490 



SCIENCE. 



[Vol. VII , No. 173 



quently, to be sure, one hears expressions about 

 natural freedom and non-interference with the 

 natural laws of trade ; expressions which are 

 survivals of the exaggerated laissez faire tinge of 

 a generation ago. But no feeling of this kind 

 operates as an effectual barrier to state interfer- 

 ence, or stands in the way of needed reforms. On 

 the contrary, public men and voters alike are 

 over-ready to jump at schemes for state regula- 

 tion, and to engage in crude and harmful and 

 impracticable legislation. Witness the passage in 

 the house of representatives of a bill like the 

 Reagan interstate - commerce bill, — fortunately 

 replaced in the senate by the more moderate, 

 though still far-reaching, bill just passed by that 

 body. In face of the rash attempts of which the 

 Reagan bill is a type, economists and students can 

 most usefully approach the problems, not by 

 general encouragement of state regulation, but 

 by the careful and unbiassed study of specific 

 questions. F. W. Taussig. 



III. 



In his criticism of my views, Professor Taussig 

 takes the old ground that economic science has 

 nothing to do with the functions of the state. 

 This is exactly the point at issue, and could not, 

 perhaps, be better put than it is by Professor 

 Taussig. I hold that the science of political 

 economy must consider the economic functions 

 (notice the limitation) of the state in order to 

 afford any satisfactory explanation of the phe- 

 nomena of wealth in modern society. It would 

 undoubtedly be possible to construct a science of 

 an economy in which capital, for example, played 

 only an insignificant part ; but such a science 

 would have no sort of relation to modern, social, 

 or political life. A science of wealth which leaves 

 out of its treatment the economic functions of that 

 co-ordinating power which in its highest form we 

 call the state, is almost as far removed from any 

 \ital connection with our present or future needs. 



This is undoubtedly the real reason why all the 

 great thinkers in the field of economics have as a 

 macter of fact, in spite of their protestations that 

 it had nothing to do with the subject, given such 

 a large share of attention to the functions of the 

 state. Adam Smith's views of state action are 

 not an unessential feature of his economic theories. 

 They form part and parcel of them, and cannot 

 be extracted without shaking to its foundations 

 the edifice into which they are built as constituent 

 parts. 



The scientific advantage of the view for which 

 I am contending, over that represented by Pro- 

 fessor Taussig, consists, as I conceive it, in this. 

 If we recognize the fundamental economic char- 



acter of state action, we have a simple, plain, 

 scientific basis for examining the relations of state 

 action to other forms of economic activity. It 

 enables us to investigate within the limits of our 

 economic system whole classes of economic facts 

 connected with state action, which, however much 

 we may wish to disregard them, will force them- 

 selves on our attention, and if not treated in an 

 open and scientific manner, and assigned to their 

 proper place, must be disposed of in a half sur- 

 reptitious and unscientific way. This point of view 

 enables us to bring state action, so far as it is 

 economic in its nature, into organic relation with 

 other economic forces in our scientific system, and 

 by an analysis of the processes of production, 

 distribution, and consumption of wealth, to assign 

 to each factor that sphere of action which, with a 

 due regard to existing economic conditions, shall 

 work out the best economic result. This theory 

 is, in my opinion, a progressive one. It contains 

 the promise and potency of life. 



The other, on the contrary, is the opposite of 

 this in the respects just enumerated. And so far as 

 any thinker maintains it, and is still doing pro- 

 gressive and active work in the field of economics, 

 — and no better example of this class can be 

 quoted than Professor Taussig himself, — he is 

 continually, as it appears to me, violating his own 

 fundamental principle, and working at a scientific 

 disadvantage. 



It will be noticed that this view in itself does 

 not call for any extension or limitation of state 

 action. It simply maintains that there is a sphere 

 of economic activity in which state action is by 

 far the best, if not the only, means of reaching 

 satisfactory results. It holds that this state action 

 is as truly economic as that of individuals, and 

 that it should therefore be regarded as a funda- 

 mental economic category. The exact limits of 

 this sphere — the exact things to be done by the 

 state — vary with time and place and circum- 

 stance. It may therefore very well be, that two 

 persons holding these different views might agree 

 as to what state action, in an economic direction, 

 is desirable, for instance, at this time in our own 

 country. The difference, as it seems to me, would 

 be simply that the views of the one in regard to 

 slat.- interference would form a consistent part of 

 that one's general economic system, while those 

 of the other would be more or less adventitious. 

 It is the former class of views which promote the 

 development of a science. 



I desire, in closing, to express my dissent from 

 Professor Taussig's opinion that the enormous ad- 

 vance in the arts during the past century lias been 

 singularly independent of state interference. To 

 argue this point of difference would require a 



