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“ Mercantile System ” was tainted with this narrowness, whatever allowance we may make for misrepresentation.
It was the apparently abstract theories of Grotius and his successors that were to set in motion the current of ideas leading to the foundation and upbuilding of a separate study of general Economics. Grotius substituted for the decisions of the Popes and the rules of the Church, the law of Nature, as yielding both a morality and an international arbiter. The morality is not due to deliberate will, but the law of nations in a sense is so. Particular institutions and proceedings are deliberately instituted ; but our conduct towards them, once they are there, is determined for us by natural laws. . So, if nations go to war, they are bound by natural laws to treat each other in a particular way. If private property is instituted, it must be respected in virtue of natural laws. The State is founded by a contract, which gives effect to the laws of Nature in a particular way, and no longer leaves men the absolute licence of the primavus naturæ status, the state of nature. Without troubling himself like Aristotle and the Stoics about the metaphysics of the subject, and "Nature" in the larger sense, Grotius deduced the political contract founding the State, and with it all contracts within the State, from human nature and its laws.
Hobbes brings out the notion of a political contract more fully. It implies (he says) that the original state of men is a state of isolation ; they are separate atoms; and their union in the view of Hobbes is not a natural but a purely artificial one. In the state of nature every man's hand is against every man, and every man's hand against him. Men are equal in their boundless desires and unlimited claims, and equal also in their helplessness. Their weakness drives them into an agreement to give up their liberty for the sake of life and peace. Thus are nations made ; and (whatever Grotius may say) towards each other these nations themselves are in a state of unqualified hostility. Selfishness rules between nations as it once ruled between individuals till their weakness tempered it with wisdom.
Such a theory, which was in later times to be held true of matters economical, is applied by Hobbes to
economical matters only by way of corollary. He gives nearly a complete economics, embedded in his political philosophy, and (if we may say so) feeling quite at home there, for what branch of activity should be “concluded all under” selfishness if not the world of business ?
Of the opponents of Hobbes, Harrington at least is well aware of the importance of the economical element in the body politic. His Commonwealth of Oceana is based on an Agrarian law. Political power (says Harrington) depends on possession of land, and the amount of land to be owned by one individual must be limited by law.
Though more practicable than More's Utopia, the republic Oceana was still not at that time within the range of practical politics. Utopias had less influence than an apparently more abstract political philosophy, with a directly practicable concrete application. In reply to writers, who attributed to Adam and King James a divine patriarchal right to rule over a subject people, Locke maintains that “by nature” all men are free and equal, not in Hobbes' illusory sense, but both before and after the foundation of the State. So far from being necessarily at enmity with each other, they may form a civil society even before the existence of the State, and in that civil society make their natural rights more secure than before by agreeing to respect each other's property, which means each other's labour. Within civil society, too, economic institutions, including the use of money, may grow up by mutual consent of men without any political contract. Even after the State is founded, economical phenomena are regulated by principles of their own.
We have thus three important features in Locke's political philosophy, (1) the claim of “natural rights ” of liberty and equality, (2) the clear distinction of Society from State with the inclusion of economical phenomena in the former, and (3) the foundation of property on labour. Locke has here presented three aspects of the subject which were to be fully treated by later writers through the next two centuries. They had never been so adequately treated before him, inadequate as his own discussion certainly is. Hume, while accepting the distinction
of Society and State, with his keen criticism brought out the difficulties in the way of theories that appeal to “nature” and a social contract, as well as the objections to labour as a title to property. Hume's own works bear witness to the growing interest in the psychology of these questions. The writings of Shaftesbury, Mandeville, and especially Hutcheson, had made searching investigation into the motives of action, the possibility of disinterestedness, the relation of morality and selfish
Mandeville in particular, when professing, to contend that private vices are public benefits, had taken economical facts for his chief illustrations each man consulted his own pleasure and interest, but the result of the separate selfish actions of individuals was the maintenance of a social machinery which was of greater collective benefit than if it had been deliberately framed for unselfish ends. Hume meets Mandeville's paradox by arguing, as a Utilitarian, that an action is virtuous not vicious if its consequence is public benefit. The "passions” as such are not evil, for reason cannot lead to action without them. Avarice and luxury are necessary and desirable for national progress; human wants are constantly multiplying. No doubt (he adds), while objectively moral action is what tends to public advantage, subjectively it springs from the reflected pleasure called sympathy; what would give me pleasure, if I saw another do it, is an action which it is morally right for me to do.
There are here two difficulties. The first is to establish on Hume's principles any objective end of action at all. Neither the public advantage nor even the general interest of the individual himself can easily if at all be resolved into pleasure or built up out of it. Yet for Economics, the idea of wealth, a collection of the means of possible satisfaction, and not simply the feeling of an isolated actual satisfaction, is indispensable. Hume indeed distinguishes happiness from wealth if not from pleasure, and thinks (like Hutcheson and Adam Smith) that the first is much more equally distributed on the earth than the second. But happiness too is relatively permanent and objective. If it is a “sum,” its relation to its units must be determined. Hume does not determine it, though he sees inter alia how in the estimates of advantage or interest the element of time figures very differently for a State and for an individual ;—he takes his fixed points for granted without deciding how they are fixed.
The second difficulty is for a writer who has rejected the ordinary view of causality to get a foundation for a science of human nature, including a political philosophy. But Hume passes over this difficulty, and lays great stress on the need for scientific treatment of these subjects. “ It is the chief business of philosophers to regard the general course of things,” and in regard to matters of trade and commerce, amongst others, the actions of large numbers can be reduced to “general principles,” while the actions of a few individuals cannot be explained scientifically. Hume has thus prepared the way for a systematic study of general economic principles such as is found in the French Economists and in Adam Smith; and Hume has also drawn the distinction between principles that are permanently true of all societies, and principles that are true only in particular societies and times.
His philosophy in fact has two voices. In his analysis of causation we hear the voice of the sceptic; in his pleadings for permanently true general principles we hear the voice of the scientific investigator, who cannot avoid assuming that there is a permanent truth discoverable. In ethical and economical reasoning he is the scientific investigator. The permanent principles of the virtues both moral and intellectual are sympathy and utility, the former being a disguised form of the latter, and hardly discernible at all in one most important virtue, the virtue of justice. Justice (to Hume as to Plato) is not the interest of the stronger, but the community of sentiment without which even a band of robbers (still less a State) would not hold together. It implies a recognition of common humanity, and it leads to the establishment of such an order as will save the community from starvation and want. This order would include certain institutions inevitable and permanent, but also institutions peculiar and transitory, to be explained as history and Montesquieu explain them.
Adam Smith may be regarded as following Hume's footsteps in his Moral Sentiments ; but in his Wealth of Nations he is on the track of Quesnay, Mercier, Gournay, and the French Economists generally. Like them he contends against the economic policy of the Mercantile System, which would increase exports and manufactures to the prejudice of imports and agriculture in order to fill the treasury of the sovereign. The mercantile theory (of the 16th and 17th centuries) was more political than economical; it depended on the assumption that commercial independence is as desirable as political and can be as plainly secured. There was no “school” of mercantile teachers. But the Economists of France in the middle of the 18th century were certainly a school, perhaps the first school of economists strictly so called, and probably the most compact that has ever existed. Their economics and their political philosophy were in close connection. In economics they were on the whole the spokesmen of the capitalist farmers, as in later times Ricardo was spokesman of the capitalist manufacturers. The only net produce was to them the produce of agriculture and the extractive industries; and agriculture itself depended for its productiveness on the “advances made by the farmers whether in the shape of wages or in the shape of material appliances. In a well-ordered state these facts would be recognised ; taxation would be laid where in any event it must ultimately fall—on the landholding class, and not on the manufacturing and trading classes, who produce no surplus and can therefore give up none, and whose maintenance depends on the farming class. Complete liberty of trading both at home and with foreign nations should be allowed, in order that the agriculturists may get their wants supplied cheaply and thus have their powers of productive labour strengthened. This “natural order of society is the basis of “natural rights,” the condition under which these are exercised. These rights include right of property in labour or freedom to work where a man will
, and right of property in the outward objects in which labour is embodied. The natural order secures to every man the fruits of his labour; and the appropriation of land is allowed, in order to furnish the motive for careful culti