F.— ECONOMIC SCIENCE AND STATISTICS 141 



forward worker is inevitably influenced by methods used in the past ; 

 methods that have already achieved good results may be expected to 

 achieve more ; tools ready to hand are taken up. By going over the old 

 ground and making a stricter survey, the methodologist may considerably 

 modify this influence of the past upon the present. For instance, by a 

 minute examination of assumptions he may show that there are certain 

 limitations in principle to the productiveness of a given method and that it 

 has in fact already yielded all the results that its assumptions allow. Or, 

 he may show that propositions usually deemed to constitute constructive 

 knowledge do not in fact do so, but consist essentially of definitions of 

 the terms employed. Or, he may show that conclusions often presented 

 as the fruits of deductive reasoning were suggested by observation of the 

 facts and have no other support, the premises used in the pedagogic 

 demonstration being hypotheses otherwise unsupported. These elucida- 

 tions may alter the forward worker's sense of proportion and the reliance 

 he implicitly places on certain tools. They may give him a greater 

 understanding of the nature of past achievements and so insensibly 

 influence him in his gropings towards fresh discovery. To do this is 

 very different from trying to lay down the lines on which he ought to work. 



This survey of economics is confined to what may be called its 

 scientific aspect — namely, the formulation of general laws and maxims. 

 Many economists are, naturally, concerned with much besides this. 

 They are concerned with the bare description of institutions, with com- 

 piling statistics and presenting them in an informative way. Study of 

 this sort may be regarded as contemporary economic history. It has 

 serious methodological problems of its own, which are not considered 

 here. 



It must not be inferred that this paper is solely concerned with so-called 

 deductive economics. Quite the contrary. Its purpose is to emphasise 

 the limitations of deduction and the importance of observation of the facts. 

 Facts may be observed for their own intrinsic interest, or as tending to 

 establish or overthrow some generalisation. It is the latter type of 

 observation that falls within this survey. 



It may be of assistance at this point to sketch out certain broad con- 

 clusions which the following reasoning seeks to establish. An advance 

 statement of this kind may make the course of the argument more easy 

 to follow. 



I propose to divide what is commonly regarded as the pure theory 

 of traditional economics into two sharply distinguished sections. Con- 

 fusion appears to me to have arisen from the failure to make this distinc- 

 tion. On the one hand there is the theory of value and distribution ; 

 on the other there is the maxim that productive resouixes should so be 

 distributed among occupations as to yield an equi-marginal social net 

 product. 2 



The theory of value and distribution seeks to show how a number of 

 circumstances taken as given (the fundamental data) — ^namely, the pre- 

 ferences and capacities of individuals and the available resources — serve 

 - Cp. Prof. Pigou, Economics of Welfare, ist ed., pt. ii, ch. 2, sec. 5. 



