POLITICAL ECONOMY. 186 POLITICAL ECONOMY. cxtroiiie partisan) of tlie ilcdiutivo type of eco- nomic theory. In Tliorold Rojjers. Cliff l.e.slie, Ar- nold Toynhee, and Prnfossors Asliley and Cmining- hani we liave a group of historical eeonnmists, all of whom liave ma<lp important eontribiitimis from the historical standpoint and who have indorsed more or less completely the general views of the Historical School (see below). Jcvons stands at the head of what might be called a psychological school of political economy, of whom ]H"rhai)s the most distinguished living British exponents are Professor Edgeworth of Oxford and Professor Smart of Glasgow. Both Jevoiis and Kdgeworth, however, have made important contributions in every branch of the science, particularly that of statistics: and the attempt to classify such men as Bagehot, Jcvons, JIarshall, Kdgeworth, and Nicholson reminds us forcibly that the period of schools has fortunately passed. The repre- sentative English economists, like those of every other country, make the most of all schools and methods: deductive, historical, psychological, statistical, and mathematical. MooF.RN' Rkactioxs Against the Classical Sy.stkm. Socialism. It is a striking tribute to the classical system of political econimiy and to the intellect, power, and personal excellence of its leaders, that the development of economic thought since 18.50 can best be iniderstood and described as a series of reactions against the dominant doctrines of that school. The earliest and most passionate protest against the classical economy came from the socialists. (See Social- ism.) The antagonism between socialism and the classical economy is fundamental and irre- concilable. The foundation of the latter was taisiir::-ftiirc and its theories were built around the system of private capitalistic enterprise; while socialism is in essence a protest against 1aissc::-faire and the private ownership of capi- tal. The rise of modern socialistic doctrine may conveniently be dated from William Godwin's Inquiry Conrrrninfr I'oliticnl Juslirc (179.3), although Godwin himself was inclined toward anarchism : but the chief bond uniting the early socialists was their common hatred of the orthodox political economy. In recent times, largely under the influence of Karl Marx (q.v.), socialism has acquired a jKisitive theory which is adopted with substantial unanimity by the great mass of people who may correctly be called so- cialists. Logically enough, this 'scientific social- ism' has its roots in the Ricardian theory of value and ilistribution. Mutilating his theory of value and interjjreting it ethically, they claim that, as lal)or is the sole caiise of value, the laborer is entitled to the whole produce of industry. They accept a part of his gloomy law of wages, magnify the class antagonism inherest in his theory of distribution, and glory in the pessimism which unconsciously pervaded his analysis. On the basis of a broader his- torical survey than Ricardo permitted himself to make, they confidently assert that the regime of capitalism is but a temporary stage in indus- trial evolution, and that it must inevitably give way to a ri'^gime of collective production. ^larx's theory of value has met little l)ut criticism from the economists, hut his doctrine that the imder- lying causes of all social phenomena, such as religion, literature, and art. are economic in character, called by him the materialistic con- ception of history, has profoundly inlluenced the science, particularly in Germany. The chief ollice of the socialists has been to arouse sym- pathy for the classes of society whose condition is such as to make socialism attractive to them. The Sociolooi.'sts. To the sociologists may be ascribed the most fundamental and incdusivc pro- test against the methods of the Classical School. The Ricardians aimed at an abstract science of rigid precision, universal in application, raised above the limitations of particular epochs and national boundaries. They were thus led to neglect history, custom, law, and ethics; they spoke as if the existing stage of economic dc- velo|)ment was permanent, and their method of treatment was predominantly deductivi>. The most etreetive protest ag^iinst these exaggerations was made by the Historical School, which will be noted hereafter; but a more fundamental pro- test, and one prior in point of time, was made by Auguste Comte (1798-1857), the father of modern sociology. He exercised great influence in shaping the methods of political economy and marking out its particular place among the social sciences. The inlluence of sociolog;v upon modern economic thouglit will be discussed more fully in the article Sociologt. The Histokical School. The most influential reaction against the classical economy was that inaugurated by what is known as the Historical School of Germany, and is usually dated from the work of Lorenz von Stein, Dcr Soziali/imus und Communistnus des Jieutigen FrintLrcichs, written in 1842, or, more correctly, from WiUielm Roscher's Grundriss zu Vorlesungen iiln-r die {iltiiilsirirtschaft nach gescltichtHc)icT Methode, published in 181.'!. Two contemporaries of Roschcr, Bruno Ilildebrand and Karl Knies. must be associated with Roscher and Stein in the introduction of this method, which has tranS' formed economic science in Germany and pro- foundly affected it the world over. The char- acteristics of the Classical School which these writers most earnestly attacked were what have been called its cosmopolitanism and its per- petualism — the belief in economic laws valid for all nations and all times. The positive docirines of these writers, briefly .siimniarizcd, maintain the propositions that economics is a social or political science which can be profitably pursued only in connection with the other sciences of social or political life, particularly administra- tion, law, and history; and that not only are economic phenonien.T conditioned by general so- cial and political institutions, but that these institutions are products of an onlered historical development, so that the economic science of any particular nation can only be studied and formulated in connection with the historical development of that nation. Thus instead of a universal political economy we have an historical national economy. The work of the Historical School must be regarded as the most important movement of economic thought in the latter half of the nineteenth century, but only a few words can be devoted to its rise and development. From the standpoint of method it was sinijilv an application to economic investigation of a method that had been developed and popularized by Grimm, Savigny. Eichhorn. and other German investigators in philology, history, and jurispru- dence, a generation before the rise of the His- torical School of political economy. What may be called the nationalistic spirit of the school
