488 



SCIENCE. 



[Vol. VII , No. 173 



functions of the state. The new school simply 

 desires to claim for them their proper position. 

 It is undoubtedly true that in certain countries 

 individual activity and initiative are not vigorous 

 enough to work out the highest possible economic 

 results ; but it is also equally true, that, in other 

 countries, state activity and initiative are not 

 vigorous enough to secure the economic results 

 which can only flow from collective action within 

 and through and by the state. 



The relation of this theory to the subject of 

 taxation, for example, is significant. From this 

 point of view, taxes are not rewards paid by the 

 individual to government for the protection ac- 

 corded by the latter. They are simply a share of 

 the product which the state may rightfully claim 

 as being one of the factors in the process of pro- 

 duction. The state, as the representative of socie- 

 ty, is the great ' silent partner ' in every business 

 enterprise. As compared with any given indi- 

 vidual, it contributes the larger share of the means 

 of production. To test the relative productivity 

 of the state and the individual, compare the for- 

 tune accumulated by Cornelius Vanderbilt in 

 America with what he might have accumulated 

 had he been adopted when an infant by a family 

 of Hottentots. 



One word more as to the bearing of this theory 

 on the future of the state as an economic factor. 

 According to the old theory, the functions of the 

 state will become fewer and fewer as society pro- 

 gresses, until finally it will do nothing, or at least 

 nothing but protect, in the narrowest sense r life 

 and property. According to the newer theory, as 

 men become more numerous, the conditions of 

 society more complicated, the solidarity of inter- 

 ests more complete, we shall find that the eco- 

 nomic sphere of collective action as opposed to 

 individual action is all the time widening. Hand 

 in hand with this advance, we shall find that gov- 

 ernment will be so improved that the state can 

 safely undertake to a larger and larger extent the 

 exercise of this collective action. So far, then, 

 from the interference of government decreasing 

 witli the improvement of men, we shall find that 

 this very improvement renders it safe and desir- 

 able to increase the sphere of state activity. All 

 this can be done without in any degree impairing 

 individual activity of a desirable kind, and, indeed, 

 with the result that the sphere of the latter may 

 be continually widened. 



To put the case in a little different way. there 

 are, according to this view, in any given slate of 

 civilized society, certain classes of economic ac- 

 tions which can he best performed by a general 

 system of co-operation embracing all the members 

 of said society. To the efficiency of certain of 



these classes it is necessary to have complete co- 

 operation, which, as all experience proves, is only 

 possible through compulsion. The only form of 

 desirable compulsion in such cases is state com- 

 pulsion, which, of course, may be exercised in 

 various ways — from compelling co-operation by 

 courts and armies, to that of undertaking the 

 business by government agencies. If such actions 

 are left to private individuals, it just as surely 

 results in economic injury to society, in circum- 

 scribing the field of employment, in discouraging 

 and destroying individual enterprise in the widest 

 and broadest view, as the assumption by the state 

 of forms of economic activity, which should be 

 left to private individuals, tends to destroy all 

 spirit of enterprise in a body politic. When it 

 appears, therefore, on analysis of a given case, 

 that it is one which calls for compulsory collective 

 action, it is not a satisfactory answer to say that 

 the government is too defective in its organization 

 to undertake such work, and therefore it must be 

 left to individuals, since this simply means that 

 it will not be done at all. For certain economic 

 ends the only efficient agency is state agency ; 

 and, if that is not available, the only result can 

 be failure to reach those ends. In case of de- 

 fective government, then, our course is not to 

 rest content with remanding government func- 

 tions to private individuals, but to improve gov- 

 ernment until it is adequate to the legitimate de- 

 mands ; and one of the most effective means of 

 improving government is to insist that it shall 

 undertake its proper functions, since the conse- 

 quent importance of its work will render impera- 

 tive its re-organization on a proper basis. 



E. J. James. 



II. 



1. Professor James says much of the old school 

 and the new school of political economy. Yet the 

 differences between the schools, so far as he men- 

 tions them, are not on strictly economic matters. 

 He discusses the nature and function of the state, 

 and raises very wide and difficult questions. 

 These questions economic science does not answer 

 and should not pretend to answer. It merely helps 

 to answer them, by investigating one aspect of 

 man's activity. Economists have often expressed 

 themselves on the general subject of the sphere 

 of government ; but in so doing they have spoken, 

 not as econouiists, but as speculators on the theory 

 of the state and of society at large. Adam Smith 

 no doubt said a good deal about the proper limits 

 of government action. Yet his conclusion- 00 

 that subject formed no essential part of his 

 economic doctrines. So, in the first halt of this 

 century the followers of Ricardo frequently gat* 



