Balfour on Political Economy
The essay ‘Politics and Political Economy’ was a public lecture given in 1885. Balfour refuses to see economic doctrines as established facts. The supposed benefits of Free Trade have no clear proof.
I’ve no idea whether Balfour knew of Karl Marx. Probably not: Marxist influence in British politics was only then beginning. But ‘Ricardian Socialism‘ had been popular even before Marx. Many similar systems existed. His failure to mention socialist economics as a third alternatives is suspicious.
Balfour is maybe like the war-propaganda of Julius Caesar, amazingly biased while sounding very detached and abstract.
Political economy is somewhat at a discount. Those who preach its doctrines scarcely speak with their old assurance, neither do they who listen, listen with the old respect. Ancient heresies, long thought to have been dead and buried, are beginning to revive. New heresies are daily springing into life. Every sign seems to portend that at a time when, of all others, problems are pressing for solution, in dealing with which we must be largely guided by economic science, the guide itself is in public estimation becoming seriously discredited. Some of you may have read the not very agreeable memoirs which that not very agreeable woman, Miss Martineau, has left of herself. If so, you will probably recollect the fame and profit which her series of political economy tales brought her some fifty years ago. You will recollect how she became a literary lion of the first magnitude, how edition after edition of the tales were sold off, how high officials furnished her with information and Cabinet Ministers besought her aid. Great is the difference between 1885 and 1833. Let no aspirant for such noisy honours seek them any more by this road. Much work may, indeed, be done in the field of political economy; work in the accumulation of facts; work in their reduction to law; work in popularising the results attained. But the most successful labourers in these departments need no longer expect to dictate terms to their publishers or be asked to dine by the President of the Board of Trade. He may consider himself fortunate if the world will consent to accept the results of his labour for nothing, and if he does not hear his science relegated to Saturn by a responsible Minister of the Crown.
What are the causes which have produced this change in the public mind, how far is it justified, and what attitude ought we ourselves to take up towards it? Such is the problem which I should wish to consider with you to-day, and no more important problem, believe me, confronts the statesman who desires to face the larger issues of contemporary politics.
I pass lightly over the superficial causes which have aided in producing this economic eclipse. Such, for example, is the unpopularity which in society the third-rate exponent of economic orthodoxy has always aroused, and which you may see exemplified in more than one character in the fiction which was contemporary with the most flourishing days of that science. The professed political economist, who had a cut-and-dried formula for every occasion, who solved all social questions by a frigid calculation, who habitually talked as if everything good in the world was produced by the accumulation of wealth and everything bad by the multiplication of children, appeared to our fathers, as, did he still flourish with all his pristine vigour, he would doubtless appear to us, to be something of a prig and a great deal of a bore. No dexterity of treatment, no literary skill, will make political economy amusing; nor will the average of mankind ever take delight in studies which require abstract thought or concentrated attention. When, therefore, a set of persons appeared, neither very original nor very learned, who would not permit a new tax or an amendment of the poor laws to be discussed in the lobby of the House of Commons or round a dinner-table without reproducing, with all the arrogance of conscious orthodoxy, some abstract train of reasoning borrowed from greater men than themselves, they and their science were naturally looked upon as socially intolerable.
This by itself was a comparatively small misfortune. A far greater one — one of which we have not yet felt the full effects — is the hostility which the claims of political economy have aroused in the breasts of the working-classes on the Continent. To many of them it appears, not as a political science, but as a political device; not as a reasoned body of truth, but as a plausible tissue of sophistries, invented in the interests of capital to justify the robbery of labour. It is true that no such prejudice, though it exists sporadically, is prevalent in this island; but we may, I think, detect a faint echo of it in the suspicion with which it is regarded by some, and the indifference with which it is regarded by others among those who profess more especially to be the guardians of the interests of the working-classes. And it is this suspicion and indifference, too largely shared by leading politicians on both sides, of which I desire to investigate the causes.
Of course, it may be maintained that the principal and all-sufficient cause of which we are in search is to be found in the shortcomings of political economy itself. It may be alleged that its premises are arbitrary, its conclusions unproved, its teachings of too remote and abstract a character to be any sufficient guide in the conduct of public affairs. This contention I do not mean here to dispute. To dispute it effectively would require a survey of the whole field of political economy — a restatement and justification of all its principal doctrines. Such a task I need not say that I have no intention of undertaking. I shall here assume, for the sake of argument, that political economy is to be accepted as true in the same sense that other sciences are accepted as true — that is, not blindly and irrevocably, but subject to revision and development; and that it is to be regarded as a guide in the same way that other sciences are regarded as guides, that is, with a due recognition of the fact that the complexity of nature never quite corresponds with the artificial simplicity of our premises, and that in proportion as the correspondence is imperfect, the result of our reasoning must in practice be applied with caution. The first cause, then, which I take note of, for the undue depreciation under which political economy is at this moment suffering, is the undue appreciation in which it was held in the last generation. That generation— the one preceding 1860 — was emphatically the generation of economic reform. It saw the new Poor Law established, the whole system of national taxation remodelled, and the Corn Laws abolished. Coincidently with this it saw an immense increase in the wealth and prosperity of the country, partly due to these changes, still more due to the development of railways and the opening up of new countries rich in agricultural and mineral resources. What wonder that the science, under whose auspices so much of this had been done, was estimated at its full, nay, at more than its full value; that the habitual distrust of theory was for a moment lulled to rest in the Anglo-Saxon mind, and that others besides Mr. Cobden prophesied the rapid and triumphant spread of Free Trade doctrines throughout the civilised world. The most stolidly practical were reconciled to abstract principles which, as they supposed, gave them an elastic revenue and an unshackled trade: the least educated could understand the meaning and merits of cheap bread.
But no science can become popular with impunity. The mere fact that it is quoted on hustings, that its doctrines, more or less misunderstood, are used as political weapons; and that its conclusions, more or less garbled, are valued not so much because they are true as because they suit the momentary necessities of party warfare, refracts in countless ways the dry light in which it should be viewed. The side against whom it makes will decry it; their opponents will laud it to the skies; and the praise which is shouted from one set of platforms will probably be not less unintelligent than the blame shouted back from another.
Not less unintelligent, and even more injurious to the cause of truth. For as soon as any body of doctrine becomes the watchword of a party or a sect, it is certain to be used with the most confident assurance by multitudes who have the most imperfect apprehension of the true grounds of the opinions they are expressing. In default of reasons they quote authorities. A dictum of Smith, Ricardo, or Mill is supposed to supply a rule of faith against which there is no appeal. A standard of orthodoxy is set up, to deviate from which is heresy, and political economy ceases to be a living science, and petrifies into an unchanging creed. From these causes has proceeded the reaction against economic teaching, which has been slowly gaining ground since 1860. Some have been repelled by the ignorant dogmatism and the narrow formalism which so often usurped the name of science. Others have been shaken in their faith by the rejection both of the theory and the practice of Free Trade by foreign countries; a still larger number have felt themselves injured by the operation of Free Trade in our own. While its friends have thus been cooled in their allegiance, its enemies have multiplied in number and increased in courage; and all those who saw in the accepted truths of political economy an obstacle to some project of their own, have been encouraged to attack it openly or by implication.
It is the first of these evils which it most behoves those of us who hold that the study of economic facts is a necessary preliminary to any judicious treatment of some of the most important problems of the day to remedy as far as in us lies. The true, if obvious, antidote to the disgust excited by the extravagant claims put forward on behalf of political economy, is to reduce those claims within strictly reasonable limits. Now what are those limits? Two there are, constantly violated, and sometimes by the greatest economic authorities, to which I would specially draw your attention. The first depends on the fact that political economy is a science, and as such deals in strictness only with laws of nature, and not with the rules of conduct or policy which may be founded on those laws. The second depends on a fact (too often forgotten) that the science of political economy, dealing as it does with only a few of the complex facts of life, cannot on most questions supply the politician with adequate grounds for framing his policy. Take an example. We constantly hear it said that the doctrine of laissez-faire — the doctrine which forbids State interference, and which asserts that all social questions should be solved by the unrestricted play of free competition, is a truth of political economy. Now I hold, first, that this is not a truth of political economy; and, secondly, that political economy by itself cannot furnish grounds for deciding whether it is a truth at all. It is not a truth of political economy, for it is not a scientific truth, but a maxim, sound or unsound, belonging to the art of politics. No doubt the grounds for accepting or rejecting it must be, and are, largely drawn from a consideration of economic laws, but in itself it is not an economic law, but a practical precept. It has no more claim to be regarded as a part of political economy than the recommendation not to throw yourself out of a second-floor window is a part of the science of mutually gravitating bodies. Do not think that the distinction here drawn is a mere subtlety. I am convinced that the neglect of it by many of the masters of the science, and by almost all their disciples, has done much to prejudice men’s minds against economic reasoning. A political economist, as such, has no business to be a politician. However strong his convictions may be, however much his own inclinations may tempt him to the advocacy of any particular mode of social organisation, he should rigidly abstain, in his investigation of the laws of wealth, from loading his pages with any practical propaganda. Science is of no party. It seeks no object, selfish or unselfish, good or bad. It is unmoved by any emotion: it feels no pity, nor is it stirred by any wrong. Its sole aim is the investigation of truth and the discovery of law, wholly indifferent to the use to which those investigations and those discoveries may afterwards be put.
But this is not the only reason, nor even the chief reason, why I object to the fusion, or rather the confusion, of the art of politics with the science of political economy. Another and a more cogent one is to be found in the fact that, as I have said, many of the most important considerations which should determine a political decision lie altogether outside the field with which an economist is at liberty to deal. The economist investigates only the laws regulating the production, exchange, and distribution of wealth; and in order to get this problem within a manageable compass, in order to avoid being confronted with calculations of hopeless complexity, he usually assumes that the human beings who produce, exchange, and consume, are actuated by no other motive than that of securing, under a regime of free competition, as large a share as possible of this wealth for themselves. The politician, on the other hand, who has to decide what course should be pursued, not in the abstract world of science but in the concrete world of fact, cannot so limit his views. He has to provide, in so far as in him lies, for the spiritual and material well-being of the real human being, not of the imaginary wealth producer and wealth consumer which science is obliged to assume; and knowing this, knowing that man does not live by bread alone, but is a creature of infinite variety living in a most complicated world, he can seldom decide any practical problem on purely economic grounds.
So far I have been occupied in conveying a not unneeded warning to those who, like myself, accept (speaking generally) the teaching of political economy: let me, in conclusion, make an even more earnest appeal to those who repudiate its lessons. They are to be found, not merely among those who are repelled by the difficulties and technicalities of the study; not merely among those who — confident in what they call their practical knowledge — that is, their knowledge of the details necessary for the conduct of their own particular business — are contemptuous of all speculation; not merely among those who dislike the theory because, on purely selfish grounds, they first dislike the conclusions which rightly or wrongly are based upon it; but among those who are most zealous and most disinterested in their efforts for the general welfare. Burning with a desire to remedy the ills they see on every side, these philanthropists are impatient of a science which is apt to beget a wise if chilling scepticism as to the efficacy of short cuts to universal happiness. Eager to employ in the redress of wrongs the most powerful machinery at their disposal, viz. that of State interference, they resent the criticism to which political economy has subjected the grounds on which plan after plan of State interference has been recommended to the public. Glowing themselves with a generous enthusiasm, they are repelled, partly by the hypothesis of universal selfishness on which political economy for reasons to which I have already adverted appears to proceed, partly by the cold and unfeeling manner in which science dissects and analyses facts, warm and palpitating with the hopes, fears, and sufferings of a whole civilisation. That these prejudices, though partly justified by errors of treatment on the part of political economists, rest in the main upon a mere confusion of thought whose nature I have already indicated, I need not stop to prove. It is only necessary to say a word on the evils they are likely to produce. I am not here to advocate any particular system of economic doctrine. There is no question concerning either the method or the results of political economy which I for one am not prepared to consider open, provided the critic can show that he really understands the doctrine he is attacking, and is not, as commonly happens, merely laying hold of some incautious expression of Ricardo, or Mill, or whoever it may be, and laboriously refuting what never was, or has long ceased to be, a received opinion. I plead not for any special scientific doctrine, but for the application to social phenomena of scientific methods. Nor has there ever been a time when, in my judgment, this was more required than it is now. Society is becoming more and more sensitive to the evils which exist in its midst; more and more impatient of their continued existence. In itself this is wholly good; but, in order that good may come of it, it behoves us to walk warily. It is, no doubt, better for us to apply appropriate remedies to our diseases than to put our whole trust in the healing powers of nature. But it is better to put our trust in the healing powers of nature than to poison ourselves straight off by swallowing the contents of the first phial presented to us by any self-constituted physician. And such self-constituted physicians are about and in large numbers — gentlemen who think that they pay Providence a compliment by assuming that for every social ill there is a speedy and effectual specific lying to hand; who regard it as impious to believe that there may be chronic diseases of the body politic as well as of any other body, or that Heaven will not hasten to bless the first heroic remedy which it pleases them in their ignorance to apply. It is true that without enthusiasm nothing will be done. But it is also true that without knowledge nothing will be done well. Philanthropic zeal supplies admirable motive power, but makes a very indifferent compass; and of two evils it is better, perhaps, that our ship shall go nowhere than that it shall go wrong, that it should stand still than that it should run upon the rocks. As, therefore, nature knows nothing of good intentions, rewarding and punishing not motives but actions; as things are what they are, describe them as we may, and their consequences will be what they will be, prophesy of them as we choose; it behoves us at this time of all others to approach the consideration of impending social questions in the spirit of scientific inquiry, and to be impartial I investigators of social facts before we become zealous reformers of social wrongs.
 Emphasis added