9. THE VAGARIES OF RECENT POLITICAL ECONOMY: A REPLY AND A REJOINDER.

PROF. NICHOLSON'S article in the last issue of the 'Quarterly Review,' entitled 'The Vagaries of Recent Political Economy,' consists, for the most part, of a spirited attack upon my bookWealth and Welfare.' As the author occupies an authoritative position in economic science, I have asked the editor to allow me a brief space in which to reply.

Among the detailed criticisms there are two whose justice I admit. I have made use of a sentence from Adam Smith in a way that is unfair to that great writer; and I have made a statement about the classical economists' views concerning the 'quality of the population,' which misrepresents what I intended to convey and is verbally incorrect. I am grateful to Prof. Nicholson for pointing out these errors. A third detailed criticism is to the effect that there is in my book 'confusion as regards the use of the idea of elasticity.' In order to establish this, Prof. Nicholson cites 'two important examples.' One of these is my argument that the demand for labour in any one country is likely to be elastic, because, if the supply price of labour falls, capital will be attracted from abroad. Prof. Nicholson's comment is, 'Could any conclusion be more remote from the facts regarding British labour and foreign capital?' The obvious answer is that the notion of attracting capital from abroad was intended, in the context, to include that of preventing capital from going abroad which would otherwise have stayed at home. And, in any case, even if this comment contained a real argument against the thesis that the demand for labour in England is elastic, it could not possibly reveal confusion in my use of the term elasticity. The other important example' is an illustration drawn from banking, which I employ to explain a rather difficult argument. Prof. Nicholson's comment is, not that there is any error either in the argument or in the illustration, but that, 'by making various unreal assumptions,' I am led to a paradoxical result far removed from a certain practical problem, which Prof. Nicholson introduces, but which I have not discussed. What relevance this comment can have to the charge of confusion in the use of terms, which it purports to support, I am unable to perceive.

Another criticism is that, in my discussion of M. Rignano's proposal for a new form of death duty, 'no mention is made of the possibility that the resources [which are threatened with taxation] might be removed to some other country, e.g., Turkey or China, where the new economy was not so

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rampant.' Prof. Nicholson is mistaken. This possibility is examined in some detail in the immediate context ('Wealth and Welfare,' p. 378). Again, Prof. Nicholson finds something wrong with my discussion of joint costs in relation to railway rates but, as I am unable to gather from his comment, what precisely he considers to be wrong, I cannot answer the criticism. Furthermore, this matter has been debated at length in a discussion between that eminently fair controversialist, Prof. Taussig, and myself in recent numbers of the Quarterly Journal of Economics.' Again, he remarks: 'If Prof. Pigou had really appreciated the work of Sidgwick, he would have been saved from some unfortunate inconsistencies and from some appalling lacunæ in his argument.' As, however, no example of these unfortunate inconsistencies and appalling lacunæ is advanced, I must again, perforce, be silent. Yet again, my critic asserts that I base upon the 'forbidding' expression 'marginal equality of net products,' a species of mathematical socialism.' The expression I employ is equality of marginal net products,' which may be forbidding but is, at all events, less ungrammatical than the one Prof. Nicholson attributes to me. As to Socialismmathematical or other-the validity of his charge depends upon the meaning of its terms. If Socialism is intended to signify that the State should own and operate the means of production, distribution and exchange-and this, after all, is the usual sense in which the word is employed-no jury, I make bold to say, would find me guilty. If, however, Prof. Nicholson means by Socialism the view that the State should requisition superfluities from the very rich for the needs of the very poor, so long as it can do this by means which do not indirectly sap the sources of future wealth, then the charge is true, and I welcome it as proven. Lastly, there is the statement, several times repeated, that the book is marred by a 'straining after the appearance of originality'; and the suggestion is not veiled that deliberate attempts are made in it to foist off borrowed ideas as novelties of my own. If this is really what is meant, I do not think that I am called upon to reply to such a charge.

Prof. Nicholson's more general criticisms may be condensed into the broad statement that the book is unduly difficult to understand. The mathematics, he says, are not explained; technical terms are employed as if they needed no definition; there is a studied avoidance of ordinary modes of expression; in short, the whole thing is exceedingly obscure. Now, in a matter of this kind, it is, of course, very difficult for an author to form a fair judgment of his own work. The

suggestion that the mathematical diagrams-of which, so far as I recollect, the book contains less than a dozen-ought to have been relegated to footnotes, is not improbably correct; and I am well prepared to believe that the exposition of the main argument is frequently less lucid than a more skilled literary craftsman could have made it. But, after all, speaking broadly, in matters that are essentially difficult, every writer has to choose between the Scylla of severity and the Charybdis of unconscionable length. Prof. Nicholson, in this same article, censures Mr Wicksteed for expanding his 'Common Sense of Political Economy' to 700 pages. M. Colson's great work, which he justly praises for its lucidity, runs to six large volumes, containing considerably more than 2000 pages. And Prof. Nicholson's own book, 'The Principles of Political Economy,' though it does not profess to enter deeply into the subtler difficulties of the subject, nevertheless appears within three expansive covers. In my book I have chosen the other horn of this dilemma, thereby throwing upon the attention of readers who are not professional economists a somewhat heavy strain. This I did knowingly, and the complaint therefore leaves me cold.

It was, however, my hope that readers who are professional economists, and who, therefore, presumably are acquainted with the terminology and general method of Dr Marshall's 'Principles,' would prefer a short precipitous route to long and tedious detours. Prof. Nicholson's condemnation disappoints this hope. If, therefore, opportunity offers, I promise him an earnest effort to make the track more smooth. A. C. PIGOU.

NOTE BY PROFESSOR NICHOLSON.

In a 13th century French romance entitled 'Flamenca' we are told that the lady and her lover could only exchange one word or two every Sunday. 'Ils ne pouvaient se dire qu'un mot ou deux chaque dimanche; mais cela suffit. Guillaume avait engagé la conversation en disant "Ai las" (Helas !); Flamenca, huit jours plus tard, murmura: "Que plans?" (De quoi vous plaignez-vous ?) . . .' and so the exchanges went on over many a Sunday. But even in old romance once a quarter would have seemed too long a period for questions and replies. I published my Ai las! on Prof. Pigou's book last October, and his Que plans? (What is wrong with it?) can only appear after the lapse of three months. I have read the interchange of comments between Professors Taussig and Pigou in the Quarterly Journal of Economics,' and I cannot

At the same

think that the example is one to be followed. time I should be most unwilling to seem discourteous to my Cambridge colleague. I can assure him it was my intention to be quite fair; and, on re-reading the review, I cannot find anything more unusual than a marked opposition between us on the value of certain methods and ideas and modes of presentation. In my opinion he has darkened counsel by new curves and new words, and generally by 'straining after originality' instead of absorbing the old learning of such a master of subtlety as Sidgwick.

I did not intend to say that Prof. Pigou had deliberately taken certain ideas from other writers and palmed them off as his own; the real burden of my complaint was that he had not taken the trouble to master this old learning, not that he had taken pains to appropriate it in a disguised form. He has only to read through, with the attention that they deserve, Sidgwick's books on the 'Principles of Political Economy' and on the Elements of Politics' to discover for himself the inconsistencies and the lacunæ of which I complain. And he has only to think out clearly the meaning of a very elastic demand for British labour to see that something is wrong with the mathematics. There is nothing very heinous or improbable in the mathematics going wrong, and it is always as well to test the mathematics by real examples. Cournot was a man of genius of the first rank, a great mathematician and also a master of philosophical ideas; and yet some of his results have been questioned by Prof. Edgeworth and other mathematical economists. Does Prof. Pigou himself believe Cournot was right in his theory of Protection?

In conclusion, I may be permitted to say that my main object was not simply to attack Prof. Pigou's book, but to point out that mathematical methods had been carried too far, and that through the mathematical bias important parts of Political Economy have been neglected. I quite agree that the mathematical method has its uses; but it has also its limitations.

J. S. NICHOLSON.

Vol. 220.-No. 438.

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Art. 10.-MOTOR TRANSPORT: A NATIONAL QUESTION.

1. Motor Transport and the Empire. Published by the Imperial Motor Transport Council, Royal Automobile Club, Pall Mall, 1913.

2. Petroleum and its Products. By Sir Boverton Redwood, Bart. London: Griffin, 1913.

3. Oil Fuel. By Prof. V. B. Lewes. (The Nation's Library.) Glasgow: Collins, 1913.

'WE are engaged in assisting as great a revolution as was brought about by the invention of printing, or by the discovery of the applicability of steam either to railway or to shipping transport, or by the invention of the electric telegraph.'

The words quoted above formed the keynote of the opening speech delivered by Lord Crewe at the first meeting of the Imperial Motor Transport Conference, which was held in London during July of last year. It is noticeable that in his enumeration of developments comparable in importance with that of motor transport, all the examples which occurred to the speaker were inseparably connected with improvements in means of communication. On such improvements, in fact, the progress of civilisation depends; and it is therefore fitting that when, as now, we are brought face to face with a great and inevitable change, we should consider how far that change may be utilised for the national welfare as a whole. We have before us a subject which cannot be ignored, whether we are discussing questions of defence or questions of commerce, the welfare and efficiency of the Imperial forces, the development of the younger Dominions and Colonies, or the enlargement of the trade and commerce of the Empire as a whole.

When we observe that the future of road transport is one and the same thing as the future of the motor vehicle, and that in many circumstances the latter is inevitably bound up with the employment of the internal combustion engine, we cannot fail to realise at once the new significance of the fuel question. So long as coal for the generation of steam in boilers formed the main requirement of power producers, we in Great Britain were wholly independent of external supplies. We were,