THE SCOPE AND METHOD OF POLITICAL ECONOMY 



BY JACOB H. HOLLANDER 



[Jacob H. Hollander, Ph.D., Professor of Political Economy, Johns Hopkins 

 University, b. Baltimore, Maryland, 1871. A.B. 1891, 'and Ph.D. 1894, 

 Johns Hopkins University. Assistant, 1894-95; Instructor, 1895-96; Asso- 

 ciate, 1896-99; Associate Professor of Finance, 1899-1900; Associate Pro- 

 fessor of Political Economy, 1901-04, Johns Hopkins University; Secretary 

 of United States Bimetallic Commission, 1897; Chairman of Municipal Light- 

 ing Commission, Baltimore, 1900; Special Commissioner to revise the laws 

 relating to taxation in Porto Rico, 1900; Treasurer of Porto Rico, 1900-01; 

 Special Agent on Taxation in the Indian Territory, 1904. Member of Ameri- 

 can Economic Association; American Statistical Association; British Eco- 

 nomic Association; American Academy of Political and Social Science; 

 Maryland Historical Society; American Jewish Historical Society. Author 

 of The Cincinnati Southern Railway, A Study in Municipal Activity; The 

 Financial History of Baltimore. Edited Letters of David Ricardo to J. R. McCul- 

 loch; Letters of David Ricardo to Hutches Trower (with James Bonar, Ph.D.) ; 

 Studies in State Taxation; reprint of economic tracts; and has made numerous 

 contributions to economic journals and other serial publications.] 



THE development of economic thought has been affected at inter- 

 vals by more or less formal consideration of the relative extent of its 

 subject-matter and the proper scope of its inquiry. Originally con- 

 ceived as the art of domestic government, political economy became 

 at the hands of the Physiocrats and their immediate precursors 

 a systematic study of the phenomena of wealth. Two influences, 

 emanating from the philosopher-scientists of the earl}'' eighteenth 

 century and together summed up in the historic ambiguity of the 

 term " natural," contributed to this end. First, the existence of 

 economic uniformities was asserted; and second, the possibility of 

 basic rules of social conduct was assumed. Similarly, Adam Smith, 

 starting from an academic discussion of " Police," in logical devel- 

 opment of the teachings of Pufendorf and Hutcheson, passed, with 

 growing sense of the importance of the subject and under the personal 

 stimulus of the Economistes, to a full consideration of national w r ell- 

 being. Professor Sidgwick has pointed out how this transition from 

 political economy as an analysis of wealth phenomena is actually 

 crystallized in the Wealth of Nations. Explicitly defining the pur- 

 pose of economic study as the first, Adam Smith in fact devoted 

 the bulk of his treatise to an analysis of public well-being. 



This drift of political economy away from rules of economic admin- 

 istration to an analysis of wealth phenomena was aided by the 

 intellectual reaction that followed the excesses of the French Revolu- 

 tion. Economic doctrines and, preeminently, the doctrines of the 

 new economic liberalism, were identified throughout Europe with 

 French principles and the revolutionary spirit. In 1793 --three 

 years after Adam Smith's death - - Dugald Stewart still hesitated to 



