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Economics - Of Scientific Method

( Originally Published Early 1900's )

As a general rule the opinions of men on those subjects which immediately concern their interests as individuals, and in which the truth of the conclusions can be speedily tested by experience, are sound and correct. But when men step outside this limited field by entering upon the investigation of wider-reaching subjects and more remote interests, error is the rule rather than truth. The tenon of this proneness to error is that in all such cases there is but one way of being right, while the ways of being wrong are innumerable. A course of reasoning may change from right to wrong at any step, and thus the' chances of being right at the end are very small unless thought is aided by correct guiding principles. Such principles are afforded by scientific method.

In treating this subject we must begin by correcting a serious misapprehension. This misapprehension consists in thinking of scientific method as something wholly different from the method of drawing conclusions in everyday life. Although the following may not be considered a logically exact definition of the subject, it is a description which the student should carefully bear in mind.

Scientific method consists in applying to those subjects which lie without the range of our immediate experience those same common-sense methods of reasoning which successful men of the world apply in judging of matters which concern their own interests.

It is not therefore some difficult and intricate theory to be learned, but rather the practice of a restraining discipline to keep the mind from wandering into vague speculation, and confine it to the analysis of each special case in hand. A distinguished English writer condensed the above description by defining science as simply " organized common-sense."

The Problem of Scientific Method. Let us now look at the problem which faces us with a view of seeing how we are to apply commonsense methods to its solution. The situation is this : every man who reads the newspapers transacts business, and studies history is brought from day to day into contact with a great mass of facts. He sees going on before him the great operations of manufacture and commerce which we have summarily described in the opening chapter. The longer he lives the greater the number of events he will have in his mind. But the mere knowledge that such and such things have happened, that certain cities have been built, new states populated, new markets opened up, fluctuations in prices taken place, and particular changes in the tariff been made, is in itself of no use to him. The poorest day-laborer may know almost as much about what has been going on as he does himself. What the man wants to be able to do is to see into the future. If it is proposed to build a new railway, he wants to know what effect this railway will have upon the supply of goods brought to market. If a new silver-mine is discovered, he wants to know the effect upon the supply of silver and upon the coinage of money. If Congress changes the tariff, he wants to know the effect of this change upon the wages or profits he can earn, and upon the prices of the clothes he wears, of the food he eats, and of the goods he .buys and sells. Thus the problem before him is, by means of such knowledge as lie has acquired from reading and experience, to foresee in what way his interests or the interests of the country at large are going to be affected by changes and improvements in manufactures, commerce, and govern-mental policy.

Here it is that scientific method must come into play. It shows him how he actually does go to work to form conclusions about the familiar facts of his daily life, and then it shows him how to apply the same method to the larger problem before him.

Form of General Propositions. In the application of scientific method all our conclusions must ultimately rest upon facts. But, as just shown, we cannot draw any sound conclusion from facts unless the circumstances are properly analyzed. If we have a fact or a series of facts we must in-quire, How did they arise? According to what general rule did these things happen ? These questions are answered, sometimes in a very imperfect way, and at other times more satisfactorily, by establishing certain relations between events; which relations are known by the name of laws of nature, or simply laws.

A law of nature can only be expressed in the form of a conditional proposition. Its general form is :

If a certain state of things be true.

Then a certain result will follow.

Examples of such propositions are as follows :

If you touch gunpowder with fire, then it will explode.

If you leave a heavy body unsupported, then it will fall to the ground.

If you bring a large extra supply of goods to market, then the prices will fall.

If you lessen a man's income, then he will economize in his expenditures.

If you increase the import duty on goods from abroad, then their prices will rise.

If you give a man perfect freedom, then he will follow the course indicated by his feelings and his judgment.

In these general statements, that which is supposed true and taken as the basis of the argument is called the hypothesis ; that which then follows is called the conclusion.

Now notice certain characteristics of all these propositions. In the first place, the conclusion is only hypothetically true. The hypothesis, commencing with an "if," is presupposed, and if it is not true the conclusion may fail. For example: if there is no heavy body, or, the body existing, if we keep it supported, there is no falling. Gunpowder has never exploded within a hundred miles of the north pole. And in general all scientific conclusions are to be regarded, not as particular truths, but only as things which are or would be true under certain assumed conditions. The question whether these conditions do or do not exist is a matter of fact always open to challenge, and which we always have to decide in the best way we can. All that we can ask of the scientific statement is that the connection between the hypothesis and the conclusion shall be true.

Again, we must never forget that, in addition to the hypothesis which we state, we always have to presume the negative hypothesis that nothing happens to change the conclusion. For example, when we say if gunpowder is touched with fire it will explode, then, in addition to the expressed hypotheses that the gunpowder exists and that you touch it with fire, we have the implied hypothesis that it is dry and in good order as we are accustomed to find it. When we say that an unsupported heavy body falls to the ground, we must implicitly assume that it is heavier than its own bulk of air, because if lighter than air, like a balloon, it will rise instead of falling. We also assume that it is not held up by electrical or any other attraction. If it is fired up from a cannon it will not fall to the ground immediately, though it must ultimately. Time will be required for the effect to follow. Thus, every general proposition may need to be modified in an infinity of ways when we consider it in its application to special eases.

Induction and Deduction. General propositions can only be learned in the first place by a study of the facts of experience. The process by which we infer a general law from. observed facts is logical induction. Induction is therefore the first step in the acquisition of exact knowledge.

Deduction. The process of reaching a conclusion by means of general propositions is called logical deduction. In strictness the process of deduction consists in chaining together a series of hypothetical propositions, the conclusion of each step being in whole or part the hypothesis of the step next following. As a simple example of how a deductive, process may be applied without thinking of logic, let us take our conclusion as to what will become of a piece of meat which a child drops over the surface of a pond stocked with fish. To reach the conclusion we have unconsciously in mind the separate propositions, "An unsupported body held over water will drop to the surface of the water ;" " A body heavier than water will sink ;" "If edible matter comes within reach of a fish he will eat it." By joining these several propositions we have the single proposition, "Heavy edible matter left unsupported over a pond stocked with fish will be eaten by the fish." But we must never forget to preserve a distinction between this general and hypothetical proposition and the concrete particular propositions, " This pond is stocked with fish ;" "Mary let a piece of meat drop into the pond." We can reach a conclusion as to the actual matter of fact only by assuring ourselves of two things : first, that the existing state of things corresponds to the hypothesis ; and secondly, that there is a true general connection between the hypothesis and conclusion.

Succession of Cause and Effect. In the process of deduction we suppose that there is a state of things corresponding to one or more of our hypotheses. From this supposition we conclude, by the aid of the law, that another state of things, or conclusion, will follow. In this process,

The first state of things is called the cause;

The second state of things is called the effect.

And, as already indicated, that general statement which ex-presses the relation between the cause and the effect is called the law.

The distinction of cause and effect is only relative, not absolute; an event is an effect in its relation to the preceding events out of which it arose; but it is also a cause of the events which follow it in pursuance of a law. As a general rule, everything that happens is both a cause and an effect.

It must be remembered that the relation of cause and effect is not one of mere succession, but of succession in pursuance of a general law. When a countryman at an inn pulled a bell, and immediately heard the gong sound for dinner, he inferred a relation of cause and effect between his effort and the sound which followed. He was clearly correct in his facts. What was his error ? It consisted in inferring a general law of connection between the pull and the sound, when in reality there was no such law.

Abstraction,. All science presupposes that the events with which it is concerned are parts of a regular series of causes and effects, following each other in pursuance of general laws. Most events which actually occur in the world are the product of a very complex combination of causes, in which the silent hypothesis, "other conditions being equal," does not hold true, and in which the operation of every cause is altered by the concurrent action of a multitude of other causes. These causes are continually changing, so that it is generally impossible to infer a law from mere observation. To reach a rational result, we have to begin by considering the action of each cause separately. We are then said to make abstraction of all the causes which we do not consider.

The first steps in the construction of a deductive science consist in the abstraction of all but the most fundamental and widely diffused causes, and in investigating the succession of cause and effect as it would be if the action of these causes were not modified in any way. As an example of this let us take the science of mechanics.

The motion of every body on the surface of the earth is the result of a great number of forces. We get at the effect of these forces by such a succession of steps as the following :

First Hypothesis. We suppose a body acted on by no force.

The conclusion is, the body will move forward in a straight line forever.

Second. Hypothesis. We suppose the body to fall under the influence of gravity, which we suppose constant.

Conclusion. The body will fall a certain distance the first second, three times as far the next second, five times as far the third, and so on.

Let it be remembered that neither of these hypotheses is ever fulfilled in nature. We never saw a body either acted on by no force, or moving under the influence of no force but gravity. Gravity itself is not the same at different heights. The same thing is true of all the fundamental conceptions of physics. We talk and think of bodies having no size; of "material points ;" of machines without friction, and so forth. We do all this to lay a foundation for further studies in which the causes first abstracted may be considered.

So in Political Economy. We begin with a hypothetical man, animated by the one motive of gaining all the satisfaction he can by his labor, alive to his own interests, ready to turn his hand to a variety of things, and of such sound judgment that he makes no mistakes in his calculations. In other words, we at first make abstraction of all the little imperfections and variations from this ideal. We then make further hypotheses respecting the occupations he can engage in, and the appliances lie can command, taking care to come as near as possible to the general average condition of mankind. Then we consider one by one the several variations from our first hypotheses, until we have gone as far as we deem necessary.

Such hypotheses and the laws with which we connect them tell us nothing about quantities, and therefore do not suffice to reach practical conclusions. To answer the question, How much ? we have to study statistics of all kinds, and thus learn, with as much exactness as we may, the numerical quantities of all kinds, whether the numbers of various kinds of men, or the quantities of various productions, which enter into the problems of our science.

Pure and Applied Science. The preceding method leads to a distinction between pure and applied science.

A pure science is one in which we consider only those causes whose action we can trace with clearness and certainty, and make abstraction of all others.

An applied science is one in which we consider, in the best way we can, all the causes which come into play in some special class of cases, and thus reach conclusions which we believe to need no further modification.

Thus, there is a pure science of thermo-dynamics, formed on ideal kinds of matter, having properties never found in real matter. And there is an applied science of steam-engineering in which the special properties of the iron in the engine, the coal it consumes, and the steam it generates are considered.

So with Political Economy. Pure economics is an ideal or hypothetical science in which we consider only the general characters of great classes of men, and those widely diffused causes whose action we can trace in the social condition of, communities and in the great movements of agriculture, manufactures, and commerce. We thus form a single consistent system.

In applied political economy we superpose upon the system of pure economics the causes which operate in some special case, and find how the conclusions of pure economics are thus modified. We may consider, for example, some peculiar state of things in a German town, or the economic effect of establishing homes for newsboys in New York, or the effect of a strike in the building trade upon the interests of those engaged in it.

The distinction between a pure and an applied science can-not be made a sharp one. As our knowledge expands, pure science is made to include a wider and wider field, and we can never say exactly where the line should be drawn.

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