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 artisan he enjoys no municipal or political privileges. In the middle ages this differentiation of the industrial, municipal and political life had not taken place, and in order to understand the working of at first sight purely economic regulations it is necessary to make a close study of the functions of local government. But this, after all, does not carry us very far. From the very nature of the records in which we study the town life of the middle ages, it follows that we obtain from them only a one-sided view. No one knows what proportion of the industrial population was included in the organized gilds, or how complete was the control exercised by these bodies over their members. Elaborate regulations were in force, but no one knows how elastic they were in practice. Medieval Englishmen were particularly apt to put their aspirations into a legal form, and then rest satisfied with their achievement. The number of regulations is scarcely to be regarded as a test of their administrative success. Further, as the country became more consolidated and the central government extended its authority over economic affairs, new regulations came into force, new organs of government appeared, which were sometimes in conflict, sometimes in harmony, with the existing system, and it becomes for a time far more difficult to obtain a clear view of the actual working of economic institutions. Thus the study of the economic life of the middle ages is one of the most complicated subjects which can engage the attention of man. It is impossible to carry the process of isolation very far. The different threads of social activity are so closely interwoven that we cannot follow any one for very long without forming wrong impressions, and it becomes necessary to turn back and study others which seemed at first sight unrelated to the subject of our investigations. Under an apparently uniform and stable system of social regulation there was much variation and movement, the significance of which it is impossible to estimate. Materials for forming such an estimate no doubt exist, but before doing so we have to study in infinite detail a vast number of separate manors, municipalities or other separate economic areas. This involves great industry on the part of many scientific workers. Meanwhile we can illustrate the economic life of the middle ages, describe its main features, indicate the more important measures of public policy and draw attention to some of the main lines of development.

It is only as we approach more modern times that the conditions of economic study are realized and economic science, as we understand it, becomes possible. Those conditions are: (i.) the life of the state or other community or communities we are studying must be so differentiated that we can isolate those functions which are wholly or predominantly economic. The “separation of employments” is not only a condition of economic efficiency; it was necessary before we could have an economic science. (ii.) We must be in a position so far to understand and estimate the character and motives of different classes and groups in these communities that we can rightly interpret their action. This condition cannot be realized without great difficulty, for “economic motives” are very different in different periods, nations and classes, and even for short periods of time in the same country are modified by the influence of other motives of an entirely different order. In studying the economic history of the 18th century, for example, it is not enough to assume with Defoe that “gain is the design of merchandise.” We have to be saturated, as it were, with 18th-century influences, so that we can realize the conditions in which industry and trade were carried on, before we can rightly explain the course of development. In our own day labour disputes, to take another example, can scarcely ever be resolved into a question of merely pecuniary gain or loss. The significance of the amount of money involved varies greatly for different trades, and can only be understood by reference to the character and habits of the people concerned. But questions of sentiment, shop-feeling and trade customs invariably play an important part. (iii.) Economics can never lead to anything but hypothetical results unless we not only realize that we must “take account of” other than the purely economic factors, but also give due weight and significance to these factors. No explanation of the industrial situation in Germany, for example, would be intelligible or satisfactory even from the economic point of view which ignored the significance of the political conditions which Germans have to deal with. So, again, it is impossible to make a useful comparative estimate of the advantages and disadvantages of the transport systems of England, the United States and Germany, unless we keep constantly in view the very different geographical, military and political conditions which these systems have to satisfy. (iv.) Sufficient information must be available to enable us to test the validity of our hypotheses and conclusions. Whatever “method” of economic investigation we employ, we must at every stage see how far our reasoning is borne out by the actual experience of life. This obvious condition of scientific inquiry is very far from being completely realized even at the present time. It implies the existence of a well-trained class engaged in the work of collecting information, and much organization both by the state and private bodies. These four conditions can be reduced to two. The community we are studying must have reached such a stage of development that its economic functions and those immediately cognate to them form a well-defined group, and adequate means must be available so that we can, as it were, watch the performance of these functions and test our hypotheses and conclusions by observation and experience.

It is easy to understand, therefore, why we trace the beginnings of economics, so far as England is concerned, in the 16th century, and why the application of strict scientific tests in this subject of human study has become possible only in comparatively recent times. Medieval economics was little more than a casuistical system of elaborate and somewhat artificial rules of conduct. From the close of the middle ages until the middle of the 18th century thousands of pamphlets and other works on economic questions were published, but the vast majority of the writers have little or no scientific importance. Their works frequently contain information given nowhere else, and throw much light on the state of opinion in the age in which they wrote. It is also possible to find in them many anticipations of the views of the economists of later times; but such statements were as a rule generated merely by the heat of controversy on some measure or event of practical importance, and when the controversy died down were seldom regarded or incorporated in a scientific system. Trade bias, personal impressions and guesswork took the place of scientific method. This was inevitable in the absence of trustworthy information on an adequate scale, and from the immediately practical aims of the writers. But from the end of the 17th century economics has been definitely recognized as a subject of scientific study.

In modern times the conditions which have made economic science possible have also made it necessary. While it is impossible to give a strictly economic interpretation of the earlier history of nations, economic interests so govern the life and determine the policy of modern states that other forces, like those of religion and politics, seem to play only a subsidiary part, modifying here and there the view which is taken of particular questions, but not changing in any important degree the general course of their development. This may be, in the historical sense, merely a passing phase of human progress, due to the rapid extension of the industrial revolution to all the civilized and many of the uncivilized nations of the world, bringing in its train the consolidation of large areas, a similarity of conditions within them, and amongst peoples and governments a great increase in the strength of economic motives. When the world has settled down to the new conditions, if it ever does so, we may be confronted with problems similar to those which our forefathers had to solve. But, for the time, if we know the economic interests of nations, classes and individuals, we can tell with more accuracy than ever before how in the long run they will act. Public policy therefore requires the closest possible study of the economic forces which are moulding the destinies of the great nations of the world. In most civilized countries except England this is recognized, and adequate provision is made for the study