The Character and Logical Method of Political Economy

Cairnes, John Elliot
(1824-1875)
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Editor/Trans.
First Pub. Date
1861
Publisher/Edition
London: Macmillan and Co.
Pub. Date
1875
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2nd edition

Lecture II

Of the Mental and Physical Premisses of Political Economy, and of the Logical Character of the Doctrines Thence Deduced.

II.1

§1. In my last lecture I called attention to the conception of Political Economy formed by the leading writers on the subject in this country, and in particular I took occasion to point out the significance of the words which describe it as the 'Science of Wealth.' We have now reached a point at which it may be well to attempt some more precise determination of its character and scope, and, with a view to this, to consider the position occupied by economic speculation in relation to the two great departments of existence—matter and mind. With regard to this aspect of the case the following theory has been advanced by high authorities in this country:—

II.2

"In all the intercourse of man with nature, whether we consider him as acting upon it, or as receiving impressions from it, the effect or phenomenon depends upon causes of two kinds: the properties of the object acting, and those of the object acted upon. Everything which can possibly happen, in which man and external things are jointly concerned, results from the joint operation of a law or laws of matter and a law or laws of the human mind. Thus the production of corn by human labour is the result of a law of mind, and many laws of matter. The laws of matter are those properties of the soil and of vegetable life which cause the seed to germinate in the ground, and those properties of the human body which render food necessary to its support. The law of mind is that man desires to possess subsistence, and consequently wills the necessary means of procuring it. Laws of mind and laws of matter are so dissimilar in their nature, that it would be contrary to all principles of rational arrangement to mix them up as part of the same study. In all scientific methods, therefore, they are placed apart. Any compound effect or phenomenon which depends both on the properties of matter and on those of mind may thus become the subject of two completely distinct sciences, or branches of science; one treating of the phenomenon in so far as it depends upon the laws of matter only; the other treating of it in so far as it depends upon the laws of mind.

II.3

"The physical sciences are those which treat of the laws of matter, and of all complex phenomena, in so far as dependent upon the laws of matter. The mental or moral sciences are those which treat of the laws of mind, and of all complex phenomena, in so far as dependent upon the laws of mind. Most of the moral sciences presuppose physical science; but few of the physical sciences presuppose moral science. The reason is obvious. There are many phenomena (an earthquake, for example, or the motions of the planets) which depend upon the laws of matter exclusively, and have nothing whatever to do with the laws of mind. Many of the physical sciences may be treated of without any reference to mind, and as if the mind existed as a recipient of knowledge only, not as a cause producing effects. But there are no phenomena which depend exclusively upon the laws of mind; even the phenomena of the mind itself being partially dependent upon the physiological laws of the body. All the mental sciences, therefore, not excepting the pure science of mind, must take account of a great variety of physical truths; mid (as physical science is commonly and very properly studied first) may be said to presuppose them, taking up the complex phenomena where physical science leaves them.

II.4

"Now this, it will be found, is a precise statement of the relation in which Political Economy stands to the various sciences which are tributary to the arts of production.

II.5

"The laws of the production of the objects which constitute wealth, are the subject-matter both of Political Economy and of almost all the physical sciences. Such, however, of those laws as are purely laws of matter belong to physical science, and that exclusively. Such of them as are laws of the human mind, and no others, belong to Political Economy, which finally sums up the result of both combined."*14

II.6

The view here set forth has been accepted by another high authority, Mr. Senior, who, in an article in the Edinburgh Review (Oct. 1848), comments as follows upon the passage just quoted:—

II.7

"The justice of these views, we think, is obvious; and though they are now for the first time formally stated, an indistinct perception of them must be general, since they are generally acted on. The Political Economist does not attempt to state the mechanical and chemical laws which enable the steam-engine to perform its miracles. He passes them by as laws of matter; but he explains as fully as his knowledge will allow the motives which induce the mechanist to erect the steam-engine and the labourer to work it: and these are laws of mind. He leaves to the geologist to explain the laws of matter which occasion the formation of coal; to the chemist, to distinguish its component elements; to the engineer, to state the means by which it is extracted; and to the teachers of many hundred different arts, to point out the uses to which it may be applied. What he reserves to himself is, to explain the laws of mind under which the owner of the soil allows his pastures to be laid waste, and the minerals which they cover to be abstracted; under which the capitalist employs in sinking shafts, and piercing galleries, funds which might be devoted to his own immediate enjoyment; under which the miner encounters the toils and the dangers of his hazardous and laborious occupation; and the laws, also laws of mind, which decide in what proportions the produce or the value of the produce is divided between the three classes by whose concurrence it has been obtained. When he uses as his premisses, as he often must do, facts supplied by physical science, he does not attempt to account for them."

II.8

The concluding sentence in the passage taken from Mr. Mill's Essay, in which he says that Political Economy "finally sums up the result of both [laws of mind and of matter] combined," seems to me to describe correctly the function of the science, but to be inconsistent with the tenor of the remarks which precede it, as it is plainly inconsistent with Mr. Senior's interpretation of the passage. Excluding that sentence, the effect of the exposition is that Political Economy belongs to the group of sciences "which treats of the laws of mind, and of all complex phenomena, in so far as dependent upon the laws of mind," and is therefore properly described as a 'mental' or 'moral' science; while its relation to the world of matter being of a different and altogether less intimate character, it is properly kept apart from the physical group. The facts and laws of material nature it takes for granted; but the facts and laws of mind, so far as these are involved in the production and distribution of wealth, constitute its proper province, furnishing the phenomena of which it 'treats' and which it 'explains.' To this effect, it seems to me, is the view fairly deducible from the passages I have quoted; and, so far as I know, the doctrine, as I have stated it, has been generally acquiesced in by later writers. Now from this view of the character of Political Economy I venture to dissent. It appears to me that the laws and phenomena of wealth which it belongs to this science to explain depend equally on physical and on mental laws; that Political Economy stands in precisely the same relation to physical and to mental nature; and that, if it is to be ranked in either of these departments of speculation, it is as well entitled to be placed in the one as in the other.

II.9

The expressions 'physical' and 'mental,' as applied to science, have generally been employed to designate those branches of knowledge of which physical and mental phenomena respectively form the subject-matter. Thus, Chemistry is considered as a physical science because the subject-matter on which chemical inquiry is exercised, viz., material elements and combinations, is physical. Psychology, on the other hand, is a mental science; the subject-matter of it being mental states and feelings. And as the office of the chemist consists in observing and analyzing material objects with a view to discovering the laws of their elementary constitution; so, that of the psychologist consists in endeavouring, by means of reflection on what passes in his own, or appears to pass in the minds of others, to ascertain the laws by which the phenomena of our mental constitution succeed and produce each other. If this be a correct statement of the principle on which the designations 'mental' and 'physical' are applied to the sciences, it seems to follow that Political Economy does not find a place under either category. Neither mental nor physical nature forms the subject-matter of the investigations of the political economist. He considers, it is true, physical phenomena, as he also considers mental phenomena, but in neither case as phenomena which it belongs to his science to explain. The subject-matter of that science is wealth; and though wealth consists in material objects, it is not wealth in virtue of those objects being material, but in virtue of their possessing value—that is to say, in virtue of their possessing a quality attributed to them by the mind. The subject-matter of Political Economy is thus neither purely physical nor purely mental, but possesses a complex character, equally derived from both departments of nature, and the laws of which are neither mental nor physical laws, though they are dependent, and, as I maintain, dependent equally on the laws of matter and on those of mind.

II.10

Let us consider, for example, the causes which determine the rate of wages. This, it will be admitted on all hands, is an economic problem. It is evident that the objects which the labourer receives are material objects, but those material objects are invested by the mind with a peculiar attribute in consequence of which they are considered as possessing value; and it is in their complex character, as physical objects invested with the attribute of value, that the political economist considers them. The subject-matter, therefore, of the wages-problem possesses qualities derived alike from physical and from mental nature; consequently, if it is to be denominated from the nature of its subject-matter, it is equally entitled or disentitled to the character of a physical or mental problem.

II.11

But it is said that Political Economy considers the problem no further than as it depends on the action of the human mind. The food and clothing which the labourer consumes have, no doubt, physical properties, as the labourer himself has a physical as well as a mental nature; but with the physical properties, we are told, the political economist has no concern: he considers those objects so far forth only as they possess value, and value is a purely mental conception. But is this true? Does the political economist—does Mr. Senior, e.g., in his purely scientific treatment of this question—entirely put out of consideration the physical properties of the commodities which the labourer consumes, or the physiological conditions on which the increase of the labouring population depends? What is the solution of the wages-problem? Wages, it will be said, depend on demand and supply; or, more explicitly, on the relation between the amount of capital applied to the payment of wages, and the number of labourers seeking employment. But the amount of capital employed in the payment of wages depends, amongst other causes, on the productiveness of industry in raising the commodities of the labourer's consumption—a circumstance which is equally dependent on the laws of physical nature and on the mental qualities which the workman brings to his task. The number of labourers seeking employment, again, depends, amongst other causes, on the laws of population; while these are determined as much by the physiological laws of the body, as the psychological laws of the mind; the political economist taking equal cognizance of both.

II.12

It thus appears that, as the subject-matter of Political Economy, viz., wealth, possesses qualities derived equally from the world of matter and from that of mind, so its premisses are equally drawn from both these departments of nature. The latter point, indeed, is admitted by the authorities to whom I have referred, who nevertheless, by what I must deem a strange oversight, represent the science as investigating the laws of wealth no further than as they depend on the laws of the human mind.

II.13

But perhaps this point will be made more clear—the equal dependence, namely, of the science of Political Economy on the laws of the physical world and on those of the human mind—if we consider that a change in the character of the former laws will equally affect its conclusions with a change in that of the latter. The physical qualities of the soil, e.g., under the present constitution of nature are such, that, after a certain quantum of cultivation has been applied to a limited area, a further application is not attended with a proportionate return. The proof of this is, that, instead of confining cultivation to the best soils, and forcing them to yield the whole amount of food that may be required, it is found profitable to resort to soils of inferior quality.*15

II.14

This physical fact, as every political economist knows, and as shall be explained on a future occasion, leads, through the play of human desires in the pursuit of wealth, to the phenomenon of rent, to the fall of profits as communities advance, and to a retardation in the advance of population. If the fact were otherwise, if the physical properties of the soil were such as to admit of an indefinite increase of produce in undiminished proportion to the outlay by simply increasing the outlay—if, e.g., it were found that by doubling the quantity of manure upon a given acre and by ploughing it twice as often, a farmer could obtain a double produce, and by a quadruple outlay, a quadruple produce, and so on ad infinitum; if this were so, the science of Political Economy, as it at present exists, would be as completely revolutionized as if human nature itself were altered—as if benevolence, for example, were so strengthened at the expense of self-love, that human beings should refuse to avail themselves, at the expense of their neighbours, of those special advantages with which nature or fortune may happen to endow them; under such a change in the physical qualities of the soil rent would disappear, profits would have no tendency permanently to fall, and population in the oldest countries might advance as rapidly as in the newest colonies.

II.15

I am therefore disposed to regard Political Economy as belonging neither to the department of physical nor to that of mental inquiry, but as occupying an intermediate position, and as referable to the class of studies which includes historical, political, and, in general, social investigations. The class appears to me to be a class sui generis, having for its subject-matter the complex phenomena presented by the concurrence of physical, physiological, and mental laws, and for its function the tracing of such phenomena to their physical, physiological, and mental causes.

II.16

Thus, to take an example from Political Economy, rent is a complex phenomenon, arising (as has been already intimated) from the play of human interests when brought into contact with the actual physical conditions of the soil in relation to the physiological character of vegetable productions. If these physical conditions were different, if capital and labour could be applied to a limited portion of the soil indefinitely with undiminished return, a small portion only of the best land in the country would be cultivated, and no farmer would consent to pay rent: on the other hand, if the principle of self-interest were absent, no landlord would exact it. Both conditions are indispensable, and equally indispensable, to the existence of rent: they are the premisses from which the theory is deduced. It is for the political economist to prove, first, that the premisses are true in fact; and, secondly, that they account for the phenomenon; but when this is done, his business is ended. He does not attempt to explain the physical laws on which the qualities of the soil depend; and no more does he undertake to analyze the nature of those feelings of self-interest in the minds of the landlord and tenant which regulate the terms of the bargain. He regards them both as facts, not to be analyzed and explained, but to be ascertained and taken account of; not as the subject-matter, but as the basis of his reasonings. If further information be desired, recourse must be had to other sciences: the physical fact he hands over to the chemist or the physiologist; the mental to the psychological or the ethical scholar.

II.17

In the considerations just adduced, we may perceive what the proper limits are of economic inquiry—at what point the economist, in tracing the phenomena of wealth to their causes and laws, may properly stop and consider his task as completed, his problem as solved. It is precisely at that point at which in the course of his reasonings he finds himself in contact with some phenomenon not economic, with some physical or mental fact, some political or social institution. So soon as he has traced the phenomena of wealth to causes of this order, he has reached the proper goal of his researches; and such causes, therefore, are properly regarded as 'ultimate' in relation to economic science. Not that they may not deserve, and admit of, further analysis and explanation, but that this analysis and explanation is not the business of the economist, is not the specific problem which he undertakes to solve.*16

II.18

The position of Political Economy, as just described, may be illustrated by that of Geology in relation to the sciences of Mechanics, Chemistry, and Physiology. The complex phenomena presented by the constitution of the earth's crust form the subject-matter of the science of the geologist; they are the complex result of mechanical, chemical, and physiological laws, and the business of the geologist is to trace them to these causes; but having done this, his labours as a geologist are at an end: the further investigation of the problem belongs not to Geology, but to Mechanics, Chemistry, and Physiology.

II.19

§2. The premisses, or ultimate facts, of Political Economy being thus drawn alike from the world of matter and from that of mind, it remains that I should indicate the character of those facts, physical and mental, from which the conclusions of the science are derived; in other words, that I should show in what manner the facts which are pertinent to economic investigations are to be distinguished from those which are not. The answer to this question must in general be determined by considering what the science proposes to accomplish. This, as you are aware, is the discovery of the laws of the production and distribution of wealth. The facts, therefore, which constitute the premisses of Political Economy are those which influence the production and distribution of wealth; and in order that the science be absolutely perfect, so that an economist might predict the course of economic phenomena with the same accuracy and certainty with which an astronomer predicts the course of celestial phenomena, it would be necessary that these premisses should include every fact, mental and physical, which influences the phenomena of wealth.

II.20

It does not, however, seem possible that this degree of perfection should ever be attained. In Political Economy, as in all those branches of inquiry which include amongst their premisses at once the moral and physical nature of man, the facts to be taken account of are so numerous, their character so various, and the laws of their sequence so obscure, that it would seem scarcely possible to ascertain them all, much less to assign to each its exact value. And even if this were possible, the task of tracing these principles to their consequences, allowing to each its due significance, and no more than its due significance, would present a problem so complex and difficult as to defy the powers of the most accomplished reasoners.

II.21

But although this is so, and although, therefore, neither Political Economy nor any of the class of inquiries to which it belongs may ever be expected to reach that perfection which has been attained in some of the more advanced physical sciences, yet this does not forbid us to hope that, by following in our economic investigations the same course which has been pursued with such success in physical science, we may attain, if not to absolute scientific perfection, at least to the discovery of solid and valuable results.

II.22

The desires, passions, and propensities which influence mankind in the pursuit of wealth are, as I have intimated, almost infinite; yet amongst these there are some principles of so marked and paramount a character as both to admit of being ascertained, and when ascertained, to afford the data for determining the most important laws of the production and distribution of wealth, in so far as these laws are affected by mental causes. To possess himself of these is the first business of the political economist; he has then to take account of some leading physiological facts connected with human nature; and, lastly, to ascertain the principal physical characteristics of those natural agents of production on which human industry is exercised. Thus he will consider, as being included amongst the paramount mental principles to which I have alluded, the general desire for physical well-being, and for wealth as the means of obtaining it; the intellectual power of judging of the efficacy of means to an end, along with the inclination to reach our ends by the easiest and shortest means,—mental facts from which results the desire to obtain wealth at the least possible sacrifice: he will further duly weigh those propensities which, in conjunction with the physiological conditions of the human frame, determine the laws of population; and, lastly, he will take into account the physical qualities of the soil and of those other natural agents on which the labour and ingenuity of man are employed. These facts, whether mental or physical, he will consider, as I have already stated, not with a view to explain them, but as the data of his reasoning, as leading causes affecting the production and distribution of wealth.

II.23

But it must not be thought that, when these cardinal facts have been ascertained and their consequences duly developed, the labours of the political economist are at an end, even supposing that his treatment of them has been exhaustive and his reasoning without a flaw. Though the conclusions thus arrived at will, in the main, correspond with the actual course of events, yet great and glaring discrepancies will frequently occur. The data on which his speculations have been based include indeed the grand and leading causes which regulate the production and distribution of wealth, but they do not include all the causes. Many subordinate influences (subordinate, I mean, in relation to the ends of Political Economy) will intervene to disturb, and occasionally to reverse, the operation of the more powerful principles, and thus to modify the resulting phenomena. The next step, therefore, in his investigations, will be to endeavour as far as possible to ascertain the character of those subordinate causes, whether physical or mental, political or social, which influence human conduct in the pursuit of wealth, and these, when he has found them and is enabled to appreciate them with sufficient accuracy, he will incorporate amongst the premisses of the science, as data to be taken account of in his future speculations.

II.24

Thus the political and social institutions of a country, and in particular the laws affecting the tenure of land, will be included among such subordinate agencies; and it will be for the political economist to show in what way causes of this kind modify the operation of more fundamental principles in relation to the phenomena which it belongs to his science to investigate.

II.25

Again, any great discovery in the arts of production, such, e.g., as the steam-engine, will be a new fact for the consideration of the political economist; it will be for him to consider its effect on the productiveness of industry or the distribution of its products; how far and in what directions it is calculated to affect wages, profits, and rent, and to modify those conclusions to which he may have been led by reasoning from the state of productive industry previous to its introduction. It will be like the discovery to an astronomer of a new planet, the attraction of which, operating on all the heavenly bodies within the sphere of its influence, will cause them more or less to deviate from the path which had been previously calculated for them. It is a new force, which, in speculating on the tendencies of economic phenomena, the political economist will include as a new datum amongst his premisses.

II.26

In the same way, also, those motives and principles of action which may be developed in the progress of society—so far as they may be found to affect the phenomena of wealth—will also be taken account of by the political economist. He will consider, e.g., the influence of custom in modifying human conduct in the pursuit of wealth; he will consider how, as civilisation advances, the estimation of the future in relation to the present is enhanced, and the desire for immediate enjoyment is controlled by the increasing efficacy of prudential restraint; he will also observe how ideas of decency, comfort, and luxury are developed as society progresses, modifying the natural force of the principles of population, influencing the mode of expenditure of different classes, and affecting thereby the distribution of industrial products.

II.27

The question is sometimes asked—How far should moral and religious considerations be admitted as coming within the purview of Political Economy?*17 and the doctrine now under exposition enables us to supply the answer. Moral and religious considerations are to be taken account of by the economist precisely in so far as they are found in fact to affect the conduct of men in the pursuit of wealth. In so far as they operate in this way, such considerations are as pertinent to his inquiries as the desire for physical well-being, or the propensity in human beings to reproduce their kind; and they are only less important as premisses of his science than the latter principles, because they are far less influential with regard to the phenomena which constitute the subject-matter of his inquiries.

II.28

As I have already remarked, it is scarcely possible that all these circumstances should be ascertained, or accurately appreciated; but it seems quite possible that some of the most important of them may, with sufficient accuracy at least to be made available as data for subsequent deductions, and be entitled to a place among the premisses of the science. And in proportion as this is done, in proportion to the completeness of its premisses, and to the skill with which they are reasoned upon, will the science of Political Economy approximate towards that perfection which has been attained in other branches of knowledge; in the same degree will its conclusions correspond with actual events, and its doctrines become safe and trustworthy guides to the practical statesman and the philanthropist.

II.29

§3. Having now considered the character and limits of Political Economy, I shall conclude this lecture by adverting briefly to a point—not, as might at first sight seem, of purely theoretic importance, on which some high authorities are at variance. I allude to the question whether Political Economy be a positive or a hypothetical science.

II.30

It does not appear that the meaning of the terms 'positive' and 'hypothetical,' as they have been used in this controversy, has been precisely fixed, and I am disposed to think that the difference of opinion which prevails may, in a great measure, be resolved into an ambiguity of language. Let us consider, then, what is to be understood by the terms 'positive' and 'hypothetical' when applied to a science.

II.31

In the first place, we may describe a science as 'positive' or 'hypothetical' with reference to the character of its premisses. It is in this sense that we speak of Mathematics as a hypothetical science, its premisses being arbitrary conceptions framed by the mind, which have nothing corresponding to them in the world of real existence; and it is in this sense that we distinguish it from the positive physical sciences, the premisses of which are laid in the existing facts of nature. But 'positive' and 'hypothetical' may also be used with reference to the conclusions of a science; and in this sense all the physical sciences which have advanced so far as to admit of deductive reasoning must be considered hypothetical, in contradistinction to those less advanced sciences which, being still in the purely inductive stage, express in their conclusions merely observed and generalized facts. The conclusions, e.g., of a mechanician or of an astronomer, though correctly deduced from premisses representing concrete realities, may have nothing accurately to correspond with them in nature. The mechanician may have overlooked the disturbing influence of friction. The astronomer may have been ignorant of the existence of some planet, the attractive force of which may be an essential element in the solution of his problem. The conclusions of each, therefore, when applied to facts, can only be said to be true in the absence of disturbing causes; which is, in other words, to say that they are true on the hypothesis that the premisses include all the causes affecting the result. The correspondence of such deductions with facts may, according to the circumstances of each case, possess any degree of probability, from a mere presumption in favour of a particular result to a probability scarcely distinguishable from absolute certainty. This will depend on the degree of perfection which the science has attained; but whatever be that degree of perfection, from the limited nature of man's faculties he can never be sure that he is in possession of all the premisses affecting the result; and therefore can never be certain that his conclusions represent positive realities. Speaking, therefore, with reference to the conclusions of those physical sciences in which deductive reasoning is employed, such sciences must be regarded as hypothetical.

II.32

On the other hand, in those sciences which have not advanced far enough to admit of deductive reasoning, such laws as they have arrived at, being mere generalized statements of observed phenomena, represent not hypothetical but positive truth. Such are the generalized facts in geology and in many of the natural sciences.

II.33

Now Political Economy seems in this respect plainly to belong to the same class of sciences with Mechanics, Astronomy, Optics, Chemistry, Electricity, and, in general, all those physical sciences which have reached the deductive stage. Its premisses are not arbitrary figments of the mind, formed without reference to concrete existences, like those of Mathematics; nor are its conclusions mere generalized statements of observed facts, like those of the purely inductive natural sciences. But, like Mechanics or Astronomy, its premisses represent positive facts; whilst its conclusions, like the conclusions of these sciences, may or may not correspond to the realities of external nature, and therefore must be considered as representing only hypothetical truth.

II.34

It is positively true, e.g., to assert that men desire wealth, that they seek, according to their lights, the easiest and shortest means by which to attain their ends, and that consequently they desire to obtain wealth with the least exertion of labour possible; and it is a logical deduction from this principle, that, where perfect liberty of action is permitted, labourers will seek those employments, and capitalists those modes of investing their capital, in which, ceteris paribus, wages and profits are highest. It is further a necessary consequence of this principle, that, were it universally and constantly acted upon, the rate of profit and the rate of wages over the whole world would not indeed be the same, but would stand, or tend to stand, in the same relation to the actual sacrifices undergone by the recipients of these two kinds of remuneration. Yet so far is this from being the case, that there are scarcely two countries in which wages and profits (meaning thereby the average rate of each) are not permanently different. The French labourer will content himself with the rate of wages which prevails in France, rather than cross the Atlantic for a double remuneration. The English capitalist will prefer eight or ten per cent. profit with English society to the quadruple returns of California or Australia. The same inequality which we find in the average rates of wages and profits prevailing in different countries, we find also in a less degree in the different departments of productive industry in the same country. What in the former case is done by the love of country to control the simple desire for wealth and aversion to labour, and to modify the resulting phenomena, is done in the latter by the ignorance and poverty of large classes which disable them for competing for the more lucrative employments, and by opinions and prejudices respecting the degree of credit or respectability attaching to particular trades and employments, such as prevail in every civilized community.

II.35

It is evident, therefore, that an economist, arguing from the unquestionable facts of man's nature—the desire of wealth and the aversion to labour—and arguing with strict logical accuracy, may yet, if he omits to notice other principles also affecting the question, be landed in conclusions which have no resemblance to existing realities. But he can never be certain that he does not omit some essential circumstance, and, indeed, it is scarcely possible to include all: it is evident, therefore, that, as is the case in those deductive physical sciences to which I have alluded, his conclusions will correspond with facts only in the absence of disturbing causes, which is, in other words, to say that they represent not positive but hypothetic truth.*18

II.36

It thus appears that Political Economy, according as we consider it with reference to its premisses or to the doctrines deduced from them, must be regarded in the one case as a positive, in the other as a hypothetical science. It is, however, to be remarked that that portion of the science which represents positive truth—its premisses, namely, or the facts mental and physical upon which it rests—belongs to it in common with many other sciences and arts. All that is properly speaking Political Economy is that system of doctrines which has been, or may be, deduced from those premisses; and all this represents, as I have shown, hypothetical truth. It appears to me, therefore, clearly proper that Political Economy should be classed as a hypothetical science.

II.37

But in thus describing Political Economy, I have ventured to dissent from the high authority of Mr. Senior. I shall therefore read you the passage in which he expresses his objections to regarding Political Economy as a hypothetical science:—

II.38

"The hypothetical treatment of the science appears to me to be open to three great objections. In the first place, it is obviously unattractive. No one listens to an exposition of what might be the state of things under given but unreal conditions with the interest with which he hears a statement of what is actually taking place.

II.39

"In the second place, a writer who starts from arbitrarily assumed premisses is in danger of forgetting, from time to time, their unsubstantial foundation, and of arguing as if they were true. This has been the source of much error in Ricardo. He assumed the land of every country to be of different degrees of fertility, and rent to be the value of the difference between the fertility of the best and of the worst land in cultivation. The remainder of the produce he divided into profit and wages. He assumed that wages naturally amount to neither more nor less than the amount of commodities which nature or habit has rendered necessary to maintain the labourer and his family in health and strength. He assumed that, in the progress of population and wealth, worse and worse soils are constantly resorted to, and that agricultural labour, therefore, becomes less, and less proportionately productive; and he inferred that the share of the produce of land taken by the landlord and by the labourer must constantly increase, and the share taken by the capitalist constantly diminish.

II.40

"This is a logical inference, and would consequently have been true in fact, if the assumed premisses had been true. The fact is, however, that almost every one of them is false. It is not true that rent depends on the difference in fertility of the different portions of land in cultivation. It might exist if the whole territory of a country were of uniform quality. It is not true that the labourer always receives precisely the necessaries, or even what custom leads him to consider the necessaries of life. In civilised countries he almost always receives much more; in barbarous countries he from time to time obtains less. It is not true that, as wealth and population advance, agricultural labour becomes less and less proportionately productive.... Mr. Ricardo was certainly justified in assuming his premisses, provided that he was always aware, and always kept in mind, that they were merely assumed. This, however, he seems sometimes not to know, and sometimes he forgets. Thus he states, as an actual fact, that in an improving country the difficulty of obtaining raw produce constantly increases. He states as a real fact, that a tax on wages falls not on the labourer but on the capitalist....

II.41

"A third objection to reasoning on hypothesis is its liability to error, either from illogical inference, or from the omission of some element necessarily incident to the supposed case. When a writer takes his premisses from observation and conciousness and infers from them what he supposes to be real facts, if he have committed any grave error, it generally leads him to some startling conclusion. He is thus warned of the probable existence of an unfounded premiss, or of an illogical inference, and if he be wise, tries back until he has detected his mistake. But the strangeness of the results of an hypothesis gives no warning. We expect them to differ from what we observe, and lose, therefore, this incidental means of testing the correctness of our reasoning."*19

II.42

With regard to the criticisms on Ricardo, I may perhaps have an opportunity of adverting to them on some future occasion. I shall merely at present say that they appear to me to be unfounded. But what I am more immediately concerned in remarking is, that the objections of Mr. Senior to the hypothetical treatment of Political Economy, so far as they possess weight, do not apply to this mode of treatment as I have just described it. According to that description, Political Economy has been represented as deriving its premisses from existing facts; it was to the inferences drawn from these premisses only that the term 'hypothetical' was applied; but as these inferences constituted the whole of what is properly called Political Economy, I conceived that Political Economy was properly designated as a hypothetical science. But it is to the character not of the conclusions but of the premisses that Mr. Senior's objections apply. "A writer," he says, "who starts from arbitrarily assumed premisses is in danger of forgetting their unsubstantial foundation." "No one listens to an exposition of what might be the state of things under given but unreal conditions with the interest with which he hears a statement of what is actually taking place." "The strangeness of the results of an hypothesis gives no warning." It is evident that these are no objections to a system of doctrines which is founded, not on an hypothesis, but on facts.

II.43

Mr. Senior's language indeed would seem to imply that, if the premisses have a foundation in existing facts, the conclusions logically deduced from them must represent actual phenomena. Speaking of Ricardo's reasoning, he says, "This was a logical inference, and would consequently have been true in fact, if the assumed premisses had been true." But it is surely possible that the premisses should be true, and yet incomplete—true so far as the facts which they assert go, and yet not including all the conditions which affect the actual course of events. The laws of motion and of gravity are not arbitrary assumptions, but have a real foundation in nature; and it is a strictly logical deduction from those laws that the path of a projectile is in the course of a parabola; yet, in point of fact, no projectile accurately describes this course; the friction of the air, which was not included in the premisses, coming in to disturb the operation of the other principles. In the same way (as I have already shown by several illustrations, and as will appear more fully hereafter) the doctrines of Political Economy, though based upon indubitable facts of human nature and of the external world, do not necessarily represent, and scarcely ever precisely represent, existing occurrences. Indeed, Mr. Senior in another passage fully admits this. "We shall not," he says, "it is true, from the fact that by acting in a particular manner, a labourer may obtain higher wages, a capitalist larger profits, or a landlord higher rent, be able to infer the further fact, that they will certainly act in this manner; but we shall be able to infer that they will do so in the absence of disturbing causes." This concedes the only point for which I contend—the point, namely, that the conclusions of Political Economy do not necessarily represent actual events. The facts thus being agreed upon, the question is reduced to the verbal one, viz.: whether a science, the doctrines of which correspond with external realities only "in the absence of disturbing causes," is properly described as a positive or hypothetical science. It appears to me that a proposition cannot correctly be said to represent "positive truth" which corresponds with facts only when no disturbing causes intervene—this condition, moreover, being one which is scarcely ever realised. Nor do I think the description would be less objectionable, even though, as Mr. Senior afterwards remarks, it were "frequently" possible "to state the cases in which these causes may be expected to exist, and the force with which they are likely to operate." On the other hand, as I have already admitted, if the term be used, not with reference to what are properly the doctrines of Political Economy, but to the grounds on which these doctrines are built, Political Economy is as well entitled to be considered a 'positive science' as any of those physical sciences to which this name is commonly applied.

II.44

This point, however, as I have said, is a purely verbal one, and as such is of little importance, provided the real character of the principles in question be borne in mind. This character, as I have endeavoured to establish, is identical with that of the physical principles which are deduced from the laws of gravitation and motion; like these, the doctrines of Political Economy are to be understood as asserting not what will take place, but what would or what tends to take place, and in this sense only are they true.*20 If this admission constitute an objection to Political Economy,*21 it is equally an objection to Astronomy, Mechanics, and to all those physical sciences which combine deductive with inductive reasoning.*22

II.45

And now I am in a position to attempt a definition of Political Economy, which I would define in either of the following forms:—As the science, which, accepting as ultimate facts the principles of human nature, and the physical laws of the external world, as well as the conditions, political and social, of the several communities of men, investigates the laws of the production and distribution of wealth, which result from their combined operation; or thus:—as the science which traces the phenomena of the production and distribution of wealth up to their causes, in the principles of human nature and the laws and events, physical, political, and social, of the external world.


Notes for this chapter


14.
'Essays on Some Unsettled Questions in Political Economy,' by J. S. Mill, pp. 130-132.
15.
This doctrine has been denied, and some curious arguments have been advanced in refutation of it. The topic most insisted on by those who controvert it is the superior productiveness of agricultural industry in the United Kingdom at present, as compared with that which prevailed in former periods, notwithstanding the greater amount of capital now employed in agriculture. This argument would be good for something if all the other conditions of the problem were the same; but it is certain that they are not the same, and that they differ precisely in the point that is of importance—the superior skill with which capital and industry are at present applied. No economist that I am aware of has ever said that a small and unskilful application of capital to land would necessarily be attended with greater proportional returns than a larger outlay more skilfully applied: and it is to this assertion only that the argument in question applies.

But it is important to remark that the attempt to meet the doctrine in question by statistical data implies (as will hereafter more clearly appear) a total misconception, both of the fact which is asserted, and of the kind of proof which an economic doctrine requires. The doctrine contains, not an historic generalization to be tested by documentary evidence, but a statement as to an existing physical fact, which if seriously questioned, can only be conclusively determined by actual experiment upon the existing soil. If anyone denies the fact, it is open to him to refute it by making the experiment. Let him show that he can obtain from a limited area of soil any required quantity of produce by simply increasing the outlay—that is to say, that, by quadrupling or decupling the outlay, he can obtain a quadruple or decuple return. If it be asked why those who maintain the affirmative of the doctrine do not establish their view by actual experiment, the answer is, that the experiment is performed for them by every practical farmer; and that the fact of the diminishing productiveness of the soil is proved by their conduct in preferring to resort to inferior soils rather than force unprofitably soils of better quality.

Mr. Carey, the American economist, has endeavoured to meet this reasoning by urging that the conduct of farmers in resorting to inferior soils after the better qualities have been all taken into cultivation no more constitutes a proof that industry on the superior soils has become less productive, than the conduct of a cotton-spinner in building a second factory when his first is full, is a proof that manufacturing industry tends to become less productive as manufacturing capital and labour increase. This is, in other words, to say that the reason farmers do not increase their outlay on the soils of superior quality is, not because it would be unprofitable to do so, but for the same reason which limits, the amount of capital and the number of hands employed in a cotton mill, namely, that the necessary conditions of space being taken into account, it would be impossible to do so. No one who holds the received theory of rent will hesitate to stake the doctrine upon this issue. When any sane farmer in the United Kingdom, or in any other quarter of the civilized world, will give the same answer to the question—'Why he does not manure more highly, or drain more deeply, or plough more frequently, a given field?' which Mr. Carey gives, viz. 'want of room,' the disciples of Ricardo will be prepared to abandon their master; but till this specimen of bucolic exegesis is produced, they will probably retain their present views.

16.
Appendix B.
17.
To be distinguished from another question with which it is commonly confounded, viz., how far should economic considerations be made subordinate to considerations of morality in the art of government?
18.
In entire accord with this is M. A. E. Cherbuliez in his admirable 'Précis de la Science Économique:'—

"Quest-ce qu'une vérité scientifique? C'est l'expression d'une idée, ou d'une loi générale, à laquelle notre intelligence arrive en partant de certaines données fournies par l'observation immédiate. Nous analysons un certain nombre de phénomènes pour en tirer ce qu'ils ont de commun; puis nous raisonnons d'après ces résultats de l'analyse, pour construire une théorie scientifique. Si nous avons bien observé, si notre raisonnement a été correct, la conséquence est aussi vraie que la donnée générale d'oł elle découle, mais elle ne peut l'être davantage, ni d'une autre manière. Or, la donnée générale n'est pas une réalité; elle n'est qu'une abstraction, au moins dans la plupart des cas. Pour l'obtenir, qu'avons-nous fait? Nous avons dépouillé les phénomènes réels de ce qui les rendait complexes et divers, pour ne voir que ce qu'ils avaient de commun. Le résultat de cette analyse peut donc fort bien ne représenter rien de réel, ne ressembler exactement à aucun des phénomènes complexes de la réalité. Des lors, la théorie, la loi, que nous construisons d'après ce résultat, peut aussi ne se vérifier dans aucun des faits que nous verrons s'accomplir sous nos yeux. Cette théorie, cette loi n'en sera pas moins une vérité scientifique." Tome I. pp. 10, 11.

19.
'Introductory Lecture on Political Economy,' 1852, p. 63.
20.
"Ce serait avec aussi peu de fondement et aussi peu de succès que vous attaqueriez la théorie du libre échange en alléguant que certains pays ont atteint, sous un régime de restrictions et d'entraves, un très-haut degré de prospérité, tandis que d'autres pays, qui jouissaient d'une liberté de commerce comparativement fort grande, sont restés en arrière des premiers dans leur développement économique. On vous répondrait que la prospérité économique est le résultat complexe de plusieurs causes, parmi lesquelles il peut y en avoir de plus puissantes que la liberté. La théorie que vous attaquez n'est point formulée en ces termes, que le développement économique des sociétés est proportionnel an degré de liberté dont elles jouissent, mais dans ceux-ci: que la liberté du commerce est plus favorable à ce développement que les entraves et les restrictions, vérité contre laquelle votre objection ne saurait avoir aucune force, puisque les faits allégués ne lui sont nullement contraires. Ces faits prouvent seulement que le développement économique est un phénomène complexe, et que, chez les nations signalées par vous comme fournissant une preuve de l'inefficacité du libre échange, l'action de ce principe a été neutralisée par d'autres causes, telle que la situation géographique, ou l'insécurité résultant de mauvaises lois, qui ont agi en sens opposé."—Précis de la Science Économique, Tome I: pp. 13, 14.
21.
Mr. Jennings ('Natural Elements of Political Economy,' p. 4) disposes of this defence of economic doctrine in the following fashion:—"The doubting pupil is now dismissed with the assurance that the principles of Political Economy which he has been taught, if not true, have a tendency to be true; that if found imperfect in the abstract (quære, concrete?) they are perfect in the concrete (quære, abstract), and that an allowance must always be made for the influence of disturbing causes."

I don't know that any further reply need be made to this than that given in the text, namely, that whatever be the value of the objection, it applies with equal force to all sciences whatever which have reached the deductive stage. In no other sense is a dynamical law true than as expressing 'a tendency' influencing matter. Whether the result in any given case be such as the law asserts, will depend, whatever be the branch of speculation, upon whether the necessary ceteris paribus, implied in its statement, is realized. The reason that attention has been drawn more to the influence of disturbing causes in the political and moral than in the physical sciences is sufficiently obvious. In those physical sciences which are sciences of observation, as Astronomy, the principles are few in number and perfectly definite in character; while in those physical sciences, as, e.g., Chemistry, in which the principles are more numerous and complex, we can avail ourselves of experiment. In the former case all, or nearly all, the causes influencing the result are known and their effect may be calculated; in the latter, all that are not required may be eliminated. But in the moral and political sciences, in which we have to deal with human interests and passions, the agencies in operation at any given time in any given society are numerous, while, being in this case precluded from experiment, we are unable to prepare the conditions beforehand with a view to preserving the necessary ceteris paribus.

22.
See Mill's 'System of Logic,' book iii. chap. x. § 5. .

End of Notes


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