I have lingered to inquire why political economy has in popular apprehension
acquired the character of indefiniteness, abstruseness, and selfishness,
merely that I may be the better able to convince you that none of these qualities
properly belong to it. I want to draw you to its study by showing you how
clear and simple and beneficent a science it is, or rather should be.
Although political economy deals with various
and complicated phenomena, yet they are phenomena which may be resolved
into simple elements, and which are but the manifestations of familiar principles.
The premises from which it makes its deductions are truths of which we are
all conscious and upon which in every-day life we constantly base our reasoning
and our actions. Its processes, which consist chiefly in analysis, have
a like certainty, although, as with all the causes of which it takes cognisance
are at all times acting other causes, it can never predict exact results
but only tendencies.
And, although in the study of political economy
we cannot use that potent method of experiment by artificially produced conditions
which is so valuable in the physical sciences, yet, not only may we find,
in the diversity of human society, experiments already worked out for us,
but there is at our command a method analogous to that of the chemist, in
what may be called mental experiment. You may separate, combine, or eliminate
conditions in your own imagination, and test in this way the working of
known principles. This, it seems to me, is the great tool of political economy.
It is a method with which you must be familiar and doubtless use every day,
though you may never have analysed the process. Let me illustrate what I
mean by something which has no reference to political economy.
When I was a boy I went down to the wharf with
another boy to see the first iron steamship which had ever crossed the ocean
to our port. Now, hearing of an iron steamship seemed to us then a good deal
like hearing of a leaden kite or a wooden cooking-stove. But, we had not been
long aboard of her, before my comrade said in a tone of contemptuous disgust:
»Pooh! I see how it is. She's all lined with wood; that's the reason
she floats.« I could not controvert him for the moment, but I was not
satisfied, and, sitting down on the wharf when he left me, I set to work
trying mental experiments. If it was the wood inside of her that made her
float, then the more wood the higher she would float; and, mentally, I loaded
her up with wood. But, as I was familiar with the process of making boats
out of blocks of wood, I at once saw that, instead of floating higher, she
would sink deeper. Then, I mentally took all the wood out of her, as we dug
out our wooden boats, and saw that thus lightened she would float higher
still. Then, in imagination, I jammed a hole in her, and saw that the water
would run in and she would sink, as did our wooden boats when ballasted with
leaden keels. And, thus I saw, as clearly as though I could have actually
made these experiments with the steamer, that it was not the wooden lining,
that made her float, but her hollowness, or, as I would now phrase it, her
displacement of water.
Now, just such mental operations as these you
doubtless perform every day, and in doing so you employ the method of imaginative
experiment, which is so useful in the investigations of political economy.
You can, in this way, turn around in your mind a proposition or phenomenon
and look on all sides of it, can isolate, analyse, recombine, or subject
it to the action of a mental magnifying glass which will reveal incongruities
as a reduction ad absurdum. Let me again illustrate:
Before I had ever read a line of political economy,
I happened once to hear a long and well-put argument in favour of a protective
tariff. Up to that time I had supposed that »protection to domestic
industry« was a good thing; not that I had ever thought out the matter,
but that I had accepted this conclusion because I had heard many men whom
I believed wiser than I say so. But this particular speaker had, so far
as one of his audience was concerned, overshot his mark. His arguments set
me thinking, just as when a boy my companion's solution of the iron-ship
mystery had set me thinking. I said to myself: The effect of a tariff is
to increase the cost of bringing goods from abroad. Now, if this benefits
a country, then all difficulties, dangers, and impediments which increase
the cost of bringing goods from abroad are likewise beneficial. If this theory
be correct, then the city which is the hardest to get at has the most advantageous
situation: pirates and shipwrecks contribute to national prosperity by raising
the price of freight and the cost of insurance; and improvements in navigation,
in railroads and steamships, are injurious. Manifestly this is absurd.
And then I looked further. The speaker had dwelt
on the folly of a great country like the United States exporting raw material
and importing manufactured goods which might as well be made at home, and
I asked myself, What is the motive which causes a people to export raw material
and import manufactured goods? I found that it could be attributed to nothing
else than the fact that they could in this way get the goods cheaper, that
is, with less labour. I looked to transactions between individuals for parallels
to this trade between nations, and found them in plenty—the farmer selling
his wheat and buying flour; the grazier sending his wool to a market and
bringing back cloth and blankets; the tanner buying back leather in shoes,
instead of making them himself. I saw, when I came to analyse them, that
these exchanges between nations were precisely the same thing as exchanges
between individuals; that they were, in fact, nothing but exchanges between
individuals of different nations; that they were all prompted by the desire
and led to the result of getting the greatest return for the least expenditure
of labour; that the social condition in which such exchanges did not take
place was the naked barbarism of the Terra del Fuegians; that just in proportion
to the division of labour and the increase of trade were the increase of
wealth and the progress of civilisation. And so, following up, turning, analysing,
and testing all the protectionist arguments, I came to conclusions which
I have ever since retained.
Now, just such mental operations as this are all
that is required in the study of political economy. Nothing more is needed
(but this is needed) than the habit of careful thought—the making sure of
every step without jumping to conclusions. This habit of jumping to conclusions
of considering essentially different things as the same because of some
superficial resemblance—is the source of the manifold and mischievous errors
which political economy has to combat.
But I can probably, by a few examples, show you
what I mean more easily than in any other way. Were I to put to you the
child's question, »Which is heavier, a pound of lead or a pound of
feathers?« you would doubtless be offended; and were I seriously to
ask you, Which is the most valuable, a dollar's worth of gold or a dollar's
worth of anything else? you might also feel that I had insulted your intelligence.
Yet the belief that a dollar's worth of gold is more valuable than a dollar's
worth of anything else is widespread and persistent. It has molded the policy
of great nations, dictated treaties, marched armies, launched fleets, fought
battles, constructed and enforced elaborate and vexatious systems of taxation,
and sent men by thousands to jail and to the gallows. Certainly a large portion,
probably a large majority, of the people of the United States—including many
college graduates, members of what are styled the learned professions, senators,
representatives, authors, and editors—seem to-day utterly unable to get it
fully through their heads that a dollar's worth of anything else is as valuable
as a dollar's worth of the precious metals, and are constantly reasoning,
arguing, and legislating on the assumption that the community which exchanges
gold for goods is suffering a loss, and that it is the part of wisdom, by
preventing such exchange, to »keep money in the country.« On
this absurd assumption the revenue system of the United States is based today,
and, if you will notice, you will find it cropping out of current discussions
in all sorts of forms. Even here, where the precious metals form one of our
staples, and for a long time constituted our only staple, you may see the
power of the same notion. The anti-cooly clubs complain of the »drain
of money to China,« but never think of complaining of the drain of
flour, wheat, quicksilver, or shrimps. And the leading journals of San Francisco,
who hold themselves on an immeasurably higher intellectual level than the
anti-cooly clubs, never, I think, let a week pass without congratulating
their readers that we have ceased to import this or that article, and are
thereby keeping so much money that we used to send abroad, or lamenting that
we still send money away to pay for this or that which might be made here.
Yet that we send away wine or wool, fruit or honey, is never thought of as
a matter of lament, but quite the contrary. What is all this but the assumption
that a dollar's worth of gold is worth more than a dollar's worth of anything
else?
This fallacy is transparently absurd when we come
to reduce it to a general proposition. But, nevertheless, the habit of jumping
at conclusions, of which I have spoken, makes it seem very natural to people
who do not stop to think. Money is our standard, or measure of values, in
which we express all other values. When we speak of gaining wealth, we speak
of »making money«; when we speak of losing wealth, we speak
of »losing money«; when we speak of a rich man, we speak of
him as possessed of much money, though as a matter of fact he may, and probably
has, very little actual money. Then, again, as money is the common medium
of exchange, in the process of getting things we want for things we are willing
to dispose of, we generally first exchange the latter for money and then
exchange the money for the things we want. And, as the number of people who
want things of all sorts must manifestly be greater than the number of people
who want the particular thing, whatever it may be that we have to exchange,
any difficulty there may be in making our exchange will generally attend
the first part of it; for, in exchanging anything for money, I must find
some one who wants my particular thing, while in exchanging money for a commodity,
any one who wants any commodity or service will be willing to take my money.
Now, this habit of estimating wealth in money, and of speaking of gain or
loss of wealth as gain or loss of money, and this habit of associating difficulties
of exchange in individual cases with the difficulty of obtaining money, constantly
lead people who do not think clearly to jump at the conclusion that money
is more valuable than anything else. Yet the slightest consideration would
show them that wealth never consists, but in very small part, of money; that
the difficulty in individual exchanges has no reference to the relative value
of money, and is eliminated when the exchanges of large numbers of individuals
are concentrated or considered, and, in short, a dollar in money is worth
no more than a dollar's worth of wheat or cloth; and that, instead of the
exchange of money for other commodities being proof of a disadvantageous
bargain, it is proof of an advantageous bargain, for, if we did not want
the goods more than the money, we would not make the exchange.
Or, to take another example: In connection with
the discussion of Chinese immigration, you have, doubtless, over and over
again heard it contended that cheap labour, which would reduce the cost
of production, is precisely equivalent to labour-saving machinery, and,
as machinery operates to increase wealth, so would cheap labour. This conclusion
is jumped at from the fact that cheap labour and labour-saving machinery
similarly reduce the cost of production to the manufacturer. But, if, instead
of jumping at this conclusion, we analyse the manner in which the reduction
of cost is produced in each case, we shall see the fallacy. Labour-saving
machinery reduces cost by increasing the productive power of labour; a reduction
of wages reduces cost by reducing the share of the product which falls to
the labourer. To the employer the effect may be the same; but, to the community,
which includes both employers and employed, the effect is very different.
In the one case there is increase in the general wealth; in the other there
is merely a change in distribution whatever one class gains another class
necessarily losing. Hence the effect of cheap labour is necessarily very
different from that of improved machinery.
And precisely similar to this fallacy is that
which seems so natural to men of another class—that because the introduction
of cheaper labour in any community does, in the present organisation of
society, tend to reduce the general level of wages, so does the importation
of cheap goods. This, also—but I must leave you to analyse it for yourselves—springs
from a confusion of thought which does not distinguish between the whole
and the parts, between the distribution of wealth and the production of wealth.
Did time permit, I might go on, showing you by
instance after instance how transparently fallacious are many current opinions—some,
even, more widely held than any of which I have spoken—when tried by the
simple tests which it is the province of political economy to apply. But
my object is not to lead you to conclusions. All I wish to impress upon you
is the real simplicity of what is generally deemed an abstruse science, and
the exceeding ease with which it may be pursued. For the study of political
economy you need no special knowledge, no extensive library, no costly laboratory.
You do not even need text-books nor teachers, if you will but think for
yourselves. All that you need is care in reducing complex phenomena to their
elements, in distinguishing the essential from the accidental, and in applying
the simple laws of human action with which you are familiar. Take nobody's
opinion for granted; »try all things: hold fast that which is good.«
In this way, the opinions of others will help you by their suggestions, elucidations,
and corrections; otherwise they will be to you but as words to a parrot.
If there were nothing more to be urged in favour
of the study of political economy than the mental exercise it will give,
it would still be worth your profoundest attention. The study which will
teach men to think for themselves is the study of all studies most needed.
Education is not the learning of facts; it is the development and training
of mental powers. All this array of professors, all this paraphernalia of
learning, cannot educate a man. They can but help him to educate himself.
Here you may obtain the tools; but they will be useful only to him who can
use them. A monkey with a microscope, a mule packing a library, are fit emblems
of the men—and, unfortunately, they are plenty—who pass through the whole
educational machinery, and come out but learned fools, crammed with knowledge
which they cannot use—all the more pitiable, all the more contemptible, all
the more in the way of real progress, because they pass, with themselves
and others, as educated men.
But, while it seems to me that nothing can be
more conducive to vigorous mental habits and intellectual self-reliance
than the study which trains us to apply the analysis of thought to the every-day
affairs of life, and to see in constantly changing phenomena the evidence
of unchanging law; which leads us to distinguish the real from the apparent,
and to mark, beneath the seething eddies of interest, passion, and prejudice,
the great currents of our times—it is not on such incentives that I wish
to dwell. There are motives as much higher than the thirst for knowledge,
as that noble passion is higher than the lust for power or the greed of gold.
In its calculations the science of wealth takes
little note of, nay, it often carefully excludes, the potent force of sympathy,
and of those passions which lead men to toil, to struggle, even to die for
the good of others. And yet it is these higher passions, these nobler impulses,
that urge most strenuously to its study. The promise of political economy
is not so much what it may do for you, as what it may enable you to do for
others.
I trust you have felt the promptings of that highest
of ambitions—the desire to be useful in your day and generation; the hope
that in something, even though little, those who come after may be wiser,
better, and happier that you have lived. Or, if you have never felt this,
I trust the feeling is only latent, ready to spring forth when you see the
need.
Gentlemen, if you but look, you will see the need!
You are of the favoured few, for the fact that you are here, students in
a university of this character, bespeaks for you the happy accidents that
fall only to the lot of the few, and you cannot yet realise, as you may by-and-by
realise, how the hard struggle which is the lot of so many may cramp and
bind and distort—how it may dull the noblest faculties and chill the warmest
impulses, and grind out of men the joy and poetry of life; how it may turn
into the lepers of society those who should be its adornment, and transmute
into vermin to prey upon it and into wild beasts to fly at its throat, the
brain and muscle that should go to its enrichment! These things may never
yet have forced themselves on your attention; but still, if you will think
of it, you cannot fail to see enough want and wretchedness, even in our own
country to-day, to move you to sadness and pity, to nerve you to high resolve;
to arouse in you the sympathy that dares, and the indignation that burns
to overthrow a wrong.
And seeing these things, would you fain do something
to relieve distress, to eradicate ignorance, to extirpate vice? You must
turn to political economy to know their causes, that you may lay the axe
to the root of the evil tree. Else all your efforts will be in vain. Philanthropy,
unguided by an intelligent apprehension of causes, may palliate or it may
intensify, but it cannot cure. If charity could eradicate want, if preaching
could make men moral, if printing books and building schools could destroy
ignorance, none of these things would be known to-day.
And there is the greater need that you make yourselves
acquainted with the principles of political economy from the fact that,
in the immediate future, questions which come within its province must assume
a greater and greater importance. To act intelligently in the struggle in
which you must take part—for positively or negatively each of you must carry
his weight—you must know something of this science. And this, I think, is
clear to whoever considers the forces that are mustering—that the struggle
to come will be fiercer and more momentous than the struggles that are past.
There is a comfortable belief prevalent among
us that we have at last struck the trade-winds of time, and that by virtue
of what we call progress all these evils will cure themselves. Do not accept
this doctrine without examination. The history of the past does not countenance
it, the signs of the present do not warrant it. Gentlemen, look at the tendencies
of our time, and see if the earnest work of intelligent men be not needed.
Look even here. Can the thoughtful man view the
development of our State with unmixed satisfaction? Do we not know that,
under present conditions, just as that city over the bay grows in wealth
and population, so will poverty deepen and vice increase; that just as the
liveried carriages become more plentiful, so do the beggars; that just as
the pleasant villas of wealth dot these slopes, so will rise up the noisome
tenement house in the city slums. I have watched the growth of San Francisco
with joy and pride, and my imagination still dwells with delight upon the
image of the great city of the future, the queen of all the vast Pacific—perhaps
the greatest city of the world. Yet what is the gain? San Francisco of to-day,
with her three hundred thousand people, is, for the classes who depend upon
their labour, not so good a place as the San Francisco of sixty thousand;
and when her three hundred thousand rises to a million, San Francisco, if
present tendencies are unchanged, must present the same sickening sights
which in the streets of New York shock the man from the open West.
This is the dark side of our boasted progress,
the Nemesis that seems to follow with untiring tread. Where wealth most abounds,
there poverty is deepest; where luxury is most profuse, the gauntest want
jostles it. In cities which are the storehouses of nations, starvation annually
claims its victims. Where the costliest churches rear the tallest spires
towards heaven, there is needed a standing army of policemen; as we build
new schools, we build new prisons; where the heaviest contributions are raised
to send missionaries to the ends of the earth to preach the glad tidings
of peace and goodwill, there may be seen squalor and vice that would affright
a heathen. In mills where the giant power of steam drives machinery that
multiplies by hundreds and thousands the productive forces of man, there
are working little children who ought to be at play or at school; where the
mechanism of exchange has been perfected to the utmost, there thousands of
men are vainly trying to exchange their labour for the necessaries of life!
Whence this dark shadow that thus attends that
which we are used to call »material progress«, that which our
current philosophy teaches us to hope for and to work for? Here is the question
of all questions for us. We must answer it or be destroyed, as preceding civilisations
have been destroyed. For no chain is stronger than its weakest link, and
our glorious statue with its head of gold and its shoulders of brass has
as yet but feet of clay!
Political economy alone can give the answer. And,
if you trace out, in the way I have tried to outline, the laws of the production
and exchange of wealth, you will see the causes of social weakness and disease
in enactments which selfishness has imposed on ignorance, and in maladjustments
entirely within our own control.
And you will see the remedies. Not in wild dreams
of red destruction nor weak projects for putting men in leading-strings
to a brainless abstraction called the state, but in simple measures sanctioned
by justice. You will see in light the great remedy, in freedom the great
solvent. You will see that the true law of social life is the law of love,
the law of liberty, the law of each for all and all for each; that the golden
rule of morals is also the golden rule of the science of wealth; that the
highest expressions of religious truth include the widest generalisations
of political economy.
There will grow on you, as no moralising could
teach, a deepening realisation of the brotherhood of man,—there will come
to you a firmer and firmer conviction of the fatherhood of God. If you have
ever thoughtlessly accepted that worse than atheistic theory that want and
wretchedness and brutalising toil are ordered by the Creator, or, revolting
from this idea, if you have ever felt that the only thing apparent in the
ordering of the world was a blind and merciless fate careless of man's aspirations
and heedless of his sufferings, these thoughts win pass from you as you
see how much of all that is bad and all that is perplexing in our social
conditions grows simply from our ignorance of law—as you come to realise
how much better and happier men might make the life of man. |