 Essays on some Unsettled Questions of Political Economy. Essay No. 4 Part 2. Essays on some Unsettled Questions of Political Economy by John Stuart Mill. Essay 4. On Profits and Interest. Part 2. The only expression of the law of prophets, which seems to be correct, is that they depend upon the cost of production of wages. This must be received as the ultimate principle. From this may be deduced all the corollaries which Mr. Ricardo and others have drawn from his theory of profits, as expounded by himself, the cost of production of the wages of one laborer for a year is the result of two concurrent elements or factors. These, first, the quality of commodities which the state of the labor market affords to him. Secondly, the cost of production of each of those commodities. It follows that the rate of profits can never rise but in conjunction with one or two other changes. First, a diminished renumeration of the laborer, or secondly, an improvement in production, or an extension of commerce by which any of the articles habitually consumed by the laborer may be obtained at a smaller cost. If the improvement be in any article which is not consumed by the laborer, it merely lowers the price of that article, and thereby benefits capitalists and all other people so far as they are consumers of that particular article. It may be said to increase gross profits but not the rate of profit. So, on the other hand, the rate of profit cannot fall unless concurrently with one of two events. First, an improvement in the laborer's condition, or secondly, an increased difficulty of producing or importing some article which the laborer habitually consumes. The progress of population and cultivation has a tendency to lower profits through the latter of these two channels, owing to the well-known law of the application of capital to land that a double capital does not, catarys paribus, yield a double produce. There is, therefore, a tendency in the rate of profits to fall with the progress of society, but there is also an antagonist tendency of profits to rise by the successive introduction of improvements in agriculture and in the production of those manufactured articles which the laborers consume. Supposing, therefore, that the actual comforts of the laborer remain the same, profits will fall or rise according as population or improvements in the production of food and other necessities advance fastest. The rate of profits, therefore, tends to fall from the following causes. One, an increase of capital beyond a population, producing increased competition for labor. Two, an increase of population, occasioning a demand for an increased quantity of food which must be produced at a greater cost. The rate of profits tends to rise from the following causes. One, an increase of population beyond capital, producing increased competition for employment. Two, improvements producing increased cheapness of necessities and other articles habitually consumed by the laborer. The circumstances which regulate the rate of interest have usually been treated, even by professed writers on political economy, in a vague, loose, and unscientific manner. It has, however, been felt that there is some connection between the rate of interest and the rate of profit, that, to use the words of Adam Smith, much will be given for money when much can be made of it. It has been felt also that the fluctuations in the market rate of interest from day to day are determined like other matters of bargain and sale by demand and supply. It has, therefore, been considered as an established principle that the rate of interest varies from day to day according to the quantity of capital offered or called on loan, but conforms on the average of years to a standard determined by the rate of profits, bearing some proportion to that rate, but a proportion which few attempts have been made to define. In consequence of these views, it has been customary to judge of the general rate of profits at any time or place by the rate of interest at that time and place it being supposed that the rate of interest, though liable to temporary fluctuations, can never vary for a very long period of time unless profits vary, a notion which appears to us to be erroneous. It was observed by Adam Smith that profits may be considered as divided into two parts, of which one may properly be considered as the renumeration for the use of the capital itself, the other as the reward of the labor of superintending its employment, and that the former of these will correspond with the rate of interest. The producer who borrows capital to employ it in his business will consent to pay for the use of it all that remains of the profits if he can make it, after reserving what he considers reasonable renumeration for the trouble and risk which he incurs by borrowing and enjoying it. This remark is just, but it remains necessary to give greater precision in the ideas which it involves. The difference between the profit, which can be made by the use of capital, and the interest which will be paid for it is rightly characterized as wages of superintendents, but to infer from this that it is regulated by entirely the same principles as other wages would be to push the analogy too far. It is wages, but wages paid by a commission upon the capital employed. If the general rate of profit is ten percent, and the rate of interest five percent, the wages of superintendents will be five percent, and the one borrower employs a capital of one hundred thousand, one another no more than one hundred one, the labor of both will be rewarded at the same percentage, though in the one ease this symbol will represent an income of five one, in the other case of five thousand one. Yet it cannot be pretended that the labor of the two borrowers differs in this proportion. The rule therefore that equal quantities of labor of equal hardness and skill are equally renumerated does not hold of this kind of labor. The wages of any other labor are here an inapplicable criterion. The wages of superintendents are distinguished from ordinary wages by another peculiarity, that they are not paid in advance out of capital, like the wages of all other laborers, but merge in the profit, and are not realized until the production is completed. This takes them entirely out of the ordinary law of wages. The wages of laborers who are paid in advance are regulated by the number of competitors compared with the amount of capital. The laborers can consume no more than what has been previously accumulated, but there is no such limit to the renumeration of a kind of labor which is not paid for out of wealth previously accumulated, but out of that produce which it is itself employed in calling into existence. When the circumstances are duly weighed it will be perceived that although profit may be correctly analyzed into interest and wages of superintendents, we ought not to lay it down as the law of interest, that it is profits minus the wages of superintendents. For the two expressions it would be decidedly the more correct that the wages of superintendents are regulated by the rate of interest, or are equal to profits minus interest. In strict propriety neither expression would be allowed. Interest and wages of superintendents can scarcely be said to depend upon one another. They are to one another in the same relation as wages and profits are. They are like two buckets in a well. When one rises the other descends, but neither of the two motions in the cause of the other both are simultaneous effects of the same cause, the turning of the windlass. There are among the capitalists of every country a considerable number who are habitually and almost necessarily lenders, to whom scarcely any difference between what they could receive for their money and what they could make by it would be an equivalent for incurring the risk and labor of carrying out business. In this predicament is the property of widows and orphans, of many public bodies, of charitable institutions, most property which is vested in trustees, and the property of a great number of persons unused to business and who have a distaste for it or whose other occupations prevent their engaging in it. How long a proportion of the property lent to the nation comes under this description has been pointed out in Mr. Tuck's considerations on the state of the currency. There is another large class consisting of bankers, billbrokers, and others who are money lenders by profession, and who enter into that profession with the intention of making such gains as it will yield them, and who would not be induced to change their business in any but a very strong pecuniary inducement. There is therefore a large class of persons who are habitually lenders. On the other hand, all persons in business may be considered as habitually borrowers, except in times of stagnation they are all desirous of extending their business beyond their own capital, and are never desirous of lending any portion of their capital except for very short periods during which they cannot advantageously invest it in their own trade. There is in short a productive class and there is, besides, a class technically styled the moneyed class who live upon the interest of their capital without engaging personally in the work of production. The class of borrowers may be considered as unlimited. There is no quantity of capital that could be offered to be lent which the productive classes would not be willing to borrow at any rate of interest which would afford them the slightest excess of profit above a equivalent for the additional risk incurred by that transaction. Of the evils attendant on insolvency, the only assignable limit to the inclination to borrow is the power of giving security. The producers would find it difficult to borrow more than an amount equal to their own capital. If more than half the capital of the country were in the hands of persons who preferred lending it to engaging personally in business, and if the surplus were greater than could be invested in loans to government or in mortgages upon the property of unproductive consumers, the competition of lenders would force down the rate of interest very low. A certain portion of the moneyed class would be obliged either to sacrifice their predilections by engaging in business or to lend on inferior security, and they would accordingly accept where they could obtain good security and abatement of interest equivalent to the difference of risk. This is an extreme case. Let us put an extreme case of a contrary kind. Suppose that the wealthy people of any country, not relishing an idle life, and having a strong taste for gainful labor, were generally indisposed to accept of a smaller income in order to be relieved of the labor and anxiety of business. Every producer in flourishing circumstances would be eager to borrow and few willing to lend. Under these circumstances the rate of interest would differ very little from the rate of profit. The trouble of managing a business is not proportionally increased by an increase of the magnitude of the business, and a very small surplus profit above the rate of interest would therefore be a sufficient inducement to capitalists to borrow. We may even conceive a people whose habits were such that in order to induce them to lend it might be necessary to offer them a rate of interest fully equal to the ordinary rate of profits. In that case, of course, the productive classes would scarcely ever borrow, but government and the unproductive classes, who do not borrow in order to make a profit by the loan, but from the pressure of a real or supposed necessity, might still be ready to borrow at this high rate. Although the inclination to borrow has no fixed or necessary limit except the power of giving security, yet it is always in point of fact stops short of this, from the uncertainty of the prospects of any individual producer which generally indisposes him to involve himself to the full extent of his means of payment. There is never any permanent want of market for things in general, but there may be so for the commodity which any one individual is producing. And even if there is a demand for the commodity, people may not buy it of him but of some other. There are, consequently, never more than a portion of the producers, the state of whose business encourages them to add to their capital by borrowing, and even these are disposed to borrow only as much as they see an immediate prospect of profitably employing. There is therefore a practical limit to the demand of borrowers at any given instant, and when these demands are all satisfied, any additional capital offered on loan can find an investment only by a reduction of the rate of interest. The amount of borrowers being given, and by the amount of borrowers here is meant the aggregate sum which people are willing to borrow at some given rate, the rate of interest will depend upon the quantity of capital owned by people who are unwilling or unable to engage in trade. The circumstances which determine this are, on the one hand, the degree in which a taste for business or an aversion to it happens to be prevalent among the classes possessed of property, and on the other hand, the amount of annual accumulation from the earnings of labor. Those who accumulate their wages, fees, or salaries have, of course, speaking generally, no means of investing their savings except by lending them to others, their occupations prevent them from personally superintending any employment. Upon these circumstances, then, the rate of interest depends, the amount of borrowers being given, and the counter proposition equally holds that the above circumstances being given, the rate of interest depends upon the amount of borrowers. Suppose, for example, that when the rate of interest has adjusted itself to the existing state of the circumstances which affect the disposition to borrow and to lend, a war breaks out, which induces government for a series of years to borrow annually a large sum of money. During the whole of this period, the rate of interest will remain considerably above what it was before and what it will be afterward. Before the commencement of the supposed war, all persons who were disposed to lend at the then rate of interest had found borrowers and their capital was invested. This may be assumed, for if any capital had been seeking for a borrower at the existing rate of interest and unable to find one, its owner would have offered it at a rate slightly below the existing rate. He would, for instance, have bought into the funds at a slight advance of price and thus set at liberty the capital of some fund holder who, the funds yielding a lower interest, would have been obliged to accept a lower interest from individuals. Since then all who were willing to lend their capital at the market rate have already lent it, government will not be able to borrow unless by offering higher interest. Though with the existing habits of the possessors of disposable capital, an increased number cannot be found who are willing to lend at the existing rate. There are doubtless some who will be induced to lend by the temptation of a higher rate. The same temptation will also induce some persons to invest in the purchase of the new stock, what they would otherwise have expended unproductively in increasing their establishments or productively by improving their estates. The rate of interest will rise just sufficiently to call forth an increase of lenders to the amount required. Thus we apprehend to be the cause why the rate of interest in this country was so high as it is well known to have been during the last war. It is therefore by no means to be inferred, as some have done, that the general rate of profits was unusually high during the same period, because interest was so. Supposing the rate of profits to have been precisely the same during the war as before or after, at the rate of interest would nevertheless have risen from the causes and in the manner above described. The practical use of the preceding investigation is to moderate the confidence with which inferences are frequently drawn with respect to the rate of profit from evidence regarding the rate of interest, and to show that although the rate of profit is one of the elements which combine to determine the rate of interest, the latter is also acted upon by causes peculiar to itself, and may either rise or fall, both temporarily and permanently, while the general rate of profits remains unchanged. The introduction of banks, which perform the function of lenders and loanbrokers with or without that of issuers of paper money, produces some further anomalies in the rate of interest, which will not, so far as we are aware, have hitherto brought within the pale of exact science. If bankers were merely a class of middlemen between the lender and the borrower, if they merely received deposits of capital from those who had it lying unemployed in their hands, and lent thus, together with their own capital, to the productive classes, receiving interest for it and paying interest in their return to those who had placed capital in their hands, the effect of the operations of banking on the rate of interest would be to lower it in some slight degree. The banker receives and collects together sums of money much too small, when taken individually, to render it worthwhile for the owners to look out for an investment, but which in the aggregate form a considerable amount. This amount may be considered a clear addition to the productive capital of the country, at least to the capital in activity at any moment, and as the addition to the capital accrues wholly to that part of it which is not employed by the owners, but lent to other producers, the natural effect is a diminution of the rate of interest. The banker, to the extent of his own private capital, the expenses of his business being first paid, is a lender at interest, but being subject to risk and trouble fully equal to that which belongs to most other employments, he cannot be satisfied with the mere interest even of his whole capital. He must have the ordinary profits of stock, or he will not engage in the business. The state of banking must be such as to hold out to him the prospect of adding to the interest of what remains of his own capital after paying the expenses of his business, interest upon capital deposited with him, insufficient amount to make up, after paying the expenses, the ordinary profit which could be derived from his own capital in any productive employment. This will be accomplished in one of two ways. One, if the circumstances of society are such as to furnish a ready investment of disposable capital, as for instance in London, where the public funds and other securities of undoubted stability and affording great advantages for receiving the interest without trouble and realizing the principle without difficulty when required, tempt all persons who have sums of importance lying idle to invest them on their own account without the intervention of any middleman. The deposits with bankers consist chiefly of small sums likely to be unwanted in a very short period for current expenses, and the interest on which would seldom be worth the trouble of calculating it. Bankers therefore do not allow any interest on their deposits. After paying the expenses of their business, all the rest of the interest they receive is clear gain. But as the circumstance of banking, as of all other modes of employing capital, will on average be such as to afford to a person entering into the business a prospect of realizing the ordinary, and no more than the ordinary, profits upon his own capital, the gains of each banker by the investment of his deposits will not, on the average, exceed what is necessary to make up his gains on his own capital to the ordinary rate. It is, of course, competition which brings about this limitation. Whether competition operates by lowering the rate of interest or by dividing the business among a larger number, it is difficult to decide. Probably it operates in both ways, but it is by no means impossible that it may operate in the latter way alone, just as an increase in the number of physicians does not lower the fees, though it diminishes an average competitor's chance of obtaining them. It is not impossible that the disposition of the lenders might be such that they would cease to lend rather than acquiesce in any reduction of the rate of interest. If so, the arrival of a new lender in the person of a banker of deposit would not lower the rate of interest in any considerable degree. A slight fall would take place, and with that exception, things would be as before, except that the capital in the hands of the banker would have put itself into the place of an equal portion of the capital belonging to other lenders who would themselves have engaged in business, for example, by subscribing to some joint stock company or entering into commandite. Bankers' profits would then be limited to the ordinary rate chiefly by the division of the business among many banks, so that each on the average would receive no more interest on his deposits than would suffice to make up the interest on his own capital to the ordinary rate of profit after paying all expenses. Two, but if the circumstances of society render it difficult and inconvenient for persons who wish to live upon the interest of their money to seek an investment for themselves, the bankers become agents for this specific purpose. Larges, while the small sums are deposited with them, and they allow interest to their customers, such as the practice of the scotch banks and of most of the country banks in England. Their customers, not living at any of the great seats of money transactions, prefer entrusting their capital to somebody on the spot whom they know and in whom they confide. He invests their money on the best terms that he can, and pays to them such interest as he can afford to give, retaining a compensation for his own risk and trouble. This compensation is fixed by the competition of the market. The rate of interest is no further lowered by its operation that inasmuch as it brings together the lender and the borrower in a safe and expeditious manner. The lender incurs less risk and a larger proportion, therefore, of the holders of capital, are willing to be lenders. When a banker, in addition to his other functions, is also an issuer of paper money, he gains an advantage similar to that which the London bankers derive from their deposits. To the extent to which he can put forth his notes, he has so much the more to lend, without himself having to pay any interest for it. If the paper is convertible, it cannot get into circulation permanently, without displacing specie, which goes abroad and brings back an equivalent value. To the extent of this value, there is an increase of the capital of the country, and the increase accrues solely to that part of the capital which is employed in loans. If the paper is inconvertible, and instead of displacing specie depreciates the currency, the banker, by issuing it, levies a tax on every person who has money in his hands or due to him. He thus appropriates to himself a portion of the capital of other people and a portion of their revenues. The capital might have been intended to be lent, or it might have been intended to be employed by the owner. Such part of it, as was intended to be employed by the owner, now changes its destination and is lent. The revenue is either intended to be accumulated, in which case it had already become capital, or it was intended to be spent. In this case revenue is converted into capital and thus, strange as it may appear, the depreciation of the currency when affected in this way operates to a certain extent as a forced accumulation. This, indeed, is no palatation of its inquiry. Though A might have spent his property unproductively, B ought not to be permitted to rob him of it because B will spend it on productive labor. In any supportable case, however, the issue of paper money by bankers increases the proportion of the whole capital of the country, which is destined to be lent. The rate of interest must therefore fall until some of the lenders give overlending or until the increase of borrowers absorbs the whole. But a fall of the rate of interest sufficient to enable the money market to absorb the whole of the paper loans may not be sufficient to reduce the profits of a lender who lends what costs him nothing to the ordinary rate of profit upon his capital. Here therefore competition will operate chiefly by dividing the business. The notes of each bank will be confined within so narrow a district, or will divide the supply of a distinct district with so many other banks, that on average each will receive no larger amount of interest on his notes, then would up the interest on his own capital to the ordinary rate of profit. But in this way, however, the competition has the effect, to a certain limited extent, of lowering the rate of interest for the power of bankers to receive interest on more than their capital attracts a greater amount of capital into the banking business, than would otherwise flow into it, and this greater capital being all lent, interest will fall into its own capital. Do you think, that the money market will be more than the money market will be less than the money market? Now, let's look at the explanation. First, let's look at the definition of the money market. First, let's look at the definition of the usually commences with an attempt to express, in a brief formula, what the science is and wherein it differs from other sciences, so it might be supposed, did the framing of such a formula naturally precede the successful cultivation of the science? This however is far from having been the case. The definition of a science is almost invariably not preceded, but followed, the creation of the science itself. Like the wall of a city, it has usually been erected, not to be a receptacle for such edifices as might afterwards spring up, but to circumscribe an aggregation already in existence. Mankind did not measure out the ground for intellectual cultivation before they began to plant it. They did not divide the field of human investigation into regular compartments first, and then began to collect truths for the purpose of being there within deposited. They proceeded in a less systematic manner. As discoveries were gathered in, either one by one or in groups resulting from the continued prosecution of some uniform course of inquiry, the truths which were successively brought into store, cohered and became agglomerated according to their individual affinities. Without any intentional classification, the facts classed themselves. They became associated in the mind, according to their general and obvious resemblances, and the aggregates thus formed, having to be frequently spoken of as aggregates, came to be denoted by a common name. Anybody of truths which had thus acquired a collective denomination was called a science. It was long before this fortuitous classification was felt not to be sufficiently precise. It was in a more advanced stage of the progress of knowledge, the mankind became sensible of the advantage of ascertaining whether the facts which they had thus grouped together were distinguished from all other facts by any common properties, and what these were. The first attempts to answer this question were commonly very unskillful. The consequent definitions extremely imperfect, and in truth there is scarcely any investigation in the whole body of a science requiring so high a degree of analysis and abstraction as the inquiry what the science itself is. In other words, what are the properties common to all the truths composing it and distinguishing them from all other truths? Many persons, accordingly, who are profoundly conversant with the details of a science, would be very much at a loss to supply such a definition of the science itself as should not be liable to well-grounded logical objections. From this remark we cannot accept the authors of elementary scientific treesies. The definitions which those works furnished of the sciences for the most part either do not fit them, some being too wide, some too narrow, or do not go deep enough into them, but define a science by its accidents, not its essentials, by some one of its properties which may, indeed, serve the purpose of a distinguishing mark, but which is of too little importance to have either of itself led mankind to give the science a name and rank as a separate object of study. The definition of a science must, indeed, be placed among that class of truths which Dougold Steward had in view when he observed that the first principles of all sciences belong to the philosophy of the human mind. The observation is just, and the first principles of all sciences, including the definitions of them, have consequently participated hitherto in the vagueness and uncertainty which has pervaded that most difficult and unsettled of all branches of knowledge. If we open any book, even of mathematics or natural philosophy, it is impossible not to be struck with the mistiness of what we find presented as preliminary and fundamental notions, and the very insufficient manner in which the propositions which are palmed upon us as first principles seem to be made out, contrasted with the lucidity of the explanations of the and the conclusiveness of the proofs as soon as the writer enters upon the details of his subject. What comes this anomaly? Why is the admitted uncertainty of the results of those sciences in no way prejudiced by the want of solidity in their premises? How happens it that a firm superstructure has been erected upon an unstable foundation? The solution of the paradox is that what is called first principles are in truth last principles. Instead of being the fixed point from whence the chain of proof which supports all the rest of the science hangs suspended, they are themselves the remotest link of the chain. Though presented as if all other truths were to be deduced from them, they are the truths which are last arrived at, the result of the last stage of generalization, or of the last and subtlest processes of analysis, to which the particular truths of the science can be subjected, those particular truths having previously been ascertained by the evidence proper to their own nature. Like other sciences, political economy has remained destitute of a definition, framed on strictly logical principles, or even of what is more easily to be had, a definition exactly co-extensive with the thing defined. This has not, perhaps, caused the real bounds of the science to be, in this country at least, particularly mistaken or past over, but it has occasioned, perhaps as we should rather say, it is connected with indefinite and often erroneous conceptions of the mode in which the science should be studied. We proceed to verify these assertions by an examination of the most generally received definitions of the science. 1. First is the vulgar notion of the nature and objects of political economy. We shall not be wide of the mark if we state it to be something to this effect. That political economy is a science that teaches, or professes to teach, in what manner a nation may be made rich. This notion of what constitutes the science is, in some degree, continenced by the title and arrangement which Adam Smith gave to his invaluable work. A systematic tricy on political economy, he chose to call an inquiry into the nature and causes of the wealth of nations, and the topics are introduced in an order suitable to that view of the purpose of his book. With respect to the definition of a question, if definition it can be called, which is not found in any set form of words, but left to be arrived at by a process of abstraction from a hundred current modes of speaking on the subject, it seems liable to the conclusive objection that it confounds the essential distinct, though closely connected, ideas of science and art. These two ideas differ from one another, as the understanding differs from the will, or as the inductive mode in grammar differs from the imperative. The one deals in facts, the other in precepts. Science is a collection of truths, art a body of rules, or directions for conduct. The language of science is, this is, or this is not. This does, or does not, happen. The language of art is, do this, avoid that, science takes cognizance of a phenomenon and endeavors to discover its law, art proposes to itself an end, and looks out for means to effect it. If therefore political economy be a science, it cannot be a collection of practical rules, though unless it be altogether a useless science, practical rules must be capable of being founded upon it. The science of mechanics, a branch of natural philosophy, lays down the laws of motion and the properties of which are called the mechanical powers. The art of practical mechanics teaches how we may avail ourselves of those laws and properties to increase our command over external nature. An art would not be an art, unless it were founded upon a scientific knowledge of the properties of the subject matter. Without this, it would not be philosophy, but empiricism. Greek impera, not Greek techni. In Plato's sense, rules therefore for making a nation increase in wealth are not a science, but they are the result of science. Political economy does not of itself instruct how to make a nation rich, but whoever would be qualified to judge the means of making a nation rich must first be a political economist. Two, the definition most generally received among instructed persons and laid down in the commencement of most of the professed trices on the subject is to the following effect. That political economy informs us of the laws which regulate the production, distribution, and consumption of wealth. To this definition is frequently appended a familiar illustration. Political economy, it is said, is to the state what domestic economy is to the family. The definition is free from the fault which we pointed out in the former one. It distinctly takes notice that political economy is a science and not an art, that it is conversant with the laws of nature, not with the maxims of conduct, and teaches us how things take place of themselves, not in what manner it is advisable for us to shape them, in order to attain some particular end. But though the definition is with regard to this particular point unobjectionable, so much can scarcely be said for the accompanying illustration, which rather sends back the mind to the current loose notion of political economy already disposed of. Political economy is really and is stated in the definition to be a science, but domestic economy, so far as it is capable of being reduced to principles, is an art. It consists of rules or maxims of prudence for keeping the family regularly supplied with what its wants require, and securing with any given amount of means the greatest possible quantity of physical comfort and enjoyment. Undoubtedly, the beneficial result, the great practical application of political economy, would be to accomplish for a nation something like what the most perfect domestic economy accomplishes for a single household. But supposing this purpose realized, there would be the same difference between the rules by which it might be affected and political economy, which there is between the art of gunnery and the theory of projectiles, or between the rules of mathematical land surveying and the science of trigonometry. The definition, though not liable to be the same objection as the illustration which is annexed to it, is itself far from unacceptable. To neither of them, considered as standing at the head of a tree-sea, have we much to object. At a very early stage in the study of the science, anything more accurate would be useless, and therefore pedantic. In a merely initiatory definition, scientific precision is not required. The object is, to insinuate into the learner's mind, it is scarcely material by what means, some general preconception of what are the uses of the pursuit, and what the series of topics through which he is about to travel. As a mere anticipation, or a bache, of a definition intended to indicate to a learner as much as he is able to understand before he begins, of the nature of what is about to be taught him, we do not quarrel with the received formula. But if it claims to be admitted as a complete definito, the boundary line which results from a thorough exploration of the whole extent of the subject, and is intended to mark the exact place of political economy among the sciences, its pretension cannot be allowed. The science of the laws which regulate the production, distribution and consumption of wealth, the term wealth is surrounded by a haze of floating and vapory associations which will let nothing that is seen through them be shown distinctly. Let us supply its place by a parafesis. Wealth is defined, all objects useful or agreeable to mankind, except such as can be obtained in indefinite quantity without labor. Instead of all objects, some authorities say all material objects, the distinction is of no moment for the present purpose. To confine ourselves to production, if the laws of production of all objects or even of all material objects which are useful or agreeable to mankind were comprised in political economy, it would be difficult to say where the science would end. At the least, all or nearly all, physical knowledge would be included in it, corn and cattle are material objects in a high degree useful to mankind. The laws of production of the one include the principles of agriculture, the production of the other is the subject of the art of cattle breeding, which insofar as really an art must be built upon the science of physiology. The laws of the production of manufactured articles involve the whole of chemistry and the whole of mechanics. The laws of production of the wealth which is extracted from the bowels of the earth cannot be set forth without taking in a large part of geology. Where a definition so manifestly surpasses in extent what it professes to define, we must suppose that it is not meant to be interpreted literally, though the limitations with which it is to be understood are not stated. Perhaps it will be said that political economy is conversant with such only of the laws of the production of wealth as are applicable to all kinds of wealth, those which relate to the details of particular trades or employments forming the subject of other and totally distinct sciences. If, however, there were no more in the distinction between political economy and physical science than this, the distinction we may venture to affirm would never have been made. No similar division exists in any other department of knowledge. We do not break up zoology or mineralogy into two parts, one treating of the properties common to all animals or to all minerals, another conversant with the properties peculiar to each particular species of animal or minerals. The reason is obvious. There is no distinction in kind between the general laws of animal or of mineral nature and the peculiar properties of particular species. There is as close an analogy between the general laws and particular ones as there is between the one of the general laws and another most commonly. Indeed, the particular laws are but the complex result of a plurality of general laws modifying each other. A separation, therefore, between the general laws and the particular ones merely because the former are general and the latter particular would run counter both to the strongest motives of convenience and to the natural tendencies of the mind. If the case is different with the laws of the production of wealth it must be because in this case the general laws differ in kind from the particular ones, but if so the difference in kind is the radical distinction, and we should find out what that is and found our definition upon it. But further the recognized boundaries which separate the field of political economy from that of physical science by no means correspond with the distinction between the truths which concern all kinds of wealth and those which relate only to some kinds. In the three laws of motion and the law of gravitation are common as far as human observation has yet extended to all matter and these therefore as being among the laws of the production of all wealth should form part of political economy. There are hardly any of the process of industry which do not partly depend upon the properties of the lever, but it would be a strange classification that included those properties among the truths of political economy. Again the latter science has many inquiries altogether as special and relating as exclusively to particular sorts of material objects as any of the branches of physical science. The investigation of some of the circumstances which regulate the price of corn has as little to do with the laws common to the production of all wealth as any part of the knowledge of the agriculturalist. The inquiry into the rent of mines or fisheries or into the value of the precious metals elicits its truths which have immediate reference to the production solely of a particular kind of wealth yet these are admitted to be correctly placed in the science of political economy. The real distinction between political economy and physical science must be sought at something deeper than the nature of the subject matter which indeed is for the most part common to both. Political economy and the scientific grounds of all useful arts have in truth one and the same subject matter namely the objects which conduce the man's convenience and enjoyment but they are nevertheless perfectly distinct branches of knowledge. Three, if we contemplate the whole field of human knowledge attained or attainable we find that it separates itself obviously and as it were spontaneously into two divisions which stand so strikingly in opposition and contra distinction to one another that in all classifications of our knowledge they are kept apart. These are physical science and moral or psychological science. The difference between these two departments of our knowledge does not reside in the subject matter with which they are conversant for although of the simplest and most elementary parts of each it may be said with an approach to truth that they are concerned with different subject matters namely the one with the human mind and the other with all things whatever except the mind. This distinction does not hold between the higher regions of the two. Take the science of politics for instance or that of law who will say that these are physical sciences and yet it is not obvious that they are conversant fully as much with matter as with mind. Take again the theory of music, of painting, or any other of the fine arts and who will venture to pronounce that the facts they are conversant with belong either wholly to the class of matter or wholly to that of mind. The following seems to be the rationale of the distinction between physical and moral science. In all the intercourse of man and nature whether we consider him as acting upon it or as receiving impressions from it the effect of phenomena depends upon causes of two kinds. The properties of the object acting and those of the object acted upon. Everything which can possibly happen in which man and external things are jointly concerned results from the joint operation of a law or laws of matter and a law or laws of the human mind. Thus the production of corn by human labor is the result of a law of mind and many laws of matter. The laws of matter are those properties of the soil and vegetable life which cause the seed to germinate in the ground and those properties of the human body which render food necessary to its support. The law of mind is that man desires to possess substance and consequently wills the necessary means of procuring it. Laws of mind and laws of matter are so dissimilar in their nature that it would be contrary to all principles of rational arrangement to mix them up as a part of the same study. In all scientific methods, therefore, they are placed apart. Any compound effect or phenomenon which depends upon the properties of matter and those of mind may thus become the subject of two completely distinct sciences or branches of science. One, treating of the phenomenon insofar as it depends upon the laws of matter. Only, the other, treating of it insofar as it depends upon the laws of mind. The physical sciences are those which treat of the laws of matter and of all complex phenomena insofar as dependent upon the laws of matter. The mental or moral sciences are those which treat of the laws of mind and of all complex phenomena insofar as dependent upon the laws of mind. Most of the moral sciences presuppose physical science, but few of the physical sciences presuppose moral science. The reason is obvious. There are many phenomena, an earthquake, for example, or the motion of the planets which depend upon the laws of matter exclusively and have nothing whatever to do with the laws of mind. Many, therefore, of the physical sciences may be treated without any reference to mind and as if the mind existed as a recipient of knowledge only, not as a cause producing effects. But there are no phenomena which depend exclusively upon the laws of mind. Even the phenomena of the mind itself being partially dependent upon the physiological laws of the body. All the mental sciences, therefore, not accepting the pure science of mind, must take account of a great variety of physical truths and as physical science is commonly and very properly studied first, may be said to presuppose them, taking up the complex phenomenon where physical science leaves them. Now this, it will be found, is a precise statement of the relation in which political economy stands to the various sciences which are tributary to the acts of production. The laws of production of the objects which constitute wealth are the subject matter both of political economy and of almost all the physical sciences. Such, therefore, of those laws as are purely laws of matter belong to physical science and that exclusively, such of them as are laws of the human mind and no others, belong to political economy which finally sums up the result of both combined. Political economy, therefore, supposes all the physical sciences. It takes for granted all such of the truths of those sciences as are concerned in the production of the objects demanded by the wants of mankind or at least it takes for granted that the physical part of the process takes place somehow. It then ensures that the phenomena of mind which are concerned in the production and distribution begin footnote. We say production and distribution not as is usual with writers on this science, the production, distribution and consumption. For we contend that political economy was conceived by those very writers has nothing to do with the consumption of wealth further than as the consideration of it is inseparable from that of production or from that of distribution. We know not of any laws of the consumption of wealth as a subject of a distinct science. They can be no other than the laws of human enjoyment. Political economists have never treated of consumption on its own account but always for the purpose of the inquiry in what manner different kinds of consumption affect the production and distribution of wealth. Under the head of consumption in professed tressies on the science the following are the subjects treated. First, the distinction between productive and unproductive consumption. Second, the inquiry whether it is possible for too much wealth to be produced and for too great a portion of what has been produced to be applied to the purpose of further production. Third, the theory of taxation, that is to say, the following two questions by whom each particular tax is paid, a question of distribution, and in what manner particular taxes affect production. End footnote. Of those same objects it borrows from the pure science of mind the laws of those phenomena and inquiries that effects follow from these mental laws acting in concurrence with those physical ones. Begin footnote. The physical laws of the production of useful objects are all equally presupposed by the science of political economy. Most of them, however, it presupposes in the gross, seeming to say nothing about them. A few, such for example as the decreasing ratio in which the production of the soil is increased by an increased application of labor. It is obliged particularly to specify and thus seems to borrow those truths from the physical sciences to which they properly belong and include them among its own. End footnote. From the above considerations the following seems to come out as the correct and complete definition of political economy. The science which treats of the production and distribution of wealth so far as they depend upon the laws of human nature, or thus, science relating to the moral or physiological laws of the production and distribution of wealth. For popular use this definition is amply sufficient, but it still falls short of the complete accuracy required for the purposes of the philosopher. Political economy does not treat of the production and distribution of wealth in all states of mankind, but only in what is termed the social state, nor so far as they depend upon the laws of human nature, but only so far as they depend upon a certain portion of those laws. Thus at least is the view which must be taken of political economy if we mean it to find any place in an encyclopedical definition of the field of science. On any other view it either is not science at all, or it is several sciences. This will appear clearly if on the one hand we take a general survey of the moral sciences with a view to assign the exact place of political economy among them, while on the other we consider attentively the nature of the methods of processes by which the truths which are the object of those sciences are arrived at. Man, who considered as a being having a moral mental nature, is the subject matter of all the moral sciences, may with reference to that part of his nature form the subject of philosophical inquiry into several distinct hypotheses. We may inquire what belongs to man considered individually as if no man being existed besides himself. We may next consider him as coming into contact with other individuals, and finally as living in a state of society, that is forming part of a body, or aggregation of human beings systematically cooperating for common purposes. Of this last state, political government, or subjection to a common superior, is an ordinary ingredient, but forms necessarily part of the conception, and with respect to our present purpose needs not be further adverted to. Those laws of properties of human nature which appertain to man as a mere individual, and do not presuppose as a necessary condition the existence of other individuals, except perhaps as mere instruments or means, form a part of the subject of pure mental philosophy. They comprise all the laws of the mere intellect and those of purely self-regarded desires. Those laws of human nature which relate to the feelings called forth in a human being by other individual humans or intelligent beings as such namely the affections, the conscience, or the feeling of duty, and the love of approbation, and to the conduct of man so far as it depends upon, or has relation to, these parts of his nature form the subject of another portion of pure mental philosophy, namely that portion of it on which morals or ethics are founded. For morality itself is not a science but an art, not truths but rules. The truths on which the rules are founded are drawn, as is the case in all arts, from a variety of sciences, but the principle of them and those which are most nearly peculiar to this particular art belong to a branch of the science of mind. Finally there are certain principles of human nature which are peculiarly connected with the ideas and feelings generated in a man by living in a state of society, that is by forming part of a union of aggregation of human beings for a common purpose or purposes. Few indeed of the elementary laws of the human mind are peculiar to this state, almost all being called into action in the other two states, but those simple laws of human nature operating in that wider field give rise to results of a sufficiently universal character and even when compared with the still more complex phenomena of which we are the determining causes sufficiently simple to admit of being called though in a somewhat looser sense laws of society or laws of human nature in the social state. These laws are general truths from the subject of a branch of science which may be aptly designated from the title of social economy, somewhat less happily by that of speculative politics or the science of politics as contradistinguished from the art. This science stands in the same relation to the social as anatomy and physiology to the physical body. It shows by what principles of his nature man is induced to enter into a state of society. How this feature of his position acts upon his interests and feelings and through them upon his conduct. How the association tends progressively to become closer and the cooperation extends itself to more and more purposes. What those purposes are and what the varieties of means most generally adopted for furthering them. What are the various relations and which establish themselves among human beings as the ordinary consequence of the social union. What those which are different in different states of society in what historical order those states tend to succeed one another and what are the effects of each upon the conduct and character of man. This branch of science whether we prefer to call its social economy speculative politics or the natural history of society presupposes the whole science of nature of the individual mind since all the laws of which the latter science takes cognizance are brought into play in a state of society and the truths of the social science are but statements of the manner in which those simple laws take effect in complicated circumstances. Pure mental philosophy therefore is an essential part or preliminary of political philosophy. The science of social economy embraces every part of man's nature in so far as influencing the conduct or condition of man in society and therefore it may be termed speculative politics as being the scientific foundation of practical politics or the art of government of which the art of legislation is a part. Begin footnote. The science of legislation is an incorrect and misleading expression. Legislation is making laws. We do not talk of the science of making anything. Even the science of government would be an objectionable expression where it not that government is often loosely taken to signify not the act of governing but the state or condition of being governed or of living under a government. A preferable expression would be the science of political society, a principal branch of the more extensive science of society characterized in the text. End footnote. End of Essay 5, Part 1. Essays on some Unsettled Questions of Political Economy Essay 5, Part 2. This is a LibriVox recording. All LibriVox recordings are in the public domain. For more information or to volunteer, please visit LibriVox.org. Essays on some Unsettled Questions of Political Economy by John Stuart Mill. Essay 5. On the Definition of Political Economy and on the Method of Investigation Proper to It Part 2. It is to this important division of the field of science that one of the writers who have most correctly conceived and copiously illustrated its nature and limits, we mean, M. Essay, has chosen to give the name Political Economy. And indeed this large extension of the signification of that term is continenced by its entomology, but the words Political Economy have long ceased to have so large a meaning. Every writer is entitled to use the words which are his tools in the manner which he judges most conductive to the general purpose of the exposition of truth. But he exercises his discretion under liability to criticism and to M. Essay seems to have done in this instance what should never be done without strong reason, to have altered the meaning of a name which was appropriated to a particular purpose and for which, therefore, a substitute must be provided in order to transfer it to an object for which it was easy to find a more characteristic denomination. What is now commonly understood by the term Political Economy is not the science of speculative politics but a branch of that science. It does not treat the whole of man's nature as modified by the social state nor of the whole conduct of man in society. It is concerned with him solely as a being who desires to possess wealth and who is capable of judging of the comparative efficacy of means for obtaining that end. It predicts only such of the phenomena of the social state as take place in consequence of the pursuit of wealth. It takes entire abstraction of every other human passion or motive except those which may be regarded as perpetually antagonizing principle to the desire of wealth namely aversion to labor and desire of the present enjoyment of costly indulgences. These it takes to a certain extent into its calculations because these do not merely like other desires occasionally conflict with the pursuits of wealth but accompanying it always as a drag or impediment and are therefore inseparably mixed up in the consideration of it. Political Economy considers mankind as occupied solely in acquiring and consuming wealth and aims at showing what is the course of action into which mankind living in a state of society would be impelled if that motive except in the degree in which it is checked by the two perpetual counter motives above averted to were absolute ruler of all their actions. Under the influence of this desire it shows mankind accumulating wealth and employing that wealth in the production of other wealth sanctioning by mutual agreement the institution of property establishing laws to prevent individuals from enroaching upon the property of others by force or fraud adopting various contrivances for increasing the productiveness of their labor settling the division of the produce by agreement under the influence of competition. Competition itself being governed by certain laws which laws are therefore the ultimate regulators of the division of the produce and employing certain expedience as money, credit, etc. to facilitate the distribution. All these operations though many of them are really the result of a plurality of motives are considered by political economy as flowing solely from the desire of wealth. The science then proceeds to investigate the laws which govern these several operations under the supposition that man is a being who is determined by the necessity of his nature to prefer a great portion of wealth to a smaller in all cases without any other exception than that constituted by the two counter motives already specified. Not that any political economist was ever so absurd as to suppose that mankind are really thus constituted but because this is the mode in which science must necessarily proceed. When an effect depends upon a concurrence of causes those causes must be studied one at a time and their laws separately investigated if we wish through the causes to obtain the power of either predicting or controlling the effect since the law of the effect is compounded of the laws of all the causes which determine it. The law of the centripetal and that of the tangential force must have been known before the motions of the earth and planets could be explained or many of them predicted. The same is the case with the conduct of man in society. In order to judge how he will act under the variety of desires and diversions which are concurrently operating on him we must know how he would act under the exclusive influence of each one in particular. There is perhaps no action of a man's life in which he is neither under the immediate nor under the remote influence of any impulse but the mere desire of wealth. With respect to these parts of human conduct of which wealth is not even the principal object to these political economy does not pretend that its conclusions are applicable. But there are also certain departments of human affairs in which the acquisition of wealth is the main and acknowledged end. It is only of these political economy takes notice. The manner in which it necessarily proceeds is that of treating the main and acknowledged end as if it were the sole end which of all hypotheses equally simple is the nearest to the truth. The political economist inquires what are the actions which would be produced by this desire if within the departments in question it were unimpeded by any other. In this way a nearer approximation is obtained than would otherwise be practicable to the real order of human affairs in those departments. The approximation is then to be corrected by making proper allowance for the effects of any impulses of a different description which can be shown to interfere with the result of any particular case. Only in a few of the most striking cases such as the important one of the principle of population are these corrections interpolated into the expositions of political economy itself. The strictness of purely scientific arrangement being thereby somewhat departed from for the sake of practical unity. So far as it is known or may be presumed that the conduct of mankind in the pursuit of wealth is under the collateral influence of any other of the properties of our nature that the desire of obtaining the greatest quantity of wealth with the least labor and self-denial the conclusions of political economy will so far fail of being applicable to the explanation or prediction of real events until they are modified by a correct allowance for the degree of influence exercised by the other causes. Political economy then may be defined as follows and the definition seems to be complete. The science which traces the laws of such of the phenomena of society as a rise from the combined operations of mankind for the production of wealth insofar as those phenomena are not modified by the pursuit of any other object. But while this is a correct definition of political economy as a portion of the field of science the didactic writer on the subject will naturally combine in his exposition with the truths of the pure science as many of the practical modifications as will in his estimation be most conductive to the usefulness of his work. The above attempt to frame a stricter definition of the science than what are commonly received as such may be thought to be of little use or at best to be chiefly useful in a general survey and classification of the sciences rather than as conducting to the more successful pursuit of the particular science in question. We think otherwise and for this reason that with the consideration of the definition of a science is inseparably connected that of the philosophic method of the science. The nature of the process by which its investigations are to be carried on its truths to be arrived at. Now in whatever science there are systematic differences of opinion which is as much as to say in all the moral or mental sciences and in political economy among the rest in whatever science there exist among those who have attended to the subject what are commonly called differences of principle as distinguished from differences of matter of fact or detail the cause will be found to be a difference in their conceptions of the philosophical method of the science. The parties who differ are guided either knowingly or unconsciously by different views concerning the nature of the evidence appropriate to the subject. They differ not solely in that they believe themselves to see but in the quarter quence they obtain the light by which they think they see it. The most universal of the forms in which this difference of method is accustomed to present itself is the ancient feud between what is called theory and what is called practice or experience. There are on social political questions two kinds of reasoners. There is one portion who term themselves practical men and call the others theorists a title which the latter do not reject though they by no means recognize it as peculiar to them. The distinction between the two is a very broad one though it is one of which the language employed is the most incorrect exponent. It has been again and again demonstrated that those who are accused of disputing facts and disregarding experience build and profess to build wholly upon facts and experience while those who disavow theory cannot make one step without theorizing. But although both classes of inquiries do nothing but theorize and both of them consult no other guide than experience there is this difference between them and the most important difference it is that those who are called practical men require specific experience and argue wholly upwards from particular facts to a general conclusion. While those who are called theorists aim at embracing a wider field of experience and having argued upwards from particular facts to a general principle including a much wider range than that of the question under discussion they argue downwards from that general principle to a variety of specific conclusions. Suppose for example that the question were whether absolute kings were likely to employ the powers of government for the welfare or for the oppression of their subjects. The practicals would endeavor to determine this question by a direct induction from the conduct of particular despotic monarchs as testified by history. The theorists would refer the question to be decided by the test not solely of our experience of kings but of our experience of men. They would contend that an observation of the tendencies which human nature has manifested in the variety of situations in which human beings have been placed and especially observation of what passes in our own minds warrant us in inferring that a human being in the situation of a despotic king will make a bad use of power and that this conclusion would lose nothing of its certainty even if absolute kings had never existed or if history furnished us with no information of the matter in which they had conducted themselves. The first of these methods is a method of induction merely the last of a mixed method of induction and racialization. The first may be called a method apostori the latter a method a priori. We are aware that this last expression is sometimes used to characterize a supposed mode of philosophizing which does not profess to be founded upon experience at all. But we are not acquainted with any mode of philosophizing on political subjects at least to which such a description is fairly applicable. By the method apostori we mean that which requires as the basis of its conclusion not experience merely but specific experience. By the method apriori we mean what is commonly been meant reasoning from an assumed hypothesis which is not a practice confined to mathematics but is of the essence of all science which admits of general reasoning at all. To verify the hypothesis itself apostoriori that is to examine whether the facts of any actual case are in accordance with it is no part of the business of science at all but of the application of science. In the definition which we have attempted to frame of the science of political economy we have characterized it as essentially an abstract science and its method as the method apriori. Such is undoubtedly its character as it has been understood and taught by all its most distinguished teachers. It reasons and as we contend must necessarily reason from assumptions not from facts. It is built upon hypotheses strictly analogous to those which under the name of definitions are to be found of other abstract sciences. Geometry presupposes an arbitrary definition of a line that which has length but not breadth. Just in the same manner does political economy presuppose an arbitrary definition of man as a being who invariably does that by which he may obtain the greatest amount of necessities conveniences and luxuries with the smallest quantity of labor and physical self-denial with which they can be obtained in the existing state of knowledge. It is true that this definition of man is not formally prefixed to any work on political economy as the definition of a line is prefixed to Euclid's elements and the proportion as by being so prefixed it would be less in danger of being forgotten. We may see ground for regret that this is not done. It is proper that what is assumed in every particular case should once for all be brought before the mind in its full extent by being somewhere formally stated as a general maxim. Now no one is conversant with systematic treesies on political economy will question that whatever a political economist has shown that by acting in a particular manner a laborer may obviously obtain higher wages, a capitalist, larger profits or a landlord higher rent, he concludes as a matter of course that they will certainly act in that manner. Political economy therefore reasons from assumed premises from premises which might be totally without foundation in fact and which are not pretended to be universally in accordance with it. The conclusions of political economy consequently like those of geometry are only true as the common phrase is in the abstract. That is, they are only true under certain suppositions in which none but general causes causes common to the whole class of cases under consideration are taken into the account. This ought not to be denied by the political economist. If he deny it then and then only he places himself in the wrong. The a priori method which is laid to his charge as if his employment of it proved his whole science to be worthless is, as we shall presently show, the only method by which truth can possibly be attained in any department of the social science. All that is requisite is that he be on his guard not to ascribe to conclusions which are grounded upon an hypothesis a different kind of certainty from which really belongs to them. There would be true without qualification. Only in cases is purely imaginary. In proportion as the actual fact recede from the hypothesis he must allow a corresponding deviation from the strict letter of his conclusion. Otherwise it will be true only of things such as he has arbitrarily supposed not of such things as really exist. That which is true in the abstract is always true in the concrete with proper allowances when a certain cause really exists and if left to itself would infallibly produce a certain effect the same effect modified by all the other concurrent causes will correctly correspond to the result really produced. The conclusions of geometry are not strictly true of such lines, angles and figures as human hands can construct but no one therefore contains that the conclusions of geometry are of no utility or that it would be better to shut up Euclid's elements and content ourselves with practice and experience. No mathematician ever thought that his definition of a line corresponded to an actual line as little did any political economist ever imagine that real men had no object of desire but wealth or none which would not give way to the slightest motive of a pecuniary kind but they were justified in assuming this for the purposes of their argument because they had to do only with those parts of human conduct which have pecuniary advantage for their direct and principal object and because as no two individual cases are exactly alike no general maxims could ever be laid down unless some of the circumstances of the particular case were left out of consideration. But we go farther than to affirm that the method a priori is a legitimate mode of philosophical investigation in the moral sciences. We contend that it is the only mode. We affirm that the method a posteriori or that of scientific experience is altogether in efficacy in those sciences as a means of arriving at any desirable body of valuable truth though it admits of being usefully applied in aid of a method a priori and even forms an indispensable supplement to it. There is a property common to almost all the moral sciences and by which they are distinguished from many of the physical. This is that it is seldom in our power to make experiments in them. In chemistry and natural philosophy we cannot only observe what happens under all combinations of circumstances which nature brings together but we may also try an indefinite number of new combinations. This we can seldom do in ethical and scarcely ever in political science. We cannot try forms of government and systems of national policy on a diminutive scale in our laboratories shaping our experiments as we think may most conduce to the advancement of knowledge. We therefore study nature under circumstances of great disadvantage in these sciences being combined to the limited number of experiments which take place if we may so speak of their own accord without any preparation or management of ours. In circumstances moreover of great complexity and never perfectly known to us and with the far greater part of processes concealed from our observation. The consequence of this unavoidable defect in the materials of the induction is that we can rarely obtain what Bacon has quaintly but not unaptly termed experimentum circusis. In any science which admits of an unlimited range of arbitrary experiments an experimentum circusis may always be obtained. Being able to vary all the circumstances we can always take effectual means of ascertaining which of them are and which of them are not material. Call the effect B and let the question be whether the cause A in any way contributes to it. We try an experiment in which all the surrounding circumstances are altered except A alone and if the effect B is nonetheless produced A is the cause of it. Or instead of leaving A and changing the other circumstances we'll leave all the other circumstances and change A. If the effect B in that case does not take place then again A is a necessary condition of its existence. Either of these experiments if accurately performed is an experimentum circusis. It converts the presumption we had before of the existence of a connection between A and B into proof by negating every other hypothesis which would account for the appearances. But this can seldomly be done in the moral sciences owing to the immense multitude of the influencing circumstances and our very scanty means of varying the experiment. Even in operating upon an individual mind which is the case affording greatest room for experimenting we cannot often obtain a crucial experiment. The effect, for example, of a particular circumstance in education upon the formation of character may be tried in a variety of cases but we can hardly ever be certain that any two of those cases differ in all their circumstances except the solitary one of which we wish to estimate the influence. In how much greater a degree must this difficulty exist in the affairs of states where even the number of recorded experiments is so scanty in comparison with the variety and multitude of the circumstances concerned in each. How, for example, can we obtain a crucial experiment on the effect of a restrictive commercial policy upon national wealth? We must find two nations alike in every other respect or at least possessed in a degree exactly equal of everything which conduces to national opulence and adopting exactly the same policy in all their other affairs but differing in this only that one of them adopts a system of commercial restrictions and the other adopts free trade. This would be a decisive experiment similar to those which we can almost always obtain in experimental physics. Doubtless this would be most conclusive evidence of all if we could get it but let any one consider how infinitely numerous and various are the circumstances which either directly or indirectly do or may influence the amount of national wealth and then ask himself what are the probabilities that in the longest revolution of ages two nations will be found which agree and can be shown to agree in all those circumstances except one. Since therefore it is vain to hope that truth can be arrived at either in political economy or in any other department of the social science while we look at facts in the concrete clothed in all the complexity with which nature has surrounded them and endeavor to elicit a general law by a process of induction from a comparison of details there remains no other method than the a priori one or that of abstract speculation. Although sufficiently ample grounds are not afforded in the field of politics for a satisfactory induction by a comparison of the effects the causes may in all cases be may subject of specific experiment. These causes are laws of human nature and external circumstances capable of exciting the human will to action. The desires of man and the nature of the conduct to which they prompt him are within the reach of our observation. We can also observe what are the objects which excite those desires. The materials of this knowledge every one can be principally collected within itself with reasonable consideration of the differences of which experience discloses to him the existence between himself and other people knowing therefore accurately the properties of the substance concerned we may reason with as much certainty as in the most demonstrative parts of physics from every assumed set of circumstances. This will be merely trifling if assumed circumstances bear no sort of resemblance to any real ones. But if the assumption is correct as far as it goes and differs from the truth in no other wise than as a part differs from the whole then the conclusions which are correctly deduced from the assumption constitute abstract truth and when completed by adding or subtracting the effect of the non-calculated circumstances they are true in the concrete and may be applied in practice. Of this character is the science of political economy in the writings of its best teachers to render it perfect as an abstract science the combinations of circumstances which it assumes in order to trace their effect should embody all the circumstances that are common to all cases whatever and likewise all the circumstances that are common to any important class of cases. The conclusions correctly deduced from these assumptions would be as true in the abstract as those of mathematics and would be as near to an approximation as abstract truth can ever be to truth in the concrete. When the principles of political economy are to be applied to a particular case then it is necessary to take into account all the individual circumstances of that case not only examining to which of the sets of circumstances contemplated by the abstract science the circumstances of the case in question correspond but likewise what other circumstances may exist in that case which not being common to it with any large and strong marked class of cases have not fallen under the cognizance of the science. The circumstances have been called disturbing causes and here only it is that an element of uncertainty enters into the process an uncertainty inherent in the nature of these complex phenomena and arising from the impossibility of being quite sure that all the circumstances of the particular case are known to us sufficiently in detail that our attention is not unduly diverted from them. This constitutes the only uncertainty of political economy and not of it alone but of the moral sciences in general. When the disturbing causes are known the allowance necessary to be made for them detracts in no way from scientific precision nor constitutes any deviation from the a priori method. The disturbing causes are not handed over to be dealt with by mere conjecture like friction in mechanics to which they have been often compared. They may at first have been considered merely as non-assignable deduction to be made by a guess from the result given by the general principles of science but in time many of them are brought within the pale of the abstract science itself and their effect is found to admit of as accurate an estimation as those more striking effects which they modify. The disturbing causes have their laws as the causes which are thereby disturbed have theirs and from the laws of the disturbing causes the nature and amount of the disturbance may be predicted a priori like the operation of the more general laws which they said to modify or disturb but with which they might more properly be said to be concurrent. The effect of the special causes is then to be added to or subtracted from the effect of the general ones. These disturbing causes are sometimes circumstances which operate upon human conduct through the same principles of human nature with which political economy is conversant namely the desire of wealth but which are not general enough to be taken into account in the abstract science. Of disturbances of this description every political economist can produce many examples. In other instances the disturbing cause is some other law of human nature. In the latter case it never can fall within the province of political economy. It belongs to some other science. And here the mere political economist he who has studied no science but political economy if he attempt to apply his science to practice will fail. Begin footnote one of the strongest reasons for drawing the line of separation clearly and broadly between science and art is the following that the principle of classification in science most conveniently follows the classification of causes while arts must necessarily be classified according to the classification of the effects the production of which is their appropriate end. Now an effect whether in physics or morals commonly depends upon a concurrence of causes and frequently happens that several of these causes belong to different sciences. Thus in the construction of engines upon the principles of science of mechanics it is necessary to bear in mind the chemical properties of the material such as its liability to oxidize its electrical and magnetic properties and so forth. From this it follows that although the necessary foundation of all art is science that is the knowledge of the properties or laws of the objects upon which and with which the art dons its work. It is not equally true that every art corresponds to one particular science. Each art presupposes not one science but science in general or at least many distinct sciences. End footnote. As for the other kind of disturbing causes namely those which operate through the same law of human nature out of which the general principles of the science arise these might always be brought within the pale of the abstract science if it were worthwhile and when we make the necessary allowances for them in practice if we are doing anything but guess we are following out the method of the abstract science into minute detail inserting among its hypothesis a fresh and still more complex combination of circumstances. So adding pro hoc vise a supplementary chapter or appendix or at least a supplementary theorem to the abstract science. End of part two of essay five.