584. TRANSACTIONS OF SECTION F, 
to they German historical economists, and made clear—what the consistent 
advocates of a ‘hypothetical’ science had never denied, but what ordinary 
economic writings had been curiously unable to keep before men’s minds—the 
vast {difference between ‘tendencies’ and actual phenomena. And finally, 
in, 1881-2, the lectures of Arnold Toynbee made an attempt to show how 
the historical method could be applied to the interpretation of actual conditions, 
Meanwhile, it should also be added, the dissemination of the teachings of the 
so-called ‘scientific’ socialists—of Lassalle’s ‘Iron Law of Wages,’ and of Marx’s 
‘Surplus Value ’—disposed conservatively minded thinkers to re-examine that 
Ricardian teaching to which the Socialists, with so much show of reason, were in 
the habit of appealing. 
To what now has all this ferment led? After a time of almost complete 
chaos it might seem as if a new structure of theory with regard to the funda- 
mental problem of distribution has once more been erected—to judge from the 
appearance in these latter years of a whole shelf full of imposing text-books. 
We need but glance through them to discover that there has as yet been no 
substantial reconstruction among English-speaking economists on historical lines. 
The historical study of economic conditions has, it is true, made considerable 
progress; to that I shall return later. But the centre of interest among academic 
economists (and with them must be reckoned for this purpose some influential 
writers outside the Universities) is still to be found, both in this country and in 
America, in abstract argument. Among the diverse lines of thought which 
converged upon the old orthodoxy for its destruction in 1870-80, that represented 
by Jevons has for the time had the widest influence. It has been supplemented 
by the similar influences of Austrian economists—Menger, Béhm-Bawerk, and 
Wieser—who have been made accessible to English readers by translation or 
paraphrase ; and partly under impulses from Jevons and the Austrians, partly 
from an original turn for abstract speculation, there has appeared in America an 
independent theorician of the first rank, Professor Clark, who has already carried 
most of the younger economists of the United States with him, and is beginning to 
make himself felt on this side of the ocean. 
In speaking of this second, this newer, phase of abstract economics, my task is 
more perilous. The movement has only just got well under way; and it would 
be rash to predict its destination. I shall confine myself to a very few observa- 
tions; and possibly one who occupies a detached position outside theoretic 
discussion may see some of the larger features of the situation more distinctly 
than those who are themselves taking part in the debate. 
Perhaps the best term for the representatives of the newer abstract phase 
would be ‘the Marginalists.’ They employ the conception in different ways and 
with different results; but with all of them the notion of the Margin, the Grenz, 
is a never-failing resource. They all begin, at any rate, by laying stress on the 
doctrine of marginal or final utility, some as the key to the whole problem of 
value, some as the key to the demand side of it. And what has one to say to it? 
Of course, in the first place, it is quite true, so far as it goes; and, in the second 
place, it is pedagogically of some use. It puts an elementary bit of psychology in 
a way calculated to make the youthful beginner do a little thinking. Even for 
this purpose it is not without its dangers; for ‘utility’ cannot but be a constantly 
misleading name for mere ‘desiredness,’ however carefully it may be explained. 
Suppose, however, we all remember always that ‘utility’ does not necessarily 
mean in economics what it means in ordinary speech, how far does the doctrine 
take us? I cannot help thinking that it takes us a very short way indeed. In- 
stead of leading ‘us to the very heart of the problem, the doctrine of marginal 
value seems to me to remain entirely on the surface; it is not much more than a 
verbal description of the superficial facts at a particular point of time. The 
intensity of demand varies inversely, more or less rapidly, with the extent to which it 
is satisfied ; for different commodities there are different scales of intensity ; under 
certain circumstances one demand will be substituted for another. True, doubt- 
less. But why do people demand just those things? On what does the rapidity 
of satiation depend? Have their desires always been the same; or the possibilities 
