Nassau William Senior - Senior's View On Political Economy

Senior's View On Political Economy

Senior regards political economy as a purely deductive science, all the truths of which are inferences from four elementary propositions. It is, in his opinion, wrongly supposed by JS Mill and others to on a hypothetic science founded, that is to say, on postulates not corresponding with social realities. The premises from which it sets out are, according to him, not assumptions but facts. It concerns itself, however, with wealth only, and can therefore give no practical counsel as to political action: it can only suggest considerations which the politician should keep in view as elements in the study of the questions with which he has to deal. According to neo-classical economics, the conception of economics as altogether deductive is certainly erroneous. But deduction has a real, though limited, sphere within it. Hence, though the chief difficulties of the subject are not of a logical kind, yet accurate nomenclature, strict definition and rigorous reasoning are of great importance. To these Senior gave special attention, and, notwithstanding occasional pedantries, with very useful results.

In several instances he improved the forms in which accepted doctrines were habitually stated. He also did excellent service by pointing out the arbitrary novelties—and frequent inconsistencies of terminology which deface Ricardo's principal works, for example, his use of value in the sense of cost of production, and of high and low wages in the sense of a certain proportion of the product as distinguished from an absolute amount, and his peculiar employment of the epithets fixed and circulating as applied to capital. He shows, too, that in numerous instances the premises assumed by Ricardo are false. Thus he cites the assertions that rent depends on the difference of fertility of the different portions of land in cultivation; that the laborer always receives precisely the necessaries, or what custom leads him to consider the necessaries, of life; that, as wealth and population advance, agricultural labor becomes less and less proportionately productive; and that therefore the share of the produce taken by the landlord and the laborer must constantly increase, whilst that taken by the capitalist must constantly diminish; and he denies the truth of all these propositions.

Besides adopting some terms, such as that of natural agents, from Say, Senior introduced the word abstinence which, though obviously not free from objection, is for some purposes useful to express the conduct of the capitalist which is remunerated by interest; but in defining cost of production as the sum of labor and abstinence necessary to production he does not seem to see that an amount of labor and an amount of abstinence are disparate, and do not admit of reduction to a common quantitative standard. He added some important considerations to what had been said by Adam Smith on the division of labor. He distinguishes usefully between the rate of wages and the price of labor. But in seeking to determine the law of wages he falls into the error of assuming a determinate wage-fund, and states as an economic truth what is only an identical proposition in arithmetic.

Whilst entertaining such an exaggerated estimate of the services of Malthus that he extravagantly pronounces him as a benefactor of mankind on a level with Adam Smith, he yet shows that he modified his opinions on population considerably in the course of his career, regards his statements of the doctrine with which his name is associated as vague and ambiguous, and asserts that, in the absence of disturbing causes, subsistence may be expected to increase in a greater ratio than population. It is urged by HXC Penn, and must, we think, be admitted, that by his isolation of economics from morals, and his assumption of the desire of wealth as the sole motive-force in the economic domain, Senior, in common with most of the other followers of Smith, tended to set up egoism as the legitimate ruler and guide of practical life. It is no sufficient answer to this charge that he makes formal reserve in favor of higher ends. From the scientific side Cliffe Leslie has abundantly proved the unsubstantial nature of the abstraction implied in the phrase desire of wealth, and the inadequacy of such a principle for the explanation of economic phenomena.