Category: Methodology

William Stanley Jevons used the opportunity of his inaugural lecture as Professor of Political Economy at University College London to muse on the future of political economy using the discussion at the Centennial Celebration by the London Political Economy Club of the publication of The Wealth of Nations for his point of departure. He positions himself in the Methodenstreit as an eclectic advocate of formal theoretical methods who gladly includes historical and statistical methods in the economist’s toolbox. The fault of the partisans of induction that Jevons sees are their claims that historical observation is not just necessary in the search for valid economic laws but that it alone is sufficient. In many ways like Carl Menger, Jevons only argues for the necessity of abstraction and deduction: “In these and many other cases, people argue, more or less consciously, that because a certain thing is true or useful, therefore other things are not true or not useful. “

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THE FUTURE OF POLITICAL ECONOMY
W. Stanley Jevons

Introductory Lecture at the opening of the Session 1876-7, at University College, London, Faculty of Arts and Laws.

The year 1876 is remarkable as being the hundredth anniversary of at least two important events. On the other side of the Atlantic, the Americans are celebrating the birth of a great nation. On this side of the water we ought to be celebrating the publication of a great book — a book to which we owe, in as great a degree as to any other circumstance, the wealth and prosperity of this kingdom. It is curious to observe, indeed, that these two centenaries are in a certain respect antithetic to each other. While we attribute our wealth to the establishment of the free trade principles which Smith advocated, the American Government yet maintains a fiscal system direct and avowed antagonism to those principles.

The enormous wealth of the United States has been created by the freedom and energy of internal trade acting upon natural resources of unexampled richness. It cannot for a moment be doubted that their wealth would be far greater still were external commerce in the States as free as internal commerce. To us, dwelling and working in this comparatively speaking very small island, endowed with no remarkable natural resources, except coal and iron, —to us, the freedom of external commerce is everything. This freedom we may properly attribute to the writings of Adam Smith, even more than to the labours of Gladstone, or Cobden, or Bright, or any of the great statesmen who actually carried the doctrines of Smith into effect.

We ought, therefore, to be celebrating the publication of the “Wealth of Nations,” and the memory of its author; but are we doing so? With a single exception, I am unacquainted with any public ceremony, or anything tending to mark this as a centennial year in Great Britain. Perhaps this is because we are not a people accustomed to commemorations of the sort. If I recollect rightly, even the Shakespearean jubilee was rather a failure. However this may be, there has been one exception, and that was a most suitable commemoration of Adam Smith. On the 31st of May last, the Political Economy Club held a grand dinner and a special discussion in honour of the hundredth anniversary of the publication of the “Wealth of Nations.”

Probably, when people saw this dinner described in the newspapers, their first thought was, “What is the Political Economy Club? We never heard of it before.” I may, therefore, explain briefly, that the Political Economy Club has pursued an inconspicuous, but very useful career for more than half a century. Whether its continued existence be due to the excellence of its monthly dinners, — in respect of which the club does not seem to study economy — or to the interest of the economical debates which follow each dinner, I will not attempt to decide. Certain it is, however, that the club was founded in the year 1821 by Ricardo, Malthus, Tooke, James Mill, Grote, Cazenove, and other distinguished men, and that since its foundation it has included as members nearly all English political economists. John Stuart Mill especially was, for many years, a leading member, and first propounded at its table the doctrines advocated in his economical works.

It was no doubt most suitable that such a body should celebrate the establishment in England of the science they cultivate, and the centenary dinner held last May was in some respects a very remarkable one. Mr. Gladstone was in the chair, with Mr. Lowe on the one hand, and M. Léon Say, the present French Minister of Finance, on the other hand. The company included a body of statesmen, economists, and statists, British, Continental, and American, such as are seldom seen together. It is true that the statesmen had it mostly their own way, and in the presence of Gladstone and Lowe, and a real French Minister of Finance, the company appeared to care little what mere literary economists thought about Adam Smith. But I shall on the present occasion be so bold as incidentally to review and criticize some of the opinions which were put forth at the dinner, a full and carefully revised report of the speeches having been printed by Messrs. Longman, under the superintendence of the committee of the club.

Mr. Lowe opened the debate in a most interesting survey and eulogium of Adam Smith and his works. He concluded with some remarks upon the results which have followed from Smith’s writings, and upon what yet remains to be achieved by political economy. I was much struck with the desponding tone in which Mr. Lowe spoke of the future of the science I have the honour to teach in this college. He seems to think that the work of the science is to a great extent finished. He said: —

“I do not myself feel very sanguine that there is a very large field— at least, according to the present state of mental and commercial knowledge— for political economy, beyond what I have mentioned; but I think that very much depends upon the degree in which other sciences are developed. Should other sciences relating to mankind, which it is the barbarous jargon of the day to call Sociology, take a spring and get forward in any degree towards the certainty attained by political economy, I do not doubt that their development would help in the development of this science; but at present, so far as my own humble opinion goes, I am not sanguine as to any very large or any very startling development of political economy. I observe that the triumphs which have been gained, have been rather in demolishing that which has been found to be undoubtedly bad and erroneous, than in establishing new truth; and imagine that, before we can attain new results, we must be furnished from without with new truths to which our principles may be applied. The controversies which we now have in political economy, although they offer a capital exercise for the logical faculties, are not of the same thrilling importance as those of earlier days; the great work has been done.”

I am far from denying that there is much to support, or at any rate to suggest, this view of the matter. Some of the greatest reforms which economists can point out the need of have been accomplished, and there is certainly no single work to be done comparable to the establishment of free trade. But this does not prevent the existence of an indefinitely great sphere of useful work which economists could accomplish, if their science were adequate to its duties. To a certain extent, again, I agree with Mr. Lowe that there is much in the present position of our science to cause despondency. A very general impression to this effect seems to exist. Some of the newspapers hinted in reference to the centenary dinner that the political economists had better be celebrating the obsequies of their science than its jubilee. The Pall-Mall Gazette especially thought that Mr. Lowe’s task was to explain the decline, not the consummation, of economical science. Perhaps with many people the wish was father of the thought. I am aware that political economists have always been regarded as cold-blooded beings, devoid of the ordinary feelings of humanity — little better, in fact, than vivisectionists. I believe that the general public would be happier in their minds for a little time if political economy could be shown up as imposture, like the greater part of what is called spiritualism.

It must be allowed, too, that there have been for some years back premonitory symptoms of disruption of the old orthodox school of economists. Respect for the names of Ricardo and Mill seems no longer able to preserve unanimity. J. S. Mill himself, in the later years of his life, gave up one of the doctrines on which he had placed much importance in his works. One economist after another — Thornton, Cairnes, Leslie, Macleod, Longe, Hearn, Musgrave — have protested against some one or other of the articles of the old Ricardian creed.

At the same time foreign economists, such as De Laveleye, Courcelle-Seneuil, Cournot, Walras, and others, have taken a course almost entirely independent of the predominant English school. So far has this discontent gone, that Mr. Bagehot has been induced to re-examine the fundamental postulates of economy from their very foundation, in his most acute papers published in the Fortnightly Review. He remarks (p. 216, Feb. 1, 1876): —

“Notwithstanding these triumphs, the position of our political economy is not altogether satisfactory. It lies rather dead in the public mind. Not only it does not excite the same interest as formerly, but there is not exactly the same confidence in it. Younger men either do not study it, or do not feel that it comes home to them, and that it matches with their most living ideas … They ask, often hardly knowing it, will this ‘Science,’ as it claims to be, harmonize with what we now know to be sciences, or bear to be tried as we now try sciences? And they are not sure of the answer.”

In short, it comes to this — that one hundred years after the first publication of the “Wealth of Nations” we find the state of the science to be almost chaotic. There is certainly less agreement now about what political economy is than there was thirty or fifty years ago. Under these circumstances, I will now draw your attention for a short time to the apparently rival sects which seem likely to arise from the break up of the old Ricardian school.

In the first place, it is impossible to ignore the fact that there has been gradually rising into prominence a school of writers who take a very radical view of the reforms required in our science. They call in question the validity even of the deductive method on which Smith mainly relied. They hold that the science must be entirely recast in method and materials, and that it must take the form of an historical or archaeological science. At the centenary dinner this view of the matter was boldly stated by one of the most distinguished of European economists — namely, M. de Laveleye. His own words, translated into English, will best explain his opinions: —

“It is principally at this point that there has recently arisen a division in the ranks of economists. Some, the old school, whom, for want of a better name, I will call the Orthodox School, believe that everything regulates itself by the effect of natural laws. The other school, which its adversaries have named the Socialists of the Chair, the ‘Katheder-socialisten,’ but which we ought rather to call the Historical School, or as the Germans say, the ‘Realist School;’ this school holds that distribution is governed in part doubtless by free contract; but also, and still more, by civil and political institutions, by religious beliefs, by moral sentiments, by custom and historical tradition. You see that there opens itself here an immense field of studies, comprehending the relations of political economy with morals, justice, right, religion, history, and connecting it to the ensemble of social science. That in my humble opinion is the actual mission of political economy. This is the path pursued by nearly all German economists, several of whom have a European reputation, such as Rau, Roscher, Knies, Nasse, Schäffle, Schmoller; in Italy by a group of writers alaready well known, Minghetti, Luzzati, Forti; in France, by Wolowski, Lavergne, Passy, Courcelle-Seneuil, Leroy-Beaulieu; and in England by authors, whom it is unnecessary to name or estimate here, because you know them better than I.”

There is certainly no difficulty in mentioning a series of distinguished English economists who have shown a propensity to the historical treatment of the science. To begin with, A. Smith would no doubt be claimed by the historical school, for there is a strong historical element running through his book. Not only does “The Wealth of Nations” contain special historical inquiries like that concerning the value of silver, the chapter on agricultural systems, or the whole book upon “The Different Progress of Opulence in Different Nations,” but the whole work teems with concrete illustrations or verifications drawn from the history of many countries. As has been well remarked, Adam Smith had some of the many-sidedness at which all have wondered in Shakespeare, and it is singular testimony to the completeness of his method, that while Mr. Lowe claimed him, and I think correctly, as a deductive economist, another speaker. Professor Rogers, held him to be the practical Bacon of economical science. The fact, I believe, is that Smith combined deductive reasoning with empirical verification in the manner required by the complete inductive method.

But to proceed, we find that the essay of Malthus on Population far from being, as many people probably suppose, a collection of rash generalisations and hypotheses, consists mainly of a most careful inquiry into historical and statistical facts concerning the numbers and conditions of mankind in all parts of the world. It is a model of inductive inquiry so far as information was available in his day. The essay of Richard Jones on the “Distribution of Wealth and the Forms of Land Tenure in Different Countries,’’ is a far less celebrated book, but displays the same careful spirit of inquiry into the past or present condition of men. Mr. Samuel Laing, again, in his well-known and most interesting works, takes the same position, and has studied upon the spot the economy of Norway, Sweden, France, Prussia, and Switzerland, somewhat in the manner that Arthur Young studied France and Great Britain in the last century. The general conclusion of Mr. Laing is that every country has a political economy of its own, suitable to its own physical circumstances and its own national character.

Passing over the minor works of Banfield, Burton, and others, it is impossible to overlook the recent admirable research of Professor Thorold Rogers, “On the History of Agriculture and Prices in England, from 1259 to 1400” (published by the Clarendon Press). [Volume I; Volume II] In this book Professor Rogers has certainly pursued the historical and inductive method with unbounded industry and remarkable success. He has made us better acquainted with the economy of the fourteenth and fifteenth centuries than we are with that of the eighteenth. In the fascinating works of Sir Henry Maine, too, especially his last work on “The Early History of Institutions,” there is much historical inquiry bearing upon economical science.

Perhaps the most recent of all declarations in favour of the inductive study of the laws of wealth, is that of Sir George Campbell, who in his inaugural address as President of the Economical and Statistical Section of the British Association, at the late Glasgow meeting, spoke as follows:—

“There was a time when it seems to have been supposed that political economy was a science regulated by natural laws, so fixed that safe results could be attained by deductive reasoning. But since it has become apparent that men do not in fact invariably follow the laws of money-making, pure and simple, that economic action is affected by moral causes which cannot be exactly measured it becomes more and more evident, that we cannot safely trust to a chain of deduction; we must test every step by an accurate observation of facts, and induction from them.”

Upon this and other statements I shall have to make some remarks presently.

It is, however, Professor Cliffe Leslie who has placed himself at the front of the inductive and historical school of economists in this country, by the thoroughness as well as the ability of the essay in which he declares his revolt from the old orthodox school. In a remarkable paper, printed in the Dublin University essays published under the title of “Hermathena,” he calls in question altogether the validity of the deductive reasoning which Mr. Lowe considered the most valuable feature in the “Wealth of Nations.” He considers the generally-recognised laws of economy to be rude generalisations, obtained by a superficial and unphilosophical process of abstraction. No attempt, he thinks, has been made to measure the relative force of economical principles in different states of society, or to allow for multitudes of disturbing causes.

“Had the actual operation of the motives in question,” he says, “been investigated, it would have been seen to vary widely in different states of society, and under different conditions. The love of distinction, or of social position, for example, may either counteract the desire of wealth, or greatly add to its force as a motive to industry and accumulation. It may lead one man to make a fortune, another to spend it. At the head of the inquiry into the causes on which the amount of the wealth of nations depends is the problem — what are the conditions which direct the energies and determine the actual occupations and pursuits of mankind in different ages and countries?”….
‘‘Enough,” he continues, “has been said in proof that the abstract à priori and deductive method yields no explanation of the causes which regulate either the nature or the amount of wealth…. The truth is, that the whole economy of every nation, as regards the occupations and pursuits of both sexes, the nature, amount, distribution, and consumption of wealth, is the result of a long evolution, in which there has been both continuity and change, and of which the economical side is only a particular aspect or phase. And the laws of which it is the result must be sought in history, and the general laws of society and social evolution.”

These extracts indicate the line of thought by which Professor Leslie has been led to regard the general theorems of Ricardo as mere “guesses,” and the deductive theory of political economy as barren, if not false. Now I am far from thinking that the historical treatment of our science is false or useless. On the contrary, I consider it to be indispensable. The present economical state of society cannot possibly be explained by theory alone. We must take into account the long past, out of which we are constantly emerging. Whether we call it sociology or not, we must have some scientific treatment of the principles of evolution as manifested in every branch of social existence. Accordingly, M. de Laveleye, Professor Cliffe Leslie, or M. Lavergne, may very properly do for political economy what Sir Henry Maine has done for jurisprudence — namely, show that every law, custom, or social fact is the product of the past, historical or forgotten.

But it is surprising how often men, even of the highest powers, fall into a logical fallacy which has not, I think, been dubbed with any special name, but might fitly be called the fallacy of exclusiveness. There are too many in the present day who advocate the teaching of physical science, and imply in the mode of their advocacy that moral, classical, or other studies are to be discountenanced. It is most common to find people speaking of inductive reasoning, as if it were entirely distinct and opposite to deductive reasoning, the fact being, however, as I believe, that deduction is a necessary element of induction.

In these and many other cases, people argue, more or less consciously, that because a certain thing is true or useful, therefore other things are not true or not useful. Some tendency of this sort might be suspected by the reader of the last two chapters of Sir Henry Maine’s “Early History of Institutions,” in which he discusses the relation of his own historical treatment of jurisprudence to the systems of Hobbes, Bentham, and especially Austin. Sir Henry Maine has conclusively shown that the investigation of the origin and development of law is essential to the understanding of the jurisprudence of any people; but it does not follow, and I do not understand Sir Henry Maine to assert, that an abstract and perfect scheme of jurisprudence, like that which Austin gave to the world in this college, is therefore devoid of truth and usefulness. Now the case of political economy is exactly parallel to this.

I cannot easily conceive any more interesting or useful subject of study than that which Professor Leslie advocates and engages in. It is absolutely essential that we should view the present by the light of the past; but I differ from him entirely when he holds that historical political economy is to destroy and replace the abstract theory which has previously held the place of the science. Does it follow that because palaeontology is now established as an all-important science of an historical character, therefore animal physiology, or the chemistry of animal substances, is false? Any group of objects may be studied, either as regards the laws of action of their component parts, irrespective of time, or as regards the successive forms produced from time to time under the action of those laws. Now the laws of political economy treat of the relations between human wants and the available natural objects and human labour by which they may be satisfied. These laws are so simple in their foundation that they would apply, more or less completely, to all human beings of whom we have any knowledge. The laws of property are very different in different countries and states of society. They seem to be in a very rudimentary state among the Eskimo. According to Dr. Rinks, if one Eskimo man has two boats and another has none, the latter has a right to borrow one of the two boats; and it is further said that it is not the custom among the Eskimo to return borrowed articles. Now this is of course a very different state of things from what obtains among us. Nevertheless we can trace in this transaction of the borrowed boat the simple principles which are at the basis of economy. The most fundamental of its laws is that of Senior and Banfield —namely, that human wants are limited in extent. One boat is very useful, if not essential, to an Eskimo; a second boat is much less useful to a man who has already one boat, but it is highly useful if passed into the hands of a boatless neighbour. The elements of value are present here as in the most complicated operations of our corn or stock exchanges. I should not despair of tracing the action of the postulates of political economy among some of the more intelligent classes of animals. Dogs certainly have strong though perhaps limited ideas of property, as you will soon discover if you interfere between a dog and his bone.

I come to the conclusion, then, that the first principles of political economy are so widely true and applicable, that they may be considered universally true as regards human nature. Historical political economy, so far from displacing the theory of economy, will only exhibit and verify the long-continued action of its laws in most widely different states of society. M. de Laveleye and Professor Leslie may succeed in constituting a new science, but they will not utterly revolutionise and destroy the old one in the way they seem to suppose.

The fact is it will no longer be possible to treat political economy as if it were a single undivided and indivisible science. The advantages of the division of labour are as great and indispensable in the pursuit of knowledge as in manual industry; and it is out of the question that political economy alone should fail to avail itself of these advantages. Differentiation, as Mr. Spencer would say, must go on. I should be afraid of tiring you if I were to attempt to trace out in detail the several divisions into which political economy will naturally fall apart. Not only will there be a number of branches, but there are actually two or three different ways in which the division will take place.

There is, firstly, the old distinction of the laws of the science, according as they treat of the production, exchange, distribution, or consumption of wealth. In this respect economy may be regarded as an aggregate of two or more different sciences, there being, in fact, little connection between the principles which should guide us in production, and those which apply in distribution or consumption.

To readers of J. S. Mill’s “Principles of Political Economy,” indeed, it may sound strange to hear of consumption as one of the chief branches of the science. Though named last, as being last in the order of time, consumption is evidently the most important of the processes through which commodities pass, because things are only produced in order that they may be consumed usefully. It is unaccountable, then, and quite paradoxical, that English economists should, with few exceptions, ignore the most important branch of their own science, especially after it has been duly treated by J. B. Say, Storch, Courcelle-Seneuil, and many other continental writers, as well as by the excellent Australian economist, Professor Hearn.

Passing now to a second aspect, political economy will naturally be divided according as it is abstract or concrete. The theory of the science consists of those general laws which are so simple in nature, and so deeply grounded in the constitution of man and the outer world, that they remain the same throughout all those ages which are within our consideration. But though the laws are the same they may receive widely different applications in the concrete. The primary laws of motion are the same, whether they be applied to solids, liquids, or gases, though the phenomena obeying those laws are apparently so different. Just as there is a general science of mechanics, so we must have a general science or theory of economy. Here, again, there is a division of opinion. There are those who think that, dealing as the science does with quantities, economy must necessarily be a mathematical science, if it is anything at all. There are those, on the other hand, who, like the late Professor Cairnes, contest, and some who even ridicule, the notion of representing truths relating to human affairs in mathematical symbols. It may be safely asserted, however, that if English economists persist in rejecting the mathematical view of their science, they will fall behind their European contemporaries. How many English students, or even professors, I should like to know, have sought out the papers of the late Dr. Whewell, printed in the Cambridge Philosophical Transactions, [Mathematical Exposition of some Doctrines of Political Economy. Read March 2 and 14, 1829;  Mathematical Exposition of some of the Leading Doctrines in Mr. Ricardo’s “Principles of Political Economy and Taxation.” Read April 18 and May 2, 1831] in which he gives his view of the mode of applying mathematics to our science? What English publisher, I may ask again, would for a moment entertain the idea of reprinting a series of mathematical works on political economy? Yet this is what is being done in Italy by Professor Gerolamo Boccardo, the very learned and distinguished editor of the “Nuova Enciclopedia Italiana.” Professor Boccardo has also prefixed to the series a remarkable treatise of his own on the application of the quantitative method to economic and social science in general. This series, which forms the third portion of the well-known “Bibliotheca Economista,” will be completed with an Italian translation of the works of Professor Léon Walras, now Rector of the Academy of Lausanne, who has in recent years independently established the fact that the laws of supply and demand, and all the phenomena of value, may be investigated algebraically and illustrated geometrically. From inquiries of this sort the curious conclusion emerges, that equilibrium of exchange of goods resembles in mathematical conditions the equilibrium of weights upon a lever of the first order. In the latter case one weight multiplied by its arm must exactly equal the other weight multiplied by its arm. So, in an act of exchange, the commodity given multiplied by its degree of utility must equal the quantity of commodity received multiplied by its degree of utility. The theory of economy proves to be, in fact, the mechanics of utility and self-interest.

Now, too, that attention is at last being given to the mathematical character of the science, it is becoming apparent that a series of writers in France, Germany, Italy, and England have made attempts towards a mathematical theory. Their works have been almost unnoticed, or, at any rate, forgotten, mainly on account of the prejudice against the line of inquiry they adopted. It is much to be desired that some competent mathematician and economist should seek these works out and prepare a compendious abstract of their contents, in the manner of Mr. Todhunter’s valuable histories of mathematical science. On the present occasion I cannot do more than mention the names of some of the principal writers referred to, such as Lang, Kroeneke, Buquoy, Dupuit, Von Thünen, Cazaux, Cournot, and Francesco Fuoco, on the Continent, and Whewell, Tozer, Lardner, Perronet Thompson, Fleming Jenkin, Alfred Marshall, and probably others, in Great Britain.

So much for the theory of economy which will naturally be one science, remaining the same throughout its applications, though it may be broken up into several parts, the theories of utility, of exchange, of labour, of interest, &c., partly corresponding to the old division of the science into the laws of consumption, exchange, distribution, production, and so forth. Concrete political economy, however, can hardly be called one science, but already consists of many extensive branches of inquiry. Currency, banking, the relations of labour and capital, those of landlord and tenant, pauperism, taxation, and finance, are some of the principal portions of applied political economy, all involving the same ultimate laws, manifested in most different circumstances. In a subject of such appalling extent and complexity as currency, for instance, we depend upon the laws of supply and demand, of consumption and production of commodities as applied to the precious metals or other materials of money. In the science of banking and the money market, we have a very difficult application of the same laws to capital in general. This separation of the concrete branches of the science is, however, sufficiently obvious and recognised, and I need not dwell further upon it. The general conclusion, then, to which I come is, that political economy must for the future be looked upon as an aggregate of sciences. A hundred years ago, it was very wise of A. Smith to attempt no sub-division, but to expound his mathematical theory (for I hold that his reasoning was really mathematical in nature) in conjunction with concrete applications and historical illustrations. He produced a work so varied in interest, so beautiful in style, and so full of instruction, that it attracted many readers, and convinced those that it attracted. But economists are no more bound to go on imitating Adam Smith in the accidental features of his work, than metaphysicians are bound to write in the form of platonic dialogues, or poets in the style of the Shakespearean drama. With the progress of industry, how many hundreds or even thousands of trades have sprung up since Smith wrote! With the progress of knowledge, how many sciences have been created, and sub-divided, again and again! The science of electricity has been almost entirely discovered since 1776, yet now it has its abstract mathematical theories, its concrete applications, and its many branches, treating of frictional or static electricity, dynamic electricity or galvanism, electro-chemistry, electro-magnetism, magnetism, terrestrial magnetism, atmospheric electricity, and so forth. Within the same century chemistry, if not born, has grown, and is now so vast a body of facts and laws that professors are appointed to teach different parts of it. Yet the political economist is expected to teach all parts of his equally extensive and growing science, and is lucky if he escape having to profess also the mental, metaphysical, and moral sciences generally.

Nor can I doubt that in the future new developments of the science of economy must take place. Whether it be a science or not, or one science or many sciences, there is certainly an immense work to be done by this or some closely related branches of knowledge. If necessity is the mother of invention, as people are so fond of saying, then many new sciences ought soon to be invented. When listening to the speeches at the centenary dinner, I was much struck with the contracted view which seemed to be entertained of the work remaining to be accomplished by economists. Mr. Gladstone spoke as follows: —

‘‘I am bound to say that this society has still got its work before it. … I do not mean to say that there is a great deal remaining to be done here in the way of direct legislation, yet there is something. It appears to me at least, that perhaps the question of the currency is one in which we are still, I think, in a backward condition; our legislation having been confined in the main to averting great evils rather than to establishing a system which, besides being sound, would be complete and logical. With that exception perhaps, not much remains in the province of direct legislation.”

Mr. Lowe also, as shown in a quotation from his speech already given took a similarly desponding view of the powers and province of economy. To my mind, however, our whole social system seems to bristle with questions which will have to be decided one way or the other, and to a great extent upon economical grounds. Whether I look at the homes of the mass of the people, at workhouses, or hospitals, whether I consider the gambling of the Stock Exchange, the perplexity of bankers, anxious at one time to get money, at another to get rid of it, the endless discussions of workmen and masters, the diversion of the lands of the country from their proper uses, the scandalous waste of endowments, I cannot help feeling that the work before economists is more than ample.

I cannot better illustrate the need of more accurate economic knowledge in some directions, than by adverting to one of the principal points in debate at the centenary dinner. Mr. Newmarch, the treasurer of the club, threw in an apple of discord when he expressed a hope that political economy would lead to a restriction of the sphere of government. He said:—

“On one of the points mentioned by Mr. Lowe, with respect to political economy in its relation to the future, I am sanguine enough to think that there be what may be called a large negative development of political economy, tending to produce an important and beneficial effect; and that is, such a development of political economy as will reduce the functions of government within a smaller and smaller compass. The full development of the principles of Adam Smith has been in no small danger for some time past; and one of the great dangers which now hangs over this country, is that the wholesome spontaneous operation of human interests and human desires, seems to be in course of rapid supersession by the erection of one government department after another, by the setting up of one set of inspectors after another, and by the whole time of parliament being taken up in attempting to do for the nation those very things which, if the teaching of the man whose name we are celebrating to-day, is to bear any fruit at all, the nation can do much better for itself.”

Now it would not create much surprise if, on a point like this, professional economists should differ, like doctors. Accordingly my predecessor, Mr. Courtney, the honorary secretary of the club, took occasion to protest against the doctrines of the honorary treasurer being considered as those accepted by the club, at least as regards legislation upon land tenure. But it was very interesting to find that the practical statesmen were quite as much divided as the economists upon this point. While some supported Mr. Newmarch, one whom I can never help admiring for his firm consistency, and the inestimable benefits which he has conferred upon this country in the passing of the Education Act, namely Mr. W. E. Forster, took the exactly opposite view.

“I am strongly of the contrary opinion,” he said, “that we cannot undertake the laissez-faire principle in the present condition of our politics or of parties in parliament, or in the general condition of the country. I gather from Mr. Newmarch’s remarks that he is an advocate of the old laissez-faire principle. Well, if we were all Mr. Newmarches, if we had nothing to deal with in the country but men like ourselves, we might do this. But we have to deal with weak people; we have to deal with people who have themselves to deal with strong people, who are borne down, who are tempted, who are unfortunate in their circumstances of life, and who will say to us, and say to us with great truth: What is your use as a parliament if you cannot help us in our weakness, and against those who are too strong for us?”

Now it is impossible to doubt that the laissez-faire principle properly applied is the wholesome and true one. It is that advocated by Adam Smith, and it is in obedience to this principle that our tariff has been reduced to the simplest possible form, that the navigation laws have been repealed, that masters and labourers have been left free to make their own bargains about wages, and that a hundred other ingenious pieces of legislation have been struck out of the Statute Book. But does it follow that because we repeal old pieces of legislation we shall need no new ones? On the contrary, as it seems to me, while population grows more numerous and dense, while industry becomes more complex and interdependent, as we travel faster and make use of more intense forces, we shall necessarily need more legislative supervision. It has been well said, I think by Professor Hodgson, that the labourer need only ask of the statesman what Diogenes asked of Alexander, that he should stand out of his light. How, it was quite proper and reasonable that Alexander should not obstruct the light of Diogenes; but what if other people should come and stand in Diogenes’ light, or, overlooking anachronisms, street musicians should disturb his sleep and render study impossible, or, finally, carrying companies should carelessly convey gunpowder close behind his tub and blow it to bits; would Alexander have been justified in standing calmly by and quoting laissez-faire doctrines like those of the French economists and Adam Smith? I think not, and I believe that it will be found impossible to dispense with more and more minute legislation.

The numerous elaborate bills which each government of England has in late years attempted to pass, but generally without success, is the best indication of the needs felt. But I quite agree with Mr. Newmarch and Mr. Lowe that we should not proceed in this path of legislative interference without most careful consideration from a theoretical, as well as a practical, point of view, of what we are doing. If such a thing is possible, we need a new branch of political and statistical science which shall carefully investigate the limits to the laissez-faire principle, and show where we want greater freedom and where less. It seems inconsistent that we should be preaching freedom of industry and commerce at the same time that we are hampering them with all kinds of minute regulations. But there may be no real inconsistency if we can show the existence of special reasons which override the general principle in particular cases. I am quite convinced, for instance, that the great mass of the people will not have healthy houses by the ordinary action of self-interest. The only chance of securing good sanitary arrangements is to pull down the houses which are hopelessly bad, as provided by an Act of the present ministry, and most carefully to superintend under legislative regulations all new houses that are built.

I will go a step farther, and assert that the utmost benefits may be, and, in fact, are secured to us by extensions of government action of a kind quite unsanctioned by the laissez-faire principle. I allude to the provision of public institutions of various sorts —libraries, museums, parks, free bridges.

Community of property is most wasteful in some cases, as in the old commons, or unpreserved oyster beds; but these are cases of the community of production. Community of consumption, on the contrary, is often most economical. The same book in a public library may serve a hundred or five hundred readers as well as one. The principle may be illustrated by the case of watches and clocks. On reasonable suppositions I have calculated that a private watch costs people on the average about one-fifteenth part of a penny for each look at the time of day; but a great public clock is none the worse, however many people may look at it. As a general rule, I should say that the average cost of public clocks is not more than one-one hundred and fiftieth of a penny for each look, securing an economy of ten times. The same principle may, however, be called into operation in a multitude of cases, most notably, however, as regards the weather. A well-appointed meteorological office with a system of weather forecasts will be a necessary part of every government, and will secure the utmost advantages to the community at a trifling cost. I see no reason, again, why our streets and roads should, as a general rule, be fit only for passing along and getting out of as quickly as you can. With a trifling expenditure they might often be converted into agreeable promenades, planted with trees, and furnished with seats at the public cost. Our idea of happiness in this country at present seems to consist in buying a piece of land if possible, and building a high wall round it. If a man can only secure, for instance, a beautiful view from his own garden and windows, he cares not how many thousands of other persons he cuts off from the daily enjoyment of that view. The rights of private property and private action are pushed so far that the general interests of the public are made of no account whatever.

But the nicest discrimination will be required to show what the government should do, and what it should leave to individuals to do. I do not in the least underestimate the wastefulness of government departments, but I believe that this wastefulness may be far more than counterbalanced in some cases by the economy of public property.

I have said enough I think to suggest that there are still great possibilities for us in the future. It will not do in a few sweeping words to re-assert an old dictum of the last century, and to condemn some of the greatest improvements of the time because they will not agree with it. Instead of one dictum, laissez faire, laissez passer, we must have at least one science, one new branch of the old political economy. Were time available I might go on to show that this is by no means the only new branch of the science needed. We need, for instance, a science of the money market, and of commercial fluctuations, which shall inquire why the world is all activity for a few years, and then all inactivity; why, in short, there are such tides in the affairs of men. But I am quite satisfied if I have pointed out the need and the probable rise of one new branch, which is only to be found briefly and imperfectly represented in the works of Mill or other economists.

The future of political economy is not likely to be such a blank as some of the speakers at the centennial dinner would lead us to suppose. I hope that the Political Economy Club may exist long enough to hold their second centennial celebration of the “Wealth of Nations,” and that then the disrupted fragments into which political economy seems now to be falling will have proved themselves the seeds of a new growth of beneficent sciences.

Source: The Fortnightly Review, Vol. 20, No. 129 (November 1, 1876), pp. 617-631.

Source:  University of Manchester Library. Rylands Collection, Jevons Family Papers. Jevons Album. (Image Number JRL023256tr).

Note: The photograph comes from a collection of photographs of Australia, taken or compiled by William Stanley Jevons during the 1850s. Between 1854-1859 Jevons was employed as assayer at the Sydney mint and also carried out detailed social surveys of the city’s slums.