384 POLITICAL ECONOMY This larger study is indeed better named sociology ; and economic studies are better regarded as forming one department of it. But the essential circumstance is that, in Dunoyer s treatment of his great subject, the widest intellectual, moral, and political considerations are insepar ably combined with purely economic ideas. It must not be supposed that by liberty, in the title of his work, is meant merely freedom from legal restraint or administra tive interference ; he uses it to express all that tends to give increased efficiency to labour. He is thus led to discuss all the causes of human progress, and to exhibit them in their historical working. Treating, in the first part, of the influence of external conditions, of race, ami of culture on liberty in this wider sense, he proceeds to divide all productive effort into two great classes, according as the action is exercised on things or on men, and censures the economists for having restricted their attention to the former. He studies in his second and third parts respectively the conditions of the efficiency of these two forms of human exertion. In treating of economic life, strictly so called, he introduces his fourfold division of material industry, in part adopted by J. S. Mill, as "(1) extractive, (2) voituriere, (3) manufacturiere, (4) agricole," a division which is useful for physical economics, but will always, when the larger social aspect of things is considered, be inferior to the more commonly accepted one into agricultural, manufactur ing, and commercial industry, banking being supposed as common president and regulator. Dunoyer, having in view only action on material objects, relegates banking, as well as commerce proper, to the separate head of exchange, which, along with association and gratuitous transmission (whether inter vivos or mortis causa), lie classes apart as being, Hot industries, in the same sense with the occupations named, but yet functions essential to the social economy. The industries which act on man he divides according as they occupy themselves with (1) the amelioration of our physical nature, (2) the culture of our imagination and sentiments, (3) the education of our intelligence, and (4) the improvement of our moral habits ; and he proceeds accordingly to study the social offices of the physician, the artist, the educator, and the priest. We meet in Bunoyer the ideas afterwards emphasized by ISastiat that the real subjects of human exchange are services ; that all value is due to human activity ; that the powers of nature always render a gratuitous assistance to the labour of man ; and that the rent of land is really a form of interest on invested capital. Though he had disclaimed the task of a practical adviser in the often-quoted sentence "Je n impose rien ; je ne propose meme rien ; j "expose," he finds himself, like all economists, unable to abstain from offering counsel. And his policy is opposed to any state interference with industry. Indeed he preaches in its extreme rigour the laissez faire doctrine, which he maintains principally on the ground that the spontaneous efforts of the individual for the improvement of his condition, by developing foresight, energy, and perseverance, are the most efficient means of social culture. But he certainly goes too far when he represents the action of Governments as normally always repressive and never directive. He was doubtless led into this exaggeration by his opposition to the artificial organizations of labour proposed by so many of his contemporaries, against which he had to vindicate the principle of competition ; but his criticism of these schemes took, as Comte remarks, too absolute a character, tending to the per petual interdiction of a true systematization of industry. At this point it will be convenient to turn aside and Am! m n tice the doctl> i nes of the American economist Carey. econo- Can ^". t muc h had been done before him in the science by miats. citizens of the United States. Benjamin Franklin, other- Franklin. wise of world- wide renown, was author of a number of tracts, in most of which he merely enforces practical lessons of industry and thrift, but in some throws out interesting theoretic ideas. Thus, fifty years before Smith, he suggested (as Petty, however, had already done) human into and labour as the true measure of value (Modest Inquiry i the Nature ami Necessity of a Paper Currency, 1721), a_... in his Observations concerning the Increase of Mankind (1751) he expresses views akin to those of Malthus. Alexander Hamilton, secretary of the treasury, in 1791 presented in his official capacity to the House of Represen tatives of the United States a report on the measures by which home manufactures could be promoted. In this document he gives a critical account of the theory of the subject, represents Smith s system of free trade as possible in practice only if adopted by all nations simultaneously, ascribes to manufactures a greater productiveness than to agriculture, and seeks to refute the objections against the development of the former in America founded on the want of capital, the high rate of wages, and the low price of land. The conclusion at which he arrives is that for the creation of American manufactures a system of moderate protective duties was necessary, and he proceeds to describe the particular features of such a system. There is some reason to believe that the German economist List, of whom we shall speak hereafter, was influenced by Hamilton s work, having, during his exile from his native country, resided in the same State, Pennsylvania, of which Hamilton was a citizen. Henry Charles Carey (1793-1879), son of an American Carey. citizen who had emigrated from Ireland, represents a reaction against the dispiriting character which the Smithian doctrines had assumed in the hands of Malthus and Ricardo. His aim was, whilst adhering to the in dividualistic economy, to place it on a higher and surer basis, and fortify it against the assaults of socialism, to which some of the Ricardian tenets had exposed it. The most comprehensive as well as mature exposition of his views is contained in his Principles of Social Science (1859). Inspired with the optimistic sentiment natural to a young and rising nation with abundant undeveloped resources and an unbounded outlook towards the future, he seeks to show that there exists, independently of human wills, a natural system of economic laws, which is essentially beneficent, and of which the increasing pro sperity of the whole community, and especially of the working classes, is the spontaneous result,- capable of being defeated only by the ignorance or perversity of man resisting or impeding its action. He rejects the Malthusian doctrine of population, maintaining that numbers regulate themselves sufficiently in every well governed society, and that their pressure on subsistence characterizes the lower, not the more advanced, stages of civilization. He rightly denies the universal truth, for all stages of cultivation, of the law of diminishing returns from land. His fundamental theoretic position relates to the antithesis of wealth and value. Wealth had been by most economists confounded with the sum of exchange values; even Smith, though at first distinguishing them, afterwards allowed himself to fall into this error. Kicardo had, indeed, pointed out the difference, but only near the end of his treatise, in the body of which value alone is considered. The later English economists had tended to regard their studies as conversant only with exchange; so far had this proceeded that Whately had proposed for the science the name of Catallactics. When wealth is considered as what it really is, the sum of useful products, we see that it has its origin in external nature as supplying both materials and physical forces, and in human labour as appropriating and adapting those natural materials and forces. Nature gives her assistance gratuitously ; labour is the sole foundation of value. The less we can appropriate and employ natural forces in any pro duction the higher the value of the product, but the less the addition to our wealth in proportion to the labour expended. Wealth, in its true sense of the sum of useful things, is the measure of the power we have acquired over nature, whilst the value of an object expresses the resistance of nature which labour has to overcome in order te produce the object. Wealth steadily increases in the course of social progress ; the exchange value of objects, on the other hand, decreases. Human intellect and faculty of social combination secure increased command over natural powers, and use them more largely in production, whilst less labour is spent in achieving each result, and the value of the pro duct accordingly falls. The value of the article is not fixed by its cost of production in the past ; what really determines it is the cost which is necessary for its reproduction under the present con ditions of knowledge and skill. The dependence of value on cost, so interpreted, Carey holds to be universally true ; whilst Ricardo maintained it only with respect to objects capable of indefinite multiplication, and in particular did not regard it as applicable to the case of land. Ricardo saw in the productive powers of land a
free gift of nature which had been monopolized by a certain number