ENGLISH POLITICAL ECONOMY SINCE RICARDO. The narrow' scope, the deductive method, and the oretical nature of the classical economy were all intensified and formally indorsed by N. W. Senior (1790-1860, the most influential En glish economist between Ricardo and the younger Mill. Within the limits of classical economics Senior did notable work; he cleared up many of the latent obscurities in the Meant inn theory of distribution, propounded the absti nence theory of interest. and formulated the fa mous doctrine of the u•naes fund. (latent in the work of Smith, Ricardo. and others) that the average rate of wages is the quotient secured by dividing the number of workmen into the fund of capital set aside by the capitalists for the employment of labor. With the exception of the Malthusian principle, this doctrine probably con tributed more than anything else to make po litical economy the 'dismal science.' Senior remarkable also for his exposition of the extent to which the monopoly element enters into ordi nary economic life. Under perfect competition, he declares, prices of commodities would ae curately measure "t lie aggregate amount of the labor and abstinence necessary to continue their production." lint lie point, out repeatedly that differential advantage of any kind in proditethm gives rise to a monopolistic rent, which includes all income obtained without a proportionate sac rifice of labor or abstinence. In his abstinence theory Senior deprived the socialists of 11111(.11 of the comfort offered them in the classical economy, but in his analysis of monopoly he clearly defines the element in distribution which supplies them with a real grievance.
John St sort I/ typifies the transition in England from the classical to the modern system of economic thought. Ile began his career as a Ricardian of the Ricardians, but in the later years of his life he cane• under the influence of Auguste Comte and the socialistic thought of his time, and in 1848 his principal economic treatise appeared under the title Prin ciples of Political Economy with. Some of Their Applications to Social Philosophy—a com promise between the Ricardian economies, which he had learned in his youth, and the warm desire to find some means to improve the condition of the masses, which had come to him from the ob servations of his matnrer years. The compro mise was not fortunate from the standpoint of logic. Most economists since Mill, and Mill himself in his later years, recognized that the book was inconsistent ; but it was superbly writ ten, alive with the desire to improve the condi tion of the masses, and exercised an enormous influence upon the subsequent development of English economic thought. The modifications of
the old doctrine which Mill introduced exercised probably a greater influence than the old theories which he incorporated in his Principles. He pre served the old doctrines of rent and profits, and advocated laissez-faire as a general principle of political expediency, hut made so many excep tions that at times they seem more important than the rule. Mill also indorsed the doctrine of the wage fund; hut in his later years he aban doned his belief in this theory, and advocated “views of the taxation and regulation of in heritanee and bequest which would break damn large fortunes and bring about a wider diffusion of property." The development of English economic thought since 1,850 has been profoundly affected by the reaction against the classical system described below. and only a few words can be devoted to the subject here. The logical of Ri cardo and Senior were Cairnes. Ilagehot. and Fawcett (to whom might lie added Professor Marshall of Cambridge). It is impossible to characterize at length the work of these men. hilt all have been ardent defenders of the orthodox school, though they have recognized and ably ex pounded its limitations as a theoretical science. They stand as the modern defenders lEaweett an extreme partisan) of the deductive type of eeo !mink theory. In Thorold Leslie, nold Tovnbee, and Professors Ashley and Cunning ham we have a group of historical economists, all of whom have made important contributirms from the historieal standpoint and who have indorsed more or loss completely the general views of the Ilisb)rieal School tsce below ). :Jevons stands at the head of what might lie called a psychological school of political economy. of whom perhaps the most c1i.tin_uisLcd living Ih•itish exponents are Professor Edgeworth of Oxford and Professor Smart of Glasgow. Both Jevons and Edgeworth, however, have made important contributions in every braneli of the science, particularly that of statistics: and the attempt to classify such men as liagehot, Jevons, AMarshall, Edgeworth, and Nicholson reminds us forcibly that the period of schools has fortunately passed. The repre sentative English economists, like those of every other country, make the most of all sehools and mP1abDds: deductive. historical, psychological, statistical. and mathematical.