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 POLITICAL

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POLITICAL

omy of the household. Where a household is not economically self-sufficing, that is, where households are economically interdependent, we have a broader economy. Where this interdependence is state- or nation-wide, there exists a national economy or political economy. The term political economy is used in yet a third sense. It is the name of the science which treats of this nation-wide complexus of eco- nomic acti\-ities.

II. Method axd Scope. — English economists in the early part of the nineteenth century, beginning with Malthus and Ricardo, hoped to establish a science of pohtical economy independent of the art of the statesman, which would to with the natural sciences in the exactness of its conclusions. They narrowed the field as conceived by Adam Smith by variously defining political economy as the science of wealth, the science of value, or the science of ex- changes. But along with this narrowing of the field and the attainment of scientific precision in the use of terms went a divorce of their science from the eco- nomic realities of life. Their met hod was strictly deduc- tive. Beginning with three or four principles for which they claimed universal validity, they proceeded to deduce a complete system without further appeal to the facts of life. These English writers, known as the Classical or Orthodox School, held that political econ- omj- must not concern itself with ethical or practical considerations. To do so, in their opinion, would degrade it to an art, for the science of political econ- omy was concerned merely with the explanation of the causal relations existing among economic phe- nomena. It was their business as economists simply to explain the existing economic system, not to defend or condemn it, nor to show how it might be replaced by a better one. To them good and bad were con- cepts which concerned moralists and not economists.

In opposition to this narrow and non-ethical \new of the Classical School, there arose in German}- in the middle of the nineteenth century, the Historical School, holding that pohtical economy is an inductive and an ethical science. They derided the abstractions of the Orthodox School, some extremists even going so far as to contend that the time was not yet ripe for a science of political economy. The business of their generation, they held, was to gather from observation and history and to classify the economic facts upon which future economists might construct a science. After a bitter struggle of half a centurj' the opposition between the schools has almost disappeared, and it is now generally recognized that the economist must use both the deductive and the inductive methods, using now one predominantly and now the other, according to the nature of the problem upon which he happens to be engaged. The best usage of the present time is to make political economy an ethical science, that is, to make it include a discussion of what ought to be in the economic world as well as what is. This has all along been the practice of Catholic writers. Some of them even go so far as to make political economy a branch of ethics and not an independent science. (See Devas, "Principles of Political Economj^".) For a further discussion of the relationship between the two sciences, see Ethics.

For purposes of exposition the field of political econ- omy is often divided into four parts: production, con- sumption, distribution, and exchange. Some authors omit one or another of these di^^sions, treating its problems under the remaining heads. The depurt- ment of production is concerned with the creation of wealth through the united efforts of land, labor, and capital. The creation of wealth involves the bringing into existence of utilities, that is, of capacities to satisfy wants. Utilities are created by changes in form of goods, or in their location, or by keeping them from a time of less demand to a time of greater demand. Consumption is concerned with the destruction of

utiUties in goods. It is the utilization of wealth, the carrying out of the purpose for which wealth is pro- duced. The department of distribution considers the manner in which the wealth which has been produced is di\-ided among the agents which have produced it. The shares in distribution are: rent, which is paid to the landlord for the use of the land; wages, which is the return to the labourer; interest, which goes to the capitaUst for the use of his capital; and profit, which is the reward of the entrepreneur or undertaker of the business. Finally, exchange has to do with the trans- fer of ownership of wealth. Under this head are dis- cussed money and credit and international exchanges. Outside of these four di\isions separate chapters are usually devoted to a consideration of taxation, monopolies, transportation, economic progress, and other problems. Adam Smith and his immediate followers were more closely concerned -n-ith the prob- lems of production. Owing to the world's remarkable progress in that direction in the last century, the in- equalities of distribution have come more and more into prominence, and this is now the favourite field of the economist.

III. HisTORT. — Ayident. — In ancient Greece and Rome there was Uttle likelihood of the emergence of a science of political economy. Their industrial sys- tem was founded on slavery, the great estates were for the most part self-sufficient economic units, leaving comparatively little room for commerce, and labour was held in contempt by the thinking element. How- ever, fragmentary discussions on economic subjects, mingled with ethical an; political considerations, are to be found. Xenophon has a rather extensive treat- ment of household economy. Plato, in the "Repub- lic", advocates an ideal communistic State. Aristotle presents a defense of private property, and writes against the taking of interest on the ground that money is barren. He defends warmly the institution of slaverj-. Among the Romans there was not much originaUty. We find frequent discussions of the rela- tive merits of large and small farms. Cicero, PUny the Elder, and other writers deplored the introduction of gold as a medium of exchange and preferred the age of barter. Seneca wrote upon the ethics of political economy and pleaded for the simple life.

Patristic ^y liters. — Under Christ ian influence labour, which had been held in contempt by the Pagans, came to be respected and honoured. The rigors of slavery were mitigated and the milder form of serfdom grew up, which later gave way to free labour. The Roman law had insisted on the rights of property; the early Fathers, on the other hand, insisted on the rights of man. Some even went to the extent of advocating a system of communism as the ideal state, merely tolerating private property. "The soil," says St. Ambrose, "was given to rich and poor in common." St. Gregory the Great, St. Augustine, St. Basil the Great, St. John Chrysostom, and St. Jerome write in similar vein. The taking of usur\' was universally condemned.

Middle Ages. — By the end of the Middle Ages there was developed a complete and systematic economic doctrine. This doctrine differed from modern pohtical economy in two important aspects. In the first place it was made to fit the economic institutions of that day, and would be inadequate if appUed to ours; and secondly, the emphasis was placed upon the ethically desirable rather than upon the actually existent. However, this latter distinction is now very much less marked than it was in the first half of the nineteenth century. Such questions as property, wealth, con- sumption, value, price, money, loans, monopoly, and taxation were treated in detail. To the medieval theologian, the "just price" of an article included enough to pay fair wages to the worker, that is, enough to enable him to maintain the standard of li\'ing of his class. In a like manner, a reasonable profit was de-