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THE LIBRARY OF 
THE UNIVERSITY OF GEORGIA 

'" 

 THE PLACE OF SCIENCE 
IN MODERN CIVILISATION 

l 
i: 

 BOOKS BY THORSTEIN VEBLEN 

THE THEORY OF THE LEISURE CLASS 
THE THEORY OF BUSINESS ENTERPRISE 
THE INSTINCT OF WORKMANSHIP 

IMPERIAL GERMANY 

AND THE INDUSTRIAL REVOLUTION 

THE NATURE OF PEACE 

AND THE TERMS OF ITS PERPETUATION 

THE HIGHER LEARNING IN AMERICA 

THE VESTED INTERESTS AND THE 
STATE OF THE INDUSTRIAL ARTS 

THE PLACE OF SCIENCE IN MODERN 
CIVILISATION 

THE PLACE OF SCIENCE 

IN 

MODERN CIVILISATION 

AND OTHER ESSAYS 

by 
THORSTEIN VEBLEN 

1 i 

.-.••'"•'•-.'. New York 
,,v':/" B. W. 
•'.';•." Mcmxix 

 COPYRIGHT, 1919 
BY B. W. HUEBSCH 

PUBLISHER'S NOTE 

These essays are here reprinted from various periodi 
cals, running over a period of about twenty years. The 
selection is due to Messrs. Leon Ardzrooni, Wesley C. 
Mitchell and Walter W. Stewart. 

It is unlikely that more than a few public libraries 
possess files so complete as to give access to all of these 
essays, and even if the magazines were readily obtainable 
at libraries they would almost certainly have to be read 
in those institutions. The nature of the material, its 
timeliness (Mr. Veblen deals with ideas in such a manner 
as to give the date of composition a secondary impor 
tance), and the fact that it would otherwise be lost to 
all save diligent excavators, explain its preservation in 
this form. 

The courtesy of the periodicals in which the papers 
first appeared, in permitting their reproduction, is grate 
fully acknowledged. 

IN THE UNITED STATES OF AMERICA 

 CONTENTS 

PAGE 

THE PLACE OF SCIENCE IN MODERN CIVILISATION . i 
THE EVOLUTION OF THE SCIENTIFIC POINT OF VIEW 32 

WHY Is ECONOMICS NOT AN EVOLUTIONARY SCI 
ENCE? ....... ..... 56 

THE PRECONCEPTIONS OF ECONOMIC SCIENCE. I. 82 

" " II. 114 

III. 148 

PROFESSOR CLARK'S ECONOMICS ...... 180 

"^ THE LIMITATIONS OF MARGINAL UTILITY . . . 231 
*• GUSTAV SCHMOLLER'S ECONOMICS ..... 252 

cT INDUSTRIAL AND PECUNIARY EMPLOYMENTS . . . 279 
\ ON THE NATURE OF CAPITAL. I. ..... 324 

^. " " " " " II. ..... 352 

f^ - SOME NEGLECTED POINTS IN THE THEORY OF SO 
CIALISM ............ 387 

THE SOCIALIST ECONOMICS OF KARL MARX. I. . 409 

.. .. « n 43I 

- THE MUTATION THEORY AND THE BLOND RACE . 457 
"- THE BLOND RACE AND THE ARYAN CULTURE . . 477 
~AN EARLY EXPERIMENTEN TRUSTS ..... 497 

 THE PLACE OF SCIENCE IN MODERN 
CIVILISATION1 

IT is commonly held that modern Christendom is superior 
to any and all other systems of civilised life. Other ages 
and other cultural regions are by contrast spoken of as 
lower, or more archaic, or less mature. The claim is that 
the modern culture is superior on the whole, not that it is 
the best or highest in all respects and at every point. It 
has, in fact, not an all-around superiority, but a superi 
ority within a closely limited range of intellectual activi 
ties, while outside this range many other civilisations sur 
pass that of the modern occidental peoples. But the 
peculiar excellence of the modern culture is of such a 
nature as to give it a decisive practical advantage over all 
other cultural schemes that have gone before or that have 
come into competition with it. It has proved itself fit to 
survive in a struggle for existence as against those civilisa 
tions which differ from it in respect of its distinctive 
traits. 

Modern civilisation is peculiarly matter-of-fact. It 
contains many elements that are not of this character, but 
these other elements do not belong exclusively or charac 
teristically to it. The modern civilised peoples are in a 
peculiar degree capable of an impersonal, dispassionate 
insight into the material facts with which mankind has to 
deal. The apex of cultural growth is at this point. 
Compared with this trait the rest of what is comprised in 
the cultural scheme is adventitious, or at the best it is a 

1 Reprinted by permission from The American Journal of So 
ciology, Vol. XI, March, 1906. 

 2 The Place of Science 

t 

'"* by-product of this hard-headed apprehension of facts. 
This quality may be a matter of habit or of racial endow 
ment, or it may be an outcome of both ; but whatever be 
the explanation of its prevalence, the immediate conse 
quence is much the same for the growth of civilisation. 
A civilisation which is dominated by this matter-of-fact 
insight must prevail against any cultural scheme that lacks 
this element. This characteristic of western civilisation 
comes to a head in modern science, and it finds its highest 
material expression in the technology of the machine in 
dustry. In these things modern culture is creative and 
self-sufficient ; and these being given, the rest of what may 
seem characteristic in western civilisation follows by easy 
consequence. The cultural structure clusters about this 
body of matter-of-fact knowledge as its substantial core. 
Whatever is not consonant with these opaque creations of 
science is an intrusive feature in the modern scheme, bor 
rowed or standing over from the barbarian past. / 

Other ages and other peoples excel in other things and 
are known by other virtues. In creative art, as well as in 
critical taste, the faltering talent of Christendom can at 
the best follow the lead of the ancient Greeks and the 
Chinese. In deft workmanship the handicraftsmen of 
the middle Orient, as well as of the Far East, stand on a 
level securely above the highest European achievement, 
old or new. In myth-making, folklore, and occult sym 
bolism many of the lower barbarians have achieved things 
beyond what the latter-day priests and poets know how to 
propose. In metaphysical insight and dialectical versa 
tility many orientals, as well as the Schoolmen of the 
Middle Ages, easily surpass the highest reaches of the 
New Thought and the Higher Criticism. In a shrewd 
sense of the religious verities, as well as in an unsparing 
faith in devout observances, the people o'f India or Thibet, 

The Place of Science 3 

or even the mediaeval Christians, are past-masters in com 
parison even with the select of the faith of modern times. 
In political finesse, as well as in unreasoning, brute loy 
alty, more than one of the ancient peoples give evidence of 
a capacity to which no modern civilised nation may aspire. 
In warlike malevolence and abandon, the hosts of Islam, 
the Sioux Indian, and the " heathen of the northern sea " 
have set the mark above the reach of the most strenuous 
civilised warlord. 

To modern civilised men, especially in their intervals of 
sober reflection, all these things that distinguish the bar 
barian civilisations seem of dubious value and are required 
to show cause why they should not be slighted. It is not 
so with the knowledge of facts. The making of states 
and dynasties, the founding of families, the prosecution of 
feuds, the propagation of creeds and the creation of sects, 
the accumulation of fortunes, the consumption of super 
fluities— these have all in their time been felt to justify 
themselves as an end of endeavor; but in the eyes of 
modern civilised men all these things seem futile in com 
parison with the achievements of science. They dwindle 
in men's esteem as time passes, while the achievements of 
science are held higher as time passes. This is the one 
secure holding-ground of|lattef,-day conviction, that " the 
increase and diffusion of ïïftowledge among men " is inde- 
feasibly right and good. When seen in such perspective 
as will clear it of the trivial perplexities of workday life, 
this proposition is not questioned within the horizon of 
the western culture, and no other cultural ideal holds a 
similar unquestioned place in the convictions of civilised 
mankind. 

On any large question which is to be disposed of for 
good and all the final appeal is by common consent taken 
to the scientist. The solution offered in the name of sei- 

,. ii r 

 4 The Place of Science 

ence is decisive so long as it is not set aside by a still more 
searching scientific inquiry. This state of things may not 
be altogether fortunate, but such is the fact. There are 
other, older grounds of' finality that may conceivably be 
better, nobler, worthier, more profound, more beautiful. 
It might conceivably be preferable, as a matter of cultural 
ideals, to leave the last word with the lawyer, the duelist, 
the priest, the moralist, or the college of heraldry. In 
past times people have been content to leave their weighti 
est questions to the decision of some one or other of these 
tribunals, and, it cannot be denied, with very happy results 
in those respects that were then looked to with the greatest 
solicitude. But whatever the common-sense of earlier 
generations may have held in this respect, modern com 
mon-sense holds that the scientist's answer is the only 
ultimately true one. In the last resort enlightened 
common-sense sticks by the opaque truth and refuses to 
go behind the returns given by the tangible facts. 

Quasi lignum vitae in paradiso Dei, et quasi lucerna 
fulgoris in domo Domini, such is the place of science in 
modern civilisation. This latterday faith in matter-of- 
fact knowledge may be well grounded or it may not. It 
has come about that men assign it this high place, perhaps 
idolatrously, perhaps to the detriment of the best and most 
intimate interests of the race. There is room for much 
more than a vague doubt that this cult of science is not 
altogether a wholesome growth — that the unmitigated 
quest of knowledge, of this matter-of-fact kind, makes for 
race-deterioration and discomfort on the whole, both in its 
immediate effects upon the spiritual life of mankind, and 
in the material consequences that follow from a great 
advance in matter-of-fact knowledge. 

But we are not here concerned with the merits of the 
case. The question here is : How has this cult of science 

The Place of Science 5 

arisen? What are its cultural antecedents? How far 
is it in consonance with hereditary human nature? and, 
What is the nature of its hold on the convictions of 
civilised men? 

In dealing with pedagogical problems and the theory of 
education, current psychology is nearly at one in saying 
that all learning is of a " pragmatic " character ; that 
knowledge is inchoate action inchoately directed to an 
end ; that all knowledge is " functional " ; that it is of the 
nature of use. This, of course, is only a corollary under 
the main postulate of the latter-day psychologists, whose 
catchword is that The Idea is essentially active. There is 
no need of quarreling with this " pragmatic " school of 
psychologists. Their aphorism may not contain the whole 
truth, perhaps, but at least it goes' nearer to the heart of 
the epistemological problem than any earlier formulation. 
It may confidently be said to do so because, for one thing, 
its argument meets the requirements of modern science. 
It is such a concept as matter-of-fact science can make 
effective use of ; it is drawn in terms which are, in the 
last analysis, of an impersonal, not to say tropismatic, 
character; such as is demanded by science, with its in 
sistence on opaque cause and effect. While knowledge is 
construed in teleological terms, in terms of personal inter 
est and attention, this teleological aptitude is itself reduci 
ble to a product of unteleological natural selection. The 
teleological bent of intelligence is an hereditary trait 
settled upon the race by the selective action of forces that 
look to no end. The foundations of pragmatic intelli 
gence are not pragmatic, nor even personal or sensible. 

This impersonal character of intelligence is, of course, 
most evident on the lower levels of life. If we follow 
Mr. .Loeb, e. g., in his inquiries into the psychology of 

 6 The Place of Science 

that life that lies below the threshold of intelligence, what 
we meet with is an aimless but unwavering motor response 
to stimulus.2 The response is of the nature of motor im 
pulse, and in so far it is'" pragmatic," if that term may 
fairly be applied to so rudimentary a phase of sensibility. 
The responding organism may be called an " agent " in so 
far. It is only by a figure of speech that these terms are 
made to apply to tropismatic reactions. Higher in the 
scale of sensibility and nervous complication instincts 
work to a somewhat similar outcome. On the human 
plane, intelligence (the selective effect of inhibitive com 
plication) may throw the response into the form of a rea 
soned line of conduct looking to an outcome that shall 
be expedient for the agent. This is naïve pragmatism of 
the developed kind. There is no longer a question but 
that the responding organism is an " agent " and that 
his intelligent response to stimulus is of a teleological 
character. But that is not all. The inhibitive nervous 
complication may also detach another chain of response 
to the given stimulus, which does not spend itself in a line 
of motor conduct and does not fall into a system of uses. 
Pragmatically speaking, this outlying chain of response is 
unintended and irrelevant. Except in urgent cases, such 
an idle response seems commonly to be present as a sub 
sidiary phenomenon. If credence is given to the view 
that intelligence is, in its elements, of the nature of an 
inhibitive selection, it seems necessary to assume some 
such chain of idle and irrelevant response to account for 
the further course of the elements eliminated in giving 
the motor response the character of a reasoned line of 
conduct. So that associated with the pragmatic atten 
tion there is found more or less of an irrelevant atten- 

2 Jacques Loeb, Heliotropismus der Thiere, and Comparative 
Psychology and Physiology of the Brain. 

The Place of Science 7 

tion, or idle curiosity. This is more particularly the case 
where a higher range of intelligence is present. This idle 
curiosity is, perhaps, closely related to the aptitude for 
play, observed both in man and in the lower animals.3 
The aptitude for play, as well as the functioning of idle 
curiosity, seems peculiarly lively in the young, whose 
aptitude for sustained pragmatism is at the same time 
relatively vague and unreliable. 

This idle curiosity formulates its response to stimulus, 
not in terms of an expedient line of conduct, nor even 
necessarily in a chain of motor activity, but in terms of 
the sequence of activities going on in the observed phe 
nomena. The " interpretation " of the facts under the 
guidance of this idle curiosity may take the form of 
anthropomorphic or animistic explanations of the " con 
duct" of the objects observed. The interpretation of 
the facts takes a dramatic form. The facts are conceived 
in an animistic way, and a pragmatic animus is imputed 
to them. Their behavior is construed as a reasoned 
procedure on their part looking to the advantage of these 
animistically conceived objects, or looking to the achieve 
ment of some end which these objects are conceived to 
have at heart for reasons of their own. 

Among the savage and lower barbarian peoples there 
is commonly current a large body of knowledge organised 
in this way into myths and legends, which need have no 
pragmatic value for the learner of them and no intended 
bearing on his conduct of practical affairs. They may 
come to have a practical value imputed to them as a 
ground of superstitious observances, but they may also 
not* All students of the lower cultures are aware of 

"Cf. Gross, Spiele der Thiere, chap. 2 (esp. pp. 65-76), and 
chap. 5 ; The Play of Man, Part III, sec. 3 ; Spencer, Principles of 
Psychology, sees. 533-35. 

*The myths and legendary lore of the Eskimo, the Pueblo 

I', 

 8 

The Place of Science 

the dramatic character of the myths current among these 
peoples, and they are also aware that, particularly among 
the peaceable communities, the great body of mythical 
lore is of an idle kind, as'having very little intended bear 
ing on the practical conduct of those who believe in these 
myth-dramas. The myths on the one hand, and the work 
day knowledge of uses, materials, appliances, and expe 
dients on the other hand, may be nearly independent of 
one another. Such is the case in an especial degree 
among those peoples who are prevailingly of a peaceable 
habit of life, among whom the myths have not in any 
great measure been canonised into precedents of divine 
malevolence. 

The lower barbarian's knowledge of the phenomena of 
nature, in so far as they are made the subject of delib 
erate speculation and are organised into a consistent body, 
is of the nature of life-histories. This body of knowl 
edge is in the main organised under the guidance of an 
idle curiosity. In so far as it is systematised under the 
canons of curiosity rather than of expediency, the test 
of truth applied throughout this body of barbarian knowl 
edge is the test of dramatic consistency. In addition to 
their dramatic cosmology and folk legends, it is needless 
to say, these peoples have also a considerable body of 
worldly wisdom in a more or less systematic form. In 
this the test of validity is usefulness.5 

Indians, and some tribes of the northwest coast afford good in 
stances of such idle creations. Cf. various Reports of the Bu 
reau of American Ethnology; also, e. g., Tylor, Primitive Culture, 
esp. the chapters on "Mythology" and "Animism." 

5 " Pragmatic " is here used in a more restricted sense than 
the distinctively pragmatic school of modern psychologists would 
commonly assign the term. " Pragmatic," " teleological," and the 
like terms have been extended to cover imputation of purpose as 
well as conversion to use. It is not intended to criticise this 
ambiguous nse of terms, nor to correct it; but the terms are 

The Place of Science 

9 

The pragmatic knowledge of the early days differs 
scarcely at all in character from that of the maturest 
phases of culture. Its highest achievements in the di 
rection of systematic formulation consist of didactic ex 
hortations to thrift, prudence, equanimity, and shrewd 
management — a body of maxims of expedient conduct. 
In this field there is scarcely a degree of advance from 
Confucius to Samuel Smiles. Under the guidance of the 
idle curiosity, on the other hand, there has been a con 
tinued advance toward a more and more comprehensive 
system of knowledge. With the advance in intelligence 
and experience there come closer observation and more 
detailed analysis of facts.6 The dramatisation of the 
sequence of phenomena may then fall into somewhat less 
personal, less anthropomorphic formulations of the proc 
esses observed; but at no stage of its growth — at least 
at no stage hitherto reached — does the output of this 
work of the idle curiosity lose its dramatic character. 
Comprehensive generalisations are made and cosmologies 
are built up, but always in dramatic form. General prin 
ciples of explanation are settled on, which in the earlier 
days of theoretical speculation seem invariably to run back 
to the broad vital principle of generation. Procreation, 
birth, growth, and decay constitute the cycle of postu 
lates within which the dramatised processes of natural 
phenomena run their course. Creation is procreation in 
these archaic theoretical systems, and causation is gesta- 

here used only in the latter sense, which alone belongs to them 
by force of early usage and etymology. " Pragmatic " knowl 
edge, therefore, is such as is designed to serve an expedient end 
for the knower, and is here contrasted with the imputation of 
expedient conduct to the facts observed. The reason for pre 
serving this distinction is simply the present need of a simple 
term by which to mark the distinction between worldly wisdom 
and idle learning. 
• Cf. Ward, Pure Sociology, esp. pp. 437-48. 

 10 

The Place of Science 

tion and birth. The archaic cosmological schemes of 
Greece, India, Japan, China, Polynesia, and America, all 
run to the same general effect on this head.7 The like 
seems true for the Elohistic elements in the Hebrew scrip 
tures. 

Throughout this biological speculation there is present, 
obscurely in the background, the tacit recognition of a 
material causation, such as conditions the vulgar opera 
tions of workday life from hour to hour. But this causal 
relation between vulgar work and product is vaguely 
taken for granted and not made a principle for compre 
hensive generalisations. It is overlooked as a trivial mat 
ter of course. The higher generalisations take their 
color from the broader features of the current scheme of 
life. The habits of thought that rule in the working-out 
of a system of knowledge are such as are fostered by 
the more impressive affairs of life, by the institutional 
structure under which the community lives. So long as 
the ruling institutions are those of blood-relationship, 
descent, and clannish discrimination, so long the canons 
of knowledge are of the same complexion. 

When presently a transformation is made in the scheme 
of culture from peaceable life with sporadic prédation to 
a settled scheme of predaceous life, involving mastery 
and servitude, gradations of privilege and honor, coercion 
and personal dependence, then the scheme of knowledge 
undergoes an analogous change. The predaceous, or 
higher barbarian, culture is, for the present purpose, 
peculiar in that it is ruled by an accentuated pragmatism. 
The institutions of this cultural phase are conventional 
ised relations of force and fraud. The questions of life 
are questions of expedient conduct as carried on under 
the current relations of mastery and subservience. The 

T Cf., e. g., Tylor, Primitive Culture, chap. 8. 

The Place of Science 

ii 

habitual distinctions are distinctions of personal force, 
advantage, precedence, and authority. A shrewd adap 
tation to this system of graded dignity and servitude be 
comes a matter of life and death, and men learn to think 
in these terms as ultimate and definitive. The system 
of knowledge, even in so far as its motives are of a dis 
passionate or idle kind, falls into the like terms, because 
such are the habits of thought and the standards of dis 
crimination enforced by daily life.8 

The theoretical work of such a cultural era, as, for in 
stance, the Middle Ages, still takes the general shape of 
dramatisation, but the postulates of the dramaturgic 
theories and the tests of theoretic validity are no longer 
the same as before the scheme of graded servitude came 
to occupy the field. The canons which guide the work 
of the idle curiosity are no longer those of generation, 
blood-relationship, and homely life, but rather those of 
graded dignity, authenticity, and dependence. The higher 
generalisations take on a new complexion, it may be with 
out formally discarding the older articles of belief. The 
cosmologies of these higher barbarians are cast in terms 
of a feudalistic hierarchy of agents and elements, and 
the causal nexus between phenomena is conceived ani- 
mistically after the manner of sympathetic magic. The 
laws that are sought to be discovered in the natural uni 
verse are sought in terms of authoritative enactment. 
The relation in which the deity, or deities, are conceived to 
stand to facts is no longer the relation of progenitor, so 
much as that of suzerainty. Natural laws are corollaries 
under the arbitrary rules of status imposed on the natural 
universe by an all-powerful Providence with a view to 
the maintenance of his own prestige. The science that 
grows in such a spiritual environment is of the class 

8 Cf. James, Psychology, chap. 9, esp. sec. 5. 

 12 

The Place of Science 

represented by alchemy and astrology, in which the im 
puted degree of nobility and prepotency of the objects and 
the symbolic force of their names are looked to for an 
explanation of what takes place. 

The theoretical output of the Schoolmen has neces 
sarily an accentuated pragmatic complexion, since the 
whole cultural scheme under which they lived and worked 
was of a strenuously pragmatic character. The current 
concepts of things were then drawn in terms of expe 
diency, personal force, exploit, prescriptive authority, and 
the like, and this range of concepts was by force of habit 
employed in the correlation of facts for purposes of 
knowledge even where no immediate practical use of the 
knowledge so gained was had in view. At the same time 
a very large proportion of the scholastic researches and 
speculations aimed directly at rules of expedient conduct, 
whether it took the form of a philosophy of life under 
temporal law and custom, or of a scheme of salvation un 
der the decrees of an autocratic Providence. A naïve 
apprehension of the dictum that all knowledge is prag 
matic would find more satisfactory corroboration in the 
intellectual output of scholasticism than in any system 
of knowledge of an older or a later date. 

With the advent of modern times a change comes over 
the nature of the inquiries and formulations worked out 
under the guidance of the idle curiosity — which from 
this epoch is often spoken of as the scientific spirit. The 
change in question is closely correlated with an analogous 
change in institutions and habits of life, particularly with 
the changes which the modern era brings in industry and 
in the economic organisation of society. It is doubtful 
whether the characteristic intellectual interests and teach 
ings of the new era can properly be spoken of as less 
" pragmatic," as that term is sometimes understood, than 

The Place of Science 13 

those of the scholastic times; but they are of another 
kind, being conditioned by a different cultural and in 
dustrial situation.9 In the life of the new era conceptions 
of authentic rank and differential dignity have grown 
weaker in practical affairs, and notions of preferential 
reality and authentic tradition similarly count for less in 
the new science. The forces at work in the external 
world are conceived in a less animistic manner, although 
anthropomorphism still prevails, at least to the degree 
required in order to give a dramatic interpretation of the 
sequence of phenomena. 

The changes in the cultural situation which seem to 
have had the most serious consequences for the methods 
and animus of scientific inquiry are those changes that 
took place in the field of industry. Industry in early 
modern times is a fact of relatively greater preponder 
ance, more of a tone-giving- factor, than it was under the 
régime of feudal status. It is the characteristic trait 
of the modern culture, very much as exploit and fealty 
were the characteristic cultural traits of the earlier time. 
This early-modern industry is, in an obvious and con 
vincing degree, a matter of workmanship. The same has 
not been true in the same degree either before or since. 
The workman, more or less skilled and with more or less 
specialised efficiency, was the central figure in the cul 
tural situation of the time; and so the concepts of the 
• scientists came to be drawn in the image of the work 
man. The dramatisations of the sequence of external 

"As currently employed, the term "pragmatic" is made to 
cover both conduct looking to the agent's preferential advantage, 
expedient conduct, and workmanship directed to the production 
of things that may or may not be of advantage to the agent. If 
the term be taken in the latter meaning, the culture of modern 
times is no less " pragmatic " than that of the Middle Ages. It 
is here intended to be used in the former sense. 

» I 

I 

 14 The Place of Science 

phenomena worked out under the impulse of the idle 
curiosity were then conceived in terms of workmanship. 
Workmanship gradually supplanted differential dignity 
as the authoritative canon of scientific truth, even on the 
higher levels of speculation and research. This, of 
course, amounts to saying in other words that the law of 
cause and effect was given the first place, as contrasted 
with dialectical consistency and authentic tradition. But 
this early-modern law of cause and effect — the law of 
efficient causes — is of an anthropomorphic kind. " Like 
causes produce like effects," in much the same sense as 
the skilled workman's product is like the workman ; 
" nothing is found in the effect that was not contained in 
the cause," in much the same manner. 

These dicta are, of course, older than modern science, 
but it is only in the early days of modern science that 
they come to rule the field with an unquestioned sway and 
to push the higher grounds of dialectical validity to one 
side. They invade even the highest and most recondite 
fields of speculation, so that at the approach to the transi 
tion from the early-modern to the late-modern period, in 
the eighteenth century, they determine the outcome even 
in the counsels of the theologians. The deity, from hav 
ing been in mediaeval times primarily a suzerain concerned 
with the maintenance of his own prestige, becomes pri 
marily a creator engaged in the workmanlike occupation 
of making things useful for man. His relation to man 
and the natural universe is no longer primarily that of 
a progenitor, as it is in the lower barbarian culture, but 
rather that of a talented mechanic. The " natural laws " 
which the scientists of that era make so much of are no 
longer decrees of a preternatural legislative authority, 
but rather details of the workshop specifications handed 
down by the master-craftsman for the guidance of handi- 

The Place of Science 15 

craftsmen working out his designs. In the eighteenth- 
century science these natural laws are laws specifying the 
sequence of cause and effect, and will bear characterisa 
tion as a dramatic interpretation of the activity of the 
causes at work, and these causes are conceived in a quasi- 
personal manner. In later modern times the formula 
tions of causal sequence grow more impersonal and more 
objective, more matter-of-fact; but the imputation of 
activity to the observed objects never ceases, and even 
in the latest and maturest formulations of scientific re 
search the dramatic tone is not wholly lost. The causes 
at work are conceived in a highly impersonal way, but 
hitherto no science (except ostensibly mathematics) has 
been content to do its theoretical work in terms of inert 
magnitude alone. Activity continues to be imputed to 
the phenomena with which science deals ; and activity is, 
of course, not a fact of observation, but is imputed to 
the phenomena by the observer.10 This is, also of course, 
denied by those who insist on a purely mathematical 
formulation of scientific theories, but the denial is main 
tained only at the cost of consistency. Those eminent 
authorities who speak for a colorless mathematical formu 
lation invariably and necessarily fall back on the (essen 
tially metaphysical) preconception of causation as soon 
as they go into the actual work of scientific inquiry.11 

Since the machine technology has made great advances, 
during the nineteenth century, and has become a cultural 
force of wide-reaching consequence, the formulations of 

10 Epistemologically speaking, activity is imputed to phenomena 
for the purpose of organising them into a dramatically consistent 
system. 

_uCf., e.g., Karl Pearson, Grammar of Science, and compare 
his ideal of inert magnitudes as set forth in his exposition with 
his actual work as shown in chaps. 9, 10, and 12, and more par 
ticularly in his discussions of " Mother Right " and related topics 
in The Chances of Death. 

ill 

 i6 

The Place of Science 

The Place of Science 

science have made another move in the direction of im 
personal matter-of-fact. The machine process has dis 
placed the workman as the archetype in whose image 
causation is conceived by the scientific investigators. The 
dramatic interpretation of natural phenomena has thereby 
become less anthropomorphic ; it no longer constructs the 
life-history of a cause working to produce a given effect 
— after the manner of a skilled workman producing a 
piece of wrought goods — but it constructs the life-his 
tory of a process in which the distinction between cause 
and effect need scarcely be observed in an itemised and 
specific way, but in which the run of causation unfolds 
itself in an. unbroken sequence of cumulative change. 
By contrast with the pragmatic formulations of worldly 
wisdom these latter-day theories of the scientists appear 
highly opaque, impersonal, and matter-of-fact; but taken 
by themselves they must be admitted still to show the 
constraint of the dramatic prepossessions that once guided 
the savage myth-makers. 

In so far as touches the aims and the animus of sci 
entific inquiry, as seen from the point of view of the 
scientist, it is a wholly fortuitous and insubstantial co 
incidence that much of the knowledge gained under ma 
chine-made canons of research can be turned to prac 
tical account. Much of this knowledge is useful, or may 
be made so, by applying it to the control of the processes 
in which natural forces are engaged. This employment 
of scientific knowledge for useful ends is technology, in 
the broad sense in which the term includes, besides the 
machine industry proper, such branches of practice as 
engineering, agriculture, medicine, sanitation, and eco 
nomic reforms. The reason why scientific theories can 
be turned to account for these practical ends is not that 
these ends are included in the scope of scientific inquiry. 

These useful purposes lie outside the scientist's interest. 
It is not that he aims, or can aim, at technological im 
provements. His inquiry is as " idle " as that of the 
Pueblo myth-maker. But the canons of validity under 
whose guidance he works are those imposed by the mod 
ern technology, through habituation to its requirements; 
and therefore his results are available for the technolog 
ical purpose. His canons of validity are made for him 
by the cultural situation ; they are habits of thought im 
posed on him by the scheme of life current in the com 
munity in which he lives ; and under modern conditions 
V this scheme of life is largely machine-made. In the mod 
ern culture, industry, industrial processes, and industrial 
products have progressively gained upon humanity, until 
these creations of man's ingenuity have latterly come to 
take the dominant place in the cultural scheme; and it is 
not too much to say that they have become the chief 
force in shaping men's daily life, and therefore the chief 
factor in shaping men's habits of thought. Hence men 
have learned to think in the terms in which the technolog 
ical processes act. This is particularly true of those men 
who by virtue of a peculiarly strong susceptibility in this 
direction become addicted to that habit of matter-of-fact 
inquiry that constitutes scientific research. 

Modern technology makes use of the same range of 
concepts, thinks in the same terms, and applies the same 
tests of validity as modern science. In both, the terms 
of standardisation, validity, and finality are always terms 
of impersonal sequence, not terms of human nature or 
of preternatural agencies. Hence the easy copartnership 
between the two. Science and technology play into one 
another's hands. The processes of nature with which 
science" deals and which technology turns to account, the 
sequence of changes in the external world, animate and 

ill 

 i8 

The Place of Science 

inanimate, run in terms of brute causation, as do the 
theories of science. These processes take no thought of 
human expediency or inexpediency. To make use of 
them they must be taken as they are, opaque and unsym 
pathetic. Technology, therefore, has come to proceed 
on an interpretation of these phenomena in mechanical 
terms, not in terms of imputed personality nor even of 
workmanship. Modern science, deriving its concepts 
from the same source, carries on its inquiries and states 
its conclusions in terms of the same objective character 
as those employed by the mechanical engineer. 

So it has come about, through the progressive change 
of the ruling habits of thought in the community, that 
the theories of science have progressively diverged from 
the formulations of pragmatism, ever since the modern 
era set in. From an organisation of knowledge on the 
basis of imputed personal or animistic propensity the 
theory has changed its base to an imputation of brute 
activity only, and this latter is conceived in an increas 
ingly matter-of-fact manner ; until, latterly, the pragmatic 
range of knowledge and the scientific are more widely out 
of touch than ever, differing not only in aim, but in matter 
as well. In both domains knowledge runs in terms of 
activity, but it is on the one hand knowledge of what had 
best be done, and on the other hand knowledge of what 
takes place; on the one hand knowledge of ways and 
means, on the other hand knowledge without any ulterior 
purpose. The latter range of knowledge may serve the 
ends of the former, but the converse does not hold true. 

These two divergent ranges of inquiry are to be found 
together in all phases of human culture. What distin 
guishes the present phase is that the discrepancy between 
the two is now wider than ever before. The present is 
nowise distinguished above other cultural eras by any 

The Place of Science 19 

exceptional urgency or acumen in the search for prag 
matic expedients. Neither is it safe to assert that the 
present excels all other civilisations in the volume or 
the workmanship of that body of knowledge that is to 
be credited to the idle curiosity. What distinguishes the 
present in these premises is (i) that the primacy in the 
cultural scheme has passed from pragmatism to -a. dis 
interested inquiry whose motive is idle curiosity, and (2) 
that in the domain of the latter the making of myths and 
legends in terms of imputed personality, as well as the 
construction of dialectical systems in terms of differential 
reality, has yielded the first place to the making of theories 
in terms of matter-of-fact sequence.12 

Pragmatism creates nothing but maxims of expedient 
conduct. Science creates nothing but theories.13 It 
knows nothing of policy or utility, of better or worse. 
None of all that is comprised in what is to-day accounted 
scientific knowledge. Wisdom and proficiency of the 
pragmatic sort does not contribute to the advance of a 
knowledge of fact. It has only an incidental bearing on 
scientific research, and its bearing is chiefly that of inhi 
bition and misdirection. Wherever canons of expediency 
are intruded into or are attempted to be incorporated in 
the inquiry, the consequence is an unhappy one for sci 
ence, however happy it may be for some other purpose 
extraneous to science. The mental attitude of worldly 
wisdom is at cross-purposes with the disinterested sci 
entific spirit, and the pursuit of it induces an intellectual 
bias that is incompatible with scientific insight. Its in 
tellectual output is a body of shrewd rules of conduct, in 
great part designed to take advantage of human infirmity. 

. 12 Cf. James, Psychology, Vol. II, chap. 28, pp. 633-71, esp. p. 
640 note. 
13 Cf. Ward, Principles of Psychology, pp. 439-43. 

H 

V I- 

II 

 2O 

The Place of Science 

Its habitual terms of standarisation and validity are terms 
of human nature, of human preference, prejudice, aspi 
ration, endeavor, and disability, and the habit of mind 
that goes with it is such as is consonant with these terms. 
No doubt, the all-pervading pragmatic animus of the older 
and non-European civilisations has had more than any 
thing else to do with their relatively slight and slow ad 
vance in scientific knowledge. In the modern scheme of 
knowledge it holds true, in a similar manner and with 
analogous effect, that training in divinity, in law, and in 
the related branches of diplomacy, business tactics, mili 
tary affairs, and political theory, is alien to the skeptical 
scientific spirit and subversive of it. 

The modern scheme of culture comprises a large body 
of worldly wisdom, as well as of science. This pragmatic 
lore stands over against science with something of a jeal 
ous reserve. The pragmatists value themselves some 
what on being useful as well as being efficient for good 
and evil. They feel the inherent antagonism between 
themselves and the scientists, and look with some doubt 
on the latter as being merely decorative trifiers, although 
they sometimes borrow the prestige of the name of science 
— as is only good and well, since it is of the essence of 
worldly wisdom to borrow anything that can be turned 
to account. The reasoning in these fields turns about 
questions of personal advantage of one kind or another, 
and the merits of the claims canvassed in these discus 
sions are decided on grounds of authenticity. Personal 
claims make up the subject of the inquiry, and these 
claims are construed and decided in terms of precedent 
and choice, use and wont, prescriptive authority, and the 
like. The higher reaches of generalisation in these prag 
matic inquiries are of the nature of deductions from au 
thentic tradition, and the training in this class of reason- 

The Place of Science 

21 

ing gives discrimination in respect of authenticity and 
expediency. The resulting habit of mind is a bias for 
substituting dialectical distinctions and decisions de jure 
in the place of explanations de facto. The so-called " sci 
ences " associated with these pragmatic disciplines, such 
as jurisprudence, political science, and the like, are a 
taxonomy of credenda. Of this character was the greater 
part of the " science " cultivated by the Schoolmen, and 
large remnants of the same kind of authentic convictions 
are, of course, still found among the tenets of the sci 
entists, particularly in the social sciences, and no small 
solicitude is still given to their cultivation. Substan 
tially the same value as that of the temporal pragmatic 
inquiries belongs also, of course, to the " science " of 
divinity. Here the questions to which an answer is 
sought, as well as the aim and method of inquiry, are of 
the same pragmatic character, although the argument runs 
on a higher plane of personality, and seeks a solution in 
terms of a remoter and more metaphysical expediency. 

In the light of what has been said above, the questions 
recur: How far is the scientific quest of matter-of-fact 
knowledge consonant with the inherited intellectual apti 
tudes and propensities of the normal .man? and, What 
foothold has science in the modern culture ? The former 
is a question of the temperamental heritage of civilised 
mankind, and therefore it is in large part a question of 
the circumstances which have in the past selectively 
shaped the human nature of civilised mankind. Under 
the barbarian culture, as well as on the lower levels of 
what is currently called civilised life, the dominant note 
has been that of competitive expediency for the individual 
or the group, great or small, in an avowed struggle for 
the means of life. Such is still the ideal of the politician 

 m 

* i 

22 

The Place of Science 

and business man, as well as of other classes whose habits 
of life lead them to cling to the inherited barbarian tra 
ditions. The upper-barbarian and lower-civilised eulture, 
as has already been indicated, is pragmatic, with a thor 
oughness that nearly bars out any non-pragmatic ideal of 
life or of knowledge. Where this tradition is strong 
there is but a precarious chance for any consistent effort 
to formulate knowledge in other terms than those drawn 
from the prevalent relations of personal mastery and sub 
servience and the ideals of personal gain. 

During the Dark and Middle Ages, for instance, it is 
true in the main that any movement of thought not con 
trolled by considerations of expediency and conventions 
of status are to be found only in the obscure depths of 
vulgar life, among those neglected elements of the popu 
lation that lived below the reach of the active class strug 
gle. What there is surviving of this vulgar, non-prag 
matic intellectual output takes the form of legends and 
folk-tales, often embroidered on the authentic documents 
of the Faith. These are less alien to the latest and high 
est culture of Christendom than are the dogmatic, dia 
lectical, and chivalric productions that occupied the atten 
tion of the upper classes in mediaeval times. It may seem 
a curious paradox that the latest and most perfect flower 
of the western civilisation is more nearly akin to the 
spiritual life of the serfs and villeins than it is to that of 
the grange or the abbey. The courtly life and the chiv 
alric habits of thought of that past phase of culture have 
left as nearly no trace in the cultural scheme of later mod 
ern times as could well be. Even the romancers who 
ostensibly rehearse the phenomena of chivalry, unavoid 
ably make their knights and ladies speak the language 
and the sentiments of the slums of that time, tempered 
with certain schematised modern reflections and specu 

The Place of Science 23 

lations. The gallantries, the genteel inanities and devout 
imbecilities of mediaeval high-life would be insufferable 
even to the meanest and most romantic modern intelli 
gence. So that in a later, less barbarian age the pre 
carious remnants of folklore that have come down through 
that vulgar channel — half savage and more than half 
pagan — are treasured as containing the largest spiritual 
gains which the barbarian ages of Europe have to offer. 

The sway of barbarian pragmatism has, everywhere in 
the western world, been relatively brief and relatively 
light ; the only exceptions would be found in certain parts 
of the Mediterranean seaboard. But wherever the bar 
barian culture has been sufficiently long-lived and unmiti 
gated to work out a thoroughly selective effect in the 
human material subjected to it, there the pragmatic 
animus may be expected to have become supreme and 
to inhibit all movement in the direction of scientific in 
quiry and eliminate all effective aptitude for other than 
worldly wisdom. What the selective consequences of 
such a protracted régime of pragmatism would be for the 
temper of the race may be seen in the human flotsam left 
by the great civilisations of antiquity, such as Egypt, In 
dia, and Persia. Science is not at home among these 
leavings of barbarism. In these instances of its long and 
unmitigated dominion the barbarian culture has selec 
tively worked out a temperamental bias and a scheme of 
life from which objective, matter-of-fact knowledge is 
virtually excluded in favor of pragmatism, secular and 
religious. But for the greater part of the race, at least 
for the greater part of civilised mankind, the régime of 
the mature barbarian culture has been of relatively short 
duration, and has had a correspondingly superficial and 
transient selective effect. It has not had force and time 
to eliminate certain elements of human nature handed 

; 

n 

 1), 

'1' 

24 

The Place of Science 

down from an earlier phase of life, which are not in full 
consonance with the barbarian animus or with the de 
mands of the pragmatic scheme of thought. The bar 
barian-pragmatic habit of. mind, therefore, is not properly 
speaking a temperamental trait of the civilised peoples, 
except possibly within certain class limits (as, e.g., the 
German nobility). It is rather a tradition, and it does 
not constitute so tenacious a bias as to make head against 
the strongly materialistic drift of modern conditions and 
set aside that increasingly urgent resort to matter-of-fact 
conceptions that makes for the primacy of science. Civ 
ilised mankind does not in any great measure take back 
atavistically to the upper-barbarian habit of mind. Bar 
barism covers too small a segment of the life-history of 
the race to have given an enduring temperamental result. 
The unmitigated discipline of the higher barbarism in 
Europe fell on a relatively small proportion- of the popu 
lation, and in the course of time this select element of the 
population was crossed and blended with the blood of the 
lower elements whose life always continued to run in the 
ruts of savagery rather than in those of the high-strung, 
finished barbarian culture that gave rise to the chivalric 
scheme of life. 

Of the several phases of human culture the most pro 
tracted, and the one which has counted for most in shap 
ing the abiding traits of the race, is unquestionably that 
of savagery. With savagery, for the purpose in hand, 
is to be classed that lower, relatively peaceable barbarism 
that is not characterised by wide and sharp class dis 
crepancies or by an unremitting endeavor of one indi 
vidual or group to get the better of another. Even under 
the full-grown barbarian culture — as, for instance, dur 
ing the Middle Ages — the habits of life and the spiritual 
interests of the great body of the population continue in 

The Place of Science 25 

large measure to bear the character of savagery. The 
savage phase of culture accounts for by far the greater 
portion of the life-history of mankind, particularly if the 
lower barbarism and the vulgar life of later barbarism 
be counted in with savagery, as in a measure they prop 
erly should. This is particularly true of those racial 
elements that have entered into the composition of the 
leading peoples of Christendom. 

The savage culture is characterised by the relative ab 
sence of pragmatism from the higher generalisations of 
its knowledge and beliefs. As has been noted above, its 
theoretical creations are chiefly of the nature of my 
thology shading off into folklore. This genial spinning 
of apocryphal yarns is, at its best, an amiably inefficient 
formulation of experiences and observations in terms of 
something like a life-history of the phenomena observed. 
It has, on the one hand, little value, and little purpose, 
in the way of pragmatic expediency, and so it is not closely 
akin to the pragmatic-barbarian scheme of life; while, 
on the other hand, it is also ineffectual as a systematic 
knowledge of matter-of-fact. It is a quest of knowledge, 
perhaps of systematic knowledge, and it is carried on 
under the incentive of the idle curiosity. In this respect 
it falls in the same class with the civilised man's science ; 
but it seeks knowledge not in terms of opaque matter-of- 
fact, but in terms of some sort of spiritual life imputed 
to the facts. It is romantic and Hegelian rather than 
realistic and Darwinian. The logical necessities of its 
scheme of thought are necessities of spiritual consistency 
rather than of quantitative equivalence. It is like science 
in that it has no ulteriar motive beyond the idle craving 
for a systematic correlation "of 4a-fc?» bytat is unlike sci 
ence in that its stajiïîâîtiisation and correlation of data 
run in terms of'fKe'free play of imputed personal initia- 

I« I 

lit 

 26 

The Place of Science 

The Place of Science 

27 

tive rather than in terms of the constraint of objective 
cause and effect. 

By force of the protracted selective discipline of this 
past phase of culture, the human nature of civilised man 
kind is still substantially the human nature of savage man. 
The ancient equipment of congenital aptitudes and pro 
pensities stands over substantially unchanged, though 
overlaid with barbarian traditions and conventionalities 
and readjusted by habituation to the exigencies of civ 
ilised life. In a measure, therefore, but by no means 
altogether, scientific inquiry is native to civilised man 
with his savage heritage, since scientific inquiry proceeds 
on the same general motive of idle curiosity as guided the 
savage myth-makers, though it makes use of concepts and 
standards in great measure alien to the myth-makers' 
habit of mind. The ancient human predilection for dis 
covering a dramatic play of passion and intrigue in the 
phenomena of nature still asserts itself. In the most 
advanced communities, and even among the adepts of 
.modern science, there comes up persistently the revulsion 
of the native savage against the inhumanly dispassionate 
sweep of the scientific quest, as well as against the inhu 
manly ruthless fabric of technological processes that have 
come out of this search for matter-of-fact knowledge. 
Very often the savage need of a spiritual interpretation 
(dramatisation) of phenomena breaks through the crust 
of acquired materialistic habits of thought, to find such 
refuge as may be had in articles of faith seized on and 
held by sheer force of instinctive conviction. Science 
and its creations are more or less uncanny, more or less 
alien, to that fashion of craving for knowledge that by 
ancient inheritance âijjijiàtes..mankind. Furtively or by 
an overt breach, cf consistency,'riipn,' still seek comfort 
in mat-velDtis'-articles of savage-born •ictz; which contra 

dict the truths of that modern science whose dominion 
they dare not question, but whose findings at the same 
time go beyond the breaking point of their jungle-fed 
spiritual sensibilities. 

The ancient ruts of savage thought and conviction are 
smooth and easy; but however sweet and indispensable 
the archaic ways of thinking may be to the civilised man's 
peace of mind, yet such is the binding force of matter-of- 
fact analysis and inference under modern conditions that 
the findings of science are not questioned on the whole. 
The name of science is after all a word to conjure with. 
So much so that the name and the mannerisms, at least, 
if nothing more of science, have invaded all fields of 
learning and have even overrun territory that belongs 
to the enemy. So there are " sciences " of theology, law, 
and medicine, as has already been noted above. And 
there are such things as Christian Science, and " scientific " 
astrology, palmistry, and the like. But within the field 
of learning proper there is a similar predilection for an 
air of scientific acumen and precision where science does 
not belong. So that even that large range of knowledge 
that has to do with general information rather than with 
theory — what is loosely termed scholarship — tends 
strongly to take on the name and forms of theoretical 
statement. However decided the contrast between these 
branches of knowledge on the one hand, and science prop 
erly so called on the other hand, yet even the classical 
learning, and the humanities generally, fall in with this 
predilection more and more with each succeeding genera 
tion of students. The students of literature, for in 
stance, are more and more prone to substitute critical 
analysis and linguistic speculation, as the end of their en 
deavors, in the place of that discipline of taste and that 
cultivated sense of literary form and literary feeling that 

 C,j 

28 

The Place of Science 

The Place of Science 

29 

! i! 

must always remain the chief end of literary training, as 
distinct from philology and the social sciences. There 
is, of course, no intention to question the legitimacy of a 
science of philology or of the analytical study of litera 
ture as a fact in cultural history, but these things do not 
constitute training in literary taste, nor can they take 
the place of it. The effect of this straining after scien 
tific formulations in a field alien to the scientific spirit 
is as curious as it is wasteful. Scientifically speaking, 
these quasi-scientific inquiries necessarily begin nowhere 
and end in the same place ; while in point of cultural gain 
they commonly come to nothing better than spiritual abne 
gation. But these blindfold endeavors to conform to 
the canons of science serve to show how wide and un 
mitigated the sway of science is in the modern community. 
Scholarship — that is to say an intimate and systematic 
familiarity with past cultural achievements — still holds 
its place in the scheme of learning, in spite of the unad 
vised efforts of the short-sighted to blend it with the work 
of science, for it affords play for the ancient genial pro 
pensities that ruled men's quest of knowledge before the 
coming of science or of the outspoken pragmatic bar 
barism. Its place may not be so large in proportion to 
the entire field of learning as it was before the scientific 
era got fully under way. But there is no intrinsic an 
tagonism between science and scholarship, as there is 
between pragmatic training and scientific inquiry. Mod 
ern scholarship shares with modern science the quality 
of not being pragmatic in its aim. Like science it has no 
ulterior end. It may be difficult here and there to draw 
the line between science and scholarship, and it may even 
more be unnecessary to draw such a line ; yet while the 
two ranges of discipline belong together in many ways, 
and while there are many points of contact and sympathy 

between the two; while the two together make up the 
modern scheme of learning; yet there is no need of con 
founding the one with the other, nor can the one do the 
work of the other. The scheme of learning has changed 
in such manner as to give science the more commanding 
place, but the scholar's domain has not thereby been in 
vaded, nor has it suffered contraction at the hands of 
science, whatever may be said of the weak-kneed abne 
gation of some whose place, if they have one, is in the 
field of scholarship rather than of science. 

All that has been said above has of course nothing to 
say as to the intrinsic merits of this quest of matter-of- 
fact knowledge. In point of fact, science gives its tone 
to modern culture. One may approve or one may depre 
cate the fact that this opaque, materialistic interpreta 
tion of things pervades modern thinking. That is a ques 
tion of taste, about which there is no disputing. The 
prevalence of this matter-of-fact inquiry is a feature of 
modern culture, and the attitude which critics take to 
ward this phenomenon is chiefly significant as indicating 
how far their own habit of mind coincides with the en 
lightened common-sense of civilised mankind. It shows 
in what degree they are abreast of the advance of culture. 
Those in whom the savage predilection or the barbarian 
tradition is stronger than their habituation to civilised life 
will find that this dominant factor of modern life is per 
verse, if not calamitous; those whose habits of thought 
have been fully shaped by the machine process and sci 
entific inquiry are likely to find it good. The modern 
western culture, with its core of matter-of-fact knowl 
edge, may be better or worse than some other cultural 
scheme, such as the classic Greek, the mediaeval Chris- 
ton, the Hindu, or the Pueblo Indian. Seen in certain 

 3O The Place of Science 

lights, tested by certain standards, it is doubtless better; 
by other standards, worse. But the fact remains that 
the current cultural scheme, in its maturest growth, is of 
that complexion; its characteristic force lies in this mat 
ter-of-fact insight ; its highest discipline and its maturest 
aspirations are these. 

In point of fact, the sober common-sense of civilised 
mankind accepts no other end of endeavor as self-suffi 
cient and ultimate. That such is the case seems to be 
due chiefly to the ubiquitous presence of the machine 
technology and its creations in the life of modern com 
munities. And so long as the machine process continues 
to hold its dominant place as a disciplinary factor in mod 
ern culture, so long must the spiritual and intellectual life 
of this cultural era maintain the character which the 
machine process gives it. 

But while the scientist's spirit and his achievements stir 
an unqualified admiration in modern men, and while his 
discoveries carry conviction as nothing else does, it does 
not follow that the manner of man which this quest of 
knowledge produces or requires comes near answering to 
the current ideal of manhood, or that his conclusions are 
felt to be as good and beautiful as they are true. The 
ideal man, and the ideal of human life, even in the appre 
hension of those who most rejoice in the advances of 
science, is neither the finikin skeptic in the laboratory 
nor the animated slide-rule. The quest of science is 
relatively new. It is a cultural factor not comprised, in 
anything like its modern force, among those circum 
stances whose selective action in the far past has given 
to the race the human nature which it now has. The 
race reached the human plane with little of this search 
ing knowledge of facts; and throughout the-greater part 
of its life-history on the human plane it has been accus- 

The Place of Science 31 

tomed to make its higher generalisations and to formu 
late its larger principles of life in other terms than those 
of passionless matter-of-fact. This manner of knowl 
edge has occupied an increasing share of men's atten 
tion in the past, since it bears in a decisive way upon the 
minor affairs of workday life ; but it has never until now 
been put in the first place, as the dominant note of human 
culture. The normal man, such as his inheritance has 
made him, has therefore good cause to be restive under 
its dominion. 

 li 

The Point of View 

33 

THE EVOLUTION- OF THE SCIENTIFIC 
POINT OF VIEW1 

A DISCUSSION of the scientific point of view which avow 
edly proceeds from this point of view itself has necessarily 
the appearance of an argument in a circle; and such in 
great part is the character of what here follows. It is 
in large part an attempt to explain the scientific point of 
view in terms of itself, but not altogether. This inquiry 
does not presume to deal with the origin or the legitima 
tion of the postulates of science, but only with the growth 
of the habitual use of these postulates, and the manner 
of using them. The point of inquiry is the changes which 
have taken place in the secondary postulates involved in 
the scientific point of view — in great part a question of 
the progressive redistribution of emphasis among the pre 
conceptions under whose guidance successive generations 
of scientists have gone to their work. 

The sciences which are in any peculiar sense modern 
take as an (unavowed) postulate the fact of consecutive 
change. Their inquiry always centers upon some manner 
of process. This notion of process about which the re 
searches of modern science cluster, is a notion of a se 
quence, or complex, of consecutive change in which the 
nexus of the sequence, that by virtue of which the change 
inquired into is consecutive, is the relation of cause and 
effect. The consecution, moreover, runs in terms of 
persistence of quantity or of force. In so far as the sci- 

1 Read before the Kosmos Club, at the University of California, 
May 4, 1908. Reprinted by permission from the University of 
California Chronicle, Vol. X, No. 4. 

32 

ence is of a modern complexion, in so far as it is not of 
the nature of taxonomy simply, the inquiry converges 
upon a matter of process ; and it comes to rest, provi 
sionally, when it has disposed of its facts in terms of 
process. But modern scientific inquiry in any case comes 
to rest only provisionally; because its prime postulate is 
that of consecutive change, and consecutive change can, 
of course, not come to rest except provisionally. By its 
own nature the inquiry cannot reach a final term in any 
direction. So it is something of a homiletical common 
place to say that the outcome of any serious research can 
only be to make two questions grow where one question 
grew before. Such is necessarily the case because the 
postulate of the scientist is that things change consecu 
tively. It is an unproven and unprovable postulate — 
that is to say, it is a metaphysical preconception — but it 
gives the outcome that every goal of research is neces 
sarily a point of departure ; every term is transitional.2 

2 It is by no means unusual for modern scientists to deny the 
truth of this characterization, so far as regards this alleged re 
course to the concept of causation. They deny that such a con 
cept — of efficiency, activity, and the like — enters, _or can legit 
imately enter, into their work, whether as an instrument of 
research or as a means or guide to theoretical formulation. They 
even deny the substantial continuity of the sequence of changes 
that excite their scientific attention. This attitude seems par 
ticularly to commend itself to those who by preference attend 
to the mathematical formulations of theory and who are chiefly 
occupied with proving up and working out details of the system 
of theory which have previously been left unsettled or uncovered. 
The concept of causation is recognized to be a metaphysical 
postulate, a matter of imputation, not of observation; whereas 
it is claimed that scientific inquiry neither does nor can legiti 
mately, nor, indeed, currently, make use of a postulate more meta 
physical than the concept of an idle concomitance of variation, 
such as is adequately expressed in terms of mathematical 
function. 

The contention seems sound, to the extent that the materials 
— essentially statistical materials — with which scientific inquiry 

-L ' 

J -i. i 
if-,. 

 34 

The Point of View 

The Point of View 

35 

A hundred years ago, or even fifty years ago, sci 
entific men were not in the habit of looking at the matter 

is occupied are of this non-committal character, and that the 
mathematical formulations of theory include no further element 
than that of idle variation. Such is necessarily the case because 
causation is a fact of imputation, not of observation, and so can 
not be included among the data; and because nothing further 
than non-committal variation can be expressed in mathematical 
terms. A bare notation of quantity can convey nothing further. 

If it were the intention to claim only that the conclusions of 
the scientists are, or should be, as a matter of conservative cau 
tion, overtly stated in terms of function alone, then the con 
tention might well be allowed. Causal sequence, efficiency or 
continuity is, of course, a matter of metaphysical imputation. 
It is not a fact of observation, and cannot be asserted of the 
facts of observation except as a trait imputed to them. It is so 
imputed, by scientists and others, as a matter of logical neces 
sity, as a basis of a systematic knowledge of the facts of obser 
vation. 

Beyond this, in their exercise of scientific initiative, as well as 
in the norms which guide the systématisation of scientific results, 
the contention will not be made good — at least not for the cur 
rent phase of scientific knowledge. The claim, indeed, carries 
its own refutation. In making such a claim, both in rejecting 
the imputation of metaphysical postulates and in defending their 
position against their critics, the arguments put forward by the 
scientists run in causal terms. For the polemical purposes, 
where their antagonists are to be scientifically confuted, the 
defenders of the non-committal postulate of concomitance find 
that postulate inadequate. They are not content, in this pre 
carious conjuncture, simply to attest a relation of idle quanti 
tative concomitance (mathematical function) between the al 
legations of their critics, on the one hand, and their own con 
troversial exposition of these matters on the other hand. They 
argue that they do not " make use of " such a postulate as " effi 
ciency," whereas they claim to " make use of " the concept of 
function. But " make use of " is not a notion of functional vari 
ation but of causal efficiency in a somewhat gross and highly 
anthropomorphic form. The relation between their own thinking 
and the " principles " which they "apply" or the experiments and 
calculations which they " institute " in their " search " for facts, 
is not held to be of this non-committal kind. It will not be 
claimed that the shrewd insight and the bold initiative of a man 
eminent in the empirical sciences bear no more efficient or con- 

in, this way. At least it did not then seem a matter of 
course, lying in the nature of things, that scientific inquiry 

sequential a relation than that of mathematical function to the 
ingenious experiments by which he tests his hypotheses and ex 
tends the secure bounds of human knowledge. Least of all is the 
masterly experimentalist himself in a position to deny that his 
intelligence counts for something more efficient than idle concom 
itance in such a case. The connection between his premises, 
hypotheses, and experiments, on the one hand, and his theo 
retical results, on the other hand, is not felt to be of the nature 
of mathematical function. Consistently adhered to, the prin 
ciple of " function " or concomitant variation precludes recourse 
to experiment, hypotheses or inquiry — indeed, it precludes "re 
course" to anything whatever. Its notation does not comprise 
anything so anthropomorphic. 

The case is illustrated by the latter-day history of theoretical 
physics. Of the sciences which affect a non-committal attitude 
in respect of the concept of efficiency and which claim to get 
along with the notion of mathematical function alone, physics 
is the most outspoken and the one in which the claim has the 
best prima facie validity. At the same time, latter-day physicists, 
for a hundred years or more, have been much occupied with 
explaining how phenomena which to all appearance involve action 
at a distance do not involve action at a distance at all. The 
greater theoretical achievements of physics during the past cen 
tury lie within the sweep of this (metaphysical) principle that 
action at a distance does not take place, that apparent action 
at a distance must be explained by effective contact, through a 
continuum, or by a material transference. But this principle is 
nothing better than an unreasoning repugnance on the part of the 
physicists to admitting action at a distance. The requirement of 
a continuum involves a gross form of the concept of efficient 
causation. The " functional " concept, concomitant variation, re 
quires no contact and no continuum. Concomitance at a dis 
tance is quite as simple and convincing a notion as concomitance 
within contact or by the intervention of a continuum, if not more 
so. What stands in the way of its acceptance is the irrepres 
sible anthropomorphism of the physicists. And yet the great 
achievements of physics are due to the initiative of men animated 
with this anthropomorphic repugnance to the notion of con 
comitant variation at a distance. All the generalisations on un- 
dulatory motion and translation belong here. The latter-day 
researches in light, electrical transmission, the theory of ions, 
together with what is known of the obscure and late-found 

 The Point of View 

The Point of View 

37 

could not reach a final term in any direction. To-day it 
is a matter of course, and will be so avowed without argu 
ment. Stated in the broadest terms, this is the substan 
tial outcome of that nineteenth-century movement in sci 
ence with which the name of Darwin is associated as a 
catch-word. 

This use of Darwin's name does not imply that this 
epoch of science is mainly Darwin's work. What merit 
may belong to Darwin, specifically, in these premises, is a 
question which need not detain the argument. He may, 
by way of creative initiative, have had more or less to do 
with shaping the course of things scientific. Or, if you 
choose, his voice may even be taken as only one of the 
noises which the wheels of civilisation make when they 
go round. But by scientifically colloquial usage we have 
come to speak of pre-Darwinian and post-Darwinian sci 
ence, and to appreciate that there is a significant differ 
ence in the point of view between the scientific era which 
preceded and that which followed the epoch to which his 
name belongs. 

Before that epoch the animus of a science was, on the 
whole, the animus of taxonomy; the consistent end of 
scientific inquiry was definition and classification,— as 
it still continues to be in such fields of science as have 
not been affected by the modern notion of consecutive 
change. The scientists of that era looked to a final term, 
a consummation of the changes which provoked their in 
quiry, as well as to a first beginning of the matters with 
which their researches were concerned. The questions 
of science were directed to the problem, essentially classi- 

radiations and emanations, are to be credited to the same meta 
physical preconception, which is never absent in any " scientific " 
inquiry in the field of physical science. It is only the " occult " 
and "Christian" "Sciences" that can dispense with this meta 
physical postulate and take recourse to " absent treatment." 

ficatory, of how things had been in the presumed pri 
mordial stable equilibrium out of which they, putatively, 
had come, and how they should be in the definitive state 
of settlement into which things were to fall as the out 
come of the play of forces which intervened between 
this primordial and the definitive stable equilibrium. To 
the pre-Darwinian taxonomists the center of interest and 
attention, to which all scientific inquiry must legitimately 
converge, was the body of natural laws governing phe 
nomena under the rule of causation. These natural laws 
were of the nature of rules of the game of causation. 
They formulated the immutable relations in which things 
" naturally " stood to one another before causal disturb 
ance took place between them, the orderly unfolding of 
the complement of causes involved in the transition over 
this interval of transient activity, and the settled relations 
that would supervene when the disturbance had passed 
and the transition from cause to effect had been consum 
mated,— the emphasis falling on the consummation. 

The characteristic feature by which post-Darwinian 
science is contrasted with what went before is a new dis 
tribution of emphasis, whereby the process of causation, 
the interval of instability and transition between initial 
cause and definitive effect, has come to take the first place 
m the inquiry; instead of that consummation in which 
causal effect was once presumed to come to rest. This 
change of the point of view was, of course, not abrupt 
or catastrophic. But it has latterly gone so far that mod 
ern science is becoming substantially a theory of the proc- 
658 of consecutive change, which is taken as a sequence 
of cumulative change, realized to be self-continuing or 
self-propagating and to have no final term. Questions 
of a primordial beginning and a definitive outcome have 
'alien into abeyance within the modern sciences, and 

1. 

 Ifl 

38 

The Point of View 

such questions are in a fair way to lose all claim to con 
sideration at the hands of the scientists. Modern science 
is ceasing to occupy itself with the natural laws — the 
codified rules of the game of causation—and is con 
cerning itself wholly with what has taken place and what 
is taking place. 

Rightly seen from this ultra-modern point of view, 
this modern science and this point of view which it affects 
are, of course, a feature of the current cultural situation, 
— of the process of life as it runs along under our eyes. 
So also, when seen from this scientific point of view, it 
is a matter of course that any marked cultural era will 
have its own characteristic attitude and animus toward 
matters of knowledge, will bring under inquiry such 
questions of knowledge as lie within its peculiar range 
of interest, and will seek answers to these questions only 
in terms that are consonant with the habits of thought 
current at the time. That is to say, science and the sci 
entific point of view will vary characteristically in re 
sponse to those variations in the prevalent habits of 
thought which constitute the sequence of cultural develop 
ment; the current science and the current scientific point 
of view, the knowledge sought and the manner of seek 
ing it, are a product of the cultural growth. Perhaps 
it would all be better characterised as a by-product of 
the cultured growth. 

This question of a scientific point of view, of a par 
ticular attitude and animus in matters of knowledge, is a 
question of the formation of habits of thought ; and hab 
its of thought are an outcome of habits of life. A sci 
entific point of view is a consensus of habits of thought 
current in the community, and the scientist is constrained 

The Point of View 

39 

to believe that this consensus is formed in response to a 
more or less consistent discipline of habituation to which 
the community is subjected, and that the consensus can 
extend only so far and maintain its force only so long 
as the discipline of habituation exercised by the circum 
stances of life enforces it and backs it up. The scheme 
of life, within which lies the scheme of knowledge, is a 
consensus of habits in the individuals which make up the 
community. The individual subjected to habituation is 
each a single individual agent, and whatever affects him 
in any one line of activity, therefore, necessarily affects 
him in some degree in all his various activities. The cul 
tural scheme of any community is a complex of the habits 
of life and of thought prevalent among the members of 
the community. It makes up a more or less congruous 
and balanced whole, and carries within it a more or less 
consistent habitual attitude toward matters of knowl 
edge — more or less consistent according as the commu 
nity's cultural scheme is more or less congruous through 
out the body of the population ; and this in its turn is in 
the main a question of how nearly uniform or consonant 
are the circumstances of experience and tradition to 
which the several classes and members of the community 
are subject. 

So, then, the change which has come over the scientific 
point of view between pre-Darwinian and post-Darwinian 
times is to be explained, at least in great part, by the 
changing circumstances of life, and therefore of habitua 
tion, among the people of Christendom during the life- 
history of modern science. But the growth of a scientific 
point of view begins farther back than modern Christen- 
. dom, and a record of its growth would be a record of the 
growth of human culture. Modern science demands a 
genetic account of the phenomena with which it deals, 

 4o 

The Point of View 

and a genetic inquiry into the scientific point of view 
necessarily will have to make up its account with the 
earlier phases of cultural growth. A life-history of hu 
man culture is a large topic, not to be attempted here even 
in the sketchiest outline. The most that can be attempted 
is a hasty review of certain scattered questions and sa 
lient points in this life-history. 

In what manner and with what effect the idle curiosity 
of mankind first began to tame the facts thrown in its 
way, far back in the night of time, and to break them in 
under a scheme of habitual interpretation ; what may have 
been the earliest norms of systematic knowledge, such 
as would serve the curiosity of the earliest generations 
of men in a way analogous to the service rendered the 
curiosity of later generations by scientific inquiry — all 
that is, of course, a matter of long-range conjecture, more 
or less wild, which cannot be gone into here. But among 
such peoples of the lower cultures as have been con 
sistently observed, norms of knowledge and schemes for 
its systematization are always found. These norms and 
systems of knowledge are naïve and crude, perhaps, but 
there is fair ground for presuming that out of the like 
norms and systems in the remoter ages of our own ante 
cedents have grown up the systems of knowledge culti 
vated by the peoples of history and by their representa 
tives now living. 

It is not unusual to say that the primitive systems of 
knowledge are constructed on animistic lines; that ani 
mistic sequence is the rule to which the facts are broken 
in. This seems to be true, if " animism " be construed 
in a sufficiently naïve and inchoate sense. But this is not 
the whole case. In their higher generalisations, in what 
Powell calls their " sophiology," it appears that the prim 

The Point of View 41 

itive peoples are guided by animistic norms ; they make up 
their cosmological schemes, and the like, in terms of 
personal or quasi-personal activity, and the whole is 
thrown into something of a dramatic form. Through the 
early cosmological lore runs a dramatic consistency which 
imputes something in the way of initiative and propensity 
to the phenomena that are to be accounted for. But this 
dramatisation of the facts, the accounting for phenomena 
in terms of spiritual or quasi-spiritual initiative, is by no 
means the whole case of primitive men's systematic knowl 
edge of facts. Their theories are not all of the nature of 
dramatic legend, myth, or animistic life-history, although 
the broader and more picturesque generalisations may 
take that form. There always runs along by the side of 
these dramaturgic life-histories, and underlying them, an 
obscure system of generalisations in terms of matter-of- 
fact. The system of matter-of-fact generalisations, or 
theories, is obscurer than the dramatic generalisations only 
in the sense that it is left in the background as being less 
picturesque and of less vital interest, not in the sense of 
being less familiar, less adequately apprehended, or less 
secure. The peoples of the lower cultures " know " that 
the broad scheme of things is to be explained in terms of 
creation, perhaps of procreation, gestation, birth, growth, 
life and initiative; and these matters engross the atten 
tion and stimulate speculation. But they know equally 
well the matter of fact that water will run down hill, 
that two stones are heavier than one of them, that an 
edge-tool will cut softer substances, that two things may 
be tied together with a string, that a pointed stick may 
be stuck in the ground, and the like. There is no range 
of knowledge that is held more securely by any people 
than such matters of fact; and these are generalisations 
from experience ; they are theoretical knowledge, and they 

. 

 42 The Point of View 

are a matter of course. They underlie the dramatical 
generalisations of the broad scheme of things, and are 
so employed in the speculations of the myth-makers and 
the learned. 

It may be that the exceptional efficiency of a given 
edge-tool, e.g., will be accounted for on animistic or 
quasi-personal grounds,— grounds of magical efficacy; 
but it is the exceptional behavior of such a tool that calls 
for explanation on the higher ground of animistic po 
tency, not its work-day performance of common work. 
So also if an edge-tool should fail to do what is expected 
of it as a matter of course, its failure may require an 
explanation in other terms than matter-of-fact. But all 
that only serves to bring into evidence the fact that a 
scheme of generalisations in terms of matter-of-fact is 
securely held and is made use of as a sufficient and ulti 
mate explanation of the more familiar phenomena of ex 
perience. These commonplace matter-of-fact generalisa 
tions are not questioned and do not clash with the higher 
scheme of things. 

All this may seem like taking pains about trivialities. 
But the data with which any scientific inquiry has to do 
are trivialities in some other bearing than that one in 
which they are of account. 

In all succeeding phases of culture, developmentally 
subsequent to the primitive phase supposed above, there 
is found a similar or analogous division of knowledge 
between a higher range of theoretical explanations of 
phenomena, an ornate scheme of things, on the one hand, 
and such an obscure range of matter-of-fact generalisa 
tions as is here spoken of, on the other hand. And the 
evolution of the scientific point of view is a matter of the 
shifting fortunes which have in the course of cultural 
growth overtaken the one and the other of these two 

The Point of View 

43 

divergent methods of apprehending and systematising the 
facts of experience. 

The historians of human culture have, no doubt justly, 
commonly dealt with the mutations that have occurred on 
the higher levels of intellectual enterprise, in the more 
ambitious, more picturesque, and less secure of these two 
contrasted ranges of theoretical knowledge; while the 
lower range of generalisations, which has to do with 
work-day experience, has in great part been passed over 
with scant ceremony as lying outside the current of ideas, 
and as belonging rather among the things which engage 
the attention than among the modes, expedients and cre 
ations of this attention itself. There is good reason for 
this relative neglect of the work-day matters of fact. It 
is on the higher levels of speculative generalisation that 
the impressive mutations in the development of thought 
have taken place, and that the shifting of points of view 
and the clashing of convictions have drawn men into con 
troversy and analysis of their ideas and have given rise 
to schools of thought. The matter-of-fact generalisations 
have met with relatively few adventures and have afforded 
little scope for intellectual initiative and profoundly pic 
turesque speculation. On the higher levels speculation is 
freer, the creative spirit has some scope, because its ex 
cursions are not so immediately and harshly checked by 
material facts. 

In these speculative ranges of knowledge it is possible 
to form and to maintain habits of thought which shall be 
consistent with themselves and with the habit of mind and 
run of tradition prevalent in the community at the time, 
though not thereby consistent with the material actuali 
ties of life in the community. Yet this range of specu 
lative generalisation, which makes up the higher learning 
of the barbarian culture, is also controlled, checked, and 

 lif 

44 

The Point of View 

guided by the community's habits of life; it, too, is an 
integral part of the scheme of life and is an outcome of 
the habituation enforced by experience. But it does not 
rest immediately on men's dealings with the refractory 
phenomena-of brute creation, nor is it guided, undisguised 
and directly, by the habitual material (industrial) occu 
pations. The fabric of institutions intervenes between 
the material exigencies of life and the speculative scheme 
of things. 

The higher theoretical knowledge, that body of tenets 
which rises to the dignity of a philosophical or scientific 
system, in the early culture, is a complex of habits of 
thought which reflect the habits of life embodied in the 
institutional structure of society ; while the lower, matter- 
of-fact generalisations of work-day efficiency — the trivial 
matters of course—reflect the workmanlike habits of 
life enforced by the commonplace material exigencies un 
der which men live. The distinction is analogous, and 
indeed, closely related, to the distinction between " in 
tangible " and " tangible " assets. And the institutions 
are more flexible, they involve or admit a larger margin 
of error, or of tolerance, than the material exigencies. 
The latter are systematised into what economists have 
called " the state of the idustrial arts," which enforce 
a somewhat rigorous standardisation of whatever knowl 
edge falls within their scope; whereas the institutional 
scheme is a matter of law and custom, politics and reli 
gion, taste and morals, on all of which matters men have 
opinions and convictions, and on which all men " have a 
right to their own opinions." The scheme of institutions 
is also not necessarily uniform throughout the several 
classes of society; and the same institution (as, e.g., 
slavery, ownership, or royalty) does not impinge with the 
same effect on all parties touched by it. The discipline of 

The Point of View 

45 

any institution of servitude, e.g., is not the same for the 
master as for the serf, etc. If there is a considerable 
institutional discrepancy between an upper and a lower 
class in the community, leading to divergent lines of 
habitual interest or discipline; if by force of the cultural 
scheme the institutions of society are chiefly in the keep 
ing of one class, whose attention is then largely engrossed 
with the maintenance of the scheme of law and order; 
while the workmanlike activities are chiefly in the hands 
of another class, in whose apprehension the maintenance 
of law and order is at the best a wearisome tribulation, 
there is likely to be a similarly considerable divergence 
or discrepancy between the speculative knowledge, culti 
vated primarily by the upper class, and the work-day 
knowledge which is primarily in the keeping of the lower 
class. Such, in particular, will be the case if the com 
munity is organised on a coercive plan, with well-marked 
ruling and subject classes. The important and interest 
ing institutions in such a case, those institutions which 
fill a large angle in men's vision and carry a great force 
of authenticity, are the institutions of coercive control, 
differential authority and subjection, personal dignity and 
consequence; and the speculative generalisations, the in 
stitutions of the realm of knowledge, are created in 
the image of these social institutions of status and per 
sonal force, and fall into a scheme drawn after the plan 
of the code of honor. The work-day generalisations, 
which emerge from the state of the industrial arts, con- 
comitantly fall into a deeper obscurity, answering to the 
depth of indignity to which workmanlike efficiency sinks 
under such a cultural scheme; and they can touch and 
check the current speculative knowledge only remotely 
and incidentally. Under such a bifurcate scheme of cul 
ture, with its concomitant two-cleft systématisation of 

 46 

The Point of View 

knowledge, " reality " is likely to be widely dissociated 
from fact — that is to say, the realities and verities which 
are accepted as authentic and convincing on the plane of 
speculative generalisation ;• while science has no show — 
that is to say, science in that modern sense of the term 
which implies a close contact, if not a coincidence, of 
reality with fact. 

Whereas, if the institutional fabric, the community's 
scheme of life, changes in such a manner as to throw the 
work-day experience into the foreground of attention and 
to center the habitual interest of the people on the imme 
diate material relations of men to the brute actualities, 
then the interval between the speculative realm of knowl 
edge, on the one hand, and the work-day generalisations 
of fact, on the other hand, is likely to lessen, and the two 
ranges of knowledge are likely to converge more or less 
effectually upon a common ground. When the growth of 
culture falls into such lines, these two methods and norms 
of theoretical formulation may presently come to further 
and fortify one another, and something in the way of 
science has at least a chance to arise. 

On this view there is a degree of interdependence be 
tween the cultural situation and the state of theoretical 
inquiry. To illustrate this interdependence, or the con 
comitance between the cultural scheme and the character 
of theoretical speculation, it may be in place to call to 
mind certain concomitant variations of a general char 
acter which occur in the lower cultures between the 
scheme of life and the scheme of knowledge. In this 
tentative and fragmentary presentation of evidence there 
is nothing novel to be brought forward ; still less is there 
anything to be offered which carries the weight of au 
thority. 

The Point of View 

47 

On the lower levels of culture, even more decidedly than 
on the higher, the speculative systématisation of knowl 
edge is prone to take the form of theology (mythology) 
and cosmology. This theological and cosmological lore 
serves the savage and barbaric peoples as a theoretical 
account of the scheme of things, and its characteristic 
traits vary in response to the variations of the institu 
tional scheme under which the community lives. In a 
prevailingly peaceable agricultural community, such, e.g., 
as the more peaceable Pueblo Indians or the more settled 
Indians of the Middle West, there is little coercive au 
thority, few and slight class distinctions involving su 
periority and inferiority; property rights are few, slight 
and unstable ;" relationship is likely to be counted in the 
female line. In such a culture the cosmological lore is 
likely to offer explanations of the scheme of things in 
terms of generation or germination and growth. Crea 
tion by fiat is not obtrusively or characteristically pres 
ent. The laws of nature bear the character of an habitual 
behavior of things, rather than that of an authoritative 
code of ordinances imposed by an overruling providence. 
The theology is likely to be polytheistic in an extreme de 
gree and in an extremely loose sense of the term, embody 
ing relatively little of the suzerainty of God. The rela 
tion of the deities to mankind is likely to be that of con 
sanguinity, and as if to emphasise the peaceable, non- 
coercive character of the divine order of things, the deities 
are, in the main, very apt to be females. The matters of 
interest dealt with in the cosmological theories are chiefly 
matters of the livelihood of the people, the growth and 
care of the crops, and the promotion of industrial ways 
and means. 

With these phenomena of the peaceable culture may be 
contrasted the order of things found among a predatory 

V- 

' n 

" Ij h 

• I 
' I 

 .v- - 

48 

The Point of View 

pastoral people — and pastoral peoples tend strongly to 
take on a predatory cultural scheme. Such a people will 
adopt male deities, in the main, and will impute to them a 
coercive, imperious, arbitrary animus and a degree of 
princely dignity. They will also tend strongly to a mono 
theistic, patriarchal scheme of divine government; to ex 
plain things in terms of creative fiat; and to a belief in 
the control of the natural universe by rules imposed by 
divine ordinance. The matters of prime consequence in 
this theology are matters of the servile relation of man 
to God, rather than the details of the quest of a livelihood. 
The emphasis falls on the glory of God rather than on 
the good of.man. The Hebrew scriptures, particularly 
the Jahvistic elements, show such a scheme of pastoral 
cultural and predatory theoretical generalisations. 

The learning cultivated on the lower levels of culture 
might be gone into at some length if space and time per 
mitted, but even what has been said may serve to show, 
in the most general way, what are the characteristic marks 
of this savage and barbarian lore. A similarly summary 
characterisation of a cultural situation nearer home will 
bear more directly on the immediate topic of inquiry. 
The learning of mediaeval Christendom shows such a con 
comitance between the scheme of knowledge and the 
scheme of institutions, somewhat analogous to the bar 
baric Hebrew situation. The mediaeval scheme of in 
stitutions was of a coercive, authoritative character, essen 
tially a scheme of graded mastery and graded servitude, 
in which a code of honor and a bill of differential dignity 
held the most important place. The theology of that 
time was of a like character. It was a monotheistic, or 
rather a monarchical system, and of a despotic com 
plexion. The cosmological scheme was drawn in terms 
of fiat; and the natural philosophy was occupied, in the 

The Point of View 

49 

main and in its most solemn endeavors, with the corol 
laries to be subsumed under the divine fiat. When the 
philosophical speculation dealt with facts it aimed to 
interpret them into systematic consistency with the glory 
of God and the divine purpose. The " realities " of the 
scholastic lore were spiritual, quasi-personal, intangible, 
and fell into a scale of differential dignity and prepotency. 
Matter-of-fact knowledge and work-day information were 
not then fit topics of dignified inquiry. The interval, or 
discrepancy, between reality and actuality was fairly wide. 
Throughout that era, of course, work-day knowledge also 
continually increased in volume and consistency; tech 
nological proficiency was gaining; the effective control 
of natural processes was growing larger and more secure ; 
showing that matter-of-fact theories drawn from expe 
rience were being extended and were made increasing 
use of. But all this went on in the field of industry ; the 
matter-of-fact theories were accepted as substantial and 
ultimate only for the purposes of industry, only as techno 
logical maxims, and were beneath the dignity of science. 

With the transition to modern times industry comes into 
the foreground in the west-European scheme of life, and 
the institutions of European civilisation fall into a more 
intimate relation with the exigencies of industry and 
technology. The technological range of habituation pro 
gressively counts for more in the cultural complex, and 
the discrepancy between the technological discipline and 
the discipline of law and order under the institutions then 
m force grows progressively less. The institutions of law 
and order take on a more impersonal, less coercive char 
acter. Differential dignity and invidious discriminations 
between classes gradually lose force. 

The industry which so comes into the foreground and 
so affects the scheme of institutions is peculiar in that its 

 5o The Point of View 

most obvious and characteristic trait is the workmanlike 
initiative and efficiency of the individual handicraftsman 
and the individual enterprise of the petty trader. The 
technology which embodies the theoretical substance of 
this industry is a technology of workmanship, in which 
the salient factors are personal skill, force and dili 
gence. Such a technology, running as it does in great 
part on personal initiative, capacity, and application, 
approaches nearer to the commonplace features of the 
institutional fabric than many another technological sys 
tem might; and its disciplinary effects in some consider 
able measure blend with those of the institutional dis 
cipline. The two lines of habituation, in the great era of 
handicraft and petty trade, even came to coalesce and 
fortify one another; as in the organisation of the craft 
gilds and of the industrial towns. Industrial life and 
usage came to intrude creatively into the cultural scheme 
on the one hand and into the scheme of authentic knowl 
edge on the other hand. So the body of matter-of-fact 
knowledge, in modern times, is more and more drawn 
into the compass of theoretical inquiry; and theoretical 
inquiry takes on more and more of the animus and 
method of technological generalisation. But the matter- 
of-fact elements so drawn in are construed in terms of 
workmanlike initiative and efficiency, as required by the 
technological preconceptions of the era of handicraft. 

In this way, it may be conceived, modern science comes 
into the field under the cloak of technology and gradually 
encroaches on the domain of authentic theory previously 
held by other, higher, nobler, more profound, more spir 
itual, more intangible conceptions and systems of knowl 
edge. In this early phase of modern science its central 
norm and universal solvent is the concept of workman 
like initiative and efficiency. This is the new organon. 

The Point of View 51 

Whatever is to be explained must be reduced to this 
notation and explained in these terms; otherwise the in 
quiry does not come to rest. But when the requirements 
of this notation in terms of workmanship have been duly 
fulfilled the inquiry does come to rest. 

By the early decades of the nineteenth century, with a 
passable degree of thoroughness, other grounds of validity 
and other interpretations of phenomena, other vouchers 
for truth and reality, had been eliminated from the quest 
of authentic knowledge and from the terms in which 
theoretical results were conceived or expressed. The 
new organon had made good its pretensions. In this 
movement to establish the hegemony of workmanlike effi 
ciency— under the style and title of the "law of causa 
tion," or of " efficient cause "— in the realm of knowl 
edge, the English-speaking communities took the lead after 
the earlier scientific onset of the south-European com 
munities had gone up in the smoke of war, politics and 
religion during the great era of state-making. The 
ground of this British lead in science is apparently the 
same as that of the British lead in technology which came 
to a head in the Industrial Revolution; and these two 
associated episodes of European civilisation are appar 
ently both traceable to the relatively peaceable run of 
life, and so of habituation, in the English-speaking com 
munities, as contrasted with the communities of the con 
tinent.3 

Along with the habits of thought peculiar to the tech- 

3 A broad exception may perhaps be taken at this point, to the 
effect that this sketch of the growth of the scientific animus 
overlooks the science of the Ancients. The scientific achieve 
ments of classical antiquity are a less obscure topic to-day than 
ever before during modern times, and the more there is known 
°f them the larger is the credit given them. But it is to be noted 
that, (a) the relatively large and free growth of scientific in- 

 52 The Point of View 

nology of handicraft, modern science also took over and 
assimilated much of the institutional preconceptions of 
the era of handicraft and petty trade. The " natural 
laws," with the formulation of which this early modern 
science is occupied, are the rules governing natural " uni 
formities of sequence "; and they punctiliously formulate 
the due procedure of any given cause creatively working 
out the achievement of a given effect, very much as the 
craft rules sagaciously specified the due routine for turn 
ing out a staple article of merchantable goods. But these 
" natural laws " of science are also felt to have some 
thing of that integrity and prescriptive moral force that 
belongs to the principles of the system of " natural 
rights " which the era of handicraft has contributed to 
the institutional scheme of later times. The natural laws 
. were not only held to be true to fact, but they were also 

quiry in classical antiquity is to be found in the relatively peace 
able and industrial Greek communities (with an industrial culture 
of unknown pre-Hellenic antiquity), and (b) that the sciences 
best and chiefly cultivated were those which rest on a mathe 
matical basis, if not mathematical sciences in the simpler sense 
of the term. Now, mathematics occupies a singular place among 
the sciences, in that it is, in its pure form, a logical discipline 
simply; its subject matter being the logic of quantity, and its 
researches being of the nature of an analysis of the intellect's 
modes of dealing with matters of quantity. Its generalisations 
are generalisations of logical procedure, which are tested and 
verified by immediate self-observation. Such a science is in a 
peculiar degree, but only in a peculiar degree, independent of the 
detail-discipline of daily life, whether technological or institu 
tional; and, given the propensity — the intellectual enterprise, 
or "idle curiosity"—to go into speculation in such a field, the 
results can scarcely vary in a manner to make the variants incon 
sistent among themselves; nor need the state of institutions 
or the state of the industrial arts seriously color or distort such 
analytical work in such a field. Mathematics is peculiarly inde 
pendent of cultural circumstances, since it deals analytically with 
mankind's native gifts of logic, not with the ephemeral traits ac 
quired by habituation. 

The Point of View 

53 

felt to be right and good. They were looked upon as 
intrinsically meritorious and beneficent, and were held 
to carry a sanction of their own. This habit of uncrit 
ically imputing merit and equity to the " natural laws " 
of science continued in force through much of the nine 
teenth century ; very much as the habitual acceptance of 
the principles of " natural rights " has held on by force 
of tradition long after the exigencies of experience -out 
of which these " rights " sprang ceased to shape men's 
habits of life.4 This traditional attitude of submissive 
approval toward the " natural laws " of science has not 
yet been wholly lost, even among the scientists of the 
passing generation, many of whom have uncritically in 
vested these " laws " with a prescriptive rectitude and 
excellence ; but so far, at least, has this animus progressed 
toward disuse that it is now chiefly a matter for expatia- 
tion in the pulpit, the accredited vent for the exudation 
of effete matter from the cultural organism. 

The traditions of the handicraft technology lasted over 
as a commonplace habit of thought in science long after 
that technology had ceased to be the decisive element in 
the industrial situation; while a new technology, with its 
inculcation of new habits of thought, new preconcep 
tions, gradually made its way among the remnants of the 
old, altering them, blending with them, and little by little 

4 " Natural laws," which are held to be not only correct 
formulations of the sequence of cause and effect in a given 
situation but also meritoriously right and equitable rules gov 
erning the run of events, necessarily impute to the facts and 
events in question a tendency to a good and equitable, if not 
beneficent, consummation; since it is necessarily the consumma 
tion, the effect considered as an accomplished outcome, that is to 
be adjudged good and equitable, if anything. Hence these 

natural laws," as traditionally conceived, are laws governing 
the accomplishment of an end — that is to say, laws as to how a 
sequence of cause and effect conies to rest in a final term, 

V 

t 

11 

 54 

The Point of View 

The Point of View 

55 

superseding them. The new technological departure, 
which made its first great epoch in the so-called industrial 
revolution, in the technological ascendancy of the ma 
chine-process, brought a new and characteristic discipline 
into the cultural situation. The beginnings of the ma 
chine-era lie far back, no doubt; but it is only of late, 
during the past century at the most, that the machine- 
process can be said to have come into the dominant place 
in the technological scheme ; and it is only later still that 
its discipline has, even in great part, remodeled the cur 
rent preconceptions as to the substantial nature of what 
goes on in the current of phenomena whose changes ex 
cite the scientific curiosity. It is only relatively very 
lately, whether in technological work or in scientific in 
quiry, that men have fallen into the habit of thinking 
in terms of process rather than in terms of the workman 
like efficiency of a given cause working to a given effect. 
These machine-made preconceptions of modern science, 
being habits of thought induced by the machine tech 
nology in industry and in daily life, have of course first 
and most consistently affected the character of those sci 
ences whose subject matter lies nearest to the technolog 
ical field of the machine-process ; and in these material 
sciences the shifting to the machine-made point of view 
has been relatively very consistent, giving a highly im 
personal interpretation of phenomena in terms of con 
secutive change, and leaving little of the ancient precon 
ceptions of differential reality or creative causation. In 
such a science as physics or chemistry, e.g., we are threat 
ened with the disappearance or dissipation of all stable 
and efficient substances ; their place being supplied, or 
their phenomena being theoretically explained, by appeal 
to unremitting processes of inconceivably high-pitched 
consecutive change. 

In the sciences which lie farther afield from the tech 
nological domain, and which, therefore, in point of habilit 
ation, are remoter from the center of disturbance, the 
effect of the machine discipline may even yet be scarcely 
appreciable. In such lore as ethics, e.g., or political 
theory, or even economics, much of the norms of the 
régime of handicraft still stands over; and very much 
of the institutional preconceptions of natural rights, asso 
ciated with the régime of handicraft in point of genesis, 
growth and content, is not only still intact in this field of 
inquiry, but it can scarcely even be claimed that there is 
ground for serious apprehension of its prospective obso 
lescence. Indeed, something even more ancient than 
handicraft and natural rights may be found surviving 
in good vigor in this " moral " field of inquiry, where 
tests of authenticity and reality are still sought and found 
by those who cultivate these lines of inquiry that lie be 
yond the immediate sweep of the machine's discipline. 
Even the evolutionary process of cumulative causation 
as conceived by the adepts of these sciences is infused 
with a preternatural, beneficent trend ; so that " evolu 
tion " is conceived to mean amelioration or " improve 
ment." The metaphysics of the machine technology has 
not yet wholly, perhaps not mainly, superseded the meta 
physics of the code of honor in those lines of inquiry 
that have to do with human initiative and aspiration. 
Whether such a shifting of the point of view in these 
sciences shall ever be effected is still an open question. 
Here there still are spiritual verities which transcend the 
sweep of consecutive change. That is to say, there are 
still current habits of thought which definitively predis 
pose their bearers to bring their inquiries to rest on 
grounds of differential reality and invidious merit. 

\ i 

 Economics and Evolution 

57 

WHY IS ECONOMICS NOT AN EVOLUTION 
ARY SCIENCE?1 

M. G. DE LAPOUGE recently said, " Anthropology is des 
tined to revolutionise the political and the social sciences 
as radically as bacteriology has revolutionised the science 
of medicine."2 In so far as he speaks of economics, the 
eminent anthropologist is not alone in his conviction that 
the science stands in need of rehabilitation. His words 
convey a rebuke and an admonition, and in both respects 
he speaks the sense of many scientists in his own and 
related lines of inquiry. It may be taken as the consensus 
of those men who are doing the serious work of modern 
anthropology, ethnology, and psychology, as well as of 
those in the biological sciences proper, that economics is 
•helplessly behind the times, and unable to handle its sub 
ject-matter in a way to entitle it to standing as a modern 
science. The other political and social sciences come in 
for their share of this obloquy, and perhaps on equally 
cogent grounds. Nor are the economists themselves 
buoyantly indifferent to the rebuke. Probably no econo 
mist to-day has either the hardihood or the inclination to 
say that the science has now reached a definitive formula 
tion, either in the detail of results or as regards the fun 
damental features of theory. The nearest recent ap 
proach to such a position on the part of an economist of 

1 Reprinted by permission from The Quarterly Journal of 
Economics, vol. xii, July, 1898. 

2 " The Fundamental Laws of Anthropo-sociology," Journal 
of Political Economy, December, 1897, P- 54- The same paper, 
in substance, appears in the Rivista Italiana di Sociologia for 
November, 1897. 

56 

accredited standing is perhaps to be found in Professor 
Marshall's Cambridge address of a year and a half ago.3 
But these utterances are so far from the jaunty confidence 
shown by the classical economists of half a century ago 
that what most forcibly strikes the reader of Professor 
Marshall's address is the exceeding modesty and the un 
called-for humility of the spokesman for the " old genera 
tion." With the economists who are most attentively 
looked to for guidance, uncertainty as to the definitive 
value of what has been and is being done, and as to what 
we may, with effect, take to next, is so common as to 
suggest that indecision is a meritorious work. Even the 
Historical School, who made their innovation with so 
much home-grown applause some time back, have been 
unable to settle down contentedly to the pace which they 
set themselves. 

The men of the sciences that are proud to own them 
selves " modern " find fault with the economists for being 
still content to occupy themselves with repairing a struc 
ture and doctrines and maxims resting on natural rights, 
utilitarianism, and administrative expediency. This as 
persion is not altogether merited, but is near enough to the 
mark to carry a sting. These modern sciences are evolu 
tionary sciences, and their adepts contemplate that charac 
teristic of their work with some complacency. Economics 
is not an evolutionary science — by the confession of its 
spokesmen ; and the economists turn their eyes with some 
thing of envy and some sense of baffled emulation to these 
rivals that make broad their phylacteries with the legend, 
" Up to date." 

Precisely wherein the social and political sciences, in 
cluding economics, fall short of being evolutionary sci- 

8"The Old Generation of Economists and the New," Quar 
terly Journal of Economics, January, 1897, p. 133. 

'il:' 

 58 Economics and Evolution 

ences, is not so plain. At least, it has not been satisfac 
torily pointed out by their critics. Their successful rivals 
in this matter — the sciences that deal with human nature 
among the rest — claim as their substantial distinction 
that they are realistic: they deal with facts. But eco 
nomics, too, is realistic in this sense : it deals with facts, 
often in the most painstaking way, and latterly with an 
increasingly strenuous insistence on the sole efficacy of 
data. But this " realism " does not make economics an 
evolutionary science. The insistence on data could 
scarcely be carried to a higher pitch than it was carried 
by the first generation of the Historical School; and yet 
no economics is farther from being an evolutionary sci 
ence than the received economics of the Historical School. 
The whole broad range of erudition and research that 
engaged the energies of that school commonly falls short 
of being science, in that, when consistent, they 'have con 
tented themselves with an enumeration of data and a 
narrative account of industrial development, and have not 
presumed to offer a theory of anything or to elaborate 
their results into a consistent body of knowledge. 

Any evolutionary science, on the other hand, is a close- 
knit body of theory. It is a theory of a process, of an 
unfolding sequence. But here, again, economics seems to 
meet the test in a fair measure, without satisfying its 
critics that its credentials are good. It must be admitted, 
e.g., that J. S. Mill's doctrines of production, distribution, 
and exchange, are a theory of certain economic processes, 
and that he deals in a consistent and effective fashion with 
the sequences of fact that make up his subject-matter. 
So, also, Cairnes's discussion of normal value, of the rate 
of wages, and of international trade, are excellent in 
stances of a theoretical handling of economic processes 
of sequence and the orderly unfolding development of 

Economics and Evolution 

59 

fact. But an attempt to cite Mill and Cairnes as expo 
nents of an evolutionary economics will produce no better 
effect than perplexity, and not a great deal of that. Very 
much of monetary theory might be cited to the same pur 
pose and with the like effect. Something similar is true 
even of late writers who have avowed some penchant for 
the evolutionary point of view ; as, e.g., Professor Had- 
ley,— to cite a work of unquestioned merit and unusual 
reach. Measurably, he keeps the word of promise to the 
ear; but any one who may cite his Economics as having 
brought political economy into line as an evolutionary sci 
ence will convince neither himself nor his interlocutor. 
Something to the like effect may fairly be said of the pub 
lished work of that later English strain of economists rep 
resented by Professors Cunningham and Ashley, and Mr. 
Cannan, to name but a few of the more eminent figures 
in the group. 

Of the achievements of the classical economists, recent 
and living, the science may justly be proud; but they fall 
short of the evolutionist's standard of adequacy, not in 
failing to offer a theory of a process or of a developmental 
relation, but through conceiving their theory in terms 
alien to the evolutionist's habits of thought. The differ 
ence between the evolutionary and the pre-evolutionary 
sciences lies not in the insistence on facts. There was a 
great and fruitful activity in the natural sciences in col 
lecting and collating facts before these sciences took on 
the character which marks them as evolutionary. Nor 
does the difference lie in the absence of efforts to formu 
late and explain schemes of process, sequence, growth, 
and development in the pre-evolutionary days. Efforts 
of this kind abounded, in number and diversity ; and many 
schemes of development, of great subtlety and beauty, 
gained a vogue both as theories of organic and inorganic 

 6o 

Economics and Evolution 

development and as schemes of the life history of nations 
and societies. It will not even hold true that our elders 
overlooked the presence of cause and effect in formulating 
their theories and reducing their data to a body of knowl 
edge. But the terms which were accepted as the defini 
tive terms of knowledge were in some degree different in 
the early days from what they are now. The terms of 
thought in which the investigators of some two or three 
generations back definitively formulated their knowledge 
of facts, in their last analyses, were different in kind from 
the terms in which the modern evolutionist is content to 
formulate his results. The analysis does not run back to 
the same ground, or appeal to the same standard of final 
ity or adequacy, in the one case as in the other. 

The difference is a difference of spiritual attitude or 
point of view in the two contrasted generations of scien 
tists. To put the matter in other words, it is a difference 
in the basis of valuation of the facts for the scientific pur 
pose, or in the interest from which the facts are appre 
ciated. With the earlier as with the later generation the 
basis of valuation of the facts handled is, in matters of 
detail, the causal relation which is apprehended to subsist 
between them. This is true to the greatest extent for the 
natural sciences. But in their handling of the more com 
prehensive schemes of sequence and relation — in their 
definitive formulation of the results — the two genera 
tions differ. The modern scientist is unwilling to depart 
from the test of causal relation or quantitative sequence. 
When he asks the question, Why? he insists on an answer 
in terms of cause and effect. He wants to reduce his 
solution of all problems to terms of the conservation of 
energy or the persistence of quantity. This is his last 
recourse. And this last recourse has in our time been 
made available for the handling of schemes of develop- 

Economics and Evolution 

61 

ment and theories of a comprehensive process by the no 
tion of a cumulative causation. The great deserts of the 
evolutionist leaders — if they have great deserts as lead 
ers— lie, on the one hand, in their refusal to go back of 
the colorless sequence of phenomena and seek higher 
ground for their ultimate syntheses, and, on the other 
hand, in their having shown how this colorless impersonal 
sequence of cause and effect can be made use of for 
theory proper, by virtue of its cumulative character. 

For the earlier natural scientists, as for the classical 
economists, this ground of cause and effect is not defini 
tive. Their sense of truth and substantiality is not satis 
fied with a formulation of mechanical sequence. The 
ultimate term in their systématisation of knowledge is a 
" natural law." This natural law is felt to exercise some 
sort of a coercive surveillance over the sequence of 
events, and to give a spiritual stability and consistence to 
the causal relation at any given juncture. To meet the 
high classical requirement, a sequence — and a develop 
mental process especially — must be apprehended in terms 
of a consistent propensity tending to some spiritually 
legitimate end. When facts and events have been reduced 
to these terms of fundamental truth and have been made 
to square with the requirements of definitive normality, 
the investigator rests his case. Any causal sequence 
which is apprehended to traverse the imputed propensity 
in events is a " disturbing factor." Logical congruity 
with the apprehended propensity is, in this view, adequate 
ground of procedure in building up a scheme of knowl- 
edge or of development. The objective point of the 
efforts of the scientists working under the guidance of 
this classical tradition, is to formulate knowledge in terms 
of absolute truth; and this absolute truth is a spiritual 
fact. It means a coincidence of facts with the deliver- 

ii 

 62 

Economics and Evolution 

Economics and Evolution 

ances of an enlightened and deliberate corntnon sense. 
The development and the attenuation of this precon 
ception of normality or of a propensity in events might be 
traced in detail from primitive animism down through the 
elaborate discipline of faith and metaphysics, overruling 
Providence, order of nature, natural rights, natural law, 
underlying principles. But all that may be necessary here 
is to point out that, by descent and by psychological con 
tent, this constraining normality is of a spiritual kind. 
It is for the scientific purpose an imputation of spiritual 
coherence to the facts dealt with. The question of inter 
est is how this preconception of normality has fared at 
the hands of modern science, and how it has come to be 
superseded in' the intellectual primacy by the latter-day 
preconception of a non-spiritual sequence. This ques 
tion is of interest because its answer may throw light on 
the question as to what chance there is for the indefinite 
persistence of this archaic habit of thought in the methods 
of economic science. 

Under primitive conditions, men stand in immediate 
personal contact with the material facts of the environ 
ment; and the force and discretion of the individual in 
shaping the facts of the environment count obviously, and 
to all appearance solely, in working out the conditions of 
life. There is little of impersonal or mechanical se 
quence visible to primitive men in their every-day life; 
and what there is of this kind in the processes of brute 
nature about them is in large part inexplicable and passes 
for inscrutable. It is accepted as malignant or beneficent, 
and is construed in the terms of personality that are 
familiar to all men at first hand,— the terms known to 
all men by first-hand knowledge of their own acts. The 
inscrutable movements of the seasons and of the natural 

forces are apprehended as actions guided by discretion, 
will power, or propensity looking to an end, much as 
human actions are. The processes of inanimate nature 
are agencies whose habits of life are to be learned, and 
who are to be coerced, outwitted, circumvented, and 
turned to account, much as the beasts are. At the same 
time the community is small, and the human contact of 
the individual is not wide. Neither the industrial life nor 
the non-industrial social life forces upon men's attention 
the ruthless impersonal sweep of events that no man can 
withstand or deflect, such as becomes visible in the more 
complex and comprehensive life process of the larger 
community of a later day. There is nothing decisive to 
hinder men's knowledge of facts and events being formu 
lated in terms of personality — in terms of habit and pro 
pensity and will power. 

As time goes on and as the situation departs from this 
archaic character,— where it does depart from it,— the 
circumstances which condition men's systématisation of 
facts change in such a way as to throw the impersonal 
character of the sequence of events more and more into 
the foreground. The penalties for failure to apprehend 
facts in dispassionate terms fall surer and swifter. The 
sweep of events is forced home more consistently on men's 
minds. The guiding hand of a spiritual agency or a pro 
pensity in events becomes less readily traceable as men's 
knowledge of things grows ampler and more searching. 
In modern times, and particularly in the industrial coun 
tries, this coercive guidance of men's habits of thought 
in the realistic direction has been especially pronounced ; 
and the effect shows itself in a somewhat reluctant but 
cumulative departure from the archaic point of view. 
The departure is most visible and has gone farthest in 
those homely branches of knowledge that have to do 

H. 

 64 

Economics and Evolution 

Economics and Evolution 

immediately with modern mechanical processes, such as 
engineering designs and technological contrivances gen 
erally. Of the sciences, those have wandered farthest on 
this way (of integration or-disintegration, according as 
one may choose to view it) that have to do with mechani 
cal sequence and process ; and those have best and longest 
retained the archaic point of view intact which — like the 
moral, social, or spiritual sciences — have to do with 
process and sequence that is less tangible, less traceable by 
the use of the senses, and that therefore less immediately 
forces upon the attention the phenomenon of sequence as 
contrasted with that of propensity. 

There is no abrupt transition from the pre-evolutionary 
to the post-evolutionary standpoint. Even in those nat 
ural sciences which deal with the processes of life and the 
evolutionary sequence of events the concept of dispassion 
ate cumulative causation has often and effectively been 
helped out by the notion that there is in all this some sort 
of a meliorative trend that exercises a constraining guid 
ance over the course of causes and effects. The faith in 
this meliorative trend as a concept useful to the science 
has gradually weakened, and it has repeatedly been dis 
avowed; but it can scarcely be said to have yet disap 
peared from the field. 

The process of change in the point of view, or in the 
terms of definitive formulation of knowledge, is a gradual 
one ; and all the sciences have shared, though in an un 
equal degree, in the change that is going forward. Eco 
nomics is not an exception to the rule, but it still shows 
too many reminiscences of the " natural " and the " nor 
mal," of " verities " and " tendencies," of " controlling 
principles " and " disturbing causes " to be classed as an 
evolutionary science. This history of the science shows 
a long and devious course of disintegrating animism,— 

from the days of the scholastic writers, who discussed 
usury from the point of view of its relation to the divine 
suzerainty, to the Physiocrats, who rested their case on 
an " ordre naturel " and a " loi naturelle " that decides 
what is substantially true and, in a general way, guides 
the course of events by the constraint of logical congru 
ence. There has been something of a change from Adam 
Smith, whose recourse in perplexity was to the guidance 
of " an unseen hand," to Mill and Cairnes, who formu 
lated the laws of " natural " wages and " normal " value, 
and the former of whom was so well content with his 
work as to say, " 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." 4 But 
the difference between the earlier and the later point of 
view is a difference of degree rather than of kind. 

The standpoint of the classical economists, in their 
higher or definitive syntheses and generalisations, may not 
inaptly be called the standpoint of ceremonial adequacy. 
The ultimate laws and principles which they formulated 
were laws of the normal or the natural, according to a 
preconception regarding the ends to which, in the nature 
of things, all things tend. In effect, this preconception 
imputes to things a tendency to work out what the in 
structed common sense of the time accepts as the ade 
quate or worthy end of human effort. It is a projection 
of the accepted ideal of conduct. This ideal of conduct 
is made to serve as a canon of truth, to the extent that the 
investigator contents himself with an appeal to its legitima 
tion for premises that run back of the facts with which he 
is immediately dealing, for the " controlling principles " 
that are conceived intangibly to underlie the process dis 
cussed, and for the " tendencies " that run beyond the 

4 Political Economy, Book III, chap. i. 

', it. 

 \ , 

66 

Economics and Evolution 

situation as it lies before him. As instances of the use 
of this ceremonial canon of knowledge may be cited the 
" conjectural history " that plays so large a part in the 
classical treatment of economic institutions, such as the 
normalized accounts of the beginnings of barter in the 
transactions of the putative hunter, fisherman, and boat- 
builder, or the man with the plane and the two planks, 
or the two men with the basket of apples and the basket 
of nuts.5 Of a similar import is the characterisation of 
money as " the great wheel of circulation " 6 or as " the 
medium of exchange." Money is here discussed in terms 
of the end which, " in the normal case," it should work 
out according to the given writer's ideal of economic life, 
rather than in terms of causal relation. 

With later writers especially, this terminology is no 
doubt to be commonly taken as a convenient use of meta 
phor, in which the concept of normality and propensity to 
an end has reached an extreme attenuation. But it is 
precisely in this use of figurative terms for the formula 
tion of theory that the classical normality still lives its 
attenuated life in modern economics; and it is this facile 
recourse to inscrutable figures of speech as the ultimate 
terms of theory that has saved the economists from being 
dragooned into the ranks of modern science. The meta 
phors are effective, both in their homiletical use and as a 
labor-saving device,— more effective than their user de 
signs them to be. By their use the theorist is enabled 
serenely to enjoin himself from following out an elusive 
train of causal sequence. He is also enabled, without 
misgivings, to construct a theory of such an institution 

5 Marshall, Principles of Economics (ad ed.), Book V, chap. 
u, P- 395, note. 

«Adam Smith, Wealth of Nations (Bohn ed.), Book II, chap, 
ii, p. 289. 

Economics and Evolution 

67 

as money or wages or land-ownership without descending 
to a consideration of the living items concerned, except 
for convenient corroboration of his normalised scheme of 
symptoms. By this method the theory of an institution 
or a phase of life may be stated in conventionalised terms 
of the apparatus whereby life is carried on, the apparatus 
being invested with a tendency to an equilibrium at the 
normal, and the theory being a formulation of the condi 
tions under which this putative equilibrium supervenes. 
In this way we have come into the usufruct of a cost-of- 
production theory of value which is pungently reminiscent 
of the time when Nature abhorred a vacuum. The ways 
and means and the mechanical structure of industry are 
formulated in a conventionalised nomenclature, and the 
observed motions of this mechanical apparatus are then 
reduced to a normalised scheme of relations. The scheme 
so arrived at is spiritually binding on the behavior of the 
phenomena contemplated. With this normalised scheme 
as a guide, the permutations of a given segment of the 
apparatus are worked out according to the values assigned 
the several items and features comprised in the calcula 
tion ; and a ceremonially consistent formula is constructed 
to cover that much of the industrial field. This is the 
deductive method. The formula is then tested by com 
parison with observed permutations, by the polariscopic 
use of the " normal case " ; and the results arrived at are 
thus authenticated by induction. Features of the process 
that do not lend themselves to interpretation in the terms 
of the formula are abnormal cases and are due to disturb 
ing causes. In all this the agencies or forces causally at 
work in the economic life process are neatly avoided. 
The outcome of the method, at its best, is a body of log 
ically consistent propositions concerning the normal rela 
tions of things — a system of economic taxonomy. At 

ii 

 68 

Economics and Evolution 

Economics and Evolution 

its worst, it is a body of maxims for the conduct of busi 
ness and a polemical discussion of disputed points of 
policy. 

In all this, economic science is living over again in its 
turn the experiences which the natural sciences passed 
through some time back. In the natural sciences the 
work of the taxonomist was and continues to be of great 
value, but the scientists grew restless under the régime of 
symmetry and system-making. They took to asking why, 
and so shifted their, inquiries from the structure of the 
coral reefs to the structure and habits of life of the polyp 
that lives in and by them. In the science of plants, sys 
tematic botany has not ceased to be of service; but the 
stress of investigation and discussion among the botanists 
to-day falls on the biological value of any given feature of 
structure, function, or tissue rather than on its taxonomic 
bearing. All the talk about cytoplasm, centrosomes, and 
karyokinetic process, means that the inquiry now looks 
consistently to the life process, and aims to explain it in 
terms of cumulative causation. 

What may be done in economic science of the taxo 
nomic kind is shown at its best in Cairnes's work, where 
the method is well conceived and the results effectively 
formulated and applied. Cairnes handles the theory of 
the normal case in economic life with a master hand. In 
his discussion the metaphysics of propensity and tenden 
cies no longer avowedly rules the formulation of theory, 
nor is the inscrutable meliorative trend of a harmony of 
interests confidently appealed to as an engine of definitive 
use in giving legitimacy to the economic situation at a 
given time. There is less of an exercise of faith in 
Cairnes's economic discussions than in those of the writers 
that went before him. The definitive terms of the formu 
lation are still the terms of normality and natural law, but 

69 

the metaphysics underlying this appeal to normality is so 
far removed from the ancient ground of the beneficent 
" order of nature " as to have become at least nominally 
impersonal and to proceed without a constant regard to 
the humanitarian bearing of the " tendencies " which it 
formulates. The metaphysics has been attenuated to 
something approaching in colorlessness the naturalist's 
conception of natural law. It is a natural law which, in 
the guise of " controlling principles," exercises a con 
straining surveillance over the trend of things ; but it is no 
longer conceived to exercise its constraint in the interest 
of certain ulterior human purposes. The element of 
beneficence has been well-nigh eliminated, and the system 
is formulated in terms of the system itself. Economics as 
it left Cairnes's hand, so far as his theoretical work is con 
cerned, comes near being taxonomy for taxonomy's sake. 
No equally capable writer has come as near making 
economics the ideal " dismal " science as Cairnes in his 
discussion of pure theory. In the days of the early classi 
cal writers economics had a vital interest for the laymen 
of the time, because it formulated the common sense 
metaphysics of the time in its application to a department 
of human life. But in the hands of the later classical 
writers the science lost much of its charm in this regard. 
It was no longer a definition and authentication of the 
deliverances of current common sense as to what ought to 
come to pass ; and it, therefore, in large measure lost thé 
support of the people out of doors, who were unable to 
take an interest in what did not concern them ; and it 
was also out of touch with that realistic or evolutionary 
habit of mind which got under way about the middle of 
the century in the natural sciences. It was neither 
vitally metaphysical nor matter-of-fact, and it found com 
fort with very few outside of its own ranks. Only for 

' i 

 70 Economics and Evolution 

those who by the fortunate accident of birth or education 
have been able to conserve the taxonomic animus has the 
science during the last third of a century continued to be 
of absorbing interest. The result has been that from the 
time when the taxonomic structure stood forth as a com 
pleted whole in its symmetry and stability the economists 
themselves, beginning with Cairnes, have been growing 
restive under its discipline of stability, and have made 
many efforts, more or less sustained, to galvanise it into 
movement. At the hands of the writers of the classical 
line these excursions have chiefly aimed at a more com 
plete and comprehensive taxonomic scheme of permuta 
tions ; while the historical departure threw away the taxo 
nomic ideal without getting rid of the preconceptions on 
which it is based; and the later Austrian group struck 
out on a theory of process, but presently came to a full 
stop because the process about which they busied them 
selves was not, in their apprehension of it, a cumulative 
or unfolding sequence. 

But what does all this signify? If we are getting rest 
less under the taxonomy of a monocotyledonous wage 
doctrine and a cryptogamic theory of interest, with in 
volute, loculicidal, tomentous and moniliform variants, 
what is the cytoplasm, centrosome, or karyokinetic proc 
ess to which we may turn, and in which we may find sur 
cease from the metaphysics of normality and controlling 
principles? What are we going to do about it? The 
question is rather, What are we doing about it? There 
is the economic life process still in great measure await 
ing theoretical formulation. The active material in which 
the economic process goes on is the human material of 
the industrial community. For the purpose of economic 
science the process of cumulative change that is to be 

Economics and Evolution 71 

accounted for is the sequence of change in the methods 
of doing things,— the methods of dealing with the ma 
terial means of life. 

What has been done in the way of inquiry into this 
economic life process? The ways and means of turning 
material objects and circumstances to account lie before 
the investigator at any given point of time in the form of 
mechanical contrivances and arrangements for compassing 
certain mechanical ends. It has therefore been easy to 
accept these ways and means as items of inert matter 
having a given mechanical structure and thereby serving 
the material ends of man. As such, they have been sched 
uled and graded by the economists under the head of 
capital, this capital being conceived as a mass of material 
objects serviceable for human use. This is well enough 
for the purposes of taxonomy; but it is not an effective 
method of conceiving the matter for the purpose of a 
theory of the developmental process. For the latter pur 
pose, when taken as items in a process of cumulative 
change or as items in the scheme of life, these produc 
tive goods are facts of human knowledge, skill, and pre 
dilection ; that is to say, they are, substantially, prevalent 
habits of thought, and it is as such that they enter into 
the process of industrial development. The physical 
properties of the materials accessible to man are con 
stants: it is the human agent that changes,— his insight 
and his appreciation of what these things can be used for 
is what develops. The accumulation of goods already on 
hand conditions his handling and utilisation of the mate 
rials offered, but even on this side — the " limitation of 
industry by capital "— the limitation imposed is on what 
men can do and on the methods of doing it. The changes 
that take place in the mechanical contrivances are an 
expression of changes in the human factor. Changes in 

•' ! T 

' ,'. I1 

 72 Economics and Evolution 

the material facts breed further change only through the 
human factor. It is in the human material that the con 
tinuity of development is to be looked for; and it is here, 
therefore, that the motor forces of the process of eco 
nomic development must be studied if they are to be stud 
ied in action at all. Economic action must be the subject- 
matter of the science if the science is to fall into line as 
an evolutionary science. 

Nothing new has been said in all this. But the fact is 
all the more significant for being a familiar fact. It is a 
fact recognised by common consent throughout much of 
the later economic discussion, and this current recognition 
of the fact is a long step towards centering discussion and 
inquiry upon it. If economics is to follow the lead or 
the analogy of the other sciences that have to do with a 
life process, the way is plain so far as regards the general 
direction in which the move will be made. 

The economists of the classical trend have made no seri 
ous attempt to depart from the standpoint of taxonomy 
and make their science a genetic account of the economic 
life process. As has just been said, much the same is true 
for the Historical School. The latter have attempted an 
account of developmental sequence, but they have fol 
lowed the lines of pre-Darwinian speculations on devel 
opment rather than lines which modern science would 
recognise as evolutionary. They have given a narrative 
survey of phenomena, not a genetic account of an unfold 
ing process. In this work they have, no doubt, achieved 
results of permanent value ; but the results achieved are 
scarcely to be classed as economic theory. On the other 
hand, the Austrians and their precursors and their co 
adjutors in the value discussion have taken up a detached 
portion of economic theory, and have inquired with great 
nicety into the process by which the phenomena within 

Economics and Evolution 

73 

their limited field are worked out. The entire discussion 
of marginal utility and subjective value as the outcome of 
a valuation process must be taken as a genetic study of 
this range of facts. But here, again, nothing further has 
come of the inquiry, so far as regards a rehabilitation of 
economic theory as a whole. Accepting Menger as their 
spokesman on this head, it must be said that the Aus 
trians have on the whole showed themselves unable to 
break with the classical tradition that economics is a 
taxonomic science. 

The reason for the Austrian failure seems to lie in a 
faulty conception of human nature,— faulty for the pres 
ent purpose, however adequate it may be for any other. 
In all the received formulations of economic theory, 
whether at the hands of English economists or those of 
the Continent, the human material with which the inquiry 
is concerned is conceived in hedonistic terms; that is to 
say, in terms of a passive and substantially inert and im 
mutably given human nature. The psychological and an 
thropological preconceptions of the economists have been 
those which were accepted by the psychological and social 
sciences some generations ago. The hedonistic concep 
tion of man is that of a lightning calculator of pleas 
ures and pains, who oscillates like a homogeneous glob 
ule of desire of happiness under the impulse of stimuli 
that shift him about the area, but leave him intact. He 
has neither antecedent nor consequent. He is an isolated, 
definitive human datum, in stable equilibrium except for 
the buffets of the impinging forces that displace him in 
one direction or another. Self-imposed in elemental 
space, he spins symmetrically about his own spiritual axis 
until the parallelogram of forces bears down upon him, 
whereupon he follows the line of the resultant. When 
the force of the impact is spent, he comes to rest, a self- 

•' f 

i ''j 

II 

:\ 

 ,tï 
•i" 

M 

74 

Economies and Evolution 

contained globule of desire as before. Spiritually, the 
hedonistic man is not a prime mover. He is not the seat 
of a process of living, except in the sense that he is sub 
ject to a series of permutations enforced upon him by 
circumstances external and alien to him. 

The later psychology, reën forced by modern an 
thropological research, gives a different conception of 
human nature. According to this conception, it is the 
characteristic of man to do something, not simply to suffer 
pleasures and pains through the impact of suitable forces. 
He is not simply a bundle of desires that are to be sat 
urated by being placed in the path of the forces of the en 
vironment, but rather a coherent structure of propensities 
and habits which seeks realisation and expression in an 
unfolding activity. According to this view, human activ 
ity, and economic activity among the rest, is not appre 
hended as something incidental to the process of saturat 
ing given desires. The activity is itself the substantial 
fact of the process, and the desires under whose guid 
ance the action takes place are circumstances of tempera 
ment which determine the specific direction in which the 
activity will unfold itself in the given case. These cir 
cumstances of temperament are ultimate and definitive 
for the individual who acts under them, so far as regards 
his attitude as agent in the particular action in which he 
is engaged. But, in the view of the science, they are ele 
ments of the existing frame of mind of the agent, and are 
the outcome of his antecedents and his life up to the point 
at which he stands. They are the products of his heredi 
tary traits and his past experience, cumulatively wrought 
out under a given body of traditions, conventionalities, 
and material circumstances ; and they afford the point of 
departure for the next step in the process. The economic 
life history of the individual is a cumulative process of 

Economics and Ez'ohttion /5 

adaptation of means to ends that cumulatively change as 
the process goes on, both the agent and his environment 
being at any point the outcome of the last process. His 
methods of life to-day are enforced upon him by his hab 
its of life carried over from yesterday and by the cir 
cumstances left as the mechanical residue of the life of 
yesterday. 

What is true of the individual in this respect is true 
of the group in which he lives. All economic change is 
a change in the economic community,— a change in the 
community's methods of turning material things to ac 
count. The change is always in the last resort a change 
in habits of thought. This is true even of changes in the 
mechanical processes of industry. A given contrivance 
for effecting certain material ends becomes a circumstance 
which affects the further growth of habits of thought — 
habitual methods of procedure — and so becomes a point 
of departure for further development of the methods of 
compassing the ends sought and for the further variation 
of ends that are sought to be compassed. In all this flux 
there is no definitively adequate method of life and no 
definitive or absolutely worthy end of action, so far as 
concerns the science which sets out to formulate a theory 
of the process of economic life. What remains as a hard 
and fast residue is the fact of activity directed to an ob 
jective end. Economic action is teleological, in the sense 
that men always and everywhere seek to do something. 
What, in specific detail, they seek, is not to be answered 
except by a scrutiny of the details of their activity; but, 
so long as we have to do with their life as members of 
the economic community, there remains the generic fact 
that their life is an unfolding activity of a teleological 
kind. 

It may or may not be a teleological process in the sense 

II 

 76 Economics and Evolution 

that it tends or should tend to any end that is conceived 
to be worthy or adequate by the inquirer or by the con 
sensus of inquirers. Whether it is or is not, is a question 
with which the present inquiry is not concerned ; and it is 
also a question of which an evolutionary economics need 
take no account. The question of a tendency in events 
can evidently not come up except on the ground of some 
preconception or prepossession on the part of the person 
looking for the tendency. In order to search for a tend 
ency, we must be possessed of some notion of a definitive 
end to be sought, or some notion as to what is the legit 
imate trend of events. The notion of a legitimate trend 
in a course of events is an extra-evolutionary preconcep 
tion, and lies outside the scope of an inquiry into the 
causal sequence in any process. The evolutionary point 
of view, therefore, leaves no place for a formulation of 
natural laws in terms of definitive normality, whether in 
economics or in any other branch of inquiry. Neither 
does it leave room for that other question of normality, 
What should be the end of the developmental process 
under discussion? 

The economic life history of any community is its life 
history in so far as it is shaped by men's interest in the 
material means of life. This economic interest has 
counted for much in shaping the cultural growth of all 
communities. Primarily and most obviously, it has 
guided the formation, the cumulative growth, of that 
range of conventionalities and methods of life that are 
currently recognized as economic institutions; but the 
same interest has also pervaded the community's life and 
its cultural growth at points where the resulting structural 
features are not chiefly and most immediately of an 
economic bearing. The economic interest goes with men 
through life, and it goes with the race throughout its pro- 

II 

III 

Economics and Evolution 

77 

cess of cultural development. It affects the cultural 
structure at all points, so that all institutions may be said 
to be in some measure economic institutions. This is 
necessarily the case, since the base of action — the point 
of departure — at any step in the process is the entire 
organic complex of habits of thought that have been 
shaped by the past process. The economic interest does 
not act in isolation, for it is but one of several vaguely 
isolable interests on which the complex of teleological 
activity carried out by the individual proceeds. The in 
dividual is but a single agent in each case ; and he enters 
into each successive action as a whole, although the 
specific end sought in a given action may be sought 
avowedly on the basis of a particular interest; as e.g., 
the economic, aesthetic, sexual, humanitarian, devo 
tional interests. Since each of these passably isolable 
interests is a propensity of the organic agent man, 
with his complex of habits of thought, the expression 
of each is affected by habits of life formed under the 
guidance of all the rest. There is, therefore, no neatly 
isolable range of cultural phenomena that can be rigor 
ously set apart under the head of economic institutions, 
although a category of " economic institutions " may be of 
service as a convenient caption, comprising those institu 
tions in which the economic interest most immediately 
and consistently finds expression, and which most imme 
diately and with the least limitation are of an economic 
bearing. 

From what has been said it appears that an evolutionary 
economics must be the theory of a process of cultural 
growth as determined by the economic interest, a theory 
of a cumulative sequence of economic institutions stated 
in terms of the process itself. Except for the want of 
space to do here what should be done in some detail if it 

* I 

 78 Economics and Evolution 

is done at all, many efforts by the later economists in this 
direction might be cited to show the trend of economic 
discussion in this direction. There is not a little evidence 
to this effect, and much of the work done must be rated 
as effective work for this purpose. Much of the work of 
the Historical School, for instance, and that of its later 
exponents especially, is too noteworthy to be passed over 
in silence, even with all due regard to the limitations of 
space. 

We are now ready to return to the question why eco 
nomics is not an evolutionary science. It is necessarily 
the aim of such an economics to trace the cumulative 
working-out of the economic interest in the cultural se 
quence. It must be a theory of the economic life process 
of the race or the community. The economists have ac 
cepted the hedonistic preconceptions concerning human 
nature and human action, and the conception of the eco 
nomic interest which a hedonistic psychology gives does 
not afford material for a theory of the development of 
human nature. Under hedonism the economic interest is 
not conceived in terms of action. It is therefore not 
readily apprehended or appreciated in terms of a cumula 
tive growth of habits of thought, and does not provoke, 
even if it did lend itself to, treatment by the evolutionary 
method. At the same time the anthropological precon 
ceptions current in that common-sense apprehension of 
human nature to which economists have habitually turned 
has not enforced the formulation of human nature in 
terms of a cumulative growth of habits of life. These re 
ceived anthropological preconceptions are such as have 
made possible the normalized conjectural accounts of 
primitive barter with which all economic readers are fa 
miliar, and the no less normalized conventional derivation 
of landed property and its rent, or the sociologico-philo- 

Economics and Evolution 

79 

sophical discussions of the " function " of this or that 
class in the life of society or of the nation. 

The premises and the point of view required for an evo 
lutionary economics have been wanting. The economists 
have not had the materials for such a science ready to 
their hand, and the provocation to strike out in such a 
direction has been absent. Even if it has been possible 
at any time to turn to the evolutionary line of speculation 
in economics, the possibility of a departure is not enough 
to bring it about. So long as the habitual view taken of a 
given range of facts is of the taxonomic kind and the 
material lends itself to treatment by that method, the tax 
onomic method is the easiest, gives the most gratifying 
immediate results, and bests fits into the accepted body of 
knowledge of the range of facts in question. This has 
been the situation in economics. The other sciences of 
its group have likewise been a body of taxonomic disci 
pline, and departures from the accredited method have 
lain under the odium of being meretricious innovations. 
The well-worn paths are easy to follow and lead into good 
company. Advance along them visibly furthers the ac 
credited work which the science has in hand. Divergence 
from the paths means tentative work, which is necessarily 
slow and fragmentary and of uncertain value. 

It is only when the methods of the science and the syn 
theses resulting from their use come to be out of line with 
habits of thought that prevail in other matters that the 
scientist grows restive under the guidance of the received 
methods and standpoints, and seeks a way out. Like 
other men, the economist is an individual with but one 
intelligence. He is a creature of habits and propensities 
given through the antecedents, hereditary and cultural, of 
which he is an outcome ; and the habits of thought formed 
in any one line of experience affect his thinking in any 

•• 

II« ;: 

t ' 

v.l. 

 8o 

Economics and Evolution 

other. Methods of observation and of handling facts that 
are familiar through habitual use in the general range of 
knowledge, gradually assert themselves in any given spe 
cial range of knowledge. They may be accepted slowly 
and with reluctance where their acceptance involves inno 
vation ; but, if they have the continued backing of the gen 
eral body of experience, it is only a question of time 
when they shall come into dominance in the special field. 
The intellectual attitude and the method of correlation en 
forced upon us in the apprehension and assimilation of 
facts in the more elementary ranges of knowledge that 
have to do with brute facts assert themselves also when 
the attention is directed to those phenomena of the life 
process with which economics has to do; and the range 
of facts which are habitually handled by other methods 
than that in traditional vogue in economics has now be 
come so large and so insistently present at every turn that 
we are left restless, if the new body of facts cannot be 
handled according to the method of mental procedure 
which is in this way becoming habitual. 

In the general body of knowledge in modern times the 
facts are apprehended in terms of causal sequence. This 
is especially true of that knowledge of brute facts which is 
shaped by the exigencies of the modern mechanical indus 
try. To men thoroughly imbued with this matter-of-fact 
habit of mind the laws and theorems of economics, and 
of the other sciences that treat of the normal course of 
things, have a character of " unreality " and futility that 
bars out any serious interest in their discussion. The 
laws and theorems are " unreal " to them because they are 
not to be apprehended in the terms which these men make 
use of in handling the facts with which they are perforce 
habitually occupied. The same matter-of-fact spiritual 
attitude and mode of procedure have now made their way 

Economics and Evolution 

81 

well up into the higher levels of scientific knowledge, even 
in the sciences which deal in a more elementary way with 
the same human material that makes the subject-matter of 
economics, and the economists themselves are beginning 
to feel the unreality of their theorems about " normal " 
cases. Provided the practical exigencies of modern in 
dustrial life continue of the same character as they now 
are, and so continue to enforce the impersonal method of 
knowledge, it is only a question of time when that (sub 
stantially animistic) habit of mind which proceeds on the 
notion of a definitive normality shall be displaced in the 
field of economic inquiry by that (substantially material 
istic) habit of mind which seeks a comprehension of facts 
in terms of a cumulative sequence. 

The later method of apprehending and assimilating 
facts and handling them for the purposes of knowledge 
may be better or worse, more or less worthy or adequate, 
than the earlier ; it may be of greater or less ceremonial 
or aesthetic effect ; we may be moved to regret the incur 
sion of underbred habits of thought into the scholar's 
domain. But all that is beside the present point. Under 
the stress of modern technological exigencies, men's every 
day habits of thought are falling into the lines that in the 
sciences constitute the evolutionary method; and knowl 
edge which proceeds on a higher, more archaic plane is 
becoming alien and meaningless to them. The social and 
political sciences must follow the drift, for they are al 
ready caught in it. 

I 
- 

I- 

 THE PRECONCEPTIONS OF ECONOMIC 
SCIENCE1 

IN an earlier paper2 the view has been expressed that 
the economics handed down by the great writers of a past 
generation is substantially a taxonomic science. A view 
of much the same purport, so far as concerns the point 
here immediately in question, is presented in an admir 
ably lucid and cogent way by Professor Clark in a recent 
number of this journal.3 There is no wish hereby to 
burden Professor Clark with a putative sponsorship of 
any ungraceful or questionable generalisations reached in 
working outward from this main position, but expression 
may not be denied the comfort which his unintended au 
thentication of the main position affords. It is true, Pro 
fessor Clark does not speak of taxonomy, but employs the 
term " statics," which is perhaps better suited to his imme 
diate purpose. Nevertheless, in spite of the high author 
ity given the term " statics," in this connection, through 
its use by Professor Clark and by other writers eminent in 
the science, it is fairly to be questioned whether the term 
can legitimately be used to characterize the received eco 
nomic theories. The word is borrowed from the jargon 
of physics, where it is used to designate the theory of 

1 Reprinted by permission from The Quarterly Journal of 
Economies, vol. xiii, Jan., 1899. 

2"Why is Economics not an Evolutionary Science?" Quar 
terly Journal of Economics, July, 1898. 

3"The Future of Economic Theory," ibid., October, 1898. 

82 

Preconceptions: I 83 

bodies at rest or of forces in equilibrium. But there is 
much in the received economic theories to which the anal 
ogy of bodies at rest or of forces in equilibrium will not 
apply. It is perhaps not too much to say that those arti 
cles of economic theory that do not lend themselves to 
this analogy make up the major portion of the received 
doctrines. So, for instance, it seems scarcely to the point 
to speak of the statics of production, exchange, consump 
tion, circulation. There are, no doubt, appreciable ele 
ments in the theory of these several processes that may 
fairly be characterized as statical features of the theory ; 
but the doctrines handed down are after all, in the main, 
theories of the process discussed under each head, and 
the theory of a process does not belong in statics. The 
epithet " statical " would, for instance, have to be 
wrenched somewhat ungently to make it apply to Ques- 
nay's classic Tableau Économique or to the great body of 
Physiocratic speculations that take their rise from it. 
The like is true for Books II. and III. of Adam Smith's 
Wealth of Nations, as also for considerable portions of 
Ricardo's work, or, to come down to the present genera 
tion, for much of Marshall's Principles, and for such a 
modern discussion as Smart's Studies in Economics, as 
well as for the fruitful activity of the Austrians and of 
the later representatives of the Historical School. 

But to return from this terminological digression. 
While economic science in the remoter past of its history 
has been mainly of a taxonomic character, later writers of 
all schools show something of a divergence from the taxo 
nomic line and an inclination to make the science a genetic 
account of the economic life process, sometimes even 
without an ulterior view to the taxonomic value of the 
results obtained. This divergence from the ancient 
canons of theoretical formulation is to be taken as an 

 84 

Preconceptions: I 

episode of the movement that is going forward in latter- 
day science generally; and the progressive change which 
thus affects the ideals and the objective point of the mod 
ern sciences seems in its turn to be an expression of that 
matter-of-fact habit of mind which the prosy but exacting 
exigencies of life in a modern industrial community 
breed in men exposed to their unmitigated impact. 

In speaking of this matter-of-fact character of the mod 
ern sciences it has been broadly characterized as " evolu 
tionary " ; and the evolutionary method and the evolution 
ary ideals have been placed in antithesis to the taxonomic 
methods and ideals of pre-evolutionary days. But the 
characteristic attitude, aims, and ideals which are so desig 
nated here are by no means peculiar to the group of sci 
ences that are professedly occupied with a process of de 
velopment, taking that term in its most widely accepted 
meaning. The latter-day inorganic sciences are in this 
respect like the organic. They occupy themselves with 
" dynamic " relations and sequences. The question which 
they ask is always, What takes place next, and why? 
Given a situation wrought out by the forces under inquiry, 
what follows as the consequence of the situation so 
wrought out? or what follows upon the accession of a 
further element of force ? Even in so non-evolutionary a 
science as inorganic chemistry the inquiry consistently 
runs on a process, an active sequence, and the value of the 
resulting situation as a point of departure for the next 
step in an interminable cumulative sequence. The last 
step in the chemist's experimental inquiry into any sub 
stance is, What comes of the substance determined? 
What will it do? What will it lead to, when it is made 
the point of departure in further chemical action ? There 
is no ultimate term, and no definitive solution except in 
terms of further action. The theory worked out is al 

Preconceptions: I 85 

ways a theory of a genetic succession of phenomena, and 
the relations determined and elaborated into a body of 
doctrine are always genetic relations. In modern chemis 
try no cognisance is taken of the honorific bearing of 
reactions or molecular formulas. The modern chemist, as 
contrasted with his ancient congener, knows nothing of 
the worth, elegance, or cogency of the relations that may 
subsist between the particles of matter with which he 
busies himself, for any other than the genetic purpose. 
The spiritual element and the elements of worth and pro 
pensity no longer count. Alchemic symbolism and the 
hierarchical glamour and virtue that once hedged about 
the nobler and more potent elements and reagents are al 
most altogether a departed glory of the science. Even the 
modest imputation of propensity involved in the construc 
tion of a scheme of coercive normality, for the putative 
guidance of reactions, finds little countenance with the 
later adepts of chemical science. The science has out 
lived that phase of its development at which the taxo- 
nomic feature was the dominant one. 

In the modern sciences, of which chemistry is one, 
there has been a gradual shifting of the point of view 
from which the phenomena which the science treats of are 
apprehended and passed upon; and to the historian of 
chemical science this shifting of the point of view must 
be a factor of great weight in the development of chemical 
knowledge. Something of a like nature is true for eco 
nomic science ; and it is the aim here to present, in out 
line, some of the successive phases that have passed over 
the spiritual attitude of the adepts of the science, and to 
point out the manner in which the transition from one 
point of view to the next has been made. 

As has been suggested in the paper already referred to, 

 86 

Preconceptions: I 

the characteristic spiritual attitude or point of view of a 
given generation or group of economists is shown not so 
much in their detail work as in their higher syntheses — 
the terms of their definitive- formulations — the grounds 
of their final valuation of the facts handled for purpose 
of theory. This line of recondite inquiry into the spirit 
ual past and antecedents of the science has not often been 
pursued seriously or with singleness of purpose, perhaps 
because it is, after all, of but slight consequence to the 
practical efficiency of the present-day science. Still, not 
a little substantial work has been done towards this end 
by such writers as Hasbach, Oncken, Bonar, Cannan, and 
Marshall. And much that is to the purpose is also due to 
writers outside of economics, for the aims of economic 
speculation have never been insulated from the work 
going forward in other lines of inquiry. As would neces 
sarily be the case, the point of view of economists has 
always been in large part the point of view of the enlight 
ened common sense of their time. The spiritual attitude 
of a given generation of economists is therefore in good 
part a special outgrowth of the ideals and preconceptions 
current in the world about them. 

So, for instance, it is quite the conventional thing to 
say that the speculations of the Physiocrats were domi 
nated and shaped by the preconception of Natural Rights. 
Account has been taken of the effect of natural-rights 
preconceptions upon the Physiocratic schemes of policy 
and economic reform, as well as upon the details of their 
doctrines.4 But little has been said of the significance of 
these preconceptions for the lower courses of the Physio 
crats' theoretical structure. And yet that habit of mind 

4 See, for instance, Hasbacli, Allgemeine philosophische Grund 
lagen der von François Quesnay und Adam S-mith begründeten 
politischen Ockonomic. 

Preconceptions: I 87 

to which the natural-rights view is wholesome and ade 
quate is answerable both for the point of departure and 
for the objective point of the Physiocratic theories, both 
for the range of facts to which they turned and for the 
terms in which they were content to formulate their 
knowledge of the facts which they handled. The failure 
of their critics to place themselves at the Physiocratic 
point of view has led to much destructive criticism of 
their work; whereas, when seen through Physiocratic 
eyes, such doctrines as those of the net product and of 
the barrenness of the artisan class appear to be substan 
tially true. 

The speculations of the Physiocrats are commonly ac 
counted the first articulate and comprehensive presenta 
tion of economic theory that is in line with later theoretical 
work. The Physiocratic point of view may, therefore, 
well be taken as the point of departure in an attempt to 
trace that shifting of aims and norms of procedure that 
comes into view in the work of later economists when 
compared with earlier writers. 

Physiocratic economics is a theory of the working-out 
of the Law of Nature (loi naturelle} in its economic bear 
ing, and this Law of Nature is a very simple matter. 

Les lois naturelles sont ou physiques ou morales. 

On entend ici, par loi physique, le cours réglé de tout événe 
ment physique de l'ordre naturel, évidemment le plus avantageux 
OM genre humain. 

On entend ici, par loi morale, la règle de toute action humaine 
ae l ordre morale, conforme à l'ordre physique évidemment le 
Plus avantageux au genre humain. 

t-es lois forment ensemble ce qu'on appelle la loi naturelle. 

_ous 'es hommes et toutes les puissances humaines doivent 

jfe soumis à ces lois souveraines, instituées par l'Être-Suprème : 

•I? if0nt imm"ables et irréfragables, et les meilleures lois pos- 

y, Droit Naturel, ch. v. (Ed. Daire, Physiocrates, pp. 

• l 

'•II: L 

 88 

Preconceptions: I 

Preconceptions: I 

89 

The settled course of material facts tending beneficently 
to the highest welfare of the human race,— this is the final 
term in the Physiocratic speculations. This is the touch 
stone of substantiality. Conformity to these " immutable 
and unerring " laws of nature is the test of economic 
truth. The laws are immutable and unerring, but that 
does not mean that they rule the course of events with a 
blind fatality that admits of no exception and no diver 
gence from the direct line. Human nature may, through 
infirmity or perversity, willfully break over the beneficent 
trend of the laws of nature ; but to the Physiocrat's sense 
of the matter the laws are none the less immutable and 
irrefragable on that account. They are not empirical 
generalisations on the course of phenomena, like the law 
of falling bodies or of the angle of reflection; although 
many of the details of their action are to be determined 
only by observation and experience, helped out, of course, 
by interpretation of the facts of observation under the 
light of reason. So, for instance, Turgot, in his Reflec 
tions, empirically works out a doctrine of the reasonable 
course of development through which wealth is accumu 
lated and reaches the existing state of unequal distribu 
tion; so also his doctrines of interest and of money. The 
immutable natural laws are rather of the nature of canons 
of conduct governing nature than generalisations of me 
chanical sequence, although in a general way the phe 
nomena of mechanical sequence are details of the conduct 
of nature working according to these canons of conduct. 
The great law of the order of nature is of the character 
of a propensity working to an end, to the accomplishment 
of a purpose. The processes of nature working under 
the quasi-spiritual stress of this immanent propensity may 
be characterised as nature's habits of life. Not that na 
ture is conscious of its travail, and knows and desires the 

worthy end of its endeavors; but for all that there is a 
quasi-spiritual nexus between antecedent and consequent 
in the scheme of operation in which nature is engaged. 
Nature is not uneasy about .interruptions of its course or 
occasional deflections from the direct line through an 
untoward conjunction of mechanical causes, nor does the 
validity of the great overruling law suffer through such 
an episode. The introduction of a mere mechanically 
effective causal factor cannot thwart the course of Nature 
from reaching the goal to which she animistically tends. 
Nothing can thwart this teleological propensity of nature 
except counter-activity or divergent activity of a similarly 
teleological kind. Men can break over the law, and have 
short-sightedly and willfully done so; for men are also 
agents who guide their actions by an end to be achieved. 
Human conduct is activity of the same kind — on the 
same plane of spiritual reality or competency — as the 
course of Nature, and it may therefore traverse the latter. 
The remedy for this short-sighted traffic of misguided hu 
man nature is enlightenment,—" instruction publique et 
privée des lois de l'ordre naturel." e 

The nature in terms of which all knowledge of phe 
nomena — for the present purpose economic phenomena 
— is to be finally synthesised is, therefore, substantially of 
a quasi-spiritual or animistic character. The laws of na 
ture are in the last resort teleological: they are of the 
nature of a propensity. The substantial fact in all the 
sequences of nature is the end to which the sequence natu 
rally tends, not the brute fact of mechanical compulsion or 
causally effective forces. Economic theory is accordingly 
the theory (i) of how the efficient causes of the ordre 
naturel work in an orderly unfolding sequence, guided 

"Quesnay, Droit Naturel, eh. v (Ed. Daire, 'Physiocrates, p. 
53/* 

"- SV 

M11 

°f 

r ï • 

 9O Preconceptions: I 

by the underlying natural laws — the propensity imma 
nent in nature to establish the highest well-being of man 
kind, and (2) of the conditions imposed upon human con 
duct by these natural laws in order to reach the ordained 
goal of supreme human welfare. The conditions so im 
posed on human conduct are as definitive as the laws and 
the order by force of which they are imposed ; and the 
theoretical conclusions reached, when these laws and this 
order are known, are therefore expressions of absolute 
economic truth. Such conclusions are an expression of 
reality, but not necessarily of fact. 

Now, the objective end of this propensity that deter 
mines the course of nature is human well-being. But eco 
nomic speculation has to do with the workings of nature 
only so far as regards the ordre physique. And the laws 
of nature in the ordre physique, working through mechan 
ical sequence, can only work out the physical well-being 
of man, not necessarily the spiritual. This propensity to 
the physical well-being of man is therefore the law of 
nature to which economic science must bring its general 
isations, and this law of physical beneficence is the sub 
stantial ground of economic truth. Wanting this, all our 
speculations are vain ; but having its authentication they 
are definitive. The great, typical function, to which all 
the other functioning of nature is incidental if not sub 
sidiary, is accordingly that of the alimentation, nutrition 
of mankind. In so far, and only in so far as the physical 
processes contribute to human sustenance and fullness of 
life, can they, therefore, further the great work of nature. 
Whatever processes contribute to human sustenance by 
adding to the material available for human assimilation 
and nutrition, by increasing the substance disposable for 
human comfort, therefore count towards the substantial 
end. All other processes, however serviceable in other 

Preconceptions: I 91 

than this physiological respect, lack the substance of eco 
nomic reality. Accordingly, human industry is produc 
tive, economically speaking, if it heightens the effective 
ness of the natural processes out of which the material of 
human sustenance emerges; otherwise not. The test of 
productivity, of economic reality in material facts, is the 
increase of nutritive material. Whatever employment of 
time or effort does not afford an increase of such material 
is unproductive, however profitable it may be to the per 
son employed, and however useful or indispensable it may 
be to the community. The type of such productive indus 
try is the husbandman's employment, which yields a sub 
stantial (nutritive) gain. The artisan's work may be 
useful to the community and profitable to himself, but its 
economic effect does not extend beyond an alteration of 
the form in which the material afforded by nature already 
lies at hand. It is formally productive only, not really 
productive. It bears no part in the creative or generative 
work of nature; and therefore it lacks the character of 
economic substantiality. It does not enhance nature's 
output of vital force. The artisan's labors, therefore, 
yield no net product, whereas the husbandman's labors do. 
Whatever constitutes a material increment of this out 
put of vital force is wealth, and nothing else is. . The 
theory of value contained in this position has not to do 
with value according to men's appraisement of the valu 
able article. Given items of wealth may have assigned to 
them certain relative values at which they exchange, and 
these conventional values may differ more or less widely 
from the natural or intrinsic value of the goods in ques 
tion; but all that is beside the substantial point. The 
point in question is not the degree of predilection shown 
by certain individuals or bodies of men for certain goods. 
That is a matter of caprice and convention, and it does not 

. 

* r 

ï 

I !'. 

 92 Preconceptions: I 

directly touch the substantial ground of the economic life. 
The question of value is a question of the extent to which 
the given item of wealth forwards the end of nature's 
unfolding process. It is valuable, intrinsically and really, 
in so far as it avails the great work which nature has in 
hand. 

Nature, then, is the final term in the Physiocratic specu 
lations. Nature works by impulse and in an unfolding 
process, under the stress of a propensity to the accom 
plishment of a given end. This propensity, taken as the 
final cause that is operative in any situation, furnishes the 
basis on which to coordinate all our knowledge of those 
efficient causes .through which Nature works to her ends. 
For the purpose of economic theory proper, this is the 
ultimate ground of reality to which our quest of economic 
truth must penetrate. But back of Nature and her works 
there is, in the Physiocratic scheme of the universe, the 
Creator, by whose all-wise and benevolent power the order 
of nature has been established in all the strength and 
beauty of its inviolate and immutable perfection. But 
the Physiocratic conception of the Creator is essentially a 
deistic one: he stands apart from the course of nature 
which he has established, and keeps his hands off. In the 
last resort, of course, " Dieu seul est producteur. Les 
hommes travaillent, receuillent, économisent, conservent; 
mais économiser n'est pas produire."T But this last 
resort does not bring the Creator into economic theory as 
a fact to be counted with in formulating economic laws. 
He serves a homiletical purpose in the Physiocratic 
speculations rather than fills an office essential to the 
theory. He comes within the purview of the theory by 
way of authentication rather than as a subject of inquiry 

TDupont de Nemours, Correspondance avec J.-B. Say (Ed. 
Daire, Physiocrates, première partie, p. 399). 

Preconceptions: I 

93 

or a term in the formulation of economic knowledge. 
The Physiocratic God can scarcely be said to be an 
economic fact, but it is otherwise with that Nature whose 
ways and means constitute the subject-matter of the 
Physiocratic inquiry. 

When this natural system of the Physiocratic specula 
tion is looked at from the side of the psychology of the 
investigators, or from that of the logical premises em 
ployed, it is immediately recognised as essentially animis 
tic. It runs consistently on animistic ground; but it is 
animism of a high grade,— highly integrated and enlight 
ened, -but, after all, retaining very much of that primitive 
force and naïveté which characterise the animistic expla 
nations of phenomena in vogue among the untroubled 
barbarians. It is not the disjected animism of the vulgar, 
who see a willful propensity — often a willful perver 
sity— in given objects or situations to work towards a 
given outcome, good or bad. It is not the gambler's hap 
hazard sense of fortuitous necessity or the housewife's 
belief in lucky days, numbers or phases of the moon. The 
Physiocrat's animism rests on a broader outlook, and does 
not proceed by such an immediately impulsive imputation 
of propensity. The teleological element — the element of 
propensity — is conceived in a large way, unified and har 
monised, as a comprehensive order of nature as a whole. 
But it vindicates its standing as a true animism by never 
becoming fatalistic and never being confused or con 
founded with the sequence of cause and effect. It has 
reached the last stage of integration and definition, be 
yond which the way lies downward from the high, quasi- 
spiritual ground of animism to the tamer levels of nor 
mality and causal uniformities. 

There is already discernible a tone of dispassionate and 
colorless " tendency " about the Physiocratic animism, 

'; i'll 

••- il 

 94 

Preconceptions: I 

such as to suggest a wavering towards the side of normal 
ity. This is especially visible in such writers as the half- 
protestant Turgot. In his discussion of the development 
of farming, for instance, Turgot speaks almost entirely 
of human motives and the material conditions under 
which the growth takes place. There is little metaphysics 
in it, and that little does not express the law of nature in 
an adequate form. But, after all has been said, it remains 
true that the Physiocrat's sense of substantiality is not 
satisfied until he reaches the animistic ground; and it 
remains true also that the arguments of their opponents 
made little impression on the Physiocrats so long as they 
were directed to other than this animistic ground of their 
doctrine. This is true in great measure even of Turgot, 
as witness his controversy with Hume. Whatever criti 
cism is directed against them on other grounds is met with 
impatience, as being inconsequential, if not disingenuous.8 
To an historian of economic theory the source and the 
line of derivation whereby this precise form of the order- 
of-nature preconception reached the Physiocrats are of 
first-rate importance; but it is scarcely a question to be 
taken up here,— in part because it is too large a question 
to be handled here, in part because it has met with ade 
quate treatment at more competent hands,9 and in part 
because it is somewhat beside the immediate point under 
discussion. This point is the logical, or perhaps better the 
psychological, value of the Physiocrats' preconception, as 
a factor in shaping their point of view and the terms of 
their definitive formulation of economic knowledge. For 
this purpose it may be sufficient to point out that the pre- 

8 Sec, for instance, the concluding chapters of La Riviere's 
Ordre Naturel des Sociétés Politiques. 

9 E. g., Hasbach, loc. cit.; Bonar, Philosophy and Political 
Economy, Book II; Ritchie, Natural Rights. 

Preconceptions: I 

95 

conception in question belongs to the generation in which 
the Physiocrats lived, and that it is the guiding norm of 
all serious thought that found ready assimilation into the 
common-sense views of that time. It is the characteristic 
and controlling feature of what may be called the com 
mon-sense metaphysics of the eighteenth century, espe 
cially so far as concerns the enlightened French com 
munity. 

It is to be noted as a point bearing more immediately 
on the question in hand that this imputation of final causes 
to the course of phenomena expresses a spiritual attitude 
which has prevailed, one might almost say, always and 
everywhere, but which reached its finest, most effective 
development, and found its most finished expression, in 
the eighteenth-century metaphysics. It is nothing recon 
dite ; for it meets us at every turn, as a matter of course, 
in the vulgar thinking of to-day,— in the pulpit and in 
the market place,— although it is not so ingenuous, nor 
does it so unquestionedly hold the primacy in the thinking 
of any class to-day as it once did. It meets us likewise, 
with but little change of features, at all past stages of cul 
ture, late or early. Indeed, it is the most generic feature 
of human thinking, so far as regards a theoretical or 
speculative formulation of knowledge. Accordingly, it 
seems scarcely necessary to trace the lineage of this char 
acteristic preconception of the era of enlightenment, 
through specific channels, back to the ancient philosophers 
or jurists of the empire. Some of the specific forms of 
its expression — as, for instance, the doctrine of Natural 
Rights — are no doubt traceable through mediaeval chan 
nels to the teachings of the ancients ; but there is no need 
of going over the brook for water, and tracing back to 
specific teachings the main features of that habit of mind 
or spiritual attitude of which the doctrines of Natural 

 96 

Preconceptions: I 

Rights and the Order of Nature are specific elaborations 
only. This dominant habit of mind came to the genera 
tion of the Physiocrats on the broad ground of group 
inheritance, not by lineal devolution from any one of the 
great thinkers of past ages who had thrown its deliver 
ances into a similarly competent form for the use of his 
own generation. 

In leaving the Physiocratic discipline and the immediate 
sphere of Physiocratic influence for British ground, we 
are met by the figure of Hume. Here, also, it will be 
impracticable to go into details as to the remoter line of 
derivation of the specific point of view that we come upon 
on making the transition, for reasons similar to those al 
ready given as excuse for passing over the similar ques 
tion with regard to the Physiocratic point of view. Hume 
is, of course, not primarily an economist ; but that placid 
unbeliever is none the less a large item in any inventory of 
eighteenth-century economic thought. Hume was not 
gifted with a facile acceptance of the group inheritance 
that made the habit of mind of his generation. Indeed, 
he was gifted with an alert, though somewhat histrionic, 
skepticism touching everything that was well received. 
It is his office to prove all things, though not necessarily 
to hold fast that which is good. 

Aside from the strain of affectation discernible in 
Hume's skepticism, he may be taken as an accentuated 
expression of that characteristic bent which distinguishes 
British thinking in his time from the thinking of the Con 
tinent, and more particularly of the French. There is in 
Hume, and in the British community, an insistence on the 
prosy, not to say the seamy, side of human affairs. He is 
not content with formulating his knowledge of things in 
terms of what ought to be or in terms of the objective 

Preconceptions: I 

97 

point of the course of things. He is not even content 
with adding to the teleological account of phenomena a 
chain of empirical, narrative generalisations as to the 
usual course of things. He insists, in season and out of 
season, on an exhibition of the efficient causes engaged in 
any sequence of phenomena ; and he is skeptical — irrev 
erently skeptical — as to the need or the use of any f ormu- 
lation of knowledge that outruns the reach of his own 
matter-of-fact, step-by-step argument from cause to 
effect. 

In short, he is too modern to be wholly intelligible to 
those of his contemporaries who are most neatly abreast 
of their time. He out-Britishes the British; and, in his 
footsore quest for a perfectly tame explanation of things, 
he finds little comfort, and indeed scant courtesy, at the 
hands of his own generation. He is not in sufficiently 
naïve accord with the range of preconceptions then in 
vogue. 

But, while Hume may be an accentuated expression of 
a national characteristic, he is not therefore an untrue 
expression of this phase of British eighteenth-century 
thinking. The peculiarity of point of view and of method 
for which he stands has sometimes been called the critical 
attitude, sometimes the inductive method, sometimes the 
materialistic or mechanical, and again, though less aptly, 
the historical method. Its characteristic is an insistence 
on matter of fact. 

This matter-of-fact animus that meets any historian of 
economic doctrine on his introduction to British econom 
ics is a large, but not the largest, feature of the British 
scheme of early economic thought. It strikes the atten 
tion because it stands in contrast with the relative ab 
sence of this feature in the contemporary speculations of 
the Continent. The most potent, most formative habit of 

il 

! 

l- " 

• :ï . ' 

 98 

Preconceptions: I 

thought concerned in the early development of economic 
teaching on British ground is best seen in the broader 
generalisations of Adam Smith, and this more potent 
factor in Smith is a bent that is substantially identical 
with that which gives consistency to the speculations of 
the Physiocrats. In Adam Smith the two are happily 
combined, not to say blended ; but the animistic habit still 
holds the primacy, with the matter-of-fact as a subsidiary 
though powerful factor. He is said to have combined 
deduction with induction. The relatively great promi 
nence given the latter marks the line of divergence of 
British from French economics, not the line of coinci 
dence ; and on this account it may not be out of place to 
look more narrowly into the circumstances to which the 
emergence of this relatively greater penchant for a matter- 
of-fact explanation of things in the British community is 
due. 

To explain the characteristic animus for which Hume 
stands, on grounds that might appeal to Hume, we should 
have to inquire into the peculiar circumstances — ulti 
mately material circumstances — that have gone to shape 
the habitual view of things within the British community, 
and that so have acted to differentiate the British precon 
ceptions from the French, or from the general range of 
preconceptions prevalent on the Continent. These pecul 
iar formative circumstances are no doubt to some extent 
racial peculiarities ; but the racial complexion of the Brit 
ish community is not widely different from the French, 
and especially not widely different from certain other 
Continental communities which are for the present pur 
pose roughly classed with the French. Race difference 
can therefore not wholly, nor indeed for the greater part, 
account for the cultural difference of which this differ 
ence in preconceptions is an outcome. Through its cumu- 

Preconceptions: I 

99 

lative effect on institutions the race difference must be 
held to have had a considerable effect on the habit of 
mind of the community; but, if the race difference is in 
this way taken as the remoter ground of an institutional 
peculiarity, which in its turn has shaped prevalent habits 
of thought, then the attention may be directed to the 
proximate causes, the concrete circumstances, through 
which this race difference has acted, in conjunction with 
other ulterior circumstances, to work out the psychologi 
cal phenomena observed. Race differences, it may be re 
marked, do not so nearly coincide with national lines of 
demarcation as differences in the point of view from 
which things are habitually apprehended or differences in 
the standards according to which facts are rated. 

If the element of race difference be not allowed defini 
tive weight in discussing national peculiarities that under 
lie the deliverances of common sense, neither can these 
national peculiarities be confidently traced to a national 
difference in the transmitted learning that enters into the 
common-sense view of things. So far as concerns the 
concrete facts embodied in the learning of the various 
nations within the European culture, these nations make 
up but a single community. What divergence is visible 
does not touch the character of the positive information 
with which the learning of the various nations is occupied. 
Divergence is visible in the higher syntheses, the methods 
of handling the material of knowledge, the basis of valua 
tion of the facts taken up, rather than in the material of 
knowledge. But this divergence must be set down to a 
cultural difference, a difference of point of view, not to a 
difference in inherited information. When a given body 
°f information passes the national frontiers it acquires a 
new complexion, a new national, cultural physiognomy. 
It is this cultural physiognomy of learning that is here 

 100 

Preconceptions: I 

Preconceptions: I 

IOI 

under inquiry, and a comparison of early French econom 
ics (the Physiocrats) with early British economics (Adam 
Smith) is here entered upon merely with a view to making 
out what significance this cultural physiognomy of the 
science has for the past progress of economic speculation. 
The broad features of economic speculation, as it stood 
at the period under consideration, may be briefly summed 
up, disregarding the element of policy, or expediency, 
which is common to both groups of economists, and at 
tending to their theoretical work alone. With the Physi 
ocrats, as with Adam Smith, there are two main points of 
view from which economic phenomena are treated: (0) 
the matter-of-fact point of view or preconception, which 
yields a discussion of causal sequences and correlations; 
and (b) what, for want of a more expressive word, is here 
called the animistic point of view or preconception, which 
yields a discussion of teleological sequences and correla 
tions,— a discussion of the function of this and that 
" organ," of the legitimacy of this or the other range of 
facts. The former preconception is allowed a larger 
scope in the British than in the French economics: there 
is more of " induction " in the British. The latter pre 
conception is present in both, and is the definitive element 
in both ; but the animistic element is more colorless in the 
British, it is less constantly in evidence, and less able to 
stand alone without the support of arguments from cause 
to effect. Still, the animistic element is the controlling 
factor in the higher syntheses of both ; and for both alike 
it affords the definitive ground on which the argument 
finally comes to rest. In neither group of thinkers is the 
sense of substantiality appeased until this quasi-spiritual 
ground, given by the natural propensity of the course of 
events, is reached. But the propensity in events, the nat 
ural or normal course of things, as appealed to by the 

British speculators, suggests less of an imputation of will 
power, or personal force, to the propensity in question. 
It may be added, as has already been said in another 
place, that the tacit imputation of will-power or spiritual 
consistency to the natural or normal course of events has 
progressively weakened in the later course of economic 
speculation, so that in this respect, the British economists 
of the eighteenth century may be said to represent a later 
phase of economic inquiry than the Physiocrats. 

Unfortunately, but unavoidably, if this question as to 
the cultural shifting of the point of view in economic sci 
ence is taken up from the side of the causes to which the 
shifting is traceable, it will take the discussion back to 
ground on which an economist must at best feel himself 
to be but a raw layman, with all a layman's limitations 
and ineptitude, and with the certainty of doing badly what 
might be done well by more competent hands. But, with 
a reliance on charity where charity is most needed, it is 
necessary to recite summarily what seems to be the psy 
chological bearing of certain cultural facts. 

A cursory acquaintance with any of the more archaic 
phases of human culture enforces the recognition of this 
fact,— that the habit of construing the phenomena of the 
inanimate world in animistic terms prevails pretty much 
universally on these lower levels. Inanimate phenomena 
are apprehended to work out a propensity to an end ; the 
movements of the elements are construed in terms of 
quasi-personal force. So much is well authenticated by 
the observations on which anthropologists and ethnologists 
draw for their materials. This animistic habit, it may be 
said, seems to be more effectual and far-reaching among 
those primitive communities that lead a predatory life. 

But along with this feature of archaic methods of 

u1" 

 K' 

IO2 

Preconceptions: I 

thought or of knowledge, the picturesqueness of which 
has drawn the attention of all observers, there goes a sec 
ond feature, no less important for the purpose in hand, 
though less obtrusive. The latter is of less interest to 
the men who have to do with the theory of cultural devel 
opment, because it is a matter of course. This second 
feature of archaic thought is the habit of also apprehend 
ing facts in non-animistic, or impersonal, terms. The 
imputation of propensity in no case extends to all the 
mechanical facts in the case. There is always a sub 
stratum of matter of fact, which is the outcome of an 
habitual imputation of causal sequence, or, perhaps better, 
an imputation of mechanical continuity, if a new term be 
permitted. The agent, thing, fact, event, or phenomenon, 
to which propensity, will-power, or purpose, is imputed, is 
always apprehended to act in an environment which is 
accepted as spiritually inert. There are always opaque 
facts as well as self-directing agents. Any agent acts 
through means which lend themselves to his use on other 
grounds than that of spiritual compulsion, although spir 
itual compulsion may be a large feature in any given case. 

The same features of human thinking, the same two 
complementary methods of correlating facts and handling 
them for the purposes of knowledge, are similarly in con 
stant evidence in the daily life of men in our own com 
munity. The question is, in great part, which of the two 
bears the greater part in shaping human knowledge at any 
given time and within,any given range of knowledge or 
of facts. 

Other features of the growth of knowledge, which are 
remoter from the point under inquiry, may be of no less 
consequence to a comprehensive theory of the develop 
ment of culture and of thought ; but it is of course out of 
the question here to go farther afield. The present in- 

Preconceptions: I 

103 

quiry will have enough to do with these two. No other 
features are correlative with these, and these merit dis 
cussion on account of their intimate bearing on the point 
of view of economics. The point of interest with respect 
to these two correlative and complementary habits of 
thought is the question of how they have fared under the 
changing exigencies of human culture ; in what manner 
they come, under given cultural circumstances, to share 
the field of knowledge between them ; what is the relative 
part of each in the composite point of view in which the 
two habits of thought express themselves at any given 
cultural stage. 

The animistic preconception enforces the apprehension 
of phenomena in terms generically identical with the terms 
of personality or individuality. As a certain modern 
group of psychologists would say, it imputes to objects 
and sequences an element of habit and attention similar 
in kind, though not necessarily in degree, to the like spirit 
ual attitude present in the activities of a personal agent. 
The matter-of-fact preconception, on the other hand, en 
forces a handling of facts without imputation of personal 
force or attention, but with an imputation of mechanical 
continuity, substantially the preconception which has 
reached a formulation at the hands of scientists under the 
name of conservation of energy or persistence of quantity. 
Some appreciable resort to the latter method of knowl 
edge is unavoidable at any cultural stage, for it is indis 
pensable to all industrial efficiency. All technological 
Processes and all mechanical contrivances rest, psycho- 
Ic^ically speaking, on this ground. This habit of thought 
*s a selectively necessary consequence of industrial life, 
and, indeed, of all human experience in making use of the 
material means of life. It should therefore follow that, in 
a general way, the higher the culture, the greater the share 

'l V 

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Preconceptions: I 

of the mechanical preconception in shaping human 
thought and knowledge, since, in a general way, the stage 
of culture attained depends on the efficiency of industry. 
The rule, while it does not hold with anything like ex 
treme generality, must be admitted to hold to a good ex 
tent; and to that extent it should hold also that, by a 
selective adaptation of men's habits of thought to the 
exigencies of those cultural phases that have actually 
supervened, the mechanical method of knowledge should 
have gained in scope and range. Something of the sort 
is borne out by observation. 

A further consideration enforces the like view. As the 
community increases in size, the range of observation of 
the individuals in the community also increases ; and con 
tinually wider and more far-reaching sequences of a me 
chanical kind have to be taken account of. Men have to 
adapt their own motives to industrial processes that are 
not safely to be construed in terms of propensity, predi 
lection, or passion. Life in an advanced industrial com 
munity does not tolerate a neglect of mechanical fact ; for 
the mechanical sequences through which men, at an appre 
ciable degree of culture, work out their livelihood, are no 
respecters of persons or of will-power. Still, on all but 
the higher industrial stages, the coercive discipline of in 
dustrial life, and of the scheme of life that inculcates re 
gard for the mechanical facts of industry, is greatly miti 
gated by the largely haphazard character of industry, and 
by the great extent to which man continues to be the prime 
mover in industry. So long as industrial efficiency is 
chiefly a matter of the handicraftsman's skill, dexterity, 
and diligence, the attention of men in looking to the indus 
trial process is met by the figure of the workman, as the 
chief and characteristic factor; and thereby it comes to 
run on the personal element in industry. 

Preconceptions: I 

105 

But, with or without mitigation, the scheme of life 
which men perforce adopt under exigencies of an ad 
vanced industrial situation shapes their habits of thought 
on the side of their behavior, and thereby shapes their 
habits of thought to some extent for all purposes. Each 
individual is but a single complex of habits of thought, 
and the same psychical mechanism that expresses itself in 
one direction as conduct expresses itself in another direc 
tion as knowledge. The habits of thought formed in the 
one connection, in response to stimuli that call for a re 
sponse in terms of conduct, must, therefore, have their 
effect when the same individual comes to respond to stim 
uli that call for a response in terms of knowledge. The 
scheme of thought or of knowledge is in good part a re 
verberation of the scheme of life. So that, after all has 
been said, it remains true that with the growth of indus 
trial organization and efficiency there must, by selection 
and by adaptation, supervene a greater resort to the me 
chanical or dispassionate method of apprehending facts. 

But the industrial side of life is not the whole of it, nor 
does the scheme of life in vogue in any community or at 
any cultural stage comprise industrial conduct alone. The 
social, civic, military, and religious interests come in for 
their share of attention, and between them they commonly 
take up by far the larger share of it. Especially is this 
true so far as concerns those classes among whom we 
commonly look for a cultivation of knowledge for knowl 
edge's sake. The discipline which these several interests 
exert does not commonly coincide with the training given 
by industry. So the religious interest, with its canons of 
truth and of right living, runs exclusively on personal re 
lations and the adaptation of conduct to the predilections 
°f a superior personal agent. The weight of its disci 
pline, therefore, falls wholly on the animistic side. It 

!' l- 

•; ». 

fr 

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''' II. 

106 

Preconceptions: I 

i( 
•i 

acts to heighten our appreciation of the spiritual bearing 
of phenomena and to discountenance a matter-of-fact 
apprehension of things. The skeptic of the type of Hume 
has never been in good repute with those who stand 
closest to the accepted religious truths. The bearing of 
this side of our culture upon the development of econom 
ics is shown by what the mediaeval scholars had to say on 
economic topics. 

The disciplinary effects of other phases of life, outside 
of the industrial and the religious, is not so simple a mat 
ter ; but the discussion here approaches nearer to the point 
of immediate inquiry,— namely, the cultural situation in 
the eighteenth century, and its relation to economic specu 
lation,— and this ground of interest in the question may 
help to relieve the topic of the tedium that of right belongs 
to it. 

In the remoter past of which we have records, and even 
in the more recent past, Occidental man, as well as man 
elsewhere, has eminently been a respecter of persons. 
Wherever the warlike activity has been a large feature of 
the community's life, much of human conduct in society 
has proceeded on a regard for personal force. The 
scheme of life has been a scheme of personal aggression 
and subservience, partly in the naïve form, partly conven 
tionalised in a system of status. The discipline of social 
life for the present purpose, in so far as its canons of 
conduct rest on this element of personal force in the un- 
conventionalised form, plainly tends to the formation of a 
habit of apprehending and coordinating facts from the 
animistic point of view. So far as we have to do with 
life under a system of status, the like remains true, but 
with a difference. The régime of status inculcates an un 
remitting and very nice discrimination and observance of 
distinctions of personal superiority and inferiority. To 

Preconceptions: I 

107 

the criterion of personal force, or will-power, taken in its 
immediate bearing on conduct, is added the criterion of 
personal excellence-in-general, regardless of the first-hand 
potency of the given person as an agent. This criterion 
of conduct requires a constant and painstaking imputation 
of personal value, regardless of fact. The discrimination 
enjoined by the canons of status proceeds on an invidious 
comparison of persons in respect of worth, value, potency, 
virtue, which must, for the present purpose, be taken as 
putative. The greater or less personal value assigned a 
given individual or a given class under the canons of 
status is not assigned on the ground of visible effciency, 
but on the ground of a dogmatic allegation accepted on the 
strength of an uncontradicted categorical affirmation sim 
ply. The canons of status hold their ground by force of 
preemption. Where distinctions of status are based on a 
putative worth transmitted by descent from honorable 
antecedents, the sequence of transmission to which appeal 
is taken as the arbiter of honor is of a putative and ani 
mistic character rather than a visible mechanical continu 
ity. The habit of accepting as final what is prescriptively 
right in the affairs of life has as its reflex in the affairs 
of knowledge the formula, Quid ab omnibus, quid itbique 
credititr credcndum est. 

Even this meager account of the scheme of life that 
characterises a régime of status should serve to indicate 
what is its disciplinary effect in shaping habits of thought, 
and therefore in shaping the habitual criteria of knowl 
edge and of reality. A culture whose institutions are a 
framework of invidious comparisons implies, or rather 
involves and comprises, a scheme of knowledge whose 
definitive standards of truth and substantiality are of an 
animistic character ; and, the more undividedly the canons 
°f status and ceremonial honor govern the conduct of the 

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108 

Preconceptions: I 

community, the greater the facility with which the se 
quence of cause and effect is made to yield before the 
higher claims of a spiritual sequence or guidance in the 
course of events. Men consistently trained to an unre 
mitting discrimination of honor, worth, and personal force 
in their daily conduct, and to whom these criteria afford 
the definitive ground of sufficiency in coordinating facts 
for the purposes of life, will not be satisfied to fall short 
of the like definitive ground of sufficiency when they come 
to coordinate facts for the purposes of knowledge simply. 
The habits formed in unfolding his activity in one direc 
tion, under the impulse of a given interest, assert them 
selves when the- individual comes to unfold his activity in 
any other direction, under the impulse of any other inter 
est. If his last resort and highest criterion of truth in 
conduct is afforded by the element of personal force and 
invidious comparison, his sense of substantiality or truth 
in the quest of knowledge will be satisfied only when a like 
definitive ground of animistic force and invidious com 
parison is reached. But when such ground is reached he 
rests content and pushes the inquiry no farther. In his 
practical life he has acquired the habit of resting his case 
on an authentic deliverance as to what is absolutely right. 
This absolutely right and good final term in conduct has 
the character of finality only when conduct is construed 
in a ceremonial sense ; that is to say, only when life is 
conceived as a scheme of conformity to a purpose outside 
and beyond the process of living. Under the régime of 
status this ceremonial finality is found in the concept of 
worth or honor. In the religious domain it is the concept 
of virtue, sanctity, or tabu. Merit lies in what one is, 
not in what one does. The habit of appeal to ceremonial 
finality, formed in the school of status, goes with the indi 
vidual in his quest of knowledge, as a dependence upon a 

Preconceptions: I 

109 

similarly authentic norm of absolute truth,— a similar 
seeking of a final term outside and beyond the range of 
knowledge. 

The discipline of social and civic life under a régime of 
status, then, reënforces the discipline of the religious life ; 
and the outcome of the resulting habituation is that the 
canons of knowledge are cast in the animistic mold and 
converge to a ground of absolute truth, and this absolute 
truth is of a ceremonial nature. Its subject-matter is a 
reality regardless of fact. 

The outcome, for science, of the religious and social life 
of the civilisation of status, in Occidental culture, was a 
structure of quasi-spiritual appreciations and explana 
tions, of which astrology, alchemy, and mediaeval theology 
and metaphysics are competent, though somewhat one 
sided, exponents. Throughout the range of this early 
learning the ground of correlation of phenomena is in part 
the supposed relative potency of the facts correlated ; but 
it is also in part a scheme of status, in which facts are 
scheduled according to a hierarchical gradation of worth 
or merit, having only a ceremonial relation to the observed 
phenomena. Some elements (some metals, for instance) 
are noble, others base ; some planets, on grounds of cere 
monial efficacy, have a sinister influence, others a benefi 
cent one; and it is a matter of serious consequence 
whether they are in the ascendant, and so on. 

The body of learning through which the discipline of 
animism and invidious comparison transmitted its effects 
to the science of economics was what is known as natural 
theology, natural rights, moral philosophy, and natural 
law. These several disciplines or bodies of knowledge 
had wandered far from the naïve animistic standpoint at 
the time when economic science emerged, and much the 
same is true as regards the time of the emergence of other 

if 

 It- 

110 

Preconceptions: I 

modern sciences. But the discipline which makes for an 
animistic formulation of knowledge continued to hold the 
primacy in modern culture, although its dominion was 
never altogether undivided or unmitigated. Occidental 
culture has long been largely an industrial culture ; and, 
as already pointed out, the discipline of industry, and of 
life in an industrial community, does not favor the animis 
tic preconception. This is especially true as regards in 
dustry which makes large use of mechanical contrivances. 
The difference in these respects between Occidental in 
dustry and science, on the one hand, and the industry and 
science of other cultural regions, on the other hand, is 
worth noting in this connection. The result has been that 
the sciences, as that word is understood in later usage, 
have come forward gradually, and in a certain rough par 
allelism with the development of industrial processes and 
industrial organisation. It is possible to hold that both 
modern industry (of the mechanical sort) and modern 
science center about the region of the North Sea. It is 
still more palpably true that within this general area the 
sciences, in the recent past, show a family likeness to the 
civil and social institutions of the communities in which 
they have been cultivated, this being true to the greatest 
extent of the higher or speculative sciences; that is, in 
that range of knowledge in which the animistic precon 
ception can chiefly and most effectively find application. 
There is, for instance, in the eighteenth century a per 
ceptible parallelism between the divergent character of 
British and Continental culture and institutions, on the 
one hand, and the dissimilar aims of British and Conti 
nental speculation, on the other hand. 

Something has already been said of the difference in 
preconceptions between the French and the British econ 
omists of the eighteenth century. It remains to point out 

Preconceptions: I 

in 

the correlative cultural difference between the two com 
munities, to which it is conceived that the difference in 
scientific animus is in great measure due. It is, of course, 
only the general features, the general attitude of the spec 
ulators, that can be credited to the difference in culture. 
Differences of detail in the specific doctrines held could 
be explained only on a much more detailed analysis than 
can be entered on here, and after taking account of facts 
which cannot here be even allowed for in detail. 

Aside from the greater resort to mechanical contriv 
ances and the larger scale of organisation in British indus 
try, the further cultural peculiarities of the British com 
munity run in the same general direction. British re 
ligious life and beliefs had less of the element of fealty — 
personal or discretionary mastery and subservience — and 
more of a tone of fatalism. The civil institutions of the 
British had not the same rich personal content as those 
of the French. The British subject owned allegiance to 
an impersonal law rather than to the person of a supe 
rior. Relatively, it may be said that the sense of status, as 
a coercive factor, was in abeyance in the British commu 
nity. Even in the warlike enterprise of the British com 
munity a similar characteristic is traceable. Warfare is, 
of course, a matter of personal assertion. Warlike com 
munities and classes are necessarily given to construing 
facts in terms of personal force and personal ends. They 
are always superstitious. They are great sticklers for 
rank and precedent, and zealously cultivate those distinc 
tions and ceremonial observances in which a system of 
status expresses itself. But, while warlike enterprise has 
by no means been absent from the British scheme of life, 
the geographical and strategic isolation of the British com 
munity has given a characteristic turn to their military 
relations. In recent times British warlike operations have 

i 

 112 

Preconceptions: I 

been conducted abroad. The military class has conse 
quently in great measure been segregated out from the 
body of the community, and the ideals and prejudices of 
the class have not been transfused through the general 
body with the same facility and effect that they might 
otherwise have had. The British community at home has 
seen the campaign in great part from the standpoint of 
the " sinews of war." 

The outcome of all these national peculiarities of cir 
cumstance and culture has been that a different scheme of 
life has been current in the British community from what 
has prevailed on the Continent. There has resulted the 
formation of a different body of habits of thought and a 
different animus in their handling of facts. The precon 
ception of causal sequence has been allowed larger scope 
in the correlation of facts for purposes of knowledge ; and, 
where the animistic preconception has been resorted to, as 
•it always has in the profounder reaches of learning, it has 
commonly been an animism of a tamer kind. 

Taking Adam Smith as an exponent of this British atti 
tude in theoretical knowledge, it is to be noted that, while 
he formulates his knowledge in .terms of a propensity 
(natural laws) working teleologically to an end, the end 
or objective point which controls the formulation has not 
the same rich content of vital human interest or advan 
tage as is met with in the- Physiocratic speculations. 
There is perceptibly less of an imperious tone in Adam 
Smith's natural laws than in those of the contemporary 
French economists. It is true, he sums up the institu 
tions with which he deals in terms of the ends which they 
should subserve, rather than in terms of the exigencies 
and habits of life out of which they have arisen; but he 
does not with the same tone of finality -appeal to the end 
subserved as a final cause through whose coercive guid- 

Preconceptions: I 

ance the complex of phenomena is kept to its appointed 
task. Under his hands the restraining, compelling agency 
retires farther into the background, and appeal is taken 
to it neither so directly nor on so slight provocation. 

But Adam Smith is too large a figure to be disposed of 
in a couple of concluding paragraphs. At the same time 
his work and the bent which he gave to economic specu 
lation are so intimately bound up with the aims and bias 
that characterise economics in its next stage of develop 
ment that he is best dealt with as the point of departure for 
die Classical School rather than merely as a British coun 
terpart of Physiocracy. Adam Smith will accordingly be 
considered in immediate connection with the bias of the 
classical school and the incursion of utilitarianism into 
economics. 

 THE PRECONCEPTIONS OF ECONOMIC 
SCIENCE1 

II 

ADAM SMITH'S animistic bent asserts itself more plainly 
and more effectually in the general trend and aim of his 
discussion than in the details of theory. " Adam Smith's 
Wealth of Nations is, in fact, so far as it has one single 
purpose, a vindication of the unconscious law present in 
the separate actions of men when these actions are di 
rected by a certain strong personal motive." 2 Both in the 
Theory of the Moral Sentiments and in the Wealth of 
Nations there are many passages that testify to his abiding 
conviction that there is a wholesome trend in the natural 
course of things, and the characteristically optimistic tone 
in which he speaks for natural liberty is but an expression 
of this conviction. An extreme resort to this animistic 
ground occurs in his plea for freedom of investment.3 

1 Reprinted by permission from The Quarterly Journal of Eco 
nomics, Vol. XIII, July. 1899. 

2Bonar, Philosophy and Political Economy, pp. 177, 178. 

3 " Every individual is continually exerting himself to find out 
the most advantageous employment for whatever capital he can 
command. It is his own advantage, and not that of the society, 
which he has in view. But the study of his own advantage 
naturally, or rather necessarily, leads him to prefer that employ 
ment which is most advantageous to the society. . . . By direct 
ing that industry in such a manner as its produce may be of the 
greatest value, he intends only his own gain; and he is in this, 
as in many other cases, led by an invisible hand to promote an 
end which was no part of his intention. Nor is it always the 
worse for society that it was no part of it. By pursuing his own 

114 

Preconceptions: II 

In the proposition that men are " led by an invisible 
hand," Smith does not fall back on a meddling Providence 
who is to set human affairs straight when they are in 
danger of going askew. He conceives the Creator to be 
very continent in the matter of interference with the nat 
ural course of things. The Creator has established the 
natural order to serve the ends of human welfare ; and he 
has very nicely adjusted the efficient causes comprised in 
the natural order, including human aims and motives, to 
this work that they are to accomplish. The guidance of 
the invisible hand takes place not by way of interposition, 
but through a comprehensive scheme of contrivances 
established from the beginning. For the purpose of eco 
nomic theory, man is conceived to be consistently self- 
seeking; but this economic man is a part of the mechan 
ism of nature, and his self-seeking traffic is but a means 
whereby, in the natural course of things, the general wel 
fare is worked out. The scheme as a whole is guided by 
the end to be reached, but the sequence of events through 
which the end is reached is a causal sequence which is 
not broken into episodically. The benevolent work of 
guidance was performed in first establishing an ingenious 
mechanism of forces and motives capable of accomplish 
ing an ordained result, and nothing beyond the enduring 
constraint of an established trend remains to enforce the 
divine purpose in the resulting natural course of things. 

The sequence of events, including human motives and 
human conduct, is a causal sequence; but it is also some 
thing more, or, rather, there is also another element of 
continuity besides that of brute cause and effect, present 
even in the step-by-step process whereby the natural 

interest he frequently promotes that of the society more effectu 
ally than when he really intends to promote itJ" Wealth of 
Nations, Book IV, chap. ii. 

il- 

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Preconceptions: II 

course of things reaches its final term. The presence of 
such a quasi-spiritual or non-causal element is evident 
from two (alleged) facts, (i) The course of things may 
be deflected from the direct line of approach to that con 
summate human welfare which is its legitimate end. The 
natural trend of things may be overborne by an untoward 
conjuncture of causes. There is a distinction, often dis 
tressingly actual and persistent, between the legitimate 
and the observed course of things. If " natural," in 
Adam Smith's use, meant necessary, in the sense of caus 
ally determined, no divergence of events from the natural 
or legitimate course of things would be possible. If the 
mechanism of nature, including man, were a mechani 
cally competent contrivance for achieving the great arti 
ficer's design, there could be no such episodes of blunder 
ing and perverse departure from the direct path as Adam 
Smith finds in nearly all existing arrangements. Institu 
tional facts would then be " natural." 4 (2) When things 
have gone wrong, they will right themselves if interfer 
ence with the natural course ceases ; whereas, in the case 
of a causal sequence simply, the mere cessation of inter 
ference will not leave the outcome the same as if no 
interference had taken place. This recuperative power of 
nature is of an extra-mechanical character. The continu 
ity of sequence by force of which the natural course of 
things prevails is, therefore, not of the nature of cause and 
effect, since it bridges intervals and interruptions in the 
causal sequence.5 Adam Smith's use of the term " real " 

4 The discrepancy between the actual, causally determined situ 
ation and the divinely intended consummation is the metaphysical 
ground of all that inculcation of morality and enlightened policy 
that makes up so large a part of Adam Smith's work. The like, 
of course, holds true for all moralists and reformers who pro 
ceed on the assumption of a providential order. 

5"In the political body, however, the wisdom of nature has 

Preconceptions: II 

117 

in statements of theory — as, for example, " real value," 
" real price "6— is evidence to this effect. " Natural " 
commonly has the same meaning as " real " in this con 
nection.7 Both " natural " and " real " are placed in con 
trast with the actual ; and, in Adam Smith's apprehension, 
both have a substantiality different from and superior to 
facts. The view involves a distinction between reality 
and fact, which survives in a weakened form in the 
theories of " normal " prices, wages, profits, costs, in 
Adam Smith's successors. 

This animistic prepossession seems to pervade the ear 
lier of his two monumental works in a greater degree 
than the later. In the Moral Sentiments recourse is had 
to the teleological ground of the natural order more freely 
and with perceptibly greater insistence. There seems to 
be reason for holding that the animistic preconception 
weakened or, at any rate, fell more into the background 
as his later work of speculation and investigation pro 
ceeded. The change shows itself also in some details of 
his economic theory, as first set forth in the Lectures, and 
afterwards more fully developed in the Wealth of Na 
tions. So, for instance, in the earlier presentation of the 

fortunately made ample provision for remedying many of the bad 
effects of the folly and injustice of man; in the same manner 
as it has done in the natural body, for remedying those of his 
sloth and intemperance." Wealth of Nations, Book IV, chap. ix. 

6E.g., "the real measure of the exchangeable value of all 
commodities." Wealth of Nations, Book I, chap, v, and re 
peatedly in the like connection. 

7 E-g., Book I, chap, vii : " When the price of any commodity is 
neither more nor less than what is sufficient to pay the rent of the 
land, the wages of the labor, and the profits of the stock employed 
m raising, preparing, and bringing it to market, according to their 
natural rates, the commodity is then sold for what may be called 
its natural price." " The actual price at which any commodity is 
commonly sold is called its market price. It may be either above 
°r below or exactly the same with its natural price," 

"1 

 n8 

Preconceptions: II 

Preconceptions: II 

119 

matter, " the division of labor is the immediate cause of 
opulence " ; and this division of labor, which is the chief 
condition of economic well-being, " flows from a direct 
propensity in human nature for one man to barter with 
another." 8 The " propensity " in question is here ap 
pealed to as a natural endowment immediately given to 
man with a view to the welfare of human society, and 
without any attempt at further explanation of how man 
has come by it. No causal explanation of its presence or 
character is offered. But the corresponding passage of 
the Wealth of Nations handles the question more cau 
tiously.9 Other parallel passages might be compared, with 
much the same effect. The guiding hand has withdrawn 
farther from the range of human vision. 

However, these and other like filial expressions of a 
devout optimism need, perhaps, not be taken as integral 
features of Adam Smith's economic theory, or as seri 
ously affecting the character of his work as an economist. 
They are the expression of his general philosophical and 
theological views, and are significant for the present pur 
pose chiefly as evidences of an animistic and optimistic 
bent. They go to show what is Adam Smith's accepted 
ground of finality,— the ground to which all his specula 
tions on human affairs converge ; but they do not in any 

6 Lectures of Adam Smith (Ed. Cannan, 1896), p. 169. 

8 " This division of labor, from which so many advantages are 
derived, is not originally the effect of any human wisdom, which 
foresees and intends that general opulence to which it gives occa 
sion. It is the necessary though very slow and gradual conse 
quence of a certain propensity in human nature which has in 
view no such extensive utility,— the propensity to truck, barter, 
and exchange one thing for another. Whether this propensity be 
one of those original principles in human nature of which no 
further account can be given, or whether, as seems more 
probable, it be the necessary consequence of the faculties of 
reason and speech, it belongs not to our present subject to in 
quire." Wealth of Nations, Book I, chap. ii. 

great degree show the teleological bias guiding his formu 
lation of economic theory in detail. 

The effective working of the teleological bias is best 
seen in Smith's more detailed handling of economic phe 
nomena — in his discussion of what may loosely be called 
economic institutions — and in the criteria and principles 
of procedure by which he is guided in incorporating these 
features of economic life into the general structure of his 
theory. A fair instance, though perhaps not the most 
telling one, is the discussion of the " real and nominal 
price," and of the " natural and market price " of com 
modities, already referred to above.10 The " real " price 
of commodities is their value in terms of human life. 
At this point Smith differs from the Physiocrats, with 
whom the ultimate terms of value are afforded by human 
sustenance taken as a product of the functioning of brute 
nature ; the cause of the difference being that the Physio 
crats conceived the natural order which works towards 
the material well-being of man to comprise the non- 
human environment only, whereas Adam Smith includes 
man in this concept of the natural order, and, indeed, 
makes him the central figure in the process of production. 
With the Physiocrats, production is the work of nature : 
with Adam Smith, it is the work of man and nature, with 
man in the foreground. In Adam Smith, therefore, labor 
is the final term in valuation. This " real " value of com 
modities is the value imputed to them by the economist 
under the stress of his teleological preconception. It has 
littlcj if any, place in the course of economic events, and 
no bearing on human affairs, apart from the sentimental 
influence which such a preconception in favor of a " real 
value " in things may exert upon men's notions of what 
is the good and equitable course to pursue in their trans- 

10 Wealth of Nations, Book I, chaps, v.-vii. 

 I2O 

Preconceptions: II 

Preconceptions: II 

121 

actions. It is impossible to gauge this real value of 
goods ; it cannot be measured or expressed in concrete 
terms. Still, if labor exchanges for a varying quantity of 
goods, " it is their value which varies, not that of the 
labor which purchases them." 11 The values which prac 
tically attach to goods in men's handling of them are con 
ceived to be determined without regard to the real value 
which Adam Smith imputes to the goods ; but, for all that, 
the substantial fact with respect to these market values is 
their presumed approximation to the real values ideologi 
cally imputed to the goods under the guidance of inviolate 
natural laws. The real, or natural, value of articles has 
no causal relation to the value at which they exchange. 
The discussion of how values are determined in practice 
runs on the motives of the buyers and sellers, and the rela 
tive advantage enjoyed by the parties to the transaction.12 
It is a discussion of a process of valuation, quite unre 
lated to the " real," or " natural," price of things, and 
quite unrelated to the grounds on which things are held 
to come by their real, or natural, price ; and yet, when the 
complex process of valuation has been traced out in terms 
of human motives and the exigencies of the market, Adam 
Smith feels that he has only cleared the ground. He 
then turns to the serious business of accounting for value 
and price theoretically, and making the ascertained facts 
articulate with his teleological theory of economic life.13 

" Wealth of Nations, Book I, chap. v. 

12 As, e.g., the entire discussion of the determination of Wages, 
Profits and Rent, in Book I, chaps, viii.-xi. 

13 " There is in every society or neighborhood an ordinary or 
average rate both of wages and profit in every different employ 
ment of labor and stock This rate is naturally regulated, . • • 
partly by the general circumstances of the society. . . . There is, 
likewise, in every society or neighborhood an ordinary or average 
rate of rent, which is regulated, too. . . . These ordinary or 
average rates may be called the natural rates of wages, profit, 

The occurrence of the words " ordinary " and " aver 
age " in this connection need not be taken too seriously. 
The context makes it plain that the equality which com 
monly subsists between the ordinary or average rates, and 
the natural rates, is a matter of coincidence, not of iden 
tity. Not only are there temporary deviations, but there 
may be a permanent divergence between the ordinary and 
the natural price of a commodity ; as in case of a monop 
oly or of produce grown under peculiar circumstances of 
soil or climate.14 

The natural price coincides with the price fixed by com 
petition, because competition means the unimpeded play 
of those efficient forces through which the nicely adjusted 
mechanism of nature works out the design to accomplish 
which it was contrived. The natural price is reached 
through the free interplay of the factors of production, 
and it is itself an outcome of production. Nature, includ 
ing the human factor, works to turn out the goods ; and 
the natural value of the goods is their appraisement from 
the standpoint of this productive process of nature. Nat 
ural value is a category of production: whereas, notori 
ously exchange value or market price is a category of 
distribution. And Adam Smith's theoretical handling of 
market price aims to show how the factors of human pre 
dilection and human wants at work in the higgling of the 

and rent, at the time and place in which they commonly prevail. 
When the price of any commodity is neither more nor less than 
what is sufficient to pay the rent of the land, the wages of the 
labor, and the profits of the stock employed in raising, preparing, 
and bringing it to market, according to their natural rates, the 
commodity is then sold for what may be called its natural price." 
wealth of Nations, Book I, chap. vii. 

14"Such commodities may continue for whole centuries to 
gether to be sold at this high price; and that part of it which 
resolves itself into the rent of land is, in this case, the part 
which is generally paid above its natural rate." Book I, chap. vii. 

 122 

Preconceptions: II 

market bring about a result in passable consonance with 
the natural laws that are conceived to govern production. 

The natural price is a composite result of the blending 
of the three " component parts of the price of commodi 
ties,"— the natural wages of laborer, the natural profits 
of stock, and the natural rent of land ; and each of these 
three components is in its turn the measure of the pro 
ductive effect of the factor to which it pertains. The 
further discussion of these shares in distribution aims to 
account for the facts of distribution on the ground of the 
productivity of the factors which are held to share the 
product between them. That is to say, Adam Smith's 
preconception of a productive natural process as the basis 
of his economic theory dominates his aims and procedure, 
when he comes to deal with phenomena that cannot be 
stated in terms of production. The causal sequence in 
the process of distribution is, by Adam Smith's own show 
ing, unrelated to the causal sequence in the process of 
production ; but, since the latter is the substantial fact, as 
viewed from the standpoint of a ideological natural order, 
the former must be stated in terms of the latter before 
Adam Smith's sense of substantiality, or " reality," is 
satisfied. Something of the same kind is, of course, vis 
ible in the Physiocrats and in Cantillon. It amounts to an 
extension of the natural-rights preconception to economic 
theory. Adam Smith's discussion of distribution as a 
function of productivity might be traced in detail through 
his handling of Wages, Profits, and Rent; but, since the 
aim here is a brief characterisation only, and not an ex 
position, no farther pursuit of this point seems feasible. 

It may, however, be worth while to point out another 
line of influence along which the dominance of the teleo- 
logical preconception shows itself in Adam Smith. This 
is the normalisation of data, in order to bring them into 

Preconceptions: II 

123 

consonance with an orderly course of approach to the 
putative natural end of economic life and development. 
The result of this normalisation of data is, on the one 
hand, the use of what James Steuart calls " conjectural 
history " in dealing with past phases of economic life, and, 
on the other hand, a statement of present-day phenomena 
in terms of what legitimately ought to be according to the 
God-given end of life rather than in terms of tmconstrued 
observation. Account is taken of the facts (supposed or 
observed) ostensibly in terms of causal sequence, but the 
imputed causal sequence is construed to run on lines of 
ideological legitimacy. 

A familiar instance of this " conjectural history," in a 
highly and effectively normalized form, is the account of 
" that early and rude state of society which precedes both 
the accumulation of stock and the appropriation of 
land." 15 It is needless at this day to point out that this 
" early and rude state," in which " the whole produce of 
labor belongs to the laborer," is altogether a figment. The 
whole narrative, from the putative origin down, is not 
only supposititious, but it is merely a schematic presenta 
tion of what should have been the course of past develop 
ment, in order to lead up to that ideal economic situation 
which would satisfy Adam Smith's preconception.16 As 
the narrative comes nearer the region of known latter-day 
facts, the normalisation of the data becomes more difficult 
and receives more detailed attention; but the change in 
method is a change of degree rather than of kind. In the 
" early and rude state " the coincidence of the " natural " 
and the actual course of events is immediate and undisx 

15 Wealth of Nations, Book I, chap, vi ; also chap. viii. 

16 For an instance of how these early phases of industrial devel-. 
opment appear, when not seen in the light of Adam Smith's pre 
conception, see, among others, Bücher, Entftehung der Volkwirt-, 
schaft. 

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 124 

Preconceptions: II 

turbed, there being no refractory data at hand ; but in the 
later stages and in the present situation, where refractory 
facts abound, the coordination is difficult, and the coin 
cidence can be shown only by'a free abstraction from phe 
nomena that are irrelevant to the teleological trend and 
by a laborious interpretation of the rest. The facts of 
modern life are intricate, and lend themselves to statement 
in the terms of the theory only after they have been sub 
jected to a " higher criticism." 

The chapter " Of the Origin and Use of Money " " is 
an elegantly normalised account of the origin and nature 
of an economic institution, and Adam Smith's further dis 
cussion of money runs on the same lines. The origin of 
money is stated in terms of the purpose which money 
should legitimately serve in such a community as Adam 
Smith considered right and good, not in terms of the 
motives and exigencies which have resulted in the use of 
money and in the gradual rise of the existing method of 
payment and accounts. Money is " the great wheel of 
circulation," which effects the transfer of goods in proc 
ess of production and the distribution of the finished 
goods to the consumers. It is an organ of the economic 
commonwealth rather than an expedient of accounting 
and a conventional repository of wealth. 

It is perhaps superfluous to remark that to the " plain 
man," who is not concerned with the " natural course of 
things " in a consummate Geldwirtschaft, the money that 
passes his hand is not a " great wheel of circulation." To 
the Samoyed, for instance, the reindeer which serves him 
as unit of value is wealth in the most concrete and tan 
gible form. Much the same is true of coin, or even of 
bank-notes, in the apprehension of unsophisticated people 
among ourselves to-day. And yet it is in terms of the 

17 Book I, chap. iv. 

Preconceptions: II 

125 

habits and conditions of life of these " plain people " that 
the development of money will have to be accounted for 
if it is to be stated in terms of cause and effect. 

The few scattered passages already cited may serve to 
illustrate how Adam Smith's animistic or teleological bent 
shapes the general structure of his theory and gives it 
consistency. The principle of definitive formulation in 
Adam Smith's economic knowledge is afforded by a puta 
tive purpose that does not at any point enter causally into 
the economic life process which he seeks to know. This 
formative or normative purpose or end is not freely con 
ceived to enter as an efficient agent in the events discussed, 
or to be in any way consciously present in the process.. 
It can scarcely be taken as an animistic agency engaged 
in the process. It sanctions the course of things, and 
gives legitimacy and substance to the sequence of events, 
so far as this sequence may be made to square with the 
requirements of the imputed end. It has therefore a 
ceremonial or symbolical force only, and lends the discus 
sion a ceremonial competency ; although with economists 
who have been in passable agreement with Adam Smith as 
regards the legitimate end of economic life this ceremo 
nial consistency, or consistency dc jure, has for many pur 
poses been accepted as the formulation of a causal con 
tinuity in the phenomena that have been interpreted in 
its terms. Elucidations of what normally ought to hap 
pen, as a matter of ceremonial necessity, have in this way 
come to pass for an account of matters of fact. 

But, as has already been pointed out, there is much more 
to Adam Smith's exposition of theory than a formulation 
of what ought to be. Much of the advance he achieved 
over his predecessors consists in a larger and more pains 
taking scrutiny of facts, and a more consistent tracing 

 126 

Preconceptions: II 

out of causal continuity in the facts handled. No doubt, 
his superiority over the Physiocrats, that characteristic of 
his work by virtue of which it superseded theirs in the 
farther growth of economic ' science, lies to some extent 
in his recourse to a different, more modern ground of 
normality,— a ground more in consonance with the body 
of preconceptions that have had the vogue in later genera 
tions. It is a shifting of the point of view from which the 
facts are handled ; but it comes in great part to a substi 
tution of a new body of preconceptions for the old, or a 
new adaptation of the old ground of finality, rather than 
an elimination of all metaphysical or animistic norms of 
valuation. With Adam Smith, as with the Physiocrats, 
the fundamental question, the answer to which affords the 
point of departure and the norm of procedure, is a ques 
tion of substantiality or economic " reality." With both, 
the answer to this question is given naively, as a deliver 
ance of common sense. Neither is disturbed by doubts as 
to this deliverance of common sense or by any need of 
scrutinising it. To the Physiocrats this substantial 
ground of economic reality is the nutritive process of Na 
ture. To Adam Smith it is Labor. His reality has the 
advantage of being the deliverance of the common sense of 
a more'modern community, and one that has maintained 
itself in force more widely and in better consonance with 
the facts of latter-day industry. The Physiocrats owe 
their preconception of the productiveness of nature to the 
habits of thought of a community in whose economic life 
the dominant phenomenon was the owner of agricultural 
land. Adam Smith owes his preconception in favor of 
labor to a community in which the obtrusive economic 
feature of the immediate past was handicraft and agri 
culture, with commerce as a scarcely secondary phe 
nomenon. 

Preconceptions: II 

127 

So far as Adam Smith's economic theories are a tracing 
out of the causal sequence in economic phenomena, they 
are worked out in terms given by these two main direc 
tions of activity,— human effort directed to the shaping 
of the material means of life, and human effort and dis 
cretion directed to a pecuniary gain. The former is the 
great, substantial productive force : the latter is not imme 
diately, or proximately, productive.18 Adam Smith still 
has too lively a sense of the nutritive purpose of the order 
of nature freely to extend the concept of productiveness 
to any activity that does not yield a material increase of 
the creature comforts. His instinctive appreciation of the 
substantial virtue of whatever effectually furthers nutri 
tion, even leads him into the concession that " in agricul 
ture nature labors along with man," although the general 
tenor of his argument is that the productive force with 
which the economist always has to count is human labor. 
This recognised substantiality of labor as productive is, 
as has already been remarked, accountable for his effort 
to reduce to terms of productive labor such a category of 
distribution as exchange value. 

With but slight qualification, it will hold that, in the 
causal sequence which Adam Smith traces out in his 
economic theories proper (contained in the first three 
books of the Wealth of Nations), the causally efficient 
factor is conceived to be human nature in these two rela 
tions,— of productive efficiency and pecuniary gain 
through exchange. Pecuniary gain — gain in the mate 
rial means of life through barter — furnishes the motive 
force to the economic activity of the individual ; although 
productive efficiency is the legitimate, normal end of the 
community's economic life. To such an extent does this 

18 See Wealth of Nations, Book II, chap, v, " Of the Different 
Employment of Capitals." 

' !'. I \ 

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If ' 

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 128 

Preconceptions: II 

Preconceptions: II 

129 

concept of man's seeking his ends through " truck, barter, 
and exchange " pervade Adam Smith's treatment of eco 
nomic processes that he even states production in its 
terms, and says that " labor was the first price, the original 
purchase-money, that was paid for all things." 18 The 
human nature engaged in this pecuniary traffic is conceived 
in somewhat hedonistic terms, and the motives and move 
ments of men are normalised to fit the requirements of a 
hedonistically conceived order of nature. Men are very 
much alike in their native aptitudes and propensities;20 
and, so far as economic theory need take account of these 
aptitudes and propensities, they are aptitudes for the pro 
duction of the " necessaries and conveniences of life," 
and propensities to secure as great a share of these crea 
ture comforts as may be. 

Adam Smith's conception of normal human nature — 
that is to say, the human factor which enters causally in 
the process which economic theory discusses — comes, on 
the whole, to this : Men exert their force and skill in a 
mechanical process of production, and their pecuniary 
sagacity in a competitive process of distribution, with a 
view to individual gain in the material means of life. 
These material means are sought in order to the satisfac 
tion of men's natural wants through their consumption. 
It is true, much else enters into men's endeavors in the 
struggle for wealth, as Adam Smith points out; but this 
consumption comprises the legitimate range of incentives, 

is Wealth of Nations, Book I, chap. v. See also the plea for 
free trade, Book IV, chap, ii : " But the annual revenue of every 
society is always precisely equal to the exchangeable value of the 
whole annual produce of its industry, or, rather, is precisely the 
same thing with that exchangeable value." 

20"The difference of natural talents in different men is in 
reality much less than we are aware of." Wealth of Nations, 
Book I, chap. ii. 

and a theory which concerns itself with the natural course 
of things need take but incidental account of what does 
not come legitimately in the natural course. In point of 
fact, there are appreciable " actual," though scarcely 
" real," departures from this rule. They are spurious and 
insubstantial departures, and do not properly come within 
the purview of the stricter theory. And, since human na 
ture is strikingly uniform, in Adam Smith's apprehension, 
both the efforts put forth and the consumptive effect 
accomplished may be put in quantitative terms and treated 
algebraically, with the result that the entire range of phe 
nomena comprised under the head of consumption need be 
but incidentally considered ; and the theory of production 
and distribution is complete when the goods or the values 
have been traced to their disappearance in the hands of 
their ultimate owners. The reflex effect of consumption 
upon production and distribution is, on the whole, quanti 
tative only. 

Adam Smith's preconception of a normal teleological 
order of procedure in the natural course, therefore, affects 
not only those features of theory where he is avowedly 
concerned with building up a normal scheme of the eco 
nomic process. Through his normalising the chief causal 
factor engaged in the process, it affects also his arguments 
from cause to effect.21 What makes this latter feature 

21 " Mit diesen philosophischen Ueberzeugungen tritt nun Adam 
Smith an die Welt der Enfahrung heran, und es ergiebt sich ihm 
die Richtigkeit der Principien. Der Reiz der Smith'schen 
Schriften beruht zum grossen Teile darauf, dass Smith die Prin 
cipien in so innige Verbindung mit dem Tatsächlichen gebracht. 
Hie und da werden dann auch die Principien, was durch diese 
Verbindung veranlasst wird, an ihren Spitzen etwas abgeschliffen, 
ihre allzuscharfe Ausprägung dadurch vermieden. Nichtsdesto 
weniger aber bleiben sie stets die leitenden Grundgedanken." 
Richard Zeyss, Adam Smith und der Eigennutz (Tübingen, 1889), 
P- Ho. 

 Il 

130 

Preconceptions: II 

worth particular attention is the fact that his successors 
carried this normalisation farther, and employed it with 
less frequent reference to the mitigating exceptions which 
Adam Smith notices by the way. 

The reason for that farther and more consistent nor 
malisation of human nature which gives us the " economic 
man " at the hands of Adam Smith's successors lies, in 
great part, in the utilitarian philosophy that entered in 
force and in consummate form at about the turning of the 
century. Some credit in the work of normalisation is due 
also to the farther supersession of handicraft by the " cap 
italistic " industry that came in at the same time and in 
pretty close relation with the utilitarian views. 

After Adam Smith's day, economics fell into profane 
hands. Apart from Malthus, who, of all the greater 
economists, stands nearest to Adam Smith on such meta 
physical heads as have an immediate bearing upon the 
premises of economic science, the next generation do not 
approach their subject from the point of view of a di 
vinely instituted order ; nor do they discuss human inter 
ests with that gently optimistic spirit of submission that 
belongs to the economist who goes to his work with the 
fear of God before his eyes. Even with Malthus the re 
course to the divinely sanctioned order of nature is some 
what sparing and temperate. But it is significant for the 
later course of economic theory that, while Malthus may 
well be accounted the truest continuer of Adam Smith, it 
was the undevout utilitarians that became the spokesmen 
of the science after Adam Smith's time. 

There is no wide breach between Adam Smith and the 
utilitarians, either in details of doctrine or in the concrete 
conclusions arrived at as regards questions of policy. On 

Preconceptions: II 

these heads Adam Smith might well be classed as a mod 
erate utilitarian, particularly so far as regards his eco 
nomic work. Malthus has still more of a utilitarian air,— 
so much so, indeed, that he is not infrequently spoken of 
as a utilitarian. This view, convincingly set forth by 
Mr. Bonar,22 is no doubt well borne out by a detailed 
scrutiny of Malthus's economic doctrines. His humani 
tarian bias is evident throughout, and his weakness for 
considerations of expediency is the great blemish of his 
scientific work. But, for all that, in order to an appre 
ciation of the change that came over classical economics 
with the rise of Benthamism, it is necessary to note that 
the agreement in this matter between Adam Smith and 
the disciples of Bentham, and less decidedly that between 
Malthus and the latter, is a coincidence of conclusions 
rather than an identity of preconceptions.23 

With .Adam Smith the ultimate ground of economic 
reality is the design of God, the teleological order; and 
his utilitarian generalisations, as well as the hedonistic 
character of his economic man, are but methods of the 
working out of this natural order, not the substantial and 
self-legitimating ground. Shifty as Malthus's metaphys 
ics are, much the same is to be said for him.24 Of the 
utilitarians proper the converse is true, although here, 
again, there is by no means utter consistency. The sub- 

22 See, e.g., Malthus and his Work, especially Book III, as also 
the chapter on Malthus in Philosophy and Political Economy^, 
Book III, Modern Philosophy: Utilitarian Economics, chap, i, 
" Malthus." 

23 Ricardo is here taken as a utilitarian of the Benthamite 
color, although he cannot be classed as a disciple of Bentham. 
His hedonism is but the uncritically accepted metaphysics com 
prised in the common sense of his time, and his substantial coin 
cidence with Bentham goes to show how well diffused the hedo 
nist preconception was at the time. 

24 Cf. Bonar, Malthus and his Work, pp. 323-336. 

i ' 

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I, 

 I32 

Preconceptions: II 

stantial economic ground is pleasure and pain : the teleo- 
logical order (even the design of God, where that is ad 
mitted) is the method of its working-out. 

It may be unnecessary here to go into the farther impli 
cations, psychological and ethical, which this preconcep 
tion of the utilitarians involves. And even this much 
may seem a taking of excessive pains with a distinction 
that marks no tangible difference. But a reading of the 
classical doctrines, with something of this metaphysics of 
political economy in mind, will show how, and in great 
part why, the later economists of the classical line di 
verged from Adam Smith's tenets in the early years of 
the century, until it has been necessary to interpret Adam 
Smith somewhat shrewdly in order to save him from 
heresy. 

The post-Bentham economics is substantially a theory 
of value. This is altogether the dominant feature of 
the body of doctrines; the rest follows from, or is 
adapted to, this central discipline. The doctrine of value 
is of very great importance also in Adam Smith; but 
Adam Smith's economics is a theory of the production 
and apportionment of the material means of life.25 With 
Adam Smith, value is discussed from the point of view of 
production. With the utilitarians, production is discussed 
from the point of view of value. The former makes 
value an outcome of the process of production : the latter 
make production the outcome of a valuation process. 

The point of departure with Adam Smith is the " pro 
ductive power of labor."20 With Ricardo it is a pecuni- 

26 His work is an inquiry into " the Nature and Causes of the 
Wealth of Nations." 

26 " The annual labor of every nation is the fund which 
originally supplies it with all the necessaries and conveniences of 
life which it annually consumes, and which consist always either 
in the immediate produce of that labor or in what is purchased 

Preconceptions: II 

ary problem concerned in the distribution of ownership;2T 
but the classical writers are followers of Adam Smith, and 
improve upon and correct the results arrived at by him, 
and the difference of point of view, therefore, becomes 
evident in their divergence from him, and the different 
distribution of emphasis, rather than in a new and antago 
nistic departure. 

The reason for this shifting of the center of gravity 
from production to valuation lies, proximately, in Ben- 
tham's revision of the " principles " of morals. Ben- 
tham's philosophical position is, of course, not a self- 
explanatory phenomenon, nor does the effect of Bentham 
ism extend only to those who are avowed followers of 
Bentham ; for Bentham is the exponent of a cultural 
change that affects the habits of thought of the entire 
community. The immediate point of Bentham's work, as 
affecting the habits of thought of the educated community, 
is the substitution of hedonism (utility) in place of 
achievement of purpose, as a ground of legitimacy and a 
guide in the normalisation of knowledge. Its effect is 
most patent in speculations on morals, where it inculcates 
determinism. Its close connection with determinism in 
ethics points the way to what may be expected of its work 
ing in economics. In both cases the result is that human 
action is construed in terms of the causal forces of the 
environment, the human agent being, at the best, taken as 
a mechanism of commutation, through the workings of 
which the sensuous effects wrought by the impinging 

with that produce from other nations." Wealth of Nations, 
'Introduction and Plan," opening paragraph. 

2T " The produce of the earth — all that is derived from its sur 
face by the united application of labor, machinery, and capital — 
18 divided among three classes of the community. . . . To deter- 
ffline the laws which regulate this distribution, is the principal 
Problem of political economy." Political Economy, Preface. 

1. 

 134 

Preconceptions: II 

forces of the environment are, by an enforced process of 
valuation, transmuted without quantitative discrepancy 
into moral or economic conduct, as the case may be. In 
ethics and economics alike the subject-matter of the theory 
is this valuation process that expresses itself in conduct, 
resulting, in the case of economic conduct, in the pursuit 
of the greatest gain or least sacrifice. 

Metaphysically or cosmologically considered, the hu 
man nature into the motions of which hedonistic ethics 
i and economics inquire is an intermediate term in a causal 
sequence, of which the initial and the terminal members 
are sensuous impressions and the details of conduct. 
This intermediate term conveys the sensuous impulse 
without loss of force to its eventuation in conduct. For 
the purpose of the valuation process through which the 
impulse is so conveyed, human nature may, therefore, be 
accepted as uniform; and the theory of the valuation 
process may be formulated quantitatively, in terms of the 
material forces affecting the human sensory and of their 
equivalents in the resulting activity. In the language of 
economics, the theory of value may be stated in terms of 
the consumable goods that afford the incentive to effort 
and the expenditure undergone in order to procure them. 
Between these two there subsists a necessary equality; 
but the magnitudes between which the equality subsists 
are hedonistic magnitudes, not magnitudes of kinetic 
energy nor of vital force, for the terms handled are sensu 
ous terms. It is true, since human nature is substantially 
uniform, passive, and unalterable in respect of men's ca 
pacity for sensuous affection, there may also be presumed 
to subsist a substantial equality between the psychologi 
cal effect to be wrought by the consumption of goods, on 
the one side, and the resulting expenditure of kinetic or 

Preconceptions: II 

135 

vital force, on the other side; but such an equality is, 
after all, of the nature of a coincidence, although there 
should be a strong presumption in favor of its prevailing 
on an average and in the common run of cases. Hedon 
ism, however, does not postulate uniformity between men 
except in the respect of sensuous cause and effect. 

The theory of value which hedonism gives is, there 
fore, a theory of cost in terms of discomfort. By virtue 
of the hedonistic equilibrium reached through the valua 
tion process, the sacrifice or expenditure of sensuous 
reality involved in acquisition is the equivalent of the 
sensuous gain secured. An alternative statement might 
perhaps be made, to the effect that the measure of the 
value of goods is not the sacrifice or discomfort un 
dergone, but the sensuous gain that accrues from the 
acquisition of the goods ; but this is plainly only an 
alternative statement, and there are special reasons in 
the economic life of the time why the statement in terms 
of cost, rather than in terms of " utility," should com 
mend itself to the earlier classical economists. 

On comparing the utilitarian doctrine of value with 
earlier theories, then, the case stands somewhat as follows. 
The Physiocrats and Adam Smith contemplate value as 
a measure of the productive force that realises itself in 
the valuable article. With the Physiocrats this produc 
tive force is the " anabolism " of Nature (to resort to 
a physiological term) : with Adam Smith it is chiefly 
human labor directed to heightening the serviceability of 
the materials with which it is occupied. Production 
causes value in either case. The post-Bentham economics 
contemplates value as a measure of, or as measured by, 
the irksomeness of the effort involved in procuring the 
valuable goods. As Mr. E. C. K. Gönner has admirably 

 136 

Preconceptions: II 

pointed out,28 Ricardo — and the like holds true of classi 
cal economics generally — makes cost the foundation of 
value, not its cause. This resting of value on cost takes 
place through a valuation. Any one who will read Adam 
Smith's theoretical exposition to as good purpose as Mr. 
Gönner has read Ricardo will scarcely fail to find that 
the converse is true in Adam Smith's case. But the 
causal relation of cost to value holds only as regards 
" natural " or " real " value in Adam Smith's doctrine. 
As regards market price, Adam Smith's theory does not 
differ greatly from that of Ricardo on this head. He does 
not overlook the valuation process by which market price 
is adjusted and the course of investment is guided, and 
his discussion of this process runs in terms that should be 
acceptable to any hedonist. 

The shifting of the point of view that comes into eco 
nomics with the acceptance of utilitarian ethics and its 
correlate, the associationist psychology, is in great part a 
shifting to the ground of causal sequence as contrasted 
with that of serviceability to a preconceived end. This 
is indicated even by the main fact already cited,— that 
the utilitarian economists make exchange value the cen 
tral feature of their theories, rather than the conducive- 
ness of industry to the community's material welfare. 
Hedonistic exchange value is the outcome of a valuation 
process enforced by the apprehended pleasure-giving 
capacities of the items valued. And in the utilitarian 
theories of production, arrived at from the standpoint so 
given by exchange value, the conduciveness to welfare is 
not the objective point of the argument. This objective 
point is rather the bearing of productive enterprise upon 

28 In the introductory essay to his edition of Ricardo's Political 
Economy. See, e.g., paragraphs 9 and 24. 

Preconceptions: II 

the individual fortunes of the agents engaged, or upon 
the fortunes of the several distinguishable classes of 
beneficiaries comprised in the industrial community; for 
the great immediate bearing of exchange values upon the 
life of the collectivity is their bearing upon the distribu 
tion of wealth. Value is a category of distribution. The 
result is that, as is well shown by Mr. Cannan's discus 
sion,29 the theories of production offered by the classical 
economists have been sensibly scant, and have been car 
ried out with a constant view to the doctrines on dis 
tribution. An incidental but telling demonstration of 
the same facts is given by Professor Bücher;30 and in 
illustration may be cited Torrens's Essay on the Produc 
tion of Wealth, which is to a good extent occupied with 
discussions of value and distribution. The classical 
theories of production have been theories of the pro 
duction of "wealth"; and "wealth," in classical usage, 
consists of material things having exchange value. Dur 
ing the vogue of the classical economics the accepted 
characteristic by which " wealth " has been defined has 
been its amenability to ownership. Neither in Adam 
Smith nor in the Physiocrats is this amenability to own 
ership made so much,of, nor is it in a similar degree 
accepted as a definite mark of the subject-matter of the 
science. 

As their hedonistic preconception would require, then, 
rt is to the pecuniary side of life that the classical econo 
mists give their most serious attention, and it is the 
pecuniary bearing of any given phenomenon or of any 
institution that commonly shapes the issue of the argu 
ment. The causal sequence about which the discussion 

29 Theories of Production and Distribution, 1776-1848. 
30Entstehung der Volkswirtschaft (second edition). 'Cf. 
Specially chaps, ii, iii, vi, and vii. 

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138 

Preconceptions: II 

Preconceptions: II 

139 

j 

centers is a process of pecuniary valuation. It runs on 
distribution, ownership, acquisition, gain, investment, ex 
change.31 In this way the doctrines on production come 
to take a pecuniary coloring; as is seen in a less de 
gree also in Adam Smith, and even in the Physiocrats, 
although these earlier economists very rarely, if ever, lose 
touch with the concept of generic serviceability as the 
characteristic feature of production. The tradition de 
rived from Adam Smith, which made productivity and 
serviceability the substantial features of economic life, 
was not abruptly put aside by his successors, though the 
emphasis was differently distributed by them in following 
out the line of investigation to which the tradition pointed 
the way. In the classical economics the ideas of produc 
tion and of acquisition are not commonly held apart, and 
very much of what passes for a theory of production is 
occupied with phenomena of investment and acquisition. 
Torrens's Essay is a case in point, though by no means an 
extreme case. 

This is as it should be; for to the consistent hedonist 
the sole motive force concerned in the industrial process 
is the self-regarding motive of pecuniary gain, and indus 
trial activity is but an intermediate term between the 
expenditure or discomfort undergone and the pecuniary 
gain sought. Whether the end and outcome is an invid 
ious gain for the individual (in contrast with or at the 
cost of his neighbors), or an enhancement of the facility 
of human life on the whole, is altogether a by-question in 

31 " Even if we put aside all questions which involve a consid 
eration of the effects of industrial institutions in modifying the 
habits and character of the classes of the community, . . . that 
enough still remains to constitute a separate science, the mere 
enumeration of the chief terms of economics — wealth, value, 
exchange, credit, money, capital, and commodity — will suffice to 
show." Shirres, Analysis of the Ideas of Economics (London, 
1893), pp. 8 and 9. 

any discussion of the range of incentives by which men 
are prompted to their work or the direction which their 
efforts take. The serviceability of the given line of activ 
ity, for the life purposes of the community or for one's 
neighbors, " is not of the essence of this contract." These 
features of serviceability come into the account chiefly as 
affecting the vendibility of what the given individual has 
to offer in seeking gain through a bargain.32 

In hedonistic theory the substantial end of economic 
life is individual gain; and for this purpose production 
and acquisition may be taken as fairly coincident, if not 
identical. Moreover, society, in the utilitarian philoso 
phy, is the algebraic sum of the individuals ; and the in 
terest of the society is the sum of the interests of the 
individuals. It follows by easy consequence, whether 
strictly true or not, that the sum of individual gains is 
the gain of the society, and that, in serving his own in 
terest in the way of acquisition, the individual serves the 
collective interest of the community. Productivity or 
serviceability is, therefore, to be presumed of any occupa 
tion or enterprise that looks to a pecuniary gain ; and so, 
by a roundabout path, we get back to the ancient conclu 
sion of Adam Smith, that the remuneration of classes or 
persons engaged in industry coincides with their produc 
tive contribution to the output of services and consum 
able goods. 

A felicitous illustration of the working of this hedon 
istic norm in classical economic doctrine is afforded by 
the theory of the wages of superintendence,— an element 
in distribution which is not much more than suggested in 

32 " If a commodity were in no way useful, ... it would be 
destitute of exchangeable value; . . . (but), possessing utility, 
commodities derive their exchangeable value from two sources," 
etc.. Ricardo, Political Economy, chap, i, sect. I. 

ü, 

;f 

ii 

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140 

Preconceptions: II 

Preconceptions: II 

141 

Adam Smith, but which receives ampler and more pains 
taking attention as the classical body of doctrines reaches 
a fuller development. The " wages of superintendence " 
are the gains due to pecuniary management. They are 
the gains that come to the director of the " business,"— 
not those that go to the director of the mechanical proc 
ess or to the foreman of the shop. The latter are wages 
simply. This distinction is not altogether clear in the 
earlier writers, but it is clearly enough contained in the 
fuller development of the theory. 

The undertaker's work is the management of invest 
ment. It is altogether of a pecuniary character, and its 
proximate aim is " the main chance." If it leads, indi 
rectly, to an enhancement of serviceability or a height 
ened aggregate output of consumable goods, that is a 
fortuitous circumstance incident to that heightened ven- 
dibility on which the investor's gain depends. Yet the 
classical doctrine says frankly that the wages of superin 
tendence are the remuneration of superior productivity,33 
and the classical theory of production is in good part a 
doctrine of investment in which the identity of produc 
tion and pecuniary gain is taken for granted. 

The substitution of investment in the place of industry 
as the central and substantial fact in the process of pro 
duction is due not to the acceptance of hedonism simply, 
but rather to the conjunction of hedonism with an eco 
nomic situation of which the investment of capital and 

33 Cf., for instance, Senior, Political Economy (London, 1872), 
particularly pp. 88, 89, and 130-135, where the wages of superin 
tendence are, somewhat reluctantly, classed under profits : and 
the work of superintendence is thereupon conceived as being, 
immediately or remotely, an exercise of " abstinence " and a pro 
ductive work. • The illustration of the bill-broker is particularly 
apt. The like view of the wages of superintendence is an article 
of theory with more than one of the later descendants of the 
classical line. 

its management for gain was the most obvious feature. 
The situation which shaped the common-sense apprehen 
sion of economic facts at the time was what has since been 
called a capitalistic system, in which pecuniary enterprise 
and the phenomena of the market were the dominant and 
tone-giving facts. But this economic situation was also 
the chief ground for the vogue of hedonism in economics ; 
so that hedonistic economics may be taken as an inter 
pretation of human nature in terms of the market-place. 
The market and the " business world," to which the busi 
ness man in his pursuit of gain was required to adapt his 
motives, had by this time grown so large that the course 
of business events was beyond the control of any one 
person ; and at the same time those far-reaching organisa 
tions of invested wealth which have latterly come to 
prevail and to coerce the market were not then in the 
foreground. The course of market events took its pas- 
.sionless way without traceable relation or deference to 
any man's convenience and without traceable guidance 
towards an ulterior end. Man's part in this pecuniary 
world was to respond with alacrity to the situation, and 
so adapt his vendible effects to the shifting demand as to 
realise something in the outcome. What he gained in 
his traffic was gained without loss to those with whom he 
dealt, for they paid no more than the goods were worth 
to them. One man's gain need not be another's loss; 
and, if it is not, then it is net gain to the community. 

Among the striking remoter effects of the hedonistic 
preconception, and its working out in terms of pecuniary 
gain, is the classical failure to discriminate between capital 
as investment and capital as industrial appliances. This 
is, of course, closely related to the point already spoken 
of. The appliances of industry further the production of 
goods, therefore capital (invested wealth) is productive; 

i M' 

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142 

Preconceptions: II 

Preconceptions: II 

143 

and the rate of its average remuneration marks the de 
gree of its productiveness.3* The most obvious fact lim 
iting the pecuniary gain secured by means of invested 
wealth is the sum invested. Therefore, capital limits the 
productiveness of industry; and the chief and indispen 
sable condition to an advance in material well-being is 
the accumulation of invested wealth. In discussing the 
conditions of industrial improvement, it is usual to assume 
that " the state of the arts remains unchanged," which is, 
for all purposes but that of a doctrine of profits per cent., 
an exclusion of the main fact. Investments may, further, 
be transferred from one enterprise to another. There 
fore, and in that degree, the means of production are 
" mobile." 

Under the hands of the great utilitarian writers, there 
fore, political economy is developed into a science of 
wealth, taking that term in the pecuniary sense, as things 
amenable to ownership. The course of things in eco 
nomic life is treated as a sequence of pecuniary events, 
and economic theory becomes a theory of what should 
happen in that consummate situation where the permuta 
tion of pecuniary magnitudes takes place without dis 
turbance and without retardation. In this consummate 
situation the pecuniary motive has its perfect work, and 
guides all the acts of economic man in a guileless, color 
less, unswerving quest of the greatest gain at the least 
sacrifice. Of course, this perfect competitive system, 
with its untainted " economic man," is a feat of the scien 
tific imagination, and is not intended as a competent ex 
pression of fact. It is an expedient of abstract reasoning; 

34 Cf. Böhm-Bawerk, Capital and Interest, Books II and IV, as 
well as the Introduction and chaps, iv and v of Book I. Böhm- 
Bawerk's discussion bears less immediately on the present point 
than the similarity of the terms employed would suggest. 

and its avowed competency extends only to the abstract 
principles, the fundamental laws of the science, which 
hold only so far as the abstraction holds. But, as happens 
in such cases, having once been accepted and assimilated 
as real, though perhaps not ae actual, it becomes an effec 
tive constituent in the inquirer's habits of thought, and 
goes to shape his knowledge of facts. It comes to serve 
as a norm of substantiality or legitimacy; and facts in 
some degree fall under its constraint, as is exemplified by 
many allegations regarding the " tendency " of things. 

To this consummation, which Senior speaks of as " the 
natural state of man," 35 human development tends by 
force of the hedonistic character of human nature ; and in 
terms of its approximation to this natural state, therefore, 
the immature actual situation had best be stated. The 
pure theory, the " hypothetical science " of Cairnes, 
" traces the phenomena of the production and distribution 
of wealth up to their causes, in the principles of human 
nature and the laws and events — physical, political, and 
social — of the external world."36 But since the prin 
ciples of human nature that give the outcome in men's 
economic conduct, so far as it touches the production and 
distribution of wealth, are but the simple and constant 
sequence of hedonistic cause and effect, the element of 
human nature may fairly be eliminated from the problem, 
with great gain in simplicity and expedition. Human 
nature being eliminated, as being a constant intermediate 
term, and all institutional features of the situation being 
also eliminated (as being similar constants under that 
natural or consummate pecuniary regime with which the 

^Political Economy, p. 87. 

38 Character and Logical Method of Political Economy (New 
York, 1875), p. 71. Cairnes may not be altogether representa 
tive of the high tide of classicism, but his characterisation of 
the science is none the less to the point. 

 144 

Preconceptions: II 

pure theory is concerned), the laws of the phenomena of 
wealth may be formulated in terms of the remaining fac 
tors. These factors are the vendible items that men 
handle in these processes of production and distribution ; 
and economic laws come, therefore, to be expressions of 
the algebraic relations subsisting between the various ele 
ments of wealth and investment,— capital, labor, land, 
supply and demand of one and the other, profits, interest, 
wages. Even such items as credit and population become 
dissociated from the personal factor, and figure in the 
computation as elemental factors acting and reacting 
though a permutation of values over the heads of the good 
people whose welfare they are working out. 

To sum up: the classical economics, having primarily 
to do with the pecuniary side of life, is a theory of a 
process of valuation. But since the human nature at 
whose hands and for whose behoof the valuation takes 
place is simple and constant in its reaction to pecuniary 
stimulus, and since no other feature of human nature is 
legitimately present in economic phenomena than this re 
action to pecuniary stimulus, the valuer concerned in the 
matter is to be overlooked or eliminated ; and the theory 
of the valuation process then becomes a theory of the 
pecuniary interaction of the facts valued. It is a theory 
of valuation with the element of valuation left out,— a 
theory of life stated in terms of the normal paraphernalia 
of life. 

In the preconceptions with which classical economics 
set out were comprised the remnants of natural rights 
and of the order of nature, infused with that peculiarly 
mechanical natural theology that made its way into popu 
lar vogue on British ground during the eighteenth cen 
tury and was reduced to a neutral tone by the British 

Preconceptions: II 

145 

penchant for the commonplace — stronger at this time 
than at any earlier period. The reason for this growing 
penchant for the commonplace, for the explanation of 
things in causal terms, lies partly in the growing resort 
to mechanical processes and mechanical prime movers in 
industry, partly in the (consequent) continued decline of 
the aristocracy and the priesthood, and partly in the grow 
ing density of population and the consequent greater spe 
cialisation and wider organisation of trade and business. 
The spread of the discipline of the natural sciences, 
largely incident to the mechanical industry, counts in the 
same direction; and obscurer factors in modern culture 
may have had their share. 

. The animistic preconception was not lost, but it lost 
tone ; and it partly fell into abeyance, particularly so far 
as regards its avowal. It is visible chiefly in the un- 
avowed readiness of the classical writers to accept as 
imminent and definitive any possible outcome which the 
writer's habit or temperament inclined him to accept as 
right and good. Hence the visible inclination of classical 
economists to a doctrine of the harmony of interests, and 
their somewhat uncircumspect readiness to state their 
generalisations in terms of what ought to happen accord 
ing to the ideal requirements of that consummate Geld 
wirtschaft to which men " are impelled by the provisions 
of nature."37 By virtue of their hedonistic preconcep 
tions, their habituation to the ways of a pecuniary culture, 
and their unavowed animistic faith that nature is in the 
right, the classical economists knew that the consumma 
tion to which, in the nature of things, all things tend, is 
die frictionless and beneficent competitive system. This 
competitive ideal, therefore, affords the normal, and con 
formity to its requirements affords the test of absolute 

37 Senior, Political Economy, p. 87. 

( . ii 

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146 

Preconceptions: II 

economic truth. The standpoint so gained selectively 
guides the attention of the classical writers in their obser 
vation and apprehension of facts, and they come to see 
evidence of conformity or approach to the normal in the 
most unlikely places. Their observation is, in great part, 
interpretative, as observation commonly is. What is pe 
culiar to the classical economists in this respect is their 
particular norm of procedure in the work of interpreta 
tion. And, by virtue of having achieved a standpoint of 
absolute economic normality, they became a " deductive " 
school, so called, in spite of the patent fact that they were 
pretty consistently employed with an inquiry into the 
causal sequence of economic phenomena. 

The generalisation of observed facts becomes a normali 
sation of them, a statement of the phenomena in terms of 
their coincidence with, or divergence from, that normal 
tendency that makes for the actualisation of the absolute 
economic reality. This absolute or definitive ground of 
economic legitimacy lies beyond the causal sequence in 
which the observed phenomena are conceived to be inter 
linked. It is related to the concrete facts neither as cause 
nor as effect in any such way that the causal relation may 
be traced in a concrete instance. It has little causally 
to do either with the " mental " or with the " physical " 
data with which the classical economist is avowedly em 
ployed. Its relation to the process under discussion is 
that of an extraneous — that is to say, a ceremonial — le 
gitimation. The body of knowledge gained by its help 
and under its guidance is, therefore, a taxonomic science. 

So, by way of a concluding illustration, it may be 
pointed out that money, for instance, is normalised in 
terms of the legitimate economic tendency. It becomes 
a measure of value and a medium of exchange. It has 
become primarily an. instrument of pecuniary commuta- 

Preconceptions: II 

147 

tion, instead of being, as under the earlier normalisation 
of Adam Smith, primarily a great wheel of circulation for 
the diffusion of consumable goods. The terms in which 
the laws of money, as of the other phenomena of pecuni 
ary life, are formulated, are terms which connote its nor 
mal function in the life history of objective values as they 
live and move and have their being in the consummate 
pecuniary situation of the " natural " state. To a similar 
work of normalisation we owe those creatures of the 
myth-maker, the quantity theory and the wages-fund. 

'S1 

 l!, l, 

THE PRECONCEPTIONS OF ECONOMIC 
SCIENCEl 

III 

IN what has already been said, it has appeared that the 
changes which have supervened in the preconceptions of 
the earlier economists constitute a somewhat orderly suc 
cession. The feature of chief interest in this development 
has been a gradual change in the received grounds of 
finality to which the successive generations of economists 
have brought their theoretical output, on which they have 
been content to rest their conclusions, and beyond which 
they have not been moved to push their analysis of events 
or their scrutiny of phenomena. There has been a fairly 
unbroken sequence of development in what may be called 
the canons of economic reality; or, to put it in other 
words, there has been a precession of the point of view 
from which facts have been handled and valued for the 
purpose of economic science. 

The notion which has in its time prevailed so widely, 
that there is in the sequence of events a consistent trend 
which it is the office of the science to ascertain and turn 
to account,— this notion may be well founded or not. 
But that there is something of such a consistent trend in 
the sequence of the canons of knowledge under whose 
guidance the scientist works is not only a generalisation 
from the past course of things, but lies in the nature of 
the case; for the canons of knowledge are of the nature 

1 Reprinted by permission from The Quarterly Journal of 
Economics. Vol. XIV, Feb., 1900. 

148 

Preconceptions: III 

149 

of habits of thought, and habit does not break with the 
past, nor do the hereditary aptitudes that find expression 
in habit vary gratuitously with the mere lapse of time. 
What is true in this respect, for instance, in the domain 
of law and institutions is true, likewise, in the domain of 
science. What men have learned to accept as good and 
definitive for the guidance of conduct and of human rela 
tions remains true and definitive and unimpeachable until 
the exigencies of a later, altered situation enforce a varia 
tion from the norms and canons of the past, and so give 
rise to a modification of the habits of thought that decide 
what is, for the time, right in human conduct. So in 
science the ancient ground of finality remains a good and 
valid test of scientific truth until the altered exigencies 
of later life enforce habits of thought that are not wholly 
in consonance with the received notions as to what con 
stitutes the ultimate, self-legitimating term — the substan 
tial reality — to which knowledge in any given case must 
penetrate. 

This ultimate term or ground of knowledge is always 
of a metaphysical character. It is something in the way 
of a preconception, accepted uncritically, but applied in 
criticism and demonstration of all else with which the 
science is concerned. So soon as it comes to be criticised, 
it is in a way to be superseded by a new, more or less 
altered formulation ; for criticism of it means that it is no 
longer fit to survive unaltered in the altered complex of 
habits of thought to which it is called upon to serve as 
fundamental principle. It is subject to natural selection 
and selective adaptation, as are other conventions. The 
underlying metaphysics of scientific research and purpose, 
therefore, changes gradually and, of course, incompletely, 
touch as is the case with the metaphysics underlying the 
common law and the schedule of civil rights. As in the 

1 I !' 

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Preconceptions: HI 

legal framework the now avowedly useless and meaning 
less preconceptions of status and caste and precedent are 
even yet at the most metamorphosed and obsolescent 
rather than overpassed,— witness the facts of inheritance, 
vested interests, the outlawry of debts through lapse of 
time, the competence of the State to coerce individuals 
into support of a given policy,— so in the science the liv 
ing generation has not seen an abrupt and traceless dis 
appearance of the metaphysics that fixed the point of 
view of the early classical political economy. This is true 
even for those groups of economists who have most in 
continently protested against the absurdity of the classical 
doctrines and methods. In Professor Marshall's words, 
" There has been no real breach of continuity in the de 
velopment of the science." 

But, while there has been no breach, there has none the 
less been change,— more far-reaching change than some 
of us are glad to recognise ; for who would not be glad to 
read his own modern views into the convincing words of 
the great masters? 

Seen through modern eyes and without effort to turn 
past gains to modern account, the metaphysical or precon- 
ceptional furniture of political economy as it stood about 
the middle of this century may come to look quite curious. 
The two main canons of truth on which the science pro 
ceeded, and with which the inquiry is here concerned, 
were: (a) a hedonistic-associational psychology, and (b) 
an uncritical conviction that there is a meliorative trend 
in the course of events, apart from the conscious ends of 
the individual members of the community. This axiom 
of a meliorative developmental trend fell into shape as a 
belief in an organic or quasi-organic (physiological) 2 life 

2 So, e.g., Röscher, Comte, the early socialists, J. S. Mill, and 
later Spencer, Schaeffle, Wagner. 

Preconceptions: HI 151 

process on the part of the economic community or of the 
nation; and this belief carried with it something of a con 
straining sense of self-realising cycles of growth, ma 
turity and decay in the life history of nations or communi 
ties. 

Neglecting what may for the immediate purpose be 
negligible in this outline of fundamental tenets, it will 
bear the following construction, (a) On the ground of 
the hedonistic or associational psychology, all spiritual 
continuity and any consequent teleological trend is tacitly 
denied so far as regards individual conduct, where the 
later psychology, and the sciences which build on this 
later psychology, insist upon and find such a teleological 
trend at every turn, (b) Such a spiritual or quasi- 
spiritual continuity and teleological trend is uncritically 
affirmed as regards the non-human sequence or the se 
quence of events in the affairs of collective life, where 
the modern sciences diligently assert that nothing of the 
kind is discernible, or that, if it is discernible, its recog 
nition is beside the point, so far as concerns the purposes 
of the science. 

This position, here outlined with as little qualifica 
tion as may be admissible, embodies the general meta 
physical ground of that classical political economy that 
affords the point of departure for Mill and Cairnes, 
and also for Jevons. And what is to be said of Mill 
and Cairnes in this connection will apply to the later 
course of the science, though with a gradually lessening 
force. 

By the middle of the century the psychological premises 
°f the science are no longer so neat and succinct as they 
Were in the days of Bentham and James Mill. At J. S. 
Mill's hands, for instance, the naively quantitative hedon 
ism of Bentham is being supplanted by a sophisticated 

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Preconceptions: III 

hedonism, which makes much of an assumed qualitative 
divergence between the different kinds of pleasures that 
afford the motives of conduct. This revision of hedon 
istic dogma, of course, means a departure from the strict 
hedonistic ground. Correlated with this advance more 
closely in the substance of the change than in the assign 
able dates, is a concomitant improvement — at least, set 
forth as an improvement — upon the received associa- 
tional psychology, whereby " similarity " is brought in to 
supplement " contiguity " as a ground of connection be 
tween ideas. This change is well shown in the work of 
J. S. Mill and Bain. In spite of all the ingenuity spent in 
maintaining the associational legitimacy of this new article 
of theory, it remains a patent innovation and a departure 
from the ancient standpoint. As is true of the improved 
hedonism, so it is true of the new theory of association 
that it is no longer able to construe the process which it 
discusses as a purely mechanical process, a concatenation 
of items simply. Similarity of impressions implies a com 
parison of impressions by the mind in which the associa 
tion takes place, and thereby it implies some degree of 
constructive work on the part of the perceiving subject. 
The perceiver is thereby construed to be an agent in the 
work of perception; therefore, he must be possessed of a 
point of view and an end dominating the perceptive proc 
ess. To perceive the similarity, he must be guided by an 
interest in the outcome, and must " attend." The like ap 
plies to the introduction of qualitative distinctions into the 
hedonistic theory of conduct. Apperception in the one 
case and discretion in the other cease to be the mere regis 
tration of a simple and personally uncolored sequence of 
permutations enforced by the factors of the external 
world. There is implied a spiritual — that is to say, ac 
tive —" ideological " continuity of process on the part of 

Preconceptions: HI 

153 

the perceiving or of the discretionary agent, as the case 
may be. 

It is on the ground of their departure from the stricter 
hedonistic premises that Mill and, after him, Cairnes are 
able, for instance, to offer their improvement upon the 
earlier doctrine of cost of production as determining 
value. Since it is conceived that the motives which guide 
men in their choice of employments and of domicile differ 
from man to man and from class to class, not only in de 
gree, but in kind, and since varying antecedents, of hered 
ity and of habit, variously influence men in their choice of 
a manner of life, therefore the mere quantitative pecuni 
ary stimulus cannot be depended on to decide the outcome 
without recourse. There are determinable variations in 
the alacrity with which different classes or communities 
respond to the pecuniary stimulus ; and in so far as this 
condition prevails, the classes or communities in question 
are non-competing. Between such non-competing groups 
the norm that determines values is not the unmitigated 
norm of cost of production taken absolutely, but only 
taken relatively. The formula of cost of production is 
therefore modified into a formula of reciprocal demand. 
This revision of the cost-of-production doctrine is ex 
tended only sparingly, and the emphasis is thrown on 
the pecuniary circumstances on which depend the forma 
tion and maintenance of non-competing groups. Consist 
ency with the earlier teaching is carefully maintained, so 
far as may be ; but extra-pecuniary factors are, after all, 
even if reluctantly, admitted into the body of the theory. 
So also, since there are higher and lower motives, higher 
and lower pleasures,— as well as motives differing in de 
gree,— it follows that an unguided response even to the 
mere quantitative pecuniary stimuli may take different 
directions, and so may result in activities of widely differ- 

i,, * 

 154 

Preconceptions: III 

ing outcome. Since activities set up in this way through 
appeal to higher and lower motives are no longer con 
ceived to represent simply a mechanically adequate effect 
of the stimuli, working under -the control of natural laws 
that tend to one beneficent consummation, therefore the 
outcome of activity set up even by the normal pecuniary 
stimuli may take a form that may or may not be service 
able to the community. Hence laissez-faire ceases to be 
a sure remedy for the ills of society. Human interests 
are still conceived normally to be at one ; but the detail 
of individual conduct need not, therefore, necessarily serve 
these generic human interests.3 Therefore, other induce 
ments than the unmitigated impact of pecuniary exigen 
cies may be necessary to bring about a coincidence of class 
or individual endeavor with the interests of the commu 
nity. It becomes incumbent on the advocate of laissez- 
faire to " prove his minor premise." It is no longer self- 
evident that: " Interests left to themselves tend to har 
monious combinations, and to the progressive preponder 
ance of the general good." 4 

The natural-rights preconception begins to fall away as 
soon as the hedonistic mechanics have been seriously tam 
pered with. Fact and right cease to coincide, because the 
individual in whom the rights are conceived to inhere has 

3 " Let us not confound the statement that human interests are 
at one with the statement that class interests are at one. The 
latter I believe to be as false as the former is true. . . . But 
accepting the major premises of the syllogism, that the interests 
of human beings are fundamentally the same, how as to the 
minor? — how as to the assumption that people know their 
interests in the sense in which they are identical with the interests 
of others, and that they spontaneously follow them in this 
sense?"—Cairnes, Essays in Political Economy (London, 1873), 
p. 245. This question cannot consistently be asked by an ad 
herent of the stricter hedonism. 

4 Bastiat, quoted by Cairnes, Essays, p. 319. 

Preconceptions: III 

155 

come to be something more than the field of intersection 
of natural forces that work out in human conduct. The 
mechanics of natural liberty — that assumed constitution 
of things by force of which the free hedonistic play of 
the laws of nature across the open field of individual 
choice is sure to reach the right outcome — is the hedon 
istic psychology ; and the passing of the doctrine of nat 
ural rights and natural liberty, whether as a premise or 
as a dogma, therefore coincides with the passing of that 
mechanics of conduct on the validity of which the theo 
retical acceptance of the dogma depends. It is, therefore, 
something more than a coincidence that the half-century 
which has seen the disintegration of the hedonistic faith 
and of the associational psychology has also seen the dissi 
pation, in scientific speculations, of the concomitant faith 
in natural rights and in that benign order of nature of 
which the natural-rights dogma is a corollary. 

It is, of course, not hereby intended to say that the 
later psychological views and premises imply a less close 
dependence of conduct on environment than do the earlier 
ones. Indeed, the reverse may well be held to be true. 
The pervading characteristic of later thinking is the con 
stant recourse to a detailed analysis of phenomena in 
causal terms. The modern catchword, in the present con 
nection, is " response to stimulus " ; but the manner in 
which this response is conceived has changed. The fact, 
and ultimately the amplitude, at least in great part, of the 
reaction to stimulus, is conditioned by the forces in im 
pact ; but the constitution of the organism, as well as its 
attitude at the moment of impact, in great part decides 
what will serve as a stimulus, as well as what the manner 
and direction of the response will be. 

The later psychology is biological, as contrasted with 
the metaphysical psychology of hedonism. It does not 

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Preconceptions: III 

conceive the organism as a causal hiatus. The causal 
sequence in the " reflex arc " is, no doubt, continuous ; 
but the continuity is not, as formerly, conceived in terms 
of spiritual substance transmitting a shock : it is conceived 
in terms of the life activity of the organism. Human 
conduct, taken as the reaction of such an organism under 
stimulus, may be stated in terms of tropism, involving, of 
course, a very close-knit causal sequence between the 
impact and the response, but at the same time imputing 
to the organism a habit of life and a self-directing and 
selective attention in meeting the complex of forces that 
make up its environment. The selective play of this trop- 
ismatic complex that constitutes the organism's habit of 
life under the impact of the forces of the environment 
counts as discretion. 

So far, therefore, as it is to be placed in contrast with 
the hedonistic phase of the older psychological doctrines, 
the characteristic feature of the newer conception is the 
recognition of a selectively self-directing life process in 
the agent. While hedonism seeks the causal determinant 
of conduct in the (probable) outcome of action, the later 
conception seeks this determinant in the complex of pro 
pensities that constitutes man a functioning agent, that is 
to say, a personality. Instead of pleasure ultimately 
determining what human conduct shall be, the tropismatic 
propensities that eventuate in conduct ultimately deter 
mine what shall be pleasurable. For the purpose in hand, 
the consequence of the transition to the altered conception 
of human nature and its relation to the environment is 
that the newer view formulates conduct in terms of per 
sonality, whereas the earlier view was content to formu 
late it in terms of its provocation and its by-product. 
Therefore, for the sake of brevity, the older preconcep 
tions of the science are here spoken of as construing 

Preconceptions: III 

157 

human nature in inert terms, as contrasted with the newer, 
which construes it in terms of functioning. 

It has already appeared above that the second great 
article of the metaphysics of classical political economy — 
the belief in a meliorative trend or a benign order of 
nature — is closely connected with the hedonistic concep 
tion of human nature ; but this connection is more intimate 
and organic than appears from what has been said above. 

'. The two are so related as to stand or fall together, for the 
latter is but the obverse of the former. The doctrine of a 
trend in events imputes purpose to the sequence of events ; 
that is, it invests this sequence with a discretionary, teleo- 
logical character, which asserts itself in a constraint over 
all the steps in the sequence by which the supposed ob 
jective point is reached. But discretion touching a given 
end must be single, and must alone cover all the acts by 
which the end is to be reached. Therefore, no discretion 
resides in the intermediate terms through which the end is 
worked out. Therefore, man being such an intermediate 
term, discretion cannot be imputed to him without violat- 

• ing the supposition. Therefore, given an indefeasible 
meliorative trend in events, man is but a mechanical inter 
mediary in the sequence. It is as such a mechanical 
intermediate term that the stricter hedonism construes 
human nature.5 Accordingly, when more of ideological 
activity came to be imputed to man, less was thereby al 
lowed to the complex of events. Or it may be put in the 
converse form : When less of a teleological continuity came 
to be imputed to the course of events, more was thereby 
imputed to man's life process. The latter form of state- 

5 It may be remarked, by the way, that the use of the differential 
calculus and similar mathematical expedients in the discussion of 
marginal utility and the like, proceeds on this psychological 
ground, and that the theoretical results so arrived at are valid to 
the full extent only if this hedonistic psychology is accepted. 

 158 Preconceptions: III 

ment probably suggests the direction in which the causal 
relation runs, more nearly than the former. The change 
whereby the two metaphysical premises in question have 
lost their earlier force and symmetry, therefore, amounts 
to a (partial) shifting of the seat of putative personality 
from inanimate phenomena to man. 

It may be mentioned in passing, as a detail lying per 
haps afield, yet not devoid of significance for latter-day 
economic speculation, that this elimination of personality, 
and so of teleological content, from the sequence of events, 
and its increasing imputation to the conduct of the human 
agent, is incident to a growing resort to an apprehension 
of phenomena in terms of process rather than in terms of 
outcome, as was the habit in earlier schemes of knowledge. 
On this account the categories employed are, in a gradu 
ally increasing degree, categories of process,—" dynamic " 
categories. But categories of process applied to conduct, 
to discretionary action, are teleological categories: 
whereas categories of process applied in the case of a 
sequence where the members of the sequence are not con 
ceived to be charged with discretion, are, by the force 
of this conception itself, non-teleological, quantitative 
categories. The continuity comprised in the concept of 
process as applied to conduct is consequently a spiritual, 
teleological continuity: whereas the concept of process 
under the second head, the non-teleological sequence, 
comprises a continuity of a quantitative, causal kind, sub 
stantially the conservation of energy. In its turn the 
growing resort to categories of process in the formula 
tion of knowledge is probably due to the epistemological 
discipline of modern mechanical industry, the technologi 
cal exigencies of which enforce a constant recourse to the 
apprehension of phenomena in terms of process, differing 
therein from the earlier forms of industry, which neither 

Preconceptions: III 

159 

obtruded visible mechanical process so constantly upon 
the apprehension nor so imperatively demanded an articu 
late recognition of continuity in the processes actually in 
volved. The contrast in this respect is still more pro 
nounced between the discipline of modern life in an indus 
trial community and the discipline of life under the con 
ventions of status and exploit that formerly prevailed. 

To return to the benign order of nature, or the melio 
rative trend,— its passing, as an article of economic faith, 
was not due to criticism leveled against it by the later 
classical economists on grounds of its epistemological in 
congruity. It was tried on its merits, as an alleged 
account of facts ; and the weight of evidence went against 
it. The belief in a self-realising trend had no sooner 
reached a competent and exhaustive statement — e.g., at 
Bastiat's hands, as a dogma of the harmony of interests 
specifically applicable to the details of economic life — 
than it began to lose ground. With his usual concision 
and incisiveness, Cairnes completed the destruction of 
Bastiat's special dogma, and put it forever beyond a re 
hearing. But Cairnes is not a destructive critic of the 
classical political economy, at least not in intention : he is 
an interpreter and continuer — perhaps altogether the 
clearest and truest continuer — of the classical teaching. 
While he confuted Bastiat and discredited Bastiat's pe 
culiar dogma, he did not thereby put the order of nature 
bodily out of the science. He qualified and improved it, 
very much as Mill qualified.and improved the tenets of the 
hedonistic psychology. As Mill and the ethical specula 
tion of his generation threw more of personality into the 
hedonistic psychology, so Cairnes and the speculators on 
scientific method (such as Mill and Jevons) attenuated 
the imputation of personality or teleological content to the 
process of material cause and effect. The work is of 

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Preconceptions: HI 

course, by no means, an achievement of Cairnes alone ; but 
he is, perhaps, the best exponent of this advance in eco 
nomic theory. In Cairnes's redaction this foundation of 
the science became the concept of a colorless normality. 

It was in Cairnes's time the fashion for speculators in 
other fields than the physical sciences to look to those 
sciences for guidance in method and for legitimation of 
the ideals of scientific theory which they were at work 
to realize. More than that, the large and fruitful achieve 
ments of the physical sciences had so far taken men's 
attention captive as to give an almost instinctive predilec 
tion for the methods that had approved themselves in that 
field. The ways of thinking which had on this ground 
become familiar to all scholars occupied with any scien 
tific inquiry, had permeated their thinking on any subject 
whatever. This is eminently true of British thinking. 

It had come to be a commonplace of the physical sci 
ences that " natural laws " are of the nature of empirical 
generalisations simply, or even of the nature of arithmeti 
cal averages. Even the underlying preconception of the 
modern physical sciences — the law of the conservation of 
energy, or persistence of quantity — was claimed to be an 
empirical generalisation, arrived at inductively and veri 
fied by experiment. It is true the alleged proof of the 
law took the whole conclusion for granted at the start, and 
used it constantly as a tacit axiom at every step in the 
argument which was to establish its truth; but that fact 
serves rather to emphasise than to call in question the 
abiding faith which these empiricists had in the sole effi 
cacy of empirical generalisation. Had they been able 
overtly to admit any other than an associational origin of 
knowledge, they would have seen the impossibility of ac 
counting on the mechanical grounds of association for the 
premise on which all experience of -mechanical fact rests. 

Preconceptions: HI 

161 

That any other than a mechanical origin should be as 
signed to experience, or that any other than a so-conceived 
empirical ground was to be admitted for any general prin 
ciple, was incompatible with the prejudices of men trained 
in the school of the associational psychology, however 
widely they perforce departed from this ideal in practice. 
Nothing of the nature of a personal element was to be 
admitted into thes.e fundamental empirical generalisations ; 
and nothing, therefore, of the nature of a discretionary or 
teleological movement was to be comprised in the general 
isations to be accepted as " natural laws." Natural laws 
must in no degree be imbued with personality, must say 
nothing of an ulterior end ; but for all that they remained 
" laws " of the sequences subsumed under them. So far 
is the reduction to colorless terms carried by Mill, for 
instance, that he formulates the natural laws as empiri 
cally ascertained sequences simply, even excluding or 
avoiding all imputation of causal continuity, as that term 
is commonly understood by the unsophisticated. In 
Mill's ideal no more of organic connection or continuity 
between the members of a sequence is implied in sub 
suming them under a law of causal relationship than is 
given by the ampersand. He is busied with dynamic 
sequences, but he persistently confines himself to static 
terms. 

Under the guidance of the associational psychology, 
therefore, the extreme of discontinuity in the deliverances 
of inductive research is aimed at by those economists — 
Mill and Cairnes being taken as typical — whose names 
have been associated with deductive methods in modern 
science. With a fine sense of truth they saw that the 
notion of causal continuity, as a premise of scientific gen 
eralisation, is an essentially metaphysical postulate; and 
they avoided it-s treacherous ground by denying it, and 

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Preconceptions: HI 

Preconceptions: HI 

163 

construing causal sequence to mean a uniformity of co 
existences and successions simply. But, since a strict 
uniformity is nowhere to be observed at first hand in the 
phenomena with which the investigator is occupied, it has 
to be found by a laborious interpretation of the phe 
nomena and a diligent abstraction and allowance for dis 
turbing circumstances, whatever may be the meaning of a 
disturbing circumstance where Causal continuity is denied. 
In this work of interpretation and expurgation the inves 
tigator proceeds on a conviction of the orderliness of the 
natural sequence. " Natura non facit saltum " : a maxim 
which has no meaning within the stricter limits of the 
associational theory of knowledge. 

Before anything can be said as to the orderliness of the 
sequence, a point of view must be chosen by the specu 
lator, with respect to which the sequence in question does 
or does not fulfill this condition of orderliness ; that is to 
say, with respect to which it is a sequence. The endeavor 
to avoid all metaphysical premises fails here as every 
where. The associationists, to whom economics owes its 
transition from the older classical phase to the modern or 
quasi-classical, chose as their guiding point of view the 
metaphysical postulate of congruity,— in substance, the 
" similarity " of the associationist theory of knowledge. 
This must be called their proton pseudos, if associationism 
pure and simple is to be accepted. The notion of con 
gruity works out in laws of resemblance and equivalence, 
in both of which it is plain to the modern psychologist 
that a metaphysical ground of truth, antecedent to and 
controlling empirical data, is assumed. But the use of 
the postulate of congruence as a test of scientific truth 
has the merit of avoiding all open dealing with an imputed 
substantiality of the data handled, such as would be in 
volved in the overt use of the concept of causation. The 

data are congruous among themselves, as items of knowl 
edge; and they may therefore be handled in a logical 
synthesis and concatenation on the basis of this congru 
ence alone, without committing the scientist to an impu 
tation of a kinetic or motor relation between them. The 
metaphysics of process is thereby avoided, in appearance. 
The sequences are uniform or consistent with one an 
other, taken as articles of theoretical synthesis simply; 
and so they become elements of a system or discipline of 
knowledge in which the test of theoretical truth is the 
congruence of the system with its premises. 

In all this there is a high-wrought appearance of matter- 
of-fact, and all metaphysical subreption of a non-empirical 
or non-mechanical standard of reality or substantiality is 
avoided in appearance. The generalisations which make 
up such a system of knowledge are, in this way, stated in 
terms of the system itself ; and when a competent formu 
lation of the alleged uniformities has been so made in 
terms of their congruity or equivalence with the prime 
postulates of the system, the work of theoretical inquiry 
is done. 

The concrete premises from which proceeds the sys 
tematic knowledge of this generation of economists are 
certain very concise assumptions concerning human na 
ture, and certain slightly less concise generalisations of 
physical fact," presumed to be mechanically empirical gen 
eralisations. These postulates afford the standard of nor 
mality. Whatever situation or course of events can be 
shown to express these postulates without mitigation is 
normal; and wherever a departure from this normal 
course of things occurs, it is due to disturbing causes,— 
that is to say, to causes not comprised in the main prem- 

6 See, e.g., Cairnes, Character and Logical Method (New 
Y°rk), p. 71. 

11 i 

 164 

Preconceptions: HI 

ises of the science,— and such departures are to be taken 
account of by way of qualification. Such departures and 
such qualification are constantly present in the facts to be 
handled by the science ; but, being not congruous with the 
underlying postulates, they have no place in the body of 
the science. The laws of the science, that which makes 
up the economist's theoretical knowledge, are laws of the 
normal case. The normal case does not occur in concrete 
fact. These laws are, therefore, in Cairnes's terminology, 
" hypothetical " truths ; and the science is a " hypotheti 
cal " science. They apply to concrete facts only as the 
facts are interpreted and abstracted from, in the light of 
the underlying postulates. The science is, therefore, a 
theory of the normal case, a discussion of the concrete 
facts of life in respect of their degree of approximation 
to the normal case. That is to say, it is a taxonomic 
science. 

Of course, in the work actually done by these econo 
mists this standpoint of rigorous normality is not con 
sistently maintained; nor is the unsophisticated imputa 
tion of causality to the facts under discussion consistently 
avoided. The associationist postulate, that causal se 
quence means empirical uniformity simply, is in great 
measure forgotten when the subject-matter of the science 
is handled in detail. Especially is it true that in Mill the 
dry light of normality is greatly relieved by a strong com 
mon sense. But the great truths or laws of the science 
remain hypothetical laws ; and the test of scientific reality 
is congruence with the hypothetical laws, not coincidence 
with matter-of-fact events. 

The earlier, more archaic metaphysics of the science, 
which saw in the orderly correlation and sequence of 
events a constraining guidance of an extra-causal, teleo- 
logical kind, in this way becomes a metaphysics of nor- 

Preconceptions: HI 

165 

mality which asserts no extra-causal constraint over 
events, but contents itself with establishing correlations, 
equivalencies, homologies, and theories concerning the 
conditions of an economic equilibrium. The movement, 
the process of economic life, is not overlooked, and it 
may even be said that it is not neglected; but the pure 
theory, in its final deliverances, deals not with the dy 
namics, but with the statics of the case. The concrete 
subject-matter of the science is, of course, the process of 
economic life,— that is unavoidably the case,— and in so 
far the discussion must be accepted as work bearing on 
the dynamics of the phenomena discussed ; but even then 
it remains true that the aim of this work in dynamics is a 
determination and taxis of the outcome of the process 
under discussion rather than a theory of the process as 
such. The process is rated in terms of the equilibrium 
to which it tends or should tend, not conversely. The 
outcome of the process, taken in its relation of equivalence 
within the system, is the point at which the inquiry comes 
to rest. It is not primarily the point of departure for an 
inquiry into what may follow. The science treats of a 
balanced system rather than of a proliferation. In this 
lies its characteristic difference from the later evolution 
ary sciences. It is this characteristic bent of the science 
that leads its spokesman, Cairnes, to turn so kindly to 
chemistry rather than to the organic sciences, when he 
seeks an analogy to economics among the physical sci 
ences/ What Cairnes has in mind in his appeal to chem 
istry is, of course, the received, extremely taxonomic 
(systematic) chemistry of his own time, not the tenta 
tively genetic theories of a slightly later day. 

It may seem that in the characterisation just offered of 
' Character and Logical Method, p. 62. 

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166 

Preconceptions: HI 

the standpoint of normality in economics there is too 
strong an implication of colorlessness and impartiality. 
The objection holds as regards much of the work of the 
modern economists of the classical line. It will-hold true 
even as to much of Cairnes's work ; but it cannot be ad 
mitted as regards Cairnes's ideal of scientific aim and 
methods. The economists whose theories Cairnes re 
ceived and developed, assuredly did not pursue the dis 
cussion of the normal case with an utterly dispassionate 
animus. They had still enough of the older teleological 
metaphysics left to give color to the accusation brought 
against them that they were advocates of laissez-faire. 
The preconception of the utilitarians,— in substance the 
natural-rights preconception,— that unrestrained human 
conduct will result in the greatest human happiness, re 
tains so much of its force in Cairnes's time as is implied 
in the then current assumption that what is normal is also 
right. The economists, and Cairnes among them, not 
only are concerned to find out what is normal and to deter 
mine what consummation answers to the normal, but they 
also are at pains to approve that consummation. It is 
this somewhat uncritical and often unavowed identifica 
tion of the normal with the right that gives colorable 
ground for the widespread vulgar prejudice, to which 
Cairnes draws attention,8 that political economy " sanc 
tions " one social arrangement and " condemns " another. 
And it is against this uncritical identification of two essen 
tially unrelated principles or categories that Cairnes's 
essay on " Political Economy and Laissez-faire," and in 
good part also that on Bastiat, are directed. But, while 
this is one of the many points at which Cairnes has sub 
stantially advanced the ideals of the science, his own con 
cluding argument shows him to have been but half-way 

8 Essays in Political Economy, pp. 260-264. 

Preconceptions: HI 

167 

emancipated from the prejudice, even while most effec 
tively combating it.9 It is needless to point out that the 
like prejudice is still present in good vigor in many later 
economists who have had the full benefit of Cairnes's 
teachings on . this head.10 Considerable as Cairnes's 
achievement in this matter undoubtedly was, it effected 
a mitigation rather than an elimination of the untenable 
metaphysics against which he contended. 

The advance in the general point of view from animis 
tic teleology to taxonomy is shown in a curiously succinct 
manner in a parenthetical clause of Cairnes's in the chap 
ter on Normal Value.11 With his acceptance of the later 
point of view involved in the use of the new term, Cairnes 
becomes the interpreter of the received theoretical results. 
The received positions are not subjected to a destructive 
criticism. The aim is to complete them where they fall 
short and to cut off what may be needless or what may 
run beyond the safe ground of scientific generalisation. 
In his work of redaction, Cairnes does not avow — prob 
ably he is not sensible of — any substantial shifting of the 
point of view or any change in the accepted ground of 
theoretic reality. But his advance to an unteleological 
taxonomy none the less changes the scope and aim of his 
theoretical discussion. The discussion of Normal Value 
may be taken in illustration. 

Cairnes is not content to find (with Adam Smith) that 
value will " naturally " coincide with or be measured by 

9 See especially Essays, pp. 263, 264. 

10 It may be interesting to point out that the like identification 
of the categories of normality and right gives the dominant note 
of Mr. Spencer's ethical and social philosophy, and that later 
economists of the classical line are prone to be Spencerians. 

11 " Normal value (called by Adam Smith and Ricardo ' natural 
value," and by Mill ' necessary value,' but best expressed, it seems 
to me, by the term which I have used)." Leading Principles 
(New York), p. 45. 

 168 

Preconceptions: HI 

cost of production, or even (with Mill) that cost of pro 
duction must, in the long run, " necessarily " determine 
value. " This ... is to take a much too limited view of 
the range of this phenomenon."12 He is concerned to 
determine not only this general tendency of values to a 
normal, but all those characteristic circumstances as well 
which condition this tendency and which determine the 
normal to which values tend. His inquiry pursues the 
phenomena of value in a normal economic system rather 
than the manner and rate of approach of value relations 
to a Ideologically or hedonistically defensible consumma 
tion. It therefore becomes an exhaustive but very dis 
criminating analysis of- the circumstances that bear upon 
market values,- with a view to determine what circum 
stances are normally present ; that is to say, what circum 
stances conditioning value are commonly effective and at 
the same time in consonance with the premises of eco 
nomic theory. These effective conditions, in so far as 
they are not counted anomalous and, therefore, to be set 
aside in the theoretical discussion, are the circumstances 
under which a hedonistic valuation process in any modern 
industrial community is held perforce to take place,— the 
circumstances which are held to enforce a recognition and 
rating of the pleasure-bearing capacity of facts. They 
are not, as under the earlier cost-of-production doctrines, 
the circumstances which determine the magnitude of the 
forces spent in the production of the valuable article. 
Therefore, the normal (natural) value is no longer (as 
with Adam Smith, and even to some extent with his 
classical successors) the primary or initial fact in value 
theory, the substantial fact of which the market value is 
an approximate expression and by which the latter is 
controlled. The argument does not, as formerly, set out 

12 Leading Principles, p. 45. 

Preconceptions: HI 

169 

from that expenditure of personal force which was once 
conceived to constitute the substantial value of goods, and 
then construe market value to be an approximate and 
uncertain expression of this substantial fact. The direc 
tion in which the argument runs is rather the reverse of 
this. The point of departure is taken from the range of 
market values and the process of bargaining by which 
these values are determined. This latter is taken to be 
a process of discrimination between various kinds and 
degrees of discomfort, and the average or consistent out 
come of such a process of bargaining constitutes normal 
value. It is only by virtue of a presumed equivalence 
between the discomfort undergone and the concomitant 
expenditure, whether of labor or of wealth, that the nor 
mal value so determined is conceived to be an expression 
of the productive force that goes into the creation of the 
valuable goods. Cost being only in uncertain equivalence 
with sacrifice or discomfort, as between different persons, 
the factor of cost falls into the background; and the 
process of bargaining, which is in the foreground, being 
a process of valuation, a balancing of individual demand 
and supply, it follows that a law of reciprocal demand 
comes in to supplant the law of cost. In all this the 
proximate causes at work in the determination of values 
are plainly taken account of more adequately than in 
earlier cost-of-production doctrines; but they are taken 
account of with a view to explaining the mutual adjust 
ment and interrelation of elements in a system rather than 
to explain either a developmental sequence or the working 
out of a foreordained end. 

This revision of the cost-of-production doctrine, 
whereby it takes the form of a law of reciprocal demand, 
is in good part effected by a consistent reduction of cost 
to terms of sacrifice,— a reduction more consistently car- 

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170 Preconceptions: III 

ried through by Cairnes than it had been by earlier hedon 
ists, and extended by Cairnes's successors with even more 
far-reaching results. By this step the doctrine of cost is 
not only brought into closer accord with the neo-hedon- 
istic premises, in that it in a greater degree throws the 
stress upon the factor of personal discrimination, but it 
also gives the doctrine a more general bearing upon 
economic conduct and increases its serviceability as a com 
prehensive principle for the classification of economic 
phenomena. In the further elaboration of the hedonistic 
theory of value at the hands of Jevons and the Austrians 
the same principle of sacrifice comes to serve as the chief 
ground of procedure. 

Of the foundations of later theory, in so far as the pos 
tulates of later economists differ characteristically from 
those of Mill and Cairnes, little can be said in this place. 
Nothing but the very general features of the later develop 
ment can be taken up ; and even these general features of 
the existing theoretic situation can not be handled with 
the same confidence as the corresponding features of a 
past phase of speculation. With respect to writers of the 
present or the more recent past the work of natural selec 
tion, as between variants of scientific aim and animus and 
between more or less divergent points of view, has not yet 
taken effect; and it would be over-hazardous to attempt 
an anticipation of the results of the selection that lies in 
great part yet in the future. As regards the directions of 
theoretical work suggested by the names of Professor 
Marshall, Mr. Cannan, Professor Clark, Mr. Pierson, 
Professor Loria, Professor Schmoller, the Austrian 
group,— no off-hand decision is admissible as between 
these candidates for the honor, or, better, for the work, 
of continuing the main current of economic speculation 

Preconceptions: III . 

171 

and inquiry. No attempt will here be made even to pass 
a verdict on the relative claims of the recognised two or 
three main " schools " of theory, beyond the somewhat 
obvious finding that, for the purpose in hand, the so- 
called Austrian school is scarcely distinguishable from the 
neo-classical, unless it be in the different distribution of 
emphasis. The divergence between the modernised clas 
sical views, on the one hand, and the historical and Marx 
ist schools, on the other hand, is wider,— so much so, 
indeed, as to bar out a consideration of the postulates of 
the latter under the same head of inquiry with the former. 
The inquiry, therefore, confines itself to the one line 
standing most obviously in unbroken continuity with that 
body of classical economics whose life history has been 
traced in outline above. And, even for this phase of 
modernised classical economics, it seems necessary to 
limit discussion, for the present, to a single strain, se 
lected as standing peculiarly close to the classical source, 
at the same time that it shows unmistakable adapta 
tion to the later habits of thought and methods of knowl 
edge. 

For this later development in the classical line of politi 
cal economy, Mr. Keynes's book may fairly be taken as 
the maturest exposition of the aims and ideals of the sci 
ence; while Professor Marshall excellently exemplifies the 
best work that is being done under the guidance of the 
classical antecedents. As, after a lapse of a dozen or 
fifteen years from Cairnes's days of full conviction, Mr. 
Keynes interprets the aims of modern economic science, 
it has less of the " hypothetical " character assigned it by 
Cairnes ; that is to say, it confines its inquiry less closely 
to the ascertainment of the normal case and the interpre 
tative subsumption of facts under the normal. It takes 
fuller account of the genesis and developmental continuity 

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Preconceptions: III 

of all features of modern economic life, gives more and 
closer attention to institutions and their history. This is, 
no doubt, due, in part at least, to impulse received from 
German economists ; and in so far it also reflects the pe 
culiarly vague and bewildered attitude of protest that 
characterises the earlier expositions of the historical 
school. To the same essentially extraneous source is 
traceable the theoretic blur embodied in Mr. Keynes's atti 
tude of tolerance towards the conception of economics as 
a " normative " science having to do with " economic 
ideals," or an " applied economics " having to do with 
" economic precepts." 13 An inchoate departure from the 
consistent taxonomic ideals shows itself in the tentative 
resort to historical and genetic formulations, as well as in 
Mr. Keynes's pervading inclination to define the scope of 
the science, not by exclusion of what are conceived to be 
non-economic phenomena, but by disclosing a point of 
view from which all phenomena are seen to be economic 
facts. The science comes to be characterised not by the 
delimitation of a range of facts, as in Cairnes,14 but as an 
inquiry into the bearing which all facts have upon men's 
economic activity. It is no longer that certain phenomena 
belong within the science, but rather that the science is 
concerned with any and all phenomena as seen from the 
point of view of the economic interest. Mr. Keynes does 
not go fully to the length which this last proposition indi 
cates. He finds 10 that political economy " treats of the 
phenomena arising out of the economic activities of man 
kind in society " ; but, while the discussion by which he 

is Scope and Method of Political Economy (London, 1891), 
chaps, i and ii. 

i« Character and Logical Method; e.g., Lecture II, especially 
PP- S3, 54, and 71. 

15 Scope and Method of Political Economy, chap, iii, particu 
larly p. 97. 

Preconceptions: III 

173 

leads up to this definition might be construed to say that 
all the activities of mankind in society have an economic 
bearing, and should therefore come within the view of the 
science, Mr. Keynes does not carry out his elucidation of 
the matter to that broad conclusion. Neither can it be 
said that modern political economy has, in practice, taken 
on the scope and character which this extreme position 
would assign it. 

The passage from which the above citation is taken is 
highly significant also in another and related bearing, and 
it is at the same time highly characteristic of the most 
effective modernised classical economics. The subject- 
matter of the science has come to be the " economic ac 
tivities "of mankind, and the phenomena in which these 
activities manifest themselves. So Professor Marshall's 
work, for instance, is, in aim, even if not always in 
achievement, a theoretical handling of human activity in 
its economic bearing,— an inquiry into the multiform 
phases and ramifications of that process of valuation of 
the material means of life by virtue of which man is an 
economic agent. And still it remains an inquiry directed 
to the determination of the conditions of an equilibrium 
of activities and a quiescent normal situation. It is not 
in any eminent degree an inquiry into cultural or institu 
tional development as affected by economic exigencies or 
by the economic interest of the men whose activities are 
analysed and portrayed. Any sympathetic reader of Pro 
fessor Marshall's great work — and that must mean every 
reader — comes away with a sense of swift and smooth 
movement and interaction of parts ; but it is the movement 
of a consummately conceived and self-balanced mechan 
ism, not that of a cumulatively unfolding process or an 
institutional adaptation to cumulatively unfolding exigen 
cies. The taxonomic bearing is, after all, the dominant 

i-i. 

•'l 

 Preconceptions: III 

feature. It is significant of the same point that even in 
his discussion of such vitally dynamic features of the 
economic process as the differential effectiveness of differ 
ent laborers or of different industrial plants, as well as of 
the differential advantages of consumers, Professor Mar 
shall resorts to an adaptation of so essentially taxonomic 
a category as the received concept of rent. Rent is a pe 
cuniary category, a category of income, which is essen 
tially a final term, not a category of the motor term, work 
or interest.16 It is not a factor or a feature of the process 
of industrial life, but a phenomenon of the pecuniary situ 
ation which emerges from this process under given con 
ventional circumstances. However far-reaching and va 
rious the employment of the rent concept in economic 
theory has been, it has through all permutations remained, 
what it was to begin with, a rubric in the classification of 
incomes. It is a pecuniary, not an industrial category. 
In so far as resort is had to the rent concept in the for 
mulation of a theory of the industrial process,— as in 
Professor Marshall's work,— it comes to a statement of 
the process in terms of its residue. Let it not seem pre 
sumptuous to say that, great and permanent as is the value 
of Professor Marshall's exposition of quasi-rents and the 
like, the endeavor which it involves to present in terms of 
a concluded system what is of the nature of a fluent proc 
ess has made the exposition unduly bulky, unwieldy, and 
inconsequent. 

There is a curious reminiscence of the perfect taxo 
nomic day in Mr. Keynes's characterisation of political 
economy as a " positive science," " the sole province of 
which is to establish economic uniformities " ;17 and, in 

16 " Interest " is, of course, here used in the sense which it has 
in modern psychological discussion. 

17 Scope and Method of Political Economy, p. 46. 

Preconceptions: III 

175 

., this resort to the associationist expedient of defining a 
natural law as a " uniformity," Mr. Keynes is also borne 
'out by Professor Marshall.18 But this and other sur 
vivals of the taxonomic terminology, or even of the taxo 
nomic canons of procedure, do not hinder the economists 
of the modern school from doing effective work of a char 
acter that must be rated as genetic rather than taxonomic. 
Professor Marshall's work in economics is not unlike that 
of Asa Gray in botany, who, while working in great part 
within the lines of " systematic botany " and adhering to 
its terminology, and on the whole also to its point of view, 
very materially furthered the advance of the science out 
side the scope of taxonomy. 

Professor Marshall shows an aspiration to treat eco 
nomic life as a development; and, at least superficially, 
much of his work bears the appearance of being a discus 
sion of this kind. In this endeavor his work is typical of 
what is aimed at by many of the later economists. The 
aim shows itself with a persistent recurrence in his Prin 
ciples. His chosen maxim is, " Natura non facit saltum," 
— a maxim that might well serve to designate the prevail 
ing attitude of modern economists towards questions of 
economic development as well as towards questions of 
classification or of economic policy. His insistence on the 
continuity of development and of the economic structure 
of communities is a characteristic of the best work along 
the later line of classical political economy. All this gives 
an air of evolutionism to the work. Indeed, the work of 
the neo-classical economics might be compared, probably 
without offending any of its adepts, with that of the early 
generation of Darwinians, though such a comparison 
might somewhat shrewdly have to avoid any but super- 

18 Principles of Economics, Vol. I, Book I, chap, vi, sect. 6, 
especially p. 105 (3d edition). 

i 

l l 

 176 

Preconceptions: III 

ficial features. Economists of the present day are com 
monly evolutionists, in a general way. They commonly 
accept, as other men do, the general results of the evolu 
tionary speculation in those directions in which the evolu 
tionary method has made its, way. But the habit of 
handling by evolutionist methods the facts with which 
their own science is concerned has made its way among 
the economists to but a very uncertain degree. 

The prime postulate of evolutionary science, the precon 
ception constantly underlying the inquiry, is the notion of 
a cumulative causal sequence; and writers on economics 
are in the habit of recognising that the phenomena with 
which they are occupied are subject to such a law of de 
velopment. Expressions of assent to this proposition 
abound. But the economists have not worked out or hit 
upon a method by which the inquiry in economics may 
consistently be conducted under the guidance of this pos 
tulate. Taking Professor Marshall as exponent, it ap 
pears that, while the formulations of economic theory are 
not conceived to be arrived at by way of an inquiry into 
the developmental variation of economic institutions and 
the like, the theorems arrived at are held, and no doubt 
legitimately, to apply to the past,19 and with due reserve 
also to the future, phases of the development. But these 
theorems apply to the various phases of the development 
not as accounting for the developmental sequence, but as 
limiting the range of variation. They say little, if any 
thing, as to the order of succession, as to the derivation 
and the outcome of any given phase, or as to the causal 
relation of one phase of any given economic convention or 
scheme of relations to any other. They indicate the con 
ditions of survival to which any innovation is subject, sup- 

19 See, e.g., Professor Marshall's " Reply " to Professor Cun- 
ningham in the Economic Journal for 1892, pp. 508-113. 

Preconceptions: HI 

177 

posing the innovation to have taken place, not the condi 
tions of variational growth. The economic laws, the 
-'' statements of uniformity," are therefore, when con 
strued in an evolutionary bearing, theorems concerning 
the superior or the inferior limit of persistent innovations, 
as the case may be.20 It is only in this negative, selective 
bearing that the current economic laws are held to be 
laws of developmental continuity; and it should be added 
that they have hitherto found but relatively scant applica 
tion at the hands of the economists, even for this purpose. 
Again, as applied to economic activities under a given 
situation, as laws governing activities in equilibrium, the 
economic laws are, in the main, laws of the limits within 
which economic action of a given purpose runs. They 
are theorems as to the limits which the economic (com 
monly the pecuniary) interest imposes upon the range of 
activities to which the other life interests of men incite, 
rather than theorems as to the manner and degree in 
which the economic interest creatively shapes the general 
scheme of life. In great part they formulate the normal 
inhibitory effect of economic exigencies rather than the 
cumulative modification and diversification of human ac 
tivities through the economic interest, by initiating and 
guiding habits of life and of thought. This, of course, 
does not go to say that economists are at all slow to 
credit the economic exigencies with a large share in the 
growth of culture ; but, while claims of this kind are large 
and recurrent, it remains true that the laws which make 
up the framework of economic doctrine are, when con 
strued as generalisations of causal relation, laws of con 
servation and selection, not of genesis and proliferation. 
The truth of this, which is but a commonplace generalisa- 

20 This is well illustrated by what Professor Marshall says of 
the Ricardian law of rent in his " Reply," cited above. 

i » 

ï,' 

 II 

178 

Preconceptions: III 

tion, might be shown in detail with respect to such funda 
mental theorems as the laws of rent, of profits, of wages, 
of the increasing or diminishing returns of industry, of 
population, of competitive prices, of cost of production. 

In consonance with this quasi-evolutionary tone of the 
neo-classical political economy, or as an expression of it, 
comes the further clarified sense that nowadays attaches 
to the terms " normal " and economic " laws." The laws 
have gained in colorlessness, until it can no longer be said 
that the concept of normality implies approval of the phe 
nomena to which it is applied.21 They are in an increas 
ing degree laws of conduct, though they still continue to 
formulate conduct in hedonistic terms; that is to say, 
conduct is construed in terms of its sensuous effect, not in 
terms of its teleological content. The light of the science 
is a drier light than it was, but it continues to be shed 
upon the accessories of human action rather than upon 
the process itself. The categories employed for the pur 
pose of knowing this economic conduct with which the 
scientists occupy themselves are not the categories under 
which the men at whose hands the action takes place them 
selves apprehend their own action at the instant of acting. 
Therefore, economic conduct still continues to be some 
what mysterious to the economists ; and they are forced to 
content themselves with adumbrations whenever the dis 
cussion touches this central, substantial fact. 

All this, of course, is intended to convey no dispraise of 
the work done, nor in any way to disparage the theories 
which the passing generation of economists have elabo 
rated, or the really great and admirable body of knowledge 
which they have brought under the hand of the science; 

21 See, e.g., Marshall, Principles, Book I, chap, vi, sect. 6, pp. 
105-108. The like dispassionateness is visible in most other 
modern writers on theory; as, e.g., Clark, Cannan, and the 
Austrians. 

Preconceptions: III 

179 

but only to indicate the direction in which the inquiry in 
its later phases — not always with full consciousness — is 
shifting as regards its categories and its point of view. 
The discipline of life in a modern community, particu 
larly the industrial life, strongly reënforced by the modern 
sciences, has divested our knowledge of non-human phe 
nomena of that fullness of self-directing life that was 
once imputed to them, and has reduced this knowledge to 
terms of opaque causal sequence. It has thereby nar 
rowed the range of discretionary, teleological action to the 
human agent alone ; and so it is compelling our knowledge 
of human conduct, in so far as it is distinguished from the 
non-human, to fall into teleological terms. Foot-pounds, 
calories, geometrically progressive procreation, and doses 
of capital, have not been supplanted by the equally un 
couth denominations of habits, propensities, aptitudes, and 
conventions, nor does there seem to be any probability that 
they will be; but the discussion which continues to run 
in terms of the former class of concepts is in an increasing 
degree seeking support in concepts of the latter class. 

iRi 

Ill 

 PROFESSOR CLARK'S ECONOMICS 1 

FOR some time past economists have been looking with 
lively anticipation for such a comprehensive statement of 
Mr. Clark's doctrines as is now offered. The leading 
purpose of the present volume 2 is " to offer a brief and 
provisional statement of the more general laws of prog 
ress " ; although it also comprises a more abridged re 
statement of the laws of " Economic Statics "-already set 
forth in fuller form in his Distribution of Wealth. 
Though brief, this treatise is to be taken as systematically 
complete, as including in due correlation all the " essen 
tials " of Mr. Clark's theoretical system. As such, its 
publication is an event of unusual interest and conse 
quence. 

Mr. Clark's position among this generation of econo 
mists is a notable and commanding one. No serious stu 
dent of economic theory will, or can afford to, forego a 
pretty full acquaintance with his development of doc 
trines. Nor will any such student avoid being greatly in 
fluenced by the position which Mr. Clark takes on any 
point of theory on which he may speak, and many look 
confidently to him for guidance where it is most needed. 
Very few of those interested in modern theory are under 
no obligations to him. He has, at the same time, in a 
singular degree the gift of engaging the affections as well 
as the attention of students in his field. Yet the critic is 

1 Reprinted by permission from The Quarterly Journal of 
Economics, Vol. XXII, Feb., 1908. 

2 The Essentials of Economic Theory, as Applied to Modern 
Problems of Industry and Public Policy. By John Bates Clark 
New York: The Macmillan Company. 1907. 

180 

Professor Clark's Economics 

181 

required to speak impersonally of Mr. Clark's work as a 
phase of current economic theory. 

In more than one respect Mr. Clark's position among 
economists recalls the great figures in the science a hun 
dred years ago. There is the same rigid grasp of the 
principles, the " essentials," out of which the broad the 
orems of the system follow in due sequence and correla 
tion; and like the leaders of the classical era, while Mr. 
Clark is always a theoretician, never to be diverted into 
' an inconsistent makeshift, he is moved by an alert and 
sympathetic interest in current practical problems. While 
his aim is a theoretical one, it is always with a view to the 
theory of current affairs; and his speculations are ani 
mated with a large sympathy and an aggressive interest 
in the amelioration of the lot of man. 

•His relation to the ancient adepts of the science, how 
ever, is something more substantial than a resemblance 
only. He is, by spiritual consanguinity, a representative 
of that classical school of thought that dominated the 
science through the better part of the nineteenth century. 
This is peculiarly true of Mr. Clark, as contrasted with 
many of those contemporaries who have fought for the 
marginal-utility doctrines. Unlike these spokesmen of 
the Austrian wing, he has had the insight and courage to 
see the continuity between the classical position and his 
own, even where he advocates drastic changes in the 
classical body of doctrines. And although his system of 
theory embodies substantially all that the consensus of 
theorists approves in the Austrian contributions to the 
science, yet he has arrived at his position on these heads 
not under the guidance of the Austrian school, but, avow 
edly, by an unbroken development out of the position 
given by the older generation of economists.3 Again, in 

3 Cf., e..a.. The Distribution of Wealth, p. 376, note. 

I: • 

If 

. I 

 il 

182 

Professor Clark's Economics 

the matter of the psychological postulates of the science, 
he accepts a hedonism as simple, unaffected, and uncritical 
as that of Jevons or of James Mill. In this respect his 
work is as true to the canons of the classical school as the 
best work of the theoreticians of the Austrian observance. 
There is the like unhesitating appeal to the calculus of 
pleasure and pain as the indefeasible ground of action and 
solvent of perplexities, and there is the like readiness to 
reduce all phenomena to terms of a " normal," or " nat 
ural," scheme of life constructed on the basis of this he 
donistic calculus. Even in the ready recourse to " con 
jectural history," to use Steuart's phrase, Mr. Clark's 
work is at one with both the early classical and the late 
(Jevons-Austrian) marginal-utility school. It has the 
virtues of both, coupled with the graver shortcomings of 
both. But, as his view exceeds theirs in breadth and gen 
erosity, so his system of theory is a more competent ex 
pression of current economic science than what is offered 
by the spokesmen of the Jevons-Austrian wing. It is as 
such, as a competent and consistent system of current 
economic theory, that it is here intended to discuss Mr. 
Clark's work, not as a body of doctrines peculiar to Mr. 
Clark or divergent from the main current. 

Since hedonism came to rule economic science, the sci 
ence has been in the main a theory of distribution,— dis 
tribution of ownership and of income. This is true 
both of the classical school and of those theorists who 
have taken an attitude of ostensible antagonism to the 
classical school. The exceptions to the rule are late and 
comparatively few, and they are not found among the 
economists who accept the hedonistic postulate as their 
point of departure. And, consistently with the spirit of 
hedonism, this theory of distribution has centered about 

Professor Clark's Economics 

183 

a doctrine of exchange value (or price) and has worked 
out its scheme of (normal) distribution in terms of (nor 
mal) price. The normal economic community, upon 
which theoretical interest has converged, is a business 
community, which centers about the market, and whose 
scheme of life is a scheme of profit and loss. Even when 
some considerable attention is ostensibly devoted to 
theories of consumption and production, in these systems 
of doctrine the theories are constructed in terms of own 
ership, price, and acquisition, and so reduce themselves 
in substance to doctrines of distributive acquisition.4 In 
this respect Mr. Clark's work is true to the received 
canons. The " Essentials of Economic Theory " are the 
essentials of the hedonistic theory of distribution, with 
sundry reflections on related topics. The scope of Mr. 
Clark's economics, indeed, is even more closely limited by 
concepts of distribution than many others, since he per 
sistently analyses production in terms of value, and value 
is a concept of distribution. 

As Mr. Clark justly observes (p. 4), "The primitive 
and general facts concerning industry . . . need to be 
known before the social facts can profitably be studied." 
In these early pages of the treatise, as in other works of 
its class, there is repeated reference to that more primi 
tive and simple scheme of economic life out of which the 
modern complex scheme has developed, and it is repeat 
edly indicated that in order to an understanding of the 
play of forces in the more advanced stages of economic 
development and complication, it is necessary to appre 
hend these forces in their unsophisticated form as they 
work out in the simple scheme prevalent on the plane of 

4 See, e.g., J. S. Mill, Political Economy, Book I ; Marshall, 
Principles of Economics, Vol. I, Books II-V. 

11!!' 

 184 

Professor Clark's Economics 

primitive life. Indeed, to a reader not well acquainted 
with Mr. Clark's scope and method of economic theoris 
ing, these early pages would suggest that he is preparing 
for something in the way of a genetic study,— a study of 
economic institutions approached from the side of their 
origins. It looks as if the intended line of approach to 
the modern situation might be such as an evolutionist 
would choose, who would set out with showing what 
forces are at work in the primitive economic community, 
and then trace the cumulative growth and complication of 
these factors as they presently take form in the institu 
tions of a later phase of the development. Such, how 
ever, is not Mr. Clark's intention. The effect of his re 
course to " primitive life " is simply to throw into the 
foreground, in a highly unreal perspective, those features 
which lend themselves to interpretation in terms of the 
normalised competitive system. The best excuse that can 
be offered for these excursions into " primitive life " is 
that they have substantially nothing to do with the main 
argument of the book, being of the nature of harmless and 
graceful misinformation. 

In the primitive economic situation — that is to say, in 
savagery and the lower barbarism — there is, of course, 
no " solitary hunter," living either in a cave or otherwise, 
and there is no man who " makes by his own labor all the 
goods that he uses," etc. It is, in effect, a highly mere 
tricious misrepresentation to speak in this connection of 
" the economy of a man who works only for himself," and 
say that " the inherent productive power of labor and cap 
ital is of vital concern to him," because such a presentation 
of the matter overlooks the main facts in the case in order 
to put the emphasis on a feature which is of negligible 
consequence. There is no reasonable doubt but that, at 
least since mankind reached the human plane, the eco- 

Professor Clark's Economics 

185 

nomic unit has been not a " solitary hunter," but a com 
munity of some kind ; in which, by the way, women seem 
in the early stages to have been the most consequential 
• factor instead of the man who works for himself. The 
" capital " possessed by such a community — as, e.g., a 
band of California "Digger" Indians — was a negligible 
quantity, more valuable to a collector of curios than to 
any one else, and the loss of which to the " Digger " 
squaws would mean very little. What was of " vital con 
cern " to them, indeed, what the life of the group de 
pended on absolutely, was the accumulated wisdom of the 
squaws, the technology of their economic situation.5 The 
loss of the basket, digging-stick, and mortar, simply as 
physical objects, would have signified little, but the con 
ceivable loss of the squaw's knowledge of the soil and 
seasons, of food and fiber plants, and of mechanical expe 
dients, would have meant the present dispersal and starva 
tion of the community. 

This may seem like taking Mr. Clark to task for an 
inconsequential gap in his general information on Digger 
Indians, Eskimos, and palaeolithic society at large. But 
the point raised is not of negligible consequence for eco 
nomic theory, particularly not for any theory of " eco 
nomic dynamics " that turns in great part about questions 
of capital and its uses at different stages of economic 
development. In the primitive culture the quantity and 
the value of mechanical appliances is relatively slight ; and 
whether the group is actually possessed of more or less 
of such appliances at a given time is not a question of 
first-rate importance. The loss of these objects — tan 
gible assets — would entail a transient inconvenience. 
But the accumulated, habitual knowledge of the ways and 

5 Cf., e.g., such an account as Barrows, Ethno-botany of the 
Coahuilla Indians. 

i1:-, i 

V I 

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 186 

Professor Clark's Economics 

means involved in the production and use of these appli 
ances is the outcome of long experience and experimenta 
tion; and, given this body of commonplace technological 
information, the acquisition and employment of the suit 
able apparatus is easily arranged. The great body of 
commonplace knowledge made use of in industry is the 
product and heritage of the group. In its essentials it is 
known by common notoriety, and the " capital goods " 
needed for putting this commonplace technological knowl 
edge to use are a slight matter,— practically within the 
reach of every one. Under these circumstances the own 
ership of " capital-goods " has no great significance, and, 
as a practical fact, interest and wages are unknown, and 
the " earning power of capital " is not seen to be " gov 
erned by a specific power of productivity which resides in 
capital-goods." But the situation changes, presently, by 
what is called an advance " in the industrial arts." The 
" capital " required to put the commonplace knowledge to 
effect grows larger, and so its acquisition becomes an in 
creasingly difficult matter. Through " difficulty of attain 
ment " in adequate quantities, the apparatus and its own 
ership become a matter of consequence ; increasingly so, 
until presently the equipment required for an effective 
pursuit of industry comes to be greater than the common 
man can hope to acquire in a lifetime. The commonplace 
knowledge of ways and means, the accumulated experi 
ence of mankind, is still transmitted in and by the body of 
the community at large ; but, for practical purposes, the 
advanced " state of the industrial arts " has enabled the 
owners of goods to corner the wisdom of the ancients 
and the accumulated experience of the race. Hence 
" capital," as it stands at that phase of the institution's 
growth contemplated by Mr. Clark. 

The " natural " system of free competition, or, as it was 

Professor Clark's Economics 

187 

once called, " the obvious and simple system of natural 
liberty," is accordingly a phase of the development of the 
institution of capital ; and its claim to immutable dominion 
is evidently as good as the like claim of any other phase 
of cultural growth. The equity, or " natural justice," 
claimed for it is evidently just and equitable only in so far 
as the conventions of ownership on which it rests continue 
to be a secure integral part of the institutional furniture 
of the community ; that is to say, so long as these conven 
tions are part and parcel of the habits of thought of the 
community; that is to say, so long as these things are 
currently held to be just and equitable. This normalised 
present, or " natural," state of Mr. Clark, is, as near as 
may be, Senior's " Natural State of Man,"— the hypo- 
thetically perfect competitive system; and economic the 
ory consists in the definition and classification of the phe 
nomena of economic life in terms of this hypothetical 
competitive system. 

Taken by itself, Mr. Clark's dealing with the past de 
velopment might be passed over with slight comment, 
except for its negative significance, since it has no theo 
retical connection with the present, or even with the 
" natural " state in which the phenomena of economic 
life are assumed to arrange themselves in a stable, normal 
scheme. But his dealings with the future, and with the 
present in so far as the present situation is conceived to 
comprise " dynamic " factors, is of substantially the same 
kind. With Senior's " natural state of man " as the base 
line of normality in things economic, questions of present 
and future development are treated as questions of de 
parture from the normal, aberrations and excesses which 
the theory does not aim even to account for. What is 
offered in place of theoretical inquiry when these " posi 
tive perversions of the natural forces themselves " are 

' II 

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188 

Professor dark's Economics 

taken up (e.g., in chapters xxii.-xxix.) is an exposition 
of the corrections that must be made to bring the situation 
back to the normal static state, and solicitous advice as to 
what measures are to be taken with a view to this benefi 
cent end. The problem presented to Mr. Clark by the 
current phenomena of economic development is : how can 
it be stopped? or, failing that, how can it be guided and 
minimised? Nowhere is there a sustained inquiry into 
the dynamic character of the changes that have brought 
the present (deplorable) situation to pass, nor into the 
nature and trend of the forces at work in the develop 
ment that is going forward in this situation. None of 
this is covered by Mr. Clark's use of the word " dynamic." 
All that it covers in the way of theory (chapters xii.- 
xxi.) is a speculative inquiry as to how the equilibrium 
reestablished itself when one or more of the quantities in 
volved increases or decreases. Other than quantitive 
changes are not noticed, except as provocations to homi- 
letic discourse. Not even the causes and the scope of 
the quantitive changes that may take place in the variables 
are allowed to fall within the scope of the theory of 
economic dynamics. 

So much of the volume, then, and of the system of doc 
trines of which the volume is an exposition, as is com 
prised in the later eight chapters (pp. 372-554), is an 
exposition of grievances and remedies, with only sporadic 
intrusions of theoretical matter, and does not properly 
constitute a part of the theory, whether static or dynamic. 
There is no intention here to take exception to Mr. Clark's 
outspoken attitude of disapproval toward certain features 
of the current business situation or to quarrel with the 
remedial measures which he thinks proper and necessary. 
This phase of his work is spoken of here rather to call 
attention to the temperate but uncompromising tone of 

Professor Clark's Economics 

189 

Mr. Clark's writings as a spokesman for the competitive 
system, considered as an element in the Order of Nature, 
and to note the fact that this is not economic theory.6 

The theoretical section specifically scheduled as Eco 
nomic Dynamics (chapters xii.-xxi.), on the other hand, 
is properly to be included under the caption of Statics. 
As already remarked above, it presents a theory of equi 
librium between variables. Mr. Clark is, indeed, barred 
out by his premises from any but a statical development of 
theory. To realise the substantially statical character of 
his Dynamics, it is only necessary to turn to his chapter 
xii. (Economic Dynamics). "A highly dynamic condi 
tion, then, is one in which the economic organism changes 
rapidly and yet, at any time in the course of its changes, 
is relatively near to a certain static model" (p. 196). 
" The actual shape of society at any one time is not the 
static model of that time; but it tends to conform to it; 
and in a very dynamic society is more nearly like it than 
it would be in one in which the forces of change are less 
active " (p. 197). The more " dynamic " the society, the 
nearer it is to the static model ; until in an ideally dynamic 
society, with a frictionless competitive system, to use Mr. 
Clark's figure, the static state would be attained, except 

6 What would be the scientific rating of the work of a botanist 
who should spend his energy in devising ways and means to neu 
tralize the ecological variability of plants, or of a physiologist 
who conceived it the end of his scientific endeavors to rehabili 
tate the vermiform appendix or the pineal eye, or to denounce 
and penalize the imitative coloring of the Viceroy butterfly? 
What scientific interest would attach to the matter if Mr. Loeb, 
e.g., should devote a few score pages to canvassing the moral 
responsibilities incurred by him in his parental relation to his 
parthenogenetically developed sea-urchin eggs? 

Those phenomena which Mr. Clark characterizes as "positive 
Perversions" may be distasteful and troublesome, perhaps, but 
" the economic necessity of doing what is legally difficult " is not 
of the " essentials of theory." 

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for an increase in size,— that is to say, the ideally perfect 
" dynamic " state would coincide with the " static " state. 
Mr. dark's conception of a dynamic state reduces itself 
to a conception of an imperfectly static state, but in such 
a sense that the more highly and truly " dynamic " condi 
tion is thereby the nearer to a static condition. Neither 
the static nor the dynamic state, in Mr. Clark's view, it 
should be remarked, is a state of quiescence. Both are 
states of more or less intense activity, the essential differ 
ence being that in the static state the activity goes on in 
perfection, without lag, leak, or friction; the movement 
of parts being so perfect as not to disturb the equilibrium. 
The static state is the more " dynamic " of the two. The 
" dynamic " condition is essentially a deranged static con 
dition: whereas the static state is the absolute perfect, 
" natural " taxonomic norm of competitive life. This 
dynamic-static state may vary in respect of the magni 
tude of the several factors which hold one another in 
equilibrium, but these are none other than quantitive vari 
ations. The changes which Mr. Clark discusses under the 
head of dynamics are all of this character,— changes in 
absolute or relative magnitude of the several factors com 
prised in the equation. 

But, not to quarrel with Mr. Clark's use of the terms 
" static " and " dynamic," it is in place to inquire into the 
merits of this class of economic science apart from any 
adventitious shortcomings. For such an inquiry Mr. 
Clark's work offers peculiar advantages. It is lucid, con 
cise, and unequivocal, with no temporising euphemisms 
and no politic affectations of sentiment. Mr. Clark's 
premises, and therewith the aim of his inquiry, are the 
standard ones of the classical English school (including 
the Jevons-Austrian wing). This school of economics 

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Professor Clark's Economics 

191 

stands on the pre-evolutionary ground of normality and 
"natural law," which the great body of theoretical sci 
ence occupied in the early nineteenth century. It is like 
the other theoretical sciences that grew out of the ration 
alistic and humitarian conceptions of the eighteenth cen 
tury in that its theoretical aim is taxonomy — definition 
and classification — with the purpose of subsuming its 
data under a rational scheme of categories which are pre 
sumed to make up the Order of Nature. This Order of 
Nature, or realm of Natural Law, is not the actual run 
of material facts, but the facts so interpreted as to meet 
the needs of the taxonomist in point of taste, logical con 
sistency, and sense of justice. The question of the truth 
and adequacy of the categories is a question as to the con 
sensus of taste and predilection among the taxonomists; 
i.e., they are an expression of trained human nature touch 
ing the matter of what ought to be. The facts so inter 
preted make up the "normal," or "natural," scheme of 
things, with which the theorist has to do. His task is to 
bring facts within the framework of this scheme of " nat 
ural " categories. Coupled with this scientific purpose of 
the taxonomic economist is the pragmatic purpose of find 
ing and advocating the expedient course of policy. On 
this latter head, again, Mr. Clark is true to the animus of 
the school. 

The classical school, including Mr. Clark and his con 
temporary associates in the science, is hedonistic and 
utilitarian,— hedonistic in its theory and utilitarian in its 
pragmatic ideals and endeavors. The hedonistic postu 
lates on which this line of economic theory is built up are 
of a statical scope and character, and nothing but statical 
theory (taxonomy) comes out of their development.7 

7 It is a notable fact that even the genius of Herbert Spencer 
could extract nothing but taxonomy from his hedonistic postu- 

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These postulates, and the theorems drawn from them, 
take account of none but quantitive variations, and quan- 
titive variation alone does not give rise to cumulative 
change, which proceeds on changes in kind. 

Economics of the line represented at its best by Mr. 
Clark has never entered this field of cumulative change. 
It does not approach questions of the class which occupy 
the modern sciences,— that is to say, questions of genesis, 
growth, variation, process (in short, questions of a dy 
namic import),— but confines its interest to the definition 
and classification of a mechanically limited range of phe 
nomena. Like other taxonomic sciences, hedonistic eco 
nomics does not, and cannot, deal with phenomena of 
growth except so far as growth is taken in the quantita 
tive sense of a variation in magnitude, bulk, mass, num 
ber, frequency. In its work of taxonomy this economics 
has consistently bound itself, as Mr. Clark does, by dis 
tinctions of a mechanical, statistical nature, and has 
drawn its categories of classification on those grounds. 
Concretely, it is confined, in substance, to the determina 
tion of and refinements upon the concepts of land, labor, 
and capital, as handed down by the great economists of 
the classical era, and the correlate concepts of rent, wages, 
interest and profits. Solicitously, with a painfully metic 
ulous circumspection, the normal, mechanical metes and 
bounds of these several concepts are worked out, the 
touchstone of the absolute truth aimed at being the hedon 
istic calculus. The facts of use and wont are not of the 

lates; e.g., his Social Statics. Spencer is both evolutionist and 
hedonist, but it is only by recourse to other factors, alien to the 
rational hedonistic scheme, such as habit, delusions, use and dis 
use, sporadic variation, environmental forces, that he is able to 
achieve anything in the way of genetic science, since it is only 
by this recourse that he is enabled to enter the field of cumula 
tive change within which the modern post-Darwinian sciences 
live and move and have their being. 

Professor Clark's Economics 

193 

essence of this mechanical refinement. These several 
categories are mutually exclusive categories, mechanically 
speaking. The circumstance that the phenomena covered 
by them are not mechanical facts is not allowed to disturb 
the pursuit of mechanical distinctions among them. 
They nowhere overlap, and at the same time between 
them they cover all the facts with which this economic 
taxonomy is concerned. Indeed, they are in logical con 
sistency, required to cover them. They are hedonistically 
" natural " categories of such taxonomic force that their 
elemental lines of cleavage run through the facts of any 
given economic situation, regardless of use and wont, 
even where the situation does not permit these lines of 
cleavage to be seen by men and recognised by use and 
wont ; so that, e.g., a gang of Aleutian Islanders slushing 
about in the wrack and surf with rakes and magical in 
cantations for the capture of shell-fish are held, in point 
of taxonomic reality, to be engaged on a feat of hedonis 
tic equilibration in rent, wages, and interest. And that 
is all there is to it. Indeed, for economic theory of this 
kind, that is all there is to any economic situation. The 
hedonistic magnitudes vary from one situation to another, 
but, except for variations in the arithmetical details of the 
hedonistic balance, all situations are, in point of economic 
theory, substantially alike.8 

Taking this unfaltering taxonomy on its own recog 
nisances, let us follow the trail somewhat more into the 

8"The capital-goods have to be taken unit by unit if their 
value for productive purposes is to be rightly gauged. A part of 
a supply of potatoes is traceable to the hoes that dig them. . . . 
We endeavor simply to ascertain how badly the loss of one hoe 
would affect us or how much good the restoration of it would do 
us. This truth, like the foregoing ones, has a universal applica 
tion in economics; for primitive men as well as civilized ones 
must estimate tlie specific productivity of the tools that they use," 
etc. Page 43. 

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arithmetical details, as it leads along the narrow ridge 
of rational calculation, above the tree-tops, on the levels 
of clear sunlight and moonshine. For the purpose in 
hand — to bring out the character of this current eco 
nomic science as a working theory of current facts, and 
more particularly " as applied to modern problems of 
industry and public policy " (title-page)— the sequence 
to be observed in questioning the several sections into 
which the theoretical structure falls is not essential. The 
structure of classical theory is familiar to all students, 
and Mr. dark's redaction offers no serious departure 
from the conventional lines. Such divergence from con 
ventional lines as may occur is a matter of details, com 
monly of improvements in detail ; and the revisions of de 
tail do not stand in such an organic relation to one an 
other, nor do they support and strengthen one another 
in such a manner, as to suggest anything like a revolu 
tionary trend or a breaking away from the conventional 
lines. 

So as regards Mr. Clark's doctrine of Capital. It does 
not differ substantially from the doctrines which are 
gaining currency at the hands of such writers as Mr. 
Fisher or Mr. Fetter; although there are certain formal 
distinctions peculiar to Mr. Clark's exposition of the 
" Capital Concept." But these peculiarities are peculiar 
ities of the method of arriving at the concept rather than 
peculiarities substantial to the concept itself. The main 
discussion of the nature of capital is contained in chapter 
ii. (Varieties of Economic Goods). The conception of 
capital here set forth is of fundamental consequence to 
the system, partly because of the important place assigned 
capital in this system of theory, partly because of the 
importance which the conception of capital must have in 
any theory that is to deal with problems of the current 

Professor Clark's Economics 

195 

(capitalistic) situation. Several classes of capital-goods 
are enumerated, but it appears that in Mr. Clark's appre 
hension — at variance with Mr. Fisher's view — persons 
are not to be included among the items of capital. It is 
also clear from the run of the argument, though not ex 
plicitly stated, that only material, tangible, mechanically 
definable articles of wealth go to make up capital. In 
current usage, in the business community, " capital " is a 
pecuniary concept, of course, and is not definable in me 
chanical terms; but Mr. Clark, true to the hedonistic 
taxonomy, sticks by the test of mechanical demarcation 
and draws the lines of his category on physical 
grounds; whereby it happens that any pecuniary con 
ception of capital is out of the question. Intangible as 
sets, or iminaterial wealth, have no place in the theory ; 
and Mr. Clark is exceptionally subtle and consistent in 
avoiding such modern notions. One gets the impression 
that such a notion as intangible assets is conceived to 
be too chimerical to merit attention, even by way of pro 
test or refutation. 

Here, as elsewhere in Mr. Clark's writings, much is 
made of the doctrine that the two facts of " capital " 
and " capital-goods " are conceptually distinct, though 
substantially identical. The two terms cover virtually 
the same facts as would be covered by the terms " pecuni 
ary capital " and " industrial equipment." They are for 
all ordinary purposes coincident with Mr. Fisher's terms, 
" capital value " and " capital," although Mr. Clark might 
enter a technical protest against identifying his categories 
with those employed by Mr. Fisher.9 " Capital is this 
permanent fund of productive goods, the identity of 
whose component elements is forever changing. Capital- 

9C/. a criticism of Mr. Fisher's conception in the Political 
Science Quarterly for February, 1908. 

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goods are the shifting component parts of this permanent 
aggregate" (p. 29). Mr. Clark admits (pp. 29-33) that 
capital is colloquially spoken and thought of in terms of 
value, but he insists that in'point of substantial fact the 
working concept of capital is (should be) that of " a fund 
of productive goods," considered as an " abiding entity." 
The phrase itself, " a fund of productive goods," is a 
curiously confusing mixture of pecuniary and mechanical 
terms, though the pecuniary expression, " a fund," is 
probably to be taken in this connection as a permissible 
metaphor. 

This conception of capital, as a physically " abiding 
entity " constituted by the succession of productive goods 
that make up the industrial equipment, breaks down in 
Mr. Clark's own use of it when he comes (pp. 37-38) 
to speak of the mobility of capital ; that is to say, so soon 
as he makes use of it. A single illustration of this will 
have to suffice, though there are several points in his 
argument where the frailty of the conception is patent 
enough. " The transfer of capital from one industry to 
another is a dynamic phenomenon which is later to be 
considered. What is here important is the fact that it 
is in the main accomplished without entailing transfers 
of capital-goods. An instrument wears itself out in one 
industry, and instead of being succeeded by a like instru 
ment in the same industry, it is succeeded by one of a 
different kind which is used in a different branch of pro 
duction " (p. 38),— illustrated on the preceding page by 
a shifting of investment from a whaling-ship to a cotton- 
mill. In all this it is plain that the " transfer of capital " 
contemplated is a shifting of investment, and that it is, 
as indeed Mr. Clark indicates, not a matter of the me 
chanical shifting of physical bodies from one industry 
to the other. To speak of a transfer of " capital " which 

Professor Clark's Economics 

197 

does not involve a transfer of " capital-goods " is a con 
tradiction of the main position, that " capital " is made 
up of " capital-goods." The continuum in which the 
" abiding entity " of capital resides is a continuity of 
ownership, not a physical fact. The continuity, in fact, 
is of an immaterial nature, a matter of legal rights, of 
contract, of purchase and sale. Just why this patent 
state of the case is overlooked, as it somewhat elaborately 
is, is not easily seen. But it is plain that, if the concept 
of capital were elaborated from observation of current 
business practice, it would be found that " capital " is a 
pecuniary fact, not a mechanical one; that it is an out 
come of a valuation, depending immediately on the state 
of mind of the valuers ; and that the specific marks of 
capital, by which it is distinguishable from other facts, 
are of an immaterial character. This would, of course, 
lead, directly, to the admission of intangible assets; and 
this, in turn, would upset the law of the " natural " re 
muneration of labor and capital to which Mr. Clark's 
argument looks forward from the start. It would also 
bring in the " unnatural " phenomena of monopoly as a 
normal outgrowth of business enterprise. 

There is a further logical discrepancy avoided by re 
sorting to the alleged facts of primitive industry, when 
there was no capital, for the elements out of which to 
construct a capital concept, instead of going to the cur 
rent business situation. In a hedonistic-utilitarian 
scheme of economic doctrine, such as Mr. Clark's, only 
physically productive agencies can be admitted as efficient 
factors in production or as legitimate claimants to a 
share in distribution. Hence capital, one of the prime 
factors in production and the central claimant in the cur 
rent scheme of distribution, must be defined in physical 
terms and delimited by mechanical distinctions. This is 

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necessary for reasons which appear in the succeeding 
chapter, on The Measure of Consumers' Wealth. 

On the same page (38), and elsewhere, it is remarked 
that " business disasters " destroy capital in part. The 
destruction in question is a matter of values; that is to 
say, a lowering of valuation, not in any appreciable de 
gree a destruction of material goods. Taken as a phys 
ical aggregate, capital does not appreciably decrease 
through business disasters, but, taken as a fact of owner 
ship and counted in standard units of value, it decreases ; 
there is a destruction of values and a shifting of owner 
ship, a loss of ownership perhaps ; but these are pecu 
niary phenomena, of an immaterial character, and so do 
not directly affect the material aggregate of the industrial 
equipment. Similarly, the discussion (pp. 301-314) of 
how changes of method, as, e.g., labor-saving devices, 
" liberate capital," and at times " destroy " capital, is in 
telligible only on the admission that " capital " here is a 
matter of values owned by investors and is not employed 
as a synonym for industrial appliances. The appli 
ances in question are neither liberated nor destroyed in 
the changes contemplated. And it will not do to say 
that the aggregate of " productive goods " suffers a 
diminution by a substitution of devices which increases 
its aggregate productiveness, as is implied, e.g., by the 
passage on page 3O/,10 if Mr. Clark's definition of capital 

10 " The machine itself is often a hopeless specialist. It can 
do one minute thing and that only, and when a new and better 
device appears for doing that one thing, the machine has to go, 
and not to some new employment, but to the junk heap. There is 
thus taking place a considerable waste of capital in consequence 
of mechanical and other progress." " Indeed, a quick throwing 
away of instruments which have barely begun to do their work is 
often the secret of the success of an enterprising manager, but it 
entails a destruction of capital." 

Professor Clark's Economics 

199 

is strictly adhered to. This very singular passage (pp. 
306-311, under the captions, Hardships entailed on Cap 
italists by Progress, and the Offset for Capital destroyed 
by Changes of Method) implies that the aggregate of 
appliances of production is decreased by a change which 
increases the aggregate of these articles in that respect 
(productivity) by virtue of which they are counted in 
the aggregate. The argument will hold good if " pro 
ductive goods " are rated by bulk, weight, number, or 
some such irrelevant test, instead of by their productivity 
or by their consequent capitalised value. On such a 
showing it should be proper to say that the polishing of 
plowshares before they are sent out from the factory 
diminishes the amount of capital embodied in plowshares 
by as much as the weight or bulk of the waste material 
removed from the shares in polishing them. 

Several things may be said of the facts discussed in 
this passage. There is, presumably, a decrease, in bulk, 
weight, or number, of the appliances that make up the 
industrial equipment at the time when such a technolog 
ical change as is contemplated takes place. This change, 
presumably, increases the productive efficiency of the 
equipment as s. whole, and so may be said without hesi 
tation to increase the equipment as a factor of produc 
tion, while it may decrease it, considered as a mechanical 
magnitude. The owners of the obsolete or obsolescent 
appliances presumably suffer a diminution of their cap 
ital, whether they discard the obsolete appliances or not. 
The owners of the new appliances, or rather those who 
own and are able to capitalise the new technological ex 
pedients, presumably gain a corresponding advantage, 
Which may take the form of an increase of the effective 
capitalisation of their outfit, as would then be shown by 
an increased market value of their plant. The largest 

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Professor Clark's Economies 

201 

theoretical outcome of the supposed changes, for an 
economist not bound by Mr. Clark's conception of capital, 
should be the generalisation that industrial capital — 
capital considered as a productive agent — is substan 
tially a capitalisation of technological expedients, and 
that a given capital invested in industrial equipment is 
measured by the portion of technological expedients whose 
usufruct the investment appropriates. It would accord 
ingly appear that the substantial core of all capital is im 
material wealth, and that the material objects which are 
formally the subject of the capitalist's ownership are, by 
comparison, a transient and adventitious matter. But if 
such a view were accepted, even with extreme reserva 
tions, Mr. Clark's scheme of the " natural " distribution 
of incomes between capital and labor would " go up in 
the air," as the colloquial phrase has it. It would be ex 
tremely difficult to determine what share of the value of 
the joint product of capital and labor should, under a 
rule of " natural " equity, go to the capitalist as an equi 
table return for his monopolisation of a, given portion of 
the intangible assets of the community at large.11 The 
returns actually accruing to him under competitive con 
ditions would be a measure of the differential advan 
tage held by him by virtue of his having become legally 
seized of the material contrivances by which the tech 
nological achievements of the community are put into 
effect. 

Yet, if in this way capital were apprehended as " an 
historical category," as Rodbertus would say, there is 
at least the comfort in it all that it should leave a free 

11 The position of the ' laborer and his wages, in this light, 
would not be substantially different from that of the capitalist 
and his interest. Labor is no more possible, as a fact of indus 
try, without the community's accumulated technological knowl 
edge than is the use of " productive goods." 

field for Mr. Clark's measures of repression as applied 
to the discretionary management of capital by the mak 
ers of trusts. And yet, again, this comforting reflection 
is coupled with the ugly accompaniment that by the same 
move the field would be left equally free of moral obstruc 
tions to the extreme proposals of the socialists. A safe 
and sane course for the quietist in these premises should 
apparently be to discard the equivocal doctrines of the 
passage (pp. 306-311) from which this train of questions 
arises, and hold fast to the received dogma, however un 
workable, that " capital " is a congeries of physical objects 
with no ramifications or complications of an immaterial 
kind, and to avoid all recourse to the concept of value, 
or price, in discussing matters of modern business. 

The center of interest and of theoretical force and va 
lidity in Mr. Clark's work is his law of " natural " distri 
bution. Upon this law hangs very much of the rest, 
if not substantially the whole structure of theory. To 
this law of distribution the earlier portions of the theo 
retical development look forward, and this the succeed 
ing portions of the treatise take as their point of de 
parture. The law of " natural " distribution says that 
any productive agent " naturally " gets what it produces. 
Under ideally free competitive conditions — such as pre 
vail in the " static " state, and to which the current situa 
tion approximates — each unit of each productive factor 
unavoidably gets the amount of wealth which it creates, 
— its " virtual product," as it is sometimes expressed. 
This law rests, for its theoretical validity, on the doctrine 
of " final productivity," set forth in full in the Distribu 
tion of Wealth, and more concisely in the Essentials12 — 

_12C/. Distribution of Wealth, chaps, xii, xiii, vii, viii; Essen 
tials, chaps, v-x. 

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Professor Clark's Economics 

" one of those universal principles which govern economic 
life in all its stages of evolution."1S 

In combination with a given amount of capital, it is 
held, each succeeding unit of added labor adds a less than 
proportionate increment to the product. The total prod 
uct created by the labor so engaged is at the same time 
the distributive share received by such labor as wages; 
and it equals the increment of product added by the 
" final " unit of labor, multiplied by the number of such 
units engaged. The law of " natural " interest is the 
same as this law of wages, with a change of terms. The 
product of each unit of labor or capital being measured 
by the product of the " final " unit, each gets the amount 
of its own product. 

In all of this the argument runs in terms of value ; but 
it is Mr. Clark's view, backed by an elaborate exposition 
of the grounds of his contention,14 that the use of these 
terms of value is merely a matter of convenience for the 
argument, and that the conclusions so reached — the 
equality so established between productivity and remu 
neration — may be converted to terms of goods, or " ef 
fective utility," without abating their validity. 

Without recourse to some such common denominator 
as value the outcome of the argument would, as Mr. 
Clark indicates, be something resembling the Ricardian 
law of differential rent instead of a law drawn in homo 
geneous terms of " final productivity " ; and the law of 
" natural " distribution would then, at the best, fall short 
of a general formula. But the recourse to terms of value 
does not, as Mr. Clark recognises, dispose of the question 
without more ado. It smooths the way for the argument, 
but, unaided, it leaves it nugatory. According to Hu- 

•1S Essentials, p. 158. 
14 Distribution, chap. xxiv. 

Professor Clark's Economics 

203 

dibras, " The value of a thing Is just as much as it will 
bring," and the later refinements on the theory of value 
have not set aside this dictum of the ancient authority. 
It answers no pertinent question of equity to say that 
the wages paid for labor are as much as it will bring. 
And Mr. Clark's chapter (xxiv.) on "The Unit for 
Measuring Industrial Agents and their Products " is 
designed to show how this tautological statement in terms 
of market value converts itself, under competitive condi 
tions, into a competent formula of distributive justice. 
It does not conduce to intelligibility to say that the wages 
of labor are just and fair because they are all that is paid 
to labor as wages. What further value Mr. Clark's ex 
tended discussion of this matter may have will lie in his 
exposition of how competition converts the proposition 
that " the value of a thing is just as much as it will bring " 
into the proposition that " the market rate of wages (or 
interest) gives to labor (or capital) the full product of 
labor (or capital)." 

In following up the theory at this critical point, it is 
necessary to resort to the fuller statement of the Distri 
bution of Wealth,15 the point being not so adequately cov 
ered in the Essentials. Consistently hedonistic, Mr. Clark 
recognises that his law of natural justice must be reduced 
to elementary hedonistic terms, if it is to make good its 
claim to stand as a fundamental principle of theory. In 
hedonistic theory, production of course means the pro 
duction of utilities, and utility is of course utility to 
the consumer.16 A product is such by virtue of and to 
the amount of the utility which it has for a consumer. 
This utility of the goods is measured, as value, by the 
sacrifice (disutility) which the consumer is willing to 

15 Chap. xxiv. 

10 Essentials, p. 40. 

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undergo in order to get the utility which the consumption 
of the goods yields him. The unit and measure of pro 
ductive labor is in the last analysis also a unit of dis 
utility ; but it is disutility to the productive laborer, not to 
the consumer. The balance which establishes itself un 
der competitive conditions is a compound balance, being 
a balance between the utility of the goods to the con 
sumer and the disutility (cost) which he is willing to 
undergo for it, on the one hand, and, on the other hand, 
a balance between the disutility of the unit of labor and 
the utility for which the laborer is willing to undergo 
this disutility. It is evident, and admitted, that there can 
be no balance, and no commensurability, between the la 
borer's disutility (pain) in producing the goods and the 
consumer's utility (pleasure) in consuming them, inas 
much as these two hedonistic phenomena lie each within 
the consciousness of a distinct person. There is, in fact, 
no continuity of nervous tissue over the interval between 
consumer and producer, and a direct comparison, equilib 
rium, equality, or discrepancy in respect of pleasure and 
pain can, of course, not be sought except within each 
self-balanced individual complex of nervous tissue.17 
The wages of labor (i.e., the utility of the goods received 
by the laborer) is not equal to the disutility undergone 
by him,'except in the sense that he is competitively will 
ing to accept it; nor are these wages equal to the utility 
got by the consumer of the goods, except in the sense 

17 Among modern economic hedonists, including Mr. Clark, 
there stands over from the better days of the order of nature a 
presumption, disavowed, but often decisive, that the sensational 
response to the like mechanical impact of the stimulating body is 
the same in different individuals. But, while this presumption 
stands ever in the background, and helps to many important con 
clusions, as in the case under discussion, few modern hedonists 
would question the statement in the text. 

Professor dark's Economics 

205 

that he is competitively willing to pay them. This point 
is covered by the current diagrammatic arguments of 
marginal-utility theory as to the determination of com 
petitive prices. 

But, while the wages are not equal to or directly com 
parable with the disutility of the productive labor en 
gaged, they are, in Mr. Clark's view, equal to the " pro 
ductive efficiency " of that labor.18 " Efficiency in a 
worker is, in reality, power to draw out labor on the part 
of society. It is capacity to offer that for which society 
will work in return." By the mediation of market price, 
under competitive conditions, it is held, the laborer gets, 
in his wages, a valid claim on the labor of other men 
(society) as large as they are competitively willing to 
allow him for the services for which he is paid his wages. 
The equitable balance between work and pay contem 
plated by the " natural " law is a balance between wages 
and " efficiency," as above denned ; that is to say, between 
tiie wages of labor and the capacity of labor to get wages. 
So far, the whole matter might evidently have been left 
as Bastiat left it. It amounts to saying that the laborer 
gets what he is willing to accept and the consumers give 
what they are .willing to. pay. And this is true, of course, 
whether competition prevails or not. 

What makes this arrangement just and right under 
competitive conditions, in Mr. Clark's view, lies in his 
further doctrine that under such conditions of unob 
structed competition the prices of goods, and therefore 
the wages of labor, are determined, within the scope of 
the given market, by a quasi-consensus of all the parties 
in interest. There is of course no formal consensus, but 
what there is of the kind is implied in the fact that bar 
gains are made, and this is taken as an appraisement by 

18 Distribution, p. 394. 

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" society " at large. The (quasi-) consensus of buyers is 
held to embody the righteous (quasi-) appraisement of 
society in the premises, and the resulting rate of wages is 
therefore a (quasi-) just return to the laborer.19 " Each 
man accordingly is paid an amount that equals the total 
product that he personally creates."20 If competitive 
conditions are in any degree disturbed, the equitable bal 
ance of prices and wages is disturbed by that much. All 
this holds true for the interest of capital, with a change of 
terms. 

The equity and binding force of this finding is evidently 
bound up with that common-sense presumption on which 
it rests; namely, that it is right and good that all men 
should get what they can without force or fraud and 
without disturbing existing property relations. It springs 
from this presumption, and, whether in point of equity 
or of expediency, it rises no higher than its source. It 
does not touch questions of equity beyond this, nor does 
it touch questions of the expediency or probable advent 
of any contemplated change in the existing conventions 
as to rights of ownership and initiative. It affords a basis 
for those who believe in the old order — without which 
belief this whole structure of opinions collapses — to 
argue questions of wages and profits in a manner con 
vincing to themselves, and to confirm in the faith those 
who already believe in the old order. But it is not easy 
to see that some hundreds of pages of apparatus should 
be required to find one's way back to these time-worn 
commonplaces of Manchester. 

In effect, this law of " natural " distribution says that 

19 In Mr. Clark's discussion, elsewhere, the " quasi "-character 
of the productive share of the laborer is indicated by saying that 
it is the product " imputed " or " imputable " to him. 

20 Essentials, p. 92. Et si sensus deficit, ad firmandum cor 
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whatever men acquire without force or fraud under 
competitive conditions is their equitable due, no more 
and no less, assuming that the competitive system, with 
its underlying institution of ownership, is equitable and 
" natural." In point of economic theory the law appears 
on examination to be of slight consequence, but it merits 
further attention for the gravity of its purport. It is 
offered as a definitive law of equitable distribution com 
prised in a system of hedonistic economics which is in 
the main a theory of distributive acquisition only. It is 
worth while to compare the law with its setting, with a 
view to seeing how its broad declarations of economic 
justice shows up in contrast with the elements out of 
which it is constructed and among which it lies. 

Among the notable chapters of the Essentials is one 
(vi.) on Value and its Relation to Different Incomes, 
which is not only a very substantial section of Mr. Clark's 
economic theory, but at the same time a type of the 
achievements of the latter-day hedonistic school. Certain 
features of this chapter alone can be taken up here. The 
rest may be equally worthy the student's attention, but 
it is the intention here not to go into the general sub 
stance of the theory of marginal utility and value, to 
which the chapter is devoted, but to confine attention to 
such elements of it as bear somewhat directly on the 
question of equitable distribution already spoken of. 
Among these latter is the doctrine of the " consumer's 
surplus,"—virtually the same as what is spoken of by 
other writers as " consumer's rent." 21 " Consumer's sur 
plus " is the surplus of utility (pleasure) derived by the 
consumer of goods above the (pain) cost of the goods to 
him. This is held to be a very generally prevalent phe 
nomenon. Indeed, it is held to be all but universally 

21 See pp. 102-113; also p. 172, note. 

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present in the field of consumption. It might, in fact, be 
effectively argued that even Mr. Clark's admitted excep 
tion 22 is very doubtfully to be allowed, on his own show 
ing. Correlated with this element of utility on the con 
sumer's side is a similar volume of disutility on the pro 
ducer's side, which may be called " producer's abate 
ment," or "producer's rent": it is the amount of dis 
utility by which the disutility-cost of a given article to 
any given producer (laborer) falls short of (or con 
ceivably exceeds) the disutility incurred by the marginal 
producer. Marginal buyers or consumers and marginal 
sellers or producers are relatively few: the great body 
on both sides come in for something in the way of a 
" surplus " of utility or disutility. 

All this bears on the law of " natural " wages and in 
terest as follows, taking that law of just rémunération 
at Mr. Clark's rating of it. The law works out through 
the mediation of price. Price is determined, competi 
tively, by marginal producers or sellers and marginal 
consumers or purchasers: the latter alone on the one 
side get the precise price-equivalent of the disutility in 
curred by them, and the latter alone on the other side 
pay the full price-equivalent of the utilities derived by 
them from the goods purchased.23 Hence the competi 
tive price — covering competitive wages and interest — 
does not reflect the. consensus of all parties concerned as 
to the " effective utility " of the goods, on the one hand, 
or as to their effective (disutility) cost, on the other hand. 
It reflects instead, if anything of this kind, the valuations 
which the marginal unfortunates on each side concede 
under stress of competition; and k leaves on each side 
of the bargain relation an uncovered " surplus," which 

22 " The cheapest and poorest grades of articles." Page 113. 

23 See p. 113- 

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209 

marks the (variable) interval by which price fails to 
cover " effective utility." The excess utility — and the 
conceivable excess cost — does not appear in the market 
transactions that mediate between consumer and pro 
ducer.24 In the balance, therefore, which establishes 
itself in terms of value between the social utility of the 
product and the remuneration of the producer's " effi 
ciency," the margin of utility represented by the aggre 
gate " consumer's surplus " and like elements is not 
accounted for. It follows, when the argument is in 
this way reduced to its hedonistic elements, that no man 
" is paid an amount that equals the amount of the total 
product that he personally creates." 

Supposing the marginal-utility (final-utility) theories 
of objective value to be true, there is no consensus, actual 
or constructive, as to the " effective utility " of the goods 
produced : there is no " social " decision in the case be 
yond what may be implied in the readiness of buyers to 
profit as much as may be by the necessities of the marginal 
buyer and seller. It appears that there is warrant, within 
these premises, for the formula: Remuneration ^ than 
Product. Only by an infinitesimal chance would it hold 
tcue in any given case that, hedonistically, Remunera 
tion = Product ; and, if it should ever happen to be true, 
there would be no finding it out. 

The (hedonistic) discrepancy which so appears be 
tween remuneration and product affects both wages and 
interest in the same manner, but there is some (hedon 
istic) ground in Mr. Clark's doctrines for holding that the 
discrepancy does not strike both in the same degree. 

24 The disappearance, and the method of disapearance, of such 
elements of differential utility and disutility occupies a very 
important place in all marginal-utility ("final-utility") theories 
of market value, or "objective value." 

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i 

There is indeed no warrant for holding that there is any 
thing like an equable distribution of this discrepancy 
among the several industries or the several industrial 
concerns ; but there appears • to be some warrant, on Mr. 
Clark's argument, for thinking that the discrepancy is 
perhaps slighter in those branches of industry which pro 
duce the prime necessaries of life.25 This point of doc 
trine throws also a faint (metaphysical) light on a, 
possibly generic, discrepancy between the remuneration 
of capitalists and that of laborers: the latter are, rela 
tively, more addicted to consuming the necessaries of life, 
and it may be that they thereby gain less in the way of 
a consumer's surplus. 

All the analysis and reasoning here set forth has an air 
of undue tenuity; but in extenuation of this fault it 
should be noted that this reasoning is made up of such 
matter as goes to make up the theory under review, and 
the fault, therefore, is not to be charged to the critic. 
The manner of argument required to meet this theory of 
the " natural law of final productivity " on its own ground 
is itself a sufficiently tedious proof of the futility of the 
whole matter in dispute. Yet it seems necessary to beg 
further indulgence for more of the same kind. As a 
needed excuse, it may be added that what immediately 
follows bears on Mr. Clark's application of the law of 
" natural distribution " to modern problems of industry 
and public policy, in the matter of curbing monopolies. 

Accepting, again, Mr. Clark's general postulates—• 
the postulates of current hedonistic economics — and ap 
plying the fundamental concepts, instead of their corol 
laries, to his scheme of final productivity, it can be shown 

25 " Only the simplest and cheapest things that are sold in the 
market at all bring just what they are worth to the buyers." 
Page 113. 

to fail on grounds even more tenuous and hedonistically 
more fundamental than those already passed in review. 
In all final-utility (marginal-utility) theory it is of the 
essence of the scheme of things that successive incre 
ments of a " good " have progressively less than propor 
tionate utility. In fact, the coefficient of decrease of util 
ity is greater than the coefficient of increase of the stock of 
goods. The solitary " first loaf " is exorbitantly useful. 
As more loaves are successively added to the stock, the 
utility of each grows small by degrees and incontinently 
less, until, in the end, the state of the " marginal " or 
" final " loaf is, in respect of utility, shameful to relate. 
So, with a change of phrase, it fares with successive in 
crements of a given productive factor — labor or capital 
— in Mr. Clark's scheme of final productivity. And so, 
of course, it also fares with the utility of successive in 
crements of product created by successively adding unit 
after unit to the complement of a given productive factor 
engaged in the case. If we attend to this matter of final 
productivity in consistently hedonistic terms, a curious 
result appears. 

A larger complement of the productive agent, counted 
by weight and tale, will, it is commonly held, create 
a larger output of goods, counted by weight and tale;26 
but these are not hedonistic terms and should not be 
allowed to cloud the argument. In the hedonistic scheme 
the magnitude of goods, in all the dimensions to be taken 

26 It is, e.g., open to serious question whether Mr. Clark's 
curves of final productivity (pp. 139, 148), showing a declining 
output per unit in response to an increase of one of the com 
plementary agents of production, will fit the common run of 
industry in case the output be counted by weight and tale. In 
many cases they will, no doubt ; in many other cases they will not. 
But this is no criticism of the curves in question, since they do 
not, or at least should not, purport to represent the product in 
such terms, but in terms of utility. 

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Professor dark's Economics 

account of, is measured in terms of utility, which is a 
different matter from weight and tale. It is by virtue of 
their utility that they are " goods," not by virtue of their 
physical dimensions, number and the like; and utility 
is a matter of the production of pleasure and the pre 
vention of pain. Hedonistically speaking, the amount 
of the goods, the magnitude of the output, is the quantity 
of utility derivable from their consumption; and the 
utility per unit decreases faster than the number of units 
increases.27 It follows that in the typical or undifferen- 
tiated case an increase of the number of units beyond a 
certain critical point entails a decrease of the " total ef 
fective utility "of the supply.28 This critical point seems 
ordinarily to be very near the point of departure of the 
curve of declining utility, perhaps it frequently coin 
cides with the latter. On the curve of declining final 
utility, at any point whose tangent cuts the axis of ordi- 
nates at an angle of less than 45 degrees, an increase of 
the number of units entails a decrease of the " total effec 
tive utility of the supply,"20 so that a gain in physical 

27 To resort to an approximation after the manner of Malthus, 
if the supply of goods be supposed to increase by arithmetical 
progression, their final utility may be said concomitantly to de 
crease by geometrical progression. 

28 Cf. Essentials, chap, iii, especially pp. 40-41. 

20 The current marginal-utility diagrams are not of much use in 
this connection, because the angle of the tangent with the axis of 
ordinates, at any point, is largely a matter of the draftsman's 
taste. The abscissa and the ordinate do not measure com 
mensurable units. The units on the abscissa are units of fre 
quency, while those on the ordinate are units of amplitude; and 
the greater or less segment of line allowed per unit on either axis 
is a matter of independently arbitrary choice. Yet the propo 
sition in the text remains true,— as true as hedonistic propositions 
commonly are. The magnitude of the angle of the tangent with 
the axis of ordinates decides whether the total (hedonistic) pro 
ductivity at a given point in the curve increases or decreases with 
a (mechanical) increase of the productive agent,— no student at 

Professor dark's Economics 

213 

productivity is a loss as counted in " total effective util 
ity." Hedonistically, therefore, the productivity in such 
a case diminishes, not only relatively to the (physical) 
magnitude of the productive agents, but absolutely. This 
critical point, of maximum " total effective utility," is, if 
the practice of shrewd business men is at all significant, 
commonly somewhat short of the point of maximum 
physical productivity, at least in modern industry and in 
a modern community. 

The " total effective utility " may commonly be in 
creased by decreasing the output of goods. The " total 
effective utility " of wages may often be increased by 
decreasing the amount (value) of the wages per man, 
particularly if such a decrease is accompanied by a rise 
in the price of articles to be bought with the wages. 
Hedonistically speaking, it is evident that the point of 
maximum net productivity is the point at which a per 
fectly shrewd business management of a perfect monopoly 
would limit the supply ; and the point of maximum (he 
donistic) remuneration (wages and interest) is the point 
which such a management would fix on in dealing with 
a wholly free, perfectly competitive supply of labor and 
capital. 

Such a monopolistic state of things, it is true, would 
not answer to Mr. Clark's ideal. Each man would not be 
"paid an amount that equals the amount of the total 
Product that he personally creates," but he would com 
monly be paid an amount that (hedonistically, in point 
of " effective utility ") exceeds what he personally creates, 
because of the high final utility of what he receives. 

all familiar with marginal-utility arguments will question that 
Patent fact. But the angle of the tangent depends on the fancy of 
the draftsman,— no one possessed of the elemental mathematical 
notions will question that equally patent fact. 

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This is easily proven. Under the monopolistic conditions 
supposed, the laborers would, it is safe to assume, not be 
fully employed all the time ; that is to say, they would be 
willing to work some more • in order to get some more 
articles of consumption ; that is to say, the articles of con 
sumption which their wages offer them have so high a 
utility as to afford them a consumer's, surplus,— the 
articles are worth more than they cost :30 Q. E. D. 

The initiated may fairly doubt the soundness of the 
chain of argument by which these heterodox theoretical 
results are derived from Mr. Clark's hedonistic postulates, 
more particularly since the adepts of the school, including 
Mr. Clark, are not accustomed to draw conclusions to 
this effect from these premises. Yet the argument pro 
ceeds according to the rules of marginal-utility permuta 
tions. In view of this scarcely avoidable doubt, it may 
be permitted, even at the risk of some tedium, to show 
how the facts of every-day life bear out this unexpected 
turn of the law of natural distribution, as briefly traced 
above. The principle involved is well and widely ac-. 
cepted. The familiar practical maxim of " charging 
what the traffic will bear " rests on a principle of this 
kind, and affords one of the readiest practical illustra 
tions of the working of the hedonistic calculus. The 
principle involved is that a larger aggregate return 
(value) may be had by raising the return per unit to such 
a point as to somewhat curtail the demand. In practice 
it is recognised, in other words, that there is a critical 
point at which the value obtainable per unit, multiplied 
by the number of units that will be taken off at that price, 
will give the largest net aggregate result (in value to the 

30 A similar line of argument has been followed up by Mr. 
Clark for capital and interest, in a different connection. See 
Essentials, pp. 34O-345, 3S6. 

Professor Clark's Economics 

215 

seller) obtainable under the given conditions. A calculus 
involving the same principle is, of course, the guiding 
consideration in all monopolistic buying and selling; but 
a moment's reflection will show that it is, in fact, the 
ruling principle in all commercial transactions and, in 
deed, in all business. The maxim of " charging what the 
traffic will bear " is only a special formulation of the 
generic principle of business enterprise. Business initia 
tive, the function of the entrepreneur (business man) is 
comprehended under this principle taken in its most 
general sense.31 In business the buyer, it is held by 
the theorists, bids up to the point of greatest obtainable 
advantage to himself under the conditions prevailing, and 
the seller similarly bids down to the point of greatest 
obtainable net aggregate gain. For the trader (business 
man, entrepreneur) doing business in the open (com 
petitive) market or for the business concern with a par 
tial or limited monopoly, the critical point above referred 
to is, of course, reached at a lower point on the curve of 
price than would be the case under a perfect and un 
limited monopoly, such as was supposed above ; but the 
principle of charging what the traffic will bear remains 
intact, although the traffic will not bear the same in the 
one case as in the other. 

Now, in the theories based on marginal (or " final ") 
utility, value is an expression or measure of " effective 
utility "— or whatever equivalent term may be preferred. 
In operating on values, therefore, under the rule of charg 
ing what the traffic will bear, the sellers of a monopolised 
supply, e.g., must operate through the valuations of the 
buyers; that is to say, they must influence the final 
utility of the goods or services to such effect that the 

31 Cf. Essentials, pp. 83-90, 118-120. 

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"total effective utility" of the limited supply to the 
consumers will be greater than would be the " total effec 
tive utility " of a larger supply, which is the point in 
question. The emphasis falls still more strongly on this 
illustration of the hedonistic calculus, if it is called to 
mind that in the common run of such limitations of sup 
ply by a monopolistic business management the manage 
ment would be able to increase the supply at a progres 
sively declining cost beyond the critical point by virtue 
of the well-known principle of increasing returns from 
industry. It is also to be added that, since the monopo 
listic business gets its enhanced return from the margin 
by which the " total effective utility " of the limited sup 
ply exceeds that of a supply not so limited, and since 
there is to be deducted from this margin the costs of 
monopolistic management in addition to other costs, there 
fore the enhancement of the " total effective utility " of 
the goods to the consumer in the case must be appre 
ciably larger than the resulting net gains to the monopoly. 
By a bold metaphor — a metaphor sufficiently bold to 
take it out of the region of legitimate figures of speech — 
the gains that come to enterprising business concerns 
by such monopolistic enhancement of the " total effective 
utility " of their products are spoken of as " robbery," 
" extortion," " plunder " ; but the theoretical complexion 
of the case should not be overlooked by the hedonistic 
theorist in the heat of outraged sentiment. The monopo 
list is only pushing the principle of all business enterprise 
(free competition) to its logical conclusion; and, in point 
of hedonistic theory, such monopolistic gains are to be 
accounted the " natural " remuneration of the monopolist 
for his " productive " service to the community in en 
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Professor Clark's Economics 

217 

to such point as to swell their net aggregate enjoyment 
to a maximum. 

This intricate web of hedonistic calculations might be 
pursued further, with the result of showing that, while 
the consumers of the monopolised supply of goods are 
gainers by virtue of the enhanced " total effective utility " 
of the goods, the monopolists who bring about this result 
do so in great part at their own cost, counting cost in 
terms of a reduction of " total effective utility." By 
injudiciously increasing their own share of goods, they 
lower the marginal and effective utility of their wealth 
to such a point as, probably, to entail a considerable 
(hedonistic) privation in the shrinkage of their enjoyment 
per unit. But it is not the custom of economists, nor 
does Mr. Clark depart from this custom, to dwell on the 
hardships of the monopolists. This much may be added, 
however, that this hedonistically consistent exposition of 
the " natural law of final productivity " shows it to be 
" one of those universal principles which govern economic 
life in all its stages of evolution," even when that evolu 
tion enters the phase of monopolistic business enterprise, 
— granting always the sufficiency of the hedonistic postu 
lates from which the law is derived. Further, the con 
siderations reviewed above go to show that, on two counts, 
Mr. Clark's crusade against monopoly in the later portion 
of his treatise is out of touch with the larger theoretical 
speculations of the earlier portions: (a) it runs counter 
to the hedonistic law of " natural " distribution; and (b) 
the monopolistic business against which Mr. Clark speaks 
is but the higher and more perfect development of that 
competitive business enterprise which he wishes to rein 
state,— competitive business, so called, being incipiently 
monopolistic enterprise. 

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Apart from this theoretical bearing, the measures which 
Mr. Clark advocajtes for the repression of monopoly, un 
der the head of applications " to modern problems of 
industry and public policy," may be good economic policy 
or they may not,— they are the expression of a sound 
common sense, an unvitiated solicitude for the welfare 
of mankind, and a wide information as to the facts of 
the situation. The merits of this policy of repression, as 
such, cannot be discussed here. On the other hand, the 
relation of this policy to the theoretical groundwork of 
the treatise needs also not be discussed here, inasmuch 
as it has substantially no relation to the theory. In this 
later portion of the volume Mr. Clark does not lean on 
doctrines of " final utility," " final productivity," or, in 
deed, on hedonistic economics at large. He speaks elo 
quently for the material and cultural interests of the 
community, and the references to his law of " natural 
distribution " might be cut bodily out of the discussion 
without lessening the cogency of his appeal or exposing 
any weakness in his position. Indeed, it is by no means 
certain that such an excision would not strengthen his 
appeal to men's sense of justice by eliminating irrelevant 
matter. 

Certain points in this later portion of the volume, how 
ever, where the argument is at variance with specific arti 
cles of theory professed by Mr. Clark, may be taken up, 
mainly to elucidate the weakness of his theoretical posi 
tion at the points in question. He recognises with more 
than the current degree of freedom that the growth and 
practicability of monopolies under modern conditions 
is chiefly due to the negotiability of securities represent 
ing capital, coupled with the joint-stock character of mod 
ern business concerns.32 These features of the modern 

32 Cf. chap, xxii, especially pp. 378-392. 

Professor Clark's Economics 

219 

(capitalistic) business situation enable a sufficiently few 
men to control a section of the community sufficiently 
large to make an effective monopoly. The most effective 
known form of organisation for purposes of monopoly, 
according to Mr. Clark, is that of the holding company, 
and the ordinary corporation follows it closely in effec 
tiveness in this respect. The monopolistic control is ef 
fected by means of the vendible securities covering the 
capital engaged. To meet the specifications of Mr. 
Clark's theory of capital, these vendible securities — as 
e.g., the securities (common stock) of a holding company 
— should be simply the formal evidence of the ownership 
of certain productive goods and the like. Yet, by his 
own showing, the ownership of a share of productive 
goods proportionate to the face value, or the market value, 
of the securities is by no means the chief consequence of 
such an issue of securities.33 One of the consequences, 
and for the purposes of Mr. Clark's argument the grav 
est consequence, of the employment of such securities, 
is the dissociation of ownership from the control of the 
industrial equipment, whereby the owners of certain se 
curities, which stand in certain immaterial, technical re 
lations to certain other securities, are enabled arbitrarily 
to control the use of the industrial equipment covered by 
the latter. These are facts of the modern organisation 
of capital, affecting the productivity of the industrial 
equipment and its serviceability both to its owners and 
to the community. They are facts, though not physically 
tangible objects ; and they have an effect on the service 
ability of industry no less decisive than the effect which 
any group of physically tangible objects of equal market 
value have. They are, moreover, facts which are bought 
and sold in the purchase and sale of these securities, as, 

33 Cf. p. 391- 

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e.g., the common stock of a holding company. They have a 
value, and therefore they have a " total effective utility." 
In short, these facts are intangible assets, which are 
the most consequential element in modern capital, but 
which have no existence in the theory of capital by which 
Mr. Clark aims to deal with " modern problems of indus 
try." Yet, when he comes to deal with these problems, 
it is, of necessity, these intangible assets that immediately 
engage his attention. These intangible assets are an out 
growth of the freedom of contract under the conditions 
imposed by the machine industry; yet Mr. Clark proposes 
to suppress this category of intangible assets without 
prejudice to freedom of contract or to the machine indus 
try, apparently without having taken thought of the les 
son which he rehearses (pp. 390-391) from the intro 
duction of the holding company, with its " sinister per 
fection," to take the place of the (less efficient) "trust" 
when the latter was dealt with somewhat as it is now 
proposed to deal with the holding company. One is 
tempted to remark that a more naïve apprehension of 
the facts of modern capital would have afforded a more 
competent realisation of the problems of monopoly. 

It appears from what has just been said of Mr. Clark's 
" natural " distribution and of his dealing with the prob 
lems of modern industry that the logic of hedonism is of 
no avail for the theory of business affairs. Yet it is held, 
perhaps justly, that the hedonistic interpretation may be 
of great avail in analysing the industrial functions of the 
community, in their broad, generic character, even if it 
should not serve so well for the intricate details of the 
modern business situation. It may be at least a service 
able hypothesis for the outlines of economic theory, for 
the first approximations to the " economic laws " sought 

Professor Clark's Economics 

221 

by taxonomists. To be serviceable for this purpose, the 
hypothesis need perhaps not be true to fact, at least not 
in the final details of the community's life or without 
material qualification ;34 but it must at least have that 
ghost of actuality that is implied in consistency with its 
own corollaries and ramifications. 

As has been suggested in an earlier paragraph, it is 
characteristic of hedonistic economics that the large and 
central element in its theoretical structure is the doctrine 
of distribution. Consumption being taken for granted 
as a quantitive matter simply,— essentially a matter of 
an insatiable appetite,— economics becomes a theory of 
acquisition; production is, theoretically, a process of ac 
quisition, and distribution a process of distributive acqui 
sition. The theory of production is drawn in terms of 
the gains to be acquired by production ; and under com 
petitive conditions this means necessarily the acquisition 
of a distributive share of what is available. The rest of 
what the facts of productive industry include, as, e.g., the 
facts of workmanship or the " state of the industrial arts," 
gets but a scant and perfunctory attention. Those mat 
ters are not of the theoretical essence of the scheme. Mr. 
Clark's general theory of production does not differ sub 
stantially from that commonly professed by the marginal- 
utility school. It is a theory of competitive acquisition. 
An inquiry into the principles of his doctrine, therefore, 
as they appear, e.g., in the early chapters of the Essen 
tials, is, in effect, an inquiry into the competence of the 
main theorems of modern hedonistic economics. 

" All men seek to get as much net service from material 
wealth as they can." " Some of the benefit received is 
neutralised by the sacrifice incurred; but there is a net 
surplus of gains not thus canceled by sacrifices, and the 

34 Cf. Essentials, p. 39. 

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generic motive which may properly be called economic 
is the desire to make this surplus large."35 It is of the 
essence of the scheme that the acquisitive activities of 
mankind afford a net balance of pleasure. It is out of 
this net balance, presumably, that " the consumer's sur 
pluses " arise, or it is in this that they merge. This opti 
mistic conviction is a matter of presumption, of course; 
but it is universally held to be true by hedonistic econo 
mists, particularly by those who cultivate the doctrines of 
marginal utility. It is not questioned and not proven. It 
seems to be a surviving remnant of the eighteenth-century 
faith in a benevolent Order of Nature ; that is to say, it 
is a rationalistic metaphysical postulate. It may be true 
or not, as matter of fact ; but it is a postulate of the school, 
and its optimistic bias runs like a red thread through all 
the web of argument that envelops the " normal " com 
petitive system. A surplus of gain is normal to the theo 
retical scheme. 

The next great theorem of this theory of acquisition 
is at cross-purposes with this one. Men get useful goods 
only at the cost of producing them, and production is 
irksome, painful, as has been recounted above. They go 
on producing utilities until, at the margin, the last in 
crement of utility in the product is balanced by the con 
comitant increment of disutility in the way of irksome 
productive effort,— labor or abstinence. At the margin, 
pleasure-gain is balanced by pain-cost. But the " effec 
tive utility " of the total product is measured by that of 
the final unit; the effective utility of the whole is given 
by the number of units of product multiplied by the 
effective utility of the final unit; while the effective dis 
utility (pain-cost) of the whole is similarly measured by 
the pain-cost of the final unit. The " total effective 

35 Essentials, p. 39. 

Professor Clark's Economics 

223 

utility " of the producer's product equals the " total ef 
fective disutility " of his pains of acquisition. Hence 
there is no net surplus of utility in the outcome. 
.,'"; The corrective objection is ready to hand,36 that, while 
the balance of utility and disutility holds at the margin, 
it does not hold for the earlier units of the product, these 
earlier units having a larger utility and a lower cost, and 
so leaving a large net surplus of utility, which gradually 
declines as the margin is approached. But this attempted 
correction evades the hedonistic test. It shifts the ground 
from the calculus to the objects which provoke the calcu 
lation. Utility is a psychological matter, a matter of 
pleasurable appreciation, just as disutility, conversely, is 
a matter of painful appreciation. The individual who 
is held to count the costs and the gain in this hedo 
nistic calculus is, by supposition, a highly reasonable per 
son. He counts the cost to him as an individual against 
the gain to him as an individual. He looks before and 
after, and sizes the whole thing up in a reasonable course 
of conduct. The " absolute utility " would exceed the 
" effective utility " only on the supposition that the " pro 
ducer" is an unreflecting sensory apparatus, such as the 
beasts of the field are supposed to be, devoid of that gift 
of appraisement and calculation which is the hypothetical 
hedonist's only human trait. There might on such a 
supposition — if the producer were an intelligent sensi 
tive organism simply — emerge an excess of total pleasure 
over total pain, but there could then be no talk of utility 
or of disutility, since these terms imply intelligent reflec 
tion, and they are employed because they do so. The 
hedonistic producer looks to his own cost and gain, as an 
intelligent pleasure-seeker whose consciousness compasses 
the contrasted elements as wholes. He does not contrast 

i; 

86 Cf. Essentials, chap, iii, especially pp. 51-56. 

 Vj'ï 

224 

Professor Clark's Economies 

thé balance of pain and pleasure in the morning with the 
balance of pain and pleasure in the afternoon, and say 
that there is so much to the good because he was not so 
tired in the morning. Indeed, by hypothesis, the pleas 
ure to be derived from the consumption of the product is 
a future, or expected, pleasure, and can be said to be pres 
ent, at the point of time at which a given unit of pain- 
cost is incurred, only in anticipation; and it cannot be 
said that the anticipated pleasure attaching to a unit of 
product which emerges from the effort of the producer 
during the relatively painless first hour's work exceeds 
the anticipated pleasure attaching to a similar unit emerg 
ing from the second hour's work. Mr. Clark has, in ef 
fect, explained this matter in substantially the same way 
in another connection (e.g., p. 42), where he shows that 
the magnitude on which the question of utility and cost 
hinges is the " total effective utility," and that the " total 
absolute utility " is a matter not of what hedonistically is, 
in respect of utility as an outcome of production, but of 
what might have been under different circumstances. 

An equally unprofitable result may be reached from 
the same point of departure along a different line of argu 
ment. Granting that increments of product should be 
measured, in respect of utility, by comparison with the 
disutility of the concomitant increment of cost, then the 
diagrammatic arguments commonly employed are inade 
quate, in that the diagrams are necessarily drawn in 
two dimensions only,— length and breadth : whereas they 
should be drawn in three dimensions, so as to take account 
of the intensity of application as well as of its duration." 

37 This difficulty is recognized by the current marginal-utility 
arguments, and an allowance for intensity is made or presumed. 
But the allowance admitted is invariably insufficient. It might be 
said to be insufficient by hypothesis, since it is by hypothesis too 
small to offset the factor which it is admitted to modify. 

Professor Clark's Economics 

225 

Apparently, the exigencies of graphic representation, for 
tified by the presumption that there always emerges a 
surplus of utility, have led marginal-utility theorists, in 
effect, to overlook this matter of intensity of applica 
tion. 

When this element is brought in with the same freedom 
as the other two dimensions engaged, the argument will, 
in hedonistic consistency, run somewhat as follows,— the 
run of the facts being what it may. The producer, setting 
out on this irksome business, and beginning with the 
production of the exorbitantly useful initial unit of prod 
uct, will, by hedonistic necessity, apply himself to the 
task with a correspondingly extravagant intensity, the 
irksomeness (disutility) of which necessarily rises to such 
a pitch as to leave no excess of utility in this initial unit 
of product above the concomitant disutility of the initial 
unit of productive effort.88 As the utility of subsequent 
units of product progressively declines, so will the pro 
ducer's intensity of irksome application concomitantly 
decline, maintaining a nice balance between utility and 
disutility throughout. There is, therefore, no excess of 
" absolute utility " above " effective utility " at any point 
on the curve, and no excess of " total absolute utility " 
above " total effective utility " of the product as a whole, 
nor above the "total absolute disutility" or the "total 
effective disutility " of the pain-cost. 

A transient evasion of this outcome may perhaps be 
sought by saying that the producer will act wisely, as a 

38 The limit to which the intensity rises is a margin of the same 
kind as that which limits the duration. This supposition, that 
tile intensity of application necessarily rises to such a pitch that 
its disutility overtakes and offsets the utility of the product, may 
be objected to as a bit of puerile absurdity; but it is a long 
time since puerility or absurdity has been a bar to any suppo 
sition in arguments on marginal utility. 

 >,] 

t 

226 

Professor dark's Economics 

good hedonist should, and save his energies during the 
earlier moments of the productive period in order to 
get the best aggregate result from his day's labor, instead 
of spending himself in ill-advised excesses at the outset. 
Such seems to be the fact of the matter, so far as the 
facts wear a hedonistic complexion; but this correction 
simply throws the argument back on the previous posi 
tion and concedes the force of what was there claimed. 
It amounts to saying that, instead of appreciating each 
successive unit of product in isolated contrast with its con 
comitant unit of irksome productive effort, the producer, 
being human, wisely looks forward to his total product 
and rates it by contrast with his total pain-cost. Where 
upon, as before, no net surplus of utility emerges, under 
the rule which says that irksome production of utilities 
goes on until utility and disutility balance. 

But this revision of " final productivity " has further 
consequences for the optimistic doctrines of hedonism. 
Evidently, by a somewhat similar line of argument the 
" consumer's surplus " will be made to disappear, even 
as this that may be called the " producer's surplus " has 
disappeared. Production being acquisition, and the con 
sumer's cost being cost of acquisition, the argument above 
should apply to the consumer's case without abatement. 
On considering this matter in terms of the hedonistic- 
ally responsive individual concerned, with a view to de 
termining whether there is, in his calculus of utilities 
and costs, any margin of uncovered utilities left over 
after he has incurred all the disutilities that are worth 
while to him,— instead of proceeding on a comparison 
between the pleasure-giving capacity of a given article 
and the market price of the article, all such alleged 
differential advantages within the scope of a single sensory 

Professor dark's Economics 

227 

are seen to be nothing better than an illusory diffractive 
effect due to a faulty instrument. 

But the trouble does not end here. The equality: 
pain-cost = pleasure-gain, is not a competent formula. 
It should be: pain-cost incurred = pleasure-gain antici 
pated. And between these two formulas lies the old 
adage, " there's many a slip 'twixt the cup and the lip." 
In an appreciable proportion of ventures, endeavors, and 
enterprises, men's expectations of pleasure-gain are in 
some degree disappointed,— through miscalculation, 
through disserviceable secondary effects of their produc 
tive efforts, by " the act of God," by " fire, flood, and pes 
tilence." In the nature of things these discrepancies fall 
out on the side of loss more frequently than on that of 
gain. After all allowance has been made for what may 
be called serviceable errors, there remains a margin of 
disserviceable error, so that pain-cost > eventual pleasure- 
gain = anticipated pleasure-gain — n. Hence, in general, 
pain-cost > pleasure-gain. Hence it appears that, in the 
nature of things, men's pains of production are underpaid 
by that much; although it may, of course, be held that 
the nature of things at this point is not " natural " or 
." normal." 

- To this it may be objected that the risk is discounted. 
Insurance is a practical discounting of risk ; but insurance 

: is resorted to only to cover risk that is appreciated by the 
person exposed to it, and it is such risks as are not ap 
preciated by those who incur them that are chiefly in 

' question here. And it may be added that insurance has 
hitherto not availed to equalise and distribute the chances 
of success and failure. Business gains — enterpreneur's 
gains, the rewards of initiative and enterprise — come out 
of this uncovered margin of adventure, and the losses 

1 ' 

l l 

 If 

228 

Professor dark's Economics 

Professor dark's Economics 

229 

) 

i 

of initiative and enterprise are to be set down to the same 
account. In some measure this element of initiative and 
enterprise enters into all economic endeavor. And it is 
not unusual for economists to remark that the volume 
of unsuccessful or only partly successful enterprise is 
very large. There are some lines of enterprise that are, 
as one might say, extra hazardous, in which the average 
falls out habitually on the wrong side of the account. 
Typical of this class is the production of the precious 
metals, particularly as conducted under that régime of 
free competition for which Mr. Clark speaks. It has been 
the opinion, quite advisedly, of such economists of the 
classic age of competition as J. S. Mill and Cairnes, e.g., 
that the world's supply of the precious metals has been 
got at an average or total cost exceeding their value by 
several fold. The producers, under free competition at 
least, are over-sanguine of results. 

But, in strict consistency, the hedonistic theory of hu 
man conduct does not allow men to be guided in their 
calculation of cost and gain, when they have to do with 
the precious metals, by different norms from those which 
rule their conduct in the general quest of gain. The 
visible difference in this respect between the production 
of the precious metals and production generally should 
be due to the larger proportions and greater notoriety 
of the risks in this field rather than to a difference in the 
manner of response to the stimulus of expected gain. 
The canons of hedonistic calculus permit none but a 
quantitative difference in the response. What happens 
in the production of the precious metals is typical of 
what happens in a measure and more obscurely through 
out the field of productive effort. 

Instead of a surplus of utility of product above the 
disutility of acquisition, therefore, there emerges an 

average or aggregate net hedonistic deficit. On a con 
sistent marginal-utility theory, all production is a losing 
game. The fact that Nature keeps the bank, it appears, 
does not take the hedonistic game of production out of 
the general category known of old to that class of san 
guine hedonistic calculators whose day-dreams are filled 
with safe and sane schemes for breaking the bank. 
" Hope springs eternal in the human breast." Men are 
congenitally over-sanguine, it appears; and the produc 
tion of utilities is, mathematically speaking, a function of 
the pig-headed optimism of mankind. It turns out that 
the laws of (human) nature malevolently grind out vexa 
tion for men instead of benevolently furthering the great 
est happiness of the greatest number. The sooner the 
whole traffic ceases, the better,— the smaller will be the 
net balance of pain. The great hedonistic Law of Na 
ture turns out to be simply the curse of Adam, backed 
by the even more sinister curse of Eve. 

The remark was made in an earlier paragraph that Mr. 
Clark's theories have substantially no relation to his 
practical proposals. This broad declaration requires an 
equally broad qualification. While the positions reached 
in his theoretical development count for nothing in mak 
ing or fortifying the positions taken on " problems of 
modern industry and public policy," the two phases of 
the discussion — the theoretical and the pragmatic — are 
the outgrowth of the same range of preconceptions and 
run back to the same metaphysical ground. The present 
canvass of items in the doctrinal system has already far 
overpassed reasonable limits, and it is out of the ques 
tion here to pursue the exfoliation of ideas through 
Mr. Clark's discussion of public questions, even in the 
fragmentary fashion in which scattered items of the 

I , 

p 

.11 

 1 

il i 

230 

Professor dark's Economics 

theoretical portion of his treatise have been passed in 
review. But a broad and rudely drawn characterisa 
tion may yet be permissible. This latter portion of the 
volume has the general complexion of a Bill of Rights. 
This is said, of course, with no intention of imputing a 
fault. It implies that the scope and method of the dis 
cussion is governed by the preconception that there is 
one right and beautiful definitive scheme of economic 
life, " to which the whole creation tends." Whenever 
and in so far as current phenomena depart or diverge 
from this definitive " natural " scheme or from the 
straight and narrow path that leads to its consummation, 
there is a grievance to be remedied by putting the wheels 
back into the rut. The future, such as it ought to be,— 
the only normally possible, natural future scheme of life, 
— is known by the light of this preconception ; and men 
have an indefeasible right to the installation and main 
tenance of those specific economic relations, expedients, 
institutions, which this " natural " scheme comprises, and 
to no others. The consummation is presumed to dom 
inate the course of things which is presumed to lead up 
to the consummation. The measures of redress whereby 
the economic Order of Nature is to renew its youth are 
simple, direct, and short-sighted, as becomes the pro 
posals of pre-Darwinian hedonism, which is not trou 
bled about the exuberant uncertainties of cumulative 
change. No doubt presents itself but that the com 
munity's code of right and equity in economic matters 
will remain unchanged under changing conditions of eco 
nomic life. 

THE LIMITATIONS OF MARGINAL UTILITY1 

The limitations of the marginal-utility economics are 
sharp and characteristic. It is from first to last a doc 
trine of value, and in point of form and method it is a 
theory of valuation. The whole system, therefore, lies 
within the theoretical field of distribution, and it has but 
a secondary bearing on any other economic phenomena 
than those of distribution — the term being taken in its 
accepted sense of pecuniary distribution, or distribution 
in point of ownership. Now and again an attempt is 
made to extend the use of the principle of marginal util 
ity beyond this range, so as to apply it to questions of 
production, but hitherto without sensible effect, and neces 
sarily so. The most ingenious and the most promising of 
such attempts have been those of Mr. Clark, whose work 
marks the extreme range of endeavor and the extreme de 
gree of success in so seeking to turn a postulate of dis 
tribution to account for a theory of production. But the 
outcome has been a doctrine of the production of values, 
and value, in Mr. Clark's as in other utility systems, is a 
matter of valuation; which throws the whole excursion 
back into the field of distribution. Similarly, as regards 
attempts to make use of this principle in an analysis of 
the phenomena of consumption, the best results arrived 
at are some formulation of the pecuniary distribution of 
consumption goods. 

Within this limited range marginal-utility theory is of a 

1 Reprinted by permission from the Journal of Political Econ- 
ony, Vol. XVII, No. g November 1909. 

231 

H 

 f- II 

232 The Limitations of Marginal Utility 

wholly statical character. It offers no theory of a move 
ment of any kind, being occupied with the adjustment of 
values to a given situation. Of this, again, no more con 
vincing illustration need be had than is afforded by the 
work of Mr. Clark, which is not excelled in point of ear 
nestness, perseverance, or insight. For all their use of 
the term "dynamic," neither Mr. Clark nor any of his 
associates in this line of research have yet contributed 
anything at all appreciable to a theory of genesis, growth, 
sequence, change, process, or the like, in economic life. 
They have had something to say as to the bearing which 
given economic changes, accepted as premises, may have 
on valuation, and so on distribution ; but as to the causes 
of change or the unfolding sequence of the phenomena of 
economic life they have had nothing to say hitherto; nor 
can they, since their theory is not drawn in causal terms 
but in terms of teleology. 

In all this the marginal-utility school is substantially at 
one with the classical economics of the nineteenth cen 
tury, the difference between the two being that the former 
is confined within narrower limits and sticks more con 
sistently to its teleological premises. Both are teleolog- 
ical, and neither can consistently admit arguments from 
cause to effect in the formulation of their main articles of 
theory. Neither can deal theoretically with phenomena 
of change, but at the most only with rational adjust 
ment to change which may be supposed to have super 
vened. 

To the modern scientist the phenomena of growth and 
change are the most obtrusive and most consequential 
facts observable in economic life. For an understanding 
of modern economic life the technological advance of the 
past two centuries — e.g., the growth of the industrial 
arts — is of the first importance ; but marginal-utility the- 

The Limitations of Marginal Utility 233 

ory does not bear on this matter, nor does this matter bear 
on marginal-utility theory. As a means of theoretically 
accounting for this technological movement in the past or 
in the present, or even as a means of formally, technically 
stating it as an element in the current economic situation, 
that doctrine and all its works are altogether idle. The 
like is true for the sequence of change that is going for 
ward in the pecuniary relations of modern life ; the hedon 
istic postulate and its propositions of differential utility 
neither have served nor can serve an inquiry into these 
phenomena of growth, although the whole body of mar 
ginal-utility economics lies within the range of these pe 
cuniary phenomena. It has nothing to say to the growth 
of business usages and expedients or to the concomitant 
changes in the principles of conduct which govern the 
pecuniary relations of men, which condition and are con 
ditioned by these altered relations of business life or 
which bring them to pass. 

It is characteristic of the school that wherever an ele 
ment of the cultural fabric, an institution or any institu 
tional phenomenon, is involved in the facts with which the 
theory is occupied, such institutional facts are taken for 
granted, denied, or explained away. If it is a question of 
price, there is offered an explanation of how exchanges 
may take place with such effect as to leave money and 
price out of the account. If it is a question of credit, the 
effect of credit extension on business traffic is left on one 
side and there is an explanation of how the borrower and 
lender cooperate to smooth out their respective income 
streams of consumable goods or sensations of consump 
tion. The failure of the school in this respect is consist 
ent and comprehensive. And yet these economists are 
lacking neither in intelligence nor in information. They 
are, indeed, to be credited, commonly, with a wide range 

:l 

I1 

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i1 
* 

 234 The Limitations of Marginal Utility 

of information and an exact control of materials, as well 
as with a very alert interest in what is going on; and 
apart from their theoretical pronouncements the members 
of the school habitually profess the sanest and most intel 
ligent views of current practical questions, even when 
these questions touch matters of institutional growth and 
decay. 

The infirmity of this theoretical scheme lies in its pos 
tulates, which confine the inquiry to generalisations of the 
ideological or " deductive " order. These postulates, to 
gether with the point of view and logical method that fol 
low from them, the marginal-utility school shares with 
other economists of the classical line — for this school is 
but a branch or derivative of the English classical econ 
omists of the nineteenth century. The substantial differ 
ence between this school and the generality of classical 
economists lies mainly in the fact that in the marginal- 
utility economics the common postulates are more consist 
ently adhered to at the same time that they are more 
neatly defined and their limitations are more adequately 
realized. Both the classical school in general and its spe 
cialized variant, the marginal-utility school, in particular, 
take as their common point of departure the traditional 
psychology of the early nineteenth-century hedonists, 
which is accepted as a matter of course or of common 
notoriety and is held quite uncritically. The central and 
well-defined tenet so held is that of the hedonistic cal 
culus. Under the guidance of this tenet and of the other 
psychological conceptions associated and consonant with 
it, human conduct is conceived of and interpreted as a 
rational response to the exigencies of the situation in 
which mankind is placed ; as regards economic conduct it 
is such a rational and unprejudiced response to the stimu 
lus of anticipated pleasure and pain — being, typically 

The Limitations of Marginal Utility 235 

and in the main, a response to the promptings of antici 
pated pleasure, for the hedonists of the nineteenth cen 
tury and of the marginal-utility school are in the main 
of an optimistic temper.2 Mankind is, on the whole and 
normally, (conceived to be) clearsighted and farsighted 
in its appreciation of future sensuous gains and losses, al 
though there may be some (inconsiderable) difference 
between men in this respect. Men's activities differ, 
therefore, (inconsiderably) in respect of the alertness of 
the response and the nicety of adjustment of irksome 
pain-cost to apprehended future sensuous gain ; but, on the 
whole, no other ground or line or guidance of conduct 
than this rationalistic calculus falls properly within the 
cognizance of the economic hedonists. Such a theory can 
take account of conduct only in so far as it is rational 
conduct, guided by deliberate and exhaustively intelligent 
choice — wise adaptation to the demands of the main 
chance. 

The external circumstances which condition conduct 
are variable, of course, and so they will have a varying 
effect upon conduct; but their variation is, in effect, con 
strued to be of such a character only as to vary the degree 
of strain to which the human agent is subject by contact 
with these external circumstances. The cultural ele 
ments involved in the theoretical scheme, elements that 

2 The conduct of mankind differs from that of the brutes in be 
ing determined by anticipated sensations of pleasure and pain, 
instead of actual sensations. Hereby, in so far, human conduct 
is taken out of the sequence of cause and effect and falls in 
stead under the rule of sufficient reason. By virtue of this ra 
tional faculty in man the connection between stimulus and re 
sponse is .teleological instead of causal. 

The reason for assigning the first and decisive place to pleas- 
tfre, rather than to pain, in the determination of human conduct, 
appears to be the (tacit) acceptance of that optimistic doctrine 
°f a beneficent order of nature which the nineteenth century in 
herited from the eighteenth. 

I' 
ll'. 

•II 

 236 The Limitations of Marginal Utility 

are of the nature of institutions, human relations gov 
erned by use and wont in whatever kind and connection, 
are not subject to inquiry but are taken for granted as 
pre-existing in a finished, typical form and as making up a 
normal and definitive economic situation, under which 
and in terms of which human intercourse is necessarily 
carried on. This cultural situation comprises a few 
large and simple articles of institutional furniture, to 
gether with their logical implications or corollaries; but 
it includes nothing of the consequences or effects caused 
by these institutional elements. The cultural elements so 
tacitly postulated as immutable conditions precedent to 
economic life are ownership and free contract, together 
with such other features of the scheme of natural rights 
as are implied in the exercise of these. These cultural 
products are, for the purpose of the theory, conceived to 
be given a priori in unmitigated force. They are part of 
the nature of things ; so that there is no need of account 
ing for them or inquiring into them, as to how they have 
come to be such as they are, or how and why they have 
changed and are changing, or what effect all this may 
have on the relations of men who live by or under this 
cultural situation. 

Evidently the acceptance of these immutable premises, 
tacitly, because uncritically and as a matter of course, by 
hedonistic economics gives the science a distinctive char 
acter and places it in contrast with other sciences whose 
premises are of a different order. As has already been 
indicated, the premises in question, so far as they are 
peculiar to the hedonistic economics, are (a) a certain in 
stitutional situation, the substantial feature of which is 
the natural right of ownership, and (£>) the hedonistic 
calculus. The distinctive character given to this system 
of theory by these postulates and by the point of view 

The Limitations of Marginal Utility 237 

resulting from their acceptance may be summed up 
broadly and concisely in saying that the theory is con 
fined to the ground of sufficient reason instead of pro 
ceeding on the ground of efficient cause. The contrary is 
true of modern science, generally (except mathematics), 
particularly of such sciences as have to do with the phe 
nomena of life and growth. The difference may seem 
trivial. It is serious only in its consequences. The two 
methods of inference — from sufficient reason and from 
efficient cause — are out of touch with one another and 
there is no transition from one to the other : no method of 
converting the procedure or the results of the one into 
those of the other. The immediate consequence is that 
the resulting economic theory is of a teleological character 
—" deductive " or " a priori " as it is often called — in 
stead of being drawn in terms of cause and effect. The 
relation sought by this theory among the facts with which 
it is occupied is the control exercised by future (appre 
hended) events over present conduct. Current phenom 
ena are dealt with as conditioned by their future conse 
quences ; and in strict marginal-utility theory they can be 
dealt with only in respect of their control of the present 
by consideration of the future. Such a (logical) rela 
tion of control or guidance between the future and the 
present of course involves an exercise of intelligence, a 
taking thought, and hence an intelligent agent through 
whose discriminating forethought the apprehended future 
may affect the current course of events; unless, indeed, 
one were to admit something in the way of a providential 
order of nature or some occult line of stress of the nature 
of sympathetic magic. Barring magical and providential 
elements, the relation of sufficient reason runs by way of 
the interested discrimination, the forethought, of an agent 
who takes thought of the future and guides his present 

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238 The Limitations of Marginal Utility 

activity by regard for this future. The relation of suf 
ficient reason runs only from the (apprehended) future 
into the present, and it is solely of an intellectual, subjec 
tive, personal, teleological character and force ; while the 
relation of cause and effect runs only in the contrary di 
rection, and it is solely of an objective, impersonal, mate 
rialistic character and force. The modern scheme of 
knowledge, on the whole, rests, for its definitive ground, 
on the relation of cause and effect; the relation of suf 
ficient reason being admitted only provisionally and as a 
proximate factor in the analysis, always with the unam 
biguous reservation that the analysis must ultimately 
come to rest in terms of cause and effect. The merits 
of this scientific animus, of course, do not concern the 
present argument. 

Now, it happens that the relation of sufficient reason 
enters very substantially into human conduct. It is this 
element of discriminating forethought that distinguishes 
human conduct from brute behavior. And since the 
economist's subject of inquiry is this human conduct, 
that relation necessarily comes in for a large share of 
his attention in any theoretical formulation of economic 
phenomena, whether hedonistic or otherwise. But while 
modern science at large has made the causal relation the 
sole ultimate ground of theoretical formulation; and 
while the other sciences that deal with human life admit 
the relation of sufficient reason as a proximate, supple 
mentary, or intermediate ground, subsidiary, and subserv 
ient to the argument from cause to effect ; economics has 
had the misfortune — as seen from the scientific point of 
view — to let the former supplant the latter. It is, of 
course, true that human conduct is distinguished from 
other natural phenomena by the human faculty for tak 
ing thought, and any science that has to do with human 

The Limitations of Marginal Utility 239 

conduct must face the patent fact that the details of such 
conduct consequently fall into the teleological form; but 
it is the peculiarity of the hedonistic economics that by 
force of its postulates its attention is confined to this teleo 
logical bearing of conduct alone. It deals with this con 
duct only in so far as it may be construed in rationalistic, 
teleological terms of calculation and choice. But it is at 
the same time no less true that human conduct, economic 
or otherwise, is subject to the sequence of cause and 
effect, by force of such elements as habituation and con 
ventional requirements. But facts of this order, which 
are to modern science of graver interest than the teleolog 
ical details of conduct, necessarily fall outside the atten 
tion of the hedonistic economist, because they cannot be 
construed in terms of sufficient reason, such as his postu 
lates demand, or be fitted into a scheme of teleological 
doctrines. 

There is, therefore, no call to impugn these premises of 
the marginal-utility economics within their field. They 
commend themselves to all serious and uncritical persons 
at the first glance. They are principles of action which 
underlie the current, business-like scheme of economic 
life, and as such, as practical grounds of conduct, they are 
not to be called in question without questioning the exist 
ing law and order. As a matter of course, men order 
their lives by these principles and, practically, entertain 
no question of their stability and finality. That is what 
is meant by calling them institutions; they are settled 
habits of thought common to the generality of men. But 
it would be mere absentmindedness in any student of civ 
ilization therefore to admit that these or any other human 
institutions have this stability which is currently imputed 
to them or that they are in this way intrinsic to the nature 
of things. The acceptance by the economists of these or 

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240 The Limitations of Marginal Utility 

other institutional elements as given and immutable lim 
its their inquiry in a particular and decisive way. It 
shuts off the inquiry at the point where the modern sci 
entific interest sets in. The institutions in question are 
no doubt good for their purpose as institutions, but they 
are not good as premises for a scientific inquiry into the 
nature, origin, growth, and effects of these institutions 
and of the mutations which they undergo and which they 
bring to pass in the community's scheme of life. 

To any modern scientist interested in economic phe 
nomena, the chain of cause and effect in which any given 
phase of human culture is involved, as well as the cumula 
tive changes wrought in the fabric of human conduct 
itself by the habitual activity of mankind, are matters 
of more engrossing and more abiding interest than the 
method of inference by which an individual is presumed 
invariably to balance pleasure and pain under given con 
ditions that are presumed to be normal and invariable. 
The former are questions of the life-history of the race 
or the community, questions of cultural growth and of 
the fortunes of generations; while the latter is a question 
of individual casuistry in the face of a given situation that 
may arise in the course of this cultural growth. The 
former bear on the continuity and mutations of that 
scheme of conduct whereby mankind deals with its mate 
rial means of life ; the latter, if it is conceived in hedon 
istic terms, concerns a disconnected episode in the sensu 
ous experience of an individual member of such a com 
munity. 

In so far as modern science inquires into the phenom 
ena of life, whether inanimate, brute, or human, it is 
occupied about questions of genesis and cumulative 
change, and it converges upon a theoretical formulation in 
the shape of a life-history drawn in causal terms. In so 

The Limitations of Marginal Utility 241 

far as it is a science in the current sense of the term, 
any science, such as economics, which has to do with 
human conduct, becomes a genetic inquiry into the human 
scheme of life ; and where, as in economics, the subject of 
inquiry is the conduct of man in his dealings with the ma 
terial means of life, the science is necessarily an inquiry 
into the life-history of material civilization, on a more or 
less extended or restricted plan. Not that the econo 
mist's inquiry isolates material civilization from all other 
phases and bearings of human culture, and so studies 
the motions of an abstractly conceived " economic man." 
On the contrary, no theoretical inquiry into this material 
civilization that shall be at all adequate to any scientific 
purpose can be carried out without taking this material 
civilization in its causal, that is to say, its genetic, rela 
tions to other phases and bearings of the cultural com 
plex ; without studying it as it is wrought upon by other 
lines of cultural growth and as working its effects in these 
other lines. But in so far as the inquiry is economic sci 
ence, specifically, the attention will converge upon the 
scheme of material life and will take in other phases of 
civilization only in their correlation with the scheme of 
material civilization. 

Like all human culture this material civilization is a 
scheme of institutions — institutional fabric and institu 
tional growth. But institutions are an outgrowth of 
habit. The growth of culture is a cumulative sequence of 
habituation, and the ways and means of it are the habit 
ual response of human nature to exigencies that vary in 
continently, cumulatively, but with something of a con 
sistent sequence in the cumulative variations that so go 
forward,— incontinently, because each new move creates 
a new situation which induces a further new variation 
in the habitual manner of response ; cumulatively, because 

\ , \ 

 242 77f£ Limitations of Marginal Utility 

each new situation is a variation of what has gone before 
it and embodies as causal factors all that has been effected 
by what went before ; consistently, because the underlying 
traits of human nature (propensities, aptitudes, and what 
not) by force of which the response takes place, and on 
the ground of which the habituation takes effect, remain 
substantially unchanged. 

Evidently an economic inquiry which occupies itself ex 
clusively with the movements of this consistent, elemental 
human nature under given, stable institutional conditions 
— such as is the case with the current hedonistic eco 
nomics— can reach statical results alone; since it makes 
abstraction from those elements that make for anything 
but a statical result. On the other hand an adequate the 
ory of economic conduct, even for statical purposes, can 
not be drawn in terms of the individual simply — as is 
the case in the marginal-utility economics — because it 
cannot be drawn in terms of the underlying traits of 
human nature simply; since the response that goes to 
make up human conduct takes place under institutional 
norms and only under stimuli that have an institutional 
bearing ; for the situation that provokes and inhibits ac 
tion in any given case is itself in great part of institu 
tional, cultural derivation. Then, too, the phenomena of 
human life occur only as phenomena of the life of a group 
or community : only under stimuli due to contact with the 
group and only under the (habitual) control exercised 
by canons of conduct imposed by the group's scheme of 
life. Not only is the individual's conduct hedged about 
and directed by his habitual relations to his fellows in 
the group, but these relations, being of an institutional 
character, vary as the institutional scheme varies. The 
wants and desires, the end and aim, the ways and means, 
the amplitude and drift of the individual's conduct are 

The Limitations of Marginal Utility 243 

functions of an institutional variable that is of a highly 
complex and wholly unstable character. 

The growth and mutations of the institutional fabric 
are an outcome of the conduct of the individual mem 
bers of the group, since it is out of the experience of 
the individuals, through the habituation of individuals, 
that institutions arise; and it is in this same experience 
that these institutions act to direct and define the aims and 
end of conduct. It is, of course, on individuals that the 
system of institutions imposes those conventional stand 
ards, ideals, and canons of conduct that make up the com 
munity's scheme of life. Scientific inquiry in this field, 
therefore, must deal with individual conduct and must 
formulate its theoretical results in terms of individual 
conduct. But such an inquiry can serve the purposes of 
a genetic theory only if and in so far as this individual 
conduct is attended to in those respects in which it counts 
toward habituation, and so toward change (or stability) 
of the institutional fabric, on the one hand, and in those 
respects in which it is prompted and guided by the re 
ceived institutional conceptions and ideals on the other 
hand. The postulates of marginal utility, and the hedon 
istic preconceptions generally, fail at this point in that 
they confine the attention to such bearings of economic 
conduct as are conceived not to be conditioned by habit 
ual standards and ideals and to have no effect in the way 
of habituation. They disregard or abstract from the 
causal sequence of propensity and habituation in eco 
nomic life and exclude from theoretical inquiry all such 
interest in the facts of cultural growth, in order to at 
tend to those features of the case that are conceived to be 
idle in this respect. All such facts of institutional force 
and growth are put on one side as not being germane to 
pure theory; they are to be taken account of, if at all, by 

 •l 

244 The Limitations of Marginal Utility 

afterthought, by a more or less vague and general allow 
ance for inconsequential disturbances due to occasional 
human infirmity. Certain institutional phenomena, it is 
true, are comprised among the premises of the hedonists, 
as has been noted above ; but they are included as postu 
lates a priori. So the institution of ownership is taken 
into the inquiry not as a factor of growth or an element 
subject to change, but as one of the primordial and im 
mutable facts of the order of nature, underlying the hed 
onistic calculus. Property, ownership, is presumed as 
the basis of hedonistic discrimination and it is conceived 
to be given in its finished (nineteenth-century) scope and 
force. There is no thought either of a conceivable 
growth of this definitive nineteenth-century institution 
out of a cruder past or of any conceivable cumulative 
change in the scope and force of ownership in the present 
or future. Nor is it conceived that the presence of this 
institutional element in men's economic relations in any 
degree affects or disguises the hedonistic calculus, or that 
its pecuniary conceptions and standards in any degree 
standardize, color, mitigate, or divert the hedonistic cal 
culator from the direct and unhampered quest of the net 
sensuous gain. While the institution of property is in 
cluded in this way among the postulates of the theory, and 
is even presumed to be ever-present in the economic 
situation, it is allowed to have no force in shaping eco 
nomic conduct, which is conceived to run its course to its 
hedonistic outcome as if no such institutional factor in 
tervened between the impulse and its realization. The 
institution of property, together with all the range of pe 
cuniary conceptions that belong under it and that cluster 
about it, are presumed to give rise to no habitual or con 
ventional canons of conduct or standards of valuation, no 

The Limitations of Marginal Utility 245 

proximate ends, ideals, or aspirations. All pecuniary no 
tions arising from ownership are treated simply as ex 
pedients of computation which mediate between the pain- 
cost and the pleasure-gain of hedonistic choice, without 
lag, leak, or friction; they are conceived simply as the 
immutably correct, God-given notation of the hedonistic 
calculus. 

The modern economic situation is a business situation, 
in that economic activity of all kinds is commonly con 
trolled by business considerations. The exigencies of 
modern life are commonly pecuniary exigencies. That is 
to say they are exigencies of the ownership of property. 
Productive efficiency and distributive gain are both rated 
in terms of price. Business considerations are considera 
tions of price, and pecuniary exigencies of whatever kind 
in the modern communities are exigencies of price. The 
current economic situation is a price system. Economic 
institutions in the modern civilized scheme of life are 
(prevailingly) institutions of the price system. The ac 
countancy to which all phenomena of modern economic 
life are amenable is an accountancy in terms of price ; and 
by the current convention there is no other recognized 
scheme of accountancy, no other rating, either in law or 
in fact, to which the facts of modern life are held amen 
able. Indeed, so great and pervading a force has this 
habit (institution) of pecuniary accountancy become 
that it extends, often as a matter of course, to many facts 
which properly have no pecuniary bearing and no pecu 
niary magnitude, as, e. g., works of art, science, scholar 
ship, and religion. More or less freely and fully, the 
price system dominates the current commonsense in its 
appreciation and rating of these non-pecuniary ramifica 
tions of modern culture ; and this in spite of the fact that. 

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 246 The Limitations of Marginal Utility 

on reflection, all men of normal intelligence will freely 
admit that these matters lie outside the scope of pecuniary 
valuation. 

Current popular taste and the popular sense of merit 
and demerit are notoriously affected in some degree by pe 
cuniary considerations. It is a matter of common notori 
ety, not to be denied or explained away, that pecuniary 
(" commercial ") tests and standards are habitually made 
use of outside of commercial interests proper. Precious 
stones, it is admitted, even by hedonistic economists, are 
more esteemed than they would be if they were more plen 
tiful and cheaper. A wealthy person meets with more 
consideration and enjoys a larger measure of good repute 
than would fall to the share of the same person with the 
same habit of mind and body and the same record of 
good and evil deeds if he were poorer. It may well be 
that this current " commercialisation " of taste and appre 
ciation has been overstated by superficial and hasty crit 
ics of contemporary life, but it will not be denied that 
there is a modicum of truth in the allegation. Whatever 
substance it has, much or little, is due to carrying over 
into other fields of interest the habitual conceptions in 
duced by dealing with and thinking of pecuniary matters. 
These " commercial " conceptions of merit and demerit 
are derived from business experience. The pecuniary 
tests and standards so applied outside of business transac 
tions and relations are not reducible to sensuous terms of 
pleasure and pain. Indeed, it may, e.g., be true, as is 
commonly believed, that the contemplation of a wealthy 
neighbor's pecuniary superiority yields painful rather 
than pleasurable sensations as an immediate result ; but it 
is equally true that such a wealthy neighbor is, on the 
whole, more highly regarded and more considerately 
treated than another neighbor who differs from the for- 

The Limitations of Marginal Utility 247 

mer only in being less enviable in respect of wealth. 
It is the institution of property that gives rise to these 
habitual grounds of discrimination, and in modern times, 
when wealth is counted in terms of money, it is in terms 
of money value that these tests and standards of pecuni 
ary excellence are applied. This much will be admitted. 
Pecuniary institutions induce pecuniary habits of thought 
which affect men's discrimination outside of pecuniary 
matters; but the hedonistic interpretation alleges that 
such pecuniary habits of thought do not affect men's dis 
crimination in pecuniary matters. Although the institu 
tional scheme of the price system visibly dominates the 
modern community's thinking in matters that lie outside 
the economic interest, the hedonistic economists insist, in 
effect, that this institutional scheme must be accounted of 
no effect within that range of activity to which it owes its 
genesis, growth, and persistence. The phenomena of busi 
ness, which are peculiarly and uniformly phenomena of 
price, are in the scheme of the hedonistic theory reduced 
to non-pecuniary hedonistic terms and the theoretical for 
mulation is carried out as if pecuniary conceptions had no 
force within the traffic in which such conceptions orig 
inate. It is admitted that preoccupation with commercial 
interests has " commercialised " the rest of modern life, 
but the " commercialisation " of commerce is not ad 
mitted. Business transactions and computations in pecu 
niary terms, such as loans, discounts, and capitalisation, 
are without hesitation or abatement converted into terms 
of hedonistic utility, and conversely. 

It may be needless to take exception to such conver 
sion from pecuniary into sensuous terms, for the theoret 
ical purpose for which it is habitually made ; although, if 
need were, it might not be excessively difficult to show 
that the whole hedonistic basis of such a conversion is a 

 248 The Limitations of Marginal Utility 

psychological misconception. But it is to the remoter 
theoretical consequences of such a conversion that excep 
tion is to be taken. In making the conversion abstrac 
tion is made from whatever elements do not lend them 
selves to its terms; which amounts to abstracting from 
precisely those elements of business that have an institu 
tional force and that therefore would lend themselves to 
scientific inquiry of the modern kind — those (institu 
tional) elements whose analysis might contribute to an 
understanding of modern business and of the life of the 
modern business community as contrasted with the as 
sumed primordial hedonistic calculus. 

The point may perhaps be made clearer. Money and 
the habitual resort to its use are conceived to be simply 
the ways and means by which consumable goods are ac 
quired, and therefore simply a convenient method by 
which to procure the pleasurable sensations of consump 
tion ; these latter being in hedonistic theory the sole and 
overt end of all economic endeavor. Money values have 
therefore no other significance than that of purchasing 
power over consumable goods, and money is simply an 
expedient of computation. Investment, credit extensions, 
loans of all kinds and degrees, with payment of interest 
and the rest, are likewise taken simply as intermediate 
steps between the pleasurable sensations of consumption 
and the efforts induced by the anticipation of these sen 
sations, other bearings of the case being disregarded. 
The balance being kept in terms of the hedonistic con 
sumption, no disturbance arises in this pecuniary traffic so 
long as the extreme terms of this extended hedonistic 
equation — pain-cost and pleasure-gain — are not altered, 
what lies between these extreme terms being merely alge 
braic notation employed for convenience of accountancy- 
But such is not the run of the facts in modern business. 

The Limitations of Marginal Utility 249 

Variations of capitalization, e. g., occur without its being 
practicable to refer them to visibly equivalent variations 
either in the state of the industrial arts or in the sensa 
tions of consumption. Credit extensions tend to infla 
tion of credit, rising prices, overstocking of markets, etc., 
likewise without a visible or securely traceable correlation 
in the state of the industrial arts or in the pleasures of 
consumption; that is to say, without a visible basis in 
those material elements to which the hedonistic theory 
reduces all economic phenomena. Hence the run of the 
facts, in so far, must be thrown out of the theoretical 
formulation. The hedonistically presumed final pur 
chase of consumable goods is habitually not contemplated 
in the pursuit of business enterprise. Business men ha 
bitually aspire to accumulate wealth in excess of the limits 
of practicable consumption, and the wealth so accumu 
lated is not intended to be converted by a final transaction 
of purchase into consumable goods or sensations of con 
sumption. Such commonplace facts as these, together 
with the endless web of business detail of a like pecuniary 
character, do not in hedonistic theory raise a question as 
to how these conventional aims, ideals, aspirations, and 
standards have come into force or how they affect the 
scheme of life in business or outside of it; they do not 
raise those questions because such questions cannot be 
answered in the terms which the hedonistic economists 
are content to use, or, indeed, which their premises per 
mit them to use. The question which arises is how to ex- 
plain the facts away : how theoretically to neutralize them 
so that they will not have to appear in the theory, which 
0311 then be drawn in direct and unambiguous terms of 
rational hedonistic calculation. They are explained away 
as being aberrations due to oversight or lapse of memory 
on the part of business men, or to some failure of logic or 

 t ' t \: 

•l h 

II 

j 

250 The Limitations of Marginal Utility 

insight. Or they are construed and interpreted into the 
rationalistic terms of the hedonistic calculus by resort to 
an ambiguous use of the hedonistic concepts. So that the 
whole " money economy," with all the machinery of credit 
and the rest, disappears in a tissue of metaphors to reap 
pear theoreticaly expurgated, sterilized, and simplified 
into a " refined system of barter," culminating in a net ag 
gregate maximum of pleasurable sensations of consump 
tion. 

But since it is in just this unhedonistic, unrationalistic 
pecuniary traffic that the tissue of business life consists; 
since it is this peculiar conventionalism of aims and stand 
ards that differentiates the life of the modern business 
community from any conceivable earlier or cruder phase 
of economic life; since it is in this tissue of pecuniary in 
tercourse and pecuniary concepts, ideals, expedients, and 
aspirations that the conjunctures of business life arise and 
run their course of felicity and devastation; since it is 
here that those institutional changes take place which dis 
tinguish one phase or era of the business community's 
life from any other ; since the growth and change of these 
habitual, conventional elements make the growth and 
character of any business era or business community ; any 
theory of business which sets these elements aside or ex 
plains them away misses the main facts which it has gone 
out to seek. Life and its conjunctures and institutions 
being of this complexion, however much that state of the 
case may be deprecated, a theoretical account of the 
phenomena of this life must be drawn in these terms in 
which the phenomena occur. It is not simply that the 
hedonistic interpretation of modern economic phenomena 
is inadequate or misleading; if the phenomena are sub 
jected to the hedonistic interpretation in the theoretical 
analysis they disappear from the theory; and if they 

The Limitations of Marginal Utility 251 

would bear the interpretation in fact they would disappear 
in fact. If, in fact, all the conventional relations and 
principles of pecuniary intercourse were subject to such a 
perpetual rationalized, calculating revision, so that each 
article of usage, appreciation, or procedure must approve 
itself de novo on hedonistic grounds of sensuous expedi 
ency to all concerned at every move, it is not conceivable 
that the institutional fabric would last over night. 

• 

ii- 

 •u.i- 

fe 

B U 

GUSTAV SCHMOLLER'S ECONOMICS1 

PROFESSOR SCHMOLLER'S Gntndriss - is an event of the 
first importance in economic literature. It appears from 
later advices that the second and concluding volume of 
the work is hardly to be looked for at as early a date 
as the author's expressions in his preface had led us to 
anticipate. What lies before Professor Schmoller's read 
ers, therefore, in this first volume of the Outlines is but 
one-half of the compendious statement which he here 
purposes making of his theoretical position and of his 
views and exemplification of the scope and method of 
economic science. It may accordingly seem adventurous 
to attempt a characterisation of his economic system on 
the basis of this avowedly incomplete statement. And 
yet such an endeavor is not altogether gratuitous, nor need 
it in any great measure proceed on hypothetical grounds. 
The introduction comprised in the present volume sketches 
the author's aim in an outline sufficiently full to afford a 
convincing view of the " system " of science for which he 
speaks; and the two books by which the introduction is 
followed show Professor Schmoller's method of inquiry 
consistently carried out, as well as the reach and nature 
of the theoretical conclusions which he considers to lie 
within the competency of economic science. And with 
regard to an economist who is so much of an innovator,— 
not to say so much of an iconoclast,— and whose work 

1 Reprinted by permission from The Quarterly Journal of Eco 
nomics, Vol. XVI, Nov., 1901. 

2 Grundriss der allgemeinen Volkswirtschaftslehre. Erster 
Teil. Leipzig, 1900. 

252 

Gustav Schmoller's Economics 

253 

touches the foundations of the science so intimately and 
profoundly, the interest of his critics and associates must, 
at least for the present, center chiefly about these ques 
tions as to the scope and nature assigned to the theory by 
his discussion, as to the range and character of the ma 
terial of which he makes use, and as to the methods of 
inquiry which his sagacity and experience commend. So, 
therefore, while the Outlines is yet incomplete, considered 
as a compendium of details of doctrine, the work in its 
unfinished state need not thereby be an inadequate ex 
pression of Professor Schmoller's relation to economic 
science. 

Herewith for the first time economic readers are put in 
possession of a fully advised deliverance on economic 
science at large as seen and cultivated by that modernised 
historical school of which Professor Schmoller is the 
authoritative exponent. Valuable and characteristic as 
his earlier discussions on the scope and method of the 
science are, they are but preliminary studies and tentative 
formulations as compared with this maturer work, which 
not only avows itself a definitive formulation, but has 
about it an air of finality perceptible at every turn. But 
this comes near saying that it embodies the sole compre 
hensive working-out of the scientific aims of the his 
torical school. Discussions partially covering the field, 
monographs and sketches there are in great number, 
showing the manner of economic theory that was to be 
looked for as an outcome of the " historical diversion." 
Some of these, especially some of the later ones, are ex 
tremely valuable in the results they offer, as well as 
significant of the trend which the science is taking under 
the hands of the German students.3 But a comprehen- 

SE"S; K. Bücher's Entstehung der Volks^mrtschaft, and Arbeit 
und Rythmus; R. Hildebrand's Recht und Sitte; Knapp's Grund- 

•i: 

 <ï. ' 

H il 

254 

Gustav Schmoller's Economies 

sive work, aiming to formulate a body of economic 
theory on the basis afforded by the " historical method," 
has not hitherto been seriously attempted. 

To the broad statement just made exception might 
perhaps be taken in favor of Schaeffle's half-forgotten 
work of the seventies, together possibly with several other 
less notable and less consistent endeavors of a similar 
kind, dating back to the early decades of the school. 
Probably none of the younger generation of economists 
would be tempted to cite Roscher's work as invalidating 
such a statement as the one made above. Although time 
has been allowed for the acceptance and authentication of 
these endeavors of the earlier historical economists in the 
direction of a system of economic theory,— that is to say, 
of an economic science,— they have failed of authentica 
tion at the hands of the students of the science ; and there 
seems no reason to regard this failure as less than de 
finitive. 

During the last two decades the historical school has 
branched into two main directions of growth, somewhat 
divergent, so that broad general statements regarding the 
historical economists can be less confidently made to-day 
than perhaps at any earlier time. Now, as regards the 
more conservative branch, the historical economists of the 
stricter observance,— these modern continuers of what 
may be called the elder line of the historical school can 
scarcely be said to cultivate a science at all, their aim 
being not theoretical work. Assuredly, the work of this 
elder line, of which Professor Wagner is the unquestioned 
head, is by no means idle. It is work of a sufficiently 
important and valuable order, perhaps it is indispensable 
to the task which the science has in hand, but, broadly 

Herrschaft und Rittergut; Ehrenberg's Zeitalter der Fugger; R- 
Mucke's various works. 

Gustav Schmoller's Economics 

255 

speaking, it need not be counted with in so far as it 
touches directly upon economic theory. This elder line 
of German economics, in its numerous modern represen 
tatives, shows both insight and impartiality; but as re 
gards economic theory their work bears the character of 
eclecticism rather than that of a constructive advance. 
Frequent and peremptory as their utterances commonly 
are on points of doctrine, it is only very rarely that these 
utterances embody theoretical views arrived at or verified 
by the economists who make them or by such methods of 
inquiry as are characteristic of these economists. Where 
these expressions of doctrine are not of the nature of 
maxims of expediency, they are, as is well known, com 
monly borrowed somewhat uncritically from classical 
sources. Of constructive scientific work — that is to say, 
of theory — this elder line of German economics is inno 
cent; nor does there seem to be any prospect of an even 
tual output of theory on the part of that branch of the 
historical school, unless they should unexpectedly take 
advice, and make the scope, and therefore the method, of 
their inquiry something more than historical in the sense 
in which that term is currently accepted. The historical 
economics of the conservative kind seems to be a barren 
field in the theoretical respect. 

So that whatever characteristic articles of general 
theory the historical school may enrich the science with 
are to be looked for at the hands of those men who, like 
Professor Schmoller, have departed from the strict 
observance of the historical method. A peculiar inter 
est, therefore, attaches to his work as the best accepted 
and most authoritative spokesman of that branch of his 
torical economics which professes to cultivate theoretical 
inquiry. It serves to show in what manner and degree 
this more scientific wing of the historical school have out- 

. 

 256 

Gustav Schmoller's Economics 

Gustav Schmoller's Economics 

257 

grown the original " historical " standpoint and range of 
conceptions, and how they have passed from a distrust of 
all economic theory to an eager quest of theoretical form 
ulations that shall cover all phenomena of economic life 
to better purpose than the body of doctrine received from 
the classical writers and more in consonance with the 
canons of contemporary science at large. That this 
should have been the outcome of the half-century of 
development through which the school has now passed 
might well seem unexpected, if not incredible, to any who 
saw the beginning of that divergence within the school, 
a generation ago, out of which this modernised, theoret 
ical historical economics has arisen. 

Professor Schmoller entered the field early, in the 
sixties, as a protestant against the aims and ideals then 
in vogue in economics. His protest ran not only against 
the methods and results of the classical writers, but also 
against the views professed by the leaders of the his 
torical school, both as regards the scope of the sci 
ence and as regards the character of the laws or gener 
alisations sought by the science. His early work, in so 
far as he was at variance with his colleagues, was chiefly 
critical; and there is no good evidence that he then had 
a clear conception of the character of that construc 
tive work to which it has been his persistent aim to 
turn the science. Hence he came to figure in common re 
pute as an iconoclast and an extreme exponent of the his 
torical school, in that he was held practically to deny the 
feasibility of a scientific treatment of economic matters 
and to aim at confining economics to narrative, statistics, 
and description. This iconoclastic or critical phase of his 
economic discussion is now past, and with it the uncer 
tainty as to the trend and outcome of his scientific ac 
tivity. 

To understand the significance of the diversion created 
by Professor Schmoller as regards the scope and method 
of economics, it is necessary, very briefly, to indicate the 
position occupied by that early generation of historical 
economists from which his teaching diverged, and more 
particularly those points of the older canon at which he 
has come to differ characteristically from the views pre 
viously in vogue. 

As regards the situation in which the historical school, 
as exemplified by its leaders, was then placed, it is, of 
course, something of a commonplace that by the end of 
its first twenty years of endeavor in the reform of eco 
nomic science the school had, in point of systematic re 
sults, scarcely got beyond preliminaries. And even these 
preliminaries were not in all respects obviously to the 
purpose. A new and wider scope had been indicated 
for economic inquiry, as well as a new aim and method for 
theoretical discussion. But the new ideals of theoretical 
advance, as well as the ways and means indicated for 
their attainment, still had mainly a speculative interest. 
Nothing substantial had been done towards the realisation 
of the former or the mise en œuvre of the latter. The 
historical economists can scarcely be said at that time to 
have put their hand to the new engines which they pro 
fessed to house in their workshop. Apart from polemics 
and speculation concerning ideals, the serious interest and 
endeavors of the school had up to that time been in the 
field of history rather than in that of economics, except so 
far as the adepts of the new school continued in a frag 
mentary way to inculcate and, in some slight and uncer 
tain degree, to elaborate the dogmas of the classical writ 
ers whom they sought to discredit. 

The character of historical economics at the time when 
Professor Schmoller entered on his work of criticism and 

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revision is fairly shown by Roscher's writings. What 
ever may be thought to-day of Roscher's rank as an 
economist, in contrast with Knies and Hildebrand, it will 
scarcely be questioned that at the close of the first quar 
ter-century of the life history of the historical school it 
was Roscher's conception of the scope and method of 
economics that found the widest acceptance and that best 
expressed the animus of that body of students who pro 
fessed to cultivate economics by the historical method. 
For the purpose in hand Roscher's views may, therefore, 
be taken as typical, all the more readily since for the very 
general purpose here intended there are no serious dis 
crepancies between Röscher and his two illustrious con 
temporaries. The chief difference is that Röscher is 
more naïve and more specific. He has also left a more 
considerable volume of results achieved by the professed 
use of his method. 

Roscher's professed method was what he calls the " his- 
torico-physiological " method. This he contrasts with the 
" philosophical " or " idealistic " method. But his air of 
depreciation as regards " philosophical " methods in eco 
nomics must not be taken to mean that Roscher's own 
economic speculations were devoid of all philosophical or 
metaphysical basis. It only means that his philosophical 
postulates were different from those of the economists 
whom he discredits, and that they were regarded by him 
as self-evident. ' ' 

As must necessarily be the case with a writer who had 
neither a special aptitude for nor special training in philo 
sophical inquiries, Roscher's metaphysical postulates are, 
of course, chiefly tacit. They are the common-sense, com 
monplace metaphysics afloat in educated German circles 
in the time of Roscher's youth,— during the period when 
his growth and education gave him his outlook on life 

Gustav Schmoller's Economics 

259 

and knowledge and laid the basis of his intellectual hab 
its; which means that these postulates belong to what 
Höffding has called the " Romantic " school of thought, 
and are of a Hegelian complexion. Röscher being not a 
professed philosophical student, it is neither easy nor safe 
to particularise closely as regards his fundamental meta 
physical tenets ; but, as near as so specific an identifica 
tion of his philosophical outlook is practicable, he must 
be classed with the Hegelian "Right." But since the 
Hegelian metaphysics had in Roscher's youth an unbroken 
vogue in reputable German circles, especially in those 
ultra-reputable circles within which lay the gentlemanly 
life and human contact of Röscher, the postulates af 
forded by the Hegelian metaphysics were accepted sim 
ply as a matter of course, and were not recognised as 
metaphysical at all. And in this his metaphysical affilia 
tion Röscher is fairly typical of the early historical school 
of economics. 

The Hegelian metaphysics, in so far as bears upon the 
matter in hand, is a metaphysics of a self-realising life 
process. This life process, which is the central and sub 
stantial fact of the universe, is of a spiritual nature,— 
"spiritual," of course, being here not contrasted with 
"material." The life process is essentially active, self- 
determining, and unfolds by inner necessity,— by neces 
sity of its own substantially active nature. The course 
of culture, in this view, is an unfolding (exfoliation) of 
the human spirit; and the task which economic science 
has in hand is to determine the laws of this cultural ex 
foliation in its economic aspect. But the laws of the cul 
tural development with which the social sciences, in the 
Hegelian view, have to do are at one with the laws of the 
Processes of the universe at large; and, more immedi 
ately, they are at one with the laws of the life process at 

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 Gustav Schmoller's Economics 

261 

260 

Gustav Schmoller's Economics 

large. For the universe at large is itself a self-unfolding 
life process, substantially of a spiritual character, of which 
the economic life process, which occupies the interest of 
the economist is but a phase and an aspect. Now, the 
course of the processes of unfolding life in organic na 
ture has been fairly well ascertained by the students of 
natural history and the like ; and this, in the nature of the 
case, must afford a clew to the laws of cultural develop 
ment, in its economic as well as in any other of its aspects 
or bearings,— the laws of life in the universe being all 
substantially spiritual and substantially at one. So we 
arrive at a physiological conception of culture after the 
analogy of the ascertained physiological processes seen 
in the biological domain. It is conceived to be physiolog 
ical after the Hegelian manner of conceiving a physiolog 
ical process, which is, however, not the same as the mod 
ern scientific conception of a physiological process.4 

4 A physiological conception of society, or of the community, 
had been employed before,— e.g., by the Physiocrats,— and such a 
concept was reached also by English speculators — e.g., Herbert 
Spencer — during Roscher's lifetime ; but these physiological con 
ceptions of society are reached by a different line of approach 
from that which led up to the late-Hegelian physiological or bio 
logical conception of human culture as a spiritual structure and 
process. The outcome is also a different one, both as regards the 
use made of the analogy and as regards the theoretical results 
reached by its aid. 

It may be remarked, by the way, that neo-Hegelianism, of the 
" Left," likewise gave rise to a theory of a self-determining cul 
tural exfoliation ; namely, the so-called " Materialistic Conception 
of History" of the Marxian socialists. This Marxian concep 
tion, too, had much of a physiological air ; but Marx and his co 
adjutors had an advantage over Röscher and his following, in 
that they were to a greater extent schooled in the Hegelian 
philosophy, instead of being uncritical receptacles of the Romantic 
commonplaces left by Hegelianism as a residue in popular 
thought They were therefore more fully conscious of the bear 
ing of their postulates and less naïve in their assumptions of self- 
sufficiency. 

Since this quasi-physiological process of cultural de 
velopment is conceived to be an unfolding of the self- 
realising human spirit, whose life history it is, it is of 
the nature of the case that the cultural process should 
run through a certain sequence of phases — a certain life 
history prescribed by the nature of the active, unfolding 
spiritual substance. The sequence is determined on the 
whole, as regards the general features of the development, 
by the nature of life on the human plane. The history 
of cultural growth and decline necessarily repeats itself, 
since it is substantially the same human spirit that seeks 
to realise itself in every comprehensive sequence of cul 
tural development, and since this human spirit is the only 
factor in the case that has substantial force. In its 
generic features the history of past cultural cycles is, 
therefore, the history of the future. Hence the impor 
tance, not to say the sole efficacy for economic science, of 
an historical scrutiny of culture. A well-authenticated 
sequence of cultural phenomena in the history of the past 
is conceived to have much the same binding force for the 
sequence of cultural phenomena in the future as a " nat 
ural law," as the term has been understood in physics or 
physiology, is conceived to have as regards the course 
of phenomena in the life history of the human body; for 
the onward cultural course of the human spirit, actively 
unfolding by inner necessity, is an organic process, fol 
lowing logically from the nature of this self-realising 
spirit. If the process is conceived to meet with obstacles 
or varying conditions, it adapts itself to the circumstances 
m any given case, and it then goes on along the line of 
its own logical bent until it eventuates in the consumma 
tion given by its own nature. The environment, in this 
view, if it is not to be conceived simply as a function of 
the spiritual force at work, is, at the most, of subsidiary 

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and transient consequence only. Environmental condi 
tions can at best give rise to minor perturbations ; they do 
not initiate a cumulative sequence which can profoundly 
affect the outcome or the ulterior course of the cultural 
process. Hence the sole, or almost sole, importance of 
historical inquiry in determining the laws of cultural de 
velopment, economic or other. 

The working conception which this romantic-historical 
school had of economic life, therefore, is, in its way, a 
conception of development, or evolution ; but it is not to 
be confused with Darwinism or Spencerianism. Inquiry 
into the cultural development under the guidance of such 
preconceptions as these has led to generalisations, more 
or less arbitrary, regarding uniformities of sequence in 
phenomena, while the causes which determine the course 
of events, and which make the uniformity or variation of 
the sequence, have received but scant attention. The 
" natural laws " found by this means are necessarily of the 
nature of empiricism, colored by the bias or ideals of the 
investigator. The outcome is a body of aphoristic wis 
dom, perhaps beautiful and valuable after its kind, but 
quite fatuous when measured by the standards and aims 
of modern science. As is well known, no substantial 
theoretical gain was made along this romantic-historical 
line of inquiry and speculation, for the reason, apparently, 
that there are no cultural laws of the kind aimed at, be 
yond the unprecise generalities that are sufficiently fa 
miliar beforehand to all passably intelligent adults. 

It has seemed necessary to offer this much in charac 
terisation of that " historical " aim and method which 
afforded a point of departure for Professor Schmoller's 
work of revision. When he first raised his protest against 
the prevailing ideals and methods, as being ill-advised an4 

Gustav Schmoller's Economics 

263 

not thorough-going, he does not seem himself to have been 
entirely free from this Romantic, or Hegelian, bias. 
There is evidence to the