Principles Of Political Economy

By

William Roscher,

Professor of Political Economy at the University of Leipzig,

Corresponding Member of the Institute of France,

Privy Counsellor To His Majesty,

The King Of Saxony.

From the Thirteenth (1877) German Edition.

With Additional Chapters Furnished By The Author,

For This First English And American Edition,

On Paper Money, International Trade,

And The Protective System;

And A Preliminary Essay

On The Historical Method In Political Economy

(From the French)

By

L. Wolowski

The Whole Translated By

John J. Lalor, A. M.

Vol. I.

New York:

Henry Holt & Co.

1878

Contents

[pg iii]

Dedication.

TO
WILLIAM H. GAYLORD, Esq.,
COUNSELLOR AT LAW,
OF CLEVELAND, OHIO,
TO WHOSE BROTHERLY CARE IT IS LARGELY DUE THAT I LIVED TO
TRANSLATE THEM,
THESE VOLUMES
ARE AFFECTIONATELY INSCRIBED.

Translator's Preface.

Our literature is rich enough in works on the principles of Political Economy. So far as the translator is informed, however, it possesses none in which the science is treated in accordance with the historical method. We may therefore venture to express the hope that this translation will fill a place hitherto unoccupied in the literatures of England and America, and fill it all the more efficiently and acceptably, as Professor Roscher is the founder and still the leader of the historical school of Political Economy. Were this the only recommendation of our undertaking, it would not be a useless one. But a glance at Professor Roscher's book will convince even the most hasty reader that its pages fascinate by their interest and are rich in treasures of erudition which should not remain inaccessible to the English student from being locked up in a foreign tongue.

The present translation has received, throughout, the revision of the author, and should any imperfections remain in the rendering of his thought into English, the blame is certainly not his, for his revision has been most minute.

The three appendices have been supplied by Professor Roscher expressly for this edition. As they are intended to form a part of the work on the Political Economy of Industry and Commerce, on which he is now engaged, he authorizes [pg vi] their publication in English, only by the publishers of this edition of his principles; and only for the purpose of being added to the present translation. He desires especially that their appearance in their present shape should not in any way interfere with any of his rights in his forthcoming volume, and that they should not be translated into any language nor translated back into German.

The essay of Mr. Wolowski, on the historical method in Political Economy constitutes no part of Professor Roscher's book, and neither he nor its author, but only the translator, is responsible for its appearance here. In it the reader will find a short sketch of the life of Professor Roscher, brought down to the date at which the essay was written. The translator has little to add to that sketch, all the information he possesses in addition to what it contains being embraced in the following lines from a letter received by him from the author in answer to a request that he would supply the biographical data not to be found in Wolowski's essay: “You might perhaps say ... that I have repeatedly declined calls to the Universities of Munich, Vienna and Berlin, but that I have never regretted remaining in Leipzig.”

The acknowledgments of the translator are due, in the first place, to the eminent author himself, for the revision of the plate-proof of the entire work, and then to Professor William F. Allen, of the University of Wisconsin, for his interest in the progress of the enterprise, and for many valuable suggestions; also to Professor W. G. Sumner, of Yale College, for some excellent hints as to the best translation of certain words in the Appendix on Paper Money.

Author's Preface. (1st Edition.)

My System der Volkswirthschaft shall, Deo volente, be completed in four parts. The second shall contain the national economy of agriculture and the related branches of natural production; the third, the national economy of industry and commerce; the fourth, of the economy of the state and of the commune (Gemeindehaushalt). While the entire work shall constitute one systematic whole, each part shall have its own appropriate title, constitute an independent treatise, and be sold separately.

Of the peculiar method which I have followed in this work, and which will produce still better fruits in the succeeding volumes, I have given a sufficient explanation in §§ [26] ff., and all I desire now is to say a few words on the relation the notes bear to the text. The careful reader will soon be convinced that of the many citations in this work, not one has been made from a vain desire of the display of erudition. Part of them serves as the necessary proof of surprising facts adduced, but which are little known. Another part of them is intended to incite the reader to the study of certain questions nearly related to those treated in the text, but which are still different from them. The object of the greater number is to supply information concerning the history of economic principles. As far as the sources at my command permitted, I have endeavored to point out the first germs, the chief stages of development, the contrasts, and, finally, what has been thus far attained in economic science. This sometimes required some little victory over self, inasmuch as I was conscious of having [pg viii] independently discovered certain facts, when I afterwards found that some old and long-forgotten writer had made similar observations. Thus, this work may serve both as a handbook and as a history of the literature of Political Economy. Students of the science know how little has thus far been done by writers in this direction. And hence I shall be very grateful to those who labor in the same field, if they will, either by writing to me personally, or through the medium of the press, inform me when I have erred in ascribing a truth, or a scientifically important error, to its earliest author.

I have already said in the title that this work is intended not for the learned only, but for all educated men, for men of a serious turn of mind, who desire truth and science for their own sake. Like that ancient historian, whom I honor above all others as my teacher, I desire that my work should be useful to those, ὅσοι βουλήσοντοι τῶν τε γενομένων τὸ σαφὲς σκοπεῖν καὶ τῶν μελλόντων ποτὲ αὖθις κατὰ τὸ ἀνθρώπειον τοιούτων καὶ παραπλησίων ἔσεσθαι. (Thucydides I, 22.)

University of Leipzig,
End of May, 1854.

From The Author's Prefaces. (2d to 11th Edition.)

The preface to the second edition is dated October, 1856; that to the third, April, 1858; that to the fourth, April, 1861; that to the fifth, November, 1863; that to the sixth, November, 1865; that to the seventh, November, 1868; that to the eighth, August, 1869; that to the ninth, March, 1871; that to the tenth, May, 1873; that to the eleventh (unaltered), December, 1873. Each successive edition, nearly, has been announced as an improved and enlarged one; and the tenth edition contains one hundred and fifty-six pages more than the first, although in places, a large number of abbreviations had been made from previous editions. There are many things in some of the previous editions which criticism induced me, long since, to change. I have considered it my duty to the public, who gave my work so warm and friendly a reception, to take into consideration, in each successive edition, not only my own new investigations, but those also of all others with which I became acquainted, and, whenever possible, to correct statistical illustrations from the latest sources. I have especially, in each following edition, enriched a number of paragraphs with here and there historical, ethnographic and statistical features. Plutarch is certainly right, spite of the fact that pedants may abuse him for it, when he says, that trifling acts, a word and even a jest, are often more important, as characterizing the life of a people or an age, than great battles which cost the lives of tens of thousands of men.

I have changed the titles “Ricardo's Law of Rent,” and “The Malthusian Law of the Increase of Population,” which [pg x] I formerly used, for others. But I would not be misunderstood here. I hold it to be a duty of reverence in the learned—as it has long been practiced in the case of the natural sciences—in the sciences of the human mind to call the natural laws, methods etc., in acquainting us with which, some one particular investigator has won very distinguished merit, by the name of that investigator. In the case of the law of rent, the application of this rule would as unquestionably entitle Ricardo to this honor as it would Malthus in that of the increase of population, spite of the fact that Ricardo may not have succeeded in finding the best possible form of the abstraction, and although Malthus even, in a one-sided reaction against a former still greater one-sidedness, was not always able to steer clear of positive and negative errors. Recent science has endeavored, and successfully, to examine the facts which contradict the Ricardoan and Malthusian formulations of the laws in question, and to extend the formulas accordingly. I have myself contributed hereto to the extent of my ability. But, in the interval, it is not hard to comprehend that, while this process of elucidation is going on, most scholars, those especially possessed more of a dogmatic than of a historical turn of mind, should estimate these two leaders more in accordance with their few defects than with the great merits of their discoveries. If, therefore, I now drop the title “Malthusian law,” it is to guard hasty readers from the illusion that §§ 242 seq. teach what the great crowd understand by Malthusianism; when they might, perhaps, omit that portion entirely. For my own part, I have no doubt that, when the process of elucidation above referred to shall have been thoroughly finished, the future will accord both to Ricardo and Malthus their full meed of honor as political economists and discoverers of the first rank.[1]

Preliminary Essay.

Preliminary Essay On The Application Of The Historical Method To The Study Of Political Economy,
By M. Wolowski,
Member Of The Institute Of France.

“Nunquam bene percipiemus usu necessarium nisi et noverimus jus illud usu non necessarium. Nexum est et colligatum alterum alteri. Nulli sunt servi nobis, cur quæstiones de servis vexamus? Digna imperito vox.”—Cuj., vii, in titul. Dig. De Justitia et Jure.[2]

“Homo sum, humani nihil a me alienum puto.”—Terence.[3]

“Ista præpotens, ac gloriosa philosophia.”—Cicero, De Or., I, 43.[4]

I.

It is no foolish desire to make a vain display of citations, that induces us, at the beginning of this essay, intended to point out the results of the application of a new method to the study of Political Economy, to invoke the authority of a poet and moralist, of a jurisconsult and of a philosopher. The writer finds in the words just quoted the loftiest expression of the thought [pg 002] which dictates these lines, viz.: that the impartial researches of history, a profound feeling of man's moral and material wants, and the light of philosophy, should govern in the teaching of a science, the object of which is to show us how those things which are intended to satisfy our wants are produced and distributed among the several classes or individuals of a nation; how they are exchanged one against another, and how they are consumed.

The nineteenth century affords us something more than the admirable spectacle of the rapid and fertile development of mechanical power and natural forces. This is but one of the aspects, we might even say but one of the results, of the general progress of the human mind. The renovation of moral and intellectual studies has served as a starting point for the application to facts of the conquests of thought. Science has preceded art.

In the foremost rank of the studies just referred to is philosophy, which initiates us into the knowledge of human nature, the basis of right, and which translates its legitimate aspirations into a language which we can understand; history, that prophetess of the truth, as one of the ancients called it, which places before us the faithful picture of times past, not by simply putting together a skeleton of facts, but by following the living progress of events and the organic development of institutions. Such, at least, has been the work of those noble minds who have consecrated their energies to the resuscitation of ages past, in their true shape, and such is the service for which we are indebted to them for the successful accomplishment of the reformation of historical studies, which they attempted with such rare devotion and such marvelous sagacity.

This renovation of history has exerted the most fertile influence in the region of philosophy, in that of law, and we believe that it will prove no less useful in that of Political Economy. It has served to put us on our guard against being easily misled by a priori notions.

By exhibiting to us the results of the life and of the experience of centuries, by teaching us by what steps the human mind has risen to its present eminence, and what the education given it in the past has been, it has enabled us to ascend from phenomena to the principles which preside over them; from facts to the law; and it has substituted for arbitrary assumptions and purely ideal systems, the slow but progressive work of the genius of nations. Not that it turns a deaf ear to the exalted lessons of philosophy, nor that it denies the eternal relations resulting from the nature of things. Far from it. On the contrary, it supplies a solid basis to intellectual investigations, and, so to speak, an answer for all the moral sciences, to this saying of Rœderer: “Politics is a field which has been traversed thus far only in a balloon; it is time to put foot on solid ground.”

Neither does history, as thus understood, confine itself to mere description; it also assumes the office of judge. While it pulls down much that passion and inaccuracy have reared, and thus restores respect for the past, it does not turn that past into a fetish. It looks it boldly in the face and questions it, instead of prostrating itself before it and worshipping it with downcast eyes. Thus, by plainly showing us the many bonds which tie us to it, it escapes at once both the rashness of impatience and the wearisomeness of routine.

The impartiality it inculcates is not indifference; and there is no danger that the justice it metes out to past ages shall degenerate into a vain scepticism or a convenient optimism.

The study of history, thus understood, has another advantage; it accustoms us to those patient and disinterested investigations, to those lengthy labors, the positive result of which at first escapes us for a time, only to burst on our eyes, with so much more brilliancy, when rigorous research has succeeded in discovering it. It frees us from the deadly constraint of immediate utility.

There is nothing more fatal to science than the feverish impatience for results which obtains only too much in our own [pg 004] days, and which induces people to run after him who is in the greatest hurry, and which leads to hasty conclusions.

“Research undertaken from a disinterested love of science,” says the learned Hugo, one of the masters of the historical school of law in Germany,[5] “that research which at first promises no other advantage but truth and the culture of the mind, is precisely that which brings us the richest rewards. Would we not be behind, in all the sciences, if we had clung only to those principles, the utility of which in practice was already known? Do we not, to-day, from many a discovery, reap advantages of which its author never dreamed?”

Doubtless this tendency, unless restrained by other demands, is not exempt from danger. We may be carried away by the attraction peculiar to these noble studies, withdraw into antiquity and fall into a species of historical mysticism which ends in the affirmation, that whatever has been is true, absolutely, and which, instead of confining itself to the explanation of transitory phenomena, invests them with all the dignity of principles. We shall endeavor to avoid the peril pointed out by Mallebranche. “Learned men study rather to acquire a chimerical greatness in the imagination of other men, than to acquire greater breadth and strength of mind themselves. They make their heads a kind of store-room, into which they gather, without order or discrimination, everything which has a look of erudition,—I mean to say everything which may seem rare or extraordinary and excite the wonder of other people. They glory in getting together, in this archæological museum, antiques with nothing that is rich or solid about them, and the price of which depends on nothing but fancy, chance or passion.”

A display of erudition may obscure the truth, and bury it under its weight, instead of bringing it out into relief. By concentrating the mind on the material vestiges of the past, it may withdraw it from the intellectual movement of the present, and give us a race of scholars, of great merit, doubtless, [pg 005] but who move about like strangers among their contemporaries.

Without a sense for the practical, and without ideas of an elevated nature, a person may, indeed, be a man of erudition—he cannot be a historian. As the proverb says, the forest cannot be seen, for the trees. That this noble study may bear its best and most useful fruit; that is, that it should preserve us against ambitious formulas and destructive chimeras, we must pursue another way.

“The world,” says Montaigne, “is incapable of curing itself. It is so impatient of what burthens it, that it thinks only of how it shall rid itself of it, without inquiring at what price. A thousand examples show us that it cures itself ordinarily at its own cost. The getting rid of the present evil is not cure, unless there be a general amendment of condition. Good does not immediately succeed evil. One evil, and a worse, may follow another, like Cæsar's assassins, who brought the republic to such a pass, that they had reason to repent the meddling with it.” Such, too frequently, is the lot of those who, abandoning themselves to their imagination, and without consulting the past, mix together promises of liberty and the despotism of Utopias which they would impose on nations under pretext of enfranchising them. Despising the work of the ages, they think they can build upon a soil shaken by destruction and crumbled, until it may be likened to moving sand.

Contempt for the past is associated with a passion for reform. Men think of destroying that which should only be transformed. They condemn everything that has been, unconditionally, and launch out towards a new future. The suffering which has been gone through irritates and troubles the mind. The work of pulling down is so easy, it is supposed that the work of building up is equally so. Hence systems rise, as if the world were to begin anew. The pride of liberty and of human action becomes the principle of science; and, like all new principles, it pretends to exclusive and absolute dominion. Rationalism governs; abstract philosophy [pg 006] ignores the traditions and the requirements of the life of nations; and finds now in it, as in geometry, nothing but principles and deductions. The memory of recent oppression causes us to act as Tarquin did, and to level down the higher classes instead of elevating the inferior. Liberty and equality then govern by their negative side, instead of exercising the positive and beneficent influence they should have, to develop all forces to their utmost, to ennoble the mind, to give more elasticity to the soul and greater vigor to thought, to give birth to those varied forms and to that moral energy, which should bring us nearer to final equality in the bosom of God.[6]

We forget that no one is born free, and that every one ought to endeavor to become so,

Feindlich ist des Mannes Streben

Mit zermalmender Gewalt

Geht der Wilde durch des Leben

Ohne Rast und Aufenthalt,

—Schiller.

and make himself worthy of liberty, by the exercise of manly virtue! Because the form has been changed, we believe that we have changed human nature.

It is easy to understand, why, where these ideas prevail, the study of the past should be neglected and despised. Efforts are made to avoid it. Why, it is asked, revive memories of oppression and misery? The old world is wrecked. It is annihilated. Peace to its ashes! Or else, after it has been destroyed, it is sought for again; and, under pretext of eradicating the evils existing in it, an attack is made on the eternal basis on which human society rests, on the laws not made by man, and which it is not given to man to change. The world becomes one vast laboratory, in which the rashest experiments are multiplied in number, in which mankind is but clay in the hands of the potter which every pretended “thinker” may mould at will, by giving him the false appearances of independence and of an emancipated being.

And, indeed, if the will of man be all-powerful, if states are to be distinguished from one another only by their boundaries, if everything may be changed like the scenery in a play by a flourish of the magic wand of a system, if man may arbitrarily make the right, if nations can be put through evolutions like a regiment of troops; what a field would the world present for attempts at the realization of the wildest dreams, and what a temptation would be offered to take possession, by main force, of the government of human affairs, to destroy the rights of property and the rights of capital, to gratify ardent longings without trouble, and provide the much coveted means of enjoyment. The Titans have tried to scale the heavens, and have fallen into the most degrading materialism. Purely speculative dogmatism sinks into materialism.

All is changed, both men and things. Yet we hear the same old style of declamation. There are those who wish to plough up the soil which the harrow of the revolution went over yesterday; and they believe they are marching in the way of progress. They do not see that they have mistaken their age, and that the bold attempts of the past have now come to possess a directly opposite meaning. Without stopping to inquire to what side the new world inclines, they repeat the same words, and swear in verba magistri, and go the road of destruction, believing themselves to be creating the world anew!

Nothing is more natural than that these excesses should produce other excesses, in a contrary direction. Moved by hatred or fear of revolutionary absolutism, nations seek an asylum in governmental absolutism, or they retrograde towards the middle ages, and consider the mutual bond of protection and dependence of that period as the ideal and the realization of true liberty. History is no longer the organic development of social life, and man, like a soldier that thoughtlessly and capriciously has gone beyond his place of supplies, is obliged to retrace his steps. The reaction is clearly defined. The past is opposed to the present, not as a [pg 008] lesson to be turned to advantage, but as a model which must be hastily accepted; and men become revolutionary in a backward direction.

However, history, rigorously studied, knows neither these complaisances nor these weaknesses. It does not descend to the apotheosis of a past which cannot return again. The real historical spirit consists in rightly discerning what belongs to each epoch. Its object is, by no means, to call back the dead to life, but to explain why and how they lived. In harmony with a healthy philosophy, it assigns a limit to the vagaries of arbitrary will, beyond which the latter cannot go. It unceasingly calls us back, from the heights of abstraction, to positive facts and things.

In the creation of systems, only one thing was wont to be forgotten, men, who were treated, in them, like so many ciphers; for intellectual despotism has this in common with all despotic authority. History teaches us that we can reach nothing great or lasting, but by addressing ourselves to the soul. If the soul decays, there can be no longer great thoughts or great actions. Society lives by the spirit which inhabits it. It may, for an instant, submit to the empire of force, but, in the long run, it hearkens only to the voice of justice. It was thus that the greatest revolution which history records, that of Christianity, was accomplished. It addressed itself only to the soul; but by changing the hearts of men, it transformed society entirely.

The violent struggle between an imperious dogmatism and an unintelligent and mistaken attempt at a retrogressive movement is resolved into a higher view, which permits the union of conservatism and progress. Violent attempts and rash endeavors made, threatened to bring contempt on the noblest teachings of philosophy, and to make them repulsive to man; and, on the other hand, a blind respect for the institutions consecrated by history threatened to stifle all examination and all freedom of judgment.

But a healthier doctrine has permitted us to understand, that [pg 009] we are continuing the work of preceding generations; that we are developing the germs which they successively sowed; that we are perfecting that which they had only sketched, and that we are letting drop that which has no support in the social condition of man. Every thing is connected; each thing is linked to every other; nothing is repeated. The hopes of sudden and total renovation, based on absolute formulas, vanish before the touch of this solid study. This shows us how firm and unshaken are those reforms which have begun by taking hold of the minds of men, the precise spirit of which had penetrated into the souls of whole nations before they had manifested themselves in facts.

Law and Economy constitute a part of the life of nations in the same way that language and customs do. The power of history in no way contradicts the supremacy of reason.

II.

These two tendencies, the rationalistic and the historical, are everywhere found face to face. They carry on an eternal warfare, which is renewed in every age, under new names and new forms. Accomplished facts and renovating thought divide the world between them. They at one time moderate its speed, and at others, spur it on its way. But these two forces, instead of compromising the destinies of humanity by their opposing action, maintain and balance them, as the contrary impulses given by the hand of the Great Architect has peopled the universe with worlds which gravitate in space.

Victor Cousin, a very competent authority on the subject, has said that the history of philosophy is the torch of philosophy itself. The remarkable works which have enriched it in this direction are well known. History, on its side, is enlightened by philosophy. Thus, it teaches us not to despise facts, but at the same time not to be slaves to precedent. It does equal justice to the incredulous and to the fanatic, to too supple practitioners and to intractable theorizers.

We may doubtless say with Henri Klimrath, who, in connection with a few others, had undertaken the work of the restoration of historical study in its application to French law, that there is an absolute, true, beautiful, good and just, the ratio recta summi Jovis,[7] the supreme reason founded in the nature of things.[8] The eternal truths taught by philosophy constitute the higher law, a law which dates not from the day on which it was reduced to writing, but from the day of its birth; and it was born with the divine intelligence itself. “Qui non tum denique incipit lex esse, cum scripta est, sed tum cum orta est. Orta autem simul est cum mente divina.”[9] And Troplong rightly adds: “There are rules anterior to all positive laws. I cannot grant that the action of conscience and the idea of right are the work of the legislator. It is not law that made the family, property, liberty, equality, the idea of good and evil. It may, indeed, give organization to all these things, but in doing so, it is only working on the foundation which nature has laid, and it is perfect in proportion as it comes nearer to the eternal, immutable laws which the Creator has engraved on our hearts. What changes is not the eternal law, the revelation of which comes to man incessantly and by a necessary action, but the form in which humanity clothes it, the institutions which man builds on its immutable foundation.”[10]

We therefore believe in the law of nature, and regret that our opinion is not shared by Mr. Roscher, at least that he does not explicitly enough express his faith in it, nor apply it broadly enough in the beautiful work which we are happy to render accessible to the French public.[11] We believe in it in its [pg 011] philosophical sense, and not simply in the juridical sense attached to it by Ulpian. “Let us not,” observes Portalis, “confound the physical order of nature, common to all animated beings, with the natural law which is peculiar to man. We call natural law, the principles which govern man considered as a moral being, that is, as an intelligent and free being, intended to live in the society of other beings, intelligent and free like himself.”[12] Ulpian's famous tripartite division, of natural law, the law of nations, and the civil law, is proof, from the meaning he attaches to them, either of a misunderstanding or of the imperfect idea which the Stoics had conceived of the essence of natural law. In vain Cujas exhausted all the resources of his noble intellect to explain it.[13]

It is necessary to draw a distinction between physical law and the law (droit) of intelligent beings. Doubtless the existence of men as well as that of animals is limited by time. They both live and die; but the soul escapes the necessities of material nature.

The moment there is question of right, intelligence governs, reason comes into play, and the science of right and wrong is appealed to as a guide. Hence the natural law of the human species is not the physical law which all creatures obey.

It was necessary for us to insist upon these principles. It was necessary for us to show that there is a law independent of positive and local law, a law which is not the expression of an arbitrary will, but an emanation from the nature of things.[14]

Hence come the features in common which we meet with everywhere, and the variable forms which develop law in harmony with the special conditions of each civil society.

We must descend into the very depths of human nature to discover these eternal and permanent laws; and if the mere effort of the mind should not reach them directly, they might be discovered in the phenomena of the life of nations. History affords us the counter-proof and confirmation of the philosophical doctrine.

The development of society does not afford a mathematical expression of these higher truths. It gives them a form which is unceasingly modified in the written law. The person who discovers in them nothing but an absolute rule, looks upon the changes as evidences of caprice and error. He alone understands the revolutions of things who knows their cause and the necessity which produces them.

Solon was right when he gave the Athenians not the most perfect laws, but the best which they could bear.

It is not in the attempts contemporary with the infancy of society, or nearly so, that we are to look for the complete realization of the precepts of the natural law; for principles obey the rule laid down by Aristotle. “The nature of each thing is precisely that which constitutes its end; and when each being has attained its entire development, we say that that is its own proper nature.”[15]

The ideas of natural law are purified in proportion as society grows enlightened and free; but the truth appears only successively in the phases it passes through. It allows us to grasp one aspect of itself after another, but does not surrender itself entirely, at any one moment, to the investigations of the historian or the jurisconsult.

History and philosophy interpenetrate and complement one another.

III.

The two schools, that of philosophy and that of history have met in our day, in the field of law. Who is there that does not remember the great and noble contest carried on, about the beginning of this century, between two descendants of Frenchmen who had sought a refuge in Germany, and who united in their own persons, and in so marvelous a manner, the different aptitudes of the country they owed their origin to, and of the land that gave them birth,—between Thibaut and Savigny?

It would be difficult to find a scientific question of a higher character, debated by champions more worthy to throw light upon it.

The Code Napoléon had appeared. It had, to use Rossi's happy expression, transferred into law the social revolution [pg 014] produced by the destruction of privilege. It was the practical formula expressive of the conquests which had been made.

The philosophy of the eighteenth century had previously inspired the Prussian Code. And yet, it was on the question of codification that this memorable controversy was carried on. The two principal combatants, while manfully battling, the one against the other, continued to hold each other in high esteem, and the profound study of law was developed in the midst of the melée.

We cannot delay long on this subject, nor analyze the arguments advanced by Thibaut[16] and Savigny.[17] What interests us at present is not so much the question debated, as the intellectual movement to which it gave birth. Savigny sustained the ancient law, Thibaut attacked it. Numerous and distinguished jurisconsults ranged themselves on the one side and the other. A new school grew up which, with the most brilliant success, made law throw light on history and history on law.

The application of the historical method to the study of law was productive of the most happy results.

Without acknowledging it to themselves, the chiefs of the contending parties were each obeying a political impulse. Savigny was by his birth and his tastes carried into the camp of conservatism; Thibaut, led by his convictions, into the liberal ranks. Nevertheless, the natural elevation of their genius preserved them from all exaggeration. The glorious defender of tradition preserved a liberal spirit, and the ardent advocate of reform desired no upheaval.

In what more nearly concerns the question with which we are now occupied, Savigny—while he maintained that law was something contingent, human, national; and while he brought out into relief the practical and exalted character of its successive developments which introduced reform and guarded [pg 015] against revolution—developments which, not confiding in the letter of the written law, unceasingly feed the living and created law, that law called in the energetic language of a great jurisconsult, a law écrit es coeurs des citoyens—is far from denying the importance of a high and healthy philosophy which directs man in the uninterrupted labor to which he is called, in the sphere of jurisprudence.

Men can no more renounce law than language, the forms of which last they have gradually modified in order to better translate their thoughts into words. The legislator's task is the successive elaboration of obligatory provisions. He will sometimes oppose and sometimes second the natural progress of law; but, in doing so, it will ever be necessary for him to ascend to the nature of things, and grasp their relations, if he would not go astray in practice, or lose himself among the successive and partial changes to which the illustrious Berlin professor would confine the legitimate ambition of legislative power. To go beyond this, in an age like ours, seemed to him to be a work of destruction. However, far from denying the influence of thought, and therefore of philosophy, acting within its sphere, Savigny invokes its fertile aid.

Thibaut, on the other hand, with more confidence in the powers of the spirit of modern times, did not believe a good codification to be impossible. His starting point had been a cry for national independence. He well knew how much veneration was due those institutions which were the slow and progressive work of national genius, and what was the power they possessed. He wished, therefore, to reform, not to abolish them. He well understood that the greatness of the Code Napoléon itself, and the respect which it inspired were due to the fact that its roots ran deep into the soil of the past, even while the modern idea it contained shone like a bright light in the world of things. Hence, without contesting the value of history, he refused to acknowledge its right to exclusive reign.[18]

The life and activity prevailing in the study of law, and the brilliant successes that study has recently achieved, are due, in great part, to the illustrious representatives of the historical school. We may add, here, that the French historical school, which has so worthily inherited the spirit of Montesquieu, has not achieved less in this direction than the older German school. It has reconciled the opposing but not mutually hostile, [pg 017] tendencies of Savigny and Thibaut. It has conscientiously scrutinized facts to show their concatenation, and to allow their meaning and bearing to be clearly grasped. A French jurisconsult, who is at the same time our highest authority in the natural law, opened the way by his excellent essays on the necessity of reforming the historical studies applicable to law; on the influence of the legists on French civilization[19] etc.; and by his prefaces, equal in value to whole works, on hypothecation, sales, loans, partnership, charter-parties etc. He may truly be said to have renewed the ancient and prolific alliance of history and law.

Instead of pursuing a pure abstraction, this historical school has confined itself to the knowledge of the life of man and the evolution of society. It has applied to law, with what success is well known, the principle which has regenerated the social sciences, philosophy, letters, history, Political Economy,—sciences which are, so to speak, different provinces of one intellectual empire, which interpenetrate one another without being confounded one with another, between which no jealous barrier should be raised, and between which reciprocity of exchange should be encouraged by the suppression of factitious duties, which have existed only too long.

IV.

We need not dwell any longer on the character of the historical method as applied to law, nor on the services it has already rendered. On this point, there can be no two opinions. And, if any one wonders that we should speak of it at all, in a work on Political Economy, we can only say to him, that we have done so to call his attention to an instructive precedent, and for the further reason that the same method is peculiarly well adapted to the study of Political Economy. Its advantages are the same here, its tendencies the same, and the same motives exist to induce us to use it here. In describing the successive phases of the question in the case of law, we have performed an important part of the task we had imposed upon ourselves, of vindicating the employment of the historical method, in the sphere of Political Economy.

The study of history is the best and most powerful antidote against social romances and ideal fancies. François Beaudouin was right when he said: “Cæca sine historia jurisprudentia;” and we are very sure that, without history as an element in it, Political Economy runs a great risk of walking blindfold.

The human mind has need of being able to know where it is at any moment, surrounded, as it is, by so many roads, running in so many different directions. It ought to account to itself for its progress, its deviations from the right path, and for its mistakes.[20] History alone can throw any light on questions which are not simply intellectual curiosities, but which, rather, are most deeply concerned with the vital interests of society. It confirms the noble teachings of philosophy, by showing how our life is made up of one unchanging tissue of relations, and how man, even if he may vary their colors, and change their design, cannot renew their texture.

It teaches us to admire nothing, and to despise nothing, beyond [pg 019] measure. It enlightens us concerning questions of a very complicated nature. Witnessing the evolutions of humanity, following the development of social facts and theories, we better discern principles, and grow wary in relation to the alchemists of thought, who imagine that society may be made to undergo a transformation between the rising and the setting of the sun.

As there is a natural law, so, too, there are certain principles of Political Economy which emanate from philosophy, and may be reduced to one supreme principle; that of liberty and responsibility. The domain of Political Economy is the labor of generations. But we reject with all our strength, the materialistic doctrine which, inexplicably confusing matters, endeavors to assimilate ideas so distinct as intelligence and things; and which would descend so low as to employ the dynamometer to measure the creative force of man and its results, and which sees only figures where there is a living soul.

Man is an intelligent being, served by organs,[21] by personal organs, with which the Creator has endowed him, by giving him a body provided with marvellous aptitudes, by external organs which he finds in nature subjected to his power. Man was created in the image of God, say the Scriptures, and these words contain a deep meaning. He alone, of all terrestrial beings, possesses a spark of divine intelligence. He alone has been called to pursue the magnificent work of creation, by giving a new face to a world to which he cannot add so much as an atom.

Labor is nothing but the action of spirit on itself and on matter.[22] Hence its dignity and grandeur. Hence, also, the difficulties in the way of economic studies; since, to consider them only as concerned with questions of material production, is to forget that the products of industry are made for man, not man for industrial products; to ignore the close relationship [pg 020] between their fruitful investigations and the whole circle of the moral sciences; to debase them and to mutilate them.

From the moment that science concerns itself with man only, and the action of the mind; from the moment that its end becomes not simply material enjoyment, but moral elevation, the questions it discusses become indeed more complex, but the answer, when found, is more prolific in results. Wealth, then, is treated only as one of the forces of civilization. Other interests than purely material ones occupy the first place. This matter-of-fact philosophy which, according to Bacon's precept, seeks to improve the conditions of life, bears in mind, that the most fruitful source of material development lies in intellectual development. It humbly recognizes that it is not the first-born of the family, and draws new strength from this avowal. From the moment that it is the mind which produces and which governs the world, intellectual and moral perfection become the cause and effect of material progress. “But seek ye first the kingdom of God and his righteousness, and all these things shall be added unto you.”

The increase of production, then, appears an instrument of elevation in the moral order.[23] It is energy of soul, intelligence and manly virtue which constitute the chief source of the wealth of nations; which create it, develop it, and preserve it. Wealth increases, declines, and disappears with the increase, decline and disappearance of these noble attributes of the soul.

Labor is the child of thought. Nothing happens in the external world which was not first conceived in the mind. The hand is the servant of the intellect; and its work is successful, beautiful or useful in proportion to the activity and development of the intellect, and in proportion as the just, the beautiful and the good exert their power over it.

Production is, therefore, not a material, but a spiritual, work. How, then, can acts and their morality be separated? How not understand that the market of labor has its own distinct [pg 021] laws, and that education, even from a material stand-point, becomes the highest interest and the most important duty of society, since on it depends the efficiency of labor?

From the time that, after a long series of years, the doctrine of Christianity had permeated the law of the civilized world; from the time that the teaching of Paul, that all men are children of one Father, took form and body, and that the principle of the equality of all men before their Maker, was supplemented by the doctrine and by the practice of that equality before the laws, the thinking masses have endeavored to discover the wherefore of their actions, and the why of their sufferings. They have called the past to account, and inquired why they have obtained so limited a share.

The people, therefore, think; and it is, therefore, a matter of importance that they should think aright. It is of importance, that they should be guarded against fallacious Utopian promises. Henceforth, there is no security for the stability of the world but in the contentment of minds. There is no rest for mankind, unless men will understand the conditions of their destiny; unless, instead of running,

“Toujours insatiable et jamais assouvis,”

after the intoxicating cup of material enjoyment—for wants not governed by the intellect and the heart are infinite in number, and the gratification of one gives birth to another—they submit to the law of sacrifice, and give play to the noblest faculty with which the Creator has endowed us, moral empire over self.

We shall meet on this road, hard of ascent, not only peace of soul, but goods, more real and more numerous, than those with which the allurements of error would dazzle our eyes. The greatest obstacles to be overcome are not material ones, but moral difficulties. As Franklin says, in substance, he that tells you you can succeed, in any way but by labor and economy, is a quack.

But labor is more productive in proportion as it is more intelligent, [pg 022] as hand and mind keep pace with each other, as good moral habits generate order and voluntary discipline.

Economy is sacrifice, binding the present to the future, widening the horizon of thought, inspiring foresight, lengthening the lever of human activity, by providing it with new instruments.

Life ceases to be a worry about how the body shall be sustained, and the material world becomes the shadow of the spiritual. The former is made to serve the latter, and man's free effort lifts him into a higher region of thought, and into a larger field of action. The more mind there is put into a piece of work, says Channing, the more it is worth.

We, men of to-day, are lookers-on at a marvelous spectacle. Steam furrows the earth. Industry has taken an immense start. Mechanical force bends the most rebellious materials. Chemistry, physics and the natural sciences are discovering a new world. But whence all this? What is the principle of this new life? We answer: intellectual and moral progress. Mind has grown; the soul has been expanded. God has permitted man to be free, and furnished him with the means to be so.

Thus man, as Mignet has said, becomes that mighty creature to whom God has given the earth for the vast theater of his action, the universe as the inexhaustible object of his knowledge, the forces of nature for the growing service of his wants, by allowing him, by ever increasing information, to obtain an ever increasing amount of well-being.

Man is free.—1789 put in action the sublime precept of the gospel. He holds his destiny in his own hands. But the rights which he enjoys impose new duties on him. If equality be the sentiment which predominates in our day, we should take care not to confound it with the leveling of Communism. Nor is it externally to us, but within ourselves, that it should be developed, by intellectual and moral culture.

History preserves the student from being led astray by a too servile adherence to any system. It exposes the folly of the [pg 023] “social contract,” and of the idyllic dreams of the advantages of savage life. It shows that nature, instead of being prodigal of her treasures, distributes them with a niggardly hand, and that it is necessary to conquer her by labor, intelligence and patience before we can control her.

It shows us human liberty growing stronger every day, thanks to moral and intellectual progress, supported by the two powerful props of property, the complement of man, the material reflection of his spiritual power; and capital, the fruit of abstinence, the symbol of moral power and the result of enlightened activity.

History walks with a firm step, because it feels secure in a knowledge of the laws of human nature, and in its experience of the successive manifestations of social life. Instead of the vagueness of ideal conceptions, it allows us to grasp and to appreciate what is real in life. It does not confine itself to the study of man. It makes us acquainted with men, whose wants extend and are ennobled in proportion to the perfection of their faculties. The feelings and the intellect are simultaneously developed in man. The savage is the most egotistical of men.

Hence, we believe that Political Economy cannot dispense with the services of morals and philosophy, of history and law; for these are branches of one common trunk, through all of which the self-same sap circulates.

V.

The isolation of the theory of Political Economy is peculiar to our own day. In more remote times, we find this study confounded with the other moral sciences, of which it was an integral part. When the genius of Adam Smith gave it a distinct character, he did not desire to separate it from those branches of knowledge without which it could only remain a bleached plant from the absence of the sunlight of ethics.

We must renounce the singular idea,[24] that thousands of years could pass away without leaving any trace of what enlightened men had thought and elaborated in the matter of Political Economy, among so many nations, and that people should never have thought of cultivating this rich intellectual domain, while in every other direction, it is easy for us to ascend by a road already cleared up to the most remote antiquity.

It has already been acknowledged, that the classic domain, fertilized by intellectual culture on a large scale and on a small one, was exceedingly rich in valuable indications, although they do not present themselves under the distinct form, which later affected the different branches of public life.

As to the pretended primitive simplicity of the middle ages, which it is claimed, prevailed during that period, a species of economic vegetation, those who maintain it forget the long series of communistic theories which, at near intervals, found expression in many a bloody struggle, and whose repression required the combined efforts of Church and State.

Doubtless, it is not in their modern forms that the elements of politico-economical science are to be found, in the past. But when we succeed in reuniting the scattered and broken parts; when we have made our way into the customs, decrees, ordinances, capitularies, laws and regulations of those times; when, so to speak, we come, unaware, upon the life of nations, in the most ingenuous and confidential documents which reflect it most faithfully because most simply, we may well be astonished at the results obtained. Where we expected, perhaps, to find only erudition, we reap a rich harvest of lessons which are all the more valuable for being disinterested.

Legislative and administrative acts frequently develop real economic doctrines. It is easy to discover in them the onward course of a theory which plunges directly into practical applications.

What results might we not expect from these efforts, if the [pg 025] genius of investigation and of divination, which has so elevated historical studies in our day, should have an observing and penetrating eye in this direction! How limited was the field on which Guérard erected the scientific monument which he has left us in his Polyptique d'Irminon; and how precious are the lessons he leaves us, since we have here to do, not with the history of professed doctrines or unlooked-for events, but with the historical development of economic society which shows us the living march of principles.

VI.

Political Economy is not, as we have just said, a new science. It has been a distinct science only a short time. Until the eighteenth century, it was confounded with philosophy, morals, politics, law and history. But it does not follow, that, because it has grown so in importance, as to deserve a place of its own, its intimate relationship with the noble studies which had until then absorbed it should cease. There is another consequence also to be deduced from this. From the moment that Political Economy ceases to be considered a new science, it finds a long series of ancestors behind it, since it is compelled to investigate a past to which so many bonds unite it. This duty may increase its difficulties, but, at the same time, it singularly adds to the attractions of a study which, instead of presenting us only with the arid deductions of dogmatism, comes to us with all the freshness and all the color of life.

We may allow those who make Political Economy simply a piece of arithmetic to ignore these retrospective studies and their importance; for mathematics has little to do with history. But it is otherwise with the life of nations. These would discover whence they come, in order to learn whither they are tending.

They are not obeying a vain interest of curiosity, as J. B. Say supposed, when, in sketching a short history of the progress [pg 026] of Political Economy, he said: “However, every kind of history has a right to gratify curiosity.” It is a thing to be regretted, that this eminent thinker could thus ignore one of the essential elements of the science to which he rendered such great and unquestioned services. A sense for the historical was wanting in him. “The history of a science,” he writes,[25] “is not like the narration of things that have happened. What would it profit us to make a collection of absurd opinions, of decried doctrines which deserved to be decried? It would be at once useless and fastidious to thus exhume them in case we perfectly knew the public economy of social bodies. It can be of little concern to us to learn what our predecessors have dreamed about this subject, and to describe the long series of mistakes in practice which have retarded man's progress in the research after truth. Error is a thing to be forgotten, not learned.” As if that which was once to be found in time is not to-day to be found in space; as if there ever was an institution that did not have its raison d' etre and had not constituted a resting place in the search after a higher truth or of a more intelligent and salutary application of an old one! There are a great many actual systems and a great many present facts which can be understood only by the help of history; and how frequently would not an acquaintance with history serve to keep us from taking for marvelous inventions the antiquated machinery of other ages, whose only advantage and only merit are that they have remained unknown. How much of the pretended daring of innovators has been old trumpery which the wisdom of the times had cast off as rubbish. Besides, as Bacon has said: “Verumtamen sæpe necessarium est, quod non est optimum.”

VII.

It is not the result of mere chance that the greatest economists have been both historians and philosophers. We need only mention Adam Smith, Turgot, Malthus, Sismondi, Droz, Rossi and Léon Faucher. It is too frequently forgotten that the father of modern Political Economy, Adam Smith, looked upon the science as only one part of the course of moral philosophy which he taught at Glasgow, and which embraced four divisions:

1. Universal theology.—The existence and attributes of God; principles or faculties of the human mind, the basis of religion.

2. Ethics.—Theory of the moral sentiments.

3. Moral principles relating to justice.—In this, as we learn from one of Adam Smith's pupils in a sketch preserved by David Stewart, he followed a plan which seems to have been suggested to him by Montesquieu. He endeavored to trace the successive advances of jurisprudence from the most barbarous times to the most polished. He carefully showed how the arts which minister to subsistence, and to the accumulation of property, act on laws and governments, and are productive of advances and changes in them analogous to those they experience themselves.

In the first part of his course, as we learn from the same authority, he examined the various political regulations not founded on the principle of justice but in expediency, the object of which is to increase the wealth, the power and the prosperity of the state. From this point of view, he considered the political institutions relating to commerce, finance, the ecclesiastical and military establishments. His lectures on the different subjects constitute the substance of the work he afterwards published on the wealth of nations. A pupil of Hutcheson, Adam Smith always applied the experimental method, “which, instead of losing itself in magnificent and hazardous [pg 028] speculations, attaches itself to certain and universal facts discovered to us by our own consciousness, by language, literature, history and society.”[26] Before taking the professorship of philosophy, Adam Smith had taught belleslettres and rhetoric in Edinburgh, in 1748. He had written a work on the origin and formation of languages; and it was because he had profoundly studied the moral sciences that it was given to him to inaugurate a new science and to become a great economist. Mr. Cousin has laid great stress on Adam Smith's taste and talent for history. “Whatever the subject he treats, he turns his eyes backward over the road traversed before himself, and he illuminates every object on his path by the aid of the torch which reflection has placed in his hand. Thus, in Political Economy, his principles not only prepare the future but renew the past, and discover the reason, heretofore unknown, of ancient facts which history had gathered together without understanding them. It is not saying enough to remark that Adam Smith possessed a great variety of historical information; we must add that he possessed the real historical spirit.” Thanks to this eminent faculty of his, the Glasgow philosopher acquired great influence over minds. In 1810, when the French empire had reached the zenith of its greatness, Marwitz wrote: “There is a monarch as powerful as Napoleon: Adam Smith.” We need not recall Turgot's historical researches.

Malthus' chief title to distinction, his work on Population, is as much a historical work as a politico-economical one; and it is not sufficiently known that he was professor of history and Political Economy in the college of the East India Company at Aylesbury.

We need say no more on this subject. The works of the other writers whom we have mentioned are too well known to permit any one to think that they excluded history and moral science from the study of Political Economy. Hence [pg 029] the school which has risen up in Germany,[27] and which is endeavoring to do for Political Economy what Savigny, Eichhorn, Schrader, Mommsen, Rudorff, and so many other illustrious scholars have done for jurisprudence, cannot be rightly accused of rashness. It has done nothing but unfurl the noble banner borne by the most venerated masters of the science.

VIII.

At the head of this school stands William Roscher, professor of Political Economy at the University of Leipzig, whose excellent work, The Principles of Political Economy, in which he follows the historical method, we have just translated. William Roscher is (1857) scarcely forty years of age. He was born at Hanover, October 21, 1817. His laborious and simple life is that of a worthy representative of the science. “You ask me,” he wrote us recently, “to give you some information concerning the incidents of my life. I have, thank God, but very little to tell you. Lives whose history it is interesting to relate are seldom happy lives.” He confined himself to giving us a few dates which are, so to say, the landmarks of a career full of usefulness. Roscher, from 1835 to 1839, studied jurisprudence and philology at the universities of Göttingen and Berlin. The learned teachers who exercised [pg 030] the greatest influence on his intellectual development were the historians Gervinus and Ranke, the philologist K. O. Müller and the Germanist Albrecht. It is easy to see that he went to a good school, and that he profited by it. He was made doctor in 1838; admitted in 1840 as Privat-docent at Göttingen; appointed in 1843 professor extraordinary at the same university, and called in 1844 to fill the chair of titular professor at Erlangen. Since 1848 he has acted in the same capacity in the University of Leipzig, where he was for six years member of the Poor Board, where he teaches also in the agricultural college. His fame has grown rapidly. Many of the German universities have emulated one another for the honor of possessing him, but he has not been willing to leave Leipzig. His first remarkable work was his doctor's thesis: De historicæ doctrinæ apud sophistas majores vestigiis, written in 1838. In 1842, he published his excellent work, which has since become classical: “The Life, Labors and age of Thucydides.”[28] From that time, important works, all bearing the stamp of varied and profound scientific acquirements, and of an erudition remarkable for sagacity and elegance, have followed one another without interruption. In 1843, he treated the question of luxury[29] with a master hand, and laid the foundation of his great work—only the first part of which has thus far appeared—at the same time tracing on a large scale the programme of a course of Political Economy according to the historical method.[30] In 1844, he published his historical study on Socialism and Communism,[31] and in 1845 and 1846, his ideas on the politics and the statistics of systems of agriculture. He is, besides, author of an excellent work on the [pg 031] corn-trade;[32] of a remarkable book on the colonial system;[33] of a sketch on the three forms of the state;[34] of a memoir on the relations between Political Economy and classical antiquity;[35] of a work of the greatest interest, on the history of economic doctrines in England in the sixteenth and seventeenth centuries—a work full of the most curious researches;[36] of a book on the economic principle of forest economy,[37] and lastly, of the great work, the first part of which we have translated, under the title of The Principles of Political Economy, and which is to be completed by the successive publication of three other volumes, on the Political Economy of Agriculture, and the related branches of primitive production, the Political Economy of Industry and Commerce, and one on the Political Economy of the State and the Commune. This work, when completed, will be a real cyclopedia of the science.[38]

Side by side with William Roscher, we must mention a [pg 032] young economist, Knies, formerly professor at the University of Marburg, but whom political persecution compelled to accept a secondary position at the gymnasium of Schaffhausen, for a time, and who fills, to-day, in the University of Freiburg, in Breisgau, a position more worthy of his great talent. We hope, in a work which we intend to publish, on Political Economy in Germany, to make the public acquainted with the works of this writer. They deserve to attract the most serious attention. We know of few works which equal his Political Economy, written on the historical method.[39] We shall also have something to say of another economist, formerly professor at Marburg, a victim, also, of the power of the elector of Hesse, Hildebrand, now professor at the University of Zurich. His National-Œkonomie[40] is a book replete with interest, and we have nowhere met with a better criticism of Proudhon's system, than in its pages. If the new school had produced but these three men, it would still have left its impress on the history of the science.

Other works, no less important, will claim our attention in the book to which we have already devoted many years of labor. If we carry out our intention, we shall review the works of a great many scholars, of great merit, whose names only are, unfortunately, known outside of Germany. The works of Rau, of Hermann, of Robert Mohl, of Hannsen, Helferich, Schütz, Kosegarten, Wirth etc., are a rich mine, from which we hope to draw much valuable information. Nor shall we neglect the original productions of J. Moser, the Franklin of Germany, nor the quaint, but sometimes striking, ideas of Adam Müller. Lastly, our learned friend, Professor Stein of Vienna, will afford us an opportunity to show forth the merit of important and extensive works, animated by the philosophic spirit. For the present, we must confine ourselves to a view of the application of the historical method to Political Economy.

There is a rather widespread prejudice existing against this order of works, a souvenir of the struggle carried on formerly, between Thibaut and Savigny, which inclines people to suppose that the historical school leans towards the political doctrines of the past, and that it is hostile to the liberal spirit of modern times. Nothing can be farther from the truth. The names of Roscher, Knies and Hildebrand are sufficient to remove this prejudice. Their works, inspired by an enlightened love for progress, do not allow of such a misconstruction. The historical point of view does not consist in the worship of the past, any more than in the depreciation of the present. It does not view the succession of phenomena as a fluctuation of events without unity or purpose. On the contrary, the historical method harmonizes wonderfully well with the wants of genuine progress. The changes accomplished bear testimony to the free and creative power of man, acting within the limit permitted to it by the degrees of intelligence reached, of the development of morals, and of individual liberty. The philosophy of Political Economy, which is the result of this calm teaching, free from the passions of party—for science acknowledges no adherence to party—is like that of law, opposed to the, more or less, ingenious or rash dreams, which build the world over again in thought. In showing how, at all times, humanity has understood and applied the principles which govern the production of wealth, it may say, with the Roman jurisconsult: “Justitiam namque colimus ... æquum ab iniquo separantes ... veram nisi fallor philosophiam, non simulatam affectantes.” “The human mind,” says Rossi, “endeavoring to attain to a knowledge of itself, estimating its strength, taking a method, and applying it with a consciousness of its mode of procedure to the knowledge of all things; such is philosophy. Without it, there is no science in any branch of human knowledge.” Thus do we rise, with the aid of a critical mind, by careful investigation and great sagacity, to the truths founded on observations made.

IX.

There is another method, which, starting out from principles, evident of themselves, develops science by way of conclusions drawn, after the manner of the geometricians. The apparent severity and simplicity of this method are very seductive, and very dangerous, when we have to deal not with figures, but with men; when the varied, complex and delicate exigencies which accumulate when human nature comes into play do not exactly square with the formula; and, when instead of dealing with abstractions, we have to tackle realities. One of our venerated teachers, the illustrious Rossi, thought he might remove the difficulty by drawing a distinction between pure Political Economy and applied Political Economy. It is not without a certain amount of hesitation that we dare differ with so high an authority; but confess we must, this distinction is far from satisfying us. The doubt it has left in our mind has been the principal cause which has inclined us to the historical method. “Rational Political Economy,” says Rossi, “is the science which investigates the nature, the causes and the movement of wealth, by basing itself on the general and constant facts of human nature, and of the external world. In applied Political Economy, the science is taken as the mean. Account is taken of external facts. Nationality, time and place play an important part.”

Let us for a moment accept these definitions; what is the consequence? That there are two sciences, the one of which, purely speculative, has more to do with philosophy than with the permanent conflicts which agitate the world; the other of which could not alone furnish us with rules in practice, nor with a formulary for the measures to be taken in a given case, since such a pretension would be both vain and ridiculous, but which would inform the practical judgment of men charged with the solution of the numberless difficult and complicated questions which come up every day. If pure science refuses to interfere in the affairs of this world; if, as the learned [pg 035] originator of the doctrine we are just now considering gives us to understand, it would compromise the solution of questions by the intoxication of logic, and the ambition of perfect system; if, consequently, it is to be worshipped like a motionless and inactive divinity, how could this platonic satisfaction suffice us? Would not the opponents of economic doctrines be disposed to acknowledge all the principles, provided the consequences to be drawn from them were left to themselves; and would they not come to us, bristling with arguments drawn from the circumstances of nationality, time and space, to refute the possibility of applying pure science?

On ne vaincra jamais les Romains que dans Rome.

This, therefore, is the ground we must explore. We must develop applied Political Economy which takes cognizance of external circumstances. To do this, no one will question that the best and most decisive of methods is the historical, which concerns itself with time, space and nationality, and which leads to proper reformation where reformation is wanted.

Moreover, principles will be no less firmly established by historical induction than by dogmatic deduction, and, moreover, science will be inseparable from art. We are not of those who deny principles, or who challenge them. What we desire is, that they should not be worshiped as fetiches, but that they should enter into the very life-blood of nations.

Further: the abstract deductions of pure science do not leave us without disquietude, since they treat man much more like a material than like a moral force. Under the vigorous procedure of speculative mathematics, man becomes a constant quantity for all times and all countries, whereas he is, in reality, a variable quantity. All the elements put in play are ideal entities, the reverse of which we find in poetry, where

Tout prend un corps, une ame, un esprit, un visage!

and where everything loses the character of life, and is transformed into inanimate units. Man is something different from [pg 036] the sum of the services he may be made to render, and from the sum of enjoyments which may be procured for him. We must not run the risk of lowering him to the level of a living tool; and from the moment that we are required to take his moral destiny into account, what becomes of abstract calculation?

X.

We have been wrong, says Rossi, in reproaching Quesnay for his famous laissez faire, laissez passer, which is pure science. We, also, are of opinion that the reproach was ill founded, for it proceeded from a wrong conception of the principle itself. But it seems to us that, far from condemning this doctrine in its serious application, the historical method may serve to explain and to justify it. Employing less of rigidity and dryness in form, it reaches consequences more in harmony with social life. But it is not to be imagined that we do not meet in this way with many ancient and glorious precedents. The great principles of industrial liberty, as well as those of commercial liberty, originated in France. Forbonnais was right when he said: “We may congratulate ourselves on being able to find, in our old books and ancient ordinances, wherewith to vindicate for ourselves the right to that light which we generally supposed to have been revealed to the English and Dutch before us.” The further Forbonnais carried his researches into our annals, the greater the number of traces of opposition to the prejudices in favor of exclusion and monopoly, so long made principles of administrative policy, did he find.[41]

The famous axiom, laissez faire, and laissez passer, the subversive tendencies of which people affect to condemn, was not invented by Quesnay. He only gave a scientific bearing to what was the inspiration of a merchant called Legendre. The latter, consulted by Colbert on the best means of protecting [pg 037] commerce, dropped these words which have since become so celebrated.

We must not lose sight of their real meaning, nor misunderstand the intention which dictated them. What Quesnay said was this: “Let everything alone which is injurious, neither to good morals, nor to liberty, nor to property, nor to personal security. Allow everything to be sold which has been produced without crime.” And he added: “Only freedom judges aright; only competition never sells too dear, and always pays a reasonable and legitimate price.” Far from being the absence of rule, liberty is the rule itself. To laisser faire the good is to prevent evil.[42]

There is need of institutions to complete the exercise of the independence acquired by labor, and of laws to regulate that exercise. The laisser faire and laisser passer of economists is, in no way, like the absolute formula, which some have denounced and others sought to utilize, as relieving authority of all care and all intervention.

To understand this maxim aright, we must go back to the oppressive regime of ancient society. Quesnay's formula was, first of all, a protest against the restraints which hampered the free development of labor. But it did not tend to abrogate the office of legislator, nor to deprive society or the individual of the support of the public power which watches over the fulfillment of our destiny.

It may have seemed convenient to find in the gravity of a politico-economical principle, an excuse for the sweets of legislative and administrative far niente, but it is generally conceded that the role of authority has grown, rather than diminished, under the regime of the liberty of labor. The task is, in our days, a hard one, both for individuals and nations; for liberty dispenses its favors only to the masculine virtues of a laborious and an enlightened people.

Liberty is not license. It refuses to bend under the yoke, [pg 038] but it submits to rule. The mission of authority is not to constrain, but to counsel; not to command, but to help accomplish; not to absorb individual activity, but to develop it. It does not pretend to raise a convenient indifference on the part of government, nor the indolent withdrawal of all protective influence to the dignity of a principle. To say, on the other hand, that the laisser faire and laisser passer of the economists means: Let robbery alone; let fraud alone etc., is to amuse one's self playing upon words, and to argue in a manner unworthy of any serious answer. Under pretext of painting a picture of economic doctrine, we are given its caricature. Such has never been the system, to the elaboration of which the purest hearts and noblest intellects have devoted themselves. A negation does not constitute the science of Political Economy.

It is very convenient to inclose humanity within a circle of action, drawn with rigorous precision, and to govern movements seen in advance. But such artificial conceptions mutilate the activity of man. To guarantee man all liberty, and prevent its abuse—such are the data of the problem. The work is a great and difficult one. Far from yielding in point of elevation to ideal systems, it is superior to them in extent and variety of combinations. Those who ignore its bearing, yield, it may be, to a certain indolence of intellect. Restrained within its natural limits, the famous laisser faire and laisser passer of the Physiocrates deserves even to-day our respect and our confidence. It ought to be preserved in the grateful memory of men, side by side with the maxim which Quesnay succeeded in having printed at Versailles, by the hand of Louis XV himself: “Pauvres paysans, pauvre royaume; pauvre royaume, pauvre souverain.”[43]

XI.

To return to the question of method. Rossi made use of an ingenious example to explain his thought:[44] “Are,” he inquires, “these deductions [of pure science] perfectly legitimate; are these consequences always true? It is incontestably true that a projectile, discharged at a certain angle, will describe a certain curve; this is a mathematical truth. It is equally true, that the resistance offered to the projectile by the medium through which it moves modifies the speculative result in practice, to some extent; this is a truth of observation. Is the mathematical deduction false? By no means; but it supposes a vacuum. I hasten to acknowledge it. Speculative economy also neglects certain facts and leaves certain resistances out of account.” Now, from the moment that we have to deal with human interests, it is not possible to suppose a vacuum, to neglect the most vulgar facts, and the most common instances of resistance, nor to lose one's self in abstraction. The correctives of applied Political Economy either may not wipe out this original sin, or else they run great danger of covering up the principles themselves. In ballistics, again, we may measure the resistance which the medium in which we are obliged to operate, makes the force of impulsion and the target both obey the same law, and yield to the same process of calculation. But is it thus when you touch upon man's innermost and most sensitive part? Is there not danger that the hypotheses may be deceitful, and that you may be accused of toiling in a vacuum? We well know the solid reason that may be opposed to sarcasm of this nature; but is it expedient to lay one's self open to it?

Moreover, the consequences are not great enough to warrant us to expose ourselves to the danger. The principles of pure science are very small in number. They might even, be easily reduced to one, of which M. Cousin has been the eloquent [pg 040] interpreter—human liberty. This liberty has no need of Political Economy to shine with the luster of evidence; nothing can prevail against it. We can prove that it is as fecund as it is respectable; but if the science of wealth should endeavor to demonstrate the contrary, the primordial bases of society, liberty, property and the family would not be less sacred nor less necessary, for they are the right of humanity. They could not be put aside, even under pretext of any mechanism which would claim to produce more.[45] These sovereign principles of economy flow from the moral law, and they have no reason to dread the power of facts, for the prosperity of nations depends on the respect with which they are surrounded and the guarantees by which they are protected.

We have spoken of the moral law; and, indeed, in our opinion, it is impossible to banish it from the domain of public economy. Any other point of view seems to us too narrow. And when we see eminent men go astray in the pursuit of an ideal which fails to take the human soul into account, and which finds nothing but equations where there are feelings and ideas, we cannot help thinking that they are unfaithful to the thought of the founder of the science, Adam Smith. Man is not simply a piece of machinery. He does not blindly submit to external impulse. Rather is he himself, the greatest of impulses. But to govern things, he must first learn to conquer himself. Personal interest is the powerful motive which he obeys. Man does not live alone, in a state of isolation, in the world. Væ soli! He lives in society and profits by the relations which he forms with other beings, intelligent like himself, and for whom he has a natural feeling of sympathy.

The good that comes to them yields satisfaction to him, and the evil that befalls them falls on him likewise. He cannot turn back entirely upon his own personality. Besides his own interest, he feels and shares another interest—the interest of all. Personal interest is perfectly legitimate. The love of self cannot [pg 041] be condemned. The Savior himself has enjoined us to love our neighbor as ourselves. To love him more than ourselves is a very high and beautiful virtue. It is the self-abnegation which inspired Christian heroes. But heroism is rare, and cannot be imposed, nor taken, as a rule. Personal interest is a powerful stimulant, and the superior harmony of social relations makes it contribute to the general good.

What must be condemned is a fatal deviation of this sentiment which destroys its effect and narrows its actions. What we need to prevent is the degeneration of personal interest into an egotism which parches, instead of fertilizing, and which compromises the future by the exclusive search after present advantage; for egotism is short-sighted. On the other hand, the broader and more generous feeling which inclines us to sympathize with our fellow beings in their sorrows, and to unite our destiny to theirs; that is, the feeling of the general interest, has a limit too.

It would be falsified if it absorbed the individual; if it destroyed the most powerful motive-force by drying up the abundant source of activity; if it attacked moral energy by enervating responsibility; if it extended the circle of results obtained to such an extent that scarcely any one should feel the rebound.

The evil produced by egotism, that sad travesty of personal interest, appears under a form quite as formidable when the general interest takes the form of communism. The coöperation of personal interest and of the general interest is always necessary, both for individual profit and social advantage. There is as much danger in annihilating the individual as in exalting him. History furnishes us with memorable examples of this. It does not allow us to go astray in the narrow ways of a peevish and jealous personality, nor to lose ourselves in the vague labyrinth of a chimerical and false communism. The latter would destroy what constitutes the power and dignity of man. It would wipe out the most prominent features of his noble nature, by destroying the support of energy and activity and the food of moral force.

XII.

But, we are told, Political Economy is only the science of selfishness; Adam Smith is the prophet of individualism; grow rich per fas et nefas is its ultimate teaching. Such a judgment is evidence of much levity and little enlightenment. How could the man who conceived the study of human interests on so large a scale, the philosopher who acknowledged Hutcheson as his master and gave his ideas a still more expansive character, be the apostle of egotism; and how can the science which he founded be its gospel? There is here an error of fact and a defect of appreciation. Hutcheson had based moral philosophy on the feeling which, according to him, engendered all the other virtues, on benevolence, which is disinterested, busied with the welfare of others, with the public weal and the general interest. Adam Smith went further, and sought to base it on a still more energetic feeling, on sympathy.

The first sentence of his Theory of the Moral Sentiments, which is a full resumé of his theory, is as follows: “How selfish soever man may be supposed, there are evidently some principles in his nature which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it, except the pleasure of seeing it.” And this is no empty declaration on his part. It is the thought which of all in his book is nearest to his heart; and hence he energetically assails those philosophers who look upon self-love and the refinements of self-love as the universal cause of all our sentiments, and seek to explain sympathy by self-love.

La Rochefoucauld, Mandeville and Helvetius never met with a more determined or energetic adversary. Nowhere have the sweet and amiable virtues, such as ingenuous condescension, indulgent humanity, and the respectable and severe virtues, such as disinterestedness and self-control which subject our movements to the requirements of the dignity of our [pg 043] nature, been better understood or interpreted. Adam Smith is the philosopher of sympathy.[46] His theory triumphs over the cowardly and shameful egotism which concentrates the moral life of the individual in himself, and separates it from the life of the human race of the outré stoicism which refuses the aid of sentiment to reason.[47] According to him, the law of private morals is sympathy; the law of natural jurisprudence, justice; the law of the production of wealth, free labor. But while he defended this principle with energy, he did not become guilty of a real recantation by worshiping the idol he had just overthrown. He would have been culpable of the strangest of all contradictions if he had made the vice which he had just lacerated the very pivot of another part of his teaching.

We regret that this essay, which has already very much exceeded the limits we assigned it in the beginning, will not permit us to reproduce here Knies' beautiful demonstration, in which he so learnedly and eloquently vindicates Adam Smith from this strange imputation, thereby placing Political Economy on its true basis, the basis of morals, by removing in a decisive way, all pretext of error and all means of subterfuge. This part is one of the best features in his most excellent work on “Political Economy, from the historical Point of View.” We shall return to this matter.

XIII.

What is there that political economists have not been charged with? They have been accused, above all, of a cold heartedness and cruelty, and the sentence passed on them has been resumed in these words: “Political Economy has no bowels!” Indeed, the representative of the science, who has been most attacked and who has been held up as a picture of impassible insensibility; on whom have been heaped the most bloody outrages, [pg 044] is Malthus. Let us hear him. He tells us in his work on Political Economy, that if a country had no other means to grow rich, except by seeking for success in the struggle with other countries, at the cost of a reduction of the wages of labor, he would unhesitatingly say: Away with such riches; that it is much to be desired that the working classes should be well remunerated, and this for a reason much more important than all the considerations relating to wealth; that is, the happiness of the great mass of society. And he goes on to say, that he knows nothing more detestable than the idea of knowingly condemning the laboring classes to cover themselves with rags, to lodge in wretched huts, to enable us to sell a few more stuffs and calicoes to foreign countries. Certain it is, that no defender, however determined, of the laboring classes, has said anything stronger or more deeply felt. The reason is, that nothing was more foreign to Malthus' ideas than the systematic rigidity of mathematical theories of wealth; that, a minister of the Gospel, he had meditated on its high precepts. His whole doctrine is based on the moral idea. “He was profoundly convinced that there are principles in Political Economy which are true only in as far as they are restricted within certain limits. He saw the principal difficulty of the science in the frequent combination of complicated causes, in the action and reaction of causes on one another, and in the necessity of setting limits or making exceptions to a great number of important propositions.” Here we are ever brought back to the undulating ground of living science, instead of having to follow the rectilineal way traced out by the dead letter. We are always driven back, whatever may be pretended to the contrary, to the realities of which history alone possesses the secret. The idea of wealth cannot absorb everything when there is question of judging and enlightening men. To do this, it is necessary to know the various phases of social housekeeping, what nations have thought of economic interests [pg 045] which have never ceased to interest them greatly, what they have attempted and what they have attained.

Hence, we must turn over the leaves of the book of the past, and study its economic aspect, as we have studied its political and literary aspect. We must follow living nations through their divers periods of development, and fathom the causes of the destruction of those that are dead. When we are dealing with the comparative study of the economic destinies of nations, our investigations are limited to a small number of individual nations—a further reason not to omit any, and above all, to scrutinize, as an anatomist would with his scalpel, the principle of life of those which are no more. We may, by accounting to ourselves for the immense variety of phenomena which are brought to light by the application of principles to facts, and in which nothing is absolute or permanent, in which, on the contrary, everything is relative and successive, acquire that sureness of touch and correctness of vision which are among the most valuable conquests of science.

It would be a mistake to suppose that theory simplifies practical solutions. Far from providing us with a sort of formulary, it teaches us to put our finger on a number of difficulties. It brings to the surface the many aspects and fertile and varied considerations, the examination of which is the mission of the real statesman and legislator. In this way, the action of thought and the power of the moral idea are revealed with most éclat. Man ceases to be an inert element, and manifests himself as a sensible being, and the sublime thought of Pascal: “Humanity is like one man who lives and learns always,” is verified by the result. The wish to violently abdicate the past, it would be vain and rash to attempt to realize. The lessons it transmits to us are as instructive as the picture it unrolls before our eyes is attractive. We have no longer but to see and hear, to be cured of the most generous impatience with what is, and to retreat from the most perilous attempts.

XIV.

The unvarying testimony of ages affirms the continued and gradual amelioration of man by individual energy and moral thought.[48] Want and suffering have urged him forward. Foresight, labor, sacrifice and virtue have in part redeemed him. No right has been lessened or usurped, and every step in civilization has been a step in the way of freedom. Instead of making the latter responsible for a material and moral wretchedness which it is called upon to cure, we may prove, that, in proportion as real liberty and legal guarantees increase, evil diminishes.

We do not desire to yield to a convenient optimism, and deny the sufferings which weigh only too heavily on the world. We are far from having reached the end assigned to our efforts; but let not the hope we entertain of further progress blind us to that which has already been accomplished. This latter shows us that we are on the right road, and that we have not done unwisely in giving free rein to the human faculties. Sudden changes are made only in theaters. In the real world, the march of progress is slow and laborious. It may be accelerated by a happy hit; but it would be vain to try to hurry it.

Man still suffers. No one desires to deny the evil, but only to estimate its extent. Yet it cannot be gainsaid that its fatal empire is narrowing instead of enlarging. Especially is it the progress accomplished in the higher regions of intellect and of the feelings which here exerts its beneficent influence. On our moral greatness depends our material power. The elevation or debasement of character, the energy or debility of the will—such is the first source of good or evil. The world, a Chalmers rightly says, is so constituted that we should be materially happy if we were morally good.

Industrial progress helps, we have said, towards moral perfection. It is not the source of that perfection, but its instrument; [pg 047] for ignorance and misery, its habitual attendants, are poor advisers. Political Economy shows how the goods of this world are multiplied. It shows how modest comfort may become more and more general, and thus an impetus be given to all noble virtues without awakening a blind passion for riches. It teaches moderation instead of exciting covetousness, nor does it come in conflict with the sublime words of Saint Augustine: “The family of men, living by faith, use the goods of the earth as strangers here, not to be captivated by them or turned away by them from the goal to which they tend, which is God, but to find in them a support which, far from aggravating, lightens the burthen of this perishable body which weighs down the soul.”

XV.

Looked at from below, all things diverge. Looked at from above, all things run into one another and combine with one another. It is one of the great merits of the historical method, that it raises the point of observation and gives the observer the support of tradition and good sense, that master of life; that it prevents a divorce between different branches of knowledge of the same order, which constitute but one intellectual family, which there is no question of confounding, and which it would be dangerous to isolate.

Aristotle, that universal genius, had discovered Political Economy, and it was the historical method which revealed it to him. Be it added, that the great philosopher had seen but one phase of the science, chrematistics, and that his ideas here bear the impress of the age in which he lived. Aristotle, however, distinguished this science from all others and from domestic economy, which is so akin to it. Doubtless, he did not found the modern study of Political Economy, but his powerful intellect gave him a presentiment of it.

The honor of producing at once, Adam Smith, Quesnay and Turgot belongs to the eighteenth century. It was in the [pg 048] course of philosophy at Glasgow that this study found a definite place. The illustrious founder of the science of Political Economy did not contemplate dissolving the ancient alliance between it and the moral sciences, history, philosophy, jurisprudence, belles-lettres—all of which he had explored and studied profoundly. Let those whose ambition it is to walk, even at a distance, in the footsteps of Adam Smith, not forget what was the cradle of the noble study to which they have devoted their intellects.

L. WOLOWSKI.

[pg 051]

Introduction.

Chapter I.

Fundamental Ideas.

Section I.

Goods—Wants.

The starting point, as well as the object-point of our science is Man.[49]

Every man has numberless wants, physical and intellectual.[50][51] Wants are either necessaries, decencies (Anstandsbedürfnisse) or luxuries. The non-satisfaction of necessary wants causes disease or death; that of the wants of decency endangers one's [pg 052] social position.[52] The much greater number, and the longer continuance of his wants are among the most striking differences between man and the brute:[53] wants such as clothing, fuel,[54] tools, and those resulting from his much longer period of infancy; which last, together with other causes, has contributed so largely to make marriage necessary and universal. While the lower animals have no wants, but necessities, and while their aggregate-want, even in the longest series of generations, admits of no qualitative increase, the circle of man's wants is susceptible of indefinite extension.[55] And, indeed, every advance in culture made by man finds expression in an increase in the number and in the keenness of his rational wants. No man who distinguishes himself in anything, but feels spurred thereto by a peculiar want; and this want is both the cause and the effect of the power which is peculiar to him. No one but the poet feels the want of poetizing; no one but the philosopher, of philosophizing. In every particular, intellectual or physical, in which the man is in advance of the child, he experiences new wants unknown to the child. Our education consists, for the most part, in awakening wants and providing for their satisfaction.

Goods are anything which can be used, whether directly or indirectly, for the satisfaction of any true[56] or legitimate human want,[57] and whose utility, for this purpose, is recognized. Hence, the idea goods is an essentially relative one. Every change in man's wants, or knowledge, is accompanied by a rapid, corresponding change, either in the limits of the circle[58] of goods, or in their relative importance. Thus, the tobacco plant has, probably, existed thousands of years. It became goods, however, only from the time that man recognized its use for smoking, snuffing etc., and experienced the want of it for these purposes. In a similar way, the limestone of the Solenhofen quarries has become goods, of considerable importance, only since the invention of lithography; decaying bones, only since that of bone-dust manure; caoutchouc since about 1825, and gutta-percha, only since 1844. On the other hand, charms,[59] philters, and even relics, since the decay of faith in their efficacy, have lost the quality of goods. If the aggregate income of all mankind were, by some sudden revolution, to be equally divided among all, diamonds, for instance, would [pg 054] greatly decline in value, for the reason that it is dependent, in great part, on the wants generated by vanity, or by the desire of outshining others. Beer, tobacco etc., would rise in the scale as goods, because the circle of those to whose wants they minister would have been very greatly extended. On the whole, advancement in civilization has uniformly the effect, of itself, to increase the quantity and number of goods, the wants and knowledge of men being thereby increased. We should reach the ideal here, if all men experienced only true or legitimate wants, but these completely; if they could see their way, clearly, to the satisfaction of them, and find the means of satisfying them with just the amount of effort most conducive to their physico-intellectual development.[60]

Section II.

Goods.—Economic Goods.

By economy (Wirthschaft=husbandry or housekeeping), we mean the systematized activity of man, to satisfy his need (Bedarf=requisite) of external goods.[61] This treatise is concerned only with economic goods (ends or means of economy).[62] The greater the advance of civilization or human culture, [pg 055] the less apt are men to pursue the satisfaction of their wants, isolated from their fellows, or, in other words, to carry on their economies or husbandries apart from one another. The more numerous the wants of men, and the more different in kind their faculties are, the more natural does exchange[63] become. Since all goods derive their character as goods from the fact that they are destined to satisfy human wants, the very possibility of exchange must greatly increase the possibility of things to become goods. Think of the machinist, whose products are used only by the astronomer, while the latter is never in a way to manufacture them for himself. (Hufeland.) Commerce is the series of combinations, created by the interchange of services: “a living net of relations, which wants and services are ever weaving and unweaving.” (Hermann.) As a rule, with an advance in civilization, there is an increase in the number of goods, which become economic goods, and in the number of economic goods which become commercial goods (objects or means promotive of commerce).[64] But this is to be considered a real advancement only to the extent that that which is obtained is superior to that which was possessed before, in consequence of the specialization of callings or the greater division of labor (§ [48] ff.). When a little street Arab exacts money from a stranger for pointing out the way, we rightly censure him; but no one would find [pg 056] it improper if he should first fit himself to play the part of a guide, and then live by his calling.[65]

Section III.

Goods.—The Three Classes Of Goods.

All economic goods are divided into three classes:

A. Persons or personal services. It is entirely repugnant to the feeling of humanity to regard a man's person in its entirety as an instrument intended to satisfy the wants of another.[66] [pg 057] Yet this happens wherever slavery exists; in its coarsest form, in cannibalism. Among civilized nations, we can speak, under this head, only of individual services or capabilities of persons; or, indeed, of the aggregate of the services rendered by them during a time determined at pleasure, or a short time.[67]

B. Things, both moveable and immovable.[68]

C. Relations to persons or things which may frequently be estimated just as accurately as material goods. (The res incorporales [pg 058] of the Roman law.) I need only mention what is called good-will, which freely, and to the advantage of customers themselves, but still with a limited amount of certainty, attaches to certain localities, and for which tavern-keepers, sometimes, as in theaters, dépôts and clubs, pay so enormous a rent.[69] When a newspaper is sold, the purchaser frequently buys nothing but the existing relations between his colaborers, subscribers etc. No small part of the value of a good business firm consists in the confidence with which it inspires all who deal with it, thus sparing them a world of care and trouble.[70] A general may be of incalculable value to an army which he has himself helped organize. In another, or in the service of a country not his own, he might be entirely valueless, incapable of accomplishing anything.[71] With the progress of civilization, as man becomes more social, the number of valuable relations increases, while that of legalized monopolies is wont to decrease. (Schäffle.)[72]

Section IV.

Of Value.—Value In Use.

The economic value of goods is the importance they possess for the purposes of man, considered as engaged in economy (housekeeping, husbandry.[73])

Looked at from the point of view of the person who wishes to employ them in his use directly, doubtless the oldest point of view, value appears first as value in use; and here, according to the difference of subjective purposes it is intended to subserve, we may speak of production value or enjoyment-value; and of this last, in turn, as utilization-value, or consumption-value. The value in use of goods, is greater in proportion as the number of wants they are calculated to satisfy are more general and more urgent, and in proportion as they are gratified by them more fully, surely, durably, easily and pleasantly.[74] Hence, it is seldom possible to find an accurate mathematical expression of the relation which exists between the value in use of different goods.[75] Thus, it is possible to estimate the [pg 060] nutritive power of different kinds of goods, the value of wheat or of hay for instance, but not the goodness or quality of their taste, of the attractiveness of their appearance, etc.

But, the more men become used to comparing the aggregate of human wants, and the aggregate of the goods which minister to the satisfaction of these wants, as if they were two great wholes, gradually shading each into the other, the more does the value in use of the different kinds of goods assume, for purposes of social rating or estimation, a fungible character.[76] If a new kind of goods be produced or discovered, which satisfies the same wants in a more complete manner than another, the latter, although it has suffered no change, generally loses in the value put upon it, especially if the new goods can be produced in any desired quantity. An instance of this is the change effected in the value of the dyers weed, woad, by the introduction of indigo.

Things present in quantities greater than the amount necessary to supply the want they satisfy, preserve their full value in use, to the limit of that want, after which they are simply an element of possible future value, dependent on an increase of the want; but they have no value for present use.[77]

The economic valuation of goods, however, is by no means exhausted, so far as the isolated individual housekeeper is concerned, by the mere establishing of its value in use. As the systematic effort of every rational individual in [pg 061] his household management is directed towards the obtaining, by a minimum of sacrifice of pleasure and energy, a maximum satisfaction of his wants, even an Adam or a Crusoe is, in his economy, compelled to estimate not only what the goods to be acquired accomplish (value in use) but also what they will cost—cost-value. Even the most indispensable kind of goods, for instance atmospheric air, is considered to have no value, when it can be obtained in sufficient quantity, without any sacrifice whatever.[78]

Section V.

Value.—Value In Exchange.

The value in exchange of goods, or the quality which makes them exchangeable against other goods, is based on a combination of their value in use with their cost-value, such as men in their intercourse with one another will make.[79] Without value in use, value in exchange[80] is unthinkable.

But there are many, and even indispensable goods which are not at all susceptible of being exchanged; for instance, the light and heat of the sun, the open sea etc.[81] Other goods, [pg 062] although capable of being exchanged, have no value in exchange, because they exist in superabundance, and may be obtained by everyone, without trouble and without reward; for instance, drinking-water in most places, ice in winter, and wood in the primeval forest.[82] Moreover, the idea of such “free goods” is in great part relative. The water of a river may, for drinking purposes, be “free” goods, and yet, for purposes of irrigation, have great value in exchange. (John Stuart Mill).

But, goods, to obtain value in exchange, must, in addition to their value in use, a value which must be recognized[83] by a certain number of persons, at least, have the capacity of becoming the exclusive property of some one individual, and therefore of being alienated or transferred; and this alienation or transfer must be desired because of the difficulty to become possessed of them in any other way.[84]

Section VI.

Value.—Alleged Contradiction Between Value In Use And Value In Exchange.

Recent, and especially socialistic,[85] writers have alluded to the great “contradiction” between value in use and value in exchange. This contradiction, however, vanishes when the above idea of economy, and the two sides or aspects, which economic value presents, are kept steadily in view. It is said, for instance, that a pound of gold has a much greater value in exchange than a pound of iron; while the value in use of iron, is incomparably greater than that of gold. I question [pg 064] this latter statement. True it is, that the need of iron is much more universal and urgent than the need of gold. On the other hand, a pound of gold yields satisfaction to the want of that metal, much greater than is yielded by a pound of iron, to the want of iron. We may speak of a contradiction between value in use and value in exchange, at the farthest, only in case the existing quantity of an article in trade, which can be done without, is not estimated correspondingly lower than the whole existing supply of a thing which is indispensable. But this is a case which cannot often occur. When, for instance, wheat is very dear, as in years of scarcity, people prefer to pay a very high price for it rather than to dispense, even in part, with its use; and so of all the necessaries of life. As people progress in economic culture, they become more expert in adapting the value in exchange of related goods, not only to their cost-value, but also to their value in use.[86][87]

The lower the state of a nation's economy, the more isolated men live from one another, the greater is the prominence given by them to value in use, as compared with value in exchange, a fact which makes a valuation of resources, which shall be universally applicable, a more difficult matter.[88][89][90]

Section VII.

Resources Or Means (Vermögen).

Resources, or means, in the sense in which we here use the term, are the aggregate of economic goods owned by a physical or legal person, after deduction is made of the person's debts, and all valuable and rightful claims have been added.[91] Hence, there are private resources, corporative resources, municipal resources, etc., state resources, national resources and the world's resources. In estimating the resources of a whole people, it is, of course, necessary to make deduction of the debts due by the individual members of the nation to their fellow countrymen.

Section VIII.

Valuation Of Resources.

It has often been made a question, whether the valuation of resources should be based on the value in use, or the value in exchange of their constituent parts.[92] The latter has, of course, no interest, except in so far as we are concerned with the possibility of obtaining the control of part of the resources, or means, of another, by the surrender of a part of one's own goods. In estimating the value of private resources, which require to be made continually an object of trade, this point is, of course, of the greatest importance. If certain of their component elements, lands, for instance, belonging to a fidei commissum, are incapable of entering immediately into the market, at least the revenue they yield is measured by its value in exchange.

It is quite otherwise, even with the resources of a whole nation. Such resources are, evidently, much more independent, and have much less need of being exchanged against their equals, than private resources. The foreign commerce, of the greatest and most advanced nations, has, hitherto, been but a small quota of their internal commerce.[93] A valuation, [pg 067] therefore, based on value in exchange, however interesting it might be to enable us to determine how property is shared by the different classes and persons that compose the nation, would afford but little information concerning the absolute amount of the national wealth. This, of course, applies in a much higher degree to the resources of the whole world.

If, now, we were to estimate the resources of an entire people, or even of the world, by summing up the value in exchange of their several component parts, many very important elements would be left out of the account entirely; as for instance, harbors, navigable streams, numberless relations which have, indeed, no value in exchange whatever, but which are of the highest importance, because promotive of the economy of the nation. The same may be said of made roads of every description, the politico-economical value of which may be much greater than the value in exchange of their stock, than their cost of production etc. The increase of the value in exchange of any of the branches of the resources of a physical or legal person contributes towards really enriching the nation or the world, only in case that the increased value in exchange is based on an increased utility in quality or quantity. Should an earthquake suddenly dry up a number of our springs, and thus give value in exchange to the drinking water from the remaining ones, we should, indeed, witness the introduction of a new object into the list of exchangeable goods; the owners of springs would be able to command a larger portion of the national resources, but at the expense of the rest of the population; and the whole country would have become poorer in goods by the catastrophe. Even the value in exchange of the national resources would not be increased; for all other goods, which, hitherto, as compared with water, had an unlimited capacity for exchange, would lose just as much of that capacity as water had gained, as compared with them.[94] On the other hand, if a new mineral [pg 068] spring should be discovered, the great value in use of the water of which gave it value in exchange, the resources of the nation would be really increased, not only in point of utility, but in exchange value; for no other goods, formerly known, would, in consequence of the discovery, lose in their exchange power.[95]

Section IX.

Wealth.

The possession of large and also of potentially lasting resources; objectively, such resources themselves, we call wealth. But it must be large in a two-fold sense; large as compared with the rational wants of its possessor, and large, also, as compared with the resources of other people, especially with the resources of those in the same condition of life. To be called rich, it is not enough “to have a sufficiency,” (the individual side); it is necessary to have more than others.[96] If all men were possessed [pg 069] of a great deal, but all of an exactly equal amount, each would be compelled, it may be conjectured, to be his own chimney-sweep, his own scavenger and “boot-black.” And how could anyone, then, be properly called wealthy? This is the social side of the idea of wealth.[97] Hence, a person, with the same resources, might be very wealthy in a provincial town, while, in the capital, he could enjoy only moderate comfort.[98]

Section X.

Wealth.—Signs Of National Wealth.

We should have a very imperfect idea of the wealth of a people (§ [8]) if we should estimate it at the value in exchange [pg 071] of the sum[99]-total of the component parts of the national resources. By the following signs, however, an approximative notion of the value in use of the resources of a nation may be obtained:

A. When, even the lower classes, who compose everywhere the greatest portion of the people, are comfortable, in a condition worthy of human beings. Thus, C. Dupin is surprised at the great quantities of meat, butter, cheese and tea entered on the accounts of the poor-houses in England, and the great [pg 072] care taken to have these of the best quality.[100] A good symptom of such a state of things is a high average duration of human life, especially when there is a relatively large number of births. (§ 246.)

B. When a considerable outlay, devoted to the satisfaction of the more refined wants, is voluntarily made, and by those only possessed of a proper economic sense. Thus, in England, the various mission, bible, and tract societies had, in 1841, an aggregate income of £630,000. The expeditions in search of Franklin cost over a million pounds sterling. The state outlay also belongs to this category, provided, that taxes are collected and loans obtained, without any noticeable oppression. The sum of 20,000,000 pounds sterling, voted, in 1833, by the British Parliament for the abolition of slavery, is one of the happiest signs of the national wealth of England.[101]

C. A large number of valuable buildings, and permanent improvements; for instance, roads of every description, works for purposes of irrigation and drainage. Thus, in London, from September, 1843, to September, 1845, there were constructed squares and streets with an aggregate length of 11.1 geographical miles. The number of newly built houses in London, between 1843 and 1847, was nearly 27,000. And so, in England and Wales there are 492 geographical miles of navigable canals, while their navigable rivers are estimated to have a length of only 449 miles. The number of miles of railroad, in the British Empire, in 1865, was 2,897 geographical miles, and they cost 459 million of pounds; in 1870, it was 3,270 geographical miles, at an aggregate cost of 650 millions sterling.

D. The frequent occurrence of heavy commercial payments, which finds expression especially in the magnitude and costliness of the most usual medium of exchange. Thus, all payments are made in England in paper (for sums of at least five [pg 073] pounds sterling) or in gold coin. Silver is used only as small change, like copper in most other countries. (Infra, § [118], seq.)[102]

E. Frequent loans to foreign nations. Hence, Storch divides all countries into borrowing or poor countries, loaning or rich countries, and independent countries which hold a middle place between the two former.[103]

Section XI.

Of Economy (Husbandry).

All normal economy[104] (husbandry) aims at securing a maximum of personal advantage with a minimum of cost or outlay.[105] And there are always two intellectual incentives at the foundation of this economy. There is, first, self-interest, the positive manifestation of which is the effort to acquire as much of the world's goods as possible, and the negative expression of which, the effort to lose as little of them as possible—acquisitiveness—saving. Self-interest, losing its moral, and assuming a guilty, character, degenerates into egotism; acquisitiveness, into covetousness; and the disposition to save, into avarice—the solipsismus of Kant. The incentive to ameliorate one's condition is common to all men, no matter how varied [pg 074] the form or different the intensity of its manifestation. It guides us all from the cradle to the grave. It may be restricted within certain limits, but never entirely extinguished. It is, in the domain of economy, what the instinct of self-preservation is to our physical existence, a powerful principle of creation, preservation and of renewed life (I. Thessal., 4, 11, seq.).[106] Then there is the incentive of the demand of God's voice within us, the voice of conscience, whether we call it, in philosophic outline “the adumbration of the ideas of equity, right, benevolence, of perfection and inner freedom,” or, framing our lives in accordance with them, the striving after the Kingdom of God.[107] It matters not, how much the image of God may have been disfigured in most men, there is no one in whom the longing for it has so far disappeared as to leave no trace behind. This puts bounds to our self-interest, and [pg 075] transmutes it into an earthly means to enable us to approximate to an eternal ideal.

As, in the structure of the world, the apparently opposing tendencies of the centrifugal and centripetal forces produce the harmony of the spheres, so, in the social life of man, self-interest and conscience produce in him the feeling for the common good.[108] This sentiment of the common interest is the foundation on which rise in successive gradation, the life of the family, of the community, of the nation and of humanity, the last of which should be coincident with the life of the Church. It, alone, can realize the kingdom of heaven on earth. Through this sentiment alone can religion be made active and moral. Only through it, can self-interest be made really sure and always to the purpose. Even the most calculating mind must acknowledge, that numberless institutions, relations etc., are useful and even necessary to many individuals, which can be established or maintained only from a sense of the general welfare, for the reason that no one individual could make the sacrifice required to establish or maintain them. And so, since commerce has wrought the interests of all men into one great piece of net-work, the best means of obtaining wherewith to satisfy our own wants is to help others satisfy theirs. Self-interest causes every one to choose the course in life in which he shall meet with the least competition and the most abundant patronage; in other words, that which answers to the most pressing and least satisfied want of the community. As a rule, the physician who cures the greatest number of patients with the greatest skill, and the manufacturer who produces the best goods cheapest, will grow to be the richest. It is, moreover, easy to see that, according as the circle of common interests grows smaller, it approximates to self-interest; and [pg 076] to “the Kingdom of God”[109] as it grows larger. And yet, all these circles respectively condition one another. Cosmopolitanism or church-zeal, without love of country; patriotism, without fidelity to the community in which one lives, or love of one's family, are more than suspicious. The reverse is also true. This is a chief connecting link between the great apparent opposites.[110][111]

Section XII.

Economy.—Grades Of Economy.

Thanks to this feeling for the common weal, the eternal and destructive war—the bellum omnium contra omnes—which an unscrupulous self-interest would not fail to generate among men engaged in the isolated prosecution of their own economic interests, ceases in the higher, well-ordered organization[112] of society. On it are based the various forms of economy in common: family-economy, corporation or association-economy, [pg 078] municipal economy, and national economy.[113] And these forms of economy in common are so essentially the condition and complement of individual economy, that the latter, without them, could either not be maintained at all, or, at least, only in the very lowest stage of civilization.

Although the higher science of Political Economy has, nearly always, been conceived[114] as treating of the aggregate national activity of a people, there have been many, recently, who consider Political Economy as no real whole, but only as a mere abstraction. This is true, especially of many unconditional free-trade theorizers, partly from a repugnance toward the governmental guardianship of private businesses or economy. It is true, also, of certain philosophers who consider the idea, “the people,” as merely nominal.[115] There are, however, [pg 079] two things necessary to warrant us to call a thing made up of a number of parts, one real whole: the parts and the whole must have a reciprocal action upon one another, and the whole, as such, must have a demonstrable action of its own. (Drobisch.) In this sense, “the people” is, unquestionably, a [pg 080] reality, and not alone the individuals who constitute the “people.” Besides, it is truly said that all husbandry or economy supposes a will (“systematized activity” etc., supra, § [2]). Such a will is ascribed to individuals, to legal persons, to the state, but not, however, to “the people,” as a whole. But this will need not be an entirely conscious one, as is plain from the case of the less gifted and less cultured individuals engaged in household economy. The systemization in the public economy of a people finds its clearest expression in economic laws, and in the institutions of the state. But it finds expression, also, without the intervention of the state, in the laws established by use, and by the opinions of jurists or courts, in community of speech, of customs and tastes etc.: things which have an important economic meaning, which depend on the common nature of the land, of race and history, and which influence the state, at least as much as they are influenced by it.[116][117]

The most that can be said, at present, so far as an economy of mankind, or a world-economy, is concerned, is, that it may be shown that important preparations have been made for it. We are approaching more nearly to it by the ways of the more and more cosmopolitan character of science, the increasing international coöperation of labor, the improvement in the means of transportation, growing emigration, the greater love of peace, and the greater toleration of nations etc.

Section XIII.

Political Economy.—The Economic Organism.

The idea conveyed by the word organism, is doubtless, one of the most obscure of all ideas; and I am so far from desiring to explain[118] by that idea, the meaning of public or national economy, that I would only use the word organism as the shortest and most familiar expression of a number of problems, which it is the purpose of the following investigation to solve.

There are two points, especially, of importance here. In the motion of any machine, it is possible to distinguish with the utmost accuracy, between the cause and the effect of the motion: the blowing of the wind, for instance, is simply and purely, the cause of the friction of the mill-stones in a wind-mill, and is not in the least influenced or conditioned by the latter. But, in the public economy of every people, patient thought soon shows the observer, that the most important simultaneous events or phenomena mutually condition one another. Thus, a flourishing state of agriculture is impossible without flourishing industries; but, conversely, the prosperity of the latter supposes the prosperity of the former, as a condition precedent. It is as in the human body. The motions of respiration are produced by the action of the spinal cord; and the spinal cord, in turn, continues to work only through the blood, that is, [pg 082] by the help of respiration. In all cases like this, we are forced, when accounting for phenomena, to move about in a circle, unless we admit the existence of an organic life, of which every individual fact is only the manifestation.[119][120]

It is, also, undeniable, that human insight into the operation and utility of a machine must always precede the existence of the machine itself. This human insight is parent to the plan, and the plan, in turn, is parent to the machine. The very reverse of this is true in the case of organisms, those “divine machines” as Leibnitz called them. Men had digested food and reproduced their kind, thousands of years before physiologists had attained to a true theory of digestion or reproduction. I do not, indeed, by any means, pretend, that the public economy of nations is governed by natural necessity, in the same degree, as for instance, the human body. We shall find, however, that the minute arbitrary variations usual here and there in the course of its development, generally compensate for one another, in accordance with the law of large numbers. Here, too, we find harmonies, frequently of wonderful beauty, which existed long before any one dreamt of them; innumerable [pg 083] natural laws,[121] whose operation does not depend on their recognition by individuals, and, over which, only he can obtain power who has learned to obey them. (Bacon)[122][123][124] But [pg 084] it should never be lost sight of, that the natural laws governing the public economy of a people, like those of the human mind, are distinguished in one very essential point from those of the material world. They have to do with free rational beings, who, because they are thus free and rational, are responsible to God and their conscience, and constitute in their aggregate a species capable of progress.

Section XIV.