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ECONOMICS

in public affairs, laisser faire was genuinely relevant at the spond strictly to the actual life and movement of any given end of the 18th and the beginning of the 19th century, state. It is useful and necessary, and plays somewhat when the Statute Book was cumbered with vexatious and the same part in economic investigation as ton-mile obsolete laws. As an explanation of what has taken place statistics do in the administration of a railway. To during the last sixty years, or of the actual express in any language or to illustrate by any images, from a purely objective standpoint, the infinitely compliinstinctive economic life of the present day, it is ludicrously features o/ inadequate. Competition, in the sense in which cated movements of the actual world, is a task far beyond modern the word is still used in many economic works, is human capacity. problems. mere}y a special case of the struggle for survival, With the aid of this general theory the methods we and, from its limitation, does not go far towards explaining have sketched in relation to historical problems apply with the actual working of modern institutions. To buy in the greater force to the special problems of modern times, and cheapest market and sell in the dearest; to secure cheap- are rewarded with results more accurate, more fruitful, ness by lowering the expenses of production ; to adopt the more relevant to difficulties which all civilized nations less expensive rather than the more expensive method of have to face, than those of historical research. To many obtaining a given result—these and other maxims are as minds the interest and usefulness of economics depend old as human society. Competition, in the Darwinian entirely on the application of these methods, for it is the sense, is characteristic not only of modern industrial actual working of economic institutions about which the states, but of all living organisms; and in the narrower statesman, the publicist, the business man, and the artisan sense of the “ higgling of the market ” is found on the wish to know. Under the conditions we have AppIica. Stock Exchange, in the markets of old country towns, in described, many of the most interesting problems tion to mediaeval fairs and Oriental bazaars. In modern countries of our own time, when they are once defined, modem roblems it takes myriads of forms, from the sweating of parasitic resolve themselves into statistical inquiries. P But in most cases such an inquiry cannot be successfully trades to the organization of scientific research. Economic motives, again, are as varied as the forms of competition, carried out by a mere statistician. Definite economic and their development is coeval with that of human problems can very rarely be dealt with by merely quantisociety. They have to be interpreted in every age in tative methods. In the tabulation and interpretation of relation to the state of society, the other motives or ideals statistical evidence, as in its collection, it is scarcely with which they are associated, the kind of action they possible to overrate the importance of wide knowledge and inspire, and the means through which they operate. Appar- experience. There is another very important instrument ently the same economic motives have led in the same age of investigation which can be used in our own time, but and in the same nation to monopoly and individual cannot be employed in historical research. Historical enterprise, protection and free trade, law and anarchy. In documents, however detailed, rarely show all the factors our own time they have inspired both the formation of we have to deal with or fully explain a given situation. trade combinations and attempts to break them up, hostility No sane person would suppose that the minutes of a to all forms of state interference and a belief in collectivism. modern legislative body explain the steps by which The conditions which are peculiar to the modern world legislation has been passed, or the issues really involved. are the large numbers we have to deal with, the vast and The ostensible cause of a modern labour dispute is frefairly homogeneous areas in which justice is administered quently not the real or the most important cause. In and property secured, and the enormously increased modern problems we can watch the economic machine facilities for transport and communication. These condi- actually at work, cross-examine our witnesses, see that tions are of course not independent of each other, and they delicate interplay of passions and interests which cannot have brought in their train many consequences, some good be set down or described in a document, and acquire a and some bad. But they supply the bases for that general certain sense of touch in relation to the questions at issue theory which, as we have seen, is indispensable in economic which manuscripts and records cannot impart. We can investigation. From the standpoint of general theory therefore substitute sound diagnosis for guess-work more economic movements assume an impersonal character, frequently in modern than in historical problems. What then, it may be asked, becomes of the “old and economic forces operate like the forces of nature. Although economic motives have become more complex, Political Economy ” 1 Of what possible use are the works they have just as much and no more to do with general of the so-called classical writers, except in relation to the economic reasoning and analysis than the causes of death history of economics and the practical influence of theory with the normal expectation of life, or domestic ideals with in past times 1 If we take the mere popular view of what the birth-rate. So far as we have anything to do with is meant by the “ old Political Economy,” that is, that a psychology at all, it is the psychology of crowds and not generation or so ago economics was comprised in a neatly of individuals which we have to consider. If we study the rounded set of general propositions, universally 0 economy of a village, the idiosyncrasies of every individual accepted, which could be set forth in a text-book ^ptjc al in it are of importance. If the village is replaced by a and learnt like the multiplication table, it is economy.>> large area, inhabited by millions, with modern facilities of not incumbent on the present generation to communication, it is a matter of observation and ex- define its attitude at all. In this sense of the words, there perience that for the purposes of general reasoning the was no faith delivered to our fathers which we are under idiosyncrasies of individuals may be neglected. Whether any obligation to guard or even explain. If by the “ old such large numbers have the character of the “ economic Political Economy ” we mean the methods and conclusions man ” of the early economists matters very little. All the of certain great writers, who stood head and shoulders assumptions we require are furnished by observation of above their contemporaries and determined the general people in the mass and the larger generalizations of character of economic science, we are still under no obligastatistics. Thus we can construct a kind of envelope of tion to define the attitude of the present generation with theory, which, by careful testing as we proceed, can be regard to them. The fact that Adam Smith, with the made to indicate in a general manner the reactions of one meagre materials of the 18th century at his disposal, saw part of the activities of the economic world upon the his way to important generalizations which later research others, and the interdependence of the several parts. has established on a firm basis, may enhance greatly the From its very nature this general theory can never corre- reputation of Adam Smith, but does not strengthen the