Page:The New International Encyclopædia 1st ed. v. 16.djvu/220

* POLITICAL ECONOMY. 184 POLITICAL ECONOMY. yields a net surplus — produil mt — over and above the ex])eiises of proJuction. To Quesnay, however, tliu Xnij^e agricultural employer, not the agrieultural laborer, Wiis the real pro<lucer of weallh: and the physioeratic theory is especially strong and ailvaneed in its analysis of capital. Agriculture being thus the sole ultimate source of national revenue, simplicity, economy, and justice demanded that the revenue of the State should be raised by a .single direct tax — the impot uni<iuc — levied upon rent. (See Single Tax.) The Physiocrats must accordingly be credited with the first statement of the ejHjch- niaking theory of surplus value, the tlicoiy that the product of industry contains a cerhiiii fund of value, due to the coiijieration of natural fac- tors, which is in excess of the mininuun remu- neration required to elicit the toil and sacrifice of industry, and which constitutes on this ac- count an exceptionally satisfactory source of taxation. Adam Smith, whose Wealth of Nations appeared in 1776, is easily the foremost fig- ure in the history of economic thought. Next to his inllu<'ncc in hastening free trade and in po])ulari/ing and dignifying the systematic study of wealtli, Smilli's most imjiortant service, per- haps, was in divorcing political economy from ethics, and in part from politics. Tliis appears plainly' from the outline of his lectures, which were divided into four parts: I. Natural The- olog)' ; II. Kthics — incorporated in his Theory of Moral Srnlimcnts ; III. Justice or .Jurispru- dence; IV. Political Kconomy. lie has been charge<l with the mistake of treating man as merely a wealth-seeking animal in whom the altruistic n:otives are wholly absent; but this criticism neglects the fact that in his Theory of Moral Scntimmts the motives of duty and sym- pathy are accorded full recognition, and the de- sire for wealth is treated as only one of the worthier objects of ambition. Even in thp Wcdllh of Salions he ojiposes piece-work as calcnialed to incite the laborer to over-exertion, and voices the necessity for rest, diversion, and even 'dissipation.' His whole attitude in the Wraith of iitioiis is essentially this: .ssuming that the object of the study is to increase the na- tioniil wealth as much as possible, this object will be most elTeetually secured by perfect in- diistrial liberty. He left the prior (|uestion of the desire for wealth to the Tlii-ori/ of Moral Soitlnunls. On the other hand, he did not suc- ceed so well in separating politics from econom- ics. He could not get without the bounds of political idiilosophy, because his ultimate pur- pose was to prove the supreme efficacy of the doctrine of laisseg-faire. Yet before he could lay down maxims for the increase of wealth, it was necessary to incpiire how wealth was actual- ly produced and distributed, and in doing this disinterested work of science he ceases to be the advocate. It was this passionless analysis of pro- duction, value, and distribution which had the greiifest eflTect upo7i the economists who followed him and led to the attempt to formulate a non- partisan science of political ec(momy, which should pass no ethical or political judgments. It must never be forgotten that Ailam Smith was not wholly consistent in the development of his theories. .t times he seems to hoUi that education should be left wholly to priv!te ini- tiative, but again he classes it among the neces- sary functions of government. In places he seems to hold a brief for 'perfect indirstrial lib- erty,' yet lie does not hesitate to recommend the State regulation of banking, and his <-liar:ictcr- ization of the Navigation .ct as "perhaps the wisest of all the commercial regulations of ICiig.- land" — purely on iiolitical grounds — is famous. This inconsistency, which was in reality ow- ing to breadth of thought, shows its<df in his method of investigation. Whether it was inductive or deductive has been the subject of wide and animated discussion. Wluitever the truth in this m:itter, the fact remains that at the hands of the economists who innneiliately suc- ceeded him the science itself became increasing- ly theoretical, increasingly deductive and ab- stract. The most potent single qualily of Smith's work which contributed to these results was its so-called 'universalism.' His work dealt with the wealth of nations, not that of a particular nation, or a particular eiioch, and his conliilence in the existence of a natural law of universal ap- plicability left an indelible impression upoi sub- se(|ucnt thinkers, (irantcd the existence of such a law, the conditions of time, place, race, and nationality must be matters of secon<lary im- portance. The superiority of the deductive method naturally follows. The Cl^v.ssical School. The economic thought of the early part of the nineteenth century was dominated bv a group of writers including Ben- tham, JIaltluis, J. B. Say, Ricardo, .McCullocli, James Mill, and others, who have been variously designated as the Classical, Orthodox, Uicardian, or Knglish School. The leaders of this school dill'ered upon points of economic doctrine, but the general system of thought developed by them is strikingly harmonious: deductive in method, pessimistic in tone, utilitarian and materialistic in its assumptions, and cosmopolitan in the sense that its ultimate scientific ideal was the discov- ery of universal economic laws applicable to all nations at all times. Jeremy Bentliam (1748-1832) gave the classi- cal economy its ethical framework through his formulation and tireless propagation of the utilitarian philosophy. Utilitarianism in its early form was largely an application to ethics of the individualistic doctrine of self-interest which Smith and the Physiocrats had a]iplied so skillfully in the field of political ]iliilosophy. ''To obtain the greatest portion of happiness for himself is the object of every rational being," says Bentham. — . that was materialistic, |)essi- mistic, and mechanical in the classical system of political econom.v seems to have been magni- fied and intensified by the famous Esfiay on the Principle of Population by Mallhiin (q.v.). who in his fondness for the historical method of re- search was in marked contradistinction to the men aboit him. But his favorite nu'thod had little or no etVect upon the classical political economy, while his famous doctrine that popilation tends to increase faster than food liecame the very backbone of the classical economy and modified almost every department of human thought. It may, indeed, be .said that while .dam Smith in- vestigated the causes of the wealth of nations, ilalthus gave an exposition of the causes of pov- erty, and the contrast is not unfair. The one was essentially an optimist, the other, if not him- self pessimistic, certainly gave a more pro- nounced impetus to pessimistic tendencies than