The Postulates of English Political Economy

Walter Bagehot
Bagehot, Walter
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London: Longmans, Green, and Co.
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Preface by Alfred Marshall


The Postulates of English Political Economy


Adam Smith completed the 'Wealth of Nations' in 1776, and our English Political Economy is therefore just a hundred years old. In that time it has had a wonderful effect. The life of almost everyone in England—perhaps of everyone—is different and better in consequence of it. The whole commercial policy of the country is not so much founded on it as instinct with it. Ideas which are paradoxes everywhere else in the world are accepted axioms here as results of it. No other form of political philosophy has ever had one thousandth part of the influence on us; its teachings have settled down into the common sense of the nation, and have become irreversible.


We are too familiar with the good we have thus acquired to appreciate it properly. To do so we should see what our ancestors were taught. The best book on Political Economy published in England before that of Adam Smith is Sir James Steuart's 'Inquiry,' a book full of acuteness, and written by a man of travel and cultivation. And its teaching is of this sort: 'In all trade two things are to be considered in the commodity sold. The first is the matter; the second is the labour employed to render this matter useful. The matter exported from a country is what the country loses; the price of the labour exported is what it gains. If the value of the matter imported be greater than the value of what is exported the country gains. If a greater value of labour be imported than exported the country loses. Why? Because in the first case strangers must have paid in matter the surplus of labour exported; and in the second place because the strangers must have paid to strangers in matter the surplus of labour imported. It is, therefore, a general maxim to discourage the importation of work, and to encourage the exportation of it.'


It was in a world where this was believed that our present Political Economy began.


Abroad the influence of cur English system has of course not been nearly so great as in England itself. But even there it has had an enormous effect. All the highest financial and commercial legislation of the Continent has been founded upon it. As curious a testimony perhaps as any to its power is to be found in the memoir of memoir of Mollien—the financial advisor of the first Napoleon, le bon Mollien, whom nothing would induce him to discard because his administration brought francs, whereas that of his more showy competitors might after all end in ideas. 'It was then,' says Mollien, in giving an account of his youth, 'that I read an English book of which the disciples whom M. Turgot had left spake with the greatest praise—the work of Adam Smith. I had especially remarked how warmly the venerable and judicious Malesherbes used to speak of it—this book so deprecated by all the men of the old routine who spoke of themselves so improperly as of the school of Colbert. They seemed to have persuaded themselves that the most important thing for our nation was that not one sou should ever leave France: that so long as this was so, the kind and the amount of taxation, the rate of wages, the greater or less perfection of industrial arts, were things of complete indifference, provided always that one Frenchman gained what another Frenchman lost.'


And he describes how the 'Wealth of Nations' led him to abandon those absurdities and to substitute the views with which we are now so familiar, but on which the 'good Mollien' dwells as on new paradoxes. In cases like this, one instance is worth a hundred arguments. We see in a moment the sort of effect that our English Political Economy has had when we find it guiding the finance of Napoleon, who hated ideologues, and who did not love the English.


But notwithstanding these triumphs, the position of our Political Economy is not altogether satisfactory. It lies rather dead in the public mind. Not only does it not excite the same interest as formerly, but there is not exactly the same confidence in it. Younger men either do not study it, or do not feel that it comes home to them, and that it matches with their most living ideas. New sciences have come up in the last few years with new modes of investigation, and they want to know what is the relation of economic science, as their fathers held it, to these new thoughts and these new instruments. They ask, often hardly knowing it, will this 'science' as it claims to be, harmonise with what we now know to be sciences, or bear to be tried as we now try sciences? And they are not sure of the answer.


Abroad, as is natural, the revolt is more avowed. Indeed, though the Political Economy of Adam Smith penetrated deep into the Continent, what has been added in England since has never penetrated equally; though if your 'science' is true, the newer work required a greater intellectual effort, and is far more complete as a scientific achievement than anything which Adam Smith did himself. Political Economy, as it was taught by Ricardo, has had in this respect much the same fate as another branch of English thought of the same age, with which it has many analogies—jurisprudence as it was taught by Austin and Bentham; it has remained insular. I do not mean that it was not often read and understood; of course it was so, though it was often misread and misunderstood. But it never at all reigned abroad as it reigns here; never was really fully accepted in other countries as it was here where it arose. And no theory, economic or political, can now be both insular and secure; foreign thoughts come soon and trouble us; there will always be doubt there as to what is only believed here.


There are, no doubt, obvious reasons why English Political Economy should be thus unpopular out of England. It is known everywhere as the theory 'of Free-trade,' and out of England Free-trade is almost everywhere unpopular. Experience shows that no belief is so difficult to create, and no one so easy to disturb. The Protectionist creed rises like a weed in every soil. 'Why,' M. Thiers was asked, 'do you give these bounties to the French sugar-refiners?' 'I wish,' replied he, 'the tall chimneys to smoke.' Every nation wishes prosperity for some conspicuous industry. At what cost to the consumer, by what hardship to less conspicuous industries, that prosperity is obtained, it does not care. Indeed, it hardly knows, it will never read, it will never apprehend the refined reasons which prove those evils and show how great they are; the visible picture of the smoking chimneys absorbs the whole mind. And, in many cases, the eagerness of England in the Free-trade cause only does that cause harm. Foreigners say, 'your English traders are strong and rich; of course you wish to under-sell our traders, who are weak and poor. You have invented this Political Economy to enrich yourselves and ruin us; we will see that you shall not do so.'


And that English Political Economy is more opposed to the action of Government in all ways than most such theories, brings it no accession of popularity. All Governments like to interfere; it elevates their position to make out that they can cure the evils of mankind. And all zealots wish they should interfere, for such zealots think they can and may convert the rulers and manipulate the State control: it is a distinct object to convert a definite man, and if he will not be convinced there is always a hope of his successor. But most zealots dislike to appeal to the mass of mankind; they know instinctively that it will be too opaque and impenetrable for them.


Still I do not believe that these are the only reasons why our English Political Economy is not estimated at its value abroad. I believe that this arises from its special characteristic, from that which constitutes its peculiar value, and, paradoxical as it may seem, I also believe that this same characteristic is likewise the reason why it is often not thoroughly understood in England itself. The science of Political Economy as we have it in England may be defined as the science of business, such as business is in large productive and trading communities. It is an analysis of that world so familiar to many Englishmen—the 'great commerce' by which England became rich. It assumes the principal facts which make that commerce possible, and as is the way of an abstract science it isolates and simplifies them: it detaches them from the confusion with which they are mixed in fact. And it deals too with the men who carry on that commerce, and who make it possible. It assumes a sort of human nature such as we see everywhere around us, and again it simplifies that human nature; it looks at one part of it only. Dealing with matters of 'business,' it assumes that man is actuated only by motives of business. It assumes that every man who makes anything, makes it for money, that he always makes that which brings him in most at least cost, and that he will make it in the way that will produce most and spend least; it assumes that every man who buys, buys with his whole heart, and that he who sells, sells with his whole heart, each wanting to gain all possible advantage. Of course we know that this is not so, that men are not like this; but we assume it for simplicity's, sake, as an hypothesis. And this deceives many excellent people, for from deficient education they have very indistinct ideas what an abstract science is.


More competent persons, indeed, have understood that English Political Economists are not speaking of real men, but of imaginary ones: not of men as we see them, but of men as it is convenient to us to suppose they are. But even they often do not understand that the world which our Political Economists treat of, is a very limited and peculiar world also. They imagine that what they read is applicable to all states of society, and to all equally, whereas it is only true of—and only proved as to—states of society in which commerce has largely developed, and where it has taken the form of development, or something near the form, which it has taken in England.


This explains why abroad the science has not been well understood. Commerce, as we have it in England, is not so full-grown anywhere else as it is here—at any rate, is not so outside the lands populated by the Anglo-Saxon race. Here it is not only a thing definite and observable, but about the most definite thing we have, the thing which it is most difficult to help seeing. But on the Continent, though there is much that is like it, and though that much is daily growing more, there is nowhere the same pervading entity—the same patent, pressing, and unmistakable object.


And this brings out too the inherent difficulty of the subject—a difficulty which no other science, I think, presents in equal magnitude. Years ago I heard Mr. Cobden say at a League Meeting that 'Political Economy was the highest study of the human mind, for that the physical sciences required by no means so hard an effort.' An orator cannot be expected to be exactly precise, and of course Political Economy is in no sense the highest study of the mind—there are others which are much higher, for they are concerned with thing, much nobler than wealth or money; nor is it true that the effect of mind which Political Economy requires is nearly as great as that acquired for the abstruser theories of physical science, for the theory of gravitation, or the theory of natural selection; but, nevertheless, what Mr. Cobden meant had—as was usual with his first-hand mind—a, great fund of truth. He meant that Political Economy—effectual Political Economy, Political Economy which in complex problems succeeds—is a very difficult thing; something altogether more abstruse and difficult, as well as more conclusive, than that which many of those who rush in upon it have a notion of. It is an abstract science which labours under a special hardship. Those who are conversant with its abstractions are usually without a true contact with its facts; those who are in contact with its facts have usually little sympathy with and little cognisance of its abstractions. Literary men who write about it are constantly using what a great teacher calls 'unreal words,'—that is, they are using expressions with which they have no complete vivid picture to correspond. They are like physiologists who have never dissected; like astronomers who have never seen the stars; and, is consequence, just when they seem to be reasoning at their best, their knowledge of the facts falls short. Their primitive picture fails them, and their deduction altogether misses the mark—sometimes, indeed, goes astray so far, that those who live and move among the facts boldly say that they cannot comprehend 'how any one can talk such nonsense.' Yet, on the other hand, these people who live and move among the facts often, or mostly, cannot of themselves put together any precise reasonings about them. Men of business have a solid judgment—a wonderful guessing power of what is going to happen—each in his own trade; but they have never practised themselves in reasoning out their judgments and in supporting their guesses by argument: probably if they did so some of the finer and correcter parts of their anticipations could vanish. They are like the sensible lady to whom Coleridge said, 'Madam, I accept your conclusion, but you must let me find the logic for it.' Men of business can no more put into words much of what guides their life than they could tell another person how to speak their language. And so the 'theory of business' leads a life of obstruction, because theorists do not see the business, and the men of business will not reason out the theories. Far from wondering that such a science is not completely perfect, we should rather wonder that it exists at all.


Something has been done to lessen the difficulty by statistics. These give tables of facts which help theoretical writers and keep them straight, but the cure is not complete. Writers without experience of trade are always fancying that these tables mean something more than, or something different from, that which they really mean. A table of prices, for example, seems an easy and simple thing to understand and a whole literature of statistics assumes that simplicity: but in fact there are many difficulties. At the outset there is a difference between the men of theory and the men of practice. Theorists take a table of prices as facts settled by unalterable laws; a stockbroker will tell you such prices can be 'made.' In actual business such is his constant expression. If you ask him what is the price of such a stock, he will say, if it be a stock at all out of the common, 'I do not know, sir: I will goon to the market and get them to make me a price.' And the following passage from the Report of the late Foreign Loans Committee shows what sort of process 'making' a price sometimes is:—'Immediately,' they say, 'after the publication of the prospectus'—the case is that of the Honduras Loan—'and before any allotment was made, M. Lefevre authorised extensive purchases and sales of loans on his behalf, brokers were employed by him to deal in the manner best calculated to maintain the price of the stock; the brokers so employed instructed jobbers to purchase the stock when the market required to be strengthened, and to sell it if the market was sufficiently firm. In consequence of the market thus created dealings were carried on to a very large amount. Fifty or a hundred men were in the market dealing with each other and the brokers all round. One jobber had sold the loan (2,500,000l.) once over.'


Much money was thus abstracted from credulous rural investors; and I regret to say that book statists are often equally, though less hurtfully, deceived. They make tables in which artificial prices run side by side with natural ones; in which the price of an article like Honduras scrip, which can be indefinitely manipulated, is treated just like the price of Consols, which can scarcely be manipulated at all. In most cases it never occurs to the maker of the table that there could be such a thing as an artificial—a malâ fide—price at all. He imagines all prices to be equally straightforward. Perhaps, however, this may be said to be an unfair sample of price difficulties, because it is drawn from the Stock Exchange, the most complex market for prices;—and no doubt the Stock Exchange has its peculiar difficulties, of which I certainly shall not speak lightly; but on the other hand, in one cardinal respect, it is the simplest of markets. There is no question in it of the physical quality of commodities: one Turkish bond of 1858 is as good or bad as another; one ordinary share in a railway exactly the same as any other ordinary share; but in other markets each sample differs in quality, and it is a learning in each market to judge of qualities, so many are they, and so fine their gradations. Yet mere tables do not tell this, and cannot tell it. Accordingly in a hundred cases you I'll see 'prices' compared as if they were prices of the same thing, when, in fact, they are prices of different things. The Gazette average of corn is thus compared incessantly, yet it is hardly the price of the same exact quality of corn in any two years. It is an average of all the prices in all the sales in all the markets. But this year the kind of corn mostly sold may be very superior, and last year very inferior—yet the tables compare the two without noticing the difficulty. And when the range of prices runs over many years, the figures are even more treacherous, for the names remain, while the quality, the thing signified, is changed. And of this persons not engaged in business have no warning. Statistical tables, even those which are most elaborate and careful, are not substitutes for an actual cognisance of the facts: they do not, as a rule, convey a just idea of the movements of a trade to persons not in the trade.


It will be asked, why do you frame such a science if from its nature it is so difficult to frame it? The answer is that it is necessary to frame it, or we must go without important knowledge. The facts of commerce, especially of 'the great commerce,' are very complex. Some of the most important are not on the surface; some of those most likely to confuse are on the surface. If you attempt to solve such problems without some apparatus of method, you are as sure to fail as if you try to take a modern military fortress—a Metz or a Belfort—by common assault;you must have guns to attack the one, and method to attack the other.


The way to be sure of this is to take a few new problems, such as are for ever presented by investigation and life, and to see what by mere common sense we can make of them. For example, it is said that the general productiveness of the earth is less or more in certain regular cycles, corresponding with perceived changes in the state of the sun,—what would be the effect of this cyclical variation in the efficiency of industry upon commerce? 7 Some hold, and as I think hold justly, that, extraordinary as it may seem, these regular changes in the sun have much to do with the regular recurrence of difficult times in the money market. What common sense would be able to answer these questions? Yet we may be sure that if there be a periodical series of changes in the yielding power of this planet, that series will have many consequences on the industry of men, whether these which have been suggested or others.


Or to take an easier case, who can tell without instruction what is likely to be the effect of the new loans of England to foreign nations? We press upon half-finished and half-civilised communities incalculable sums; we are to them what the London money-dealers are to students at Oxford and Cambridge, We enable these communities to read in every newspaper that they can have ready money, almost of any amount, on 'personal security.' No incipient and no arrested civilisations ever had this facility before. What will be the effect on such civilisations now, no untutored mind can say.


Or again: since the Franco-German War an immense sum of new money has come to England; England has become the settling-place of international bargains much more than it was before; but whose mind could divine the effect of such a change as this, except it had a professed science to help it?


There are indeed two suggested modes of investigation, besides our English Political Economy, and competing with it. One is the Enumerative, or, if I may coin such a word, the 'All-case method.' One school of theorists say, or assume oftener than they say, that you should have a 'complete experience;' that you should accumulate all the facts of these subjects before you begin to reason. A very able German writer has said, in the 'Fortnightly Review,'*1 of a great economical topic, banking,—'I venture to suggest that there is but one way of arriving at such knowledge and truth'—that is absolute truth and full knowledge—'namely, a thorough investigation of the facts of the case. By the facts, I mean not merely such facts as present themselves to so-called practical men in the common routine of business, but the facts which a complete historical and statistical inquiry would develop. When such a work shall have been accomplished, German economists may boast of having restored the principles of banking, that is to say, of German banking, but not even then of banking in general. To set forth principles of banking in general, it will be necessary to master in the same way the facts of English, Scotch, French, and American banking, in short, of every country where banking exists.' 'The only,' he afterwards continues, 'but let us add also, the safe ground of hope for political economy, is, following Bacon's exhortation, to recommence afresh the whole work of economic inquiry. In what condition would chemistry, physics, geology, zoology be, and till other branches of natural science which have yielded such prodigious results, if their students had been linked to their chains of deduction from the assumptions and speculations of the last century?'


But the reply is that the method which Mr. Cohn suggests was tried in physical science and failed. And it is very remarkable that he should not have remembered it as he speaks of Lord Bacon, for the method which he suggests is exactly that which Lord Bacon himself followed, and owing to the mistaken nature of which he discovered nothing. The investigation into the nature of heat in the Novum Organum is exactly such a collection of facts as Mr. Cohn suggests;—but nothing comes of it. As Mr. Jevons well says, 'Lord Bacon's notion of scientific method was that of a kind of scientific book-keeping. Facts were to be indiscriminately gathered from every source, and posted in a kind of ledger from which would emerge in time a clear balance of truth. It is difficult to imagine a less likely way of arriving at discoveries.' And yet it is precisely that from which, mentioning Bacon's name, but not forewarned by his experience, Mr. Cohn hopes to make them.


The real plan that has answered in, physical science is much simpler. The discovery of a law of nature is very like the discovery of a murder. In the one case you arrest a suspected person, and in the other you isolate a suspected cause. When Newton, by the fall of the apple, or something else, was led to think that the attraction of gravitation would account for the planetary motions, he took that cause by itself, traced out its effects by abstract mathematics, and so to say, found it 'guilty,'—he discovered that it would produce the phenomenon under investigation. In the same way Geology has been revolutionised in own time by Sir Charles Lyell. He for the first time considered the effects of one particular set of causes by themselves. He showed how large a body of facts could be explained on the hypothesis 'that the forces now operating upon and beneath the earth's surface are the same both in kind and degree as those which, at remote epochs, have worked out geological changes.' He did not wait to begin his inquiry till his data about all kinds of strata, or even about any particular kind, were complete; he took palpable causes as he knew them, and showed how many facts they would explain; he spent a long and most important life in fitting new facts into an abstract and youthful speculation. Just so in an instance which has made a literature and gone the round of the world. Mr. Darwin, who is a disciple of Lyell, has shown how one vera causa, 'natural selection,' would account for an immense number of the facts of nature; for how many, no doubt, is controverted, but, as is admitted, for a very large number. And this he showed by very difficult pieces of reasoning which very few persons would have thought of, and which most people found at first not at all easy to comprehend. The process by which physical science has become what it is, has not been that of discarding abstract speculations, but of working out abstract speculations. The most important known laws of nature—the laws of motion—the basis of the figures in the 'Nautical Almanack' by which every ship sails,—are difficult and abstract enough, as most of us found to our cost in our youth.


There is no doubt a strong tendency to revolt against abstract reasoning. Human nature has a strong 'factish' element in it. The The reasonings of Principia are now accepted. But in the beginning they were 'mere crotchets of Mr. Newton's;' Flamstead, the greatest astronomical discoverer of his day—the man of facts, par excellence—so called them; they have irresistibly conquered; but at first even those most conversant with the matter did not believe them. I do not claim for the conclusions of English Political Economy the same certainty as for the 'laws of motion.' But I say that the method by which they have been obtained is the same, and that the difference in the success of the two investigations largely comes from this—that the laws of wealth are the laws of a most complex phenomenon which you can but passively observe, and on which you cannot try experiments for science' sake, and that the laws of motion relate to a matter on which you can experiment, and which is comparatively simple in itself.


And to carry the war into the enemy's country, I say also that the method proposed by Mr. Cohn, the 'all case' method is impossible. When I read the words 'all the facts of English banking,' I cannot but ask of what facts is Mr. Cohn thinking. Banking in England goes on growing, multiplying, and changing, as the English people itself goes on growing, multiplying, and changing. The facts of it are one thing to-day and another to-morrow; nor at one moment does any one know them completely. Those who best know many of them will not tell them or hint at them; gradually and in the course of years they separately come to light, and by the time they do so, for the most part, another crop of unknown ones has accumulated. If we wait to reason till the 'facts' are complete, we shall wait till the human race has expired. I think that Mr. Cohn, and those who think with him, are too 'bookish' in this matter. They mean by having all the 'facts' before them, having all the printed facts, all the statistical tables. But what has been said of Nature is true of Commerce. 'Nature,' says Sir Charles Lyell, 'has made it no part of her concern to provide a record of her operations for the use of men;' nor does trade either—only the smallest of fractions of actual transactions is set down so that investigation can use it. Literature has been called the 'fragment of fragments,' and in the same way statistics are the 'scrap of scraps.' In real life scarcely any one knows more than a small part of what his neighbour is doing, and he scarcely makes public any of that little, or of what he does himself. A complete rental of commercial facts, or even of one kind of each facts, is the completest of dreams. You might as well hope for an entire record of human conversation.


There is also a second antagonistic method to that of English Political Economy, which, by contrast, I will call the 'single case' method. It is said that you should analyse each group of facts separately—that you should take the panic of 1868 separately, and explain it; or, at any rate, the whole history of Lombard Street separately, and explain it. And this is very good and very important; but it is no substitute for a preliminary theory. You might as well try to substitute a corollary for the proposition on which it depends. The history of a panic is the history of a confused conflict of many causes; and unless you know what sort of effect each cause is likely to produce, you cannot explain any part of what happens. It is trying to explain the bursting of a boiler without knowing the theory of steam. Any history of similar phenomena like those of Lombard Street could not be usefully told, unless there was a considerable accumulation of applicable doctrine before existing. You might as well try to write the 'life' of a ship, making as you went along the theory of naval construction. Clumsy dissertations would run all over the narrative and the result would be a perfect puzzle.


I have been careful not to use in this discussion of methods the phrase which is oftenest used, viz., the Historical method, because there is an excessive ambiguity in it. Sometimes it seems what I have called the Enumerative, or, 'all case' method; sometimes the 'single case' method; a most confusing double meaning, for by the mixture of the two the mind is prevented from seeing the defects of either. And sometimes it has other meanings, with which, as I shall show, I have no quarrel, but rather much sympathy. Rightly conceived, the Historical method is no rival to the abstract method rightly conceived.


This conclusion is confirmed by a curious circumstance. At the very moment that our Political Economy is objected to in some quarters as too abstract, in others an attempt is made to substitute for it one which is more abstract still. Mr. Stanley Jevons, and M. Walras, of Lausanne, without communication, and almost simultaneously, have worked out a 'mathematical' theory of Political Economy;—and anyone who thinks what is ordinarily taught in England objectionable, because it is too little concrete in its method, and looks too unlike life and business, had better try the new doctrine, which he will find to be much worse on these points than the old.


But I shall be asked, Do you then say that English Political Economy is perfect?—surely it is contrary to reason that so much difficulty should be felt in accepting a real science properly treated? At the first beginning no doubt there are difficulties in gaining a hearing for all sciences, but English Political Economy has long passed out of its first beginning? Surely, if there were not some intrinsic defect, it would have been firmly and coherently established, just as others are?


In this reasoning there is evident plausibility, and I answer that, in my judgment, there are three defects in the mode in which Political Economy has been treated in England, which have prevented people from seeing what it really is, and from prizing it at its proper value.


First,—It has often been put forward, not as a theory of the principal causes affecting wealth in certain societies, but as a theory of the principal, sometimes even of all, the causes affecting wealth in every society. And this haws occasioned many and strong doubts about it. Travellers fresh from the sight, and historians fresh from the study, of peculiar and various states of society, look with dislike and disbelief on a single set of abstract propositions which claim, as they think, to be applicable to all such societies, and to explain a most important part of most of them. I cannot here pause to say how far particular English Economists have justified this accusation; I only say that, taking the whole body of them, there is much ground for it, and that in almost every one of them there is some ground. No doubt almost every one—every one of importance—has admitted that there is a 'friction' in society which counteracts the effect of the causes treated of. But in general they leave their readers with the idea that, after all, this friction is but subordinate; that probably in the course of years it may be neglected; and, at any rate, that the causes assigned in the science of Political Economy, as they treat it, are the main and principal ones. Now I hold that these causes are only the main ones in a single kind of society—a society of grown-up competitive commerce, such as we, have in England; that it is only is such societies that the other and counteracting forces can be set together under the minor head of 'friction;' but that in other societies these other causes—in some cases one, and in some another—are the most effective ones, and that the greatest confusion arises if you try to fit on un-economic societies the theories only true of, add only proved as to, economic ones. In my judgment, we need—not that the authority of our Political Economy should be impugned, but that it should be minimised; that we should realise distinctly where it is established, and where not; that its sovereignty should be upheld, but its frontiers marked. And until this is done, I am sure that there will remain the same doubt and hesitation in many minds about the science that there is now.


Secondly,—I think in consequence of this defect of conception Economists have been far more abstract, and in consequence much more dry, than they need have been. If they had distinctly set before themselves that they were dealing only with the causes of wealth in a single set of societies, they might have effectively pointed their doctrines with fact, from those societies. But, so long as the vision of universal theory vaguely floated before them, they shrank from particular illustrations. Real societies are plainly so many and so unlike, that an instance from one kind does not show that the same thing exists in other societies;—it rather raises in the mind a presumption that it does not exist there; and therefore speculators aiming at an all-embracing doctrine refrain from telling cases, because those cases are apt to work in unexpected ways, and to raise up the image not only of the societies in which the tenet illustrated is true, but also of the opposite group in which it is false.


Thirdly,—It is also in consequence, as I imagine, of this defective conception of their science, that English Economists have not been so fertile as they should have been in verifying it. They have been too content to remain in the 'abstract,' and to shrink from concrete notions, because they could not but feel that many of the most obvious phenomena of many nations did not look much like their abstractions. Whereas in the societies with which the science is really concerned, an almost infinite harvest of verification was close at hand, ready to be gathered in; and because it has not been used, much confidence in the science has been lost, and it is thought 'to be like the stars which give no good light because, they are so high.'


Of course this reasoning implies that the boundaries of this sort of Political Economy are arbitrary, and might be fixed here or there. But this is already implied when it is said that Political Economy is an abstract science. All abstractions are arbitrary; they are more or less convenient fictions made by the mind for its own purposes. An abstract idea means a concrete fact or set of facts minus something thrown away. The fact or set of facts were made by nature; but how much you will throw aside of them and how much you will keep for consideration you settle for yourself. There may be any number of political economies according as the subject is divided off in on way or in another, and in this way all may be useful if they do not interfere with one another, or attempt to rule further than they are proved.


The particular Political Economy which I have been calling the English Political Economy is that of which the first beginning was made by Adam Smith. But what he did was much like the rough view of the first traveller who discovers a country; he saw some great outlines well, but he mistook others and left out much. It was Ricardo who made the first map; who reduced the subjects into consecutive shape, and constructed what you can call a science. Few greater efforts of mind have been made, and not many have had greater fruits. From Ricardo the science passed to a whole set of minds—James Mill, Senior, Torrens, Macculloch, and others, who busied themselves with working out his ideas, with elaborating and with completing them. For five-and-twenty years the English world was full of such discussions. Then Mr. J. S. Mill—the Mr. Mill whom the present generation know so well, and who has had so much influence,—shaped with masterly literary skill the confused substance of those discussions into a compact whole. He did not add a great deal which was his own, and some of what is due to him does not seem to me of great value. But he pieced the subjects together, showed where what one of his predecessors had done had fitted on to that of another, and adjusted this science to other sciences according to the notions of that time. To many students his book is the Alpha and Omega of Political Economy; they know little of what was before, and imagine little which can come after in the way of improvement. But it is not given to any writer to occupy such a place. Mr. Mill would have been the last to claim it for himself. He well knew that, taking his own treatise as the standard, what he added to Political Economy was not a ninth of what was due to Ricardo, and that for much of what is new in his book he was rather the Secrétaire de la Rédaction, expressing and formulating the current views of a certain world, than producing by original thought from his own brain. And his remoteness from mercantile life, and I should say his enthusiastic character, eager after things far less sublunary than money, made him little likely to give finishing touches to a theory of 'the great commerce.' In fact he has not done so; much yet remains to be done in it as in all sciences. Mr. Mill, too, seems to me open to the charge of having widened the old Political Economy either too much or not enough. If it be, as I hold, a theory proved of and applicable to, particular societies only, much of what is contained in Mr. Mill's book should not be there; if it is, on the contrary, a theory holding good for all societies, as far as they are concerned with wealth, much more ought to be there, and much which is there should be guarded and limited. English Political Economy is not a finished and completed theory, but the first lines of a great analysis which has worked out much, but which still leaves much unsettled and unexplained.


There is nothing capricious, we should observe, in this conception of Political Economy, nor, though it originated in England, is there anything specially English in it. It is the theory of commerce, as commerce tends more and more to be when capital increases and competition grows. England was the first—or one of the first—countries to display these characteristics in such vigour and so isolated as to suggest a separate analysis of them, but as the world goes on, similar characteristics are being evolved in one, society after another. A similar money market, a similar competing trade based on large capital, gradually tends to arise in all countries. As 'men of the world' are the same everywhere, so 'the great commerce' is the same everywhere. Local peculiarities and ancient modifying circumstances fall away in both cases; and it is of this one and uniform commerce which grows daily, and which will grow, according to every probability, more and more, that English Political Economy aspires to be the explanation.


And our Political Economy does not profess to prove this growing world to be a good world—far less to be the best. Abroad the necessity of contesting socialism has made some writers lose the conclusions brought out by our English science for that object. But the aim of that science is far more humble; it says these and these forces produce these and these effects, and there it stops. It does not profess to give a moral judgment on either; it leaves it for a higher science, and one yet more difficult, to pronounce what ought and what ought not to be.


The first thing to be done for English Political Economy, as I hold, is to put its aim right. So long as writers on it do not clearly see, and as readers do not at all see, the limits of what they are analysing, the result will not satisfy either. The science will continue to seem what to many minds it seems now, proved perhaps, but proved in nubibus; true, no doubt, somehow and somewhere, but that somewhere a terra incognita, and that somehow an unknown quantity.—As a help in this matter I propose to take the principal assumptions of Political Economy one by one, and to show, not exhaustively, for that would require a long work, but roughly, where each is true and where it is not. We shall then find that our Political Economy is not a questionable thing of unlimited extent, but a most certain and useful thing of limited extent. By marking the frontier of our property we shall learn its use, and we shall have a positive and reliable basis for estimating its value.

Notes for this chapter

Fortnightly Review for September 1873.

End of Notes

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