The Principles of Political Economy

Henry Sidgwick

Book 3

The Art of Political Economy

Chapter 3

The Relations of Government to Industry

§1. In the chapter that follows this I propose to discuss some of the chief cases of Governmental intervention to benefit production which forms a part of the accepted policy and practice of civilized communities at the present day: in order to examine the general principles on which they are or may be maintained, and to point out how they illustrate the general exceptions to the sufficiency of Natural Liberty which we have just been considering from an abstract point of view.

But before proceeding to this examination, it seems desirable to distinguish as clearly as we can between the strictly economic intervention of Government and those cases of governmental interference with industry in which the better production---or even better distribution---of purchaseable commodities is not the primary aim; and in which, therefore, economic considerations cannot be put forward as decisive, though they must always be allowed some weight. The investigation of this latter class of interventions belongs rather to the wider Art of Politics than to the special Art of Political Economy. It is, of course, fundamentally important, for the economic prosperity of the community governed, that Government should perform efficiently its main and universally admitted function of protecting private persons and their property from injury and securing the fulfilment of contracts: but the particulars and limits of this indispensable work have to be considered in relation not simply to wealth but to social well-being generally. At the same time, since---as we shall see---it is difficult to draw the line between these two classes of governmental intervention, and since even where the primary aim of the intervention carries us beyond the range of Political Economy, economic considerations are often important, I propose in the present chapter to examine briefly the chief economic questions that arise in considering the necessary action of Government in relation to private industry.

I will begin by giving a completer statement of what may be called the `individualistic minimum' of governmental interference; which---as I briefly noticed in the preceding chapter---is generally taken for granted even by thorough-going advocates of the system of Natural Liberty. We find that, even in the view of individualists, Government has the following fundamental duties:---

  1. To protect the interests of the community generally, and individual citizens so far as may be necessary, from the attacks of foreign states.
  2. To guard individual citizens from physical injury, constraint, insult, or damage to reputation, caused by the intentional or culpable careless action of other individuals.
  3. To guard their property from detriment similarly caused; which involves the function of determining doubtful points as to the extent and content of the Right of Property and the modes of legally acquiring it.
  4. To prevent deception leading to detriment of person or property.
  5. To enforce contracts made by adults in full possession of their reasoning faculties, and not obtained by coercion or misrepresentation, nor injurious to other persons.
  6. To protect in a special degree persons unfit, through age or mental disorder, to take care of their own interests. Of this kind of protection the most important case is that of children; and here it should be observed that the protection may be exercised either directly, or indirectly through regulation of the relations of the sexes, so far as this may he required in order to make generally adequate provision for the care and nurture of children.

To these may be added the duty of providing for its own support and its own defence against internal as well as external foes. The enquiry into the best mode of making this provision, by taxation or otherwise, has always been regarded as an important branch of the economist's study;---indeed it constitutes a chief part of the art of Political Economy in the view of most economists since Adam Smith; and I accordingly propose to deal with it in a separate chapter.

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