, Lassalle (Stuttgart, 1904).

[880] There has been no dispute concerning the French origin of Rodbertus’s ideas since the evidence was sifted by Menger in his Das Recht auf den vollen Arbeitsertrag (1st ed., 1886). But Menger only mentions two sources of inspiration, Proudhon and the Saint-Simonians. The text will sufficiently indicate his indebtedness to the Saint-Simonians, but we think that Sismondi might well have been substituted for Proudhon. The only Proudhonian doctrine that is discoverable in Rodbertus is the theory concerning the constitution of value. But in the second of the Soziale Briefe (Schriften, vol. ii, p. 46, note) he states definitely that the idea was not a borrowed one, and that he himself was the first to formulate it, although he omits to state in what connection. He may be referring to a passage in his Forderungen, where the idea is quite clearly expressed. Speaking of Ricardo’s theory of value, he says: “That theory comes to grief on a single issue, namely, in regarding a thing as existing when it only exists in the mind, and treating a thing as a reality when it only becomes real in the future.” (Schriften, vol. iii, p. 120.) It is clearly pointed out that the task of the future is to determine what value is. The Forderungen, where all the master ideas of Rodbertus may be studied, was published in 1837, nine years before the Contradictions économiques was published by Proudhon, who made his first reference to the question in that work.