CHAPTER IV

THE DIVISION OF LABOUR; AND EXCHANGEABLE VALUES

WE have stated that there can be no two sciences upon the same subject, and we have also observed that by far the greatest thinkers in economic science were Smith, Say, List and Colwell. In studying the works of the first three, one is struck by the similarity of ideas which seem to permeate their doctrines; and in regard to Say and List in particular, the impression is distinctly formed that they built their systems upon the foundation laid by Smith. List of course attempts to deny this.

Economists may quarrel over the merits of their respective systems, but we contend that there is only one true economic science and that is the National System. Smith, Say, List and Colwell discussed four economic systems, but close observation reveals the fact that they were developing-each in their own way-one system only, namely, the National System. And it will be our business to reduce their apparent differences

of opinion to the narrowest possible limits. We classify the systems discussed as follows:

1. The Mercantile or Exclusive System (based on High Tariffs or Prohibitions).

2. The Agricultural System (based on restraint and monopoly).

3. The National System (based on Low Tariffs on manufactures only).

4. The Laissez-faire or Free Trade System. (For a clear interpretation the chart at the beginning of the book should be studied.)

Smith and Say in their writings set out to destroy the Mercantile and Agricultural Systems and to develop a National System. But the public mistook the National System for Laissezfaire, popularly known as Free Trade. clearly saw what Smith and Say intended but, for reasons which we shall explain later, feigned to be ignorant of it.

List

Smith in our view was the founder of the system of National Economy; and in making this assertion we clearly disagree with List. The latter asserts that the doctrine of Adam Smith in regard to international trade is but a continuation of that of the physiocrats. Like the latter, it disregards nationality, it excludes almost entirely politics and government; it supposes the existence of perpetual peace and universal

association; it depreciates the advantages of national manufacturing industry as well as the means of acquiring it; it demands absolute free trade." 1

Now if Smith is read from the standpoint of National Economy, it will clearly be seen that he was in no way impressed with the teachings of the physiocrats-in fact, he actually condemned them, as will be seen from the quotations we give later on-nor did he advocate any doctrine that savoured of absolute free trade. The under

lying principle of his whole work in the Wealth of Nations is," Defence is of more importance than opulence."

List's object in classifying Smith with the physiocrats is somewhat mystifying; it points to a deliberate intention of destroying the rights which Smith clearly established, and, which evidently no one at that time observed but List, of being the founder of National Economy. List evidently hoped by this subterfuge to claim the whole credit for the supposed originality of his system. On page 421 of his work List makes the following observation, which is worth noting: "The intelligent biographer of Adam Smith, Dugald Stewart, informs us that twenty-one years before the publication of his book in 1755 in a literary society, Smith pronounced the 1 N.S.P.E., p. 420.

following words, which appear to give him the priority of the idea of free trade (note the word appear there seems to be a doubt about it): 'Men are ordinarily considered by statesmen and projectors, as the material for a kind of political industry. Their projectors disturb the operations of nature in human affairs, whilst they should be let alone and be permitted to act freely for the purpose of working out their end. To elevate a nation from the lowest degree of barbarism needs but three things: peace, moderate taxes, and a tolerable administration of justice. All the rest comes in the natural course of things. Every government which opposes itself to this natural current, or which attempts to give to Capital a different direction, or to arrest society in its progress, revolts against nature, and in maintaining this policy becomes a tyrant and an oppressor.

List then goes on to say that that fundamental thought was Adam Smith's starting-point, and his later words had no other end than to establish and to demonstrate it. "He was confirmed in it by Quesnay, Turgot and other leaders of the physiocratic school with whom he became acquainted on his visit to France, in 1765."

Now List is very unfair in endeavouring to confirm Smith as the founder of absolute free trade from opinions formed by other people, and

not from what Smith himself wrote on the subject. This is quite contrary to the rules of evidence. But the fact is quite clear that List could not convict Smith by his own writing, but only from what other people said that it "appeared to give him the priority of the idea of free trade."

The famous formula, Laissez-faire et Laissezpasser, which in these few words contains the main dogma of the free trade school, is attributable to Gournay, a friend and disciple of Quesnay. List confirms this in his work, yet he would have us believe that Adam Smith must be the founder of the system, knowing full well that the phrase was French in origin. No; Colwell tells us the truth when he writes: "It is a striking fact that the modern school has adopted two great errors from their predecessors of the mercantile theory and the physiocrats. From the former they derive their devotion to foreign trade as the highest interest of a nation, and from the second their idea of free trade as the great means of promoting national wealth and rewarding industry. These points are main dogmas of the modern school, but are not, of course, original. They were main dogmas of two exploded schools, whose doctrines are thus taken and pressed again upon the acceptance of the world."1

If List had been honest, or had read more

1 Stephen Colwell, N.S.P.E., p. 343.