The Principles of Political Economy

Henry Sidgwick

Book 3

The Art of Political Economy

The Art of Political Economy

In this third book of my treatise I propose to discuss briefly the principles of Political Economy considered as an Art, or department of the general Theory of Practice. It has been already observed, in the introductory portion of this work, that the ``principles of Political Economy'' are still most commonly understood, even in England, and in spite of many protests to the contrary, to be practical principles---rules of conduct public or private. This being so, it seems to me that confusion of thought on the subject is likely to be most effectually prevented, not by confining the Theory of Political Economy to economic science in the strictest sense---the study, whether by a positive or a hypothetical treatment, of the actually existing production and distribution of valuable commodities---but by marking and maintaining as clearly as possible the distinction between the points of view of the Science and the Art respectively, and the methods of reasoning appropriate to each.

How then shall we define the scope of Political Economy considered as an Art?

If we follow the indications of language, it would seem to be a branch or application of a more general art called `Economy' without qualification. Another branch of this more comprehensive art is commonly recognised as ``Domestic Economy'' or ``economy in household matters''. Here the object with which the economist is concerned is wealth or money; but we equally speak of ``economizing'' time (or labour measured by time), economizing mechanical force, &c., &c. Comparing these different uses, we may define `Economy' generally as the art or method of attaining the greatest possible amount of some desirable result for a given cost, or a given result for the least possible cost; `cost' being of two kinds, either (1) the endurance of pain, discomfort, or something else undesirable, or (2) the sacrifice of something desirable, either as an end or a means.

The Art of Political Economy, then, would seem to be Economy applied to the attainment of some desirable result not for an individual but for a political community (or aggregate of such communities.)

So far we may hope to avoid controversy. But when we go on to ask what the desirable result is which Political Economy seeks to realise, we find the question less easy to answer. It has already been noticed that Adam Smith and his earlier successors, so far as they treated Political Economy as an Art, conceived its end to be that the national production of wealth should be as great as possible; and hardly appear to have entertained the notion of aiming at the best possible Distribution. But this limitation of view is not in accordance with the ordinary use of the wider term `economy'. The idea of an economic expenditure of wealth, of which the aim is to make a given amount of wealth as useful as possible, is even more familiar than that of economic production of wealth: in fact Domestic Economy, as ordinarily understood, is simply the Art or Faculty of ``making wealth go as far as possible''. And it seems most in harmony with the received division of economic science, adopted in the present treatise, to recognise at least a possible Art of Distribution, of which the aim is to apportion the produce among the members of the community so that the greatest amount of utility or satisfaction may be derived from it.

It may be said that this latter inquiry takes us beyond the limits that properly separate Political Economy from the more comprehensive and more difficult art of general Politics; since it inevitably carries us into a region of investigation in which we can no longer use the comparatively exact measurements of economic science, but only those more vague and uncertain balancings of different quantities of happiness with which the politician has to content himself. But the discussions in Book I on the definitions of wealth and value seemed to lead to the conclusion that the real exactness of economic as compared with ordinary political estimates is generally overrated. For it there appeared that, though we could measure all wealth at the same time and place by the ordinary standard of exchange value,---i.e. money,---still in comparing amounts of wealth at different times and places neither this nor any equally exact standard was available; and we were accordingly obliged to some extent to fall back on a necessarily more indefinite comparison of utilities. Since, then, even in the reasonings of economic science, an estimate of the utility of wealth is to some extent indispensable, no fundamental change of method is introduced by adopting this estimate more systematically in the present part of our investigation.

It may however be questioned whether, so far as we regulate the distribution of produce, we should do so on the principle that 1 have said down as `economic'. Many would urge that we ought to aim at realizing Justice or Equity in our distribution. Hence it seems desirable to examine the principles of Justice or Equity that have been proposed as supreme rules of distribution: and, so far as any such principles approve themselves on examination, to consider bow far their application would concide with, and how far it would diverge from, the pursuit of the `economic' ideal.

Meanwhile we may take the subject of Political Economy considered as an Art to include, besides the Theory of provision for governmental expenditure, (1) the Art of making the proportion of produce to population a maximum, taking generally as a measure the ordinary standard of exchange value, so far as it can be applied: and (2) the Art of rightly Distributing produce among members of the community, whether on any principle of Equity or Justice, or on the economic principle of making the whole produce as useful as possible.

Here, however, it may be asked, Whose conduct the Art is supposed to direct? and some further explanation on this point seems certainly to be required. First as regards Production---the term `Art of Production' might be fairly understood to denote a systematic exposition of the rules, by conforming to which individuals engaged in industry may produce the maximum of commodity with the minimum of cost. But Political Economy is not usually supposed to include such an exposition; and it appears to me that it would be difficult to give any general instruction of this kind, if it is to be more than a collection of common-places, without entering more fully than would be convenient into the details of particular kinds of industry. At any rate I do not propose to attempt this in the present book; I shall follow tradition in treating as the main subject of Political Economy, regarded as an Art of Production, the action of Government for the improvement of the national production: but it seems desirable, for completeness, to include in our consideration the action of private persons for the same end, so far as it is not prompted by the ordinary motives of pecuniary self-interest or regulated on commercial principles. This extension of view is still more clearly called for in dealing with the Art of Distribution; where gratuitous labour and expenditure have, especially in modern times, largely supplemented the efforts of governments to mitigate the distressing inequalities in the distribution of produce, that are incidental to the existing competitive organisation of society.

Finally, I have to observe that, in defining the scope of the Art of Production, I have implied that the mere increase of population is not an end at which it aims. This is, I think, now the generally accepted view of political economists. A statesman, however, will generally desire, ceteris paribus, a large population for his country: and we shall find that some important kinds of governmental interference with industry---such as the regulation of land-tenure---have been partly advocated with a view to increase of population rather than of wealth. I propose therefore in one or two cases to consider the effects of governmental interference in relation to this end.

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