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therefore endeavour to sketch as shortly as possible the course 
of instruction which the modern teacher of economic theory, if 
unhampered by too close adherence to traditional standards, 
puts before those who come to him for instruction. 
The first, or almost the first, thing he will do is to try to open 
the eyes of his pupils to the wonderful way in which the people 
of the whole civilised world now cooperate in the production of 
wealth. He may perhaps read them Adam Smith’s famous 
description of the making of the labourer’s coat, a description 
which required three generations and three great writers to 
elaborate in the form in which we know it. Or he will ask 
them to consider the daily feeding of London. There are, he 
will point out, six millions of people in and about London, so 
closely packed together that they cannot grow anything for their 
own consumption, and yet every morning their food arrives with 
unfailing regularity, so that all but an infinitesimal fraction of 
them would be extremely surprised if they did not find their 
breakfast ready to hand. To prepare it they use coal which has 
been dug from great depths hundreds of miles away in the Mid- 
lands or Durham ; in consuming it they eat and drink products 
which have come from Wiltshire, Jamaica, Dakota, India, or 
China, with no more thought than an infant consuming its 
mother’s milk. It is clear that there is in existence some 
machinery, some organisation for production which, in spite of 
occasional failures here and there, does its work on the whole with 
extraordinary success. It is easy to be pessimistic, especially 
when the weather is damp, and we are apt to concentrate our 
attention, and to endeavour to make others concentrate their 
attention, on this or that defect, and to forget that the system is 
not made up of defects, but on the whole works very well. 
Imagine the report of a really outside observer. In all civilised 
planets, I have no doubt, there must be an institution more or 
less resembling the British Association. An economist in Mars, 
let us say, has been favoured with a glimpse of this island 
through a new mammoth telescope of sufficient power to let 
him see us walking about, and he is reporting to Section F 
what he saw, Will he say that he saw a confused scramble for 
the scanty natural products of the earth? That most people 
were obviously in a state of starvation? That few had clothes? 
And that scarcely any were housed? No, truly; he will be 
much more likely to report that he saw a wonderfully orderly 
population, going to and from its work with amazing regularity, 
without a sign of compulsion or unwillingness ; that it appeared 
to be fed and clothed and housed in a way extraordinarily 
creditable on the whole to some mysterious organisation, the 
nature of which he could only guess at. 
Having endeavoured to make his pupils recognise that we are 
organised, and that the organisation works, the teacher will go 
on to show how it works ; why things that are wanted are pro- 
duced in the places where they can be easiest produced and 
taken to the places where it is most convenient to consume them ; 
why people go to live in large numbers in spots where it is 
desirable they should work, and leave great areas sparsely in- 
habited ; why more people are brought up to follow an occupa- 
tion when the desire for its products increases, and fewer when 
it decreases ; why if the harvest is short the consumption is 
economised so as to spread it over the year; andso on. The 
answer to all these questions is of course ‘‘ self-interest ” or 
“‘the hope of gain.” Durham coal, Wiltshire milk, Danish 
butter, Jamaica sugar, Dakota wheat and China tea go to 
London because it pays to send them there. People congregate in 
London or Belfast because it pays them to work there. More do 
not come because it would not pay them. Young people leave 
agriculture and go to towns to make agricultural implements or 
bicycles because it pays. The consumption of grain is economised 
and spread over the year because it pays to hold the stock. If 
people with one accord left off doing what paid we should all be 
dead in two months. 
The reasons why it pays to do the right thing—to do nearly 
what an omniscient and omnipotent benevolent Inca would 
order to be done—are to be looked for in the laws of value. 
This used to be regarded as a somewhat arid subject, but the 
discussions of recent years, especially the contribution made by 
Jevons and the Austrian school, have fertilised it. Long ago 
economists pointed out how the much-abused corn-dealer who 
held out for a higher price saved the people from starvation ; 
and we now, thanks to the theory of final utility, not only know 
that it is a fact, but also why it is a fact, that value rises with 
the extent and urgency of demand, so that when athing is much 
wanted, much is offered to those who produce it, or are ready 
NO. 1716, VOL. 66] 
NATURE 
[SEPTEMBER 18, 1902 
to part with it, and consequently its production is stimulated or 
its consumption economised, as need be. 
This will naturally lead to the question of distribution—the 
question, that is, why much of the produce falls to the share of 
one individual and little to that of another ; why, in a word, 
some are rich and others poor. The teacher will here explain 
that the share of each person depends on the amount and value 
of his contribution to production, whether that contribution be 
labour or the use of property. He will show how this system of 
distribution is essential to the existing system of production, 
where no man is compelled to work or to allow his property to 
be used by others, and where every man has legal freedom to 
choose his own occupation and the uses to which he will put 
his property. He will beware of claiming for it that it is just 
in the sense in which justice is understood in the nurseries where 
jam is given when the children are good. There is, he will 
explain, no claim on behalf of the system that it rewards moral 
excellence, but only that it rewards economic service. There 
isno claim that economic service is meritorious. Whether a 
man can and does perform valuable economic service does 
not by any means depend entirely on his own volition, His 
valuable property may have come to him by bequest or in- 
heritance ; his incapacity to do any but the least valuable work 
may be the result of conditions over which he has had no 
control. The system exists, not because it is just, or to reward 
merit, but because it is inextricably mixed up with the system of 
production. It has one great evil—its inequality. Moralists 
and statesmen have long seen the evils of great inequality of 
wealth, and now, thanks to modern discoveries in economic 
theory, the economist is able to explain that it is wasteful, that it 
makes a given amount of produce less useful, because each 
successive increment of expenditure yields, as a rule, less enjoy- 
ment to the spender. The teacher will go on to show how this 
organisation of production and distribution is made possible by 
the order enforced by Government, and how, in various ways, 
Government supplements or modifies it ; but I shall not enlarge 
upon this part of the teaching of economics, as its practical use- 
fulness is obvious. My theme is the usefulness of the other 
part, the explanation of the organisation of production and dis- 
tribution in so far as it depends on separate property, free labour, 
and the consequent action of self-interest. 
In the first place, I maintain that the widespread dissemina- 
tion of such teaching would help to do away with a vast amount 
of most disastrous obstruction of necessary and desirable changes. 
Take, for example, the obstruction offered to changes in inter- 
national trade. Of course every conceivable argument has been 
used by different writers in wholly different circumstances for ob- 
structing the cooperation of mankind in production, as soon as 
it oversteps a national boundary. But what is the real support 
of this kind of obstruction? Obviously the fact that certain 
producers, or owners of certain means of production, are 
damaged by an increase in the importation of a particular article. 
Their loss, their suffering, if their loss is severe enough to de- 
serve that name, appeals to popular compassion, and their 
request for ‘‘ protection” is easily granted, the new trade is 
nipped in the bud, and things are forced to remain in their 
accustomed channels. The same principle is not applied as 
between county and county or between province and province, 
simply because there is then visible to everyone an opposing 
interest, the interest of the new producers, within the hallowed 
pale of the national boundary. Adam Smith tells us that when 
the great roads into London were improved, some of the land- 
lords in the home counties protested on the ground that the 
competition of the more distant counties would reduce their 
rent. The home counties did not get the protection they wanted, 
because it was obviously to the interest of the more distant 
counties that they should not have it. These two interests being 
balanced, the interest of the consumer, London, turned the 
scale. So it usually happens that beneficial changes in internal 
trade are allowed to take their course without obstruction be- 
cause the votes of two sets of producers counteract each other, 
and the consumer’s interest settles the question. But in inter- 
national trade one of the two sets of producers is outside the 
country ; it consists of hated foreigners, the fact that it will 
benefit is an argument against rather than for the threatened 
change in trade, and the consumers therefore feel it patriotic to 
sacrifice their own interest and vote for protection. But if they 
were properly instructed in economic theory they would see at 
once that such magnanimity is entirely misplaced. They would 
see that it would cut away all international trade, since, if 
