1. In the first place there is a quite unexpected revival of theoretical studies. Pure economic theory, which had been deliberately neglected by the Historical school, by the State and Christian Socialists, was in 1875 again taken up by a group of eminent writers who flourished in England, France, and Austria. With the aid of conceptions that had not been in current use since the days of Condillac, coupled with the application of the mathematical method, which had not been attempted since the time of Cournot, they have succeeded in substituting an attractive and ingenious theory of prices for the somewhat halting hypothesis put forth by the Classical theorists. The success of the method in other fields of economic inquiry is every day enhancing its reputation. A number of writers both in America and Europe (excepting France, perhaps) are engaged upon this task, following in the wake of Walras, of Jevons, and of Menger. Diagrams, algebraical formulæ, and subtle reasoning again characterise the works of economists. Pure economics, so much decried since the days of Ricardo, has once more justified its claim to a position of honour, and despite keen opposition it is attracting attention everywhere. From the point of view of economic science this is the most notable fact of recent years.
2. Parallel with this has gone on a profound change in socialism. We have already shown in the course of the preceding book the transformations undergone by Marx’s ideas at the hands of even his own followers. The decline is equally evident everywhere else. All pretension to set up a proletarian in opposition to a bourgeois economics has been renounced. “It is necessary,” says M. Sorel somewhere, “to abandon every thought of transforming socialism into a science.” In fact, French syndicalists, English Fabians, and German revisionists have rallied with more or less good grace to the scientific ideas of Pareto, Marshall, or Böhm-Bawerk. But the real reason for this change of attitude is the strong desire to devote themselves with greater vigour to the social and political demands of socialism. The general strike, the creation of syndicats, the establishment of co-operative societies, and the problems of municipal socialism are attracting more and more attention, whereas the theory of surplus value is falling into the background. Even more striking still, as we shall see, is the attempt made by some of them, especially the advocates of land nationalisation—to reconcile Liberalism and socialism upon the basis of a doctrine that is Classical par excellence—the theory of rent.
3. This is not the only change that socialism has undergone. The ideal of collectivism which long prevailed among the working classes was that of a centralised sovereign authority, and the active part taken by the collectivist party in the legislative and even in the administrative work of some countries still further encouraged this belief. But the old revolutionary spirit, always individualistic to the core, was still alive, especially in the Latin countries, and it began to show signs of impatience at the turn things had taken. And so we witness among the working classes a revival of Liberalism, harsh and violent in its expression perhaps, and doubtless very different from the founders’. Smith and Bastiat would have some difficulty in recognising it, and with a view to avoiding confusion with the older doctrine it has assumed the name libertaire, but is generally known by the no less authentic title of “anarchism.” This tendency towards extreme individualism and anarchy, of which there is unmistakable evidence even in the annals of the International, has gained the ascendancy over the working classes, leaving a deep mark upon the recent syndicalist movement in France and Italy. At the same time there has also appeared among writers of the bourgeois class a kind of philosophical and moral anarchism which affords further proof of the revival of individualism.
4. Owing to these transformations in the theories of individualism and socialism, that other doctrine which in an earlier book went by the name of State Socialism has also undergone a change. In France, at any rate, it has reappeared under the name of Solidarism, which attempts a justification of State intervention by basing it on new foundations and confining it within just limits. It thus really represents an effort at synthesising individualism and socialism.
These are the main currents which we have attempted to describe in the following chapters. By describing them as recent doctrines our aim was not to emphasise the date of their appearance—which indeed is often in the distant past—but to show that they are merely a fresh effort to rejuvenate the older theories of which they are the latest manifestation. We might perhaps have borrowed a term from another domain and referred to them as modernist doctrines did it not seem rash to group under a perfectly definite term conceptions that are so very diverse in character and which have nothing more than a chronological order binding them together.
CHAPTER I: THE HEDONISTS
I: THE PSEUDO-RENAISSANCE OF THE CLASSICAL SCHOOL
If we are to give this new doctrine its true setting we must return for a moment to our study of the Historical school. The criticism of that school, as we have already seen, was directed chiefly against the method of the Classical writers. The faith which their predecessors had placed in the permanence and universality of natural law was scornfully rejected, and the possibility of ever founding a science upon a chain of general propositions emphatically denied. Political economy, so it was decreed, was henceforth to be concerned merely with the classification of observed facts.
It would not have been difficult to foretell that the swing of the pendulum—in accordance with that strange rhythm which is such a feature of the history of thought—would at the opportune moment cause a reversion to the abstract method. That is exactly what happened. Just at the moment when Historical study seemed to be triumphantly forging ahead—that is, about the years 1872-74—several eminent economists in Austria, England, Switzerland, and America suddenly and simultaneously made their appearance with an emphatic demand that political economy should be regarded as an independent science. They brought forward the claims of what they called pure economics. Naturally enough there ensued the keenest controversy between the champions of the two schools, notably between Professors Schmoller and Karl Menger.