FOOTNOTES:

The problems appear to be too simple to require long preliminary investigations of fact. Torrens speaks of proving by 'strictly demonstrative evidence' or of 'proceeding to demonstrate' by strict analysis.[359]This is generally the preface to one of those characteristic arithmetical illustrations to which Ricardo's practice gave a sanction. We are always starting an imaginary capitalist with so many quarters of corn and suits of clothes, which he can transmute into any kind of product, and taking for granted that he represents a typical case. This gives a certain mathematical air to the reasoning, and too often hides from the reasoner that he may be begging the question in more ways than one by the arrangement ofhis imaginary case. One of the offenders in this kind was Nassau Senior (1790-1864), a man of remarkable good sense, and fully aware of the necessity of caution in applying his theories to facts. He was the first professor of Political Economy at Oxford (1825-1830), and his treatise[360]lays down the general assumption of his orthodox contemporaries clearly and briefly. The science, he tells us, is deducible from four elementary propositions: the first of which asserts that every 'man desires to obtain additional wealth with as little sacrifice as possible'; while the others state the first principles embodied in Malthus's theory of population, and in the laws corresponding to the increasing facility of manufacturing and the decreasing facility of agricultural industry.[361]As these propositions include no reference to the particular institutions or historical development of the social structure, they virtually imply that a science might be constructed equally applicable in all times and places; and that, having obtained them, we need not trouble ourselves any further with inductions. Hence it follows that we can at once get from the abstract 'man' to the industrial order. We may, it would seem, abstract from history in general. This corresponds to the postulate explicitly stated by M'Culloch. 'A state,' he tells us, 'is nothing more than an aggregate of individuals': men, that is, who 'inhabit a certain tract of country.'[362]He infers that 'whatever is most advantageous to them' (the individuals) 'is most advantageous to the state.' Self-interest, therefore, the individual's desire ofadding to his 'fortune,' is the mainspring orcausa causansof all improvement.[363]This is, of course, part of the familiar system, which applies equally in ethics and politics. M'Culloch is simply generalising Adam Smith's congenial doctrine that statesmen are guilty of absurd presumption when they try to interfere with a man's management of his own property.[364]This theory, again, is expressed by the familiar maximpas trop gouverner, which is common to the whole school, and often accepted explicitly.[365]

It will be quite enough to notice one or two characteristic results. The most important concern the relation between the labourer and the capitalist. Malthus gives the starting-point. Torrens, for example, says that the 'real wages of labour have a constant tendency to settle down' to the amount rendered necessary by 'custom and climate' in order to keep up his numbers.[366]Mill observes in his terse way that the capitalist in the present state of society 'is as much the owner of the labour' as the manufacturer who operates with slaves. The only 'difference is in the mode of purchasing.'[367]One buys a man's whole labour; the other his labour for a day. The rate of wages can therefore be raised, like the price of slaves, only by limiting the supply. Hence the 'grand practical problem is to find the means of limiting the number of births.'[368]M'Culloch is equally clear, andinfers that every scheme 'not bottomed on' the principle of proportioning labour to capital must be 'completely nugatory and ineffectual.'[369]

The doctrine common to the whole school led M'Culloch to conclusions which became afterwards notorious enough to require a word of notice. Torrens, like Ricardo, speaks of capital as 'accumulated labour,' but makes a great point of observing that, although this is true, the case is radically changed in a developed state of society. The value of things no longer depends upon the labour, but upon the amount of capital employed in their production.[370]This, indeed, may seem to be the most natural way of stating the accepted principle. M'Culloch replies that the change makes no difference in the principle,[371]inasmuch as capital being 'accumulated labour,' value is still proportioned to labour, though in a transubstantiated shape. M'Culloch supposed that by carrying out this principle systematically he was simplifying Ricardo and bringing the whole science into unity. All questions, whether of value in exchange, or of the rate of wages, can then be reduced to comparing the simple unit called labour. Both Mill and M'Culloch regard capital as a kind of labour, so that things may be produced by capital alone, 'without the co-operation of any immediate labour'[372]—a result which can hardly be realised with the discovery of a perpetual motion. So, again, the value of a joint product is the 'sum' of these two values.[373]All value, therefore, can be regarded as proportionedto labour in one of its two states. M'Culloch advanced to an unfortunate conclusion, which excited some ridicule. Though Ricardo and Torrens[374]rejected it, it was accepted by Mill in his second edition.[375]Wine kept in a cask might increase in value. Could that value be ascribed to 'additional labour actually laid out'? M'Culloch gallantly asserted that it could, though 'labour' certainly has to be interpreted in a non-natural sense.[376]Not only is capital labour, but fermentation is labour, or how can we say that all value is proportioned to labour? This is only worth notice as a pathetic illustration of the misfortunes of a theorist ridden by a dogma of his own creation. Another conclusion is more important. The 'real value' of anything is measured by the labour required to produce it. Nothing 'again is more obvious' than that equal labour implies the 'same sacrifice' in all states of society.[377]It might seem to follow that the value of anything was measured by the labour which it would command. This doctrine, however, though maintained by Malthus, was, according to M'Culloch, a pestilent heresy, first exploded by Ricardo's sagacity.[378]Things exchange, as he explains, in proportion to the labour which produces them, but the share given to the labourer may vary widely. The labourer, he says, 'gives a constant, but receives a variable quantity in its stead.' He makes the same sacrifice when he works for a day, but may get for it what heproduces in ten hours, or only in one. In every case, however, he gets less than he produces, for the excess 'constitutes profits.'[379]The capitalist must get his interest, that is, the wages of the accumulated labour. Here we come again to the Socialist position, only that the Socialist infers that the labourer is always cheated by the capitalist, and does not consider that the machine can ask for 'wages' on the pretext that it is accumulated labour. What, however, determines the share actually received? After all, as a machine is not actually a labourer, and its work not a separable product, we cannot easily see how much wages it is entitled to receive. M'Culloch follows the accepted argument. 'No proposition,' he says, 'can be better established than that the market rate of wages ... is exclusively determined by the proportion between capital and population.'[380]We have ultimately here, as elsewhere, 'the grand principle to which we must always come at last,' namely, 'the cost of production.'[381]Wages must correspond to the cost of raising the labourer. This leads to a formula, which afterwards became famous. In a pamphlet[382]devoted to the question, he repeats the statement that wages depend upon the proportion between population and capital; and then, as if the phrase were identical, substitutes that portion of capital which is required for the labourer's consumption. This is generally cited as the first statement of the 'wage-fund' theory, to which I shall have to return.

I need not pursue these illustrations of the awkward results of excessive zeal in a disciple. It is worth noticing, however, that M'Culloch's practical conclusions are not so rigid as might be inferred. His abstract doctrines do not give his true theory, so much as what he erroneously took to be his theory. The rules with which he works are approximately true under certain conditions, and he unconsciously assumes the conditions to be negligible, and the rules therefore absolute. It must be added that he does not apply his conclusions so rigidly as might be expected. By the help of 'friction,' or the admission that the ride is only true in nineteen cases out of twenty, he can make allowance for many deviations from rigid orthodoxy. He holds, for example, that government interference is often necessary. He wishes in particular for the establishment of a 'good system of public education.'[383]He seems to have become more sentimental in later years. In the edition of 1843 he approves the Factory Acts, remarking that the last then passed 'may not, in some respects, have gone far enough.'[384]He approves a provision for the 'impotent poor,' on the principle of the Elizabethan act, though he disapproves the centralising tendency of the new poor-law. Though he is a good Malthusian,[385]and holds the instinct of population to be a 'constant quantity,'[386]he does not believe in the impossibility of improvement. The 'necessary' rate of wages fixes only a minimum:an increase of population has been accompanied by an increase of comfort.[387]Wages rise if the standard of life be raised, and a rise of wages tends to raise the standard. He cordially denounces the benevolent persons who held that better wages only meant more dissipation. Better wages are really the great spur to industry and improvement.[388]Extreme poverty causes apathy; and the worst of evils is the sluggishness which induces men to submit to reductions of wages. A sense of comfort will raise foresight; and thevis medicatrixshould be allowed to act upon every rank of society. He is no doubt an individualist, as looking to the removal of restrictions, such as the Conspiracy Laws,[389]rather than to a positive action of the government; but it is worth notice that this typical economist is far from accepting some of the doctrines attributed to the school in general.

The classical school blundered when it supposed that the rules which it formulated could be made absolute. To give them that character, it was necessary to make false assumptions as to the ultimate constitution of society; and the fallacy became clear when the formulæ were supposed to give a real history or to give first principles, from which all industrial relations could be deduced. Meanwhile, the formulæ, as they really expressed conditional truths, might be very useful so long as, in point of fact, the conditions existed, and were very effective in disposing of many fallacies. The best illustration would probably be given by the writings of Thomas Tooke (1774-1858),[390]one of the founders of the Political Economy Club. TheHistory of Pricesis an admirable explanation of phenomena which had given rise to the wildest theories. The many oscillations of trade and finance during the great struggle, the distress which had followed the peace, had bewildered hasty reasoners. Some people, of course, found consolation in attributing everything to the mysterious action of the currency; others declared that the war-expenditure had supplied manufacturers and agriculturists with a demand for their wares, apparently not the less advantageous because the payment came out of their own pockets.[391]Tooke very patiently and thoroughly explodes these explanations, and traces the fluctuations of price to such causes as the effect of the seasons and the varying events of the war which opened or closed the channels of commerce. The explanation in general seems to be thoroughly sound and conclusive, and falls in, as far as it goes, with the principles of his allies. He shows, for example, very clearly what were the conditions under which the orthodox theory of rent was really applicable; how bad seasons brought gain instead of loss to the 'agricultural interest,' that is, as Tooke explains, to the landlord and farmer; how by a rise of price out of proportion to the diminution of supply, the farmer made large profits; how rents rose, enclosure bills increased, and inferior land was brought under the plough. The landlord's interest was for the time clearly opposed to that of all other classes, howeverinadequate the doctrine might become when made absolute by a hasty generalisation. I need not dwell upon the free-trade argument which made the popular reputation of the economists. It is enough to note briefly that the error as to the sphere of applicability of the doctrine did not prevent many of the practical conclusions from being of the highest value.

FOOTNOTES:[294]A life of Ricardo by M'Culloch is prefixed to hisWorks. I cite the edition of 1880. Ricardo's letters to Malthus were published by Mr. Bonar in 1887; his letters to M'Culloch, edited by Mr. Hollander for the American Economic Association, in 1895; and his letters to H. Trower, edited by Mr. Bonar and Mr. Hollander, have just appeared (1900).[295]He remarks upon this difficulty in the case of Smith's treatment of rent, and gives a definition to which he scarcely adheres.—Works, p. 34 ('Principles,' ch. ii., 1888).[296]Works, p. 378. Ricardo, it should be said, complained when Malthus interpreted him to mean that this opposition of interests was permanent and absolute.[297]Malthus admits the general principle of free trade, but supports some degree of protection to corn, mainly upon political grounds. He holds, however, with Adam Smith, that 'no equal quantity of productive labour employed in manufactures could ever occasion so great a reproduction as in agriculture' (Grounds of an Opinion, etc., p. 35)—a relic of the 'physiocrat' doctrine.[298]Works, p. 385.[299]Ibid.p. 386.[300]See alsoLetters to Malthus, p. 175.[301]'Your modern political economists say that it is a principle in their science that all things find their level; which I deny, and say, on the contrary, that it is the true principle that all things are finding their level, like water in a storm.'—Coleridge'sTable-Talk, 17th May 1833.[302]Letters to Malthus, p. 96; and see the frequently quoted passage where he complains that Malthus has taken his book as more 'practical' than he had intended it to be, and speaks of his method of imagining 'strong cases.'—Ibid.p. 167.[303]Works, p. 40n.(ch. ii.).[304]Works, p. 53 (ch. v.), and p. 124 (ch. xvi.), where he quotes from theWealth of Nations(M'Culloch), p. 390 (bk. v. ch. ii. art. 3).[305]Works, p. 131.[306]Wealth of Nations(M'Culloch), p. 31 (bk. i. ch. viii.).[307]Works, p. 41 (ch. ii.).[308]Wealth of Nations(M'Culloch), p. 36.[309]Works, p. 51 (ch. v.).[310]Letters to Malthus, p. 98.[311]Works, p. 239 (ch. xxxi., added in third edition, 1821).[312]Ibid.p. 50 (ch. v.).[313]Ibid.p. 52.[314]Ibid.p. 15 (ch. i. sec. ii.).[315]There is, indeed, a difficulty which I happily need not discuss. Undoubtedly the doctrine of gluts was absurd. There is, of course, no limit to the amount of wealth which can be used or exchanged. But there certainly seems to be a great difficulty in effecting such a readjustment of the industrial system as is implied in increased production of wealth; and the disposition to save may at a given time be greater than the power of finding profitable channels for employing wealth. This involves economical questions beyond my ability to answer, and happily not here relevant.[316]Letters to Malthus, p. 101.[317]Ibid.p. 52.[318]Works, p. 174 (ch. xxi.).[319]Works, p. 66 (ch. vi.).[320]Works, p. 240 (ch. xxxi.).[321]Ricardo,Works, p. xxiv.[322]Menger'sDas Recht auf den vollen Arbeitsertrag(1891), p. 38.[323]Works, p. 228 (ch. xxviii.).[324]Works, pp. 29, 60.[325]Ibid.p. 166.[326]Works, p. 170 (ch. xx.).[327]Ibid.p. 7.[328]So he tells Malthus (Letters, pp. 173, 174) that the buyer has 'the least to do in the world' with the regulation of prices. It is all the competition of the sellers. 'Demand' influences price for the moment, but 'supply follows close upon its heels, and takes up the regulation of price.'[329]Works, p. 234.[330]Bentham'sWorks, x. 498.[331]Works, p. 250 (ch. xxxii.).[332]Stewart'sWorks, x. 34.[333]See Bagehot's remarks upon J. S. Mill's version of this doctrine inEconomic Studies: chapter on 'Cost of Production.'[334]Another illustration of the need of such considerations is given, as has been pointed out, in Adam Smith's famous chapter upon the variation in the rate of wages. He assumes that the highest wages will be paid for the least agreeable employments, whereas, in fact, the least agreeable are generally the worst paid. His doctrine, that is, is only true upon a tacit assumption as to the character and position of the labourer, which must be revised before the rule can be applied.[335]J. S. Mill, too, in hisPolitical Economymakes the foundation of private property 'the right of producers to what they themselves have produced.' (Bk. ii. ch. ii. § 1.)[336]Mr. Edwin Cannan, inProduction and Distribution(1894), p. 383.[337]A definition, says Burke in his essay on the 'Sublime and Beautiful' (introduction) 'seems rather to follow than to precede our inquiry, of which it ought to be considered as the result.'[338]Works, p. 34 (chap. ii.). Rent is there defined as the sum paid for the original and indestructible powers of the soil.[339]Works, p. 132 (chap. xvii.). He admits (Ibid.p. 210n.) that the labourer may have a little more than what is absolutely necessary, and that his inference is therefore 'expressed too strongly.'[340]SeeLetters to M'Culloch, p. xxi.[341]'The assaults upon Malthus's "great work,"' he says (Works, p. 243, ch. xxxii.), 'have only served to prove its strength.'[342]Letters to Malthus, p. 226.[343]Works, p. 58 (ch. v.).[344]Ibid.p. 211n.(ch. xxvi.).[345]Ibid.p. 258 (ch. xxxii.).[346]Works, p. 248 (ch. xxii.).[347]Bain'sJames Mill, p. 211.[348]Editions in 1821, 1824, and 1826.[349]Autobiography, p. 204.[350]The first edition, an expanded version of an article in theEncyclopædia Britannica, appeared in 1825.[351]Latter-day Pamphlets(New Downing Street). M'Crowdy is obviously a type, not an individual.[352]See Mr. Hewin's life of him inDictionary of National Biography.[353]Fourth edition in 1827.[354]Ricardo'sWorks, p. 164n.[355]External Corn-trade, preface to fourth edition. J. S. Mill observes in his chapter upon 'International Trade' that Torrens was the earliest expounder of the doctrine afterwards worked out by Ricardo and Mill himself. For Ricardo's opinion of Torrens, seeLetters to Trower, p. 39.[356]Production of Wealth(Preface).[357]Production of Wealth(Preface).[358]Political Economy(1825), p. 21.[359]External Corn-trade, pp. xviii, 109, 139;Production of Wealth, p. 375.[360]Originally in theEncyclopædia Metropolitana, 1836.[361]Senior'sPolitical Economy(1850), p. 26.[362]Ibid.(1825), pp. 55, 129-131.[363]Senior'sPolitical Economy(150), p. 125.[364]Ibid.p. 135. M'Culloch admits the possibility that a man may judge his own interests wrongly, but thinks that this will not happen in one case out of twenty (Ibid.p. 15).[365]See Torrens'sProduction of Wealth, p. 208; and M'Culloch'sPolitical Economy(1843), p. 294, where he admits some exceptions.[366]External Corn-trade, p. 87, etc.[367]Political Economy(second edition), pp. 21, 22.[368]Ibid.p. 67.[369]Political Economy(1825), p. 329.[370]Production of Wealth, p. 34, etc.[371]Political Economy(1825), p. 318.[372]Mill'sPolitical Economy(second edition), p. 102; M'Culloch'sPolitical Economy(1825), pp. 289-291.[373]M'Culloch'sPolitical Economy, p. 290.[374]Preface toExternal Corn-trade.[375]Ibid.p. 95.[376]Political Economy(1825), pp. 313-18. This argument disappears in later editions.[377]Ibid.p. 217.[378]Political Economy, p. 221. De Quincey makes a great point of this doctrine, of which it is not worth while to examine the meaning.[379]Political Economy, p. 221n.[380]Ibid.p. 336.[381]Ibid.p. 337.[382]'Essay upon the Circumstances which determine the Rate of Wages' (1826), p. 113. This was written for Constable'sMiscellany, and is mainly repetition from thePolitical Economy. It was republished, with alterations, in 1851.[383]Political Economy, pp. 359-61.[384]Ibid.(1843), p. 178. And see his remarks on the unfavourable side of the Factory System, p. 186seq.[385]'Wherever two persons have the means of subsisting,' as he quaintly observes, 'a marriage invariably takes place' (Political Economy, p. 154).[386]Political Economy, p. 206.[387]Political Economy, p. 344.[388]Ibid.pp. 349-52.[389]See pamphlet on the rate of wages, pp. 178-204.[390]Tooke'sThoughts and Details on the High and Low Prices of the last Thirty Yearsappeared in 1823 (second edition 1824). This was rewritten and embodied in theHistory of Prices, the first two volumes of which appeared in 1838. Four later volumes appeared in 1839, 1848, and 1857.[391]The popular view is given by Southey. The Radicals, he says in 1823, desire war because they expect it to lead to revolution. 'In this they are greatly deceived, for it would restore agricultural prosperity, and give a new spur to our manufactures' (Selections from Southey's Letters, iii. 382. See alsoLife and Correspondence, iv. 228, 386).

[294]A life of Ricardo by M'Culloch is prefixed to hisWorks. I cite the edition of 1880. Ricardo's letters to Malthus were published by Mr. Bonar in 1887; his letters to M'Culloch, edited by Mr. Hollander for the American Economic Association, in 1895; and his letters to H. Trower, edited by Mr. Bonar and Mr. Hollander, have just appeared (1900).

[295]He remarks upon this difficulty in the case of Smith's treatment of rent, and gives a definition to which he scarcely adheres.—Works, p. 34 ('Principles,' ch. ii., 1888).

[296]Works, p. 378. Ricardo, it should be said, complained when Malthus interpreted him to mean that this opposition of interests was permanent and absolute.

[297]Malthus admits the general principle of free trade, but supports some degree of protection to corn, mainly upon political grounds. He holds, however, with Adam Smith, that 'no equal quantity of productive labour employed in manufactures could ever occasion so great a reproduction as in agriculture' (Grounds of an Opinion, etc., p. 35)—a relic of the 'physiocrat' doctrine.

[298]Works, p. 385.

[299]Ibid.p. 386.

[300]See alsoLetters to Malthus, p. 175.

[301]'Your modern political economists say that it is a principle in their science that all things find their level; which I deny, and say, on the contrary, that it is the true principle that all things are finding their level, like water in a storm.'—Coleridge'sTable-Talk, 17th May 1833.

[302]Letters to Malthus, p. 96; and see the frequently quoted passage where he complains that Malthus has taken his book as more 'practical' than he had intended it to be, and speaks of his method of imagining 'strong cases.'—Ibid.p. 167.

[303]Works, p. 40n.(ch. ii.).

[304]Works, p. 53 (ch. v.), and p. 124 (ch. xvi.), where he quotes from theWealth of Nations(M'Culloch), p. 390 (bk. v. ch. ii. art. 3).

[305]Works, p. 131.

[306]Wealth of Nations(M'Culloch), p. 31 (bk. i. ch. viii.).

[307]Works, p. 41 (ch. ii.).

[308]Wealth of Nations(M'Culloch), p. 36.

[309]Works, p. 51 (ch. v.).

[310]Letters to Malthus, p. 98.

[311]Works, p. 239 (ch. xxxi., added in third edition, 1821).

[312]Ibid.p. 50 (ch. v.).

[313]Ibid.p. 52.

[314]Ibid.p. 15 (ch. i. sec. ii.).

[315]There is, indeed, a difficulty which I happily need not discuss. Undoubtedly the doctrine of gluts was absurd. There is, of course, no limit to the amount of wealth which can be used or exchanged. But there certainly seems to be a great difficulty in effecting such a readjustment of the industrial system as is implied in increased production of wealth; and the disposition to save may at a given time be greater than the power of finding profitable channels for employing wealth. This involves economical questions beyond my ability to answer, and happily not here relevant.

[316]Letters to Malthus, p. 101.

[317]Ibid.p. 52.

[318]Works, p. 174 (ch. xxi.).

[319]Works, p. 66 (ch. vi.).

[320]Works, p. 240 (ch. xxxi.).

[321]Ricardo,Works, p. xxiv.

[322]Menger'sDas Recht auf den vollen Arbeitsertrag(1891), p. 38.

[323]Works, p. 228 (ch. xxviii.).

[324]Works, pp. 29, 60.

[325]Ibid.p. 166.

[326]Works, p. 170 (ch. xx.).

[327]Ibid.p. 7.

[328]So he tells Malthus (Letters, pp. 173, 174) that the buyer has 'the least to do in the world' with the regulation of prices. It is all the competition of the sellers. 'Demand' influences price for the moment, but 'supply follows close upon its heels, and takes up the regulation of price.'

[329]Works, p. 234.

[330]Bentham'sWorks, x. 498.

[331]Works, p. 250 (ch. xxxii.).

[332]Stewart'sWorks, x. 34.

[333]See Bagehot's remarks upon J. S. Mill's version of this doctrine inEconomic Studies: chapter on 'Cost of Production.'

[334]Another illustration of the need of such considerations is given, as has been pointed out, in Adam Smith's famous chapter upon the variation in the rate of wages. He assumes that the highest wages will be paid for the least agreeable employments, whereas, in fact, the least agreeable are generally the worst paid. His doctrine, that is, is only true upon a tacit assumption as to the character and position of the labourer, which must be revised before the rule can be applied.

[335]J. S. Mill, too, in hisPolitical Economymakes the foundation of private property 'the right of producers to what they themselves have produced.' (Bk. ii. ch. ii. § 1.)

[336]Mr. Edwin Cannan, inProduction and Distribution(1894), p. 383.

[337]A definition, says Burke in his essay on the 'Sublime and Beautiful' (introduction) 'seems rather to follow than to precede our inquiry, of which it ought to be considered as the result.'

[338]Works, p. 34 (chap. ii.). Rent is there defined as the sum paid for the original and indestructible powers of the soil.

[339]Works, p. 132 (chap. xvii.). He admits (Ibid.p. 210n.) that the labourer may have a little more than what is absolutely necessary, and that his inference is therefore 'expressed too strongly.'

[340]SeeLetters to M'Culloch, p. xxi.

[341]'The assaults upon Malthus's "great work,"' he says (Works, p. 243, ch. xxxii.), 'have only served to prove its strength.'

[342]Letters to Malthus, p. 226.

[343]Works, p. 58 (ch. v.).

[344]Ibid.p. 211n.(ch. xxvi.).

[345]Ibid.p. 258 (ch. xxxii.).

[346]Works, p. 248 (ch. xxii.).

[347]Bain'sJames Mill, p. 211.

[348]Editions in 1821, 1824, and 1826.

[349]Autobiography, p. 204.

[350]The first edition, an expanded version of an article in theEncyclopædia Britannica, appeared in 1825.

[351]Latter-day Pamphlets(New Downing Street). M'Crowdy is obviously a type, not an individual.

[352]See Mr. Hewin's life of him inDictionary of National Biography.

[353]Fourth edition in 1827.

[354]Ricardo'sWorks, p. 164n.

[355]External Corn-trade, preface to fourth edition. J. S. Mill observes in his chapter upon 'International Trade' that Torrens was the earliest expounder of the doctrine afterwards worked out by Ricardo and Mill himself. For Ricardo's opinion of Torrens, seeLetters to Trower, p. 39.

[356]Production of Wealth(Preface).

[357]Production of Wealth(Preface).

[358]Political Economy(1825), p. 21.

[359]External Corn-trade, pp. xviii, 109, 139;Production of Wealth, p. 375.

[360]Originally in theEncyclopædia Metropolitana, 1836.

[361]Senior'sPolitical Economy(1850), p. 26.

[362]Ibid.(1825), pp. 55, 129-131.

[363]Senior'sPolitical Economy(150), p. 125.

[364]Ibid.p. 135. M'Culloch admits the possibility that a man may judge his own interests wrongly, but thinks that this will not happen in one case out of twenty (Ibid.p. 15).

[365]See Torrens'sProduction of Wealth, p. 208; and M'Culloch'sPolitical Economy(1843), p. 294, where he admits some exceptions.

[366]External Corn-trade, p. 87, etc.

[367]Political Economy(second edition), pp. 21, 22.

[368]Ibid.p. 67.

[369]Political Economy(1825), p. 329.

[370]Production of Wealth, p. 34, etc.

[371]Political Economy(1825), p. 318.

[372]Mill'sPolitical Economy(second edition), p. 102; M'Culloch'sPolitical Economy(1825), pp. 289-291.

[373]M'Culloch'sPolitical Economy, p. 290.

[374]Preface toExternal Corn-trade.

[375]Ibid.p. 95.

[376]Political Economy(1825), pp. 313-18. This argument disappears in later editions.

[377]Ibid.p. 217.

[378]Political Economy, p. 221. De Quincey makes a great point of this doctrine, of which it is not worth while to examine the meaning.

[379]Political Economy, p. 221n.

[380]Ibid.p. 336.

[381]Ibid.p. 337.

[382]'Essay upon the Circumstances which determine the Rate of Wages' (1826), p. 113. This was written for Constable'sMiscellany, and is mainly repetition from thePolitical Economy. It was republished, with alterations, in 1851.

[383]Political Economy, pp. 359-61.

[384]Ibid.(1843), p. 178. And see his remarks on the unfavourable side of the Factory System, p. 186seq.

[385]'Wherever two persons have the means of subsisting,' as he quaintly observes, 'a marriage invariably takes place' (Political Economy, p. 154).

[386]Political Economy, p. 206.

[387]Political Economy, p. 344.

[388]Ibid.pp. 349-52.

[389]See pamphlet on the rate of wages, pp. 178-204.

[390]Tooke'sThoughts and Details on the High and Low Prices of the last Thirty Yearsappeared in 1823 (second edition 1824). This was rewritten and embodied in theHistory of Prices, the first two volumes of which appeared in 1838. Four later volumes appeared in 1839, 1848, and 1857.

[391]The popular view is given by Southey. The Radicals, he says in 1823, desire war because they expect it to lead to revolution. 'In this they are greatly deceived, for it would restore agricultural prosperity, and give a new spur to our manufactures' (Selections from Southey's Letters, iii. 382. See alsoLife and Correspondence, iv. 228, 386).

ECONOMIC HERETICS

I. THE MALTHUSIAN CONTROVERSY

The Economic theory became triumphant. Expounded from new university chairs, summarised in text-books for schools, advocated in the press, and applied by an energetic party to some of the most important political discussions of the day, it claimed the adhesion of all enlightened persons. It enjoyed the prestige of a scientific doctrine, and the most popular retort seemed to be an involuntary concession of its claims. When opponents appealed from 'theorists' to practical men, the Utilitarians scornfully set them down as virtually appealing from reason to prejudice. No rival theory held the field. If Malthus and Ricardo differed, it was a difference between men who accepted the same first principles. They both professed to interpret Adam Smith as the true prophet, and represented different shades of opinion rather than diverging sects. There were, however, symptoms of opposition, which, at the time, might be set down as simple reluctance to listen to disagreeable truths. In reality, they were indications of a dissatisfaction which was to become of more importance and to lead in time to a more decided revolt. I must indicate some of them,though the expressions of dissent were so various and confused that it is not very easy to reduce them to order.

Malthus's doctrine was really at the base of the whole theory, though it must be admitted that neither Malthus himself nor his opponents were clear as to what his doctrine really was. His assailants often attacked theories which he disavowed, or asserted principles which he claimed as his own.[392]I mention only to set aside some respectable and wearisome gentlemen such as Ingram, Jarrold, Weyland, and Grahame, who considered Malthus chiefly as impugning the wisdom of Providence. They quote the divine law, 'Increase and multiply'; think that Malthus regards vice and misery as blessings, and prove that population does not 'tend' to increase too rapidly. Jarrold apparently accepts the doctrine which Malthus attributes to Süssmilch, that lives have been shortened since the days of the patriarchs, and the reproductive forces diminished as the world has grown fuller. Grahame believes in a providential 'ordeal,' constituted by infant mortality, which is not, like war and vice, due to human corruption, but a beneficent regulating force which correlates fertility with the state of society. This might be taken by Malthus as merely amounting to anotherversion of his checks. Such books, in fact, simply show, what does not require to be further emphasised, that Malthus had put his version of the struggle for existence into a form which seemed scandalous to the average orthodox person. The vagueness of Malthus himself and the confused argument of such opponents makes it doubtful whether they are really answering his theories or reducing them to a less repulsive form of statement.

In other directions, the Malthusian doctrine roused keen feeling on both sides, and the line taken by different parties is significant. Malthus had appeared as an antagonist of the revolutionary party. He had laid down what he took to be an insuperable obstacle to the realisation of their dreams. Yet his views were adopted and extended by those who called themselves thorough Radicals. As, in our days, Darwinism has been claimed as supporting both individualist and socialistic conclusions, the theory of his predecessor, Malthus, might be applied in a Radical or a Conservative sense. In point of fact, Malthus was at once adopted by the Whigs, as represented by theEdinburgh Review. They were followers of Adam Smith and Dugald Stewart; they piqued themselves, and, as even James Mill admitted, with justice, upon economic orthodoxy. They were at the same time predisposed to a theory which condemned the revolutionary Utopias. It provided them with an effective weapon against the agitators whom they especially dreaded. The Tories might be a little restrained by orthodox qualms. In 1812 Southey was permitted to make an onslaught upon Malthus in theQuarterly;[393]but more complimentaryallusions followed, and five years later the essay was elaborately defended in an able article.[394]An apology was even insinuated for the previous assault, though the blame was thrown upon Malthus for putting his doctrines in an offensive shape. A reference to Owen suggests that the alarm excited by Socialism had suggested the need of some sound political economy.

Another controversy which was being carried on at intervals indicates the line of cleavage between the capitalist and the landed interest. James Mill's early pamphlet,Commerce Defended(1808), and Torrens's pamphlet,Economists Refuted, were suggested by this discussion. Although the war was partly in defence of British trade, its vicissitudes produced various commercial crises; and the patriotic Tories were anxious to show that we could thrive even if our trade was shut out from the Continent. The trading classes maintained that they really supplied the sinews of war, and had a right to some control of the policy. The controversy about the orders in council and Berlin decrees emphasised these disputes, and called some attention to the questions involved in the old controversy between the 'mercantile' and the 'agricultural' systems. A grotesque exaggeration of one theory was given by Mill's opponent, William Spence[395](1783-1860), in hisBritain independent of Commerce, which went through several editions in 1808, and refurbished or perverted the doctrine of the French economists. The argument, at least, shows what fallacies then neededconfutation by the orthodox. In the preface to his collected tracts, Spence observes that the high price of corn was the cause of 'all our wealth and prosperity during the war.' The causes of the high price ('assisted,' he admits, 'by occasional bad seasons') were the 'national debt, in other words, taxation,' which raised the price, first, of necessaries, and then of luxuries (thus, he says, 'neutralising its otherwise injurious effects'), and the virtual monopoly by the agriculturist of the home market.[396]All our wealth, that is, was produced by taxation aided by famine, or, in brief, by the landowner's power of squeezing more out of the poor. Foreign trade, according to Spence, is altogether superfluous. Its effect is summed up by the statement that we give hardware to America, and, in return, get only 'the vile weed, tobacco.'[397]Spence's writings only show the effect of strong prejudices on a weak brain. A similar sentiment dictated a more noteworthy argument to a much abler writer, whose relation to Malthus is significant—Thomas Chalmers (1780-1847),[398]probably best remembered at present for his leadership of the great disruption of 1843. He had a reputation for eloquence and philosophic ability not fully intelligible at the present day. His appearance was uncouth, and his written style is often clumsy. He gave an impression at times of indolence and of timidity. Yet his superficial qualities concealed an ardent temperament and cordial affections. Under a sufficient stimulus he could blaze out in stirring speech and vigorous action. His intellectual training was limited. He had, we aretold, been much influenced in his youth by the French philosophers of the time, and had appeared on the side of the more freethinking party in the famous Leslie controversy. Soon afterwards, however, he was converted to 'evangelical' views. He still accepted Thomas Brown as a great metaphysician,[399]but thought that in moral questions Brown's deistical optimism required to be corrected by an infusion of Butler's theory of conscience. He could adapt Butler'sAnalogy, and write an edifying Bridgewater Treatise. I need only say, however, that, though his philosophy was not very profound, he had an enthusiasm which enables him at times to write forcibly and impressively.

Chalmers was from 1803 to 1815 minister of Kilmany, Fifeshire, and his attention had already been drawn to the question of pauperism. He took part in the Spence controversy, by an essay upon theExtent and Stability of National Resources.[400]In this he expounds a doctrine which is afterwards given in hisPolitical Economy in Connection with the Moral State and Moral Aspects of Society.[401]The main purpose of his early book is the patriotic. It is meant, like Spence's pamphlet, to prove that Napoleon could do us no vital injury. Should he succeed, he would only lop off superfluous branches, not hew down the main trunk. Chalmers's argument to show the ease with which a country may recover the effects of a disastrous war is highly praised by J. S. Mill[402]as the first sound explanation of the facts. Chalmers's position, however, is radically different fromthe position of either James or J. S. Mill. Essentially it is the development of the French economists' theory, though Chalmers is rather unwilling to admit his affinity to a discredited school.[403]He has reached some of their conclusions, he admits, but by a different path.[404]He coincides, in this respect, with Malthus, who was equally impressed by the importance of 'subsistence,' or of the food-supply of the labourer. The great bulk of the food required must be raised within our own borders. As Chalmers says, in 1832, the total importation of corn, even in the two famine years, 1800 and 1801, taken together, had only provided food for five weeks,[405]and could normally represent a mere fringe or superfluous addition to our resources. His main argument is simple. The economists have fallen into a fatal error. A manufacturer, he observes, only makes his own article.[406]The economists somehow imagine that he also supports himself. You see a prosperous 'shawl-making village.' You infer that its ruin would cause the destitution of so many families. It would only mean the loss of so many shawls. The food which supports the shawl-makers would still be produced, and would be only diverted to support makers of some other luxury.[407]There would be a temporary injury to individuals, but no permanent weakening of national resources. Hence we have his division of the population. The agriculturists, and those who make the 'second necessaries' (the cottages, ploughs, and so forth, required by the agriculturist), create the great wealth of the country. Besides these we have the 'disposable'population, which is employed in making luxuries for the landowners, and, finally, the 'redundant' or what he calls in his later book the 'excrescent' or 'superinduced' population,[408]which is really supported by foreign trade. Commerce, then, is merely 'the efflorescence of our agriculture.'[409]Were it annihilated this instant, we should still retain our whole disposable population. The effect of war is simply to find a different employment for this part of the nation. Napoleon, he says, is 'emptying our shops and filling our battalions.'[410]All the 'redundant' population might be supported by simply diminishing the number of our cart-horses.[411]Similarly, the destruction of the commerce of France 'created her armies.' It only transferred men from trade to war, and 'millions of artisans' were 'transformed into soldiers.'[412]Pitt was really strengthening when he supposed himself to be ruining his enemy. 'Excrescence' and 'efflorescence' are Chalmers's equivalent for the 'sterility' of the French economists. The backbone of all industry is agriculture, and the manufacturers simply employed by the landowner for such purposes as he pleases. Whether he uses them to make his luxuries or to fight his battles, the real resources of the nation remain untouched. The Ricardians insist upon the vital importance of 'capital.' The one economic end of the statesmen, as the capitalist class naturally thinks, should be to give every facility for its accumulation, and consequently for allowing it to distribute itself in the most efficient way. Chalmers, on the contrary, argues that wemay easily have too much capital. He was a firm believer in gluts. He admits that the extension of commerce was of great good at the end of the feudal period, but not as the 'efficient cause' of wealth, only as 'unlocking the capabilities of the soil.'[413]This change produced the illusion that commerce has a 'creative virtue,' whereas its absolute dependence upon agriculture is a truth of capital importance in political economy. More Malthusian than Malthus, Chalmers argues that the case of capital is strictly parallel to the case of population.[414]Money may be redundant as much as men, and the real causes of every economic calamity are the 'over-speculation of capitalists,' and the 'over-population of the community at large.'[415]In this question, however, Chalmers gets into difficulties, which show so hopeless a confusion between 'capital,' income, and money, that I need not attempt to unravel his meaning.[416]Anyhow, he is led to approve the French doctrine of the single tax. Ultimately, he thinks, all taxes fall upon rent.[417]Agriculture fills the great reservoir from which all the subsidiary channels are filled. Whether the stream be tapped at the source or further down makes no difference. Hence he infers that, as the landlords necessarily pay the taxes, they should pay them openly. By an odd coincidence, he would tax rents like Mill,though upon opposite grounds. He holds that the interest of the landowners is not opposed to, but identical with, the interest of all classes. Politically, as well as economically, they should be supreme. They are, 'naturally and properly, the lords of the ascendant,' and, as he oddly complains in the year of the Reform Bill, not 'sufficiently represented in parliament.'[418]A 'splendid aristocracy' is, he thinks, a necessary part of the social edifice;[419]the law of primogeniture is necessary to support them; and the division of land will cause the decay of France. The aristocracy are wanted to keep up a high standard of civilisation and promote philosophy, science, and art.[420]The British aristocracy in the reign of Georgeiv.scarcely realised this ideal, and would hardly have perceived that to place all the taxes upon their shoulders would be to give them a blessing in disguise. According to Chalmers, however, an established church represents an essential part of the upper classes, and is required to promote a high standard of life among the poor.[421]In connection with this, he writes a really forcible chapter criticising the economical distinction of productive and unproductive labour, and shows at least that the direct creation of material wealth is not a sufficient criterion of the utility of a class.

Chalmers's arguments are of interest mainly from their bearing upon his practical application of the Malthusian problem. His interest in the problem of pauperism had been stimulated by his residence in Glasgow, where from 1815 to 1823 he had been actively engaged in parochial duties. In 1819 he had set up an organised system ofcharity in a poor district, which both reduced the expenditure and improved the condition of the poor. The experiment, though dropped some years later, became famous, and in later years Chalmers successfully started a similar plan in Edinburgh. It was this experience which gave shape to his Malthusian theories. He was, that is, a Malthusian in the sense of believing that the great problem was essentially the problem of raising the self-respect and spirit of independence of the poor. The great evil which confronted him in Glasgow was the mischief connected with the growth of the factory system. He saw, as he thought, the development of wealth leading to the degradation of the labourer. The great social phenomenon was the tendency to degeneration, the gradual dissolution of an organism, and corruption destroying the vital forces. On the one hand, this spectacle led him, as it led others, to look back fondly to the good old times of homely food and primitive habits, to the peasantry as represented in Burns'sCotter's Saturday Nightor Scott'sHeart of Midlothian, when the poor man was part of a social, political, and ecclesiastical order, disciplined, trained, and self-respecting, not a loose waif and stray in a chaotic welter of separate atoms. These were the facts which really suggested his theory of the 'excrescent' population, produced by the over-speculation of capitalists. The paupers of Glasgow were 'excrescent,' and the 'gluts' were visible in the commercial crises which had thrown numbers of poor weavers out of employment and degraded them into permanent paupers. The facts were before his eyes, if the generalisation was hasty and crude. He held, on the other hand, that indiscriminate charity, and still more theestablishment by poor-laws of a legal right to support, was stimulating the evil. The poor-law had worked incalculable mischiefs in England,[422]and he struggled vigorously, though unavailingly, to resist its introduction into Scotland. Chalmers, however, did not accept the theory ascribed to the Utilitarians, that the remedy for the evils was simply to leave things alone. He gives his theory in an article upon the connection between the extension of the church and the extinction of pauperism. He defends Malthus against the 'execrations' of sentimentalism. Malthus, he thinks, would not suppress but change the direction of beneficence. A vast expenditure has only stimulated pauperism. The true course is not to diminish the rates but to make them 'flow into the wholesome channel of maintaining an extended system of moral and religious instruction.'[423]In other words, suppress workhouses but build schools and churches; organise charity and substitute a systematic individual inspection for reckless and indiscriminate almsgiving. Then you will get to the root of the mischief. The church, supported from the land, is to become the great civilising agent. Chalmers, accordingly, was an ardent advocate of a church establishment. He became the leader of the Free Church movement not as objecting to an establishment on principle, but because he thought that the actual legal fetters of the Scottish establishment made it impossible to carry out an effective reorganisation and therefore unable to discharge its true functions.

Here Chalmers's economical theories are crossed by various political and ecclesiastical questions with whichI am not concerned. His peculiarities as an economist bring out, I think, an important point. He shows how Malthus's views might be interpreted by a man who, instead of sharing, was entirely opposed to the ordinary capitalist prejudices. It would be idle to ask which was the more logical development of Malthus. When two systems are full of doubtful assumptions of fact and questionable logic and vague primary conceptions, that question becomes hardly intelligible. We can only note the various turns given to the argument by the preconceived prejudices of the disputants. By most of them the Malthusian view was interpreted as implying the capitalist as distinguished from the landowning point of view.

To Southey as to Chalmers the great evil of the day was the growth of the disorganised populace under the factory system. The difference is that while Chalmers enthusiastically adopted Malthus's theory as indicating the true remedy for the evil, Southey regards it with horror as declaring the evil to be irremediable. Chalmers, a shrewd Scot actively engaged in parochial work, had his attention fixed upon the reckless improvidence of the 'excrescent' population, and welcomed a doctrine which laid stress upon the necessity of raising the standard of prudence and morality. He recognised and pointed out with great force the inadequacy of such palliatives as emigration, home-colonisation, and so forth.[424]Southey, an ardent and impulsive man of letters, with no practical experience of the difficulties of social reform, has no patience for such inquiries. His remedy, in all cases, was a 'paternal government' vigorously regulatingsociety; and Malthus appears to him to be simply an opponent of all such action. Southey had begun the attack in 1803 by an article in theAnnual Review(edited by A. Aikin) for which the leading hints were given by Coleridge, then with Southey at Keswick.[425]In his letters and his later articles he never mentions Malthus without abhorrence.[426]Malthus, according to his article in theAnnual Review, regards 'vice' and 'misery' as desirable; thinks that the 'gratification of lust' is a 'physical necessity'; and attributes to the 'physical constitution of our nature' what should be ascribed to the 'existing system of society.' Malthus, that is, is a fatalist, a materialist, and an anarchist. His only remedy is to abolish the poor-rates, and starve the poor into celibacy. The folly and wickedness of the book have provoked him, he admits, to contemptuous indignation; and Malthus may be a good man personally. Still, the 'farthing candle' of Malthus's fame as a political philosopher must soon go out. So in theQuarterly ReviewSouthey attributes the social evils to the disintegrating effect of the manufacturing system, of which Adam Smith was the 'tedious and hard-hearted' prophet. The excellent Malthus indeed becomes the 'hard-hearted' almost as Hooker was the 'judicious.' This sufficiently represents the view of the sentimental Tory. Malthus, transformed into a monster, deserves the 'execrations' noticed by Chalmers. There is a thorough coincidence between this view and that of the sentimental Radicals. Southey observes that Malthus (as interpreted by him) does notreally answer Godwin. Malthus argues that 'perfectibility' gives an impossible end because equality would lead to vice and misery. But why should we not suppose with Godwin a change of character which would imply prudence and chastity? Men as they are may be incapable of equality because they have brutal passions. But men as they are to be may cease to be brutal and become capable of equality. This, indeed, represents a serious criticism. What Malthus was really concerned to prove was that the social state and the corresponding character suppose each other; and that real improvement supposes that the individual must somehow acquire the instincts appropriate to an improved state. The difference between him and his opponents was that he emphasised the mischief of legislation, such as that embodied in the poor-law, which contemplated a forcible change, destroying poverty without raising the poor man's character. Such a rise required a long and difficult elaboration, and he therefore dwells mainly upon the folly of the legislative, unsupported by the moral, remedy. To Godwin, on the other hand, who professed an unlimited faith in the power of reason, this difficulty was comparatively unimportant. Remove political inequalities and men will spontaneously become virtuous and prudent.

Godwin accordingly, when answering Dr. Parr and Mackintosh,[427]in 1801, welcomed Malthus's first version of the essay. He declares it to be as 'unquestionable an addition to the theory of political economy' as has been made by any writer for a century past; and 'admitsthe ratios to their full extent.'[428]In this philosophical spirit he proceeds to draw some rather startling conclusions. He hopes that, as mankind improves, such practices as infanticide will not be necessary; but he remarks that it would be happier for a child to perish in infancy than to spend seventy years in vice and misery.[429]He refers to the inhabitants of Ceylon as a precedent for encouraging other practices restrictive of population. In short, though he hopes that such measures may be needless, he does not shrink from admitting their possible necessity. So far, then, Godwin and Malthus might form an alliance. Equality might be the goal of both; and both might admit the necessity of change in character as well as in the political framework; only that Malthus would lay more stress upon the evil of legislative changes outrunning or independent of moral change. Here, however, arose the real offence. Malthus had insisted upon the necessity of self-help. He had ridiculed the pretensions of government to fix the rate of wages; and had shown how the poor-laws defeated their own objects. This was the really offensive ground to the political Radicals. They had been in the habit of tracing all evils to the selfishness and rapacity of the rulers; pensions, sinecures, public debts, huge armies, profligate luxuries of all kinds, were the fruits of bad government and the true causes of poverty. Kings and priests were the harpies who had settled upon mankind, and were ruining their happiness. Malthus, they thought, was insinuating a base apology for rulers when he attributed the evil to the character of the subjects instead of attributing it to thewickedness of their rulers. He was as bad as the old Tory, Johnson,[430]exclaiming:—

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