1902 Encyclopedia > Political Economy (Economics) > Political Economy - Third Modern Phase (cont) - Adam Smith, etc. - France

Political Economy
(Part 11)


2. Adam Smith, with his Immediate Predecessors and his Followers

France.—All the later European schools presuppose—in part adopting, in part criticizing—the work of the English economists from Smith1 to Ricardo and the Epigoni. The German school has had in a greater degree than any other a movement of its own—following, at least in its more recent period, an original method, and tending to special and characteristic conclusions. The French school, on the other had,—If we omit the socialists, who do not here come under consideration,—has in the main reproduced the doctrines of the leading English thinkers,—stopping short, however, in general of the extremes of Ricardo and his disciples. In the field of exposition the French are unrivalled ; and in political economy they have produced a series of more or less remarkable systematic treatises, text books, and compendiums, at the head of which stands the celebrated work of J. B. Say. But the number of seminal minds which have appeared in French economic literature—of writers who have contributed important truths, introduced improvements of method, or presented the phenomena under new lights—has not been large. Sismondi, Dunoyer, and Bastiat will deserve our attention, as being the most important of those who occupy independent positions (whether permanently tenable or not), if we pass over for the present the great philosophical renovation of Auguste Comte, which comprehend actually or potentially all the branches of sociological inquiry. Before estimating the labours of Bastiat, we shall find it desirable to examine the views of Carey, the most renowned of American economists, with which the latest teachings of the ingenious and eloquent Frenchman are, up to a certain point, in remarkable agreement. Cournot, too, must find a place among the French writers of this period, as the chief representative of the conception of a mathematical method in political economy.

Of Jean Baptiste Say (1767-1832) Ricardo says—"He was the first, or among the first, of Continental writers who justly appreciated and applied the principles of Smith, and has done more than all other Continental writers taken together to recommend that enlightened and beneficial system to the nations of Europe." The Wealth of Nations in the original language was placed in Say’s hands by Clavière, afterwards minister, then director of the assurance society of which Say was a clerk ; and the book made a powerful impression on him. Long after, when Dupont de Nemours complained of his injustice to the physiocrats, and claimed him as, through Smith, a spiritual grandson of Quesnay and nephew of Turgot, he replied that he had learned to read in the writings of the mercantile school, had learned to think in those f Quesnay and his followers, but that it was in Smith that he had learned to seek the causes and the effects of social phenomena in the nature of things, and to arrive at this last by a scrupulous analysis. His Traité d’ Économie Politique (1803) was essentially founded on Smith’s work, but he aimed at arranging the materials in a more logical and instructive order. He has the French art of easy and lucid exposition, though his facility sometimes degenerates into superficiality ; and hence his book became popular, both directly and through translation obtained a wide circulation, and diffused rapidly through the civilized world the doctrines of the master. Says’s knowledge of common life, says Roscher, was equal to Smith’s ; but he falls far below him in living insight into larger political phenomena, and he carefully eschews historical and philosophical explanations. He is sometimes strangely shallow, as when he says that "the best tax is that smallest in amount." He appears not to have much claim to the position of an original thinker in political economy. Ricardo, indeed, speaks of him as having "enriched the science by several discussions, original, accurate, and profound." What he has specially in view in using these words was what is, perhaps rather pretentiously, called Say’s théorie des débouchés, with his connected disproof of the possibility of a universal glut.

The theory amounts simply to this, that buying is also selling, and that it is by producing that we are enabled to purchase the products of others. Several distinguished economists, especially Malthus and Sismondi, in consequence chiefly of a misinterpretation of the phenomena of commercial crises, maintained that there might be general over-supply or excess of all commodities above the demand. This Say rightly denied. A particular branch of production may, it must indeed be admitted, exceed the existing capabilities of the market ; but, if we remember that supply is demand, that commodities are purchasing power, we cannot accept the doctrine of the possibility of a universal glut without holding that we can have too much of everything—that "all men can be so fully provided with the precise articles they desire as to afford no market for each other’s superfluities." But, whatever services he may have rendered by original ideas on those on other subjects, his great merit is certainly that of a propagandist and popularizer.

The imperial police would not permit a second edition of his work to be issued without the introduction of changes which, with noble independence, he refused to make; and that edition did not therefore appear till 1814. Three other editions were published during the life of the author—in 1817, 1819, and 1826. In 1828 Say published a second treatise, Cours complet d’Économie Politique Pratique, which contained the substance of his lectures at the Conservatoire des Arts et Métiers and at the Collége de France. Whilst in his earlier treatise he had kept within the narrow limits of strict economics, in his work he enlarged the sphere of discussion, introducing in particular many considerations respecting the economic influence of social institutions.

Jean Charles L. Simonde de Sismondi (1773-1842), author of the Histoire des Républiques Italiennes du moyen âge, represents in the economic field a protest, founded mainly on humanitarian sentiment, against the dominant doctrines. He wrote first a treatise De la Richesse Commerciale (1803), in which he followed strictly the principles of Adam Smith. But he afterwards came to regard these principles as insufficient and requiring modification. He contributed an article on political economy to the Edinburgh Encyclopaedia, in which his new views were partially indicated. They were fully developed in his principal economic work, Nouveaux Principes d’ Économie Politique, ou de la Richesse dans ses rapports avec la Population (1819; 2d ed., 1827). This work, as he tells us, was not received with favour by economists, a fact which he explains by the consideration that he had "attacked an orthodoxy—an enterprise dangerous in philosophy as in religion." According to this view, the science, as commonly understood, was too much of a mere chrematistic ; it studied too exclusively the means of increasing wealth, and not sufficiently the use of this wealth for producing general happiness. The practical system founded on it tended, as he believed, not only to make the rich richer, but to make the poor poorer and more dependent ; and he desired to fix attention on the question of distribution as by far the most important, especially in the social circumstances of recent times.

The personal union in Sismondi of three nationalities, the Italian, the French, and the Swiss, and his comprehensive historical studies, gave him a special largeness of view ; and he was filled with a noble sympathy for the suffering members of society. He stands nearer to socialism than any other French economist proper, but it is only in sentiment, not in opinion, that he approximates to it ; he does not recommend any socialistic scheme. On the contrary, he declared in a memorable passage that, whilst he sees where justice lies, he must confess himself unable to suggest the means of realizing it in practice; the division of the fruits of industry between those who are united in their production appears to him vicious ; but it is, in his judgment, almost beyond human power to conceived any system of property absolutely different from that which is known to us by experience. He goes no further than protesting, in view of the great evils which he saw around him, against the doctrine of laissez faire, and invoking, somewhat vaguely, the intervention of Government to "regulate the progress of wealth" and to protect the weaker member of the community.

His frank confession of impotence, far wiser and more honourable than the suggestion of precipitate and dangerous remedies, or of a recurrence to outworn mediaeval institutions, has not affected the reputation of the work. A prejudice was indeed early created against it in consequence of its partial harmony of tone, though, as we have seen, not of policy, with socialism, which was then beginning to show its strength, as well as by the rude way in which his descriptions of the modern industrial system, especially as it existed in England, disturbed the complacent optimism of some members of the so-called orthodox school. These treated the book with ill-disguised contempt, and Bastiat spoke of it as preaching an économie politique à rebours. But it has held its place in the literature of the science, and is now even more interesting than when it first appeared, because in our time there is a more general disposition, instead of denying or glossing over the serious evils of industrial society, to face and remove or at least mitigate them. The laissez faire doctrine, too, has been discredited in theory and abandoned in practice ; and we are ready to admit Sismond’s view of the state as a power not merely intrusted with the maintenance of peace, but charged also with the mission of extending the benefits of the social union and of modern progress as widely as possible through all classes of the community. Yet the impression which his treatise leaves behind it is a discouraging one ; and this because he regards as essentially evil many things which seem to be the necessary results of the development of industry. The growth of a wealthy capitalist class and of manufacture on the great scale, the rise of a vast body of workers who lives by their labour alone, the extended application of machines, large landed properties cultivated with the aid of the most advanced appliances—all these he dislike and deprecates; but they appear to be inevitable. The problem is, how to regulate and moralize the system they imply ; but we must surely accept it in principle, unless we aim at a thorough social revolution. Sismondi may be regarded as the precursor of the German economists known under the inexact designation of "Socialists of the Chair" ; but their writings are much more hopeful and inspiring.

To the subject of population he devotes special care, as of great importance for the welfare of the working classes. So far as agriculturists are concerned, he thinks the system of what he calls patriarchal exploitation, where the cultivator is also proprietor, and is aided by his family in tilling the land—a law of equal division among the natural heirs being apparently presupposed—the one which is most efficacious in preventing an undue increase of the population. The father is, in such a case, able distinctly to estimate the resources available for his children, and to determine the stage of subdivision which would necessitate the descent of the family from the material and social position it had previously occupied. When children beyond this limit are born, they do not marry, or they choose amongst their number one to continue the race. This is the view which, adopted by J.S. Mill, makes so great a figure in the too favourable presentation by that writer of the system of peasant proprietors.

In no French economic writer is greater force or general solidity of thought to be found than in Charles Dunover (1786-1862), author of La Liberté du Travail (1845; the substance of the first volume had appeared under a different title in 1825), honourably known for his integrity and independence under the régime of the Restoration. What makes him of special importance in the history of the science is his view of its philosophical constitution and method. With respect to method, he strikes the keynote at the very outset in the words "rechercher expérimentalement," and in professing to build on "les données de l’observation et de l’expérience." He shows a marked tendency to widen economics into a general science of society, expressly describing political economy as having for its province the whole order of things which results from the exercise and development of the social forces. This larger study is indeed better named sociology ; and economic studies are better regarded as forming one department of it. But the essential circumstance is that, in Dunoyer’s treatment of his great subject, the widest intellectual, moral, and political considerations are inseparably combined with purely economic ideas. It must not be supposed that by liberty, in the title of his work, is meant merely freedom from legal restraint or administrative interference ; he uses it to express all that tends to give increase efficiency to labour. He is thus led to discuss all the causes of human progress, and to exhibit them in their historical working.

Treating, in the first part, of the influence of external conditions, of race, and of culture on liberty in this wider sense, he proceeds to divide all productive effort into two great classes, according as the action is exercised on things or on men, and censures the economists for having restricted their attention to the former. He studies in his second and third parts respectively the conditions of the efficiency of these two forms of human exertion. In treating of economic life, strictly so called, he introduces his fourfold division of material industry, in part adopted by J. S. Mill, as "(1) extractive, (2) voiturière, (3) manufacturière, (40 agricole," a division which is useful for physical economics, but will always, when the larger social aspect of things is considered, be inferior to the more commonly accepted one into agricultural, manufacturing, and commercial industry, banking supposed as common president and regulator. Dunoyer, having in view only action on material objects, relegates banking, as well as commerce proper, to the separate head of exchange, which, along with association and gratuitous transmission (whether inter vivos or mortis causa), he classes apart as being, not industries, in the same sense with the occupations named, but yet functions essential to the social economy. The industries which act on man he divides according as they occupy themselves with (1) the amelioration of our physical nature, (2) the culture of our imagination and sentiments, (3) the education of our intelligence, and (4) the improvement of our moral habits ; and he proceeds according to study the social offices of the physician, the artist, the educator, and the priest. We meet in Dunoyer the ideas afterwards emphasized by Bastiat that the real subjects of human exchange are services ; that all value is due to human activity ; that the powers of nature always render a gratuitous assistance to the labour of man ; and that the rent of land is really a form of interest on invested capital. Though he had disclaimed the task of a practical adviser in the often-quoted sentence—"Je n’impose rien ; je ne propose même rien ; j’expose," he finds himself, like all economists, unable to abstain from offering counsel. And his policy is opposed to any state interference with industry. Indeed he preaches in its extreme rigour the laissez faire doctrine, which he maintains principally on the ground that the spontaneous efforts of the individual for the improvement of his condition, by developing foresight, energy, and perseverance, are the most efficient means of social culture. But he certainly goes too far when he represents the action of Governments as normally always repressive and never directive. He was doubtless led into this exaggeration by his opposition to the artificial organization of labour proposed by so many of his contemporaries, against which he had to vindicate the principle of competition ; but hid criticism of these schemes took, as Comte remarks, too absolute a character, tending to the perpetual interdiction of a true systematization of industry.

At this point it will convenient to turn aside and notice the doctrine of the American economist Carey. Not much had been done before him in the science by citizens of the United States. Benjamin Franklin, other wise of world-wide renown, was author of a number of tracts of industry and thrift, but in some throws out interesting theoretic ideas. Thus, fifty years before Smith, he suggest (as Petty, however, had already done) human labour as the true measure of value (Modest Inquiry into the Nature and Necessity of a Paper Currency, 1721), and in his Observations concerning the Increase of Mankind (1751) he expresses views akin to those of Malthus. Alexander Hamilton, secretary of the treasury, in 1791 presented in his official capacity to the House of Representatives of the United States a report on the measures by which home manufactures could be promoted. In this document he gives a critical account of the theory of the subject, represents Smith’s system of free trade as possible in practice only if adopted by all nations simultaneously, ascribes to manufactures a greater productiveness than to agriculture, and seeks to refute the objections against the development of the former in America founded on the want of capital, the high rate of wages, and the low price of land. The conclusion at which he arrives is that for the creation of American manufactures a system of moderate protective duties was necessary, and he proceeds to describe the particular features of such as system. There is some reason to believe that the German economist List, of whom we shall speak hereafter, was influenced by Hamilton’s work, having during his exile from his native country, resided in Pennsylvania, and may have come into communication with Hamilton, who lived in a neighbouring State.

Henry Charles Carey (1793-1879), son of an American citizen who had emigrated from Ireland, represents a reaction against the dispiriting character which the Smithian doctrines had assumed in the hands of Mathus and Ricardo. His aim was, whilst adhering to the individualistic economy, to place it on a higher and surer basis, and fortify it against the assaults of socialism, to which some of the Ricardian tenets had exposed it. The most comprehensive as well as mature exposition of his views is contained in his Principles of Social Science (1859). Instead with the optimistic sentiment natural to a young and rising nation with abundant undeveloped resources and an unbounded outlook towards the future, he seeks to show that there exists, independently of human wills, a natural system of economic laws, which is essentially beneficent, and of which the increasing prosperity of the whole community, and especially of the working classes, is the spontaneous result,—capable of being defeated only by the ignorance or perversity of man resisting or impeding its action. He rejects the Malthusian doctrine of population, maintaining that numbers regulate themselves sufficiently in every well governed society, and that their pressure on subsistence characterizes the lower, not the more advanced, stages of civilization. He rightly denies the universal truth, for all stages of cultivation, of the law of diminishing returns from land. His fundamental theoretic position relates to the antithesis of wealth and value.

Wealth had been by most economists confounded with the sum of exchange value ; even Smith, though at first distinguishing them, afterwards allowed himself to fall into this error. Ricardo had, indeed, pointed out the difference, but only near the end of his treatise, in the body of which value alone is considered. The later English economists had tended to regard their studies as conversant only with exchange ; so far had this proceeded that Whately had proposed for the science the name of Catallactics. When wealth is considered as what it really is, the sume of useful products, we seer that it has its origin in external nature as supplying both materials and physical forces, and in human labour as appropriating and adapting those natural materials and forces. Nature gives her assistance gratuitiously ; labour is the sole foundation of value The less we can appropriate and employ natural forces in any production the higher the value of the product, but the less the addition to our wealth in proportion to the labour expended. Wealth, in its true sense of the sum of useful things, is the measure of the power we have acquired over nature, whilst the value of an object expresses the resistance of nature which labour has to overcome in order to produce the object. Wealth steadily increases in the course of social progress ; the exchange value of objections, on the other hand, decreases. Human intellectual and faculty of social combination secure increased command over natural powers, and use them more largely in production, whilst less labour is spent in achieving each result, and the value of the product accordingly falls. The value of the articles is not fixed by its cost of production in the past ; what really determines it is the cost which is necessary for its reproduction under the present conditions of knowledge and skill. The dependence of value on cost, so interpreted, Carey holds to be universally true; whilst Ricardo maintained it only with respect to objects capable of indefinite multiplication, and in particular did not regard it as applicable to the case of land. Ricardo Ricardo saw in the productive powers of land a free gift of nature which had been monopolized by a certain number of persons, and which became, with the increased demand for food, a larger and larger value in the hands of its possessors. To this value, however, as not being the result of labour, the owner had no rightful claim ; he could not justly demand a payment for what was done by the "original and indestructible powers of the soil." But Carey held that land, as we are concerned with its in industrial life, is really an instrument of production which has been formed as such by man, and that its value is due to the labour expended on it in the past,—though measured, not by the sum of that labour, but by the labour necessary under existing conditions to bring new land to the same stage of productiveness. He studies the occupation and reclamation of land with peculiar advantage as an American, for whom the traditions of first settlement are living and fresh, and before whose eyes the process is indeed still going on. The difficulties of adapting a primitive soil to the work of yielding organic products for man’s use can be lightly estimated only by an inhabitant of a country long under cultivation. It is, in Carey’s view, the overcoming of these difficulties by arduous and continued effort that entitles occupier of land to his property in the soil. Its present value forms a very small proportion of the cost expended on it, because it represents only what would be required, with the science and appliances of our time, to bring the land from its primitive into its present state. Property in land is therefore only a form of invested capital—a quantity of labour or the fruits of labour permanently incorporated with the soil ; for which, like any other capitalist, the owner is compensated by a share of the produce. He is not rewarded for what is done by the powers of nature, an society is in no sense defrauded by his sole possession. The so-called Ricardian theory of rent is a speculative fancy, contradicted by all experience. Cultivation does not in fact, as that theory supposed, begin with the best, and move downwards to the poorer soils in the order of their inferiority.1 The light and dry higher lands are first cultivated ; and only when population has become dense and capital has accumulated, are the low-lying lands, with their greater fertility, but also with their morasses, inundations, and miasmas, attacked and brought into occupation. Rent, regarded as a proportion of the produce, sinks like all interest on capital, in process of time, but, as an absolute amount, increases. The share of the labourer increases, both as a proportion and an absolute amount. And thus the interests of these different social classes are in harmony.

But, Carey proceeds to say, in order that this harmonious progress may be realized, what is taken from the land must be given back to it. All the articles derived from it are really separated parts of it, which must be restored on pain of its exhaustion. Hence the producer and consumer must be close to each other ; the products must not be exported to a foreign country in exchange for its manufactures, and thus go to enrich as manure a foreign soil. In immediate exchange value the landowner may gain by such exportation, but the productive powers of the land will suffer. And thus Carey, who had set out as an earnest advocate of free trade, arrives at the doctrine of protection : the "co-ordinating power" in society must intervene to prevent private advantage from working public mischief.2 He attributes his conversion on this question to his observation of the effects of liberal and protective question to his observation of the effects of liberal and protective tariffs respectively on American prosperity. This observation, he says, threw him back on theory, and led him to see that the intervention referred to might be necessary to remove (as he phrases it) the obstacles to the progress of younger communities created by the action of older and wealthier nations. But it seems probable that the influence of List’s writings, added to his own deep-rooted and hereditary jealousy and dislike o English predominance, had something to do with his change of attitude.

The practical conclusion at which he thus arrived, though it is by no means in contradiction to the doctrine of the existence of natural economic laws, accords but ill with his optimistic scheme ; and another economist, accepting his fundamental ideas, applied himself to remove the foreign accretion, as he regarded it, and to preach the theory of spontaneous social harmonies in relation with the practice of free trade as its legitimate outcome.

Frédéric Bastiat (1801-1850), though not a profound thinker, was a brilliant and popular writer on economic questions. Though he always had an inclination for such studies, he was first impelled to the active propagation of his views by his earnest sympathy with the English anti-corn-law agitation. Naturally of an ardent temperament, he threw himself with zeal into the free-trade controversy, though which he hoped to influence French economic policy, and published in 1845 a history of the struggle under the title of Cobden et la Ligue. In 1845-48 appeared his Sophismes Économisques (Eng. Trans. By P. J. Stirling, 1873), in which he exhibited his best qualities of mind. Though Cairnes goes too far in comparing this work with the Lettres Provinciales, it is certainly marked by much liveliness, point, and vigour. But to expose the absurdities of the ordinary protectionism was no difficult task ; it is only in such a form as the doctrine assumed in the hands of List, as purely provisional and preparatory scheme, that it deserves and demands consideration. After the revolution of 1848, which for a time put an end to the free-trade movement in France, the efforts of Bastiat were directed against the socialists. Besides several minor pieces possessing the same sort of merit as the Sophismes, he produced, with a view to this controversy, his most ambitious as well as characteristic work, the Harmonies Éconimiques (Eng. trans. by P.J. Stirling, 1860). The only first volume was published ; it appeared in 1850, and its author died in the same year. Since then the notes and sketches which he had prepared as materials towards the production of the second volume have been given to the public in the collected edition of his writings (by Pailottet, with Life by Fontenay, 7 vols.), and we can thus gather what would have been the spirit and substance of the later portions of the book.

It will always be historically interesting as the last incarnation of thorough-going économic optimism. This optimism, recurring to its first origin, sets out from theological considerations, and Bastiat is recommended by his English translator for treating political economy "in connexion with final causes." The spirit of the work is to represent "all principles, all motives, all springs of action, all interest, as co-operating towards a final result which humanity will never reach, but to which it will always increasingly tend, namely, the indefinite approximation of all classes towards a level, which steadily rises. – in other words the equalization of individuals in the general amelioration."

What claimed to be novel and peculiar in his scheme was principally his theory of value. Insisting on the idea that value does not denote anything inherent in the objects to which it is attributed, he endeavoured to show that it never signifies anything but the ratio of two "services." This view he develops with great variety and felicity of illustration. Only the mutual services of human beings, according to him, possess value and can claim a retribution ; the assistance given by the nature to the work of production is always purely gratuitous, and never enters into price. Economic progress, as. For example, the improvement and larger use of machinery, tends perpetually to transfer more and more of the elements of utility from the domain of property, and therefore of the value, into that of community, or of universal and unpurchased enjoyment. It will be observed that this theory is substantially identical with Carey’s, which had been earlier propounded ; and the latter author in so many words alleges it to have been taken from him without acknowledgement. It has not perhaps been sufficiently attended to that very simlar views are found in Dunoyer, of whose work Bastiat spoke as exercising a powerful influence on "the restoration of the science," and whom Fontenay, the biographer of Bastiat, tells us he recognized as one of his masters, Charles Comte being the other.

The mode which has been explained of conceiving industrial action and industrial progress is an interesting and instructive so far as it is really applicable, but it was unduly generalized. Cairness has well pointed out that Bastiat’s theoretic soundness was injuriously affected by his habit of studying doctrines with a direct view to contemporary social and political controversies. He was thus predisposed to accept views which appeared to lend a sanction to legitimate and valuable institutions, and to reject those which seemed to him to lead to a dangerous consequences. His constant aim is, as he himself expressed it, to break the weapons of antisocial reasoners "in their hands," and this preoccupation interferes with the single-minded effort towards the attainment of scientific truth. The creation or adoption of his theory of value was inspired by the wish to meet the socialistic criticism of property in land ; for the exigencies of this controversy it was desirable to be able to show that nothing is ever paid for except personal effort. his view of rent was, therefore, so to speak, foreordained, though it may have been suggested, as indeed the editor of his posthumous fragments admits, by the writings of Carey. He held, with the American writer, that rent is purely the reward of the pains and expenditure of the landlord or his predecessors in the process of converting the natural soil into a farm by clearing, draining, fencing, and the other species of permanent improvements. He thus gets rid of the (so called) Ricardian doctrine which was accepted by the socialist, and by the used for the purpose of assailing the institutions of landed property, or, at least, of supporting a claim of compensation to the community for the appropriation of the land by the concession of the "right to labour." As Cairnes has said, "what Bastiat did was this : having been at infinite pains to exclude gratuitous gifts of nature from the possible elements of value, and pointedly identified [rather, associated] the phenomenon with ‘human effort’ as its exclusive source, he designates human effort by the term ‘service,’ and then employs this term to admit as sources of value those very gratuitous natural gifts the exclusion of which in this capacity constituted the essence of his doctrine." The justice of this criticism will be apparent to any one who considers the way in which Bastiat treats the question of the value of a diamond. That what is paid for in most cases of human dealings is effort no one can dispute. But it is surely a reductio ad absurdum of his theory of value, regarded as a doctrine of universal application, to represent the price of a diamond which has been accidentally found as remuneration for the effort of the finder in appropriating and transmitting it. And, with respect to land, whilst a large part of rent, in the popular sense, must be explained as interest on capital, it is plain that the native powers of the soil are capable of appropriation, and that then a price can be demanded and will be paid for their use.

Bastiat is weak on the philosophical side ; he is filled with the ideas of theological teleology, and is led by these ideas to form a priori opinions of what existing facts and laws must necessarily be. And the jus naturae, which, like metaphysical ideas generally, has its root in theology, is as much a postulate with him as with the physiocrats. Thus, in his essay on Free Trade, he says: —"Exchange is a natural right like property. Every citizen who has created or acquired a product ought to have the option of either applying it immediately to his own use or ceding it to whosoever on the surface of the globe consents to give him in exchanged the object of his desires." Something of the same sort had been said by Turgot ; and in his time this way of regarding things was excusable, and even provisionally useful ;but in the middle of the 19th century it was time that it should be seen through and abandoned.

Bastiat had a real enthusiasm for a science which he thought destined to render great services to mankind, and he seems to have believed intensely the doctrines which he seems to have believed intensely the doctrines which gave a special colour to his teaching. If his optimistic exaggerations favoured the propertie classes, they certainly were not prompted by self-interest or servility. But they are exaggerations ;and amidst the modern conflicts of capital and labour, his perpetual assertion of social harmonies is the cry of peace, peace, where there is no peace. The freedom of industry, which he treated as a sort of panacea, has undoubtedly brought with it great benefits ; but a sufficient experience has shown that it is inadequate to solve the social problem. How can the advocates of economic revolution be met by assuring them that everything in the natural economy is harmonious—that, in fact, all they seek for already exists? A certain degree of spontaneous harmony does indeed exist, for society could not continue without it, but it is imperfect and precarious ; the question is, How can we give to it the maximum of completeness and stability?

Augustin Cournot (1801-1877) appears to have been the first (the German, H. H. Gossen, praised by Jevons, wrote in 1854) who, with a competent knowledge of both subjects, endeavoured to apply mathematics to the treatment of economic question. His treatise entitled Recherches sur les Principes Mathématiques de la Théorie des Richesses was published in 1838. He mentions in it only one previous enterprise of the same kind (though there had in fact been others)—that namely, of Nicolas François Canard, whose book, published in 1802, was crowned by the Institute, though "its principles were radically false as well as erroneously applied." Notwithstanding Cournot’s just reputation as a writer on mathematics, the Recherches made little impression. The truth seems to be that his results are in some cases of little importance, in others of questionable correctness, and that, in the abstractions to which he has recourse in order to facilitate hid calculations, an essential part of the real condition of the problem is sometimes omitted. His pages abound in symbols representing unknown functions, the form of the function being left to be ascertained by observation of facts, which he does not regard as a part of his task, or only some known properties of the undetermined function being used as bases for deduction. Jevons includes in his list of works in which a mathematical treatment of economics is adopted a second treatise which Cournot published in 1863, with the title Principes de la Théorie des Richesses. But in reality, in the work so named, which is written with great ability, and contains much forcible reasoning in opposition to the exaggerations of economic optimists, the mathematical method is abandoned, and there is not an algebraical formula in the book. The author admits that the public has always shown a repugnance to the use of mathematical symbols in economic discussion, and though he thinks they might be of service in facilitating exposition, fixing the ideas, and suggesting further developments, he acknowledges that a grave danger attends their use.

The danger, according to him, consists in the probability that an undue value may be attached to the abstract hypotheses from which the investigation sets out, and which enable him to construct his formulae. And his practical conclusion is that mathematical processes should be employed only with great precaution, or even not employed at all if the public judgment is against them, for "this judgment," he says, "has its secret reasons, almost always more sure than those which determined the opinions of individuals." It is an obvious consideration that the acceptance of unsound or one-sided abstract principles as the premises of argument does not depend on the use of mathematical forms, though it is possible that the employment of the latter may be association produce an illusion in favour of the certainly of those premises. But the great objection to the use of mathematics in economics reasoning is that it is necessarily sterile. If we examine the attempts which have been made to employ it, we shall find that the fundamental conceptions on which the deductions are made to rest are vague, indeed metaphysical, in their character. Units of animal or moral satisfaction, of utility, and the like are as foreign to positive science as a unit of dormitive faculty would be ; and a unit of value, unless we understand by value the quantity of one commodity exchangeable under given conditions of another, is an equally indefinite idea. Mathematics can indeed formulate ratios of exchange when they have once been observed ; but it cannot by any process of its won determine those ratios, for quantitative conclusions imply quantitative premises, and these are wanting. There is then no future for this kind of study, and it is only waste of intellectual power to pursue it. But the importance of mathematics as an educational introduction to all the higher orders of research is not affected by this conclusion. The study of the physical medium, or environment, in which economic phenomena take place, and by which they are affected, required mathematics as an instrument ; and nothing can ever dispense with the didactic efficacy of that science, as supplying the primordial type of rational investigation, giving the lively sentiment of decisive proof, and disinclining the mind to illusory conceptions and sophistical combinations. And a knowledge of at least the fundamental principles of mathematics is necessary to economists to keep them right in their statements of doctrine, and prevent their enunciating propositions which have no definite meaning. Even distinguished writers sometimes betray a serious deficiency in this respect ; thus they assert that one quantity "varies inversely as" another, when what is meant is that the sum (not the product) of the two is constant ; and they treat as capable of numerical estimation the amount of an aggregate of elements which, differing in kind, cannot be reduced to a common standard. As an example of the latter error, it may be mentioned that "quantity of labour." So often spoken of by Ricardo, and in fact made the basis of his system, includes such various species of exertion as will not admit of summation or comparison.


FOOTNOTE (p. 382)

1 The first French translation of the Wealth of Nations, by Blavet, appeared in the Journal de l’Agriculture, du Commerce, des Finances, et des Art, 1779-80 ; new editions of it were published in 1781, 1788, and 1800 ; it was also printed at Amsterdam in 1784. Smith himself recommended it in his third edition of the original as excellent. In 1790 appeared the translation by Roucher, with notes by Condorcet, exile in England which is now considered the standard version, and has been reproduced, with notes by Say, Sismondi, Blanqui, &c., in the Collection des Principaux Économistes.

FOOTNOTES (p. 385)

(1) It is, however, a mistake to suppose that the assumption of this historical order of descent is essential to the theory in question.

(2) This argument seems scarcely met by Prof. F. A. Walker, Political Economy, 50-52. But perhaps he is right in thinking that Carey exaggerates the importance of the considerations on which it is founded. Mill and Leslie remark that the transportation of agricultural products from the western to the Atlantic States has the same effect as their export to Europe, so far as this so-called "land-butchery" is concerned ; besides, some manures are obtainable from abroad.

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