CERTAIN PSYCHOLOGICAL PHASES OF INDUSTRIAL 

 EVOLUTION 



BY RICHARD T. ELY 



[Richard T. Ely, Ph.D., LL.D., Professor of Political Economy, University of 

 Wisconsin, b. Ripley, New York, 1854. Graduate, Columbia University, 

 1876; Fellow in Letters, Columbia University, 1876-79; student at Uni- 

 versities of Halle, Heidelberg, and Geneva, and at Royal Statistical Bureau, 

 Berlin, 1877-80; Ph.D., Heidelberg University, 1879. Professor of Political 

 Economy, Johns Hopkins University, 1881-92; Director, School of Economics, 

 Political Science, and History, University of Wisconsin, 1892; Secretary, Ameri- 

 can Economic Association, 1885-92; President, American Economic Association, 

 1899-1901. President, American Association for Labor Leoislation, 1906. Edi- 

 tor, Macmillan's Citizen's Library of Economics, Political Science and Sociology. 

 Author of French and German Socialism; Taxation in American States and Cities; 

 Introduction to Political Economy; Outlines of Economics; Socialism and Social 

 Reform; Social Law of Service; Monopolies and Trusts; Labor Movement in 

 America; Past and Present of Political Economy; Problems of To-day; Social 

 Aspects of Christianity; The Coming City; Studies in the Evolution of Industrial 

 Society; with Dr. George Ray Wicker, Elementary Principles of Political Economy.] 



A FEW years ago we heard a great deal about a new forward 

 movement in economic theory that was attributed to a profounder 

 study of the psychological forces at work in man's socio-economic 

 activities than had previously been made. Professors Menger, 

 Bohm-Bawerk, and Wieser, leaders in the so-called Austrian school 

 of economists, were most prominent in this renaissance, and their 

 chief service was a new elaboration of the theory of value based upon 

 a more careful analysis of man's mental processes. But the dis- 

 tinguished German economist, Adolph Wagner, of the University of 

 Berlin, who long before the Austrians were widely known, achieved 

 fame, has frequently insisted upon a deeper study of psychological 

 forces in our industrial life as a condition of an improvement in 

 economic science. Wagner's treatment of capital affords illustra- 

 tion. An examination of psychical considerations disclosed by the 

 study of economic society, he tells us, gives reason to believe that 

 only under private ownership will there be a sufficient accumulation 

 of capital. 



Strangely enough, with all this emphasis upon the psychology of 

 economic life, the peculiarly psychical elements at work in industrial 

 evolution have received little distinctive attention even at the hands 

 of scientists, while their existence appears to be almost unknown to 

 those whom we ordinarily call the educated public. Nevertheless, 

 it is precisely the so-called psychological considerations which are 

 decisive in the elaboration of a wise policy as well as in the correct 

 scientific treatment of industrial problems. In other words, in my 

 opinion we have had the smallest attention given to the psycholog- 

 ical considerations precisely in that field of economics where the 



