§1. Some twenty years ago, both the Theory of Political Economy in its main outlines, and the most important practical applications of it, were considered as finally settled by the great majority of educated persons in England. Two causes appear to have chiefly cooperated in producing this result. The prosperity that had followed on the abolition of the corn-laws had given practical men a most impressive and satisfying proof of soundness of the abstract reasoning by which the expediency of Free Trade had been inferred; and a masterly expositor of thought (J. S. Mill) had published in a convenient treatise a skilful statement of the chief results of the controversies of the preceding generation; in which the doctrines of Ricardo were presented with many of the requisite explanations and qualifications, and much of what was sound in the objections and supplementary suggestions of other writers was duly taken into account. It seemed that the science had at length emerged from the state of polemical discussion on fundamental notions and principles, and that whatever further remained to be done would be building on a foundation already laid. J. S. Mill's language had a considerable share in producing this belief. No English thinker, since Locke, who has exercised so wide and intense an influence on his contemporaries, has been generally so little open to the charge of overrating the finality---as regards either substance or form---of the theories he has expounded: and no one since Bacon has been more concerned to point the way to the illimitable worlds of knowledge that remain to be conquered. Hence it is all the more remarkable that he should have commenced his account of value with the unhesitating assertion that ``there is nothing in the laws of value which remains for the present or any future writer to clear up: the theory of the subject is complete''. It is not surprising that the younger generation, to whom his treatise soon became the chief---and often the sole---source of economic knowledge, should be equally confident; and that it should become the fashion to point to Political Economy as unique among moral sciences for the clearness and certainty of its method and the admitted trustworthiness of its conclusions.
Probably many of the generation taught by J. S. Mill are not aware how recent is the date of this confident tone. In fact, however, during the second quarter of the present century almost every English writer on Political Economy took note in some form or other of the rudimentary and unsettled condition of his study. For example, Senior, in an Introductory Lecture delivered before the University of Oxford in 1826, spoke of the science as ``in that state of imperfect development, which … throws the greatest difficulty in the way of a beginner and consequently of a teacher, and offers the fairest scope to the objections of an idle or interested adversary''. Malthus in the following year remarked that ``the differences of opinion among political economists'' have ``of late been a frequent subject of complaint''. The Edinburgh Reviewer of McCulloch's first edition (1831) characterized Political Economy as ``a moral science of which the doctrines are not recognised'': and McCulloch himself through his successive editions, was obliged to note that ``the differences it which have subsisted among the most eminent of its professors have proved exceedingly unfavourable to its progress, and have generated a disposition to distrust its best established conclusions''. Even in 1852 when Senior again addressed the University of Oxford, be announced that his subject was still ``in a state of imperfect development'', and devoted his first lecture to an explanation of ``the causes that have retarded its progress''.
No doubt many of these writers express a confident hope that this `retardation' will soon cease. McCulloch has no doubt that ``the errors with which the science was formerly infected are fast disappearing'', and Colonel Torrens ventures to prophesy more definitely that ``twenty years hence there will scarcely exist a doubt respecting any of its more fundamental principles''. And by the time that Mill's work had gone through several editions an impression began to prevail widely that this better time had actually arrived. The generation whose study of Political Economy commenced about 1860 were for the most part but dimly conscious of the element of stormy controversy from which the subject had so recently emerged. It is true that there were still loud voices heard on the opposite side; but comparatively little notice was taken of them. For instance, the condemnation of Political Economy by Auguste Comte was generally disregarded---in spite of the great and growing interest that was then taken in the Positive Philosophy---as being plainly irrelevant to Mill's exposition of the subject; in fact, it seemed to be based on a misunderstanding nearly as palpable as that involved in the vulgar dislike of the political economist as a preacher of the gospel of Mammon and selfishness. I hardly think that even the eloquent diatribes of Mr Frederic Harrison induced any considerable number of readers---outside the working classes---even to doubt the established position of economic science. Nor did the elaborate attacks made by Mr Macleod on the received doctrines succeed in attracting public attention: his books were bought and read, but were valued almost exclusively for their information on the special subject of Banking. Mr F. D. Longe's refutation of the Wages-Fund Theory (1867) fell quite dead: even the Quarterly Review, which in 1871 attacked Thornton for ignoring his obligations to Mr Longe, and sneered at Mill for admitting when urged by a friend a hostile argument to the force of which he had previously remained deaf, had up to that date never found occasion to mention Mr Longe's name.
In 1871, however, these halcyon days of Political Economy had passed away. Their termination was of course not abrupt; but so far as any date can be fixed for it, I should place it at the appearance of Mill's notice of Thornton's book On Labour in the Fortnightly Review of March, 1869. 1 do not think that the work itself, apart from the review, would have produced so much effect; since Thornton's criticism of the Theory of Value showed so serious a misapprehension of the general relation which economic theory necessarily bears to economic facts, that a disciple of Mill might be pardoned for underrating the real use and importance of this and other parts of Thornton's book. But the manner in which Mill replied to this criticism appeared to most of his disciples highly unsatisfactory, and the facility with which he resigned a doctrine (the old 'Wages-Fund Theory') which he had taught for years caused them an unexpected shock; thus they were naturally led to give a more respectful attention not only to Thornton's assaults, but also to other utterances of dissent from economic orthodoxy to which they had hitherto turned a deaf ear. A second shock was given in 1871 by the publication of Jevons' Theory of Political Economy; which took up in reference to the received mode of treating the subject an attitude almost similar to that which each new metaphysical system has hitherto adopted towards its predecessors. Again, in 1874, Cairnes' Leading Principles of Political Economy, though written by a disciple of Mill and in fundamental agreement with his doctrines, still contributed to impair the unique prestige which Mill's exposition had enjoyed for nearly half a generation. As a controversialist Cairnes, though scrupulously fair in intention, was deficient in intellectual sympathy; he could hardly avoid representing any doctrine that he did not hold in such a way as to make it almost inconceivable to his readers that it could possibly have been maintained by a man of sense; and when this treatment was applied to some of his master's most important statements, the expressions of personal regard for Mill by which it was accompanied only made the result seem more damaging to a reader who was convinced by Cairnes' reasoning. Meanwhile the strife between Labour and Capital had come to occupy more and more of the attention of cultivated society; and the conviction had gradually gained ground that Political Economy had failed to ascertain the ``law that determines the stable equilibrium of work and wages'' {Ref}: and even that ``the attempt to solve great industrial questions on the hypothesis which Mr Mill states to be the fundamental one of Political Economy''---i.e. that men are governed by self-interest only---``is to confuse rather than to elucidate the problems which it behoves us to investigate''.
In short, when the concluding quarter of this century began, it was evident that Political Economy had returned to the condition in which it was in the second quarter; and that McCulloch's melancholy admission that ``the differences which have subsisted among the most eminent of its professors have proved exceedingly unfavourable to its progress, and have generated a disposition to distrust its best established conclusions'' was again only too applicable. This unfortunate result would, I think, have been brought about merely by the disputes and divergences of opinion among economists who adhered to the mode of treating the subject which has prevailed in England since Ricardo. But a powerful contribution to it was supplied by a thoughtful and independent writer, Cliffe Leslie; who in 1870, in an article on the Political Economy of Adam Smith, began that attack on the `Ricardian' or `à priori' method which he continued in several subsequent articles, afterwards reprinted in his Essays Moral and Political. One part of Cliffe Leslie's work consisted in drawing the attention of English economists to the movement in opposition to their method which had for some time been carried on in Germany, and which, during the last twenty years, has continually gained strength. The leaders of this movement, however widely they also differ among themselves, are generally agreed in repudiating as ``Manchesterthum'' or even ``Smithianismus''---the view of Political Economy mainly adopted in England; and their influence constitutes an additional force under which the disputes as to particular doctrines among the English Economists tend to broaden into more fundamental controversy as to the general method of dealing with economic questions.
At the same time the opposition of influential artisans to the traditional Political Economy has not diminished, if I may judge from Mr Howell's Conflict of Labour and Capital; it has only changed somewhat from sullen distrust to confident contempt. While, finally, the great practical success of Free Trade---which, as I said at the outset, contributed largely to the prestige enjoyed by Political Economy during its halcyon days in the third quarter of this century---has recently been called in question by an apparently growing party of practical men; and is certainly rendered dubious through the signal disappointment of Cobden's confident expectations that the example of England would be speedily followed by the whole civilised world.
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