III. OPPONENTS AND LEADING CRITICS

A majority of the preceding economists who have been classed as Smith's followers took occasion now and then to criticize their master as well as each other. On certain points Malthus criticizes Ricardo, and Ricardo assails the logic of Malthus, while both find imperfections in the Wealth of Nations. Such men, too, as Senior and Thünen were independent in a considerable degree, and did not fail to point out weak spots in the classical economics. Yet they all wrote within the framework of its doctrines as laid down by Smith and Ricardo, on the whole accepting the typical theories of production, value and distribution, and free trade. Whether tending toward pessimism or optimism, believing in this particular modification or that, the foregoing economists have been, for the most part, at bottom in accord with the doctrines of the English Classical School.

It is no simple matter to classify those who, on the other hand, opposed the classical economics or criticized it in so fundamental a manner as to make it illogical to range them among the followers. By no means all of the critics are discussed; but only those whose criticisms seem the most fundamental, taken together with a considerable degree of influence. They have been divided into three groups: (1) those whose thought was based upon a philosophy which was opposed to the underlying system of the Classicists, (2) those who are most notable for their criticisms of the method of reasoning pursued, and (3) those whose chief criticism concerns the logic of the theories, regardless of philosophy or method. In other words, there were some who directed their assault upon its fundamental assumptions, opposing its underlying philosophy and its ethical basis. Others centered their attention upon the method pursued by the Classicists, criticizing their logical processes, while others cared relatively little about philosophy or method in themselves, but attacked the conclusions reached as being illogical.

Of course the heads of such a classification cannot be allinclusive and exclusive, and, needless to say, some critics opposed Smith and his followers on all three grounds. Just as philosophy and method are related, so the thinkers who criticize the logical method of the older economists are apt also to be at variance with them in underlying philosophy; and many criticisms of the logic of the classical theories were made by economists placed under one of the first two heads. Nevertheless it seems desirable to distinguish these groups, emphasizing the main characteristics. It is generally possible to say that this or that opponent or critic directed his attention chiefly to one or the other of these three phases of thought. Generally one of the above points of attack is hit the hardest. It will lead to a clearer understanding of the weaknesses of the classical economics and to a better appreciation of the several groups of opponents.

1. THE PHILOSOPHICAL AND ETHICAL SYSTEM

One of the earliest and most frequent grounds of criticism has been the general underlying philosophy of the economics of Smith and his followers. This philosophy tended toward materialism, individualism, and utilitarianism. It tended to leave ethical factors out of consideration, and to shun ethical responsibility; to make self-interest its sole basis and to recognize little or no good in government interference with industry; to assume that humanity consists of "economic men" who determine courses of action by balancing pleasures against pains to ascertain a balance of utility. It had the idea of an unlimited possibility of expansion in wants and of an indefinite sum of satisfactions. Furthermore there was a tendency to regard men as equal by nature, and consequently the idea of cosmopolitanism was easy. Men being naturally pretty much equal, actual differences must be due to environment: this was a part of the materialistic tendency.

Of course all the followers of Adam Smith did not show all these tendencies. They varied in the number of the tendencies

exhibited and the degree in which they were emphasized. Taken together, however, these tendencies form a closely connected group; and the foregoing paragraphs, together with the sections on philosophy and method in the preceding chapters, will give a sufficiently clear idea of that which the following thinkers attacked.

a. INDIVIDUALISTIC CRITICS

The relation of the individual to the state has from the beginning been a chief point of dispute in economic thought. The social philosophy of the Physiocrats and Adam Smith, on the whole, favored individualism and laisser faire. It was based upon the assumption that the economic interests of individuals and nations are materially the same. One of the earliest attacks upon their system centered upon this idea.

It is interesting, however, to observe that several different points of view were taken by those who opposed that philosophy, some rejecting it in part, others in its entirety. Thus the least radical group accepted the individualism, but sought to make it more humanitarian by limiting laisser faire, being as a rule less hopeful, or careless, than the Classicists proper. There was, then, an individualistic criticism. But others rejected individualism, and while they did not go so far as to advocate a socialization of property, they emphasized the nation as an economic unit, favoring more or less interference with industry for national ends. These were nationalists in their criticism. They opposed that part of the individualistic tendency which leads to cosmopolitanism, regarding men as world citizens. Finally, the Socialists must be noted among the opponents and critics, along with the individualists and nationalists. They have been the most radical of all, though the prevalence of misinterpretation and inconsistency sometimes makes Socialism seem quite in harmony with certain points in the philosophy and doctrine of the economists. Socialism, however, is the antithesis of individualism, and it must logically ever tend toward idealism in philosophy, while thorough-going Socialists have always opposed the most fundamental postulates of economics.

CHAPTER XVIII

LAUDERDALE AND RAE AS INDIVIDUALISTIC CRITICS: SOCIAL AND INDIVIDUAL WEALTH

Lauderdale. Early in the nineteenth century two shrewd and eccentric Scotchmen wrote books in which they opposed Smith's economic system in a fundamental way. While accepting his individualistic viewpoint, they took the Wealth of Nations to task on the ground that it confused public and private wealth. The first of these was Lord Lauderdale (17591830), who in 1804 published his Inquiry into the Nature and Origin of Public Wealth and into the Nature and Causes of its Increase. French and German translations of this work appeared in 1808, and an enlarged English edition in 1819. Its main points concern value, wealth, and capital, in treating all of which the author showed much originality and had a very considerable effect. More will be said of his ideas on value and capital in other chapters.

At the very outset, he emphasizes the importance of defining terms and analyzing their meaning; and he particularly stresses the distinction between "wealth" and "riches." The latter term he uses to designate private wealth. The former consists of "all that man desires, as useful or delightful to him" (56).

Then, in his chapter on public wealth and private riches (pp. 43 ff.), Lauderdale begins by stating that all previous writers had made the mistake of confusing individual and national wealth, and had accordingly made national wealth equal the sum of individual riches. With such an idea these writers had naturally reasoned that the proper way to increase national wealth is by means of "parsimony" (saving); for that is the way in which individuals become rich.