NORTH AMERICAN REVIEW.
FEBRUARY, 1887.
POLITICAL ECONOMY IN AMERICA.
by RICHARD T. ELY
At a meeting of political economists held at Saratoga in the month of September, 1885, in order to form an economic society — finally called the American Economic Association — Professor Alexander Johnston, of Princeton College, defined the purposes of the contemplated organization, as understood by him, in these words:
“This is an effort to stop the formation of any ‘crust’ on the development of economics, to assert the economic right of attempts to develop in every direction, unhampered by any accusation of heterodoxy, with the assurance that unlimited freedom of individual attempt to develop will bring about the truest, most natural, and healthiest development.”
Other ideas were brought out in the interesting discussion about the aims which should animate a body of American economists at the present time, and valuable suggestions were derived from men like Hon. Andrew D. White; Rev. Dr. Washington Gladden; Professor Henry C. Adams, of Michigan University; Professor E. J. James, of the University of Pennsylvania; Dr. Herbert B. Adams, of the Johns Hopkins University; Dr. Edwin R. A. Seligman, of Columbia College; Professor Andrews, of Brown University; and President Charles Kendall Adams, of Cornell University.
There can be no doubt, however, that all present agreed with Professor Johnston, and it is equally certain that he struck the key-note of future progress in economics.
But what did the undertaking signify? What did it mean to remove the “crust” already formed on the development of economics and to prevent its formation in the future? It is necessary for us to get a clear idea of this, if we would understand the past history and present condition of economic science in America.
The word “heterodoxy” uttered by Professor Johnston is one which throws a whole flood of light on the situation. The utterly unscientific conceptions, orthodoxy and heterodoxy, had crept into political economy; and men had with their aid attempted to check every advance in the science with a strong hand. What was orthodox? What was heterodox? Certain Englishmen, Ricardo, Malthus, Mill, Senior, successors of Adam Smith, had developed an à priori political economy which was well-pleasing to influential social elements. This was still further purified by later successors until the strong and mighty could find in it nothing to terrify “or make afraid,” nothing to disturb their calm repose. This at last became the political economy of the most conservative portion of the press, and as such gave us, to use the words of Professor Gustav Cohn, not a description of actual life, but at best a picture of the life of men in society such as one might expect to find in the “Dream of the Millionaire.” It was a Utopia as dangerous as it was pleasing. Imported to this country, it acquired a strength in certain educated circles — particularly in the North and East — to which it could scarcely aspire, even in England. It was always ready with its little tests of orthodoxy to mete out praise or condemnation, to accord honor or shame. Acceptance of its creed was often a condition of academic preferment. A small clique of men, not without newspaper influence, constituted themselves its special guardians and, still maintaining that position, even now attempt to exercise a sort of terrorism over the intellect of the country. Any deviation from the straight and narrow path laid down by them was deeply damned. Was there not, indeed, that never-failing refuge of incompetence and malignity, the epithet “socialism,” ready to hurl at all offenders?
Manifestly, the first need of the hour was to break this “crust,” and this was a worthy object for the American Economic Association. “Orthodox” and “heterodox” must be as completely driven out of economic discussion as out of biology and mineralogy. Those who use these phrases must necessarily look back to the past to discover the belief of others, whereas science should ever keep its glance directed to the future and press on to the discovery of new truth.
This determination “to assert the right of attempts to develop in every direction, unhampered by any accusation of heterodoxy,” is of particular importance in political economy, because, in the nature of things, economists worthy of the name always have been, and always will be, in opposition to current opinion. What is an economist? An economist is a man who studies the economic life of men as members of society. Now, if the science of economics is not a humbug, he must know more about industrial society than others, and that is simply saying, in other words, that he holds opinions not generally received. The true economist is a guide who always keeps in advance, who marks out new paths of social progress. This explains why the “heterodox” economist of one age becomes the “orthodox” economist of a succeeding one. Social development has gone on in the direction in which he foresaw it must move. An American writer [Daniel Raymond, Thoughts on Political Economy] in 1820, for example, speaks of the “gross heresies” of Adam Smith’s “Wealth of Nations,” and even this great “Father” of English political economy did not escape the reproach of socialism. Could that progressive, far-seeing man know that his name was now used to retard the advance of his favorite study, he surely could not rest easy in his grave!
All articles on political economy in America written before 1880 are chiefly concerned with the question: Why have Americans done comparatively nothing to advance the science of industrial society? This is the nature of Professor Dunbar’s article on “Political Economy in the United States from 1776 to 1876,” which appeared in the NORTH AMERICAN REVIEW in the latter year; it is also the nature of T. E. Cliffe Leslie’s article on “Political Economy in the United States,” which appeared in the Fortnightly Review, in 1880. The main thought brought out is the preponderating importance attached to the pursuit of wealth rather than to an inquiry as to its philosophy in this new country. The absence of obviously pressing economic questions is also dwelt upon by both writers. All this is true. The two chief causes of research in economics are large financial questions, and wide-spread dissatisfaction among the masses with existing social arrangements, coupled with a determination to change these radically. Our late civil war brought us one of these two chief causes of economic study; events of the past ten years have brought us the other. Thus has a mighty impulse been given to the development of political economy. But there is another aspect of the situation — not unrelated to what has already been said about economic orthodoxy — which deserves mention. The chairs of political economy in the United States have in the past been filled, to large extent, by men who were not appointed, like professors of chemistry, as searchers after truth, but as advocates — chiefly of free trade or protection as the case might be. This has been sufficiently understood, and it has acted injuriously in several ways. It has kept the best men out of the academic career, and it has repressed aspirations looking in the direction of new scientific explorations. Finally, it has reduced the influence of political economists to a minimum. Business men have despised them, while their power to guide and direct the thought of the laboring classes has been less than nothing. It has been so generally felt that professors of political economy in America were mere advocates of existing institutions, that the masses have turned away from them in angry impatience, and have been prejudiced even against the important and unassailable doctrines which they did teach. Thus has the task been rendered more difficult for those truly scientific men who with the impartiality of all science, tell the plain truth to all classes and would thus benefit all alike — for a lie is of no permanent benefit to any one! And what about the politicians? Well, every one knows they have given themselves little concern about political economy, and the political economists often censure them severely on this account. While the politicians doubtless deserve it, there is another side to the case, brought out by my good friend Professor Jesse Macy in those felicitous words: “A political science which does not at least honestly seek to give direction to actual politics is an unmitigated nuisance. Colleges and universities have in the past been treated with contempt by practical politicians simply because their work has been contemptible. Politicians are the last men in the world to treat with contempt a respectable and efficient political power and influence.”
The present time is one in which the evolution of society is proceeding with more than its usual rapidity, and it is evident that we need a positive constructive political economy, and this requirement the old political economy cannot meet. Let the reader consider for a moment the age in which its great masters, Quesnay, Turgot, and Adam Smith, lived. It was the latter half of the eighteenth century, when the progress of industry was retarded by a multitude of old institutions, good in their day, doubtless, but then antiquated. The cry of men who understood their time was, “Remove the barriers! clear the way for new social forms!” The work which the great economists advocated during that period was very properly negative and destructive. It ought not then to surprise us that when we go to our old text books of political economy to seek advice in reference to practical measures, the one chief lesson which we learn is “DON’T.” Manifestly, the call of our age is DO.
A new movement in economics was then inevitable, and it has already come. Its precise beginning cannot, perhaps, be ascertained, but the writings of the distinguished head of the Massachusetts Institute of Technology, General Francis A. Walker, first made it a clearly recognized accomplished fact in America. Probably, his works have inspired more of the American economists under thirty-five-possibly under forty-than those of any other man. He sowed seed which is now springing up and bearing fruit in all parts of our land. The movement was furthered by the establishment of new chairs of political economy in American colleges and universities, which was due to the wonderful impulse given to the study by the undeniable existence of those two classes of economic phenomena to which reference has already been made; namely, large financial problems and pressing social questions. Before 1876 one might have counted on one’s fingers the institutions where any serious instruction in political economy was given, whereas provision is now made for its study in every one of the more prominent colleges of the country; and although it is still inadequate in most cases, this is a remarkable advance. There are now a few colleges with two or three instructors, even, and it is not foolish to hope that in a not remote future we shall have as completely developed departments of political economy as we now have of physics and chemistry in our best universities.
Another good sign is the growing faith, both within and without our institutions of learning, in truth. People value the searcher for truth more than formerly, the mere advocate less. It is a significant fact that the youngest of the great American universities, the Johns Hopkins, founded in 1876, took for its motto, “Veritas vos liberabit.” [“Truth will set you free”] Another equally significant fact is this: The Johns Hopkins University assumed a non-partisan attitude in natural science. Its biological laboratory was instituted solely for the search of truth, regardless of consequences. Darwinian and anti-Darwinian doctrines, as such, could not be considered. Some good people were prejudiced against the University at the start on this account, and looked with much trepidation upon its teachings; but in ten years this has for a large part disappeared, and no college has warmer, more devoted friends among the clergy. This means faith in truth and a conscious recognition of the fact that one truth can not clash with another. One other illustration of this all-important point must follow, if the reader will pardon a personal allusion. When the writer’s name was brought forward for the position of teacher of political economy in the Johns Hopkins University five years ago, the authorities of the institution, true to their motto, asked no questions about his opinions in regard to free trade and protection or anything else, although these were then as unknown as he himself. There was simply an endeavor to ascertain his qualifications for the position. This is an experience which is probably almost unique.
People are learning, both in political economy and natural science, that truth alone can make them free; that truth alone has in it the power of life; that truth — not error — is able to conserve the good, and that to fear it is unworthy of an enlightened people.
There has been the same remarkable progress in the development of an economic literature in America, which has been noted elsewhere. To confine ourselves to the past few months, such works may be mentioned as James on “The Relation of the Modern Municipality to the Gas Supply;” Shaw on “Co-operation in a Western City” — two remarkable publications of the American Economic Association — Hudson on “Railways and the Republic;” Hadley on “Railroad Transportation,” and Laughlin on “Bi-metallism in the United States.” These are all based on investigations in the rich field of American economic life. We have also bold endeavors to reconstruct fundamental principles in economics, like Patten’s “Premises of Political Economy,” and J. B. Clark’s “Philosophy of Wealth.” All these are works of international importance.
One year ago there was no economic periodical in the United States. To-day there are three, and all evidently rest on a permanent basis. They are the bi-monthly monographs of the American Economic Association, published in Baltimore; the Political Science Quarterly of Columbia College, and the Quarterly Journal of Economics, published under the auspices of Harvard University.
A change in the conception of political economy must not fail to be noticed in this place. Its scope has become enlarged, and it is not quite the same thing which it was once. It has become a distinctively ethical science, and necessarily includes purpose within its province. It is clearly recognized that the will of man is a chief factor in economic life, and that, within certain limits, we can have just such a social system as we choose — always, be it observed, however, within certain limits. Accordingly, ideals for the individual, for the State, for society, for the church, are placed before men, and they are urged to strive for them in every practicable way. It is on this account, also, that the new political economy lays so much stress on ethical education, for it is seen that errors as often proceed from the heart as from the head.
It must not be supposed that the new political economy has gained exclusive sway even in the colleges and universities of the United States — much less outside of them. Still it is making its way rapidly; it is accepted by the teachers in most of our colleges, and it is beginning to permeate the thought of our time, as may be seen in the utterances of press and pulpit.
The economists of the older school cannot, either, be denied their use. They are not mere drags on the car of progress, but with their criticism, sharp and ungracious though it sometimes be, they render the advance surer.
In conclusion, however, it is undeniable that the prime need of the hour is increased light in economics, a further development of the new political economy, and the qualities indispensable in the men who would carry on the work already so auspiciously begun are these: a good heart, a strong intellect, and dauntless courage.
Source: North American Review, Vol. 144, No. 363 (February, 1887), pp. 113-119.
Image Source: Universities and their sons; history, influence and characteristics of American universities, with biographical sketches and of alumni and recipients of honorary degrees, Vol. IV (1900), p. 505. Image was smoothed and colorised at Economics in the Rear-view Mirror.