Bauhaus-Universität Weimar

Titel:
Dictionary of philosophy and psychology including many of the principal conceptions of ethics, logics, aesthetics ... and giving a terminology in English, French, German and Italian, vol. 1 [a-laws]
Person:
Baldwin, James Mark
PURL:
https://digitalesammlungen.uni-weimar.de/viewer/image/lit29445/336/
ECONOMIC HARMONIES — ECONOMIC METHOD 
The idea of economic freedom was the 
result of a protest against the £ mercantile 
system ’ of international trade restraints on 
the one hand, and the system of internal police 
restrictions adopted by the Wohlfahrtsstaat 
on the other. The idea expressed in the 
definition has been perhaps most fully de¬ 
veloped by W. v. Humboldt. 
The development of these ideas, both in 
theory and in practice, has been checked by 
the growth of democracy and the ideals of 
equality connected with it. As Lassalle so 
well showed, equal rights under unequal con¬ 
ditions mean assured inequality. Hence the 
pressure for factory acts, for laws governing 
the prices and profits of large corporations, 
for progressive taxation, and for extension of 
government activity. (a.t.h.) 
Economic Harmonies : Ger. Interessen- 
Harmonien ; Fr. harmonies économiques ; 
Ital. armonie economiche. A series of coinci¬ 
dences between the self-interest of individuals 
and the general interest of society in matters 
relating to wealth. 
The agreement between the results of 
egoism and altruism is perhaps no closer 
in economic life than in other departments 
of human activity ; but it is, at any rate, more 
verifiable. As a natural consequence, the 
relations between self-interest and public 
interest have been more clearly recognized in 
this field than in any other; and there has 
been a tendency to assume the existence of 
such a harmony in all cases where it is not 
specifically disproved. The laissez-faire prin¬ 
ciple of the Physiocrats (q. v.), urging non¬ 
interference with industry, was the natural 
result of this assumption, which was after¬ 
wards carried to an extreme by Bastiat in 
France and Prince-Smith in Germany. 
Literature : Bastiat, Harmonies éco¬ 
nomiques. Among the most active critics of 
the views represented by Bastiat may be men¬ 
tioned the names of Proudhon, Lassalle, 
Marlo, and Marx. (a.t.h.) 
Economic Law : Ger. Gesetz des mensch¬ 
lichen Verkehrs, ökonomisches Gesetz ; Fr. 
loi économique ; Ital. legge economica. A 
universal proposition relating to wealth : e. g. 
law of diminishing return ; law of supply and 
demand. 
The earliest students of political economy 
regarded their subject as an art, and often 
thought of economic laws as matters of human 
enactment. The economists of the early part 
of the present century went to the other ex¬ 
treme. Having discovered certain sequences 
of cause and effect, they thought that these 
sequences applied to a wider range of places 
and times than was actually the case. In 
other words, they overlooked the conditional 
character of these laws. They are universal 
in the sense that they are not subject to 
exceptions ; but they are to be stated in 
narrowly defined terms rather than in loose 
or broad ones. In the view now generally 
held, the conditions of their applicability are 
determined by natural selection. The struggle 
for existence between different groups creates 
economic types ; and so far as an economic 
law involves an assumption as to human 
motives, its application may be limited by 
the extent of the conditions which create 
and perpetuate the type to which a certain 
motive belongs. 
Literature : Bagehot, Postulates of Eng. 
Polit. Econ. (a.t.h.) 
Economic Mean : see Economic Motive. 
Economic Method : Ger. ökonomische 
Methode ; Fr. méthode économique ; Ital. 
metodo economico. The logical processes 
habitually employed by an investigator for 
the discovery or development of laws relating 
to wealth. These processes fall into two 
groups—deductive methods, which start from 
generalizations as to the conduct of individuals ; 
and historical methods, which start from ob¬ 
servation of the conduct of masses. 
Down to the end of the last century the 
dominant methods were historical, though 
the French and English economists both made 
much use of deduction when it suited their 
purpose. Ricardo’s work, on the other hand, 
was rigorously deductive, and so was that of 
Malthus. Deductive methods were carried 
to an almost absurd extreme by the ‘ ortho¬ 
dox ’ writers of the first half of the 19th 
century. John Stuart Mill showed a health¬ 
ful reaction from this extreme ; and Mill’s 
use of historical method was carried yet 
further by a group of German writers of the 
third quarter of the century (Knies, Koscher, 
Brentano, Schmoller, Cohn, &c.), who called 
themselves by the distinctive name ‘ Historical 
school.’ About 1870a counter-reaction toward 
deductive methods made itself felt, headed 
by Menger in Austria, and by the Mathe¬ 
matical Economists (q. v.) of all countries 
of Europe. At present the leading economists 
make use of both deductive and historical 
methods, being guided in their choice by the 
character of the problems under investigation. 
Literature : Keynes, Scope and Method of 
Polit. Econ. (a.t.h.) 
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