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SCIENCE. 



[Vol. VII., No. 173 



port and co-operation of the latter. It established 

 the fact that in state initiative, indeed, lay often- 

 times the only hope of any economic develop- 

 ment. It demonstrated that many of the very in- 

 stitutions which Adam Smith and his followers so 

 vigorously and successfully assailed had in their 

 own time done the most valuable service in initi- 

 ating and furthering economic progress. In a 

 word, it dealt a death-blow to that conception of 

 the nature and origin of the state winch played 

 so large a role in the political speculations of 

 English. French, and German philosophers of the 

 last century by showing conclusively that noth- 

 ing corresponding to their premises had ever 

 actually existed in human history, and that state 

 action, not merely of a restraining but also of a 

 fostering and furthering kind, has always been 

 the condition and concomitant of any considera- 

 ble economic development. 



The conclusions of history, sufficient of them- 

 selves to destroy the old theory, are amply sustained 

 by a careful analysis of the process of production 

 and distribution hi our modern society. If we ana- 

 lyze any of the most ordinary acts of production, 

 we shall find that the state is actually or potentially 

 present at every stage of the process. Take, for ex- 

 ample, the business of making cloth. The manu- 

 facturer could not hope to make any considerable 

 amount of cloth if the state did not protect him in 

 his work by the force of its courts and armies. He 

 could make but a very small quantity, indeed, 

 without the aid of inventions, the preservation 

 and transmittance of which, nay, their very ex- 

 istence itself, is only possible within and through 

 and by the state. Having produced his cloth, he 

 would have no right worth the name to its owner- 

 ship, if the state did not define and enforce his 

 rights as against all other parties within the state. 

 Having produced it, and being acknowledged 

 as the owner of it, it would be of no earthly 

 value to him, except so much as he might wish to 

 make use of for his own personal purposes, if the 

 state did not protect him in his right to exchange 

 it for the product of other labor toward which the 

 state stands in exactly the same relation as it bears 

 toward that which he produced. The value of his 

 product depends almost entirely upon the means 

 which the state has provided, in the form of roads 

 and means of transportation and communication, 

 to enable him to get to a place where he can 

 exchange it. The value, moreover, depends 

 largely on the general state of civilization within 

 the country, whicli is to a very great extent de- 

 termined by state activity. The enjoyments 

 which he can extract from the products he may 

 receive in exchange for his cloth will depend to 

 a great extent on the education which he may 



have enjoyed, which, again, will be determined 

 by the extent to which the state may have pro- 

 vided the necessary facilities. When we look, not 

 merely at an individual act of production, but 

 take in a wider view of the industry of the coun- 

 try as a whole, we shall see still more clearly the 

 real character of the state as an economic factor. 

 We see, for instance, in manufacturing, that 

 the discover}' and introduction of improvements, 

 the provision of means of transportation, the 

 general provision of educational facilities, both 

 technical and general, — all necessary elements in 

 any wide and long-continued successful system 

 of industry, — have been nearly always chiefly 

 furthered and promoted by state activity in some 

 form or other. In other words, every great ex- 

 tension of the field of production has really been 

 to a large degree dependent on state interference 

 — not merely in a restraining, but also in a pro- 

 moting and fostering way. 



We may formulate our conclusion, then, some- 

 what as follows : the state is an economic factor 

 of prime importance. To our modern system of 

 production not only are natural agents, labor, and 

 capital necessary, but also the particular kind of 

 services which can be rendered only by the state. 

 The nature of its service is just as fundamental 

 to production as that of labor or capital, and it 

 should be included among the requisites of produc- 

 tion. It is a fundamental economic category, 

 something which belongs to the very essence of 

 production, and not something accidental and 

 external, which may be lightly cast aside. 



The particular function of the state in the sphere 

 of economics is a varying one. It changes with 

 time and place and circumstance. Perhaps the 

 most general formulation of the essential charac- 

 teristic of state action in this field is that it is pre- 

 eminently a co-ordinating power. It is a special 

 form of associative action. History shows that men 

 as individuals do not live unto themselves. They 

 must carry on the struggle for existence side by side 

 within and through some kind of social organiza- 

 tion, if they are to attain any higher level than the 

 brutes. But no sooner do they appear within such 

 an organization, than the absolute necessity of 

 some tvpo of co-ordinating power immediately 

 appears. Individuals may and ordinarily do ap- 

 propriate natural agents, and insist on utilizing 

 them in such a way as to preclude any great 

 economic advance ; as, for instance, when men 

 take possession of large tracts of land, and refuse 

 to allow others to pass through them. In such a 

 case, the necessity of a co-ordinating power imme- 

 diately appears. The state, or what answers for 

 that in the given condition of society, must open 

 up roads, no matter what individuals may wish, if 



