The Preconceptions of Economic Science by Thorstein Veblen Part 1

Thorstein VeblenThe Preconceptions of Economic ScienceThe Quarterly Journal of Economics 13 (1899) I In an earlier paper(1*) the view has been expressed that theeconomics handed down by the great writers of a past generationis substantially a taxonomic science. A view of much the samepurport, so far as concerns the point here immediately inquestion, is presented in an admirably lucid and cogent way byProfessor Clark in a recent number of this journal.(2*) There isno wish hereby to burden Professor Clark with a putativesponsorship of any ungraceful or questionable generalisationsreached in working outward from this main position, butexpression may not be denied the comfort which his unintendedauthentication of the main position affords. It is true,Professor Clark does not speak of taxonomy, but employs the term"statics" which is this connection, through its use by ProfessorClark and by other writers eminent in the science, it is fairlyto be questioned whether the term can legitimately be used tocharacterize the received economic theories. The word is borrowedfrom the jargon of physics, where it is used to designate thetheory of bodies at rest or of forces in equilibrium. But thereis much in the received economic theories to which the analogy ofbodies at rest or of forces in equilibrium will not apply. It isperhaps not too much to say that those articles of economictheory that do not lend themselves to this analogy make up themajor portion of the received doctrines. So, for instance, itseems scarcely to the point to speak of the statics ofproduction, exchange, consumption, circulation. There are, nodoubt, appreciable elements in the theory of these severalprocesses that may fairly be characterized as statical featuresof the theory; but the doctrines handed down are after all, inthe main, theories of the process discussed under each head, andthe theory of a process does not belong in statics. The epithet"statical" would, for instance, have to be wrenched somewhatungently to make it apply to Quesnay's classic Tableau Economiqueor to the great body of Physiocratic speculations that take theirrise from it. The like is true for Books II. and III. of AdamSmith's Wealth of Nations, as also for considerable portionsgeneration, for much of Marshall's Principles, and for such amodern discussion as Smart's Studies in Economics, as well as forthe fruitful activity of the Austrians and of the laterrepresentatives of the Historical School. But to return from this terminological digression. Whileeconomic science in the remoter past of its history has beenmainly of a taxonomic character, later writers of all schoolsshow something of a divergence from the taxonomic line and aninclination to make the science a genetic account of the economiclife process, sometimes even without an ulterior view to thetaxonomic value of the results obtained. The divergence from theancient canons of theoretical formulation is to be taken as anepisode of the movement that is going forward in latter-dayscience generally; and the progressive change which thus affectsthe ideals and the objective point of the modern sciences seemsin its turn to be an expression of that matter-of-fact habit ofmind which the prosy but exacting exigencies of life in a modernindustrial community breed in men exposed to their unmitigatedimpact. In speaking of this matter-of-fact character of the modernsciences it has been broadly characterized as "evolutionary"; andthe evolutionary method and the evolutionary ideals have beenplaced in antithesis to the taxonomic methods and ideals ofpre-evolutionary days. But the characteristic attitude, aims, andideals which are so designated here are by no means peculiar tothe group of sciences that are professedly occupied with aprocess of development, taking that term in its most widelyaccepted meaning. The latter-day inorganic sciences are in thisrespect like the organic. They occupy themselves with "dynamic"relations and sequences. The question which they ask is always,What takes place next, and why? Given a situation wrought out outby the forces under inquiry, what follows as the consequence ofthe situation so wrought out? or what follows upon the accessionof further element of force? Even in so non-evolutionary ascience as inorganic chemistry the inquiry consistently runs on aprocess, an active sequence, and the value of the resultingsituation as a point of departure for the next step in aninterminable cumulative sequence. The last step in the chemist'sexperimental inquiry into any substance is, What comes of thesubstance determined? What will it do? What will it lead to, whenit is made the point of departure in further chemical action?There is no ultimate term, and no definite solution except interms of further action. The theory worked out is always a theoryof a genetic succession of phenomena, and the relationsdetermined and elaborated into a body of doctrine are alwaysgenetic relations. In modern chemistry no cognisance is taken ofthe honorific bearing of reactions or molecular formulae. Themodern chemist, as contrasted with this ancient congener, knowsnothing of the worth, elegance, or cogency of the relations thatmay subsist between the particles of matter with which he busieshimself, for any other than the genetic purpose. The spiritualelement and the elements of worth and propensity no longer count.Alchemic symbolism and the hierarchical glamour and virtue thatonce hedged about the nobler and more potent elements andreagents are almost altogether a departed glory of the science.Even the modest imputation of propensity involved in theconstruction of a scheme of coercive normality, for the putativeguidance of reactions, finds little countenance with the lateradepts of chemical science. The science has outlived that phaseof its development at which the taxonomic feature was thedominant one. In the modern sciences, of which chemistry is one, there hasbeen a gradual shifting of the point of view from which thephenomena which the science treats of are apprehended and passedupon; and to the historian of chemical science this shifting ofthe point of view must be a factor of great weight in thedevelopment of chemical knowledge. Something of a like nature istrue for economic science; and it is the aim here to present, inoutline, some of the successive phases that have passed over thespiritual attitude of the adepts of the science, and to point outthe manner in which the transition from one point of view to thenext has been made. As has been suggested in the paper already referred to, thecharacteristic spiritual attitude or point of view of a givengeneration or group of economists is shown not so much in theirdetail work as in their higher syntheses -- the terms of theirdefinite formulations -- the grounds of their final valuation ofthe facts handled for purpose of theory. This line of reconditeinquiry into the spiritual past and antecedents of the sciencehas not often been pursued seriously or with singleness ofpurpose, perhaps because it is, after all, of but slightconsequence to the practical efficiency of the present-dayscience. Still, not a little substantial work has been donetowards this end by such writers as Hasbach, Oncken, Bonar,Cannan, and Marshall. And much that is to the purpose is also dueto writers outside of economics, for the aims of economicspeculation have never been insulated from the work going forwardin other lines of inquiry. As would necessarily be the case, thepoint of view of the enlightened common sense of their time. Thespiritual attitude of a given generation of economists istherefore in good part a special outgrowth of the ideals andpreconceptions current in the world about them. So, for instance, it is quite the conventional thing to saythat the speculations of the Physiocrats were dominated andshaped by the preconception of Natural Rights. Account has beentaken of the effect of natural-rights preconceptions upon thePhysiocratic schemes of policy and economic reform, as well asupon the details of their doctrines.(3*) But little has been saidof the significance of these preconceptions for the lower coursesof the Physiocrats' theoretical structure. And yet that habit ofmind to which the natural-rights view is wholesome and adequateis answerable both for the point of departure and for theobjective point of the Physiocratic theories, both for the rangeof facts to which they turned and for the terms in which theywere content to formulate their knowledge of the facts which theyhandled. The failure of their critics to place themselves at thePhysiocratic point of view has led to much destructive criticismof their work; whereas, when seen through Physiocratic eyes, suchdoctrines as those of the net product and of the barrenness ofthe artisan class appear to be substantially true. The speculations of the Physiocrats are commonly accountedthe first articulate and comprehensive presentation of economictheory that is in line with later theoretical work. ThePhysiocratic point of view may, therefore, well be taken as thepoint of departure in an attempt to trace that shifting of aimsand norms of procedure that comes into view in the work of latereconomists when compared with earlier writers. Physiocratic economics is a theory of the working-out of theLaw of Nature (loi naturelle) in its economic bearing, and thisLaw of Nature is a very simple matter. Les lois naturelles sont on physiques ou morales. On entend ici, par loi physique, le cours regie de toutevenement physique de l'ordre naturel, evidemment le plusavatageux au genre humain. On entend ici, par loi morale, the regle de toute actionhumaine de l'ordre morale, conforme a l'ordre physique evidemmentle plus advantageux au genre humain. Ces lois forment ensemble ce qu'on appelle la loi naturelle.Tous les hommes et toutes les puissances humaines doivent etresoumis a ces lois souveraines, instituees par l'Etre-Supreme:elles sont immuables et irrefragables, et les meilleures loispossible.(4*) The settled course of material facts tending beneficently tothe highest welfare of the human race, -- this is the final termin the Physiocratic speculations. This is the touchstone ofsubstantiality. Conformity to these "immutable and unerring" lawsof nature is the test of economic truth. The laws are immutableand unerring, but that does not mean that they rule the course ofevents with a blind fatality that admits of no exception and nodivergence from the direct line. Human nature may, throughinfirmity or perversity, willfully break over the beneficenttrend of the laws of nature; but to the Physiocrat's sense of thematter the laws are none the less immutable and irrefragable onthat account. They are not empirical generalisations on thecourse of phenomena, like the law of falling bodies or of theangle of reflection; although many of the details of their actionare to be determined only by observation and experience, helpedout, of course, by interpretation of the facts of observationunder the light of reason. So, for instance, Turgot, in hisReflections, empirically works out a doctrine of the reasonablecourse of development through which wealth is accumulated andreaches the existing state of unequal distribution; so also hisdoctrines of interest and of money. The immutable natural lawsare rather of the nature of canons of conduct governing naturethan generalisations of mechanical sequence, although in ageneral way the phenomena of mechanical sequence are details ofthe conduct of nature working according to these canons ofconduct. The great law of the order of nature is of the characterof a propensity working to an end, to the accomplishment of apurpose. The processes of nature working under thequasi-spiritual stress of this immanent propensity may becharacterised as nature's habits of life. Not that nature isconscious of its travail, and knows and desires the worthy end ofits endeavors; but for all that there is a quasi-spiritual nexusbetween antecedent and consequent in the scheme of operation inwhich nature is engaged. Nature is not uneasy about interruptionsof its course or occasional deflections from the direct linethrough an untoward conjunction of mechanical causes, nor doesthe validity of the great overruling law suffer through such anepisode. The introduction of a mere mechanically effective causalfactor cannot thwart the course of Nature from reaching the goalto which she animistically tends. Nothing can thwart thistelological propensity of nature except counter-activity ordivergent activity of a similarly teleological kind. Men canbreak over the law, and have short-sightly and willfully done so;for men are also agents who guide their actions by an end to beachieved. Human conduct is activity of the same kind -- on thesame plane of spiritual reality or competency -- as the course ofNature, and it may therefore traverse the latter. The remedy forthis short-sighted traffic of misguided human nature isenlightenment, -- "instruction publique et privee des lois del'ordre naturel."(5*) The nature in terms of which all knowledge of phenomena --for the present purpose economic phenomena -- is to be finallysynthesised is, therefore, substantially of a quasi-spiritual oranimistic character. The laws of nature are in the last resortteleological; they are of the nature of a propensity. Thesubstantial fact in all the sequences of nature is the end towhich the sequence naturally tends, not the brute fact ofmechanical compulsion or causally effective forces. Economictheory is accordingly the theory (1) of how the efficient causesof the ordre naturel work in an orderly unfolding sequence,guided by the underlying natural law -- the propensity immanentin nature to establish the highest well-being of mankind, and (2)of the conditions imposed upon human conduct by these naturallaws in order to reach the ordained goal of supreme humanwelfare. The conditions so imposed on human conduct are asdefinitive as the laws and the order by force of which they areimposed; and the theoretical conclusions reached, when these lawsand this order are known, are therefore expressions of absoluteeconomic truth. Such conclusions are an expression of reality,but not necessarily of fact. Now, the objective end of this propensity that determines thecourse of nature is human well-being. But economic speculationhas to do with the workings of nature only so far as regards theordre physique. And the laws of nature in the ordre physique,working through mechanical sequence, can only work out thephysical well-being of man, not necessarily the spiritual. Thispropensity to the physical well-being of man is therefore the lawof nature to which economic science must bring itsgeneralisations, and this law of physical beneficence is thesubstantial ground of economic truth. Wanting this, all ourspeculations are vain; but having its authentication they aredefinitive. The great, typical function, to which all the otherfunctioning of nature is incidental if not subsidiary, isaccordingly that of the alimenation, nutrition of mankind. In sofar, and only in so far as the physical processes contribute tohuman sustenance and fullness of life, can they, therefore,further the great work of nature. Whatever processes contributeto human sustenance by adding to the material available for humanassimilation and nutrition, by increasing the substantialdisposable for human comfort, therefore count towards thesubstantial end. All other processes, however serviceable inother than this physiological respect, lack the substance ofeconomic reality. Accordingly, human industry is productive,economically speaking, if it heightens the effectiveness of thenatural processes out of which the material of human sustenanceemerges; otherwise not. The test of productivity, or economicreality in material facts, is the increase of nutritive material.Whatever employment of time or effort does not afford an increaseof such material is unproductive, however profitable it may be tothe person employed, and however useful or indispensable it maybe to the community. The type of such productive industry is thehusbandman's employment, which yields a substantial (nutritive)gain. The artisan's work may be useful to the community andprofitable to himself, but its economic effect does not extendbeyond an alteration of the form in which the material affordedby nature already lies at hand. It is formally productive only,not really productive. It bears no part in the creative orgenerative work of nature; and therefore it lacks the characterof economic substantiality. It does not enhance nature's outputof vital force. The artisan's labors, therefore, yield no netproduct, whereas the husbandman's labors do. Whatever constitutes a material increment of this output ofvital force is wealth, and nothing else is. The theory of valuecontained in this position has not to do with value according tomen's appraisement of the valuable article. Given items of wealthmay have assigned to them certain relative values at which theyexchange, and these conventional values may differ more or lesswidely from the natural or intrinsic value of the goods inquestion; but all that is beside the substantial point. The pointin question is not the degree of predilection shown by certainindividuals or bodies of men for certain goods. That is a matterof caprice and convention, and it does not directly touch thesubstantial ground of the economic life. The question of value isa question of the extent to which the given item of wealthforwards the end of nature's unfolding process. It is valuable,intrinsically and really, in so far as it avails the great workwhich nature has in hand. Nature, then, is the final term in the Physiocraticspeculations. Nature works by impulse and in an unfoldingprocess, under the stress of a propensity to the accomplishmentof a given end. The propensity, taken as the final cause that isoperative in any situation, furnishes the basis on which tocoordinate all our knowledge of those efficient causes throughwhich Nature works to her ends. For the purpose of economictheory proper, this is the ultimate ground of reality to whichour quest of economic truth must penetrate. But back of Natureand her works there is, in the Physiocratic scheme of theuniverse,the Creator, by whose all-wise and benevolent power theorder of nature has been established in all the strength andbeauty of its inviolate and immutable perfection. But thePhysiocratic conception of the Creator is essentially a deisticone: he stands apart from the course of nature which he hasestablished, and keeps his hands off. In the last resort, ofcourse, "Dieu seul est producteur. Les hommes travaillent,receuillent, economisent, conservent; mais economiser n'est parproduire."(6*) But this last resort does not bring the Creatorinto economic theory as a fact to be counted with in formulatingeconomic laws. He serves a homiletical purpose in thePhysiocratic speculations rather than fills an office essentialto the theory. He comes within the purview of the theory by wayof authentication rather than as a subject of inquiry or a termin the formulation of economic knowledge. The Physiocratic Godcan scarcely be said to be an economic fact, but it is otherwisewith that Nature whose ways and means constitute thesubject-matter of the Physiocratic inquiry. When this natural system of the Physiocratic speculation islooked at from the side of the psychology of the investigators,or from that of the logical premises employed, it is immediatelyrecognised as essentially animistic. It runs consistently onanimistic ground; but it is animism of a high grade, -- highlyintegrated and enlightened, but, after all, retaining very muchof that primitive force and naivete which characterise theanimistic explanations of phenomena in vogue among the untroubledbarbarians. It is not the disjected animism of the vulgar, whosee a willful propensity -- often a willful perversity -- ingiven objects or situations to work towards a given outcome, goodor bad. It is not the gambler's haphazard sense of fortuitousnecessity or the housewife's belief in lucky days, numbers orphases of the moon. The Physiocrat's animism rests on a broaderoutlook, and does not proceed by such an immediately impulsiveimputation of propensity. The teleological element -- the elementof propensity -- is conceived in a large way, unified andharmonised, as a comprehensive order of nature as a whole. But itvindicates its standing as a true animism by never becomingfatalistic and never being confused or confounded with thesequence of cause and effect. It has reached the last stage ofintegration and definition, beyond which the way lies downwardfrom the high, quasi-spiritual ground of animism to the tamerlevels of normality and causal uniformities. There is already discernible a tone of dispassionate andcolorless "tendency" about the Physiocratic animism, such as tosuggest a wavering towards the side of normality. This isespecially visible in such writers as the half-protestant Turgot.In his discussion of the development of farming, for instance,Turgot speaks almost entirely of human motives and the materialconditions under which the growth takes place. There is littlemetaphysics in it, and that little does not express the law ofnature in an adequate form. But, after all has been said, itremains true that the Physiocrat's sense of substantiality is notsatisfied until he reaches the animistic ground; and it remainstrue also that the arguments of their opponents made littleimpression on the Physiocrats so long as they were directed toother than this animistic ground of their doctrine. This is truein great measure even of Turgot, as witness his controversy withHume. Whatever criticism is directed against them on othergrounds is met with impatience, as being inconsequential, if notdisingenuous.(7*) To an historian of economic theory the source and the line ofderivation whereby this precise form of the order-of-naturepreconception reached the Physiocrats are of first-rateimportance; but it is scarcely a question to be taken up here, --in part because it is too large a question to be handled here, inpart because it has met with adequate treatment at more competenthands,(8*) and in part because it is somewhat beside theimmediate point under discussion. This point is the logical, orperhaps better the psychological, value of the Physiocrats'preconception, as a factor in shaping their point of view and theterms of their definitive formulation of economic knowledge. Forthis purpose it may be sufficient to point out that thepreconception in question belongs to the generation in which thePhysiocrats lived, and that it is the guiding norm of all seriousthought that found ready assimilation into the common-sense viewsof that time. It is the characteristic and controlling feature ofwhat may be called the common-sense metaphysics of the eighteenthcentury, especially so far as concerns the enlightened Frenchcommunity. It is to be noted as a point bearing more immediately on thequestion in hand that this imputation of final causes to thecourse of phenomena expresses a spiritual attitude which hasprevailed, one might almost say, always and everywhere, but whichreached its finest, most effective development, and found itsmost finished expression, in the eighteenth-century metaphysics.It is nothing recondite; for it meets us at every turn, as amatter of course, in the vulgar thinking of to-day,- in thepulpit and in the market place,- although it is not so ingenuous,nor does it so unquestionedly hold the primacy in the thinking ofany class to-day as it once did. It meets us likewise, with butlittle change of features, at all past stages of culture, late orearly. Indeed, it is the most generic feature of human thinking,so far as regards a theoretical or speculative formulation ofknowledge. Accordingly, it seems scarcely necessary to trace thelineage of this characteristic preconception of the era ofenlightenment, through specific channels, back to the ancientphilosophers or jurists of the empire. Some of the specific formsof its expression - as, for instance, the doctrine of NaturalRights - are no doubt traceable through medieval channels to theteachings of the ancients; but there is no need of going over thebrook for water, and tracing back to specific teachings the mainfeatures of that habit of mind or spiritual attitude of which thedoctrines of Natural Rights and the Order of Nature are specificelaborations only. This dominant habit of mind came to thegeneration of the Physiocrats on the broad ground of groupinheritance, not by lineal devolution from any one of the greatthinkers of past ages who had thrown its deliverances into asimilarly competent form for the use of his own generation. In leaving the Physiocratic discipline and the immediatesphere of Physiocratic influence for British ground, we are metby the figure of Hume. Here, also, it will be impracticable to gointo details as to the remoter line of derivation of the specificpoint of view that we come upon on making the transition, forreasons similar to those already given as excuse for passing overthe similar question with regard to the Physiocratic point ofview. Hume is, of course, not primarily an economist; but thatplacid unbeliever is none the less a large item in any inventoryof eighteenth-century economic thought. Hume was not gifted witha facile acceptance of the group inheritance that made the habitof mind of his generation. Indeed, he was gifted with an alert,though somewhat histrionic, skepticism touching everything thatwas well received. It is his office to prove all things, thoughnot necessarily to hold fast that which is good. Aside from the strain of affectation discernible in Hume'sskepticism, he may be taken as an accentuated expression of thatcharacteristic bent which distinguishes British thinking in histime from the thinking of the Continent, and more particularly ofthe French. There is in Hume, and in the British community, aninsistence on the prosy, not to say the seamy, side of humanaffairs. He is not content with formulating his knowledge ofthings in terms of what ought to be or in terms of the objectivepoint of the course of things. He is not even content with addingto the teleological account of phenomena a chain of empirical,narrative generalisations as to the usual course of things. Heinsists, in season and out of season, on an exhibition of theefficient causes engaged in any sequence of phenomena; and he isskeptical - irreverently skeptical - as to the need or the use ofany formulation of knowledge that outruns the reach of his ownmatter-of-fact, step-by-step argument from cause to effect. In short, he is too modern to be wholly intelligible to thoseof his contemporaries who are most neatly abreast of their time.He out-Britishes the British; and, in his footsore quest for aperfectly tame explanation of things, he finds little comfort,and indeed scant courtesy, at the hands of his own generation. Heis not in sufficiently naive accord with the range ofpreconceptions then in vogue. But, while Hume may be an accentuated expression of anational characteristic, he is not therefore an untrue expressionof this phase of British eighteenth-century thinking. Thepeculiarity of point of view and of method for which he standshas sometimes been called the critical attitude, sometimes theinductive method, sometimes the materialistic or mechanical, andagain, though less aptly, the historical method. Itscharacteristic is an insistence on matter of fact. This matter-of-fact animus that meets any historian ofeconomic doctrine on his introduction to British economics is alarge, but not the largest. feature of the British scheme ofearly economic thought. It strikes the attention because itstands in contrast with the relative absence of this feature inthe contemporary speculations of the Continent. The most potent,most formative habit of thought concerned in the earlydevelopment of economic teaching on British ground is best seenin the broader generalisations of Adam Smith, and this morepotent factor in Smith is a bent that is substantially identicalwith that which gives consistency to the speculations of thePhysiocrats. In Adam Smith the two are happily combined, not tosay blended; but the animistic habit still holds the primacy,with the matter-of-fact as a subsidiary though powerful factor.He is said to have combined deduction with induction. Therelatively great prominence given the latter marks the line ofdivergence of British from French economics, not the line ofcoincidence; and on this account it may not be out of place tolook more narrowly into the circumstances to which the emergenceof this relatively greater penchant for a matter-of-factexplanation of things in the British community is due. To explain the characteristic animus for which Hume stands,on grounds that might appeal to Hume, we should have to inquireinto the peculiar circumstances - ultimately materialcircumstances - that have gone to shape the habitual view ofthings within the British community, and that so have acted todifferentiate the British preconceptions from the French, or fromthe general range of preconceptions prevalent on the Continent.These peculiar formative circumstances are no doubt to someextent racial peculiarities; but the racial complexion of theBritish community is not widely different from the French, andespecially not widely different from certain other Continentalcommunities which are for the present purpose roughly classedwith the French. Race difference can therefore not wholly, norindeed for the greater part, account for the cultural differenceof which this difference in preconceptions is an outcome. Throughits cumulative effect on institutions the race difference must beheld to have had a considerable effect on the habit of mind ofthe community. but, if the race difference is in this way takenas the remoter ground of an institutional peculiarity, which inits turn has shaped prevalent habits of thought, then theattention may be directed to the proximate causes, the concretecircumstances, through which this race difference has acted, inconjunction with other ulterior circumstances, to work out thepsychological phenomena observed. Race differences, it may beremarked, do not so nearly coincide with national lines ofdemarcation as differences in the point of view from which thingsare habitually apprehended or differences in the standardsaccording to which facts are rated. If the element of race difference be not allowed definitiveweight in discussing national peculiarities that underlie thedeliverances of common sense, neither can these nationalpeculiarities be confidently traced to a national difference inthe transmitted learning that enters into the common-sense viewof things. So far as concerns the concrete facts embodied in thelearning of the various nations within the European culture,these nations make up but a single community. What divergence isvisible does not touch the character of the positive informationwith which the learning of the various nations is occupied.Divergence is visible in the higher syntheses, the methods ofhandling the material of knowledge, the basis of valuation of thefacts taken up, rather than in the material of knowledge. Butthis divergence must be set down to a cultural difference, adifference of point of view, not to a difference in inheritedinformation. When a given body of information passes the nationalfrontiers it acquires a new complexion, a new national, culturalphysiognomy. It is this cultural physiognomy of learning that ishere under inquiry, and a comparison of early French economics(the Physiocrats) with early British economics (Adam Smith) ishere entered upon merely with a view to making out whatsignificance this cultural physiognomy of the science has for thepast progress of economic speculation. The broad features of economic speculation. as it stood atthe period under consideration, may be briefly summed up,disregarding the element of policy, or expediency, which iscommon to both groups of economists, and attending to theirtheoretical work alone. With the Physiocrats, as with Adam Smith,there are two main points of view from which economic phenomenaare treated: (a) the matter-of-fact point of view orpreconception, which yields a discussion of causal sequences andcorrelations; and (b) what, for want of a more expressive word,is here called the animistic point of view or preconception,which yields a discussion of teleological sequences andcorrelations, a discussion of the function of this and that"organ," of the legitimacy of this or the other range of facts.The former preconception is allowed a larger scope in the Britishthan in the French economics: there is more of "induction" in theBritish. The latter preconception is present in both, and is thedefinitive element in both but the animistic element is morecolorless in the British, it is less constantly in evidence, andless able to stand alone without the support of arguments fromcause to effect. Still, the animistic element is the controllingfactor in the higher syntheses of both; and for both alike itaffords the definitive ground on which the argument finally comesto rest. In neither group of thinkers is the sense ofsubstantiality appeased until this quasi-spiritual ground. givenby the natural propensity of the course of events, is reached.But the propensity in events, the natural or normal course ofthings, as appealed to by the British speculators, suggests lessof an imputation of willpower, or personal force, to thepropensity in question. It may be added, as has already been saidin another place, that the tacit imputation of will-power orspiritual consistency to the natural or normal course of eventshas progressively weakened in the later course of economicspeculation, so that in this respect, the British economists ofthe eighteenth century may be said to represent a later phase ofeconomic inquiry than the Physiocrats. Unfortunately, but unavoidably, if this question as to thecultural shifting of the point of view in economic science istaken up from the side of the causes to which the shifting istraceable, it will take the discussion back to ground on which aneconomist must at best feel himself to be but a raw layman, withall a layman's limitations and ineptitude, and with the certaintyof doing badly what might be done well by more competent hands.But, with a reliance on charity where charity is most needed, itis necessary to recite summarily what seems to be thepsychological bearing of certain cultural facts. A cursory acquaintance with any of the more archaic phases ofhuman culture enforces the recognition of this fact,- that thehabit of construing the phenomena of the inanimate world inanimistic terms prevails pretty much universally on these lowerlevels. Inanimate phenomena are apprehended to work out apropensity to an end; the movements of the elements are construedin terms of quasi-personal force. So much is well authenticatedby the observations on which anthropologists and ethnologistsdraw for their materials. This animistic habit. it may be said,seems to be more effectual and far-reaching among those primitivecommunities that lead a predatory life. But along with this feature of archaic methods of thought orof knowledge, the picturesqueness of which has drawn theattention of all observers, there goes a second feature, no lessimportant for the purpose in hand, though less obtrusive. Thelatter is of less interest to the men who have to do with thetheory of cultural development, because it is a matter of course.This second feature of archaic thought is the habit of alsoapprehending facts in non-animistic, or impersonal, terms. Theimputation of propensity in no case extends to all the mechanicalfacts in the case. There is always a substratum of matter offact, which is the outcome of an habitual imputation of causalsequence, or, perhaps better, an imputation of mechanicalcontinuity, if a new term be permitted. The agent, thing, fact,event. or phenomenon, to which propensity, will-power, orpurpose, is imputed, is always apprehended to act in anenvironment which is accepted as spiritually inert. There arealways opaque facts as well as self-directing agents. Any agentacts through means which lend themselves to his use on othergrounds than that of spiritual compulsion, although spiritualcompulsion may be a large feature in any given case. The same features of human thinking, the same twocomplementary methods of correlating facts and handling them forthe purposes of knowledge, are similarly in constant evidence inthe daily life of men in our own community. The question is, ingreat part, which of the two bears the greater part in shapinghuman knowledge at any given time and within any given range ofknowledge or of facts. Other features of the growth of knowledge, which are remoterfrom the point under inquiry, may be of no less consequence to acomprehensive theory of the development of culture and ofthought; but it is of course out of the question here to gofarther afield. The present inquiry will have enough to do withthese two. No other features are correlative with these, andthese merit discussion on account of their intimate bearing onthe point of view of economics. The point of interest withrespect to these two correlative and complementary habits ofthought is the question of how they have fared under the changingexigencies of human culture; in what manner they come, undergiven cultural circumstances, to share the field of knowledgebetween them; what is the relative part of each in the compositepoint of view in which the two habits of thought expressthemselves at any given cultural stage. The animistic preconception enforces the apprehension ofphenomena in terms generically identical with the terms ofpersonality or individuality. As a certain modern group ofpsychologists would say, it imputes to objects and sequences anelement of habit and attention similar in kind, though notnecessarily in degree, to the like spiritual attitude present inthe activities of a personal agent. The matter-of-factpreconception, on the other hand, enforces a handling of factswithout imputation of personal force or attention, but with animputation of mechanical continuity, substantially thepreconception which has reached a formulation at the hands ofscientists under the name of conservation of energy orpersistence of quantity. Some appreciable resort to the lattermethod of knowledge is unavoidable at any cultural stage, for itis indispensable to all industrial efficiency. All technologicalprocesses and all mechanical contrivances rest, psychologicallyspeaking, on this ground. This habit of thought is a selectivelynecessary consequence of industrial life, and, indeed, of allhuman experience in making use of the material means of life. Itshould therefore follow that, in a general way, the higher theculture, the greater the share of the mechanical preconception inshaping human thought and knowledge, since, in a general way, thestage of culture attained depends on the efficiency of industry.The rule, while it does not hold with anything like extremegenerality, must be admitted to hold to a good extent; and tothat extent it should hold also that, by a selective adaptationof men's habits of thought to the exigencies of those culturalphases that have actually supervened, the mechanical method ofknowledge should have gained in scope and range. Something of thesort is borne out by observation. A further consideration enforces the like view. As thecommunity increases in size, the range of observation of theindividuals in the community also increases; and continuallywider and more far-reaching sequences of a mechanical kind haveto be taken account of. Men have to adapt their own motives toindustrial processes that are not safely to be construed in termsof propensity, predilection, or passion. Life in an advancedindustrial community does not tolerate a neglect of mechanicalfact; for the mechanical sequences through which men, at anappreciable degree of culture, work out their livelihood, are norespecters of persons or of will-power. Still, on all but thehigher industrial stages, the coercive discipline of industriallife, and of the scheme of life that inculcates regard for themechanical facts of industry, is greatly mitigated by the largelyhaphazard character of industry, and by the great extent to whichman continues to be the prime mover in industry. So long asindustrial efficiency is chiefly a matter of the handicraftsman'sskill, dexterity, and diligence, the attention of men in lookingto the industrial process is met by the figure of the workman, asthe chief and characteristic factor; and thereby it comes to runon the personal element in industry. But, with or without mitigation, the scheme of life which menperforce adopt under exigencies of an advanced industrialsituation shapes their habits of thought on the side of theirbehavior, and thereby shapes their habits of thought to someextent for all purposes. Each individual is but a single complexof habits of thought, and the same psychical mechanism thatexpresses itself in one direction as conduct expresses itself inanother direction as knowledge. The habits of thought formed inthe one connection, in response to stimuli that call for aresponse in terms of conduct, must, therefore, have their effectwhen the same individual comes to respond to stimuli that callfor a response in terms of knowledge. The scheme of thought or ofknowledge is in good part a reverberation of the scheme of life.So that, after all has been said, it remains true that with thegrowth of industrial organization and efficiency there must, byselection and by adaptation, supervene a greater resort to themechanical or dispassionate method of apprehending facts. But the industrial side of life is not the whole of it, nordoes the scheme of life in vogue in any community or at anycultural stage comprise industrial conduct alone. The social,civic, military, and religious interests come in for their shareof attention, and between them they commonly take up by far thelarger share of it. Especially is this true so far as concernsthose classes among whom we commonly look for a cultivation ofknowledge for knowledge's sake. The discipline which theseseveral interests exert does not commonly coincide with thetraining given by industry. So the religious interest, with itscanons of truth and of right living, runs exclusively on personalrelations and the adaptation of conduct to the predilections of asuperior personal agent. The weight of its discipline, therefore,falls wholly on the animistic side. It acts to heighten ourappreciation of the spiritual bearing of phenomena and todiscountenance a matter-of-fact apprehension of things. Theskeptic of the type of Hume has never been in good repute withthose who stand closest to the accepted religious truths. Thebearing of this side of our culture upon the development ofeconomics is shown by what the mediaeval scholars had to say oneconomic topics. The disciplinary effects of other phases of life, outside ofthe industrial and the religious, is not so simple a matter; butthe discussion here approaches nearer to the point of immediateinquiry, -- namely, the cultural situation in the eighteenthcentury, and its relation to economic speculation, -- and thisground of interest in the question may help to relieve the topicof the tedium that of right belongs to it. In the remoter past of which we have records, and even in themore recent past, Occidental man, as well as man elsewhere, haseminently been a respecter of persons. Wherever the warlikeactivity has been a large feature of the community's life, muchof human conduct in society has proceeded on a regard forpersonal force. The scheme of life has been a scheme of personalaggression and subservience, partly in the naive form, partlyconventionalised in a system of status. The discipline of sociallife for the present purpose, in so far as its canons of conductrest on this element of personal force in the unconventionalisedform, plainly tends to the formation of a habit of apprehendingand coordinating facts from the animistic point of view. So faras we have to do with life under a system of status, the likeremains true, but with a difference. The regime of statusinculcates an unremitting and very nice discrimination andobservance of distinctions of personal superiority andinferiority. To the criterion of personal force, or will-power,taken in its immediate bearing on conduct, is added the criterionof personal excellence-in-general, regardless of the first-handpotency of the given person as an agent. This criterion ofconduct requires a constant and painstaking imputation ofpersonal value, regardless of fact. The discrimination enjoinedby the canons of status proceeds on an invidious comparison ofpersons in respect of worth, value, potency, virtue, which must,for the present purpose, be taken as putative. The greater orless personal value assigned a given individual or a given classunder the canons of status is not assigned on the ground ofvisible efficiency, but on the ground of a dogmatic allegationaccepted on the strength of an uncontradicted categoricalaffirmation simply. The canons of status hold their ground byforce of preemption. Where distinctions of status are based on aputative worth transmitted by descent from honorable antecedents,the sequence of transmission to which appeal is taken as thearbiter of honor is of a putative and animistic character ratherthan a visible mechanical continuity. The habit of accepting asfinal what is prescriptively right in the affairs of life has asits reflex in the affairs of knowledge the formula, Quid abomnibus, quid ubique creditur credendum est. Even this meager account of the scheme of life thatcharacterises a regime of status should serve to indicate what isits disciplinary effect in shaping habits of thought, andtherefore in shaping the habitual criteria of knowledge and ofreality. A culture whose institutions are a framework ofinvidious comparisons implies, or rather involves and comprises,a scheme of knowledge whose definitive standards of truth andsubstantiality are of an animistic character; and, the moreundividedly the canons of status and ceremonial honor govern theconduct of the community, the greater the facility with which thesequence of cause and effect is made to yield before the higherclaims of a spiritual sequence or guidance in the course ofevents. Men consistently trained to an unremitting discriminationof honor, worth, and personal force in their daily conduct, andto whom these criteria afford the definitive ground ofsufficiency in coOrdinating facts for the Purposes of life, willnot be satisfied to fall short of the like definitive ground ofsufficiency when they come to coordinate facts for the purposesof knowledge simply. The habits formed in un folding his activityin one direction, under the impulse of a given interest, assertthemselves when the individual comes to unfold his activity inany other direction, under the impulse of any other interest. Ifhis last resort and highest criterion of truth in conduct isafforded by the element of personal force and invidiouscomparison, his sense of substantiality or truth in the quest ofknowledge will be satisfied only when a like definitive ground ofanimistic force and invidious comparison is reached. But whensuch ground is reached he rests content and pushes the inquiry nofarther. In his practical life he has acquired the habit ofresting his case on an authentic deliverance as to what isabsolutely right. This absolutely right and good final term inconduct has the character of finality only when conduct isconstrued in a ceremonial sense; that is to say, only when lifeis conceived as a scheme of conformity to a purpose outside andbeyond the process of living. Under the regime of status thisceremonial finality is found in the concept of worth or honor. Inthe religious domain it is the concept of virtue, sanctity, ortabu. Merit lies in what one is, not in what one does. The habitof appeal to ceremonial finality, formed in the school of status,goes with the individual in his quest of knowledge, as adependence upon a similarly authentic norm of absolute truth, --a similar seeking of a final term outside and beyond the range ofknowledge. The discipline of social and civic life under a regime ofstatus, then, reinforces the discipline of the religious life;and the outcome of the resulting habituation is that the canonsof knowledge are cast in the animistic mold and converge to aground of absolute truth, and this absolute truth is of aceremonial nature. Its subject-matter is a reality regardless offact. The outcome, for science, of the religious and social lifeof the civilisation of status, in Occidental culture, was astructure of quasi-spiritual appreciations and explanations, ofwhich astrology, alchemy, and medieval theology and metaphysicsare competent, though somewhat one-sided, exponents. Throughoutthe range of this early learning the ground of correlation ofphenomena is in part the supposed relative potency of the factscorrelated. but it is also in part a scheme of status, in whichfacts are scheduled according to a hierarchical gradation ofworth or merit, having only a ceremonial relation to the observedphenomena. Some elements (some metals. for instance) are noble,others base; some planets, on grounds of ceremonial efficacy,have a sinister influence, others a beneficent one; and it is amatter of serious consequence whether they are in the ascendant,and so on. The body of learning through which the discipline of animismand invidious comparison transmitted its effects to the scienceof economics was what is known as natural theology, naturalrights, moral philosophy, and natural law. These severaldisciplines or bodies of knowledge had wandered far from thenaive animistic standpoint at the time when economic scienceemerged, and much the same is true as regards the time of theemergence of other modern sciences. But the discipline whichmakes for an animistic formulation of knowledge continued to holdthe primacy in modern culture, although its dominion was neveraltogether undivided or unmitigated. Occidental culture has longbeen largely an industrial culture; and, as already pointed out,the discipline of industry, and of life in an industrialcommunity, does not favor the animistic preconception. This isespecially true as regards industry which makes large use ofmechanical contrivances. The difference in these respects betweenOccidental industry and science, on the one band, and theindustry and science of other cultural regions, on the otherhand, is worth noting in this connection. The result has beenthat the sciences, as that word is understood in later usage,have come forward gradually, and in a certain rough parallelismwith the development of industrial processes and industrialorganisation. It is possible to hold that both modern industry(of the mechanical sort) and modern science center about theregion of the North Sea. It is still more palpably true thatwithin this general area the sciences, in the recent past, show afamily likeness to the civil and social institutions of thecommunities in which they have been cultivated, this being trueto the greatest extent of the higher or speculative sciences;that is, in that range of knowledge in which the animisticpreconception can chiefly and most effectively find application.There is, for instance, in the eighteenth century a perceptibleparallelism between the divergent character of British andContinental culture and institutions, on the one hand, and thedissimilar aims of British and Continental speculation, on theother hand. Something has already been said of the difference inpreconceptions between the French and the British economists ofthe eighteenth century. It remains to point out the correlativecultural difference between the two communities, to which it isconceived that the difference in scientific animus is in greatmeasure due. It is, of course, only the general features, thegeneral attitude of the speculators, that can be credited to thedifference in culture. Differences of detail in the specificdoctrines held could be explained only on a much more detailedanalysis than can be entered on here, and after taking account offacts which cannot here be even allowed for in detail. Aside from the greater resort to mechanical contrivances andthe larger scale of organisation in British industry, the furthercultural peculiarities of the British community run in the samegeneral direction. British religious life and beliefs had less ofthe element of fealty personal or discretionary mastery andsubservience -- and more of a tone of fatalism. The civilinstitutions of the British had not the same rich personalcontent as those of the French. The British subject ownedallegiance to an impersonal law rather than to the person of asuperior. Relatively, it may be said that the sense of status, asa coercive factor, was in abeyance in the British community. Evenin the warlike enterprise of the British community a similarcharacteristic is traceable. Warfare is, of course, a matter ofpersonal assertion. Warlike communities and classes arenecessarily given to construing facts in terms of personal forceand personal ends. They are always superstitious. They are greatsticklers for rank and precedent, and zealously cultivate thosedistinctions and ceremonial observances in which a system ofstatus expresses itself. But, while warlike enterprise has by nomeans been absent from the British scheme of life, thegeographical and strategic isolation of the British community hasgiven a characteristic turn to their military relations. Inrecent times British warlike operations have been conductedabroad. The military class has consequently in great measure beensegregated out from the body of the community, and the ideals andprejudices of the class have not been transfused through thegeneral body with the same facility and effect that they mightotherwise have had. The British community at home has seen thecampaign in great part from the standpoint of the "sinews ofwar." The outcome of all these national peculiarities ofcircumstance and culture has been that a different scheme of lifehas been current in the British community from what has prevailedon the Continent. There has resulted the formation of a differentbody of habits of thought and a different animus in theirhandling of facts. The preconception of causal sequence has beenallowed larger scope in the correlation of facts for purposes ofknowledge; and, where the animistic preconception has beenresorted to, as it always has in the profounder reaches oflearning, it has commonly been an animism of a tamer kind. Taking Adam Smith as an exponent of this British attitude intheoretical knowledge, it is to be noted that, while heformulates his knowledge in terms of a propensity (natural laws)working teleologically to an end, the end or objective pointwhich controls the formulation has not the same rich content ofvital human interest or advantage as is met with in thePhysiocratic speculations. There is perceptibly less of animperions tone in Adam Smith's natural laws than in those of thecontemporary French economists. It is true, he sums up theinstitutions with which he deals in terms of the ends which theyshould subserve, rather than in terms of the exigencies andhabits of life out of which they have arisen; but he does notwith the same tone of finality appeal to the end subserved as afinal cause through whose coercive guidance the complex ofphenomena is kept to its appointed task. Under his hands therestraining, compelling agency retires farther into thebackground, and appeal is taken to it neither so directly nor onso slight provocation. But Adam Smith is too large a figure to be disposed of in acouple of concluding paragraphs. At the same time his work andthe bent which he gave to economic speculation are so intimatelybound up with the aims and bias that characterise economics inits next stage of development that he is best dealt with as thepoint of departure for the Classical School rather than merely asa British counterpart of Physiocracy. Adam Smith will accordinglybe considered in immediate connection with the bias of theclassical school and the incursion of utilitarianism intoeconomics. NOTES: 1. "Why is Economics not an Evolutionary Science?" QuarterlyJournal of Economics, July, 1898. 2. "The Future of Economic Theory," ibid., October, 1898. 3. See, for instance, Hasbuch, Allgemeine philosophischeGrundlagen der von Francois Quesnay und Adam Smith begrundetenpolitischen Oekonomie. 4. Quesnay, Droit Naturel, ch. v. (Ed. Daire, Physiocrates, pp.52-53). 5. Quesnay, Droit Naturel, ch. v. (Ed. Daire, Physiocrates, p.53). 6. Dupont de Nemours, Correspondence avec J.-B. Say (Ed. Daire,Physiocrates, premiere partie, p. 399). 7. See, for instance, the concluding chapters of La Riviere'sOrdre Naturel des Societies Politiques. 8. E.g., Hasbuch, loc. cit.; Bonar, Philosophy and PoliticalEconomy, Book II; Ritchie, Natural Rights.