The Philosophy of the Practical: Economic and Ethic

by Benedetto Croce

There is no disagreement, then, between the Philosophy of Economy described by us and economic Science or Calculus, of which we have just defined the nature, since there cannot be any between two altogether heterogeneous forms, the one moving within the categories of truth, the other outside them, with objects of a practical order. This reciprocal tolerance can be disturbed only by Philosophy, when it compels itself, either to invade the field of economic Science, or to receive within itself, to a greater or less extent, the method and the formulæ proper to the latter. We have already referred to the first, when we noted the inadmissibility of the economic attempts of philosophism and historicism, and we will say no more on the subject. But it is opportune to draw attention to the fact that we must distinguish among these attempts those that we are accustomed to meet with in many treatises on economy, pure or political, and in the Science of finance (especially in the prologues), which labour to discover what economic action may be, and in what way it differs from morality, what are pleasure and pain, utility and value; whether the State be rational will that levies a portion of the riches of the citizens for the ends of civilization, or a simple fact resulting from general economic laws and the like. In all these efforts of the writers of treatises, we have an example of the gradual passage from empiria to philosophy, which is to be observed in all the other fields of knowledge, and if it be only possible to say in general that the Philosophy of Economy is derived from economic Science, it is certain, on the other hand, that it finds no small incentive in the philosophical doubts and discussions which economic Science supports. On the other hand, the claim to resolve philosophically and historically the economic Science or Calculus is, as we have seen, altogether sterile, or contradicts itself in development.

Errors that derive from it.

From the second of the cases stated above, that is to say, from the mixture of economic with philosophic methods, arises a series of errors that are very common and very grave, and of which it is opportune to take some notice here.

These errors can be divided into three groups, according as they consist of (a) considering economic Science or Calculus as a method exclusive of every other, and alone capable of bestowing upon man all the truth that can ever be attained in the field of human actions; (b) in attributing the value of universal thought to the empirical thoughts upon which economic calculation is based; (c) in changing into reality the fictions excogitated for the establishment of the Calculus.

1st. Negation of philosophy for economy.

Of the three groups, the first, which represents the most extended and radical form of the error, is, as usual, the least harmful, for the reason previously given, that the precise and loyal positions are those that are the most completely surpassed. Several cultivators of economic Science, among the most strict and mathematical, enter upon this desperate struggle against philosophy, which they ridicule as empty chatter and do not merely wish to subdue but altogether to destroy, substituting for it the methods of empirical observation and of mathematical construction, thus favouring a particular empirical and mathematical philosophy of their own, however much they may protest to the contrary. That the pretension is unsustainable, is to be seen, both from the contradictions in which they become entangled and from the very fury that animates them, which is, at bottom, vexation at not being able to free themselves from the contradictions in which they have become involved. For our part, we should like to say to those excellent economists, alike pure and mathematical, did this not appear to be pouring oil upon the flames:—Spare yourselves the trouble of philosophizing. Calculate, and do not think!

2nd. Universal value attributed to empirical concepts. Example: protection and free trade.

The other group is represented by a particular case of the empiristical error that we have already several times criticized, and many propositions of the kind that one hears in ordinary conversation, against which simple good sense has often rebelled, are to be reduced to it. Thus the empirical consideration of certain human actions as constituting richness and happiness, causes those individuals and peoples who possess property of that sort to be called rich and happy; but to this is opposed, with evident truth, that every one is happy in his own way and that external conditions are not proof of internal satisfaction, which is alone real and effective. The great dispute on free trade is also to be reduced to the same misunderstanding, for when we undertake to demonstrate that wealth is destroyed by protection, the demonstration is efficacious only if the wealth, said to be destroyed, is precisely that of which it was desired to assure the increase by protection; but nothing has been proved if it be a different quality of wealth that it may be desirable to acquire, even with the loss and the destruction of the other. For example, a people may find it advantageous from a political and military point of view to maintain in its territories the cultivation of grain or the construction of ships, even if that were to cost more than to provide itself with grain and ships from abroad; in this case, we should, strictly speaking, talk, not of the destruction of wealth, but rather of the acquisition of wealth (presumed national security), paid for with dear grain and dear naval construction. When the empirical ideas of free trade were raised to the dignity of laws of nature (reason), there was a rebellion against the economists, by which it was made clear that those laws of nature were laws, not absolute, but empirical, that is to say, historical and contingent facts, and that the economists who propounded them as absolute, were not at all men of science, but politicians, and represented (if not seriously, at least by unconscious suggestion, or, if it be preferred, by mere chance) the interests of certain definite classes or of certain definite peoples. And the rebellion was right, although it afterwards degenerated into the inconclusiveness of historicism, and absolutely denied to those false practical applications the formulæ and laws of Economy, which are natural in quite another sense, as nominal and therefore irrefutable definitions. Abstract principles, which are always inadequate to grasp the richness of reality, supply with a simple instrument him who passes from them to historical and sociological observation, which requires altogether different methods. Hence, for instance, the meaning of the school of Le Play, which in studying concrete economic conditions took note of religion, of family and political feelings, and of all the other things connected with the first; hence the admitted necessity of completing the analytic method (as it is called) with the synthetic, or (as it would be preferable to say) of neglecting abstractions when dealing with the problems of life and of directly intuiting life itself.

3rd. Transformation of the functions of the calculus into reality.

But what is particular to a philosophy that enters into hybrid wedlock with economic Science, is the transformation of those quantitative principles, of which we have seen the artificial origin, into effective reality. As a result, when this origin has not been observed, or has been forgotten, we may chance to hear the theories of Gossen on the decline of pleasures, as though they were "fundamental laws of human sensibility"; or that some homo economicus has appeared, constructor of diagrams and calculator of degrees of utility and of curves of satisfaction, as though these were real things. Some false conceptions derive from economic principles transported into the philosophy of the practical, which we have already had occasion to refute, such as that of a scale of values, which the volitional man is supposed to have before him whenever he deliberates, and that other of the embarrassment he experiences in choosing between two equal goods; and finally the belief that man wills things, whereas what he wills in reality is not things but actions.