PART II
CHAPTER VIII[ToC]
POLITICAL ECONOMY
I. Objects and Methods.
Political economy is, in the widest sense, the science of the laws controlling the production and exchange of the material necessities of life in human society. Production and exchange are two entirely different functions. Production may exist without exchange, exchange—since there can only be exchange of products—cannot exist without production. Each of the two social functions is controlled by entirely different external influences and thus has, generally speaking, its own peculiar laws. But on the other hand they become so mutually involved at a given time and react one upon the other that they might be designated the abscisses and ordinates of the economic curve.
The conditions under which men produce and exchange develop from land to land, and in the same land from generation to generation. Political economy cannot be the same for all lands and for all historical epochs. From the bow and arrow, from the stone knife and the exceptional and occasional trading intercourse of the barbarian to the steam engine with its thousands of horse-power, to the mechanical weaving machine, to the railway and the Bank of England is a tremendous leap. The Patagonians do not have production on a large scale and world-commerce any more than they have swindling or bankruptcy. Anyone who should attempt to apply the same laws of political economy to Patagonia as to present-day England would only succeed in producing stupid commonplaces. Political economy is thus really a historical science. It is engaged with historical material, that is, material which is always in course of development. At the close of this investigation it can, for the first time, show the few (especially as regards production and exchange) general laws which apply universally. In this way it is made evident that the laws which are common to certain methods of production or forms of exchange are common to all historical periods in which these methods of production and forms of exchange are the same. Thus for example with the introduction of specie, there came into being a series of laws which holds good for all lands and historical epochs in which specie is a means of exchange.
The method of distributing the product is in accordance with the method of production and exchange of a given society at a given time. In the tribal or village community with communal ownership of land, of which there are obvious survivals in the history of all civilized peoples, there is practically an equal distribution; where a greater inequality of distribution of the product has been introduced among the members of a society, it is a sign of the coming dissolution of the community—large and small farming have very different modes of distribution according to the historical circumstances from which they have developed. But it is apparent that large farming requires a different mode of distribution than small farming; that the large farming shows the existence of class antagonism—slave-holders and slaves, landlords and tenants, capitalists and wage workers,—but that, on the contrary, in small farming, class distinction does not arise from the farming operations of separate individuals but from the mere beginnings of farming on a large scale. The introduction and development of the use of gold into a country where formerly exchange of actual goods was the exclusive or general practice, is closely associated with a slow or rapid revolution of the mode of distribution hitherto prevailing, and to such an extent that inequality of distribution among individuals and, so, antagonism between rich and poor becomes more and more apparent. Local gild hand-production as it prevailed in the Middle Ages made great capitalists and life-long wage-workers just as impossible as the great modern industry, the credit system of to-day, and form of exchange, corresponding with the development of these, free competition, render them inevitable.
With the difference in distribution however class differences are introduced. Society becomes divided into upper and lower classes, into plunderers and plundered, into master and servant classes, and the state which the original groups composed of societies claiming the same ancestry only regarded as a means of protection of the common interests (remnants of which remain in the Orient, e.g.) and against foreign force, takes upon itself the duty of maintaining the economic and political supremacy of the dominant class against the dominated class by means of force.