images of public domain material from the ,google ,print project47 ,,the ,,place ,,of ,,science ,,in ,,modern ,,civilisation ,,books ,,by ,,thorstein ,,veblen ,,the ,,theory ,,of ,,the ,,leisure ,,class ,,the ,,theory ,,of ,,business ,,enterprise ,,the ,,instinct ,,of ,,workmanship ,,imperial ,,germany ,,and ,,the ,,industrial ,,revolution ,,the ,,nature ,,of ,,peace ,,and ,,the ,,terms ,,of ,,its ,,perpetuation ,,the ,,higher ,,learning ,,in ,,america ,,the ,,vested ,,interests ,,and ,,the ,,state ,,of ,,the ,,industrial ,,arts ,,the ,,place ,,of ,,science ,,in ,,modern ,,civilisation ,,the ,,place ,,of ,,science ,,in ,,modern ,,civilisation ,,and ,,other ,,essays by ,,thorstein ,,veblen ,new ,york ,b4 ,w4 ,,huebsch ,mcmxix ,,copyright1 #aiai ,,by ,b4 ,w4 ,,huebsch ,,printed ,,in ,,the ,,united ,,states ,,of ,,america ,,publisher',s ,,note ,these essays are here reprinted from various periodicals1 running over a period of about twenty years4 ,the selection is due to ,messrs4 ,leon ,ardzrooni1 ,wesley ,c4 ,mitchell and ,walter ,w4 ,stewart4 ,it is unlikely that more than a few public libraries possess files so complete as to give access to all of these essays1 and even if the magazines were readily obtainable at libraries they would almost certainly have to be read in those institutions4 ,the nature of the material1 its timeliness 7,mr4 ,veblen deals with ideas in such a manner as to give the date of composition a secondary importance71 and the fact that it would otherwise be lost to all save diligent excavators1 explain its preservation in this form4 ,the courtesy of the periodicals in which the papers first appeared1 in permitting their reproduction1 is gratefully acknowledged4 ,,contents ,,page ,,the ,,place ,,of ,,science ,,in ,,modern ,,civilisation #a ,,the ,,evolution ,,of ,,the ,,scientific ,,point ,,of ,,view #cb ,,why ,,is ,,economics ,,not ,,an ,,evolutionary ,,science8 #ef ,,the ,,preconceptions ,,of ,,economic ,,science4 ,i4 #hb ,,ii4 #aad ,,iii4 #adh ,,professor ,,clark',s ,,economics #ahj ,,the ,,limitations ,,of ,,marginal ,,utility #bca ,,gustav ,,schmoller',s ,,economics #beb ,,industrial ,,and ,,pecuniary ,,employments #bgi ,,on ,,the ,,nature ,,of ,,capital4 ,i4 #cbd ,,ii4 #ceb ,,some ,,neglected ,,points ,,in ,,the ,,theory ,,of ,,socialism #chg ,,the ,,socialist ,,economics ,,of ,,karl ,,marx4 ,i4 #dji ,,ii4 #dca ,,the ,,mutation ,,theory ,,and ,,the ,,blond ,,race #deg ,,the ,,blond ,,race ,,and ,,the ,,aryan ,,culture #dgg ,,an ,,early ,,experiment ,,in ,,trusts #dig ,,the ,,place ,,of ,,science ,,in ,,modern ,,civilisation#a ,it is commonly held that modern ,christendom is superior to any and all other systems of civilised life4 ,other ages and other cultural regions are by contrast spoken of as lower1 or more archaic1 or less mature4 ,the claim is that the modern culture is superior on the whole1 not that it is the best or highest in all respects and at every point4 ,it has1 in fact1 not an all-around superiority1 but a superiority within a closely limited range of intellectual activities1 while outside this range many other civilisations surpass that of the modern occidental peoples4 ,but the peculiar excellence of the modern culture is of such a nature as to give it a decisive practical advantage over all other cultural schemes that have gone before or that have come into competition with it4 ,it has proved itself fit to survive in a struggle for existence as against those civilisations which differ from it in respect of its distinctive traits4 ,modern civilisation is peculiarly matter-of-fact4 ,it contains many elements that are not of this character1 but these other elements do not belong exclusively or characteristically to it4 ,the modern civilised peoples are in a peculiar degree capable of an impersonal1 dispassionate insight into the material facts with which mankind has to deal4 ,the apex of cultural growth is at this point4 ,compared with this trait the rest of what is comprised in the cultural scheme is adventitious1 or at the best it is a by-product of this hard-headed apprehension of facts4 ,this quality may be a matter of habit or of racial endowment1 or it may be an outcome of both2 but whatever be the explanation of its prevalence1 the immediate consequence is much the same for the growth of civilisation4 ,a civilisation which is dominated by this matter-of-fact insight must prevail against any cultural scheme that lacks this element4 ,this characteristic of western civilisation comes to a head in modern science1 and it finds its highest material expression in the technology of the machine industry4 ,in these things modern culture is creative and self-sufficient2 and these being given1 the rest of what may seem characteristic in western civilisation follows by easy consequence4 ,the cultural structure clusters about this body of matter-of-fact knowledge as its substantial core4 ,whatever is not consonant with these opaque creations of science is an intrusive feature in the modern scheme1 borrowed or standing over from the barbarian past4 ,other ages and other peoples excel in other things and are known by other virtues4 ,in creative art1 as well as in critical taste1 the faltering talent of ,christendom can at the best follow the lead of the ancient ,greeks and the ,chinese4 ,in deft workmanship the handicraftsmen of the middle ,orient1 as well as of the ,far ,east1 stand on a level securely above the highest ,european achievement1 old or new4 ,in myth-making1 folklore1 and occult symbolism many of the lower barbarians have achieved things beyond what the latter-day priests and poets know how to propose4 ,in metaphysical insight and dialectical versatility many orientals1 as well as the ,schoolmen of the ,middle ,ages1 easily surpass the highest reaches of the ,new ,thought and the ,higher ,criticism4 ,in a shrewd sense of the religious verities1 as well as in an unsparing faith in devout observances1 the people of ,india or ,thibet1 or even the mediaeval ,christians1 are past-masters in comparison even with the select of the faith of modern times4 ,in political finesse1 as well as in unreasoning1 brute loyalty1 more than one of the ancient peoples give evidence of a capacity to which no modern civilised nation may aspire4 ,in warlike malevolence and abandon1 the hosts of ,islam1 the ,sioux ,indian1 and the heathen of the northern sea have set the mark above the reach of the most strenuous civilised warlord4 ,to modern civilised men1 especially in their intervals of sober reflection1 all these things that distinguish the barbarian civilisations seem of dubious value and are required to show cause why they should not be slighted4 ,it is not so with the knowledge of facts4 ,the making of states and dynasties1 the founding of families1 the prosecution of feuds1 the propagation of creeds and the creation of sects1 the accumulation of fortunes1 the consumption of superfluities--these have all in their time been felt to justify themselves as an end of endeavor2 but in the eyes of modern civilised men all these things seem futile in comparison with the achievements of science4 ,they dwindle in men's esteem as time passes1 while the achievements of science are held higher as time passes4 ,this is the one secure holding-ground of latter-day conviction1 that the increase and diffusion of knowledge among men is indefeasibly right and good4 ,when seen in such perspective as will clear it of the trivial perplexities of workday life1 this proposition is not questioned within the horizon of the western culture1 and no other cultural ideal holds a similar unquestioned place in the convictions of civilised mankind4 ,on any large question which is to be disposed of for good and all the final appeal is by common consent taken to the scientist4 ,the solution offered in the name of science is decisive so long as it is not set aside by a still more searching scientific inquiry4 ,this state of things may not be altogether fortunate1 but such is the fact4 ,there are other1 older grounds of finality that may conceivably be better1 nobler1 worthier1 more profound1 more beautiful4 ,it might conceivably be preferable1 as a matter of cultural ideals1 to leave the last word with the lawyer1 the duelist1 the priest1 the moralist1 or the college of heraldry4 ,in past times people have been content to leave their weightiest questions to the decision of some one or other of these tribunals1 and1 it cannot be denied1 with very happy results in those respects that were then looked to with the greatest solicitude4 ,but whatever the common-sense of earlier generations may have held in this respect1 modern common-sense holds that the scientist's answer is the only ultimately true one4 ,in the last resort enlightened common-sense sticks by the opaque truth and refuses to go behind the returns given by the tangible facts4 ,quasi lignum vitae in paradiso ,dei1 et quasi lucerna fulgoris in domo ,domini1 such is the place of science in modern civilisation4 ,this latterday faith in matter-of-fact knowledge may be well grounded or it may not4 ,it has come about that men assign it this high place1 perhaps idolatrously1 perhaps to the detriment of the best and most intimate interests of the race4 ,there is room for much more than a vague doubt that this cult of science is not altogether a wholesome growth--that the unmitigated quest of knowledge1 of this matter-of-fact kind1 makes for race-deterioration and discomfort on the whole1 both in its immediate effects upon the spiritual life of mankind1 and in the material consequences that follow from a great advance in matter-of-fact knowledge4 ,but we are not here concerned with the merits of the case4 ,the question here is3 ,how has this cult of science arisen8 ,what are its cultural antecedents8 ,how far is it in consonance with hereditary human nature8 and1 ,what is the nature of its hold on the convictions of civilised men8 99 99 99 99 99 ,in dealing with pedagogical problems and the theory of education1 current psychology is nearly at one in saying that all learning is of a pragmatic character2 that knowledge is inchoate action inchoately directed to an end2 that all knowledge is functional2 that it is of the nature of use4 ,this1 of course1 is only a corollary under the main postulate of the latter-day psychologists1 whose catchword is that ,the ,idea is essentially active4 ,there is no need of quarreling with this pragmatic school of psychologists4 ,their aphorism may not contain the whole truth1 perhaps1 but at least it goes nearer to the heart of the epistemological problem than any earlier formulation4 ,it may confidently be said to do so because1 for one thing1 its argument meets the requirements of modern science4 ,it is such a concept as matter-of-fact science can make effective use of2 it is drawn in terms which are1 in the last analysis1 of an impersonal1 not to say tropismatic1 character2 such as is demanded by science1 with its insistence on opaque cause and effect4 ,while knowledge is construed in teleological terms1 in terms of personal interest and attention1 this teleological aptitude is itself reducible to a product of unteleological natural selection4 ,the teleological bent of intelligence is an hereditary trait settled upon the race by the selective action of forces that look to no end4 ,the foundations of pragmatic intelligence are not pragmatic1 nor even personal or sensible4 ,this impersonal character of intelligence is1 of course1 most evident on the lower levels of life4 ,if we follow ,mr4 ,loeb1 e4g41 in his inquiries into the psychology of that life that lies below the threshold of intelligence1 what we meet with is an aimless but unwavering motor response to stimulus4#b ,the response is of the nature of motor impulse1 and in so far it is pragmatic1 if that term may fairly be applied to so rudimentary a phase of sensibility4 ,the responding organism may be called an agent in so far4 ,it is only by a figure of speech that these terms are made to apply to tropismatic reactions4 ,higher in the scale of sensibility and nervous complication instincts work to a somewhat similar outcome4 ,on the human plane1 intelligence 7the selective effect of inhibitive complication7 may throw the response into the form of a reasoned line of conduct looking to an outcome that shall be expedient for the agent4 ,this is naive pragmatism of the developed kind4 ,there is no longer a question but that the responding organism is an agent and that his intelligent response to stimulus is of a teleological character4 ,but that is not all4 ,the inhibitive nervous complication may also detach another chain of response to the given stimulus1 which does not spend itself in a line of motor conduct and does not fall into a system of uses4 ,pragmatically speaking1 this outlying chain of response is unintended and irrelevant4 ,except in urgent cases1 such an idle response seems commonly to be present as a subsidiary phenomenon4 ,if credence is given to the view that intelligence is1 in its elements1 of the nature of an inhibitive selection1 it seems necessary to assume some such chain of idle and irrelevant response to account for the further course of the elements eliminated in giving the motor response the character of a reasoned line of conduct4 ,so that associated with the pragmatic attention there is found more or less of an irrelevant attention1 or idle curiosity4 ,this is more particularly the case where a higher range of intelligence is present4 ,this idle curiosity is1 perhaps1 closely related to the aptitude for play1 observed both in man and in the lower animals4#c ,the aptitude for play1 as well as the functioning of idle curiosity1 seems peculiarly lively in the young1 whose aptitude for sustained pragmatism is at the same time relatively vague and unreliable4 ,this idle curiosity formulates its response to stimulus1 not in terms of an expedient line of conduct1 nor even necessarily in a chain of motor activity1 but in terms of the sequence of activities going on in the observed phenomena4 ,the interpretation of the facts under the guidance of this idle curiosity may take the form of anthropomorphic or animistic explanations of the conduct of the objects observed4 ,the interpretation of the facts takes a dramatic form4 ,the facts are conceived in an animistic way1 and a pragmatic animus is imputed to them4 ,their behavior is construed as a reasoned procedure on their part looking to the advantage of these animistically conceived objects1 or looking to the achievement of some end which these objects are conceived to have at heart for reasons of their own4 ,among the savage and lower barbarian peoples there is commonly current a large body of knowledge organised in this way into myths and legends1 which need have no pragmatic value for the learner of them and no intended bearing on his conduct of practical affairs4 ,they may come to have a practical value imputed to them as a ground of superstitious observances1 but they may also not4#d ,all students of the lower cultures are aware of the dramatic character of the myths current among these peoples1 and they are also aware that1 particularly among the peaceable communities1 the great body of mythical lore is of an idle kind1 as having very little intended bearing on the practical conduct of those who believe in these myth-dramas4 ,the myths on the one hand1 and the workday knowledge of uses1 materials1 appliances1 and expedients on the other hand1 may be nearly independent of one another4 ,such is the case in an especial degree among those peoples who are prevailingly of a peaceable habit of life1 among whom the myths have not in any great measure been canonised into precedents of divine malevolence4 ,the lower barbarian's knowledge of the phenomena of nature1 in so far as they are made the subject of deliberate speculation and are organised into a consistent body1 is of the nature of life-histories4 ,this body of knowledge is in the main organised under the guidance of an idle curiosity4 ,in so far as it is systematised under the canons of curiosity rather than of expediency1 the test of truth applied throughout this body of barbarian knowledge is the test of dramatic consistency4 ,in addition to their dramatic cosmology and folk legends1 it is needless to say1 these peoples have also a considerable body of worldly wisdom in a more or less systematic form4 ,in this the test of validity is usefulness4#e ,the pragmatic knowledge of the early days differs scarcely at all in character from that of the maturest phases of culture4 ,its highest achievements in the direction of systematic formulation consist of didactic exhortations to thrift1 prudence1 equanimity1 and shrewd management--a body of maxims of expedient conduct4 ,in this field there is scarcely a degree of advance from ,confucius to ,samuel ,smiles4 ,under the guidance of the idle curiosity1 on the other hand1 there has been a continued advance toward a more and more comprehensive system of knowledge4 ,with the advance in intelligence and experience there come closer observation and more detailed analysis of facts4#f ,the dramatisation of the sequence of phenomena may then fall into somewhat less personal1 less anthropomorphic formulations of the processes observed2 but at no stage of its growth--at least at no stage hitherto reached--does the output of this work of the idle curiosity lose its dramatic character4 ,comprehensive generalisations are made and cosmologies are built up1 but always in dramatic form4 ,general principles of explanation are settled on1 which in the earlier days of theoretical speculation seem invariably to run back to the broad vital principle of generation4 ,procreation1 birth1 growth1 and decay constitute the cycle of postulates within which the dramatised processes of natural phenomena run their course4 ,creation is procreation in these archaic theoretical systems1 and causation is gestation and birth4 ,the archaic cosmological schemes of ,greece1 ,india1 ,japan1 ,china1 ,polynesia1 and ,america1 all run to the same general effect on this head4#g ,the like seems true for the ,elohistic elements in the ,hebrew scriptures4 ,throughout this biological speculation there is present1 obscurely in the background1 the tacit recognition of a material causation1 such as conditions the vulgar operations of workday life from hour to hour4 ,but this causal relation between vulgar work and product is vaguely taken for granted and not made a principle for comprehensive generalisations4 ,it is overlooked as a trivial matter of course4 ,the higher generalisations take their color from the broader features of the current scheme of life4 ,the habits of thought that rule in the working-out of a system of knowledge are such as are fostered by the more impressive affairs of life1 by the institutional structure under which the community lives4 ,so long as the ruling institutions are those of blood-relationship1 descent1 and clannish discrimination1 so long the canons of knowledge are of the same complexion4 ,when presently a transformation is made in the scheme of culture from peaceable life with sporadic predation to a settled scheme of predaceous life1 involving mastery and servitude1 gradations of privilege and honor1 coercion and personal dependence1 then the scheme of knowledge undergoes an analogous change4 ,the predaceous1 or higher barbarian1 culture is1 for the present purpose1 peculiar in that it is ruled by an accentuated pragmatism4 ,the institutions of this cultural phase are conventionalised relations of force and fraud4 ,the questions of life are questions of expedient conduct as carried on under the current relations of mastery and subservience4 ,the habitual distinctions are distinctions of personal force1 advantage1 precedence1 and authority4 ,a shrewd adaptation to this system of graded dignity and servitude becomes a matter of life and death1 and men learn to think in these terms as ultimate and definitive4 ,the system of knowledge1 even in so far as its motives are of a dispassionate or idle kind1 falls into the like terms1 because such are the habits of thought and the standards of discrimination enforced by daily life4#h ,the theoretical work of such a cultural era1 as1 for instance1 the ,middle ,ages1 still takes the general shape of dramatisation1 but the postulates of the dramaturgic theories and the tests of theoretic validity are no longer the same as before the scheme of graded servitude came to occupy the field4 ,the canons which guide the work of the idle curiosity are no longer those of generation1 blood-relationship1 and homely life1 but rather those of graded dignity1 authenticity1 and dependence4 ,the higher generalisations take on a new complexion1 it may be without formally discarding the older articles of belief4 ,the cosmologies of these higher barbarians are cast in terms of a feudalistic hierarchy of agents and elements1 and the causal nexus between phenomena is conceived animistically after the manner of sympathetic magic4 ,the laws that are sought to be discovered in the natural universe are sought in terms of authoritative enactment4 ,the relation in which the deity1 or deities1 are conceived to stand to facts is no longer the relation of progenitor1 so much as that of suzerainty4 ,natural laws are corollaries under the arbitrary rules of status imposed on the natural universe by an all-powerful ,providence with a view to the maintenance of his own prestige4 ,the science that grows in such a spiritual environment is of the class represented by alchemy and astrology1 in which the imputed degree of nobility and prepotency of the objects and the symbolic force of their names are looked to for an explanation of what takes place4 ,the theoretical output of the ,schoolmen has necessarily an accentuated pragmatic complexion1 since the whole cultural scheme under which they lived and worked was of a strenuously pragmatic character4 ,the current concepts of things were then drawn in terms of expediency1 personal force1 exploit1 prescriptive authority1 and the like1 and this range of concepts was by force of habit employed in the correlation of facts for purposes of knowledge even where no immediate practical use of the knowledge so gained was had in view4 ,at the same time a very large proportion of the scholastic researches and speculations aimed directly at rules of expedient conduct1 whether it took the form of a philosophy of life under temporal law and custom1 or of a scheme of salvation under the decrees of an autocratic ,providence4 ,a naive apprehension of the dictum that all knowledge is pragmatic would find more satisfactory corroboration in the intellectual output of scholasticism than in any system of knowledge of an older or a later date4 ,with the advent of modern times a change comes over the nature of the inquiries and formulations worked out under the guidance of the idle curiosity--which from this epoch is often spoken of as the scientific spirit4 ,the change in question is closely correlated with an analogous change in institutions and habits of life1 particularly with the changes which the modern era brings in industry and in the economic organisation of society4 ,it is doubtful whether the characteristic intellectual interests and teachings of the new era can properly be spoken of as less pragmatic1 as that term is sometimes understood1 than those of the scholastic times2 but they are of another kind1 being conditioned by a different cultural and industrial situation4#i ,in the life of the new era conceptions of authentic rank and differential dignity have grown weaker in practical affairs1 and notions of preferential reality and authentic tradition similarly count for less in the new science4 ,the forces at work in the external world are conceived in a less animistic manner1 although anthropomorphism still prevails1 at least to the degree required in order to give a dramatic interpretation of the sequence of phenomena4 ,the changes in the cultural situation which seem to have had the most serious consequences for the methods and animus of scientific inquiry are those changes that took place in the field of industry4 ,industry in early modern times is a fact of relatively greater preponderance1 more of a tone-giving factor1 than it was under the regime of feudal status4 ,it is the characteristic trait of the modern culture1 very much as exploit and fealty were the characteristic cultural traits of the earlier time4 ,this early-modern industry is1 in an obvious and convincing degree1 a matter of workmanship4 ,the same has not been true in the same degree either before or since4 ,the workman1 more or less skilled and with more or less specialised efficiency1 was the central figure in the cultural situation of the time2 and so the concepts of the scientists came to be drawn in the image of the workman4 ,the dramatisations of the sequence of external phenomena worked out under the impulse of the idle curiosity were then conceived in terms of workmanship4 ,workmanship gradually supplanted differential dignity as the authoritative canon of scientific truth1 even on the higher levels of speculation and research4 ,this1 of course1 amounts to saying in other words that the law of cause and effect was given the first place1 as contrasted with dialectical consistency and authentic tradition4 ,but this early-modern law of cause and effect--the law of efficient causes--is of an anthropomorphic kind4 ,like causes produce like effects1 in much the same sense as the skilled workman's product is like the workman2 nothing is found in the effect that was not contained in the cause1 in much the same manner4 ,these dicta are1 of course1 older than modern science1 but it is only in the early days of modern science that they come to rule the field with an unquestioned sway and to push the higher grounds of dialectical validity to one side4 ,they invade even the highest and most recondite fields of speculation1 so that at the approach to the transition from the early-modern to the late-modern period1 in the eighteenth century1 they determine the outcome even in the counsels of the theologians4 ,the deity1 from having been in mediaeval times primarily a suzerain concerned with the maintenance of his own prestige1 becomes primarily a creator engaged in the workmanlike occupation of making things useful for man4 ,his relation to man and the natural universe is no longer primarily that of a progenitor1 as it is in the lower barbarian culture1 but rather that of a talented mechanic4 ,the natural laws which the scientists of that era make so much of are no longer decrees of a preternatural legislative authority1 but rather details of the workshop specifications handed down by the master-craftsman for the guidance of handicraftsmen working out his designs4 ,in the eighteenth-century science these natural laws are laws specifying the sequence of cause and effect1 and will bear characterisation as a dramatic interpretation of the activity of the causes at work1 and these causes are conceived in a quasi-personal manner4 ,in later modern times the formulations of causal sequence grow more impersonal and more objective1 more matter-of-fact2 but the imputation of activity to the observed objects never ceases1 and even in the latest and maturest formulations of scientific research the dramatic tone is not wholly lost4 ,the causes at work are conceived in a highly impersonal way1 but hitherto no science 7except ostensibly mathematics7 has been content to do its theoretical work in terms of inert magnitude alone4 ,activity continues to be imputed to the phenomena with which science deals2 and activity is1 of course1 not a fact of observation1 but is imputed to the phenomena by the observer4#aj ,this is1 also of course1 denied by those who insist on a purely mathematical formulation of scientific theories1 but the denial is maintained only at the cost of consistency4 ,those eminent authorities who speak for a colorless mathematical formulation invariably and necessarily fall back on the 7essentially metaphysical7 preconception of causation as soon as they go into the actual work of scientific inquiry4#aa ,since the machine technology has made great advances1 during the nineteenth century1 and has become a cultural force of wide-reaching consequence1 the formulations of science have made another move in the direction of impersonal matter-of-fact4 ,the machine process has displaced the workman as the archetype in whose image causation is conceived by the scientific investigators4 ,the dramatic interpretation of natural phenomena has thereby become less anthropomorphic2 it no longer constructs the life-history of a cause working to produce a given effect--after the manner of a skilled workman producing a piece of wrought goods--but it constructs the life-history of a process in which the distinction between cause and effect need scarcely be observed in an itemised and specific way1 but in which the run of causation unfolds itself in an unbroken sequence of cumulative change4 ,by contrast with the pragmatic formulations of worldly wisdom these latter-day theories of the scientists appear highly opaque1 impersonal1 and matter-of-fact2 but taken by themselves they must be admitted still to show the constraint of the dramatic prepossessions that once guided the savage myth-makers4 ,in so far as touches the aims and the animus of scientific inquiry1 as seen from the point of view of the scientist1 it is a wholly fortuitous and insubstantial coincidence that much of the knowledge gained under machine-made canons of research can be turned to practical account4 ,much of this knowledge is useful1 or may be made so1 by applying it to the control of the processes in which natural forces are engaged4 ,this employment of scientific knowledge for useful ends is technology1 in the broad sense in which the term includes1 besides the machine industry proper1 such branches of practice as engineering1 agriculture1 medicine1 sanitation1 and economic reforms4 ,the reason why scientific theories can be turned to account for these practical ends is not that these ends are included in the scope of scientific inquiry4 ,these useful purposes lie outside the scientist's interest4 ,it is not that he aims1 or can aim1 at technological improvements4 ,his inquiry is as idle as that of the ,pueblo myth-maker4 ,but the canons of validity under whose guidance he works are those imposed by the modern technology1 through habituation to its requirements2 and therefore his results are available for the technological purpose4 ,his canons of validity are made for him by the cultural situation2 they are habits of thought imposed on him by the scheme of life current in the community in which he lives2 and under modern conditions this scheme of life is largely machine-made4 ,in the modern culture1 industry1 industrial processes1 and industrial products have progressively gained upon humanity1 until these creations of man's ingenuity have latterly come to take the dominant place in the cultural scheme2 and it is not too much to say that they have become the chief force in shaping men's daily life1 and therefore the chief factor in shaping men's habits of thought4 ,hence men have learned to think in the terms in which the technological processes act4 ,this is particularly true of those men who by virtue of a peculiarly strong susceptibility in this direction become addicted to that habit of matter-of-fact inquiry that constitutes scientific research4 ,modern technology makes use of the same range of concepts1 thinks in the same terms1 and applies the same tests of validity as modern science4 ,in both1 the terms of standardisation1 validity1 and finality are always terms of impersonal sequence1 not terms of human nature or of preternatural agencies4 ,hence the easy copartnership between the two4 ,science and technology play into one another's hands4 ,the processes of nature with which science deals and which technology turns to account1 the sequence of changes in the external world1 animate and inanimate1 run in terms of brute causation1 as do the theories of science4 ,these processes take no thought of human expediency or inexpediency4 ,to make use of them they must be taken as they are1 opaque and unsympathetic4 ,technology1 therefore1 has come to proceed on an interpretation of these phenomena in mechanical terms1 not in terms of imputed personality nor even of workmanship4 ,modern science1 deriving its concepts from the same source1 carries on its inquiries and states its conclusions in terms of the same objective character as those employed by the mechanical engineer4 ,so it has come about1 through the progressive change of the ruling habits of thought in the community1 that the theories of science have progressively diverged from the formulations of pragmatism1 ever since the modern era set in4 ,from an organisation of knowledge on the basis of imputed personal or animistic propensity the theory has changed its base to an imputation of brute activity only1 and this latter is conceived in an increasingly matter-of-fact manner2 until1 latterly1 the pragmatic range of knowledge and the scientific are more widely out of touch than ever1 differing not only in aim1 but in matter as well4 ,in both domains knowledge runs in terms of activity1 but it is on the one hand knowledge of what had best be done1 and on the other hand knowledge of what takes place2 on the one hand knowledge of ways and means1 on the other hand knowledge without any ulterior purpose4 ,the latter range of knowledge may serve the ends of the former1 but the converse does not hold true4 ,these two divergent ranges of inquiry are to be found together in all phases of human culture4 ,what distinguishes the present phase is that the discrepancy between the two is now wider than ever before4 ,the present is nowise distinguished above other cultural eras by any exceptional urgency or acumen in the search for pragmatic expedients4 ,neither is it safe to assert that the present excels all other civilisations in the volume or the workmanship of that body of knowledge that is to be credited to the idle curiosity4 ,what distinguishes the present in these premises is 7#a7 that the primacy in the cultural scheme has passed from pragmatism to a disinterested inquiry whose motive is idle curiosity1 and 7#b7 that in the domain of the latter the making of myths and legends in terms of imputed personality1 as well as the construction of dialectical systems in terms of differential reality1 has yielded the first place to the making of theories in terms of matter-of-fact sequence4#ab ,pragmatism creates nothing but maxims of expedient conduct4 ,science creates nothing but theories4#ac ,it knows nothing of policy or utility1 of better or worse4 ,none of all that is comprised in what is to-day accounted scientific knowledge4 ,wisdom and proficiency of the pragmatic sort does not contribute to the advance of a knowledge of fact4 ,it has only an incidental bearing on scientific research1 and its bearing is chiefly that of inhibition and misdirection4 ,wherever canons of expediency are intruded into or are attempted to be incorporated in the inquiry1 the consequence is an unhappy one for science1 however happy it may be for some other purpose extraneous to science4 ,the mental attitude of worldly wisdom is at cross-purposes with the disinterested scientific spirit1 and the pursuit of it induces an intellectual bias that is incompatible with scientific insight4 ,its intellectual output is a body of shrewd rules of conduct1 in great part designed to take advantage of human infirmity4 ,its habitual terms of standardisation and validity are terms of human nature1 of human preference1 prejudice1 aspiration1 endeavor1 and disability1 and the habit of mind that goes with it is such as is consonant with these terms4 ,no doubt1 the all-pervading pragmatic animus of the older and non-,european civilisations has had more than anything else to do with their relatively slight and slow advance in scientific knowledge4 ,in the modern scheme of knowledge it holds true1 in a similar manner and with analogous effect1 that training in divinity1 in law1 and in the related branches of diplomacy1 business tactics1 military affairs1 and political theory1 is alien to the skeptical scientific spirit and subversive of it4 ,the modern scheme of culture comprises a large body of worldly wisdom1 as well as of science4 ,this pragmatic lore stands over against science with something of a jealous reserve4 ,the pragmatists value themselves somewhat on being useful as well as being efficient for good and evil4 ,they feel the inherent antagonism between themselves and the scientists1 and look with some doubt on the latter as being merely decorative triflers1 although they sometimes borrow the prestige of the name of science--as is only good and well1 since it is of the essence of worldly wisdom to borrow anything that can be turned to account4 ,the reasoning in these fields turns about questions of personal advantage of one kind or another1 and the merits of the claims canvassed in these discussions are decided on grounds of authenticity4 ,personal claims make up the subject of the inquiry1 and these claims are construed and decided in terms of precedent and choice1 use and wont1 prescriptive authority1 and the like4 ,the higher reaches of generalisation in these pragmatic inquiries are of the nature of deductions from authentic tradition1 and the training in this class of reasoning gives discrimination in respect of authenticity and expediency4 ,the resulting habit of mind is a bias for substituting dialectical distinctions and decisions de jure in the place of explanations de facto4 ,the so-called sciences associated with these pragmatic disciplines1 such as jurisprudence1 political science1 and the like1 are a taxonomy of credenda4 ,of this character was the greater part of the science cultivated by the ,schoolmen1 and large remnants of the same kind of authentic convictions are1 of course1 still found among the tenets of the scientists1 particularly in the social sciences1 and no small solicitude is still given to their cultivation4 ,substantially the same value as that of the temporal pragmatic inquiries belongs also1 of course1 to the science of divinity4 ,here the questions to which an answer is sought1 as well as the aim and method of inquiry1 are of the same pragmatic character1 although the argument runs on a higher plane of personality1 and seeks a solution in terms of a remoter and more metaphysical expediency4 99 99 99 99 99 ,in the light of what has been said above1 the questions recur3 ,how far is the scientific quest of matter-of-fact knowledge consonant with the inherited intellectual aptitudes and propensities of the normal man8 and1 ,what foothold has science in the modern culture8 ,the former is a question of the temperamental heritage of civilised mankind1 and therefore it is in large part a question of the circumstances which have in the past selectively shaped the human nature of civilised mankind4 ,under the barbarian culture1 as well as on the lower levels of what is currently called civilised life1 the dominant note has been that of competitive expediency for the individual or the group1 great or small1 in an avowed struggle for the means of life4 ,such is still the ideal of the politician and business man1 as well as of other classes whose habits of life lead them to cling to the inherited barbarian traditions4 ,the upper-barbarian and lower-civilised culture1 as has already been indicated1 is pragmatic1 with a thoroughness that nearly bars out any non-pragmatic ideal of life or of knowledge4 ,where this tradition is strong there is but a precarious chance for any consistent effort to formulate knowledge in other terms than those drawn from the prevalent relations of personal mastery and subservience and the ideals of personal gain4 ,during the ,dark and ,middle ,ages1 for instance1 it is true in the main that any movement of thought not controlled by considerations of expediency and conventions of status are to be found only in the obscure depths of vulgar life1 among those neglected elements of the population that lived below the reach of the active class struggle4 ,what there is surviving of this vulgar1 non-pragmatic intellectual output takes the form of legends and folk-tales1 often embroidered on the authentic documents of the ,faith4 ,these are less alien to the latest and highest culture of ,christendom than are the dogmatic1 dialectical1 and chivalric productions that occupied the attention of the upper classes in mediaeval times4 ,it may seem a curious paradox that the latest and most perfect flower of the western civilisation is more nearly akin to the spiritual life of the serfs and villeins than it is to that of the grange or the abbey4 ,the courtly life and the chivalric habits of thought of that past phase of culture have left as nearly no trace in the cultural scheme of later modern times as could well be4 ,even the romancers who ostensibly rehearse the phenomena of chivalry1 unavoidably make their knights and ladies speak the language and the sentiments of the slums of that time1 tempered with certain schematised modern reflections and speculations4 ,the gallantries1 the genteel inanities and devout imbecilities of mediaeval high-life would be insufferable even to the meanest and most romantic modern intelligence4 ,so that in a later1 less barbarian age the precarious remnants of folklore that have come down through that vulgar channel--half savage and more than half pagan--are treasured as containing the largest spiritual gains which the barbarian ages of ,europe have to offer4 ,the sway of barbarian pragmatism has1 everywhere in the western world1 been relatively brief and relatively light2 the only exceptions would be found in certain parts of the ,mediterranean seaboard4 ,but wherever the barbarian culture has been sufficiently long-lived and unmitigated to work out a thoroughly selective effect in the human material subjected to it1 there the pragmatic animus may be expected to have become supreme and to inhibit all movement in the direction of scientific inquiry and eliminate all effective aptitude for other than worldly wisdom4 ,what the selective consequences of such a protracted regime of pragmatism would be for the temper of the race may be seen in the human flotsam left by the great civilisations of antiquity1 such as ,egypt1 ,india1 and ,persia4 ,science is not at home among these leavings of barbarism4 ,in these instances of its long and unmitigated dominion the barbarian culture has selectively worked out a temperamental bias and a scheme of life from which objective1 matter-of-fact knowledge is virtually excluded in favor of pragmatism1 secular and religious4 ,but for the greater part of the race1 at least for the greater part of civilised mankind1 the regime of the mature barbarian culture has been of relatively short duration1 and has had a correspondingly superficial and transient selective effect4 ,it has not had force and time to eliminate certain elements of human nature handed down from an earlier phase of life1 which are not in full consonance with the barbarian animus or with the demands of the pragmatic scheme of thought4 ,the barbarian-pragmatic habit of mind1 therefore1 is not properly speaking a temperamental trait of the civilised peoples1 except possibly within certain class limits 7as1 e4g41 the ,german nobility74 ,it is rather a tradition1 and it does not constitute so tenacious a bias as to make head against the strongly materialistic drift of modern conditions and set aside that increasingly urgent resort to matter-of-fact conceptions that makes for the primacy of science4 ,civilised mankind does not in any great measure take back atavistically to the upper-barbarian habit of mind4 ,barbarism covers too small a segment of the life-history of the race to have given an enduring temperamental result4 ,the unmitigated discipline of the higher barbarism in ,europe fell on a relatively small proportion of the population1 and in the course of time this select element of the population was crossed and blended with the blood of the lower elements whose life always continued to run in the ruts of savagery rather than in those of the high-strung1 finished barbarian culture that gave rise to the chivalric scheme of life4 ,of the several phases of human culture the most protracted1 and the one which has counted for most in shaping the abiding traits of the race1 is unquestionably that of savagery4 ,with savagery1 for the purpose in hand1 is to be classed that lower1 relatively peaceable barbarism that is not characterised by wide and sharp class discrepancies or by an unremitting endeavor of one individual or group to get the better of another4 ,even under the full-grown barbarian culture--as1 for instance1 during the ,middle ,ages--the habits of life and the spiritual interests of the great body of the population continue in large measure to bear the character of savagery4 ,the savage phase of culture accounts for by far the greater portion of the life-history of mankind1 particularly if the lower barbarism and the vulgar life of later barbarism be counted in with savagery1 as in a measure they properly should4 ,this is particularly true of those racial elements that have entered into the composition of the leading peoples of ,christendom4 ,the savage culture is characterised by the relative absence of pragmatism from the higher generalisations of its knowledge and beliefs4 ,as has been noted above1 its theoretical creations are chiefly of the nature of mythology shading off into folklore4 ,this genial spinning of apocryphal yarns is1 at its best1 an amiably inefficient formulation of experiences and observations in terms of something like a life-history of the phenomena observed4 ,it has1 on the one hand1 little value1 and little purpose1 in the way of pragmatic expediency1 and so it is not closely akin to the pragmatic-barbarian scheme of life2 while1 on the other hand1 it is also ineffectual as a systematic knowledge of matter-of-fact4 ,it is a quest of knowledge1 perhaps of systematic knowledge1 and it is carried on under the incentive of the idle curiosity4 ,in this respect it falls in the same class with the civilised man's science2 but it seeks knowledge not in terms of opaque matter-of-fact1 but in terms of some sort of spiritual life imputed to the facts4 ,it is romantic and ,hegelian rather than realistic and ,darwinian4 ,the logical necessities of its scheme of thought are necessities of spiritual consistency rather than of quantitative equivalence4 ,it is like science in that it has no ulterior motive beyond the idle craving for a systematic correlation of data2 but it is unlike science in that its standardisation and correlation of data run in terms of the free play of imputed personal initiative rather than in terms of the constraint of objective cause and effect4 ,by force of the protracted selective discipline of this past phase of culture1 the human nature of civilised mankind is still substantially the human nature of savage man4 ,the ancient equipment of congenital aptitudes and propensities stands over substantially unchanged1 though overlaid with barbarian traditions and conventionalities and readjusted by habituation to the exigencies of civilised life4 ,in a measure1 therefore1 but by no means altogether1 scientific inquiry is native to civilised man with his savage heritage1 since scientific inquiry proceeds on the same general motive of idle curiosity as guided the savage myth-makers1 though it makes use of concepts and standards in great measure alien to the myth-makers' habit of mind4 ,the ancient human predilection for discovering a dramatic play of passion and intrigue in the phenomena of nature still asserts itself4 ,in the most advanced communities1 and even among the adepts of modern science1 there comes up persistently the revulsion of the native savage against the inhumanly dispassionate sweep of the scientific quest1 as well as against the inhumanly ruthless fabric of technological processes that have come out of this search for matter-of-fact knowledge4 ,very often the savage need of a spiritual interpretation 7dramatisation7 of phenomena breaks through the crust of acquired materialistic habits of thought1 to find such refuge as may be had in articles of faith seized on and held by sheer force of instinctive conviction4 ,science and its creations are more or less uncanny1 more or less alien1 to that fashion of craving for knowledge that by ancient inheritance animates mankind4 ,furtively or by an overt breach of consistency1 men still seek comfort in marvelous articles of savage-born lore1 which contradict the truths of that modern science whose dominion they dare not question1 but whose findings at the same time go beyond the breaking point of their jungle-fed spiritual sensibilities4 ,the ancient ruts of savage thought and conviction are smooth and easy2 but however sweet and indispensable the archaic ways of thinking may be to the civilised man's peace of mind1 yet such is the binding force of matter-of-fact analysis and inference under modern conditions that the findings of science are not questioned on the whole4 ,the name of science is after all a word to conjure with4 ,so much so that the name and the mannerisms1 at least1 if nothing more of science1 have invaded all fields of learning and have even overrun territory that belongs to the enemy4 ,so there are sciences of theology1 law1 and medicine1 as has already been noted above4 ,and there are such things as ,christian ,science1 and scientific astrology1 palmistry1 and the like4 ,but within the field of learning proper there is a similar predilection for an air of scientific acumen and precision where science does not belong4 ,so that even that large range of knowledge that has to do with general information rather than with theory--what is loosely termed scholarship--tends strongly to take on the name and forms of theoretical statement4 ,however decided the contrast between these branches of knowledge on the one hand1 and science properly so called on the other hand1 yet even the classical learning1 and the humanities generally1 fall in with this predilection more and more with each succeeding generation of students4 ,the students of literature1 for instance1 are more and more prone to substitute critical analysis and linguistic speculation1 as the end of their endeavors1 in the place of that discipline of taste and that cultivated sense of literary form and literary feeling that must always remain the chief end of literary training1 as distinct from philology and the social sciences4 ,there is1 of course1 no intention to question the legitimacy of a science of philology or of the analytical study of literature as a fact in cultural history1 but these things do not constitute training in literary taste1 nor can they take the place of it4 ,the effect of this straining after scientific formulations in a field alien to the scientific spirit is as curious as it is wasteful4 ,scientifically speaking1 these quasi-scientific inquiries necessarily begin nowhere and end in the same place2 while in point of cultural gain they commonly come to nothing better than spiritual abnegation4 ,but these blindfold endeavors to conform to the canons of science serve to show how wide and unmitigated the sway of science is in the modern community4 ,scholarship--that is to say an intimate and systematic familiarity with past cultural achievements--still holds its place in the scheme of learning1 in spite of the unadvised efforts of the short-sighted to blend it with the work of science1 for it affords play for the ancient genial propensities that ruled men's quest of knowledge before the coming of science or of the outspoken pragmatic barbarism4 ,its place may not be so large in proportion to the entire field of learning as it was before the scientific era got fully under way4 ,but there is no intrinsic antagonism between science and scholarship1 as there is between pragmatic training and scientific inquiry4 ,modern scholarship shares with modern science the quality of not being pragmatic in its aim4 ,like science it has no ulterior end4 ,it may be difficult here and there to draw the line between science and scholarship1 and it may even more be unnecessary to draw such a line2 yet while the two ranges of discipline belong together in many ways1 and while there are many points of contact and sympathy between the two2 while the two together make up the modern scheme of learning2 yet there is no need of confounding the one with the other1 nor can the one do the work of the other4 ,the scheme of learning has changed in such manner as to give science the more commanding place1 but the scholar's domain has not thereby been invaded1 nor has it suffered contraction at the hands of science1 whatever may be said of the weak-kneed abnegation of some whose place1 if they have one1 is in the field of scholarship rather than of science4 99 99 99 99 99 ,all that has been said above has of course nothing to say as to the intrinsic merits of this quest of matter-of-fact knowledge4 ,in point of fact1 science gives its tone to modern culture4 ,one may approve or one may deprecate the fact that this opaque1 materialistic interpretation of things pervades modern thinking4 ,that is a question of taste1 about which there is no disputing4 ,the prevalence of this matter-of-fact inquiry is a feature of modern culture1 and the attitude which critics take toward this phenomenon is chiefly significant as indicating how far their own habit of mind coincides with the enlightened common-sense of civilised mankind4 ,it shows in what degree they are abreast of the advance of culture4 ,those in whom the savage predilection or the barbarian tradition is stronger than their habituation to civilised life will find that this dominant factor of modern life is perverse1 if not calamitous2 those whose habits of thought have been fully shaped by the machine process and scientific inquiry are likely to find it good4 ,the modern western culture1 with its core of matter-of-fact knowledge1 may be better or worse than some other cultural scheme1 such as the classic ,greek1 the mediaeval ,christian1 the ,hindu1 or the ,pueblo ,indian4 ,seen in certain lights1 tested by certain standards1 it is doubtless better2 by other standards1 worse4 ,but the fact remains that the current cultural scheme1 in its maturest growth1 is of that complexion2 its characteristic force lies in this matter-of-fact insight2 its highest discipline and its maturest aspirations are these4 ,in point of fact1 the sober common-sense of civilised mankind accepts no other end of endeavor as self-sufficient and ultimate4 ,that such is the case seems to be due chiefly to the ubiquitous presence of the machine technology and its creations in the life of modern communities4 ,and so long as the machine process continues to hold its dominant place as a disciplinary factor in modern culture1 so long must the spiritual and intellectual life of this cultural era maintain the character which the machine process gives it4 ,but while the scientist's spirit and his achievements stir an unqualified admiration in modern men1 and while his discoveries carry conviction as nothing else does1 it does not follow that the manner of man which this quest of knowledge produces or requires comes near answering to the current ideal of manhood1 or that his conclusions are felt to be as good and beautiful as they are true4 ,the ideal man1 and the ideal of human life1 even in the apprehension of those who most rejoice in the advances of science1 is neither the finikin skeptic in the laboratory nor the animated slide-rule4 ,the quest of science is relatively new4 ,it is a cultural factor not comprised1 in anything like its modern force1 among those circumstances whose selective action in the far past has given to the race the human nature which it now has4 ,the race reached the human plane with little of this searching knowledge of facts2 and throughout the greater part of its life-history on the human plane it has been accustomed to make its higher generalisations and to formulate its larger principles of life in other terms than those of passionless matter-of-fact4 ,this manner of knowledge has occupied an increasing share of men's attention in the past1 since it bears in a decisive way upon the minor affairs of workday life2 but it has never until now been put in the first place1 as the dominant note of human culture4 ,the normal man1 such as his inheritance has made him1 has therefore good cause to be restive under its dominion4 ,,footnotes3 #a ,reprinted by permission from ,the ,american ,journal of ,sociology1 ,vol4 ,,xi1 ,march1 #aijf4 #b ,jacques ,loeb1 ,heliotropismus der ,thiere1 and ,comparative ,psychology and ,physiology of the ,brain4 #c ,cf4 ,gross1 ,spiele der ,thiere1 chap4 #b 7esp4 pp4 #fe-gf71 and chap4 #e2 ,the ,play of ,man1 ,part ,,iii1 sec4 #c2 ,spencer1 ,principles of ,psychology1 secs4 #ecc-ce4 #d ,the myths and legendary lore of the ,eskimo1 the ,pueblo ,indians1 and some tribes of the northwest coast afford good instances of such idle creations4 ,cf4 various ,reports of the ,bureau of ,american ,ethnology2 also1 e4g41 ,tylor1 ,primitive ,culture1 esp4 the chapters on ,mythology and ,animism4 #e ,pragmatic is here used in a more restricted sense than the distinctively pragmatic school of modern psychologists would commonly assign the term4 ,pragmatic1 teleological1 and the like terms have been extended to cover imputation of purpose as well as conversion to use4 ,it is not intended to criticise this ambiguous use of terms1 nor to correct it2 but the terms are here used only in the latter sense1 which alone belongs to them by force of early usage and etymology4 ,pragmatic knowledge1 therefore1 is such as is designed to serve an expedient end for the knower1 and is here contrasted with the imputation of expedient conduct to the facts observed4 ,the reason for preserving this distinction is simply the present need of a simple term by which to mark the distinction between worldly wisdom and idle learning4 #f ,cf4 ,ward1 ,pure ,sociology1 esp4 pp4 #dcg-dh4 #g ,cf41 e4g41 ,tylor1 ,primitive ,culture1 chap4 #h4 #h ,cf4 ,james1 ,psychology1 chap4 #i1 esp4 sec4 #e4 #i ,as currently employed1 the term pragmatic is made to cover both conduct looking to the agent's preferential advantage1 expedient conduct1 and workmanship directed to the production of things that may or may not be of advantage to the agent4 ,if the term be taken in the latter meaning1 the culture of modern times is no less pragmatic than that of the ,middle ,ages4 ,it is here intended to be used in the former sense4 #aj ,epistemologically speaking1 activity is imputed to phenomena for the purpose of organising them into a dramatically consistent system4 #aa ,cf41 e4g41 ,karl ,pearson1 ,grammar of ,science1 and compare his ideal of inert magnitudes as set forth in his exposition with his actual work as shown in chaps4 #i1 #aj1 and #ab1 and more particularly in his discussions of ,mother ,right and related topics in ,the ,chances of ,death4 #ab ,cf4 ,james1 ,psychology1 ,vol4 ,,ii1 chap4 #bh1 pp4 #fcc-ga1 esp4 p4 #fdj note4 #ac ,cf4 ,ward1 ,principles of ,psychology1 pp4 #dci-dc4 ,,the ,,evolution ,,of ,,the ,,scientific ,,point ,,of ,,view#a ,a discussion of the scientific point of view which avowedly proceeds from this point of view itself has necessarily the appearance of an argument in a circle2 and such in great part is the character of what here follows4 ,it is in large part an attempt to explain the scientific point of view in terms of itself1 but not altogether4 ,this inquiry does not presume to deal with the origin or the legitimation of the postulates of science1 but only with the growth of the habitual use of these postulates1 and the manner of using them4 ,the point of inquiry is the changes which have taken place in the secondary postulates involved in the scientific point of view--in great part a question of the progressive redistribution of emphasis among the preconceptions under whose guidance successive generations of scientists have gone to their work4 99 99 99 99 99 ,the sciences which are in any peculiar sense modern take as an 7unavowed7 postulate the fact of consecutive change4 ,their inquiry always centers upon some manner of process4 ,this notion of process about which the researches of modern science cluster1 is a notion of a sequence1 or complex1 of consecutive change in which the nexus of the sequence1 that by virtue of which the change inquired into is consecutive1 is the relation of cause and effect4 ,the consecution1 moreover1 runs in terms of persistence of quantity or of force4 ,in so far as the science is of a modern complexion1 in so far as it is not of the nature of taxonomy simply1 the inquiry converges upon a matter of process2 and it comes to rest1 provisionally1 when it has disposed of its facts in terms of process4 ,but modern scientific inquiry in any case comes to rest only provisionally2 because its prime postulate is that of consecutive change1 and consecutive change can1 of course1 not come to rest except provisionally4 ,by its own nature the inquiry cannot reach a final term in any direction4 ,so it is something of a homiletical commonplace to say that the outcome of any serious research can only be to make two questions grow where one question grew before4 ,such is necessarily the case because the postulate of the scientist is that things change consecutively4 ,it is an unproven and unprovable postulate--that is to say1 it is a metaphysical preconception--but it gives the outcome that every goal of research is necessarily a point of departure2 every term is transitional4#b ,a hundred years ago1 or even fifty years ago1 scientific men were not in the habit of looking at the matter in this way4 ,at least it did not then seem a matter of course1 lying in the nature of things1 that scientific inquiry could not reach a final term in any direction4 ,to-day it is a matter of course1 and will be so avowed without argument4 ,stated in the broadest terms1 this is the substantial outcome of that nineteenth-century movement in science with which the name of ,darwin is associated as a catch-word4 ,this use of ,darwin's name does not imply that this epoch of science is mainly ,darwin's work4 ,what merit may belong to ,darwin1 specifically1 in these premises1 is a question which need not detain the argument4 ,he may1 by way of creative initiative1 have had more or less to do with shaping the course of things scientific4 ,or1 if you choose1 his voice may even be taken as only one of the noises which the wheels of civilisation make when they go round4 ,but by scientifically colloquial usage we have come to speak of pre-,darwinian and post-,darwinian science1 and to appreciate that there is a significant difference in the point of view between the scientific era which preceded and that which followed the epoch to which his name belongs4 ,before that epoch the animus of a science was1 on the whole1 the animus of taxonomy2 the consistent end of scientific inquiry was definition and classification1--as it still continues to be in such fields of science as have not been affected by the modern notion of consecutive change4 ,the scientists of that era looked to a final term1 a consummation of the changes which provoked their inquiry1 as well as to a first beginning of the matters with which their researches were concerned4 ,the questions of science were directed to the problem1 essentially classificatory1 of how things had been in the presumed primordial stable equilibrium out of which they1 putatively1 had come1 and how they should be in the definitive state of settlement into which things were to fall as the outcome of the play of forces which intervened between this primordial and the definitive stable equilibrium4 ,to the pre-,darwinian taxonomists the center of interest and attention1 to which all scientific inquiry must legitimately converge1 was the body of natural laws governing phenomena under the rule of causation4 ,these natural laws were of the nature of rules of the game of causation4 ,they formulated the immutable relations in which things naturally stood to one another before causal disturbance took place between them1 the orderly unfolding of the complement of causes involved in the transition over this interval of transient activity1 and the settled relations that would supervene when the disturbance had passed and the transition from cause to effect had been consummated1--the emphasis falling on the consummation4 ,the characteristic feature by which post-,darwinian science is contrasted with what went before is a new distribution of emphasis1 whereby the process of causation1 the interval of instability and transition between initial cause and definitive effect1 has come to take the first place in the inquiry2 instead of that consummation in which causal effect was once presumed to come to rest4 ,this change of the point of view was1 of course1 not abrupt or catastrophic4 ,but it has latterly gone so far that modern science is becoming substantially a theory of the process of consecutive change1 which is taken as a sequence of cumulative change1 realized to be self-continuing or self-propagating and to have no final term4 ,questions of a primordial beginning and a definitive outcome have fallen into abeyance within the modern sciences1 and such questions are in a fair way to lose all claim to consideration at the hands of the scientists4 ,modern science is ceasing to occupy itself with the natural laws--the codified rules of the game of causation--and is concerning itself wholly with what has taken place and what is taking place4 99 99 99 99 99 ,rightly seen from this ultra-modern point of view1 this modern science and this point of view which it affects are1 of course1 a feature of the current cultural situation1--of the process of life as it runs along under our eyes4 ,so also1 when seen from this scientific point of view1 it is a matter of course that any marked cultural era will have its own characteristic attitude and animus toward matters of knowledge1 will bring under inquiry such questions of knowledge as lie within its peculiar range of interest1 and will seek answers to these questions only in terms that are consonant with the habits of thought current at the time4 ,that is to say1 science and the scientific point of view will vary characteristically in response to those variations in the prevalent habits of thought which constitute the sequence of cultural development2 the current science and the current scientific point of view1 the knowledge sought and the manner of seeking it1 are a product of the cultural growth4 ,perhaps it would all be better characterised as a by-product of the cultured growth4 99 99 99 99 99 ,this question of a scientific point of view1 of a particular attitude and animus in matters of knowledge1 is a question of the formation of habits of thought2 and habits of thought are an outcome of habits of life4 ,a scientific point of view is a consensus of habits of thought current in the community1 and the scientist is constrained to believe that this consensus is formed in response to a more or less consistent discipline of habituation to which the community is subjected1 and that the consensus can extend only so far and maintain its force only so long as the discipline of habituation exercised by the circumstances of life enforces it and backs it up4 ,the scheme of life1 within which lies the scheme of knowledge1 is a consensus of habits in the individuals which make up the community4 ,the individual subjected to habituation is each a single individual agent1 and whatever affects him in any one line of activity1 therefore1 necessarily affects him in some degree in all his various activities4 ,the cultural scheme of any community is a complex of the habits of life and of thought prevalent among the members of the community4 ,it makes up a more or less congruous and balanced whole1 and carries within it a more or less consistent habitual attitude toward matters of knowledge--more or less consistent according as the community's cultural scheme is more or less congruous throughout the body of the population2 and this in its turn is in the main a question of how nearly uniform or consonant are the circumstances of experience and tradition to which the several classes and members of the community are subject4 ,so1 then1 the change which has come over the scientific point of view between pre-,darwinian and post-,darwinian times is to be explained1 at least in great part1 by the changing circumstances of life1 and therefore of habituation1 among the people of ,christendom during the life-history of modern science4 ,but the growth of a scientific point of view begins farther back than modern ,christendom1 and a record of its growth would be a record of the growth of human culture4 ,modern science demands a genetic account of the phenomena with which it deals1 and a genetic inquiry into the scientific point of view necessarily will have to make up its account with the earlier phases of cultural growth4 ,a life-history of human culture is a large topic1 not to be attempted here even in the sketchiest outline4 ,the most that can be attempted is a hasty review of certain scattered questions and salient points in this life-history4 99 99 99 99 99 ,in what manner and with what effect the idle curiosity of mankind first began to tame the facts thrown in its way1 far back in the night of time1 and to break them in under a scheme of habitual interpretation2 what may have been the earliest norms of systematic knowledge1 such as would serve the curiosity of the earliest generations of men in a way analogous to the service rendered the curiosity of later generations by scientific inquiry--all that is1 of course1 a matter of long-range conjecture1 more or less wild1 which cannot be gone into here4 ,but among such peoples of the lower cultures as have been consistently observed1 norms of knowledge and schemes for its systematization are always found4 ,these norms and systems of knowledge are naive and crude1 perhaps1 but there is fair ground for presuming that out of the like norms and systems in the remoter ages of our own antecedents have grown up the systems of knowledge cultivated by the peoples of history and by their representatives now living4 ,it is not unusual to say that the primitive systems of knowledge are constructed on animistic lines2 that animistic sequence is the rule to which the facts are broken in4 ,this seems to be true1 if animism be construed in a sufficiently naive and inchoate sense4 ,but this is not the whole case4 ,in their higher generalisations1 in what ,powell calls their sophiology1 it appears that the primitive peoples are guided by animistic norms2 they make up their cosmological schemes1 and the like1 in terms of personal or quasi-personal activity1 and the whole is thrown into something of a dramatic form4 ,through the early cosmological lore runs a dramatic consistency which imputes something in the way of initiative and propensity to the phenomena that are to be accounted for4 ,but this dramatisation of the facts1 the accounting for phenomena in terms of spiritual or quasi-spiritual initiative1 is by no means the whole case of primitive men's systematic knowledge of facts4 ,their theories are not all of the nature of dramatic legend1 myth1 or animistic life-history1 although the broader and more picturesque generalisations may take that form4 ,there always runs along by the side of these dramaturgic life-histories1 and underlying them1 an obscure system of generalisations in terms of matter-of-fact4 ,the system of matter-of-fact generalisations1 or theories1 is obscurer than the dramatic generalisations only in the sense that it is left in the background as being less picturesque and of less vital interest1 not in the sense of being less familiar1 less adequately apprehended1 or less secure4 ,the peoples of the lower cultures know that the broad scheme of things is to be explained in terms of creation1 perhaps of procreation1 gestation1 birth1 growth1 life and initiative2 and these matters engross the attention and stimulate speculation4 ,but they know equally well the matter of fact that water will run down hill1 that two stones are heavier than one of them1 that an edge-tool will cut softer substances1 that two things may be tied together with a string1 that a pointed stick may be stuck in the ground1 and the like4 ,there is no range of knowledge that is held more securely by any people than such matters of fact2 and these are generalisations from experience2 they are theoretical knowledge1 and they are a matter of course4 ,they underlie the dramatical generalisations of the broad scheme of things1 and are so employed in the speculations of the myth-makers and the learned4 ,it may be that the exceptional efficiency of a given edge-tool1 e4g41 will be accounted for on animistic or quasi-personal grounds1--grounds of magical efficacy2 but it is the exceptional behavior of such a tool that calls for explanation on the higher ground of animistic potency1 not its work-day performance of common work4 ,so also if an edge-tool should fail to do what is expected of it as a matter of course1 its failure may require an explanation in other terms than matter-of-fact4 ,but all that only serves to bring into evidence the fact that a scheme of generalisations in terms of matter-of-fact is securely held and is made use of as a sufficient and ultimate explanation of the more familiar phenomena of experience4 ,these commonplace matter-of-fact generalisations are not questioned and do not clash with the higher scheme of things4 ,all this may seem like taking pains about trivialities4 ,but the data with which any scientific inquiry has to do are trivialities in some other bearing than that one in which they are of account4 ,in all succeeding phases of culture1 developmentally subsequent to the primitive phase supposed above1 there is found a similar or analogous division of knowledge between a higher range of theoretical explanations of phenomena1 an ornate scheme of things1 on the one hand1 and such an obscure range of matter-of-fact generalisations as is here spoken of1 on the other hand4 ,and the evolution of the scientific point of view is a matter of the shifting fortunes which have in the course of cultural growth overtaken the one and the other of these two divergent methods of apprehending and systematising the facts of experience4 ,the historians of human culture have1 no doubt justly1 commonly dealt with the mutations that have occurred on the higher levels of intellectual enterprise1 in the more ambitious1 more picturesque1 and less secure of these two contrasted ranges of theoretical knowledge2 while the lower range of generalisations1 which has to do with work-day experience1 has in great part been passed over with scant ceremony as lying outside the current of ideas1 and as belonging rather among the things which engage the attention than among the modes1 expedients and creations of this attention itself4 ,there is good reason for this relative neglect of the work-day matters of fact4 ,it is on the higher levels of speculative generalisation that the impressive mutations in the development of thought have taken place1 and that the shifting of points of view and the clashing of convictions have drawn men into controversy and analysis of their ideas and have given rise to schools of thought4 ,the matter-of-fact generalisations have met with relatively few adventures and have afforded little scope for intellectual initiative and profoundly picturesque speculation4 ,on the higher levels speculation is freer1 the creative spirit has some scope1 because its excursions are not so immediately and harshly checked by material facts4 ,in these speculative ranges of knowledge it is possible to form and to maintain habits of thought which shall be consistent with themselves and with the habit of mind and run of tradition prevalent in the community at the time1 though not thereby consistent with the material actualities of life in the community4 ,yet this range of speculative generalisation1 which makes up the higher learning of the barbarian culture1 is also controlled1 checked1 and guided by the community's habits of life2 it1 too1 is an integral part of the scheme of life and is an outcome of the habituation enforced by experience4 ,but it does not rest immediately on men's dealings with the refractory phenomena of brute creation1 nor is it guided1 undisguised and directly1 by the habitual material 7industrial7 occupations4 ,the fabric of institutions intervenes between the material exigencies of life and the speculative scheme of things4 ,the higher theoretical knowledge1 that body of tenets which rises to the dignity of a philosophical or scientific system1 in the early culture1 is a complex of habits of thought which reflect the habits of life embodied in the institutional structure of society2 while the lower1 matter-of-fact generalisations of work-day efficiency--the trivial matters of course--reflect the workmanlike habits of life enforced by the commonplace material exigencies under which men live4 ,the distinction is analogous1 and indeed1 closely related1 to the distinction between intangible and tangible assets4 ,and the institutions are more flexible1 they involve or admit a larger margin of error1 or of tolerance1 than the material exigencies4 ,the latter are systematised into what economists have called the state of the industrial arts1 which enforce a somewhat rigorous standardisation of whatever knowledge falls within their scope2 whereas the institutional scheme is a matter of law and custom1 politics and religion1 taste and morals1 on all of which matters men have opinions and convictions1 and on which all men have a right to their own opinions4 ,the scheme of institutions is also not necessarily uniform throughout the several classes of society2 and the same institution 7as1 e4g41 slavery1 ownership1 or royalty7 does not impinge with the same effect on all parties touched by it4 ,the discipline of any institution of servitude1 e4g41 is not the same for the master as for the serf1 etc4 ,if there is a considerable institutional discrepancy between an upper and a lower class in the community1 leading to divergent lines of habitual interest or discipline2 if by force of the cultural scheme the institutions of society are chiefly in the keeping of one class1 whose attention is then largely engrossed with the maintenance of the scheme of law and order2 while the workmanlike activities are chiefly in the hands of another class1 in whose apprehension the maintenance of law and order is at the best a wearisome tribulation1 there is likely to be a similarly considerable divergence or discrepancy between the speculative knowledge1 cultivated primarily by the upper class1 and the work-day knowledge which is primarily in the keeping of the lower class4 ,such1 in particular1 will be the case if the community is organised on a coercive plan1 with well-marked ruling and subject classes4 ,the important and interesting institutions in such a case1 those institutions which fill a large angle in men's vision and carry a great force of authenticity1 are the institutions of coercive control1 differential authority and subjection1 personal dignity and consequence2 and the speculative generalisations1 the institutions of the realm of knowledge1 are created in the image of these social institutions of status and personal force1 and fall into a scheme drawn after the plan of the code of honor4 ,the work-day generalisations1 which emerge from the state of the industrial arts1 concomitantly fall into a deeper obscurity1 answering to the depth of indignity to which workmanlike efficiency sinks under such a cultural scheme2 and they can touch and check the current speculative knowledge only remotely and incidentally4 ,under such a bifurcate scheme of culture1 with its concomitant two-cleft systematisation of knowledge1 reality is likely to be widely dissociated from fact--that is to say1 the realities and verities which are accepted as authentic and convincing on the plane of speculative generalisation2 while science has no show--that is to say1 science in that modern sense of the term which implies a close contact1 if not a coincidence1 of reality with fact4 ,whereas1 if the institutional fabric1 the community's scheme of life1 changes in such a manner as to throw the work-day experience into the foreground of attention and to center the habitual interest of the people on the immediate material relations of men to the brute actualities1 then the interval between the speculative realm of knowledge1 on the one hand1 and the work-day generalisations of fact1 on the other hand1 is likely to lessen1 and the two ranges of knowledge are likely to converge more or less effectually upon a common ground4 ,when the growth of culture falls into such lines1 these two methods and norms of theoretical formulation may presently come to further and fortify one another1 and something in the way of science has at least a chance to arise4 99 99 99 99 99 ,on this view there is a degree of interdependence between the cultural situation and the state of theoretical inquiry4 ,to illustrate this interdependence1 or the concomitance between the cultural scheme and the character of theoretical speculation1 it may be in place to call to mind certain concomitant variations of a general character which occur in the lower cultures between the scheme of life and the scheme of knowledge4 ,in this tentative and fragmentary presentation of evidence there is nothing novel to be brought forward2 still less is there anything to be offered which carries the weight of authority4 ,on the lower levels of culture1 even more decidedly than on the higher1 the speculative systematisation of knowledge is prone to take the form of theology 7mythology7 and cosmology4 ,this theological and cosmological lore serves the savage and barbaric peoples as a theoretical account of the scheme of things1 and its characteristic traits vary in response to the variations of the institutional scheme under which the community lives4 ,in a prevailingly peaceable agricultural community1 such1 e4g41 as the more peaceable ,pueblo ,indians or the more settled ,indians of the ,middle ,west1 there is little coercive authority1 few and slight class distinctions involving superiority and inferiority2 property rights are few1 slight and unstable2 relationship is likely to be counted in the female line4 ,in such a culture the cosmological lore is likely to offer explanations of the scheme of things in terms of generation or germination and growth4 ,creation by fiat is not obtrusively or characteristically present4 ,the laws of nature bear the character of an habitual behavior of things1 rather than that of an authoritative code of ordinances imposed by an overruling providence4 ,the theology is likely to be polytheistic in an extreme degree and in an extremely loose sense of the term1 embodying relatively little of the suzerainty of ,god4 ,the relation of the deities to mankind is likely to be that of consanguinity1 and as if to emphasise the peaceable1 non-coercive character of the divine order of things1 the deities are1 in the main1 very apt to be females4 ,the matters of interest dealt with in the cosmological theories are chiefly matters of the livelihood of the people1 the growth and care of the crops1 and the promotion of industrial ways and means4 ,with these phenomena of the peaceable culture may be contrasted the order of things found among a predatory pastoral people--and pastoral peoples tend strongly to take on a predatory cultural scheme4 ,such a people will adopt male deities1 in the main1 and will impute to them a coercive1 imperious1 arbitrary animus and a degree of princely dignity4 ,they will also tend strongly to a monotheistic1 patriarchal scheme of divine government2 to explain things in terms of creative fiat2 and to a belief in the control of the natural universe by rules imposed by divine ordinance4 ,the matters of prime consequence in this theology are matters of the servile relation of man to ,god1 rather than the details of the quest of a livelihood4 ,the emphasis falls on the glory of ,god rather than on the good of man4 ,the ,hebrew scriptures1 particularly the ,jahvistic elements1 show such a scheme of pastoral cultural and predatory theoretical generalisations4 ,the learning cultivated on the lower levels of culture might be gone into at some length if space and time permitted1 but even what has been said may serve to show1 in the most general way1 what are the characteristic marks of this savage and barbarian lore4 ,a similarly summary characterisation of a cultural situation nearer home will bear more directly on the immediate topic of inquiry4 ,the learning of mediaeval ,christendom shows such a concomitance between the scheme of knowledge and the scheme of institutions1 somewhat analogous to the barbaric ,hebrew situation4 ,the mediaeval scheme of institutions was of a coercive1 authoritative character1 essentially a scheme of graded mastery and graded servitude1 in which a code of honor and a bill of differential dignity held the most important place4 ,the theology of that time was of a like character4 ,it was a monotheistic1 or rather a monarchical system1 and of a despotic complexion4 ,the cosmological scheme was drawn in terms of fiat2 and the natural philosophy was occupied1 in the main and in its most solemn endeavors1 with the corollaries to be subsumed under the divine fiat4 ,when the philosophical speculation dealt with facts it aimed to interpret them into systematic consistency with the glory of ,god and the divine purpose4 ,the realities of the scholastic lore were spiritual1 quasi-personal1 intangible1 and fell into a scale of differential dignity and prepotency4 ,matter-of-fact knowledge and work-day information were not then fit topics of dignified inquiry4 ,the interval1 or discrepancy1 between reality and actuality was fairly wide4 ,throughout that era1 of course1 work-day knowledge also continually increased in volume and consistency2 technological proficiency was gaining2 the effective control of natural processes was growing larger and more secure2 showing that matter-of-fact theories drawn from experience were being extended and were made increasing use of4 ,but all this went on in the field of industry2 the matter-of-fact theories were accepted as substantial and ultimate only for the purposes of industry1 only as technological maxims1 and were beneath the dignity of science4 ,with the transition to modern times industry comes into the foreground in the west-,european scheme of life1 and the institutions of ,european civilisation fall into a more intimate relation with the exigencies of industry and technology4 ,the technological range of habituation progressively counts for more in the cultural complex1 and the discrepancy between the technological discipline and the discipline of law and order under the institutions then in force grows progressively less4 ,the institutions of law and order take on a more impersonal1 less coercive character4 ,differential dignity and invidious discriminations between classes gradually lose force4 ,the industry which so comes into the foreground and so affects the scheme of institutions is peculiar in that its most obvious and characteristic trait is the workmanlike initiative and efficiency of the individual handicraftsman and the individual enterprise of the petty trader4 ,the technology which embodies the theoretical substance of this industry is a technology of workmanship1 in which the salient factors are personal skill1 force and diligence4 ,such a technology1 running as it does in great part on personal initiative1 capacity1 and application1 approaches nearer to the commonplace features of the institutional fabric than many another technological system might2 and its disciplinary effects in some considerable measure blend with those of the institutional discipline4 ,the two lines of habituation1 in the great era of handicraft and petty trade1 even came to coalesce and fortify one another2 as in the organisation of the craft gilds and of the industrial towns4 ,industrial life and usage came to intrude creatively into the cultural scheme on the one hand and into the scheme of authentic knowledge on the other hand4 ,so the body of matter-of-fact knowledge1 in modern times1 is more and more drawn into the compass of theoretical inquiry2 and theoretical inquiry takes on more and more of the animus and method of technological generalisation4 ,but the matter-of-fact elements so drawn in are construed in terms of workmanlike initiative and efficiency1 as required by the technological preconceptions of the era of handicraft4 ,in this way1 it may be conceived1 modern science comes into the field under the cloak of technology and gradually encroaches on the domain of authentic theory previously held by other1 higher1 nobler1 more profound1 more spiritual1 more intangible conceptions and systems of knowledge4 ,in this early phase of modern science its central norm and universal solvent is the concept of workmanlike initiative and efficiency4 ,this is the new organon4 ,whatever is to be explained must be reduced to this notation and explained in these terms2 otherwise the inquiry does not come to rest4 ,but when the requirements of this notation in terms of workmanship have been duly fulfilled the inquiry does come to rest4 ,by the early decades of the nineteenth century1 with a passable degree of thoroughness1 other grounds of validity and other interpretations of phenomena1 other vouchers for truth and reality1 had been eliminated from the quest of authentic knowledge and from the terms in which theoretical results were conceived or expressed4 ,the new organon had made good its pretensions4 ,in this movement to establish the hegemony of workmanlike efficiency--under the style and title of the law of causation1 or of efficient cause--in the realm of knowledge1 the ,english-speaking communities took the lead after the earlier scientific onset of the south-,european communities had gone up in the smoke of war1 politics and religion during the great era of state-making4 ,the ground of this ,british lead in science is apparently the same as that of the ,british lead in technology which came to a head in the ,industrial ,revolution2 and these two associated episodes of ,european civilisation are apparently both traceable to the relatively peaceable run of life1 and so of habituation1 in the ,english-speaking communities1 as contrasted with the communities of the continent4#c ,along with the habits of thought peculiar to the technology of handicraft1 modern science also took over and assimilated much of the institutional preconceptions of the era of handicraft and petty trade4 ,the natural laws1 with the formulation of which this early modern science is occupied1 are the rules governing natural uniformities of sequence2 and they punctiliously formulate the due procedure of any given cause creatively working out the achievement of a given effect1 very much as the craft rules sagaciously specified the due routine for turning out a staple article of merchantable goods4 ,but these natural laws of science are also felt to have something of that integrity and prescriptive moral force that belongs to the principles of the system of natural rights which the era of handicraft has contributed to the institutional scheme of later times4 ,the natural laws were not only held to be true to fact1 but they were also felt to be right and good4 ,they were looked upon as intrinsically meritorious and beneficent1 and were held to carry a sanction of their own4 ,this habit of uncritically imputing merit and equity to the natural laws of science continued in force through much of the nineteenth century2 very much as the habitual acceptance of the principles of natural rights has held on by force of tradition long after the exigencies of experience out of which these rights sprang ceased to shape men's habits of life4#d ,this traditional attitude of submissive approval toward the natural laws of science has not yet been wholly lost1 even among the scientists of the passing generation1 many of whom have uncritically invested these laws with a prescriptive rectitude and excellence2 but so far1 at least1 has this animus progressed toward disuse that it is now chiefly a matter for expatiation in the pulpit1 the accredited vent for the exudation of effete matter from the cultural organism4 ,the traditions of the handicraft technology lasted over as a commonplace habit of thought in science long after that technology had ceased to be the decisive element in the industrial situation2 while a new technology1 with its inculcation of new habits of thought1 new preconceptions1 gradually made its way among the remnants of the old1 altering them1 blending with them1 and little by little superseding them4 ,the new technological departure1 which made its first great epoch in the so-called industrial revolution1 in the technological ascendancy of the machine-process1 brought a new and characteristic discipline into the cultural situation4 ,the beginnings of the machine-era lie far back1 no doubt2 but it is only of late1 during the past century at the most1 that the machine-process can be said to have come into the dominant place in the technological scheme2 and it is only later still that its discipline has1 even in great part1 remodeled the current preconceptions as to the substantial nature of what goes on in the current of phenomena whose changes excite the scientific curiosity4 ,it is only relatively very lately1 whether in technological work or in scientific inquiry1 that men have fallen into the habit of thinking in terms of process rather than in terms of the workmanlike efficiency of a given cause working to a given effect4 ,these machine-made preconceptions of modern science1 being habits of thought induced by the machine technology in industry and in daily life1 have of course first and most consistently affected the character of those sciences whose subject matter lies nearest to the technological field of the machine-process2 and in these material sciences the shifting to the machine-made point of view has been relatively very consistent1 giving a highly impersonal interpretation of phenomena in terms of consecutive change1 and leaving little of the ancient preconceptions of differential reality or creative causation4 ,in such a science as physics or chemistry1 e4g41 we are threatened with the disappearance or dissipation of all stable and efficient substances2 their place being supplied1 or their phenomena being theoretically explained1 by appeal to unremitting processes of inconceivably high-pitched consecutive change4 ,in the sciences which lie farther afield from the technological domain1 and which1 therefore1 in point of habituation1 are remoter from the center of disturbance1 the effect of the machine discipline may even yet be scarcely appreciable4 ,in such lore as ethics1 e4g41 or political theory1 or even economics1 much of the norms of the regime of handicraft still stands over2 and very much of the institutional preconceptions of natural rights1 associated with the regime of handicraft in point of genesis1 growth and content1 is not only still intact in this field of inquiry1 but it can scarcely even be claimed that there is ground for serious apprehension of its prospective obsolescence4 ,indeed1 something even more ancient than handicraft and natural rights may be found surviving in good vigor in this moral field of inquiry1 where tests of authenticity and reality are still sought and found by those who cultivate these lines of inquiry that lie beyond the immediate sweep of the machine's discipline4 ,even the evolutionary process of cumulative causation as conceived by the adepts of these sciences is infused with a preternatural1 beneficent trend2 so that evolution is conceived to mean amelioration or improvement4 ,the metaphysics of the machine technology has not yet wholly1 perhaps not mainly1 superseded the metaphysics of the code of honor in those lines of inquiry that have to do with human initiative and aspiration4 ,whether such a shifting of the point of view in these sciences shall ever be effected is still an open question4 ,here there still are spiritual verities which transcend the sweep of consecutive change4 ,that is to say1 there are still current habits of thought which definitively predispose their bearers to bring their inquiries to rest on grounds of differential reality and invidious merit4 ,,footnotes3 #a ,read before the ,kosmos ,club1 at the ,university of ,california1 ,may #d1 #aijh4 ,reprinted by permission from the ,university of ,california ,chronicle1 ,vol4 ,x1 ,no4 #d4 #b ,it is by no means unusual for modern scientists to deny the truth of this characterization1 so far as regards this alleged recourse to the concept of causation4 ,they deny that such a concept--of efficiency1 activity1 and the like--enters1 or can legitimately enter1 into their work1 whether as an instrument of research or as a means or guide to theoretical formulation4 ,they even deny the substantial continuity of the sequence of changes that excite their scientific attention4 ,this attitude seems particularly to commend itself to those who by preference attend to the mathematical formulations of theory and who are chiefly occupied with proving up and working out details of the system of theory which have previously been left unsettled or uncovered4 ,the concept of causation is recognized to be a metaphysical postulate1 a matter of imputation1 not of observation2 whereas it is claimed that scientific inquiry neither does nor can legitimately1 nor1 indeed1 currently1 make use of a postulate more metaphysical than the concept of an idle concomitance of variation1 such as is adequately expressed in terms of mathematical function4 ,the contention seems sound1 to the extent that the materials--essentially statistical materials--with which scientific inquiry is occupied are of this non-committal character1 and that the mathematical formulations of theory include no further element than that of idle variation4 ,such is necessarily the case because causation is a fact of imputation1 not of observation1 and so cannot be included among the data2 and because nothing further than non-committal variation can be expressed in mathematical terms4 ,a bare notation of quantity can convey nothing further4 ,if it were the intention to claim only that the conclusions of the scientists are1 or should be1 as a matter of conservative caution1 overtly stated in terms of function alone1 then the contention might well be allowed4 ,causal sequence1 efficiency or continuity is1 of course1 a matter of metaphysical imputation4 ,it is not a fact of observation1 and cannot be asserted of the facts of observation except as a trait imputed to them4 ,it is so imputed1 by scientists and others1 as a matter of logical necessity1 as a basis of a systematic knowledge of the facts of observation4 ,beyond this1 in their exercise of scientific initiative1 as well as in the norms which guide the systematisation of scientific results1 the contention will not be made good--at least not for the current phase of scientific knowledge4 ,the claim1 indeed1 carries its own refutation4 ,in making such a claim1 both in rejecting the imputation of metaphysical postulates and in defending their position against their critics1 the arguments put forward by the scientists run in causal terms4 ,for the polemical purposes1 where their antagonists are to be scientifically confuted1 the defenders of the non-committal postulate of concomitance find that postulate inadequate4 ,they are not content1 in this precarious conjuncture1 simply to attest a relation of idle quantitative concomitance 7mathematical function7 between the allegations of their critics1 on the one hand1 and their own controversial exposition of these matters on the other hand4 ,they argue that they do not make use of such a postulate as efficiency1 whereas they claim to make use of the concept of function4 ,but make use of is not a notion of functional variation but of causal efficiency in a somewhat gross and highly anthropomorphic form4 ,the relation between their own thinking and the principles which they apply or the experiments and calculations which they institute in their search for facts1 is not held to be of this non-committal kind4 ,it will not be claimed that the shrewd insight and the bold initiative of a man eminent in the empirical sciences bear no more efficient or consequential a relation than that of mathematical function to the ingenious experiments by which he tests his hypotheses and extends the secure bounds of human knowledge4 ,least of all is the masterly experimentalist himself in a position to deny that his intelligence counts for something more efficient than idle concomitance in such a case4 ,the connection between his premises1 hypotheses1 and experiments1 on the one hand1 and his theoretical results1 on the other hand1 is not felt to be of the nature of mathematical function4 ,consistently adhered to1 the principle of function or concomitant variation precludes recourse to experiment1 hypotheses or inquiry--indeed1 it precludes recourse to anything whatever4 ,its notation does not comprise anything so anthropomorphic4 ,the case is illustrated by the latter-day history of theoretical physics4 ,of the sciences which affect a non-committal attitude in respect of the concept of efficiency and which claim to get along with the notion of mathematical function alone1 physics is the most outspoken and the one in which the claim has the best prima facie validity4 ,at the same time1 latter-day physicists1 for a hundred years or more1 have been much occupied with explaining how phenomena which to all appearance involve action at a distance do not involve action at a distance at all4 ,the greater theoretical achievements of physics during the past century lie within the sweep of this 7metaphysical7 principle that action at a distance does not take place1 that apparent action at a distance must be explained by effective contact1 through a continuum1 or by a material transference4 ,but this principle is nothing better than an unreasoning repugnance on the part of the physicists to admitting action at a distance4 ,the requirement of a continuum involves a gross form of the concept of efficient causation4 ,the functional concept1 concomitant variation1 requires no contact and no continuum4 ,concomitance at a distance is quite as simple and convincing a notion as concomitance within contact or by the intervention of a continuum1 if not more so4 ,what stands in the way of its acceptance is the irrepressible anthropomorphism of the physicists4 ,and yet the great achievements of physics are due to the initiative of men animated with this anthropomorphic repugnance to the notion of concomitant variation at a distance4 ,all the generalisations on undulatory motion and translation belong here4 ,the latter-day researches in light1 electrical transmission1 the theory of ions1 together with what is known of the obscure and late-found radiations and emanations1 are to be credited to the same metaphysical preconception1 which is never absent in any scientific inquiry in the field of physical science4 ,it is only the occult and ,christian ,sciences that can dispense with this metaphysical postulate and take recourse to absent treatment4 #c ,a broad exception may perhaps be taken at this point1 to the effect that this sketch of the growth of the scientific animus overlooks the science of the ,ancients4 ,the scientific achievements of classical antiquity are a less obscure topic to-day than ever before during modern times1 and the more there is known of them the larger is the credit given them4 ,but it is to be noted that1 7a7 the relatively large and free growth of scientific inquiry in classical antiquity is to be found in the relatively peaceable and industrial ,greek communities 7with an industrial culture of unknown pre-,hellenic antiquity71 and 7b7 that the sciences best and chiefly cultivated were those which rest on a mathematical basis1 if not mathematical sciences in the simpler sense of the term4 ,now1 mathematics occupies a singular place among the sciences1 in that it is1 in its pure form1 a logical discipline simply2 its subject matter being the logic of quantity1 and its researches being of the nature of an analysis of the intellect's modes of dealing with matters of quantity4 ,its generalisations are generalisations of logical procedure1 which are tested and verified by immediate self-observation4 ,such a science is in a peculiar degree1 but only in a peculiar degree1 independent of the detail-discipline of daily life1 whether technological or institutional2 and1 given the propensity--the intellectual enterprise1 or idle curiosity--to go into speculation in such a field1 the results can scarcely vary in a manner to make the variants inconsistent among themselves2 nor need the state of institutions or the state of the industrial arts seriously color or distort such analytical work in such a field4 ,mathematics is peculiarly independent of cultural circumstances1 since it deals analytically with mankind's native gifts of logic1 not with the ephemeral traits acquired by habituation4 #d ,natural laws1 which are held to be not only correct formulations of the sequence of cause and effect in a given situation but also meritoriously right and equitable rules governing the run of events1 necessarily impute to the facts and events in question a tendency to a good and equitable1 if not beneficent1 consummation2 since it is necessarily the consummation1 the effect considered as an accomplished outcome1 that is to be adjudged good and equitable1 if anything4 ,hence these natural laws1 as traditionally conceived1 are laws governing the accomplishment of an end--that is to say1 laws as to how a sequence of cause and effect comes to rest in a final term4 ,,why ,,is ,,economics ,,not ,,an ,,evolutionary ,,science8#a ,m4 ,g4 ,de ,lapouge recently said1 ,anthropology is destined to revolutionise the political and the social sciences as radically as bacteriology has revolutionised the science of medicine4#b ,in so far as he speaks of economics1 the eminent anthropologist is not alone in his conviction that the science stands in need of rehabilitation4 ,his words convey a rebuke and an admonition1 and in both respects he speaks the sense of many scientists in his own and related lines of inquiry4 ,it may be taken as the consensus of those men who are doing the serious work of modern anthropology1 ethnology1 and psychology1 as well as of those in the biological sciences proper1 that economics is helplessly behind the times1 and unable to handle its subject-matter in a way to entitle it to standing as a modern science4 ,the other political and social sciences come in for their share of this obloquy1 and perhaps on equally cogent grounds4 ,nor are the economists themselves buoyantly indifferent to the rebuke4 ,probably no economist to-day has either the hardihood or the inclination to say that the science has now reached a definitive formulation1 either in the detail of results or as regards the fundamental features of theory4 ,the nearest recent approach to such a position on the part of an economist of accredited standing is perhaps to be found in ,professor ,marshall's ,cambridge address of a year and a half ago4#c ,but these utterances are so far from the jaunty confidence shown by the classical economists of half a century ago that what most forcibly strikes the reader of ,professor ,marshall's address is the exceeding modesty and the uncalled-for humility of the spokesman for the old generation4 ,with the economists who are most attentively looked to for guidance1 uncertainty as to the definitive value of what has been and is being done1 and as to what we may1 with effect1 take to next1 is so common as to suggest that indecision is a meritorious work4 ,even the ,historical ,school1 who made their innovation with so much home-grown applause some time back1 have been unable to settle down contentedly to the pace which they set themselves4 ,the men of the sciences that are proud to own themselves modern find fault with the economists for being still content to occupy themselves with repairing a structure and doctrines and maxims resting on natural rights1 utilitarianism1 and administrative expediency4 ,this aspersion is not altogether merited1 but is near enough to the mark to carry a sting4 ,these modern sciences are evolutionary sciences1 and their adepts contemplate that characteristic of their work with some complacency4 ,economics is not an evolutionary science--by the confession of its spokesmen2 and the economists turn their eyes with something of envy and some sense of baffled emulation to these rivals that make broad their phylacteries with the legend1 ,up to date4 ,precisely wherein the social and political sciences1 including economics1 fall short of being evolutionary sciences1 is not so plain4 ,at least1 it has not been satisfactorily pointed out by their critics4 ,their successful rivals in this matter--the sciences that deal with human nature among the rest--claim as their substantial distinction that they are realistic3 they deal with facts4 ,but economics1 too1 is realistic in this sense3 it deals with facts1 often in the most painstaking way1 and latterly with an increasingly strenuous insistence on the sole efficacy of data4 ,but this realism does not make economics an evolutionary science4 ,the insistence on data could scarcely be carried to a higher pitch than it was carried by the first generation of the ,historical ,school2 and yet no economics is farther from being an evolutionary science than the received economics of the ,historical ,school4 ,the whole broad range of erudition and research that engaged the energies of that school commonly falls short of being science1 in that1 when consistent1 they have contented themselves with an enumeration of data and a narrative account of industrial development1 and have not presumed to offer a theory of anything or to elaborate their results into a consistent body of knowledge4 ,any evolutionary science1 on the other hand1 is a close-knit body of theory4 ,it is a theory of a process1 of an unfolding sequence4 ,but here1 again1 economics seems to meet the test in a fair measure1 without satisfying its critics that its credentials are good4 ,it must be admitted1 e4g41 that ,j4 ,s4 ,mill's doctrines of production1 distribution1 and exchange1 are a theory of certain economic processes1 and that he deals in a consistent and effective fashion with the sequences of fact that make up his subject-matter4 ,so1 also1 ,cairnes's discussion of normal value1 of the rate of wages1 and of international trade1 are excellent instances of a theoretical handling of economic processes of sequence and the orderly unfolding development of fact4 ,but an attempt to cite ,mill and ,cairnes as exponents of an evolutionary economics will produce no better effect than perplexity1 and not a great deal of that4 ,very much of monetary theory might be cited to the same purpose and with the like effect4 ,something similar is true even of late writers who have avowed some penchant for the evolutionary point of view2 as1 e4g41 ,professor ,hadley1--to cite a work of unquestioned merit and unusual reach4 ,measurably1 he keeps the word of promise to the ear2 but any one who may cite his ,economics as having brought political economy into line as an evolutionary science will convince neither himself nor his interlocutor4 ,something to the like effect may fairly be said of the published work of that later ,english strain of economists represented by ,professors ,cunningham and ,ashley1 and ,mr4 ,cannan1 to name but a few of the more eminent figures in the group4 ,of the achievements of the classical economists1 recent and living1 the science may justly be proud2 but they fall short of the evolutionist's standard of adequacy1 not in failing to offer a theory of a process or of a developmental relation1 but through conceiving their theory in terms alien to the evolutionist's habits of thought4 ,the difference between the evolutionary and the pre-evolutionary sciences lies not in the insistence on facts4 ,there was a great and fruitful activity in the natural sciences in collecting and collating facts before these sciences took on the character which marks them as evolutionary4 ,nor does the difference lie in the absence of efforts to formulate and explain schemes of process1 sequence1 growth1 and development in the pre-evolutionary days4 ,efforts of this kind abounded1 in number and diversity2 and many schemes of development1 of great subtlety and beauty1 gained a vogue both as theories of organic and inorganic development and as schemes of the life history of nations and societies4 ,it will not even hold true that our elders overlooked the presence of cause and effect in formulating their theories and reducing their data to a body of knowledge4 ,but the terms which were accepted as the definitive terms of knowledge were in some degree different in the early days from what they are now4 ,the terms of thought in which the investigators of some two or three generations back definitively formulated their knowledge of facts1 in their last analyses1 were different in kind from the terms in which the modern evolutionist is content to formulate his results4 ,the analysis does not run back to the same ground1 or appeal to the same standard of finality or adequacy1 in the one case as in the other4 ,the difference is a difference of spiritual attitude or point of view in the two contrasted generations of scientists4 ,to put the matter in other words1 it is a difference in the basis of valuation of the facts for the scientific purpose1 or in the interest from which the facts are appreciated4 ,with the earlier as with the later generation the basis of valuation of the facts handled is1 in matters of detail1 the causal relation which is apprehended to subsist between them4 ,this is true to the greatest extent for the natural sciences4 ,but in their handling of the more comprehensive schemes of sequence and relation--in their definitive formulation of the results--the two generations differ4 ,the modern scientist is unwilling to depart from the test of causal relation or quantitative sequence4 ,when he asks the question1 ,why8 he insists on an answer in terms of cause and effect4 ,he wants to reduce his solution of all problems to terms of the conservation of energy or the persistence of quantity4 ,this is his last recourse4 ,and this last recourse has in our time been made available for the handling of schemes of development and theories of a comprehensive process by the notion of a cumulative causation4 ,the great deserts of the evolutionist leaders--if they have great deserts as leaders--lie1 on the one hand1 in their refusal to go back of the colorless sequence of phenomena and seek higher ground for their ultimate syntheses1 and1 on the other hand1 in their having shown how this colorless impersonal sequence of cause and effect can be made use of for theory proper1 by virtue of its cumulative character4 ,for the earlier natural scientists1 as for the classical economists1 this ground of cause and effect is not definitive4 ,their sense of truth and substantiality is not satisfied with a formulation of mechanical sequence4 ,the ultimate term in their systematisation of knowledge is a natural law4 ,this natural law is felt to exercise some sort of a coercive surveillance over the sequence of events1 and to give a spiritual stability and consistence to the causal relation at any given juncture4 ,to meet the high classical requirement1 a sequence--and a developmental process especially--must be apprehended in terms of a consistent propensity tending to some spiritually legitimate end4 ,when facts and events have been reduced to these terms of fundamental truth and have been made to square with the requirements of definitive normality1 the investigator rests his case4 ,any causal sequence which is apprehended to traverse the imputed propensity in events is a disturbing factor4 ,logical congruity with the apprehended propensity is1 in this view1 adequate ground of procedure in building up a scheme of knowledge or of development4 ,the objective point of the efforts of the scientists working under the guidance of this classical tradition1 is to formulate knowledge in terms of absolute truth2 and this absolute truth is a spiritual fact4 ,it means a coincidence of facts with the deliverances of an enlightened and deliberate common sense4 ,the development and the attenuation of this preconception of normality or of a propensity in events might be traced in detail from primitive animism down through the elaborate discipline of faith and metaphysics1 overruling ,providence1 order of nature1 natural rights1 natural law1 underlying principles4 ,but all that may be necessary here is to point out that1 by descent and by psychological content1 this constraining normality is of a spiritual kind4 ,it is for the scientific purpose an imputation of spiritual coherence to the facts dealt with4 ,the question of interest is how this preconception of normality has fared at the hands of modern science1 and how it has come to be superseded in the intellectual primacy by the latter-day preconception of a non-spiritual sequence4 ,this question is of interest because its answer may throw light on the question as to what chance there is for the indefinite persistence of this archaic habit of thought in the methods of economic science4 99 99 99 99 99 ,under primitive conditions1 men stand in immediate personal contact with the material facts of the environment2 and the force and discretion of the individual in shaping the facts of the environment count obviously1 and to all appearance solely1 in working out the conditions of life4 ,there is little of impersonal or mechanical sequence visible to primitive men in their every-day life2 and what there is of this kind in the processes of brute nature about them is in large part inexplicable and passes for inscrutable4 ,it is accepted as malignant or beneficent1 and is construed in the terms of personality that are familiar to all men at first hand1--the terms known to all men by first-hand knowledge of their own acts4 ,the inscrutable movements of the seasons and of the natural forces are apprehended as actions guided by discretion1 will power1 or propensity looking to an end1 much as human actions are4 ,the processes of inanimate nature are agencies whose habits of life are to be learned1 and who are to be coerced1 outwitted1 circumvented1 and turned to account1 much as the beasts are4 ,at the same time the community is small1 and the human contact of the individual is not wide4 ,neither the industrial life nor the non-industrial social life forces upon men's attention the ruthless impersonal sweep of events that no man can withstand or deflect1 such as becomes visible in the more complex and comprehensive life process of the larger community of a later day4 ,there is nothing decisive to hinder men's knowledge of facts and events being formulated in terms of personality--in terms of habit and propensity and will power4 ,as time goes on and as the situation departs from this archaic character1--where it does depart from it1--the circumstances which condition men's systematisation of facts change in such a way as to throw the impersonal character of the sequence of events more and more into the foreground4 ,the penalties for failure to apprehend facts in dispassionate terms fall surer and swifter4 ,the sweep of events is forced home more consistently on men's minds4 ,the guiding hand of a spiritual agency or a propensity in events becomes less readily traceable as men's knowledge of things grows ampler and more searching4 ,in modern times1 and particularly in the industrial countries1 this coercive guidance of men's habits of thought in the realistic direction has been especially pronounced2 and the effect shows itself in a somewhat reluctant but cumulative departure from the archaic point of view4 ,the departure is most visible and has gone farthest in those homely branches of knowledge that have to do immediately with modern mechanical processes1 such as engineering designs and technological contrivances generally4 ,of the sciences1 those have wandered farthest on this way 7of integration or disintegration1 according as one may choose to view it7 that have to do with mechanical sequence and process2 and those have best and longest retained the archaic point of view intact which--like the moral1 social1 or spiritual sciences--have to do with process and sequence that is less tangible1 less traceable by the use of the senses1 and that therefore less immediately forces upon the attention the phenomenon of sequence as contrasted with that of propensity4 ,there is no abrupt transition from the pre-evolutionary to the post-evolutionary standpoint4 ,even in those natural sciences which deal with the processes of life and the evolutionary sequence of events the concept of dispassionate cumulative causation has often and effectively been helped out by the notion that there is in all this some sort of a meliorative trend that exercises a constraining guidance over the course of causes and effects4 ,the faith in this meliorative trend as a concept useful to the science has gradually weakened1 and it has repeatedly been disavowed2 but it can scarcely be said to have yet disappeared from the field4 ,the process of change in the point of view1 or in the terms of definitive formulation of knowledge1 is a gradual one2 and all the sciences have shared1 though in an unequal degree1 in the change that is going forward4 ,economics is not an exception to the rule1 but it still shows too many reminiscences of the natural and the normal1 of verities and tendencies1 of controlling principles and disturbing causes to be classed as an evolutionary science4 ,this history of the science shows a long and devious course of disintegrating animism1--from the days of the scholastic writers1 who discussed usury from the point of view of its relation to the divine suzerainty1 to the ,physiocrats1 who rested their case on an ordre naturel and a loi naturelle that decides what is substantially true and1 in a general way1 guides the course of events by the constraint of logical congruence4 ,there has been something of a change from ,adam ,smith1 whose recourse in perplexity was to the guidance of an unseen hand1 to ,mill and ,cairnes1 who formulated the laws of natural wages and normal value1 and the former of whom was so well content with his work as to say1 ,happily1 there is nothing in the laws of ,value which remains for the present or any future writer to clear up3 the theory of the subject is complete4#d ,but the difference between the earlier and the later point of view is a difference of degree rather than of kind4 ,the standpoint of the classical economists1 in their higher or definitive syntheses and generalisations1 may not inaptly be called the standpoint of ceremonial adequacy4 ,the ultimate laws and principles which they formulated were laws of the normal or the natural1 according to a preconception regarding the ends to which1 in the nature of things1 all things tend4 ,in effect1 this preconception imputes to things a tendency to work out what the instructed common sense of the time accepts as the adequate or worthy end of human effort4 ,it is a projection of the accepted ideal of conduct4 ,this ideal of conduct is made to serve as a canon of truth1 to the extent that the investigator contents himself with an appeal to its legitimation for premises that run back of the facts with which he is immediately dealing1 for the controlling principles that are conceived intangibly to underlie the process discussed1 and for the tendencies that run beyond the situation as it lies before him4 ,as instances of the use of this ceremonial canon of knowledge may be cited the conjectural history that plays so large a part in the classical treatment of economic institutions1 such as the normalized accounts of the beginnings of barter in the transactions of the putative hunter1 fisherman1 and boat-builder1 or the man with the plane and the two planks1 or the two men with the basket of apples and the basket of nuts4#e ,of a similar import is the characterisation of money as the great wheel of circulation#f or as the medium of exchange4 ,money is here discussed in terms of the end which1 in the normal case1 it should work out according to the given writer's ideal of economic life1 rather than in terms of causal relation4 ,with later writers especially1 this terminology is no doubt to be commonly taken as a convenient use of metaphor1 in which the concept of normality and propensity to an end has reached an extreme attenuation4 ,but it is precisely in this use of figurative terms for the formulation of theory that the classical normality still lives its attenuated life in modern economics2 and it is this facile recourse to inscrutable figures of speech as the ultimate terms of theory that has saved the economists from being dragooned into the ranks of modern science4 ,the metaphors are effective1 both in their homiletical use and as a labor-saving device1--more effective than their user designs them to be4 ,by their use the theorist is enabled serenely to enjoin himself from following out an elusive train of causal sequence4 ,he is also enabled1 without misgivings1 to construct a theory of such an institution as money or wages or land-ownership without descending to a consideration of the living items concerned1 except for convenient corroboration of his normalised scheme of symptoms4 ,by this method the theory of an institution or a phase of life may be stated in conventionalised terms of the apparatus whereby life is carried on1 the apparatus being invested with a tendency to an equilibrium at the normal1 and the theory being a formulation of the conditions under which this putative equilibrium supervenes4 ,in this way we have come into the usufruct of a cost-of-production theory of value which is pungently reminiscent of the time when ,nature abhorred a vacuum4 ,the ways and means and the mechanical structure of industry are formulated in a conventionalised nomenclature1 and the observed motions of this mechanical apparatus are then reduced to a normalised scheme of relations4 ,the scheme so arrived at is spiritually binding on the behavior of the phenomena contemplated4 ,with this normalised scheme as a guide1 the permutations of a given segment of the apparatus are worked out according to the values assigned the several items and features comprised in the calculation2 and a ceremonially consistent formula is constructed to cover that much of the industrial field4 ,this is the deductive method4 ,the formula is then tested by comparison with observed permutations1 by the polariscopic use of the normal case2 and the results arrived at are thus authenticated by induction4 ,features of the process that do not lend themselves to interpretation in the terms of the formula are abnormal cases and are due to disturbing causes4 ,in all this the agencies or forces causally at work in the economic life process are neatly avoided4 ,the outcome of the method1 at its best1 is a body of logically consistent propositions concerning the normal relations of things--a system of economic taxonomy4 ,at its worst1 it is a body of maxims for the conduct of business and a polemical discussion of disputed points of policy4 ,in all this1 economic science is living over again in its turn the experiences which the natural sciences passed through some time back4 ,in the natural sciences the work of the taxonomist was and continues to be of great value1 but the scientists grew restless under the regime of symmetry and system-making4 ,they took to asking why1 and so shifted their inquiries from the structure of the coral reefs to the structure and habits of life of the polyp that lives in and by them4 ,in the science of plants1 systematic botany has not ceased to be of service2 but the stress of investigation and discussion among the botanists to-day falls on the biological value of any given feature of structure1 function1 or tissue rather than on its taxonomic bearing4 ,all the talk about cytoplasm1 centrosomes1 and karyokinetic process1 means that the inquiry now looks consistently to the life process1 and aims to explain it in terms of cumulative causation4 ,what may be done in economic science of the taxonomic kind is shown at its best in ,cairnes's work1 where the method is well conceived and the results effectively formulated and applied4 ,cairnes handles the theory of the normal case in economic life with a master hand4 ,in his discussion the metaphysics of propensity and tendencies no longer avowedly rules the formulation of theory1 nor is the inscrutable meliorative trend of a harmony of interests confidently appealed to as an engine of definitive use in giving legitimacy to the economic situation at a given time4 ,there is less of an exercise of faith in ,cairnes's economic discussions than in those of the writers that went before him4 ,the definitive terms of the formulation are still the terms of normality and natural law1 but the metaphysics underlying this appeal to normality is so far removed from the ancient ground of the beneficent order of nature as to have become at least nominally impersonal and to proceed without a constant regard to the humanitarian bearing of the tendencies which it formulates4 ,the metaphysics has been attenuated to something approaching in colorlessness the naturalist's conception of natural law4 ,it is a natural law which1 in the guise of controlling principles1 exercises a constraining surveillance over the trend of things2 but it is no longer conceived to exercise its constraint in the interest of certain ulterior human purposes4 ,the element of beneficence has been well-nigh eliminated1 and the system is formulated in terms of the system itself4 ,economics as it left ,cairnes's hand1 so far as his theoretical work is concerned1 comes near being taxonomy for taxonomy's sake4 ,no equally capable writer has come as near making economics the ideal dismal science as ,cairnes in his discussion of pure theory4 ,in the days of the early classical writers economics had a vital interest for the laymen of the time1 because it formulated the common sense metaphysics of the time in its application to a department of human life4 ,but in the hands of the later classical writers the science lost much of its charm in this regard4 ,it was no longer a definition and authentication of the deliverances of current common sense as to what ought to come to pass2 and it1 therefore1 in large measure lost the support of the people out of doors1 who were unable to take an interest in what did not concern them2 and it was also out of touch with that realistic or evolutionary habit of mind which got under way about the middle of the century in the natural sciences4 ,it was neither vitally metaphysical nor matter-of-fact1 and it found comfort with very few outside of its own ranks4 ,only for those who by the fortunate accident of birth or education have been able to conserve the taxonomic animus has the science during the last third of a century continued to be of absorbing interest4 ,the result has been that from the time when the taxonomic structure stood forth as a completed whole in its symmetry and stability the economists themselves1 beginning with ,cairnes1 have been growing restive under its discipline of stability1 and have made many efforts1 more or less sustained1 to galvanise it into movement4 ,at the hands of the writers of the classical line these excursions have chiefly aimed at a more complete and comprehensive taxonomic scheme of permutations2 while the historical departure threw away the taxonomic ideal without getting rid of the preconceptions on which it is based2 and the later ,austrian group struck out on a theory of process1 but presently came to a full stop because the process about which they busied themselves was not1 in their apprehension of it1 a cumulative or unfolding sequence4 99 99 99 99 99 ,but what does all this signify8 ,if we are getting restless under the taxonomy of a monocotyledonous wage doctrine and a cryptogamic theory of interest1 with involute1 loculicidal1 tomentous and moniliform variants1 what is the cytoplasm1 centrosome1 or karyokinetic process to which we may turn1 and in which we may find surcease from the metaphysics of normality and controlling principles8 ,what are we going to do about it8 ,the question is rather1 ,what are we doing about it8 ,there is the economic life process still in great measure awaiting theoretical formulation4 ,the active material in which the economic process goes on is the human material of the industrial community4 ,for the purpose of economic science the process of cumulative change that is to be accounted for is the sequence of change in the methods of doing things1--the methods of dealing with the material means of life4 ,what has been done in the way of inquiry into this economic life process8 ,the ways and means of turning material objects and circumstances to account lie before the investigator at any given point of time in the form of mechanical contrivances and arrangements for compassing certain mechanical ends4 ,it has therefore been easy to accept these ways and means as items of inert matter having a given mechanical structure and thereby serving the material ends of man4 ,as such1 they have been scheduled and graded by the economists under the head of capital1 this capital being conceived as a mass of material objects serviceable for human use4 ,this is well enough for the purposes of taxonomy2 but it is not an effective method of conceiving the matter for the purpose of a theory of the developmental process4 ,for the latter purpose1 when taken as items in a process of cumulative change or as items in the scheme of life1 these productive goods are facts of human knowledge1 skill1 and predilection2 that is to say1 they are1 substantially1 prevalent habits of thought1 and it is as such that they enter into the process of industrial development4 ,the physical properties of the materials accessible to man are constants3 it is the human agent that changes1--his insight and his appreciation of what these things can be used for is what develops4 ,the accumulation of goods already on hand conditions his handling and utilisation of the materials offered1 but even on this side--the limitation of industry by capital--the limitation imposed is on what men can do and on the methods of doing it4 ,the changes that take place in the mechanical contrivances are an expression of changes in the human factor4 ,changes in the material facts breed further change only through the human factor4 ,it is in the human material that the continuity of development is to be looked for2 and it is here1 therefore1 that the motor forces of the process of economic development must be studied if they are to be studied in action at all4 ,economic action must be the subject-matter of the science if the science is to fall into line as an evolutionary science4 ,nothing new has been said in all this4 ,but the fact is all the more significant for being a familiar fact4 ,it is a fact recognised by common consent throughout much of the later economic discussion1 and this current recognition of the fact is a long step towards centering discussion and inquiry upon it4 ,if economics is to follow the lead or the analogy of the other sciences that have to do with a life process1 the way is plain so far as regards the general direction in which the move will be made4 ,the economists of the classical trend have made no serious attempt to depart from the standpoint of taxonomy and make their science a genetic account of the economic life process4 ,as has just been said1 much the same is true for the ,historical ,school4 ,the latter have attempted an account of developmental sequence1 but they have followed the lines of pre-,darwinian speculations on development rather than lines which modern science would recognise as evolutionary4 ,they have given a narrative survey of phenomena1 not a genetic account of an unfolding process4 ,in this work they have1 no doubt1 achieved results of permanent value2 but the results achieved are scarcely to be classed as economic theory4 ,on the other hand1 the ,austrians and their precursors and their coadjutors in the value discussion have taken up a detached portion of economic theory1 and have inquired with great nicety into the process by which the phenomena within their limited field are worked out4 ,the entire discussion of marginal utility and subjective value as the outcome of a valuation process must be taken as a genetic study of this range of facts4 ,but here1 again1 nothing further has come of the inquiry1 so far as regards a rehabilitation of economic theory as a whole4 ,accepting ,menger as their spokesman on this head1 it must be said that the ,austrians have on the whole showed themselves unable to break with the classical tradition that economics is a taxonomic science4 ,the reason for the ,austrian failure seems to lie in a faulty conception of human nature1--faulty for the present purpose1 however adequate it may be for any other4 ,in all the received formulations of economic theory1 whether at the hands of ,english economists or those of the ,continent1 the human material with which the inquiry is concerned is conceived in hedonistic terms2 that is to say1 in terms of a passive and substantially inert and immutably given human nature4 ,the psychological and anthropological preconceptions of the economists have been those which were accepted by the psychological and social sciences some generations ago4 ,the hedonistic conception of man is that of a lightning calculator of pleasures and pains1 who oscillates like a homogeneous globule of desire of happiness under the impulse of stimuli that shift him about the area1 but leave him intact4 ,he has neither antecedent nor consequent4 ,he is an isolated1 definitive human datum1 in stable equilibrium except for the buffets of the impinging forces that displace him in one direction or another4 ,self-imposed in elemental space1 he spins symmetrically about his own spiritual axis until the parallelogram of forces bears down upon him1 whereupon he follows the line of the resultant4 ,when the force of the impact is spent1 he comes to rest1 a self-contained globule of desire as before4 ,spiritually1 the hedonistic man is not a prime mover4 ,he is not the seat of a process of living1 except in the sense that he is subject to a series of permutations enforced upon him by circumstances external and alien to him4 ,the later psychology1 reenforced by modern anthropological research1 gives a different conception of human nature4 ,according to this conception1 it is the characteristic of man to do something1 not simply to suffer pleasures and pains through the impact of suitable forces4 ,he is not simply a bundle of desires that are to be saturated by being placed in the path of the forces of the environment1 but rather a coherent structure of propensities and habits which seeks realisation and expression in an unfolding activity4 ,according to this view1 human activity1 and economic activity among the rest1 is not apprehended as something incidental to the process of saturating given desires4 ,the activity is itself the substantial fact of the process1 and the desires under whose guidance the action takes place are circumstances of temperament which determine the specific direction in which the activity will unfold itself in the given case4 ,these circumstances of temperament are ultimate and definitive for the individual who acts under them1 so far as regards his attitude as agent in the particular action in which he is engaged4 ,but1 in the view of the science1 they are elements of the existing frame of mind of the agent1 and are the outcome of his antecedents and his life up to the point at which he stands4 ,they are the products of his hereditary traits and his past experience1 cumulatively wrought out under a given body of traditions1 conventionalities1 and material circumstances2 and they afford the point of departure for the next step in the process4 ,the economic life history of the individual is a cumulative process of adaptation of means to ends that cumulatively change as the process goes on1 both the agent and his environment being at any point the outcome of the last process4 ,his methods of life to-day are enforced upon him by his habits of life carried over from yesterday and by the circumstances left as the mechanical residue of the life of yesterday4 ,what is true of the individual in this respect is true of the group in which he lives4 ,all economic change is a change in the economic community1--a change in the community's methods of turning material things to account4 ,the change is always in the last resort a change in habits of thought4 ,this is true even of changes in the mechanical processes of industry4 ,a given contrivance for effecting certain material ends becomes a circumstance which affects the further growth of habits of thought--habitual methods of procedure--and so becomes a point of departure for further development of the methods of compassing the ends sought and for the further variation of ends that are sought to be compassed4 ,in all this flux there is no definitively adequate method of life and no definitive or absolutely worthy end of action1 so far as concerns the science which sets out to formulate a theory of the process of economic life4 ,what remains as a hard and fast residue is the fact of activity directed to an objective end4 ,economic action is teleological1 in the sense that men always and everywhere seek to do something4 ,what1 in specific detail1 they seek1 is not to be answered except by a scrutiny of the details of their activity2 but1 so long as we have to do with their life as members of the economic community1 there remains the generic fact that their life is an unfolding activity of a teleological kind4 ,it may or may not be a teleological process in the sense that it tends or should tend to any end that is conceived to be worthy or adequate by the inquirer or by the consensus of inquirers4 ,whether it is or is not1 is a question with which the present inquiry is not concerned2 and it is also a question of which an evolutionary economics need take no account4 ,the question of a tendency in events can evidently not come up except on the ground of some preconception or prepossession on the part of the person looking for the tendency4 ,in order to search for a tendency1 we must be possessed of some notion of a definitive end to be sought1 or some notion as to what is the legitimate trend of events4 ,the notion of a legitimate trend in a course of events is an extra-evolutionary preconception1 and lies outside the scope of an inquiry into the causal sequence in any process4 ,the evolutionary point of view1 therefore1 leaves no place for a formulation of natural laws in terms of definitive normality1 whether in economics or in any other branch of inquiry4 ,neither does it leave room for that other question of normality1 ,what should be the end of the developmental process under discussion8 ,the economic life history of any community is its life history in so far as it is shaped by men's interest in the material means of life4 ,this economic interest has counted for much in shaping the cultural growth of all communities4 ,primarily and most obviously1 it has guided the formation1 the cumulative growth1 of that range of conventionalities and methods of life that are currently recognized as economic institutions2 but the same interest has also pervaded the community's life and its cultural growth at points where the resulting structural features are not chiefly and most immediately of an economic bearing4 ,the economic interest goes with men through life1 and it goes with the race throughout its process of cultural development4 ,it affects the cultural structure at all points1 so that all institutions may be said to be in some measure economic institutions4 ,this is necessarily the case1 since the base of action--the point of departure--at any step in the process is the entire organic complex of habits of thought that have been shaped by the past process4 ,the economic interest does not act in isolation1 for it is but one of several vaguely isolable interests on which the complex of teleological activity carried out by the individual proceeds4 ,the individual is but a single agent in each case2 and he enters into each successive action as a whole1 although the specific end sought in a given action may be sought avowedly on the basis of a particular interest2 as e4g41 the economic1 aesthetic1 sexual1 humanitarian1 devotional interests4 ,since each of these passably isolable interests is a propensity of the organic agent man1 with his complex of habits of thought1 the expression of each is affected by habits of life formed under the guidance of all the rest4 ,there is1 therefore1 no neatly isolable range of cultural phenomena that can be rigorously set apart under the head of economic institutions1 although a category of economic institutions may be of service as a convenient caption1 comprising those institutions in which the economic interest most immediately and consistently finds expression1 and which most immediately and with the least limitation are of an economic bearing4 ,from what has been said it appears that an evolutionary economics must be the theory of a process of cultural growth as determined by the economic interest1 a theory of a cumulative sequence of economic institutions stated in terms of the process itself4 ,except for the want of space to do here what should be done in some detail if it is done at all1 many efforts by the later economists in this direction might be cited to show the trend of economic discussion in this direction4 ,there is not a little evidence to this effect1 and much of the work done must be rated as effective work for this purpose4 ,much of the work of the ,historical ,school1 for instance1 and that of its later exponents especially1 is too noteworthy to be passed over in silence1 even with all due regard to the limitations of space4 ,we are now ready to return to the question why economics is not an evolutionary science4 ,it is necessarily the aim of such an economics to trace the cumulative working-out of the economic interest in the cultural sequence4 ,it must be a theory of the economic life process of the race or the community4 ,the economists have accepted the hedonistic preconceptions concerning human nature and human action1 and the conception of the economic interest which a hedonistic psychology gives does not afford material for a theory of the development of human nature4 ,under hedonism the economic interest is not conceived in terms of action4 ,it is therefore not readily apprehended or appreciated in terms of a cumulative growth of habits of thought1 and does not provoke1 even if it did lend itself to1 treatment by the evolutionary method4 ,at the same time the anthropological preconceptions current in that common-sense apprehension of human nature to which economists have habitually turned has not enforced the formulation of human nature in terms of a cumulative growth of habits of life4 ,these received anthropological preconceptions are such as have made possible the normalized conjectural accounts of primitive barter with which all economic readers are familiar1 and the no less normalized conventional derivation of landed property and its rent1 or the sociologico-philosophical discussions of the function of this or that class in the life of society or of the nation4 ,the premises and the point of view required for an evolutionary economics have been wanting4 ,the economists have not had the materials for such a science ready to their hand1 and the provocation to strike out in such a direction has been absent4 ,even if it has been possible at any time to turn to the evolutionary line of speculation in economics1 the possibility of a departure is not enough to bring it about4 ,so long as the habitual view taken of a given range of facts is of the taxonomic kind and the material lends itself to treatment by that method1 the taxonomic method is the easiest1 gives the most gratifying immediate results1 and best fits into the accepted body of knowledge of the range of facts in question4 ,this has been the situation in economics4 ,the other sciences of its group have likewise been a body of taxonomic discipline1 and departures from the accredited method have lain under the odium of being meretricious innovations4 ,the well-worn paths are easy to follow and lead into good company4 ,advance along them visibly furthers the accredited work which the science has in hand4 ,divergence from the paths means tentative work1 which is necessarily slow and fragmentary and of uncertain value4 ,it is only when the methods of the science and the syntheses resulting from their use come to be out of line with habits of thought that prevail in other matters that the scientist grows restive under the guidance of the received methods and standpoints1 and seeks a way out4 ,like other men1 the economist is an individual with but one intelligence4 ,he is a creature of habits and propensities given through the antecedents1 hereditary and cultural1 of which he is an outcome2 and the habits of thought formed in any one line of experience affect his thinking in any other4 ,methods of observation and of handling facts that are familiar through habitual use in the general range of knowledge1 gradually assert themselves in any given special range of knowledge4 ,they may be accepted slowly and with reluctance where their acceptance involves innovation2 but1 if they have the continued backing of the general body of experience1 it is only a question of time when they shall come into dominance in the special field4 ,the intellectual attitude and the method of correlation enforced upon us in the apprehension and assimilation of facts in the more elementary ranges of knowledge that have to do with brute facts assert themselves also when the attention is directed to those phenomena of the life process with which economics has to do2 and the range of facts which are habitually handled by other methods than that in traditional vogue in economics has now become so large and so insistently present at every turn that we are left restless1 if the new body of facts cannot be handled according to the method of mental procedure which is in this way becoming habitual4 ,in the general body of knowledge in modern times the facts are apprehended in terms of causal sequence4 ,this is especially true of that knowledge of brute facts which is shaped by the exigencies of the modern mechanical industry4 ,to men thoroughly imbued with this matter-of-fact habit of mind the laws and theorems of economics1 and of the other sciences that treat of the normal course of things1 have a character of unreality and futility that bars out any serious interest in their discussion4 ,the laws and theorems are unreal to them because they are not to be apprehended in the terms which these men make use of in handling the facts with which they are perforce habitually occupied4 ,the same matter-of-fact spiritual attitude and mode of procedure have now made their way well up into the higher levels of scientific knowledge1 even in the sciences which deal in a more elementary way with the same human material that makes the subject-matter of economics1 and the economists themselves are beginning to feel the unreality of their theorems about normal cases4 ,provided the practical exigencies of modern industrial life continue of the same character as they now are1 and so continue to enforce the impersonal method of knowledge1 it is only a question of time when that 7substantially animistic7 habit of mind which proceeds on the notion of a definitive normality shall be displaced in the field of economic inquiry by that 7substantially materialistic7 habit of mind which seeks a comprehension of facts in terms of a cumulative sequence4 ,the later method of apprehending and assimilating facts and handling them for the purposes of knowledge may be better or worse1 more or less worthy or adequate1 than the earlier2 it may be of greater or less ceremonial or aesthetic effect2 we may be moved to regret the incursion of underbred habits of thought into the scholar's domain4 ,but all that is beside the present point4 ,under the stress of modern technological exigencies1 men's every-day habits of thought are falling into the lines that in the sciences constitute the evolutionary method2 and knowledge which proceeds on a higher1 more archaic plane is becoming alien and meaningless to them4 ,the social and political sciences must follow the drift1 for they are already caught in it4 ,,footnotes3 #a ,reprinted by permission from ,the ,quarterly ,journal of ,economics1 vol4 xii1 ,july1 #ahih4 #b ,the ,fundamental ,laws of ,anthropo-sociology1 ,journal of ,political ,economy1 ,december1 #ahig1 p4 #ed4 ,the same paper1 in substance1 appears in the ,rivista ,italiana di ,sociologia for ,november1 #ahig4 #c ,the ,old ,generation of ,economists and the ,new1 ,quarterly ,journal of ,economics1 ,january1 #ahig1 p4 #acc4 #d ,political ,economy1 ,book ,,iii1 chap4 i4 #e ,marshall1 ,principles of ,economics 7#b;d ed471 ,book ,v1 chap4 ii1 p4 #cie1 note4 #f ,adam ,smith1 ,wealth of ,nations 7,bohn ed471 ,book ,,ii1 chap4 ii1 p4 #bhi4 ,,the ,,preconceptions ,,of ,,economic ,,science#a ,i ,in an earlier paper#b the view has been expressed that the economics handed down by the great writers of a past generation is substantially a taxonomic science4 ,a view of much the same purport1 so far as concerns the point here immediately in question1 is presented in an admirably lucid and cogent way by ,professor ,clark in a recent number of this journal4#c ,there is no wish hereby to burden ,professor ,clark with a putative sponsorship of any ungraceful or questionable generalisations reached in working outward from this main position1 but expression may not be denied the comfort which his unintended authentication of the main position affords4 ,it is true1 ,professor ,clark does not speak of taxonomy1 but employs the term statics1 which is perhaps better suited to his immediate purpose4 ,nevertheless1 in spite of the high authority given the term statics1 in this connection1 through its use by ,professor ,clark and by other writers eminent in the science1 it is fairly to be questioned whether the term can legitimately be used to characterize the received economic theories4 ,the word is borrowed from the jargon of physics1 where it is used to designate the theory of bodies at rest or of forces in equilibrium4 ,but there is much in the received economic theories to which the analogy of bodies at rest or of forces in equilibrium will not apply4 ,it is perhaps not too much to say that those articles of economic theory that do not lend themselves to this analogy make up the major portion of the received doctrines4 ,so1 for instance1 it seems scarcely to the point to speak of the statics of production1 exchange1 consumption1 circulation4 ,there are1 no doubt1 appreciable elements in the theory of these several processes that may fairly be characterized as statical features of the theory2 but the doctrines handed down are after all1 in the main1 theories of the process discussed under each head1 and the theory of a process does not belong in statics4 ,the epithet statical would1 for instance1 have to be wrenched somewhat ungently to make it apply to ,quesnay's classic ,tableau ,economique or to the great body of ,physiocratic speculations that take their rise from it ,the like is true for ,books ,,ii4 and ,,iii4 of ,adam ,smith's ,wealth of ,nations1 as also for considerable portions of ,ricardo's work1 or1 to come down to the present generation1 for much of ,marshall's ,principles1 and for such a modern discussion as ,smart's ,studies in ,economics1 as well as for the fruitful activity of the ,austrians and of the later representatives of the ,historical ,school4 ,but to return from this terminological digression4 ,while economic science in the remoter past of its history has been mainly of a taxonomic character1 later writers of all schools show something of a divergence from the taxonomic line and an inclination to make the science a genetic account of the economic life process1 sometimes even without an ulterior view to the taxonomic value of the results obtained4 ,this divergence from the ancient canons of theoretical formulation is to be taken as an episode of the movement that is going forward in latter-day science generally2 and the progressive change which thus affects the ideals and the objective point of the modern sciences seems in its turn to be an expression of that matter-of-fact habit of mind which the prosy but exacting exigencies of life in a modern industrial community breed in men exposed to their unmitigated impact4 ,in speaking of this matter-of-fact character of the modern sciences it has been broadly characterized as evolutionary2 and the evolutionary method and the evolutionary ideals have been placed in antithesis to the taxonomic methods and ideals of pre-evolutionary days4 ,but the characteristic attitude1 aims1 and ideals which are so designated here are by no means peculiar to the group of sciences that are professedly occupied with a process of development1 taking that term in its most widely accepted meaning4 ,the latter-day inorganic sciences are in this respect like the organic4 ,they occupy themselves with dynamic relations and sequences4 ,the question which they ask is always1 ,what takes place next1 and why8 ,given a situation wrought out by the forces under inquiry1 what follows as the consequence of the situation so wrought out8 or what follows upon the accession of a further element of force8 ,even in so non-evolutionary a science as inorganic chemistry the inquiry consistently runs on a process1 an active sequence1 and the value of the resulting situation as a point of departure for the next step in an interminable cumulative sequence4 ,the last step in the chemist's experimental inquiry into any substance is1 ,what comes of the substance determined8 ,what will it do8 ,what will it lead to1 when it is made the point of departure in further chemical action8 ,there is no ultimate term1 and no definitive solution except in terms of further action4 ,the theory worked out is always a theory of a genetic succession of phenomena1 and the relations determined and elaborated into a body of doctrine are always genetic relations4 ,in modern chemistry no cognisance is taken of the honorific bearing of reactions or molecular formulae4 ,the modern chemist1 as contrasted with his ancient congener1 knows nothing of the worth1 elegance1 or cogency of the relations that may subsist between the particles of matter with which he busies himself1 for any other than the genetic purpose4 ,the spiritual element and the elements of worth and propensity no longer count4 ,alchemic symbolism and the hierarchical glamour and virtue that once hedged about the nobler and more potent elements and reagents are almost altogether a departed glory of the science4 ,even the modest imputation of propensity involved in the construction of a scheme of coercive normality1 for the putative guidance of reactions1 finds little countenance with the later adepts of chemical science4 ,the science has outlived that phase of its development at which the taxonomic feature was the dominant one4 ,in the modern sciences1 of which chemistry is one1 there has been a gradual shifting of the point of view from which the phenomena which the science treats of are apprehended and passed upon2 and to the historian of chemical science this shifting of the point of view must be a factor of great weight in the development of chemical knowledge4 ,something of a like nature is true for economic science2 and it is the aim here to present1 in outline1 some of the successive phases that have passed over the spiritual attitude of the adepts of the science1 and to point out the manner in which the transition from one point of view to the next has been made4 99 99 99 99 99 ,as has been suggested in the paper already referred to1 the characteristic spiritual attitude or point of view of a given generation or group of economists is shown not so much in their detail work as in their higher syntheses--the terms of their definitive formulations--the grounds of their final valuation of the facts handled for purpose of theory4 ,this line of recondite inquiry into the spiritual past and antecedents of the science has not often been pursued seriously or with singleness of purpose1 perhaps because it is1 after all1 of but slight consequence to the practical efficiency of the present-day science4 ,still1 not a little substantial work has been done towards this end by such writers as ,hasbach1 ,oncken1 ,bonar1 ,cannan1 and ,marshall4 ,and much that is to the purpose is also due to writers outside of economics1 for the aims of economic speculation have never been insulated from the work going forward in other lines of inquiry4 ,as would necessarily be the case1 the point of view of economists has always been in large part the point of view of the enlightened common sense of their time4 ,the spiritual attitude of a given generation of economists is therefore in good part a special outgrowth of the ideals and preconceptions current in the world about them4 ,so1 for instance1 it is quite the conventional thing to say that the speculations of the ,physiocrats were dominated and shaped by the preconception of ,natural ,rights4 ,account has been taken of the effect of natural-rights preconceptions upon the ,physiocratic schemes of policy and economic reform as well as upon the details of their doctrines4#d ,but little has been said of the significance of these preconceptions for the lower courses of the ,physiocrats' theoretical structure4 ,and yet that habit of mind to which the natural-rights view is wholesome and adequate is answerable both for the point of departure and for the objective point of the ,physiocratic theories1 both for the range of facts to which they turned and for the terms in which they were content to formulate their knowledge of the facts which they handled4 ,the failure of their critics to place themselves at the ,physiocratic point of view has led to much destructive criticism of their work2 whereas1 when seen through ,physiocratic eyes1 such doctrines as those of the net product and of the barrenness of the artisan class appear to be substantially true4 ,the speculations of the ,physiocrats are commonly accounted the first articulate and comprehensive presentation of economic theory that is in line with later theoretical work4 ,the ,physiocratic point of view may1 therefore1 well be taken as the point of departure in an attempt to trace that shifting of aims and norms of procedure that comes into view in the work of later economists when compared with earlier writers4 ,physiocratic economics is a theory of the working-out of the ,law of ,nature 7loi naturelle7 in its economic bearing1 and this ,law of ,nature is a very simple matter4 ,les lois naturelles sont ou physiques ou morales4 ,on entend ici1 par loi physique1 le cours regle de tout evenement physique de l'ordre naturel1 evidemment le plus avantageux au genre humain4 ,on entend ici1 par loi morale1 la regle de toute action humaine de l'ordre morale1 conforme a l'ordre physique evidemment le plus avantageux au genre humain4 ,ces lois forment ensemble ce qu'on appelle la loi naturelle4 ,tous les hommes et toutes les puissances humaines doivent etre soumis a ces lois souveraines1 instituees par l',etre-,supreme3 elles sont immuables et irrefragables1 et les meilleures lois possible4#e ,the settled course of material facts tending beneficently to the highest welfare of the human race1--this is the final term in the ,physiocratic speculations4 ,this is the touchstone of substantiality4 ,conformity to these immutable and unerring laws of nature is the test of economic truth4 ,the laws are immutable and unerring1 but that does not mean that they rule the course of events with a blind fatality that admits of no exception and no divergence from the direct line4 ,human nature may1 through infirmity or perversity1 willfully break over the beneficent trend of the laws of nature2 but to the ,physiocrat's sense of the matter the laws are none the less immutable and irrefragable on that account4 ,they are not empirical generalisations on the course of phenomena1 like the law of falling bodies or of the angle of reflection2 although many of the details of their action are to be determined only by observation and experience1 helped out1 of course1 by interpretation of the facts of observation under the light of reason4 ,so1 for instance1 ,turgot1 in his ,reflections1 empirically works out a doctrine of the reasonable course of development through which wealth is accumulated and reaches the existing state of unequal distribution2 so also his doctrines of interest and of money4 ,the immutable natural laws are rather of the nature of canons of conduct governing nature than generalisations of mechanical sequence1 although in a general way the phenomena of mechanical sequence are details of the conduct of nature working according to these canons of conduct4 ,the great law of the order of nature is of the character of a propensity working to an end1 to the accomplishment of a purpose4 ,the processes of nature working under the quasi-spiritual stress of this immanent propensity may be characterised as nature's habits of life4 ,not that nature is conscious of its travail1 and knows and desires the worthy end of its endeavors2 but for all that there is a quasi-spiritual nexus between antecedent and consequent in the scheme of operation in which nature is engaged4 ,nature is not uneasy about interruptions of its course or occasional deflections from the direct line through an untoward conjunction of mechanical causes1 nor does the validity of the great overruling law suffer through such an episode4 ,the introduction of a mere mechanically effective causal factor cannot thwart the course of ,nature from reaching the goal to which she animistically tends4 ,nothing can thwart this teleological propensity of nature except counter-activity or divergent activity of a similarly teleological kind4 ,men can break over the law1 and have short-sightedly and willfully done so2 for men are also agents who guide their actions by an end to be achieved4 ,human conduct is activity of the same kind--on the same plane of spiritual reality or competency--as the course of ,nature1 and it may therefore traverse the latter4 ,the remedy for this short-sighted traffic of misguided human nature is enlightenment1--instruction publique et privee des lois de l'ordre naturel4#f ,the nature in terms of which all knowledge of phenomena--for the present purpose economic phenomena--is to be finally synthesised is1 therefore1 substantially of a quasi-spiritual or animistic character4 ,the laws of nature are in the last resort teleological3 they are of the nature of a propensity4 ,the substantial fact in all the sequences of nature is the end to which the sequence naturally tends1 not the brute fact of mechanical compulsion or causally effective forces4 ,economic theory is accordingly the theory 7#a7 of how the efficient causes of the ordre naturel work in an orderly unfolding sequence1 guided by the underlying natural laws--the propensity immanent in nature to establish the highest well-being of mankind1 and 7#b7 of the conditions imposed upon human conduct by these natural laws in order to reach the ordained goal of supreme human welfare4 ,the conditions so imposed on human conduct are as definitive as the laws and the order by force of which they are imposed2 and the theoretical conclusions reached1 when these laws and this order are known1 are therefore expressions of absolute economic truth4 ,such conclusions are an expression of reality1 but not necessarily of fact4 ,now1 the objective end of this propensity that determines the course of nature is human well-being4 ,but economic speculation has to do with the workings of nature only so far as regards the ordre physique4 ,and the laws of nature in the ordre physique1 working through mechanical sequence1 can only work out the physical well-being of man1 not necessarily the spiritual4 ,this propensity to the physical well-being of man is therefore the law of nature to which economic science must bring its generalisations1 and this law of physical beneficence is the substantial ground of economic truth4 ,wanting this1 all our speculations are vain2 but having its authentication they are definitive4 ,the great1 typical function1 to which all the other functioning of nature is incidental if not subsidiary1 is accordingly that of the alimentation1 nutrition of mankind4 ,in so far1 and only in so far as the physical processes contribute to human sustenance and fullness of life1 can they1 therefore1 further the great work of nature4 ,whatever processes contribute to human sustenance by adding to the material available for human assimilation and nutrition1 by increasing the substance disposable for human comfort1 therefore count towards the substantial end4 ,all other processes1 however serviceable in other than this physiological respect1 lack the substance of economic reality4 ,accordingly1 human industry is productive1 economically speaking1 if it heightens the effectiveness of the natural processes out of which the material of human sustenance emerges2 otherwise not4 ,the test of productivity1 of economic reality in material facts1 is the increase of nutritive material4 ,whatever employment of time or effort does not afford an increase of such material is unproductive1 however profitable it may be to the person employed1 and however useful or indispensable it may be to the community4 ,the type of such productive industry is the husbandman's employment1 which yields a substantial 7nutritive7 gain4 ,the artisan's work may be useful to the community and profitable to himself1 but its economic effect does not extend beyond an alteration of the form in which the material afforded by nature already lies at hand4 ,it is formally productive only1 not really productive4 ,it bears no part in the creative or generative work of nature2 and therefore it lacks the character of economic substantiality4 ,it does not enhance nature's output of vital force4 ,the artisan's labors1 therefore1 yield no net product1 whereas the husbandman's labors do4 ,whatever constitutes a material increment of this output of vital force is wealth1 and nothing else is4 ,the theory of value contained in this position has not to do with value according to men's appraisement of the valuable article4 ,given items of wealth may have assigned to them certain relative values at which they exchange1 and these conventional values may differ more or less widely from the natural or intrinsic value of the goods in question2 but all that is beside the substantial point4 ,the point in question is not the degree of predilection shown by certain individuals or bodies of men for certain goods4 ,that is a matter of caprice and convention1 and it does not directly touch the substantial ground of the economic life4 ,the question of value is a question of the extent to which the given item of wealth forwards the end of nature's unfolding process4 ,it is valuable1 intrinsically and really1 in so far as it avails the great work which nature has in hand4 ,nature1 then1 is the final term in the ,physiocratic speculations4 ,nature works by impulse and in an unfolding process1 under the stress of a propensity to the accomplishment of a given end4 ,this propensity1 taken as the final cause that is operative in any situation1 furnishes the basis on which to cooerdinate all our knowledge of those efficient causes through which ,nature works to her ends4 ,for the purpose of economic theory proper1 this is the ultimate ground of reality to which our quest of economic truth must penetrate4 ,but back of ,nature and her works there is1 in the ,physiocratic scheme of the universe1 the ,creator1 by whose all-wise and benevolent power the order of nature has been established in all the strength and beauty of its inviolate and immutable perfection4 ,but the ,physiocratic conception of the ,creator is essentially a deistic one3 he stands apart from the course of nature which he has established1 and keeps his hands off4 ,in the last resort1 of course1 ,dieu seul est producteur4 ,les hommes travaillent1 receuillent1 economisent1 conservent2 mais economiser n'est pas produire4#g ,but this last resort does not bring the ,creator into economic theory as a fact to be counted with in formulating economic laws4 ,he serves a homiletical purpose in the ,physiocratic speculations rather than fills an office essential to the theory4 ,he comes within the purview of the theory by way of authentication rather than as a subject of inquiry or a term in the formulation of economic knowledge4 ,the ,physiocratic ,god can scarcely be said to be an economic fact1 but it is otherwise with that ,nature whose ways and means constitute the subject-matter of the ,physiocratic inquiry4 ,when this natural system of the ,physiocratic speculation is looked at from the side of the psychology of the investigators1 or from that of the logical premises employed1 it is immediately recognised as essentially animistic4 ,it runs consistently on animistic ground2 but it is animism of a high grade1--highly integrated and enlightened1 but1 after all1 retaining very much of that primitive force and naivete which characterise the animistic explanations of phenomena in vogue among the untroubled barbarians4 ,it is not the disjected animism of the vulgar1 who see a willful propensity--often a willful perversity--in given objects or situations to work towards a given outcome1 good or bad4 ,it is not the gambler's haphazard sense of fortuitous necessity or the housewife's belief in lucky days1 numbers or phases of the moon4 ,the ,physiocrat's animism rests on a broader outlook1 and does not proceed by such an immediately impulsive imputation of propensity4 ,the teleological element--the element of propensity--is conceived in a large way1 unified and harmonised1 as a comprehensive order of nature as a whole4 ,but it vindicates its standing as a true animism by never becoming fatalistic and never being confused or confounded with the sequence of cause and effect4 ,it has reached the last stage of integration and definition1 beyond which the way lies downward from the high1 quasi-spiritual ground of animism to the tamer levels of normality and causal uniformities4 ,there is already discernible a tone of dispassionate and colorless tendency about the ,physiocratic animism1 such as to suggest a wavering towards the side of normality4 ,this is especially visible in such writers as the half-protestant ,turgot4 ,in his discussion of the development of farming1 for instance1 ,turgot speaks almost entirely of human motives and the material conditions under which the growth takes place4 ,there is little metaphysics in it1 and that little does not express the law of nature in an adequate form4 ,but1 after all has been said1 it remains true that the ,physiocrat's sense of substantiality is not satisfied until he reaches the animistic ground2 and it remains true also that the arguments of their opponents made little impression on the ,physiocrats so long as they were directed to other than this animistic ground of their doctrine4 ,this is true in great measure even of ,turgot1 as witness his controversy with ,hume4 ,whatever criticism is directed against them on other grounds is met with impatience1 as being inconsequential1 if not disingenuous4#h ,to an historian of economic theory the source and the line of derivation whereby this precise form of the order-of-nature preconception reached the ,physiocrats are of first-rate importance2 but it is scarcely a question to be taken up here1--in part because it is too large a question to be handled here1 in part because it has met with adequate treatment at more competent hands1#i and in part because it is somewhat beside the immediate point under discussion4 ,this point is the logical1 or perhaps better the psychological1 value of the ,physiocrats' preconception1 as a factor in shaping their point of view and the terms of their definitive formulation of economic knowledge4 ,for this purpose it may be sufficient to point out that the preconception in question belongs to the generation in which the ,physiocrats lived1 and that it is the guiding norm of all serious thought that found ready assimilation into the common-sense views of that time4 ,it is the characteristic and controlling feature of what may be called the common-sense metaphysics of the eighteenth century1 especially so far as concerns the enlightened ,french community4 ,it is to be noted as a point bearing more immediately on the question in hand that this imputation of final causes to the course of phenomena expresses a spiritual attitude which has prevailed1 one might almost say1 always and everywhere1 but which reached its finest1 most effective development1 and found its most finished expression1 in the eighteenth-century metaphysics4 ,it is nothing recondite2 for it meets us at every turn1 as a matter of course1 in the vulgar thinking of to-day1--in the pulpit and in the market place1--although it is not so ingenuous1 nor does it so unquestionedly hold the primacy in the thinking of any class to-day as it once did4 ,it meets us likewise1 with but little change of features1 at all past stages of culture1 late or early4 ,indeed1 it is the most generic feature of human thinking1 so far as regards a theoretical or speculative formulation of knowledge4 ,accordingly1 it seems scarcely necessary to trace the lineage of this characteristic preconception of the era of enlightenment1 through specific channels1 back to the ancient philosophers or jurists of the empire4 ,some of the specific forms of its expression--as1 for instance1 the doctrine of ,natural ,rights--are no doubt traceable through mediaeval channels to the teachings of the ancients2 but there is no need of going over the brook for water1 and tracing back to specific teachings the main features of that habit of mind or spiritual attitude of which the doctrines of ,natural ,rights and the ,order of ,nature are specific elaborations only4 ,this dominant habit of mind came to the generation of the ,physiocrats on the broad ground of group inheritance1 not by lineal devolution from any one of the great thinkers of past ages who had thrown its deliverances into a similarly competent form for the use of his own generation4 99 99 99 99 99 ,in leaving the ,physiocratic discipline and the immediate sphere of ,physiocratic influence for ,british ground1 we are met by the figure of ,hume4 ,here1 also1 it will be impracticable to go into details as to the remoter line of derivation of the specific point of view that we come upon on making the transition1 for reasons similar to those already given as excuse for passing over the similar question with regard to the ,physiocratic point of view4 ,hume is1 of course1 not primarily an economist2 but that placid unbeliever is none the less a large item in any inventory of eighteenth-century economic thought4 ,hume was not gifted with a facile acceptance of the group inheritance that made the habit of mind of his generation4 ,indeed1 he was gifted with an alert1 though somewhat histrionic1 skepticism touching everything that was well received4 ,it is his office to prove all things1 though not necessarily to hold fast that which is good4 ,aside from the strain of affectation discernible in ,hume's skepticism1 he may be taken as an accentuated expression of that characteristic bent which distinguishes ,british thinking in his time from the thinking of the ,continent1 and more particularly of the ,french4 ,there is in ,hume1 and in the ,british community1 an insistence on the prosy1 not to say the seamy1 side of human affairs4 ,he is not content with formulating his knowledge of things in terms of what ought to be or in terms of the objective point of the course of things4 ,he is not even content with adding to the teleological account of phenomena a chain of empirical1 narrative generalisations as to the usual course of things4 ,he insists1 in season and out of season1 on an exhibition of the efficient causes engaged in any sequence of phenomena2 and he is skeptical--irreverently skeptical--as to the need or the use of any formulation of knowledge that outruns the reach of his own matter-of-fact1 step-by-step argument from cause to effect4 ,in short1 he is too modern to be wholly intelligible to those of his contemporaries who are most neatly abreast of their time4 ,he out-,britishes the ,british2 and1 in his footsore quest for a perfectly tame explanation of things1 he finds little comfort1 and indeed scant courtesy1 at the hands of his own generation4 ,he is not in sufficiently naive accord with the range of preconceptions then in vogue4 ,but1 while ,hume may be an accentuated expression of a national characteristic1 he is not therefore an untrue expression of this phase of ,british eighteenth-century thinking4 ,the peculiarity of point of view and of method for which he stands has sometimes been called the critical attitude1 sometimes the inductive method1 sometimes the materialistic or mechanical1 and again1 though less aptly1 the historical method4 ,its characteristic is an insistence on matter of fact4 ,this matter-of-fact animus that meets any historian of economic doctrine on his introduction to ,british economics is a large1 but not the largest1 feature of the ,british scheme of early economic thought4 ,it strikes the attention because it stands in contrast with the relative absence of this feature in the contemporary speculations of the ,continent4 ,the most potent1 most formative habit of thought concerned in the early development of economic teaching on ,british ground is best seen in the broader generalisations of ,adam ,smith1 and this more potent factor in ,smith is a bent that is substantially identical with that which gives consistency to the speculations of the ,physiocrats4 ,in ,adam ,smith the two are happily combined1 not to say blended2 but the animistic habit still holds the primacy1 with the matter-of-fact as a subsidiary though powerful factor4 ,he is said to have combined deduction with induction4 ,the relatively great prominence given the latter marks the line of divergence of ,british from ,french economics1 not the line of coincidence2 and on this account it may not be out of place to look more narrowly into the circumstances to which the emergence of this relatively greater penchant for a matter-of-fact explanation of things in the ,british community is due4 ,to explain the characteristic animus for which ,hume stands1 on grounds that might appeal to ,hume1 we should have to inquire into the peculiar circumstances--ultimately material circumstances--that have gone to shape the habitual view of things within the ,british community1 and that so have acted to differentiate the ,british preconceptions from the ,french1 or from the general range of preconceptions prevalent on the ,continent4 ,these peculiar formative circumstances are no doubt to some extent racial peculiarities2 but the racial complexion of the ,british community is not widely different from the ,french1 and especially not widely different from certain other ,continental communities which are for the present purpose roughly classed with the ,french4 ,race difference can therefore not wholly1 nor indeed for the greater part1 account for the cultural difference of which this difference in preconceptions is an outcome4 ,through its cumulative effect on institutions the race difference must be held to have had a considerable effect on the habit of mind of the community2 but1 if the race difference is in this way taken as the remoter ground of an institutional peculiarity1 which in its turn has shaped prevalent habits of thought1 then the attention may be directed to the proximate causes1 the concrete circumstances1 through which this race difference has acted1 in conjunction with other ulterior circumstances1 to work out the psychological phenomena observed4 ,race differences1 it may be remarked1 do not so nearly coincide with national lines of demarcation as differences in the point of view from which things are habitually apprehended or differences in the standards according to which facts are rated4 ,if the element of race difference be not allowed definitive weight in discussing national peculiarities that underlie the deliverances of common sense1 neither can these national peculiarities be confidently traced to a national difference in the transmitted learning that enters into the common-sense view of things4 ,so far as concerns the concrete facts embodied in the learning of the various nations within the ,european culture1 these nations make up but a single community4 ,what divergence is visible does not touch the character of the positive information with which the learning of the various nations is occupied4 ,divergence is visible in the higher syntheses1 the methods of handling the material of knowledge1 the basis of valuation of the facts taken up1 rather than in the material of knowledge4 ,but this divergence must be set down to a cultural difference1 a difference of point of view1 not to a difference in inherited information4 ,when a given body of information passes the national frontiers it acquires a new complexion1 a new national1 cultural physiognomy4 ,it is this cultural physiognomy of learning that is here under inquiry1 and a comparison of early ,french economics 7the ,physiocrats7 with early ,british economics 7,adam ,smith7 is here entered upon merely with a view to making out what significance this cultural physiognomy of the science has for the past progress of economic speculation4 ,the broad features of economic speculation1 as it stood at the period under consideration1 may be briefly summed up1 disregarding the element of policy1 or expediency1 which is common to both groups of economists1 and attending to their theoretical work alone4 ,with the ,physiocrats1 as with ,adam ,smith1 there are two main points of view from which economic phenomena are treated3 7a7 the matter-of-fact point of view or preconception1 which yields a discussion of causal sequences and correlations2 and 7b7 what1 for want of a more expressive word1 is here called the animistic point of view or preconception1 which yields a discussion of teleological sequences and correlations1--a discussion of the function of this and that organ1 of the legitimacy of this or the other range of facts4 ,the former preconception is allowed a larger scope in the ,british than in the ,french economics3 there is more of induction in the ,british4 ,the latter preconception is present in both1 and is the definitive element in both2 but the animistic element is more colorless in the ,british1 it is less constantly in evidence1 and less able to stand alone without the support of arguments from cause to effect4 ,still1 the animistic element is the controlling factor in the higher syntheses of both2 and for both alike it affords the definitive ground on which the argument finally comes to rest4 ,in neither group of thinkers is the sense of substantiality appeased until this quasi-spiritual ground1 given by the natural propensity of the course of events1 is reached4 ,but the propensity in events1 the natural or normal course of things1 as appealed to by the ,british speculators1 suggests less of an imputation of will-power1 or personal force1 to the propensity in question4 ,it may be added1 as has already been said in another place1 that the tacit imputation of will-power or spiritual consistency to the natural or normal course of events has progressively weakened in the later course of economic speculation1 so that in this respect1 the ,british economists of the eighteenth century may be said to represent a later phase of economic inquiry than the ,physiocrats4 99 99 99 99 99 ,unfortunately1 but unavoidably1 if this question as to the cultural shifting of the point of view in economic science is taken up from the side of the causes to which the shifting is traceable1 it will take the discussion back to ground on which an economist must at best feel himself to be but a raw layman1 with all a layman's limitations and ineptitude1 and with the certainty of doing badly what might be done well by more competent hands4 ,but1 with a reliance on charity where charity is most needed1 it is necessary to recite summarily what seems to be the psychological bearing of certain cultural facts4 ,a cursory acquaintance with any of the more archaic phases of human culture enforces the recognition of this fact1--that the habit of construing the phenomena of the inanimate world in animistic terms prevails pretty much universally on these lower levels4 ,inanimate phenomena are apprehended to work out a propensity to an end2 the movements of the elements are construed in terms of quasi-personal force4 ,so much is well authenticated by the observations on which anthropologists and ethnologists draw for their materials4 ,this animistic habit1 it may be said1 seems to be more effectual and far-reaching among those primitive communities that lead a predatory life4 ,but along with this feature of archaic methods of thought or of knowledge1 the picturesqueness of which has drawn the attention of all observers1 there goes a second feature1 no less important for the purpose in hand1 though less obtrusive4 ,the latter is of less interest to the men who have to do with the theory of cultural development1 because it is a matter of course4 ,this second feature of archaic thought is the habit of also apprehending facts in non-animistic1 or impersonal1 terms4 ,the imputation of propensity in no case extends to all the mechanical facts in the case4 ,there is always a substratum of matter of fact1 which is the outcome of an habitual imputation of causal sequence1 or1 perhaps better1 an imputation of mechanical continuity1 if a new term be permitted4 ,the agent1 thing1 fact1 event1 or phenomenon1 to which propensity1 will-power1 or purpose1 is imputed1 is always apprehended to act in an environment which is accepted as spiritually inert4 ,there are always opaque facts as well as self-directing agents4 ,any agent acts through means which lend themselves to his use on other grounds than that of spiritual compulsion1 although spiritual compulsion may be a large feature in any given case4 ,the same features of human thinking1 the same two complementary methods of correlating facts and handling them for the purposes of knowledge1 are similarly in constant evidence in the daily life of men in our own community4 ,the question is1 in great part1 which of the two bears the greater part in shaping human knowledge at any given time and within any given range of knowledge or of facts4 ,other features of the growth of knowledge1 which are remoter from the point under inquiry1 may be of no less consequence to a comprehensive theory of the development of culture and of thought2 but it is of course out of the question here to go farther afield4 ,the present inquiry will have enough to do with these two4 ,no other features are correlative with these1 and these merit discussion on account of their intimate bearing on the point of view of economics4 ,the point of interest with respect to these two correlative and complementary habits of thought is the question of how they have fared under the changing exigencies of human culture2 in what manner they come1 under given cultural circumstances1 to share the field of knowledge between them2 what is the relative part of each in the composite point of view in which the two habits of thought express themselves at any given cultural stage4 ,the animistic preconception enforces the apprehension of phenomena in terms generically identical with the terms of personality or individuality4 ,as a certain modern group of psychologists would say1 it imputes to objects and sequences an element of habit and attention similar in kind1 though not necessarily in degree1 to the like spiritual attitude present in the activities of a personal agent4 ,the matter-of-fact preconception1 on the other hand1 enforces a handling of facts without imputation of personal force or attention1 but with an imputation of mechanical continuity1 substantially the preconception which has reached a formulation at the hands of scientists under the name of conservation of energy or persistence of quantity4 ,some appreciable resort to the latter method of knowledge is unavoidable at any cultural stage1 for it is indispensable to all industrial efficiency4 ,all technological processes and all mechanical contrivances rest1 psychologically speaking1 on this ground4 ,this habit of thought is a selectively necessary consequence of industrial life1 and1 indeed1 of all human experience in making use of the material means of life4 ,it should therefore follow that1 in a general way1 the higher the culture1 the greater the share of the mechanical preconception in shaping human thought and knowledge1 since1 in a general way1 the stage of culture attained depends on the efficiency of industry4 ,the rule1 while it does not hold with anything like extreme generality1 must be admitted to hold to a good extent2 and to that extent it should hold also that1 by a selective adaptation of men's habits of thought to the exigencies of those cultural phases that have actually supervened1 the mechanical method of knowledge should have gained in scope and range4 ,something of the sort is borne out by observation4 ,a further consideration enforces the like view4 ,as the community increases in size1 the range of observation of the individuals in the community also increases2 and continually wider and more far-reaching sequences of a mechanical kind have to be taken account of4 ,men have to adapt their own motives to industrial processes that are not safely to be construed in terms of propensity1 predilection1 or passion4 ,life in an advanced industrial community does not tolerate a neglect of mechanical fact2 for the mechanical sequences through which men1 at an appreciable degree of culture1 work out their livelihood1 are no respecters of persons or of will-power4 ,still1 on all but the higher industrial stages1 the coercive discipline of industrial life1 and of the scheme of life that inculcates regard for the mechanical facts of industry1 is greatly mitigated by the largely haphazard character of industry1 and by the great extent to which man continues to be the prime mover in industry4 ,so long as industrial efficiency is chiefly a matter of the handicraftsman's skill1 dexterity1 and diligence1 the attention of men in looking to the industrial process is met by the figure of the workman1 as the chief and characteristic factor2 and thereby it comes to run on the personal element in industry4 ,but1 with or without mitigation1 the scheme of life which men perforce adopt under exigencies of an advanced industrial situation shapes their habits of thought on the side of their behavior1 and thereby shapes their habits of thought to some extent for all purposes4 ,each individual is but a single complex of habits of thought1 and the same psychical mechanism that expresses itself in one direction as conduct expresses itself in another direction as knowledge4 ,the habits of thought formed in the one connection1 in response to stimuli that call for a response in terms of conduct1 must1 therefore1 have their effect when the same individual comes to respond to stimuli that call for a response in terms of knowledge4 ,the scheme of thought or of knowledge is in good part a reverberation of the scheme of life4 ,so that1 after all has been said1 it remains true that with the growth of industrial organization and efficiency there must1 by selection and by adaptation1 supervene a greater resort to the mechanical or dispassionate method of apprehending facts4 ,but the industrial side of life is not the whole of it1 nor does the scheme of life in vogue in any community or at any cultural stage comprise industrial conduct alone4 ,the social1 civic1 military1 and religious interests come in for their share of attention1 and between them they commonly take up by far the larger share of it4 ,especially is this true so far as concerns those classes among whom we commonly look for a cultivation of knowledge for knowledge's sake4 ,the discipline which these several interests exert does not commonly coincide with the training given by industry4 ,so the religious interest1 with its canons of truth and of right living1 runs exclusively on personal relations and the adaptation of conduct to the predilections of a superior personal agent4 ,the weight of its discipline1 therefore1 falls wholly on the animistic side4 ,it acts to heighten our appreciation of the spiritual bearing of phenomena and to discountenance a matter-of-fact apprehension of things4 ,the skeptic of the type of ,hume has never been in good repute with those who stand closest to the accepted religious truths4 ,the bearing of this side of our culture upon the development of economics is shown by what the mediaeval scholars had to say on economic topics4 ,the disciplinary effects of other phases of life1 outside of the industrial and the religious1 is not so simple a matter2 but the discussion here approaches nearer to the point of immediate inquiry1--namely1 the cultural situation in the eighteenth century1 and its relation to economic speculation1--and this ground of interest in the question may help to relieve the topic of the tedium that of right belongs to it4 ,in the remoter past of which we have records1 and even in the more recent past1 ,occidental man1 as well as man elsewhere1 has eminently been a respecter of persons4 ,wherever the warlike activity has been a large feature of the community's life1 much of human conduct in society has proceeded on a regard for personal force4 ,the scheme of life has been a scheme of personal aggression and subservience1 partly in the naive form1 partly conventionalised in a system of status4 ,the discipline of social life for the present purpose1 in so far as its canons of conduct rest on this element of personal force in the unconventionalised form1 plainly tends to the formation of a habit of apprehending and cooerdinating facts from the animistic point of view4 ,so far as we have to do with life under a system of status1 the like remains true1 but with a difference4 ,the regime of status inculcates an unremitting and very nice discrimination and observance of distinctions of personal superiority and inferiority4 ,to the criterion of personal force1 or will-power1 taken in its immediate bearing on conduct1 is added the criterion of personal excellence-in-general1 regardless of the first-hand potency of the given person as an agent4 ,this criterion of conduct requires a constant and painstaking imputation of personal value1 regardless of fact4 ,the discrimination enjoined by the canons of status proceeds on an invidious comparison of persons in respect of worth1 value1 potency1 virtue1 which must1 for the present purpose1 be taken as putative4 ,the greater or less personal value assigned a given individual or a given class under the canons of status is not assigned on the ground of visible efficiency1 but on the ground of a dogmatic allegation accepted on the strength of an uncontradicted categorical affirmation simply4 ,the canons of status hold their ground by force of preemption4 ,where distinctions of status are based on a putative worth transmitted by descent from honorable antecedents1 the sequence of transmission to which appeal is taken as the arbiter of honor is of a putative and animistic character rather than a visible mechanical continuity4 ,the habit of accepting as final what is prescriptively right in the affairs of life has as its reflex in the affairs of knowledge the formula1 ,quid ab omnibus1 quid ubique creditur credendum est4 ,even this meager account of the scheme of life that characterises a regime of status should serve to indicate what is its disciplinary effect in shaping habits of thought1 and therefore in shaping the habitual criteria of knowledge and of reality4 ,a culture whose institutions are a framework of invidious comparisons implies1 or rather involves and comprises1 a scheme of knowledge whose definitive standards of truth and substantiality are of an animistic character2 and1 the more undividedly the canons of status and ceremonial honor govern the conduct of the community1 the greater the facility with which the sequence of cause and effect is made to yield before the higher claims of a spiritual sequence or guidance in the course of events4 ,men consistently trained to an unremitting discrimination of honor1 worth1 and personal force in their daily conduct1 and to whom these criteria afford the definitive ground of sufficiency in cooerdinating facts for the purposes of life1 will not be satisfied to fall short of the like definitive ground of sufficiency when they come to cooerdinate facts for the purposes of knowledge simply4 ,the habits formed in unfolding his activity in one direction1 under the impulse of a given interest1 assert themselves when the individual comes to unfold his activity in any other direction1 under the impulse of any other interest4 ,if his last resort and highest criterion of truth in conduct is afforded by the element of personal force and invidious comparison1 his sense of substantiality or truth in the quest of knowledge will be satisfied only when a like definitive ground of animistic force and invidious comparison is reached4 ,but when such ground is reached he rests content and pushes the inquiry no farther4 ,in his practical life he has acquired the habit of resting his case on an authentic deliverance as to what is absolutely right4 ,this absolutely right and good final term in conduct has the character of finality only when conduct is construed in a ceremonial sense2 that is to say1 only when life is conceived as a scheme of conformity to a purpose outside and beyond the process of living4 ,under the regime of status this ceremonial finality is found in the concept of worth or honor4 ,in the religious domain it is the concept of virtue1 sanctity1 or tabu4 ,merit lies in what one is1 not in what one does4 ,the habit of appeal to ceremonial finality1 formed in the school of status1 goes with the individual in his quest of knowledge1 as a dependence upon a similarly authentic norm of absolute truth1--a similar seeking of a final term outside and beyond the range of knowledge4 ,the discipline of social and civic life under a regime of status1 then1 reenforces the discipline of the religious life2 and the outcome of the resulting habituation is that the canons of knowledge are cast in the animistic mold and converge to a ground of absolute truth1 and this absolute truth is of a ceremonial nature4 ,its subject-matter is a reality regardless of fact4 ,the outcome1 for science1 of the religious and social life of the civilisation of status1 in ,occidental culture1 was a structure of quasi-spiritual appreciations and explanations1 of which astrology1 alchemy1 and mediaeval theology and metaphysics are competent1 though somewhat one-sided1 exponents4 ,throughout the range of this early learning the ground of correlation of phenomena is in part the supposed relative potency of the facts correlated2 but it is also in part a scheme of status1 in which facts are scheduled according to a hierarchical gradation of worth or merit1 having only a ceremonial relation to the observed phenomena4 ,some elements 7some metals1 for instance7 are noble1 others base2 some planets1 on grounds of ceremonial efficacy1 have a sinister influence1 others a beneficent one2 and it is a matter of serious consequence whether they are in the ascendant1 and so on4 ,the body of learning through which the discipline of animism and invidious comparison transmitted its effects to the science of economics was what is known as natural theology1 natural rights1 moral philosophy1 and natural law4 ,these several disciplines or bodies of knowledge had wandered far from the naive animistic standpoint at the time when economic science emerged1 and much the same is true as regards the time of the emergence of other modern sciences4 ,but the discipline which makes for an animistic formulation of knowledge continued to hold the primacy in modern culture1 although its dominion was never altogether undivided or unmitigated4 ,occidental culture has long been largely an industrial culture2 and1 as already pointed out1 the discipline of industry1 and of life in an industrial community1 does not favor the animistic preconception4 ,this is especially true as regards industry which makes large use of mechanical contrivances4 ,the difference in these respects between ,occidental industry and science1 on the one hand1 and the industry and science of other cultural regions1 on the other hand1 is worth noting in this connection4 ,the result has been that the sciences1 as that word is understood in later usage1 have come forward gradually1 and in a certain rough parallelism with the development of industrial processes and industrial organisation4 ,it is possible to hold that both modern industry 7of the mechanical sort7 and modern science center about the region of the ,north ,sea4 ,it is still more palpably true that within this general area the sciences1 in the recent past1 show a family likeness to the civil and social institutions of the communities in which they have been cultivated1 this being true to the greatest extent of the higher or speculative sciences2 that is1 in that range of knowledge in which the animistic preconception can chiefly and most effectively find application4 ,there is1 for instance1 in the eighteenth century a perceptible parallelism between the divergent character of ,british and ,continental culture and institutions1 on the one hand1 and the dissimilar aims of ,british and ,continental speculation1 on the other hand4 ,something has already been said of the difference in preconceptions between the ,french and the ,british economists of the eighteenth century4 ,it remains to point out the correlative cultural difference between the two communities1 to which it is conceived that the difference in scientific animus is in great measure due4 ,it is1 of course1 only the general features1 the general attitude of the speculators1 that can be credited to the difference in culture4 ,differences of detail in the specific doctrines held could be explained only on a much more detailed analysis than can be entered on here1 and after taking account of facts which cannot here be even allowed for in detail4 ,aside from the greater resort to mechanical contrivances and the larger scale of organisation in ,british industry1 the further cultural peculiarities of the ,british community run in the same general direction4 ,british religious life and beliefs had less of the element of fealty--personal or discretionary mastery and subservience--and more of a tone of fatalism4 ,the civil institutions of the ,british had not the same rich personal content as those of the ,french4 ,the ,british subject owned allegiance to an impersonal law rather than to the person of a superior4 ,relatively1 it may be said that the sense of status1 as a coercive factor1 was in abeyance in the ,british community4 ,even in the warlike enterprise of the ,british community a similar characteristic is traceable4 ,warfare is1 of course1 a matter of personal assertion4 ,warlike communities and classes are necessarily given to construing facts in terms of personal force and personal ends4 ,they are always superstitious4 ,they are great sticklers for rank and precedent1 and zealously cultivate those distinctions and ceremonial observances in which a system of status expresses itself4 ,but1 while warlike enterprise has by no means been absent from the ,british scheme of life1 the geographical and strategic isolation of the ,british community has given a characteristic turn to their military relations4 ,in recent times ,british warlike operations have been conducted abroad4 ,the military class has consequently in great measure been segregated out from the body of the community1 and the ideals and prejudices of the class have not been transfused through the general body with the same facility and effect that they might otherwise have had4 ,the ,british community at home has seen the campaign in great part from the standpoint of the sinews of war4 ,the outcome of all these national peculiarities of circumstance and culture has been that a different scheme of life has been current in the ,british community from what has prevailed on the ,continent4 ,there has resulted the formation of a different body of habits of thought and a different animus in their handling of facts4 ,the preconception of causal sequence has been allowed larger scope in the correlation of facts for purposes of knowledge2 and1 where the animistic preconception has been resorted to1 as it always has in the profounder reaches of learning1 it has commonly been an animism of a tamer kind4 ,taking ,adam ,smith as an exponent of this ,british attitude in theoretical knowledge1 it is to be noted that1 while he formulates his knowledge in terms of a propensity 7natural laws7 working teleologically to an end1 the end or objective point which controls the formulation has not the same rich content of vital human interest or advantage as is met with in the ,physiocratic speculations4 ,there is perceptibly less of an imperious tone in ,adam ,smith's natural laws than in those of the contemporary ,french economists4 ,it is true1 he sums up the institutions with which he deals in terms of the ends which they should subserve1 rather than in terms of the exigencies and habits of life out of which they have arisen2 but he does not with the same tone of finality appeal to the end subserved as a final cause through whose coercive guidance the complex of phenomena is kept to its appointed task4 ,under his hands the restraining1 compelling agency retires farther into the background1 and appeal is taken to it neither so directly nor on so slight provocation4 ,but ,adam ,smith is too large a figure to be disposed of in a couple of concluding paragraphs4 ,at the same time his work and the bent which he gave to economic speculation are so intimately bound up with the aims and bias that characterise economics in its next stage of development that he is best dealt with as the point of departure for the ,classical ,school rather than merely as a ,british counterpart of ,physiocracy4 ,adam ,smith will accordingly be considered in immediate connection with the bias of the classical school and the incursion of utilitarianism into economics4 ,,footnotes3 #a ,reprinted by permission from ,the ,quarterly ,journal of ,economics1 vol4 xiii1 ,jan41 #ahii4 #b ,why is ,economics not an ,evolutionary ,science8 ,quarterly ,journal of ,economics1 ,july1 #ahih4 #c ,the ,future of ,economic ,theory1 ibid41 ,october1 #ahih4 #d ,see1 for instance1 ,hasbach1 ,allgemeine philosophische ,grundlagen der von ,francois ,quesnay und ,adam ,smith begruendeten politischen ,oekonomie4 #e ,quesnay1 ,droit ,naturel1 ch4 v4 7,ed4 ,daire1 ,physiocrates1 pp4 #eb-ec74 #f ,quesnay1 ,droit ,naturel1 ch4 v 7,ed4 ,daire1 ,physiocrates1 p4 #ec74 #g ,dupont de ,nemours1 ,correspondance avec ,j4-,b4 ,say 7,ed4 ,daire1 ,physiocrates1 premiere partie1 p4 #cii74 #h ,see1 for instance1 the concluding chapters of ,la ,riviere's ,ordre ,naturel des ,societes ,politiques4 #i ,e4g41 ,hasbach1 loc4 cit42 ,bonar1 ,philosophy and ,political ,economy1 ,book ,,ii2 ,ritchie1 ,natural ,rights4 ,,the ,,preconceptions ,,of ,,economic ,,science#a ,,ii ,adam ,smith's animistic bent asserts itself more plainly and more effectually in the general trend and aim of his discussion than in the details of theory4 ,adam ,smith's ,wealth of ,nations is1 in fact1 so far as it has one single purpose1 a vindication of the unconscious law present in the separate actions of men when these actions are directed by a certain strong personal motive4#b ,both in the ,theory of the ,moral ,sentiments and in the ,wealth of ,nations there are many passages that testify to his abiding conviction that there is a wholesome trend in the natural course of things1 and the characteristically optimistic tone in which he speaks for natural liberty is but an expression of this conviction4 ,an extreme resort to this animistic ground occurs in his plea for freedom of investment4#c ,in the proposition that men are led by an invisible hand1 ,smith does not fall back on a meddling ,providence who is to set human affairs straight when they are in danger of going askew4 ,he conceives the ,creator to be very continent in the matter of interference with the natural course of things4 ,the ,creator has established the natural order to serve the ends of human welfare2 and he has very nicely adjusted the efficient causes comprised in the natural order1 including human aims and motives1 to this work that they are to accomplish4 ,the guidance of the invisible hand takes place not by way of interposition1 but through a comprehensive scheme of contrivances established from the beginning4 ,for the purpose of economic theory1 man is conceived to be consistently self-seeking2 but this economic man is a part of the mechanism of nature1 and his self-seeking traffic is but a means whereby1 in the natural course of things1 the general welfare is worked out4 ,the scheme as a whole is guided by the end to be reached1 but the sequence of events through which the end is reached is a causal sequence which is not broken into episodically4 ,the benevolent work of guidance was performed in first establishing an ingenious mechanism of forces and motives capable of accomplishing an ordained result1 and nothing beyond the enduring constraint of an established trend remains to enforce the divine purpose in the resulting natural course of things4 ,the sequence of events1 including human motives and human conduct1 is a causal sequence2 but it is also something more1 or1 rather1 there is also another element of continuity besides that of brute cause and effect1 present even in the step-by-step process whereby the natural course of things reaches its final term4 ,the presence of such a quasi-spiritual or non-causal element is evident from two 7alleged7 facts4 7#a7 ,the course of things may be deflected from the direct line of approach to that consummate human welfare which is its legitimate end4 ,the natural trend of things may be overborne by an untoward conjuncture of causes4 ,there is a distinction1 often distressingly actual and persistent1 between the legitimate and the observed course of things4 ,if natural1 in ,adam ,smith's use1 meant necessary1 in the sense of causally determined1 no divergence of events from the natural or legitimate course of things would be possible4 ,if the mechanism of nature1 including man1 were a mechanically competent contrivance for achieving the great artificer's design1 there could be no such episodes of blundering and perverse departure from the direct path as ,adam ,smith finds in nearly all existing arrangements4 ,institutional facts would then be natural4#d 7#b7 ,when things have gone wrong1 they will right themselves if interference with the natural course ceases2 whereas1 in the case of a causal sequence simply1 the mere cessation of interference will not leave the outcome the same as if no interference had taken place4 ,this recuperative power of nature is of an extra-mechanical character4 ,the continuity of sequence by force of which the natural course of things prevails is1 therefore1 not of the nature of cause and effect1 since it bridges intervals and interruptions in the causal sequence4#e ,adam ,smith's use of the term real in statements of theory--as1 for example1 real value1 real price#f--;is evidence to this effect4 ,natural commonly has the same meaning as real in this connection4#g ,both natural and real are placed in contrast with the actual2 and1 in ,adam ,smith's apprehension1 both have a substantiality different from and superior to facts4 ,the view involves a distinction between reality and fact1 which survives in a weakened form in the theories of normal prices1 wages1 profits1 costs1 in ,adam ,smith's successors4 ,this animistic prepossession seems to pervade the earlier of his two monumental works in a greater degree than the later4 ,in the ,moral ,sentiments recourse is had to the teleological ground of the natural order more freely and with perceptibly greater insistence4 ,there seems to be reason for holding that the animistic preconception weakened or1 at any rate1 fell more into the background as his later work of speculation and investigation proceeded4 ,the change shows itself also in some details of his economic theory1 as first set forth in the ,lectures1 and afterwards more fully developed in the ,wealth of ,nations4 ,so1 for instance1 in the earlier presentation of the matter1 the division of labor is the immediate cause of opulence2 and this division of labor1 which is the chief condition of economic well-being1 flows from a direct propensity in human nature for one man to barter with another4#h ,the propensity in question is here appealed to as a natural endowment immediately given to man with a view to the welfare of human society1 and without any attempt at further explanation of how man has come by it4 ,no causal explanation of its presence or character is offered4 ,but the corresponding passage of the ,wealth of ,nations handles the question more cautiously4#i ,other parallel passages might be compared1 with much the same effect4 ,the guiding hand has withdrawn farther from the range of human vision4 ,however1 these and other like filial expressions of a devout optimism need1 perhaps1 not be taken as integral features of ,adam ,smith's economic theory1 or as seriously affecting the character of his work as an economist4 ,they are the expression of his general philosophical and theological views1 and are significant for the present purpose chiefly as evidences of an animistic and optimistic bent4 ,they go to show what is ,adam ,smith's accepted ground of finality1--the ground to which all his speculations on human affairs converge2 but they do not in any great degree show the teleological bias guiding his formulation of economic theory in detail4 ,the effective working of the teleological bias is best seen in ,smith's more detailed handling of economic phenomena--in his discussion of what may loosely be called economic institutions--and in the criteria and principles of procedure by which he is guided in incorporating these features of economic life into the general structure of his theory4 ,a fair instance1 though perhaps not the most telling one1 is the discussion of the real and nominal price1 and of the natural and market price of commodities1 already referred to above4#aj ,the real price of commodities is their value in terms of human life4 ,at this point ,smith differs from the ,physiocrats1 with whom the ultimate terms of value are afforded by human sustenance taken as a product of the functioning of brute nature2 the cause of the difference being that the ,physiocrats conceived the natural order which works towards the material well-being of man to comprise the non-human environment only1 whereas ,adam ,smith includes man in this concept of the natural order1 and1 indeed1 makes him the central figure in the process of production4 ,with the ,physiocrats1 production is the work of nature3 with ,adam ,smith1 it is the work of man and nature1 with man in the foreground4 ,in ,adam ,smith1 therefore1 labor is the final term in valuation4 ,this real value of commodities is the value imputed to them by the economist under the stress of his teleological preconception4 ,it has little1 if any1 place in the course of economic events1 and no bearing on human affairs1 apart from the sentimental influence which such a preconception in favor of a real value in things may exert upon men's notions of what is the good and equitable course to pursue in their transactions4 ,it is impossible to gauge this real value of goods2 it cannot be measured or expressed in concrete terms4 ,still1 if labor exchanges for a varying quantity of goods1 it is their value which varies1 not that of the labor which purchases them4#aa ,the values which practically attach to goods in men's handling of them are conceived to be determined without regard to the real value which ,adam ,smith imputes to the goods2 but1 for all that1 the substantial fact with respect to these market values is their presumed approximation to the real values teleologically imputed to the goods under the guidance of inviolate natural laws4 ,the real1 or natural1 value of articles has no causal relation to the value at which they exchange4 ,the discussion of how values are determined in practice runs on the motives of the buyers and sellers1 and the relative advantage enjoyed by the parties to the transaction4#ab ,it is a discussion of a process of valuation1 quite unrelated to the real1 or natural1 price of things1 and quite unrelated to the grounds on which things are held to come by their real1 or natural1 price2 and yet1 when the complex process of valuation has been traced out in terms of human motives and the exigencies of the market1 ,adam ,smith feels that he has only cleared the ground4 ,he then turns to the serious business of accounting for value and price theoretically1 and making the ascertained facts articulate with his teleological theory of economic life4#ac ,the occurrence of the words ordinary and average in this connection need not be taken too seriously4 ,the context makes it plain that the equality which commonly subsists between the ordinary or average rates1 and the natural rates1 is a matter of coincidence1 not of identity4 ,not only are there temporary deviations1 but there may be a permanent divergence between the ordinary and the natural price of a commodity2 as in case of a monopoly or of produce grown under peculiar circumstances of soil or climate4#ad ,the natural price coincides with the price fixed by competition1 because competition means the unimpeded play of those efficient forces through which the nicely adjusted mechanism of nature works out the design to accomplish which it was contrived4 ,the natural price is reached through the free interplay of the factors of production1 and it is itself an outcome of production4 ,nature1 including the human factor1 works to turn out the goods2 and the natural value of the goods is their appraisement from the standpoint of this productive process of nature4 ,natural value is a category of production3 whereas1 notoriously exchange value or market price is a category of distribution4 ,and ,adam ,smith's theoretical handling of market price aims to show how the factors of human predilection and human wants at work in the higgling of the market bring about a result in passable consonance with the natural laws that are conceived to govern production4 ,the natural price is a composite result of the blending of the three component parts of the price of commodities1--the natural wages of laborer1 the natural profits of stock1 and the natural rent of land2 and each of these three components is in its turn the measure of the productive effect of the factor to which it pertains4 ,the further discussion of these shares in distribution aims to account for the facts of distribution on the ground of the productivity of the factors which are held to share the product between them4 ,that is to say1 ,adam ,smith's preconception of a productive natural process as the basis of his economic theory dominates his aims and procedure1 when he comes to deal with phenomena that cannot be stated in terms of production4 ,the causal sequence in the process of distribution is1 by ,adam ,smith's own showing1 unrelated to the causal sequence in the process of production2 but1 since the latter is the substantial fact1 as viewed from the standpoint of a teleological natural order1 the former must be stated in terms of the latter before ,adam ,smith's sense of substantiality1 or reality1 is satisfied4 ,something of the same kind is1 of course1 visible in the ,physiocrats and in ,cantillon4 ,it amounts to an extension of the natural-rights preconception to economic theory4 ,adam ,smith's discussion of distribution as a function of productivity might be traced in detail through his handling of ,wages1 ,profits1 and ,rent2 but1 since the aim here is a brief characterisation only1 and not an exposition1 no farther pursuit of this point seems feasible4 ,it may1 however1 be worth while to point out another line of influence along which the dominance of the teleological preconception shows itself in ,adam ,smith4 ,this is the normalisation of data1 in order to bring them into consonance with an orderly course of approach to the putative natural end of economic life and development4 ,the result of this normalisation of data is1 on the one hand1 the use of what ,james ,steuart calls conjectural history in dealing with past phases of economic life1 and1 on the other hand1 a statement of present-day phenomena in terms of what legitimately ought to be according to the ,god-given end of life rather than in terms of unconstrued observation4 ,account is taken of the facts 7supposed or observed7 ostensibly in terms of causal sequence1 but the imputed causal sequence is construed to run on lines of teleological legitimacy4 ,a familiar instance of this conjectural history1 in a highly and effectively normalized form1 is the account of that early and rude state of society which precedes both the accumulation of stock and the appropriation of land4#ae ,it is needless at this day to point out that this early and rude state1 in which the whole produce of labor belongs to the laborer1 is altogether a figment4 ,the whole narrative1 from the putative origin down1 is not only supposititious1 but it is merely a schematic presentation of what should have been the course of past development1 in order to lead up to that ideal economic situation which would satisfy ,adam ,smith's preconception4#af ,as the narrative comes nearer the region of known latter-day facts1 the normalisation of the data becomes more difficult and receives more detailed attention2 but the change in method is a change of degree rather than of kind4 ,in the early and rude state the coincidence of the natural and the actual course of events is immediate and undisturbed1 there being no refractory data at hand2 but in the later stages and in the present situation1 where refractory facts abound1 the cooerdination is difficult1 and the coincidence can be shown only by a free abstraction from phenomena that are irrelevant to the teleological trend and by a laborious interpretation of the rest4 ,the facts of modern life are intricate1 and lend themselves to statement in the terms of the theory only after they have been subjected to a higher criticism4 ,the chapter ,of the ,origin and ,use of ,money#ag is an elegantly normalised account of the origin and nature of an economic institution1 and ,adam ,smith's further discussion of money runs on the same lines4 ,the origin of money is stated in terms of the purpose which money should legitimately serve in such a community as ,adam ,smith considered right and good1 not in terms of the motives and exigencies which have resulted in the use of money and in the gradual rise of the existing method of payment and accounts4 ,money is the great wheel of circulation1 which effects the transfer of goods in process of production and the distribution of the finished goods to the consumers4 ,it is an organ of the economic commonwealth rather than an expedient of accounting and a conventional repository of wealth4 ,it is perhaps superfluous to remark that to the plain man1 who is not concerned with the natural course of things in a consummate ,geldwirtschaft1 the money that passes his hand is not a great wheel of circulation4 ,to the ,samoyed1 for instance1 the reindeer which serves him as unit of value is wealth in the most concrete and tangible form4 ,much the same is true of coin1 or even of bank-notes1 in the apprehension of unsophisticated people among ourselves to-day4 ,and yet it is in terms of the habits and conditions of life of these plain people that the development of money will have to be accounted for if it is to be stated in terms of cause and effect4 99 99 99 99 99 ,the few scattered passages already cited may serve to illustrate how ,adam ,smith's animistic or teleological bent shapes the general structure of his theory and gives it consistency4 ,the principle of definitive formulation in ,adam ,smith's economic knowledge is afforded by a putative purpose that does not at any point enter causally into the economic life process which he seeks to know4 ,this formative or normative purpose or end is not freely conceived to enter as an efficient agent in the events discussed1 or to be in any way consciously present in the process4 ,it can scarcely be taken as an animistic agency engaged in the process4 ,it sanctions the course of things1 and gives legitimacy and substance to the sequence of events1 so far as this sequence may be made to square with the requirements of the imputed end4 ,it has therefore a ceremonial or symbolical force only1 and lends the discussion a ceremonial competency2 although with economists who have been in passable agreement with ,adam ,smith as regards the legitimate end of economic life this ceremonial consistency1 or consistency de jure has for many purposes been accepted as the formulation of a causal continuity in the phenomena that have been interpreted in its terms4 ,elucidations of what normally ought to happen1 as a matter of ceremonial necessity1 have in this way come to pass for an account of matters of fact4 ,but1 as has already been pointed out1 there is much more to ,adam ,smith's exposition of theory than a formulation of what ought to be4 ,much of the advance he achieved over his predecessors consists in a larger and more painstaking scrutiny of facts1 and a more consistent tracing out of causal continuity in the facts handled4 ,no doubt1 his superiority over the ,physiocrats1 that characteristic of his work by virtue of which it superseded theirs in the farther growth of economic science1 lies to some extent in his recourse to a different1 more modern ground of normality1--a ground more in consonance with the body of preconceptions that have had the vogue in later generations4 ,it is a shifting of the point of view from which the facts are handled2 but it comes in great part to a substitution of a new body of preconceptions for the old1 or a new adaptation of the old ground of finality1 rather than an elimination of all metaphysical or animistic norms of valuation4 ,with ,adam ,smith1 as with the ,physiocrats1 the fundamental question1 the answer to which affords the point of departure and the norm of procedure1 is a question of substantiality or economic reality4 ,with both1 the answer to this question is given naively1 as a deliverance of common sense4 ,neither is disturbed by doubts as to this deliverance of common sense or by any need of scrutinising it4 ,to the ,physiocrats this substantial ground of economic reality is the nutritive process of ,nature4 ,to ,adam ,smith it is ,labor4 ,his reality has the advantage of being the deliverance of the common sense of a more modern community1 and one that has maintained itself in force more widely and in better consonance with the facts of latter-day industry4 ,the ,physiocrats owe their preconception of the productiveness of nature to the habits of thought of a community in whose economic life the dominant phenomenon was the owner of agricultural land4 ,adam ,smith owes his preconception in favor of labor to a community in which the obtrusive economic feature of the immediate past was handicraft and agriculture1 with commerce as a scarcely secondary phenomenon4 ,so far as ,adam ,smith's economic theories are a tracing out of the causal sequence in economic phenomena1 they are worked out in terms given by these two main directions of activity1--human effort directed to the shaping of the material means of life1 and human effort and discretion directed to a pecuniary gain4 ,the former is the great1 substantial productive force3 the latter is not immediately1 or proximately1 productive4#ah ,adam ,smith still has too lively a sense of the nutritive purpose of the order of nature freely to extend the concept of productiveness to any activity that does not yield a material increase of the creature comforts4 ,his instinctive appreciation of the substantial virtue of whatever effectually furthers nutrition1 even leads him into the concession that in agriculture nature labors along with man1 although the general tenor of his argument is that the productive force with which the economist always has to count is human labor4 ,this recognised substantiality of labor as productive is1 as has already been remarked1 accountable for his effort to reduce to terms of productive labor such a category of distribution as exchange value4 ,with but slight qualification1 it will hold that1 in the causal sequence which ,adam ,smith traces out in his economic theories proper 7contained in the first three books of the ,wealth of ,nations71 the causally efficient factor is conceived to be human nature in these two relations1--of productive efficiency and pecuniary gain through exchange4 ,pecuniary gain--gain in the material means of life through barter--furnishes the motive force to the economic activity of the individual2 although productive efficiency is the legitimate1 normal end of the community's economic life4 ,to such an extent does this concept of man's seeking his ends through truck1 barter1 and exchange pervade ,adam ,smith's treatment of economic processes that he even states production in its terms1 and says that labor was the first price1 the original purchase-money1 that was paid for all things4#ai ,the human nature engaged in this pecuniary traffic is conceived in somewhat hedonistic terms1 and the motives and movements of men are normalised to fit the requirements of a hedonistically conceived order of nature4 ,men are very much alike in their native aptitudes and propensities2#bj and1 so far as economic theory need take account of these aptitudes and propensities1 they are aptitudes for the production of the necessaries and conveniences of life1 and propensities to secure as great a share of these creature comforts as may be4 ,adam ,smith's conception of normal human nature--that is to say1 the human factor which enters causally in the process which economic theory discusses--comes1 on the whole1 to this3 ,men exert their force and skill in a mechanical process of production1 and their pecuniary sagacity in a competitive process of distribution1 with a view to individual gain in the material means of life4 ,these material means are sought in order to the satisfaction of men's natural wants through their consumption4 ,it is true1 much else enters into men's endeavors in the struggle for wealth1 as ,adam ,smith points out2 but this consumption comprises the legitimate range of incentives1 and a theory which concerns itself with the natural course of things need take but incidental account of what does not come legitimately in the natural course4 ,in point of fact1 there are appreciable actual1 though scarcely real1 departures from this rule4 ,they are spurious and insubstantial departures1 and do not properly come within the purview of the stricter theory4 ,and1 since human nature is strikingly uniform1 in ,adam ,smith's apprehension1 both the efforts put forth and the consumptive effect accomplished may be put in quantitative terms and treated algebraically1 with the result that the entire range of phenomena comprised under the head of consumption need be but incidentally considered2 and the theory of production and distribution is complete when the goods or the values have been traced to their disappearance in the hands of their ultimate owners4 ,the reflex effect of consumption upon production and distribution is1 on the whole1 quantitative only4 ,adam ,smith's preconception of a normal teleological order of procedure in the natural course1 therefore1 affects not only those features of theory where he is avowedly concerned with building up a normal scheme of the economic process4 ,through his normalising the chief causal factor engaged in the process1 it affects also his arguments from cause to effect4#ba ,what makes this latter feature worth particular attention is the fact that his successors carried this normalisation farther1 and employed it with less frequent reference to the mitigating exceptions which ,adam ,smith notices by the way4 ,the reason for that farther and more consistent normalisation of human nature which gives us the economic man at the hands of ,adam ,smith's successors lies1 in great part1 in the utilitarian philosophy that entered in force and in consummate form at about the turning of the century4 ,some credit in the work of normalisation is due also to the farther supersession of handicraft by the capitalistic industry that came in at the same time and in pretty close relation with the utilitarian views4 99 99 99 99 99 ,after ,adam ,smith's day1 economics fell into profane hands4 ,apart from ,malthus1 who1 of all the greater economists1 stands nearest to ,adam ,smith on such metaphysical heads as have an immediate bearing upon the premises of economic science1 the next generation do not approach their subject from the point of view of a divinely instituted order2 nor do they discuss human interests with that gently optimistic spirit of submission that belongs to the economist who goes to his work with the fear of ,god before his eyes4 ,even with ,malthus the recourse to the divinely sanctioned order of nature is somewhat sparing and temperate4 ,but it is significant for the later course of economic theory that1 while ,malthus may well be accounted the truest continuer of ,adam ,smith1 it was the undevout utilitarians that became the spokesmen of the science after ,adam ,smith's time4 ,there is no wide breach between ,adam ,smith and the utilitarians1 either in details of doctrine or in the concrete conclusions arrived at as regards questions of policy4 ,on these heads ,adam ,smith might well be classed as a moderate utilitarian1 particularly so far as regards his economic work4 ,malthus has still more of a utilitarian air1--so much so1 indeed1 that he is not infrequently spoken of as a utilitarian4 ,this view1 convincingly set forth by ,mr4 ,bonar1#bb is no doubt well borne out by a detailed scrutiny of ,malthus's economic doctrines4 ,his humanitarian bias is evident throughout1 and his weakness for considerations of expediency is the great blemish of his scientific work4 ,but1 for all that1 in order to an appreciation of the change that came over classical economics with the rise of ,benthamism1 it is necessary to note that the agreement in this matter between ,adam ,smith and the disciples of ,bentham1 and less decidedly that between ,malthus and the latter1 is a coincidence of conclusions rather than an identity of preconceptions4#bc ,with ,adam ,smith the ultimate ground of economic reality is the design of ,god1 the teleological order2 and his utilitarian generalisations1 as well as the hedonistic character of his economic man1 are but methods of the working out of this natural order1 not the substantial and self-legitimating ground4 ,shifty as ,malthus's metaphysics are1 much the same is to be said for him4#bd ,of the utilitarians proper the converse is true1 although here1 again1 there is by no means utter consistency4 ,the substantial economic ground is pleasure and pain3 the teleological order 7even the design of ,god1 where that is admitted7 is the method of its working-out4 ,it may be unnecessary here to go into the farther implications1 psychological and ethical1 which this preconception of the utilitarians involves4 ,and even this much may seem a taking of excessive pains with a distinction that marks no tangible difference4 ,but a reading of the classical doctrines1 with something of this metaphysics of political economy in mind1 will show how1 and in great part why1 the later economists of the classical line diverged from ,adam ,smith's tenets in the early years of the century1 until it has been necessary to interpret ,adam ,smith somewhat shrewdly in order to save him from heresy4 ,the post-,bentham economics is substantially a theory of value4 ,this is altogether the dominant feature of the body of doctrines2 the rest follows from1 or is adapted to1 this central discipline4 ,the doctrine of value is of very great importance also in ,adam ,smith2 but ,adam ,smith's economics is a theory of the production and apportionment of the material means of life4#be ,with ,adam ,smith1 value is discussed from the point of view of production4 ,with the utilitarians1 production is discussed from the point of view of value4 ,the former makes value an outcome of the process of production3 the latter make production the outcome of a valuation process4 ,the point of departure with ,adam ,smith is the productive power of labor4#bf ,with ,ricardo it is a pecuniary problem concerned in the distribution of ownership2#bg but the classical writers are followers of ,adam ,smith1 and improve upon and correct the results arrived at by him1 and the difference of point of view1 therefore1 becomes evident in their divergence from him1 and the different distribution of emphasis1 rather than in a new and antagonistic departure4 ,the reason for this shifting of the center of gravity from production to valuation lies1 proximately1 in ,bentham's revision of the principles of morals4 ,bentham's philosophical position is1 of course1 not a self-explanatory phenomenon1 nor does the effect of ,benthamism extend only to those who are avowed followers of ,bentham2 for ,bentham is the exponent of a cultural change that affects the habits of thought of the entire community4 ,the immediate point of ,bentham's work1 as affecting the habits of thought of the educated community1 is the substitution of hedonism 7utility7 in place of achievement of purpose1 as a ground of legitimacy and a guide in the normalisation of knowledge4 ,its effect is most patent in speculations on morals1 where it inculcates determinism4 ,its close connection with determinism in ethics points the way to what may be expected of its working in economics4 ,in both cases the result is that human action is construed in terms of the causal forces of the environment1 the human agent being1 at the best1 taken as a mechanism of commutation1 through the workings of which the sensuous effects wrought by the impinging forces of the environment are1 by an enforced process of valuation1 transmuted without quantitative discrepancy into moral or economic conduct1 as the case may be4 ,in ethics and economics alike the subject-matter of the theory is this valuation process that expresses itself in conduct1 resulting1 in the case of economic conduct1 in the pursuit of the greatest gain or least sacrifice4 ,metaphysically or cosmologically considered1 the human nature into the motions of which hedonistic ethics and economics inquire is an intermediate term in a causal sequence1 of which the initial and the terminal members are sensuous impressions and the details of conduct4 ,this intermediate term conveys the sensuous impulse without loss of force to its eventuation in conduct4 ,for the purpose of the valuation process through which the impulse is so conveyed1 human nature may1 therefore1 be accepted as uniform2 and the theory of the valuation process may be formulated quantitatively1 in terms of the material forces affecting the human sensory and of their equivalents in the resulting activity4 ,in the language of economics1 the theory of value may be stated in terms of the consumable goods that afford the incentive to effort and the expenditure undergone in order to procure them4 ,between these two there subsists a necessary equality2 but the magnitudes between which the equality subsists are hedonistic magnitudes1 not magnitudes of kinetic energy nor of vital force1 for the terms handled are sensuous terms4 ,it is true1 since human nature is substantially uniform1 passive1 and unalterable in respect of men's capacity for sensuous affection1 there may also be presumed to subsist a substantial equality between the psychological effect to be wrought by the consumption of goods1 on the one side1 and the resulting expenditure of kinetic or vital force1 on the other side2 but such an equality is1 after all1 of the nature of a coincidence1 although there should be a strong presumption in favor of its prevailing on an average and in the common run of cases4 ,hedonism1 however1 does not postulate uniformity between men except in the respect of sensuous cause and effect4 ,the theory of value which hedonism gives is1 therefore1 a theory of cost in terms of discomfort4 ,by virtue of the hedonistic equilibrium reached through the valuation process1 the sacrifice or expenditure of sensuous reality involved in acquisition is the equivalent of the sensuous gain secured4 ,an alternative statement might perhaps be made1 to the effect that the measure of the value of goods is not the sacrifice or discomfort undergone1 but the sensuous gain that accrues from the acquisition of the goods2 but this is plainly only an alternative statement1 and there are special reasons in the economic life of the time why the statement in terms of cost1 rather than in terms of utility1 should commend itself to the earlier classical economists4 ,on comparing the utilitarian doctrine of value with earlier theories1 then1 the case stands somewhat as follows4 ,the ,physiocrats and ,adam ,smith contemplate value as a measure of the productive force that realises itself in the valuable article4 ,with the ,physiocrats this productive force is the anabolism of ,nature 7to resort to a physiological term73 with ,adam ,smith it is chiefly human labor directed to heightening the serviceability of the materials with which it is occupied4 ,production causes value in either case4 ,the post-,bentham economics contemplates value as a measure of1 or as measured by1 the irksomeness of the effort involved in procuring the valuable goods4 ,as ,mr4 ,e4 ,c4 ,k4 ,gonner has admirably pointed out1#bh ,ricardo--and the like holds true of classical economics generally--makes cost the foundation of value1 not its cause4 ,this resting of value on cost takes place through a valuation4 ,any one who will read ,adam ,smith's theoretical exposition to as good purpose as ,mr4 ,gonner has read ,ricardo will scarcely fail to find that the converse is true in ,adam ,smith's case4 ,but the causal relation of cost to value holds only as regards natural or real value in ,adam ,smith's doctrine4 ,as regards market price1 ,adam ,smith's theory does not differ greatly from that of ,ricardo on this head4 ,he does not overlook the valuation process by which market price is adjusted and the course of investment is guided1 and his discussion of this process runs in terms that should be acceptable to any hedonist4 99 99 99 99 99 ,the shifting of the point of view that comes into economics with the acceptance of utilitarian ethics and its correlate1 the associationist psychology1 is in great part a shifting to the ground of causal sequence as contrasted with that of serviceability to a preconceived end4 ,this is indicated even by the main fact already cited1--that the utilitarian economists make exchange value the central feature of their theories1 rather than the conduciveness of industry to the community's material welfare4 ,hedonistic exchange value is the outcome of a valuation process enforced by the apprehended pleasure-giving capacities of the items valued4 ,and in the utilitarian theories of production1 arrived at from the standpoint so given by exchange value1 the conduciveness to welfare is not the objective point of the argument4 ,this objective point is rather the bearing of productive enterprise upon the individual fortunes of the agents engaged1 or upon the fortunes of the several distinguishable classes of beneficiaries comprised in the industrial community2 for the great immediate bearing of exchange values upon the life of the collectivity is their bearing upon the distribution of wealth4 ,value is a category of distribution4 ,the result is that1 as is well shown by ,mr4 ,cannan's discussion1#bi the theories of production offered by the classical economists have been sensibly scant1 and have been carried out with a constant view to the doctrines on distribution4 ,an incidental but telling demonstration of the same facts is given1 by ,professor ,buecher2#cj and in illustration may be cited ,torrens's ,essay on the ,production of ,wealth1 which is to a good extent occupied with discussions of value and distribution4 ,the classical theories of production have been theories of the production of wealth2 and wealth1 in classical usage1 consists of material things having exchange value4 ,during the vogue of the classical economics the accepted characteristic by which wealth has been defined has been its amenability to ownership4 ,neither in ,adam ,smith nor in the ,physiocrats is this amenability to ownership made so much of1 nor is it in a similar degree accepted as a definite mark of the subject-matter of the science4 ,as their hedonistic preconception would require1 then1 it is to the pecuniary side of life that the classical economists give their most serious attention1 and it is the pecuniary bearing of any given phenomenon or of any institution that commonly shapes the issue of the argument4 ,the causal sequence about which the discussion centers is a process of pecuniary valuation4 ,it runs on distribution1 ownership1 acquisition1 gain1 investment1 exchange4#ca ,in this way the doctrines on production come to take a pecuniary coloring2 as is seen in a less degree also in ,adam ,smith1 and even in the ,physiocrats1 although these earlier economists very rarely1 if ever1 lose touch with the concept of generic serviceability as the characteristic feature of production4 ,the tradition derived from ,adam ,smith1 which made productivity and serviceability the substantial features of economic life1 was not abruptly put aside by his successors1 though the emphasis was differently distributed by them in following out the line of investigation to which the tradition pointed the way4 ,in the classical economics the ideas of production and of acquisition are not commonly held apart1 and very much of what passes for a theory of production is occupied with phenomena of investment and acquisition4 ,torrens's ,essay is a case in point1 though by no means an extreme case4 ,this is as it should be2 for to the consistent hedonist the sole motive force concerned in the industrial process is the self-regarding motive of pecuniary gain1 and industrial activity is but an intermediate term between the expenditure or discomfort undergone and the pecuniary gain sought4 ,whether the end and outcome is an invidious gain for the individual 7in contrast with or at the cost of his neighbors71 or an enhancement of the facility of human life on the whole1 is altogether a by-question in any discussion of the range of incentives by which men are prompted to their work or the direction which their efforts take4 ,the serviceability of the given line of activity1 for the life purposes of the community or for one's neighbors1 is not of the essence of this contract4 ,these features of serviceability come into the account chiefly as affecting the vendibility of what the given individual has to offer in seeking gain through a bargain4#cb ,in hedonistic theory the substantial end of economic life is individual gain2 and for this purpose production and acquisition may be taken as fairly coincident1 if not identical4 ,moreover1 society1 in the utilitarian philosophy1 is the algebraic sum of the individuals2 and the interest of the society is the sum of the interests of the individuals4 ,it follows by easy consequence1 whether strictly true or not1 that the sum of individual gains is the gain of the society1 and that1 in serving his own interest in the way of acquisition1 the individual serves the collective interest of the community4 ,productivity or serviceability is1 therefore1 to be presumed of any occupation or enterprise that looks to a pecuniary gain2 and so1 by a roundabout path1 we get back to the ancient conclusion of ,adam ,smith1 that the remuneration of classes or persons engaged in industry coincides with their productive contribution to the output of services and consumable goods4 ,a felicitous illustration of the working of this hedonistic norm in classical economic doctrine is afforded by the theory of the wages of superintendence1--an element in distribution which is not much more than suggested in ,adam ,smith1 but which receives ampler and more painstaking attention as the classical body of doctrines reaches a fuller development4 ,the wages of superintendence are the gains due to pecuniary management4 ,they are the gains that come to the director of the business1--not those that go to the director of the mechanical process or to the foreman of the shop4 ,the latter are wages simply4 ,this distinction is not altogether clear in the earlier writers1 but it is clearly enough contained in the fuller development of the theory4 ,the undertaker's work is the management of investment4 ,it is altogether of a pecuniary character1 and its proximate aim is the main chance4 ,if it leads1 indirectly1 to an enhancement of serviceability or a heightened aggregate output of consumable goods1 that is a fortuitous circumstance incident to that heightened vendibility on which the investor's gain depends4 ,yet the classical doctrine says frankly that the wages of superintendence are the remuneration of superior productivity1#cc and the classical theory of production is in good part a doctrine of investment in which the identity of production and pecuniary gain is taken for granted4 ,the substitution of investment in the place of industry as the central and substantial fact in the process of production is due not to the acceptance of hedonism simply1 but rather to the conjunction of hedonism with an economic situation of which the investment of capital and its management for gain was the most obvious feature4 ,the situation which shaped the common-sense apprehension of economic facts at the time was what has since been called a capitalistic system1 in which pecuniary enterprise and the phenomena of the market were the dominant and tone-giving facts4 ,but this economic situation was also the chief ground for the vogue of hedonism in economics2 so that hedonistic economics may be taken as an interpretation of human nature in terms of the market-place4 ,the market and the business world1 to which the business man in his pursuit of gain was required to adapt his motives1 had by this time grown so large that the course of business events was beyond the control of any one person2 and at the same time those far-reaching organisations of invested wealth which have latterly come to prevail and to coerce the market were not then in the foreground4 ,the course of market events took its passionless way without traceable relation or deference to any man's convenience and without traceable guidance towards an ulterior end4 ,man's part in this pecuniary world was to respond with alacrity to the situation1 and so adapt his vendible effects to the shifting demand as to realise something in the outcome4 ,what he gained in his traffic was gained without loss to those with whom he dealt1 for they paid no more than the goods were worth to them4 ,one man's gain need not be another's loss2 and1 if it is not1 then it is net gain to the community4 ,among the striking remoter effects of the hedonistic preconception1 and its working out in terms of pecuniary gain1 is the classical failure to discriminate between capital as investment and capital as industrial appliances4 ,this is1 of course1 closely related to the point already spoken of4 ,the appliances of industry further the production of goods1 therefore capital 7invested wealth7 is productive2 and the rate of its average remuneration marks the degree of its productiveness4#cd ,the most obvious fact limiting the pecuniary gain secured by means of invested wealth is the sum invested4 ,therefore1 capital limits the productiveness of industry2 and the chief and indispensable condition to an advance in material well-being is the accumulation of invested wealth4 ,in discussing the conditions of industrial improvement1 it is usual to assume that the state of the arts remains unchanged1 which is1 for all purposes but that of a doctrine of profits per cent41 an exclusion of the main fact4 ,investments may1 further1 be transferred from one enterprise to another4 ,therefore1 and in that degree1 the means of production are mobile4 99 99 99 99 99 ,under the hands of the great utilitarian writers1 therefore1 political economy is developed into a science of wealth1 taking that term in the pecuniary sense1 as things amenable to ownership4 ,the course of things in economic life is treated as a sequence of pecuniary events1 and economic theory becomes a theory of what should happen in that consummate situation where the permutation of pecuniary magnitudes takes place without disturbance and without retardation4 ,in this consummate situation the pecuniary motive has its perfect work1 and guides all the acts of economic man in a guileless1 colorless1 unswerving quest of the greatest gain at the least sacrifice4 ,of course1 this perfect competitive system1 with its untainted economic man1 is a feat of the scientific imagination1 and is not intended as a competent expression of fact4 ,it is an expedient of abstract reasoning2 and its avowed competency extends only to the abstract principles1 the fundamental laws of the science1 which hold only so far as the abstraction holds4 ,but1 as happens in such cases1 having once been accepted and assimilated as real1 though perhaps not as actual1 it becomes an effective constituent in the inquirer's habits of thought1 and goes to shape his knowledge of facts4 ,it comes to serve as a norm of substantiality or legitimacy2 and facts in some degree fall under its constraint1 as is exemplified by many allegations regarding the tendency of things4 ,to this consummation1 which ,senior speaks of as the natural state of man1#ce human development tends by force of the hedonistic character of human nature2 and in terms of its approximation to this natural state1 therefore1 the immature actual situation had best be stated4 ,the pure theory1 the hypothetical science of ,cairnes1 traces the phenomena of the production and distribution of wealth up to their causes1 in the principles of human nature and the laws and events--physical1 political1 and social--of the external world4#cf ,but since the principles of human nature that give the outcome in men's economic conduct1 so far as it touches the production and distribution of wealth1 are but the simple and constant sequence of hedonistic cause and effect1 the element of human nature may fairly be eliminated from the problem1 with great gain in simplicity and expedition4 ,human nature being eliminated1 as being a constant intermediate term1 and all institutional features of the situation being also eliminated 7as being similar constants under that natural or consummate pecuniary regime with which the pure theory is concerned71 the laws of the phenomena of wealth may be formulated in terms of the remaining factors4 ,these factors are the vendible items that men handle in these processes of production and distribution2 and economic laws come1 therefore1 to be expressions of the algebraic relations subsisting between the various elements of wealth and investment1--capital1 labor1 land1 supply and demand of one and the other1 profits1 interest1 wages4 ,even such items as credit and population become dissociated from the personal factor1 and figure in the computation as elemental factors acting and reacting though a permutation of values over the heads of the good people whose welfare they are working out4 99 99 99 99 99 ,to sum up3 the classical economics1 having primarily to do with the pecuniary side of life1 is a theory of a process of valuation4 ,but since the human nature at whose hands and for whose behoof the valuation takes place is simple and constant in its reaction to pecuniary stimulus1 and since no other feature of human nature is legitimately present in economic phenomena than this reaction to pecuniary stimulus1 the valuer concerned in the matter is to be overlooked or eliminated2 and the theory of the valuation process then becomes a theory of the pecuniary interaction of the facts valued4 ,it is a theory of valuation with the element of valuation left out1--a theory of life stated in terms of the normal paraphernalia of life4 ,in the preconceptions with which classical economics set out were comprised the remnants of natural rights and of the order of nature1 infused with that peculiarly mechanical natural theology that made its way into popular vogue on ,british ground during the eighteenth century and was reduced to a neutral tone by the ,british penchant for the commonplace--stronger at this time than at any earlier period4 ,the reason for this growing penchant for the commonplace1 for the explanation of things in causal terms1 lies partly in the growing resort to mechanical processes and mechanical prime movers in industry1 partly in the 7consequent7 continued decline of the aristocracy and the priesthood1 and partly in the growing density of population and the consequent greater specialisation and wider organisation of trade and business4 ,the spread of the discipline of the natural sciences1 largely incident to the mechanical industry1 counts in the same direction2 and obscurer factors in modern culture may have had their share4 ,the animistic preconception was not lost1 but it lost tone2 and it partly fell into abeyance1 particularly so far as regards its avowal4 ,it is visible chiefly in the unavowed readiness of the classical writers to accept as imminent and definitive any possible outcome which the writer's habit or temperament inclined him to accept as right and good4 ,hence the visible inclination of classical economists to a doctrine of the harmony of interests1 and their somewhat uncircumspect readiness to state their generalisations in terms of what ought to happen according to the ideal requirements of that consummate ,geldwirtschaft to which men are impelled by the provisions of nature4#cg ,by virtue of their hedonistic preconceptions1 their habituation to the ways of a pecuniary culture1 and their unavowed animistic faith that nature is in the right1 the classical economists knew that the consummation to which1 in the nature of things1 all things tend1 is the frictionless and beneficent competitive system4 ,this competitive ideal1 therefore1 affords the normal1 and conformity to its requirements affords the test of absolute economic truth4 ,the standpoint so gained selectively guides the attention of the classical writers in their observation and apprehension of facts1 and they come to see evidence of conformity or approach to the normal in the most unlikely places4 ,their observation is1 in great part1 interpretative1 as observation commonly is4 ,what is peculiar to the classical economists in this respect is their particular norm of procedure in the work of interpretation4 ,and1 by virtue of having achieved a standpoint of absolute economic normality1 they became a deductive school1 so called1 in spite of the patent fact that they were pretty consistently employed with an inquiry into the causal sequence of economic phenomena4 ,the generalisation of observed facts becomes a normalisation of them1 a statement of the phenomena in terms of their coincidence with1 or divergence from1 that normal tendency that makes for the actualisation of the absolute economic reality4 ,this absolute or definitive ground of economic legitimacy lies beyond the causal sequence in which the observed phenomena are conceived to be interlinked4 ,it is related to the concrete facts neither as cause nor as effect in any such way that the causal relation may be traced in a concrete instance4 ,it has little causally to do either with the mental or with the physical data with which the classical economist is avowedly employed4 ,its relation to the process under discussion is that of an extraneous--that is to say1 a ceremonial--legitimation4 ,the body of knowledge gained by its help and under its guidance is1 therefore1 a taxonomic science4 ,so1 by way of a concluding illustration1 it may be pointed out that money1 for instance1 is normalised in terms of the legitimate economic tendency4 ,it becomes a measure of value and a medium of exchange4 ,it has become primarily an instrument of pecuniary commutation1 instead of being1 as under the earlier normalisation of ,adam ,smith1 primarily a great wheel of circulation for the diffusion of consumable goods4 ,the terms in which the laws of money1 as of the other phenomena of pecuniary life1 are formulated1 are terms which connote its normal function in the life history of objective values as they live and move and have their being in the consummate pecuniary situation of the natural state4 ,to a similar work of normalisation we owe those creatures of the myth-maker1 the quantity theory and the wages-fund4 ,,footnotes3 #a ,reprinted by permission from ,the ,quarterly ,journal of ,economics1 ,vol4 ,,xiii1 ,july4 #ahii4 #b ,bonar1 ,philosophy and ,political ,economy1 pp4 #agg1 #agh4 #c ,every individual is continually exerting himself to find out the most advantageous employment for whatever capital he can command4 ,it is his own advantage1 and not that of the society1 which he has in view4 ,but the study of his own advantage naturally1 or rather necessarily1 leads him to prefer that employment which is most advantageous to the society4444 ,by directing that industry in such a manner as its produce may be of the greatest value1 he intends only his own gain2 and he is in this1 as in many other cases1 led by an invisible hand to promote an end which was no part of his intention4 ,nor is it always the worse for society that it was no part of it4 ,by pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it4 ,wealth of ,nations1 ,book ,,iv1 chap4 ii4 #d ,the discrepancy between the actual1 causally determined situation and the divinely intended consummation is the metaphysical ground of all that inculcation of morality and enlightened policy that makes up so large a part of ,adam ,smith's work4 ,the like1 of course1 holds true for all moralists and reformers who proceed on the assumption of a providential order4 #e ,in the political body1 however1 the wisdom of nature has fortunately made ample provision for remedying many of the bad effects of the folly and injustice of man2 in the same manner as it has done in the natural body1 for remedying those of his sloth and intemperance4 ,wealth of ,nations1 ,book ,,iv1 chap4 ix4 #f ,e4g41 the real measure of the exchangeable value of all commodities4 ,wealth of ,nations1 ,book ,i1 chap1 v1 and repeatedly in the like connection4 #g ,e4g41 ,book ,i1 chap4 vii3 ,when the price of any commodity is neither more nor less than what is sufficient to pay the rent of the land1 the wages of the labor1 and the profits of the stock employed in raising1 preparing1 and bringing it to market1 according to their natural rates1 the commodity is then sold for what may be called its natural price4 ,the actual price at which any commodity is commonly sold is called its market price4 ,it may be either above1 or below or exactly the same with its natural price4 #h ,lectures of ,adam ,smith 7,ed4 ,cannan1 #ahif71 p4 #afi4 #i ,this division of labor1 from which so many advantages are derived1 is not originally the effect of any human wisdom1 which foresees and intends that general opulence to which it gives occasion4 ,it is the necessary though very slow and gradual consequence of a certain propensity in human nature which has in view no such extensive utility1--the propensity to truck1 barter1 and exchange one thing for another4 ,whether this propensity be one of those original principles in human nature of which no further account can be given1 or whether1 as seems more probable1 it be the necessary consequence of the faculties of reason and speech1 it belongs not to our present subject to inquire4 ,wealth of ,nations1 ,book ,i1 chap4 ii4 #aj ,wealth of ,nations1 ,book ,i1 chaps1 v4-vii4 #aa ,wealth of ,nations1 ,book ,i1 chap4 v4 #ab ,as1 e4g41 the entire discussion of the determination of ,wages1 ,profits and ,rent1 in ,book ,i1 chaps1 viii4-xi4 #ac ,there is in every society or neighborhood an ordinary or average rate both of wages and profit in every different employment of labor and stock4 ,this rate is naturally regulated1 444 partly by the general circumstances of the society4444 ,there is1 likewise1 in every society or neighborhood an ordinary or average rate of rent1 which is regulated1 too4444 ,these ordinary or average rates may be called the natural rates of wages1 profit1 and rent1 at the time and place in which they commonly prevail4 ,when the price of any commodity is neither more nor less than what is sufficient to pay the rent of the land1 the wages of the labor1 and the profits of the stock employed in raising1 preparing1 and bringing it to market1 according to their natural rates1 the commodity is then sold for what may be called its natural price4 ,wealth of ,nations1 ,book ,i1 chap4 vii4 #ad ,such commodities may continue for whole centuries together to be sold at this high price2 and that part of it which resolves itself into the rent of land is1 in this case1 the part which is generally paid above its natural rate4 ,book ,i1 chap4 vii4 #ae ,wealth of ,nations1 ,book ,i1 chap1 vi2 also chap4 viii4 #af ,for an instance of how these early phases of industrial development appear1 when not seen in the light of ,adam ,smith's preconception1 see1 among others1 ,buecher1 ,entstchung der ,volkswirtschaft4 #ag ,book ,i1 chap4 iv4 #ah ,see ,wealth of ,nations1 ,book ,,ii1 chap4 v1 ,of the ,different ,employment of ,capitals4 #ai ,wealth of ,nations1 ,book ,i1 chap4 v4 ,see also the plea for free trade1 ,book ,,iv1 chap4 ii3 ,but the annual revenue of every society is always precisely equal to the exchangeable value of the whole annual produce of its industry1 or1 rather1 is precisely the same thing with that exchangeable value4 #bj ,the difference of natural talents in different men is in reality much less than we are aware of4 ,wealth of ,nations1 ,book ,i1 chap4 ii4 #ba ,mit diesen philosophischen ,ueberzeugungen tritt nun ,adam ,smith an die ,welt der ,enfahrung heran1 und es ergiebt sich ihm die ,richtigkeit der ,principien4 ,der ,reiz der ,smith'schen ,schriften beruht zum grossen ,teile darauf1 dass ,smith die ,principien in so innige ,verbindung mit dem ,thatsaechlichen gebracht4 ,hie und da werden dann auch die ,principien1 was durch diese ,verbindung veranlasst wird1 an ihren ,spitzen etwas abgeschliffen1 ihre allzuscharfe ,auspraegung dadurch vermieden4 ,nichtsdestoweniger aber bleiben sie stets die leitenden ,grundgedanken4 ,richard ,zeyss1 ,adam ,smith und der ,eigennutz 7,tuebingen1 #ahhi71 p4 #aaj4 #bb ,see1 e4g41 ,malthus and his ,work1 especially ,book ,,iii1 as also the chapter on ,malthus in ,philosophy and ,political ,economy1 ,book ,,iii1 ,modern ,philosophy3 ,utilitarian ,economics1 chap4 i1 ,malthus4 #bc ,ricardo is here taken as a utilitarian of the ,benthamite color1 although he cannot be classed as a disciple of ,bentham4 ,his hedonism is but the uncritically accepted metaphysics comprised in the common sense of his time1 and his substantial coincidence with ,bentham goes to show how well diffused the hedonist preconception was at the time4 #bd ,cf4 ,bonar1 ,malthus and his ,work1 pp4 #cbc-ccf4 #be ,his work is an inquiry into the ,nature and ,causes of the ,wealth of ,nations4 #bf ,the annual labor of every nation is the fund which originally supplies it with all the necessaries and conveniences of life which it annually consumes1 and which consist always either in the immediate produce of that labor or in what is purchased with that produce from other nations4 ,wealth of ,nations1 ,introduction and ,plan1 opening paragraph4 #bg ,the produce of the earth--all that is derived from its surface by the united application of labor1 machinery1 and capital--is divided among three classes of the community4444 ,to determine the laws which regulate this distribution1 is the principal problem of political economy4 ,political ,economy1 ,preface4 #bh ,in the introductory essay to his edition of ,ricardo's ,political ,economy4 ,see1 e4g41 paragraphs #i and #bd4 #bi ,theories of ,production and ,distribution1 #aggf-ahdh4 #cj ,entstehung der ,volkswirtschaft 7second edition74 ,cf4 especially chaps4 ii1 iii1 vi1 and vii4 #ca ,even if we put aside all questions which involve a consideration of the effects of industrial institutions in modifying the habits and character of the classes of the community1 444 that enough still remains to constitute a separate science1 the mere enumeration of the chief terms of economics--wealth1 value1 exchange1 credit1 money1 capital1 and commodity--will suffice to show4 ,shirres1 ,analysis of the ,ideas of ,economics 7,london1 #ahic71 pp4 #h and #i4 #cb ,if a commodity were in no way useful1 444 it would be destitute of exchangeable value2 444 7but71 possessing utility1 commodities derive their exchangeable value from two sources1 etc4 ,ricardo1 ,political ,economy1 chap1 i1 sect4 ,i4 #cc ,cf41 for instance1 ,senior1 ,political ,economy 7,london1 #ahgb71 particularly pp4 #hh1 #hi1 and #acj-ace1 where the wages of superintendence are1 somewhat reluctantly1 classed under profits2 and the work of superintendence is thereupon conceived as being1 immediately or remotely1 an exercise of abstinence and a productive work4 ,the illustration of the bill-broker is particularly apt4 ,the like view of the wages of superintendence is an article of theory with more than one of the later descendants of the classical line4 #cd ,cf4 ,boehm-,bawerk1 ,capital and ,interest1 ,books ,,ii and ,,iv1 as well as the ,introduction and chaps4 iv and v of ,book ,i4 ,boehm-,bawerk's discussion bears less immediately on the present point than the similarity of the terms employed would suggest4 #ce ,political ,economy1 p4 #hg4 #cf ,character and ,logical ,method of ,political ,economy 7,new ,york1 #ahge71 p4 #ga4 ,cairnes may not be altogether representative of the high tide of classicism1 but his characterisation of the science is none the less to the point4 #cg ,senior1 ,political ,economy1 p4 #hg4 ,,the ,,preconceptions ,,of ,,economic ,,science#a ,,iii ,in what has already been said1 it has appeared that the changes which have supervened in the preconceptions of the earlier economists constitute a somewhat orderly succession4 ,the feature of chief interest in this development has been a gradual change in the received grounds of finality to which the successive generations of economists have brought their theoretical output1 on which they have been content to rest their conclusions1 and beyond which they have not been moved to push their analysis of events or their scrutiny of phenomena4 ,there has been a fairly unbroken sequence of development in what may be called the canons of economic reality2 or1 to put it in other words1 there has been a precession of the point of view from which facts have been handled and valued for the purpose of economic science4 ,the notion which has in its time prevailed so widely1 that there is in the sequence of events a consistent trend which it is the office of the science to ascertain and turn to account1--this notion may be well founded or not4 ,but that there is something of such a consistent trend in the sequence of the canons of knowledge under whose guidance the scientist works is not only a generalisation from the past course of things1 but lies in the nature of the case2 for the canons of knowledge are of the nature of habits of thought1 and habit does not break with the past1 nor do the hereditary aptitudes that find expression in habit vary gratuitously with the mere lapse of time4 ,what is true in this respect1 for instance1 in the domain of law and institutions is true1 likewise1 in the domain of science4 ,what men have learned to accept as good and definitive for the guidance of conduct and of human relations remains true and definitive and unimpeachable until the exigencies of a later1 altered situation enforce a variation from the norms and canons of the past1 and so give rise to a modification of the habits of thought that decide what is1 for the time1 right in human conduct4 ,so in science the ancient ground of finality remains a good and valid test of scientific truth until the altered exigencies of later life enforce habits of thought that are not wholly in consonance with the received notions as to what constitutes the ultimate1 self-legitimating term--the substantial reality--to which knowledge in any given case must penetrate4 ,this ultimate term or ground of knowledge is always of a metaphysical character4 ,it is something in the way of a preconception1 accepted uncritically1 but applied in criticism and demonstration of all else with which the science is concerned4 ,so soon as it comes to be criticised1 it is in a way to be superseded by a new1 more or less altered formulation2 for criticism of it means that it is no longer fit to survive unaltered in the altered complex of habits of thought to which it is called upon to serve as fundamental principle4 ,it is subject to natural selection and selective adaptation1 as are other conventions4 ,the underlying metaphysics of scientific research and purpose1 therefore1 changes gradually and1 of course1 incompletely1 much as is the case with the metaphysics underlying the common law and the schedule of civil rights4 ,as in the legal framework the now avowedly useless and meaningless preconceptions of status and caste and precedent are even yet at the most metamorphosed and obsolescent rather than overpassed1--witness the facts of inheritance1 vested interests1 the outlawry of debts through lapse of time1 the competence of the ,state to coerce individuals into support of a given policy1--so in the science the living generation has not seen an abrupt and traceless disappearance of the metaphysics that fixed the point of view of the early classical political economy4 ,this is true even for those groups of economists who have most incontinently protested against the absurdity of the classical doctrines and methods4 ,in ,professor ,marshall's words1 ,there has been no real breach of continuity in the development of the science4 ,but1 while there has been no breach1 there has none the less been change1--more far-reaching change than some of us are glad to recognise2 for who would not be glad to read his own modern views into the convincing words of the great masters8 ,seen through modern eyes and without effort to turn past gains to modern account1 the metaphysical or preconceptional furniture of political economy as it stood about the middle of this century may come to look quite curious4 ,the two main canons of truth on which the science proceeded1 and with which the inquiry is here concerned1 were3 7a7 a hedonistic-associational psychology1 and 7b7 an uncritical conviction that there is a meliorative trend in the course of events1 apart from the conscious ends of the individual members of the community4 ,this axiom of a meliorative developmental trend fell into shape as a belief in an organic or quasi-organic 7physiological7#b life process on the part of the economic community or of the nation2 and this belief carried with it something of a constraining sense of self-realising cycles of growth1 maturity and decay in the life history of nations or communities4 ,neglecting what may for the immediate purpose be negligible in this outline of fundamental tenets1 it will bear the following construction4 7a7 ,on the ground of the hedonistic or associational psychology1 all spiritual continuity and any consequent teleological trend is tacitly denied so far as regards individual conduct1 where the later psychology1 and the sciences which build on this later psychology1 insist upon and find such a teleological trend at every turn4 7b7 ,such a spiritual or quasi-spiritual continuity and teleological trend is uncritically affirmed as regards the non-human sequence or the sequence of events in the affairs of collective life1 where the modern sciences diligently assert that nothing of the kind is discernible1 or that1 if it is discernible1 its recognition is beside the point1 so far as concerns the purposes of the science4 ,this position1 here outlined with as little qualification as may be admissible1 embodies the general metaphysical ground of that classical political economy that affords the point of departure for ,mill and ,cairnes1 and also for ,jevons4 ,and what is to be said of ,mill and ,cairnes in this connection will apply to the later course of the science1 though with a gradually lessening force4 ,by the middle of the century the psychological premises of the science are no longer so neat and succinct as they were in the days of ,bentham and ,james ,mill4 ,at ,j4 ,s4 ,mill's hands1 for instance1 the naively quantitative hedonism of ,bentham is being supplanted by a sophisticated hedonism1 which makes much of an assumed qualitative divergence between the different kinds of pleasures that afford the motives of conduct4 ,this revision of hedonistic dogma1 of course1 means a departure from the strict hedonistic ground4 ,correlated with this advance more closely in the substance of the change than in the assignable dates1 is a concomitant improvement--at least1 set forth as an improvement--upon the received associational psychology1 whereby similarity is brought in to supplement contiguity as a ground of connection between ideas4 ,this change is well shown in the work of ,j4 ,s4 ,mill and ,bain4 ,in spite of all the ingenuity spent in maintaining the associational legitimacy of this new article of theory1 it remains a patent innovation and a departure from the ancient standpoint4 ,as is true of the improved hedonism1 so it is true of the new theory of association that it is no longer able to construe the process which it discusses as a purely mechanical process1 a concatenation of items simply4 ,similarity of impressions implies a comparison of impressions by the mind in which the association takes place1 and thereby it implies some degree of constructive work on the part of the perceiving subject4 ,the perceiver is thereby construed to be an agent in the work of perception2 therefore1 he must be possessed of a point of view and an end dominating the perceptive process4 ,to perceive the similarity1 he must be guided by an interest in the outcome1 and must attend4 ,the like applies to the introduction of qualitative distinctions into the hedonistic theory of conduct4 ,apperception in the one case and discretion in the other cease to be the mere registration of a simple and personally uncolored sequence of permutations enforced by the factors of the external world4 ,there is implied a spiritual--that is to say1 active--teleological continuity of process on the part of the perceiving or of the discretionary agent1 as the case may be4 ,it is on the ground of their departure from the stricter hedonistic premises that ,mill and1 after him1 ,cairnes are able1 for instance1 to offer their improvement upon the earlier doctrine of cost of production as determining value4 ,since it is conceived that the motives which guide men in their choice of employments and of domicile differ from man to man and from class to class1 not only in degree1 but in kind1 and since varying antecedents1 of heredity and of habit1 variously influence men in their choice of a manner of life1 therefore the mere quantitative pecuniary stimulus cannot be depended on to decide the outcome without recourse4 ,there are determinable variations in the alacrity with which different classes or communities respond to the pecuniary stimulus2 and in so far as this condition prevails1 the classes or communities in question are non-competing4 ,between such non-competing groups the norm that determines values is not the unmitigated norm of cost of production taken absolutely1 but only taken relatively4 ,the formula of cost of production is therefore modified into a formula of reciprocal demand4 ,this revision of the cost-of-production doctrine is extended only sparingly1 and the emphasis is thrown on the pecuniary circumstances on which depend the formation and maintenance of non-competing groups4 ,consistency with the earlier teaching is carefully maintained1 so far as may be2 but extra-pecuniary factors are1 after all1 even if reluctantly1 admitted into the body of the theory4 ,so also1 since there are higher and lower motives1 higher and lower pleasures1--as well as motives differing in degree1--it follows that an unguided response even to the mere quantitative pecuniary stimuli may take different directions1 and so may result in activities of widely differing outcome4 ,since activities set up in this way through appeal to higher and lower motives are no longer conceived to represent simply a mechanically adequate effect of the stimuli1 working under the control of natural laws that tend to one beneficent consummation1 therefore the outcome of activity set up even by the normal pecuniary stimuli may take a form that may or may not be serviceable to the community4 ,hence laissez-faire ceases to be a sure remedy for the ills of society4 ,human interests are still conceived normally to be at one2 but the detail of individual conduct need not1 therefore1 necessarily serve these generic human interests4#c ,therefore1 other inducements than the unmitigated impact of pecuniary exigencies may be necessary to bring about a coincidence of class or individual endeavor with the interests of the community4 ,it becomes incumbent on the advocate of laissez-faire to prove his minor premise4 ,it is no longer self-evident that3 ,interests left to themselves tend to harmonious combinations1 and to the progressive preponderance of the general good4#d ,the natural-rights preconception begins to fall away as soon as the hedonistic mechanics have been seriously tampered with4 ,fact and right cease to coincide1 because the individual in whom the rights are conceived to inhere has come to be something more than the field of intersection of natural forces that work out in human conduct4 ,the mechanics of natural liberty--that assumed constitution of things by force of which the free hedonistic play of the laws of nature across the open field of individual choice is sure to reach the right outcome--is the hedonistic psychology2 and the passing of the doctrine of natural rights and natural liberty1 whether as a premise or as a dogma1 therefore coincides with the passing of that mechanics of conduct on the validity of which the theoretical acceptance of the dogma depends4 ,it is1 therefore1 something more than a coincidence that the half-century which has seen the disintegration of the hedonistic faith and of the associational psychology has also seen the dissipation1 in scientific speculations1 of the concomitant faith in natural rights and in that benign order of nature of which the natural-rights dogma is a corollary4 ,it is1 of course1 not hereby intended to say that the later psychological views and premises imply a less close dependence of conduct on environment than do the earlier ones4 ,indeed1 the reverse may well be held to be true4 ,the pervading characteristic of later thinking is the constant recourse to a detailed analysis of phenomena in causal terms4 ,the modern catchword1 in the present connection1 is response to stimulus2 but the manner in which this response is conceived has changed4 ,the fact1 and ultimately the amplitude1 at least in great part1 of the reaction to stimulus1 is conditioned by the forces in impact2 but the constitution of the organism1 as well as its attitude at the moment of impact1 in great part decides what will serve as a stimulus1 as well as what the manner and direction of the response will be4 ,the later psychology is biological1 as contrasted with the metaphysical psychology of hedonism4 ,it does not conceive the organism as a causal hiatus4 ,the causal sequence in the reflex arc is1 no doubt1 continuous2 but the continuity is not1 as formerly1 conceived in terms of spiritual substance transmitting a shock3 it is conceived in terms of the life activity of the organism4 ,human conduct1 taken as the reaction of such an organism under stimulus1 may be stated in terms of tropism1 involving1 of course1 a very close-knit causal sequence between the impact and the response1 but at the same time imputing to the organism a habit of life and a self-directing and selective attention in meeting the complex of forces that make up its environment4 ,the selective play of this tropismatic complex that constitutes the organism's habit of life under the impact of the forces of the environment counts as discretion4 ,so far1 therefore1 as it is to be placed in contrast with the hedonistic phase of the older psychological doctrines1 the characteristic feature of the newer conception is the recognition of a selectively self-directing life process in the agent4 ,while hedonism seeks the causal determinant of conduct in the 7probable7 outcome of action1 the later conception seeks this determinant in the complex of propensities that constitutes man a functioning agent1 that is to say1 a personality4 ,instead of pleasure ultimately determining what human conduct shall be1 the tropismatic propensities that eventuate in conduct ultimately determine what shall be pleasurable4 ,for the purpose in hand1 the consequence of the transition to the altered conception of human nature and its relation to the environment is that the newer view formulates conduct in terms of personality1 whereas the earlier view was content to formulate it in terms of its provocation and its by-product4 ,therefore1 for the sake of brevity1 the older preconceptions of the science are here spoken of as construing human nature in inert terms1 as contrasted with the newer1 which construes it in terms of functioning4 ,it has already appeared above that the second great article of the metaphysics of classical political economy--the belief in a meliorative trend or a benign order of nature--is closely connected with the hedonistic conception of human nature2 but this connection is more intimate and organic than appears from what has been said above4 ,the two are so related as to stand or fall together1 for the latter is but the obverse of the former4 ,the doctrine of a trend in events imputes purpose to the sequence of events2 that is1 it invests this sequence with a discretionary1 teleological character1 which asserts itself in a constraint over all the steps in the sequence by which the supposed objective point is reached4 ,but discretion touching a given end must be single1 and must alone cover all the acts by which the end is to be reached4 ,therefore1 no discretion resides in the intermediate terms through which the end is worked out4 ,therefore1 man being such an intermediate term1 discretion cannot be imputed to him without violating the supposition4 ,therefore1 given an indefeasible meliorative trend in events1 man is but a mechanical intermediary in the sequence4 ,it is as such a mechanical intermediate term that the stricter hedonism construes human nature4#e ,accordingly1 when more of teleological activity came to be imputed to man1 less was thereby allowed to the complex of events4 ,or it may be put in the converse form3 ,when less of a teleological continuity came to be imputed to the course of events1 more was thereby imputed to man's life process4 ,the latter form of statement probably suggests the direction in which the causal relation runs1 more nearly than the former4 ,the change whereby the two metaphysical premises in question have lost their earlier force and symmetry1 therefore1 amounts to a 7partial7 shifting of the seat of putative personality from inanimate phenomena to man4 ,it may be mentioned in passing1 as a detail lying perhaps afield1 yet not devoid of significance for latter-day economic speculation1 that this elimination of personality1 and so of teleological content1 from the sequence of events1 and its increasing imputation to the conduct of the human agent1 is incident to a growing resort to an apprehension of phenomena in terms of process rather than in terms of outcome1 as was the habit in earlier schemes of knowledge4 ,on this account the categories employed are1 in a gradually increasing degree1 categories of process1--dynamic categories4 ,but categories of process applied to conduct1 to discretionary action1 are teleological categories3 whereas categories of process applied in the case of a sequence where the members of the sequence are not conceived to be charged with discretion1 are1 by the force of this conception itself1 non-teleological1 quantitative categories4 ,the continuity comprised in the concept of process as applied to conduct is consequently a spiritual1 teleological continuity3 whereas the concept of process under the second head1 the non-teleological sequence1 comprises a continuity of a quantitative1 causal kind1 substantially the conservation of energy4 ,in its turn the growing resort to categories of process in the formulation of knowledge is probably due to the epistemological discipline of modern mechanical industry1 the technological exigencies of which enforce a constant recourse to the apprehension of phenomena in terms of process1 differing therein from the earlier forms of industry1 which neither obtruded visible mechanical process so constantly upon the apprehension nor so imperatively demanded an articulate recognition of continuity in the processes actually involved4 ,the contrast in this respect is still more pronounced between the discipline of modern life in an industrial community and the discipline of life under the conventions of status and exploit that formerly prevailed4 ,to return to the benign order of nature1 or the meliorative trend1--its passing1 as an article of economic faith1 was not due to criticism leveled against it by the later classical economists on grounds of its epistemological incongruity4 ,it was tried on its merits1 as an alleged account of facts2 and the weight of evidence went against it4 ,the belief in a self-realising trend had no sooner reached a competent and exhaustive statement--e4g41 at ,bastiat's hands1 as a dogma of the harmony of interests specifically applicable to the details of economic life--than it began to lose ground4 ,with his usual concision and incisiveness1 ,cairnes completed the destruction of ,bastiat's special dogma1 and put it forever beyond a rehearing4 ,but ,cairnes is not a destructive critic of the classical political economy1 at least not in intention3 he is an interpreter and continuer--perhaps altogether the clearest and truest continuer--of the classical teaching4 ,while he confuted ,bastiat and discredited ,bastiat's peculiar dogma1 he did not thereby put the order of nature bodily out of the science4 ,he qualified and improved it1 very much as ,mill qualified and improved the tenets of the hedonistic psychology4 ,as ,mill and the ethical speculation of his generation threw more of personality into the hedonistic psychology1 so ,cairnes and the speculators on scientific method 7such as ,mill and ,jevons7 attenuated the imputation of personality or teleological content to the process of material cause and effect4 ,the work is of course1 by no means1 an achievement of ,cairnes alone2 but he is1 perhaps1 the best exponent of this advance in economic theory4 ,in ,cairnes's redaction this foundation of the science became the concept of a colorless normality4 ,it was in ,cairnes's time the fashion for speculators in other fields than the physical sciences to look to those sciences for guidance in method and for legitimation of the ideals of scientific theory which they were at work to realize4 ,more than that1 the large and fruitful achievements of the physical sciences had so far taken men's attention captive as to give an almost instinctive predilection for the methods that had approved themselves in that field4 ,the ways of thinking which had on this ground become familiar to all scholars occupied with any scientific inquiry1 had permeated their thinking on any subject whatever4 ,this is eminently true of ,british thinking4 ,it had come to be a commonplace of the physical sciences that natural laws are of the nature of empirical generalisations simply1 or even of the nature of arithmetical averages4 ,even the underlying preconception of the modern physical sciences--the law of the conservation of energy1 or persistence of quantity--was claimed to be an empirical generalisation1 arrived at inductively and verified by experiment4 ,it is true the alleged proof of the law took the whole conclusion for granted at the start1 and used it constantly as a tacit axiom at every step in the argument which was to establish its truth2 but that fact serves rather to emphasise than to call in question the abiding faith which these empiricists had in the sole efficacy of empirical generalisation4 ,had they been able overtly to admit any other than an associational origin of knowledge1 they would have seen the impossibility of accounting on the mechanical grounds of association for the premise on which all experience of mechanical fact rests4 ,that any other than a mechanical origin should be assigned to experience1 or that any other than a so-conceived empirical ground was to be admitted for any general principle1 was incompatible with the prejudices of men trained in the school of the associational psychology1 however widely they perforce departed from this ideal in practice4 ,nothing of the nature of a personal element was to be admitted into these fundamental empirical generalisations2 and nothing1 therefore1 of the nature of a discretionary or teleological movement was to be comprised in the generalisations to be accepted as natural laws4 ,natural laws must in no degree be imbued with personality1 must say nothing of an ulterior end2 but for all that they remained laws of the sequences subsumed under them4 ,so far is the reduction to colorless terms carried by ,mill1 for instance1 that he formulates the natural laws as empirically ascertained sequences simply1 even excluding or avoiding all imputation of causal continuity1 as that term is commonly understood by the unsophisticated4 ,in ,mill's ideal no more of organic connection or continuity between the members of a sequence is implied in subsuming them under a law of causal relationship than is given by the ampersand4 ,he is busied with dynamic sequences1 but he persistently confines himself to static terms4 ,under the guidance of the associational psychology1 therefore1 the extreme of discontinuity in the deliverances of inductive research is aimed at by those economists--,mill and ,cairnes being taken as typical--whose names have been associated with deductive methods in modern science4 ,with a fine sense of truth they saw that the notion of causal continuity1 as a premise of scientific generalisation1 is an essentially metaphysical postulate2 and they avoided its treacherous ground by denying it1 and construing causal sequence to mean a uniformity of coexistences and successions simply4 ,but1 since a strict uniformity is nowhere to be observed at first hand in the phenomena with which the investigator is occupied1 it has to be found by a laborious interpretation of the phenomena and a diligent abstraction and allowance for disturbing circumstances1 whatever may be the meaning of a disturbing circumstance where causal continuity is denied4 ,in this work of interpretation and expurgation the investigator proceeds on a conviction of the orderliness of the natural sequence4 ,natura non facit saltum3 a maxim which has no meaning within the stricter limits of the associational theory of knowledge4 ,before anything can be said as to the orderliness of the sequence1 a point of view must be chosen by the speculator1 with respect to which the sequence in question does or does not fulfill this condition of orderliness2 that is to say1 with respect to which it is a sequence4 ,the endeavor to avoid all metaphysical premises fails here as everywhere4 ,the associationists1 to whom economics owes its transition from the older classical phase to the modern or quasi-classical1 chose as their guiding point of view the metaphysical postulate of congruity1--in substance1 the similarity of the associationist theory of knowledge4 ,this must be called their proton pseudos1 if associationism pure and simple is to be accepted4 ,the notion of congruity works out in laws of resemblance and equivalence1 in both of which it is plain to the modern psychologist that a metaphysical ground of truth1 antecedent to and controlling empirical data1 is assumed4 ,but the use of the postulate of congruence as a test of scientific truth has the merit of avoiding all open dealing with an imputed substantiality of the data handled1 such as would be involved in the overt use of the concept of causation4 ,the data are congruous among themselves1 as items of knowledge2 and they may therefore be handled in a logical synthesis and concatenation on the basis of this congruence alone1 without committing the scientist to an imputation of a kinetic or motor relation between them4 ,the metaphysics of process is thereby avoided1 in appearance4 ,the sequences are uniform or consistent with one another1 taken as articles of theoretical synthesis simply2 and so they become elements of a system or discipline of knowledge in which the test of theoretical truth is the congruence of the system with its premises4 ,in all this there is a high-wrought appearance of matter-of-fact1 and all metaphysical subreption of a non-empirical or non-mechanical standard of reality or substantiality is avoided in appearance4 ,the generalisations which make up such a system of knowledge are1 in this way1 stated in terms of the system itself2 and when a competent formulation of the alleged uniformities has been so made in terms of their congruity or equivalence with the prime postulates of the system1 the work of theoretical inquiry is done4 ,the concrete premises from which proceeds the systematic knowledge of this generation of economists are certain very concise assumptions concerning human nature1 and certain slightly less concise generalisations of physical fact1#f presumed to be mechanically empirical generalisations4 ,these postulates afford the standard of normality4 ,whatever situation or course of events can be shown to express these postulates without mitigation is normal2 and wherever a departure from this normal course of things occurs1 it is due to disturbing causes1--that is to say1 to causes not comprised in the main premises of the science1--and such departures are to be taken account of by way of qualification4 ,such departures and such qualification are constantly present in the facts to be handled by the science2 but1 being not congruous with the underlying postulates1 they have no place in the body of the science4 ,the laws of the science1 that which makes up the economist's theoretical knowledge1 are laws of the normal case4 ,the normal case does not occur in concrete fact4 ,these laws are1 therefore1 in ,cairnes's terminology1 hypothetical truths2 and the science is a hypothetical science4 ,they apply to concrete facts only as the facts are interpreted and abstracted from1 in the light of the underlying postulates4 ,the science is1 therefore1 a theory of the normal case1 a discussion of the concrete facts of life in respect of their degree of approximation to the normal case4 ,that is to say1 it is a taxonomic science4 ,of course1 in the work actually done by these economists this standpoint of rigorous normality is not consistently maintained2 nor is the unsophisticated imputation of causality to the facts under discussion consistently avoided4 ,the associationist postulate1 that causal sequence means empirical uniformity simply1 is in great measure forgotten when the subject-matter of the science is handled in detail4 ,especially is it true that in ,mill the dry light of normality is greatly relieved by a strong common sense4 ,but the great truths or laws of the science remain hypothetical laws2 and the test of scientific reality is congruence with the hypothetical laws1 not coincidence with matter-of-fact events4 ,the earlier1 more archaic metaphysics of the science1 which saw in the orderly correlation and sequence of events a constraining guidance of an extra-causal1 teleological kind1 in this way becomes a metaphysics of normality which asserts no extra-causal constraint over events1 but contents itself with establishing correlations1 equivalencies1 homologies1 and theories concerning the conditions of an economic equilibrium4 ,the movement1 the process of economic life1 is not overlooked1 and it may even be said that it is not neglected2 but the pure theory1 in its final deliverances1 deals not with the dynamics1 but with the statics of the case4 ,the concrete subject-matter of the science is1 of course1 the process of economic life1--that is unavoidably the case1--and in so far the discussion must be accepted as work bearing on the dynamics of the phenomena discussed2 but even then it remains true that the aim of this work in dynamics is a determination and taxis of the outcome of the process under discussion rather than a theory of the process as such4 ,the process is rated in terms of the equilibrium to which it tends or should tend1 not conversely4 ,the outcome of the process1 taken in its relation of equivalence within the system1 is the point at which the inquiry comes to rest4 ,it is not primarily the point of departure for an inquiry into what may follow4 ,the science treats of a balanced system rather than of a proliferation4 ,in this lies its characteristic difference from the later evolutionary sciences4 ,it is this characteristic bent of the science that leads its spokesman1 ,cairnes1 to turn so kindly to chemistry rather than to the organic sciences1 when he seeks an analogy to economics among the physical sciences4#g ,what ,cairnes has in mind in his appeal to chemistry is1 of course1 the received1 extremely taxonomic 7systematic7 chemistry of his own time1 not the tentatively genetic theories of a slightly later day4 99 99 99 99 99 ,it may seem that in the characterisation just offered of the standpoint of normality in economics there is too strong an implication of colorlessness and impartiality4 ,the objection holds as regards much of the work of the modern economists of the classical line4 ,it will hold true even as to much of ,cairnes's work2 but it cannot be admitted as regards ,cairnes's ideal of scientific aim and methods4 ,the economists whose theories ,cairnes received and developed1 assuredly did not pursue the discussion of the normal case with an utterly dispassionate animus4 ,they had still enough of the older teleological metaphysics left to give color to the accusation brought against them that they were advocates of laissez-faire4 ,the preconception of the utilitarians1--in substance the natural-rights preconception1--that unrestrained human conduct will result in the greatest human happiness1 retains so much of its force in ,cairnes's time as is implied in the then current assumption that what is normal is also right4 ,the economists1 and ,cairnes among them1 not only are concerned to find out what is normal and to determine what consummation answers to the normal1 but they also are at pains to approve that consummation4 ,it is this somewhat uncritical and often unavowed identification of the normal with the right that gives colorable ground for the widespread vulgar prejudice1 to which ,cairnes draws attention1#h that political economy sanctions one social arrangement and condemns another4 ,and it is against this uncritical identification of two essentially unrelated principles or categories that ,cairnes's essay on ,political ,economy and ,laissez-faire1 and in good part also that on ,bastiat1 are directed4 ,but1 while this is one of the many points at which ,cairnes has substantially advanced the ideals of the science1 his own concluding argument shows him to have been but half-way emancipated from the prejudice1 even while most effectively combating it4#i ,it is needless to point out that the like prejudice is still present in good vigor in many later economists who have had the full benefit of ,cairnes's teachings on this head4#aj ,considerable as ,cairnes's achievement in this matter undoubtedly was1 it effected a mitigation rather than an elimination of the untenable metaphysics against which he contended4 ,the advance in the general point of view from animistic teleology to taxonomy is shown in a curiously succinct manner in a parenthetical clause of ,cairnes's in the chapter on ,normal ,value4#aa ,with his acceptance of the later point of view involved in the use of the new term1 ,cairnes becomes the interpreter of the received theoretical results4 ,the received positions are not subjected to a destructive criticism4 ,the aim is to complete them where they fall short and to cut off what may be needless or what may run beyond the safe ground of scientific generalisation4 ,in his work of redaction1 ,cairnes does not avow--probably he is not sensible of--any substantial shifting of the point of view or any change in the accepted ground of theoretic reality4 ,but his advance to an unteleological taxonomy none the less changes the scope and aim of his theoretical discussion4 ,the discussion of ,normal ,value may be taken in illustration4 ,cairnes is not content to find 7with ,adam ,smith7 that value will naturally coincide with or be measured by cost of production1 or even 7with ,mill7 that cost of production must1 in the long run1 necessarily determine value4 ,this 444 is to take a much too limited view of the range of this phenomenon4#ab ,he is concerned to determine not only this general tendency of values to a normal1 but all those characteristic circumstances as well which condition this tendency and which determine the normal to which values tend4 ,his inquiry pursues the phenomena of value in a normal economic system rather than the manner and rate of approach of value relations to a teleologically or hedonistically defensible consummation4 ,it therefore becomes an exhaustive but very discriminating analysis of the circumstances that bear upon market values1 with a view to determine what circumstances are normally present2 that is to say1 what circumstances conditioning value are commonly effective and at the same time in consonance with the premises of economic theory4 ,these effective conditions1 in so far as they are not counted anomalous and1 therefore1 to be set aside in the theoretical discussion1 are the circumstances under which a hedonistic valuation process in any modern industrial community is held perforce to take place1--the circumstances which are held to enforce a recognition and rating of the pleasure-bearing capacity of facts4 ,they are not1 as under the earlier cost-of-production doctrines1 the circumstances which determine the magnitude of the forces spent in the production of the valuable article4 ,therefore1 the normal 7natural7 value is no longer 7as with ,adam ,smith1 and even to some extent with his classical successors7 the primary or initial fact in value theory1 the substantial fact of which the market value is an approximate expression and by which the latter is controlled4 ,the argument does not1 as formerly1 set out from that expenditure of personal force which was once conceived to constitute the substantial value of goods1 and then construe market value to be an approximate and uncertain expression of this substantial fact4 ,the direction in which the argument runs is rather the reverse of this4 ,the point of departure is taken from the range of market values and the process of bargaining by which these values are determined4 ,this latter is taken to be a process of discrimination between various kinds and degrees of discomfort1 and the average or consistent outcome of such a process of bargaining constitutes normal value4 ,it is only by virtue of a presumed equivalence between the discomfort undergone and the concomitant expenditure1 whether of labor or of wealth1 that the normal value so determined is conceived to be an expression of the productive force that goes into the creation of the valuable goods4 ,cost being only in uncertain equivalence with sacrifice or discomfort1 as between different persons1 the factor of cost falls into the background2 and the process of bargaining1 which is in the foreground1 being a process of valuation1 a balancing of individual demand and supply1 it follows that a law of reciprocal demand comes in to supplant the law of cost4 ,in all this the proximate causes at work in the determination of values are plainly taken account of more adequately than in earlier cost-of-production doctrines2 but they are taken account of with a view to explaining the mutual adjustment and interrelation of elements in a system rather than to explain either a developmental sequence or the working out of a foreordained end4 ,this revision of the cost-of-production doctrine1 whereby it takes the form of a law of reciprocal demand1 is in good part effected by a consistent reduction of cost to terms of sacrifice1--a reduction more consistently carried through by ,cairnes than it had been by earlier hedonists1 and extended by ,cairnes's successors with even more far-reaching results4 ,by this step the doctrine of cost is not only brought into closer accord with the neo-hedonistic premises1 in that it in a greater degree throws the stress upon the factor of personal discrimination1 but it also gives the doctrine a more general bearing upon economic conduct and increases its serviceability as a comprehensive principle for the classification of economic phenomena4 ,in the further elaboration of the hedonistic theory of value at the hands of ,jevons and the ,austrians the same principle of sacrifice comes to serve as the chief ground of procedure4 99 99 99 99 99 ,of the foundations of later theory1 in so far as the postulates of later economists differ characteristically from those of ,mill and ,cairnes1 little can be said in this place4 ,nothing but the very general features of the later development can be taken up2 and even these general features of the existing theoretic situation can not be handled with the same confidence as the corresponding features of a past phase of speculation4 ,with respect to writers of the present or the more recent past the work of natural selection1 as between variants of scientific aim and animus and between more or less divergent points of view1 has not yet taken effect2 and it would be over-hazardous to attempt an anticipation of the results of the selection that lies in great part yet in the future4 ,as regards the directions of theoretical work suggested by the names of ,professor ,marshall1 ,mr4 ,cannan1 ,professor ,clark1 ,mr4 ,pierson1 ,professor ,loria1 ,professor ,schmoller1 the ,austrian group1--no off-hand decision is admissible as between these candidates for the honor1 or1 better1 for the work1 of continuing the main current of economic speculation and inquiry4 ,no attempt will here be made even to pass a verdict on the relative claims of the recognised two or three main schools of theory1 beyond the somewhat obvious finding that1 for the purpose in hand1 the so-called ,austrian school is scarcely distinguishable from the neo-classical1 unless it be in the different distribution of emphasis4 ,the divergence between the modernised classical views1 on the one hand1 and the historical and ,marxist schools1 on the other hand1 is wider1--so much so1 indeed1 as to bar out a consideration of the postulates of the latter under the same head of inquiry with the former4 ,the inquiry1 therefore1 confines itself to the one line standing most obviously in unbroken continuity with that body of classical economics whose life history has been traced in outline above4 ,and1 even for this phase of modernised classical economics1 it seems necessary to limit discussion1 for the present1 to a single strain1 selected as standing peculiarly close to the classical source1 at the same time that it shows unmistakable adaptation to the later habits of thought and methods of knowledge4 ,for this later development in the classical line of political economy1 ,mr4 ,keynes's book may fairly be taken as the maturest exposition of the aims and ideals of the science2 while ,professor ,marshall excellently exemplifies the best work that is being done under the guidance of the classical antecedents4 ,as1 after a lapse of a dozen or fifteen years from ,cairnes's days of full conviction1 ,mr4 ,keynes interprets the aims of modern economic science1 it has less of the hypothetical character assigned it by ,cairnes2 that is to say1 it confines its inquiry less closely to the ascertainment of the normal case and the interpretative subsumption of facts under the normal4 ,it takes fuller account of the genesis and developmental continuity of all features of modern economic life1 gives more and closer attention to institutions and their history4 ,this is1 no doubt1 due1 in part at least1 to impulse received from ,german economists2 and in so far it also reflects the peculiarly vague and bewildered attitude of protest that characterises the earlier expositions of the historical school4 ,to the same essentially extraneous source is traceable the theoretic blur embodied in ,mr4 ,keynes's attitude of tolerance towards the conception of economics as a normative science having to do with economic ideals1 or an applied economics having to do with economic precepts4#ac ,an inchoate departure from the consistent taxonomic ideals shows itself in the tentative resort to historical and genetic formulations1 as well as in ,mr4 ,keynes's pervading inclination to define the scope of the science1 not by exclusion of what are conceived to be non-economic phenomena1 but by disclosing a point of view from which all phenomena are seen to be economic facts4 ,the science comes to be characterised not by the delimitation of a range of facts1 as in ,cairnes1#ad but as an inquiry into the bearing which all facts have upon men's economic activity4 ,it is no longer that certain phenomena belong within the science1 but rather that the science is concerned with any and all phenomena as seen from the point of view of the economic interest4 ,mr4 ,keynes does not go fully to the length which this last proposition indicates4 ,he finds#ae that political economy treats of the phenomena arising out of the economic activities of mankind in society2 but1 while the discussion by which he leads up to this definition might be construed to say that all the activities of mankind in society have an economic bearing1 and should therefore come within the view of the science1 ,mr4 ,keynes does not carry out his elucidation of the matter to that broad conclusion4 ,neither can it be said that modern political economy has1 in practice1 taken on the scope and character which this extreme position would assign it4 ,the passage from which the above citation is taken is highly significant also in another and related bearing1 and it is at the same time highly characteristic of the most effective modernised classical economics4 ,the subject-matter of the science has come to be the economic activities of mankind1 and the phenomena in which these activities manifest themselves4 ,so ,professor ,marshall's work1 for instance1 is1 in aim1 even if not always in achievement1 a theoretical handling of human activity in its economic bearing1--an inquiry into the multiform phases and ramifications of that process of valuation of the material means of life by virtue of which man is an economic agent4 ,and still it remains an inquiry directed to the determination of the conditions of an equilibrium of activities and a quiescent normal situation4 ,it is not in any eminent degree an inquiry into cultural or institutional development as affected by economic exigencies or by the economic interest of the men whose activities are analysed and portrayed4 ,any sympathetic reader of ,professor ,marshall's great work--and that must mean every reader--comes away with a sense of swift and smooth movement and interaction of parts2 but it is the movement of a consummately conceived and self-balanced mechanism1 not that of a cumulatively unfolding process or an institutional adaptation to cumulatively unfolding exigencies4 ,the taxonomic bearing is1 after all1 the dominant feature4 ,it is significant of the same point that even in his discussion of such vitally dynamic features of the economic process as the differential effectiveness of different laborers or of different industrial plants1 as well as of the differential advantages of consumers1 ,professor ,marshall resorts to an adaptation of so essentially taxonomic a category as the received concept of rent4 ,rent is a pecuniary category1 a category of income1 which is essentially a final term1 not a category of the motor term1 work or interest4#af ,it is not a factor or a feature of the process of industrial life1 but a phenomenon of the pecuniary situation which emerges from this process under given conventional circumstances4 ,however far-reaching and various the employment of the rent concept in economic theory has been1 it has through all permutations remained1 what it was to begin with1 a rubric in the classification of incomes4 ,it is a pecuniary1 not an industrial category4 ,in so far as resort is had to the rent concept in the formulation of a theory of the industrial process1--as in ,professor ,marshall's work1--it comes to a statement of the process in terms of its residue4 ,let it not seem presumptuous to say that1 great and permanent as is the value of ,professor ,marshall's exposition of quasi-rents and the like1 the endeavor which it involves to present in terms of a concluded system what is of the nature of a fluent process has made the exposition unduly bulky1 unwieldy1 and inconsequent4 ,there is a curious reminiscence of the perfect taxonomic day in ,mr4 ,keynes's characterisation of political economy as a positive science1 the sole province of which is to establish economic uniformities2#ag and1 in this resort to the associationist expedient of defining a natural law as a uniformity1 ,mr4 ,keynes is also borne out by ,professor ,marshall4#ah ,but this and other survivals of the taxonomic terminology1 or even of the taxonomic canons of procedure1 do not hinder the economists of the modern school from doing effective work of a character that must be rated as genetic rather than taxonomic4 ,professor ,marshall's work in economics is not unlike that of ,asa ,gray in botany1 who1 while working in great part within the lines of systematic botany and adhering to its terminology1 and on the whole also to its point of view1 very materially furthered the advance of the science outside the scope of taxonomy4 ,professor ,marshall shows an aspiration to treat economic life as a development2 and1 at least superficially1 much of his work bears the appearance of being a discussion of this kind4 ,in this endeavor his work is typical of what is aimed at by many of the later economists4 ,the aim shows itself with a persistent recurrence in his ,principles4 ,his chosen maxim is1 ,natura non facit saltum1--a maxim that might well serve to designate the prevailing attitude of modern economists towards questions of economic development as well as towards questions of classification or of economic policy4 ,his insistence on the continuity of development and of the economic structure of communities is a characteristic of the best work along the later line of classical political economy4 ,all this gives an air of evolutionism to the work4 ,indeed1 the work of the neo-classical economics might be compared1 probably without offending any of its adepts1 with that of the early generation of ,darwinians1 though such a comparison might somewhat shrewdly have to avoid any but superficial features4 ,economists of the present day are commonly evolutionists1 in a general way4 ,they commonly accept1 as other men do1 the general results of the evolutionary speculation in those directions in which the evolutionary method has made its way4 ,but the habit of handling by evolutionist methods the facts with which their own science is concerned has made its way among the economists to but a very uncertain degree4 ,the prime postulate of evolutionary science1 the preconception constantly underlying the inquiry1 is the notion of a cumulative causal sequence2 and writers on economics are in the habit of recognising that the phenomena with which they are occupied are subject to such a law of development4 ,expressions of assent to this proposition abound4 ,but the economists have not worked out or hit upon a method by which the inquiry in economics may consistently be conducted under the guidance of this postulate4 ,taking ,professor ,marshall as exponent1 it appears that1 while the formulations of economic theory are not conceived to be arrived at by way of an inquiry into the developmental variation of economic institutions and the like1 the theorems arrived at are held1 and no doubt legitimately1 to apply to the past1#ai and with due reserve also to the future1 phases of the development4 ,but these theorems apply to the various phases of the development not as accounting for the developmental sequence1 but as limiting the range of variation4 ,they say little1 if anything1 as to the order of succession1 as to the derivation and the outcome of any given phase1 or as to the causal relation of one phase of any given economic convention or scheme of relations to any other4 ,they indicate the conditions of survival to which any innovation is subject1 supposing the innovation to have taken place1 not the conditions of variational growth4 ,the economic laws1 the statements of uniformity1 are therefore1 when construed in an evolutionary bearing1 theorems concerning the superior or the inferior limit of persistent innovations1 as the case may be4#bj ,it is only in this negative1 selective bearing that the current economic laws are held to be laws of developmental continuity2 and it should be added that they have hitherto found but relatively scant application at the hands of the economists1 even for this purpose4 ,again1 as applied to economic activities under a given situation1 as laws governing activities in equilibrium1 the economic laws are1 in the main1 laws of the limits within which economic action of a given purpose runs4 ,they are theorems as to the limits which the economic 7commonly the pecuniary7 interest imposes upon the range of activities to which the other life interests of men incite1 rather than theorems as to the manner and degree in which the economic interest creatively shapes the general scheme of life4 ,in great part they formulate the normal inhibitory effect of economic exigencies rather than the cumulative modification and diversification of human activities through the economic interest1 by initiating and guiding habits of life and of thought4 ,this1 of course1 does not go to say that economists are at all slow to credit the economic exigencies with a large share in the growth of culture2 but1 while claims of this kind are large and recurrent1 it remains true that the laws which make up the framework of economic doctrine are1 when construed as generalisations of causal relation1 laws of conservation and selection1 not of genesis and proliferation4 ,the truth of this1 which is but a commonplace generalisation1 might be shown in detail with respect to such fundamental theorems as the laws of rent1 of profits1 of wages1 of the increasing or diminishing returns of industry1 of population1 of competitive prices1 of cost of production4 ,in consonance with this quasi-evolutionary tone of the neo-classical political economy1 or as an expression of it1 comes the further clarified sense that nowadays attaches to the terms normal and economic laws4 ,the laws have gained in colorlessness1 until it can no longer be said that the concept of normality implies approval of the phenomena to which it is applied4#ba ,they are in an increasing degree laws of conduct1 though they still continue to formulate conduct in hedonistic terms2 that is to say1 conduct is construed in terms of its sensuous effect1 not in terms of its teleological content4 ,the light of the science is a drier light than it was1 but it continues to be shed upon the accessories of human action rather than upon the process itself4 ,the categories employed for the purpose of knowing this economic conduct with which the scientists occupy themselves are not the categories under which the men at whose hands the action takes place themselves apprehend their own action at the instant of acting4 ,therefore1 economic conduct still continues to be somewhat mysterious to the economists2 and they are forced to content themselves with adumbrations whenever the discussion touches this central1 substantial fact4 ,all this1 of course1 is intended to convey no dispraise of the work done1 nor in any way to disparage the theories which the passing generation of economists have elaborated1 or the really great and admirable body of knowledge which they have brought under the hand of the science2 but only to indicate the direction in which the inquiry in its later phases--not always with full consciousness--is shifting as regards its categories and its point of view4 ,the discipline of life in a modern community1 particularly the industrial life1 strongly reenforced by the modern sciences1 has divested our knowledge of non-human phenomena of that fullness of self-directing life that was once imputed to them1 and has reduced this knowledge to terms of opaque causal sequence4 ,it has thereby narrowed the range of discretionary1 teleological action to the human agent alone2 and so it is compelling our knowledge of human conduct1 in so far as it is distinguished from the non-human1 to fall into teleological terms4 ,foot-pounds1 calories1 geometrically progressive procreation1 and doses of capital1 have not been supplanted by the equally uncouth denominations of habits1 propensities1 aptitudes1 and conventions1 nor does there seem to be any probability that they will be2 but the discussion which continues to run in terms of the former class of concepts is in an increasing degree seeking support in concepts of the latter class4 ,,footnotes3 #a ,reprinted by permission from ,the ,quarterly ,journal of ,economics4 ,vol4 ,,xiv1 ,feb41 #aijj4 #b ,so1 e4g41 ,roscher1 ,comte1 the early socialists1 ,j4 ,s4 ,mill1 and later ,spencer1 ,schaeffle1 ,wagner4 #c ,let us not confound the statement that human interests are at one with the statement that class interests are at one4 ,the latter ,i believe to be as false as the former is true4444 ,but accepting the major premises of the syllogism1 that the interests of human beings are fundamentally the same1 how as to the minor8--how as to the assumption that people know their interests in the sense in which they are identical with the interests of others1 and that they spontaneously follow them in this sense8--,cairnes1 ,essays in ,political ,economy 7,london1 #ahgc71 p4 #bde4 ,this question cannot consistently be asked by an adherent of the stricter hedonism4 #d ,bastiat1 quoted by ,cairnes1 ,essays1 p4 #cai4 #e ,it may be remarked1 by the way1 that the use of the differential calculus and similar mathematical expedients in the discussion of marginal utility and the like1 proceeds on this psychological ground1 and that the theoretical results so arrived at are valid to the full extent only if this hedonistic psychology is accepted4 #f ,see1 e4g41 ,cairnes1 ,character and ,logical ,method 7,new ,york71 p4 #ga4 #g ,character and ,logical ,method1 p4 #fb4 #h ,essays in ,political ,economy1 pp4 #bfj-bfd4 #i ,see especially ,essays1 pp4 #bfc1 #bfd4 #aj ,it may be interesting to point out that the like identification of the categories of normality and right gives the dominant note of ,mr4 ,spencer's ethical and social philosophy1 and that later economists of the classical line are prone to be ,spencerians4 #aa ,normal value 7called by ,adam ,smith and ,ricardo 'natural value1' and by ,mill 'necessary value1' but best expressed1 it seems to me1 by the term which ,i have used74 ,leading ,principles 7,new ,york71 p4 #de4 #ab ,leading ,principles1 p4 #de4 #ac ,scope and ,method of ,political ,economy 7,london1 #ahia71 chaps4 i and ii4 #ad ,character and ,logical ,method2 e4g41 ,lecture ,,ii1 especially pp4 #ec1 #ed1 and #ga4 #ae ,scope and ,method of ,political ,economy1 chap4 iii1 particularly p4 #ig4 #af ,interest is1 of course1 here used in the sense which it has in modern psychological discussion4 #ag ,scope and ,method of ,political ,economy1 p4 #df4 #ah ,principles of ,economics1 ,vol4 ,i1 ,book ,i1 chap1 vi1 sect4 #f1 especially p4 #aje 7#c;d edition74 #ai ,see1 e4g41 ,professor ,marshall's ,reply to ,professor ,cunningham in the ,economic ,journal for #ahib1 pp4 #ejh-aac4 #bj ,this is well illustrated by what ,professor ,marshall says of the ,ricardian law of rent in his ,reply1 cited above4 #ba ,see1 e4g41 ,marshall1 ,principles1 ,book ,i1 chap1 vi1 sect4 #f1 pp4 #aje-ajh4 ,the like dispassionateness is visible in most other modern writers on theory2 as1 e4g41 ,clark1 ,cannan1 and the ,austrians4 ,,professor ,,clark',s ,,economics#a ,for some time past economists have been looking with lively anticipation for such a comprehensive statement of ,mr4 ,clark's doctrines as is now offered4 ,the leading purpose of the present volume#b is to offer a brief and provisional statement of the more general laws of progress2 although it also comprises a more abridged restatement of the laws of ,economic ,statics already set forth in fuller form in his ,distribution of ,wealth4 ,though brief1 this treatise is to be taken as systematically complete1 as including in due correlation all the essentials of ,mr4 ,clark's theoretical system4 ,as such1 its publication is an event of unusual interest and consequence4 ,mr4 ,clark's position among this generation of economists is a notable and commanding one4 ,no serious student of economic theory will1 or can afford to1 forego a pretty full acquaintance with his development of doctrines4 ,nor will any such student avoid being greatly influenced by the position which ,mr4 ,clark takes on any point of theory on which he may speak1 and many look confidently to him for guidance where it is most needed4 ,very few of those interested in modern theory are under no obligations to him4 ,he has1 at the same time1 in a singular degree the gift of engaging the affections as well as the attention of students in his field4 ,yet the critic is required to speak impersonally of ,mr4 ,clark's work as a phase of current economic theory4 ,in more than one respect ,mr4 ,clark's position among economists recalls the great figures in the science a hundred years ago4 ,there is the same rigid grasp of the principles1 the essentials1 out of which the broad theorems of the system follow in due sequence and correlation2 and like the leaders of the classical era1 while ,mr4 ,clark is always a theoretician1 never to be diverted into an inconsistent makeshift1 he is moved by an alert and sympathetic interest in current practical problems4 ,while his aim is a theoretical one1 it is always with a view to the theory of current affairs2 and his speculations are animated with a large sympathy and an aggressive interest in the amelioration of the lot of man4 ,his relation to the ancient adepts of the science1 however1 is something more substantial than a resemblance only4 ,he is1 by spiritual consanguinity1 a representative of that classical school of thought that dominated the science through the better part of the nineteenth century4 ,this is peculiarly true of ,mr4 ,clark1 as contrasted with many of those contemporaries who have fought for the marginal-utility doctrines4 ,unlike these spokesmen of the ,austrian wing1 he has had the insight and courage to see the continuity between the classical position and his own1 even where he advocates drastic changes in the classical body of doctrines4 ,and although his system of theory embodies substantially all that the consensus of theorists approves in the ,austrian contributions to the science1 yet he has arrived at his position on these heads not under the guidance of the ,austrian school1 but1 avowedly1 by an unbroken development out of the position given by the older generation of economists4#c ,again1 in the matter of the psychological postulates of the science1 he accepts a hedonism as simple1 unaffected1 and uncritical as that of ,jevons or of ,james ,mill4 ,in this respect his work is as true to the canons of the classical school as the best work of the theoreticians of the ,austrian observance4 ,there is the like unhesitating appeal to the calculus of pleasure and pain as the indefeasible ground of action and solvent of perplexities1 and there is the like readiness to reduce all phenomena to terms of a normal1 or natural1 scheme of life constructed on the basis of this hedonistic calculus4 ,even in the ready recourse to conjectural history1 to use ,steuart's phrase1 ,mr4 ,clark's work is at one with both the early classical and the late 7,jevons-,austrian7 marginal-utility school4 ,it has the virtues of both1 coupled with the graver shortcomings of both4 ,but1 as his view exceeds theirs in breadth and generosity1 so his system of theory is a more competent expression of current economic science than what is offered by the spokesmen of the ,jevons-,austrian wing4 ,it is as such1 as a competent and consistent system of current economic theory1 that it is here intended to discuss ,mr4 ,clark's work1 not as a body of doctrines peculiar to ,mr4 ,clark or divergent from the main current4 99 99 99 99 99 ,since hedonism came to rule economic science1 the science has been in the main a theory of distribution1--distribution of ownership and of income4 ,this is true both of the classical school and of those theorists who have taken an attitude of ostensible antagonism to the classical school4 ,the exceptions to the rule are late and comparatively few1 and they are not found among the economists who accept the hedonistic postulate as their point of departure4 ,and1 consistently with the spirit of hedonism1 this theory of distribution has centered about a doctrine of exchange value 7or price7 and has worked out its scheme of 7normal7 distribution in terms of 7normal7 price4 ,the normal economic community1 upon which theoretical interest has converged1 is a business community1 which centers about the market1 and whose scheme of life is a scheme of profit and loss4 ,even when some considerable attention is ostensibly devoted to theories of consumption and production1 in these systems of doctrine the theories are constructed in terms of ownership1 price1 and acquisition1 and so reduce themselves in substance to doctrines of distributive acquisition4#d ,in this respect ,mr4 ,clark's work is true to the received canons4 ,the ,essentials of ,economic ,theory are the essentials of the hedonistic theory of distribution1 with sundry reflections on related topics4 ,the scope of ,mr4 ,clark's economics1 indeed1 is even more closely limited by concepts of distribution than many others1 since he persistently analyses production in terms of value1 and value is a concept of distribution4 99 99 99 99 99 ,as ,mr4 ,clark justly observes 7p4 #d71 ,the primitive and general facts concerning industry 444 need to be known before the social facts can profitably be studied4 ,in these early pages of the treatise1 as in other works of its class1 there is repeated reference to that more primitive and simple scheme of economic life out of which the modern complex scheme has developed1 and it is repeatedly indicated that in order to an understanding of the play of forces in the more advanced stages of economic development and complication1 it is necessary to apprehend these forces in their unsophisticated form as they work out in the simple scheme prevalent on the plane of primitive life4 ,indeed1 to a reader not well acquainted with ,mr4 ,clark's scope and method of economic theorising1 these early pages would suggest that he is preparing for something in the way of a genetic study1--a study of economic institutions approached from the side of their origins4 ,it looks as if the intended line of approach to the modern situation might be such as an evolutionist would choose1 who would set out with showing what forces are at work in the primitive economic community1 and then trace the cumulative growth and complication of these factors as they presently take form in the institutions of a later phase of the development4 ,such1 however1 is not ,mr4 ,clark's intention4 ,the effect of his recourse to primitive life is simply to throw into the foreground1 in a highly unreal perspective1 those features which lend themselves to interpretation in terms of the normalised competitive system4 ,the best excuse that can be offered for these excursions into primitive life is that they have substantially nothing to do with the main argument of the book1 being of the nature of harmless and graceful misinformation4 ,in the primitive economic situation--that is to say1 in savagery and the lower barbarism--there is1 of course1 no solitary hunter1 living either in a cave or otherwise1 and there is no man who makes by his own labor all the goods that he uses1 etc4 ,it is1 in effect1 a highly meretricious misrepresentation to speak in this connection of the economy of a man who works only for himself1 and say that the inherent productive power of labor and capital is of vital concern to him1 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 consequence4 ,there is no reasonable doubt but that1 at least since mankind reached the human plane1 the economic unit has been not a solitary hunter1 but a community of some kind2 in which1 by the way1 women seem in the early stages to have been the most consequential factor instead of the man who works for himself4 ,the capital possessed by such a community--as1 e4g41 a band of ,california ,digger ,indians--was a negligible quantity1 more valuable to a collector of curios than to any one else1 and the loss of which to the ,digger squaws would mean very little4 ,what was of vital concern to them1 indeed1 what the life of the group depended on absolutely1 was the accumulated wisdom of the squaws1 the technology of their economic situation4#e ,the loss of the basket1 digging-stick1 and mortar1 simply as physical objects1 would have signified little1 but the conceivable loss of the squaw's knowledge of the soil and seasons1 of food and fiber plants1 and of mechanical expedients1 would have meant the present dispersal and starvation of the community4 ,this may seem like taking ,mr4 ,clark to task for an inconsequential gap in his general information on ,digger ,indians1 ,eskimos1 and palaeolithic society at large4 ,but the point raised is not of negligible consequence for economic theory1 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 development4 ,in the primitive culture the quantity and the value of mechanical appliances is relatively slight2 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 importance4 ,the loss of these objects--tangible assets--would entail a transient inconvenience4 ,but the accumulated1 habitual knowledge of the ways and means involved in the production and use of these appliances is the outcome of long experience and experimentation2 and1 given this body of commonplace technological information1 the acquisition and employment of the suitable apparatus is easily arranged4 ,the great body of commonplace knowledge made use of in industry is the product and heritage of the group4 ,in its essentials it is known by common notoriety1 and the capital goods needed for putting this commonplace technological knowledge to use are a slight matter1--practically within the reach of every one4 ,under these circumstances the ownership of capital-goods has no great significance1 and1 as a practical fact1 interest and wages are unknown1 and the earning power of capital is not seen to be governed by a specific power of productivity which resides in capital-goods4 ,but the situation changes1 presently1 by what is called an advance in the industrial arts4 ,the capital required to put the commonplace knowledge to effect grows larger1 and so its acquisition becomes an increasingly difficult matter4 ,through difficulty of attainment in adequate quantities1 the apparatus and its ownership become a matter of consequence2 increasingly so1 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 lifetime4 ,the commonplace knowledge of ways and means1 the accumulated experience of mankind1 is still transmitted in and by the body of the community at large2 but1 for practical purposes1 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 race4 ,hence capital1 as it stands at that phase of the institution's growth contemplated by ,mr4 ,clark4 ,the natural system of free competition1 or1 as it was once called1 the obvious and simple system of natural liberty1 is accordingly a phase of the development of the institution of capital2 and its claim to immutable dominion is evidently as good as the like claim of any other phase of cultural growth4 ,the equity1 or natural justice1 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 community2 that is to say1 so long as these conventions are part and parcel of the habits of thought of the community2 that is to say1 so long as these things are currently held to be just and equitable4 ,this normalised present1 or natural1 state of ,mr4 ,clark1 is1 as near as may be1 ,senior's ,natural ,state of ,man1--the hypothetically perfect competitive system2 and economic theory consists in the definition and classification of the phenomena of economic life in terms of this hypothetical competitive system4 ,taken by itself1 ,mr4 ,clark's dealing with the past development might be passed over with slight comment1 except for its negative significance1 since it has no theoretical connection with the present1 or even with the natural state in which the phenomena of economic life are assumed to arrange themselves in a stable1 normal scheme4 ,but his dealings with the future1 and with the present in so far as the present situation is conceived to comprise dynamic factors1 is of substantially the same kind4 ,with ,senior's natural state of man as the base-line of normality in things economic1 questions of present and future development are treated as questions of departure from the normal1 aberrations and excesses which the theory does not aim even to account for4 ,what is offered in place of theoretical inquiry when these positive perversions of the natural forces themselves are taken up 7e4g41 in chapters xxii4-xxix47 is an exposition of the corrections that must be made to bring the situation back to the normal static state1 and solicitous advice as to what measures are to be taken with a view to this beneficent end4 ,the problem presented to ,mr4 ,clark by the current phenomena of economic development is3 how can it be stopped8 or1 failing that1 how can it be guided and minimised8 ,nowhere is there a sustained inquiry into the dynamic character of the changes that have brought the present 7deplorable7 situation to pass1 nor into the nature and trend of the forces at work in the development that is going forward in this situation4 ,none of this is covered by ,mr4 ,clark's use of the word dynamic4 ,all that it covers in the way of theory 7chapters xii4-xxi47 is a speculative inquiry as to how the equilibrium reestablished itself when one or more of the quantities involved increases or decreases4 ,other than quantitive changes are not noticed1 except as provocations to homiletic discourse4 ,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 dynamics4 ,so much of the volume1 then1 and of the system of doctrines of which the volume is an exposition1 as is comprised in the later eight chapters 7pp4 #cgb-eed71 is an exposition of grievances and remedies1 with only sporadic intrusions of theoretical matter1 and does not properly constitute a part of the theory1 whether static or dynamic4 ,there is no intention here to take exception to ,mr4 ,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 necessary4 ,this phase of his work is spoken of here rather to call attention to the temperate but uncompromising tone of ,mr4 ,clark's writings as a spokesman for the competitive system1 considered as an element in the ,order of ,nature1 and to note the fact that this is not economic theory4#f ,the theoretical section specifically scheduled as ,economic ,dynamics 7chapters xii4-xxi471 on the other hand1 is properly to be included under the caption of ,statics4 ,as already remarked above1 it presents a theory of equilibrium between variables4 ,mr4 ,clark is1 indeed1 barred out by his premises from any but a statical development of theory4 ,to realise the substantially statical character of his ,dynamics1 it is only necessary to turn to his chapter xii4 7,economic ,dynamics74 ,a highly dynamic condition1 then1 is one in which the economic organism changes rapidly and yet1 at any time in the course of its changes1 is relatively near to a certain static model 7p4 #aif74 ,the actual shape of society at any one time is not the static model of that time2 but it tends to conform to it2 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 7p4 #aig74 ,the more dynamic the society1 the nearer it is to the static model2 until in an ideally dynamic society1 with a frictionless competitive system1 to use ,mr4 ,clark's figure1 the static state would be attained1 except for an increase in size1--that is to say1 the ideally perfect dynamic state would coincide with the static state4 ,mr4 ,clark's conception of a dynamic state reduces itself to a conception of an imperfectly static state1 but in such a sense that the more highly and truly dynamic condition is thereby the nearer to a static condition4 ,neither the static nor the dynamic state1 in ,mr4 ,clark's view1 it should be remarked1 is a state of quiescence4 ,both are states of more or less intense activity1 the essential difference being that in the static state the activity goes on in perfection1 without lag1 leak1 or friction2 the movement of parts being so perfect as not to disturb the equilibrium4 ,the static state is the more dynamic of the two4 ,the dynamic condition is essentially a deranged static condition3 whereas the static state is the absolute perfect1 natural taxonomic norm of competitive life4 ,this dynamic-static state may vary in respect of the magnitude of the several factors which hold one another in equilibrium1 but these are none other than quantitive variations4 ,the changes which ,mr4 ,clark discusses under the head of dynamics are all of this character1--changes in absolute or relative magnitude of the several factors comprised in the equation4 99 99 99 99 99 ,but1 not to quarrel with ,mr4 ,clark's use of the terms static and dynamic1 it is in place to inquire into the merits of this class of economic science apart from any adventitious shortcomings4 ,for such an inquiry ,mr4 ,clark's work offers peculiar advantages4 ,it is lucid1 concise1 and unequivocal1 with no temporising euphemisms and no politic affectations of sentiment4 ,mr4 ,clark's premises1 and therewith the aim of his inquiry1 are the standard ones of the classical ,english school 7including the ,jevons-,austrian wing74 ,this school of economics stands on the pre-evolutionary ground of normality and natural law1 which the great body of theoretical science occupied in the early nineteenth century4 ,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 ,nature4 ,this ,order of ,nature1 or realm of ,natural ,law1 is not the actual run of material facts1 but the facts so interpreted as to meet the needs of the taxonomist in point of taste1 logical consistency1 and sense of justice4 ,the question of the truth and adequacy of the categories is a question as to the consensus of taste and predilection among the taxonomists2 i4e41 they are an expression of trained human nature touching the matter of what ought to be4 ,the facts so interpreted make up the normal1 or natural1 scheme of things1 with which the theorist has to do4 ,his task is to bring facts within the framework of this scheme of natural categories4 ,coupled with this scientific purpose of the taxonomic economist is the pragmatic purpose of finding and advocating the expedient course of policy4 ,on this latter head1 again1 ,mr4 ,clark is true to the animus of the school4 ,the classical school1 including ,mr4 ,clark and his contemporary associates in the science1 is hedonistic and utilitarian1--hedonistic in its theory and utilitarian in its pragmatic ideals and endeavors4 ,the hedonistic postulates on which this line of economic theory is built up are of a statical scope and character1 and nothing but statical theory 7taxonomy7 comes out of their development4#g ,these postulates1 and the theorems drawn from them1 take account of none but quantitive variations1 and quantitive variation alone does not give rise to cumulative change1 which proceeds on changes in kind4 ,economics of the line represented at its best by ,mr4 ,clark has never entered this field of cumulative change4 ,it does not approach questions of the class which occupy the modern sciences1--that is to say1 questions of genesis1 growth1 variation1 process 7in short1 questions of a dynamic import71--but confines its interest to the definition and classification of a mechanically limited range of phenomena4 ,like other taxonomic sciences1 hedonistic economics does not1 and cannot1 deal with phenomena of growth except so far as growth is taken in the quantitative sense of a variation in magnitude1 bulk1 mass1 number1 frequency4 ,in its work of taxonomy this economics has consistently bound itself1 as ,mr4 ,clark does1 by distinctions of a mechanical1 statistical nature1 and has drawn its categories of classification on those grounds4 ,concretely1 it is confined1 in substance1 to the determination of and refinements upon the concepts of land1 labor1 and capital1 as handed down by the great economists of the classical era1 and the correlate concepts of rent1 wages1 interest and profits4 ,solicitously1 with a painfully meticulous circumspection1 the normal1 mechanical metes and bounds of these several concepts are worked out1 the touchstone of the absolute truth aimed at being the hedonistic calculus4 ,the facts of use and wont are not of the essence of this mechanical refinement4 ,these several categories are mutually exclusive categories1 mechanically speaking4 ,the circumstance that the phenomena covered by them are not mechanical facts is not allowed to disturb the pursuit of mechanical distinctions among them4 ,they nowhere overlap1 and at the same time between them they cover all the facts with which this economic taxonomy is concerned4 ,indeed1 they are in logical consistency1 required to cover them4 ,they are hedonistically natural categories of such taxonomic force that their elemental lines of cleavage run through the facts of any given economic situation1 regardless of use and wont1 even where the situation does not permit these lines of cleavage to be seen by men and recognised by use and wont2 so that1 e4g41 a gang of ,aleutian ,islanders slushing about in the wrack and surf with rakes and magical incantations for the capture of shell-fish are held1 in point of taxonomic reality1 to be engaged on a feat of hedonistic equilibration in rent1 wages1 and interest4 ,and that is all there is to it4 ,indeed1 for economic theory of this kind1 that is all there is to any economic situation4 ,the hedonistic magnitudes vary from one situation to another1 but1 except for variations in the arithmetical details of the hedonistic balance1 all situations are1 in point of economic theory1 substantially alike4#h ,taking this unfaltering taxonomy on its own recognisances1 let us follow the trail somewhat more into the arithmetical details1 as it leads along the narrow ridge of rational calculation1 above the tree-tops1 on the levels of clear sunlight and moonshine4 ,for the purpose in hand--to bring out the character of this current economic science as a working theory of current facts1 and more particularly as applied to modern problems of industry and public policy 7title-page7--the sequence to be observed in questioning the several sections into which the theoretical structure falls is not essential4 ,the structure of classical theory is familiar to all students1 and ,mr4 ,clark's redaction offers no serious departure from the conventional lines4 ,such divergence from conventional lines as may occur is a matter of details1 commonly of improvements in detail2 and the revisions of detail do not stand in such an organic relation to one another1 nor do they support and strengthen one another in such a manner1 as to suggest anything like a revolutionary trend or a breaking away from the conventional lines4 ,so as regards ,mr4 ,clark's doctrine of ,capital4 ,it does not differ substantially from the doctrines which are gaining currency at the hands of such writers as ,mr4 ,fisher or ,mr4 ,fetter2 although there are certain formal distinctions peculiar to ,mr4 ,clark's exposition of the ,capital ,concept4 ,but these peculiarities are peculiarities of the method of arriving at the concept rather than peculiarities substantial to the concept itself4 ,the main discussion of the nature of capital is contained in chapter ii4 7,varieties of ,economic ,goods74 ,the conception of capital here set forth is of fundamental consequence to the system1 partly because of the important place assigned capital in this system of theory1 partly because of the importance which the conception of capital must have in any theory that is to deal with problems of the current 7capitalistic7 situation4 ,several classes of capital-goods are enumerated1 but it appears that in ,mr4 ,clark's apprehension--at variance with ,mr4 ,fisher's view--persons are not to be included among the items of capital4 ,it is also clear from the run of the argument1 though not explicitly stated1 that only material1 tangible1 mechanically definable articles of wealth go to make up capital4 ,in current usage1 in the business community1 capital is a pecuniary concept1 of course1 and is not definable in mechanical terms2 but ,mr4 ,clark1 true to the hedonistic taxonomy1 sticks by the test of mechanical demarcation and draws the lines of his category on physical grounds2 whereby it happens that any pecuniary conception of capital is out of the question4 ,intangible assets1 or immaterial wealth1 have no place in the theory2 and ,mr4 ,clark is exceptionally subtle and consistent in avoiding such modern notions4 ,one gets the impression that such a notion as intangible assets is conceived to be too chimerical to merit attention1 even by way of protest or refutation4 ,here1 as elsewhere in ,mr4 ,clark's writings1 much is made of the doctrine that the two facts of capital and capital-goods are conceptually distinct1 though substantially identical4 ,the two terms cover virtually the same facts as would be covered by the terms pecuniary capital and industrial equipment4 ,they are for all ordinary purposes coincident with ,mr4 ,fisher's terms1 capital value and capital1 although ,mr4 ,clark might enter a technical protest against identifying his categories with those employed by ,mr4 ,fisher4#i ,capital is this permanent fund of productive goods1 the identity of whose component elements is forever changing4 ,capital-goods are the shifting component parts of this permanent aggregate 7p4 #bi74 ,mr4 ,clark admits 7pp4 #bi-cc7 that capital is colloquially spoken and thought of in terms of value1 but he insists that in point of substantial fact the working concept of capital is 7should be7 that of a fund of productive goods1 considered as an abiding entity4 ,the phrase itself1 a fund of productive goods1 is a curiously confusing mixture of pecuniary and mechanical terms1 though the pecuniary expression1 a fund1 is probably to be taken in this connection as a permissible metaphor4 ,this conception of capital1 as a physically abiding entity constituted by the succession of productive goods that make up the industrial equipment1 breaks down in ,mr4 ,clark's own use of it when he comes 7pp4 #cg-ch7 to speak of the mobility of capital2 that is to say1 so soon as he makes use of it4 ,a single illustration of this will have to suffice1 though there are several points in his argument where the frailty of the conception is patent enough4 ,the transfer of capital from one industry to another is a dynamic phenomenon which is later to be considered4 ,what is here important is the fact that it is in the main accomplished without entailing transfers of capital-goods4 ,an instrument wears itself out in one industry1 and instead of being succeeded by a like instrument in the same industry1 it is succeeded by one of a different kind which is used in a different branch of production 7p4 #ch71--;illustrated on the preceding page by a shifting of investment from a whaling-ship to a cotton-mill4 ,in all this it is plain that the transfer of capital contemplated is a shifting of investment1 and that it is1 as indeed ,mr4 ,clark indicates1 not a matter of the mechanical shifting of physical bodies from one industry to the other4 ,to speak of a transfer of capital which does not involve a transfer of capital-goods is a contradiction of the main position1 that capital is made up of capital-goods4 ,the continuum in which the abiding entity of capital resides is a continuity of ownership1 not a physical fact4 ,the continuity1 in fact1 is of an immaterial nature1 a matter of legal rights1 of contract1 of purchase and sale4 ,just why this patent state of the case is overlooked1 as it somewhat elaborately is1 is not easily seen4 ,but it is plain that1 if the concept of capital were elaborated from observation of current business practice1 it would be found that capital is a pecuniary fact1 not a mechanical one2 that it is an outcome of a valuation1 depending immediately on the state of mind of the valuers2 and that the specific marks of capital1 by which it is distinguishable from other facts1 are of an immaterial character4 ,this would1 of course1 lead1 directly1 to the admission of intangible assets2 and this1 in turn1 would upset the law of the natural remuneration of labor and capital to which ,mr4 ,clark's argument looks forward from the start4 ,it would also bring in the unnatural phenomena of monopoly as a normal outgrowth of business enterprise4 ,there is a further logical discrepancy avoided by resorting to the alleged facts of primitive industry1 when there was no capital1 for the elements out of which to construct a capital concept1 instead of going to the current business situation4 ,in a hedonistic-utilitarian scheme of economic doctrine1 such as ,mr4 ,clark's1 only physically productive agencies can be admitted as efficient factors in production or as legitimate claimants to a share in distribution4 ,hence capital1 one of the prime factors in production and the central claimant in the current scheme of distribution1 must be defined in physical terms and delimited by mechanical distinctions4 ,this is necessary for reasons which appear in the succeeding chapter1 on ,the ,measure of ,consumers' ,wealth4 ,on the same page 7#ch71 and elsewhere1 it is remarked that business disasters destroy capital in part4 ,the destruction in question is a matter of values2 that is to say1 a lowering of valuation1 not in any appreciable degree a destruction of material goods4 ,taken as a physical aggregate1 capital does not appreciably decrease through business disasters1 but1 taken as a fact of ownership and counted in standard units of value1 it decreases2 there is a destruction of values and a shifting of ownership1 a loss of ownership perhaps2 but these are pecuniary phenomena1 of an immaterial character1 and so do not directly affect the material aggregate of the industrial equipment4 ,similarly1 the discussion 7pp4 #cja-cad7 of how changes of method1 as1 e4g41 labor-saving devices1 liberate capital1 and at times destroy capital1 is intelligible only on the admission that capital here is a matter of values owned by investors and is not employed as a synonym for industrial appliances4 ,the appliances in question are neither liberated nor destroyed in the changes contemplated4 ,and it will not do to say that the aggregate of productive goods suffers a diminution by a substitution of devices which increases its aggregate productiveness1 as is implied1 e4g41 by the passage on page #cjg1aj if ,mr4 ,clark's definition of capital is strictly adhered to4 ,this very singular passage 7pp4 #cjf-caa1 under the captions1 ,hardships entailed on ,capitalists by ,progress1 and the ,offset for ,capital destroyed by ,changes of ,method7 implies that the aggregate of appliances of production is decreased by a change which increases the aggregate of these articles in that respect 7productivity7 by virtue of which they are counted in the aggregate4 ,the argument will hold good if productive goods are rated by bulk1 weight1 number1 or some such irrelevant test1 instead of by their productivity or by their consequent capitalised value4 ,on such a showing it should be proper to say that the polishing of plowshares before they are sent out from the factory diminishes the amount of capital embodied in plowshares by as much as the weight or bulk of the waste material removed from the shares in polishing them4 ,several things may be said of the facts discussed in this passage4 ,there is1 presumably1 a decrease1 in bulk1 weight1 or number1 of the appliances that make up the industrial equipment at the time when such a technological change as is contemplated takes place4 ,this change1 presumably1 increases the productive efficiency of the equipment as a whole1 and so may be said without hesitation to increase the equipment as a factor of production1 while it may decrease it1 considered as a mechanical magnitude4 ,the owners of the obsolete or obsolescent appliances presumably suffer a diminution of their capital1 whether they discard the obsolete appliances or not4 ,the owners of the new appliances1 or rather those who own and are able to capitalise the new technological expedients1 presumably gain a corresponding advantage1 which may take the form of an increase of the effective capitalisation of their outfit1 as would then be shown by an increased market value of their plant4 ,the largest theoretical outcome of the supposed changes1 for an economist not bound by ,mr4 ,clark's conception of capital1 should be the generalisation that industrial capital--capital considered as a productive agent--is substantially a capitalisation of technological expedients1 and that a given capital invested in industrial equipment is measured by the portion of technological expedients whose usufruct the investment appropriates4 ,it would accordingly appear that the substantial core of all capital is immaterial wealth1 and that the material objects which are formally the subject of the capitalist's ownership are1 by comparison1 a transient and adventitious matter4 ,but if such a view were accepted1 even with extreme reservations1 ,mr4 ,clark's scheme of the natural distribution of incomes between capital and labor would go up in the air1 as the colloquial phrase has it4 ,it would be extremely difficult to determine what share of the value of the joint product of capital and labor should1 under a rule of natural equity1 go to the capitalist as an equitable return for his monopolisation of a given portion of the intangible assets of the community at large4#aa ,the returns actually accruing to him under competitive conditions would be a measure of the differential advantage held by him by virtue of his having become legally seized of the material contrivances by which the technological achievements of the community are put into effect4 ,yet1 if in this way capital were apprehended as an historical category1 as ,rodbertus would say1 there is at least the comfort in it all that it should leave a free field for ,mr4 ,clark's measures of repression as applied to the discretionary management of capital by the makers of trusts4 ,and yet1 again1 this comforting reflection is coupled with the ugly accompaniment that by the same move the field would be left equally free of moral obstructions to the extreme proposals of the socialists4 ,a safe and sane course for the quietist in these premises should apparently be to discard the equivocal doctrines of the passage 7pp4 #cjf-caa7 from which this train of questions arises1 and hold fast to the received dogma1 however unworkable1 that capital is a congeries of physical objects with no ramifications or complications of an immaterial kind1 and to avoid all recourse to the concept of value1 or price1 in discussing matters of modern business4 99 99 99 99 99 ,the center of interest and of theoretical force and validity in ,mr4 ,clark's work is his law of natural distribution4 ,upon this law hangs very much of the rest1 if not substantially the whole structure of theory4 ,to this law of distribution the earlier portions of the theoretical development look forward1 and this the succeeding portions of the treatise take as their point of departure4 ,the law of natural distribution says that any productive agent naturally gets what it produces4 ,under ideally free competitive conditions--such as prevail in the static state1 and to which the current situation approximates--each unit of each productive factor unavoidably gets the amount of wealth which it creates1--its virtual product1 as it is sometimes expressed4 ,this law rests1 for its theoretical validity1 on the doctrine of final productivity1 set forth in full in the ,distribution of ,wealth1 and more concisely in the ,essentials#ab--one of those universal principles which govern economic life in all its stages of evolution4#ac ,in combination with a given amount of capital1 it is held1 each succeeding unit of added labor adds a less than proportionate increment to the product4 ,the total product created by the labor so engaged is at the same time the distributive share received by such labor as wages2 and it equals the increment of product added by the final unit of labor1 multiplied by the number of such units engaged4 ,the law of natural interest is the same as this law of wages1 with a change of terms4 ,the product of each unit of labor or capital being measured by the product of the final unit1 each gets the amount of its own product4 ,in all of this the argument runs in terms of value2 but it is ,mr4 ,clark's view1 backed by an elaborate exposition of the grounds of his contention1#ad that the use of these terms of value is merely a matter of convenience for the argument1 and that the conclusions so reached--the equality so established between productivity and remuneration--may be converted to terms of goods1 or effective utility1 without abating their validity4 ,without recourse to some such common denominator as value the outcome of the argument would1 as ,mr4 ,clark indicates1 be something resembling the ,ricardian law of differential rent instead of a law drawn in homogeneous terms of final productivity2 and the law of natural distribution would then1 at the best1 fall short of a general formula4 ,but the recourse to terms of value does not1 as ,mr4 ,clark recognises1 dispose of the question without more ado4 ,it smooths the way for the argument1 but1 unaided1 it leaves it nugatory4 ,according to ,hudibras1 ,the value of a thing ,is just as much as it will bring1 and the later refinements on the theory of value have not set aside this dictum of the ancient authority4 ,it answers no pertinent question of equity to say that the wages paid for labor are as much as it will bring4 ,and ,mr4 ,clark's chapter 7xxiv47 on ,the ,unit for ,measuring ,industrial ,agents and their ,products is designed to show how this tautological statement in terms of market value converts itself1 under competitive conditions1 into a competent formula of distributive justice4 ,it does not conduce to intelligibility to say that the wages of labor are just and fair because they are all that is paid to labor as wages4 ,what further value ,mr4 ,clark's extended discussion of this matter may have will lie in his exposition of how competition converts the proposition that the value of a thing is just as much as it will bring into the proposition that the market rate of wages 7or interest7 gives to labor 7or capital7 the full product of labor 7or capital74 ,in following up the theory at this critical point1 it is necessary to resort to the fuller statement of the ,distribution of ,wealth1#ae the point being not so adequately covered in the ,essentials4 ,consistently hedonistic1 ,mr4 ,clark recognises that his law of natural justice must be reduced to elementary hedonistic terms1 if it is to make good its claim to stand as a fundamental principle of theory4 ,in hedonistic theory1 production of course means the production of utilities1 and utility is of course utility to the consumer4#af ,a product is such by virtue of and to the amount of the utility which it has for a consumer4 ,this utility of the goods is measured1 as value1 by the sacrifice 7disutility7 which the consumer is willing to undergo in order to get the utility which the consumption of the goods yields him4 ,the unit and measure of productive labor is in the last analysis also a unit of disutility2 but it is disutility to the productive laborer1 not to the consumer4 ,the balance which establishes itself under competitive conditions is a compound balance1 being a balance between the utility of the goods to the consumer and the disutility 7cost7 which he is willing to undergo for it1 on the one hand1 and1 on the other hand1 a balance between the disutility of the unit of labor and the utility for which the laborer is willing to undergo this disutility4 ,it is evident1 and admitted1 that there can be no balance1 and no commensurability1 between the laborer's disutility 7pain7 in producing the goods and the consumer's utility 7pleasure7 in consuming them1 inasmuch as these two hedonistic phenomena lie each within the consciousness of a distinct person4 ,there is1 in fact1 no continuity of nervous tissue over the interval between consumer and producer1 and a direct comparison1 equilibrium1 equality1 or discrepancy in respect of pleasure and pain can1 of course1 not be sought except within each self-balanced individual complex of nervous tissue4#ag ,the wages of labor 7i4e41 the utility of the goods received by the laborer7 is not equal to the disutility undergone by him1 except in the sense that he is competitively willing to accept it2 nor are these wages equal to the utility got by the consumer of the goods1 except in the sense that he is competitively willing to pay them4 ,this point is covered by the current diagrammatic arguments of marginal-utility theory as to the determination of competitive prices4 ,but1 while the wages are not equal to or directly comparable with the disutility of the productive labor engaged1 they are1 in ,mr4 ,clark's view1 equal to the productive efficiency of that labor4#ah ,efficiency in a worker is1 in reality1 power to draw out labor on the part of society4 ,it is capacity to offer that for which society will work in return4 ,by the mediation of market price1 under competitive conditions1 it is held1 the laborer gets1 in his wages1 a valid claim on the labor of other men 7society7 as large as they are competitively willing to allow him for the services for which he is paid his wages4 ,the equitable balance between work and pay contemplated by the natural law is a balance between wages and efficiency1 as above defined2 that is to say1 between the wages of labor and the capacity of labor to get wages4 ,so far1 the whole matter might evidently have been left as ,bastiat left it4 ,it amounts to saying that the laborer gets what he is willing to accept and the consumers give what they are willing to pay4 ,and this is true1 of course1 whether competition prevails or not4 ,what makes this arrangement just and right under competitive conditions1 in ,mr4 ,clark's view1 lies in his further doctrine that under such conditions of unobstructed competition the prices of goods1 and therefore the wages of labor1 are determined1 within the scope of the given market1 by a quasi-consensus of all the parties in interest4 ,there is of course no formal consensus1 but what there is of the kind is implied in the fact that bargains are made1 and this is taken as an appraisement by society at large4 ,the 7quasi-7 consensus of buyers is held to embody the righteous 7quasi-7 appraisement of society in the premises1 and the resulting rate of wages is therefore a 7quasi-7 just return to the laborer4#ai ,each man accordingly is paid an amount that equals the total product that he personally creates4#bj ,if competitive conditions are in any degree disturbed1 the equitable balance of prices and wages is disturbed by that much4 ,all this holds true for the interest of capital1 with a change of terms4 ,the equity and binding force of this finding is evidently bound up with that common-sense presumption on which it rests2 namely1 that it is right and good that all men should get what they can without force or fraud and without disturbing existing property relations4 ,it springs from this presumption1 and1 whether in point of equity or of expediency1 it rises no higher than its source4 ,it does not touch questions of equity beyond this1 nor does it touch questions of the expediency or probable advent of any contemplated change in the existing conventions as to rights of ownership and initiative4 ,it affords a basis for those who believe in the old order--without which belief this whole structure of opinions collapses--to argue questions of wages and profits in a manner convincing to themselves1 and to confirm in the faith those who already believe in the old order4 ,but it is not easy to see that some hundreds of pages of apparatus should be required to find one's way back to these time-worn commonplaces of ,manchester4 ,in effect1 this law of natural distribution says that whatever men acquire without force or fraud under competitive conditions is their equitable due1 no more and no less1 assuming that the competitive system1 with its underlying institution of ownership1 is equitable and natural4 ,in point of economic theory the law appears on examination to be of slight consequence1 but it merits further attention for the gravity of its purport4 ,it is offered as a definitive law of equitable distribution comprised in a system of hedonistic economics which is in the main a theory of distributive acquisition only4 ,it is worth while to compare the law with its setting1 with a view to seeing how its broad declarations of economic justice shows up in contrast with the elements out of which it is constructed and among which it lies4 ,among the notable chapters of the ,essentials is one 7vi47 on ,value and its ,relation to ,different ,incomes1 which is not only a very substantial section of ,mr4 ,clark's economic theory1 but at the same time a type of the achievements of the latter-day hedonistic school4 ,certain features of this chapter alone can be taken up here4 ,the rest may be equally worthy the student's attention1 but it is the intention here not to go into the general substance of the theory of marginal utility and value1 to which the chapter is devoted1 but to confine attention to such elements of it as bear somewhat directly on the question of equitable distribution already spoken of4 ,among these latter is the doctrine of the consumer's surplus1--virtually the same as what is spoken of by other writers as consumer's rent4#ba ,consumer's surplus is the surplus of utility 7pleasure7 derived by the consumer of goods above the 7pain7 cost of the goods to him4 ,this is held to be a very generally prevalent phenomenon4 ,indeed1 it is held to be all but universally present in the field of consumption4 ,it might1 in fact1 be effectively argued that even ,mr4 ,clark's admitted exception#bb is very doubtfully to be allowed1 on his own showing4 ,correlated with this element of utility on the consumer's side is a similar volume of disutility on the producer's side1 which may be called producer's abatement1 or producer's rent3 it is the amount of disutility by which the disutility-cost of a given article to any given producer 7laborer7 falls short of 7or conceivably exceeds7 the disutility incurred by the marginal producer4 ,marginal buyers or consumers and marginal sellers or producers are relatively few3 the great body on both sides come in for something in the way of a surplus of utility or disutility4 ,all this bears on the law of natural wages and interest as follows1 taking that law of just remuneration at ,mr4 ,clark's rating of it4 ,the law works out through the mediation of price4 ,price is determined1 competitively1 by marginal producers or sellers and marginal consumers or purchasers3 the latter alone on the one side get the precise price-equivalent of the disutility incurred by them1 and the latter alone on the other side pay the full price-equivalent of the utilities derived by them from the goods purchased4#bc ,hence the competitive price--covering competitive wages and interest--does not reflect the consensus of all parties concerned as to the effective utility of the goods1 on the one hand1 or as to their effective 7disutility7 cost1 on the other hand4 ,it reflects instead1 if anything of this kind1 the valuations which the marginal unfortunates on each side concede under stress of competition2 and it leaves on each side of the bargain relation an uncovered surplus1 which marks the 7variable7 interval by which price fails to cover effective utility4 ,the excess utility--and the conceivable excess cost--does not appear in the market transactions that mediate between consumer and producer4#bd ,in the balance1 therefore1 which establishes itself in terms of value between the social utility of the product and the remuneration of the producer's efficiency1 the margin of utility represented by the aggregate consumer's surplus and like elements is not accounted for4 ,it follows1 when the argument is in this way reduced to its hedonistic elements1 that no man is paid an amount that equals the amount of the total product that he personally creates4 ,supposing the marginal-utility 7final-utility7 theories of objective value to be true1 there is no consensus1 actual or constructive1 as to the effective utility of the goods produced3 there is no social decision in the case beyond what may be implied in the readiness of buyers to profit as much as may be by the necessities of the marginal buyer and seller4 ,it appears that there is warrant1 within these premises1 for the formula3 ,remuneration than ,product4 ,only by an infinitesimal chance would it hold true in any given case that1 hedonistically1 ,remuneration ,product2 and1 if it should ever happen to be true1 there would be no finding it out4 ,the 7hedonistic7 discrepancy which so appears between remuneration and product affects both wages and interest in the same manner1 but there is some 7hedonistic7 ground in ,mr4 ,clark's doctrines for holding that the discrepancy does not strike both in the same degree4 ,there is indeed no warrant for holding that there is anything like an equable distribution of this discrepancy among the several industries or the several industrial concerns2 but there appears to be some warrant1 on ,mr4 ,clark's argument1 for thinking that the discrepancy is perhaps slighter in those branches of industry which produce the prime necessaries of life4#be ,this point of doctrine throws also a faint 7metaphysical7 light on a1 possibly generic1 discrepancy between the remuneration of capitalists and that of laborers3 the latter are1 relatively1 more addicted to consuming the necessaries of life1 and it may be that they thereby gain less in the way of a consumer's surplus4 ,all the analysis and reasoning here set forth has an air of undue tenuity2 but in extenuation of this fault it should be noted that this reasoning is made up of such matter as goes to make up the theory under review1 and the fault1 therefore1 is not to be charged to the critic4 ,the manner of argument required to meet this theory of the natural law of final productivity on its own ground is itself a sufficiently tedious proof of the futility of the whole matter in dispute4 ,yet it seems necessary to beg further indulgence for more of the same kind4 ,as a needed excuse1 it may be added that what immediately follows bears on ,mr4 ,clark's application of the law of natural distribution to modern problems of industry and public policy1 in the matter of curbing monopolies4 99 99 99 99 99 ,accepting1 again1 ,mr4 ,clark's general postulates--the postulates of current hedonistic economics--and applying the fundamental concepts1 instead of their corollaries1 to his scheme of final productivity1 it can be shown to fail on grounds even more tenuous and hedonistically more fundamental than those already passed in review4 ,in all final-utility 7marginal-utility7 theory it is of the essence of the scheme of things that successive increments of a good have progressively less than proportionate utility4 ,in fact1 the coefficient of decrease of utility is greater than the coefficient of increase of the stock of goods4 ,the solitary first loaf is exorbitantly useful4 ,as more loaves are successively added to the stock1 the utility of each grows small by degrees and incontinently less1 until1 in the end1 the state of the marginal or final loaf is1 in respect of utility1 shameful to relate4 ,so1 with a change of phrase1 it fares with successive increments of a given productive factor--labor or capital--in ,mr4 ,clark's scheme of final productivity4 ,and so1 of course1 it also fares with the utility of successive increments of product created by successively adding unit after unit to the complement of a given productive factor engaged in the case4 ,if we attend to this matter of final productivity in consistently hedonistic terms1 a curious result appears4 ,a larger complement of the productive agent1 counted by weight and tale1 will1 it is commonly held1 create a larger output of goods1 counted by weight and tale2#bf but these are not hedonistic terms and should not be allowed to cloud the argument4 ,in the hedonistic scheme the magnitude of goods1 in all the dimensions to be taken account of1 is measured in terms of utility1 which is a different matter from weight and tale4 ,it is by virtue of their utility that they are goods1 not by virtue of their physical dimensions1 number and the like2 and utility is a matter of the production of pleasure and the prevention of pain4 ,hedonistically speaking1 the amount of the goods1 the magnitude of the output1 is the quantity of utility derivable from their consumption2 and the utility per unit decreases faster than the number of units increases4#bg ,it follows that in the typical or undifferentiated case an increase of the number of units beyond a certain critical point entails a decrease of the total effective utility of the supply4#bh ,this critical point seems ordinarily to be very near the point of departure of the curve of declining utility1 perhaps it frequently coincides with the latter4 ,on the curve of declining final utility1 at any point whose tangent cuts the axis of ordinates at an angle of less than #de degrees1 an increase of the number of units entails a decrease of the total effective utility of the supply1#bi so that a gain in physical productivity is a loss as counted in total effective utility4 ,hedonistically1 therefore1 the productivity in such a case diminishes1 not only relatively to the 7physical7 magnitude of the productive agents1 but absolutely4 ,this critical point1 of maximum total effective utility1 is1 if the practice of shrewd business men is at all significant1 commonly somewhat short of the point of maximum physical productivity1 at least in modern industry and in a modern community4 ,the total effective utility may commonly be increased by decreasing the output of goods4 ,the total effective utility of wages may often be increased by decreasing the amount 7value7 of the wages per man1 particularly if such a decrease is accompanied by a rise in the price of articles to be bought with the wages4 ,hedonistically speaking1 it is evident that the point of maximum net productivity is the point at which a perfectly shrewd business management of a perfect monopoly would limit the supply2 and the point of maximum 7hedonistic7 remuneration 7wages and interest7 is the point which such a management would fix on in dealing with a wholly free1 perfectly competitive supply of labor and capital4 ,such a monopolistic state of things1 it is true1 would not answer to ,mr4 ,clark's ideal4 ,each man would not be paid an amount that equals the amount of the total product that he personally creates1 but he would commonly be paid an amount that 7hedonistically1 in point of effective utility7 exceeds what he personally creates1 because of the high final utility of what he receives4 ,this is easily proven4 ,under the monopolistic conditions supposed1 the laborers would1 it is safe to assume1 not be fully employed all the time2 that is to say1 they would be willing to work some more in order to get some more articles of consumption2 that is to say1 the articles of consumption which their wages offer them have so high a utility as to afford them a consumer's surplus1--the articles are worth more than they cost3#cj ,q4 ,e4 ,d4 ,the initiated may fairly doubt the soundness of the chain of argument by which these heterodox theoretical results are derived from ,mr4 ,clark's hedonistic postulates1 more particularly since the adepts of the school1 including ,mr4 ,clark1 are not accustomed to draw conclusions to this effect from these premises4 ,yet the argument proceeds according to the rules of marginal-utility permutations4 ,in view of this scarcely avoidable doubt1 it may be permitted1 even at the risk of some tedium1 to show how the facts of every-day life bear out this unexpected turn of the law of natural distribution1 as briefly traced above4 ,the principle involved is well and widely accepted4 ,the familiar practical maxim of charging what the traffic will bear rests on a principle of this kind1 and affords one of the readiest practical illustrations of the working of the hedonistic calculus4 ,the principle involved is that a larger aggregate return 7value7 may be had by raising the return per unit to such a point as to somewhat curtail the demand4 ,in practice it is recognised1 in other words1 that there is a critical point at which the value obtainable per unit1 multiplied by the number of units that will be taken off at that price1 will give the largest net aggregate result 7in value to the seller7 obtainable under the given conditions4 ,a calculus involving the same principle is1 of course1 the guiding consideration in all monopolistic buying and selling2 but a moment's reflection will show that it is1 in fact1 the ruling principle in all commercial transactions and1 indeed1 in all business4 ,the maxim of charging what the traffic will bear is only a special formulation of the generic principle of business enterprise4 ,business initiative1 the function of the entrepreneur 7business man7 is comprehended under this principle taken in its most general sense4#ca ,in business the buyer1 it is held by the theorists1 bids up to the point of greatest obtainable advantage to himself under the conditions prevailing1 and the seller similarly bids down to the point of greatest obtainable net aggregate gain4 ,for the trader 7business man1 entrepreneur7 doing business in the open 7competitive7 market or for the business concern with a partial or limited monopoly1 the critical point above referred to is1 of course1 reached at a lower point on the curve of price than would be the case under a perfect and unlimited monopoly1 such as was supposed above2 but the principle of charging what the traffic will bear remains intact1 although the traffic will not bear the same in the one case as in the other4 ,now1 in the theories based on marginal 7or final7 utility1 value is an expression or measure of effective utility--or whatever equivalent term may be preferred4 ,in operating on values1 therefore1 under the rule of charging what the traffic will bear1 the sellers of a monopolised supply1 e4g41 must operate through the valuations of the buyers2 that is to say1 they must influence the final utility of the goods or services to such effect that the total effective utility of the limited supply to the consumers will be greater than would be the total effective utility of a larger supply1 which is the point in question4 ,the emphasis falls still more strongly on this illustration of the hedonistic calculus1 if it is called to mind that in the common run of such limitations of supply by a monopolistic business management the management would be able to increase the supply at a progressively declining cost beyond the critical point by virtue of the well-known principle of increasing returns from industry4 ,it is also to be added that1 since the monopolistic business gets its enhanced return from the margin by which the total effective utility of the limited supply exceeds that of a supply not so limited1 and since there is to be deducted from this margin the costs of monopolistic management in addition to other costs1 therefore the enhancement of the total effective utility of the goods to the consumer in the case must be appreciably larger than the resulting net gains to the monopoly4 ,by a bold metaphor--a metaphor sufficiently bold to take it out of the region of legitimate figures of speech--the gains that come to enterprising business concerns by such monopolistic enhancement of the total effective utility of their products are spoken of as robbery1 extortion1 plunder2 but the theoretical complexion of the case should not be overlooked by the hedonistic theorist in the heat of outraged sentiment4 ,the monopolist is only pushing the principle of all business enterprise 7free competition7 to its logical conclusion2 and1 in point of hedonistic theory1 such monopolistic gains are to be accounted the natural remuneration of the monopolist for his productive service to the community in enhancing their enjoyment per unit of consumable goods to such point as to swell their net aggregate enjoyment to a maximum4 ,this intricate web of hedonistic calculations might be pursued further1 with the result of showing that1 while the consumers of the monopolised supply of goods are gainers by virtue of the enhanced total effective utility of the goods1 the monopolists who bring about this result do so in great part at their own cost1 counting cost in terms of a reduction of total effective utility4 ,by injudiciously increasing their own share of goods1 they lower the marginal and effective utility of their wealth to such a point as1 probably1 to entail a considerable 7hedonistic7 privation in the shrinkage of their enjoyment per unit4 ,but it is not the custom of economists1 nor does ,mr4 ,clark depart from this custom1 to dwell on the hardships of the monopolists4 ,this much may be added1 however1 that this hedonistically consistent exposition of the natural law of final productivity shows it to be one of those universal principles which govern economic life in all its stages of evolution1 even when that evolution enters the phase of monopolistic business enterprise1--granting always the sufficiency of the hedonistic postulates from which the law is derived4 ,further1 the considerations reviewed above go to show that1 on two counts1 ,mr4 ,clark's crusade against monopoly in the later portion of his treatise is out of touch with the larger theoretical speculations of the earlier portions3 7a7 it runs counter to the hedonistic law of natural distribution2 and 7b7 the monopolistic business against which ,mr4 ,clark speaks is but the higher and more perfect development of that competitive business enterprise which he wishes to reinstate1--competitive business1 so called1 being incipiently monopolistic enterprise4 ,apart from this theoretical bearing1 the measures which ,mr4 ,clark advocates for the repression of monopoly1 under the head of applications to modern problems of industry and public policy1 may be good economic policy or they may not1--they are the expression of a sound common sense1 an unvitiated solicitude for the welfare of mankind1 and a wide information as to the facts of the situation4 ,the merits of this policy of repression1 as such1 cannot be discussed here4 ,on the other hand1 the relation of this policy to the theoretical groundwork of the treatise needs also not be discussed here1 inasmuch as it has substantially no relation to the theory4 ,in this later portion of the volume ,mr4 ,clark does not lean on doctrines of final utility1 final productivity1 or1 indeed1 on hedonistic economics at large4 ,he speaks eloquently for the material and cultural interests of the community1 and the references to his law of natural distribution might be cut bodily out of the discussion without lessening the cogency of his appeal or exposing any weakness in his position4 ,indeed1 it is by no means certain that such an excision would not strengthen his appeal to men's sense of justice by eliminating irrelevant matter4 ,certain points in this later portion of the volume1 however1 where the argument is at variance with specific articles of theory professed by ,mr4 ,clark1 may be taken up1 mainly to elucidate the weakness of his theoretical position at the points in question4 ,he recognises with more than the current degree of freedom that the growth and practicability of monopolies under modern conditions is chiefly due to the negotiability of securities representing capital1 coupled with the joint-stock character of modern business concerns4#cb ,these features of the modern 7capitalistic7 business situation enable a sufficiently few men to control a section of the community sufficiently large to make an effective monopoly4 ,the most effective known form of organisation for purposes of monopoly1 according to ,mr4 ,clark1 is that of the holding company1 and the ordinary corporation follows it closely in effectiveness in this respect4 ,the monopolistic control is effected by means of the vendible securities covering the capital engaged4 ,to meet the specifications of ,mr4 ,clark's theory of capital1 these vendible securities--as e4g41 the securities 7common stock7 of a holding company--should be simply the formal evidence of the ownership of certain productive goods and the like4 ,yet1 by his own showing1 the ownership of a share of productive goods proportionate to the face value1 or the market value1 of the securities is by no means the chief consequence of such an issue of securities4#cc ,one of the consequences1 and for the purposes of ,mr4 ,clark's argument the gravest consequence1 of the employment of such securities1 is the dissociation of ownership from the control of the industrial equipment1 whereby the owners of certain securities1 which stand in certain immaterial1 technical relations to certain other securities1 are enabled arbitrarily to control the use of the industrial equipment covered by the latter4 ,these are facts of the modern organisation of capital1 affecting the productivity of the industrial equipment and its serviceability both to its owners and to the community4 ,they are facts1 though not physically tangible objects2 and they have an effect on the serviceability of industry no less decisive than the effect which any group of physically tangible objects of equal market value have4 ,they are1 moreover1 facts which are bought and sold in the purchase and sale of these securities1 as1 e4g41 the common stock of a holding company4 ,they have a value1 and therefore they have a total effective utility4 ,in short1 these facts are intangible assets1 which are the most consequential element in modern capital1 but which have no existence in the theory of capital by which ,mr4 ,clark aims to deal with modern problems of industry4 ,yet1 when he comes to deal with these problems1 it is1 of necessity1 these intangible assets that immediately engage his attention4 ,these intangible assets are an outgrowth of the freedom of contract under the conditions imposed by the machine industry2 yet ,mr4 ,clark proposes to suppress this category of intangible assets without prejudice to freedom of contract or to the machine industry1 apparently without having taken thought of the lesson which he rehearses 7pp4 #cij-cia7 from the introduction of the holding company1 with its sinister perfection1 to take the place of the 7less efficient7 trust when the latter was dealt with somewhat as it is now proposed to deal with the holding company4 ,one is tempted to remark that a more naive apprehension of the facts of modern capital would have afforded a more competent realisation of the problems of monopoly4 99 99 99 99 99 ,it appears from what has just been said of ,mr4 ,clark's natural distribution and of his dealing with the problems of modern industry that the logic of hedonism is of no avail for the theory of business affairs4 ,yet it is held1 perhaps justly1 that the hedonistic interpretation may be of great avail in analysing the industrial functions of the community1 in their broad1 generic character1 even if it should not serve so well for the intricate details of the modern business situation4 ,it may be at least a serviceable hypothesis for the outlines of economic theory1 for the first approximations to the economic laws sought by taxonomists4 ,to be serviceable for this purpose1 the hypothesis need perhaps not be true to fact1 at least not in the final details of the community's life or without material qualification2#cd but it must at least have that ghost of actuality that is implied in consistency with its own corollaries and ramifications4 ,as has been suggested in an earlier paragraph1 it is characteristic of hedonistic economics that the large and central element in its theoretical structure is the doctrine of distribution4 ,consumption being taken for granted as a quantitive matter simply1--essentially a matter of an insatiable appetite1--economics becomes a theory of acquisition2 production is1 theoretically1 a process of acquisition1 and distribution a process of distributive acquisition4 ,the theory of production is drawn in terms of the gains to be acquired by production2 and under competitive conditions this means necessarily the acquisition of a distributive share of what is available4 ,the rest of what the facts of productive industry include1 as1 e4g41 the facts of workmanship or the state of the industrial arts1 gets but a scant and perfunctory attention4 ,those matters are not of the theoretical essence of the scheme4 ,mr4 ,clark's general theory of production does not differ substantially from that commonly professed by the marginal-utility school4 ,it is a theory of competitive acquisition4 ,an inquiry into the principles of his doctrine1 therefore1 as they appear1 e4g41 in the early chapters of the ,essentials1 is1 in effect1 an inquiry into the competence of the main theorems of modern hedonistic economics4 ,all men seek to get as much net service from material wealth as they can4 ,some of the benefit received is neutralised by the sacrifice incurred2 but there is a net surplus of gains not thus canceled by sacrifices1 and the generic motive which may properly be called economic is the desire to make this surplus large4#ce ,it is of the essence of the scheme that the acquisitive activities of mankind afford a net balance of pleasure4 ,it is out of this net balance1 presumably1 that the consumer's surpluses arise1 or it is in this that they merge4 ,this optimistic conviction is a matter of presumption1 of course2 but it is universally held to be true by hedonistic economists1 particularly by those who cultivate the doctrines of marginal utility4 ,it is not questioned and not proven4 ,it seems to be a surviving remnant of the eighteenth-century faith in a benevolent ,order of ,nature2 that is to say1 it is a rationalistic metaphysical postulate4 ,it may be true or not1 as matter of fact2 but it is a postulate of the school1 and its optimistic bias runs like a red thread through all the web of argument that envelops the normal competitive system4 ,a surplus of gain is normal to the theoretical scheme4 ,the next great theorem of this theory of acquisition is at cross-purposes with this one4 ,men get useful goods only at the cost of producing them1 and production is irksome1 painful1 as has been recounted above4 ,they go on producing utilities until1 at the margin1 the last increment of utility in the product is balanced by the concomitant increment of disutility in the way of irksome productive effort1--labor or abstinence4 ,at the margin1 pleasure-gain is balanced by pain-cost4 ,but the effective utility of the total product is measured by that of the final unit2 the effective utility of the whole is given by the number of units of product multiplied by the effective utility of the final unit2 while the effective disutility 7pain-cost7 of the whole is similarly measured by the pain-cost of the final unit4 ,the total effective utility of the producer's product equals the total effective disutility of his pains of acquisition4 ,hence there is no net surplus of utility in the outcome4 ,the corrective objection is ready to hand1#cf that1 while the balance of utility and disutility holds at the margin1 it does not hold for the earlier units of the product1 these earlier units having a larger utility and a lower cost1 and so leaving a large net surplus of utility1 which gradually declines as the margin is approached4 ,but this attempted correction evades the hedonistic test4 ,it shifts the ground from the calculus to the objects which provoke the calculation4 ,utility is a psychological matter1 a matter of pleasurable appreciation1 just as disutility1 conversely1 is a matter of painful appreciation4 ,the individual who is held to count the costs and the gain in this hedonistic calculus is1 by supposition1 a highly reasonable person4 ,he counts the cost to him as an individual against the gain to him as an individual4 ,he looks before and after1 and sizes the whole thing up in a reasonable course of conduct4 ,the absolute utility would exceed the effective utility only on the supposition that the producer is an unreflecting sensory apparatus1 such as the beasts of the field are supposed to be1 devoid of that gift of appraisement and calculation which is the hypothetical hedonist's only human trait4 ,there might on such a supposition--if the producer were an intelligent sensitive organism simply--emerge an excess of total pleasure over total pain1 but there could then be no talk of utility or of disutility1 since these terms imply intelligent reflection1 and they are employed because they do so4 ,the hedonistic producer looks to his own cost and gain1 as an intelligent pleasure-seeker whose consciousness compasses the contrasted elements as wholes4 ,he does not contrast the balance of pain and pleasure in the morning with the balance of pain and pleasure in the afternoon1 and say that there is so much to the good because he was not so tired in the morning4 ,indeed1 by hypothesis1 the pleasure to be derived from the consumption of the product is a future1 or expected1 pleasure1 and can be said to be present1 at the point of time at which a given unit of pain-cost is incurred1 only in anticipation2 and it cannot be said that the anticipated pleasure attaching to a unit of product which emerges from the effort of the producer during the relatively painless first hour's work exceeds the anticipated pleasure attaching to a similar unit emerging from the second hour's work4 ,mr4 ,clark has1 in effect1 explained this matter in substantially the same way in another connection 7e4g41 p4 #db71 where he shows that the magnitude on which the question of utility and cost hinges is the total effective utility1 and that the total absolute utility is a matter not of what hedonistically is1 in respect of utility as an outcome of production1 but of what might have been under different circumstances4 ,an equally unprofitable result may be reached from the same point of departure along a different line of argument4 ,granting that increments of product should be measured1 in respect of utility1 by comparison with the disutility of the concomitant increment of cost1 then the diagrammatic arguments commonly employed are inadequate1 in that the diagrams are necessarily drawn in two dimensions only1--length and breadth3 whereas they should be drawn in three dimensions1 so as to take account of the intensity of application as well as of its duration4#cg ,apparently1 the exigencies of graphic representation1 fortified by the presumption that there always emerges a surplus of utility1 have led marginal-utility theorists1 in effect1 to overlook this matter of intensity of application4 ,when this element is brought in with the same freedom as the other two dimensions engaged1 the argument will1 in hedonistic consistency1 run somewhat as follows1--the run of the facts being what it may4 ,the producer1 setting out on this irksome business1 and beginning with the production of the exorbitantly useful initial unit of product1 will1 by hedonistic necessity1 apply himself to the task with a correspondingly extravagant intensity1 the irksomeness 7disutility7 of which necessarily rises to such a pitch as to leave no excess of utility in this initial unit of product above the concomitant disutility of the initial unit of productive effort4#ch ,as the utility of subsequent units of product progressively declines1 so will the producer's intensity of irksome application concomitantly decline1 maintaining a nice balance between utility and disutility throughout4 ,there is1 therefore1 no excess of absolute utility above effective utility at any point on the curve1 and no excess of total absolute utility above total effective utility of the product as a whole1 nor above the total absolute disutility or the total effective disutility of the pain-cost4 ,a transient evasion of this outcome may perhaps be sought by saying that the producer will act wisely1 as a good hedonist should1 and save his energies during the earlier moments of the productive period in order to get the best aggregate result from his day's labor1 instead of spending himself in ill-advised excesses at the outset4 ,such seems to be the fact of the matter1 so far as the facts wear a hedonistic complexion2 but this correction simply throws the argument back on the previous position and concedes the force of what was there claimed4 ,it amounts to saying that1 instead of appreciating each successive unit of product in isolated contrast with its concomitant unit of irksome productive effort1 the producer1 being human1 wisely looks forward to his total product and rates it by contrast with his total pain-cost4 ,whereupon1 as before1 no net surplus of utility emerges1 under the rule which says that irksome production of utilities goes on until utility and disutility balance4 ,but this revision of final productivity has further consequences for the optimistic doctrines of hedonism4 ,evidently1 by a somewhat similar line of argument the consumer's surplus will be made to disappear1 even as this that may be called the producer's surplus has disappeared4 ,production being acquisition1 and the consumer's cost being cost of acquisition1 the argument above should apply to the consumer's case without abatement4 ,on considering this matter in terms of the hedonistically responsive individual concerned1 with a view to determining whether there is1 in his calculus of utilities and costs1 any margin of uncovered utilities left over after he has incurred all the disutilities that are worth while to him1--instead of proceeding on a comparison between the pleasure-giving capacity of a given article and the market price of the article1 all such alleged differential advantages within the scope of a single sensory are seen to be nothing better than an illusory diffractive effect due to a faulty instrument4 ,but the trouble does not end here4 ,the equality3 pain-cost pleasure-gain1 is not a competent formula4 ,it should be3 pain-cost incurred pleasure-gain anticipated4 ,and between these two formulas lies the old adage1 there's many a slip 'twixt the cup and the lip4 ,in an appreciable proportion of ventures1 endeavors1 and enterprises1 men's expectations of pleasure-gain are in some degree disappointed1--through miscalculation1 through disserviceable secondary effects of their productive efforts1 by the act of ,god1 by fire1 flood1 and pestilence4 ,in the nature of things these discrepancies fall out on the side of loss more frequently than on that of gain4 ,after all allowance has been made for what may be called serviceable errors1 there remains a margin of disserviceable error1 so that pain-cost eventual pleasure-gain anticipated pleasure-gain--n4 ,hence1 in general1 pain-cost pleasure-gain4 ,hence it appears that1 in the nature of things1 men's pains of production are underpaid by that much2 although it may1 of course1 be held that the nature of things at this point is not natural or normal4 ,to this it may be objected that the risk is discounted4 ,insurance is a practical discounting of risk2 but insurance is resorted to only to cover risk that is appreciated by the person exposed to it1 and it is such risks as are not appreciated by those who incur them that are chiefly in question here4 ,and it may be added that insurance has hitherto not availed to equalise and distribute the chances of success and failure4 ,business gains--entrepreneur's gains1 the rewards of initiative and enterprise--come out of this uncovered margin of adventure1 and the losses of initiative and enterprise are to be set down to the same account4 ,in some measure this element of initiative and enterprise enters into all economic endeavor4 ,and it is not unusual for economists to remark that the volume of unsuccessful or only partly successful enterprise is very large4 ,there are some lines of enterprise that are1 as one might say1 extra hazardous1 in which the average falls out habitually on the wrong side of the account4 ,typical of this class is the production of the precious metals1 particularly as conducted under that regime of free competition for which ,mr4 ,clark speaks4 ,it has been the opinion1 quite advisedly1 of such economists of the classic age of competition as ,j4 ,s4 ,mill and ,cairnes1 e4g41 that the world's supply of the precious metals has been got at an average or total cost exceeding their value by several fold4 ,the producers1 under free competition at least1 are over-sanguine of results4 ,but1 in strict consistency1 the hedonistic theory of human conduct does not allow men to be guided in their calculation of cost and gain1 when they have to do with the precious metals1 by different norms from those which rule their conduct in the general quest of gain4 ,the visible difference in this respect between the production of the precious metals and production generally should be due to the larger proportions and greater notoriety of the risks in this field rather than to a difference in the manner of response to the stimulus of expected gain4 ,the canons of hedonistic calculus permit none but a quantitative difference in the response4 ,what happens in the production of the precious metals is typical of what happens in a measure and more obscurely throughout the field of productive effort4 ,instead of a surplus of utility of product above the disutility of acquisition1 therefore1 there emerges an average or aggregate net hedonistic deficit4 ,on a consistent marginal-utility theory1 all production is a losing game4 ,the fact that ,nature keeps the bank1 it appears1 does not take the hedonistic game of production out of the general category known of old to that class of sanguine hedonistic calculators whose day-dreams are filled with safe and sane schemes for breaking the bank4 ,hope springs eternal in the human breast4 ,men are congenitally over-sanguine1 it appears2 and the production of utilities is1 mathematically speaking1 a function of the pig-headed optimism of mankind4 ,it turns out that the laws of 7human7 nature malevolently grind out vexation for men instead of benevolently furthering the greatest happiness of the greatest number4 ,the sooner the whole traffic ceases1 the better1--the smaller will be the net balance of pain4 ,the great hedonistic ,law of ,nature turns out to be simply the curse of ,adam1 backed by the even more sinister curse of ,eve4 99 99 99 99 99 ,the remark was made in an earlier paragraph that ,mr4 ,clark's theories have substantially no relation to his practical proposals4 ,this broad declaration requires an equally broad qualification4 ,while the positions reached in his theoretical development count for nothing in making or fortifying the positions taken on problems of modern industry and public policy1 the two phases of the discussion--the theoretical and the pragmatic--are the outgrowth of the same range of preconceptions and run back to the same metaphysical ground4 ,the present canvass of items in the doctrinal system has already far overpassed reasonable limits1 and it is out of the question here to pursue the exfoliation of ideas through ,mr4 ,clark's discussion of public questions1 even in the fragmentary fashion in which scattered items of the theoretical portion of his treatise have been passed in review4 ,but a broad and rudely drawn characterisation may yet be permissible4 ,this latter portion of the volume has the general complexion of a ,bill of ,rights4 ,this is said1 of course1 with no intention of imputing a fault4 ,it implies that the scope and method of the discussion is governed by the preconception that there is one right and beautiful definitive scheme of economic life1 to which the whole creation tends4 ,whenever and in so far as current phenomena depart or diverge from this definitive natural scheme or from the straight and narrow path that leads to its consummation1 there is a grievance to be remedied by putting the wheels back into the rut4 ,the future1 such as it ought to be1--the only normally possible1 natural future scheme of life1--is known by the light of this preconception2 and men have an indefeasible right to the installation and maintenance of those specific economic relations1 expedients1 institutions1 which this natural scheme comprises1 and to no others4 ,the consummation is presumed to dominate the course of things which is presumed to lead up to the consummation4 ,the measures of redress whereby the economic ,order of ,nature is to renew its youth are simple1 direct1 and short-sighted1 as becomes the proposals of pre-,darwinian hedonism1 which is not troubled about the exuberant uncertainties of cumulative change4 ,no doubt presents itself but that the community's code of right and equity in economic matters will remain unchanged under changing conditions of economic life4 ,,footnotes3 #a ,reprinted by permission from ,the ,quarterly ,journal of ,economics1 ,vol4 ,,xxii1 ,feb41 #aijh4 #b ,the ,essentials of ,economic ,theory1 as ,applied to ,modern ,problems of ,industry and ,public ,policy4 ,by ,john ,bates ,clark4 ,new ,york3 ,the ,macmillan ,company4 #aijg4 #c ,cf41 e4g4 ,the ,distribution of ,wealth1 p4 #cgf1 note4 #d ,see1 e4g41 ,j4 ,s4 ,mill1 ,political ,economy1 ,book ,i2 ,marshall1 ,principles of ,economics1 ,vol4 ,i1 ,books ,,ii-,v4 #e ,cf41 e4g41 such an account as ,barrows1 ,ethno-botany of the ,coahuilla ,indians4 #f ,what would be the scientific rating of the work of a botanist who should spend his energy in devising ways and means to neutralize the ecological variability of plants1 or of a physiologist who conceived it the end of his scientific endeavors to rehabilitate the vermiform appendix or the pineal eye1 or to denounce and penalize the imitative coloring of the ,viceroy butterfly8 ,what scientific interest would attach to the matter if ,mr4 ,loeb1 e4g41 should devote a few score pages to canvassing the moral responsibilities incurred by him in his parental relation to his parthenogenetically developed sea-urchin eggs8 ,those phenomena which ,mr4 ,clark characterizes as positive perversions may be distasteful and troublesome1 perhaps1 but the economic necessity of doing what is legally difficult is not of the essentials of theory4 #g ,it is a notable fact that even the genius of ,herbert ,spencer could extract nothing but taxonomy from his hedonistic postulates2 e4g41 his ,social ,statics4 ,spencer is both evolutionist and hedonist1 but it is only by recourse to other factors1 alien to the rational hedonistic scheme1 such as habit1 delusions1 use and disuse1 sporadic variation1 environmental forces1 that he is able to achieve anything in the way of genetic science1 since it is only by this recourse that he is enabled to enter the field of cumulative change within which the modern post-,darwinian sciences live and move and have their being4 #h ,the capital-goods have to be taken unit by unit if their value for productive purposes is to be rightly gauged4 ,a part of a supply of potatoes is traceable to the hoes that dig them4444 ,we endeavor simply to ascertain how badly the loss of one hoe would affect us or how much good the restoration of it would do us4 ,this truth1 like the foregoing ones1 has a universal application in economics2 for primitive men as well as civilized ones must estimate the specific productivity of the tools that they use1 etc4 ,page #dc4 #i ,cf4 a criticism of ,mr4 ,fisher's conception in the ,political ,science ,quarterly for ,february1 #aijh4 #aj ,the machine itself is often a hopeless specialist4 ,it can do one minute thing and that only1 and when a new and better device appears for doing that one thing1 the machine has to go1 and not to some new employment1 but to the junk heap4 ,there is thus taking place a considerable waste of capital in consequence of mechanical and other progress4 ,indeed1 a quick throwing away of instruments which have barely begun to do their work is often the secret of the success of an enterprising manager1 but it entails a destruction of capital4 #aa ,the position of the laborer and his wages1 in this light1 would not be substantially different from that of the capitalist and his interest4 ,labor is no more possible1 as a fact of industry1 without the community's accumulated technological knowledge than is the use of productive goods4 #ab ,cf4 ,distribution of ,wealth1 chaps1 xii1 xiii1 vii1 viii2 ,essentials1 chaps1 v-x4 #ac ,essentials1 p4 #aeh4 #ad ,distribution1 chap4 xxiv4 #ae ,chap4 xxiv4 #af ,essentials1 p4 #dj4 #ag ,among modern economic hedonists1 including ,mr4 ,clark1 there stands over from the better days of the order of nature a presumption1 disavowed1 but often decisive1 that the sensational response to the like mechanical impact of the stimulating body is the same in different individuals4 ,but1 while this presumption stands ever in the background1 and helps to many important conclusions1 as in the case under discussion1 few modern hedonists would question the statement in the text4 #ah ,distribution1 p4 #cid4 #ai ,in ,mr4 ,clark's discussion1 elsewhere1 the quasi-character of the productive share of the laborer is indicated by saying that it is the product imputed or imputable to him4 #bj ,essentials1 p4 #ib4 ,et si sensus deficit1 ad firmandum cor sincerum sola fides sufficit4 #ba ,see pp4 #ajb-aac2 also p4 #agb1 note4 #bb ,the cheapest and poorest grades of articles4 ,page #aac4 #bc ,see p4 #aac4 #bd ,the disappearance1 and the method of disappearance1 of such elements of differential utility and disutility occupies a very important place in all marginal-utility 7final-utility7 theories of market value1 or objective value4 #be ,only the simplest and cheapest things that are sold in the market at all bring just what they are worth to the buyers4 ,page #aac4 #bf ,it is1 e4g41 open to serious question whether ,mr4 ,clark's curves of final productivity 7pp4 #aci1 #adh71 showing a declining output per unit in response to an increase of one of the complementary agents of production1 will fit the common run of industry in case the output be counted by weight and tale4 ,in many cases they will1 no doubt2 in many other cases they will not4 ,but this is no criticism of the curves in question1 since they do not1 or at least should not1 purport to represent the product in such terms1 but in terms of utility4 #bg ,to resort to an approximation after the manner of ,malthus1 if the supply of goods be supposed to increase by arithmetical progression1 their final utility may be said concomitantly to decrease by geometrical progression4 #bh ,cf4 ,essentials1 chap4 iii1 especially pp4 #dj-da4 #bi ,the current marginal-utility diagrams are not of much use in this connection1 because the angle of the tangent with the axis of ordinates1 at any point1 is largely a matter of the draftsman's taste4 ,the abscissa and the ordinate do not measure commensurable units4 ,the units on the abscissa are units of frequency1 while those on the ordinate are units of amplitude2 and the greater or less segment of line allowed per unit on either axis is a matter of independently arbitrary choice4 ,yet the proposition in the text remains true1--as true as hedonistic propositions commonly are4 ,the magnitude of the angle of the tangent with the axis of ordinates decides whether the total 7hedonistic7 productivity at a given point in the curve increases or decreases with a 7mechanical7 increase of the productive agent1--no student at all familiar with marginal-utility arguments will question that patent fact4 ,but the angle of the tangent depends on the fancy of the draftsman1--no one possessed of the elemental mathematical notions will question that equally patent fact4 #cj ,a similar line of argument has been followed up by ,mr4 ,clark for capital and interest1 in a different connection4 ,see ,essentials1 pp4 #cdj-cde1 #cef4 #ca ,cf4 ,essentials1 pp4 #hc-ij1 #aah-abj4 #cb ,cf4 chap4 xxii1 especially pp4 #cgh-cib4 #cc ,cf4 p4 #cia4 #cd ,cf4 ,essentials1 p4 #ci4 #ce ,essentials1 p4 #ci4 #cf ,cf4 ,essentials1 chap4 iii1 especially pp4 #ea-ef4 #cg ,this difficulty is recognized by the current marginal-utility arguments1 and an allowance for intensity is made or presumed4 ,but the allowance admitted is invariably insufficient4 ,it might be said to be insufficient by hypothesis1 since it is by hypothesis too small to offset the factor which it is admitted to modify4 #ch ,the limit to which the intensity rises is a margin of the same kind as that which limits the duration4 ,this supposition1 that the intensity of application necessarily rises to such a pitch that its disutility overtakes and offsets the utility of the product1 may be objected to as a bit of puerile absurdity2 but it is a long time since puerility or absurdity has been a bar to any supposition in arguments on marginal utility4 ,,the ,,limitations ,,of ,,marginal ,,utility#a ,the limitations of the marginal-utility economics are sharp and characteristic4 ,it is from first to last a doctrine of value1 and in point of form and method it is a theory of valuation4 ,the whole system1 therefore1 lies within the theoretical field of distribution1 and it has but a secondary bearing on any other economic phenomena than those of distribution--the term being taken in its accepted sense of pecuniary distribution1 or distribution in point of ownership4 ,now and again an attempt is made to extend the use of the principle of marginal utility beyond this range1 so as to apply it to questions of production1 but hitherto without sensible effect1 and necessarily so4 ,the most ingenious and the most promising of such attempts have been those of ,mr4 ,clark1 whose work marks the extreme range of endeavor and the extreme degree of success in so seeking to turn a postulate of distribution to account for a theory of production4 ,but the outcome has been a doctrine of the production of values1 and value1 in ,mr4 ,clark's as in other utility systems1 is a matter of valuation2 which throws the whole excursion back into the field of distribution4 ,similarly1 as regards attempts to make use of this principle in an analysis of the phenomena of consumption1 the best results arrived at are some formulation of the pecuniary distribution of consumption goods4 ,within this limited range marginal-utility theory is of a wholly statical character4 ,it offers no theory of a movement of any kind1 being occupied with the adjustment of values to a given situation4 ,of this1 again1 no more convincing illustration need be had than is afforded by the work of ,mr4 ,clark1 which is not excelled in point of earnestness1 perseverance1 or insight4 ,for all their use of the term dynamic1 neither ,mr4 ,clark nor any of his associates in this line of research have yet contributed anything at all appreciable to a theory of genesis1 growth1 sequence1 change1 process1 or the like1 in economic life4 ,they have had something to say as to the bearing which given economic changes1 accepted as premises1 may have on valuation1 and so on distribution2 but as to the causes of change or the unfolding sequence of the phenomena of economic life they have had nothing to say hitherto2 nor can they1 since their theory is not drawn in causal terms but in terms of teleology4 ,in all this the marginal-utility school is substantially at one with the classical economics of the nineteenth century1 the difference between the two being that the former is confined within narrower limits and sticks more consistently to its teleological premises4 ,both are teleological1 and neither can consistently admit arguments from cause to effect in the formulation of their main articles of theory4 ,neither can deal theoretically with phenomena of change1 but at the most only with rational adjustment to change which may be supposed to have supervened4 ,to the modern scientist the phenomena of growth and change are the most obtrusive and most consequential facts observable in economic life4 ,for an understanding of modern economic life the technological advance of the past two centuries--e4g41 the growth of the industrial arts--is of the first importance2 but marginal-utility theory does not bear on this matter1 nor does this matter bear on marginal-utility theory4 ,as a means of theoretically accounting for this technological movement in the past or in the present1 or even as a means of formally1 technically stating it as an element in the current economic situation1 that doctrine and all its works are altogether idle4 ,the like is true for the sequence of change that is going forward in the pecuniary relations of modern life2 the hedonistic postulate and its propositions of differential utility neither have served nor can serve an inquiry into these phenomena of growth1 although the whole body of marginal-utility economics lies within the range of these pecuniary phenomena4 ,it has nothing to say to the growth of business usages and expedients or to the concomitant changes in the principles of conduct which govern the pecuniary relations of men1 which condition and are conditioned by these altered relations of business life or which bring them to pass4 ,it is characteristic of the school that wherever an element of the cultural fabric1 an institution or any institutional phenomenon1 is involved in the facts with which the theory is occupied1 such institutional facts are taken for granted1 denied1 or explained away4 ,if it is a question of price1 there is offered an explanation of how exchanges may take place with such effect as to leave money and price out of the account4 ,if it is a question of credit1 the effect of credit extension on business traffic is left on one side and there is an explanation of how the borrower and lender cooeperate to smooth out their respective income streams of consumable goods or sensations of consumption4 ,the failure of the school in this respect is consistent and comprehensive4 ,and yet these economists are lacking neither in intelligence nor in information4 ,they are1 indeed1 to be credited1 commonly1 with a wide range of information and an exact control of materials1 as well as with a very alert interest in what is going on2 and apart from their theoretical pronouncements the members of the school habitually profess the sanest and most intelligent views of current practical questions1 even when these questions touch matters of institutional growth and decay4 ,the infirmity of this theoretical scheme lies in its postulates1 which confine the inquiry to generalisations of the teleological or deductive order4 ,these postulates1 together with the point of view and logical method that follow from them1 the marginal-utility school shares with other economists of the classical line--for this school is but a branch or derivative of the ,english classical economists of the nineteenth century4 ,the substantial difference between this school and the generality of classical economists lies mainly in the fact that in the marginal-utility economics the common postulates are more consistently adhered to at the same time that they are more neatly defined and their limitations are more adequately realized4 ,both the classical school in general and its specialized variant1 the marginal-utility school1 in particular1 take as their common point of departure the traditional psychology of the early nineteenth-century hedonists1 which is accepted as a matter of course or of common notoriety and is held quite uncritically4 ,the central and well-defined tenet so held is that of the hedonistic calculus4 ,under the guidance of this tenet and of the other psychological conceptions associated and consonant with it1 human conduct is conceived of and interpreted as a rational response to the exigencies of the situation in which mankind is placed2 as regards economic conduct it is such a rational and unprejudiced response to the stimulus of anticipated pleasure and pain--being1 typically and in the main1 a response to the promptings of anticipated pleasure1 for the hedonists of the nineteenth century and of the marginal-utility school are in the main of an optimistic temper4#b ,mankind is1 on the whole and normally1 7conceived to be7 clearsighted and farsighted in its appreciation of future sensuous gains and losses1 although there may be some 7inconsiderable7 difference between men in this respect4 ,men's activities differ1 therefore1 7inconsiderably7 in respect of the alertness of the response and the nicety of adjustment of irksome pain-cost to apprehended future sensuous gain2 but1 on the whole1 no other ground or line or guidance of conduct than this rationalistic calculus falls properly within the cognizance of the economic hedonists4 ,such a theory can take account of conduct only in so far as it is rational conduct1 guided by deliberate and exhaustively intelligent choice--wise adaptation to the demands of the main chance4 ,the external circumstances which condition conduct are variable1 of course1 and so they will have a varying effect upon conduct2 but their variation is1 in effect1 construed to be of such a character only as to vary the degree of strain to which the human agent is subject by contact with these external circumstances4 ,the cultural elements involved in the theoretical scheme1 elements that are of the nature of institutions1 human relations governed by use and wont in whatever kind and connection1 are not subject to inquiry but are taken for granted as pre-existing in a finished1 typical form and as making up a normal and definitive economic situation1 under which and in terms of which human intercourse is necessarily carried on4 ,this cultural situation comprises a few large and simple articles of institutional furniture1 together with their logical implications or corollaries2 but it includes nothing of the consequences or effects caused by these institutional elements4 ,the cultural elements so tacitly postulated as immutable conditions precedent to economic life are ownership and free contract1 together with such other features of the scheme of natural rights as are implied in the exercise of these4 ,these cultural products are1 for the purpose of the theory1 conceived to be given a priori in unmitigated force4 ,they are part of the nature of things2 so that there is no need of accounting for them or inquiring into them1 as to how they have come to be such as they are1 or how and why they have changed and are changing1 or what effect all this may have on the relations of men who live by or under this cultural situation4 ,evidently the acceptance of these immutable premises1 tacitly1 because uncritically and as a matter of course1 by hedonistic economics gives the science a distinctive character and places it in contrast with other sciences whose premises are of a different order4 ,as has already been indicated1 the premises in question1 so far as they are peculiar to the hedonistic economics1 are 7a7 a certain institutional situation1 the substantial feature of which is the natural right of ownership1 and 7b7 the hedonistic calculus4 ,the distinctive character given to this system of theory by these postulates and by the point of view resulting from their acceptance may be summed up broadly and concisely in saying that the theory is confined to the ground of sufficient reason instead of proceeding on the ground of efficient cause4 ,the contrary is true of modern science1 generally 7except mathematics71 particularly of such sciences as have to do with the phenomena of life and growth4 ,the difference may seem trivial4 ,it is serious only in its consequences4 ,the two methods of inference--from sufficient reason and from efficient cause--are out of touch with one another and there is no transition from one to the other3 no method of converting the procedure or the results of the one into those of the other4 ,the immediate consequence is that the resulting economic theory is of a teleological character--deductive or a priori as it is often called--instead of being drawn in terms of cause and effect4 ,the relation sought by this theory among the facts with which it is occupied is the control exercised by future 7apprehended7 events over present conduct4 ,current phenomena are dealt with as conditioned by their future consequences2 and in strict marginal-utility theory they can be dealt with only in respect of their control of the present by consideration of the future4 ,such a 7logical7 relation of control or guidance between the future and the present of course involves an exercise of intelligence1 a taking thought1 and hence an intelligent agent through whose discriminating forethought the apprehended future may affect the current course of events2 unless1 indeed1 one were to admit something in the way of a providential order of nature or some occult line of stress of the nature of sympathetic magic4 ,barring magical and providential elements1 the relation of sufficient reason runs by way of the interested discrimination1 the forethought1 of an agent who takes thought of the future and guides his present activity by regard for this future4 ,the relation of sufficient reason runs only from the 7apprehended7 future into the present1 and it is solely of an intellectual1 subjective1 personal1 teleological character and force2 while the relation of cause and effect runs only in the contrary direction1 and it is solely of an objective1 impersonal1 materialistic character and force4 ,the modern scheme of knowledge1 on the whole1 rests1 for its definitive ground1 on the relation of cause and effect2 the relation of sufficient reason being admitted only provisionally and as a proximate factor in the analysis1 always with the unambiguous reservation that the analysis must ultimately come to rest in terms of cause and effect4 ,the merits of this scientific animus1 of course1 do not concern the present argument4 ,now1 it happens that the relation of sufficient reason enters very substantially into human conduct4 ,it is this element of discriminating forethought that distinguishes human conduct from brute behavior4 ,and since the economist's subject of inquiry is this human conduct1 that relation necessarily comes in for a large share of his attention in any theoretical formulation of economic phenomena1 whether hedonistic or otherwise4 ,but while modern science at large has made the causal relation the sole ultimate ground of theoretical formulation2 and while the other sciences that deal with human life admit the relation of sufficient reason as a proximate1 supplementary1 or intermediate ground1 subsidiary1 and subservient to the argument from cause to effect2 economics has had the misfortune--as seen from the scientific point of view--to let the former supplant the latter4 ,it is1 of course1 true that human conduct is distinguished from other natural phenomena by the human faculty for taking thought1 and any science that has to do with human conduct must face the patent fact that the details of such conduct consequently fall into the teleological form2 but it is the peculiarity of the hedonistic economics that by force of its postulates its attention is confined to this teleological bearing of conduct alone4 ,it deals with this conduct only in so far as it may be construed in rationalistic1 teleological terms of calculation and choice4 ,but it is at the same time no less true that human conduct1 economic or otherwise1 is subject to the sequence of cause and effect1 by force of such elements as habituation and conventional requirements4 ,but facts of this order1 which are to modern science of graver interest than the teleological details of conduct1 necessarily fall outside the attention of the hedonistic economist1 because they cannot be construed in terms of sufficient reason1 such as his postulates demand1 or be fitted into a scheme of teleological doctrines4 ,there is1 therefore1 no call to impugn these premises of the marginal-utility economics within their field4 ,they commend themselves to all serious and uncritical persons at the first glance4 ,they are principles of action which underlie the current1 business-like scheme of economic life1 and as such1 as practical grounds of conduct1 they are not to be called in question without questioning the existing law and order4 ,as a matter of course1 men order their lives by these principles and1 practically1 entertain no question of their stability and finality4 ,that is what is meant by calling them institutions2 they are settled habits of thought common to the generality of men4 ,but it would be mere absentmindedness in any student of civilization therefore to admit that these or any other human institutions have this stability which is currently imputed to them or that they are in this way intrinsic to the nature of things4 ,the acceptance by the economists of these or other institutional elements as given and immutable limits their inquiry in a particular and decisive way4 ,it shuts off the inquiry at the point where the modern scientific interest sets in4 ,the institutions in question are no doubt good for their purpose as institutions1 but they are not good as premises for a scientific inquiry into the nature1 origin1 growth1 and effects of these institutions and of the mutations which they undergo and which they bring to pass in the community's scheme of life4 ,to any modern scientist interested in economic phenomena1 the chain of cause and effect in which any given phase of human culture is involved1 as well as the cumulative changes wrought in the fabric of human conduct itself by the habitual activity of mankind1 are matters of more engrossing and more abiding interest than the method of inference by which an individual is presumed invariably to balance pleasure and pain under given conditions that are presumed to be normal and invariable4 ,the former are questions of the life-history of the race or the community1 questions of cultural growth and of the fortunes of generations2 while the latter is a question of individual casuistry in the face of a given situation that may arise in the course of this cultural growth4 ,the former bear on the continuity and mutations of that scheme of conduct whereby mankind deals with its material means of life2 the latter1 if it is conceived in hedonistic terms1 concerns a disconnected episode in the sensuous experience of an individual member of such a community4 ,in so far as modern science inquires into the phenomena of life1 whether inanimate1 brute1 or human1 it is occupied about questions of genesis and cumulative change1 and it converges upon a theoretical formulation in the shape of a life-history drawn in causal terms4 ,in so far as it is a science in the current sense of the term1 any science1 such as economics1 which has to do with human conduct1 becomes a genetic inquiry into the human scheme of life2 and where1 as in economics1 the subject of inquiry is the conduct of man in his dealings with the material means of life1 the science is necessarily an inquiry into the life-history of material civilization1 on a more or less extended or restricted plan4 ,not that the economist's inquiry isolates material civilization from all other phases and bearings of human culture1 and so studies the motions of an abstractly conceived economic man4 ,on the contrary1 no theoretical inquiry into this material civilization that shall be at all adequate to any scientific purpose can be carried out without taking this material civilization in its causal1 that is to say1 its genetic1 relations to other phases and bearings of the cultural complex2 without studying it as it is wrought upon by other lines of cultural growth and as working its effects in these other lines4 ,but in so far as the inquiry is economic science1 specifically1 the attention will converge upon the scheme of material life and will take in other phases of civilization only in their correlation with the scheme of material civilization4 ,like all human culture this material civilization is a scheme of institutions--institutional fabric and institutional growth4 ,but institutions are an outgrowth of habit4 ,the growth of culture is a cumulative sequence of habituation1 and the ways and means of it are the habitual response of human nature to exigencies that vary incontinently1 cumulatively1 but with something of a consistent sequence in the cumulative variations that so go forward1--incontinently1 because each new move creates a new situation which induces a further new variation in the habitual manner of response2 cumulatively1 because each new situation is a variation of what has gone before it and embodies as causal factors all that has been effected by what went before2 consistently1 because the underlying traits of human nature 7propensities1 aptitudes1 and what not7 by force of which the response takes place1 and on the ground of which the habituation takes effect1 remain substantially unchanged4 ,evidently an economic inquiry which occupies itself exclusively with the movements of this consistent1 elemental human nature under given1 stable institutional conditions--such as is the case with the current hedonistic economics--can reach statical results alone2 since it makes abstraction from those elements that make for anything but a statical result4 ,on the other hand an adequate theory of economic conduct1 even for statical purposes1 cannot be drawn in terms of the individual simply--as is the case in the marginal-utility economics--because it cannot be drawn in terms of the underlying traits of human nature simply2 since the response that goes to make up human conduct takes place under institutional norms and only under stimuli that have an institutional bearing2 for the situation that provokes and inhibits action in any given case is itself in great part of institutional1 cultural derivation4 ,then1 too1 the phenomena of human life occur only as phenomena of the life of a group or community3 only under stimuli due to contact with the group and only under the 7habitual7 control exercised by canons of conduct imposed by the group's scheme of life4 ,not only is the individual's conduct hedged about and directed by his habitual relations to his fellows in the group1 but these relations1 being of an institutional character1 vary as the institutional scheme varies4 ,the wants and desires1 the end and aim1 the ways and means1 the amplitude and drift of the individual's conduct are functions of an institutional variable that is of a highly complex and wholly unstable character4 ,the growth and mutations of the institutional fabric are an outcome of the conduct of the individual members of the group1 since it is out of the experience of the individuals1 through the habituation of individuals1 that institutions arise2 and it is in this same experience that these institutions act to direct and define the aims and end of conduct4 ,it is1 of course1 on individuals that the system of institutions imposes those conventional standards1 ideals1 and canons of conduct that make up the community's scheme of life4 ,scientific inquiry in this field1 therefore1 must deal with individual conduct and must formulate its theoretical results in terms of individual conduct4 ,but such an inquiry can serve the purposes of a genetic theory only if and in so far as this individual conduct is attended to in those respects in which it counts toward habituation1 and so toward change 7or stability7 of the institutional fabric1 on the one hand1 and in those respects in which it is prompted and guided by the received institutional conceptions and ideals on the other hand4 ,the postulates of marginal utility1 and the hedonistic preconceptions generally1 fail at this point in that they confine the attention to such bearings of economic conduct as are conceived not to be conditioned by habitual standards and ideals and to have no effect in the way of habituation4 ,they disregard or abstract from the causal sequence of propensity and habituation in economic life and exclude from theoretical inquiry all such interest in the facts of cultural growth1 in order to attend to those features of the case that are conceived to be idle in this respect4 ,all such facts of institutional force and growth are put on one side as not being germane to pure theory2 they are to be taken account of1 if at all1 by afterthought1 by a more or less vague and general allowance for inconsequential disturbances due to occasional human infirmity4 ,certain institutional phenomena1 it is true1 are comprised among the premises of the hedonists1 as has been noted above2 but they are included as postulates a priori4 ,so the institution of ownership is taken into the inquiry not as a factor of growth or an element subject to change1 but as one of the primordial and immutable facts of the order of nature1 underlying the hedonistic calculus4 ,property1 ownership1 is presumed as the basis of hedonistic discrimination and it is conceived to be given in its finished 7nineteenth-century7 scope and force4 ,there is no thought either of a conceivable growth of this definitive nineteenth-century institution out of a cruder past or of any conceivable cumulative change in the scope and force of ownership in the present or future4 ,nor is it conceived that the presence of this institutional element in men's economic relations in any degree affects or disguises the hedonistic calculus1 or that its pecuniary conceptions and standards in any degree standardize1 color1 mitigate1 or divert the hedonistic calculator from the direct and unhampered quest of the net sensuous gain4 ,while the institution of property is included in this way among the postulates of the theory1 and is even presumed to be ever-present in the economic situation1 it is allowed to have no force in shaping economic conduct1 which is conceived to run its course to its hedonistic outcome as if no such institutional factor intervened between the impulse and its realization4 ,the institution of property1 together with all the range of pecuniary conceptions that belong under it and that cluster about it1 are presumed to give rise to no habitual or conventional canons of conduct or standards of valuation1 no proximate ends1 ideals1 or aspirations4 ,all pecuniary notions arising from ownership are treated simply as expedients of computation which mediate between the pain-cost and the pleasure-gain of hedonistic choice1 without lag1 leak1 or friction2 they are conceived simply as the immutably correct1 ,god-given notation of the hedonistic calculus4 ,the modern economic situation is a business situation1 in that economic activity of all kinds is commonly controlled by business considerations4 ,the exigencies of modern life are commonly pecuniary exigencies4 ,that is to say they are exigencies of the ownership of property4 ,productive efficiency and distributive gain are both rated in terms of price4 ,business considerations are considerations of price1 and pecuniary exigencies of whatever kind in the modern communities are exigencies of price4 ,the current economic situation is a price system4 ,economic institutions in the modern civilized scheme of life are 7prevailingly7 institutions of the price system4 ,the accountancy to which all phenomena of modern economic life are amenable is an accountancy in terms of price2 and by the current convention there is no other recognized scheme of accountancy1 no other rating1 either in law or in fact1 to which the facts of modern life are held amenable4 ,indeed1 so great and pervading a force has this habit 7institution7 of pecuniary accountancy become that it extends1 often as a matter of course1 to many facts which properly have no pecuniary bearing and no pecuniary magnitude1 as1 e4g41 works of art1 science1 scholarship1 and religion4 ,more or less freely and fully1 the price system dominates the current commonsense in its appreciation and rating of these non-pecuniary ramifications of modern culture2 and this in spite of the fact that1 on reflection1 all men of normal intelligence will freely admit that these matters lie outside the scope of pecuniary valuation4 ,current popular taste and the popular sense of merit and demerit are notoriously affected in some degree by pecuniary considerations4 ,it is a matter of common notoriety1 not to be denied or explained away1 that pecuniary 7commercial 7 tests and standards are habitually made use of outside of commercial interests proper4 ,precious stones1 it is admitted1 even by hedonistic economists1 are more esteemed than they would be if they were more plentiful and cheaper4 ,a wealthy person meets with more consideration and enjoys a larger measure of good repute than would fall to the share of the same person with the same habit of mind and body and the same record of good and evil deeds if he were poorer4 ,it may well be that this current commercialisation of taste and appreciation has been overstated by superficial and hasty critics of contemporary life1 but it will not be denied that there is a modicum of truth in the allegation4 ,whatever substance it has1 much or little1 is due to carrying over into other fields of interest the habitual conceptions induced by dealing with and thinking of pecuniary matters4 ,these commercial conceptions of merit and demerit are derived from business experience4 ,the pecuniary tests and standards so applied outside of business transactions and relations are not reducible to sensuous terms of pleasure and pain4 ,indeed1 it may1 e4g41 be true1 as is commonly believed1 that the contemplation of a wealthy neighbor's pecuniary superiority yields painful rather than pleasurable sensations as an immediate result2 but it is equally true that such a wealthy neighbor is1 on the whole1 more highly regarded and more considerately treated than another neighbor who differs from the former only in being less enviable in respect of wealth4 ,it is the institution of property that gives rise to these habitual grounds of discrimination1 and in modern times1 when wealth is counted in terms of money1 it is in terms of money value that these tests and standards of pecuniary excellence are applied4 ,this much will be admitted4 ,pecuniary institutions induce pecuniary habits of thought which affect men's discrimination outside of pecuniary matters2 but the hedonistic interpretation alleges that such pecuniary habits of thought do not affect men's discrimination in pecuniary matters4 ,although the institutional scheme of the price system visibly dominates the modern community's thinking in matters that lie outside the economic interest1 the hedonistic economists insist1 in effect1 that this institutional scheme must be accounted of no effect within that range of activity to which it owes its genesis1 growth1 and persistence4 ,the phenomena of business1 which are peculiarly and uniformly phenomena of price1 are in the scheme of the hedonistic theory reduced to non-pecuniary hedonistic terms and the theoretical formulation is carried out as if pecuniary conceptions had no force within the traffic in which such conceptions originate4 ,it is admitted that preoccupation with commercial interests has commercialised the rest of modern life1 but the commercialisation of commerce is not admitted4 ,business transactions and computations in pecuniary terms1 such as loans1 discounts1 and capitalisation1 are without hesitation or abatement converted into terms of hedonistic utility1 and conversely4 ,it may be needless to take exception to such conversion from pecuniary into sensuous terms1 for the theoretical purpose for which it is habitually made2 although1 if need were1 it might not be excessively difficult to show that the whole hedonistic basis of such a conversion is a psychological misconception4 ,but it is to the remoter theoretical consequences of such a conversion that exception is to be taken4 ,in making the conversion abstraction is made from whatever elements do not lend themselves to its terms2 which amounts to abstracting from precisely those elements of business that have an institutional force and that therefore would lend themselves to scientific inquiry of the modern kind--those 7institutional7 elements whose analysis might contribute to an understanding of modern business and of the life of the modern business community as contrasted with the assumed primordial hedonistic calculus4 ,the point may perhaps be made clearer4 ,money and the habitual resort to its use are conceived to be simply the ways and means by which consumable goods are acquired1 and therefore simply a convenient method by which to procure the pleasurable sensations of consumption2 these latter being in hedonistic theory the sole and overt end of all economic endeavor4 ,money values have therefore no other significance than that of purchasing power over consumable goods1 and money is simply an expedient of computation4 ,investment1 credit extensions1 loans of all kinds and degrees1 with payment of interest and the rest1 are likewise taken simply as intermediate steps between the pleasurable sensations of consumption and the efforts induced by the anticipation of these sensations1 other bearings of the case being disregarded4 ,the balance being kept in terms of the hedonistic consumption1 no disturbance arises in this pecuniary traffic so long as the extreme terms of this extended hedonistic equation--pain-cost and pleasure-gain--are not altered1 what lies between these extreme terms being merely algebraic notation employed for convenience of accountancy4 ,but such is not the run of the facts in modern business4 ,variations of capitalization1 e4g41 occur without its being practicable to refer them to visibly equivalent variations either in the state of the industrial arts or in the sensations of consumption4 ,credit extensions tend to inflation of credit1 rising prices1 overstocking of markets1 etc41 likewise without a visible or securely traceable correlation in the state of the industrial arts or in the pleasures of consumption2 that is to say1 without a visible basis in those material elements to which the hedonistic theory reduces all economic phenomena4 ,hence the run of the facts1 in so far1 must be thrown out of the theoretical formulation4 ,the hedonistically presumed final purchase of consumable goods is habitually not contemplated in the pursuit of business enterprise4 ,business men habitually aspire to accumulate wealth in excess of the limits of practicable consumption1 and the wealth so accumulated is not intended to be converted by a final transaction of purchase into consumable goods or sensations of consumption4 ,such commonplace facts as these1 together with the endless web of business detail of a like pecuniary character1 do not in hedonistic theory raise a question as to how these conventional aims1 ideals1 aspirations1 and standards have come into force or how they affect the scheme of life in business or outside of it2 they do not raise those questions because such questions cannot be answered in the terms which the hedonistic economists are content to use1 or1 indeed1 which their premises permit them to use4 ,the question which arises is how to explain the facts away3 how theoretically to neutralize them so that they will not have to appear in the theory1 which can then be drawn in direct and unambiguous terms of rational hedonistic calculation4 ,they are explained away as being aberrations due to oversight or lapse of memory on the part of business men1 or to some failure of logic or insight4 ,or they are construed and interpreted into the rationalistic terms of the hedonistic calculus by resort to an ambiguous use of the hedonistic concepts4 ,so that the whole money economy1 with all the machinery of credit and the rest1 disappears in a tissue of metaphors to reappear theoretically expurgated1 sterilized1 and simplified into a refined system of barter1 culminating in a net aggregate maximum of pleasurable sensations of consumption4 ,but since it is in just this unhedonistic1 unrationalistic pecuniary traffic that the tissue of business life consists2 since it is this peculiar conventionalism of aims and standards that differentiates the life of the modern business community from any conceivable earlier or cruder phase of economic life2 since it is in this tissue of pecuniary intercourse and pecuniary concepts1 ideals1 expedients1 and aspirations that the conjunctures of business life arise and run their course of felicity and devastation2 since it is here that those institutional changes take place which distinguish one phase or era of the business community's life from any other2 since the growth and change of these habitual1 conventional elements make the growth and character of any business era or business community2 any theory of business which sets these elements aside or explains them away misses the main facts which it has gone out to seek4 ,life and its conjunctures and institutions being of this complexion1 however much that state of the case may be deprecated1 a theoretical account of the phenomena of this life must be drawn in these terms in which the phenomena occur4 ,it is not simply that the hedonistic interpretation of modern economic phenomena is inadequate or misleading2 if the phenomena are subjected to the hedonistic interpretation in the theoretical analysis they disappear from the theory2 and if they would bear the interpretation in fact they would disappear in fact4 ,if1 in fact1 all the conventional relations and principles of pecuniary intercourse were subject to such a perpetual rationalized1 calculating revision1 so that each article of usage1 appreciation1 or procedure must approve itself de novo on hedonistic grounds of sensuous expediency to all concerned at every move1 it is not conceivable that the institutional fabric would last over night4 ,,footnotes3 #a ,reprinted by permission from the ,journal of ,political ,economy1 ,vol4 ,,xvii1 ,no4 #i ,november #aiji4 #b ,the conduct of mankind differs from that of the brutes in being determined by anticipated sensations of pleasure and pain1 instead of actual sensations4 ,hereby1 in so far1 human conduct is taken out of the sequence of cause and effect and falls instead under the rule of sufficient reason4 ,by virtue of this rational faculty in man the connection between stimulus and response is teleological instead of causal4 ,the reason for assigning the first and decisive place to pleasure1 rather than to pain1 in the determination of human conduct1 appears to be the 7tacit7 acceptance of that optimistic doctrine of a beneficent order of nature which the nineteenth century inherited from the eighteenth4 ,,gustav ,,schmoller',s ,,economics#a ,professor ,schmoller's ,grundriss#b is an event of the first importance in economic literature4 ,it appears from later advices that the second and concluding volume of the work is hardly to be looked for at as early a date as the author's expressions in his preface had led us to anticipate4 ,what lies before ,professor ,schmoller's readers1 therefore1 in this first volume of the ,outlines is but one-half of the compendious statement which he here purposes making of his theoretical position and of his views and exemplification of the scope and method of economic science4 ,it may accordingly seem adventurous to attempt a characterisation of his economic system on the basis of this avowedly incomplete statement4 ,and yet such an endeavor is not altogether gratuitous1 nor need it in any great measure proceed on hypothetical grounds4 ,the introduction comprised in the present volume sketches the author's aim in an outline sufficiently full to afford a convincing view of the system of science for which he speaks2 and the two books by which the introduction is followed show ,professor ,schmoller's method of inquiry consistently carried out1 as well as the reach and nature of the theoretical conclusions which he considers to lie within the competency of economic science4 ,and with regard to an economist who is so much of an innovator1--not to say so much of an iconoclast1--and whose work touches the foundations of the science so intimately and profoundly1 the interest of his critics and associates must1 at least for the present1 center chiefly about these questions as to the scope and nature assigned to the theory by his discussion1 as to the range and character of the material of which he makes use1 and as to the methods of inquiry which his sagacity and experience commend4 ,so1 therefore1 while the ,outlines is yet incomplete1 considered as a compendium of details of doctrine1 the work in its unfinished state need not thereby be an inadequate expression of ,professor ,schmoller's relation to economic science4 ,herewith for the first time economic readers are put in possession of a fully advised deliverance on economic science at large as seen and cultivated by that modernised historical school of which ,professor ,schmoller is the authoritative exponent4 ,valuable and characteristic as his earlier discussions on the scope and method of the science are1 they are but preliminary studies and tentative formulations as compared with this maturer work1 which not only avows itself a definitive formulation1 but has about it an air of finality perceptible at every turn4 ,but this comes near saying that it embodies the sole comprehensive working-out of the scientific aims of the historical school4 ,discussions partially covering the field1 monographs and sketches there are in great number1 showing the manner of economic theory that was to be looked for as an outcome of the historical diversion4 ,some of these1 especially some of the later ones1 are extremely valuable in the results they offer1 as well as significant of the trend which the science is taking under the hands of the ,german students4#c ,but a comprehensive work1 aiming to formulate a body of economic theory on the basis afforded by the historical method1 has not hitherto been seriously attempted4 ,to the broad statement just made exception might perhaps be taken in favor of ,schaeffle's half-forgotten work of the seventies1 together possibly with several other less notable and less consistent endeavors of a similar kind1 dating back to the early decades of the school4 ,probably none of the younger generation of economists would be tempted to cite ,roscher's work as invalidating such a statement as the one made above4 ,although time has been allowed for the acceptance and authentication of these endeavors of the earlier historical economists in the direction of a system of economic theory1--that is to say1 of an economic science1--they have failed of authentication at the hands of the students of the science2 and there seems no reason to regard this failure as less than definitive4 ,during the last two decades the historical school has branched into two main directions of growth1 somewhat divergent1 so that broad general statements regarding the historical economists can be less confidently made to-day than perhaps at any earlier time4 ,now1 as regards the more conservative branch1 the historical economists of the stricter observance1--these modern continuers of what may be called the elder line of the historical school can scarcely be said to cultivate a science at all1 their aim being not theoretical work4 ,assuredly1 the work of this elder line1 of which ,professor ,wagner is the unquestioned head1 is by no means idle4 ,it is work of a sufficiently important and valuable order1 perhaps it is indispensable to the task which the science has in hand1 but1 broadly speaking1 it need not be counted with in so far as it touches directly upon economic theory4 ,this elder line of ,german economics1 in its numerous modern representatives1 shows both insight and impartiality2 but as regards economic theory their work bears the character of eclecticism rather than that of a constructive advance4 ,frequent and peremptory as their utterances commonly are on points of doctrine1 it is only very rarely that these utterances embody theoretical views arrived at or verified by the economists who make them or by such methods of inquiry as are characteristic of these economists4 ,where these expressions of doctrine are not of the nature of maxims of expediency1 they are1 as is well known1 commonly borrowed somewhat uncritically from classical sources4 ,of constructive scientific work--that is to say1 of theory--this elder line of ,german economics is innocent2 nor does there seem to be any prospect of an eventual output of theory on the part of that branch of the historical school1 unless they should unexpectedly take advice1 and make the scope1 and therefore the method1 of their inquiry something more than historical in the sense in which that term is currently accepted4 ,the historical economics of the conservative kind seems to be a barren field in the theoretical respect4 ,so that whatever characteristic articles of general theory the historical school may enrich the science with are to be looked for at the hands of those men who1 like ,professor ,schmoller1 have departed from the strict observance of the historical method4 ,a peculiar interest1 therefore1 attaches to his work as the best accepted and most authoritative spokesman of that branch of historical economics which professes to cultivate theoretical inquiry4 ,it serves to show in what manner and degree this more scientific wing of the historical school have outgrown the original historical standpoint and range of conceptions1 and how they have passed from a distrust of all economic theory to an eager quest of theoretical formulations that shall cover all phenomena of economic life to better purpose than the body of doctrine received from the classical writers and more in consonance with the canons of contemporary science at large4 ,that this should have been the outcome of the half-century of development through which the school has now passed might well seem unexpected1 if not incredible1 to any who saw the beginning of that divergence within the school1 a generation ago1 out of which this modernised1 theoretical historical economics has arisen4 ,professor ,schmoller entered the field early1 in the sixties1 as a protestant against the aims and ideals then in vogue in economics4 ,his protest ran not only against the methods and results of the classical writers1 but also against the views professed by the leaders of the historical school1 both as regards the scope of the science and as regards the character of the laws or generalisations sought by the science4 ,his early work1 in so far as he was at variance with his colleagues1 was chiefly critical2 and there is no good evidence that he then had a clear conception of the character of that constructive work to which it has been his persistent aim to turn the science4 ,hence he came to figure in common repute as an iconoclast and an extreme exponent of the historical school1 in that he was held practically to deny the feasibility of a scientific treatment of economic matters and to aim at confining economics to narrative1 statistics1 and description4 ,this iconoclastic or critical phase of his economic discussion is now past1 and with it the uncertainty as to the trend and outcome of his scientific activity4 ,to understand the significance of the diversion created by ,professor ,schmoller as regards the scope and method of economics1 it is necessary1 very briefly1 to indicate the position occupied by that early generation of historical economists from which his teaching diverged1 and more particularly those points of the older canon at which he has come to differ characteristically from the views previously in vogue4 ,as regards the situation in which the historical school1 as exemplified by its leaders1 was then placed1 it is1 of course1 something of a commonplace that by the end of its first twenty years of endeavor in the reform of economic science the school had1 in point of systematic results1 scarcely got beyond preliminaries4 ,and even these preliminaries were not in all respects obviously to the purpose4 ,a new and wider scope had been indicated for economic inquiry1 as well as a new aim and method for theoretical discussion4 ,but the new ideals of theoretical advance1 as well as the ways and means indicated for their attainment1 still had mainly a speculative interest4 ,nothing substantial had been done towards the realisation of the former or the mise en oeuvre of the latter4 ,the historical economists can scarcely be said at that time to have put their hand to the new engines which they professed to house in their workshop4 ,apart from polemics and speculation concerning ideals1 the serious interest and endeavors of the school had up to that time been in the field of history rather than in that of economics1 except so far as the adepts of the new school continued in a fragmentary way to inculcate and1 in some slight and uncertain degree1 to elaborate the dogmas of the classical writers whom they sought to discredit4 ,the character of historical economics at the time when ,professor ,schmoller entered on his work of criticism and revision is fairly shown by ,roscher's writings4 ,whatever may be thought to-day of ,roscher's rank as an economist1 in contrast with ,knies and ,hildebrand1 it will scarcely be questioned that at the close of the first quarter-century of the life history of the historical school it was ,roscher's conception of the scope and method of economics that found the widest acceptance and that best expressed the animus of that body of students who professed to cultivate economics by the historical method4 ,for the purpose in hand ,roscher's views may1 therefore1 be taken as typical1 all the more readily since for the very general purpose here intended there are no serious discrepancies between ,roscher and his two illustrious contemporaries4 ,the chief difference is that ,roscher is more naive and more specific4 ,he has also left a more considerable volume of results achieved by the professed use of his method4 ,roscher's professed method was what he calls the historico-physiological method4 ,this he contrasts with the philosophical or idealistic method4 ,but his air of depreciation as regards philosophical methods in economics must not be taken to mean that ,roscher's own economic speculations were devoid of all philosophical or metaphysical basis4 ,it only means that his philosophical postulates were different from those of the economists whom he discredits1 and that they were regarded by him as self-evident4 ,as must necessarily be the case with a writer who had neither a special aptitude for nor special training in philosophical inquiries1 ,roscher's metaphysical postulates are1 of course1 chiefly tacit4 ,they are the common-sense1 commonplace metaphysics afloat in educated ,german circles in the time of ,roscher's youth1--during the period when his growth and education gave him his outlook on life and knowledge and laid the basis of his intellectual habits2 which means that these postulates belong to what ,hoeffding has called the ,romantic school of thought1 and are of a ,hegelian complexion4 ,roscher being not a professed philosophical student1 it is neither easy nor safe to particularise closely as regards his fundamental metaphysical tenets2 but1 as near as so specific an identification of his philosophical outlook is practicable1 he must be classed with the ,hegelian ,right4 ,but since the ,hegelian metaphysics had in ,roscher's youth an unbroken vogue in reputable ,german circles1 especially in those ultra-reputable circles within which lay the gentlemanly life and human contact of ,roscher1 the postulates afforded by the ,hegelian metaphysics were accepted simply as a matter of course1 and were not recognised as metaphysical at all4 ,and in this his metaphysical affiliation ,roscher is fairly typical of the early historical school of economics4 ,the ,hegelian metaphysics1 in so far as bears upon the matter in hand1 is a metaphysics of a self-realising life process4 ,this life process1 which is the central and substantial fact of the universe1 is of a spiritual nature1--spiritual1 of course1 being here not contrasted with material4 ,the life process is essentially active1 self-determining1 and unfolds by inner necessity1--by necessity of its own substantially active nature4 ,the course of culture1 in this view1 is an unfolding 7exfoliation7 of the human spirit2 and the task which economic science has in hand is to determine the laws of this cultural exfoliation in its economic aspect4 ,but the laws of the cultural development with which the social sciences1 in the ,hegelian view1 have to do are at one with the laws of the processes of the universe at large2 and1 more immediately1 they are at one with the laws of the life process at large4 ,for the universe at large is itself a self-unfolding life process1 substantially of a spiritual character1 of which the economic life process which occupies the interest of the economist is but a phase and an aspect4 ,now1 the course of the processes of unfolding life in organic nature has been fairly well ascertained by the students of natural history and the like2 and this1 in the nature of the case1 must afford a clew to the laws of cultural development1 in its economic as well as in any other of its aspects or bearings1--the laws of life in the universe being all substantially spiritual and substantially at one4 ,so we arrive at a physiological conception of culture after the analogy of the ascertained physiological processes seen in the biological domain4 ,it is conceived to be physiological after the ,hegelian manner of conceiving a physiological process1 which is1 however1 not the same as the modern scientific conception of a physiological process4#d ,since this quasi-physiological process of cultural development is conceived to be an unfolding of the self-realising human spirit1 whose life history it is1 it is of the nature of the case that the cultural process should run through a certain sequence of phases--a certain life history prescribed by the nature of the active1 unfolding spiritual substance4 ,the sequence is determined on the whole1 as regards the general features of the development1 by the nature of life on the human plane4 ,the history of cultural growth and decline necessarily repeats itself1 since it is substantially the same human spirit that seeks to realise itself in every comprehensive sequence of cultural development1 and since this human spirit is the only factor in the case that has substantial force4 ,in its generic features the history of past cultural cycles is1 therefore1 the history of the future4 ,hence the importance1 not to say the sole efficacy for economic science1 of an historical scrutiny of culture4 ,a well-authenticated sequence of cultural phenomena in the history of the past is conceived to have much the same binding force for the sequence of cultural phenomena in the future as a natural law1 as the term has been understood in physics or physiology1 is conceived to have as regards the course of phenomena in the life history of the human body2 for the onward cultural course of the human spirit1 actively unfolding by inner necessity1 is an organic process1 following logically from the nature of this self-realising spirit4 ,if the process is conceived to meet with obstacles or varying conditions1 it adapts itself to the circumstances in any given case1 and it then goes on along the line of its own logical bent until it eventuates in the consummation given by its own nature4 ,the environment1 in this view1 if it is not to be conceived simply as a function of the spiritual force at work1 is1 at the most1 of subsidiary and transient consequence only4 ,environmental conditions can at best give rise to minor perturbations2 they do not initiate a cumulative sequence which can profoundly affect the outcome or the ulterior course of the cultural process4 ,hence the sole1 or almost sole1 importance of historical inquiry in determining the laws of cultural development1 economic or other4 ,the working conception which this romantic-historical school had of economic life1 therefore1 is1 in its way1 a conception of development1 or evolution2 but it is not to be confused with ,darwinism or ,spencerianism4 ,inquiry into the cultural development under the guidance of such preconceptions as these has led to generalisations1 more or less arbitrary1 regarding uniformities of sequence in phenomena1 while the causes which determine the course of events1 and which make the uniformity or variation of the sequence1 have received but scant attention4 ,the natural laws found by this means are necessarily of the nature of empiricism1 colored by the bias or ideals of the investigator4 ,the outcome is a body of aphoristic wisdom1 perhaps beautiful and valuable after its kind1 but quite fatuous when measured by the standards and aims of modern science4 ,as is well known1 no substantial theoretical gain was made along this romantic-historical line of inquiry and speculation1 for the reason1 apparently1 that there are no cultural laws of the kind aimed at1 beyond the unprecise generalities that are sufficiently familiar beforehand to all passably intelligent adults4 99 99 99 99 99 ,it has seemed necessary to offer this much in characterisation of that historical aim and method which afforded a point of departure for ,professor ,schmoller's work of revision4 ,when he first raised his protest against the prevailing ideals and methods1 as being ill-advised and not thorough-going1 he does not seem himself to have been entirely free from this ,romantic1 or ,hegelian1 bias4 ,there is evidence to the contrary in his early writings4#e ,it cannot even be said that his later theoretical work does not show something of the same animus1 as1 e4g41 when he assumes that there is a meliorative trend in the course of cultural events4#f ,what has differentiated his work from that of the group of writers which has above been called the elder line of historical economics is the weakness or relative absence of this bias in his theoretical work4 ,particularly1 he has refused to bring his researches in the field of theory definitely to rest on ground given by the ,hegelian1 or ,romantic1 school of thought4 ,he was from the first unwilling to accept classificatory statements of uniformity or of normality as an adequate answer to questions of scientific theory4 ,he does not commonly deny the truth or the importance of the empirical generalisations aimed at by the early historical economists4 ,indeed1 he makes much of them and has been notoriously urgent for a full survey of historical data and a painstaking digestion of materials with a view to a comprehensive work of empirical generalisation4 ,as is well known1 in his earlier work of criticism and methodological controversy he was led to contend that for at least one generation economists must be content to spend their energies on descriptive work of this kind2 and he thereby earned the reputation of aiming to reduce economics to a descriptive knowledge of details and to confine its method to the ,baconian ground of generalisation by simple enumeration4 ,but this exhaustive historical scrutiny and description of detail has always1 in ,professor ,schmoller's view1 been preliminary to an eventual theory of economic life4 ,the survey of details and the empirical generalisations reached by its help are useful for the scientific purpose only as they serve the end of an eventual formulation of the laws of causation that work out in the process of economic life4 ,the ulterior question1 to which all else is subsidiary1 is a question of the causes at work rather than a question of the historical uniformities observable in the sequence of phenomena4 ,the scrutiny of historical details serves this end by defining the scope and character of the several factors causally at work in the growth of culture1 and1 what is of more immediate consequence1 as they are at work in the shaping of the economic activities and the economic aims of men engaged in this unfolding cultural process as it lies before the investigator in the existing situation4 ,in the preliminary work1 then1 of defining and characterising the causes or factors of economic life1 historical investigation plays a large1 if not the largest1 part2 but it is by no means the sole line of inquiry to which recourse is had for this purpose4 ,nor1 it may be added1 is this the sole use of historical inquiry4 ,to the like end a comparative study of the climatic1 geographical1 and geological features of the community's environment is drawn into the inquiry2 and more particularly there is a careful study of ethnographic parallels and a scrutiny of the psychological foundations of culture and the psychological factors involved in cultural change4 ,hence it appears that ,professor ,schmoller's work differs from that of the elder line of historical economics in respect of the scope and character of the preliminaries of economic theory no less than in the ulterior aim which he assigns the science4 ,it is only by giving a very broad meaning to the term that this latest development of the science can be called an historical economics4 ,it is ,darwinian rather than ,hegelian1 although with the earmarks of ,hegelian affiliation visible now and again2 and it is historical only in a sense similar to that in which a ,darwinian account of the evolution of economic institutions might be called historical4 ,for the distinguishing characteristic of ,professor ,schmoller's work1 that wherein it differs from the earlier work of the economists of his general class1 is that it aims at a ,darwinistic account of the origin1 growth1 persistence1 and variation of institutions1 in so far as these institutions have to do with the economic aspect of life either as cause or as effect4 ,in much of what he has to say1 he is at one with his contemporaries and predecessors within the historical school2 and he shows at many points both the excellences and weaknesses due to his historical antecedents4 ,but his striking and characteristic merits lie in the direction of a post-,darwinian1 causal theory of the origin and growth of species in institutions4 ,in this line of theoretical inquiry ,professor ,schmoller is not alone1 nor does he1 perhaps1 go so far or with such singleness of purpose in this direction as some others do at given points2 but the seniority belongs to him1 and he is also in the lead as regards the comprehensiveness of his work4 99 99 99 99 99 ,but to return to the ,grundriss1 to which recourse must be had to substantiate the characterisation here offered4 ,the entire work as projected comprises an ,introduction and four ,books1 of which the introduction and the first two books are contained in the volume already published4 ,the two books yet to be published1 in a second volume1 promise to be of a length corresponding to the first two4 ,the present volume should accordingly contain approximately three-fifths of the whole1 counted by bulk4 ,the scheme of the work is as follows3 ,an ,introduction 7pp4 #a-abd7 treats of 7#a7 the ,concept of ,economics1 7#b7 the ,psychical1 ,ethical 7or ,conventional1 sittliche71 and ,legal ,foundations of ,economic ,life and of ,culture1 and 7#c7 the ,literature and ,method of the ,science4 ,this is followed by ,book ,i4 7pp4 #abe-bbh7 on ,land1 ,population1 and the ,industrial ,arts1 considered as collective phenomena and factors in economic life1 and ,book ,,ii4 7pp4 #bbi-deg71 on the ,constitution of ,economic ,society1 its chief organs and the causal factors to which they are due4 ,books ,,iii4 and ,,iv4 are to deal with the ,circulation of ,goods and the ,distribution of ,income1 and to give a genetic account of the ,development of ,economic ,society4 ,the course outlined differs noticeably from what has been customary in treatises on economics4 ,the point of departure is a comprehensive general survey of the factors which enter into the growth of culture1 with special reference to their economic bearing4 ,this survey runs chiefly on psychological and ethnographic ground1 historical inquiry in the stricter sense being relatively scant and obviously of secondary consequence4 ,it is followed up with a more detailed and searching discussion of the factors engaged in the economic process in any given situation4 ,the factors1 or collective phenomena1 in question are not the time-honored ,land1 ,labor1 and ,capital1 but rather population1 material environment1 and technological conditions4 ,here1 too1 the discussion has to do with ethnographic rather than with properly historical material4 ,the question of population concerns not the numerical force of laborers1 but rather the diversity of race characteristics and the bearing of race endowment upon the growth of economic institutions4 ,the discussion of the material environment1 again1 has relatively little to say of the fertility of the soil1 and gives much attention to diversities of climate1 geographical situation1 and geological and biological conditions4 ,and this first book closes with a survey of the growth of technological knowledge and the industrial arts4 ,in all this the significant innovation lies not so much in the character of the details4 ,they are for the most part commonplace enough as details of the sciences from which they are borrowed4 ,they are shrewdly chosen and handled in such a way as to bring out their bearing upon the ulterior questions about which the economist's interest centers2 but there is1 as might be expected1 little attempt to go back of the returns given by specialists in the several lines of research that are laid under contribution4 ,but the significance of it all lies rather in the fact that material of this kind should have been drawn upon for a foundation for economic theory1 and that it should have seemed necessary to ,professor ,schmoller to make this introductory survey so comprehensive and so painstaking as it is4 ,its meaning is that these features of human nature and these forces of nature and circumstances of environment are the agencies out of whose interaction the economic situation has arisen by a cumulative process of change1 and that it is this cumulative process of development1 and its complex and unstable outcome1 that are to be the economist's subject-matter4 ,the theoretical outcome for which such a foundation is prepared is necessarily of a genetic kind4 ,it necessarily seeks to know and explain the structure and functions of economic society in terms of how and why they have come to be what they are1 not1 as so many economic writers have explained them1 in terms of what they are good for and what they ought to be4 ,it means1 in other words1 a deliberate attempt to substitute an inquiry into the efficient causes of economic life in the place of empirical generalisations1 on the one hand1 and speculations as to the eternal fitness of things1 on the other hand4 ,it follows from the nature of the case that an economics of this genetic character1 working on grounds of the kind indicated1 comprises nothing in the way of advice or admonition1 no maxims of expediency1 and no economic1 political1 or cultural creed4 ,how nearly ,professor ,schmoller conforms to this canon of continence is another question4 ,the above indicates the scope of such doctrines as are consistently derivable from the premises with which the work under review starts out1 not the scope of its writer's speculations on economic matters4 ,the second book1 by the help of prehistoric and ethnographic material as well as history1 deals with the evolution of the methods of social organisation1--the growth of institutions in so far as this growth shapes or is shaped by the exigencies of economic life4 ,the organs1 or social-economic institutions1 whose life history is passed in review are3 the family2 the methods of settlement and domicile1 in town and country2 the political units of control and administration2 differentiation of functions between industrial and other classes and groups2 ownership1 its growth and distribution2 social classes and associations2 business enterprise1 industrial organisations and corporations4 ,as regards the singleness of purpose with which ,professor ,schmoller has carried out the scheme of economic theory for which he has sketched the outlines and pointed the way1 it is not possible to speak with the same confidence as of his preliminary work4 ,it goes without saying that this further work of elaboration is excellent after its kind2 and this excellence1 which was to be looked for at ,professor ,schmoller's hands1 may easily divert the reader's attention from the shortcomings of the work in respect of kind rather than of quality4 ,now1 while a broad generalisation on this head may be hazardous and is to be taken with a large margin1 still1 with due allowance1 the following generalisation will probably stand1 so far as regards this first volume4 ,so long as the author is occupied with the life-history of institutions down to contemporary developments1 so long his discussion proceeds by the dry light of the scientific interest1 simply1 as the term scientific is understood among the modern adepts of the natural sciences2 but so soon as he comes to close quarters with the situation of to-day1 and reaches the point where a dispassionate analysis and exposition of the causal complex at work in contemporary institutional changes should begin1 so soon the scientific light breaks up into all the colors of the rainbow1 and the author becomes an eager and eloquent counselor1 and argues the question of what ought to be and what modern society must do to be saved4 ,the argument at this point loses the character of a genetic explanation of phenomena1 and takes on the character of appeal and admonition1 urged on grounds of expediency1 of morality1 of good taste1 of hygiene1 of political ends1 and even of religion4 ,all this1 of course1 is what we are used to in the common run of writers of the historical school2 but those students whose interest centers in the science rather than in the ways and means of maintaining the received cultural forms of ,german society have long fancied they had ground to hope for something more to the purpose when ,professor ,schmoller came to put forth his great systematic work4 ,brilliant and no doubt valuable in its way and for its end1 this digression into homiletics and reformatory advice means that the argument is running into the sands just at the stage where the science can least afford it4 ,it is precisely at this point1 where men of less years and breadth and weight would find it difficult to hold tenaciously to the course of cause and effect through the maze of jarring interests and sentiments that make up the contemporary situation1--it is precisely at this point that a genetic theory of economic life most needs the guidance of the firm1 trained1 dispassionate hand of the master4 ,and at this point his guidance all but fails us4 ,what has just been said applies generally to ,professor ,schmoller's treatment of contemporary economic development1 and it should be added that it applies at nearly all points with more or less of qualification4 ,but the qualifications required are not large enough to belie the general characterisation just offered4 ,it would be asking too large an indulgence to follow the point up in this place through all the discussions of the volume that fairly come under this criticism4 ,the most that may be done is to point for illustration to the handling which two or three of the social-economic organs receive4 ,so1 for instance1 ,book ,,ii4 opens with an account of the family and its place and function in the structure of economic society4 ,the discussion proceeds along the beaten paths of ethnographic research1 with repeated and well-directed recourse to the psychological knowledge that ,professor ,schmoller always has well in hand4 ,coming down into recent times1 the discussion still proceeds to show how the large economic changes of late mediaeval and early modern times acted to break down the patriarchal regime of the earlier culture2 but at the same time there comes into sight 7pp4 #bde-bdi7 a bias in favor of the recent as against the earlier form of the household4 ,the author is no longer content to show the exigencies which set the earlier patriarchal household aside in favor of the modified patriarchal household of more recent times4 ,he also offers reasons why the later1 modified form is intrinsically the more desirable2 reasons1 it should perhaps be said1 which may be well taken1 but which are beside the point so far as regards a scientific explanation of the changes under discussion4 ,the closing paragraphs of the section 7#ia7 dwell with a kindly insistence on the many elements of strength and beauty possessed by the form of household organisation handed down from the past generation to the present4 ,the facts herewith recited by the author are1 no doubt1 of weight1 and must be duly taken account of by any economist who ventures on a genetic discussion of the present situation and the changing fortunes of the received household4 ,but ,professor ,schmoller has failed even to point out in what manner these elements of strength and beauty have in the recent past or may in the present and immediate future causally affect the fortunes of the institution4 ,the failure to turn the material in question to scientific account becomes almost culpable in ,professor ,schmoller1 since there are few1 if any1 who are in so favorable a position to outline the argument which a theoretical account of the situation at this point must take4 ,plainly1 as shown by ,professor ,schmoller's argument1 economic exigencies are working an incessant cumulative change in the form of organisation of the modern household2 but he has done little towards pointing out in what manner and with what effect these exigencies come into play4 ,neither has he gone at all into the converse question1 equally grave as a question of economic theory1 of how the persistence1 even though qualified1 of the patriarchal family has modified and is modifying economic structure and function at other points and qualifying or accentuating the very exigencies themselves to which the changes wrought in the institution are to be traced4 ,plainly1 too1 the strength and beauty of the traditionally received form of the household--that is to say1 the habits of life and of complacency which are bound up with this household--are elements of importance in the modern situation as affects the degree of persistence and the direction of change which this institution shows under modern circumstances4 ,they are psychological facts1 facts of habit and propensity and spiritual fitness1 the efficiency of which as live forces making for survival or variation is in this connection probably second to that of no other factors that could be named4 ,we had1 therefore1 almost a right to expect that ,professor ,schmoller's profound and comprehensive erudition in the fields of psychology and cultural growth should turn these facts to better ends than a preachment concerning an intrinsically desirable consummation4 ,regarding the present visible disintegration of the family1 and the closely related woman question1 ,professor ,schmoller's observations are of much the same texture4 ,he notes the growing disinclination to the old-fashioned family life on the part of the working population1 and shows that there are certain economic causes for this growth or deterioration of sentiment4 ,what he has to offer is made up of the commonplaces of latter-day social-economic discussion1 and is charged with a strong undertone of deprecation4 ,what the trend of the causes at work to alter or fortify this body of sentiment may be1 counts for very little in what he says on the present movement or on the immediate future of the institution4 ,the best he has to offer on the woman question is an off-hand reference of the ground of sentiment on which it rests to a recrudescence of the eighteenth century spirit of egalite4 ,this notion of the equality of the sexes he refutes in graceful and affecting terms1 and he pleads for the unbroken preservation of woman's sphere and man's primacy2 as if the matter of superiority or inferiority between the sexes could conceivably be anything more than a conventional outcome of the habits of life imposed upon the community by the circumstances under which they live4 ,how it has come to pass that under the economic exigencies of the past the physical and temperamental diversity between the sexes has been conventionally construed into a superiority of the man and an inferiority of the woman1--on this head he has no more to say or to suggest than on the correlate question of why this conventional interpretation of the facts has latterly not been holding its ancient ground4 ,the discussion of the family and of the relation of the sexes1 in modern culture1 is marked throughout by unwillingness or inability to penetrate behind the barrier of conventional finality4 ,the discussion of the family just cited occupies the opening chapter of ,book ,,ii4 ,for a further instance of ,professor ,schmoller's handling of a modern economic problem1 reference may be had to the closing chapter of ,book ,i41 on the ,development of ,technological ,expedients and its ,economic ,significance1 but more particularly the sections 7#hd-hf7 on the modern machine industry 7pp4 #baa-bbh74 ,in this discussion1 also1 the point of interest is the attention given to the latter-day phenomena of machine industry1 and the author's method and animus in dealing with them4 ,there is 7pp4 #baa-bah7 a condensed and competent presentation of the main characteristics of the modern machine age1 followed 7pp4 #bah-bbh7 by a critical discussion of its cultural value4 ,the customary eulogy1 but with more than the customary discrimination1 is given to the advantages of the regime of the machine in point of economy1 creature comforts1 and intellectual sweep2 and it is pointed out how the regime of the machine has brought about a redistribution of wealth and of population and a reorganisation and redistribution of social and economic structures and functions4 ,it is pointed out 7p4 #bbc7 that the gravest social effect of the machine industry has been the creation of a large class of wage laborers4 ,the material circumstances into which this class has been thrown1 particularly in point of physical comfort1 are dealt with in a sober and discriminating way2 and it is shown 7p4 #bbd7 that in the days of its fuller development the machine's regime has evolved a class of trained laborers who not only live in comfort1 but are sound and strong in mind and body4 ,but with the citation of these facts the pursuit of the chain of cause and effect in this modern machine situation comes to an end4 ,the remainder of the space given to the subject is occupied with extremely sane and well-advised criticism1 moral and aesthetic1 and indications of what the proper ideals and ends of endeavor should be4 ,professor ,schmoller misses the opportunity he here has of dealing with this material in a scientific spirit and with some valuable results for economic theory4 ,he could1 it is not too bold to assume1 have sketched for us an effective method and line of research to be pursued1 for instance1 in following up the scientific question of what may be the cultural1 spiritual effects of the machine's regime upon this large body of trained workmen1 and what this body of trained workmen in its turn counts for as a factor in shaping the institutional growth of the present and the economic and cultural situation of to-morrow4 ,work of this kind1 there is reason to believe1 ,professor ,schmoller could have done with better effect than any of his colleagues in the science2 for he is1 as already noticed above1 possessed of the necessary qualifications in the way of psychological training1 broad knowledge of the play of cause and effect in cultural growth1 and an ability to take a scientific point of view4 ,instead of this he harks back again to the dreary homiletical waste of the traditional ,historismus4 ,it seems as if a topic which he deals with as an objective matter so long as it lies outside the sphere of every-day humanitarian and social solicitude1 becomes a matter to be passed upon by conventional standards of taste1 dignity1 morality1 and the like1 so soon as it comes within the sweep of latter-day ,german sentiment4 ,this habit of treating a given problem from these various and shifting points of view at times gives a kaleidoscopic effect that is not without interest4 ,so in the matter of the technically trained working population in the machine industry1 to which reference has already been made1 something of an odd confusion appears when expressions taken from diverse phases of the discussion are brought side by side4 ,he speaks of this class at one point 7p4 #bbd7 as sound1 strong1 spiritually and morally advancing1 superior in all these virtues to the working classes of other times and places4 ,at another point 7pp4 #bej-bec7 he speaks of the same popular element1 under the designation of socialists1 as perverse1 degenerate1 and reactionary4 ,this latter characterisation may be substantially correct1 but it proceeds on grounds of taste and predilection1 not on grounds of scientifically determinable cause and effect4 ,and the two characterisations apply to the same elements of population2 for the substantial core and tone-giving factor of the radical socialistic element in the ,german community is1 notoriously1 just this technically trained population of the industrial towns where the discipline of the machine industry has been at work with least mitigation4 ,the only other fairly isolable element of a radical socialistic complexion is found among the students of modern science4 ,now1 further1 in his speculations on the relation of technological knowledge to the advance of culture1 ,professor ,schmoller points out 7e4g41 p4 #bbf7 that a high degree of culture connotes1 on the whole1 a high degree of technological efficiency1 and conversely4 ,in this connection he makes use of the terms ,halbkulturvoelker and ,ganskulturvoelker to designate different degrees of cultural maturity4 ,it is curious to reflect1 in the light of what he has to say on these several heads1 that if the socialistically affected1 technically trained population of the industrial towns1 together with the radical-socialistic men of science1 were abstracted from the ,german population1 leaving substantially the peasantry1 the slums1 and the aristocracy great and small1 the resulting ,german community would unquestionably have to be classed as a ,halbkulturvoelk in ,professor ,schmoller's scheme4 ,whereas the elements abstracted1 if taken by themselves1 would as unquestionably be classed among the ,ganskulturvoelker4 ,in conclusion1 one may turn to the concluding chapter 7,book ,,ii41 ,chapter vii47 of the present volume for a final illustration of ,professor ,schmoller's method and animus in handling a modern economic problem4 ,all the more so as this chapter on business enterprise better sustains that scientific attitude which the introductory outline leads the reader to look for throughout4 ,it shows how modern business enterprise is in the main an outgrowth of commercial activity1 as also that it has retained the commercial spirit down to the present4 ,the motive force of business enterprise is the self-seeking quest of dividends2 but ,professor ,schmoller shows1 with more dispassionate insight than many economists1 that this self-seeking motive is hemmed in and guided at all points in the course of its development by considerations and conventions that are not of a primarily self-seeking kind4 ,he is not content to point to the beneficent working of a harmony of interests1 but sketches the play of forces whereby a self-seeking business traffic has come to serve the interests of the community4 ,business enterprise has gradually emerged and come into its present central and dominant position in the community's industry as a concomitant of the growth of individual ownership and pecuniary discretion in modern life4 ,it is therefore a phase of the modern cultural situation2 and its survival and the direction of its further growth are therefore conditioned by the exigencies of the modern cultural situation4 ,what this modern cultural situation is and what are the forces1 essentially psychological1 which shape the further growth of the situation1 no one is better fitted to discuss than ,professor ,schmoller2 and he has also given valuable indications 7pp4 #dbh-deg7 of what these factors are and how the inquiry into their working must be conducted4 ,but even here1 where a dispassionate tracing-out of the sequence of cause and effect should be easier to undertake1 because less readily blurred with sentiment1 than in the case1 e4g41 of the family1 the work of tracing the developmental sequence tapers off into advice and admonition proceeding on the assumption that the stage now reached is1 or at least should be1 final4 ,the attention in the later pages diverges from the process of growth and its conditioning circumstances1 to the desirability of maintaining the good results attained and to the ways and means of holding fast that which is good in the outcome already achieved4 ,the question to which an answer is sought in discussing the present phase of the development is not a question as to what is taking place as respects the institution of business enterprise1 but rather a question as to what form should be given to an optimistic policy of fostering business enterprise and turning it to account for the common good4 ,at this point1 as elsewhere1 though perhaps in a less degree than elsewhere1 the existing form of the institution is accepted as a finality4 ,all this is disappointing in view of the fact that at no other point do modern economic institutions bear less of an air of finality than in the forms and conventions of business organisations and relations4 ,as ,professor ,schmoller remarks 7p4 #dee71 the scope and character of business undertakings necessarily conform to the circumstances of the time1 not to any logical scheme of development from small to great or from simple to complex4 ,so also1 one might be tempted to say1 the expediency and the chance of ultimate survival of business enterprise is itself an open question1 to be answered by a scrutiny of the forces that make for its survival or alteration1 not by advice as to the best method of sustaining and controlling it4 99 99 99 99 99 ,what has here been said in criticism of ,professor ,schmoller's work1 particularly as regards his departure from the path of scientific research in dealing with present-day phenomena1 may1 of course1 have to be qualified1 if not entirely set aside1 when his work is completed with the promised genetic survey of modern institutions to be set forth in the concluding fourth book4 ,perhaps it may even be said that there is fair hope1 on general grounds1 of such a consummation2 but the present volume does not afford ground for a confident expectation of this kind4 ,it is perhaps needless1 perhaps gratuitous1 to add that the strictures offered indicate1 after all1 but relatively slight shortcomings in a work of the first magnitude4 ,,footnotes3 #a ,reprinted by permission from ,the ,quarterly ,journal of ,economics1 ,vol4 ,,xvi1 ,nov41 #aija4 #b ,grundriss der allgemeinen ,volkswirtschaftslehre4 ,erster ,teil4 ,leipzig1 #aijj4 #c ,e4g41 ,k4 ,buecher's ,entstehung der ,volkswirtschaft1 and ,arbeit und ,rythmus2 ,r4 ,hildebrand's ,recht und ,sitte2 ,knapp's ,grundherrschaft und ,rittergut2 ,ehrenberg's ,zeitalter der ,fugger2 ,r4 ,mucke's various works4 #d ,a physiological conception of society1 or of the community1 had been employed before1--e4g41 by the ,physiocrats1--and such a concept was reached also by ,english speculators--e4g41 ,herbert ,spencer--during ,roscher's lifetime2 but these physiological conceptions of society are reached by a different line of approach from that which led up to the late-,hegelian physiological or biological conception of human culture as a spiritual structure and process4 ,the outcome is also a different one1 both as regards the use made of the analogy and as regards the theoretical results reached by its aid4 ,it may be remarked1 by the way1 that neo-,hegelianism1 of the ,left1 likewise gave rise to a theory of a self-determining cultural exfoliation2 namely1 the so-called ,materialistic ,conception of ,history of the ,marxian socialists4 ,this ,marxian conception1 too1 had much of a physiological air2 but ,marx and his coadjutors had an advantage over ,roscher and his following1 in that they were to a greater extent schooled in the ,hegelian philosophy1 instead of being uncritical receptacles of the ,romantic commonplaces left by ,hegelianism as a residue in popular thought4 ,they were therefore more fully conscious of the bearing of their postulates and less naive in their assumptions of self-sufficiency4 #e ,e4g41 in his controversy with ,treitschke4 ,see ,grundfragen der ,socialpolitik und der ,volkswirtschaftslehre1 particularly pp4 #bd1 #be4 #f ,e4g41 ,grundriss1 pp4 #bbe1 #dji1 #daa4 ,,industrial ,,and ,,pecuniary ,,employments#a ,for purposes of economic theory1 the various activities of men and things about which economists busy themselves were classified by the early writers according to a scheme which has remained substantially unchanged1 if not unquestioned1 since their time4 ,this scheme is the classical three-fold division of the factors of production under ,land1 ,labor1 and ,capital4 ,the theoretical aim of the economists in discussing these factors and the activities for which they stand has not remained the same throughout the course of economic discussion1 and the three-fold division has not always lent itself with facility to new points of view and new purposes of theory1 but the writers who have shaped later theory have1 on the whole1 not laid violent hands on the sacred formula4 ,these facts must inspire the utmost reserve and circumspection in any one who is moved to propose even a subsidiary distinction of another kind between economic activities or agents4 ,the terminology and the conceptual furniture of economics are complex and parti-colored enough without gratuitous innovation4 ,it is accordingly not the aim of this paper to set aside the time-honored classification of factors1 or even to formulate an iconoclastic amendment1 but rather to indicate how and why this classification has proved inadequate for certain purposes of theory which were not contemplated by the men who elaborated it4 ,to this end a bit of preface may be in place as regards the aims which led to its formulation and the uses which the three-fold classification originally served4 99 99 99 99 99 ,the economists of the late eighteenth and early nineteenth centuries were believers in a ,providential order1 or an order of ,nature4 ,how they came by this belief need not occupy us here2 neither need we raise a question as to whether their conviction of its truth was well or ill grounded4 ,the ,providential order or order of ,nature is conceived to work in an effective and just way toward the end to which it tends2 and in the economic field this objective end is the material welfare of mankind4 ,the science of that time set itself the task of interpreting the facts with which it dealt1 in terms of this natural order4 ,the material circumstances which condition men's life fall within the scope of this natural order of the universe1 and as members of the universal scheme of things men fall under the constraining guidance of the laws of ,nature1 who does all things well4 ,as regards their purely theoretical work1 the early economists are occupied with bringing the facts of economic life under natural laws conceived somewhat after the manner indicated2 and when the facts handled have been fully interpreted in the light of this fundamental postulate the theoretical work of the scientist is felt to have been successfully done4 ,the economic laws aimed at and formulated under the guidance of this preconception are laws of what takes place naturally or normally1 and it is of the essence of things so conceived that in the natural or normal course there is no wasted or misdirected effort4 ,the standpoint is given by the material interest of mankind1 or1 more concretely1 of the community or society in which the economist is placed2 the resulting economic theory is formulated as an analysis of the natural course of the life of the community1 the ultimate theoretical postulate of which might1 not unfairly1 be stated as in some sort a law of the conservation of economic energy4 ,when the course of things runs off naturally or normally1 in accord with the exigencies of human welfare and the constraining laws of nature1 economic income and outgo balance one another4 ,the natural forces at play in the economic field may increase indefinitely through accretions brought in under man's dominion and through the natural increase of mankind1 and1 indeed1 it is of the nature of things that an orderly progress of this kind should take place2 but within the economic organism1 as within the larger organism of the universe1 there prevails an equivalence of expenditure and returns1 an equilibrium of flux and reflux1 which is not broken over in the normal course of things4 ,so it is1 by implication1 assumed that the product which results from any given industrial process or operation is1 in some sense or in some unspecified respect1 the equivalent of the expenditure of forces1 or of the effort1 or what not1 that has gone into the process out of which the product emerges4 ,this theorem of equivalence is the postulate which lies at the root of the classical theory of distribution1 but it manifestly does not admit of proof--or of disproof either1 for that matter2 since neither the economic forces which go into the process nor the product which emerges are1 in the economic respect1 of such a tangible character as to admit of quantitative determination4 ,they are in fact incommensurable magnitudes4 ,to this last remark the answer may conceivably present itself that the equivalence in question is an equivalence in utility or in exchange value1 and that the quantitative determination of the various items in terms of exchange value or of utility is1 theoretically1 not impossible2 but when it is called to mind that the forces or factors which go to the production of a given product take their utility or exchange value from that of the product1 it will easily be seen that the expedient will not serve4 ,the equivalence between the aggregate factors of production in any given case and their product remains a dogmatic postulate whose validity cannot be demonstrated in any terms that will not reduce the whole proposition to an aimless fatuity1 or to metaphysical grounds which have now been given up4 ,the point of view from which the early1 and even the later classical1 economists discussed economic life was that of the society taken as a collective whole and conceived as an organic unit4 ,economic theory sought out and formulated the laws of the normal life of the social organism1 as it is conceived to work out in that natural course whereby the material welfare of society is attained4 ,the details of economic life are construed1 for purposes of general theory1 in terms of their subservience to the aims imputed to the collective life process4 ,those features of detail which will bear construction as links in the process whereby the collective welfare is furthered1 are magnified and brought into the foreground1 while such features as will not bear this construction are treated as minor disturbances4 ,such a procedure is manifestly legitimate and expedient in a theoretical inquiry whose aim is to determine the laws of health of the social organism and the normal functions of this organism in a state of health4 ,the social organism is1 in this theory1 handled as an individual endowed with a consistent life purpose and something of an intelligent apprehension of what means will serve the ends which it seeks4 ,with these collective ends the interests of the individual members are conceived to be fundamentally at one2 and1 while men may not see that their own individual interests coincide with those of the social organism1 yet1 since men are members of the comprehensive organism of nature and consequently subject to beneficent natural law1 the ulterior trend of unrestrained individual action is1 on the whole1 in the right direction4 ,the details of individual economic conduct and its consequences are of interest to such a general theory chiefly as they further or disturb the beneficent natural course4 ,but if the aims and methods of individual conduct were of minor importance in such an economic theory1 that is not the case as regards individual rights4 ,the early political economy was not simply a formulation of the natural course of economic phenomena1 but it embodied an insistence on what is called natural liberty4 ,whether this insistence on natural liberty is to be traced to utilitarianism or to a less specific faith in natural rights1 the outcome for the purpose in hand is substantially the same4 ,to avoid going too far afield1 it may serve the turn to say that the law of economic equivalence1 or conservation of economic energy1 was1 in early economics1 backed by this second corollary of the order of nature1 the closely related postulate of natural rights4 ,the classical doctrine of distribution rests on both of these1 and it is consequently not only a doctrine of what must normally take place as regards the course of life of society at large1 but it also formulates what ought of right to take place as regards the remuneration for work and the distribution of wealth among men4 ,under the resulting natural-economic law of equivalence and equity1 it is held that the several participants or factors in the economic process severally get the equivalent of the productive force which they expend4 ,they severally get as much as they produce2 and conversely1 in the normal case they severally produce as much as they get4 ,in the earlier formulations1 as1 for example1 in the authoritative formulation of ,adam ,smith1 there is no clear or consistent pronouncement as regards the terms in which this equivalence between production and remuneration runs4 ,with the later1 classical economists1 who had the benefit of a developed utilitarian philosophy1 it seems to be somewhat consistently conceived in terms of an ill-defined serviceability4 ,with some later writers it is an equivalence of exchange values2 but as this latter reduces itself to tautology1 it need scarcely be taken seriously4 ,when we are told in the later political economy that the several agents or factors in production normally earn what they get1 it is perhaps fairly to be construed as a claim that the economic service rendered the community by any one of the agents in production equals the service received by the agent in return4 ,in terms of serviceability1 then1 if not in terms of productive force1#b the individual agent1 or at least the class or group of agents to which the individual belongs1 normally gets as much as he contributes and contributes as much as he gets4 ,this applies to all those employments or occupations which are ordinarily carried on in any community1 throughout the aggregate of men's dealings with the material means of life4 ,all activity which touches industry comes in under this law of equivalence and equity4 ,now1 to a theorist whose aim is to find the laws governing the economic life of a social organism1 and who for this purpose conceives the economic community as a unit1 the features of economic life which are of particular consequence are those which show the correlation of efforts and the solidarity of interests4 ,for this purpose1 such activities and such interests as do not fit into the scheme of solidarity contemplated are of minor importance1 and are rather to be explained away or construed into subservience to the scheme of solidarity than to be incorporated at their face value into the theoretical structure4 ,of this nature are what are here to be spoken of under the term pecuniary employments1 and the fortune which these pecuniary employments have met at the hands of classical economic theory is such as is outlined in the last sentence4 ,in a theory proceeding on the premise of economic solidarity1 the important bearing of any activity that is taken up and accounted for1 is its bearing upon the furtherance of the collective life process4 ,viewed from the standpoint of the collective interest1 the economic process is rated primarily as a process for the provision of the aggregate material means of life4 ,as a late representative of the classical school expresses it3 ,production1 in fact1 embraces every economic operation except consumption4#c ,it is this aggregate productivity1 and the bearing of all details upon the aggregate productivity1 that constantly occupies the attention of the classical economists4 ,what partially diverts their attention from this central and ubiquitous interest1 is their persistent lapse into natural-rights morality4 ,the result is that acquisition is treated as a sub-head under production1 and effort directed to acquisition is construed in terms of production4 ,the pecuniary activities of men1 efforts directed to acquisition and operations incident to the acquisition or tenure of wealth1 are treated as incidental to the distribution to each of his particular proportion in the production of goods4 ,pecuniary activities1 in short1 are handled as incidental features of the process of social production and consumption1 as details incident to the method whereby the social interests are served1 instead of being dealt with as the controlling factor about which the modern economic process turns4 ,apart from the metaphysical tenets indicated above as influencing them1 there are1 of course1 reasons of economic history for the procedure of the early economists in so relegating the pecuniary activities to the background of economic theory4 ,in the days of ,adam ,smith1 for instance1 economic life still bore much of the character of what ,professor ,schmoller calls ,stadtwirtschaft4 ,this was the case to some extent in practice1 but still more decidedly in tradition4 ,to a greater extent than has since been the case1 households produced goods for their own consumption1 without the intervention of sale2 and handicraftsmen still produced for consumption by their customers1 without the intervention of a market4 ,in a considerable measure1 the conditions which the ,austrian marginal-utility theory supposes1 of a producing seller and a consuming buyer1 actually prevailed4 ,it may not be true that in ,adam ,smith's time the business operations1 the bargain and sale of goods1 were1 in general1 obviously subservient to their production and consumption1 but it comes nearer being true at that time than at any time since then4 ,and the tradition having once been put into form and authenticated by ,adam ,smith1 that such was the place of pecuniary transactions in economic theory1 this tradition has lasted on in the face of later and further changes4 ,under the shadow of this tradition the pecuniary employments are still dealt with as auxiliary to the process of production1 and the gains from such employments are still explained as being due to a productive effect imputed to them4 ,according to ancient prescription1 then1 all normal1 legitimate economic activities carried on in a well regulated community serve a materially useful end1 and so far as they are lucrative they are so by virtue of and in proportion to a productive effect imputed to them4 ,but in the situation as it exists at any time there are activities and classes of persons which are indispensable to the community1 or which are at least unavoidably present in modern economic life1 and which draw some income from the aggregate product1 at the same time that these activities are not patently productive of goods and can not well be classed as industrial1 in any but a highly sophisticated sense4 ,some of these activities1 which are concerned with economic matters but are not patently of an industrial character1 are integral features of modern economic life1 and must therefore be classed as normal2 for the existing situation1 apart from a few minor discrepancies1 is particularly normal in the apprehension of present-day economists4 ,now1 the law of economic equivalence and equity says that those who normally receive in income must perforce serve some productive end2 and1 since the existing organization of society is conceived to be eminently normal1 it becomes imperative to find some ground on which to impute industrial productivity to those classes and employments which do not at first view appear to be industrial at all4 ,hence there is commonly visible in the classical political economy1 ancient and modern1 a strong inclination to make the schedule of industrially productive employments very comprehensive2 so that a good deal of ingenuity has been spent in economically justifying their presence by specifying the productive effect of such non-industrial factors as the courts1 the army1 the police1 the clergy1 the schoolmaster1 the physician1 the opera singer4 ,but these non-economic employments are not so much to the point in the present inquiry2 the point being employments which are unmistakably economic1 but not industrial in the naive sense of the word industry1 and which yield an income4 ,adam ,smith analysed the process of industry in which he found the community of his time engaged1 and found the three classes of agents or factors3 ,land1 ,labor1 and ,capital 7stock74 ,the productive factors engaged being thus determined1 the norm of natural-economic equivalence and equity already referred to above1 indicated what would be the natural sharers in the product4 ,later economists have shown great reserve about departing from this three-fold division of factors1 with its correlated three-fold division of sharers of remuneration2 apparently because they have retained an instinctive1 indefeasible trust in the law of economic equivalence which underlies it4 ,but circumstances have compelled the tentative intrusion of a fourth class of agent and income4 ,the undertaker and his income presently came to be so large and ubiquitous figures in economic life that their presence could not be overlooked by the most normalising economist4 ,the undertaker's activity has been interpolated in the scheme of productive factors1 as a peculiar and fundamentally distinctive kind of labor1 with the function of cooerdinating and directing industrial processes4 ,similarly1 his income has been interpolated in the scheme of distribution1 as a peculiar kind of wages1 proportioned to the heightened productivity given the industrial process by his work4#d ,his work is discussed in expositions of the theory of production4 ,in discussions of his functions and his income the point of the argument is1 how and in what degree does his activity increase the output of goods1 or how and in what degree does it save wealth to the community4 ,beyond his effect in enhancing the effective volume of the aggregate wealth the undertaker receives but scant attention1 apparently for the reason that so soon as that point has been disposed of the presence of the undertaker and his income has been reconciled with the tacitly accepted natural law of equivalence between productive service and remuneration4 ,the normal balance has been established1 and the undertaker's function has been justified and subsumed under the ancient law that ,nature does all things well and equitably4 ,this holds true of the political economy of our grandfathers4 ,but this aim and method of handling the phenomena of life for theoretical ends1 of course1 did not go out of vogue abruptly in the days of our grandfathers4#e ,there is a large sufficiency of the like aim and animus in the theoretical discussions of a later time2 but specifically to cite and analyse the evidence of its presence would be laborious1 nor would it conduce to the general peace of mind4 ,some motion towards a further revision of the scheme is to be seen in the attention which has latterly been given to the function and the profits of that peculiar class of undertakers whom we call speculators4 ,but even on this head the argument is apt to turn on the question of how the services which the speculator is conceived to render the community are to be construed into an equivalent of his gains4#f ,the difficulty of interpretation encountered at this point is considerable1 partly because it is not quite plain whether the speculators as a class come out of their transactions with a net gain or with a net loss4 ,a systematic net loss1 or a no-profits balance1 would1 on the theory of equivalence1 mean that the class which gets this loss or doubtful gain is of no service to the community2 yet we are1 out of the past1 committed to the view that the speculator is useful--indeed economically indispensable--and shall therefore have his reward4 ,in the discussions given to the speculator and his function some thought is commonly given to the question of the legitimacy of the speculator's traffic4 ,the legitimate speculator is held to earn his gain by services of an economic kind rendered the community4 ,the recourse to this epithet1 legitimate1 is chiefly of interest as showing that the tacit postulate of a natural order is still in force4 ,legitimate are such speculative dealings as are1 by the theorist1 conceived to serve the ends of the community1 while illegitimate speculation is that which is conceived to be disserviceable to the community4 ,the theoretical difficulty about the speculator and his gains 7or losses7 is that the speculator ex professo is quite without interest in or connection with any given industrial enterprise or any industrial plant4 ,he is1 industrially speaking1 without visible means of support4 ,he may stake his risks on the gain or on the loss of the community with equal chances of success1 and he may shift from one side to the other without winking4 ,the speculator may be treated as an extreme case of undertaker1 who deals exclusively with the business side of economic life rather than with the industrial side4 ,but he differs in this respect from the common run of business men in degree rather than in kind4 ,his traffic is a pecuniary traffic1 and it touches industry only remotely and uncertainly2 while the business man as commonly conceived is more or less immediately interested in the successful operation of some concrete industrial plant4 ,but since the undertaker first broke into economic theory1 some change has also taken place as regards the immediacy of the relations of the common run of undertakers to the mechanical facts of the industries in which they are interested4 ,half a century ago it was still possible to construe the average business manager in industry as an agent occupied with the superintendence of the mechanical processes involved in the production of goods or services4 ,but in the later development the connection between the business manager and the mechanical processes has1 on an average1 grown more remote2 so much so1 that his superintendence of the plant or of the processes is frequently visible only to the scientific imagination4 ,that activity by virtue of which the undertaker is classed as such makes him a businessman1 not a mechanic or foreman of the shop4 ,his superintendence is a superintendence of the pecuniary affairs of the concern1 rather than of the industrial plant2 especially is this true in the higher development of the modern captain of industry4 ,as regards the nature of the employment which characterises the undertaker1 it is possible to distinguish him from the men who are mechanically engaged in the production of goods1 and to say that his employment is of a business or pecuniary kind1 while theirs is of an industrial or mechanical kind4 ,it is not possible to draw a similar distinction between the undertaker who is in charge of a given industrial concern1 and the business man who is in business but is not interested in the production of goods or services4 ,as regards the character of employment1 then1 the line falls not between legitimate and illegitimate pecuniary transactions1 but between business and industry4 ,the distinction between business and industry has1 of course1 been possible from the beginning of economic theory1 and1 indeed1 the distinction has from time to time temporarily been made in the contrast frequently pointed out between the proximate interest of the business man and the ulterior interest of society at large4 ,what appears to have hindered the reception of the distinction into economic doctrine1 is the constraining presence of a belief in an order of ,nature and the habit of conceiving the economic community as an organism4 ,the point of view given by these postulates has made such a distinction between employments not only useless1 but even disserviceable for the ends to which theory has been directed4 ,but the fact has come to be gradually more and more patent that there are constantly1 normally present in modern economic life an important range of activities and classes of persons who work for an income but of whom it cannot be said that they1 either proximately or remotely1 apply themselves to the production of goods4 ,their services1 proximate or remote1 to society are often of quite a problematical character4 ,they are ubiquitous1 and it will scarcely do to say that they are anomalous1 for they are of ancient prescription1 they are within the law and within the pale of popular morals4 ,of these strictly economic activities that are lucrative without necessarily being serviceable to the community1 the greater part are to be classed as business4 ,perhaps the largest and most obvious illustration of these legitimate business employments is afforded by the speculators in securities4 ,by way of further illustration may be mentioned the extensive and varied business of real-estate men 7land-agents7 engaged in the purchase and sale of property for speculative gain or for a commission2 so1 also1 the closely related business of promoters and boomers of other than real-estate ventures2 as also attorneys1 brokers1 bankers1 and the like1 although the work performed by these latter will more obviously bear interpretation in terms of social serviceability4 ,the traffic of these business men shades off insensibly from that of the bona fide speculator who has no ulterior end of industrial efficiency to serve1 to that of the captain of industry or entrepreneur as conventionally set forth in the economic manuals4 ,the characteristic in which these business employments resemble one another1 and in which they differ from the mechanical occupations as well as from other non-economic employments1 is that they are concerned primarily with the phenomena of value--with exchange or market values and with purchase and sale--and only indirectly and secondarily1 if at all1 with mechanical processes4 ,what holds the interest and guides and shifts the attention of men within these employments is the main chance4 ,these activities begin and end within what may broadly be called the higgling of the market4 ,of the industrial employments1 in the stricter sense1 it may be said1 on the other hand1 that they begin and end outside the higgling of the market4 ,their proximate aim and effect is the shaping and guiding of material things and processes4 ,broadly1 they may be said to be primarily occupied with the phenomena of material serviceability1 rather than with those of exchange value4 ,they are taken up with phenomena which make the subject matter of ,physics and the other material sciences4 ,the business man enters the economic life process from the pecuniary side1 and so far as he works an effect in industry he works it through the pecuniary dispositions which he makes4 ,he takes thought most immediately of men's convictions regarding market values2 and his efforts as a business man are directed to the apprehension1 and commonly also to the influencing of men's beliefs regarding market values4 ,the objective point of business is the diversion of purchase and sale into some particular channel1 commonly involving a diversion from other channels4 ,the laborer and the man engaged in directing industrial processes1 on the other hand1 enter the economic process from the material side2 in their characteristic work they take thought most immediately of mechanical effects1 and their attention is directed to turning men and things to account for the compassing of some material end4 ,the ulterior aim1 and the ulterior effect1 of these industrial employments may be some pecuniary result2 work of this class commonly results in an enhancement1 or at least an alteration1 of market values4 ,conversely1 business activity may1 and in a majority of cases it perhaps does1 effect an enhancement of the aggregate material wealth of the community1 or the aggregate serviceability of the means at hand2 but such an industrial outcome is by no means bound to follow from the nature of the business man's work4 ,from what has just been said it appears that1 if we retain the classical division of economic theory into ,production1 ,distribution1 and ,consumption1 the pecuniary employments do not properly fall under the first of these divisions1 ,production1 if that term is to retain the meaning commonly assigned to it4 ,in an earlier and less specialised organisation of economic life1 particularly1 the undertaker frequently performs the work of a foreman or a technological expert1 as well as the work of business management4 ,hence in most discussions of his work and his theoretical relations his occupation is treated as a composite one4 ,the technological side of his composite occupation has even given a name to his gains 7wages of superintendence71 as if the undertaker were primarily a master-workman4 ,the distinction at this point has been drawn between classes of persons instead of between classes of employments2 with the result that the evident necessity of discussing his technological employment under production has given countenance to the endeavor to dispose of the undertaker's business activity under the same head4 ,this endeavor has1 of course1 not wholly succeeded4 ,in the later development1 the specialisation of work in the economic field has at this point progressed so far1 and the undertaker now in many cases comes so near being occupied with business affairs alone1 to the exclusion of technological direction and supervision1 that1 with this object lesson before us1 we no longer have the same difficulty in drawing a distinction between business and industrial employments4 ,and even in the earlier days of the doctrines1 when the aim was to dispose of the undertaker's work under the theoretical head of ,production1 the business side of his work persistently obtruded itself for discussion in the books and chapters given to ,distribution and ,exchange4 ,the course taken by the later theoretical discussion of the entrepreneur1 leaves no question but that the characteristic fact about his work is that he is a business man1 occupied with pecuniary affairs4 ,such pecuniary employments1 of which the purely fiscal or financiering forms of business are typical1 are nearly all and nearly throughout1 conditioned by the institution of property or ownership--an institution which1 as ,john ,stuart ,mill remarks1 belongs entirely within the theoretical realm of ,distribution4 ,ownership1 no doubt1 has its effect upon productive industry1 and1 indeed1 its effect upon industry is very large1 both in scope and range1 even if we should not be prepared to go the length of saying that it fundamentally conditions all industry2 but ownership is not itself primarily or immediately a contrivance for production4 ,ownership directly touches the results of industry1 and only indirectly the methods and processes of industry4 ,if the institution of property be compared with such another feature of our culture1 for instance1 as the domestication of plants or the smelting of iron1 the meaning of what has just been said may seem clearer4 ,so much then of the business man's activity as is conditioned by the institution of property1 is not to be classed1 in economic theory1 as productive or industrial activity at all4 ,its objective point is an alteration of the distribution of wealth4 ,his business is1 essentially1 to sell and buy--sell in order to buy cheaper1 buy in order to sell dearer4#g ,it may or may not1 indirectly1 and in a sense incidentally1 result in enhanced production4 ,the business man may be equally successful in his enterprise1 and he may be equally well remunerated1 whether his activity does or does not enrich the community4 ,immediately and directly1 so long as it is confined to the pecuniary or business sphere1 his activity is incapable of enriching or impoverishing the community as a whole except1 after the fashion conceived by the mercantilists1 through his dealings with men of other communities4 ,the circulation and distribution of goods incidental to the business man's traffic is commonly1 though not always or in the nature of the case1 serviceable to the community2 but the distribution of goods is a mechanical1 not a pecuniary transaction1 and it is not the objective point of business nor its invariable outcome4 ,from the point of view of business1 the distribution or circulation of goods is a means of gain1 not an end sought4 ,it is true1 industry is closely conditioned by business4 ,in a modern community1 the business man finally decides what may be done in industry1 or at least in the greater number and the more conspicuous branches of industry4 ,this is particularly true of those branches that are currently thought of as peculiarly modern4 ,under existing circumstances of ownership1 the discretion in economic matters1 industrial or otherwise1 ultimately rests in the hands of the business men4 ,it is their business to have to do with property1 and property means the discretionary control of wealth4 ,in point of character1 scope and growth1 industrial processes and plants adapt themselves to the exigencies of the market1 wherever there is a developed market1 and the exigencies of the market are pecuniary exigencies4 ,the business man1 through his pecuniary dispositions1 enforces his choice of what industrial processes shall be in use4 ,he can1 of course1 not create or initiate methods or aims for industry2 if he does so he steps out of the business sphere into the material domain of industry4 ,but he can decide whether and which of the known processes and industrial arts shall be practiced1 and to what extent4 ,industry must be conducted to suit the business man in his quest for gain2 which is not the same as saying that it must be conducted to suit the needs or the convenience of the community at large4 ,ever since the institution of property was definitely installed1 and in proportion as purchase and sale has been practiced1 some approach has been made to a comprehensive system of control of industry by pecuniary transactions and for pecuniary ends1 and the industrial organisation is nearer such a consummation now than it ever has been4 ,for the great body of modern industry the final term of the sequence is not the production of the goods but their sale2 the endeavor is not so much to fit the goods for use as for sale4 ,it is well known that there are many lines of industry in which the cost of marketing the goods equals the cost of making and transporting them4 ,any industrial venture which falls short in meeting the pecuniary exigencies of the market declines and yields ground to others that meet them with better effect4 ,hence shrewd business management is a requisite to success in any industry that is carried on within the scope of the market4 ,pecuniary failure carries with it industrial failure1 whatever may be the cause to which the pecuniary failure is due--whether it be inferiority of the goods produced1 lack of salesmanlike tact1 popular prejudice1 scanty or ill-devised advertising1 excessive truthfulness1 or what not4 ,in this way industrial results are closely dependent upon the presence of business ability2 but the cause of this dependence of industry upon business in a given case is to be sought in the fact that other rival ventures have the backing of shrewd business management1 rather than in any help which business management in the aggregate affords to the aggregate industry of the community4 ,shrewd and farsighted business management is a requisite of survival in the competitive pecuniary struggle in which the several industrial concerns are engaged1 because shrewd and farsighted business management abounds and is employed by all the competitors4 ,the ground of survival in the selective process is fitness for pecuniary gain1 not fitness for serviceability at large4 ,pecuniary management is of an emulative character and gives1 primarily1 relative success only4 ,if the change were equitably distributed1 an increase or decrease of the aggregate or average business ability in the community need not immediately affect the industrial efficiency or the material welfare of the community4 ,the like can not be said with respect to the aggregate or average industrial capacity of the men at work4 ,the latter are1 on the whole1 occupied with production of goods2 the business men1 on the other hand1 are occupied with the acquisition of them4 ,theoreticians who are given to looking beneath the facts and to contemplating the profounder philosophical meaning of life speak of the function of the undertaker as being the guidance and cooerdination of industrial processes with a view to economies of production4 ,no doubt1 the remoter effect of business transactions often is such cooerdination and economy1 and1 no doubt also1 the undertaker has such economy in view and is stimulated to his maneuvers of combination by the knowledge that certain economies of this kind are feasible and will inure to his gain if the proper business arrangements can be effected4 ,but it is practicable to class even this indirect furthering of industry by the undertaker as a permissive guidance only4 ,the men in industry must first create the mechanical possibility of such new and more economical methods and arrangements1 before the undertaker sees the chance1 makes the necessary business arrangements1 and gives directions that the more effective working arrangements be adopted4 ,it is notorious1 and it is a matter upon which men dilate1 that the wide and comprehensive consolidations and cooerdinations of industry1 which often add so greatly to its effectiveness1 take place at the initiative of the business men who are in control4 ,it should be added that the fact of their being in control precludes such cooerdination from being effected except by their advice and consent4 ,and it should also be added1 in order to a passably complete account of the undertaker's function1 that he not only can and does effect economising cooerdinations of a large scope1 but he also can and does at times inhibit the process of consolidation and cooerdination4 ,it happens so frequently that it might fairly be said to be the common run that business interests and undertaker's maneuvers delay consolidation1 combination1 cooerdination1 for some appreciable time after they have become patently advisable on industrial grounds4 ,the industrial advisability or practicability is not the decisive point4 ,industrial advisability must wait on the eventual convergence of jarring pecuniary interests and on the strategical moves of business men playing for position4 ,which of these two offices of the business man in modern industry1 the furthering or the inhibitory1 has the more serious or more far-reaching consequences is1 on the whole1 somewhat problematical4 ,the furtherance of cooerdination by the modern captain of industry bulks large in our vision1 in great part because the process of widening cooerdination is of a cumulative character4 ,after a given step in cooerdination and combination has been taken1 the next step takes place on the basis of the resulting situation4 ,industry1 that is to say the working force engaged in industry1 has a chance to develop new and larger possibilities to be taken further advantage of4 ,in this way each successive move in the enhancement of the efficiency of industrial processes1 or in the widening of cooerdination in industrial processes1 pushes the captain of industry to a further concession1 making possible a still farther industrial growth4 ,but as regards the undertaker's inhibitory dealings with industrial cooerdination the visible outcome is not so striking4 ,the visible outcome is simply that nothing of the kind then takes place in the premises4 ,the potential cumulative sequence is cut off at the start1 and so it does not figure in our appraisement of the disadvantage incurred4 ,the loss does not commonly take the more obtrusive form of an absolute retreat1 but only that of a failure to advance where the industrial situation admits of an advance4 ,it is1 of course1 impracticable to foot up and compare gain and loss in such a case1 where the losses1 being of the nature of inhibited growth1 cannot be ascertained4 ,but since the industrial serviceability of the captain of industry is1 on the whole1 of a problematical complexion1 it should be advisable for a cautious economic theory not to rest its discussion of him on his serviceability4#h ,it appears1 then1 as all economists are no doubt aware1 that there is in modern society a considerable range of activities1 which are not only normally present1 but which constitute the vital core of our economic system2 which are not directly concerned with production1 but which are nevertheless lucrative4 ,indeed1 the group comprises most of the highly remunerative employments in modern economic life4 ,the gains from these employments must plainly be accounted for on other grounds than their productivity1 since they need have no productivity4 ,but it is not only as regards the pecuniary employments that productivity and remuneration are constitutionally out of touch4 ,it seems plain1 from what has already been said1 that the like is true for the remuneration gained in the industrial employments4 ,most wages1 particularly those paid in the industrial employments proper1 as contrasted with those paid for domestic or personal service1 are paid on account of pecuniary serviceability to the employer1 not on grounds of material serviceability to mankind at large4 ,the product is valued1 sought and paid for on account of and in some proportion to its vendibility1 not for more recondite reasons of ulterior human welfare at large4 ,it results that there is no warrant1 in general theory1 for claiming that the work of highly paid persons 7more particularly that of highly paid business men7 is of greater substantial use to the community than that of the less highly paid4 ,at the same time1 the reverse could1 of course1 also not be claimed4 ,wages1 resting on a pecuniary basis1 afford no consistent indication of the relative productivity of the recipients1 except in comparisons between persons or classes whose products are identical except in amount1--that is to say1 where a resort to wages as an index of productivity would be of no use anyway4#i 99 99 99 99 99 ,a result of the acceptance of the theoretical distinction here attempted between industrial and pecuniary employments and an effective recognition of the pecuniary basis of the modern economic organisation would be to dissociate the two ideas of productivity and remuneration4 ,in mathematical language1 remuneration could no longer be conceived and handled as a function of productivity1--unless productivity be taken to mean pecuniary serviceability to the person who pays the remuneration4 ,in modern life remuneration is1 in the last analysis1 uniformly obtained by virtue of an agreement between individuals who commonly proceed on their own interest in point of pecuniary gain4 ,the remuneration may1 therefore1 be said to be a function of the pecuniary service rendered the person who grants the remuneration2 but what is pecuniarily serviceable to the individual who exercises the discretion in the matter need not be productive of material gain to the community as a whole4 ,nor does the algebraic sum of individual pecuniary gains measure the aggregate serviceability of the activities for which the gains are got4 ,in a community organized1 as modern communities are1 on a pecuniary basis1 the discretion in economic matters rests with the individuals1 in severalty2 and the aggregate of discrete individual interests nowise expresses the collective interest4 ,expressions constantly recur in economic discussions which imply that the transactions discussed are carried out for the sake of the collective good or at the initiative of the social organism1 or that society rewards so and so for their services4 ,such expressions are commonly of the nature of figures of speech and are serviceable for homiletical rather than for scientific use4 ,they serve to express their user's faith in a beneficent order of nature1 rather than to convey or to formulate information in regard to facts4 ,of course1 it is still possible consistently to hold that there is a natural equivalence between work and its reward1 that remuneration is naturally1 or normally1 or in the long run1 proportioned to the material service rendered the community by the recipient2 but that proposition will hold true only if natural or normal be taken in such a sense as to admit of our saying that the natural does not coincide with the actual2 and it must be recognised that such a doctrine of the natural apportionment of wealth or of income disregards the efficient facts of the case4 ,apart from effects of this kind in the way of equitable arrangements traceable to grounds of sentiment1 the only recourse which modern science would afford the champion of a doctrine of natural distribution1 in the sense indicated1 would be a doctrine of natural selection2 according to which all disserviceable or unproductive1 wasteful employments would1 perforce1 be weeded out as being incompatible with the continued life of any community that tolerated them4 ,but such a selective elimination of unserviceable or wasteful employments would presume the following two conditions1 neither of which need prevail3 7#a7 ,it must be assumed that the disposable margin between the aggregate productivity of industry and the aggregate necessary consumption is so narrow as to admit of no appreciable waste of energy or of goods2 7#b7 it must be assumed that no deterioration of the condition of society in the economic respect does or can naturally take place4 ,as to the former of these two assumptions1 it is to be said that in a very poor community1 and under exceptionally hard economic circumstances1 the margin of production may be as narrow as the theory would require4 ,something approaching this state of things may be found1 for instance1 among some ,eskimo tribes4 ,but in a modern industrial community--where the margin of admissible waste probably always exceeds fifty per cent1 of the output of goods--the facts make no approach to the hypothesis4 ,the second assumed condition is1 of course1 the old-fashioned assumption of a beneficent1 providential order or meliorative trend in human affairs4 ,as such1 it needs no argument at this day4 ,instances are not far to seek of communities in which economic deterioration has taken place while the system of distribution1 both of income and of accumulated wealth1 has remained on a pecuniary basis4 99 99 99 99 99 ,to return to the main drift of the argument4 ,the pecuniary employments have to do with wealth in point of ownership1 with market values1 with transactions of exchange1 purchase and sale1 bargaining for the purpose of pecuniary gain4 ,these employments make up the characteristic occupations of business men1 and the gains of business are derived from successful endeavors of the pecuniary kind4 ,these business employments are the characteristic activity 7constitute the function7 of what are in theory called undertakers4 ,the dispositions which undertakers1 qua business men1 make are pecuniary dispositions--whatever industrial sequel they may or may not have--and are carried out with a view to pecuniary gain4 ,the wealth of which they have the discretionary disposal may or may not be in the form of production goods2 but in whatever form the wealth in question is conceived to exist1 it is handled by the undertakers in terms of values and is disposed of by them in the pecuniary respect4 ,when1 as may happen1 the undertaker steps down from the pecuniary plane and directs the mechanical handling and functioning of production goods1 he becomes for the time a foreman4 ,the undertaker1 if his business venture is of the industrial kind1 of course takes cognizance of the aptness of a given industrial method or process for his purpose1 and he has to choose between different industrial processes in which to invest his values2 but his work as undertaker1 simply1 is the investment and shifting of the values under his hand from the less to the more gainful point of investment4 ,when the investment takes the form of material means of industry1 or industrial plant1 the sequel of a given business transaction is commonly some particular use of such means2 and when such industrial use follows1 it commonly takes place at the hands of other men than the undertaker1 although it takes place within limits imposed by the pecuniary exigencies of which the undertaker takes cognizance4 ,wealth turned to account in the way of investment or business management may or may not1 in consequence1 be turned to account1 materially1 for industrial effect4 ,wealth1 values1 so employed for pecuniary ends is capital in the business sense of the word4#aj ,wealth1 material means of industry1 physically employed for industrial ends is capital in the industrial sense4 ,theory1 therefore1 would require that care be taken to distinguish between capital as a pecuniary category1 and capital as an industrial category1 if the term capital is retained to cover the two concepts4#aa ,the distinction here made substantially coincides with a distinction which many late writers have arrived at from a different point of approach and have1 with varying success1 made use of under different terms4#ab ,a further corollary touching capital may be pointed out4 ,the gains derived from the handling of capital in the pecuniary respect have no immediate relation1 stand in no necessary relation of proportion1 to the productive effect compassed by the industrial use of the material means over which the undertaker may dispose2 although the gains have a relation of dependence to the effects achieved in point of vendibility4 ,but vendibility need not1 even approximately1 coincide with serviceability1 except serviceability be construed in terms of marginal utility or some related conception1 in which case the outcome is a tautology4 ,where1 as in the case commonly assumed by economists as typical1 the investing undertaker seeks his gain through the production and sale of some useful article1 it is commonly also assumed that his effort is directed to the most economical production of as large and serviceable a product as may be1 or at least it is assumed that such production is the outcome of his endeavors in the natural course of things4 ,this account of the aim and outcome of business enterprise may be natural1 but it does not describe the facts4 ,the facts being1 of course1 that the undertaker in such a case seeks to produce economically as vendible a product as may be4 ,in the common run vendibility depends in great part on the serviceability of the goods1 but it depends also on several other circumstances2 and to that highly variable1 but nearly always considerable extent to which vendibility depends on other circumstances than the material serviceability of the goods1 the pecuniary management of capital must be held not to serve the ends of production4 ,neither immediately1 in his purely pecuniary traffic1 nor indirectly1 in the business guidance of industry through his pecuniary traffic1 therefore1 can the undertaker's dealings with his pecuniary capital be accounted a productive occupation1 nor can the gains of capital be taken to mark or to measure the productivity due to the investment4 ,the cost of production of goods in the case contemplated is to an appreciable1 but indeterminable1 extent a cost of production of vendibility--an outcome which is often of doubtful service to the body of consumers1 and which often counts in the aggregate as waste4 ,the material serviceability of the means employed in industry1 that is to say the functioning of industrial capital in the service of the community at large1 stands in no necessary or consistent relation to the gainfulness of capital in the pecuniary respect4 ,productivity can accordingly not be predicated of pecuniary capital4 ,it follows that productivity theories of interest should be as difficult to maintain as productivity theories of the gains of the pecuniary employments1 the two resting on the same grounds4 ,it is1 further1 to be remarked that pecuniary capital and industrial capital do not coincide in respect of the concrete things comprised under each4 ,from this and from the considerations already indicated above1 it follows that the magnitude of pecuniary capital may vary independently of variations in the magnitude of industrial capital--not indefinitely1 perhaps1 but within a range which1 in its nature1 is indeterminate4 ,pecuniary capital is a matter of market values1 while industrial capital is1 in the last analysis1 a matter of mechanical efficiency1 or rather of mechanical effects not reducible to a common measure or a collective magnitude4 ,so far as the latter may be spoken of as a homogenous aggregate--itself a doubtful point at best--the two categories of capital are disparate magnitudes1 which can be mediated only through a process of valuation conditioned by other circumstances besides the mechanical efficiency of the material means valued4 ,market values being a psychological outcome1 it follows that pecuniary capital1 an aggregate of market values1 may vary in magnitude with a freedom which gives the whole an air of caprice1--such as psychological phenomena1 particularly the psychological phenomena of crowds1 frequently present1 and such as becomes strikingly noticeable in times of panic or of speculative inflation4 ,on the other hand1 industrial capital1 being a matter of mechanical contrivances and adaptation1 cannot similarly vary through a revision of valuations4 ,if it is taken as an aggregate1 it is a physical magnitude1 and as such it does not alter its complexion or its mechanical efficiency in response to the greater or less degree of appreciation with which it is viewed4 ,capital pecuniarily considered rests on a basis of subjective value2 capital industrially considered rests on material circumstances reducible to objective terms of mechanical1 chemical and physiological effect4 ,the point has frequently been noted that it is impossible to get at the aggregate social 7industrial7 capital by adding up the several items of individual 7pecuniary7 capital4 ,a reason for this1 apart from variations in the market values of given material means of production1 is that pecuniary capital comprises not only material things but also conventional facts1 psychological phenomena not related in any rigid way to material means of production1--as e4g41 good will1 fashions1 customs1 prestige1 effrontery1 personal credit4 ,whatever ownership touches1 and whatever affords ground for pecuniary discretion1 may be turned to account for pecuniary gain and may therefore be comprised in the aggregate of pecuniary capital4 ,ownership1 the basis of pecuniary capital1 being itself a conventional fact1 that is to say a matter of habits of thought1 it is intelligible that phenomena of convention and opinion should figure in an inventory of pecuniary capital2 whereas1 industrial capital being of a mechanical character1 conventional circumstances do not affect it--except as the future production of material means to replace the existing outfit may be guided by convention--and items having but a conventional existence are1 therefore1 not comprised in its aggregate4 ,the disparity between pecuniary and industrial capital1 therefore1 is something more than a matter of an arbitrarily chosen point of view1 as some recent discussions of the capital concept would have us believe2 just as the difference between the pecuniary and the industrial employments1 which are occupied with the one or the other category of capital1 means something more than the same thing under different aspects4 99 99 99 99 99 ,but the distinction here attempted has a farther bearing1 beyond the possible correction of a given point in the theory of distribution4 ,modern economic science is to an increasing extent concerning itself with the question of what men do and how and why they do it1 as contrasted with the older question of how ,nature1 working through human nature1 maintains a favorable balance in the output of goods4 ,neither the practical questions of our generation1 nor the pressing theoretical questions of the science1 run on the adequacy or equity of the share that goes to any class in the normal case4 ,the questions are rather such realistic ones as these3 ,why do we1 now and again1 have hard times and unemployment in the midst of excellent resources1 high efficiency and plenty of unmet wants8 ,why is one-half our consumable product contrived for consumption that yields no material benefit8 ,why are large cooerdinations of industry1 which greatly reduce cost of production1 a cause of perplexity and alarm8 ,why is the family disintegrating among the industrial classes1 at the same time that the wherewithal to maintain it is easier to compass8 ,why are large and increasing portions of the community penniless in spite of a scale of remuneration which is very appreciably above the subsistence minimum8 ,why is there a widespread disaffection among the intelligent workmen who ought to know better8 ,these and the like questions1 being questions of fact1 are not to be answered on the grounds of normal equivalence4 ,perhaps it might better be said that they have so often been answered on those grounds1 without any approach to disposing of them1 that the outlook for help in that direction has ceased to have a serious meaning4 ,these are1 to borrow ,professor ,clark's phrase1 questions to be answered on dynamic1 not on static grounds4 ,they are questions of conduct and sentiment1 and so far as their solution is looked for at the hands of economists it must be looked for along the line of the bearing which economic life has upon the growth of sentiment and canons of conduct4 ,that is to say1 they are questions of the bearing of economic life upon the cultural changes that are going forward4 ,for the present it is the vogue to hold that economic life1 broadly1 conditions the rest of social organization or the constitution of society4 ,this vogue of the proposition will serve as excuse from going into an examination of the grounds on which it may be justified1 as it is scarcely necessary to persuade any economist that it has substantial merits even if he may not accept it in an unqualified form4 ,what the ,marxists have named the ,materialistic ,conception of ,history is assented to with less and less qualification by those who make the growth of culture their subject of inquiry4 ,this materialistic conception says that institutions are shaped by economic conditions2 but1 as it left the hands of the ,marxists1 and as it still functions in the hands of many who knew not ,marx1 it has very little to say regarding the efficient force1 the channels1 or the methods by which the economic situation is conceived to have its effect upon institutions4 ,what answer the early ,marxists gave to this question1 of how the economic situation shapes institutions1 was to the effect that the causal connection lies through a selfish1 calculating class interest4 ,but1 while class interest may count for much in the outcome1 this answer is plainly not a competent one1 since1 for one thing1 institutions by no means change with the alacrity which the sole efficiency of a reasoned class interest would require4 ,without discrediting the claim that class interest counts for something in the shaping of institutions1 and to avoid getting entangled in preliminaries1 it may be said that institutions are of the nature of prevalent habits of thought1 and that therefore the force which shapes institutions is the force or forces which shape the habits of thought prevalent in the community4 ,but habits of thought are the outcome of habits of life4 ,whether it is intentionally directed to the education of the individual or not1 the discipline of daily life acts to alter or reenforce the received habits of thought1 and so acts to alter or fortify the received institutions under which men live4 ,and the direction in which1 on the whole1 the alteration proceeds is conditioned by the trend of the discipline of daily life4 ,the point here immediately at issue is the divergent trend of this discipline in those occupations which are prevailingly of an industrial character1 as contrasted with those which are prevailingly of a pecuniary character4 ,so far as regards the different cultural outcome to be looked for on the basis of the present economic situation as contrasted with the past1 therefore1 the question immediately in hand is as to the greater or less degree in which occupations are differentiated into industrial and pecuniary in the present as compared with the past4 ,the characteristic feature which is currently held to differentiate the existing economic situation from that out of which the present has developed1 or out of which it is emerging1 is the prevalence of the machine industry with the consequent larger and more highly specialised organisation of the market and of the industrial force and plant4 ,as has been pointed out above1 and as is well enough known from the current discussions of the economists1 industrial life is organised on a pecuniary basis and managed from the pecuniary side4 ,this1 of course1 is true in a degree both of the present and of the nearer past1 back at least as far as the ,middle ,ages4 ,but the larger scope of organisations in modern industry means that the pecuniary management has been gradually passing into the hands of a relatively decreasing class1 whose contact with the industrial classes proper grows continually less immediate4 ,the distinction between employments above spoken of is in an increasing degree coming to coincide with a differentiation of occupations and of economic classes4 ,some degree of such specialisation and differentiation there has1 of course1 been1 one might almost say1 always4 ,but in our time1 in many branches of industry1 the specialisation has been carried so far that large bodies of the working population have but an incidental contact with the business side of the enterprise1 while a minority have little if any other concern with the enterprise than its pecuniary management4 ,this was not true1 e4g41 at the time when the undertaker was still salesman1 purchasing agent1 business manager1 foreman of the shop1 and master workman4 ,still less was it true in the days of the self-sufficing manor or household1 or in the days of the closed town industry4 ,neither is it true in our time of what we call the backward or old-fashioned industries4 ,these latter have not been and are not organised on a large scale1 with a consistent division of labor between the owners and business managers on the one side and the operative employees on the other4 ,our standing illustrations of this less highly organised class of industries are the surviving handicrafts and the common run of farming as carried on by relatively small proprietors4 ,in that earlier phase of economic life1 out of which the modern situation has gradually grown1 all the men engaged had to be constantly on their guard1 in a pecuniary sense1 and were constantly disciplined in the husbanding of their means and in the driving of bargains1--as is still true1 e4g41 of the ,american farmer4 ,the like was formerly true also of the consumer1 in his purchases1 to a greater extent than at present4 ,a good share of the daily attention of those who were engaged in the handicrafts was still perforce given to the pecuniary or business side of their trade4 ,but for that great body of industry which is conventionally recognised as eminently modern1 specialisation of function has gone so far as1 in great measure1 to exempt the operative employees from taking thought of pecuniary matters4 ,now1 as to the bearing of all this upon cultural changes that are in progress or in the outlook4 ,leaving the backward1 relatively unspecialised1 industries on one side1 as being of an equivocal character for the point in hand and as not differing characteristically from the corresponding industries in the past so far as regards their disciplinary value2 modern occupations may1 for the sake of the argument1 be broadly distinguished1 as economic employments have been distinguished above1 into business and industrial4 ,the modern industrial and the modern business occupations are fairly comparable as regards the degree of intelligence required in both1 if it be borne in mind that the former occupations comprise the highly trained technological experts and engineers as well as the highly skilled mechanics4 ,the two classes of occupations differ in that the men in the pecuniary occupations work within the lines and under the guidance of the great institution of ownership1 with its ramifications of custom1 prerogative1 and legal right2 whereas those in the industrial occupations are1 in their work1 relatively free from the constraint of this conventional norm of truth and validity4 ,it is1 of course1 not true that the work of the latter class lies outside the reach of the institution of ownership2 but it is true that1 in the heat and strain of the work1 when the agent's powers and attention are fully taken up with the work which he has in hand1 that of which he has perforce to take cognisance is not conventional law1 but the conditions impersonally imposed by the nature of material things4 ,this is the meaning of the current commonplace that the required close and continuous application of the operative in mechanical industry bars him out of all chance for an all-around development of the cultural graces and amenities4 ,it is the periods of close attention and hard work that seem to count for most in the formation of habits of thought4 ,an a priori argument as to what cultural effects should naturally follow from such a difference in discipline between occupations1 past and present1 would probably not be convincing1 as a priori arguments from half-authenticated premises commonly are not4 ,and the experiments along this line which later economic developments have so far exhibited have been neither neat enough1 comprehensive enough1 nor long continued enough to give definite results4 ,still1 there is something to be said under this latter head1 even if this something may turn out to be somewhat familiar4 ,it is1 e4g4 a commonplace of current vulgar discussions of existing economic questions1 that the classes engaged in the modern mechanical or factory industries are improvident and apparently incompetent to take care of the pecuniary details of their own life4 ,in this indictment may well be included not only factory hands1 but the general class of highly skilled mechanics1 inventors1 technological experts4 ,the rule does not hold in any hard and fast way1 but there seems to be a substantial ground of truth in the indictment in this general form4 ,this will be evident on comparison of the present factory population with the class of handicraftsmen of the older culture whom they have displaced1 as also on comparison with the farming population of the present time1 especially the small proprietors of this and other countries4 ,the inferiority which is currently conceded to the modern industrial classes in this respect is not due to scantier opportunities for saving1 whether they are compared with the earlier handicraftsmen or with the modern farmer or peasant4 ,this phenomenon is commonly discussed in terms which impute to the improvident industrial classes something in the way of total depravity1 and there is much preaching of thrift and steady habits4 ,but the preaching of thrift and self-help1 unremitting as it is1 is not producing an appreciable effect4 ,the trouble seems to run deeper than exhortation can reach4 ,it seems to be of the nature of habit rather than of reasoned conviction4 ,other causes may be present and may be competent partially to explain the improvidence of these classes2 but the inquiry is at least a pertinent one2 how far the absence of property and thrift among them may be traceable to the relative absence of pecuniary training in the discipline of their daily life4 ,if1 as the general lie of the subject would indicate1 this peculiar pecuniary situation of the industrial classes is in any degree due to comprehensive disciplinary causes1 there is material in it for an interesting economic inquiry4 ,the surmise that the trouble with the industrial class is something of this character is strengthened by another feature of modern vulgar life1 to which attention is directed as a further1 and1 for the present1 a concluding illustration of the character of the questions that are touched by the distinction here spoken for4 ,the most insidious and most alarming malady1 as well as the most perplexing and unprecedented1 that threatens the modern social and political structure is what is vaguely called socialism4 ,the point of danger to the social structure1 and at the same time the substantial core of the socialistic disaffection1 is a growing disloyalty to the institution of property1 aided and abetted as it is by a similarly growing lack of deference and affection for other conventional features of social structure4 ,the classes affected by socialistic vagaries are not consistently averse to a competent organisation and control of society1 particularly not in the economic respect1 but they are averse to organisation and control on conventional lines4 ,the sense of solidarity does not seem to be either defective or in abeyance1 but the ground of solidarity is new and unexpected4 ,what their constructive ideals may be need not concern nor detain us2 they are vague and inconsistent and for the most part negative4 ,their disaffection has been set down to discontent with their lot by comparison with others1 and to a mistaken view of their own interests2 and much and futile effort has been spent in showing them the error of their ways of thinking4 ,but what the experience of the past suggests that we should expect under the guidance of such motives and reasoning as these would be a demand for a redistribution of property1 a reconstitution of the conventions of ownership on such new lines as the apprehended interests of these classes would seem to dictate4 ,but such is not the trend of socialistic thinking1 which contemplates rather the elimination of the institution of property4 ,to the socialists property or ownership does not seem inevitable or inherent in the nature of things2 to those who criticise and admonish them it commonly does4 ,compare them in this respect with other classes who have been moved by hardship or discontent1 whether well or ill advised1 to put forth denunciations and demands for radical economic changes2 as e4g41 the ,american farmers in their several movements1 of grangerism1 populism1 and the like4 ,these have been loud enough in their denunciations and complaints1 and they have been accused of being socialistic in their demand for a virtual redistribution of property4 ,they have not felt the justice of the accusation1 however1 and it is to be noted that their demands have consistently run on a rehabilitation of property on some new basis of distribution1 and have been uniformly put forth with the avowed purpose of bettering the claimants in point of ownership4 ,ownership1 property honestly acquired1 has been sacred to the rural malcontents1 here and elsewhere2 what they have aspired to do has been to remedy what they have conceived to be certain abuses under the institution1 without questioning the institution itself4 ,not so with the socialists1 either in this country or elsewhere4 ,now1 the spread of socialistic sentiment shows a curious tendency to affect those classes particularly who are habitually employed in the specialised industrial occupations1 and are thereby in great part exempt from the intellectual discipline of pecuniary management4 ,among these men1 who by the circumstances of their daily life are brought to do their serious and habitual thinking in other than pecuniary terms1 it looks as if the ownership preconception were becoming obsolescent through disuse4 ,it is the industrial population1 in the modern sense1 and particularly the more intelligent and skilled men employed in the mechanical industries1 that are most seriously and widely affected4 ,with exceptions both ways1 but with a generality that is not to be denied1 the socialistic disaffection spreads through the industrial towns1 chiefly and most potently among the better classes of operatives in the mechanical employments2 whereas the relatively indigent and unintelligent regions and classes1 which the differentiation between pecuniary and industrial occupations has not reached1 are relatively free from it4 ,in like manner the upper and middle classes1 whose employments are of a pecuniary character1 if any1 are also not seriously affected2 and when avowed socialistic sentiment is met with among these upper and middle classes it commonly turns out to be merely a humanitarian aspiration for a more equitable redistribution of wealth--a readjustment of ownership under some new and improved method of control--not a contemplation of the traceless disappearance of ownership4 ,socialism1 in the sense in which the word connotes a subversion of the economic foundations of modern culture1 appears to be found only sporadically and uncertainly outside the limits1 in time and space1 of the discipline exercised by the modern mechanical1 non-pecuniary occupations4 ,this state of the case need of course not be due solely to the disciplinary effects of the industrial employments1 nor even solely to effects traceable to those employments whether in the way of disciplinary results1 selective development1 or what not4 ,other factors1 particularly factors of an ethnic character1 seem to cooeperate to the result indicated2 but1 so far as evidence bearing on the point is yet in hand and has been analysed1 it indicates that this differentiation of occupations is a necessary requisite to the growth of a consistent body of socialistic sentiment2 and the indication is also that wherever this differentiation prevails in such a degree of accentuation and affects such considerable and compact bodies of people as to afford ground for a consistent growth of common sentiment1 a result is some form of iconoclastic socialism4 ,the differentiation may of course have a selective as well as a disciplinary effect upon the population affected1 and an off-hand separation of these two modes of influence can of course not be made4 ,in any case1 the two modes of influence seem to converge to the outcome indicated2 and1 for the present purpose of illustration simply1 the tracing out of the two strands of sequence in the case neither can nor need be undertaken4 ,by force of this differentiation1 in one way and another1 the industrial classes are learning to think in terms of material cause and effect1 to the neglect of prescription and conventional grounds of validity2 just as1 in a faintly incipient way1 the economists are also learning to do in their discussion of the life of these classes4 ,the resulting decay of the popular sense of conventional validity of course extends to other matters than the pecuniary conventions alone1 with the outcome that the socialistically affected industrial classes are pretty uniformly affected with an effortless iconoclasm in other directions as well4 ,for the discipline to which their work and habits of life subject them gives not so much a training away from the pecuniary conventions1 specifically1 as a positive and somewhat unmitigated training in methods of observation and inference proceeding on grounds alien to all conventional validity4 ,but the practical experiment going on in the specialisation of discipline1 in the respect contemplated1 appears still to be near its beginning1 and the growth of aberrant views and habits of thought due to the peculiar disciplinary trend of this late and unprecedented specialisation of occupations has not yet had time to work itself clear4 ,the effects of the like one-sided discipline are similarly visible in the highly irregular1 conventionally indefensible attitude of the industrial classes in the current labor and wage disputes1 not of an avowedly socialistic aim4 ,so also as regards the departure from the ancient norm in such non-economic1 or secondarily economic matters as the family relation and responsibility1 where the disintegration of conventionalities in the industrial towns is said to threaten the foundations of domestic life and morality2 and again as regards the growing inability of men trained to materialistic1 industrial habits of thought to appreciate1 or even to apprehend1 the meaning of religious appeals and consolations that proceed on the old-fashioned conventional or metaphysical grounds of validity4 ,but these and other like directions in which the cultural effects of the modern specialisation of occupations1 whether in industry or in business1 may be traceable can not be followed up here4 ,,footnotes3 #a ,reprinted by permission from ,publications of the ,american ,economic ,association1 series #c1 ,vol4 ,,ii4 #b ,some late writers1 as1 e4g41 ,j4 ,b4 ,clark1 apparently must be held to conceive the equivalence in terms of productive force rather than of serviceability2 or1 perhaps1 in terms of serviceability on one side of the equation and productive force on the other4 #c ,j4 ,b4 ,clark1 ,the ,distribution of ,wealth1 p4 #bj4 #d ,the undertaker gets an income2 therefore he must produce goods4 ,but human activity directed to the production of goods is labor2 therefore the undertaker is a particular kind of laborer4 ,there is1 of course1 some dissent from this position4 #e ,the change which has supervened as regards the habitual resort to a natural law of equivalence is in large part a change with respect to the degree of immediacy and reality imputed to this law1 and to a still greater extent a change in the degree of overtness with which it is avowed4 #f ,see1 e4g41 a paper by ,h4 ,c4 ,emery in the ,papers and ,proceedings of the ,twelfth ,annual ,meeting of the ,american ,economic ,association1 on ,the ,place of the ,speculator in the ,theory of ,distribution1 and more particularly the discussion following the paper4 #g ,cf4 e4g41 ,marx1 ,capital1 especially bk4 ,i1 ch4 ,,iv4 #h ,it is not hereby intended to depreciate the services rendered the community by the captain of industry in his management of business4 ,such services are no doubt rendered and are also no doubt of substantial value4 ,still less is it the intention to decry the pecuniary incentive as a motive to thrift and diligence4 ,it may well be that the pecuniary traffic which we call business is the most effective method of conducting the industrial policy of the community2 not only the most effective that has been contrived1 but perhaps the best that can be contrived4 ,but that is a matter of surmise and opinion4 ,in a matter of opinion on a point that can not be verified1 a reasonable course is to say that the majority are presumably in the right4 ,but all that is beside the point4 ,however probable or reasonable such a view may be1 it can find no lodgment in modern scientific theory1 except as a corollary of secondary importance4 ,nor can scientific theory build upon the ground it may be conceived to afford4 ,policy may so build1 but science can not4 ,scientific theory is a formulation of the laws of phenomena in terms of the efficient forces at work in the sequence of phenomena4 ,so long as 7under the old dispensation of the order of nature7 the animistically conceived natural laws1 with their ,god-given objective end1 were considered to exercise a constraining guidance over the course of events whereof they were claimed to be laws1 so long it was legitimate scientific procedure for economists to formulate their theory in terms of these laws of the natural course2 because so long they were speaking in terms of what was1 to them1 the efficient forces at work4 ,but so soon as these natural laws were reduced to the plane of colorless empirical generalization as to what commonly happens1 while the efficient forces at work are conceived to be of quite another cast1 so soon must theory abandon the ground of the natural course1 sterile for modern scientific purposes1 and shift to the ground of the causal sequence1 where alone it will have to do with the forces at work as they are conceived in our time4 ,the generalisations regarding the normal course1 as normal has been defined in economics since ,j4 ,s4 ,mill1 are not of the nature of theory1 but only rule-of-thumb4 ,and the talk about the function of this and that factor of production1 etc41 in terms of the collective life purpose1 goes to the same limbo2 since the collective life purpose is no longer avowedly conceived to cut any figure in the every-day guidance of economic activities or the shaping of economic results4 ,the doctrine of the social-economic function of the undertaker may for the present purpose be illustrated by a supposititious parallel from ,physics4 ,it is an easy generalisation1 which will scarcely be questioned1 that1 in practice1 pendulums commonly vibrate in a plane approximately parallel with the nearest wall of the clock-case in which they are placed4 ,the normality of this parallelism is fortified by the further observation that the vibrations are also commonly in a plane parallel with the nearest wall of the room2 and when it is further called to mind that the balance which serves the purpose of a pendulum in watches similarly vibrates in a plane parallel with the walls of its case1 the absolute normality of the whole arrangement is placed beyond question4 ,it is true1 the parallelism is not claimed to be related to the working of the pendulum1 except as a matter of fortuitous convenience2 but it should be manifest from the generality of the occurrence that in the normal case1 in the absence of disturbing causes1 and in the long run1 all pendulums will naturally tend to swing in a plane faultlessly parallel with the nearest wall4 ,the use which has been made of the organic concept1 in economics and in social science at large1 is fairly comparable with this supposititious argument concerning the pendulum4 #i ,since the ground of payment of wages is the vendibility of the product1 and since the ground of a difference in wages is the different vendibility of the product acquired through the purchase of the labor for which the wages are paid1 it follows that wherever the difference in vendibility rests on a difference in the magnitude of the product alone1 there wages should be somewhat in proportion to the magnitude of the product4 #aj ,all wealth so used is capital1 but it does not follow that all pecuniary capital is social wealth4 #aa ,in current theory the term capital is used in these two senses2 while in business usage it is employed pretty consistently in the former sense alone4 ,the current ambiguity in the term capital has often been adverted to by economists1 and there may be need of a revision of the terminology at this point2 but this paper is not concerned with that question4 #ab ,professor ,fetter1 in a recent paper 7,quarterly ,journal of ,economics1 ,november1 #aijj7 is1 perhaps1 the writer who has gone the farthest in this direction in the definition of the capital concept4 ,professor ,fetter wishes to confine the term capital to pecuniary capital1 or rather to such pecuniary capital as is based on the ownership of material goods4 ,the wisdom of such a terminological expedient is1 of course1 not in question here4 ,,on ,,the ,,nature ,,of ,,capital#a ,i4 ,,the ,,productivity ,,of ,,capital ,,goods ,it has been usual in expositions of economic theory to speak of capital as an array of productive goods4 ,what is immediately had in mind in this expression1 as well as in the equivalent capital goods1 is the industrial equipment1 primarily the mechanical appliances employed in the processes of industry4 ,when the productive efficiency of these and of other subsidiary classes of capital goods is subjected to further analysis1 it is not unusual to trace it back to the productive labor of the workmen1 the labor of the individual workman being the ultimate productive factor in the commonly accepted systems of theory4 ,the current theories of production1 as also those of distribution1 are drawn in individualistic terms1 particularly when these theories are based on hedonistic premises1 as they commonly are4 ,now1 whatever may or may not be true for human conduct in some other bearing1 in the economic respect man has never lived an isolated1 self-sufficient life as an individual1 either actually or potentially4 ,humanly speaking1 such a thing is impossible4 ,neither an individual person nor a single household1 nor a single line of descent1 can maintain its life in isolation4 ,economically speaking1 this is the characteristic trait of humanity that separates mankind from the other animals4 ,the life-history of the race has been a life-history of human communities1 of more or less considerable size1 with more or less of group solidarity1 and with more or less of cultural continuity over successive generations4 ,the phenomena of human life occur only in this form4 ,this continuity1 congruity1 or coherence of the group1 is of an immaterial character4 ,it is a matter of knowledge1 usage1 habits of life and habits of thought1 not a matter of mechanical continuity or contact1 or even of consanguinity4 ,wherever a human community is met with1 as1 e4g41 among any of the peoples of the lower cultures1 it is found in possession of something in the way of a body of technological knowledge1--knowledge serviceable and requisite to the quest of a livelihood1 comprising at least such elementary acquirements as language1 the use of fire1 of a cutting edge1 of a pointed stick1 of some tool for piercing1 of some form of cord1 thong1 or fiber1 together with some skill in the making of knots and lashings4 ,cooerdinate with this knowledge of ways and means1 there is also uniformly present some matter-of-fact knowledge of the physical behavior of the materials with which men have to deal in the quest of a livelihood1 beyond what any one individual has learned or can learn by his own experience alone4 ,this information and proficiency in the ways and means of life vests in the group at large2 and1 apart from accretions borrowed from other groups1 it is the product of the given group1 though not produced by any single generation4 ,it may be called the immaterial equipment1 or1 by a license of speech1 the intangible assets#b of the community2 and1 in the early days at least1 this is far and away the most important and consequential category of the community's assets or equipment4 ,without access to such a common stock of immaterial equipment no individual and no fraction of the community can make a living1 much less make an advance4 ,such a stock of knowledge and practice is perhaps held loosely and informally2 but it is held as a common stock1 pervasively1 by the group as a body1 in its corporate capacity1 as one might say2 and it is transmitted and augmented in and by the group1 however loose and haphazard the transmission may be conceived to be1 not by individuals and in single lines of inheritance4 ,the requisite knowledge and proficiency of ways and means is a product1 perhaps a by-product1 of the life of the community at large2 and it can also be maintained and retained only by the community at large4 ,whatever may be true for the unsearchable prehistoric phases of the life-history of the race1 it appears to be true for the most primitive human groups and phases of which there is available information that the mass of technological knowledge possessed by any community1 and necessary to its maintenance and to the maintenance of each of its members or subgroups1 is too large a burden for any one individual or any single line of descent to carry4 ,this holds true1 of course1 all the more rigorously and consistently1 the more advanced the state of the industrial arts may be4 ,but it seems to hold true with a generality that is fairly startling1 that whenever a given cultural community is broken up or suffers a serious diminution of numbers1 its technological heritage deteriorates and dwindles1 even though it may have been apparently meager enough before4 ,on the other hand1 it seems to hold true with a similar uniformity that1 when an individual member or a fraction of a community on what we call a lower stage of economic development is drawn away and trained and instructed in the ways of a larger and more efficient technology1 and is then thrown back into his home community1 such an individual or fraction proves unable to make head against the technological bent of the community at large or even to create a serious diversion4 ,slight1 perhaps transient1 and gradually effective technological consequences may result from such an experiment2 but they become effective by diffusion and assimilation through the body of the community1 not in any marked degree in the way of an exceptional efficiency on the part of the individual or fraction which has been subjected to exceptional training4 ,and inheritance in technological matters runs not in the channels of consanguinity1 but in those of tradition and habituation1 which are necessarily as wide as the scheme of life of the community4 ,even in a relatively small and primitive community the mass of detail comprised in its knowledge and practice of ways and means is large1--too large for any one individual or household to become competently expert in it all2 and its ramifications are extensive and diverse1 at the same time that all these ramifications bear1 directly or indirectly1 on the life and work of each member of the community4 ,neither the standard and routine of living nor the daily work of any individual in the community would remain the same after the introduction of an appreciable change1 for good or ill1 in any branch of the community's equipment of technological expedients4 ,if the community grows larger1 to the dimensions of a modern civilised people1 and this immaterial equipment grows proportionately great and various1 then it will become increasingly difficult to trace the connection between any given change in technological detail and the fortunes of any given obscure member of the community4 ,but it is at least safe to say that an increase in the volume and complexity of the body of technological knowledge and practice does not progressively emancipate the life and work of the individual from its dominion4 ,the complement of technological knowledge so held1 used1 and transmitted in the life of the community is1 of course1 made up out of the experience of individuals4 ,experience1 experimentation1 habit1 knowledge1 initiative1 are phenomena of individual life1 and it is necessarily from this source that the community's common stock is all derived4 ,the possibility of its growth lies in the feasibility of accumulating knowledge gained by individual experience and initiative1 and therefore it lies in the feasibility of one individual's learning from the experience of another4 ,but the initiative and technological enterprise of individuals1 such1 e4g41 as shows itself in inventions and discoveries of more and better ways and means1 proceeds on and enlarges the accumulated wisdom of the past4 ,individual initiative has no chance except on the ground afforded by the common stock1 and the achievements of such initiative are of no effect except as accretions to the common stock4 ,and the invention or discovery so achieved always embodies so much of what is already given that the creative contribution of the inventor or discoverer is trivial by comparison4 ,in any known phase of culture this common stock of intangible1 technological equipment is relatively large and complex1--i4e41 relatively to the capacity of any individual member to create or to use it2 and the history of its growth and use is the history of the development of material civilisation4 ,it is a knowledge of ways and means1 and is embodied in the material contrivances and processes by means of which the members of the community make their living4 ,only by such means does technological efficiency go into effect4 ,these material contrivances 7capital goods1 material equipment7 are such things as tools1 vessels1 vehicles1 raw materials1 buildings1 ditches1 and the like1 including the land in use2 but they include also1 and through the greater part of the early development chiefly1 the useful minerals1 plants1 and animals4 ,to say that these minerals1 plants1 and animals are useful--in other words1 that they are economic goods--means that they have been brought within the sweep of the community's knowledge of ways and means4 ,in the relatively early stages of primitive culture the useful plants and minerals are1 no doubt1 made use of in a wild state1 as1 e4g41 fish and timber have continued to be used4 ,yet in so far as they are useful they are unmistakably to be counted in among the material equipment 7tangible assets7 of the community4 ,the case is well illustrated by the relation of the ,plains ,indians to the buffalo1 and by the northwest coast ,indians to the salmon1 on the one hand1 and by the use of a wild flora by such communities as the ,coahuilla ,indians1#c the ,australian blacks1 or the ,andamanese1 on the other hand4 ,but with the current of time1 experience1 and initiative1 domesticated 7that is to say improved7 plants and animals come to take the first place4 ,we have then such technological expedients in the first rank as the many species and varieties of domestic animals1 and more particularly still the various grains1 fruits1 root-crops1 and the like1 virtually all of which were created by man for human use2 or perhaps a more scrupulously veracious account would say that they were in the main created by the women1 through long ages of workmanlike selection and cultivation4 ,these things1 of course1 are useful because men have learned their use1 and their use1 so far as it has been learned1 has been learned by protracted and voluminous experience and experimentation1 proceeding at each step on the accumulated achievements of the past4 ,other things1 which may in time come to exceed these in usefulness are still useless1 economically non-existent1 on the early levels of culture1 because of what men in that time have not yet learned4 99 99 99 99 99 ,while this immaterial equipment of industry1 the intangible assets of the community1 have apparently always been relatively very considerable and are always mainly in the keeping of the community at large1 the material equipment1 the tangible assets1 on the other hand1 have1 in the early stages 7say the earlier #ij per cent47 of the life-history of human culture1 been relatively slight1 and have apparently been held somewhat loosely by individuals or household groups4 ,this material equipment is relatively very slight in the earlier phases of technological development1 and the tenure by which it is held is apparently vague and uncertain4 ,at a relatively primitive phase of the development1 and under ordinary conditions of climate and surroundings1 the possession of the concrete articles 7capital goods7 needed to turn the commonplace knowledge of ways and means to account is a matter of slight consequence1--contrary to the view commonly spoken for by the economists of the classical line4 ,given the commonplace technological knowledge and the commonplace training1--and these are given by common notoriety and the habituation of daily life1--the acquisition1 construction1 or usufruct of the slender material equipment needed arranges itself almost as a matter of course1 more particularly where this material equipment does not include a stock of domestic animals or a plantation of domesticated trees and vegetables4 ,under given circumstances a relatively primitive technological scheme may involve some large items of material equipment1 as the buffalo pens 7piskun7 of the ,blackfoot ,indians or the salmon weirs of the river ,indians of the northwest coast4 ,such items of material equipment are then likely to be held and worked collectively1 either by the community at large or by subgroups of a considerable size4 ,under ordinary1 more generally prevalent conditions1 it appears that even after a relatively great advance has been made in the cultivation of crops the requisite industrial equipment is not a matter of serious concern1 particularly so aside from the tilled ground and the cultivated trees1 as is indicated by the singularly loose and inconsequential notions of ownership prevalent among peoples occupying such a stage of culture4 ,a primitive stage of communism is not known4 ,but as the common stock of technological knowledge increases in volume1 range1 and efficiency1 the material equipment whereby this knowledge of ways and means is put into effect grows greater1 more considerable relatively to the capacity of the individual4 ,and so soon1 or in so far1 as the technological development falls into such shape as to require a relatively large unit of material equipment for the effective pursuit of industry1 or such as otherwise to make the possession of the requisite material equipment a matter of consequence1 so as seriously to handicap the individuals who are without these material means1 and to place the current possessors of such equipment at a marked advantage1 then the strong arm intervenes1 property rights apparently begin to fall into definite shape1 the principles of ownership gather force and consistency1 and men begin to accumulate capital goods and take measures to make them secure4 ,an appreciable advance in the industrial arts is commonly followed or accompanied by an increase of population4 ,the difficulty of procuring a livelihood may be no greater after such an increase2 it may even be less2 but there results a relative curtailment of the available area and raw materials1 and commonly also an increased accessibility of the several portions of the community4 ,a wide-reaching control becomes easier4 ,at the same time a larger unit of material equipment is needed for the effective pursuit of industry4 ,as this situation develops1 it becomes worth while--this is to say1 it becomes feasible--for the individual with the strong arm to engross1 or corner1 the usufruct of the commonplace knowledge of ways and means by taking over such of the requisite material as may be relatively scarce and relatively indispensable for procuring a livelihood under the current state of the industrial arts4#d ,circumstances of space and numbers prevent escape from the new technological situation4 ,the commonplace knowledge of ways and means cannot be turned to account1 under the new conditions1 without a material equipment adapted to the then current state of the industrial arts2 and such a suitable material equipment is no longer a slight matter1 to be compassed by workmanlike initiative and application4 ,beati possidentes4 ,the emphasis of the technological situation1 as one might say1 may fall now on one line of material items1 now on another1 according as the exigencies of climate1 topography1 flora and fauna1 density of population1 and the like1 may decide4 ,so also1 under the rule of the same exigencies1 the early growth of property rights and of the principles 7habits of thought7 of ownership may settle on one or another line of material items1 according as one or another affords the strategic advantage for engrossing the current technological efficiency of the community4 ,should the technological situation1 the state of the industrial arts1 be such as to throw the strategic emphasis on manual labor1 on workmanlike skill and application1 and if at the same time the growth of population has made land relatively scarce1 or hostile contact with other communities has made it impracticable for members of the community to range freely over outlying tracts1 then it would be expected that the growth of ownership should take the direction primarily of slavery1 or of some equivalent form of servitude1 so effecting a naive and direct monopolistic control of the current knowledge of ways and means4#e ,whereas if the development has taken such a turn1 and the community is so placed as to make the quest of a livelihood a matter of the natural increase of flocks and herds1 then it should reasonably be expected that these items of equipment will be the chief and primary subject of property rights4 ,in point of fact1 it appears that a pastoral culture commonly involves also some degree of servitude1 along with the ownership of flocks and herds4 ,under different circumstances the mechanical appliances of industry1 or the tillable land1 might come into the position of strategic advantage1 and might come in for the foremost place in men's consideration as objects of ownership4 ,the evidence afforded by the known 7relatively7 primitive cultures and communities seems to indicate that slaves and cattle have in this way come into the primacy as objects of ownership at an earlier period in the growth of material civilisation than land or the mechanical appliances4 ,and it seems similarly evident--more so1 indeed--that land has on the whole preceded the mechanical equipment as the stronghold of ownership and the means of engrossing the community's industrial efficiency4 ,it is not until a late period in the life-history of material civilisation that ownership of the industrial equipment1 in the narrower sense in which that phrase is commonly employed1 comes to be the dominant and typical method of engrossing the immaterial equipment4 ,indeed1 it is a consummation which has been reached only a very few times even partially1 and only once with such a degree of finality as to leave the fact indisputable4 ,if it may be said1 loosely1 that mastery through the ownership of slaves1 cattle1 or land comes on in force only after the economic development has run through some nine-tenths of its course hitherto1 then it may be said likewise that some ninety-nine one-hundredths of this course of development had been completed before the ownership of the mechanical equipment came into undisputed primacy as the basis of pecuniary dominion4 ,so late an innovation1 indeed1 is this modern institution of capitalism1--the predominant ownership of industrial capital as we know it1--and yet so intimate a fact is it in our familiar scheme of life1 that we have some difficulty in seeing it in perspective at all1 and we find ourselves hesitating between denying its existence1 on the one hand1 and affirming it to be a fact of nature antecedent to all human institutions1 on the other hand4 ,in so speaking of the ownership of industrial equipment as being an institution for cornering the community's intangible assets1 there is conveyed an unavoidably implied1 though unintended1 note of condemnation4 ,such an implication of merit or demerit is an untoward circumstance in any theoretical inquiry4 ,any sentimental bias1 whether of approval or disapproval1 aroused by such an implied censure1 must unavoidably hamper the dispassionate pursuit of the argument4 ,to mitigate the effect of this jarring note as far as may be1 therefore1 it will be expedient to turn back for a moment to other1 more primitive and remoter forms of the institution1--as slavery and landed wealth1--and so reach the modern facts of industrial capital by a roundabout and gradual approach4 ,these ancient institutions of ownership1 slavery and landed wealth1 are matters of history4 ,considered as dominant factors in the community's scheme of life1 their record is completed2 and it needs no argument to enforce the proposition that it is a record of economic dominion by the owners of the slaves or the land1 as the case may be4 ,the effect of slavery in its best day1 and of landed wealth in mediaeval and early modern times1 was to make the community's industrial efficiency serve the needs of the slave-owners in the one case and of the land-owners in the other4 ,the effect of these institutions in this respect is not questioned now1 except in such sporadic and apologetical fashion as need not detain the argument4 ,but the fact that such was the direct and immediate effect of these institutions of ownership in their time by no means involves the instant condemnation of the institutions in question4 ,it is quite possible to argue that slavery and landed wealth1 each in its due time and due cultural setting1 have served the amelioration of the lot of man and the advance of human culture4 ,what these arguments may be that aim to show the merits of slavery and landed wealth as a means of cultural advance does not concern the present inquiry1 neither do the merits of the case in which the arguments are offered4 ,the matter is referred to here to call to mind that any similar theoretical outcome of an analysis of the productivity of capital goods need not be admitted to touch the merits of the case in controversy between the socialistic critics of capitalism and the spokesmen of law and order4 ,the nature of landed wealth1 in point of economic theory1 especially as regards its productivity1 has been sifted with the most jealous precautions and the most tenacious logic during the past century2 and any economic student can easily review the course of the argument whereby that line of economic theory has been run to earth4 ,it is only necessary here to shift the point of view slightly to bring the whole argument concerning the rent of land to bear on the present question4 ,rent is of the nature of a differential gain1 resting on a differential advantage in point of productivity of the industry employed upon or about it4 ,this differential advantage attaching to a given parcel of land may be a differential as against another parcel or as against industry applied apart from land4 ,the differential advantage attaching to agricultural land--e4g41 as against industry at large--rests on certain broad peculiarities of the technological situation4 ,among them are such peculiarities as these3 the human species1 or the fraction of it concerned in the case1 is numerous1 relatively to the extent of its habitat2 the methods of getting a living1 as hitherto elaborated1 the ways and means of life1 make use of certain crop-plants and certain domestic animals4 ,apart from such conditions1 taken for granted in arguments concerning agricultural rent1 there could manifestly be no differential advantage attaching to land1 and no production of rent4 ,with increased command of methods of transportation1 the agricultural lands of ,england1 e4g41 and of ,europe at large1 declined in value1 not because these lands became less fertile1 but because an equivalent result could more advantageously be got by a new method4 ,so1 again1 the flint- and amber-bearing regions that are now ,danish and ,swedish territory about the waters at the entrance to the ,baltic were in the neolithic culture of northern ,europe the most favored and valuable lands within that cultural region4 ,but1 with the coming of the metals and the relative decline of the amber trade1 they began to fall behind in the scale of productivity and preference4 ,so also in later time1 with the rise of industry and the growth of the technology of communication1 urban property has gained1 as contrasted with rural property1 and land placed in an advantageous position relatively to shipping and railroads has acquired a value and a productiveness which could not be claimed for it apart from these modern technological expedients4 ,the argument of the single-tax advocates and other economists as to the unearned increment is sufficiently familiar1 but its ulterior implications have not commonly been recognised4 ,the unearned increment1 it is held1 is produced by the growth of the community in numbers and in the industrial arts4 ,the contention seems to be sound1 and is commonly accepted2 but it has commonly been overlooked that the argument involves the ulterior conclusion that all land values and land productivity1 including the original and indestructible powers of the soil1 are a function of the state of the industrial art4 ,it is only within the given technological situation1 the current scheme of ways and means1 that any parcel of land has such productive powers as it has4 ,it is1 in other words1 useful only because1 and in so far1 and in such manner1 as men have learned to make use of it4 ,this is what brings it into the category of land1 economically speaking4 ,and the preferential position of the landlord as a claimant of the net product consists in his legal right to decide whether1 how far1 and on what terms men shall put this technological scheme into effect in those features of it which involve the use of his parcel of land4 99 99 99 99 99 ,all this argument concerning the unearned increment may be carried over1 with scarcely a change of phrase1 to the case of capital goods4 ,the ,danish flint supply was of first-rate economic consequence1 for a thousand years or so1 during the stone age2 and the polished-flint utensils of that time were then capital goods of inestimable importance to civilisation1 and were possessed of a productivity so serious that the life of mankind in that world may be said to have been balanced on the fine-ground edge of those magnificent polished-flint axes4 ,all that lasted through its technological era4 ,the flint supply and the mechanical expedients and capital goods1 whereby it was turned to account1 were valuable and productive then1 but neither before nor after that time4 ,under a changed technological situation the capital goods of that time have become museum exhibits1 and their place in human economy has been taken by technological expedients which embody another state of the industrial arts1 the outcome of later and different phases of human experience4 ,like the polished-flint ax1 the metal utensils which gradually displaced it and its like in the economy of the ,occidental culture were the product of long experience and the gradual learning of ways and means4 ,the steel ax1 as well as the flint ax1 embodies the same ancient technological expedient of a cutting edge1 as well as the use of a helve and the efficiency due to the weight of the tool4 ,and in the case of the one or the other1 when seen in historical perspective and looked at from the point of view of the community at large1 the knowledge of ways and means embodied in the utensils was the serious and consequential matter4 ,the construction or acquisition of the concrete capital goods was simply an easy consequence4 ,it cost nothing but labor1 as ,thomas ,mun would say4 ,yet it might be argued that each concrete article of capital goods was the product of some one man's labor1 and1 as such1 its productivity1 when put to use1 was but the indirect1 ulterior1 deferred productiveness of the maker's labor4 ,but the maker's productivity in the case was but a function of the immaterial technological equipment at his command1 and that in its turn was the slow spiritual distillate of the community's time-long experience and initiative4 ,to the individual producer or owner1 to whom the community's accumulated stock of immaterial equipment was open by common notoriety1 the cost of the concrete material goods would be the effort involved in making or getting them and in making good his claim to them4 ,to his neighbor who had made or acquired no such parcel of productive goods1 but to whom the resources of the community1 material and immaterial1 were open on the same easy terms1 the matter would look very much the same4 ,he would have no grievance1 nor would he have occasion to seek one4 ,yet1 as a resource in the maintenance of the community's life and a factor in the advance of material civilisation1 the whole matter would have a different meaning4 ,so long1 or rather in so far1 as the capital goods required to meet the technological demands of the time were slight enough to be compassed by the common man with reasonable diligence and proficiency1 so long the draft upon the common stock of immaterial assets by any one would be no hindrance to any other1 and no differential advantage or disadvantage would emerge4 ,the economic situation would answer passably to the classical theory of a free competitive system1--the obvious and simple system of natural liberty1 which rests on the presumption of equal opportunity4 ,in a roughly approximate way1 such a situation supervened in the industrial life of western ,europe on the transition from mediaeval to modern times1 when handicraft and industrial enterprise superseded landed wealth as the chief economic factor4 ,within the industrial system1 as distinct from the privileged non-industrial classes1 a man with a modicum of diligence1 initiative1 and thrift might make his way in a tolerable fashion without special advantages in the way of prescriptive right or accumulated means4 ,the principle of equal opportunity was1 no doubt1 met only in a very rough and dubious fashion2 but so favorable became the conditions in this respect that men came to persuade themselves in the course of the eighteenth century that a substantially equitable allotment of opportunities would result from the abrogation of all prerogatives other than the ownership of goods4 ,but so precarious and transient was this approximation to a technologically feasible system of equal opportunity that1 while the liberal movement which converged upon this great economic reform was still gathering head1 the technological situation was already outgrowing the possibility of such a scheme of reform4 ,after the ,industrial ,revolution came on1 it was no longer true1 even in the roughly approximate way in which it might have been true some time earlier1 that equality before the law1 barring property rights1 would mean equal opportunity4 ,in the leading1 aggressive industries which were beginning to set the pace for all that economic system that centered about the market1 the unit of industrial equipment1 as required by the new technological era1 was larger than one man could compass by his own efforts with the free use of the commonplace knowledge of ways and means4 ,and the growth of business enterprise progressively made the position of the small1 old-fashioned producer more precarious4 ,but the speculative theoreticians of that time still saw the phenomena of current economic life in the light of the handicraft traditions and of the preconceptions of natural rights associated with that system1 and still looked to the ideal of natural liberty as the goal of economic development and the end of economic reform4 ,they were ruled by the principles 7habits of thought7 which had arisen out of an earlier situation1 so effectually as not to see that the rule of equal opportunity which they aimed to establish was already technologically obsolete4#f ,during the hundred years and more of this ascendancy of the natural-rights theories in economic science1 the growth of technological knowledge has unremittingly gone forward1 and concomitantly the large-scale industry has grown great and progressively dominated the field4 ,this large-scale industrial regime is what the socialists1 and some others1 call capitalism4 ,capitalism1 as so used1 is not a neat and rigid technical term1 but it is definite enough to be useful for many purposes4 ,on its technological side the characteristic trait of this capitalism is that the current pursuit of industry requires a larger unit of material equipment than one individual can compass by his own labor1 and larger than one person can make use of alone4 ,so soon as the capitalist regime1 in this sense1 comes in1 it ceases to be true that the owner of the industrial equipment 7or the controller of it7 in any given case is or may be the producer of it1 in any naive sense of production4 ,he is under the necessity of acquiring its ownership or control by some other expedient than that of industrially productive work4 ,the pursuit of industry requires an accumulation of wealth1 and1 barring force1 fraud1 and inheritance1 the method of acquiring such an accumulation of wealth is necessarily some form of bargaining2 that is to say1 some form of business enterprise4 ,wealth is accumulated1 within the industrial field1 from the gains of business2 that is to say1 from the gains of advantageous bargaining4#g ,taking the situation by and large1 looking to the body of business enterprise as a whole1 the advantageous bargaining from which gains accrue and from which1 therefore1 accumulations of capital are derived1 is necessarily1 in the last analysis1 a bargaining between those who own 7or control7 industrial wealth and those whose work turns this wealth to account in productive industry4 ,this bargaining for hire--commonly a wage agreement--is conducted under the rule of free contract1 and is concluded according to the play of demand and supply1 as has been well set forth by many writers4 ,on this technological view of capital1 as here spoken for1 the relations between the two parties to the bargain1 the capitalist-employer and the working class1 stand as follows4 ,more or less rigorously1 the technological situation enforces a certain scale and method in the various lines of industry4#h ,the industry can1 in effect1 be carried on only by recourse to the technologically requisite scale and method1 and this requires a material equipment of a certain 7large7 magnitude2 while material equipment of this required magnitude is held exclusively by the capitalist-employer1 and is de facto beyond the reach of the common man4 ,a corresponding body of immaterial equipment--knowledge and practice of ways and means--is likewise requisite1 under the rule of the same technological exigencies4 ,this immaterial equipment is in part drawn on in the making of the material equipment held by the capitalist-employers1 in part in the use to be made of this material equipment in the further processes of industry4 ,this body of immaterial equipment so drawn on in any line of industry is1 relatively1 still larger1 being1 on any exhaustive analysis1 virtually the whole body of industrial experience accumulated by the community up to date4 ,a free draft on this common stock of technological wisdom must be had both in the construction and in the subsequent use of the material equipment2 although no one person can master1 or himself employ1 more than an inconsiderable fraction of the immaterial equipment so drawn on for the installation or operation of any given block of the material equipment4 ,the owner of the material equipment1 the capitalist-employer1 is1 in the typical case1 not possessed of any appreciable fraction of the immaterial equipment necessarily drawn on in the construction and subsequent use of the material equipment owned 7controlled7 by him4 ,his knowledge and training1 so far as it enters into the question1 is a knowledge of business1 not of industry4#i ,the slight technological proficiency which he has or needs for his business ends is of a general character1 wholly superficial and impracticable in point of workmanlike efficiency2 nor is it turned to account in actual workmanship4 ,he therefore needs in his business the service of persons who have a competent working mastery of this immaterial technological equipment1 and it is with such persons that his bargains for hire are made4 ,by and large1 the measure of their serviceability for his ends is the measure of their technological competency4 ,no workman not possessed of some fractional mastery of the technological requirements is employed1--imbeciles are useless in proportion to their imbecility2 and even unskilled and unintelligent workmen1 so called1 are of relatively little use1 although they may be possessed of a proficiency in the commonplace industrial details such as would bulk large in absolute magnitude4 ,the common laborer is1 in fact1 a highly trained and widely proficient workman when contrasted with the conceivable human blank supposed to have drawn on the community for nothing but his physique4 ,in the hands of these workmen--the industrial community1 the bearers of the immaterial1 technological equipment--the capital goods owned by the capitalist become a means of production4 ,without them1 or in the hands of men who do not know their use1 the goods in question would be simply raw materials1 somewhat deranged and impaired through having been given the form which now makes them capital goods4 ,the more proficient the workmen in their mastery of the technological expedients involved1 and the greater the facility with which they are able to put these expedients into effect1 the more productive will be the processes in which the workmen turn the employer's capital goods to account4 ,so1 also1 the more competent the work of superintendence1 the foreman-like oversight and correlation of the work in respect of kind1 speed1 volume1 the more will it count in the aggregate of productive efficiency4 ,but this work of correlation is a function of the foreman's mastery of the technological situation at large and his facility in proportioning one process of industry to the requirements and effects of another4 ,without this due and sagacious correlation of the processes of industry1 and their current adaptation to the demands of the industrial situation at large1 the material equipment engaged would have but slight efficiency and would count for but little in the way of capital goods4 ,the efficiency of the control exercised by the master-workman1 engineer1 superintendent1 or whatever term may be used to designate the technological expert who controls and correlates the productive processes1--this workmanlike efficiency determines how far the given material equipment is effectually to be rated as capital goods4 ,through all this functioning of the workman and the foreman the capitalist's business ends are ever in the background1 and the degree of success that attends his business endeavors depends1 other things equal1 on the efficiency with which these technologists carry on the processes of industry in which he has invested4 ,his working arrangements with these workmen1 the bearers of the immaterial equipment engaged1 enables the capitalist to turn the processes for which his capital goods are adapted to account for his own profit1 but at the cost of such a deduction from the aggregate product of these processes as the workmen may be able to demand in return for their work4 ,the amount of this deduction is determined by the competitive bidding of other capitalists who may have use for the same lines of technological efficiency1 in the manner set forth by writers on wages4 ,with the conceivable consolidation of all material assets under one business management1 so as to eliminate competitive bidding between employers1 it is plain that the resulting business concern would command the undivided forces of the technological situation1 with such deduction as is involved in the livelihood of the working population4 ,this livelihood would in such a case be reduced to the most economical footing1 as seen from the standpoint of the employer4 ,and the employer 7capitalist7 would be the de facto owner of the community's aggregate knowledge of ways and means1 except so far as this body of immaterial equipment serves also the housekeeping routine of the working population4 ,how nearly the current economic situation may approach to this finished state is a matter of opinion4 ,there is also place for a broad question whether the conditions are more or less favorable to the working population under the existing business regime1 involving competitive bidding between the several business concerns1 than they would be in case a comprehensive business consolidation had eliminated competition and placed the ownership of the material assets on a footing of unqualified monopoly4 ,nothing but vague surmises can apparently be offered in answer to these questions4 ,but as bearing on the question of monopoly and the use of the community's immaterial equipment it is to be kept in mind that the technological situation as it stands to-day does not admit of a complete monopolisation of the community's technological expedients1 even if a complete monopolisation of the existing aggregate of material property were effected4 ,there is still current a large body of industrial processes to which the large-scale methods do not apply and which do not presume such a large unit of material equipment or involve such rigorous correlation with the large-scale industry as to take them out of the range of discretionary use by persons not possessed of appreciable material wealth4 ,typical of such lines of work1 hitherto not amenable to monopolisation1 are the details of housekeeping routine alluded to above4 ,it is1 in fact1 still possible for an appreciable fraction of the population to pick up a living1 more or less precarious1 without recourse to the large-scale processes that are controlled by the owners of the material assets4 ,this somewhat precarious margin of free recourse to the commonplace knowledge of ways and means appears to be what stands in the way of a neater adjustment of wages to the minimum of subsistence and the virtual ownership of the immaterial equipment by the owners of the material equipment4 ,it follows from what has been said that all tangible#aj assets owe their productivity and their value to the immaterial industrial expedients which they embody or which their ownership enables their owner to engross4 ,these immaterial industrial expedients are necessarily a product of the community1 the immaterial residue of the community's experience1 past and present2 which has no existence apart from the community's life1 and can be transmitted only in the keeping of the community at large4 ,it may be objected by those who make much of the productivity of capital that tangible capital goods on hand are themselves of value and have a specific productive efficiency1 if not apart from the industrial processes in which they serve1 then at least as a prerequisite to these processes1 and therefore a material condition-precedent standing in a causal relation to the industrial product4 ,but these material goods are themselves a product of the past exercise of technological knowledge1 and so back to the beginning4 ,what there is involved in the material equipment1 which is not of this immaterial1 spiritual nature1 and so what is not an immaterial residue of the community's experience1 is the raw material out of which the industrial appliances are constructed1 with the stress falling wholly on the raw4 ,the point is illustrated by what happens to a mechanical contrivance which goes out of date because of a technological advance and is displaced by a new contrivance embodying a new process4 ,such a contrivance goes to the junk-heap1 as the phrase has it4 ,the specific technological expedient which it embodies ceases to be effective in industry1 in competition with improved methods4 ,it ceases to be an immaterial asset4 ,when it is in this way eliminated1 the material repository of it ceases to have value as capital4 ,it ceases to be a material asset4 ,the original and indestructible powers of the material constituents of capital goods1 to adapt ,ricardo's phrase1 do not make these constituents capital goods2 nor1 indeed1 do these original and indestructible powers of themselves bring the objects in question into the category of economic goods at all4 ,the raw materials--land1 minerals1 and the like--may1 of course1 be valuable property1 and may be counted among the assets of a business4 ,but the value which they so have is a function of the anticipated use to which they may be put1 and that is a function of the technological situation under which it is anticipated that they will be useful4 99 99 99 99 99 ,all this may seem to undervalue or perhaps to overlook the physical facts of industry and the physical nature of commodities4 ,there is1 of course1 no call to understate the importance of material goods or of manual labor4 ,the goods about which this inquiry turns are the products of trained labor working on the available materials2 but the labor has to be trained1 in the large sense1 in order to be labor1 and the materials have to be available in order to be materials of industry4 ,and both the trained efficiency of the labor and the availability of the material objects engaged are a function of the state of the industrial arts4 ,yet the state of the industrial arts is dependent on the traits of human nature1 physical1 intellectual1 and spiritual1 and on the character of the material environment4 ,it is out of these elements that the human technology is made up2 and this technology is efficient only as it meets with the suitable material conditions and is worked out1 practically1 in the material forces required4 ,the brute forces of the human animal are an indispensable factor in industry1 as are likewise the physical characteristics of the material objects with which industry deals4 ,and it seems bootless to ask how much of the products of industry or of its productivity is to be imputed to these brute forces1 human and non-human1 as contrasted with the specifically human factors that make technological efficiency4 ,nor is it necessary to go into questions of that import here1 since the inquiry here turns on the productive relation of capital to industry2 that is to say1 the relation of the material equipment and its ownership to men's dealings with the physical environment in which the race is placed4 ,the question of capital goods 7including that of their ownership and therefore including the question of investment7 is a question of how mankind as a species of intelligent animals deals with the brute forces at its disposal4 ,it is a question of how the human agent deals with his means of life1 not of how the forces of the environment deal with man4 ,questions of the latter class belong under the head of ,ecology1 a branch of the biological sciences dealing with the adaptive variability of plants and animals4 ,economic inquiry would belong under that category if the human response to the forces of the environment were instinctive and variational only1 including nothing in the way of a technology4 ,but in that case there would be no question of capital goods1 or of capital1 or of labor4 ,such questions do not arise in relation to the non-human animals4 ,in an inquiry into the productivity of labor some perplexity might be met with as to the share or the place of the brute forces of the human organism in the theory of production2 but in relation to capital that question does not arise1 except so far as these forces are involved in the production of the capital goods4 ,as a parenthesis1 more or less germane to the present inquiry into capital1 it may be remarked that an analysis of the productive powers of labor would apparently take account of the brute energies of mankind 7nervous and muscular energies7 as material forces placed at the disposal of man by circumstances largely beyond human control1 and in great part not theoretically dissimilar to the like nervous and muscular forces afforded by the domestic animals4 ,,footnotes3 #a ,reprinted by permission from ,the ,quarterly ,journal of ,economics1 ,vol4 ,,xxii1 ,aug41 #aijh4 #b ,assets is1 of course1 not to be taken literally in this connection4 ,the term properly covers a pecuniary concept1 not an industrial 7technological7 one1 and it connotes ownership as well as value2 and it will be used in this literal sense when1 in a later article1 ownership and investment come into the discussion4 ,in the present connection it is used figuratively1 for want of a better term1 to convey the connotation of value and serviceability without thereby implying ownership4 #c ,barrows4 #d ,motives of exploit and emulation1 no doubt1 play a serious part in bringing on the practice of ownership and in establishing the principles on which it rests2 but this play of motives and the concomitant growth of institutions cannot be taken up here4 ,cf4 ,the ,theory of the ,leisure ,class1 chaps4 i1 ii1 iii4 #e ,cf4 ,h4 ,nieboer1 ,slavery as an ,industrial ,system1 chap4 iv1 sect4 #ab4 #f ,for a more extended discussion of this point see the ,quarterly ,journal of ,economics1 ,july1 #ahii1 ,the ,preconceptions of ,economic ,science2 also ,the ,theory of ,business ,enterprise1 chap4 iv1 especially pp4 #gj-hb4 #g ,marx holds that the primitive accumulation from which capitalism takes its rise is a matter of force and fraud 7,capital1 ,book ,i1 chap4 xxiv474 ,sombart holds the source to have been landed wealth 7,moderne ,kapitalismus1 ,book ,,ii1 ,part ,,ii1 especially chap4 xii74 ,ehrenberg and other critics of ,sombart incline to the view that the most important source was usury and the petty trade 7,zeitalter der ,fugger1 chaps4 i1 ii74 #h ,the phrase more or less covers a certain margin of tolerance in respect of scale and method1 which may be very appreciably wider in some lines of industry than in others1 and which cannot be more adequately defined or described here within such space as could reasonably be allowed4 ,the requirement of scale and method is enforced by competition4 ,the force and reach of this competitive adjustment can also not be dealt with here1 but the familiar current acceptance of the fact will dispense with details4 #i ,cf4 ,theory of ,business ,enterprise1 chap4 iii4 #aj ,tangible assets is here taken to signify serviceable capital goods considered as valuable possessions yielding income to their owner4 ,,on ,,the ,,nature ,,of ,,capital#a ,,ii4 ,,investment1 ,,intangible ,,assets1 ,,and ,,the ,,pecuniary ,,magnate ,what has been said in the earlier section of this paper#b applies to capital goods1 so called1 and it is intended to apply to these in their character of productive goods rather than in their character of capital2 that is to say1 what is had in mind is the industrial1 or technological1 efficiency and subservience of the material means of production1 rather than the pecuniary use and effect of invested wealth4 ,the inquiry has dealt with the industrial equipment as plant rather than as assets4 ,in the course of this inquiry it has appeared that out of the profitable engrossing of the community's industrial efficiency through control of the material equipment there arises the practice of investment1 which has further consequences that merit more detailed attention4 ,investment is a pecuniary transaction1 and its aim is pecuniary gain1--gain in terms of value and ownership4 ,invested wealth is capital1 a pecuniary magnitude1 measured in terms of value and determined in respect of its magnitude by a valuation which proceeds on an appraisement of the gain expected from the ownership of this invested wealth4 ,in modern business practice1 capital is distinguished into two cooerdinate categories of assets1 tangible and intangible4 ,tangible assets is here taken to designate pecuniarily serviceable capital goods1 considered as a valuable possession yielding an income to their owner4 ,such goods1 material items of wealth1 are assets to the amount of their capitalisable value1 which may be more or less closely related to their industrial serviceability as productive goods4 ,intangible assets are immaterial items of wealth1 immaterial facts owned1 valued1 and capitalised on an appraisement of the gain to be derived from their possession4 ,these are also assets to the amount of their capitalisable value1 which has commonly little1 if any1 relation to the industrial serviceability of these items of wealth considered as factors of production4 99 99 99 99 99 ,before going into the matter of intangible assets1 it is necessary to speak further of the consequences which investment--and hence capitalisation--has for the use and serviceability of 7material7 capital goods4 ,it has commonly been assumed by economists1 without much scrutiny1 that the gains which accrue from invested wealth are derived from and 7roughly7 measured by the productivity of the industrial process in which the items of wealth so invested are employed1 productivity being counted in some terms of material serviceability to the community1 conduciveness to the livelihood1 comfort1 or consumptive needs of the community4 ,in the course of the present inquiry it has appeared that the gainfulness of such invested wealth 7tangible assets7 is due to a more or less extensive engrossing of the community's industrial efficiency4 ,the aggregate gains of the aggregate material capital accrue from the community's industrial activity1 and bear some relation to the productive capacity of the industrial traffic so engrossed4 ,but it will be noted that there is no warrant in the analysis of these phenomena as here set forth for alleging that the gains of investment bear a relation of equality or proportion to the material serviceability of the capital goods1 as rated in terms of effectual usefulness to the community4 ,given capital goods1 tangible assets1 may owe their pecuniary serviceability to their owner1 and so their value1 to other things than their serviceability to the community2 although the gains of investment in the aggregate are drawn from the aggregate material productivity of the community's industry4 ,the ownership of the material equipment gives the owner not only the right of use over the community's immaterial equipment1 but also the right of abuse and of neglect or inhibition4 ,this power of inhibition may be made to afford an income1 as well as the power to serve2 and whatever will yield an income may be capitalised and become an item of wealth to its possessor4 ,under modern conditions of investment it happens not infrequently that it becomes pecuniarily expedient for the owner of the material equipment to curtail or retard the processes of industry1--restraint of trade4 ,the motive in all such cases of retardation is the pecuniary expediency of the measure for the owner 7controller7 of capital1--expediency in terms of income from investment1 not expediency in terms of serviceability to the community at large or to any fraction of the community except the owner 7manager74 ,except for the exigencies of investment1 i4e41 exigencies of pecuniary gain to the investor1 phenomena of this character would have no place in the industrial system4 ,they invariably come of the endeavors of business men to secure a pecuniary gain or to avoid a pecuniary loss4 ,more frequently1 perhaps1 manoeuvers of inhibition--advised idleness of plant--in industry aim to effect a saving or avoid a waste than to procure an increase of gain2 but the saving to be effected and the waste to be avoided are always pecuniary saving to the owner and pecuniary waste in the matter of ownership1 not a saving of goods to the community or a prevention of wasteful consumption or wasteful expenditure of effort and resources on the part of the community4 ,pecuniary--that is to say1 differential--advantage to the capitalist-manager has1 under the regime of investment1 taken precedence of economic advantage to the community2 or rather1 the differential advantage of ownership is alone regarded in the conduct of industry under this system4 ,business practices which inhibit industrial efficiency and curtail the industrial output are too well known to need particular enumeration4 ,nor is it necessary to cite evidence to show that such inhibition and curtailment are resorted to from motives of pecuniary expediency4 ,but an illustrative example or two will make the theoretical point clearer1 and perhaps more plainly bring out the wholly pecuniary grounds of such business procedure4 ,the most comprehensive principle involved in this class of business management is that of raising prices1 and so increasing the net gains of business1 by limiting the supply1 or charging what the traffic will bear4 ,of a similar effect1 for the point here in question1 are the obstructive tactics designed to hinder the full efficiency of a business rival4 ,these phenomena lie along the line of division between tangible and intangible assets4 ,successful strategy of this kind may1 by force of custom1 legislation1 or the freezing-out of rival concerns1 pass into settled conditions of differential advantage for the given business concern1 which so may be capitalised as an item of intangible assets and take their place in the business community as articles of invested wealth4 ,but1 aside from such capitalisation of inefficiency1 it is at least an equally consequential fact that the processes of productive industry are governed in detail by the exigencies of investment1 and therefore by the quest of gain as counted in terms of price1 which leads to the dependence of production on the course of prices4 ,so that1 under the regime of capital1 the community is unable to turn its knowledge of ways and means to account for a livelihood except at such seasons and in so far as the course of prices affords a differential advantage to the owners of the material equipment4 ,the question of advantageous--which commonly means rising--prices for the owners 7managers7 of the capital goods is made to decide the question of livelihood for the rest of the community4 ,the recurrence of hard times1 unemployment1 and the rest of that familiar range of phenomena1 goes to show how effectual is the inhibition of industry exercised by the ownership of capital under the price system4#c ,so also as regards the discretionary abuse of the community's industrial efficiency vested in the owner of the material equipment4 ,disserviceability may be capitalised as readily as serviceability1 and the ownership of the capital goods affords a discretionary power of misdirecting the industrial processes and perverting#d industrial efficiency1 as well as of inhibiting or curtailing industrial processes and their output1 while the outcome may still be profitable to the owner of the capital goods4 ,there is a large volume of capital goods whose value lies in their turning the technological inheritance to the injury of mankind4 ,such are1 e4g41 naval and military establishments1 together with the docks1 arsenals1 schools1 and manufactories of arms1 ammunition1 and naval and military stores1 that supplement and supply such establishments4 ,these armaments and the like are1 of course1 public and quasi-public enterprises1 under the current regime1 with somewhat disputable relations to the system of current business enterprise4 ,but it is no far-fetched interpretation to say that they are1 in great part1 a material equipment for the maintenance of law and order1 and so enable the owners of capital goods with immunity to inhibit or pervert the industrial processes when the exigencies of business profits make it expedient2 that they are1 further1 a means--more or less ineffectual1 it is true--for extending and protecting trade1 and so serve the differential advantage of business men at the cost of the community2 and that they are also in large part a material equipment set apart for the diversion of a livelihood from the community at large to the military1 naval1 diplomatic1 and other official classes4 ,these establishments may in any case be taken as illustrating how items of material equipment may be devoted to and may be valued for the use of the technological expedients for the damage and discomfort of mankind1 without sensible offset or abatement4 ,typical of a class of investments which derive profits from capital goods devoted to uses that are altogether dubious1 with a large presumption of net detriment1 are such establishments as race-tracks1 saloons1 gambling-houses1 and houses of prostitution4#e ,some spokesmen of the non-,christian tribes might wish to include churches under the same category1 but the consensus of opinion in modern communities inclines to look on churches as serviceable1 on the whole2 and it may be as well not to attempt to assign them a specific place in the scheme of serviceable and disserviceable use of invested wealth4 ,there is1 further1 a large field of business1 employing much capital goods and many technological processes1 whose profits come from products in which serviceability and disserviceability are mingled with waste in the most varying proportions4 ,such are the production of goods of fashion1 disingenuous proprietary articles1 sophisticated household supplies1 newspapers and advertising enterprise4 ,in the degree in which business of this class draws its profits from wasteful practices1 spurious goods1 illusions and delusions1 skilled mendacity1 and the like1 the capital goods engaged must be said to owe their capitalisable value to a perverse use of the technological expedients employed4 ,these wasteful or disserviceable uses of capital goods have been cited1 not as implying that the technological proficiency embodied in these goods or brought into effect in their use1 intrinsically has a disserviceable bearing1 nor that investment in these things1 and business enterprise in the management of them1 need aim at disserviceability1 but only to bring out certain minor points of theory1 obvious but commonly overlooked3 7a7 technological proficiency is not of itself and intrinsically serviceable or disserviceable to mankind1--it is only a means of efficiency for good or ill2 7b7 the enterprising use of capital goods by their businesslike owner aims not at serviceability to the community1 but only at serviceability to the owner2 7c7 under the price system--under the rule of pecuniary standards and management--circumstances make it advisable for the business man at times to mismanage the processes of industry1 in the sense that it is expedient for his pecuniary gain to inhibit1 curtail1 or misdirect industry1 and so turn the community's technological proficiency to the community's detriment4 ,these somewhat commonplace points of theory are of no great weight in themselves1 but they are of consequence for any theory of business or of life under the rules of the price system1 and they have an immediate bearing here on the question of intangible assets4 99 99 99 99 99 ,at the risk of some tedium it is necessary to the theory of intangible assets to pursue this analysis and piecing together of commonplaces somewhat farther4 ,as has already been remarked1 assets is a pecuniary concept1 not a technological one2 a concept of business1 not of industry4 ,assets are capital1 and tangible assets are items of material equipment and the like1 considered as available for capitalisation4 ,the tangibility of tangible assets is a matter of the materiality of the items of wealth of which they are made up1 while they are assets to the amount of their value4 ,capital goods1 which typically make up the category of tangible assets1 are capital goods by virtue of their technological serviceability1 but they are capital in the measure1 not of their technological serviceability1 but in the measure of the income which they may yield to their owner4 ,the like is1 of course1 true of intangible assets1 which are likewise capital1 or assets1 in the measure of their income-yielding capacity4 ,their intangibility is a matter of the immateriality of the items of wealth--objects of ownership--of which they are made up1 but their character and magnitude as assets is a matter of the gainfulness to their owner of the processes which their ownership enables him to engross4 ,the facts so engrossed1 in the case of intangible assets1 are not of a technological or industrial character2 and herein lies the substantial disparity between tangible and intangible assets4 ,mankind has other dealings with the material means of life1 besides those covered by the community's technological proficiency4 ,these other dealings have to do with the use1 distribution1 and consumption of the goods procured by the employment of the community's technological proficiency1 and are carried out under working arrangements of an institutional character1--use and wont1 law and custom4 ,the principles and practice of the distribution of wealth vary with the changes in technology and with the other cultural changes that are going forward2 but it is probably safe to assume that the principles of apportionment1--that is to say1 the consensus of habitual opinion as to what is right and good in the distribution of the product1--these principles and the concomitant methods of carrying them out in practice have always been such as to give one person or group or class something of a settled preference above another4 ,something of this kind1 something in the way of a conventionally arranged differential advantage in the apportionment of the common livelihood1 is to be found in all cultures and communities that have been observed at all carefully2 and it is perhaps needless to remark that in the higher cultures such economic preferences1 privileges1 prerogatives1 differential advantages and disadvantages1 are numerous and varied1 and that they make up an intricate fabric of economic institutions4 ,indeed1 peculiarities of class difference in some such respect are among the most striking and decisive features that distinguish one cultural era from another4 ,in all phases of material civilisation these preferential advantages are sought and valued4 ,classes or groups which are in a position to make good a claim to such differential advantages commonly come1 in due course1 to put forward such claims2 as1 e4g41 the priesthood1 the princely and ruling class1 the men as contrasted with the women1 the adults as against minors1 the able-bodied as against the infirm4 ,principles 7habits of thought7 countenancing some form of class or personal preference in the distribution of income are to be found incorporated in the moral code of all known civilisations and embodied in some form of institution4 ,such items of immaterial wealth are of a differential character1 in that the advantage of those who secure the preference is the disadvantage of those who do not2 and it may be mentioned in passing1 that such a differential advantage inuring to any one class or person commonly carries a more than equal disadvantage to some other class or person or to the community at large4#f ,when property rights fall into definite shape and the price system comes in1 and more particularly when the practice of investment arises and business enterprise comes into vogue1 such differential advantages take on something of the character of intangible assets4 ,they come to have a pecuniary value and rating1 whether they are transferable or not2 and if they are transferable1 if they can be sold and delivered1 they become assets in a fairly clear and full sense of that term4 ,such immaterial wealth1 preferential benefits of the nature of intangible assets1 may be a matter of usage simply1 as the vogue of a given public house1 or of a given tradesman1 or of a given brand of consumable goods2 or may be a matter of arrogation1 as the ,king's ,customs in early times1 or the once notorious ,sound ,dues1 or the closing of public highways by large land-owners2 or of contractual concession1 as the freedom of a city or a guild1 or a franchise in the ,hanseatic ,league or in the ,associated ,press2 or of government concession1 whether on the basis of a bargain or otherwise1 as the many trade monopolies of early modern times1 or a corporation charter1 or a railway franchise1 or letters of marque1 or letters patent2 or of statutory creation1 as trade protection by import1 export1 or excise duties or navigation laws2 or of conventionalised superstitious punctilio1 as the creation of a demand for wax by the devoutly obligatory consumption of consecrated tapers1 or the similar devout consumption of and demand for fish during ,lent4 ,under the regime of investment and business enterprise these and the like differential benefits may turn to the business advantage of a given class1 group1 or concern1 and in such an event the resulting differential business advantage in the pursuit of gain becomes an asset1 capitalised on the basis of its income-yielding capacity1 and possibly vendible under the cover of a corporation security 7as1 e4g41 common stock71 or even under the usual form of private sale 7as1 e4g41 the appraised good-will of a business concern74 ,but the regime of business enterprise has not only taken over various forms of institutional privileges and prerogatives out of the past3 it also gives rise to new kinds of differential advantage and capitalises them into intangible assets4 ,these are all 7or virtually all7 of one kind1 in that their common aim and common basis of value and capitalisation is a preferentially advantageous sale4 ,naturally so1 since the end of all business endeavor1 in the last analysis1 is an advantageous sale4 ,the commonest and typical kind of such intangible assets is good-will1 so called1--a term which has come to cover a great variety of differential business advantages1 but which in the original business usage of it meant the customary resort of a clientele to the concern so possessed of the good-will4 ,it seems originally to have implied a kindly sentiment of trust and esteem on the part of a customer1 but as the term is now used it has lost this sentimental content4 ,in the broad and loose sense in which it is now currently employed it is extended to cover such special advantages as inure to a monopoly or a combination of business concerns through its power to limit or engross the supply of a given line of goods or services4 ,so long as such a special advantage is not specifically protected by special legislation or by a due legal instrument1--as in the case of a franchise or a patent right1--it is likely to be spoken of loosely as good-will4 ,the results of the analysis may be summed up to show the degree of coincidence and the distinctions between the two categories of assets3 7a7 the value 7that is to say1 the amount7 of given assets1 whether tangible or intangible1 is the capitalised 7or capitalisable7 value of the given articles of wealth1 rated on the basis of their income-yielding capacity to their owner2 7b7 in the case of tangible assets there is a presumption that the objects of wealth involved have some 7at least potential7 serviceability at large1 since they serve a materially productive work1 and there is therefore a presumption1 more or less well founded1 that their value represents1 though it by no means measures1 an item of serviceability at large2 7c7 in the case of intangible assets there is no presumption that the objects of wealth involved have any serviceability at large1 since they serve no materially productive work1 but only a differential advantage to the owner in the distribution of the industrial product2#g 7d7 given tangible assets may be disserviceable to the community1--a given material equipment may owe its value as capital to a disserviceable use1 though in the aggregate or on an average the body of tangible assets are 7presumptively7 serviceable2 7e7 given intangible assets may be indifferent in respect of serviceability at large1 though in the aggregate1 or on an average1 intangible assets are 7presumably7 disserviceable to the community4 ,on this showing it would appear that the substantial difference between tangible and intangible assets lies in the different character of the immaterial facts which are turned to pecuniary account in the one case and in the other4 ,the former1 in effect1 capitalise such fraction of the technological proficiency of the community as the ownership of the capital goods involved enables the owner to engross4 ,the latter capitalise such habits of life1 of a non-technological character1--settled by usage1 convention1 arrogation1 legislative action1 or what not1--as will effect a differential advantage to the concern to which the assets in question appertain4 ,the former owe their existence and magnitude to the usufruct of technological expedients involved in the industrial process proper2 while the latter are in like manner due to the usufruct of what may be called the interstitial correlations and adjustments both within the industrial system and between industry proper and the market1 in so far as these relations are of a pecuniary rather than a technological character4 ,much the same distinction may be put in other words1 so as to bring the expression nearer the current popular apprehension of the matter1 by saying that tangible assets1 commonly so called1 capitalise the processes of production1 while intangible assets1 so called1 capitalise certain expedients and processes of acquisition1 not productive of wealth1 but affecting only its distribution4 ,formulated in either way1 the distinction seems not to be an altogether hard-and-fast one1 as will immediately appear if it is called to mind that intangible assets may be converted into tangible assets1 and conversely1 as the exigencies of business may decide4 ,yet1 while the two categories of assets stand in such close relation to one another as this state of things presumes1 it is still evident from the same state of things that they are not to be confounded with one another4 ,taking good-will as typical of the category of intangible assets1 as being the most widely prevalent and at the same time the farthest removed in its characteristics from the range of tangible assets1 some slight further discussion of it may serve to bring out the difference between the two categories of assets and at the same time to enforce their essential congruity as assets as well as the substantial connection between them4 ,in the earlier days of the concept1 in the period of growth to which it owes its name1 when good-will was coming into recognition as a factor affecting assets1 it was apparently looked on habitually as an adventitious differential advantage accruing spontaneously to the business concern to which it appertained2 an immaterial by-product of the concern's conduct of business1--commonly presumed to be an adventitious blessing incident to an upright and humane course of business life4 ,poor ,richard would express this sense of the matter in the saying that honesty is the best policy4 ,but presently1 no doubt1 some thought would be taken of the acquirement of good-will1 and some effort would be expended by the wise business man in that behalf4 ,goods would be given a more elegant finish for the sake of a readier sale1 beyond what would conduce to their brute serviceability simply2 smooth-spoken and obsequious salesmen and solicitors1 gifted with a tactful effrontery1 have come to be preferred to others1 who1 without these merits1 may be possessed of all the diligence1 dexterity1 and muscular force required in their trade2 something is expended on convincing1 not to say vain-glorious1 show-windows that shall promise something more than one would like to commit one's self to in words2 itinerant agents1 and the like1 are employed at some expense to secure a clientele2 much thought and substance is spent on advertising of many kinds4 ,this last-named item may be taken as typical of the present stage of growth in the production or generation of good-will1 and therefore in the creation of intangible assets4 ,advertising has come to be an important branch of business enterprise by itself1 and it employs a large and varied array of material appliances and processes 7tangible assets74 ,investment is made in certain material items 7productive goods71 such as printed matter1 billboards1 and the like1 with a view to creating a certain body of good-will4 ,the precise magnitude of the product may not be foreseen1 but1 if sagaciously made1 such investment rarely fails of the effect aimed at--unless a business rival with even greater sagacity should out-manoeuver and offset these endeavors with a superior array of appliances 7productive goods7 and workmen for the generation of good-will4 ,the product aimed at1 commonly with effect1 is good-will1--an intangible asset1--which may be considered to have been generated by converting certain tangible assets into this intangible2 or it may be considered as an industrial product1 the output of certain industrial processes in which the given items of material equipment are employed and give effect to the requisite technological proficiency4 ,whichever view be taken of the causal relation between the material equipment and processes employed1 on the one hand1 and the output of good-will1 on the other hand1 the result is substantially the same for the purpose in hand4 ,the ulterior end of the advertising is1 it may be said1 the sale of an increased quantity of the advertised articles1 at an increased net gain2 which would mean an increased value of the material items offered for sale2 which1 in turn1 is the same as saying an increase of tangible assets4 ,it may be assumed without debate that the end of business endeavor is a gain in final terms of tangible values4 ,but this ulterior end is1 in the case of advertising enterprise1 to be gained only by the intermediate step of a production of an immaterial item of good-will1 an intangible asset4 ,so the case in illustration shows not only the conversion of tangible assets 7material capital goods1 such as printed matter7 into intangible wealth1 or1 if that formula be preferred1 the production of immaterial wealth by the productive use of material wealth1 but also1 conversely1 in the second step of the process1 it shows the conversion of intangible assets into tangible wealth 7enhanced value of vendible goods71 or1 if the expression seems preferable1 the production of tangible assets by the use of intangible wealth4 ,this creation of tangible wealth out of intangible assets is seen perhaps at its neatest in the enhancement of land values by the endeavors of interested parties4 ,real estate is1 of course1 a tangible asset of the most authentic tangibility1 and it is an asset to the amount of its value1 which is determined1 say1 by the figures at which the real estate in question is currently bought and sold4 ,this is the current value of the real estate1 and therefore its current actual magnitude as a tangible asset4 ,the value of the real estate might also be computed by capitalising its rental value2 but1 where the current market value does not coincide with the capitalised rental value1 the former must1 according to business conceptions1 be accepted as the actual value4 ,in many parts of this country1 perhaps in most1 but particularly in the ,western ,states and in the neighborhood of flourishing towns1 these two methods of rating the pecuniary magnitude of real estate will habitually not coincide4 ,due allowance1 often very considerable1 being made1 the capitalised rental value of the land may be taken as measuring its current serviceability as an item of material equipment2 while the amount by which the market value of the land exceeds its capitalised rental value may be taken as the product1 the tangible residue1 of an intangible asset of the nature of good-will1 turned to account1 or productively employed1 in behalf of this parcel of land4#h ,some of the lands of ,california may be taken as a very good1 though perhaps not an extreme1 example of such a creation of real estate by spiritual instrumentalities4 ,it is probably well within the mark to say that some of these lands owe not more than one-half their current market value to their current serviceability as an instrument of production or use4 ,the excess may be attributable to illusions touching the chances of future sale1 to anticipation of a prospective enhanced usefulness1 and the like2 but all these are immaterial factors1 of the nature of good-will4 ,like other assets1 these lands are capitalised on the basis of the anticipated income from them1 part of which income is anticipated from profitable sales to persons who1 it is hoped1 will be persuaded to take a very sanguine view of the land situation1 while part of it may be due to over-sanguine anticipations of usefulness generated by the advertising matter and the efforts of the land agents directed to what is called developing the country4 ,to any one preoccupied with the conceit that capital means capital goods such a conversion of intangible into tangible goods1 or such a generation of intangible assets by the productive use of tangible assets1 might be something of a puzzle4 ,if assets were a physical concept1 covering a range of physical things1 instead of a pecuniary concept1 such conversion of tangible into intangible assets1 and conversely1 would be a case of transubstantiation4 ,but there is nothing miraculous in the matter4 ,assets are a pecuniary magnitude1 and belong among the facts of investment4 ,except in relation to investment the items of wealth involved are not assets4 ,in other words1 assets are a matter of capitalisation1 which is a special case of valuation2 and the question of tangibility or intangibility as regards a given parcel of assets is a question of what article or class of articles the valuation shall attach to or be imputed to4 ,if1 e4g41 the fact to which value is imputed in the valuation is the habitual demand for a given article of merchandise1 or the habitual resort of a given group of customers to a particular shop or merchant1 or a monopolistic control or limitation of price and supply1 then the resulting item of assets will be intangible1 since the object to which the capitalised value in question is imputed is an immaterial object4 ,if the fact which is by imputation made the bearer of the capitalised value is a material object1 as1 e4g41 the merchantable goods of which the supply is arbitrarily limited or the price arbitrarily fixed1 or if it is the material means of supplying such goods1 then the capitalised value in question is a case of tangible assets4 ,the value involved is1 like all value1 a matter of imputation1 and as assets it is a matter of capitalisation2 but capitalisation is an appraisement of a pecuniary income-stream in terms of the vendible objects to the ownership of which the income is assumed to inure4 ,to what object the capitalised value of the income-stream shall be imputed is a question of what object of ownership secures to the owner an effectual claim on this income-stream 2 that is to say1 it is a question of what object of ownership the strategic advantages is assumed to attach to1 which is a question of the play of business exigencies in the given case4 ,the income-stream in question is a pecuniary income-stream1 and is in the last resort traceable to transactions of sale4 ,within the confines of business--and therefore within the scope of capital1 investments1 assets1 and the like business concepts--transactions of purchase and sale are the final terms of any analysis4 ,but beyond these confines1 comprehending and conditioning the business system1 lie the material facts of the community's work and livelihood4 ,in the final transaction of sale the merchantable goods are valued by the consumer1 not as assets1 but as livelihood2#i and in the last analysis and long run it is to some such transaction that all business imputations of value and capitalistic appraisement of assets must have regard and by which they must finally be checked4 ,dissociated from the facts of work and livelihood1 therefore1 assets cease to be assets2 but this does not preclude their relation to these facts of work and livelihood being at times somewhat remote and loose4 ,without recourse1 immediately or remotely1 to certain material facts of industrial process and equipment1 assets would not yield earnings2 that is to say1 wholly disjoined from these material facts1 they would in effect not be assets4 ,this is true for both tangible and intangible assets1 although the relation of the assets to the material facts of industry is not the same in the two cases4 ,the case of tangible assets needs no argument4 ,intangible assets1 such as patent right or monopolistic control1 are likewise of no effect except in effectual contact with industrial facts4 ,the patent right becomes effective for the purpose only in the material working of the innovation covered by it2 and monopolistic control is a source of gain only in so far as it effectually modifies or divides the supply of goods4 ,in the light of these considerations it seems feasible to indicate both the congruence and the distinction between the two categories of assets a little more narrowly than was done above4 ,both are assets1--that is to say1 both are values determined by a capitalisation of anticipated income-yielding capacity2 both depend for their income-yielding capacity on the preferential use of certain immaterial factors2 both depend for their efficiency on the use of certain material objects2 both may increase or decrease1 as assets1 apart from any increase or decrease of the material objects involved4 ,the tangible assets capitalise the preferential use of technological1 industrial expedients1--expedients of production1 dealing with the facts of brute nature under the laws of physical cause and effect1--this preferential use being secured by the ownership of material articles employed in the processes in which these expedients are put into effect4 ,the intangible assets capitalise the preferential use of certain facts of human nature--habits1 propensities1 beliefs1 aspirations1 necessities--to be dealt with under the psychological laws of human motivation2 this preferential use being secured by custom1 as in the case of old-fashioned good-will1 by legal assignment1 as in patent or copyright1 by ownership of the instruments of production1 as in the case of industrial monopolies4#aj 99 99 99 99 99 ,intangible assets are capital as well as tangible assets2 that is to say1 they are items of capitalised wealth4 ,both categories of assets1 therefore1 represent expected income-streams which are of such definite character as to admit of their being rated in set terms per cent4 per time unit2 although the expected income need not therefore be anticipated to come in an even flow or to be distributed in any equable manner over a period of time4 ,the income-streams to be so rated and capitalised are associated in such a manner with some external fact 7impersonal to their claimant71 whether material or immaterial1 as to permit their being traced or attributed to an income-yielding capacity on the part of this external fact1 to which their valuation as a whole may be imputed and which may then be capitalised as an item of wealth yielding this income-stream4 ,income-streams which do not meet these requirements do not give rise to assets in the accepted sense of the term1 and so do not swell the volume of capitalised wealth4 ,there are income-streams which do not meet the necessary specifications of capitalisable wealth2 and in modern business traffic1 particularly1 there are large and secure sources of income that are in this way not capitalisable and yet yield a legitimate business income4 ,such are1 indeed1 to be rated among the most consequential factors in the current business situation4 ,under the guidance of traditions carried over from a more primitive business situation1 it has been usual to speak of income-streams derived in such a manner as wages of superintendence1 or undertaker's wages1 or entrepreneur's profits1 or1 latterly1 as profits simply and specifically4 ,such phenomena of this class as are of consequence in business are commonly accounted for1 theoretically1 under this head2 and the effort so to account for them is to be taken as1 at least1 a laudable endeavor to avoid an undue multiplication of technical terms and categories4#aa ,yet the most striking phenomena of this class1 and the most consequential for modern business and industry1 both in respect of their magnitude and in respect of the pecuniary dominion and discretion which they represent1 cannot well be accounted undertaker's gains1 in the ordinary sense of that term4 ,the great gains of the great industrial financiers or of the great interests1 e4g41 do not answer the description of undertaker's gains1 in that they do not accrue to the captain of industry on the basis of his managerial ability alone1 apart from his wealth or out of relation to his wealth2 and yet it is not safe to say that such gains 7which are over and above ordinary returns on his investments7 accrue on the ground of the requisite amount of wealth alone1 apart from the exercise of a large business direction on the part of the owner of such wealth1 or on the part of his agent to whom discretion has been delegated4 ,administrative1 or strategic1 discretion and activity must necessarily be present in the case3 otherwise1 the income in question would rightly be rated as income from capital simply4 ,the captain of industry1 the pecuniary magnate1 is normally in receipt of income in excess of the ordinary rate per cent4 on investment2 but apart from his large holdings he is not in a position to get these large gains4 ,dissociated from his large holdings1 he is not a large captain of industry2 but it is not the size of his holdings alone that determines what the gains of the pecuniary magnate in modern industry shall be4 ,gains of the kind and magnitude that currently come to this class of business men come only on condition that the owner 7or his agent7 shall exercise a similarly large discretion and control in the affairs of the business community2 but the magnitude of the gains1 as well as of the discretion and control exercised1 is somewhat definitely conditioned by the magnitude of the wealth which gives effect to this discretion4 ,the disposition of pecuniary forces in such matters may be well seen in the work and remuneration of any coalition of interests1 such as the modern business community has become familiar with4 ,the interests in such a case are of a personal character1--they are interested parties1--and the sagacity1 experience1 and animus of these various interested parties counts in the outcome1 both as regards the aggregate gains of the coalition and as regards the distribution of these gains among the several parties in interest2 but the weight of any given interest in a coalition or system is more nearly proportioned to the wealth controlled by the given interest1 and to the strategic position of such wealth1 than to any personal talents or proficiency of the interested party4 ,the talents and proficiency involved are not the main facts4 ,indeed1 the movements of such a system1 and of the several component interests1 are largely a matter of artless routine1 in which the greatest ingenuity and initiative engaged in the premises are commonly exercised by the legal counsel working for a fee4 ,a dispassionate student of the current business traffic1 who is not overawed by round numbers1 will be more impressed by the ease and simplicity of the manoeuvers that lead to large pecuniary results in the higher business finance than by any evidence of preeminent sagacity and initiative among the pecuniary magnates4 ,one need only call to mind the simple and obvious way in which the promoters of the ,steel ,corporation were magnificently checkmated by the financiers of the ,carnegie interest1 when that great and reluctant corporation was floated1 or the pettyfogging tactics of ,standard ,oil in its later career4 ,in extenuation of their visible lack of initiative and insight it may not be ungraceful to call to mind that many of the discretionary heads of the great interests are men of advanced years1 and that in the nature of the case the pecuniary magnates of the present generation must commonly be men of a somewhat advanced age2 and it is only during the present generation that the existing situation has arisen1 with its characteristic opportunities and demands4 ,to take their present foremost rank in the new business finance which is here under inquiry1 they have had to accumulate the great wealth on which alone their discretionary control of business affairs rests1 and their best vigor has been spent in this work of preparation2 so that they have commonly attained the requisite strategic position only after they had outlived their years of discretion4 ,but there is no intention here to depreciate the work of the pecuniary magnates or the spokesmen of the great interests4 ,the matter has been referred to only as it bears on this category of capitalistic income which accrues on other grounds than the earning-capacity of the assets involved1 and which still cannot be imputed to the earning-capacity of these business men apart from these assets4 ,the case is evidently not one of wages of superintendence or undertaker's profits2 but it is as evidently not a case of the earning-capacity of the assets4 ,the proof of the latter point is quite as easy as of the former4 ,if the gains of the system or of its constituent interests and magnates were imputable to the earning-capacity of the assets involved1--in any accepted sense of earnings1--then it would immediately follow that these assets would be recapitalised on the basis of these extraordinary earnings1 and that the income derived in this class of traffic should reappear as interest or dividends on the capital so increased to correspond with the increased earnings4 ,but such recapitalisation takes place only to a relatively very limited extent1 and the question then bears on the income which is not so accounted for in the recapitalisation4 ,the gains of this class of traffic are1 of course1 themselves capitalised1--for the most part they accrue in the capitalised form1 as issues of securities and the like2 but the sources of this income are not capitalised as such4 ,the 7large7 accumulated wealth1 or assets1 which gives weight to the movements of the interests and magnates in question1 and which affords the ground for the discretionary control of business affairs exercised by them1 are1 for the most part at least1 invested in ordinary business ventures1 in the form of corporation securities and the like1 and are there earning dividends or interest at current rates2 and these assets are valued in the market 7and thereby capitalised7 on the basis of their current earnings in the various enterprises in which they are so invested4 ,but their being so invested in profitable business enterprises does not in the least hinder their usefulness in the hands of the magnates as a basis or means of carrying on the large and highly profitable transactions of the higher industrial finance4 ,to impute these gains to these assets as earnings1 therefore1 would be to count the assets twice as capital1 or rather to count them over and over4 ,an additional perplexity in endeavoring to handle gains of this class theoretically as earnings1 in the ordinary sense1 arises from the fact that they stand in no definable time relation to their underlying assets4 ,they have no definable time-shape1 as ,mr4 ,fisher might put it4#ab ,such gains are timeless1 in the sense that the time relation does not count in any substantial manner or in any sensible degree in their determination4#ac 99 99 99 99 99 ,in a more painstaking statement of this point of theory it would be necessary to note that these gains are timeless1 in the sense indicated1 in so far as the enterprise from which they accrue is dissociated from the technological circumstances and processes of industry1 and only in so far4 ,technological 7industrial7 procedure1 being of the nature of physical causation1 is subject to the time relation under which causal sequence runs4 ,this is the basis of such discussions of capital and interest as those of ,boehm-,bawerk1 and of ,fisher4 ,but business traffic1 as distinguished from the processes of industry1 being not immediately concerned with the technological process1 is also not immediately or uniformly subject to the time relation involved in the causal sequence of the technological process4 ,business traffic is subject to the time relation because and in so far as it depends upon and follows up the processes of production4 ,the commonplace or old-fashioned business enterprise1 the competitive system of investment in industrial business simply1 commonly rests pretty directly on the due sequence of the industrial processes in which the investments of such enterprise are placed4 ,such enterprise1 as conceived by the current theories of capital1 does business at first hand in the industrial efficiency of the community1 which is conditioned by the time relation of the causal sequence1 and which is1 indeed1 in great measure a function of the time consumed in the technological processes4 ,therefore1 the gains1 as well as the transactions1 of such enterprise are also commonly somewhat closely conditioned by the like time relation1 and they typically emerge under the form of a per-cent4 per time unit2 that is to say1 as a function of the lapse of time4 ,yet the business transactions themselves are not a matter of the lapse of time4 ,time is not of the essence of the case4 ,the magnitude of a pecuniary transaction is not a function of the time consumed in concluding it1 nor are the gains which accrue from the transaction4 ,in business enterprise on the higher plane1 which is here under inquiry1 the relation of the transactions1 and of their gains1 to the consecution of the technological processes remotely underlying them is distant1 loose1 and uncertain1 so that the time element here does not obtrude itself3 rather1 it somewhat obviously falls into abeyance1 marking the degree of its remoteness4 ,yet this phase of business enterprise1 like any other1 of course takes place in time2 and1 it is also to be remarked1 the volume of the traffic and the gains derived from it are1 no doubt1 somewhat closely conditioned in the long run by the time relation which dominates that technological 7industrial7 efficiency on which this enterprise1 too1 ultimately and indirectly rests and from which in the last resort its gains are finally drawn1 however remotely and indirectly4 ,an analysis of these phenomena on lines similar to those which have been followed in the discussion of assets above is not without difficulty1 nor can it fairly be expected to yield any but tentative and provisional results4 ,the matter has received so little attention from economic theoreticians that even significant mistakes in this connection are of very rare occurrence4#ad ,the cause of this scant attention to these matters lies1 no doubt1 in the relative novelty of the facts in question4 ,the facts may be roughly drawn together under the caption ,traffic in ,vendible ,capital2 although that term serves rather as a comprehensive designation of the class of business enterprise from which these gains accrue than as an adequate characterisation of the play of forces involved4#ae ,traffic in vendible capital has not been unknown in the past1 but it is only recently that it has come into the foreground as the most important line of business enterprise4 ,such it now is1 in that it is in this traffic that the ultimate initiative and discretion in business are now to be found4 ,it is at the same time the most gainful of business enterprise1 not only in absolute terms1 but relatively to the magnitude of the assets involved as well4 ,one reason for this superior gainfulness is the fact that the assets involved in this traffic are at the same time engaged as assets to their full extent in ordinary business1 so that the peculiar gains of this traffic are of the nature of a bonus above the earnings of the invested wealth4 ,it is like finding money4 ,as was said above1 the method1 or the ways and means1 characteristic of this superior business enterprise is a traffic in vendible capital4 ,the wealth gained in this field is commonly in the capitalised form1 and constitutes in each transaction1 or deal1 a deduction or abstraction from the capitalised wealth of the business community in favor of the magnates or interests to whom the gains accrue4 ,its proximate aim is a transfer of capitalised wealth from other capitalists to those who so gain4 ,this transfer or abstraction of capitalised wealth from the former owners is commonly effected by an augmentation of the nominal capital1 based on a 7transient7 advantage inuring to the particular concerns whose capitalisation is so augmented4#af ,any such increase of the community's aggregate capitalisation1 without a corresponding increase of the material wealth on which the capitalisation is based1 involves1 of course1 in effect a redistribution of the aggregate capitalised wealth2 and in this redistribution the great financiers are in a position to gain4 ,the gains in question1 it will be seen1 come out of the business community1 out of invested wealth1 and only remotely and indirectly out of the community at large from which the business community draws its income4 ,these gains1 therefore1 are a tax on commonplace business enterprise1 in much the same manner and with much the like effects as the gains of commonplace business 7ordinary profits and interest7 are a tax on industry4#ag ,in a manner analogous to the old-fashioned capitalist-employer's engrossing of the industrial community's technological efficiency does the modern pecuniary magnate engross the business community's capitalistic efficiency4 ,this capitalistic efficiency lies in the capitalist-employer's ability--by force of the ownership of the material equipment--to induce the industrial community1 through suitable bargaining1 to turn over to the owner of the material equipment the excess of the product above the industrial community's livelihood4 ,the fortunes of the capitalist-employer are closely dependent on the run of the market1--the conjunctures of advantageous purchase and sale2 and it is his constant endeavor to create or gain for himself some peculiar degree of advantage in the market1 in the way of monopoly1 good-will1 legalised privilege1 and the like1--something in the way of intangible assets4 ,but the pecuniary magnate1 in the measure in which he truly answers to the concept1 is superior to the market on which the capitalist-employer depends1 and can make or mar its conjunctures of advantageous purchase and sale of goods2 that is to say1 he is in a position to make or mar any peculiar advantage possessed by the given capitalist-employer who comes in his way4 ,he does this by force of his large holdings of capital at large1 the weight of which he can shift from one point of investment to another as the relative efficiency--earning-capacity--of one and another line of investment may make it expedient2 and at each move of this kind1 in so far as it is effective for his ends1 he cuts into and assimilates a fraction of the invested wealth involved1 in that he cuts into and sequesters a fraction of the capital's earning-capacity in the given line4 ,that is to say1 in the measure in which he is a pecuniary magnate1 and not simply a capitalist-employer1 he engrosses the capitalistic efficiency of invested wealth2 he turns to his own account the capitalist-employer's effectual engrossing of the community's industrial efficiency4 ,he engrosses the community's pecuniary initiative and proficiency4 ,in the measure1 therefore1 in which this relatively new-found serviceability of extraordinarily large wealth is effective for its peculiar business function1 the old-fashioned capitalist-employer loses his discretionary initiative and becomes a mediator1 an instrumentality of extraction and transmission1 a collector and conveyer of revenue from the community at large to the pecuniary magnate1 who1 in the ideal case1 should leave him only such an allowance out of the gross earnings collected and transmitted as will induce him to continue in business4 ,to the community at large1 whose industrial efficiency is already virtually engrossed by the capitalist-employer's ownership and control of the material equipment1 this later step in the evolution of the economic situation should apparently not be a matter of substantial consequence or a matter for sentimental disturbance4 ,on the face of it1 it should appear to have little more than a speculative interest for those classes of the community who do not derive an income from investments2 particularly not for the working classes1 who own nothing to speak of and whose only dependence is their technological efficiency1 which has virtually ceased to be their own4 ,but such is not the current state of sentiment4 ,this inchoate new phase of capitalism1 this business enterprise on the higher plane1 is in fact viewed with the most lively apprehension4 ,in a maze of consternation and solicitude the boldest1 wisest1 most public-spirited1 most illustrious gentlemen of our time are spending their manhood in an endeavor to make the hen continue sitting on the nest after the chickens are out of the shell4 ,the modern community is imbued with business principles--of the old dispensation4 ,by precept and example1 men have learned that the business interests 7of the authentic superannuated scale and kind7 are the palladium of our civilisation1 as ,mr4 ,dooley would say2 and it is felt that any disturbance of the existing pecuniary dominion of the capitalist-employer--as contrasted with the pecuniary magnate--would involve the well-being of the community in one common agony of desolation4 ,the merits of this perturbation1 or of the remedies proposed for saving the pecuniary life of the old-fashioned capitalist-employer1 of course do not concern the present inquiry2 but the matter has been referred to here as evidence that the pecuniary magnate's work1 and the dominion which his extraordinarily large wealth gives him1 are1 in effect1 substantially a new phase of the economic development1 and that these phenomena are distastefully unfamiliar and are felt to be consequential enough to threaten the received institutional structure4 ,that is to say1 it is felt to be a new phase of business enterprise1--distasteful to those who stand to lose by it4 ,the basis of this business enterprise on the higher plane is capital-at-large1 as distinguished from capital invested in a given line of industrial enterprise1 and it becomes effective when wealth has accumulated in holdings sufficiently large to give the holder 7or combination of holders1 the system7 a controlling weight in any group or ramification of business interests into which he may throw his weight by judicious investment 7or by underwriting and the like74 ,the pecuniary magnate must be able effectually to engross the pecuniary initiative and the business opportunities on which such a section or ramification of the business community depends for its ordinary gains4 ,how large a proportion of the business community's capital is needed for such an effectual engrossing of its capitalistic efficiency1 in any given bearing1 is a question that cannot be answered in anything like absolute terms1 or even in relative terms of a satisfactorily definite kind4 ,it is1 of course1 evident that a relatively large disposable body of capital is needed for such a purpose2 and it is also evident1 from the current facts of business1 that the body of capital so disposed of need not amount to a majority1 or anything near a majority1 of the investments involved1--at least not at the present relatively inchoate phase of this larger business enterprise4 ,the larger the holdings of the magnate1 the more effectual and expeditious will be his work of absorbing the holdings of the smaller capitalist-employer1 and the more precipitately will the latter yield his assets to the new claimant4 ,evidently1 this work of the pecuniary magnate bears a great resemblance to the creation of intangible assets under the ordinary competitive system4 ,this is1 no doubt1 the point of its nearest relation to the current capitalistic enterprise4 ,but1 as has already been indicated above1 it cannot be said that the magnate's peculiar work is the creation of intangible1 or other assets1 although there is commonly some recapitalisation involved in his manoeuvers1 and although his gains commonly come as assets1 i4e41 in the capitalised form4 ,nor can it1 as has also been indicated above1 be said that the wealth which serves him as the means of his peculiar enterprise stands in the relation of assets to this enterprise or to the gains in question1 since this wealth already stands in an exhaustive relation as assets to some corporate enterprise in ordinary business and to the corresponding items of interest and dividends4 ,it may1 of course1 be contended that the present state of things on this higher plane of enterprise is transient and transitional only1 and that in the settled condition which may conceivably supervene1 the magnate's relation to business at large will be capitalised in some form of intangible assets1 after the manner in which the monopoly advantage of an ordinary trust is now capitalised4 ,but this is at the best only a surmise1 guided by inapplicable generalisations drawn from a past situation in which this higher enterprise has not engrossed the pecuniary initiative and played the ruling part4 ,,footnotes3 #a ,reprinted by permission from ,the ,quarterly ,journal of ,economics1 ,vol4 ,,xxiii1 ,nov41 #aijh4 #b ,see this ,journal for ,august1 #aijh4 #c ,for the connection between prices and prosperity1 hard times1 unemployment1 etc41 see ,the ,theory of ,business ,enterprise1 chap4 vii 7pp4 #ahe-beb1 especially #aif-bab74 #d ,by perversion is here meant such disposition of the industrial forces as entails a net waste or detriment to the community's livelihood4 #e ,should the connection at this point with the main argument of the paper as set forth in the earlier section seem doubtful or obscure1 it may be called to mind that these dubious enterprises in dissipation are cases of investment for a profit1 and that the capital goods engaged are invested wealth yielding an income1 but that they yield an income only on the fulfillment of two conditions3 7a7 the possession and employment of these capital goods enables their holder to turn to account the common stock of technological proficiency1 in those bearings in which it may be of use in his enterprise2 and 7b7 the limited amount of wealth available for the purpose enables their holder to engross the usufruct of such a fraction of the common stock of technological proficiency1 in the degree determined by this limitation of the amount available4 ,in so far1 these enterprises are like any other industrial enterprise2 but beyond this they have the peculiarity that they do not1 or need not1 even ostensibly1 turn the current knowledge and use of ways and means to productive account for the community at large1 but simply take their stand on the 7institutionally sacred7 accomplished fact of invested wealth4 ,they have less of the fog of apology about them than the common run of business enterprise4 #f ,this statement may not seem clear without indicating in a more concrete manner some terms in which to measure the relative differential advantage and disadvantage which so emerge in such a case of prerogative or privilege4 ,where1 as in the earlier1 non-pecuniary phases of culture1 no price test is applicable1 the statement in the text may be taken to mean that the differential disadvantage at the cost of which the differential benefit in question is gained is greater than the beneficiary would be willing to undergo in order to procure this benefit4 #g ,a doubt has been offered as to the applicability of this characterization to such intangible assets as a patent right and other items of the same class4 ,the doubt seems to arise from a misapprehension of the analysis and of its intention4 ,it should be remarked that there is no intention to condemn or disapprove any of the items here spoken of as intangible assets4 ,the patent right may be justifiable or it may not3 there is no call to discuss that question here4 ,other intangible assets are in the same case in this respect4 ,further1 as to the character of a patent right considered as an asset4 ,the invention or innovation covered by the patent right is a contribution to the common stock of technological proficiency4 ,it may be 7immediately7 serviceable to the community at large1 or it may not2--e4g41 a cash register1 a bank-check punch1 a streetcar fare register2 a burglar-proof safe1 and the like are of no immediate service to the community at large1 but serve only a pecuniary use to their users4 ,but1 whether the innovation is useful or not1 the patent right1 as an asset1 has no 7immediate7 usefulness at large1 since its essence is the restriction of the usufruct of the innovation to the patentee4 ,immediately and directly the patent right must be considered a detriment to the community at large1 since its purport is to prevent the community from making use of the patented innovation1 whatever may be its ulterior beneficial effects or its ethical justification4 #h ,neither as a physical magnitude 7land7 nor as a pecuniary magnitude 7real estate7 is the capitalised land in question an item of good-will2 but its value as real estate--i4e41 its magnitude as an asset--is in part a product of the good-will 7illusions and the like7 worked up in its behalf and turned to account1 by the land agent4 ,the real estate is a tangible asset1 an item of material wealth1 while the good-will to which in part it owes its magnitude as an item of wealth is an intangible asset1 an item of immaterial wealth4 #i ,livelihood is1 of course1 here taken in a loose sense1 not as denoting the means of subsistence simply or even the means of physical comfort1 but as signifying that the purchases in question are made with a view to the consumptive use of the goods rather than with a view to their use for a profit4 #aj ,the instruments of production so monopolised are1 of course1 tangible assets1 but the ownership of such means of production in amount sufficient to enable the owner to monopolise or control the market1 whether for purchase 7as of materials or labor7 or for sale 7as of marketable goods or services71 gives rise to a differential business advantage which is to be classed as intangible assets4 #aa ,one writer even goes so far in the endeavor to bring the facts within the scope of the staple concepts of theory at this point as to rate the persons concerned in such a case as capital1 after having satisfied himself that such income-streams are traceable to a personal source4--,see ,fisher1 ,nature of ,capital and ,income1 chap4 v4 #ab ,cf4 ,fisher1 ,rate of ,interest1 chap4 vi4 #ac ,this conclusion is reached1 e4g41 by ,mr4 ,g4 ,p4 ,watkins 7,the ,growth of ,large ,fortunes1 chap4 iii1 sec4 #aj71 although through a curious etymological misapprehension he rejects the term timeless as not available4 #ad ,even ,mr4 ,watkins 7as cited above71 e4g41 is led by a superficial generalisation to class these gains as speculative1 and so to excuse himself from a closer acquaintance with their character and with the bearings of the class of business enterprise out of which they arise4 #ae ,cf4 ,theory of ,business ,enterprise1 chap1 v1 pp4 #aai-acj2 chap4 vi1 pp4 #afb-agd4 #af ,cf4 ,theory of ,business ,enterprise1 footnote on pp4 #afi-agj4 #ag ,as should be evident from the run of the argument in the earlier portions of this paper1 the use of the words tax1 deduction1 abstraction1 in this connection1 is not to be taken as implying approval or disapproval of the phenomena so characterised4 ,the words are used for want of better terms to indicate the source of business gains1 and objectively to characterise the relation of give-and-take between industry and ordinary capitalistic business1 on the one hand1 and between ordinary business and this business enterprise on the higher plane1 on the other hand4 ,,some ,,neglected ,,points ,,in ,,the ,,theory ,,of ,,socialism#a ,the immediate occasion for the writing of this paper was given by the publication of ,mr4 ,spencer's essay1 ,from ,freedom to ,bondage2#b although it is not altogether a criticism of that essay4 ,it is not my purpose to controvert the position taken by ,mr4 ,spencer as regards the present feasibility of any socialist scheme4 ,the paper is mainly a suggestion1 offered in the spirit of the disciple1 with respect to a point not adequately covered by ,mr4 ,spencer's discussion1 and which has received but very scanty attention at the hands of any other writer on either side of the socialist controversy4 ,this main point is as to an economic ground1 as a matter of fact1 for the existing unrest that finds expression in the demands of socialist agitators4 ,i quote from ,mr4 ,spencer's essay a sentence which does fair justice1 so far as it goes1 to the position taken by agitators3 ,in presence of obvious improvements1 joined with that increase of longevity1 which even alone yields conclusive proof of general amelioration1 it is proclaimed1 with increasing vehemence1 that things are so bad that society must be pulled to pieces and reorganised on another plan4 ,the most obtrusive feature of the change demanded by the advocates of socialism is governmental control of the industrial activities of society--the nationalisation of industry4 ,there is also1 just at present1 a distinct movement in practice1 towards a more extended control of industry by the government1 as ,mr4 ,spencer has pointed out4 ,this movement strengthens the position of the advocates of a complete nationalisation of industry1 by making it appear that the logic of events is on their side4 ,in ,america at least1 this movement in the direction of a broader assertion of the paramount claims of the community1 and an extension of corporate action on part of the community in industrial matters1 has not generally been connected with or based on an adherence to socialistic dogmas4 ,this is perhaps truer of the recent past than of the immediate present4 ,the motive of the movement has been1 in large part1 the expediency of each particular step taken4 ,municipal supervision1 and1 possibly1 complete municipal control1 has come to be a necessity in the case of such industries--mostly of recent growth--as elementary education1 street-lighting1 water-supply1 etc4 ,opinions differ widely as to how far the community should take into its own hands such industries as concern the common welfare1 but the growth of sentiment may fairly be said to favor a wider scope of governmental control4 ,but the necessity of some supervision in the interest of the public extends to industries which are not simply of municipal importance4 ,the modern development of industry and of the industrial organisation of society makes it increasingly necessary that certain industries--often spoken of as natural monopolies--should be treated as being of a semi-public character4 ,and through the action of the same forces a constantly increasing number of occupations are developing into the form of natural monopolies4 ,the motive of the movement towards corporate action on the part of the community--,state control of industry--has been largely that of industrial expediency4 ,but another motive has gone with this one1 and has grown more prominent as the popular demands in this direction have gathered wider support and taken more definite form4 ,the injustice1 the inequality1 of the existing system1 so far as concerns these natural monopolies especially1 are made much of4 ,there is a distinct unrest abroad1 a discontent with things as they are1 and the cry of injustice is the expression of this more or less widely prevalent discontent4 ,this discontent is the truly socialistic element in the situation4 ,it is easy to make too much of this popular unrest4 ,the clamor of the agitators might be taken to indicate a wider prevalence and a greater acuteness of popular discontent than actually exists2 but after all due allowance is made for exaggeration on the part of those interested in the agitation1 there can still be no doubt of the presence of a chronic feeling of dissatisfaction with the working of the existing industrial system1 and a growth of popular sentiment in favor of a leveling policy4 ,the economic ground of this popular feeling must be found1 if we wish to understand the significance1 for our industrial system1 of the movement to which it supplies the motive4 ,if its causes shall appear to be of a transient character1 there is little reason to apprehend a permanent or radical change of our industrial system as the outcome of the agitation2 while if this popular sentiment is found to be the outgrowth of any of the essential features of the existing social system1 the chances of its ultimately working a radical change in the system will be much greater4 ,the explanation offered by ,mr4 ,spencer1 that the popular unrest is due essentially to a feeling of ennui--to a desire for a change of posture on part of the social body1 is assuredly not to be summarily rejected2 but the analogy will hardly serve to explain the sentiment away4 ,this may be a cause1 but it can hardly be accepted as a sufficient cause4 ,socialist agitators urge that the existing system is necessarily wasteful and industrially inefficient4 ,that may be granted1 but it does not serve to explain the popular discontent1 because the popular opinion1 in which the discontent resides1 does notoriously not favor that view4 ,they further urge that the existing system is unjust1 in that it gives an advantage to one man over another4 ,that contention may also be true1 but it is in itself no explanation1 for it is true only if it be granted that the institutions which make this advantage of one man over another possible are unjust1 and that is begging the question4 ,this last contention is1 however1 not so far out of line with popular sentiment4 ,the advantage complained of lies1 under modern conditions1 in the possession of property1 and there is a feeling abroad that the existing order of things affords an undue advantage to property1 especially to owners of property whose possessions rise much above a certain rather indefinite average4 ,this feeling of injured justice is not always distinguishable from envy2 but it is1 at any rate1 a factor that works towards a leveling policy4 ,with it goes a feeling of slighted manhood1 which works in the same direction4 ,both these elements are to a great extent of a subjective origin4 ,they express themselves in the general1 objective form1 but it is safe to say that on the average they spring from a consciousness of disadvantage and slight suffered by the person expressing them1 and by persons whom he classes with himself4 ,no flippancy is intended in saying that the rich are not so generally alive to the necessity of any leveling policy as are people of slender means4 ,any question as to the legitimacy of the dissatisfaction1 on moral grounds1 or even on grounds of expediency1 is not very much to the point2 the question is as to its scope and its chances of persistence4 ,the modern industrial system is based on the institution of private property under free competition1 and it cannot be claimed that these institutions have heretofore worked to the detriment of the material interests of the average member of society4 ,the ground of discontent cannot lie in a disadvantageous comparison of the present with the past1 so far as material interests are concerned4 ,it is notorious1 and1 practically1 none of the agitators deny1 that the system of industrial competition1 based on private property1 has brought about1 or has at least co-existed with1 the most rapid advance in average wealth and industrial efficiency that the world has seen4 ,especially can it fairly be claimed that the result of the last few decades of our industrial development has been to increase greatly the creature comforts within the reach of the average human being4 ,and1 decidedly1 the result has been an amelioration of the lot of the less favored in a relatively greater degree than that of those economically more fortunate4 ,the claim that the system of competition has proved itself an engine for making the rich richer and the poor poorer has the fascination of epigram2 but if its meaning is that the lot of the average1 of the masses of humanity in civilised life1 is worse to-day1 as measured in the means of livelihood1 than it was twenty1 or fifty1 or a hundred years ago1 then it is farcical4 ,the cause of discontent must be sought elsewhere than in any increased difficulty in obtaining the means of subsistence or of comfort4 ,but there is a sense in which the aphorism is true1 and in it lies at least a partial explanation of the unrest which our conservative people so greatly deprecate4 ,the existing system has not made1 and does not tend to make1 the industrious poor poorer as measured absolutely in means of livelihood2 but it does tend to make them relatively poorer1 in their own eyes1 as measured in terms of comparative economic importance1 and1 curious as it may seem at first sight1 that is what seems to count4 ,it is not the abjectly poor that are oftenest heard protesting2 and when a protest is heard in their behalf it is through spokesmen who are from outside their own class1 and who are not delegated to speak for them4 ,they are not a negligible element in the situation1 but the unrest which is ground for solicitude does not owe its importance to them4 ,the protest comes from those who do not habitually1 or of necessity1 suffer physical privation4 ,the qualification of necessity1 is to be noticed4 ,there is a not inconsiderable amount of physical privation suffered by many people in this country1 which is not physically necessary4 ,the cause is very often that what might be the means of comfort is diverted to the purpose of maintaining a decent appearance1 or even a show of luxury4 ,man as we find him to-day has much regard to his good fame--to his standing in the esteem of his fellowmen4 ,this characteristic he always has had1 and no doubt always will have4 ,this regard for reputation may take the noble form of a striving after a good name2 but the existing organisation of society does not in any way preeminently foster that line of development4 ,regard for one's reputation means1 in the average of cases1 emulation4 ,it is a striving to be1 and more immediately to be thought to be1 better than one's neighbor4 ,now1 modern society1 the society in which competition without prescription is predominant1 is preeminently an industrial1 economic society1 and it is industrial--economic--excellence that most readily attracts the approving regard of that society4 ,integrity and personal worth will1 of course1 count for something1 now as always2 but in the case of a person of moderate pretentions and opportunities1 such as the average of us are1 one's reputation for excellence in this direction does not penetrate far enough into the very wide environment to which a person is exposed in modern society to satisfy even a very modest craving for respectability4 ,to sustain one's dignity--and to sustain one's self-respect--under the eyes of people who are not socially one's immediate neighbors1 it is necessary to display the token of economic worth1 which practically coincides pretty closely with economic success4 ,a person may be well-born and virtuous1 but those attributes will not bring respect to the bearer from people who are not aware of his possessing them1 and these are ninety-nine out of every one hundred that one meets4 ,conversely1 by the way1 knavery and vulgarity in any person are not reprobated by people who know nothing of the person's shortcomings in those respects4 ,in our fundamentally industrial society a person should be economically successful1 if he would enjoy the esteem of his fellowmen4 ,when we say that a man is worth so many dollars1 the expression does not convey the idea that moral or other personal excellence is to be measured in terms of money1 but it does very distinctly convey the idea that the fact of his possessing many dollars is very much to his credit4 ,and1 except in cases of extraordinary excellence1 efficiency in any direction which is not immediately of industrial importance1 and does not redound to a person's economic benefit1 is not of great value as a means of respectability4 ,economic success is in our day the most widely accepted as well as the most readily ascertainable measure of esteem4 ,all this will hold with still greater force of a generation which is born into a world already encrusted with this habit of a mind4 ,but there is a further1 secondary stage in the development of this economic emulation4 ,it is not enough to possess the talisman of industrial success4 ,in order that it may mend one's good fame efficiently1 it is necessary to display it4 ,one does not make much of a showing in the eyes of the large majority of the people whom one meets with1 except by unremitting demonstration of ability to pay4 ,that is practically the only means which the average of us have of impressing our respectability on the many to whom we are personally unknown1 but whose transient good opinion we would so gladly enjoy4 ,so it comes about that the appearance of success is very much to be desired1 and is even in many cases preferred to the substance4 ,we all know how nearly indispensable it is to afford whatever expenditure other people with whom we class ourselves can afford1 and also that it is desirable to afford a little something more than others4 ,this element of human nature has much to do with the standard of living4 ,and it is of a very elastic nature1 capable of an indefinite extension4 ,after making proper allowance for individual exceptions and for the action of prudential restraints1 it may be said1 in a general way1 that this emulation in expenditure stands ever ready to absorb any margin of income that remains after ordinary physical wants and comforts have been provided for1 and1 further1 that it presently becomes as hard to give up that part of one's habitual standard of living which is due to the struggle for respectability1 as it is to give up many physical comforts4 ,in a general way1 the need of expenditure in this direction grows as fast as the means of satisfying it1 and1 in the long run1 a large expenditure comes no nearer satisfying the desire than a smaller one4 ,it comes about through the working of this principle that even the creature comforts1 which are in themselves desirable1 and1 it may even be1 requisite to a life on a passably satisfactory plane1 acquire a value as a means of respectability quite independent of1 and out of proportion to1 their simple utility as a means of livelihood4 ,as we are all aware1 the chief element of value in many articles of apparel is not their efficiency for protecting the body1 but for protecting the wearer's respectability2 and that not only in the eyes of one's neighbors but even in one's own eyes4 ,indeed1 it happens not very rarely that a person chooses to go ill-clad in order to be well dressed4 ,much more than half the value of what is worn by the ,american people may confidently be put down to the element of dress1 rather than to that of clothing4 ,and the chief motive of dress is emulation--economic emulation4 ,the like is true1 though perhaps in a less degree1 of what goes to food and shelter4 ,this misdirection of effort through the cravings of human vanity is of course not anything new1 nor is economic emulation a modern fact4 ,the modern system of industry has not invented emulation1 nor has even this particular form of emulation originated under that system4 ,but the system of free competition has accentuated this form of emulation1 both by exalting the industrial activity of man above the rank which it held under more primitive forms of social organisation1 and by in great measure cutting off other forms of emulation from the chance of efficiently ministering to the craving for a good fame4 ,speaking generally and from the standpoint of the average man1 the modern industrial organization of society has practically narrowed the scope of emulation to this one line2 and at the same time it has made the means of sustenance and comfort so much easier to obtain as very materially to widen the margin of human exertion that can be devoted to purposes of emulation4 ,further1 by increasing the freedom of movement of the individual and widening the environment to which the individual is exposed--increasing the number of persons before whose eyes each one carries on his life1 and1 pari passu1 decreasing the chances which such persons have of awarding their esteem on any other basis than that of immediate appearances1 it has increased the relative efficiency of the economic means of winning respect through a show of expenditure for personal comforts4 ,it is not probable that further advance in the same direction will lead to a different result in the immediate future2 and it is the immediate future we have to deal with4 ,a further advance in the efficiency of our industry1 and a further widening of the human environment to which the individual is exposed1 should logically render emulation in this direction more intense4 ,there are1 indeed1 certain considerations to be set off against this tendency1 but they are mostly factors of slow action1 and are hardly of sufficient consequence to reverse the general rule4 ,on the whole1 other things remaining the same1 it must be admitted that1 within wide limits1 the easier the conditions of physical life for modern civilised man become1 and the wider the horizon of each and the extent of the personal contact of each with his fellowmen1 and the greater the opportunity of each to compare notes with his fellows1 the greater will be the preponderance of economic success as a means of emulation1 and the greater the straining after economic respectability4 ,inasmuch as the aim of emulation is not any absolute degree of comfort or of excellence1 no advance in the average well-being of the community can end the struggle or lessen the strain4 ,a general amelioration cannot quiet the unrest whose source is the craving of everybody to compare favorably with his neighbor4 ,human nature being what it is1 the struggle of each to possess more than his neighbor is inseparable from the institution of private property4 ,and also1 human nature being what it is1 one who possesses less will1 on the average1 be jealous of the one who possesses more2 and more means not more than the average share1 but more than the share of the person who makes the comparison4 ,the criterion of complacency is1 largely1 the de facto possession or enjoyment2 and the present growth of sentiment among the body of the people--who possess less--favors1 in a vague way1 a readjustment adverse to the interests of those who possess more1 and adverse to the possibility of legitimately possessing or enjoying more2 that is to say1 the growth of sentiment favors a socialistic movement4 ,the outcome of modern industrial development has been1 so far as concerns the present purpose1 to intensify emulation and the jealousy that goes with emulation1 and to focus the emulation and the jealousy on the possession and enjoyment of material goods4 ,the ground of the unrest with which we are concerned is1 very largely1 jealousy1--envy1 if you choose2 and the ground of this particular form of jealousy1 that makes for socialism1 is to be found in the institution of private property4 ,with private property1 under modern conditions1 this jealousy and unrest are unavoidable4 ,the corner-stone of the modern industrial system is the institution of private property4 ,that institution is also the objective point of all attacks upon the existing system of competitive industry1 whether open or covert1 whether directed against the system as a whole or against any special feature of it4 ,it is1 moreover1 the ultimate ground--and1 under modern conditions1 necessarily so--of the unrest and discontent whose proximate cause is the struggle for economic respectability4 ,the inference seems to be that1 human nature being what it is1 there can be no peace from this--it must be admitted--ignoble form of emulation1 or from the discontent that goes with it1 this side of the abolition of private property4 ,whether a larger measure of peace is in store for us after that event shall have come to pass1 is of course not a matter to be counted on1 nor is the question immediately to the point4 ,this economic emulation is of course not the sole motive1 nor the most important feature1 of modern industrial life2 although it is in the foreground1 and it pervades the structure of modern society more thoroughly perhaps than any other equally powerful moral factor4 ,it would be rash to predict that socialism will be the inevitable outcome of a continued development of this emulation and the discontent which it fosters1 and it is by no means the purpose of this paper to insist on such an inference4 ,the most that can be claimed is that this emulation is one of the causes1 if not the chief cause1 of the existing unrest and dissatisfaction with things as they are2 that this unrest is inseparable from the existing system of industrial organisation2 and that the growth of popular sentiment under the influence of these conditions is necessarily adverse to the institution of private property1 and therefore adverse to the existing industrial system of free competition4 99 99 99 99 99 ,the emulation to which attention has been called in the preceding section of this paper is not only a fact of importance to an understanding of the unrest that is urging us towards an untried path in social development1 but it has also a bearing on the question of the practicability of any scheme for the complete nationalisation of industry4 ,modern industry has developed to such a degree of efficiency as to make the struggle of subsistence alone1 under average conditions1 relatively easy1 as compared with the state of the case a few generations ago4 ,as ,i have labored to show1 the modern competitive system has at the same time given the spirit of emulation such a direction that the attainment of subsistence and comfort no longer fixes1 even approximately1 the limit of the required aggregate labor on the part of the community4 ,under modern conditions the struggle for existence has1 in a very appreciable degree1 been transformed into a struggle to keep up appearances4 ,the ultimate ground of this struggle to keep up appearance by otherwise unnecessary expenditure1 is the institution of private property4 ,under a regime which should allow no inequality of acquisition or of income1 this form of emulation1 which is due to the possibility of such inequality1 would also tend to become obsolete4 ,with the abolition of private property1 the characteristic of human nature which now finds its exercise in this form of emulation1 should logically find exercise in other1 perhaps nobler and socially more serviceable1 activities2 it is at any rate not easy to imagine it running into any line of action more futile or less worthy of human effort4 ,supposing the standard of comfort of the community to remain approximately at its present average1 the abolition of the struggle to keep up economic appearances would very considerably lessen the aggregate amount of labor required for the support of the community4 ,how great a saving of labor might be effected is not easy to say4 ,i believe it is within the mark to suppose that the struggle to keep up appearances is chargeable1 directly and indirectly1 with one-half the aggregate labor1 and abstinence from labor--for the standard of respectability requires us to shun labor as well as to enjoy the fruits of it--on part of the ,american people4 ,this does not mean that the same community1 under a system not allowing private property1 could make its way with half the labor we now put forth2 but it means something more or less nearly approaching that4 ,any one who has not seen our modern social life from this point of view will find the claim absurdly extravagant1 but the startling character of the proposition will wear off with longer and closer attention to this aspect of the facts of everyday life4 ,but the question of the exact amount of waste due to this factor is immaterial4 ,it will not be denied that is is a fact of considerable magnitude1 and that is all that the argument requires4 ,it is accordingly competent for the advocates of the nationalisation of industry and property to claim that even if their scheme of organisation should prove less effective for production of goods than the present1 as measured absolutely in terms of the aggregate output of our industry1 yet the community might readily be maintained at the present average standard of comfort4 ,the required aggregate output of the nation's industry would be considerably less than at present1 and there would therefore be less necessity for that close and strenuous industrial organisation and discipline of the members of society under the new regime1 whose evils unfriendly critics are apt to magnify4 ,the chances of practicability for the scheme should logically be considerably increased by this lessening of the necessity for severe application4 ,the less irksome and exacting the new regime1 the less chance of a reversion to the earlier system4 ,under such a social order1 where common labor would no longer be a mark of peculiar economic necessity and consequent low economic rank on part of the laborer1 it is even conceivable that labor might practically come to assume that character of nobility in the eyes of society at large1 which it now sometimes assumes in the speculations of the well-to-do1 in their complacent moods4 ,much has sometimes been made of this possibility by socialist speculators1 but the inference has something of a utopian look1 and no one1 certainly1 is entitled to build institutions for the coming social order on this dubious ground4 ,what there seems to be ground for claiming is that a society which has reached our present degree of industrial efficiency would not go into the ,socialist or ,nationalist state with as many chances of failure as a community whose industrial development is still at the stage at which strenuous labor on the part of nearly all members is barely sufficient to make both ends meet4 ,in ,mr4 ,spencer's essay1 in conformity with the line of argument of his ,principles of ,sociology1 it is pointed out that1 as the result of constantly operative social forces1 all social systems1 as regards the form of organisation1 fall into the one or the other of ,sir ,henry ,maine's two classes--the system of status or the system of contract4 ,in accordance with this generalisation it is concluded that whenever the modern system of contract or free competition shall be displaced1 it will necessarily be replaced by the only other known system--that of status2 the type of which is the military organisation1 or1 also1 a hierarchy1 or a bureaucracy4 ,it is something after the fashion of the industrial organisation of ancient ,peru that ,mr4 ,spencer pictures as the inevitable sequel of the demise of the existing competitive system4 ,voluntary cooeperation can be replaced only by compulsory cooeperation1 which is identified with the system of status and defined as the subjection of man to his fellow-man4 ,now1 at least as a matter of speculation1 this is not the only alternative4 ,these two systems1 of status1 or prescription1 and of contract1 or competition1 have divided the field of social organisation between them in some proportion or other in the past4 ,mr4 ,spencer has shown that1 very generally1 where human progress in its advanced stages has worked towards the amelioration of the lot of the average member of society1 the movement has been away from the system of status and towards the system of contract4 ,but there is at least one1 if not more than one exception to the rule1 as concerns the recent past4 ,the latest development of the industrial organisation among civilised nations--perhaps in an especial degree in the case of the ,american people--has not been entirely a continuation of the approach to a regime of free contract4 ,it is also1 to say the least1 very doubtful if the movement has been towards a regime of status1 in the sense in which ,sir ,henry ,maine uses the term4 ,this is especially evident in the case of the great industries which we call natural monopolies2 and it is to be added that the present tendency is for a continually increasing proportion of the industrial activities of the community to fall into the category of natural monopolies4 ,no revolution has been achieved2 the system of competition has not been discarded1 but the course of industrial development is not in the direction of an extension of that system at all points2 nor does the principle of status always replace that of competition wherever the latter fails4 ,the classification of methods of social organisation under the two heads of status or of contract1 is not logically exhaustive4 ,there is nothing in the meaning of the terms employed which will compel us to say that whenever man escapes from the control of his fellow man1 under a system of status1 he thereby falls into a system of free contract4 ,there is a conceivable escape from the dilemma1 and it is this conceivable1 though perhaps impracticable1 escape from both these systems that the socialist agitator wishes to effect4 ,an acquaintance with the aims and position of the more advanced and consistent advocates of a new departure leaves no doubt but that the principles of contract and of status1 both1 are in substance familiar to their thoughts--though often in a vague and inadequate form--and that they distinctly repudiate both4 ,this is perhaps less true of those who take the socialist position mainly on ethical grounds4 ,as bearing on this point it may be remarked that while the industrial system1 in the case of all communities with whose history we are acquainted1 has always in the past been organised according to a scheme of status or of contract1 or of the two combined in some proportion1 yet the social organisation has not in all cases developed along the same lines1 so far as concerns such social functions as are not primarily industrial4 ,especially is this true of the later stages in the development of those communities whose institutions we are accustomed to contemplate with the most complacency1 e4g41 the case of the ,english-speaking peoples4 ,the whole system of modern constitutional government in its latest developed forms1 in theory at least1 and1 in a measure1 in practice1 does not fall under the head of either contract or status4 ,it is the analogy of modern constitutional government through an impersonal law and impersonal institutions1 that comes nearest doing justice to the vague notions of our socialist propagandists4 ,it is true1 some of the most noted among them are fond of the analogy of the military organisation1 as a striking illustration of one feature of the system they advocate1 but that must after all be taken as an obiter dictum4 ,further1 as to the manner of the evolution of existing institutions and their relation to the two systems spoken of4 ,so far as concerns the communities which have figured largely in the civilised world1 the political organisation has had its origin in a military system of government4 ,so1 also1 has the industrial organisation4 ,but while the development of industry1 during its gradual escape from the military system of status1 has been1 at least until lately1 in the direction of a system of free contract1 the development of the political organisation1 so far as it has escaped from the regime of status1 has not been in that direction4 ,the system of status is a system of subjection to personal authority1--of prescription and class distinctions1 and privileges and immunities2 the system of constitutional government1 especially as seen at its best among a people of democratic traditions and habits of mind1 is a system of subjection to the will of the social organism1 as expressed in an impersonal law4 ,this difference between the system of status and the constitutional system expresses a large part of the meaning of the boasted free institutions of the ,english-speaking people4 ,here1 subjection is not to the person of the public functionary1 but to the powers vested in him4 ,this has1 of course1 something of the ring of latter-day popular rhetoric1 but it is after all felt to be true1 not only speculatively1 but in some measure also in practice4 ,the right of eminent domain and the power to tax1 as interpreted under modern constitutional forms1 indicate something of the direction of development of the political functions of society at a point where they touch the province of the industrial system4 ,it is along the line indicated by these and kindred facts that the socialists are advancing2 and it is along this line that the later developments made necessary by the exigencies of industry under modern conditions are also moving4 ,the aim of the propagandists is to sink the industrial community in the political community2 or perhaps better1 to identify the two organisations2 but always with insistence on the necessity of making the political organisation1 in some further developed form1 the ruling and only one in the outcome4 ,distinctly1 the system of contract is to be done away with2 and equally distinctly1 no system of status is to take its place4 ,all this is pretty vague1 and of a negative character1 but it would quickly pass the limits of legitimate inference from the accepted doctrines of the socialists if it should attempt to be anything more4 ,it does not have much to say as to the practicability of any socialist scheme4 ,as a matter of speculation1 there seems to be an escape from the dilemma insisted on by ,mr4 ,spencer4 ,we may conceivably have nationalism without status and without contract4 ,in theory1 both principles are entirely obnoxious to that system4 ,the practical question1 as to whether modern society affords the materials out of which an industrial structure can be erected on a system different from either of these1 is a problem of constructive social engineering which calls for a consideration of details far too comprehensive to be entered on here4 ,still1 in view of the past course of development of character and institutions on the part of the people to which we belong1 it is perhaps not extravagant to claim that no form of organisation which should necessarily eventuate in a thorough-going system of status could endure among us4 ,the inference from this proposition may be1 either that a near approach to nationalisation of industry would involve a regime of status1 a bureaucracy1 which would be unendurable1 and which would therefore drive us back to the present system before it had been entirely abandoned2 or that the nationalisation would be achieved with such a measure of success1 in conformity with the requirements of our type of character1 as would make it preferable to what we had left behind4 ,in either case the ground for alarm does not seem so serious as is sometimes imagined4 ,a reversion to the system of free competition1 after it had been in large part discarded1 would no doubt be a matter of great practical difficulty1 and the experiment which should demonstrate the necessity of such a step might involve great waste and suffering1 and might seriously retard the advance of the race toward something better than our present condition2 but neither a permanent deterioration of human society1 nor a huge catastrophe1 is to be confidently counted on as the outcome of the movement toward nationalisation1 even if it should prove necessary for society to retrace its steps4 ,it is conceivable that the application of what may be called the constitutional method to the organisation of industry--for that is essentially what the advocates of ,nationalisation demand--would result in a course of development analogous to what has taken place in the case of the political organisation under modern constitutional forms4 ,modern constitutional government--the system of modern free institutions--is by no means an unqualified success1 in the sense of securing to each the rights and immunities which in theory are guaranteed to him4 ,our modern republics have hardly given us a foretaste of that political millennium whereof they proclaim the fruition4 ,the average human nature is as yet by no means entirely fit for self-government according to the constitutional method4 ,shortcomings are visible at every turn4 ,these shortcomings are grave enough to furnish serious arguments against the practicability of our free institutions4 ,on the continent of ,europe the belief seems to be at present in the ascendant that man must yet1 for a long time1 remain under the tutelage of absolutism before he shall be fit to organise himself into an autonomous political body4 ,the belief is not altogether irrational4 ,just how great must be the advance of society and just what must be the character of the advance1 preliminary to its advantageously assuming the autonomous--republican--form of political organisation1 must be admitted to be an open question4 ,whether we1 or any people1 have yet reached the required stage of the advance is also questioned by many4 ,but the partial success which has attended the movement in this direction1 among the ,english-speaking people for example1 goes very far towards proving that the point in the development of human character at which the constitutional method may be advantageously adopted in the political field1 lies far this side the point at which human nature shall have become completely adapted for that method4 ,that is to say1 it does not seem necessary1 as regards the functions of society which we are accustomed to call political1 to be entirely ready for nationalisation before entering upon it4 ,how far the analogy of this will hold when applied to the industrial organisation of society is difficult to say1 but some significance the analogy must be admitted to possess4 ,certainly1 the fact that constitutional government--the nationalisation of political functions--seems to have been a move in the right direction is not to be taken as proof of the advisability of forthwith nationalising the industrial functions4 ,at the same time this fact does afford ground for the claim that a movement in this direction may prove itself in some degree advantageous1 even if it takes place at a stage in the development of human nature at which mankind is still far from being entirely fit for the duties which the new system shall impose4 ,the question1 therefore1 is not whether we have reached the perfection of character which would be necessary in order to a perfect working of the scheme of nationalisation of industry1 but whether we have reached such a degree of development as would make an imperfect working of the scheme possible4 ,,footnotes3 #a ,reprinted by permission from the ,annals of ,american ,academy of ,political and ,social ,science1 ,vol4 ,,ii1 #ahib4 #b ,introductory paper of ,a ,plea for ,liberty2 edited by ,thomas ,mackay4 ,,the ,,socialist ,,economics ,,of ,,karl ,,marx ,,and ,,his ,,followers#a ,i4 ,,the ,,theories ,,of ,,karl ,,marx ,the system of doctrines worked out by ,marx is characterised by a certain boldness of conception and a great logical consistency4 ,taken in detail1 the constituent elements of the system are neither novel nor iconoclastic1 nor does ,marx at any point claim to have discovered previously hidden facts or to have invented recondite formulations of facts already known2 but the system as a whole has an air of originality and initiative such as is rarely met with among the sciences that deal with any phase of human culture4 ,how much of this distinctive character the ,marxian system owes to the personal traits of its creator is not easy to say1 but what marks it off from all other systems of economic theory is not a matter of personal idiosyncrasy4 ,it differs characteristically from all systems of theory that had preceded it1 both in its premises and in its aims4 ,the 7hostile7 critics of ,marx have not sufficiently appreciated the radical character of his departure in both of these respects1 and have1 therefore1 commonly lost themselves in a tangled scrutiny of supposedly abstruse details2 whereas those writers who have been in sympathy with his teachings have too commonly been disciples bent on exegesis and on confirming their fellow-disciples in the faith4 ,except as a whole and except in the light of its postulates and aims1 the ,marxian system is not only not tenable1 but it is not even intelligible4 ,a discussion of a given isolated feature of the system 7such as the theory of value7 from the point of view of classical economics 7such as that offered by ,boehm-,bawerk7 is as futile as a discussion of solids in terms of two dimensions4 ,neither as regards his postulates and preconceptions nor as regards the aim of his inquiry is ,marx's position an altogether single-minded one4 ,in neither respect does his position come of a single line of antecedents4 ,he is of no single school of philosophy1 nor are his ideals those of any single group of speculators living before his time4 ,for this reason he takes his place as an originator of a school of thought as well as the leader of a movement looking to a practical end4 ,as to the motives which drive him and the aspirations which guide him1 in destructive criticism and in creative speculation alike1 he is primarily a theoretician busied with the analysis of economic phenomena and their organisation into a consistent and faithful system of scientific knowledge2 but he is1 at the same time1 consistently and tenaciously alert to the bearing which each step in the progress of his theoretical work has upon the propaganda4 ,his work has1 therefore1 an air of bias1 such as belongs to an advocate's argument2 but it is not1 therefore1 to be assumed1 nor indeed to be credited1 that his propagandist aims have in any substantial way deflected his inquiry or his speculations from the faithful pursuit of scientific truth4 ,his socialistic bias may color his polemics1 but his logical grasp is too neat and firm to admit of any bias1 other than that of his metaphysical preconceptions1 affecting his theoretical work4 ,there is no system of economic theory more logical than that of ,marx4 ,no member of the system1 no single article of doctrine1 is fairly to be understood1 criticised1 or defended except as an articulate member of the whole and in the light of the preconceptions and postulates which afford the point of departure and the controlling norm of the whole4 ,as regards these preconceptions and postulates1 ,marx draws on two distinct lines of antecedents1--the ,materialistic ,hegelianism and the ,english system of ,natural ,rights4 ,by his earlier training he is an adept in the ,hegelian method of speculation and inoculated with the metaphysics of development underlying the ,hegelian system4 ,by his later training he is an expert in the system of ,natural ,rights and ,natural ,liberty1 ingrained in his ideals of life and held inviolate throughout4 ,he does not take a critical attitude toward the underlying principles of ,natural ,rights4 ,even his ,hegelian preconceptions of development never carry him the length of questioning the fundamental principles of that system4 ,he is only more ruthlessly consistent in working out their content than his natural-rights antagonists in the liberal-classical school4 ,his polemics run against the specific tenets of the liberal school1 but they run wholly on the ground afforded by the premises of that school4 ,the ideals of his propaganda are natural-rights ideals1 but his theory of the working out of these ideals in the course of history rests on the ,hegelian metaphysics of development1 and his method of speculation and construction of theory is given by the ,hegelian dialectic4 99 99 99 99 99 ,what first and most vividly centered interest on ,marx and his speculations was his relation to the revolutionary socialistic movement2 and it is those features of his doctrines which bear immediately on the propaganda that still continue to hold the attention of the greater number of his critics4 ,chief among these doctrines1 in the apprehension of his critics1 is the theory of value1 with its corollaries3 7a7 the doctrines of the exploitation of labor by capital2 and 7b7 the laborer's claim to the whole product of his labor4 ,avowedly1 ,marx traces his doctrine of labor-value to ,ricardo1 and through him to the classical economists4#b ,the laborer's claim to the whole product of labor1 which is pretty constantly implied1 though not frequently avowed by ,marx1 he has in all probability taken from ,english writers of the early nineteenth century1#c more particularly from ,william ,thompson4 ,these doctrines are1 on their face1 nothing but a development of the conceptions of natural rights which then pervaded ,english speculation and afforded the metaphysical ground of the liberal movement4 ,the more formidable critics of the ,marxian socialism have made much of these doctrinal elements that further the propaganda1 and have1 by laying the stress on these1 diverted attention from other elements that are of more vital consequence to the system as a body of theory4 ,their exclusive interest in this side of scientific socialism has even led them to deny the ,marxian system all substantial originality1 and make it a 7doubtfully legitimate7 offshoot of ,english ,liberalism and natural rights4#d ,but this is one-sided criticism4 ,it may hold as against certain tenets of the so-called scientific socialism1 but it is not altogether to the point as regards the ,marxian system of theory4 ,even the ,marxian theory of value1 surplus value1 and exploitation1 is not simply the doctrine of ,william ,thompson1 transcribed and sophisticated in a forbidding terminology1 however great the superficial resemblance and however large ,marx's unacknowledged debt to ,thompson may be on these heads4 ,for many details and for much of his animus ,marx may be indebted to the ,utilitarians2 but1 after all1 his system of theory1 taken as a whole1 lies within the frontiers of neo-,hegelianism1 and even the details are worked out in accord with the preconceptions of that school of thought and have taken on the complexion that would properly belong to them on that ground4 ,it is1 therefore1 not by an itemised scrutiny of the details of doctrine and by tracing their pedigree in detail that a fair conception of ,marx and his contribution to economics may be reached1 but rather by following him from his own point of departure out into the ramifications of his theory1 and so overlooking the whole in the prospective which the lapse of time now affords us1 but which he could not himself attain1 since he was too near to his own work to see why he went about it as he did4 99 99 99 99 99 ,the comprehensive system of ,marxism is comprised within the scheme of the ,materialistic ,conception of ,history4#e ,this materialistic conception is essentially ,hegelian1#f although it belongs with the ,hegelian ,left1 and its immediate affiliation is with ,feuerbach1 not with the direct line of ,hegelian orthodoxy4 ,the chief point of interest here1 in identifying the materialistic conception with ,hegelianism1 is that this identification throws it immediately and uncompromisingly into contrast with ,darwinism and the post-,darwinian conceptions of evolution4 ,even if a plausible ,english pedigree should be worked out for this ,materialistic ,conception1 or ,scientific ,socialism1 as has been attempted1 it remains none the less true that the conception with which ,marx went to his work was a transmuted framework of ,hegelian dialectic4#g ,roughly1 ,hegelian materialism differs from ,hegelian orthodoxy by inverting the main logical sequence1 not by discarding the logic or resorting to new tests of truth or finality4 ,one might say1 though perhaps with excessive crudity1 that1 where ,hegel pronounces his dictum1 ,das ,denken ist das ,sein1 the materialists1 particularly ,marx and ,engels1 would say ,das ,sein macht das ,denken4 ,but in both cases some sort of a creative primacy is assigned to one or the other member of the complex1 and in neither case is the relation between the two members a causal relation4 ,in the materialistic conception man's spiritual life--what man thinks--is a reflex of what he is in the material respect1 very much in the same fashion as the orthodox ,hegelian would make the material world a reflex of the spirit4 ,in both1 the dominant norm of speculation and formulation of theory is the conception of movement1 development1 evolution1 progress2 and in both the movement is conceived necessarily to take place by the method of conflict or struggle4 ,the movement is of the nature of progress1--gradual advance toward a goal1 toward the realisation in explicit form of all that is implicit in the substantial activity involved in the movement4 ,the movement is1 further1 self-conditioned and self-acting3 it is an unfolding by inner necessity4 ,the struggle which constitutes the method of movement or evolution is1 in the ,hegelian system proper1 the struggle of the spirit for self-realisation by the process of the well-known three-phase dialectic4 ,in the materialistic conception of history this dialectical movement becomes the class struggle of the ,marxian system4 ,the class struggle is conceived to be material1 but the term material is in this connection used in a metaphorical sense4 ,it does not mean mechanical or physical1 or even physiological1 but economic4 ,it is material in the sense that it is a struggle between classes for the material means of life4 ,the materialistic conception of history proceeds on the principle that production and1 next to production1 the exchange of its products is the groundwork of every social order4#h ,the social order takes its form through the class struggle1 and the character of the class struggle at any given phase of the unfolding development of society is determined by the prevailing mode of economic production and exchange4 ,the dialectic of the movement of social progress1 therefore1 moves on the spiritual plane of human desire and passion1 not on the 7literally7 material plane of mechanical and physiological stress1 on which the developmental process of brute creation unfolds itself4 ,it is a sublimated materialism1 sublimated by the dominating presence of the conscious human spirit2 but it is conditioned by the material facts of the production of the means of life4#i ,the ultimately active forces involved in the process of unfolding social life are 7apparently7 the material agencies engaged in the mechanics of production2 but the dialectic of the process--the class struggle--runs its course only among and in terms of the secondary 7epigenetic7 forces of human consciousness engaged in the valuation of the material products of industry4 ,a consistently materialistic conception1 consistently adhering to a materialistic interpretation of the process of development as well as of the facts involved in the process1 could scarcely avoid making its putative dialectic struggle a mere unconscious and irrelevant conflict of the brute material forces4 ,this would have amounted to an interpretation in terms of opaque cause and effect1 without recourse to the concept of a conscious class struggle1 and it might have led to a concept of evolution similar to the unteleological ,darwinian concept of natural selection4 ,it could scarcely have led to the ,marxian notion of a conscious class struggle as the one necessary method of social progress1 though it might conceivably1 by the aid of empirical generalisation1 have led to a scheme of social process in which a class struggle would be included as an incidental though perhaps highly efficient factor4#aj ,it would have led1 as ,darwinism has1 to a concept of a process of cumulative change in social structure and function2 but this process1 being essentially a cumulative sequence of causation1 opaque and unteleological1 could not1 without an infusion of pious fancy by the speculator1 be asserted to involve progress as distinct from retrogression or to tend to a realisation or self-realisation of the human spirit or of anything else4 ,neither could it conceivably be asserted to lead up to a final term1 a goal to which all lines of the process should converge and beyond which the process would not go1 such as the assumed goal of the ,marxian process of class struggle1 which is conceived to cease in the classless economic structure of the socialistic final term4 ,in ,darwinism there is no such final or perfect term1 and no definitive equilibrium4 ,the disparity between ,marxism and ,darwinism1 as well as the disparity within the ,marxian system between the range of material facts that are conceived to be the fundamental forces of the process1 on the one hand1 and the range of spiritual facts within which the dialectic movement proceeds1--this disparity is shown in the character assigned the class struggle by ,marx and ,engels4 ,the struggle is asserted to be a conscious one1 and proceeds on a recognition by the competing classes of their mutually incompatible interests with regard to the material means of life4 ,the class struggle proceeds on motives of interest1 and a recognition of class interest can1 of course1 be reached only by reflection on the facts of the case4 ,there is1 therefore1 not even a direct causal connection between the material forces in the case and the choice of a given interested line of conduct4 ,the attitude of the interested party does not result from the material forces so immediately as to place it within the relation of direct cause and effect1 nor even with such a degree of intimacy as to admit of its being classed as a tropismatic1 or even instinctive1 response to the impact of the material force in question4 ,the sequence of reflection1 and the consequent choice of sides to a quarrel1 run entirely alongside of a range of material facts concerned4 ,a further characteristic of the doctrine of class struggle requires mention4 ,while the concept is not ,darwinian1 it is also not legitimately ,hegelian1 whether of the ,right or the ,left4 ,it is of a utilitarian origin and of ,english pedigree1 and it belongs to ,marx by virtue of his having borrowed its elements from the system of self-interest4 ,it is in fact a piece of hedonism1 and is related to ,bentham rather than to ,hegel4 ,it proceeds on the grounds of the hedonistic calculus1 which is equally foreign to the ,hegelian notion of an unfolding process and to the post-,darwinian notions of cumulative causation4 ,as regards the tenability of the doctrine1 apart from the question of its derivation and its compatibility with the neo-,hegelian postulates1 it is to be added that it is quite out of harmony with the later results of psychological inquiry1--just as is true of the use made of the hedonistic calculus by the classical 7,austrian7 economics4 99 99 99 99 99 ,within the domain covered by the materialistic conception1 that is to say within the domain of unfolding human culture1 which is the field of ,marxian speculation at large1 ,marx has more particularly devoted his efforts to an analysis and theoretical formulation of the present situation1--the current phase of the process1 the capitalistic system4 ,and1 since the prevailing mode of the production of goods determines the institutional1 intellectual1 and spiritual life of the epoch1 by determining the form and method of the current class struggle1 the discussion necessarily begins with the theory of capitalistic production1 or production as carried on under the capitalistic system4#aa ,under the capitalistic system1 that is to say under the system of modern business traffic1 production is a production of commodities1 merchantable goods1 with a view to the price to be obtained for them in the market4 ,the great fact on which all industry under this system hinges is the price of marketable goods4 ,therefore it is at this point that ,marx strikes into the system of capitalistic production1 and therefore the theory of value becomes the dominant feature of his economics and the point of departure for the whole analysis1 in all its voluminous ramifications4#ab ,it is scarcely worth while to question what serves as the beginning of wisdom in the current criticisms of ,marx2 namely1 that he offers no adequate proof of his labor-value theory4#ac ,it is even safe to go farther1 and say that he offers no proof of it4 ,the feint which occupies the opening paragraphs of the ,kapital and the corresponding passages of ,zur ,kritik1 etc41 is not to be taken seriously as an attempt to prove his position on this head by the ordinary recourse to argument4 ,it is rather a self-satisfied superior's playful mystification of those readers 7critics7 whose limited powers do not enable them to see that his proposition is self-evident4 ,taken on the ,hegelian 7neo-,hegelian7 ground1 and seen in the light of the general materialistic conception1 the proposition that value labor-cost is self-evident1 not to say tautological4 ,seen in any other light1 it has no particular force4 ,in the ,hegelian scheme of things the only substantial reality is the unfolding life of the spirit4 ,in the neo-,hegelian scheme1 as embodied in the materialistic conception1 this reality is translated into terms of the unfolding 7material7 life of man in society4#ad ,in so far as the goods are products of industry1 they are the output of this unfolding life of man1 a material residue embodying a given fraction of this forceful life-process4 ,in this life-process lies all substantial reality1 and all finally valid relations of quantivalence between the products of this life-process must run in its terms4 ,the life-process1 which1 when it takes the specific form of an expenditure of labor power1 goes to produce goods1 is a process of material forces1 the spiritual or mental features of the life-process and of labor being only its insubstantial reflex4 ,it is consequently only in the material changes wrought by this expenditure of labor power that the metaphysical substance of life--labor power--can be embodied2 but in these changes of material fact it cannot but be embodied1 since these are the end to which it is directed4 ,this balance between goods in respect of their magnitude as output of human labor holds good indefeasibly1 in point of the metaphysical reality of the life-process1 whatever superficial 7phenomenal7 variations from this norm may occur in men's dealings with the goods under the stress of the strategy of self-interest4 ,such is the value of the goods in reality2 they are equivalents of one another in the proportion in which they partake of this substantial quality1 although their true ratio of equivalence may never come to an adequate expression in the transactions involved in the distribution of the goods4 ,this real or true value of the goods is a fact of production1 and holds true under all systems and methods of production1 whereas the exchange value 7the phenomenal form of the real value7 is a fact of distribution1 and expresses the real value more or less adequately according as the scheme of distribution in force at the given time conforms more or less closely to the equities given by production4 ,if the output of industry were distributed to the productive agents strictly in proportion to their shares in production1 the exchange value of the goods would be presumed to conform to their real value4 ,but1 under the current1 capitalistic system1 distribution is not in any sensible degree based on the equities of production1 and the exchange value of goods under this system can therefore express their real value only with a very rough1 and in the main fortuitous1 approximation4 ,under a socialistic regime1 where the laborer would get the full product of his labor1 or where the whole system of ownership1 and consequently the system of distribution1 would lapse1 values would reach a true expression1 if any4 ,under the capitalistic system the determination of exchange value is a matter of competitive profit-making1 and exchange values therefore depart erratically and incontinently from the proportions that would legitimately be given them by the real values whose only expression they are4 ,marx's critics commonly identify the concept of value with that of exchange value1#ae and show that the theory of value does not square with the run of the facts of price under the existing system of distribution1 piously hoping thereby to have refuted the ,marxian doctrine2 whereas1 of course1 they have for the most part not touched it4 ,the misapprehension of the critics may be due to a 7possibly intentional7 oracular obscurity on the part of ,marx4 ,whether by his fault or their own1 their refutations have hitherto been quite inconclusive4 ,marx's severest stricture on the iniquities of the capitalistic system is that contained by implication in his development of the manner in which actual exchange value of goods systematically diverges from their real 7labor-cost7 value4 ,herein1 indeed1 lies not only the inherent iniquity of the existing system1 but also its fateful infirmity1 according to ,marx4 ,the theory of value1 then1 is contained in the main postulates of the ,marxian system rather than derived from them4 ,marx identifies this doctrine1 in its elements1 with the labor-value theory of ,ricardo1#af but the relationship between the two is that of a superficial coincidence in their main propositions rather than a substantial identity of theoretic contents4 ,in ,ricardo's theory the source and measure of value is sought in the effort and sacrifice undergone by the producer1 consistently1 on the whole1 with the ,benthamite-utilitarian position to which ,ricardo somewhat loosely and uncritically adhered4 ,the decisive fact about labor1 that quality by virtue of which it is assumed to be the final term in the theory of production1 is its irksomeness4 ,such is of course not the case in the labor-value theory of ,marx1 to whom the question of the irksomeness of labor is quite irrelevant1 so far as regards the relation between labor and production4 ,the substantial diversity or incompatibility of the two theories shows itself directly when each is employed by its creator in the further analysis of economic phenomena4 ,since with ,ricardo the crucial point is the degree of irksomeness of labor1 which serves as a measure both of the labor expended and the value produced1 and since in ,ricardo's utilitarian philosophy there is no more vital fact underlying this irksomeness1 therefore no surplus-value theory follows from the main position4 ,the productiveness of labor is not cumulative1 in its own working2 and the ,ricardian economics goes on to seek the cumulative productiveness of industry in the functioning of the products of labor when employed in further production and in the irksomeness of the capitalist's abstinence4 ,from which duly follows the general position of classical economics on the theory of production4 ,with ,marx1 on the other hand1 the labor power expended in production being itself a product and having a substantial value corresponding to its own labor-cost1 the value of the labor power expended and the value of the product created by its expenditure need not be the same4 ,they are not the same1 by supposition1 as they would be in any hedonistic interpretation of the facts4 ,hence a discrepancy arises between the value of the labor power expended in production and the value of the product created1 and this discrepancy is covered by the concept of surplus value4 ,under the capitalistic system1 wages being the value 7price7 of the labor power consumed in industry1 it follows that the surplus product of their labor cannot go to the laborers1 but becomes the profits of capital and the source of its accumulation and increase4 ,from the fact that wages are measured by the value of labor power rather than by the 7greater7 value of the product of labor1 it follows also that the laborers are unable to buy the whole product of their labor1 and so that the capitalists are unable to sell the whole product of industry continuously at its full value1 whence arise difficulties of the gravest nature in the capitalistic system1 in the way of overproduction and the like4 ,but the gravest outcome of this systematic discrepancy between the value of labor power and the value of its product is the accumulation of capital out of unpaid labor1 and the effect of this accumulation on the laboring population4 ,the law of accumulation1 with its corollary1 the doctrine of the industrial reserve army1 is the final term and the objective point of ,marx's theory of capitalist production1 just as the theory of labor value is his point of departure4#ag ,while the theory of value and surplus value are ,marx's explanation of the possibility of existence of the capitalistic system1 the law of the accumulation of capital is his exposition of the causes which must lead to the collapse of that system and of the manner in which the collapse will come4 ,and since ,marx is1 always and everywhere1 a socialist agitator as well as a theoretical economist1 it may be said without hesitation that the law of accumulation is the climax of his great work1 from whatever point of view it is looked at1 whether as an economic theorem or as a tenet of socialistic doctrine4 ,the law of capitalistic accumulation may be paraphrased as follows3#ah ,wages being the 7approximately exact7 value of the labor power bought in the wage contract2 the price of the product being the 7similarly approximate7 value of the goods produced2 and since the value of the product exceeds that of the labor power by a given amount 7surplus value71 which by force of the wage contract passes into the possession of the capitalist and is by him in part laid by as savings and added to the capital already in hand1 it follows 7a7 that1 other things equal1 the larger the surplus value1 the more rapid the increase of capital2 and1 also 7b71 that the greater the increase of capital relatively to the labor force employed1 the more productive the labor employed and the larger the surplus product available for accumulation4 ,the process of accumulation1 therefore1 is evidently a cumulative one2 and1 also evidently1 the increase added to capital is an unearned increment drawn from the unpaid surplus product of labor4 ,but with an appreciable increase of the aggregate capital a change takes place in its technological composition1 whereby the constant capital 7equipment and raw materials7 increases disproportionately as compared with the variable capital 7wages fund74 ,labor-saving devices are used to a greater extent than before1 and labor is saved4 ,a larger proportion of the expenses of production goes for the purchase of equipment and raw materials1 and a smaller proportion--though perhaps an absolutely increased amount--goes for the purchase of labor power4 ,less labor is needed relatively to the aggregate capital employed as well as relatively to the quantity of goods produced4 ,hence some portion of the increasing labor supply will not be wanted1 and an industrial reserve army1 a surplus labor population1 an army of unemployed1 comes into existence4 ,this reserve grows relatively larger as the accumulation of capital proceeds and as technological improvements consequently gain ground2 so that there result two divergent cumulative changes in the situation1--antagonistic1 but due to the same set of forces and1 therefore1 inseparable3 capital increases1 and the number of unemployed laborers 7relatively7 increases also4 ,this divergence between the amount of capital and output1 on the one hand1 and the amount received by laborers as wages1 on the other hand1 has an incidental consequence of some importance4 ,the purchasing power of the laborers1 represented by their wages1 being the largest part of the demand for consumable goods1 and being at the same time1 in the nature of the case1 progressively less adequate for the purchase of the product1 represented by the price of the goods produced1 it follows that the market is progressively more subject to glut from overproduction1 and hence to commercial crises and depression4 ,it has been argued1 as if it were a direct inference from ,marx's position1 that this maladjustment between production and markets1 due to the laborer not getting the full product of his labor1 leads directly to the breakdown of the capitalistic system1 and so by its own force will bring on the socialistic consummation4 ,such is not ,marx's position1 however1 although crises and depression play an important part in the course of development that is to lead up to socialism4 ,in ,marx's theory1 socialism is to come by way of a conscious class movement on the part of the propertyless laborers1 who will act advisedly on their own interest and force the revolutionary movement for their own gain4 ,but crises and depression will have a large share in bringing the laborers to a frame of mind suitable for such a move4 ,given a growing aggregate capital1 as indicated above1 and a concomitant reserve of unemployed laborers growing at a still higher rate1 as is involved in ,marx's position1 this body of unemployed labor can be1 and will be1 used by the capitalists to depress wages1 in order to increase profits4 ,logically1 it follows that1 the farther and faster capital accumulates1 the larger will be the reserve of unemployed1 both absolutely and relatively to the work to be done1 and the more severe will be the pressure acting to reduce wages and lower the standard of living1 and the deeper will be the degradation and misery of the working class and the more precipitately will their condition decline to a still lower depth4 ,every period of depression1 with its increased body of unemployed labor seeking work1 will act to hasten and accentuate the depression of wages1 until there is no warrant even for holding that wages will1 on an average1 be kept up to the subsistence minimum4#ai ,marx1 indeed1 is explicit to the effect that such will be the case1--that wages will decline below the subsistence minimum2 and he cites ,english conditions of child labor1 misery1 and degeneration to substantiate his views4#bj ,when this has gone far enough1 when capitalist production comes near enough to occupying the whole field of industry and has depressed the condition of its laborers sufficiently to make them an effective majority of the community with nothing to lose1 then1 having taken advice together1 they will move1 by legal or extra-legal means1 by absorbing the state or by subverting it1 to establish the social revolution4 ,socialism is to come through class antagonism due to the absence of all property interests from the laboring class1 coupled with a generally prevalent misery so profound as to involve some degree of physical degeneration4 ,this misery is to be brought about by the heightened productivity of labor due to an increased accumulation of capital and large improvements in the industrial arts2 which in turn is caused by the fact that under a system of private enterprise with hired labor the laborer does not get the whole product of his labor2 which1 again1 is only saying in other words that private ownership of capital goods enables the capitalist to appropriate and accumulate the surplus product of labor4 ,as to what the regime is to be which the social revolution will bring in1 ,marx has nothing particular to say1 beyond the general thesis that there will be no private ownership1 at least not of the means of production4 99 99 99 99 99 ,such are the outlines of the ,marxian system of socialism4 ,in all that has been said so far no recourse is had to the second and third volumes of ,kapital4 ,nor is it necessary to resort to these two volumes for the general theory of socialism4 ,they add nothing essential1 although many of the details of the processes concerned in the working out of the capitalist scheme are treated with greater fullness1 and the analysis is carried out with great consistency and with admirable results4 ,for economic theory at large these further two volumes are important enough1 but an inquiry into their contents in that connection is not called for here4 ,nothing much need be said as to the tenability of this theory4 ,in its essentials1 or at least in its characteristic elements1 it has for the most part been given up by latter-day socialist writers4 ,the number of those who hold to it without essential deviation is growing gradually smaller4 ,such is necessarily the case1 and for more than one reason4 ,the facts are not bearing it out on certain critical points1 such as the doctrine of increasing misery2 and the ,hegelian philosophical postulates1 without which the ,marxism of ,marx is groundless1 are for the most part forgotten by the dogmatists of to-day4 ,darwinism has largely supplanted ,hegelianism in their habits of thought4 ,the particular point at which the theory is most fragile1 considered simply as a theory of social growth1 is its implied doctrine of population1--implied in the doctrine of a growing reserve of unemployed workmen4 ,the doctrine of the reserve of unemployed labor involves as a postulate that population will increase anyway1 without reference to current or prospective means of life4 ,the empirical facts give at least a very persuasive apparent support to the view expressed by ,marx1 that misery is1 or has hitherto been1 no hindrance to the propagation of the race2 but they afford no conclusive evidence in support of a thesis to the effect that the number of laborers must increase independently of an increase of the means of life4 ,no one since ,darwin would have the hardihood to say that the increase of the human species is not conditioned by the means of living4 ,but all that does not really touch ,marx's position4 ,to ,marx1 the neo-,hegelian1 history1 including the economic development1 is the life-history of the human species2 and the main fact in this life-history1 particularly in the economic aspect of it1 is the growing volume of human life4 ,this1 in a manner of speaking1 is the base-line of the whole analysis of the process of economic life1 including the phase of capitalist production with the rest4 ,the growth of population is the first principle1 the most substantial1 most material factor in this process of economic life1 so long as it is a process of growth1 of unfolding1 of exfoliation1 and not a phase of decrepitude and decay4 ,had ,marx found that his analysis led him to a view adverse to this position1 he would logically have held that the capitalist system is the mortal agony of the race and the manner of its taking off4 ,such a conclusion is precluded by his ,hegelian point of departure1 according to which the goal of the life-history of the race in a large way controls the course of that life-history in all its phases1 including the phase of capitalism4 ,this goal or end1 which controls the process of human development1 is the complete realisation of life in all its fullness1 and the realisation is to be reached by a process analogous to the three-phase dialectic1 of thesis1 antithesis1 and synthesis1 into which scheme the capitalist system1 with its overflowing measure of misery and degradation1 fits as the last and most dreadful phase of antithesis4 ,marx1 as a ,hegelian1--that is to say1 a romantic philosopher1--is necessarily an optimist1 and the evil 7antithetical element7 in life is to him a logically necessary evil1 as the antithesis is a necessary phase of the dialectic2 and it is a means to the consummation1 as the antithesis is a means to the synthesis4 ,,footnotes3 #a ,the substance of lectures before students in ,harvard ,university in ,april1 #aijf4 ,reprinted by permission from ,the ,quarterly ,journal of ,economics1 ,vol4 ,,xx1 ,aug41 #aijf #b ,cf4 ,critique of ,political ,economy1 chap4 i1 ,notes on the ,history of the ,theory of ,commodities1 pp4 #ef-gc 7,english translation1 ,new ,york1 #aijd74 #c ,see ,menger1 ,right to the ,whole ,produce of ,labor1 sections iii-v and viii-ix1 and ,foxwell's admirable ,introduction to ,menger4 #d ,see ,menger and ,foxwell1 as above1 and ,schaeffle1 ,quintessence of ,socialism1 and ,the ,impossibility of ,social ,democracy4 #e ,see ,engels1 ,the ,development of ,socialism from ,utopia to ,science1 especially section ii and the opening paragraphs of section iii2 also the preface of ,zur ,kritik der politischen ,oekonomie4 #f ,see ,engels1 as above1 and also his ,feuerbach3 ,the ,roots of ,socialist ,philosophy 7translation1 ,chicago1 ,kerr ,co41 #aijc74 #g ,see e4g41 ,seligman1 ,the ,economic ,interpretation of ,history1 ,part ,i4 #h ,engels1 ,development of ,socialism1 beginning of section iii4 #i ,cf41 on this point1 ,max ,adler1 ,kausalitaet und ,teleologie im ,streite um die ,wissenschaft 7included in ,marx-,studien1 edited by ,adler and ,hilfendirg1 vol4 i71 particularly section xi2 cf4 also ,ludwig ,stein1 ,die soziale ,frage im ,lichte der ,philosophie1 whom ,adler criticises and claims to have refuted4 #aj ,cf4 ,adler1 as above4 #aa ,it may be noted1 by way of caution to readers familiar with the terms only as employed by the classical 7,english and ,austrian7 economists1 that in ,marxian usage capitalistic production means production of goods for the market by hired labor under the direction of employers who own 7or control7 the means of production and are engaged in industry for the sake of a profit4 ,capital is wealth 7primarily funds7 so employed4 ,in these and other related points of terminological usage ,marx is1 of course1 much more closely in touch with colloquial usage than those economists of the classical line who make capital signify the products of past industry used as aids to further production4 ,with ,marx ,capitalism implies certain relations of ownership1 no less than the productive use which is alone insisted on by so many later economists in defining the term4 #ab ,in the sense that the theory of value affords the point of departure and the fundamental concepts out of which the further theory of the workings of capitalism is constructed1--in this sense1 and in this sense only1 is the theory of value the central doctrine and the critical tenet of ,marxism4 ,it does not follow that the ,marxist doctrine of an irresistible drift towards a socialistic consummation hangs on the defensibility of the labor-value theory1 nor even that the general structure of the ,marxist economics would collapse if translated into other terms than those of this doctrine of labor-value4 ,cf4 ,boehm-,bawerk1 ,karl ,marx and the ,close of his ,system2 and1 on the other hand1 ,franz ,oppenheimer1 ,das ,grundgesetz der ,marx'schen ,gesellschaftslehre2 and ,rudolf ,goldscheid1 ,verelendungs- oder ,meliorationstheorie4 #ac ,cf41 e4g41 ,boehm-,bawerk1 as above2 ,georg ,adler1 ,grundlagen der ,karl ,marx'schen ,kritik4 #ad ,in much the same way1 and with an analogous effect on their theoretical work1 in the preconceptions of the classical 7including the ,austrian7 economists1 the balance of pleasure and pain is taken to be the ultimate reality in terms of which all economic theory must be stated and to terms of which all phenomena should finally be reduced in any definitive analysis of economic life4 ,it is not the present purpose to inquire whether the one of these uncritical assumptions is in any degree more meritorious or more serviceable than the other4 #ae ,boehm-,bawerk1 ,capital and ,interest1 ,book ,,vi1 chap1 iii2 also ,karl ,marx and the ,close of his ,system1 particularly chap4 iv2 ,adler1 ,grundlagen1 chaps4 ii4 and iii4 #af ,cf4 ,kapital1 vol4 i1 chap4 xv1 p4 #dhf 7#dth ed474 ,see also notes #i and #af to chap4 i of the same volume1 where ,marx discusses the labor-value doctrines of ,adam ,smith and an earlier 7anonymous7 ,english writer1 and compares them with his own4 ,similar comparisons with the early--classical--value theories recur from time to time in the later portions of ,kapital4 #ag ,oppenheimer 7,das ,grundgesetz der ,marx'schen ,gesellschaftslehre7 is right in making the theory of accumulation the central element in the doctrines of ,marxist socialism1 but it does not follow1 as ,oppenheimer contends1 that this doctrine is the keystone of ,marx's economic theories4 ,it follows logically from the theory of surplus value1 as indicated above1 and rests on that theory in such a way that it would fail 7in the form in which it is held by ,marx7 with the failure of the doctrine of surplus value4 #ah ,see ,kapital1 vol4 i1 chap4 xxiii4 #ai ,the subsistence minimum is here taken in the sense used by ,marx and the classical economists1 as meaning what is necessary to keep up the supply of labor at its current rate of efficiency4 #bj ,see ,kapital1 vol4 i1 chap1 xxiii1 sections #d and #e4 ,,the ,,socialist ,,economics ,,of ,,karl ,,marx ,,and ,,his ,,followers#a ,,ii4 ,,the ,,later ,,marxism ,marx worked out his system of theory in the main during the third quarter of the nineteenth century4 ,he came to the work from the standpoint given him by his early training in ,german thought1 such as the most advanced and aggressive ,german thinking was through the middle period of the century1 and he added to this ,german standpoint the further premises given him by an exceptionally close contact with and alert observation of the ,english situation4 ,the result is that he brings to his theoretical work a twofold line of premises1 or rather of preconceptions4 ,by early training he is a neo-,hegelian1 and from this ,german source he derives his peculiar formulation of the ,materialistic ,theory of ,history4 ,by later experience he acquired the point of view of that ,liberal-,utilitarian school which dominated ,english thought through the greater part of his active life4 ,to this experience he owes 7probably7 the somewhat pronounced individualistic preconceptions on which the doctrines of the ,full ,product of ,labor and the ,exploitation of ,labor are based4 ,these two not altogether compatible lines of doctrine found their way together into the tenets of scientific#b socialism1 and gives its characteristic ,marxian features to the body of socialist economics4 ,the socialism that inspires hopes and fears to-day is of the school of ,marx4 ,no one is seriously apprehensive of any other so-called socialistic movement1 and no one is seriously concerned to criticise or refute the doctrines set forth by any other school of socialists4 ,it may be that the socialists of the ,marxist observance are not always or at all points in consonance with the best accepted body of ,marxist doctrine4 ,those who make up the body of the movement may not always be familiar with the details--perhaps not even with the general features--of the ,marxian scheme of economics2 but with such consistency as may fairly be looked for in any popular movement1 the socialists of all countries gravitate toward the theoretical position of the avowed ,marxism4 ,in proportion as the movement in any given community grows in mass1 maturity1 and conscious purpose1 it unavoidably takes on a more consistently ,marxian complexion4 ,it is not the ,marxism of ,marx1 but the materialism of ,darwin1 which the socialists of to-day have adopted4 ,the ,marxist socialists of ,germany have the lead1 and the socialists of other countries largely take their cue from the ,german leaders4 ,the authentic spokesmen of the current international socialism are avowed ,marxists4 ,exceptions to that rule are very few4 ,on the whole1 the substantial truth of the ,marxist doctrines is not seriously questioned within the lines of the socialists1 though there may be some appreciable divergence as to what the true ,marxist position is on one point and another4 ,much and eager controversy circles about questions of that class4 ,the keepers of the socialist doctrines are passably agreed as to the main position and the general principles4 ,indeed1 so secure is this current agreement on the general principles that a very lively controversy on matters of detail may go on without risk of disturbing the general position4 ,this general position is avowedly ,marxism4 ,but it is not precisely the position held by ,karl ,marx4 ,it has been modernised1 adapted1 filled out1 in response to exigencies of a later date than those which conditioned the original formulation of the theories4 ,it is1 of course1 not admitted by the followers of ,marx that any substantial change or departure from the original position has taken place4 ,they are somewhat jealously orthodox1 and are impatient of any suggested improvements on the ,marxist position1 as witness the heat engendered in the revisionist controversy of a few years back4 ,but the jealous protests of the followers of ,marx do not alter the fact that ,marxism has undergone some substantial change since it left the hands of its creator4 ,now and then a more or less consistent disciple of ,marx will avow a need of adapting the received doctrines to circumstances that have arisen later than the formulation of the doctrines2 and amendments1 qualifications1 and extensions1 with this need in view1 have been offered from time to time4 ,but more pervasive though unavowed changes have come in the teachings of ,marxism by way of interpretation and an unintended shifting of the point of view4 ,virtually1 the whole of the younger generation of socialist writers shows such a growth4 ,a citation of personal instances would be quite futile4 99 99 99 99 99 ,it is the testimony of his friends as well as of his writings that the theoretical position of ,marx1 both as regards his standpoint and as regards his main tenets1 fell into a definitive shape relatively early1 and that his later work was substantially a working out of what was contained in the position taken at the outset of his career4#c ,by the latter half of the forties1 if not by the middle of the forties1 ,marx and ,engels had found the outlook on human life which came to serve as the point of departure and the guide for their subsequent development of theory4 ,such is the view of the matter expressed by ,engels during the later years of his life4#d ,the position taken by the two great leaders1 and held by them substantially intact1 was a variant of neo-,hegelianism1 as has been indicated in an earlier section of this paper4#e ,but neo-,hegelianism was short-lived1 particularly considered as a standpoint for scientific theory4 ,the whole romantic school of thought1 comprising neo-,hegelianism with the rest1 began to go to pieces very soon after it had reached an approach to maturity1 and its disintegration proceeded with exceptional speed1 so that the close of the third quarter of the century saw the virtual end of it as a vital factor in the development of human knowledge4 ,in the realm of theory1 primarily of course in the material sciences1 the new era belongs not to romantic philosophy1 but to the evolutionists of the school of ,darwin4 ,some few great figures1 of course1 stood over from the earlier days1 but it turns out in the sequel that they have served mainly to mark the rate and degree in which the method of scientific knowledge has left them behind4 ,such were ,virchow and ,max ,mueller1 and such1 in economic science1 were the great figures of the ,historical ,school1 and such1 in a degree1 were also ,marx and ,engels4 ,the later generation of socialists1 the spokesmen and adherents of ,marxism during the closing quarter of the century1 belong to the new generation1 and see the phenomena of human life under the new light4 ,the materialistic conception in their handling of it takes on the color of the time in which they lived1 even while they retain the phraseology of the generation that went before them4#f ,the difference between the romantic school of thought1 to which ,marx belonged1 and the school of the evolutionists into whose hands the system has fallen1--or perhaps1 better1 is falling1--is great and pervading1 though it may not show a staring superficial difference at any one point1--at least not yet4 ,the discrepancy between the two is likely to appear more palpable and more sweeping when the new method of knowledge has been applied with fuller realisation of its reach and its requirement in that domain of knowledge that once belonged to the neo-,hegelian ,marxism4 ,the supplanting of the one by the other has been taking place slowly1 gently1 in large measure unavowedly1 by a sort of precession of the point of view from which men size up the facts and reduce them to intelligible order4 ,the neo-,hegelian1 romantic1 ,marxian standpoint was wholly personal1 whereas the evolutionistic--it may be called ,darwinian--standpoint is wholly impersonal4 ,the continuity sought in the facts of observation and imputed to them by the earlier school of theory was a continuity of a personal kind1--a continuity of reason and consequently of logic4 ,the facts were construed to take such a course as could be established by an appeal to reason between intelligent and fair-minded men4 ,they were supposed to fall into a sequence of logical consistency4 ,the romantic 7,marxian7 sequence of theory is essentially an intellectual sequence1 and it is therefore of a teleological character4 ,the logical trend of it can be argued out4 ,that is to say1 it tends to a goal4 ,on the other hand1 in the ,darwinian scheme of thought1 the continuity sought in and imputed to the facts is a continuity of cause and effect4 ,it is a scheme of blindly cumulative causation1 in which there is no trend1 no final term1 no consummation4 ,the sequence is controlled by nothing but the vis a tergo of brute causation1 and is essentially mechanical4 ,the neo-,hegelian 7,marxian7 scheme of development is drawn in the image of the struggling ambitious human spirit3 that of ,darwinian evolution is of the nature of a mechanical process4#g ,what difference1 now1 does it make if the materialistic conception is translated from the romantic concepts of ,marx into the mechanical concepts of ,darwinism8 ,it distorts every feature of the system in some degree1 and throws a shadow of doubt on every conclusion that once seemed secure4#h ,the first principle of the ,marxian scheme is the concept covered by the term ,materialistic1 to the effect that the exigencies of the material means of life control the conduct of men in society throughout1 and thereby indefeasibly guide the growth of institutions and shape every shifting trait of human culture4 ,this control of the life of society by the material exigencies takes effect through men's taking thought of material 7economic7 advantages and disadvantages1 and choosing that which will yield the fuller material measure of life4 ,when the materialistic conception passes under the ,darwinian norm1 of cumulative causation1 it happens1 first1 that this initial principle itself is reduced to the rank of a habit of thought induced in the speculator who depends on its light1 by the circumstances of his life1 in the way of hereditary bent1 occupation1 tradition1 education1 climate1 food supply1 and the like4 ,but under the ,darwinian norm the question of whether and how far material exigencies control human conduct and cultural growth becomes a question of the share which these material exigencies have in shaping men's habits of thought1 i4e41 their ideals and aspirations1 their sense of the true1 the beautiful1 and the good4 ,whether and how far these traits of human culture and the institutional structure built out of them are the outgrowth of material 7economic7 exigencies becomes a question of what kind and degree of efficiency belongs to the economic exigencies among the complex of circumstances that conduce to the formation of habits4 ,it is no longer a question of whether material exigencies rationally should guide men's conduct1 but whether1 as a matter of brute causation1 they do induce such habits of thought in men as the economic interpretation presumes1 and whether in the last analysis economic exigencies alone are1 directly or indirectly1 effective in shaping human habits of thought4 ,tentatively and by way of approximation some such formulation as that outlined in the last paragraph is apparently what ,bernstein and others of the revisionists have been seeking in certain of their speculations1#i and1 sitting austere and sufficient on a dry shoal up stream1 ,kautsky has uncomprehendingly been addressing them advice and admonition which they do not understand4#aj ,the more intelligent and enterprising among the idealist wing--where intellectual enterprise is not a particularly obvious trait--have been struggling to speak for the view that the forces of the environment may effectually reach men's spiritual life through other avenues than the calculus of the main chance1 and so may give rise to habitual ideals and aspirations independent of1 and possibly alien to1 that calculus4#aa ,so1 again1 as to the doctrine of the class struggle4 ,in the ,marxian scheme of dialectical evolution the development which is in this way held to be controlled by the material exigencies must1 it is held1 proceed by the method of the class struggle4 ,this class struggle is held to be inevitable1 and is held inevitably to lead at each revolutionary epoch to a more efficient adjustment of human industry to human uses1 because1 when a large proportion of the community find themselves ill served by the current economic arrangements1 they take thought1 band together1 and enforce a readjustment more equitable and more advantageous to them4 ,so long as differences of economic advantage prevail1 there will be a divergence of interests between those more advantageously placed and those less advantageously placed4 ,the members of society will take sides as this line of cleavage indicated by their several economic interests may decide4 ,class solidarity will arise on the basis of this class interest1 and a struggle between the two classes so marked off against each other will set in1--a struggle which1 in the logic of the situation1 can end only when the previously less fortunate class gains the ascendancy1--and so must the class struggle proceed until it shall have put an end to that diversity of economic interest on which the class struggle rests4 ,all this is logically consistent and convincing1 but it proceeds on the ground of reasoned conduct1 calculus of advantage1 not on the ground of cause and effect4 ,the class struggle so conceived should always and everywhere tend unremittingly toward the socialistic consummation1 and should reach that consummation in the end1 whatever obstructions or diversions might retard the sequence of development along the way4 ,such is the notion of it embodied in the system of ,marx4 ,such1 however1 is not the showing of history4 ,not all nations or civilisations have advanced unremittingly toward a socialistic consummation1 in which all divergence of economic interest has lapsed or would lapse4 ,those nations and civilisations which have decayed and failed1 as nearly all known nations and civilisations have done1 illustrate the point that1 however reasonable and logical the advance by means of the class struggle may be1 it is by no means inevitable4 ,under the ,darwinian norm it must be held that men's reasoning is largely controlled by other than logical1 intellectual forces2 that the conclusion reached by public or class opinion is as much1 or more1 a matter of sentiment than of logical inference2 and that the sentiment which animates men1 singly or collectively1 is as much1 or more1 an outcome of habit and native propensity as of calculated material interest4 ,there is1 for instance1 no warrant in the ,darwinian scheme of things for asserting a priori that the class interest of the working class will bring them to take a stand against the propertied class4 ,it may as well be that their training in subservience to their employers will bring them again to realise the equity and excellence of the established system of subjection and unequal distribution of wealth4 ,again1 no one1 for instance1 can tell to-day what will be the outcome of the present situation in ,europe and ,america4 ,it may be that the working classes will go forward along the line of the socialistic ideals and enforce a new deal1 in which there shall be no economic class discrepancies1 no international animosity1 no dynastic politics4 ,but then it may also1 so far as can be foreseen1 equally well happen that the working class1 with the rest of the community in ,germany1 ,england1 or ,america1 will be led by the habit of loyalty and by their sportsmanlike propensities to lend themselves enthusiastically to the game of dynastic politics1 which alone their sportsmanlike rulers consider worth while4 ,it is quite impossible on ,darwinian ground to foretell whether the proletariat will go on to establish the socialistic revolution or turn aside again1 and sink their force in the broad sands of patriotism4 ,it is a question of habit and native propensity and of the range of stimuli to which the proletariat are exposed and are to be exposed1 and what may be the outcome is not a matter of logical consistency1 but of response to stimulus4 ,so1 then1 since ,darwinian concepts have begun to dominate the thinking of the ,marxists1 doubts have now and again come to assert themselves both as to the inevitableness of the irrepressible class struggle and to its sole efficacy4 ,anything like a violent class struggle1 a seizure of power by force1 is more and more consistently deprecated4 ,for resort to force1 it is felt1 brings in its train coercive control with all its apparatus of prerogative1 mastery1 and subservience4#ab ,so1 again1 the ,marxian doctrine of progressive proletarian distress1 the so-called ,verelendungstheorie1 which stands pat on the romantic ground of the original ,marxism1 has fallen into abeyance1 if not into disrepute1 since the ,darwinian conceptions have come to prevail4 ,as a matter of reasoned procedure1 on the ground of enlightened material interest alone1 it should be a tenable position that increasing misery1 increasing in degree and in volume1 should be the outcome of the present system of ownership1 and should at the same time result in a well-advised and well-consolidated working-class movement that would replace the present system by a scheme more advantageous to the majority4 ,but so soon as the question is approached on the ,darwinian ground of cause and effect1 and is analysed in terms of habit and of response to stimulus1 the doctrine that progressive misery must effect a socialistic revolution becomes dubious1 and very shortly untenable4 ,experience1 the experience of history1 teaches that abject misery carries with it deterioration and abject subjection4 ,the theory of progressive distress fits convincingly into the scheme of the ,hegelian three-phase dialectic4 ,it stands for the antithesis that is to be merged in the ulterior synthesis2 but it has no particular force on the ground of an argument from cause to effect4#ac ,it fares not much better with the ,marxian theory of value and its corollaries and dependent doctrines when ,darwinian concepts are brought in to replace the romantic elements out of which it is built up4 ,its foundation is the metaphysical equality between the volume of human life force productively spent in the making of goods and the magnitude of these goods considered as human products4 ,the question of such an equality has no meaning in terms of cause and effect1 nor does it bear in any intelligible way upon the ,darwinian question of the fitness of any given system of production or distribution4 ,in any evolutionary system of economics the central question touching the efficiency and fitness of any given system of production is necessarily the question as to the excess of serviceability in the product over the cost of production4#ad ,it is in such an excess of serviceability over cost that the chance of survival lies for any system of production1 in so far as the question of survival is a question of production1 and this matter comes into the speculation of ,marx only indirectly or incidentally1 and leads to nothing in his argument4 ,and1 as bearing on the ,marxian doctrines of exploitation1 there is on ,darwinian ground no place for a natural right to the full product of labor4 ,what can be argued in that connection on the ground of cause and effect simply is the question as to what scheme of distribution will help or hinder the survival of a given people or a given civilisation4#ae ,but these questions of abstruse theory need not be pursued1 since they count1 after all1 but relatively little among the working tenets of the movement4 ,little need be done by the ,marxists to work out or to adapt the ,marxian system of value theory1 since it has but slight bearing on the main question1--the question of the trend towards socialism and of its chances of success4 ,it is conceivable that a competent theory of value dealing with the excess of serviceability over cost1 on the one hand1 and with the discrepancy between price and serviceability1 on the other hand1 would have a substantial bearing upon the advisability of the present as against the socialistic regime1 and would go far to clear up the notions of both socialists and conservatives as to the nature of the points in dispute between them4 ,but the socialists have not moved in the direction of this problem1 and they have the excuse that their critics have suggested neither a question nor a solution to a question along any such line4 ,none of the value theorists have so far offered anything that could be called good1 bad1 or indifferent in this connection1 and the socialists are as innocent as the rest4 ,economics1 indeed1 has not at this point yet begun to take on a modern tone1 unless the current neglect of value theory by the socialists be taken as a negative symptom of advance1 indicating that they at least recognise the futility of the received problems and solutions1 even if they are not ready to make a positive move4 99 99 99 99 99 ,the shifting of the current point of view1 from romantic philosophy to matter-of-fact1 has affected the attitude of the ,marxists towards the several articles of theory more than it has induced an avowed alteration or a substitution of new elements of theory for the old4 ,it is always possible to make one's peace with a new standpoint by new interpretations and a shrewd use of figures of speech1 so far as the theoretical formulation is concerned1 and something of this kind has taken place in the case of ,marxism2 but when1 as in the case of ,marxism1 the formulations of theory are drafted into practical use1 substantial changes of appreciable magnitude are apt to show themselves in a changed attitude towards practical questions4 ,the ,marxists have had to face certain practical problems1 especially problems of party tactics1 and the substantial changes wrought in their theoretical outlook have come into evidence here4 ,the real gravity of the changes that have overtaken ,marxism would scarcely be seen by a scrutiny of the formal professions of the ,marxists alone4 ,but the exigencies of a changing situation have provoked readjustments of the received doctrinal position1 and the shifting of the philosophical standpoint and postulates has come into evidence as marking the limits of change in their professions which the socialistic doctrinaires could allow themselves4 ,the changes comprised in the cultural movement that lies between the middle and the close of the nineteenth century are great and grave1 at least as seen from so near a standpoint as the present day1 and it is safe to say that1 in whatever historical perspective they may be seen1 they must1 in some respects1 always assert themselves as unprecedented4 ,so far as concerns the present topic1 there are three main lines of change that have converged upon the ,marxist system of doctrines1 and have led to its latter-day modification and growth4 ,one of these--the change in the postulates of knowledge1 in the metaphysical foundations of theory--has been spoken of already1 and its bearing on the growth of socialist theory has been indicated in certain of its general features4 ,but1 among the circumstances that have conditioned the growth of the system1 the most obvious is the fact that since ,marx's time his doctrines have come to serve as the platform of a political movement1 and so have been exposed to the stress of practical party politics dealing with a new and changing situation4 ,at the same time the industrial 7economic7 situation to which the doctrines are held to apply--of which they are the theoretical formulation--has also in important respects changed its character from what it was when ,marx first formulated his views4 ,these several lines of cultural change affecting the growth of ,marxism cannot be held apart in so distinct a manner as to appraise the work of each separately4 ,they belong inextricably together1 as do the effects wrought by them in the system4 ,in practical politics the ,social ,democrats have had to make up their account with the labor movement1 the agricultural population1 and the imperialistic policy4 ,on each of these heads the preconceived programme of ,marxism has come in conflict with the run of events1 and on each head it has been necessary to deal shrewdly and adapt the principles to the facts of the time4 ,the adaptation to circumstances has not been altogether of the nature of compromise1 although here and there the spirit of compromise and conciliation is visible enough4 ,a conciliatory party policy may1 of course1 impose an adaptation of form and color upon the party principles1 without thereby seriously affecting the substance of the principles themselves2 but the need of a conciliatory policy may1 even more1 provoke a substantial change of attitude toward practical questions in a case where a shifting of the theoretical point of view makes room for a substantial change4 ,apart from all merely tactical expedients1 the experience of the past thirty years has led the ,german ,marxists to see the facts of the labor situation in a new light1 and has induced them to attach an altered meaning to the accepted formulations of doctrine4 ,the facts have not freely lent themselves to the scheme of the ,marxist system1 but the scheme has taken on such a new meaning as would be consistent with the facts4 ,the untroubled ,marxian economics1 such as it finds expression in the ,kapital and earlier documents of the theory1 has no place and no use for a trade-union movement1 or1 indeed1 for any similar non-political organisation among the working class1 and the attitude of the ,social-,democratic leaders of opinion in the early days of the party's history was accordingly hostile to any such movement1#af--;as much so1 indeed1 as the loyal adherents of the classical political economy4 ,that was before the modern industrial era had got under way in ,germany1 and therefore before the ,german socialistic doctrinaires had learned by experience what the development of industry was to bring with it4 ,it was also before the modern scientific postulates had begun to disintegrate the neo-,hegelian preconceptions as to the logical sequence in the development of institutions4 ,in ,germany1 as elsewhere1 the growth of the capitalistic system presently brought on trade-unionism2 that is to say1 it brought on an organised attempt on the part of the workmen to deal with the questions of capitalistic production and distribution by business methods1 to settle the problems of working-class employment and livelihood by a system of non-political1 businesslike bargains4 ,but the great point of all socialist aspiration and endeavor is the abolition of all business and all bargaining1 and1 accordingly1 the ,social ,democrats were heartily out of sympathy with the unions and their endeavors to make business terms with the capitalist system1 and make life tolerable for the workmen under that system4 ,but the union movement grew to be so serious a feature of the situation that the socialists found themselves obliged to deal with unions1 since they could not deal with the workmen over the heads of the unions4 ,the ,social ,democrats1 and therefore the ,marxian theorists1 had to deal with a situation which included the union movement1 and this movement was bent on improving the workman's conditions of life from day to day4 ,therefore it was necessary to figure out how the union movement could and must further the socialistic advance2 to work into the body of doctrines a theory of how the unions belong in the course of economic development that leads up to socialism1 and to reconcile the unionist efforts at improvement with the ends of ,social ,democracy4 ,not only were the unions seeking improvement by unsocialistic methods1 but the level of comfort among the working classes was in some respects advancing1 apparently as a result of these union efforts4 ,both the huckstering animus of the workmen in their unionist policy and the possible amelioration of working-class conditions had to be incorporated into the socialistic platform and into the ,marxist theory of economic development4 ,the ,marxist theory of progressive misery and degradation has1 accordingly1 fallen into the background1 and a large proportion of the ,marxists have already come to see the whole question of working-class deterioration in some such apologetic light as is shed upon it by ,goldscheid in his ,verelendungs-oder ,meliorationstheorie4 ,it is now not an unusual thing for orthodox ,marxists to hold that the improvement of the conditions of the working classes is a necessary condition to the advance of the socialistic cause1 and that the unionist efforts at amelioration must be furthered as a means toward the socialistic consummation4 ,it is recognised that the socialistic revolution must be carried through not by an anaemic working class under the pressure of abject privation1 but by a body of full-blooded workingmen gradually gaining strength from improved conditions of life4 ,instead of the revolution being worked out by the leverage of desperate misery1 every improvement in working-class conditions is to be counted as a gain for the revolutionary forces4 ,this is a good ,darwinism1 but it does not belong in the neo-,hegelian ,marxism4 ,perhaps the sorest experience of the ,marxist doctrinaires has been with the agricultural population4 ,notoriously1 the people of the open country have not taken kindly to socialism4 ,no propaganda and no changes in the economic situation have won the sympathy of the peasant farmers for the socialistic revolution4 ,notoriously1 too1 the large-scale industry has not invaded the agricultural field1 or expropriated the small proprietors1 in anything like the degree expected by the ,marxist doctrinaires of a generation ago4 ,it is contained in the theoretical system of ,marx that1 as modern industrial and business methods gain ground1 the small proprietor farmers will be reduced to the ranks of the wage-proletariat1 and that1 as this process of conversion goes on1 in the course of time the class interest of the agricultural population will throw them into the movement side by side with the other wage-workmen4#ag ,but at this point the facts have hitherto not come out in consonance with the ,marxist theory4 ,and the efforts of the ,social ,democrats to convert the peasant population to socialism have been practically unrewarded4 ,so it has come about that the political leaders and the keepers of the doctrines have1 tardily and reluctantly1 come to see the facts of the agrarian situation in a new light1 and to give a new phrasing to the articles of ,marxian theory that touch on the fortunes of the peasant farmer4 ,it is no longer held that either the small properties of the peasant farmer must be absorbed into larger properties1 and then taken over by the ,state1 or that they must be taken over by the ,state directly1 when the socialistic revolution is established4 ,on the contrary1 it is now coming to be held that the peasant proprietors will not be disturbed in their holdings by the great change4 ,the great change is to deal with capitalistic enterprise1 and the peasant farming is not properly capitalistic4 ,it is a system of production in which the producer normally gets only the product of his own labor4 ,indeed1 under the current regime of markets and credit relations1 the small agricultural producer1 it is held1 gets less than the product of his own labor1 since the capitalistic business enterprises with which he has to deal are always able to take advantage of him4 ,so it has become part of the overt doctrine of socialists that as regards the peasant farmer it will be the consistent aim of the movement to secure him in the untroubled enjoyment of his holding1 and free him from the vexatious exactions of his creditors and the ruinous business traffic in which he is now perforce involved4 ,according to the revised code1 made possible by recourse to ,darwinian concepts of evolution instead of the ,hegelian three-phase dialectic1 therefore1 and contrary to the earlier prognostications of ,marx1 it is no longer held that agricultural industry must go through the capitalistic mill2 and it is hoped that under the revised code it may be possible to enlist the interest and sympathy of this obstinately conservative element for the revolutionary cause4 ,the change in the official socialist position on the agricultural question has come about only lately1 and is scarcely yet complete1 and there is no knowing what degree of success it may meet with either as a matter of party tactics or as a feature of the socialistic theory of economic development4 ,all discussions of party policy1 and of theory so far as bears on policy1 take up the question2 and nearly all authoritative spokesmen of socialism have modified their views in the course of time on this point4 ,the socialism of ,karl ,marx is characteristically inclined to peaceable measures and disinclined to a coercive government and belligerent politics4 ,it is1 or at least it was1 strongly averse to international jealousy and patriotic animosity1 and has taken a stand against armaments1 wars1 and dynastic aggrandisement4 ,at the time of the ,french-,prussian war the official organisation of ,marxism1 the ,international1 went so far in its advocacy of peace as to urge the soldiery on both sides to refuse to fight4 ,after the campaign had warmed the blood of the two nations1 this advocacy of peace made the ,international odious in the eyes of both ,french and ,germans4 ,war begets patriotism1 and the socialists fell under the reproach of not being sufficiently patriotic4 ,after the conclusion of the war the ,socialistic ,workingmen's ,party of ,germany sinned against the ,german patriotic sentiment in a similar way and with similarly grave results4 ,since the foundation of the empire and of the ,social-,democratic party1 the socialists and their doctrines have passed through a further experience of a similar kind1 but on a larger scale and more protracted4 ,the government has gradually strengthened its autocratic position at home1 increased its warlike equipment1 and enlarged its pretensions in international politics1 until what would have seemed absurdly impossible a generation ago is now submitted to by the ,german people1 not only with a good grace1 but with enthusiasm4 ,during all this time that part of the population that has adhered to the socialist ideals has also grown gradually more patriotic and more loyal1 and the leaders and keepers of socialist opinion have shared in the growth of chauvinism with the rest of the ,german people4 ,but at no time have the socialists been able to keep abreast of the general upward movement in this respect4 ,they have not attained the pitch of reckless loyalty that animates the conservative ,german patriots1 although it is probably safe to say that the ,social ,democrats of to-day are as good and headlong patriots as the conservative ,germans were a generation ago4 ,during all this period of the new era of ,german political life the socialists have been freely accused of disloyalty to the national ambition1 of placing their international aspirations above the ambition of imperial aggrandisement4 ,the socialist spokesmen have been continually on the defensive4 ,they set out with a round opposition to any considerable military establishment1 and have more and more apologetically continued to oppose any undue extension of the warlike establishments and the warlike policy4 ,but with the passage of time and the habituation to warlike politics and military discipline1 the infection of jingoism has gradually permeated the body of ,social ,democrats1 until they have now reached such a pitch of enthusiastic loyalty as they would not patiently hear a truthful characterisation of4 ,the spokesmen now are concerned to show that1 while they still stand for international socialism1 consonant with their ancient position1 they stand for national aggrandisement first and for international comity second4 ,the relative importance of the national and the international ideals in ,german socialist professions has been reversed since the seventies4#ah ,the leaders are busy with interpretation of their earlier formulations4 ,they have come to excite themselves over nebulous distinctions between patriotism and jingoism4 ,the ,social ,democrats have come to be ,german patriots first and socialists second1 which comes to saying that they are a political party working for the maintenance of the existing order1 with modifications4 ,they are no longer a party of revolution1 but of reform1 though the measure of reform which they demand greatly exceeds the ,hohenzollern limit of tolerance4 ,they are now as much1 if not more1 in touch with the ideas of ,english liberalism than with those of revolutionary ,marxism4 ,the material and tactical exigencies that have grown out of changes in the industrial system and in the political situation1 then1 have brought on far-reaching changes of adaptation in the position of the socialists4 ,the change may not be extremely large at any one point1 so far as regards the specific articles of the programme1 but1 taken as a whole1 the resulting modification of the socialistic position is a very substantial one4 ,the process of change is1 of course1 not yet completed1--whether or not it ever will be1--but it is already evident that what is taking place is not so much a change in amount or degree of conviction on certain given points as a change in kind1--a change in the current socialistic habit of mind4 ,the factional discrepancies of theory that have occupied the socialists of ,germany for some years past are evidence that the conclusion1 even a provisional conclusion1 of the shifting of their standpoint has not been reached4 ,it is even hazardous to guess which way the drift is setting4 ,it is only evident that the past standpoint1 the standpoint of neo-,hegelian ,marxism1 cannot be regained1--it is a forgotten standpoint4 ,for the immediate present the drift of sentiment1 at least among the educated1 seems to set toward a position resembling that of the ,national ,socials and the ,rev4 ,mr4 ,naumann2 that is to say1 imperialistic liberalism4 ,should the conditions1 political1 social1 and economic1 which to-day are chiefly effective in shaping the habits of thought among the ,german people1 continue substantially unchanged and continue to be the chief determining causes1 it need surprise no one to find ,german socialism gradually changing into a somewhat characterless imperialistic democracy4 ,the imperial policy seems in a fair way to get the better of revolutionary socialism1 not by repressing it1 but by force of the discipline in imperialistic ways of thinking to which it subjects all classes of the population4 ,how far a similar process of sterilisation is under way1 or is likely to overtake the socialist movement in other countries1 is an obscure question to which the ,german object-lesson affords no certain answer4 ,,footnotes3 #a ,reprinted by permission from ,the ,quarterly ,journal of ,economics1 ,vol4 ,,xxi1 ,feb41 #aijg4 #b ,scientific is here used in the half-technical sense which by usage it often has in this connection1 designating the theories of ,marx and his followers4 #c ,there is1 indeed1 a remarkable consistency1 amounting substantially to an invariability of position1 in ,marx's writing1 from the ,communist ,manifesto to the last volume of the ,capital4 ,the only portion of the great ,manifesto which became antiquated1 in the apprehension of its creators1 is the polemics addressed to the ,philosophical socialists of the forties and the illustrative material taken from contemporary politics4 ,the main position and the more important articles of theory--the materialistic conception1 the doctrine of class struggle1 the theory of value and surplus value1 of increasing distress1 of the reserve army1 of the capitalistic collapse--are to be found in the ,critique of ,political ,economy 7#ahei71 and much of them in the ,misery of ,philosophy 7#ahdg71 together with the masterful method of analysis and construction which he employed throughout his theoretical work4 #d ,cf4 ,engels1 ,feuerbach 7,english translation1 ,chicago1 #aijc71 especially ,part ,,iv1 and various papers published in the ,neue ,zeit2 also the preface to the ,communist ,manifesto written in #ahhh2 also the preface to volume ii4 of ,capital1 where ,engels argues the question of ,marx's priority in connection with the leading theoretical principles of his system4 #e ,cf4 ,feuerbach1 as above2 ,the ,development of ,socialism from ,utopia to ,science1 especially sections ii and iii4 #f ,such a socialist as ,anton ,menger1 e4g41 comes into the neo-,marxian school from without1 from the field of modern scientific inquiry1 and shows1 at least virtually1 no ,hegelian color1 whether in the scope of his inquiry1 in his method1 or in the theoretical work which he puts forth4 ,it should be added that his ,neue ,staatslehre1 and ,neue ,sittenlehre are the first socialistic constructive work of substantial value as a contribution to knowledge1 outside of economic theory proper1 that has appeared since ,lassalle4 ,the efforts of ,engels 7,ursprung der ,familie7 and ,bebel 7,die ,frau7 would scarcely be taken seriously as scientific monographs even by hot-headed socialists if it were not for the lack of anything better4 ,menger's work is not ,marxism1 whereas ,engels's and ,bebel's work of this class is practically without value or originality4 ,the unfitness of the ,marxian postulates and methods for the purposes of modern science shows itself in the sweeping barrenness of socialistic literature all along that line of inquiry into the evolution of institutions for the promotion of which the materialistic dialectic was invented4 #g ,this contrast holds between the original ,marxism of ,marx and the scope and method of modern science2 but it does not1 therefore1 hold between the latter-day ,marxists--who are largely imbued with post-,darwinian concepts--and the non-,marxian scientists4 ,even ,engels1 in his latter-day formulation of ,marxism1 is strongly affected with the notions of post-,darwinian science1 and reads ,darwinism into ,hegel and ,marx with a good deal of naivete4 7,see his ,feuerbach1 especially pp4 #ic-ih of the ,english translation47 ,so1 also1 the serious but scarcely quite consistent qualifications of the materialistic conception offered by ,engels in the letters printed in the ,sozialistische ,akademiker1 #ahie4 #h ,the fact that the theoretical structures of ,marx collapse when their elements are converted into the terms of modern science should of itself be sufficient proof that those structures were not built by their maker out of such elements as modern science habitually makes use of4 ,marx was neither ignorant1 imbecile1 nor disingenuous1 and his work must be construed from such a point of view and in terms of such elements as will enable his results to stand substantially sound and convincing4 #i ,cf4 ,voraussetzungen des ,sozialismus1 especially the first two 7critical7 chapters4 ,bernstein's reverent attitude toward ,marx and ,engels1 as well as his somewhat old-fashioned conception of the scope and method of science1 gives his discussion an air of much greater consonance with the orthodox ,marxism than it really has4 ,in his later expressions this consonance and conciliatory animus show up more strongly rather than otherwise4 7,see ,socialism and ,science1 including the special preface written for the ,french edition47 ,that which was to ,marx and ,engels the point of departure and the guiding norm--the ,hegelian dialectic--is to ,bernstein a mistake from which scientific socialism must free itself4 ,he says1 e4g4 7,voraussetzungen1 end of ch4 iv471 ,the great things achieved by ,marx and ,engels they have achieved not by the help of the ,hegelian dialectic1 but in spite of it4 ,the number of the revisionists is very considerable1 and they are plainly gaining ground as against the ,marxists of the older line of orthodoxy4 ,they are by no means agreed among themselves as to details1 but they belong together by virtue of their endeavor to so construe 7and amend7 the ,marxian system as to bring it into consonance with the current scientific point of view4 ,one should rather say points of view1 since the revisionists' endeavors are not all directed to bringing the received views in under a single point of view4 ,there are two main directions of movement among the revisionists3 7a7 those who1 like ,bernstein1 ,conrad ,schmidt1 ,tugan-,baranowski1 ,labriola1 ,ferri1 aim to bring ,marxism abreast of the standpoint of modern science1 essentially ,darwinists2 and 7b7 those who aim to return to some footing on the level of the romantic philosophy4 ,the best type and the strongest of the latter class are the neo-,kantians1 embodying that spirit of revulsion to romantic norms of theory that makes up the philosophical side of the reactionary movement fostered by the discipline of ,german imperialism4 7,see ,k4 ,vorlaender1 ,die neukantische ,bewegung im ,sozialismus47 ,except that he is not officially inscribed in the socialist calendar1 ,sombart might be cited as a particularly effective revisionist1 so far as concerns the point of modernising ,marxism and putting the modernised materialistic conception to work4 #aj ,cf4 the files of the ,neue ,zeit1 particularly during the controversy with ,bernstein1 and ,bernstein und das ,sozialdemokratische ,programm4 #aa ,the idealist socialists are even more in evidence outside of ,germany4 ,they may fairly be said to be in the ascendant in ,france1 and they are a very strong and free-spoken contingent of the socialist movement in ,america4 ,they do not commonly speak the language either of science or of philosophy1 but1 so far as their contentions may be construed from the standpoint of modern science1 their drift seems to be something of the kind indicated above4 ,at the same time the spokesmen of this scattering and shifting group stand for a variety of opinions and aspirations that cannot be classified under ,marxism1 ,darwinism1 or any other system of theory4 ,at the margin they shade off into theology and the creeds4 #ab ,throughout the revisionist literature in ,germany there is a visible softening of the traits of the doctrine of the class struggle1 and the like shows itself in the programmes of the party4 ,outside of ,germany the doctrinaire insistence on this tenet is weakening even more decidedly4 ,the opportunist politicians1 with strong aspirations1 but with relatively few and ill-defined theoretical preconceptions1 are gaining ground4 #ac ,cf4 ,bernstein1 ,die heutige ,sozialdemokratie in ,theorie und ,praxis1 an answer to ,brunhuber1 ,die heutige ,sozialdemokratie1 which should be consulted in the same connection3 ,goldscheid1 ,verelendungs- oder ,meliorationstheorie2 also ,sombart1 ,sozialismus und soziale ,bewegung1 #eth edition1 pp4 #hf-hi4 #ad ,accordingly1 in later ,marxian handling of the questions of exploitation and accumulation1 the attention is centered on the surplus product rather than on the surplus value4 ,it is also currently held that the doctrines and practical consequences which ,marx derived from the theory of surplus value would remain substantially well founded1 even if the theory of surplus value was given up4 ,these secondary doctrines could be saved--at the cost of orthodoxy--by putting a theory of surplus product in the place of the theory of surplus value1 as in effect is done by ,bernstein 7,socialdemokratie in ,theorie und ,praxis1 sec4 #e4 ,also various of the essays included in ,zur ,geschichte und ,theorie des ,sozialismus74 #ae ,the right to the full product of labor and the ,marxian theory of exploitation associated with that principle has fallen into the background1 except as a campaign cry designed to stir the emotions of the working class4 ,even as a campaign cry it has not the prominence1 nor apparently the efficacy1 which it once had4 ,the tenet is better preserved1 in fact1 among the idealists1 who draw for their antecedents on the ,french ,revolution and the ,english philosophy of natural rights1 than among the latter-day ,marxists4 #af ,it is1 of course1 well known that even in the transactions and pronounciamentos of the ,international a good word is repeatedly said for the trade-unions1 and both the ,gotha and the ,erfurt programmes speak in favor of labor organisations1 and put forth demands designed to further the trade-union endeavors4 ,but it is equally well known that these expressions were in good part perfunctory1 and that the substantial motive behind them was the politic wish of the socialists to conciliate the unionists1 and make use of the unions for the propaganda4 ,the early expressions of sympathy with the unionist cause were made for an ulterior purpose4 ,later on1 in the nineties1 there comes a change in the attitude of the socialist leaders toward the unions4 #ag ,cf4 ,kapital1 vol4 i1 ch4 xiii1 sect #aj4 #ah ,cf4 ,kautsky1 ,erfurter ,programm1 ch4 v1 sect4 #ac2 ,bernstein1 ,voraussetzungen1 ch4 iv1 sect4 e4 ,,the ,,mutation ,,theory ,,and ,,the ,,blond ,,race#a ,the theories of racial development by mutation1 associated with the name of ,mendel1 when they come to be freely applied to man1 must greatly change the complexion of many currently debated questions of race--as to origins1 migrations1 dispersion1 chronology1 cultural derivation and sequence4 ,in some respects the new theories should simplify current problems of ethnology1 and they may even dispense with many analyses and speculations that have seemed of great moment in the past4 ,the main postulate of the ,mendelian theories--the stability of type--has already done much service in anthropological science1 being commonly assumed as a matter of course in arguments dealing with the derivation and dispersion of races and peoples4 ,it is only by force of this assumption that ethnologists are able to identify any given racial stock over intervals of space or time1 and so to trace the racial affinities of any given people4 ,question has been entertained from time to time as to the racial fixity of given physical traits--as1 e4g41 stature1 the cephalic indices1 or hair and eye color--but on the whole these and other standard marks of race are still accepted as secure grounds of identification4#b ,indeed1 without some such assumption any ethnological inquiry must degenerate into mere wool-gathering4 ,but along with this1 essentially ,mendelian1 postulate of the stability of types1 ethnologists have at the same time habitually accepted the incompatible ,darwinian doctrine that racial types vary incontinently after a progressive fashion1 arising through insensible cumulative variations and passing into new specific forms by the same method1 under the ,darwinian rule of the selective survival of slight and unstable 7non-typical7 variations4 ,the effect of these two incongruous premises has been to leave discussions of race derivation somewhat at loose ends wherever the two postulates cross one another4 ,if it be assumed1 or granted1 that racial types are stable1 it follows as a matter of course that these types or races have not arisen by the cumulative acquirement of unstable non-specific traits1 but must have originated by mutation or by some analogous method1 and this view must then find its way into anthropology as into the other biological sciences4 ,when such a step is taken an extensive revision of questions of race will be unavoidable1 and an appreciable divergence may then be looked for among speculations on the mutational affinities of the several races and cultures4 ,among matters so awaiting revision are certain broad questions of derivation and ethnography touching the blond race or races of ,europe4 ,much attention1 and indeed much sentiment1 has been spent on this general topic4 ,the questions involved are many and diverse1 and many of them have been subject of animated controversy1 without definitive conclusions4 ,the mutation theories1 of course1 have immediately to do with the facts of biological derivation alone1 but when the facts are reviewed in the light of these theories it will be found that questions of cultural origins and relationship are necessarily drawn into the inquiry4 ,in particular1 an inquiry into the derivation and distribution of the blond stock will so intimately involve questions of the ,aryan speech and institutions as to be left incomplete without a somewhat detailed attention to this latter range of questions4 ,so much so that an inquiry into the advent and early fortunes of the blond stock in ,europe will fall1 by convenience1 under two distinct but closely related captions3 ,the ,origin of the ,blond ,type1 and ,the ,derivation of the ,aryan ,culture4 99 99 99 99 99 7a7 ,it is held1 on the one hand1 that there is but a single blond race1 type or stock 7,keane1 ,lapouge1 ,sergi71 and on the other hand that there are several such races or types1 more or less distinct but presumably related 7,deniker1 ,beddoe1 and other1 especially ,british1 ethnologists74 7b7 ,there is no good body of evidence going to establish a great antiquity for the blond stock1 and there are indications1 though perhaps inconclusive1 that the blond strain1 including all the blond types1 is of relatively late date--unless a ,berber 7,kabyle7 blond race is to be accepted in a more unequivocal manner than hitherto4 7c7 ,neither is there anything like convincing evidence that this blond strain has come from outside of ,europe--except1 again1 for the equivocal ,kabyle--or that any blond race has ever been widely or permanently distributed outside of its present ,european habitat1 7d7 ,the blond race is not found unmixed4 ,in point of pedigree all individuals showing the blond traits are hybrids1 and the greater number of them show their mixed blood in their physical traits4 7e7 ,there is no community1 large or small1 made up exclusively of blonds1 or nearly so1 and there is no good evidence available that such an all-blond or virtually all-blond community ever has existed1 either in historic or prehistoric times4 ,the race appears never to have lived in isolation4 7f7 ,it occurs in several 7perhaps hybrid7 variants--unless these variants are to be taken 7with ,deniker7 as several distinct races1 7g7 ,counting the dolicho-blond as the original type of the race1 its nearest apparent relative among the races of mankind is the ,mediterranean 7of ,sergi71 at least in point of physical traits4 ,at the same time the blond race1 or at least the dolicho-blond type1 has never since neolithic times1 so far as known1 extensively and permanently lived in contact with the ,mediterranean4 7h7 ,the various 7national7 ramifications of the blond stock--or rather the various racial mixtures into which an appreciable blond element enters--are all1 and to all appearance have always been1 of ,aryan 7,indo-,european1 ,indo-,germanic7 speech--with the equivocal exception of the ,kabyle4 7i7 ,yet far the greater number and variety 7national and linguistic7 of men who use the ,aryan speech are not prevailingly blond1 or even appreciably mixed with blond4 7j7 ,the blond race1 or the peoples with an appreciable blond admixture1 and particularly the communities in which the dolicho-blond element prevails1 show little or none of the peculiarly ,aryan institutions--understanding by that phrase not the known institutions of the ancient ,germanic peoples1 but that range of institutions said by competent philologists to be reflected in the primitive ,aryan speech4 7k7 ,these considerations raise the presumption that the blond race was not originally of ,aryan speech or of ,aryan culture1 and they also suggest 7l7 that the ,mediterranean1 the nearest apparent relative of the dolicho-blond1 was likewise not originally ,aryan4 99 99 99 99 99 ,accepting the mutation theory1 then1 for the purpose in hand1 and leaving any questions of ,aryanism on one side for the present1 a canvass of the situation so outlined may be offered in such bold1 crude and summary terms as should be admissible in an analysis which aims to be tentative and provisional only4 ,it may be conceived that the dolichocephalic blond originated as a mutant of the ,mediterranean type 7which it greatly resembles in its scheme of biometric measurements#c7 probably some time after that race had effected a permanent lodgment on the continent of ,europe4 ,the ,mediterranean stock may be held 7,sergi and ,keane7 to have come into ,europe from ,africa1#d whatever its remoter derivation may have been4 ,it is1 of course1 not impossible that the mutation which gave rise to the dolicho-blond may have occurred before the parent stock left ,africa1 or rather before it was shut out of ,africa by the submergence of the land connection across ,sicily1 but the probabilities seem to be against such a view4 ,the conditions would appear to have been less favorable to a mutation of this kind in the ,african habitat of the parent stock than in ,europe1 and less favorable in ,europe during earlier quaternary time than toward the close of the glacial period4 ,the causes which give rise to a variation of type have always been sufficiently obscure1 whether the origin of species be conceived after the ,darwinian or the ,mendelian fashion1 and the mutation theories have hitherto afforded little light on that question4 ,yet the ,mendelian postulate that the type is stable except for such a mutation as shall establish a new type raises at least the presumption that such a mutation will take place only under exceptional circumstances1 that is to say1 under circumstances so substantially different from what the type is best adapted to as to subject it to some degree of physiological strain4 ,it is to be presumed that no mutation will supervene so long as the conditions of life do not vary materially from what they have been during the previous uneventful life-history of the type4 ,such is the presumption apparently involved in the theory and such is also the suggestion afforded by the few experimental cases of observed mutation1 as1 e4g41 those studied by ,de ,vries4 ,a considerable climatic change1 such as would seriously alter the conditions of life either directly or through its effect on the food supply1 might be conceived to bring on a mutating state in the race2 or the like effect might be induced by a profound cultural change1 particularly any such change in the industrial arts as would radically affect the material conditions of life4 ,these considerations1 mainly speculative it is true1 suggest that the dolicho-blond mutant could presumably have emerged only at a time when the parent stock was exposed to notably novel conditions of life1 such as would be presumed 7with ,de ,vries7 to tend to throw the stock into a specifically unstable 7mutating7 state2 at the same time these novel conditions of life must also have been specifically of such a nature as to favor the survival and multiplication of this particular human type4 ,the climatic tolerance of the dolicho-blond1 e4g41 is known to be exceptionally narrow4 ,now1 it is not known1 indeed there is no reason to presume1 that the ,mediterranean race was exposed to such variations of climate or of culture before it entered ,europe as might be expected to induce a mutating state in the stock1 and at the same time a mutant gifted with the peculiar climatic intolerance of the dolicho-blond would scarcely have survived under the conditions offered by northern ,africa in late quaternary time4 ,but the required conditions are had later on in ,europe1 after the ,mediterranean was securely at home in that continent4 ,the whole episode may be conceived to have run off somewhat in the following manner4 ,the ,mediterranean race is held to have entered ,europe in force during quaternary time1 presumably after the quaternary period was well advanced1 most likely during the last genial1 interglacial period4 ,this race then brought the neolithic culture1 but without the domestic animals 7or plants87 that are a characteristic feature of the later neolithic age1 and it encountered at least the remnants of an older1 palaeolithic population4 ,this older ,european population was made up of several racial stocks1 some of which still persist as obscure and minor elements in the later peoples of ,europe4 ,the 7geologic7 date to be assigned this intrusion of the ,mediterranean race into ,europe is of course not1 and can perhaps never be1 determined with any degree of nicety or confidence4 ,but there is a probability that it coincides with the recession of the ice-sheet1 following one or another of the severer periods of glaciations1 that occurred before the submergence of the land connection between ,europe and ,africa1 over ,gibraltar1 ,sicily1 and perhaps ,crete4 ,how late in quaternary time the final submergence of the ,mediterranean basin occurred is still a matter of surmise2 the intrusion of the ,mediterranean race into ,europe appears1 on archaeological evidence1 to have occurred in late quaternary time1 and in the end this archaeological evidence may help to decide the geologic date of the severance of ,europe from ,africa4 ,the ,mediterranean race seems to have spread easily over the habitable surface of ,europe and shortly to have grown numerous and taken rank as the chief racial element in the neolithic population2 which argues that no very considerable older population occupied the ,european continent at the time of the ,mediterranean invasion2 which in turn implies that the fairly large 7,magdalenian7 population of the close of the palaeolithic age was in great part destroyed or expelled by the climatic changes that coincided with or immediately preceded the advent of the ,mediterranean race4 ,the known characteristics of the ,magdalenian culture indicate a technology1 a situation and perhaps a race1 somewhat closely paralleled by the ,eskimo2#e which argues that the climatic situation before which this ,magdalenian race and culture gave way would have been that of a genial interglacial period rather than a period of glaciation4 ,during this genial 7perhaps sub-tropical7 inter-glacial period immediately preceding the last great glaciation the ,magdalenian stock would presumably find ,europe climatically untenable1 judging by analogy with the ,eskimo2 whereas the ,mediterranean stock should have found it an eminently favorable habitat1 for this race has always succeeded best in a warm-temperate climate4 ,both the extensive northward range of the early neolithic 7,mediterranean7 settlements and the total disappearance of the ,magdalenian culture from the ,european continent point to a climatic situation in ,europe more favorable to the former race and more unwholesome for the latter than the conditions known to have prevailed at any time since the last interglacial period1 especially in the higher latitudes4 ,the indications would seem to be that the whole of ,europe1 even the ,baltic and ,arctic seaboards1 became climatically so fully impossible for the ,magdalenian race during this interglacial period as to result in its extinction or definitive expulsion2 for when1 in recent times1 climatically suitable conditions return1 on the ,arctic seaboard1 the culture which takes the place that should have been occupied by the ,magdalenian is the ,finnic 7,lapp7--a culture unrelated to the ,magdalenian either in race or technology1 although of much the same cultural level and dealing with a material environment of much the same character4 ,and this genial interval that was fatal to the ,magdalenian was1 by just so much1 favorable to the ,mediterranean race4 ,but glacial conditions presently returned1 though with less severity than the next preceding glacial period2 and roughly coincident with the close of the genial interval in ,europe the land connection with ,africa was cut off by submergence1 shutting off retreat to the south4 ,how far communication with ,asia may have been interrupted during the subsequent cold period1 by the local glaciation of the ,caucasus1 ,elburz and ,armenian highlands1 is for the present apparently not to be determined1 although it is to be presumed that the outlet to the east would at least be seriously obstructed during the glaciation4 ,there would then be left available for occupation1 mainly by the ,mediterranean race1 central and southern ,europe together with the islands1 notably ,sicily and ,crete1 left over as remnants of the earlier continuous land between ,europe and ,africa4 ,the southern extensions of the mainland1 and more particularly the islands1 would still afford a favorable place for the ,mediterranean race and its cultural growth4 ,so that the early phases of the great ,cretan 7,aegean7 civilisation are presumably to be assigned to this period that is covered by the last advance of the ice in northern ,europe4 ,but the greater portion of the land area so left accessible to the ,mediterranean race1 in central or even in southern ,europe1 would have been under glacial or sub-glacial climatic conditions4 ,for this race1 essentially native to a warm climate1 this situation on the ,european mainland would be sufficiently novel and trying1 particularly throughout that ice-fringed range of country where they would be exposed to such cold and damp as this race has never easily tolerated4 ,the situation so outlined would afford such a condition of physiological strain as might be conceived to throw the stock into a specifically unstable state and so bring on a phase of mutation4 ,at the same time this situation1 climatic and technological1 would be notably favorable to the survival and propagation of a type gifted with all the peculiar capacities and limitations of the dolicho-blond2 so that any mutant showing the traits characteristic of that type would then have had an eminently favorable chance of survival4 ,indeed1 it is doubtful1 in the present state of the available evidence1 whether such a type of man could have survived in ,europe from or over any period of quaternary time prior to the last period of glaciation4 ,the last preceding interglacial period appears to have been of a sufficiently genial 7perhaps sub-tropical7 character throughout ,europe to have definitively eliminated the ,magdalenian race and culture1 and a variation of climate in the genial sense sufficiently pronounced to make ,europe absolutely untenable for the ,magdalenian--presumed to be something of a counterpart to the ,eskimo both in race and culture--should probably have reached the limit of tolerance for the dolicho-blond as well4 ,the latter is doubtless not as intolerant of a genial--warm-temperate--climate as the former1 but the dolicho-blond after all stands much nearer to the ,eskimo in this matter of climatic tolerance than to either of the two chief ,european stocks with which it is associated4 ,apparently no racial stock with a climatic tolerance approximately like that of the ,eskimo1 the ,magdalenian1 or the current races of the ,arctic seaboard1 survived over the last inter-glacial period2 and if the dolicho-blond is conceived to have lived through that period it would appear to have been by a precariously narrow margin4 ,so that1 on one ground and another1 the mutation out of which the dolicho-blond has arisen is presumably to be assigned to the latest period of glaciation in ,europe1 and with some probability to the time when the latest glaciation was at its maximum1 and to the region where glacial and seaboard influences combined to give that racial type a differential advantage over all others4 ,this dolicho-blond mutation may1 of course1 have occurred only once1 in a single individual1 but it should seem more probable1 in the light of ,de ,vries' experiments1 that the mutation will have been repeated in the same specific form in several individuals in the same general locality and in the same general period of time4 ,indeed1 it would seem highly probable that several typically distinct mutations will have occurred1 repeatedly1 at roughly the same period and in the same region1 giving rise to several new types1 some of which1 including the dolicho-blond1 will have survived4 ,many1 presumably the greater number1 of these mutant types will have disappeared1 selectively1 being unfit to survive under those sub-glacial seaboard conditions that were eminently favorable to the dolicho-blond2 while other mutants arising out of the same mutating period and adapted to climatic conditions of a more continental character1 suitable to more of a continental habitat1 less humid1 at a higher altitude and with a wider seasonal variation of temperature1 may have survived in the regions farther inland1 particularly eastward of the selectively defined habitat of the dolicho-blond4 ,these latter may have given rise to several blond races1 such as are spoken for by ,deniker#f and certain ,british ethnologists4 ,the same period of mutation may well have given rise also to one or more brunet types1 some of which may have survived4 ,but if any new brunet type has come up within a period so recent as this implies1 the fact has not been noted or surmised hitherto--unless the brunet races spoken for by ,deniker are to be accepted as typically distinct and referred to such an origin4 ,the evidence for the brunet stocks has not been canvassed with a question of this kind in view4 ,these stocks have not been subject of such eager controversy as the dolicho-blond1 and the attention given them has been correspondingly less4 ,the case of the blond is unique in respect of the attention spent on questions of its derivation and prehistory1 and it is also singular in respect of the facility with which it can be isolated for the purposes of such an inquiry4 ,this large and persistent attention1 from all sorts of ethnologists1 has brought the evidence bearing on the dolicho-blond into such shape as to permit more confident generalisations regarding that race than any other4 ,in any case the number of mutant individuals1 whether of one or of several specific types1 will have been very few as compared with the numbers of the parent stock from which they diverged1 even if they may have been somewhat numerous as counted absolutely1 and the survivors whose offspring produced a permanent effect on the ,european peoples will have been fewer still4 ,it results that these surviving mutants will not have been isolated from the parent stock1 and so could not breed in isolation1 but must forthwith be crossed on the parent stock and could therefore yield none but hybrid offspring4 ,from the outset1 therefore1 the community or communities in which the blond mutants were propagated would be made up of a mixture of blond and brunet1 with the brunet greatly preponderating4 ,it may be added that in all probability there were also present in this community from the start one or more minor brunet elements besides the predominant ,mediterranean1 and that at least shortly after the close of the glacial period the new brachycephalic brunet 7,alpine7 race comes into the case2 so that the chances favor an early and persistent crossing of the dolicho-blond with more than one brunet type1 and hence they favor complications and confusion of types from the start4 ,it follows that1 in point of pedigree1 according to this view there neither is nor ever has been a pure-bred dolicho-blond individual since the putative original mutant with which the type came in4 ,but under the ,mendelian rule of hybrids it is none the less to be expected that1 in the course of time and of climatically selective breeding1 individuals 7perhaps in appreciable numbers7 will have come up from time to time showing the type characters unmixed and unweakened1 and effectively pure-bred in point of heredity4 ,indeed1 such individuals1 effectively pure-bred or tending to the establishment of a pure line1 will probably have emerged somewhat frequently under conditions favorable to the pure type4 ,the selective action of the conditions of life in the habitat most favorable to the propagation of the dolicho-blond has worked in a rough and uncertain way toward the establishment1 in parts of the ,baltic and ,north ,sea region1 of communities made up prevailingly of blonds4 ,yet none of these communities most favorably placed for a selective breeding in the direction of a pure dolicho-blond population have gone far enough in that direction to allow it safely to be said that the composite population of any such given locality is more than half blond4 ,placed as it is in a community of nations made up of a hybrid mixture of several racial stocks there is probably no way at present of reaching a convincing demonstration of the typical originality of this dolicho-blond mutant1 as contrasted with the other blond types with which it is associated in the ,european population2 but certain general considerations go decidedly1 perhaps decisively1 to enforce such a view3 7a7 ,this type shows such a pervasive resemblance to a single one of the known older and more widely distributed types of man 7the ,mediterranean7 as to suggest descent by mutation from this one rather than derivation by crossing of any two or more known types4 ,the like can not be said of the other blond types1 all and several of which may plausibly be explained as hybrids of known types4 ,they have the appearance of blends1 or rather of biometrical compromises1 between two or more existing varieties of man4 ,whereas it does not seem feasible to explain the dolicho-blond as such a blend or compromise between any known racial types4 7b7 ,the dolicho-blond occurs1 in a way1 centrally to the other blond types1 giving them a suggestive look of being ramifications of the blond stock1 by hybridisation1 into regions not wholly suited to the typical blond4 ,the like can scarcely be said for any of the other ,european types or races4 ,the most plausible exception would be ,deniker's ,east-,european or ,oriental race1 ,beddoe's ,saxon1 which stands in a somewhat analogous spacial relation to the other blond types4 ,but this brachycephalic blond is not subject to the same sharp climatic limitations that hedge about the dolicho-blond2 it occurs apparently with equally secure viability within the littoral home area of the dolicho-blond and in continental situations where conditions of altitude and genial climate would bar the latter from permanent settlement4 ,the ancient and conventionally accepted center of diffusion of blondness in ,europe lies within the seaboard region bordering on the south ,baltic1 the ,north ,sea and the narrow waters of the ,scandinavian peninsulas4 ,probably1 if this broad central area of diffusion were to be narrowed down to a particular spot1 the consensus of opinion as to where the narrower area of characteristic blondness is to be looked for1 would converge on the lands immediately about the narrow ,scandinavian waters4 ,this would seem to hold true for historic and for prehistoric times alike4 ,this region is at the same time1 by common consent1 the peculiar home of the dolicho-blond1 rather than of any other blond type4 7c7 ,the well known but little discussed climatic limitation of the blond race applies particularly to the dolicho-blond1 and only in a pronouncedly slighter degree to the other blond types4 ,the dolicho-blond is subject to a strict regional limitation1 the other blond types to a much less definite and wider limitation of the same kind4 ,hence these others are distributed somewhat widely1 over regions often remote and climatically different from the home area of the dolicho-blond1 giving them the appearance of being dispersed outward from this home area as hybrid extensions of the central and typical blond stock4 ,a further and equally characteristic feature of this selective localisation of the dolicho-blond race is the fact that while this race does not succeed permanently outside the seaboard region of the south ,baltic and ,north ,sea1 there is no similar selective bar against other races intruding into this region4 ,although the dolicho-blond perhaps succeeds better within its home area than any other competing stock or type1 yet several other types of man succeed so well within the same region as to hold it1 and apparently always to have held it1 in joint tenancy with the dolicho-blond4 ,a close relationship1 amounting to varietal identity1 of the ,kabyle with the dolicho-blond has been spoken for by ,keane and by other ethnologists4 ,but the very different climatic tolerance of the two races should put such an identity out of the question4 ,the ,kabyle lives and thrives best1 where his permanent home area has always been1 in a high and dry country1 sufficiently remote from the sea to make it a continental rather than a littoral habitat4 ,the dolicho-blond1 according to all available evidence1 can live in the long run only in a seaboard habitat1 damp and cool1 at a high latitude and low altitude4 ,there is no known instance of this race having gone out from its home area on the northern seaboard into such a region as that inhabited by the ,kabyle and having survived for an appreciable number of generations4 ,that this type of man should have come from ,mauritania1 where it could apparently not live under the conditions known to have prevailed there in the recent or the remoter past1 would seem to be a biologic impossibility4 ,hitherto1 when the dolicho-blond has migrated into such or a similar habitat it has not adapted itself to the new climatic requirements but has presently disappeared off the face of the land4 ,indeed1 the experiment has been tried in ,mauritanian territory4 ,if the ,kabyle blond is to be correlated with those of ,europe1 it will in all probability have to be assigned an independent origin1 to be derived from an earlier mutation of the same ,mediterranean stock to which the dolicho-blond is to be traced4 ,questions of race in ,europe are greatly obscured by the prevalence of hybrid types having more or less fixity and being more or less distinctly localised4 ,the existing ,european peoples are hybrid mixtures of two or more racial stocks4 ,the further fact is sufficiently obvious1 though it has received less critical attention than might be1 that these several hybrid populations have in the course of time given rise to a number of distinct national and local types1 differing characteristically from one another and having acquired a degree of permanence1 such as to simulate racial characters and show well marked national and local traits in point of physiognomy and temperament4 ,presumably1 these national and local types of physique and temperament are hybrid types that have been selectively bred into these characteristic forms in adaptation to the peculiar circumstances of environment and culture under which each particular local population is required to live1 and that have been so fixed 7provisionally7 by selective breeding of the hybrid material subject to such locally uniform conditions--except so far as the local characters in question are of the nature of habits and are themselves therefore to be classed as an institutional element rather than as characteristics of race4 ,it is evident that under the ,mendelian law of hybridisation the range of favorable1 or viable1 variations in any hybrid population must be very large--much larger than the range of fluctuating 7non-typical7 variations obtainable under any circumstances in a pure-bred race4 ,it also follows from these same laws of hybridisation that by virtue of the mutual exclusiveness of allelomorphic characters or groups of characters it is possible selectively to obtain an effectually pure line of hybrids combining characters drawn from each of the two or more parent stocks engaged1 and that such a composite pure line may selectively be brought to a provisional fixity#g in any such hybrid population4 ,and under conditions favorable to a type endowed with any given hybrid combination of characters so worked out the given hybrid type 7composite pure line7 may function in the racial mixture in which it is so placed very much as an actual racial type would behave under analogous circumstances2 so that1 e4g41 under continued intercrossing such a hybrid population would tend cumulatively to breed true to this provisionally stable hybrid type1 rather than to the actual racial type represented by any one of the parent stocks of which the hybrid population is ultimately made up1 unless the local conditions should selectively favor one or another of these ultimate racial types4 ,evidently1 too1 the number of such provisionally stable composite pure lines that may be drawn from any hybrid mixture of two or more parent stocks must be very considerable--indeed virtually unlimited2 so that on this ground there should be room for any conceivable number of provisionally stable national or local types of physique and temperament1 limited only by the number of characteristically distinguishable local environments or situations that might each selectively act to characterise and establish a locally characteristic composite pure line2 each answering to the selective exigencies of the habitat and cultural environment in which it is placed1 and each responding to these exigencies in much the same fashion as would an actual racial type--provided only that this provisionally stable composite pure line is not crossed on pure-bred individuals of either of the parent stocks from which it is drawn1 pure-bred in respect of the allelomorphic characters which give the hybrid type its typical traits4 ,when the hybrid type is so crossed back on one or other of its parent stocks it should be expected to break down2 but in so slow-breeding a species as man1 with so large a complement of unit characters 7some #djjj it has been estimated71 it will be difficult to decide empirically which of the two lines--the hybrid or the parent stock--proves itself in the offspring effectively to be a racial type2 that is to say1 which of the two 7or more7 proves to be an ultimately stable type arisen by a ,mendelian mutation1 and which is a provisionally stable composite pure line selectively derived from a cross4 ,the inquiry at this point1 therefore1 will apparently have to content itself with arguments of probability drawn from the varying behavior of the existing hybrid types under diverse conditions of life4 ,such general consideration of the behavior of the blond types of ,europe1 other than the dolicho-blond1 and more particularly consideration of their viability under divergent climatic conditions1 should apparently incline to the view that they are hybrid types1 of the nature of provisionally stable composite pure lines4 ,so far1 therefore1 as the evidence has yet been canvassed1 it seems probable on the whole that the dolicho-blond is the only survivor from among the several mutants that may have arisen out of this presumed mutating period2 that the other existing blond types1 as well as certain brunets1 are derivatives of the hybrid offspring of the dolicho-blond crossed on the parent ,mediterranean stock or on other brunet stocks with which the race has been in contact early or late2 and that several of these hybrid lines have in the course of time selectively been established as provisionally stable types 7composite pure lines71 breakable only by a fresh cross with one or other of the parent types from which the hybrid line sprang1 according to the ,mendelian rule4#h ,all these considerations may not be convincing1 but they are at least suggestive to the effect that if originality is to be claimed for any one of the blond types or stocks it can best be claimed for the dolicho-blond1 while the other blond types may better be accounted for as the outcome of the crossing of this stock on one or another of the brunet stocks of ,europe4 ,,footnotes3 #a ,reprinted by permission from ,the ,journal of ,race ,development1 ,vol4 ,,iii1 ,no4 #d4 #b ,cf41 however1 ,w4 ,ridgeway1 ,the ,application of ,zoological ,laws to ,man1 ,report1 ,british ,association for ,advancement of ,science 7,dublin71 #aijh4 #c ,cf4 ,sergi1 ,the ,mediterranean ,race1 ch4 xi1 xiii4 #d ,sergi1 ,arii e ,italici2 ,keane1 ,man ,past and ,present1 ch4 xii4 #e ,cf4 ,w4 ,j4 ,sollas1 ,palaeolithic ,races and their ,modern ,representatives1 ,science ,progress1 vol4 iv1 #aiji-aiaj4 #f ,the ,races of ,mankind2 and ,les six races composant la population de l',europe1 ,journal ,anth4 ,inst41 #aijf4 #g ,illustrated by the various pure breeds or races of domestic animals4 #h ,mr4 ,r4 ,b4 ,bean's discussion of ,deniker's ,six ,races1 e4g41 goes far to show that such is probably the standing of the blond types1 other than the dolicho-blond1 among these six races of ,europe2 although such is not the conclusion to which ,mr4 ,bean comes4 ,philippine ,journal of ,science1 ,september1 #aiji4 ,,the ,,blond ,,race ,,and ,,the ,,aryan ,,culture#a ,it has been argued in an earlier paper#b that the blond type or types of man 7presumably the dolichocephalic blond7 arose by mutation from the ,mediterranean stock during the last period of severe glaciation in ,europe4 ,this would place the emergence of this racial type roughly coincident with the beginning of the ,european neolithic2 the evidence going presumptively to show that the neolithic technology came into ,europe with the ,mediterranean race1 at or about the same time with that race1 and that the mutation which gave rise to the dolicho-blond took place after the ,mediterranean race was securely settled in ,europe4 ,since this blond mutant made good its survival under the circumstances into which it so was thrown it should presumably be suited by native endowment to the industrial and climatic conditions that prevailed through the early phases of the neolithic age in ,europe2 that is to say1 it would be a type of man selectively adapted to the technological situation characteristic of the early neolithic but lacking as yet the domestic animals 7and crop-plants87 that presently give much of its character to that culture4 ,beginning1 then1 with the period of the last severe glaciation1 and starting with this technological equipment1 those portions of the ,european population that contained an appreciable and increasing admixture of the blond may be conceived to have ranged across the breadth of ,europe1 particularly in the lowlands1 in the belt of damp and cool country that fringed the ice1 and to have followed the receding ice-sheet northward when the general climate of ,europe began to take on its present character with the returning warmth and dryness4 ,by force of the strict climatic limitation to which this type is subject1 the blond element1 and more particularly the dolicho-blond1 will presently have disappeared by selective elimination from the population of those regions from which the ice-sheet and its fringe of cool and humid climate had receded4 ,the cool and humid belt suited to the propagation of the blond mutant 7and its blond hybrids7 would shift northward and shorten down to the seaboard as the glacial conditions in which it had originated presently ceased4 ,so that presently1 when ,europe finally lost its ice-sheet1 the blond race and its characteristic hybrids would be found confined nearly within the bounds which have marked its permanent extension in historic times4 ,these limits have1 no doubt1 fluctuated somewhat in response to secular variations of climate2 but on the whole they appear to have been singularly permanent and singularly rigid4 ,apparently after the dolicho-blond had come to occupy the restricted habitat which the stock has since continued to hold on the northern seaboard of ,europe1 toward the close of what is known in ,danish chronology as the older stone age1 the early stock of domestic animals appear to have been introduced into ,europe from ,asia2 the like statement will hold more doubtfully for the older staple crop plants1 with the reservation that their introduction appears to antedate that of the domestic animals4 ,at least some such date seems indicated by their first appearance in ,denmark late in the period of the kitchen middens4 ,virtually all of these essential elements of their material civilisation appear to have come to the blond-hybrid communities settled on the narrow ,scandinavian waters1 as to the rest of ,europe1 from ,turkestan4 ,this holds true at least for the domestic animals as a whole1 the possible exceptions among the early introductions being not of great importance4 ,some of the early crop plants may well have come from what is now ,mesopotamian or ,persian territory1 and may conceivably have reached western ,europe appreciably earlier1 without affecting the present argument4 ,if the ,european horse had been domesticated in palaeolithic times1 as appears at least extremely probable1 that technological gain appears to have been lost before the close of the palaeolithic age2 perhaps along with the extinction of the ,european horse4 ,these new elements of technological equipment1 the crop plants and animals1 greatly affected the character of the neolithic culture in ,europe2 visibly so as regards the region presumably occupied by the dolicho-blond1--or the blond-hybrid peoples4 ,on the material side of the community's life they would bring change direct and immediate1 altering the whole scheme of ways and means and shifting the pursuit of a livelihood to new lines2 and on the immaterial side their effect would be scarcely less important1 in that the new ways and means and the new manner of life requisite and induced by their use would bring on certain new institutional features suitable to a system of mixed farming4 ,whatever may have been the manner of their introduction1 whether they were transmitted peaceably by insensible diffusion from group to group or were carried in with a high hand by a new intrusive population that overran the country and imposed its own cultural scheme upon the ,europeans along with the new ways and means of life1--in any case these new cultural elements will have spread over the face of ,europe somewhat gradually and will have reached the blond-hybrid communities in their remote corner of the continent only after an appreciable lapse of time4 ,yet1 it is to be noted1 it is after all relatively early in neolithic times that certain of the domestic plants and animals first come into evidence in the ,scandinavian region4 ,the crop plants appear to have come in earlier than the domestic animals1 being perhaps brought in by the peoples of the ,mediterranean race at their first occupation of ,europe in late quaternary time4 ,with tillage necessarily goes a sedentary manner of life4 ,so that at their first introduction the domestic animals were intruded into a system of husbandry carried on by a population living in settled communities1 and drawing their livelihood in great part from the tilled ground but also in part from the sea and from the game-bearing forests that covered much of the country at that time4 ,it was into such a situation that the domestic animals were intruded on their first coming into ,europe1--particularly into the seaboard region of north ,europe4 ,on the open ranges of western and central ,asia1 from which these domestic animals came1 and even in the hill country of that general region1 the peoples that draw their livelihood from cattle and sheep are commonly of a nomadic habit of life1 in the sense that the requirements of forage for their herds and flocks hold them to an unremitting round of seasonal migration4 ,it results that1 except in the broken hill country1 these peoples habitually make use of movable habitations1 live in camps rather than in settled1 sedentary communities4 ,certain peculiar institutional arrangements also result from this nomadic manner of life associated with the care of flocks and herds on a large scale4 ,but on their introduction into ,europe the domestic animals appear on the whole not to have supplanted tillage and given rise to such a nomadic-pastoral scheme of life1 exclusively given to cattle raising1 but rather to have fallen into a system of mixed farming which combined tillage with a sedentary or quasi-sedentary grazing industry4 ,such particularly appears to have been the case in the seaboard region of the north1 where there is no evidence of tillage having been displaced by a nomadic grazing industry4 ,indeed1 the small-scale and broken topography of this ,european region has never admitted a large-scale cattle industry1 such as has prevailed on the wide ,asiatic ranges4 ,an exception1 at least partial and circumscribed1 may perhaps be found in the large plains of the extreme ,southeast and in the ,danube valley2 and it appears also that grazing1 after the sedentary fashion1 took precedence of tillage in prehistoric ,ireland as well as here and there in the hilly countries of southern and central ,europe4 ,such an introduction of tillage and grazing would mean a revolutionary change in the technology of the ,european stone age1 and a technological revolution of this kind will unavoidably bring on something of a radical change in the scheme of institutions under which the community lives2 primarily in the institutions governing the details of its economic life1 but secondarily also in its domestic and civil relations4 ,when such a change comes about through the intrusion of new material factors the presumption should be that the range of institutions already associated with these material factors in their earlier home will greatly influence the resulting new growth of institutions in the new situation1 even if circumstances may not permit these alien institutions to be brought in and put into effect with the scope and force which they may have had in the culture out of which they have come4 ,some assimilation is to be looked for even if circumstances will not permit the adoption of the full scheme of institutions1 and the institutions originally associated with the intrusive technology will be found surviving with least loss or qualification in those portions of the invaded territory where the invaders have settled in force1 and particularly where conditions have permitted them to retain something of their earlier manner of life4 ,the bringers of these new elements of culture1 material and immaterial1 had acquired what they brought with them on the open sheep and cattle ranges of the central-,asiatic plains and uplands1--as is held to be the unequivocal testimony of the ,aryan speech1 and as is borne out by the latest explorations in that region4 ,these later explorations indicate west-central ,turkestan as the probable center of the domestication and diffusion of the animals1 if not also of the crop plants1 that have stocked ,europe4 ,of what race these bearers of the new technology and culture may have been1 and just what they brought into ,europe1 is all a matter of inference and surmise4 ,it was once usual to infer1 as a ready matter of course1 that these immigrant pastoral nomads from the ,asiatic uplands were ,aryans1 ,indo-,europeans1 ,indo-,germans1 of a predominantly blond physique4 ,but what has been said above as well as in the earlier paper referred to comes near excluding the possibility of these invaders being blonds1 or more specifically the dolicho-blond4 ,it is1 of course1 conceivable1 with ,keane 7if his speculations on this head are to be taken seriously71 that a fragment of the alleged blond race from ,mauretania may have wandered off into ,turkestan by way of the ,levant1 and so may there have acquired the habits of a pastoral life1 together with the ,aryan speech and institutions1 and may then presently have carried these cultural factors into ,europe and imposed them on the ,european population1 blond and brunet4 ,but such speculations1 which once were allowable though idle1 have latterly been put out of all question1 at least for the present1 by the recent ,pumpelly explorations in ,turkestan4 ,it is1 for climatic reasons1 extremely improbable that any blond stock should have inhabited any region of the central-,asiatic plains or uplands long enough to acquire the pastoral habits of life and the concomitant ,aryan speech and institutions1 and it is fairly certain that the dolicho-blond could not have survived for that length of time under the requisite conditions of climate and topography4 ,it is similarly quite out of the question that the dolicho-blond1 arising as a mutant type late in quaternary time1 should have created the ,aryan speech and culture in ,europe1 since neither the archaeological evidence nor the known facts of climate and topography permit the hypothesis that a pastoral-nomadic culture of home growth has ever prevailed in ,europe on a scale approaching that required for such a result4 ,and there is but little more possibility that the bringers of the new 7,aryan7 culture should have been of the ,mediterranean race2 although the explorations referred to make it nearly certain that the communities which domesticated the pastoral animals 7and perhaps the crop-plants7 in ,turkestan were of that race4 ,the ,mediterranean race originally is ,hamitic1 not ,aryan1 it is held by men competent to speak on that matter1 and the known 7presumably7 ,mediterranean prehistoric settlements in ,turkestan1 at ,anau1 are moreover obviously the settlements of a notably sedentary people following a characteristically peaceable mode of life4 ,the population of these settlements might of course conceivably have presently acquired the nomadic and predatory habits reflected by the ,aryan speech and institutions1 but there is no evidence of such an episode at ,anau1 where the finds show an uninterrupted peaceable and sedentary occupation of the sites throughout the period that could come in question4 ,the population of the settlements at ,anau could scarcely have made such a cultural innovation1 involving the adoption of an alien language1 except under the pressure of conquest by an invading people2 which would involve the subjection of the peaceable communities of ,anau and the incorporation of their inhabitants as slaves or as a servile class in the predatory organisation of their masters4 ,the ,mediterranean people of ,anau could accordingly have had a hand in carrying this pastoral-predatory 7,aryan7 culture into the ,west only as a subsidiary racial element in a migratory community made up primarily of another racial stock4 ,this leaves the probability that an ,asiatic stock1 without previous settled sedentary habits of life1 acquired the domesticated animals from the sedentary and peaceable communities of ,anau1 or from some similar village 7pueblo7 or villages of western ,turkestan1 and then through a 7moderately7 long experience of nomadic pastoral life acquired also the predatory habits and institutions that commonly go with a pastoral life on a large scale4 ,these cultural traits they acquired in such a degree of elaboration and maturity as is implied by the primitive ,aryan 7or1 better1 proto-,aryan7 speech1 including a more or less well developed patriarchal system2 so that they would presently become a militant and migratory community somewhat after the later-known ,tatar fashion1 and so made their way westward as a self-sufficient migratory host and carried the new material culture into ,europe together with the alien ,aryan speech4 ,it is at the same time almost unavoidable that in such an event this migratory host would have carried with them into the ,west an appreciable servile contingent made up primarily of enslaved captives from the peaceable agricultural settlements of the ,mediterranean race1 which had originally supplied them with their stock of domestic animals4 ,along with these new technological elements and the changes of law and custom which their adoption would bring on1 there will also have come in the new language that was designed to describe these new ways and means of life and was adapted to express the habits of thought which the new ways and means bred in the peoples that adopted them4 ,the immigrant pastoral 7proto-,aryan7 language and the pastoral 7patriarchal and predatory7 law and custom will in some degree have been bound up with the technological ways and means out of which they arose1 and they would be expected to have reached and affected the various communities of ,europe in somewhat the same time and the same measure in which these material facts of the pastoral life made their way among these peoples4 ,in the course of the diffusion of these cultural elements1 material and immaterial1 among the ,european communities the language and in a less degree the domestic and civil usages and ideals bred by the habits of the pastoral life might of course come to be dissociated from their material or technological basis and might so be adopted by remoter peoples who never acquired any large measure of the material culture of those pastoral nomads whose manner of life had once given rise to these immaterial features of ,aryan civilisation4 99 99 99 99 99 ,certain considerations going to support this far-flung line of conjectural history may be set out more in detail3 7a7 ,the ,aryan civilisation is of the pastoral type1 with such institutions1 usages and preconceptions as a large-scale pastoral organisation commonly involves4 ,such is said by competent philologists to be the evidence of the primitive ,aryan speech4 ,it is substantially a servile organisation under patriarchal rule1 or1 if the expression be preferred1 a militant or predatory organisation2 these alternative phrases describe the same facts from different points of view4 ,it is characterised by a well-defined system of property rights1 a somewhat pronounced subjection of women and children1 and a masterful religious system tending strongly to monotheism4 ,a pastoral culture on the broad plains and uplands of a continental region1 such as west-central ,asia1 will necessarily fall into some such shape1 because of the necessity of an alert and mobile readiness for offense and defense and the consequent need of soldierly discipline4 ,insubordination1 which is the substance of free institutions1 is incompatible with a prosperous pastoral-nomadic mode of life4 ,when worked out with any degree of maturity and consistency the pastoral-nomadic culture that has to do with sheep and cattle appears always to have been a predatory1 and therefore a servile culture1 particularly when drawn on the large scale imposed by the topography of the central-,asiatic plains1 and reenforced with the use of the horse4 7,the reindeer nomads of the arctic seaboard may appear to be an exception1 at least in a degree1 but they are a special case1 admitting a particular explanation1 and their case does not affect the argument for the ,aryan civilisation47 ,the characteristic and pervasive human relation in such a culture is that of master and servant1 and the social 7domestic and civil7 structure is an organisation of graded servitude1 in which no one is his own master but the overlord1 even nominally4 ,the family is patriarchal1 women and children are in strict tutelage1 and discretion vests in the male head alone4 ,if the group grows large its civil institutions are of a like coercive character1 it commonly shows a rigorous tribal organisation1 and in the end1 with the help of warlike experience1 it almost unavoidably becomes a despotic monarchy4 ,it has not been unusual to speak of the popular institutions of ,germanic paganism--typified1 e4g41 by the ,scandinavian usages of local self-government in pagan times--as being typically ,aryan institutions1 but that is a misnomer due to uncritical generalisation guided by a chauvinistic bias4 ,these ancient north-,european usages are plainly alien to the culture reflected by the primitive ,aryan ,speech1 if we are to accept the consensus of the philological ethnologists to the effect that the people who used the primitive ,aryan speech must have been a community of pastoral nomads inhabiting the plains and uplands of a continental region4 ,that many of these philological ethnologists also hold to the view that these ,aryans were north-,european pagan blonds may raise a personal question of consistency but does not otherwise touch the present argument4 7b7 ,a racial stock that has ever been of first-rate consequence in the ethnology of ,europe 7the ,alpine1 brachycephalic brunet1 the homo alpinus of the ,linnean scheme7 comes into ,europe at this general period1 from ,asia2 and this race is held to have presently made itself at home1 if not dominant1 throughout middle ,europe1 where it has in historic times unquestionably been the dominant racial element4 7c7 ,the pastoral-nomadic institutions spoken of above appear to have best made their way in those regions of ,europe where this brachycephalic brunet stock has been present in some force if not as a dominant racial factor4 ,the evidence is perhaps not conclusive1 but there is at least a strong line of suggestion afforded by the distribution of the patriarchal type of institutions within ,europe1 including the tribal and gentile organisation4 ,there is a rough concomitance between the distribution of these cultural elements presumably derived from an ,aryan source on the one hand1 and the distribution past or present of the brachycephalic brunet type on the other hand4 ,the regions where this line of institutions are known to have prevailed in early times are1 in the main1 regions in which the ,alpine racial type is also known to have been present in force1 as1 e4g41 in the classic ,greek and ,roman republics4 ,at the same time a gentile organisation seems also to have been associated from the outset with the ,mediterranean racial stock and may well have been comprised in the institutional furniture of that race as it stood before the advent of the ,alpine stock2 but the drift of later inquiry and speculation on this head appears to support the view that this ,mediterranean gentile system was of a matrilinear character1 such as is found in many extant agricultural communities of the lower barbarian culture1 rather than of a patriarchal kind1 such as characterises the pastoral nomads4 ,the northern blond communities alone appear1 on the available evidence1 to have had no gentile or tribal institutions1 whether matrilinear or patriarchal4 ,the classic ,greek and ,roman communities appear originally to have been of the ,mediterranean race and to have always retained a broad substratum of the ,mediterranean stock as the largest racial element in their population1 but the ,alpine stock was also largely represented in these communities at the period when their tribal and gentile institutions are known to have counted for much1 as1 indeed1 it has continued ever since4 ,apart from these communities of the ,mediterranean seaboard1 the peoples of the ,keltic culture appear to have had the tribal and gentile system1 together with the patriarchal family1 in more fully developed form than it is to be found in ,europe at large4 ,the peoples of ,keltic speech are currently believed by ethnologists to have originally been of a blond type1 although opinions are not altogether at one on that head1--the tall1 perhaps red-haired1 brachycephalic blond1 the ,saxon of ,beddoe1 the ,oriental of ,deniker4 ,but this blond type is perhaps best accounted for as a hybrid of the dolicho-blond crossed on the ,alpine brachycephalic brunet4 ,some such view of its derivation is fortified by what is known of the prehistory and the peculiar features of the early ,keltic culture4 ,this culture differs in some respects radically from that of the dolicho-blond communities1 and it bears more of a resemblance to the culture of such a brunet group of peoples as the early historic communities of upper and middle ,italy4 ,if the view is to be accepted which is coming into currency latterly1 that the ,keltic is to be affiliated with the culture of ,hallstatt and ,la ,tene1 such affiliation will greatly increase the probability that it is to be counted as a culture strongly influenced if not dominated by the ,alpine stock4 ,the ,hallstatt culture1 lying in the valley of the ,danube and its upper affluents1 lay in the presumed westward path of immigration of the ,alpine stock2 its human remains are of a mixed character1 showing a strong admixture of the brachycephalic brunet type2 and it gives evidence of cultural gains due to outside influence in advance of the adjacent regions of ,europe4 ,this ,keltic culture1 then1 as known to history and prehistory1 runs broadly across middle ,europe along the belt where blond and brunet elements meet and blend2 and it has some of the features of that predatory-pastoral culture reflected by the primitive ,aryan speech1 in freer development1 or in better preservation1 than the adjacent cultural regions to the north2 at the same time the peoples of this ,keltic culture show more of affiliation to or admixture with the brachycephalic brunet than the other blond-hybrid peoples do4 ,on the other hand the communities of dolicho-blond hybrids on the shores of the narrow ,scandinavian waters1 remote from the centers of the ,alpine culture1 show little of the institutions peculiar to a pastoral people4 ,these dolicho-blond hybrids of the ,north come into history at a later date1 but with a better preserved and more adequately recorded paganism than the other barbarians of ,europe4 ,the late-pagan ,germanic-,scandinavian culture affords the best available instance of archaic dolicho-blond institutions1 if not the sole instance2 and it is to be noted that among these peoples the patriarchal system is weak and vague1--women are not in perpetual tutelage1 the discretion of the male head of the household is not despotic nor even unquestioned1 children are not held under paternal discretion beyond adult age1 the patrimony is held to no clan liabilities and is readily divisible on inheritance1 and so forth4 ,neither is there any serious evidence of a tribal or gentile system among these peoples1 early or late1 nor are any of them1 excepting the late and special instance of the ,icelandic colony1 known ever to have been wholly or mainly of pastoral habits2 indeed1 they are known to have been without the pastoral animals until some time in the neolithic period4 ,the only dissenting evidence on these heads is that of the ,latin writers1 substantially ,caesar and ,tacitus1 whose testimony is doubtless to be thrown out as incompetent in view of the fact that it is supported neither by circumstantial evidence nor by later and more authentic records4 ,in speaking of tribes among the ,germanic hordes these ,latin writers are plainly construing ,germanic facts in ,roman terms1 very much as the ,spanish writers of a later day construed ,mexican and ,peruvian facts in mediaeval-feudalistic terms1--to the lasting confusion of the historians2 whereas in enlarging on the pastoral habits of the ,germanic communities they go entirely on data taken from bodies of people on the move and organised for raiding1 or recently and provisionally settled upon a subject population presumably of ,keltic derivation or of other alien origin and inhabiting the broad lands of middle ,europe remote from the permanent habitat of the dolicho-blond4 ,great freedom of assumption has been used and much ingenuity has been spent in imputing a tribal system to the early ,germanic peoples1 but apart from the sophisticated testimony of these classical writers there is no evidence for it4 ,the nearest approach to a tribal or a gentile organisation within this culture is the kin which counts for something in early ,germanic law and custom2 but the kin is far from being a gens or clan1 and it will be found to have more of the force of a clan organisation the farther it has strayed from the ,scandinavian center of diffusion of the dolicho-blond and the more protracted the warlike discipline to which the wandering host has been exposed4 ,all these properly ,aryan institutions are weakest or most notably wanting where the blond is most indubitably in evidence4 ,taking early ,europe as a whole1 it will appear that among the ,european peoples at large institutions of the character reflected in the primitive ,aryan speech and implied in the pastoral-nomadic life evidenced by the same speech are relatively weak1 ill-defined or wanting1 arguing that ,europe was never fully ,aryanised4 ,and the peculiar geographical and ethnic distribution of this ,aryanism of institutions argues further that the dolicho-blond culture of the ,scandinavian region was less profoundly affected by the ,aryan invasion than any other equally well known section of ,europe4 ,what is known of this primitive ,aryan culture1 material1 domestic1 civil and religious1 through the ,sanskrit and other early ,asiatic sources1 may convincingly be contrasted with what is found in early ,europe4 ,these ,asiatic records1 which are our sole dependence for a competent characterisation of the ,aryan culture1 shows it to have resembled the culture of the early ,hebrews or that of the pastoral ,turanians more closely than it resembles the early ,european culture at large1 and greatly more than it resembles the known culture of the early communities of dolicho-blond hybrids4 7d7 ,scarcely more conclusive1 but equally suggestive1 is the evidence from the religious institutions of the ,aryanised ,europeans4 ,as would be expected in any predatory civilisation1 such as the pastoral-nomadic cultures typically are1 the ,aryan religious system is said to have leaned strongly toward a despotic monarchical form1 a hierarchically graded polytheism1 culminating in a despotic monotheism4 ,there is little of all this to be found in early pagan ,europe4 ,the nearest well-known approach to anything of the kind is the late-,greek scheme of ,olympian divinities with ,zeus as a doubtful suzerain1--known through latter-day investigations to have been superimposed on an earlier cult of a very different character4 ,the ,keltic 7,druidical7 system is little known1 but it is perhaps not beyond legitimate conjecture1 on the scant evidence available1 that this system had rather more of the predatory1 monarchical-despotic cast than the better known pagan cults of ,europe4 ,the ,germanic paganism1 as indicated by the late ,scandinavian--which alone is known in any appreciable degree--was a lax polytheism which imputed little if any coercive power to the highest god1 and which was not taken so very seriously anyway by the worshipers1--if ,snorri's virtually exclusive account is to be accepted without sophistication4 ,the evidence accorded by the religious cults of ,europe yields little that is conclusive1 beyond throwing the whole loose-jointed1 proliferous ,european paganism out of touch with anything that can reasonably be called ,aryan4 ,and this in spite of the fact that all the available evidence is derived from the ,european cults as they stood after having been exposed to long centuries of ,aryanisation4 ,so that it may well be held that such systematisation of myths and observances as these ,european cults give evidence of1 and going in the direction of a despotic monotheism1 is to be traced to the influence of the intrusive culture of the ,aryan or ,aryanised invaders1--as is fairly plain in the instance of the ,olympians4 7e7 ,that the languages of early ,europe1 so far as known1 belong almost universally to the ,aryan family may seem an insurmountable obstacle to the view here spoken for4 ,but the difficulties of the case are not appreciably lessened by so varying the hypothesis as to impute the ,aryan speech to the dolicho-blond1 or to any blond stock1 as its original bearer4 ,indeed1 the difficulties are increased by such an hypothesis1 since the ,aryan-speaking peoples of early times1 as of later times1 have in the main been communities made up of brunets without evidence of a blond admixture1 not to speak of an exclusively blond people4 7,there is no evidence of the existence of an all-blond people anywhere1 early or late47 ,the early ,european situation1 so far as known1 offers no exceptional obstacles to the diffusion of an intrusive language4 ,certain mass movements of population1 or rather mass movements of communities shifting their ground by secular progression1 are known to have taken place1 as1 e4g41 in the case of the ,hallstatt-,la ,tene-,keltic culture moving westward on the whole as it gained ground and spread by shifting and ramification outward from its first-known seat in the upper ,danube valley4 ,all the while1 as this secular movement of growth1 ramification and advance was going on1 the ,hallstatt-,la ,tene-,keltic peoples continued to maintain extensive trade relations with the ,mediterranean seaboard and the ,a,egean on the one side and reaching the ,north-,sea littoral on the other side4 ,in all probability it is by trade relations of this kind--chiefly1 no doubt1 through trade carried on by itinerant merchants--that the new speech made its way among the barbarians of ,europe2 and it is no far-fetched inference that it made its way1 in the ,north at least1 as a trade jargon4 ,all this accords with what is going on at present under analogous circumstances4 ,the superior merit by force of which such a new speech would make its way need be nothing more substantial than a relatively crude syntax and phonetics--such as furthers the dissemination of ,english to-day in the form of ,chinook jargon1 ,pidgin ,english1 and ,beach la ,mar4 ,such traits1 which might in some other light seem blemishes1 facilitate the mutilation of such a language into a graceless but practicable trade jargon4 ,with jargons as with coins the poorer 7simpler7 drives out the better 7subtler and more complex74 ,a second1 and perhaps the chief1 point of superiority by virtue of which a given language makes its way as the dominant factor in such a trade jargon1 is the fact that it is the native language of the people who carry on the trade for whose behoof the jargon is contrived4 ,the traders1 coming in contact with many men1 of varied speech1 and carrying their varied stock of trade goods1 will impose their own names for the articles bartered and so contribute that much to the jargon vocabulary1--and a jargon is at its inception little more than a vocabulary4 ,the traders at the same time are likely to belong to the people possessed of the more efficient technology1 since it is the superior technology that commonly affords them their opportunity for advantageous trade2 hence the new or intrusive words1 being the names of new or intrusive facts1 will in so far find their way unhindered into current speech and further the displacement of the indigenous language by the jargon4 ,such a jargon at the outset is little else than a vocabulary comprising names for the most common objects and the most tangible relations4 ,on this simple but practicable framework new varieties of speech will develop1 diversified locally according to the kind and quantity of materials and linguistic tradition contributed by the various languages which it supplants or absorbs4 ,in so putting forward the conjecture that the several forms of ,aryan speech have arisen out of trade jargons that have run back to a common source in the language of an intrusive proto-,aryan people1 and developing into widely diversified local and ethnic variants according as the mutilated proto-,aryan speech 7vocabulary7 fell into the hands of one or another of the indigenous barbarian peoples1--in this suggestion there is after all nothing substantially novel beyond giving a collective name to facts already well accepted by the philologists4 ,working backward analytically step by step from the mature results given in the known ,aryan languages they have discovered and divulged--with what prolixity need not be alluded to here--that in their beginnings these several idioms were little else than crude vocabularies covering the commonest objects and most tangible relations1 and that by time-long use and wont the uncouth strings of vocables whereby the beginners of these languages sought to express themselves have been worked down through a stupendously elaborate fabric of prefixes1 infixes and suffixes1 etc41 etc41 to the tactically and phonetically unexceptionable inflected languages of the ,aryan family as they stood at their classical best4 ,and what is true of the ,european languages should apparently hold with but slight modification for the ,asiatic members of the family4 ,these ,european idioms are commonly said to be1 on the whole1 less true to the pattern of the inferentially known primitive ,aryan than are its best ,asiatic representatives2 as would be expected in case the latter were an outgrowth of jargons lying nearer the center of diffusion of the proto-,aryan speech and technology4 ,as regards the special case of the early north-,european communities of dolicho-blond hybrids1 the trade between the ,baltic and ,danish waters on the one hand and the ,danube valley1 ,adriatic and ,a,egean on the other hand is known to have been continued and voluminous during the neolithic and bronze ages1--as counted by the ,scandinavian chronology4 ,in the course of this traffic1 extending over many centuries and complicated as it seems to have been with a large infiltration of the brachycephalic brunet type1 much might come to pass in the way of linguistic substitution and growth4 ,,footnotes3 #a ,reprinted by permission from ,the ,university of ,missouri ,bulletin1 ,science ,series1 vol4 ii1 ,no4 #c4 #b ,the ,mutation ,theory and the ,blond ,race1 in ,the ,journal of ,race ,development1 ,april1 #aiac4 ,,an ,,early ,,experiment ,,in ,,trusts#a ,according to ,much1#b following in the main the views of ,penka1 ,wilser1 ,de ,lapouge1 ,sophus ,mueller1 ,andreas ,hansen1 and other spokesmen of the later theories touching ,aryan origins1 the area of characterisation of the ,west-,european culture1 as well as of that dolicho-blond racial stock that bears this culture1 is the region bordering on the ,north ,sea and the ,baltic1 and its center of diffusion is to be sought on the southern shores of the ,baltic4 ,this region is in a manner1 then1 the primary focus of that culture of enterprise that has reshaped the scheme of life for mankind during the ,christian era4 ,its spirit of enterprise and adventure has carried this race to a degree of material success that is without example in history1 whether in point of the extent or of the scope of its achievements4 ,up to the present the culminating achievement of this enterprise is dominion in business1 and its most finished instrument is the quasi-voluntary coalition of forces known as a ,trust4 ,in its method and outward form this enterprise of the ,indo-germanic racial stock has varied with the passage of time and the change of circumstances2 but in its spirit and objective end it has maintained a singularly consistent character through all the mutations of name and external circumstance that have passed over it in the course of history4 ,in its earlier1 more elemental expression this enterprise takes the form of raiding1 by land and sea4 ,a shrewd interpretation might1 without particular violence to the facts1 find a coalition of forces of the kind which is later known as a ,trust in the ,barbarian raids spoken of as the ,voelkerwanderung4 ,such an interpretation would seem remote1 however1 and not particularly apt4 ,the beginnings of a bona fide trust enterprise are of a more businesslike character and have left a record more amenable to the tests of accountancy4 ,a trust1 as that term is colloquially understood1 is a business organisation4 ,now1 the line of enterprise1 of indigenous growth in the north-,european cultural region1 which first falls into settled shape as an orderly1 organised business is the traffic of those seafaring men of the ,north known to fame as the ,vikings4 ,and it is in this traffic1 so far as the records show1 that a trust1 with all essential features1 is first organised4 ,the term viking covers1 somewhat euphemistically1 two main facts3 piracy and slave-trade4 ,without both of these lines of business the traffic could not be maintained in the long run2 and both1 but more particularly the latter1 presume1 as an indispensable condition to their successful prosecution1 a regular market and an assured demand for the output4 ,it is a traffic in which1 in order to get the best results1 a relatively large initial investment must be sunk1 and the period of turnover--the period of production--is necessarily of some duration2 the risk is also considerable4 ,further1 certain technological prerequisites must be met1 in the way particularly of shipbuilding1 navigation1 and the manufacture of weapons2 an adequate accumulation of capital goods must be had1 coupled with a sagacious spirit of adventure2 there must also be an available supply of labor4 ,there appears to have been a concurrence of all these circumstances1 together with favorable market conditions1 in the south-,baltic region from about the sixth century onward2 the circumstances apparently growing gradually more favorable through the succeeding four centuries4 ,the viking trade appears to have grown up gradually on the ,baltic seaboard1 as well as in the ,sound country and throughout the fjord region of ,norway1 as a by-occupation of the farming population4 ,its beginnings are earlier than any records1 so that the earliest traditions speak of it as an institution well understood and fully legitimate4 ,the well-to-do freehold farmers1 including some who laid claim to the rank of jarl1 seem to have found it an agreeable and honorable diversion1 as well as a lucrative employment for their surplus wealth and labor supply4 ,from such sporadic and occasional beginnings it passed presently into an independently organised and self-sustaining line of business enterprise1 and in the course of time it attained a settled business routine and a defined code of professional ethics4 ,syndication1 of a loose form1 had begun as early as the oldest accounts extant1 but it is evident from the way in which the matter is spoken of that combination had not at that date--say1 about the beginning of the ninth century--long been the common practice4 ,it was not then a matter of course4 ,the early combinations were relatively small and transient4 ,they took the form of gentlemen's agreements1 pools1 working arrangements1 division of territory1 etc41 rather than hard and fast syndicates4 ,in those early days a combine would be formed for a season between two or more capitalist-undertakers1 for the most part employing their own capital only1 without recourse to credit2 although credit arrangements occur quite early1 but are not very common in the earlier recorded phases of the trade4 ,such a loose combine1 say about the middle of the ninth century1 might comprise from two to a dozen boats4 ,what may be called the normal unit in the trade at that time was a boat of perhaps thirty tons' burden1 with an effective crew of some eighty men4 ,boats and crews gradually increase both in size and efficiency for a century and a half after that time4 ,syndication1 of an increasingly close texture and increasingly permanent effect1 appears to have rapidly grown in favor through the ninth and tenth centuries4 ,the reasons for this movement of coalition are plain4 ,the volume of the trade1 as well as its territorial extension1 increased uninterruptedly4 ,the technique of the trade was gradually improved1 and the equipment and management were improved and reduced to standard forms4 ,the tonnage employed at any given time can1 of course1 not be ascertained with anything like a confident approximation2 but its steady increase is unmistakable4 ,year by year the boats and crews increase in average size as well as in number1 until by the middle of the tenth century the number of men and ships engaged1 as well as the volume of capital invested in the trade1 are probably larger than the corresponding figures for any other form of lucrative enterprise at that time4 ,it is1 at that time1 altogether the best-organised line of enterprise in the ,west-,european region in respect of its business management1 and the most efficient and progressive in respect of its equipment and technology4 ,at a conservative guess1 the aggregate number of ships engaged about the middle of the tenth century must have appreciably exceeded six hundred1 and may have reached one thousand2 with crews which had also grown gradually larger until they may by this time have averaged #aej or #bjj men4 ,there was consequently what would in modern phrase be called an overproduction of piratical craft--overinvestment in the viking trade and consequent cut-throat competition4 ,the various coalitions came into violent conflict1 and many of them went under1 with great resultant loss of capital1 impoverishment of well-to-do families1 hardship and demoralisation of the entire trade4 ,added to these untoward conditions within the trade was the open disfavor of the crown1 in each of the three ,scandinavian kingdoms4 ,the traffic had long passed out of the stage at which it had offered a lucrative opening for farmers' sons who were tired of the farm and eager to find excitement1 reputation1 and creature comforts in that wider human contact and busier life for which the tedium of the farm had sharpened their appetites4 ,the larger capitalists alone could succeed as organisers or directors of a viking concern under the changed conditions4 ,the common run of well-to-do farmers had neither the tangible assets nor the good-will requisite to the successful promotion of a new company of freebooters4 ,at the best1 their sons could enter the business only as employees and with but a very uncertain outlook to speedy promotion to an executive position4 ,on the other hand1 as the trade became better organised in stronger hands1 with a larger equipment1 and as the competition within the trade grew more severe1 the blackmail from which much of the profits of the trade was drawn grew more excessive and more uncertain1 both as to its amount and as to the manner and incidents with which it was levied4 ,as competition grew severe and the small vikings practically disappeared1 and as the demoralisation that goes with cut-throat competition set in1 the livelihood of the common people1 at whose expense the vikings lived1 grew progressively more precarious1 and even their domestic peace and household industry grew insecure4 ,popular sentiment was running strongly against the whole traffic4 ,so much so1 indeed1 as to threaten the tenure of courts and sovereigns if the popular hardship incident to the continuance of the trade were not abated4 ,the politicians1 therefore1 made a strenuous show of effort to regulate1 or even to repress1 the viking organisations4 ,outright and indiscriminate repression was scarcely a feasible remedy1 certainly not an agreeable one4 ,the viking companies were a source of strength to the country1 both in that they might be drawn on for support in case of war and in that they brought funds into the country4 ,the remedy to which the politicians turned1 by preference1 therefore1 was a regulation of the companies in such a manner as to let the foreigners pay the tax1 to adapt a modern phrase4 ,if the freebooters of a given state could be induced1 by stringent regulations1 to prey upon the people of the neighboring states1 and particularly if they worked at cross-purposes with similar companies of freebooters domiciled in such neighboring states1 it was then plain to the sagacious politicians of those days that the companies might be more of a blessing than a curse4 ,on trial it was found that this policy of control gave at the best but very dubious results1 and consequently the repressive hand of the authorities perforce fell with increasingly rigorous pressure on the viking organisations1 particularly on the smaller ones which were scarcely of national importance4 ,the competition in the trade was too severe to admit of a consistent avoidance of excesses and irregularities on the part of the vikings1 and these irregularities obliged the authorities to interfere4 ,under these circumstances it is plain that no viking combine could hope to prosper in the long run unless it were strong enough to take an international position and to maintain a practical monopoly of the trade4 ,international in these premises means within the ,scandinavian countries4 ,in the days of its finest development the viking trade was domiciled in the ,scandinavian countries1 almost exclusively4 ,this means the two ,scandinavian peninsulas1 with ,iceland1 the ,faroes1 ,orkneys1 ,hebrides1 and the ,scandinavian portions of ,scotland4 ,to this1 for completeness of statement1 is to be added a stretch of ,wendish seaboard on the south of the ,baltic and a negligible patch of ,german territory4 ,the trade1 so far as regards its home offices1 to use a modern phrase1 gathered in the main about two chief centers3 the ,orkneys and the south end of the ,baltic4 ,outlying regions1 such as the ,norwegian fjord country and the ,hebrides1 are by no means negligible1 but the two regions named above are after all the chief seats of the traffic2 and of these two centers the ,baltic--chiefly ,danish--region is in many respects the more notable4 ,its viking traffic is better1 more regularly organised1 is carried on with a more evident sense of a solidarity of interests and a more consistent view to a long-term prosperity4 ,as one might say1 looking at the matter from the modern standpoint1 it has more of a look of stability and conservative management1 such as belongs to an investment business1 and has less of a speculative air1 than the trade that centers in the western isles4 ,perhaps it is just on this account1 because of its greater stability of interests and more conservative animus1 that the traffic of this region responds with greater alacrity to the pressure of excessive competition and political interference1 and so enters on a policy of larger and closer coalition4 ,it may be added that many of the great captains of adventure in this region are men of good family and substantial standing in the community4 ,as may often happen in a like conjuncture1 when the irksomeness of this competitive situation in the ,baltic was fast becoming intolerable1 there arose a man of far-seeing sagacity and settled principles1 of executive ability and businesslike integrity1 who saw the needs of the hour and the available remedy1 and who saw at the same glance his own opportunity of gain4 ,this man was ,palnatoki1 the descendant of an honorable line of country gentlemen in the island of ,funen1 whose family had from time immemorial borne an active and prudent part in the trade1 and had been well seen at court and in society4 ,he was a man of mature experience1 with a large investment in the traffic1 and with a body of good-will that gave him perhaps his most decisive advantage4 ,during the reign of ,harald ,gormsson1 about the middle of the tenth century1 ,palnatoki seems to have cast about for a basis on which to promote an international coalition of vikings1 such as would put an end to headlong competition in the trade and would at the same time be placed above the accidents of national politics4 ,to this end it was necessary to find a neutral ground on which to establish the home office of the concern4 ,such a mediaeval-,scandinavian ,new ,jersey was the ,wendish kingdom at the south of the ,baltic4 ,jomsborg 7on the island of ,wollin1 at the mouth of the ,oder7 seems to have been a resort of vikings before ,palnatoki organised his company there and strengthened the harbor1 which may have been fortified by those who held it before him4 ,here the new company was incorporated under a special franchise from the ,wendish crown1 with the stipulation that it was to do business only outside the ,wendish territories4 ,the tangible assets of the corporation were the harbor and fortified town of ,jomsborg1 together with the ships and other equipment of such vikings as were admitted to fellowship2 its intangible assets were its franchise and the good-will of the promoter and the underlying companies4 ,its by-laws were very strict1 both as to the discipline of the personnel and as to the distribution of earnings4 ,the promoter1 who was the first president of the corporation1 was given extreme powers for the enforcement of the by-laws1 and throughout his long incumbency of office he exercised his powers with the greatest discretion and with a most salutary effect4 ,this neutral1 international corporation of piracy rapidly won a great prestige4 ,in modern phrase1 its intangible assets grew rapidly larger4 ,backed by the competitive pressure which the new corporation was able to bring upon the smaller companies and syndicates1 this prestige of the ,jomsvikings brought a steady run of applications for admission into the trust4 ,the trust's policy was substantially the same as has since become familiar in other lines of enterprise1 with the difference that in those early days the competitive struggle took a less sophisticated form4 ,outstanding syndicates and private firms were given the alternative of submission to the trust's terms or retirement from the traffic4 ,there was great hardship among the outstanding concerns1 especially among that large proportion of them that were unable to meet the scale of requirements imposed on applicants for admission into the trust4 ,the qualifications both as to equipment and personnel were extremely strict1 so that a large percentage of the applicants were excluded2 and the unfortunates who failed of admission found themselves in a doubtful position that grew more precarious with every year that passed4 ,practically1 such concerns were either frozen out of the business or forced into a liquidation which permanently wound up their affairs and terminated their corporate existence4 ,the accounts extant are of course not reliable in minute details1 being not strictly contemporary1 nor are they cast in such modern terms as would give an easy comparison with present-day facts4 ,the chief documents in the case are ,jomsvikingasaga1 ,saxo ,grammaticus1 ,heimskringla1 and ,olafssaga ,tryggvasonar2 but nearly the whole of the saga literature bears on the development of the viking trade1 and characteristic references to the ,jomsviking trust occur throughout4 ,the evidence afforded by these accounts converges to the conclusion that toward the close of the tenth century the trust stood in a high state of prosperity and was in a position virtually to dictate the course of the traffic for all that portion of the viking trade that centered in the ,baltic4 ,its prestige and influence were strong wherever the traffic extended1 even in the region of the western isles and in the fjord country of ,norway4 ,it had even come to be a factor of first-rate consequence in international politics1 and its power was feared and courted by those two sovereigns who established the ,danish rule in ,england1 as well as by their ,swedish1 ,norwegian1 and ,russian contemporaries4 ,it is probably not an overstatement to say that the ,danish conquest of ,england would not have been practicable except for the alliance of the trust with ,svend1 which enabled him to turn his attention from the complications of ,scandinavian politics to his ,english interests4 ,the extent of the trust's material equipment at the height of its prosperity is a matter of surmise rather than of statistical information4 ,some notion of its strength may be gathered from the statement that the fortified harbor of ,jomsborg included within its castellated sea-wall an inclosed basin capable of floating three hundred ships at anchor4 ,in the great raid against the kingdom of ,norway1 whose failure inaugurated the disintegration of the trust1 the number of ships sent out is variously given by different authorities4 ,the ,jomsvikingasaga says that they numbered one long hundred4 ,this fleet1 however1 was made up of craft selected from among the ships that were under the immediate command of four of the great captains of adventure4 ,the fleet1 as it lay in the ,sound before the final selection1 is said to have numbered #ahe1 but the context shows that this fleet was but a fraction of the aggregate ,jomsviking tonnage4 ,of this disastrous expedition but a fraction returned2 yet various later expeditions of the ,jomsvikings are mentioned in which some scores of their ships took part4 ,the trust having become an international power1 it undertook to shape the destiny of nations and dynasties1 and it broke under the strain4 ,it1 or its directors1 took a contract to bring ,norway into subjection to the ,danish crown4 ,partly through untoward accidents1 partly through miscalculation and hurried preparations1 it failed in this undertaking1 which brought the affairs of the trust to a spectacular crisis4 ,from this disaster it never recovered4 ,with the opening of the eleventh century the viking trust fell into abeyance1 and in a few years it disappeared from the field4 ,there are several good reasons for its failure4 ,on the death of its founder the management had passed into the hands of ,sigvaldi1 a man of less sagacity and less integrity as well as of more unprincipled personal ambition1 and somewhat given to flighty ventures in the field of politics4 ,it was ,sigvaldi's overweening personal ambition that committed the corporation to the ill-advised expedition against ,norway4 ,the trust1 moreover1 being supreme within its field1 the discipline grew lax and its exactions grew arbitrary1 sometimes going to unprovoked excesses4 ,as one might say1 too little thought was given to economies of production1 and the charges were pushed beyond what the traffic would bear4 ,but for all that1 in spite of its meddling in politics1 and in spite of jobbery and corruption in its management1 the trust still had a fair outlook for continued success1 except that the bottom dropped out of the trade4 ,for better or worse1 the slave-trade in the north of ,europe collapsed on the introduction of ,christianity1 at least so far as regards the trade in ,christians2 and without a slave market the viking enterprise had no chance of reasonable earnings4 ,at the same time1 the risk and hardships of the traffic--the cost of production--grew heavier as the countries to the south became better able to defend their shores4 ,the passenger traffic failed almost entirely1 and the goods traffic was in a disorganised and unprofitable state4 ,the costs were fast becoming prohibitive1 even to men so enterprising and necessitous as the ,norwegian freebooters4 ,the situation changed in such a way as to leave the trust out4 ,some show of corporate existence was still maintained for a short period after the trust's great crisis1 but there was an end of discipline and authoritative control4 ,the minor concerns and private establishments that had once formed part of the trust continued in the trade on an independent footing1 but with decreasing regularity and with diminishing strength4 ,as the equipment wore out it was not replaced1 and the trade lapsed4 ,the great captains of the industry1 like ,sigvaldi1 ,thorkel ,haraldson1 ,sigurd ,kapa1 and ,vagn ,akason1 turned their holdings to the service of the dynastic politics which were then engaging the attention of the northern countries4 ,much of this body of enterprise and wealth was exhausted in working out the imperialistic schemes of expansion of ,svend and ,knut the ,great2 and what was left over shared the fortunes of the other available forces of the ,scandinavian countries1 being dissipated in political dissensions1 extortionate government organisations1 and the establishment of a church and a nobility4 ,,footnotes3 #a ,reprinted by permission from ,the ,journal of ,political ,economy1 ,vol4 ,,xii1 ,march1 #aijd4 #b ,,matthaeus ,,much1 ,die ,heimat der ,indogermanen4 ,,the ,,end