the best discipline over the producer, and the tacit assumption that demand in the market is an index of social need and economic worth.

The idea of mutual gain serves to combat the medieval notion of exchange of absolute values, wherein one side gains only as the other loses. Mercantile notions of foreign trade carried this same assumption: one nation gained only as another lost, and a balance of trade favorable to one must be unfavorable to the other. The conception of consumable goods as the end of production served to combat the warped notion of exports as a national gain and imports as a national loss, which went with the doctrine of the balance of trade. The idea of the consumer as the best source of trade discipline was urged, not as against social humanitarian policies, but against gild privileges and gild restrictions of an essentially monopolistic character. And the idea of demand as a measure of economic worth, warped as it is when judged by humanitarian standards, served in this period to combat standards which were in every respect farther from the truth. It left ample room for such "noneconomic" values as national defense, but served very effectually to puncture the sophisms used to mask the economic burdens of protection.

As over against the chief doctrines they had, at the time, to combat, these classical assumptions were true. If they had been surrendered, it would not have been in favor of modern policies of social welfare and democratic solidarity, for such did not exist at the time. They would have yielded the field to the interests and sophisms of class exploitation; and they retain essential truth to just the extent that these interests and sophisms retain a dangerous degree of vitality. But these early assumptions of liberalism ignore many democratic and human values which are now striving for practical recognition, and the adjustment between these limited truths and others less limited is one of the central conflicts of modern economic thought.

Another conception is the production of "utilities of form, time and place. This expresses a truth as over against the idea that only the creation of material goods is productive. It is, however, only the beginning of an analysis of production from the standpoint of utility. Akin to this is the concept of marginal utility, which was bound to come from the moment the early economists compared gold and iron, or coal and diamonds, and concluded that value and utility were not quantitatively related. This drew attention to an unsolved problem and made some solution inevitable. As against

the older blank negative, the doctrine of marginal utility expresses a truth, partial, and expressed with a mathematical exactness not found in nature, but nevertheless important.

The doctrine that "industry is limited by capital" served to emphasize the contention that industries created by protection are not a net addition to the productive forces of the nation.1 It is valuable for this purpose, even though not unqualifiedly true, but it becomes a stumblingblock when we come to the business cycle, where varying rates of exploitation are of the essence of the problem. The pragmatic bearing of the Marxian "surplus value" theory need not be pointed out, nor the fact that the Ricardian statements which formed its logical basis would have been modified and safeguarded if Ricardo had foreseen to what use Marx would put them. No less obvious is the appropriateness of the "marginal productivity" theory as an answer to Marx on the one side, and to wage-fund extremists on the other.2

Adam Smith was born into a world whose official economics was utterly distrustful of free exchange, at a time when free exchange was demonstrating its ability to rise superior to the crude and misdirected forms of regulation then prevailing. He became aware of the wonder of unintentional coöperation in which the frankest selfishness yields surprisingly tolerable results through the efficient but unplanned organization which the system of exchange carries with it. He noted the genuine service rendered by the price that equates supply and demand, chiefly by noting its superiority to those crude attempts at regulation which furnished his standard of comparison. He grasped the element of mutual aid running through exchange, saw its organizing possibilities and contrasted these with the crippling effects of contemporary sorts of interference. Given all this, the message he had to convey to an unseeing world, and the dominant abstractions of his system-suited to convey this message-were foregone conclusions. The validity of price as an economic organizing force is his contribution, not its imperfections.

The most one-sided parts of such a message are not the parts that deal consciously with the question whether private enterprise is better than public enterprise in any given case, but rather the parts where the writer feels himself to be abstractly and impartially describ

1 John Stuart Mill specifically makes this use of the doctrine: Principles of Economics, Book I, chap. V, § I, 64, Ashley ed.

2 Since writing the above, I note that Fetter explains the development of the marginal-subjective doctrine as a conscious reply to Marx. See Jour. Pol. Econ. xxxi, 602-5, Oct., 1923.

ing the economic system "as it is." For here he is not on his guard as to the use or abuse that may be made of his doctrines. One of the best examples of this unconscious attitude may be found in Smart's Second Thoughts of an Economist where he says:

"What I, for my part, found in Political Economy was a science whose main object was not defence of any particular system, but explanation of how men, consciously and unconsciously, work into one another's hands, and get and give each his daily bread. I saw it analysing what we do in the everyday life of making an income and spending it; gathering up facts into categories and generalisations; drawing deductions of what men in general will do in the future from observation of what they have done in the past. All this seemed to me as impersonal as anatomy, as the writing of history, as the observation of the tides-and as necessary."

In other words, political economy does not defend the existing system but it explains the elements of coöperation in it; which are the elements everybody approves of. It is in fact a highly selective and partial theory which Smart seems to have found as impersonal as anatomy, and it does credit to his saving sense of relevance to the needs of humanity that he felt something lacking in this theory and was moved to step outside of its limitations in his last book.

These limitations are chiefly the work of later writers than Adam Smith, who seldom allowed his thinking to be cramped by its own machinery. But such conceptions become more formalized and crystallized with the passage of time, and structures of deduction are increased upon them, becoming ever more elaborate and more brittle. This happened to the free-trade economics, long after its chief active purpose had been attained in the freeing of trade from mercantilist shackles, and it had subsided into the more passive rôle of furnishing a prima facie case for the competitive order-now the established order-as over against projects of revolution or of fundamental reform. Meanwhile the new generations were arising.

4. MODERN ANTITHESIS OF THE ENGLISH TRADITION

What is their vision? The marvel of spontaneous coöperation is no marvel to them. Their textbooks have presented them with its concentrated essence in a purity more or less frankly unreal. This furnishes their intellectual point of departure. The direction in which the world about them departs from this formula is toward apparent variations from type, which fail to produce the expected efficiency and instead cause waste and social loss rather than pure mutual gain in the process of free exchange. The older student was

interested primarily in the fact that prices do reach an approximate equilibrium. The newer is interested in their erratic and unruly movements-also in the bad quality of housing accommodations as a disastrous and unnecessary phase of laissez-faire, in the effects of seasonal fluctuations of industry as an imperfectly compensated cost of production, in the wastes of competition and in methods of diminishing them.

The older theorist had written down as his "balance carried forward" a theory of the pernicious effects of free enterprise and such tolerably good tendencies as he discovered were clear gain. The modern theorist carries forward a theory of one hundred per cent efficiency for competitive institutions and is alert to all shortages, for they appear as a clear deficit. Thus it is the most natural thing in the world that Veblen should reverse the classifications of "orthodox" economics, finding the normal workings of business enterprise in those things which the older economists classed as disturbing elements causing departures from normal.

Orthodox economics undertakes to interpret equilibrium: Veblen undertakes to interpret progressive change. And in the social world this is much the same as saying that orthodox economics studies the assumptions of contentment while Veblen studies the assumptions of discontent; both of which are undeniable facts. Since undeniable facts are difficult to ignore, the net result is very largely to call them by different names.

So when Veblen says that the inherent nature of business is parasitism and that any modicum of service rendered is rendered incidentally and in spite of the inherent nature of business; and when orthodox economics says that the inherent nature of business is service, and that any modicum of parasitism that may remain is an incidental perversion of the true spirit of the institution-they are not so much contradicting each other as selecting different things to talk about. Veblen is talking about the nature of the pursuit of profits; and the beneficial effects of competition, where competition works beneficially, are an incidental and very partial check (and possibly a temporary one) on the natural tactics of the pursuit of gain. Orthodox economics is talking about the nature of competition (or rather of an "ideal" form of competition) as a check on human selfishness in the pursuit of profits and to them any failures of competition to produce its full effects appear as incidental disturbances. In a general way most economists admit the same general mass of facts, but pick out different ones as the central axioms of their systematic economic theorizing.

While Veblen admits a modicum of serviceability under private enterprise, he does not seriously undertake to explain how this perversion of the essentially parasitic nature of business enterprise comes about. He does not focus attention on the nature of the checks on selfish exploitation, embodied in customs, morals, rights of property and person with the negative and positive duties they involve, and in that complex, self-contradictory but very real institution of economic competition.

On the other hand, the older economics more or less tacitly assumes that these checks do their work perfectly, and its conception of competition may be characterized as a simplified and unattainable ideal. Thus we have two antithetical doctrines, both at least partially true. The synthesis which can unite them lies largely in the realistic study of the social checks on private self-interest; their nature, adequacy and inadequacy, success and failure, actualities and potentialities.

Can it be that human nature is so built that it demands the clash of opposing half-truths in order to raise the issues from which it may work out a closer approximation to the truth? In that case, the only truths we can ever arrive at consist of these half-truths; and even ostensibly contradictory propositions might both be "true," in this provisional fashion, which is the only fashion of truth we can attain. A half-truth outgrown becomes an error; till then it was truth. Or, as dirt is only matter out of place, so error is only truth out of place one of these human half-truths out of its appropriate environment and application.

III

NON-EUCLIDEAN ECONOMICS: AN EXPERIMENT IN THE SIMULTANEOUS TRUTH OF OPPOSITES.

From the foregoing it appears that there are systems of economics with axioms as far removed from each other as the geometry of Euclid and the non-Euclideans; perhaps as far apart as the conventional physics and Einstein. As abstract systems, they describe different worlds, and Veblen's theory of invidious prestige might be called a theory of economic relativity.

Just what is meant by "non-Euclidean economics" in the present instance? The question can be best answered by taking eight axioms which represent in a general way the traditional position on a number of central points, and inverting them. This is done with no