May 28, 1886. J 



SCIENCE. 



489 



expression to a certain conception of the state, 

 which is indicated by the phrase laissez faire. 

 They sometimes went so far as to treat laissez 

 faire as a natural law, nay, as a natural law of 

 political economy. It was a great mistake to 

 treat it as a natural law ; at most, the phrase in- 

 dicates only a rough rule of thumb. It was a 

 still greater mistake to treat it as a law of politi- 

 cal economy. Political economy investigates and 

 explains the phenomena of wealth ; in doing so, 

 it helps the ' jural and politico - philosophical ' 

 thinker (to use Professor James's comprehensive 

 expression) in solving his general problem as to 

 what the state should do. But economic science 

 does not pretend to solve it, by laying down a rule 

 of laissez faire or one of state interference. In 

 laying down a rule as to state interference, the 

 new school is not a new school of political econo- 

 my, but a new school as to something else. Its 

 adherents commit the same mistake, as it seems 

 to me, that was committed in former days by the 

 adherents of the laissez faire ideas, whom they 

 attack so sharply. They fail to distinguish be- 

 tween the province of economic science, and that 

 of sociology, or social science, or political science, 

 or whatever the general science be called. 



2. No economist has denied that the state is a 

 most important factor in industrial matters. The 

 economist says, given such and such a condition of 

 the laws and of the government, what effect on 

 the phenomena of wealth can be traced ? Ob- 

 viously the character of the government, and the 

 extent to which it maintains peace and order, en- 

 forces contracts, and protects property, are of the 

 utmost economic importance. Professor James's 

 lucid exposition of the cloth-manufacturer's situa- 

 tion is hardly needed to prove this. But thereby 

 he does not succeed in showing that the govern- 

 ment should become a still more important factor, 

 or a factor of an essentially different kind. Pos- 

 sibly it should ; but to establish this, it is not a 

 valid argument to adduce the unquestioned fact 

 that the activity of the state is at present one im- 

 portant cause among a large number that bring 

 about economic phenomena. In the eighteenth 

 century, government interfered multifariously and 

 vexatiously in industrial matters ; yet surely that 

 fact in itself did not go to prove that it should 

 interfere still more. 



3. It is a very sweeping statement that "every 

 great extension of the field of production has been 

 to a large degree dependent on state interference, 

 not merely in a restraining but in a fostering and 

 promoting way." That raises a question of fact, 

 of economic history, on which I must beg to differ 

 with Professor James. His statement seems to me 

 exaggerated, and in essentials incorrect. The eco- 



nomic history of the last hundred and fifty years 

 does not support it. The enormous advance in the 

 arts during the past century seems to me to have 

 been singularly independent of state interference. 

 Certainly it has not been the result of any exten- 

 sion of government activity over and above that 

 degree of activity which was common in the pre- 

 ceding period. The state tried to foster and pro- 

 mote in the seventeenth and eighteenth centuries 

 much more than it has done in our time ; yet we 

 have seen a striking enlargement of the field of 

 production. If economists of the old school belit- 

 tled the importance of the state, those of the new 

 school are in danger of succumbing to a tempta- 

 tion to exaggerate it. 



4. As to the main question, namely, the atti- 

 tude we should take to the question of state inter- 

 ference in industry, Professor James states his 

 belief that the presumption is strongly in favor 

 of interference ' in whole classes of economic 

 processes.' It is not clear to me how much he in- 

 cludes in this phrase. No doubt there is a tendency 

 toward a degree of regulation in some branches of 

 industry, of which railroads and telegraphs are 

 prominent examples. Economic study gives cer- 

 tain data on such questions ; for instance, by show- 

 ing the advantages of single management, and the 

 supplanting of competition by combination. The 

 data given by economic study, together with 

 those given by study from other points of view, 

 lead us to believe that, as matters stand now, the 

 community should regulate these industries more 

 than it does cotton-spinning and bread-making. 

 How far it should go in its interference is a prac- 

 tical question, to be settled for each case slowly, 

 cautiously, tentatively. In comparatively simple 

 cases, like water-supply, complete ownership by 

 the public has come to be the general rule. The 

 time has perhaps come to handle gas-supply in the 

 same way. How far we will go or should go in a 

 complicated problem like that of railroads, no 

 man can tell. Certainly it is premature to lay 

 down a general rule or presumption in favor of 

 state ownership or management. That new theory 

 which tries to lay down as some sort of a law, or 

 at all events as a certainty for the future, a steady 

 and continued enlargement of the sphere of state 

 activity, rests as yet on a very slender basis of ex- 

 perience. In any case, it is not a new economic 

 theory, but a wide speculation in sociology. 



Very little seems to me to be gained by advan- 

 cing, for problems of this kind, general specu- 

 lations about collective action and the sphere of 

 the state. Certainly there is no occasion in this 

 country to stimulate the tendency in favor of 

 state interference. There is already quite a suffi- 

 cient general inclination to interfere. Not infre- 



