POLITICAL ECONOMY The theme of the book is handled with, perhaps, an undue degree of expansion and detail. The author ex hibits much sagacity as well as learning, and criticizes effectively the errors, inconsistencies, and exaggerations of his predecessors. But in characterizing and vindicating the historical method he has added nothing to Comte. A second edition of his treatise was published in 1883, and in this he makes the singular confession that, when he wrote in 1852, the Philosophic Positive, the six volumes of which had appeared from 1830 to 1842, was entirely unknown to him and, he adds, probably to all German economists. This is not to the credit of their open- mindedness or literary vigilance, if we remember that Mill was already in correspondence with Comte in 1841, and that his eulogistic notice of him in the Logic appeared in 1843. When, however, Knies at a later period examined Comte s work, he was, he tells us, surprised at finding in it so many anticipations of, or " parallelisms " with, his own conclusions. And well he might ; for all that is really valuable in his methodology is to be found in Comte, applied on a larger scale, and designed with the broad and commanding power which marks the dii majores of philosophy. There are two points which seem to be open to criticism in the position taken by some German economists of the historical school. 1. Knies and some other writers, in maintaining the principle of relativity in economic theory, appear not to preserve the due balance in one particular. The two forms of absolutism in doctrine, cosmopolitanism and what Knies calls perpetualism, he seems to place on exactly the same footing; in other words, he considers the error of overlooking varieties of local circumstances and nationality to be quite as serious as that of neglecting differences in the stage of historical development. But this is certainly not so. In every branch of sociology the latter is much the graver error, vitiating radically, wherever it is found, the whole of our investigations. If we ignore the fact, or mistake the direction, of the social movement, we are wrong in the most fundamental point of all a point, too, which is involved in every question. But the variations depending on difference of race, as affecting bodily and mental endowment, or on diversity of external situation, are secondary phenomena only ; they must be postponed in studying the general theory of social development, and taken into account afterwards when we come to examine the modifications in the character of the development arising out of peculiar conditions. And, though the physical nature of a territory is a condition which is likely to operate with special force on economic phenomena, it is rather on the technical forms and comparative extension of the several branches of industry that it will act than on the social conduct of each branch, or the co-ordination and relative action of all, which latter are the proper subjects of the inquiries of the economist. 2. Some members of the school appear, in their anxiety to assert the relativity of the science, to fall into the error of denying economic laws altogether ; they are at least unwilling to speak of "natural laws" in relation to the economic world. From a too exclusive consideration of law in the inorganic sphere, they regard this phraseology as binding them to the notion of fixity and of an invariable system of practical economy. But, if we turn our attention rather to the organic sciences, which are more kindred to the social, we shall see that the term "natural law" carries with it no such implication. As we have more than once indicated, an essential part of the idea of life is that of development, in other words, of " ordered change." And that such a development takes place in the constitution and working of society in all its elements is a fact which cannot be doubted, and which these writers themselves emphatically assert. That there exist between the several social elements such relations as make the change of one element involve or determine the change of another is equally plain ; and why the name of natural laws should be denied to such constant relations of coexistence and succession it is not easy to see. These laws, being universal, admit of the construction of an abstract theory of economic development ; whilst a part of the German historical school tends to substitute for such a theory a mere description of different national economies, introducing prematurely as we have pointed out the action of special territorial or ethno logical conditions, instead of reserving this as the ground of later modifications, in concrete cases, of the primary general laws deduced from a study of the common human evolution. To tlrj three writers above named, Reseller, Hildebrand, and Knies, the foundation of the German historical school of political economy belongs. It does not appear that Roscher in his own subsequent labours has been much under the influence of the method which he has in so many places admirably characterized. In his System der Volksicirtltxhaft (vol. i. , Gmndlagen dcr Nationalbkonomic, 1854, 15th ed. 1880 ; vol. ii., N. 0. dcs Ackerbaues, 1860, 10th ed. 1882 ; vol. iii. N. 0. dcs Handels und Gcwcrbflcisscs, 3d ed., 1882) the dogmatic and the historical matter are rather juxtaposed than vitally combined. It is true that he has most usefully applied his vast learning to special historical studies, in relation especially to the progress of the science itself. His treatise Uebcr das Verhaltniss der Nationalokonomic zum classi- schen Altcrthume, his Zur Geschichte der Englischcn Volksivirtli- schaflshhre (Leipsic, 1851-2), and, above all, that marvellous monument of erudition and industry, his Geschichte, der National- Ockonomik in Deutschland (1874), to which he is said to have devoted fifteen years of study, are among the most valuable extant works of this kind, though the last by its accumulation of detail is unfitted for general study outside of Germany itself. Several interesting and useful monographs are collected in his Ansichtcn der Volksiuirthschaft rom gcscliichtlichcn Standpunkte (3d ed., 1878). His systematic treatise, too, above referred to, abounds in historical notices of the rise and development of the several doc trines of the science. But it cannot be alleged that he has done much towards the transformation of political economy which his earliest labours seemed to announce ; and Cossa appears to be right in saying that his dogmatic work has not effected any substantial modification of the principles of Hermann and Kau. The historical method has exhibited its essential features more fully in the hands of the younger generation of scientific economists in Germany, amongst whom may be reckoned Lujo Brentano, Adolf Held, Erwin Nasse, Gustav Schmoller, H. Rosier, Albert Schiiftie, Hans von Scheel, Gustav Schonberg, and Adolf Wagner. Besides the general principle of an historical treatment of the science, the leading ideas which have been most strongly insisted on by this school are the following. I. The necessity of accentuating the moral element in economic study. This consideration has been urged with special emphasis by Schmoller in his Grundfntc/en (1875) and by Schaffle in his Das gesellschaftliche System der menschlichen Wirthscha/t (3d ed., 1873). G. Kries (d. 1858) appears also to have handled the subject well in a review of J. S. Mill, xlccord- ing to the most advanced organs of the school, three principles of organization are at work in practical economy ; and, corresponding with these, there are three different systems or spheres of activity. The latter are (1) private economy ; (2) the compulsory public economy ; (3) the "caritative" sphere. In the first alone personal interest predominates ; in the second the general interest of the society ; in the third the benevolent impulses. Even in the first, however, the action of private interest cannot be unlimited ; not to speak here of the intervention of the public power, the excesses and abuses of the fundamental principle in this department must be checked and controlled by an economic morality, which can never be left out of account in theory any more than in practical applications In the third region above-named, moral influences are of course supreme. II. The close relation which necessarily exists between economics and jurisprudence. This has been brought out by L. von Stein and H. Rosier, but is most systematically established by Wagner who is, without doubt, one of the most eminent of living German economists especially in his Grundleguny, now forming- part of the Lehrbucli der politischen Oekonomie in course of publication by him and Professor Nasse jointly. The doctrine of the jus naturx, on which the physiocrats, as we have seen, reared their economic structure, has lost its hold on belief, and the old a priori and absolute concep tions of personal freedom and property have given way along with it. It is seen that the economic position of the individual, instead of depending merely on so-called natural rights or even on his natural powers, is conditioned by the contemporary juristic system, which is itself an historical product. The above-named conceptions, therefore, half economic half juristic, of freedom and property require a
fresh examination. It is principally from this point of