of ritualism and conservatism, for then they protect what has been or what is as fact or idea and dignify them as more important than the things that may be. Least of all should they protect the twohundred-year old institutions of industry, the most transient institutions of our time, from the free thinking and experiment of economists; for industry is a social instrument which, if freely experimented with, and if directed to the uses of men, holds definite promise for the future. Industry can lay the basis for any higher life; and no higher life can be built without an industrial basis. In this sense the new industry will make the future. It can free mankind for whatever life seems to men good. It remains only to be said that an experimental economics is the condition of this freedom.

REGIONAL COMPARISON AND

ECONOMIC PROGRESS

by

WILLIAM ERNEST WELD

1. Certain Definite Trends

2. "Regional Comparison" and the Increase of Welfare

3. The Comparisons that Can Be Made

4. Economic Causation

425

428

429

432

5. Difficulties of Causation not Peculiar to Economics

433

6. The Establishment of Causal Relations in Regional Comparison 7. Conclusion and Summary

434

440

REGIONAL COMPARISON AND

ECONOMIC PROGRESS

1. CERTAIN DEFINITE TRENDS

There are certain signs and tendencies of the last ten years that suggest the probable trend of economics in the coming decade. Three of these tendencies are particularly conspicuous. First, economists have not grown frenzied over abstract economic theory. Certain disputations there have been, but the temperature of the "listenersin" and even of the disputants themselves has rarely risen to fever heat. In a few instances, such controversies have been accompanied by sustained interest on the part of the economists of this country, but this interest was due not to the longing to apprehend abstract truth, but to some practical application which might be made of the conclusions arrived at. At a recent meeting of the American Economic Association, a lively discussion developed over the proper definition of "income," not because such a proper understanding was an end in itself, but because of its bearing upon the income-tax law. The economist of to-day is not so interested as his teacher was in such abstract problems as how and when rents would arise on Robinson Crusoe's island, if all the land were of equal productivity. In fact, this island has been neglected in recent years by the students of economics. The present-day economist is profoundly interested in human welfare, and the doctrine of "truth for its own sake" in such an engrossing world of actualities does not have the chance to make itself felt. The World War is partly responsible for this tendency, but not entirely; it had shown itself before the war began. Then the war came and forced upon the nations definite problems of production, consumption and distribution for the prosecution of the war and the maintenance of the civil population. The future had to take care of itself. With the conclusion of peace, the economic problems which faced the nations of the world were of a different nature, but were even more farreaching than those connected with the carrying on of the war. They have not yet been solved. The economist must face them, and give the help the world has a right to ask of him. The next ten

years will find him busy at this task. The goal of his efforts will be social welfare.

Second, economists in recent years have neglected the "old deductive approach" and turned more and more to induction as a method of study. Used in this way, these terms, "induction" and "deduction," are misleading, because no complete act of reflective thinking can belong exclusively to either the one or the other order. The difference between the two seems to be partly a matter of position in the process of thinking and partly a matter of emphasis. The older method is reputed to have been inference from a principle, which was considered to have been firmly established, to some consequence of the principle in economic life. In many cases the principle was not applicable, because of the presence of other factors which over-weighted or neutralized the result. The inductive approach consists in examining the facts-the larger the number the better, and working from them towards principles which explain the facts. The most important reason why many of the students of economics are turning to induction is that they feel that the method of study generally used by the Classical School has reached its limit. It served a very useful purpose, but economic life is progressing toward a greater complexity; and the so-called "other things" are less and less likely to be "equal." Therefore the tendency during the war and since has been to search for the facts, to analyze them, and to draw the conclusions that seem warranted by the facts. This will doubtless be the more prevalent method of the near future.

Third, during the last few years there has been a notable advance in the use of statistics and in the graphic presentation of the findings of the statisticians. The evidence for this assertion comes from many sources, and reveals the fact that interest in the quantitative method of economic study is general and widespread.

Many large corporations have established research departments, in which they have placed trained statisticians to study their own problems. In some instances these studies have been far wider than a quantitative analysis of costs of producing or marketing their own individual commodity or service; they have included an examination of the industry as a whole, from the production of the raw material through all the intermediate stages to the hands of the final consumer. The corporations in which this advance has been most notable are the banks. Most of the large city banks are perfecting and enlarging their research departments and are publishing reports which have a wider social value than the advertising the banks receive.