PROFESSOR CAIRNES'S RECENT ECONOMICAL WRITINGS.
ANYTHING written by Professor Cairnes on political economy is sure to command the attention of all who are interested in the development of a science which with every advance luta discovered some erroneous policy or false doctrine, not only thwarting human progress, but also at variance with the par- ticular interests of those who are supposed to benefit by it, and who defend and support it with all their strength and energy. In the books now before us, Professor Cairues has investigated with great subtlety and power some of its most difficult problems, • 1. 80ms Leading Nina*. of Political Economy. By J. E. Clams. London: Macmillan. 1874. Lltio771:. Charcytcter and LogicalMethod of Political Economy. By J. B. CatimM. a clear conception of which is absolutely essential in order to understand the intimate connection which exists between indi- vidual and national interests, and between national progress and international prosperity.
The Character and Logical Method of Political Economy is a new and enlarged edition of some lectures which Professor Cairnes delivered some years ago in Dublin, on the method which should be adopted in order to discover the laws of the production and distribution of wealth. Some passages have been altered, some new topics treated, and a new lecture on the place and pur- pose of Definition in economic science inserted. After an intro- ductory lecture, in which Professor Cairnes discusses the sig- nificance of the term "science" in political economy, and the evils which must result from ignoring the scientific character of economic speculation, he proceeds to investigate whether political economy ought to be classed with the physical or with the mental sciences. After carefully weighing the arguments brought for- ward by Mill and Senior in support of the opinion that only such of the laws of production as are also laws of the human mind belong to economic science, he contends that as the subject- matter with which the economist has to deal is composed neither exclusively of material elements nor of mental feelings, but is of a complex character, Political Economy cannot be regarded either as a purely mental or as a purely physical science. And in sup- port of this view he appeals to the causes which determine the rate of wages :—"It is evident," he says, "that the objects which the labourer receives are material objects, but those material objects are invested by the mind with a peculiar attribute, in con- sequence of which they are considered as possessing value ; andit is in their complex character as physical objects invested with the attribute of value, that the political economist considers them. 'The subject-matter, therefore, of the wages problem possesses qualities derived alike from physical and mental nature ; con- sequently, if it is to be denominated from the nature of its subject-matter, it is equally entitled or disentitled to the character of a physical or mental problem." (p. 33.) It thus appears that the subject-matter of economic science holds an intermediate position between the physical and mental sciences, and is a science which occupies itself with the investigation of social, political, and even historical questions, in so far as they throw light on the production of wealth and the phenomena of exchanges. This proposition being established, Professor Cairnes defines political economy "as the science which traces the phenomena of the production and distribution of wealth up to their causes, in the principles of human nature, and the laws and events, physical, political, and social, of the external world." (p. 57.) Having thus described the character and defined the science of political economy, Professor Cairues proceeds to investi- gate the method which should be adopted in order to discover its laws, and after an exhaustive examination of the inductive method, in which he conclusively shows that it is in the strict sense of the term unsuited to economic inquiry, he contends that as the economist starts with a knowledge of the ultimate principles which govern economic phenomena, viz., certain mental feelings and animal propensities in human beings, he must regard deduction as his principal resource, and must employ the facts furnished by experience to prove the conclusions which he has thus obtained. Such is the method of investigation which Pro- fessor Cairnes considers the true one to be followed in economic investigation, and such certainly has been the method which has been generally employed by the great masters of economic science. As an illustration of this method, Professor Cairnes explains the reasoning by which Malthus established his celebrated doctrine of population, and the lecture which he devotes to this subject is, perhaps, the most important in the whole book. Professor Cairnes does not indeed answer all the objections which have been brought against the doctrine of Malthus, for he expressly con- fines himself to investigating those which seem to him most suit- able to illustrate his economic method. During the course of -this lecture he notices incidentally how far Malthus may be con- sidered to have been anticipated by other writers, and instancing Botero, a Piedmontese Jesuit, who appears to have held the Mal- thusian doctrine, he insists, nevertheless, that for all practical purposes it was wholly unappreciated before Malthus wrote. Pro- fessor Cairnes does not, however, allude to Giammaria Ortes, a much more considerable man than Botero, whose unquestionable achievement in the history of the science it is, on many points, to have anticipated the greatEnglish economist. Ortes was a Venetian monk who wrote towards the close of the last century some treatises on entails, mortmain, &c., and put himself generally in opposition to the views of political economy which prevailed on the eve of the French Revolution. Whilst his contemporaries were with very few exceptions proclaiming the indefinite perfectibility of man- kind, he was endeavouring to point out the limits of human progress. He insisted that agriculture cannot be extended as much as trade, that the growth of population is only beneficial up to the point within which the increasing numbers can support themselves with security, and that when this point is reached celibacy is as necessary as marriage in order to maintain popu- lation in its proper proportions. He also taught that the wealth of a nation cannot be increased by decreasing the number of holidays, or by giving work to the disoccupanti. If the practical influence of this remarkable writer has not been very considerable, this is owing partly to the extravagance of some of his opinions, but it has, no doubt, been chiefly caused by his confused writing, which is fatiguing in the extreme. But although Ortes did on so many points anticipate Malthus, we are far from thinking that Professor Cairnes has estimated too highly the importance of the writings of the latter, and as he truly says, it is owing to Malthus that the opinions on the policy which ought to be followed as regards population are so entirely different from those which were held and acted upon up to the close of the last century. This lecture, however, is not only remarkable as showing the services which Malthus has rendered to economic science, and as containing a clear ex- position of Malthusian doctrine; it is, moreover, important as illus- trating Professor Cairnes's general 'position towards the science, without which many would find it difficult to follow his reasoning in his great work On Some Leading Principles of Political Economy.
This book is divided into three parts. The first part is devoted to an investigation of the general problem of value, which em- braces inquiries into the conditions essential to the existence of value and into the conditions which determine it. The second part treats of questions connected with labour and capital, and in this portion of the work there is an elaborate ex- position of the wages-fund theory, and a reply to Mr. Thornton's objections to this doctrine, as well as some keen criticism of Mill's position in regard to it in the last years of his life. Professor Cairnes, in the third part of his work, dis- cusses the theory of international trade, and in his treatment of the controversy between Free-trade and Protection he is often as happy in his reasoning as lie is always brilliant in his style.
Before proceeding to deal with specific problems of value, Professor Cairnes devotes a chapter to the consideration of the agencies of Supply and Demand, and points out that the funda- mental truth to be seized in connection with those agencies, is that Supply and Demand, considered as aggregates, are not independ- ent but mutually dependent phenomena, so strictly connected, that neither can increase or diminish without a corresponding increase or diminution of the other, and he defines the terms as follows :- "Demand, as the desire for commodities or services, seeking its end by an offer of general purchasing power ; and Supply, as the desire for general purchasing power, seeking its end by an offer of specific commodities or services" (p. 21). It is easy to per- ceive that Demand and Supply, thus defined, are analogous conceptions, and Professor Cairnes does well to insist upon this point, because so well known an economist as Mill countenances the contrary view. That writer, speaking of the ratio between demand and supply, asks, "What ratio can there be between a quantity and a desire, or even a desire combined with power?" But it is incorrect to consider Supply simply as a quantity. In the true conception of Supply, as well as in the true conception of Demand, there is a mental as well as a material element, and in each case the complex phenomenon is limited by its material element, "Supply by the quantity of specific com- modities offered for sale, and Demand by the quantity of pur- chasing power offered for their purchase." So that, although it is true that Supply is measured by the quantity offered, and not by the desire to obtain general purchasing power, it is no less true that Demand is measured not by the desire to obtain the com- modities or services offered for sale, but by the quantity of general purchasing power which is offered in exchange for them. There- fore, both in Supply and in Demand there is a mental element, a desire, and a material element, specific commodities or services, and hence the conceptions are strictly analogous. We cannot think that this point can be too strongly insisted upon, or that Professor Cairnes has devoted too much space to its proof, because the proposition, although fundamental and elementary, is often entirely ignored even by economists of repute, and hence arises the confusion of thought which so generally prevails on such subjects as wages, money, or foreign trade.
In the chapter which he devotes to the consideration of
normal value, Professor Carnes is naturally led to investigate the current theories as to the nature of cost of Production, and considers that the view enunciated by Mill may fairly be considered as being generally accepted by economists. Ac- cording to that writer, "cost of production consists of several elements, some of which are constant and universal, others occa- sional. The universal elements of the cost of production are the wages of the labour and the profits of the capital. The occasional elements are taxes, and any extra cost occasioned by a scarcity value of some of the requisites." (Principles of Political Economy, book iii., chap. vi.) Professor Cairnes holds that this conception confounds things in their nature not only distinct, but antithetical ; that it mixes up together ideas so profoundly opposed to each other as cost and the reward of cost, that it sets M an essentially false light the incidents of production and ex- change, and that it must lead those who adopt it into hopeless errors,, of all kinds not only as regards value, but also as regards many vital questions in the higher regions of economic science. He asserts that if Mill's analysis be accepted, and that if wages and profits be taken as the only constituents of the cost of production, it must follow that "the cost of producing commodities, taking industry as a whole, is a constant con- dition, incapable, ,however great or universal the progress of industrial improvement, of undergoing change."
Having pointed out some of the principal objections to Mill's theory of the cost of rroduction, Professor Cairnes proceeds to giva.-a fresh exposition of the doctrine. He resolves the cost of Production into three elements,—Labour, Abstinence, and Risk, the first borne by the labourer, the second by the capitalist, the third by both; and after devoting _several pages to a very lucid examination of the labour-element of cost, to. the relation of skill to cost, to the nature of abstinence, and to the nature of Reciprocal Demand, he sums up his view as to the opera- tion of Reciprocal Demand and cost of Production upon normal value as follows :—" Reciprocal International Demand determines the average level of prices throughout the entire trade of each com- mercial country in relation to that prevailing in other countries in commercial connection with it. Reciprocal Domestic Demand determines certain minor relative averages extending over classes of articles, the products of non-competing industrial groups ; while cost of Production acts upon particular commodities, and in each case within the range of industrial competition, deter- mines their relative prices. The actual price, therefore, of any given commodity will, it is evident, be the composite result of the combined action of these several agencies." (p. 106.) Such is Professor Cairnes's view of the cost of Production and Reciprocal Demand, as governing normal value, and even those who may not entirely concur in it must acknowledge the ability and ingenuity with which he defends it.
It is difficult to praise too highly the manner in which Professor Cairnes, in the second part of this book, deals with subjects re- garding the relations between labour and capital. The whole labour question is treated by him with a clearness and a depth of sympathy rarely found in the best economical writings, and we earnestly recommend its careful study to those false friends of the -working-classes who encourage them to place exclusive reliance on Trades Unionism, and also to those who dream of a redistri- bution of wealth on principles which could only be carried into effect by invoking the powers of the State, and which must in- evitably bring ruin and disaster on any society which adopts them.
In the third part of this book, in which the conditions under 'which international trade arises and the advantages derived from it are treated, Professor Cairnes finds himself obliged to devote some space to the great controversy between Free-traders and Protectionists. Some hundred and seventy years have passed since Fenelon, who was certainly one of the greatest political geniuses of his age and country, advocated the principles of Free- trade. Since that time, the doctrine has been formulated by economists and scientifically proved ; it has been held by such political philosophers as Condillac and Burke, and accepted in principle by such great practical statesmen as - Turgot and Pitt, Huskisson and Peel, yet there is not a single theory in politics so little understood, and it may be doubted whether the theory of Protection was ever stronger with- in the last thirty years than it is at this moment. The essence of this pernicious doctrine is to protect native industry by excluding the entrance into the protected country of articles which could compete with it ; and the result of that policy, if consistently carried out, would inevitably be simply to extinguish foreign trade. Our space does not permit us to follow Professor Cairnes in his powerful criticism of the fatal and demoralising effects of the protective system. He shows how injurious it is to the national industry which it is supposed to promote, and he points to the results of the Morrill tariff in the United States to illustrate the effect of that attempt to override the laws of nature, and calls attention to the serious check which the commercial progress of the United States has suffered since its introduc- tion. The external trade of the country has fallen from 81 to 19 per cent., commercial tonnage has declined, the business- of shipbuilding has been almost destroyed, and the real re- muneration of the United States labourer has fallen in a propor- tion to his former earnings of not less than twenty per cent. Such are some of the results of the Protectionist experiment in the United States, and similar consequences must always follow where the animating principle of a commercial policy is a suicidal jealousy of foreign competition.
We recommend both these works, and especially Some Leading Principles of Political Economy, to the careful study of our readers. It behoves English politicians to master at least the great funda- mental truths of economic science, and above all things, clearly to understand the general question of international trade. Sir Robert Peel, writing to Lord Ilardinge on the 4th of July, 1846, speaks of the satisfaction with which he heard, a few days previously, on the 25th of June, two hours before he was ejected from power, a couple of drowsy Masters in Chancery mumble at the table of the House of Commons that the Lords had agreed to the Customs Duties Bills and to the Corn Importation Bill without any amendment. That date not only narks an important moment in our national history, it is one, we are sure, that will be remembered by posterity as commencing a new era in the history of mankind. It was then that the English nation accepted and began to practise the doctrine which must become, sooner or later, the vivifying principle of a new international life. Englishmen are accustomed to look back to the history of their country with pride, and to reflect with satisfaction that no disaster can now rend from England some of her proudest titles to the admiration and gratitude of mankind. But if they only remain true to themselves, and if English statesmen will prudently, but steadily and bravely push the doctrine of Free- trade to its legitimate consequences, and endeavour to realise the radical changes which the ultimate acceptance of this principle by other countries must bring about in international life, there is every reason to hope, notwithstanding some sinister signs, that England may occupy even a more splendid position in the future than ever she has done in the most glorious moments of the past.
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