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the altered hypotheses may not always be easy to work with, and that
the ideal of mathematical procedure may not be attainable. It might
be added that as our general command over the processes of deduc-
tive reasoning in economics increases, the greater will be our success
in working from these modified assumptions.
142 The notion that the whole of the science is built up from just one or
two premisses has always been seized upon for comment by adverse
critics. Compare, for instance, Mr Frederic Harrison s criticism that
political economy has two postulates production as the sole end,
competition as the sole motive postulates of which the human race
and its history can show no actual example.
143 The enumeration of postulates proposed by Bagehot was unfortu-
nately never completed. Enumerations of the kind referred to will,
however, be found in Senior, Political Economy, p. 26; Cairnes, Logi-
cal Method, Lecture 2, §2, and Lecture 3, §1; Cossa, Introduction to
the Study of Political Economy, Theoretical Part, Chapter 6, §2;
Sidgwick, Principles of Political Economy, 3rd edition, Introduc-
tion, Chapter 3, §4. Compare also the postulates formulated by
Wagner, as given in the note on page 241. It may be useful to quote
from Senior and Cairnes. Senior says, We have already stated that
the general facts on which the science of political economy rests are
comprised in a few general propositions, the result of observation or
consciousness. The propositions to which we then alluded are these:
1. That every man desires to obtain additional wealth with as little
sacrifice as possible. 2. That the population of the world, or, in other
words, the number of persons inhabiting it, is limited only by moral
or physical evil, or by fear of a deficiency of those articles of wealth
which the habits of the individuals of each class of its inhabit. ants
lead them to require. 3. That the powers of labour, and of the other
instruments which produce wealth, may be indefinitely increased by
using their products as the means of further production. 4. That, ag-
ricultural skill remaining the same, additional labour employed on
212/John Neville Keynes
the land within a given district produces in general a less proportion-
ate return, or, in other words, that though, with every increase of the
labour bestowed, the aggregate return is increased, the increase of
the return is not in proportion to the increase of the labour. Cairnes
indicates the following as the ultimate premisses of economic sci-
ence, first, the general desire for physical well-being, and for wealth
as the means of obtaining it ; next, the intellectual power of judging
of the efficacy of means to an end, along with the inclination to reach
our ends by the easiest and shortest means ; thirdly, those propensi-
ties which, in conjunction with the physiological conditions of the
human frame, determine the laws of population ; and lastly, the
physical qualities of the soil and of those other natural agents on
which the labour and ingenuity of man are employed. It is clear that
such enumerations as these cannot lav claim to completeness. Some
postulate is, for example, essential in re lard to the nature of the
social customs and legal institutions relating to property. Some pos-
tulate is also requisite in regard to the variation of utility with amount
of commodity; for it would not be possible from Senior s or Cairnes s
premisses alone to deduce laws of demand. Even the principle of free
competition is not clearly enunciated. This principle is indeed so com-
plex, and involves so many different subsidiary assumptions in dif-
ferent connexions, that it would be difficult to analyse once for all its
full content in the various economic reasonings in which it plays a
part.
A well-arranged enumeration of postulates is given by Mr W. E. Johnson
in his article on the Method of Political Economy in Mr Palgrave s
Dictionary of Political Economy. Mr Johnson does not profess that
any complete enumeration of premisses is possible. Agreeing, how-
ever, with the view taken in the text, he considers that there are some
half dozen premisses which may be regarded as typical and which
are almost universally applied. Of these six data, two belong to each
of the divisions, physical, psychological, and social. (1) The two physi-
cal or natural laws presupposed are the law of Diminishing Returns,
which arises from the necessity of having recourse to inferior agents
of production, or to their use under less advantageous circumstances;
and the law of Increasing Returns, which results from the increased
possibilities of industrial organization under extension of supply. But
these laws represent tendencies ascertained by ordinary observation,
which work in opposite directions. Hence more exact knowledge as
The Scope and Method of Political Economy/213
to the magnitude of the forces in particular circumstances has to be
supplied by further detailed observation. (2) The two psychological
data are general expressions of the nature of Demand and of Supply,
so far as these depend on the characters of individuals. The law of
demand is to the effect that the utility afforded by any increment of
any kind of desired object diminishes with increase of the amount
possessed: the law of supply is to the effect that every one tries to
procure material well-being with the least possible sacrifice. These
assumptions are common to almost all economic reasonings of a de-
ductive type, though they are not always explicitly formulated. Here,
as in the case of the physical presuppositions, further detailed obser-
vation is required to determine the precise degree in which these psy-
chological forces act under any circumstances. In particular, the law
of supply requires to be made more definite by an estimate of the
influences of habit, inertia, ignorance, or custom. which materially
affect its application. (3) The two sociological data relate to the coa-
litions of freedom and restraint under which the economic activitity
of a community take place. Speaking generally, it is assumed on the
one hand that individual action is controlled by certain legalised in-
stitution with regard to property and, on the other hand, that indi-
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