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THE POSTULATES
OF
J. l"t.|
LK 1V1AYLK LIBRARY
LOSDOX PRINTED BT 8POTTISWOODK AND CO., KXW-STBEET SQCAttB ASD PAHHAilEST STUKKT
:
WALTER BAGEHOT
>:.A.
STUDENTS EDITION
WITH A PREFACE
BT
ALFRED MARSHALL
PROFESSOR
OF
POLITICAL
ECONOMY,
CAMBRIDGE
LONDON
CO.
All
nyhtt i-eiervtd
LIBRARY
UNIVERSITY OF CALIFORNIA
SAM A BARBARA
PREFACE.
MR. BAGEHOT
left
for a
abuse,
into
But these
he treated with so
much
and
among
students. 1
in 1876,
They were originally published in the Fortnightly Review and are republished with some other materials for the
Vl
PKEFACE.
He was
undertook.
excellently
qualified
for
the task he
He had
He was
an inde;
by disparaging them.
Though
its
'
aid in
If
you
'
without
to fail as
Metz
or a Belfort
by common
assault.'
fitted to
show the
modes of reasonlife,
or to bring
PEEFACE.
vii
And
we must remember
that
he had to say.
But what
may
help us to
ALFRED MARSHALL.
CAMBRIDGE: July
10, 1885.
CONTENTS.
PACK
I,
34
II.
65
THE POSTULATES
OF
ADAM SMITH
fore just a
completed the
'
Wealth of Nations
'
in
Economy
is
thereit
hundred years
effect.
old.
In that time
has
had a wonderful
in
The
life
of almost everyone
is
England
perhaps of everyone
it.
different
and
better in consequence of
policy of the country
instinct with
it.
is
not so
much founded on
it
as
where
else in the
it.
results of
No
its
down
into the
common
irreversible.
We
we have thus
To do
so
acquired to appreciate
properly.
we
THE POSTULATES OF
The
Economy
is
published in
Sir
England
Steuart's
Adam Smith
and
James
and written by a
its
man
of travel
c
:
cultivation.
And
teaching
is
of this sort
In
all
sidered in the
commodity
is
The
first
is
the
matter
this
the second
matter useful.
is
what the country loses the price of the country If the value of the labour exported is what it gains.
matter imported be greater than the value of what
is
If a greater value of
loses.
Why?
Because in the
first
case
strangers
must
;
therefore, a general
maxim
to dis-
this
Economy began.
it-
it
effect.
of the Continent
it.
As
is
power
to
the financial
Napoleon,
le
Ion Mollien,
whom
nothing would induce him to discard because his administration brought francs, whereas that of his
more showy competitors might after all end in ideas. It was then,' says Mollien, in giving an account of his youth, 'that I read an English book of which
1
the disciples
whom M.
Turgot had
left
spake with
I
the
had especially remarked how warmly the venerable and judicious Malesherbes used to speak of it this
book so deprecated by
all
the
men
who spoke
of themselves
school of Colbert.
They seemed
amount
And
led
he describes
to
how
the
'
Wealth of Xations
'
him
to substiB 2
THE POSTULATES OF
we
are
'
now
so familiar,
on which the
paradoxes.
good Mollien dwells as on new In cases like this, one instance is worth
'
a hundred arguments.
sort of effect that
We
see
in a
moment
the
Imd when we
find
Vho
who
did
English.
posi-
Economy
is
rather dead
in the public
mind.
there
Yoimger men
that
it
or do
it
not
feel
New
sciences
the last
new
modes of
what
is
investigation, and they want to know the relation of economic science, as their
it,
fathers held
to these
these
new
it,
instruments.
will this
'
They
'
knowing
science
as
we now
try sciences ?
And
the answer.
Abroad, as
is
is
more avowed.
though the Political Economy of Adam Smith penetrated deep into the Continent, what has been added in England since has never penetrated
;
equally
though
if
our
'
science
'
is true,
the newer
work required a greater intellectual effort, and is far more complete as a scientific achievement than anything which
Adam Smith
did himself.
Political
was taught by Ricardo, has had in Economy, this respect much the same fate as another branch of English thought of the same age, with which it has
as it
many
analogies
jurisprudence as
;
it
it
of course
it
was
abroad as
it
reigns here
it
theory, economic or political, can now be both insular and secure foreign thoughts
;
And no
there will
always
be
There
are,
lish Political
of
'
Economy should be thus unpopular out England. It is known everywhere as the theory
is
Experience shows
6 that no belief
THE POSTULATES OF
is
so difficult to create,
and no one
so
easy to disturb.
The
soil.
weed
'
'Why,' M. Thiers was asked, do you give these bounties to the French sugarin every
'
refiners ?
the
tall
chimneys
to smoke.'
conspicuous industry.
At what
less
cost to the
con-
conspicuous indusit
that prosperity
it
is
obtained,
it
Indeed,
hardly knows,
will
never read,
will
how
the visible
mind.
And, in many
Eng-
harm.
our traders,
who
we
weak and
poor.
You have
do
Economy
to enrich yourselves
shall not
is
so.'
and ruin us
you
And
Economy
more op-
Government
it
in all
ways than
most such
larity.
theories, brings
no accession of popuit
ele-
make
And
zealots
wish they
may
control
it
is
man, and
if
he
be convinced there
is
always
But most
;
zealots dislike to
they
know
instinc-
them.
Still I
reasons
do not believe that these are the only why our English Political Economy is not
its
estimated at
arises
value abroad.
from
may
is
why
it is
understood in England
tical
itself.
it
The
in
science of Poli-
Economy
as
we have
England may be
is
denned
in large productive
It is
lishmen
an analysis of that world so familiar to many Engthe great commerce by which England
'
It
which make
that
commerce
and
as is the
way of an abstract science it isolates and simplifies them it detaches them from the confusion with
:
in fact.
And
it
THE POSTULATES OF
the
it
men who
who make
possible.
as
we
and again
it
simpliit
fies
that
human
nature
it
Dealing with matters of business,' it assumes that man is actuated only by motives of business.
only.
It
anything,
makes
make
least
;
it
in the
way
it
man who
who
buys, buys
sells,
sells
all
is
pos-
this
not
for
that
men
but we assume
it
simplicity's sake, as an
hypothesis.
people,
for
And
this de-
ceives
many
excellent
from deficient
More competent
of real
not of
men
as
we
men
as
it is
convenient to us to
suppose they are. But even they often do not understand that the world which our Political Economists
treat of, is a very limited
also.
They often imagine that what they read is applicable to all states of society, and to all equally, whereas it is
only true of
in
it
and only proved as to states of society which commerce has largely developed, and where
has taken the form of development, or something
it
This explains
why
Commerce,
as
we have
it
in
else as it is
any
by the Anglo-Saxon
Here
it is
not only
we
it
is
most
to
help
is
though there
much
that
is like it,
much
growing more, there is nowhere the same pervading entity the same patent, pressing,
is
daily
and unmistakable
object.
And
the subject
Years ago I
Political
human mind,
by no means
an
effort.'
An
orator cannot
10
Political
THE POSTULATES OF
Economy is in no sense the highest study the mind there are others which are much
are
of
much
the
effort of
nor
is
true that
requires
or
the theory of
natural
selection
but,
nevertheless,
as
was
of
usual with
truth.
his
mind
great fund
He meant
that Political
Political
Economy
Economy
effectual
Political
Economy,
which
in
;
complex problems succeeds is a very difficult thing something altogether more abstruse and difficult, as
well
as
more
which many of
It is
those
who rush
special
hardship.
its
abstracits
those
little
who
have
usually
cognisance of
write about
calls
'
its abstractions.
men who
it
un-
words
'
that
is,
which they have no complete vivid picture to correThey are like physiologists who have never spond.
11
like astronomers
seen the
to
them,
that those
who
they
cannot comprehend
sense/
cannot of
Men
judgment
going to
happen
own
trade
judgments and
:
they did so
their anticipations
sensible lady to
They
whom
Men
of
Coleridge said,
Madam,
me
find
it.'
of business can no
their
life
more put
than they
much
'
what guides
'
could
tell
another person
how to speak
leads a
their language.
life
And
the
so the
theory of business
of obstruc-
men
12
THE POSTULATES OF
Far from wondering that such a science is not completely perfect, we should rather wonder that it exists
at
all.
Something has been done to lessen the difficulty These give tables of facts which help by theoretical writers and keep them straight, but the
statistics.
cure
is
not complete.
trade
mean
something more than, or something different from, A table of prices, for that which they really mean. example, seems an easy and simple thing to understand,
and a whole
:
literature of statistics
assumes
that simplicity
men
Theorists take a
;
by unalterable laws
a stockbroker will
'
tell
be
made.'
pression.
stock,
is
he will say, if it be a stock at all out of the common, I do not know, sir I will go on to the
c
:
me
a price.'
And
'
the
Loans Committee shows what sort of process making a price sometimes is Immediately,' they say,
'
:
'
'
'
the case
is
13
allot-
Honduras Loan
ment was made, M. Lefevre authorised extensive purchases and sales of loans on his behalf, brokers were
the brokers so
when
sell it if
In conse-
men were
on to a very large amount. Fifty or a hundred in the market dealing with each other and
all
the brokers
round.
and
book
statists
They make
by
article like
tables in
though which
;
hurtfully,
deceived.
artificial prices
run side
in
Honduras
is
scrip,
which can be
manipulated,
In most
price
at
all.
He
imagines
all
prices to be
equally straightforward.
may
difficulties,
14
because
it is
THE POSTULATES OF
drawn from the Stock Exchange, the and no doubt the most complex market for prices
;
its
it
is it
There
is
no question
in
bond of 1858
good or bad as another; one ordinary share in a railway exactly the same as any other ordinary
as
share
differs in
quality,
and
it is
of qualities, so
dations.
tell
it.
'
many
and so
Yet mere
'
and cannot
may
see
prices
compared
as if they
same thing, when, in fact, they are prices of different The Gazette average of corn is thus comthings.
pared incessantly, yet
it
is
It is
But
may
yet the tables compare the two without noticing the And when the range of prices runs over difficulty.
many
more treacherous,
quality, the thing
for the
15
changed.
And
of
this
persons not
engaged in business have no warning. Statistical tables, even those which are most elaborate and careful,
the facts
they do not, as a
trade.
It will be asked,
if
such a science
it ?
from
its
is
nature
it is
so difficult to frame
it,
The
com-
answer
that
it is
or
we must
The
facts of
complex.
the surface
Some
;
most important are not on some of those most likely to confuse are
of the
on the surface.
If you attempt to solve such problems without some apparatus of method, you are as
sure to
fortress
fail
as if
you try
to take a
modern military
;
Metz or a
Belfort
The way
gation and
sense
new
and
to see
we can make
of them.
said
less
more
16
THE POSTULATES OF
what
the
would be the
efficiency of industry
upon commerce
Some
hold,
it
and
may much
difficult
times in the
money market.
if
What common
?
sense
Yet we
may
be sure that
power of
have
many consequences on
the industry
Or
to take
an easier
is
case,
who can
tell
without
instruction
what
new
loans of
England
to
foreign nations ?
half-civilised
We
press
upon
half-finished
and
communities
incalculable
sums
we
are to
Cam-
We
'
personal security.'
No
this
and no arrested
civilisations ever
had
facility before.
What
since
will
civilisations
Or again
the
Franco -German
War
an
17
immense sum of new money lias come to England England has become the settling-place of inter;
national bargains
it
was before
but
effect of such a change had a professed science to help it ? There are indeed two suggested modes of in-
Economy,
it.
One
is
may
One
complete experiall
the facts of
very
German
l
the
'
Fortnightly
'
Review,'
such knowledge
and truth'
'
truth
and
full
knowledge
namely,
thorough investigation of the facts of the case. By the facts, I mean not merely such facts as present
themselves to so-called practical
men
in the
common
such a
and statistical inquiry would develop. When work shall have been accomplished, German
economists
1
may
18
THE POSTULATES OF
German banking, general. To set forth
it
will be necessary
to master in the
same way the facts of English, Scotch, French, and American banking, in short, of The only,' every country where banking exists.'
' '
he afterwards continues,
safe
but
let
ground of hope
for political
economy,
is,
fol-
lowing
Bacon's exhortation, to
recommence
.
afresh
In what conbe,
as-
sumptions and speculations of the last century ? But the reply is that the method which Mr. Cohn
suggests was tried in physical science and failed.
And
it
is
remembered
as
method which he suggests is exactly that which Lord Bacon himself followed, and owing to the mistaken nature of which he discovered nothing. The investigation into the nature of heat in the
.A*
is
it.
As Mr.
scientific
19
scientific
book-keeping.
imagine a
less likely
it
way
of arriving
at discoveries.'
And
yet
is
by
his experience,
The
science
real
is
Mr. Cohn hopes to make them. plan that has answered in physical
simpler.
much
nature
is
the one case you arrest a suspected person, and in the other you isolate
a
suspected cause.
When
Newton, by the
fall
was led
would account
that cause by
he took
itself,
traced out
its effects
it
'
by abstract
he dis-
guilty,'
would produce the phenomenon under investigation. In the same way Geology has been revolutionised in our
for the first
own time by
He
large
set of causes
by themselves.
He showed how
now
same both
in kind
and degree
c 2
20
THE POSTULATES OF
worked out
geological changes.'
He
inquiry
till
he took
many
facts
most important life in fitting new facts into an abJust so in an instract and youthful speculation.
stance which has
of the world.
made a
literature
is
has shown
how one
for
would account
nature
;
for
how many, no
controverted, but,
number.
And
this
he
showed by very difficult pieces of reasoning which very few persons would have thought of, and which most
people found at
first
not at
all
easy to comprehend.
The process by which physical science has become what it is, has not been that of discarding abstract
speculations, ba* of
tions.
Nautical
difficult
Almanack by which every ship sails, are and abstract enough, as most of us found to
is
There
revolt
21
abstract
'
reasoning.
Human
But
nature has a
strong
factish
element in
it.
Principia are
now
accepted.
they were
'
Flam-
the
man
most
of facts,
par
excellence
;
so called
them
but at
first
even
not
believe them.
English Political
the
Economy
But
laws of motion.'
the difference in the success of the two investigations that the laws of wealth are
to
comparatively simple in
And
'
to carry the
I say also
'
war into the enemy's country, that the method proposed by Mr. Cohn, the
all
case
'
method
is
impossible.
When
I read the
words
all
22
THE POSTULATES OF
on growing, multiply-
ing, and changing. The facts of it are one thing to-day and another to-morrow nor at one moment does any
;
one
know them
completely.
them or hint at them gradually and in the course of years they separately come to
light,
so, for
another crop of
we wait
shall wait
the
'
facts
are complete,
I
we
the
human
think
bookish
'
'
in this
'
the
facts
the printed
said
facts, all
of Nature
true of Commerce.
'
Charles Lyell,
has
made
it
men
'
down so
that investigation
'
can use
it.
fragment
of fragments,'
'
and in the same way statistics are the scrap of scraps.' In real life scarcely any one knows more than a small part of what his neighbour is doing,
and he scarcely makes public any of that little, or of what he does himself. A complete record of commercial
facts, or
facts, is
the
23
for
an entire record
There
is
to that
of English Political
will call the
l
Economy, which, by
'
contrast, I
single case
method.
It is said that
is
but
it
is
no
as
You might
is
on which
it
depends.
The
history of a panic
the
many
causes
and
unless you
likely to
know what
what happens.
Any
phenomena
like those of
Lombard
considerable
accumulation
of
applicable
doctrine
before existing.
' '
You might
making
as
life
of a ship,
of naval construction.
run
all
a perfect puzzle.
24
I
THE POSTULATES OF
have been careful not to use in this discussion
is offcenest is
of
used, viz.,
an excessive
ambiguity in
'
it.
Sometimes
'
it
all
case
;
method
some-
times the
single case
'
method
a most confusing
mind
is
And
sometimes
prevented from seeing the defects of either. it has other meanings, with which,
much
is
sympathy. Rightly conceived, the Historical method no rival to the abstract method rightly conceived.
This conclusion
stance.
is
At
is
the very
moment
that our
Political
Economy
it
objected to in
stract, in others
one which
is
Jevons, and
M. Walras,
'
com-
mathematical
theory of Political
is
Economy
little
ordinarily taught in
it
England
crete
objectionable, because
its
is
too
con-
method, and looks too unlike life and business, had better try the new doctrine, which he
in
will find to be
old.
much worse on
25
be asked,
Do you
is
perfect ?
much
difficulty should
be
felt
At the
difficulties
out of
its
first
beginning
defect,
it
Surely, if there
In this reasoning there is evident plausibility, and I answer that, in my judgment, there are three
defects in the
mode
in
which
Political
Economy has
been treated in
England, which
it
have prevented
really
is,
proper value.
It has often
been put forward, not as a theory of the principal causes affecting wealth in
First,
sometimes even of
every society.
all,
And
many and
and historians
and various
disbelief
on a single
of abstract
26
THE POSTULATES OF
how
accusation
of them, there
much ground
is
for
it,
some ground.
No
doubt almost every one every one of importance has admitted that there is a 'friction' in society
But
the
;
this friction is
but subordinate
it
that probably in
the
course
of years
may
treat
be
neglected
Economy, as they
it,
are the
main and principal ones. Now I hold that main ones in a single kind
a society of grown-up competitive com;
of society
that
it
is
only
'
friction
some cases one, and in some another are the most effective ones, and that the greatest
causes
in
confusion arises
if
you try to
In
fit
on tm-economic
my judgment, we
27
Economy
;
it
should be minimised
we should
realise distinctly
its
where
it is
estab-
lished,
sovereignty should
be upheld, but
is
marked.
And
until this
done, I
am
is
the science
now.
I think in consequence of this defect
Secondly,
more
abstract,
and in consequence much more dry, than they need have been. If they had distinctly set before themwere dealing only with the causes of wealth in a single set of societies, they might have
selves that they
effectively pointed their
from
those societies.
many and
societies
so unlike, that
it
mind
a presumption
that
it
aiming
work
in
unexpected ways, and to raise up the image not only of the societies in which the tenet illustrated is
28
THE POSTULATES OF
group in which
it is
Thirdly,
It
is
fertile as
they
it.
abstract,'
from concrete notions, because they could not but feel that many of the most obvious phenomena of
many
tions.
much
Whereas
is
in
the
societies
science
really concerned,
an almost
of verification
in
;
was
and because
much
con-
and
it is
Of course
and might be
implied
bounda-
Economy But
are arbitrary,
this is already
is
when
Economy
;
an
abstract science.
are
they
more or
for its
less
convenient fictions
made by the
a
mind
own purposes.
away.
The
29
much you
will
will
much you
yourself.
for consideration
divided off in
one way or in another, and in this way all may be useful if they do not interfere with one another, or
attempt to rule further than they are proved.
The
particular Political
Economy which
I
is
have
that
Smith.
beginning was made by Adam But what he did was much like the rough
first
view of the
traveller
who
discovers a country
he saw some great outlines well, but he mistook It was Ricardo who made others and left out much.
the
first
map
who reduced
secutive shape,
science.
and constructed what you can call a Few greater efforts of mind have been
made, and not many have had greater fruits. From Ricardo the science passed to a whole set of minds
James
others,
ideas,
Mill,
Senior,
Torrens,
Macculloch,
and
who
For five-and-twenty years the English world was Then Mr. J. S. Mill the full of such discussions.
Mr. Mill
whom
know
so well,
much
influence,-
-shaped with
30
THE POSTULATES OF
skill
masterly literary
the confused
substance of
He
did not
add a great deal which was his own, and some oi what is due to him does not seem to me of great But he pieced the subjects together, showed value.
his predecessors
time.
To many students
of Political
before,
his
book
;
is
Omega
aftsr in
Economy
they
little
know
But
little
of
what was
and imagine
the
way
of improvement.
is
not
Mr. Mill
He
the
knew
that,
taking his
own
treatise
as
Economy was
was rather the
much
of what
is
new
in his book he
Secretaire de la Redaction,
producing by original thought from his own brain. And his remoteness from mercantile life, and I
should say his enthusiastic character, eager after
things far less sublunary than
little likely
'
In
fact
31
much
Mr.
it
Mill, too,
seems to
me open
it
much
or not enough.
If
proved of, and applicable to, particular societies only, much of what is contained in Mr. Mill's book should
not be there
;
if it is,
good for all societies, as far as they are concerned with wealth, much more ought to be there, and much which is there should be guarded and limited.
English Political Economy
pleted theory, but the
is
first lines
which has worked out much, but which much unsettled and unexplained.
There
is
leaves
Economy,
nor,
though
English in
It is the theory of
commerce, as
to be
when
capital
or one of the
and so
suggest
separate
analysis of them,
characteristics
but as the
are
similar
being
similar
money market,
32
THE POSTULATES OF
all
countries.
As
'
'
men
of the world
'
are the
'
same everywhere,
the great commerce is the same everywhere. so Local peculiarities and ancient modifying circum-
away in both cases and it is of this one and uniform commerce which grows daily, and which
stances
fall
;
will
Economy
aspires to be
And
less to
our Political
Economy
Abroad the necessity of contesting socialism has made some writers use the
be the
best.
of that science
is far
more
humble
it
and these
profess to
it
and there
it
stops.
It does
not
;
on either
it
leaves
difficult, to
not to be.
The
first
Economy,
not at
aim
right.
So long
and
as readers do
The science
will
33
seems now,
many minds
it
unknown
As a
Economy one
would
is
by one, and
and where
Political
true
is not.
is
We
shall
Economy
By marking
property
we
and we
have a
positive and
34
THE POSTULATES OF
I.
is
that
which
made
in
our economic
mean) and
employment, leaving that in which the remuneration is smaller and going to that in which it is greater.
No
assumption can be better founded, as respects such a country as England, in such an economic
state as our present one.
capital, in any trade, brings
more
capital to it with
us now-a-days
would
be too feeble a word, but almost instantaneously. If, owing to a high price of corn, the corn trade on a
sudden becomes more profitable than usual, the billcases of bill-brokers and bankers are in a few days that is to say, the free stuffed with corn-bills
capital of the country
is
by the lending
capitalists,
35
it is
most wanted.
When
much
capital
was found
to erect
new
furnaces that
the profits of the coal and iron trades have not yet
In this case the influence of capital attracted by high profits was not only adequate but much more than adequate instead of reducing these
recovered
it.
:
profits only to
an average
this
level, it
happens commonly, for the which brings in the new capital speculative enterprise is a strong, eager, and rushing force, and rarely stops
that level
;
and
exactly where
it
should.
for
a plethora of
it
as winter to be followed
by by summer.
man
is
money
'
but
facts
still
moves very quickly. Patent statistical show what we may call the tides of our
it
'
people.
last census,
cent.
North-Western counties
14
London
16
D 2
36
THE POSTULATES OF
While that of
The South- Western
Eastern
counties only increased 2 per cent. 7
North Midland
9
fertility of
is
though the
marriages
equal.
The
and rapidly from the counties where there is only agriculture and little to be made of new labour, towards those where there are many employments and where much is to be made
of
it.
No
many
doubt there
are,
and of labour, which are of various degrees of importance, and which need to be considered for various
purposes.
'
'
There
is
'
friction,'
but
still it is
only a
friction
its resisting
power
is
at a first
view need not be regarded. But taking the world, present and past, as a whole, the exact conis
trary
true
in most ages
and countries
;
this
tendency
cases,
in
some
can scarcely be said even to have existed, much If you take at random a less to have conquered.
country in history, the immense chances are that
you
absent, or not at
Economy
is
37
The truth of
first,
as
it
is
First, there
is
must be
employ;
ments
this
'
to migrate
and
is
of the primitive
states of
society.
We
which abounds
in felt
wants that
can
satisfy,
men
we
call
them
of them.
But
this exists.
of
men
are few,
them
still
fewer,
and the
one
man
living
much
another.
Civilisation
is
a shifting mixture of
many
was and
is
of a dull
monotony, hardly varying even in shade. A picture or two of savage tribes brings this home to the mind better than abstract words. Let
us hear Mr. Catlin's description of a favourite North
American
pleased
:
tribe,
'
much
The Mandans,
and
lives of idleness
leisure,
38
THE POSTULATES OF
Of these dancing
is
one
'starts
'
and jumps' of
it
Buffaloes,
is
well
known,
occasionally in
strolling
away about
lead
whims
or fancies
may
them
this
means most
eat,
without anything to
and
by going
far
almost in a
every
man
In any emergency of this kind musters and brings out of his lodge his
mask
which he
occasion
;
obliged to
keep in readiness
buffalo
for the
dance of
of in-
their wanderings,
ducing the buffalo herds to change the direction of and bend their course towards the
39
Mandan
and
shoot
village
and graze about on the beautiful hills where the Mandans can
as they
want them
for food.
from the village can kill meat in abundance and sometimes large herds of these animals may be seen
;
grazing in
full
view of the
village.
seasons also
when
the young
men
on account of their enemies, without finding meat. This sad intelligence is brought back to the
chiefs
and
doctors,
who
sit
in solemn council
and
This
the buffalo
" buffalo
dance, which
is
incessantly continued
till
seen, there
is
chase
pieces
Spirit,
of the
sacrificed to
the
Great
and then a
surfeit or a carouse.
for'
These dances
two or three
40
THE POSTULATES OF
their appearance.
And
of
Such
is
the
mode
And
as
to the rest
we
The
principal
occupations of the
women
cooking,
dressing
is
hardly any
hunt, fight,
all
men women do
the
life,
the rest.
And in
in the stone
still
more
were
still less
means
to break or
much
have imagined, and savages made more things with it than anyone would make now. Time is nothing
in the savage state, and protracted labour, even with
the
worst
instrument,
when
But there
achieves
'
41
continues.
is
We
all
know
the constitution of a
it
As we
no
alternative pursuits.
are domestic, are the
What
work of women
at spare times.
No
is
is
Many
similar.
agricultural
are
left
exactly
The
the
life
of movement, which
to a subsistence
on
change one sort of uniformity for another. They have become peasant proprietors combining into a
and holding more or less their land in common, but having no pursuit worth mentioning,
village,
except
tillage.
The whole
absorbed in that.
No
42
THE POSTULATES OF
sight
we might expect
that with
it
a circulation
of
But an examination
;
on the
shows that a main object of the social contrary, organisation which then exists, is to impede or prevent that circulation.
the reason
;
thought no paradox in the notion early nations were not giving up an adthe good vantage which they might have had which we enjoy from the circulation of labour was
is
And upon
There
is
little
evident.
unattainable by
them
all
it
means
of enjoying the
advantages of the division of labour without it, and this they did. We must cany back our minds
to the circumstances of primitive society before
we
difficulty
it
A
to
free
circulation
of labour from
employment
constant
employment
involves
an incessant competition
which'
as
between
quarrels,
causes
we
and
new
bargains,
43
of another kind.
The peace of
in early times to greater danger from this source than now, because the passions of men were then
less
'
which
we read of
and people
as
one another,
for
very
little
matters
And
now
We
midst of us a formed, elaborate, strong government, which is incessantly laying down the best rules
which
it
rules.'
We
are so
government inherently
possibility
if
we
we
Hebrew
society,
we
power, and only a faint and intermittent executive power. The idea of law-making, the idea of making
44
THE POSTULATES OF
rules for
new
new
They and their contemporaries thought that there was an unalterable law consecrated by religion and confirmed by custom which they had to obey, but they
it
except
a worshipping of Baal.
And
ing breaches of
broken.
was always
slight,
and often
One
power
is
always limited
it,
there
is is
for transmitting
no king in Israel whatever. The names and the details of this book may or may not be historical, but its spirit is certainly true. The
peace of society then reposed on a confused senti-
at least
law
modern sense
was an inconsiderable
men
from thinking what they had not before thought, and from doing what they had not before done a vague
;
know
what,
45
if
they did so
who hated
local
uninherited ways
and a submission to
family and
tribe
when
were the main props of life, when there really was no world without Verona's walls,' when every exile was an outcast, expelled from what
'
alter-
No
the
as
'
all
communities
partially reinforced
by
police.
Even
'
at the time of
local authorities,'
we should now
who
forcibly maintained
some
when the central power was weakBut the main support of these authorities was the established opinion they had no military to call
sort of order even
est.
;
in,
no
them
if
ment
community was not strong enough to aid them, they collapsed and failed. But that fixed sentiment would have been at once weakened, if not
of the destroyed, by a free circulation of labour, which
is
new
ideas,
new
being where his father was, that interrupts the tradition of generations and breaks inherited
feeling.
Besides causing
new
sorts of quarrels
by creating
46
THE POSTULATES OF
circumstances and
new
of
new
to
occasions, this
change
employment decomposes
alone
in this state of
settle
the moral
authority which
them.
Accordhave
for-
societies
much
as possible,
and
have endeavoured, as
far as
Henry
Maine, to
whom
belongs, and
who
has taught us so
much more on
it
else, shall
surviving in India
'
There
'
is,'
group which connects them with primitive western communities of the same kind. I have several times
spoken of them as organised and
self-acting.
They,
any per-
power, they contain a village police, now recognised and paid in certain provinces by the British Govern-
ment.
traders;
They include
the
blacksmith,
the
harness-maker,
the
47
The Brahmin
is
attendance at
festivities.
There
is
invariably a
village accountant,
current in
engaged in
assumption that there must be a single proprietor somewhere to mistake the accountant for the owner
of the village, and to record
official register.
him
as such
in the
of these hereditary
a servant
of the
community
as one of its
component
members.
grain,
He
is
What-
ever else he
is
may demand
fixed
for the
wares he produces
limited
by a
price
from.'
we have
it
in England,
and
as
we assume
it
in our
In this case as
in
many
others,
what seems
is
natural organisation
really
one most
difficult
to
48
create,
THE POSTULATES OF
and
it
till
after
many
organisa-
tions
which seem to our notions more complex have preceded it and perished. The village association of
India, as Sir
Henry Maine
structure, a
describes
it,
seems a much
involved piece
village,
more elaborate
much more
of workmanship, than
common English
where everyone chooses his own calling, and where there are no special rules for each person, and where
a single law rules
is
all.
But
the more
artificial
because
vading intervention of an effectual Government the last triumph of civilisation, and one to which early times had nothing comparable. In expecting what
we
call
we
are in fact
One
which has, almost more than any other, impaired the free transit of labour, is the comIn a plexity of the early forms of landholding.
institutions,
it
with the
made by Eicardo
it
and
others.
am
as
affecting the
movement
49
generally
As
is
now
In
the old
was
commoner than
land,
for the
and the buyers could not comprehend that according to native notions he had no right to do so, that he could not make a title to it, and that according to those notions there was no one
who
could.
Englishmen
in
all
single owner, or at
owners,
who had an
;
pieces of land
ownership of a
as in
New
Zealand, or of a
Yet
this joint-
stock principle
is
commonest
began with.
in the world,
And
would have been impossible early ages of society, to maintain the exclusive ownership of a few persons
in
what seems
at first sight
an equal
gift to all
thing to
which everyone has the same claim. There was then no distinct government apart from and
landers
above the tribe any more than among New ZeaThere was no compulsory agency now.
50
THE POSTULATES OF
it
And
of
course
it
experience has
now
is
conclusively
desirable for
exclusive ownership
This monopoly
is
almost a
paradox
after experience,
folly before
it, it.
and
it
monstrous
cussion of
is
1000
B.C.
Common
evitable
;
no alternative
for it
was
possible, or
it is
would
But
in its essence
Few
man
so
much
;
as a share in a property
which
fixed
it
by nature
wherever
share.
prevails,
And
there
is
which does not act so widely, but which when it does act is even stronger in many cases is omnipotent.
This
is
the disposition of
many
societies to crystallise
themselves into specialised groups, which are definite units, each with a character of its own, and are
more
Sir
51
smith
is
hereditary,
shoemaker,
its secrets,
and
mystery
and which must be learnt by transmission or The first and most efficient kind of not at all.
of
it,
apprenticeship
his son that
is
that by birth
by which he makes
it
;
without knowing
is
which
he
doing
so.
Even now we
families,
legal families,
special kind of taste and knowledge are on in each generation by tradition, and which passed in each have in that respect an advantage over others.
where a
bounded and
it
may be
called,
which
keeps or
keep in each case to itself the rich And even when no secret of the inherited art.
tries to
pains
gains
are
occupation, after
it
form
itself
into
separate group. Each occupation has certain peculiar characteristics which help to success in it, and which,
therefore,
it
fosters
and develops
and in a subtle
E 2
52
THE POSTULATES OF
these traits collect together and form a group-
way
The
is often thought to be an which came to an nd when certain old-world thing old castes were made and fixed before the dawn of
process of caste-making
history.
But
and has hardly yet died out. Thus in Cashmere, where the division of castes is already minute, Mr. Drew tells us that of the Batals
in recent times,
work
'
whose
trade
it is
and to cure
leather,'
he has heard
'
two
classes
so apt are
divide,
to
follow
the
Mohammedan
rules as to eating,
some fellowship with the other Mohammedans. The lower Batals eat carrion, and would not bear the
name
of
Mohammedans
'
in the
mouths of
others,
though they might call themselves so.' Just so, Mr. Hunter says that the Brahmans of Lower Bengal bore to the Brahmans of Oudh the same relation that
the landed gentry of Canada or Australia bears to
Each
is
an
aristo-
social history is
widely
53
The Brahmans
they declared the
day many of the north country Brahmans do not eat with the Brahmans of the lower valley, and convicted
felons from the north-west will suffer repeated flog-
gings in
jail,
for
let
rice
Caste-
is
mind
is
predisposed to
aid
to
it.
One great
hates,' said
this
process
l
is
What one
'
Napoleon,
is
is
another nation
:
just so,
what one
caste hates
another caste
the marked
difference
There
as you
is
is
an
human mind
to hate
may
any and strange in other people, and each caste supplies those adjoining it with a conspicuous supply of what
is
set of schoolboys
what
unusual
unusual.
And
makes each
caste
much
54
THE POSTULATES OF
of his
own
caste,
and by avoiding
theirs.
In the ancient parts of the world these contrasts of group to group are more or less connected for the
most part with contrasts of race. Very often the the mental tendency which made origin of the -caste
its first
members take
was
some inborn peculiarity of race and at other times, as successive waves of conquest passed over the
country, each race of conquerors connected themselves
most with, and at last were absorbed in, the preexisting kind of persons which they most resembled,
caste
and frequently in so doing hardened into an absolute what was before a half-joined and incipient
group.
Each conquest,
casts
too, tends to
make
a set of out-
generally from the worst part of the previous population and these become hewers of wood and
'
'
that
is
is,
they are
race,
which
not admitted
compete or
more degraded from feeling that it is thus inferior, and from being confined to the harder, baser, and
less
And upon these unhappy and hatred of the higher ones groups the contempt tend to concentrate themselves, and, like most strong
teaching occupations.
55
To many
villages in
Henry Maine says, there are attached a outsiders who never enter the village, or
'
it,
who
are looked on
essentially impure,'
as contaminating.'
less
thought to be
'
to have
some
taint
which shows that the gods hate them, and which justifies men in hating them too, and in refusing to
that
many
ancient
bits of
societies are
contrasted
human
They
have a variegated complexity, which modern civilised And there must clearly have States mostly want.
been an advantage in this organisation of labour speak of
it
to
modern phrase though it seems to us now so strange, or it would not have sprung up independently in many places and many ages, and
in
have endured in
advantage, as
many for long tracts of years. This we have seen, was the gain of the
which with
but which the structure of society
us accompanies
it,
No
56
THE POSTULATES OF
too rigid to
in every
age and place where that system prevails, some have been Thus in India we are told a Brahmana provided.
'
may
live
by the duty
if
of these employments, he
attendance on
cattle, or
Ghatriya in distress
may
subsist
Vaisya unable
by
his
own
;
duties
may
and a Sudra, not finding employment by waiting on men of the higher classes, may
Sudra
subsist
by handicrafts
mixed
classes,
which regularly
from which they derive their and so on, without end. origin on the mother's side
'
And
probably
it is
provisions, as I
may
call
down and
ancient
certainly disappeared
in
and when a change of religion had removed the sanctions which fixed and consecrated
57
The process is most slow, as our experience in The saying that La Providence a ses India proves.
'
aises true.
dans
'
le
temps
Still,
the course
will
in
substitute has
been made
it.
for
it,
would be a great mistake to believe that, whenever and wherever there is an efficient external
it
But
of labour
safe
most
cases, a
interval to be passed
first.
by
We
on nations as
least,
at
even
now
in
;
on large nations. But this is a new idea, and it has to be taken with many qualifications.
But
many
periods of history
it
at all
was
whether they should be conquered and In such times the whole energy of the destroyed.
tinue,
or
its
own
defence
58
all
THE POSTULATES OF
that interferes with
it
must be
sacrificed, if it is to
live.
is
And
mode
that
is,
of defending
it
a local militia
soil
and which he must stay on certain to perform when wanted. In consequence the
himself,
races of
possessed of an organisation
The feudal
Campbell, on
tent judges,
many
{
I believe to be
no invention of the
Middle Ages, but the almost necessary result of the hereditary character of the Indo-Germanic institutions,
when the
dominant
conquerors.
They form,
in military opera-
Accordingly,
we
find that
among all
is
the tribes
of
In Rajpootana the system is still in full The Mahrattas and Sikhs had both established
In
a similar system.
my
early days
it
existed in
59
in
And where
class
immovable
what
we choose
to call
them
who do not
fight themselves,
who perhaps
cultivate the
who
The
ground
for those
who
really fight.
has beneath
to the soil
it
more rooted
I need not
by the tenure of
say how
opposed to the
ment.
Where
there
much impeded
as prevented.
And
is
enemy
of
This
is
slavery.
We
is
must remember that our modern notion that slavery an exceptional institution, is itself an exceptional
idea
;
it is
philosophies.
No
community, would have comprehended what we meant by it. That human beings are divided into
and weak, higher and lower, or what is thought to be such and that the weak and inferior
strong
;
60
THE POSTULATES OF
ought to be made to serve the higher and better, whether they would wish to do so or not, are settled
axioms of early thought. Whatever might be the origin and whatever might be the fate of other institutions,
doubt that
slavery at
events existed
and would
last as
long as
'
employment
call
in
two ways.
*
First, it prevents
'
what
we
is, purpose employments markets where labour may be bought, mostly in order that the produce may be sold. Slavery, on the
for this
that
never sold at
all,
where
it
never intended to be
its
so,
by
wants.
is
In a slavelittle
fit
community
for it to
there
quick
places
migrate between
the purchase of
much
at
of
society tends to be
little
from
the exterior.
And
movement
of free labour
It
more
61
who wants
to execute
it,
any
sort of
work
so in a former stage
it.
of progress he would
buy
slaves in order to do
He might
buy enough
slaves
is,
as our present classified system of free labour, and But it does from intrinsic defects never can be.
develop earlier.
Just
if
it
when
were
might develop
the
imperfect
it.
and
spoils
When
and
irregularly,
when
many
much
is
the easiest
*,
So
when
a good
well
filled.
The
capitalist finds
better to
buy than
many men to be bought and comparatively few to be hired. And the result takes unexpected directions. What the is in modern times,' says a German printing press
condition of things comparatively
'
And
certain
though
this
may
be a
exaggerated,
it is
that in ancient
cheaper and in
for
Rome books were produced much much greater number than they were
When
there was
62
a
'
THE POSTULATES OF
for a book, extra copying-slaves could
'
demand
be
way which in later times, when slavery had ceased, was impossible, and which is only surpassed by the way in which addito multiply
it
turned on
in a
works in demand
proposed to obtain
to
now.
And
political philosophers
source, and
'
save
taxation.
should buy twelve thousand slaves, and should let them out to work in the mines at an obolus a head,
new
in the
the State
would then by these means in five or six years possess six thousand slaves,' which would yield a large
income.
in to
The idea
of a
compound
interest investment
Xenophon.
And almost
proves
then existing
was based on slavery in one or other of its forms that of skilled labour (the father of Demosthenes and twenty coachmakers) or unskilled, that might either be worked by the
owned
thirty-three cutlers
he liked.
Even
if
it
this
must
63
have prevented the beginning of freely moving labour, for it is much handier than such a system can be at
its outset.
And
as
we know,
effects
for it
it
the slave-mark,
mean white
of
American
one of the least respectable and the plantations least workmanlike of mankind.
Happily this full-grown form of slavery is exceedWe have ourselves seen in America how ingly frail.
completely
easy
it
it
how
it.
is
to destroy
how
impossible to revive
And much
was
also so caused.
Any
must be
in unstable equilibrium.
it,
overthrow
re-establish
it.
And
'
makes
slaves the
'
many
fills
Capitalistic slavery
as
domestic slavery
is
But
64
THE POSTULATES OF
all
influenced nearly
We
to
be
before
this
Political
labour
Economy is true within a nation. Before can move easily and as it pleases from employ-
ment to employment there must be such employments for it to move between there must be an effectual
;
Government capable of maintaining peace and order during the transition, and not requiring itself to be
supported by fixity of station in society as so
many
maintaining
its
on
localised
number of employments or moving between them more perfectly than contemporary free labour. These
the
are not indeed all the conditions needful for the truth
when some
first
discussed.
65
II.
my
last
paper I discussed
the
fundaniental
ment
which
it
quence there
is
a tendency
still a tendency to an equality of commerce. profits through First, this requires such a development of the
contracted, but
what we
call
'
trade,'
that
is
working
for the
wants
the
own wants by
But
66
THE POSTULATES OF
race.
by the human
tralian
tribes
to
whom
seemed
unknown.
readily, but they received it as a present only; they seemed to have no notion of giving anything in
lieu of
it.
The idea
of barter
an idea usually so
appeared never
men
is
ones.
But among
no change of trades
becomes more and more profitable in any one. The very conception comes long after. Everyone works for himself at everything and he always
;
works most
at
what he
likes
most
for the
time
as
his labour.
tools
he changes his desires, so far as he can he changes Whenever he works he uses the few he
has,
the charred
way he can
some
'
a hundred savages
are doing
so at once,
in one way,
some
in another,
and
shiftings of capital.'
profit, as
But there
profit,
no computation of
shiftings.
is
we now reckon we
calculate,
is
on such
Profit,
as
means
that which
replaced.
But
a savage incapable of
does not
make
this cal-
and
his hides.
The idea
67
medium
is,
in
which the
a money,
And
try
little
it
does so because
who
are
making much,
to:
more those
who
are losing
have.
But
if
no money to compute
wants
in,
neither will
motive, and
trade
an extra high price in the article that trade makes or sells; but this test fails altogether when
one
there
is
no
'
'
money
to sell in.
And
calculate
its
when
there
is
no common
measure
between
of them.
Political
of
'
exchangeable value
that
is,
of the
number
for
of
article will
exchange
and
68
THE POSTULATES OF
its
pro-
But
reality.
No
money, was ever able to conceive so thin and hard an idea as exchangeable value.' Even now Mr.
'
it
puzzles
many
people, and
Economy.
In
fact it is
They
see
money
it fetches, is
equal to
steadily
this
'
its
'
'
purchasing power
'
to be able to think of
purchasing power
it
separately,
and
to call
and
reason upon
is
as exchangeable value.
As
A most
it.
'
acute traveller
among
saw
Galton
possess
tells
us of the Damaras,
their
whatever they
certainly
may
in
language, they
three.
use no
When
they wish to
69
them
sliding rule
to
very
much
after
to grasp
and secure the fingers that are required for " units." Yet they seldom lose oxen the way in
:
is
not by the
When
bartering
going on each sheep must be paid for separately. Thus suppose two sticks of tobacco to be the rate of
exchange
would sorely puzzle a Damara to take two sheep and give him four sticks. I have done so, and seen a man first put two of the
for
one sheep,
it
and take a sight over them at one of the sheep he was about to sell. Having satisfied that that one was honestly paid for, and himself
sticks apart,
mained
in
hand
sheep, he would be afflicted with doubts the transaction seemed too pat to be correct, and he would refer back to the first couple of sticks, and then his
two sticks were put into his hand and one sheep driven away, and then the other two sticks
70
THE POSTULATES OF
Such
itself,
and
it
is
abstraction like
value in exchange
'
is
utterly
beyond
that a habit
are necessary
a pursuit utterly
fails,
or if
it
immensely
eager in
succeeds.
The
earliest
making
there are so
of them, and
no doubt they did not try to breed cattle where they But there was in those days no adjusted comdied.
parison between one thing and another
;
all
pursuits
Money,
too, is in this
matter essential, or
It is a
all
but
essential, in
another way.
form in which
capital
is
loss.
The
transfer
of capital from
employment
requiring consideration,
But most
they lose in
an ordinary
often
much
less
than he gave.
But
71
money
itself,
is
never
it
'
second-hand
'
it will
always fetch
and
loses
nothing by keeping.
No
doubt
modern
civilisation has
Some
bills,
are so,
and pay an
interest besides.
But these
are
it
;
they presuppose
it.
it,
community of pure barter, even if it could reckon and compare profits, would not be able to move
capital accurately
for it
the computation.
The
effected
refined
is
is
now
as
civilisation.
The three
principal
them
are
follows
First,
There
is
that
is
unusually profitable,
number of corn
the iron trade,
and
if
72
THE POSTULATES OF
bills.
then of iron
You
mental
transfer,
skill
and knowledge which have made that and without which it could not have been
Probably
;
made
people
safely.
if
it
stated plainly
many
of the
little
strongest heads in
else
their debts.
The
life
Lombard
Street bill-brokers
Mr. Chapman, one of is the partners in Overend, Gurney, and Co., once rather amused a parliamentary committee by speaking with
almost exclusively so spent.
unction and enthusiasm of
quality,'
'
Bills of
undertakings to
paid are,
and the
a
The mind of
Mr. Chapman, if it could be looked into, would be found to be a graduating machine marking
like
man
in
an instant the
rises
and
falls
of pecuniary likeliis
hood.
Each banker
;
in his
'
own neighbourhood
the
same
he
is
a kind of
'
he would
call it.
And
why
the
73
scale is
London
bill-broker has to do
it
on a greater
He
is
thus become
seen
means and moneyed probity which the world has ever to reduce it to its lowest terms, he knows that
;
more people
will
now
is,
And
the
combined aggregate of these persons is a prepared machine ready to carry capital in any direction. The moment any set of traders want capital, the best of
them, those whose promises are well known to be
good, get
it
live
by know-
to have
it.
In modern England, there is a great Secondly, speculative fund which is always ready to go into anything which promises high profits. The largest
part of this
business.
is
When,
many
trades suddenly
become much greater than usual, the Stock Exchange instantly becomes animated there is
;
at once a
market
for all
either
by great interest or by
rise
Men
of business
who
74
THE POSTULATES OF
percentage of profit in their own trade despise 3 or 4 per cent., and think that they ought to have much
In consequence there is no money so often lost as theirs ; there is an idea that it is the country clergyman and the ignorant widow who mostly lose
more.
And no doubt
it
they
still
But
I believe that
is
oftener
men
and of active
temperament, who have made money rapidly, and who fancy that the skill and knowledge of a special
trade which have enabled
them
whereas, in
for
there
more incompetent,
know
everything,
when they
little
really
know almost
business,
money
as
comes to London
is
in greater jeopardy
But there
is
a great
who
make
and
it
own
trade
The very
defects
which make the trader so bad a judge of other things make him an excellent judge of these, and he is ready
and daring, and most quick to make use of what he knows. Each trade in modern commerce is surrounded
75
by subsidiary and kindred trades, which familiarise the imagination with it, and make its state known
;
trade are
known
Why
should
not
in
we do
it
as well too ?
'
their capital
whole wisely and beneficially. In an animated business world like ours, these inroads into the trades
with largest gains by the nearest parts of the speculative
equalising profits.
Lastly,
There
is
men
thought to be so at that time. This, in the best cases, also acts mainly on the allied
business, or
is
what
and analogous trades. Little good, for the most part, comes of persons who have been brought up on
one side of the business world going quite to the
other side
of farmers' sons going to cotton-spinning,
Each
own, which is never written, probably could not be written, which can only be learned in fragments, and which is best
of
its
life,
taken in early
ideas fixed.
before the
all
mind
is
From
an
76
incessant
THE POSTULATES OF
movement
of
common
average.
to
am more
is
careful than
because
it
we can
see
how
complex
it
it is,
;
requires
and how much development in society but as yet the description is not com-
We
is
influx of
money
into
new
necessary.
by money alone
thing.
'
'
money by itself will not make anyWhat, then, do we mean when we speak of
;
capital
as flowing
ment?
Some
writers speak as
if
labour that
is
set in
motion
sort of
this is
new employments
of capital do
require
new
labour.
Human
labour
is
the primitive
moving force, and you must have more of it if you want more things done but the description, though
;
most incomplete, as the most obvious facts true, in the matter prove. When new capital comes into
is
cotton-spinning, this
is
applied to
77
buying new spinning machines; these spinning machines are made by other machines, as well as labour and the second lot
new money
is
applied
to
set, as
well as other
made by brute labour everything is made by aids to labour; and when capital goes from trade to
trade,
it
settles
be worn
an endless
fully,
we must have
and on
what on
this occasion
this
matter we mean by
science like Political
its
'capital.'
When we come
to
reason
relate,
we must
is that it will not do, if you are writmass of men, even of educated men, to ing use words always in the same sense. Common words
them down
to one
meaning
78
THE POSTULATES OF
;
they do their
work
in
common
life
in
in the
If
we were
really
to
write
an invariable
so
we have
much
many things as we have in Political we must invent new terms, like the Economy, Mr. De Morgan said (in writers on other sciences.
defence of some fresh-coined substantive),
'
Mathe-
know
But
writer
on
Political
Economy
is
bound
of
but by his readers. He must not use words out his own head, which they never heard of; they
him
if
he does.
as
we
a
cannot do
this, is to
to write
is
more
as
we
do in
common
'
sort of unexpressed
in
only, as in Political
Economy we have more difficult things to speak of than in common conversation, we must take more
care,
give more
at
interpretation clause
'
for that
page or discussion,
I
lest there
is
know
that this
difficult
and
delicate
\vork
79
is
it
that in
of
practice
is
safer
than
the
competing plan
inflexible definitions.
Anyone who
tries to express
varied meanings on
grows cumbrous without being accurate, that he has common thoughts, and
all
that after
he does not come out right, for he back into the senses which
is
fit
sometimes another, and almost always different from In such discussions we his hard and fast sense.
'
'
we want,
and now
just
we
'
say,
let x, y, z
;
mean now
and
this,
'
this,
that,
in different problems
always avow
it, is
and most
effective writers.
By
we mean an
commodities
co-operative things which help labour, and remunerative things which pay for it. The two have
this in
human
you judge of them by the visual appearance. Between a loaf of bread and a steam-engine, between a gimlet
as if there
were really
80
THE POSTULATES OF
man manufactured
is
so
great, the
essential
common
to
profixes
perty which
Economy
is
of both
augment
human
;
wealth.
for
They
>
and
And
its
here
we come
Economy.
Taking
in
life,
it
and
a
way which common people would never think of. The obvious resemblances which we deal with in life
dictate one mode of grouping objects in the mind, and one mode of speaking of them the latent but more powerful resemblance which science finds would
;
then what seems a perverse use of language must be made. Thus, for the present discussion, the
acquired
in
skill
And
of a labourer
is capital,
though no one
common
life
would
call it
so.
It is a productive
;
an immaterial
tool
81
It is co-operative capital
much
as anything
can be.
And
then, again,
Artisans
green
peas,
and gin
idle if
they would
stay
and
therefore
(like
these
capital.'
Political
Economy
to
change
to
definitions
moves from problem some problems to use which, unless we see the motive, seem
definitions
as
it
for
most strange
just as
if
will
easily be
Remembering
all
this,
we
it is
which
is
transferable
from employment to employment. Some tools and instruments are, no doubt, used in many trades,
the complex ones knives, hammers, and nails can be used, are used, in a thoutwine, The existing stock of these is transferred sand. when capital migrates from an employment. bodily
especially
;
82
'
THE POSTULATES OF
effect of
to
change
the
speed with which the existing machines are worked out, and the nature of the new machines
;
the
'
'
live skill
of an artisan being
treated as a machine.
effect is simpler.
On
As
a rule,
much
one
to
or,
is
who
little
one which employs much, then the commodities which skilled labour wants will costly
skilled labour to
be an increase of animation in
all
the ancillary
We
see also
'
more
what we
of
mean by an
employment.'
We
mean a group
skill
'
paid by
tools
'
I purposely speak of
want
on the
labour.
less.
effort of
fruit of
human
use-
all else is
And
things as coal
any other
83
call
so,
we have now
'
And employment
'
in
employer.'
The
capitalist is the
in the
shall
great commerce.'
He
;
to market,
and what
fixes
not.
He
is
the
army
its
organises
If
execution.
he does
;
well,
it
the
ill,
business
he does
the busi-
and
sagacity
of
the
determining mind.
this,
And
it
am
and
careful to dwell
on
though
it
is
so obvious,
though no
writers
man
worth
because the
it.
with
They
it
is
we who made
'
Birmingham, we who made Manchester, but you might as well say that it was the compositors who
'
made
the
'
Times newspaper.
'
No
The
men were
settle
were insufficient to
printers
do not
what
is
to be printed
84
settle
THE POSTULATES OF
what
is
to be written.
It is the editor
'
who
from
settles everything.
He
creates the
Times
'
day
its
to day
on
his
on his daily bringing to the public exactly what the the rest of Printing-House public wants to buy
;
Square
staff,
all
the steam-presses,
all
the type,
all
the
clever as so
many
'
of them, are,
what commodities
how and
is
when
to
offer
them, and
material.
This
monarchical
of
money
corresponding structure of war business does, ami from the same causes. In primitive times a battle
depends as
much on
men, of some Hector or some Achilles, as on the a good science of the general. But now-a-days it
i-^
man
at the far
a Count
who
sees
who
secures
the
victory.
So
in
commerce.
The
primitive
apiece, the
flints
men with
there
is
no organised
action,
no planning,
85
but
now
;
the whole
is
an
affair
of
of a thinking
man
in a
No
by a
it.
But these
predicted,
;
Adam Smith
and as painful experience now shows, are very few the moment there comes anything difficult or complicated, the
Board
'
its
except
it is
But the
The
my
present purpose.
now
material
is
employment involves the pre-existence of employment, and this pre-existence involves that of em' '
ployers
of a set of persons
usually one
effect
of that
manage
which
it
it
arrives
at the
employment
to
it is
taken.
And
all
this
management
to ends, of
implies
knowledge.
In
adapting means
86
as
THE POSTULATES OF
you want
it.
But
has
arisen, it implies
this
it
then re-
know
the wants
of the consumer, a
seen,
likely
man whom
what he produces.
see is to suit another
And
who
if
is
a person
who
does not
much head-knowledge,
things to meet them.
an acquired
learning
of
in
mode
making
knowledge
capital, for
is
and
if
he
is
the change
gain.
transferred and of
it
what we mean by
be
it,
may seem
shorter in
long, but
will enable us to
much
the
existence of transferable
labour,
and
is
labour
in the world,
prerequisites.
and how very peculiar are its You cannot have it unless you have a
87
You must
ways and means to do without a strong government, but which often last on after it begins
at first are
;
local
much
to
fixed
pursuits
transferable
existence of
Complete freedom of capital presupposes complete freedom of labour, and can only be attained when and where this exists.
No
much
first
before
perfect.
The
great
who
is
is
when
his
name
mentioned, but in
whom
those
money-lender whose capital is first primitive community, transferred readily from occupation to occupation.
a
It is the
immediately the
little
proprietors throng to
the
money-lenders
to obtain funds to
his help,
buy
cotton.
new
trade
is
begun by
88
THE POSTULATES OF
If cotton ceases to
it,
his
some
other loan,
cotton
in
profitableness.
no more useful trade in early civilisation, though there is none which has such a bad name, and not unnaturally, for there is none which then
There
is
produces more
loans, such as
Securities for
we have them
met with
in developed commerce,
;
are rarely to be
in early times
it
the land
we think
there
is
upon
that
conditions
which prevent
;
its
movable property of much value, and peasants who work the land have
way
available
is
little
scarcely
any of that
little
But then
'
when
the loan
is
not paid,
'
is
use of
it
is
hated.
pledged,
peasant proprietors
if
is is
is
not paid.
theirs,
it,
upon
or
neglected to pay.
89
is
But odious
useful
as the
'
usurer
'
thus becomes, he
most
really,
great commerce.'
free trans-
the
is
first
of capital
free
slavery,
and within
enough; indeed, more free than anything else similar, for you have not to consult the labourer
at all, as in all other organisations
capitalist buys the slave and sets
you must.
to do, not
The
what
him
I can
was the best way of getting things done, though not for the happiness of the doer. It makes the working
'
group into an army where the general is absolute, and desertion penal. But so subtle is the nature
of things, that actual trial shows this structure of
society not to be industrially superior to all others,
'
most of them.
is
The
work
;
except he
is
little
he
and therefore he
rarely cares to do
very well.
On
a small scale,
may
be
made
to do very
90
THE POSTULATES OF
scale
it is
any large
impossible.
gang of
slaves
can do nothing but what is most simple and easy, and most capable of being looked after. The Southern States of America, for some years before their
rebellion, scale
were engaged in trying on the greatest and the most ample means the world has ever
how
stated
far slavery
;
would go
'
and
the result
is easily
make
it
must
exist
and be
it.
who
wish to transfer
This
is
especially evident as to
most transferable of
all
capital.
But the
earliest
wages-paying commodities
saries
which in simple communities the labourer desires are accumulated by persons who want them for their own use, and who will not part with them.
The
'
untransferable labourer
'
for himself,
He
In a society where there is no transferable labour, or need to hire, there is no motive, or almost
which
is
to
buy
labour.
The
idea of
it,
simple as
it
91
one of a
much
the commonest
for
hiring
it
among
The means
grow together.
that which aids
As
savage tribes, which is so peculiar a feature of the present world, has brought out its scantiness I
might say
it
its
meanness
Sir
John Lubbock,
They have no knowledge of pottery, and carry water in skins, or in vessels made of bark. They are quite of warm water, which strikes them with ignorant
'
great amazement.'
Some
of
is
made by laying threads, loop within loop, somewhat in the manner of knitting used by our ladies to make
purses.
man
carries loose
upon
his
back
;
which passes over his head it generally contains a lump or two of paint and resin, some fish-hooks and lines, a shell or two out of which
by a small
92
'THE POSTULATES OF
the
richest
man among
them.'
All
anything no materials lying ready to be worked the whole is a up, no idle tools waiting to be used
;
hand-to-mouth' world.
And
way
that
no
capital of
kind to be transferred.
We
said just
now
what we meant by
change
was a
But
in these
no such stock
exists
is
at
all.
petty purposes,
and cannot be worked more quickly than it already is, or be worn out more rapidly than it is being worn
out.
'trades,'
the sake of
capitalist,
and
it
must be worked by
not yield
is
a single
or
little
group of
may
of
all
And
this, as
somewhat
advanced
And
93
a knowledge which
Now-a-days the
'
is
we
capital
in various pur-
that
of them.
But such persons could not do this unless they were assisted by more specialised persons. The same
principle governs political administration. Sir George
has observed
'
The permanent
by the
officers
ment
information on questions of
official
prac-
tice, and knowledge of this sort acquired in one department would be useless in another. If, for
Home
Office
Foreign
Office,
or
the Admiralty,
the special
Home Office,
and which
the
is
Home
the Foreign
Lord of the
is
Admiralty.
required,
Where
a general superintendence
ordinates, and where the chief qualifications are judgment, sagacity, and enlightened political opinions,
94
such
a
THE POSTULATES OF
change of
offices
is
possible
scale,
but as you
official
the speciality of
The duties must be performed in person, with little or no assistance, and there is consequently a necessity for special knowledge and
experience.
sively at the
succes-
Home
Office,
the Foreign
;
he
may be
and Chancellor of the Exchequer experienced clerk from one office to another would be
like transferring a skilful naval officer to the
army, or
a
officer to
command
And just
so in mercantile business
common
it, and a person can be of considerable use in more than one kind if he understands these
kinds of
principles,
sort of mind.
is
But the
appearance of this
common element
in commerce,
and primitive
is
commerce
is
all
petty.
man
Each
and very
carried
it
much
on.
who
for
by few, kept
95
this
there
'
The idea of a general art of money-making very modern almost everything ancient about it
;
is
is
Distance helped
much
we
in
To the great
'
fair
of Stourare
its
who German Empire, or of the who had won his spurs at Crecy, and
. .
.
Thither
from the springs of Worcestershire, as well as that which had been gathered under the
also salt
came
forges.'
costly, the
make
separate
monopolies of them.
Other
difficulties of transfer-
knowledge necessary
for carrying
on.
96
Next, as
from trade to trade, there must be a money in which to calculate such profits, and a good money too.
Many media
for
many
Cattle,
for instance,
call
the primi-
They
are good
enough
and
loss.
The notation
is
accuracy.
price
list
One cow
is
saying that so
much
for the
purpose
to give or
loss
by exchange
which would
calculations of profit
Until you get good coined money, and loss that could guide capital
are impossible.
Next,
'
there
must be
the
means
of
shifting
money,' which we analysed the loan fund, the speculative fund, and the choice of employment by young capitalists, or some of them. The loan fund
97
on a small
institution
as soon as
;
scale
is,
as
we have
any kind of trade begins at all, and a perception of its enormous value is one of the earliest In the pieces of true economical speculation.
'
Athenian
laws,' says
Demosthenes,
'
are
many
well;
whom no
vessel,
port.'
no navi-
Even
in
these days
we
the
full
development, modern
The
is
that
it utilises all
down
nearly to the
class. This is lodged with bankers on running account, and though incessantly changing in distribution, the quantity is nearly fixed on the
and therefore
it
is
so
much
use,
only use
it
with caution.
Besides this,
98
THE POSTULATES OF
English bankers have most of the permanent savings of little persons deposited with them, and so have an
But ages of
and of Scotland
still
more, have
Our insular position exempting us from it. and enabling our free institutions to develop war, both quietly and effectually, is at the very root of it.
favoured
hundred years there was no such concentration of minute moneys, no such incre-
But here
until within a
ment
is
nothing
a rare
equal to it
it is
and
special
phenomenon.
moneyed savings
who have
themselves.
begins,
As
much, become a
money
it
of others,
and
middlemen to put
is
out
but almost
veying capital from trade to trade everywhere else than here in very many countries it is only incipient in some it can hardly be said to exist at all.
; ;
The
it,
has also
99
The number of
are
who have
large
in
willing to invest
them
new
things
is
in
it is
small.
England Such
they have a good deal" to In most comlose, and they do not wish to lose it. munities there is not even the beginning of a settled
persons fear the
;
unknown
opinion to
tell
is
likely to
an
extreme monotony
the same
The data which should guide original minds are few and insufficient; there was not such a thing as a
'
'
price
list
in
No
Athenian
merchant could, by looking over a file of figures, see which commodities were much lower in their average
price,
and which therefore might be advantageously bought with money that he could not employ in his
usual trade.
Even
for so simple a
speculation as
was either altogether wanting or confined to a few persons, none of whom might have the idle capital.
The
rate
become a
force of first-
magnitude
till
we have
in the
same community
H
2
TOO
THE POSTULATES OF
a great accumulation of spare capital, and a wide diffusion of sound trade knowledge,
and then
of the
it
does.
The
free choice
by young men
mode
in
which they
is also
cramped, and
influence which
times.
associations called
guilds
prohibited
it
these kept
They even kept the trade of quite apart from the same trade in city B
;
them down.
strong,
and there was no great movement to throw They strengthened what was already
protest.
matters in such
to
keep
who understood
it
it
other people
ft
ill,
going into
lose their
it
would,
well
by
a pernicious competition.
is
We
now know
that this
harm
than good, that only experiment can show where capital will answer in trade, that it is from the out-
101
improvements commonly come. which are now commonplaces after things, The first deexperience, were paradoxes before it.
But these
is
the
by mere argument. Civilisation must increase, trade ideas must grow and spread, and idle capital waiting to change must accumulate. Till these things have happened, the
is it
Nor
dispelled
free choice
by a young
man how he will invest his common rule, but the rare excepmay
it
tion
it is not what ; mostly happens, though it be resisted, but what happens only where
is
unusually helped.
is
no formal
many, create an informal monopoly, mostly much stronger than any force which strives to infringe it.
so
now convey
when
capital
doing
so,
even
at
least is available to be
employed by
neither the
young men,
;
is
then a commonly
predominant power
much
in
comparison
102
THE POSTULATES OF
And
even
if their intrinsic
greater than
it
was,
it
which
yet.
This
is
a political condition.
We
have seen
employment
employment a strong government is necessary. The rules regulating the inheritance of trades and
the fixed separations of labour were really contri-
when
for
want of an
effectual
governlife,
free
movement
same
And
this
effectual
government
is
equally
migration of money.
and order quite as obviously as the migration of labour and those who understand the delicacy of
;
required,
wanted too
for the
movement
is
of capital
to be
we need a
fair government.
If capital
tempted from
it
must be allowed
have been made.
tion
is
to
when they
it
that
when
much money
103
sees
and that
it.
if
it
more
laid
money
it
Adam Smith
is
most easy
for the
is
rule
to take
how
it is
most easy
to find
and
seize
Under
governments with that rule persons who are doing well shrink from showing that they are doing well
;
those
selves,
who
and
lest
are
will
making money
refuse to enjoy
them-
money,
take as
show none of the natural signs of that the tax-gatherer should appear and should
as he likes of
'
much
it.
socialist
speaker
once spoke of a
much
it is
Wherever
it
exists
abounds to
prevent them.
These reasonings give us a conception of a preeconomic era when the fundamental postulates of
'
'
Political
tal
men who
could
neither
move
it
nor themselves
to
who
really never
often
104
THE POSTULATES OF
if
more often
prevented
difficulties.
And
this
historical
retro-
know
and
different causes.
many
They make what happens now to have happened always, according to the same course of
a
new
one.
time.
And
what
early
is
common
in
all
One
'
of the
'
com-
monest phenomena of primitive trade is fixed prices, and the natural inquiry of everyone who is trained
in our Political
Economy
is,
how
They seem impossible according to the teaching which he has received, and yet they were maintained for ages they lasted longer than
be maintained
?
;
many
we do not reckon
is
short-lived.
One explanation
;
that
they were
the
crisis.
maintained by custom
but this
fails at
105
how
tained
The unchanging
Why
'
did not
capital and labour flow into the trades which at the time had more than their natural price, desert
'
less,
and
The
is
that
natural
'
is
not the
of
men
when
much one
of
And
in such a society,
in
a primitive
as far as
we do
of
is
when
there
in
is
no
The way
which
custom
is
'
settles prices,
how
it
gradually arrives at
what
what
is
en-
durable, one cannot well say probably many incipient customary prices break down before the one
which
suits
and
lasts is
stumbled upon.
But
defects
to
of this rule-of-thumb
primitive times.
ourselves
monopolies
we have
The
106
THE POSTULATES OF
the fixed prices at which these
are as accidental,
fares of railways
much
ments, as
be.
And
would be tedious
show
it
again,
movement
of capital from
nation,
ment within a
tendency to
daily
an equality of
as
becoming truer
all
diminishing,
all
But
it
is
this
Economy
In
is
of
its ideals,
'
an ultimate one.
fact the
it
;
great
commerce
beyond
we can
have merged
it
in as
something larger.
Political
Economy,
we know,
and
it
'
Feelings,'
says
Ricardo,
which I
men
107
own
But these
feelings
are
being weakened
every day.
them
at
all.
When
new
most others, and especially had isolated England in habit and in feeling. Ricardo framed, and others
have continued, a theory of foreign trade in which
each nation
is bounded by a ring-fence, through which capital cannot pass in or out. But the present state of things is far less simple, and much of that
The truth
for
is
that the
capital
great
instruments
transferring
we have
analysed,
The
'
first
ful of these,
Whenever the
it
bare of cash
can at once
by raising the
rate of interest.
That
is
to
any moment to meet its occasions or what is the same thing, can call in loans of its own. Other
nations can do so too, each in proportion to
its credit
and
its
wealth
108
THE POSTULATES OF
on account of our superiority in these things. A cosmopolitan loan fund exists, which runs everywhere as
tempts
it.
it
is
A
'
of recent times,
securities
The
well-known countries, their national debts, their railway shares, and so on (a kind
of
all
now most
through
If the rate cf
any one country the price of such foreign countries come in and buy
and their purchase-money
'
them they
;
comes here.
a sort
puts out
rich.
when
it is
poor,
it is
to
in which the indemnity from France was paid is the most striking instance Germany The sum of this which ever occurred in the world.
The mode
upon a
single contract,
payments began. Without a great lending apparatus such an operation could not have been effected. The resources of one nation, as
since the system of
109
it.
now
are,
In
fact it
the business.
official report,
We
may
say,'
M. Say
states in his
that all the great banking-houses of have concurred in this operation, and it is Europe
sufficient to
'
show the extent and the magnitude of it number of houses which signed or
fifty-five,
and
many
so that
of them represented syndicates of bankers, the actual number concerned was far more
'
considerable/
effects of all
The
concentration,' he adds,
'
of the
an unhoped-for magnitude. All other business of a similar nature was almost suspended for a time, while
the capital of
friends,
all
all
their
French
lent
fact
loans, and in the transmission of the money This was a new from country to country.
and we should
it.'
The magnitude of
;
as a single transaction
but
it is
happens
actions,
more remarkable, and even more size of this one and similar
;
110
THE POSTULATES OF
'
loan fund
'
are going
on constantly, though on a
We
because
must
concerned,
On
difference
The
old
country, where capital accumulates, will always, on an average, have it cheaper than the new country, which
has saved
little,
The
Americans in the Mississippi Valley are naturally a borrowing community, and the English at home are
naturally lenders.
And
We see approaches
distant
approaches even yet, but still distinct approaches to a time at which all civilised and industrial countries will
The
'
also
becoming common
to all countries, and it is the English who have taken the lead, because they have more money, more
practical adaptation to circumstances,
dustrial courage than other nations.
and more
in-
Some
nations,
111
efficiency
which
in
three.
The way
which continental railways the early ones espewere made by Engcially, when the idea was novel
an example of this. When Mr. Brassey, the greatest of them, was making the line from Turin to Novara, for the Italian Government,
lish contractors is
and
said,
We
are in a difficulty
am
to
determined to
want
know
if
if
Mr.
the Italian
Government
did
so,
Mr. Brassey
This
is
the
world
is filled
its
triumphs.
So
is
large, so daring,
so reckless
some persons have imagined that there was nothing which would seem absurd to it. A very little while ago, a scheme a
this speculative fund, that
Panama
and
lifted off
other.
speculative fund would not stand that, and the scheme collapsed. Yet the caricature shows
112
the reality
THE POSTULATES OF
;
we may use
it
to
is,
and how
it
runs from
Young men
also
now
unknown.
their
many
privations of a residence
above
all
other nations.
whole the English have a vast superiority. They have more capital to transfer, and their language is
the language of the great commerce everywhere, and
' '
More
'
transac-
cosmopolitan speculative fund are arranged in English, probably, than in all the other
languages of the
world
put
together
not
only
though that is not small, but because of the wealth and influence of the other States which speak that
language
also,
British India,
trade.
all
which uses
it
mostly for
its
largest
The number of English commercial houses over the world is immense, and of American very
113
men
we
capital,
it
And
But
commonly the
case
it
effect is
still
incomplete,
touches.
We
have to consider,
as
manner Eicardo began, international trade one between two or more limits which do not in-
how much
And
simple manner,
justly said,
Mr. Mill
discussion
and
on
of
it
it
well
know)
an excessively
difficult subject
inquiry,
we may expect to find many parts of hard indeed to reduce to anything like very
l
114
simplicity
are added.
The
popular discussion of the subject tends to conceal its difficulties, and indeed is mostly conducted by those
who do
Nothing
is
commoner than
it
to see statements on
Economy, but
to define its
it till
we
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