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THE SYSTEM OF NATURAL LIBERTY.
until “the lowest recompence for which they will consent to work and propagate is reached. As a matter of fact, upon an average, two-fifths, or rather the monetary equivalent of two-fifths, of the commodities produced go, in this country, to the labourers. The other three-fifths are taken by the owners of the instruments of production.
Such is the operation, exhibited in its simplest form, of the law of Supply and Demand. It is the practical outcome of what the father and founder of “ orthodox” Political Economy considered “the obvious and simple system of natural liberty," the essence of which, he goes on to tell us, is to leave “every man, so long as he does not violate the laws of justice, perfectly free to pursue his own interests his own way, and to bring his industry and his capital into competition with those
any man or order of men.” Adam Smith proceeded
upon the assumption that all men are perfectly free and economically equal. The assumption is false, The absolute freedom which Adam Smith, like Rousseau, predicated of the individual human unit, does not exist. Moral liberty, indeed, may
in a sense be said to be unlimited, for it is beyond the attack of any human power. But as soon as it manifests itself externally, it is brought into contact with the environment, and becomes conditioned. This subject has been considered, at some length, in a previous chapter. It must here suffice to observe that the freedom of members of the
social organism is not absolute, but relative, and varies indefinitely in extent. And so the dictum of the tragic poet that no mortal man is free: oủk čomu Ovntôv Otis čor' élevdepos. But, obviously, the capitalist enjoys a much greater amount of freedom, both positive and negative, than falls to the lot of the labourer. The matter is too plain to require further words. Nor are men economically equal. What economic equality is there between a man who owns lands, mines, machinery, and a man who owns nothing but his ten fingers, skilled or unskilled—“lord of himself, that heritage of woe”? Parity of condition is an essential element of freedom of contract. What parity of condition is there between a maker of the Demand, who has a monopoly of the means of subsistence, and a purveyor of the Supply, who, if he will not purvey, must starve, steal, or go into the workhouse? Just as much as there is between a highwayman who with pointed pistol demands money or life, and an unarmed traveller who supplies the robber with his
The postulate of pure competition, working by Supply and Demand, which is the corner-stone, elect, precious, whereon the Smithian edifice is founded, is, then, an arbitrary assumption. And it is of such assumptions, and of deductions from them, and generalization of them, that the so-called
“science” of Political Economy, constructed by the school of Adam Smith, is largely composed. I should be sorry, indeed, to seem unjust to that memorable man, or oblivious of the real debt of gratitude due to him for breaking down the commercial system which had become antiquated and indefensible, and disastrous to the cause of trade: and, again, for dealing a death-blow to the law of settlement, which, however necessary in the previous ordering of society, had served its hour and lingered in the Statute Book as a mischievous survival of a bygone age. But I do say that the Political Economy of his school, whether as originally taught by him, or as modified by Ricardo, Senior, Mill, and Fawcett, starting as it does from premises arbitrarily assumed or imperfectly verified, isolating, as it does, the facts with which it deals, and ignoring their connection with other coexistent facts, proceeding well nigh exclusively, as it does, by the method of deduction and abstract analysis, is not a real science at all, but a pseudo-science. And such, be it remembered, is the Political Economy still much honoured among us as the gospel of industrial and economic freedom. True it is, that teachers of another school-conspicuous among them, to speak only of this country, are Cliffe-Leslie, Toynbee, Ingram, Syme, and Devas—have pointed, with greater or less directness, to a more excellent way. But the last considerable contribution to economic
literature which has appeared in England — the first volume of Professor Marshall's elaborate work recently given to the world—may serve to show how strong the old Smithian tradition still is. It also shows, as I am well aware, that much once confidently taught as eternal and immutable truth by Professor Marshall's predecessors in his chair, is now abandoned as exploded error.
But the Professor's preference of the mathematico-materialistic way of dealing with economic questions to the ethical and historical way, proves that he has by no means purged out the old leaven: while his constant assumption of that very fallacy of “ nomic freedom” upon which I have touched — that is, of the absence of combination of laws protecting the weak, of the influence of religion or customissues in unreal and mischievous conclusions. He admits, indeed, that the old economists attributed to the force of Supply and Demand a much more mechanical and regular action than they actually have; that they laid down laws with regard to profit and wages which did not really hold, even for England, in their own day. Unquestionably they did. But their master error went beyond that. What it was I shall endeavour briefly to indicate.
It consists in this : that they, one and all, regard man as a constant quantity in every problem, always governed wholly by selfishness. Adam Smith in his Wealth of Nations saw in human nature only two principles: “The tendency of every man to follow his own interest,” and “the uniform,
THE LAWS OF POLITICAL ECONOMY.
constant, and uninterrupted effort of every man to better his condition." Senior combines these two principles in the dictum“ that every man desires to obtain additional wealth with as little sacrifice as possible.” “This proposition,” he says, “ is in Political Economy what gravitation is in physics : the ultimate fact, beyond which reasoning cannot go.”+ Such, with whatever variation of language it may be stated, is the first and fundamental principle of the whole school. From it they deduce their “laws” of competition, prices, wages, profits, rent:
laws which are merely accounts of the modes in which self-interest operates, and which, if stripped of the pompous phraseology wherein they are clad, are largely mere truisms, when they are true at all. Their Political Economy then-in the language of Mr. Mill—is the “science which professes to teach or to investigate the nature of Wealth and the laws of its promotion and distribution.”
66 It is concerned with man,” he tells us, “solely as a being who desires to possess wealth.” “It makes entier abstraction of every other human passion or motive except those which may be regarded as perpetually antagonizing principles to the desire of wealth: namely, aversion to labour and desire of the present enjoyment of costly indulgences."'S Well,
* Bouk II. c. 3.
† Political Economy, p. 28. I Principles of Political Economy, vol. i. p. 1. § Essays on some Unsettled Questions of Political Economy, 137.