production under a system of competition among small capitalists.' But in such an industry as sugar-refining, in the United States, this condition does not hold good. 'There is no normal level of competitive price based on the cost of production.'[1] The whole industrial organization takes other forms, and the mechanism of competition does not work in the fashion which English economists would assume. We have need to be doubly on our guard, since unconscious assumptions may not only affect our powers of observation, but may also be present to color the language we use in describing unfamiliar phenomena.
III. It is not easy to overrate the services which the classical economists rendered in their day to the progress of economic science, owing to the clearness of the conceptions they applied to the limited field they studied, and to the accuracy they endeavored to introduce in regard to the use of familiar languages. It was their misfortune, rather than their fault, that their manner of treating individual human nature and the mechanism of society has given some excuse for the popular misuse of their teaching. In the public mind, principles which had been legitimately put forward as convenient hypotheses for the investigation of a particular sphere have been transmuted into axioms of universal applicability. But when we turn to other subjects of economic inquiry, the limitations, and consequent defects, of the classical school become more apparent. The idea of the growth of society was not easily brought within the limits of a system which makes so much use of terminology borrowed from physics. Some of the precursors of economic science in England had treated national life as organic, and had relied on biological conceptions. Hobbes had devoted a chapter of the 'Leviathan' to the nutrition and procreation of States;[2] and Sir William Petty, who had held the chair of anatomy in the University of Oxford, entitled an important statistical work 'The Political Anatomy of Ireland.' But another and less fruitful habit of thought existed side by side; the mercantilists, in discussing the benefits of commerce, wrote much of the balance of trade; and the physical analogies they introduced—especially the notion of equilibrium—exerted a dominating influence over the form which the science took in the hands of the classical economists. These last were so much absorbed in the discussion of the mechanism of exchange and the mechanism of society that they failed even to recognize that it is essentially organic. As has been well said, "the classical economists belonged to the pre-Darwinian age. We differ from them in our whole view of life and of the ends of life—in our whole mental method as well as in our possession of the practical experience of the last sixty years."[3] It is only in recent
