448 



SCIENCE. 



[X. S. Vol. XXI. Xo. 534. 



act science ? It is often said that this sub- 

 ject depends too much on the vagaries of 

 human nature to bring the economic proc- 

 esses within the category of exactness, 

 This is true to some extent. We all know 

 that the eoi-n and the cotton crops, for 

 instance, are uncertain quantities. We 

 know that these affect economic activities 

 to such an extent as to require constant 

 readjustment. On the other hand, it is true 

 that we know just about how a shortage in 

 the corn crop or a marked enlargement in 

 the cotton crop is going to affect the actions 

 of persons interested. We know how the 

 economic order in general, and how the 

 divisions of enterprises directly affected are 

 going to behave, other things being equal, 

 under the changed conditions in the crop 

 yield. It may, therefore, be said that 

 there is a far greater degree of exactness 

 attainable in measuring the force of eco- 

 nomic processess than is usually assumed 

 in the criticism based upon the assumptions 

 of the vagaries of human nature. 



We may, therefore, be exact in the in- 

 vestigation of the action of causes. For 

 example, we can study with a remarkable 

 degree of accuracy the influence of the in- 

 crease of currency upon prices. 



We may also make the comparative con- 

 dition of the masses in different countries 

 a subject of exact study. Take the five 

 different nationalities of Russia, Austria, 

 France, England and the United States. 

 These are given in the order of the wage 

 income, let us assume. The cost of sub- 

 sistence is about the same in all of them, 

 but wages are lower in the order given. 

 Why is this the case ? There must be some 

 exact causes, and the problem is to deter- 

 mine what these laws are. 



Another phase of the subject of method 

 on the action of causes appears in the ap- 

 plication of mathematical methods or prin- 

 ciples to the study of economics. Jevons, 

 for instance, applied mathematical methods 



to the determination of the law of marginal 

 utility thirty or more years ago, and the 

 principle has been extensively used and 

 developed in numerous treatises since then. 

 The law of supply and demand has like- 

 wise been treated mathematically by Mar- 

 shall. 



Returning again to the study of the con- 

 dition of the masses, the main question is 

 to find the causes of inequality of income. 

 Methods hitherto pursued have generally 

 lacked comprehensiveness. We may, how- 

 ever, assume that these inequalities are de- 

 termined by the law of supply and demand 

 and by a law of distribution growing out 

 of the law of supply and demand. 



One of the first things we notice is the 

 great dift'erence in apparently similar men. 

 The captain of an Atlantic liner, for in- 

 stance, who has millions of dollars of value 

 intrusted to his care, together with thou- 

 sands of lives, may in all outward respects 

 and in mental qualities be apparently the 

 equal of one whose judgment and practical 

 capacity could in no wise be intrusted with 

 so responsible a task as that of bringing a 

 vessel across the Atlantic in safety. 



The first problem which we may propose 

 for ourselves in this field is that of the 

 effect of supply and demand on the distri- 

 bution of income. In books three and four 

 of my 'Principles of Political Economy,' 

 published twenty years ago, I sought to 

 work out this problem in its twofold as- 

 pects: (1) From the standpoint of the 

 productive process, and (2) from the 

 standpoint of the societary circulation or 

 the monetary movement. The chief diifi- 

 eulty in the solution of this problem lies 

 in the numerous complications of the eco- 

 nomic order as represented in changes and 

 the multifarious causes at work. The 

 problem may be simplified in statement 

 by being represented in graphical form. 

 We may, for instance, take the loaf of 

 bread as a product and follow it back 



