superseded by the real man known to modern psychologists, the creature of unreasoning hasty moods and propensities to heedless action. Well, what of it? is the reply. Granting that people's wants are determined frequently by instincts, and often by imprudent ones at that what change does it necessitate in economic principles? We do not need to account for the origin of wants; our business is to study the means of satisfying them, and the conditions under which they may be satisfied. An ordinary degree of foresight with respect to these means does not seem to be such a far-fetched assumption. The other objections have seemed to be as easily met, and on the whole, in the hearts of most economic students, no conviction of sin has been awakened, altho the "psycho-economists" have been pressing their attacks, in different quarters, for over twenty-five years.

Some of the skeptics suspect that the trouble arises from too exclusive attention being given by the innovators to the subjective, or mental elements of economics, and from a preoccupation with the exceptional or abnormal cases even in that limited field. Results so obtained, of course, would hardly call for a revolutionizing of economic theory as a whole. It seems to the present writer that much of the criticism from the standpoint of modern psychology heretofore made by economists is inadequate, both as to psychological facts and their applications to economics, and the object herein is to make it clearer where the psychological discoveries and economic theory do fit together.1 But let us at the very beginning safeguard ourselves against material fallacy by giving the purely physical factors of economics their

1 The present writer is preparing a thesis in which questions of fact in psychology related to economics are considered. The discussion in the present paper, however, is concerned only with the place which psychological data have in economics, assuming them to be true.

due — those which are stubbornly indifferent to human thoughts or preferences. Then we may consider some ways in which psychical forces coöperate with these external facts to produce the activities we study.

Whether we like it or not, as Mill said, "a double quantity of labor will not raise on the same land a double quantity of food, unless some improvement takes place in the processes of cultivation." And the principle of diminishing quota of "overhead " expense to the unit of product, as volume of output increases (the basis of "increasing returns "), is likewise simply a way things have of acting. So is the pure fertility of the human species, with its enormous potentialities for the destruction of men's hopes. Whatever other factors may enter into the value of money, it seems clear that its quantity, by purely mechanical principles, must be a part of the explanation.

The superior productivity of labor which is specialized, moreover, and the gain in the efficiency of labor through saving and the use of tools or machinery, are not the projections of anyone's mind, tho we may choose either to regard or disregard these facts. But having once chosen, we must take the consequences, and cannot change the results by wishing. If we decide to do without the capitalists, and do not otherwise provide for the saving of wealth, our society as a whole will have perforce to work harder for its daily bread. The foregoing purely objective observations we recognize as economic principles which Adam Smith, Ricardo and Malthus elaborated and stressed; and these contributions at least, must not be included among the " tissue of false conclusions" which the classicists are supposed to have constructed from false psychological assumptions.

To illustrate further: The "law of variable proportions" is a name given to an external fact which shapes

the world's values no less than do the reason and passions of men- the fact that in most productive processes, an increased use of one ingredient, all others remaining stationary, will result in a larger total product, but in a lessening proportion to the units of the ingredient which is being increased. If you are smelting iron, or making shoes, or growing wheat, you will find that increasing applications of coal or leather or labor, the other factors in the processes remaining the same, will yield less and less increase in the output of pig iron or shoes or wheat. The most advantageous combinations are based on natural laws, or "habits of matter," which our technology takes increasing advantage of (through processes in part psychological) but cannot change. Under no conceivable social arrangements can the superabundant elements be made as valuable as the less abundant, or limiting, elements.

Without attempting to enumerate the special physical, mechanical, geographical or biological facts and uniformities which economic science must use as presuppositions, there is still another sense in which economic principles are independent of human volitions. Economic theory treats of means of economizing, or using without waste, the limited resources which nature affords to satisfy men's wants. Men usually try to get as much coat as possible out of their cloth, and economics gives them some information as to how to accomplish that result on a large scale. They can accomplish it only by acting reasonably, it is true. But suppose you can point out a group of people who have irrational and uneconomic ideas which they prefer to follow: does that prove the theory to be unreal and irrelevant to actual life? Let us see. The Indians of Paraguay, according to the account cited by Mill, sometimes killed for supper the oxen which the missionaries had given them;" thinking,

when reprehended, that they sufficiently excused themselves by saying they were hungry." 1 Their conduct was "natural" enough, but it was not "economic " that is, it did not work economically. Since there are other peoples in the world who keep their oxen for work, and eventually need more land, there is every prospect that the Paraguayans will be eventually displaced by them. Hence the principles of economy are not exactly "idle tho true," even if not practiced by every one.2

But the foregoing instances of the purely objective subject-matter in economics must have called to mind several psychological principles which are closely associated with such physical data as these, throughout economic discussions. We are accustomed to think of the Malthusian law of animal fertility in connection with the theory of wages, an essential part of which is the doctrine that human self-restraint keeps population within the physiological maximum in practically every civilization. It may restrain the increase only to the point where a very scanty subsistence can be earned by each man, or it may under certain circumstances maintain a much better "standard of living" by placing a sufficient check upon reproduction. Besides this, every theory of wages must make several further psychological assumptions concerning the motives to work and to idleness, the relations of differences in wages between occupations and within occupations to maximum effort; the theory of human nature implied in the concept of non-competing groups; the effects of various wage systems and of scientific management; the mobility of labor, how affected by "non-economic" motives; and so on. If we assume that men will, in general, work as effectively for a smaller as for a larger wage, our con

1 Mill, Principles, Bk. I, chap. xi, § 3.

2 See remarks by Professor T. N. Carver along this line in "The Behavioristio Man," Quarterly Journal of Economics, vol. xxxiii, pp. 195–199, November, 1918.

the world's values no less than do the reason and sions of men- the fact that in most productive esses, an increased use of one ingredient, all t remaining stationary, will result in a larger total uct, but in a lessening proportion to the units of ingredient which is being increased. If you are sme iron, or making shoes, or growing wheat, you will that increasing applications of coal or leather or in the other factors in the processes remaining the s will yield less and less increase in the output of pig or shoes or wheat. The most advantageous con. tions are based on natural laws, or "habits of mai which our technology takes increasing advanta (through processes in part psychological) but ca. change. Under no conceivable social arrangemen the superabundant elements be made as valuable. less abundant, or limiting, elements.

Without attempting to enumerate the special ical, mechanical, geographical or biological fac uniformities which economic science must use as p positions, there is still another sense in which ecc principles are independent of human volitions. nomic theory treats of means of economizing, without waste, the limited resources which nat fords to satisfy men's wants. Men usually try t much coat as possible out of their cloth, and ecc gives them some information as to how to acc that result on a large scale. They can accomplish. by acting reasonably, it is true. But suppose. point out a group of people who have irrational economic ideas which they prefer to follow: de prove the theory to be unreal and irrelevant to life? Let us see. The Indians of Paraguay, acco. the account cited by Mill, sometimes killed for suy oxen which the missionaries had given them;" t