The Scholastic Breakdown
- Progress and Poverty
- Professors abandon science rather than face it
- The Encyclopedia Britannica
- The "Austrian school"
Epigraphs to Book II
Definitions are the basis of systematic reasoning.
The mixture of those things by speech which are by nature divided is the mother of all error.
Bacon made us sensible of the emptiness of the Aristotelian philosophy; Smith, in like manner, caused us to perceive the fallaciousness of all the previous systems of political economy; but the latter no more raised the superstructure of this science, than the former created logic.... We are, however, not yet in possession of an established text-book on the science of political economy, in which the fruits of an enlarged and accurate observation are referred to general principles that can be admitted by every reflecting mind; a work in which these results are so complete and well arranged as to afford to each other mutual support, and that many everywhere and at all times be studied with advantage.
-- J.B. Say, 1803
We may cite as examples of such inchoate but yet incomplete discoveries the great Wealth of Nations by Adam Smith -- a work which still stands out, and will ever stand out, as that of a pioneer, and the only book on political economy which displays its genius to every kind of intelligent reader. But among the specialists and the schools, this work of genius which swayed all Europe in its day, is laid upon the shelf as an antiquated affair, superseded by the smaller and duller men who have pulled his system to pieces and are offering us the fragments as a science most of whose first principles are still under dispute.
-- Professor (Greek) J.P. Mahaffy, "The Present Position of Egyptology," "Nineteenth Century," August, 1894.
The Science of Political Economy
Book II, The Nature of Wealth
Breakdown of Scholastic Political Economy
Showing the Reason, the Reception, and Effect on Political Economy of Progress and Poverty
In January, 1880, preceded in 1879 by an author's edition in San Francisco, appeared my Progress and Poverty, and it was followed later in the same year by an English edition and a German edition, and in 1882 by cheap paper editions both in England and the United States. The history of the book is briefly this: I reached California by sea in the early part of 1858, and finally became an editorial writer. In 1869 I went East on newspaper business, returning to California in the early summer of 1870. John Russell Young was at that time managing editor of the New York Tribune, and I wrote for him an article on "The Chinese on the Pacific Coast," a question that had begun to arouse attention there, taking the side popular among the working-classes of the Coast, in opposition to the unrestricted immigration of that people. Wishing to know what political economy had to say about the causes of wages, I went to the Philadelphia Library, looked over John Stuart Mill's Political Economy, and accepting his view without question, based my article upon it. This article attracted attention, especially in California, and a copy I sent from there to John Stuart Mill brought a letter of commendation.
While in the East, the contrast of luxury and want that I saw in New York appalled me, and I left for the West feeling that there must be a cause for this, and that if possible I would find out what it was. Turning over the matter in my mind amid pretty constant occupation, I at length found the cause in the treatment of land as property, and in a pamphlet which I took an interval of leisure to write, Our Land and Land Policy (San Francisco, 1871), I stated it. Something like a thousand copies of this were sold; but I saw that to command attention the work must be done more thoroughly, and refraining from any effort to press it at the East until I knew more, I engaged with others in starting (December, 1871) a small San Francisco daily paper, which occupied my attention, though I never forgot my main purpose, until December, 1875, when, becoming entangled with an obligation to a rich man (U. S. Senator John P. Jones), whose note we had at his own request taken, I went out penniless. I then asked the Governor (Irwin), whom I had supported, for a place that would give me leisure to devote myself to thoughtful work. He gave me what was much of a sinecure, and which has now been abolished -- the position of State Inspector of Gas-meters. This, while giving, though irregularly, enough to live on, afforded ample leisure. I had intended to devote this to my long-cherished plan; and after some time spent in writing and speaking, with intervals of reading and study, I brought out Progress and Poverty in an author's edition, in August, 1879.
In this book I took the same question that had perplexed me. Stating the world-wide problem in an introductory chapter, I found that the explanation of it given by the accepted political economy was that wages are drawn from capital, and constantly tend to the lowest amount on which labor will consent to live and reproduce, because the increase in the number of laborers tends naturally to follow and overtake any increase in capital. Examining this doctrine in Book I, consisting of five chapters, entitled "Wages and Capital," I showed that it was based upon misconceptions, and that wages were not drawn from existing capital, but produced by labor. In Book II, "Population and Subsistence," I devoted four chapters to examining and disproving the Malthusian theory. Then in Book III, "The Laws of Distribution," I showed (in eight chapters) that what were given as laws did not correlate, and proceeded to show what the laws of rent, interest and wages really were. In Book IV (four chapters), I proved that the effect of material progress was to increase the proportion of the product that would go to rent. In Book V (two chapters), I showed this to be the primary cause of paroxysms of industrial depression, and of the persistence of poverty amid advancing wealth. In Book VI, "The Remedy" (two chapters), I showed the inadequacy of all remedies for industrial distress short of a measure for giving the community the benefit of the increase of rent. In Book VII (five chapters), I examined the justice; in Book VIII (four chapters), the exact relation and practical application of this remedy; and in Book IX (four chapters), I discussed its effect on production, on distribution, on individuals and classes, and social organization and life; while in Book X (five chapters), I worked out briefly the great law of human progress, and showed the relation to this law of what I proposed. The conclusion (one chapter), "The Problem of Individual Life," is devoted to the problem that arises in the heart of the individual.
This work was the most thorough and exhaustive examination of political economy that had yet been made, going over in the space of less than six hundred pages the whole subject that I deemed it necessary to explain, and completely recasting political economy. I could get no one to print the work except my old partner in San Francisco, William M. Hinton, who had gone into the printing business, and who had sufficient faith in me to make the plates. I sold this author's edition in San Francisco at a good price, which almost paid for the plates, and sent copies to publishers in New York and London, offering to furnish them with plates. With the heavy expense met, Appleton & Co., of New York, undertook its printing, and though I could get no English publisher at the time, before the year of first publication was out they got Kegan Paul, Trench & Co. to undertake its printing in London. In the meantime, before publishing this book, I had delivered a lecture in San Francisco which led to the formation of the Land Reform Union of San Francisco, the first of many similar movements since.
Progress and Poverty has been, in short, the most successful economic work ever published. Its reasoning has never been successfully assailed, and on three continents it has given birth to movements whose practical success is only a question of time. Yet though the scholastic political economy has been broken, it has not been, as I at the time anticipated, by some one of its professors taking up what I had pointed out; but a new and utterly incoherent political economy has taken its place in the schools.
Among the adherents of the scholastic economy, who had been claiming it as a science, there had been from the time of Smith no attempt to determine what wealth was; no attempt to say what constituted property, and no attempt to make the laws of production or distribution correlate and agree, until there thus burst on them from a fresh man, without either the education or the sanction of the schools, on the remotest verge of civilization, a reconstruction of the science, that began to make its way and command attention. What were their training and laborious study worth if it could be thus ignored, and if one who had never seen the inside of a college, except when he had attempted to teach professors the fundamentals of their science, whose education was of the mere common-school branches, whose alma mater had been the forecastle and the printing-office, should be admitted to prove the inconsistency of what they had been teaching as a science? It was not to be thought of. And so while a few of these professional economists, driven to say something about Progress and Poverty, resorted to misrepresentation, the majority preferred to rely upon their official positions in which they were secure by the interests of the dominant class, and to treat as beneath contempt a book circulating by thousands in the three great English-speaking countries and translated into all the important modern languages. Thus the professors of political economy seemingly rejected the simple teachings of Progress and Poverty, refrained from meeting with disproof or argument what it had laid down, and treated it with contemptuous silence.
Had these teachers of the schools frankly admitted the changes called for by Progress and Poverty, something of the structure on which they built might have been retained. But that was not in human nature. It would not have been merely to accept a new man without the training of the schools, but to admit that the true science was open to any one to pursue, and could be successfully continued only on the basis of equal rights and privileges. It would not merely have made useless so much of the knowledge that they had laboriously attained, and was their title to distinction and honor, but would have converted them and their science into opponents of the tremendous pecuniary interests that were vitally concerned in supporting the justification of the unjust arrangements which gave them power. The change in credence that this would have involved would have been the most revolutionary that had ever been made, involving a far-reaching change in all the adjustments of society such as had hardly before been thought of, and never before been accomplished at one stroke; for the abolition of chattel slavery was as nothing in its effects as compared with the far-reaching character of the abolition of private ownership of land. Thus the professors of political economy, having the sanction and support of the schools, preferred, and naturally preferred, to unite their differences, by giving up what had before been insisted on as essential, and to teach what was an incomprehensible jargon to the ordinary man, under the assumption of teaching an occult science, which required a great study of what had been written by numerous learned professors all over the world, and a knowledge of foreign languages. So the scholastic political economy, as it had been taught, utterly broke down, and, as taught in the schools, tended to protectionism and the German, and to the assumption that it was a recondite science on which no one not having the endorsement of the colleges was competent to speak, and on which only a man of great reading and learning could express an opinion.
The first evidence of the change was given in the Encyclopedia Britannica, which in Vol. XIX of the ninth edition, printed in 1886, discarded the dogmatic article on the science of political economy, which had been printed in previous editions, and on the plea that political economy was really in a transition state, and a dogmatic treatise would not be opportune, gave the space instead to an article on the science of political economy by Professor J. K. Ingram, which undertook to review all that had been written about it, and was almost immediately reprinted in an octavo volume with an introduction by Professor E. J. James, of the University of Pennsylvania, the leading American protectionist institution of learning.
This confession that the old political economy was dead was written in the "good God, good devil," or historical style, and consisted in a notice of the writers on political economy, from the most ancient times, through a first, a second and a third modern phase, to the coming or historical phase.
Adam Smith is put down as leading in the third modern school -- the system of natural liberty. Among the predecessors of Smith are reckoned the French Physiocrats, whose proposition for a single tax on the value of land is related to their doctrine of the productiveness of agriculture and the sterility of manufactures and commerce, "which has been disposed of by Smith and others, and falls to the ground with the doctrine on which it was based;" and Smith himself is treated as a respectable "has-been," whose teachings must now give way to the wider criticism and larger knowledge of the historical school. Writers of France, Spain, Germany, Italy and northern nations are referred to in the utmost profusion, but there is no reference whatever to the man or the book that was then exerting more influence upon thought and finding more purchasers than all the rest of them combined, an example which has been followed to this day in the elaborate four -- volume Dictionary of Political Economy, edited by R. H. Inglis Palgrave.
This action was enough. The encyclopedias and dictionaries printed since have followed this example of the Britannica. Chambers, which was the first to print a new and revised edition, and Johnson's, which soon followed, concluded in 1896, discarded what they had previously printed as the teaching of political economy for articles in the style of the Britannica's; while the new dictionaries are repeatedly giving place to the jargon which has been introduced as economic terms.
As for the University of Pennsylvania, the great authority of American scholastic protectionism, it may be said that it soon after relegated to a back seat its Professor of Political Economy, Professor Robert Ellis Thompson, a Scotsman, who had been up to that time teaching the best scientific justification of protectionism that could be had, and has put in his place the Professor E. J. James already spoken of, and thrown its whole influence and resources into the teaching of protection by the Anglicized historical and inductive method, under a new though rarely mentioned name. The new science speaks of the "science of economics" and not of "political economy;" teaches that there are no eternally valid natural laws; and, asked if free trade or protection be beneficial or if the trusts be good or bad, declines to give a categorical answer, but replies that this can be decided only as to the particular time and place, and by a historical investigation of all that has been written about it. As such inquiry must, of course, be left to professors and learned men, it leaves the professors of "economics," who have almost universally taken the places founded for professors of "political economy," to dictate as they please, without any semblance of embarrassing axioms or rules. How this lends itself to an acquiescence in the views or whims of the wealthy class, dominant in all colleges, the University of Pennsylvania, controlled in the interests of protectionists for revenue only, was the first to find out, but it has been rapidly and generally followed.
Such inquiry as I have been able to make of the recently published works and writings of the authoritative professors of the science has convinced me that this change has been general among all the colleges, both of England and the United States. So general is this scholastic utterance that it may now be said that the science of political economy, as founded by Adam Smith and taught authoritatively in 1880, has now been utterly abandoned, its teachings being referred to as teachings of "the classical school" of political economy, now obsolete.
What has succeeded is usually denominated the Austrian school, for no other reason that I can discover than that "far kine have long horns." If it has any principles, I have been utterly unable to find them. The inquirer is usually referred to the incomprehensible works of Professor Alfred Marshall of Cambridge, England, whose first 764-page volume of his Principles of Economics, out in 1891, has not yet given place to a second; to the ponderous works of Eugen V. Böhm-Bawerk, Professor of Political Economy, first in Innsbruck and then at Vienna, Capital and Interest and The Positive Theory of Capital, translated by Professor William Smart of Glasgow; or to Professor Smart's Introduction to the Theory of Value on the Lines of Menger, Wieser and Böhm-Bawerk, or to a lot of German works written by men he never heard of and whose names he cannot even pronounce.
This pseudo-science gets its name from a foreign language, and uses for its terms words adapted from the German -- words that have no place and no meaning in an English work. It is, indeed, admirably calculated to serve the purpose of those powerful interests dominant in the colleges under our organization, that must fear a simple and understandable political economy, and who vaguely wish to have the poor boys who are subjected to it by their professors rendered incapable of thought on economic subjects. There is nothing that suggests so much what Schopenhauer (Parerga and Paralipomena) said of the works of the German philosopher Hegel than what the professors have written, and the volumes for mutual admiration which they publish as serials:
- If one should wish to make a bright young man so stupid as to become incapable of all real thinking, the best way would be to commend to him a diligent study of these works. For these monstrous piecings together of words which really destroy and contradict one another so causes the mind to vainly torment itself in the effort to discover their meaning that at last it collapses exhausted, with its capacity for thinking so completely destroyed that from that time on meaningless phrases count with it for thoughts.
It is to this state that political economy in the teachings of the schools, which profess to know all about it, has now come.