same time possess exchangeable value' Walter Bagehot defined Political Economy characteristically as 'the Science of business'. It is, he goes on to say, 'an analysis of that world so familiar to many Englishmen-the "great commerce" by which England has become rich... And it deals too with the men who carry on that commerce, and who make it possible '.2 Emile de Laveleye defines Political Economy as 'the science which determines what laws men ought to adopt in order that they may with the least possible exertion procure the greatest abundance of things useful for the satisfaction of their wants, may distribute them justly and consume them rationally's M. Charles Gide, perhaps the most eminent of French Economists, draws a significant distinction between 'pure Economics' and Social Economy'. Pure Economics 'studies the spontaneous relations that arise between men living together as it might study the relations that arise between any bodies whatsoever-" those necessary relations which derive from the nature of things" as Montesquieu said. It does not set out to judge them either from the moral or from the practical point of view, but simply to explain what is. In so far it tries to follow the methods of a natural or even of a mathematical science. On the other hand, social Economy studies rather the voluntary relations that men create among themselves-associations, written laws, institutions of all kinds-with a view to improving them. Its object is to find out the best means of doing this. It partakes therefore more of the character of the moral sciences as seeking what ought to be, and of the arts as seeking what must be done.'4 These definitions would seem to raise two questions: First, is Political Economy a science or an art? And, secondly, what is its appropriate sphere and subject-matter? A science is concerned simply with investigation. It seeks to ascertain and to formulate the operation of laws. An 1 Principles of Political Economy, 1849. 2 Economic Studies, 1880. ↑ Political Economy, Eng. trans., 1914. 8 Political Economy, 1882. art, on the other hand, is not theoretical but practical; not content with investigating laws, it teaches men how to utilize the materials at their command to the best advantage. In the view of the best authorities Political Economy is pre-eminently a science, though closely related to it stands the art of business. As a science, then, it will in this book be mainly treated. What is the subject-matter of this science? All authorities agree that it is primarily 'wealth', though there is an increasing tendency among modern Economists1 to emphasize the fact that the proper study of Economics is not wealth, but man in relation to wealth. Provisionally, however, we may define Economics as the science of wealth: the study which investigates the laws of the production, exchange, distribution, and consumption of wealth. of Econo mics. To such a definition there are obvious objections. In the The scope first place it would seem gratuitously to narrow the limits of inquiry, and thus to diminish both the interest and the utility of the study of Economics. How can such a study, it is impatiently asked, be of any practical value either to the social worker or to the business man? But does not a similar objection apply to many of the sciences most highly esteemed? Astronomy, for example, is an exact science, but who would deny its close relation to the art of navigation? Physiology and Chemistry are sciences, a knowledge of which is indispensable to the art of the physician. Similarly, though the science of Economics may not provide a vade mecum for the banker or the merchant or the politician, it does, nevertheless, supply a body of knowledge which may well be regarded as indispensable alike in the world of politics and of commerce. The art of business stands in fact in the same relation to the science of Economics as the art of navigation to the science of astronomy. Economics, then, is concerned with wealth and with 'Wealth' 1 E. g. Professor Alfred Marshall, and Sir Sydney Chapman. The latter writes: Political Economy treats of all the actions of human beings in relation to wealth'.-Political Economy, p. 1. defined. human beings in relation to the production, distribution, exchange, and consumption of wealth. But what is 'wealth'? Wealth is defined by John Stuart Mill as 'all useful or agreeable things which possess exchangeable value; or, in other words, all useful or agreeable things except those which can be obtained in the quantity desired without labour or sacrifice'. Wealth' says Walker, ' comprises all articles of value and nothing else'. These definitions have aroused the scorn of the moralists. Ruskin, for example, declared that the things regarded by the economists as of 'value' are not in reality wealth but illth. Political Economy itself he denounces as 'peculiarly and alone the science of darkness; probably a bastard science', and elsewhere as the science of getting rich.1 The latter, be it noted in passing, is not merely a libel upon Economics, but a gross misrepresentation of the nature and function of science. Political Economy does not inculcate the love of riches nor the pursuit of wealth. It does not indeed inculcate anything. But it does claim to proceed on an hypothesis. The hypothesis is that all men are moved by the desire to live, and that this desire can be satisfied only by the acquisition of those material objects which are essential to the maintenance of life. Nowhere does Political Economy suggest that the attainment of riches ought to be the exclusive concern of mankind. Much of the current criticism of Economics is therefore irrelevant. Thus we read in the Report of the Archbishop's Committee on Christianity and Industrial Problems: 'The pursuit of wealth as an end in itself creates an atmosphere in which right social relations are hardly attainable, and in which it is difficult not only for the rich, but for all classes to enter the kingdom of Heaven.' Again: 'Divorced from spiritual standards, industry is only too likely to degenerate into a struggle to escape poverty, or to obtain riches.' Once more: 'to treat human beings as instruments of production is morally wrong'.2 1 Unto This Last, p. 133. rent criti Is not much of this criticism wholly beside the point? Much curIs it denied, even by Christian moralists, that human cism irbeings, whatever be the Economic organization under which relevant. they live, must necessarily be 'instruments of production'? 'In the sweat of thy face shalt thou eat bread.' Labour is essential to life, and the end of labour is production. Is it open to question that the production of wealth, or, if the phrase be preferred, the attainment of riches, is one of the main ends of man? Not necessarily the exclusive end, but at least an indispensable condition of terrestrial existence. We know that in fact men are not, in the ordinary affairs of life, actuated solely, or even perhaps mainly, by Economic motives. Love of kin, kind, and country supplies an incentive to human activity more powerful, at times, than love of life itself. Yet all men, so long as they are in the flesh, must have the means of subsistence, and in so far as they work to obtain it, the attainment of riches', be the amount great or small, is one of the main ends of man. Political Economy, while recognizing and emphasizing Economic this basic fact, does not preach the love of money or even of method. wealth; it simply assumes that men desire to live; and on that assumption proceeds to investigate the laws which govern the production and exchange and consumption of those material things which sustain and enrich life. Moreover, being a science, it claims the right, for its own. purposes, to isolate its phenomena. It does not, on that account, ignore the existence of other phenomena, outside the orbit of its own special investigation. The anatomist is aware that the physiological aspects of the human body are at least as important as its anatomical structure. Because the chemist is concerned with chemical substances he does not refuse to acknowledge the existence of bacteria. Before water can be pronounced to be safe for drinking purposes the sanitary authority will doubtless be well advised to consult both the chemist and the bacteriologist; but that is no reason for confounding two sciences, or for refusing to allow each to isolate its phenomena. This is the accepted method of the abstract' sciences. Weight The his- Economic But does Economics belong to this category? Is it an 'abstract' science? Is it not essentially a human and a social science which cannot afford to ignore any of the motives which actuate men or any of the forces which mould society? If the scope of Economics is to be thus enlarged the study of Economic phenomena may still be of considerable interest and perhaps of some value, but it will cease to be scientific; it cannot possibly, within the limits of human existence, reach any conclusions or formulate any laws. Its conclusions have indeed been assailed on the ground that they are already so far out of touch with the realities of life that they cease to possess any validity. Is the criticism sound? Admittedly it has so far affected students of Economics that some of them have preferred altogether to abandon the abstract method; to surrender the 'unreal' hypothesis on which the 'orthodox' economists of the English school proceeded, and to adopt the historical or inductive method. Instead of an assumed, and admittedly partial hypothesis, they have preferred to build up, by the investigation, comparison, and correlation of actual Economic phenomena, an organized body of knowledge. This latter method has obvious advantages: if the investigation could ever be completed the conclusions reached would presumably be purged of the errors incidental to the deductions derived from an hypothesis of limited validity. But could the investigation ever be completed? Would conclusions ever be reached? The phenomena under investigation would be so bewildering in their multiplicity, the motives subjected to analysis so various and even contradictory, that it is doubtful whether it would be possible to reach conclusions at all. At this point it is necessary to obtrude a word of caution. We must not confound the historical method of Economic the Economic theorist with the task and function of the |