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Cours d'Économie Politique professé a l'université de Lausanne. Tome

second. Lausanne (F. Rouge), 1897.

The successor to Professor Pareto's very able first volumel proves to be an even more important contribution to economic science. It consists of Book II, on the “Economic Organism," Book III, on Distribution and Consumption, and a General Summary. The opening chapter is concerned with the general principles of social evolution and is quite as much a chapter in Sociology as in Economics. Though it contains little or nothing, in its positive matter, which can be called new, it abounds with acute and original observations and forms an admirable statement of much of the best that has been written on the subject. The author maintains that the biological view of society as an organism is permissible and helpful and shows that this does not preclude the use of mechanical analogy in economics. He observes also that a prime desideratum is lacking for a completer treatment of the subject, viz., a mode of conceiving and denoting explicitly dynamic considerations. In place of a genuine analysis of the process of change from one economic state to another, we are forced to consider only the series of states during the change. It is, says Prof. Pareto, as if in studying the motion of a sled down hill, we were forced to treat it as we would a man walking down and stopping stock still at every step. Later on in his book, however, Prof. Pareto, in treating of crises, makes an attempt, which, if not altogether successful, is, at any rate, brilliant and suggestive, to treat economic oscillations from the dynamic point of view. This is one of the few cases in the book where the element of time receives explicit recognition.

In this opening chapter,Prof. Pareto makes clearer than in his first volume the application of his distinction between "utility” and "ophélimité." He goes on to distinguish between individual and

1 See YALE REVIEW, November, 1896. The reviewer is indebted to Professor Pareto for pointing out two cases in which his meaning was incorrectly interpreted. The statement cited from p. 10 should have been, may not," instead

cannot,” and that from p. 41, that some raw materials may also be used as "direct" goods, not that all may be so considered.

2 The reader will need to be reminded that Prof. Pareto uses the term “ophélimité” in the sense in which most writers use “utility,” and reserves the latter word to denote well-being as distinct from the mere gratification of desire.

of "

social utility. The fuller development of these rather vague ideas and of their mutual relations, he leaves to future writers. In the study of economic equilibrium, “ophélimité” plays the central rôle; but in the study of social development and survival, and in plans for the amelioration of society through legislation, "utility” is the important factor.

The second chapter, on Production, is devoted to a "second approximation" of the theory of the same subject contained in the first volume. It employs throughout Walras's "coefficients of production." One of its most suggestive parts is that in which the connection is shown between the use of these coefficients and the "factors of production” employed by other writers. According to the latter method, the rate of remuneration of each factor is determined by the importance of one unit more or less of it, the other factors remaining the same. When, however, the factors are so connected that a change in one requires absolutely a change in the others, this method fails; whereas, under the other method, the coefficients simply become constants. How important a criticism this may be on the method of factors as employed by Wicksteed and others depends largely on how frequently the case occurs. In our opinion the weakness referred to is also a source of strength. The rigid connection of factors of production, however frequent it may be in practice, is not the "general case" in theory. For this general case the formula of coefficients is but ill adapted, as Prof. Pareto's own work shows in some particulars. This formula is based on the classical but false assumption that the price of any product is separable into parts assignable respectively to the various agents of production. This is roughly true of "running expenses” but it is not true at all of "fixed charges.” It is not only practically impossible but theoretically absurd to discover the part of the price of a yard of cloth due to the fence enclosing the premises or the land or buildings or chimneys. It is somewhat surprising that this master of mathematical method should be so bound by traditions as to pass over one of the most inviting fields in which to apply his favorite instrument. In the theory of monopoly especially the need of a more general expression for the relation between the factors of production and cost is apparent. The modern theory of "cut-throat competition,” especially as developed in this country, is quite overlooked. The author seems to cling to the old doctrine that competition is, in and of itself, a good thing and combination universally and necessarily baneful. This error is traceable to the idea that

every factor of production enters into the cost per unit, an idea embodied in the "coefficients." But fixed charges do not enter into marginal cost at all, as was made evident mathematically by Cournot and is daily illustrated by railway experience. Competition therefore, in cases of large fixed plant, will never insure a return of interest on the capital invested. In many instances the defeat of combination means the cessation of investment. Most of what Prof. Pareto writes of monopoly is true and good, but it is often too sweeping. He is a determined opponent of trusts and pools and does not altogether resist the temptation to display the animus of the partisan. The same may be said of some of his attacks on Protectionism, Socialism, and Bimetallism, though we agree thoroughly with his general point of view on each of these questions. The statement of the benefits of free trade is clear, concise, and convincing; but it is too elementary and does not take account of several limitations recently brought forward by Free Traders themselves.

The most characteristic, original, and important chapter in the work is that on La courbe des revenus. Prof. Pareto here presents in full the results of an exhaustive statistical study of the distribution of wealth. He finds for all countries a most remarkable similarity in this distribution. If we make a curve of which the ordinate is the logarithm of the number of persons whose incomes exceed a certain limit, and the abscissa is the logarithm of this limit, this curve approximates closely to a straight line. This line will have different positions for different countries but the same inclination for all. Many applications of this curious and important result are given. For instance, it is shown that a decrease in the "inequality of incomes" can only occur through an increase of total incomes faster than the increase of population, and that probably the converse is also true in practice. This is added refutation of the popular idea that “the rich are growing richer and the poor poorer.” The chief faults in this admirable chapter seem to be the absence of any preliminary analysis as to what income and distribution really are and the somewhat rash manner in which the author denies any relation between his law of distribution of incomes and the “laws of distribution of errors." The former neglects much that is valuable and suggestive, if not clear and satisfactory, in recent writings and which stands in need of just such penetrating thinkers as Pareto to clear it up, while the latter has drawn the author into a controversy with another master of the subject, Professor Edgeworth.

1 In the Journal of the Royal Statistical Society and the Giornale degli Economisti.

Typographically the book has some defects. There are several misprints among the formulæ and a is altogether too similar to a, which is confusing. The titles of foreign works and proper names are frequently misspelled. The American reader will wonder at first where the state of “Jowah” is and will need to reassure himself that a reference to the “Bill Mac-Kinley” is not a flippant familiarity!

But faults are few and merits are many in the book as a whole. As is apt to be the case in reviewing a work so positive and virile as Prof. Pareto's, the former have obtruded themselves unduly. This is partly because of the high standard which the book itself sets up and partly because oversights are easier to describe than

emonstrations, especially in so intricate a work as that before us. A definite picture of its inner machinery can only be gained from a careful study at first hand. Such a study will be amply repaid. The book is many-sided. Its strength does not lie in theory alone. History, statistics, and biology are drawn upon with a facility which reveals a learning as broad and deep as the intellectual insight of the author. He would be the last to claim finality for his conclusions. But his work is a model of method and one with which all future economists must reckon.

I. F.

Governments and Parties in Continental Europe. By A. Lawrence

Lowell. Two volumes, octavo. Houghton, Mifflin & Co., 1896.

A work like this one by Mr. Lowell has been long needed. For an account of the government of the United States as it works we have Mr. Bryce's American Commonwealth; for the government of England, we have Bagehot's The English Constitution, and lately Prof. Macy's book on the same subject; but heretofore there has been no work in English describing the governments of continental Europe from the same practical point of view. The excellent works of Burgess and Goodnow are written from the legal standpoint chiefly. Mr. Lowell now considers the continental governments from the standpoint of a politician and citizen.

Believing that political parties at the present time furnish the main motive power in public life, Mr. Lowell has selected the history of these parties within the last few years and the methods of their actual work as the central topic for his discussion, preceding this discussion in each case by a brief description of the general political organization of the country. He very properly does not

trouble himself with general abstract questions concerning the excellence of any special form of government, or regarding the good or evil of political parties in general; but he considers that, as he says, “in reality parties are a fact and as such their manifestations ought to be studied.” The countries considered are France, Italy, Germany including both the Empire and Prussia and brief sketches of the other smaller German states, Austria-Hungary and Switzerland.

To any one who is familiar with Mr. Lowell's other writings, it is needless to say that this work is well and thoroughly done. The best authorities in English, French, German and Italian have been used, and the author has apparently also satisfied himself at times by personal investigation on the ground.

It is possible to find occasionally some minor matters in which the author gives a somewhat misleading representation of the governments, either from his desire to condense or from the lack of detailed information, and at times one may object to the form of expression. In the first volume, page 275, in his discussion of the power of the King of Prussia as Emperor, he says that the Emperor has no veto as Emperor, but that as King he has a very extensive veto. He avoids, wisely, I think, raising the question whether the Emperor may refuse to promulgate the laws passed by the two houses of the German Parliament, and thus veto a law, although the German authorities seem to think it worth while to discuss the question at length. It seems to be straining the meaning of the word veto a little to consider the negative vote of Prussia in the Bundesrath as the veto of the King. It might be hypercritical to object to the expression were it not for the fact that the word is used in two senses in the same sentence, when there is a question of fact in dispute concerning the accuracy of the interpretation of the constitution.

In his discussion of the Committee system in the German Reichstag Mr. Lowell has given us a good example of the practical standpoint from which the work is written, but here something needs to be added. In accordance with the rules of the house, the members are divided by lot into seven sections which correspond to the Bureaux of the French Chambers, and one of the chief duties of these sections is that of choosing the committees of the House. Mr. Lowell explains as follows: "As in France and Italy, however, the choice by the sections is really cut and dried beforehand. It is in fact controlled by the Senioren-Convent, a body composed of

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