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indeed has been the Spinoza of economic theory. Yet value, as a central economic doctrine relating to a central social problem, that of distribution, demanded the most searching investigation, and could not receive it except in connection with consumption.

In such an investigation twenty years ago or so, German and English economics found their point of convergence, After the common impulse given to both by Adam Smith and Ricardo, Germans and English had seemed to follow separate paths, as they have so often done in philosophy. In both countries, the phase of economics now reached has been largely even if indirectly affected by the philosophy.

German metaphysics made a new departure with Kant's Critique of Pure Reason in 1781, and German Ethics with the Metaphysic of Ethics, 1786, and Critique of Practical Reason, 1788. But political philosophy was not so well served by the Königsberg philosopher. In his Rechtslehre (1796) Kant teaches that Civil Society exists to secure the outward freedom, not the happiness of its members. The rational (though not necessarily the historical) basis of the State, is an original contract by which all give up their natural liberty to secure civil liberty and are bound to give absolute submission to the ruler they have chosen. Kant's notion of the State is not very different from Adam Smith's ; it is to be keeper of the peace and protector of property. Law is separated by him from Morality as, in Adam Smith and Hume, Justice is deemed unlike any of the other virtues. Kant looks forward to a Universal Peace, and thinks that trade will be a chief means of introducing it. “Nature," by a mechanism which is non-moral, will thus bring about a result demanded by the moral law. The individual looks after himself; nature provides for the race ; and nature will one day secure that all human capacities shall be developed, in a cosmopolitan civil society. The development of the race in history will be slow and sure.

This notion of Development was expanded by Fichte, and still more by Hegel.

Fichte, agreeing with Kant in the severance of law from morality, goes far beyond him both in politics and in economics. He has two ideals, a National and a Cosmopolitan. The National Ideal is a State shut off from its neighbours industrially, as European Staces were then shut off politically ; and this closed State was to be organized on socialistic principles to prevent the evils rampant (even a century ago) in the production and distribution of wealth. The Cosmopolitan Ideal is (like Godwin's) the absence of all States ; when national States are perfect, they will make themselves superfluous, for they will present the world with an educated, purified, and elevated humanity that is able to order its conversation aright without any aid from them.

It might fairly be contended that Fichte's contemporary, Krause, has been a greater power than Fichte in economical speculation ; he has certainly been so in the philosophy of law. The idea that natural right is a claim for the conditions that make a rational human life possible is first clearly taught by Krause, and it is found now not only among Krause's professed followers in Germany but in philosophers otherwise so divergent as T. H. Green' and Mr. Herbert Spencer, as well as in Lorimer. It may indeed be described as the conception now dominant in the policy of all civilized governments, at least towards their own subjects. Since Grotius, and in spite of Hobbes, the idea that might is right has been discredited.

Both of Fichte's ideals were Utopias, and, like other Utopias, have lost their influence with the changes of time. His metaphysical doctrines have been really more potent, though seemingly more remote from everyday life. The conception of development as a progress through opposites was Fichte's contribution to Hegel's more ambitious and more logical system. Hegel finds that whatever is is composed of two opposite elements in process of becoming united in a third which reconciles them. His logic or “dialectic” is not (he says) simply in men's thoughts but in things themselves, for things and thought

· As early as 1881. Liberal Legislation and Freedom of Contract, p. 10. See also Works, vol. ii. 450, 476, 477, 479, and especially p. 341 note, though Krause's early view is there treated as his final.

2 See above, p. 196. Compare Pulszky Theory of Law and Civil Society (Engl. transl.), 1888, pp. 342, etc.

are one world. Hegel counts himself the most concrete of thinkers, for the opposite elements which other philosophers have regarded abstractly as necessarily separate he regards concretely as necessarily united. The process of development takes place by virtue of this conflict and union; the reconciling third element, held abstractly, awakes an opposite element of its own, and the two are then reconciled in a new concrete. The development involves that the past is not lost or destroyed but is “ laid by” in the present. In human beings this process comes to light more clearly than elsewhere. For example, rational freedom arises out of the nullity of the abstractions of mere caprice and mere passion ; it is the truth that was in them both. The philosophy of history traces the development of the idea of freedom from stage to stage. The philosophy of law, morals, society, and the State gives us a view of the same development, statically. True freedom does not (as some might fancy) lie in mere recognition of the individual's rights as a person, though the recognition of such rights is indeed indispensable to it ; nor does freedom lie (as others might think) in mere consciousness of empire over oneself in obedience to a merely inward law of duty ; it lies in a man's oneness with social institutions, where, while he has rights, he finds his duties also embodied. Law and morality are thus opposites which are reconciled and made concrete in the family, civil society, and the State. On Hegel's principles of development the last includes all the foregoing as its elements ; and it seems to follow that there must always exist in the world of men, whatever the progress of the race, rights and duties, families and associations, all under the one State, which is as imperishable as they. Hegel gives an assured place to Civil Society as distinguished from the body politic ; and it is in civil society that the “laws” of economics have their special sphere of action. But, though spontaneously formed, civil society (in his conception) passes necessarily into organized groups; and, the more numerous and the better organized the groups, the stronger and more nearly perfect is the State in which they grow. The strength of a State must on occasion be asserted outwardly, in conflict with other States ; and the absolute cessation of such struggles (in negotiations or even in wars) cannot be expected, and is not to be desired. There is no outward force to bring the various States to one mind; but the indwelling and controlling power of Providence secures victory to that State which represents the general march of intellect at its farthest point. Such a State may be said to conquer by divine right; and so in history we find in successive epochs the Oriental, the Greek, the Roman, and finally the German spirit holding the field. The last includes and represents all the truth that was in the three former and something more. Even the Prussian Monarchy is to Hegel for this reason substantially rational. What is real is rational.”

Even before the death of Hegel in November, 1831, his followers had begun to break up into a Left, a Right, and a Centre. The Hegelian idea of development might be taken up (as it was by the Right), with an emphasis on its conservation of the past and its relative justification of the present ;-or it might be taken up (as by the Left) with an emphasis on the ceaselessness of change, and the inevitableness of revolution ;-or finally, by moderate men (of the Centre) the balancing of the two might be kept in the forefront, as it was by Hegel himself. It was the “Young Hegelians," or Hegelians of the Left, who passed from philosophy to economics, and applied the Hegelian notion of development to economic history. Strictly speaking, Marx and Engels applied it to all history, for they regard all history as ultimately the product of economic causes. The certain economic revolution brings with it in their view the certain political revolution.

The first elaborate attempt to apply the logic of Hegel to economics was made by the Anarchist P. J. Proudhon in 1846 ; but the phraseology of Hegel was employed by Proudhon without any thorough appreciation of its spirit, and the ideas of classical economists were handled with a fallacious if not sophistical perversion of their meaning. Proudhon's

way

of escape from a labyrinth of his own constructing is in the end an unintelligible compromise in the guise of a Hegelian reconciliation of opposites. Marx, in exposing Proudhon, states his own position. He rejects the current view that property and the institutions that concern the protection of property and the production and distribution of wealth are “natural” and permanent. They belong, he says, to a stage in history beyond which development will certainly carry us.

As the antagonism of the aristocracy and the middle classes under feudalism has landed us in our present social and political institutions, so the present antagonism of the middle classes and the working classes will carry us into a completely different system of society. But to understand and co-operate with this change we need to understand the economic situation as it is. The inquiry thus foreshadowed in 1847 was carried out in 1859 and 1867. The book of Marx on Capital took Ricardo and his theory of value in earnest. In the present state of industry, goods and services are exchanged according to " the average social human labour” needed to produce them. Goods are made for sale, not for use; and, as competition reduces the value to the average cost, they only yield a profit to the employer when he forces his “hands” to work a certain portion of their day for nothing. The possession of property by the employer makes this feat possible; and with its accomplishment the growth of capital goes on, and its reign is more and more firmly established. Not so firmly however that it will not sooner or later give place to a system under which the instruments of production will be held by the State for all, instead of by the few for themselves. When the struggle of the classes reaches its keenest intensity, the end is at hand, the revolution will come.

The view that all history is economical seems to be as abstract as Ricardo's economics, on which Marx founds his own political economy.

Historical Economists have pointed in the opposite direction ; they have reasoned " from particular to particular”; they have tended to explain all economics by the other elements in history rather than all history by its economical element. Yet Engels, who gives the most recent exposition of the “scientific socialism ” of Marx, retains the “materialistic” view of history, and even pushes it beyond written history to the history of primitive man. Lassalle had applied the same view to the development of legal forms.

But neither the Materialistic view of history nor the

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