696 REPORT— 1902. 



method of the Ricardian school, historical investigation, yielding at most 

 dynamical laws or generalisations as to the course of economic development. The 

 extravagance of the claim provoked an equal extravagance of repudiation. But it 

 is now generally admitted that there is room for both the economic historian and 

 the economic theorist ; and their labours have become mutually helpful in propor- 

 tion as each has confined himself more strictly to his proper sphere. 



There can be no doubt that economics, in common with modern science gene- 

 rally, has gained immensely from the application of the historical method. It is 

 not merely that the study of economic history has furnished abundant material 

 by means of which the economic theorist can illustrate or test his deductive con- 

 clusions. It h.'^s led, in the interpretation of tlieory itself, to a really effective 

 recognition by economists of the truth that in most cases their conclusions or laws 

 have merely a hypothetical and in others only a relative validity. In this way it 

 has done much to remove the basis of that popular misconception of, and antipathy 

 to, political economy for which the teaching of Ricardo and his early disciples 

 was in some degree responsible. 



The iufiiience of the historical conception in this direction is seen if we con- 

 sider that among the leading defects of the teaching of the early liicardians were — • 

 (1) Their employment of faulty abstractions which, as in the case of capital, gave 

 rise to {a) an intensely materialistic view of industrial progress. As a consequence 

 of this, (A) in their treatment of distribution the force of attention was misdirected, 

 and the influence of efficiency on wages was ignored. Human nature was treated 

 as a conrstant, and labour as a mere commodity, of which the price was inevitably 

 determined, under the influence of free competition, by the laws of demand and 

 supply. Thus (c) it was tacitly assumed that the mechanical theor}' of exchange 

 exhausted the problem of distribution. This was associated with another defect, 

 namely, (2) their treatment of these faulty abstractions as if they were concrete 

 realities, e.f/. the ' economic man.' From this, again, naturally followed (3) their 

 incautious advocacy of laisser faire, as exemplified especially in their opposition 

 to the early Factory Acts. 



On all these points the historical conception has profoundly influenced the 

 teaching of the latest representatives of the classical English school. But the 

 tendency, elsewhere prominent, on the part of the leaders of the historical school 

 to confuse ethical and economic considerations, and to justify a great extension of 

 the sphere of governmental action, has had little influence in this country, where 

 the application of the historical and comparative method is generally held to have 

 decidedly strengthened the presumption in favour of freedom of contract, and 

 against governmental action, as the general rule. 



3. The Position of Economics and the AppJied Sciences in a py'oposed 

 University Training of Persons intended for a Commercial Life, 

 ^ij W. R. Scott, M.A., D.Phil., Litt.D. 



' Higher Commercial Education ' is intended to provide a suitable training 

 for persons who aim at discharging the duties of responsible positions in business. 

 Such education should embody the principles of subjects taught: therefore it falls 

 ■within the sphere of the university. The relative importance of principles of 

 knowledge as opposed to applications of principles constitutes the distinction 

 between the university and the technical college. 



In Germany, about twenty years ago, higher commercial education was under- 

 stood as the study of science and its application to industries. But a training in 

 applied science alone is not a complete commercial education, because such train- 

 ing ignores the claims of economics. 



In England the tendency is towards the opposite extreme of proposing the 

 extension of the study of economics and political science as a higher commercial 

 education. The following are examples of recent developments in this direction : 



^1) The prpposed curriculum for Ilonouis in Economics at Cambridge, as 



