vantages gained by other opportunities lost, or if it didn't lead to class taxation; both of which it was difficult to prove. So, under the circumstances, what else was there but to consent to policies diametrically opposed to a static view of production? The free-trader faced an insurmountable obstacle! Decline of Utilitarian Economics.-Utilitarian economics, however, remained not merely unheeded at courts of legislation, but what is more to the point, weighty theoretical objections appeared. The theory of diminishing returns, for instance, was extended by v. Thuenen to the whole realm of production. It was shown even then that rightly understood agricultural laborers were little worse off than the urban. In the second place the Malthusian theorem was combated vigorously by a number of writers partly out of mere humanitarian sentiment, partly because the case for agriculture was not held to be nearly as grim as the English preacher had made out. His later concessions were therefore taken to be more truthful, and if so the distributive problem had to be, of course, restated. In the end such was the effect of the counterblast of men like Lloyd, Chalmers, Gray, 66 Scrope 67 and Donisthorpe in England, Sismondi in France, and Wayland and Carey in America. But for that matter, had not Senior himself said: "A population increasing more rapidly than the means of subsistence is, generally speaking, a symptom of misgovernment indicating deeper-seated evils, of which it is only one of the results"? 68 The wages-fund idea had been definitely abandoned at the time of J. S. Mill's death (1873). It could not survive the successive attacks of Thornton, Jones, Leslie, Gray, J. The Social System, 1831, ch. 10. Scrope, G. P. Principles of Political Economy, 1833. and of Herrmann in Germany. Mill himself had recognized its uselessness and said so openly. The Ricardian rent doctrine suffered at the hands of Jones, Rodbertus, Carey, and Bastiat. In fact, it was one of the first fundamental points to be assailed in an attempt at obtaining a clear-cut case for competitive pricing. As a monopoly, rent had a place and could be fitted into rules, each and every one of which had its exception. But otherwise it occupied an anomalous position, besides being vulnerable from the historical standpoint as Carey was not slow to indicate. That labor measured values was also found to be an untenable assertion, the ultimate answer to which was a resort to either costs of reproduction, as with Malthus, or to supply and demand which really involved a petitio principii, or to monopoly or maximum costs, these latter meaning for the most part enterpreneur expenses, the discussion of which is particularly convincing in Herrmann and Mangoldt. But if all this was granted, what became of the relation of price to producer-shares? Evidently, the two need in no wise coincide. Not only were there incomparable kinds of labor, as MacLeod and Cairnes had pointed out; not only were there discrepancies involved in the traditional analysis of prices or shares, but furthermore the reliance upon laws of distribution psychologically derived had proven futile. Ever and anon the non-competitive standpoint encroaches upon the competitive. Even Malthus could write: "If we were to define wealth to be whatever has value in exchange, it is obvious that acting, dancing, singing, and oratory would sometimes be wealth, and sometimes not." 69 Precisely in this temper had J. Rae in 1834 enlarged upon the earlier criticisms of the Earl "Principles of Political Economy, p. 34. of Lauderdale, drawing a sharp line of division between social and individual wealth, and ending his discourse with a plea for scientific government. Rodbertus and Wagner in Germany accentuated social as against acquisitive wealth, an awkward way of renouncing the Utilitarian premises. Continually facts outside of the exchange régime were brought in to supplement explanations from within. In his "Principles of Plutology," 1876,70 Donisthorpe passed judgment on "classicism" as a whole, convinced that neither the law of the division of labor, nor free-trade, nor Malthusianism, nor Ricardian rent had justified itself. The golden harmonies, too, that Carey and Bastiat sung about, had existence only outside of the Utilitarian economics, if we may believe these men. In 1837 Carey could write: "The prosperity of nations, and the happiness of the individuals composing them are in the ratio in which the laws of nature have been allowed to govern their operations, and . . . the poverty, misery, and distress that exist are invariably to be traced to the interference of man with those laws, and they exist in the ratio of that interference"; 71 but thirty-five years later we read in "The Unity of Law": "Such is the politico-economical science whose . . . every suggestion is opposed to that which common sense and common humanity teach...." 72 The system supposedly grounded on solid premises had led to absurdities, permitting conditions of life for which Carey entertained nothing but contempt. His was a confession stronger in words, but not more sincere than that of Bastiat on behalf of the millions. The belief of this Frenchman that "God has TO Ch. 1. "Principles of Political Economy, Part I, p. xvi. 72 Page 29. placed within each individual an irresistible impulse toward the good, and a never-failing light which enables him to discern it" 73 was rudely shaken by the distress of the people around him.74 Somehow it became clearer as the decades rolled by that the cosmic harmonies created nothing but discord among humans. Individualism rampant had not justified the optimism of an earlier age, for misery was real and widespread. Over-population was a fact, not a myth of the philosopher. Crises and years of depression went over western Europe again and again, at not too long intervals. A proletariat had emerged out of the industrial revolution that was hostile to LetAlone policies and eager for betterments. Political rights were demanded and yet, upon use, found an insufficient protection against ills that the organization of production and exchange somehow gave rise to. Legislators felt the need of heroic efforts to appease the multitudes, and theorists were impressed with the breach steadily widening between what they preached and what grim reality proved. Economics apparently would either have to revise many of its definitions and arguments within the limits set, or else start over again from altogether new premises. The issue was clear, but the outcome unpredictable. 73 Harmonies Economiques. 74 For a criticism of Bastiat and a clear distinction between economic expediency and abstract justice see Cairnes, J. E., in Some Leading Principles of Political Economy Newly Expounded, 1874, p. 269. CHAPTER SIX HISTORISM Idea of Collectivism.-The Historical School among economists became a power to reckon with during the sixth decade of the last century, that is, about the time that Utilitarianism had reached the apogee of its fame. It might, therefore, seem strange that the two should be virtually contemporary if we didn't know that the Historical movement, or—to give it a brief name—Historism, was as much a reaction against Smith's Naturalism as against the Ricardo-Mill group, while furthermore Historism was continental in its origins and hence not likely to agree with British Utilitarianism in any form. To the founders of the Historical School so-called, which was represented at first by a mere handful of men, Naturalism and Utilitarian economics were substantially one -a view one can hardly condemn once the Historical outlook is properly understood. There was no doubt that the two earlier economic systems showed important resemblances, in that both built on individualism, on a static notion of life, on premises generally speaking that yielded conclusions altogether distinct from actualities. Whatever the differences between Naturalists and Utilitarians, or between members within the latter groupand they were not inconsiderable-they did offer a united front in their treatment of Historical critics. They insisted upon the universal validity of their theorems, con |