He who has improved upon previous conceptions, and been the only one to make any very important advance in the science since Mill's day, is J. E. Cairnes,[47] in his “Leading Principles of [pg 024] Political Economy newly expounded” (1874). Scarcely any previous writer has equaled him in logical clearness, originality, insight into economic phenomena, and lucidity of style. He subjected value, supply and demand, cost of production, and international trade, to a rigid investigation, which has given us actual additions to our knowledge of the study. The wages-fund theory was re-examined, and was stated in a new form, although Mr. Mill had given it up. Cairnes undoubtedly has given it its best statement. His argument on free trade (Part III, chapter iv) is the ablest and strongest to be found in modern writers. This volume is, however, not a systematic treatise on all the principles of political economy; but no student can properly pass by these great additions for the right understanding of the science. His “Logical Method of Political Economy” (1875) is a clear and able statement of the process to be adopted in an economic investigation, and is a book of exceptional merit and usefulness, especially in view of the rising differences in the minds of economists as to method.
A group of English writers of ability in this period have written in such a way as to win for them mention in connection with Cairnes and Mill. Professor W. Stanley Jevons[48] [pg 025] put himself in opposition to the methods of the men just mentioned, and applied the mathematical process to political economy, but without reaching new results. His most serviceable work has been in the study of money, which appears in an excellent form, “The Money and Mechanism of Exchange” (1875), and in an investigation which showed a fall of the value of gold since the discoveries of 1849. In this latter he has furnished a model for any subsequent investigator. Like Professor Jevons, T. E. Cliffe Leslie[49] opposed the older English school (the so-called “orthodox”), but in the different way of urging with great ability the use of the historical method, of which more will be said in speaking of later German writers.[50] He also distinguished himself by a study of land tenures, in his “Land Systems and Industrial [pg 026] Economy of Ireland, England, and Continental Countries” (1870), which was a brilliant exposition of the advantages of small holdings.
By far the ablest of the group, both by reason of his natural gifts and his training as a banker and financial editor, was Walter Bagehot.[51] In his “Economic Studies” (1880) he has discussed with a remarkable economic insight the postulates of political economy, and the position of Adam Smith, Ricardo, and Malthus; in his “Lombard Street” (fourth edition, 1873), the money market is pictured with a vivid distinctness which implies the possession of rare qualities for financial writing; indeed, it is in this practical way also, as editor of the London “Economist,”[52] that he made his great reputation.
Of living English economists, Professor Henry Fawcett,[53] in his “Manual of Political Economy” (1865; sixth edition, 1883), is a close follower of Mill, giving special care to co-operation, silver, nationalization of land, and trades-unions. He is an exponent of the strict wages-fund theory, and a vigorous free-trader. Professor J. E. Thorold Rogers, of Oxford, also holds aloof from the methods of the old school. [pg 027] His greatest contribution has been a “History of Agriculture and Prices in England,” from 1255 to 1793, in four volumes[54] (1866-1882).
Of all the writers[55] since Cairnes, it may be said that, while adding to the data with which political economy has to do, and putting principles to the test of facts, they have made no actual addition to the existing body of principles; although questions of distribution and taxation are certainly not yet fully settled, as is seen by the wide differences of opinion expressed on subjects falling within these heads by writers of to-day.
It now remains to complete this sketch of the growth of political economy by a brief account of the writers on the Continent and in the United States, beginning with France. About the time of the founding of the London “Economist” (1844) and “The Statistical Journal” (1839) in England, there was established in Paris the “Journal des Économistes” (1842), which contains many valuable papers. On the whole, the most popular writer since J. B. Say has been Bastiat,[56] who aspired to be the French Cobden. He especially urged [pg 028] a new[57] view of value, which he defined as the relation established by an exchange of services; that nature's products are gratuitous, so that man can not exact anything except for a given service. Chiefly as a foe of protection, which he regarded as qualified socialism, he has won a reputation for popular and clever writing; and he was led to believe in a general harmony of interests between industrial classes; but in general he can not be said to have much influenced the course of French thought. On value, rent, and population, he is undoubtedly unsound. A writer of far greater depth than Bastiat, with uncommon industry and wide knowledge, was Michel Chevalier,[58] easily the first among modern French economists. He has led in the discussion upon the fall of gold, protection, banking, and particularly upon money; an ardent free-trader, he had influence enough to induce France to enter into the commercial treaty of 1860 with England. One of the ablest writers on special topics is [pg 029] Levasseur,[59] who has given us a history of the working-classes before and since the Revolution, and the best existing monograph on John Law. The most industrious and reliable of the recent writers is the well-known statistician, Maurice Block,[60] while less profound economists were J. A. Blanqui[61] and Wolowski.[62] The latter devoted himself enthusiastically [pg 030] to banks of issue, and bimetallism. A small group gave themselves up chiefly to studies on agriculture and land-tenures—H. Passy,[63] Laveleye, and Lavergne.[64] The latter is by far the most important, as shown by his “L'économie rurale de la France depuis 1789” (1857), which gives a means of comparing recent French agriculture with that before the Revolution, as described in Arthur Young's “Travels in France” (1789). The best systematic treatise in French is the “Précis de la science économique” (1862), by Antoine-Élise Cherbuliez,[65] a Genevan. The French were the first to produce an alphabetical encyclopædia of economics, [pg 031] by Coquelin and Guillaumin, entitled the “Dictionnaire de l'économie politique” (1851-1853, third edition, 1864). Courcelle-Seneuil,[66] by his “Traité théorique et pratique d'économie politique” (second edition, 1867); and Baudrillart, by a good compendium. Joseph Garnier, Dunoyer,[67] Paul Leroy-Beaulieu,[68] Reybaud,[69] De Parieu,[70] Léon Say,[71] Boiteau, and others, have done excellent work in France, and Walras[72] in Switzerland.
As Cobden had an influence on Bastiat, so both had an influence in Germany in creating what has been styled by opponents the “Manchester school,” led by Prince-Smith (died 1874). They have worked to secure complete liberty of [pg 032] commerce and industry, and include in their numbers many men of ability and learning. Yearly congresses have been organized for the purpose of disseminating liberal ideas, and an excellent review, the “Vierteljahrschrift für Volkswirthschaft, Politik, und Kulturgeschichte,”[73] has been established. They have devoted themselves successfully to reforms of labor-laws, interest, workingmen's dwellings, the money system, and banking, and strive for the abolition of protective duties. Schulze-Delitzsch has acquired a deserved reputation for the creation of people's banks, and other forms of co-operation. The translator of Mill into German, Adolph Soetbeer,[74] is the most eminent living authority on the production of the precious metals, and a vigorous monometallist. The school is represented in the “Handwörterbuch der Volkswirthschaftslehre” (1865) of Reutzsch. The other writers of this group are Von Böhmert,[75] Faucher, Braun, Wolff, Michaelis, Emminghaus,[76] Wirth,[77] Hertzka, and Von Holtzendorf. The best known of the German protectionists is Friedrich List, the author of “Das nationale System der politischen Oekonomie” (1841), whose doctrines are very similar to those of H. C. Carey in this country.[78] An able writer on [pg 033] administrative functions and finance[79] is Lorenz Stein, of Vienna.
But German economists are of interest, inasmuch as they have established a new school who urge the use of the historical method in political economy, and it is about the question of method that much of the interest of to-day centers. In 1814 Savigny introduced this method into jurisprudence, and about 1850 it was applied to political economy. The new school claim that the English “orthodox” writers begin by an a priori process, and by deductions reach conclusions which are possibly true of imaginary cases, but are not true of man as he really acts. They therefore assert that economic laws can only be truly discovered by induction, or a study of phenomena first, as the means of reaching a generalization. To them Bagehot[80] answers that scientific bookkeeping, or collections of facts, in themselves give no results ending in scientific laws; for instance, since the facts of banking change and vary every day, no one can by induction alone reach any laws of banking; or, for example, the study of a panic from the concrete phenomena would be like trying to explain the bursting of a boiler without a theory of steam. More lately,[81] since it seems that the new school claim that induction does not preclude deduction, and as the old school never intended to disconnect themselves from “comparing conclusions with external facts,” there is not such a cause of difference as has previously appeared. Doubtless the insistence upon the merits of induction will be fruitful of good to “orthodox” writers, in the more general resort to the collection of statistics and means of verification. It is suggestive also that the leaders of the new school in Germany [pg 034] and England have reached no different results by their new method, and in the main agree with the laws evolved by the old English school. The economist does not pretend that his assumptions are descriptions of economic conditions existing at a given time; he simply considers them as forces (often acting many on one point or occasion) to be inquired into separately, inasmuch as concrete phenomena are the resultants of several forces, not to be known until we know the separate operation of each of the conjoined forces.
The most prominent of the new school is Wilhelm Roscher,[82] of Leipsic, who wrote a systematic treatise, “System der Volkswirthschaft” (1854, sixteenth edition, 1883), in the first division of which the notes contain a marvelous collection of facts and authorities. He agrees in results with Adam Smith, Ricardo, Malthus, and Mill, but does not seem to have known much of Cairnes. This book, however, is only a first of four treatises eventually intended to include the political economy of (2) agriculture, (3) industry and commerce, [pg 035] and (4) the state and commune. The ablest contemporary of Roscher, who was probably the first to urge the historical method, is Karl Knies,[83] in “Die politische Oekonomie vom Standpunkte der geschichtlichen Methode” (1853, second edition, 1881-1883). The third of the group who founded the historical school is Bruno Hildebrand,[84] of Jena, author of “Die Nationalökonomie der Gegenwart und Zukunft” (1848).
The German mind has always been familiar with the interference of the state, and a class of writers has arisen, not only advocating the inductive method, but strongly imbued with a belief in a close connection of the state with industry; and, inasmuch as the essence of modern socialism is a resort to state-help, this body of men, with Wagner at their head, has received the name of “Socialists[85] of the Chair,” and now wield a wide influence in Germany. Of these writers,[86] Wagner, Engel, Schmoller, Von Scheel, Brentano, Held, Schönberg, and Schäffle are the most prominent.