But German economists are of interest, inasmuch as they have established a new school who urge the use of the historical method in political economy, and it is about the question of method that much of the interest of to-day centers. In 1814 Savigny introduced this method into jurisprudence, and about 1850 it was applied to political economy. The new school claim that the English “orthodox” writers begin by an a priori process, and by deductions reach conclusions which are possibly true of imaginary cases, but are not true of man as he really acts. They therefore assert that economic laws can only be truly discovered by induction, or a study of phenomena first, as the means of reaching a generalization. To them Bagehot[80] answers that scientific bookkeeping, or collections of facts, in themselves give no results ending in scientific laws; for instance, since the facts of banking change and vary every day, no one can by induction alone reach any laws of banking; or, for example, the study of a panic from the concrete phenomena would be like trying to explain the bursting of a boiler without a theory of steam. More lately,[81] since it seems that the new school claim that induction does not preclude deduction, and as the old school never intended to disconnect themselves from “comparing conclusions with external facts,” there is not such a cause of difference as has previously appeared. Doubtless the insistence upon the merits of induction will be fruitful of good to “orthodox” writers, in the more general resort to the collection of statistics and means of verification. It is suggestive also that the leaders of the new school in Germany and England have reached no different results by their new method, and in the main agree with the laws evolved by the old English school. The economist does not pretend that his assumptions are descriptions of economic conditions existing at a given time; he simply considers them as forces (often acting many on one point or occasion) to be inquired into separately, inasmuch as concrete phenomena are the resultants of several forces, not to be known until we know the separate operation of each of the conjoined forces.
The most prominent of the new school is Wilhelm Roscher,[82] of Leipsic, who wrote a systematic treatise, “System der Volkswirthschaft” (1854, sixteenth edition, 1883), in the first division of which the notes contain a marvelous collection of facts and authorities. He agrees in results with Adam Smith, Ricardo, Malthus, and Mill, but does not seem to have known much of Cairnes. This book, however, is only a first of four treatises eventually intended to include the political economy of (2) agriculture, (3) industry and commerce, and (4) the state and commune. The ablest contemporary of Roscher, who was probably the first to urge the historical method, is Karl Knies,[83] in “Die politische Oekonomie vom Standpunkte der geschichtlichen Methode” (1853, second edition, 1881-1883). The third of the group who founded the historical school is Bruno Hildebrand,[84] of Jena, author of “Die Nationalökonomie der Gegenwart und Zukunft” (1848).
The German mind has always been familiar with the interference of the state, and a class of writers has arisen, not only advocating the inductive method, but strongly imbued with a belief in a close connection of the state with industry; and, inasmuch as the essence of modern socialism is a resort to state-help, this body of men, with Wagner at their head, has received the name of “Socialists[85] of the Chair,” and now wield a wide influence in Germany. Of these writers,[86] Wagner, Engel, Schmoller, Von Scheel, Brentano, Held, Schönberg, and Schäffle are the most prominent.
The historical school has received the adhesion of Émile de Laveleye,[87] in Belgium, and other economists in England and the United States. While Cliffe Leslie has been the most vigorous opponent of the methods of the old school, there have been many others of less distinction. Indeed, the period, the close of which is marked by J. R. McCulloch's book, was one in which the old school had seemingly come to an end of its progress, from too close an adhesion to deductions from assumed premises. Mill's great merit was that he began the movement to better adapt political economy to society as it actually existed; and the historical school will probably give a most desirable impetus to the same results, even though its exaggerated claims as to the true method[88] can not possibly be admitted.
Italian writers have not received hitherto the attention they deserve. After 1830, besides Rossi, who went to France, there was Romagnosi, who dealt more with the relations of economics to other studies; Cattanes, who turned to rural questions and free trade (combating the German, List); Scialoja, at the University of Turin; and Francesco Ferrara, also at Turin from 1849 to 1858. The latter was a follower of Bastiat and Carey, as regards value and rent, and at the same time was a radical believer in laissez-faire. Since the union of Italy there has been a new interest in economic study, as with us after our war. The most eminent living Italian economist is said to be Angelo Messedaglia, holding a chair at Padua since 1858. He has excelled in statistical and financial subjects, and is now engaged on a treatise on money, “Moneta,” of which one part has been issued (1882). Marco Minghetti and Fedele Lampertico stand above others, the former for a study of the connection of political economy with morals, and for his public career as a statesman; the latter for his studies on paper money and other subjects. Carlo Ferrais presented a good monograph on “Money and the Forced Currency” (1879); and Boccardo issued a library of selected works of the best economists, and a large Dictionary of Political Economy, “Dizionario universale di Economia Politica e di Commercio” (2 vols., second edition, 1875). Luigi Luzzati is a vigorous advocate of co-operation; and Elia Lattes has made a serious study of the early Venetian banks.
Political economy has gained little from American writers. Of our statesmen none have made any additions to the science, and only Hamilton and Gallatin can properly be called economists. Hamilton, in his famous “Report on Manufactures” (1791), shared in some of the erroneous conceptions of his day; but this paper, together with his reports on a national bank and the public credit, are evidences of a real economic power. Gallatin's “Memorial in Favor of Tariff Reform” (1832) is as able as Hamilton's report on manufactures, and a strong argument against protection. Both men made a reputation as practical financiers.
“With few exceptions, the works produced in the United States have been prepared as text-books[89] by authors engaged in college instruction, and therefore chiefly interested in bringing principles previously worked out by others within the easy comprehension of undergraduate students.”[90] Of these exceptions, Alexander H. Everett's “New Ideas on Population”[91] (1822), forms a valuable part in the discussion which followed the appearance of Malthus's “Essay.” The writer, however, who has drawn most attention, at home and abroad, for a vigorous attack on the doctrines of Ricardo is Henry Charles Carey.[92] Beginning with “The Rate of Wages” (1835), he developed a new theory of value (see “Principles of Political Economy,” 1837-1840), “which he defined as a measure of the resistance to be overcome in obtaining things required for use, or the measure of the power of nature over man. In simpler terms, value is measured by the cost of reproduction. The value of every article thus declines as the arts advance, while the general command of commodities constantly increases. This causes a constant fall in the value of accumulated capital as compared with the results of present labor, from which is inferred a tendency toward harmony rather than divergence of interests between capitalist and laborer.” This theory of value[93] he applied to land, and even to man, in his desire to give it universality. He next claimed to have discovered a law of increasing production from land in his “Past, Present, and Future” (1848), which was diametrically opposed to Ricardo's law of diminishing returns. His proof was an historical one, that in fact the poorer, not the richer lands, were first taken into cultivation. This, however, did not explain the fact that different grades of land are simultaneously under cultivation, on which Ricardo's doctrine of rent is based. The constantly increasing production of land naturally led Carey to believe in the indefinite increase of population. He, however, was logically brought to accept the supposed law of an ultimate limit to numbers suggested by Herbert Spencer, based on a diminution of human fertility. He tried to identify physical and social laws, and fused his political economy in a system of “Social Science” (1853), and his “Unity of Law” (1872). From about 1845 he became a protectionist, and his writings were vigorously controversial. In his doctrines on money he is distinctly a mercantilist;[94] but, by his earnest attacks on all that has been gained in the science up to his day, he has done a great service in stimulating inquiry and causing a better statement of results. While undoubtedly the best known of American writers, yet, because of a prolix style and an illogical habit of mind, he has had no extended influence on his countrymen.[95]
81
In Ely's “The Past and Present of Political Economy” (p. 9) it is clear the new school do not differ so much in reality as in seeming from the methods of the English writers, like Cairnes.
82
The first division of Roscher's (born 1817) treatise, also known under the title of “Grundlagen der Nationalökonomie,” has been translated here by J. J. Lalor, in two volumes, “Principles of Political Economy” (1878), with an essay by Wolowski on the historical method inserted. In 1840 he was made Privat-Docent at Göttingen, and professor extraordinary in 1843. In 1844 he was called to a chair at Erlangen, but since 1848 he has remained at Leipsic. A list of Roscher's works is as follows:
“Grundriss zu Vorlesungen über die Staatswirthschaft nach geschichtlicher Methode” (1843); “Kornhandel und Theuerungspolitik” (third edition, 1852); “Untersuchungen über das Colonialwesen”; “Verhältniss der Nationalökonomie zum klassischen Alterthume” (1849); “Geschichte der englischen Volkswirthschaftslehre im 16. und 17. Jahrhunderts”; “Ein nationalökonom. Princep der Forstwirthschaft”; “Ansichten der Volkswirthschaft aus dem geschichtlichen Standpunkte” (second edition, 1861); “Die deutsche Nationalökonomie an der Grenzscheide des 16. und 17. Jahrhunderts” (1862); “Gründungsgeschichte des Zollvereins” (1870); “Betrachtungen über die Währungsfrage der deutschen Müntzreform” (1872); “Geschichte der Nationalökonomie in Deutschland” (1874); “Nationalökonomie des Ackerbaues” (eighth edition, 1875). His histories of political economy in England and Germany are particularly valuable (see review by Cliffe Leslie, “Fortnightly Review,” July, 1875). But he does not rightly estimate the English writers when he takes McLeod as a type; and Carey is the only American to whom he refers.
83
Professor at Marburg, then at the University of Friedburg, in Breisgau, and now at Heidelberg. He has also studied railways (1853), and telegraphs (1857), and money and credit, “Geld und Credit” (1873-1879).
84
Died 1878. He devoted himself mainly to criticism of other systems, and seems to be the least able of the three.
86
By far the ablest is Adolph Wagner, of Berlin, editor of Rau's “Lehrbuch der politischen Oekonomie” (1872). He also published “Die russische Papierwährung” (1868); “Staatspapiergeld, Reichs-Kassen Scheine, und Banknoten” (1874); “Unsere Müntzreform” (1877); “Finanzwissenschaft” (1877); and “Die Communalsteuerfrage” (1878).
Dr. Eduard Engel was formerly the head of the Prussian Bureau of Statistics. Professor Gustav Schönberg, of Tübingen, with the assistance of twenty-one other economists, produced a large “Handbuch der politischen Oekonomie” (1882). The school have expressed their peculiar doctrines in the “Zeitschrift für die gesammte Staatswissenschaft” (quarterly, founded 1844, Tübingen), and the “Jahrbücher für Nationalökonomie” (established at Jena, 1863). Also, see A. Wagner's “Rede über die sociale Frage” (1872), H. v. Scheel's “Die Theorie der socialen Frage” (1871), and G. Schmoller's “Ueber einige Grundfrage des Rects und der Volkswirthschaft” (1875). A. E. F. Schäffle, once Minister of Commerce at Vienna, gained considerable reputation by “Das gesellschaftliche System der menschlichen Wirthschaft” (third edition, 1873).
87
Émile de Laveleye (born 1822) studied law at Ghent, but since 1848 has given himself up to political economy and public questions. Through the pages of the “Revue des Deux Mondes” he gained attention in 1863, and the next year was made Professor of Political Economy at the University of Liége. In 1869 he received an election as corresponding member of the Academy of Sciences. While a fertile writer on political subjects, he has produced “La question d'or” (1860); “Essai sur l'économie rurale de la Belgique” (1863); a study on “Suisse,” see “Revue des Deux Mondes,” April 15, 1863; “Études d'économie rurale, la Neerlande” (1864); “La marché monetaire depuis cinquante ans” (1865); “Land Systems of Belgium and Holland,” in the Cobden Club volume on “Land Tenures” (1870); “Bi-metallic Money,” translated by G. Walker (1877); “La socialisme contemporaine” (1881); “Éléments d'économie politique” (1882), which satisfies a certain modern demand for “ethical political economy.”
88
Leslie found support in a well-known paper read before the Association for the Advancement of Science (see “London Statistical Journal,” December, 1878; also see “Penn Monthly,” 1879), by J. K. Ingram, who claimed that the old school isolated the study of economic from other social phenomena, and that Ricardo's system was not only too abstract, but that its conclusions were of so absolute a character that they were little adapted for real use. Robert Lowe (Lord Sherbrooke) replied to Leslie and Ingram (“Nineteenth Century,” November, 1878). For most of this literature it will be necessary to consult the magazines. Cliffe Leslie, “Fortnightly Review” (November, 1870), placed Adam Smith among the inductive economists; D. Syme attacked the old methods, “Westminster Review,” vol. xcvi (1871); Cairnes represented the old school, and discussed the new theories, “Political Economy and Comte,” in the “Fortnightly Review,” vol. xiii, p. 579 (1870), “Political Economy and Laissez Faire,” vol. xvi, p. 80 (1871), and in 1872; see also his admirable “Logical Method”; F. Harrison discussed the limits of political economy, ibid. (1865), and answered Cairnes in an article on “Cairnes on Political Economy and M. Comte,” “Fortnightly Review,” vol. xiv, p. 39 (1870). W. Newmarch gave attention to Ingram's paper, “Statistical Journal” (1871). Leslie, “Fortnightly Review” (1875), and G. Cohn, ibid. (1873), wrote on political economy in Germany. Leslie also contributed an article on “Political Economy and Sociology,” “Fortnightly Review,” vol. xxxi, p. 25 (1879), and the “Bicentenary of Political Economy,” in the “Bankers' Magazine,” vol. xxxii, p. 29. Leslie examined the philosophical method, “Penn Monthly” (1877); Jevons saw the only hope for the future in the mathematical method, “Fortnightly Review” (1876); McLeod asks, “What is political economy?” in the “Contemporary Review” (1875); Maurice Block entered the discussion, “Penn Monthly” (1877), and “Bankers' Magazine,” March and November, 1878. Henry Sidgwick answers Leslie in a paper on “Economic Method,” in the “Fortnightly Review,” vol. xxxi (1879), p. 301. See also essay by Wolowski prefixed to Roscher's “Political Economy” (English translation); Roscher's own statement in Chapters II and III of the Introduction to his “Political Economy,” and Laveleye's “New Tendencies of Political Economy” (1879). See also “Penn Monthly,” vol. vii, p. 190, and “Bankers' Magazine,” vol. xxxiii, pp. 601, 698, 761; vol. xxxvi, pp. 349, 422; S. Newcomb for an admirable essay “On the Method and Province of Political Economy,” “North American Review” (1875), vol. cxxi, p. 241, in which the “Orthodox” method is strongly supported; and an extreme position in favor of the historical method in a pamphlet, “The Past and Present of Political Economy,” by R. T. Ely (1884).
89
Daniel Raymond, “The Elements of Political Economy” (1820). Thomas Cooper, “Lectures on the Elements of Political Economy” (1826); “A Manual of Political Economy” (1834). Willard Phillips, “A Manual of Political Economy” (1828); “Propositions concerning Protection and Free Trade” (1860). President Francis Wayland (1796-1865), “The Elements of Political Economy” (1837). Henry Vethake, “Principles of Political Economy” (1838). From 1840 to the civil war there appeared F. Bowen's “Principles of Political Economy” (1856), since changed to “American Political Economy” (1873), which opposed the Malthusian doctrine and defended protection; John Bascom's “Political Economy” (1859); and Stephen Colwell's “Ways and Means of Payment” (1859). After the war, “Science of Wealth” (1866), by Amasa Walker, a lecturer in Amherst College, and father of F. A. Walker.
90
Prof. C. F. Dunbar, “North American Review,” January, 1876, in an admirable review of economic science in America during the last century (1776-1876).
92
Carey (1793-1879) was the son of an Irish exile, and began a business career at the age of twelve. At twenty-eight he was the leading partner in the publishing firm of Carey & Lea, Philadelphia, from which he retired in 1835, to devote himself wholly to political economy. His leading works have been translated into French, Italian, Portuguese, German, Swedish, Russian, Magyar, and Japanese. He has written thirteen octavo volumes, three thousand pages in pamphlet form, and twice that amount for the newspaper press. See “Proceedings of the American Academy of Science” (1881-1882, p. 417), and W. Elder's “Memoir of Henry C. Carey” (January 5, 1880). The latter gives a list of his books.
93
Bastiat's “Harmonies économiques” appeared in 1850, and the question of his indebtedness to Carey was discussed, rather unfavorably to Bastiat, in a series of letters in the “Journal des économistes” for 1851.
94
See an able study, by Adolphe Held, “Carey's Socialwissenschaft und das Merkantilsystem” (1866).
95
His system appears also in the books of disciples: E. Peshine Smith, “A Manual of Political Economy” (1853), William Elder's “Questions of the Day” (1871), and of Robert E. Thompson's “Social Science and National Economy” (1875). A condensation of Carey's “Social Science” has been made by Kate McKean, in one volume, octavo.