In Political Economy,as in other sciences,a careful study of method is an absolute necessity.And this subject of method will come into special prominence in the present lecture,because we have now to consider the writings of a man of extraordinary intellect and force,who,beyond any other thinker,has left the impress of his mind on economic method.Yet even he would have been saved from several fallacies,if he had paid more careful attention to the necessary limitations of the method which he employed.It may be truly said that David Ricardo has produced a greater effect even than Adam Smith on the actual practice of men as well as on the theoretical consideration of social problems.
His book has been at once the great prop of the middle classes,and their most terrible menace;the latter,because from it have directly sprung two great text-books of Socialism,Das Kapital of Karl Marx,and the Progress and Poverty of Mr Henry George.And yet for thirty or forty years Ricardo's writings did more than those of any other author to justify in the eyes of men the existing state of society.
Ricardo's life has little in it of external interest.He made his fortune on the Stock Exchange by means of his great financial abilities,and then retired and devoted himself to literature.
During the few years that he sat in Parliament,he worked (we have it on Huskisson's testimony)a great change in the opinions of legislators,even in those of the country squires-a remarkable fact,since his speeches are highly abstract,and contain few allusions to current politics,reading in fact like chapters from his book.We may notice one direct effect of his speeches:they were the most powerful influence in determining the resumption of cash payments.In his private life he associated much with Bentham and James Mill.
James Mill,like Bentham and Austin,was a staunch adherent of the deductive method,and it was partly through Mill's influence that Ricardo adopted it.Mill was his greatest friend;it was he who persuaded him both to go into Parliament,and to publish his great book.Ricardo's political opinions in fact merely reflect those of James Mill,and the other philosophical Radicals of the time,though in Political Economy he was their teacher.Ricardo reigned without dispute in English Economics from 1817to 1848,and though his supremacy has since then been often challenged,it is by no means entirely overthrown.His influence was such that his method became the accepted method of economists;and to understand how great the influence of method may be,you should turn from his writings and those of his followers to Adam Smith,or to Sir Henry Maine,where you come in contact with another cast of mind,and will find yourselves in a completely different mental atmosphere.Now what is this deductive method which Ricardo employed?It consists in reasoning from one or two extremely simple propositions down to a series of new laws.He always employed this method,taking as his great postulate that all men will on all matters follow their own interests.The defect of the assumption lies in its too great simplicity as a theory of human nature.Men do not always know their own interest.Bagehot points out that the *10householders,who were enfranchised by the first Reform Bill,were after 1832the most heavily taxed class in the community,though the remedy was in their own hands;because they were ignorant and apathetic.
And even when men know their interests,they will not always follow them;other influences intervene,custom,prejudice,even fear.Cairnes frankly admits these defects in Ricardo's method;but it took economists some thirty or forty years to learn the necessity of testing their conclusions by facts and observations.
Since 1848their attitude has improved;it is now seen that we must insist upon the verification of our premisses,and examine our deductions by the light of history.
Ricardo has deduced from very simple data a famous law of industrial progress.In an advancing community,he says,rent must rise,profits fall,and wages remain about the same.We shall find from actual facts that this law has been often true,and is capable of legitimate application,though Mr Cliffe-Leslie would repudiate it altogether;but it cannot be accepted as a universal law.The historical method,on the other hand,is impotent of itself to give us a law of progress,because so many of the facts on which it relies are,in Economics,concealed from us.By the historical method we mean the actual observation of the course of economic history,and the deduction from it of laws of economic progress;and this method,while most useful in checking the results of deduction is,by itself,full of danger from its tendency to set up imperfect generalisations.Sir H.
Maine and M.Laveleye,for instance,have taken an historical survey of land-tenure,and drawn from it the conclusion that the movement of property in land is always from collective to individual ownership;and Mr Ingram,again,alluding to this law,accepts it as true that there is a natural tendency towards private property in land.He can build his argument on the universal practice from Java to the Shetlands,and it would seem a legitimate conclusion that the tendency will be constant.Yet there is at the present day a distinct movement towards replacing private by collective ownership,due to the gradual change in the opinions of men as to the basis on which property in land should rest.Mill,in 1848,argued that where the cultivator was not also the owner,there was no justification for private ownership;later in his life,he advocated the confiscation of the unearned increment in land.If we ask,'Was he right?'the answer must be.
