POLITICAL ECONOMY".
READERS of recent works on Political Economy can scarcely fail to perceive that the science is entering upon a new phase. Generalisations drawn from the limited range of individual experi- ence have been found insufficient when practicallyapplied and tested in legislation. Even Adam Smith's theory of wages, so long accepted by economists, proved, palpable as its truth had ap- peared, when submitted to the unequivocal testimony of statis- tics, only a glaring example of the inadequacy of the analogies on which it was based. So it is with other questions of political economy, and, indeed, to such an extent is this the case, that the opinion begins to prevail that the method of investigation hitherto employed, taken alone, is not one by which we can arrive at uni- versal truths. It was, therefore, with no small interest that a book proposing recriticism of the views of previous economists, and a new model of construction, had been expected by all interested in the future of the subject. Mr. Macleod's book, however, though it abounds with interesting details and lively criticism, and displays much varied knowledge, offers nothing for the solution of the problems with which it undertakes to deal. Mr. Macleod does not even seem fully to appreciate the difficulties that his predecessors have attempted to overcome. His own theories of Value, Rent, and Credit it would be hard to defend, and his fundamental division of "Quantities which have value" into "Material, Immaterial, and Incorporeal" will not bear criticism. We think, in short, that he has not been happy in his selection of "the rigorous principles of Baconian inductive logic" as his guiding light.
Mr. Macleod has come to the conclusion that "the sole origin, source, or cause of value is demand," on the ground that "labour and utility altogether fail to stand the test of being considered the cause of value." Here, apart from the novel manner of de- riving the conclusion, he seems to be killing a giant of his own creation. We know of none that maintain in our day that labour or utility is the " sole " cause of value. Ricardo certainly did not ; he held that labour, together with demand and supply, was the source of value, and Mr. Mill gave the theory a more definite shape. With respect to Mr. Mill's proposal to adopt " equation" instead of "ratio," as expressing the relation of de- mand to supply that determines value, we fear that he would not have been satisfied with the "intelligent schoolboy's "explanation that a ratio and equation are " absolutely " the same thing, because "an equation is a ratio." The intelligent lad might, we think, on further thought have corrected even Mr. Macleod without having read a chapter on "Fallacies" in a text-book of logic. Again, as regards Mr. Mill's analysis of international value, admitting that it is not satisfactory, it is evident that he wrote it for England. Still Mr. Macleod assumes that it applies to universal conditions, and tears it mercilessly to shreds. He tells us twice in his book, at some length, of this "breach of the law of con- tinuity." Mr. Mill, he asserts, would have maintained that the laws which govern the prices of certain goods would, were there no import duties in question, change, exteri.c paribus, on removal of a geographical line ! This is clearly not a fair statement of Mr. Mill's view. Mr. Macleod's own theory of value, the reader has seen, has not a very sound foundation, and it loses con- siderably in strength when he must except bills of lading from his articles "possessing value." They only represent, are only titles to, certain specific goods, he tells us, and are not separately exchangeable. Still they can be negotiated and transferred by endorsement, but having no exchange-power, they possess no value; whilst, on the other hand, bills of exchange have both. We would suggest for Mr. Macleod's consideration that the chief difference between a bill of lading and a bill of exchange from the point of view of an economist, is that whilst the former represents specific goods, the latter represents goods in general. So much for Mr. Macleod's treatment of value.
"Credit," says Mr. Macleod, "is capital ;" "money is only per-
* The Principles of Economical Philosophy. By Henry Dunning Macleod, laq- Vol. I. 1872; VoL IL Part 1, 1875. London: Longman, Green, Reader, aud Dyer. manent and general credit; it is only the highest form of credit" (page 478, VoL L). We cannot agree with the first assertion, we don't understand the other. The fact is, it seems to us to read better reversed. In regard to the oft-mooted question whether credit can be regarded as a part of capital, we think Mr. Macleod would admit that it would lead to some erroneous impressions of our economic condition, if, in an estimate of the wealth of England, credit were added to the general total. Mr. Macleod makes the old mistake of attributing to credit a productive power independ- ently of what it represents. He forgets that if a man uses his own name, or the name of any other person, instead of his own capital, or that of this other person, it still implies the employ- ment of capital, for the very purpose of credit is to obtain it. We cannot therefore agree with Mr. Macleod in his belief that he "has brought this weary controversy to an end for ever."
As regards rent, we have again to enter our protest. The Ricardo principle, we admit, is not sufficient to predict the average prices of wheat, as Mr. Macleod maintains the followers of Ricardo assume, but it is nevertheless generally admitted to be in con- formity with the results of historical research and present obser- vation. Mr. Macleod cannot contain his indignation. "Let us suppose," he says, "some vast plains of illimitable [sic] extent on the earth's surface, all of uniform fertility, with markets thickly distributed over them, so that their situa- tion is uniform, and also equal amounts of capital expended on the soil ; such as the plains of Bengal or Lombardy, or such as the plains of South America along the Amazon might be. Now, in such a country," he asks, "could there not be such a thing as rent? According to the doctrine of Ricardo, MacCulloch, and Mill, there could not be such a thing as rent in such a country ! The very statement of such a doctrine," he says, "is enough to call forth the amazement and ridicule of any practical man of business." This is not the tone of just and calm criticism. In every page of Mr. Macleod's book we meet with condemnations of the doctrines of Smith, Malthus, Ricardo, Mill, and others, as ridiculous and absurd, with allusions to what a sane man would think, to their astonishi g confu,si o n , and so on. In a modern book on chemistry we may expect authors writing in the light of modern dis- covery to speak of the views of Stahl, Lavoisier, or Priestley, if erro- neous, still with respect, and we would resent the application to these men of the adjectives used by Mr. Macleod. The theories Mr. Marleod treats as ridiculous blunders were the searching glances of men of genius that have guided speculation in its course towards the truth ; and let us add that Mr. Macleod has not the excuse of modern chemists to justify irreverent allusions to the great masters of his own science. The opinions expressed by them with which he chiefly deals still belong to the domain of specu- lation, and in most cases may be presumed to supply the best approximations to the truth we yet possess. It is, then, incumbent on Mr. Macleod to study them carefully and apprehend their whole meaning, before pronouncing such judgments as that quoted above.
The explanation Mr. Macleod proposes to take the place of the Ricardo theory is as follows :—" 1. That the land belong to a landlord, and be let to a tenant. 2. That the tenant shall have in his possession a larger amount of land than is necessary for his own maintenance. 3. That the population in some parts of the country be collected in such dense masses, that they cannot grow corn for their subsistence on the land they occupy. 4. That the population in other parts of the country be scattered so widely that they cannot consume the produce of the soil, but they may sell some of it to the town population." This may be all true enough, but it is irrelevant. If Mr. Macleod were to consult a chemical book upon the nature of soap, and found that it was a commodity used by people in their ablutions, that it was of various colours and various qualities, had a soapy taste, and could be obtained of all apothecaries, in small cakes for a pecuniary trifle, he would be as much satisfied with this account of soap as we are with his account of "rent." As for his definition of the word, it is purely philological, and will be found more briefly and more satisfactorily stated in Webster's Dictionary.
The chapters on Currency, and the Bank of England, in the second volume, will be found to contain interesting accounts of recent events and existing institutions. Whilst differing from Mr. Macleod in many of his conclusions, we can recommend them as being very clearly expressed. In fine, the book, though of doubt- ful scientific value, will be found to be pleasant and profitable reading by those who wish to get a general view of the subjects treated of by economists, without the trouble of wading through chapters of close consecutive reasoning.
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