In the primitive economic situation—that is to say, in savagery and the lower barbarism—there is, of course, no "solitary hunter," living either in a cave or otherwise, and there is no man who "makes by his own labor all the goods that he uses," etc. It is, in effect, a highly meretricious misrepresentation to speak in this connection of "the economy of a man who works only for himself," and say that "the inherent productive power of labor and capital is of vital concern to him," because such a presentation of the matter overlooks the main facts in the case in order to put the emphasis on a feature which is of negligible consequence. There is no reasonable doubt but that, at least since mankind reached the human plane, the economic unit has been not a "solitary hunter," but a community of some kind; in which, by the way, women seem in the early stages to have been the most consequential factor instead of the man who works for himself. The "capital" possessed by such a community—as, e.g., a band of California "Digger" Indians—was a negligible quantity, more valuable to a collector of curios than to any one else, and the loss of which to the "Digger" squaws would mean very little. What was of "vital concern" to them, indeed, what the life of the group depended on absolutely, was the accumulated wisdom of the squaws, the technology of their economic situation.[5] The loss of the basket, digging-stick, and mortar, simply as physical objects, would have signified little, but the conceivable loss of the squaw's knowledge of the soil and seasons, of food and fiber plants, and of mechanical expedients, would have meant the present dispersal and starvation of the community.
This may seem like taking Mr. Clark to task for an inconsequential gap in his general information on Digger Indians, Eskimos, and palæolithic society at large. But the point raised is not of negligible consequence for economic theory, particularly not for any theory of "economic dynamics" that turns in great part about questions of capital and its uses at different stages of economic development. In the primitive culture the quantity and the value of mechanical appliances is relatively slight; and whether the group is actually possessed of more or less of such appliances at a given time is not a question of first-rate importance. The loss of these objects—tangible assets—would entail a transient inconvenience. But the accumulated, habitual knowledge of the ways and means involved in the production and use of these appliances is the outcome of long experience and experimentation; and, given this body of commonplace technological information, the acquisition and employment of the suitable apparatus is easily arranged. The great body of commonplace knowledge made use of in industry is the product and heritage of the group. In its essentials it is known by common notoriety, and the "capital goods" needed for putting this commonplace technological knowledge to use are a slight matter,—practically within the reach of every one. Under these circumstances the ownership of "capital-goods" has no great significance, and, as a practical fact, interest and wages are unknown, and the "earning power of capital" is not seen to be "governed by a specific power of productivity which resides in capital-goods." But the situation changes, presently, by what is called an advance "in the industrial arts." The "capital" required to put the commonplace knowledge to effect grows larger, and so its acquisition becomes an increasingly difficult matter. Through "difficulty of attainment" in adequate quantities, the apparatus and its ownership become a matter of consequence; increasingly so, until presently the equipment required for an effective pursuit of industry comes to be greater than the common man can hope to acquire in a lifetime. The commonplace knowledge of ways and means, the accumulated experience of mankind, is still transmitted in and by the body of the community at large; but, for practical purposes, the advanced "state of the industrial arts" has enabled the owners of goods to corner the wisdom of the ancients and the accumulated experience of the race. Hence "capital," as it stands at that phase of the institution's growth contemplated by Mr. Clark.
The "natural" system of free competition, or, as it was once called, "the obvious and simple system of natural liberty," is accordingly a phase of the development of the institution of capital; and its claim to immutable dominion is evidently as good as the like claim of any other phase of cultural growth. The equity, or "natural justice," claimed for it is evidently just and equitable only in so far as the conventions of ownership on which it rests continue to be a secure integral part of the institutional furniture of the community; that is to say, so long as these conventions are part and parcel of the habits of thought of the community; that is to say, so long as these things are currently held to be just and equitable. This normalised present, or "natural," state of Mr. Clark, is, as near as may be, Senior's "Natural State of Man,"—the hypothetically perfect competitive system; and economic theory consists in the definition and classification of the phenomena of economic life in terms of this hypothetical competitive system.
Taken by itself, Mr. Clark's dealing with the past development might be passed over with slight comment, except for its negative significance, since it has no theoretical connection with the present, or even with the "natural" state in which the phenomena of economic life are assumed to arrange themselves in a stable, normal scheme. But his dealings with the future, and with the present in so far as the present situation is conceived to comprise "dynamic" factors, is of substantially the same kind. With Senior's "natural state of man" as the base-line of normality in things economic, questions of present and future development are treated as questions of departure from the normal, aberrations and excesses which the theory does not aim even to account for. What is offered in place of theoretical inquiry when these "positive perversions of the natural forces themselves" are taken up (e.g., in chapters xxii.-xxix.) is an exposition of the corrections that must be made to bring the situation back to the normal static state, and solicitous advice as to what measures are to be taken with a view to this beneficent end. The problem presented to Mr. Clark by the current phenomena of economic development is: how can it be stopped? or, failing that, how can it be guided and minimised? Nowhere is there a sustained inquiry into the dynamic character of the changes that have brought the present (deplorable) situation to pass, nor into the nature and trend of the forces at work in the development that is going forward in this situation. None of this is covered by Mr. Clark's use of the word "dynamic." All that it covers in the way of theory (chapters xii.-xxi.) is a speculative inquiry as to how the equilibrium reëstablished itself when one or more of the quantities involved increases or decreases. Other than quantitive changes are not noticed, except as provocations to homiletic discourse. Not even the causes and the scope of the quantitive changes that may take place in the variables are allowed to fall within the scope of the theory of economic dynamics.
So much of the volume, then, and of the system of doctrines of which the volume is an exposition, as is comprised in the later eight chapters (pp. 372-554), is an exposition of grievances and remedies, with only sporadic intrusions of theoretical matter, and does not properly constitute a part of the theory, whether static or dynamic. There is no intention here to take exception to Mr. Clark's outspoken attitude of disapproval toward certain features of the current business situation or to quarrel with the remedial measures which he thinks proper and necessary. This phase of his work is spoken of here rather to call attention to the temperate but uncompromising tone of Mr. Clark's writings as a spokesman for the competitive system, considered as an element in the Order of Nature, and to note the fact that this is not economic theory.[6]
The theoretical section specifically scheduled as Economic Dynamics (chapters xii.-xxi.), on the other hand, is properly to be included under the caption of Statics. As already remarked above, it presents a theory of equilibrium between variables. Mr. Clark is, indeed, barred out by his premises from any but a statical development of theory. To realise the substantially statical character of his Dynamics, it is only necessary to turn to his chapter xii. (Economic Dynamics). "A highly dynamic condition, then, is one in which the economic organism changes rapidly and yet, at any time in the course of its changes, is relatively near to a certain static model" (p. 196). "The actual shape of society at any one time is not the static model of that time; but it tends to conform to it; and in a very dynamic society is more nearly like it than it would be in one in which the forces of change are less active" (p. 197). The more "dynamic" the society, the nearer it is to the static model; until in an ideally dynamic society, with a frictionless competitive system, to use Mr. Clark's figure, the static state would be attained, except for an increase in size,—that is to say, the ideally perfect "dynamic" state would coincide with the "static" state. Mr. Clark's conception of a dynamic state reduces itself to a conception of an imperfectly static state, but in such a sense that the more highly and truly "dynamic" condition is thereby the nearer to a static condition. Neither the static nor the dynamic state, in Mr. Clark's view, it should be remarked, is a state of quiescence. Both are states of more or less intense activity, the essential difference being that in the static state the activity goes on in perfection, without lag, leak, or friction; the movement of parts being so perfect as not to disturb the equilibrium. The static state is the more "dynamic" of the two. The "dynamic" condition is essentially a deranged static condition: whereas the static state is the absolute perfect, "natural" taxonomic norm of competitive life. This dynamic-static state may vary in respect of the magnitude of the several factors which hold one another in equilibrium, but these are none other than quantitive variations. The changes which Mr. Clark discusses under the head of dynamics are all of this character,—changes in absolute or relative magnitude of the several factors comprised in the equation.
But, not to quarrel with Mr. Clark's use of the terms "static" and "dynamic," it is in place to inquire into the merits of this class of economic science apart from any adventitious shortcomings. For such an inquiry Mr. Clark's work offers peculiar advantages. It is lucid, concise, and unequivocal, with no temporising euphemisms and no politic affectations of sentiment. Mr. Clark's premises, and therewith the aim of his inquiry, are the standard ones of the classical English school (including the Jevons-Austrian wing). This school of economics stands on the pre-evolutionary ground of normality and "natural law," which the great body of theoretical science occupied in the early nineteenth century. It is like the other theoretical sciences that grew out of the rationalistic and humanitarian conceptions of the eighteenth century in that its theoretical aim is taxonomy—definition and classification—with the purpose of subsuming its data under a rational scheme of categories which are presumed to make up the Order of Nature. This Order of Nature, or realm of Natural Law, is not the actual run of material facts, but the facts so interpreted as to meet the needs of the taxonomist in point of taste, logical consistency, and sense of justice. The question of the truth and adequacy of the categories is a question as to the consensus of taste and predilection among the taxonomists; i.e., they are an expression of trained human nature touching the matter of what ought to be. The facts so interpreted make up the "normal," or "natural," scheme of things, with which the theorist has to do. His task is to bring facts within the framework of this scheme of "natural" categories. Coupled with this scientific purpose of the taxonomic economist is the pragmatic purpose of finding and advocating the expedient course of policy. On this latter head, again, Mr. Clark is true to the animus of the school.
The classical school, including Mr. Clark and his contemporary associates in the science, is hedonistic and utilitarian,—hedonistic in its theory and utilitarian in its pragmatic ideals and endeavors. The hedonistic postulates on which this line of economic theory is built up are of a statical scope and character, and nothing but statical theory (taxonomy) comes out of their development.[7] These postulates, and the theorems drawn from them, take account of none but quantitive variations, and quantitive variation alone does not give rise to cumulative change, which proceeds on changes in kind.
Economics of the line represented at its best by Mr. Clark has never entered this field of cumulative change. It does not approach questions of the class which occupy the modern sciences,—that is to say, questions of genesis, growth, variation, process (in short, questions of a dynamic import),—but confines its interest to the definition and classification of a mechanically limited range of phenomena. Like other taxonomic sciences, hedonistic economics does not, and cannot, deal with phenomena of growth except so far as growth is taken in the quantitative sense of a variation in magnitude, bulk, mass, number, frequency. In its work of taxonomy this economics has consistently bound itself, as Mr. Clark does, by distinctions of a mechanical, statistical nature, and has drawn its categories of classification on those grounds. Concretely, it is confined, in substance, to the determination of and refinements upon the concepts of land, labor, and capital, as handed down by the great economists of the classical era, and the correlate concepts of rent, wages, interest and profits. Solicitously, with a painfully meticulous circumspection, the normal, mechanical metes and bounds of these several concepts are worked out, the touchstone of the absolute truth aimed at being the hedonistic calculus. The facts of use and wont are not of the essence of this mechanical refinement. These several categories are mutually exclusive categories, mechanically speaking. The circumstance that the phenomena covered by them are not mechanical facts is not allowed to disturb the pursuit of mechanical distinctions among them. They nowhere overlap, and at the same time between them they cover all the facts with which this economic taxonomy is concerned. Indeed, they are in logical consistency, required to cover them. They are hedonistically "natural" categories of such taxonomic force that their elemental lines of cleavage run through the facts of any given economic situation, regardless of use and wont, even where the situation does not permit these lines of cleavage to be seen by men and recognised by use and wont; so that, e.g., a gang of Aleutian Islanders slushing about in the wrack and surf with rakes and magical incantations for the capture of shell-fish are held, in point of taxonomic reality, to be engaged on a feat of hedonistic equilibration in rent, wages, and interest. And that is all there is to it. Indeed, for economic theory of this kind, that is all there is to any economic situation. The hedonistic magnitudes vary from one situation to another, but, except for variations in the arithmetical details of the hedonistic balance, all situations are, in point of economic theory, substantially alike.[8]
Taking this unfaltering taxonomy on its own recognisances, let us follow the trail somewhat more into the arithmetical details, as it leads along the narrow ridge of rational calculation, above the tree-tops, on the levels of clear sunlight and moonshine. For the purpose in hand—to bring out the character of this current economic science as a working theory of current facts, and more particularly "as applied to modern problems of industry and public policy" (title-page)—the sequence to be observed in questioning the several sections into which the theoretical structure falls is not essential. The structure of classical theory is familiar to all students, and Mr. Clark's redaction offers no serious departure from the conventional lines. Such divergence from conventional lines as may occur is a matter of details, commonly of improvements in detail; and the revisions of detail do not stand in such an organic relation to one another, nor do they support and strengthen one another in such a manner, as to suggest anything like a revolutionary trend or a breaking away from the conventional lines.