Statistics and Political Economy

Introduction

For a long time the science of politics was confounded with political economy.

But wealth is essentially independent of political organization.

Under every form of government, a state, whose affairs are well administered, may prosper. Nations have risen to opulence under absolute monarchs, and have been ruined by popular councils. If political liberty is more favourable to he development of wealth, it is indirectly, in the same manner that it is more favourable to general education.

The following confused politics with economics:

• Stewart in Chapter 1 in his “Of the Government of Mankind”
• The “Economists” sect of the last century
• J. J. Rousseau in his article “Political Economy” in the Encyclopedie

Since the time of Adam Smith, these two very distinct inquiries have been uniformly separated:

• Political economy is now confined to the science which treats of wealth.
• Politics is the science that designates:
  • the relations between a government and its people
  • the relations of different states to each other.

Like the systems of natural philosophy, the systems of political economy were formed before facts have been established. These facts were supplied by purely gratuitous assertions.

The inductive method of philosophizing from the time of Bacon has advanced the sciences so much. It has been applied more recently to the political economy. This method admits only facts which are carefully observed and the consequences rigorously deduced from them. It excludes those prejudices and authorities which have so often been interposed between man and truth.

Pure politics is a wide field.

Political economy includes agriculture, commerce and the arts, the true sources of wealth, and upon which laws have but an accidental and indirect influence.

Accordingly, it is necessary to ascertain the points of contact, or the articulations by which the different branches are united. Through this, a more exact knowledge will be obtained of whatever is peculiar to each, and where they run into one another.

But the merchant must also understand:

• the processes of trade
• the commodities in which he deals
• the countries from which they are derived, their markets
• their means of their transportation
• the values to be given for them in exchange
• the method of keeping accounts.

The second class of facts, namely, events that take place, consists of the phenomena exhibited, when we observe the manner in which things take place. It is, for instance, a fact, that metals, when exposed to a certain degree of heat, become fluid.

The manner in with things exist and take place, constitutes what is called “the nature of things”. A careful observation of the nature of things is the sole foundation of all truth.

Hence, there is a twofold classification of sciences:

1. Descriptive – this arranges and accurately designate the properties of certain objects

Examples are botany and natural history

2. Experimental – these unfold the reciprocal action of substances on each other as the connexion between cause and effect

Examples are chemistry and natural philosophy. Political economy belongs here in showing how events take place.

Both these are founded on facts and constitute an equally solid and useful portion of knowledge.

THe following are also experimental:

• the agriculturist
• the manufacturer
• the practical man of business

Adam Smith knew of these different subjects.

• But neither he, nor later writers, have guarded themselves against all other sources of confusion which made later developments not useful.

But facts that take place may be considered in two points of view; either as general or constant, or as particular or vari- able. General facts are the results of the nature of things in all analogous cases; particular facts as truly result from the nature of things, but they are the result of several operations modified by each other in a particular case.

The former are not less incontrovertible than the latter, even when apparently they contradict each other. In natural philosophy, it is a general fact, that heavy bodies fall to the earth; the water in a fountain, nevertheless, rises above it.

The particular fact of the fountain is a result wherein the laws of equilibrium are combined with those of gravity, but without destroying them.

A perfect knowledge of the principles of political economy may be obtained, inasmuch as all the general facts which compose this science may be discovered.

In statistics, this never can be the case. This latter science, like history, being a recital of facts, more or less uncertain, and necessarily incomplete.

Of the statistics of former periods and distant countries, only detached and very imperfect accounts can be furnished.

With respect to the present time, there are few persons who unite the qualifications of good observers with a situation favourable for accurate observation. The inaccuracy of the statements we are compelled to have recourse to, the restless suspicions of particular governments, and even of individuals, their ill-will and indifference, present obstacles often in surmountable, notwithstanding the toil and care of inquirers to collect minute details with exactness; and which. after all, when in their possession, are only true for an instant.

Adam Smith accordingly avows that he puts no great faith in political arithmetic which is merely the arrangement of statistical data.

In our present inquiry, the knowledge of these two classes of facts, namely, of objects that exist, and of events that take place, embraces two distinct sciences, political economy and statistics.

Political economy explains the nature of wealth from facts always carefully observed. This leads to the means of its creation, the order of its distribution, and the phenomena at tending its destruction.

Political economy, on the other hand, whenever the principles which constitute its basis are the rigorous deductions of undeniable general facts, rests upon an immoveable foundation.

General facts are based on the observation of particular facts. But upon such particular facts as have been selected from those most carefully observed, best established, and witnessed by ourselves.

When the results of these facts have uniformly been the same, the cause of their having been so satisfactorily demonstrated, and the exceptions to them even confirming other principles equally well established, we are authorised to give them as ultimate general facts, and to submit them with confidence to the examination of all competent inquirers, who may be again desirous of subjecting them to experiment.

A new particular fact, when insulated, and the connexion between its antecedents and consequents not established by reasoning, is not sufficient to shake our confidence in a general fact; for who can say that some unknown circumstance has not produced the difference noticed in their several results? A light feather is seen to mount in the air, and sometimes remain there for a long time before it falls back to the ground. Would it not, nevertheless, be erroneous to conclude that this feather is not affected by the universal law of gravitation? In political economy it is a general fact, that the interest of money rises in proportion to the risk run by the lender of not being repaid.

Shall it be inferred that this principle is false, from having seen money lent at a low rate of interest upon hazardous occasions?

The lender may have been ignorant of the risk, gratitude or fear may have induced sacrifices, and the general law, disturbed in this particular case, will resume its entire force the moment the causes of its interruption have ceased to operate. Finally, how small a number of particular facts are completely examined, and how few among them are observed under all their aspects? And in supStatistics exhibit the amount of production and of consumption of a particular country, at a designated period; its population, military force, wealth, and whatever else is susceptible of valuation. It is a description in detail.

Between political economy and statistics there is the same difference as between the science of politics and history.

The study of statistics may gratify curiosity.

But it can never be productive of advantage when it does not indicate the origin and consequences of the facts it has collected.

Statistics becomes the science of political economy when it indicates their origin and consequences.

This is why these 2 distinct sciences have hitherto been confounded.

Adam Smith’s work is an immethodical assemblage of the soundest principles of political economy, supported by luminous illustrations of highly ingenious researches in statistics, blended with instructive reflections.

But it is not a complete treatise of either science.

It is an irregular mass of curious and original speculations, and of known demonstrated truths.