inculcating habits of thrift or prodigality, thus affecting capital accumulation in the next generation.

The supply of labor is controlled through a control of the number of people. A new state, possessed of undeveloped resources, can partially control its numbers, through regulation of immigration. But such a state has least need for controlling its numbers. As the country develops, as resources are utilized, and as immigration falls off, a control of numbers becomes more and more a control of the birth-rate. No state has thus far succeeded directly in controlling the number of births. Even indirectly its influence has not been very potent. This matter has been in the past, and will be in the future very largely, left to the family. Yet upon this question of numbers rest very vital economic considerations, including the questions of wages, standards of living, capacity for material development, etc. In brief, the forces influencing the sizes of the productive funds out of which wealth is to be increased are very largely familial.

It is often said that wants are the mainspring of economic activity; that it is the possession of wants which is responsible for our industrial system. If this is so, we must remember that the wants which lead to industrial endeavor, particularly to the fullest utilization of personal productive capacities, are familial, rather than personal, wants. The beginning and end of the economic process lie in the family. It is, both directly and indirectly, one of the most potent factors in organizing society and in determining the direction of its development.

40. The State as an Institution of Social Control'

BY EDWIN CANNAN

The existence of the state and the order enforced by it makes it possible for property to play a part in organization. We might conceive a state of things where co-operation carried on under the influence of property might exist without any organized authority of government. But such a state of things has never been realized, nor is likely to be. So the state has been necessary in the past and is likely to continue to be so in the immediate future. Further, even in a society of perfectly just men it would be desirable to have some common authority to make changes when necessary. Otherwise progress would be exceedingly slow, since it would have to be imperceptible. If fast enough to be perceptible, it would seem to violate

Adapted from Wealth: A Brief Explanation of the Causes of Economic Welfare, 89-95 (1914).

custom and would, therefore, be tabooed, in the absence of machinery for discussing reasons and passing judgment on them.

In the eighteenth century there grew up a school of thinkers who said to the governments of the time, "Laissez faire" or "Let alone." The more philosophical among them were influenced by the cult of Nature prevalent at the time, thinking that certain institutions were natural and therefore good, while others were artificial and bad. They wanted the institutions which they thought natural let alone and the others abolished. The practical men wanted certain institutions abolished which they regarded as harmful, and did not trouble themselves to think of the others. The natural institutions of the philosophers are now seen to be nothing but slight modifications of the institutions of their own time. To the practical man, the precept "Laissez faire" never meant "Leave everything alone," nor even "Leave all natural things alone," but simply, "Leave alone certain things which I think ought to be left alone." The practical men got their way to a considerable extent, and therefore it has become the fashion to speak of the "laissez-faire period." But there never was and never can be a state which practices this policy. The very establishment of the State negatives a policy of complete "Let alone."

In primitive times the demand upon the authority which represents the State is constantly for the enforcement of "good old customs." When the State complies, it is not letting alone, but taking an active part in the enforcement of these customs, which might otherwise fall into disuse owing to violation by interested parties. Moreover, the enforcement of these customs, coupled with neglect to enforce other customs, involves a discrimination favorable to progress. Consequently there was a large amount of "State interference" even in periods when the State seemed to do nothing except to reinforce the people's respect for custom.

The general enforcement of law and order and the facilitation of necessary and desirable changes in that law and order, though perhaps the most vital, is by no means the only important function of the State in economic organization. Separate property in land has never covered the face of any considerable country. A network of narrow strips forming the means of communication is always found outside the limits of private property. Without this reservation from private property any considerable amount of communication would be impossible. Hence provision of the means of communication has always been in the hands of the State. Where private parties build railways they are granted by the State the right of eminent domain,

or the power to buy the land they need to get the required consecu tive strip, even if the owners do not wish to sell. They have to pay only fair "compensation."

In modern times a number of other things have grown up which resemble the means of communication in being spread over large areas in thin lines. Water, drainage, gas and electric lighting, telegraphic and telephonic communications, require a laying of a network of wires all over the face of the world. It is constantly necessary to acquire private property for a part of this work. These things are very similar to roads, railways, and canals in many of their characteristics, and are therefore dealt with in much the same way. In helping to provide these engineering works required for the progress of invention and the thicker population in modern times, the State may be said to be arranging for a necessary supplement to the organization based on separate property.

Some kind of organization covering the whole industrial territory and armed with certain disciplinary powers is obviously necessary, and is supplied by the State; badly as it works in its earlier forms, it is never worse than the chaos which preceded it, and as time goes on it is gradually improved.

C. THE STATEMENT OF THE LAISSEZ-FAIRE

THEORY

41. The Fundamental Law of Nature

BY WILLIAM BLACKSTONE

As, therefore, the Creator is a being, not only of infinite power and wisdom, but also of infinite goodness, he has been pleased so to contrive the constitution and frame of humanity, that we should. want no other prompter to enquire after and pursue the rule of right, but only our self love, that universal principle of action. For he has so intimately connected, so inseparably interwoven the laws of external justice with the happiness of each individual that the latter cannot be attained but by observing the former, and if the former be punctually obeyed, it cannot but induce the latter. In consequence of which mutual connection of justice and human felicity, he has not preplexed the law of nature with a multitude of abstracted rules and precepts, referring merely to the fitness or unfitness of things, as some have vainly surmised, but has graciously reduced the rule of obedience to this one paternal precept, "that man should pursue his own true and substantial happiness.' This

Commentaries on the Laws of England, Book i, sec. 2 (1765).

is the foundation of what we call ethics or natural law; for the several articles into which it is branched in our system amount to no more than demonstrating that this or that action tends to man's real happiness, and therefore very justly concluding that the performance of it is a part of the law of nature; or, on the other hand, that this or that action is destructive to man's real happiness, and therefore that the law of nature forbids it.

42. A Diatribe against Human Institutions"

BY J. J. ROUSSEAU

All things are good as their Author made them, but everything degenerates in the hands of man. By man our native soil is forced to nourish plants brought from foreign regions, and one tree is made to bear the fruit of another. Man brings about a general confusion of elements, climates, and seasons; he mutilates his dogs, his horses, and his slaves; he seems to delight only in monsters and deformity. He is not content with anything as Nature left it.

As things now are, a man left to himself from his birth would, in his association with others, prove the most preposterous creature possible. The prejudices, authority, necessity, example, and, in short, the vicious social institutions in which we find ourselves submerged, would stifle everything natural in him, and yet give him nothing in return. He would be like a shrub which has sprung up by accident in the middle of the highway, to perish by being thrust this way and that and trampled upon by passers-by. All our wisdom consists in servile prejudices; all our customs are but suggestions, anxiety and constraint. Civilized man is born, lives, dies in a state of slavery. At his birth he is sewed in swaddling clothes; at his death he is nailed in a coffin; as long as he preserves the human form he is fettered by our institutions.

43. A Plea against Governmental Restraints"

BY ADAM SMITH

Every individual is continually exerting himself to find out the most advantageous employment for whatever capital he can command. It is his own advantage, indeed, and not that of the society, which he has in view. But the study of his own advantage, naturally, or rather necessarily, leads him to prefer that employment which is most advantageous to the society.

*Emile ou l'Education, liv. 1 (1762).

"The Wealth of Nations, Book iv, chap. ii (1776).

First, every individual endeavors to employ his capital as near home as he can, and consequently as much as he can in the support of domestic industry, provided always that he can thereby obtain the ordinary, or not a great deal less than the ordinary, profits of stock. Secondly, every individual who employs his capital in the support of domestic industry necessarily endeavors so to direct that industry, that its produce may be of the greatest possible value.

The produce of industry is what it adds to the subject or materials upon which it is employed. In proportion as the value of this produce is great or small, so will likewise be the profits of the employer. But it is only for the sake of profit that any man employs a capital in the support of industry; and he will always, therefore, endeavor to employ it in the support of that industry of which the produce is likely to be of the greatest value, or to exchange for the greatest quantity either of money or of other goods.

But the annual revenue of every society is always precisely equal to the exchangeable value of the whole annual produce of its industry, or, rather, is precisely the same thing with that exchangeable value. As every individual, therefore, endeavors as much as he can both to employ his capital in the support of domestic industry, and so to direct that industry that its produce may be of the greatest value, every individual necessarily labors to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good. It is an affectation, indeed, not very common among merchants, and very few words need be employed in dissuading them from it.

What is the species of domestic industry which his capital can employ, and of which the produce is likely to be of the greatest value, every individual, it is evident, can, in his local situation, judge, much better than any statesman or lawgiver can do for him. The statesman who should attempt to direct private people in what manner they ought to employ their capitals would not only load. himself with a most unnecessary attention, but assume an authority