SECTION F.-ECONOMIC SCIENCE AND STATISTICS.

PRESIDENT OF THE SECTION-Professor C. F. BASTABLE, M.A., F.S.S.

THURSDAY, AUGUST 9.

The President delivered the following Address:

THE long period that has elapsed since the British Association last met in Oxford, covering as it does the life of an entire generation remarkable for activity in all departments of scientific work, would of itself suggest at least some passing notice of the changes that have taken place, and the progress realised in the subjects assigned to this section.

But some special reasons combine to give increased interest to a comparison between the position of economic science in 1860 and at the present day. What is usually known as orthodox political economy had taken its final shape and reached its highest point of practical influence just at the time when Nassau W. Senior, one of its most typical expositors, was chosen to preside over Section F. at its first meeting here. Far better even than J. S. Mill, Senior represented the strong and weak points of the English school. Clearness of thought, a firm grasp of elementary principles, and complete freedom from the disturbing influence of sentiment, are distinguishing marks of the compact treatise in which he set forth the chief doctrines of Economics, and they are equally shown in his presidential address. Political economy, he maintains, is a science and nothing else, limited in its scope to the subject of wealth, and concerned rather with mental than with physical phenomena. This very precision and rigid limitation naturally tended to produce some of the less admirable characteristics of the normal political economist.' Undue insistence on the omnipotence of purely material motives, a somewhat cynical disregard of the moral forces that influence human action in respect to wealth, and a certain love of paradox, especially in cases where popular prejudice was concerned, may be traced in Senior's writings as in those of most of his contemporaries, and go far to account for the intense repugnance felt by moralists and social reformers for a system which confined itself to one, and that which they deemed the lowest and coarsest side of human life.

Such as it was, however, with, and in part by reason of, its definiteness and its narrowness, political economy commanded the respect of a large section of the public and of its instructors and guides in the Press, who looked on it as supplying a rational code of industrial and commercial conduct. The recognised principles of political economy,' or 'the immutable laws of supply and demand,' were phrases that occurred as readily to a journalist in the sixties as 'the exploded doctrine of laisser faire' does to the leader-writer of to-day. The scientific doctrine of the economist applied to practice became the guiding rule of the practical man of business. Its influence on legislation is strikingly shown by two important triumphs gained in this very year (1860). The first and most enduring was the full and complete establishment of free trade as the basis of the fiscal policy of the United Kingdom by the budget measures of the year; the second, though

transient, is even more instructive for our present purpose-viz., the declaration, in Cardwell's Irish Land Act, that for the future tenancies should rest 'on contract and not on tenure,' so that the relation between letters and hirers of land was reduced to a purely commercial one subject to the law of the market, and released, so far as legislation could secure that result, from all influence of senti

ment or custom.

In such a condition of apparent prosperity, it was hardly likely that any apprehensions should be felt as to the future of economic study, and accordingly no signs of misgiving are to be found in Senior's brief but emphatic statements. His sole complaint is directed against the unfortunate tendency on the part of contributors of papers to wander from the region of science into that of art or practice, to the neglect of their proper subject, which afforded a sufficiently ample field for fruitful inquiries.

I need not say that this attitude of calm and assured confidence did not long continue, and it is equally unnecessary to attempt any description of the series of revolts against both the strict theoretical doctrines and some of the practical conclusions of the classical economy. Abundant information as to the leading phases of the movement and the chief actors therein is supplied in works so well known that any summary of their contents could be only the merest commonplace.1 As affording a starting-point for further discussion I may, however, remark that three causes have most effectively operated in bringing about the changed position of our science-viz. (1) The influence of foreign, and chiefly German, workers in the same field; (2) the profound though peaceful political revolution by which power has been transferred to the working classes; and (3) the growth of the doctrine of evolution, which has been perhaps more potent in its effects on the social than even on the biological sciences.

As regards the first point, there is no room for doubt or question. With the exception of Say and Bastiat-who were chiefly valued as popularisers of English opinions-no foreign economist was at all known in England before the last thirty years. The mere suggestion that we had anything to learn from Germany, Holland, or Italy would have appeared ludicrous to Senior or McCulloch, or, indeed, to the educated public. The true position of the foreigner was that of the humble disciple accepting gladly orthodox English teaching. This insularity of tone undoubtedly retarded progress in all departments of economics, but its evil effect was greatest in preventing any thorough consideration of the social and political groundwork on which all systems of economy rest, and to which all economic theories must, if they are to be enduring, pay adequate attention. The great and saving merit of German economic investigation lies in its unreserved acceptance of this fundamental fact, and it was in this very point that our English predecessors most signally failed. We should have escaped much narrowness and onesidedness of view if our writers had sought to understand and appreciate the Continental conception of the political sciences as an organised group of studies. Nor is it quite clear that this just ground of complaint has been altogether removed. Admirable efforts have been made by Leslie and others to diffuse a general knowledge of the labours of the historical school, and our principal textbooks no longer pass over in silence the weighty contributions of foreign writers to special points of doctrine. Among professed students and teachers of economics there is a considerable and growing acquaintance with the products of foreign thought. Yet it seems as if the best lesson that they convey has not been thoroughly laid to heart, and that most of our attention has been directed to one particular school which makes the nearest approach to English methods, and is therefore least likely to help in correcting our peculiar failings. Is it not somewhat curious-might I not say discreditable-that the works of the eminent Roscher, whose loss every student of economic and political science must deplore,

1 Dr. Ingram's History of Political Economy (1888), pp. 221-235, and Professor Foxwell's letter on The Economic Movement in England,' Quarterly Journal of Economics, October 1887 (vol. ii. pp. 84–103), may be particularly referred to.

2 Political economy,' said Professor Huxley in 1868, is an intensely Anglican science.'-Lay Sermons, p. 48.

hive found no English translator or even effective imitator? 1 Other instances nearly as glaring might be mentioned, leading to the general result that the distinctive differences of the English mode of treating economics are not sufficiently recognised, and further progress is for the time hindered.

Increased political power obtained by the class of manual workers has most markedly altered the prevalent tone of thought on industrial questions, and, if it has not caused, has at all events coincided with the adoption of more tolerant views respecting the effect of labour combinations. Fuller analysis has shown that the consequences of economic action are far more complex and more affected by surrounding conditions than upholders of the orthodox doctrines were willing to admit; but this modification in theory has been guided by the urgent pressure of non-expert opinion. It needed a very hard struggle to secure due recognition of the elements of truth in the trade-union position as to the determination of wages. But the mere substitution of working class' for 'middle class' dogma would not indicate any scientific advance. It is rather in the evidence of the close connection of economic facts with other forms of social activity that the true importance of the change consists. It is henceforth clear that no interpretation of industrial or other economic phenomena can claim to be adequate unless it takes into account the particular forms of social structure and the special political conditions which have helped to produce them.

More profound and far-reaching, both in its actual effects and in its still greater promise for the future, was the appearance of the principle of evolution, that I became an active force from 1859. Its immediate influence in one branch of social study is well shown in the reception given to Maine's 'Ancient Law;' and though the economists did not at once recognise the full import of the method in respect to their own department of work, they saw its value in some special points, and thereby gave an opening for its further and more extensive employment. The most obvious of the services that the new conception rendered was in bringing out the general similarity of the various sciences dealing with man, which again made examination of the bonds joining economics to the related subjects a more prominent object. Just as in biology the older inelastic views as to the nature of species and types gave way before the idea of innumerable gradations and transitional forms, so rigidity of definition and isolation of the study of wealth became no longer possible. Economic problems were found to be in contact at many points with social and political ones, and even within the artificially limited field of economics maintenance of the sharp lines between 'capital' and 'noncapital,' between 'rent' and 'interest,' between currency' and 'credit,' presented difficulties in face of the complexities of real life.3

Thus the disposition to take a broader view of the subject, and to widen the general conceptions and the 'setting' in which the received economic doctrines were presented, was encouraged by a series of influences operating in the same direction, and which, taken together, have left no inconsiderable mark on the actual condition of the science. The severest critic of the current political economy cannot, without unfairness, refuse to admit the improvement in tone, the greater thoroughness in the investigation of economic problems, and the wider range undertaken by the latest work of the English school. Much that was misleading or positively erroneous has been removed, and many valuable additions have been made to that part of the older system which has successfully stood the test of hostile examination. There is, besides, ample opportunity afforded for carrying on the work of reconstruction; indeed, it is chiefly because any suggestions. no matter how crude or imperfectly thought out, are likely to receive fair and candid consideration that I venture to notice some of the respects in which the revised

The Grundlagen, the least characteristic and original of Roscher's works, has been translated in America, but the other volumes of his System' and his remaining writings are inaccessible to the English student.

2 See J. S. Mill's Principles, Book II., chap. ii. § 3n, and Cairnes' Political Essays, p. 154, for recognition of Maine's services. But to the end neither seemed to understand the real bearing of the evolutionary mode of thought.

See Marshall's Principles, Preface, pp. vi.-x., on this point.

1894.

3 A

and amended economic doctrine, as it appears to-day, seems to require further expansion and readjustment.

In the first place I cannot feel that there is any adequate expression of the ultimate dependence of economics on that larger subject of study which treats of society as a whole. It is no doubt true that our leading economists state very distinctly the great importance of a science of society could it only be brought into a healthful existence; but such general confessions lose most of their value when accompanied by a very pronounced scepticism as to the establishment in the present or near future of any set of doctrines worthy of the name of sociology.1 The very danger of this attitude lies in the fact that in one way it is so undeniably correct. When some of the more vehement assailants of the old political economy sought to contrast it to its disadvantage with a supposed social science into which it was to be absorbed, it was very natural to reply that political economy, however defective, was a fact, while sociology' was best described as an aspiration.' There was no difficulty in showing that the so-called systems of sociology consisted of imperfectly collated facts and daring-often most unlucky-guesses as to the course of future events. The strict economist stood on very safe ground in contending against the dogmatism of the Positive Polity. But though the best attempts at a systematic treatment of social science have hitherto been grossly defective, this affords no excuse for neglecting a statement and analysis of the fundamental conceptions appropriate to social study and presupposed in all more special inquiries.

Political economy, like jurisprudence or political science proper, requires as its basis a fairly accurate comprehension of these preliminary parts of sociology. The questions What is a society? What are the conditions necessary for its existence ? 'In what manner the chief social structures are produced ?'-and many others of the same class should, I believe, be discussed as an introduction to the narrower economic problems. Moreover, some topics that seem purely economic have really a far wider significance. Division of labour,'' Supply and demand,' and The population question,' must be regarded in a broader way than is possible within the limits that logical symmetry prescribes to the economist. In fact, the greater part of the matter to be found in the division of our text-books devoted to the subject of Production' is only introduced to supply the want of a due preparatory study of the leading features of what I may for the moment call the social organism.' That expression has unfortunately some unsatisfactory implications. It seems to give support to the idea that the social and political sciences may be regarded as mere appendices to biology, and that by a liberal adoption of the technical terms of that science we can turn out a complete and definite system without the trouble of continued effort applied directly to the study of social phenomena. This belief seems to me to be hopelessly mistaken, and I would protest as strongly as anyone against the 'manipulation of biological ideas and phrases' as a mode of dealing with either economic or social questions. But the general conceptions which are needed to realise the broad features of social structure are not the peculiar property of any single science. Division of labour, e.g., was recognised as a social truth long before its importance for the vital sciences was appreciated. It is therefore quite possible, without any illegitimate borrowing or routine imitation of inappropriate methods of exposition, to provide a satisfactory groundwork of social doctrine on which our economic theories can be securely based. Such a change in the usual method of treatment would be in harmony with the development of economics during the last twenty years, and could be attained without any sacrifice of the valuable material stored up in the standard treatises. Nor is it merely at the outset that systematic reference to social structures and conditions is required; all through the course of investigation that the economist has to pursue he will find that fresh light is thrown on even the minutest details by continually keeping in mind and striving as far as possible to realise the complete life of the society which exhibits them as one part of its varied activities.

See Sidgwick, 'Scope and Method of Political Economy,' in Statistical Society's Journal, vol. xlviii. p. 612; Marshall, Principles, Book I., chap. v. § 1; Nicholson, Frinciples, pp. 11-14.

2 Nicholson, Principles, p. 12.

Great advances have already been made in this direction. No one can fail to perceive the contrast between the bareness of the manuals of Senior and Fawcett and-except in some particulars of J. S. Mill's' Principles' as compared with the more elaborate presentation of our best modern text-books. Refined analysis of economic motives and critical discussion of abstract theoretical conceptions still hold a very large place; but the accurate exhibition of the growth of population and of the forms of industrial organisation, the tracing in their natural order of development of the village community,' the 'feudal system,' and of commercial land tenure, do much more to promote the effective progress of scientific economics than the most brilliant efforts at deduction from unduly simplified premises. I would specially insist on the fact that it is the social basis rather than the slighter edifice of half-developed theory that gives life and power to our present work. We are thus led to the conclusion that one important step in the further progress of economics must be the fuller recognition of its dependence at the outset on, and its close relation all through its inquiries with, general social science, but that this reform does not need any extreme change in attitude-it rather involves the logical carrying out of an already pronounced tendency. No department or section of economics can escape this revision. Questions of value, money, credit, and foreign trade to take topics that are supposed to be particularly amenable to abstract treatment are more affected by social conditions than the theoretic economist will formally admit. Only through study of these influences can the materials needed for a correct theoretical solution be obtained, and due weight given to the several elements involved.

Another reform will be the natural, or rather necessary, consequence of that already urged. As soon as we get thoroughly accustomed to contemplating economic conditions in their actual forms as the special products of social life, it is but a matter of course to notice the remarkable differences and equally remarkable resemblances that different instances of the same economic institution or function will present. The banking system-to take a familiar example is not the same in England as in France, while in the United States a third variety, or set of varieties, is to be found. Even within the same country there is no absolute uniformity. London banking differs from country banking, and Scotch banking, again, is distinct from either. Differences in environment will supply a partial explanation. A new country does not require and could not maintain the more complex arrangements suited to an old centre of industry and commerce. But peculiarities of social structure and even historical accidents count for much. We must go to history to find the origin of the Bank of England and the system of which it is the foundation, and to some peculiarities of the American Constitution for an explanation of the failure of the two attempts to permanently establish a similar institution in that country. Now, what is true of banking is equally true of the monetary organisation, the economic features of the transport system-in a word, of every part of the economy of a nation or people. The attempts of different schools of economists to deal with this problem of variations must, I think, strike the unprejudiced observer as at best inadequate. Senior and McCulloch, representing very fairly the average economic opinion of their day, admitted the existence of diversities, but escaped their consideration by placing them outside the ring fence that bounded pure economics, or by regarding them as certain to disappear with the diffusion of sound views on the

1 Mill's treatment of the earlier and ruder forms of land tenure is much more realistic and better nourished with specific facts;' but this departure, as he deemed it, from scientific precision was partly due to his strong interest in the Irish land question, and, as Whewell pointed out, is really an imitation of the method pursued by R. Jones in his admirable but premature book on Rent (1832).

2 For population see the treatment by Marshall, Principles, Book IV., chaps. iv. and v.; for industrial organisation, ib. chaps. viii.-xii.; for the village community and feudalism, Nicholson, Principles, Book II., chaps. vi. and vii.; and compare with both the fuller treatment in the new edition of A. Wagner's Grundlagen der Volkswirthschaft (1892-3).

* See the several articles on 'Banking' in the new Dictionary of Political Economy; also C. F. Ferraris, Scienza Bancaria.