  His writings were not numerous, but his influence, like that of Socrates, disseminated as it was by his disciples, became very considerable. The best edition of his works is that published by Professor Oncken of Berne, Œuvres Économiques et philosophiques de F. Quesnay (Paris and Frankfort, 1888). Our quotations from the founders are taken from Collections des Principaux Économistes, published by Daire. The Marquis de Mirabeau, father of the great orator of the Revolution, a man of a fiery temperament like his son, published at about the same date as the production of the Tableau his L’Ami des Hommes. This book, which created a great sensation, does not strictly belong to Physiocratic literature, for it ignores the fundamental doctrine of the school. La ThÉorie de l’ImpÔt (1760) and La Philosophie rurale (1763), on the other hand, owe their inspiration to Physiocracy. Mercier de la RiviÈre, a parliamentary advocate, published L’Ordre natural et essentiel des SociÉtÉs politiques in 1767. Dupont de Nemours refers to this as a “sublime work,” and though it does not, perhaps, deserve that epithet it contains, nevertheless, the code of the Physiocratic doctrine. Dupont de Nemours, as he is called after his native town published about the same time, 1768, when he was only twenty-nine, a book entitled Physiocratie, ou Constitution essentielle du Gouvernement le plus avantageux au Genre humain. To him we owe the term from which the school took its name—Physiocracy, which signifies “the rule of nature.” But the designation “Physiocrats” was unfortunate and was almost immediately abandoned for “Économistes.” Quesnay and his disciples were the first “Économistes.” It was only much later, when the name “Economist” became generic and useless as a distinctive mark for a special school, that writers made a practice of reverting to the older term “Physiocrat.” An enthusiastic disciple of Quesnay, Dupont’s rÔle was chiefly that of a propagandist of Physiocratic doctrines, and he made little original contribution to the science. At an early date, moreover, the great political events in which he took an active part proved a distraction. He survived all his colleagues, and was the only one of them who lived long enough to witness the Revolution, in which he played a prominent part. He successively became a deputy in the Tiers État, a president of the Constituent Assembly, and later on, under the Directoire, President du Conseil des Anciens. He even assisted in the restoration of the Empire, and political economy was first honoured at the hands of the Institut when he became a member of that body. In 1777 Le Trosne, an advocate at the Court of Orleans, published a book entitled De l’IntÉrÊt social, par rapport À la Valuer, À la Circulation, À l’Industrie et au Commerce, which is perhaps the best or at least the most strictly economic of all. Mention must also be made of the AbbÉ Baudeau, who has no less than eighty volumes to his credit, chiefly dealing with the corn trade, but whose principal work is L’Introduction À la Philosophie Économique (1771); and of the AbbÉ Roubaud, afterwards Margrave of Baden, who had the advantage of being not merely a writer but a prince, and who carried out some Physiocratic experiments in some of the villages of his small principality. We have not yet mentioned the most illustrious member of the school, both in respect of his talent and his position, namely, Turgot (1727-81). His name is generally coupled with that of the Physiocrats, and this classification is sufficiently justified by the similarity of their ideas. Still, as we shall see, in many respects he stands by himself, and bears a close resemblance to Adam Smith. Moreover, he commenced writing before the Physiocrats. His essay on paper money dates from 1748, when he was only twenty-one years of age, but his most important work, RÉflexions sur la Formation et la Distribution des Richesses, belongs to 1766. As the Intendant of Limoges and again as a minister of Louis XVI he possessed the necessary authority to enable him to realise his ideas of economic liberty, which he did by his famous edicts abolishing taxes upon corn passing from one province to another, and by the abolition of the rights of wardenship and privilege. Unlike the other Physiocrats, who swore only by Dr. Quesnay, Turgot owed a great deal to a prominent business man, Vincent de Gournay, who at a later date became the Intendant of Commerce. Gournay died in 1759, at the early age of forty-seven. Of Gournay we know next to nothing beyond what Turgot says of him in his eulogy (See Schelle, Vincent de Gournay, 1897). Bibliography. Books dealing with the Physiocratic system, both in French and other languages, are fairly numerous. A very detailed account of these may be found in M. Weulersse’s work, Le Mouvement physiocratique en France de 1756 À 1770, published in 1910, which also contains a very complete exposition of the Physiocratic doctrine. In English there is a succinct account of the system in Higgs’ Physiocrats (1897). It is true that Rousseau was an equally enthusiastic believer in a natural order, in the voice of nature, and in the native kindness of mankind. “The eternal laws of nature and order have a real existence. For the wise they serve as positive laws, and they are engraved on the innermost tablets of the heart by both conscience and reason.” (Émile, Book V.) The language is identical with that of the Physiocrats. But there is this great difference. Rousseau thought that the state of nature had been denaturalised by social and especially by political institutions, including, of course, private property; and his chief desire was to give back to the people the equivalent of what they had lost. The “social contract” is just an attempt to secure this. The Physiocrats, on the other hand, regarded the institution of private property as the perfect bloom of the “natural order.” Its beauty has perhaps suffered at the hands of turbulent Governments, but let Governments be removed and the “natural order” will at once resume its usual course. There is also this other prime difference. The Physiocrats regarded interest and duty as one and the same thing, for by following his own interest the individual is also furthering the good of everybody else. To Rousseau they seemed antagonistic: the former must be overcome by the latter. “Personal interest is always in inverse ratio to duty, and becomes greater the narrower the association, and the less sacred.” (Contrat Social, ii, chap. 3.) In other words, family ties and co-operative associations are stronger than patriotism. The view is not peculiar to the Physiocrats, but it is interesting to note how unfamiliar they were with the modern idea of evolutionary progress. Hector Denis in his Histoire des Doctrines expresses the belief that the most characteristic feature of the Physiocratic system is the emphasis laid upon a naturalistic conception of society. He illustrates this by means of diagrams showing the identity of the circulation of wealth and the circulation of the blood. “This physical truth that the earth is the source of all commodities is so very evident that none of us can doubt it.” (Le Trosne, IntÉrÊt social.) “The produce of the soil may be divided into two parts … what remains over is free and disposable, a pure gift given to the cultivator in addition to the return for his outlay and the wages of his labour.” (Turgot, RÉflexions.) “Raw material is transformed into beautiful and useful objects through the diligence of the artisan, but before his task begins it is necessary that others should supply the raw material and provide the necessary sustenance. When their part is completed others should recompense them and pay them for their trouble. The cultivators, on the other hand, produce their own raw material, whether for use or for consumption, as well as everything that is consumed by others. This is just where the difference between a productive and a sterile class comes in.” (Baudeau, Correspondance avec M. Graslin.) “Land owes its fertility to the might of the Creator, and out of His blessing flow its inexhaustible riches. This power is already there, and man simply makes use of it.” (Le Trosne, IntÉrÊt social, chap. 1, § 2.) M. MÉline’s book, Le Retour À la Terre, though Protectionist in tone, is wholly imbued with the Physiocratic spirit. The first edition of the Tableau, of which only a few copies were printed, is missing altogether, but a proof of that edition, corrected by Quesnay himself, was recently discovered in the BibliothÈque Nationale in Paris by Professor Stephen Bauer, of the University of BÂle. A facsimile was published by the British Economic Association in 1894. His explanation of the Tableau by means of mathematical tables gives him a claim to be considered a pioneer of the Mathematical school. Full justice has been done to him in this respect. An article by Bauer in the Quarterly Journal of Economics, 1890, recognises his claim, and there is another by Oncken in the Economic Journal for June 1896, entitled The Physiocrats as Founders of the Mathematical School. His contemporary Le Trosne is even more emphatic on the point: “Economic science, being a study of measurable objects, is an exact science, and its conclusions may be mathematically tested. What the science lacked was a convenient formula which might be applied to test its general conclusions. Such a formula we now have in the Tableau Économique.” (De l’Ordre social, viii, p. 218.) “It is this expenditure that makes the claim of proprietors real and their existence just and necessary. Until such expenditure is incurred the right of property is merely an exclusive right to make the soil capable of bearing fruit.” (Baudeau, p. 851.) In other words, so long as the proprietor has not incurred some expenditure the right of property is simply reduced to occupation. The Physiocrats distinguished three kinds of avances: 1. The annual expenditure (avances annuelles) incurred in connection with the actual work of cultivation, which recurs every year, such as the cost of seed and manure, cost of maintaining labourers, etc. The annual harvest ought to repay all this, which to-day would be called circulating capital. 2. The “original” outlay (avances primitives) involved in buying cattle and implements which render service for a number of years, and for which the proprietor does not expect to be recompensed in a single year. The return is spread out over a number of years. Here we have the distinction between fixed and circulating capital, and the idea of the gradual redemption of the former as against the total repayment of the latter at one single use. It did not escape the Physiocrats’ notice that an intelligent increase of the fixed might gradually reduce the annual expenditure. Such ideas were quite novel. But they immediately took their place as definite contributions to the science. They are no longer confined to agriculture, however, but apply equally to all branches of production. 3. The avances fonciÈres are the expenses which are undertaken with a view to preparing the land for cultivation. (The adjective “primitive” would have been better applied here.) The first two kinds of expenditure are incumbent upon the agriculturist and entitle him to a remuneration sufficient to cover his expenses. The third is incumbent upon the proprietor and constitutes his claim to a share of the funds. “Before you can set up a farm where agriculture may be steadily practised year in and year out what must be done? A block of buildings and a farmhouse must be built, roads made and plantations set, the soil must be prepared, the stones cleared, trees cut down and roots removed; drains must also be cut and shelters prepared. These are the avances fonciÈres, the work that is incumbent upon proprietors, and the true basis of their claim to the privileges of proprietorship.” (Baudeau, ÉphÉmÉrides, May 1776. A reply to Condillac.) But let us always remember that when the Physiocrats speak of the rights of the cultivator they think only of the farmer and mÉtayer and never of the paid agriculturist. They are content to demand merely a decent existence for the latter. Were they put too much at ease they would perhaps leave off working. See Weulersse, vol. ii, p. 729. He seems a little unjust, and quotes some words of Quesnay, who protests against the belief that “the poor must be kept poor if they are not to become indolent.” Mercier de la RiviÈre writes in a similar vein. “A good constant average price ensures abundance, but without freedom we have neither a good price nor plenty.” (P. 570.) Turgot in his Lettres sur le Commerce des Grains develops the argument at great length and tries to give a mathematical demonstration of it. There was no need for this. It is a commonplace of psychology that a steady price of 20 is preferable to alternative prices of 35 and 5 francs respectively, although the average in both cases is the same. “The Greek republics never became acquainted with the laws of the order. Those restless, usurping, tyrannical tribes never ceased to drench the plains with human blood, to cover with ruins and to reduce to waste the most fertile and the best situated soil in the then known world.” (Baudeau, p. 800.) “It is evident that a democratic sovereign—i.e. the whole people—cannot itself exercise its authority, and must be content to name representatives. These representatives are merely agents, whose functions are naturally transitory, and such temporary agents cannot always be in complete harmony with every interest within the nation. This is not the kind of administration contemplated by the Physiocrats. The sovereignty of the natural order is neither elective nor aristocratic. Only in the case of hereditary monarchy can all interests, both personal and individual, present and future, be clearly linked with those of the nation, by their co-partnership in all the net products of the territory submitted to their care.” (Dupont, vol. i, pp. 359-360.) This sounds very much like a eulogy of the House of Hohenzollern, delivered by William II. Very curious also are Dupont’s criticisms of the parliamentary rÉgime. In his letter to J. B. Say (p. 414) he notes “its tendency to corruption and canker,” which had not then manifested itself in the United States of America. These letters, though very interesting, hardly belong to a history of economic doctrines. Is it necessary to point out that this is exactly the reverse of the view held by interventionists and socialists of these later times, who think that the mission of the State is to redress the grievances caused by natural laws? The three errors usually committed by States, and the three that led to the downfall of Greece, Baudeau thought, were arbitrary use of legislative authority, oppressive taxation, and aggressive patriotism (p. 801). “It is a narrow and churlish English idea which decrees that an annual sum should be annually voted to the Government, and that Parliament should reserve to itself the right of refusing this tax. Such a procedure is a travesty of democracy.” (Dupont, in a letter to J. B. Say.) The French Budget of 1781, introduced by Necker, corresponded almost exactly with the figure given by the Physiocrats, namely, 610 millions. Of course, we ought to add to this the ecclesiastical dues, the seigniorial rights, and the compulsory labour of every kind, which were to disappear under the Physiocratic rÉgime. “A fall in the expenditure means a smaller harvest, which means that less will be expended upon making preparation for the next harvest. This cyclical movement seems a terrible thing to those who have given it some thought.” (Mercier de la RiviÈre, p. 499.) “It would be better for the landed proprietors to pay it direct to the Treasury, and thus save the cost of collection.” (Dupont de Nemours, p. 352.) It is also possible that Jesus was not formulating a general law when He said that we have the poor always with us. Turgot likewise wished to state the simple fact, and not to draw a general conclusion. “The tax must never be assessed in accordance with individual caprice. The amount is determined by the natural order.” (Dupont, Sur l’Origin d’un Science nouvelle.) Neither should the State, in their opinion, exceed the limit, because it would mean having recourse to borrowing, which would simply mean increased deferred taxation. All that we know of Smith’s character shows him to have been a man of tender feelings and of great refinement of character. His absent-mindedness has become proverbial. In politics his sympathies were with the Whigs. In religion he associated himself with the deists, a school that was greatly in vogue towards the end of the eighteenth century, and of which Voltaire, who was much admired by Smith, was the most celebrated representative. For a long time the only life of Smith which we possessed was the memoir written by Dugald Stewart, Account of the Life and Writings of Adam Smith, and read by him in 1793 before the Royal Society of Edinburgh. It appeared in the Transactions of the society for 1794, and was published in volume form in 1811 along with other biographies, under the title of Biographical Memoirs of Adam Smith, Robertson, etc., by Dugald Stewart. To-day we are more fortunate. John Rae in his charming Life of Adam Smith (London, 1895) has succeeded in bringing to light all that we can know of Smith and his circle. To him we are indebted for most of the details we have given. In 1894 James Bonar published a catalogue of Smith’s library, containing about 2300 volumes, and comprising about two-thirds of his whole library. A still more important contribution to the study of Smith’s ideas has been made by Dr. Edwin Cannan, who in 1896 published Lectures on Justice, Police, Revenue, and Arms, delivered in Glasgow by Adam Smith, from Notes taken by a Student in 1763 (Oxford). This represents the course of lectures on political economy delivered by Smith while professor at Glasgow. A manuscript copy of the notes taken in this course by a student, probably in 1763, was accidentally discovered by a London solicitor in 1876. These notes were in 1895 forwarded to Dr. Cannan for publication. They are especially precious in helping us to understand Smith’s ideas before his stay in France and his meeting with the Physiocrats. Of the numerous editions of the Wealth of Nations which have hitherto been published, the more important are those of Buchanan, McCulloch, Thorold Rogers, and Nicholson. The latest critical edition is that of Dr. Cannan, published in 1904 by Methuen, containing very valuable notes. This is the edition we have used. It is impossible to reconcile these statements. In the one case rent is regarded as a constituent element of price, in the other it is the effect of price. In the first edition this contradiction was still more evident. In that edition rent, along with profit and wages, was treated as a third determinant of value. (See Cannan’s edition, vol. i, p. 51, note 7.) The paragraph was deleted from the second edition, and rent was treated merely as a component part of the price. This modification was perhaps the outcome of a letter written by Hume to Smith on April 1, 1776, after he had read the Wealth of Nations for the first time. “I cannot think,” says Hume, “that the rent of farms makes any part of the price of the produce, but that the price is determined altogether by the quantity and the demand.” (Quoted by Rae in his Life of Adam Smith, p. 286.) The celebrated controversy as to whether rent enters into prices is not a thing of yesterday. Its origin dates from the birth of political economy itself, and it will probably only die with it. Smith had anticipated the arguments advanced by such socialists as Rodbertus and Lassalle, who regard saving rather than labour as the source of capital. “Parsimony, and not industry, is the immediate cause of the increase of capital. Industry, indeed, provides the subject which parsimony accumulates. But whatever industry might acquire, if parsimony did not save and store up, the capital would never be the greater.” (Wealth of Nations, Book II, chap. 3; Cannan, vol. i, p. 320.) The correspondence between selling price and the cost of production seemed to Smith to be of the very essence of justice. Complete correspondence would realise the ideal of the just price. Malthus was a young unmarried clergyman living in a small country parish when, at the age of thirty-two, he in 1798 published anonymously his famous Essay on the Principle of Population as it affects the Future Improvement of Society. His critics were legion. In order to devote more study to the subject, he took a three years’ tour (1799-1802) on the Continent—avoiding France, because France at this period was anything but inviting to an Englishman. In 1803 he published—under his own name this time—a second edition, much modified and amplified, and with a slightly different title: An Essay on the Principle of Population, or a View of its Past and Present Effects on Human Happiness. Four other editions were published during his lifetime. We must not forget his other works, although they were all eclipsed by his earliest effort. These were: The Principles of Political Economy considered with a View to their Practical Application (1820); A Series of Short Studies dealing with the Corn Laws (1814-15); On Rent (1815); The Poor Law (1817); and finally his Definitions in Political Economy (1827). To justify multiplying by two, Malthus regards a family of six as being a normal one. Of the six, two will die before attaining marriageable age, or will remain celibates, so that we are left with four, who will in turn become parents, and so we have the series 2, 4, etc. He also notes that this virtue has usually been especially commended to women, but that “there is no reason for supposing that the violation of the laws of chastity are not equally dishonourable for both sexes.” Malthus evidently believed in one moral law for both sexes. Consequently whenever the reverend gentleman is reproached with encouraging blasphemy, a point upon which he is particularly sensitive—for example, when it is pointed out that God’s injunction to man was to increase and multiply—he has no difficulty in showing that if procreation is the will of Providence, chastity is dictated by Christianity, and that the glorious work of chastity is to aid Providence in keeping even the balance of life. “I have said what I conceive to be strictly true, that it is our duty to defer marriage till we can feed our children; and that it is also our duty not to indulge ourselves in vicious gratifications; but I have never said that I expected either, much less both, of these duties to be completely fulfilled. In this and a number of other cases, it may happen that the violation of one of two duties will enable a man to perform the other with greater facility.… The moralist is still bound to inculcate the practice of both duties, and each individual must be left to act as his conscience shall dictate.” (P. 560.) This is Manu’s law, which Malthus quotes in support of his contention. But he failed to see that as soon as one begins to doubt Manu’s teaching the argument is the other way. One of the reasons why sterility was considered a dishonour by Jewish women was that each of them secretly hoped that she might become the mother of the promised Messiah. But when the Jews ceased to hope for the Deliverer that was to come, then the incentive to childbirth was gone. Not only does he condemn charity in the way of almsgiving, but also the practice of giving work for charity’s sake. He admits an exception in the case of education, of which everybody can partake without making anyone else the poorer. Such arguments would seem to imply the prohibition of all charity, whether public or private, and as a matter of fact he demands the gradual abolition of the Poor Laws and of every kind of systematic assistance which offers to the poor any kind of help upon which they can always reckon. But he recognises the “good results of private charity, discriminately and occasionally exercised.” Though he failed to remove the Poor Laws, the effect of his teaching is clearly seen in the Poor Law Amendment Act of 1834. Malthus’s doctrine is just the reverse of the social teaching on the question in France at the present time. There you have an attempt to substitute solidarity for Christian charity. That means that the poor should be able to demand assistance, not as a gift, but as a right, and that the place of individual or private charity should be taken by a public institution with a view to giving effect to this. His teaching concerning the preventive obstacle has been so thoroughly taken to heart that there is not much fear of legal assistance resulting in a growth of population. Marriage, Malthus thought, had a restraining influence upon population. He admits that the simplest and most natural obstacle is to oblige every father to rear his own children. He also admits that the shame which the mother of a bastard and her child have to endure is a matter of social necessity. He does not approve of forcing the man who has betrayed a woman to marry, but he declares that seduction ought to be seriously punished. This is the view commonly adopted to-day, but it was very novel then. Naturally enough, his earliest interest in economics centred round banking questions. The French wars had caused a depreciation in the value of the bank-note, and this aroused the interest not only of the specialists, but also of the public. His first essay, published in 1810, when he was thirty-eight years of age, was entitled The High Price of Bullion a Proof of the Depreciation of Bank-notes. It was soon followed by other studies dealing with banks and with the credit system. But these short polemical efforts gave scarcely any indication of the great attention which he was bestowing upon the principles of the science. His interest was primarily personal, for it appears that he had no intention of publishing anything on the subject. In 1817, however, the results were seen in a volume entitled The Principles of Political Economy. Ricardo the business man could hardly have guessed that it would shake the capitalistic edifice to its very foundations. In 1819 he was elected a member of the House of Commons, but he was as indifferent a speaker as he was a writer. He was always listened to, however, with the greatest respect. “I have twice attempted to speak,” he writes, “but I proceeded in the most embarrassed manner: and I have no hope of conquering the alarm with which I am assailed the moment I hear the sound of my own voice.” In 1821 he founded the Political Economy Club, the earliest of those numerous societies for the study of economic subjects which have since been established in every country. In 1822 he published a work on Protection to Agriculture. The following year he died, at the comparatively early age of fifty-one. Since his death all his writings have been carefully collected, and his correspondence with the chief economists of his day, with Malthus, McCulloch, and Say, published. The correspondence is extremely important for an understanding of his doctrines. In a letter to Malthus written on August 15, 1820, speaking of his own theory of value and of McCulloch’s, he despairingly adds: “Both of us have failed.” See HalÉvy, Le Radicalisme philosophique, and Hector Denis, op. cit. “The comparative scarcity of the most fertile lands is the cause of rent.” (Ibid., p. 395.) Adam Smith had already offered this as an explanation in the case of the products of the mine, but he failed to see that arable land is really nothing but a sort of mine.
“The comparison is not very exact, but it is near enough to enable us to understand that when the earth is producing nearly all it can, a great deal of expense is necessary to obtain very little more produce.” Turgot, with his usual perspicacity, has noted a fact which the Classical writers generally failed to perceive, namely, that at the beginning of the process of cultivation there may be a period when the return shows no signs of diminishing. Ricardo soon finds a reply to the comfortable doctrine of Smith, that the interests of the landlords are nowhere opposed to those of the rest of the community. “The interest of the landlord is always opposed to that of the consumer and manufacturer. Corn can be permanently at an advanced price only because additional labour is necessary to produce it, because its cost of production is increased. It is therefore for the interest of the landlord that the cost attending the production of corn should be increased. This, however, is not the interest of the consumer.… Neither is it the interest of the manufacturer that corn should be at a high price, for the high price of corn will occasion high wages, but will not raise the price of his commodity.” (Ibid., p. 322.) One seems justified in saying that in England and even in France and other Protective countries the land has lost both in revenue and value during the last quarter of the nineteenth century almost all that it had gained from the time of Ricardo up till then. But is the recoil sufficient to justify Foville’s description of Ricardo’s vaunted law as a pure myth? We think not. It has the experience of seventy-five years behind it and of twenty-five years against it, that is all. Anyone who would predict a further fall in rent would certainly be running the risk of becoming a false prophet. “Thus in every case … profits are lowered … by a rise of wages.” On the inexactness of the term “high rate of profits” as a synonym for a proportionally larger share of the produce see note, p. 162. In his essay On Protection to Agriculture (1822) he shows how Protection, by forcing the cultivation of less fertile lands at home, raises the price of corn and increases rents; and his demand was not for free importation, but for a reduction of the duty to 10s. a quarter. With regard to Ricardo, Sismondi relates that in the very year of his death he had two or three conversations with him on this subject at Geneva. In the end he seems to have accepted Ricardo’s point of view, but not without several reservations. “We arrive then at Ricardo’s conclusion and find that when circulation is complete (and having nowhere been arrested) production does give rise to consumption”; but he adds: “This involves making an abstraction of time and place, and of all those obstacles which might arrest this circulation.” Sismondi defended his point of view against his three critics in two articles reprinted at the end of the second edition of the Nouveaux Principes. “But it is not in the interest of society that the one should exercise the force and that the other should yield. The interest of the day labourer undoubtedly is that the wages for a day of ten hours should be sufficient for his upkeep and the upbringing of his children. It is also the interest of society. But the interest of the unemployed is to find bread at any price. He will work fourteen hours a day, will send his children to work in a factory at ten years of age, will jeopardise his own health and life and the very existence of his own class in order to escape the pressure of present need.” (Nouveaux Principes, vol. i, pp. 200-201.) There is no doubt that the leaders of the Revolution—including Marat even, who is wrongly regarded as a supporter of that agrarian law which he condemned as fatal and erroneous—always showed unfailing respect for the institution of private property. The confiscation of the property of the Church and of the ÉmigrÉ nobles was a political and not an economic measure, and in that respect is fairly comparable with the historic confiscation of the property of Jews, Templars, Huguenots, and Irish, which in no case was inspired by merely socialist motives. The confiscation of endowments—of goods belonging to legal persons—was regarded as a means of defending individual or real property against the encroachments of merely fictitious persons and the tyranny of the dead hand. When it came to the abolition of feudal rights great care was taken to distinguish the tenant’s rights of sovereignty, which were about to be abolished, from his proprietary rights, which deserved the respect of everyone who recognised the legitimacy of compensation. In practice the distinction proved of little importance. Scores of people were ruined during those unfortunate months—some through mere misfortune, others because of the muddle over the issue of assignats, and others, again, because of the confiscation of rents; but the intention to respect the rights of property remains indisputable still. It would seem that in this matter the revolutionary leaders had come under the influence of the Physiocrats, whose cult of property has already engaged our attention. And how easy it would be to imagine a Physiocrat penning Article 17 of the Declaration of the Rights of Man when it speaks of property as an inviolable, sacred right! But, on the other hand, it is true that Rousseau in his article Économie politique speaks of the rights of property as the most sacred of the citizen’s rights. It was not only on the question of property that the revolutionists of 1789 showed themselves anti-socialist. They were also anti-socialist in the sense that they paid no attention to class war and ignored the antagonism that exists between capitalists and workers. All were to be treated as citizens and brothers, all were equal and alike. However, those who claim the most intimate connection with the spirit of the Revolution remain undismayed by such considerations. They endeavour to show that the Revolution was not quite so conservative nor so completely individualistic as is generally supposed, and after diligent search they claim to have discovered certain decrees bearing unmistakable traces of socialism. But a much more general practice is to plead extenuating circumstances. “Are we to demand that the social problems which appeared fifty years afterwards, when industry had revolutionised the relations of capital and labour, should have been solved at the end of the eighteenth century? It would have been worse than useless for the men of 1789 and 1793 to try to regulate such things in advance.” (Aulard, Address to Students, April 21, 1893. Cf. his Histoire politique de la RÉvolution, chap. 8, paragraph entitled “Le Socialisme.”) We must not lose sight of the communist plot hatched by FranÇois Babeuf during the period of the Revolution. But in this case, at any rate, the exception proves the rule, for, despite the fact that Babeuf had assumed the suggestive name of Gaius Gracchus, he found little sympathy among the men of the Convention, even in La Montagne, and he was condemned and executed by order of the Directory. Babeuf’s plot is interesting, if only as an anticipatory protest of revolutionary socialism against bourgeois revolution. Cf. Aulard, loc. cit., p. 627. The Saint-Simonians seem to have remained in ignorance of the socialist theories of their contemporaries, the French Fourier and the English Thompson and Owen. Fourier’s work only became known to Enfantin after his own economic doctrine had been formulated. Saint-Simon and Bazard appear never to have read him. It is probable that Enfantin only became aware of Fourier’s writings after 1829, and when he did he interested himself merely in those that dealt with free love and the theory of passions. As Bourgin put it: “If Fourier did anything at all, he has rather hastened the decomposition of Saint-Simonism.” (Henry Bourgin, Fourier, p. 419; Paris, 1905.) The English socialists are never as much as mentioned. The Ricardian doctrine of labour-value, which is the basis of Thompson’s theory and of Owen’s, and later still of that of Marx, seems never to have become known to them. “Questions of value, price, and production, which demand no fundamental knowledge either of the composition or the organisation of society,” are treated as so many details (Le Producteur, vol. iv, p. 388). Their doctrine is primarily social, containing only occasional allusions to political economy. Enfantin is careful to distinguish between Quesnay and his school and Smith or Say. The Physiocrats gave a social character to their doctrine, which the economists wrongfully neglected to develop. Aug. Comte, in the fourth volume of the Cours de Philosophie, has criticised political economy in almost identical terms, which affords an additional proof of his indebtedness to Saint-Simonism. 1. All who till the land, as well as any who direct their operations. 2. All artisans, manufacturers, and merchants, all carriers by land or by sea, as well as everyone whose labour serves directly or indirectly for the production or the utilisation of commodities; all savants who have consecrated their talents to the study of the positive sciences, all artists and liberal advocates; “the small number of priests who preach a healthy morality; and, finally, all citizens who willingly employ either their talents or their means in freeing producers from the unjust supremacy exercised over them by idle consumers.” “In the anti-national party figure the nobles who labour for the restoration of the old rÉgime, all priests who make morality consist of blind obedience to the decrees of Pope or clergy, owners of real estates, noblemen who do nothing, judges who exercise arbitrary jurisdiction, as well as soldiers who support them—in a word, everyone who is opposed to the establishment of the system that is most favourable to economy or liberty.” (Le Parti national, in Le Politique, Œuvres, vol. iii, pp. 202-204.) Later on the Saint-Simonians abandoned this idea and demanded Governmental control of all social relations. “Far from admitting that the directive control of Government in social matters ought to be restricted, we believe that it ought to be extended until it includes every kind of social activity. Moreover, we believe that it should always be exercised, for society to us seems a veritable hierarchy.” (Doctrine de Saint-Simon, Exposition, DeuxiÈme AnnÉe, p. 108; Paris, 1830.) As to the question of private property, Saint-Simon certainly regarded its transformation as at least possible. This is seen in a number of passages. “Property should be reconstituted and established upon a foundation that might prove more favourable for production,” says he in L’Organisateur. (Ibid., vol. iv, p. 59.) Elsewhere, in a letter written to the editor of the Journal gÉnÉral de la France, he mentions the fact that he is occupied with the development of the following ideas: (1) That the law establishing the right of private property is the most important of all, seeing that it is the basis of our social edifice; (2) the institution of private property ought to be constituted in such a fashion that the possessors may be stimulated to make the best possible use of it. (Ibid., vol. iii, pp. 43-44.) In his Lettres À un AmÉricain he gives the following rÉsumÉ of the principles which underlie the work of J. B. Say (an incidental proof of his attachment to the Liberal economists): “The production of useful objects is the only positive, reasonable aim which political societies can propose for themselves, and consequently the principle of respect for production and producers is a much more fruitful one than the other principle of respect for property and proprietors.” (Œuvres, vol. ii, pp. 186-187.) But all that this seems to us to imply is that the utility of property constitutes its legality and that it should be organised with a view to social utility. Admitting that he did conceive of the necessity of a reform of property, it does not appear that he intended this to mean anything beyond a reform of landed property. We have already seen how he regarded capital as a kind of social outlay which demanded remuneration. The following passage bears eloquent testimony to his respect for movable property: “Wealth, generally speaking, affords a proof of the manufacturers’ ability even where that wealth is derived from inherited fortune, whereas in the other classes of society it is apparently true to say that the richer are inferior in capacity to those who have received less education but have a smaller fortune. This is a truth that must play an important part in positive politics.” (Syst. indust., Œuvres, vol. v, p. 49, note.) (1) Sismondi thinks that the worker is exploited whenever he is not paid a wage sufficient to enable him to lead a decent existence. Unearned income seems quite legitimate, however. (2) Exploitation exists, in the opinion of the Saint-Simonians, whenever a part of the material produce raised by labour is devoted to the remuneration of proprietors through the operation of ordinary social factors. (3) Marx speaks of exploitation whenever a portion of the produce of labour is devoted to the remuneration of capital either through the existence of social institutions or the operation of the laws of exchange. Owen lived an extremely active life, and died in 1857 at the advanced age of eighty-seven. Of Welsh artisan descent, he began life as an apprentice in a cotton factory, setting up as a master spinner on his own account with a capital of £100, which he had borrowed from his father. His rise was very rapid, and at the age of thirty he found himself co-proprietor and director of the New Lanark Mills. It was then that he first made a name for himself by his technical improvements and his model dwellings for his workmen. It was at this period that his ideas on education also took shape. By and by it became the fashion to make a pilgrimage to view the factory at New Lanark, and among the visitors were several very distinguished people. His correspondents also included more than one royal personage. Among these we may specially mention the King of Prussia, who sought his advice on the question of education, and the King of Holland, who consulted him on the question of charity. The crisis of 1815 revealed to Owen the serious defects in the economic order, and this marks the beginning of the second period of his life, when he dabbled in communal experiments. In 1825 he founded the colony of New Harmony in Indiana, and the same year witnessed the establishment of another colony at Orbiston, in Scotland. But these lasted only for a few years. In 1832 we have the National Equitable Labour Exchange, which was not much more successful. Owen, sixty-three years of age, and thoroughly disappointed with his experiments, but as convinced as ever of the truth of his doctrines, entered now upon the third period of his life, which, as it happened, was to be a fairly long one. This period was to be devoted wholly to propagating the gospel of the New Moral World—The New Moral World being the title of his chief work and of the newspaper which he first published towards the end of 1834. He took an active part in the Trade Union movement, but does not seem to have been much interested in the co-operative experiments which were started by the Rochdale Pioneers in 1844, although curiously enough this is his chief claim to fame. Owen was in no sense a littÉrateur, being essentially a man of affairs, and we are not surprised to find that the number of books which he has left behind him is small. But he was an indefatigable lecturer, and wrote a good deal for the press. We must confess, however, that it is not easy, as we read his addresses and articles to-day, to account for the wonderful contemporary success which they had. There is an excellent French work by DollÉans dealing with his life and doctrines (1907). The best English life, that of Podmore, is unfortunately out of print. Whenever profit forms a part of cost of production it is impossible to distinguish it from interest. In that case it is true that even perfect competition would not do away with profit, since it will only reduce the price to the level of cost of production. In that case profit cannot be said to be either unjust or parasitic, for the product is sold exactly for what it cost. When profit does not enter into cost of production there is no possibility of confusing it with interest. It is simply the difference between the sale price and the cost of replacing the article. In this it is certainly parasitic, and would disappear under a rÉgime of perfect competition, which must to some extent destroy the monopoly upon which such profit rests. But the distinction between profit and interest was not known in Owen’s time, and Owen would have said that they are both one, and that if profit occasionally claims a share in the cost of production with a view to defying competition it has no right to any such refuge, for cost of production should consist of nothing but the value of labour and the wear and tear of capital. Accordingly it ought to be got rid of altogether. “The secret of profit is to buy cheap and to sell dear in the name of an artificial conception of wealth which neither expands as wealth grows nor contracts as it diminishes.” (a) The associates, being themselves allowed to state the value of their products, naturally exaggerated, and it became necessary to relieve them of a task which depended entirely upon their honour, and to place the valuation in the hands of experts. But these experts, who were not at all versed in Owen’s philosophy, valued the goods in money in the ordinary way, and then expressed those values in labour notes at the rate of 6d. for every hour’s work. It could hardly have been done on any other plan. But it was none the less true that Owen’s system was in this way inverted, for instead of the labour standard determining the selling value of the product, the money value of the product determined the value of the labour. (b) As soon as the society began to attract members who were not quite as conscientious as those who first joined it, the Exchange was flooded with goods that were really unsaleable. But for the notes received in exchange for these the authorities would be forced to give goods which possessed a real value, that is, goods which had been honestly marked, and which commanded a good price, with the result that in the long run there would be nothing left in the depot except worthless products. In short, the Exchange would be reduced to buying goods which cost more than they were worth, and selling goods that really cost less than they were worth. Since the notes were not in any way registered, any one, whether a member of the society or not, could buy and sell them in the ordinary way and make a handsome profit out of the transaction. Three hundred London tradesmen did this by offering to take labour notes in payment for merchandise. They soon emptied the Exchange, and when they saw that nothing valuable was left they stopped taking the notes, and the trick was done. M. Denis very aptly points out that the Exchange was really of not much use to the wage-earner, who was not even allowed to own what he had produced. There is some doubt after all as to whether the system would prove quite successful in abolishing the wage-earners. On the one hand we have co-operative associations of producers who are not particularly anxious that their products should be distributed among themselves; they simply produce the goods with a view to selling them and making a profit out of the transaction. On the other hand, the distributing societies simply aim at giving their members certain advantages, such as cheaper goods, but they make no attempt to produce the goods which they need. In countries where co-operative societies are properly organised, as they are in England, for example, many of these societies have undertaken to produce at least a part of what they consume, and some of them have even acquired small estates for the purpose; but only a small proportion of the employees are members of the societies, with the result that their position is not very different from that of other working men. One understands the difficulty of grouping people in this way. But if the associations are to live it is absolutely necessary that they should produce what they require under conditions that are more favourable than those of ordinary producers; in a word, that they should be able to create a kind of new economic environment. Even in the colonies one does not find many instances of vigorous associations of this kind. Without stopping to examine some of the more solid reasons—which unfortunately are buried beneath a great deal of rubbish—why fruit-growing should take the place of agriculture, we must just recall the curious fact that he was always emphasising the superiority of sugar and preserves over bread, and pointed to the “divine instinct” by which children are enabled to discover this. The suggestion was ridiculed at the time, but is to-day confirmed by some of the most eminent doctors and teachers of hygiene. Similar attempts have been made in France at a still more recent period. The one at CondÉ-sur-Vesgres, near Rambouillet, where a few faithful disciples of Fourier have come together, is still flourishing. No one, we believe, has as yet remarked that List borrowed this enumeration of the different economic states, almost word for word, from Adam Smith. In chap. 5 of Book II, speaking of the various employments of capital, Smith clearly distinguished between three stages of evolution—the agricultural state, the agricultural-manufacturing, and the agricultural-manufacturing-commercial. Smith considered that this last stage was the most desirable, but in his opinion its realisation must depend upon the natural course of things. It is certain that List, during his first stay in France, had read these two authors, and had there found a confirmation of his own Protectionist ideas. It is not less certain, from a letter written by him in April 1825 (quoted by Miss Hirst, p. 33), that he was converted before going to America, but that he expected to find some new arguments there which would strengthen him in his opposition to Smith. Marx’s assertion made in his Theorien Über den Mehrwerth, vol. i, p. 339 (published by Kautsky, Stuttgart, 1905), that List’s principal source of inspiration was Ferrier (Du Gouvernement considÉrÉ dans ses Rapports avec le Commerce, Paris, 1805) has not the slightest foundation. Neither has the attempt to credit Adam MÜller with being the real author of the conception of a national system of political economy. List, we know, was acquainted with MÜller, a Catholic writer who wished for the restoration of the feudal system. But to be a German writer in the Germany of the nineteenth century was quite enough to imbue one with the idea of nationality. Moreover, Protectionists’ arguments are extremely limited in number, so that they do not differ very much from one epoch to another, and it is a comparatively easy task to find some precursors of Friedrich List. Bonnard’s Bank differs from the others in this way. The client of the bank, instead of bringing it some commodity or other which may or may not be sold by the bank, gets from the bank some commodity which he himself requires, promising to supply the bank with a commodity of his own production whenever the bank requires it. The bank charges a commission on every transaction. Its one aim is to bring buyer and seller together, and the notes are simply bills, payable according to the conditions written on them. But they cannot be regarded as substitutes for bank bills. Cf. Banque d’Échange de Marseille, C. Bonnard et Cie., fondÉe par Acte du 10 Janvier, 1849 (Marseilles, 1849). “As a matter of fact,” says Dunoyer elsewhere, “this competition which seems such an element of discord is really the one solid bond which links together all the various sections of the social body.” These dates possess some importance. At the time of the publication of the Harmonies in 1850 Carey wrote a letter to the Journal des Économistes accusing Bastiat of plagiarism. Bastiat, who was already on the point of death, wrote to the same paper to defend himself. He admitted that he had read Carey’s first book, and excuses himself for not making any reference to it on the ground that Carey had said so many uncomplimentary things about the French that he hesitated to recommend his work. Several foreign economists have since made the assertion that Bastiat merely copied Carey, but this is a gross exaggeration. Coincidence is a common feature in literary and scientific history. We have quite a recent instance in the simultaneous appearance of the utility theory in England and France. Brief as was Bastiat’s life, his literary career was shorter still. It lasted just six years. His first article appeared in the Journal des Économistes in 1844. His one book, appropriately called Les Harmonies Économiques, written in 1849, remains a fragment. In the meantime he published his Petits Pamphlets and his Sophismes, which were aimed at Protection and socialism. He was very anxious to organise a French Free Trade League on the lines of that which won such triumphs in England under the guidance of Cobden, but he did not succeed. His life was that of the publicist rather than the scholar. He was not a bookworm, although he had read Say before he was nineteen, and Franklin’s Poor Richard’s Almanac soon afterwards. He was very enthusiastic about the merits of Franklin’s works, and Franklin’s influence upon his writings, even upon his personal appearance and behaviour, is very marked. “With his long hair, his small cap, his long frock-coat, and his large umbrella, he seemed for all the world like a rustic on a visit to town.” (Molinari in the Journal des Économistes, February 1851.) These biographical details should not be lost sight of, especially by those who accuse him of lacking scientific culture and of being more of a journalist than an economist. Despite the fact that he has been severely judged by foreign economists, he is still very popular in France. His wit is a little coarse, his irony somewhat blunt, and his discourses are perhaps too superficial, but his moderation, his good sense, and his lucidity leave an indelible impression on the mind. And we are by no means certain that the Harmonies and the Pamphlets are not still the best books that a young student of political economy can possibly read. Moreover, we shall find by and by that the purely scientific part of his work is by no means negligible. “Looking at this harmony, the economist can join with the astronomer and the physiologist and say: Digitus Dei est hic.” (Ibid., chap. 10, p. 39.) “If everyone would only look after his own affairs, God would look after everybody’s.” (Ibid., chap. 8, p. 290.) “Socialists and economists, champions of equality and fraternity, I challenge you, however numerous you may be, to raise even a shadow of objection to the legitimacy of mutual service voluntarily rendered, and consequently against the institution of private property as I have defined it. With regard to both these considerations, men can only possess values, and values merely represent equal services freely secured and freely given.” (Ibid., chap. 8, pp. 265, 268.) Had the limits of this work permitted us to speak of the Italian economists we should have had to refer to Ferrara, professor at Turin from 1849 to 1858, whose theory of value and economic harmony link him to his contemporaries Carey and Bastiat. The whole economic edifice, according to Ferrara, was built upon cost of production. The value of a commodity is not measured by the amount of labour which it really has cost to produce, but by the amount of labour that would be required to produce another similar commodity, or, if the commodity in question be absolutely limited in quantity, such as is the case with an old work of art, by the labour necessary to produce a new one that would satisfy the same need equally well—an application of the principle of substitution which had not been formulated when Ferrara wrote. The progress of industry gradually reduces the cost of labour and dispenses with human effort; hence harmony. Everything, including the earth and its products, even capital, are subject to this same law, and a gradual diminution of rent and a lowering of the rate of interest are thus assured. Ferrara’s principal writings consist of prefaces to Italian translations of the works of the chief economists. They were published in a collection known as Biblioteca dell’ Economista (Turin, 1850-70, 26 vols.). But if the world is full of people who are paid for services which they have never given or for merely imaginary and improper work, what is the use of speaking of value and property as if they were founded upon service rendered? See Gide’s article on La Notion de la Valeur dans Bastiat, in the Revue d’Économie politique, 1887. “Coal is free for everyone. There is neither paradox nor exaggeration in that. It is as free as the water of the brook, if we only take the trouble to get it, or pay others for getting it for us.” (Ibid., chap. 10.) Bastiat would not regard the shareholders’ dividends as payments for the trouble which the shareholders have taken in getting the coal. The dividends simply pay for the trouble taken to save the money which made the exploitation possible. Say spoke of free natural agents. What he meant to refer to was such natural commodities as air and water, which are at the disposal of everyone. (1) That Ricardian or differential rent would not exist were all the land equally fertile and suitably cultivated. (2) That it is incorrect to speak of the rent of natural fertility, as Adam Smith and the Physiocrats did, if all utility (and not merely value) is the product of human labour. A fish, a grape, a grain of wheat, a fat ox, all of them have been created by human industry. Nature is for ever incapable of doing this. This is quite true if we say nature alone, but it is equally true of labour taken by itself. “As man’s power over nature grows, his power over his fellow-men seems to dwindle and equality becomes possible.” (Ibid., vol. iii, p. 122.) Compare, for example, the relative equality of comfort enjoyed by those who travel by rail irrespective of class distinctions (which are only to be found in some countries) with the former method of travelling by post-chaise. Bastiat’s thesis may also be seen in Carey. The Liberal school has clearly adopted it. See Paul Leroy-Beaulieu’s RÉpartition der Richesses. “There is not a man living whose character has not been determined by a thousand factors entirely beyond his control.” (Ibid., p. 623.) “All profit by the progress of the one, and the one by the progress of the many.” (Ibid., chap. 11, p. 411.) “A peasant marries late in the hope of having a small family, and we force him to rear other people’s children. He has to contribute towards the rearing of bastards.” (Ibid., chap. 20, pp. 617, 618.) Speaking of sharing in the benefits, he remarks: “That is really not worth talking about.” (Ibid., chap. 14, p. 457.) “Life has been defined as an exchange of mutual obligations, but if there were no difference between the various objects how could the exchange take place?” (Ibid., vol. i, pp. 54-55.) “The more perfectly co-ordinated the whole is, the better developed will be each of its parts.” (Ibid., vol. iii, p. 462.)
See Senior’s Theory of Monopoly, by Richard Ely (American Economic Association, 1899). (a) The Individualist school, according to the worst interpretation put upon it, thinks that egoism is the only possible system of ethics and that each for himself is the sole principle of action. But, naturally enough, everyone is anxious to avoid the taunt of selfishness, and the existence of such economic ties as exchange and division of labour make egoism impossible as an ethical system. According to the broadest interpretation of the term, individualism implies the recognition of individual welfare as the sole aim of every activity, whether individual or social, economic or political. But this does not take us very far, for every socialist and individualist would accept this interpretation. We seldom speak of the welfare of society per se as an entity possessed of conscious feeling. This definition is much too wide. It includes solidarity and association, State intervention and labour legislation, provided the aim be to protect the individual against certain dangers. Self-sacrifice is not excluded, for what can strengthen individualism like self-sacrifice? This is the interpretation which Schatz puts upon it in his L’Individualisme Économique et social. But the term “individualist” is too indefinite and we must avoid it whenever we can. (b) The so-called Liberal school uses the term in a much more definite fashion. The individual is to be not merely the sole end of economic action, but he is also to be the sole agent of the economic movement, because no one else can understand his true interests or realise them in a better way. Interpreted in this fashion, it means letting the individual alone and removing every external intervention, whether by the State or the master. According to the one definition, individualism is a creed which everyone can adopt; according to the other it is open to very serious objections. Experience shows that the individual, whether as consumer buying injurious, costly, or useless commodities, or as worker working for wages that ruin his health and lower his children’s vitality, is a poor judge of his own interest, and is helpless to defend himself, even where science and hygiene are on his side. (c) If we push this interpretation a stage farther and admit not only that each individual is best qualified to speak for himself, but also that the social interest is simply the sum of the individual interests, all of which converge in a harmonious whole, then the Liberal school becomes the Optimistic. In France it has the tradition of a generation behind it, and an attempt has been made to revive it in certain recent works; still it may now be regarded as somewhat antiquated. (d) When we speak of the Classical school we mean those who have remained faithful to the principles enunciated by the earlier masters of economic science. An effort has been made to improve, to develop, and even to correct the older theories, but no attempt has been made to change their essential aspects. Individualistic and liberal by tradition, this school has never been optimistic. It lays no claim to finality of doctrine or to the universality of its aim, but simply confines itself to pure science. He complains that the Christian religion inculcates the belief that God in His wisdom and care blesses a numerous family. On the other hand he thought that a law which limited the number of public-houses involved a violation of liberty because it meant treating the workers as children. (Ibid., chap. 5.) Cournot in his criticisms of the law of demand and supply had anticipated Mill. But it is very probable that Mill was not acquainted with the Recherches. The unions might limit the number of available men. He feared that this would result in high wages for the small number of organised labourers and in low wages for the others. They might check the birth-rate, their members becoming accustomed to such a degree of comfort and well-being as would raise their standard of life. He was always a strict Malthusian. “The extra gains which any producer or dealer obtains through superior talents for business or superior business arrangements are very much of a similar kind. If all his competitors had the same advantages, and used them, the benefit would be transferred to their customers through the diminished value of the article: he only retains it for himself because he is able to bring his commodity to market at a lower cost while its value is determined by a higher.” (Ibid., Book III, chap. 5, § 4.) Senior had already emphasised one important difference between agricultural and industrial production, namely that whilst the law of diminishing returns operates in the former case, the law of increasing returns is operative in the second. In other words, the cost of production diminishes as the quantity produced increases. The result is, as Mill points out elsewhere, that the industrial employer is anxious to reduce the sale price in order to produce more and to recoup himself for a reduction in price by a reduced cost of production. “Two men can both make shoes and hats, and one is superior to the other in both employments; but in making hats, he can only exceed his competitor by one-fifth, or 20 per cent., and in making shoes he can excel him by one-third, or 33 per cent. Will it not be for the interest of both, that the superior man should employ himself exclusively in making shoes, and the inferior man in making hats.” (Ricardo, Works, p. 77, note.) And so England might find it advantageous to exchange her coal for French cloths, although she may be able to produce those cloths cheaper herself. “In this or some such mode, the existing accumulations of capital might honestly and by a kind of spontaneous process become in the end the joint property of all who participate in their productive employment—a transformation which, thus effected, would be the nearest approach to social justice and the most beneficial ordering of industrial affairs for the universal good which it is possible at present to foresee.” (Ibid., Book IV, chap. 7, § 6.) “The opinion expressed in a former part of this treatise respecting small landed properties and peasant proprietors may have made the reader anticipate that a wide diffusion of property in land is the resource on which I rely for exempting at least the agricultural labourers from exclusive dependence on labour for hire. Such, however, is not my opinion. I indeed deem that form of agricultural economy to be most groundlessly cried down, and to be greatly preferable in its aggregate effects on human happiness to hired labour in any form in which it exists at present. But the aim of improvement should be not solely to place human beings in a condition in which they will be able to do without one another, but to enable them to work with or for one another in relations not involving dependence.” (Principles, Book IV, chap. 7, § 4.) Mill was not the only one who looked to peasant proprietorship partly to solve the social problem. Not to mention Sismondi, who was very much taken up with the idea, we have Thornton in England in his Plea for Peasant Proprietors (1848) and Hippolyte Passy in France in his excellent little volume Des SystÈmes de Culture (1852) strongly advocating it. The Classical economists for the most part took the opposite point of view, especially Lavergne in his Essai sur l’Économie rurale de l’Angleterre. It is hardly necessary to say that this limitation of the right of inheritance is a purely personal opinion of Mill, and that it is rejected along with his other solutions by most individualists. It is not quite correct to say then, as Schatz has said in his Individualism, that Stuart Mill is “the very incarnation of the individualistic spirit.” He was really a somewhat sceptical disciple of the school, and his frequent change of opinion was very embarrassing! Mill indicates the causes that contribute to a fall in the rate of profits as well as the causes that arrest that fall, such as the progress of production and the destruction of wealth by wars and crises. It may be worth while pointing out that the word profit as employed by the English economists, and especially by Mill, has not the same meaning as it has with the French writers. French economists since the time of Say have employed the term profit to denote the earnings of the entrepreneur, the capitalist’s income being designated interest. The English economists do not distinguish between the work of the entrepreneur and that of the capitalist, and the term profit covers them both. The result is that the French Hedonistic economists can say that under a rÉgime of absolutely free competition profit would fall to zero, while the English economists cannot accept their thesis because profits include interest, which will always remain as the reward of waiting. The French point of view is more generally adopted to-day. What we say about the mathematical method does not imply any criticism of the Mathematical method in political economy. To establish mathematical relations between economic phenomena, as Walras and his school did, and to deduce economic conclusions from general mathematical theories are two different things. It is quite clear that this complicated question must be carefully defined. Three different factors must be distinguished: (1) The individual’s wage; (2) labour’s share in the product; (3) the income of the working class. On this problem see Edwin Cannan’s article in the Quarterly Journal of Economics, 1905, and his statements in his Theory of Production and Distribution, 1776-1848. Although Marx was one of the founders and directors of the famous association known as the “International,” which was the terror of every European Government between 1863 and 1872, he was not a mere revolutionary like his rival Bakunin, nor was he a famous tribune of the people like Lassalle. He was essentially a student, an affectionate father, like Proudhon, an indefatigable traveller, and a man of great intellectual culture. The best known of his works, which is frequently quoted but seldom read, is Das Kapital, of which the first volume—the only one published during his lifetime—appeared in 1867. The other two volumes were issued after his death, in 1885 and 1894, through the efforts of his collaborator Engels. This book has exercised a great influence upon nineteenth-century thought, and probably no work, with the exception of the Bible and the Pandects, has given rise to such a host of commentators and apologists. Marx’s other writings, though much less frequently quoted, are also exceedingly important, especially La MisÈre de la Philosophie, published in 1847 in answer to Proudhon’s Les Contradictions Économiques; Zur Kritik der politischen Oekonomie (1859); and particularly the Communist Manifesto, published in January 1848. The Manifesto is merely a pamphlet, and at first it attracted scarcely any attention, but Labriola goes so far as to say—not without some exaggeration, perhaps—that “the date of its publication marks the beginning of a new era” (Essai sur la Conception matÉrialiste de l’Histoire, p. 81). At any rate, it is the breviary of modern socialism. There is scarcely a single one of its phrases, each of which stings like a dart, that has not been invoked a thousand times. The Programme of the Communist Manifesto is included in Ensor’s Modern Socialism. It is a much-debated question as to whether Karl Marx was influenced by French socialists, and if so to what extent. On the question of his indebtedness to Pecqueur and Proudhon see Bourguin’s article in La Revue d’Économie politique, 1892, on Des Rapports entre Proudhon et K. Marx. Proudhon’s work, at any rate, was known to him, for one of his books was a refutation of the doctrines of the petit bourgeois, as he called him. Certain analogies between the works of these two writers to which we shall have to call attention will help us to appreciate the extent to which Marx is indebted to Proudhon. But, as Anton Menger has pointed out, we must seek Marx’s antecedents among English socialists, in the works of writers like Thompson especially. Nor must we forget his friend and collaborator Friedrich Engels, who for the sake of his master has been content to remain in the background. Engels collaborated in the publication of the famous Manifesto in 1848, and it was he who piously collected and edited Karl Marx’s posthumous work. It is difficult to know exactly what part he played in the development of Marx’s ideas, but it is highly probable that it was considerable. “If we make abstraction from its use-value we make abstraction at the same time from the material elements and shapes that make the product a use-value.… Its existence as a material thing is put out of sight. Neither can it any longer be regarded as the product of the labour of the joiner, the mason, the spinner, or of any other definite kind of productive labour … there is nothing left but what is common to them all; all are reduced to one and the same sort of labour—human labour in the abstract.” (Ibid., p. 5.) The demonstration is based upon a postulate which ought first to have been proved, namely, that the quantity of labour necessary to keep the worker alive is always less than the quantity which he provides for his master. But what is there to prove that a man who works ten hours a day does not require all those ten hours to produce sufficient for his upkeep? Is there some natural law that supports this contention? Marx simply regards it as an axiom and attempts no proof. Everyone would admit it to be true in a general way—as a kind of empirical law. For were it true that man’s labour was wholly absorbed by the necessaries of life there would be no increase of numbers, no saving of capital, and civilisation, which is the product of leisure, would never have been possible. What we have here is the Physiocratic “net product” once again, with this difference, that instead of being confined to agricultural labour it is now regarded as an attribute of labour of every kind. By parity of reasoning ought it not to reduce the price of goods produced by the wage-earner and so lower the surplus value? We must be careful, however, not to confuse a reduction in the price of each unit with a reduction in the total value of the articles produced by machinery. A yard of cloth produced by a modern loom has not the same value as a yard produced by an old hand-loom. But the value of the total quantity produced each day must be equal to the value produced by hand, provided the same number of hours have been spent upon its production. Although Marx never says that the worker is actually robbed by the capitalist, but simply that the capitalist profits by circumstances which he is powerless to change, that has not prevented him treating the capitalist somewhat harshly and unjustly even, judging from his own point of view. He speaks of the capitalist as “a vampire which thrives upon the blood of others and becomes stouter and broader the more blood it gets.” He might have added that no blame could be attached to the vampire, seeing that it only obeyed the tendencies of its nature. It is true that Marx had drawn attention to the contradiction in the first volume, but no explanation was forthcoming until the later volumes appeared. Having stated that the greater quantity of surplus value is the direct result of the greater proportion of circulating capital employed, he proceeds: “This law clearly contradicts all experience based on appearance. Everyone knows that a cotton-spinner who, reckoning the percentage on the whole of his applied capital, employs much constant and little variable capital, does not, on account of this, pocket less profit or surplus value than a baker who relatively sets in motion much variable and little constant capital. For the solution of this apparent contradiction many intermediate terms are as yet wanted, as from the standpoint of elementary algebra many intermediate terms are wanted to demonstrate that 0/0 may represent an actual magnitude.… Vulgar economy, which, indeed, has really learnt nothing, here, as everywhere, sticks to appearance in opposition to the law which regulates and explains them.” (Kapital, p. 274.) It is probable that Marx was not very well satisfied with his explanation, which may account for his reluctance to publish it during his lifetime. We must call attention once more to the different interpretations which have been given of the term “profit.” Marx and the English economists take the word to comprise the whole revenue of capital under a rÉgime of free competition, no distinction being drawn between profit properly so called and interest. To-day we understand by profit the income drawn by the entrepreneur—as distinct from the capitalist—as the result of certain favourable circumstances, notably imperfect competition. It would be absurd to speak of a law of equality of profit, seeing that profit, as we have defined it, is, like rent, a differential revenue. However great he may have been, we cannot help thinking that, in common with most scientists, he discovered just what he was looking for, and it would be difficult to prove that Marx was not a socialist long before he began the writing of Kapital, even long before he had constructed a system at all. Our object in stating the conclusion first of all is to help the reader to an understanding of the argument, but it is quite open to anyone who thinks differently to say that Marx had not the least idea where the analysis would lead him. James Guillaume, in the preface to the second volume of Bakunin’s works, p. xxxvi, gives the following account of the origin of the word “collectivism”: “At the fourth General Congress of the International, held at BÂle in 1869, almost every delegate voted in favour of collective property. But there were two distinct opinions cherished by the delegates present. The German-Swiss, the English, and the German delegates were really State communists. The Spanish, Belgian, French-Swiss, and most of the French delegates were federal or anarchist communists who took the name of collectivists. Bakunin belonged to the second group, and to this group also belonged the Belgian Paepe and the French Varlin.” Bakunin always spoke of himself as a collectivist and not a communist, and in this respect he differs from Marx. The habit of thinking that all anarchists are communists is largely due to Kropotkin. Nowadays, however, it is more usual to characterise the aim of collectivism as an attempt to abolish the wage-earning class—abolition of property being simply a step towards that. This is how Labriola writes in his Essai sur la Conception matÉrialiste (2nd ed., p. 62): “The proletariat must learn to concentrate upon one thing, namely, the abolition of the wage-earner.” It is well to remember that such is also the aim of the Associationists, the co-operators, and the Radical Socialists. They proceed, however, from the opposite point of view, and would multiply property rather than abolish it, thinking that the latter process would merely universalise the wage-earner. The bulk of his adherents is drawn either from Germany or Russia, England being the country which has done least to swell the ranks of his followers. In France the pure doctrine has been vigorously preached since 1878 by MM. Jules Guesde and Lafargue—the latter of whom is Marx’s son-in-law. But a great many French socialists, though collectivists in name, refuse their adhesion to the Marxian doctrine in all its rigidity. They have accepted three of his main principles—the socialisation of the means of production, class war, and internationalism—but reject his theory of value and his materialistic conception of history. Moreover, they show no desire to break with the French socialist tradition, which was pre-eminently idealistic. BenoÎt Malon, the founder of the Revue socialiste (1885), was one of the earliest representatives of French collectivism, and among his successors may be reckoned M. George Renard and FourniÈre. Besides, the Marxians themselves have tried to prove that capital is actively undermining its own existence, which is surely the ne plus ultra of the revolutionary temperament. “In the course of their efforts at production men enter into certain definite and necessary relations which may be wholly independent of their own individual preferences—such industrial ties being, of course, correlative to the state of their productive forces. Taken together, all these links constitute the economic structure of society. In other words, it supplies a basis upon which the legal and political superstructure is raised, and corresponding to it are certain social forms which depend upon the public conscience. The method of producing commodities, speaking generally, fixes the social, political, and intellectual processus of life. A man’s conscience has less to do with determining his manner of life than has his manner of life with determining the state of his conscience.” The word “fixes,” even when qualified by “speaking generally,” seems a little pronounced, and Marxism has substituted the term “explained,” which is somewhat nearer the mark. Labriola says that “it merely represents an attempt to explain historical facts in the light of the economic substructure.” (Conception matÉrialiste, p. 120.) This materialistic conception is developed in a very paradoxical fashion in Loria’s La Constitution sociale. He shows how all history and every war, whether of Guelph or of Ghibelline, the Reformation and the French Revolution, and even the death of Christ upon Calvary, rest upon an economic basis. In Loria’s opinion, however, this basal fact is not industrialism, but the various types of land systems. See the chapter on Rent. It would not be correct to regard Marxism as a mere expression of fatalism or out-and-out determinism. The Marxian pretends to be, and as a matter of fact he really is, a great believer in will-power. Once the workers see where their interests really lie he would have them move towards that goal with irresistible strength. It is not always even necessary to define the end quite clearly before beginning to move. “Everything that has happened in history has, of course, been the work of man, but only very rarely has it been the result of deliberate choice and well-considered planning on his part.” (Labriola, Conception matÉrialiste, p. 133.) Elsewhere: “The successive creation of different social environments means the development of man himself.” (Ibid., pp. 131-132.) It would be beyond the scope of this work to enter into a metaphysical discussion of these theories, however much one would like to. M. Landry, in a book of lectures delivered by different authors entitled Études sur la Philosophie morale au XIXe SiÈcle (p. 164), is of an entirely different opinion. He thinks that Marx’s moral basis is simply potentiality. In other words, everything that has been created in the ordinary course of economic development is moral, everything that has been destroyed is immoral. Bernstein adds: “This admission makes it impossible to treat the themes of Gossen, of Jevons, and of BÖhm-Bawerk as so many insignificant irrelevancies.” (Die Voraussetzungen des Sozialismus.) “In the general ruin of institutions something new and powerful will remain intact. This will be what is generally known as the proletarian soul, which it is hoped will survive the general reassessment of moral values, but that will depend on the energy displayed by the workers in resisting the corruption of the bourgeoisie and in meeting their advances with the most unmistakable hostility.” (Ibid., p. 253.) It is altogether a different point of view from that of the consumer, the shareholder, or the “literary idler,” who are only interested in the success of buyers’ social leagues, or in consumers’ societies. Cf. p. 342. One cannot fail to see the antagonism which exists in France between the Socialistes UnifiÉs (which is largely recruited from the old Marxian party) and the syndicalists, who condemn both universal suffrage and parliamentary action. The recent literature of syndicalism is very extensive. We have already mentioned M. Guy Grand’s La Philosophie Syndicaliste. “There is no need to think of the Church as a kind of gendarme in cassock flinging itself against the people in the interest of capital. Rather it should be understood that it is working in the interests and solely for the defence of the weak.” (Comte de Mun, Discours, April 1893.) Kidd in his Social Evolution, a work which attracted great attention when it was first published in 1894, attempts to apply the Darwinian theory to Christianity. He accepts the Darwinian hypothesis that the struggle for existence and natural selection constitute the mainsprings of progress. But the struggle may demand, or the selection involve, the sacrifice of individual to collective interest, and the only force which can inspire such sacrifice is religion. In 1856 Le Play founded La SociÉtÉ d’Économie sociale, which since 1881 has been responsible for the publication of La RÉforme sociale. He organised the Universal Exhibition in 1867, and was one of the first to arrange exhibitions of social work. For a rÉsumÉ of his life and work see FrÉdÉric Le Play d’aprÈs lui-mÊme, by Auburtin (Paris, 1906). The method requires supplementing by reference to statistics of population and wages, which can only be supplied, of course, by Governments.
we cannot help thinking that the so-called method of observation has a very pronounced trait of dogmatism in its constitution. “The problem is to outline a state of society where working men will work only for themselves and not for others; where none will reap but has already sown, and where each will enjoy the fruits of his own labour.” (Ibid.) Hitze, however, shows none of his master’s hesitation, but emphatically declares that “the solution of the social question is essentially and exclusively bound up with a reorganisation of trades and professions. We must have the mediÆval rÉgime of corporations re-established—a rÉgime which offers a better solution of the social problem than any which existed either before or after. Of course times have changed, and certain features of the mediÆval rÉgime would need modification. But some such corporative rÉgime conceived in a more democratic spirit must form the economic basis.” (Capital and Labour.) Co-operative association is dismissed altogether. The Social Catholics have especially little sympathy with the small retail co-operative stores, because they threaten the existence of the small merchant and the small artisan—types of individuals that are dear to the heart of the Catholics. On the other hand, it shows itself very favourably inclined towards co-operative credit, because of the possibility of assisting the classes already referred to—the shopkeeper and the small merchant. To this it might be replied that the majority generally makes the law for the commune, but that in the case of a free corporation it is often the minority that rules. To which it might be retorted that the so-called majority is often not better than a minority of the electors, and a very small minority indeed of the whole inhabitants—who of course include women, who generally have no votes. Moreover, as soon as the rules of the syndicat became really obligatory the majority if not the whole of the workers in the trade would be found within the union. The annual study reunions which go by the name of les Semaines sociales, and which afford one of the best manifestations of the kind of activities which Social Christianity gives rise to everywhere, are not so exclusive. Economic questions of all kinds are discussed, but the programme is not strictly Catholic at all, and the basis is wide enough to include everyone who is a professed Christian. “Marc Sangnier. The social transformation which we desire to see, comrades, will aim, not at absorbing the individual, but rather at developing him. We want the factories, the mines, and the industries in the possession, not of the State, but of groups of workers. “An Interrupter. That is socialism. “Marc Sangnier. You can call it socialism if you like. It makes no difference to me. But it is not the socialism of the socialists, of the centralising socialists. We don’t want to set the proletarians free from the control of the masters to put them under the immediate control of one great master, the State; we want the proletarians themselves, acting collectively, to become their own masters.” It is only just to note that Channing, the American pastor, who died in 1842, was one of the pioneers. His writings on social questions are still read. Those who wish for more information either on the history or on the other aspects of Social Christianity should consult the New EncyclopÆdia of Social Reform, published in America. And this is how State intervention appealed to him: “The devil is always ready to urge us to change law and government, heaven and earth even, but takes good care never to suggest that we might change ourselves.” The well-known economist Professor Richard T. Ely is another of the leaders of this movement. Nor must we omit Herron, who caused some sensation by declaring that it is necessary to go well beyond collectivism, which he thinks altogether too conservative and reactionary. He adds that Karl Marx is a crusted Tory compared with Jesus, “for any one who accepts private property in any form whatsoever, even in matters of consumption, must reject Christ.” “We are Social Christians because we are solidarists. In our search for solidarity we have found the Messiah and His Kingdom. Solidarity is the layman’s term, the Kingdom of God the theologian’s, but the two are the same.” (Gounelle, L’Avant-Garde,1907.) The Christian Socialist group publishes a journal of its own, entitled L’Espoir du Monde. See also the preface to Unto This Last, which has for its sub-title “Four Essays on the First Principles of Political Economy.” Nor does it seem much more hopeful when written out thus:
It appears that the first suggestion of final utility in the sense in which it is employed by the Psychological school is due to a French engineer of the name of Dupuit. He threw out the suggestion in two memoirs entitled La Mesure de l’UtilitÉ des Travaux publics (1844) and L’UtilitÉ des Voies de Communication (1849), both of which were published in the Annales des Ponts et ChaussÉes, although their real importance was not realised until a long time afterwards. Gossen also, whose book is referred to on p. 529, was one of the earliest to discover it. In its present form it was first expounded by Stanley Jevons in his Theory of Political Economy, and by Karl Menger in his GrundsÄtze der Volkswirtschaftlehre (1871). Walras’s conception of scarcity, which is just a parallel idea, was made public about the same time (1874). Finally Clark, the American economist, in his Philosophy of Value, which is of a somewhat later date (1881), seems to have arrived at a similar conclusion by an entirely different method—a remarkable example of simultaneous discoveries, which are by no means rare in the history of thought. Despite its cosmopolitan origin, the school is generally spoken of as the Austrian school, because its most eminent representatives have for the most part been Austrians. Among these we may mention Karl Menger, already referred to, Professor Sax (Das Wesen und die Aufgabe der NationalÖkonomie, 1884), Wieser (Der natÜrliche Werth, 1889), and of course BÖhm-Bawerk (author of GrundzÜge der Theorie des wirtschaftlichen GÜterwerths, in JahrbÜcher fÜr NationalÖkonomie, 1886, and the well-known book on capital and interest). Lately, however, the doctrine seems to have changed its nationality and become wholly American. The American professors J. B. Clark, Patten, Irving Fisher, Carver, Fetter, etc., are assiduous students of marginal utility, applying the conception not only to problems of capital and interest, but also to the question of distribution. The connection between quantity and demand is best expressed by means of a curve either of utility or of demand (see p. 532). Along the horizontal line let the figures 1, 2, 3, 4 denote the quantities consumed, and from each of these points draw a vertical line to denote the intensity of demand for each of these quantities. The height of the ordinate decreases more or less rapidly as the quantity increases, until at last it falls to zero. We must be careful not to confuse matters, however. It is not suggested that the final utilities in the case of the two co-exchangers are equal. There is no common measure by which the desires of different persons can be compared, and no bridge from one to the other. What is implied is that the final utility of both commodities for the same person are the same. The balance lies between two preferences of the same individual. The actual market exchange is just the resultant of all these virtual exchanges. The Austrian school in its explanation makes use of a hypothesis known as the double limit, which does not seem to be absolutely indispensable, seeing that other economists of the same school—Walras, for example—appear to get on well enough without it. They seem to think of buyers and sellers drawn up in two rows facing one another. Every one of the sellers attributes to the object which he possesses and which he wants to sell a certain utility different from his neighbour’s. Each buyer in the same way attributes to that object which he desires to buy a degree of utility which is different from that which his neighbour puts upon it. The first exchange, which will probably have the effect of fixing the price for all the other buyers and sellers, will take place between the buyer who attributes the greatest utility to the commodity he has to sell, and who is therefore least compelled to sell, and the buyer who attributes the least utility to the commodity he wishes to buy and who is therefore least tempted to buy. At first sight it seems impossible that the party as a whole should be bound by the action of the two individuals who show the least inclination to come to terms. It would be more natural to expect the first move to take place between the seller who is forced to sell and because of his urgency is content with a price of 10s. per bushel, say, and the buyer who feels the strongest desire to buy and who rather than go without would be willing to give 30s. for it. But upon consideration it will be found that the price is indeterminate just because these two are ready to treat at any price. The most impatient individual will surely wait to see what terms the least pressed will be able to make, and it is only natural that those who are nearest one another should be the first to come together. These two co-exchangists who control the market are known as the “limiting couple.” Really, however, the similarity is simply a matter of words, because consumer’s rent is purely subjective, whereas producer’s rent is a marketable commodity. It would be better to say simply that in many cases of exchange it is not correct to argue that because the prices are equal the satisfaction given to different persons is necessarily equal. It is generally recognised to-day that the school dates from the appearance of Cournot’s Recherches sur les Principes mathÉmatiques de la ThÉorie des Richesses (1838). Cournot, who was a school inspector, died in 1877, leaving behind him several philosophical works which are now considered to be of some importance. The story of his economic work affords an illustration of the kind of misfortune which awaits a person who is in advance of his age. For several years not a single copy of the book was sold. In 1863 the author tried to overcome the indifference of the public by recasting the work and omitting the algebraical formulÆ. This time the book was called Principes de la ThÉorie des Richesses. In 1876 he published it again in a still more elementary form, and under the title of Revue sommaire des Doctrines Économiques, but with the same result. It was only shortly before his death that attention was drawn to the merits of the work in a glowing tribute which was paid to him by Stanley Jevons. Gossen’s book, Entwickelung der Gesetze des menschlichen Verkehrs, which appeared much later (1853), was equally unfortunate. The author remained an obscure civil servant all his life. His book, of which there is still a copy in the British Museum—the only one in existence possibly—was accidentally discovered by Professor Adamson, and Stanley Jevons was again the first to recognise its merits. A brief rÉsumÉ of the work will be found in our chapter on Rent. Stanley Jevons (died 1882) belongs both to the Mathematical and to the Final Utility school. His charming book, The Theory of Political Economy, dates from 1871. LÉon Walras, who is persistently spoken of as a Swiss economist just because he happened to spend the greater part of his life at the University of Lausanne, also known as the School of Lausanne, was in reality a Frenchman. His ÉlÉments d’Économie politique pure, of which the first part appeared in 1874, contains a full exposition of Mathematical economics. To-day the Mathematical method can claim representatives in every country: Marshall and Edgeworth in England, Launhardt, Auspitz, and Lieben in Germany, Vilfredo Pareto and Barone in Italy, Irving Fisher in the United States, and Bortkevitch in Russia. France, however, the country of Cournot and Walras, has no Mathematical economists, unless we mention Aupetit whose work, ThÉorie de la Monnaie, although dealing with a special subject, contains a general introduction. Graph of demand and supply curves The figures along the horizontal line denote price, along the vertical the quantity demanded. In the given figure when price is 1, quantity demanded is VI, and with the price at 7 the quantity demanded falls to zero. The dotted curve represents the supply. When price is 1, supply is nil. When price is 10, supply mounts up to IV. Exchange obviously must take place just where demand and supply are equal, i.e. at b, which marks the point of intersection of the two lines, when the amount demanded is equal to the quantity offered and the price is 5. The vertical lines are called ordinates, and 0 X the axis of the ordinates. Distances along 0 X are called abscissÆ. Each point on the curve simply marks the intersection of these, of the ordinates and the abscissÆ. This is true of the point a, for example, where the perpendicular denotes the price (1) and the other line the number of units sold, in this case VI. Though in the diagram we have considered the ordinates to represent price and the abscissÆ quantities, the reverse notation would work equally well. Both Walras and Pareto fully admit the paradoxical nature of the statement. Of course it is understood that it can only happen under a rÉgime of perfectly free competition, care being also taken to distinguish between profits and interest, a thing that is never done, apparently, by English economists, who treat both interest and profit as constituent elements of cost of production. But this is not so wonderful as it seems at first sight. It simply means a return to the well-known formula that under a rÉgime of free competition selling price must necessarily coincide with cost of production. This does not prevent our recognising the existence of actual profits. Profits are to be regarded as the result of incessant oscillations of a system round some fixed point with which it never has the good fortune actually to coincide. According to this conception they are but the waves of the sea. But the existence of waves is no reason for denying a mean level of the ocean or for not taking that mean level as a basis for measuring other heights. Some day, perhaps, equilibrium will become a fact, and profits will vanish. But if that day ever does dawn either upon the physical or the economic world, all activity will suddenly cease, and the world itself will come to a standstill. To say that the price of capital has gone up is to say that the rate of interest or the reward of saving has fallen. But a fall in the rate of interest will check saving. The result will be a change of equilibrium, the price of new capital will fall, the rate of interest will go up, etc. Briefly, then, the total maximum utilities on the one hand and the price on the other, these are the two conditions determining equilibrium in the economic world, no matter whether it be products or services or capital. “The same thing is true of gravity in the physical world, which varies directly with the mass and inversely with the square of the distance. Such is the twofold condition which determines the movement of the celestial bodies.… In both cases the whole science may be represented by a formula consisting of only two lines. Such a formula will include a great number of facts.” (Walras, Économie politique pure, p. 306.) Pareto regards political economy as a study of the balance between desires and the obstacles which stand in the way of their satisfaction. This last criticism is somewhat unexpected, for we have already seen that the Hedonists are very far indeed from ignoring the law of substitution. If they did not actually discover it they immensely amplified it. And it is very probable that if there had been a contradiction between their doctrines and this law it would not have escaped them. Moreover, we note that beer and cider have their demand curves: cannot wine have one as well? Having to pass from one to the other does undoubtedly complicate matters, and the Mathematical economist frequently finds himself obliged to juggle not with one but with two or three balls. But this is just the kind of difficulty which is amenable to mathematical treatment—nay, even, perhaps, demands it. The connection between the values of complementary or supplementary goods is one of the problems that has been most thoroughly investigated by the Hedonists. See Pantaleoni, Economia pura. A criticism of Mathematical economics may be found in an article by M. Simiand entitled La MÉthode positive en Science Économique (Revue de MÉtaphysique et de Morale, November 1908), and a good reply in La MÉthode mathÉmatique en Économie politique, by M. Bouvier. Such is the theoretical solution, but the practical suggestion is somewhat milder, a kind of territorial wage being suggested. Every master would be obliged to give to his workmen, in addition to a minimum wage, a certain amount of land at the end of a given number of years. If during that period the workman has been employed by several masters, each master should contribute in proportion to the length of time he has been in his service. At the end of a certain period every worker would thus become a proprietor. These would thus be in the same position as their primitive ancestors were as far as natural economy is concerned, and would be able to join with the older proprietors in a kind of association of capital and labour on a footing of absolute equality, which Signor Loria thought would be a most fruitful type of organisation. During the intervening years a certain amount of pressure would have to be put upon the proprietors. M. Millerand, at the time Minister of Commerce, in a speech delivered at the opening of the Exposition Universelle in 1900, said: “Science teaches men the true secret of material greatness and of social morality; and all its teaching, in a word, points to solidarity.” M. Deherme, the founder of the People’s University movement, says: “The folly of solidarity should be the source of our inspiration, just as the martyrs of old were inspired by the folly of the Cross. The thing that wants doing is to organise democracy.” (La Co-operation des IdÉes, June 16, 1900.) “As in physical organisms the unity is made up of separate limbs, so among reasoning things the reason is distributed among individuals constituted for unity of co-operation.” (Marcus Aurelius, vii, 13; Rendall’s translation.) Herbert Spencer, who was the pioneer of the analogy, had abandoned it; and Auguste Comte, the godfather of sociology, took good care to put sociologists on their guard against the method, which he considered irrational. It would have been better, perhaps, to have spoken of a new movement rather than of a new school, seeing the variety of schools, some of them actually opposed to one another, such as the school of Biological Naturalism and the Christian school, the Anarchist school and the State Socialist school, that have adopted solidarity as a part of their creed. French books and articles dealing with the subject are plentiful enough. We can only mention La SolidaritÉ sociale et ses Nouvelles Formules, by M. d’Eichthal (1903); the annual report of L’AcadÉmie des Sciences morales et politiques for 1903; M. BouglÉ’s book Le Solidarisme (1907); and Fleurant’s La SolidaritÉ (1907). There is hardly a manual for teachers published which does not contain a chapter devoted to this question. The end of the quotation apparently contradicts the statement we have italicised, in which he speaks of pooling risks and advantages. With regard to the latter, it is enough, apparently, to secure equal opportunity. It is not very obvious why the principle should be so rigidly enforced in the one case and so reluctantly in the other. If the principle of solidarity holds me responsible for the degradation of the drunkard in the one case, is there any reason why I should not be allowed to share in the good fortune of the lucky speculator in another? Is it because the logical application of this principle would directly lead to communism? “The most unmistakable manifestation of solidarity consists in the employment of a part of the wealth produced by labour in order to repair the poverty caused by the deficient organisation of labour, which leaves the worker and his family liable to the acutest suffering whenever illness, old age, or misfortune crosses their paths.” (Programme on the cover of a journal known as L’Association ouvriÈre, the organ of the producers’ associations.) The task of reorganising society belongs, not to the producers, but to the consumers, for while the former are inspired by the co-operative spirit, the latter are imbued with enthusiasm for the general well-being. Consumers have only to unite and all their wants are satisfied just in the way they desire, for they can either buy directly from the producers all that they need, or they can, when they have become sufficiently rich and powerful, produce for themselves in their own factories and on their own lands. This would mean the abolition of all profits, those of middlemen and manufacturers alike. The societies would retain only as much as would be necessary for the further extension of the movement, returning all the rest to the consumers in proportion to the amount of their purchases. We have already had occasion to note how this idea of the abolition of profits had haunted John Stuart Mill, and how it seemed linked with an entirely new phase of social evolution, to which he gave the name of the “stationary State.” We have also witnessed the Hedonists’ arrival at exactly the same conclusion, though along a directly opposite path, namely, that of absolutely free competition. We must not lose sight of the fact that this revolution is accomplished without affecting the foundations of the social order—property, inheritance, interest, etc.—and without having recourse to any measure of expropriation save such as naturally results from the free play of present economic laws. Co-operators have no desire to interfere with accumulated capital, their aim being merely to form new capital which shall render the old useless. If existing capital is merely accumulated profits made out of labour, why should not labour itself make a profit, and this time keep it for its own use? Complaints have been made that a system of this kind, even if it were realised, would not result in the abolition of the wage-earner, seeing that the workers would still be employed, the only difference being that their employer would be a society instead of an individual. The reply is that a person who works for a society of which he himself is a member is very near to being his own master. Moreover, has anyone a right to raise this objection? The upholder of the present economic order certainly has not when we remember that he considers the wage contract to be the definite type of pure contract. Neither are the collectivists entitled to make it, for under their system everybody would be a civil servant. Hence the only persons who are really justified in making this criticism are those who believe that the future will see an increase in the number of independent proprietors. The reply that we would make to them is this: The only hope of seeing this realised—which is also the ideal of some co-operators—is to set up producers’ associations under the control and protection of consumers’ societies. In fact, a rÉgime of federated co-operative societies is not incompatible with the maintenance of a certain amount of autonomous production, thanks to various considerations which need not be detailed here. See also Lassalle’s book, Das System der erworbenen Rechte. Mention should also be made of M. Emmanuel LÉvy de Lyon, who has published several articles of this kind, especially the pamphlet entitled Capital et Travail. “The solidarist theories would simply greatly increase the number and incapacity of the unemployable.” (Demolins, La SupÉrioritÉ des Anglo-Saxons.) In Paul Bureau’s book La Crise morale des Temps nouveaux there is a lengthy, lively criticism of solidarism from the moral standpoint. (1) Inasmuch as it always implies, in addition to money payment, a certain sacrifice of time and trouble, perhaps even of independence. It involves something more than the obligation to attend meetings and to conform to rules. (2) It implies something more than a mere act of exchange which is completed in an instant and at one stroke. It implies the indefinite collaboration of the parties concerned. “Property and want are the great incentives to crime. But if defective society organisation is the cause of crime, an improvement in organisation should cause a disappearance of crime.” (Jean Grave, La SociÉtÉ future, pp. 137-138.) Kropotkin thinks that man has always lived in society of one kind or another. “As far back as we can go in the palÆo-ethnology of mankind, we find men living in societies, in tribes similar to those of the highest mammals.” (Mutual Aid, p. 80). “Man did not create society; society is older than man.” (The State, its Historic RÔle, p. 6; London, 1898.) Jean Grave, on the other hand, thinks that “the individual was prior to society. Destroy the individual, and there will be nothing left of society. Let the association be dissolved and the individuals scattered, they will fare badly and will possibly return to savagery, their faculties will decay and not progress, but still they will continue to exist.” (La SocietÉ future, pp. 160-162.) Grave’s view is essentially his own and does not square with those of either Kropotkin, Bakunin, or Proudhon, the real founders of anarchy. It is, moreover, quite obvious that their theories are really much nearer the truth, for it is as impossible to conceive of society without the individual as it is to conceive of the individual without society. The individual, as Bakunin emphatically declares, is a fiction, or an abstraction, as Walras would say. Many people find it difficult to accept this doctrine. But it seems the only one that tallies with the facts, whether of nature or of history. We can no more imagine the individual without society than we can a fish without water. Deprived of water, it is not only less of a fish, but it is no longer a fish at all—except a dead one. |
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