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ECONOMICS which they are employed, organized, and directed, throws more than an indication of the kind of thing which might very little light on agriculture. Every improvement be expected in a purely hypothetical world. When the involves, from a quantitative point of view, more or less of aim of the man of affairs and the hypothesis of the capital or of labour, so that it is the “antagonizing” economist was unrestricted competition, and ^eIatioas influences, which are nearly all qualitative, which appear measures were being adopted to realize it, between to be really important. It is therefore extraordinarily general theory such as the classical economists genera/ difficult at present to know what happens, or rather what provided was perhaps a sufficiently trustworthy economics c/a/ would happen if it were not prevented, when a country guide for practical statesmen and men of busi-®^^® reaches “ the stage of diminishing returns ” ; what precisely ness. If only people can be got to believe in it is which comes into operation, for obviously the them, a few abstract principles are quite enough to destroy diminishing returns are the results, not the cause; or how an institution which it has taken centuries to create. But commodities “obey” a law which is always “suspended.” a new institution cannot be made on the same terms. The Possibly the next few years of English industrial history modern industrial system has brought with it an immense will furnish many illustrations of the law of diminishing variety of practical problems which nations must solve on returns. We can only say that it requires investigation pain of industrial and commercial ruin. For these problems we want, not a few old-established general principles and restatement. Closely related to the law of diminishing returns is which no one seriously calls in question, but genuine conthe Theory of Pent. No economic doctrine so well illus- structive and organizing capacity, aided by scientific and trates the achievements and the defects of modern economic detailed knowledge of particular institutions, industries, analysis. Ricardo’s statement of the theory left upon the and classes. Just as the historical school grew up along world an impression, not wholly just, of singular clearness. with the greatest constructive achievement of the 19th He employed the theory with wonderful success in un- century, namely, the consolidation of Germany, so the apravelling the problems of his time. Its importance has plication to modern problems of the methods of that school not been seriously, or at any rate successfully, called in has been called forth by the constructive needs of the question. Treated at first as a doctrine peculiarly appli- present generation. We have already shown how these cable to land, with a certain controverted relevance to methods, in their turn, require the aid of general theory, other natural agents, it has been so extended that there but not of a general theory which tries to do their work. is scarcely any subject of economic study in which we In fact, every attempt to make it do so must inevitably may not expect to find adaptations or analogies, so that fail. How can such a huge mass of general propositions Ricardo seemed to have discovered the key of economic as are necessarily included in a system of economics ever knowledge. But it was discovered that there were no be thoroughly tested by an appeal to facts 1 If they are “ indestructible powers of the soil ”that the fertility not so tested, the general theory will remain a general of land in a country like England is almost entirely the theory, of no practical use in itself, until the end result of improvement at some time or other; that “ advan- of time. If they are to be tested, an indefinitely tage of situation ” includes very much more than the words large number of special studies must be made, for in their literal sense imply; that both “fertility” and which the original materials must be collected and “advantage of situation” include many kinds of differ- examined. That is, original investigation of special ential advantage; that in some circumstances rent does problems has to be carried out on a more gigantic scale not enter into the price of agricultural and other produce, than any economist of the historical school ever dreamt of and that in others it does. Moreover, the study of the or the world requires, with the certain knowledge that at theory of rent has had a very great influence on all the end of it all the general theory will not correspond branches of economics, by destroying the notion that it with the facts of life. For there is Ml the difference in is possible to draw sharp lines of distinction or deal with the world between using a body of general theory as an economic conceptions as though they were entirely inde- indication of the factors to be considered in the study of pendent categories. That modern economic analysis is a special problem, and undertaking special studies with a incomparably more accurate than that of earlier times view to testing the general theory. If the necessary there can be no question. But the net result of the limitations of general economic theory are recognized, most development of the doctrine of rent is that all problems of the difficulties we have noticed disappear. Now that in which this factor appears, and they embrace the whole the “ industrial revolution ” has extended practically all range of economic theory, must apparently be treated on over the world, so that we have several countries carrying their merits. In its modern form the doctrine is far too on production by modern methods, it is easily possible to general to be serviceable without the closest scrutiny of sketch the main features of industrial and commercial all the facts relating to the particular case to which it organization at the present time, to describe the banking is applied. To deal adequately with the numerous exten- and currency systems of the principal nations, their means sions or qualifications of these and other doctrines in the of transport and communication, their systems of comhands of modern economists would involve us in an attempt mercial law and finance, and their commercial policy. It to do what we have already said is impossible except on is true that at present very little work of this kind has conditions not at present realized. It is clear that in the been done in England, but innumerable books, many of interests of general economic theory we require a vast them about England, have been written by thoroughly number of special studies before an adequate restatement competent economists, in French, German, and other languages. So that no great amount of original work can be undertaken. It must be clearly recognized that the functions of is required for a reliable account of those general features economic science in the present requirements of the world of the modern system which should form the introduction cannot possibly be discharged by treatises on economic to economics. The general theory which we require should theory. The relations between general theory and special be sketched in firm and clear outline, leaving the detailed studies conducted on the lines we have indicated have qualifications of broad principles to special studies, where completely changed in the last thirty years. General they can be dealt with if it is necessary or desirable, and extheory never has been, and in the nature of things never can amined by statistical and other tests. For such a general be, the actual reflex of the life and movement of the theory there is ample material in the economic literature economic world. It never has been, and never can be, of all civilized countries. It is of the utmost import-