definite character; to the established order of an organized state or other community, at a stage of development which in its main features can be recognized. In all economic investigation assumptions must be made, but we must see that they are legitimate in view of the actual life and character of the community or communities which are the subject of investigation. In common with other sciences, economics makes use of “abstractions”; but if for some problems we employ symbolic processes of reasoning, we must keep clearly in view the limits of their significance, and neither endow the symbols with attributes they can never possess, nor lose sight of the realities behind them. Every hypothesis must be tested by an appeal to the facts of life, and modified or abandoned if it will not bear examination, unless we are convinced on genuine evidence that it may for a time be employed as a useful approximation, without prejudice to the later stages of the investigation we are conducting.
We shall best illustrate the character and method of economic reasoning by examples, and for that purpose let us take first of all a purely historical problem, namely, the effect on the wage-earners of the wages clauses of the Statute of Apprenticeship (1563). It is at once obvious that we An illustration of economic method.are dealing not with an abstract scheme of regulation in a hypothetical world, but with an act of parliament nominally in force for two hundred and fifty years, and applicable to a great variety of trades whose organization and history can be ascertained. The conclusions we reach may or may not modify any opinions we have formed as to the manner in which wages are determined under modern conditions. For the time being such opinions are irrelevant to the question we are investigating, and the less they are in our minds the better. There is no reason why we should apply to this particular act a different method of inquiry from that we should apply to any other of the numerous acts, of more or less economic importance, passed in the same session of parliament. The first step is to see whether there is a prima facie case for inquiry, for many acts of parliament have been passed which have never come into operation at all, or have been administered only for a short time on too limited a scale to have important or lasting results. The justices were authorized to fix wages at the Easter quarter sessions. Did they exercise their powers? To answer this question we must collect the wages assessments sanctioned by the magistrates. This is a perfectly simple and straightforward operation, involving nothing more than familiarity with records and industry in going through them. Without having recourse to any elaborate process of economic reasoning, by confining our attention to one simple question, namely, what happened, we can establish conclusions of the greatest interest to economic historians and, further, define the problem we have to investigate. We can show, for example: (1) that the Statute of Apprenticeship did not stand alone; it was one of a long series of similar measures, beginning more than two centuries before, which in their turn join on to the municipal and gild regulations of the middle ages; one of an important group of statutes, more or less closely interwoven throughout their history, administered by local authorities whose functions had grown largely in connexion with this legislation and the gradual differentiation of the trades and callings to which it related. (2) That wages were regulated with much greater frequency during the reigns of Elizabeth, James I. and Charles I. than at any later period. (3) That they were regulated in some counties and not in others. (4) That in the counties and towns where they were regulated the action of the magistrates was in general spasmodic, and rarely continuous for a long series of years. (5) That the magistrates used their powers sometimes to raise wages, sometimes to force them down. (6) That the local variations of wages and prices were what we should call excessive, so that the standard of comfort in one district was very different from that of others. (7) That the wages assessments group themselves round certain short periods, coincident in many instances with high prices, increase of poverty, and other causes of exceptional action. (8) That what we may call, with the above limitations, the effective period of the act terminates with the outbreak of the Civil War. (9) That subsequent to that period organic changes in the industries affected, coupled with the incompetence of parliament to adapt the old legislation to new conditions, and the growing acceptance of the doctrine of laissez faire, brought about a general disuse of the statute, though isolated attempts to enforce it were made and new acts applicable to certain trades were passed in the 18th century. (10) For more than one hundred years before the repeal of the act, trade unions and other forms of voluntary association amongst wage-earners, combinations amongst employers, collective agreements, customary regulations, were established in many of the important trades of the country. But these conclusions, after all, suggest more difficulties than they remove, for they show that our inquiry, instead of presenting certain well-marked features which can be readily dealt with, has to be split up into a number of highly specialized studies: the investigation of rates of wages, prices and the standard of comfort in different localities, bye-industries, regularity of employment, the organization of particular trades, the economic functions of local authorities, apprenticeship and a host of other subjects. Moreover, all these subjects hang together, so that it seems impossible to come to a decision about one of them without knowing all about the others.
It is a comparatively simple thing to state the question to which we want an answer, but extremely difficult to define the exact nature of the evidence which will constitute a good answer; easy enough to say we must try hypothesis after hypothesis, and test each one by an appeal to the facts, but a man may easily spend his life in this sort of thing and still leave to his descendants nothing more than a legacy of rejected hypotheses. Every volume of records we look through contains a mass of detailed information on the economic life of England in the period we are studying. How much of it is relevant to the subject of inquiry? What is to be the principle of selection? How shall we determine the relative weight and importance of different kinds of relevant evidence? As in modern problems, so in those of past times, a man requires for success qualities quite distinct from those conferred by merely academic training and the use of scientific methods. A correct sense of proportion and the faculty of seizing upon the dominant factors in an historical problem are the result partly of the possession of certain natural gifts in which many individuals and some nations are conspicuously wanting, partly of general knowledge of the working of the economic and political institutions of the period we are studying, partly of what takes the place of practical experience in relation to modern problems, namely, detailed acquaintance with different kinds of original sources and the historical imagination by which we can realize the life and the ideals of past generations. These qualities are required all the more because, in order to make any further progress with such an inquiry as we have suggested, we have deliberately to make use of abstraction as an instrument of investigation.
Let us see how this will work out. Suppose we have selected one of the numerous subsidiary problems suggested by the general inquiry, and obtained such full and complete information about one particular industry that we can tabulate the wages of the workers for a long series The plan of a general theory.of years. We may do the same for other industries, some of them coming under the Statute of Apprenticeship, others not. If all the industries belong to one economic area over which, so far as we can tell from general statistics of wages and prices, and other information, fairly homogeneous conditions prevailed, we may be able to reach some useful conclusions as to the operation of the act. But it would be absurd to suppose that we could reach those conclusions by simple reference to the trades themselves. We cannot assume that the fluctuations in wages were due to the action or inaction of magistrates without the most careful examination of the other influences affecting the trades. In economic affairs the argument post hoc propter hoc never leads to the whole truth, and is frequently quite misleading. We cannot suppose that the policy of the Merchant Adventurers’ Company had nothing to do with the woollen industry; that the export trade in woollen cloth was quite independent of the
