730 REPORT — 1891. 



plicated phenomena which go to make up human society ; only hy carefully stating- 

 our hypotheses can we avoid the dogmatism with which economists are so often 

 charged ; since by putting forward tlie condition we assume, we are also stating 

 the hmits within which our conclusions hold good. In reasoning from assumed 

 premisses we may obtain conclusions that have demonstrative certainty and state 

 laws which have universal validity ' in any sphere we can think about, even if 

 there is no place or time where the conditions on which they depend are realised, 

 so that these laws have nothing corresponding to them in any actual existence. 

 Our results may have no material truth, even though they have universal validity. 

 The pursuit of such speculations may be most valuable as a mental discipline, if for 

 no other reason because they may assist us to see how many matters must be taken 

 into consideration if we wish to make our investigations of actual phenomena 

 exhaustive. But if we are careful that our hypotheses about human nature shall 

 not be arbitrary, but shall have as much appropriateness as possible to actual men 

 and women in some actual place at some actual time, we get conclusions that are 

 not only universally valid in form, but that also serve to be a convenient instru- 

 ment for investigating facts. We may assume that people are grouped in nations, 

 and that each individual acts out of pure self-interest ; or we may assume that 

 people are grouped in families, and always act from a sense of duty in adhering to 

 known customs ; in either case we can state laws that have universal validity 

 on the assumed conditions ; but for purposes of empirical investigation, one 

 hypothesis is more convenient for studying the actual facts in Western Europe, 

 and the other is more convenient for studying the actual facts on the Russian 

 Steppes ; they are not equally appropriate to both groups of economic phenomena. 

 As Dr. Wliewell pointed out in excellent terms,- the progress of empirical 

 science demands the employment of appropriate conceptions ; but an illustration 

 may enforce this necessity in regard to economic investigation. Some little time 

 ago I was anxious to get a few statistics about the growth of British shipping 

 during: last century, and I turned to the beautiful ' Statistical Atlas' which was 

 published by William Playfair, who first applied the graphic method to statistics. 

 But I found that his careful diagrams were useless for my purpose, and I think I 

 may add for any possible purpose. He has arranged all his facts with the view of 

 showing in the clearest manner how the balance of trade stood between Great 

 Britain and each of the other countries with which we had commercial dealings, 

 and he thus demonstrated whether any branch was a losing or a gaining trade. 

 At the time when he wrote the unwisdom of this way of looking at things had 

 been clearly exposed, but he had failed to move with the times, and the work on 

 which he spent so much labour was simply thrown away. He only serves as 

 a warning to other economists, lest by adhering rigidly to habits of thought which 

 have ceased to be appropriate to the changing conditions of industry and commerce 

 their investigations and reflections should be out of touch with actual life, and 

 should all too soon find their place in the limbo of misapplied erudition. 



(a) To my mind the cosmopolitan and international character of industry and 

 commerce has not yet been sufficiently taken into account by economists. They 

 inherit the conception of mankind as grouped for economic purposes in nations, and 

 they adhere to it very closely. Adam Smith did much to break the old spell and 

 to show that it was not worth wbile to try and build up an independent national 

 economic life, but be was still under the thraldom of the old phrases. He still 

 spoke of the Wealth of Nations, and treated the nation as the economic unit. 

 List ' does indeed speak of Adam Smith as concerned with a world-wide economy, 

 but this is hardly correct ; he describes, not a cosmopolitan system, but economic 

 principles that would serve for any nation — they are nationalist still. Cobden and 

 the Free Traders took the same standpoint ; they thought of the nation as an 

 economic whole; they hoped that unin peded intercourse would bring about more 

 friendly feeling between nations ; they anticipated a great brotherhood in which 

 each nation should be a !member ; but Cobden was intensely nationalist and in- 



' Marshall, Present Position, 15. 



^ Philosophy of Inductive Sciences, II., 184 



' Xdtio mil System of Political Econvmy, 120. 



