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that industry depends.

It is not necessary to do

this-to resort to this circuitous process-for this reason, that we have, or may have if we choose to turn our attention to the subject, direct knowledge of these causes in our consciousness of what passes in our own minds, and in the information which our senses convey, or at least are capable of conveying, to us of external facts. Everyone who embarks in any industrial pursuit is conscious of the motives which actuate him in doing so. He knows that he does so from a desire, for whatever purpose, to possess himself of wealth; he knows that, according to his lights, he will proceed towards his end in the shortest way open to him; that, if not prevented by artificial restrictions, he will buy such materials as he requires in the cheapest market, and sell the commodities which he produces in the dearest. Everyone feels that in selecting an industrial pursuit, where the advantages are equal in other respects, he will select that in which he may hope to obtain the largest remuneration in proportion to the sacrifices he undergoes; or that in seeking for an investment for what he has realized, he will, where the security is equal, choose those stocks in which the rate of interest to be obtained is highest. With respect to the other causes on which the production and distribution of wealth depend— the physical properties of natural agents, and the physiological character of human beings in regard to their capacity for increase--for these also direct proof, though of a different kind, is available; proof which appeals not indeed to our consciousness, but to

our senses. Thus, e.g., the law of the diminishing productiveness of the soil to repeated applications of capital, if seriously questioned, is capable of being established by direct physical experiment upon the soil, of the result of which our senses may be the judges. If political economists do not perform this experiment themselves in order to establish the fact, it is only because every practical farmer performs it for them. In the case of the physical premisses, therefore, of Political Economy, equally with the mental, we are entirely independent of those refined inductive processes by which the ultimate truths of physical science are established.

§ 4. The economist may thus be considered at the outset of his researches as already in possession of those ultimate principles governing the phenomena which form the subject of his study, the discovery of which in the case of physical investigation constitutes for the inquirer his most arduous task; but, on the other hand, he is excluded from the use of experiment. There is, however, an inferior substitute for this powerful instrument at his disposal, on which it may be worth while here to say a few words. I refer to the employment of hypothetical cases framed with a view to the purpose of economic inquiry. For, although precluded from actually producing the conditions suited to his purpose, there is nothing to prevent the economist from bringing such conditions before his mental vision, and from reasoning as if these

only were present, while some agency comes into operation-whether it be a human feeling, a material object, or a political institution-the economic character of which he desires to examine. If, for example, his purpose be to ascertain the relation subsisting between the quantity of money in circulation in any given area of exchange transactions and its value, he might make some such supposition as this-1, in a given state of productive industry a certain number and amount of exchange transactions to be performed; 2, a certain amount of money in circulation; 3, a certain degree of efficiency (in the sense explained by Mr. Mill ') in the discharge of its functions by this money; lastly, a certain addition made to the money already in circulation. These conditions being supposed, and being also supposed to remain constant, the scene of the experiment would be prepared. It is true the action of the added money cannot be made apparent to the senses of the economist, or to those of his hearers or readers, but from his knowledge of the purposes for which money is used, and of the motives of human beings in the production and exchange of wealth, it will be in his power to trace the consequences which in the assumed circumstances would ensue. These he would find to be, an advance in the prices of commodities in proportion to the augmentation of the monetary circulation;-a result from which he would be justified in formulating the doctrine that, other things being the same, the value of money is inversely as Principles of Political Economy,' vol. II. p. 18. Sixth Edition.

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its quantity. Or again, supposing the object be to ascertain the law governing agricultural rent, the economist might take as his hypothesis the following conditions:-1, a certain state of agricultural skill; 2, a capacity of the soil to yield certain returns on the application of capital and labour in certain proportions; 3, a tendency in the soil to yield diminished proportional returns after a certain point in cultivation has been reached; 4, different degrees of fertility in different soils; lastly, the land owned by one class of persons, while another, in possession of capital, desires to occupy it for the purpose of cultivation. These suppositions being made, he would then take account of the known motives on the one hand of farmers, on the other of landlords in their dealings concerning rent, and would deduce from these, in connection with the supposed circumstances, the amount of rent which the latter would be content to receive and the former to pay. The conditions determining agricultural rent would thus be ascertained. It is true the conclusion arrived at would represent hypothetical truth merely that is to say, would express a law true only in the absence of disturbing causes; but, as I have already explained,1 so much qualification as this must be understood of all scientific laws whatever. Putting aside mere empirical generalizations, no law of nature, it matters not whether the sphere of inquiry be physical, mental, or economic, is true otherwise than hypothetically-than in the absence of disturbing causes. The process,

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1 Ante, pp. 55-56.

then, which I have been describing is one mode by which a knowledge of economic laws may be reached; and I think you will perceive that it is in the nature of an experiment conducted mentally. I am far indeed from saying that it is not very inferior, as an agency for the discovery of truth, to the sensible physical process for which it is the substitute; since, while the actual operations of nature cannot err, there is in a hypothetical experiment always the danger, not only that some of the conditions supposed to be present may, in the course of ratiocination, be overlooked, but also of a flaw in the reasoning by which the action of the particular cause under consideration is established. And this renders it expedient that the process in question should as far as possible be supplemented by such sorts of verification as economical inquiry admits of. For example, it is open to the economist, having worked out his problem in the manner described, to look out for some actual instance which approximates in as many of its principal circumstances as possible to those of his hypothesis. Having found one, he can observe how far the results realized in the actual case correspond with his hypothetical conclusions; and in case, as would usually happen, the correspondence was not complete, he would have to consider how far the discrepancy admitted of being explained by reference to the presence of known disturbing causes. Unfortunately, for reasons already indicated, verification can never, in economic inquiry, be otherwise than very imperfectly performed; but this notwithstanding, if carefully

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