economists to work out their theories on the tacit supposition that the world was made up of city

men.

§ 5. This did little harm so long as they treated of money and foreign trade, but great harm when they treated of the relations between the different industrial classes. It led them to regard labour simply as a commodity without throwing themselves into the point of view of the workman; without allowing for his human passions, his instincts and habits, his sympathies and antipathies, his class jealousies and class adhesiveness, his want of knowledge and of the opportunities for free and vigorous action. They therefore attributed to the forces of supply and demand a much more mechanical and regular action than they actually have; and laid down laws with regard to profits and wages that did not really hold even for England in their own time.

But their most vital fault was that they did not see how liable to change are the habits and institutions of industry. In particular they did not see

that the poverty of the poor is the chief cause of that weakness and inefficiency which are the cause of their poverty: they had not the faith, that modern economists have, in the possibility of a vast improvement in the condition of the working classes.

§ 6. The perfectibility of man had indeed been asserted by Owen and other socialists. But their views were based on little historic and scientific study; and were expressed with an extravagance that moved the contempt of the business-like economists of the age. The socialists did not attempt to understand the doctrines which they attacked; and there was no difficulty in showing that they had not rightly apprehended the nature and efficiency of the existing economic organization of society. It is therefore not a matter for wonder that the economists, flushed with their victories over a set of much more solid thinkers, did not trouble themselves to examine any of the doctrines of the socialists, and least of all their speculations as to human nature.

But the socialists were men who had felt intensely, and who knew something about the hidden

springs of human action of which the economists took no account. Buried among their wild rhapsodies there were shrewd observations and pregnant suggestions from which philosophers and economists had much to learn. And gradually their influence began to tell. Comte's debts to them were very great; and the crisis of John Stuart Mill's life, as he tells us in his autobiography, came to him from reading them. The influence which they are now exercising on the younger economists in England and Germany is important, and I think for the greater part wholesome; even though the association with fervid philanthropy does perhaps cause some tendency to rapid and unscientific reasoning.

§ 7. Among the bad results of the narrowness of the work of English economists early in the century perhaps the most unfortunate was the opportunity which it gave to sciolists to quote and misapply economic dogmas. These dogmas were taken away from their context and set up as universal and necessary truths; although a little care would often have discovered that they were originally

put forward not at all as independent truths, but as the outcome of particular illustrations of a scientific method of inquiry. Much as Ricardo and his chief followers are to be blamed for what they omitted to do, they have not committed, to the extent that is generally supposed, the fault of claiming universality and necessity for their doctrines. But they did not make their drift obvious. They did not make clear to others, it was not even quite clear to themselves, that what they were building up was not universal truth, but machinery of universal application in the discovery of a certain class of truths. This is the main point on which I wish to insist to-day.

§ 8. Adam Smith is most widely known for his argument, that Government does harm by interfering in trade. While admitting that self-interest often led the individual trader to act injuriously to the community, he thought that Government even with the best intentions nearly always served the public worse than the enterprise of the individual trader, however selfish he might happen to be. This doctrine it is which most German writers have

chiefly in view when they speak of Smithianismus. But it was not his chief work. His chief work was to indicate the manner in which value measures human motive.

Possibly the full drift of what he was doing was not seen by him, certainly it was not perceived by many of his followers who approached economics from the point of view of business rather than of philosophy. But for all that, the best economic work which came after the Wealth of Nations is distinguished from that which went before, by a clearer insight into the balancing and weighing, by means of money, of the desire for the possession of a thing on the one hand, and on the other of all the various efforts and self-denials which directly and indirectly contribute towards making it. Important as had been the steps that others had taken in this direction, the advance made by him was so great that he really opened out this new point of view, and by so doing he made an epoch.

He showed the need of analysing the causes that determine the difficulty of attainment of various