RICARDO AND THE OLD POLITICAL

ECONOMY.

I.

The change that has come over Political Economy-Ricardo responsible for the form of that Science-The causes of his great influence—The economic assumptions of his treatise-Ricardo ignorant of the nature of his own method-Malthus's protest-Limitations of Ricardo's doctrine recognised by Mill and Senior—Observation discouraged by the Deductive Method— The effect of the Labour Movement on Economics-Modifications of the Science by recent writers-The new method of economic investigation.

THE bitter argument between economists and human beings has ended in the conversion of the economists. But it was not by the fierce denunciation of moralists, nor by the mute visible suffering of degraded men, that this conversion was effected. What the passionate protests of Past and Present and the grave official revelations of government reports could not do, the chill breath of intellectual criticism has done. Assailed for two generations as an insult to the simple natural piety of human affections, the Political Economy of Ricardo is at last rejected as an intellectual imposture. The obstinate, blind repulsion of the labourer is approved by the professor.

Yet very few people even now understand the nature of that system. I have called it the Political Economy of Ricardo, because it was he, more than any one, who gave to the science that peculiar form which, on the one hand, excited such intense antagonism, and, on the other, procured it the extraordinary influence which it has exercised over English thought and English politics.

No other book on the subject ever provoked the same fierce, intellectual disparagement and moral aversion as the Principles of Political Economy and Taxation; no other book, not even the Wealth of Nations, obtained the same immediate ascendency over men of intellectual eminence. Evidence of the first statement may

A

be sought in innumerable refutations by economists and moralists; evidence of the second it seems worth while, in view of recent controversies, to recall once more. To Colonel Torrens, an economist of remarkable vigour and independence, Ricardo was still in 1844 "his great master;" to John Mill, writing about 1830, his book was the "immortal Principles of Political Economy and Taxation"; to Charles Austin, many years later, there was, with one or two exceptions, nothing in that great work which he desired to see altered; and to De Quincey, writing soon after his first perusal of the book, it seemed the revelation of a new science. "Had this profound work," he writes in the Confessions of an Opium Eater, "been really written in England during the nineteenth century? Was it possible? I supposed thinking had been extinct in England. Could it be that an Englishman, and he not in academic bowers, but oppressed by mercantile and senatorial cares, had accomplished what all the universities of Europe and a century of thought had failed even to advance by one hair's-breadth? All other writers had been crushed and overlaid by the enormous weight of facts and documents; Mr. Ricardo had deduced, à priori, from the understanding itself, laws which first gave a ray of light into the unwieldy mass of materials, and had constructed what had been but a collection of tentative discussions into a science of regular proportions, now first standing on an eternal basis." Not merely the members of the school to which Ricardo belonged, and literary philosophers like De Quincey, but even the Tories themselves, the ancient natural enemies of the economists, joined in the applause. Christopher North, in Blackwood's Magazine, in a professed eulogy of Adam Smith, placed Ricardo above him.

At first sight nothing appears more strange than this antipathy to, and this adoration of Ricardo. The bitter antagonism, the unqualified admiration seem alike inexplicable. Why should a treatise so remote, so abstract, so neutral, not filled with passion, like the Wealth of Nations, not eloquent in denunciation and exhortation, stating conclusions without eagerness, suggesting applications almost without design, why should such a treatise as this excite an uncompromising moral repugnance? Because it was remote, abstract, neutral, because, while excluding from its consideration every aspect of human life but the economic, and dealing with that in isolation, it

came, nevertheless, though not with the conscious intention of its author, to be looked upon and quoted as a complete philosophy of social and industrial life. And this isolation, this artificial separation of elements, carried by the same habit of mind into the explanation of economic facts themselves-this separation it is, which explains the persistent criticism of many of the leading theories of the treatise. The moral wickedness of the whole tendency of Political Economy, and the intellectual fallacies of the theory of value, have been denounced almost in the same breath, and for precisely the same cause.

But again, we may ask, why should a treatise so destitute of sympathy, observation, imagination, even literary style-a great part of it is nothing more than bald disjointed criticism of other books-dealing as it did with the most interesting, the most vital of human affairs; why should such a treatise as this dominate the minds of nearly all the distinguished men of a distinguished time? Because, I answer-though no one answer will serve as a complete explanation of its marvellous logical power, the almost faultless sequence of the arguments. Systems are strong not in proportion to the accuracy of their premises, but to the perfection of their reasoning; and it was this logical invulnerability that gave to the Principles of Political Economy its instantaneous influence. Ricardo has been recently compared to Spinoza; and what was said of Spinoza may be said of him: grant his premises and you must grant all. The contrast in the case of Ricardo, between the looseness and unreality of the premises and the closeness and vigour of the argument, is a most curious one.

For a complete explanation, we must push our investigation further. We have seen that admiration of Ricardo was not confined to any one class or school; but, undoubtedly, the influence of his book was increased by the fact that in method and spirit it coincided completely with the mental habits of the most vigorous and active thinkers of that age. Indeed, Ricardo was their disciple. "I am the spiritual father of James Mill, James Mill is the spiritual father of Ricardo, therefore I am the spiritual grandfather of Ricardo," was an utterance of Bentham's; and it is exactly true. James Mill exercised over Ricardo the greatest influence. Ricardo's disciple in Political Economy, he was his master in everything else. It is probable that it was only through the encouragement of

Mill that Ricardo, by nature unambitious and diffident, resolved to undertake the composition of his famous treatise. It is certain that it was by Mill's express exhortation that he bought his seat in Parliament; and Ricardo's speeches in the House of Commons popularised-for he was far more persuasive and lucid as a speaker than as a writer-the principles of his treatise.

Though in Parliament only four years, Ricardo revolutionised opinion there on economic subjects. "It is known," says a writer a few months after his death, "how signal a change has taken place in the tone of the House of Commons, on subjects of Political Economy, during his short parliamentary career." "It was only," said Joseph Hume, the most distinguished disciple of Ricardo in Parliament, "by the advice and in hopes of the assistance of a distinguished individual, whose recent loss the kingdom has to deplore," that he (Hume) called attention to the subject of the combination laws. "The late Mr. Ricardo was so well acquainted with every branch of the science of Political Economy, formerly and until he had thrown light upon it so ill understood, that his aid in such a question would have been of the utmost value." "Surprising as it may appear," says a writer in the Westminster Review, "it is no less notorious, that up to the year 1818, the science of Political Economy was scarcely known or talked of beyond a small circle of philosophers, and that legislation, so far from being in conformity with its principles, was daily receding from them more and more."

Besides the influence of the school of Bentham on political thought, and Ricardo's presence in Parliament, we may find still another reason for the magical effect of his treatise in the circumstances of the time. He lived in an age of economic revolution and anarchy. The complications of industrial phenomena were such as to bewilder the strongest mind. No light had been thrown by Adam Smith on those vital questions, discussed before every Parliamentary committee on industrial distress, as to the relations between rent, profits, wages, and price. Adam Smith had distinctly spoken of rent, profits, and wages as the causes of prices. Not one of those who pored over piles of blue-books, or spent years in minute industrious observation of the actual world, had offered one single suggestion for the solution of these problems. The ordinary business man was simply dazed and helpless. He thought on the

whole that a rise or fall in wages was the cause of a rise or fall in prices; but he could not explain himself, and was not sure. "Does a diminution in the prices of the goods generally precede a diminution of wages?" asks a member of a committee. "It has been both ways," answers the manufacturer, “for I have known people decrease the wages before there was a diminution; but it follows the moment the wages are decreased, the goods follow immediately."

To people groping in this darkness, Ricardo's treatise, with its clear-cut answers to their chronic difficulties, was a revelation indeed. But Ricardo's solution of the problem, i.e. that the prices of freely produced commodities depend upon cost of production, measured in labour, and that wages, profits, and rent are not the causes but the results of price; this solution was only reached by making certain audacious assumptions which it would have been hardly possible for any economist before his time to make. Adam Smith lived on the eve of an industrial revolution. Ricardo lived in the midst of it. Assumptions which could never have occurred to Adam Smith, because foreign to the quiet world he lived in, a world of restrictions and scarcely perceptible industrial movement, occurred to Ricardo almost as a matter of course. That unceasing, all-penetrating competition-that going to and fro on the earth in search of gold-that rapid migration of men and things, the premises of all his arguments, were but the exaggeration, however wild, of the actual state of the industrial world of Ricardo's time. The steam-engine, the spinning-jenny, the power-loom, had torn up the population by the roots; corporation laws, laws of settlement, acts of apprenticeship, had been swept away by the mere stress of physical circumstances; and with all that visible movement of vast masses of people before his eyes, with that ceaseless tossing and eddying of the liberated industrial stream ever before him, is it to be wondered at that, with the strong native bias of his mind already in this direction, he should make without hesitation that postulate of pure competition on which all the arguments of his treatise depend? It was this assumption, together with its corollaries, which enabled him to pour such a flood of light upon the chaotic controversies of his time, and to appear to his contemporaries like the revealer of a new gospel. But it was this assumption also,

1 Committee on Woollen Petitions, 1808.