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HENRY 
GEORGE 

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THE LIBRARY OF 
THE UNIVERSITY OF GEORGIA 

 THE SCIENCE OF POLITICAL ECONOMY 

 But let none expect any great promotion 
of the sciences, especially in their effective 
part, unless natural philosophy be drawn 
out to particular sciences; and again unless 
these particular sciences be brought back 
again to natural philosophy. From this de 
fect it is that astronomy, optics, music, 
many mechanical arts, and what seems 
stranger, even moral and civil philosophy 
and logic, rise but little above their founda 
tions, and only skim over the varieties and 
surface of things, viz., because after these 
particular sciences are formed and divided 
off they are no longer nourished by natural 
philosophy, which might give them strength 
and increase; and therefore no wonder if 
the sciences thrive not when separated 
from their roots.—Bacon, Novum Organum. 

 wru^ &&r&>?-' 

 THE COMPLETE WORKS 

OF HENRY GEORGE 

• 

THE SCIENCE OF 
POLITICAL ECONOMY 

BOOKS I AND II 

NEW YORK: DOUBLEDAY 
PAGE & COMPANY 3 1904 

 Copyright, 1897, by 
ANNIE C. GEORGE 

 Take, since you bade it should bear, 
These, of the seed of your sowing— 

Blossom or berry or weed. 
Sweet though they be not, or fair, 
That the dew of your word kept growing; 
Sweet at least was the seed. 

—Swinburne to Maszini. 

TO 

AUGUST LEWIS OF NEW YORK 

AND 
TOM L. JOHNSON OF CLEVELAND, OHIO, 

WHO, OF THEIR OWN MOTION, AND WITHOUT SUGGESTION OR 
THOUGHT OF MINE, HAVE HELPED ME TO THE 
LEISURE NEEDED TO WRITE IT, I AFFEC 
TIONATELY DEDICATE WHAT EN 
THIS SENSE IS THEIR 
WORK 

 PREFATORY NOTE. 

r I THIS work, begun in 1891, after returning from a 
I lecturing tour through Australia and a trip around 
the world, grew out of the author's long-cherished purpose 
to write a small text-book, which should present in brief 
the principles of a true political economy. This " Primer 
of Political Economy " was to set forth in direct, didactic 
form the main principles of what he conceived to be an 
exact and indisputable science, leaving controversy for a 
later and larger work. 

Before proceeding far, however, the author realized the 
difficulty of making a simple statement of principles while 
there existed so much confusion as to the meaning of 
terms. He therefore felt impelled to change his plan, and 
first to present the larger work, which should recast polit 
ical economy and examine and explicate terminology as 
well as principles; and which, beginning at the beginning, 
should trace the rise and partial development of the science 
in the hands of its founders a century ago, and then show 
its gradual emasculation and at last abandonment by its 
professed teachers—accompanying this with an account of 
the extension of the science outside and independently of 
the schools, in the philosophy of the natural order now 
spreading over the world under the name of the single tax. 
Soon after this work had got well under way the author 
laid it aside to write a brochure in reply to a papal encyc 
lical ("The Condition of Labor," 1891), and again later 

 vi PREFATORY NOTE. 

to write a book exposing Mr. Herbert Spencer's recantation 
of principles on the land question ("A Perplexed Philoso 
pher," 1892). Save for these interruptions, and occasional 
newspaper and magazine writing, and lecturing and polit 
ical speaking, he devoted himself continuously to his great 
undertaking until he entered the mayoralty campaign, 
toward the close of which death came, October 29, 1897. 

" The Science of Political Economy," if entirely finished 
as planned by the author, would have shown Book V., on 
Money, extended, and the nature and function of the laws 
of Wages, Interest and Rent fully considered in Book IV.; 
but the work as left was, in the opinion of its author, 
in its main essentials completed, the broken parts, to quote 
his own words a few days before his death, "indicating 
the direction in which my [his] thought was tending." 

The author's preface is fragmentary. It bears in the 
manuscript a penciled date, " March 7, 1894," and is here 
transcribed from a condensed writing used by him in his 
preliminary "roughing-out" work. 

Aside from the filling in of summaries in four chapter 
headings (indicated by foot-notes), the addition of an 
index, and the correction of a few obvious clerical errors, 
the work is here presented exactly as it was left by the 
author—the desire of those closest to him being that it 
should be given to the world untouched by any other 
hand. 

HENRY GEORGE, JR. 

NEW YOBK, February 1, 1898. 

 PREFACE. 

IN "Progress and Poverty" I recast political economy 
in what were at the time the points which most needed 
recasting. Criticism has but shown the soundness of the 
views there expressed. 

But " Progress and Poverty" did not cover the whole 
field of political economy, and was necessarily in large 
measure of a controversial rather than of a constructive 
nature. To do more than this was at the time beyond the 
leisure at my command. Nor did I see fully the necessity. 
For while I realized the greatness of the forces which 
would throw themselves against the simple truth which 
I endeavored to make clear, I did think that should 
"Progress and Poverty" succeed in commanding anything 
like wide attention there would be at least some of the 
professed teachers of political economy who, recognizing 
the ignored truths which I had endeavored to make clear, 
would fit them in with what of truth was already under 
stood and taught. 

The years which have elapsed since the publication of 
"Progress and Poverty" have been on my part devoted 
to the propagation of the truths taught in " Progress and 
Poverty" by books, pamphlets, magazine articles, news 
paper work, lectures and speeches, and have been so 
greatly successful as not only far to exceed what fifteen 
years ago I could have dared to look forward to in this 
time, but to have given me reason to feel that of all the 

vii 

 viii PKEFACE. 

men of whom I have ever heard who have attempted any 
thing like so great a work against anything like so great 
odds, I have been in the result of the endeavor to arouse 
thought most favored. 

Not merely wherever the English tongue is spoken, but 
in all parts of the world, men are arising who will carry 
forward to final triumph the great movement which " Prog 
ress and Poverty" began. The great work is not done, 
but it is commenced, and can never go back. 

On the night on which I finished the final chapter of 
"Progress and Poverty" I felt that the talent intrusted 
to me had been accounted for—felt more fully satisfied, 
more deeply grateful than if all the kingdoms of the earth 
had been laid at my feet; and though the years have jus 
tified, not dimmed, my faith, there is still left for me 
something to do. 

But this reconstruction of political economy has not 
been done. So I have thought it the most useful thing I 
could do to drop as far as I could the work of propaganda 
and the practical carrying forward of the movement to 
do this. 

 GENERAL CONTENTS. 

GRAND DIVISIONS. 

GENERAX INTRODUCTION. 

BOOK I.—THE MEANING OF POUTICAL ECONOMY. 
BOOK II.—THE NATURE OF WEALTH. 
BOOK III.—THE PRODUCTION OF WEALTH. 
BOOK IT.—THE DISTRIBUTION OF WEAXTH. 

BOOK V.—MONEY—THE MEDIUM OF EXCHANGE AND MEA 
SURE OF VALUE. 

SUB-DIVISIONS. 

PAGE 

GENERAL INTRODUCTION . . xxix 

BOOK I. 
THE MEANING OF POLITICAL ECONOMY. 

INTRODUCTION TO BOOK L 

CHAPTER I. 
THE THREE FACTORS OF THE WORLD. 

SHOWING THE CONSTITUENTS OP AT.T. WE PERCEIVE. 

Meaning of factor; and of philosophy; and of the world—What 
we call spirit—What we call matteiv-What we call energy— 

ix 

 i GENERAL CONTENTS. 

PAOB 

Though these three may be at bottom one, we must separate 
them in thought—Priority of spirit ...... 9 

CHAPTER II. 
MAN, HIS PLACE AND POWER& 

SHOWING OUR RELATIONS TO THE GLOBE, AND THE QUALITIES 
THAT ENABLE US TO EXTEND OUR KNOWLEDGE OF IT AND CUE 
POWERS ON IT. 

Man's earliest knowledge of his habitat—How that knowledge 
grows, and what civilized men now know of it—The essential 
distinction between man and other animals—In this lies his 
power of producing and improving ...... 11 

CHAPTER in. 
HOW MAN'S POWERS AKE EXTENDED. 

SHOWING THAT THEIR USE OF REASON WELDS MEN INTO 
THE SOCIAL ORGANISM OR ECONOMIC BODY. 

Extensions of man's powers in civilization—Due not to improve 
ment in the individual but in the society—Hobbes's "Levia 
than"—The Greater Leviathan—This capacity for good also 
capacity for evil .......... 19 

CHAPTER IV. 
CIVILIZATION —WHAT IT MEAN& 

SHOWING THAT CIVILIZATION CONSISTS IN THE WELDING OF 
MEN INTO THE SOCIAL ORGANISM OR ECONOMIC BODY. 

Vagueness as to what civilization is—Guizot quoted—Deriva 
tion and original meaning—Civilization and the State—Why 
a word referring to the precedent and greater has been taken 
from one referring to the subsequent and lesser . . .24 

CHAPTER V. 
THE ORIGIN AND GENESIS OF CIVILIZATION. 

SHOWING THE NATURE OP REASON; AND HOW IT IMPELS TO 
EXCHANGE, BY WHICH CIVILIZATION DEVELOPS. 

Reason the power of tracing causal relations—Analysis and syn 
thesis—Likeness and unlikeness between, man and other ani- 

 GENERAL CONTENTS. xi 

FAQE 

TDS.IB—Powers that the apprehension of causal relations gives— 
Moral connotations of civilization—Bnt begins with and in 
creases through exchange—Civilization relative, and exists in 
the spiritual .......... 29 

CHAPTER VI. 
OF KNOWLEDGE AND THE GROWTH OF KNOWLEDGE. 

SHOWING THAT THE GROWTH OF KNOWLEDGE IS BY COfiPER- 
ATION, AND THAT IT INHERES IN THE SOCIETY. 

Civilization implies greater knowledge—This gain comes from 
cooperation—The incommunicable knowing called skill—The 
communicable knowing usually called knowledge—The rela 
tion of systematized knowledge to the means of storing know 
ledge, to skill and to the economic body—Illustration from as 
tronomy ........... 39 

CHAPTER VII. 
OF SEQUENCE, CONSEQUENCE AND LAWS OF NATURE. 

SHOWING THE PROPER MEANING OF SEQUENCE AND OF CON 
SEQUENCE, AND WHY WE SPEAK OF LAWS OF NATURE. 

Coexistence and succession—Sequence and consequence—Causes 
in series; names for them—Our direct knowledge is of spirit 
—Simplest perception of causal relation—Extensions of this— 
The causal se_arch unsatisfied till it reaches spirit—And finds • 
or assumes intent—Early evidences of this—Why we must 
assume a superior spirit—Evidences of intent—The word 
nature and its implication of will or spirit—The word law— 
The term "law of nature". ....... 44 

CHAPTER Vin. 
OF THE KNOWLEDGE PROPERLY CALLED SCIENCE. 

SHOWING THAT SCIENCE DEALS ONLY WITH LAWS OP NATURE, 
AND THAT IN THE CURRENT POLITICAL ECONOMY THIS HAS 
BEEN FORGOTTEN. 

Proper meaning of science—It investigates laws of nature, not 
laws of man—Distinction between the two—Their confusion 
in the current political economy—Mason and Lalor's "Primer 
of Political Economy" quoted—Absurdity of this confusion— 
Turgot on the cause of such confusions ..... 58 

 rii GENERAL CONTENTS. 

CHAPTER IX. 
THE ECONOMY CALLED POLITICAL ECONOMY. 

SHOWING THE MEANING, DNITS AND SCOPE OF POLITICAL 
ECONOMY. 

PAGE 

The word economy—The word political—Origin of the term 
"political economy" and its confusions—It is not concerned 
with the body politic, but with the body economic—Its units, 
and the system or arrangement of which it treats—Its scope . 65 

CHAPTER X. 
THE ELEMENTS OP POLITICAL ECONOMY. 

SHOWING HOW POLITICAL ECONOMY SHOULD FEOCEED AND 
WHAT RELATIONS IT SEEKS TO DISCOVER. 

How to understand a complex system—It is the purpose of such 
a system that political economy seeks to discover—These 
laws, natural laws of human nature—The two elements rec 
ognized by political economy—These distinguished only by 
reason—Human will affects the material world only through 
laws of nature—It is the active factor in all with which polit 
ical economy deals ......... 74 

CHAPTER XL 
OF DESIRES AND SATISFACTIONS. 

SHOWING THE WIDTH AND IMPORTANCE OF THE FIELD OF 
POLITICAL ECONOMY. 

Action springs from desire and seeks satisfaction—Order of de 
sires—Wants or needs—Subjective and objective desires- 
Material and immaterial desires—The hierarchy of life and 
of desires ...........81 

CHAPTER XH. 
THE FUNDAMENTAL LAW OF POLITICAL ECONOMY. 

SHOWING THAT THE LAW FROM WHICH POLITICAL ECONOMY PRO 
CEEDS IS THAT MEN SEEK TO SATISFY THEIR DESIRES WITH 
THE LEAST EXERTION. 

Exertion followed by weariness—The fact that men seek to sat 
isfy their desires with the least exertion—Meaning and ana 
logue—Exemplified in trivial things—Is a law of nature and 

 GENERAL CONTENTS. xiii 

FAGB 

the fundamental law of political economy—Substitution of 
selfishness for this principle—Buckle quoted—Political econ 
omy requires no such assumption—The necessity of labor not 
a curse ............ 86 

CHAPTER XIII. 
METHODS OF POLITICAL. ECONOMY. 

SHOWING THE NATURE OF THE METHODS OF INVESTIGATION 
THAT MAY BE USED IN POLITICAL ECONOMY. 

Deductive and inductive schools—"New American Cyclopedia" 
quoted—Triumph of the inductionists—The method of in 
duction and the method of deduction—Method of hypothesis. 
Bacon's relation to induction—Real error of the deduction- 
ists and the mistake of the inductionists—Lalor's Cyclopedia 
quoted—Result of the triumph of the inductionists—A true 
science of political economy must follow the deductive method 
—Da vis's "Elements of Inductive Logic" quoted—Double as 
surance of the real postulate of political economy—Method of 
mental or imaginative experiment ...... 92 

CHAPTER XIV. 
POLITICAL ECONOMY AS SCIENCE AND AS ART. 

SHOWING THAT POLITICAL ECONOMY IS PROPERLY A SCIENCE, 
AND THE MEANING IT SHOULD HAVE IF SPOKEN OF AS ART. 

Science and art—There must be a science of political economy, 
but no proper art—What must be the aim of an art of politi 
cal economy—White art and black art—Course of further 
investigation .......... 101 

BOOK IL 
THE KATUBE OF WEALTH. 

INTRODUCTION TO BOOK H ...... 115 

CHAPTER I. 
CONFUSIONS AS TO THE MEANING OF WEALTH. 

SHOWING THE FAILURE OF THB CURRENT POLITICAL ECONOMY TO 
DEFINE WEALTH, AND THE CONFUSIONS THEREFROM, CULMI 
NATING IN THE ABANDONMENT OF POLITICAL ECONOMY BY ITS 
PROFESSED TEACHERS. 

Wealth the primary term of political economy—Common use 
of the word—Vagueness more obvious in political economy— 

 xiv GENERAL CONTENTS. 

FAGB 

Adam Smith not explicit—Increasing confusion of subsequent 
writers—Their definitions—Many make no attempt at defini 
tion—Perry's proposition to abandon the term—Marshall and 
Nicholson—Failure to define the term leads to the abandon 
ment of political economy—This concealed under the word 
"economic"—The intent expressed by Macleod—Results to 
political economy.......... 117 

CHAPTER II. 
CAUSES OF CONFUSION AS TO THE MEANING OF WEALTH. 

SHOWING THE REAL DIFFICULTY THAT BESBTS THE 
ECONOMIC DEFINITION OF WEALTH. 

Effect of slavery on the definition of wealth—Similar influences 
now existing—John S. Mill on prevalent delusions—Genesis 
of the protective absurdity—Power of special interests to 
mold common opinion—Of injustice and absurdity, and the 
power of special interests to pervert reason—Mill an example 
of how accepted opinions may blind men—E_ffect upon a 
philosophical system of the acceptance of an incongruity— 
Meaning of a saying of Christ—Influence of a class profiting 
by robbery shown in the development of political economy— 
Archbishop Whately puts the cart before the horse—The power 
of a great pecuniary interest to affect thought can be ended only 
by abolishing that interest—This shown in American slavery. 131 

CHAPTER in. 
WHAT ADAM SMITH MEANT BY WEALTH. 

SHOWING HOW ESSENTIALLY ADAM SMITH'S PRIMARY CONCEPTION 
OF WEALTH DIFFERED FROM THAT NOW HELD BY HIS SUCCES 
SORS. 

Significance of the title " Wealth of Nations"—Its origin shown 
in Smith's reference to the Physiocrats—His conception of 
wealth in his introduction—Objection by Malthus and by Mac 
leod—Smith's primary conception that given in " Progress and 
Poverty"—His subsequent confusions .... .143 

CHAPTER IV. 
THE FRENCH PHYSIOCRATS. 

SHOWING WHO THE FIRST DEVELOPERS OF A TRUE SCIENCE 
OF POLITICAL ECONOMY WERE, AND WHAT THEY HELD. 

Quesnay and his followers—The great truths they grasped and 
the cause of the confusion into which they fell—This used to 
discredit their whole system, but not really vital—They were 

 GENERAL CONTENTS. xv 

PAGE 

real free traders—The scant justice yet done them—Reference 
to them in "Progress and Poverty"—Macleod's statement of 
their doctrine of natural order—Their conception of wealth— 
Their day of hope and their fall....... 148 

CHAPTER V. 
ADAM SMITH AND THE PHYSIOCRATS. 

BHOWING THE RELATION BETWEEN ADAM BMITH AND THE 
PHYSIOCRATS. 

Smith and Quesnay—The "Wealth of Nations " and Physiocratic 
ideas—Smith's criticism of the Physiocrats—His failure to ap 
preciate the single tax—His prudence . . . . .160 

CHAPTER VL 
SMITH'S INFLUENCE ON POLITICAL ECONOMY. 

SHOWING WHAT THE "WEALTH OF NATIONS" ACCOMPLISHED 
AND THE COURSE OF THE SUBSEQUENT DEVELOPMENT OF PO 
LITICAL ECONOMY. 

Smith, a philosopher, who addressed the cultured, and whose at 
tack on mercantilism rather found favor with the powerful land 
owners—Not entirely exempt from suspicion of radicalism, yet 
pardoned for his affiliation with the Physiocrats—Efforts of 
Malthus and Ricardo on respectabilizing the science—The fight 
against the corn-laws revealed the true beneficiaries of protec 
tion, but passed for a free-trade victory, and much strength 
ened the incoherent science—Confidence of its scholastic ad 
vocates—Say's belief in the result of the colleges taking up 
political economy—Torrens's confidence—Failure of other 
countries to follow England's example—Cairnes doubts the 
effect of making it a scholastic study—His sagacity proved 
by the subsequent breakdown of Smith's economy—The true 
reason ............ 170 

CHAPTER VH. 

INEFFECTUAL GROPENGS TOWARD A DETERMINA 
TION OF WEALTH. 

SHOWING THE OPPOSITION TO THE SCHOLASTIC ECONOMY 
BEFORE "PROGRESS AND POVERTY." 

Illogical character of the " Wealth of Nations "—Statements of 
natural right—Spence, Ogilvie, Chalmers, Wakefield, Spencer, 
Dove, Bisset—Vague recognitions of natural right—Protec 
tion gave rise to no political economy in England, but did else- 

 xvi GENERAL CONTENTS. 

PAGE 

where—Germany and protectionist political economy in the 
United States—Divergence of the schools—Trade-unionism 
in socialism ........... 182 

CHAPTER VIII. 
BREAKDOWN OF SCHOLASTIC POLITICAL ECONOMY. 

SHOWIHG THE REASON, THE RECEPTION, AND EFFECT ON PO 
LITICAL ECONOMY OF " PROGRESS AND POVERTY." 

"Progress and Poverty"—Preference of professors to abandon 
the " science " rather than radically change it, brings the break 
down of scholastic economy—The " Encyclopaedia Britannica" 
—The "Austrian school "that has succeeded the "classical" 200 

CHAPTER IX. 
WEALTH AND VALUE. 

SHOWING THE REASON FOR CONSIDERING THE NATURE OF 
VALUE BEFORE THAT OF WEALTH. 

The point of agreement as to wealth—Advantages of proceeding 
from this point .......... 210 

CHAPTER X. 
VALUE IN USE AND VALUE IN EXCHANGE. 

SHOWING THE TWO SENSES OF VALUE; HOW THE DISTINCTION 
HAS BEEN IGNORED, AND ITS REAL VALIDITY J AND THE REASON 
FOR CONFINING THE ECONOMIC TERM: TO ONE BENSE. 

Importance of the term value—Original meaning of the word— 
Its two senses—Names for them adopted by Smith—Utility 
and desirability—Mill's criticism of Smi h—Complete ignor 
ing of the distinction by the Austrian school—Cause of this 
confusion—Capability of use not usefulness—Smith's distinc 
tion a real one—The dual use of one word in common speech 
must be avoided in political economy—Intrinsic value . . 212 

CHAPTER XI. 

ECONOMIC VALUE—ITS REAL MEANING AND FINAL 
MEASURE. 

SHOWING HOW VALUE IN EXCHANGE HAS BEEN DEEMED A RELATION 
OF PROPORTION J AND THE AMBIGUITY WHICH HAS LED TO THIS. 

The conception of value as a relation of proportion—It is really 
a relation to exertion—Adam Smith's perception of this—His 
reasons for accepting the term value in exchange—His con 
fusion and that of his successors ...... 226 

 GENERAL CONTENTS. xvii 

CHAPTER XII. 
VALUE IN EXCHANGE REALLY RELATED TO LABOR. 

SHOWING THAT VALUE DOES NOT COME FROM EXCHANGEABILITY, 
BUT EXCHANGEABILITY PROM VALUE, WHICH IS AN EXPRESSION 
OP THE SAVING OP LABOR INVOLVED IN POSSESSION. 

FADE 

Root of the assumption that the sum of values cannot increase 
or diminish—The fundamental idea of proportion—We can 
not really think of value in this way—The confusion that 
makes us imagine that we do—The tacit assumption and re 
luctance to examine that bolster the current notion—Imagina 
tive experiment shows that value is related to labor—Common 
facts that prove this—Current assumption a fallacy of undis 
tributed middle—Various senses of " labor "—Exertion positive 
and exertion negative—Re-statement of the proposition as to 
value—Of desire and its measurement—Causal relationship of 
value and exchangeability—Imaginative experiment showing 
that value may exist where_ exchange is impossible—Value and 
expression of exertion avoided ....... 235 

CHAPTER XHI. 
THE DENOMINATOR OF VALUE. 

SHOWING WHAT VALUE IS, AND ITS RELATIONS. 

What value is—The test of real value—Value related only to 
human desire—This perception at the bottom of the Austrian 
school—But its measure must be objective—How cost of 
production acts as a measure of value—Desire for similar 
things and for essential things—Application of this principle— 
Its relation to land values . . . . . • • 250 

CHAPTER XIV. 
THE TWO SOURCES OF VALUE. 

SHOWING THAT THERE IS A VALUE PROM PRODUCTION AND 
ALSO A VALUE FROM OBLIGATION. 

Value does not involve increase of wealth—Value of obligation 
—Of enslavement—Economic definition of wealth impossible 
without recognition of this difference in value—Smith's con 
fusion and results—Necessity of the distinction—Value from 
production and value from obligation—Either gives the essen 
tial quality of commanding exertion—The obligation of debt— 
Other obligations—Land values most important of all forms 
of value from obligation—Property in land equivalent to 
property in men—Common meaning of value in exchange— 
Real relation with exertion—Ultimate exchangeability is for 
labor—Adam Smith right—Light thrown by this theory of 
value ............ 257 

 xviii GENERAL CONTENTS. 

CHAPTER XV. 
THE MEANING OP WEALTH IN POLITICAL ECONOMY. 

SHOWING HOW VALUE FROM PRODUCTION IS WEALTH IN 
POLITICAL ECONOMY. 

PAGE 

Wealth as fixed in "Progress and Poverty"—Course of the 
scholastic political economy—The reverse method of this work 
—The conclusion the same—Reason of the disposition to in 
clude all value as wealth—Metaphorical meanings—Bull and 
pun—Metaphorical meaning of wealth—Its core meaning—Its 
use to express exchangeability—Similar use of money—Ordi 
nary core meaning the proper meaning of wealth—Its use in 
individual economy and in political economy—What is meant 
by increase of wealth—Wealth and labor—Its factors nature 
and man—Wealth their resultant—Of Adam Smith—Danger 
of carrying into political economy a meaning proper in indi 
vidual economy—Example of "money"—"Actual wealth "and 
"relative wealth"—"Value from production" and "value 
from obligation"—The English tongue has no single word for 
an article of wealth—Of " commodities"—Of "goods"—Why 
there is no singular in English—The attempt to form one by 
dropping the "e" and Anglo-German jargon . . . .270 

CHAPTER XVI. 
THE GENESIS OF WEALTH. 

SHOWING HOW WEALTH ORIGINATES AND WHAT IT ESSEN 
TIALLY IS. 

Reason of this inquiry—Wealth proceeds from exertion prompted 
by desire, but all exertion does not result in wealth—Simple 
examples of action, and of action resulting in wealth—" Rid 
ing and tying "—Sub-divisions of effort resulting in increments 
of wealth—Wealth essentially a stored and transferable ser 
vice—Of transferable service—The action of reason as natural, 
though not as certain and quick as that of instinct—Wealth 
is service impressed on matter—Must be objective and have 
tangible form .......... 283 

CHAPTER XVH. 
THE WEALTH THAT IS CALLED CAPITAL. 

SHOWING WHAT THE WEALTH CALLED CAPITAL REALLY IS. 

Capital is a part of wealth used indirectly to satisfy desire— 
Simple illustration of fruit—Wealth permits storage of labor— 
The bull and the man—Exertion and its higher powers—Per- 

 GENERAL CONTENTS. xix 

PAGE 

sonal qualities cannot really be wealth or capital—The taboo 
and its modern form—Common opinion of wealth and capital 293 

CHAPTER XVIII. 
WHY POLITICAL ECONOMY CONSIDERS ONLY WEALTH. 

SHOWING THAT POLITICAL ECONOMY, AS PROPERLY STATED, 
COVERS ALL THE RELATIONS OP MEN IN SOCIETY INTO WHICH 
IT IS NECESSARY TO INQUIRE. 

Political economy does not include all the exertions for the 
satisfaction of material desires; but it does include the greater 
part of them, and it is through value that the exchange of 
services for services is made—Its duty and province . . 301 

CHAPTER XIX. 
MORAL CONTUSIONS AS TO WEALTH. 

SHOWING HOW RICH AND POOR ARE CORRELATIVES, AND 
WHY CHRIST SYMPATHIZED WITH THE POOR. 

The legitimacy of wealth and the disposition to regard it as 
sordid and mean—The really rich and the really poor—They 
are really correlatives—The good sense of Christ's teaching . 304 

CHAPTER XX. 
OF THE PERMANENCE OF WEALTH. 

SHOWING THAT VALUES PROM OBLIGATION SEEM REALLY TO 
LAST LONGER THAN VALUES PROM PRODUCTION. 

Value from production and value from obligation—The one 
material and the other existing in the spiritual—Superior 
permanence of the spiritual—Shakespeare's boast—Maecenas's 
buildings and Horace's odes—The two values now existing— 
Franchises and land values last longer than gold and gems— 
Destruction in social advance—Conclusions from all this . 308 

CHAPTER XXI. 
THE RELATION OF MONEY TO WEALTH. 

SHOWING THAT SOME MONEY IS AND SOME MONEY IS NOT 
WEALTH. 

Where I shall treat of money—No categorical answer can yet 
be given to the question whether money is wealth—Some 
money is and some is not wealth ...... 313 

 xx GENERAL CONTENTS. 

BOOK m. 

THE PRODUCTION OF WEALTH. 

CHAPTER I. 
THE MEANING OP PRODUCTION. 

SHOWING THE MEANING AND PROPER USE OP PRODUCTION. 

PAGE 

Production a drawing forth of what before exists—Its difference 
from creation—Production other than of wealth—Includes 
all stages of bringing to be—Mistakes as to it . . . 323 

CHAPTER n. 
THE THREE MODES OF PRODUCTION. 

SHOWING THE COMMON CHARACTER, YET DIFFERENT MODES 
OF PRODUCTION. 

Production involves change, brought about by conscious will— 
Its three modes: (1) adapting, (2) growing, (3) exchanging— 
This the natural order of these modes ..... 327 

CHAPTER IH. 
POPULATION AND SUBSISTENCE. 

SHOWING THAT THE THEORY OF A TENDENCY IN POPULATION TO 
INCREASE PASTER THAN SUBSISTENCE HAS PREVIOUSLY BEEN 
EXAMINED AND CONDEMNED. 

The Malthusian theory—Discussed in "Progress and Poverty" . 333 

CHAPTER IV. 

THE ALLEGED LAW OP DIMINISHING RETURNS 
IN AGRICULTURE. 

SHOWING WHAT THIS ALLEGED LAW IS. 

John Stuart Mill quoted as to the importance, relations and 
nature of this law—The reductio ad absiirdum by which it 
is proved—Contention that it is a misapprehension of the uni 
versal law of space ......... 335 

 GENERAL CONTENTS. xxi 

CHAPTER V. 
OF SPACE AND TIME. 

SHOWING THAT HUMAN REASON IS ONE, AND SO FAR AS IT 
CAN QO MAY BE RELIED ON. 

Purpose of this work—Of metaphysics—Danger of thinking of 
words as things—Space and time not conceptions of things, 
but of relations of things—They cannot, therefore, have 
independent beginning or ending—The verbal habit which 
favors this idea—How favored by poets and by religious 
teachers—How favored by philosophers—Of Kant—Of Scho 
penhauer—Mysteries and antinomies that are really confusions 
in the meaning of words—Human reason and the eternal reason 
—Philosophers who are really word-jugglers .... 3391 

CHAPTER VL 

CONFUSION OF THE SPACIAL LAW WITH AGRI 
CULTURE. 

SHOWING THE GENESIS OF THIS CONFUSION. 

What space is—The place to which man is confined—Extension 
a part of the concept, land—Perception is by contrast—Man's 
first use of land is by_ the mode of adapting—His second, and 
for a long time most important, use is by growing—The third, 
on which civilization is now entering, is exchanging—Political 
economy began in the second, and growing still attracts most 
attention—The truth and error of the Physiocrats—The suc 
cessors of Smith, while avoiding the error of the Physiocrats, 
also ignored their truth; and with their acceptance of the Mal- 
thusian theory, and Ricardo's explanation of rent as relating 
to agricultural land, they fell into, and have continued the 
habit of treating land and rent as agricultural—Difficulty of 
the single tax in the United States ...... 351 

CHAPTER VII. 
THE RELATION OF SPACE IN PRODUCTION. 

SHOWING THAT SPACE HAS RELATION TO ALL MODES OF 
PRODUCTION. 

Matter being material, space must have relation to all produc 
tion—This relation readily seen in agriculture—The concen 
tration of labor in agriculture tends up to a certain point to 
increase and then to diminish production—But it is a mis 
apprehension to attribute this law to agriculture or to the 
mode of growing—It holds in all modes and sub-divisions of 

I 

, 

 xxii GENERAL CONTENTS. 

PAGB 

these modes—Instances: of the production of brick, of the mere 
storage of brick—Man himself requires space—The division of 
labor aa requiring space—Intensive and extensive use of land 357 

CHAPTER VHI. 
THE RELATION OF TIME IN PRODUCTION, 

SHOWING THAT ALL MODES OF PRODUCTION HAVE RELATION 
TO TIME. 

Difference between apprehensions of space and time, the one 
objective, the other subjective—Of spirits and of creation— 
All production requires time—The concentration of labor in 
time ............ 365 

CHAPTER IX. 
COOPERATION —ITS TWO WAYS. 

SHOWING THE TWO WAYS OP COOPERATION. 

Cooperation is the union of individual powers in the attainment 
of common ends—Its ways and their analogues: (1) the com 
bination of effort; (2) the separation of effort—Illustrations: 
of building houses, of joint-stock companies, etc.—Of sailing a 
boat—The principle shown in naval architecture—The Erie 
Canal—The baking of bread—Production requires conscious 
thought—The same principle in mental effort—What is on 
the one side separation is on the other concentration—Extent 
of concentration and specialization of work in modern civiliza 
tion—The principle of the machine—Beginning and increase 
of division of labor—Adam Smith's three heads—A better 
analysis. ........... 371 

CHAPTER X. 
COOPERATION —ITS TWO KINDS. 

SHOWING THE TWO KINDS OP COOPERATION, AND HOW THE 
POWER OF THE ONE GREATLY EXCEEDS THAT OF THE OTHER. 

The kind of cooperation which, as to method of union or how of 
initiation, results from without and may be called directed 
or conscious cooperation—Another proceeding from within 
which may be called spontaneous or unconscious cooperation 
—Types of the two kinds and their analogues—Tacking of a 
full-rigged ship and of a bird—Intelligence that suffices for 
the one impossible for the other—The savage and the ship— 
Unconscious cooperation required in ship-building—Conscious 
cooperation will not suffice for the work of unconscious—The 
fatal defect of socialism—The reason of this is that the power 
of thought is spiritual and cannot be fused as can physical 

 GENERAL CONTENTS. xxiii 

PAOB 

force—Of "man power"and "mind power"—Illustration from 
the optician—Impossibility of socialism—Society a Leviathan 
greater than that of Hobbes ....... 382 

CHAPTER XI. 
THE OFFICE OF EXCHANGE IN PRODUCTION. 

SHOWING THAT IN MAN THE LACE OF INSTINCT IS SUPPLIED 
BT THE HIGHER QUALITY OF REASON, WHICH LEADS TO EX 
CHANGE. 

The cooperation of ants and bees is from within and not from 
without; from instinct and not from direction—Man has little 
instinct; but the want supplied by reason—Reason shows 
itself in exchange—This suffices for the unconscious coopera 
tion of the economic body or Greater Leviathan—Of the three 
modes of production, exchanging is the highest—Mistake of 
writers on political economy—The motive of exchange . . 397 

CHAPTER Xn. 
OFFICE OF COMPETITION IN PRODUCTION. 

SHOWING THAT COMPETITION BRINGS TRADE, AND CONSE 
QUENTLY SERVICE, TO ITS JUST LEVEL. 

"Competition is the life of trade," an old and true adage—The 
assumption that it is an evil springs from two causes—one 
bad, the other good—The bad cause at the root of protection 
ism—Law of competition a natural law—Competition neces 
sary to civilization ......... 402 

CHAPTER XHI. 
OF DEMAND AND SUPPLY IN PRODUCTION . 404 

CHAPTER XIV. 
ORDER OF THE THREE FACTORS OF PRODUCTION. 

SHOWING THE AGREEMENT OF ALL ECONOMISTS AS TO THE 
NAMES AND ORDER OF THE FACTORS OF PRODUCTION. 

Land and labor necessary elements in production—Union of a 
composite element, capital—Reason for dwelling on this agree 
ment as to order .......... 405 

CHAPTER XV. 
THE FIRST FACTOR OF PRODUCTION—LAND. 

SHOWING THAT LAND IS THE NATURAL OR PASSIVE FACTOR 
IN ALL PRODUCTION. 

The term land—Landowners—Labor the only active factor . 408 

 xxiv GENERAL CONTENTS. 

CHAPTEE XVI. 
THE SECOND PACTOE OF PRODUCTION—LABOB. 

SHOWING THAT LABOR IS THE HUMAN OR ACTIVE FACTOR 
IN ALL PRODUCTION. 

PAGE 

The term labor—It is the only active factor in producing wealth, 
and by nature spiritual ........ 411 

CHAPTER XVH. 
THE THJRD FACTOE OF PRODUCTION—CAPITAL. 

SHOWING THAT CAPITAL IS NOT A PRIMARY FACTOR, BUT PROCEEDS 
FROM LAND AND LABOR, AND IS A FORM OR USE OF WEALTH. 

Capital is essentially labor raised to a higher power—Where it 
may, and where it must aid labor—In itself it is helpless . 413 

BOOK IV. 
THE DISTRIBUTION OF WEAI/TH. 

INTRODUCTION TO BOOK IV. . . . . . .421 

CHAPTEE I. 
THE MEANING OF DISTBIBTJTION. 

SHOWING THE MEANING AND USES OP THE WORD DISTRIBUTION J 
THE PLACE AND MEANING OP THE ECONOMIC TERM ; AND THAT 
IT IS CONCERNED ONLY WITH NATURAL LAWS. 

Derivation and uses of the word—Exchange, consumption and 
taxation not proper divisions of political economy—Need of a 
consideration of distribution—It is the continuation and end 
Of what begins in production, and thus the final division of 
political economy—The meaning usually assigned to distribu 
tion as an economic term, and its true meaning . . . 423 

CHAPTEE II. 
THE NATUEE OF DISTRIBUTION. 

SHOWING THE FALLACY OF THE CONTENTION THAT DISTRIBUTION 
IS A MATTER OF HUMAN LAW; THAT THE NATURAL LAWS OF 
DISTRIBUTION ARE MANIFEST NOT ON WEALTH ALREADY PRO 
DUCED, BUT ON SUBSEQUENT PRODUCTION J AND THAT THEY ARE' 
MORAL LAWS. 

John Stuart Mill's argument that distribution is a matter of hu 
man law—Its evidence of the unscientific character of the 

 GENERAL CONTENTS. xxv 

PAGE 

scholastic economy—The fallacy it involves and the confusion 
it shows—Illustration from Bedouin and from civilized society 
—Natural laws of distribution do not act upon wealth already 
produced, but on future production—Reason of this—Illustra 
tion of siphon and analogy of blood ..... 430 

CHAPTER HI. 

THE COMMON PERCEPTION OP NATURAL LAW IN 
DISTRIBUTION. 

SHOWING THE COMMON AND INERADICABLE PERCEPTION OF 
NATURAL LAWS OF DISTRIBUTION. 

Mill's admission of natural law in his argument that distribution 
is a matter of human law—Sequence and consequence—Human 
will and the will manifest in nature—Inflexibility of natural 
laws of distribution—Human will powerless to affect distribu 
tion—This shown by attempts to affect distribution through 
restriction of production—Mill's confusion and his high char 
acter ........... 440 

CHAPTER IV. 

THE REAL DIFFERENCE BETWEEN LAWS OF 
PRODUCTION AND OF DISTRIBUTION. 

SHOWING THAT DISTRIBUTION HAS REFERENCE TO ETHICS, 
WHILE PRODUCTION HAS NOT. 

The laws of production are physical laws; the laws of distribu 
tion moral laws, concerned only with spirit—This the reason 
why the immutable character of the laws of distribution is more 
quickly and clearly recognized ...... 450 

CHAPTER V. 
OF PROPERTY. 

SHOWING THAT PROPERTY DEPENDS UPON NATURAL LAW. 

The law of distribution must be the law which determines owner 
ship—John Stuart Mill recognizes this; but extending his error, 
treats property as a matter of human institution solely—His 
assertion quoted and examined—His utilitarianism—His 
further contradictions ........ 454 

CHAPTER VI. 
CAUSE OF CONFUSION AS TO PROPERTY. 

SHOWING WHY AND HOW POLITICAL ECONOMISTS FELL INTO 
SUCH CONFUSIONS WITH REGARD TO PROPERTY. 

Mill blinded by the pre-assumption that laud is property—He all 
but states later the true principle of property, but recovers by 

 xxvi GENERAL CONTENTS. 

PAGE 

substituting in place of the economic term " land," the word in 
its colloquial use—The different senses of the word illustrated 
from the shore of New York harbor—Mill attempts to justify 
property in land, but succeeds only in justifying property in 
wealth ........... 460 

BOOK V. 

MONEY—THE MEDIUM OF EXCHANGE AND 
MEASURE OF VALUE. 

INTRODUCTION TO BOOK V. . . . . . .477 

CHAPTER I. 
CONFUSIONS AS TO MONEY. 

SHOWING THE DIVERGENCE IN COMMON THOUGHT AND AMONG 
ECONOMISTS AS TO MONEY. 

Present confusions as to money—Their cause—How to disen 
tangle them .......... 479 

CHAPTER H. 
THE COMMON UNDERSTANDING OP MONEY. 

SHOWING THAT THE COMMON USE OF MONEY IS TO BUY THINGS 
WITH, AND THAT ITS ESSENTIAL CHARACTER IS NOT IN ITS MA 
TERIAL, BUT IN ITS USE. 

The use of money to exchange for other things—Buying and sell 
ing—Illustration of the travelers—Money not more valuable 
than other things, but more readily exchangeable—Exchanges 

•without money—Checks, etc., not money—Different money in 
different countries—But money not made by government fiat— 
Does not necessarily consist of gold and silver—Or need intrin 
sic value—Its essential quality and definition .... 482 

CHAPTER III. 
MEDIUM OP EXCHANGE AND MEASURE OP VALUE. 

SHOWING HOW THE COMMON MEDIUM OF EXCHANGE BECOMES THE 
COMMON MEASURE OF VALUE, AND WHY WE CANNOT FIND A COM 
MON MEASURE IN LABOR. 

Money is most exchanged—Why not measure value by laborT 

—Smith's unsatisfactory answer—The true answer—Labor can 
afford no common measure, and commodities are preferably 

 GENERAL CONTENTS. xivii 

PAGE 

taken—Survivals of common measures—Difference in common 
measures does not prevent exchange ..... 495 

CHAPTER IV. 
THE OFFICE OF CEEDIT IN EXCHANGES. 

SHOWING THAT THE ADVANCE OF CIVILIZATION ECONOMIZES 
THE USE OF MONET. 

Tendency to over-estimate the importance of money—Credit 
existed before the use of money began—And it is now and 
always has been the most important instrument of exchange— 
Illustration of shipwrecked men—Adam Smith's error as to 
barter—Money's most important use to-day is as a measure of 
value ........... 504 

CHAPTER V. 
THE GENESIS OF MONEY. 

SHOWING THAT THE LAW OF GRATIFYING DESIRES WITH THE 
LEAST EXERTION PROMPTS THE USE FROM TIME TO TIME OF 
THE MOST LABOR-SAVING MEDIUM AVAILABLE. 

Money not an invention, but developed by civilization—It grows 
with the growth of exchanges—Exchange first of general com 
modities—Then of the more convenient commodities—Then 
of coin, whose commodity value comes to be forgotten—Illus 
tration of the American trade dollar—The lessening uses of 
commodity money and extensions of credit money—Two ele 
ments in exchange value of metal coin: intrinsic, or value of 
the metal itself; and seigniorage—Meaning of seigniorage— 
Exchange value of paper money is seigniorage—Use of money 
is not for consumption, but exchange—Proprietary articles as 
mediums of exchange—Mutilated coins—When lessening metal 
value in coins does not lessen circulating value—The essential 
being that both represent the same exertion—This the reason 
why paper money exchanges equally with metal money of like 
denomination .......... 512 

CHAPTER VI. 
THE TWO KINDS OF MONEY. 

SHOWING THAT ONE ORIGINATES IN VALUE FROM PRODUC 
TION AND THE OTHER IN VALUE FROM OBLIGATION. 

Money peculiarly the representative of value—Two kinds of 
money in the more highly civilized world—Commodity money 
and value from production—Credit money and value from obli 
gation—Of credit money—Of commodity money—Of intrinsic 
value—Gold coin the only intrinsic value money now in cir 
culation in the United States, England, France or Germany 526 

 GENERAL INTRODUCTION 

 For tho' the Giant Ages heave the hill 
And break the shore, and evermore 

Make and break, and work their will; 
Tho' world on world in myriad myriads roll 

Bound us, each with different powers 

And other forms of life than ours, 
"What know we greater than the soulT 

 GENEBAL INTBODUCTION. 

REASON OP Tms WORK. 

I SHALL try in this work to put in clear and systematic 
form the main principles of political economy. 

The place I would take is not that of a teacher, who 
states what is to be believed, but rather that of a guide, 
who points out what by looking is to be seen. So far from 
asking the reader blindly to follow me, I would urge him 
to accept no statement that he himself can doubt, and to 
adopt no conclusion untested by his own reason. 

This I say, not in unfelt deprecation of myself nor in 
idle compliment to the reader, but because of the nature 
and present condition of political economy. 

Of all the sciences, political economy is that which to 
civilized men of to-day is of most practical importance. 
For it is the science which treats of the nature of wealth 
and the laws of its production and distribution; that is to 
say, of matters which absorb the larger part of the thought 
and effort of the vast majority of us—the getting of a liv 
ing. It includes in its domain the greater part of those 
vexed questions which lie at the bottom of our politics and 
legislation, of our social and governmental theories, and 
even, in larger measure than may at first be supposed, of 
our philosophies and religions. It is the science to which 
must belong the solving of problems that at the close of a 
century of the greatest material and scientific development 

YXX1 

 GENERAL INTKODUCTION. 

the world has yet seen, are in all civilized countries clouding 
the horizon of the future—the only science that can enable 
our civilization to escape already threatening catastrophe. 

Yet, surpassing in its practical importance as political 
economy is, he who to-day would form clear and sure ideas 
of what it really teaches must form them for himself. For 
there is no body of accepted truth, no consensus of recog 
nized authority, that he may without question accept. In 
all other branches of knowledge properly called science the 
inquirer may find certain fundamentals recognized by all 
and disputed by none who profess it, which he may safely 
take to embody the information and experience of his time. 
But, despite its long cultivation and the multitude of its 
professors, he cannot yet find this in political economy. 
If he accepts the teaching of one writer or one school, it 
will be to find it denied by other writers and other schools. 
This is not merely true of the more complex and delicate 
questions, but of primary questions. Even on matters 
such as in other sciences have long since been settled, he 
who to-day looks for the guidance of general acceptance 
in political economy will find a chaos of discordant opin 
ions. So far indeed are first principles from being agreed 
on, that it is still a matter of hot dispute whether protec 
tion or free trade is most conducive to prosperity—a ques 
tion that in political economy ought to be capable of as 
certain an answer as in hydrodynamics the question 
whether a ship ought to be broader than she is long, or 
longer than she is broad. 

This is not for want of what passes for systematic study. 
Not only are no subjects so widely and frequently discussed 
as those that come within the province of political economy, 
but every university and college has now its professor 
of the science, whose special business it is to study and 
to teach it. But nowhere are inadequacy and confusion 
more apparent than in the writings of these men; nor is 

 GENERAL INTRODUCTION. xxxiii 

anything so likely to give the impression that there is not 
and cannot be a real science of political economy. 

But while this discordance shows that he who would 
really acquaint himself with political economy cannot rely 
upon authority, there is in it nothing to discourage the 
hope that he who will use his own reason in the honest 
search for truth may attain firm and clear conclusions. 

For in the supreme practical importance of political 
economy we may see the reason that has kept and still 
keeps it in dispute, and that has prevented the growth of 
any body of accepted and assured opinion. 

Under existing conditions in the civilized world, the 
great struggle among men is for the possession of wealth. 
Would it not then be irrational to expect that the science 
which treats of the production and distribution of wealth 
should be exempt from the influence of that struggle? 
Macaulay has well said that if any large pecuniary interest 
were concerned in disputing the attraction of gravitation, 
that most obvious of all facts would not yet be accepted. 
What, then, can we look for in the teaching of a science 
which directly concerns the most powerful of "vested 
rights"—which deals with rent and wages and interest, 
with taxes and tariffs, with privileges and franchises and 
subsidies, with currencies and land-tenures and public 
debts, with the ideas on which trade-unions are based and 
the pleas by which combinations of capitalists are de 
fended f Economic truth, under existing conditions, has 
not merely to overcome the inertia of indolence or habit; 
it is in its very nature subject to suppressions and distor 
tions from the influence of the most powerful and vigilant 
interests. It has not merely to make its way; it must con 
stantly stand on guard. It cannot safely be trusted to any 
selected body of men, for the same reasons that the power 
of making laws and administering public affairs cannot be 
so trusted. 

 xxxiv GENERAL INTRODUCTION. 

It is especially true to-day that all large political ques 
tions are at bottom economic questions. There is thus in 
troduced into the study of political economy the same 
disturbing element that setting men by the ears over the 
study of theology has written in blood a long page in the 
world's history, and that at one time, at least, so affected 
even the study of astronomy as to prevent the authori 
tative recognition of the earth's movement around the 
sun long after its demonstration. The organization of 
political parties, the pride of place and power that they 
arouse and the strong prejudices they kindle, are always 
inimical to the search for truth and to the acceptance of 
truth. 

And while colleges and universities and similar institu 
tions, though ostensibly organized for careful investigation 
and the honest promulgation of truth, are not and cannot 
be exempt from the influences that disturb the study of 
political economy, they are especially precluded under 
present conditions from faithful and adequate treatment 
of that science. For in the present social conditions of 
the civilized world nothing is clearer than that there is 
some deep and wide-spread wrong in the distribution, if 
not in the production, of wealth. This it is the office of 
political economy to disclose, and a really faithful and 
honest explication of the science must disclose it. 

But no matter what that injustice may be, colleges and 
universities, as at present constituted, are by the very law 
of their being precluded from discovering or revealing it. 
For no matter what be the nature of this injustice, the 
wealthy class must, relatively at least, profit by it, and this 
is the class whose views and wishes dominate in colleges 
and universities. As, while slavery was yet strong, we 
might have looked in vain to the colleges and universities 
and accredited organs of education and opinion in our 
Southern States, and indeed for that matter in the North, 

 GENERAL INTRODUCTION. 

for any admission of its injustice, so under present condi 
tions must we look in vain to such sources for any faithful 
treatment of political economy. Whoever accepts from 
them a chair of political economy must do so under the 
implied stipulation that he shall not really find what it is 
his professional business to look for.* 

In these extraneous difficulties, and not in any difficulty 
inherent in political economy itself, lies the reason why, 
to-day, after all the effort that since Adam Smith wrote has 
been devoted to its investigation, or presumed investiga 
tion, he who would really know what it teaches can find 
no consistent body of undisputed doctrine that he may 
safely accept; and can turn to the colleges and universities 
only with the certainty that, wherever else he may find the 
truth, he cannot find it there. 

Yet, if political economy be the one science that cannot 
safely be left to specialists, the one science of which it is 
needful for all to know something, it is also the science 
which the ordinary man may most easily study. It re 
quires no tools, no apparatus, no special learning. The 
phenomena which it investigates need not be sought for 
in laboratories or libraries; they lie about us, and are con 
stantly thrust upon us. The principles on which it builds 
are truths of which we all are conscious, and on which in 
every-day matters we constantly base our reasoning and 
our actions. And its processes, which consist mainly in 
analysis, require only care in distinguishing what is essen 
tial from what is merely accidental. 

In proposing to my readers to go with me in an attempt 
to work out the main principles of political economy, I am 
not asking them to think of matters they have never 
thought of before, but merely to think of them in a careful 

* On this subject, Adam Smith's opinion of colleges and universi 
ties (Article II., Part III., Chapter I., Book V., " Wealth of Nations ") 
may still be read with much advantage. 

 xxxvi GENERAL INTRODUCTION. 

and systematic way. For we all have some sort of political 
economy. Men may honestly confess an ignorance of 
astronomy, of chemistry, of geology, of philology, and 
really feel their ignorance. But few men honestly confess 
an ignorance of political economy. Though they may 
admit or even proclaim ignorance, they do not really 
feel it. There are many who say that they know nothing 
of political economy—many indeed who do not know what 
the term means. Yet these very men hold at the same 
time and with the utmost confidence opinions upon matters 
that belong to political economy, such as the causes which 
affect wages and prices and profits, the effects of tariffs, 
the influence of labor-saving machinery, the function and 
proper substance of money, the reason of " hard times " or 
" good times," and so on. For men living in society, which 
is the natural way for men to live, must have some sort of 
politico-economic theories—good or bad, right or wrong. 
The way to make sure that these theories are correct, or 
if they are not correct, to supplant them by true theories, 
is by such systematic and careful investigation as in this 
work I propose. 

But to such an investigation there is one thing so neces 
sary, one thing of such primary and constant importance, 
that I cannot too soon and too strongly urge it upon the 
reader. It is, that in attempting the study of political 
economy we should first of all, and at every step, make 
sure of the meaning of the words that we use as its terms, 
so that when we use them they shall always have for us 
the same meaning. 

Words are the signs or tokens by which in speech or 
writing we communicate our thoughts to one another. It 
is only as we attach a common meaning to words that we 
can communicate with one another by speech. And to 
understand one another with precision, it is necessary that 

 GENERAL INTRODUCTION. 

XZXTll 

each attach precisely the same meaning to the same word. 
Thus, two men may look on the ocean from the same place, 
and one honestly insist that there are three ships in sight, 
while the other as honestly insists that there are only two, 
if the one uses the word ship in its general meaning of 
navigable vessel, and the other uses it in its technical 
meaning of a vessel carrying three square-rigged masts. 
Such use of words in somewhat different senses is pecu 
liarly dangerous in philosophic discussion. 

But words are more than the means by which we com 
municate our thoughts. They are also signs or tokens in 
which we ourselves think—the labels of the thought- 
drawers or pigeonholes in which we stow away the various 
ideas that we often mentally deal with by label. Thus, we 
cannot think with precision unless in our own minds 
we use words with precision. Failure to do this is a 
great cause of the generation and persistence of economic 
fallacies. 

In all studies it is important that we should attach defi 
nite meanings to the terms we use. But this is especially 
important in political economy. For in other studies most 
of the words used as terms are peculiar to that study. The 
terms used in chemistry, for instance, are used only in 
chemistry. This makes the study of chemistry harder in 
beginning, for the student has to familiarize himself with 
new words. But it avoids subsequent difficulties, for these 
words being used only in chemistry, their meaning is not 
likely to be warped by other use from the one definite 
sense they properly bear in chemistry. 

Now the terms used in political economy are not words 
reserved to it. They are words in every-day use, which 
the necessities of daily life constantly require us to give to, 
and accept for, a different than the economic meaning. 
In studying political economy, in thinking out any of its 

 ixxviii GENBEAL INTRODUCTION. 

problems, it is absolutely necessary to give to such terms 
as wealth, value, capital, land, labor, rent, interest, wages, 
money, and so on, a precise meaning; arid to use them 
only in this—a meaning which always differs, and in some 
cases differs widely, from the common meaning. But not 
only have we all been accustomed in the first place to use 
these words in their common meanings; but even after we 
have given them as politico-economic terms a definite 
meaning, we must, in ordinary talk and reading continue 
to use and accept them in their ordinary sense. 

Hence arises in political economy a liability to confusion 
in thought from lack of definiteness in the use of terms. 
The careless as to terms cannot take a step without falling 
into this confusion, and even the usually careful are liable 
to fall into confusion if at any moment they relax their 
vigilance. The most eminent writers on political economy 
have given examples of this, confusing themselves as well 
as their readers by the vague use of a term. To guard 
against this danger it is necessary to be careful in begin 
ning, and continuously to be carefuL I shall therefore in 
this work try to define each term as it arises, and there 
after, when using it as an economic term, try to use it in 
that precise sense, and in no other. 

To define a word is to mark off what it includes from 
what it does not include—to make it in our minds, as it 
were, clear and sharp on its edges—so that it will always 
stand for the same thing or things, not at one time mean 
more and at another time less. 

Thus, beginning at the beginnings, let us consider the 
nature and scope of political economy, that we may see its 
origin and meaning, what it includes and what it does not 
include. If in this I ask the reader to go with me deeper 
than writers on political economy usually do, let him not 
think me wandering from the subject. He who would 
build a towering structure of brick and stone, that in stress 

 GENERAL INTRODUCTION. 

and strain will stand firm and plumb, digs for its founda 
tion to solid rock. 

Should we grudge such pains in laying the foundations 
of a great science, on which in its superstructure so much 
must rest? 

In nothing more than in philosophy is it wise that we 
should be " like a man which built an house, and digged 
deep, and laid the foundation on a rock." 

 BOOK I. 

THE MEANING OF POLITICAL ECONOMY 

 Though but an atom midst immensity, 

Still I am something, fashioned by Thy hand! 
I hold a middle rank 'twixt heaven and earth— 

On the last verge of mortal being stand 
Close to the realms where angels have their birth, 

Just on the boundaries of the spirit-land! 
The chain of being is complete in me— 

In me is matter's last gradation lost, 
And the next step is spirit—Deity! 

I can command the lightning, and am dust! 

—Bowing's translation ofDerzhavin. 

 CONTENTS OF BOOK I. 

THE MEANING OF POLITICAL ECONOMY. 

INTRODUCTION TO BOOK I. 

FAGE 

. 7 

CHAPTER I. 
THE THREE FACTORS OF THE WORLD. 

SHOWING THE CONSTITUENTS OF ALL WE PERCEIVE. 

Meaning of factor; and of philosophy; and of the world—What 
we call spirit—What we call matter—What we call energy— 
Though these three may be at bottom one, we must separate 
them in thought—Priority of spirit ...... 9 

CHAPTER n. 
MAN, HIS PLACE AND POWERS. 

SHOWING OUR RELATIONS TO THE GLOBE, AND THE QUALITIES 
THAT ENABLE US TO EXTEND OUR KNOWLEDGE OP IT AND OUR 
POWERS ON IT. 

Man's earliest knowledge of his habitat—How that knowledge 
grows, and what civilized men now know of it—The essential 
distinction between man and other animals—In this lies his 
power of producing and improving ...... 11 

CHAPTER IH. 
HOW MAN'S POWERS ARE EXTENDED. 

SHOWING THAT THEIR USE OF REASON WELDS MEN INTO 
THE SOCIAL ORGANISM OR ECONOMIC BODY. 

Extensions of man's powers in civilization—Due not to improve 
ment in the individual but in the society—Hobbes's "Levia 
than"—The Greater Leviathan—This capacity for good also 
capacity for evil .......... 19 

3 

 4 CONTENTS OF BOOK I. 

CHAPTER IV. 
CIVILIZATION—WHAT IT MEANS. 

PAGE 

SHOWING THAT CIVILIZATION CONSISTS IN THE WELDING OP 
MEN INTO THE SOCIAL ORGANISM OB ECONOMIC BODY. 

Vagueness as to what civilization is—Guizot quoted—Deriva 
tion and original meaning—Civilization and the State—Why 
a word referring to the precedent and greater has been taken 
from one referring to the subsequent and lesser . . .24 

CHAPTER V. 
THE ORIGIN AND GENESIS OF CIVILIZATION. 

SHOWING THE NATURE OP REASON; AND HOW IT IMPELS TO 
EXCHANGE, BY WHICH CIVILIZATION DEVELOPS. 

Reason the power of tracing causal relations—Analysis and syn 
thesis—Likeness and unUkeness between man and other ani 
mals—Powers that the apprehension of causal relations gives— 
Moral connotations of civilization—But begins with and in 
creases through exchange—Civilization relative, and exists in 
the spiritual........... 29 

CHAPTER VI. 
OF KNOWLEDGE AND THE GROWTH OF KNOWLEDGE. 

SHOWING THAT THE GROWTH OP KNOWLEDGE IS BY COOPER 
ATION, AND THAT IT INHERES IN THE SOCIETY. 

Civilization implies greater knowledge—This gain comes from 
cooperation—The incommunicable knowing called skill—The 
communicable knowing usually called knowledge—The rela 
tion of systematized knowledge to the means of storing know 
ledge, to skill and to the economic body—Illustration from as 
tronomy ...........39 

CHAPTER VII. 
OF SEQUENCE, CONSEQUENCE AND LAWS OF NATURE. 

SHOWING THE PROPER MEANING OP SEQUENCE AND OP CON 
SEQUENCE, AND WHY WE SPEAK OP LAWS OP NATURE. 

Coexistence and succession—Sequence and consequence—Causes 
in series; names for them—Our direct knowledge is of spirit 
—Simplest perception of causal relation—Extensions of this— 
The causal search unsatisfied till it reaches spirit—And finds 
or assumes intent—Early evidences of this—Why we must 
assume a superior spirit—Evidences of intent—The word 
nature and its implication of will or spirit—The word law— 
The term "law of nature" . ....... 44 

 CONTENTS OF BOOK I. 

CHAPTER Vin. 
OF THE KNOWLEDGE PROPERLY CALLED SCIENCE. 

PAGE 

SHOWING THAT SCIENCE DEALS ONLY WITH LAWS OF NATURE, 
AND THAT IN THE CURRENT POLITICAL ECONOMY THIS HAS 
BEEN FORGOTTEN. 

Proper meaning of science—It investigates laws of nature, not 
laws of man—Distinction between the two—Their confusion 
in the current political economy—Mason and Lalor's "Primer 
of Political Economy" quoted—Absurdity of this confusion— 
Turgot on the cause of such confusions ..... 58 

CHAPTER IX. 
THE ECONOMY CALLED POLITICAL ECONOMY. 

SHOWING THE MEANING, UNITS AND SCOPE OF POLITICAL 
ECONOMY. 

The word economy—The word political—Origin of the term 
"political economy" and its confusions—It is not concerned 
with the body politic, but with the body economic—Its units, 
and the system or arrangement of which it treats—Its scope . 65 

CHAPTER X. 
THE ELEMENTS OF POLITICAL ECONOMY. 

SHOWING HOW POLITICAL ECONOMY SHOULD PROCEED AND 
WHAT RELATIONS IT SEEKS TO DISCOVER. 

How to understand a complex system—It is the purpose of such 
a system that political economy seeks to discover—These 
laws, natural laws of human nature—The two elements rec 
ognized by political economy—These distinguished only by 
reason—Human will affects the material world only through 
laws of nature—It is the active factor in all with which polit 
ical economy deals ......... 74 

CHAPTER XL 
OF DESIRES AND SATISFACTIONS. 

SHOWING THE WIDTH AND IMPORTANCE OF THE FIELD OF 
POLITICAL ECOVOMY. 

Action springs from desire and seeks satisfaction—Order of de 
sires—Wants or needs—Subjective and objective desires— 
Material and immaterial desires—The hierarchy of life and 
of desires ........... 81 

 CONTENTS OP BOOK L 

CHAPTER XIL 
THE FUNDAMENTAL LAW OF POLITICAL ECONOMY. 

PAOB 

SHOWING THAT THE LAW FROM WHICH POLITICAL ECONOMY PRO 
CEEDS IS THAT MEN SEEK TO SATISFY THEIR DESIRES WITH 
THE LEAST EXERTION. 

Exertion followed by weariness—The fact that men seek to sat 
isfy their desires with the least exertion—Meaning and ana 
logue—Exemplified in trivial things—Is a law of nature and 
the fundamental law of political economy—Substitution of 
selfishness for this principle—Buckle quoted—Political econ 
omy requires no such assumption—The necessity of labor not 
a curse ............ 86 

CHAPTER XIII. 
METHODS OF POLITICAL ECONOMY. 

SHOWING THE NATURE OF THE METHODS OF INVESTIGATION 
THAT MAY BE USED IN POLITICAL ECONOMY. 

Deductive and inductive schools—"New American Cyclopedia" 
quoted—Triumph of the inductionists—The method of in 
duction and the method of deduction—Method of hypothesis. 
Bacon's relation to induction—Real error of the deduction- 
ists and the mistake of the inductioniste—Lalor's Cyclopedia 
quoted—Result of the triumph of the inductionists—A true 
science of political economy must follow the deductive method 
—Davis's "Elements of Inductive Logic" quoted—Double as 
surance of the real postulate of political economy—Method of 
mental or imaginative experiment ...... 92 

CHAPTER XIV. 
POLITICAL ECONOMY AS SCIENCE AND AS ART. 

SHOWING THAT POLITICAL ECONOMY IS PROPERLY A SCIENCE, 
AND THE MEANING IT SHOULD HAVE IF SPOKEN OF AS ART. 

Science and art—There must be a'science of political economy, 
but no proper art—What must be the aim of an art of politi 
cal economy—White art and black art—Course of further 
investigation .......... 101 

 INTRODUCTION TO BOOK I. 

fTIHE earliest, and as I think sufficient, definition of 
_L Political Economy, is, the science that treats of the 
nature of wealth, and of the laws of its production and 
distribution. But as this definition seems never to have 
been fully understood and adhered to by the accepted 
teachers of political economy, and has during late years 
been abandoned by those who occupy the position of of 
ficial teachers in all our leading colleges and universities, 
let us, beginning at the beginnings, endeavor to see for 
ourselves just what political economy is. 

 CHAPTER I. 
THE THREE FACTORS OF THE WORLD. 

SHOWING THE CONSTITUENTS OF ALL WE PERCEIVE. 

Meaning of factor; and of philosophy; and of the world—What we 
call spirit—What we call matter—What we call energy—Though 
these three may be at bottom one, we must separate them in 
thought—Priority of spirit. 

THE word factor, in commercial use, means one who 
acts as agent for another. In mathematical use, it 
means one of the quantities which multiplied together form 
a product. Hence in philosophy, which may be denned as 
the search for the nature and relations of tilings, the word 
factor affords a fit term for the elements which bring 
about a result, or the categories into which analysis enables 
us to classify these elements. 

In the world—I use the term in its philosophic sense of 
the aggregate or system of things of which we are cog 
nizant and of which we ourselves are part—we are enabled 
by analysis to distinguish three elements or factors: 

1. That which feels, perceives, thinks, wills; which to 
distinguish, we call mind or soul or spirit. 

2. That which has a mass or weight, and extension or 
form; which to distinguish, we call matter. 

3. That which acting on matter produces movement j 
which to distinguish, we call motion or force or energy. 

9 

 10 THE MEANING OF POLITICAL ECONOMY. Book I. 

We cannot, in truth, directly recognize energy apart 
from matter; nor matter without some manifestation of 
energy; nor mind or spirit unconjoined with matter and 
motion. For though our own consciousness may testify 
to our own essentially spiritual nature, or even at times to 
what we take to be direct evidence of pure spiritual exis 
tence, yet consciousness itself begins with us only after 
bodily life has already begun, and memory by which alone 
we can recall past consciousness is later still in appearing. 
It may be that what we call matter is but a form of energy; 
and it may perhaps be that what we call energy is but a 
manifestation of what we call mind or soul or spirit; and 
some have even held that from matter and its inherent 
powers all else originates. Yet though they may not be 
in fact separable by us, and though it may be that at 
bottom they are one, we are compelled in thought to dis 
tinguish these three as independent, separable elements, 
which in their actions and reactions make up the world as 
it is presented to our perception. 

Of these from our standpoint, that which feels, perceives, 
thinks, wills, comes first in order of priority, for it is this 
which is first in our own consciousness, and it is only 
through this that we have consciousness of any other exis 
tence. In this, as our own consciousness testifies, is the 
initiative of all our own motions and movements, so far as 
consciousness and memory shed light; and in all cases in 
which we can trace the genesis of anything to its begin 
ning we find that beginning in thought and will. So clear, 
so indisputable is the priority of this spiritual element that 
wherever and whenever men have sought to account for 
the origin of the world they have always been driven to 
assume a great spirit or God. For though there be athe 
istic theories, they always avoid the question of origin, 
and assume the world always to have been. 

 CHAPTER II. 
MAN, HIS PLACE AND POWERS. 

SHOWING OUR RELATIONS TO THE GLOBE, AND THE QUALI 
TIES THAT ENABLE US TO EXTEND OUR KNOWLEDGE OF IT 
AND OUR POWERS ON IT. 

Man's earliest knowledge of his habitat—How that knowledge grows, 
and what civilized men now know of it—The essential distinc 
tion between man and other animals—In this lies his power of 
producing and improving. 

"VTTE awake to consciousness to find ourselves, clothed in 
T T flesh, and in company with other like beings, resting 
on what seems to us a plane surface. Above us, when the 
clouds do not conceal them, the sun shines by day and the 
moon and stars by night. Of what this place is, and of 
our relations to it, the first men probably knew little more 
than is presented to us in direct consciousness, little more 
in fact than the animals know; and, individually, we our 
selves could know little more. But the observations and 
reflections of many succeeding men, garnered and system 
atized, enable us of the modern civilization to know, and 
with the eyes of the mind almost to see, things to which the 
senses untaught by reason are blind. 

By the light of this gathered knowledge we behold our 
selves, the constantly changing tenants of the exterior of 
a revolving sphere, circling around a larger and luminous 
sphere, the sun, and beset on all sides by depths of space, 
to which we can neither find nor conceive of limits. 

11 

 12 THE MEANING OF POLITICAL ECONOMY. Book I. 

Through this immeasurable space revolve myriads of lu 
minous bodies of the nature of our sun, surrounded, it is 
confidently inferred from the fact that we know it to be 
the case with our sun, by lesser, non-luminous bodies that 
have in them their centers of revolution. 

Our sun, but one, and far from one of the largest, of 
countless similar orbs, is the center of light and heat and 
revolution to eight principal satellites (having in their 
turn satellites of their own), as well as to an indefinite 
number of more minute bodies known to us as asteroids 
and of more erratic bodies called comets. Of the princi 
pal satellites of the sun, the third in point of distance from 
it, and the fourth in point of size, is our earth. It is in 
constant movement around the sun, and in constant revo 
lution on its own axis, while its satellite, the moon, also 
revolving on its own axis, is in constant movement around 
it. The sun itself, revolving too on its own axis, is, with 
all its attendant bodies, in constant movement around 
some, probably moving, point in the universe which 
astronomers have not yet been able to determine. 

Thus we find ourselves, on the surface of a globe seem 
ingly fixed, but really in constant motion of so many dif 
ferent kinds that it would be impossible with our present 
knowledge to make a diagram indicating its real movement 
through space at any point—a globe large to us, yet only 
as a grain of sand on the sea-shore compared with the 
bodies and spaces of the universe of which it is a part. 
We find ourselves on the surface of this ceaselessly mov 
ing globe, as passengers, brought there in utter insensibil 
ity, they know not how or whence, might find themselves 
on the deck of a ship, moving they know not where, and 
who see in the distance similar ships, whether tenanted or 
how tenanted they can only infer and guess. The im 
measurably great lies beyond us, and about and beneath 

 Chap. II. MAN, HIS PLACE AND POWERS. 13 

us the immeasurably small. The microscope reveals in 
finitudes no less startling to our minds than does the tele 
scope. 

Here we are, depth upon depth about us, confined to the 
bottom of that sea of air which envelops the surface of this 
moving globe. In it we live and breathe and are con 
stantly immersed. Were our lungs to cease taking in and 
pumping out this air, or our bodies relieved of its pressure, 
we should die. 

Small as our globe seems in the light of astronomy, it 
is not really of the whole globe that we are tenants, but 
only of a part of its surface. Above this mean surface, 
men have found it possible only with the utmost effort and 
fortitude to ascend something less than seven miles; below 
it our deepest mining shafts do not pierce a mile. Thus 
the extreme limits in depth and height to which man may 
occasionally adventure, though not permanently live, are 
hardly eight miles. In round numbers the globe is 8000 
miles in diameter. Thus the skin of the thinnest-skinned 
apple gives no idea of the relative thinness of the zone of 
perpendicular distance to which man is confined. And 
three fourths of the surface of the globe at its junction 
with the air is covered by water, on which, though man 
may pass, he cannot dwell; while considerable parts of 
what remain are made inaccessible by ice. Like a bridge 
of hair is the line of temperature that we must keep. In 
vestigators tell us of the existence of temperatures thou 
sands of degrees above zero and thousands of degrees below 
zero. But man's body must maintain the constant level 
of a fraction over 98 degrees above zero. A rise or fall 
of seven degrees either way from this level and he dies. 
With the permanent rise or fall of a few more degrees in 
the mean temperature of the surface of the globe it would 
become uninhabitable by us. 

 14 THE MEANING OF POLITICAL ECONOMY. Book L 

And while all about us, even what seems firmest, is in 
constant change and motion, so is it with ourselves. These 
bodies of ours are in reality like the flame of a gas-burner, 
which has continuous and defined form, but only as the 
manifestation of changes in a stream of succeeding parti 
cles, and which disappears the moment that stream is cut 
off. What there is real and distinctive in us is that to 
which we may give a name but cannot explain nor easily 
define—that which gives to changing matter and passing 
motion the phase and form of man. But our bodies and 
our physical powers themselves, like the form and power 
of the gas-flame, are only passing manifestations of that 
indestructible matter and eternally pulsing energy of which 
the universe so far as it is tangible to us is made up. Stop 
the air that every instant is drawn through our lungs and 
we cease to live. Stop the food and drink that serve to 
us the same purpose as coal and water to the steam-engine, 
and, as certainly, if more slowly, the same result follows. 

In all this, man resembles the other animals that with 
him tenant the superficies of the same earth. Physically 
he is merely such an animal, in form and structure and 
primary needs closely allied to the mammalia, with whose 
species he is zoologically classified. Were man only an 
animal he would be but an inferior animal. Nature has 
not given him the powers and weapons which enable other 
animals readily to secure their food. Nor yet has she 
given him the covering which protects them. Had he like 
them no power of providing himself with artificial clothing, 
man could not exist in many of the regions he now in 
habits. He could live only in the most genial and equable 
parts of the globe. 

But man is more than an animal. Though in physical 
equipment he may in nothing surpass, and in some things 
fall below other animals, in mental equipment he is so 
vastly superior as to take him out of their class, and to 

 Chap. II. MAN, HIS PLACE AND POWERS. 16 

make him the lord and master of them all—to make him 
veritably, of all that we may see, " the roof and crown of 
things." And what more clearly perhaps than all else in 
dicates the deep gulf which separates him from all other 
animals is that he alone of all animals is the producer, or 
bringer forth, and in that sense a maker. In this is a 
difference which renders the distinction between the high 
est animal and the lowest man one not of degree but of 
kind, and which, linked with the animals though he be, 
justifies the declaration of the Hebrew Scripture, that man 
is created in the likeness of the All-Maker. 

Consider this distinction: We know of no race of men 
so low that they do not raise fruits or vegetables, or 
domesticate and breed animals; that do not cook food; 
that do not fashion weapons; that do not construct habita 
tions ; that do not make for themselves garments; that do 
not adorn themselves or their belongings with ornamenta 
tion; that do not show at least the rude beginnings of 
drawing and painting and sculpture and music. In all the 
tribes of animated nature below man there is not the 
slightest indication of the power thus shown. No animal 
save man ever kindled a fire or cooked a meal, or made a 
tool or fashioned a weapon. 

It is true that the squirrel hides nuts; that birds build 
nests; that the beaver dams streams; that bees construct 
combs, in which they store the honey they extract from 
flowers; that spiders weave webs; that one species of ants 
are said to milk insects of another kind. All this is true, 
just as it is also true that there are birds whose melody 
far surpasses the best music of the savage, and that on 
tribes below man nature lavishes an adornment of attire 
that in taste as well as brilliancy surpasses the meretricious 
adornments of primitive man. 

But in all this there is nothing akin to the faculties 
which in these things man displays. What man does, he 

 16 THE MEANING OF POLITICAL ECONOMY. Book I. 

does by taking thought, by consciously adjusting means 
to ends. He does it by adapting and contriving and ex 
perimenting and copying; by effort after effort and trial 
after trial. What he does, and his ways of doing it, vary 
with the individual, with social development, with time and 
place and surroundings, and with what he sees others do. 

But the squirrel hides its nuts; the birds after their 
orders build their nests, and in due time force their young 
to fly; the beaver constructs its dam; the bees store their 
honey; the spiders weave, and the ants do the work of 
their societies, without taking thought, without toilsomely 
scheming for the adapting of means to ends, without 
experimenting or copying or improving. What they do of 
such things, they do not as originators who have discovered 
how to do it; nor yet as learners or imitators or copyists. 
They do it, first as well as last, unfalteringly and unalter- 
ingly, forgetting nothing and improving in nothing. They 
do it, not by reason but by instinct; by an impulse inhering 
in their nature which prompts them without perplexity or 
trial on their part to go so far, but gives them no power 
to go farther. They do it as the bird sings or the dog 
barks, as the hen sits on her eggs or the chick picks its 
way from the shell to scratch the ground. 

Nature provides for all living things beneath man by 
implanting in them blind, strong impulses which at proper 
times and seasons prompt them to do what it is necessary 
they should do. But to man she grants only such impel- 
lings of instinct as that which prompts the mother to press 
the new-born babe to her breast and the babe to suckle. 
With exceptions such as these, she withdraws from man 
her guiding power and leaves him to himself. For in him 
a higher power has arisen and looks out on the world—a 
power that separates him from the brute as clearly and as 
widely as the brute is separated from the clod; a power 
that has in it the potency of producing, of making, of 

 Chap. II. MAN, HIS PLACE AND POWERS. 17 

causing things to be; a power that seeks to look back into 
a past ere the globe was, and to peer into a future when 
it will cease to exist; a power that looks on Nature's show 
with curiosity like that with which an apprentice might 
scan a master's work, and will ask why tides run and 
winds blow, and how suns and stars have been put to 
gether ; a power that in its beginnings lacks the certainty 
and promptness of instinct, but which, though infinitely 
lower in degree, must yet in some sort be akin to that from 
which all things proceed. 

As this power, which we call reason, rises in man, na 
ture withdraws the light of instinct and leaves him to his 
own devices—to rise or fall, to soar above the brute or to 
sink lower. For as the Hebrew Scriptures have phrased 
it, his eyes are opened and before him are good and evil. 
The ability to fall, no less than the ability to rise—the very 
failures and mistakes and perversities of man—show his 
place and powers. There is among the brutes no drunk 
enness, no unnatural vice, no waste of effort in accom 
plishing injurious results, no wanton slaughter of their 
own kind, no want amid plenty. We may conceive of 
beings in the form of man, who, like these animals, should 
be ruled by such clear and strong instincts that among 
them also there would be no liability to such perversions. 
Yet such beings would not be men. They would lack the 
essential character and highest powers of man. Fitted 
perfectly to their environment they might be happy in a 
way. But it would be as the full-fed hog is happy. The 
pleasure of making, the joy of overcoming, the glory of 
rising, how could they exist for such beings ? That man 
is not fitted for his environment shows his higher quality. 
In him is that which aspires—and still aspires. 

Endowed with reason, and deprived, or all but deprived, 
of instinct, man differs from other animals in being the 
producer. Like them, for instance, he requires food. But 

 18 THE MEANING OP POLITICAL ECONOMY. Book I. 

while the animals get their food by taking what they find, 
and are thus limited by what they find already in exis 
tence, man has the power of getting his food by bringing 
it into existence. He is thus enabled to obtain food in 
greater variety and in larger quantity. The amount of 
grass limits the number of wild cattle, the amount of their 
prey limits the number of the carnivora; but man causes 
grasses and grains and fruits to grow where they did not 
grow before; he breeds animals on which he feeds. And 
so it is with the fulfilment of all his wants; the satisfaction 
of all his desires. By the use of his animal powers, man 
can cover perhaps as much ground in a day as can a horse 
or a dog; he can cross perhaps about as wide a stream. 
But by virtue of the power that makes him the producer 
he is already spanning continents and oceans with a speed, 
a certainty and an ease that not even the birds of most 
powerful wing and swiftest flight can rival. 

 CHAPTER III. 
HOW MAN'S POWERS ARE EXTENDED. 

SHOWING THAT THEIR USE OF REASON WELDS MEN INTO 
THE SOCIAL ORGANISM OR ECONOMIC BODY. 

Extensions of man's powers in civilization—Due not to improve 
ment in the individual but in the society—Hobbes's "Leviathan" 
—The Greater Leviathan—This capacity for good also capacity 
for evil. 

MAN, as we have any knowledge of him, either in the 
present or in the past, is always man; differing from 
other animals in the same way, feeling the same essential 
needs, moved by the same essential desires, and possessed 
of the same essential powers. 

Yet between man in the lowest savagery and man in 
the highest civilization how vast the difference in the 
ability of satisfying these needs and desires by the use of 
these powers. In food, in raiment, in shelter; in tools 
and weapons; in ease of movement and of transportation; 
in medicine and surgery; in music and the representative 
arts; in the width of his horizon j in the extent and pre 
cision of the knowledge at his service—the man who is 
free to the advantages of the civilization of to-day is as 
a being of higher order compared to the man who was 
clothed in skins or leaves, whose habitation was a cave or 
rude hut, whose best tool a chipped flint, whose boat a 
hollowed log, whose weapons the bow and arrows, and 

19 

 20 THE MEANING OF POLITICAL ECONOMY. Book I. 

whose horizon was bounded, as to the past, by tribal tra 
dition, and as to the present by the mountains or sea-shore 
of his immediate home and the arched dome which seemed 
to him to shut it in. 

But if we analyze the way in which these extensions of 
man's power of getting and making and knowing and 
doing are gained, we shall see that they come, not from 
changes in the individual man, but from the union of 
individual powers. Consider one of those steamships now 
crossing the Atlantic at a rate of over five hundred miles 
a day. Consider the cooperation of men in gathering 
knowledge, in acquiring skill, in bringing together mate 
rials, in fashioning and managing the whole great struc 
ture; consider the docks, the storehouses, the branching 
channels of trade, the correlation of desires reaching over 
Europe and America and extending to the very ends of 
the earth, which the regular crossing of the ocean by such 
a steamship involves. Without this cooperation such a 
steamship would not be possible. 

There is nothing whatever to show that the men who 
to-day build and navigate and use such ships are one whit 
superior in any physical or mental quality to their ances 
tors, whose best vessel was a coracle of wicker and hide. 
The enormous improvement which these ships show is not 
an improvement of human nature; it is an improvement 
of society—it is due to a wider, fuller union of individual 
efforts in the accomplishment of common ends. 

To consider in like manner any one of the many and 
great advances which civilized man in our time has made 
over the power of the savage, is to see that it has been 
gained, and could only have been gained, by the widening 
cooperation of individual effort. 

The powers of the individual man do not indeed reach 
their full limit when maturity is once attained, as do those 
of the animal; but, the highest of them at least, are capable 

 Ckap.IIL HOW MAN'S POWERS AKE EXTENDED. 21 

of increasing development up to the physical decay that 
comes with age, if not up to the verge of the grave. Yet, 
at best, man's individual powers are small and his life is 
short. What advances would be possible if men were 
isolated from each other and one generation separated 
from the next as are the generations of the seventeen-year 
locusts? The little such individuals might gain during 
their own lives would be lost with them. Each generation 
would have to begin from the starting-place of its prede 
cessor. 

But man is more than an individual. He is also a social 
animal, formed and adapted to live and to cooperate with 
his fellows. It is in this line of social development that 
the great increase of man's knowledge and powers takes 
place. 

The slowness with which we attain the ability to care 
for ourselves and the qualities incident to our higher gifts 
involve an overlapping of individuals that continues and 
extends the family relation beyond the limits which obtain 
among other mammalia. And, beyond this relation, com 
mon needs, similar perceptions and like desires, acting 
among creatures endowed with reason and developing 
speech, lead to a cooperation of effort that even in its 
crudest forms gives, to man powers that place him far 
above the beasts and that tends to weld individual men 
into a social body, a larger entity, which has a life and 
character of its own, and continues its existence while its 
components change, just as the life and characteristics of 
our bodily frame continue, though the atoms of which it 
is composed are constantly passing away from it and as 
constantly being replaced. 

It is in this social body, this larger entity, of which in 
dividuals are the atoms, that the extensions of human 
power which mark the advance of civilization are secured. 
The rise of civilization is the growth of this cooperation 

 22 THE MEANING OP POLITICAL ECONOMY. Hook I. 

and the increase of the body of knowledge thus obtained 
and garnered. 

Perhaps I can better point out what I mean by an illus 
tration : 

The famous treatise in which the English philosopher 
Hobbes, during the revolt against the tyranny of the 
Stuarts in the seventeenth century, sought to give the 
sanction of reason to the doctrine of the absolute authority 
of kings, is entitled " Leviathan." It thus begins: 

Nature, the art whereby God hath made and governs the world, is 
by the art of man, as in many other things, so in this also imitated, 
that it can make an artificial animal. . . . For by art is created that 
great Leviathan called a commonwealth or state, in Latin cimtas, 
which is but an artificial man; though of greater stature and strength 
than the natural, for whose protection and defense it was intended; 
and in which the sovereignty is an artificial soul, as giving life and 
motion to the whole body; the magistrates and other officers of judi 
cature and execution, artificial joints; reward and punishment, by 
which fastened to the seat of the sovereignty every joint and mem 
ber is moved to perform his duty, are the nerves, that do the same 
in the body natural; the wealth and riches of all the particular mem 
bers, are the strength; solus populi, the people's safety, its business; 
counselors by whom all things needful for it to know are suggested 
unto it, are the memory; equity and laws, an artificial reason and 
will; concord, health; sedition, sickness; and civil war, death. 
Lastly, the pacts and covenants, by which the parts of this body 
politic were at first made, set together, and united, resemble that 
fiat, or the " Let us make man," pronounced by God in the creation. 

Without stopping now to comment further on Hobbes's 
suggestive analogy, there is, it seems to me, in the system 
or arrangement into which men are brought in social life, 
by the effort to satisfy their material desires—an integra 
tion which goes on as civilization advances—something 
which even more strongly and more clearly suggests the 
idea of a gigantic man, formed by the union of individual 
men, than any merely political integration. 

This Greater Leviathan is to the political structure or 
conscious commonwealth what the unconscious functions 

 CIiap.ITT. HOW MAN'S POWERS AEE EXTENDED. 23 

of the body are to the conscious activities. It is not made 
by pact and covenant, it grows; as the tree grows, as the 
man himself grows, by virtue of natural laws inherent in 
human nature and in the constitution of things; and the 
laws which it in turn obeys, though their manifestations 
may be retarded or prevented by political action are them 
selves utterly independent of it, and take no note whatever 
of political divisions. 

It is this natural system or arrangement, this adjust 
ment of means to ends, of the parts to the whole and the 
whole to the parts, in the satisfaction of the material de 
sires of men living in society, which, in the same sense as 
that in which we speak of the economy of the solar system, 
is the economy of human society, or what in English we 
call political economy. It is as human units, individuals 
or families, take their place as integers of this higher man, 
this Greater Leviathan, that what we call civilization 
begins and advances. 

But in this as in other things, the capacity for good is 
also capacity for evil, and prejudices, superstitions, errone 
ous beliefs and injurious customs may in the same way be 
so perpetuated as to turn what is the greatest potency of 
advance into its greatest obstacle, and to engender degra 
dation out of the very possibilities of elevation. And it 
is well to remember that the possibilities of degradation 
and deterioration seem as clear as the possibilities of ad 
vance. In no race and at no place has the advance of man 
been continuous. At the present time, while European 
civilization is advancing, the majority of mankind seem 
stationary or retrogressive. And while even the lowest 
peoples of whom we have knowledge show in some things 
advances over what we infer must have been man's primi 
tive condition, yet it is at the same time true that in other 
things they also show deteriorations, and that even the most 
highly advanced peoples seem in some things below what 
we best imagine to have been as the original state of man. 

 CHAPTER IV. 
CIVILIZATION-WHAT IT MEANS. 

SHOWING THAT CIVILIZATION CONSISTS IN THE WELDING OP 
MEN INTO THE SOCIAL ORGANISM OR ECONOMIC BODY. 

Vagueness as to what civilization is—Guizot quoted—Derivation 
and original meaning—Civilization and the State—Why a word 
referring to the precedent and greater has been taken from one 
referring to the subsequent and lesser. 

THE word civilization is in common use. But it is 
used with vague and varying meanings, which refer 
to the qualities or results that we attribute to the thing, 
rather than to the thing itself the existence or possibility 
of which we thus assume. 

Sometimes our expressed or implied test of civilization 
is in the methods of industry and control of natural forces. 
Sometimes it is in the extent and diffusion of knowledge. 
Sometimes in the kindliness of manners and justice and 
benignity of laws and institutions. Sometimes it may be 
suspected that we use the word as do the Chinese when 
they class as barbarians all humanity outside of the " Cen 
tral Flowery Kingdom." And there is point in the satire 
which tells how men who had lost their way in the wilder 
ness, exclaimed at length when they reached a prison: 
" Thank God, we are at last in civilization!" 

This difficulty in determining just what civilization is, 
does not pertain to common speech alone, but is felt by 

24 

 Cliap.IV. CIVILIZATION-WHAT IT MEANS. 25 

the best writers on the subject. Thus Buckle, in the two 
great volumes of the general introduction to his " History 
of Civilization in England," which was all his untimely 
death permitted him to complete, gives us his view of what 
civilization depends on, what influences it, what promotes 
or retards it; but does not venture to say what civilization 
is. And thus Guizot, in his " General History of Civiliza 
tion in Modern Europe," says of civilization itself: 

It is so general in its nature that it can scarcely be seized; so com 
plicated that it can scarcely be unraveled; so hidden as scarcely to 
be discernible. The difficulty of describing it, or recounting its his 
tory, is apparent and acknowledged; but its existence, its worthiness 
to be described and to be recounted, is not less certain and manifest. 

Yet, surely, it ought to be possible to fix the meaning of a 
word so common and so important; to determine the thing 
from which the qualities we attribute to civilization pro 
ceed. This I shall attempt, not only because I shall have 
future occasion to use the word, but because of the light 
the effort may throw on the matter now in hand, the 
nature of political economy. 

The word civilization comes from the Latin tins, a 
citizen. Its original meaning is, the manner or condition 
in which men live together as citizens. Now the relations 
of the citizen to other citizens, which are in their concep 
tion peaceable and friendly, involving mutual obligations, 
mutual rights and mutual services, spring from the rela 
tion of each citizen to a whole of which each is an integral 
part. That whole, from membership in which proceeds 
the relationship of citizens to each other, is the body 
politic, or political community, which we name the state, 
and which, struck by the analogy between it and the 
human body, Hobbes likened to a larger and stronger man 
made up by the integration of individual men, and called 
Leviathan. 

 26 THE MEANING OF POLITICAL ECONOMY. Book I. 

Yet it is not this political relation, but a relation like 
it, that is suggested in this word civilization—a relation 
deeper, wider and closer than the relation of the citizen to 
the State, and prior to it. 

There is a relation between what we call a civilization 
and what we call a state, but in this the civilization is the 
antecedent and the state the subsequent. The appearance 
and development of the body politic, the organized state, 
the Leviathan of Hobbes, is the mark of civilization already 
in existence. Not in itself civilization, it involves and 
presupposes civilization. 

And in the same way the character of the state, the 
nature of the laws and institutions which it enacts and 
enforces, indicate the character of the underlying civiliza 
tion. For while civilization is a general condition, and 
we speak of mankind as civilized, half civilized or uncivi 
lized, yet we recognize individual differences in the char 
acteristics of a civilization, as we recognize differences in 
the characteristics of a state or in the characteristics of a 
man. We speak of ancient civilization and modern civili 
zation ; of Asiatic civilization and European civilization; 
of the Egyptian, the Assyrian, the Chinese, the Indian, 
the Aztec, the Peruvian, the Roman and the Greek civili 
zations, as separate things, having such general likeness 
to each other as men have to men, but each marked by 
such individual characteristics as distinguish one man from 
other men. And whether we consider them in their grand 
divisions or in their minor divisions, the line between what 
we call civilizations is not the line of separation between 
bodies politic. The United States and Canada, or the 
United States and Great Britain, are separate bodies politic, 
yet their civilization is the same. The making of the 
Queen of Great Britain Empress of India does not substi 
tute the English civilization for the Indian civilization in 
Bengal, nor the Indian civilization for the English civiliza- 

 Chap. IV. CIVILIZATION-WHAT IT MEANS. 27 

tion in Yorkshire or Kent. Change in allegiance involves 
change in citizenship, but in itself involves no change in 
the civilization. Civilization is evidently a relation which 
underlies the relations of the body politic as the uncon 
scious motions of the body underlie the conscious motions. 

Now, as the relations of the citizen proceed essentially 
from the relation of each citizen to a whole—the body pol 
itic, or Leviathan, of which he is a part—is it not clear, 
when we consider it, that the relations of the civilized man 
proceed from his relations to what I have called the body 
economic, or Greater Leviathan ? It is this body economic, 
or body industrial, which grows up in the cooperation of 
men to supply their wants and satisfy their desires, that 
is the real thing constituting what we call civilization. 
Of this the qualities by which we try to distinguish what 
we mean by civilization are the attributes. It does indeed, 
I think, best present itself to our apprehension in the 
likeness of a larger and greater man, arising out of and 
from the cooperation of individual men to satisfy their 
desires, and constituting, after the evolution which finds 
its crown in the appearance of man himself, a new and 
seemingly illimitable field of progress. 

This body economic, or Greater Leviathan, always pre 
cedes and always underlies the body politic or Leviathan. 
The body politic or state is really an outgrowth of the 
body economic, in fact one of its organs, the need for 
which and appearance of which arises from and with its 
own appearance and growth. And from this relation of 
dependence upon the body economic, the body politic can 
never become exempt. 

Why, then, it may be asked, is it that we take for the 
greater and precedent a word drawn from the lesser and 
subsequent, and find in the word civilization, which ex 
presses an analogy to the body politic, the word that 
serves us as a name for the body economic ? The reason 

 28 THE MEANING OF POLITICAL ECONOMY. SooJcI. 

of this is worth noting, as it flows from au important 
principle in the growth of human knowledge. Things 
that come first in the natural order are not always first 
apprehended. As the human eye looks out, but not in, so 
the human mind as it scans the world is apt to observe 
what is of the superstructure of things before it observes 
what is of the foundation. 

The body politic is more obvious to our eyes, and, so to 
speak, makes more noise in our ears, than the unseen and 
silent body economic, from which it proceeds and on which 
it depends. Thus, in the intellectual development of 
mankind, it and its relations are noticed sooner and receive 
names earlier than the body economic. And the words so 
made part of our mental furniture, afterwards by their 
analogies furnish us with words needed to express the 
body economic and its relations when later in intellectual 
growth we come to recognize it. Thus it is that while the 
thing civilization must in the natural order precede the 
body politic or state, yet when in the development of 
human knowledge we come to recognize this thing, we take 
to express it and its relations words already in use as ex 
pressive of the body politic and its relations. 

But without at present pursuing further that record of 
the history of thought that lies in the meaning of words, 
let us endeavor to see whence comes the integration of 
men into a body economic and how it grows. 

 CHAPTER V. 
THE ORIGIN AND GENESIS OF CIVILIZATION. 

SHOWING THE NATURE OP REASON; AND HOW IT IMPELS TO 
EXCHANGE, BY WHICH CIVILIZATION DEVELOPS. 

Reason the power of tracing causal relations—Analysis and syn 
thesis—Likeness and unlikeness between man and other animals 
—Powers that the apprehension of causal relations gives—Moral 
connotations of civilization—But begins with and increases 
through exchange—Civilization relative, and exists in the spirit 
ual. 

MAN is an animal; but an animal plus something more 
—the divine spark differentiating him from all other 
animals, which enables him to become a maker, and which 
we call reason. To style it a divine spark is to use a fit 
figure of speech, for it seems analogous to, if not indeed 
a lower form of, the power to which we must attribute the 
origin of the world; and like light and heat radiates and 
enkindles. 

The essential quality of reason seems to lie in the power 
of tracing the relationship of cause and effect. This power, 
in one of its aspects, that which proceeds from effect to 
cause, thus, as it were, taking things apart, so as to see 
how they have been put together, we call analysis. In 
another of its aspects, that which proceeds from cause to 
effect, thus, as it were, putting things together, so as to 
eee iii what they result, we call synthesis. In both of 

29 

 30 THE MEANING OP POLITICAL ECONOMY. Book I. 

these aspects, reason, I think, involves the power of pic 
turing things in the mind, and thus making what we may 
call mental experiments. 

Whoever will take the trouble (and if he has the time, 
he will find in it pleasure) to get on friendly and intimate 
terms with a dog, a cat, a horse, or a pig, or, still better,— 
since these animals, though they have four limbs like ours, 
lack hands,—with an intelligent monkey, will find many 
things in which our "poor relations" resemble us, or 
perhaps rather, we resemble them. 

To such a man these animals will exhibit traces at least 
of all human feelings—love and hate, hope and fear, pride 
and shame, desire and remorse, vanity and curiosity, 
generosity and cupidity. Even something of our small 
vices and acquired tastes they may show. Goats that 
chew tobacco and like their dram are known on shipboard, 
and dogs that enjoy carriage-rides and like to run to fires, 
on hind. "Bummer" and his client "Lazarus" were as 
well known as any two-legged San Franciscan some thirty- 
five or forty years ago, and until their skins had been 
affectionately stuffed, they were "deadheads" at free 
lunches, in public conveyances and at public functions. 
I bought in Calcutta, when a boy, a monkey which all the 
long way home would pillow her little head on mine as I 
slept, and keep off my face the cockroaches that infested 
the old Indiaman by catching them with her hands and 
cramming them into her maw. When I got her home, she 
was so jealous of a littie brother that I had to part with 
her to a lady who had no children. And my own children 
had in New York a little monkey, sent them from Para 
guay, that so endeared herself to us all that when she died 
from over-indulgence in needle-points and pinheads it 
seemed like losing a member of the family. She knew 
my step before I reached the door on coming home, and 
when it opened would spring to meet me with chattering 

 Chap. r. OKIGIN AND GENESIS OF CIVILIZATION. 31 

caresses, the more prolonged the longer I Lad been away. 
She leaped from the shoulder of one to that of another at 
table; nicely discriminating between those who had been 
good to her and those who had offended her. She had all 
the curiosity attributed to her sex in man, and a vanity 
most amusing. She would strive to attract the attention 
of visitors, and evince jealousy if a child called off their 
notice. At the time for school-children to pass by, she 
would perch before a front window and cut monkey shines 
for their amusement, chattering with delight at their 
laughter and applause as she sprang from curtain to 
curtain and showed the convenience of a tail that one may 
swing by. 

How much "human nature" there is in animals, who 
ever treats them kindly knows. We usually become most 
intimate with dogs. And who that has been really inti 
mate with a generous dog has not sympathized with the 
children's wish to have him decently buried and a prayer 
said over him? Or who, when he saw at last the poor 
beast's stiffened frame, could, despite his accustomed 
philosophy which reserves a future life to man alone, re 
frain from a moment's hope that when his own time came 
to cross the dark river his faithful friend might greet him 
on the other shore 1 And must we say, Nay T The title 
by which millions of men prefer to invoke the sacred 
name, it is not "the All Mighty," but "the Most Mer 
ciful." 

One of the most striking differences between man and 
the lower animals is that which distinguishes man as the 
unsatisfied animal. Yet I am not sure that this is in itself 
an original difference; an essential difference of kind. I 
am, on the contrary, as I come closely to consider it, in 
clined rather to think it a result of the endowment of man 
with the quality of reason that animals lack, than in itself 
an original difference. 

 32 THE MEANING OF POLITICAL ECONOMY. Book I. 

For, on the one side, we see that men when placed in 
conditions that forbid the hope of improvement do become 
almost if not quite as stolidly content with no greater 
satisfactions than their fathers could obtain as the mere 
animals are. And, on the other side, we see that, to some 
extent at least, the desires of animals increase as oppor 
tunities for gratifying them are afforded. Give a horse 
lump-sugar and he will come to you again to get it, though 
in his natural state he aspires to nothing beyond the herb 
age. The pampered lap-dogs whose tails stick out from 
warm coats on the fashionable city avenues in winter seem 
to enjoy their clothing, though they could never solve the 
mystery of how to get it on, let alone how to make it. 
They come to want the daintiest food served in china on 
soft carpets, while dogs of the street will fight for the 
dirtiest bone. I know a cat in the mountains that lives 
in the woods all the months when leaves are green, but 
when they turn and die seeks the farmer's hearth. The 
big white puss that lies curled in the soft chair beside the 
stove in the hall below, and who will swell and purr with 
satisfaction when I scratch her head and stroke her back 
as I pass down, hardly dared sneak into the house a few 
weeks ago, but now that she finds she is welcome is content 
with nothing less than the softest couch and the wannest 
fire. And the shaggy dog that likes so well to sit in a boat 
and watch the water as it plashes by, makes me wonder 
sometimes if he would not want a nicely cushioned naph 
tha launch if he could make out how to get one. Even 
man is content with the best he can get until he begins to 
see he can get better. A handsome woman I have met, 
who puts on for ball or opera an earl's ransom in gems, 
and must have a cockade in her coachman's hat and bicycle 
tires on her carriage-wheels, will tell you that once her 
greatest desire was for a new wash-tub and a better 
cooking-stove. 

 Chap. V. OKIGIN AND GENESIS OF CIVILIZATION. 33 

The more we come to know the animals the harder we 
find it to draw any clear mental line between them and 
us, except on one point, as to which we may see a clear 
and profound distinction. This, that animals lack and 
that men have, is the power of tracing effect to cause, and 
from cause assuming effect. Among animals this want is 
to some extent made up for by finer sense-perceptions and 
by the keener intuitions that we call instinct. But the line 
that thus divides us from them is nevertheless wide and 
deep. Memory, which the animals share with man, enables 
them to some extent to do again what they have been first 
taught to do; to seek what they have found pleasant, and 
to avoid what they have found painful. They certainly 
have some way of communicating their impressions and 
feelings to others of their kind which constitutes a rudi 
mentary language, while their sharper senses and keener 
intuitions serve them in some cases where men would be 
at fault. Yet they do not, even in the simplest cases, show 
the ability to " think a thing out," and the wiliest and most 
sagacious of them may be snared and held by devices the 
simplest man would with a moment's reflection " see his 
way through."* 

Is it not in this power of "thinking things out," of 
"seeing the way through"—the power of tracing causal 
relations—that we find the essence of what we call rea 
son, the possession of which constitutes the unmistakable 
difference, not in degree but in kind, between man and the 
brutes, and enables him, though their fellow on the plane 
of material existence, to assume mastery and lordship over 
them all ? 

Here is the true Promethean spark, the endowment to 

* I do not of course include the animals of fairy tale, nor the 
superordinary dogs that Herbert Spencer's correspondents write to 
him about. See Herbert Spencer's "Justice," Appendix D, or my 
"A Perplexed Philosopher," p. 285. 

 34 THE MEANING OF POLITICAL ECONOMY. Book I. 

which the Hebrew Scriptures refer when they say that 
God created man in His own image; and the means by 
which we, of all animals, become the only progressive 
animal. Here is the germ of civilization. 

It is this power of relating effect to cause and cause to 
effect which renders the world intelligible to man; which 
enables him to understand the connection of things around 
him and the bearings of things above and beyond him; to 
live not merely in the present, but to pry into the past 
and to forecast the future; to distinguish not only what 
are presented to him through the senses, but things of 
which the senses cannot tell ; to recognize as through mists 
a power from which the world itself and all that therein 
is must have proceeded; to know that he himself shall 
surely die, but to believe that after that he shall live 
again. 

It is this power of discovering causal relations that en 
ables him to bring forth fire and call out light; to cook 
food; to make for himself coats other than the skin with 
which nature clothes him; to build better habitations than 
the trees and caves that nature offers; to construct tools; 
to forge weapons; to bury seeds that they may rise again 
in more abundant life; to tame and breed animals; to 
utilize in his service the forces of nature; to make of water 
a highway; to sail against the wind and lift himself by 
the force that pulls all things down; and gradually to 
exchange the poverty and ignorance and darkness of the 
savage state for the wealth and knowledge and light that 
come from associated effort. 

All these advances above the animal plane, and all that 
they imply or suggest, spring at bottom from the power 
that makes it possible for a man to tie or untie a square 
knot, which animals cannot do; that makes it impossible 
that he should be caught in a figure-4 trap as rabbits and 
birds are caught, or should stand helpless like a bull or a 

 Cftop. F. ORIGIN AND GENESIS OF CIVILIZATION. 35 

horse that has wound his tethering-rope around a stake 
or a tree, not knowing in which way to go to loose it. 
This power is that of discerning the relation between cause 
and effect. 

We measure civilization in various ways, for it has 
various aspects or sides; various lines along which the 
general advance implied in the word shows itself—as in 
knowledge, in power, in wealth, in justice and kindliness. 
But it is in this last aspect, I think, that the term is most 
commonly used. This we may see if we consider that the 
opposite of civilized is savage or barbarous. Now savage 
and barbarous refer in common thought and implication 
not so much to material as to moral conditions, and are 
synonyms of ferocious or cruel or merciless or inhuman. 
Thus, the aspect of civilization most quickly apprehended 
in common thought is that of a keener sense of justice and 
a kindlier feeling between man and man. And there is 
reason for this. While an increased regard for the rights 
of others and an increased sympathy with others is not 
all there is in civilization, it is an expression of its moral 
side. And as the moral relates to the spiritual, this aspect 
of civilization is the highest, and does indeed furnish the 
truest sign of general advance. 

Yet for the line on which the general advance primarily 
proceeds, for the manner in which individual men are 
integrated into a body economic or greater man, we must 
look lower. Let us try to trace the genesis of civilization. 

Gifted alone with the power of relating cause and effect, 
man is among all animals the only producer in the true 
sense of the term. He is a producer, even in the savage 
state; and would endeavor to produce even in a world 
where there was no other man. But the same quality of 
reason which makes him the producer, also, wherever 
exchange becomes possible, makes him the exchanger. 
And it is along this line of exchanging that the body 

 36 THE MEANING OF POLITICAL ECONOMY. Book I. 

economic is evolved and develops, and that all the advances 
of civilization are primarily made. 

But while production must have begun with man, and 
the first human pair to appear in the world, we may con 
fidently infer, must have begun to use in the satisfaction 
of their wants a power essentially different in kind from 
that used by animals, they could not begin to nse the 
higher forms of that power until their numbers had in 
creased. With this increase of numbers the cooperation 
of efforts in the satisfaction of desires would begin. Aided 
at first by the natural affections, it would be carried be 
yond the point where these suffice to begin or to continue 
cooperation by that qnality of reason which enables the 
man to see what the animal cannot, that by parting with 
what is less desired in exchange for what is more desired, 
a net increase in satisfaction is obtained. 

Thus, by virtue of the same power of discerning causal 
relations which leads the primitive man to construct tools 
and weapons, the individual desires of men, seeking satis 
faction through exchange with their fellows, would operate, 
like the microscopic hooks which are said to give its felting 
quality to wool, to unite individuals in a mutual coopera 
tion that would weld them together as interdependent 
members of an organism, larger, wider and stronger than 
the individual man—the earlier and Greater Leviathan that 
I have called the body economic. 

With the beginning of exchange or trade among men 
this body economic begins to form, and in its beginning 
civilization begins. The animals do not develop civiliza 
tion, because they do not trade. The simulacra of civili 
zation which we observe among some of them, such as 
ants and bees, proceed from a lower plane than that of 
reason—from instinct. While such organization is more 
perfect in its beginnings, for instinct needs not to learn 

 Chap.V. OKIGIN AND GENESIS OF CIVILIZATION. 37 

from experience, it lacks all power of advance. Reason 
may stumble and fall, but it involves possibilities of what 
seem like infinite progression. 

As trade begins in different places and proceeds from 
different centers, sending out the network of exchange 
which relates men to each other through their needs and 
desires, different bodies economic begin to form and to 
grow in different places, each with distinguishing char 
acteristics which, like the characteristics of the individual 
face and voice, are so fine as only to be appreciated rela 
tively, and then are better recognized than expressed. 
These various civilizations, as they meet on their margins, 
sometimes overlap, sometimes absorb, and sometimes over 
throw one another, according to a vitality dependent on 
their mass and degree, and to the manner in which their 
juxtaposition takes place. 

We are accustomed to speak of certain peoples as un 
civilized, and of certain other peoples as civilized or fully 
civilized, but in truth such use of terms is merely relative. 
To find an utterly uncivilized people we must find a people 
among whom there is no exchange or trade. Such a people 
does not exist, and, so far as our knowledge goes, never 
did. To find a fully civilized people we must find a people 
among whom exchange or trade is absolutely free, and has 
reached the fullest development to which human desires can 
carry it. There is, as yet, unfortunately, no such people. 

To consider the history of civilization, with its slow 
beginnings, its long periods of quiescence, its sudden flashes 
forward, its breaks and retrogressions, would carry me 
further than I can here attempt. Something of that the 
reader may find in the last grand division of "Progress 
and Poverty," Book X., entitled, "The Law of Human 
Progress." What I wish to point out here is in what 
civilization essentially and primarily consists. 

 38 THE MEANING OF POLITICAL ECONOMY. Book I. 

But this is to be remembered: Neither what we speak 
of as different civilizations nor yet what we call civilization 
in the abstract or general has existence in the material or 
is directly related to rivers and mountains, or divisions 
of the earth's surface. Its existence is in the mental or 
spiritual. 

 CHAPTER VI. 

OF KNOWLEDGE AND THE GROWTH OF 
KNOWLEDGE. 

SHOWING THAT THE GROWTH OF KNOWLEDGE IS BY COOP 
ERATION, AND THAT IT INHERES IN THE SOCIETY. 

Civilization implies greater knowledge—This gain comes from co 
operation—The incommunicable knowing called skill—The com 
municable knowing usually called knowledge—The relation of 
systematized knowledge to the means of storing knowledge, to 
skill and to the economic body—Illustration from astronomy. 

IN contrasting man in the civilized state with man in 
his primitive state I have dwelt most on the gain in 
the power of gratifying material desires, because such gains 
are most obvious. Yet as thought precedes action, the 
essential gain which these indicate must be in knowledge. 
That the ocean steamship takes the place of the hollow 
log, the great modern building of the rude hut, shows a 
larger knowledge utilized in such constructions. 

To consider the nature of this gain in knowledge is to 
see that it is not due to improvement in the individual 
power of knowing, but to the larger and wider cooperation 
of individual powers; to the growth of that body of 
knowledge which is a part, or rather, perhaps, an aspect 
of the social integration I have called the body economic. 
If we could separate the individuals whose knowledge, 
correlated and combined, is expressed in the ocean steam 
ship or great modern building, it is doubtful if their sepa- 

39 

 40 THE MEANING OF POLITICAL ECONOMY. Book I. 

rate knowledge would suffice for more than the construc 
tions and tools of the savage. 

The knowledge that comes closest to the individual is 
what we call skill, which consists in knowing how to 
govern the organs directly responsive to the conscious 
will, so as to bring about desired results. Whoever, in 
mature years, has learned to do some new thing, as for 
instance to ride a bicycle, knows how slowly and painfully 
such knowledge is acquired. At first each leg and foot, 
each arm and hand, to say nothing of the muscles of the 
chest and neck, seems to need separate direction, which 
the conscious mind cannot give so quickly and in such 
order as to prevent the learner from falling off or running 
into what he would avoid. But as the effort is continued, 
the knowledge of how to direct these muscles passes from 
the domain of the conscious to that of the subconscious 
mind, becoming part of what we sometimes call the memory 
of the muscles, and the needed correlation takes place with 
the will to bring about the result, or automatically. For 
a while, even after one has learned to hold on and keep his 
wheel moving, the exertion needed will be so great and his 
attention will be so absorbed in this, that he can look 
neither to right nor to left, nor notice what he passes. 

But with continued effort, the knowledge required for 
the proper movement of the muscles becomes so fully stored 
in the subconscious memory that at length the learner may 
ride easily, indulging in other trains of thought and notic 
ing persons and scenery. His hard-gotten knowledge has 
passed into skill. 

So in learning to use a typewriter. We must at first 
find out, and with a separate effort strike the key for each 
separate letter. But as this knowledge takes its place in 
the subconscious memory, we merely think the word, and 
without further conscious direction, the fingers, as we need 
the letters, strike their keys. 

 Chap. VI. KNOWLEDGE AND GROWTH OF KNOWLEDGE. 41 

This is how all skill is gained. We may see it in the 
child. We may see him gradually acquiring skill in doing 
things that we have forgotten that we ourselves had to 
learn how to do. When a new man comes into the world 
he seems to know only how to cry. But by degrees, and 
evidently in the same way by which so many of us over 
fifty have learned to ride a bicycle, he learns to suck; to 
laugh; to eat; to use his eyes; to grasp and hold things; 
to sit; to stand; to walk; to speak; and later, to read, to 
write, to cipher, and so on, through all the kinds and de 
grees of skill. 

Now, because skill is that part of knowledge which 
comes closest to the individual, becoming as it were a part 
of his being, it is the knowledge which is longest retained, 
and is also that which cannot be communicated from one 
to another, or so communicated only in very small degree. 
You may give a man general directions as to how to ride 
a bicycle or operate a typewriter, but he can get the skill 
necessary to do either only by practice. 

As to this part of knowledge at least, it is clear that the 
advances of civilization do not imply any gain in the 
power of the individual to acquire knowledge. Not only 
do antiquities show that in arts then cultivated the men of 
thousands of years ago were as skilful as the men of to-day, 
but we see the same thing in our contact with people whom 
we deem the veriest savages, and the Australian black 
fellow will throw a boomerang in a way that excites the 
wonder of the civilized man. On the other hand, the 
European with sufficient practice will learn to handle the 
boomerang or practise any of the other arts of the savages 
as skilfully as they, and wild tribes to whom the horse and 
firearms are first introduced by Europeans become excel 
lent riders and most expert marksmen. 

It is not in skill, but in the knowledge which can be 
communicated from one to another, that the civilized man 

 42 THE MEANING OF POLITICAL ECONOMY. Book I. 

shows his superiority to the savage. This part of know 
ledge, to which the term knowledge is usually reserved, 
as when we speak of knowledge and skill, consists in a 
knowing of the relation of things to other external things, 
and may, but does not always or necessarily, involve a 
knowing of how to modify those relations. This know 
ledge, since it is not concerned with the government of the 
organs directly responsive to the conscious will, does not 
come as close to the individual as skill, but is held rather 
as a possession of the organ of conscious memory, than as 
a part of the individual himself. While thus subject to 
loss with the weakening or lapse of that organ, it is also 
thus communicable from one to another. 

Now, this is the knowledge which constitutes the body 
of knowledge that so vastly increases with the progress of 
civilization. Being held in the memory, it is transferable 
by speech; and as the development of speech leads to the 
adoption of means for recording language, it becomes 
capable of more permanent storage and of wider and easier 
transferability—in monuments, manuscripts, books, and 
so on. 

This ability to store and transmit knowledge in other 
and better ways than in the individual memory and in 
individual speech, which comes with the integration of 
individual men in the social body or body economic, is 
of itself an enormous gain in the advance of the sum of 
knowledge. But the gain in other and allied directions 
that comes from the larger and closer integration of indi 
viduals in the social man is greater still. Of the sys 
tematized knowledges, that which we call astronomy was 
probably one of the earliest. Consider the first star-gazers, 
who with no instrument of observation but the naked eyes, 
and no means of record save the memory, saw by watch 
ing night after night related movements in the heavenly 
bodies. How little even of their own ability to gather and 

 Chap.n. KNOWLEDGE AND GROWTH OF KNOWLEDGE. 43 

store knowledge could they apply to the getting of such 
knowledge. For until civilization Lad passed its first 
stages, the knowledge and skill required to satisfy their 
own material needs must have very seriously lessened the 
energy that could be applied to the gaining of any other 
knowledge. 

Compare with such an observer of the stars, the star- 
gazer who watches now in one of the great modern observa 
tories. Consider the long vistas of knowledge and skill, 
of experiment and meditation and effort, that are involved 
in the existence of the building itself, with its mechanical 
devices; in the great lenses; in the ponderous tube so 
easily adjusted; in the delicate instruments for measuring 
time and space and temperature; in the tables of logarithms 
and mechanical means for effecting calculations; in the 
lists of recorded observations and celestial atlases that may 
be consulted; in the means of communicating by telegraph 
and telephone with other observers in other places, that 
now characterize a well-appointed observatory, and in the 
means and appliances for securing the comfort and freedom 
from distraction of the observer himself! To consider all 
these is to begin to realize how much the cooperation of 
other men contributes to the work of even such a special 
ized individual as he who watches the stars. 

 CHAPTER VII. 

OF SEQUENCE, CONSEQUENCE AND LAWS OF 
NATURE. 

SHOWING THE PEOPER MEANING OF SEQUENCE AND OF CON 
SEQUENCE, AND WHY WE SPEAK OF LAWS OF NATURE. 

Coexistence and succession—Sequence and consequence—Causes in 
series; names for them—Our direct knowledge is of spirit— 
Simplest perception of causal relation—Extensions of this—The 
causal search unsatisfied till it reaches spirit—And finds or as 
sumes intent—Early evidences of this—Why we must assume a 
superior spirit.—Evidences of intent—The word nature and its 
implication of will or spirit—The word law—The term " law of 
nature." 

WHETHER all our knowledge of the relations of 
things in the external world comes to us primarily 
by experience and through the gates of the senses, or 
whether there is some part of such knowledge of which 
we are intuitively conscious and which belongs to our 
human nature as its original endowment, are matters as 
to which philosophers are, and probably always will be, at 
variance. But into such discussions, mainly verbal as 
they are, it is needless for us to enter. For what concerns 
us here the distinctions made in ordinary perceptions and 
common speech will suffice. 

In the phenomena presented to him, man must early 
notice two kinds of relation. Some things show themselves 

41 

 C1uy.ni. OF THE LAWS OP NATURE. 45 

with other things, and some things follow other things. 
These two kinds of relation we call relations of coexistence, 
and relations of succession or sequence. Since what con 
tinues is not so apt to attract our attention as what 
changes, it is probable that the first of these two relations 
to be noticed is that of succession. Light comes with the 
appearance of the luminous bodies of the firmament, and 
darkness with their disappearance. Night succeeds day, 
and day night; spring the winter, and summer the spring; 
the leaf, the bud; and wind and rain the heavy threaten 
ing cloud. The approach to fire is followed by a pleasant 
sensation as we get close enough to it, and by a most painful 
sensation if we get too close. The eating of some things 
is succeeded by satisfaction; the eating of other things 
by pain. 

But to note the relation of things in succession does not 
content man. The essential quality of reason, the power 
of discerning causal relations, leads him to ask why one 
thing follows another, and in the relation of sequence to 
assume or to seek for a relation of con-sequence. 

Let us fix in our minds the meaning of these two words. 
For even by usually careful writers one of them is some 
times used when the other is really meant, which brings 
about confusion of thought where precision is needed. 

The proper meaning of sequence is that which follows 
or succeeds. The proper meaning of consequence is that 
which follows from. To say that one thing is a sequence 
of another, is to say that the one has to the other a relation 
of succession or coming after. To say that one thing is a 
consequence of another, is to say that the one has to the 
other a relation not merely of succession, but of necessary 
succession, the relation namely of effect to cause. 

Now of the sequences which we notice in external nature, 
some are variable, that is to say, they do not always follow 
what is given as the antecedent, while some are invariable, 

 46 THE MEANING OF POLITICAL ECONOMY. Hook I. 

that is to say, they always follow what is given as the 
antecedent. As to these invariable sequences, which we 
properly call consequences, we give a name to the causal 
connection between what we apprehend as effect and what 
we assume as cause by calling it a law of nature. What 
we mean by this term is a matter too important to be left 
in the uncertainty and confusion with which it is treated 
in the standard economic works. Let us therefore, before 
beginning to use the term, try to discover how it has come 
into use, that we may fully understand it. 

When, proceeding from what we apprehend as effect or 
consequence, we begin to seek cause, it in most cases hap 
pens that the first cause we find, as accounting for the 
phenomena, we soon come to see to be in itself an effect 
or consequence of an antecedent which to it is cause. 
Thus our search for cause begins again, leading us from 
one link to another link in the chain of causation, until 
we come to a cause which we can apprehend as capable of 
setting in motion the series of which the particular result 
is the effect or consequence. 

In a series of causes, what we apprehend as the begin 
ning cause is sometimes called "primary cause" and 
sometimes " ultimate cause;" while " final cause," which 
has the meaning of purpose or intent, lies deeper still. 
This use of seemingly opposite names for the same thing 
may at first puzzle others as at first it puzzled me. But 
it is explained when we remember that what is first and 
what last in a chain or series depends upon which end we 
start from. Thus, when we proceed from cause towards 
effect, the beginning cause comes first, and is styled the 
" primary cause." But when we start from effect to seek 
cause, as is usually the case, for we can know cause as 
cause only when it lies in our own consciousness, the 
cause nearest the result comes first, and we call it the 
" proximate cause j" and what we apprehend as the begin- 

 Chap.ni. OF THE LAWS OF NATUBE. 47 

ning cause is found last, and we call it the "ultimate" or 
"efficient cause," or, at least where an intelligent will is 
assumed, as the all-originator, the "final cause;" while 
those which lie between either end of the chain are styled, 
sometimes "secondary," and sometimes "intermediate 
causes." 

Now the only way in which we can hope to discover 
what to us is yet unknown is by reasoning to it from what 
to us is known. What we know most directly and imme 
diately is that in us which feels and wills; that which to 
distinguish from our own organs, parts or powers we call 
the ego, or I; that which distinguishes us, ourselves, from 
the external world, and which is included in the element 
or factor of the world that in Chapter I. we called spirit. 

Man himself, in outward and tangible form at least, is 
comprehended in nature, even in what, when we make the 
distinction between subjective and objective, we call ex 
ternal nature. His body is but a part of the, to us, inde 
structible matter, and the motion which imbues it and 
through which he may modify external things, is but part 
of the, to us, indestructible energy which existed in nature 
before man was, and which will remain, nothing less and 
nothing more, after he is gone. As I brought into the 
world no matter or motion, but from the time of my first 
tangible existence as a germ or cell have merely used the 
matter and motion already here, so I take nothing away 
when I depart Whether, when I am done with it, my 
body be cremated or buried or sunk in the depths of the 
sea, the matter which gave it form and the energy which 
gave it movement do not cease to be, but continue to exist 
and to act in other forms and other expressions. 

That which really distinguishes man from external na 
ture ; that which seems to come into the world with the 
dawning of life and to depart from it with death, is that 
whose identity I recognize as " me," through all changes 

 48 THE MEANING OF POLITICAL ECONOMY. Book I. 

of matter and motion. It is this which not only receives 
the impressions brought to it through the senses, but by 
the use of the power we call imagination contemplates 
itself, as one may look at his own face in a mirror. In 
this way the ego or I of man may reason, not only upon 
the phenomena of the external world as presented to it 
through the senses, but also upon its own nature, its own 
powers, and its own activities, and regard the world, ex 
ternal and internal, as a whole, having for its components 
not merely matter and energy, but also spirit. 

Whatever doubts any one may entertain or profess to 
entertain of the existence of what we have called spirit, 
can come only, I think, from a confusion in words. For 
the one thing of which each of us must be most certain is 
that" I am." And it is through this assurance of our own 
existence that we derive certainties of all other existence. 

The simplest causal relation we perceive is that which 
we find in our own consciousness. I scratch my head, I 
slap my leg, and feel the effects. I drink, and my thirst is 
quenched. Here we have perhaps the closest connection 
between consequence and cause. The feeling of head or 
leg or stomach, which here is consequence, transmitted 
through sense to the consciousness, finds in the direct 
perceptions of the same consciousness, the cause—an 
exertion of the will. Or, reversely, the conscious exertion 
of the will to do these things produces through the senses 
a consciousness of result. How this connection takes place 
we cannot really tell. When we get to that, the scientist 
is as ignorant as the savage. Yet, savage or scientist, we 
all know, because we feel the relation in such cases between 
cause and consequence. 

Passing beyond the point where both cause and effect 
are known by consciousness, we carry the certainty thus 
derived to the explanation of phenomena as to which cause 
and effect, one or both, lie beyond consciousness. I throw 

 Chap.ril. OF THE LAWS OF NATURE. 49 

a stone at a bird and it falls. This result, the fall of the 
bird, is made known to me indirectly through my sense of 
sight, and later when I pick it up, by my sense of touch. 
The bird falls because the stone hit it. The stone hit it 
because put in motion by the movement of my hand and 
arm. And the movement of my hand and arm was be 
cause of my exertion of will, known to me directly by 
consciousness. 

What we apprehend as the beginning cause in any series, 
whether we call it primary cause or final cause, is always 
to us the cause or sufficient reason of the particular result. 
And this point in causation at which we rest satisfied is 
that which implies the element of spirit, the exertion of 
will. For it is of the nature of human reason never to 
rest content until it can come to something that may be 
conceived of as acting in itself, and not merely as a 
consequence of something else as antecedent, and thus 
be taken as the cause of the result or consequence from 
which the backward search began. Thus, in our instance, 
leaving out intermediate links in the chain of causation, 
and proceeding at once from result to ultimate cause, or 
sufficient reason, we say correctly that the bird fell because 
I hit it—that is, because I exerted in an effective way the 
will to hit it. 

But I know, by consciousness, that in me the exertion 
of will proceeds from some motive or desire. And reason 
ing from what I know to explain what I wish to discover, 
I explain similar acts in others by similar desires. 

So, if one man brain another by striking him with a 
club, or bring about his death more gradually by giving 
him a slow poison, we should feel that we were being played 
with and our intelligence insulted if on asking the cause 
of death we were told it was because a club struck him, 
or because breath failed him. We are not satisfied until 
we know what will was exerted to put into action the 

 BO THE MEANING OF POLITICAL ECONOMY. Book I. 

proximate causes of the result. Nor does this completely 
satisfy us. After we know the how, we are apt to ask the 
why—the purpose or motive that prompted this exertion 
of will. It is not till we get some answer to this that we 
feel completely satisfied. 

And thus, we sometimes make a still shorter cut in our 
causal explanation, by dropping will itself, and speaking 
of the desire which prompts to the exertion of will as the 
cause of an effect. I see another walk or run or climb a 
tree. From what I know of the causes of my own acts, I 
recognize in this an exertion of will prompted by desire- 
the tangible manifestation of an intent; and say, he walks 
or runs or climbs the tree because he wants to get or do 
or avoid something. So when we see the bird fly, the fish 
swim, the mole or gopher burrow in the ground, we also 
recognize in their acts similar intent—the exertion of will 
prompted by desire. 

Now, this motive or intent or purpose or desire to bring 
about an end, which sets an efficient cause to work, was 
recognized by Aristotle, and the logicians and meta 
physicians who so long followed him, as properly a cause, 
and a beginning cause, and called in their terminology the 
" final cause." This term has now, however, become limited 
in its use to the idea of purpose or intent in the mind of 
the Supreme Being, and the " doctrine of final causes," now 
largely out of fashion, is understood to mean the doctrine 
which, as the last or final explanation of the existence and 
order of the world, seeks to discover the purpose or intent 
of the Creator. The argument from the assumption of 
what are now called final causes for the existence of an 
intelligent Creator is called the " teleological argument," 
and is by those who have the vogue in modern philosophy 
regarded with suspicion, if not with contempt. Neverthe 
less, the recognition of purpose or intent as a final or 
beginning cause is still to be found in that homely logic 

 CAap.PI/. OF THE LAWS OP NATUKE. 61 

that fills the common speech of ordinary people with 
" becauses." 

How early and how strong is the disposition to seek 
cause in the exertion of will prompted by desire is shown 
in the prattle of children, in folk-lore and fairy tales. We 
are at first apt to attribute even to what we afterwards 
learn are inanimate things the exertion of will and the 
promptings of desire such as we find in our own conscious 
ness, and to say, not as figures of speech, but as recogni 
tions of cause, that the sun smiles and the clouds threaten 
and the wind blows for this or that purpose or with this 
or that intent. 

And in the earliest of such recognitions we find the 
moral element, which belongs alone to spirit. What 
mother has not soothed her child by threatening or pre 
tending to whip the naughty chair or bad stone that caused 
her little girl or boy to stumble, and has not held the little 
thing in rapt silence with stories of talking animals and 
thinking trees ? But as we look closer, we see that the 
power of reason is not in animals, nor volition in sticks 
and stones. Yet still seeking cause behind effect, and not 
satisfied that we have found cause until we have come to 
spirit, we find rest for a while by accounting for effects 
that we cannot trace to will in men or animals, on the 
assumption of will in supersensible forms, and thus gratify 
the longing of the reason to discover cause, by peopling 
rivers and mountains and lakes and seas and trees and 
seasons with spirits and genii, and fairies and goblins, and 
angels and devils, and special gods. 

Yet, in and through this stage of human thought grows 
the apprehension of an order and co-relation in things, 
which we can understand only by assuming unity of will 
and comprehensiveness of intent—of an all-embracing 
system or order which we personify as Nature, and of a 
great" I am " from whose exertion of will all things visible 

 B2 THE MEANING OF POLITICAL ECONOMY. Book I. 

and invisible proceed, and which is the first or all-begin 
ning cause. In every direction the effort of the reason to 
seek the cause of what it perceives, forces this upon the 
thoughtful mind. 

The bird flies because it wants to fly. In this will or 
spirit of the bird we find an ultimate cause or sufficient 
reason to satisfy us so far as such action is concerned. 
But probably no man ever lived, and certainly no child, 
who, seeing the easy sweep of birds through the open 
highways of air, has not felt the wish to do likewise. Why 
does not the man also fly when he wants to fly? We 
answer, that while the bird's bodily structure permits of 
the gratification of a will to fly, the man's bodily structure 
does not. But what is the reason of this difference I Here 
we come to a sphere where we can no longer find the cause 
of result in the individual will. Seeking still for will, as 
the only final explanation of cause, we are compelled to 
assume a higher and more comprehensive will or spirit, 
which has given to the bird one bodily structure, to the 
man another. 

Or take the man himself. The child cries because it 
wants to cry and laughs because it wants to laugh. But 
that its teeth begin to come at the proper age—is it be 
cause it wants teeth ? In one sense, yes! When its teeth 
begin to come it begins to need teeth; or rather will shortly 
begin to need teeth, to fit for its stomach the more solid 
food it will then require. But in another, and in what we 
are discussing, the real sense, no! The need for teeth 
when they begin to come is not a need of the child as it 
then is, but a need of the child as it will in future be; a 
totally different being so far as consciousness is concerned. 
The yet sucking child can no more want teeth, in the sense 
of desiring teeth, than the adult can want to have those 
teeth pulled out for the sake of the pulling. The coming 
of teeth is not pleasant, but painful—seemingly more 

 Chap.ni. OF THE LAWS OP NATURE. 63 

painful and probably more dangerous than is the pulling 
of teeth by modern dentistry. It is clearly not by the 
will of the child that we can explain the coming of teeth. 
Nor yet can we explain it by the will of the mother. She 
may desire that the child's teeth should come. But she 
cannot make her will effective in any larger degree than 
by rubbing the child's gmns. Nor can the most learned 
physician help her further than by lancing them, should 
they seriously swell. To find a sufficient cause for this 
effect, we are compelled to assume a higher will and more 
comprehensive purpose than that of man; a will conscious 
from the very first of what will yet be needed, as well as 
of what already is needed. 

The things that show most clearly the adaptation of 
means to ends, so that we can at once understand their 
genesis and divine their cause, are things made by man, 
such as houses, clothing, tools, adornments, machines; in 
short, what we call human productions. These, as evincing 
the adaptation of means to ends, have an unmistakable 
character. The coming upon a piece of clothing, or a 
brooch or ring, or tomahawk or bow, or the embers and 
fragments of a cooked meal, would have been as quick and 
even surer proof of the presence of man on his supposed 
desert island than were to Robinson Crusoe the footprints 
in the sand. For of all the beings that our senses give us 
knowledge of, man is the only one that in himself has the 
power of adapting means to ends by taking thought. 

Yet, so soon as man looks out, he finds in the world 
itself evidences of the same power of adapting means to 
ends that characterize his own works. Hence, recognizing 
in the sum of perceptible things—exclusive of himself, or 
rather of his essential principle or ego, but inclusive, not 
merely of his bodily, but also of his mental frame—a system 
or whole, composed of related parts, he personifies it in 
thought and calls it Nature. 

 54 THE MEANING OP POLITICAL ECONOMY. Book I. 

Still, while we personify this, which is to our apprehen 
sion the greatest of systems, and give to it in our English 
speech the feminine gender, it is, I think, as sailors per 
sonify a ship, or engine-drivers a locomotive. That is to 
say, the general perception of the sum of related parts or 
system, that we call Nature, does not include the idea of 
the originating will, or first or final cause of all. That, 
we conceive of as something essentially distinct from 
Nature, though animating Nature, and give it another 
name, such as Great Spirit, or Creator, or God. Those 
who contend that Nature is all, and that there is nothing 
above or beyond or superior to Nature, do so, I think, by 
confounding two distinct conceptions, and using the word 
Nature as meaning what is usually distinguished by the 
word God. 

We all, indeed, frequently use the word Nature to 
avoid the necessity of naming that which we feel to be 
unnamable, in the sense of being beyond our comprehen 
sion, and therefore beyond our power of defining. Yet I 
think that not merely the almost universal, but the clearest, 
and therefore best, perceptions of mankind, really dis 
tinguish what we call Nature from what we call God, just 
as we distinguish the ship, or other machine, that we per 
sonify, from the will which we recognize as exerted in its 
origination and being; and that at the bottom our idea is 
that of Pope: 

All are but parts of one stupendous whole, 
Whose body Nature is, and God the soul. 

It is from this conception of Nature as expressing or as 
animated by the highest will, that we derive, I think, the 
term " law of Nature." 

We come here to another instance of the application to 
greater things of names suggested by the less. In original 
meaning, the word law refers to human will, and is the 

 Chap.ni. OF THE LAWS OF NATURE. 66 

name given to a command or rule of conduct imposed 
by a superior upon an inferior, as by a sovereign or state 
upon those subject to it. At first the word law doubtless 
referred only to human law. But when, later in intellec 
tual development, men came to note invariable coexis 
tences and sequences in the relations of external things, 
they were, of the mental necessity already spoken of, com 
pelled to assume as cause a will superior to human will, 
and adapting the word they were wont to use for the 
highest expression of human will, called them laws of 
Nature. 

Whatever we observe as an invariable relation of things, 
of which in the last analysis we can affirm only that " it 
is always so," we call a law of Nature. But though we use 
this phrase to express the fact of invariable relation, 
something more than this is suggested. The term itself 
involves the idea of a causative will. As John Stuart Mill, 
trained to analysis from infancy, and from infancy exempt 
from theological bias, says: 

The expression "law of Nature " is generally employed T)y scientific 
men with a sort of tacit reference to the original sense of the word 
law, namely, the expression of the will of a superior—the superior, 
in this instance, being the Ruler of the universe. 

Thus, then, when we find in Nature certain invariable 
sequences, whose cause of being transcends the power of 
the will testified to by our own consciousness—such, for 
instance, as that stones and apples always fall towards the 
earth; that the square of a hypothenuse is always equal to 
the sum of the squares of its base and perpendicular; that 
gases always coalesce in certain definite proportions; that 
one pole of the magnet always attracts what the other 
always repels; that the egg of one bird subjected to a 
certain degree of warmth for a certain time brings forth a 
chick that later will clothe itself with plumage of a certain 

 56 THE MEANING OF POLITICAL ECONOMY. Book I. 

kind and color, and the egg of another bird under the same 
conditions brings forth a chick of a different kind; that at 
a certain stage of infancy teeth appear, and later decay and 
drop out; and so on through the list of invariable sequences 
that these will suggest—we say, for it is really all that we 
can say, that these sequences are invariable because they 
belong to the order or system of Nature; or, in short, that 
they are "laws of Nature." 

The dog and cow sometimes look wise enough to be 
meditating on anything. If they really could bother their 
heads with such matters or express their ideas in speech, 
they would probably say that such sequences are invari 
able, and then rest. But man is impelled by his endow 
ment of reason to seek behind fact for cause. For that 
something cannot come from nothing, that every conse 
quence implies a cause, lies at the very foundation of our 
perception of causation. To deny or ignore this would be 
to cease to reason—which we can no more cease in some 
sort of fashion to do than we can cease to breathe. 

Thus, whether civilized or uncivilized, man is compelled, 
of mental necessity, to look for cause beneath the phe 
nomena that he begins really to consider, and no matter 
what intermediate cause he may find, cannot be content 
until he reaches will and finds or assumes intent. This 
necessity is universal to human nature, for it belongs to 
that quality or principle of reason which essentially dis 
tinguishes man from the brute. The notion that— 

The heathen in his blindness, 
Bows down to wood and stone, 

is of the real ignorance of pretended knowledge. Beneath 
the belief of the savage in totems and amulets and charms 
and witchcraft lurks the recognition of spirit; and the 
philosophies that have hardened into grotesque forms of 
religion contain at bottom that idea of an originating will 

 Chap.VII. OF THE LAWS OF NATURE. 67 

which the Hebrew Scriptures express in their opening 
sentence: " In the beginning God created the heaven and 
the earth." 

To such recognition of will or spirit, reason, as it 
searches from effect for cause, must come before it can 
rest content. Beyond this, reason cannot go. Why is it 
that some things always coexist with other things? and 
that some things always follow other things ? The Mo 
hammedan will answer: " It is the will of God." The man 
of our Western civilization will answer: " It is a law of 
Nature." The phrase is different, but the answer one. 

 CHAPTER VIII. 

OF THE KNOWLEDGE PEOPEELY CALLED 
SCIENCE. 

SHOWING THAT SCIENCE DEALS ONLY WITH LAWS OP NA 
TURE, AND THAT IN THE CURRENT POLITICAL ECONOMY 
THIS HAS BEEN FORGOTTEN. 

Proper meaning of science—It investigates laws of nature, not 
laws of man—Distinction between the two—Their confusion in 
the current political economy—Mason and Lalor's "Primer of 
Political Economy" quoted—Absurdity of this confusion—Tur- 
got on the cause of such confusions. 

SCIENCE is a word much abused just now, when all 
sorts of pretenders to special knowledge style them 
selves scientists and all sorts of ill-verified speculations are 
called sciences; yet it has a well-defined, proper meaning 
which may easily be kept in mind. Literally, the word 
science means knowledge, and when used to distinguish 
a particular kind of knowledge, should have the meaning 
of flie knowledge—that is, of the highest and deepest 
knowledge. This is, indeed, the idea which attaches to 
the word. In its proper and definite meaning, science 
does not include all knowledge or any knowledge, but that 
knowledge by or in which results or phenomena are related 
to what we assume to be their cause or sufficient reason, 
and call a law or laws of nature. 

58 

 Chap. mi. KNOWLEDGE PROPERLY CALLED SCIENCE. 59 

As the knowledge we call skill is that part of knowledge 
which comes closest to the individual, being retained in 
the subconscious memory, and hence nearly or completely 
incommunicable; so, on the contrary, science properly so 
called is that part of knowledge which comes closer to the 
higher faculty of reason, being retained in the conscious 
memory, and hence most easily and completely commu 
nicable through the power of speech in which reason finds 
expression, and through the arts that are extensions of and 
STibservient to speech, such as writing, printing and the 
like. Something of skill even animals may acquire. 
Trained dogs, trained goats, trained monkeys and trained 
bears are common, and even what are called trained fleas 
are exhibited. Bnt it is impossible to teach an animal 
science, since animals lack the causal faculty by which 
alone science is apprehended. It is in youth, when the 
joints are most flexible and the muscles most supple, that 
skill is most readily acquired. But it is in the years that 
bring the contemplative mind that we most appreciate and 
best acquire science. And so, while the advantages of 
civilization do uot imply increased skill, they do imply the 
extension of science. 

With human laws what is properly called science has 
nothing whatever to do, unless it be as phenomena which 
it subjects to examination in the effort to discover in 
natural law their cause. Thus there may be a science of 
jurisprudence, or a science of legislation, as there may be 
a science of grammar, a science of language, or a science 
of the mental structure and its operations. But the object 
of such sciences, properly so called, is always to discover 
the laws of nature in which human laws, customs and 
modes of thought originate—the natural laws which lie 
behind and permanently affect, not merely all external 
manifestations of human will, but even the internal affec 
tions of that will itself. 

 60 THE MEANING OF POLITICAL ECONOMY. Book I. 

Human laws are made by man, and share in all his 
weaknesses and frailties. They must be enforced by 
penalties subsequent to and conditioned upon their viola 
tion. Such penalties are called sanctions. Unless ac 
companied by some penalty for its violation, no act of 
legislative body or sovereign prince becomes law. Lack 
ing sanction, it is merely an expression of wish, not a 
declaration of will. Human laws are acknowledged only 
by man; and that not by all men in all times and places, 
but only by some men—that is, by men living in the time 
and place where the political power that imposes them has 
the ability to enforce their sanctions; and not even by all 
of these men, but generally by only a very small part of 
them. Limited to the circumscribed areas which we call 
political divisions, they are even there constantly fluctuat 
ing and changing. 

Natural laws, on the other hand, belong to the natural 
order of things; to that order in which and by which not 
only man himself but all that is, exists. They have no 
sanctions in the sense of penalties imposed upon their 
violation, and enforced subsequent to their violation; they 
cannot be violated. Man can no more resist or swerve a 
natural law than he can build a world. They are acknow 
ledged not only by all men in all times and places, but also 
by all animate and all inanimate things; and their sway 
extends not merely over and throughout the whole earth 
of which we are constantly changing tenants, but over and 
through the whole system of which it is a part, and so far 
as either observation or reason can give us light, over and 
through the whole universe, visible or invisible. So far 
as we can see, either by observation or by reason, they 
know not change or the shadow of turning, but are the 
same—yesterday, to-day, to-morrow; for they are expres 
sions, not of the mutable will of man, but of the immutable 
will of God. 

 Chap.VIII. KNOWLEDGE PEOPEELY CALLED SCIENCE. 61 

I dwell again on the distinction between laws of nature 
and laws of man, because it is of the first necessity in be 
ginning the study of political economy that we should 
grasp it firmly and keep it clearly in mind. This necessity 
is the greater, since we shall find that in the accredited 
economic treatises laws of nature and laws of man are 
confused together in what they call laws of political 
economy. 

It is not worth while to make many quotations to show 
a confusion which one may see by taking up the economic 
work approved by college or university that first comes to 
his hand; but that what passes in these institutions for 
the science of political economy may speak for itself, I 
shall make one quotation. 

I take for that purpose the best book I can find that puts 
into compact form the teachings of the scholastic econo 
mists—one that is, I think, superior in this to Mrs. Millicent 
Garrett Fawcett's "Political Economy for Beginners," 
which at the time I wrote " Progress and Poverty " seemed 
to me the best short statement of accepted economic teach 
ings I then knew of. It is " The Primer of Political Econ 
omy, in Sixteen Definitions and Forty Propositions," by 
Alfred B. Mason and John J. Lalor (Chicago, A. C. McClurg 
& Co.).* Messrs. Mason and Lalor, who have since proved 
themselves to be men of ability, were in 1875, when they 
wrote the primer, fresh from a university course of political 
economy and a subsequent study of the approved authori 
ties, and their primer has been widely indorsed and largely 
used in institutions of learning. This is the first of their 
sixteen definitions, and their explanation of it: 

* In writing this book I have vainly tried to find some such con 
densation that would do for the "new-school" scholastic economy 
what Mrs. Fawcett and Messrs. Mason and Lalor have done for the 
old, and can only conclude that its teachings are too vague to permit 
of such condensation. 

 62 TflE MEANING OF POLITICAL ECONOMY. Book I. 

DEFINITION I.—Political Economy is the Science which teaches 
the laws that regulate the Production, Distribution and Exchange 
of Wealth. 

Everything in this world is governed by law. Human laws are 
those made by man. All others are natural laws. A law providing 
for the education of children in schools is a human law. The law 
that children shall keep growing, if they live, until they are men and 
women, and shall then slowly decay and at last die, is a natural law. 
An apple falls from a tree .and the earth moves around the sun in 
obedience to natural laws. The laws which regulate the production, 
distribution and exchange of wealth are of both kinds. The more 
important ones, however, are natural. 

In this Messrs. Mason and Lalor aptly illustrate the 
essential difference between natural law and human law. 
But the way in which the two are mixed together as eco 
nomic laws suggests the examination-paper of a Philadel 
phia boy more interested in hooking catfish and stoning 
frogs than in Lindley Murray. To the question, " Name 
and describe nouns?" the answer was: 

Nouns are three in number and sometimes more. There are 
proper nouns, common nouns, bloody nouns* and other nouns. 
Proper nouns are the properest nouns, but common nouns are the 
commonest. Bloody nouns are the big ones. Other nouns are no 
good. 

Yet ridiculous as is this confusion of human law and 
natural law, and absurd as is a definition that leaves one 
to guess which is meant by " laws," this little primer cor 
rectly gives what is to be found in the pretentious treatises 
it endeavors to condense—and that even in the most 
(systematic and careful of them, as I shall hereafter have 
occasion to show. 

It is only with the implication that by law is meant 
natural law, that we can say, " Everything in this world is 

* A name given by boys in Philadelphia to large bullfrogs. 

 Cliap. mi. KNOWLEDGE PKOPEELY CALLED SCIENCE. 63 

governed by law." To say, as the little summary of the 
scholastic political economy from which I have quoted 
says, that political economy is the science which teaches 
the laws, some of them natural laws and some of them 
human laws, which regulate the production, distribution 
and exchange of wealth, is like saying that astronomy is 
the science which teaches the laws, some of them laws of 
matter and motion and some of them Bulls of Popes and 
Acts of Parliament, which regulate the movements of stars 
and comets. 

The absurdity of this is not so strikingly obvious in the 
ponderous treatises from which it is derived as in this little 
primer, because the attention of the reader is in them con 
fused by the utter want of logical arrangement, and dis 
tracted by the shoveling in ou him, as it were, of great 
masses of irrelevant matter, which makes it a most difficult, 
and with the majority of readers an utterly hopeless task 
to dig out what is really meant—a task usually abandoned 
by the ordinary reader with a secret feeling of shame at 
his own incapacity to follow such deep and learned men, 
who seem lightly to revel in what he cannot understand. 
The expositions of what passes for the science of political 
economy in our schools do indeed for the most part con 
tain some things that really belong to science. But in far 
larger part what properly belongs to science is, in the 
literature of political economy that has grown up since 
his time, confused and overlaid with what Turgot, over a 
hundred years ago, spoke of as an art—the art, namely, 
" of those who set themselves to darken things that are 
clear to the open mind." 

What this truly great Frenchman of the eighteenth cen 
tury said is worth quoting, for it finds abundant and con 
stant illustration in the writings of the professors of 
political economy of the nineteenth century, and especially 
in the latest of them: 

 64 THE MEANING OP POLITICAL ECONOMY. Book I. 

This art consists in never beginning at the beginning, but in rush 
ing into the subject in all its complications, or with some fact that 
is only an exception, or some circumstance, isolated, far-fetched or 
merely collateral, which does not belong to the essence of the ques 
tion and goes for nothing in its solution. . . . Like a geometer who 
treating of triangles should begin with white triangles as most sim 
ple, in order to treat afterwards of blue triangles, then of red trian 
gles, and so on. 

If political economy is a science—and if not it is hardly 
worth the while of earnest men to bother themselves with 
it—it must follow the rules of science, and seek in natural 
law the causes of the phenomena which it investigates. 
With human law, except as furnishing illustrations and 
supplying subjects for its investigation, it has, as I have 
already said, nothing whatever to do. It is concerned 
with the permanent, not with the transient; with the laws 
of nature, not with the laws of man. 

 CHAPTER IX. 
THE ECONOMY CALLED POLITICAL ECONOMY. 

SHOWING THE MEANING, UNITS AND SCOPE OP POLITICAL 

ECONOMY. 

The word economy—The word political—Origin of the term "political 
economy" and its confusions—It is not concerned with the body 
politic, but with the body economic—Its units, and the system or 
arrangement of which it treats—Its scope. 

THE word economy, drawn from two Greek words, 
house and law, which together signify the manage 
ment or arrangement of the material part of household 
or domestic affairs, means in its most common sense the 
avoidance of waste. We economize money or time or 
strength or material when we so arrange as to accomplish 
a result with the smallest expenditure. In a wider sense 
its meaning is that of a system or arrangement or adapta 
tion of means to ends or of parts to a whole. Thus, we 
speak of the economy of the heavens; of the economy of 
the solar system; the economy of the vegetable or animal 
kingdoms; the economy of the human body; or, in short, 
of the economy of anything which involves or suggests the 
adaptation of means to ends, the coordination of parts in 
a whole. 

As there is an economy of individual affairs, an economy 
of the household, an economy of the farm or workshop 
or railway, each concerned with the adaptation in these 

65 

 66 THE MEANING OF POLITICAL ECONOMY. Book I. 

spheres of means to ends, by which waste is avoided and 
the largest results obtained with the least expenditure, so 
there is an economy of communities, of the societies in 
which civilized men live—an economy which has special 
relation to the adaptation or system by which material 
wants are satisfied, or to the production and distribution 
of wealth. 

The word political means, relating to the body of citi 
zens or state, the body politic; to things coming within the 
scope and action of the commonwealth or government; to 
public policy. 

Political economy, therefore, is a particular kind of 
economy. In the literal meaning of the words it is that 
kind of economy which has relation to the community or 
state; to the social whole rather than to individuals. 

But the convenience which impels us to abbreviate a 
long term has led to the frequent use of " economic " when 
"politico-economic" is meant, so that we may by usage 
speak of the literature or principles or terms of political 
economy as "economic literature," or "economic princi 
ples," or " economic terms." Some recent writers, indeed, 
seem to have substituted the term " economics " for politi 
cal economy itself. But this is a matter as to which the 
reader should be on his guard, for it has been used to make 
what is not really political economy pass for political econ 
omy, as I shall hereafter show. 

Adam Smith, who at the close of the last century gave 
so powerful an impulse to the study of what has since been 
called political economy that he is, not without justice, 
spoken of as its father, entitled his great book, "An 
Inquiry into the Nature and Causes of the Wealth of 
Nations;" and what we call political economy the Germans 
call national economy. 

No term is of importance if we rightly understand what 
it means. But, both in the term " political economy/' and 

 Chap. IX. ECONOMY CALLED POLITICAL ECONOMY. 67 

in that of "national economy," as well as in the phrase 
" wealth of nations," lurk suggestions which may and in 
fact often do interfere with a clear apprehension of the 
ground they properly cover. 

The use of the term " political economy " began at a time 
when the distinction between natural law and human law 
was not clearly made, when what I have called the body 
economic was largely confounded with what is properly 
the body politic, and when it was the common opinion in 
Europe, even of thoughtful men, that the production and 
distribution of wealth were to be regulated by the legisla 
tive action of the sovereign or state. 

The first one to use the term is said to have been 
Antoiiie de Montchretien in his "Treatise on Political 
Economy " (" Traite de 1'economie politique "), published in 
Rouen, France, 1615. But if not invented by them, it was 
given currency, some 130 or 140 years after, by those 
French exponents of natural right, or the natural order, 
who may to-day be best described as the first single-tax 
men. They used the term "political economy" to distin 
guish from politics the branch of knowledge with which 
they were concerned, and from this called themselves 
Economists. The term is used by Adam Smith only in 
speaking of " this sect," composed of " a few men of great 
learning and ingenuity in France." But although these 
Economists were overwhelmed and have been almost for 
gotten, yet of their "noble and generous system" this 
term remained, and since the time of Adam Smith it has 
come into general use as expressive of—to accept the most 
common and I think sufficient definition—that branch of 
knowledge that treats of the nature of wealth, and the laws 
of its production and distribution. 

But the confusion with politics, which the Frenchmen 
of whom Adam Smith speaks endeavored to clear away 
by their adoption of the term "political economy," still con- 

 68 THE MEANING OF POLITICAL ECONOMY. Book I. 

tinues, and is in fact suggested by the term itself, which 
seems at first apt to convey the impression of a particular 
kind of politics rather than of a particular kind of econ 
omy. The word political has a meaning which relates it 
to civil government, to the exercise of human sovereignty 
by enactment or administration, without reference to those 
invariable sequences which we call natural laws. An area 
differentiated from other areas with reference to this 
power of making municipal enactments and compelling 
obedience to them, we style a political division; and the 
larger political divisions, in which the highest sovereignty 
is acknowledged, we call nations. It is therefore impor 
tant to keep in mind that the laws with which political 
economy primarily deals are not human enactments or 
municipal laws, but natural laws; and that they have 
no more reference to political divisions than have the 
laws of mechanics, the laws of optics or the laws of gravi 
tation. 

It is not with the body politic, but with that body social 
or body industrial that I have called the body economic, 
that political economy is directly concerned; not with the 
commonwealth of which a man becomes a member by the 
attribution or acceptance of allegiance to prince, potentate 
or republic; but with the commonwealth of which he be 
comes a member by the fact that he lives in a state of 
society in which each does not attempt to satisfy all of his 
own material wants by his own direct efforts, but obtains 
the satisfaction of some of them at least through the 
cooperation of others. The fact of participation in this 
cooperation does not make him a citizen of any particular 
state. It makes him a civilized man, a member of the 
civilized world—a unit in that body economic to which 
our political distinctions of states and nations have no 
more relation than distinctions of color have to distinctions 
of form. 

 Chap. IX. ECONOMY CALLED POLITICAL ECONOMY. 69 

The unit of human life is the individual. From our first 
consciousness, or at least from our first memory, our 
deepest feeling is, that what we recognize as " I" is some 
thing distinct from all other things, and the actual merge- 
ment of its individuality in other individualities, however 
near and dear, is something we cannot conceive of. But 
the lowest nnit of which political economy treats often 
includes the family with the individual. For though 
isolated individuals may exist for a while, it is only under 
unnatural conditions. Human life, as we know it, begins 
with the conjuncture of individuals, and even for some 
time after birth can continue to exist only under conditions 
which make the new individual dependent on and subject 
to preceding individuality; while it requires for its fullest 
development and highest satisfactions the union of indi 
viduals in one economic unit. 

While, then, in treating of the subject-matter of political 
economy, it will be convenient to speak of the units we 
shall have occasion to refer to as individuals, it should be 
understood that this term does not necessarily mean sepa 
rate persons, but includes, as one, those so bound together 
by the needs of family life as to have, as our phrase is, 
" one purse." 

fAn economy of the economic unit would not be a polit 
ical economy, and the laws of which it would treat would 
not be those with which political economy is concerned. 
They would be the laws of personal or family conduct. 
An economy of the individual or family could treat the 
production of wealth no further than related to the pro 
duction of such a unit. And though it might take cog 
nizance of the physical laws involved in its agriculture and 
mechanics, of the distribution of wealth in the economic 
sense it could not treat at all, since any apportionment 
among the members of such a family of wealth obtained 
by it would be governed by the laws of individual or family 

 70 THE MEANING OF POLITICAL ECONOMY. Book I. 

life, and not by any law of the distribution of the results 
of socially conjoined effort. 

But when in the natural course of human growth and 
development economic units come into such, relations that 
the satisfaction of material desires is sought by conjoined 
effort, the laws which political economy seeks to discover 
begin to appear. 

The system or arrangement by which in such conditions 
material satisfactions are sought and obtained may be 
roughly likened to a machine fed by combined effort, and 
producing joint results, which are finally divided or dis 
tributed in individual satisfactions—a machine resem 
bling an old-time grist-mill to which individuals brought 
separate parcels of grain, receiving therefrom in meal, not 
the identical grain each had put in, nor yet its exact equiva 
lent, but an equivalent less a charge for milling. 

Or to make a closer illustration: The system or arrange 
ment which it is the proper purpose of political economy 
to discover may be likened to that system or arrangement 
by which the physical body is nourished. The lowest unit 
of animal life, so far as we can see, is the single cell, which 
sucks in and assimilates its own food; thus directly satis 
fying what we may style its own desires. But in those 
highest forms of animal life of which man is a type, myr 
iads of cells have become conjoined in related parts and 
organs, exercising different and complex functions, which 
result in the procurement, digestion and assimilation of 
the food that nourishing each separate cell maintains the 
entire organism. Brain and stomach, hands and feet, 
eyes and ears, teeth and hair, bones, nerves, arteries and 
veins, still less the cells of which all these parts are com 
posed, do not feed themselves. Under the government of 
the brain, what the hands, aided by the legs, assisted by 
the organs of sense, procure, is carried to the mouth, mas 
ticated by the teeth, taken by the throat to the alembic of 

I 

 Chap. IX. ECONOMY CALLED POLITICAL ECONOMY. 71 

the stomach, where aided by the intestines it is digested, 
and passing into a fluid containing all nutritive substances, 
is oxygenized by the lungs; and impelled by the pumping 
of the heart, makes a complete circuit of the body through 
a system of arteries and veins, in the course of which 
every part and every cell takes the nutriment it requires. 

Now, what the blood is to the physical body, wealth, as 
we shall hereafter see more fully, is to the body economic. 
And as we should find, were we to undertake it, that a 
description of the manner in which blood is produced and 
distributed in the physical body would involve almost, if 
not quite, a description of the entire physical man with all 
his powers and functions and the laws which govern their 
operations; so we shall find that what is included or in 
volved in political economy, the science which treats of 
the production and distribution of wealth, is almost, if 
not quite, the whole body social, with all its parts, powers 
and functions, and the laws under which they operate. 

The scope of political economy would be roughly ex 
plained were we to style it the science which teaches how 
civilized men get a living. Why this idea is sufficiently 
expressed as the production and distribution of wealth will 
be more fully seen hereafter; but there is a distinction as 
to what is called getting a living that it may be worth 
while here to note. 

We have but to look at existing facts to see that there 
are two ways in which men (i.e., some men) may obtain 
satisfaction of their material desires for things not freely 
supplied to them by nature. 

The first of these ways is, by working, or rendering 
service. 

The second is, by stealing, or extorting service. 

But there is only one way in which man (i.e., men in 
general or all men) can satisfy his material desires—that 
is by working, or rendering service. 

 72 THE MEANING OF POLITICAL ECONOMY. Book I. 

For it is manifestly impossible that men in general or 
all men, or indeed any but a small minority of men, can 
satisfy their material desires by stealing, since in the 
nature of things working or the rendering of service is the 
only way in which the material satisfactions of desire can 
be primarily obtained or produced. 

Stealing produces nothing; it only alters the distribution 
of what has already been produced. 

Therefore, however it be that stealing is to be considered 
by an individual economy or by an economy of a political 
division, and with whatever propriety a successful thief 
who has endowed churches and colleges and libraries and 
soup-houses may in such an economy be treated as a public 
benefactor and spoken of as Antony spoke of Caesar— 

He hath brought many captives home to Rome, 
Whose ransoms did the general coffers fill, 

—a true science of political, economy takes no cognizance 
of stealing, except in so far as the various forms of it may 
pervert the natural distribution, and thus check the nat 
ural production of wealth. 

Yet, at the same time, political economy does not con 
cern itself with the character of the desires for which sat 
isfaction is sought. It has nothing to do, either with the 
originating motive that prompts to action in the satisfac 
tion of material desires, nor yet with the final satisfaction 
which is the end and aim of that action. It is, so to speak, 
like the science of navigation, which is concerned with the 
means whereby a ship may be carried from point to point 
on the ocean, but asks not whether that ship may be a 
pirate or a missionary barque, what are the expectations 
which may induce its passengers to go from one place to 
another, or whether or not these expectations will be grati 
fied on their arrival. Political economy is not moral or 

 Chap. IX. ECONOMY CALLED POLITICAL ECONOMY. 73 

ethical science, nor yet is it political science. It is the 
science of the maintenance and nutriment of the body 
politic. 

Although it will be found incidentally to throw a most 
powerful light upon, and to give a most powerful support 
to, the teachings of moral or ethical science, its proper 
business is neither to explain the difference between right 
and wrong nor to persuade to one in preference to the 
other. And while it is in the same way what may be 
termed the bread-and-butter side of politics, it is directly 
concerned only with the natural laws which govern the 
production and distribution of wealth in the social organ 
ism, and not with the enactments of the body politic or 
state. 

 CHAPTER X. 
THE ELEMENTS OF POLITICAL ECONOMY. 

SHOWING HOW POLITICAL ECONOMY SHOULD PROCEED AND 
WHAT RELATIONS IT SEEKS TO DISCOVER. 

How to understand a complex system—It is the purpose of such a 
system that political economy seeks to discover—These laws, nat 
ural laws of human nature—The two elements recognized by po 
litical economy—These distinguished only by reason—Human 
will affects the material world only through laws of nature—It is 
the active factor in all with which political economy deals. 

TO understand a complex machine the best way is first 
to see what is the beginning and what the end of its 
movements, leaving details until we have mastered its gen 
eral idea and comprehended its purpose. In this way we 
most easily see the relation of parts to each other and to the 
object of the whole, and readily come to understand to the 
minutest movements and appliances what without the clue 
of intention might have hopelessly perplexed us. 

When the safety bicycle was yet a curiosity even in the 
towns of England and the United States, an American 
missionary in a far-off station received from an old friend, 
unaccompanied by the letter intended to go with it, a 
present of one of these machines, which for economy in 
transportation had not been set np, but was forwarded in 
its unassembled parts. How these parts were to be put 
together was a perplexing problem, for neither the mission-. 

74 

 Gimp. X. THE ELEMENTS OF POLITICAL ECONOMY. 75 

ary himself nor any one he could consult could at first 
imagine what the thing was intended to do, and their 
guesses were of almost everything but the truth, until at 
length the saddle suggested a theory, which was so suc 
cessfully followed that by the time, months afterwards, 
another ship brought the missing letter, the mission 
ary was riding over the hard sand of the beach on his 
wheel. 

In the same way an intelligent savage, placed in a great 
industrial hive of our civilization before some enormous 
factory throbbing and whirring with the seemingly inde 
pendent motion of pistons and wheels and belts and looms, 
might, with no guide but his own observation and reason, 
soon come to see the what, the how and the why of the 
whole as a connected device for using the power obtained 
by the transformation of coal into heat in the changing of 
such things as wool, silk or cotton into blankets or piece- 
goods, stockings or ribbons. 

Now the reason which enables us to understand the 
works of man as soon as we discover the reason that has 
brought them into existence, also enables us to interpret 
nature by assuming a like reason in nature. The child's 
question, " What is it for ? "—what is its purpose or intent ? 
—is the master key that enables us to turn the locks that 
hide nature's mysteries. It is in this way that all dis 
coveries in the field of the natural sciences have been 
made, and this will be our best way in the investigation 
we are now entering upon. The complex phenomena of 
the production and distribution of wealth in the elaborate 
organization of modern civilization will only puzzle us, as 
the many confused and confusing books written to explain 
it show, if we begin, as it were, from the middle. But if 
we seek first principles and trace out main lines, so as to 
comprehend the skeleton of their relation, they will readily 
become intelligible. 

 •76 THE MEANING OF POLITICAL ECONOMY. Book I. 

The immense aggregate of movements by which, in 
civilization, wealth is produced and distributed, viewed 
collectively as the subject of political economy, constitute 
a system or arrangement much greater than, yet analogous 
to, the system or arrangement of a great factory. In the 
attempt to understand the laws of nature, which they illus 
trate and obey, let us avoid the confusion that inevitably 
attends beginning from the middle, by proceeding in the 
way suggested in our illustration—the only scientific way. 

These movements, so various in their modes, and so 
complex in their relations, with which political economy 
is concerned, evidently originate in the exertion of human 
will, prompted by desire; their means are the material and 
forces that nature offers to man and the natural laws which 
these obey; their end and aim the satisfaction of man's 
material desires. If we try to call to mind as many as we 
can of the different movements that are included in the 
production and distribution of wealth in modern civiliza 
tion—the catching and gathering, the separating and 
combining, the digging and planting, the baking and 
brewing, the weaving and dyeing, the sewing and washing, 
the sawing and planing, the melting and forging, the 
moving and transporting, the buying and selling—we 
shall see that what they all aim to accomplish is some sort 
of change in the place, form or relation of the materials 
or forces supplied by nature so as better to satisfy human 
desire. 

Thus the movements with which political economy is 
concerned are human actions, having for their aim the 
attainment of material satisfactions. And the laws that it 
is its province to discover are not the laws manifested in 
the existence of the materials and forces of nature that 
man thus utilizes, nor yet the laws which make possible 
their change in place, form or relation, but the laws of 
man's own nature, which affect his own actions in the 

 Clmp.X. THE ELEMENTS OP POLITICAL ECONOMY. 77 

endeavor to satisfy his desires by bringing about such 
changes. 

The world, as it is apprehended by human reason, is by 
that reason resolvable, as we have seen, into three elements 
or factors—spirit, matter and energy. But as these three 
ultimate elements are conjoined both in what we call man 
and in what we call nature, the world regarded from the 
standpoint of political economy has for its original ele 
ments, man and nature. Of these, the human element is 
the initiative or active factor—that which begins or acts 
first. The natural element is the passive factor—that 
which receives action and responds to it. From the 
interaction of these two proceed all with which political 
economy is concerned—that is to say, all the changes that 
by man's agency may be wrought in the place, form or 
condition of material things so as better to fit them for 
the satisfaction of his desires. 

Between the material things which come into existence 
through man's agency and those which come into existence 
through the agency of nature alone, the difference is as 
clear to human reason as the difference between a moun 
tain and a pyramid, between what was on the shores of 
Lake Michigan when the caravels of Columbus first plowed 
the waters of the Caribbean Sea and the wondrous White 
City, beside which in 1893 the antitypes of those caravels, 
by gift of Spain, were moored. Yet it eludes our senses 
and can be apprehended only by reason. 

Any one can distinguish at a glance, it may be said, 
between a pyramid and a mountain, or a city and a forest. 
But not by the senses uninterpreted by reason. The ani 
mals, whose senses are even keener than ours, seem inca 
pable of making the distinction. In the actions of the most 
intelligent dog you will find no evidence that he recognizes 
any difference between a statue and a stone, a tobacconist's 
wooden Indian and the stump of a tree. And things are 

 78 THE MEANING OF POLITICAL ECONOMY. Bookl. 

now manufactured and sold as to which it requires an 
expert to tell whether they are products of man or products 
of nature. 

For the essential thing that in the last analysis distin 
guishes man from nature can, on the material plane that 
is cognizable by the senses, appear only in the garb and 
form of the material. Whatever man makes must have 
for its substance preexisting matter; whatever motion he 
exerts must be drawn from a preexisting stock of energy. 
Take away from man all that is contributed by external 
nature, all that belongs to the economic factor land, and 
you have, what ? Something that is not tangible by the 
senses, yet which is the ultimate recipient and final cause 
of sensation; something which has no form or substance 
or direct power in or over the material world, but which 
is yet the originating impulse which utilizes motion to 
mold matter into forms it desires, and to which we must 
look for the origin of the pyramid, the caravel, the indus 
trial palaces of Chicago and the myriad marvels they con 
tained. 

I do not wish to raise, or even to refer further than is 
necessary, to those deep problems of being and genesis 
where the light of reason seems to fail us and twilight 
deepens into dark. But we must grasp the thread at its 
beginning, if we are to hope to work our way through a 
tangled skein. And into what fatal confusions those fall 
who do not begin at the beginning may be seen in current 
economic works, which treat capital as though it were the 
originator in production, labor as though it were a product, 
and land as though it were a mere agricultural instrument 
—a something on which cattle are fed and wheat and 
cabbages raised. 

We cannot really consider the beginning of things, so 
far as a true political economy is forced to concern itself 
with them, without seeing that when man came into the 

 .X. THE ELEMENTS OF POLITICAL ECONOMY. 79 

world the sum of energy was not increased nor that of 
matter added to; and that so it must be to-day. In all the 
changes that man brings about in the material world, he 
adds nothing to and subtracts nothing from the sum of 
matter and energy. He merely brings about changes in 
the place and relation of what already exists, and the first 
and always indispensable condition to his doing anything 
in the material world, and indeed to his very existence 
therein, is that of access to its material and forces. 

So far as we can see, it is universally true that matter 
and energy are indestructible, and that the forms in which 
we apprehend them are but transmutations from forms 
they have held before; that the inorganic cannot of itself 
pass into the organic; that vegetable life can only come 
from vegetable life; animal life from animal life; and 
human life from human life. Notwithstanding all specu 
lation on the subject, we have never yet been able to trace 
the origin of one well-defined species from another well- 
defined species. Yet the way in which we find the orders 
of existence superimposed and related, indicates to us design 
or thought—a something of which we have the first 
glimpses only in man. Hence, while we may explain the 
world of which our senses tell us by a world of which our 
senses do not tell us, a world of what Plato vaguely called 
ideas, or what we vaguely speak of as spirit, yet we are 
compelled when we would seek for the beginning cause 
and still escape negation to posit a primary or all-causative 
idea or spirit, an all-producer or creator, for which our 
short word is God. 

But to keep within what we do know. In man, con 
scious will—that which feels, reasons, plans and contrives, 
in some way that we cannot understand—is clothed in 
material form. Coming thus into control of some of the 
energy stored up in our physical bodies, and learning, as 
we may see in infancy, to govern arms, legs and a few 

 80 THE MEANING OP POLITICAL ECONOMY. Book I. 

other organs, this conscious will seeks through them to 
grasp matter and to set to work, in changing its place and 
form, other stores of energy. The steam-engine rushing 
along with its long train of coal or goods or passengers, 
is in all that is evident to our senses but a new form of 
what previously existed. Everything of it that we can 
see, hear, touch, taste, weigh, measure or subject to chem 
ical tests, existed before man was. What has brought 
preexisting matter and motion to the shape, place and 
function of engine and train is that which, prisoned in 
the engineer's brain, grasps the throttle; the same thing 
that in the infant stretches for the moon, and in the child 
makes mud-pies. It is this conscious will seeking the 
gratification of its desires in the alteration of material 
forms that is the primary motive power, the active factor, 
in bringing about the relations with which political econ 
omy deals. And while, whatever be its origin, this will is 
in the world as we know it an original element, yet it can 
act only in certain ways, and is subject in that action to 
certain uniform sequences, which we term laws of nature. 

 CHAPTER XL 
OP DESIRES AND SATISFACTIONS. 

SHOWING THE WIDTH AND IMPORTANCE OF THE FIELD OF 
POLITICAL ECONOMY. 

Action springs from desire and seeks satisfaction—Order of desires— 
Wants or needs—Subjective and objective desires—Material and 
immaterial desires—The hierarchy of life and of desires. 

AjL human actions—at least all conscious and voluntary 
actions—are prompted by desire, and have for their 
aim its satisfaction. It may be a desire to gain something 
or a desire to escape something, as to obtain food or to 
enjoy a pleasing odor, or to escape cold or pain or a noi 
some smell; a desire to benefit or give pleasure to others, 
or a desire to do them harm or give them pain. But 
whether positive or negative, physical or mental, benefi 
cent or injurious, so invariably is desire the antecedent 
of action that when our attention is called to any human 
action we feel perplexed if we do not recognize the ante 
cedent desire or motive, and at once begin to look for it, 
confident that it has to the action the relation of cause to 
effect. 

So confident, indeed, are we of this necessary causal 
relation between action and desire, that when we cannot 
find, or at least with some plausibility surmise, an ante 
cedent desire of which the action is an expression, we will 
not believe that the action took place, or at the least, will 

81 

 82 THE MEANING OF POLITICAL ECONOMY. Book I. 

not believe that it was a voluntary, conscious action, but 
will assume, as the older phraseology put it, that the man 
was possessed by some other human or extra-human will; 
or, as the more modern phrase puts it, that he was insane. 
For so unthinkable is conscious, voluntary action without 
antecedent desire, that we will reject the testimony of 
others or even the testimony of our own senses rather than 
believe that a conscious act can take place without motive. 

And as desire is the prompter, and the satisfaction of 
desire is the end and aim, of all human action, all that men 
seek to do, to obtain or to avoid may be embraced in one 
term, as satisfactions, or satisfactions of desire. 

But of these desires and their corresponding satisfac 
tions, some are more primary or fundamental than others; 
and it is only as these desires obtain satisfaction that other 
desires arise and are felt. Thus the desire for air is per 
haps the most fundamental of all human desires. Yet its 
satisfaction is under normal conditions so easily had that 
we usually are not conscious of it—it is in fact rather a 
latent than an actual desire. But let one be shut off from 
air, and the desire to get it becomes at once the strongest 
of desires, casting out for the moment all others. So it is 
with other desires, such as those for food and drink, the 
satisfaction of which is necessary to the maintenance of 
life and health and the avoidance of injury and pain, and 
which we share in common with the brute. These primary 
desires lie as it were beneath, or are fundamental to, the 
manifold desires which arise in man when they are satis 
fied. For, while the desires of other animals seem com 
paratively speaking few and fixed, the desires of man are 
seemingly illimitable. He is indeed the never-satisfied 
animal; his desires under normal conditions growing with 
his power of satisfying them, without assignable limit. 

In the same way as we distinguish between necessities 
and luxuries, so do we often distinguish between what we 

 Cliaf.XI. OF DESIRES AND SATISFACTIONS. 83 

call "wants" or "needs" and what we speak of simply as 
desires. The desires whose satisfaction is necessary to 
the maintenance of life and health and the avoidance of 
injury and pain—those desires, in short, which come 
closest to the merely animal plane—we are accustomed to 
call "wants" or "needs." At least this is the primary 
idea, though as a matter of fact we often speak of needs 
or wants in accordance with that usual standard of comfort 
which we call reasonable, and which is in a large degree 
a matter of habit. And thus while the satisfaction of 
desire of some kind is the end and aim of all human 
action, we recognize, though vaguely, a difference in rel 
ative importance when we say that the end and aim of 
human effort is the satisfaction of needs and the gratifica 
tion of desires. 

Without desire man could not exist, even in his animal 
frame. And those Eastern philosophies, of which that of 
Schopenhauer is a Western version, that teach that the 
wise man should seek the extinction of all desire, also 
teach that such attainment would be the cessation of in 
dividual existence, which they hold to be in itself an evil. 
But in fact, as man develops, rising to a higher plane, his 
desires infallibly increase, if not in number at least in 
quality, becoming higher and broader in their end and aim. 

Now, of human desires and their corresponding satis 
factions, some may be subjective, that is, relating to the 
individual mind or thinking subject; and some objective, 
that is, relatiug to the external world, the object of its 
thought. And by another distinction, some may be said 
to be immaterial, that is, relating to things not cognizable 
by the senses, i.e., thoiight and feeling; and some to be 
material, that is, relating to things cognizable by the 
senses, i.e., matter and energy. 

There is a difference between these two distinctions, but 
practically it is not a large one. A subjective desire—as 

 84 THE MEANING OF POLITICAL ECONOMY. Book I. 

when I desire greater love or greater knowledge or hap 
piness for and in my own mind—is always an immaterial 
desire. But it does not follow that an objective desire is 
always a material desire, since I may desire greater love 
or knowledge or happiness for and in the mind of another. 
Yet we have to remember: 1. That much that we are 
prone to consider as immaterial seems to be so only be 
cause the words we use involve a purely ideal abstraction 
of qualities from things they qualify, and without which 
they cannot exist as things really conceived. Love, 
knowledge or happiness presupposes something which 
loves, knows or feels, as whiteness presupposes a thing 
which is white. 2. That while such qualities as love, 
knowledge or happiness may be predicated of objective 
though immaterial things, yet, normally at least, we can 
have no cognizance of such an immaterial thing, or of its 
states or conditions, except through the material. De 
prived of the senses of sight, sound, touch, taste and smell, 
the gates through which the ego becomes conscious of the 
material world, how, in any normal way, could I or you 
know of the love, knowledge, happiness or existence of any 
other such being? Except, indeed, there be some direct 
way in which spirit may have knowledge of spirit—a way 
it may be that is opened when that through the material 
by the gates of the senses is closed—the exclusion of the 
material is therefore a practical exclusion of the objective. 
I speak of this for the purpose of showing how nearly 
the field of material desires and satisfactions, within which 
the sphere of political economy lies, comes to including all 
human desires and satisfactions. And when we consider 
how in mau the subjective is bound in with the objective, 
the spiritual with the material, the importance of material 
desires and satisfactions to human life as a whole is even 
clearer. For though we may be forced to realize, as the 
innermost essential of man, a something that is not 
material j yet this spirit or soul, as in this life we know it, 

 Chap. XL OF DESIEES AND SATISFACTIOKS. 85 

is incased and imprisoned in matter. Even if subjective 
existence be possible without the body, the ego as we know 
it, deprived of touch with matter through the senses, would 
be condemned to what may be likened to solitary impris 
onment 

As vegetable life is built, so to speak, upon inorganic 
existence, and the animal may be considered as a self- 
moving plant, plus perhaps an animal soul; so man is an 
animal plus a human soul, or reasoning power. And while, 
for reasons I have touched on, we are driven when we 
think of ultimate origins to consider the highest element 
of which we know as the originating element, yet we are 
irresistibly compelled to think of it as having first laid the 
foundation before raising the superstructure. This is the 
profound truth of that idea of evolution which all theories 
of creation have recognized and must recognize, but which 
is not to be confounded with the materialistic notion of 
evolution which has of late years been popularized among 
superficial thinkers. The wildest imagination never 
dreamed that first of all man came into being; then the 
animals; afterwards the plants; then the earth; and finally 
the elementary forces. In the hierarchy of life, as we 
know it, the higher is built upon the lower, order on order, 
and is as summit to base. And so in the order of human 
desires, what we call needs come first, and are of the 
widest importance. Desires that transcend the desires of 
the animal can arise and seek gratification only when the 
desires we share with other animals are satisfied. And 
those who are inclined to deem that branch of philosophy 
which is concerned with the gratification of material needs, 
and especially with the way in which men are fed, clothed 
and sheltered, as a secondary and ignoble science, are like 
a general so absorbed in the ordering and moving of his 
forces as utterly to forget a commissariat; or an architect 
who should deem the ornamentation of a facade more im 
portant than the laying of a foundation. 

 CHAPTER XII. 

THE FUNDAMENTAL LAW OP POLITICAL 
ECONOMY. 

SHOWING THAT THE LAW PROM WHICH POLITICAL ECONOMY 
PROCEEDS IS THAT MEN SEEK TO SATISFY THEIR DESIRES 
WITH THE LEAST EXERTION. 

Exertion followed by weariness— The fact that men seek to satisfy 
their desires with the least exertion— Meaning and analogue- 
Exemplified in trivial things— Is a law of nature and the funda 
mental law of political economy — Substitution of selfishness for 
this principle — Buckle quoted — Political economy requires no 
such assumption— The necessity of labor not a curse. 

only way man has of satisfying his desires is by 
I action. 

Now action, if continued long enough in one line to 
become really exertion, a conscious putting forth of effort, 
produces in the consciousness a feeling of reluctance or 
weariness. This comes from something deeper than the 
exhaustion of energy in what we call physical labor ; for 
whoever has tried it knows that one may lie on his back 
in the most comfortable position and by mere dint of sus 
tained thinking, without consciously moving a muscle, tire 
himself as truly as by sawing wood ; and that the mere 
clash and conflict of involuntary or undirected thought or 
feeling, or its continuance in one direction, will soon bring 
extreme weariness. 

86 

 Chap. XII. THE LAW OF POLITICAL ECONOMY. 87 

But whatever be its ultimate cause, the fact is that labor, 
the attempt of the conscious will to realize its material 
desire, is always, when continued for a little while, in itself 
hard and irksome. And whether from this fact alone, or 
from this fact, conjoined with or based upon something 
intuitive to our perceptions, the further fact, testified to 
both by observation of our own feelings and actions and 
by observation of the acts of others, is that men always 
seek to gratify their desires with the least exertion. 

This, of course, does not mean that they always succeed 
in doing so, any more than the physical law that motion 
tends to persist in a straight line means that moving 
bodies always take that line. But it does mean the mental 
analogue of the physical law that motion seeks the line of 
least resistance—that in seeking to gratify their desires 
men will always seek the way which under existing physi 
cal, social and personal conditions seems to them to involve 
the least expenditure of exertion. 

Whoever would see this disposition of human nature 
exemplified in trivial things has only to watch the passers- 
by in a crowded street, or those who enter or depart from 
a frequented house. He will be instructed and perhaps 
not a little amused to note how slight the obstruction 
or semblance of obstruction that will divert their steps; 
and will see the principle observed by saint and sinner— 
by " wicked man on evil errand bent," and " Good Samar 
itan intent on works of mercy." 

Whether it proceed from experience of the irksomeness 
of labor and the desire to avoid it, or further back than 
that, have its source in some innate principle of the human 
constitution, this disposition of men to seek the satisfaction 
of their desires with the minimum of exertion is so uni 
versal and unfailing that it constitutes one of those in 
variable sequences that we denominate laws of nature, and 
from which we may safely reason. It is this law of nature 

 88 THE MEANING OF POLITICAL ECONOMY. Book I. 

that is the fundamental law of political economy—the 
central law from which its deductions and explanations 
may with certainty be drawn, and, indeed, by which alone 
they become possible. It holds the same place in the 
sphere of political economy that the law of gravitation 
does in physics. Without it there could be no recognition 
of order, and all would be chaos. 

Yet the failure clearly to apprehend this as the funda 
mental law of political economy has led to very serious 
and wide-spread mistakes as to the nature of the science; 
and has indeed, in spite of the vigorous assertions and 
assumptions of its accredited professors, prevented it from 
truly taking in popular esteem the place of a real science, 
or from long holding in scholastic circles the credit it had 
for a while gained. For the principle that men always 
seek to satisfy their desires with the least exertion, there 
has been substituted, from the time that political economy 
began to claim the attention of thoughtful men, the prin 
ciple of human selfishness. And with the assumption that 
political economy takes into its account only the selfish 
feelings of human nature, there have been linked, as laws 
of political economy, other assumptions as destitute of 
validity. 

To show how completely the idea has prevailed that the 
foundation of political economy is the assumption of 
human selfishness, I shall not stop to quote from the 
accredited writers on the subject, nor yet from those who 
have made of it a ground of their repugnance to the 
political economy that has been with justice styled "the 
dismal science "—such as Carlyle, Dickens or Ruskin. I 
take for that purpose a writer who, while he fully accepted 
what was at his time (1857-60) the orthodox political econ 
omy, deeming it " the only subject immediately connected 
with the art of government that has yet been raised to a 
science," and was well conversant with its literature, was 

 Cliap.XII. THE LAW OF POLITICAL ECONOMY. 89 

not concerned with it as a controversialist, but only as a 
historian of the development of thought. 

Buckle's understanding of political economy was that 
it eliminated every other feeling than selfishness. In his 
" Inquiry into the Influence Exercised by Religion, Litera 
ture and Government" (Vol. I., Chapter V., of his " History 
of Civilization in England "), he says that in the " Wealth 
of Nations," which he regards as "probably the most 
important book which has ever been written," Smith 
" generalizes the laws of wealth, not from the phenomena 
of wealth, nor from statistical statements, but from the 
phenomena of selfishness; thus making a deductive ap 
plication of one set of mental principles to the whole set 
of economical facts." 

And in his " Examination of the Scotch Intellect during 
the Eighteenth Century " (Vol. II., Chapter VI.), he returns 
in greater detail to the same subject. Adam Smith, he 
says, wrote two great books, with an interval of seventeen 
years between them. In both he employed the same 
method, that form of deduction "which proceeds by an 
artificial separation of facts in themselves inseparable." 
In the first of these, the " Theory of Moral Sentiments," 
he " so narrowed the field of inquiry as to exclude from it 
all consideration of selfishness as a primary principle, and 
only to admit its great antagonist, sympathy." In the 
second, the " Wealth of Nations," which Buckle regards as 
a correlative part of Smith's one great scheme, though still 
greater than its predecessor, Smith, on the contrary, " as 
sumes that selfishness is the main regulator of human 
affairs, just as in his previous work he had assumed sym 
pathy to be so." Or, as Buckle, later on, repeats: 

He everywhere assumes that the great moving power of all men, 
all interests and all classes, in all ages and in all countries, is selfish 
ness. The opposite power of sympathy he entirely shuts out; and I 
hardly remember an instance in which even the word occurs in the 

 90 THE MEANING OP POLITICAL ECONOMY. Book I. 

whole course of his work. Its fundamental assumption is, that each 
man exclusively follows his own interest, or what he deems to be his 
own interest. ... In this way Adam Smith completely changes the 
premises he had assumed in his earlier work. Here, he makes men 
naturally selfish; formerly, he had made them naturally sympathetic. 
Here, he represents them pursuing wealth for sordid objects, and for 
the narrowest personal pleasures; formerly, he represented them 
as pursuing it out of regard to the sentiments of others, and for the 
sake of obtaining their sympathy. In the "Wealth of Nations" we 
hear no more of this conciliatory and sympathetic spirit; such ami 
able maxims are altogether forgotten, and the affairs of the world 
are regulated by different principles. It now appears that benevo 
lence and affection have no influence over our actions. Indeed, 
Adam Smith will hardly admit common humanity into his theory of 
motives. If a people emancipate their slaves, it is a proof, not that 
the people are acted on by high moral considerations, nor that their 
sympathy is excited by the cruelty inflicted on these nnhappy crea 
tures. Nothing of the sort. Such inducements to conduct are 
imaginary and exercise no real sway. All that the emancipation 
proves, is, that the slaves were few in number, and, therefore, small 
in value. Otherwise they would not have been emancipated. 

So, too, while in his former work he had ascribed the different 
systems of morals to the power of sympathy, he, in this work, ascribes 
them entirely to the power of selfishness. 

This presumption, so well stated and defended by 
Buckle, that political economy must eliminate everything 
but the selfish feelings of mankind, has continued to 
pervade the accredited political economy up to this time, 
whatever may have been the effects upon the common 
mind of the attacks made upon it by those, who, not 
putting their objections into logical and coherent form, 
could be spoken of as sentimentalists, but not political 
economists. Yet, however generally the accepted writers 
on political economy may have themselves supposed the 
assumption of universal selfishness to be the fundamental 
principle of political economy, or how much ground they 
may have given for such a supposition on the part of their 
readers, a true political economy requires no such assump- 

 Chap. XII. THE LAW OF POLITICAL ECONOMY. 91 

tion. The primary postulate on and from which its whole 
structure is built is not that all men are governed only by 
selfish motives, or must for its purposes be considered as 
governed only by selfish motives; it is that all men seek 
to gratify their desires, whatever those desires may be, 
with the least exertion. This fundamental law of political 
economy is, like all other laws of nature, so far as we are 
concerned, supreme. It is no more affected Ly the selfish 
ness or unselfishness of our desires than is the law of 
gravitation. It is simply a fact. 

The irksomeness or weariness that inevitably attends 
all continued exertion caused earlier men to look on the 
necessity of labor to production as a penalty imposed upon 
our kind by an offended Deity. But in the light of modern 
civilization we may see that what they deemed a curse is 
in reality the impulse that has led to the most enormous 
extensions of man's power of dealing with nature. So 
true is it that good and evil are not in external things or 
in their laws of action, but in will or spirit. 

 CHAPTER XIII. 
METHODS OF POLITICAL ECONOMY. 

SHOWING THE NATURE OF THE METHODS OP INVESTIGATION 
THAT MAY BE USED IN POLITICAL ECONOMY. 

Deductive and inductive schools—"New American Cyclopedia'» 
quoted—Triumph of the inductionists—The method of induction 
and the method of deduction—Method of hypothesis—Bacon's re 
lation to induction—Real error of the deductionists and the mistake 
of the inductionists—Lalor's Cyclopedia quoted—Result of the 
triumph of the inductionists—A true science of political econ 
omy must follow the deductive method—Davis's "Elements of 
Inductive Logic" quoted—Double assurance of the real postulate 
of political economy—Method of mental or imaginative experiment. 

A MISCONCEPTION of the fundamental law on which 
a science is based must lead to divergences and con 
fusions as the attempt to develop that science proceeds. 

In the case of political economy, the result of the as 
sumption that its fundamental principle is human selfish 
ness is shown in disputes and confusions as to its proper 
method. These began shortly after it was recognized as 
deserving the attention of the institutions of learning, and 
are an increasingly noticeable feature in economic litera 
ture for some sixty or seventy years. Adam Smith and 
the most prominent of his successors followed the deduc 
tive method. But ere long there began to be questionings 
as to whether the inductive method was not the proper 

92 

 Chap. XIII. METHODS OF POLITICAL ECONOMY. 93 

one. Having on their side the weight of authority, the 
defenders of the deductive method, or "old school" politi 
cal economy, as it began to be called, held for a long time 
their formal position, though compelled by the incon 
gruities of the system they were endeavoring to uphold to 
make damaging deductions and weakening admissions; 
while the opposition to them, called by various names, but 
generally known as inductive or " new school" economists, 
gathered strength. 

What lay beneath this contest, which was largely verbal, 
and in which there was confusion on both sides, I shall 
have occasion to speak of hereafter; but as to how it 
seemed to stand in the scholastic world at the beginning 
of the seventh decade of our century I quote from the 
article " Political Economy " in the " New American Cyclo 
pedia" (18G1), which, as written by an opponent of the 
then orthodox school (Henry Carey Baird), with an evident 
desire to be entirely fair, will I think better show the actual 
situation at that time than anything else I can find: 

The progress thus far made in political economy has been slow and 
uncertain, and there is in its entire range hardly a doctrine or even 
the definition of an important word which is universally or even 
generally accepted beyond dispute. . . . Amid all their discords and 
disagreements it is possible to divide political economists under two 
general heads: those who treat the subject as a deductive science, 
"in which all the general propositions are in the strictest sense of 
the word hypothetical;" and those who treat it by the inductive or 
Baconian method. Of the first-named school are all the English 
economists and most of those of continental Europe who have ac 
quired any reputation. As the representatives of the last, Mr. Henry 
C. Carey and his followers are most prominent.* 

* As illustrating the looseness with which the words "inductive" 
and " deductive " have been thrown around in this discussion as to 
the proper method of political economy, it may be worth mentioning 
that the same Henry C. Carey, who is here cited as the most promi 
nent representative of the inductive school, as opposed to the deduc- 

 94 THE MEANING OF POLITICAL ECONOMY. Book I. 

Thus, in 1861, the deductive method, even to the view 
of an adherent of the opposing school, still formally held 
sway in the scholastic world. But at present, as the cen 
tury nears its close, it has so utterly lost its hold that so 
far as I can discover, there is not now a prominent college 
or university anywhere in which the professed teachers of 
what is reputed to be political economy adhere to what 
was then called the deductive method. 

Yet this triumph in scholastic opinion of the advocates 
of what is called the inductive method is in reality but the 
triumph of one set of confusions over another set of con 
fusions, in which the determining element has been the 
vague consciousness that the previously authoritative 
political economy was not a true political economy. 
Where a new set of confusions is pitted against an old 
set of confusions, the victory must finally and for a time 
remain with the new; for the reason that on the old lies 
the burden of defending what is indefensible, while the 
new has for a while only the easier task of attack. What 
this passing phase of economic thought really shows is the 
utter confusion into which the whole scholastic political 
economy has fallen from lack of care as to first principles. 
In my view of the matter those who have said that the 
deductive method was the proper method of political econ 
omy have been right as to that, but wrong in principles 
from which they have made deductions; while those who 
contended for the inductive method have been wrong as 
to that, but right as to the weaknesses of their opponents. 

As to the course of what has been called the science of 

tive school of Smith, Eicardo and Mill, is in the biographical notice 
of him in the latest successor of the " New American Cyclopedia," 
the revised edition of " Johnson's Universal Cyclopedia " (1895), said 
to be "the founder of a school of political economy whose principles 
are anti-socialistic and more deductive than those of Smith, Eicardo 
and Mill." 

 Chap. XIII. METHODS OF POLITICAL ECONOMY. 95 

political economy and the destructive revolution which it 
has of late years undergone, I shall have occasion to speak 
in the iiext book. I am here concerned in clearing only 
what might be a perplexity to the reader in regard to the 
proper methods of the real science. 

The human reason has two ways of ascertaining truth. 
The first of these is that of reasoning from particulars to 
generals in an ascending line, until we come at last to one 
of those invariable uniformities that we call laws of nature. 
This method we call the inductive, or a posteriori. But 
when we have reached what we feel sure is a law of na 
ture, and as such true in all times and places, then an 
easier and more powerful method of ascertaining truth is 
open to us—the method of reasoning in the descending 
line from generals to particulars. This is the method that 
we call the deductive, or a priori method. For knowing 
what is the general law, the invariable sequence that we 
call a law of nature, we have only to discover that a par 
ticular comes under it to know what is true in the case of 
that particular. 

In the relation of priority the two methods stand in the 
order in which I have named them—induction being the 
first or primary method of applying human reason to the 
investigation of facts, and deduction being the second or 
derivative. So far as our reason is concerned, induction 
must give the facts on which we may proceed to deduction. 
Deduction can safely be based only on what has been sup 
plied to the reason by induction; and where the validity 
of this first step is called in question, must apply to induc 
tion for proof. Both methods are proper to the careful 
investigation that we speak of as scientific: induction in 
its preliminary stages, when it is groping for the law of 
nature; deduction when it has discovered that law, and is 
thus able to proceed by a short cut from the general to 
the particular, without any further need for the more 

 96 THE MEANING OF POLITICAL ECONOMY. Book I. 

laborious and, so to speak, uphill method of induction, 
except it may be to verify its conclusions. 

There is a further method of investigation, which con 
sists in a combination of these two original methods of 
the reason, and which has been found most effective in the 
discovery of truth in the physical sciences. When our 
inductions so point to the existence of a natural law that 
we are able to form a surmise or suspicion of what it may 
prove to be, we may tentatively assume the existence of 
such a law, and proceed to see whether particulars will fall 
into place in deductions made from it. This is the method 
of tentative deduction, or hypothesis. 

The inductive method is sometimes, as in the last quota 
tion I have made, spoken of as the Baconian method, and 
the great name of Bacon has been freely used to give 
plausibility to what the advocates of the " new school" in 
political economy have called the inductive method. But 
whatever originality there may have been in his classifica 
tions and devices, Bacon did not invent the inductive 
method. It was by that method that man's reason has 
from the first enabled him to apprehend laws of nature 
that he has subsequently used as bases for deduction. It 
was thus that he must have learned what we are accus 
tomed to think the simplest of nature's uniformities—such 
as, that after an interval a new moon succeeds the old 
moon; that the sun, after apparently tending to the south 
for a while, turns again to the north; that fire will burn, 
and that water will quench fire. What Bacon did was 
not to invent or discover the inductive method, but to 
formulate some rules for its application and to apply it to 
the investigation of fields of knowledge from which it had 
been long shut out by a blind reliance upon authority— 
by a false assumption that wiser men who had gone before 
had taught all there was worth knowing on certain sub 
jects, and that there remained for those who came after 

 Cliap. XIII. METHODS OF POLITICAL ECONOMY. 97 

nothing further to do than to make deductions from 
premises their predecessors had supplied. 

Where the application of the inductive method was 
really needed in what is now called by the "new lights" 
the " classical" political economy was to test the premises 
from which its deductions were made, and to clear them 
of what had no better warrant than a disposition to use 
political economy to justify existing social arrangements. 
It was not needed to take the place of the deductive 
method, where that was applicable. For the deductive 
method, when applied to the further extension of what 
has already been validly ascertained, constitutes the most 
powerful means of extending knowledge that the human 
mind can avail itself of. 

In its use of the deductive method after its premises 
had been settled, the classical political economy was not 
in error. The error that gave insecurity to its whole 
structure lay deeper still, in the insufficient inductions on 
which those premises rested. But, instead of addressing 
themselves to these flaws in its accepted premises, the 
various schools of economists generally classed as induc 
tive have denied that there were any general principles 
that could with certainty be laid down as the basis for 
deduction. Thus, if such a question be asked them as, 
does free trade or protection best promote a general pros 
perity? or, what is the best system of land-tenure? or, 
what is the best system of taxation ? or, what are the limits 
of governmental interference with industry, or trade-union 
regulations t no general answer can be given. It can only 
be said that one thing may be best in one place and time, 
and another in another place and time, so that the matter 
can be determined only by special investigations. In other 
words, to quote the phrase of Professor James, of the 
University of Pennsylvania, an adherent of the "new 
school" (article, "Political Economy," in Lalor's "Cyclo- 

 98 THE MEANING OF POLITICAL ECONOMY. Eook I. 

pedia of Political Science, Political Economy and United 
States History," 1884), they have opposed "the theory 
which seeks eternally valid natural laws in economics, 
and which considers the natural condition of unlimited 
personal freedom as the only justifiable one, without regard 
to the needs of special times and nations." 

The result, therefore, of the triumph of the " induction- 
ists" over the " deductionists " in the accredited organs of 
economic teaching, has been to destroy in the "new" 
political economy even the semblance of coherency that 
it had in the " old," and to decompose it into a congeries 
of unrelated doctrines and unverified speculations which 
only its professors can presume to understand, and as to 
which they can dispute and quarrel with each other in the 
wild abandon that results from the absence of any recog 
nized common principle. 

But to me it seems clear that if political economy can 
be called a science at all, it must as a science, that is to 
say from the moment the laws of nature on which it 
depends are discovered, follow the deductive method of 
examination, using induction only to test the conclusions 
thus obtained. For the particulars which are included in 
its province are too vast and too complex to admit of any 
hope of bringing them into order and relation by direct 
induction. 

To quote from the latest elementary text-book of logic 
of which I know, Professor Noah K. Davis's " Elements of 
Inductive Logic " (Harper Bros., New York, 1893), p. 197: 

The great object of the scientist is to obtain by rigid induction the 
laws of nature, and to follow them by rigid deduction to their conse 
quences. A science at first wholly inductive becomes, as soon as a 
law has been proved, more or less deductive, and as it progresses, 
rising to higher and wider but fewer inductions, the deductive 
processes increase in number and importance, until it is no longer 
properly an inductive, but a deductive science. Thus, hydrostatics, 
Acoustics, optics and electricity, commonly called inductive sciences, 

 Cliap.XIII. METHODS OF POLITICAL ECONOMY. 99 

have passed under the dominion of mathematics, from inductive to 
deductive sciences and mechanics has a like history. Celestial 
mechanics as founded in the " Principia " of Newton is mainly induc 
tive, as elaborated in the "MScanique Celeste" of Laplace, is 
mainly deductive. By pursuing this latter process it has multiplied 
its matter and reached its present high perfection. A revolution is 
quietly progressing in all the natural sciences. Bacon changed their 
method from deductive to inductive, and it is now rapidly reverting 
from inductive to deductive. The task of logic is to explicate and 
regulate these methods. 

Now the law of nature which forms the postulate of a 
true science of political economy is not, as has been erro 
neously assumed, that men are invariably and universally 
selfish. As a matter of fact, this is not true. Nor can we 
abstract from man all but selfish qualities in order to make 
as the object of our thought on economic matters what 
has been called the " economic man," without getting what 
is really a monster, not a man. 

The law of nature which is really the postulate of a true 
science of political economy is that men always seek to 
gratify their desires with the least exertion, whether those 
desires are selfish or unselfish, good or bad. 

That this is a law of nature we have the highest possible 
warrant, wider in fact than we can have for any of the 
laws of external nature, such for instance as the law of 
gravitation. For the laws of external nature can be appre 
hended only objectively. But that it is a law of nature 
that men seek to gratify their desires with the least exer 
tion, we may see both subjectively and objectively. Since 
man himself is included in nature, we may subjectively 
reach the law of nature that men seek to gratify their 
desires with the least exertion, by an induction derived 
from consciousness of our own feelings and an analysis of 
our own motives of action; while objectively we may also 
reach the same law by an induction derived from obser 
vation of the acts of others. 

 100 THE MEANING OF POLITICAL ECONOMY. Book I. 

Proceeding from a law of nature thus doubly assured, 
the proper method of a political economy which becomes 
really a science by its correct apprehension of a funda 
mental law, is the method of deduction from that law, the 
method of proceeding from the general to the particular; 
for this is the method which will enable us to attain incom 
parably greater results. To abandon that method and 
resort to what the " new lights " of political economy seem 
really to mean by induction, would be as though we were 
to discard the rules of arithmetic and endeavor by direct 
inquiries in all parts of the world to discover how much 
one number added to another would make, and what 
would be the quotient of a sum divided by itself. 

Thus, in the main, the science of political economy re 
sorts to the deductive method, using induction for its tests. 
But in its more common investigations its most useful 
instrument is a form of hypothesis which may be called 
that of mental or imaginative experiment,* by which we 
may separate, combine or eliminate conditions in our own 
imaginations, and thus test the working of known prin 
ciples. This is a most common method of reasoning, 
familiar to us all, from our very infancy. It is the great 
working tool of political economy, and in its use we have 
only to be careful as to the validity of what we assume as 
principles. 

* See lecture delivered by me before the students of the Univer 
sity of California on "The Study of Political Economy," April, 1877, 
reprinted in "Popular Science Monthly," March, 1880. 

 CHAPTER XIV. 

POLITICAL ECONOMY AS SCIENCE AND 
AS ART. 

SHOWING THAT POLITICAL ECONOMY IS PROPERLY A 
SCIENCE, AND THE MEANING IT SHOULD HAVE IF SPOKEN 
OF AS ART. 

Science and art—There must be a science of political economy, but 
no proper art—What must be the aim of an art of political econ 
omy—White art and black art—Course of further investigation. 

rINHERE is found among economic writers much dis- 
I pute not only as to the proper method of political 
economy, but also as to whether it should be spoken of as 
a science or as an art. There are some who have styled 
it a science, and some who have styled it an art, and some 
who speak of it as both science and art. Others again 
make substantially the same division, into abstract or 
theoretical or speculative political economy, on the one 
side, and concrete or normative or regulative or applied 
political economy, on the other side. 

Into this matter, however, it is hardly worth while for 
us to enter at any length, since the reasons for considering 
a proper political economy as a science rather than an art 
have been already given. It is only necessary to observe 
that where systematized knowledge may be distinguished, 
as it sometimes is, into two branches, science and art, the 

101 

 102 THE MEANING OP POLITICAL ECONOMY. Boole I. 

proper distinction between them is that the one relates to 
what we call laws of nature; the other to the manner in 
which we may avail ourselves of fhese natural laws to 
attain desired ends. 

This first branch of knowledge, it is clear, is in political 
economy the primary and most important. It is only as 
we know the natural laws of the production and distribu 
tion of wealth that we can previse the result of the adjust 
ments and regulations which human laws attempt. And 
as whoever wishes to understand and treat the diseases 
and accidents of the human frame would properly begin 
by studying it in its normal condition, noting the position, 
relation and functions of the organs in a state of perfect 
health; so any study of the faults, aberrations and in 
juries which occur in the economy of society comes best 
after the study of its natural and normal condition. 

There may be disputes as to whether there is yet a 
science of political economy, that is to say, whether our 
knowledge of the natural economic laws is as yet so large 
and well digested as to merit the title of science. But 
among those who recognize that the world we live in is in 
all its spheres governed by law, there can be no dispute as 
to the possibility of such a science. 

And as there can be only one science of chemistry, one 
science of astronomy and one science of physiology, which, 
in so far as they are really sciences, must be true and in 
variable, so, while there may be various opinions, various 
teachings, various hypotheses (or in a loose and improper 
but exceedingly common use of the word, various theories), 
of political economy, there can be only one science. And 
it, in so far as it is really a science—that is to say, in so 
far as we have really discovered and related the natural 
laws which are within its province—must in all times and 
places be true and invariable. For we live in a world 
where the same effects always follow the same causes and 

 Chap. SIV. AS SCIENCE AND AS ART. 103 

where nothing is capricious, unless indeed it be that some 
thing within us which desires, wills and chooses. But this 
in man, that seems, to a certain extent at least, indepen 
dent of the external nature that is recognized by our 
senses, can manifest itself only in accordance with natural 
laws, and can accomplish its external purposes only by 
using those laws. 

When we shall have worked out the science of political 
economy—when we shall have discovered and related the 
natural laws which govern the production and distribution 
of wealth, we shall then be in position to see the effect of 
human laws and customs. But it does not seem to me 
that a knowledge of the effect which natural laws of the 
production and distribution of wealth bring about in the 
outcome of human laws, customs and efforts, can be 
properly spoken of as an art of political economy, or that 
the knowledge properly classified under the term political 
economy, can be divided, as some writers have attempted 
to divide it, into a science and an art. There is a science 
of astronomy, which hap its applications in such arts as 
those of navigation and surveying;but no art of astronomy. 
There is a science of chemistry, which has its applications in 
many arts; but no art of chemistry. And so the science of 
political economy finds its applications in politics and its 
various subdivisions. But these applications can hardly 
be spoken of as constituting an art of political economy. 

Yet if we choose, as some have done, to speak of political 
economy as both science and art, then the art of political 
economy is the art of securing the greatest production and 
the fairest distribution of wealth; the art whose proper 
object it is to abolish poverty and the fear of poverty, and 
so lift the poorest and weakest of mankind above the hard 
struggle to live. For if there be an art of political econ 
omy, it must be the noble art that has for its object the 
benefit of all members of the economic community. 

 104 THE MEANING OP POLITICAL ECONOMY. Book I. 

But just as when men believed in magic they held that 
there was both a white magic and a black magic—an art 
which aimed at alleviating suffering and doing good, and 
an art which sought knowledge for selfish and evil ends— 
so, in this view, it may be said that there is a white polit 
ical economy and a black political economy. Where a 
knowledge of the laws of the production and distribution 
of wealth is used to enrich a few at the expense of the 
many, or even where a reputed knowledge of those laws 
is used to bolster up such injustice, and by darkening 
counsel to prevent or delay the reform of it, such art of 
political economy, real or reputed, is truly a black art. 
This is the art of which the great Turgot spoke. 

For our part, having seen the nature and scope of the 
science of political economy, for which we adopt the older 
definition—the science that investigates the nature of 
wealth and the laws of its production and distribution—let 
us proceed in this order, endeavoring to discover: (1) the 
nature of wealth; (2) the laws of its production; and then 
(3) the laws of its distribution. When this is done we 
shall have accomplished all that is necessary for a true 
science of political economy, as I understand it. It will 
not be necessary for us to consider the matter of the con 
sumption of wealth; nor, indeed, as I shall hereafter show, 
is a true political economy concerned with consumption, 
as many of the minor economic writers have assumed it 
to be. 

 BOOK II. 

THE NATUEE OF WEALTH 

 Definitions are the basis of systematic reasoning. 
—Aristotle. 

The mixture of those things by speech which 
are by nature divided is the mother of all error.— 
Hooker. 

Bacon made us sensible of the emptiness of the 
Aristotelian philosophy; Smith, in like manner, 
caused us to perceive the fallaciousness of all the 
previous systems of political economy; but the lat 
ter no more raised the superstructure of this science, 
than the former created logic. . . . We are, how 
ever, not yet in possession of an established text 
book on the science of political economy, in which 
the fruits of an enlarged and accurate observation 
are referred to general principles that can be ad 
mitted by every reflecting mind; a work in which 
these results are so complete and well arranged as 
to afford to each other mutual support, and that may 
everywhere and at all times be studied with advan 
tage.— J. B. Say, 1803. 

We may cite as examples of such inchoate but yet 
incomplete discoveries the great "Wealth of Na 
tions" by Adam Smith—a work which still stands 
out, and will ever stand out, as that of a pioneer, 
and the only book on political economy which dis 
plays its genius to every kind of intelligent reader. 
But among the specialists and the schools, this work 
of genius which swayed all Europe in its day, is laid 
upon the shelf as an antiquated affair, superseded 
by the smaller and duller men who have pulled his 
system to pieces and are offering us the fragments 
as a science most of whose first principles are still 
under dispute.—Professor (Greek) J. P. Mahaffy, 
"The Present Position of Egyptology," "Nineteenth 
Century," August, 1894. 

 CONTENTS OF BOOK II. 

THE NATURE OF WEAI/TH. 

PAGE 

INTRODUCTION TO BOOK H. ...... 115 

CHAPTER I. 
CONFUSIONS AS TO THE MEANING OP WEALTH. 

SHOWING THE FAILURE OP THE CURRENT POLITICAL ECONOMY TO 
DEFINE WEALTH, AND THE CONFUSIONS THEREFROM, CULMI 
NATING IN THE ABANDONMENT OP POLITICAL ECONOMY BY ITS 
PROFESSED TEACHERS. 

Wealth the primary term of political economy—Common use 
of the word—Vagueness more obvious in political economy— 
Adam Smith not explicit—Increasing confusion of subsequent 
writers—Their definitions—Many make no attempt at defini 
tion—Perry's proposition to abandon the term—Marshall and 
Nicholson—Failure to define the term leads to the abandon 
ment of political economy—This concealed under the word 
"economic"—The intent expressed by Macleod—Results to 
political economy.......... 117 

CHAPTER n. 
CAUSES OP CONFUSION AS TO THE MEANING OP WEALTH. 

SHOWING THE REAL DIFFICULTY THAT BESETS THE 
ECONOMIC DEFINITION OF WEALTH. 

Effect of slavery on the definition of wealth—Similar influences 
now existing—John 3. Mill on prevalent delusions—Genesis 

107 

 108 CONTENTS OF BOOK H. 

PAOB 

of the protective absurdity—Power of special interests to 
mold common opinion—Of injustice and absurdity, and the 
power of special interests to pervert reason—Mill an example 
of how accepted opinions may blind men—Effect upon a 
philosophical system of the acceptance of an incongruity— 
Meaning of a saying of Christ—Influence of a class profiting 
by robbery shown in the development of political economy— 
Archbishop Whately puts the cart before the horse—The power 
of a great pecuniary interest to affect thought can be ended only 
by abolishing that interest—This shown in American slavery . 131 

CHAPTER HI. 
WHAT ADAM SMITH MEANT BY WEALTH. 

SHOWING HOW ESSENTIALLY ADAM SMITH'6 PRIMARY CONCEPTION 
OP WEALTH DIFFERED FROM THAT NOW HELD RY HIS SUCCES 
SORS. 

Significance of the title " Wealth of Nations "—Its origin shown 
in Smith's reference to the Physiocrats—His conception of 
wealth in his introduction—Objection by Malthus and by Mae- 
leod—Smith's primary conception that given in " Progress and 
Poverty"—His subsequent confusions ..... 143 

CHAPTER IV. 
THE FRENCH PHYSIOCRATS. 

SHOWING WHO THE FIRST DEVELOPERS OF A TRUE SCIENCE 
OF POLITICAL ECONOMY WERE, AND WHAT THEY HELD. 

Qnesnay and his followers—The great truths they grasped and 
the cause of the confusion into which they fell—This used to 
discredit their whole system, but not really vital—They were 
real free traders—The scant justice yet done them—Reference 
to them in "Progress and Poverty"—Macleod's statement of 
their doctrine of natural order—Their conception of wealth— 
Their day of hope and their fall....... 148 

CHAPTER V. 
ADAM SMITH AND THE PHYSIOCRATS. 

SHOWING THE RELATION BETWEEN ADAM SMITH AND THE 
PHYSIOCRATS. 

Smith and Quesnay—The " Wealth of Nations " and Physiocratic 
ideas—Smith's criticism of the Physiocrats—His failure to ap 
preciate the single tax—His prudence ..... 160 

 CONTENTS OF BOOK IL 

109 

CHAPTER VI. 
SMITH'S INFLUENCE ON POLITICAL ECONOMY. 

SHOTTING WHAT THE "WEALTH OP NATIONS" ACCOMPLISHED 
AND THE COURSE OP THE SUBSEQUENT DEVELOPMENT OP PO 
LITICAL ECONOMY. 

PAGB 

Smith, a philosopher, who addressed the cultured, and whose at 
tack on mercantilism rather found favor with the powerful land 
owners—Not entirely exempt from suspicion of radicalism, yet 
pardoned for his affiliation with the Physiocrats—Efforts of 
Maltbus and Ricardo on respectabilizing the science—The fight 
against the corn-laws revealed the true beneficiaries of protec 
tion, but passed for a free-trade victory, and mnch strength 
ened the incoherent science—Confidence of its scholastic ad 
vocates—Say's belief in the result of the colleges taking np 
political economy—Torrens's confidence—Failure of other 
countries to follow England's example—Cairnes doubts the 
effect of making it a scholastic study—His sagacity proved 
by the subsequent breakdown of Smith's economy—The true 
reason ............ 170 

CHAPTER VH. 

INEFFECTUAL GROPINGS TOWARD A DETERMINATION 
OF WEALTH. 

SHOWING THE OPPOSITION TO THE SCHOLASTIC ECONOMY 
BEFORE "PROGRESS AND POVERTY." 

Illogical character of the "Wealth of Nations"—Statements of 
natural right—Spence, Ogilvie, Chalmers, Wakefield, Spencer, 
Dove, Bisset—Vague recognitions of natural right—Protec 
tion gave rise to no political economy in England, but did else 
where—Germany and protectionist political economy in the 
United States—Divergence of the schools—Trade-unionism 
in socialism ........... 182 

CHAPTER VIII. 
BREAKDOWN OF SCHOLASTIC POLITICAL ECONOMY. 

SHOWING THE REASON, THE RECEPTION, AND EFFECT ON PO 
LITICAL ECONOMY OP " PROGRESS AND POVERTY." 

"Progress and Poverty"—Preference of professors to abandon 
the " science " rather than radically change it, brings the break 
down of scholastic economy—The "Encyclop»diaBritannica" 
—The "Austrian school" that has succeeded the "classical" 200 

 110 CONTENTS OF BOOK II. 

CHAPTER IX. 

WEALTH AND VALUE. 

SHOWING THE SEASON FOB CONSIDERING THE NATURE OF 
VALUE BEFORE THAT OF WEALTH. 

PAGE 

The point of agreement as to wealth—Advantages of proceeding 
from this point .......... 210 

CHAPTER X. 
VALUE IN USE AND VALUE IN EXCHANGE. 

SHOWING THE TWO SENSES OF VALUE; HOW THE DISTINCTION 
HAS BEEN IGNORED, AND ITS REAL VALIDITY J AND THE REASON 
FOR CONFINING THE ECONOMIC TERM TO ONE SENSE. 

Importance of the term value—Original meaning of the word— 
Its two senses—Names for them adopted by Smith—Utility 
and desirability—Mill's criticism of Smith—Complete ignor 
ing of the distinction by the Austrian school—Cause of this 
confusion—Capability of use not usefulness—Smith's distinc 
tion a real one—The dual use of one word in common speech 
must be avoided in political economy—Intrinsic value . . 212 

CHAPTER XI. 

ECONOMIC VALUE—ITS REAL MEANING AND FINAL 
MEASURE. 

SHOWING HOW VALUE IN EXCHANGE HAS BEEN DEEMED A RELATION 
OF PROPORTION; AND THE AMBIGUITY WHICH HAS LED TO THIS. 

The conception of value as a relation of proportion—It is really 
a relation to exertion—Adam Smith's perception of this—His 
reasons for accepting the term value in exchange—His con 
fusion and that of his successors ...... 226 

CHAPTER XH. 
VALUE IN EXCHANGE REALLY RELATED TO LABOR. 

SHOWING THAT VALUE DOES KOT COME FROM EXCHANGEABILITY, 
BUT EXCHANGEABILITY FROM VALUE, WHICH IS AN EXPRESSION 
OF THE SAVING OF LABOR INVOLVED IN POSSESSION. 

Root of the assumption that the sum of values cannot increase 
or diminish—The fundamental idea of proportion—We can 
not really think of value in this way—The confusion that 
makes us imagine that we do—The tacit assumption and re 
luctance to examine that bolster the current notion—Imagina 
tive experiment shows that value is related to labor—Common 

 CONTENTS OF BOOK II. Ill 

FAGB 

facts that prove this— Current assumption a fallacy of undis 
tributed middle — Various senses of " labor " — Exertion positive 
and exertion negative — Re-statement of the proposition as to 
value — Of desire and its measurement — Causal relationship of 
value and exchangeability — Imaginative experiment showing 
that value may exist where exchange is impossible — Value and 
expression of exertion avoided ....... 235 

CHAPTER 
THE DENOMINATOR OF VALUE. 

SHOWING WHAT VALDE IS, AND ITS RELATIONS. 

What value is — The test of real value — Value related only to 
human desire — This perception at the bottom of the Austrian 
school — But its measure must be objective— How cost of 
production acts as a measure of value — Desire for similar 
things and for essential things — Application of this principle — 
Its relation to land values ........ 250 

CHAPTER XIV. 
THE TWO SOURCES OF VALUE. 

SHOWING THAT THERE IS A VALDE PROM PEODDCTION AMD 
ALSO A VALUE FROM OBLIGATION. 

Value does not involve increase of wealth — Value of obligation 

—Of enslavement — Economic definition of wealth impossible 
without recognition of this difference in value — Smith's con 
fusion and results — Necessity of the distinction — Value from 
production and value from obligation — Either gives the essen 
tial quality of commanding exertion — The obligation of debt — 
Other obligations — Land values most important of all forms 
of value from obligation — Property in land equivalent to 
property in men — Common meaning of value in exchange — 
Eeal relation with exertion — Ultimate exchangeability is for 
labor — Adam Smith right — Light thrown by this theory of 
value . . . ... . . . . . .257 

CHAPTER XV. 
THE MEANING OF WEALTH IN POLITICAL ECONOMY. 

SHOWING HOW VALDE FROM PRODUCTION IS WEALTH IN 
POLITICAL ECONOMY. 

Wealth as fixed in "Progress and Poverty" — Course of the 
scholastic political economy — The reverse method of this work 

— The conclusion the same — Reason of the disposition to in 
clude all value as wealth — Metaphorical meanings — Bull and 
pun— Metaphorical meaning of wealth — Its core meaning— Its 

 112 CONTENTS OP BOOK II. 

PAGE 

use to express exchangeability—Similar use of money—Ordi 
nary core meaning the proper meaning of wealth—Its use in 
individual economy and in political economy—What is meant 
by increase of wealth—Wealth and labor—Its factors nature 
and man—Wealth their resultant—Of Adam Smith—Danger 
of carrying into political economy a meaning proper in indi 
vidual economy—Example of " money "—" Actual wealth " and 
"relative wealth"—"Value from production" and "value 
from obligation"—The English tongue has no single word for 
an article of wealth—Of " commodities "—Of "goods"—Why 
there is no singular in English—The attempt to form one by 
dropping the "s" and Anglo-German jargon .... 270 

CHAPTER XVI. 
THE GENESIS OF WEALTH. 

SHOWING HOW WEALTH ORIGINATES AND WHAT IT ESSEN 
TIALLY IS. 

Reason of this inquiry—Wealth proceeds from exertion prompted 
by desire, but all exertion does not result in wealth—Simple 
examples of action, and of action resulting in wealth—" Rid 
ing and tying"—Sub-divisions of effort resulting in increments 
of wealth—Wealth essentially a stored and transferable ser 
vice—Of transferable service—The action of reason as natural, 
though not as certain and quick as that of instinct—Wealth 
is service impressed on matter—Must be objective and have 
tangible form .......... 285 

CHAPTER XVII. 
THE WEALTH THAT IS CALLED CAPITAL. 

SHOWING WHAT THE WEALTH CALLED CAPITAL REALLY IS. 

Capital is a part of wealth used indirectly to satisfy desire— 
Simple illustration of fruit—Wealth permits storage of labor— 
The bull and the man—Exertion and its higher powers—Per 
sonal qualities cannot really be wealth or capital—The taboo 
and its modern form—Common opinion of wealth and capital 293 

CHAPTER XVIU. 
WHY POLITICAL ECONOMY CONSIDERS ONLY WEALTH. 

SHOWING THAT POLITICAL ECONOMY, AS PROPERLY STATED, 
COVERS ALL THE RELATIONS OF MEN IN SOCIETY INTO WHICH 
IT IS NECESSARY TO INQUIRE. 

Political economy does not include all the exertions for the 
satisfaction of material desires; but it does include the greater 
part of them, and it is through value that the exchange of 
services for services is made—Its duty and province . . 301 

 CONTENTS OF BOOK II. 113 

CHAPTER XIX. 
MORAL CONFUSIONS AS TO WEALTH. 

SHOWING HOW RICH AND POOR ARE CORRELATIVES, AND 
WHY CHRIST SYMPATHIZED WITH THE POOR. 

PAGE 

The legitimacy of wealth and the disposition to regard it as 
sordid and mean—The really rich and the really poor—They 
are really correlatives—The good sense of Christ's teaching . 304 

CHAPTER XX. 
OF THE PERMANENCE OF WEALTH. 

SHOWING THAT VALUES FROM OBLIGATION SEEM REALLY TO 
LAST LONGER THAN VALUES FROM PRODUCTION. 

Value from production and value from obligation—The one 
material and the other existing in the spiritual—Superior 
permanence of the spiritual—Shakespeare's boast—Maecenas's 
buildings and Horace's odes—The two values now existing— 
Franchises and land values last longer than gold and gems— 
Destruction in social advance—Conclusions from all this . 308 

CHAPTER XXI. 
THE RELATION OF MONEY TO WEALTH. 

SHOWING THAT SOME MONEY IS AND SOME HONEY IS NOT 
WEALTH. 

Where I shall treat of money—No categorical answer can yet 
be given to the question whether money is wealth—Some 
money is and some is not wealth ...... 313 

 INTRODUCTION TO BOOK II. 

SINCE political economy is the science which treats of 
the nature of wealth and the laws of its production 
and distribution, our first step is to fix the meaning that 
in this science properly attaches to its primary term. 

I shall in the first place show the need for an exhaustive 
inquiry, by showing the confusion that from the time of 
Adam Smith has attached to this term, and the utter 
incoherency with regard to it into which the scholastic 
economy has now fallen. 

I shall next try to ascertain the causes of this confusion. 
This will lead to a consideration of economic development, 
and in the absence in our literature of any intelligent his 
tory of political economy, I shall attempt briefly to trace 
its course, from the time of Adam Smith and his prede 
cessors, the French economists called Physiocrats, to its 
virtual abandonment in the teachings of the English and 
American colleges and universities at the present time. 

Having seen that the only point as to wealth on which 
the scholastic economists now agree is that it has value, 
and that their confusions as to wealth proceed largely from 
confusions as to value, I shall then try to determine the 
proper meaning of the term value. That fixed, we shall 
be in a position to fix the real meaning and relations of the 
term wealth, and shall proceed to do so. 

Although in this book it will be seen that I am giving 
many chapters to a subject which preceding systematic 

115 

 116 THE NATURE OF WEALTH. Book II. 

writers have passed over in a few lines, even where, as is 
the case with many of them, they have not utterly ignored 
it, I am sure that the reader will ultimately find iu the ease 
and certainty with which subsequent inquiries may be 
conducted an ample reward for the care thus taken in the 
beginning. 

 CHAPTER I. 
CONFUSIONS AS TO THE MEANING OF WEALTH. 

SHOWING THE FAILURE OF THE CURRENT POLITICAL ECON 
OMY TO DEFINE WEALTH, AND THE CONFUSIONS THERE 
FROM, CULMINATING IN THE ABANDONMENT OF POLITICAL 
ECONOMY BY ITS PROFESSED TEACHERS. 

Wealth the primary term of political economy—Common use of 
the word—Vagueness more obvious in political economy—Adam 
Smith not explicit—Increasing confusion of subsequent writers— 
Their definitions—Many make no attempt at definition—Perry's 
proposition to abandon the term—Marshall and Nicholson—Fail 
ure to define the term leads to the abandonment of political econ 
omy—This concealed under the word "economic"—The intent 
expressed by Macleod—Results to political economy. 

ri\HE purpose of the science of political economy is, as 
I we have seen, the investigation of the laws that gov 
ern the production and distribution of wealth in social or 
civilized life. In beginning its study, our first step is 
therefore to see what is the nature of the wealth of socie 
ties or communities; to determine exactly what we mean 
by the word wealth when used as a term of political 
economy. 

There are few words in more common use than this 
word wealth, and in the general way that suffices for 
ordinary purposes we all know what we mean by it. But 
•when it comes to defining that meaning with the precision 

117 

 118 THE NATURE OF WEALTH. Book II. 

necessary for the purposes of political economy, so as to 
determine what is and what is not properly included in the 
idea of wealth as political economy must treat of it, most 
of us, though we often and easily use the word in ordinary 
thought and speech, are apt to become conscious of indefi- 
niteness and perplexity. 

This is not strange. Indeed, it is a natural result of the 
transference to a wider economy of a term we are accus 
tomed to use in a narrower economy. In our ordinary 
thought and speech, referring, as it most frequently does, 
to every-day affairs and the relations of individuals with 
other individuals, the economy with which we are usually 
concerned and have most frequently in mind is individual 
economy, not political economy—the economy whose 
standpoint is that of the unit, not the economy whose 
standpoint is that of the social whole or social organism; 
the Greater Leviathan of natural origin of which I have 
before spoken. 

The original meaning of the word wealth is that of 
plenty or abundance; that of the possession of things con 
ducive to a certain kind of weal or well-being. Health, 
strength and wealth express three kinds of weal or well- 
being. Health relates to the constitution or structure, and 
expresses the idea of well-being with regard to the physi 
cal or mental frame. Strength relates to the vigor of the 
natural powers, and expresses the idea of well-being with 
regard to the ability of exertion. Wealth relates to the 
command of external things that gratify desire, and ex 
presses the idea of well-being with regard to possessions 
or property. Now, as social health must mean something 
different from individual health, and social strength some 
thing different from individual strength; so social wealth, 
or the wealth of the society, the larger man or Greater 
Leviathan of which individuals living in civilization are 

L 

 Chap. I. CONFUSIONS AS TO MEANING. 119 

components, must be something different from the wealth 
of the individual. 

In the one economy, that of individuals or social units, 
everything is regarded as wealth the possession of which 
tends to give wealthiness, or the command of external 
things that satisfy desire, to its individual possessor, even 
though it may involve the taking of such things from 
other individuals. But in the other economy, that of 
social wholes, or the social organism, nothing can be re 
garded as wealth that does not add to the wealthiness of 
the whole. What, therefore, may be regarded as wealth 
from the individual standpoint, may not be wealth from 
the standpoint of the society. An individual, for instance, 
may be wealthy by virtue of obligations due to him from 
other individuals; but such obligations can constitute no 
part of the wealth of the society, which includes both 
debtor and creditor. Or, an individual may increase his 
wealth by robbery or by gaming; but the wealth of the 
social whole, which comprises robbed as well as robber, 
loser as well as winner, cannot be thus increased. 

It is therefore no wonder that men accustomed to the 
use of the word wealth in its ordinary sense, a sense in 
which no one can avoid its continual use, should be liable, 
unless they take great care, to slip into confusion when 
they come to use the same word in its economic sense. 
But what does seem strange is that indefiniteness, per 
plexity and confusion as to the meaning of the economic 
term wealth, are even more obvious in the writings of 
the professional economists who are accredited by colleges 
and universities and other institutions of learning with 
the possession of special knowledge which authorizes them 
to instruct their fellows on economic subjects. While as 
for the professional statisticians who in long arrays of 
figures attempt to estimate the aggregate wealth of states 

 120 THE NATURE OF WEALTH. Book II. 

and nations, they seem for the most part innocent of any 
suspicion that what may be wealth to an individual may 
not be wealth to a community.* 

Adam Smith, who is regarded as the founder of the 
modern science of political economy, is not very definite 
or entirely consistent as to the real nature of the wealth 
of nations, or wealth in the economic sense. But since 
his time the confusions of which he shows traces, instead 
of being cleared up by the writings of those who in our 
schools and colleges are recognized as political economists,t 
has become progressively so much worse confounded that 
in the latest and most elaborate of these treatises all at 
tempts to define the term seem to have been abandoned. 

In " Progress and Poverty" (1879), I showed the utter 
confusion as to wealth into which the scholastic political 
economy had fallen, by printing together a number of 
varying and contradictory definitions of its sub-term cap 
ital, as given by accredited economic writers.J Although 
I was then obliged to fix the meaning of the main term 
wealth in order to fix the meaning of the sub-term 

* A curious, if not comical, instance of the loose way in which pro 
fessed statisticians jump at conclusions is afforded in the controversy 
I had in "Frank Leslie's Weekly" (1883) with Professor Francis A. 
Walker, then superintendent of the United States Census, and which 
was afterwards reprinted as an appendix to the American edition of 
my "Social Problems." 

t "Progress and Poverty," although it has already exerted awider 
influence than any other economic work written since the "Wealth 
of Nations," is not so recognized, not being even alluded to in the 
elaborate history of political economy which, on account of the utter 
chaos into which the teachings of that science have fallen, takes in 
the last edition of the " Encyclopredia Britannica" the place before 
accorded to the science itself, and which has since been reprinted in 
separate form. ("A History of Political Economy," by John Kells 
Ingram, LL.D., Macmillan & Co., 1888.) 

t " Progress and Poverty," Book I., Chapter II., " The Meaning of 
the Terms." 

 Cliap.I. CONFUSIONS AS TO MEANING. 121 

capital, with which I was immediately concerned, the 
confusion among the accredited economists has "got no 
better very fast," the " economic revolution " which has in 
the meanwhile displaced from their chairs the professors 
of the then orthodox political economy in order to give 
place to so-called "Austrians," or similar professors of 
"economics," having only made confusion worse con 
founded. Let me, therefore, in order to show in the most 
up-to-date way the confusion existing among scholastic 
economists as to the primary term of political economy, 
put together what definitions of the economic term 
wealth I can find in the works of representative and 
accredited economic writers since Adam Smith to the 
present time, placing them in chronological order as far 
as possible: 

J. B. Say—Divides wealth into natural and social, and 
applies the latter term to whatever is susceptible of ex 
change. 

Malthus—Those material objects which are necessary, 
useful or agreeable to man. 

Torrens—Articleswhich possess utility and are produced 
by some portion of voluntary effort. 

McCulloch—Those articles or products which have ex 
changeable value, and are either necessary, useful or 
agreeable to man. 

Jones—Material objects voluntarily appropriated by 
man. 

Rae—All I can find on this subject in his " New Princi 
ples of Political Economy" (1833) is that "individuals 
grow rich by the acquisition of wealth previously existing; 
nations by the creation of wealth that did not before 
exist." 

Senior—All those things, and those things only, which 
are transferable, are limited in supply, and are directly or 
indirectly productive of pleasure or preventive of pain. .. . 

tin 

 122 THE NATURE OF WEALTH. Book 11. 

Health, strength and knowledge, and the other acquired 
powers of body and mind, appear to us to be articles of 
wealth. 

Vethake—All objects, immaterial as well as material, 
having utility, excepting those not susceptible of being 
appropriated, and those supplied gratuitously by nature. 
By the wealth of a community or nation is meant all the 
wealth which is possessed by the persons composing it, 
either in their individual or corporate capacities. 

John Stuart Mill—All useful and agreeable things which 
possess exchangeable value; or in other words, all useful 
and agreeable things except those which can be obtained, 
in the quantity desired, without labor or sacrifice. 

Fawcett—Wealth may be defined to consist of every 
commodity which has an exchangeable value. 

Bowen—The aggregate of all things, whether material 
or immaterial, which contribute to comfort and enjoyment 
and which are objects of frequent barter and sale. 

Jevons—What is (1) transferable, (2) limited in supply, 
(3) useful. 

Mason and Lalor, 1875—Anything for which something 
can be got in exchange. 

Leverson—The necessaries and comforts of life produced 
by labor. 

Shadwell—All articles the possession of which affords 
pleasure to anybody. 

Macleod—Anything whatever that can be bought, sold 
or exchanged, or whose value can be measured in money. 
. . . Wealth is nothing but exchangeable rights. 

De Laveleye—Everything which answers to men's ra 
tional wants. A useful service and a useful object are 
equally wealth. . . . Wealth is what is good and useful— 
a good climate, well-kept roads, seas teeming with fish, are 
unquestionably wealth to a country, and yet they cannot 
be bought. 

 Chap. I. CONFUSIONS AS TO MEANING. 123 

Francis A. Walker—All articles of value and nothing 
else. 

Macvane—All the useful and agreeable material objects 
we own or have the right to use and enjoy without asking 
the consent of any other person. Wealth is of two gen 
eral kinds—natural wealth and wealth produced by labor. 

Clark—Usage has employed the word wealth to sig 
nify, first, the comparative welfare resulting from material 
possessions, and secondly, and by a transfer, the posses 
sions themselves. Wealth then consists in the relative- 
weal-constituting elements in man's material environment. 
It is objective to the user, material, useful and appropri 
able. 

Laughlin—Defines material wealth as something which 
satisfies a want; cannot be obtained without some sacrifice 
of exertion, and is transferable; but also speaks of imma 
terial wealth without defining it. 

Newcomb—That for the enjoyment of which people pay 
money. The skill, business ability or knowledge which 
enables their possessors to contribute to the enjoyment of 
others, including the talents of the actor, the ability of the 
man of business, the knowledge of the lawyer and the skill 
of the physician, is to be considered wealth when we use 
the term in its most extended sense. 

Bain—A commodity is material worked up after a de 
sign to answer to a definite demand or need, and wealth is 
simply the sum total of commodities. 

Ruskin—This brilliant essayist and art critic can hardly 
be classed as a scholastically accepted political economist, 
and I have refrained from giving his definition of wealth 
in what otherwise would have been its proper place. But 
his "Unto this Last" (1866) consists of four essays on 
political economy, and the brilliant flashes of ethical truth 
which they like his other works contain have led many 
admirers to regard him as a profound economist. He is 

 124 THE NATURE OF WEALTH. Book II. 

anything but complimentary to the "modern soi-disant 
science," as he calls it, against which he brings the charge 
that while claiming to be the science of wealth it cannot 
tell what wealth is. In the preface to these essays he says: 
" The real gist of these papers, their central meaning and 
aim is to give, as I believe, for the first time in plain 
English, a logical definition of wealth; such definition 
being absolutely needed for a basis of economical science." 
It would be well, therefore, without assuming that Ruskin 
in any way represents the scholastic political economy, 
which he likened to an astronomy unable to say what a 
star was, to give his definition. That definition, to use 
his own words is—"The possession of useful articles that 
we can use," or as again stated somewhat later on, " The 
possession of the valuable by the valiant." 

The endeavor to get together these definitions of wealth 
by economic writers has involved considerable effort, but 
it is likely to be noticeable by its omissions. The fact is, 
that many of the best-known writers on political economy, 
such for instance as Ricardo, Chalmcrs, Thorold Rogers 
and Cairnes, make no attempt to give any definition of 
wealth. The same thing is to be said of the two volumes 
of Karl Marx entitled " Capital;" and also of the two vol 
umes on the same subject by Bohm-Bawerk, which also 
have been translated into English, and are much quoted 
by that now dominant school of scholastic political econ 
omy known as the "Austrian." And while many of the 
writers who make no attempt to define wealth, do have a 
good deal to say about it, what they say is too diffused 
and incoherent either to quote or condense. There are 
many who without saying so, evidently hold the opinion 
thus frankly expressed by Professor Perry in his " Ele 
ments of Political Economy" (18G6): 

This word wealth has been the bane of political economy. It is 
the bog whence most of the mists Lave arisen which have beclouded 

 Chap. I. CONFUSIONS AS TO MEANING. 125 

the whole subject. Prom its indefiniteness and the variety of asso 
ciations it carries along with it in different minds, it is totally unfit 
for any scientific purpose whatever. It is itself almost impossible 
to be defined, and consequently can serve no useful purpose in a 
definition of anything else. . . . The meaning of the word wealth 
has never yet been settled; and if political economy must wait until 
that work be done as a preliminary, the science will never be satis 
factorily constructed. . . . Men may think, and talk, and write, and 
dispute till doomsday, but until they come to use words with defi- 
niteness, and mean the same thing by the same word, they reach com 
paratively few results and make but little progress. And it is just 
at this point that we find the first grand reason of the slow advance 
hitherto made by this science. It undertook to use a word for scien 
tific purposes which no amount of manipulation and explanation could 
make suitable for that service. Happily there is no need to use this 
word. In emancipating itself from the word wealth as a technical 
term, political economy has dropped a clog, and its movements are 
now relatively free. 

To make this exhibition of definitions as fairly repre 
sentative as possible I have wished to include in it that of 
Professor Alfred Marshall, Professor of Political Economy 
in the University of Cambridge, England, whose " Princi 
ples of Economics " (of which only the first volume, issued 
in 1890, and containing some 800 octavo pages, has yet 
been published) may be considered the latest and largest, 
and scholastically the most highly indorsed, economic work 
yet published in English. 

It cannot be said of him, as of many economic writers, 
that he does not attempt to say what is meant by wealth, 
for if one turns to the index he is directed to a whole 
chapter. But neither in this chapter nor elsewhere can I 
find any paragraph, however long, that may be quoted as 
defining the meaning he attaches to the term wealth. The 
only approach to it is this: 

All wealth consists of things that satisfy wants, directly or indi 
rectly. All wealth therefore consists of goods; but not all kinds of 
goods are reckoned as wealth. 

' 

 126 THE NATURE OF WEALTH. Book II. 

But for the distinction between goods reckoned as 
wealth and goods not reckoned as wealth, which one would 
think was about to follow, the reader looks in vain. He 
merely finds that Professor Marshall gives him the choice 
of classifying goods into external-material-transferable 
goods, external-material-non-transferable goods, external- 
personal-transferable goods, external-personal-non-trans 
ferable goods, and internal-personal-non-transferable 
goods; or else into material-external-transferable goods, 
material-external-non-transferable goods, personal-exter 
nal-transferable goods, personal-external-non-transferable 
goods, and personal-internal-non-transferable goods. But 
as to which of these kinds of goods are reckoned as wealth 
and which are not, Professor Marshall gives the reader no 
inkling, unless, indeed, he may be able to find it in Wag 
ner's " Volkswirthschaftslehre," to which the reader is re 
ferred at the conclusion of the chapter as throwing " much 
light upon the connection between the economic concept 
of wealth and the juridical concept of rights in private 
property." I can convey the impression produced on my 
mind by repeated struggles to discover what the Professor 
of Political Economy in the great English University of 
Cambridge holds is to be reckoned as wealth, only by say 
ing that it seems to comprise all things in the heavens 
above, the earth beneath and the waters under the earth, 
that may be useful to or desired by man, individually or 
collectively, including man himself with all his natural or 
acquired capabilities, and that all I can absolutely affirm, 
for it is the only thing for which I can find a direct state 
ment, is, that " we ought for many purposes to reckon the 
Thames a part of England's wealth." 

The same utter, though perhaps somewhat less elaborate, 
incoherency is shown by Professor J. Shield Nicholson, 
Professor of Political Economy in the great Scottish 
University of Edinburgh, whose " Principles of Political 

 Chip. I. CONFUSIONS AS TO MEANING. 127 

Economy " appeared in first volume (less than half as big 
as that of Professor Marshall's) in 1893, and has not yet 
(1897) been succeeded by another. Looking up the index 
for the word " wealth " one finds no less than fifteen refer 
ences, of which the first is "popular conception of," and 
the second "economic conception of." Yet in none of 
these, nor in the whole volume, though cue wade through 
it all in the search, is anything like a definition of wealth to 
be found, the only thing resembling a direct statement 
being the incidental remark (p. 404) that "land is in 
general the most important item in the inventory of na 
tional wealth "—a proposition which logically is as untrue 
as thajt we ought to reckon the Thames a part of England's 
wealth. \ 

Now, wealth is the object-noun, or name given to the 
subject-matter, of political economy, the science that seeks 
to discover the laws of the production and distribution of 
wealth in human society. It is therefore the economic 
term of first importance. Unless we know what wealth 
is, how possibly can we hope to discover how it is pro 
cured and distributed ? Yet after a century of what passes 
for the cultivation of this science, with professors of 
political economy in every college, the question, " What is 
wealth ? " finds at their hands no certain answer. Even to 
such questions as, " Is wealth material or immaterial ?" or 
" Is it something external to man or does it include man 
and his attributes ? " we get no undisputed reply. There 
is not even a consensus of opinion. And in the latest and 
most pretentious scholastic teaching the attempt to obtain 
any has been virtually, where not definitely, abandoned, 
and the economic meaning of wealth reduced to that of 
anything having value to the social unit. 

It is clear that failure to define its subject-matter or 
object-noun must be fatal to any attempted science; for it 
shows lack of the first essential of true science. And the 

 128 THE NATURE OP WEALTH. Book II. 

fate of rejection even by those who profess to study and 
teach it has already befallen political economy at the hands 
of the accredited institutions of learning. 

This fact will not be obvious to the ordinary reader, for 
it is concealed to him under a change in the meaning of 
a word. 

Since the term comes into our language from the Greek, 
the proper word for expressing the idea of relationship to 
political economy is "politico-economic." But this is a 
term too long, and too alien to the Saxon genius of our 
mother tongue, for frequent repetition. And so the word 
"economic" has come into accepted use in English, as ex 
pressing that idea. We are justified therefore, in suppos 
ing, and as a matter of fact do generally suppose when we 
first hear of them, that the works now written by the pro 
fessors of political economy in our universities and col 
leges, and entitled " Elements of Economics," " Principles 
of Economics," " Manual of Economics," etc., are treatises 
on political economy. Examination, however, will show 
that many of these at least are not in reality treatises on 
the science of political economy, but treatises on what 
their authors might better call the science of exchanges, 
or the science of exchangeable quantities. This is not the 
same thing as political economy, but quite a different thing 
—a science in short akin to the science of mathematics.* 
In this there is no necessity for distinguishing between 
what is wealth to the unit and what is wealth to the whole, 
and moral questions, that must be met in a true political 
economy, may be easily avoided by those to whom they 
seem awkward. 

A proper name for this totally different science, which 
the professors of political economy in so many of the lead- 

* The attempts by titular professors of political economy to find 
mathematical expression for what they call "economics" must be 
familiar to those who have toiled through recent scholastic literature. 

 Chap. I. CONFUSIONS AS TO MEANING. 129 

ing colleges and universities on both sides of the Atlantic 
have now substituted in their teaching for the science they 
are officially supposed to expound, would be that of " cat- 
allactics," as proposed by Archbishop Whately, or that of 
"plutology,"as proposed by Professor Hern, of Melbourne; 
but it is certainly not properly " economics," for that by 
long usage is identified with political economy. 

Both the reason for, and what is meant by, the change 
of title from political Economy to economics, which is so 
noticeable in the writings of the professors of political 
economy in recent years, are thus frankly shown by Mac- 
leod (Vol. I., Chapter VII., Sec. 11, "Science of Econom 
ics "): 

We do not propose to make any change at all in the name of the 
science. Both the terms "Political Economy" and "Economic Sci 
ence," or "Economics," are in common use, and it seems better to 
discontinue that name which is liable to misinterpretation, and which 
seems to relate to politics, and to adhere to that one which most 
clearly defines its nature and extent and is most analogous to the 
names of other sciences. We shall, therefore, henceforth discon 
tinue the use of the term "political economy" and adhere to that of 
" economics." Economics, then, is simply the science of exchanges, 
or of commerce in its widest extent and in all its forms and varieties; 
it is sometimes called the science of wealth or the theory of value. 
The definition of the science which we offer is: 

Economics is the science which treats of the laws which govern 
the relations of exchangeable quantities. 

Now the laws which govern the relations of exchange 
able quantities are such laws as 2 + 2 = 4; 4—1 = 3; 
2x4 = 8; 4-7-2 = 2; and their extensions. 

The proper place for such laws in any honest classifica 
tion of the sciences is as laws of arithmetic or laws of 
mathematics, not as laws of economics. And the attempt 
of holders of chairs of political economy to take advantage 
of the usage of language which has made " economic" a 
short word for " politico-economic " to pass off their " sci- 

 130 THE NATURE OF WEALTH. Book II. 

ence of economics" as if it were the science of political 
economy, is as essentially dishonest as the device of the 
proverbial Irishman who attempted to cheat his partners 
by the formula, " Here's two for you two, and here's two 
for me too." 

To this, in less than a century after Say congratulated 
his readers on the first establishment of chairs of political 
economy in universities, has the scholastic political econ 
omy come. 

Professor Perry, writing thirty years ago, thought that 
by emancipating itself from the word wealth as a tech 
nical term, political economy would drop a clog and its 
movements would become relatively free. In what is now 
taught from the chairs of political economy in our leading 
colleges on both sides of the Atlantic the clog has indeed 
been dropped, with results which very strongly suggest 
the increased freedom of movement which comes from 
the dropping of its tail by a boy's kite. Without the clog 
of an object-noun, political economy as there taught has 
plunged out of existence, and the science of values which 
is taught in its place has no answer whatever to give even 
to questions which Professor Perry would have thought 
completely settled at the time he wrote. 

 CHAPTER II. 

CAUSES OF CONFUSION AS TO THE MEANING 
OF WEALTH. 

SHOWING THE REAL DIFFICULTY THAT BESETS THE 
ECONOMIC DEFINITION OP WEALTH. 

Effect of slavery on the definition of wealth—Similar influences now 
existing—John Stuart Mill on prevalent delusions—Genesis of the 
protective absurdity—Power of special interests to mold common 
opinion—Of injustice and absurdity, and the power of special in 
terests to pervert reason—Mill an example of how accepted opin 
ions may blind men—Effect upon a philosophical system of the 
acceptance of an incongruity—Meaning of a saying of Christ— 
Influence of a class profiting by robbery shown in the development 
of political economy—Archbishop Whately puts the cart before 
the horse—The power of a great pecuniary interest to affect 
thought can be ended only by abolishing that interest—This shown 
in American slavery. 

THE neglect of political economy in the classical world 
has been explained by modern economists as due to 
the effect of slavery in causing labor to be regarded as 
degrading.* 

But in this a quicker and more direct effect of slavery 
in preventing the cultivation of political economy has been 
overlooked. 

* See, for instance, McCulloch's " Principles of Political Economy " 
(1825), Part I. 

131 

 132 THE NATURE OF WEALTH. Bookll. 

Except perhaps as the crucified fomenter of a servile 
rebellion, the only class in which any philosopher of the 
ancient world might have got a hearing that could have 
brought his name and teachings down to us, was that 
wealthy class, whose riches were largely in their slaves. 
For in any social condition in which privilege and wealth 
are inequitably distributed, what Jefferson said of Jesus* 
must be true of all moral or economic teachers—" All the 
learned of His country, intrenched in its power and riches, 
were opposed to Him, lest His labors should undermine 
their advantages." 

The first question which a coherent political economy 
must answer is, what is wealth ? This, in a state of society 
in which the ruling class were universally slaveholders, 
was too delicate a question for any accredited philosopher 
to have fairly met. Even the most astute among them 
could go no further than to say, with the intellectual giant 
Aristotle, that wealth " is all things whose value is mea 
sured by money," or with the Roman jurist Ulpian, " that 
is wealth which can be bought and sold." From this 
point, the very point to which our modern political econ 
omy has in current scholastic teachings now come again, 
though there may be economies of finance and economies 
of exchange and economies of agriculture (there were 
many such among the Greeks and Romans, their agricul 
tural economy even teaching how slaves should be sold as 
soon as age and infirmity began to lessen the work that 
could be extorted from them), there was and could be no 
political economy. 

But this indisposition to recognize the distinction be 
tween what may be wealth to the individual and what is 

* " Syllabus of an estimate of the merits of the doctrines of Jesus." 
("The Writings of Thomas Jefferson," collected and edited by Paul 
Leicester Ford, Putnam's Sons, Vol. VIII., p. 227.) 

 Chap. II. CAUSES OF CONFUSION. 133 

wealth to the society, which has prevented the growth of 
any science of political economy wherever, either in the 
ancient or the modern world, the ownership of human 
beings has been an important element in the wealth of the 
wealthy class, has not entirely ceased to show itself with 
the abolition of chattel slavery. Even the men who have 
seen that there was a connection between the failure of the 
restless and powerful thinkers of the classic world to de 
velop a political economy and their acceptance of slavery, 
have in their own development of political economy been 
unconsciously affected by a similar retarding and aberrat 
ing influence. Chattel slavery is only one of the means by 
which individuals become wealthy without increase in the 
general wealth, and as in modern civilization it has lost 
importance, other means to the same end have taken its 
place. But wherever and from whatever causes society is 
divided into the very rich and the very poor, the primary 
question of political economy, what is wealth ? must be a 
delicate one to men sensibly or insensibly influenced by 
the feelings and opinions of the dominating class. For 
in such social conditions much that commonly passes for 
wealth must really be only legalized robbery, and nothing 
can be more offensive to those enjoying the profit of rob 
bery than to call it by its true name. 

In the preliminary remarks to his " Principles of Politi 
cal Economy " John Stuart Mill says: 

It often happens that the universal belief of one age of mankind 
—a belief from which no one was, nor without an extraordinary 
effort of genius and courage, could at that time be free—becomes to 
a subsequent age so palpable an absurdity, that the only difficulty 
then is to imagine how such a thing can ever have appeared credible. 
It has so happened with the doctrine that money is synonymous with 
wealth. The conceit seems too preposterous to be thought of as a 
serious opinion. It looks like one of the crude fancies of childhood, 
instantly corrected by a word from any grown person. But let no 

 134 THE NATURE OF WEALTH. Book II. 

one feel confident that he should have escaped the delusion if he had 
lived at the time when it prevailed. 

Let no one be confident indeed! 

Yet it is a mistake to liken the absurdities of the mer 
cantile or protective system to the crude fancies of child 
hood. This has never been their origin or their strength. 
In the petty commerce in marbles and tops that goes on 
among school-boys no boy ever imagined that the more 
he gave and the less he got in such exchange the better 
off he should be. No primitive people were ever yet so 
stupid as to suppose that they could increase their wealth 
by taxing themselves. Any child that could understand 
the proposition would see that a dollar's worth of gold 
could not be more valuable than a dollar's worth of any 
thing else, as readily as it would see that a pound of lead 
could not be heavier than a pound of feathers. Such 
ideas are not the fancies of childhood. Their growth, 
their strength, their persistence, as we may clearly see in 
the newer countries of America and Australia, where they 
have appeared and gathered force since Adam Smith's 
time, is due to the growth of special interests in artificial 
restrictions on trade as a means of increasing individual 
wealth at the expense of the general wealth. 

The power of a special interest, though inimical to the 
general interest, so to influence common thought as to 
make fallacies pass as truths, is a great fact without which 
neither the political history of our own time and people 
nor that of other times and peoples can be understood. 
A comparatively small number of individuals brought 
into virtual though not necessarily formal agreement of 
thought and action by something that makes them indi 
vidually wealthy without adding to the general wealth, 
may exert an influence out of all proportion to their num 
bers. A special interest of this kind is, to the general in- 

 C1iajp.II. CAUSES OF CONFUSION. 135 

terests of society, as a standing army is to an unorganized 
mob. It gains intensity and energy in its specialization, 
and in the wealth it takes from the general stock finds 
power to mold opinion. Leisure and culture and the cir 
cumstances and conditions that command respect accom 
pany wealth, and intellectual ability is attracted by it. On 
the other hand, those who suffer from the injustice that 
takes from the many to enrich the few, are in that very 
thing deprived of the leisure to think, and the opportuni 
ties, education and graces necessary to give their thought 
acceptable expression. They are necessarily the "unlet 
tered," the " ignorant," the " vulgar," prone in their con 
sciousness of weakness to look up for leadership and 
guidance to those who have the advantages that the pos 
session of wealth can give. 

Now, if we consider it, injustice and absurdity are sim 
ply different aspects of incongruity. That which to right 
reason is unjust must be to right reason absurd. But an 
injustice that impoverishes the many to enrich the few 
shifts the centers of social power, and thus controls the 
social organs and agencies of opinion and education. 
Growing in strength and acceptance by what it feeds on, 
it has only to continue to exist to become at length so 
vested or rooted, not in the constitution of the human 
mind itself, but in that constitution of opinions, beliefs and 
habits of thought which we take, as we take our mother 
tongue, from our social environment, that it is not per 
ceived as injustice or absurdity, but seems' even to the 
philosopher an integral part of the natural order, with 
which it were as idle if not as impious to quarrel as with 
the constitution of the elements. Even that highest gift, 
the gift of reason, is in its bestowal on man subjected to 
his use, and the very mental qualities that enable us to 
discover truth may be perverted to fortify error, and are 
always so perverted wherever an anti-social special interest 

 136 THE NATUEE OF WEALTH. Book II. 

gains control of the thinking and teaching functions of 
society. 

In this lies the explanation of the fact that looking 
through the vista of "what we know of human history we 
everywhere find what are to us the most palpable absurdi 
ties enshrining themselves in the human mind as unques 
tionable truths—whole nations the prey of preposterous 
superstitions, abasing themselves before fellow-creatures, 
often before idiots or voluptuaries, whom their imagina 
tion has converted into the representatives of Deity; the 
great masses toiling, suffering, starving, that those they 
bear on their shoulders may live idly and daintily. Wher 
ever and whenever what we may now see to be a palpable 
absurdity has passed for truth, we may see if we look close 
enough that it has always been because behind it crouched 
some powerful special interest, and that the man has 
hushed the questioning of the child. 

This is of human nature. The world is so new to us 
when we first come into it; we are so compelled at every 
turn to rely upon what we are told rather than on what 
we ourselves can discover; what we find to be the common 
and respected opinion of others has with us such almost 
irresistible weight, that it becomes possible for a special 
interest by usurping the teaching province to make to us 
black seem white and wrong seem right. 

Let no one indeed feel confident that he could have es 
caped any delusion, no matter how preposterous, that has 
ever prevailed among men, if he had lived when and where 
it was accepted. From as far back as we can see, human 
nature has not changed, and we have but to look around 
us to discover in operation to-day the great agency that 
has made falsehood seem truth. 

Of the fact of which, in what I have quoted, John Stuart 
Mill speaks with reference to the doctrine that money is 
synonymous with wealth—the fact that accepted opinion 

 Chap. II. CAUSES OF CONFUSION. 137 

may blind even able and courageous men—he himself, in 
the same book and almost in the same paragraph, gives 
unconscious illustration, in the timidity with which he 
touches the question of the nature of wealth, when it leads 
beyond what Adam Smith had already shown, that it was 
not synonymous with money. He recognizes, indeed, 
that what is wealth to an individual is not therefore wealth 
to the community or nation, and definitely states, or rather 
concedes, that debt, even funded debt, is no part of the 
wealth of the society. But the way in which he does this 
is suggestive. He says: 

The canceling of the debt would be no destruction of wealth, but 
a transfer of it; a wrongful abstraction of wealth from certain mem 
bers of the community, for the profit of the government or of the 
taxpayers. 

The gratuitous word " wrongful" shows the bias. And 
even this recognition that debt cannot be wealth in the 
economic sense is ignored in the subsequent definition of 
wealth. 

So strongly indeed was John Stuart Mill, who seems to 
me a very type of intellectual honesty, under the influence 
of the accustomed ideas of his time and class, that al 
though he saw with perfect clearness that the wealth that 
comes to individuals by reason of their monopoly of land 
really comes to them through force and fraud, yet he 
seemingly never dreamed that land was no part of national 
wealth. Nor yet, does he seem even to dream that the 
people of a country, once they had been forcibly deprived 
of it, could recover what he saw to be their natural right. 
In all the history of dead absurdities there can be no sen 
tence more strikingly illustrative of the power of accepted 
opinion to hide absurdity than this of his: 

The land of Ireland, the land of every country, belongs to the 
people of that country. The individuals called landowners have no 

 138 THE NATURE OF WEALTH. Book II. 

right in morality and justice to anything but rent, or compensation 
for its salable value. 

This is simply to say that the ownership of the land of 
Ireland gave the people who morally owned it the right to 
buy it from those who did not morally own it. 

What was it that hid from this trained logician and 
radically minded man the patent absurdity of saying that 
the individuals called landowners had no right to land, 
except that which is the sum and expression of all ex 
changeable rights to land—rent ? 

Whoever will examine his writings will see that it was 
his previous acceptance of certain doctrines—doctrines 
with which a succession of ingenious men had endeavored 
to bring into semblance of logical coherence a political 
economy vitally defective, and which resembled the elabo 
rate system of cycles and epicycles with which the ingenu 
ity of astronomers previous to Copernicus had endeavored 
to account for the movements of the heavenly bodies. 

When an incongruous substance, such for instance as a 
bullet, is implanted in the human body, the physical system, 
as soon as it despairs of its removal, sets about the en 
deavor to accommodate itself to the incongruity, frequent 
ly with such success that at length the incongruity is not 
noticed. The stout, masterful man with whom I have just 
now been talking, and whom you might liken to a bull if 
it were not for the intelligence of his face, has long carried 
a bullet under his skin. And men have even been known 
to live for years with bullets in their brains. 

So, too, with philosophical systems. When an incon 
gruity is accepted in a philosophical system, the abilities 
of its professors are at once set to work to accommodate 
other parts of the system to the incongruity, frequently 
with such success that philosophical systems containing 
fatal incongruities have been known to command accep- 

 .II. CAUSES OP CONFUSION. 139 

tance for long generations. For the mind of man is even 
more plastic than the body of man, and the human imagi 
nation, which is the chief element in the building up of 
philosophical systems, furnishes a lymph more subtle than 
that which the blood supplies to the bodily system. 

Indeed, the artificialities and confusions by which an 
incongruity is made tolerable to a philosophic system, for 
the very reason that they cannot be understood except by 
those who have submitted their minds to a special course 
of cramping, become to them a seeming evidence of su 
periority, gratifying a vanity like that of the contortionist 
who has painfully learned to walk a little way on his hands 
instead of his feet and to twist his body into unnatural 
and unnecessary positions; or like that of the conveyancer 
or lawyer, who has in the same way painfully learned to 
perform such tricks with language. 

And just as the long toleration by the physical system 
of such an incongruity as a bullet, a tumor or a dislocation, 
by reason of the efforts which the system has made to rec 
oncile to it other parts and functions, renders it more diffi 
cult of removal or remedy, so the toleration in a philosoph 
ical system of an incongruity makes its removal or remedy 
far more difficult to those who have bent their minds to 
the system as it has by ingenious men been adapted to the 
incongruity, than it is to those who approach the subject 
from first principles, and who if they may have more to 
learn have less to unlearn. For it is true, as Bacon said, 
that " a cripple in the right way may beat a racer in the 
wrong one. Nay, the fleeter the racer is who has once 
missed his way, the farther he leaves it behind." 

This, I think, is what was meant in the concise but deep 
philosophy of Christ by such sayings as that the Kingdom 
of Heaven, or system of right-doing, though revealed unto 
babes, is hidden from those deemed wise and prudent, and 
that what the common people heard gladly was foolishness 

 140 THE NATUEE OF WEALTH. Book II. 

to the learned scribes and pharisees. With illustrations 
of this principle the history of-accepted opinion in every 
time and place abounds. 

It is not to the fancies of childhood that we must look 
for an explanation of the strength of long dominant 
absurdities. Michelet ("The People") truly says: "No 
consecrated absurdity would have stood its ground in this 
world if the man had not silenced the objection of the child." 

But not to depart from the matter in hand.- It is evi 
dent that the existence of a powerful class whose incomes 
could not fail to be endangered by a recognition of the fact 
that what makes them individually wealthy is not any part 
of the wealth of society, but only robbery, must from the 
beginning of the cultivation of political economy in modern 
times have beset its primary step, the determination of 
what the wealth of society consists of, with something of 
the same difficulty that prevented its development in classic 
times. And when the development commenced, and 
especially after it had been taken charge of by the colleges 
and universities, which as at present constituted must be 
peculiarly susceptible to the influence of the wealthy 
classes, it is evident that the efforts of able men to bring 
into some semblance of coherency a system of political 
economy destitute of any clear and coherent definition of 
wealth must have surrounded the subject with greater 
perplexities and helped powerfully to prevent the need of 
a definition of wealth from being felt. 

This is precisely what we see when we examine the dif 
ferent attempts to define wealth in the economic sense, 
and note the increasing confusions that have attended 
them, culminating in the acceptance of the common mean 
ing of the word wealth—anything that has exchangeable 
power—as the only meaning that can be given to the eco 
nomic term; and the consequent abandonment of the 
possibility of a science of political economy. 

 Chap. II. CAUSES OF CONFUSION. 141 

Archbishop "Whately, in the chapter on ambiguous terms 
appended to his " Elements of Logic," says in speaking of 
one of the ambiguities of the word wealth, that which 
led to the use of wealth as synonymous with money: 

The results have been fraud, punishment and poverty at home, and 
discord and war without. It has made nations consider the wealth 
of their customers a source of loss instead of profit; and an advan 
tageous market a curse instead of a blessing. By inducing them to 
refuse to profit by the peculiar advantages in climate, soil or indus 
try, possessed by their neighbors, it has forced them in a great 
measure to give up their own. It has for centuries done more, and 
perhaps for centuries to come will do more, to retard the improve 
ment of Europe than all other causes put together. 

In this, the Archbishop, though famous as a logician, 
" puts the cart before the horse." 

These are not the effects of the confusion of a term. 
The confusion of the term is one of the effects of the in 
fluence upon thought of the same special interest that in 
its efforts to give wealth to individuals at the expense of 
the general wealth, has done and is doing all this. 

Nor can this power of a great pecuniary interest to 
affect thought, and especially to affect thought in those 
circles of society whose opinions are most respected, ever 
be done away with save by the abolition of its cause—the 
social adjustment or institution that gives power to obtain 
wealth without earning it. The pecuniary interest in the 
ownership of slaves was never very large in the United 
States. But it so dominated the thought of the whole 
country that up to the outbreak of the civil war the term 
abolitionist was to good, kindly and intelligent people 
even in the North an expression that meant everything 
vile and wicked. And whatever else might have been the 
issue of the war, had the pecuniary interest in the main 
tenance of slavery remained, it would still have continued 
to show itself in thought. But as soon as the supplies of 

 142 THE NATUEE OF WEALTH. Book II. 

the slave-owning interest were cut off by the freeing of 
the slaves this power upon opinion vanished. Now, no 
preacher, professor or politician, even in the South, would 
think of advocating or defending slavery; and in Boston, 
where he narrowly escaped mobbing, stands a public statue 
of William Lloyd Garrison. 

 CHAPTER III. 
WHAT ADAM SMITH MEANT BY WEALTH. 

SHOWING HOW ESSENTIALLY ADAM SMITH'S PRIMARY CON 
CEPTION OP WEALTH DIFFERED FKOM THAT NOW HELD 
BY HIS SUCCESSORS. 

Significance of the title "Wealth of Nations"—Its origin shown in 
Smith's reference to the Physiocrats—His conception of wealth 
in his introduction—Objection by Malthus and by Macleod— 
Smith's primary conception that given in "Progress and Poverty" 
—His subsequent confusions. 

IF, considering the increasing indefiniteness among pro 
fessed economists as to the nature of wealth, we com 
pare Adam Smith's great book with the treatises that have 
succeeded it, we may observe on its very title-page some 
thing usually unnoticed, but really very significant. Adam 
Smith does not propose an inquiry into the nature and 
causes of wealth, but "an inquiry into the nature and 
causes of the wealth of nations." 

The words I here italicize have become the descriptive 
title of the book. This is known, not as " Adam Smith's 
Inquiry," or "Adam Smith's Wealth," but as "Adam 
Smith's Wealth of Nations." Yet these limiting words, 
"of nations," seem to have been little noticed and less 
understood by the writers who in increasing numbers for 
almost a hundred years have taken this great book as a 

143 

 144 THE NATURE OF WEALTH. Sookll. 

basis for their elucidations and supposed improvements. 
Their assumption seems to be that it is wealth generally or 
wealth without limitation which Adam Smith treats of and 
which is the proper subject of political economy, and that 
if he meant anything by his determining words " of na 
tions," he referred to such political divisions as England, 
France, Holland, etc. 

Some superficial plausibility is perhaps given to this 
view from the fact that one of the divisions of the " Wealth 
of Nations," Book III., is entitled " Of the Different Prog 
ress of Opulence in Different Nations," and that in it illus 
trative reference is made to various ancient and modern 
states. But that in his choice of the limiting words " of 
nations" as indicating the kind of wealth into the nature 
and causes of which he proposed to inquire, Adam Smith 
referred to something other than the political divisions of 
mankind called states or nations, is sufficiently clear. 

While he is, as I have said, not very definite and not 
entirely consistent in his use of the term wealth, yet it 
is certain that what he meant by "the wealth of nations," 
of the nature and causes of which he proposed to inquire, 
was something essentially different from what is meant by 
wealth in the ordinary use of the word, which includes as 
wealth everything that may give wealthiness to the indi 
vidual considered apart from other individuals. It was 
that kind of wealth the production of which increases and 
the destruction of which decreases the wealth of society as 
a whole, or of mankind collectively, which he sought to 
distinguish from the word "wealth" in its common or 
individual sense by the limiting words, " of nations," in the 
meaning not of the larger political divisions of mankind, 
but of societies or social organisms. 

In the body of the "Wealth of Nations" there occurs 
again the phrase which furnished Adam Smith the title 
for his ten years' work. In Book IV., speaking of those 

 Chap. III. WHAT SMITH MEANT BY WEALTH. 145 

members of " the French republic of letters " who at that 
time called themselves and were called " Economists," but 
who have been since distinguished from other economists, 
real or pretended, by the name of Physiocrats,*—a school 
who might be better still distinguished as the Single Taxers 
of the Eighteenth Century, he says (the italics are mine): 

This sect, in their works, which are very numerous, and which 
treat not only of what is properly called political economy, or of the 
nature and causes of the wealth of nations, but of every other branch 
of the system of civil government, all follow implicitly, and without 
any sensible variation, the doctrines of Mr. Quesnai. 

This recognition of the fact that, not wealth in the loose 
and common sense of the word, but that which is wealth 
to societies considered as wholes, or as he phrased it, " the 
wealth of nations," is the proper subject-matter of what is 
properly called political economy—shows the origin of the 
title Adam Smith chose for his book. He had doubtless 
thought of calling it a "Political Economy," but either 
from the consciousness that his work was incomplete, or 
from the modesty of his real greatness, finally preferred 
the less pretentious title, which expressed to his mind the 
same idea, " An inquiry into the Nature and Causes of 
the Wealth of Nations." 

It has been much complained of Adam Smith that he 
does not define what he means by wealth. But this has 
been exaggerated. In the very first paragraph of the 
introduction to his work he thus explains what he means 
by the wealth of nations, the only sense of the word wealth 
which it is the business " of what is properly called politi 
cal economy " to consider: 

* From pltysiocratie, or government in the nature of things, or nat 
ural order, a name suggested, in 1768, by Dupont de Nemours, one 
of the most active of their number. 

 146 THE NATUKE OF WEALTH. Sodkll. 

The annual labor of every nation is the fund which originally sup 
plies it with all the necessaries and conveniences of life which it 
annually consumes, and which consist always either in the immedi 
ate produce of that labor, or in what is purchased with that produce 
from other nations. 

Again, in the last sentence of this introduction he speaks 
of " the real wealth, the annual produce of the land and 
labor of the society." And in other places throughout the 
book he also speaks of this wealth of society or wealth of 
nations, or real wealth, as the produce of land and labor. 

What he meant by the produce of land and labor was of 
course not the produce of land plus the produce of labor, 
but the joint produce of both—that is to say: the result of 
labor, the active factor of all production, exerted upon land, 
the passive factor of all production, in such a way as to fit 
it (land or matter) for the gratification of human desires. 
Malthus, indorsed by McCulloch and a long line of com 
mentators upon Adam Smith, objects to his definition that 
" it includes all the useless products of the earth, as well 
as those which are appropriated and enjoyed by man." 
And in the same way Macleod, a recent writer whose ability 
to say clearly what he wants to say makes his " Elements 
of Economics," despite its essential defects, a grateful relief 
among economic writings, objects that if— 

the annual produce of land and labor, either separately or combined, 
is wealth, then every useless product of the earth is wealth, as well 
as the most useful—the tares as well as the wheat. If a diver fetch 
a pearl oyster from the deep sea, the shell is as much the "produce 
of land and labor" as the pearl itself. So if a nugget of gold or a 
diamond is obtained from a mine, the rubbish it is found in and 
brought up with is as much the "produce of land and labor" as the 
gold or the diamond; and innumerable instances of this sort may be 
cited. 

The communication of thought by speech would be at 
an end if Adam Smith could be asked to explain that the 

 Cliay.III. WHAT SMITH MEANT BY .WEALTH. 147 

produce of labor means what the labor is exerted to get, 
not what it is incidentally obliged to remove in the process 
of getting that. Yet most of the complaints of his failure 
to say what he means by wealth have no better basis than 
these objections. 

In truth whoever will attend to the obvious meaning of 
the word he uses will see that what Adam Smith meant by 
" the wealth of nations" or wealth in the sense it is to be 
considered in " what is properly called political economy," 
is in reality what in the chapter of " Progress and Poverty " 
entitled " The Meaning of the Terms " (Book I., Chapter II.) 
is given as the proper meaning of the economic term— 
namely, that of " natural products that have been secured, 
moved, combined, separated, or in other ways modified by 
human exertion, so as to fit them for the gratification of 
human desires." 

Through the first and most important part of his work, 
this is the idea which Smith has constantly in mind and 
to which he constantly adheres in tracing all production 
of wealth to labor. But having grasped this idea of the 
nature of wealth without having clearly defined its relation 
to other ideas still lying in his mind, he falls into the sub 
sequent confusion of also classing personal qualities and 
debts as wealth. 

 CHAPTER IV. 
THE FRENCH PHYSIOCRATS. 

SHOWING WHO THE FIRST DEVELOPERS OF A TRUE SCIENCE 
OF POLITICAL ECONOMY WERE, AND WHAT THEY HELD. 

Quesnay and his followers—The great truths they grasped and the 
cause of the confusion into which they fell—This used to dis 
credit their whole system, but not really vital—They were real 
free traders—The scant justice yet done them—Eeference to 
them in "Progress and Poverty"—Macleod's statement of their 
doctrine of natural order—Their conception of wealth—Their 
day of hope and their fall. 

THE first developers in modern times of something 
like a true science of political economy, or, rather 
(since social truths, though they may be covered up and 
for a while ignored, must since the origin of human so 
ciety always have been here to be seen), the men who first 
got a hearing large enough and wide enough to bring 
down their names and their teachings to our times, were 
the French philosophers whom Adam Smith speaks of in 
the sentence before quoted, as the sect who "all follow 
implicitly, and without any sensible variation, the doctrines 
of Mr. Quesnai." 

Francois Quesnai, or Quesnay, as the name is now usu 
ally spelled, a French philosopher, who, as McCulloch says, 
was " equally distinguished for the subtlety and originality 
of his understanding and the integrity and simplicity of 
his character," -was born June 4,1694, twenty-eight years 

148 

 Chap. IV. THE FRENCH PHYSIOCRATS. 149 

before Adam Smith, at Mercy, some ten leagues from Paris. 
Beginning life in the manual labor of the farm, he was 
without either the advantages or, as they often prove to 
men of parts, the disadvantages of a scholastic education. 
With much effort he taught himself to read, became ap 
prentice to a surgeon, and at length began practice for 
himself at Mantes, where he acquired some means and 
came to the knowledge of Marshal de Noailles, who spoke 
of him to the queen, who in her turn recommended him 
to tiie king. He finally settled in Paris, bought the place 
of physician to the king, and was made by the monarch 
his first physician. Abstaining from the intrigues of the 
court, he won the sincere respect of Louis XV., with whom 
as his first physician he was brought into close personal 
contact. The king made him a noble, gave him a coat of 
arms, assigned him apartments in the palace, calling him 
affectionately his thinker, and had his books printed in 
the royal printing-office. And around him, in his apart 
ments in the palace of Versailles, this "King's Thinker" 
was accustomed to gather a group of eminent men who 
joined him in an aim the grandest the human mind can 
entertain—being nothing less than the establishment of 
liberty and the abolition of poverty among men, by the 
conformation of human laws to the natural order intended 
by the Creator. 

These men saw what has often been forgotten amid the 
complexities of a high civilization, but is yet as clear as 
the sun at noonday to whoever considers first principles. 
They saw that there is but one source on which men can 
draw for all their material needs—land; and that there is 
but one means by which land can be made to yield to 
their desires—labor. All real wealth, they therefore saw, 
all that constitutes or can constitute any part of the wealth 
of society as a whole, or of the wealth of nations, is the 
result or product of the application of labor to land. 

 160 THE NATURE OF WEALTH. Book II. 

They had not only grasped this first principle—from 
which any true economy, even that of a savage tribe or an 
isolated individual, must start—but they had grasped the 
central principle of a true political economy. This is the 
principle that in the natural growth of the social organism 
into which men are integrated in society there is developed 
a fund which is the natural provision for the natural needs 
of that organism—a fund which is not merely sufficient 
for all the material wants of society, and may be taken 
for that purpose, its intended destination, without depriv 
ing the unit of anything rightfully his; but which must be 
so taken to prevent the gravest injuries to individuals and 
the direst disasters to the state. 

This fund Quesnay and his followers styled the produit 
net—the net, or surplus, or remaining, product. They 
called it this, evidently because they saw it as something 
which remained, attached, as it were, to the control of 
land, after all the expenses of production that are resolvable 
into compensation for the exertion of individual labor are 
paid. What they really meant by the produit net, or net 
product, is precisely what is properly to be understood in 
English by the word " rent" when used in the special sense 
or technical meaning which it has acquired since Ricardo's 
time as a term of political economy. Net product is really 
a better term than rent, as not being so liable to confusion 
with a word in constant use in another sense; and John 
Stuart Mill, probably without thought of the Physiocrats, 
came very close to the perception that governed their 
choice of a term when he spoke of economic rent as " the 
unearned increment of land values." 

That Quesnay and his associates saw the enormous sig 
nificance of this " net product" or " unearned increment" 
for which our economic term is " rent," is clear from their 
practical proposition, the impot unique, or single tax. By 
this they meant just what its modern advocates now mean 

 Cliap.IV. THE PEENCH PHYSIOCRATS. 151 

by it—the abolition of all taxes whatever on the making, 
the exchanging or the possession of wealth in any form, 
and the recourse for public revenues to economic rent; 
the net or surplus product; the (to the individual) unearned 
increment which attaches to land wherever in the progress 
of society any particular piece of land comes to afford to 
the user superior opportunities to those obtainable on land 
that any one is free to use. 

In grasping the real meaning and intent of the net prod 
uct, or economic rent, there was opened to the Physiocrats 
a true system of political economy—a system of harmonious 
order and beneficent purpose. They had grasped the key 
without which no true science of political economy is pos 
sible, and from the refusal to accept which the scholastic 
economy that has succeeded Adam Smith is, after nearly 
a hundred years of cultivation, during which it has sunk 
into the contemptible position of "the dismal science,"now 
slipping into confessed incompetency and rejection. 

But misled by defective observation and a habit of 
thought that prevailed long after them, and indeed yet 
largely prevails (a matter to which I shall subsequently 
more fully allude), tlie Physiocrats failed to perceive that 
what they called the net or surplus product, and what we 
now call economic rent, or the unearned increment, may 
attach to land used for any purpose. Looking for some 
explanation in natural law of what was then doubtless 
generally assumed to be the fact, and of which I know of 
no clear contradiction until " Progress and Poverty " was 
written, that agriculture is the only occupation which 
yields to the landlord a net or surplus product, or unearned 
increment (rent), over and above the expenses of produc 
tion, they not unnaturally under the circumstances hit 
upon a striking difference between agriculture, which 
grows things, and the mechanical and trading occupations, 
which merely change things in form, place or ownership, 

 152 THE NATUEE OF WEALTH. Sookll. 

as furnishing the explanation for which they were in 
search. This difference lies in the use which agriculture 
makes of the generative or reproductive principle in 
nature. 

This supposed fact, and what seemed to them the ra 
tional explanation of it, in the peculiar use made in agri 
culture of the principle of growth and reproduction which 
characterizes all forms of life, vegetable and animal, the 
Physiocrats expressed in their terminology by styling 
agriculture the only productive occupation. All other 
occupations, however useful, they regarded as sterile or 
barren, insomuch as under the fact assumed such occu 
pations give rise to no net produce or unearned increment, 
merely returning again to the general fund of wealth, or 
gross product, the equivalent of what they had taken from 
it in changing the form, place or ownership of material 
things already in existence. 

This was their great and fatal misapprehension, since it 
has been effectually used to discredit their whole system. 

Still, it was not really a vital mistake. That is to say, 
it made no change in their practical proposals. The fol 
lowers of Quesnay insisted that agriculture, in which they 
admitted fisheries and mines, was the only productive 
occupation, or in other words the only application of labor 
that added to the sum of wealth; while manufactures and 
exchange, though useful, were sterile, merely changing the 
form or place of wealth without adding to its sum. They, 
however, proposed no restrictions or disabilities whatever 
on the occupations they thus stigmatized. On the con 
trary, they were—what the so-called " English free traders " 
who have followed Adam Smith never yet have been— 
free traders in the full sense of the term. In their practical 
proposition, the single tax, they proposed the only means 
by which the free trade principle can ever be carried to its 
logical conclusion—the freedom not merely of trade, but 

 Chap. IP-. THE FRENCH PHYSIOCRATS. 153 

of all other forms and modes of production, with full free 
dom of access to the natural element which is essential to 
all production. They were the authors of the motto that 
in the English use of the phrase " Laissez faire!" " Let 
things alone," has been so emasculated and perverted, but 
which on their lips was, " Laissez faire, laissez aller," " Clear 
the ways and let things alone!" This is said to come 
from the cry that in medieval tournaments gave the signal 
for combat. The English motto which I take to come 
closest to the spirit of the French phrase is, " A fair field 
and no favor!" 

It is for the reason that of all modern philosophers they 
not only were the first, but were really true free traders, 
that I dedicated to the memory of Quesnay and his fellows 
my " Protection or Free Trade " (1885), saying: 

By thus carrying the inquiry beyond the point where Adam Smith 
and the writers who have followed him have stopped, I believe I have 
stripped the vexed tariff question of its greatest difficulties, and have 
cleared the way for the settlement of a dispute which otherwise might 
fjo on interminably. The conclusions thus reached raise the doctrine 
of free trade from the emasculated form in which it has been taught 
by the English economists to the fullness in which it was held by the 
predecessors of Adam Smith, those illustrious Frenchmen, with whom 
originated the motto " Laisscx faire," and who, whatever may have 
been the confusions of their terminology or the faults of their method, 
grasped a central truth which free traders since their time have ignored. 

These French " Economists," now more definitely kno\vn 
as Physiocrats, or single taxers, had got hold of what in 
its bearings on philosophy and politics is probably.; the 
greatest of truths; but had got hold of it through curi 
ously distorted apprehensions. It was to them, however, 
like a rainbow seen through clouds. They did not see the 
full sweep of the majestic curve, and endeavored to piece 
oat their lack of insight with a confused and confusing 
terminology. But what they did see showed them its trend, 
and they felt that natural laws could be trusted where 

 154 THE NATURE OF WEALTH. Book II. 

attempts to order the world by human legislation would 
be certain to go astray. 

Yet nothing better shows the importance of correct 
theory to the progress of truth against the resistance of 
powerful special interests than the complete overthrow of 
the Physiocrats. Their mistake in theory has sufficed to 
prevent, or perhaps rather to furnish a sufficient excuse to 
prevent the justice and expediency of their practical pro 
posal from being considered. 

I know of no English writer on the Physiocrats or their 
doctrines who seems to have understood them or to have 
had any glimmering that the truth which lay behind their 
theory that agriculture is the only productive occupation 
was an apprehension of what has since been known as 
the Bicardian doctrine of rent, carried out further than 
Eicardo carried it, to its logical results; but apprehended, 
as indeed Ricardo himself seems to have apprehended it, 
only in its relations to agriculture. 

In " Progress and Poverty," after working out what I 
believe to be the simple yet sovereign remedy for the con 
tinuance of wide-spread poverty amid material progress, I 
thus, in the chapter entitled "Indorsements and Objec 
tions" (Book VIII., Chapter IV.), refer to the Physiocrats: 

In fact, that rent should, both on grounds of expediency and jus 
tice, be the peculiar subject of taxation, is involved in the accepted 
doctrine of rent, and may be found iu embryo in the works of all 
economists who have accepted the law of Eicardo. That these prin 
ciples have not been pushed to their necessary conclusions, as I have 
pushed them, evidently arises from the indisposition to endanger or 
offend the enormous interest involved in private ownership in land, 
and from the false theories in regard to wages and the cause of pov 
erty which have dominated economic thought. 

But there has been a school of economists who plainly perceived, 
what is clear to the natural perceptions of men when uninfluenced 
by habit—that the revenues of the common property, land, ought to 
be appropriated to the common service. The French Economists of 
the last century, headed by Quesnay and Turgot, proposed just what 

 Chap.ir. THE FRENCH PHYSIOCRATS. 155 

I have proposed, that all taxation should be abolished save a tax upon 
the value of land. As I am acquainted with the doctrines of Ques- 
nay and his disciples only at second hand through the medium of the 
English writers, I am unable to say how far his peculiar ideas as to 
agriculture being the only productive avocation, etc., are erroneous 
apprehensions, or mere peculiarities of terminology. But of this I 
am certain from the proposition in which his theory culminated—that 
he saw the fundamental relation between land and labor which has 
since been lost sight of, and that he arrived at practical truth, though, 
it may be, through a course of defectively expressed reasoning. 
The causes which leave in the hands of the landlord a "produce 
net" were by the Physiocrats no better explained than the suc 
tion of a pump was explained by the assumption that nature abhors 
a vacuum; but the fact in its practical relations to social economy 
was recognized, and the benefit which would result from the perfect 
freedom given to industry and trade by a substitution of a tax on 
rent for all the impositions which hamper and distort the application 
of labor, was doubtless as clearly seen by them as it is by me. One 
of the things most to be regretted about the French Revolution is 
that it overwhelmed the ideas of the Economists, just as they were 
gaining strength among tho thinking classes, and were apparently 
about to influence fiscal legislation. 

Without knowing anything of Quesnay or his doctrines, I have 
reached the same practical conclusion by a route which cannot be 
disputed, and have based it on grounds which cannot be questioned 
by the accepted political economy. 

The best English account of tlie Physiocratic views that 
I now know of is that given by Henry Dunning Macleod, 
in his "Elements of Economics" (1881). He seems to 
have no notion of the truth that lay at the bottom of a 
mistake that has caused their great services to be all but 
forgotten, and which I shall take opportunity in a subse 
quent book more fully to explain. To him it is " simply 
incomprehensible how men of the ability of the Physio 
crats could maintain that a country could not be enriched 
by the labor of artisans and by commerce." This he styles 
" one of those aberrations of the human intellect which we 
can only wonder at and not explain." But nevertheless 
he awards them the honor of being the founders of the 

 156 THE NATURE OP WEALTH. Book II. 

science of political economy, declares that in spite of their 
errors " they are entitled to imperishable glory in the his 
tory of mankind," and gives in his own language an out 
line of their doctrine, from which (Book I., Chapter V., 
Sec. 3) I take the following: 

The Creator has placed man upon the earth with the evident in 
tention that the race should prosper, and there are certain physical 
and moral laws which conduce in the highest degree to ensure his 
preservation, increase, well-being, and improvement The correla 
tion between these physical and moral laws is so close that if either 
be misunderstood, through ignorance or passion, the others are also. 
Physical nature, or matter, bears to mankind very much the relation 
which the body does to the soul. Hence the perpetual and necessary 
relation of physical and moral good and evil on each other. 

Natural justice is the conformity of human laws and actions to 
natural order, and this collection of physical and moral laws existed 
before any positive institutions among men. And while their obser 
vance produces the highest degree of prosperity and well-being 
among men, the non-observance or transgression of them is the cause 
of the extensive physical evils which afflict mankind. 

If such a natural law exists, our intelligence is capable of under 
standing it; for, if not, it would bo useless, and the sagacity of the 
Creator would be at fault. As, therefore, these laws are instituted 
by the Supreme Being, all men and all states ought to be governed 
by them. They are immutable and irrefragable, and the best possi 
ble laws: therefore necessarily the basis of the most perfect govern 
ment, and the fundamental rule of all positive laws, which are only 
for the purpose of upholding natural order, evidently the most 
advantageous for the human race. 

The evident object of the Creator being the preservation, the in 
crease, the well-being, and the improvement of the race, man neces 
sarily received from his origin not only intelligence, but instincts 
conformable to that end. Every one feels himself endowed with the 
triple instincts of well-being, sociability, and justice. He understands 
that the isolation of the brute is not suitable to his double nature, 
and that his physical and moral wants urge him to live in the society 
of his equals in a state of peace, good-will, and concord. 

He also recognizes that other men, having the same wants as him 
self, cannot have less rights than himself, and therefore he is bound 
to respect this right, so that other men may observe a similar obli 
gation towards him. 

 CMp.IV. THE FEENCH PHYSIOCEATS. 157 

These ideas—the product of reason, the necessity of work, the 
necessity of society, and the necessity of justice—imply three others 
—liberty, property, and authority, which are the three essential terms 
of all social order. 

How could man understand the necessity of labor to obey the ir 
resistible instinct of his preservation and well-being, without con 
ceiving at the same time that the instrument of labor, the physical 
and intellectual qualities with which he is endowed by nature, be 
longs to him exclusively, without perceiving that he is master and 
the absolute proprietor of his person, that he is born and should re 
main freef 

But the idea of liberty cannot spring up in the mind without asso 
ciating with it that of property, in the absence of which the first 
would only represent an illusory right, without an object. The free 
dom the individual has of acquiring useful things by labor supposes 
necessarily that of preserving them, of enjoying them, and of dispos 
ing of them without reserve, and also of bequeathing them to his 
family, who prolong his existence indefinitely. Thus liberty con 
ceived in this manner becomes property, which may be conceived in 
two aspects as it regards movable goods on the earth, which is the 
source from which labor ought to draw them. 

At first property was principally movable; but when the cultiva 
tion of the earth was necessary for the preservation, increase, and 
improvement of the race, individual appropriation of the soil became 
necessary, because no other system is so proper to draw from the 
earth all the mass of utilities it can produce; and, secondly, because 
the collective constitution of property would have produced many 
inconveniences as to sharing of the fruits, which would not arise 
from the division of the land, by which the rights of each are fixed 
in a clear and definite manner. Property in land, therefore, is the 
necessary and legitimate consequence of personal and movable prop 
erty. Every man has, then, centered in him by the laws of Provi 
dence, certain rights and duties; the right of enjoying himself to the 
utmost of his capacity, and the duty of respecting similar rights in 
others. The perfect respect and protection of reciprocal rights and 
duties conduces to production in the highest degree, and the obtain 
ing the greatest amount of physical enjoyments. 

The Physiocrats, then, placed absolute freedom, or property—as 
the fundamental right of man—freedom of Person, freedom of Opin 
ion, and freedom of Contract, or Exchange; and the violation of 
these as contrary to the law of Providence, and therefore the cause 
of all evil to man. Quesnay's first publication, "Le Droit Naturel," 

 ±58 THE NATURE OP WEALTH. 

contains an inquiry into these natural rights; and he afterwards, in 
another called " General Maxims of the Economical Government of 
an Agricultural Kingdom," endeavored to lay down in a series of 
thirty maxims, or fundamental general principles, the whole bases 
of the economy of society. The 23d of these declares that a nation 
suffers no loss by trading with foreigners. The 24th declares the 
fallacy of the doctrine of the balance of trade. The 25th says: "Let 
entire freedom of commerce be maintained; for the regulation of 
commerce, both internal and external, the most sure, the most true, 
the most profitable to the nation and to the state, exists in entire 
freedom of competition." In these three maxims, which Quesuay 
and his followers developed, was contained the entire overthrow of 
the existing system of Political Economy; and notwithstanding cer 
tain errors and shortcomings, they are unquestionably entitled to be 
considered as the founders of the science of Political Economy. 

Wealth, in the economic sense of the wealth of societies, 
or the wealth of nations, Macleod goes on to state, the 
Physiocrats held to consist exclusively of material things, 
drawn from land—to man the source of all material things 
—by the exertion of labor, and possessing value in ex 
change, or exchangeability; a distinction which they recog 
nized as essentially different from, and not necessarily 
associated with, value in use or usefulness. That man 
can neither create nor annihilate matter they repeated 
again and again in such phrases as: "Man can create 
nothing," and " Nothing can come out of nothing." They 
expressly excluded land itself and labor itself, and all 
personal capacities and powers and services, from the 
category of wealth, and were far ahead of their time in 
deriving the essential quality of money from its use in 
serving as a medium of exchange, and in including all 
usury laws in the restrictions that they would sweep 
away. 

That these men rose in France, and as it were in the 
very palace of the absolute king, just as the rotten Bour 
bon dynasty was hastening to its fall, is one of the most 
striking of the paradoxes with which history abounds. 

 Chap.IV. THE FRENCH PHYSIOCRATS. 159 

Never, before nor since, out of the night of despotism 
gleamed there such clear light of liberty. 

They were deluded by the idea—the only possibility in 
fact, under existing conditions of carrying their views into 
effect in their time—that the power of a king whose pre 
decessor had said, " I am the state!" might be utilized to 
break the power of other special interests, and to bring lib 
erty and plenty to France, and through Prance to the world. 

They had their day of hope, and almost it must have 
seemed of assured trinmph, when in 1774, three months 
before Quesnay's death, Turgot was made Finance Minister 
of Louis XVI., aud at once began clearing the ways by 
cutting the restrictions that were stifling French industry. 
But they leaned on a reed. Turgot was removed. His 
reforms were stopped. The pent-up misery of the masses, 
which they had been so largely instrumental in showing 
utterly repugnant to the natural order, burst into the blind 
madness of the great revolution. The Physiocrats were 
overthrown, many of them perishing on the guillotine, in 
prison or in exile. In the reaction which the excesses of 
that revolution everywhere produced among those most 
influencing thought, the propertied and the powerful, the 
Physiocrats were remembered merely by their unfortunate 
misapprehension in regarding agriculture as the only pro 
ductive occupation. 

France will some day honor among the noblest the cen 
turies have given her the names of Quesnay, and Gournay, 
and Turgot, and Mirabeau, and Condorcet, and Dupont, 
and their fellows, as we shall have in English, intelligent 
explanations, if not translations of their works. But, 
probably for the reason that France has as yet felt less 
than the English and Teutonic and Scandinavian nations 
the influence of the new philosophy of the natural order, 
best known as the Single Tax, the teachings of these men 
seem at present, even in France, to be practically forgotten. 

 CHAPTER V. 
ADAM SMITH AND THE PHYSIOCRATS. 

SHOWING THE RELATION BETWEEN ADAM SMITH AND THE 
PHYSIOCRATS. 

Smith and Quesnay—The "Wealth of Nations" and Phyaiocratic 
ideas—Smith's criticism of the Physiocrats—His failure to ap 
preciate the single tax—His prudence. 

ON the continental trip he made between 1764 and 
1766, after resigning his Glasgow professorship of 
moral philosophy to accompany as tutor the young Duke of 
Buccleuch, Adam Smith made the personal acquaintance 
of Quesnay and some of the " men of great learning and 
ingenuity," who regarded the "King's Thinker" with an 
admiration "not inferior to that of any of the ancient 
philosophers for the founders of their respective systems," 
and was, while in Paris, a frequent and welcome visitor at 
the apartments in the palace, where, unmindful of the 
gaieties and intrigues of the most splendid and corrupt 
court of Europe that went on but a floor below them, this 
remarkable group discussed matters of the highest and 
most permanent interest to mankind. 

This must have been a fruitful time in Adam Smith's 
intellectual life. During this time the almost unknown 
Scottish tutor, notable among his few acquaintances for 
his fits of abstraction, must have been mentally occupied 

160 

 Chap.V. SMITH AND THE PHYSIOCRATS. 161 

with the work which ten years after was to begin a fame 
that for more than a century has kept him at the very head 
of economic philosophers and in the first rank of the per 
manently illustrious men of his generation. 

Upon this work he entered immediately after his return 
from the continent, in the leisure afforded him by the 
ample pension that the trustees of the Duke had agreed 
should continue until he could be provided with a profit 
able government place. The Duke himself, on coming to 
his majority and estates, seems to have made no effort to 
release himself from this payment by securing such a 
place for the man whom he always continued to regard 
with respect and affection, thinking doubtless that its 
duties, however nearly nominal, might somewhat interfere 
with his freedom to devote himself to his long work. And 
when, the " Wealth of Nations " having been at last pub 
lished, its author was appointed by Lord North to be one 
of the Commissioners of Customs in Scotland—an appoint 
ment which seems to have been due to the gratitude of the 
Premier for hints received from that book as to new 
sources of taxation rather than to any pressure of the 
Buccleueh interest, and which raised the simple-mannered 
student to comparative opulence—the Duke insisted on 
making no change in his payment, but continued the 
pension for life. 

The " liberal and generous system " of the French Econ 
omists could not fail to appeal powerfully to a man of 
Adam Smith's disposition, and the " Wealth of Nations " 
bears ample evidence of the depth of the opinion he in one 
place expresses in terms, that this system, "with all its 
imperfections, is perhaps the nearest approximation to the 
truth that has yet been published upon the subject of 
political economy." It was indeed his original intention 
as stated to his friend and biographer, Professor Dugald 
Stewart, to dedicate to Quesnay the fruits of his ten years' 

 162 THE NATURE OF WEALTH. Book II. 

application. But the French philosopher died in 1774, 
two years before the Scotsman's great work saw the light. 
Thus it appeared without any indication of an intention 
which, had it been expressed, might, in the bitter prejudice 
soon afterwards aroused against the Physiocrats by the 
outbreak of the French Revolution, have seriously mili 
tated against its usefulness. 

The resemblance of the views expressed in this work to 
those held by the Physiocrats has, however, been noticed 
by all critics, and both on the side of their opponents and 
their advocates there have not been wanting intimations 
that Smith borrowed from them. But while he must have 
been eminently ready to absorb any idea that commended 
itself to his mind, there is no reason to regard these views 
as not originally Adam Smith's own. The keenness of 
observation and analysis, the vigor of imagination and 
solidity of learning, that characterize the " Wealth of Na 
tions " are shown in the " Theory of the Moral Sentiments," 
•written before Smith had left the University of Glasgow, 
and which indeed led to the invitation that he should ac 
company the young nobleman on his trip. They are shown 
as well in the paper on the formation of languages, and 
the papers on the principles which lead and direct philo 
sophical inquiry, as illustrated in the history of various 
sciences, which are usually published with that work. It 
appears from the " Theory of the Moral Sentiments " that 
Adam Smith was even then meditating some such a book 
as the "Wealth of Nations," and there is no reason to 
suppose that without knowledge of the Physiocrats it 
would have been essentially different. 

It is a mistake to which the critics who are themselves 
mere compilers are liable, to think that men must draw 
from one another to see the same truths or to fall into the 
same errors. Truth is, in fact, a relation of things, which 
is to be seen independently because it exists independently. 

 Chap.V. SMITH AND THE PHYSIOCRATS. 163 

Error is perhaps more likely to indicate transmission from 
mind to mind; yet even that usually gains its strength 
and permanence from misapprehensions that in them 
selves have independent plausibility. Such relations of 
the stars as that appearance in the north which we call 
the Dipper or Great Bear, or as that in the south which 
we call the Southern Cross, are seen by all who scan the 
starry heavens, though the names by which men know 
them are various. And to think that the sun revolves 
around the earth is an error into which the testimony of 
their senses must cause all men independently to fall, 
until the first testimony of the senses is corrected by 
reason applied to wider observations. 

In what is most important, I have come closer to the 
views of Quesnay and his followers than did Adam Smith, 
who knew the men personally. But in my case there was 
certainly no derivation from them. I well recall the day 
when, checking my horse on a rise that overlooks San 
Francisco Bay, the commonplace reply of a passing team 
ster to a commonplace question, crystallized, as by light 
ning-flash, my brooding thoughts into coherency, and I 
there and then recognized the natural order—one of those 
experiences that make those who have had them feel there, 
after that they can vaguely appreciate what mystics and 
poets have called the " ecstatic vision." Yet at that time 
I had never heard of the Physiocrats, or even read a line 
of Adam Smith. 

Afterwards, with the great idea of the natural order in 
my head, I printed a little book, "Our Land and Land 
Policy," in which I urged that all taxes should be laid on 
the value of land, irrespective of improvements. Casually 
meeting on a San Francisco street a scholarly lawyer, 
A. B. Douthitt, we stopped to chat, and he told me that 
what I had in my little book proposed was what the French 
"Economists" a hundred years before had proposed. 

 164 THE NATUEE OF WEALTH. Book II. 

I forget many things, but the place where I heard this, 
and the tones and attitude of the man who told me of it, 
are photographed on my memory. For, when you have 
seen a truth that those around you do not see, it is one of 
the deepest of pleasures to hear of others who have seen 
it. This is true even though these others were dead years 
before you were born. For the stars that we of to-day see 
when we look were here to be seen hundreds and thou 
sands of years ago. They shine on. Men come and go, 
in their generations, like the generations of the ants. 

This pleasure of a common appreciation of truth not yet 
often accepted, Adam Smith must have had from his in 
tercourse with the Physiocrats. Widely as he and they 
may have differed, there was yet much that was common 
in their thought. He was a free trader as they were, 
though perhaps not so logical and thorough-going. And 
though differing in temper and widely differing in condi 
tions, both were bent on struggling against what must 
have seemed at the time insuperable difficulties. 

Adam Smith's knowledge of, and admiration for, the 
Physiocrats must at least have affected his thought and 
expression, sometimes by absorption and sometimes per 
haps by reaction. But no matter how much of his eco 
nomic views were original with him and how much he 
imbibed consciously or unconsciously from them, it is 
certain that his political economy, as far as it goes on all 
fours, is the system of natural order proclaimed by them. 

What Adam Smith meant by the wealth of nations is in 
most cases, and wherever he is consistent, the material 
things produced from land by labor which constitute the 
necessities and conveniences of human life; the aggregate 
prodtice of society, using the word produce as expressive 
of the sum of material results, in the same way that we 
speak of agricultural produce, of factory produce, of the 
produce of mines, or fisheries, or the chase. Now this is 

 Chap.r. SMITH AND THE PHYSIOCEATS. 165 

what the Physiocrats meant by wealth, or as they some 
times termed it, the gross product of land and labor. 

But this is also, as I shall hereafter show, the primary 
or root meaning of the word wealth in its common use. 
And whoever will read Smith's " Considerations Concerning 
the First Formation of Languages," originally published 
with his "Moral Sentiments," in 1759, will see from his 
manner of tracing words to their primary uses, that when 
ever he came to think of it, he would have recognized the 
original and true meaning of the word wealth to be that 
of the necessities and conveniences of human life, brought 
into being by the exertion of labor upon land. 

The difference between Smith and the Physiocrats is 
this: 

The Physiocrats, on their part, clearly laid down and 
steadily contended that nothing that did not have material 
existence, or was not produced from land, could be included 
in the category of the wealth of society. Adam Smith, how 
ever, with seeming inadvertence, has fallen in places into 
the inconsistency of classing personal qualities and obliga 
tions as wealth. This is probably attributable to the fact 
that what it seemed to him possible to accomplish was 
much less than what the Physiocrats aimed at. The task 
to which he set himself, that in the main of showing the 
absurdity and impolicy of the mercantile or protective 
system, was sufficiently difficult to make him comparatively 
regardless of speculations that led far beyond it. With 
the disproval of the current notion that the wealth of 
nations consists of the precious metals, his care as to what 
is and what is not a part of that wealth relaxed. He went 
with the Physiocrats in their condemnation of the attempts 
of governments to check commerce, but stopped both 
where they had carried tha idea of freeing all production 
from tax or restraint to the point of a practical proposi 
tion, and where they had fallen into obvious error. He 

 166 THE NATURE OF WEALTH. Book II. 

neither proposed the single tax nor did he fall into the 
mistake of declaring agriculture the only productive occu 
pation. That there is a natural order he saw; and that 
to this natural order our perceptions of justice conform, 
he also saw, But that involved in this natural order is a 
provision for the material needs of advancing society he 
seems never to have seen. 

Whether Adam Smith's failure to grasp the great truth 
that the French "Economists" perceived, though "as 
through a glass, darkly," was due to their erroneous way 
of stating it, or to some of those environments of the 
individual mind which seem on special points to close its 
powers of perception, there is no means that I know of for 
determining. Adam Smith saw that the Physiocrats must 
be wrong in regarding manufactures and exchanges as 
sterile occupations, but he did not see the true answer to 
their contention, the answer that would have brought into 
the light of a larger truth that portion of truth they had 
wrongly apprehended. The answer he makes to them in 
Book rv., Chapter IX., of the " Wealth of Nations " could 
hardly have been entirely satisfactory to himself. In this 
he does not venture to contend that the labor of artificers, 
manufacturers and merchants is as productive of wealth 
as the labor of agriculturists. He only contends that it is 
not to be considered as utterly sterile, and that " the rev 
enue of a trading and manufacturing country must, other 
things being equal, always be much greater than that of 
one without trade and manufactures," because " a smaller 
quantity of manufactured produce purchases a great 
quantity of rude produce." That he himself, indeed, re 
garded agriculture as at least the most productive of occu 
pations is shown directly in other places in his great work. 

And there is one part of this answer that is extremely 
unsatisfactory and utterly out of its author's usual temper. 
No one better than Adam Smith could see the fallacy of 

 Chap.r. SMITH AND THE PHYSIOCRATS. 167 

comparing a philosopher who declared that the political 
body would thrive best under conditions of perfect liberty 
and perfect justice with a physician who "imagined that 
the health of the human body could be preserved only by 
a certain precise regimen of diet and exercise." And that 
he should resort to an illustration which depended for its 
effect upon such a suppressio veri to explain or emphasize 
his dissent from a man whom he esteemed so highly as 
Quesnay, shows a latent uncertainty. Both in quality and 
in temper of mind, Smith seems the last of men to use such 
an argument except in despair of finding a better one. 

There are passages in the "Wealth of Nations" where 
Adam Smith checks his inquiry with a suddenness that 
shows an indisposition to venture on ground that the pos 
sessing classes would deem dangerous. But in nothing he 
left after him (just before his death he destroyed all manu 
scripts he did not wish published), is there an indication 
that he was more than puzzled by the attempt of the 
Physiocrats to explain the great truth that they saw mth 
wrong apprehension. He clearly perceived that " the prod 
uce of labor constitutes the natural recompense or wages 
of labor," and that it was the appropriation of land that 
had deprived the laborer of his natural due. But he had 
evidently never looked further into the phenomena of rent 
than to see that " the landlords, like all other men, love to 
reap where they never sowed." He passes over the great 
subject of the relations of men to the land they inhabit, 
as though the appropriation by a few of what nature has 
provided as the dwelling-place and storehouse of all must 
now be accepted as if it were a part of the natural order. 
And so, indeed, in his times and conditions it must have 
appeared to him. 

Even if Adam Smith had seen the place of the single 
tax in the natural order, as the natural means for the 
supply of the natural needs of civilized societies, prudence 

 168 THE NATURE OP WEALTH. Book II. 

might well -have suggested that his inquiry should not be 
carried so far. I mean, not merely that prudence of the 
individual which impelled Copernicus to withhold until 
after his death any publication of his discovery of the 
movement of the earth about the sun; but that prudence 
of the philosopher which, from a desire to do the utmost 
that he can for Truth and Justice in his own time, may 
prevent him from advancing a larger measure of truth 
than his own time can receive. 

In that part of the eighteenth century when the Physio 
crats dreamed that they were on the verge of carrying 
their great reform and Smith wrote painfully his " Wealth 
of Nations," there was a wide difference between the con 
ditions of France and Scotland. 

Sheltered under the friendship of a king whose dynasty 
had reduced the great feudal landlords to servitors and 
courtiers; seeking with the aphorism, "Poor peasants, 
poor kingdom; poor kingdom, poor king," to arouse the 
strongest power in the state to the relief of the most 
downtrodden; cherishing the hope that the emancipation 
of man might be accomplished by the short and royal road 
of winning the mind and conscience of a young and ami 
able sovereign, the French philosophers might have some 
prospect of getting a hearing in their advocacy of the 
single tax. But, on the other side of the Channel, the 
"landed interest," gorged with the spoil of Church and 
Crown and peasants and clansmen, reigned supreme. For 
a solitary man of letters to have attacked this supreme 
power in front would have been foolishness. 

That Adam Smith, " all-round man " that he was, pos 
sessed both the prudence of the man and the prudence of 
the philosopher, is shown by the fact that he managed to 
do what he did, without arousing in greater degree the ire 
of the defenders of vested wrongs. Whoever will intelli 
gently read the "Wealth of Nations" will find it full of 

 Chap.r. SMITH AND THE PHYSIOCRATS. 169 

radical sentiment, an arsenal from which lovers of liberty 
and justice may still draw weapons for victories remaining 
to be won. Yet its author was a college professor, travel 
ing tutor of a duke, held a lucrative government position 
and died Lord Rector of Glasgow University. 

For the present times at least, the Scotsman succeeded 
where the Frenchman failed. It is he, not Quesnay, who 
has come down to us as the " father of political economy." 

This position is recognized even by economists who differ 
from what they deem his school. Tims Professor James, 
of the University of Pennsylvania, himself belonging to 
the "new school," says of Adam Smith in the article 
" Political Economy " in Lalor's Cyclopedia, 1884 : 

All theories and development of the preceding ages culminate in 
him, all lines of development in the succeeding ages start from him. 
His work has been before the public over one hundred years, and yet 
no second book has been produced that deserves to be compared with 
it in originality and importance. The subsequent history of the 
science is mainly the history of attempts to broaden and deepen the 
foundation laid by Adam Smith, to build the superstructure higher 
and render it more solid. 

It is for this reason that I take Adam Smith's " Wealth 
of Nations" as the great landmark in the history of 
Political Economy. 

 CHAPTER VI. 
SMITH'S INFLUENCE ON POLITICAL ECONOMY. 

SHOWING WHAT THE "WEALTH OF NATIONS" ACCOMPLISHED 
AND THE COURSE OF THE SUBSEQUENT DEVELOPMENT OF 
POLITICAL ECONOMY. 

Smith, a philosopher, who addressed the cultured, and whose attack 
on mercantilism rather found favor with the powerful landowners 

—Not entirely exempt from suspicion of radicalism, yet pardoned 
for his affiliation with the Physiocrats—Efforts of Malthus and 
Eicardo on respectabilizing the science—The fight against the 
corn-laws revealed the true beneficiaries of protection, but passed 
for a free-trade victory, and much strengthened the incoherent 
science—Confidence of its scholastic advocates—Say's belief in 
the result of the colleges taking up political economy—Torrens's 
confidence—Failure of other countries to follow England's ex 
ample—Cairnes doubts the effect of making it a scholastic study 

—His sagacity proved by the subsequent breakdown of Smith's 
economy—The true reason. 

A DAM SMITH was not a propagandist or a politician, 
XJL as were the Physiocrats. He was simply a philoso 
pher, addressing primarily a small, comfortable and cul 
tured class, whose sympathies and feelings were identified 
with the existing social order, and he wielded a power 
which requires the fruition of time and the opening of 
opportunity for its culmination in action—a power which 
men of affairs are in its first beginnings apt to underrate. 

When the first few copies of my "Progress and Pov 
erty" were printed in an author's edition in San Francisco, 

170 

 Chap. VI. ADAM SMITH'S INFLUENCE. 171 

a large landowner (the late General Beale, proprietor of 
the Tejon Ranch, and afterwards United States Minister to 
Austria), sought me to express the pleasure with which he 
had read it as an intellectual performance. This, he said, 
he had felt at liberty to enjoy, for to speak with the free 
dom of philosophic frankness, he was certain my work 
would never be heard of by those whom I wished it to 
affect. 

In the same way, but to a much greater degree, the 
small class whom alone the "Wealth of Nations" could 
first reach were able to enjoy its greatness as an intellec 
tual performance that widened the circle of thought. Few 
of them were disturbed by any fear of its ultimate effect 
on special interests. At that time a popular press was 
not yet in existence, and books of this kind were addressed 
only to the " superior orders." The House of Commons, 
the nominal representative of the unprivileged in Great 
Britain, was filled by the appointees of the great land 
owners ; and the oligarchy that ruled in the British Islands 
was really stronger than the similar class under the abso 
lute monarchy of France. It was only a few years before 
the publication of the " Wealth of Nations " that the land 
lord's right of pit and gallows, i.e., of life and death, had 
been abolished in Scotland, not as a matter of justice, but 
by purchase, as a matter of dynastic expediency; and work 
men in coal-pits and salt-works were still virtually slaves, 
being formally denied the right of habeas cm-pus. 

Adam Smith had avoided arousing antagonism from the 
landed interests. And in turning the aggressive side of 
the new science against the mercantile system, as he styled 
what has since been known as the protective system, he 
found favor with, rather than excited prejudice among, 
the cultured class—the only class to which such a book as 
his could at that time be addressed. Such a class, under 
the conditions then existing in Great Britain, is apt to feel 

 172 THE NATURE OF WEALTH. Book II. 

contempt tinged with anger for traders beginning to aspire 
towards sharing the power and place of " born masters of 
the soil." Thus the indignation with which he speaks of 
how " the sneaking arts of underling tradesmen are erected 
into political maxims for the conduct of a great empire," 
and with which he compares " the capricious ambition of 
kings and ministers"—"the violence and injustice of the 
rulers of mankind, for which, perhaps, the nature of human 
affairs can scarce afford a remedy," with " the impertinent 
jealousy, the mean rapacity, the monopolizing spirit of 
merchants and manufacturers who neither are nor ought 
to be the rulers of mankind," could not fail to strike a 
sympathetic chord in the spirit then intellectually as 
politically dominant in Great^Britain. This would render 
unnoticed the quiet way in which he shows that " superi 
ority !of birth " is but " an ancient superiority of fortune " * 
and attributes the difference between the philosopher and 
the street porter to the difference in the accidents under 
which they have been placed. 

Yet with the outbreak of the French Revolution the 
radicalism of the " Wealth of Nations" did not pass en 
tirely unnoticed. A note appended by Dugald Stewart, in 
1810, to the second edition of the biography of Adam 
Smith, first read before the Royal Society of Edinburgh 
in 1793, explains as a reason why he had in the first edi 
tion confined himself to a much more general view of the 
"Wealth of Nations" than he had once intended, that: 

The doctrine of a free trade was itself represented as of a revolu 
tionary tendency; and some who had formerly prided themselves on 
an intimacy with Mr. Smith, and on their zeal for the propagation 
of his liberal system, began to call in question the expediency of 
subjecting to the disputations of philosophers the arcana of state 
policy and the unfathomable wisdom of the feudal ages. 

* "Wealth of Nations," Book V., Chapter II., Part II. 

 Chap. VI. ADAM SMITH'S INFLUENCE. 173 

And William Playfair, in his annotated edition of the 
"Wealth of Nations" (London, 1805), deems it necessary 
to apologize for Smith's sympathy with the Physiocrats by 
declaring that " the real fact is that Dr. Smith, as well as 
many of the Economists themselves, was ignorant of the 
secret belonging to the sect"—that " simply pretending to 
reduce to practice the Economical Table, they were silently 
laboring to overturn the thrones of Europe." This igno 
rance, since it was shared at the same time by " a monarch 
of such eminent abilities and penetration" as the great 
Frederick of Prussia, Playfair thinks may be well par 
doned to Dr. Smith. And pardoned it was. Or rather 
the objections made to Dr. Smith on the score of radicalism 
attracted so little attention that it is only by delving in 
forgotten literature that any trace of them can be found. 
The larger fact is that Adam Smith, opening the study of 
political economy at a lower level than the Physiocrats, 
found less resistance, and his book began to secure so per 
manent a recognition for the new science that its continu 
ance to our time is properly traced to him as its founder 
rather than to them. 

In 1798, five years after Stewart read his biography of 
Smith before the Royal Society of Edinburgh, and eight 
years after the author of the " Wealth of Nations," lament 
ing with his last breath that he had done so little, was laid 
to rest in the Edinburgh Cannongate, the English clergy 
man Malthus brought forward his famous theory of popu 
lation. This at once, like " a long-felt want," took its place 
in the crystallizing system of political economy which 
Smith had brought into shape, and which, if it was lacking 
in a clear and consistent definition of wealth, was not on 
that account objectionable to the spirit of the learned in 
stitutions which soon began to make its teaching a func 
tion of their official faculties. A few years after Malthus 
came Ricardo, to correct mistakes into which Smith had 

 174 THE NATUEE OP WEALTH. Hook II. 

fallen as to the nature and cause of rent, and to formulate 
the true law of rent; but to do this by laying stress on the 
fact that rent would increase as the necessities of increas 
ing population forced cultivation to less and less produc 
tive land, or to less and less productive points on the same 
land. 

Thus, the theory of wages into which Adam Smith fell 
when, as though fearful of the radical conclusions to which 
it must lead, he suddenly abandons his true perception 
that " the produce of labor constitutes the natural recom 
pense or wages of labor," to consider the master as provid 
ing from his capital the wages of his workmen, together 
with the theory of the tendency of population to increase 
faster than subsistence, and the apprehension of the 
theory of rent as resulting from the forcing of exertion to 
less and less productive land, with what was deemed its 
corollary, " the law of diminishing productiveness in agri 
culture," became cardinal doctrine. These linking with 
and buttressing each other, in what soon became the ac 
cepted system of political economy as developed from the 
" Wealth of Nations," did away effectually with any fear 
that the study of natural laws of the production and dis 
tribution of wealth might be dangerous to the great House 
of Have. For in this way political economy was made to 
serve the purpose of an assumed scientific demonstration 
that the shocking contrasts in the material conditions of 
men which our advancing civilization presents, result not 
from the injustice and mistakes of human law, but from 
the immutable law of Nature—the decrees of the All-origi 
nating, All-maintaining Spirit. 

So far from showing any menace to the great special 
interests, a political economy, so perverted, soon took its 
place with a similarly perverted Christianity to soothe the 
conscience of the rich and to frown down discontent on 
the part of the poor. In text-books and teachings from 

 Chap. VI. ADAM SMITH'S INFLUENCE. 176 

which Adam Smith's recurring perceptions of the natural 
equality of men were eliminated, it became indeed "the 
dismal science." It was held by its admirers that it needed 
only to be sufficiently taught them to convince even the 
" lower orders," that things as they are are things as they 
ought to be, except perhaps that " the monopolizing spirit 
of merchants and manufacturers," and " the sneaking arts 
of underling tradesmen" should no longer be permitted 
to be erected into maxims for governmental interferences 
with trade. 

Thus as the system of political economy presented by 
Adam Smith began to attract the attention of the thought 
ful and cultured, it did not meet the resistance it would 
have encountered had the special interests which it threat 
ened been really those of the growing class of merchants 
and manufacturers. On the other hand, the apparent 
turning of its aggressive side against merchants and manu 
facturers prevented the powerful landed interest from 
perceiving fully its relation to their own monopoly until 
it had gained the weight of recognized philosophic au 
thority. 

Now the course of social development in the civilized 
world generally, but particularly in Great Britain, in the 
era of steam which immediately followed Adam Smith, 
was enormously to increase the relative social weight of 
the mercantile and manufacturing classes. But when, 
fifty years after the death of Adam Smith, what he called 
the mercantile system came into political issue in the 
agitation for the repeal of the corn-laws, it was not among 
merchants and manufacturers, but in the power of the 
landed interest, that the strong defense of this system 
was seen to lie. The repeal of the corn-laws was carried 
against the strenuous resistance of the landowners by a 
combination of merchants and manufacturers with the 
working-classes, urged by bitter discontent and growing 

 176 THE NATUEE OF WEALTH. Book II. 

aspirations. But it was not carried until it becrane evident 
to the more thoughtful that if the agitation went on it 

•would be sure to lead to an inquiry into the right by which 
a few individuals called landowners, claimed the land of 
the British Islands as their property. 

The truth is that merchants and manufacturers, as 
merchants and manufacturers, are not the ultimate bene 
ficiaries of the protective system, and that mercantile 
interests can long profit by it only when sheltered behind 
some special monopoly. This has been shown in the 
United States, where the owners of coal and mineral and 
timber and sugar land have constituted the backbone 
of the political strength that has carried protection to such 
monstrous length. 

The repeal of the English corn-laws passed in Great 
Britain for a victory of free trade as far as it was practicable 
to carry free trade. And in scholastic circles in that coun 
try and in the United States, and throughout the civilized 

•world that took its intellectual impulse from England, it 
greatly increased the hopefulness of the professed econo 
mists. 

Thus strengthened by this powerful impulse, there con 
tinued to grow up under the sanction and development of 
a series of able and authoritatively placed men, whose 
efforts were devoted to smoothing: away difficulties and 
covering up incongruities, an accredited system of political 
economy which found its most widely accepted expounder 
in John Stuart Mill, and reached perhaps its highest point 
of authority in scholastic circles about or shortly after the 
centennial of the publication of the " Wealth of Nations." 
Yet it was as wanting in coherence as the image that 
Nebuchadnezzar saw in his dream. It contained much 
real truth well worked out. But this was conjoined with 
fallacies which could not stand examination. The attempt 
to define its object-noun, wealth, and the sub-term of 

 Chap. VI. ADAM SMITH'S INFLUENCE. 177 

wealth, capital, made them much more indefinite and 
confused than they had been left by Adam Smith. And 
it was never attempted to bring together what were given 
as the laws of the distribution of wealth, as that would 
have shown at a glance their want of relation. 

This political economy had no real hold on common 
thought, and was regarded even by ordinarily intelligent 
men as a scholastic or esoteric science. But it was spoken 
of by its professors with the utmost confidence as an 
assured science, and their belief in its success was greatly 
increased. 

From the beginning until well past the middle of the 
nineteenth century the temper of the recognized expound 
ers of the political economy which took shape from Adam 
Smith's foundation was hopeful and confident. They 
believed they had hold of a true science, which needed 
only development to be universally recognized. 

In what was printed as the introduction to the first 
American edition of Jean Baptiste Say's treatise on polit 
ical economy*—which being translated into English and 
widely circulated on both sides of the Atlantic became for 
a long time, in the United States at least, perhaps the most 
popular of the expositions of the science that Adam Smith 
had founded—Say points out certain difficulties that polit 
ical economy must have to encounter: " that opinions in 
political economy are not only maintained by vanity, but 
by the self-interest enlisted in the maintenance of a vicious 
order of things;" that " writers are found who possess the 
lamentable faculty of composing articles for journals, 
pamphlets and even whole volumes upon subjects which, 
according to their own confession, they do not under 
stand ;" and that " such is the indifference of the public 

* The original work was published in 1803. But this introduction 
bears internal evidence of having been written not earlier than 1814. 

I 

 178 THE NATURE OF WEALTH. Book II. 

that they rather prefer trusting to assertions than be at the 
trouble of investigating them." 
But he continues: 

Everything, however, announces that this beautiful, and above 
all, useful science, is spreading itself with increasing rapidity. Since 
it has been perceived that it does not rest upon hypothesis, but is 
founded upon observation and experience, its importance has been 
felt. It is now taught wherever knowledge is cherished. In the 
universities of Germany, of Scotland, of Spain, of Italy, and of the 
north of Europe, professorships of political economy are already es 
tablished. Hereafter this science will be taught in them, with all the 
advantages of a regular and systematic study. Whilst the Univer 
sity of Oxford proceeds in her old and beaten track, within a few 
years that of Cambridge has established a chair for the purpose of 
imparting instruction in this new science. Courses of lectures are 
delivered in Geneva and various other places; and the merchants of 
Barcelona have, at their own expense, founded a professorship on 
political economy. It is now considered as forming an essential part 
of the education of princes; and those who are called to that high 
distinction ought to blush at being ignorant of its principles. The 
Emperor of Russia has desired his brothers, the Grand Dukes Nicho 
las and Michael, to pursue a course of study on this subject under 
the direction of M. Storch. Finally, the Government of France has 
done itself lasting honor by establishing in this kingdom, under the 
sanction of public authority, the first professorship of political 
economy. 

This hopefulness as to what was to be accomplished 
by the regular and systematic study of political economy 
pervaded for a long time all economic writings. Even 
when it was necessary to admit that the unanimity that 
had been confidently expected had not come, it was always 
just about to come. 

Thus Colonel Torrens, in the introduction to his " Essay 
on the Production of Wealth," says in 1821 .- 

In the progress of the human mind, a period of controversy among 
the cultivators of any branch of science must necessarily precede the 
period of unanimity. With respect to political economy, the period 

 C/wp. VI. ADAM SMITH'S INFLUENCE. 179 

of controversy is passing away, and that of unanimity rapidly ap 
proaching. Twenty years hence there will scarcely exist a doubt 
respecting any of its fundamental principles. 

With the great defeat of protection in 1846, the confi 
dence of political economists became even greater than 
before. But the predictions that the example of Great 
Britain in abolishing protective duties would be quickly 
followed throughout the civilized world—predictions based 
on the assumption that this partial victory for freedom 
had been won by the advance of an intelligent political 
economy, were not realized; and fostered by such tre 
mendous political events as the great fight between the 
American States and the Franco-German war, a wave of 
reaction in favor of protection seemed to sweep over pretty 
nearly all the civilized world outside of Great Britain. 

And while in the scholastic world, of the English-speak 
ing countries at least, the triumph of Adam Smith's oppo 
sition to the principles of the mercantile system seemed to 
have established firmly an accepted science of political 
economy, and chairs for its teaching formed an indispensa 
ble adjunct of every institution of education, the real inco- 
herencies which had been slurred over began more and 
more to show themselves. 

In 1856 Professor J. E. Cairnes, delivering in Dublin 
University on the Whately Foundation a series of lectures 
afterwards reprinted under the title of "The Character 
and Logical Method of Political Economy," quoted what he 
called the unlucky prophecy of Torrens, made in 1821, that 
the period of controversy had passed and that of unanimity 
was rapidly approaching, and that in twenty years from 
then there would scarcely exist a doubt respecting any of 
the fundamental principles of political economy. Professor 
Cairnes did this onty to give point to a statement that fun 
damental questions "are still vehemently debated, not 
merely by sciolists and smatterers, who may always be 

 180 THE NATURE OF WEALTH. EooJcII. 

expected to wrangle, but by the professed cultivators and 
recognized expounders of the science," and that: 

So far from the period of controversy having passed, it seems 
hardly yet to have begun—controversy, I mean, not merely respect 
ing propositions of secondary importance, or the practical application 
of scientific doctrines (for such controversy is only an evidence of the 
vitality of a science, and is a necessary condition of its progress), but 
controversy respecting fundamental principles which lie at the root 
of its reasonings, and which were regarded as settled when Colonel 
Torrens wrote. 

Cairnes continues with a passage, which as showing a 
perception by a leading professor of political economy 
of the effect of the establishment of professorships, from 
which Say a generation before had hoped so much and 
from which up to this very time so much continued as it 
still continues to be hoped by those who know no better, 
is worth my quoting: 

When Political Economy had nothing to recommend it to public 
notice but its own proper and intrinsic evidence, no man professed 
himself a political economist who had not conscientiously studied 
and mastered its elementary principles; and no one who acknowledged 
himself a political economist discussed an economic problem without 
constant reference to the recognized axioms of the science. But 
when the immense success of free trade gave experimental proof of 
the justice of those principles on which economists relied, an obser 
vable change took place both in the mode of conducting economic 
discussions and in the class of persons who attached themselves to 
the cause of political economy. Many now enrolled themselves as 
political economists who had never taken the trouble to study the 
elementary principles of the science; and some, perhaps, 'whose 
capacities did not enable them to appreciate its evidence; while even 
those who had mastered its doctrines, in their anxiety to propitiate 
a popular audience, were too often led to abandon the true grounds 
of the science, in order to find for it in the facts and results of free 
trade a more popular and striking vindication. It was as if mathe 
maticians, in order to attract new adherents to their ranks, had con 
sented to abandon the method of analysis, and to rest the truth of 
their formulas on the correspondence of the almanacs with astro- 

 Chap. VI. ADAM SMITH'S INFLUENCE. 181 

nomical events. The severe and logical style which characterized the 
cultivators of the science in the early part of the century has thus 
been changed to suit the different character of the audience to whom 
economists now addressed themselves. The discussions of Political 
Economy have been constantly assuming more of a statistical char 
acter ; results are now appealed to instead of principles; the rules of 
arithmetic are superseding the canons of inductive reasoning; till the 
true course of investigation has been well-nigh forgotten, and Politi 
cal Economy seems in danger of realizing the fate of Atalanta. 

At the present time it is clearly to be seen that the worst 
fears of Cairnes have been more than realized. The period 
of controversy instead of having passed, had indeed, it has 
since been proved, hardly then begun. The accelerating 
tendency since his time as in the period of which he then 
spoke, has been away from, not towards, uniformity; con 
troversy has become incoherence, and what he then thought 
to be the science of political economy has been destroyed 
at the hands of its owu professors. 

But while Cairnes realized the true drift of a tendency 
that most of his contemporaries did not understand, and saw 
the real effect of a study of political economy for the pur 
pose of filling professorships and writing books, he did not 
see the real cause which so much faster and farther than he 
could have imagined has given sober reality to his more 
than half-rhetorical prediction. The reason of the con 
stantly increasing confusion of the scholastic political econ 
omy has lain in the failure of the so-called science to define 
its subject-matter or object-noun. Statistics cannot aid us 
in the search for a thing until we know what it is we want to 
find. It is the Tower of Babel over again. Men who at 
tempt to develop a science of the production and distribu 
tion of wealth without first deciding what they mean by 
wealth cannot understand each other or even understand 
themselves. 

 CHAPTER VII. 

INEFFECTUAL GROPINGS TOWARD A DETER 
MINATION OF WEALTH. 

SHOWING THE OPPOSITION TO THE SCHOLASTIC ECONOMY 
BEFORE " PROGRESS AND POVERTY." 

Illogical character of the "Wealth of Nations"—Statements of nat 
ural right—Spence, Ogilvie, Chalmers, Wakefield, Spencer, Dove, 
Bisset—Vague recognitions of natural right—Protection gave rise 
to no political economy in England, but did elsewhere—Germany 
and protectionist political economy in the United States—Diver 
gence of the schools—Trade-unionism in socialism. 

fllHE " Wealth of Nations " won great vogue by its strik- 
I ing qualities and its prudence in avoiding antagonism 
with landowners. It made a nucleus around which the 
scholastic classes could rally, assuming that they were 
teaching a science of political economy, without seriously 
hurting any powerful interest. What Smith had done 
was after all an evasion—a settlement which left the 
cardinal principles unsettled. He had shown how greatly 
the division of labor increases the productiveness of labor, 
and without daring to go too far had shown that to leave 
labor unrestricted would increase the annual product. He 
had in short turned the aggressive side of the science 
against the protective, or, as he styled it, the mercantile 
system, thus putting on its feet apolitical economy which 
taught a sort of free trade that did not seriously object to 

182 

 Chap.VU. INEFFECTUAL GEOPINGS. 183 

taxes on labor and the products of labor for raising the 
revenues of government. 

What wealth, or its sub-term, capital, was, Smith did 
not really say, nor yet did he make clear the division of 
their joint produce between the human factor and the 
natural factor, nor venture to show what was the cause 
and warrant of poverty. In political economy as he left 
it there were no axioms—nothing that would correlate and 
hold together. But such was his genius and prudence, and 
his adaptability to the temper of his time, that he got a 
hearing where more daring thinkers failed, and a science 
of political economy began to grow on his foundations. 
Malthus by giving a scientific semblance to a delusion 
which tallied with popular impressions, and Ricardo by 
giving form to a scientific interpretation of rent, soon 
provided what passed for axioms, one of which was wrong, 
and the other of which was wrongly or at least inade 
quately stated. While between them, all was left at sea. 

Yet such was the feeling that there ought to be a polit 
ical economy, and so agreeable to the ruling class was 
what was offered as such, that chairs for the study of it 
began to multiply. They were of course filled by men 
who taught what they had learned, with the constant pres 
sure on them of the class dominant in all colleges—a class 
which, whatever be the faults of a political economy, are 
disposed to accept things as they are as the best order of 
things possible, and to view with intense opposition any 
radical change that would provoke real discussion. And 
as nearly every professor of political economy thought it 
incumbent on him to write a textbook, or at least to do 
something to show a reason for his existence, there was 
much going over old ground and picking out of small 
differences, but no questioning of anything that could 
arouse vital debate. And given a state of society in which 
the many were poor and the few were rich, any attempt to 

 184 THE NATUKE OF WEALTH. Book II. 

point out a true political economy, if it got attention, 
would inevitably arouse much debate. 

Thus in fact political economy, as it found teachers and 
professors and the standing of a science, was to the class 
who had appropriated land as belonging to them exclu 
sively a very comfortable doctrine. It applied the doctrine 
of "letting things alone," without any suggestion of the 
question of how things came to be. It was, as it was 
styled by Clement C. Biddle, the American translator of 
Say, "the liberal doctrine that the most active, general 
and profitable employments are given to the industry and 
commerce of every people by allowing to their direction 
and application the most perfect freedom compatible mth 
the security of property." As to what constitutes property 
there was no dispute. And if one did not look too closely, 
and beyond the usages of the times, in the more advanced 
European nations there could be no dispute. Property! 
Why property was of course what was susceptible of 
ownership. Any fool would know that! 

Nor after the surrender of the Peel ministry, in time to 
prevent it, was any question of the sanction of property 
raised. English slavery had disappeared in its last forms 
before the nineteenth century began, and though the 
question of the ownership of slaves in the tropical colonies, 
and finally in the Southern United States, was likely if 
continuously debated to bring up the larger question, this 
did not appeal to the feelings of the people. So it was 
settled for the time, as to the colonies by the device of 
buying off the slave-owners at public expense; and hi the 
United States by the arbitrament of war. 

The question of the validity of property was never really 
raised in England until after the publication of " Progress 
and Poverty" began to call it up. But the attention 
which that has aroused has since brought to light some 
definite utterances, which show, as I take it, that the 

 Chap.FIL INEFFECTUAL GEOPINGS. 185 

doctrines of the French Physiocrats would have found 
hospitable reception in Great Britain had it been possible 
at the time to have really made them known. 

Thus H. M. Hyndman has dng up from the British 
Museum a lecture by Thomas Spence, delivered before 
the Philosophical Society of Newcastle, on November 8, 
1775, a year prior to the publication of the " Wealth of 
Nations," and for which the Society, as Spence puts it, did 
him "the honor" to expel him. In this lecture Spence 
declares that all men " have as equal and just a property 
in land as they have in liberty, air, or the light and heat 
of the sun," and he proposes what now would be again 
called " the single tax "—that the value of land should be 
taken for all public expenses, and all other taxes of what 
ever kind and nature should be abolished. He draws a 
glowing picture of what humanity would be if this simple 
but most radical reform were adopted. But so much 
against the wishes of all that had authority was he, that 
his proposal was utterly forgotten until dug out of its 
burial-place more than a century after. 

So, in 1889, D. C. Macdonald, a single-tax man, and a 
solicitor of Aberdeen, dug out of the Advocates' Library 
of Edinburgh, and the British Museum, in London, copies 
of a book printed in 1782 by William Ogilvie, Professor 
of Humanities in King's College, Aberdeen, entitled " An 
Essay on the Right of Property in Land, with Respect to 
its Foundation in the Law of Nature, its Present Estab 
lishment by the Municipal Laws of Europe, and the Regu 
lations by which it might be Rendered More Beneficial to 
the Lower Ranks of Mankind." Professor Ogilvie, though 
he makes no reference to any other authority than that of 
Moses, had evidently some knowledge of the Physiocrats, 
and most unquestionably declares that land is a Hrtliriglit 
which every citizen still retains. He advocates the taxation 
of land, with the entire abolition of all other taxes, though, 

 186 THE NATURE OF WEALTH. Sook II. 

as if despairing of so radical a reform, he proposes some 
palliatives such as allotments to actual settlers, leases, etc. 
He doubtless saw the utter hopelessness of making the 
fight under existing conditions, for it seems probable that 
his book was never published, only a few copies being 
printed for private circulation by the author. 

Among the scholastically accepted writers in the first 
thirty years of the century are two who seem to have some 
glimmerings of the truth perceived by the Physiocrats, of 
the relations between land and labor, though in a curi 
ously distorted way. Dr. Chalmers, who was a divinity 
professor in the University of Edinburgh, and a strong 
Malthusian, contended that the owners of land ultimately 
paid all taxes levied on labor, and contended that titles 
(which he regarded as so much retained by the state for 
beneficial purposes) should be maintained. All others he 
would have ultimately abolished, and the revenues of the 
state ultimately raised from the value of land. This, he 
thought, would be simpler and better, and avoid much 
dispute, " relieving government from the odium of taxes 
which so endanger the cause of order and authority." He 
was a stanch supporter of primogeniture, opposed to any 
thing which aimed at the division of the land, and would 
have the country enjoy the spectacle of a noble and splen 
did aristocracy, of which the younger branches should be 
supported by places of at least £1000 a year in the public 
services. And, while he would have the landlords pay all 
taxes, he thought it " wholesome and befitting that they 
should have the political ascendancy also." For "the 
lords of the soil, we repeat, are naturally and properly the 
lords of the ascendant." Chalmers was a good example of 
the toadying spirit of so many of the Scottish ministers. 
He afterward joined in the disruption of the Kirk by the 
Free Kirk movement. Yet, in spite of his obsequience, 
he did not succeed in popularizing the single tax with the 

 Chap.ni. INEFFECTUAL GROPINGS. 187 

British aristocracy, who fought the repeal of the corn-laws 
as long as they could. He passed as an economist almost 
into oblivion. 

Another curious example of the perversion of the doc 
trine of the relation between land and labor was given by 
Edward Gibbon Wakefield, who visited this country in its 
more democratic days in the first quarter of the century, 
ere the natural result of our thoughtless acceptance of 
land and true property as alike wealth, and our desire to 
get in the first place an owner for land had begun to show 
so fully its effects. He was impressed with the difference 
between the society growing up here and that to which he 
had been used, and viewing everything from the stand 
point of those accustomed to look on the rest of mankind 
as created for their benefit, he deemed the great social and 
economic disadvantage of the United States to be "the 
scarcity of labor." To this he traces the rudeness of the 
upper class—its want of those refinements, enjoyments 
and delicacies of life, common to the aristocracy of Eng 
land. How could an English gentleman emigrate to a 
country where he might actually have to black his own 
boots, and where 110 one could count on a constant supply 
of labor ready to accept as a boon any opportunity to per 
form the most menial and degrading service ? He saw, as 
Adam Smith before him saw, that this " scarcity of labor" 
came from the cheapness of land where the vast area of 
the public domain was open for settlement at nominal prices. 
Without the slightest question that the land was made for 
landlords, and that laborers were intended to furnish a 
supply of labor for the upper classes, he wished the new 
countries which England had yet to settle to be socially, 
politically and economically newer Englands; and, without 
waiting for the slower process of speculation, he wished to 
bring about in these new countries such salutary " scarcity 
of employment" as would give cheap and abundant labor 

 188 THE NATURE OF WEALTH. Book II. 

from the very start of settlement. He, therefore, proposed 
that land should not be given, but sold at the outset, at 
what he called a sufficient price—a price high enough to 
make laborers work for others until they had acquired the 
fund necessary to pay a price for what nature offered with 
out money and without price. The money received by the 
state in this way he proposed to devote in paying the 
passage of suitable and selected immigrants. This would 
give from the start two classes of immigrants to settle the 
great waste places which England still retained, especially 
in Australia and New Zealand—the better class, who would 
pay their own expenses, and buy from the government 
their own land, which would at first have a value; and the 
assisted class, who, being selected from the best workers 
in the old country, would at once be able to supply all the 
required labor. Thus the new country where this plan was 
adopted would from the first, while wages were still enough 
higher than iu England to make working-men, especially 
if assisted, desire to go there, offer the inducement to a 
wealthy and cultivated class of a "reasonable" and ready 
supply of labor, and save them from such hardships from 
the lack of it as made the United States so unattractive to 
the " better class " of Englishmen. 

This plan was very attractive to the more wealthy and 
influential class of Englishmen concerned in, or thinking 
of, emigrating to the newer colonies, and was finally adopted 
by the corporation concerned in settling West Australia, 
and afterwards the other Australian colonies. But even 
its obvious inferences never affected the teaching of 
political economy. 

In 1850 two works appeared in England, which, though 
neither of them was from the ranks of the scholastic econ 
omists, were both premonitions of a coming demand for a 
political economy which would take some consideration of 
the interest of the masses. One of these was by Herbert 

 Chap.VII. INEFFECTUAL GEOPINGS. 189 

Spencer, then young and unknown, and was entitled 
"Social Statics, or The Conditions Essential to Human 
Happiness Specified, and the First of Them Developed." 
Chapter IX. of this book, " The Right to the Use of the 
Earth," is a telling denial of what the economists of Smith's 
school had quietly assumed could not be questioned, the 
validity of property in land. It got no attention in Eng 
land, having been noticed in the " British Quarterly Re 
view " only in 1876, when his sociological works began first 
to be heard of. It was however reprinted in the United 
States in 1864, with a note by the author, and when, about 
1877, Appleton & Co., of New York, became the American 
publishers of his philosophical writings, they reprinted 
this with his other works, and on the strength of them it 
began to get into circulation. 

This was the only work of the kind I knew of when 
writing " Progress and Poverty;" and in " A Perplexed 
Philosopher" (1892), I have given a full account of it, and 
of Mr. Spencer's slufting repudiation and final recantation 
of what he had said in denial of property in hind. 

In the same year (1850) appeared in London "The 
Theory of Human Progression and Natural Probability of 
a Reign of Justice." It was published anonymously and 
dedicated to Victor Cousin of France. The argument of 
"The Theory of Human Progression" is that there is a 
probability of the reign of justice on earth, or millennium, 
foretold by Scriptural prophecy. One of his primary 
postulates is the inspiration of the Bible and the divinity 
of the founder of the Christian religion, which in his view 
is Scottish Presbyterianism, and which he treats as the true 
religion, all others being false. But, though adhering to 
the doctrine of the fall of man, who is by nature vile and 
wicked, he is an evolutionist in believing in the natural 
necessary advance of mankind by the progress of know 
ledge, or to use his phrase, by the progress of correct cre^ 

 190 THE NATURE OP WEALTH. Book II. 

dence in the natural order and necessary sequence of the 
sciences, to a reign of justice, in which is to grow a reign 
of benevolence. 

The elements of correct credence as he enunciates them 
(p. 94) are: 

1. The Bible. 

2. A correct view of the phenomena of material nature. 

3. A correct philosophy of the mental operations. 

The three things which he links together as respectively 
cause and effect, involving the conditions of society, are 
(p. 120): 

Knowledge and freedom. 
Superstition and despotism. 
Infidelity and anarchy. 

And the four propositions which best give an idea of 
the scope of his work and the course of his thought are 
(p. 160): 

1. On the sure word of divine prophecy we anticipate a reign of 
justice on the earth. 

2. That a reign of justice necessarily implies that every man in 
the world shall at some future time be put in possession of all his 
rights. 

3. That the history of civilized communities shows us that the 
progression of mankind in a political aspect is from a diversity of 
privileges toward an equality of rights. 

4. That one man can have a privilege only by depriving another 
man or many other men of a portion of their rights. Consequently 
that a reign of justice will consist in the destruction of every privi 
lege, and in the restitution of every right. 

These propositions are extended to twenty-one main 
propositions and twelve sub-propositions, but they are all 
involved in the first four. The tenth sub-division of the 
twentieth proposition and the twenty-first proposition as a 
whole are, however, well worth quoting as giving an idea 
of the character of the man and his thought: 

 Chap.VIL INEFFECTUAL GEOPINGS. 191 

. . . Knowledge does necessarily produce change, as much as heat 
necessarily produces change; and where knowledge becomes more 
and more accurate, more and more extensive, and more and more 
generally diffused, change must necessarily take place in the same 
ratio and entail with it a new order of society, and an amended con 
dition of man upon the globe. Wherever, then, the unjust interests 
of the ruling classes are required to give way before the progress of 
knowledge and those ruling classes peremptorily refuse to allow the 
condition of society to be amended, the sword is the instrument 
which knowledge and reason may be compelled to use; for it is not 
possible, it is not within the limits of man's choice, that the progress 
of society can be permanently arrested when the intellect of the 
masses has advanced in knowledge beyond those propositions, of 
which the present condition is only the realization. 

21. We posit, finally, that the acquisition, scientific ordination, 
and general diffusion of knowledge will necessarily obliterate error 
and superstition, and continually amend the condition of man upon 
the globe, until his ultimate condition shall be the best the circum 
stances of the earth permit of. On this ground we take up (what 
might in other and abler hands be an argument of no small interest, 
namely) the natural probability of a millennium, based on the clas 
sification of the sciences, on the past progress of mankind, and on 
the computed evolution of man's future progress. The outline alone 
of this argument we shall indicate, and we have no hesitation in 
believing that every one who sees it in its true light will at once see 
how the combination of knowledge and reason must regenerate the 
earth and evolve a period of universal prosperity which the Divine 
Creator has graciously promised, and whose natural probability we 
maintain to be within the calculation of the human reason. 

The book which, so far as my knowledge goes, "The 
Theory of Human Progression" most nearly resembles 
in motive, scope and conclusions is Herbert Spencer's 
" Social Statics," published in the same year, though evi 
dently without knowledge of each other. Both seem to 
have little knowledge of and make slight reference to 
writers on political economy—Spencer referring in one 
place to Smith, Mill and Chalmers, while Dove quotes no 
authority later than Moses. Both go largely over the same 
ground, and both reach substantially the same practical 

 192 THE NATURE OF WEALTH. Book II. 

conclusion; both assert the same grand doctrine of the 
natural rights of men, which is the essence of Jeffersonian 
democracy and the touchstone of true reform; both de 
clare the supremacy of a higher law than human enact 
ments, and both believe in an evolutionary process which 
shall raise men to higher and nobler conditions. Both 
express clearly and well the fundamental postulates of the 
single tax, and both are of course absolute free traders. 
Spencer devotes more space to the land question, and more 
elaborately proves the incompatibility of private ownership 
of land with the moral law, and declares the justice and 
necessity of appropriating rent for public revenues with 
out saying anything of the mode; while Dove dwells at 
more length on the wickedness and stupidity of tariffs, 
excises and the other modes of raising revenues from taxes 
on the products of labor, and clearly indicates taxation as 
the method of appropriating rent for public purposes. 
But while the English agnostic might have regarded the 
Scottish Calvinist as yet in the bonds of an utterly un 
scientific superstition, there is one respect in which tho 
vigor and courage of Dove's thought shines superior to 
Spencer's. Spencer, after demonstrating the absolute in 
validity of any possible claim to the private ownership of 
land, goes on to say that great difficulties must attend the 
resumption by mankind at large of their rights to the soil; 
that had we to deal with the parties who originally robbed 
the human race of their heritage, we might make short 
work of the matter; but that unfortunately most of our 
present landowners are men who have either mediately or 
immediately given for their estates equivalents of honestly 
earned wealth, and that to "justly estimate and liquidate 
the claims of such is one of the most intricate problems 
society will one day have to solve." 

But the orthodox Presbyterian utterly refuses thus to 
bend the knee to Baal in the slightest concession. While 

 i. INEFFECTUAL GEOPINGS. 193 

lie is not more clear than Spencer in demonstrating that 
landowners as landowners have no rights whatever, there 
is not one word in his book that recognizes in any way 
their claims. On the contrary, he declares that slavery is 
man-robbery, and that the £20,000,000 compensation given 
by the British Parliament to the West India planters on 
the emancipation of their slaves was an act of injustice 
and oppression to the British masses, and (p. 139) adds: 

No man in the world and no association in the world could ever 
have an equitable right to tax a laborer for the purpose of remunerat 
ing a man-robber; and, although the measure is now past and done 
with, we very much question whether some analogous cases will 
not be cleared up by the mass of the nation ere many years pass 
over the heads of Englishmen. When the question of landed 
property comes to a definite discussion there may be little thought 
of compensation. 

Yet neither in England nor in the United States, where 
an edition seems to have been published in Boston at the 
expense of Senator Sumiier, did Dove get any attention, 
and I never heard of it until after the publication of 
" Progress and Poverty," when, in Ireland in 1882,1 was 
presented with a copy by Charles Eason, head of the 
Dublin branch of the great news-publishing house of 
Smith & Sons. 

In 1854 appeared another book by Patrick Edward 
Dove, in which the authorship of " The Theory of Human 
Progression " was announced—" The Elements of Political 
Science, in two books: first, on Method, second, on 
Doctrine." And in 1856 appeared a third book, "The 
Logic of the Christian Faith," being a dissertation on 
skepticism, pantheism, the a priori argument, the a pos- 
tmori argument, the intuitional argument and revelation, 
also under title of the author, and with a dedication to 
Charles Sunnier, Senator of the United States, who, with 
out his knowledge, had procured a republication of Dove's 

 194 THE NATURE OF WEALTH. Book II. 

first book in Boston, being moved thereto doubtless by its 
vigorous words on slavery. 

In 1859 appeared in London " The Strength of Nations," 
by Andrew Bisset, who has since (1877) published " The 
History of the Struggle for Parliamentary Government 
in England," a review of the systematic attempt of the 
families of Plantagenet, Tudor and Stuart to enslave the 
English people, which is mainly occupied with the attempt 
of Charles I., the resistance to it, and his final execution. 
" The Strength of Nations " very suggestively calls atten 
tion to the fact that feudal tenures were conditioned on 
the payment of rent or special services to the state, and 
thus the much-lauded abolition of what was left of the 
feudal incidents by the Long Parliament was a relief of 
the landholders of the payment of what measured at 
present prices would suffice for the whole expenditure of 
England, and the saddling of it on general taxation; and 
that from this dates the beginning of the English national 
debt. 

These books have produced very little effect upon polit 
ical economy, and some of them have passed out of print 
without any perceptible effect at all. It is likely that there 
were others in addition to what I have mentioned, and it 
is certain that there were others that occasionally found 
their way into print which irregularly and spasmodically 
expressed some touch of the idea formulated in lines of 
the Wat Tyler rising: 

When Adam delved and Eve span, 
Who was then a gentleman? 

Some notion of the incongruity of the idea that a small 
fraction of mankind were intended to eat, and eat luxuri 
ously without working, and another and far larger portion 
to have nothing but work to enable them to eat, and be 
compelled to beg as a boon the opportunity to do that, 

 Chap.ni. INEFFECTUAL GEOPINGS. 195 

runs in broken flashes through much of the reform litera 
ture. But in political economy as it up to 1880 existed 
all such questioning was tabooed, and the utmost that 
could be found in any of the writers recognized by the 
schools was a timid suggestion that the future unearned 
increment of land values might sometime be recognized 
as belonging to the community, a proposition that, though 
it amounted to nothing whatever, as landlords were ready 
to sell land for what would give them any unearned 
increment not yet in sight, caused John Stuart Mill who 
had been giving some adhesion to it to be looked on 
askance by some, as an awful radical. 

The struggle for the repeal of the corn-laws in England 
did not lead to any development of a protectionist political 
economy. Books and pamphlets enough were written in 
favor of protection, but they were merely appeals to old 
habits of thought and vulgar prejudices, and the forces in 
favor of repeal carried them down. Elsewhere, however, 
it was different. On the Continent the conditions under 
which the tentative victory of free trade was won in Eng 
land were lacking. Cut up into hostile nations, burdened 
with demands for revenue, the mercantile system got a 
practical hold that could not be broken by the half-hearted 
measures of its English opponents, and the gleam of hope 
which came with the English-French treaty negotiated be 
tween Cobden and Napoleon III. was destroyed by the 
tremendous struggles which followed the fall of the latter. 
In Germany the outburst of national feeling which fol 
lowed the struggles with France and the unification of 
German states gave rise to a school of German economists 
who taught a national economy, in which under various 
names, such as romantic, inductive and national, protec 
tionism was advocated. 

When it came to making peace between England and 
the United States after the War of Independence, the 

 196 THE NATURE OF WEALTH. Book II. 

American Commissioners were instructed to stipulate for 
a complete free trade between the two countries. They 
failed in this, owing to the prevalence of the protective 
sentiment in Great Britain at the time. When the Arti 
cles of Confederation gave way to the Constitution, the 
need for an independent source of revenue took the easy 
means of laving a Federal tariff upon foreign productions, 
though free trade between the States was guaranteed; and 
the growth of selfish interests caused by and promotive of 
a constantly increasing demand for greater revenue built 
up a strong party in favor of protection, which had its 
way when the slavery question taking sectional shape put 
the States in which protectionism was dominant in control 
of the government with the secession of the South. This 
interest sought warrant in a scheme of political economy, 
and found it in drawing from the German economists and 
in the writings of Henry C. Carey of Philadelphia, whose 
theory in many respects differed from the English philos 
ophy, noticeably in its advocacy of protection. In America 
this protectionist semblance of a political economy had its 
chief seat in the University of Pennsylvania, and the sup 
port of a powerful party in which the ideas of Jefferson 
were opposed by those of Hamilton; while in Great Britain 
the works of Carlyle and the course of modern study and 
development had in scholastic circles popularized the 
German. 

Among the schools, moreover, there was a divergence 
which began to assume greater proportions as the success 
of the anti-corn-laws struggle began to be shown in the 
accomplishment of all that any of its advocates dared to 
propose. This took shape in a contention as to value, which 
inclined to emphasize the fact that the admission that some 
immaterial things were conceded to be wealth destroyed 
the ability to keep any immaterial things having value out 
of that category, and consequently that wealth in the 

 Chap.VII. INEFFECTUAL GEOPINGS. 197 

common sense was the only thing to be considered in 
political economy, which was really a science of exchanges. 
With the efforts of Jevons, Macleod and others this began 
to make way, and naturally affiliated with the historical, 
the inductive, the socialistic and other protectionist schools 
which grew from the Continental teachings. Instead of 
working for greater directness and simplicity, it really 
made of political economy an occult science, in which 
nothing was fixed, and the professors of which, claiming 
superior knowledge, could support whatever they chose to. 
During the century another form of protectionism had 
been growing up, originating in England, but gaining 
adherents everywhere. Like the others, it recognized no 
difference between land and products of labor, counting 
them all as wealth, and aimed by main strength at im 
provement in the conditions of labor. Recognizing the 
workers as a class naturally separate from employers, it 
aimed to unite the laborers in combinations, and to invoke 
in their behalf the power of the state to impose restrictions, 
shorten hours, and in various ways to serve their interests 
at the expense of the primarily employing class. The 
German mind, learned, bureaucratic and incomprehensible, 
put this in the form of what passed for a system in Karl 
Marx's ponderous two volumes entitled " Capital," written 
in England in 1867, but published in German and not 
translated into English until after his death in 1887. 
Without distinguishing between products of nature and 
the products of man, Marx holds that there are two kinds of 
value—use value and exchange value—and that through 
some alchemy of buying and selling the capitalist who 
hires men to turn material into products gets a larger 
value than he gives. Upon this economic proposition of 
Marx (it can hardly be called a theory), or others similar 
to it, political schemes with slight variations have been 
promulgated after the manner of political platforms. 

 198 THE NATURE OP WEALTH. Book II. 

Under the name of socialism, a name which all such 
movements have now succeeded in appropriating, all such 
plans are embraced. We sometimes hear of "scientific 
socialism," as something to be established, as it were, by 
proclamation, or by act of government. In this there is a 
tendency to confuse the idea of science with that of some 
thing purely conventional or political, a scheme or pro 
posal, not a science. For science, as previously explained, 
is concerned with natural laws, not with the proposal of 
man—with relations which always have existed and always 
must exist. Socialism takes no account of natural laws, 
neither seeking them nor striving to be governed by them. 
It is an art or conventional scheme like any other scheme 
in politics or government, while political economy is an 
exposition of certain invariable laws of human nature. 
The proposal which socialism makes is that the collectivity 
or state shall assume the management of all means of 
production, including land, capital and man himself; do 
away with all competition, and convert mankind into two 
classes, the directors, taking their orders from government 
and acting by governmental authority, and the workers, 
for whom everything shall be provided, including the di 
rectors themselves. It is a proposal to bring back man 
kind to the socialism of Peru, but without reliance on 
divine will or power. Modern socialism is in fact without 
religion, and its tendency is atheistic. It is more destitute 
of any central and guiding principle than any philosophy 
I know of. Mankind is here; how, it does not state; and 
must proceed to make a world for itself, as disorderly as 
that which Alice in Wonderland confronted. It has no 
system of individual rights whereby it can define the ex 
tent to which the individual is entitled to liberty or to 
which the state may go in restraining it. And so long as 
no individual has any principle of guidance it is impossible 
that society itself should have any. How such a combina- 

 Chap. VII. INEFFECTUAL GKOPINGS. 199 

tion could be called a science, and how it should get a fol 
lowing, can be accounted for only by the " fatal facility of 
writing without thinking," which the learned German 
ability of studying details without any leading principle 
permits to pass, and by the number of places which such 
a bureaucratic organization would provide. However, 
through government repression and its falling in with 
trade-union notions it has made great headway in Ger 
many, and has taken considerable hold in England. 

This was the condition of things at the beginning of the 
eighth decade of the century, when the English political 
economy, the only economy making any pretensions to a 
science, received from a newer and freer England what has 
proved a fatal blow. 

 CHAPTER Vin. 

BREAKDOWN OF SCHOLASTIC POLITICAL 
ECONOMY. 

SHOWING THE REASON, THE RECEPTION, AND EFFECT ON PO 
LITICAL ECONOMY OF "PROGRESS AND POVERTY." 

"Progress and Poverty"—Preference of professors to abandon the 
"science" rather than radically change it, brings the breakdown 
of scholastic economy—The "Encyclopaedia Britannica"—The 
"Austrian school" that has succeeded the "classical." 

IN January, 1880, preceded in 1879 by an author's 
edition in San Francisco, appeared my " Progress and 
Poverty," and it was followed later in the same year by an 
English edition and a German edition, and in 1882 by 
cheap paper editions both in England and the United 
States. The history of the book is briefly this: I reached 
California by sea in the early part of 1858, and finally 
became an editorial writer. In 1869 I went East on 
newspaper business, returning to California in the early 
summer of 1870. John Russell Young was at that time 
managing editor of the New YorJc Tribune, and I wrote 
for him an article on " The Chinese on the Pacific Coast," 
a question that had begun to arouse attention there, taking 
the side popular among the working-classes of the Coast, 
in opposition to the unrestricted immigration of that 
people. Wishing to know what political economy had to 
say about the causes of wages, I went to the Philadelphia 

200 

 Chap.VIII. THE SCHOLASTIC BREAKDOWN. 201 

Library, looked over John Stuart Mill's "Political Econ 
omy," and accepting his view without question, based my 
article upon it. This article attracted attention, especially 
in California, and a copy I sent from there to John Stuart 
Mill brought a letter of commendation. 

While in the East, the contrast of luxury and want that 
I saw in New York appalled me, and I left for the West 
feeling that there must be a cause for this, and that if 
possible I would find out what it was. Turning over the 
matter in my iniiid amid pretty constant occupation, I at 
length found the cause in the treatment of laud as prop 
erty, and in a pamphlet which I took an interval of leisure 
to write, "Our Land and Land Policy" (San Francisco, 
1871), I stated it. Something like a thousand copies of 
this were sold; but I saw that to command attention the 
work must be done more thoroughly, and refraining from 
any effort to press it at the East until I knew more, I 
engaged with others in starting (December, 1871) a small 
San Francisco daily paper, which occupied my attention, 
though I never forgot my main purpose, until December, 
1875, when, becoming entangled with an obligation to a 
rich man (U. S. Senator John P. Jones), whose note we 
had at his own request taken, I went out penniless. I 
then asked the Governor (Irwin), whom I had supported, 
for a place that would give me leisure to devote myself to 
thoughtful work. He gave me what was much of a sine 
cure, and which has now been abolished—the position of 
State Inspector of Gas-meters. This, while giving, though 
irregularly, enough to live on, afforded ample leisure. I had 
intended to devote this to my long-cherished plan; and 
after some time spent in writing and speaking, with inter 
vals of reading and study, I brought out " Progress and 
Poverty" in an author's edition, in August, 1879. 

In this book I took the same question that had perplexed 
me. Stating the world-wide problem in an introductory 

 202 TEE NATUBE OF WEALTH. BookIL 

chapter, I found that the explanation of it given by the 
accepted political economy was that wages are drawn from 
capital, and constantly tend to the lowest amount on which 
labor will consent to live and reproduce, because the 
increase in the number of laborers tends naturally to fol 
low and overtake any increase in capital. Examining this 
doctrine in Book I., consisting of five chapters, entitled 
"Wages and Capital," I showed that it was based upon 
misconceptions, and that wages were not drawn from 
existing capital, but produced by labor. In Book II., 
" Population and Subsistence," I devoted four chapters to 
examining and disproving the Malthusian theory. Then 
in Book III., "The Laws of Distribution," I showed 
(in eight chapters) that what were given as laws did not 
correlate, and proceeded to show what the laws of rent, 
interest and wages really were. In Book IV. (four chapters), 
I proved that the effect of material progress was to increase 
the proportion of the product that would go to rent. In 
Book V. (two chapters), I showed this to be the primary 
cause of paroxysms of industrial depression, and of the 
persistence of poverty amid advancing wealth. In Book 
VI., "The Remedy" (two chapters), I showed the inade 
quacy of all remedies for industrial distress short of a 
measure for giving the community the benefit of the increase 
of rent. In Book VII. (five chapters), I examined the jus 
tice ; in Book VIII. (four chapters), the exact relation and 
practical application of this remedy; and in Book IX. (four 
chapters), I discussed its effect on production, on distribu 
tion, on individuals and classes, and social organization 
and life; while in Book X. (five chapters), I worked out 
briefly the great law of human progress, and showed the 
relation to this law of what I proposed. The conclu 
sion (one chapter), " The Problem of Individual Life," is 
devoted to the problem that arises in the heart of the 
individual. 

 Chap.VIII. THE SCHOLASTIC BREAKDOWN. 203 

This work was the most thorough and exhaustive ex 
amination of political economy that had yet been made, 
going over in the space of less than sis hundred pages the 
whole subject that I deemed it necessary to explain, and 
completely recasting political economy. I could get no 
one to print the work except my old partner in San 
Francisco, William M. Hinton, who had gone into the 
printing business, and who had sufficient faith in me to 
make the plates. I sold this author's edition in San Fran 
cisco at a good price, which almost paid for the plates, and 
sent copies to publishers in New York and London, offer 
ing to furnish them with plates. With the heavy expense 
met, Appleton & Co., of New York, undertook its printing, 
and though I could get no English publisher at the time, 
before the year of first publication was out they got Kegan 
Paul, Trench & Co. to undertake its printing in London. In 
the meantime, before publishing this book, I had delivered 
a lecture in San Francisco which led to the formation 
of the Land Reform Union of San Francisco, the first of 
many similar movements since. 

"Progress and Poverty" has been, in short, the most 
successful economic work ever published. Its reasoning 
has never been successfully assailed, and on three con 
tinents it has given birth to movements whose practical 
success is only a question of time. Yet though the scho 
lastic political economy has been broken, it has not been, 
as I at the time anticipated, by some one of its professors 
taking up what I had pointed out; but a new and utterly 
incoherent political economy has taken its place in the 
schools. 

Among the adherents of the scholastic economy, who 
had been claiming it as a science, there had been from the 
time of Smith no attempt to determine what wealth was; 
no attempt to say what constituted property, and no at 
tempt to make the laws of production or distribution cor- 

 204 THE NATURE OP WEALTH. Bwk II. 

relate and agree, until there thus burst on them from a 
fresh man, without either the education or the sanction of 
the schools, on the remotest verge of civilization, a recon 
struction of the science, that began to make its way and 
command attention. What were their training and labo 
rious study worth if it could be thus ignored, and if one 
who had never seen the inside of a college, except when 
he had attempted to teach professors the fundamentals of 
their science, whose education was of the mere common- 
school branches, whose alma mater had been the forecastle 
and the printing-office, should be admitted to prove the 
inconsistency of what they had been teaching as a science ? 
It was not to be thought of. And so while a few of these 
professional economists, driven to say something about 
"Progress and Poverty," resorted to misrepresentation, 
the majority preferred to rely upon their official positions 
in which they were secure by the interests of the dominant 
class, and to treat as beneath contempt a book circulating 
by thousands in the three great English-speaking countries 
and translated into all the important modern languages. 
Thus the professors of political economy seemingly re 
jected the simple teachings of "Progress and Poverty," 
refrained from meeting with disproof or argument what it 
had laid down, and treated it with contemptuous silence. 
Had these teachers of the schools frankly admitted the 
changes called for by " Progress and Poverty," something 
of the structure on which they built might have been re 
tained. But that was not in human nature. It would 
not have been merely to accept a new man without the 
training of the schools, but to admit that the true science 
was open to any one to pursue, and could be successfully 
continued only on the basis of equal rights and privileges. 
It would not merely have made useless so much of the 
knowledge that they had laboriously attained, and was 
their title to distinction and honor, but would have con- 

 Chap-mi. THE SCHOLASTIC BREAKDOWN. 205 

verted them and their science into opponents of the tre 
mendous pecuniary interests that were vitally concerned 
in supporting the justification of the unjust arrangements 
which gave them power. The change in credence that this 
would have involved would have been the most revolu 
tionary that had ever been made, involving a far-reaching 
change in all the adjustments of society such as had hardly 
before been thought of, and never before been accom 
plished at one stroke; for the abolition of chattel slavery 
was as nothing in its effects as compared with the far- 
reaching character of the abolition of private ownership 
of land. Thus the professors of political economy, having 
the sanction and support of the schools, preferred, and 
naturally preferred, to unite their differences, by giving 
up what had before been insisted on as essential, and to 
teach what was an incomprehensible jargon to the ordinary 
man, under the assumption of teaching an occult science, 
which required a great study of what had been written by 
numerous learned professors all over the world, and a 
knowledge of foreign languages. So the scholastic polit 
ical economy, as it had been taught, utterly broke down, 
and, as taught in the schools, tended to protectionism 
and the German, and to the assumption that it was a 
recondite science on which no one not having the indorse 
ment of the colleges was competent to speak, and on which 
only a man of great reading and learning could express an 
opinion. 

The first evidence of the change was given in the " En 
cyclopaedia Britannica," which in Vol. XIX. of the ninth 
edition, printed in 1886, discarded the dogmatic article on 
the science of political economy, which had been printed 
in previous editions, and on the plea that political economy 
was really in a transition state, and a dogmatic treatise 
would not be opportune, gave the space instead to an 
article on the science of political economy by Professor 

 206 THE NATURE OF WEALTH. Book II. 

3. K. Ingram, which undertook to review all that had been 
written about it, and was almost immediately reprinted in 
an 8vo volume with an introduction by Professor E. J. 
James, of the University of Pennsylvania, the leading 
American protectionist institution of learning. 

This confession that the old political economy was dead 
was written in the " good God, good devil," or historical 
style, and consisted in a notice of the writers on political 
economy, from the most ancient times, through a first, a 
second and a third modern phase, to the coming or histor 
ical phase. 

Adam Smith is put down as leading in the third modern 
school—the system of natural liberty. Among the prede 
cessors of Smith are reckoned the French Physiocrats, 
whose proposition for a single tax on the value of land is 
related to their doctrine of the productiveness of agricul 
ture and the sterility of manufactures and commerce, 
"which has been disposed of by Smith and others, and 
falls to the ground with the doctrine on which it was 
based;" and Smith himself is treated as a respectable " has- 
been," whose teachings must now give way to the wider 
criticism and larger knowledge of the historical school. 
Writers of France, Spain, Germany, Italy and northern 
nations are referred to in the utmost profusion, but there 
is no reference whatever to the man or the book that was 
then exerting more influence upon thought and finding 
more purchasers than all the rest of them combined, an 
example which has been followed to this day in the elabo 
rate four-volume" Dictionary of Political Economy," edited 
by E. H. Inglis Palgrave. 

This action was enough. The encyclopedias and dic 
tionaries printed since have followed this example of the 
Britannica. Chambers, which was the first to print a new 
and revised edition, and Johnson's, which soon followed, 
concluded in 1896, discarded what they had previously 

 Chap.rill. THE SCHOLASTIC BEEAKDOWN. 207 

printed as the teaching of political economy for articles 
in the style of the Britannica's; while the new dictionaries 
are fepeatedly giving place to the jargon which has been 
introduced as economic terms. 

As for the University of Pennsylvania, the great au 
thority of American scholastic protectionism, it may be 
said that it soon after relegated to a back seat its Professor 
of Political Economy, Professor Robert Ellis Thompson, 
a Scotsman, who Lad been up to that time teaching the 
best scientific justification of protectionism that could be 
had, and has put in his place the Professor E. J. James 
already spoken of, and thrown its whole influence and re 
sources into the teaching of protection by the Anglicized 
historical and inductive method, under a new though 
rarely mentioned name. The new science speaks of the 
" science of economics " and not of " political economy;" 
teaches that there are no eternally valid natural laws; and, 
asked if free trade or protection be beneficial or if the trusts 
be good or bad, declines to give a categorical answer, but 
replies that this can be decided only as to the particular 
time and place, and by a historical investigation of all 
that has been written about it. As such inquiry must, of 
course, be left to professors and learned men, it leaves the 
professors of "economics," who have almost universally 
taken the places founded for professors of " political econ 
omy," to dictate as they please, without any semblance of 
embarrassing axioms or rules. How this lends itself to 
an acquiescence in the views or whims of the wealthy class, 
dominant in all colleges, the University of Pennsylvania, 
controlled in the interests of protectionists for revenue 
only, was the first to find out, but it has been rapidly and 
generally followed. 

Such inquiry as I have been able to make of the recently 
published works and writings of the authoritative pro 
fessors of the science has convinced me that this change 

 208 THE NATURE OP WEALTH. Book If. 

has been general among all the colleges, both of England 
and the United States. So general is this scholastic utter 
ance that it may now be said that the science of political 
economy, as founded by Adam Smith and taught authori 
tatively in 1880, has now been utterly abandoned, its teach 
ings being referred to as teachings of " the classical school" 
of political economy, now obsolete. 

What has succeeded is usually denominated the Austrian 
school, for no other reason that I can discover than that 
" far kine have long horns." If it has any principles, I have 
been utterly unable to find them. The inquirer is usually 
referred to the incomprehensible works of Professor Alfred 
Marshall of Cambridge, England, whose first 764-page 
volume of his " Principles of Economics," out in 1891, has 
not yet given place to a second; to the ponderous works of 
Eugen V. Bohm-Bawerk, Professor of Political Economy, 
first in Innsbruck and then at Vienna, " Capital and In 
terest" and "The Positive Theory of Capital," translated 
by Professor William Smart of Glasgow; or to Professor 
Smart's " Introduction to the Theory of Value on the Lines 
of Menger, Wieser and Bohm-Bawerk," or to a lot of Ger 
man works written by men he never heard of and whose 
names he cannot even pronounce. 

This pseudo-science gets its name from a foreign lan 
guage, and uses for its terms words adapted from the 
German—words that have no place and no meaning in an 
English work. It is, indeed, admirably calculated to serve 
the purpose of those powerful interests dominant in the 
colleges under our organization, that must fear a simple 
and understandable political economy, and who vaguely 
wish to have the poor boys who are subjected to it by 
their professors rendered incapable of thought on economic 
subjects. There is nothing that suggests so much what 
Schopenhauer ("Parerga and Paralipomena") said of the 
works of the German philosopher Hegel than what the 

 Chap.nil. THE SCHOLASTIC BREAKDOWN. 209 

professors have written, and the volumes for mutual ad 
miration which they publish as serials: 

If one should wish to make a bright young man so stupid as to 
become incapable of all real thinking, the best way would be to 
commend to him a diligent study of these works. For these monstrous 
piecings together of words which really destroy and contradict one 
another so causes the mind to vainly torment itself in the effort to 
discover their meaning that at last it collapses exhausted, with its 
capacity for thinking so completely destroyed that from that time on 
meaningless phrases count with it for thoughts. 

It is to this state that political economy in the teachings 
of the schools, which profess to know all about it, has now 
come. 

 CHAPTER IX. 
WEALTH AND VALUE. 

SHOWING THE REASON FOR CONSIDERING THE NATURE OP 
VALUE BEFORE THAT OF WEALTH. 

The point of agreement as to wealth—Advantages of proceeding 
from this point. 

"VTTE have seen the utter confusion that exists among 
Tf economists as to the nature of wealth, and have 
sufficiently shown its causes and results. Let us return 
now to the question we have in hand, and that must first 
be settled before we can advance on solid ground: What 
is the meaning of wealth as an economic term ? 

The lack of definiteness and want of consistency as to 
the nature of the wealth of nations, with which Adam 
Smith began, have in the hands of his accredited succes 
sors resulted in confusion so much worse confounded that 
the only proposition as to wealth on which we may say 
that all economists are agreed is that all wealth has value. 
But as to whether all that has value is wealth, or as to 
what forms of value are wealth and what not, there is wide 
divergence. And if we consider the definitions that are 
given in accepted works either of the term wealth or of 
the sub-term of wealth, capital, it will be seen that the 
confusions as to the nature of wealth which they show 
Seem to proceed from confusions as to the nature of value. 

210 

 Chap. IX. WEALTH AND VALUE. 211 

It is quite possible, I think, to fix the meaning of the 
term wealth without first fixing the meaning of the term 
value. This I did in "Progress and Poverty," where 
my purpose in defining the meaning of wealth was to 
fix the meaning of its sub-term, capital, in order to see 
whether or not it is true that wages are drawn from 
capital. But as in the present work, being a treatise on 
the whole subject of political economy, it will be necessary 
to treat independently of the nature of value, it will, I 
think, be more conducive to orderly and concise arrange 
ment to consider the nature of value before proceeding 
definitely to the consideration of the nature of wealth. 

And since minds that have been befogged by accepted 
confusions may be more easily opened to the truth by 
pointing out in what these confusions consist, and how 
they originate, this mode of proceeding to a determination 
of the nature of wealth through an examination of the 
nature of value will have the advantage of meeting on the 
way the confusions as to value which in the minds of the 
students of the scholastic economy have perplexed the idea 
of wealth. 

 CHAPTER X. 
VALUE IN USE AND VALUE IN EXCHANGE. 

SHOWING THE TWO SENSES OP VALUE; HOW THE DISTINC 
TION HAS BEEN IGNORED, AND ITS REAL VALIDITY; AND 
THE REASON FOR CONFINING THE ECONOMIC TERM TO ONE 
SENSE. 

Importance of the term value—Original meaning of the word— 
Its two senses—Names for them adopted by Smith—Utility and 
desirability—Mill's criticism of Smith—Complete ignoring of the 
distinction by the Austrian school—Cause of this confusion— 
Capability of use not usefulness—Smith's distinction a real one 
—The dual use of one word in common speech must be avoided in 
political economy—Intrinsic value. 

rTlHE term value is of most fundamental importance 
i in political economy; so much so that by some writers 
political economy has been styled the science of values. 
Yet in the consideration of the meaning and nature of 
value we come at once into the very quicksand and f ogland 
of economic discussion—a point which from the time of 
Adam Smith to the present has been wrapped in increasing 
confusions and beset with endless controversy. Let us 
move carefully, even at the cost of what may seem at the 
moment needless pains, for here is a point from which 
apparently slight divergences may ultimately distort con 
clusions as to matters of the utmost practical moment. 

212 

 Chap. X. THE TWO SENSES OF VALUE. 213 

The original and widest meaning of the word " value " is 
that of worth or worthiness, which involves and expresses 
the idea of esteem or regard. 

But we esteem some things for their own qualities or 
for uses to which they may be directly put, while we esteem 
other things for what they will bring in exchange. We 
do not distinguish the kind or reason of regard in our use 
of the word esteem, nor yet is there any need of doing 
so in our common use of the word value. The sense in 
which the word value is used, when not expressed in 
the associated words or context, is for common purposes 
sufficiently indicated by the conditions or nature of the 
thing to which value is attributed. Thus, the one word 
value has in common English speech two distinct senses. 
One is that of usefulness or utility—as when we speak of 
the value of the ocean to man, the value of the compass in 
navigation, the value of the stethoscope in the diagnosis 
of disease, the value of the antiseptic treatment in surgery; 
or when, having in mind the merits of the mental produc 
tion, its quality of usefulness to the reader or to the public, 
we speak of the value of a book. 

The other and, though derived, utterly distinct sense of 
the word value, is that of what is usually, and for most 
purposes even of political economy, sufficiently described 
as exchangeability or purchasing power—as when we speak 
of the value of gold as greater than that of iron; of a book 
in rich binding as being more valuable than the same book 
in plain binding; of the value of a copyright or a patent; 
or of the lessening in the value of steel by the Bessemer 
process, or in that of aluminium "by the improvements in 
extraction now going on. 

The first sense of the word value, which is that of use 
fulness, the quality that a thing may have of ministering 
directly to human needs, was distinguished by Adam Smith 
as " value in use." 

 214 THE NATURE OF WEALTH. Book II. 

The second sense of the word value, which is that of 
worth in transfer or trade, the quality that a thing may 
have of ministering indirectly to human desire through 
its exchangeability for other things, was distinguished by 
Adam Smith as " value in exchange." 

Adam Smith's words are (Book I., Chapter IV.): 

The word " value," it is to be observed, has two different meanings, 
and sometimes expresses the utility of some particular object, and 
sometimes the power of purchasing other goods which the possession 
of that object conveys. The one may be called " value in use;" the 
other, "value in exchange." The things which have the greatest 
value in use have frequently little or no value in exchange; and, on 
the contrary, those which have the greatest value in exchange have 
frequently little or no value in use. Nothing is more useful than 
water; but it will purchase scarce anything; scarce anything can be 
had in exchange for it. A diamond, on the contrary, has scarce any 
value in use, but a very great quantity of goods may frequently be 
had in exchange for it. 

These two terms, adopted by Adam Smith, as best ex 
pressing the two distinct senses of the word value, at once 
took their place in the accepted economic terminology, and 
have since his time been generally used. 

But though the terms of distinction which he used have 
been from the first accepted, this has not been the case 
with the distinction itself. From the first, his successors 
and commentators began to question its validity, declaring 
that nothing could have exchange value for which there 
was not demand; that demand implied some kind of utDity 
or usefulness, and hence that what has value in exchange 
must also have value in use; and that Smith had been led 
into confusion by a disposition to import moral distinc 
tions into a science that knows nothing of moral distinc 
tions. This view has been generally, so far indeed as I 
know universally, accepted by political economists.* 

* There is a latent confusion in the use of a word to which I must 
here call attention, as I have in previous writings slipped into this 

 Chap. X. THE TWO SENSES OP VALUE. 215 

Thus, John Stuart Mill (whom I take as the best ex 
ponent of the scholastically accepted political economy up 
to the time when the Austrian or psychological school 
began to become the " fad " of confused professors), begins 
his treatment of value by pointing out that " the smallest 
error on that subject infects with corresponding error all 
our other conclusions, and anything vague or misty in our 
conceptions of it creates confusion and uncertainty in 
everything else." And he thus proceeds ("Principles of 
Political Economy," Book III., Chapter I., Sec. 1}: 

We must begin by settling our phraseology. Adam Smith, in a 
passage often quoted, has touched upon the most obvious ambiguity 
of the word "value;" which, in one of its senses, signifies usefulness, 
in another, power of purchasing; in his own language, value in use 
and value in exchange. But (as Mr. De Quincey has remarked) in 
illustrating this double meaning, Adam Smith has himself fallen into 
another ambiguity. Things (he says) which have the greatest value 
in use have often little or no value in exchange; which is true, since 
that which can be obtained without labor or sacrifice will command 
no price, however useful or needful it may be. But he proceeds 

nse myself. The word " utility " correctly expresses the idea of what 
gives value in use—the quality of usefulness. And the word "de 
sirability" is sometimes used by economists to express the contrasted 
idea, of what gives value in exchange, the quality of being desired, 
though not necessarily satisfying a need or useful purpose. Such use 
seems convenient and has some sanction in economic writing, and I 
see that I have fallen into it in Part I., Chapter V., of my "A Per 
plexed Philosopher," where I say: 

"If we inquire what is the attribute or condition concurring with 
the presence, absence or degree of value attaching to anything—we 
see that things having some form of utility or desirability, are valu 
able or not valuable, as they are hard or easy to get." 

Yet in reality such use of the word is not correct. There is a dif 
ficulty in using the word "desirability" in distinction to "utility." 
"Utility" means the capability of being used, and by analogy "de 
sirability" should mean the capability of being desired. Yet if it 
did, it would not be the word we need to contrast with utility. For 
words of distinction must be words of restriction, as are "utility" 

 216 THE NATURE OP WEALTH. Book II. 

to add, that things which have the greatest value in exchange, as a 
diamond for example, may have little or no value in use. This is 
employing the word " use," not in the sense in which political economy 
is concerned with it, but in that other sense in which use is opposed to 
pleasure. Political economy has nothing to do with the comparative 
estimation of different uses in the judgment of a philosopher or of 
a moralist. The use of a thing, in political economy, means its 
capacity to satisfy a desire, or serve a purpose. Diamonds have this 
capacity in a high degree, and unless they had it, would not bear any 
price. Value in use, or, as Mr. De Quincey calls it, "teleologic" 
value, is the extreme limit of value in exchange. The exchange value 
of a thing may fall short, to any amount, of its value in use; but that 
it can ever exceed the value in use implies contradiction; it supposes 
that persons will give, to possess a thing, more than the utmost value 
which they themselves put upon it, as a means of gratifying their 
inclinations. 

The word "value," when used without adjunct, always means, in 
political economy, value in exchange. 

or "usefulness"—expressing a capability in some things which other 
things do not have. "Desirability," however, even if it had or we 
could give it the sense of capability of being desired, would not be 
a word of restriction, since anything without exception may be de 
sired, and what we really want is not a word which expresses the 
capability of being desired, but the fact of being desired. "Desir 
ability " in its well-established use, however, does MO* mean the capa 
bility of being desired, as " utility "means the capability of being used. 
When we say that a thing is desirable or undesirable, we do not mean 
that it may or may not be desired, nor that it is or is not desired, 
but that it ought or ought not to be desired. Thus, a desirable 
exchange or trade is an exchange which, with reference to the party 
considered, will prove a good one. An undesirable exchange is one 
that will to the party considered prove a bad one. So we speak of 
a desirable book, horse, beverage, food, medicine, appetite, habit, 
thought, feeling or gratification, with reference to an ultimate benefit 
or injury to the person or persons specially considered or to mankind 
generally. So, indeed, we may speak even of a desirable or unde 
sirable desire. The reason why there is no word in the English lan 
guage which expresses the idea I wish to express, and which if at 
liberty to coin a word I should call "desiredness," is that the one 
word, "value," serving in common speech for both senses, there ia 
no common need for it. 

 Chap.X. THE TWO SENSES OF VALUE. 217 

Here is a queer settlement of phraseology. Let us pick 
out the positive statements. They are: That Adam Smith 
was wrong in saying that things which have the greatest 
value in exchange, as a diamond, may have little or no 
value in use, because the use of a thing in political econ 
omy, which knows nothing of any moral estimate of uses, 
means its capacity to satisfy a desire or serve a purpose— 
a capacity which diamonds have in high degree, and unless 
they had it would iiot have any value in exchange (" bear 
any price"). Value in use is the highest possible ("ex 
treme limit of ") value iu exchange. The exchange value 
of a thing can never exceed the use value of a thing. To 
suppose that it could implies a contradiction—that persons 
will give to possess a thing more than its utmost use value 
to them ("value which they themselves put upon it as a 
means of gratifying their inclinations "). 

In this there is a complete identification of value in use, 
utility or usefulness, with value in exchange, exchange 
ability or purchasing power. What then becomes of 
Mill's other statement in the same paragraph ? If Adam 
Smith was wrong in saying that the exchange value of a 
thing may be more than its use value, how could he be 
right in saying that the exchange value of a thing may be 
less than its use value ? If value in use is the highest limit 
of value iu exchange, is it not necessarily the lowest limit ? 
If diamonds derive their exchange value from their capacity 
to satisfy a desire or serve a purpose, do not beans? If 
value in exchange means merely value in use, why does 
Mr. Mill distinguish between the two senses of the word 
value, that of usefulness, and that of purchasing power? 
Why does lie tell us that the word value, when used with 
out adjunct, always means in political economy value in 
exchange? Why keep up a distinction where there is 
really no difference ? 

In this identification of utility with " desiredness " (which 
I have merely quoted Mill to illustrate, for it began imme- 

 218 THE NATURE OP WEALTH. Book II. 

diately after Adam Smith, and was well rooted in the cur 
rent political economy long before Mill, as he indeed 
declares, saying in the first paragraph of his treatment of 
values, "Happily there is nothing in the laws of value 
which remains for the present or any future writer to clear 
up; the theory of the subject is complete ") is the begin 
ning of that theory of value as springing from marginal 
utilities of which Jevons was the first English expounder, 
and which has been carried to elaborate development by 
what is known as the Austrian or psychological school. 
This school, setting aside all distinction between value in 
use and value in exchange, makes value without distinc 
tion an expression of the intensity of desire, thus tracing 
it to a purely mental or subjective origin. In this theory 
the intensity of the desire of the bread-eater to eat bread 
fixes the extreme or marginal utility of bread. This again 
fixes the utility of the products of which bread is made- 
flour, yeast, fuel, etc.—and of the tools used in making it 
—ovens, pans, etc.—and again of the natural materials 
used in making these products, and finally of the land and 
labor. 

But all this elaborate piling of confusion on confusion 
originates, as we may see in Mill, in a careless use of 
words. Nothing indeed could more strikingly illustrate 
the need of the warning as to the use of words in political 
economy which I endeavored to impress on the reader in 
the introductory chapter of this work than the spectacle 
here presented of the author of the most elaborate work 
on logic in the English language falling into vital error in 
what he himself declares to be a most fundamental ques 
tion of political economy, from failure to apprehend a 
distinction in the meaning of two common words. Yet 
here plainly enough is the source of Mill's acceptance of 
what much inferior thinkers to Adam Smith had deemed 
a correction of the great Scotsman. The gist of his argu- 

 Chap.X. THE TWO SENSES OF VALUE. 219 

mfint is that the capability of " a use," in the sense of sat 
isfying a desire or serving a purpose, is identical with 
usefulness. But this is not so. Every child learns long 
before he reaches his teens that the capability of a use is 
not usefulness. Here, for instance, is a dialogue such as 
every one who has gone to an old-fashioned primary school 
or mixed as a boy with boys must have heard time and 
again: 

First Boy—What's the use of that crooked pin you're 
bending T 

Second Boy—What's the use! Its use is to lay it on 
a seat some fellow is just going to sit down on, and to 
make him jump and squeal, and to hear the teacher charg 
ing around while you're busy studying your lesson, and 
don't know anything about what's the matter. 

This is certainly a use; but would any one, even a 
school-boy, attribute usefulness to such a use T 

So, the wearing of nose-rings by some savages; the 
tattooing of their bodies by other savages, and by sailors; 
the squeezing of their waists by civilized women; the mon 
strous structures into which the hair of fashionable Euro 
pean ladies was built in the last century; the hooped skirts 
worn during a part of this; the pitiful distortion practised 
on the feet of upper-class female infants by the Chinese, 
are all uses. But do they therefore imply usefillness T 

Again, the thumb-screws brought from Russia by Drum- 
mond and Dalziel, when they were sent to Scotland by 
Charles II. to force Episcopacy upon the Covenanters, had 
" a use." The racks which the English captors of the ships 
of the Spanish Armada were said to have found in those 
vessels, intended, as was believed, for the purpose of con 
verting English Protestants to the true faith of Rome, had 
also a capacity of satisfying a devilish desire. They had 
unquestionably at that time value in exchange, and indeed, 
if still in existence, would have value in exchange now, for 

 220 THE NATURE OF "WEALTH. JBooJcII. 

they would be purchased for museums; and I do not see 
how they could at that time have been refused, or if in 
existence, could now be refused, a place in any category 
of articles of wealth. But were they useful articles ? No 
one would now say so. There were, it is true, at that time 
some people who might have contended for their useful 
ness. But consider the supposition under which alone 
this claim for their usefulness could have been made, for 
it points to an essential distinction between the meaning 
of usefulness and that of mere capacity for use. The 
thumb-screws and racks could have been considered as 
useful only on the assumption that the eternal salvation of 
men, their exemption from endless torture, depended on 
their acceptance of certain theological beliefs, and there 
fore that the rooting out of schism and heresy, even by the 
use of temporal torture, was conducive to the true welfare 
and final happiness of the generality of mankind. 

To consider this is to see that what is really the essen 
tial idea of usefulness, of that quality of a thing which 
Adam Smith distinguished as utility or value in use, is, 
not the capability of any use, but the capability of use in 
the satisfaction of the natural, normal and general desires 
of men. 

And in this Adam Smith, following the Physiocrats, 
recognized a distinction that he did not create, and that 
no confusions of current economic teaching can eradicate; 
a distinction that does not come from the refinements of 
philosophers or moralists, but that rests on common per 
ceptions of the human mind—the distinction, namely, be 
tween things which in themselves or in their uses conduce 
to well-being and happiness and the things which in them 
selves or in their uses involve fruitless effort or ultimate 
injury and pain. The capacity of satisfying some desire, 
no matter how idle, vicious or cruel, is indeed all that is 
necessary to exchangeability or value in exchange. But 

 i. Z. THE TWO SENSES OF VALUE. 221 

to give usefulness or value in use something more is neces 
sary, and that is the capacity to satisfy, not any possible 
desire, but those desires which we call needs or wants, and 
which, lying lower in the order of desires, are felt by all 
men.* 

Value in use and value in exchange may and often do 
attach to the same things, and, as a matter of fact, doubt 
less the great majority of things having value in exchange 
have also value in use. But this connection is not neces 
sary, and the two qualities have no relation whatever to 
each other. A thing may have use value in the highest 
degree, yet very little exchange value or none at all. A 
thing may have exchange value in very high degree and 
little or no use value. Air has the highest value in use, 
as without air we could not live a minute. But this 
supreme utility does not give air exchange value. The 
Bambino of Rome or the Holy Coat of Treves could prob 
ably be exchanged, as similar venerated objects have been 
at times exchanged, for enormous sums; but the use value 
of the one is that of a wax doll baby, that of the other an 
old rag. The two qualities of value in use and value in 
exchange are as essentially different and unrelatable as 
are weight and color, though as we sometimes speak of 
heavy browns and light blues, so do we in common speech 
use the word value now to express one of these qualities 
and now the other. The quality of value in use is an in 
trinsic or inherent quality attaching to the thing itself, and 
giving to it fitness to satisfy man's needs. It cannot have 
value in use except it has that, and as it has that, no matter 
what be its value in exchange. And its use value is the 
same whether much can be obtained for it in exchange or 
" no one would pick it up." The quality of value in ex 
change, on the other hand, is not intrinsic or inherent. 

* As explained in Book I.. Chapter XI. 

 222 THE NATURE OP WEALTH. Book II. 

There is, to be sure, a special sense in which, comform- 
ably to usage, we may speak in certain cases of an intrinsic 
value as applying to the part of the value which comes 
wholly from the estimate of man, and where in reality in 
herent or intrinsic value cannot exist. The cases in which 
we do this are cases in which we wish to distinguish be 
tween the exchange value which a thing may have in a 
higher or more valuable form and that exchange value 
which still remains if it were reduced to a lower or less 
valuable form. Thus, a silver pitcher or a United States 
silver coin would loose exchange value if beaten .into in 
gots ; or a coil of lead pipe or a ship's anchor and cable 
would lose in exchange value if melted into pigs. Yet 
they would retain the exchange value of the metal from 
which they were made. This value in exchange which 
would remain in a lower form we are accustomed to speak 
of as " intrinsic value." But in using this term we should 
always remember its merely relative sense. Value in the 
economic sense, or value in exchange, can never really be 
intrinsic. It refers not to any property of the thing itself, 
but to an estimate that is placed on it by man—to the toil 
and trouble that men will undergo to acquire possession 
of it, or the amount of other things costing toil and trouble 
that they will give for it. 

Nor is there any common measure in the human mind 
between usefulness and exchangeability. Whether we 
most esteem a thing for the intrinsic qualities that give it 
usefulness, or for its intrinsic quality of commanding other 
things in exchange, depends upon conditions. 

A daring fellow recently crossed from the coast of Nor 
way to the United States in a sixteen-foot boat. Suppos 
ing him to come to New York, and one of our hundredfold 
millionaires, in the fashion of an Arabian Nights' Sultan, 
to say to him: " If you will make a trip at my direction 
you may fill up your boat at my expense with anything 

 Chap. X. THE TWO SENSES OF VALUE. 223 

you choose to take from New York, regardless of its cost." 
What would he fill it up with? That could not be an 
swered in a word, as it would entirely depend upon where 
the millionaire wanted him to go. If he were merely to 
cross the North River from New York to Jersey City, he 
would disregard value in use and fill up with what had the 
highest value in exchange, in comparison to bulk and 
weight—gold, diamonds, paper money. To carry the more 
of these he would leave out everything having value in use 
that he could get along without for an hour or two—even 
to extra sails, anchor, sea-drag, compass, a morsel of food 
or a drink of water. But if he were to cross the Atlantic 
again, his first care would be for things useful in the 
management of his boat and the maintenance of his own 
life and comfort during the long months of danger and 
solitude before he could hope again to reach land. He 
would regard value in use, disregarding value in exchange. 
If he had not lost the prudence which, no less than daring, 
is required successfully to make such a trip, it may well be 
doubted whether he would not prefer to carry its weight 
in fresh water than to take a single diamond or gold piece 
and prefer another can of biscuit or condensed beef to 
the last bundle of thousand-dollar notes that he might take 
instead. 

Adam Smith was right. The distinction between value 
in use and value in exchange is an essential one. It is so 
clear and true and necessary that, as we have seen, John 
Stuart Mill could not refrain from partially recognizing it 
in the very breath in which he had eliminated it altogether, 
and the later economists who have carried the confusion 
which he expresses to a point of more elaborate confusion 
are also compelled to recognize it the moment they get out 
of the fog of ill-understood words. Despite all attempts 
to confuse and obliterate them, " value in use " and " value 
in exchange " must still hold their place in economic ter- 

 224 THE NATURE OF WEALTH. Book II. 

minology. The terms themselves are perhaps not the 
happiest that might be chosen. But so long have they 
now been used that it would be difficult to substitute any 
thing in their place. It is only necessary to do what Adam 
Smith could hardly have deemed necessary—point out 
what they really mean. They were taken indeed by him 
from common speech, and still retain the great advantage 
to any economic term of being generally intelligible. 

In common speech the one word value, as I have already 
said, usually suffices to express either value in use or value 
in exchange. For which sense of the word value is meant 
is ordinarily indicated with sufficient clearness either by 
the context or by the situation or nature of the tiling spoken 
of. But in cases where there is no indication thus sup 
plied, or the indication is not sufficiently clear, the use of 
the word "value" will at once provoke a question equivalent 
to "Do you mean value for use or value for exchange?" 

Thus, if a man says to me, " That is a valuable dog, he 
saved a child from drowning; " I know that the value he 
means is value in use. If he says, however, "That is a 
valuable dog, his brother brought a hundred dollars;" I 
know that he has in mind value in exchange. Even where 
he says simply," That is a valuable dog," there is generally 
some indication that enables me to tell what sense of value 
he has in mind. If there is none, and I am interested 
enough to care, I ask for it by such question as "Why?" 
or "What for?" 

In economic reasoning, however, the danger of using 
one word to represent two distinct and often contrasted 
ideas is very much greater than in common speech, and if 
the word is to be retained, one of its senses must be 
abandoned. Of the two meanings of the word value, the 
first, that of value in use, is not called for, or called for 
only incidentally in political economy; while the second, 
that of value in exchange, is called for continually, for 

 CJtap. X. THE TWO SENSES OF VALUE. 225 

this is the value with which political economy deals. To 
economize the use of words, while at the same time 
avoiding liability to misunderstanding and confusion, it 
is expedient, therefore, to restrict the use of the word 
value, as an economic term, to the meaning of value in 
exchange, as was done by Adam Smith, and has since his 
time generally been followed; and to discard the use of 
the single word value in the sense of value in use, sub 
stituting for it where there is occasion to express the 
idea of value in use, and the close context does not clearly 
show the limitation of meaning, either the term " value in 
use " or some such word as usefulness or utility. This I 
shall endeavor to do in this work—using hereafter the 
single term value, as meaning purchasing power or " value 
in exchange." 

 CHAPTER XL 

ECONOMIC VALUE-ITS REAL MEANING AND 
FINAL MEASURE. 

SHOWING HOW VALUE IN EXCHANGE HAS BEEN DEEMED A 
RELATION OP PROPORTION; AND THE AMBIGUITY WHICH 
HAS LED TO THIS. 

The conception of value as a relation of proportion—It is really a 
relation to exertion—Adam Smith's perception of this—His rea 
sons for accepting the term value in exchange—His confusion 
and that of his successors. 

VALUE, as an economic term, means, as we have seen, 
what in denning it from the other sense of the word 
value, is known as value in exchange, or exchangeability. 
And to this meaning alone I shall, when using the word 
value without adjunct, hereafter confine it. 

But from what does this quality of value in exchange, 
or exchangeability, proceed ? And by what may we mea 
sure it? 

As to this the current teachings of political economy 
are, that value, the quality or power of exchangeability, is 
a relation between each exchangeable thing and all other 
exchangeable things. Thus, it is said, there can be no 
general increase or decrease of values, since what one val 
uable thing may gain in exchange power, some other val 
uable thing or things must lose; and what one loses some 

226 

 Chap. XI. ECONOMIC VALUE. 227 

other or others must gain. In other words, the relation 
of value being a relation of ratio or proportion, any change 
in one ratio must involve reverse changes in other ratios, 
since the sum total of ratios can neither be increased nor 
diminished. There may be increase or decrease of value 
in any one or more things, as compared with any other 
one or more things; but no increase or decrease in all 
values at once. All prices, for instance, may increase or 
diminish, because price is a relation of exchangeability 
between all other exchangeable things and one particular 
exchangeable thing, money; and increase or decrease of 
price (greater or less exchangeability of other things for 
money) involves correlatively decrease or increase of the 
exchangeability of money for other things. But increase 
or decrease in value generally (i.e., all values) is a contra 
diction in terms. 

This view has a certain plausibility. Yet to examine it 
is to see that it makes value dependent on value without 
possibility of measurement except arbitrarily and rela 
tively, by comparing one value with another; that it leaves 
the idea of value swimming, as it were, in vacancy, with 
out connection or fixed starting-point, such as we attach 
to all other qualities of relation, and without which any 
definite idea of relation is impossible. 

Thus, such qualities as size, distance, direction, color, 
consanguinity and the like are only comprehensible and 
intelligible to us by reference to some fixed starting-point, 
to which and not to all other things having the same 
quality the relation is made. Size and distance, for in 
stance, are comprehended and intelligibly expressed as 
relations to certain measures of extension, such as the 
barleycorn, the foot, the meter, diameters of the earth, or 
diameters of the earth's orbit; direction, as a relation to 
the radii of a sphere, which, proceeding from a central 
point, would include all possible directions; color, as a 

 228 THE NATUEE OF WEALTH. Book II. 

relation to the order in which certain impressions are re 
ceived through the human eye; consanguinity, as a relation 
in blood to the primary blood-relationship, that between 
parent and child; and so on. 

Now, has not also the idea of value some fixed starting- 
point, by which it becomes comprehensible and intelligible, 
as have all other ideas of relation ? 

Clearly it has. What the idea of value really springs 
from, is not the relation of each thing having value to all 
things having value, but the relation of each thing having 
value to something which is the source and natural mea 
sure of all value—namely, human exertion, with its atten 
dant irksomeness or weariness. 

Adam Smith saw this, though he may not have consis 
tently held to it, as was the case with some other things he 
clearly saw for a moment, as through a rift in clouds which 
afterwards closed up again. In the first paragraphs of 
Chapter V., Book I., " Wealth of Nations," he says: 

Every man is rich or poor according to the degree in which he 
can afford to enjoy the necessaries, conveniences and amusements of 
human life. But after the division of labor has once thoroughly 
taken place, it is but a very small part of these with which a man's 
own labor can supply him. The far greater part of them he must 
derive from the labor of other people, and he must be rich or poor 
according to the quantity of that labor which he can command, or 
which he can afford to purchase. The value of any commodity, 
therefore, to the person who possesses it, and who means not to u«e 
or consume it himself, but to exchange it for other commodities, is 
equal to the quantity of labor which it enables him to purchase or 
command. Labor, therefore, is the real measure of the exchangeable 
value of all commodities. 

The real price of everything, what everything really costs to the 
man who wants to acquire it, is the toil and trouble of acquiring it. 
What everything is really worth to the man who has acquired it, and 
•who wants to dispose of it or exchange it for something else, is the 
toil and trouble which it can save to himself, and which it can impose 
npon other people. What is bought with money or with goods is 
purchased by labor, as much as what we acquire by the toil of our 

 Chap. XL ECONOMIC VALUE. 229 

own body. That money or those goods indeed save us this toil. 
They contain the valne of a certain quantity of labor, which we ex 
change for what is supposed at the time to contain the value of an 
equal quantity. Labor was the first price, the original purchase 
money that was paid for all things. It was not by gold or by silver, 
but by labor, that all the wealth of the world was originally pur 
chased; and its value, to those who possess it, and who want to 
exchange it for some new productions, is precisely equal to the 
quantity of labor which it can enable them to purchase or command. 
Wealth, as Mr. Hobbes says, is power. But the person who either 
acquires or succeeds to a great fortune, does not necessarily acquire 
or succeed to any political power, either civil or military. His for 
tune may perhaps afford him the means of acquiring both, but the 
mere possession of that fortune does not necessarily convey to him 
either. The; power which that possession immediately and directly 
conveys to him is the power of purchasing; a certain command over 
all the labor, or over all the produce of labor which is then in the 
market. His fortune is greater or less precisely in proportion to the 
extent of this power; or to the quantity of other men's labor, or, 
what is the same thing, of the produce of other men's labor which it 
enables him to purchase or command. The exchangeable value of 
everything must always be precisely equal to the extent of this 
power which it will convey to its owner. 

This is perfectly clear, if we attend only to the meaning 
Adam Smith puts upon the words he uses somewhat 
loosely. The sense in which he uses the word labor is 
that of exertion, with its inseparable attendants, toil and 
trouble. What he means by price, is cost in toil and 
trouble, as he indeed incidentally explains,* and by wealth 

* " Price," as un economic term, has come to mean value in terms 
of money, or at least in terms of one particular commodity; but Adam 
Smith did not make this distinction. He uses the word "price" 
sometimes where he means "cost," and sometimes where he means 
"value." This use of price for value he once in a while indicates, 
as where, in Chapter VI., he speaks of "j>rice or exchangeable value," 
but in general he leaves it to inference. Where it is necessary for 
him to make the distinction between what we now call value and 
what we now call price, he usually speaks of the one as "real price " 
and of the other as "nominal price," meaning by "real price" value 
in labor, and by " nominal price " value in money. 

 230 THE NATURE OF WEALTH. Book II. 

he evidently means the products or tangible results of 
human exertion. What he says is that value is the equiva 
lent of the toil and trouble of exertion, and that its mea 
sure is the amount of toil and trouble that it will save to 
the owner or enable him by exchange to induce others to 
take for him. 

And he again repeats this statement a little further on 
in the same book: 

Equal quantities of labor, at all times and places, may be said to 
be of equal value to the laborer. In his ordinary state of health, 
strength and spirits; in the ordinary degree of his skill and dexterity, 
he must always lay down the same portion of his ease, his liberty, 
and his happiness. The price which he pays must always be the 
same, whatever may be the quantity of goods which he receives in 
return for it. Of these indeed it may sometimes purchase a greater 
and sometimes a smaller quantity; but it is their value which varies, 
not that of the labor which purchases them. At all times and places 
that is dear which it is difficult to come at, or which it costs much 
labor to acquire; and that cheap which is to be had easily, or with 
very little labor. Labor alone, therefore, never varying in its own 
value, is alone the ultimate and real standard by which the value of 
all commodities can at all times and places be estimated and com 
pared. It is their real price; money is their nominal price only. . . . 
Labor, therefore, it appears evidently, is the only universal, as well 
as the only accurate measure of value, or the only standard by which 
we can compare the values of different commodities at all times and 
at all places. 

How then is it that Adam Smith, when he needed a 
term which should express the second sense of the word 
value, did not adopt a phrase that would bring out the 
fundamental meaning of value in this sense, such, for in 
stance, as " value in toil," or " value in exertion," or " value 
in labor;" but instead of any of them chose a phrase, 
"value in exchange," which refers directly to only a 
secondary and derivative meaning? 

The reasons he himself gives, in what immediately fol 
lows the first two paragraphs I have quoted: 

 Chap. XI. ECONOMIC VALUE. 231 

But though labor be the real measure of the exchangeable value 
of all commodities, it is not that by which their value is commonly 
estimated. It is often difficult to ascertain the proportion between 
two different quantities of labor. The time spent in two different 
sorts of work will not always alone determine this proportion. The 
different degrees of hardship endured, and of ingenuity exercised, 
must likewise be taken into account. There may be more labor in 
an hour's hard work than in two hours' easy business; or in an hour's 
application to a trade which it cost ten years' labor to learn, than in 
a month's industry at an ordinary and obvious employment. But it 
is not easy to find any accurate measure either of hardship or inge 
nuity. In exchanging, indeed, the different productions of different 
sorts of labor for one another, some allowance is commonly made for 
both. It is adjusted, however, not by any accurate measure, but by 
the higgling and the bargaining of the market, according to that sort 
of rough equality which, though not exact, is yet sufficient for carry 
ing on the business of common life. 

Every commodity, besides, is more frequently exchanged for, and 
thereby compared with, other commodities than with labor. It is 
more natural therefore to estimate its exchangeable value by the 
quantity of some other commodity, than by that of the labor which 
it can purchase. The greater part of people, too, understand better 
what is meant by a quantity of a particular commodity than by a 
quantity of labor. The one is a plain and palpable object; the other 
an abstract notion, which, though it can be made sufficiently intelli 
gible, is not altogether so natural and obvious. 

There are here two reasons assigned for the choice of 
the term " value in exchange," to denote what Smith saw 
with perfect, though only momentary clearness, really to 
mean " value in exertion," or in the phraseology he uses, 
" value in labor." 

The first, and it is a weighty one, is that the term " value 
in exchange" was already familiar, and would be best 
understood in bringing out the distinction he wished to 
dwell upon—the difference between value in the economic 
sense and " value in use." 

The second, which indicates a confusion in the philoso 
pher's own mind—the swiftness with which the clouds 
drifted over the star he had just seen—is that he could 

 232 THE NATURE OP WEALTH. Book II. 

think of nothing by which to measure the toil and trouble 
of exertion except time of application, which he truly saw 
could only measure quantity and not quality—that is to 
say, duration, not intensity. He failed to recognize the 
obvious fact that if the toil and trouble of exertion dis 
pensed with be the measure of value, then, correlatively, 
value must be the real measure of the toil and trouble of 
that exertion, and that the something he was seemingly 
looking for—some material thing or attribute which, as a 
yardstick measures length and a standard weight mea 
sures mass, should, independently of " the higgling of the 
market," measure the toil and trouble of exertion—is not to 
be found, because it cannot exist, the only possibility of 
such a measurement lying in "the higgling of the market." 
For since toil and trouble, which constitute the resistance 
to exertion, are subjective feelings which cannot be objec 
tively recognized until brought, through their influence 
upon action, into the objective field, there is no way of 
measuring them except by the inducement that will tempt 
men to undergo them in exertion, which can be determined 
only by competition or " the higgling of the market." 

So, for a good reason and a bad reason, Adam Smith, 
for the purpose of expressing the economic sense of the 
word value, chose the term "value in exchange." It 
would be too much to say that he made a bad choice) 
especially considering his time and the main purpose he 
had in mind, which was to show the absurdity of what 
was then called the mercantile system, and has since been 
re-christened the protective system. But the ambiguity 
involved in the term "value in exchange" has been a 
stumbling-block in political economy from his day to this, 
and, indeed, to the ambiguity concealed in his own chosen 
term Adam Smith himself fell a victim. Or perhaps, 
rather, it should be said, that the ambiguity of the term 
allowed him to retain confusions that were already in his 

 Chap. XI. ECONOMIC VALUE. 233 

mind, save when in the paragraphs just quoted he 
momentarily brushed them away, only to have them recur 
again. It will be noticed that, in these paragraphs, Smith 
clearly distinguishes between labor and commodities, evi 
dently meaning by commodities things produced by labor; 
and that he seems clearly to understand by wealth the 
products of labor. But in other places he drops into the 
confusion of treating labor itself as a commodity, and of 
classing personal qualities, such as industry, skill, know 
ledge, etc., as articles of wealth; just as, in Chapter VIII., 
he clearly sees and correctly states the true origin and 
nature of wages where he says: "The produce of labor 
constitutes the natural recompense or wages of labor," 
only almost immediately to abandon it and proceed to 
treat wages as supplied from the capital of the employer. 
Adam Smith was never called upon to revise or in any 
way to reconsider the statement of his great book as to 
the nature of value, the discussion on the subject having 
arisen since his death. His successors in political economy 
have been with few exceptions, not men of original 
thought, but the mere imitators, compilers and straw- 
splitters who usually follow a great work of genius. They 
have, without looking further, accepted the term used by 
him, "value in exchange," not merely in the same way 
that he accepted it, as a convenient, because a readily 
understood, name for a quality, but as expressing the na 
ture of that quality. Thus Adam Smith's explanation of 
the essential relation of value to the exertion of labor has 
been virtually, if not utterly, ignored. And from looking 
further than exchangeability for an explanation of the 
nature of value, these succeeding economists have been 
dissuaded and debarred not only by certain facts not un 
derstood, such as the fact that many things having value 
do not originate in labor, and by erroneous conceptions, 
such as that which treats labor itself as a commodity; but 

 234 THE NATUEE OF WEALTH. Book II. 

by a greatly effective, though doubtless in most cases a 
very vague recognition of the fact that danger to existing 
social institutions would follow any too searching an 
inquiry into the fundamental principle of value. A world 
of ingenuity has been expended and monstrous books have 
been written that it will tire a man to read and almost 
make him doubt his own sanity to try to understand, to 
solve the problem of the fundameutal nature of value in 
exchange. Yet they have resulted in what are but pon 
derous elaborations of confusion, for the good and sufficient 
reason that the essence or foundation of what we call value 
in exchange does not lie in exchangeability at all, but in 
something from which exchangeability springs—the toil 
and trouble attendant upon exertion. 

Let me endeavor, even at some length, to prove this in 
a succeeding chapter, for most vital and far-reaching eco 
nomic issues are involved in this settlement of the meaning 
of a term. 

 CHAPTER XII. 

VALUE IN EXCHANGE REALLY RELATED 
TO LABOR. 

SHOWING THAT VALUE DOES NOT COME FROM EXCHANGE 
ABILITY, BUT EXCHANGEABILITY FROM VALUE, WHICH IS 
AN EXPRESSION OF THE SAVING OF LABOR INVOLVED IN 
POSSESSION. 

Root of the assumption that the sum of values cannot increase or 
diminish—The fundamental idea of proportion—We cannot really 
think of value in this way—The confusion that makes us imagine 
that we do—The tacit assumption and reluctance to examine that 
bolster the current notion—Imaginative experiment shows that 
value is related to labor—Common facts that prove this—Current 
assumption a fallacy of undistributed middle—Various senses of 
"labor"—Exertion positive and exertion negative—Re-statement 
of the proposition as to value—Of desire and its measurement— 
Causal relationship of value and exchangeability—Imaginative 
experiment showing that value may exist where exchange is im 
possible—Value an expression of exertion avoided. 

FROM the assumption that economic value is not merely 
what we have found it convenient to call value in 
exchange, but in reality is exchangeability—a quality of 
power by which the owner of a valuable thing may, by 
surrendering his ownership to some one else, obtain from 
him by similar transfer the ownership of another valuable 
thing—value is thought of as proceeding from »lue, and 
existing in a circle of which each part must have a relation 
of proportion or ratio to all other parts. It is this that 

235 

 236 THE NATURE OF WEALTH. Book II. 

gives axiomatic semblance to the proposition that while 
there may be increase or decrease in some values, this 
must always involve reversely decrease or increase in some 
other values, and hence that increase or decrease of all 
values, or of the sum of values, is impossible. If value be 
really a relation of proportion, this indeed is self-evident. 

But is value really a relation of proportion or ratio f 
What is the fundamental idea of proportion or ratio ? Is 
it not that of the relation of the parts of a whole to that 
whole? When we use such a phrase as one-eighth we 
mean the relation of a part represented as one of eight 
equal partitions to a whole represented by one. When we 
use such a phrase as 10 per cent, we mean a relation of a 
part represented by ten of 100 equal partitions to a whole 
represented by 100. So such propositions as 
or .153+ .147 = .3; or 4 :8 ::6 : 12; or5% 
depend for their validity upon the relations of the propor 
tions spoken of to a whole or totality, which is the sum of 
all possible proportions. That there cannot be increase or 
decrease in all proportions follows from the axiom that a 
whole is equal to the sum of its parts. 

But if value be a relation of proportion or ratio, what 
is the whole which it implies ? How shall we express this 
totality? Or by what calculus shall we fix the relations 
of its parts, the numberless and constantly changing arti 
cles of value ? Might we not as well try to think of or 
express the relation of each particular hair of our heads to 
the sum of the hairs in the heads of all humanity ? 

The truth is that we cannot think of value in this way, 
nor do we really try to, and the more ingenious and elabo 
rate the attempts that have been made to give something 
like solid support and logical coherency to the prevailing 
theory that value is really nothing more than exchange 
ability only the more clearly show its utter inadequacy. 
Thus the latest and most elaborate of these attempts, that 

 Clap. XII. VALUE IN EXCHANGE AND LABOR. 237 

of the Austrian or psychological school, which has been of 
recent years so generally accepted in the universities and 
colleges of the United States and England, and which de 
rives value from what it calls " marginal utilities," is an 
attempt to emulate in economic reasoning the stories told 
of East Indian jugglers, who throwing a ball of thread into 
the air, pull up by it a stouter thread, then a rope, and 
finally a ladder, on which they ascend until out of sight, 
and then—come down again! 

For whoever will work his way through the perplexities 
of their reasoning will find that the adherents of this school 
derive the value of pig-iron, for instance, or even of iron 
ore in the vein, from the willingness of consumers to pay 
for higher and more elaborate products into the produc 
tion of which iron enters, deriving that willingness from 
a mental estimate on the part of consumers of the utility 
of these products to them. Thus, as coolly as such stories 
of Indian jugglers ignore the law of gravitation, do they 
ignore that law which to political economy is what gravi 
tation is to physics, the law that men seek to satisfy their 
desires with the least exertion—a law from which proceeds 
the universal fact that as a matter of exchange no one will 
pay more for anything than he is obliged to. 

These elaborate attempts to link value on utility, and 
utility on individual will or perception, in order to find a 
support for the idea of value, only show that there is no 
resting-place in the supposition that value proceeds from 
exchangeability, and can only be relative to other values. 
The plausibility of this supposition comes from confusion 
in the use of a simple word. 

Of all words in common use in the English tongue the 
word " thing " is the widest. It includes whatever may be 
an object of thought—an atom or a universe; a fact or a 
fancy; what comes into consciousness through our senses 
and what constitutes the peopling and furniture of our 

 238 THE NATUEE OP WEALTH. Book II. 

dreams; that which analysis cannot further resolve and 
that which has no other coherence than a verbal habit or 
mistake. But this comprehensiveness of the word we are 
sometimes apt to forget, or not fully to keep in mind, and 
to use such phrases as "all things" or "anything" when 
we really have in mind only things of one particular kind. 
When we wish [to test the proposition that value is a 
relation of exchangeability between valuable things, we 
usually proceed to make a mental experiment with some 
few valuable things, for it would be impossible to take 
them all, and tiresome to attempt it. For the things se 
lected for this experiment we are apt, as examination and 
observation will show, and as is evident in the writings of 
economists, to take such things as are most widely known 
and commonly exchanged, turning the particular into the 
general when required, by the formula, expressed or im 
plied, "and other valuable things." Thus, for instance, 
we think of money, or as the most widely known repre 
sentative of money, a piece of gold, and say to ourselves: 
" Here is a piece of gold. Why is it valuable ? It is that 
it can be exchanged for wheat, hardware, cotton goods and 
other valuable things. If it could not be so exchanged it 
would have no value, and the measure of its value is the 
value of the wheat, hardware, cotton goods and other val 
uable things for which it is exchangeable. If the relation 
of exchangeability alters so that for the same piece of gold 
one can obtain more wheat, hardware, cotton goods and 
other valuable things, the value of the gold rises, and that 
of the other valuable things falls. If the relation of ex 
changeability alters so that the piece of gold will exchange 
for less of these things, the value of the gold falls and that 
of the other things rises." Then, we reverse the standpoint 
of examination, taking in turn wheat, hardware or cotton 
goods, as representative of a particular instance of value, 
and gold, as representing other valuable things j and seeing 

 Chap. XII. VALUE IN EXCHANGE AND LABOR. 239 

that their value depends upon their exchangeable relation 
in the same way as that of gold in our first experiment, 
we conclude that value is indeed a relation of exchange 
ability, and that that is the beginning and end of it. 

Thus, that value depends on value, and springs from 
value and can only be measured by value—that is, by the 
selection of some particular article having value, from 
which relatively and empirically the value of other articles 
may be measured—seems to us perfectly clear, and we 
accept the doctrine that there can be no general increase 
or decrease in values, as if it were but another statement 
of the axiom that a whole is equal to the sum of its parts, 
and consequently that all those parts can never be increased 
or diminished at the same time. The habitual use of money 
as a common measure of value is apt to prevent any reali 
zation of the fact that we are reasoning in a circle. 

I think I have correctly described the line of reasoning 
which makes the derivation of value from exchangeability 
so plausible. I do not of course mean to say that labor is 
never taken into account. It is often expressly mentioned 
and always implied to be one of the valuable things in the 
category of valuable or exchangeable things. But the 
weight of the examination is, I think, always thrown upon 
such things as I have named—things resulting from the 
exertion of labor; while labor itself is passed over lightly 
as one of the " other valuable things," and attention never 
rests upon it. 

And, furthermore, I am inclined to think that there 
always lurks in this examination—which is in reality an 
examination of the relative value of products of labor- 
the tacit assumption that the quantity of the valuable 
things (thought of as products of labor) existing at the 
specific moment presumed in the examination is a fixed 
quantity, so that there can be no exchange between those 
possessed of valuable things (i.e., products of labor) and 

 240 THE NATUEE OF WEALTH. BookII. 

those possessed of no valuable things (i.e., no products of 
labor). This, I think, is the case even where there is an 
assumption of giving the value of labor a place in the 
category of considered values, for what the reputed econ 
omists since Smith have called the " value of labor " is in 
reality the value of the products of labor paid to laborers 
in wages, which has been usually assumed to come from a 
(at any given moment) fixed quantity, capital. And on 
another side, any rigorous examination of the nature of 
value has been prevented by the universal disposition of 
economists, not really questioned until "Progress and 
Poverty" was published, to slur over the nature of the 
value of land, and practically to assume, what was indeed 
the common assumption, that it was of the same origin as 
the value attaching to such things as gold, wheat, hard 
ware, cotton goods or similar products of labor. 

That it takes two to make an exchange, as certainly as 
" it takes two to make a quarrel," is clear. But that value 
in one person's hands does not, as is impliedly or expressly 
taught in economic works, necessarily involve the existence 
of value in the hands of others, may be seen by another 
imaginative experiment: 

Let us imagine some remote and as yet undiscovered 
island, where men still live as in the Biblical account our 
first parents lived before the Fall, taking their food from 
never-failing trees, quenching their thirst from ample and 
convenient springs, sleeping in the balmy air, and without 
thought of clothing, even of aprons of fig-leaves. The 
power of exerting labor they would of course possess, as 
Adam and Eve possessed it from the first; but of that 
exertion itself and of the toil it involves, we may imagine 
them as ignorant as Adam and Eve in their first estate are 
supposed to have been. On that island there would clearly 
be no value. Yet if valuable articles were brought there, 
would they necessarily lose their value? Could they be 

 Chap. XII. VALUE IN EXCHANGE AND LABOK. 241 

parted with only by gift, and would there be no possibility 
of exchanging them? 

Imagine, now, a ship containing such merchandise as 
would tempt the fancy of a primitive people to come in 
sight of the island and cast anchor. Would exchange 
between the ship's people and the islanders be impossible 
because of the lack on the part of the islanders of anything 
having value? By no means. If nothing else would 
suffice, the offer of bright cloths and looking-glasses would 
surely tempt the Eves, if it did not the Adams; and though 
never exerted before, the islanders would exert their power 
of labor to fill the ship with fruit or nuts or shells, or 
whatever else of the natural products of the island their 
exertion could procure, or to pull her on the beach so that 
she might be calked, or to fill and roll her water-casks. 
There was nothing of value in the island before the ship 
came. Yet the exchanges that would thus take place would 
be the giving of value in return for value; for on the part 
of the islanders value that did not exist before would be 
brought into existence by the conversion of their labor 
power through exertion into wealth or services. There 
would thus be what so many of our economists say is im 
possible, a general increase of values. Even if we suppose 
the islanders to relapse into their former easy way of living 
when their visitors sailed off, there would still remain on 
the island, where there was no value before, some things 
having value, and this value would attach to these things 
until they were destroyed or so long as such desire as 
would prompt any of the islanders to render labor in 
exchange for them remained. On the other side, the value 
that the ship would carry off would certainly be not less 
than the value she contained on arrival, and in all proba 
bility would be much more. 

Now the way thus illustrated is the way in which the 
value that attaches to the greater number of valuable 

 242 THE NATURE OF WEALTH. Book II. 

things originates. I do not mean merely to say that this 
was the way of the first appearance of value among men, 
but that it is the way in which the value that attaches to 
what are properly articles of wealth now originates. I do 
not mean merely to say, as Adam Smith said, that it was 
" by labor that all the wealth of the world was originally 
purchased." I mean to say that it is by labor that it is now 
purchased. 

Nothing, indeed, can be clearer than this. Even in the 
richest of civilized countries, the ultimate purchasers of 
the greater mass of valuable things, are not those who have 
in store valuable things that they can give in exchange. 
The great body of the people in any civilized society con 
sist of what we call the working-class, who live almost 
literally from hand to mouth, and who have in their pos 
session at any one time little, or practically nothing, of 
value. Yet they are the purchasers of the great body of 
articles of value. Where does the value which they thus 
exchange for value which is already in concrete form come 
from ? Does it not come from the conversion of their labor 
power, through exertion, into value ? Is not the exchange 
which is constantly going on, the exchange of the potenti 
ality of labor, or raw labor power for labor power that by 
that transfer has already been converted into value ? In 
common phrase, they exchange their labor for commodities. 

How does this fact—the fact that the great body of val 
uable things pass into the hands of those who have no 
value to give for them except as they make valuable what 
before had no value, and are consumed, by being eaten, 
drunk, burned up or worn out, by them—consort with the 
theory that value is a relation of exchangeability between 
valuable things, and that there can be no general increase 
or decrease of values? Does it not utterly invalidate the 
theory? Must there not be a constant increase of value 
to make up for the constant destruction of value, and in 

 Chap. XII. VALUE IN EXCHANGE AND LABOR. 243 

spite of it, to permit such growth of aggregate values as 
we see going on in progressive countries ? And in times 
when the ability to convert labor into values is checked by 
what we call "want of employment" and great numbers 
of workers are idle, is there not a clear lessening of the 
sum of values, a general decrease in values, as compared 
with the times when there is what we call " abundance of 
employment," and the great majority of them are at work, 
turning labor power through exertion into value ? 

The truth is that current theories of value have resulted 
from the efforts of intelligent men to mold into a sem 
blance of coherency teachings built upon fundamental 
incoherencies. Let me point out what gives them plausi 
bility, the fallacy involved in the inclusion of labor as an 
" other valuable thing," while the real stress of the exami 
nation is laid upon the relative values of such things as 
gold, wheat, hardware and cotton goods—things that are 
products of labor. It is a fallacy which our habit of 
speaking of the buying and selling and exchanging of 
labor, and our habit of thinking of the value of labor as 
we think of the value of gold or wheat or hardware or 
cotton goods, conceals from attention, but which is in 
reality a fallacy of the kind named by the old logicians 
" the fallacy of undistributed middle." 

Here we come to another instance of the care needed in 
political economy in the use of words. By the word 
"labor" we sometimes mean the power of laboring—as 
when we speak of the exertion of labor, or of labor being 
employed, or of labor being idle or wasting. Sometimes 
we mean the act of laboring—as when we speak of the 
irksomeness or toil of labor, or of the results or products 
of labor. Sometimes we mean the results of laboring— 
as is the case in most or all of the instances in which 
we speak of buying, selling or exchanging labor—the 
real thing bought, sold or exchanged being the results of 

 244 THE NATURE OP WEALTH. Hook II. 

laboring, that is to say, wealth or services. And sometimes, 
again, we mean the persons who do labor or the persons 
who have the power and the willingness to labor. 

It is clear that labor in the iirst-mentioned sense of the 
word, that of the power or ability of laboring, is not an 
exchangeable thing and cannot come into any category of 
values. It resides in the individual body and cannot be 
taken out of that body and transferred to another, any 
more than can sight or hearing, or wisdom or courage or 
skill. I may avail myself of another's skill, courage or 
wisdom, of his hearing or of his sight, by getting him to 
exert them for my benefit. And so I may avail myself of 
another's ability to labor by getting him to do me services, 
or to produce things which I am to own. But the power 
of laboring he cannot give, nor I receive. While there 
are results of its expenditure that may be transferred, 
the power itself is intransferable, and therefore unex 
changeable. 

Now the failure to keep in mind these different senses 
of the word labor, the failure to distribute the term, as 
the logicians would say, operates to shut off inquiry as to 
whether the cause of value is not to be found in labor. 
For since in some senses labor is thought of as having 
value in exchange, the term, without distinction as to its 
various senses, is apt to pass in our minds into the category 
of exchangeable things, with gold or wheat or hardware or 
cotton goods, or " other products of labor;" and thus the 
question is unconsciously begged. 

But, when we realize that, in whatever other sense of the 
word we may say that labor is a valuable thing, we must 
carefully exclude the sense of labor power, or ability to 
labor, a confusion is cleared up which has made the search 
for the true nature of what we call value in exchange a 
fruitless " swinging round a circle." For since value does 
not exist in labor power, but does appear where that power 

 Clmp.XII. VALUE IN EXCHANGE AND LABOR. 245 

takes tangible form through exertion, the fundamental 
relation of value must be a relation to exertion. 

But a relation to exertion in what sense? A rela 
tion to exertion positively, or a relation to exertion nega 
tively T 

I exchange gold for silver, let us say. In this I give 
something positively and receive something positively. I 
get rid of gold and acquire silver. The other party to the 
exchange gets rid of silver and acquires gold. But when 
I exchange gold for exertion or toil, do I get rid of gold 
and acquire toil, and does he get rid of toil and acquire 
gold ? Clearly not. No one wants exertion or toil; all of 
us want to get rid of it. It is not exertion in a positive 
sense which is the object of exchange, but exertion in a 
negative sense; not exertion given or imposed, but exer 
tion avoided or saved; or, to use the algebraic form, the 
relation of the quality of value is not to plus-exertion, but 
to minus-exertion. Value, in short, is equivalent to the 
saving of exertion or toil, and the value of anything is the 
amount of toil which the possession of that thing will save 
the possessor, or enable him, to use Adam Smith's phrase, 
" to impose upon other people," through exchange. Thus, 
it is not exchangeability that gives value; but value that 
gives exchangeability. For since it is only by exertion 
that human desires can be satisfied (those cravings or im 
pulses that can be satisfied without exertion not rising to 
the point of desire) whatever will dispense its owner from 
the toil and trouble of exertion in the satisfaction of desire 
in that acquires exchangeability. 

Let me put the proposition in another form: 

The current theory is that it is when and because a thing 
becomes exchangeable that it becomes valuable. My con 
tention is that the truth is just the reverse of this, and 
it is when and because a thing becomes valuable that it 
becomes exchangeable. 

 246 THE NATURE OP WEALTH. Book II. 

It is not the toil and trouble which a thing lias cost that 
gives it value. It may have cost much and yet be worth 
nothing. It may have cost nothing and yet be worth 
much. It is the toil and trouble that others are now 
willing, directly or indirectly, to relieve the owner of, in 
exchange for the thing, by giving him the advantage of 
the results of exertion, while dispensing him of the toil 
and tronble that are the necessary accompaniments of 
exertion. Whether I have obtained a diamond, for 
instance, by years of hard toil or by merely stooping to 
pick it up—a movement which can hardly be called an 
exertion, since it is in itself but a gratification of curiosity 
which does not involve irksomeness—has nothing what 
ever to do with its value. That depends upon the amount 
of toil and trouble that others will undergo for my benefit 
in exchange for it; or what amounts to the same thing, 
which they will dispense me of in the satisfaction of my 
desire, by giving me things in exchange, for which others 
will undergo toil and trouble. 

That which may be had without the toil and trouble of 
exertion has no value. That for which the desire to pos 
sess is not strong enough to prompt to the toil and trouble 
of exertion has likewise no value. But everything having 
value, has that value only when, where and to the degree 
that its possession will, without exertion on the part of its 
possessor, satisfy through exchange a desire that prompts 
to exertion. 

In other words, the value of a thing is the amount of 
laboring or work that its possession will save to the 
possessor. 

Desire itself, which is the prompter to exertion, cannot 
be measured, as the most recent school of pseudo-econo 
mists attempt vainly to measure it. It is a quality or 
affection of the will or individual Ego, which, being in its 
nature subjective, can have no objective measurement 

 Chap. XII. VALUE IN EXCHANGE AND LABOR. 247 

until it passes through action into the field of objective 
existence. Even in the individual it is not a fixed quality 
or affection, but resembles more the illumination produced 
by a movable search-light, which, as it brings one object 
in the landscape into focus, throws another into shade. 
All that we can say of it is that it has a certain scale or 
order of appearance, so that when the more primitive 
desires that we call "wants" or "needs" slumber in sat 
isfaction, other desires appear; or as they are enkindled 
again, these others disappear. 

But desire impels to action, as what we call energy or 
force impels to movement. And while we can no more 
measure desire in itself than we can measure force in itself, 
we can measure it in the same way that we measure energy 
or force—by the resistance it will overcome. Now, while 
the resistance to movement is inertia—probably resolvable 
into gravitation and chemical affinities; so the resistance 
to the gratification of desire is the toil and trouble of exer 
tion. It is this that is expressed by and measured in 
values. 

To repeat: Since the desire for material satisfactions is 
universal among men, and the only way in which these 
satisfactions can be obtained from Nature is by exertion, 
which men always seek to avoid, whatever will satisfy de 
sire without calling for exertion is for that reason desired 
of itself, not for its own uses, but because it affords the 
means of gratifying other desires, and thus becomes 
exchangeable whenever the existence of others than its 
owner makes exchange possible. Normally, at least, value 
and exchangeability are thus always associated and seem 
ingly identical. But in the causal relationship, value 
comes first. That is to say, it is not true, as economists 
since the time of Adam Smith have erroneously taught, 
that a thing is valuable because it is exchangeable. On 
the contrary, it is exchangeable because it is valuable. Ex- 

 248 THE NATURE OF WEALTH. JBooJcII. 

change is in fact the mutual transfer of value. Of all 
other qualities of things, value is the only quality of which 
exchange takes note. 

A little use of imaginative experiment will make it clear 
that what we call value in exchange is in reality not depen 
dent on exchangeability, but may exist when exchange is 
impossible. 

A Robinson Crusoe during his period of isolation could 
make no exchanges, for there was no one with whom he 
could exchange, and it was only the hope of being some 
time discovered and relieved that could have prompted him 
to take his pieces of eight ashore. Yet, as this hope faded 
it is not true that his estimate of the different things he 
possessed would be entirely based on their utility to him, 
and that he would have no sense of the relation which we 
call value in exchange. Even if the hope of being some 
time relieved had entirely disappeared from his thought, 
something essentially the same as value in exchange would 
be brought out in his mind by any question of getting or 
saving one of two or more things. Of several things to 
him equally useful, which he might find in the wreck of his 
ship or on the shore line under conditions which would 
enable him to secure but one; or of several equally useful 
to him, which were threatened by a deluge of rain or an 
incursion of savages, it is evident that he would " set the 
most store by" that which would represent to him the 
greatest effort to replace. Thus, in a tropical island his 
valuation of a quantity of flour, which he could replace only 
by cultivating, gathering and pounding the grain, would 
be much greater than that of an equal quantity of bananas, 
which he might replace at the cost of plucking and carry, 
ing them; but on a more northern island this estimate of 
relative value might be reversed. 

And so all things which to get or retain would require 
of him toil would come to assume in his mind a relation 

 Chap. XII. VALUE IN EXCHANGE AND LABOR. 249 

of value distinct from and independent of their usefulness, 
a relation based on the greater or less degree of exertion 
that their possession would enable him to avoid in the 
gratification of his desires. 

It is this relation which lies at the bottom of value in 
the economic sense, or value in exchange. In the last 
analysis value is but an expression of exertion avoided. 

To sum up: 

Value in exchange, or value in the economic sense, is 
worth in exertion. It is a quality attaching to the owner 
ship of things, of dispensing with the exertion necessary 
to secure the satisfaction of desire, by inducing others to 
take it. Things are valuable in proportion to the amount 
of exertion which they will command in exchange, and 
will exchange with each other in that proportion. 

The value of a thing in any given time and place is the 
largest amount of exertion that any one will render in 
exchange for it. But as men always seek to gratify their 
desires with the least exertion, this is the lowest amount 
for which a similar thing can otherwise be obtained. 

But while value means always the same quality—that 
of dispensing with exertion in the satisfaction of desire 
—yet there are various sources from