Page:Encyclopædia Britannica, Ninth Edition, v. 19.djvu/380

Rh 364 POLITICAL ECONOMY fashion,&quot; Schmalz could not doubt that Quesnay s doctrine was alone true, and would ere long be triumphant everywhere. Just before the appearance of Smith, as in England Steuart, and Sonnen- in Italy Genovesi, so in Austria Sonnenfels (1733-1817), the first fels. distinguished economist of that country, sought to present the mercantile system in a modified and more enlightened form ; and his work (Grundsatze dcr Polizci, Handlung, und Finanz, 1765 ; 8th ed., 1S22) exercised even during a considerable part of the present century much influence on opinion and on policy in Austria. But the greatest German economist of the 18th century was, in Moser. Roscher s opinion, Justus Moser (1720-1794), the author of Patrio- tische Phantasiecn (1774), a series of fragments, which, Goethe nevertheless declares, form &quot; ein wahrhaftes Gauzes.&quot; The poet was much influenced by Moser in his youth, and has eulogized in the Dichtung und WahrJieit his spirit, intellect, and character, and his thorough insight into all that goes on in the social world. AVhilst others occupied themselves with larger and more prominent public affairs and transactions, Moser observed and reproduced the common daily life of his nation, and the thousand &quot; little things &quot; which compose the texture of popular existence. He has been com pared to Franklin for the homeliness, verve, and freshness of his writings. In opinions he is akin to the Italian Ortes. He is opposed to the whole spirit of the &quot;Aufklarung,&quot; and to the liberal and rationalistic direction of which Smith s work became after wards the expression. He is not merely conservative but reaction ary, manifesting a preference for mediaeval institutions such as the trade guilds, and, like Carlyle in our own time, seeing advantages even in serfdom, when compared with the sort of freedom enjoyed by the modern drudge. He has a marked antipathy for the growth of the money power and of manufactures on the large scale, and for the highly developed division of labour. He is opposed to absolute private property in land, and would gladly see revived such a system of restrictions as in the interest of the state, the commune, and the family were imposed on mediaeval ownership. In his wayward and caustic style, he often criticizes effectively the doctrinaire narrowness of his contemporaries, throws out many striking ideas, and in particular sheds real light on the economic phenomena and general social conditions of the Middle Ages. 2. Adam Smith, ivith his Immediate Predecessors and his Followers. England. The stagnation in economic inquiry which showed itself in England in the early part of the 18th century was not broken by any notable manifestation before 1735, when Bishop Berkeley put forward in his Querist, with much force and point, views opposed to those of the mercantile school on the nature of national wealth and the functions of money, though not without an admixture of grave error. But soon a more decisive advance was made. Whilst in France the physiocrats were working after their own fashion towards the con struction of a definitive system of political economy, a Scottish thinker of the first order was elucidating, in a series of short but pregnant essays, some of the funda mental conceptions of the science. What had been written on these questions in the English language before his time had remained almost altogether within the limits of the directly practical sphere. With Locke, indeed, the general system of the modern critical philosophy had come into relation with economic inquiry, but only in a partial and Hume, indeterminate way. But in Hume the most advanced form of this philosophy was represented, and his appear ance in the field of economics decisively marks the tendency of the latter order of speculation to place itself in con nexion with the largest and deepest thought on human nature and general human history. Most of the essays here referred to first appeared in 1752, in a volume entitled Political Discourses, and the number was completed in the collection of Essays and Treatises on Several Subjects, pub lished in the following year. The most important of them are those on Commerce, on Money, on Interest, and on the Balance of Trade. Yet these should not be separated from the rest, for, notwithstanding the unconnected form of these little treatises, there runs through them a pro found unity of thought, so that they indeed compose in a certain sense an economic system. They exhibit in full measure Hume s wonderful acuteness and subtlety, which indeed sometimes dispose him to paradox, in combination with the breadth, the absence of prejudice, and the social sympathies which so eminently distinguish him ; and they offer, besides, the charm of his easy and natural style and his rare power of lucid exposition. In the essay on money he refutes the mercantilist error, which tended to confound it with wealth. &quot; Men and commodities,&quot; he says, &quot; are the real strength of any community.&quot; &quot; In the national stock of labour consists all real power and riches.&quot; Money is only the oil which makes the movements of the mechanism of commerce more smooth and easy. He shows that, from the domestic as distinguished from the international point of view, the absolute quantity of money, supposed as of fixed amount, in a country is of no consequence, whilst an excessive quantity, larger, that is, than is required for the interchange of commodities, may bo injurious as raising prices and driving foreigners from the home markets. He goes so far, in one or two places, as to assert that the value of money is chiefly fictitious or conventional, a position which cannot be defended; but it must not be pressed against him, as he builds nothing on it. He has some very ingenious observations (since, however, questioned by J. S. Mill) on the effects of the increase of money in a country in stimulating industry during the interval which takes place before the additional amount is sufficiently diffused to alter the whole scale of prices. He shows that the fear of the money of an industrious community being lost to it by passing into foreign countries is groundless, and that, under a system of freedom, the distribution of the precious metals which is adapted to the requirements of trade will spontaneously establish itself. &quot; In short, a Government has great reason to preserve with care its people and its manufactures ; its money it may safely trust to the course of human affairs without fear or jealousy. &quot; A very important service was rendered by his treatment of the rate of interest. He exposes the erroneous idea often entertained that it depends on the quantity of money in a country, and shows that the reduction of it must in general be the result of the increase of industry and frugality, of arts and commerce,&quot; so that it may serve as a barometer, its lowness being an almost infallible sign of the flourishing condition of a people. It may be observed in pass ing that in the essay devoted to this subject he brings out a prin ciple of human nature which economists too often overlook, &quot;the constant and insatiable desire of the mind for exercise and employ ment,&quot; and the consequent action of ennui in prompting to exer tion. With respect to commerce, he points to its natural foundation in what has since been called &quot; the territorial division of labour,&quot; and proves that the prosperity of one nation, instead of being a hin drance, is a help to that of its neighbours. &quot;Not only as a man, but as a British subject,&quot; he says, I pray for the flourishing com merce of Germany, Spain, Italy, and even France itself.&quot; He con demns the &quot; numberless bars, obstructions, and imposts which all nations of Europe, and none more than England, have put upon trade.&quot; Yet on the question of protection to national industry he is not quite at the free-trade point of view, for he approves of a tax on German linen as encouraging home manufactures, and of a tax on brandy as increasing the sale of rum and supporting our southern colonies. Indeed it has been justly observed that there are in him several traces of a refined mercantilism, and that he represents a state of opinion in which the transition from the old to the new views is not yet completely elfected. We cannot do more than refer to the essay on taxes, in which, amongst other tilings, he repudiates the impGt unique of the physio crats, and to that on public credit, in which he criticizes the &quot; new paradox that public incumbrances are of themselves advan tageous, independent of the necessity of contracting them,&quot; and objects, perhaps too absolutely, to the modern expedient of raising the money required for national enterprises by way of loan, and so shifting our burdens upon the shoulders of posterity. The characteristics of Hume which are most important in the history of economic investigation are (1) his practice of bringing economic facts into connexion with all the weighty interests of social and political life, and (2) his tendency to introduce the historical spirit into the study of those facts. He admirably illustrates the mutual action of the several branches of industry, and the influ ences of progress in the arts of production and in com merce on general civilization, exhibits the striking con trasts of the ancient and modern system of life (see espe cially the essay On the Populousness of Ancient Nations), and considers almost every phenomenon which comes under discussion in its relations to the contemporary stage of social development. It cannot be doubted that Hume exercised a most important influence on Adam Smith, who