noticed and then Professor Walker distinct from the The step which

of non-competing groups of workmen—a fact neglected by Mill-on the theory of value. explained the function of the employer as capitalist in the economy of industrial life. might have been taken half a century ago has been taken at last in the past decade, and Political Economy bids fair to bear fruit once more. Not that the deductive method, which failed so lamentably after its first triumphs, will be discarded as useless. It will take its place as a needful instrument of investigation, but its conclusions will be generally recognised as hypothetical. Care will be taken to include in its premises the greatest possible number of facts, and to apply its results with the utmost scrupulousness to existing industrial and social relations. It will no longer be a common error to confuse the abstract science of Economics with the real science of human life.

II.

The philosophic assumptions of Ricardo-They are derived from Adam Smith -The worship of individual liberty-It involves freedom of competition and removal of industrial restrictions-The flaw in this theory-It is confirmed by the doctrine of the identity of individual and social interests-Criticism of this doctrine-The idea of invariable law-True nature of economic laws -Laws and precepts-The great charge brought against Political Economy -Its truth and its falsehood.

But in examining the system of Ricardo and the causes alike of its extraordinary success, and the deep repugnance which it has excited, it is not sufficient to consider only the nature of his logical method. We must take into account also the general philosophical conceptions which underlie his treatise. Ricardo's economic assumptions were of his own making. Not so his philosophical assumptions. These were derived from his great predecessor, Adam Smith, whose intellectual position he accepted in the main without question. Two conceptions are woven into every argument of the Wealth of Nations-the belief in the supreme value of individual liberty, and the conviction that Man's self-love is God's providence, that the individual in pursuing his own interest is promoting the welfare of all. To these conceptions there is not a single allusion in Ricardo's treatise, but that is simply because,

1

neither a theologian nor a politician himself, he was not aware of the political and theological elements in his economic inheritance. Though not expressly acknowledged, these two ideas permeate his doctrine, as they do that of all the economists of the old school. The first belief is too familiar to need illustration, but the second, which is the foundation of all the practical precepts of the old economists, it may be worth while once more to exhibit in its most unmistakeable shape. "Private interest," writes James Anderson, the Scotch farmer whose theory of rent was brought to light by his laborious countryman MacCulloch, "is in this, as it ought to be in every case in well-regulated society, the true primum mobile, and the great source of public good, which, though operating unseen, never ceases one moment to act with unabating power, if it be not perverted by the futile regulations of some short-sighted politician." But it is in the great work of the clergyman Malthus that the opinion takes its most theological form. "By this wise provision," he says, “i.e. by making the passion of self-love beyond comparison stronger than the passion of benevolence, the more ignorant are led to pursue the general happiness, an end which they would have totally failed to attain if the moving principle of their conduct had been benevolence. Benevolence, indeed, as the great and constant source of action, would require the most perfect knowledge of causes and effects, and therefore can only be the attribute of the Deity. In a being so short-sighted as man it would lead to the grossest errors, and soon transform the fair and cultivated soil of human society into a dreary scene of want and confusion." 2 This is the doctrine which, divested of its theological fervour and blended with the political doctrine of individual liberty, constitutes the main philosophical assumption of Ricardo's treatise.

It is necessary to consider the effect of these ideas upon the attitude of the economists, and the reception which was accorded to their doctrines. And first, for the idea of the supreme value of individual liberty.

It was as the gospel of industrial freedom that the Wealth of Nations obtained its magical power. The civilised world was

1 A Comparative View of the Effects of Rent and of Tythe in influencing the Price of Corn, 1801. In Recreations in Agriculture, vol. v. (2d series, vol. i.) p. 408. 2 Malthus, Essay on Population, 1872 (7th edition, Appendix), p. 492.

restless with dreams of political emancipation; it trembled with expectation of a deliverance to come. The principle which was in the mind of every eager politician Adam Smith and the Physiocrats applied to industry and trade. They claimed "as one of the most sacred rights of mankind," not merely liberty of thought and speech, but liberty of production and exchange. Personal, political, and industrial liberty were for them but parts of one great system; and if they dwelt with greater emphasis on industrial liberty it was because they saw in that the most certain and least dangerous remedy for the evils of their time. It was impossible, however, to advocate the one without giving support to the other; and it is interesting to find Adam Smith pointed to in the House of Lords as the real originator of the "French Principles," against which a crusade was contemplated. "With respect to French principles, as they have been denominated," said the Marquis of Lansdowne, three years after Smith's death," these principles have been exported from us to France, and cannot be said to have originated among the people of the latter country. The new principles of government founded on the abolition of the old feudal system were originally propagated among us by the Dean of Gloucester, Mr. Tucker, and have since been more generally inculcated by Dr. Adam Smith in his work on the Wealth of Nations, which has been recommended as a book necessary for the information of youth by Mr. Dugald Stewart in his Elements of the Philosophy of the Human Mind."1

Without stopping to comment on this curious statement, we may remark that it is a striking evidence of the impression produced on a cultivated mind by Adam Smith's great work as a treatise of political philosophy. Such in fact it was, as we know from Adam Smith's own words, the statements of his pupil, and the composition of the work itself. Whether he writes as a pamphleteer or a historian; whether he is pursuing a grave investigation into the influence of political institutions on economic progress, or dogging tedious and confused advocates of the mercantile system through all the weary windings of their arguments; whether he is engaged in learned research, fierce denunciation, or dubious refutation, every page of Adam Smith's writings is illumined by one great

1 House of Lords, February 1, 1793.

passion, the passion for freedom. This was the first and last word of his political and industrial philosophy, as it was the first and last word of the political and industrial philosophy of the age. All around were the signs of an obsolete system of restriction, cramping and choking political and industrial life. Every philosopher, every enlightened statesman, every enlightened merchant saw only one remedy. Talking with Turgot in Paris, or with Cochran, "one of the sages of the kingdom," in Glasgow, Adam Smith found the same echo of his own opinions. Turgot in Limousin, Adam Smith in Glasgow, saw in a different form the hateful evils of the ancient system. Whilst Turgot, the governor of a province, was labouring day and night to improve the condition of down-trodden peasants, Adam Smith, the professor, was shielding from the effects of obsolete privileges the greatest mechanical genius of the age. Nothing can be more interesting than that story of James Watt, refused permission to practise his trade by the corporation of hammermen, but admitted by the professor within the walls of the University of Glasgow, and allowed there to set up his workshop. Thus in Glasgow, "a perfect bee-hive of industry," according to Smollett, where people were filled with a noble spirit of enterprise," where commercial and intellectual activity went hand in hand-many of the principal writings of the mercantile system being reprinted there whilst Adam Smith was giving his lectures-and in Limousin, the oppressed and poverty-stricken French province, the same lesson was being forced into men's minds-the need of liberty; and at the same time great mechanical inventions were preparing the way for a new age.

The Wealth of Nations was published on the eve of an industrial revolution. When Adam Smith talked with James Watt in his workshop at Glasgow, he little thought that by the invention of the steam-engine Watt would make possible the realisation of that freedom which Adam Smith looked upon as a dream, a utopia. It is true we see traces in the Wealth of Nations of the great changes that were everywhere beginning, but the England described by Adam Smith differed more from the England of to-day than it did from the England of the middle ages. The cotton manufacture is mentioned only once in Smith's book. The staple industries of the country were still wool, tanned leather,

and hardware, while silk and linen came next in importance. Iron was still smelted chiefly by charcoal, though smelting by pitcoal had been introduced. It was not, however, produced in such quantities as to supply the greater part of England's demand; much was imported from America, Russia, and Sweden. Wool and silk were woven and spun in scattered villages by families who eked out their subsistence by agriculture. "Manufacturer" meant not the owner of power-looms and steam-engines and factories, buying and selling in the markets of the world, but the actual weaver at his loom, the actual spinner at her wheel. But seven years before the publication of the Wealth of Nations Arkwright had patented his water-frame and James Watt his steam-engine. A few years after its publication Cartwright invented the power-loom, Crompton the mule. It was by these discoveries that population was drawn out of cottages in distant valleys by secluded streams and driven together into factories and cities. Old restrictions became obsolete by sheer force of necessity, and the freedom of internal trade to which England, according to Adam Smith, owed so much, was completed under conditions which Adam Smith could not imagine.

In all respects but one the internal trade of England in the time of Adam Smith was completely free. "The inland trade," he says, "is almost perfectly free." And he adds, "this freedom of interior commerce is perhaps one of the principal causes of the prosperity of Great Britain." But there was one great exception to this general freedom, and that was the position of labour, which was entangled in a perfect network of restrictions. Combination was illegal-a strike generally ended in "nothing but the punishment or ruin of the ringleaders." Laws of settlement prevented the emigration of artisans and labourers. "There is scarce a poor man in England of forty years of age, I will venture to say," wrote Adam Smith, "who has not in some part of his life felt himself most cruelly oppressed by this ill-contrived law of settlement." Emigration of labourers was forbidden by statute. Corporation laws and the law of apprenticeship closed innumerable employments. Adam Smith's condemnation of these restrictions is memorable: "The property which every man has in his own labour, as it is the original foundation of all other property, so it is the most sacred and inviolable. The patrimony of a poor man lies in the