Principles Of Political Economy


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Introduction

Let it be remembered that at the time when the Essay on Population was published, now more than thirty years ago, there were two great dangers threatening the peace of society, with which he had to deal; on the one hand, Mr. Godwin and his followers were striking at the reverence for all social institutions, by holding out delusive visions of perfectibility which could never be realized, and on the other a real and practical pauperism was diffusing itself widely and rapidly over the land, and undermining more surely the basis both of property and law, by an ignorant and indolent reliance upon their omnipotence—that foresight and frugality, the special virtues of their station, were fast losing ground in the estimation of the poor, and that they were recklessly sinking into a state of entire dependence on the parish rate; while the conduct and opinions of those above them, so far from repressing their error, rather tended to encourage it.

With these facts before him, and the consequences strongly impressed on his mind, we cannot wonder that Mr. Malthus, having laid down and demonstrated the great law of nature respecting population, should have thought it necessary in the first instance to point out, in all their naked deformity, the dangers it would always involve, and the sin and misery Edition: current; Page: [ xlvii ] which would inevitably attend an habitual disregard of it; and that under this aspect he himself should have chiefly regarded it.

But this view of the subject, however favourable to the argument of Dr. Sumner, was not adapted to the adversary which Mr. Malthus had to encounter. Malthus, and all the wise and salutary parochial regulations which have sprung from it, the danger would have been infinitely greater, and our way out of it much more obscure and difficult,—if any way could have been found at all, short of a convulsion of society. It must always however be a matter of regret Edition: current; Page: [ xlviii ] that Mr.

The goodness of the Deity was a theme on which he loved to dwell, and if any thing were wanting to testify to his piety and humanity it might be drawn from that very work which has been the subject of so much animadversion. After all it must be allowed that the great, we had almost said the only, fault of Mr. Malthus with the public was that his opinions were in advance of his age. Nor should it be forgotten that in this respect his reputation has in many instances suffered more from the headlong zeal of his followers and imitators than from the mistakes and even malice of his enemies; by the former his propositions have not only been affirmed more generally than he himself intended, but they have been pushed, contrary to his own practice, to extremes, and applied indifferently without any modification or reserve.

Hence it has happened that the author has been made responsible for consequences which he never contemplated, and for opinions which we know he reprobated and abjured. Of his character in a social and domestic view, it would be difficult to speak in terms which would be thought extravagant by those who knew him intimately, and who, after all, are the only judges of it.

Although much conversant with the world, and engaged in important labours, his life was, more than any other we have ever witnessed, a perpetual flow of enlightened benevolence, contentment, and peace; it was the best and purest philosophy, heightened by Christian views, and softened by Christian charity. His temper was so mild and placid, his allowances for others so large and so considerate, his desires so moderate, and his command over his own passions so complete, that the writer of this article, who has known him intimately for nearly fifty years, scarcely ever saw him ruffled, never angry, never above measure elated or depressed.

Nor were Edition: current; Page: [ l ] his patience and forbearance less remarkable—no unkind word or uncharitable expression respecting any one, either present or absent, ever fell from his lips; and though doomed to pass through more censure and calumny than any author of this or perhaps of any other age, he was little disposed to advert to this species of injury, still less to complain of it, and least of all to retort it.

Indeed, he had this felicity of mind, in a degree almost peculiar to himself, that, being singularly alive to the approbation of the wise and good, and anxious generally for the regard of his fellow-creatures, he was impassive to abuse—so conscious was he of his integrity of purpose, so firmly convinced of the truth of the principles he advocated, and so thoroughly prepared for the repugnance with which, in some quarters, they would be heard.

But never was his equanimity so striking as when towards the close of his life, in the plenitude of his success, he saw his doctrines adopted and propagated in every part of Europe, and heard himself called the greatest benefactor to mankind since the days of Adam Smith; then to his honour be it spoken, he was never known to betray, even to his most intimate friends, the slightest symptom of vanity, triumph or self-applause. The most remarkable feature of his mind was the love of truth, and it was also the most influential: it was this which enabled him patiently to investigate, and fearlessly to expose, an inveterate and popular error; and it was this which, in his private life, was the parent or the nurse of many other virtues conspicuous in him—justice, prudence, temperance, and simplicity.


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It is almost unnecessary to add, that in his domestic relations, all these qualities appeared under their fairest form, and with their sweetest influence. All the members of his family loved and honoured him; his servants lived with him till their marriage Edition: current; Page: [ li ] or settlement in life, and the humble and poor within his influence always found him disposed, not only to assist and improve them, but to treat them with kindness and respect. His conversation naturally turned upon those important subjects connected with the welfare of society which were his peculiar study; in them he was always earnest, serious, and impressive, producing his opinions in such a clear and intelligible way, as to show that they were the fruit of considerable thought and reflection, and always impressing you with the notion that he was speaking in sincerity and truth; apart from these he was habitually cheerful and playful, and as ready to engage in all the innocent pursuits and pleasures of the young, as to encourage them in their studies.

By his intelligent colleagues at Haileybury, his loss will be long and sincerely felt—few persons knew so well as they how to appreciate his worth, and none had so many opportunities of observing its influence. His good-breeding, candour, and gentlemanly conduct were felt in everything; and his sound judgment and conciliatory spirit, were not less remarkable in the councils of the college, than his manners and attainments were delightful and improving in their social intercourse and relations. To his intimate friends his place will rarely, if ever, be supplied; there was in him an union of truth, judgment, and warmth of heart, which at once invited confidence, and set at nought all fear of being ridiculed or betrayed.

You were always certain of his sympathy, and wherever the case allowed it, his assistance was as prompt and effective as his advice was sound and good. In politics he was a firm, consistent, and decided Whig, the earnest advocate of salutary improvement and reform, but strongly and sincerely attached to the institutions of his country, and fearful of all wanton experiment and innovations. In controversy which he never invited, nor Edition: current; Page: [ lii ] ever shunned when the truth was likely to be elicited, he was calm, clear and logical, fertile in argument, and though sufficiently tenacious, just and open to conviction; and being always deliberate in composition, and habitually disposed to weigh well every opinion before he submitted it to the public, he was rarely called upon to retract, but whenever the case required it, no one could do it with more candour, or with a better grace.

He expunged two whole chapters from his first work, in deference to the opinions of some distinguished persons in our church; and after the publication of Dr.

Introduction

The same spirit was shewn in the correspondence between Mr. Malthus and Mr. Ricardo, which would form, if laid before the public, a perfect model of benevolent and enlightened controversy, and though at last each retired with Edition: current; Page: [ liii ] his own opinion, the effect of the whole was rather to improve than to diminish the respect and affection which each bore to the other.

The discussion between the author and Mr.

Principles of Political Economy

Senior was brief, and rather concerning words than things; it ended, however, as few controversies do, in mutual agreement, and was creditable to both; and in no part of his works has Mr. Malthus expressed himself with more clearness, or reasoned with more sagacity and strength than in this. Malthus was a clergyman of the Church of England, and during a large portion of his life read prayers and preached regularly in turn with the other professors in the chapel of the East India College at Haileybury: in these services, and, indeed, in every other ordinance of religion, his manner was uniformly serious and devout; nor could he ever say grace at his own table, without inspiring those present with a sense of his piety.

Of his sermons, it may be said, that they were calculated to make a strong impression on the minds of the young men, for whose edification they were chiefly intended; and it is now particularly pleasing to record, that they became more earnest and more edifying every year he lived. In religion, indeed, as well as in other things, he was always unobtrusive and unostentatious, but it was easy to perceive that the spirit of the Gospel had shared largely in forming his character, and that both the precepts and doctrines of Christianity had made a deep impression upon his mind.

In the latter period of his life, his temper and character were subjected to a peculiar trial: the government, by adopting the principles of his work, as the basis of their Poor Laws Amendment Bill, recalled in a remarkable manner the public attention towards him, which had before begun to decline; and the praise lavished upon him during the discussion in parliament, only Edition: current; Page: [ liv ] served to connect him more intimately with the measure. The consequence was, that from all quarters a fresh flood of calumny and abuse was poured upon him, which has continued without intermission to the present day; and though he was never consulted about any of the provisions or enactments of the bill, yet every real or supposed defect which was discovered in the construction of it, every rub or difficulty which was found in the working of it, were without ceremony attributed to him.

At all events, we know well, Mr. Malthus himself was never heard to utter the slightest murmur or complaint: with his usual equanimity he bore the neglect of one party and the abuse of the other; and, whatever might have been his apprehensions and feelings respecting the change of the ministry, as far as regarded the country, he never for a moment spoke of it as affecting, or likely to affect, himself.

It has been said, and perhaps with truth, that the conclusions of Political Economy partake more of the certainty of the stricter sciences than those of most of the other branches of human knowledge. Yet we should fall into a serious error if we were to suppose that any propositions, the practical results of which depend upon the agency of so variable a being as man, and the qualities of so variable a compound as the soil, can ever admit of the same kinds of proof, or lead to the same certain conclusions, as those which relate to figure and number.

There are indeed in political economy great general principles, to which exceptions are of the most rare occurrence, and prominent land-marks which may almost always be depended upon as safe guides; but even these, when examined, will be found to resemble in most particulars the great general rules in morals and politics founded upon the known passions and propensities of human nature: and whether we advert to the qualities of man, or of the earth he is destined to cultivate, we shall be compelled to acknowledge, that the science of political economy bears a nearer resemblance to the science of morals and politics than to that of mathematics.

This conclusion, which could hardly fail to be formed merely from a view of the subjects about which political economy is conversant, is further strengthened by the differences of opinion which have prevailed among those who have directed a large share of talent and attention to this study. During the prevalence of the mercantile system, the interest which the subject excited was confined almost exclusively to those who were engaged in the details of commerce, or expected immediate benefit from its results.

The differences which prevailed among merchants and statesmen, which were differences rather in practice than principle, were not calculated to attract much attention. But no sooner was the subject raised into a science by the works of the French Economists and of Adam Smith, than a memorable schism divided, for a considerable time, the students of this new branch of knowledge, on the fundamental questions—What is wealth?

Happily for the interests of the science and its usefulness to society, the Economists and Adam Smith entirely agreed on some of those great general principles which lead to the most important practical conclusions; such as the freedom of trade, and the leaving every person, while he adheres to the rules of justice, to pursue his own interest his own way, together with some others: and unquestionably their agreement on these principles affords the strongest presumption of their truth. Yet the differences of the Economists and Adam Smith were not mere differences in theory; they were not different interpretations of the same phenomena, which would have no influence on practice; but they involved such views of the nature and origin of wealth, as, if adopted, would lead, in almost every country, to great practical changes particularly on the very important subject of taxation.

All the main propositions of the science have been examined, and the events which have since occurred, tending either to illustrate or confute them, have been repeatedly discussed. The result of this examination and discussion seems to be, that on some very important points there are still great differences of opinion. On all these points, and many others among the numerous subjects which belong to political economy, differences have prevailed among persons whose opinions are entitled to attention. Some of these questions are to a certain degree theoretical; and the solution of them, though obviously necessary to the improvement of the science, might not essentially affect its practical rules; but others are of such a nature, that the determination of them one way or the other will necessarily influence the conduct both of individuals and of governments; and their correct determination therefore must be a matter of the highest practical importance.

In a science such as that of political economy, it is not to be expected that an universal assent should be obtained to all its important propositions; but, in order to give them their proper weight and justify their being acted upon, it is extremely desirable, indeed almost necessary, that a considerable majority of those who, from their attention to the subject, are considered by the public as likely to be the most competent judges, should agree in the truth of them.

Among those writers who have treated the subject Edition: current; Page: [ 4 ] scientifically, there is not perhaps, at the present moment, so general an agreement as would be desirable to give effect to their conclusions; and the writers who peculiarly call themselves practical, either draw no general inferences, or are so much influenced by narrow, partial, and sometimes interested views, that no reliance can be placed on them for the establishment of general rules.

The last twenty or thirty years have besides been marked by a train of events of a most extraordinary kind; and there has hardly yet been time so to arrange and examine them as to see to what extent they confirm or invalidate the received principles of the science to which they relate. The present period, therefore, seems to be unpropitious to the publication of a new systematic treatise on political economy. When these discussions have been for some time before the public, and a sufficient opportunity has been given, by the collision of different opinions and an appeal to experience, to separate what is true from what is false, the different parts may then be combined into a consistent whole, and may be expected to carry with it such weight and authority as to produce the most useful practical results.

The principal cause of error, and of the differences which prevail at present among the scientific writers on political economy, appears to me to be a precipitate attempt to simplify and generalize. While their more practical opponents draw too hasty inferences from a frequent appeal to partial facts, these writers run into a contrary extreme, and do not sufficiently try their theories by a reference to that enlarged and Edition: current; Page: [ 5 ] comprehensive experience which, on so complicated a subject, can alone establish their truth and utility.

To minds of a certain cast there is nothing so captivating as simplification and generalization. It is indeed the desirable and legitimate object of genuine philosophy, whenever it can be effected consistently with truth; and for this very reason, the natural tendency towards it has, in almost every science with which we are acquainted, led to crude and premature theories. In political economy the desire to simplify has occasioned an unwillingness to acknowledge the operation of more causes than one in the production of particular effects; and if one cause would account for a considerable portion of a certain class of phenomena, the whole has been ascribed to it without sufficient attention to the facts, which would not admit of being so solved.

I have always thought that the late controversy on the bullion question presented a signal instance of this kind of error. Each party being possessed of a theory which would account for an unfavourable exchange, and an excess of the market price above the mint price of bullion, adhered to that single view of the question, which it had been accustomed to consider as correct; and scarcely one writer seemed willing to admit of the operation of both theories, the combination of which, sometimes acting in conjunction and sometimes in opposition, could alone adequately account for the variable and complicated phenomena observable.

It is certain that we cannot too highly respect and venerate that admirable rule of Newton, not to admit more causes than are necessary to the solution of the phenomena we are considering; but the rule itself implies, that those which really are necessary must be Edition: current; Page: [ 6 ] admitted.

Before the shrine of truth, as discovered by facts and experience, the fairest theories and the most beautiful classifications must fall. The chemist of thirty years ago may be allowed to regret, that new discoveries in the science should disturb and confound his previous systems and arrangements; but he is not entitled to the rank of philosopher, if he does not give them up without a struggle, as soon as the experiments which refute them are fully established. The same tendency to simplify and generalize, produces a still greater disinclination to allow of modifications, limitations, and exceptions to any rule or proposition, than to admit the operation of more causes than one.

Nothing indeed is so unsatisfactory, and gives so unscientific and unmasterly an air to a proposition as to be obliged to make admissions of this kind; yet there is no truth of which I feel a stronger conviction than that there are many important propositions in political economy which absolutely require limitations and exceptions; and it may be confidently stated that the frequent combination of complicated causes, the action and reaction of cause and effect on each other, and the necessity of limitations and exceptions in a considerable number of important propositions, form the main difficulties of the science, and occasion those frequent mistakes which it must be allowed are made in the prediction of results.

To explain myself by an instance. No considerable and continued increase of wealth could possibly take place without that degree of frugality which occasions, annually, the conversion of some revenue into capital, and creates a balance of produce above consumption; but it is quite obvious Edition: current; Page: [ 7 ] that they are not true to an indefinite extent, and that the principle of saving, pushed to excess, would destroy the motive to production.

If every person were satisfied with the simplest food, the poorest clothing, and the meanest houses, it is certain that no other sort of food, clothing, and lodging would be in existence; and as there would be no adequate motive to the proprietors of land to cultivate well, not only the wealth derived from conveniences and luxuries would be quite at an end, but if the same divisions of land continued, the production of food would be prematurely checked, and population would come to a stand long before the soil had been well cultivated.

If consumption exceed production, the capital of the country must be diminished, and its wealth must be gradually destroyed from its want of power to produce; if production be in a great excess above consumption, the motive to accumulate and produce must cease from the want of an effectual demand in those who have the principal means of purchasing. The two extremes are obvious; and it follows that there must be some intermediate point, though the resources of political economy may not be able to ascertain it, where, taking into consideration both the power to produce and the will to consume, the encouragement to the increase of wealth is the greatest.

The division of landed property presents another obvious instance of the same kind. No person has ever for a moment doubted that the division of such immense tracts of land as were formerly in possession of the great feudal proprietors must be favourable to industry and production. It is equally difficult to doubt that a division of landed property may be carried to such an extent as to destroy all the benefits to be derived from the accumulation of capital and the division of labour, and to occasion the most extended poverty.

There is here then a point as well as in the other instance, though we may not know how to place it, where the division of property is best suited to the actual circumstances of the society, and calculated to Edition: current; Page: [ 8 ] give the best stimulus to production and to the increase of wealth and population.

It follows clearly that no general rule can be laid down respecting the advantage to be derived from saving, or the division of property, without limitations and exceptions; and it is particularly worthy of attention that in cases of this kind, where the extremes are obvious and striking, but the most advantageous mean cannot be marked, that in the progress of society effects may be produced by an unnoticed approximation to this middle point, which are attributed to other causes, and lead to false conclusions.

The tendency to premature generalization occasions also, in some of the principal writers on political economy, an unwillingness to bring their theories to the test of experience. I should be the last person to lay an undue stress upon isolated facts, or to think that a consistent theory, which would account for the great mass of phenomena observable, was immediately invalidated by a few discordant appearances, the reality and the bearings of which there might not have been an opportunity of fully examining.

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But certainly no theory can have any pretension to be accepted as correct, which is inconsistent with general experience. Such inconsistency appears to me at once a full and sufficient reason for its rejection. Under such circumstances it must be either radically false, or essentially incomplete; and in either case, it can neither be adopted as a satisfactory solution of existing phenomena, nor acted upon with any degree of safety for the future. The first business of philosophy is to account for things as they are; and till our theories will do this, they ought not to be the ground of any practical conclusion.

I should never have had that steady and unshaken confidence in the theory of population which I have invariably felt, if it had not appeared to me to be confirmed, in the most remarkable manner, by the state of society as it actually exists in every country with which we are acquainted. To this test Edition: current; Page: [ 9 ] I appealed in laying it down; and a frequent appeal to this sort of experience is pre-eminently necessary in most of the subjects of political economy, where various and complicated causes are often in operation, the presence of which can only be ascertained in this way.

A theory may appear to be correct, and may really be correct under given premises; it may further appear that these premises are the same as those under which the theory is about to be applied; but a difference which might before have been unobserved, may shew itself in the difference of the results from those which were expected; and the theory may justly be considered as failing, whether this failure arises from an original error in its formation, or from its general inapplicability, or specific misapplication, to actual circumstances.

Where unforeseen causes may possibly be in operation, and the causes that are foreseen are liable to great variations in their strength and efficacy, an accurate yet comprehensive attention to facts is necessary, both to prevent the multiplication of erroneous theories, and to confirm and sanction those that are just. The science of political economy is essentially practical, and applicable to the common business of human life. There are few branches of human knowledge where false views may do more harm, or just views more good. I cannot agree, therefore, with a writer in one of our most popular critical journals, who considers the subjects of population, bullion, and corn laws in the same light as the scholastic questions of the middle ages, and puts marks of admiration to them expressive of his utter astonishment that such perishable stuff should engage any portion of the public attention.

In the very practical science of political economy perhaps it might be difficult to mention three subjects more practical than those unfortunately selected for a comparison with scholastic questions. But in fact, most of the subjects which belong to it are peculiarly Edition: current; Page: [ 10 ] applicable to the common concerns of mankind. What shall we say of all the questions relating to taxation, various and extensive as they are? It will hardly be denied that they come home to the business and bosoms of mankind. What shall we say of the laws which regulate exchangeable value, or every act of purchase and exchange which takes place in our markets?

The study of the laws of nature is, in all its branches, interesting. Even those physical laws by which the more distant parts of the universe are governed, and over which, of course, it is impossible for man to have the slightest influence, are yet noble and rational objects of curiosity; but the laws which regulate the movements of human society have an infinitely stronger claim to our attention, both because they relate to objects about which we are daily and hourly conversant, and because their effects are continually modified by human interference.

There are some eminent persons so strongly attached to the general rules of political economy, that, though they are aware that in practice some exceptions to them may occasionally occur; yet they do not think it wise and politic to notice them, for fear of directing the public attention too much and too frequently to exceptions, and thus weakening the force and utility of the general rules. In this conclusion, however, I cannot agree with them.

If the consequences of not attending to such exceptions were of sufficient magnitude and frequency to be conspicuous to the public, I should be decidedly of opinion that the cause of general principles was much more likely to lose than to gain by concealment. It is, for instance, a just and general rule in political economy, that the wealth of a particular nation is increased by the increasing wealth and prosperity of surrounding states; and unquestionably there cannot Edition: current; Page: [ 11 ] be a more obvious truth than that, if these states are not successful competitors in those branches of trade in which the particular nation had excelled, their increasing wealth must tend to increase the demand for its products, and call forth more effectively its resources.

But if this rule be repeatedly insisted upon without noticing the above most important limitation, how is the student in political economy to account for some of the most prominent and best attested facts in the history of commerce. How is he to account for the rapid failure of the resources of Venice under the increasing wealth of Portugal and the rest of Europe, after the discovery of a passage to India by the Cape of Good Hope; the stagnation of the industry of Holland, when the surrounding nations grew sufficiently rich to undertake their own carrying trades, the increasing trade and wealth of Great Britain, during the war of the French Revolution, under the diminishing trade and increasing poverty of the greatest part of Europe, and the comparative distress of America, when other states were enabled to participate in those trades, which as a neutral she had carried on during a great part of the late war with such signal success.

It is not favourable to the science of political economy, that the same persons who have been laying down a rule as universal should be obliged to found their explanations of most important existing phenomena on the exceptions to it. It is surely much better that such a rule should be laid down at first with its limitations. Nothing can tend so strongly to bring theories and general principles into discredit as the occurrence of consequences, from particular premises, which have not been foreseen.

Though in reality such an event forms no just objection to theory, in the general and proper sense of the term; yet it forms a most valid objection to the specific theory in question, as proving it in some way or other wrong; and with the mass of mankind this will pass for an impeachment of general principles, and of the knowledge or good faith of those who are in the habit of inculcating them. It appears Edition: current; Page: [ 12 ] to me, I confess, that the most perfect sincerity, together with the greatest degree of accuracy attainable, founded upon the most comprehensive view of all the circumstances of the case, are necessary to give that credit and circulation to general principles which is so desirable.

And no views of temporary advantage, nor, what is more likely to operate, the fear of destroying the simplicity of a general rule, should ever tempt us to deviate from the strict line of truth, or to conceal or overlook any circumstances that may interfere with the universality of the principle. There is another class of persons who set a very high value upon the received general rules of political economy, as of the most extensive practical use.

They have seen the errors of the mercantile system refuted and replaced by a more philosophical and correct view of the subject; and having made themselves masters of the question so far, they seem to be satisfied with what they have got, and do not look with a favorable eye on new and further inquiries, particularly if they do not see at once clearly and distinctly to what beneficial effects they lead. This indisposition to innovation, even in science, may possibly have its use, by tending to check crude and premature theories; but it is obvious that, if carried too far, it strikes at the root of all improvement.

It is impossible to observe the great events of the last twenty-five years in their relation to subjects belonging to political economy, and sit down satisfied with what has been already done in the science. But if the science be manifestly incomplete, and yet of the highest importance, it would surely be most unwise to restrain inquiry, conducted upon just principles, even where the immediate practical utility of it was not visible.

In mathematics, chemistry, and every branch of natural philosophy, how many are the inquiries necessary to their improvement and completion, which, taken separately, do not appear to lead to any specifically advantageous purpose! How many useful inventions, and how much valuable and improving knowledge Edition: current; Page: [ 13 ] would have been lost, if a rational curiosity and a mere love of information had not generally been allowed to be a sufficient motive for the search after truth!

I should not, therefore, consider it as by any means conclusive against further inquiries in political economy, if they would not always bear the rigid application of the test of cui bono?


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  • But such, in fact, is the nature of the science, so intimately is it connected with the business of mankind, that I really believe more of its propositions will bear this test than those of any other department of human knowledge. To trace distinctly the operations of that circle of causes and effects in political economy which are acting and re-acting on each other, so as to foresee their results, and lay down general rules accordingly, is, in many cases, a task of very great difficulty. But there is scarcely a single inquiry belonging to these subjects, however abstruse and remote it may at first sight appear, which in some point or other does not bear directly upon practice.

    It is unquestionably desirable, therefore, both with a view to the improvement and completion of the science, and the practical advantages which may be expected from it, that such inquiries should be pursued; and no common difficulty or obscurity should be allowed to deter those who have leisure and ability for such researches. In many cases, indeed, it may not be possible to predict results with certainty, on account of the complication of the causes in action, the different degrees of strength and efficacy with which they may operate, and the number of unforeseen circumstances which are likely to interfere; but it is surely knowledge of the highest importance to be able to draw a line, with tolerable precision, between those cases where the expected results are certain, and those where they are doubtful; and further to be able satisfactorily to explain, in the latter case, the reasons of such uncertainty.

    To know what can be done, and how to do it, is Edition: current; Page: [ 14 ] beyond a doubt, the most valuable species of information. The next to it is, to know what cannot be done, and why we cannot do it. The first enables us to attain a positive good, to increase our powers, and augment our happiness: the second saves us from the evil of fruitless attempts, and the loss and misery occasioned by perpetual failure.

    But these inquiries demand more time and application than the practical statesman, whom of all others they most nearly concern, can give to them. In the public measures of every state all are, no doubt, interested; but a peculiar responsibility, as well as interest, must be felt by those who are the principal advisers of them, and have the greatest influence in their enactment; and if they have not leisure for such researches themselves, they should not be unwilling, under the guidance of a sound discretion, to make use of the advantages which may be afforded by the leisure of others.

    They will not indeed be justified in taking any decided steps, if they do not themselves see, or at least think they see, the way they are going; but they may be fairly expected to make use of all the lights which are best calculated to illumine their way, and enable them to reach the object which they have in view. It may perhaps be thought that, if the great principle so ably maintained by Adam Smith be true, namely, that the best way of advancing a people towards wealth and prosperity is not to interfere with them, the business of government, in matters relating to political economy, must be most simple and easy.

    But it is to be recollected, in the first place, that there is a class of duties connected with these subjects, which, it is universally acknowledged, belongs to the Sovereign; and though the line appears to be drawn with tolerable precision, when it is considered generally; yet when we come to particulars, doubts may arise, and certainly in many instances have arisen, as to the subjects to be included in this classification. To what extent education and the support of the poor Edition: current; Page: [ 15 ] should be public concerns?

    What share the Government should take in the construction and maintenance of roads, canals, public docks? What course it should adopt with regard to colonization and emigration, and in the support of forts and establishments in foreign countries? The distinction between Value and Price, as we have now refined them, is so obvious, as scarcely to seem in need of any illustration.

    But in political economy the greatest errors arise from overlooking the most obvious truths. Simple as this distinction is, it has consequences with which a reader unacquainted with the subject would do well to begin early by making himself thoroughly familiar. The following is one of the principal.

    There is such a thing as a general rise of prices. All commodities may rise in their money price. But there cannot be a general rise of values. It is a contradiction in terms. A can only rise in value by exchanging for a greater quantity of B and C; in which case these must exchange for a smaller quantity of A. All things cannot rise relatively to one another. If one-half of the commodities in the market rise in exchange value, the very terms imply a fall of the other half; and reciprocally, the fall implies a rise.

    Principles of Political Economy by John Stuart Mill

    Things which are exchanged for one another can no more all fall, or all rise, than a dozen runners can each outrun all the rest, or a hundred trees all overtop one another. Simple as this truth is, we shall presently see that it is lost sight of in some of the most accredited doctrines both of theorists and of what are called practical men.

    And as a first specimen, we may instance the great importance attached in the imagination of most people to a rise or fall of general prices. Because when the price of any one commodity rises, the circumstance usually indicates a rise of its value, people have an indistinct feeling when all prices rise, as if all things simultaneously had risen in value, and all the possessors had become enriched.

    That the money prices of all things should rise or fall, provided they all rise or fall equally, is in itself, and apart from existing contracts, of no consequence. Every one gets more money in the one case and less in the other; but of all that is to be bought with money they get neither more nor less than before. It makes no other difference than that of using more or fewer counters to reckon by.

    The only thing which in this case is really altered in value is money; and the only persons who either gain or lose are the holders of money, or those who have to receive or to pay fixed sums of it. There is a difference to annuitants and to creditors the one way, and to those who are burthened with annuities, or with debts, the contrary way.

    But as to future transactions there is no difference to any one. Let it therefore be remembered and occasions will often arise for calling it to mind that a general rise or a general fall of values is a contradiction; and that a general rise or a general fall of prices is merely tantamount to an alteration in the value of money, and is a matter of complete indifference, save in so far as it affects existing contracts for receiving and paying fixed pecuniary amounts, and it must be added as it affects the interests of the producers of money.

    Before commencing the inquiry into the laws of value and price, I have one further observation to make. I must give warning, once for all, that the cases I contemplate are those in which values and prices are determined by competition alone.

    On the Principles of Political Economy and Taxation - Wikipedia

    In so far only as they are thus determined, can they be reduced to any assignable law. The buyers must be supposed as studious to buy cheap, as the sellers to sell dear. The values and prices, therefore, to which our conclusions apply, are mercantile values and prices; such prices as are quoted in price-currents; prices in the wholesale markets, in which buying as well as selling is a matter of business; in which the buyers take pains to know, and generally do know, the lowest price at which an article of a given quality can he obtained; and in which, therefore, the axiom is true, that there cannot be for the same article, of the same quality, two prices in the same market.

    Our propositions will be true in a much more qualified sense, of retail prices; the prices paid in shops for articles of personal consumption. It includes a whole range of alternative theories, including Post-Keynesian, Austrian, Marxian, radical, feminist, institutionalist, and other approaches. The purpose is to teach students about alternative schools of economic thought but also to deepen their understanding of the dominant, neoclassical approach to economics. Following Wolff and Resnick, an even broader objective is to teach students that economics is a discourse and that no single voice can rightfully claim to have a monopoly on the truth about economics.

    Daniel E.

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