84 



sciEJsrciJ. 



[Vol. VIll., No. 181 



According to the wage-fnnd theory, there can be 

 no increase of wages except by increase of capital 

 or diminution of the number of laborers ; and as, 

 according to the Malthusian theory, population 

 tends to increase to the limits of food-supply, there 

 will be no diminution of population, and hence no 

 increase of wages is possible. Can any solution 

 of the labor-problem be easier ? Do we ask if a 

 country should protect its home industries? Self- 

 interest, it is said, leads each man to make the 

 best bargain for himself, therefore free trade 

 should be the universal rule. This answers the 

 question for Germany as well as for the United 

 States ; for India as well as for England. Do we 

 demand that the state control the charges of cor- 

 porations? It is answered, profits tend to an equal- 

 ity in all employments : therefore, if in any one 

 business profits are abnormally high, capital will 

 rush into that business, and the charges will be 

 brought dov/n, and the public will be best served. 

 Behold, the solution of the railroad question ! 



It is true that the new method does not give us 

 principles which, like these (to use the expression 

 of Ingram), are unchangeable, perpetual, and cos- 

 mopolitan. Neither does it lay down laws which 

 can be applied by the rule of thumb to every new 

 economic and social problem, wherever occurring, 

 or under whatever circumstances. Such a science 

 is, on the face of it, absurd. It is like introducing 

 steam-engines where there is no fuel, or ma- 

 chinery where there is already an excess of hand- 

 labor. It is like that pseudo-political science that 

 desires to see representative institutions estab- 

 hshed in Egypt, or the trial by jury adopted by 

 the Zulus. Such universal principles, like the 

 contrat social and the theory of natural rights, 

 have long gone by the board in social science. 

 AU we seek now are certain empirical generaliza- 

 tions which will guide our judgment in approach- 

 ing practical problems. Such generalizations are 

 not immutable laws ; but they are extremely valu- 

 able to philosopher and statesman, just as the 

 knowledge of markets and business methods is of 

 value to a business man. 



The statement, however, that the inductive 

 method does not enable us to formulate any gen- 

 eral principles of economic life is not true for two 

 reasons : 1°. There is absolutely nothing in the 

 new method to prevent our accepting and using 

 any facts of the human mind or of nature which 

 will aid us in determining how men act in eco- 

 nomic affairs. No economist would venture on 

 the solution of an economic problem without tak- 

 ing into consideration the fact that men are ordi- 

 narily moved by self-uiterest, any more than a 

 general would manoeuvre for a battle without 

 taking into account whether his men were fresh 



or tired, weU fed or half starved, in good spirits 

 or depressed. The economist is supposed to know 

 what the leading characteristics of the human 

 mind are, and to calculate their probable influ- 

 ence. The chief merit of the new school is that 

 it studies carefully to give due weight to all of 

 these forces, such as degi-ee of civilization, cus- 

 tom, law, etc., which the older economists neg- 

 lected. 2°. The new method has not the slight- 

 est objection to reaching general conclusions 

 from its inductions, any more than the natural 

 philosopher hesitates to reason from the fall of an 

 apple to the law of gravitation. On the contrary, 

 the very object of political economy according to 

 this method, is to reach such general conclusions 

 as will be of aid in directing social activity in 

 economic affairs. From the experience of differ- 

 ent nations in tenure of land, we reason to the 

 general desirability of peasant proprietorship, or 

 some fixity of tenure. From the history of the 

 double standard, we reach Gresham's law, that, 

 where two currencies exist side by side, the baser 

 will drive the good out. From the history of 

 English poor-laws, we can reason to the general 

 desirability of self-help ; and from the prosperity 

 of England to the principle of free trade, at least 

 for industrially developed nations. This is what 

 Ingi'am calls reflective analysis, and is no more 

 shut out from inductive political economy than it 

 is from the natural sciences. To assert that the 

 inductive method gives us merely sketches of 

 economic history, or descriptions of economic 

 institutions, or masses of economic statistics, 

 is as wide of the mark as to call chemistry 

 a mere collection of analyses of organic and 

 inorganic substances. Science is systematized 

 knowledge, and political economy seeks to sys- 

 tematize its knowledge gained through history, 

 comparative study of institutions, and statistics, 

 as rapidly as possible, so as to reach general prin- 

 ciples of economic life. Only, by this method we 

 escape the sterility which comes from following 

 supposed immutable principles ; for every fresh 

 induction very probably modifies or corrects our 

 previous rule. The principles we reach are, as 

 said before, empirical at the best. Like the rising 

 of the sun, they may be of a very high degree of 

 certainty ; or, like the predictions of meteorology, 

 they may be of comparatively little value. We 

 take them for what they are worth, and try by 

 further observation to make them more exact. 



The advantages of the inductive method. 



It will strengthen our apiweciation of the new 

 method of political economy if we consider for a 

 moment the collateral advantages which accom- 

 pany it. In the first place, we acquire a great 



