"He sends his son to school, and the simple teaching which is given there, is itself due to the work of many thousand minds. "If he undertakes a journey, he finds that, in order to save him time and exertion, other men have removed and levelled up the soil, filled up valleys, hewed down mountains, united the banks of rivers, and brought the power of steam into subjection to human wants.

"It is impossible not to be struck with the measureless disproportion which exists between the enjoyments which this man derives from society, and what he could obtain by his own unassisted exertions. The social mechanism then must be very ingenious and very powerful, since it leads to this singular result, that each man, even he whose lot is cast in the humblest condition, obtains things every day which he could not himself produce in many ages.

66 The study of that mechanism is the business of Political Economy1."

In other words, we may say that Political Economy examines the Production, the Distribution and the Consumption of wealth. It seeks for the causes which determine wages, profits, and rent; it inquires how far these causes are fixed by unchangeable natural laws, and how far they can be modified by human effort. Last, but not least, it traces the connexion that there is between the character of the workman and the character of his work. “As a man thinketh, so is he"; as the work is, so is the worker; as the worker is, so is the work.

The nation used to be called "the Body Politic." So long as this phrase was in common use, men thought of the interests of the whole nation when they used the word "Political"; and then "Political Economy" served well enough as a name for the science. But now "political interests" generally mean the interests of only some part or parts of the nation; so that it seems best to drop the name "Political Economy," and to speak simply of Economic Science, or more shortly, Economics.

The present volume is called The Economics of Industry because it treats of the affairs of producers, both employers and workmen. The discussion of banking, foreign trade and finance is deferred to the companion volume.

§ 2. Economics is a science because it collects, arranges, and reasons about one particular class of facts. A science brings together a great number of similar facts and finds that they are special cases of some great Uniformity which exists in nature. It describes this Uniformity in a simple and definite statement, or Law.

1 Bastiat's Harmonies of Political Economy.

pro

A Law of Science states that a certain result will be duced whenever a certain set of causes are present1. Science traces the connexion between different Laws, often shewing that some of them are explained by, or contained in others. It reasons from these Laws, applying them to new cases of gradually increasing difficulty, and finds out the conclusions to which they point. It then inquires how far these conclusions are consistent with observation, so as to verify its work. If necessary, it goes back to its original Laws, and corrects, or modifies or adds to them, so as to make them represent Nature more truly. Thus gradually science becomes able to predict future events with increasing confidence and accuracy3.

But this is all that a science can do; it cannot claim to be a guide in life, or to lay down rules for the practical conduct of affairs. That is the task of what in old times used to be called an Art. An Art considers some important practical end, and directs men in their efforts to obtain it. First it inquires, generally into the various conditions of the case. Then taking one of them at a time it seeks out the science whose special business it is to answer questions relating to this particular class of conditions, and demands of this science an answer to a question which bears directly on the end in view. Having collected such answers from many sciences, Art puts them together; and says, Since we are told by the sciences that such and such effects will follow from such and such causes, therefore it is best to pursue such and such a course: this course will, all things being considered, lead us up to, or near to, our desired end, so as to cause as much good and as little evil as possible.

Thus the railway engineer is a man who devotes himself to the Art of making railways: and when it is decided that a railway is to be made from one town to another, he consults Geology and other sciences and obtains their answers to certain definite questions before he decides which route to adopt.

1 It is unfortunate that the word Law is used in this sense, and also in the sense of a command by authority. The law which speaks in the Indicative mood, and says, A is a cause of B, is as different in character from a Law which speaks in the Imperative mood, and says "Do this, Avoid that," as a bat that flies is from a bat that is used at cricket.

2 Beginners should omit all passages contained in square brackets. 3 Science, when obtaining new Laws, is said to be Inductive; when reasoning from them and finding how they are connected with one another, it is said to be Deductive; its third task, that of Verification, has just been described. There has been a controversy as to whether Economics is an Inductive or a Deductive Science. It is both its Inductions continually suggest new Deductions; its Deductions continually suggest new Inductions.

:

But the statesman or the financier who decides that these two towns are to be connected by a railway is a man of Art in a yet broader sense of the term. For he has to consider not only what it will cost to make the railway but also what nett profit it will bring in, and perhaps what will be its indirect political, social and moral effects. In doing this he has to make many inquiries of Economics; for this science examines the laws that determine the growth of trade in particular channels, and the cost of making and working the railway.

Economics then cannot by itself be a guide in the practical affairs of life; but it answers a number of difficult questions which must be asked of it by the statesman, the man of business, and the philanthropist. Economics is to be classed with the Moral or Social Sciences; because it deals only incidentally with inanimate things. Its main purpose is to seek for the moral and social Laws by which men's conduct is determined in the every day work of their lives: the motives which cause them to seek one trade and occupation rather than another, and which govern their behaviour to others with whom their trade brings them into contact. Economics investigates the causes which determine the work of a man's daily life, the manner in which he spends his income, and the influence which his work exerts on his character.

§ 3. Social sciences have made slower progress than physical sciences. One reason of this is that men have only recently begun to apply to social sciences those methods of classification, and that systematic study of each class of truths, which have been so successful in the physical sciences. But now that men have set themselves to study each separate group of social facts by itself, these sciences too are beginning to advance steadily.

In any history of the physical sciences we may read how men failed to make rapid progress so long as they persisted in the vain attempt to discover some simple explanation of all the various natural phenomena. The ancients used to be continually starting new theories for the explanation of the universe, which succeeding ages had to cast away. As time went on, men learnt that they must separate the study of inorganic life from that of organic, the study of chemistry from that of mechanics, and so on. And when men had thus begun to concentrate their attention on one particular class of natural phenomena at a time, to trace by careful and steady work their Laws, they made solid progress. Of course they seldom obtained results that were completely true. But the new results were always nearer the truth than those which they displaced, so that each generation started from a more advantageous position than its predecessors; and thus by gradual

steps man has obtained a command over nature similar to that which fancy used to attribute to the fairy or the magician.

At the same time it is true that in the Moral Sciences, even more than the physical, a man who confines himself entirely to one narrow branch of inquiry is not likely to make good progress in it. The economist should know something of the history of manners and customs and laws, and of the principles of mental, moral, legal and political science. He must avoid the error of regarding "the present experience of mankind as of universal validity, mistaking temporary or local phases of human character for human nature itself, having no faith in the wonderful pliability of the human mind; deeming it impossible in spite of the strongest evidence that the earth can produce human beings of a different type from that which is familiar to him in their own age and even perhaps in his own country. The only security against this narrowness is a liberal mental cultivation... A person is not likely to be a good economist who is nothing else. Social phenomena acting and reacting on one another, they cannot rightly be understood apart; but this by no means proves that the material and industrial phenomena of society are not themselves susceptible of useful generalisations, but only that these generalisations must necessarily be relative to a given form of civilisation and a given stage of social advancement1."

Thus the economist must pause sometimes to consider the connexion between that element of well-being with which he is chiefly concerned, and the other elements; for it is only by this means that he can ascertain the real significance of his own results, and can learn in what direction it is most important to extend his inquiries.]

§ 4. This account of Economic science may be summed up in the following definitions:

Those portions of human conduct which are directed towards the acquirement of material wealth, and those conditions of human well-being which directly depend on material wealth, are called Economic.

The Science of Economics collects, examines, arranges and reasons about the facts which are connected with the economic habits and conditions of well-being in various countries at various times.

§ 5. The subject-matter of Economics is Wealth. But there is some difficulty in ascertaining the meaning of this word. Wealth must be distinguished from well-being.

All things which are useful or pleasurable are elements of Well-being, whether they are material things, or human faculties and capacities for enjoyment.

1 Mill, On Comte, pp. 81-83.

And it se

possessed by a cart-horse or a slave. able to exclude that of a free man simply beca be sold, and so has no market-price.

But we want some term which will fitly descri as are capable of being exchanged and of havi definitely measured; and we find such a term Wealth."

Wealth then may be said to consist of M and Personal or non-material wealth. Material Wealth consists of the mate enjoyment which are capable of being and therefore of being exchanged.

Thus it includes not only commodities (or thi sion of which can give enjoyment directly), but and other things which are made or appropria aid man in producing commodities.

"Personal" or "non-material wealth" co

human energies faculties and habits, p and moral, which directly contribute t industrially efficient, and which therefor power of producing material wealth. Thus manual skill, intelligence, and honesty m in the personal wealth of a country.

All other human faculties and qualities advantage to have, and all other sources are elements in the well-being of a ma included under the term wealth.

Thus the power of appreciating and deriving music is an element of well-being, but it is not because generally speaking it does not make men in the production of material wealth.

§ 6. The term Productive has been used in many senses, and has caused much misund seems best that Productive when used simply term should mean productive of wealth.

Labour is Productive when it produces w
Personal or Material.

But whenever there is any room for doubt, n made of the particular kind of thing which is pr it may be said that labour is "productive of anticipate the use of terms which will soon be de tive of capital," or "productive of wage-capital,"