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The Preconceptions of Economic Science

Thorstein Veblen

The Quarterly Journal of Economics 13 (1899)

Part ne

!n an earlier paper(1") the #ie$ has been e%presse& that theeconomics han&e& &o$n by the 'reat $riters of a past 'enerationis substantially a ta%onomic science #ie$ of much the samepurport* so far as concerns the point here imme&iately in+uestion* is presente& in an a&mirably luci& an& co'ent $ay byProfessor ,lar- in a recent number of this .ournal(/") There isno $ish hereby to bur&en Professor ,lar- $ith a putati#esponsorship of any un'raceful or +uestionable 'eneralisationsreache& in $or-in' out$ar& from this main position* bute%pression may not be &enie& the comfort $hich his uninten&e&authentication of the main position affor&s !t is true*Professor ,lar- &oes not spea- of ta%onomy* but employs the term0statics0 $hich is this connection* throu'h its use by Professor ,lar- an& by other $riters eminent in the science* it is fairlyto be +uestione& $hether the term can le'itimately be use& tocharacterie the recei#e& economic theories The $or& is borro$e&from the .ar'on of physics* $here it is use& to &esi'nate thetheory of bo&ies at rest or of forces in e+uilibrium 2ut thereis much in the recei#e& economic theories to $hich the analo'y of bo&ies at rest or of forces in e+uilibrium $ill not apply !t isperhaps not too much to say that those articles of economictheory that &o not len& themsel#es to this analo'y ma-e up the

ma.or portion of the recei#e& &octrines So* for instance* itseems scarcely to the point to spea- of the statics of pro&uction* e%chan'e* consumption* circulation There are* no&oubt* appreciable elements in the theory of these se#eralprocesses that may fairly be characterie& as statical featuresof the theory but the &octrines han&e& &o$n are after all* inthe main* theories of the process &iscusse& un&er each hea&* an&the theory of a process &oes not belon' in statics The epithet0statical0 $oul&* for instance* ha#e to be $renche& some$hatun'ently to ma-e it apply to Quesnay4s classic Tableau Economi+ueor to the 'reat bo&y of Physiocratic speculations that ta-e their rise from it The li-e is true for 2oo-s !! an& !!! of &amSmith4s 5ealth of 6ations* as also for consi&erable portions'eneration* for much of 7arshall4s Principles* an& for such amo&ern &iscussion as Smart4s Stu&ies in Economics* as $ell as for the fruitful acti#ity of the ustrians an& of the later representati#es of the istorical School 2ut to return from this terminolo'ical &i'ression 5hileeconomic science in the remoter past of its history has beenmainly of a ta%onomic character* later $riters of all schoolssho$ somethin' of a &i#er'ence from the ta%onomic line an& aninclination to ma-e the science a 'enetic account of the economiclife process* sometimes e#en $ithout an ulterior #ie$ to theta%onomic #alue of the results obtaine& The &i#er'ence from theancient canons of theoretical formulation is to be ta-en as an

episo&e of the mo#ement that is 'oin' for$ar& in latter&ayscience 'enerally an& the pro'ressi#e chan'e $hich thus affectsthe i&eals an& the ob.ecti#e point of the mo&ern sciences seems

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min& $hich the prosy but e%actin' e%i'encies of life in a mo&ernin&ustrial community bree& in men e%pose& to their unmiti'ate&impact !n spea-in' of this matteroffact character of the mo&ernsciences it has been broa&ly characterie& as 0e#olutionary0 an&the e#olutionary metho& an& the e#olutionary i&eals ha#e beenplace& in antithesis to the ta%onomic metho&s an& i&eals of

pree#olutionary &ays 2ut the characteristic attitu&e* aims* an&i&eals $hich are so &esi'nate& here are by no means peculiar tothe 'roup of sciences that are professe&ly occupie& $ith aprocess of &e#elopment* ta-in' that term in its most $i&elyaccepte& meanin' The latter&ay inor'anic sciences are in thisrespect li-e the or'anic They occupy themsel#es $ith 0&ynamic0relations an& se+uences The +uestion $hich they as- is al$ays*5hat ta-es place ne%t* an& $hy: ;i#en a situation $rou'ht out outby the forces un&er in+uiry* $hat follo$s as the conse+uence of the situation so $rou'ht out: or $hat follo$s upon the accessionof further element of force: E#en in so none#olutionary ascience as inor'anic chemistry the in+uiry consistently runs on aprocess* an acti#e se+uence* an& the #alue of the resultin'

situation as a point of &eparture for the ne%t step in aninterminable cumulati#e se+uence The last step in the chemist4se%perimental in+uiry into any substance is* 5hat comes of thesubstance &etermine&: 5hat $ill it &o: 5hat $ill it lea& to* $henit is ma&e the point of &eparture in further chemical action:There is no ultimate term* an& no &efinite solution e%cept interms of further action The theory $or-e& out is al$ays a theoryof a 'enetic succession of phenomena* an& the relations&etermine& an& elaborate& into a bo&y of &octrine are al$ays'enetic relations !n mo&ern chemistry no co'nisance is ta-en of the honorific bearin' of reactions or molecular formulae Themo&ern chemist* as contraste& $ith this ancient con'ener* -no$s

nothin' of the $orth* ele'ance* or co'ency of the relations thatmay subsist bet$een the particles of matter $ith $hich he busieshimself* for any other than the 'enetic purpose The spiritualelement an& the elements of $orth an& propensity no lon'er count lchemic symbolism an& the hierarchical 'lamour an& #irtue thatonce he&'e& about the nobler an& more potent elements an&rea'ents are almost alto'ether a &eparte& 'lory of the scienceE#en the mo&est imputation of propensity in#ol#e& in theconstruction of a scheme of coerci#e normality* for the putati#e'ui&ance of reactions* fin&s little countenance $ith the later a&epts of chemical science The science has outli#e& that phaseof its &e#elopment at $hich the ta%onomic feature $as the&ominant one !n the mo&ern sciences* of $hich chemistry is one* there hasbeen a 'ra&ual shiftin' of the point of #ie$ from $hich thephenomena $hich the science treats of are apprehen&e& an& passe&upon an& to the historian of chemical science this shiftin' of the point of #ie$ must be a factor of 'reat $ei'ht in the&e#elopment of chemical -no$le&'e Somethin' of a li-e nature istrue for economic science an& it is the aim here to present* inoutline* some of the successi#e phases that ha#e passe& o#er thespiritual attitu&e of the a&epts of the science* an& to point outthe manner in $hich the transition from one point of #ie$ to thene%t has been ma&e

s has been su''este& in the paper alrea&y referre& to* thecharacteristic spiritual attitu&e or point of #ie$ of a 'i#en'eneration or 'roup of economists is sho$n not so much in their

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&efinite formulations the 'roun&s of their final #aluation of the facts han&le& for purpose of theory This line of recon&itein+uiry into the spiritual past an& antece&ents of the sciencehas not often been pursue& seriously or $ith sin'leness of purpose* perhaps because it is* after all* of but sli'htconse+uence to the practical efficiency of the present&ayscience Still* not a little substantial $or- has been &one

to$ar&s this en& by such $riters as asbach* nc-en* 2onar*,annan* an& 7arshall n& much that is to the purpose is also &ueto $riters outsi&e of economics* for the aims of economicspeculation ha#e ne#er been insulate& from the $or- 'oin' for$ar&in other lines of in+uiry s $oul& necessarily be the case* thepoint of #ie$ of the enli'htene& common sense of their time Thespiritual attitu&e of a 'i#en 'eneration of economists istherefore in 'oo& part a special out'ro$th of the i&eals an&preconceptions current in the $orl& about them So* for instance* it is +uite the con#entional thin' to saythat the speculations of the Physiocrats $ere &ominate& an&shape& by the preconception of 6atural <i'hts ccount has beenta-en of the effect of naturalri'hts preconceptions upon the

Physiocratic schemes of policy an& economic reform* as $ell asupon the &etails of their &octrines(3") 2ut little has been sai&of the si'nificance of these preconceptions for the lo$er coursesof the Physiocrats4 theoretical structure n& yet that habit of min& to $hich the naturalri'hts #ie$ is $holesome an& a&e+uateis ans$erable both for the point of &eparture an& for theob.ecti#e point of the Physiocratic theories* both for the ran'eof facts to $hich they turne& an& for the terms in $hich they$ere content to formulate their -no$le&'e of the facts $hich theyhan&le& The failure of their critics to place themsel#es at thePhysiocratic point of #ie$ has le& to much &estructi#e criticismof their $or- $hereas* $hen seen throu'h Physiocratic eyes* such

&octrines as those of the net pro&uct an& of the barrenness of the artisan class appear to be substantially true The speculations of the Physiocrats are commonly accounte&the first articulate an& comprehensi#e presentation of economictheory that is in line $ith later theoretical $or- ThePhysiocratic point of #ie$ may* therefore* $ell be ta-en as thepoint of &eparture in an attempt to trace that shiftin' of aimsan& norms of proce&ure that comes into #ie$ in the $or- of later economists $hen compare& $ith earlier $riters Physiocratic economics is a theory of the $or-in'out of the=a$ of 6ature (loi naturelle) in its economic bearin'* an& this=a$ of 6ature is a #ery simple matter

=es lois naturelles sont on physi+ues ou morales n enten& ici* par loi physi+ue* le cours re'ie &e toute#enement physi+ue &e l4or&re naturel* e#i&emment le plusa#ata'eu% au 'enre humain n enten& ici* par loi morale* the re'le &e toute actionhumaine &e l4or&re morale* conforme a l4or&re physi+ue e#i&emmentle plus a&#anta'eu% au 'enre humain ,es lois forment ensemble ce +u4on appelle la loi naturelleTous les hommes et toutes les puissances humaines &oi#ent etresoumis a ces lois sou#eraines* instituees par l4EtreSupreme>elles sont immuables et irrefra'ables* et les meilleures loispossible(?")

The settle& course of material facts ten&in' beneficently tothe hi'hest $elfare of the human race* this is the final term

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substantiality ,onformity to these 0immutable an& unerrin'0 la$sof nature is the test of economic truth The la$s are immutablean& unerrin'* but that &oes not mean that they rule the course of e#ents $ith a blin& fatality that a&mits of no e%ception an& no&i#er'ence from the &irect line uman nature may* throu'hinfirmity or per#ersity* $illfully brea- o#er the beneficenttren& of the la$s of nature but to the Physiocrat4s sense of the

matter the la$s are none the less immutable an& irrefra'able onthat account They are not empirical 'eneralisations on thecourse of phenomena* li-e the la$ of fallin' bo&ies or of thean'le of reflection althou'h many of the &etails of their actionare to be &etermine& only by obser#ation an& e%perience* helpe&out* of course* by interpretation of the facts of obser#ationun&er the li'ht of reason So* for instance* Tur'ot* in his<eflections* empirically $or-s out a &octrine of the reasonablecourse of &e#elopment throu'h $hich $ealth is accumulate& an&reaches the e%istin' state of une+ual &istribution so also his&octrines of interest an& of money The immutable natural la$sare rather of the nature of canons of con&uct 'o#ernin' naturethan 'eneralisations of mechanical se+uence* althou'h in a

'eneral $ay the phenomena of mechanical se+uence are &etails of the con&uct of nature $or-in' accor&in' to these canons of con&uct The 'reat la$ of the or&er of nature is of the character of a propensity $or-in' to an en&* to the accomplishment of apurpose The processes of nature $or-in' un&er the+uasispiritual stress of this immanent propensity may becharacterise& as nature4s habits of life 6ot that nature isconscious of its tra#ail* an& -no$s an& &esires the $orthy en& of its en&ea#ors but for all that there is a +uasispiritual ne%usbet$een antece&ent an& conse+uent in the scheme of operation in$hich nature is en'a'e& 6ature is not uneasy about interruptionsof its course or occasional &eflections from the &irect line

throu'h an unto$ar& con.unction of mechanical causes* nor &oesthe #ali&ity of the 'reat o#errulin' la$ suffer throu'h such anepiso&e The intro&uction of a mere mechanically effecti#e causalfactor cannot th$art the course of 6ature from reachin' the 'oalto $hich she animistically ten&s 6othin' can th$art thistelolo'ical propensity of nature e%cept counteracti#ity or &i#er'ent acti#ity of a similarly teleolo'ical -in& 7en canbrea- o#er the la$* an& ha#e shortsi'htly an& $illfully &one sofor men are also a'ents $ho 'ui&e their actions by an en& to beachie#e& uman con&uct is acti#ity of the same -in& on thesame plane of spiritual reality or competency as the course of 6ature* an& it may therefore tra#erse the latter The reme&y for this shortsi'hte& traffic of mis'ui&e& human nature isenli'htenment* 0instruction publi+ue et pri#ee &es lois &el4or&re naturel0(@") The nature in terms of $hich all -no$le&'e of phenomena for the present purpose economic phenomena is to be finallysynthesise& is* therefore* substantially of a +uasispiritual or animistic character The la$s of nature are in the last resortteleolo'ical they are of the nature of a propensity Thesubstantial fact in all the se+uences of nature is the en& to$hich the se+uence naturally ten&s* not the brute fact of mechanical compulsion or causally effecti#e forces Economictheory is accor&in'ly the theory (1) of ho$ the efficient causesof the or&re naturel $or- in an or&erly unfol&in' se+uence*

'ui&e& by the un&erlyin' natural la$ the propensity immanentin nature to establish the hi'hest $ellbein' of man-in&* an& (/)of the con&itions impose& upon human con&uct by these natural

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$elfare The con&itions so impose& on human con&uct are as&efiniti#e as the la$s an& the or&er by force of $hich they areimpose& an& the theoretical conclusions reache&* $hen these la$san& this or&er are -no$n* are therefore e%pressions of absoluteeconomic truth Such conclusions are an e%pression of reality*but not necessarily of fact 6o$* the ob.ecti#e en& of this propensity that &etermines the

course of nature is human $ellbein' 2ut economic speculationhas to &o $ith the $or-in's of nature only so far as re'ar&s theor&re physi+ue n& the la$s of nature in the or&re physi+ue*$or-in' throu'h mechanical se+uence* can only $or- out thephysical $ellbein' of man* not necessarily the spiritual Thispropensity to the physical $ellbein' of man is therefore the la$of nature to $hich economic science must brin' its'eneralisations* an& this la$ of physical beneficence is thesubstantial 'roun& of economic truth 5antin' this* all our speculations are #ain but ha#in' its authentication they are&efiniti#e The 'reat* typical function* to $hich all the other functionin' of nature is inci&ental if not subsi&iary* isaccor&in'ly that of the alimenation* nutrition of man-in& !n so

far* an& only in so far as the physical processes contribute tohuman sustenance an& fullness of life* can they* therefore*further the 'reat $or- of nature 5hate#er processes contributeto human sustenance by a&&in' to the material a#ailable for humanassimilation an& nutrition* by increasin' the substantial&isposable for human comfort* therefore count to$ar&s thesubstantial en& ll other processes* ho$e#er ser#iceable inother than this physiolo'ical respect* lac- the substance of economic reality ccor&in'ly* human in&ustry is pro&ucti#e*economically spea-in'* if it hei'htens the effecti#eness of thenatural processes out of $hich the material of human sustenanceemer'es other$ise not The test of pro&ucti#ity* or economic

reality in material facts* is the increase of nutriti#e material5hate#er employment of time or effort &oes not affor& an increaseof such material is unpro&ucti#e* ho$e#er profitable it may be tothe person employe&* an& ho$e#er useful or in&ispensable it maybe to the community The type of such pro&ucti#e in&ustry is thehusban&man4s employment* $hich yiel&s a substantial (nutriti#e)'ain The artisan4s $or- may be useful to the community an&profitable to himself* but its economic effect &oes not e%ten&beyon& an alteration of the form in $hich the material affor&e&by nature alrea&y lies at han& !t is formally pro&ucti#e only*not really pro&ucti#e !t bears no part in the creati#e or 'enerati#e $or- of nature an& therefore it lac-s the character of economic substantiality !t &oes not enhance nature4s outputof #ital force The artisan4s labors* therefore* yiel& no netpro&uct* $hereas the husban&man4s labors &o 5hate#er constitutes a material increment of this output of #ital force is $ealth* an& nothin' else is The theory of #aluecontaine& in this position has not to &o $ith #alue accor&in' tomen4s appraisement of the #aluable article ;i#en items of $ealthmay ha#e assi'ne& to them certain relati#e #alues at $hich theye%chan'e* an& these con#entional #alues may &iffer more or less$i&ely from the natural or intrinsic #alue of the 'oo&s in+uestion but all that is besi&e the substantial point The pointin +uestion is not the &e'ree of pre&ilection sho$n by certainin&i#i&uals or bo&ies of men for certain 'oo&s That is a matter

of caprice an& con#ention* an& it &oes not &irectly touch thesubstantial 'roun& of the economic life The +uestion of #alue isa +uestion of the e%tent to $hich the 'i#en item of $ealth

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intrinsically an& really* in so far as it a#ails the 'reat $or-$hich nature has in han& 6ature* then* is the final term in the Physiocraticspeculations 6ature $or-s by impulse an& in an unfol&in'process* un&er the stress of a propensity to the accomplishmentof a 'i#en en& The propensity* ta-en as the final cause that isoperati#e in any situation* furnishes the basis on $hich to

coor&inate all our -no$le&'e of those efficient causes throu'h$hich 6ature $or-s to her en&s Aor the purpose of economictheory proper* this is the ultimate 'roun& of reality to $hichour +uest of economic truth must penetrate 2ut bac- of 6aturean& her $or-s there is* in the Physiocratic scheme of theuni#erse*the ,reator* by $hose all$ise an& bene#olent po$er theor&er of nature has been establishe& in all the stren'th an&beauty of its in#iolate an& immutable perfection 2ut thePhysiocratic conception of the ,reator is essentially a &eisticone> he stan&s apart from the course of nature $hich he hasestablishe&* an& -eeps his han&s off !n the last resort* of course* 0Bieu seul est pro&ucteur =es hommes tra#aillent*receuillent* economisent* conser#ent mais economiser n4est par

pro&uire0(C") 2ut this last resort &oes not brin' the ,reator into economic theory as a fact to be counte& $ith in formulatin'economic la$s e ser#es a homiletical purpose in thePhysiocratic speculations rather than fills an office essentialto the theory e comes $ithin the pur#ie$ of the theory by $ayof authentication rather than as a sub.ect of in+uiry or a termin the formulation of economic -no$le&'e The Physiocratic ;o&can scarcely be sai& to be an economic fact* but it is other$ise$ith that 6ature $hose $ays an& means constitute thesub.ectmatter of the Physiocratic in+uiry 5hen this natural system of the Physiocratic speculation isloo-e& at from the si&e of the psycholo'y of the in#esti'ators*

or from that of the lo'ical premises employe&* it is imme&iatelyreco'nise& as essentially animistic !t runs consistently onanimistic 'roun& but it is animism of a hi'h 'ra&e* hi'hlyinte'rate& an& enli'htene&* but* after all* retainin' #ery muchof that primiti#e force an& nai#ete $hich characterise theanimistic e%planations of phenomena in #o'ue amon' the untrouble&barbarians !t is not the &is.ecte& animism of the #ul'ar* $hosee a $illful propensity often a $illful per#ersity in'i#en ob.ects or situations to $or- to$ar&s a 'i#en outcome* 'oo&or ba& !t is not the 'ambler4s haphaar& sense of fortuitousnecessity or the house$ife4s belief in luc-y &ays* numbers or phases of the moon The Physiocrat4s animism rests on a broa&er outloo-* an& &oes not procee& by such an imme&iately impulsi#eimputation of propensity The teleolo'ical element the elementof propensity is concei#e& in a lar'e $ay* unifie& an&harmonise&* as a comprehensi#e or&er of nature as a $hole 2ut it#in&icates its stan&in' as a true animism by ne#er becomin'fatalistic an& ne#er bein' confuse& or confoun&e& $ith these+uence of cause an& effect !t has reache& the last sta'e of inte'ration an& &efinition* beyon& $hich the $ay lies &o$n$ar&from the hi'h* +uasispiritual 'roun& of animism to the tamer le#els of normality an& causal uniformities There is alrea&y &iscernible a tone of &ispassionate an&colorless 0ten&ency0 about the Physiocratic animism* such as tosu''est a $a#erin' to$ar&s the si&e of normality This is

especially #isible in such $riters as the halfprotestant Tur'ot!n his &iscussion of the &e#elopment of farmin'* for instance*Tur'ot spea-s almost entirely of human moti#es an& the material

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metaphysics in it* an& that little &oes not e%press the la$ of nature in an a&e+uate form 2ut* after all has been sai&* itremains true that the Physiocrat4s sense of substantiality is notsatisfie& until he reaches the animistic 'roun& an& it remainstrue also that the ar'uments of their opponents ma&e littleimpression on the Physiocrats so lon' as they $ere &irecte& toother than this animistic 'roun& of their &octrine This is true

in 'reat measure e#en of Tur'ot* as $itness his contro#ersy $ithume 5hate#er criticism is &irecte& a'ainst them on other 'roun&s is met $ith impatience* as bein' inconse+uential* if not&isin'enuous(D") To an historian of economic theory the source an& the line of &eri#ation $hereby this precise form of the or&erofnaturepreconception reache& the Physiocrats are of firstrateimportance but it is scarcely a +uestion to be ta-en up here* in part because it is too lar'e a +uestion to be han&le& here* inpart because it has met $ith a&e+uate treatment at more competenthan&s*(8") an& in part because it is some$hat besi&e theimme&iate point un&er &iscussion This point is the lo'ical* or perhaps better the psycholo'ical* #alue of the Physiocrats4

preconception* as a factor in shapin' their point of #ie$ an& theterms of their &efiniti#e formulation of economic -no$le&'e Aor this purpose it may be sufficient to point out that thepreconception in +uestion belon's to the 'eneration in $hich thePhysiocrats li#e&* an& that it is the 'ui&in' norm of all seriousthou'ht that foun& rea&y assimilation into the commonsense #ie$sof that time !t is the characteristic an& controllin' feature of $hat may be calle& the commonsense metaphysics of the ei'hteenthcentury* especially so far as concerns the enli'htene& Arenchcommunity !t is to be note& as a point bearin' more imme&iately on the+uestion in han& that this imputation of final causes to the

course of phenomena e%presses a spiritual attitu&e $hich haspre#aile&* one mi'ht almost say* al$ays an& e#ery$here* but $hichreache& its finest* most effecti#e &e#elopment* an& foun& itsmost finishe& e%pression* in the ei'hteenthcentury metaphysics!t is nothin' recon&ite for it meets us at e#ery turn* as amatter of course* in the #ul'ar thin-in' of to&ay* in thepulpit an& in the mar-et place* althou'h it is not so in'enuous*nor &oes it so un+uestione&ly hol& the primacy in the thin-in' of any class to&ay as it once &i& !t meets us li-e$ise* $ith butlittle chan'e of features* at all past sta'es of culture* late or early !n&ee&* it is the most 'eneric feature of human thin-in'*so far as re'ar&s a theoretical or speculati#e formulation of -no$le&'e ccor&in'ly* it seems scarcely necessary to trace thelinea'e of this characteristic preconception of the era of enli'htenment* throu'h specific channels* bac- to the ancientphilosophers or .urists of the empire Some of the specific formsof its e%pression as* for instance* the &octrine of 6atural<i'hts are no &oubt traceable throu'h me&ie#al channels to theteachin's of the ancients but there is no nee& of 'oin' o#er thebroo- for $ater* an& tracin' bac- to specific teachin's the mainfeatures of that habit of min& or spiritual attitu&e of $hich the&octrines of 6atural <i'hts an& the r&er of 6ature are specificelaborations only This &ominant habit of min& came to the'eneration of the Physiocrats on the broa& 'roun& of 'roupinheritance* not by lineal &e#olution from any one of the 'reat

thin-ers of past a'es $ho ha& thro$n its &eli#erances into asimilarly competent form for the use of his o$n 'eneration

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sphere of Physiocratic influence for 2ritish 'roun&* $e are metby the fi'ure of ume ere* also* it $ill be impracticable to 'ointo &etails as to the remoter line of &eri#ation of the specificpoint of #ie$ that $e come upon on ma-in' the transition* for reasons similar to those alrea&y 'i#en as e%cuse for passin' o#er the similar +uestion $ith re'ar& to the Physiocratic point of #ie$ ume is* of course* not primarily an economist but that

placi& unbelie#er is none the less a lar'e item in any in#entoryof ei'hteenthcentury economic thou'ht ume $as not 'ifte& $itha facile acceptance of the 'roup inheritance that ma&e the habitof min& of his 'eneration !n&ee&* he $as 'ifte& $ith an alert*thou'h some$hat histrionic* s-epticism touchin' e#erythin' that$as $ell recei#e& !t is his office to pro#e all thin's* thou'hnot necessarily to hol& fast that $hich is 'oo& si&e from the strain of affectation &iscernible in ume4ss-epticism* he may be ta-en as an accentuate& e%pression of thatcharacteristic bent $hich &istin'uishes 2ritish thin-in' in histime from the thin-in' of the ,ontinent* an& more particularly of the Arench There is in ume* an& in the 2ritish community* aninsistence on the prosy* not to say the seamy* si&e of human

affairs e is not content $ith formulatin' his -no$le&'e of thin's in terms of $hat ou'ht to be or in terms of the ob.ecti#epoint of the course of thin's e is not e#en content $ith a&&in'to the teleolo'ical account of phenomena a chain of empirical*narrati#e 'eneralisations as to the usual course of thin's einsists* in season an& out of season* on an e%hibition of theefficient causes en'a'e& in any se+uence of phenomena an& he iss-eptical irre#erently s-eptical as to the nee& or the use of any formulation of -no$le&'e that outruns the reach of his o$nmatteroffact* stepbystep ar'ument from cause to effect !n short* he is too mo&ern to be $holly intelli'ible to thoseof his contemporaries $ho are most neatly abreast of their time

e out2ritishes the 2ritish an&* in his footsore +uest for aperfectly tame e%planation of thin's* he fin&s little comfort*an& in&ee& scant courtesy* at the han&s of his o$n 'eneration eis not in sufficiently nai#e accor& $ith the ran'e of preconceptions then in #o'ue 2ut* $hile ume may be an accentuate& e%pression of anational characteristic* he is not therefore an untrue e%pressionof this phase of 2ritish ei'hteenthcentury thin-in' Thepeculiarity of point of #ie$ an& of metho& for $hich he stan&shas sometimes been calle& the critical attitu&e* sometimes thein&ucti#e metho&* sometimes the materialistic or mechanical* an&a'ain* thou'h less aptly* the historical metho& !tscharacteristic is an insistence on matter of fact This matteroffact animus that meets any historian of economic &octrine on his intro&uction to 2ritish economics is alar'e* but not the lar'est feature of the 2ritish scheme of early economic thou'ht !t stri-es the attention because itstan&s in contrast $ith the relati#e absence of this feature inthe contemporary speculations of the ,ontinent The most potent*most formati#e habit of thou'ht concerne& in the early&e#elopment of economic teachin' on 2ritish 'roun& is best seenin the broa&er 'eneralisations of &am Smith* an& this morepotent factor in Smith is a bent that is substantially i&entical$ith that $hich 'i#es consistency to the speculations of thePhysiocrats !n &am Smith the t$o are happily combine&* not to

say blen&e& but the animistic habit still hol&s the primacy*$ith the matteroffact as a subsi&iary thou'h po$erful factore is sai& to ha#e combine& &e&uction $ith in&uction The

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&i#er'ence of 2ritish from Arench economics* not the line of coinci&ence an& on this account it may not be out of place toloo- more narro$ly into the circumstances to $hich the emer'enceof this relati#ely 'reater penchant for a matteroffacte%planation of thin's in the 2ritish community is &ue To e%plain the characteristic animus for $hich ume stan&s*on 'roun&s that mi'ht appeal to ume* $e shoul& ha#e to in+uire

into the peculiar circumstances ultimately materialcircumstances that ha#e 'one to shape the habitual #ie$ of thin's $ithin the 2ritish community* an& that so ha#e acte& to&ifferentiate the 2ritish preconceptions from the Arench* or fromthe 'eneral ran'e of preconceptions pre#alent on the ,ontinentThese peculiar formati#e circumstances are no &oubt to somee%tent racial peculiarities but the racial comple%ion of the2ritish community is not $i&ely &ifferent from the Arench* an&especially not $i&ely &ifferent from certain other ,ontinentalcommunities $hich are for the present purpose rou'hly classe&$ith the Arench <ace &ifference can therefore not $holly* nor in&ee& for the 'reater part* account for the cultural &ifferenceof $hich this &ifference in preconceptions is an outcome Throu'h

its cumulati#e effect on institutions the race &ifference must behel& to ha#e ha& a consi&erable effect on the habit of min& of the community but* if the race &ifference is in this $ay ta-enas the remoter 'roun& of an institutional peculiarity* $hich inits turn has shape& pre#alent habits of thou'ht* then theattention may be &irecte& to the pro%imate causes* the concretecircumstances* throu'h $hich this race &ifference has acte&* incon.unction $ith other ulterior circumstances* to $or- out thepsycholo'ical phenomena obser#e& <ace &ifferences* it may beremar-e&* &o not so nearly coinci&e $ith national lines of &emarcation as &ifferences in the point of #ie$ from $hich thin'sare habitually apprehen&e& or &ifferences in the stan&ar&s

accor&in' to $hich facts are rate& !f the element of race &ifference be not allo$e& &efiniti#e$ei'ht in &iscussin' national peculiarities that un&erlie the&eli#erances of common sense* neither can these nationalpeculiarities be confi&ently trace& to a national &ifference inthe transmitte& learnin' that enters into the commonsense #ie$of thin's So far as concerns the concrete facts embo&ie& in thelearnin' of the #arious nations $ithin the European culture*these nations ma-e up but a sin'le community 5hat &i#er'ence is#isible &oes not touch the character of the positi#e information$ith $hich the learnin' of the #arious nations is occupie&Bi#er'ence is #isible in the hi'her syntheses* the metho&s of han&lin' the material of -no$le&'e* the basis of #aluation of thefacts ta-en up* rather than in the material of -no$le&'e 2utthis &i#er'ence must be set &o$n to a cultural &ifference* a&ifference of point of #ie$* not to a &ifference in inherite&information 5hen a 'i#en bo&y of information passes the nationalfrontiers it ac+uires a ne$ comple%ion* a ne$ national* culturalphysio'nomy !t is this cultural physio'nomy of learnin' that ishere un&er in+uiry* an& a comparison of early Arench economics(the Physiocrats) $ith early 2ritish economics (&am Smith) ishere entere& upon merely $ith a #ie$ to ma-in' out $hatsi'nificance this cultural physio'nomy of the science has for thepast pro'ress of economic speculation The broa& features of economic speculation as it stoo& at

the perio& un&er consi&eration* may be briefly summe& up*&isre'ar&in' the element of policy* or e%pe&iency* $hich iscommon to both 'roups of economists* an& atten&in' to their

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there are t$o main points of #ie$ from $hich economic phenomenaare treate&> (a) the matteroffact point of #ie$ or preconception* $hich yiel&s a &iscussion of causal se+uences an&correlations an& (b) $hat* for $ant of a more e%pressi#e $or&*is here calle& the animistic point of #ie$ or preconception*$hich yiel&s a &iscussion of teleolo'ical se+uences an&correlations* a &iscussion of the function of this an& that

0or'an*0 of the le'itimacy of this or the other ran'e of factsThe former preconception is allo$e& a lar'er scope in the 2ritishthan in the Arench economics> there is more of 0in&uction0 in the2ritish The latter preconception is present in both* an& is the&efiniti#e element in both but the animistic element is morecolorless in the 2ritish* it is less constantly in e#i&ence* an&less able to stan& alone $ithout the support of ar'uments fromcause to effect Still* the animistic element is the controllin'factor in the hi'her syntheses of both an& for both ali-e itaffor&s the &efiniti#e 'roun& on $hich the ar'ument finally comesto rest !n neither 'roup of thin-ers is the sense of substantiality appease& until this +uasispiritual 'roun& 'i#enby the natural propensity of the course of e#ents* is reache&

2ut the propensity in e#ents* the natural or normal course of thin's* as appeale& to by the 2ritish speculators* su''ests lessof an imputation of $illpo$er* or personal force* to thepropensity in +uestion !t may be a&&e&* as has alrea&y been sai&in another place* that the tacit imputation of $illpo$er or spiritual consistency to the natural or normal course of e#entshas pro'ressi#ely $ea-ene& in the later course of economicspeculation* so that in this respect* the 2ritish economists of the ei'hteenth century may be sai& to represent a later phase of economic in+uiry than the Physiocrats

nfortunately* but una#oi&ably* if this +uestion as to the

cultural shiftin' of the point of #ie$ in economic science ista-en up from the si&e of the causes to $hich the shiftin' istraceable* it $ill ta-e the &iscussion bac- to 'roun& on $hich aneconomist must at best feel himself to be but a ra$ layman* $ithall a layman4s limitations an& ineptitu&e* an& $ith the certaintyof &oin' ba&ly $hat mi'ht be &one $ell by more competent han&s2ut* $ith a reliance on charity $here charity is most nee&e&* itis necessary to recite summarily $hat seems to be thepsycholo'ical bearin' of certain cultural facts cursory ac+uaintance $ith any of the more archaic phases of human culture enforces the reco'nition of this fact* that thehabit of construin' the phenomena of the inanimate $orl& inanimistic terms pre#ails pretty much uni#ersally on these lo$er le#els !nanimate phenomena are apprehen&e& to $or- out apropensity to an en& the mo#ements of the elements are construe&in terms of +uasipersonal force So much is $ell authenticate&by the obser#ations on $hich anthropolo'ists an& ethnolo'ists&ra$ for their materials This animistic habit it may be sai&*seems to be more effectual an& farreachin' amon' those primiti#ecommunities that lea& a pre&atory life 2ut alon' $ith this feature of archaic metho&s of thou'ht or of -no$le&'e* the pictures+ueness of $hich has &ra$n theattention of all obser#ers* there 'oes a secon& feature* no lessimportant for the purpose in han&* thou'h less obtrusi#e Thelatter is of less interest to the men $ho ha#e to &o $ith the

theory of cultural &e#elopment* because it is a matter of courseThis secon& feature of archaic thou'ht is the habit of alsoapprehen&in' facts in nonanimistic* or impersonal* terms The

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facts in the case There is al$ays a substratum of matter of fact* $hich is the outcome of an habitual imputation of causalse+uence* or* perhaps better* an imputation of mechanicalcontinuity* if a ne$ term be permitte& The a'ent* thin'* fact*e#ent or phenomenon* to $hich propensity* $illpo$er* or purpose* is impute&* is al$ays apprehen&e& to act in anen#ironment $hich is accepte& as spiritually inert There are

al$ays opa+ue facts as $ell as self&irectin' a'ents ny a'entacts throu'h means $hich len& themsel#es to his use on other 'roun&s than that of spiritual compulsion* althou'h spiritualcompulsion may be a lar'e feature in any 'i#en case The same features of human thin-in'* the same t$ocomplementary metho&s of correlatin' facts an& han&lin' them for the purposes of -no$le&'e* are similarly in constant e#i&ence inthe &aily life of men in our o$n community The +uestion is* in'reat part* $hich of the t$o bears the 'reater part in shapin'human -no$le&'e at any 'i#en time an& $ithin any 'i#en ran'e of -no$le&'e or of facts ther features of the 'ro$th of -no$le&'e* $hich are remoter from the point un&er in+uiry* may be of no less conse+uence to a

comprehensi#e theory of the &e#elopment of culture an& of thou'ht but it is of course out of the +uestion here to 'ofarther afiel& The present in+uiry $ill ha#e enou'h to &o $iththese t$o 6o other features are correlati#e $ith these* an&these merit &iscussion on account of their intimate bearin' onthe point of #ie$ of economics The point of interest $ithrespect to these t$o correlati#e an& complementary habits of thou'ht is the +uestion of ho$ they ha#e fare& un&er the chan'in'e%i'encies of human culture in $hat manner they come* un&er 'i#en cultural circumstances* to share the fiel& of -no$le&'ebet$een them $hat is the relati#e part of each in the compositepoint of #ie$ in $hich the t$o habits of thou'ht e%press

themsel#es at any 'i#en cultural sta'e The animistic preconception enforces the apprehension of phenomena in terms 'enerically i&entical $ith the terms of personality or in&i#i&uality s a certain mo&ern 'roup of psycholo'ists $oul& say* it imputes to ob.ects an& se+uences anelement of habit an& attention similar in -in&* thou'h notnecessarily in &e'ree* to the li-e spiritual attitu&e present inthe acti#ities of a personal a'ent The matteroffactpreconception* on the other han&* enforces a han&lin' of facts$ithout imputation of personal force or attention* but $ith animputation of mechanical continuity* substantially thepreconception $hich has reache& a formulation at the han&s of scientists un&er the name of conser#ation of ener'y or persistence of +uantity Some appreciable resort to the latter metho& of -no$le&'e is una#oi&able at any cultural sta'e* for itis in&ispensable to all in&ustrial efficiency ll technolo'icalprocesses an& all mechanical contri#ances rest* psycholo'icallyspea-in'* on this 'roun& This habit of thou'ht is a selecti#elynecessary conse+uence of in&ustrial life* an&* in&ee&* of allhuman e%perience in ma-in' use of the material means of life !tshoul& therefore follo$ that* in a 'eneral $ay* the hi'her theculture* the 'reater the share of the mechanical preconception inshapin' human thou'ht an& -no$le&'e* since* in a 'eneral $ay* thesta'e of culture attaine& &epen&s on the efficiency of in&ustryThe rule* $hile it &oes not hol& $ith anythin' li-e e%treme

'enerality* must be a&mitte& to hol& to a 'oo& e%tent an& tothat e%tent it shoul& hol& also that* by a selecti#e a&aptationof men4s habits of thou'ht to the e%i'encies of those cultural

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-no$le&'e shoul& ha#e 'aine& in scope an& ran'e Somethin' of thesort is borne out by obser#ation further consi&eration enforces the li-e #ie$ s thecommunity increases in sie* the ran'e of obser#ation of thein&i#i&uals in the community also increases an& continually$i&er an& more farreachin' se+uences of a mechanical -in& ha#eto be ta-en account of 7en ha#e to a&apt their o$n moti#es to

in&ustrial processes that are not safely to be construe& in termsof propensity* pre&ilection* or passion =ife in an a&#ance&in&ustrial community &oes not tolerate a ne'lect of mechanicalfact for the mechanical se+uences throu'h $hich men* at anappreciable &e'ree of culture* $or- out their li#elihoo&* are norespecters of persons or of $illpo$er Still* on all but thehi'her in&ustrial sta'es* the coerci#e &iscipline of in&ustriallife* an& of the scheme of life that inculcates re'ar& for themechanical facts of in&ustry* is 'reatly miti'ate& by the lar'elyhaphaar& character of in&ustry* an& by the 'reat e%tent to $hichman continues to be the prime mo#er in in&ustry So lon' asin&ustrial efficiency is chiefly a matter of the han&icraftsman4ss-ill* &e%terity* an& &ili'ence* the attention of men in loo-in'

to the in&ustrial process is met by the fi'ure of the $or-man* asthe chief an& characteristic factor an& thereby it comes to runon the personal element in in&ustry 2ut* $ith or $ithout miti'ation* the scheme of life $hich menperforce a&opt un&er e%i'encies of an a&#ance& in&ustrialsituation shapes their habits of thou'ht on the si&e of their beha#ior* an& thereby shapes their habits of thou'ht to somee%tent for all purposes Each in&i#i&ual is but a sin'le comple%of habits of thou'ht* an& the same psychical mechanism thate%presses itself in one &irection as con&uct e%presses itself inanother &irection as -no$le&'e The habits of thou'ht forme& inthe one connection* in response to stimuli that call for a

response in terms of con&uct* must* therefore* ha#e their effect$hen the same in&i#i&ual comes to respon& to stimuli that callfor a response in terms of -no$le&'e The scheme of thou'ht or of -no$le&'e is in 'oo& part a re#erberation of the scheme of lifeSo that* after all has been sai&* it remains true that $ith the'ro$th of in&ustrial or'aniation an& efficiency there must* byselection an& by a&aptation* super#ene a 'reater resort to themechanical or &ispassionate metho& of apprehen&in' facts 2ut the in&ustrial si&e of life is not the $hole of it* nor &oes the scheme of life in #o'ue in any community or at anycultural sta'e comprise in&ustrial con&uct alone The social*ci#ic* military* an& reli'ious interests come in for their shareof attention* an& bet$een them they commonly ta-e up by far thelar'er share of it Especially is this true so far as concernsthose classes amon' $hom $e commonly loo- for a culti#ation of -no$le&'e for -no$le&'e4s sa-e The &iscipline $hich thesese#eral interests e%ert &oes not commonly coinci&e $ith thetrainin' 'i#en by in&ustry So the reli'ious interest* $ith itscanons of truth an& of ri'ht li#in'* runs e%clusi#ely on personalrelations an& the a&aptation of con&uct to the pre&ilections of asuperior personal a'ent The $ei'ht of its &iscipline* therefore*falls $holly on the animistic si&e !t acts to hei'hten our appreciation of the spiritual bearin' of phenomena an& to&iscountenance a matteroffact apprehension of thin's Thes-eptic of the type of ume has ne#er been in 'oo& repute $ith

those $ho stan& closest to the accepte& reli'ious truths Thebearin' of this si&e of our culture upon the &e#elopment of economics is sho$n by $hat the me&iae#al scholars ha& to say on

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The &isciplinary effects of other phases of life* outsi&e of the in&ustrial an& the reli'ious* is not so simple a matter butthe &iscussion here approaches nearer to the point of imme&iatein+uiry* namely* the cultural situation in the ei'hteenthcentury* an& its relation to economic speculation* an& this'roun& of interest in the +uestion may help to relie#e the topicof the te&ium that of ri'ht belon's to it

!n the remoter past of $hich $e ha#e recor&s* an& e#en in themore recent past* cci&ental man* as $ell as man else$here* haseminently been a respecter of persons 5here#er the $arli-eacti#ity has been a lar'e feature of the community4s life* muchof human con&uct in society has procee&e& on a re'ar& for personal force The scheme of life has been a scheme of personala''ression an& subser#ience* partly in the nai#e form* partlycon#entionalise& in a system of status The &iscipline of sociallife for the present purpose* in so far as its canons of con&uctrest on this element of personal force in the uncon#entionalise&form* plainly ten&s to the formation of a habit of apprehen&in'an& coor&inatin' facts from the animistic point of #ie$ So far as $e ha#e to &o $ith life un&er a system of status* the li-e

remains true* but $ith a &ifference The re'ime of statusinculcates an unremittin' an& #ery nice &iscrimination an&obser#ance of &istinctions of personal superiority an&inferiority To the criterion of personal force* or $illpo$er*ta-en in its imme&iate bearin' on con&uct* is a&&e& the criterionof personal e%cellencein'eneral* re'ar&less of the firsthan&potency of the 'i#en person as an a'ent This criterion of con&uct re+uires a constant an& painsta-in' imputation of personal #alue* re'ar&less of fact The &iscrimination en.oine&by the canons of status procee&s on an in#i&ious comparison of persons in respect of $orth* #alue* potency* #irtue* $hich must*for the present purpose* be ta-en as putati#e The 'reater or

less personal #alue assi'ne& a 'i#en in&i#i&ual or a 'i#en classun&er the canons of status is not assi'ne& on the 'roun& of #isible efficiency* but on the 'roun& of a &o'matic alle'ationaccepte& on the stren'th of an uncontra&icte& cate'oricalaffirmation simply The canons of status hol& their 'roun& byforce of preemption 5here &istinctions of status are base& on aputati#e $orth transmitte& by &escent from honorable antece&ents*the se+uence of transmission to $hich appeal is ta-en as thearbiter of honor is of a putati#e an& animistic character rather than a #isible mechanical continuity The habit of acceptin' asfinal $hat is prescripti#ely ri'ht in the affairs of life has asits refle% in the affairs of -no$le&'e the formula* Qui& abomnibus* +ui& ubi+ue cre&itur cre&en&um est E#en this mea'er account of the scheme of life thatcharacterises a re'ime of status shoul& ser#e to in&icate $hat isits &isciplinary effect in shapin' habits of thou'ht* an&therefore in shapin' the habitual criteria of -no$le&'e an& of reality culture $hose institutions are a frame$or- of in#i&ious comparisons implies* or rather in#ol#es an& comprises*a scheme of -no$le&'e $hose &efiniti#e stan&ar&s of truth an&substantiality are of an animistic character an&* the moreun&i#i&e&ly the canons of status an& ceremonial honor 'o#ern thecon&uct of the community* the 'reater the facility $ith $hich these+uence of cause an& effect is ma&e to yiel& before the hi'her claims of a spiritual se+uence or 'ui&ance in the course of

e#ents 7en consistently traine& to an unremittin' &iscriminationof honor* $orth* an& personal force in their &aily con&uct* an&to $hom these criteria affor& the &efiniti#e 'roun& of

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not be satisfie& to fall short of the li-e &efiniti#e 'roun& of sufficiency $hen they come to coor&inate facts for the purposesof -no$le&'e simply The habits forme& in un fol&in' his acti#ityin one &irection* un&er the impulse of a 'i#en interest* assertthemsel#es $hen the in&i#i&ual comes to unfol& his acti#ity inany other &irection* un&er the impulse of any other interest !f his last resort an& hi'hest criterion of truth in con&uct is

affor&e& by the element of personal force an& in#i&iouscomparison* his sense of substantiality or truth in the +uest of -no$le&'e $ill be satisfie& only $hen a li-e &efiniti#e 'roun& of animistic force an& in#i&ious comparison is reache& 2ut $hensuch 'roun& is reache& he rests content an& pushes the in+uiry nofarther !n his practical life he has ac+uire& the habit of restin' his case on an authentic &eli#erance as to $hat isabsolutely ri'ht This absolutely ri'ht an& 'oo& final term incon&uct has the character of finality only $hen con&uct isconstrue& in a ceremonial sense that is to say* only $hen lifeis concei#e& as a scheme of conformity to a purpose outsi&e an&beyon& the process of li#in' n&er the re'ime of status thisceremonial finality is foun& in the concept of $orth or honor !n

the reli'ious &omain it is the concept of #irtue* sanctity* or tabu 7erit lies in $hat one is* not in $hat one &oes The habitof appeal to ceremonial finality* forme& in the school of status*'oes $ith the in&i#i&ual in his +uest of -no$le&'e* as a&epen&ence upon a similarly authentic norm of absolute truth* a similar see-in' of a final term outsi&e an& beyon& the ran'e of -no$le&'e The &iscipline of social an& ci#ic life un&er a re'ime of status* then* reinforces the &iscipline of the reli'ious lifean& the outcome of the resultin' habituation is that the canonsof -no$le&'e are cast in the animistic mol& an& con#er'e to a'roun& of absolute truth* an& this absolute truth is of a

ceremonial nature !ts sub.ectmatter is a reality re'ar&less of fact The outcome* for science* of the reli'ious an& social lifeof the ci#ilisation of status* in cci&ental culture* $as astructure of +uasispiritual appreciations an& e%planations* of $hich astrolo'y* alchemy* an& me&ie#al theolo'y an& metaphysicsare competent* thou'h some$hat onesi&e&* e%ponents Throu'houtthe ran'e of this early learnin' the 'roun& of correlation of phenomena is in part the suppose& relati#e potency of the factscorrelate& but it is also in part a scheme of status* in $hichfacts are sche&ule& accor&in' to a hierarchical 'ra&ation of $orth or merit* ha#in' only a ceremonial relation to the obser#e&phenomena Some elements (some metals for instance) are noble*others base some planets* on 'roun&s of ceremonial efficacy*ha#e a sinister influence* others a beneficent one an& it is amatter of serious conse+uence $hether they are in the ascen&ant*an& so on The bo&y of learnin' throu'h $hich the &iscipline of animisman& in#i&ious comparison transmitte& its effects to the scienceof economics $as $hat is -no$n as natural theolo'y* naturalri'hts* moral philosophy* an& natural la$ These se#eral&isciplines or bo&ies of -no$le&'e ha& $an&ere& far from thenai#e animistic stan&point at the time $hen economic scienceemer'e&* an& much the same is true as re'ar&s the time of theemer'ence of other mo&ern sciences 2ut the &iscipline $hichma-es for an animistic formulation of -no$le&'e continue& to hol&

the primacy in mo&ern culture* althou'h its &ominion $as ne#er alto'ether un&i#i&e& or unmiti'ate& cci&ental culture has lon'been lar'ely an in&ustrial culture an&* as alrea&y pointe& out*

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community* &oes not fa#or the animistic preconception This isespecially true as re'ar&s in&ustry $hich ma-es lar'e use of mechanical contri#ances The &ifference in these respects bet$eencci&ental in&ustry an& science* on the one ban&* an& thein&ustry an& science of other cultural re'ions* on the other han&* is $orth notin' in this connection The result has beenthat the sciences* as that $or& is un&erstoo& in later usa'e*

ha#e come for$ar& 'ra&ually* an& in a certain rou'h parallelism$ith the &e#elopment of in&ustrial processes an& in&ustrialor'anisation !t is possible to hol& that both mo&ern in&ustry(of the mechanical sort) an& mo&ern science center about there'ion of the 6orth Sea !t is still more palpably true that$ithin this 'eneral area the sciences* in the recent past* sho$ afamily li-eness to the ci#il an& social institutions of thecommunities in $hich they ha#e been culti#ate&* this bein' trueto the 'reatest e%tent of the hi'her or speculati#e sciencesthat is* in that ran'e of -no$le&'e in $hich the animisticpreconception can chiefly an& most effecti#ely fin& applicationThere is* for instance* in the ei'hteenth century a perceptibleparallelism bet$een the &i#er'ent character of 2ritish an&

,ontinental culture an& institutions* on the one han&* an& the&issimilar aims of 2ritish an& ,ontinental speculation* on theother han& Somethin' has alrea&y been sai& of the &ifference inpreconceptions bet$een the Arench an& the 2ritish economists of the ei'hteenth century !t remains to point out the correlati#ecultural &ifference bet$een the t$o communities* to $hich it isconcei#e& that the &ifference in scientific animus is in 'reatmeasure &ue !t is* of course* only the 'eneral features* the'eneral attitu&e of the speculators* that can be cre&ite& to the&ifference in culture Bifferences of &etail in the specific&octrines hel& coul& be e%plaine& only on a much more &etaile&

analysis than can be entere& on here* an& after ta-in' account of facts $hich cannot here be e#en allo$e& for in &etail si&e from the 'reater resort to mechanical contri#ances an&the lar'er scale of or'anisation in 2ritish in&ustry* the further cultural peculiarities of the 2ritish community run in the same'eneral &irection 2ritish reli'ious life an& beliefs ha& less of the element of fealty personal or &iscretionary mastery an&subser#ience an& more of a tone of fatalism The ci#ilinstitutions of the 2ritish ha& not the same rich personalcontent as those of the Arench The 2ritish sub.ect o$ne&alle'iance to an impersonal la$ rather than to the person of asuperior <elati#ely* it may be sai& that the sense of status* asa coerci#e factor* $as in abeyance in the 2ritish community E#enin the $arli-e enterprise of the 2ritish community a similar characteristic is traceable 5arfare is* of course* a matter of personal assertion 5arli-e communities an& classes arenecessarily 'i#en to construin' facts in terms of personal forcean& personal en&s They are al$ays superstitious They are 'reatstic-lers for ran- an& prece&ent* an& ealously culti#ate those&istinctions an& ceremonial obser#ances in $hich a system of status e%presses itself 2ut* $hile $arli-e enterprise has by nomeans been absent from the 2ritish scheme of life* the'eo'raphical an& strate'ic isolation of the 2ritish community has'i#en a characteristic turn to their military relations !nrecent times 2ritish $arli-e operations ha#e been con&ucte&

abroa& The military class has conse+uently in 'reat measure beense're'ate& out from the bo&y of the community* an& the i&eals an&pre.u&ices of the class ha#e not been transfuse& throu'h the

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other$ise ha#e ha& The 2ritish community at home has seen thecampai'n in 'reat part from the stan&point of the 0sine$s of $ar0 The outcome of all these national peculiarities of circumstance an& culture has been that a &ifferent scheme of lifehas been current in the 2ritish community from $hat has pre#aile&on the ,ontinent There has resulte& the formation of a &ifferent

bo&y of habits of thou'ht an& a &ifferent animus in their han&lin' of facts The preconception of causal se+uence has beenallo$e& lar'er scope in the correlation of facts for purposes of -no$le&'e an&* $here the animistic preconception has beenresorte& to* as it al$ays has in the profoun&er reaches of learnin'* it has commonly been an animism of a tamer -in& Ta-in' &am Smith as an e%ponent of this 2ritish attitu&e intheoretical -no$le&'e* it is to be note& that* $hile heformulates his -no$le&'e in terms of a propensity (natural la$s)$or-in' teleolo'ically to an en&* the en& or ob.ecti#e point$hich controls the formulation has not the same rich content of #ital human interest or a&#anta'e as is met $ith in thePhysiocratic speculations There is perceptibly less of an

imperions tone in &am Smith4s natural la$s than in those of thecontemporary Arench economists !t is true* he sums up theinstitutions $ith $hich he &eals in terms of the en&s $hich theyshoul& subser#e* rather than in terms of the e%i'encies an&habits of life out of $hich they ha#e arisen but he &oes not$ith the same tone of finality appeal to the en& subser#e& as afinal cause throu'h $hose coerci#e 'ui&ance the comple% of phenomena is -ept to its appointe& tas- n&er his han&s therestrainin'* compellin' a'ency retires farther into thebac-'roun&* an& appeal is ta-en to it neither so &irectly nor onso sli'ht pro#ocation 2ut &am Smith is too lar'e a fi'ure to be &ispose& of in a

couple of conclu&in' para'raphs t the same time his $or- an&the bent $hich he 'a#e to economic speculation are so intimatelyboun& up $ith the aims an& bias that characterise economics inits ne%t sta'e of &e#elopment that he is best &ealt $ith as thepoint of &eparture for the ,lassical School rather than merely asa 2ritish counterpart of Physiocracy &am Smith $ill accor&in'lybe consi&ere& in imme&iate connection $ith the bias of theclassical school an& the incursion of utilitarianism intoeconomics

6TES>

1 05hy is Economics not an E#olutionary Science:0 QuarterlyJournal of Economics* July* 1898

/ 0The Auture of Economic Theory*0 ibi&* ctober* 1898

3 See* for instance* asbuch* ll'emeine philosophische;run&la'en &er #on Arancois Quesnay un& &am Smith be'run&etenpolitischen e-onomie

? Quesnay* Broit 6aturel* ch # (E& Baire* Physiocrates* pp@/@3)

@ Quesnay* Broit 6aturel* ch # (E& Baire* Physiocrates* p@3)

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Physiocrates* premiere partie* p 399)

D See* for instance* the conclu&in' chapters of =a <i#iere4sr&re 6aturel &es Societies Politi+ues

8 E'* asbuch* loc cit 2onar* Philosophy an& PoliticalEconomy* 2oo- !! <itchie* 6atural <i'hts

Part T$o

B7 S7!T4S animistic bent asserts itself more plainly an& moreeffectually in the 'eneral tren& an& aim of his &iscussion thanin the &etails of theory 0&am Smith4s 5ealth of 6ations is* infact* so far as it has one sin'le purpose* a #in&ication of theunconscious la$ present in the separate actions of men $hen theseactions are &irecte& by a certain stron' personal moti#e0(1")2oth in the Theory of the 7oral Sentiments an& in the 5ealth of 6ations there are many passa'es that testify to his abi&in'

con#iction that there is a $holesome tren& in the natural courseof thin's* an& the characteristically optimistic tone in $hich hespea-s for natural liberty is but an e%pression of thiscon#iction n e%treme resort to this animistic 'roun& occurs inhis plea for free&om of in#estment(/") !n the proposition that men are 0le& by an in#isible han&*0Smith &oes not fall bac- on a me&&lin' Pro#i&ence $ho is to sethuman affairs strai'ht $hen they are in &an'er of 'oin' as-e$ econcei#es the ,reator to be #ery continent in the matter of interference $ith the natural course of thin's The ,reator hasestablishe& the natural or&er to ser#e the en&s of human $elfarean& he has #ery nicely a&.uste& the efficient causes comprise& in

the natural or&er* inclu&in' human aims an& moti#es* to this $or-that they are to accomplish The 'ui&ance of interposition* thein#isible han& ta-es place not by $ay of interposition* butthrou'h a comprehensi#e scheme of contri#ances establishe& fromthe be'innin' Aor the purpose of economic theory* man isconcei#e& to be consistently selfsee-in' but this economic manis a part of the mechanism of nature* an& his selfsee-in'traffic is but a means $hereby* in the natural course of thin's*the 'eneral $elfare is $or-e& out The scheme as a $hole is'ui&e& by the en& to be reache&* but the se+uence of e#entsthrou'h $hich the en& is reache& is a causal se+uence $hich isnot bro-en into episo&ically The bene#olent $or- of 'ui&ance $asperforme& in first establishin' an in'enious mechanism of forcesan& moti#es capable of accomplishin' an or&aine& result* an&nothin' beyon& the en&urin' constraint of an establishe& tren&remains to enforce the &i#ine purpose in the resultin' naturalcourse of thin's The se+uence of e#ents* inclu&in' human moti#es an& humancon&uct* is a causal se+uence but it is also somethin' more* or*rather* there is also another element of continuity besi&es thatof brute cause an& effect* present e#en in the stepbystepprocess $hereby the natural course of thin's reaches its finalterm The presence of such a +uasispiritual or noncausalelement is e#i&ent from t$o (alle'e&) facts (1) The course of thin's may be &eflecte& from the &irect line of approach to that

consummate human $elfare $hich is its le'itimate en& The naturaltren& of thin's may be o#erborne by an unto$ar& con.uncture of causes There is a &istinction* often &istressin'ly actual an&

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thin's !f 0natural*0 in &am Smith4s use* meant necessary* inthe sense of causally &etermine&* no &i#er'ence of e#ents fromthe natural or le'itimate course of thin's $oul& be possible !f the mechanism of nature* inclu&in' man* $ere a mechanicallycompetent contri#ance for achie#in' the 'reat artificer4s &esi'n*there coul& be no such episo&es of blun&erin' an& per#erse&eparture from the &irect path as &am Smith fin&s in nearly all

e%istin' arran'ements !nstitutional facts $oul& then be0natural0(3") (/) 5hen thin's ha#e 'one $ron'* they $ill ri'htthemsel#es if interference $ith the natural course ceases$hereas* in the case of a causal se+uence simply* the merecessation of interference $ill not lea#e the outcome the same asif no interference ha& ta-en place This recuperati#e po$er of nature is of an e%tramechanical character The continuity of se+uence by force of $hich the natural course of thin's pre#ailsis* therefore* not of the nature of cause an& effect* since itbri&'es inter#als an& interruptions in the causal se+uence(?") &am Smith4s use of the term 0real 0 in statements of theory as* for e%ample* 0real #alue*0 0real price0(@") is e#i&ence tothis effect 06atural0 commonly has the same meanin' as 0real0 in

this connection(C") 2oth 0natural0 an& 0real0 are place& incontrast $ith the actual an&* in &am Smith4s apprehension* bothha#e a substantiality &ifferent from an& superior to facts The#ie$ in#ol#es a &istinction bet$een reality an& fact* $hichsur#i#es in a $ea-ene& form in the theories of 0normal0 prices*$a'es* profits* costs* in &am Smith4s successors This animistic prepossession seems to per#a&e the earlier of his t$o monumental $or-s in a 'reater &e'ree than the later !nthe 7oral Sentiments recourse is ha& to the teleolo'ical 'roun&of the natural or&er more freely an& $ith perceptibly 'reater insistence There seems to be reason for hol&in' that theanimistic preconception $ea-ene& or* at any rate* fell more into

the bac-'roun& as his later $or- of speculation an& in#esti'ationprocee&e& The chan'e sho$s itself also in some &etails of hiseconomic theory* as first set forth in the =ectures* an&after$ar&s more fully &e#elope& in the 5ealth of 6ations So* for instance* in the earlier presentation of the matter*0 the&i#ision of labor is the imme&iate cause of opulence0 an& this&i#ision of labor* $hich is the chief con&ition of economic$ellbein'* 0flo$s from a &irect propensity in human nature for one man to barter $ith another0(D") The 0propensity0 in +uestionis here appeale& to as a natural en&o$ment imme&iately 'i#en toman $ith a #ie$ to the $elfare of human society* an& $ithout anyattempt at further e%planation of ho$ man has come by it 6ocausal e%planation of its presence or character is offere& 2utthe correspon&in' passa'e of the 5ealth of 6ations han&les the+uestion more cautiously(8") ther parallel passa'es mi'ht becompare&* $ith much the same effect The 'ui&in' han& has$ith&ra$n farther from the ran'e of human #ision o$e#er* these an& other li-e filial e%pressions of a &e#outoptimism nee&* perhaps* not be ta-en as inte'ral features of &amSmith4s economic theory* or as seriously affectin' the character of his $or- as an economist They are the e%pression of his'eneral philosophical an& theolo'ical #ie$s* an& are si'nificantfor the present purpose chiefly as e#i&ences of an animistic an&optimistic bent They 'o to sho$ $hat is &am Smith4s accepte&'roun& of finality* the 'roun& to $hich all his speculations

on human affairs con#er'e but they &o not in any 'reat &e'reesho$ the teleolo'ical bias 'ui&in' his formulation of economictheory in &etail

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in Smith4s more &etaile& han&lin' of economic phenomena in his&iscussion of $hat may loosely be calle& economic institutions an& in the criteria an& principles of proce&ure by $hich he is'ui&e& in incorporatin' these features of economic life into the'eneral structure of his theory fair instance* thou'h perhapsnot the most tellin' one* is the &iscussion of the 0real an&nominal price*0 an& of the 0natural an& mar-et price0 of

commo&ities* alrea&y referre& to abo#e(9") The 0real0 price of commo&ities is their #alue in terms of human life t this pointSmith &iffers from the Physiocrats* $ith $hom the ultimate termsof #alue are affor&e& by human sustenance ta-en as a pro&uct of the functionin' of brute nature the cause of the &ifferencebein' that the Physiocrats concei#e& the natural or&er $hich$or-s to$ar&s the material $ellbein' of man to comprise thenonhuman en#ironment only* $hereas &am Smith inclu&es man inthis concept of the natural or&er* an&* in&ee&* ma-es him thecentral fi'ure in the process of pro&uction 5ith thePhysiocrats* pro&uction is the $or- of nature> $ith &am Smith*it is the $or- of man an& nature* $ith man in the fore'roun& !n &am Smith* therefore* labor the final term in #aluation This

0real0 #alue of commo&ities is the #alue impute& to them by theeconomist un&er the stress of his teleolo'ical preconception !thas little* if any* place in the course of economic e#ents* an&no bearin' on human affairs* apart from the sentimental influence$hich such a preconception in fa#or of a 0real #alue 0 in thin'smay e%ert upon men4s notions of $hat is the 'oo& an& e+uitablecourse to pursue in their transactions !t is impossible to 'au'ethis real #alue of 'oo&s it cannot be measure& or e%presse& inconcrete terms Still* if labor e%chan'es for a #aryin' +ualityof 'oo&s* 0it is their #alue $hich #aries* not that of the labor $hich purchases them0(1F") The #alues $hich practically attachto 'oo&s in men4s han&lin' of them are concei#e& to be &etermine&

$ithout re'ar& to the real #alue $hich &am Smith imputes to the'oo&s but* for all that* the substantial fact $ith respect tothese mar-et #alues is their presume& appro%imation to the real#alues teleolo'ically impute& to the 'oo&s un&er the 'ui&ance of in#iolate natural la$s The real* or natural* #alue of articleshas no causal relation to the #alue at $hich they e%chan'e The&iscussion of ho$ #alues are &etermine& in practice runs on themoti#es of the buyers an& sellers* an& the relati#e a&#anta'een.oye& by the parties to the transaction(11") !t is a&iscussion of a process of #aluation* +uite unrelate& to the0real*0 or 0natural*0 price of thin's* an& +uite unrelate& to the'roun&s on $hich thin's are hel& to come by their real* or natural* price an& yet* $hen the comple% process of #aluationhas been trace& out in terms of human moti#es an& the e%i'enciesof the mar-et* &am Smith feels that he has only cleare& the'roun& e then turns to the serious business of accountin' for #alue an& price theoretically* an& ma-in' the ascertaine& factsarticulate $ith his teleolo'ical theory of economic life(1/") The occurrence of the $or&s 0or&inary0 an& 0a#era'e0 in thisconnection nee& not be ta-en too seriously The conte%t ma-es itplain that the e+uality $hich commonly subsists bet$een theor&inary or a#era'e rates* an& the natural rates* is a matter of coinci&ence* not of i&entity 6ot only are there temporary&e#iations* but there may be a permanent &i#er'ence bet$een theor&inary an& the natural price of a commo&ity as in case of a

monopoly or of pro&uce 'ro$n un&er peculiar circumstances of soilor climate(13") The natural price coinci&es $ith the price fi%e& by

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those efficient forces throu'h $hich the nicely a&.uste&mechanism of nature $or-s out the &esi'n to accomplish $hich it$as contri#e& The natural price is reache& throu'h the freeinterplay of the factors of pro&uction* an& it is itself anoutcome of pro&uction 6ature* inclu&in' the human factor* $or-sto turn out the 'oo&s an& the natural #alue of the 'oo&s istheir appraisement from the stan&point of this pro&ucti#e process

of nature 6atural #alue is a cate'ory of pro&uction> $hereas*notoriously e%chan'e #alue or mar-et price is a cate'ory of &istribution n& &am Smith4s theoretical han&lin' of mar-etprice aims to sho$ ho$ the factors of human pre&ilection an&human $ants at $or- in the hi''lin' of the mar-et brin' about aresult in passable consonance $ith the natural la$s that areconcei#e& to 'o#ern pro&uction The natural price is a composite result of the blen&in' of the three 0component parts of the price of commo&ities*0 thenatural $a'es of laborer* the natural profits of stoc-* an& thenatural rent of lan& an& each of these three components is inits turn the measure of the pro&ucti#e effect of the factor to$hich it pertains The further &iscussion of these shares in

&istribution aims to account for the facts of &istribution on the'roun& of the pro&ucti#ity of the factors $hich are hel& to sharethe pro&uct bet$een them That is to say* &am Smith4spreconception of a pro&ucti#e natural process as the basis of hiseconomic theory &ominates his aims an& proce&ure* $hen he comesto &eal $ith phenomena that cannot be state& in terms of pro&uction The causal se+uence in the process of &istributionis* by &am Smith4s o$n sho$in'* unrelate& to the causal se+uencein the process of pro&uction but* since the latter is thesubstantial fact* as #ie$e& from the stan&point of a teleolo'icalnatural or&er* the former must be state& in terms of the latter before &am Smith4s sense of substantiality* or 0reality*0 is

satisfie& Somethin' of the same -in& is* of course* #isible inthe Physiocrats an& in ,antillon !t amounts to an e%tension of the naturalri'hts preconception to economic theory &am Smith4s&iscussion of &istribution as a function of pro&ucti#ity mi'ht betrace& in &etail throu'h his han&lin' of 5a'es* Profits* an&<ent but* since the aim here is a brief characterisation only*an& not an e%position* no farther pursuit of this point seemsfeasible !t may* ho$e#er* be $orth $hile to point out another line of influence alon' $hich the &ominance of the teleolo'icalpreconception sho$s itself in &am Smith This is thenormalisation of &ata* in or&er to brin' them into consonance$ith an or&erly course of approach to the putati#e natural en& of economic life an& &e#elopment The result of this normalisationof &ata is* on the one an&* the use of $hat James Steuart calls0con.ectural history0 in &ealin' $ith past phases of economiclife* an&* on the other han&* a statement of present&ayphenomena in terms of $hat le'itimately ou'ht to be accor&in' tothe ;o&'i#en en& of life rather than in terms of unconstrue&obser#ation ccount is ta-en of the facts (suppose& or obser#e&)ostensibly in terms of causal se+uence* but the impute& causalse+uence is construe& to run on lines of teleolo'ical le'itimacy familiar instance of this 0con.ectural history*0 in ahi'hly an& effecti#ely normalie& form* is the account of 0thatearly an& ru&e state of society $hich prece&es both the

accumulation of stoc- an& the appropriation of lan&0 (1?") !t isnee&less at this &ay to point out that this 0early an& ru&estate*0 in $hich 0the $hole pro&uce of labor belon's to the

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putati#e ori'in &o$n* is not only supposititious* but it ismerely a schematic presentation of $hat shoul& ha#e been thecourse of past &e#elopment* in or&er to lea& up to that i&ealeconomic situation $hich $oul& satisfy &am Smith4spreconception(1@") s the narrati#e comes nearer the re'ion of -no$n latter&ay facts* the normalisation of the &ata becomesmore &ifficult an& recei#es more &etaile& attention but the

chan'e in metho& is a chan'e of &e'ree rather than of -in& !nthe 0early an& ru&e state0 the coinci&ence of the 0natural0 an&the actual course of e#ents is imme&iate an& un&isturbe&* therebein' no refractory &ata at han& but in the later sta'es an& inthe present situation* $here refractory facts aboun&* thecoor&ination is &ifficult* an& the coinci&ence can be sho$n onlyby a free abstraction from phenomena that are irrele#ant to theteleolo'ical tren& an& by a laborious interpretation of the restThe facts of mo&ern life are intricate* an& len& themsel#es tostatement in the terms of the theory only after they ha#e beensub.ecte& to a 0hi'her criticism0 The chapter 0f the ri'in an& se of 7oney0(1C") is anele'antly normalise& account of the ori'in an& nature of an

economic institution* an& &am Smith4s further &iscussion of money runs on the same lines The ori'in of money is state& interms of the purpose $hich money shoul& le'itimately ser#e insuch a community as &am Smith consi&ere& ri'ht an& 'oo&* not interms of the moti#es an& e%i'encies $hich ha#e resulte& in theuse of money an& in the 'ra&ual rise of the e%istin' metho& of payment an& accounts 7oney is 0the 'reat $heel of circulation*0$hich effects the transfer of 'oo&s in process of pro&uction an&the &istribution of the finishe& 'oo&s to the consumers !t is anor'an of the economic common$ealth rather than an e%pe&ient of accountin' an& a con#entional repository of $ealth !t is perhapssuperfluous to remar- that to the 0plain man*0 $ho is not

concerne& $ith the 0natural course of thin's0 in a consummate;el&$irtschaft* the money that passes his han& is not a 0'reat$heel of circulation0 To the Samoye&* for instance* the rein&eer $hich ser#es him as unit of #alue is $ealth in the most concretean& tan'ible form 7uch the same is true of coin* or e#en of ban-notes* in the apprehension of unsophisticate& people amon'oursel#es to&ay n& yet it is in terms of the habits an&con&itions of life of these 0plain people0 that the &e#elopmentof money $ill ha#e to be accounte& for if it is to be state& interms of cause an& effect

The fe$ scattere& passa'es alrea&y cite& may ser#e toillustrate ho$ &am Smith4s animistic or teleolo'ical bent shapesthe 'eneral structure of his theory an& 'i#es it consistency Theprinciple of &efiniti#e formulation in &am Smith4s economic-no$le&'e is affor&e& by a putati#e purpose that &oes not at anypoint enter causally into the economic life process $hich hesee-s to -no$ This formati#e or normati#e purpose or en& is notfreely concei#e& to enter as an efficient a'ent in the e#ents&iscusse&* or to be in any $ay consciously present in theprocess !t can scarcely be ta-en as an animistic a'ency en'a'e&in the process !t sanctions the course of thin's* an& 'i#esle'itimacy an& substance to the se+uence of e#ents* so far asthis se+uence may be ma&e to s+uare $ith the re+uirements of theimpute& en& !t has therefore a ceremonial or symbolical force

only* an& len&s the &iscussion a ceremonial competency althou'h$ith economists $ho ha#e been in passable a'reement $ith &amSmith as re'ar&s the le'itimate en& of economic life this

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purposes been accepte& as the formulation of a causal continuityin the phenomena that ha#e been interprete& in its termsEluci&ations of $hat normally ou'ht to happen* as a matter of ceremonial necessity* ha#e in this $ay come to pass for anaccount of matters of fact 2ut* as has alrea&y been pointe& out* there is much more to &am Smith4s e%position of theory than a formulation of $hat

ou'ht to be 7uch of the a&#ance he achie#e& o#er hispre&ecessors consists in a lar'er an& more painsta-in' scrutinyof facts* an& a more consistent tracin' out of causal continuityin the facts han&le& 6o &oubt* his superiority o#er thePhysiocrats* that characteristic of his $or- by #irtue of $hichit superse&e& theirs in the farther 'ro$th of economic science*lies to some e%tent in his recourse to a &ifferent* more mo&ern'roun& of normality* a 'roun& more in consonance $ith the bo&yof preconceptions that ha#e ha& the #o'ue in later 'enerations!t is a shiftin' of the point of #ie$ from $hich the facts arehan&le& but it comes in 'reat part to a substitution of a ne$bo&y of preconceptions for the ol&* or a ne$ a&aptation of theol& 'roun& of finality* rather than an elimination of all

metaphysical or animistic norms of #aluation 5ith &am Smith* as$ith the Physiocrats* the fun&amental +uestion* the ans$er to$hich affor&s the point of &eparture an& the norm of proce&ure*is a +uestion of substantiality or economic 0reality0 5ith both*the ans$er to this +uestion is 'i#en nai#ely* as a &eli#erance of common sense 6either is &isturbe& by &oubts as to this&eli#erance of common sense or by any nee& of scrutinisin' it Tothe Physiocrats this substantial 'roun& of economic reality isthe nutriti#e process of 6ature To &am Smith it is =abor isreality has the a&#anta'e of bein' the &eli#erance of the commonsense of a more mo&ern community* an& one that has maintaine&itself in force more $i&ely an& in better consonance $ith the

facts of latter&ay in&ustry The Physiocrats o$e their preconception of the pro&ucti#eness of nature to the habits of thou'ht of a community in $hose economic life the &ominantphenomenon $as the o$ner of a'ricultural lan& &am Smith o$eshis preconception in fa#or of labor to a community in $hich theobtrusi#e economic feature of the imme&iate past $as han&icraftan& a'riculture* $ith commerce as a scarcely secon&aryphenomenon So far as &am Smith4s economic theories are a tracin' out of the causal se+uence in economic phenomena* they are $or-e& out interms 'i#en by these t$o main &irections of acti#ity* humaneffort &irecte& to the shapin' of the material means of life* an&human effort an& &iscretion &irecte& to a pecuniary 'ain Theformer is the 'reat* substantial pro&ucti#e force> the latter isnot imme&iately* or pro%imately* pro&ucti#e(1D") &am Smithstill has too li#ely a sense of the nutriti#e purpose of theor&er of nature freely to e%ten& the concept of pro&ucti#eness toany acti#ity that &oes not yiel& a material increase of thecreature comforts is instincti#e appreciation of thesubstantial #irtue of $hate#er effectually furthers nutrition*e#en lea&s him into the concession that 0in a'riculture naturelabors alon' $ith man*0 althou'h the 'eneral tenor of hisar'ument is that the pro&ucti#e force $ith $hich the economistal$ays has to count is human labor This reco'nise&substantiality of labor as pro&ucti#e is* as has alrea&y been

remar-e&* accountable for his effort to re&uce to terms of pro&ucti#e labor such a cate'ory of &istribution as e%chan'e#alue

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causal se+uence $hich &am Smith traces out in his economictheories proper (containe& in the first three boo-s of the 5ealthof 6ations)* the causally efficient factor is concei#e& to behuman nature in these t$o relations* of pro&ucti#e efficiencyan& pecuniary 'ain throu'h e%chan'e Pecuniary 'ain 'ain inthe material means of life throu'h barter furnishes the moti#eforce to the economic acti#ity of the in&i#i&ual althou'h

pro&ucti#e efficiency is the le'itimate* normal en& of thecommunity4s economic life To such an e%tent &oes this concept of man4s see-in' his en&s throu'h 0truc-* barter* an& e%chan'e0per#a&e &am Smith4s treatment of economic processes that he e#enstates pro&uction in its terms* an& says that** labor $as thefirst price* the ori'inal purchasemoney* that $as pai& for allthin's0(18") The human nature en'a'e& in this pecuniary trafficis concei#e& in some$hat he&onistic terms* an& the moti#es an&mo#ements of men are normalise& to fit the re+uirements of ahe&onistically concei#e& or&er of nature 7en are #ery much ali-ein their nati#e aptitu&es an& propensities(19") an&* so far aseconomic theory nee& ta-e account of these aptitu&es an&propensities* they are aptitu&es for the pro&uction of the

0necessaries an& con#eniences of life*0 an& propensities tosecure as 'reat a share of these creature comforts as may be &am Smith4s conception of normal human nature that is tosay* the human factor $hich enters causally in the process $hicheconomic theory &iscusses comes* on the $hole* to this> 7ene%ert their force an& s-ill in a mechanical process of pro&uction* an& their pecuniary sa'acity in a competiti#e processof &istribution* $ith a #ie$ to in&i#i&ual 'ain in the materialmeans of life These material means are sou'ht in or&er to thesatisfaction of men4s natural $ants throu'h their consumption !tis true* much else enters into men4s en&ea#ors in the stru''lefor $ealth* as &am Smith points out but this consumption

comprises the le'itimate ran'e of incenti#es* an& a theory $hichconcerns itself $ith the natural course of thin's nee& ta-e butinci&ental account of $hat &oes not come le'itimately in thenatural course !n point of fact* there are appreciable 0actual*0thou'h scarcely 0real*0 &epartures from this rule They arespurious an& insubstantial &epartures* an& &o not properly come$ithin the pur#ie$ of the stricter theory n&* since humannature is stri-in'ly uniform* in &am Smith4s apprehension* boththe efforts put forth an& the consumpti#e effect accomplishe& maybe put in +uantitati#e terms an& treate& al'ebraically* $ith theresult that the entire ran'e of phenomena comprise& un&er thehea& of consumption nee& be but inci&entally consi&ere& an& thetheory of pro&uction an& &istribution is complete $hen the 'oo&sor the #alues ha#e been trace& to their &isappearance in thehan&s of their ultimate o$ners The refle% effect of consumptionupon pro&uction an& &istribution is* on the $hole* +uantitati#eonly &am Smith4s preconception of a normal teleolo'ical or&er of proce&ure in the natural course* therefore* affects not onlythose features of theory $here he is a#o$e&ly concerne& $ithbuil&in' up a normal scheme of the economic process Throu'h hisnormalisin' the chief causal factor en'a'e& in the process* itaffects also his ar'uments from cause to effect(/F") 5hat ma-esthis latter feature $orth particular attention is the fact thathis successors carrie& this normalisation farther* an& employe&

it $ith less fre+uent reference to the miti'atin' e%ceptions$hich &am Smith notices by the $ay The reason for that farther an& more consistent normalisation

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&am Smith4s successors lies* in 'reat part* in the utilitarianphilosophy that entere& in force an& in consummate form at aboutthe turnin' of the century Some cre&it in the $or- of normalisation is &ue also to the farther supersession of han&icraft by the 0capitalistic0 in&ustry that came in at thesame time an& in pretty close relation $ith the utilitarian#ie$s

fter &am Smith4s &ay* economics fell into profane han&s part from 7althus* $ho* of all the 'reater economists* stan&snearest to &am Smith on such metaphysical hea&s as ha#e animme&iate bearin' upon the premises of economic science* the ne%t'eneration &o not approach their sub.ect from the point of #ie$of a &i#inely institute&* or&er nor &o they &iscuss humaninterests $ith that 'ently optimistic spirit of submission thatbelon's to the economist $ho 'oes to his $or- $ith the fear of ;o& before his eyes E#en $ith 7althus the recourse to the&i#inely sanctione& or&er of nature is some$hat sparin' an&temperate 2ut it is si'nificant for the later course of economictheory that* $hile 7althus may $ell be accounte& the truest

continuer of &am Smith* it $as the un&e#out utilitarians thatbecame the spo-esmen of the science after &am Smith4s time There is no $i&e breach bet$een &am Smith an& theutilitarians* either in &etails of &octrine or in the concreteconclusions arri#e& at as re'ar&s +uestions of policy n thesehea&s &am Smith mi'ht $ell be classe& as a mo&erate utilitarian*particularly so far as re'ar&s his economic $or- 7althus hasstill more of a utilitarian air* so much so* in&ee&* that heis not infre+uently spo-en of as a utilitarian This #ie$*con#incin'ly set forth by 7r 2onar*(/1") is no &oubt $ell borneout by a &etaile& scrutiny of 7althus4s economic &octrines ishumanitarian bias is e#i&ent throu'hout* an& his $ea-ness for

consi&erations of e%pe&iency is the 'reat blemish of hisscientific $or- 2ut* for all that* in or&er to an appreciationof the chan'e that came o#er classical economics $ith the rise of 2enthamism* it is necessary to note that the a'reement in thismatter bet$een &am Smith an& the &isciples of 2entham* an& less&eci&e&ly that bet$een 7althus an& the latter* is a coinci&enceof conclusions rather than an i&entity of preconceptions(//") 5ith &am Smith the ultimate 'roun& of economic reality isthe &esi'n of ;o&* the teleolo'ical or&er an& his utilitarian'eneralisations* as $ell as the he&onistic character of hiseconomic man* are but metho&s of the $or-in' out of this naturalor&er* not the substantial an& selfle'itimatin' 'roun& Shiftyas 7althus4s metaphysics are* much the same is to be sai& for him(/3") f the utilitarians proper the con#erse is true*althou'h here* a'ain* there is by no means utter consistency Thesubstantial economic 'roun& is pleasure an& pain> theteleolo'ical or&er (e#en the &esi'n of ;o&* $here that isa&mitte&) is the metho& of its $or-in'out !t may be unnecessary here to 'o into the farther implications* psycholo'ical an& ethical* $hich this preconceptionof the utilitarians in#ol#es n& e#en this much may seem ata-in' of e%cessi#e pains $ith a &istinction that mar-s notan'ible &ifference 2ut a rea&in' of the classical &octrines*$ith somethin' of this metaphysics of political economy in min&*$ill sho$ ho$* an& in 'reat part $hy* the later economists of the

classical line &i#er'e& from &am Smith4s tenets in the earlyyears of the century* until it has been necessary to interpret &am Smith some$hat shre$&ly in or&er to sa#e him from heresy

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#alue This is alto'ether the &ominant feature of the bo&y of &octrines the rest follo$s from* or is a&apte& to* this central&iscipline The &octrine of #alue is of #ery 'reat importancealso in &am Smith but &am Smith4s economics is a theory of thepro&uction an& apportionment of the material* means of life(/?")5ith &am Smith* #alue is &iscusse& from the point of #ie$ of pro&uction 5ith the utilitarians* pro&uction is &iscusse& from

the point of #ie$ of #alue The former ma-es #alue an outcome of the process of pro&uction> the latter ma-e pro&uction the outcomeof a #aluation process The point of &eparture $ith &am Smith is the 0pro&ucti#epo$er of labor0 (/@") 5ith <icar&o it is a pecuniary problemconcerne& in the &istribution of o$nership(/C") but theclassical $riters are follo$ers of &am Smith* an& impro#e uponan& correct the results arri#e& at by him* an& the &ifference of point of #ie$* therefore* becomes e#i&ent in their &i#er'encefrom him* an& the &ifferent &istribution of emphasis* rather thanin a ne$ an& anta'onistic &eparture The reason for this shiftin' of the center of 'ra#ity frompro&uction to #aluation lies* pro%imately* in 2entham4s re#ision

of the 0principles 0 of morals 2entham4s philosophical positionis* of course* not a selfe%planatory phenomenon* nor &oes theeffect of 2enthamism e%ten& only to those $ho are a#o$e&follo$ers of 2entham for 2entham is the e%ponent of a culturalchan'e that affects the habits of thou'ht of the entirecommunity The imme&iate point of 2entham4s $or-* as affectin'the habits of thou'ht of the e&ucate& community* is thesubstitution of he&onism (utility) in place of achie#ement of purpose* as a 'roun& of le'itimacy an& a 'ui&e in thenormalisation of -no$le&'e !ts effect is most patent inspeculations on morals* $here it inculcates &eterminism !tsclose connection $ith &eterminism in ethics points the $ay to

$hat may be e%pecte& of its $or-in' in economics !n both casesthe result is that human action is construe& in terms of thecausal forces of the en#ironment* the human a'ent bein'* at thebest* ta-en as a mechanism of commutation* throu'h the $or-in'sof $hich the sensuous effects $rou'ht by the impin'in' forces of the en#ironment are* by an enforce& process of #aluation*transmute& $ithout +uantitati#e &iscrepancy into moral or economic con&uct* as the case may be !n ethics an& economicsali-e the sub.ectmatter of the theory is this #aluation processthat e%presses itself in con&uct* resultin'* in the case of economic con&uct* in the pursuit of the 'reatest 'ain or leastsacrifice 7etaphysically or cosmolo'ically consi&ere&* the human natureinto the motions of $hich he&onistic ethics an& economics in+uireis an interme&iate term in a causal se+uence* of $hich theinitial an& the terminal members are sensuous impressions an& the&etails of con&uct This interme&iate term con#eys the sensuousimpulse $ithout loss of force to its e#entuation in con&uct Aor the purpose of the #aluation process throu'h $hich the impulse isso con#eye&* human nature may* therefore* be accepte& as uniforman& the theory of the #aluation process may be formulate&+uantitati#ely* in terms of the material forces affectin' thehuman sensory an& of their e+ui#alents in the resultin' acti#ity!n the lan'ua'e of economics* the theory of #alue may be state&in terms of the consumable 'oo&s that affor& the incenti#e to

effort an& the e%pen&iture un&er'one in or&er to procure them2et$een these t$o there subsists a necessary e+uality but thema'nitu&es bet$een $hich the e+uality subsists are he&onistic

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for the terms han&le& are sensuous terms !t is true* since humannature is substantially uniform* passi#e* an& unalterable inrespect of men4s capacity for sensuous affection* there may alsobe presume& to subsist a substantial e+uality bet$een thepsycholo'ical effect to be $rou'ht by the consumption of 'oo&s*on the one si&e* an& the resultin' e%pen&iture of -inetic or #ital force* on the other si&e but such an e+uality is* after

all* of the nature of a coinci&ence* althou'h there shoul& be astron' presumption in fa#or of its pre#ailin' on an a#era'e an&in the common run of cases e&onism* ho$e#er* &oes not postulateuniformity bet$een men e%cept in the respect of sensuous causean& effect The theory of #alue $hich he&onism 'i#es is* therefore* atheory of cost in terms of &iscomfort 2y #irtue of thehe&onistic e+uilibrium reache& throu'h the #aluation process* thesacrifice or e%pen&iture of sensuous reality in#ol#e& inac+uisition is the e+ui#alent of the sensuous 'ain secure& nalternati#e statement mi'ht perhaps be ma&e* to the effect thatthe measure of the #alue of 'oo&s is not the sacrifice or &iscomfort un&er'one* but the sensuous 'ain that accrues from the

ac+uisition of the 'oo&s but this is plainly only an alternati#estatement* an& there are special reasons in the economic life of the time $hy the statement in terms of cost* rather than in termsof 0utility*0 shoul& commen& itself to the earlier classicaleconomists n comparin' the utilitarian &octrine of #alue $ith earlier theories* then* the case stan&s some$hat as follo$s ThePhysiocrats an& &am Smith contemplate #alue as a measure of thepro&ucti#e force that realises itself in the #aluable article5ith the Physiocrats this pro&ucti#e force is the 0anabolism 0 of 6ature (to resort to a physiolo'ical term)> $ith &am Smith it ischiefly human labor &irecte& to hei'htenin' the ser#iceability of

the materials $ith $hich it is occupie& Pro&uction causes #aluein either case The post2entham economics contemplates #alue asa measure of* or as measure& by the ir-someness of the effortin#ol#e& in procurin' the #aluable 'oo&s s 7r E , G ;onner has a&mirably pointe& out*(/D") <icar&o an& the li-e hol&strue of classical economics 'enerally ma-es cost thefoun&ation of #alue* not its cause This restin' of #alue on costta-es place throu'h a #aluation ny one $ho $ill rea& &amSmith4s theoretical e%position to as 'oo& purpose as 7r ;onner has rea& <icar&o $ill scarcely fail to fin& that the con#erse istrue in &am Smith4s case 2ut the causal relation of cost to#alue hol&s only as re'ar&s 0natural0 or 0real0 #alue in &amSmith4s &octrine s re'ar&s mar-et price* &am Smith4s theory&oes not &iffer 'reatly from that of <icar&o on this hea& e&oes not o#erloo- the #aluation process by $hich mar-et price isa&.uste& an& the course of in#estment is 'ui&e&* an& his&iscussion of this process runs in terms that shoul& beacceptable to any he&onist

The shiftin' of the point of #ie$ that comes into economics$ith the acceptance of utilitarian ethics an& its correlate* theassociationist psycholo'y* is in 'reat part a shiftin' to the'roun& of causal se+uence as contraste& $ith that of ser#iceability to a preconcei#e& en& This is in&icate& e#en bythe main fact alrea&y cite&* that the utilitarian economists

ma-e e%chan'e #alue the central feature of their theories* rather than the con&uci#eness of in&ustry to the community4s material$elfare e&onistic e%chan'e #alue is the outcome of a #aluation

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the items #alue& n& in the utilitarian theories of pro&uction*arri#e& at from the stan&point so 'i#en by e%chan'e #alue* thecon&uci#eness to $elfare is not the ob.ecti#e point of thear'ument This ob.ecti#e point is rather the bearin' of pro&ucti#e enterprise upon the in&i#i&ual fortunes of the a'entsen'a'e&* or upon the fortunes of the se#eral &istin'uishableclasses of beneficiaries comprise& in the in&ustrial community

for the 'reat imme&iate bearin' of e%chan'e #alues upon the lifeof the collecti#ity is their bearin' upon the &istribution of $ealth Value is a cate'ory of &istribution The result is that*as is $ell sho$n by 7r ,annan4s &iscussion*(/8") the theories of pro&uction offere& by the classical economists ha#e been sensiblyscant* an& ha#e been carrie& out $ith a constant #ie$ to the&octrines on &istribution n inci&ental but tellin'&emonstration of the same facts is 'i#en by Professor 2ucher(/9") an& in illustration may be cite& Torrens4s Essay nthe Pro&uction of 5ealth* $hich is to a 'oo& e%tent occupie& $ith&iscussions of #alue an& &istribution The classical theories of pro&uction ha#e been theories of the pro&uction of 0$ealth0 an&0$ealth*0 in classical usa'e* consists of material thin's ha#in'

e%chan'e #alue Burin' the #o'ue of the classical economics theaccepte& characteristic by $hich 0$ealth0 has been &efine& hasbeen its amenability to o$nership 6either in &am Smith nor inthe Physiocrats is this amenability to o$nership ma&e so much of*nor is it in a similar &e'ree accepte& as a &efinite mar- of thesub.ectmatter of the science s their he&onistic preconception $oul& re+uire* then* it isto the pecuniary si&e of life that the classical economists 'i#etheir most serious attention* an& it is the pecuniary bearin' of any 'i#en phenomenon or of any institution that commonly shapesthe issue of the ar'ument The causal se+uence about $hich the&iscussion centers is a process of pecuniary #aluation !t runs

on &istribution* o$nership* ac+uisition* 'ain* in#estment*e%chan'e(3F") !n this $ay the &octrines on pro&uction come tota-e a pecuniary colorin' as is seen in a less &e'ree also in &am Smith* an& e#en in the Physiocrats* althou'h these earlier economists #ery rarely* if e#er* lose touch $ith the concept of 'eneric ser#iceability as the characteristic feature of pro&uction The tra&ition &eri#e& from &am Smith* $hich ma&epro&ucti#ity an& ser#iceability the substantial features of economic life* $as not abruptly put asi&e by his successors*thou'h the emphasis $as &ifferently &istribute& by them infollo$in' out the line of in#esti'ation to $hich the tra&itionpointe& the $ay !n the classical economics the i&eas of pro&uction an& of ac+uisition are not commonly hel& apart* an&#ery much of $hat passes for a theory of pro&uction is occupie&$ith phenomena of in#estment an& ac+uisition Torrens4s Essay isa case in point* thou'h by no means an e%treme case This is as it shoul& be for to the consistent he&onist thesole moti#e force concerne& in the in&ustrial process is theselfre'ar&in' moti#e of pecuniary 'ain* an& in&ustrial acti#ityis but an interme&iate term bet$een the e%pen&iture or &iscomfortun&er'one an& the pecuniary 'ain sou'ht 5hether the en& an&outcome is an in#i&ious 'ain for the in&i#i&ual (in contrast $ithor at the cost of his nei'hbors)* or an enhancement of thefacility of human life on the $hole* is alto'ether a by+uestionin any &iscussion of the ran'e of incenti#es by $hich men are

prompte& to their $or- or the &irection $hich their efforts ta-eThe ser#iceability of the 'i#en line of acti#ity* for the lifepurposes of the community or for one4s nei'hbors* 0is not of the

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into the account chiefly as affectin' the #en&ibility of $hat the'i#en in&i#i&ual has to offer in see-in' 'ain throu'h abar'ain(31") !n he&onistic theory the substantial en& of economic life isin&i#i&ual* 'ain* an& for this purpose pro&uction an& ac+uisitionmay be ta-en as fairly coinci&ent* if not i&entical 7oreo#er*society* in the utilitarian philosophy* is the al'ebraic sum of

the in&i#i&uals an& the interest of the society is the sum of the interests of the in&i#i&uals !t follo$s by easy conse+uence*$hether strictly true or not* that the sum of in&i#i&ual 'ains isthe 'ain of the society* an& that* in ser#in' his o$n interest inthe $ay of ac+uisition* the in&i#i&ual ser#es the collecti#einterest of the community Pro&ucti#ity or ser#iceability is*therefore* to be presume& of any occupation or enterprise thatloo-s to a pecuniary 'ain an& so* by a roun&about path* $e 'etbac- to the ancient conclusion of &am Smith* that theremuneration of classes or persons en'a'e& in in&ustry coinci&es$ith their pro&ucti#e contribution to the output of ser#ices an&consumable 'oo&s felicitous illustration of the $or-in' of this he&onistic

norm in classical economic &octrine is affor&e& by the theory of the $a'es of superinten&ence* an element in &istribution $hichis not much more than su''este& in &am Smith* but $hich recei#esampler an& more painsta-in' attention as the classical bo&y of &octrines reaches a fuller &e#elopment The 0$a'es of superinten&ence0 are the 'ains &ue to pecuniary mana'ement Theyare the 'ains that come to the &irector of the** business*0 not those that 'o to the &irector of the mechanical process or tothe foreman of the shop The latter are $a'es simply This&istinction is not alto'ether clear in the earlier $riters* butit is clearly enou'h containe& in the fuller &e#elopment of thetheory

The un&erta-er4s $or- is the mana'ement of in#estment !t isalto'ether of a pecuniary character* an& its pro%imate aim is0the main chance0 !f it lea&s* in&irectly* to an enhancement of ser#iceability or a hei'htene& a''re'ate output of consumable'oo&s* that is a fortuitous circumstance inci&ent to thathei'htene& #en&ibility on $hich the in#estor4s 'ain &epen&s Hetthe classical &octrine says fran-ly that the $a'es of superinten&ence are the remuneration of superior pro&ucti#ity*(3/") an& the classical theory of pro&uction is in'oo& part a &octrine of in#estment in $hich the i&entity of pro&uction an& pecuniary 'ain is ta-en for 'rante& The substitution of in#estment in the place of in&ustry asthe central an& substantial fact in the process of pro&uction is&ue not to the acceptance of he&onism simply* but rather to thecon.unction of he&onism $ith an economic situation of $hich thein#estment of capital an& its mana'ement for 'ain $as the mostob#ious feature The situation $hich shape& the commonsenseapprehension of economic facts at the time $as $hat has sincebeen calle& a capitalistic system* in $hich pecuniary enterprisean& the phenomena of the mar-et $ere the &ominant an& tone'i#in'facts 2ut this economic situation $as also the chief 'roun& for the #o'ue of he&onism in economics so that he&onistic economicsmay be ta-en as an interpretation of human nature in terms of themar-etplace The mar-et an& the 0business $orl&*0 to $hich thebusiness man in his pursuit of 'ain $as re+uire& to a&apt his

moti#es* ha& by this time 'ro$n so lar'e that the course of business e#ents $as beyon& the control of any one person an& atthe same time those farreachin' or'anisations of in#este& $ealth

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not then in the fore'roun& The course of mar-et e#ents too- itspassionless $ay $ithout traceable relation or &eference to anyman4s con#enience an& $ithout traceable 'ui&ance to$ar&s anulterior en& 7an4s part in this pecuniary $orl& $as to respon&$ith alacrity to the situation* an& so a&apt his #en&ible effectsto the shiftin' &eman& as to realise somethin' in the outcome5hat he 'aine& in his traffic $as 'aine& $ithout loss to those

$ith $hom he &ealt* for they pai& no more than the 'oo&s $ere$orth to them ne man4s 'ain nee& not be another4s loss an&* if it is not* then it is net 'ain to the community mon' the stri-in' remoter effects of the he&onisticpreconception* an& its $or-in' out in terms of pecuniary 'ain* isthe classical failure to &iscriminate bet$een capital asin#estment an& capital as in&ustrial appliances This is* of course* closely relate& to the point alrea&y spo-en of Theappliances of in&ustry further the pro&uction of 'oo&s* thereforecapital (in#este& $ealth) is pro&ucti#e an& the rate of itsa#era'e remuneration mar-s the &e'ree of its pro&ucti#eness(33")The most ob#ious fact limitin' the pecuniary 'ain secure& bymeans of in#este& $ealth is the sum in#este& Therefore* capital

limits the pro&ucti#eness of in&ustry an& the chief an&in&ispensable con&ition to an a&#ance in material $ellbein' isthe accumulation of in#este& $ealth !n &iscussin' the con&itionsof in&ustrial impro#ement* it is usual to assume that 0the stateof the arts remains unchan'e&*0 $hich is* for all purposes butthat of a &octrine of profits per cent* an e%clusion of the mainfact !n#estments may* further* be transferre& from oneenterprise to another Therefore* an& in that &e'ree* the meansof pro&uction are 0mobile0

n&er the han&s of the 'reat utilitarian $riters* therefore*political economy is &e#elope& into a science of $ealth* ta-in'

that term in the pecuniary sense* as thin's amenable too$nership The course of thin's in economic life is treate& as ase+uence of pecuniary e#ents* an& economic theory becomes atheory of $hat shoul& happen in that consummate situation $herethe permutation of pecuniary ma'nitu&es ta-es place $ithout&isturbance an& $ithout retar&ation !n this consummate situationthe pecuniary moti#e has its perfect $or-* an& 'ui&es all theacts of economic man in a 'uileless* colorless* uns$er#in' +uestof the 'reatest 'ain at the least sacrifice f course* thisperfect competiti#e system* $ith its untainte& 0economic man*0isa feat of scientific ima'ination* an& is not inten&e& as acompetent e%pression of fact !t is an e%pe&ient of abstractreasonin' an& its a#o$e& competency e%ten&s only to the abstractprinciples* the fun&amental la$s of the science* $hich hol& onlyso far as the abstraction hol&s 2ut* as happens in such cases*ha#in' once been accepte& an& assimilate& as real* thou'h perhapsnot as actual* it becomes an effecti#e constituent in thein+uirer4s habits of thou'ht* an& 'oes to shape his -no$le&'e of facts !t comes to ser#e as a norm of substantiality or le'itimacy an& facts in some &e'ree fall un&er its constraint*as is e%emplifie& by many alle'ations re'ar&in' the 0ten&ency0 of thin's To this consummation* $hich Senior spea-s of as 0the naturalstate of man*0(3?") human &e#elopment ten&s by force of thehe&onistic character of human nature an& in terms of its

appro%imation to this natural state* therefore* the immatureactual situation ha& best be state& The pure theory* the0hypothetical science0 of ,airnes* 0traces the phenomena of the

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principles of human nature an& the la$s an& e#ents physical*political* an& social of the e%ternal $orl&0(3@") 2ut sincethe principles of human nature that 'i#e the outcome in men4seconomic con&uct* so far as it touches the pro&uction an&&istribution of $ealth* are but the simple an& constant se+uenceof he&onistic cause an& effect* the element of human nature mayfairly be eliminate& from the problem* $ith 'reat 'ain in

simplicity an& e%pe&ition uman nature bein' eliminate&* asbein' a constant interme&iate term* an& all institutionalfeatures of the situation bein' also eliminate& (as bein' similar constants un&er that natural or consummate pecuniary re'ime $ith$hich the pure theory is concerne&)* the la$s of the phenomena of $ealth may be formulate& in terms of the remainin' factors Thesefactors are the #en&ible items that men han&le in these processesof pro&uction an& &istribution an& economic la$s come* therefore*to be e%pressions of the al'ebraic relations subsistin' bet$eenthe #arious elements of $ealth an& in#estment* capital* labor*lan&* supply an& &eman& of one an& the other* profits* interest*$a'es E#en such items as cre&it an& population become&issociate& from the personal factor* an& fi'ure in the

computation as elemental factors actin' an& reactin' thou'h apermutation of #alues o#er the hea&s of the 'oo& people $hose$elfare they are $or-in' out

To sum up> the classical economics* ha#in' primarily to &o$ith the pecuniary si&e of life* is a theory of a process of #aluation 2ut since the human nature at $hose han&s an& for $hose behoof the #aluation ta-es place is simple an& constant inits reaction to pecuniary stimulus* an& since no other feature of human nature is le'itimately present in economic phenomena thanthis reaction to pecuniary stimulus* the #aluer concerne& in thematter is to be o#erloo-e& or eliminate& an& the theory of the

#aluation process then becomes a theory of the pecuniaryinteraction of the facts #alue& !t is a theory of #aluation $iththe element of #aluation left out* a theory of life state& interms of the normal paraphernalia of life !n the preconceptions $ith $hich classical economics set out$ere comprise& the remnants of natural ri'hts an& of the or&er of nature* infuse& $ith that peculiarly mechanical natural theolo'ythat ma&e its $ay into popular #o'ue on 2ritish 'roun& &urin' theei'hteenth century an& $as re&uce& to a neutral tone by the2ritish penchant for the commonplace stron'er at this timethan at any earlier perio& The reason for this 'ro$in' penchantfor the commonplace* for the e%planation of thin's in causalterms* lies partly in the 'ro$in' resort to mechanical processesan& mechanical prime mo#ers in in&ustry* partly in the(conse+uent) continue& &ecline of the aristocracy an& thepriesthoo&* an& partly in the 'ro$in' &ensity of population an&the conse+uent 'reater specialisation an& $i&er or'anisation of tra&e an& business The sprea& of the &iscipline of the naturalsciences* lar'ely inci&ent to the mechanical in&ustry* counts inthe same &irection an& obscurer factors in mo&ern culture mayha#e ha& their share The animistic preconception $as not lost* but it lost tonean& it partly fell into abeyance* particularly so far as re'ar&sits a#o$al !t is #isible chiefly in the una#o$e& rea&iness of the classical $riters to accept as imminent an& &efiniti#e any

possible outcome $hich the $riter4s habit or temperament incline&him to accept as ri'ht an& 'oo& ence the #isible inclination of classical economists to a &octrine of the harmony of interests*

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'eneralisations in terms of $hat ou'ht to happen accor&in' to thei&eal re+uirements of that consummate ;el&$irtschaft to $hich men0are impelle& by the pro#isions of nature0(3C") 2y #irtue of their he&onistic preconceptions* their habituation to the $ays of a pecuniary culture* an& their una#o$e& animistic faith thatnature is in the ri'ht* the classical economists -ne$ that theconsummation to $hich* in the nature of thin's* all thin's ten&*

is the frictionless an& beneficent competiti#e system Thiscompetiti#e i&eal* therefore* affor&s the normal* an& conformityto its re+uirements affor&s the test of absolute economic truthThe stan&point so 'aine& selecti#ely 'ui&es the attention of theclassical $riters in their obser#ation an& apprehension of facts*an& they come to see e#i&ence of conformity or approach to thenormal in the most unli-ely places Their obser#ation is* in'reat part* interpretati#e* as obser#ation commonly is 5hat ispeculiar to the classical economists in this respect is their particular norm of proce&ure in the $or- of interpretation n&*by #irtue of ha#in' achie#e& a stan&point of absolute economicnormality* they became a 0&e&ucti#e0 school* so calle&* in spiteof the patent fact that they $ere pretty consistently employe&

$ith an in+uiry into the causal se+uence of economic phenomena The 'eneralisation of obser#e& facts becomes a normalisationof them* a statement of the phenomena in terms of their coinci&ence $ith* or &i#er'ence from* that normal ten&ency thatma-es for the actualisation of the absolute economic realityThis absolute or &efiniti#e 'roun& of economic le'itimacy liesbeyon& the causal se+uence in $hich the obser#e& phenomena areconcei#e& to be interlin-e& !t is relate& to the concrete factsneither as cause nor as effect in any such $ay that the causalrelation may be trace& in a concrete instance !t has littlecausally to &o either $ith the 0mental0 or $ith the 0physical0&ata $ith $hich the classical economist is a#o$e&ly employe& !ts

relation to the process un&er &iscussion is that of an e%traneous that is to say* a ceremonial le'itimation The bo&y of -no$le&'e 'aine& by its help an& un&er its 'ui&ance is*therefore* a ta%onomic science So* by $ay of a conclu&in' illustration* it may be pointe&out that money* for instance* is normalise& in terms of thele'itimate economic ten&ency !t becomes a measure of #alue an& ame&ium of e%chan'e !t has become primarily an instrument of pecuniary commutation* instea& of bein'* as un&er the earlier normalisation of &am Smith* primarily a 'reat $heel of circulation for the &iffusion of consumable 'oo&s The terms in$hich the la$s of money* as of the other phenomena of pecuniarylife* are formulate&* are terms $hich connote its normal functionin the life history of ob.ecti#e #alues as they li#e an& mo#e an&ha#e their bein' in the consummate pecuniary situation of the0natural0 state To a similar $or- of normalisation $e o$e thosecreatures of the mythma-er* the +uantity theory an& the$a'esfun&

6TES>

1 2onar* Philosophy an& Political Economy* pp 1DD* 1D8

/ 0E#ery in&i#i&ual is continually e%ertin' himself to fin& outthe most a&#anta'eous employment for $hate#er capital he can

comman& !t is his o$n a&#anta'e* an& not that of the society*$hich he has in #ie$ 2ut the stu&y of his o$n a&#anta'enaturally* or rather necessarily* lea&s him to prefer that

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&irectin' that in&ustry in such a manner as its pro&uce may be of the 'reatest #alue* he inten&s only his o$n 'ain an& he is inthis* as in many other cases* le& by an in#isible han& to promotean en& $hich $as no part of his intention 6or is it al$ays the$orse for society that it $as no part of it 2y pursuin' his o$ninterest he fre+uently promotes that of the society moreeffectually than $hen he really inten&s to promote it0 5ealth of

6ations* 2oo- !V* chap ii

3 The &iscrepancy bet$een the actual* causally &etermine&situation an& the &i#inely inten&e& consummation is themetaphysical 'roun& of all that inculcation of morality an&enli'htene& policy that ma-es up so lar'e a part of &am Smith4s$or- The li-e* of course* hol&s true for all moralists an&reformers $ho procee& on the assumption of a pro#i&ential or&er

? 0!n the political bo&y* ho$e#er* the $is&om of nature hasfortunately ma&e ample pro#ision for reme&yin' many of the ba&effects of the folly an& in.ustice of man in the same manner asit has &one in the natural bo&y* for reme&yin' those of his sloth

an& intemperance0 5ealth of 6ations* 2oo- !V* chap i%

@ E'* 0the real measure of the e%chan'eable #alue of allcommo&ities0 5ealth of 6ations* 2oo- !* chap #* an& repeate&lyin the li-e connection

C E'* 2oo- !* chap #ii> 05hen the price of any commo&ity isneither more nor less than $hat is sufficient to pay the rent of the lan&* the $a'es of the labor* an& the profits of the stoc-employe& in raisin'* preparin'* an& brin'in' it to mar-et*accor&in' to their natural rates* the commo&ity is then sol& for $hat may be calle& its natural price0 0The actual price at $hich

any commo&ity is commonly sol& is calle& its mar-et price !t maybe either abo#e or belo$ or e%actly the same $ith its naturalprice0

D =ectures of &am Smith (E& ,annan* 189C) p 1C9

8 0This &i#ision of labor* from $hich so many a&#anta'es are&eri#e&* is not ori'inally the effect of any human $is&om* $hichforesees an& inten&s that 'eneral opulence to $hich it 'i#esoccasion !t is the necessary thou'h #ery slo$ an& 'ra&ualconse+uence of a certain propensity in human nature $hich has in#ie$ no such e%tensi#e utility* the propensity to truc-*barter* an& e%chan'e one thin' for another 5hether thispropensity be one of those ori'inal principles in human nature of $hich no further account can be 'i#en* or $hether* as seems moreprobable* it be the necessary conse+uence of the faculties of reason an& speech* it belon's not to our present sub.ect toin+uire0 5ealth of 6ations* 2oo- !* chap ii

9 5ealth of 6ations* 2oo- !* chaps ##ii

1F 5ealth of 6ations* 2oo- !* chap #

11 s e'* the entire &iscussion of the &etermination of 5a'es*Profits an& <ent* in 2oo- !* chaps #iii%i

1/ 0There is in e#ery society or nei'hborhoo& an or&inary or a#era'e rate both of $a'es an& profit in e#ery &ifferent

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partly by the 'eneral circumstance of the society There is*li-e$ise* in e#ery socity or nei'hborhoo& an or&inary or a#era'erate of rent* $hich is re'ulate&* too These or&inary or a#era'e rates may be calle& the natural rates of $a'es* profit*an& rent* at the time an& place in $hich they commonly pre#ail5hen the price of any commo&ity is neither more nor less than$hat is sufficient to pay the rent of the lan&* the $a'es of the

labor* an& the profits of the stoc- employe& in raisin'*preparin'* an& brin'in' it to mar-et* accor&in' to their naturalrates* the commo&ity is then sol& for $hat may be calle& itsnatural price0 5ealth of 6ations* 2oo- !* chap #ii

13 0Such commo&ities may continue for $hole centuries to'ether to be sol& at this hi'h price an& that part of it $hich resol#esitself into the rent of lan& is* in this case* the part $hich is'enerally pai& abo#e its natural rate0 2oo- !* chap #ii

1? 5ealth of 6ations* 2oo- !* chap #i also chap #iii

1@ Aor an instance of ho$ these early phases of in&ustrial

&e#elopment appear* $hen not seen in the li'ht of &am Smith4spreconception* see* amon' others* 2ucher* Entstehun' &er Vol-s$irtscha't

1C 2oo- !* chap i#

1D See 5ealth of 6ations* 2oo- !!* chap #* 0f the BifferentEmployment of ,apitals0

18 5ealth of 6ations* 2oo- !* chap # See also the plea for free tra&e* 2oo- !V* chap ii> 02ut the annual re#enue of e#erysociety is al$ays precisely e+ual to the e%chan'eable #alue of

the $hole annual pro&uce of its in&ustry* or* rather* isprecisely the same thin' $ith that e%chan'eable #alue0

19 0The &ifference of natural talents in &ifferent men is inreality much less than $e are a$are of0 5ealth of 6ations* 2oo-!* chap ii

/F 07it &iesen philosophischen ebereu'un'en tritt nun &amSmith an &ie 5elf &er En'ahrun' heran* an& es er'iebt sich ihm&ie <ichti'-eit &er Principien Ber <ei &er Smiths4schenSchriften beruht um 'rossen Teile &arauf* &ass Smith &iePrincipien in so inni'e Verbin&un' mit &em Thatsachlichen'ebracht ie un& &a $er&en &ann auch &ie Principien* $as &urch&iese Verbin&un' #eranlasst $ir&* an ihren Spiten et$asal'eschliffen* ihre allruscharfe uspra'un' &a&urch #ermie&en6ichts&esto$eni'er aber bleiben sie stets &ie leiten&en;run&'e&an-en0 <ichar& Ieyss* &am Smith un& &er Ei'ennut(Tubin'en* 1889)* p 11F

/1 See* e'* 7althus an& his 5or-* especially 2oo- !!!* as alsothe chapter on 7althus in Philosophy an& Political Economy* 2oo-!!!* 7o&ern Philosophy> tilitarian Economics* chap i*07althus0

// <icar&o is here ta-en as a utilitarian of the 2enthamite

color* althou'h he cannot be classe& as a &isciple of 2enthamis he&onism is but the uncritically accepte& metaphysicscomprise& in the common sense of his time* an& his substantial

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he&onist preconception $as at the time

/3 ,f 2onar* 7althus an& his 5or-* pp 3/333C

/? is $or- is an in+uiry into 0the 6ature an& ,auses of the5ealth of 6ations0

/@ 0The annual labor of e#ery nation is the fun& $hichori'inally supplies it $ith all the necessaries an& con#eniencesof life $hich it annually consumes* an& $hich consist al$ayseither in the imme&iate pro&uce of that labor or in $hat ispurchases $ith that pro&uce from other nations0 5ealth of 6ations* 0!ntro&uction an& Plan*0 openin' para'raph

/C 0The pro&uce of the earth all that is &eri#e& from itssurface by the unite& application of labor* machinery an& capital is &i#i&e& amon' three classes of the community To&etermine the la$s $hich re'ulate this &istribution is theprincipal problem of political economy0 Political Economy*Preface

/D !n the intro&uctory essay to his e&ition of <icar&o4sPolitical Economy See* e'* para'raphs 9 an& /?

/8 Theories of Pro&uction an& Bistribution* 1DDC18?8

/9 Entstehun' &er Vol-s$irtschaft (secon& e&ition) ,fespecially chaps ii* iii* #i* an& #ii

3F 0E#en if $e put asi&e all +uestions $hich in#ol#e aconsi&eration of the effects of in&ustrial institutions inmo&ifyin' the habits an& character of the classes of the

community that enou'h still remains to constitute a separatescience* the mere enumeration of the chief terms of economics $ealth* #alue* e%chan'e* cre&it* money* capital* an& commo&ity $ill suffice to sho$0 Shirres* nalysis of the !&eas of Economics (=on&on* 1893)* pp 8 an& 9

31 0!f a commo&ity $ere in no $ay useful it $oul& be&estitute of e%chan'eable #alue (but)* possessin' utility*commo&ities &eri#e their e%chan'eable #alue from t$o sources*0etc <icar&o* Political Economy* chap i* sect !

3/ ,f* for instance* Senior* Political Economy (=on&on* 18D/)*particularly pp 88* 89* an& 13F13@* $here the $a'es of superinten&ence are* some$hat reluctantly* classe& un&er profitsan& the $or- of superinten&ence is thereupon concei#e& as bein'*imme&iately or remotely* an e%ercise of 0abstinence0 an& apro&ucti#e $or- The illustration of the billbro-er isparticularly apt The li-e #ie$ of the $a'es of superinten&encein an article of theory $ith more than one of the later &escen&ents of the classical line

33 ,f 2ohm2a$er-* ,apital an& !nterest* 2oo-s !! an& !V* as$ell as the !ntro&uction an& chaps i# an& # of 2oo- !2ohm2a$er-4s &iscussion bears less imme&iately on the presentpoint than the similarity of the terms employe& $oul& su''est

3? Political Economy* p 8D

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18D@)* p D1 ,airnes may not be alto'ether representati#e of thehi'h ti&e of classicism* but his characterisation of the scienceis none the less to the point

3C Senior* Political Economy* p 8D

Part Three

!6 $hat has alrea&y been sai&* it has appeare& that the chan'es$hich ha#e super#ene& in the preconceptions of the earlier economists constitute a some$hat or&erly succession The featureof chief interest in this &e#elopment has been a 'ra&ual chan'ein the recei#e& 'roun&s of finality to $hich the successi#e'enerations of economists ha#e brou'ht their theoretical output*on $hich they ha#e been content to rest their conclusions* an&beyon& $hich they ha#e not been mo#e& to push their analysis of e#ents or their scrutiny of phenomena There has been a fairlyunbro-en se+uence of &e#elopment in $hat may be calle& the canons

of economic reality or* to put it in other $or&s* there has beena precession of the point of #ie$ from $hich facts ha#e beenhan&le& an& #alue& for the purpose of economic science The notion $hich has in its time pre#aile& so $i&ely* thatthere is in the se+uence of e#ents a consistent tren& $hich it isthe office of the science to ascertain an& turn to account* this notion may be $ell foun&e& or not 2ut that there issomethin' of such a consistent tren& in the se+uence of thecanons of -no$le&'e un&er $hose 'ui&ance the scientist $or-s isnot only a 'eneralisation from the past course of thin's* butlies in the nature of the case for the canons of -no$le&'e areof the nature of habits of thou'ht* an& habit &oes not brea- $ith

the past* nor &o the here&itary aptitu&es that fin& e%pression inhabit #ary 'ratuitously $ith the mere lapse of time 5hat is truein this respect* for instance* in the &omain of la$ an&institutions is true* li-e$ise* in the &omain of science 5hatmen ha#e learne& to accept as 'oo& an& &efiniti#e for the'ui&ance of con&uct an& of human relations remains true an&&efiniti#e an& unimpeachable until the e%i'encies of a later*altere& situation enforce a #ariation from the norms an& canonsof the past* an& so 'i#e rise to a mo&ification of the habits of thou'ht that &eci&e $hat is* for the time* ri'ht in humancon&uct So in 'oo& an& science the ancient 'roun& of finalityremains a #ali& test of scientific truth until the altere&e%i'encies of later life enforce habits of thou'ht that are not$holly in consonance $ith the recei#e& notions as to $hatconstitutes the ultimate* selfle'itimatin' term thesubstantial reality to $hich -no$le&'e in any 'i#en case mustpenetrate This ultimate term or 'roun& of -no$le&'e is al$ays of ametaphysical character !t is somethin' in the $ay of apreconception* accepte& uncritically* but applie& in criticisman& &emonstration of all else $ith $hich the science isconcerne& So soon as it comes to be criticise&* it is in a $ayto be superse&e& by a ne$* more or less altere& formulation for criticism of it means that it is no lon'er fit to sur#i#eunaltere& in the altere& comple% of habits of thou'ht to $hich it

is calle& upon to ser#e as fun&amental principle !t is sub.ectto natural selection an& selecti#e a&aptation* as are other con#entions The un&erlyin' metaphysics of scientific research

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incompletely* much as is the case $ith the metaphysics un&erlyin'the common la$ an& the sche&ule of ci#il ri'hts s in the le'alframe$or- the no$ a#o$e&ly useless an& meanin'less preconceptionsof status an& caste an& prece&ent are e#en yet at the mostmetamorphose& an& obsolescent rather than o#erpasse&* $itnessthe facts of inheritance* #este& interests* the outla$ry of &ebtsthrou'h lapse of time* the competence of the State to coerce

in&i#i&uals into support of a 'i#en* policy so in the sciencethe li#in' 'eneration has not seen an abrupt an& traceless&isappearance of the metaphysics that fi%e& the point of #ie$ of the early classical political economy This is true e#en for those 'roups of economists $ho ha#e most incontinently proteste&a'ainst the absur&ity of the classical &octrines an& metho&s !nProfessor 7arshall4s $or&s* 0There has been no real breach of continuity in the &e#elopment of the science*0 2ut* $hile there has been no breach* there has none the lessbeen chan'e* more farreachin' chan'e than some of us are 'la&to reco'nise for $ho $oul& not be 'la& to rea& his o$n mo&ern#ie$s into the con#incin' $or&s of the 'reat masters: Seen throu'h mo&ern eyes an& $ithout effort to turn past

'ains to mo&ern account* the metaphysical or preconceptionalfurniture of political economy as it stoo& about the mi&&le of this century may come to loo- +uite curious The t$o main canonsof truth on $hich the science procee&e&* an& $ith $hich thein+uiry is here concerne&* $ere> (a) a he&onistic associationalpsycholo'y* an& (b) an uncritical con#iction that there is ameliorati#e tren& in the course of e#ents* apart from theconscious en&s of the in&i#i&ual members of the community Thisa%iom of a meliorati#e &e#elopmental tren& fell into shape as abelief in an or'anic or +uasior'anic (physiolo'ical)(1") lifeprocess on the part of the economic community or of the nationan& this belief carrie& $ith it somethin' of a constrainin' sense

of self realisin' cycles of 'ro$th* maturity an& &ecay in thelife history of nations or communities 6e'lectin' $hat may for the imme&iate purpose be ne'li'iblein this outline of fun&amental tenets* it $ill bear the follo$in'construction (a) n the 'roun& of the he&onistic or associational psycholo'y* all spiritual continuity an& anyconse+uent teleolo'ical tren& is tacitly &enie& so far as re'ar&sin&i#i&ual con&uct* $here the later psycholo'y* an& the sciences$hich buil& on this later psycholo'y* insist upon an& fin& such ateleolo'ical tren& at e#ery turn (b) Such a spiritual or +uasispiritual continuity an& teleolo'ical tren& is uncriticallyaffirme& as re'ar&s the nonhuman se+uence or the se+uence of e#ents in the affairs of collecti#e life* $here the mo&ernsciences &ili'ently assert that nothin' of the -in& is&iscernible* or that* if it is &iscernible* its reco'nition isbesi&e the point* so far as concerns the purposes of the science This position* here outline& $ith as little +ualification asmay be a&missible* embo&ies the 'eneral metaphysical 'roun& of that classical political economy that affor&s the point of &eparture for 7ill an& ,airnes* an& also for Je#ons n& $hat isto be sai& of 7ill an& ,airnes in this connection $ill apply tothe later course of the science* thou'h $ith a 'ra&uallylessenin' force2y the mi&&le of the century the psycholo'ical premises of thescience are no lon'er so neat an& succinct as they $ere in the

&ays of 2entham an& James 7ill t JS 7ill4s han&s for instance* the nai#ely +uantitati#e he&onism of 2entham is bein'supplante& by a sophisticate& he&onism* $hich ma-es much of an

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pleasures that affor& the moti#es of con&uct This re#ision of he&onistic &o'ma* of course* means a &eparture from the stricthe&onistic 'roun& ,orrelate& $ith this a&#ance more closely inthe substance of the chan'e than in the assi'nable &ates* is aconcomitant impro#ement at least* set forth as an impro#ement upon the recei#e& associational psycholo'y* $hereby0similarity0 is brou'ht in to supplement 0conti'uity0 as a 'roun&

of connection bet$een i&eas This chan'e is $ell sho$n in the$or- of JS 7ill an& 2ain !n spite of all the in'enuity spentin maintainin' the associational le'itimacy of this ne$ articleof theory* it remains a patent inno#ation an& a &eparture fromthe ancient stan&point s is true of the impro#e& he&onism* soit is true of the ne$ theory of association that it is no lon'er able to construe the process $hich it &iscusses as a purelymechanical process* a concatenation of items simply Similarityof impressions implies a comparison of impressions by the min& in$hich the association ta-es place* an& thereby it implies some&e'ree of constructi#e $or- on the part of the percei#in'sub.ect The percei#er is thereby construe& to be an a'ent in the$or- of perception therefore* he must be possesse& of a point of

#ie$ an& an en& &ominatin' the percepti#e process To percei#ethe similarity* he must be 'ui&e& by an interest in the outcome*an& must 0atten&*0 The li-e applies to the intro&uction of +ualitati#e &istinctions into the he&onistic theory of con&uct pperception in the one case an& &iscretion in the other cease tobe the mere re'istration of a simple an& personally uncolore&se+uence of permutations enforce& by the factors of the e%ternal$orl& There is implie& a spiritual that is to say* acti#e 0teleolo'ical0 continuity of process on the part of thepercei#in' or of the &iscretionary a'ent* as the case may be !t is on the 'roun& of their &eparture from the stricter he&onistic premises that 7ill an&* after him* ,airnes are able*

for instance* to offer their impro#ement upon the earlier &octrine of cost of pro&uction as &eterminin' #alue Since it isconcei#e& that the moti#es $hich 'ui&e men in their choice of employments an& of &omicile &iffer from man to man an& from classto class* not only in &e'ree* but in -in&* an& since #aryin'antece&ents* of here&ity an& of habit* #ariously influence men intheir choice of a manner of life* therefore the mere +uantitati#epecuniary stimulus cannot be &epen&e& on to &eci&e the outcome$ithout recourse There are &eterminable #ariations in thealacrity $ith $hich &ifferent classes or communities respon& tothe pecuniary stimulus an& in so far as this con&ition pre#ails*the classes or communities in +uestion are noncompetin' 2et$eensuch noncompetin' 'roups the norm that &etermines #alues is notthe unmiti'ate& norm of cost of pro&uction ta-en absolutely* butonly ta-en relati#ely The formula of cost of pro&uction istherefore mo&ifie& into a formula of reciprocal &eman& Thisre#ision of the costofpro&uction &octrine is e%ten&e& onlysparin'ly* an& the emphasis is thro$n on the pecuniarycircumstances on $hich &epen& the formation an& maintenance of noncompetin' 'roups ,onsistency $ith the earlier teachin' iscarefully maintaine&* so far as may be but e%trapecuniaryfactors are* after all* e#en if reluctantly* a&mitte& into thebo&y of the theory So also* since there are hi'her an& lo$er moti#es* hi'her an& lo$er pleasures* as $ell as moti#es&ifferin' in &e'ree* it follo$s that an un'ui&e& response e#en

to the mere +uantitati#e pecuniary stimuli may ta-e &ifferent&irections* an& so may result in acti#ities of $i&ely &ifferin'outcome Since acti#ities set up in this $ay throu'h appeal to

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simply a mechanically a&e+uate effect of the stimuli* $or-in'un&er the control of natural la$s that ten& to one beneficentconsummation* therefore the outcome of acti#ity set up e#en bythe normal pecuniary stimuli may ta-e a form that may or may notbe ser#iceable to the community ence laissefaire ceases to bea sure reme&y for the ills of society uman interests are stillconcei#e& normally to be at one but the &etail of in&i#i&ual

con&uct nee& not* therefore* necessarily ser#e these 'enerichuman interests(/") Therefore* other in&ucements than theunmiti'ate& impact of pecuniary e%i'encies may be necessary tobrin' about a coinci&ence of class or in&i#i&ual en&ea#or $iththe interests of the community !t becomes incumbent on thea&#ocate of laissefaire to 0pro#e his minor premise0 !t is nolon'er selfe#i&ent that>0 !nterests left to themsel#es ten& toharmonious combinations* an& to the pro'ressi#e prepon&erance of the 'eneral 'oo&0 (3") The naturalri'hts preconception be'ins to fall a$ay as soonas the he&onistic mechanics ha#e been seriously tampere& $ithAact an& ri'ht cease to coinci&e* because the in&i#i&ual in $homthe ri'hts are concei#e& to inhere has come to be somethin' more

than the fiel& of intersection of natural forces that $or- out inhuman con&uct The mechanics of natural liberty that assume&constitution of thin's by force of $hich the free he&onistic playof the la$s of nature across the open fiel& of in&i#i&ual choiceis sure to reach the ri'ht outcome is the he&onisticpsycholo'y* an& the passin' of the &octrine of natural ri'hts an&natural liberty $hether as a premise or as a &o'ma* thereforecoinci&es $ith the passin' of that mechanics of con&uct on the#ali&ity of $hich the theoretical acceptance of the &o'ma&epen&s !t is* therefore* somethin' more than a coinci&ence thatthe halfcentury $hich has seen the &isinte'ration of thehe&onistic faith an& of the associational psycholo'y has also

seen the &issipation* in scientific speculations* of theconcomitant faith in natural ri'hts an& in that beni'n or&er of nature of $hich the naturalri'hts &o'ma is a corollary !t is* of course* not hereby inten&e& to say that the later psycholo'ical #ie$s an& premises imply a less close &epen&ence of con&uct on en#ironment than &o the earlier ones !n&ee&* there#erse may $ell be hel& to be true The per#a&in' characteristicof later thin-in' is the constant recourse to a &etaile& analysisof phenomena in causal terms The mo&ern catch$or&* in thepresent connection* is0 response to stimulus*4 4 but the manner in $hich this response is concei#e& has chan'e& The fact* an&ultimately the amplitu&e* at least in 'reat part* of the reactionto stimulus* is con&itione& by the forces in impact but theconstitution of the or'anism* as $ell as its attitu&e at themoment of impact* in 'reat part &eci&es $hat $ill ser#e as astimulus* as $ell as $hat the manner an& &irection of theresponse $ill be The later psycholo'y is biolo'ical* as contraste& $ith themetaphysical psycholo'y of he&onism !t &oes not concei#e theor'anism as a causal hiatus The causal se+uence in the 0refle%arc0 is* no &oubt* continuous but the continuity is not* asformerly* concei#e& in terms of spiritual substance transmittin'a shoc-> it is concei#e& in terms of the life acti#ity of theor'anism uman con&uct* ta-en as the reaction of such anor'anism un&er stimulus* may be state& in terms of tropism*

in#ol#in'* of course* a #ery close-nit causal se+uence bet$eenthe impact an& the response* but at the same time imputin' to theor'anism a habit of life an& a self&irectin' an& selecti#e

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en#ironment The selecti#e play of this tropismatic comple% thatconstitutes the or'anism4s habit of life un&er the impact of theforces of the en#ironment counts as &iscretion So far* therefore* as it is to be place& in contrast $ith thehe&onistic phase of the ol&er psycholo'ical &octrines* thecharacteristic feature of the ne$er conception is the reco'nitionof a selecti#ely self&irectin' life process in the a'ent 5hile

he&onism see-s the causal &eterminant of con&uct in the(probable) outcome of action* the later conception see-s this&eterminant in the comple% of propensities that constitutes man afunctionin' a'ent* that is to say* a personality !nstea& of pleasure ultimately &eterminin' $hat human con&uct shall be* thetropismatic propensities that e#entuate in con&uct ultimately&etermine $hat shall be pleasurable Aor the purpose in han&* theconse+uence of the transition to the altere& conception of humannature an& its relation to the en#ironment is that the ne$er #ie$formulates con&uct in terms of personality* $hereas the earlier #ie$ $as content to formulate it in terms of its pro#ocation an&its bypro&uct Therefore* for the sa-e of bre#ity* the ol&er preconceptions of the science are here spo-en of as construin'

human nature in inert terms* as contraste& $ith the ne$er* $hichconstrues it in terms of functionin' !t has alrea&y appeare& abo#e that the secon& 'reat articleof the metaphysics of classical political economy the belief in ameliorati#e tren& or a beni'n or&er of nature is closelyconnecte& $ith the he&onistic conception of human nature butthis connection is more intimate an& or'anic than appears from$hat has been sai& abo#e The t$o are so relate& as to stan& or fall to'ether* for the latter is but the ob#erse of the formerThe &octrine of a tren& in e#ents imputes purpose to the se+uenceof e#ents that is* it in#ests this se+uence $ith a&iscretionary* teleolo'ical character* $hich asserts itself in a

constraint o#er all the steps in the se+uence by $hich thesuppose& ob.ecti#e point is reache& 2ut &iscretion touchin' a'i#en en& must be sin'le* an& must alone co#er all the acts by$hich the en& is to be reache& Therefore* no &iscretion resi&esin the interme&iate terms throu'h $hich the en& is $or-e& outTherefore* man bein' such an interme&iate term* &iscretion cannotbe impute& to him $ithout #iolatin' the supposition Therefore*'i#en an in&efeasible meliorati#e tren& in e#ents* man is but amechanical interme&iary in the se+uence !t is as such amechanical interme&iate term that the stricter he&onism construeshuman nature(?") ccor&in'ly* $hen more of teleolo'ical acti#itycame to be impute& to man* less $as thereby allo$e& to thecomple% of e#ents r it may be put in the con#erse form> 5henless of a teleolo'ical continuity came to be impute& to thecourse of e#ents* more $as thereby impute& to man4s life processThe latter form of statement probably su''ests the &irection in$hich the causal relation runs* more nearly than the former Thechan'e $hereby the t$o metaphysical premises in +uestion ha#elost their earlier force an& symmetry* therefore* amounts to a(partial) shiftin' of the seat of putati#e personality frominanimate phenomena to man !t may be mentione& in passin'* as a &etail lyin' perhapsafiel&* yet not &e#oi& of si'nificance for latter&ay economicspeculation* that this elimination of personality* an& so of teleolo'ical content* from the se+uence of e#ents* an& its

increasin' imputation to the con&uct of the human a'ent* isinci&ent to a 'ro$in' resort to an apprehension of phenomena interms of process rather than in terms of outcome* as $as the

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cate'ories employe& are* in a 'ra&ually increasin' &e'ree*cate'ories of process* 0&ynamic0 cate'ories 2ut cate'ories of process applie& to con&uct* to &iscretionary action* areteleolo'ical cate'ories> $hereas cate'ories of process applie& inthe case of a se+uence $here the members of the se+uence are notconcei#e& to be char'e& $ith &iscretion* are* by the force of this conception itself* nonteleolo'ical* +uantitati#e

cate'ories The continuity comprise& in the concept of process asapplie& to con&uct is conse+uently a spiritual* teleolo'icalcontinuity $hereas the concept of process un&er the secon& hea&*the nonteleolo'ical se+uence* comprises a continuity of a+uantitati#e* causal -in&* substantially the conser#ation of ener'y !n its turn the 'ro$in' resort to cate'ories of processin the formulation of -no$le&'e is probably &ue to theepistemolo'ical &iscipline of mo&ern mechanical in&ustry* thetechnolo'ical e%i'encies of $hich enforce a constant recourse tothe apprehension of phenomena in terms of process* &ifferin'therein from the earlier forms of in&ustry* $hich neither obtru&e& #isible mechanical process so constantly upon theapprehension nor so imperati#ely &eman&e& an articulate

reco'nition of continuity in the processes actually in#ol#e& Thecontrast in this respect is still more pronounce& bet$een the&iscipline of mo&ern life in an in&ustrial community an& the&iscipline of life un&er the con#entions of status an& e%ploitthat formerly pre#aile& To return to the beni'n or&er of nature* or the meliorati#etren&* its passin'* as an article of economic faith* $as not&ue to criticism le#ele& a'ainst it by the later classicaleconomists on 'roun&s of its epistemolo'ical incon'ruity !t $astrie& on its merits* as an alle'e& account of facts an& the$ei'ht of e#i&ence $ent a'ainst it The belief in aselfrealisin' tren& ba& no sooner reache& a competent an&

e%hausti#e statement e'* at 2astiat4s han&s* as a &o'ma of the harmony of interests specifically applicable to the &etailsof economic life than it be'an to lose 'roun& 5ith his usualconcision an& incisi#eness* ,airnes complete& the &estruction of 2astiat4s special &o'ma* an& put it fore#er beyon& a rehearin'2ut ,airnes is not a &estructi#e critic of the classicalpolitical economy* at least not in intention> he is aninterpreter an& continuer perhaps alto'ether the clearest an&truest continuer of the classical teachin' 5hile he confute&2astiat an& &iscre&ite& 2astiat4s peculiar &o'ma* he &i& notthereby put the or&er of nature bo&ily out of the science e+ualifie& an& impro#e& it* #ery much as 7ill +ualifie& an&impro#e& the tenets of the he&onistic psycholo'y s 7ill an& theethical speculation of his 'eneration thre$ more of personalityinto the he&onistic psycholo'y* so ,airnes an& the speculators onscientific metho& (such as 7ill an& Je#ons) attenuate& theimputation of personality or teleolo'ical content to the processof material cause an& effect The $or- is of course* by no means*an achie#ement of ,airnes alone but he is* perhaps* the beste%ponent of this a&#ance in economic theory !n ,airnes4sre&action this foun&ation of the science became the concept of acolorless normality !t $as in ,airnes4s time the fashion for speculators in other fiel&s than the physical sciences to loo- tothose sciences for 'ui&ance in metho& an& for le'itimation of thei&eals of scientific theory $hich they $ere at $or- to realie

7ore than that* the lar'e an& fruitful achie#ements of thephysical sciences ha& so far ta-en men4s attention capti#e as to'i#e an almost instincti#e pre&ilection for the metho&s that ha&

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on this 'roun& become familiar to all scholars occupie& $ith anyscientific in+uiry* ha& permeate& their thin-in' on any sub.ect$hate#er This is eminently true of 2ritish thin-in' !t ha& come to be a commonplace of the physical sciences that0natural la$s0 are of the nature of empirical 'eneralisationssimply* or e#en of the nature of arithmetical a#era'es E#en theun&erlyin' preconception of the mo&ern physical sciences the

la$ of the conser#ation of ener'y* or persistence of +uantity $as claime& to be an empirical 'eneralisation* arri#e& atin&ucti#ely an& #erifie& by e%periment !t is true the alle'e&proof of the la$ too- the $hole conclusion for 'rante& at thestart* an& use& it constantly as a tacit a%iom at e#ery step inthe ar'ument $hich $as to establish its truth but that factser#es rather to emphasise than to call in +uestion the abi&in'faith $hich these empiricists ha& in the sole efficacy of empirical 'eneralisation a& they been able o#ertly to a&mit anyother than an associational ori'in of -no$le&'e* they $oul& ha#eseen the impossibility of accountin' on the mechanical 'roun&s of association for the premise on $hich al e%perience of mechanicalfact rests That any other than a mechanical ori'in shoul& be

assi'ne& to e%perience* or that any other than a soconcei#e&empirical 'roun& $as to be a&mitte& for any 'eneral principle*$as incompatible $ith the pre.u&ices of men traine& in the schoolof the associational psycholo'y* ho$e#er $i&ely they perforce&eparte& from this i&eal in practice 6othin' of the nature of apersonal element $as to be a&mitte& into these fun&amentalempirical 'eneralisations an& nothin'* therefore* of the natureof a &iscretionary or teleolo'ical mo#ement $as to be comprise&in the 'eneralisations to be accepte& as0 natural la$s0 6aturalla$s must in no &e'ree be imbue& $ith personality* must saynothin' of an ulterior en& but for all that they remaine& 0la$s0of the se+uences subsume& un&er them So far is the re&uction to

colorless terms carrie& by 7ill* for instance* that he formulatesthe natural la$s as empirically ascertaine& se+uences simply*e#en e%clu&in' or a#oi&in' all imputation of causal continuity*as that term is commonly un&erstoo& by the unsophisticate& !n7ill4s i&eal no more of or'anic connection or continuity bet$eenthe members of a se+uence is implie& in subsumin' them un&er ala$ of causal relationship than is 'i#en by the ampersan&* e isbusie& $ith &ynamic se+uences* but he persistently confineshimself to static terms n&er the 'ui&ance of the associational psycholo'y*therefore* the e%treme of &iscontinuity in the &eli#erances of in&ucti#e research is aime& at by those economists 7ill an&,airnes bein' ta-en as typical $hose names ha#e beenassociate& $ith &e&ucti#e metho&s in mo&ern science 5ith a finesense of truth they sa$ that the notion of causal continuity* asa premise of scientific 'eneralisation* is an essentiallymetaphysical postulate an& they a#oi&e& its treacherous 'roun&by &enyin' it* an& construin' causal se+uence to mean auniformity of coe%istences an& successions simply 2ut* since astrict uniformity is no$here to be obser#e& at first han& in thephenomena $ith $hich the in#esti'ator is occupie&* it has to befoun& by a laborious interpretation of the phenomena an& a&ili'ent abstraction an& allo$ance for &isturbin' circumstances*$hate#er may be the meanin' of a &isturbin' circumstance $herecausal continuity is &enie& !n this $or- of interpretation an&

e%pur'ation the in#esti'ator procee&s on a con#iction of theor&erliness of the natural se+uence 06atura non facit saltum0> ama%im $hich has no meanin' $ithin the stricter limits of the

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2efore anythin' can be sai& as to the or&erliness of these+uence* a point of #ie$ must be chosen by the speculator* $ithrespect to $hich the se+uence in +uestion &oes or &oes notfulfill this con&ition of or&erliness that is to say* $ithrespect to $hich it is a se+uence The en&ea#or to a#oi& allmetaphysical premises fails here as e#ery$here Theassociationists* to $hom economics o$es its transition from the

ol&er classical phase to the mo&ern or +uasiclassical* chose astheir 'ui&in' point of #ie$ the metaphysical postulate of con'ruity* in substance* the 0similarity0 of theassociationist theory of -no$le&'e This must be calle& their proton pseu&os* if associationism pure an& simple is to beaccepte& The notion of con'ruity $or-s out in la$s of resemblance an& e+ui#alence* in both of $hich it is plain to themo&ern psycholo'ist that a metaphysical 'roun& of truth*antece&ent to an& controllin' empirical &ata* is assume& 2ut theuse of the postulate of con'ruence as a test of scientific truthhas the merit of a#oi&in' all open &ealin' $ith an impute&substantiality of the &ata han&le&* such as $oul& be in#ol#e& inthe o#ert use of the concept of causation The &ata are con'ruous

amon' themsel#es* as items of -no$le&'e an& they may thereforebe han&le& in a lo'ical synthesis an& concatenation on the basisof this con'ruence alone* $ithout committin' the scientist to animputation of a -inetic or motor relation bet$een them Themetaphysics of process is thereby a#oi&e&* in appearance These+uences are uniform or consistent $ith one another* ta-en asarticles of theoretical synthesis simply0 an& so they becomeelements of a system or &iscipline of -no$le&'e in $hich the testof theoretical truth is the con'ruence of the system $ith itspremises !n all this there is a hi'h$rou'ht appearance of matteroffact* an& all metaphysical subreption of a

nonempirical or nonmechanical stan&ar& of reality or substantiality is a#oi&e& in appearance The 'eneralisations$hich ma-e up such a system of -no$le&'e are* in this $ay* state&in terms of the system itself an& $hen a competent formulationof the alle'e& uniformities has been so ma&e in terms of their con'ruity or e+ui#alence $ith the prime postulates of the system*the $or- of theoretical in+uiry is &one The concrete premises from $hich procee&s the systematic-no$le&'e of this 'eneration of economists are certain #eryconcise assumptions concernin' human nature* an& certain sli'htlyless concise 'eneralisations of physical fact*(@") presume& to bemechanically empirical 'eneralisations These postulates affor&the stan&ar& of normality 5hate#er situation or course of e#entscan be sho$n to e%press these postulates $ithout miti'ation isnormal an& $here#er a &epartu<e from this normal course of thin's occurs* it is &ue to &isturbin' causes*that is to say* tocauses not comprise& in the main premises of the science* an&such &epartures are to be ta-en account of by $ay of +ualification Such &epartures an& such +ualification areconstantly present in the facts to be han&le& by the sciencebut* bein' not con'ruous $ith the un&erlyin' postulates* theyha#e no place in the bo&y of the science The la$s of thescience* that $hich ma-es up the economist4s theoretical-no$le&'e* are la$s of the normal case The normal case &oes notoccur in concrete fact These la$s are* therefore* in ,airnes4s

terminolo'y* 0hypothetical0 truths an& the science is a0hypothetical0 science They apply to concrete facts only as thefacts are interprete& an& abstracte& from* in the li'ht of the

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normal case* a &iscussion of the concrete facts of life inrespect of their &e'ree of appro%imation to the normal case Thatis to say* it is a ta%onomic science f course* in the $or- actually &one by these economists thisstan&point of ri'orous normality is not consistently maintaine&nor is the unsophisticate& imputation of causality to the factsun&er &iscussion consistently a#oi&e& The associationist

postulate* that causal se+uence means empirical uniformitysimply* is in 'reat measure for'otten $hen the sub.ectmatter of the science is han&le& in &etail Especially is it true that in7ill the &ry li'ht of normality is 'reatly relie#e& by a stron'common sense 2ut the 'reat truths or la$s of the science remainhypothetical la$s an& the test of scientific reality iscon'ruence $ith the hypothetical la$s* not coinci&ence $ithmatteroffact e#ents The earlier* more archaic metaphysics of the science* $hichsa$ in the or&erly correlation an& se+uence of e#ents aconstrainin' 'ui&ance of an e%tracausal* teleolo'ical -in&* inthis $ay becomes a metaphysics of normality $hich asserts noe%tracausal constraint o#er e#ents* but contents itself $ith

establishin' correlations* e+ui#alencies* homolo'ies* an&theories concernin' the con&itions of an economic e+uilibriumThe mo#ement* the process of economic life* is not o#erloo-e&*an& it may e#en be sai& that it is not ne'lecte&* but the puretheory* in its final &eli#erances* &eals not $ith the &ynamics*but $ith the statics of the case The concrete sub.ectmatter of the science is* of course* the process of economic life* thatis una#oi&ably the case* an& in so far the &iscussion must beaccepte& as $or- bearin' on the &ynamics of the phenomena&iscusse& but e#en then it remains true that the aim of this$or- in &ynamics is a &etermination an& ta%is of the outcome of the process un&er &iscussion rather than a theory of the process

as such The process is rate& in terms of the e+uilibrium to$hich it ten&s or shoul& ten&* not con#ersely* The outcome of theprocess* ta-en in its relation of e+ui#alence $ithin the system*is the point at $hich the in+uiry comes to rest !t is notprimarily the point of &eparture for an in+uiry into $hat mayfollo$* The science treats of a balance& system rather than of aproliferation !n this lies its characteristic &ifference fromthe later e#olutionary sciences !t is this characteristic bentof the science that lea&s its spo-esman* ,airnes* to turn so-in&ly to chemistry rather than to the or'anic sciences* $hen hesee-s an analo'y to economics amon' the physical sciences(C")5hat ,airnes has in min& in his appeal to chemistry is* of course* the recei#e&* e%tremely ta%onomic (systematic) chemistryof his o$n time* not the tentati#ely 'enetic theories of asli'htly later &ay

!t may seem that in the characterisation .ust offere& of thestan&point of normality in economics there is too stron' animplication of colorlessness an& impartiality The ob.ectionhol&s as re'ar&s much of the $or- of the mo&ern economists of theclassical line !t $ill hol& true e#en as to much of ,airnes4s$or-* but it cannot be a&mitte& as re'ar&s ,airnes4s i&eal of scientific aim an& metho&s The economists $hose theories ,airnesrecei#e& an& &e#elope&* assure&ly &i& not pursue the &iscussionof the normal case $ith an utterly &ispassionate animus They ha&

still enou'h of the ol&er teleolo'ical metaphysics left to 'i#ecolor to the accusation brou'ht a'ainst them that they $erea&#ocates of laissefaire The preconception of the

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that unrestraine& human con&uct $ill result in the 'reatesthuman happiness* retains so much of its force in ,airnes4s timeas is implie& in the then current assumption that $hat is normalis also ri'ht The economists* an& ,airnes amon' them* not onlyare concerne& to fin& out $hat is normal an& to &etermine $hatconsummation ans$ers to the normal* but they also are at pains toappro#e that consummation !t is this some$hat uncritical an&

often una#o$e& i&entification of the normal $ith the ri'ht that'i#es colorable 'roun& for the $i&esprea& #ul'ar pre.u&ice* to$hich ,airnes &ra$s attention*(D") that political economy0sanctions0 one social arran'ement an& 0con&emns0 another n& itis a'ainst this uncritical i&entification of t$o essentiallyunrelate& principles or cate'ories that ,airnes4s essay on0Political Economy an& =aissefaire*0 an& in 'oo& part also thaton 2astiat* are &irecte& 2ut* $hile this is one of the manypoints at $hich ,airnes has substantially a&#ance& the i&eals of the science* his o$n conclu&in' ar'ument sho$s him to ha#e beenbut half$ay emancipate& from the pre.u&ice* e#en $hile mosteffecti#ely combatin' it(8") !t is nee&less to point out thatthe li-e pre.u&ice is still present in 'oo& #i'or in many later

economists $ho ha#e ha& the full benefit of ,airnes4s teachin'son this hea&(9") ,onsi&erable as ,airnes4s achie#ement in thismatter un&oubte&ly $as* it effecte& a miti'ation rather than anelimination of the untenable metaphysics a'ainst $hich heconten&e& The a&#ance in the 'eneral point of #ie$ from animisticteleolo'y to ta%onomy is sho$n in a curiously succinct manner ina parenthetical clause of ,airnes4s in the chapter on 6ormalValue(1F") 5ith his acceptance of the later point of #ie$in#ol#e& in the use of the ne$ term* ,airnes becomes theinterpreter of the recei#e& theoretical results The recei#e&positions are not sub.ecte& to a &estructi#e criticism The aim

is to complete them $here they fall short an& to cut off $hat maybe nee&less or $hat may run beyon& the safe 'roun& of scientific'eneralisation !n his $or- of re&action* ,airnes &oes not a#o$ probably he is not sensible of any substantial shiftin' of the point of #ie$ or any chan'e in the accepte& 'roun& of theoretic reality 2ut his a&#ance to an unteleolo'ical ta%onomynone the less chan'es the scope an& aim of his theoretical&iscussion The &iscussion of 6ormal Value may be ta-en inillustration ,airnes is not content to fin& ($ith &am Smith) that #alue$ill 0naturally0 coinci&e $ith or be measure& by cost of pro&uction* or e#en ($ith 7ill) that cost of pro&uction must* inthe lon' run* 0necessarily0 &etermine #alue 0This is to ta-e amuch too limite& #ie$ of the ran'e of this phenomenon0 (11") eis concerne& to &etermine not only this 'eneral ten&ency of #alues to a normal* but all those characteristic circumstances as$ell $hich con&ition this ten&ency an& $hich &etermine the normalto $hich #alues ten& is in+uiry pursues the phenomena of #aluein a normal economic system rather than the manner an& rate of approach of #alue relations to a teleolo'ically or he&onistically&efensible consummation !t therefore becomes an e%hausti#e but#ery &iscriminatin' analysis of the circumstances that bear uponmar-et #alues* $ith a #ie$ to &etermine $hat circumstances arenormally present that is to say* $hat circumstances con&itionin'#alue are commonly effecti#e an& at the same time in consonance

$ith the premises of economic theory* These effecti#e con&itions*in so far as they are not counte& anomalous an&* therefore* to beset asi&e in the theoretical &iscussion* are the circumstances

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in&ustrial community is hel& perforce to ta-e place* thecircumstances $hich are hel& to enforce a reco'nition an& ratin'of the pleasurebearin' capacity of facts They are not* as un&er the earlier costofpro&uction &octrines* the circumstances $hich&etermine the ma'nitu&e of the forces spent in the pro&uction of the #aluable article Therefore* the normal (natural) #alue is nolon'er (as $ith &am Smith* an& e#en to some e%tent $ith his

classical successors) the primary or initial fact in #aluetheory* the substantial fact of $hich the mar-et #alue is anappro%imate e%pression an& by $hich the latter is controlle& Thear'ument &oes not* as formerly* set out from that e%pen&iture of personal force $hich $as once concei#e& to constitute thesubstantial #alue of 'oo&s* an& then construe mar-et #alue to bean appro%imate an& uncertain e%pression of this substantial factThe &irection in $hich the ar'ument runs is rather the re#erse of this The point of &eparture is ta-en from the ran'e of mar-et#alues an& the process of bar'ainin' by $hich these #alues are&etermine& This latter is ta-en to be a process of &iscrimination bet$een #arious -in&s an& &e'rees of &iscomfort*an& the a#era'e or consistent outcome of such a process of

bar'ainin' constitutes normal #alue !t is only by #irtue of apresume& e+ui#alence bet$een the &iscomfort un&er'one an& theconcomitant e%pen&iture* $hether of labor or of $ealth* that thenormal #alue so &etermine& is concei#e& to be an e%pression of the pro&ucti#e force that 'oes into the creation of the #aluable'oo&s ,ost bein' only in uncertain e+ui#alence $ith sacrifice or &iscomfort* as bet$een &ifferent persons* the factor of costfalls into the bac-'roun& an& the process of bar'ainin'* $hichis in the fore'roun&* bein' a process of #aluation* a balancin'of in&i#i&ual &eman& an& supply* it follo$s that a la$ of reciprocal &eman& comes in to supplant the la$ of cost !n allthis the pro%imate causes at $or- in the &etermination of #alues

are plainly ta-en account of more a&e+uately than in earlier costofpro&uction &octrines but they are ta-en account of $itha #ie$ to e%plainin' the mutual a&.ustment an& interrelation of elements in a system rather than to e%plain either a&e#elopmental se+uence or the $or-in' out of a foreor&aine& en& This re#ision of the costofpro&uction &octrine* $hereby itta-es the form of a la$ of reciprocal &eman&* is in 'oo& parteffecte& by a consistent re&uction of cost to terms of sacrifice* a re&uction more consistently carrie& throu'h by ,airnes thanit ha& been by earlier he&onists* an& e%ten&e& by ,airnes4ssuccessors $ith e#en more farreachin' results 2y this step the&octrine of cost is not only brou'ht into closer accor& $ith theneohe&onistic premises* in that it in a 'reater &e'ree thro$sthe stress upon the factor of personal &iscrimination* but italso 'i#es the &octrine a more 'eneral bearin' upon economiccon&uct an& increases its ser#iceability as a comprehensi#eprinciple for the classification of economic phenomena !n thefurther elaboration of the he&onistic theory of #alue at thehan&s of Je#ons an& the ustrians the same principle of sacrificecomes to ser#e as the chief 'roun& of proce&ure

f the foun&ations of later theory* in so far as thepostulates of later economists &iffer characteristically fromthose of 7ill an& ,airnes* little can be sai& in this place6othin' but the #ery 'eneral features of the later &e#elopment

can be ta-en up an& e#en these 'eneral features of the e%istin'theoretic situation can not be han&le& $ith the same confi&enceas the correspon&in' features of a past phase of speculation

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the $or- of natural selection* as bet$een #ariants of scientificaim an& animus an& bet$een more or less &i#er'ent points of #ie$*has not yet ta-en effect an& it $oul& be o#erhaar&ous toattempt an anticipation of the results of the selection that liesin 'reat part yet in the future s re'ar&s the &irections of theoretical $or- su''este& by the names of Professor 7arshall*7r ,annan* Professor ,lar-* 7r Pierson* ustrian Professor

=oria* Professor Schmoller* the 'roup* no offhan& &ecision isa&missible as bet$een these can&i&ates for the honor* or* better*for the $or-* of continuin' the main current of economicspeculation an& in+uiry 6o attempt $ill here be ma&e e#en topass a #er&ict on the relati#e claims of the reco'nise& t$o or three main 0schools0 of theory* beyon& the some$hat ob#iousfin&in' that* for the purpose in han&* the socalle& ustrianschool is scarcely &istin'uishable from the neoclassical* unlessit be in the &ifferent &istribution of emphasis The &i#er'encebet$een the mo&ernise& classical #ie$s* on the one han&* an& thehistorical an& 7ar%ist schools* on the other han&* is $i&er* so much so* in&ee&* as to bar out a consi&eration of thepostulates of the latter un&er the same hea& of in+uiry $ith the

former The in+uiry* therefore* confines itself to the one linestan&in' most ob#iously in unbro-en continuity $ith that bo&y of classical economics $hose life history has been trace& in outlineabo#e n&* e#en for this phase of mo&ernise& classicaleconomics* it seems necessary to limit &iscussion* for thepresent* to a sin'le strain* selecte& as stan&in' peculiarlyclose to the classical source* at the same time that it sho$sunmista-able a&aptation to the later habits of thou'ht an&metho&s of -no$le&'e Aor this later &e#elopment in the classical line of politicaleconomy* 7r Geynes4s boo- may fairly be ta-en as the matureste%position of the aims an& i&eals of the science $hile Professor

7arshall e%cellently e%emplifies the best $or- that is bein' &oneun&er the 'ui&ance of the classical antece&ents s* after alapse of a &oen or fifteen years from ,airnes4s &ays of fullcon#iction* 7r Geynes interprets the aims of mo&ern economicscience* it has less of the 0hypothetical0 character assi'ne& itby ,airnes that is to say* it confines its in+uiry less closelyto the ascertainment of the normal case an& the interpretati#esubsumption of facts un&er the normal !t ta-es fuller account of the 'enesis an& &e#elopmental continuity of all features of mo&ern economic life* 'i#es more an& closer attention toinstitutions an& their history This is* no &oubt* &ue* in partat least* to impulse recei#e& from ;erman economists an& in sofar it also reflects the peculiarly #a'ue an& be$il&ere& attitu&eof protest that characterises the earlier e%positions of thehistorical school To the same essentially e%traneous source istraceable the theoretic blur embo&ie& in 7r Geynes4s attitu&e of tolerance to$ar&s the conception of economics as a 0normati#e0science ha#in' to &o $ith 0economic i&eals0* or an 0applie&economics0 ha#in' to &o $ith 0economic precepts0 (1/") ninchoate &eparture from the consistent ta%onomic i&eals sho$sitself in the tentati#e resort to historical an& 'eneticformulations* as $ell as in 7r Geynes4s per#a&in' inclination to&efine the scope of the science* not by e%clusion of $hat areconcei#e& to be noneconomic phenomena* but by &isclosin' a pointof #ie$ from $hich all phenomena are seen to be economic facts

The science comes to be characterise& not by the &elimitation of a ran'e of facts* as in ,airnes*(13") but as an in+uiry into thebearin' $hich all facts ha#e upon men4s economic acti#ity !t is

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rather that the science is concerne& $ith any an& all phenomenaas seen from the point of #ie$ of the economic interest 7rGeynes &oes not 'o fully to the len'th $hich this lastproposition in&icates e fin&s (1?") that political economy0treats of the phenomena arisin' out of the economic acti#ities of man-in& in society0 but* $hile the &iscussion by $hich he lea&sup to this &efinition mi'ht be construe& to say that all the

acti#ities of man-in& in society ha#e an economic bearin'* an&shoul& therefore come $ithin the #ie$ of the science* 7r Geynes&oes not carry out his eluci&ation of the matter to that broa&conclusion 6either can it be sai& that mo&ern political economyhas* in practice* ta-en on the scope an& character $hich thise%treme position $oul& assi'n it The passa'e from $hich the abo#e citation is ta-en is hi'hlysi'nificant also in another an& relate& bearin'* an& it is at thesame time hi'hly characteristic of the most effecti#e mo&ernise&classical economics The sub.ect matter of the science has cometo be the 0economic acti#ities0 of man-in&* an& the phenomena in$hich these acti#ities manifest themsel#es So Professor 7arshall4s $or-* for instance* is* in aim* e#en if not al$ays in

achie#ement* a theoretical han&lin' of human acti#ity in itseconomic bearin'* an in+uiry into the multiform phases an&ramifications of that process of #aluation of the material meansof life by #irtue of $hich man is an economic a'ent n& still itremains an in+uiry &irecte& to the &etermination of thecon&itions of an e+uilibrium of acti#ities an& a +uiescent normalsituation !t is not in any eminent &e'ree an in+uiry intocultural or institutional &e#elopment as affecte& by economice%i'encies or by the economic interest of the men $hoseacti#ities are analyse& an& portraye& ny sympathetic rea&er of Professor 7arshall4s 'reat $or- an& that must mean e#eryrea&er comes a$ay $ith a sense of s$ift an& smooth mo#ement

an& interaction of parts but it is the mo#ement of aconsummately concei#e& an& selfbalance& mechanism* not that of acumulati#ely unfol&in' process or an institutional a&aptation tocumulati#ely unfol&in' e%i'encies The ta%onomic bearin' is*after all* the &ominant feature !t is si'nificant of the samepoint that e#en in his &iscussion of such #itally &ynamicfeatures of the economic process as the &ifferentialeffecti#eness of &ifferent laborers or of &ifferent in&ustrialplants* as $ell as of the &ifferential a&#anta'es of consumers*Professor 7arshall resorts to an a&aptation of so essentiallyta%onomic a cate'ory as the recei#e& concept of rent <ent is apecuniary cate'ory* a cate'ory of income* $hich is essentially afinal term* not a cate'ory of the motor term* $or- or interest(1@") !t is not a factor or a feature of the process of in&ustrial life* but a phenomenon of the pecuniary situation$hich emer'es from this process un&er 'i#en con#entionalcircumstances o$e#er farreachin' an& #arious the employment of the rent concept in economic theory has been* it has throu'h allpermutations remaine&* $hat it $as to be'in $ith* a rubric in theclassification of incomes !t is a pecuniary* not an in&ustrialcate'ory !n so far as resort is ha& to the rent concept in theformulation of a theory of the in&ustrial process* as inProfessor 7arshall4s $or-* it comes to a statement of theprocess in terms of its resi&ue =et it not seem presumptuous tosay that 'reat an& permanent as is the #alue of Professor

7arshall4s e%position of +uasirents an& the li-e* the en&ea#or $hich it in#ol#es to present in terms of a conclu&e& system $hatis of the nature of a fluent process has ma&e the e%position

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There is a curious reminiscence of the perfect ta%onomic &ayin 7r Geynes4s characterisation of political economy as a0positi#e science*0 0the sole pro#ince of $hich is to establisheconomic uniformities0 (1C") an&* in this resort to theassociationist e%pe&ient of &efinin' a natural la$ as a0uniformity*0 7r Geynes is also borne out by Professor 7arshall(1D") 2ut this an& other sur#i#als of the ta%onomic

terminolo'y* or e#en of the ta%onomic canons of proce&ure* &o notbin&er the economists of the mo&ern school from &oin' effecti#e$or- of a character that must be rate& as 'enetic rather thanta%onomic Professor 7arshall4s $or- in economics is not unli-ethat of sa ;ray in botany* $ho* $hile $or-in' in 'reat part$ithin the lines of 0systematic botany0 an& a&herin' to itsterminolo'y* an& on the $hole also to its point of #ie$* #erymaterially furthere& the a&#ance of the science outsi&e the scopeof ta%onomy Professor 7arshall sho$s an aspiration to treat economic lifeas a &e#elopment an&* at least superficially* much of his $or-bears the appearance of bein' a &iscussion of this -in& !n thisen&ea#or his $or- is typical of $hat is aime& at by many of the

later economists The aim sho$s itself $ith a persistentrecurrence in his Principles is chosen ma%im is* 06atura nonfacit saltum*0 a ma%im that mi'ht $ell ser#e to &esi'nate thepre#ailin' attitu&e of mo&ern economists to$ar&s +uestions of economic &e#elopment as $ell as to$ar&s +uestions of classification or of economic policy is insistence on thecontinuity of &e#elopment an& of the economic structure of communities is a characteristic of the best $or- alon' the later line of classical political economy ll this 'i#es an air of e#olutionism to the $or- !n&ee&* the $or- of the neoclassicaleconomics mi'ht be compare&* probably $ithout offen&in' any of its a&epts* $ith that of the early 'eneration of Bar$inians*

thou'h such a comparison mi'ht some$hat shre$&ly ha#e to a#oi&any but superficial features Economists of the present &ay arecommonly e#olutionists* in a 'eneral $ay They commonly accept*as other men &o* the 'eneral results of the e#olutionaryspeculation in those &irections in $hich the e#olutionary metho&has ma&e its $ay 2ut the habit of han&lin' by e#olutionistmetho&s the facts $ith $hich their o$n science is concerne& hasma&e its $ay amon' the economists to but a #ery uncertain &e'ree The prime postulate of e#olutionary science* thepreconception constantly un&erlyin' the in+uiry* is the notion of a cumulati#e causal se+uence an& $riters on economics are in thehabit of reco'nisin' that the phenomena $ith $hich they areoccupie& are sub.ect to such a la$ of &e#elopment E%pressions of assent to this proposition aboun& 2ut the economists ha#e not$or-e& out or hit upon a metho& by $hich the in+uiry in economicsmay consistently be con&ucte& un&er the 'ui&ance of thispostulate Ta-in' Professor 7arshall as e%ponent* it appearsthat* $hile the formulations of economic theory are not concei#e&to be arri#e& at by $ay of an in+uiry into the &e#elopmental#ariation of economic institutions an& the li-e* the theoremsarri#e& at are hel&* an& no &oubt le'itimately* to apply to thepast*(18") an& $ith &ue reser#e also to the future* phases of the&e#elopment 2ut these theorems apply to the #arious phases of the &e#elopment not as accountin' for the &e#elopmental se+uence*but as limitin' the ran'e of #ariation They say little* if

anythin'* as to the or&er of succession* as to the &eri#ation an&the outcome of any 'i#en phase* or as to the causal relation of one phase of any 'i#en economic con#ention or scheme of relations

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any inno#ation is sub.ect* supposin' the inno#ation to ha#e ta-enplace* not the con&itions of #ariational 'ro$th The economicla$s* the0 statements of uniformity*0 are therefore* $henconstrue& in an e#olutionary bearin'* theorems concernin' thesuperior or the inferior limit of persistent inno#ations* as thecase may be(19") !t is only in this ne'ati#e* selecti#e bearin'that the current economic la$s are hel& to be la$s of

&e#elopmental continuity an& it shoul& be a&&e& that they ha#ehitherto foun& but relati#ely scant application at the han&s of the economists* e#en for this purpose 'ain* as applie& to economic acti#ities un&er a 'i#ensituation* as la$s 'o#ernin' acti#ities in e+uilibrium* theeconomic la$s are* in the main* la$s of the limits $ithin $hicheconomic action of a 'i#en purpose runs They are theorems as tothe limits $hich the economic (commonly the pecuniary) interestimposes upon the ran'e of acti#ities to $hich the other lifeinterests of men incite* rather than theorems as to the manner an& &e'ree in $hich the economic interest creati#ely shapes the'eneral scheme of life !n 'reat part they formulate the normalinhibitory effect of economic e%i'encies rather than the

cumulati#e mo&ification an& &i#ersification of human acti#itiesthrou'h the economic interest* by initiatin' an& 'ui&in' habitsof life an& of thou'ht This* of course* &oes not 'o to say thateconomists are at all slo$ to cre&it the economic e%i'encies $itha lar'e share in the 'ro$th of culture but* $hile claims of this-in& are lar'e an& recurrent* it remains true that the la$s $hichma-e up the frame$or- of economic &octrine are* $hen construe& as'eneralisations of causal relation* la$s of conser#ation an&selection* not of 'enesis an& proliferation The truth of this*$hich is but a commonplace 'eneralisation* mi'ht be sho$n in&etail $ith respect to such fun&amental theorems as the la$s of rent* of profits* of $a'es* of the increasin' or &iminishin'

returns of in&ustry* of population* of competiti#e prices* of cost of pro&uction !n consonance $ith this +uasie#olutionary tone of theneoclassical political economy* or as an e%pression of it* comesthe further clarifie& sense that no$a&ays attaches to the terms0normal0 an& economic 0la$s0 The la$s ha#e 'aine& incolorlessness* until it can no lon'er be sai& that the concept of normality implies appro#al of the phenomena to $hich it isapplie&(/F") They are in an increasin' &e'ree la$s of con&uct*thou'h they still continue to formulate con&uct in he&onisticterms that is to say* con&uct is construe& in terms of itssensuous effect* not in terms of its teleolo'ical content Theli'ht of the science is a &rier li'ht than it $as* but itcontinues to be she& upon the accessories of human action rather than upon the process itself The cate'ories employe& for thepurpose of -no$in' this economic con&uct $ith $hich thescientists occupy themsel#es are not the cate'ories un&er $hichthe men at $hose han&s the action ta-es place themsel#esapprehen& their o$n action at the instant of actin' Therefore*economic con&uct still continues to be some$hat mysterious to theeconomists an& they are force& to content themsel#es $itha&umbrations $hene#er the &iscussion touches this central*substantial fact ll this* of course* is inten&e& to con#ey no &ispraise of the $or- &one* nor in any $ay to &ispara'e the theories $hich the

passin' 'eneration of economists ha#e elaborate&* or the really'reat an& a&mirable bo&y of Gno$le&'e $hich they ha#e brou'htun&er the han& of the science but only to in&icate the &irection

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consciousness is shiftin' as re'ar&s its cate'ories an& itspoint of #ie$ The &iscipline of life in a mo&ern community*particularly the in&ustrial life* stron'ly reinforce& by themo&ern sciences* has &i#este& our -no$le&'e of nonhumanphenomena of that fullness of self&irectin' life that $as onceimpute& to them* an& has re&uce& this -no$le&'e to terms of opa+ue causal se+uence !t has thereby narro$e& the ran'e of

&iscretionary* teleolo'ical action to the human a'ent alone an&so it is compellin' our -no$le&'e of human con&uct* in so far asit is &istin'uishe& from the nonhuman* to fall into teleolo'icalterms Aootpoun&s* calories* 'eometrically pro'ressi#eprocreation* an& &oses of capital* ha#e not been supplante& bythe e+ually uncouth &enominations of habits* propensities*aptitu&es* an& con#entions* nor &oes there seem to be anyprobability that they $ill be but the &iscussion $hich continuesto run in terms of the former class of concepts is in anincreasin' &e'ree see-in' support in concepts of the latter class

6TES>

1 So* e'* <oscher* ,omte* the early socialists* JS 7ill* an&later Spencer* Schaeffle* 5a'ner

/ 0=et us not confoun& the statement that human interests are atone $ith the statement that class interests are at one Thelatter ! belie#e to be as false as the former is true 2utacceptin' the ma.or premises of the syllo'ism* that the interestsof human bein's are fun&amentally the same* ho$ as to the minor: ho$ as to the assumption that people -no$ their interests in

the sense in $hich they are i&entical $ith the interests of others* an& that they spontaneously follo$ them in this sense:0 ,airnes* Essays in Political Economy (=on&on* 18D3)* p /?@This +uestion cannot consistently be as-e& by an a&herent of thestricter he&onism

3 2astiat* +uote& by ,airnes* Essays* p 319

? !t may be remar-e&* by the $ay* that the use of the&ifferential calculus an& similar mathematical e%pe&ients in the&iscussion of mar'inal utility an& the li-e* procee&s on thepsycholo'ical 'roun&* an& that the theoretical results so arri#e&at are #ali& to the full e%tent only if this he&onisticpsycholo'y is accepte&

@ See* e'* ,airnes* ,haracter an& =o'ical 7etho& (6e$ Hor-)*p D1

C ,haracter an& =o'ical 7etho&* p C/

D Essays in Political Economy* pp /CF/C?

8 See especially Essays* pp /C3* /C?

9 !t may be interestin' to point out that the li-e

i&entification of the cate'ories of normality an& ri'ht 'i#es the&ominant note of 7r Spencer4s ethical an& social philosophy* an&that later economists of the classical an& social philosophy to

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1F 06ormal #alue (calle& by &am Smith an& <icar&o 0natural#alue*0 an& by 7ill 0necessary #alue*0 but best e%presse&* itseems to me* by the term $hich ! ha#e use&)0 =ea&in' Principles(6e$ Hor-)* p ?@

11 =ea&in' Principles* p ?@

1/ Scope an& 7etho& of Political Economy (=on&on* 1891)* chapsi an& ii

13 ,haracter an& =o'ical 7etho& e'* =ecture !!* especiallypp @3* @?* D1

1? Scope an& 7etho& of Political Economy* chap iii*particularly p 9D

1@ 0!nterest0 is* of course* here use& in the sense $hich it hasin mo&ern psycholo'ical &iscussion

1C Scope an& 7etho& of Political Economy* p ?C

1D Principles of Economics* Vol 1* 2oo- 1* chap #i* sect C*especially p 1F@ (3r& e&ition)

18 See* e'* Professor 7arshall4s 0<eply0 to Professor ,unnin'ham in the Economic Journal for 189/* pp @F8113

19 This is $ell illustrate& by $hat Professor 7arshall says of the <icar&ian la$ of rent in his 0<eply0 cite& abo#e

/F See* e'* 7arshall* Principles* 2oo- !* chap #i* sect C*

pp 1F@1F8 The li-e &ispassionateness is #isible in most other mo&ern $riters on theory as* e'* ,lar-* ,annan* an& the ustrians

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