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III
The Classical Economists and the Development of Individualism

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In passing from Adam Smith to the group of Classical Economists of the early nineteenth century, one is conscious of a great change in the intellectual outlook. The period embraced between the dates 1815 and 1845,—from the beginning of ‘the great peace’ till the passage of the Corn Law repeal,—may be reckoned as the halcyon age of the English political economist. The economist here occupies the position, never before or since accorded to him, of confidential adviser to the nation. He has become the mentor of the statesman.[8] His wisdom is at once the guide of the parliamentarian and the vade-mecum of the Manchester merchant.

The attitude of the classical Economist towards his science reflects this fact. He looks upon the body of doctrine of which he holds the key with a complacent pride. He regards it as a science, complete or almost so: capable of emendation here and there, of a neater precision, of a finer clarity of statement, but in the main a science complete in its outlines, well-rounded and compact. Taken altogether it is to him, ‘une science que j’ai achevée,’ as the Abbé Siéyčs but shortly before had prematurely said of Politics.[9] Of the national importance of such a body of truth the economist is conscious in an eminent degree.[10] He feels that it is an art as well as a science, that it is contributory to the national wealth.[11] He is interested in its diffusion, anxious that it should be placed even within the reach of the masses whose lot it is calculated to console with a fitting resignation. For the benefit of Mankind at large he reduces his science to the form of catechisms, of conversations, even of fictitious and illustrative anecdote.[12] Nor is he solely impressed with the chrematistic and material side of his teaching. Its moral aspect has laid hold of him: he has become a propagandist. He is a man with a mission.

It is natural therefore that in this form of a propaganda, the doctrine of the economist should undergo a centripetal impulse and seek to focus itself about a central point, when a science is made to do duty as a gospel, it naturally takes on a new aspect. It becomes positive, dogmatic, over-definite. It is but ill work preaching a creed of half-truths and qualified propositions. As political economy therefore in the early decades of the century, from being analytical and tentative, passes into the position of a recognised authority, it inevitably seeks to gather its teaching around a central point of truth. And this point is found for the economist in the doctrine of the non-interference of government, which now becomes the dominant note of economic teaching. Political Economy is thus carried forward by the momentum of its own dogma until the climax is reached in the Optimists of the middle century.

Yet, while this is true, it will appear on closer examination that the identification of the teaching of the classicists with the absolute principle of non-interference is rather a matter of appearance than of reality. The false stigma that attached to them both, then and later, as exponents of the extreme doctrine of laissez faire arose from the peculiar circumstances and method of their presentation. As teachers of an art, as exponents of a gospel, they necessarily tended to lay emphasis on the central point of their teaching. It is the aim of the present chapter to discuss in some detail the individualist principle as held by the writers of the Peace Era. In the succeeding chapter their influence on legislative policy will be traced.

In the thirty years thus covered, the history of Political Economy in England presents us with a school of writers who may be described in the main as followers and exponents of Adam Smith. Few of these writers,—the exceptions of course include Ricardo, Malthus and Senior,—can hope for a permanent niche in the temple of economic fame. The bulk of them, including the amiable and didactic Dr. Chalmers, the moderate McCulloch, and the admirable Mrs. Marcett, must be content with the generic title of epigoni that has been somewhat contemptuous[ly] applied to them. Speaking generally of these writers, it may be said that they are all to be classed as individualists of a more or less pronounced type. They resemble Smith in that their view of non-interference admits a number of qualifications. They do not stand for the complete inaction on the part of government false[ly] attributed to them by the German School. They admit, for example, the wisdom of government education with an alacrity begotten perhaps of their interest in the diffusion of economic science, and which contrasts strongly with the reluctant sanction accorded by Adam Smith. On the propriety of governmental construction of roads, canals and similar public works (the railroad was not yet in question), they are all agreed.

Their discussion of these exceptional cases to their general rule is scant and perfunctory. Take, for example, the case of Malthus. He accepts[13] what he calls the ‘grand principle so ably maintained by Adam Smith that the best way towards advancing a people towards wealth and prosperity is not to interfere with them.’ He thinks [it] necessary to add however that the ‘great principle’ is not without its qualifications. He intimates that the state should concern itself with the construction and maintenance of roads, docks and canals: that possibly also state aid to emigration and colonialization may be approved. But his mention of these things appears to be merely a tribute to the principle of fair-mindedness. This becomes clearer when we observe that, looking about him for further qualifications to the principle of non-interference, he tells us that government may interfere in order to repeal existing restrictive laws. A theorist would be uncompromising indeed whose creed condemned the repeal of previous interference! Malthus adds to this that the interference involved in taxation is another permissible exception to the rule. Very evidently such feeble exceptions as these two are paraded before the reader mainly to avoid the accusation of one-sidedness, and without fear on the part of the economist that they are exceptions at all dangerous to his general theorem.

Beyond this initial conception of a road-making, educating government, the classicists are not in accord. The further qualifications to be made to the laissez faire principle vary according to the individual sympathies or peculiar tenets of the writer. They vary for instance in their treatment of the question of state aid to the poor. Most of them include it among the admissible functions of government usually with but little discussion. Ricardo[14] in treating of it as a form of taxation seems to assume its existence. McCulloch lays it down with some show of argumentation and proof. Dr. Chalmers,[15] on the other hand, tender as always in his sympathies for the land-owning and rate-paying class, is emphatically against it. He urges the very comfortable doctrine that public aid to the poor is a detriment to those who stand just above the pauper class. Mindful however of the obligation of his cloth, he extols the excellence of private charity.

The interest of the land-owning class proves, indeed, a very special stumbling block to the feet of the writers of the Peace Era. At this time (previous to the Reform bill of 1832 and in fact one might say previous to the second reform of 1867) the land-owning class were the governing oligarchy of England. To this governing class the economist stood as has been said in a special relation. He was at once a mentor and a client: the statesman was his disciple and his patron. The economist had, it is true, the ear of the government but into an ear so august there was a natural hesitancy to instil truths too unpalatable. The economists, therefore, though reformers, carefully avoid all that might appear revolutionary or iconoclastic: they abstain from alloying their doctrine of industrial liberty with purely political reform.[16] The excellent Dr. Chalmers[17] is especially instructive in this respect. As an advocate of a Physiocratic policy of freeing industry from all taxes and throwing the whole burden into a land tax, he has an especial sin to atone. He is at some pains, therefore, to put himself right with the governing class. He denounces that ‘waywardness of innovation’ that might meddle with the monarchy or with the peerage. For these latter, he somewhat naďvely explains, supply the ‘vis inertiae, indispensable to right politics.’ The landowners are to understand, moreover, that the inconvenience of being the sole taxpayers will be compensated to them by certain other effects of his proposal. When once they are ‘declaredly and obviously the only taxpayers in the Kingdom we can scarcely imagine the vast moral ascendancy they would thenceforth acquire.’ Nor need the proposed abolition of the Corn laws (for this too is part of the reverend gentleman’s programme) occasion the landowners any alarm. Provided it is done gradually, ‘the lords of the soil will find their wealth unimpaired.’ As a further spice to his unpalatable dose of reform the author reflects with pride,—‘what a death blow would thus be inflicted on the vocation of demagogues’! and ‘what a sweetening influence it would have upon British society!’

The same author affords throughout his work an excellent example of the hortatory or didactic strain that characterized the economics of the period. He incessantly substitutes the attitude of the moralist for that of the economist, and finds his favorite resort in the sustained and decorous exhortation of the pulpit. It is this tendency, coupled with the peculiar ‘dead sureness’ of the classical economists, which has helped to identify them in the popular estimate with an extreme point of view which they never really entertained.

There is further reason for the general impression that the classical school were the partisans of a more extreme individualism, a more uncompromising acceptation of the policy of non-intervention than was Adam Smith. It lies in this. The writers of the Peace Era were avowedly aiming only at giving a new exposition,[18] and where possible a slightly improved exposition, of the doctrines of Adam Smith. Now Smith was in large measure an empiric, a man of detailed experience studiously and consciously accumulated, and, naturally enough, a little lengthy in the telling of it. He was,—if one may state it so broadly,—a man of many words. The obvious line of improvement and revision lay therefore in the direction of greater brevity and condensation of statement than had been shewn by the master himself. The adoption of such a course brought about a result not primarily aimed at. With the removal of all unnecessary digression, and all apparently superfluous illustration, the underlying basis of individualism stands out in cleaner outline. Its volume is in reality no larger, yet it becomes more evident to the eye. Just as the shrinking of the skin upon the dead carcass serves to shew in relief the bony framework within, so the contraction of the thick integument of illustration and digression with which the Smithian doctrines were originally enveloped, brings into sharp and angular prominence the underlying structure of individualism.

This is seen most clearly in the case of Ricardo. Ricardo’s work is of a character peculiarly calculated to breed the accusation of rigidity of principle. His natural bent led him to avoid anything in the way [of] copious illustration. His examples are purely hypothetical and are not culled from inductive historical fact. He has no descriptive digressions. He adheres to the treatment of what he considers universal and permanent tendencies, not accidental and temporary conditions.[19] To this is to be added the fact that his chief work, though entitled Principles of Political Economy and Taxation, does not cover more than a portion of what would now be included under that head. It is in reality an essay, or rather, a series of essays on the problem of distribution as interpreted in the light of Ricardo’s cost-of production theory of value. Of political economy in its original sense,—of the management of State,—he has almost nothing to say. It is of course written large in the pages of his treatise that free trade is more profitable than a system of protective duties: but this appears rather as evidenced by cause and effect, than expressly advocated in precept. The point of view is that of scientific analyst, not of the partisan advocate. But it is quite impossible on this ground to view Ricardo as any whit more of an individualist than Adam Smith. Beyond the question of free trade, the subject of the functions of government can hardly be said to enter into his discussion.[20] His chapters on taxation which might have opened the way for a treatment of the question of the proper functions of government, are concerned only with the question of incidence. He discusses the poor rate, for instance (Chapter XVIII), not in terms of political justice or of social effect, but solely as an analysis of incidence. The same can be said of his treatment of the taxation of luxuries (Chapter XVI). All such questions as the regulation of the conditions of labor, the control of monopoly etc. lie outside of the field of Ricardo’s treatise.

McCulloch is one of the few of the group who give a formal exposition of the proper sphere of government. He devotes the tenth chapter of his Principles (1825) to a detailed study of the topic and may therefore be best taken a[s] representing the views of the school. An examination of this chapter shews him to occupy almost identical ground with Adam Smith, except that in some instances he shews a greater explicitness of application. He classifies the functions of government under six heads: (a) the security of property; (b) the enforcement of contract: this topic leads him to declare against state regulation of interest and against laws in restraint of forestalling;[21] (c) the adjustment of disputes; (d) prevention of fraud: here he is led to sanction governmental regulation of bank issue; (e) ‘industrious undertakings’: this corresponds with Smith’s ‘public institutions’: McCulloch here says it is ‘injurious to regulate the modes of manufacture’; (f) security against ‘natural casualties’: this last refers to lighthouses etc. Most notable is a dictum[22] in reference to the current opinions of economic teaching then gaining ground. ‘An idea seems to have been recently gaining ground that in so far as respects the production of wealth, the duty of government is almost entirely of a negative kind....’ The truth of the matter, he says, is ‘by no means so simply and easily defined.... freedom is not the end of government.... no solution can be applicable to all times and under all circumstances.’ In summing up his opinions, however, he concludes that ‘non-interference shall be the leading principle.’

To properly estimate the drift of the teaching of the classical school, mention should be made of the Malthusian theory of population which connected itself so intimately with it. If mankind multiplied or tended to multiply until prevented by some positive economic check, the existence of a starving class seemed a necessary part of the social organism. The doctrine could easily be turned into a sort of fatalism which would render state interference directed to the elevation of the poor a contravention of the forces and plan of nature. Political quietism might seem from this point of view to receive a quasi-biological sanction. Ricardo raises this issue in his denunciation of the poor law still in operation.[23] Chalmers, an enthusiast on the subject of the Malthusian theory, makes still more elaborate use of it in the same direction.[24] The full bearing,—or rather the full possible application,—of biological ideas to social conditions, could not as yet be properly appreciated. It remained for Darwin to expand the Malthusian theory into the theory of evolution. And it remained, as will appear later, for Spencer to attempt the sociological application thereof and to bring the doctrine of non-interference into line with the biological law of natural selection. This, however, remains to be treated in a subsequent chapter.

The Doctrine of Laissez Faire

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