SCIENCE.-SUPPLEMENT. 



FRIDAY, JULY 30, 1886. 



ANOTHER VIEW OF ECONOMIC LAWS 

 AND METHODS. 



When the editor of Science invited me to take 

 part in a discussion upon economic principles and 

 methods, I at first declined, because of my doubt 

 whether any fruitful results would follow ; and 

 my final acceptance was due to the thought that 

 the professed economists in this country were not 

 so widely apart in their views as the expression 

 which they sometimes use would seeQito indicate, 

 and that through discussion they might perhaps 

 become better acquainted with each other's pur- 

 poses and methods. It would be premature to 

 say that there is no hope of realizing such an ex- 

 pectation, although the rigidity with which the 

 lines between the old and the new in economy are 

 drawn is not very encouraging. Nor is this im- 

 pression wholly the result of the aggressive state- 

 ments of the representatives of the ' new school; ' 

 the criticisms offered by Mr. Hadley under the 

 title ' Economic laws and methods,' present views 

 which by universal consent are the exclusive 

 property of the ' old school.' 



Mr. Hadley's paper is professedly a criticism 

 upon my presentation of the relation that exists 

 between economics and jurisprudence, but it sug- 

 gests much more than was directly touched in 

 that discussion ; and, in meeting the editor's re- 

 quest for a ' reply,' I may perhaps be permitted 

 the same liberty, and state, in as concise a man- 

 ner as possible, the views which I hold respecting 

 the nature and purpose of political economy, and 

 the method of study which its profitable prosecu- 

 tion imposes. 



If asked to define political economy, I should 

 say that political economy treats of industrial 

 society. Its purpose as an analytic science is to 

 explain the industrial actions of men. Its purpose 

 as a constructive science is to discover a scientific 

 and rational basis for the formation and govern- 

 ment of industrial society. 



But, it may be asked, under what conditions can 

 political economy be said to have attained its sci- 

 entific purpose ? When is an industrial fact satis- 

 factorily explained ? I answer, when it is referred 

 to some general truth which, either for the sake 

 of convenience or because our limited intelligence 

 will not permit us to press the inquiry further, 

 must be regarded as final. Truths of this sort 



are fundamental in economics, and are capable of 

 being classified under three heads, (a) The first 

 class embraces what is ordinarily called the laws 

 of human nature. Such truths are discovered by 

 a study of one's self, by a study of history, and 

 by a study of statistics. There can be no quarrel 

 between the old and the new economists as to the 

 propriety of admitting such facts. The quarrel 

 begins when the members of the old school assert 

 that ' a few simple laws of human nature' furnish 

 adequate material out of which to construct an 

 economic science capable of explaining all indus- 

 trial facts, (b) The truths of physical nature to 

 which all industrial activity must conform are 

 likewise final for purposes of explanation. Why 

 do men go west to take up new lands ? Because, 

 to quote from Mr. Hadley, they desire " to obtain 

 the maximum of satisfaction for the minimum of 

 sacrifice." This, however, does not explain the 

 fact of migrations. One does not understand why 

 a given quantity of satisfaction can be secured 

 for less sacrifice by an agriculturalist in the west 

 than if he increased the numbers already living 

 on the lands of the east, until he discovers the 

 physical law of the productivity of land known 

 as the law of diminishing returns. Again, it is an 

 industrial fact that the Christian world is growing 

 rich. Is it enough to trace this fact to the perma- 

 nent desire on the part of men to grow rich ? Do we 

 not understand it better when we learn that the 

 latent energy in a ton of coal is equal to eleven 

 million times its own weight, and that th.e avail- 

 able energy when the best machines are used is 

 equal to one million times its ow^n weight? If, 

 then, physical laws are essential to a satisfactory 

 explanation of industi'ial facts, and if such explana- 

 tion is the scientific purpose of economics, are we 

 not justified in admitting such physical laws as 

 material for the construction of the science? 

 But, says the objector, English economy recog- 

 nizes physical laws. The law of diminishing 

 returns is called by Mr. Mill the fundamental law 

 of economy. This is certainly true, and this is 

 why it is so diflacult for me to understand the plan 

 of architecture according to which English econ- 

 omists have built their science. I cannot appreci- 

 ate the necessity of bringing in at the back door 

 any facts essential to the explanation of industrial 

 phenomena, (c) The third class of final truths is 

 disclosed when once the explanation of observed 

 facts is traceable to the legal structure of society. 

 Why were wages in England between the years 



