The National System of Political Economy

Book II, Chapter XVI
POPULAR AND STATE FINANCIAL ADMINISTRATION, POLITICAL AND NATIONAL ECONOMY.

THAT which has reference to the raising, the expending, and the administration of the material means of government of a community (the financial economy of the State), must necessarily be distinguished everywhere from those institutions, regulations, laws, and conditions on which the economy of the individual subjects of a State is dependent, and by which it is regulated; i.e. from the economy of the people. The necessity for this distinction is apparent in reference to all political communities, whether these comprise a whole nation or merely fractions of a nation, and whether they are small or large.

In a confederated State, the financial economy of the State is again divided into the financial economy of the separate states and the financial economy of the entire union.

The economy of the people becomes identical with national economy where the State or the confederated State embraces a whole nation fitted for independence by the number of its population, the extent of its territory, by its political institutions, civilisation, wealth, and power, and thus fitted for stability and political influence. The economy of the people and national economy are, under these circumstances, one and the same. They constitute with the financial economy of the State the political economy of the nation.

But, on the other hand, in States whose population and territory merely consist of the fraction of a nation or of a national territory, which neither by complete and direct union, nor by means of a federal union with other fractions, constitutes a whole, we can only take into consideration an 'economy of the people' which is directly opposed to 'private economy' or to 'financial economy of the State.'

In such an imperfect political condition, the objects and requirements of a great nationality cannot be taken into consideration; especially is it impossible to regulate the economy of the people with reference to the development of a nation complete in itself, and with a view to its independence, permanence, and power. Here politics must necessarily remain excluded from economy, here can one only take account of the natural laws of social economy, as these would develop and shape themselves if no large united nationality or national economy existed anywhere.

It is from this standpoint that that science has been cultivated in Germany which was formerly called 'State administration,' then 'national economy,' then 'political economy,' then 'popular administration,' without anyone having clearly apprehended the fundamental error of these systems.

The true conception and real character of national economy could not be recognised because no economically united nation was in existence, and because for the distinct and definite term 'nation' men had everywhere substituted the general and vague term 'society,' an idea which is as applicable to entire humanity, or to a small country, or to a single town, as to the nation.