Principles of western civilisation

x THE MODERN WORLD-CONFLICT 381

What was the nature of the subordinating cause here represented? Schmoller gives us no real answer to this question.‘ So far as any explanation is attempted, he simply identifies the principle with © a tendency to what he calls State-making or Nattonmaking. To answer the question we must turn to the consideration of the economic process in the most advanced phase it has yet attained, namely, as we see it represented at the present day, principally within the pale of the English-speaking world.

Now, it has been already remarked that in the business and industrial life of the United States at the present time, the fact that most profoundly

+ The failure at this point is the characteristic weakness of the German Historical School of Economics. As a recent writer puts it, in words which, however, must be held to apply rather to Schmoller’s predecessors :— ‘‘ The insistence on data could scarcely be carried to a higher pitch than it was carried by the first generation of the Historical school; and yet no economics is farther from being an evolutionary science than the received economics of the Historical school. The whole broad range of erudition and research that engaged the energies of that school commonly falls short of being science, in that, when consistent, they have contented themselves with an enumeration of data and a narrative account of industrial development, and have not presumed to offer a theory of anything or to elaborate their resulls into a consistent body of knowledge” (Quarterly Journal of Economics, vol. xii.: “‘Why is Economics not an Evolutionary Science (Thorstein Veblen)). On the other hand, it is interesting to note how equally characteristic has been the weakness on the historical side of the English empirical school of economics which has come down through Adam Smith and the Manchester school. ‘It can hardly be doubted,” says Professor W. J. Ashley (‘‘ Historical School of Economics,” Dzct. Pol. Econ.) “ that (Adam) Smith’s frame of mind was, on the whole, essentially unhistorical, and that historical narrative and inductive reasoning were with him subordinate to a deductive movement of thought.”

* Schmoller notices at the beginning that the process of economic assimilation and emancipation proceeded most quickly in those areas in which it coincided with the movement towards nationhood (p. 16). At the stage at which the process of development reached the mercantile system, he asserts that, ‘* The essence of the system lies not in some doctrine of money, or in the balance of trade; not in tariff barriers, protective duties, or navigation laws ; but in something far greater . . . In its innermost kernel it is nothing but state-making” (The Mercantile System, pp. 50, 51).