Its merits lay in its treatment of certain special questions of the day;while in the purely scientific questions it was hopelessly confused and inconsistent.Undoubtedly,as I have tried to point out,Malthus and Ricardo were reasoning upon the contemporary state of things,the doctrine started from observation of facts;it was too 'abstract'so far as it neglected elements in the concrete realities which were really relevant to the conclusions,One cause of confusion was the necessity of starting from the classification implied in ordinary phrases.It is exemplified by the vague use of such words as 'capital,''value,''supply and demand.'Definitions,as is often remarked,45come at the end of an investigation,though they are placed at the beginning of an exposition.When the primary conceptions to be used were still so shifting and contradictory as is implied in the controversies of the day,it is no wonder that the formula should be wanting in scientific precision.Until we have determined what is meant by 'force'we cannot have a complete science of dynamics.The economists imagined that they had reached the goal before they had got rid of ambiguities hidden in the accepted terminology.Meanwhile it will be enough if I try to consider broadly what was the nature of the body of statements which thus claimed to be an elaborated science.
Ricardo's purpose was to frame a calculus,to give a method of reasoning which will enable us to clinch our economic reasoning.We are to be sure that we have followed out the whole cycle of cause and effect.Capitalists,landowners,labourers form parts of a rounded system,implying reciprocal actions and reactions.
The imposition of a tax or a tariff implies certain changes in existing relations:that change involves other changes;and to trace out the total effect,we must understand what are the ultimate conditions of equilibrium,or what are the processes by which the system will adjust itself to the new conditions,to describe,again,the play of a number of reciprocal forces,we have to find what mathematicians call an 'independent variable';some one element in the changes on which all other changes will depend.
That element,roughly speaking,ultimately comes out to be 'labour.'The simplicity of the system gave an impression both of clearness and certainty,which was transfer red from the reasoning to the premises.The facts seemed to be established,because they were necessary to the system.The first step to an estimate of the value of the doctrine would be to draw up a statement of the 'postulates'implied.Among them,we should have such formulae as the single rate of profits and wages;which imply the 'transferability'of labour and capital,or the flow of either element to the best-paid employment.
We should have again the Malthusian doctrine of the multiplication of labour up to a certain standard;and the fact that scarcity means dearness and plenty cheapness.These doctrines at least are taken for granted;and it may perhaps be said that they are approximations which only require qualifications,though sometimes very important qualifications,to hold good of the society actually contemplated.
They were true enough to give the really conclusive answer to many popular fallacies.The type of sophistry which Ricardo specially assailed was that which results from neglecting the necessary implications of certain changes.The arguments for the old 'mercantile theory'--for 'protection'of industry,for the poor-law,for resisting the introduction of machinery,the fear of 'gluts'and all manner of doctrines about the currency were really exposed by the economists upon the right grounds.It was absurd to suppose that by simply expanding the currency,or by making industry less efficient,or forcing it to the least profitable employments,you were increasing the national wealth;or to overlook the demoralising effects of a right to support because you resolved only to see the immediate benefits of charity to individuals.
It is true,no doubt,that in some cases there might be other arguments,and that the economists were apt to take a narrow view of the facts.Yet they decisively exploded many bad arguments,and by the right method of enforcing the necessity of tracing out the whole series of results.It was partly to their success in confuting absurd doctrines that their confidence was due;though the confidence was excessive when it was transferred to the axioms from which they professed to start.A doctrine may be true enough to expose an error,and yet not capable of yielding definite and precise conclusions.If I know that nothing can come out of nothing,I am on the way to a great scientific principle and able to confute some palpable fallacies;but I am still a very long way from understanding the principle of the 'conservation of energy,'the truth that scarcity meant dearness was apparently well known to Joseph in Egypt,and applied very skilfully for his purpose.
Economists have framed a 'theory of value'which explains more precisely the way in which this is brought about,A clear statement may be valuable to psychologists;but for most purposes of political economy Joseph's knowledge is quite sufficient,it is the doctrine which is really used in practice whatever may be its ultimate justification.
The postulates,however,were taken by the economists to represent something more than approximate statements of the fact.They imply certain propositions which might be regarded as axioms.Men desire wealth and prefer their own interests.The whole theory might then be regarded as a direct deduction from the axioms.