THE DEDUCTIVE :\ IETTIOD. What is known in economics as the deductive method consists nsually of three stages, the first and last of which are inductive. In the preliminary stage. either from common observation or more complex induction, the postulates of the deductive science are secured. In the English economic theory prevalent from Ricardo to Cairnes these pos tulates were excessively simplified. Ricardo, like Adam Smith, was fond of drawing his premises from an imaginary state of primitive industry. Senior reduced the postulates of political econ omy to four general propositions: "(1 ) That every man desires to obtain additional wealth with as little sacrifice as possible. (2) That the population of the world is limited only by moral or physical evil, or by fear of a deficiency of those articles of wealth which the habits of the individuals of each class of its inhabit ants lead them to require. (3) That the powers of labor, and of the other instruments which produce wealth, may be indefinitely increased by using their products as a means of future production. (4) That. agricultural skill remain ing the same, additional labor employed cm the land within a given district produces in general a less proportionate return." It is impossible to give a list of the postulates which have been assumed by different. writers. hut it is evident that they must vary widely in different branches of the science. and that almost every deductive writer has unconsciously assumed many pos tulates not specifically stated. In the ordinary deductive treatment of value and distribution there are usually postulated the propositions that men not only desire, hut know how in general to obtain the maximum satisfaction with the minimum effort; that certain industries are subject to the law of increasing rather than diminishing returns; that the satisfaction afforded by a commodity decreases (per unit) as the amount consumed increases; that exist ing law, public opinion, and ethical standards, in general remain constant. It is the inter mediate stage which is most appropriately called deductive. Here the familiar processes of the deductive logic are employed. It is evident,
however, that the results obtained from the artificially simplified premises of ordinary de ductive theory are of doubtful value. If the postulates be absolutely true and the deduction faultless, the conclusions express abstract ten dencies which will be modified in real life by the action of secondary forces not taken into account in the premises. This, however. is the character of the pure theory of all sciences. lf, on the other hand, the premises practically cover the predominant forces in any domain of economics, they may yield results capable of explaining actual economic conditions, and capa ble of affording the basis of prevision. In actual usage, however, these postulates bare been some times untrue, often ambiguous, and always more numerous than was explicitly stated, so that Cliff Leslie and other writers of the Historical School have characterized the conclusions of Eng lish theory as utterly inapplicable in any sense either to the of existing conditions or the solution of practical problems. This ex treme antipathy to deductive theory is. however. plainly illogical. Whatever the necessity of studying the past, no one denies that. the present and the future furnish the ultimate and prineipal problems of the science. And many of these problems are new; to solve them we must isolate the factors at work. calculate separately their effects, and try to estimate the net results. This process must be largely deductive. and it is strange that those who insist most strenuously that the science is a practical one should attack a method necessary in the solution of practical problems. The historical method alone is helpless in the face of such a problem as the proposition to introduce compulsory arbitra tion.
Of the third stage in the deductive process, that of verification by observation, little need lie said. In practice it is exceedingly difficult, as was shown when Mill attempted to "apply" the Rieardian theories, but it is essentially a species of induction subject to all the limitations of the inductive method in general.