PRESIDENTIAL ADDRESS. 671 



was completed the economist should depart, and leave the practical statesman 

 to collate his report with those of the moralist and the politician, and to draw 

 the necessary inferences as to practical policy from their combined study. 



Such a limitation as this would have been quite foreign to the ideas of the 

 early makers of political economy. The mediasval thinkers were frankly con- 

 cerned with economic conduct and morals ; the mercantilists with the very prac- 

 tical question of adapting economic policy to the race for national power ; the 

 physiocrats with the freeing of pre-revolution France from the network of 

 vexatious and oppressive State restrictions on industry with a view to giving 

 free play to the natural expansion of manufacture and commerce. Malthus 

 was engaged in combating social utopias, while Adam Smith was concerned, as 

 we have been recently reminded in Professor Nicholson's striking book, with 

 every field of political and moral activity, as well as with that region within 

 which economic science is usually supposed to be confined. The author of the 

 ' Wealth of Nations ' would certainly have been astonished at the suggestion that 

 political economy is not concerned with ends. Yet the first step towards at 

 least a temporary divorce between the study of economic ends and means was 

 taken when Adam Smith enunciated his famous conclusion that ' all systems, 

 either of preference or of restraint . . . being . . . completely taken away, the 

 obvious and simple system of natural liberty establishes itself of its own accord.' 



I am not concerned to discuss whether this conclusion was an induction from 

 experience or a deduction from moral or theological presuppositions, or how far 

 it. is to be qualified by many other passages in the same great work. But in 

 any case the proposition that the natural forces of human desires and aversions, 

 and their mutual reactions, will naturally and without conscious intention on 

 the part of the individual lead to the greatest advantage of society, became 

 the starting-point of a school of propagandists of economic truth who too often 

 identified the indicative with the imperative mood, and blurred the distinction 

 between scientific generalisations and moral precepts of conduct. 



To those who adopted this view of the Economic Harmonies in its extreme 

 form the question whether political economy is concerned with ends as distinct 

 from means became a relatively unimportant question, and fell naturally into 

 the background. 



The maximising of production (or, as we should now say, of the national 

 dividend) is the only end that these economists could be said to propound, the 

 distribution of the resultant wealth being automatically determined by the 

 beneficent action of the ' system of natural liberty.' Sooner or later the current 

 utilitarian philosophy, with its principle of ' greatest happiness,' was bound to 

 come into conflict with this ideal, for the policy of maximising satisfaction is 

 clearly not identical with that of maximising production. The enunciation of 

 ' maximum satisfaction ' as an end necessarily raised — though it could not solve — 

 the question of distribution of wealth among different social classes. In regard 

 to this matter it shook confidence in the shallow dogmatism of the propagandist 

 economists, but it substituted no definite alternative commanding general assent, 

 and accordingly the immediate. practical result on economic thought was not 

 to inspire it with a new creed, but to deprive it of all creed, and to replace the 

 art of political economy by the conception of an economic science concerned 

 solely with the ascertainment of the results which flow from certain hypothetical 

 assumptions, and not at all with guiding mankind towards a desirable goal. 



Such a view could hardly hold permanent sway, though it was a great 

 advance on the dogmatic and insolent optimism which it displaced, and nominally 

 at least it dominated English economic thought from the middle of the nine- 

 teenth century almost to the present day. This domination has, however, been 

 more nominal than real. The limitation was from the first subjected to vigorous 

 criticism, and at bottom the critics were right, for however carefully we may 

 expel the idea of ends from our reasoning, current ideals and even prejudices 

 are certain to affect our choice of hypotheses. As a fact, all the latter-day 

 economists have by one expedient or another escaped from their own theoretic 

 limitation. To take a single example, it has become a recognised axiom of 

 economic reasoning that the diminution of poverty is a proper object of economic 

 effort. Of course, the pure utilitarian would have nothing to do with distinc- 

 tions of quality in happiness — distinctions which are fatal to the simplicity of 



x x 2 



