Chapter XL: Book IV: , chap. 7, § 6.) (1)

[789] 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.

[790] 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_.

[791] “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!

[792] _Principles_, Book II, chap. 6, § 2.

[793] “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.

[794] 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?”

[795] 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.

[796] _Essays_, p. 281.

[797] 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.

[798] 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.

[799] 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_.

[800] G. Schmoller, _Zur Litteraturgeschichte der Staats- und Sozialwissenschaften_ (Leipzig, 1888). The expression will be found in his study of Roscher.

[801] A. Toynbee, _The Industrial Revolution_.

[802] 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).

[803] 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.

[804] 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.

[805] _Grundriss_, preface.

[806] 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.)

[807] _Grundriss_, preface, pp. iv-v.

[808] _Untersuchungen über die Methode der Sozialwissenschaften und der Politischen Oekonomie insbesondere._ (Leipzig, 1883.)

[809] 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.

[810] 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.”

[811] 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.”

[812] 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.

[813] Schmoller, _Grundriss der Volkswirtschaftslehre_, vol. i, p. 107 (1904).

[814] _Ibid._, vol. i, p. 108.

[815] _Ibid._, vol. ii, p. 653.

[816] 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.)

[817] 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.”

[818] Marshall, _Principles_, Appendix A.

[819] 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.)

[820] The first edition appeared in 1857.

[821] We would specially mention Levasseur’s excellent work, _Histoire des Classes ouvrières en France_ (first edition, 1867).

[822] 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.

[823] 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.

[824] 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).

[825] 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.)

[826] 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.)

[827] See Karl Pearson, _The Grammar of Science_.

[828] 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.

[829] 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.

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

[831] _Principles_, Book I, chap. 6, § 6.

[832] Walras, _Economie politique pure_.

[833] Some authors would not admit complete assimilation; e.g. Wagner (_Grundlegung_, vol. i, p. 335).

[834] Schmoller especially insists on this point.

[835] Knies, _op. cit._, p. 23.

[836] A. Wagner, _Grundlegung_, § 67.

[837] Vol. ii, p. 502.

[838] _Logic_, vol. ii, p. 497.

[839] _Principles_, Book I, chap. 5, § 9.

[840] Marshall, _Principles_, Book I, chap. 5, § 7.

[841] _Zur Litteraturgeschichte_, p. 279.

[842] _Untersuchungen über die Methode_, p. 279.

[843] 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).

[844] 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.

[845] 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.

[846] _Manuale di Economia politica_, p. 24 (Milan, 1906).

[847] _Principles_, 4th ed., Book I, chap. 3.

[848] _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.

[849] _Die Entstehung der Volkswirtschaft_, Dr. Wickett’s translation.

[850] “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.

[851] _Die Nationalökonomie der Gegenwart und Zukunft_, p. 29.

[852] _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.”

[853] 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.

[854] 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.”

[855] 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.

[856] 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_.

[857] _Grundlegung_, p. 342.

[858] Cf. Ingram, _History of Political Economy_, and Denis, _Histoire des Systèmes_.

[859] A. Comte, _Cours_, vol. iv, p. 198.

[860] _Cours_, vol. iv, p. 328.

[861] 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_.

[862] _Theory of Political Economy_, preface to the second edition, 1879.

[863] Schmoller’s _Jahrbuch_ contains descriptive studies of present-day commercial and industrial undertakings which are veritable models.

[864] _The Present Position of Political Economy_, in the _Economic Journal_, 1907, p. 481.

[865] 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.

[866] 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.

[867] “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.)

[868] _Wealth of Nations_, Book IV, chap. 9; Cannan’s ed., vol. ii, p. 185.

[869] _Harmonies_, 10th ed., p. 556.

[870] Hermann, _Staatswirtschaftliche Untersuchungen_, 1st ed., pp. 12-18.

[871] 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.)

[872] Michel Chevalier, Introductory Lectures, No. 10, in _Cours_, vol. i, p. 221.

[873] _Cours_, vol. i, pp. 211, 214; vol. ii, pp. 38, 115.

[874] Pareto, _Cours d’Économie politique_, vol. ii, § 656 (1897).

[875] _Principes_, p. 422.

[876] _Ibid._, pp. 444, 462, 521.

[877] 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.)

[878] Republished in his _Études d’Économie sociale_, 1896. See a brief _résumé_ in our chapter on Rent.

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

[880] 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.

[881] _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.

[882] 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.

[883] In his introduction to the _Briefe von Lassalle an Rodbertus_, p. 8 (Berlin, 1878).

[884] 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.

[885] 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.

[886] 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_.

[887] 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_.

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

[889] _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.

[890] _Ibid._, October 17, 1872.

[891] _Ibid._, January 6, 1873.

[892] _Ibid._, March 10, 1872, and _Physiokratie u. Anthropokratie_, in _Briefe u. Sozialpolitische Aufsätze_, pp. 521, 522.

[893] 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).

[894] “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.)

[895] _Physiokratie u. Anthropokratie_, in _Briefe u. Sozialpolitische Aufsätze_, p. 519.

[896] _Schriften_, vol. iii, p. 216.

[897] “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.)

[898] “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.)

[899] _Ibid._, p. 108.

[900] _Kapital_, p. 143.

[901] 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.

[902] 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.

[903] _Kapital_, pp. 164-166.

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

[905] _Kapital_, pp. 150-160.

[906] 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.

[907] On this point see Rist’s _Le Capital provient-il uniquement du Travail?_ in the _Revue d’Économie politique_, February 1906.

[908] 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.”

[909] “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_.)

[910] 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.)

[911] _Kapital_, p. 105.

[912] “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.)

[913] _Kapital_, p. 153.

[914] 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.

[915] _Kapital_, p. 53.

[916] 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_.)

[917] 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.

[918] _Kapital_, p. 176.

[919] _Ibid._, p. 187.

[920] “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.”

[921] 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.

[922] Cf. _Kapital_, p. 188, note.

[923] _Zur Geschichte der römischen Tributsteuer_, in _Jahrbücher für Nationalökonomie u. Statistik_, vol. viii, pp. 446-447, note.

[924] “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.)

[925] 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).

[926] _Théorie systématique des Droits acquis_, vol. i, p. 274, note (Paris, 1904).

[927] _Briefe von Lassalle an Rodbertus_, p. 46 (Berlin, 1878).

[928] _Ibid._, p. 44.

[929] _Freilich darf man das dem Mob heut noch nicht sagen._ (_Ibid._, p. 46.)

[930] “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.)

[931] 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.)

[932] _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.”

[933] _Schriften_, vol. i, p. 213.

[934] 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).

[935] 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.

[936] 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.

[937] 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.

[938] 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_.

[939] 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_.

[940] 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.)

[941] “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_.)

[942] “Kultur und Wohlfahrtzweck” (Wagner, _Grundlegung_, p. 885.)

[943] 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.

[944] Dupont-White, _L’Individu et l’État_, 5th ed., p. 9.

[945] _Ibid._, p. 267.

[946] Preface to Stuart Mill’s _Liberty_.

[947] Wagner, _Grundlegung_, 3rd ed., pp. 892 _et seq._

[948] _Finanzwissenschaft und Staatssozialismus_, p. 106.

[949] See _supra_, p. 430.

[950] Dupont-White, _Capital et Travail_, p. 353 (1847); _L’Individu et L’État_, p. 81.

[951] _L’Individu et l’État_, p. 65.

[952] _Ibid._, pp. 163, 164.

[953] “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).

[954] Wagner, _Grundlegung_, p. 887.

[955] 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.)

[956] 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.”

[957] 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.

[958] 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.)

[959] P. 398.

[960] _Finanzwissenschaft und Staatssozialismus_, p. 718.

[961] 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.

[962] Speech delivered on March 18, 1889, quoted by Brodnitz, _Bismarcks Nationalökonomische Ansichten_, p. 141 (Jena, 1902).