glimmer of later marginal theories of value. The general profits of stock depend wholly on the profits of the last portion of capital employed on the land." But there is no such glimmer in the first chapter of the Principles, where it is argued that the value of any commodity, subject to certain modifications, depends on the quantity of labour which is necessary for its production." This theory, though commonly spoken of as "the Ricardian theory of value," is directly derived from a passage in Adam Smith, which Ricardo quotes in support of it.2 " §3. Ricardo influenced subsequent thought both by his actual conclusions and hardly less by the conclusions which have been mistakenly attributed to him. But such mistakes have been due at least as much to the obscurity of his style as to lack of intelligence in some of his readers. Marx's Capital was professedly based on Ricardo's theory of value, Henry George's Progress and Poverty on Ricardo's theory of rent. But for Ricardo, neither Marxian nor Single Tax theories could have followed quite those lines with which we are to-day familiar. Ricardo, furthermore, influenced subsequent thought by his general method of reasoning and by the lines of enquiry which he elected to pursue. He confirmed, for example, the growing tradition that economic science should deal with persons indirectly, through categories, rather than directly. The causes of the inequality of individual incomes did not, as such, ever engage his attention. "Ricardo, as became a stockbroker, took "the existing institutions of private property "for granted without any consideration." His only reference to inheritance occurs in a passage in which he argues against "all taxes affecting the transference of property from • Ibid, p. 10. 1 Ibid, p. 378. * Cannan, Theories of Production and Distribution, p. 9. the dead to the living" on the ground that "the capital of the country is diminished thereby." Had he devoted even a single chapter of his Principles to the general aspects of inheritance, such a chapter, in the hands of a Marx or a Henry George, might have become the germ of a new social faith held as widely and with as passionate a degree of conviction as are Marxism and the Single Tax to-day. A movement against the inheritance by individuals of vast fortunes, had it chanced to find eloquent advocates, would probably have made no less strong an appeal to men's sense of justice and a far stronger appeal to their sense of the practicable than either of these two movements have done. Such a movement might, by now, have so far triumphed as to have profoundly modified the distribution of income in modern states. §4. The immediate followers of Ricardo are far less famous men. James Mill, for instance, is better known as the eccentric father of John Stuart Mill, than as an original thinker. His Elements of Political Economy, published in 1821, consists of four chapters, entitled Production, Distribution, Interchange and Consumption, respectively. This classification of the subject-matter of economics, though slavishly followed by many later writers, had not been previously adopted in any English book. Apart from this fact, the most original point in the Elements is James Mill's quaint doctrine that a limitation of the birth-rate among the working classes might be carried so far as to "raise the condition of the labourer to any state of comfort and enjoyment which may be desired."3 2 §5. McCulloch is generally regarded as a mere campfollower of Ricardo, but this is not a just view. Not 1 Works, p. 89. But see Cannan, Theories of Production and Distribution, p. 35. 3 Elements, p. 53. only did he write a book about inherited wealth,1 but he devotes part of his Principles of Political Economy, published in 1825, to this same topic. Thus, while arguing against Senior's "restricted system of Political Economy," he points out that “it is necessary that individuals should be permitted to exert some degree of authority over the disposal of property in the event of their death, and this being admitted, it follows that all the knotty questions respecting conditions in wills, the influence of primogeniture and entails compared with the system of equal partition, and so forth, come legitimately within the scope of the enquiries belonging to this science, the economist being bound to show the bearing of each system that may be proposed over the production and distribution of wealth."2 While holding that Government should interfere as little as possible in economic matters, he notes that it must decide in regard to the property of those who die intestate and the effect to be given to the directions in wills and testaments."3 McCulloch, therefore, and the point is interesting-does not deduce complete freedom of bequest as a logical corollary of the individualism which he advocates. - "But, though the question be not tree from difficulty," he proceeds, we are inclined to think that they are right who argue in favour of the uncontrolled power of bequeathing." He defends primogeniture on the ground that "the manner of living among the great landlords is that in which every one is ambitious to indulge; and their habits of expenditure, though sometimes injurious to themselves, act as powerful incentives to the ingenuity 1 A Treatise on the Succession to Property Vacant by Death, including Inquiries into the Influence of Primogeniture, Entails, Compulsory Partition, Foundations, etc., over the Public Interests (1848). • Principles (3rd edition), pp. ix.-x. • Ibid, p. 188. • Ibid, p. 196. and enterprise of the other classes."1 Those who inherit large fortunes, he thinks, spend rather than accumulate, but on the whole this is a desirable state of things, for it causes the spread of a generous spirit throughout society, patronage of the arts and solicitude for the welfare of others." On this and other grounds the English is to be preferred to the French Law. But “in regulating the transfer of property by will, a term should be fixed, beyond which the instructions of the testator should have no effect." The term provided by English Law, namely "lives in being, plus twenty one years," he is inclined to consider "as judicious a term as could be devised."3 McCulloch's treatment of inherited wealth is defective, in that he devotes too little attention to effects on distribution, as compared with effects on production. The same criticism applies to his advocacy of a national system of education, with regard to which his ideas, though not his tone, were much in advance of his time. "To render education productive of all the utility that may be derived from it, the poor should, in addition to elementary instruction (in the arts of reading, writing, and arithmetic) be made acquainted with the duties enjoined by religion and morality, and with the circumstances which occasion that gradation of rank and inequality of fortunes that usually exist." For "neither the errors nor the vices of the poor are incurable and if education were made a means of instructing the poor in the circumstances which elevate and depress the rate of wages, and which, consequently, exert the most powerful influence over their condition, there can be little doubt that they would endeavour to profit by it." A better system of education and a better law of 1 Ibid, p. 197. Ibid, pp. 198-9. Ibid, p. 201. inheritance are two of the most powerful means of reducing inequalities of income.1 McCulloch at least perceived the importance of these two subjects, a thing which no previous economist had done.. §6. A more alert and critical mind was that of Senior, sometime Professor at Oxford and one of the authors of the famous Poor Law Report of 1834. Apart from this Report, his chief work was An Outline of Political Economy, published in 1836. His analysis of cost of production, as a determinant of value, led him to his famous conception of "abstinence a term by which we express the conduct of a person who either abstains from the unproductive use of what he can command, or designedly prefers the production of remote to that of immediate results." The fact that later writers have preferred to speak of "saving" or "waiting," rather than “abstinence," does not take away from the originality of Senior's thought on this point. Elsewhere he "is on the verge of great truths, but does not grasp them." The following passage, for instance, might have become the starting point of an elaborate analysis of inherited wealth: "For all useful purposes the distinction of profits from rent ceases as soon as the capital from which a given revenue arises has become, whether by gift or by inheritance, the property of a person to whose abstinence and exertions it did not owe its creation."'5 But Senior did not develop the idea further. §7. To complete the study of our third period, it only remains to consider, first, certain developments of economic thought outside England, and, second, the pernicious, but important, doctrine of the wages fund. This doctrine, though its parentage has been much disputed, is at least indisputably English. 1 Compare Part IV. below, especially Chs. III. and X. For a list of his other writings see Haney, op. cit., p. 263 n. • Outline, p. 58. s Outline, p. 129. Haney, op. cit., p. 269. |