POLITICAL ECONOMY 393 view that Wagner approaches economic studies. The point, as he says, on which all turns is the old question of the relation of the individual to the community. Whoever with the older juristic and political philosophy and national economy places the individual in the centre comes neces sarily to the untenable results which, in the economic field, the physiocratic and Smithian school of free com petition has set up. Wagner on the contrary investigates, before anything else, the conditions of the economic life of the community, and, in subordination to this, deter mines the sphere of the economic freedom of the individual. III. A different conception of the functions of the state from that entertained by the school of Smith. The latter school has in general followed the view of Rousseau and Kant that the sole office of the state is the protection of the members of the community from violence and fraud. This doctrine, which was in harmony with those of tliejiis naturae and the social contract, was temporarily useful for the demo lition of the old economic system with its complicated appa ratus of fetters and restrictions. But it could not stand against a rational historical criticism, and still less against the growing practical demands of modern civilization. In fact, the abolition of the impolitic and discredited system of European Governments, by bringing to the surface the evils arising from unlimited competition, irresistibly demon strated the necessity of public action according to new and more enlightened methods. The German historical school recognizes the state as not merely an institution for the maintenance of order, but as the organ of the nation for all ends which cannot be adequately effected by voluntary individual effort. Whenever social aims can be attained only or most advantageously through its action, that action is justified. The cases in which it can properly interfere must be determined separately on their own merits and in relation to the stage of national development. It ought certainly to promote intellectual and aesthetic culture. It ought to enforce provisions for public health and regula tions for the proper conduct of production and transport. It ought to protect the weaker members of society, espe cially women, children, the aged, and the destitute, at least in the absence of family maintenance and guardianship. It ought to secure the labourer against the worst conse quences of personal injury not due to his own negligence, to assist through legal recognition and supervision the efforts of the working classes for joint no less than individual self-help, and to guarantee the safety of their earnings, when entrusted to its care. A special influence which has worked on this more recent group is that of theoretic socialism ; we shall see hereafter that socialism as a party organization has also affected their practical politics. With such writers as St. Simon, Fourier, and Proudhon, Lassalle, Marx, Engels, Mario, and liodber-tus (who, notwithstanding a recent denial, seems rightly described as a socialist) we do not deal in the present sketch (see SOCIALISM) ; but we must recognize them as having powerfully stimulated the younger German economists (in the strict sense of this last word). They have even modified the scientific conclusions of the latter, especially through criticism of the so-called orthodox system. Schaffle and Wagner may be especially named as having given a large space and a respectful attention to their arguments. In particular, the important consideration, to which we have already referred, that the economic position of the individual depends on the existing legal system, and notably on the existing organization of property, was first insisted on by the socialists. They had also pointed out that the present institutions of society in relation to property, inheritance, contract, and the like are (to use Lassalle s phrase) " historical categories which have changed, and are subject to further change," whilst in the orthodox economy they are generally assumed as a fixed order of things on the basis of which the individual creates his own position. J. S. Mill called attention to the fact of the distribution of wealth depending, unlike its production, not on natural laws alone, but on the ordinances of society, but it is some of the German economists of the younger historical school who have most strongly emphasized this view. To rectify and complete the conception, however, we must bear in mind that those ordinances themselves are not arbitrarily changeable, but are conditioned by the stage of general social development. In economic politics these writers have taken up a posi tion between the German free-trade (or, as it is sometimes with questionable propriety called, the Manchester) party and the democratic socialists. The latter invoke the omni potence of the state to transform radically and immediately the whole economic organization of society in the interest of the proletariate. The free-traders seek to minimize state action for any end except that of maintaining public order, and securing the safety and freedom of the individual. The members of the school of which we are now speaking, when intervening in the discussion of practical questions, have occupied an intermediate standpoint. They are op posed alike to social revolution and to rigid laissez faire. Whilst rejecting the socialistic programme, they call for the intervention of the state, in accordance with the theoretic- principles already mentioned, for the purpose of mitigating the pressure of the modern industrial system on its weaker members, and extending in greater measure to the working classes the benefits of advancing civilization. Schafiie in his Capitalismus und Socialismiis (1870; now absorbed into a larger work), Wagner in his Rede iiber die sociale Frage (1871), and Schonberg in his Arbeitscimter : eine Aufyabe des deutschen ReicJis (1871) advocated this policy in relation to the question of the labourer. These expres sions of opinion, with which most of the German professors of political economy sympathized, were violently assailed by the organs of the free-trade party, who found in them "a new form of socialism." Out of this arose a lively controversy ; and, the necessity of a closer union and a practical political organization being felt amongst the partisans of the new direction, a congress was held at Eisenach in October 1872, for the consideration of "the social question." It was attended by almost all the professors of economic science in the German universities, by representatives of the several political parties, by leaders of the working men, and by some of the large capitalists. At this meeting the principles above explained were formulated. Those who adopted them obtained from their opponents the appellation of " Katheder-Socialisten," or " socialists of the (professorial) chair," a nickname in vented by H. B. Oppenheim, and which those to whom it was applied were not unwilling to accept. Since 1873 this group has been united in the " Verein fur Socialpolitik," in which, as the controversy became mitigated, free-traders also have taken part. Within the Verein a division has shown itself. The left wing has favoured a systematic gradual modification of the law of property in such a direction as would tend to the fulfilment of the socialistic aspirations, so far as these are legitimate, whilst the majority advocate reform through state action on the basis of existing jural institutions. Schaffle goes so far as to maintain that the present "capitalistic" regime will be replaced by a socialistic organization ; but, like J. S. Mill, he adjourns this change to a more or less remote future, and expects it as the result of a natural development, or process of " social selection ; " l he repudiates any immediate 1 This should be remembered by readers of M. Leroy-Beaulieu s recent work on Collectivism (1884), in which he treats Schaffle as the principal theoretic representative of that form of socialism.
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