toward both the conflicts and the unity of interests that center herea policy that will be felt in labor unions and employers associations as well as in legislatures.

The conditions under which these problems new and old will be treated in the days to come promise to be more favorable to scientific fruitfulness than were conditions during the war. Then, it was often more necessary to settle a question promptly than to solve it correctly. Despite our national impatience this pressure for off-hand decisions has relaxed. We can take time to assemble data, to analyze them, to weigh the relative importance of different factors, and to study the bearing of each problem on the others. Decisions will not be left so largely to a small group of executives as they were during the war. In many issues appeal must be made to voters; in others legislators and officials will seek support from competent opinions of many kinds before accepting the responsibility for a decision. Most of the economic analyses made during the war were jotted down in hasty memoranda, read by a few officia'; and then tucked into filingcases. We shall return perforce to the practice of publishing the grounds of action, and economic literature will profit. Finally, the ultimate criterion by which economic policies are judged will cease to be military efficiency and become, at least in name, civilian welfare. That shift will make solutions more difficult to reach, but also far more interesting to the economist.

2.

ECONOMICS AS A SCIENCE OF BEHAVIOR

So far the argument has been rather obvious. We certainly face difficult economic problems, old and new. Certainly the economists. will have a chance to show what they can do in a constructive way; working conditions favor their efforts: it will be strange if economic theory as well as economic practice fails to benefit. But we may go beyond these quasi-certainties into a more interesting range of possibilities, and forecast some of the ways in which economic theory will change as it grows.

Of widest significance among these changes will be a firmer grasp upon the fact that economics is a science of human behavior. That conception will give the valuable contributions of past theorists their proper setting and afford a framework within which the diverse contributions of the future will find their proper places. It will show that economic history, economic theory and applied economics have close organic relations, and it will dispel the darkness that has shrouded the relations between economics and the other sciences of behavior-psychology in particular.

As soon as an economist has assimilated this idea that he is dealing with one aspect of human behavior, he faces his share in that problem so conspicuous in current psychology, nature and nurture, the propensities with which men are born and their modifications in experience. I do not imply that the economist must read all the literature upon instincts and repressions which the psychologists publish. Doubtless acquaintance with that literature is helpful; it suggests a wide variety of hypotheses, and it makes one critical of the naïve theories about the human mind which each mind proffers in profusion. But we do not get very far with academic disquisitions upon instincts, or with general discussions of balked dispositions. They are at best a starting point for more serious work. And the economist has constructive work to do upon his aspect of behavior which the psychologist can but help him to set about in an intelligent

way.

Phychology itself makes most rapid strides when it deals with a con$ crete problem. The economists and psychologists share many such problems-for example, the problem known as "industrial relations." In this field the competent investigator finds an especially promising opening for work:-he can get excellent facilities for investigation; predecessors have left him working hypotheses to develop; the problem is clarified by the formal organization of the opposing interests, by the standardized behavior demanded by machine tending, the standardized reactions of the workers, and by the repetition of the same situation with instructive variations in a thousand plants. When a human situation gets organized in this fashion half the theorist's work is done for him. Adam Smith could make a great advance upon earlier economists because the economic life of England in his day was taking on a definite and fairly uniform pattern. Ricardo could formulate a theory of rent because the relations between landlord and tenant were taking shape as a business contract. So in our turn we should be able to analyze effectively the problems of industrial relations, because the underlying facts are crystallizing of themselves.

Many economists think psychology useless, because it is introspective and subjective. When they grasp the idea that their business is with behavior, and that behavior is objective they will see that their psychological footing can be made secure. Indeed, one of the developments to be looked for is the rapid application of statistical technique to the study of demand for commodities, to the measurement of fatigue, to saving and other aspects of behavior which have seemed particularly baffling because particularly subjective. Psychological

facts that can be measured are better data for science than most of the materials the economists have utilized in the past.

While fresh fields will thus be brought into the economist's demesne, he will find that his old fields of work gain new fertility from his new way of working. It will become evident that orthodox economic theory, particularly in the most clarified recent types, is not so much an account of how men do behave as an account of how they would behave if they followed out in practice the logic of the money economy. Now the money economy, seen from the new viewpoint, is in fact one of the most potent institutions in our whole culture. In sober truth it stamps its pattern upon wayward human nature, makes us all react in standard ways to the standard stimuli it offers, and affects our very ideals of what is good, beautiful, and true. The strongest testimony to the power and pervasiveness of this institution in molding human behavior is that a type of economic theory which implicitly assumed men to be perfectly disciplined children of the money economy could pass for several generations as a social science. The better orientation we are getting will not lead economists to neglect pecuniary logic as a sterile or an exhausted field. On the contrary not only will it make clear the limitations of the older work but it will also show how the old inquiries may be carried further, and how they may be fitted into a comprehensive study of economic behavior.

So also, the numerous special branches of economics, which have recently become sharply differentiated, will gain more from economic theory and contribute more to it as that theory takes on a realistic, quantitative form. For many years there has been a notable difference between the way in which economists handled economic theory on the one hand and the way in which they handled such problems as transportation, public finance, tariffs, money, banking, insurance, trusts and labor on the other hand. The monographs made little use of the theoretical treatises, and the treatises drew upon the monographs for little beyond illustrations. Text books often had a theoretical part and an applied part held together by nothing more intimate than the binding. When, however, economic theory is made an account of the cumulative change of economic behavior, then all studies of special institutions become organic parts of a single whole. The viewpoint of the man who writes on railroad rates becomes that of the man who writes on the economic life of the ancient Greeks and that of the man who is concerned with the process of valuation. Thus economic theory will cease to be a thing apart from applied

economics, because economic theory itself will deal with genuine issues the kind of issues that are now discussed in monographs.

3. THE SIGNIFICANCE OF INSTITUTIONS IN ECONOMIC BEHAVIOR As we work with the conception that economics is a science of behavior, we find our attention focussing upon the rôle played in behavior by institutional factors. That idea has been suggested casually in the preceding sections; the reason for it should be made clear.

In economics as in other sciences we desire knowledge mainly as an instrument of control. Control means the alluring possibility of shaping the evolution of economic life to fit the developing purposes of our race. It is this possibility, of which we catch fleeting glimpses in our sanguine moments, that grips us. Always the center of our interest lies in the changes that have taken place in economic behavior, the changes that are now taking place, the changes that may take place in the future.

From all that we know about the history of our race it seems probable that the equipment with which men are born alters little if at all through millenniums. Our reflexes, instincts, and capacity to learn are believed to be substantially the same as those of our cavedwelling ancestors. If our lives are radically different from theirs, it is because we have developed through a long process of cumulative change more effective ways of training our native capacities. We have acquired certain ways of dealing with each other and with material things that are roughly standardized and taught to our children-ways of behaving that have their aspects of feeling, thinking, and willing. It is these widely prevalent social habits, learnt afresh with modifications by each generation, that make our behavior so different from that of our ancestors, and that will make the behavior of our descendents different from ours.

Accordingly, it is in these habits that the student of economic behavior finds his chief problems when he studies the past or the present, and his chief hope when he thinks of the future. "Institutions" is merely a convenient term for the more important among the widely prevalent, highly standardized social habits. And so it seems that the behavioristic viewpoint will make economics theory more and more a study of economic institutions.

Throughout the nineteenth century it was possible to assume with Ricardo that economic organization had attained a permanent form. Robert Owen's socialism was verily utopian, John Stuart Mill's ex

pectation that coöperation would spread rapidly proved a genial delusion, the processes which Marx saw undermining capitalism failed to work as he prophesied. Alfred Marshall seemed justified in taking as the motto of his treatise, Natura non facit saltum. Changes in organization did occur; indeed the current of change was swifter perhaps than in any preceding century. Yet with their astonishing capacity for not seeing what they were not looking for the economists could treat these changes as negligible in their analyses. In the world thus made stable, the economist's business was merely to analyze the workings of existing institutions. An historian it was admitted, might gratify idle curiosity by tracing the tortuous process through which economic organization had reached. its final shape; but the economic theorist should stick to the serious task of understanding the present and not bemuse himself with speculations about the past or the future.

Darwinism with its picture of the whole universe as evolving through a process of cumulative change which has no final term disturbed this orthodox tradition, though the economists with their wonted deliberation took more than a generation to grasp the significance for the social sciences of Darwin's work. Nor did the men who sought to make economics an evolutionary science produce much impression on their fellow workers. Biological evolution as Darwin pictured it was a process of change infinitely slow, and the fact that the evolution of institutions proceeds far more rapidly was not brought home to most economists with convincing effect. By the time formal recognition was won for the evolutionary viewpoint in the social sciences, Darwinism had become outworn theology to alert biologists and Gregor Mendel had been rediscovered. In 1914 the institutional type of economic theory was still a rare form of mental aberration, to which few but the young succumbed and from which most victims made a prompt recovery.

Catastrophies, the anthropologists say, have been the potent factor in social change, the great provoker of social thinking. So it was with the war. Western civilization was not so solidly crystallized but that the belligerent nations could readjust their institutions promptly and considerably, under the intense pressure which they suffered. The institutional changes then effected, though intended to be temporary, have made a deep impression upon thoughtful minds, and shifted the perspective in which men see the future. Even in days of reaction, we cannot regain implicit faith in the stability of our prewar institutions. We cannot forget the national program of economic mobilization which was just emerging from the earlier