The Principles of Political Economy

Henry Sidgwick

Book III

Chapter IX


§1. We had occasion to notice in the last chapter but one, that in considering some important departments of governmental interference it is practically necessary to take account of the unconstrained action of private persons for public objects. We cannot determine what Government ought to do without considering what private persons may be expected to do; and what they may be expected to do will, to some extent at least, depend on what it is thought to be their duty to do. And, more generally, it was before observed that in the performance even of the ordinary industrial functions with which economic science is primarily concerned men axe not merely influenced by the motive of self-interest, as economists have sometimes assumed, but also extensively by moral considerations. Hence it would seem that an Art of Political Economy is incomplete without some consideration of the principles that ought to govern private conduct in economic matters. But for a complete treatment of this subject, it would seem needful to begin by establishing systematically certain principles of morality, and then considering the relation of these to the principles of Political Economy as expounded in the present treatise;---a procedure which would inevitably introduce the fundamental and unsettled controversies of ethics to an extent that would be hardly. suitable in the concluding chapter of a work on Political Economy. I therefore propose in this concluding chapter to confine myself to a brief reflective survey of the manner in which the morality of common sense has actually been modified by economic considerations, only trying here and there to introduce somewhat more clearness and precision than appears to be found in ordinary thought.

It is generally recognised that the current economic doctrines, and the prevalent habits of thought connected with them, have had an important effect in modifying that part of current morality which is concerned with the getting and disposing of wealth---otherwise than by merely enlightening and rationalizing the pursuit of private pecuniary interest; which, indeed, English Political Economy has for the most part rather assumed to be enlightened than sought to improve by instruction. The department of duty in which this influence has been chiefly noticed is that of liberality or charity. By many persons ``hardhearted Political Economy'' has been vaguely believed to dry up the sources of almsgiving; and it is undoubtedly true that almsgiving under certain conditions is shewn to be opposed to the true interests of the community by economic arguments fundamentally similar to a portion of those on which the inexpediency of legally enforced communism is usually rested. But we have also had occasion to observe that economic considerations have had an important share in defining the current conceptions of the more stringent duties of Justice and Equity: and it will be in accordance with the received order of ethical discussion to begin by considering these more comprehensively than we have yet done.

To begin with an uncontroversial definition of Justice---we may perhaps say that ``just'' claims to wealth or services are claims precise in their nature, for the non-fulfilment of which a man is liable to strong censure, if not to legal interference; indeed we should agree that such claims ought to be capable of legal enforcement, if the benefits of this were not in some cases outweighed by the incidental difficulties and drawbacks of judicial investigation and governmental coercion---as is (e.g.) largely the case with the mutual claims of members of a family. So far as we distinguish from strictly just claims those that we should rather call ``fair'' or ``equitable'', the latter would seem to be less definite but yet claims for the fulfilment of which gratitude is, not to be expected, while their non-fulfilment is blamed.

Both kinds of claims without distinction may be conveniently classified according to their sources as follows: besides (1) claims determined by law independently of contract, with which we need not here concern ourselves, the most important class is (2) that of claims arising out of contract, express or tacit---the notion of ``tacit contract'' being extended to cover all normal expectations which a man knows (or ought to know) will be produced by his conduct in the minds of others. Such expectations are of course largely determined by custom: while in (3) a certain class of cases custom practically restricts freedom of contract---as in the case of fees to a physician. Further, there are (4) claims arising out of previous services rendered under circumstances under which contract would have been impossible or inexpedient; such as the claims of parents on children: and (5) claims to reparation for harm inflicted; along with which we may class claims to the prevention of harm, where A has done an act which would injure B if no provision were made against its harmful consequences. Under this last head would come the claims of children on parents for sustenance and nurture during infancy.

The influence of Political Economy is, I conceive, chiefly noticeable as regards the second and third of these classes. In the first place the `orthodox' ideal of free exchange is necessarily antagonistic to the sway of custom as such---except so far as a customary determination of the price of services, modifiable from time to time by changes in supply and demand, is economically advantageous by saving time and trouble. But, as I have already observed, in a modern industrial community custom can hardly be regarded as an effective economic force, except so far as it blends with tacit combination---or, I should perhaps say, tends to turn into combination when resisted. If A pays B for certain services a customary price which he believes to be above the competition price, it is generally under the condition of both being aware that the majority of B's fellow-labourers would if necessary combine with him in refusing to accept a lower price. How far Political Economy, considered as a doctrine of what ought to be, approves of combinations to raise prices, when prompted by self-interest, I will presently consider: meanwhile there seems no doubt that the influence of economic discussion has tended to invalidate all quasi-moral obligations founded on customs pure and simple, substituting for customary terms of exchange conditions determined by definite agreements freely entered into.

The duty of observing such engagements was so clearly recognised in pre-economic morality that it can hardly be said to have been made any clearer through the teachings of economists, though no doubt these have dwelt with strong emphasis on the fundamental importance of this department of morality in a modern industrial community. It is rather in the determination of certain doubtful points that arise when we try to define exactly the conditions under which an agreement is to be regarded as really embodying the free choice of both contracting parties, that the influence of political economy appears to be traceable. It is admitted that, generally speaking any `really free' exchange of commodities which the exchangers have a right to dispose of is legitimate and should be held valid, and that `real freedom' excludes (1) fraud and (2) undue influence: but how are we to define these latter terms? Is A justified in taking any advantage that the law allows him (1) of the ignorance and (2) of the distress of B---supposing that A is not himself the cause either of the ignorance or of the distress? If not, to what extent is he justified in taking such advantage? In the answers that thoughtful persons would give to these questions we may, I think, trace the influence of economic considerations, limiting the play of the natural or moral sentiments of sincerity and sympathy.

To begin with the case of ignorance: we should not blame A for having, in a negotiation with a stranger B, taken advantage of B's ignorance of facts known to himself, provided that A's superior knowledge had been obtained by a legitimate use of diligence and foresight, which B might have used with equal success. We should praise A for magnanimity if he forbore such advantage: but we should not blame him for taking it, even if the bargain that B was thus led to make were positively injurious to the latter, supposing that the injury would otherwise have fallen on A, so that there is only a transfer and not an increase of damage. For instance, we should not blame a man for selling in open market the shares of a bank that he believed was going to break, if his belief was founded, not on information privately obtained from one of the partners, but on his own observations of the bank's public acts or on the judgment of other experienced outsiders. Again if a man has discovered by a legitimate use of geological knowledge and skill, that there is probably a valuable mine on a piece of land owned by a stranger, reasonable persons would not blame him for keeping the discovery secret until he had bought the land at its market value. And what prevents us from censuring in this and similar cases is, I conceive, a more or less conscious apprehension of the indefinite loss to the wealth of the community that is likely to result from any effective social restrictions on the free pursuit and exercise of knowledge of this kind. Such use of special and concealed knowledge is only censured by thoughtful men, either (1) when it is for some particular reason against the public interest---as (e.g.) if members of a cabinet were to turn their foresight of political events to account on the Stock Exchange---; or (2) when the person using it has obtained it in some way having a taint of illegitimacy---as by betrayal of confidence, intrusion into privacy, &c.---; or (3) when the person of whom advantage is taken is thought to have some claim on the other beyond that of an ordinary stranger.

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