Book Iv, Chap. 7, § 6.)

The co-operative movement probably suggested this idea to him. He several times expresses the opinion that middlemen’s profits exceed those of the capitalists, and that the working class would gain more by the removal of the former than they would by the extinction of the latter.

But Young remained a champion of grande culture, while Mill was a complete convert to peasant proprietorship. But peasant proprietorship is proposed simply as a step towards association.

“The opinion expressed in a former part of this treatise respecting small landed properties and peasant proprietors may have made the reader anticipate that a wide diffusion of property in land is the resource on which I rely for exempting at least the agricultural labourers from exclusive dependence on labour for hire. Such, however, is not my opinion. I indeed deem that form of agricultural economy to be most groundlessly cried down, and to be greatly preferable in its aggregate effects on human happiness to hired labour in any form in which it exists at present. But the aim of improvement should be not solely to place human beings in a condition in which they will be able to do without one another, but to enable them to work with or for one another in relations not involving dependence.” (Principles, Book IV, chap. 7, § 4.)

Mill was not the only one who looked to peasant proprietorship partly to solve the social problem. Not to mention Sismondi, who was very much taken up with the idea, we have Thornton in England in his Plea for Peasant Proprietors (1848) and Hippolyte Passy in France in his excellent little volume Des Systèmes de Culture (1852) strongly advocating it. The Classical economists for the most part took the opposite point of view, especially Lavergne in his Essai sur l’Économie rurale de l’Angleterre.

“Were I framing a code of laws according to what seems to me best in itself, without regard to existing opinions and sentiments, I should prefer to restrict, not what anyone might bequeath, but what anyone should be permitted to acquire by bequest or inheritance. Each person should have power to dispose by will of his or her whole property; but not to lavish it in enriching some one individual beyond a certain maximum.” (Principles, Book II, chap. 2, § 4.)

It is hardly necessary to say that this limitation of the right of inheritance is a purely personal opinion of Mill, and that it is rejected along with his other solutions by most individualists. It is not quite correct to say then, as Schatz has said in his Individualism, that Stuart Mill is “the very incarnation of the individualistic spirit.” He was really a somewhat sceptical disciple of the school, and his frequent change of opinion was very embarrassing!

Principles, Book II, chap. 6, § 2.

“There is at every time and place some particular rate of profit, which is the lowest that will induce the people of that country and time to accumulate savings.… But though the minimum rate of profit is thus liable to vary, and though to specify exactly what it is would at any given time be impossible, such a minimum always exists; and whether it be high or low, when once it is reached no further increase of capital can for the present take place. The country has then attained what is known to political economists under the name of the Stationary State.” (Ibid., Book IV, chap. 4, § 3.)

Mill indicates the causes that contribute to a fall in the rate of profits as well as the causes that arrest that fall, such as the progress of production and the destruction of wealth by wars and crises.

It may be worth while pointing out that the word profit as employed by the English economists, and especially by Mill, has not the same meaning as it has with the French writers. French economists since the time of Say have employed the term profit to denote the earnings of the entrepreneur, the capitalist’s income being designated interest. The English economists do not distinguish between the work of the entrepreneur and that of the capitalist, and the term profit covers them both. The result is that the French Hedonistic economists can say that under a régime of absolutely free competition profit would fall to zero, while the English economists cannot accept their thesis because profits include interest, which will always remain as the reward of waiting.

The French point of view is more generally adopted to-day.

In a letter to Gustave d’Eichthal, recently published, speaking of Auguste Comte, he writes as follows: “How ridiculous to think that this law of civilisation requires as its correlative constant progress! Why not admit that as humanity advances in certain respects it degenerates in others?”

On the question of co-operation as a method of social reform, Cairnes, who simply refers to it as a possible alternative, may have owed something to Mill.

Essays, p. 281.

Since 1830 there have only been four professors.—J. B. Say, Rossi, Michel Chevalier, and Chevalier’s son-in-law, M. Paul Leroy-Beaulieu. The history of the chair is a fair summary of the history of French economics.

His most curious book, perhaps, was De la Baisse probable de l’Or, a title that caused a good deal of amusement during the latter half of the nineteenth century, but which proved somewhat of a prophecy after all.

Joseph Garnier, who must not be confused with Germain Garnier, the translator of Smith’s works, published the first edition of his Éléments d’Économie politique in 1845. From 1848 up to his death in 1881 he was chief editor of the Journal des Économistes.

G. Schmoller, Zur Litteraturgeschichte der Staats- und Sozialwissenschaften (Leipzig, 1888). The expression will be found in his study of Roscher.

A. Toynbee, The Industrial Revolution.

It is curious that the Historians never refer to Sismondi as one of the pioneers of historical study. Roscher and Hildebrand never mention him at all, and Knies only thinks of him as a socialist (cf. Die Nationalökonomie vom historischen Standpunkt, 2nd ed., p. 322).

Even List did not escape criticism at their hands. Hildebrand thinks that he was infected with the atomic views of Adam Smith and never showed himself sufficiently conscious of the ethical nature of society. “List seems to think that the entire subordination of private interest to public utility is dictated by custom, and even by private interest when properly understood, but he never regards it as a public duty rising out of the very nature of society itself.” (Hildebrand, Die Nationalökonomie der Gegenwart und Zukunft, p. 73.) Note the ethical standpoint of the school.

See, among others, Max Weber’s articles in Schmoller’s Jahrbuch for 1903, p. 1881, and 1905, p. 1323. The methodological errors of Roscher, Knies, and Hildebrand get their due meed of criticism.

Grundriss, preface.

Knies is of the same opinion. He remarks that Roscher’s work simply means “a completion of historiography rather than a correction of political economy.” (Die Nationalökonomie vom geschichtlichen Standpunkte, p. 35.)

Grundriss, preface, pp. iv-v.

Untersuchungen über die Methode der Sozialwissenschaften und der Politischen Oekonomie insbesondere. (Leipzig, 1883.)

Schmoller, loc. cit. For further information concerning the Cameralists see Geschichte der Nationalökonomie, by M. Oncken. Menger and Schmoller also connect Roscher with Heeren, Gervinus, and the other historians of Göttingen who during the first quarter of the nineteenth century tried to found a science of politics upon a general study of history. Roscher had studied history under them, and his aim is in every respect similar to theirs.

In the introduction, p. v, he declares that the object of his work is “to open a way for an essentially historical standpoint in political economy and to transform the science of political economy into a body of doctrines dealing with the economic development of nations.”

Even Roscher had ventured to say that they partook of a mathematical nature. This is how he expresses his views as against those of Hildebrand on the real aim of political economy in the Jahrbücher für Nationalökonomie und Statistik, vol. i, p. 145: “Economic science need not attempt to find the unchangeable, identical laws amid the multiplicity of economic phenomena. Its task is to show how humanity has progressed despite all the transformations of economic life, and how this economic life has contributed to the perfection of mankind. Its task is to follow the economic evolution of nations as well as of humanity as a whole, and to discover the bases of the present economic civilisation as well as of the problems that now await solution.”

The exact title of the first edition was Die Politische Oekonomie vom Standpunkte der geschichtlichen Methode. A second edition appeared in 1883 with a slightly different title. Our quotations are taken from the second edition.

Schmoller, Grundriss der Volkswirtschaftslehre, vol. i, p. 107 (1904).

Ibid., vol. i, p. 108.

Ibid., vol. ii, p. 653.

All historians, however, are not equally sceptical. Ashley in his preface to English Economic History and Theory writes as follows: “Just as the history of society, in spite of apparent retrogressions, reveals an orderly development, so there has been an orderly development in the history of what men have thought, and therefore in what they have thought concerning the economic side of life.” And Ingram, in his History of Political Economy, points out that “As we have more than once indicated, an essential part of the idea of life is that of development—in other words, of ordered change. And that such a development takes place in the constitution and working of society in all its elements is a fact which cannot be doubted.… That there exist between the several social elements such relations as make the change of one element involve or determine the change of another is equally plain; and why the name of natural laws should be denied to such constant relations of coexistence and succession it is not easy to see. These laws being universal admit of the construction of an abstract theory of economic development.” (P. 205.)

Schmoller thinks that the science in the present stage of development, while it cannot be prevented from attempting a philosophy of history, is much better employed in building up simple scientific hypotheses with a view to gauging the future course of development than in getting hold of “absolute truths.”

Marshall, Principles, Appendix A.

Its influence has been noted by Toynbee in his article on Ricardo and the Old Political Economy. “It was the labour question, unsolved by that removal of restrictions which was all deductive political economy had to offer, that revived the method of observation. Political economy was transformed by the working classes.” Elsewhere he adds: “The Historical method is often deemed conservative, because it traces the gradual and stately growth of our venerable institutions; but it may exercise a precisely opposite influence by showing the gross injustice which was blindly perpetrated during this growth.” (Industrial Revolution, p. 58.)

The first edition appeared in 1857.

We would specially mention Levasseur’s excellent work, Histoire des Classes ouvrières en France (first edition, 1867).

More especially we must mention the group of workers associated with M. Durkheim and the Anné sociologique. But it would be a great mistake to confuse the two methods, the Historical and the Sociological. See Simiand, Méthode historique et Science sociale, in the Revue de Synthèse historique, 1903. See also La Méthode positive en Science économique (Paris, 1912), which contains a study of the methodological problems presented by political economy.

There is one aspect of the critical work of the German school with which we have not dealt in this book—namely, the criticism of laissez-faire. Some of the members, e.g. Hildebrand, have insisted on the ethical criterion, but none of them share in the optimism of either Smith or Bastiat. The emphasis laid upon relativity made this quite impossible. But all the more eminent writers have remained faithful to the Liberal teaching of the founders. See Hildebrand’s confession of faith at the beginning of vol. i of the Jahrbücher für Nationalökonomie, 1863, vol. i, p. 3. And although some of them, e.g. Brentano and Schmoller, seem to be connected with the new current of ideas that gave rise to State Socialism, the association was quite accidental. They never considered it an organic part of their teaching, and they made no very original contribution to that part of the study. Their connection with economics must always depend upon the light which they have thrown upon the question of method.

Cf. Schmoller’s account of Menger’s work published in the Jahrbuch in 1884. The article appears also in the volume entitled Zur Litteraturgeschichte der Staats- und Sozialwissenschaften (1888).

Cf. Menger, loc. cit., pp. 130 et seq. Marshall’s ironical remark is very apposite here: “German economists have done good service by insisting on this class of consideration, but they seem to be mistaken in supposing that it was overlooked by the older English economists.” (Principles, Book I, chap. 6, note.)

Knies, loc. cit., pp. 24-25. Ashley gives an unmistakable expression to the same opinion in his History. “Political economy is not a body of absolutely true doctrines, revealed to the world at the end of the last and the beginning of the present century, but a number of more or less valuable theories and generalisations.… Modern economic theories, therefore, are not universally true; they are true neither for the past, when the conditions they postulate did not exist, nor for the future, when, unless society becomes stationary, the conditions will have changed.” (Preface.)

See Karl Pearson, The Grammar of Science.

Marshall, Principles, 4th ed., Book I, chap. 6, § 6.

What we say about the mathematical method does not imply any criticism of the Mathematical method in political economy. To establish mathematical relations between economic phenomena, as Walras and his school did, and to deduce economic conclusions from general mathematical theories are two different things.

Knies employs the differences there set up in order to deny that economic laws have even the character of national laws. The new Historical school does not go quite so far, as we shall see presently.

Chap. 4, “Of the Logic of the Moral Sciences.”

Principles, Book I, chap. 6, § 6.

Walras, Economie politique pure.

Some authors would not admit complete assimilation; e.g. Wagner (Grundlegung, vol. i, p. 335).

Schmoller especially insists on this point.

Knies, op. cit., p. 23.

A. Wagner, Grundlegung, § 67.

Vol. ii, p. 502.

Logic, vol. ii, p. 497.

Principles, Book I, chap. 5, § 9.

Marshall, Principles, Book I, chap. 5, § 7.

Zur Litteraturgeschichte, p. 279.

Untersuchungen über die Methode, p. 279.

The English economists, even the most eminent, are often mistaken, says Wagner (Grundlegung, chap. 4, § 4), but their errors are not to be imputed to their method so much as to the use they make of it. And Menger, who so energetically undertook the defence of deduction, further undertakes to renew the Classical theories. Economic theory, says he, as constituted by the English Classical school, has not succeeded in giving us a satisfactory science of economic laws (Menger, loc. cit., p. 15).

Cf. Menger, loc. cit., p. 79: “The student of pure mechanics does not deny the existence of air or friction, any more than the student of pure mathematics denies the existence of real bodies, of surfaces, and lines, or the student of pure chemistry denies the influence of physical forces or the physicist the presence of chemical factors in actual phenomena, although each of these sciences only considers one side of the real world, making an abstraction of every other aspect of it. Nor does the economist pretend that men are only moved by egoism or that they are infallible and omniscient because they envisage social life from the point of view of the free play of individual interest uninfluenced by other considerations, by sin or ignorance.” Wagner and Marshall take the same view.

So great is the respect for psychology among the deductive writers of to-day that it has been suggested that the Austrian school should be known as the Psychological school. We can say that they have done much more in this direction than the Historical school.

Manuale di Economia politica, p. 24 (Milan, 1906).

Principles, 4th ed., Book I, chap. 3.

Handwörterbuch der Staatswissenschaften. In his Grundriss we read: “The writers who figure as representatives of inductive research in recent German economics are not opposed to the practice of deduction as such, but they do believe that it is too often based upon superficial and insufficient principles and that other principles derived from a more exact observation of facts might very well be substituted for these.” Everyone would subscribe to this view.

Die Entstehung der Volkswirtschaft, Dr. Wickett’s translation.

“National life, like every other form of existence, forms a whole of which the different parts are very intimately connected. Complete understanding even of a single aspect of it requires a careful study of the whole. Language, religion, arts and sciences, law, politics and economics must all be laid under tribute.” (Roscher, Principles.) Cf. also Hildebrand, Die Nationalökonomie der Gegenwart und Zukunft, p. 29. This is also Knies’s thought.

Die Nationalökonomie der Gegenwart und Zukunft, p. 29.

Principles, Book I, chap. 4, § 1. “History,” says Wagner (Grundlegung, § 83), “may well affirm the existence of causal or conditional relations, but it can never prove it.”

History may, as a matter of fact, become explanatory, but only in a particular sense. In other words, although it cannot discover the general laws regulating phenomena, it may show what special circumstances (whose general laws are already supposed to be known) have given rise to some event equally specialised in character. But every honest historian has to admit that such explanations are definitely personal and subjective in character. For a recent examination of these ideas from the pen of a historian see the profound yet charming introduction contributed by Meyer to the second edition of his Geschichte des Alterthums. Cf. also Simiand, pp. 14-16.

Cf. Marshall, Principles, Book I, chap. 6, § 4, and especially Menger, Untersuchungen, pp. 15-17: “We may be said to have historical knowledge of a particular phenomenon when we have traced its individual genesis, i.e. when we have succeeded in representing to ourselves the concrete circumstances among which it came into being, with their proper qualifications, etc. We may be said to have a theoretical knowledge of some concrete phenomenon when we are enabled to envisage it as a particular instance of a certain law or regularity of sequence or coexistence, i.e. when we are able to give an account of the raison d’être and the nature of its existence as an exemplification of some general law.”

A full exposition of this idea is given in his Grundriss, but Knies, in the name of the conception of a unique evolution, contests the view.

This is what M. Renouvier thinks of this conception: “If we proceed to ask another question in addition to the difficult one already asked and inquire as to the circumstances under which different nations have advanced or declined in the path of goodness and of truth and transmitted their triumphs or their defeats to the next generations, and if we support ourselves in the quest by the belief that we already have some knowledge of a scientific law and consequently of the aim of human society (this kind of knowledge generally begins with formulating such aims), we shall find ourselves in the position of a religious prophet who, not merely content with an inspired version of the truth, and of the destiny of mankind, proceeds to expound to his auditors the necessity under which both preacher and auditors are compelled to believe and to act in accordance with what will undoubtedly come to pass. Philosophical and religious imagination seeks in external observation the elements of a confidence which it can no longer place in itself. History becomes a kind of inspiring divinity. But although the object of the illusion is different its nature is still the same, for the new deity is as little effective as were the ancient ones in the opinion of those who have no faith in it, and it only inspires those who already believe.” (Introduction à la Philosophie analytique de l’Histoire, 2nd ed., vol. i, p. 121.) Bergson’s philosophy also contests the possibility of guessing what the future may be like from the character of the present. See especially Creative Evolution.

Grundlegung, p. 342.

Cf. Ingram, History of Political Economy, and Denis, Histoire des Systèmes.

A. Comte, Cours, vol. iv, p. 198.

Cours, vol. iv, p. 328.

It is interesting to learn the views of historians on this point. Meyer thinks that the object of history is not to discover the general laws of development, but to describe and explain particular concrete events as they succeed one another. Such descriptions can only be made in accordance with the rules of historical criticism, but explanation is only possible with the aid of analogy. “It is only by the use of analogy that the historian can explain past events, especially where there are psychological motives that require analysis. The explanation thus given will necessarily be of a subjective character, and from its very nature somewhat problematic.” Cf. Ed. Meyer, Geschichte des Alterthums, Introduction, 2nd ed. §§ 112 et seq. There does not seem to be any connection between this method and that of Aug. Comte. One becomes still more convinced of this after reading Langlois and Seignobos’s Introduction aux Études historiques or G. Monod’s study in historical method in De la Méthode dans les Sciences (Paris, 1909), or, finally, the numerous articles dealing with this question of method which have appeared in the Revue de Synthèse historique.

Theory of Political Economy, preface to the second edition, 1879.

Schmoller’s Jahrbuch contains descriptive studies of present-day commercial and industrial undertakings which are veritable models.

The Present Position of Political Economy, in the Economic Journal, 1907, p. 481.

We have not the necessary space in this volume to refer to the history of statistics. This science, though independent of political economy, is, however, such a powerful auxiliary that its progress has to some extent been parallel with the growth of economics. During the last twenty years the methods of interpreting statistics (we are speaking merely of observation) have been very considerably improved. The logical problems involved have been studied with much care, and the application of mathematics to these problems has proved very fruitful. No student of the social sciences can afford to neglect such mathematical theories as those of combination, correlation, degree of error, etc. The history of statistics, which contains many eminent names, from Quetelet to Karl Pearson, would certainly deserve a chapter in a book dealing with method, although there would be some risk of giving it too statistical a bias. We must rest content with referring the reader to Udny Yule’s Introduction to the Theory of Statistics, which constitutes what is perhaps the best recent introduction to the discussion concerning the method to be employed in this social science, and forms an indispensable complement to the study of the problems examined in this chapter.

Dupont-White makes the remark somewhere that the State, strictly speaking, has only existed since 1789. It appears, then, that a State which is not constitutional, democratic, and liberal has none of the virtues of the true State. Such exclusion, although permissible in the publicist, is indefensible in the theorist or historian.

“The distinctive character of the State merely consists in this necessity to have recourse to force, which also helps to indicate the extent and the proper limits of its action. Government is only possible through the intervention of force, and its action is only legitimate when the intervention of force can be shown to be justifiable.” (Harmonies, 10th ed., pp. 552-553.)

Wealth of Nations, Book IV, chap. 9; Cannan’s ed., vol. ii, p. 185.

Harmonies, 10th ed., p. 556.

Hermann, Staatswirtschaftliche Untersuchungen, 1st ed., pp. 12-18.

A similar idea is contained in Liberty, where it is stated that “trade is a social act,” that the conduct of every merchant “comes within the jurisdiction of society,” and that “as the principle of individual liberty is not involved in the doctrine of Free Trade, so neither is it in most of the questions which arise respecting the limits of that doctrine; as, for example, what amount of public control is admissible for the prevention of fraud by adulteration; how far sanitary precautions, or arrangements to protect workpeople employed in dangerous occupations, should be enforced on employers.… But that they [people] may be legitimately controlled for these ends is in principle undeniable.” (Chap. 5.)

Michel Chevalier, Introductory Lectures, No. 10, in Cours, vol. i, p. 221.

Cours, vol. i, pp. 211, 214; vol. ii, pp. 38, 115.

Pareto, Cours d’Économie politique, vol. ii, § 656 (1897).

Principes, p. 422.

Ibid., pp. 444, 462, 521.

Stuart Mill has tried to do so in a formula that is not very illuminating: “To individuality should belong the part of life in which it is chiefly the individual that is interested; to society, the part which chiefly interests society.” (Liberty, chap. 4.)

Republished in his Études d’Économie sociale, 1896. See a brief résumé in our chapter on Rent.

For a general account of Lassalle’s life, and especially his relations with Bismarck, see Hermann Oncken, Lassalle (Stuttgart, 1904).

There has been no dispute concerning the French origin of Rodbertus’s ideas since the evidence was sifted by Menger in his Das Recht auf den vollen Arbeitsertrag (1st ed., 1886). But Menger only mentions two sources of inspiration, Proudhon and the Saint-Simonians. The text will sufficiently indicate his indebtedness to the Saint-Simonians, but we think that Sismondi might well have been substituted for Proudhon. The only Proudhonian doctrine that is discoverable in Rodbertus is the theory concerning the constitution of value. But in the second of the Soziale Briefe (Schriften, vol. ii, p. 46, note) he states definitely that the idea was not a borrowed one, and that he himself was the first to formulate it, although he omits to state in what connection. He may be referring to a passage in his Forderungen, where the idea is quite clearly expressed. Speaking of Ricardo’s theory of value, he says: “That theory comes to grief on a single issue, namely, in regarding a thing as existing when it only exists in the mind, and treating a thing as a reality when it only becomes real in the future.” (Schriften, vol. iii, p. 120.) It is clearly pointed out that the task of the future is to determine what value is. The Forderungen, where all the master ideas of Rodbertus may be studied, was published in 1837, nine years before the Contradictions économiques was published by Proudhon, who made his first reference to the question in that work.

Zur Erkenntniss unserer staatswirtschaftlichen Zustände (New Brandenburg, 1842). The work was to consist of three parts, only the first of which was published, and that has not been reissued since.

The first three Soziale Briefe, as well as the Forderungen, have been republished in Schriften von Dr. Karl Rodbertus-Jagetsow (Berlin, 1899, 3 vols.). This is the edition we quote. The fourth Brief, entitled Das Kapital, was written in 1852, but was not published until after Rodbertus’s death. It was translated into French in 1904 by M. Chatelain, and published by Messrs. Giard and Brière. Our references in the succeeding pages are to this edition. Two other articles written by Rodbertus have been published, one by R. Meyer under the title Briefe u. Sozialpolitische Aufsätze (Berlin, 1882), the other by Moritz Wirth under the title of Kleine Schriften (Berlin, 1890). For a complete bibliography of Rodbertus’s work see Andler’s Le Socialisme d’État en Allemagne (Paris, 1897). Professor Gonner has written an illuminating study of his political philosophy.

In his introduction to the Briefe von Lassalle an Rodbertus, p. 8 (Berlin, 1878).

On the other hand, as Menger shows, the sources of Marx’s theory are English rather than French—another point of difference between the two socialists.

He was for a short time Minister of Public Worship. Appointed on July 4, he resigned at the end of a fortnight because his colleagues refused to recognise quite as fully as he wished the rights of the Parliament of Frankfort.

A characteristic sign of this evolution is the substitution throughout the second edition of the Sociale Briefe of the word Staatswille (“the will of the State”) for the word Volkswille (“the people’s will”). This second edition, comprising the second and third letters, was published by him in 1875 under the title Zur Beleuchtung der sozialen Frage.

Letter to R. Meyer, November 29, 1871. This point of view is developed at length in his “Open Letter to the Committee of the Association of German Workmen at Leipzig,” April 10, 1863, published by Moritz Wirth in the Kleine Schriften.

Letter to R. Meyer, March 12, 1872. Cf. the letters of January 23 and February 3, 1871.

Ibid., November 30, 1871. In 1874 he proposes to offer himself as a socialist candidate for the Reichstag, but recognises that the State must first of all be strengthened on the military side as well as on the religious.

Ibid., October 17, 1872.

Ibid., January 6, 1873.

Ibid., March 10, 1872, and Physiokratie u. Anthropokratie, in Briefe u. Sozialpolitische Aufsätze, pp. 521, 522.

He protests vigorously against the title of Katheder Sozialist in a letter of August 26, 1872. A vigorous criticism of the Socialism of the Chair, written in a private letter of Rodbertus, is quoted at length by Rudolf Meyer in his Emancipationskampf des 4ten Standes, pp. 60-63 (Berlin, 1874).

“Communion or community of labour would be a better term than division of labour” (Kapital, p. 74); and in another connection: “The only real division of labour is territorial division of labour” (ibid.). Elsewhere (p. 87) he warns his readers against confusing the terms “social” and “national.” Adopting the Saint-Simonian philosophy of history, he declares history to be a process of unification which brings gradually widening circles into closer unity with one another (Zur Geschichte der römischen Tributsteuer, in the Jahrbücher für Nationalökonomie u. Statistik, 1865, vol. v, p. 2). “The course of history is just the expansion of communism.” (Kapital, p. 85, note.)

Physiokratie u. Anthropokratie, in Briefe u. Sozialpolitische Aufsätze, p. 519.

Schriften, vol. iii, p. 216.

“In a social State of this description people produce, not with a view to satisfying the needs of labour, but the needs of possession; in other words, they produce for those who possess.” (Kapital, p. 161. Cf. also p. 51.)

“Provided we knew the time that a person could afford to devote to the work of production, we could easily determine the quantity that would be sufficient to satisfy the needs of everybody.” (Kapital, p. 109.)

Ibid., p. 108.

Kapital, p. 143.

The question of the net and gross product was one of the outstanding problems of this period. Vidal (Répartition des Richesses, p. 219, Paris, 1846) and Ott (Traité d’Économie sociale, p. 95, 1851) lay stress upon it. Since then Cournot, Dühring, and more recently Effertz and Landry, have handled the problem anew. But each of them when he comes to define the word “productivity” defines it in his own fashion, so that they do not really discuss the same question. Rodbertus, as we shall have occasion to point out in the text, uses the word in a very vague fashion indeed, but still it is the basis of his whole discussion. It seems to us that under a régime of division of labour rentability should be the one criterion. But it would be a mistake to imagine that when dwindling profits make a change in the methods of production imperative, that change will be welcomed with equal enthusiasm by everybody, by both master and worker alike.

He is dealing merely with individual wants. Rentability is not the only guide. Many collective wants must be satisfied, but the process is not always a profitable one. The problem is to determine which are those wants. Rodbertus is speaking of private wants; he has taken good care to leave the public needs aside, so that his argument applies only to the former.

Kapital, pp. 164-166.

Rodbertus further adds that a portion of everybody’s income should be expended in supplying such public needs. (Kapital, pp. 132-133.)

Kapital, pp. 150-160.

Cf. Zur Erkenntniss, pp. 7-10: “Every economic good costs labour and only labour.” In the third of the Soziale Briefe he expresses this idea in a slightly different form: “All economic goods are the product of labour” (Schriften, vol. ii, pp. 105-106). Developing the same thought, he declares that this formula means: (1) that “only those goods which have involved labour should figure in the category of economic goods”; (2) that, “economically speaking, goods are regarded, not as the product of nature or of any other force, but simply as the product of labour”; (3) that “goods economically considered are just the product of labour, carried out by means of the material operations which are necessary for production.” The work of industrial direction and its remuneration are regarded in the same light. Cf. Schriften, vol. ii, p. 219.

On this point see Rist’s Le Capital provient-il uniquement du Travail? in the Revue d’Économie politique, February 1906.

Rodbertus expressly declares that to say that goods are the product of labour is not to imply that the value of the product is always equal to what it cost in the way of labour, or, in other words, that the labour spent on it does not always measure its value (Schriften, vol. ii, pp. 104, 105). A similar statement is made in the Forderungen (1837). In the Zur Erkenntniss (1842) (pp. 129-131) he gives some of the reasons why he thinks that the value of a product is not equal to the labour it has cost: (1) There is the necessity for equalising the gains of capital; (2) the price of a unit of any commodity is fixed by the price of the unit which costs most to reproduce. In the second of the Soziale Briefe he repeats the statement that the labour value theory is nothing better than an ideal (Kapital, Appendix, p. 279). In a letter written to R. Meyer on January 7, 1872, he affirms the demonstration which he had already given, “that goods do not and cannot exchange merely in proportion to the quantity of labour which has been absorbed by them simply because of the existence of capital”; and he adds the significant words: “a demonstration that might in case of need be employed against Marx.”

“The coincidence between the value of the products and the quantity of labour involved in their production is simply the most ambitious ideal that economics has ever formulated.” (Second Sozial Brief.)

Occasionally Rodbertus admits for the sake of hypothesis or demonstration that prices do coincide with the labour cost; but his essential theory has no need of any such hypothesis, and it really plays quite an auxiliary or subordinate rôle. It is in the course of his exposition of the theory concerning the distribution of unearned income between landed proprietors and capitalists (quite an erroneous theory, by the way) that he is driven to admit that “the exchange value of each completed product, as well as of each portion of the product, is equal to its labour value.” (Third Sozial Brief, Schriften, vol. ii, p. 101.)

Kapital, p. 105.

“Whenever exchange is allowed to take its own course in the matter of distributing the national dividend, certain circumstances connected with the development of society and with the growing productivity of social labour cause the wages of the working classes to diminish so as to constitute a decreasing fraction of the national product.” (Second Sozial Brief, Schriften, vol. ii, p. 37.)

Kapital, p. 153.

The idea that entrepreneurs base their production upon the demand of the higher classes is a somewhat novel one, but it is quite definitely stated by Rodbertus. “The classes can only influence the market in proportion to the quantity of the social product which is given them. But the entrepreneurs must determine the quantities which they will produce, according to the size of their demands.” (Kapital, pp. 51-52. Cf. also pp. 170-171.) It is quite obvious, on the contrary, that the entrepreneurs base their production solely upon the demand for the particular goods which they manufacture, and that they are quite indifferent to the share which goes to the higher classes.

Kapital, p. 53.

We shall soon be convinced of the similarity that exists between the two theories if we read the passage in the article on Balance des Consommations avec les Productions, published by Sismondi as an appendix to the second edition of the Nouveaux Principes, vol. ii, p. 430. Rodbertus agrees with Sismondi that equilibrium will be re-established in the long run, but that in the meantime a crisis may have to intervene. (Kapital, p. 171, note; cf. p. 190, supra.)

Such, as we have already seen, is Colson’s conclusion (Cours, vol. iii, p. 366), and such is the verdict of M. Chatelain after studying the United States census returns. According to Chatelain (Questions pratiques de Législation ouvrière, June and July, 1908), the American metal-workers’ share in the product fell from 71 to 68 per cent. between the years 1890 and 1905, while capital’s share increased from 28 to 32 per cent. The men’s wages during the same period rose from 551 dollars to 626, while the rate of interest fell from 9 to 8 per cent. Despite this diminution in labour’s share of the total product it is impossible to say whether the remuneration of labour in general is moving upward or downward, for the working classes do not depend solely upon the wages of their labour. Some of them have a little capital—a very small amount, perhaps, but there is no reason for thinking that it will not grow in future.

It is quite clear that this complicated question must be carefully defined. Three different factors must be distinguished: (1) The individual’s wage; (2) labour’s share in the product; (3) the income of the working class. On this problem see Edwin Cannan’s article in the Quarterly Journal of Economics, 1905, and his statements in his Theory of Production and Distribution, 1776-1848.

Kapital, p. 176.

Ibid., p. 187.

“And so I believe that just as history is nothing but a series of compromises, the first problem that awaits economic science at the present moment is that of effecting some kind of a working compromise between labour, capital, and property.” (Kapital, p. 187.) In a letter written on September 18, 1873, to R. Meyer, he declares that the great problem “is to help us to pass by a peaceful evolution from our present system, which is based upon private property in land and capital, to that superior social order which must succeed it in the natural course of history, which will be based upon desert and the mere ownership of income, and which is already showing itself in various aspects of social life, as if it were already on the point of coming into operation.”

Cf. Kapital, pp. 109 et seq., and especially his article Der Normalarbeitstag, which appeared in 1871 and was republished in Briefe u. Sozialpolitische Aufsätze, p. 552 et seq. The idea of determining value in the way Rodbertus intended was criticised by Marx in his Misère de la Philosophie, à propos of Proudhon’s attempt in 1847. The socialisation of production involves the socialisation of exchange as well. This is another point upon which Marx and Rodbertus differ.

Cf. Kapital, p. 188, note.

Zur Geschichte der römischen Tributsteuer, in Jahrbücher für Nationalökonomie u. Statistik, vol. viii, pp. 446-447, note.

“Extreme socialism,” says Wagner, “is simply an exaggeration of that partial socialism which has long been a feature of the economic and social evolution of all nations, especially the most civilised.” (Grundlegung, 3rd ed., p. 756.)

George Meredith in his Tragic Comedians weaves his story round this tragic adventure, giving us an admirable study of Lassalle’s psychology. Cf. also Lassalle, by Georges Brandes, and Oncken’s Lassalle (Stuttgart, 1904).

Théorie systématique des Droits acquis, vol. i, p. 274, note (Paris, 1904).

Briefe von Lassalle an Rodbertus, p. 46 (Berlin, 1878).

Ibid., p. 44.

Freilich darf man das dem Mob heut noch nicht sagen. (Ibid., p. 46.)

“No workman will ever forget that property whenever legally acquired is absolutely inviolable and just,” says he in an address delivered to the workers of Berlin on April 12, 1862, and published under the title of Arbeiterprogramm (Schriften, vol. i, p. 197). Elsewhere he defends himself against the charge of inciting the proletariat by claiming that his agitation was of a purely democratic character, and intended to facilitate the fusion of classes (ibid., vol. ii, pp. 126-127). (Our quotations are taken from Pfau’s edition. We were unable to obtain the latest and by far the best edition of Lassalle’s works, published by Bernstein.)

Wagner’s introduction to Briefe von Lassalle an Rodbertus, p. 5. Lassalle has himself defined this somewhat Machiavellian attitude in a letter written to Marx in 1859, in which he speaks of a drama which he had just written dealing with Franz von Sickingen. “It looks like the triumph of superior realistic ability when the leader of a rebellion takes account of the limited means at his disposal and attempts to hide from other men the real object which he has in view. But the success achieved by deceiving the ruling classes in this way puts him in possession of new forces which enable him to employ this partial triumph for carrying out his real object.” (Aus dem litterarischen Nachlass von K. Marx, F. Engels, und Lassalle, vol. iv, p. 133; published by F. Mehring, Stuttgart, 1902.)

Schriften, vol. ii, p. 99. This address has been published under the title of Arbeiterlesebuch. This is just the attitude of which Marx disapproved. In a letter written to Schweitzer on October 13, 1868, quoted by Mehring (Aus dem litterarischen Nachlass, etc., vol. iv, p. 362), he expresses himself as follows: “He is too liable to be influenced by the immediate circumstances of the moment. He exaggerates the trivial difference between himself and a nonentity like Schulze-Delitzsch, until the issue between them, governmental intervention as against private initiative, becomes the central point of his agitation.”

Schriften, vol. i, p. 213.

See, among others, the chapter entitled Hegel et la Théorie de l’État, in Lévy-Brühl’s L’Allemagne depuis Liebnitz, especially p. 398 (Paris, 1890). The State, according to Hegel, is an expression of the spirit realising itself in the conscience of the world, while nature is an expression of the same spirit without the conscience, an alter ego—a spirit in bondage. God moving in the world has made the State possible. Its foundation is in the might of reason realising itself in will. It is necessary to think of it not merely as a given State or a particular institution, but of its essence or idea as a real manifestation of the mind of God. Every State, of whatever kind it may be, partakes of this divine essence. For full information concerning the philosophical origin of State Socialism see Andler’s Le Socialisme d’État en Allemagne (1897).

Fichte issued a very curious work in 1800 entitled Der geschlossene Handelsstaat, published in vol. iii of his complete works (Berlin, 1845), and containing ideas with many points of resemblance to those of State Socialism. Fichte thought that the State should not merely guarantee to every citizen his property, but should first of all rear its citizens, let them build their property, and then defend it. In order to do this everyone should be given the necessary means of livelihood, for the one aim of all human activity is to live, and everyone here has an equal right to live (p. 402)—a declaration of the right of existence. Until all are so provided for no luxuries should be allowed. No one should decorate his house until he feels certain that everyone has a house, and everyone should be comfortably and warmly clad before anyone is elegantly dressed (p. 400). “Nor is it enough to say that I can afford to pay for it, for it is unjust that one individual should be able to buy luxuries while his fellow citizens have not enough to procure the necessaries of life. The money with which the former purchases his luxuries would in a rational State not be his at all.” Adopting this as his guiding principle, Fichte proposes to organise a State in which the members of every profession, agriculturists, artisans, merchants, etc., would make a collective contract with one another, in which they would promise not to encroach upon one another’s labour, but would guarantee to everyone a sufficient number of the goods which each has made for his own use. The State would also undertake to see that the number of persons in every profession was neither too few nor too many. It would also fix the price of goods. Lastly, in view of the fact that foreign trade would naturally upset the equilibrium established by the contract which guaranteed security of existence to each individual, the commercial State would have to be entirely hemmed in by tariff walls. The whole work is original and interesting. A. Menger, who gives a brief résumé of it in his second chapter of The Right to the Whole Produce of Labour, thinks that Fichte was influenced by what he saw of the Convention during the Reign of Terror, by the issue of assignats, and perhaps by Babeuf. Fichte, on the other hand, takes care to point out that his commercial State is not realisable as such, but that a book like his is not less useful in view of the general hints which it affords a statesman.

It is remarkable that the majority of the commercial and financial measures introduced in Germany between 1866 and 1875, such as a uniform system of weights and measures, the reform of the monetary system, banks, the tariffs, etc., were directly inspired by the principles of economic Liberalism.

A copy of the text translated into French appeared in the Revue d’Économie politique, 1892. The translation was the work of our regretted colleague Saint-Marc.

In addition to Wagner we might mention Albert Schaeffle, who has shown considerable literary activity, but who is more of a sociologist than an economist. His great work, Bau und Leben des sozialen Körpers (1875-78), contains an organic and biological theory of society, but his best known book is the Quintessenz des Sozialismus.

Wagner’s principal works, which contain an exposition both of the ideas and programme of State Socialism, are Grundlegung (1st ed. 1876), translated into French in 1900 under the title Fondements de l’Économie politique; Finanzwissenschaft; his article Staat in the Handwörterbuch der Staatswissenschaften; and especially two articles entitled Finanzwissenschaft and Staatssozialismus, published in the Zeitschrift für die gesammte Staatswissenschaft, 1887, pp. 37-122, 675-746. One might profitably consult two addresses, the one of March 29, 1895, Sozialismus, Sozialdemokratie, Katheder u. Staatssozialismus, the other of April 21, 1892, Das neue sozialdemokratische Programm.

It is a curious fact that Wagner’s definition of the province and functions of the State is not very different from Smith’s, though differing considerably from Bastiat’s. “As a general rule,” says he, “the State should take charge of those operations which are intended to satisfy the wants of the citizens, but which private enterprise or voluntary associations acting for the community either cannot undertake or cannot perform as well or as cheaply.” (Grundlegung, 3rd ed., 1893, 1st part, p. 916.)

“Liberalism only recognises one task which the State can perform, namely, the production of security.” (Quoted by Schönberg, Handbuch der politischen Oekonomie, 3rd ed., vol. i, p. 61. The quotation is taken from Rentzsch’s dictionary, articles on Freihandel and Handelsfreiheit.)

“Kultur und Wohlfahrtzweck” (Wagner, Grundlegung, p. 885.)

Wagner, Grundlegung, 3rd ed., pp. 811 et seq.; 839 et seq. The State Socialists have a habit of wrongfully using the two expressions “free competition” and “economic liberty” as if they were synonymous terms. See Grundlegung, p. 97.

Dupont-White, L’Individu et l’État, 5th ed., p. 9.

Ibid., p. 267.

Preface to Stuart Mill’s Liberty.

Wagner, Grundlegung, 3rd ed., pp. 892 et seq.

Finanzwissenschaft und Staatssozialismus, p. 106.

See supra, p. 430.

Dupont-White, Capital et Travail, p. 353 (1847); L’Individu et L’État, p. 81.

L’Individu et l’État, p. 65.

Ibid., pp. 163, 164.

“No means has as yet been suggested which will help to delimit the functions of the State from those of the individual. But that is not a consideration of any great moment, for we can always arrange matters so as to make them balance roughly when it comes to a particular case.” (L’Individu et l’État, pp. 298 and 301.) Elsewhere (in his preface to Mill’s Liberty) he gives it as his opinion that such a delimitation is impossible, and that when we are speaking of the State and the individual we are speaking of two distinct powers, such as life and law (p. vii). Law has to follow in the footsteps of life, reproving its excesses and correcting its faults (p. xiii).

Wagner, Grundlegung, p. 887.

State enterprise is to be recommended wherever possible, “not only for specific reasons which make the State ownership of certain industries highly desirable, but also for reasons of social policy, such as the advisability of helping industry to pass from a régime of individual ownership to that of communal control.” (Finanzwissenschaft und Staatssozialismus, p. 115.)

Dupont-White’s individualism is as unimpeachable as Wagner’s, which proves that an individualist need not always be a Liberal. “The author of Liberty,” says he in his preface to Mill’s Liberty, p. lxxxix, “has a keen sympathy for individualism, which I share to the full, though without any misgivings as to the future destiny of this unalterable element. Individualism is life. In that sense individualism is imperishable.”

Cf., for example, Schmoller’s open letter to von Treitschke (1874-75), translated in his Politique sociale et Économie politique (Paris, 1902). To the objection that the civil list of European monarchs is condemned in principle Schmoller replies that he is “speaking of the average man,” but that “the Hohenzollerns, when considered in this light, have no more than they deserve” (p. 92). We suspect that this argument will not carry much weight outside Germany.

Wagner recognises the arbitrary nature of his suggestions. Theoretically, he says, this method of procedure is quite legitimate, but practically it is not so simple, “for the object, in short, is to employ the principles of equity and of social utility, which are by no means difficult to formulate, and to transmute those principles into legislative enactments, so as to put a check upon the arbitrary and excessive accumulation of wealth in the hands of a few individuals, such as is the case under a régime of free competition.” (Finanzwissenschaft und Staatssozialismus, p. 719.)

P. 398.

Finanzwissenschaft und Staatssozialismus, p. 718.

The imperial message of November 17, 1881, announcing the celebrated series of Insurance Acts admits the necessity for a more marked policy of State intervention: “To lay hold of the ways and means whereby the working classes may best be helped is by no means an easy task, but it is one of the highest which a moral and Christian community can set its heart upon.” Bismarck, in his speech of May 9, 1884, said: “I unhesitatingly recognise the rights of labour, and so long as I occupy this place I shall uphold them. In so doing I base my plea, not upon socialism, but upon the Prussian Landrecht.” Section 2 of Art. XIX of the second part of the Prussian Landrecht (February 5, 1794) reads as follows: “To such as have neither the means nor the opportunity of earning their own livelihood or that of their family, work shall be given, adapted to their strength and capacity.” Despite its general tone, it did not contemplate giving relief.

Speech delivered on March 18, 1889, quoted by Brodnitz, Bismarcks Nationalökonomische Ansichten, p. 141 (Jena, 1902).

The well-known German economist Professor Lexis has unfortunately not been mentioned in this chapter, for the Göttingen professor has the misfortune of being neither a State Socialist nor a member of the Historical school. His works, dealing with various topics—money, the population theory, and general economic theory—are scattered through a number of reviews and other publications, especially the Jahrbücher für Nationalökonomie und Statistik, Schönberg’s Handbuch, and the great Handwörterbuch der Staatswissenschaften. His writings are distinguished not only by a definitely scientific method of treatment, but also by a remarkable clearness of thought. While appearing to continue the tradition of the Classical school, he takes care to reject the optimistic conclusions which are too often regarded as an inseparable element of that tradition. In 1900 Lexis gave us a general résumé of his teaching in the Allgemeine Volkswirtschaftslehre, where he treats of the economic world as concerned merely with the circulation of goods. In addition to an interesting theory of crises, upon which we cannot dwell just now, the most original part of the work consists of a theory concerning the method of distributing the social product between workers and capitalists. Lexis thinks that all material goods are produced by labour and measurable in terms of labour. The problem then is to determine where the capitalist gets his income. The capitalist’s profit is not the result of exploitation, as Marx thought, but is simply what is added to the sale price—a sum corresponding to the capitalist’s interest is added to the sum representing the workmen’s wages. Profit originates in the sphere of circulation. But how will this increased sale price benefit the capitalists, seeing that under existing conditions the workers can only buy the equivalent of the products which they have already helped to produce? We need to remember, however, that they produce for the capitalist as well as for themselves, and with the money thus obtained the working classes are enabled to buy whatever they need at market prices, i.e. at a price that includes interest, which constitutes the capitalist’s profit. Whenever the capitalists themselves purchase goods made by themselves they are reciprocally benefiting one another. Their class position is not modified by such procedure, for each entrepreneur simply draws profits in proportion to his capital. And so we avoid the most serious objection which can be raised to Marx’s theory. This explanation of the surplus value received by the capitalists is at least very ingenious. Lexis has been mostly influenced by Marx and Rodbertus, and has attempted a fusion of their more vigorous conceptions. Despite the objections that might be raised to it, the work is certainly one of the most original of recent years.

Karl Marx, generally spoken of as a Jew, was born on May 5, 1818, of Jewish parents who had been converted to Protestantism. Born of a respectable bourgeois family and wedded to the daughter of a German baron, few would have predicted for him the career of a militant socialist. Such was to be his lot, however. In 1843, at the age of twenty-five, the authorities having suppressed a newspaper which he was conducting, he fled to Paris, and thence to Brussels. Returning to Germany during the Revolution of 1848, in which he took an active part, he was again expelled, and this time took refuge in London (1849). Here he spent the rest of his life (about thirty years), leaving for France a short time before his death in 1883. He died at London on March 14 in that year.

Although Marx was one of the founders and directors of the famous association known as the “International,” which was the terror of every European Government between 1863 and 1872, he was not a mere revolutionary like his rival Bakunin, nor was he a famous tribune of the people like Lassalle. He was essentially a student, an affectionate father, like Proudhon, an indefatigable traveller, and a man of great intellectual culture.

The best known of his works, which is frequently quoted but seldom read, is Das Kapital, of which the first volume—the only one published during his lifetime—appeared in 1867. The other two volumes were issued after his death, in 1885 and 1894, through the efforts of his collaborator Engels.

This book has exercised a great influence upon nineteenth-century thought, and probably no work, with the exception of the Bible and the Pandects, has given rise to such a host of commentators and apologists. Marx’s other writings, though much less frequently quoted, are also exceedingly important, especially La Misère de la Philosophie, published in 1847 in answer to Proudhon’s Les Contradictions Économiques; Zur Kritik der politischen Oekonomie (1859); and particularly the Communist Manifesto, published in January 1848. The Manifesto is merely a pamphlet, and at first it attracted scarcely any attention, but Labriola goes so far as to say—not without some exaggeration, perhaps—that “the date of its publication marks the beginning of a new era” (Essai sur la Conception matérialiste de l’Histoire, p. 81). At any rate, it is the breviary of modern socialism. There is scarcely a single one of its phrases, each of which stings like a dart, that has not been invoked a thousand times. The Programme of the Communist Manifesto is included in Ensor’s Modern Socialism.

It is a much-debated question as to whether Karl Marx was influenced by French socialists, and if so to what extent. On the question of his indebtedness to Pecqueur and Proudhon see Bourguin’s article in La Revue d’Économie politique, 1892, on Des Rapports entre Proudhon et K. Marx. Proudhon’s work, at any rate, was known to him, for one of his books was a refutation of the doctrines of the petit bourgeois, as he called him. Certain analogies between the works of these two writers to which we shall have to call attention will help us to appreciate the extent to which Marx is indebted to Proudhon. But, as Anton Menger has pointed out, we must seek Marx’s antecedents among English socialists, in the works of writers like Thompson especially. Nor must we forget his friend and collaborator Friedrich Engels, who for the sake of his master has been content to remain in the background. Engels collaborated in the publication of the famous Manifesto in 1848, and it was he who piously collected and edited Karl Marx’s posthumous work. It is difficult to know exactly what part he played in the development of Marx’s ideas, but it is highly probable that it was considerable.

Marx calls attention to the fact that even Aristotle was puzzled by this common element which exchanged objects seemed to possess, and by the fact that exchange appeared to make them of equal value. We say that 5 beds = 1 house. “What is that equal something, that common substance, which admits of the value of the beds being expressed by a house? Such a thing, in truth, cannot exist, says Aristotle. And why not? Compared with the beds the house does represent something equal to them, in so far as it represents what is really equal, both in the beds and the house. And that is—human labour.” (Kapital, p. 29; Moore and Aveling’s translation—to which the Translator is indebted for the succeeding quotations also.)

“If we make abstraction from its use-value we make abstraction at the same time from the material elements and shapes that make the product a use-value.… Its existence as a material thing is put out of sight. Neither can it any longer be regarded as the product of the labour of the joiner, the mason, the spinner, or of any other definite kind of productive labour … there is nothing left but what is common to them all; all are reduced to one and the same sort of labour—human labour in the abstract.” (Ibid., p. 5.)

“The capitalist epoch is therefore characterized by this, that labour-power takes in the eyes of the labourer himself the form of a commodity which is his property; his labour consequently becomes wage-labour.… Given the individual, the production of labour-power consists in his reproduction of himself or his maintenance. For his maintenance he requires a given quantity of the means of subsistence. Therefore the labour-time requisite for the production of labour-power reduces itself to that necessary for the production of those means of subsistence: in other words, the value of labour-power is the value of the means of subsistence necessary for the maintenance of the labourer.” (Kapital, p. 149.)

This demonstration implies that the wages drawn by the worker is necessarily only just equal to the value of the means of his subsistence. It is the old classic law of Turgot and Ricardo over again, which Lassalle, Marx’s contemporary and rival, graphically called the “brazen law of wages.” We are simply given a more scientific demonstration of it, that is all.

The demonstration is based upon a postulate which ought first to have been proved, namely, that the quantity of labour necessary to keep the worker alive is always less than the quantity which he provides for his master. But what is there to prove that a man who works ten hours a day does not require all those ten hours to produce sufficient for his upkeep? Is there some natural law that supports this contention? Marx simply regards it as an axiom and attempts no proof. Everyone would admit it to be true in a general way—as a kind of empirical law. For were it true that man’s labour was wholly absorbed by the necessaries of life there would be no increase of numbers, no saving of capital, and civilisation, which is the product of leisure, would never have been possible.

What we have here is the Physiocratic “net product” once again, with this difference, that instead of being confined to agricultural labour it is now regarded as an attribute of labour of every kind.

See p. 184 for what is said of Sismondi and his conception of “increment value.”

It is necessary to point out that this proportion, which gives half the value to hand labour, leaving 100 per cent. surplus value, is put forward merely for the sake of illustration. Some Marxians, however, among whom is Jules Guesde, claim that this is actually the proportion in practice. Marx himself would probably have been more moderate in his estimate, because in one part of his thesis he accepts the statement of English manufacturers who declared that it was just the last hour that gave them their profits.

The development of machinery, according to the Marxian theory, tends to reduce the cost of living, and consequently the price of labour, by producing cheaper clothes, furniture, etc., and to a lesser extent cheaper food.

By parity of reasoning ought it not to reduce the price of goods produced by the wage-earner and so lower the surplus value? We must be careful, however, not to confuse a reduction in the price of each unit with a reduction in the total value of the articles produced by machinery. A yard of cloth produced by a modern loom has not the same value as a yard produced by an old hand-loom. But the value of the total quantity produced each day must be equal to the value produced by hand, provided the same number of hours have been spent upon its production.

Marx points out that there are other ways of increasing the amount of work done and of adding to the surplus value, such as the speeding up of labour. Speeding up does not increase the value of the goods, because the value depends upon the time spent upon them, and not upon the intensity of the effort put forth, but it does lower the cost of production.

“Our friend Money-bags … must buy his commodities at their value, must sell them at their value, and yet at the end of the process must withdraw more value from circulation than he threw into it at starting.… These are the conditions of the problem. Hic Rhodus! hic salta!” (Kapital, p. 145.) Cf. p. 215, where something is said about the different phases through which the idea of exploitation has passed.

Although Marx never says that the worker is actually robbed by the capitalist, but simply that the capitalist profits by circumstances which he is powerless to change, that has not prevented him treating the capitalist somewhat harshly and unjustly even, judging from his own point of view. He speaks of the capitalist as “a vampire which thrives upon the blood of others and becomes stouter and broader the more blood it gets.” He might have added that no blame could be attached to the vampire, seeing that it only obeyed the tendencies of its nature.

“By turning his money into commodities that serve as the material elements of a new product, and as factors in the labour process by incorporating living labour with their dead substance, the capitalist at the same time converts value—i.e. past, materialized, and dead labour—into capital, into value big with value, a live monster that is fruitful and multiplies.” (Ibid., p. 176.)

A potter working with his hands makes a vase in ten hours; each vase, then, costs ten hours’ labour. The same potter decides to make a wheel—a species of fixed capital. Setting up the wheel was a hundred hours’ task. If he still continues to produce only one vase per diem, which is a perfectly absurd proposition, for he would never have gone to the trouble of making the wheel if it did not mean some advantage to him, the value of each vase will now be 10 hours + 100 hours divided by x, which is the number of vases he would have produced had he not wasted his time making a wheel.

Take two industries, A and B, each employing a capital of £1000. In A the amount of fixed capital is £100 and circulating £900. In B the fixed = £900 and the circulating £100. Admitting that surplus value is at the rate of 100 per cent., as in the example chosen just now, the total surplus value in A will be £900, equal to a profit of 90 per cent. on a capital of £1000. B, on the other hand, will only make £100 profit, which is equal to 10 per cent.

This explanation only appears in the later volumes, which were published after his death.

It is true that Marx had drawn attention to the contradiction in the first volume, but no explanation was forthcoming until the later volumes appeared. Having stated that the greater quantity of surplus value is the direct result of the greater proportion of circulating capital employed, he proceeds: “This law clearly contradicts all experience based on appearance. Everyone knows that a cotton-spinner who, reckoning the percentage on the whole of his applied capital, employs much constant and little variable capital, does not, on account of this, pocket less profit or surplus value than a baker who relatively sets in motion much variable and little constant capital. For the solution of this apparent contradiction many intermediate terms are as yet wanted, as from the standpoint of elementary algebra many intermediate terms are wanted to demonstrate that 0/0 may represent an actual magnitude.… Vulgar economy, which, indeed, has really learnt nothing, here, as everywhere, sticks to appearance in opposition to the law which regulates and explains them.” (Kapital, p. 274.)

It is probable that Marx was not very well satisfied with his explanation, which may account for his reluctance to publish it during his lifetime.

In the example just given suppose A and B represent the total industry of the country: the whole national industry will be made up of £900 + £100 circulating capital and £100 + £900 fixed—£2000 altogether. If the surplus value be at the rate of 100 per cent. of the circulating capital, the total capital value will be £900 + £100 = £1000 on a capital of £2000, or a percentage of 50.

Taking the example given on p. 427, the mean of £900 + £100 = £500, and industry A, instead of 90 per cent., will draw only 50 per cent. profit, while industry B, instead of drawing only 10 per cent., will draw 50 per cent.

We have indifferently employed the terms “profit” and “surplus value” simply because the former is a much more familiar word. But we must warn the reader against thinking that the two terms are synonymous. The surplus value is all that part of the value of the produce which is over and above the expenses of labour involved in its production—that enormous slice which becomes the property of every class in society except the workers, not merely the employers, but merchants, landlords, etc.; while profit is that part of the surplus value which the employers of labour keep for their own use. The rate of profit also is something quite different from the percentage of surplus value, as we shall see later.

We must call attention once more to the different interpretations which have been given of the term “profit.” Marx and the English economists take the word to comprise the whole revenue of capital under a régime of free competition, no distinction being drawn between profit properly so called and interest. To-day we understand by profit the income drawn by the entrepreneur—as distinct from the capitalist—as the result of certain favourable circumstances, notably imperfect competition.

It would be absurd to speak of a law of equality of profit, seeing that profit, as we have defined it, is, like rent, a differential revenue.

We are fully aware of the fact that our method of approach must appear absurd from the Marxian standpoint, because it lays Marx open to the charge of starting with a preconceived idea, much after the style of economists like Bastiat, for example. Such a method, it is contended, is utterly unscientific and unworthy of a great mind like Marx’s.

However great he may have been, we cannot help thinking that, in common with most scientists, he discovered just what he was looking for, and it would be difficult to prove that Marx was not a socialist long before he began the writing of Kapital, even long before he had constructed a system at all.

Our object in stating the conclusion first of all is to help the reader to an understanding of the argument, but it is quite open to anyone who thinks differently to say that Marx had not the least idea where the analysis would lead him.

The general use of the term “collectivism” is largely due to Marx. While “collectivism” occurs almost on every page of the Manifesto, the term “communism,” on the other hand, is never once employed.

James Guillaume, in the preface to the second volume of Bakunin’s works, p. xxxvi, gives the following account of the origin of the word “collectivism”: “At the fourth General Congress of the International, held at Bâle in 1869, almost every delegate voted in favour of collective property. But there were two distinct opinions cherished by the delegates present. The German-Swiss, the English, and the German delegates were really State communists. The Spanish, Belgian, French-Swiss, and most of the French delegates were federal or anarchist communists who took the name of collectivists. Bakunin belonged to the second group, and to this group also belonged the Belgian Paepe and the French Varlin.” Bakunin always spoke of himself as a collectivist and not a communist, and in this respect he differs from Marx. The habit of thinking that all anarchists are communists is largely due to Kropotkin.

“We think we can perceive a change in the physiognomy of our dramatis personæ. He who before was the money-owner now strides in front as capitalist; the possessor of labour-power follows as his labourer. The one with an air of importance, smirking, intent on business; the other timid and holding back, like one who is bringing his own hide to market and has nothing to expect but—a hiding.” (Kapital, p. 155.)

Manifesto, § 1.

One of the chief objects of the trusts is the avoidance of over-production, but that does not mean less unemployment; on the contrary, a part of their policy consists in closing down certain establishments which appear to be unnecessary.

See the Manifesto for an eloquent statement of this.

Labriola.

Kapital, p. 647.

Manifesto, § 1.

Engels in his preface to the Manifesto admits that one of its objects was “to announce the inevitable and imminent downfall of bourgeois property.”

Nowadays, however, it is more usual to characterise the aim of collectivism as an attempt to abolish the wage-earning class—abolition of property being simply a step towards that. This is how Labriola writes in his Essai sur la Conception matérialiste (2nd ed., p. 62): “The proletariat must learn to concentrate upon one thing, namely, the abolition of the wage-earner.”

It is well to remember that such is also the aim of the Associationists, the co-operators, and the Radical Socialists. They proceed, however, from the opposite point of view, and would multiply property rather than abolish it, thinking that the latter process would merely universalise the wage-earner.

“Communism deprives no man of the power to appropriate the products of society. All that it does is to deprive him of the power to subjugate the labour of others by means of such appropriation.” (Manifesto, § 2.)

To say that Karl Marx was the leader of a great socialist school is hardly the way to describe him, for it is necessary that we should remember that the vast majority of those who consider themselves socialists are more or less his disciples. The other socialist schools, the anarchists, the Fabians, the Collinsists, and the followers of Henry George, cut a very poor figure beside his.

The bulk of his adherents is drawn either from Germany or Russia, England being the country which has done least to swell the ranks of his followers. In France the pure doctrine has been vigorously preached since 1878 by MM. Jules Guesde and Lafargue—the latter of whom is Marx’s son-in-law. But a great many French socialists, though collectivists in name, refuse their adhesion to the Marxian doctrine in all its rigidity. They have accepted three of his main principles—the socialisation of the means of production, class war, and internationalism—but reject his theory of value and his materialistic conception of history. Moreover, they show no desire to break with the French socialist tradition, which was pre-eminently idealistic. Benoît Malon, the founder of the Revue socialiste (1885), was one of the earliest representatives of French collectivism, and among his successors may be reckoned M. George Renard and Fournière.

Labriola, Essai sur la Conception matérialiste de l’Histoire, p. 24. The Saint-Simonians had already made a similar claim. It is hardly fair to class them among the Utopians, and some Marxians are quite ready to admit their claim to priority in this matter.

Georges Sorel, one of Marx’s disciples, writing in no derogatory spirit, we may be certain, expresses himself as follows: “Our experience of the Marxian theory of value convinces us of the importance which obscurity of style may lend to a doctrine”—a remark that is applicable to other writers besides Marx.

See Sorel’s article, Les Polémiques pour l’Interprétation du Marxisme, in the Revue internationale de Sociologie, 1900, p. 248. There is no such thing as a theory of value—in the accepted sense of the term in Marx. What we have is a theory of economic equilibrium which would only be true of a very rudimentary kind of society. It is assumed, for example, that all industries are equally easy or difficult, that all the workers are of one type, that ten men working for one hour will produce the same amount of wealth no matter what task they are engaged upon. It is this equality that enables comparison to be made between one commodity and another, and this constitutes their value. We are simply treated to an abstraction which shows that with the exercise of a little ingenuity it is at least possible to reconcile the theory of time-value and the theory of market price.

Conception matérialiste, p. 91. Sorel says: “Marxism is really much more akin to the Manchester doctrine than to the Utopian. We must never forget this.” (La Décomposition du Marxisme, p. 44.)

“The bourgeoisie, historically, has played a most revolutionary part.… The bourgeoisie cannot exist without constantly revolutionising the instruments of production, and thereby the relations of production, and with them the whole relations of society.… All fixed, fast-frozen relations, with their train of ancient and venerable prejudices and opinions, are swept away, all new-formed ones become antiquated before they can ossify, all that is solid melts into air, all that is holy is profaned.” (Manifesto, § 1.)

Besides, the Marxians themselves have tried to prove that capital is actively undermining its own existence, which is surely the ne plus ultra of the revolutionary temperament.

“The result is that capital has managed to solve problems which the Utopians tackled in vain. It has also given rise to conditions which permit of an entrance into a new form of society. Thus socialism will not need to invent new machinery or to get people accustomed to them,” etc. (Sorel, loc. cit., p. 41.)

“The economists regard the feudal institutions as artificial, the bourgeois as natural. The existing economic ties, in their opinion, are elemental laws that must always bind society.… They have had some history, that is all we can really say.” (Marx, Misère de la Philosophie, pp. 167-168.)

Manifesto, § 2.

Whenever they change their method of production men also change their whole social outlook. “The hand-mill gave us the servile State; the steam-mill is the parent of the industrial, capitalist State.” (Misère de la Philosophie, 2nd ed., p. 156.) This oft-repeated phrase contains a picturesque antithesis rather than a scientific formula of historical materialism. In his preface to his Kritik der politischen Oekonomie Marx expresses himself with much more moderation. The following is the most important passage of that celebrated page (p. 5):

“In the course of their efforts at production men enter into certain definite and necessary relations which may be wholly independent of their own individual preferences—such industrial ties being, of course, correlative to the state of their productive forces. Taken together, all these links constitute the economic structure of society. In other words, it supplies a basis upon which the legal and political superstructure is raised, and corresponding to it are certain social forms which depend upon the public conscience. The method of producing commodities, speaking generally, fixes the social, political, and intellectual processus of life. A man’s conscience has less to do with determining his manner of life than has his manner of life with determining the state of his conscience.”

The word “fixes,” even when qualified by “speaking generally,” seems a little pronounced, and Marxism has substituted the term “explained,” which is somewhat nearer the mark. Labriola says that “it merely represents an attempt to explain historical facts in the light of the economic substructure.” (Conception matérialiste, p. 120.)

This materialistic conception is developed in a very paradoxical fashion in Loria’s La Constitution sociale. He shows how all history and every war, whether of Guelph or of Ghibelline, the Reformation and the French Revolution, and even the death of Christ upon Calvary, rest upon an economic basis. In Loria’s opinion, however, this basal fact is not industrialism, but the various types of land systems. See the chapter on Rent.

It would not be correct to regard Marxism as a mere expression of fatalism or out-and-out determinism. The Marxian pretends to be, and as a matter of fact he really is, a great believer in will-power. Once the workers see where their interests really lie he would have them move towards that goal with irresistible strength. It is not always even necessary to define the end quite clearly before beginning to move. “Everything that has happened in history has, of course, been the work of man, but only very rarely has it been the result of deliberate choice and well-considered planning on his part.” (Labriola, Conception matérialiste, p. 133.) Elsewhere: “The successive creation of different social environments means the development of man himself.” (Ibid., pp. 131-132.)

It would be beyond the scope of this work to enter into a metaphysical discussion of these theories, however much one would like to.

See the works of MM. Jaurès, Études socialistes; George Renard, Le Régime socialiste; Fournière, L’Individu, l’Association, et l’État.

Labriola, op. cit. Vandervelde (L’Idéalisme Marxiste, in La Revue socialiste, February 1904) says that “upon final analysis it will be found that Marx’s whole argument rests upon a moral basis, which is that justice requires that every man should get all that he produces.”

M. Landry, in a book of lectures delivered by different authors entitled Études sur la Philosophie morale au XIXe Siècle (p. 164), is of an entirely different opinion. He thinks that Marx’s moral basis is simply potentiality. In other words, everything that has been created in the ordinary course of economic development is moral, everything that has been destroyed is immoral.

Hence the alliance of the Marxians with what appears to be a directly opposite philosophy—that of William James and Bergson (see Guy Grand, La Philosophie syndicaliste).

Manifesto. It is impossible to do away with the intellectuals altogether, but they may be reduced to the rank of mere wage-earners. “The Marxians always regarded revolution as the special privilege of the producers, by whom, of course, they understood the manual workers, who, accustomed as they are to nothing but the factory régime, would force the intellectuals also to supply some of the more ordinary wants of life.” (Sorel, Décomposition du Marxisme, p. 51.)

Manifesto, § 2. It is necessary that we should be reminded of the fact that the Saint-Simonians had already emphasised the antagonism by speaking, not of rich and poor, but of idlers and workers. The differentiation, that is to say, was economic. The Marxian distinction is quite different, for the Saint-Simonians included within the category workers, bankers, and employers, for example, who are excluded by the Marxians. In some cases the Saint-Simonians thought they had even better claims to inclusion than the ordinary worker.

The first of these means, namely, the acquiring of public works by the State, is spoken of as unified socialism in France, whereas the second, which relies upon direct action without the assistance of any political organisation, is known as syndicalism and is represented by the Confédération générale du Travail (see p. 480).

Marx, Misère de la Philosophie. “What does the word ‘revolt’ imply? Simply disobedience to law. But what are these laws that govern our lives? They are just the products of bourgeois society and of the institutions which they are supposed to defend. Revolution will simply mean replacing these laws by others which will have an entirely different kind of justification.”

“It is the worst side of things that begets movement and makes history by begetting strife.” (Ibid., 2nd ed., p. 173.)

Preface to Kapital, p. xix.

For the evolution of Marxism see Sombart’s lively volume Sozialismus und soziale Bewegung im 19 Jahrhundert (6th ed., 1908), and also Georges Sorel, La Décomposition du Marxisme (1908).

Labriola, Socialisme et Philosophie, p. 29. Others declare more unmistakably still that “these obscure formulæ [the writer is thinking of surplus labour] lead to equivocation and must be banished from the science altogether.” (Sorel, Revue internationale de Sociologie, 1900, p. 270.)

M. Sorel says of the revolutionary movement that everything connected with it is very improbable. (Décomposition du Marxisme.)

The Italian syndicalist Arthur Labriola (Revue socialiste, 1899, vol. i, p. 674) writes as follows: “While we Marxians are trying to repatch the master’s cloak political economy is making some headway every day. If we compare Marx’s Kapital with Marshall’s Principles—chapter by chapter, that is to say—we shall find that problems which required a few hundred pages in the Kapital are solved in a few lines by Marshall.” B. Croce (Materialismo storico ed Economia marxistica, 1900, p. 105) writes thus: “I am strongly in favour of economic construction along Hedonistic lines. But that does not satisfy the natural desire for a sociological treatment of profits, and such treatment is impossible unless we make use of the comparative considerations suggested by Marx.” Lastly, Sorel, in Saggi di Critica del Marxismo (1903, p. 13) says: “It is necessary to give up the attempt to transform socialism into a science.”

Especially in that passage to which Bernstein calls attention: “According to the law of value not merely must one devote the socially necessary amount of time to the production of each commodity, but each group of commodities must have such extra effort spent upon it as the nature of the commodity or the character of the demand requires. The first condition of value is utility or the satisfaction of some social need—that is, value in use raised to such a degree of potentiality as shall determine the proportion of total social labour to each of the various kinds of production.” (Kapital, vol. iii.)

Bernstein adds: “This admission makes it impossible to treat the themes of Gossen, of Jevons, and of Böhm-Bawerk as so many insignificant irrelevancies.” (Die Voraussetzungen des Sozialismus.)

“The surplus-value theory may be true or it may be false, but that will make no difference to the existence of surplus labour. Surplus labour is a fact of experience, demonstrable by observation, and requires no deductive proof.” (Bernstein, loc. cit., p. 42.) That Marx did not treat it with quite the same indifference is evident from the fact that the whole theory is developed, not incidentally in the course of the work, but at the very opening of the book.

In the book already quoted, which was published in 1899.

Sorel, Les Polémiques pour l’Interprétation du Marxisme, in the Revue internationale de Sociologie, 1900.

Sorel, Décomposition du Marxisme, p. 33.

Socialisme et Social-démocratie, p. 234. We have recently been told that syndicalism is just a literal application of Bergson’s philosophy.

This point of view is very neatly expressed in an article of M. Berth’s (Mouvement socialiste, May 1908, p. 393): “From a purely negative or critical point of view we agree with Bernstein rather than the orthodox Kautsky. But what does Bernstein propose to substitute for the revolutionary ideal—impracticable as it was—of the German Social Democratic party? The alternative offered is a simple democratic, reformist evolution, a political or economic development which would just be a pale imitation of the bourgeois Liberal régime, which it is hoped would result in the emancipation of the workers by getting rid of bourgeois Liberalism altogether. The complete democratisation of politics and economics would, it is hoped, effect the necessary improvement. On this point we syndicalists must definitely part company with Bernstein and his confrères, for what we want is not a mere evolution, but a revolutionary creation of new social forms.”

“An organisation of producers who will be able to manage their own affairs without having recourse to the superior knowledge which the typical bourgeois in supposed to possess.” (Sorel, Décomposition du Marxisme, pp. 60-61.)

“Revolutionary syndicalism is the great educative force which contemporary society has at its disposal to prepare it for the tasks which await it.” (Sorel, Réflexions sur la Violence, p. 244; 1909.)

“In the general ruin of institutions something new and powerful will remain intact. This will be what is generally known as the proletarian soul, which it is hoped will survive the general reassessment of moral values, but that will depend on the energy displayed by the workers in resisting the corruption of the bourgeoisie and in meeting their advances with the most unmistakable hostility.” (Ibid., p. 253.)

It is altogether a different point of view from that of the consumer, the shareholder, or the “literary idler,” who are only interested in the success of buyers’ social leagues, or in consumers’ societies. Cf. p. 342.

This incessant struggle is what Sorel has named violence, which he thinks is peculiarly healthy. “I have shown,” says he, “that proletarian violence has an entirely different significance from that usually attributed to it by politicians and amateur students of society.” It is incorrect, however, to say that he is in favour of sabotage. “Sabotage,” says Sorel, “belongs to the old régime, but does nothing to set the worker in the way of emancipation.” (Mouvement socialiste, 1905, November 1 and 15.)

One cannot fail to see the antagonism which exists in France between the Socialistes Unifiés (which is largely recruited from the old Marxian party) and the syndicalists, who condemn both universal suffrage and parliamentary action.

“One no longer thinks of drawing up a scheme which shall determine the way in which people in the future are to seek their own well-being. The problem now is how to complete the revolutionary education of the proletarian.” (Sorel, Décomposition du Marxisme, introduction, p. 37.)

This group is represented by the review called Le Mouvement socialiste, which is controlled by M. Lagardelle. Sorel has withdrawn from the group and is now leading a campaign in favour of Catholic nationalism.

The recent literature of syndicalism is very extensive. We have already mentioned M. Guy Grand’s La Philosophie Syndicaliste.

Réflexions sur la Violence, p. xxxv. We must note, however, that M. Sorel protests against any confusion being made between the myth as he understands it and Utopian socialism. The myth is obviously superior in the fact that it cannot be refuted, seeing that it is merely the expression of a conviction. See pp. xxv and 218 of the same work.

We need only recall the doctrine of usury and the legislation on the question—all of it the outcome of Canonist teaching.

A Catholic professor—long since forgotten—of the name of de Coux wrote as follows in a book entitled Essai d’Economie politique, published in 1832: “The practical application of Catholicism would result in the finest system of social economy that the world has ever seen.”

“Catholicism alone has the necessary cohesion and power to withstand socialism, which has been erected upon the ruins of the Liberal system.” (Comte de Mun, La Question sociale au XIXe Siècle, 1900.)

“There is no need to think of the Church as a kind of gendarme in cassock flinging itself against the people in the interest of capital. Rather it should be understood that it is working in the interests and solely for the defence of the weak.” (Comte de Mun, Discours, April 1893.)

The Social Christians somewhere make the remark that even if the orthodox account of creation is destined to disappear before the onslaughts of the evolutionary theory and Adam makes way for the gorilla, the problem would merely be intensified, for it would still be necessary to get rid of the “old man.” “We live,” says Brunetière, “in the strength of the victories won over the more primitive instincts of our nature” (Revue des Deux Mondes, May 1, 1895).

Kidd in his Social Evolution, a work which attracted great attention when it was first published in 1894, attempts to apply the Darwinian theory to Christianity. He accepts the Darwinian hypothesis that the struggle for existence and natural selection constitute the mainsprings of progress. But the struggle may demand, or the selection involve, the sacrifice of individual to collective interest, and the only force which can inspire such sacrifice is religion.

It was no Christian Socialist, but Auguste Comte, the founder of Positivism, who wrote: “The original equality of men is not a doctrine founded simply upon the observation of social facts. It was only clearly affirmed for the first time by Christianity.” (Traité de Politique, vol. i, p. 407.)

Frédéric Le Play (1806-82) was a mining engineer, and was educated at the École Polytechnique. He subsequently became a professor at the École des Mines and a Counseiller d’État. In 1855 he published a collection of monographs dealing with working-class families under the title of Les Ouvriers européens, in one volume (the second edition, which appeared in 1877, consisted of six volumes). In 1864 he published an exposition of his social creed in La Réforme sociale, a book that Montalembert declared to be “the most original, the most courageous, the most useful, and altogether the most powerful book of the century.” It hardly deserves such extravagant praise, perhaps, but it is true that many of its more pessimistic prophecies concerning the future of France have been very curiously verified.

In 1856 Le Play founded La Société d’Économie sociale, which since 1881 has been responsible for the publication of La Réforme sociale. He organised the Universal Exhibition in 1867, and was one of the first to arrange exhibitions of social work. For a résumé of his life and work see Frédéric Le Play d’après lui-même, by Auburtin (Paris, 1906).

Programme des Unions de la Paix sociale, chap. 1.

“The gravest and most dangerous error of all, and one that has been the parent of all our revolutions, is the false principle which the innovators of 1789 would put into practice and which affirms the original perfection of mankind. It also encourages the belief that a society composed of ‘natural’ men would enjoy peace and happiness without any effort at all, and that these desiderata are just the spontaneous outcome of every free society.”

“It is the great misfortune of France that the family should be immersed in the commune, the commune in the department, the department in the State.” (La Réforme sociale, vol. iii, Book VII.)

“It [the patriarchal régime] in all matters relating to economic action or to social life shows greater attachment to the past than concern for the future. Obedience is the keynote rather than initiation. The family group tends to arrest the enterprise which would characterise the action of the more independent members of the family in a somewhat freer atmosphere.” (La Réforme sociale, Book III.)

“In short, I have never met with a social organisation which to the same extent vitiates the laws both of nature and morality.”

Le Play, who had some influence over Napoleon III, tried to get him to consent to some such modification of the Civil Code. But the Emperor, though favourably inclined, and despot as he was, dared not alienate public sympathy in the matter. And really fathers seldom exercise the full authority which the law gives them even now. The evil, then, if it is an evil, is deeper than Le Play imagined, and seems to be moral rather than legal.

“Human societies should aim not so much at the creation of wealth as such, but rather at increasing the well-being of mankind. Well-being includes daily bread, but it does not exclude social peace.” (Claudio Jannet in a lecture on Les Quatre Écoles d’Économie sociale.)

We must remember that these were the orthodox views then. Villermé, writing in 1840 in his celebrated Tableau de l’État moral et physique des Ouvriers, thought it was the employers really who could best improve the circumstances and character of the workers.

We get some idea of the importance which he attributed to the permanence of engagements when we realise that he contemplated the abolition of slavery with a measure of regret. (La Réforme sociale.)

Principles, Book IV, chap. 7.

“Among the panaceas advocated in our time none has been more criticised than ‘association.’ From a practical point of view these societies seem to present none of the advantages ordinarily associated either with complete independence or with a well-managed business concern.”

“I have frequently posted as much as 1000 kilometres in order to consult some eminent landowner living on the confines of Europe.” (Letter to M. de Ribbes, October 3, 1867.)

“This method is based upon a careful observation of each fact and its past history. Nothing is left to the imagination, the presupposition, or the prejudices of the observer. It is essentially scientific and exact.” (La Réforme en Europe.)

These monographs appeared first of all, as we have seen, in his great work on the European workmen in 1855. The work has been carried on by his disciples and the results incorporated in the Ouvriers des Deux Mondes, which already numbers above a hundred volumes. They have also employed the method in writing monographs on industries and communes, etc.

The method requires supplementing by reference to statistics of population and wages, which can only be supplied, of course, by Governments.

“The comparison of receipts and expenditure should help to discover any oversight, just as the weight of a chemical substance both before and after an experiment helps to determine the nature of the chemical reaction.” (Bureau, L’Œuvre d’Henri de Tourville.)

With a good deal of candour he admits offering a reward to anyone who could show him a single happy family except under conditions of this kind. “But,” he adds, “all my efforts proved fruitless.” (Les Ouvriers européens, vol. iv, introduction.)

When Le Play teaches us that the essential condition of society implies

A double foundation—the Decalogue and paternal authority, A twofold link—religion and sovereignty, and Three kinds of material—the community, private property, and employers,

we cannot help thinking that the so-called method of observation has a very pronounced trait of dogmatism in its constitution.

“The principal object to aim at here is the limitation of the ecclesiastical personnel with a view to keeping them all fully employed,” as he adds later on. He had the same antipathy to religious congregations as he had to other forms of association.

“No social phenomenon can ever be explained if it is taken out of its own setting. All social science is based upon this law.” (Demolins, La Classification sociale.)

The similarity noted here has given rise to emphatic protests on the part of certain members of this school. There is no need to take offence at the epithet, however, provided we are careful to distinguish it from philosophic materialism and recognise that it does not necessarily exclude idealism.

This branch of the school, of which Tourville and Demolins were the earliest leaders, has given us several excellent books. Demolins’ own work on the superiority of the Anglo-Saxons caused quite a stir. Then there is M. de Rousiers’ book on producers’ industrial unions, and P. du Maroussem’s. We would also specially mention Paul Bureau’s Le Contrat de Travail (1902), La Participation aux Bénéfices, and La Crise morale des Temps nouveaux. Bureau’s work is characterised by precise impartial analysis of facts combined with great moral fervour.

Huet was a professor at Ghent, which accounts for his being considered a Belgian, just as Walras is generally considered a Swiss.

He was the first to emphasise the importance of borrowers combining. Only in this way can the poor hope to offer some real security. “How is it that the worker cannot borrow? Simply because he has no security to offer except just his work in the future. That future guarantee can only become real and certain by means of combination. Union eliminates the uncertainty which hitherto made the security worthless and the loan impossible.” (La Question du Travail, p. 25.)

“The problem is to outline a state of society where working men will work only for themselves and not for others; where none will reap but has already sown, and where each will enjoy the fruits of his own labour.” (Ibid.)

“Christianity and revolution as far as humanity is concerned have identical aims, and the one is the natural outcome of the other.” (Buchez, Traité de la Politique, vol. ii, p. 504.)

Moufang’s principal writings were published in 1864 under the title of Le Question ouvrière et le Christianisme. He could never make up his mind as between the corporative and the co-operative ideal, however. The latter was very much to the front just then, not only in France, but also with the English Christian Socialists and with the German socialist Lassalle. This was before the co-operative movement was eclipsed by trade unionism.

Hitze, however, shows none of his master’s hesitation, but emphatically declares that “the solution of the social question is essentially and exclusively bound up with a reorganisation of trades and professions. We must have the mediæval régime of corporations re-established—a régime which offers a better solution of the social problem than any which existed either before or after. Of course times have changed, and certain features of the mediæval régime would need modification. But some such corporative régime conceived in a more democratic spirit must form the economic basis.” (Capital and Labour.)

“We must direct all our private initiative and concentrate public attention upon this one reform—the corporative reorganisation of society.” (Programme de l’Œuvre des Cercles ouvriers, April 1894.)

Co-operative association is dismissed altogether. The Social Catholics have especially little sympathy with the small retail co-operative stores, because they threaten the existence of the small merchant and the small artisan—types of individuals that are dear to the heart of the Catholics. On the other hand, it shows itself very favourably inclined towards co-operative credit, because of the possibility of assisting the classes already referred to—the shopkeeper and the small merchant.

In 1894 the Congress of Catholic Circles which met at Rheims declared that, “without minimising the difficulties which stand in the way of extending the mixed syndicats, the formation of such syndicats must be our chief aim.” In 1904 Father Rutten, one of the leaders of the Belgian Catholic Syndical movement, in a report on the syndicalist movement writes as follows: “We do not despair of the mixed syndicat, which in theory we certainly think is nearest perfection. But we must not blind ourselves to facts, and whether we will or no we have to admit that at the present moment the mixed syndicat in ninety industries out of every hundred seems quite Utopian.” (Quoted by Dechesne, Syndicats Ouvriers belges, p. 76; 1906.)

Such is the programme as outlined especially in Austria, which is one of the countries where Social Catholicism seems fairly powerful. As a matter of fact, the corporative régime has never quite disappeared there, and for some years now attempts have been made to revive it in the smaller crafts. The new corporation would take the form of a centralised organisation, whose regulations would be obligatory upon all the members of the craft.

“The commune has always been organised. Is there any reason why the trade should not be? In both cases special relations are established, special needs arise, there are frequent conflicts and occasional harmony between the different interests. But all of them are nevertheless intimately bound together, and the links connecting them must be co-ordinated on some regular plan if every one is to be safe, and free to follow his own bent.” (Henri Lorin, Principes de l’Organisation professionnelle, in L’Association catholique, July 15, 1892.)

To this it might be replied that the majority generally makes the law for the commune, but that in the case of a free corporation it is often the minority that rules. To which it might be retorted that the so-called majority is often not better than a minority of the electors, and a very small minority indeed of the whole inhabitants—who of course include women, who generally have no votes. Moreover, as soon as the rules of the syndicat became really obligatory the majority if not the whole of the workers in the trade would be found within the union.

Father Antoine writes as follows in his Cours d’Économie sociale, p. 154; “The social question can never be completely solved until we have a complete revival of Christian morals.” Still more categorical is the declaration of M. Léon Harmel in L’Association catholique for December 1889: “We can see only one remedy, and that is that the authority of the Pope should be recognised all the world over, and his ruling accepted by all people.”

The annual study reunions which go by the name of les Semaines sociales, and which afford one of the best manifestations of the kind of activities which Social Christianity gives rise to everywhere, are not so exclusive. Economic questions of all kinds are discussed, but the programme is not strictly Catholic at all, and the basis is wide enough to include everyone who is a professed Christian.

“The corporations which would be set up under the ægis of religion would aim at making all their members contented with their lot, patient in toil and disposed to lead a tranquil, happy life” (sua sorte contentos, operumque patientes et ad quietam ac tranquillam vitam agendam inducant). (Encyclical of Leo XII, December 28, 1878, called the Quod Apostolici. See History of Corporations, by M. Martin Saint-Leon.)

“The corporation is simply the model of the Church. Just as for the Church all the faithful are equal in the sight of God, so here. But equality ends there. For the rest it is a hierarchy.” (Ségur-Lamoignon, L’Association catholique, July 13, 1894.)

The Ligue sociale d’Acheteurs, founded in Paris in 1900, is of Social Catholic inspiration.

“More important even than free will, whether of masters or of men, is that higher and more ancient law of natural justice which demands that wages should always be sufficient to enable the worker to lead a sober and honest life. But lest the public authority in this case, as in some other analogous cases, such as the question of the length of the working day, should unwisely intervene, and in view of the great variety of circumstances, it is better that the solution should be left in the hands of the corporations or the unions.” (Encyclical, Rerum Novarum, 1891.)

The Social Catholics wherever found are usually Protectionists, the reason being that they think their “corporative régime could never be kept going without some protection against foreign competition,” and also because most of their adherents are drawn from the ranks of the agricultural unions. (Programme de l’Œuvre des Cercles ouvriers, Art. 7.)

“The so-called productivity of capital, which constitutes the greatest iniquity of profit-making society, and which is from an economical point of view the final cause of social suffering, is nothing better than a word invented to hide the real fact, namely, the appropriation of the fruits of labour by those who possess the instruments of labour.” (Loesewitz, Législation du Travail, in L’Association catholique, 1886.)

Extract from a report of a meeting of the Sillon, November 1907:

“MARC SANGNIER. The social transformation which we desire to see, comrades, will aim, not at absorbing the individual, but rather at developing him. We want the factories, the mines, and the industries in the possession, not of the State, but of groups of workers.

“AN INTERRUPTER. That is socialism.

“MARC SANGNIER. You can call it socialism if you like. It makes no difference to me. But it is not the socialism of the socialists, of the centralising socialists. We don’t want to set the proletarians free from the control of the masters to put them under the immediate control of one great master, the State; we want the proletarians themselves, acting collectively, to become their own masters.”

Milcent, in L’Association catholique, 1897, vol. ii, p. 58. There is a Catholic Social school which is Liberal and individualist in its tendencies, and which is represented by such writers as the late Charles Périn, professor at Louvain, author of La Richesse and La Socialisme chrétien, and by M. Rambaud, author of Cours d’Histoire des Doctrines. Nor ought we to forget their connection with the development of agricultural credit banks of the Raiffeisen type which have been established in Germany, France, and Italy—although their inception in Italy is largely the work of a Jew named Wollemborg.

Such, for example, is the opinion of Nitti in his book on Catholic Socialism, and because of that rather unsatisfactory reason he only devotes a few pages to it.

There are several historical considerations that may with advantage be kept in mind in dealing with this subject, such as, for example, the notable fact that while the Catholic Church has always been opposed to usury, it was Calvin and Calvinists like Saumaise and the ancient jurist Dumoulin who first justified the practice of taking interest.

The Christian Socialist was preceded by another paper called Politics for the People, founded in 1848, which may be taken as the birthday of the movement. In any case the date is significant in view of the contemporary revolution in France.

It is only just to note that Channing, the American pastor, who died in 1842, was one of the pioneers. His writings on social questions are still read.

Those who wish for more information either on the history or on the other aspects of Social Christianity should consult the New Encyclopædia of Social Reform, published in America.

The following year Charles Kingsley preached a sermon in London which caused such a sensation that the vicar of the parish felt bound to protest against its tone even during the service. In the course of the sermon Kingsley remarked that any social system which enabled capital to become the possession of a few, which robbed the masses of the land which they and their ancestors had cultivated from time immemorial, and reduced them to the condition of serfs working for daily wage or for charity, was contrary to the spirit of the Kingdom of God, as revealed in Christ. The sermon was afterwards published under the title of The Church’s Message to the Workers.

Maurice declared that everyone who is a Christian must also be a socialist. But the significance of the word “socialist” has changed somewhat since then. According to Maurice, “The motto of the socialist is co-operation; of the anti-socialist, competition.”

“There is no doubt about association being the form which industrial government will take in future, and I have no doubt as to its success, but a preliminary training extending possibly over a couple of generations is necessary before the worker has the requisite ability or moral strength to make use of it.” (Kingsley in 1856.)

And this is how State intervention appealed to him: “The devil is always ready to urge us to change law and government, heaven and earth even, but takes good care never to suggest that we might change ourselves.”

The official organ of the Christian Social Union, which is definitely connected with the Church of England, is the Economic Review, published at Oxford—not to be confused with the Economic Journal, which is published in London by the Royal Economic Society.

E. Gounelle, Le Mouvement des Fraternités.

Mr. Josiah Strong, director of the Institute of Social Service at New York, is the publisher of a review called The Gospel of the Kingdom, which has for its programme “the study of economic facts in the light of the Gospel,” and in which he maintains that “if the world is ever to be Christianised industry must be Christianised first of all.” On the question of unemployment, for example, he refers us to Matthew xx, 6, and on the still more vexed question of the closed or open shop we are referred to 1 Corinthians xii, 16, 26. We must also mention Rauschenbusch’s eloquent book, Christianity and the Social Crisis.

The well-known economist Professor Richard T. Ely is another of the leaders of this movement. Nor must we omit Herron, who caused some sensation by declaring that it is necessary to go well beyond collectivism, which he thinks altogether too conservative and reactionary. He adds that Karl Marx is a crusted Tory compared with Jesus, “for any one who accepts private property in any form whatsoever, even in matters of consumption, must reject Christ.”

At a conference held at Geneva in 1891. At this conference M. Stöcker defined his programme as follows: “We do not believe that we can do anything without the State, but we also believe in the spirit of association. We have told the masters that their duty is to make some sacrifice for the sake of solving the question in a way that will be agreeable to their men. We have also told the workers that they must work hard, economically, and conscientiously, even if they never obtain a better situation.”

He was formally repudiated by the Emperor in 1896 in a telegram addressed to a powerful employer, Baron Stumm.

Goehre is the author of a work entitled Three Months in a Workshop. The book has been a great success and has produced a crop of imitations.

Kutter’s book Sie Mussen caused quite a flutter. The author attempts to show that the socialists are to-day the real disciples of Christ, but have been disowned by the Church.

For the past twenty years M. de Boyve, the leader of the co-operative movement in France, has been the president, which confirms us in the suspicion that the two schools had a common parentage, both really springing from the École de Nîmes. Periodical congresses are held in connection with it, and it also has a review called Le Christianisme Social.

Pastor Tomy Fallot, the initiator of this movement, indicates the path that should be followed thus: “The essential thing is to get a rough outline of that perfect type which is known as co-operation. Just now it seems the only thing that contains a prophecy of better times.” (L’Action Bonne.) Compare this with Maurice’s formula.

“We are Social Christians because we are solidarists. In our search for solidarity we have found the Messiah and His Kingdom. Solidarity is the layman’s term, the Kingdom of God the theologian’s, but the two are the same.” (Gounelle, L’Avant-Garde,1907.)

This group found its earliest recruits among the young pastors who ministered in the great industrial towns (M. Wilfred Monod at Rouen and M. Gounelle at Roubaix, for example), and thus found itself in close touch with poverty, suffering, and discontent. But several laymen have also joined it, among them being a son of the economist who was regarded as the doyen of the Liberal school—Frédéric Passy.

The Christian Socialist group publishes a journal of its own, entitled L’Espoir du Monde.

“‘For I could wish that myself were accursed from Christ for my brethren,’ writes St. Paul; in other words, ‘I do not want to be saved alone, and I shall be completely saved only when humanity as a whole has been saved.’ And so the evangelical doctrine would subordinate the full realisation of my personal salvation to the salvation of others.” (W. Monod, La Notion apostolique du Salut.)

Or, as he epitomises it elsewhere, “It is useless to speak of giving ourselves until we are certain that we own ourselves.”

Ruskin himself did not think that his doctrines were only of slight importance. The introduction to Munera Pulveris (1862) contains the following words: “The following pages contain, I believe, the first accurate analysis of the laws of Political Economy which has been published in England.”

See also the preface to Unto This Last, which has for its sub-title “Four Essays on the First Principles of Political Economy.”

There are a great number of novels dealing with social questions. For the English novels bearing on this topic see M. Cazamian, Le Roman social.

So much was this the case with Ruskin that Mme. Brunhes has published a book called Ruskin et la Bible, and Tolstoy on his side has an edition of the Gospels to his credit which is said to be much nearer the original than the ordinary version of the canon.

See Fors Clavigera, passim. Tolstoy writes in a similar strain. Money is just a conventional sign giving the right or the possibility of claiming the service of others. But although money is all-powerful in the matter of exploiting the worker it is quite useless when it comes to a question of furthering his well-being. There is a curious development of this thesis in Tolstoy’s What is to be Done?

“All this has come of the spreading of that thrice accursed, thrice impious doctrine of the modern economist, that ‘To do the best for yourself, is finally to do the best for others.’ Friends, our great Master said not so.” (Ruskin, Crown of Wild Olive, Lecture II).

Especially in that celebrated passage: “It [Political Economy] sounds with Philosophico-Politice-Economic plummet the deep dark sea of troubles, and having taught us rightly what an infinite sea of troubles it is sums up with the practical inference and use of consolation that nothing whatever can be done in it by man, who has simply to sit still and look wistfully to ‘time and general laws,’ and thereupon without so much as recommending suicide coldly takes its leave of us.” (Chartism.)

“If thou ask again … What is to be done? allow me to reply: By thee, for the present, almost nothing.… Thou shalt descend into thy inner man, and see if there be any traces of a soul there; till then there can be nothing done!… Then shall we discern, not one thing, but, in clearer or dimmer sequence, a whole endless host of things that can be done. Do the first of these.” (Past and Present. Book I. chap. 4.)

See particularly Fors Clavigera.

“Why, the four-footed worker has already got all that this two-handed one is clamouring for, and you say it is impossible.” (Carlyle, Past and Present, chap. 3; and see also Chartism, chap. 4.)

This was the ideal which he had in mind in founding the Guild of St. George. See an article by Professor Marshall, The Social Possibilities of Economic Chivalry, in the Economic Journal, March 1907. There is no reference to Ruskin in it, however.

When the Christian Socialists in 1854 organised a course of lectures for working men in London Ruskin volunteered to give a few addresses, not on social economics or on history, but on drawing.

One naturally thinks first of such industrial villages as Bournville and Port Sunlight. But in 1903 an entirely new city of this kind was begun at Letchworth, Herts. The idea has recently undergone a considerable development by a society that owes its inspiration to Ruskin.

Story of a Horse, in his First Stories (1861).

See a book entitled Labour, which consists of the meditations of a muzhik called Bondareff upon those words of Genesis, “In the sweat of thy face shalt thou eat bread,” followed by a long commentary by Tolstoy.

“Pleasure and pain are undoubtedly the ultimate objects of the calculus of economics. To satisfy our wants to the utmost with the least effort, to procure the greatest amount of what is desirable at the expense of the least that is undesirable, in other words, to maximise pleasure, is the problem of economics.” (Stanley Jevons, Theory of Political Economy, p. 40.)

“The errors of the Classical school are, so to speak, the ordinary diseases of the childhood of every science.” (Böhm-Bawerk, The Austrian Economists, in Annals of the American Academy of Political and Social Science, January 1891.)

Recherches sur les Principes mathématiques de la Théorie des Richesses.

Let P = value of product and x, y, z represent wages, interest, and rent respectively, then x + y + z = P, which is insoluble.

Nor does it seem much more hopeful when written out thus:

x = P - (y + z) y = P - (x + z) z = P - (x + y)

“The theory of economic equilibrium is quite distinct from the theory of final utility, although the public are apt to confuse them and to think that they are both the same.” (Vilfredo Pareto, L’Economie pure, 1902.)

The name varies a little with different authors and in different countries. “The final degree of utility” is the term used by Jevons, “marginal utility” by the Americans, “the intensity of the last satisfied want” by Walras. Walras also speaks of it as “scarcity,” using the term in a purely subjective fashion to denote insufficiency for present need. This very plethora of terms suggests a certain haziness of conception. The term “marginal” seems clearer than the term “final,” although in some cases it may be impossible to oust the latter.

It appears that the first suggestion of final utility in the sense in which it is employed by the Psychological school is due to a French engineer of the name of Dupuit. He threw out the suggestion in two memoirs entitled La Mesure de l’Utilité des Travaux publics (1844) and L’Utilité des Voies de Communication (1849), both of which were published in the Annales des Ponts et Chaussées, although their real importance was not realised until a long time afterwards. Gossen also, whose book is referred to on p. 529, was one of the earliest to discover it.

In its present form it was first expounded by Stanley Jevons in his Theory of Political Economy, and by Karl Menger in his Grundsätze der Volkswirtschaftlehre (1871). Walras’s conception of scarcity, which is just a parallel idea, was made public about the same time (1874). Finally Clark, the American economist, in his Philosophy of Value, which is of a somewhat later date (1881), seems to have arrived at a similar conclusion by an entirely different method—a remarkable example of simultaneous discoveries, which are by no means rare in the history of thought.

Despite its cosmopolitan origin, the school is generally spoken of as the Austrian school, because its most eminent representatives have for the most part been Austrians. Among these we may mention Karl Menger, already referred to, Professor Sax (Das Wesen und die Aufgabe der Nationalökonomie, 1884), Wieser (Der natürliche Werth, 1889), and of course Böhm-Bawerk (author of Grundzüge der Theorie des wirtschaftlichen Güterwerths, in Jahrbücher für Nationalökonomie, 1886, and the well-known book on capital and interest).

Lately, however, the doctrine seems to have changed its nationality and become wholly American. The American professors J. B. Clark, Patten, Irving Fisher, Carver, Fetter, etc., are assiduous students of marginal utility, applying the conception not only to problems of capital and interest, but also to the question of distribution.

To escape the confusion which would result from employing the same term in two such very different senses—a confusion that is inevitable however one may try to avoid it—Pareto has substituted the word “ophelimity,” and Gide in his Principles (1883) “desirability.”

“The idea of final utility is the ‘open sesame,’ the key to the most complicated phenomena of economic life, affording a solution of its most difficult problems.” (Böhm-Bawerk, The Austrian Economists, in Annals of the American Academy of Political and Social Science, 1891.)

Condillac had already drawn attention to this fact (see p. 48), and Buffon had noted it even before that. “The poor man’s coin which goes to pay for the necessaries of life and the last coin that goes to fill the financier’s purse are in the opinion of the mathematician two units of the same order, but to the moralist the one is worth a louis, the other not a cent.” (Essai d’Arithmétique morale.)

The connection between quantity and demand is best expressed by means of a curve either of utility or of demand (see p. 532). Along the horizontal line let the figures 1, 2, 3, 4 denote the quantities consumed, and from each of these points draw a vertical line to denote the intensity of demand for each of these quantities. The height of the ordinate decreases more or less rapidly as the quantity increases, until at last it falls to zero.

It is in cases of this kind that figures become handy. If we take two curves, an ascending one to represent the utility of each handful of salt parted with, and a descending one to represent the utility of each handful of rice acquired, the two curves must necessarily intersect, seeing that one is just the inverse of the other. The point of intersection marks the place where the utilities of the two exchanged handfuls are exactly equal.

We must be careful not to confuse matters, however. It is not suggested that the final utilities in the case of the two co-exchangers are equal. There is no common measure by which the desires of different persons can be compared, and no bridge from one to the other. What is implied is that the final utility of both commodities for the same person are the same. The balance lies between two preferences of the same individual. The actual market exchange is just the resultant of all these virtual exchanges.

The Austrian school in its explanation makes use of a hypothesis known as the double limit, which does not seem to be absolutely indispensable, seeing that other economists of the same school—Walras, for example—appear to get on well enough without it. They seem to think of buyers and sellers drawn up in two rows facing one another. Every one of the sellers attributes to the object which he possesses and which he wants to sell a certain utility different from his neighbour’s. Each buyer in the same way attributes to that object which he desires to buy a degree of utility which is different from that which his neighbour puts upon it. The first exchange, which will probably have the effect of fixing the price for all the other buyers and sellers, will take place between the buyer who attributes the greatest utility to the commodity he has to sell, and who is therefore least compelled to sell, and the buyer who attributes the least utility to the commodity he wishes to buy and who is therefore least tempted to buy. At first sight it seems impossible that the party as a whole should be bound by the action of the two individuals who show the least inclination to come to terms. It would be more natural to expect the first move to take place between the seller who is forced to sell and because of his urgency is content with a price of 10s. per bushel, say, and the buyer who feels the strongest desire to buy and who rather than go without would be willing to give 30s. for it. But upon consideration it will be found that the price is indeterminate just because these two are ready to treat at any price. The most impatient individual will surely wait to see what terms the least pressed will be able to make, and it is only natural that those who are nearest one another should be the first to come together. These two co-exchangists who control the market are known as the “limiting couple.”

It was Stanley Jevons who gave it this expressive name. It is meant to imply that if two objects which fulfil very different needs, perhaps, can be interchanged, they cannot have very different values.

The law of substitution applies not merely to different objects which satisfy the same need, but also to objects which supply different needs, provided those needs are to any extent interchangeable—to tea as a substitute for wines, to coffee as a substitute for both, to travel as a substitute for the life of a country gentleman.

“The enjoyment derived from the least enjoyable unit is what we understand by final utility.” (Böhm-Bawerk, The Austrian Economists, in the Annals of the American Academy of Political and Social Science, 1891.)

The new school deduces a very curious conclusion from this law of indifference. Although there is only one price for all corn buyers, say, the final utility of the corn for each individual is by no means the same. Let us assume that the price is 20s., but one of the buyers, rather than go without, would possibly have given 25s. for it, and others might have been willing to give 24s., 23s., 22s., etc. Every one of those who ex hypothesi only pay 20s. gains a surplus which Professor Marshall has called consumer’s rent (Principles,