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POLITICAL ECONOMY - present condition of the study of political economy seems to prescribe, as most suitable for these pages, a treatment of the subject different front that adopted in relation to other departments of knowledge. There pre-vails wide-spread dissatisfaction with the existing state of economic science, and much difference of opinion both as to its method and as to its doctrines. There is, it) fact, reason to believe that it has now entered on a transition stage, and is destined ere long to undergo a considerable transformation. Hence it has appeared to be unseasonable, and therefore inexpedient, to attempt in this place a new dogmatic treatise on political economy. What is known as the " orthodox " or " classical " systetn, though in our time very generally called in question, is to be found set out in numerous text-books accessible to every one. Again, some of the most important special branches of economics are so fully explained and discussed in other parts of the present work (see BANKING, EXCHANGE, FINANCE, MONEY, &C.) as to dispense with any further treatment of them here. It has been thought that the mode of handling the subject most appropriate to the circumstances of the case, and likely to be most profitable, would be that of tracing historically from a general point of view the course of speculation regarding economic phenomena, and contemplating the suc-cessive forms of opinion concerning them as products of the periods at which they were respectively- evolved.
Such a study is in harmony with the best intellectual tendencies of our age, which is, more than anything else, characterized by the universal supremacy of the historical spirit. To such a degree has this spirit permeated all our modes of thinking that with respect to every branch of knowledge, no less than with respect t-o every institution and every form of human activity, we almost instinctively ask, not merely what is its existing condition, but what were its earliest discoverable germs, and what has been the course of its development ? The assertion of J. B. Say that the history of political economy is of little value, being for the most part a record of absurd and justly exploded opinions, belongs to a sy-stein of ideas already obsolete, and requires at the present time no formal refuta-tion. It deserves notice only as reminding us that we must discriminate between history and antiquarianism : what from the first had no significance it is mere pedantry to study now. We need concern ourselves only with those modes of thinking which have prevailed largely and seriously influenced practice in the past, 'or in which We can discover the roots of the present and the future.
When we thus place ourselves at the point of view of history, it becomes unnecessary- to discuss the definition of political economy, or to enlarge on its method, at the out-set. It will suffice to conceive it as the theory of social wealth, or to accept provisionally Say's definition which makes it the science of the production, distribution, and consumption of wealth. Any supplementary- ideas which require to be taken into account will be suggested in the progress of our survey, and the determination of the proper method of economic research will be treated as one of the principal results of the historical evolution of the science.
The history of political economy must of course be dis-tinguished from the economic history of mankind, or of any separate portion of our race. The study of the suc-cession of economic facts themselves is one tiling ; the study of the succession of theoretic ideas concerning the facts is another. And it is with the latter alone that we are here directly concerned. But these two branches of research, though distinct, yet stand irr the closest relation to each other. The rise and the form of economic doctrines have been largely conditioned by the practical situation, needs, and tendencies of the corresponding epochs. With each important social change new economic questions have presented themselves ; and the theories prevailing in each period have owed much of their influ-ence to the fact that they seemed to oiler solutions of the urgent problems of the age. Again, every thinker, however in some respects he may sta,nd above or before his contemporaries, is yet a. child of his time, and cannot be isolated from the social medium in which lie lives and inoves. He will necessarily be affected by the circutn-stances which surround him, and in particular by the practical exigencies of which his fellows feel the strain. This connexion of theory with practice has its advantages and its dangers. It tends to give a real and positive character to theoretic inquiry ; but it may- also be expected to produce exaggerations in doctrine, to lend undue pro-minence to particular sides of the truth, and to make transitory situations or temporary expedients be regarded as universally normal conditions.
There are other relations which we must not overlook in tracing the progress of economic opinion. The, several branches of the science of society are so closely connected that the history of no one of them can with perfect rationality be treated apart, though such a treatment is recommended - indeed necessitated - by practical utility. The movement of economic thought is constantly and powerfully affected by the prevalent mode of thinking, and even the habitual tone of sentiment, on social subjects generally. All the intellectual manifestations of a period in relation to human questions have a kindred character, and bear a certain stamp of homogeneity, which is vaguely present to our minds when we speak of the spirit of the age. Social speculation again, and economic research as one branch of it, is both through its philosophic method and through its doctrine under the influence of those simpler sciences which in the order of development precede the social, especially of the science of organic nature.
It is of the highest importance to bear in mind these several relations of economic research both to external cir-cumstance and to other spheres of contemporary thought, because by- keeping them in view we shall be led to form less absolute and therefore juster estimates of the succes-sive phases of opinion. Instead of merely- praising or blaming these according to the degrees of their accordance with a predeterinined standard of doctrine, we shall view them as elements in an ordered series, to be studied mainly with respect to their filiation, their opportuneness, and their influences. -We shall not regard each new step in this theoretic development implying an unconditional negation of earlier views, which often had a relative justi-fication, resting, as they did, on a real, though narrower, basis of experience, or assuming the existence of a ditferent social order. Nor shall we consider all the theoretic positions now occupied as definitive ; for the practical system of life which they tacitly- assume is itself susceptible of change, and destined, without doubt, more or less to undergo it. Within the limits of a sketch like the present these considerations cannot be fully worked out ; but an effort will be made to keep them in view, and to mark the relations here indicated, wherever their influence is spe,ci-ally- important or interesting.
The particular situation and tendencies of the several thinkers whose names are associated with economic doctrines have, of course, modified in a greater or less degree the spirit or form of those doctrines. Their rela-tion to special predecessors, their native temperament, their early training, their religious prepossessions and political partialities, have all had their effects. To these we shall in some remarkable instances direct attention ; but, in the main, they are, for our present purpose, secondary and subordinate. The ensemble must prepon-derate over the individual ; and the constructors of theories must be regarded as organs of a common intel-lectual and social moveme,nt.
The history of economic inquiry is most naturally divided into the three great periods of (1) the, ancient, (2) the medheval, and (3) the modern worlds. In the two former, this branch of study could exist only in a rudi-mentary state. It is evident that for any considerable development of social theory two conditions must be ful-filled. First, the phenomena must have exhibited them-selves on a sufficiently extended scale to supply adequate matter for observation, and afford a satisfactory basis for scientific generalizations; and secondly, whilst the spectacle is thus provided, the spectator must have been trained for his task, and armed with the appropriate aids and instru-ments of research, that is to say, there must have been such a, previous cultivation of the less complex sciences as will have both furnished the necessary- data, of doctrine and prepared the proper methods of investigation. Socio-logy requires to use for its purposes theorems which belong to the domains of physics and biology, and which it must borrow from their professors ; and, on the logical side, the methods which it has to employ--deductive, observational, comparative - must have been previously shaped in the cultivation of mathematics and the study of the inorganic world or of organisms less complex than the social. Hence it is plain that, though some laws or tendencies of society must have been forced on men's attention in every age by practical exigencies which could not be postponed, and though the questions thus raised must have received some empirical solution, a really scien-tific sociology must be the product of a very advanced stage of intellectual development. And this is true of the economic, as of other branches of social theory. We shall therefore content ourselves with a general outline of the character of economic thought in antiquity and the Middle Ages, and of the conditions which determined that character.