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SOME REMARKS ON CONSUMPTION. HENRY HIGGS.
· 505 OLD AGE PENSIONS. C. S. LOCH..
520 THE DISTRIBUTION OF REVENUE BETWEEN THE CENTRAL
GOVERNMENT AND LOCAL AUTHORITIES. C. F. BASTABLE, 541 II. ReviewsBERNSTEIN'S Die Voraussetzungen des Sozialismus und die Aufgaben der Sozialdemocratie, 551 :
by J. Bonar; VILLEY'S L'Euvre Economique de Charles Dunoyer, 553: by J. Bonar ;
the Liquor Problem, 565 : by Sidney Peel;' SITES'S Centralised Administration of Propriété Paysanne, étude d'Economie Rurale, 567 : by E. Castelot. III. Notes and Memoranda
THE PROBLEM OF OUR NATIONAL SAVINGS. An English Savings Bank Manager 569 SUCCESSFUL PROFIT-SHARING. Z
585 THE COURSE OF AVERAGE WAGES BETWEEN 1790 ANI) 1860. GEORGE H. WOOD 588 THE REGULATION OF WAGES BY LISTS IN THE SPINNING INDUSTRY. S. J. CHAPMAN
592 NOTES TOWARDS THE HISTORY OF LONDON WAGES. B. L. HUTCHINS
599 LABOURERS' DWELLINGS. LETTICE ILBERT
605 STATE PROTECTION OF INDUSTRY AND COMMERCE IN WÜRTTEMBERG. OTTO TRÜDINGER ...
611 DOMESTIC SERVANTS IN GERMANY. HENRIETTE JASTROU
625 THE OVERPRODUCTION OF CURRANTS. T. A. BURLIMI LETTER FROM JAPAN (continued from No. 35). J. SOYEDA
651 RECENT OFFICIAL PAPERS
662 IV. Obituary
664 V. Current Topics
666 VI. Recent Periodicals and New Books
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THE ECONOMIC JOURNAL
SOME REMARKS ON CONSUMPTION.I
The prime concern of the economist and of the statistician is the condition of the people. Other matters which engage their attention-particular problems, questions of history, discussions of method, developments of theory-all derive their ultimate importance from their bearing upon this central subject. The statistician measures the changing phenomena of the production, distribution, and consumption of wealth, which to a large extent reflect and determine the material condition of the people. The economist analyses the motives of these phenomena, and endeavours to trace the connection between cause and effect. He is unable to push his analysis far without a firm mastery of the theory of value, the perfecting of which has been the chief stride made by economic science in the nineteenth century. When we read the Wealth of Nations we are forced to admit that in sheer sagacity Adam Smith is unsurpassed by any of his successors. It is only when we come to his imperfect and unconnected views upon value that we feel the power of increased knowledge. J. S. Mill supposed in 1848 that the last word had been said on the theory of value. In his third book he writes : “In a state of society in which the industrial system is entirely founded on purchase and sale ... the question of value is fundamental. Almost every speculation respecting the economical interests of a society thus constituted implies some theory of value: the smallest error on this subject infects with corresponding error all our other conclusions, and anything vague or misty in our conception of it creates confusion and uncertainty in everything
1 Presidential Address to the Economic Science and Statistics Section of the British Association for the Advancement of Science, at Dover, 1899.
No. 36.-VOL IX.
else.” And he adds: “Happily, there is nothing in the laws of value which remains for the present or any future writer to clear up; the theory of the subject is complete.” We know now that he was wrong.
Thanks in the main to economists still alive, and especially to the mathematical economists, we have at length a theory of value so formally exact that, whatever may be added to it in the future, time can take nothing from it, while it is sufficiently flexible to lend itself as well to a régime of monopoly as to one of competition. Yet our confidence in this instrument of analysis is far from inspiring us with the assurance which has done so much to discredit economics by. provoking its professors to dogmatise upon problems with the whole facts of which they were imperfectly acquainted. Given certain conditions of supply and certain conditions of demand, the economist should have no doubt as to the resulting determination of value; but he is more than ever alert to make sure that he has all the material factors of the case before him ; that he understands the facts and their mutual relation before he ventures to pronounce an opinion upon any mixed question. He must have the facts before he can analyse them. A small array of syllogisms, which, as Bacon says, “master the assent and not the subject,” are not an adequate equipment for him. He sees more and more the need for careful and industrious investigation, and prominent among the subjects which await bis trained observation are the condition of the people and the related subject of the consumption of wealth. Training is, indeed, indispensable. Every social question has its purely economic elements for the skilled economist to unravel, and when this part of his task has been achieved, he is at an advantage in approaching the other parts of it, while his habit of mind helps him to know what to look out for and what to expect.
It is a curious paradox that, busying ourselves as we do with the condition of the people, we are lamentably lacking in precision in our knowledge of the economic life and state of the British people in the present day. Political economy has, however, followed the lines of development of political power. At one time it was, as the Germans say, cameralistic-an affair of the council chamber, a question of the power and resources of the king. Taking a wider but still restricted view of society, it became capitalistic, identifying the economic interests of the community to a too great extent with those of the capitalist class. It has at length become frankly democratic, looking consciously and directly to the prosperity of the people at large.
Thus, then, we have at once a more accurate theory, a livelier sense of caution as to its limitations in practice, and the widest possible field of study. So far as most of us are concerned, we might as well spend our time in verifying the ready reckoner as in tracing and retracing the lines of pure theory. These tools are made for use. Economic science is likely to make the most satisfactory progress if we watch the social forces that surround us, detecting the operation of economic law in all its manifestations, and in observing, coordinating, and recording the facts of economic life. It is not enough to borrow the language of the biologist (part of which he himself borrowed from the old economists), to talk of the struggle for existence, the survival of the fittest, and of evolution. We want, above all, his spirit and his method—the careful, minute, systematic observation of life as affected by environment, heredity, and habit. Different problems are brought to the front by different circumstances and appeal to different minds; but at all times and to all economists the condition of the people is of chief interest, and the consumption of wealth is so closely connected with it that it might seem superfluous to plead for its study. Yet some such plea is necessary. The arts of production improve apace. The victories of science are rapidly utilised by manufacturers anxious to make a fortune. Even here the descriptive study of the subject is hampered by the trade secrets involved in many processes, and by a feeling that production may safely be left to the unresting intelligence of
captains of industry, so that the onlooker is chiefly concerned in this branch of the subject with solicitude for the health and safety of the workmen employed. The departments of distribution and exchange appeal especially to the pride of intellect. The delicate theorems of value in all their branches—wages, rent, interest, profits, the problems of taxation, the alluring study of currency, the mechanism of banking and exchange-have attracted the greatest share of the economist's attention. On the practical side of distribution the growth of trade unions, the spread of education, the improved standard of living, have increased the bargaining power of the working classes and combined with other causes to effect a gratifying improvement in the distribution of wealth, so that they receive a growing share of the growing national dividend. The practical and the speculative aspects alike of the consumption of wealth have received less consideration. Nobody sees his way to a fortune through the spread of more knowledge of domestic economy in workmen's homes; and the scientific observer has curbed his curiosity before what might seem an