Chapter 58 APPENDIX II DEVELOPMENT OF ECONOMIC SCIENCE

Section 1 Modern economic science is mostly influenced by ancient thoughts indirectly, but less directly. We have seen that economic liberty has its historical roots, but it is largely a modern product; and next we must inquire into the corresponding development of economic science.Modern social conditions developed from the institutions of the early Aryans and Semites with the aid of Greek thought and Roman law; but the study of modern economics has rarely been directly influenced by the theories of the ancients. Indeed, modern economics, like other sciences, has its roots in the Renaissance.But an industrial system based on slavery, and a philosophy which disdained manufactures and commerce, was alien to obstinate burghers, who were as interested in their crafts and commerce as they were in the government of the state. Honorable.These tenacious and brutish people may well have benefited from the philosophical discipline and wide-ranging interests of the great thinkers of the past, but, in fact, they set out vigorously to solve their own problems; sex and simplicity, and at the same time a prejudice against wealth as an end rather than a means of sustaining human life.It deals directly with general revenues, with the benefits and effects of taxation; and on this point the statesmen of free cities and empires alike feel more and more economical as commerce expands and war costs increase. The urgency and difficulty of the problem.

Throughout the ages, and especially in the early Middle Ages, statesmen and merchants were busy doing their best to make nations rich and powerful by managing commerce.Their chief concern is the supply of the precious metals, which they regard as an index, if not a chief cause, of wealth, both to individuals and to nations.The geographical discoveries of Vasco da Gama and Columbus raised the question of commerce from a secondary to a major position in the countries of Western Europe.Theories about the importance of the precious metals, and the best means of obtaining their supplies, became in a way the arbiter of public policy of the sort of alliances which determine war and peace, and the rise and fall of nations.Sometimes, such theories have greatly affected the migration of peoples on the earth.

The regulations concerning the trade in precious metals are but one of many regulations which endeavor to prescribe to each individual with varying degrees of detail and closeness what he should produce, how he should produce it, what he should earn, and how he should use his proceeds.The natural assimilation of the Teutonic peoples gave custom an extraordinary force in the early Middle Ages.This force affected merchant guilds, local authorities, and national governments as they engaged in coping with the successively changing tendencies that occurred in American trade.In France this Teuton bias was transformed into institutions by the genius of the Romans, and paternalism reached its apogee; Colbert's rules of trade became golden rules.It was at this time that economic theory emerged, the so-called mercantilist system came to the fore, and the regulations of trade were enforced with unprecedented severity.

As the years went by, there was a tendency towards economic freedom, and those who opposed the new thought invoked on their part the mercantilists of the previous generation as a basis.But the regulations and restrictions contained in their system were the zeitgeist of the time; many of the changes they sought to bring about were directed towards the freedom of enterprise.Contrary to those who advocated a strict prohibition of the exportation of precious metals, they especially argued that no trade should be prohibited which in the long run would tend to import more gold and silver into the country than it exported.By framing the question whether the country is persecuted for letting merchants run their businesses freely, they have initiated a new current of thought; What people want.This movement towards restraint of trade continued until the second half of the eighteenth century, when the theory matured that the welfare of society could not be guaranteed if the state attempted to set artificial regulations against the natural liberty of each man to do his own thing. suffered greatly.

Section II Physiocrats.Adam Smith developed the theory of free trade and believed that the theory of value was central to making economic science a unity. The first systematic establishment of economic science on a broad basis was undertaken in the middle of the eighteenth century by a group of French statesmen and philosophers under the leadership of Dr. Quesnay, physician to Louis XV.The cornerstone of their policy is obedience to nature. They were the first to proclaim the doctrine of free trade as a general principle of action, and in this respect no less than the advanced English writer Sir Dudley North; In nature, many herald future generations.However, their thinking was unclear, and this was a common feature of scientists at that time. This kind of unclear thinking was eliminated from natural science after a long struggle.They confuse the ethical principle of obedience to nature with the laws of causality, the former in the imperative mood, prescribing certain laws of action, while the latter in the declarative mood, the laws discovered by science through the study of nature.For this and other reasons, their treatises are of little immediate value.

But its indirect influence on modern economics is great.There are two reasons: first, the clarity and logical consistency of their arguments gave them a great influence on the thinking of later generations; second, the main motive of their research was not to increase the wealth of merchants and fill the revenue of the treasury, as Most of their predecessors did, but to alleviate the suffering and degradation caused by excessive poverty.Thus they give economics the modern purpose of seeking to help improve the character of human life. The third section continues. The second big step forward, the biggest step that economics has ever taken, was not the work of a school but of a single man.Adam Smith was certainly not the only great economist of his day.Not long before his book was written, Hume and Stuart had made important contributions to economic theory, and Anderson and Young had published some extremely valuable economic research.But the scope of Adam Smith's discussion is sufficient to include the whole essence of the writings of his English and French contemporaries at that time.Though he no doubt inherited much from others, yet the more we compare him with his predecessors and successors, the more gifted, the more knowledgeable, and the more impartial in his judgment do we think him.

He lived for a long time in France, and had contact with the Physiocrats; he studied the English and French philosophy of his time, and his knowledge of the world was actually due to his travels and intimate contacts with Scottish merchants. return.In addition to these favorable conditions, there are also his extraordinary powers of observation, judgment and reasoning.It turns out that where he disagreed with his predecessors, he was almost more right than they were.And there is almost no economic truth known now that he has not dabbled in.Because he was the first to treat wealth in all its major social dimensions, he may rightly be considered the founder of modern economics for this reason alone.

But the field he opened up is too large to be surveyed by one person.At one time many of the truths which he sees, at another time are lost from his vision.Hence it is possible to cite him to confirm many errors; though after examination he always moves towards the truth. He developed the Physiocrat's theory of free trade with such common sense and practical business knowledge that he made it a force in practical life; foreign.While giving examples of situations in which self-interest can lead an individual businessman to harm society, he argues that even when the government acts with the best of intentions, it will almost always serve the public less well than the entrepreneurial spirit of a businessman, no matter how selfish the businessman may be Self-interest.So impressive was his defense of this theory that most German scholars refer primarily to it when they speak of Smithism.

But after all, this is not his main achievement.His main achievement is that he synthesized and developed the studies on value of British and French scholars and his predecessors at that time.It is said that he opened a new era in thought because he was the first to make a serious and scientific study of the way in which value measures human motivation, on the one hand the desire of the buyer to acquire wealth, and on the other the toil and sacrifice of the producer ( or "actual production costs"). It is probable that the gist of what he carried out was unknown even to himself, and certainly not to many of his successors.Nevertheless, there is a distinction between the good economics writings after the "Inquiry into the Nature and Causes of National Wealth" and the previous writings. All kinds of labor and self-control caused directly or indirectly can be seen more clearly.The efforts of other scholars in this direction were important, but he developed it so much that he actually championed this new insight.In this regard, neither he nor his predecessors and successors invented a new academic concept; they only clarified the usual concepts in daily life.In fact the average person unaccustomed to analysis is apt to regard money as a more precise measure of motives and happiness than it really is; partly because he does not think of the manner in which the measure is formed.The terms of economics seem to be more specialized and less realistic than the terms of everyday life.But in fact it is more real, because it is more deliberate, and takes into account differences and difficulties more carefully.

Section IV The study of factual material was not neglected by his successors, although some of them were prejudiced against the deductive method. Among Adam Smith's contemporaries and immediate successors, there is no one with such a broad and unbiased mind.But they all made valuable contributions, and each was engaged in the study of certain kinds of problems, some of which came from his own genius, and others which arose from the particular events of the time.In the late eighteenth century, the major economic works were historical and narrative, dealing with the conditions of the working class, especially in the agricultural areas.Younger went on to write his famous travelogue, Eden wrote a history of the poor, which served as the basis and example for all subsequent historians of industry; and Malthus, by his study of history, pointed out that at different times and in different countries the growth of population was actually determined of various factors.

But on the whole, Bentham is the most influential of Adam Smith's immediate successors.He wrote very little in economics, but he had a major influence on the emerging British school of economics in the early nineteenth century.A staunch logician, he opposed all kinds of unreasonable restrictions and regulations in trade; support.Britain ruled the world by rapidly adapting itself to new economic movements, while the countries of Central Europe were unable to take advantage of their rich natural resources because of their obstinacy.Therefore, the merchants of England generally regard commercial discipline as harmful, at least in England it has diminished, is diminishing, and will soon disappear.Bentham's disciples immediately concluded that they need not worry much about custom; it was enough for them to discuss the tendency of human behavior on the assumption that each is pursuing his own self-interest. Hence the charge often made against English economists in the early nineteenth century, that they did not examine carefully whether collective action should not be given greater attention than individual action in social and economic life, and that, moreover, they exaggerated the importance of competition. Force and the swiftness of its effect, these accusations are quite just.The accusation that their research has been marred by a certain rigid generalization, or even harshness of tone, is not without some small reason.These shortcomings were partly due to Bentham's influence, partly due to the zeitgeist of the age he represented.But part of it is also due to the fact that much of the study of economics is in the hands of people whose strength lies in drive rather than in philosophy. The fifth section continues. Politicians and merchants were again engaged in the study of money and foreign trade problems with even greater energy than these problems first occurred in the early days of the great economic transformation at the end of the Middle Ages.Their contact with real life, their great experience, and their great knowledge, seem likely at first sight to lead them to make an extensive study of human nature, and to base their reasoning on a broad basis.But the edification of real life often leads them to draw general conclusions hastily from personal experience. In their fields, their research is extremely valuable.For the theory of money is that part of economic science in which it does no harm to ignore human motives (other than those of enrichment); and the famous school of deductive law led by Ricardo is invincible here. land. Secondly, economists are engaged in the study of foreign trade theory and cleared up many shortcomings left by Adam Smith in this regard.No part of economics is more within the realm of purely deductive reasoning than the theory of money.Indeed, an adequate discussion of free trade policy must take into account many questions which are not strictly economic; and most of these questions, while important to agricultural countries, especially emerging countries, are of great concern to Britain. Small. The study of economic facts in England was not neglected throughout this period.The statistical research of Petty, Younger, Eden and other scholars was inherited and developed by Tuke, McCulloch and Porter.Although in their writings there seems to be too much prominence to those facts which are directly related to merchants and other capitalists, the same cannot be said of the extensive parliamentary investigations on the condition of the working class which were carried out under the influence of British economists.In fact, the official and private statistics and economic history that came out in England in the late eighteenth and early nineteenth centuries can be regarded as the starting point for systematic historical and statistical research in economics. However, their research has a certain narrowness.It is certainly historical, but for the most part it is not "comparative."Hume, Adam Smith, Younger, and others, guided by their own intuitive genius and by the example of Montesquieu, occasionally compared and drew lessons from social phenomena in different ages and countries, but none of them Acquire the concept of comparative study of history in a systematic scheme.Therefore, scholars at that time were serious and capable in searching for materials, but quite blind in research work.They overlooked a body of material that we now consider extremely important, and were often incapable of making good use of what they collected.This narrowness is all the more apparent when they move from gathering material to general reasoning. Section VI But they underestimated that human nature depends on the environment.Research by socialists and biologists has had an impact on this.John Stuart Mill.Features of modern writing. For the sake of simplicity of argument, Ricardo and his followers often seem to regard human beings as immutable in their arguments, and they have never vigorously studied the variation of human beings.The people with whom they are most acquainted are the bourgeois; and sometimes, through indiscretion, almost imply that other Englishmen are exactly like the bourgeois they know. They understood that the inhabitants of other countries had their own peculiarities worthy of study; but they seemed to regard these differences as superficial, and certainly capable of being eliminated, once other peoples had learned the better manners which the English were prepared to teach them. lifestyle words.This thinking has led our lawyers to impose English civil law on the Hindoos, and our economists to formulate their theories implicitly on the assumption that the world is made up of citizens.It does little harm when discussing money and foreign trade, but misleads them when discussing the relations between different industrial classes.It causes them to speak of labor as a commodity, without studying the worker's point of view; without carefully considering his emotions, instincts, and habits, his sympathies and aversions, his class envy and class friendship, his lack of knowledge and freedom of movement. Opportunity.Therefore, they believe that the forces of supply and demand have a more mechanical and regular role than in real life; The laws of profit and wages which they laid down were untenable even in England at that time. But their fatal flaw is that they don't understand that industrial routines and systems are extremely changeable.They especially fail to understand that the poverty of the poor is the chief cause of the infirmity and inefficiency of labor that make them poor.They do not have the confidence that modern economists have in the possibility of greatly improving the conditions of the working class. It is true that socialists advocate the all-round development of human beings.However, their opinions have little basis in historical and scientific research; at the same time, due to the arrogance of their expressions, this has caused the contempt of contemporary serious economists.The socialists have not studied the theories they attack; it is not difficult to point out that they do not understand the nature and efficiency of the existing social and economic organization.Economists therefore disdain to seriously test any of their theories, especially their speculations about human nature. But socialists have strong feelings; they understand the underlying motives of human behavior that economists do not consider.In their wild quatrains lurk keen observations and constructive opinions, and philosophers and economists have much to learn from them.Their influence gradually increased, and Comte owed much to their help; the transformation in John Stuart Mill's life, as he tells us in his autobiography, was caused by reading the socialists came. The seventh section continues. When we compare the modern views on the great question of the distribution of wealth with those prevailing in the early nineteenth century, we find that, apart from various changes in detail and improvements in the scientific accuracy of reasoning, There has been a fundamental change in the approach to the problem; for the previous economists' arguments seemed to regard human character and efficiency as invariables, while modern economists have never forgotten that man is a product of the environment in which he lives. a fact.This change in economic point of view is due partly to the fact that human nature changed so rapidly during the last fifty years of the nineteenth century that it compelled their attention; partly to various writers, socialist and other scholars; partly because of the indirect influence of similar changes in certain branches of the natural sciences. In the early nineteenth century, the mathematical and physical sciences were thriving.Although these sciences are different from each other, they have a common feature, that is, their objects of study are fixed and unchanged in every country and every age.The progress of science is familiar, but the development of scientific objects is strange.As time went on, biology gradually improved, and people began to have a clearer concept of the nature of animal and plant growth.They understand that if the objects of science go through different stages of development, the laws applicable to one stage will hardly apply to other stages without modification; the laws of science must have a corresponding development with the development of the objects they study.The influence of this new conception gradually extended to the human sciences; it appeared in the writings of Goethe, Hegel, Comte, and others. Finally, the study of biology has come a long way.Its discoveries, like those of earlier years in physics, attracted the attention of the world, and the tone of the ethical and historical sciences changed markedly.Economics also joined this general movement, paying increasing attention to the flexibility of human nature and to the effects and reactions on human nature of current methods of production, distribution, and consumption of wealth.The first important signs of this new tendency can be seen in John Stuart Mill's famous Principles of Political Economy. Mill's followers departed from the position taken by Ricardo's immediate successors and continued in this direction; the human factor, as distinguished from the mechanical factor, assumed an increasingly important place in economics.Leaving aside the living economists at the time, this new ethos permeated the historical studies of Clive Lethlie, the writings of Bagehot, Keynes, Toynby and others, especially Jevons It has achieved a glorious and immortal position in the history of economics because of its clever synthesis of various great advantages. A new concept of social responsibility is spreading.In parliament, in newspapers and pulpits, the spirit of humanitarianism resounded through the air.Mill and the economists who followed him promoted this movement, and they in turn drew much inspiration from it.Partly for this reason, and partly because of the development of modern historical science, their study of the actual material has also been more extensive and philosophical.Indeed, some of the early economists' research in history and statistics is rare, if not superior.But much that was previously unknown to them is now known.Economists who are neither as deep in business as McCulloch nor as profound as his historical knowledge can also put forward broader and clearer views on the relationship between economic theory and real data than he does. In this they have benefited from a general improvement in the method of all sciences, including history. Consequently, economic reasoning is now in every respect more precise than it was in the past.The premises assumed in any study are more carefully formulated than ever before.But sophistication of thought has been partly destructive in its use; many previous uses of the general theory are now shown to be untenable, because care has not been taken before to take into account all the assumptions implied and the particular Whether such an assumption can be generally made in the case.Consequently, many dogmas have been broken which appear simple only because they are loosely formulated; but which, for the same reason, serve as defenders (mainly the capitalist class) with which they arm themselves for struggle. ) arsenal.This destructive effect may at first appear to devalue the general reasoning process in economics, but it has the opposite effect.It cleared the way for newer and more powerful theoretical machines of the kind we are painstakingly building; it makes it possible for us to see life more fully, to move forward more steadily, and scientifically than the maestros who first set out to solve economic problems. Bigger, less dogmatic; and they pioneered the road we now have. This change may be regarded as a transition from the primary stage of the development of economic method to the advanced stage. In the primary stage, the description of the operation of nature is as usual simple, in order to enable these phenomena to be expressed in simple sentences. But at the advanced stage, the study of natural phenomena is more careful, and the description is more original, even at the expense of a certain degree of simplicity and popularity.Thus the general reasoning of economics has come a long way, and has established itself in a century of hostile criticism at every step than it was at the height of its prestige. Above we have examined recent developments from a British point of view only.But British developments were only one side of a broader movement that extended to the countries of Western Europe. The eighth section continues. British economists have many believers abroad, as well as many critics.The French school has continued to develop from its great eighteenth-century thinkers, and has avoided many of the errors and confusions, especially concerning wages, which are common to second-rate English economists.It does a lot of useful work since say.Cournot was the most gifted constructive thinker of the French school; while Fourier, Saint-Simon, Proudhon, and Louis Blanc produced many of the most valuable and arrogant socialist insights. Perhaps the biggest relevant development in recent years has been in the United States.A century ago the "American School" was thought to consist of a group of protectionists led by Carlyle; but now a new school of bright thinkers is forming; and there are signs that America is gaining in economic thought. The kind of leadership that has been achieved in economic affairs. Economic science is making a comeback in its two birthplaces, Holland and Italy.The superb analytical work of the Austrian School of Economics in particular has attracted great attention from all countries. On the whole, however, the most important work of economic research ever done on the modern Continent was in Germany.While acknowledging the leadership of Adam Smith, German economists were at first offended by what they perceived as insular intolerance and Ricardian self-confidence.They were especially dissatisfied with the assumption made by the British free traders that the propositions established for an industrial country like England could be transferred intact to an agricultural country.List's brilliant genius and patriotic zeal overturned this assumption and pointed out that Ricardians rarely considered the indirect effects of free trade.So far as England is concerned, it can do little harm by ignoring them; for they are basically salutary, and thereby amplify the influence of the immediate effect.But he pointed out that in Germany and especially in the United States, many of the indirect effects of free trade were harmful; he believed that this harm outweighed its direct benefits.Many of his arguments are flimsy, but some are applicable; and as English economists refuse to discuss them patiently, the politicians who are impressed by the correct arguments, in order to mobilize the masses, do not The use of arguments that are unscientific but have a greater appeal to the working class is also muted. American industrialists regarded List as their spokesman.The widespread popularity of a popular pamphlet he wrote to them was the beginning of his fame in the United States and his systematic formulation of protectionist theory. The Germans are fond of saying that the Physiocrats and the Adam Smith school underestimated the importance of national life; tendencies of life.They credit Liszt with doing much to inspire patriotic sentiments, which are more generous than individualistic and more determined than cosmopolitan.It is doubtful whether the cosmopolitan sense of the Physiocrats and British economists was as strong as the Germans imagined.But there is no doubt about the influence of modern German political history on the statism of German economists.Germany, surrounded by invading armies, can exist only through patriotic zeal.German scholars have argued (perhaps a bit too much) that the sense of altruism operates in a narrower range of economic relations between states than between individuals. Although the Germans are nationalistic in their sentiments, they are noble internationalists in their studies.They were leaders in the "comparative" study of economic and general history.They enumerate the social and industrial phenomena of various countries and ages, arrange them in such a way as to clarify the relationship between each phenomenon, and study these phenomena in conjunction with the history of jurisprudence for reference. The writings of a few members of the German school are prone to hyperbole, and even a cautious disdain for the Ricardian theory, the essence and purpose of which they themselves do not understand.This has given rise to many tasteless heated debates.But few of the leaders of the school were this intolerable.It may be difficult to overestimate the work done by them and their foreign colleagues in the study and interpretation of the history of economic customs and institutions.It is one of the greatest achievements of our time, a new and precious addition to our real wealth.More than almost anything else, it enlarges our horizons, heightens our awareness of ourselves, and helps us understand the evolution of the ethical life of human society and the divine principles it embodies. They concentrated their attention on the historical investigation of science, on the application of science to the conditions of German social and political life, and especially to the economic obligations of the German bureaucracy.But under the guidance of Hermann's brilliant genius, they have carried out brilliant theoretical analysis, which has enriched our knowledge, and at the same time they have greatly expanded the scope of economic theory. German thought also promoted the study of socialism and state functions.Most of the most radical initiatives of modern times known to the world, the almost gratuitous expropriation of private property for the benefit of society, have come from German scholars, some of them Jewish.Indeed, upon closer study, their writings are not as deep and original as they appear at first glance.But it derives its great strength from its dialectical sleight of hand and excellent style, and sometimes from its vast and distorted knowledge of history. In addition to the revolutionary socialists, there were many thinkers in Germany who insisted that the existing form of the private property system lacked historical basis; and called for a reconsideration of social rights relative to the individual on many scientific and philosophical grounds.The political-military system of the German people has lately encouraged their natural tendency to depend more on the government than the English do on the government and less on private enterprise.England and Germany have much to learn from each other on various questions of social improvement. But in the midst of the current wave of historical knowledge and demands for improvement, a difficult but very important work in economic science is in danger of being neglected.The popularity of economics has tended in part to ignore careful and rigorous reasoning.The rise of a so-called scientific view of biology has tended to throw into the background notions of economic laws and measures; as if these concepts were too rigid and rigid for the living, ever-changing economic organism.But biology teaches that the organisms of the vertebrates are the most developed, that modern economic organizations are backboned; and that the sciences dealing with it should not be invertebrates.It should have the ingenuity and sensitivity required to adapt itself closely to the real phenomena of the world; but it must also have a solid backbone of careful reasoning and analysis.