Principles of Political Economy Read Online

This book, however, is only a first of four treatises eventually intended to include the political economy of (2) agriculture, (3) industry and commerce, [pg 035] and (4) the state and commune. The ablest contemporary of Roscher, who was probably the first to urge the historical method, is Karl Knies,83 in “Die politische Oekonomie vom Standpunkte der geschichtlichen Methode” (1853, second edition, 1881-1883). The third of the group who founded the historical school is Bruno Hildebrand,84 of Jena, author of “Die Nationalökonomie der Gegenwart und Zukunft” (1848).

The German mind has always been familiar with the interference of the state, and a class of writers has arisen, not only advocating the inductive method, but strongly imbued with a belief in a close connection of the state with industry; and, inasmuch as the essence of modern socialism is a resort to state-help, this body of men, with Wagner at their head, has received the name of “Socialists85 of the Chair,” and now wield a wide influence in Germany. Of these writers,86 Wagner, Engel, Schmoller, Von Scheel, Brentano, Held, Schönberg, and Schäffle are the most prominent.

The historical school has received the adhesion of Émile [pg 036] de Laveleye,87 in Belgium, and other economists in England and the United States. While Cliffe Leslie has been the most vigorous opponent of the methods of the old school, there have been many others of less distinction. Indeed, the period, the close of which is marked by J. R. McCulloch's book, was one in which the old school had seemingly come to an end of its progress, from too close an adhesion to deductions from assumed premises. Mill's great merit was that he began the movement to better adapt political economy to society as it actually existed; and the historical school will probably give a most desirable impetus to the same results, even though its exaggerated claims as to the true method88 can not possibly be admitted.

Italian writers have not received hitherto the attention they deserve. After 1830, besides Rossi, who went to France, there was Romagnosi, who dealt more with the relations of economics to other studies; Cattanes, who turned to rural questions and free trade (combating the German, List); Scialoja, at the University of Turin; and Francesco Ferrara, also at Turin from 1849 to 1858. The latter was a follower of Bastiat and Carey, as regards value and rent, and at the same time was a radical believer in laissez-faire. Since the union of Italy there has been a new interest in economic study, as with us after our war. The most eminent living Italian economist is said to be Angelo Messedaglia, holding a chair at Padua since 1858. He has excelled in statistical and financial subjects, and is now engaged on a treatise on money, “Moneta,” of which one part has been issued (1882). Marco Minghetti and Fedele Lampertico stand above others, the former for a study of the connection of political economy [pg 038] with morals, and for his public career as a statesman; the latter for his studies on paper money and other subjects. Carlo Ferrais presented a good monograph on “Money and the Forced Currency” (1879); and Boccardo issued a library of selected works of the best economists, and a large Dictionary of Political Economy, “Dizionario universale di Economia Politica e di Commercio” (2 vols., second edition, 1875). Luigi Luzzati is a vigorous advocate of co-operation; and Elia Lattes has made a serious study of the early Venetian banks.

Political economy has gained little from American writers. Of our statesmen none have made any additions to the science, and only Hamilton and Gallatin can properly be called economists. Hamilton, in his famous “Report on Manufactures” (1791), shared in some of the erroneous conceptions of his day; but this paper, together with his reports on a national bank and the public credit, are evidences of a real economic power. Gallatin's “Memorial in Favor of Tariff Reform” (1832) is as able as Hamilton's report on manufactures, and a strong argument against protection. Both men made a reputation as practical financiers.

“With few exceptions, the works produced in the United States have been prepared as text-books89 by authors engaged in college instruction, and therefore chiefly interested in bringing principles previously worked out by others within the easy comprehension of undergraduate students.”90 Of these [pg 039] exceptions, Alexander H. Everett's “New Ideas on Population”91 (1822), forms a valuable part in the discussion which followed the appearance of Malthus's “Essay.” The writer, however, who has drawn most attention, at home and abroad, for a vigorous attack on the doctrines of Ricardo is Henry Charles Carey.92 Beginning with “The Rate of Wages” (1835), he developed a new theory of value (see “Principles of Political Economy,” 1837-1840), “which he defined as a measure of the resistance to be overcome in obtaining things required for use, or the measure of the power of nature over man. In simpler terms, value is measured by the cost of reproduction. The value of every article thus declines as the arts advance, while the general command of commodities constantly increases. This causes a constant fall in the value of accumulated capital as compared with the results of present labor, from which is inferred a tendency toward harmony rather than divergence of interests between capitalist and laborer.” This theory of value93 he applied to land, and even to man, in his desire to give it universality. He next claimed to have discovered a law of increasing production from land in his “Past, Present, and Future” (1848), which was diametrically opposed to Ricardo's law of diminishing returns. His proof was an historical one, that in fact the poorer, not the richer lands, were first taken into cultivation. This, however, did not explain the fact that different grades of [pg 040] land are simultaneously under cultivation, on which Ricardo's doctrine of rent is based. The constantly increasing production of land naturally led Carey to believe in the indefinite increase of population. He, however, was logically brought to accept the supposed law of an ultimate limit to numbers suggested by Herbert Spencer, based on a diminution of human fertility.