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 6_d._ 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.

[524] This does not imply that consumers’ associations, when they are
better organised and federated, with large central depots at their
command, will not take up this project once again—that is, will not
try to dispense with money in their commercial transactions. They will
certainly keep an eye on that problem.

[525] That was Holyoake’s view (_History of Co-operation_, vol. i, p.
215). But, according to a passage quoted by Dolléans, Owen contemplated
making an appeal to the co-operative societies to come to the rescue of
his National Labour Exchange.

[526] To the workers he wrote: “Would you like to enjoy yourselves the
whole products of your labour? You have nothing more to do than simply to
_alter the direction of your labour_. Instead of working for you know not
whom, _work for each other_.” (Quoted by Foxwell in his introduction to
Anton Menger’s _The Right to the Whole Produce of Labour_.)

[527] See the lecture on _Les Prophéties de Fourier_ in Gide’s
_Co-opération_.

[528] It is hardly necessary, however, to credit him with a greater
amount of eccentricity than he actually possessed, and I seize this
opportunity of refuting once more a story told by more than one eminent
economist, attributing to him the statement that the members of the
Phalanstère would all be endowed with a tail with an eye at the end of
it. The caricaturists of the period—“Cham,” for example—represent them
in that fashion. The legend doubtless grew out of the following passage
from his works, which is fantastic enough, as everybody will admit. After
pointing out that the inhabitants of other planets have several limbs
which we do not possess, he proceeds: “There is one limb especially
which we have not, and which possesses the following very useful
characteristics. It acts as a support against falling, it is a powerful
means of defence, a superb ornament of gigantic force and wonderful
dexterity, and gives a finish as well as lending support to every bodily
movement.” (_Fausse Industrie_, vol. ii, p. 5.)

[529] _Nouveau Monde industriel_, p. 473.

[530] Letter dated January 23, 1831, quoted by Pellarin, _Vie de Fourier_
(Paris, 1850).

[531] _Nouveau Monde industriel_, p. 26. For further details see _Œuvres
choisies de Fourier_, with introduction by Charles Gide, and Hubert
Bourgin’s big volume on Fourier.

[532] It is necessary to point out that Fourier’s suggestions for a
solution of the domestic servant problem are really not quite so definite
as we have given the reader to understand in the text. They are mixed up
with a number of other ideas of a more or less fantastic description, but
very suggestive nevertheless. This is especially true of the suggestion
to transform domestic service by making it mutually gratuitous—an idea
that is worth thinking about.

[533] We were thinking especially of associations like that of the
painters under the leadership of M. Buisson, where distribution is as
follows: labour, 50 per cent., capital 27 per cent., administration 12
per cent.

[534] _Association domestique_, vol. i, p. 466.

[535] _Ibid._, p. 466. Note that Fourier says that this only applies to
civilised societies. For those who live in the future Harmony city there
will be other and more powerful motives.

[536] _Unité universelle_, vol. iii, p. 517.

[537] _Ibid._, p. 457.

[538] The system of integral association proposed by Fourier, including
both co-operative production and co-operative distribution, will be
better understood if we look at the facts of the present situation.

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.

[539] Co-partnership as outlined by M. Briand is to-day an item in the
programme of the Radical Democratic party. See _Les Actions du Travail_,
by M. Antonelli.

[540] M. Faguet, _Revue des Deux Mondes_, August 1, 1896.

[541] “Industrialism is the latest scientific illusion.” (_Quatre
Mouvements_, p. 28.) We must also draw attention to his suggestion for
co-operative banks, where agriculturists could bring their harvest and
obtain money in exchange for it—a rough model of the agricultural credit
banks. But he only regarded this as a step towards the Phalanstère.

[542] The kinds of labour which Fourier selects as examples are always
connected with fruit-growing—cherry orchards, pear orchards, etc. Fruit
and flowers have a very important place in his writings. He seems to have
anticipated the fruit-growing rancher of California.

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.

[543] It is interesting to contrast this view with Bücher’s, who thinks
that the evolution of industry simply increases its irksomeness. A
conception of regressive or spiral evolution might reconcile the two
views.

[544] Let us not forget his _Petites Hordes_, which consisted of groups
of boys who undertook the sweeping of public paths, the surveillance of
public gardens, and the protection of animals. The idea was very much
ridiculed at the time, but a number of similar organisations, each with
its badge and banner, were recently instituted by Colonel Waring in the
city of New York.

[545] “My theory is that every passion given by nature should be allowed
the fullest scope. That is the key to my whole system. Society requires
the full exercise of all the faculties given us by God.”

[546] _Quatre Mouvements_, p. 194.

[547] See, for example, such works as Zola’s _Travail_, and Barrè’s
_L’Ennemi des Lois_; and as an example of the general change in the tone
of the economists we may refer to Paul Leroy-Beaulieu’s latest writings,
in which he speaks of Fourier as a “genial thinker.”

[548] It is no part of our task to relate the story of the several
colonies founded either by disciples of Fourier or of Owen. Experiments
of this kind were fairly general in the United States between 1841 and
1844, when no less than forty colonies were founded. Brook Farm, which
is the best known of these, included among its members some of the most
eminent Americans—Channing and Hawthorne, for example—but none of the
settlements lasted very long.

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.

[549] Founded in 1859, it only became a co-partnership in 1888, the year
of Godin’s death.

[550] As a matter of fact it first appeared as an article in the _Revue
du Progrès_ in 1839.

[551] Buonarotti was the author of _La Conspiration pour l’Égalité, dite
de Babeuf_, published in 1828. Little notice was taken of the volume by
the public, but it was much discussed in democratic circles.

[552] _Organisation du Travail_, 5th ed. (1848). p. 77.

[553] We refer to it as the commonest type because in the previous
section we have shown that other co-operative societies exist, such as Le
Travail, for example, which claims to be modelled upon Fourier’s scheme,
especially in the matter of borrowed capital. But the usual type is
affiliated to the Chambre consultative des Associations de Production.
Article II of its regulations reads as follows: “No one will be allowed
to become a subscriber who is not a worker in some branch of production
or other.” See the volume published by the Office du Travail in 1898,
_Les Associations Ouvrières de Production_.

[554] In the _Journal des Sciences morales et politiques_, December 17,
1831. Only one association—the goldsmiths’, in 1834—was founded as the
result of this article.

[555] Quoted by Festy, _Le Mouvement ouvrier au Début de la Monarchie de
Juillet_, p. 88 (Paris, 1908).

[556] Buchez’s proposals for the reform of the “great industry” were of
an entirely different character.

[557] François Vidal, _De la Répartition des Richesses_ (1846).

[558] “The emancipation of the working classes is a very complicated
business. It is bound up with so many other questions and involves such
profound changes of habit. So numerous are the various interests upon
which an apparent though perhaps not a real attack is contemplated, that
it would be sheer folly to imagine that it could ever be accomplished by
a series of efforts tentatively undertaken and partially isolated. The
whole power of the State will be required if it is to succeed. What the
proletarian lacks is capital, and the duty of the State is to see that he
gets it. Were I to define the State I should prefer to think of it as the
poor man’s bank.” (_Organisation du Travail_, p. 14.)

[559] “The illusive conception of an abstract right has had a great
hold upon the public ever since 1789. But it is nothing better than a
metaphysical abstraction, which can afford but little consolation to
a people who have been robbed of a definite security that was really
theirs. The ‘rights of man,’ proclaimed with pomp and defined with
minuteness in many a charter, has simply served as a cloak to hide the
injustice of individualism and the barbarous treatment meted out to
the poor under its ægis. Because of this practice of defining liberty
as a right, men have got into the habit of calling people free even
though they are the slaves of hunger and of ignorance and the sport of
every chance. Let us say once for all that liberty consists, not in the
abstract right given to a man, but in the power given him to exercise and
develop his faculties.” (_Organisation du Travail_, p. 19.)

[560] Cf. pp. 186 _et seq._

[561] “Your want of faith in association,” he wrote to the National
Assembly of 1848, “will force you to expose civilisation to a terribly
agonising death.”

[562] _L’Humanité_ (1840). It would be wrong to conclude, however,
that this desire for secularising charity meant that Leroux was
anti-religious. On the contrary, he admits his indebtedness for the
conception of solidarity to the dictum of St. Paul, “We are all members
of one body.”

[563] “I was the first to employ the term ‘socialism.’ It was a neologism
then, but a very necessary term. I invented the word as an antithesis
to ‘individualism.’” (_Grève de Samarez_, p. 288.) As a matter of
fact, as far back as 1834 he had contributed an article entitled _De
l’Individualisme et du Socialisme_ to the _Revue encyclopédique_. The
same word occurs in the same review in an article entitled _Discours sur
la Situation actuelle de l’Esprit humain_, written two years before. See
his complete works, vol. i, pp. 121, 161, 378. For a further account of
Leroux see M. F. Thomas’s _Pierre Leroux_ (1905), a somewhat dull but
highly imaginative production.

[564] For Cabet’s life and the story of Icaria see Prudhommeaux’s two
volumes, _Étienne Cabet_ and _Histoire de la Communauté icarienne_.

[565] “The communists will never gain much success until they have
learned to reform themselves. Let them preach by example and by the
exercise of social virtues, and they will soon convert their adversaries.”

[566] Protection was attacked by Sismondi in _Nouv. Princ._, Book
IV, chap. 11. He considered it a fruitful source of over-production,
and uttered his condemnation of the absurd desire of nations for
self-sufficiency. Saint-Simon considered Protection to be the outcome
of international hatred (_Œuvres_, vol. iii, p. 36), and commended
the economists who had shown that “mankind had but one aim and that
its interests were common, and consequently that each individual in
his social connection must be viewed as one of a company of workers”
(_Lettres à un Americaine, Œuvres_, vol. ii, pp. 186-187). The
Saint-Simonians never touched upon the question directly, but it is quite
clear that Protective rights were to have no place in the universal
association of which they dreamt. According to Fourier, there was to be
the completest liberty in the circulation of goods among the Phalanstères
all the world over. (_Cf._ Bourgin, _Fourier_, pp. 326-329; Paris, 1905.)

[567] We refer to two of them only: Augustin Cournot and Louis Say of
Nantes. The former, in his _Recherches sur les Principes mathématiques de
la Théorie des Richesses_ (1838), a work that is celebrated to-day but
which passed unnoticed at the time of its publication, has criticised
the theory of Free Trade. But the reputation which he subsequently
achieved was not based upon this part of the book. Louis Say (1774-1840)
was a brother of J. B. Say. He published a number of works, now quite
forgotten, in which he criticised several doctrines upheld by his
brother, whose displeasure he thus incurred. We refer to his last work,
_Études sur la Richesse des Nations et Réfutation des principales
Erreurs en Économie politique_ (1836), for this is the work to which
List alludes. It is probable that Louis Say’s name would have remained
in oblivion but for List. Richelot, in his translation of List (second
edition, p. 477), quotes some of the more important passages of Say’s
book.

[568] The union of England and Scotland dates from 1707. Compare the
passage in Adam Smith, Book V, chap. 2, part ii, art. 4; Cannan’s
edition, vol. ii, p. 384.

[569] List, _Werke_, ed. Häusser, vol. ii, p. 17. The seventh edition
of the _National System_, which was published in 1883 by M. Eheberg,
contains an excellent historical and critical introduction. Our
quotations are from the English translation by Lloyd, published in 1885,
republished, with introduction by Professor Shield Nicholson, in 1909.

[570] Petition presented to a meeting of the German princes at Vienna in
1820 (_Werke_, vol. ii, p. 27).

[571] Baden, Nassau, and Frankfort joined in 1835 and 1836. But there
still remained outside Mecklenburg and the Free Towns of the Hanse,
Hanover, Brunswick, and Oldenburg.

[572] List’s expression “exchangeable value” merely signifies the mass of
present advantages—the material profit existing at the moment. It is not
a very happy phrase, and it would be a great mistake to take it literally
or to attach great importance to it. In his _Letters to Ingersoll_, p.
186, he gives expression to the same idea by saying that Smith’s school
had in view “the exchange of one material good for another,” and that
its concern was chiefly with “such exchanged goods rather than with
productive forces.” We note that List never speaks of Ricardo, but only
of Smith and Say, whose works alone he seems to have read.

[573] “In the Italian and the Hanseatic cities, in Holland and England,
in France and America, we find the powers of production and consequently
the wealth of individuals growing in proportion to the liberties enjoyed,
to the degree of perfection of political and social institutions, while
these, on the other hand, derive material and stimulus for their further
improvement from the increase of the material wealth and the productive
power of individuals.” (_National System_, p. 87.)

[574] He defines “political or national economy” as “that which,
emanating from the idea and nature of the nation, teaches how a given
_nation_, in the present state of the world and its own special national
relations, can maintain and improve its economical condition.” (_Ibid._,
p. 99.)

[575] It was the example of England that gave List the idea, but the
whole conception is based upon a historical error. England possessed a
navy, had founded colonies and developed her international trade long
before she became a manufacturing nation. Since the time of List various
categories of national development have been proposed. Hildebrand speaks
of periods of natural economy, of money economy, and of credit economy
(_Jahrbücher für National Oekonomie_, vol. ii, pp. 1-24). Bücher proposed
the periods of domestic economy, of town economy, and of national economy
as a substitute (_Die Entstehung der Volkswirtschaft_, 3rd ed., p. 108).
Sombart, in his turn, has very justly criticised this classification in
his book _Der moderne Kapitalismus_ (vol. i, p. 51; Leipzig, 1902). But
would that which he proposes himself be much better?

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.

[576] The term “normal” is one of the vaguest and most equivocal we have
in political economy. It would be well if we were rid of it altogether.
What controversies have not raged around the ideas of a normal wage or a
normal price! One of the chief merits of the Mathematical school lies in
the success with which it has effected the substitution of the idea of an
equilibrium price. The idea of a normal nation is about as vague as that
of a normal wage, and it is curious that our author describes as normal a
whole collection of characteristics which, according to his own account,
were at the moment when he wrote only realised by one nation, namely,
England.

[577] P. 292. The idea of national power is, moreover, not completely
lost sight of by Smith, as is proved by the following passages: “The
riches and, so far as power depends upon riches, the power of every
country must always be in proportion to the value of its annual produce.…
But the great object of the political economy of every country is to
increase the riches and power of that country.” (_Wealth of Nations_,
Book II, chap. 5; Cannan’s edition, vol. i, p. 351.)

[578] On the question of the industrial vocation of the temperate zone
and the agricultural vocation of the torrid compare _National System_,
Book II, chap. 4.

[579] “The German nation will at once obtain what it is now in need of,
namely, fisheries and naval power, maritime commerce and colonies.”
(_National System_, p. 143.) List has no difficulty in allying his
patriotic idealism with the practical side of his nature.

[580] List deliberately distinguishes between exchange values and
productive forces; but the distinction is by no means a happy one. For a
policy which aims at encouraging productive forces has no other way of
demonstrating its superiority than by showing an increase of exchange
value. The two notions are not opposed to one another, and in reckoning
a nation’s wealth we must take some account of its present state as well
as of its future resources. In his _Letters to Ingersoll_ (_cf._ Letter
IV, referred to above) he distinguishes between “natural and intellectual
capital” on the one hand and “material productive capital” on the other
(Adam Smith’s idea of capital). “The productive powers of the nation
depend not only upon the latter, but also and chiefly upon the former.”

[581] _National System_, p. 117.

[582] Unjustly as we think, for on more than one occasion Smith did take
account of moral forces. He dated the prosperity of English agriculture
from the time when farmers were freed from their long servitude and
became henceforth independent of the proprietors. He remarks that
towns attain prosperity quicker than the country, because a regular
government is earlier established there. “The best effect which commerce
and manufactures have is the gradual introduction and establishment of
order and good government, and with them the liberty and security of
individuals among the inhabitants of the country. This, though it has
been the least observed, is by far the most important of their effects.
Mr. Hume is the only writer who so far as I know has hitherto taken
notice of it.” (Book III, chap. 4; Cannan, vol i, p. 383.) Speaking of
the American colonies, Smith (Cannan, vol. ii, p. 73) makes the remark
that although their fertility is inferior to the Spanish, Portuguese, and
the French colonies, “the political institutions of the English colonies
have been more favourable to the improvement and cultivation of this
land than those of any of the other three nations.” How could List have
forgotten the celebrated passage in which Smith attributes the prosperity
of Great Britain largely to its legal system, which guarantees to each
individual the fruits of his toil and which must be reckoned among
the definitive achievements of the Revolution of 1688? “That security
which the laws in Great Britain give to every man that he shall enjoy
the fruits of his own labour is alone sufficient to make any country
flourish, notwithstanding these and twenty other absurd regulations of
commerce; and this security was perfected much about the same time that
the bounty was established.” (Book IV, chap. 5; Cannan, vol. ii, pp.
42-43.)

[583] _National System_, chap. 17, beginning.

[584] Compare chapters 7 and 15, where he treats of the manufacturing
industry in its relation to each of the great economic forces of the
country.

[585] _Ibid._, p. 87.

[586] _National System_, p. 150.

[587] “It may in general be assumed that where any technical industry
cannot be established by means of an original protection of 40 to 60
per cent., and cannot continue to maintain itself under a continued
protection of 20 to 30 per cent., the fundamental conditions of
manufacturing power are lacking.” (_Ibid._, p. 251.)

[588] “Solely in nations of the latter kind, namely, those which
possess all the necessary mental and material conditions and means for
establishing a manufacturing power of their own and of thereby attaining
the highest degree of civilisation and development of material prosperity
and political power, but which are retarded in their progress by the
competition of a foreign manufacturing Power which is already farther
advanced than their own—only in such nations are commercial restrictions
justified for the purpose of establishing and protecting their own
manufacturing power.” (_Ibid._, p. 144.)

[589] _Ibid._, p. 240.

[590] “Everyone knows,” says he (quoted by Hirst, pp. 231 _et seq._),
“that the cost of production of a manufactured good depends very largely
upon the quantity produced—that is, upon the operation of the law of
increasing returns. This law exercises considerable influence upon the
rise and fall of manufacturing power.… An English manufacturer producing
for the home market has a regular sale of 10,000 yards at 6 dollars
a yard.… His expenses being thus guaranteed by his sales in the home
market, the cost of producing a further quantity of 10,000 yards for the
foreign market will be considerably reduced and would yield him a profit
even were he to sell for 3 or 4 dollars a yard. And even though he should
not be making any profit just then, he can feel pretty confident about
the future when he has ruined the foreign producer and driven him out
of the field altogether.” List thinks that this shows how impossible it
is for manufacturers in a new country without any measure of protection
to compete with other countries whose industry is better established.
But this is one of the arguments that has been most frequently used by
British manufacturers in recent years in demanding protection against
American competition. We would like to know what List would have thought
of this.

[591] _National System_, p. 144, and the whole of chap. 16 of Book II.
He considered that “it would be a further error if France, after her
manufacturing power has become sufficiently strong and established,
were not willing to revert gradually to a more moderate system of
Protection and by permitting a limited amount of competition incite her
manufacturers to emulation.” (_Ibid._, p. 249.)

[592] _Ibid._, p. 253, and especially p. 162, etc., where with a
sudden change of front he declares himself in favour of Free Trade in
agriculture, and employs the arguments which Free Traders had applied to
all products. Compare again p. 230, where he declares that agriculture
“by the very nature of things is sufficiently well protected against
foreign competition.”

[593] The authors were unable to find a copy of Hamilton’s works in
France, but according to Bastable (_Commerce of Nations_, 6th ed.,
London, 1912, pp. 120, 121) the principal arguments deduced by the report
to prove the advantages of industry are that it permits of greater
division of labour, prevents unemployment, supplies a more regular market
than the foreign, and encourages immigration.

[594] It is very probable that List had read the work of another
American Protectionist, Daniel Raymond, whose _Thoughts on Political
Economy_ appeared in 1820 and ran into four editions (cf. _Daniel
Raymond_, by Charles Patrick Neill, Baltimore, 1897). This seems to be
the opinion of the majority of writers who during the last few years
have especially concerned themselves with the study of List’s opinions
(Miss Hirst, in her _Life of Friedrich List_, and M. Curt Kohler in his
book _Problematisches zu Friedrich List_, Leipzig, 1909). But to regard
Raymond as his only inspirer, as is done by Rambaud in his _Histoire des
Doctrines_, seems to us mere exaggeration. Apart from the facts that
Raymond’s ideas are not particularly original and that List had lived
some years in America in a Protectionist environment, List never quotes
him at all. On the other hand, he frequently and enthusiastically refers
to both Dupin and Chaptal in his _Letters to Ingersoll_. The expression
“productive forces” was probably borrowed from Baron Dupin’s _Situation
progressive des Forces de la France_ (Paris, 1827), which opens with the
following words: “This forms an introduction to a work entitled _The
Productive and Commercial Forces of France_. By _productive forces_ I
mean the combined forces of men, animals, and nature applied to the
work of agriculture, of industry, or of commerce.” Again, the idea of
protecting infant industries is very neatly put by Chaptal. On p. xlvi of
the introduction to his _De l’Industrie français_ (published in 1819) we
meet with the following words: “It does not require much reflection to be
convinced of the fact that something more than mere desire is needed to
overcome the natural obstacles in the way of the development of industry.
Everywhere we feel that ‘infant industries’ cannot struggle against older
establishments cemented by time, supported by much capital, freed from
worry and carried on by a number of trained, skilled workmen, without
having recourse to prohibition in order to overcome the competition of
foreign industries.”

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.

[595] Published in a volume entitled _Outlines of a New System of
Political Economy, in a Series of Letters addressed by F. List to Charles
Ingersoll_ (Philadelphia, 1827). This publication did not find a place in
the collected edition published by Häusser, but the whole of it has been
incorporated in the interesting _Life of Friedrich List_ by Margaret E.
Hirst (London, 1909).

[596] This was the consideration that influenced him in adopting a
Protectionist attitude, although hitherto he had regarded himself as a
disciple of Smith and Say. (_Letters to Ingersoll_, p. 173.)

[597] _National System_, preface, p. 54.

[598] The _Zollvereinsblatt_, which was published by him towards the end
of 1843.

[599] _National System_, p. 230. We do not by any means imply that the
Germany of List’s day was in greater need of Protection than the Germany
of to-day. Indeed, if we accept Chaptal’s view, we may well deny this,
for, writing in 1819, he said that Saxony occupied a place in the front
rank of European nations in the matter of industry. Speaking of Prussia,
he declared that the industry of Aix-la-Chapelle alone was enough to
establish the fame of any nation (_De l’Industrie française_, vol. i,
p. 75). We must also recall the fact that the basis of the present
prosperity of Germany was laid under a _régime_ of much greater freedom.

[600] “Neither is it at all necessary that all branches of industry
should be protected in the same degree. Only the most important branches
require special protection, for the working of which much outlay of
capital in building and management, much machinery and therefore
much technical knowledge, skill, and experience, and many workmen
are required, and whose products belong to the category of the first
necessaries of life and consequently are of the greatest importance as
regards their total value as well as regards national independence (as,
for example, cotton, woollen, and linen manufactures, etc.). If these
main branches are suitably protected and developed, all other less
important branches of manufacture will rise up around them under a less
degree of protection.” (_National System_, p. 145.)

[601] On Carey see _infra_, Book III.

[602] Carey, _Principles of Social Science_.

[603] Carey, _Principles of Social Science_.

[604] _National System_, Book II, chap. 3.

[605] _Principles of Political Economy_, Book V, chap. 10, § 1.

[606] “Of all the things required for the purposes of man, the one that
least bears transportation, and is, yet, of all the most important, is
manure. The soil can continue to produce on the condition, only, of
restoring to it the elements of which its crop had been composed. That
being complied with, the supply of food increases, and men are enabled
to come nearer together and combine their efforts—developing their
individual faculties, and thus increasing their wealth; and yet this
condition of improvement, essential as it is, has been overlooked by all
economists.” (_Principles of Social Science_, vol. i, pp. 273-274.)

[607] _Principles of Political Economy_, Book V, chap. 10, § 1.

[608] On this point see Jenks, _Henry C. Carey als Nationalökonom_, chap.
1 (Jena, 1885).

[609] Compare the long passage in the _Principles_, Book V, chap.
10, § 1, which begins: “The only case in which on mere principles of
political economy protecting duties can be defensible is when they are
imposed temporarily (especially in a young and rising nation) in hopes
of naturalising a foreign industry, in itself perfectly suitable to the
circumstances of the country. The superiority of one country over another
in a branch of production often varies only from having begun it sooner.”
Stuart Mill, however, does not refer to List, and one wonders whether the
paragraph owes anything to his influence.

[610] We must make an exception of M. Cauwès, whose Protectionism, on
the contrary, is a quite logical adaptation of List’s idea, viz. the
superiority of nations possessing a complex economy. This is the only
scientific system of Protection that we are to-day acquainted with. But
it must be confessed that the majority of writers are very far removed
from Cauwès’ point of view. Compare his _Cours d’ Économie politique_,
3rd ed., vol. iii.

[611] Such, _e.g._, are the economists who are always speaking of a
“commercial deficit,” _i.e._ of an unfavourable balance of commerce.
Despite the frequent refutations which have been given of it, it is still
frequently quoted as an axiomatic truth. List criticised the school for
its complete indifference to the balance of imports and exports. But he
did not favour the Mercantilist theory of the balance of trade; on the
contrary, he regarded that as definitely condemned (p. 218). He regarded
the question from a special point of view, that of monetary equilibrium.
When a nation, says he, imports much, but does not export a corresponding
amount of goods, it may be forced to furnish payment in gold, and a
drainage of gold might give rise to a financial crisis. The indifference
of the school with regard to this question of the quantity of money
is very much exaggerated (Book II, chap. 13). The policy of the great
central banks of to-day aims at easing those tensions in the money market
which appear as the result of over-importation, and in this matter they
have proved themselves much superior to any system of Protection.

[612] Some writers go even farther. Patten (_Economic Foundations of
Protection_) longs to see a national type established peculiar to each
country, as the result of forcing the inhabitants to be nourished and
clothed according to the natural resources of the country in which they
live. We should, as a consequence of this, have an American type quite
superior to any European type. “Then,” says he, “we should be able to
exercise a preponderant influence upon the fate of other nations and
could force them to renounce their present economic methods and adopt a
more highly developed social State.” Until then no foreign goods are to
enter the country. Here, as is very frequently the case, Protectionism is
confounded with nationalism or imperialism.

[613] “A merely agricultural State is an infinitely less perfect
institution than an agricultural-manufacturing State. The former is
always more or less economically and politically dependent on those
foreign nations which take from it agricultural products in exchange
for manufactured goods. It cannot determine for itself how much it
will produce: it must wait and see how much others will buy from it.”
(_National System_, p. 145.)

[614] “A nation which has already attained manufacturing supremacy can
only protect its own manufactures and merchants against retrogression
and indolence by the free importation of means of subsistence and raw
materials, and by the competition of foreign manufactured goods.”
(_National System_, p. 153.) Hence the appeal to England in the name
of this theory to abolish her tariffs, but to gracefully allow France,
Germany, and the United States to continue theirs.

[615] See M. Pareto’s _Economia Politica_ (Milan, 1906) for a
demonstration that international exchange is not necessarily advantageous
for both parties (chap. 9, § 45).

[616] But the line is sometimes difficult to follow. Latterly statesmen
have been concerned not so much with the exportation of goods as with
the migration of capital. Ought the Minister for Foreign Affairs to veto
the raising of a loan in the home market on behalf of a foreign Power or
an alien company? To what extent ought bankers and capitalists to accept
his advice? Such are some of the questions that for some years past have
been repeatedly asked in France, England, and Germany. And it seems in
almost every case that political economy has had to bow before political
necessity, and not _vice versa_.

[617] It is very remarkable that List’s greatest admirer, Dühring, in
his _Kritische Geschichte der Nationalökonomie und des Sozialismus_ (2nd
ed., p. 362), insists on the fact that Protection is not an essential
element, but a mere temporary form of the principle of national economic
solidarity, which is List’s fundamental conception, and which must
survive all forms of Protection. Dühring is the only real successor
of List and Carey. He has developed their ideas with a great deal of
ability and has shown himself a really scientific thinker. But what he
chiefly admires in both writers is not their Protection, but their effort
to lay hold of the material and moral forces which lie below the mere
fact of exchange, and upon which a nation’s prosperity really depends.
His _Kursus der National- und Sozial-oekonomie_ (Berlin, 1873) is very
interesting reading.

[618] Except the Saint-Simonians nobody seems to have conceived of the
State’s responsibility for a nation’s productive forces. List refers to
them sympathetically, especially to those who, like Michel Chevalier,
“sought to discover the connection of these doctrines with those of
the premier schools, and to make their ideas compatible with existing
circumstances” (_National System_, p. 287). But List differs from them in
his love of individual liberty and in the importance which he attaches
to moral, political, and intellectual liberty as elements of productive
efficiency.

[619] _Philosophie du Progrès, Œuvres_, vol. xx, p. 19: “Growth is
essential to thought, and truth or reality whether in nature or in
human affairs is essentially historical, at one time advancing, at
another receding, evolving slowly, but always undergoing some change.”
In his _Contradictions économiques_ he defines social science as “the
systematised study of society, not merely as it was in the past or
will be in the future, but as it is in the present in all its manifold
appearances, for only by looking at the whole of its activities can we
hope to discover intelligence and order.” (Vol. i, p. 43.) “If we apply
this conception to the organisation of labour we cannot agree with the
economists when they say that it is already completely organised, or with
the socialists when they declare that it must be organised, but simply
that it is gradually organising itself; that is, that the process of
organisation has gone on since time immemorial and is still going on, and
that it will continue to go on. Science should always be on the look-out
for the results that have already been achieved or are on the point of
realisation.” (Vol. i, p. 45.)

[620] A vigorous exposition of his other ideas is given in Bouglé’s _La
Sociologie de Proudhon_ (Paris, 1911).

[621] The following are Proudhon’s principal works: 1840, _Qu’est-ce
que la Propriété?_ (studies in ethics and politics); 1846, _Système des
Contradictions économiques_ (the “philosophy of destitution”); 1848,
_Organisation du Crédit et de la Circulation et Solution du Problème
social_; 1848, _Résumé de la Question sociale, Banque d’Échange_; 1849,
_Les Confessions d’un Révolutionnaire_; 1850, _Intérêt et Principal_ (a
discussion between M. Bastiat and M. Proudhon); 1858, _De la Justice
dans la Révolution et dans l’Église_ (three volumes); 1861, _La Guerre
et la Paix_; 1865, _De la Capacité politique des Classes ouvrières_. Our
quotations are taken from the _Œuvres complètes_, published in twenty-six
volumes by Lacroix (1867-70).

[622] “Do you happen to know, madam, what my father was? Well, he was
just an honest brewer whom you could never persuade to make money by
selling above cost price. Such gains, he thought, were immoral. ‘My
beer,’ he would always remark, ‘costs me so much, including my salary.
I cannot sell it for more.’ What was the result? My dear father always
lived in poverty and died a poor man, leaving poor children behind him.”
(Letter to Madame d’Agoult, _Correspondance_, vol. ii, p. 239.)

[623] It has been said that Proudhon borrowed this formula from Brissot
de Warville, the author of a work entitled _Recherches philosophiques
sur le Droit de Propriété et sur le Vol, considérés dans la Nature et
dans la Société_. It was first published in 1780, and reappeared with
some modifications in vol. vi, pp. 261 _et seq._, of his _Bibliothèque
philosophique du Législateur_ (1782). But this is a mistake. Proudhon
declares that the work was unknown to him (_Justice_, vol. i, p. 301);
and, moreover, the formula is not there at all. Brissot’s point of view
is entirely different from Proudhon’s. The former believes that in a
state of nature the right of property is simply the outcome of want, and
disappears when that want is satisfied; that man, and even animals and
plants, has a right to everything that can satisfy his wants, but that
the right disappears with the satisfaction of the want. Consequently
theft perpetrated under the pressure of want simply means a return to
nature. The rich are really the thieves, because they refuse to the
culprit the lawful satisfaction of his needs. The result is a plea for
a more lenient treatment of thieves. But Brissot is very careful not to
attack civil property, which is indispensable for the growth of wealth
and the expansion of commerce, although it has no foundation in a natural
right (p. 333). There is no mention of unearned income. Proudhon, on the
other hand, never even discusses the question as to whether property is
based upon want or not. He would certainly have referred to this if he
had read Brissot.

[624] _Contradictions_, vol. i, pp. 219, 221.

[625] _Résumé de la Question sociale_, p. 29. We meet with the same idea
in other passages. “Property under the influence of division of labour
has become a mere link in the chain of circulation, and the proprietor
himself a kind of toll-gatherer who demands a toll from every commodity
that passes his way. Property is the real thief.” (_Banque d’Échange_, p.
166.) We must also remember that Proudhon did not consider that taking
interest was always illegal. In the controversy with Bastiat he admits
that it was necessary in the past, but that he has found a way of getting
rid of it altogether.

[626] We must distinguish between this and Marx’s doctrine. Marx believed
that all value is the product of labour. Proudhon refuses to admit this.
He thinks that value should in some way correspond to the quantity of
labour, but that this is not the case in present-day society. Marx was
quite aware of the fact that Proudhon did not share his views (see
_Misère de la Philosophie_). Proudhon follows Rodbertus, who taught that
the products only and not their values are provided by labour.

[627] _Propriété, 1er Mémoire_, pp. 131-132. It is true that Proudhon
adds that without land and capital labour would be unproductive. But he
soon forgets his qualifications when he proceeds to draw conclusions,
especially when he comes to give an exposition of the Exchange Bank,
where we meet with the following sentence: “Society is built up as
follows: All the raw material required is gratuitously supplied by
nature, so that in the economic world every product is really begot
of labour, and capital must be considered unproductive.” Elsewhere he
writes: “To work is not necessarily to produce anything.” (_Solution du
Problème social_, Œuvres, vol. vi, pp. 361 _et seq._, and p. 187.)

[628] _Propriété, 1er Mémoire_, p. 133.

[629] L. von Stein, _Geschichte der sozialen Bewegung in Frankreich_,
vol. iii, p. 362 (Leipzig, 1850). A remarkable piece of work altogether.

[630] It is true that Proudhon’s attack is entirely directed against the
ethics of private property. He shows how every justification that is
usually offered, such as right of occupation, natural right, or labour,
cannot justify the institution as it is to-day. Private property as we
know it is confined to the few, whereas on these principles it ought
to be widely diffused. Criticism of this kind is not very difficult,
perhaps, but it does nothing to weaken the arguments of those who would
justify property on the grounds of social utility. The criticism of the
Saint-Simonians, who approach it from the point of view of utility and
productiveness rather than from the ethical standpoint, seems to be
much more profound. This is why we have regarded them as the critics of
private property.

[631] “This is the fundamental idea of my first _Mémoire_.” (Quoted by
Sainte-Beuve, _P. J. Proudhon_, p. 90.) Later on he complains that the
suggestion was never even discussed.

[632] _Propriété, 1er Mémoire_, p. 94.

[633] _Ibid._, p. 91.

[634] Blanqui’s letter dated May 1, 1841, in reply to a communication
from Proudhon concerning the second _Mémoire_ on property.

[635] Cf. Sainte-Beuve, _P. J. Proudhon_, pp. 202, 203; and see on this
point Proudhon’s amusing letters to Guillaumin (_Correspondance_, vol.
ii).

[636] _Propriété, 1er Mémoire_, p. 203.

[637] An article in _Le Peuple_, in 1848. Proudhon’s attacks are more
especially directed against Fourier. Fourier’s was at this time the only
socialist school that had any influence, and this was largely due to the
active propaganda of Victor Considérant. See _Contradictions_, vol. ii,
p. 297, and _Propriété, 1er Mémoire_, pp. 153 _et seq._

[638] _Contradictions_, vol. ii, p. 285. For the attack on Cabet,
Louis Blanc, and the communists see the whole of chap. 12 of the
_Contradictions_. Louis Blanc “has poisoned the working classes with his
ridiculous formulæ” (_Idée générale de la Révolution_, p. 108). Louis
Blanc himself is summed up as follows: “He seriously thought that he was
the bee of the Revolution, but he turned out to be only a grasshopper.”
(_Ibid._)

[639] “I believe that I am the first person possessed of a full knowledge
of the phenomena in question who has dared to uphold the doctrine that
instead of restraining economic forces whose strength has been so much
exaggerated we ought to try to balance them against one another in
accordance with the little known and less perfectly understood principle
that contraries, far from being mutually destructive, support one another
just because of their contrary nature.” (_Justice_, vol. i, pp. 265-266.)
The same idea also finds expression on pp. 302-303. Elsewhere he remarks
that what society is in search of is a way of balancing the natural
forces that are contained within itself (_Révolution démontrée par le
Coup d’État_, p. 43).

[640] “Division of labour, collective force, competition, exchange,
credit, property, and even liberty—these are the true economic forces,
the raw materials of all wealth, which, without actually making men
the slaves of one another, give entire freedom to the producer, ease
his toil, arouse his enthusiasm, and double his produce by creating
a real solidarity which is not based upon personal considerations,
but which binds men together with ties stronger than any which
sympathetic combination or voluntary contract can supply.” (_Idée
générale de la Révolution au XIXe Siècle_, p. 95.) The economic forces
are somewhat differently enumerated in chap. 13 of _La Capacité des
Classes ouvrières_. Association and mutuality are mentioned; but while
recognising the prestige of the word “association,” especially among
working men, Proudhon concludes that the only real association is
mutuality—not in the sense of a mutual aid society, which he thinks is
altogether too narrow.

[641] It is true that Fourier was not a communist. Proudhon shows that on
the one hand his Phalanstère would abolish interest, while it would give
a special remuneration to talent on the other, simply because “talent
is a product of society rather than a gift of nature.” (_Propriété, 1er
Mémoire_, p. 156.)

[642] Proudhon’s opposition to the principle of association is very
remarkable. He refers to it more than once, but especially in the _Idée
générale de la Révolution_. “Can association be regarded as an economic
force? For my own part I distinctly say, No. By itself it is sterile,
even if it does not check production, because of the limits it puts upon
the liberty of the worker.” (P. 89.) “Association means that everyone
is responsible for someone else, and the least counts as much as the
greatest, the youngest as the oldest. It gets rid of inequality, with the
result that there is general awkwardness and incapacity.” (_Ibid._)

[643] _La Révolution démontrée par le Coup d’État_, pp. 53, 54.
Elsewhere: “When you speak of organising labour it seems as if you would
put out the eyes of liberty.” (_Organisation du Crédit et de l’Échange,
Œuvres_, vol. vi, p. 91.)

[644] _Programme révolutionnaire._ To the electors of the Seine, in the
_Représentant du Peuple_. (_Œuvres_, vol. xvii, pp. 45, 46.)

[645] “I should like everybody to have some property. We are anxious
that they should have property in order to avoid paying interest,
because exorbitant interest is the one obstacle to the universal use of
property.” (_Le Peuple_, September 2, 1849.)

[646] _Propriété, 1er Mémoire_, p. 204.

[647] _Contradictions_, vol. ii, p. 203.

[648] _Organisation du Credit et de la Circulation_, p. 131. Elsewhere:
“To adopt Hegelian phraseology, the community is the first term in social
development—the thesis; property the contradictory term—the antithesis.
The third term—the synthesis—must be found before the solution can be
considered complete.” (_Propriété, 1er Mémoire_, p. 202.) That term
will be possession pure and simple—the right of property with no claim
to unearned income. “Get rid of property, but retain the right of
possession, and this very simple change of principle will result in an
alteration of the laws, the method of government, and the character of a
nation’s economic institutions. Evil of every kind will be entirely swept
away.” Proudhon employed Hegelian terminology as early as 1840, four
years before Karl Grün’s visit to Paris. For Proudhon’s relation to Grün
see Sainte-Beuve’s _P. J. Proudhon_.

[649] _Justice dans la Révolution_, vol. i, pp. 182-183.

[650] _Ibid._, p. 269. “It is easy to show how the principle of mutual
respect is logically convertible with the principle of reciprocal
service. If men are equal in the eyes of justice they must also have a
common necessity, and whoever would place his brothers in a position of
inferiority, against which it is the chief duty of society to fight, is
not acting justly.”

[651] This idea of mutual service is further developed, especially in
_Organisation du Crédit et de la Circulation_ (_Œuvres_, vol. vi, pp.
92-93), and in _Idée générale_, p. 97.

[652] That is how the problem is put in the preface to the first
_Mémoire_.

[653] _Contradictions_, vol. ii, p. 414.

[654] _Le Droit au Travail et le Droit de Propriété_, pp. 4, 5, 58 (1848).

[655] Every historian is agreed on this point, which Louis Blanc has
dealt with at great length in his _Histoire de la Révolution de 1848_
(chap. 11). The testimony of contemporaries, especially Lamartine in
his _Histoire de la Révolution de 1848_ (vol. ii, p. 120), is also very
significant. “These national workshops were placed under the direction of
men who belonged to the anti-socialist party, whose one aim was to spoil
the experiment, but who managed to keep the sectaries of the Luxembourg
and the rebels of the clubs apart until the meeting of the National
Assembly. Paris was disgusted with the quantity and the character of the
work accomplished, but it little thought that these men had on more than
one occasion defended and protected the city. Far from being in the pay
of Louis Blanc, as some people seem to think, they were entirely at the
beck and call of his opponents.” É. Thomas in his _Histoire des Ateliers
nationaux_ (pp. 146-147) relates how Marie sent for him on May 23 and
secretly asked him whether the men in the workshops could be relied upon.
“Try to get them strongly attached to you. Spare no expense. If there is
any need we shall give you plenty of money.” Upon Thomas asking what was
the purpose of all this, Marie replied: “It is all in the interest of
public safety. Make sure of the men. The day is not far distant when we
shall need them in the streets.”

[656] These addresses were afterwards published in a volume entitled _Le
Droit au Travail_.

[657] Louis Blanc, _Histoire de la Révolution de 1848_, vol. ii, p. 135.

[658] See the addresses in his _La Révolution de Février au Luxembourg_
(Paris, 1849).

[659] _Moniteur_, April 27, May 2, 3, and 6, 1848. The dismissal of the
commission meant an interruption of the _Exposé général_, but Vidal in
his work _Vivre en travaillant! Projets, Voires, et Moyens de Réformes
sociales_ (1848) continued the exposition. It contains a plan for
agricultural credit, a State land purchase scheme in order to get rid of
rent, a proposal for buying up railways and mines and for erecting cheap
dwellings. It affords an interesting example of State Socialism in 1848
which seems to have struck many people then as being very amusing.

[660] _Cf. supra_, p. 297, note 3.

[661] _Cf. supra_, “The Associative Socialists.”

[662] “I need hardly say that this measure of fiscal reform [namely, the
abolition of private property] must be carried out without any violence
or robbery. There must be no spoliation, but ample compensation must be
given.” (_Résumé de la Question sociale_, p. 27.)

[663] _Solution du Problème social_ (_Œuvres_, vol. vi, p. 32).

[664] _Œuvres_, vol. xviii, pp. 6-7. See also the letter dated February
25, 1848 (_Correspondance_, vol. ii, p. 280): “France will certainly
accomplish it, whether it remains a republic or not. It might even be
carried out by the present decadent Government, at a trifling cost.” This
thought did not prevent his taking a hand in the Revolution.

[665] In a pamphlet entitled _Organisation du Crédit et de la
Circulation_, and dated March 31, 1848, he expounds the principle of the
scheme and indicates some of its general features. The scheme is dealt
with in a number of articles contributed to _Le Représentant du Peuple_
for April, afterwards published in book form by Darimon, under the title
of _Résumé de la Question sociale_. The plan differs slightly from the
statutes of the People’s Bank as they appear in vol. vi of the _Œuvres_,
but the guiding principle is much the same. A further exposition was
given in _Le Peuple_ in February and March 1849, just when the Bank was
being founded. There is still another account contained in the volume
entitled _Intérêt et Principal: Discussion entre M. Proudhon and M.
Bastiat sur l’Intérêt du Capitaux_ (Paris, 1880). This controversy was
carried on in the columns of _La Voix du Peuple_ from October 1849 to
October 1850. Proudhon frequently refers to the same idea in his other
works, notably in _Justice dans la Révolution_, vol. i, pp. 289 _et
seq_., and in _Idée générale_, pp. 197 _et seq_.

[666] See _Solution du Problème social_, pp. 178, 179.

[667] _Intérêt et Principal_, p. 112.

[668] “Money is simply a supplementary kind of capital, a medium of
exchange or a credit instrument. If this is the case what claim has it to
payment? To think of remunerating money for the service which it gives!”
(_Ibid._, p. 113.)

[669] Cf. _Résumé de la Question sociale_, p. 39.

[670] Moreover, the advances will take the form of discount. The
_entrepreneur_ who has some scheme which he wishes to carry out “will in
the first place collect orders, and on the strength of those orders get
hold of some producer or dealer who has such raw material or services
at his disposal. Having obtained the goods, he pays for them by means
of promissory notes, which the bank, after taking due precaution, will
convert into circulation notes.” The consumer is really a sleeping
partner in the business, and between him and the _entrepreneur_ there is
no need for the intervention of money at all. (_Organisation du Crédit,
Œuvres_, vol. vi, p. 123.) Discount was the fundamental characteristic
of the bank, and no criticism is directed against this feature of its
operations.

[671] “How to resolve the _bourgeoisie_ and the proletariat into the
middle class, the class which lives upon its income and that which draws
a salary into a class which has neither revenue nor wages, but lives by
inventing and producing valuable commodities to exchange them for others.
The middle class is the most active class in society, and is truly
representative of a country’s activity. This was the problem in February
1848.” (_Révolution démontrée par le Coup d’État_, p. 135.)

[672] “Reciprocity means a guarantee on the part of those who exchange
commodities to sell at cost price.” (_Idée générale de la Révolution_,
pp. 97-98.)

[673] “The very existence of the State implies antagonism or war as the
essential or inevitable condition of humanity, a condition that calls
for the intervention of a coercive force which shall put an end to the
struggle continually waging between the weak and the strong.” (_Voix du
Peuple_, December 3, 1849; _Œuvres_, vol. xix, p. 23.) “When economic
development has resulted in the transformation of society even despite
itself, then the weak and the strong will alike disappear. There will
only be workers; and industrial solidarity, and a guarantee that their
products will be sold, will tend to make them equal both in capacity and
wealth.” (_Ibid._, p. 18.)

[674] “Consequently we consider ourselves anarchists and we have
proclaimed the fact more than once. Anarchy is suitable for an adult
society just as hierarchy is for a primitive one. Human society has
progressed gradually from hierarchy to anarchy.” (_Œuvres_, vol. xix,
p. 9.) A little later, in _Idée générale de la Révolution_, he states
that the aim of the Revolution was “to build up a property constitution
and to dissolve or otherwise cause the disappearance of the political
or government system by reducing or simplifying, by decentralising and
suppressing the whole machinery of the State.” This idea was borrowed
from Saint-Simon, and Proudhon has acknowledged the debt in his _Idée
générale_. This conception of industrial society rendering government
useless or reducing it to harmless proportions is a development, though
perhaps somewhat extravagant, of the economic Liberalism of J. B. Say.
The first edition of the _Mémoire sur la Propriété_ contains an admission
of anarchical tendencies. “What are you, then? I am an anarchist.—I
understand your doubts on this question. You think that I am against the
Government.—That is not so. You asked for my confession of faith. Having
duly pondered over it, and although a lover of order, I have come to the
conclusion that I am in the fullest sense of the word an anarchist.”

[675] “The whole problem of circulation is how to make the exchange
note universally acceptable, how to secure that it shall always
be exchangeable for goods and services and convertible at sight.”
(_Organisation du Crédit, Œuvres_, vol. vi, pp. 113, 114.)

[676] _Organisation du Crédit._

[677] Proudhon always maintained that his reform merely consisted in
transforming a credit sale into a cash one. But he might as well have
said that black was white. Far from giving mutual benefit, the borrower
will be the one who will gain most advantage. Elsewhere he says that to
give credit is merely to exchange. This is true enough, but discount is
employed just to equalise different credit transactions.

[678] In the _Idée générale de la Révolution au XIXe Siècle_, p. 198:
“The citizens of France have a right to demand and if need be to join
together for the establishment of bakehouses, butchers’ shops, etc.,
which will sell them bread and meat and other articles of consumption
of good quality at a reasonable price, taking the place of the present
chaotic method, where short weight, poor quality, and an exorbitant
price seem to be the order. For a similar reason they have the right to
establish a bank, with the amount of capital which they think fit, in
order to get the cash which they need for their transactions as cheaply
as possible.”

[679] “Association avoids the waste of the retail system. M. Rossi
recommends it to those small householders who cannot afford to buy
wholesale. But this kind of association is wrong in principle. Give the
producer, by helping him to exchange his products, an opportunity of
supplying them with provisions at wholesale prices, or, what comes to the
same thing, organise the retail trade so as to leave only just the same
advantage as in the case of the wholesale transaction, and ‘association’
will be unnecessary.” (_Idée générale de la Révolution_, p. 92.)

[680] This system was criticised by Marx in his _Misère de la
Philosophie_, published in 1847 (Giard and Brière’s edition, 1896, pp.
92 _et seq._). A more recent and more complete exposition is given in
Foxwell’s introduction to Anton Menger’s _The Right to the Whole Produce
of Labour_, pp. lxv, etc.

[681] Mazel gave an exposition of his scheme in a series of pamphlets
written in very bombastic language, but only of very slight interest
to the economist. Another bank known as Bonnard’s Bank was established
at Marseilles in 1838, and afterwards at Paris. The ideas are somewhat
similar, but much more practical. Both branches are still in active
operation. Proudhon refers to this bank in his _Capacité politique des
Classes ouvrières_. Courcelle-Seneuil gives a very eulogistic account of
it in his _Traité des Banques_, and in an article in the _Journal des
Économistes_ for April 1853. The _modus operandi_ is explained in three
brochures, which may be seen in the Bibliothèque Nationale. One of these
is entitled _Liste des Articles disponibles à la Banque_; the other two
describe the mechanism of the bank. Darimon, one of Proudhon’s disciples,
in his work _De la Réforme des Banques_ (Paris, Guillaumin, 1856), gives
an account of a large number of similar institutions which were founded
during this period. Several systems of the kind have also been discussed
by M. Aucuy in his _Systèmes socialistes_ _d’Échange_ (Paris, 1907). But
we cannot accept his interpretation of various points.

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).

[682] “I repudiate Mazel’s system root and branch,” he declares in an
article contributed to _Le Peuple_ of December 1848 (_Œuvres_, vol. xvii,
p. 221). He also adds that when he wrote first he had no acquaintance of
any kind with Mazel. “It was M. Mazel who on his own initiative revealed
his scheme to me and gave me the idea.” In one of his projects, published
on May 10, 1848, Proudhon seems inclined to adopt this idea, just for a
moment at any rate. Article 17 seems to hint at this. “The notes will
always be exchangeable at the bank and at the offices of members, but
only against goods and services, and in the same way commodities and
services can always be exchanged for notes.” (_Résumé de la Question
sociale_, p. 41.) This article justifies the interpretation which
Courcelle-Seneuil puts on it, in his _Traité des Operations de Banque_
(9th ed., 1899, p. 470), and which Ott accepts in his _Traité d’Économie
sociale_ (1851), which, moreover, contains a profound analysis and some
subtle criticism of Proudhon’s idea. But we think that this article was
simply an oversight on Proudhon’s part; for beyond a formal refutation of
Mazel’s idea there is no reference to it in any of his other works, not
even in the scheme of the People’s Bank. Moreover, it seems to contradict
the statement that the notes would be issued against commodities which
had been actually sold and delivered, as well as other articles of the
scheme—_e.g._ Article 30, dealing with buying and selling. It also
conflicts with the idea that the discounting of goods is the prime and
essential operation of the bank. In our opinion, Diehl in his book on
Proudhon (_P. J. Proudhon, Seine Lehre u. seine Leben_, vol. ii, p. 183)
is wrong in thinking that the Exchange Bank would issue notes against all
kinds of goods without taking the trouble to discover whether they had
been sold or not.

[683] _Annales de l’Institut Solvay_, vol. i, p. 19.

[684] _Ibid._, p. 25.

[685] Cf. _Principes d’Orientation sociale_, a _résumé_ of Solvay’s
studies in productivism and accounting (Brussels, 1904).

[686] Although Solvay’s scheme seems very different from Proudhon’s,
it possesses features that received the highest commendation from
the Luxembourg Commission. In _L’Exposé général de la Commission de
Gouvernement pour les Travailleurs_, which appeared in _Le Moniteur_
of May 6, 1848, we read: “When in the future association has become
complete, there will be no need for notes even. Every transaction will be
carried on by balancing the accounts. Book-keepers will take the place of
collecting clerks. Money, both paper and metallic, is largely superfluous
even in present-day society.” The author then proceeds to outline a
scheme of clearing-houses.

[687] A hit at Proudhon’s _Philosophie de la Misère_, which was the
sub-title of his _Contradictions économiques_.

[688] In a letter written to Karl Marx on May 17, 1846 (_Correspondance_,
vol. ii, p. 199), _à propos_ the expression “at the moment of striking,”
which Marx had employed, Proudhon takes the opportunity of declaring
that he is opposed to all kinds of revolution. “You are perhaps still
of opinion that no reform is possible without some kind of struggle or
revolution, as it used to be called, but which is nothing more or less
than a shock to society. That opinion I shared for a long time. I was
always willing to discuss it, to explain it, and to defend it. But in
my later studies I have completely changed my opinion. I think that it
is not in the least necessary, and that consequently we ought not to
consider revolution as a means of social reform. Revolution means an
appeal to force, which is clearly in contradiction to every project of
reform. I prefer to put the question in a different fashion, namely, How
can we arrange the economic activities of society in such a fashion that
the wealth which is at present lost to society may be retained for its
use?” And in the _Confessions d’un Révolutionnaire_, p. 61: “A revolution
is an explosion of organic forces, an evolution spreading from the heart
of society through all its members. It can only be justified if it be
spontaneous, peaceful, and gradual. It would be as tyrannous to try to
suppress it as to bring it about through violence.” See M. Bourguin’s
article on Proudhon and Karl Marx in the _Revue d’Économie politique_,
1893.

[689] On this point see Puech, _Proudhon et l’Internationale_ (Paris,
1907); preface by M. Andler.

[690] This fact is recognised even by German socialists themselves. “The
people who gave socialism to the world even in its earlier forms have
immortalised themselves,” says Karl Grün, when speaking of France just
about the time that our chapter refers to. (Quoted by Puech, _loc. cit._,
p. 57.)

[691] “So many things have we attempted! How is it that liberty, the
easiest of all, has never been given a trial?” (Bastiat, _Harmonies_,
chap. 4, p. 125.)

[692] One of the sections of Dunoyer’s _La Liberté du Travail_ is
entitled: “Of the True Means of remedying the Evils from which the
Workers suffer, by extending the Sphere of Competition.” (Book IV, chap.
10, § 18.)

“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.”

[693] “Whenever the State undertakes to supply the wants of the
individual, the individual himself loses his right of free choice and
becomes less progressive and less human; and by and by all his fellow
citizens are infected with a similar moral indifference.” (Bastiat,
_Harmonies_, chap. 17, p. 545.)

[694] Dunoyer says: “You may search the literature of association as
much as you like, but you will never come across a single intelligent
discussion of an equitable means of distribution.” (_Liberté du Travail_,
vol. ii, p. 397.) Further, he asserts that association has damaged social
even more than individual morality, because nothing will be considered
lawful unless done by society as a whole. It is true that in this case he
was speaking chiefly of corporative association, but the condemnation has
a wider import.

[695] On the occasion of the international gathering of economists at
the Paris Exposition in July 1900, Levasseur, one of the most moderate
members of the Liberal school, said: “There is no need to draw any
distinction between us. Liberal economists ought not to be divided in
this way. There may be different opinions on the question of applying
our principles, but we are all united on this question of liberty. A man
becomes wealthy, successful, or powerful all the sooner if he is free.
The more liberty we have, the greater the stimulus to labour and thought
and to the production of wealth.” (_Journal des Économistes_, August 15,
1900.)

[696] “It is a good thing to have a number of inferior places in society
to which families that conduct themselves badly are liable to fall, and
from which they can rise only by dint of good behaviour. Want is just
such a hell.” (Dunoyer, _La Liberté du Travail_, p. 409.)

[697] See the discussion of the political doctrine of the Physiocrats,
pp. 33 _et seq._

[698] Editions of the same work appeared between 1825 and 1830; but
the volume was much smaller and had a different title. Dunoyer will
again engage our attention towards the end of this chapter. Cf. Villey,
_L’Œuvre économique de Dunoyer_ (Paris, 1899).

[699] Henry Charles Carey was born at Philadelphia in 1793, and died
in 1879. Up to the age of forty-two he followed the profession of a
publisher, retiring in 1835 to devote himself to economic studies. The
three volumes of his _Principles of Political Economy_ were issued in
1837, 1838, and 1840 respectively. In 1848 appeared _The Past, the
Present, and the Future_, which contains his theory of rent. In 1850 his
_Harmony of Interests, Agricultural, Manufacturing, and Commercial_, was
published, and in 1858-59 his _Principles of Social Science_.

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.

[700] Frédéric Bastiat, born in 1801 near Bayonne, belonged to a family
of fairly wealthy merchants, and he himself became in turn a merchant,
a farmer in the Landes district, a justice of the peace, a councillor,
and finally a deputy in the Constituent Assembly of 1848. He made little
impression in the Assembly; but he scarcely had time to become known
there before his health gave way. He died at Rome in 1850, at the age of
forty-nine.

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.

[701] On this question of who benefits by international trade see our
discussion of Mill’s treatment of the problem (pp. 364-365).

[702] _Harmonies_, p. 21. Our quotations are taken from the tenth edition
of the _Œuvres complètes_.

[703] “Economic phenomena are not without their efficient cause and their
Providential aim.” (_Harmonies_, last page.)

“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.)

[704] Auguste Comte, _Cours de Philosophie positive_, vol. iv, p. 202.

[705] The liturgy of the Reformed Church reads as follows: “We
acknowledge and confess our manifold sins.” See our chapter on _Doctrines
that owe their Inspiration to Christianity_.

[706] _Harmonies_, chap. 5, p. 140.

[707] “I have attempted to show that value is based not so much upon the
amount of labour which a thing has cost the person who made it, as upon
the amount of labour it saves the persons who obtain it. [He ought to
have acknowledged his indebtedness to Carey in this matter.] Hence I have
adopted the term ‘service,’ which implies both ideas.” (_Ibid._, chap. 9,
p. 341.)

[708] _Ibid._, chap. 5, p. 145.

[709] _Harmonies_, chap. 5, p. 193.

“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.).

[710] _Harmonies_, chap. 7, p. 236. The controversy between Bastiat and
Proudhon in 1849 concerning the legitimacy of interest was published
under the title of _Gratuité du Crédit_, but the argument is scarcely
worth examining here. Bastiat’s argument is based upon the supposition
that the person who lends money performs some service or other, and that
the service, whenever given, should be paid for; in other words, he
maintains that capital is productive. A plane means more planks produced,
and it is only just that the owner of the plane should get some of
them. Proudhon replies that he does not deny the legitimacy of interest
under present conditions, but that interest itself is just a historical
category—to use a phrase that only became current after Proudhon’s
time—and that it will be quite unnecessary under the new _régime_. The
Exchange Bank was to be the parent of the new order. The two combatants
never really come to blows. They keep on arguing about nothing. The
result is that this discussion is very trying and brings little honour to
either.

[711] “The relative importance of any service must vary with the
circumstances. This will depend upon its utility, and the number of
people who are willing to give the amount of labour, of ability or
training necessary to produce it, as well as the amount of labour which
it will save us.” (_Harmonies_, chap. 5, p. 146.)

[712] Bastiat himself was obliged to recognise this. “I have not taken
the trouble to ask whether all these services are real and proper or
whether men are not sometimes paid for services which they never give.
The world is full of such injustices.” (_Ibid._, chap. 5, p. 157.)

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.

[713] J. B. Say had already employed the term “service” without giving it
any normative significance, simply using it to distinguish between wealth
which consists of acts and wealth which consists of material products.

[714] _Social Possibilities of Economic Chivalry_, in _Economic Journal_,
March 1907.

[715] “And I also declare that you have not intercepted any of the gifts
of God. It is true that you received them free out of nature’s hand. But
it is equally true that you have handed them on freely, reserving nothing
for yourself. Fear not, but live in peace and freedom from every qualm.”
(_Harmonies_, chap. 8, p. 257.)

“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.

[716] _Harmonies_, chap. 8, p. 256.

[717] _Ibid._, chap. 5, p. 142.

[718] Bastiat does not seem to have studied rent. The chapter of the
_Harmonies_ on this subject was never completed. Fontenay, one of his
disciples, wrote a brilliant book called _Du Revenu foncier_ (1854),
which is almost forgotten to-day. He attempted to show:

(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.

[719] Carey, _Principles of Social Science_.

[720] Even in Algeria, for example, where Carey’s theory was at first
true, now that the fertile plain of the Mitidja has been cultivated
by two generations of colonists it is certain that there is only
second-class land available.

[721] “Wealth consists of the right to command the services of nature,
which are always free.” (Carey, _Principles of Social Science_, vol. i,
chap. 13.)

“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.

[722] “Capitalists and workers, don’t look at one another with an air of
defiance and vengeance.” (_Harmonies_, p. 252.)

[723] A lowering of the rate of interest from 5 to 3 per cent. means that
what formerly cost £60 and yielded 3 per cent. will now cost £100. There
is no decrease of the revenue and there is an increase in the capital. It
is quite a good bargain. A lowering of the rate of interest will simply
reduce the amount of capital in those instances where the borrower can
effect a conversion to his own advantage.

[724] This truth is so obvious that Rodbertus, as we shall see by and by,
took the opposite point of view and attempted to argue on the strength of
the “iron law” that capital’s share is always increasing, while labour’s
is decreasing. This thesis seems to have no better foundation than the
other. See an article by Rist entitled _Deux Sophismes économiques_, in
the _Revue d’Économie politique_ for March 1905.

Bastiat’s thesis may also be seen in Carey. The Liberal school has
clearly adopted it. See Paul Leroy-Beaulieu’s _Répartition der Richesses_.

[725] See Gide’s _Political Economy_, p. 599 (English translation), and
Colson’s _Political Economy_, vol. iii, p. 366. According to Colson,
capital’s share has quadrupled since 1820, while labour’s has only
increased in the proportion of 1:3½.

[726] “Just as the earth is the great reservoir of electricity, so the
public or the consumer is the one source of any gain or loss which
the producer makes or suffers. Everything comes back to the consumer.
Consequently every important question must be studied from the consumer’s
point of view if we want to get hold of its general and permanent
results.” (_Harmonies_, chap. 11, p. 414.)

[727] See one of Bastiat’s best known pamphlets, _La Vitre cassée_.

[728] _Harmonies_, chap. 6, p. 419.

[729] Quoted by his friend Paillottet in his preface to the _Œuvres
complètes_.

[730] _E.g._ Yves Guyot in the _Journal des Économistes_ for 1904 _et
passim_. See p. 326.

[731] The word is not his invention. That honour is claimed by Pierre
Leroux. See p. 235.

[732] _Harmonies_, chap. 21, p. 624.

“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.)

[733] “Solidarity implies a kind of collective responsibility. And so
solidarity as well as responsibility is a force that makes for progress.
It is a system that is admirably calculated to check evil and to advance
the good.” (_Ibid._, chap. 21, pp. 622-626.)

[734] “Workers must understand that these collective funds [pension
funds] must be voluntarily contributed by those who are to have a share
in them. It would be quite unjust, as well as anti-social, to raise them
by means of taxation—that is, by force—from the classes who have no share
in the benefits.” (_Harmonies_, chap. 14, p. 471.)

“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.)

[735] “Organisms in nature have their rank and degree of perfection
determined by the number of organs which they possess and the amount of
difference which exists between each of them.” (_Social Science_, vol.
iii, p. 461.)

“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.)

[736] Charles Dunoyer was Bastiat’s senior. The first edition of _De la
Liberté du Travail_, to which we have already referred, dates from 1825,
and the last edition from 1845. He took an active part in opposing the
Restoration Government, but he became prefect and subsequently Conseiller
d’État under Louis Philippe.

[737] Molinari, a modern French economist, holds similar views.

[738] If a person died intestate he was in favour of equal division of
wealth. The arguments which he employed are very interesting, especially
those directed against the upholders of primogeniture. They thought that
by depriving the younger sons of their inheritance they became more
industrious and thoughtful. Dunoyer replies by asking whether it would
not be an advantage to deny the right of succession to the eldest son
as well, “for it is obviously unfair that he should be deprived of that
kind of training which is so profitable to his younger brothers.” Dunoyer
forgot that it would have gone ill with his arguments if the socialists
had taken him at his word.

[739] “Labour is the only source of productive power. Capital is a human
creation, and land is simply a form of capital.” (_De la Liberté du
Travail_, Book VI.)

[740] Say had already recognised the claims of immaterial wealth
alongside of material, and he had employed the term “services” in
describing them. In this way he considered that the professor, the doctor
and the actor had claims to be regarded as producers. Dunoyer, while
accepting his conclusion, criticises his way of putting it. He recognises
no distinction between material and immaterial wealth. There is nothing
but utility. “It is true that taste, education, etc., are immaterial,
but so is everything that man produces.” But he is entirely wrong when
he says that a good teacher is a producer of enlightened men and a
doctor a producer of healthy persons. We are at a loss to explain why at
one moment he refuses to recognise the material element in production,
while at another he grossly exaggerates the material results of purely
intellectual labour.

[741] “Labour and exchange belong to two categories of facts which are
absolutely distinct in their nature. Labour implies production. Commerce
and exchange imply nothing of the kind.” (_De la Liberté du Travail_, p.
599.)

[742] Seligman in the _Economic Journal_ for 1903, pp. 335-511, devotes
two very interesting articles to such writers under the title of _Some
Neglected British Economists_. One is astonished to find how many there
are and the originality which they show, and to learn that several of the
more important modern theories are simply rediscoveries.

[743] Mrs. Marcet’s _Conversations_ belong to 1817, Miss Martineau’s
_Illustrations_ to 1832. The latter had a wonderful vogue.

[744] Quoted by Seager in a lecture on economics at Columbia University
in 1908.

[745] We have already referred to McCulloch and James Mill, two of
Ricardo’s immediate disciples. We must just add the names of Torrens and
Gibbon Wakefield. Wakefield was the author of a book which had a great
reputation at one time, but which was simply an attempt to apply the
Ricardian principles to the practice of colonisation.

[746] Nassau Senior during a part of his life was Professor of Political
Economy at Oxford. The Oxford chair, created in 1825, was the first chair
of economics to be established in England. His writings, which treat of
various subjects, belong to the period 1827-52. The bulk of his doctrine
is contained in his _Political Economy_, contributed to the _Encyclopædia
Britannica_ in 1836 and afterwards published separately. This small
volume may be regarded as the earliest manual of political economy.

[747] The four principles were: (i) the Hedonistic Principle; (ii) the
Principle of Population; (iii) the Law of Increasing Returns in Industry;
(iv) the Law of Diminishing Returns in Agriculture.

[748] “But a considerable part of the produce of every country is the
recompense of no sacrifice whatever; is received by those who neither
labour nor put by, but merely hold out their hands to accept the
offerings of the rest of the community.” (_Political Economy_, p. 89.) He
takes the income of a successful doctor as an illustration, and divides
it up as follows (_ibid._, p. 189):

  Wages or payment for labour          £40
  Profit or payment for abstinence    £960
  Rent                               £3000

See _Senior’s Theory of Monopoly_, by Richard Ely (American Economic
Association, 1899).

[749] This confusion between rent and the income of inherited wealth does
little honour to Senior, for the two facts belong to entirely different
categories. Rent is a purely economic phenomenon, resulting from the
necessary conditions of exchange. It owes nothing to social organisation,
not even to the institution of private property. Inheritance, on the
other hand, is a purely juridical phenomenon, the product of civil law.
Even if inheritance were abolished it would make no difference to the
existence and growth of rent, whether obtained from the soil or from
some other source; whereas under the hypothetical _régime_ of perfectly
free competition, although rent would no longer be known, inheritance,
together with all its privileges, might still continue to exist. Senior
evidently understands by the term “rent” any kind of income that is not
obtained by personal effort. But this is clearly a perversion of the
original meaning.

[750] Rau’s treatise on political economy belongs to the years 1826-37,
and von Thünen’s _Der Isolirte Staat_ appeared in 1826.

[751] Pellegrino Rossi, who became a naturalised Frenchman in 1833, was
an Italian by birth. He succeeded Say as professor at the Collège de
France. He afterwards became Lecturer on Constitutional Law, and his
name is commemorated in one of the annual prizes. He eventually entered
the diplomatic service, and was attached to the Papal See during the
pontificate of Pius IX. He was assassinated at Rome in 1848.

[752] John Stuart Mill, born in 1806, was the son of James Mill the
economist of whom we have already spoken. The system of education which
his father planned for him can only be described as extraordinary.
Practised on anyone else it would have been fatal. At the age of ten
he was already well versed in universal history and in the literatures
of Greece and Rome. At thirteen he had a fair grasp of science and
philosophy, and had written a history of Rome. By the time he was
fourteen he knew all the political economy that there was to know then.
In 1829, then a young man of twenty-three, he published his first essays
on political economy. In 1843 appeared his well-known _System of Logic_,
which immediately established his fame. In 1848 he issued the admirable
_Principles of Political Economy_. Mill was in the service of the East
India Company up to the time when it lost its charter in 1858. From
1865 to 1868 he was a member of the House of Commons. After the death
of his wife, who collaborated with him in the production of several of
his works, especially _Liberty_ (1859), being unwilling to quit the
spot where she lay buried, he spent the last years of his life, except
those taken up by his Parliamentary work, at Avignon. His autobiography
contains a precious account of his life and of his gradual conversion to
socialistic views.

[753] _Principles_, Book II, chap. 1, § 3.

[754] _Ibid._, Book IV, chap. 7, § 7.

[755] Dupont de Nemours, writing very much in the spirit of the Classical
school, had already given an excellent definition of natural law. “By
natural law we are to understand those essential conditions that regulate
all things in accordance with the design laid down by the Author of
Nature. They are the ‘essential conditions’ to which men must submit if
they would obtain all the benefits which the natural order offers them.”
(Introduction to Quesnay’s works, p. 21.)

[756] Adam Smith, let us remember, also wrote a book on the _Theory
of Moral Sentiments_ (see Book I, chap. 2), and Stuart Mill writes as
follows: “In the golden rule of Jesus of Nazareth we read the complete
spirit of the ethics of utility. To do as you would be done by and to
love your neighbour as yourself constitute the ideal perfection of
utilitarian morality.” (_Utilitarianism_, chap. 2.)

[757] This is how Mill views it: “It is only in a very imperfect state
of the world’s arrangements that anyone can best serve the happiness of
others by the absolute sacrifice of his own.” (_Utilitarianism_, chap.
2.) But it is scarcely necessary to add, seeing that the two propositions
are necessarily complementary, that one of the best ways of securing
happiness is to sacrifice one’s self in the cause of others. All that is
required is a little patience. “Education and opinion will so use that
power as to establish in the mind of every individual an indissoluble
association between his happiness and the good of the whole.” Interpreted
in this way, individualism is closely akin even to the most transcendent
form of solidarity.

[758] One is sometimes asked to state the differences between the
Classical, the Individualist, the Liberal, and the Optimist schools.
The question does not seem to us to be a very important one, but we may
answer it in this way:

(_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.

[759] _Auguste Comte and Positivism._

[760] _Principles_, Book IV, chap. 7, par. 7 (Ashley’s ed., p. 793). See
the recent work of Molinari, or _La Morale de la Concurrence_, by Yves
Guyot.

[761] “It is in vain to say that all mouths which the increase of mankind
calls into existence bring with them hands. The new mouths require
as much food as the old ones and the hands do not produce as much.”
(_Principles_, Book I, chap. 11, § 2.)

[762] “It is seldom by the choice of the wife that families are too
numerous; on her devolves (along with all the physical suffering and
at least a full share of the privations) the whole of the intolerable
domestic drudgery resulting from the excess.” (_Principles_, Book II,
chap. 13, § 2.)

[763] “While a man who is intemperate in drink, is discountenanced and
despised by all who profess to be moral people, it is one of the chief
grounds made use of in appeals to the benevolent that the applicant
has a large family and is unable to maintain them.” (_Ibid._, Book II,
chap. 13, § 1.) “Little improvement can be expected in morality, until
the producing large families is regarded with the same feelings as
drunkenness or any other physical excess. But while the aristocracy and
clergy are foremost to set the example of this kind of incontinence what
can be expected of the poor?” (_Ibid._, Ashley’s ed., p. 375, note.)

He complains that the Christian religion inculcates the belief that God
in His wisdom and care blesses a numerous family.

[764] “The laws which in many countries on the Continent forbid marriage
unless the parties can show that they have the means of supporting a
family, do not exceed the legitimate powers of the State. They are not
objectionable as violations of liberty.” (_Liberty_, chap. 5.)

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.)

[765] “The rise or the fall continues until the demand and supply are
again equal to one another: and the value which a commodity will bring
in any market is no other than the value which in that market gives a
demand just sufficient to carry off the existing or expected supply.”
(_Principles_, Book III, chap. 2, § 4.)

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_.

[766] _Principles_, Book III, chap. 3, § 1.

[767] _Ibid._, Book III, chap. 1, § 1.

[768] “Wages depend, then, on the proportion between the number of the
labouring population and the capital or other funds devoted to the
purchase of labour, and cannot under the rule of competition be affected
by anything else.” (_Ibid._, Book II, chap. 11, parts 1 and 3.)

[769] Saving with a view to augmenting the wages fund is only possible
for the rich, and Mill is as insistent upon their doing it as he is upon
the workers refraining from marriage. He also tries to impress upon the
workers the importance of saving, but his way of showing its advantages
is often laborious and obscure.

[770] Stuart Mill admitted that trade unions might modify the relations
between demand and supply, forgetting for the moment that this meant a
contradiction of the Classical theory.

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.

[771] See the quarterlies of Harvard and Columbia. It was an American,
however, Francis Walker, in his _Wages Question_ (1876), who did more
than anyone to destroy the old wage fund theory.

[772] “The cost value of a thing means the cost value of the most costly
portion of it.” (_Principles_, Book III, chap. 6, § 1, prop. 7.)

“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.

[773] Ricardo, moreover, gives an exposition of the advantages of
international trade in terms that Bastiat might have adopted. “Under a
system of perfectly free commerce each country naturally devotes its
capital and labour to such employments as are most beneficial to each.
This pursuit of individual advantage is admirably connected with the
universal good of the whole. By stimulating industry, by rewarding
ingenuity, and by using most efficaciously the peculiar powers bestowed
by nature, it distributes labour most effectively and most economically:
while by increasing the general mass of productions it diffuses
general benefit and binds together, by one common tie of interest and
intercourse, the universal society of nations throughout the civilised
world. It is this principle which determines that wine shall be made in
France and Portugal, that corn shall be grown in America and Poland,
and that hardware and other goods shall be manufactured in England.”
(Ricardo, _Works_, p. 75.)

[774] The following apparent paradox may be deduced from Ricardo’s
theory. A country is wise in importing not only those commodities which
it can only produce at a disadvantage as compared with its rivals, but
also those goods in which it has a distinct advantage in the matter of
production, though not so great as the advantage enjoyed in some other
case. Under those circumstances it is better that it should produce that
product in the making of which it has the greater advantage and exchange
it for some other product in which it has less.

“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.

[775] “The value of a thing in any place depends on the cost of its
acquisition in that place; which in the case of an imported article means
the cost of production of the thing which is exported to pay for it.”
(_Principles_, Book III, chap. 18, § 1.)

[776] Mill first treated of the theory in his _Unsettled Questions of
Political Economy_. A more complicated but more precise exposition is
given in the _Principles_ Book III, chap. 18, § 7. The whole process of
reasoning, based as it is upon the hypothetical conduct of two persons,
is purely abstract, and is of very little practical use. What is really
important is to know the relation between the advantages gained by either
side. It is true that on the whole imports and exports balance one
another, thanks to the operation of money, but that is another question.

[777] “It still appears, that the countries which carry on their foreign
trade on the most advantageous terms are those whose commodities are
most in demand by foreign countries, and which have themselves the least
demand for foreign commodities, from which, among other consequences, it
follows that the richest countries, _ceteris paribus_, gain the least
by a given amount of foreign commerce, since, having a greater demand
for commodities generally they are likely to have a greater demand for
foreign commodities and thus modify the terms of interchange to their
own disadvantage.” (_Principles_, Book III, chap. 18, § 8.) Note the
phrase “a given amount of foreign commerce.” That is, although the rate
of interchange is less advantageous for the rich country than it is for
the poor, still, since the former exchanges much more than the latter
it gains more on the whole transaction. Mill states this expressly
elsewhere. The rich and the poor country are like the wholesale house and
the little shop. The former gains very little on each article sold, but
gains much on the whole turnover.

[778] _Ibid._, Book V, chap. 10, § 1.

[779] An even more important concession to the Protectionist view is
his admission that the duties are not always borne by the home consumer
in the form of higher prices, but that they are sometimes paid by the
foreigner.

[780] _Principles_, Book V, chap. 10, § 1. The duty would check the
demand of the importing country, and according to Mill’s own formula it
ought to modify the exchange equation in its favour.

[781] _Histoire des Doctrines économiques_, p. 338.

[782] Mill was for many years resident in France, and died at Avignon.
An article written by him in defence of the Revolution of 1848 has been
translated into French and published in book form by M. Sadi Carnot.

[783] _Principles_, p. 210.

[784] _Representative Government_, chap. 3.

[785] “The laws and conditions of the production of wealth partake of the
character of physical truths. There is nothing optional or arbitrary in
them.… It is not so with the distribution of wealth. This is a matter of
human institution solely. The things once there, mankind, individually
or collectively, can do with them as they like.” (_Principles_, Book
II, chap. 1, § 1.) Karl Marx, a little later than this, claimed that
distribution is wholly determined by production.

[786] See Chatelain’s introduction to Rodbertus’s _Kapital_.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

[796] _Essays_, p. 281.

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

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

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

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

[801] A. Toynbee, _The Industrial Revolution_.

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

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

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

[805] _Grundriss_, preface.

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

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

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

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

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

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

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

[813] Schmoller, _Grundriss der Volkswirtschaftslehre_, vol. i, p. 107
(1904).

[814] _Ibid._, vol. i, p. 108.

[815] _Ibid._, vol. ii, p. 653.

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

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

[818] Marshall, _Principles_, Appendix A.

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

[820] The first edition appeared in 1857.

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

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

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

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

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

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

[827] See Karl Pearson, _The Grammar of Science_.

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

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

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

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

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

[832] Walras, _Economie politique pure_.

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

[834] Schmoller especially insists on this point.

[835] Knies, _op. cit._, p. 23.

[836] A. Wagner, _Grundlegung_, § 67.

[837] Vol. ii, p. 502.

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

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