China are considered low relative to those of other countries. Comparison is connoted in a mere statement of the facts-a contrast of effects. What is now required is a thorough-going search for the causes of the differences in real incomes in separate regions. Doubtless there is not one cause, but a number of interacting causes. And so far no adequate effort has been made to measure the importance and relative strength of those forces which have been responsible. Because we understand so imperfectly what the quantitive criteria for economic progress are, we cannot measure the degree to which such countries as India and China lack them.

To summarize briefly the argument of this paper: the next ten years will bring still greater efforts to measure quantitatively and to interpret the economic factors which determine human welfare. The economic world is so rapidly becoming more unified that no part of it can afford to neglect the study of the economic conditions of other parts. The economist should not restrict his interest to his own country or to any section thereof. A very important aspect of economic study has been to some degree neglected: the comparison of the economic factors operating in different regions. Their very differences may be illuminating. Inter-regional comparison conforms in a general way to the same methods of experimental research used in infra-regional comparison. It is more difficult because more complex but it is far from being impossible. Inter-regional comparison is becoming more possible each year with the advances in the technique of collecting quantitative data and in the refinements of statistical measurements. Such research should yield standards or principles of economic progress which would greatly assist the backward regions of the earth in their struggle to pass from indigence to comfort.

3. Scientific Objectivity with Practical and Ethical Objectives 4. Psychological Data in Scientific Economics

460

461

5. Ethical Norms and Functional Economics

469

a. The Relation between Price Economics and Welfare Economics

469

b. The Nature of Functional Economics

473

c. Is a Scientific Ethics Possible?

478

d. The Relation of a Scientific Ethics to Functional Economics 481

FUNCTIONAL ECONOMICS

1. THE DEMAND FOR A SCIENTIFIC ECONOMICS

By far the greater number of the younger generation of economists are absorbed in business economics and the special problems of organization and control arising from the current politico-economic situation. They are in the main very highly specialized teachers or investigators, without much opportunity to follow up such interest as they may some time have had in the theoretical problems of general economics and its methods of thought and research. Whether this specialization is from personal choice or in answer to the demand for specialized experts in specific narrow fields, the result is that but comparatively few men are devoting their energies to the advancement of economic theory, and that a still smaller proportion of university students in economics feel it worth while to make any very extended study of the problems involved in an attempt to arrive at a philosophical, or scientific, and systematized knowledge of economic life as a whole.

A small minority, apparently increasing, still carries forward the older philosophical tradition, however, and retains an interest in economics, not as a loose collection of "applied" problems of the day, but as a systematized body of doctrine which seeks to explain economic phenomena in general and to clarify and deepen our understanding of them. The members of this minority seem to be in cordial agreement among themselves on one matter only. They are all convinced that the older economic theory, current in journal literature to within a decade, and still standard in most economic treatises and texts, is in need of thorough renovation and reconstruction, even if it should not prove necessary to tear it away altogether and erect an entirely new structure of theory in its place. With of course notable differences of emphasis and degree of revolt from the traditions of theory, whether classical or marginalistic, they are in substantial accord in the conviction that the older economics is inadequate to meet the standards set by modern scientific ideals of objectivity, realism, and freedom from metaphysical preconceptions. The older body of doctrine, it is charged, is static and taxonomic, a

priori and deductive, unrealistic, scholastically over-refined, and based on an antiquated and unscientific psychology, instead of what a valid body of doctrine must be, namely, dynamic, evolutionary and relative, concerned broadly and objectively with processes rather than with the precise implications of conceptual definitions, scientifically inductive rather than formalistically logical in method, and realistic in that its generalizations pertain to and are derived from actualities rather than metaphysical postulates and hypotheses.

Having in mind the American literature only, we may safely say that most of the noteworthy theoretical work by the younger economists in the past decade has been in the nature of destructive criticism. That some of this criticism is as metaphysically scholastic as anything the classicists or marginalists can be accused of, and that some of it reveals the lack of a fair appreciation of possibly permanently valid elements in the older theory, even in the much reviled economic hedonism, need not concern us at this point. The patent fact is that we have entered and are well along in one of those recurrent periods of iconoclastic criticism which have marked the history of all philosophy and of economic theory in particular, and that comparatively little positive, constructive work of a broad nature has yet been done by the younger theorists. At least this would seem to be true unless we count the necessary work of adverse criticism, and the lively interest in methodology, constructive. When it comes to constructive theory, either as to economic principles or as to methods of research and analysis, we find little clear agreement.

The points of disagreement among the insurgents are striking and important. Some of them hold that economics cannot be objective and scientific unless it is pursued as a pure science; others that it would be a useless academic amusement if it were. Some say that economics must be based on a scientific (as opposed to the associationalhedonistic) psychology; others that a scientific psychology, if possible at all, is not as yet in existence, and that the economist must get along without psychological data-which means that he cannot admit any consideration of motives into his analysis. Some say that economics must be a study of the functional processes of creating and advancing human welfare, to the extent that welfare is related to the production, distribution, and consumption of material goods and services, and hence that a close relation between economics and ethics must be recognized; others hold that economics proper has nothing to do with welfare, but is concerned only with the mechanics of the price and market process, and exhibit an almost morbid fear lest scientific "objectivity" be contaminated by ethical interest. The main issues