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New ideas well presented are applied to many old problems. Even such familiar themes as the public control of monopoly and the public operation of industries are enlivened by recherché arguments. But the new weights put into the scales of deliberation are not over-estimated. For instance, with reference to the waste of resources caused by cost which hinders the movement of workpeople and by their mistakes in judging what is to their own interest; it is shown that where error of judgment exists, a cheapening of the cost of movement may prove socially injurious. The case is not merely academic, but is applicable to the aimless wanderings and useless changes of situation which are sometimes occasioned by facility of movement (p. 119). “But these exceptional cases are not subversive of old-established beliefs." When we are contemplating, from a general point of view, the consequences of these diminutions [in cost of movement and in falsity of judgment], “it is not the possible, but the probable, effect that concerns us (p. 121). With regard to the more familiar considerations which Professor Pigou from time to time quite properly throws into the balance, we think that he might with advantage have more frequently referred to standard versions of similar arguments.

Thus, in connection with the failure of harmony between private and social interest (p. 158, and context), there might have been expected a reference to Sidgwick's masterly treatment of that subject in the third book of his Political Economy. Again, when Professor Pigou places among the ultimate effects of an artificial wage-rate the circumstance “that the reward of employing power and waiting in industries in general being somewhat reduced, these factors are likely to be forthcoming in somewhat diminished quantities” (p. 343), he might have referred-with an expression of assent or qualification—to some of the leading writers who have dwelt on that circumstance.

The originality which we have noted with respect to theory makes itself felt in several practical suggestions. The author has, we believe, only one precursor in the suggestion, that it is possible to increase the national dividend by imposing differential taxes on industries governed by the law of diminishing returns (p. 179). Many suggestions are directed to improvements in distribution. Munificence might be encouraged by honours and decorations, a new “order," not interfering with the attractions of old ones. On more familiar lines Professor Pigou advocates a modified form of income-tax which should exempt resources devoted to investment in general (not to insurance only) (p. 371).

He mentions with approbation Rignano's plan of taxing inheritances with increased severity at each successive devolution (p. 376). But he would confine taxes on unearned increments to “windfalls (p. 370). He would accompany transferences from the rich to the poor with strict conditions (p. 392). He is in favour of “taking some cautious steps” towards a very drastic treatment of the very unfit (p. 55). Among plans for reducing fluctuations of earnings there is adduced Mr. Balfour's suggestion that when industry is depressed, a bounty should be given to firms making for foreign orders, in such wise as to enable them to accept contracts. Why not to firms making for British orders, suggests Professor Pigou (p. 481). He is “inclined to believe ” that a very considerable net benefit would result from a method of steadying prices such as that proposed by Professor Irving Fisher (p. 438; cp. p. 464). There would be available for the purpose the index-number proposed by Professor Pigou, in which the prices of commodities at one of two compared epochs are weighted with the quantities of the commodities consumed at the other epoch (p. 46). One of the most ingeniously deduced proposals is the one about the value of which we are least confident. With a view to maximising the national dividend, it is concluded that in the regulation of railways discrimination, or the “value of service” principle, should be adopted at one (probably brief) stage of a country's development, and “this principle should give place to simple competition, or the cost of service principle, as soon as population has grown and demand has risen sufficiently to lift it out of that stage” (p. 234).

The last topic introduces our principal difference with Professor Pigou. He seems to us in his estimates of probabilities not always to attach sufficient weight to authority. For instance, on a question of definition, the use of the term "jointcost," more deference might have been shown towards Professor Taussig (p. 216). We think it very improbable that an “accident of language” (p. 217) should have conduced to a “fallacious general argument” on the part of Professor Taussig (p. 219). The following passage brings out the matter at issue : “Principal Hadley and his followers, not content with demonstrating that fact [that a certain case may occur in practice], add, without argument, that this case is typical of the whole railway world, and suppose themselves, therefore, to have proved that the value of service prinicple ought to be followed in the determination of all railway rates. Such an unargued inference is plainly illegitimate” (p. 231). It is plainly legitimate, we think, to defer to the unargued judgments of the leading authorities on railway economics with respect to the question whether a certain abstract case may be taken as typical of the actual facts. This is just one of those matters which are amenable to the Aristotelian doctrine that we ought to attend to the unargued pronouncements of the practically wise, who have acquired by experience a certain power of mental vision.

Here arises the question : How far do our author's theories belong to the category of practical wisdom, or to that higher kind of science which the philosopher distinguishes as grand and wonderful and difficult, but not useful for human purposes? Mathematical economics are certainly useful to some extent; but does the further elaboration which that study has received in this treatise imply a correspondingly large contribution to the Art of Political Economy? The analogy of mathematical physics does not help us to answer this question ; the calculus of utility and probability is something so peculiar and unique. “Ai posteri L'ardua sentenza ! ”

F. Y. EDGEWORTH

ور

Principles of Economics. Vol. II. By N. G. PIERSON. Trans

lated from the Dutch by A. A. Wotzel. (London: Macmillan. 1912. Pp. xxiii +645. Price 10s. net.)

ECONOMISTS have been looking for this second instalment of Mr. Wotzel's translation of Pierson for some time, ten years having passed since the first volume appeared. It is worth the waiting for; the quality of the translation is well up to the high level of its predecessor, and it seems so free from doubtful passages that the last 300 pages probably lose little from missing revision by the author. One cause of the delay was the accidental destruction of a part of the manuscript. The present volume covers production and the revenues of the State. One long chapter deals with the place of self-interest in production. Qualifications of the doctrine of maximum satisfaction are brought out by an examination of concrete cases, for instance, the smoke nuisance (the total loss occasioned by which probably exceeds to an enormous extent the sum of the individual savings which are made by disregarding it) and the developments in railway transportation for which State action has been responsible. But there is no attempt to distil from the facts the fundamental principles which may be laid down in these matters, or to measure gains and losses against each other—as is done, for example, by Professor Pigou in his recent book. In short, the method of the book tends to be that of pre-Marshall Economics; but, within the scope of his method, the author's acuteness, independence, and judgment are, on the whole, beyond praise, though possibly the common sense has here and there a trace of the hardness of outline which, for a time, made English Political Economy so unpopular.

Dr. Pierson's bias—not pronounced-is to justify the ways of trade. Thus : “Like a bodily pain (trade depression) serves as a useful warning; it does more : it gives a powerful incentive to do what is urgently needed to be done. We might even go further and say that, human nature being prone to sluggishness, depressions provide the stimulant without which there would be no progress. But the description of depressions and crises is thoroughly done, though the problem of the periodicity of the former is hardly approached. The same closeness of observation and absence of the refinements of theoretical analysis mark the treatment of trade unions, about which the author is not afraid to speak his mind. He inclines to think that “the power of capital” needs “the presence of some other power to hold it in check, and to inspire fear where the sense of duty or humanity is lacking,” and allows that trade unions “possibly enable a working-class population, which has already risen above the ordinary level of welfare and enlightenment, to rise still further.” However, those who expect from Dr. Pierson's belief that trade unions “can never be the means of raising a working-class population which still occupies a very low level,” and his qualifications of the doctrine of maximum satisfaction, that he must fall into the arms of the more moderate socialists, will find themselves disappointed. “When we sound the depths of their (the socialists”) philosophy, we soon touch the bottom. Lassalle performs the most astounding feats in logic ... the economic wisdom of Flürscheim is below the lowest conceivable level. ... (Marx's) errors are such as make it difficult for us to accept him as a strictly scientific thinker. Let us not look for science among these men, but rather for expressions of feeling.

Till now the strength of the Socialists has lain solely in their criticism. By that criticism, even though it be exaggerated, we must endeavour to benefit. So far as constructive theory is concerned, nothing of any value has yet been contributed by Socialists." On the subject of population, Malthus is closely followed ; P. Leroy Beaulieu's alleged law, to the effect that the rate of increase falls as civilisation advances, is attacked ; and neo-Malthusianism is outspokenly discussed. To Protectionism Dr. Pierson is by no means favourably disposed, as he makes plain in the course of a vigorous discussion extending over nearly 100 pages, in which, however, there seems to be nothing strikingly novel. The land question in its relation to production is comprehensively and judiciously treated. On questions like this Dr. Pierson is at his best; as he is also (as one would expect from a Finance Minister of his speculative bent of mind) on topics of Public Finance. It is notable, however, that the modern demand for Progressive Taxation, beyond what is needed “to provide an easy transition from total exemption to full taxation,” is regarded as indefensible. Taken as a whole, Dr. Pierson's work is leisurely and spacious, and treats of society in masses after the grand manner of the old school, which, it is to be hoped, will never expire.

S. J. CHAPMAN

Political Economy. By S. J. CHAPMAN. (Home University

Library of Modern Knowledge.) (London : Williams and
Norgate. 1912. 18.)

“THE explanations that will be presented are those which became current after the exact analysis begun by Jevons and Léon Walras had been perfected and applied to the whole field of economic phenomena by later writers, particularly by Dr. Marshall. Though the new generalisations were suggested at many points by mathematics, it is perfectly easy to represent them in simple language which implies no mathematical knowledge; and I shall try to do so " (pp. 7, 8).

If the implications of the first of these two sentences, and the statement embodied in the second, are accepted, criticism of Professor Chapman's book resolves itself into unqualified admiration of the judgment, skill, and subtlety which it displays.

But neither the implications nor the assertions seem to the present reviewer to be above challenge. To begin with the latter, which can be more briefly dealt with than the former. On p. 75 we read, “the price of a commodity will be the price at which equal quantities are demanded and supplied, provided that a slight addition to the supply would mean a supply price above the demand price, and a slight reduction of the supply would mean a supply price below the demand price. There may be, but there is not likely to be, more than one such price. It is only possible when increasing returns rules, and if it does, is least likely when demand is highly inelastic.” If the reader who has

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