greater production. The increased volume of the supply thus produced inevitably forces down the price till it sinks to the point of cost. If circumstances (such, for example, as miscalculation and an over-great supply) depress the price below the point of cost, then the discouragement of further production presently shortens the supply and brings the price up again. Price is thus like an oscillating pendulum seeking its point of rest, or like the waves of the sea rising and falling about its level. By this same mechanism the quantity and direction of production, argued the economists, respond automatically to the needs of humanity, or, at least, to the "effective demand," which the classicist mistook for the same thing. Just as much wheat or bricks or diamonds would be produced as the world called for; to produce too much of any one thing was to violate a natural law; the falling price and the resulting temporary loss sternly rebuked the producer.

In the same way the technical form and mechanism of production were presumed to respond to an automatic stimulus. Inventions and improved processes met their own reward. Labor, so it was argued, was perpetually being saved by the constant introduction of new uses of machinery.

By a parity of reasoning, the shares received by all the participants and claimants in the general process of production were seen to be regulated in accordance with natural law. Interest on capital was treated merely as a particular case under the general theory of price. It was the purchase price needed to call forth the "saving" (a form, so to speak, of production) which brought the capital into the market. The "profits" of the employer represented the necessary price paid by society for his services, just enough and not more than enough to keep him and his fellows in operative activity, and always tending under the happy operation of competition to fall to the minimum consistent with social progress.

Rent, the share of the land-owner, offered to the classicist a rather peculiar case. There was here a physical basis of surplus over cost. But, granted the operation of the factors and forces concerned, rent emerged as a differential payment to the fortunate owner of the soil. It did not in any way affect prices or wages, which were rendered neither greater nor less thereby. The full implication of the rent doctrine and its relation to social justice remained obscured to the eye of the classical economist; the fixed conviction that what a man owns is his own created a mist through which the light could not pass.

Wages, finally, were but a further case of value. There was a demand for labor, represented by the capital waiting to remunerate it, and a supply of labor represented by the existing and increasing working class. Hence wages, like all other shares and factors, corresponded, so it was argued, to social justice. Whether wages were high or low, whether hours were long or short, at least the laborer like everybody else "got what was coming to him." All possibility of a general increase of wages depended on the relation of available capital to the numbers of the working men.

Thus the system as applied to society at large could be summed up in the consoling doctrine that every man got what he was worth, and was worth what he got; that industry and energy brought their own reward; that national wealth and individual welfare were one and the same; that all that was needed for social progress was hard work, more machinery, more saving of labor and a prudent limitation of the numbers of the population.

The application of such a system to legislation and public policy was obvious. It carried with it the principle of laissez-faire. The doctrine of international free trade, albeit the most conspicuous of its applications, was but one case under the general law. It taught that the mere organization of labor was powerless to raise wages; that strikes were of no avail, or could at best put a shilling into the pocket of one artisan by taking it out of that of another; that wages and prices could not be regulated by law; that poverty was to a large extent a biological phenomenon representing the fierce struggle of germinating life against the environment that throttles part of it. The poor were like the fringe of grass that fades or dies where it meets the sand of the desert. There could be no social remedy for poverty except the almost impossible remedy of the limitation of life itself. Failing this the economist could wash his hands of the poor.

These are the days of relative judgments and the classical economy, like all else, must be viewed in the light of time and circumstance. With all its fallacies, or rather its shortcomings, it served a magnificent purpose. It opened a road never before trodden from social slavery towards social freedom, from the mediæval autocratic régime of fixed caste and hereditary status towards a régime of equal social justice. In this sense the classical economy was but the fruition, or rather represented the final consciousness of a process that had been going on for centuries, since the breakdown of feudalism and the emancipation of the serf. True, the goal has not been reached. The vision of the universal happiness seen by the economists has proved a mirage. The end of the road is not in sight. But it cannot be doubted that in the long pilgrimage of mankind towards social betterment the economists guided us in the right turning. If we turn again in a new direction, it will at any rate not be in the direction of a return to autocratic mediævalism.

But when all is said in favor of its historic usefulness, the failures and the fallacies of natural liberty have now become so manifest that the system is destined in the coming era to be revised from top to bottom. It is to these failures and fallacies that attention will be drawn in the next chapter.