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region of investigation which those English economists who are not content with barren abstraction have before them.

Nothing can be more unfounded than the imputation of socialist or destructive tendencies which the nickname of Katheder-Socialisten has linked with the historical school of German economists. Historical philosophy has assuredly no revolutionary tendencies; it has been with more justice accused of tending to make its disciples distrustful of reforms which do not seem to be evolved by historical sequence, and the spontaneous births of time. But, as a matter of fact, a great diversity of opinion is to be found among the economists of this school in Germany; some being Conservative, and others Liberal in their politics, but no revolutionary or socialist schemes have emanated from its most advanced Liberal rank. Their principal practical aims would excite little terror in England. Some legislation after the model of the English Factory Laws, some system of arbitration for the adjustment of disputes about wages, and the legalization of trade-unions under certain conditions, are the main points in their practical programme; and they are supported by some of the warmest friends of the German throne and aristocracy.

It is impossible to praise too highly the extraordinary erudition, the immense industry, and the manysidedness of intellectual sympathy which distinguish Roscher's history of German political economy; but we venture to suggest to him a revision of the brief notice which it includes of the history of English political economy in the last thirty years. Generous in the extreme in his estimate of the earlier economic literature of this country, he is less than just in his criticism of it in recent years -an injustice of which the present writer may speak without prejudice, being excepted along with Thornton and Thorold Rogers from Dr. Roscher's unfavourable judgment; one for which no other reasons are assigned than some defects in Mr. Mill's system, on the one hand, which are really attributable to Mr. Mill's predecessors, and the doctrines of a writer,* on the other hand, who represents no English school, and has no sup

* Mr. H. D. Macleod.

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porter among authors of economic works or professors of political economy in this country. In this single instance Dr. Roscher has deviated from the impartiality which is one of the great merits of his History. Readers interested in the historical study of political economy, will find an excellent companion to Dr. Roscher's History in Dr. Karl Knies's highly philosophical treatise, Die Politische Oekonomie vom Standpunkte der Geschichtlichen Methode.

XII.

'SOME LEADING PRINCIPLES OF POLITICAL ECONOMY NEWLY EXPOUNDED,' BY PROFESSOR CAIRNES.

(The Academy, June 27, 1874.)

ANY new work by Mr. Cairnes would be sure of a succès d'estime, but the present is one, the importance of which the economist most opposed to some of the principles it expounds with so much force, clearness, and skill, will not call in question. Its very importance, on the other hand, the high reputation of its author, and the consummate literary art it displays, impose on a reviewer the duty of sifting it closely. Mr. Cairnes himself sets an example of independent criticism. Thus he speaks of Mr. Mill's doctrine of cost of production as 'radically unsound, confounding things in their own nature distinct and even antithetical, setting in an essentially false light the incidents of production and exchange, and leading to practical errors of a serious kind, not merely with regard to value, but also with regard to some other important doctrines of the science.'

As we, for our own part, think not a few of Mr. Cairnes's own positions, including his doctrine of the relation of cost of production to value, untenable, we must claim for ourselves like independence of judgment and freedom of speech. Mr. Cairnes, we may observe, overestimates sometimes the amount of authority opposed to his own views, sometimes the amount on their side. In the case just referred to, he too hastily assumes that the view he dissents from has the general concurrence of economists.' The English market for. economic publications is extremely limited, the works on the subject are necessarily few, but it is notorious that various doctrines to be met with in the

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English text-books have often been questioned in lectures, articles, discussions, and private conversation; and that the general concurrence even of English economists-of whom alone English economists are apt to take account-ought not to be assumed from the agreement of those books. In the second place, the definition of cost of production which Mr. Cairnes puts forward, had, in fact, been set forth in very similar terms in a treatise which has gone through many editions. Mr. Senior, criticising Malthus for terming profit a part of the cost of production, says, 'Want of the term abstinence has led Mr. Malthus into inaccuracy an inaccuracy precisely similar to that committed by those who term wages a part of the cost of production.' Mr. Senior proceeds to define cost of production as 'the sum of the labour and abstinence necessary to production.' Mr. Senior's analysis is, indeed, defective in omitting the element of risk, but that defect is beside the question, and in respect to it we may observe that Mr. Cairnes too narrowly limits it, in the case of the labourer, to risk to mental and bodily faculties. The labourer often shares the pecuniary risks of the capitalist's enterprise; he runs the risk of being thrown out of work and wages at a critical time; and this is only one of a number of facts inconsistent with the assumption of an equality of wages, even within the limits which Mr. Cairnes sets to it.

The doctrine of cost of production involves the whole theory of wages and profit; and an immense superstructure which has been built on what Mr. Cairnes would call the orthodox theory, must stand or fall with that theory. The subject may be conveniently approached by an examination of the doctrine of the Wages Fund' and an 'average rate of wages,' for which Mr. Cairnes contends. An instance has just been noticed of an over-estimate, on his part, of the amount of difference between his own views and those of other economists: we here meet with one of an over-estimate of the amount of support from authority which Mr. Cairnes is entitled to claim for his own view. He terms his own side of the question with respect to the Wages Fund the orthodox side.' If orthodoxy in economics is to be determined by authority, some weight surely is to be attached to

continental authority. And in Germany, as Dr. Gustav Cohn has lately pointed out, the doctrine of a Wages Fund was controverted more than fifty years ago, and has been repeatedly assailed since; nor does it now form, we may believe we may affirm, an article of the creed of any scientific school of German economists. It is condemned by M. Emile de Laveleye, of Belgium, to whom Mr. Cairnes will not deny a place in the front rank of European economists. French economists have never been polled on the question, but it is at least certain that the notion that there is an aggregate national wages fund, the proportion of which to the entire number of labourers determines the general rate of wages, is incompatible with the exposition which M. Léonce de Lavergne-who, it is needless to say, combines the highest theoretical attainments with the most extensive knowledge of the actual economic phenomena of his own country-has given of the diversity of the rates of wages and the causes determining them, in different parts of France. In England the doctrine was, after mature consideration, abandoned by Mr. Mill; it has been vigorously assailed by Mr. Thornton; it is repudiated by Mr. Jevons; and among other economists in this country, the present reviewer long ago combated it. On the whole, we believe that the chief weight of European authority is against the doctrine, and that it is a heresy, if that constitutes one. But the terms orthodoxy and heresy are singularly inappropriate in philosophical discussions. What philosophy seeks is reason and truth, not authority; and we will briefly state some of the grounds of reason and fact on which we take our stand in maintaining that an aggregate wages fund and an average rate of wages are mere fictionsfictions which have done much harm, both theoretically and practically, by hiding the real rates of wages, the real causes which govern them, and the real sources from which wages proceed. In every country in Europe, the rates of wages even in the same occupation vary from place to place; in other words, the same amount of labour and sacrifice of the same kind is differently remunerated in different localities. The Devonshire, Somersetshire, or Dorsetshire labourer has been earning for the last fifty years less than half what the same man might have earned

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