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Wednesday, October 31, 2012

Digression on Keynes - BENJAMIN M. ANDERSON

I. A Refutation of Keynes's Attack on the Doctrine that Aggregate Supply Creates Aggregate Demand. The central theoretical issue involved in the problem of postwar economic readjustment, and in the problem of full employment in the postwar period, is the issue between the equilibrium doctrine and the purchasing power doctrine. 
Those who advocate vast governmental expenditures and deficit financing after the war as the only means of getting full employment, separate production and purchasing power sharply. Purchasing power must be kept above production if production is to expand, in their view. If purchasing power falls off, production will fall off. 
The prevailing view among economists, on the other hand, has long been that purchasing power grows out of production. The great producing countries are the great consuming countries. The twentieth century world consumes vastly more than the eighteenth century world because it produces vastly more. Supply of wheat gives rise to demand for automobiles, silks, shoes, cotton goods, and other things that the wheat producer wants. Supply of shoes gives rise to demand for wheat, for silks, for automobiles and for other things that the shoe producer wants. Supply and demand in the aggregate are thus not merely equal, but they are identical, since every commodity may be looked upon either as supply of its own kind or as demand for other things. But this doctrine is subject to the great qualification that the proportions must be right; that there must be equilibrium.
 On the equilibrium theory occasional periods of readjustment are inevitable and are useful. An active boom almost inevitably generates disequilibria. The story in the present volume of the boom of 1919-1920 and the crisis of 1920-1921 gives a classical illustration. The period of readjustment may be relatively short and need not be severe, but a period of shakedown, a period in which overexpanded industries are contracted and opportunities made for underdeveloped industries to expand, a period in which prices and costs come into equilibrium, a period in which weak spots in the credit situation are cleaned up, a period in which excessive debts are liquidated-such periods we must have from time to time. The effort to prevent adjustment and liquidation by the pouring out of artificial purchasing power is, from the standpoint of the equilibrium doctrine, an utterly futile and wasteful and dangerous performance. Once a reequilibration is accomplished, moreover, the equilibrium doctrine would regard pouring out new artificial purchasing power as wholly unnecessary and further as dangerous, since it would tend to create new disequilibria. 
The late Lord Keynes was the leading advocate of the purchasing power doctrine, and the leading opponent of the doctrine that supply creates its own demand. The present chapter is concerned with Keynes' attack on the doctrine that supply creates its own demand. 
Keynes was a dangerously unsound thinker. 1 His influence in the Roosevelt Administration was very great. His .influence upon most of the economists in the employ of the Government is incredibly great. There has arisen a volume of theoretical literature regarding Keynes almost equal to that which has arisen around Karl Marx. 2 His followers are satisfied that he has destroyed the long accepted economic doctrine that aggregate supply and aggregate demand grow together. It seems necessary to analyze Keynes's argument with respect to this point. 
Keynes Ignores the Essential Point in the Doctrine He Attacks. Keynes presents his argument in his 1'he General Theory o/Employment, Interest and Money, published in 1936. But he nowhere in the book takes account of the law of equilibrium among the industries, which has always been recognized as an essential part of the doctrine that supply creates its own demand. He takes as his target a seemingly crude statement from. J. S.· Mill's· Principles of Political Economy (Book III, chap. 14, par. 2) which follows: 

"What constitutes the means of payment for commodities is simply commodities. Each person's nleans of paying for the productions of other people consist. of those which he himself possesses. All sellers are ine,vitably, and by the meaning of the word, buyers. Could we suddenly double the productive powers of the country, we should double the supply of commodities in every market; but we should, by the same stroke, double the purchasing power. Everybody would bring a double demand as well as supply: everybody would be able to· buy twice as much, because everyone would have twice as much to offer in exchange." 

N ow this passage by itself does not present the essentials of the doctrine. If we doubled the productive power of the country, we should not double the supply of commodities in every market, and if we did, we should not clear the markets of the double supply in every market. If we doubled the supply in the salt market, for example, we should have an appalling glut of salt. The great increases would come in the items where demand is elastic. We should change very radically the proportions in which we produced commodities. 
But it is unfair to Mill to take this brief passage out of its context and present it as if it represented the heart of the doctrine. If Keynes had quoted only the three sentences immediately following, he would have introduced us to the conception of balance and proportion and equilibrium which is the heart of the doctrine-a notion which Keynes nowhere considers in this book. Mill's next few lines, immediately following the passage torn from its context, quoted above, are as follows:

 "It is probable, indeed, that there would now be a superfluity of certain things. Although the community would willingly double its aggregate consumption, it may already have as much as it desires of some commodities, and it may prefer to do more than double its consumption of others, or to exercise its increased purchasing power on some new thing. If so, the supply will adapt itself accordingly, and the values of things will continue to conform to their cost of production."

 Keynes, furthermore, ignores entirely the rich, fine work done by such writers as J. B. Clark and the Austrian School, who elaborated the laws of proportionality and equilibrium. 
 The doctrine that supply creates its own demand, as presented by John Stuart Mill, assumes a proper equilibrium anlong the different kinds of production, assumes proper terms of exchange (i.e., price relationships) among different kinds of· products, assumes proper relations between prices and costs. And the doctrine expects competition and free markets to be the instrumentality by means of which these proportions and price relations will be brought about. The modern version of the doctrine  would make explicit certain additional factors. There must be a proper balance in the international balance sheet. If foreign debts are excessive in relation to the volume of foreign trade, grave disorders can come. Moreover, the money and capital markets must be in a state of balance. When there is an excess of bank credit used as a substitute for savings, when bank credit goes in undue amounts into capital uses and speculative uses, impairing the liquidity of bank assets, or when the total volume of money and credit is expanded far beyond the growth of production and trade, disequilibria arise, and, above all, the quality of credit is impaired. Confidence may be suddenly shaken and a countermovement may set in.
 With respect to all these points, automatic market forces tead to restore equilibrium in the absence of overwhelming governmental interference.
 Keynes has nothing to say in·' his attack upon the doctrine that supply creates its own demand, in the volume referred to, with respect to these matters.
 Incleed, far from considering the· intricacies of the .. interrelations of markets, prices and different kinds of production, Keynes prefers to look at things in block. He says:

 "In dealing with the theory of employment I propose,. therefore, to make use of onlytwo fundamental units of quantity, namely, quantities of money-value and quantities of employment. The first of these is strictly homogeneous, and the secondcan be made .so. For, in so far as different grades and kinds of labor and salaried assistance enjoy a more or less fixed relative remuneration, the quantity of employment can be sufficiently defined for our purpose by taking an hour's employment of ordinary labor as our unit anti 'weightingan hour's employment of special labor in proportion /0 its remuneration; i.e., an hour ot· special labor remunerated at double ordlnar1rates wfll count as two units."  •••
 "It is mybelie£ that much unnecessary perplexity can be avoided if we limit ourselvesstrictly to the two units, money and labor, when we are dealing with the behavior of the economic system as a whole ••." 

 Procedure of this kind is empty and tells us nothing about economic life. How empty it' is becomes apparent' when we observe that· these two·· supposedly independent units of quantity, namely, "quantities of money value))· and "quantities of employment," are· both merely quantities .. of money value. If ten laborers working for $2 a day are dismissed and two laborers working for $10 a day are taken on, there is no change in the volume of employment, by Keynes's method of reckoning, as,is obvious from the italicized portiono£ the quotation above. His "quantity of employment" is not a quantity of employment. It is a quantity of money received by laborers who are employed. 
 Throughout Keynes's analysis he is working with aggregate,·. block concepts. He has an aggregate supply.funct~on' and an aggregate demand function.  But nowhere is there any discussion of the interrelationships of the elements in these vast aggregates, or of elements in one aggregate with elements in another. Nowhere is there a recognition that different eletnents in the aggregate supply give rise to the demand for other elements in the aggregate supply. In Keynes's discussion, purchasing power and production are sharply sundered.

 The Function of Prices. 
It is part of the equilibrium doctrine that prices tend to equate supply and demand in various markets: commodities, labor, capital, and so on. If prices go down in particular markets this constitutes a signal for producers to produce less, and a signal for consumers to consume more. In the markets, on the other hand, where prices are rising we have a signal for producers to produce more,. for consumers to consume less, and a signal for men in fields where prices are less satisfactory to shift their labor and, to the extent that this is possible,· to shift their capital to the more productive field. Free prices, telling the truth about supply and demand, thus constitute the great· equilibrating factor. 

The Function of the Rate of Interest.
 Among these prices is the rate of interest. The traditional doctrine is that the rate of interest equates supply and demand in the capital market and equates·saving and investment. Interest is.looked upon as reward' for saving and as inducement to saving. The old doctrine which looked upon consumer's thrift as the primary source of capital is inadequate. It must be broadened to include producer's thrift, and especially corporate thrift, and direct. capitalization, as when the farmer uses his spare time in building fences and putting other improvements on his farm, or when the farmer lets his flocks and herds increase instead of selling off the whole of the annual increase, and so forth. It must include governmental thrift, as when government taxes to pay down public debt or when government taxes for capital purposes· instead of borrowing-historically very important! The doctrine needs a major qualification, moreover, with respect to tke use of bank credit for capital purposes. 

 Keynes's Attack on the Interest Ratc as Equilibrator. 
 It. is. with respect to the interest·· rate as the equilibrating factor that Keynes. has made his most vigorous assault upon prevailing views. Where economists generally have held that saving and avoiding unnecessary debt and paying off debt where possible are good things, Keynes. holds that they are bad things. He deprecates depreciation reserves for business corporations. He deprecates· amortization of· public debt by municipalities. He·· deprecates additions to· corporate surpluses out of earnings. His philosophy is responsible for the ill-fated undistributed profits tax which we adopted in 1936 and which we abandoned with a great sigh of relief, over the President's plaintive protest, in 1938.
 Keynes gives two reasons for his rejection of prevailing ideas with respect to interest and savings, ~nd the equilibrating function of the rate of interest. The first will be found on pages 110 and I I I of his General Theory. He says:

 "The influenciOf changes in the rate of interest on the amount actually saved is of paramount im o.rtance, but is in the oppOJite direction to that usually supposed. For even if the att action of the larger future income to be earned fronl a higher rate of interest has ,the effect of diminishing the propensity to consume, nevertheless we can be certa1o,n that a rise in the rate of interest Will. have the effect of reducing the amount act ally saved. For aggregate saving is governed by aggregate investment; a rise in he rate of interest (unless it is offset by a corresponding cnange in tne demand-sen dule for investment) [italics mine] will diminish investment; hence a rise in the rate of interest must have the effect of reducing incomes to a level at which savin is decreased in the same measure as investment. Since incomes will decrease by a reater absolute amount than investment, it is, indeed, true that, when the rate of in erest rises, the rate of consumption will decrease. But this does not mean that there will be a wider margin for saving. On the contrary, saving and spending will both decrease." 

 This is an extraord narily superficial argument. The whole case is given away by the parenthetical assage, " (unless it is offset by a corresponding change in the demand.lschedule for investment)." The usual cause of an increase in the rate of interest is a ri e in the demand-schedule for investment. Interest usually rises because of an inc eased demand for capital on the part of those who wish to increase their investents, of businesses which wish to expand, of speculators for the rise, of ho~e-builders, and so on. Usually, when the interest rate rises, it rises because 'nvestment is increasing, and the increased savings which rising interest rates nduce are promptly invested. Indeed, investment often precedes saving 10 in such a situation, through an expansion of bank credit, also induced by the rising rate of interest.
 Keynes is assuming an uncaused rise in the rate of interest, and he has very little difficulty in disposing of this. But economic phenomena do not occur without causes.
 Keynes's second argument against the prevailing doctrine will be found in his Chapter 14 (ibid.) called "The Classical Theory of the Rate of Interest." Here (with a diagram on page 180) he complains that the static theory of interest has not taken account of the possibility of changes in the level of income, or the possibility that the level of income is actually a function of the rate of investment.
 Now it may be observed that Keynes is here introducing dynamic considerations into a static analysis. By this device one may equally destroy the law of supply and demand, the law of cost of production, the capitalization theory, or any other of the standard working tools of the static analysis. Thus the static law of supply and demand is that a decrease in price will lead to an increase in the amount demanded. But with a sudden, violent general fall in prices the tendency is for buyers to hold off and wait until they see where prices are going to settle.
 The static economist has known all this almost from the beginning. He has been aware that he was making abstractions. He has protected himself in general by the well-known phrase, ((ceteris paribus" (other things equal), and the general level of income has been among those other things assumed to be unchanged. Moreover, the static economist has concerned himself with delicate marginal adjustments, and· with infinitesimal variations in the region of the margin, a device which Keynes is very glad to borrow from static economics in his conception of the "marginal propensity to consume" and in his initial conception of the "marginal efficiency of capital." 
The Multiplier.
 Rejecting the function of the interest rate as the equilibrator of saving and investment, Keynes is so impressed with the danger of thrift that he finally convinces himself in one of his major doctrines that no part of an increase in income which is not consumed is invested; that all of the unconsumed increase in income is hoarded. This major doctrine is the much-praised Keynesian "investment multiplier theory."  If an investment is made it gives a certain amount of employment, but that is not the end of the story. Investment tends to multiply itself in subsequent stages of spending. The recipients of the proceeds of the investment spend at least part of it, and the recipients of their spending spend part of what they get, and so on. How many times does the original investment multiply itself? Keynes gives a definite mathematical answer in which his· investment· multiplier rests solely on what he calls "the marginal propensity to consume." The multiplier figure rests on the assumption that the subsequent spending consists entirely of purchases for consumption. None of the unconsumed increase in income is invested. If any of the recipients of the proceeds of the investment should add to their expenditures ,for consumption any investment at all, the mathematics of the Keynes multiplier would be upset, and the multiplier would, be increased. It is a source of satisfaction to find this view in agreement with that of Professor James W. Angell on this point. 
 The multiplier concept is an unfruitful notion. In times when the business cycle is moving upward, particularly in the early stages of revival, increased expenditure, whether for investment or consumption, tends to multiply itself many fold, as Wesley Mitchell 13 has shown.
 In times of business reaction there may be very little multiplication. The soldiers' bonus payments by the Government under Mr. Hoover made no difference in the business, picture. On the other hand, the soldiers' bonus payments under Mr. Roosevelt in 1936, at a time when the business curve was moving upward sharply, appear to have intensified the movement.
 The Relation of Savings to Investment.
 The preoccupation with the varying relationship of saving to investment is superficial. Investment tends. to equal saving in a reasonably good business situation, when bank credit is not expanding. In a strong upward move, when bank credit is readily obtainable, investment tends to exceed saving because men borrow at the banks and because expanding bank credit facilitates the issue of new securities. Ina crisis and in the liquidation that follows a crisis, saving exceeds investment. Men and businessesare saving to pay down debts and especially to repay bank loans-a necessary preliminary to a subsequent revival of business. But the reasons for these changes in the relation of saving to investment are the all-important things. The relation of saving to investment is itself a very superficial thing. The reasons lie in the factors which govern the prospects of profits, including the price and cost equilibrium, the industrial equilibrium, and the quality of credit.
 Keynes strives desperately to rule out bank credit as a factor in the relation of savings to investment. At one point he does it very simply indeed:
 "We have, indeed, to adjust for the creation and discharge of debts (including changes in the quantity of credit or money); but since for the community as a whole the increase or decrease of the aggregate creditor position is always exactly equal to the increase or decrease of the aggregate debtor position, this complication also cancels out when we are dealing with aggregate investment." 
 But bank credit is not so easily canceled out as a factor in the volume of money available for investment. The borrower at the bank is, of course, both debtor to and creditor of the bank when he gets his loan. But his debt is an obligation which is not money, and his credit is a demand deposit, which is money. When he uses this money for investment, he is making an investment in addition to the investment which comes from savings.
 On pages 8 I to 85 of the same book, Keynes engages in a very confused further argument on this point.
 "It is supposed that a depositor and his bank can somehow contrive between them to perform an operation by which savings can disappear into the banking system so that they are lost to investment,or, contrariwise, that the banking system can make it possible for investment to occur, to which no saving corresponds. But no one can save without acquiring an asset, whether it be cash or a debt or capitalgoods; and no one can acquire an asset which he did not previously possess, unless either an asset of equal value is newly produced or someone else parts with an asset of that value which he previously had. In the first alternative there is a corresponding new investment: in the second alternative someone else must be dissaving an equal sum. For his loss of wealth must be due to his consumption exceeding his income... "
 But the assumption that a man who parts with an asset for cash is losing wealth, and that this must be due to his consumption exceeding his income, is purely gratuitous. The man who sells an asset for cash may hold his cash or he may reinvest it in something else. It is not "dis-saving" unless he spends it for current consumption, and he does not have to do that unless he wants to. Indeed on the next page (page 83) the man who holds the additional money corresponding to the new bank-credit is said to be saving. "Moreover the savings which result from this decision are just as genuine as any other savings. No one can be compelled to own the additional money corresponding to the new bankcredit, unless he deliberately prefers to hold more money rather than some other form of wealth."
 Keynes's confusion· here could be interpreted as due to his effort to carry out a puckish joke on the Keynesians. He had got them excited in his earlier writings about the relation between savings and investment. Then, in his General Theory, he propounds the doctrine that savings are always equal to investment. 15 This makes the theology harder for the devout follower to understand, and calls, moreover, for a miracle by which the disturbing factor of bank credit may be abolished. This miracle Keynes attempts in the pages cited above, with indifferent success.
 One must here protest against the dangerous identification of bank expansIon with savings, which is part of the Keynesian doctrine. This, fallacy is discussed at length in the chapters dealing with the expansion of bank credit in the 1920'S and the discussion of the doctrine of oversaving in connection with the undistributed profits tax. This doctrine is particularly dangerous today, when we find our vast increase in money and bank deposits growing out of'war finance described as "savings," just because somebody happens to hold them at a given moment of time. On this doctrine, the greater the inflation, the greater the savings! The alleged excess of savings over investment in the period, 1924- 1929, was merely a failure to invest all of the rapidly expanding bank credit. All of the real savings of this period was invested, and far too much new bank credit in addition.
 The Wage-rate as h'quilibrator of the Supply and Demand of Labor.
 Keynes also tries to destroy the accepted doctrine regarding the rate of wages as the equilibrating factor between" the supply and demand, of labor: He attempts at various places to suggest' that a reduction in money wages "may be" ineffective in increasing the demand for labor (e.g., ibid., p. 13), but he nowhere, so far as I can find, positively states this. He does suggest (p. 264) that a fall in wages would mean a fall in prices, and' that this could lead to embarrassment and insolvency to entrepreneurs who' are heavily indebted, and to an increase in the real burden of the national debt. On this point it is sufficient to say that the fall in wages in a depression usually follows, and does not precede, the fall in prices, and that it is usually more'moderate than the fall in prices. It does not need to be so great as the fall in prices in order to bring about a reequilibration, since wages are only part of cost of production, and, since the efficiency of labor increases in such a situation.
 Keynes accuses other economists of reasoning regarding the demand' schedule for labor on the basis of a single industry, and then, without substantial modification, making a simple extension of the argument, to industry, as, a whole (pp. 258-259). But this is merely additional evidence that he has ignored John Bates Clark's Distribution of TVealth, and the theory of costs of the Austrian School, for whom the law of costs, including wages, is merely the law of the leveling of values among the different industries. Moreover, the studies of Paul Douglas, dealing with the elasticity of the demand for labor as a whole, constitute a sufficient answer to Keynes on this point.. Douglas holds that the demand for labor is highly elastic; so much so that a I % decline in wages can mean a 3% or·4%increase in employment, when wages are held above the marginal product of labor.
 But the practical issue does not usually relate to wages as a whole. The wages of nonunion labor, and especially agricultural labor, usually recede promptly and sometimes to extremes, in a depression. The issue usually relates to union wage scales hel-d so high in particular industries that employment falls off, very heavily in these industries, and that· the· industries constitute bottlenecks. 
 But Keynes does not come to. the theoretical conclusion that a reduction in money wages could not· bring about an increase in employment. He rather reaches the practical conclusion that this is not the best way to do- it. Instead, he would prefer in a closed economy, i.e., one without foreign trade, to make such readjustments as are necessary by manipulations of money, and for an open economy, i.e., one with large foreign trade, to accomplish it by letting the foreignexchangesfluctuate (p. 270).
 The fact seems to be that Keynes entertains a settled prejudice against any reduction in money wages. He is opposed to flexibility downward' in wage scales. He has, however, no such prejudice against flexibility upward. On the contrary, in the Keynes plan for an International Clearing Union of' April 8, 1943, Keynes proposes, as a means of maintaining stability in foreign exchange rates, that a member state in the Clearing Union whose credit balance is increasing unduly, shall encourage. an increase in money rates of earnings. (meaning wages) .18. This would increase the cost of its goods in foreign trade, and consequently reduce its exports, and' consequently hold down its credit balance. But Keynes makes no corresponding demand on the country whose debit in the Clearing Union is increasing unduly that it should encourage a decrease in money rates of earnings.
Economics and the Public Welfare

Monday, October 29, 2012

Top 40 Austrian Economics Blogs BY JARED CUMMANS

The world of investing is largely shaped by the varyingeconomic schools of thought that individuals fall under. One of the best-known of these groups is the Keynsian school, which promotes a more hands-ongovernment that has more control over a particular economy. Another big name in the world of economics is those that associate with the Austrian school of thought, which promotes a laissez-faire government that has little influence on the developments around it. As the years have gone on, the Austrian way of thinking has become incredibly popular, and has shaped a number of investors’ capital allocations [see also How to Play Schiff’s $5,000 Gold Prediction].
Below, we outline the top 40 Austrian Economics blogs for those looking to get a deeper understanding of this niche world.

Most Active

The first group of Austrian Economics resources are what we defined (subjectively) as the most active of the list [see also The Ten Commandments of Commodity Investing].
  1. Luwig von Mises Institute: The who’s-who of Austrian resources, this website is a go to for investors all around the world.
  2. Austrianomics: A good resource with regular postings regarding this particular economic approach.
  3. Bastiat Institute: A regularly-updated Austrian blog that focuses on economies all across the globe.
  4. Economic Thought: A relatively small but extremely active resource chock full of ideas and commentary.
  5. The Radical Subjectivist: An extremely active and bold blog for those looking for strong opinions.
  6. Freeman: A blog that features regular posts about things like “How the Government Destroys Wealth”.
  7. Thinking Machine Blog: A good blog that features regular posts.
  8. Economic Freedom: This blog aims to bring you the latest news, research, commentary and analysis on what is impacting your quality of life.
  9. Monty Pelerin’s World: This popular blog features readers in over 150 countries as it keeps pace with global economic news.
  10. Mercatus Center: A George Mason University-run website that has a nice, widespread focus.
  11. Economic Liberty: A blog that allows visitors to post and share their ideas with the world.
  12. Austrian Economics and Liberty: A blog that focuses on both writing and videos to educate investors.

Sunday, October 28, 2012


It would be presumptuous if I attempted to indicate the numberless channels by which Christian influence gradually penetrated the State. The first striking phenomenon is the slowness with which an action destined to be so· prodigious became manifest. Going forth to all nations, in many stages of civilisation and under almost every form of government, Christianity had none of the character of a political· aposto- late, and in its absorbing mission to individuals did not challenge public authority. The early Christians avoided contact with the State, abstained from the responsibilities of office, and were even reluctant to serve in the army. Cher- ishing their citizenship of a kingdom not of this world, they despaired of an empire which seemed too powerful to be resisted and too corrupt to be converted, whose institutions, the work and the pride of untold centuries of paganism, drew their sanctions from the gods whom th€ Christians ac- counted devils, which plunged its hands from age to age in the blood of martyrs, and was beyond the hope of regenera- tion and foredoomed to perish. They were so much overawed as to imagine that the fall of the State would be the end of the Church and of the world, and no man dreamed of the boundless future of spiritual and social influence that awaited their religion among the race of destroyers that were bring- ing the empire of Augustus and of Constantine to humilia- tion and ruin. The duties of government were less in their thoughts than the private virtues and duties of subjects; and it was long before they became aware of the burden of power in their faith. Down almost to the time of Chrysostom, they shrank from contemplating the obligation to emancipate the slaves.
Although the doctrine of self-reliance and self-denial, which is the foundation of political economy, was written as legibly in the New Testament as in the Wealth of Nations} it was not recognised until our age. Tertullian boasts of the passive obedience of the Christians. Melito writes to a pagan Em- peror as if he were incapable of giving an unjust command; and in Christian times Optatus thought that whoever pre- sumed to find fault with his sovereign exalted himself almost to the level of a god. But this political quietism was not universal. Origen, the ablest writer of early times, spoke with approval of conspiring for the destruction of tyranny.
After the fourth century the declarations against slavery are earnest and continual. And in a theological but yet preg- nant sense, divines of the second century insist on liberty, and divines of the fourth century on equality. There was one essential and inevitable transformation in politics. Popular governments had· existed, and also mixed and federal governments, but there had been no limited government, no State the circumference of whose authority had been defined by a force external to its own. That was the great problem which philosophy had raised, and which no statesmanship had been able to solve. Those who proclaimed the assistance of a higher authority had indeed drawn a metaphysical bar- rier before the governments, but they had not known how to make it real. All that Socrates could effect by way of protest against the tyranny of the reformed democracy was to die for his convictions. The Stoics could only advise the wise man to hold aloof from politics, keeping the unwritten law in his heart. But when Christ said: "Render unto C~sar the things that are C~sar's, and unto God the things that are God's," those words, spoken on His last visit to the Temple, three days before His death, gave to the civil power, under the protection of conscience, a sacredness it had never enjoyed, and bounds it had never acknowledged; and they were the repudiation of absolutism and the inauguration of freedom. For our Lord not only delivered the precept, but created the force to execute it. To maintain the necessary immunity in one supreme sphere, to reduce all political authority within defined limits, ceased to be an aspiration of patient reasoners, and was made the perpetual charge and care of the most energetic institution and the most universal association in the world. The new law, the new spirit, the new authority, gave to liberty a meaning and a value it had not possessed in
the philosophy or in the constitution of Greece or Rome be- fore the knowledge of the truth that makes us free.  

Saturday, October 27, 2012


Parallel with the rise and fall of Athenian freedom, Rome was employed in working out the same problems, with greater constructive sense, and greater temporary success, but ending at last in a far more terrible catastrophe. That which among the ingenious Athenians had been a develop- ment carried forward by the spell of plausible argument, was in Rome a conflict between rival forces. Speculative politics had no attraction for the grim and practical' genius of the Romans. They did not consider what would be the cleverest way of getting over a difficulty, but what ",\Tay was indicated by analogous cases; and they assigned less influence to the im- pulse and spirit of the moment, than to precedent and. ex- ample. Their peculiar character prompted them to ascribe the origin of their laws to early times, and in their desire to justify the continuity of their institutions, and to get rid of the reproach of innovation, they imagined the legendary history of the kings of Rome. The energy of their adherence to traditions made their progress slow, they advanced only under compulsion of almost unavoidable necessity, and the same questions recurred often, before they were settled. The constitutional history of the Republic turns on the endeavours of the aristocracy, who claimed to be the only true Romans, to retain in their hands the power they had wrested from the kings, and of the plebeians to get an equal share in it. And this controversy, which the eager and restless Athenians went through in one generation, lasted for more than two centuries, from a time when the plebs were excluded from the government of the city, and were taxed, and made to serve without pay, until, in the year 286, they were admitted to political equality. Then followed one hundred and fifty years of unexampled prosperity and glory; and then, out of the original conflict which had been compromised, if not theoretically settled, a new struggle arose which was without an· issue.
The mass of poorer families, impoverished by incessant service in war, were reduced to dependence on an aristocracy of about two thousand wealthy men, who divided among themselves the immense domain of the State. When the need became intense the Gracchi tried to relieve it by inducing the richer classes to allot some share .in the public lands to the common people. The old and famous aristocracy of birth and rank had made a stubborn resistance, but ·it knew the art of yielding. The later and more selfish aristocracy was unable to learn it. The character of the people was changed by the sterner motives of dispute. The fight for political power had been carried on with.the moderation which is so honourable a quality of party contests in England. But the struggle for the objects of material existence grew to be as ferocious as civil controversies in France. Repulsed by the rich, after a•.struggle of twenty..two years, the people, three hundred and twenty thousand of whom depended on public rations for food,. were ready to follow any man who promised to obtain for them by revolution what they could not obtain by law.
For a time the Senate, representing the. ancient and threatened order of things, was. strong enough to overcome every popular leader that arose, until Julius C£esar, sup- ported by an army which he had led·· in an unparalleled career of conquest, and by the famished masses which he won by his lavish liberality, and skilled beyond all other menin the art of governing, converted the Republic into amon- archy· by a series of measures that were neither violent nor injurious.
The Empire preserved the Republican forms until .the reign of Diocletian; but the will of the Emperors was as un- controlled as that of the people had been after the victory of the Tribunes. Their power was arbitrary even when it was most widely employed, and yet the Roman Empire rendered greater services to the cause of liberty than the Roman Republic. I do not mean by reason of the temporary accident that· there w~re emperors "vho made good use of their immense opportunities, such as Nerva, of whom Tacitus says that he combined monarchy and otherwise incompatible; or that the Empire was what .its panegyrists declared it, the perfection of democracy. In truth, it was at best an ill..disguised and odious despotism. But Frederic the Great was a despot; yet he was a friend to toleration and free discussion. The Bonapartes were despotic; yet no liberal ruler was ever more acceptable to the masses of the people than the First Napoleon, after he had destroyed the Republic, in 1805, and the Third Napoleon at the height of his power in 1859. In the same way, the Roman Empire possessed merits which, at a distance, and especially at a great distance of time, concern men more deeply than the tragic tyranny which was felt in the neighbourhood of the Palace. The poor had what they had demanded in vain of the Republic. The rich fared better than during the Triumvirate. The rights of Roman citizens were extended to the people of the provinces. To the imperial epoch belong the better part of Roman literature and nearly the entire Civil Law; and it was the Empire that mitigated slavery, instituted religious tolera- tion, made a beginning of the law of nations, and created a perfect system of the law of property. The Republic which C(Esar overthrew had been anything but a free State. It pro- vided admirable securities for the rights of citizens; it treated with savage disregard the rights of men; and allowed the free Roman to inflict atrocious wrongs on his children, on debtors and dependants, on prisoners and slaves. Those deeper ideas of right and duty, which are not found on the tables of muni- cipallaw, but with which the generous minds of Greece were conversant, were held of little account, and the philosophy which dealt with such speculations was repeatedly proscribed, as a teacher of sedition and impiety.
At length, in the year 155, the Athenian philosopher Car- neades appeared at Rome on a political mission. During an interval of official business he delivered two public orations, to give the unlettered conquerors of his country a taste of the disputations that flourished in the Attic schools. On the first day he discoursed of natural justice. On the next, he denied its existence, arguing that all our notions of good and evil are derived from positive enactment. From the time of that memorable display, the genius of the vanquished held its conquerors in thrall. The most eminent of the public men of Rome, such as Scipio an~ Cicero, formed their minds on Grecian models, and her jurists underwent the rigorous discipline of Zeno and Chrysippus.
If, drawing the limit in the·second century, when the in- fluence of Christianity bec.omes perceptible, w~ should form our judgment of the politics of antiquity by its actual legis- lation, our estimate would be low. The prevailing notions of freedom were imperfect, and the endeavours to realise them were wide of the mark. The ancients understood the regulation of power better than the regulation of liberty. They concentrated so many prerogatives in the State as to leave no footing from which a man could deny its jurisdiction or assign bounds to its activity. If I may employ an expressive anachronism, the vice of the classic State was that it was both Church and State in one. Morality was undistinguished from religion and politics from morals; and in religion, morality, and politics there was only one legislator and one authority. The State, while it did deplorably little for edu- cation, for practical science, for the indigent and helpless, or for the spiritual needs of man, nevertheless claimed the use of all his faculties and the determination of all his duties. Individuals and families, associations and dependencies were so much material that the sovereign power consumed for its own purposes. What the slave was in the hands of his master, the citizen was in the hands of the community. The most sacred obligations vanished before the public advantage. The passengers existed for the sake of the·ship. By their disregard for private interests, and for the moral welfare and improvement of the people, both Greece and Rome destroyed the vital elements on which the prosperity of nations rests,
and perished by the decay of families and the depopulation of the country. They survive not in their institutions, but in their ideas, their ideas, especially on the art of government, they are -
The dead, but sceptred sovereigns who still rule Our spirits from their urns.
To them, indeed, may be tracked nearly all the errors that are undermining political society - communism, utilitarianism, the confusion between tyranny and authority, and be- tween lawlessness and freedom.
The notion that men lived originally in a state of nature, by violence and without laws, is due to Critias. Communism in its grossest form was recommended by Diogenes of Sinope. According to the Sophists, there is no duty above expediency and no virtue apart from pleasure. Laws are an invention of weak men to rob their betters of the reasonable enjoy- ment of their superiority. It is better to inflict than to suffer wrong; and as there is no greater good than to do evil with- out fear of retribution, so there is no worse evil than to suffer without the consolation of revenge. Justice is the mask of a craven spirit; injustice is worldly wisdom; and duty, obe- dience, self-denial are the impostures of hypocrisy. Govern- ment is absolute, and may ordain what it pleases, and no sub- ject can complain that it does him wrong, but as long as he can escape compulsion and punishment, he is always free to disobey. Happiness consists in obtaining power and in eluding the necessity of obedience; and he that gains a throne by perfidy and ·murder, deserves to be truly envied.
Epicurus differed but little from the propounders of the code of revolutionary despotism. All societies, he said, are founded on contract for mutual protection. Good and evil are conventional terms, for the thunderbolts of heaven fall alike on the just and the unjust.. The objection to wrong- doing is not the act, but in its consequences to the wrongdoer. 'Vise men contrive laws, not to bind, but to protect them- selves; and when they prove to be unprofitable they cease
to be valid. The illiberal sentiments of even the most il- lustrious metaphysicians are disclosed in the saying of Aris- totle, that the mark of the worst governments is that they leave men free to live as they please.
If you will bear in mind that Socrates, the best of the pagans, knew of no higher criterion for men, of no better guide of conduct, than the laws of each country; that Plato, whose sublime doctrine was so near an anticipation of Christianity that celebrated theologians wished his works to be for  lest me.n should b~ content lvith them, and indifferent to any higher dogma- to whom was granted that prophetic vision of the Just Man, accused, condemned· and scourged, and dying on a Cross - nevertheless employed the most splendid intellect ever bestowed on man to advocate the abolition of the family and the exposure of infants; that Aristotle, the ablest moralist of antiquity, saw no harm in making raids upon a neighbouring people, for the sake of reducing them to slavery - still IIlore, if you will consider that, among the moderns, men of genius equal to these have held political doctrines not less criminal or absurd - it will be apparent to you how stubborn a phalanx of error blocks the paths of truth; that pure reason is as powerless as custom to solve the problem of free government; that it can only be the fruit of long, manifold, and painful experience; and that the tracing of the methods by which divine wisdom has edu- cated the nations to appreciate and to assume the duties of freedom, is not the least part of that true philosophy that studies to Assert eternal Providence, And justify the ways of God to men.
But, having sounded the depth of their errors, I should give you a very inadequate idea of the wisdom of the ancients if I allowed it to appear that their precepts were no better than their practice.·· While statesmen and senates and pop- ular assemblies supplied examples of every description of blunder, a noble literature arose, in which a priceless treasure of political knowledge was· stored, and in which the defects of the existing institutions were exposed with unsparing sagacity. The point on which the ancients were most nearly unanimous is the right of the people to govern, and their inability to govern alone. T o meet this difficulty, to give to the popular element a full share without a monopoly of power, they adopted very generally the theory of a mixed Constitution. They differed from our notion of the same thing, because·modern Constitutions have been a device for limiting monarchy; with them they were invented to curb democracy. The idea arose in the time of Plato - though he repelled it - when the early monarchies and oligarchies had vanished, and it continued to be cherished long after all democracies had been absorbed in the Roman Empire. But whereas a sovereign prince who surrenders part of his author- ity yields to the argument of superior force, a sovereign people relinquishing its own prerogative succumbs to the influence of reason. And it has in all times proved more easy to create limitations by the use of force than by persuasion.
The ancient writers saw very clearly that each principle of government standing alone is' carried to excess and pro- vokes a reaction. Monarchy hardens into despotism. Aristoc- racy contracts into oligarchy. Democracy expands into the supremacy of numbers. They therefore imagined that to restrain each element by combining it with the others would avert the natural process of self-destruction, and endow the State with perpetual youth. But this harmony of monarchy, aristocracy, and democracy blended together, which was the ideal of many writers, and which they supposed to be ex- hibited by Sparta, by Carthage, and by Rome, was a chimera of philosophers never realised by antiquity.· At last Tacitus, wiser than the rest, confessed that the mixed Constitution, however admirable in theory, was difficult to establish and impossible to maintain. His disheartening avowal is not dis- owned by later experience..
The experiment has been tried more often than I can tell, with a combination of resources that were unknown to the ancients- with Christianity, parliamentary government, and a free press. Yet there is no example of such a balanced Constitution having lasted a century. If it has succeeded any- where it has been in our favoured country and in our time; and we know not yet how long the wisdom of the nation will preserve the equipoise. The Federal check was as familiar to the ancients as the Constitutional. For the type of all their Republics was the government of a city by its own inhabitants meeting in the public place. An administration embracing many cities was known to them only in the form of the oppression which Sparta exercised over the Messenians, Athens over her Confederates, and Rome over Italy. The resources which, in modern times, enabled a great people to govern itself through a single centre did not exist. Equality could be preserved only by federalism; and it occurs more often amongst them than in the modern world. If the distribution of power among the several parts of the State is the most efficient restraint on monarchy, the distribution of power among several States is the best check on democracy. By multiplying centres of government and discussion it pro- motes the diffusion of. political knowledge and the maintenance of healthy and independent opinion. It is the protectorate of minorities, and· the consecration of self-government. But although it must be enumerated among the better achievements of practical genius in antiquity, it arose from necessity, and its properties were imperfectly investi- gated in theory.
When the Greeks began to reflect on the problems of society, they first of all accepted things as they were, and did their best to explain and defend them. Inquiry, which with us is stimulated by doubt, began with them in wonder. The most illustrious of the early philosophers, Pythagoras, promulgated a theory for the preservation of political power in the educated class, and ennobled a form of government which was generally founded on popular ignorance and on strong class interests. He preached authority and subordina- tion, and dwelt more on duties than on rights, on religion than on policy; and his system perished in the revolution by
which oligarchies were swept away. The revolution· after- wards developed its own philosophy, whose excesses I have described.
But between the two eras, between the rigid didactics of the early Pythagoreans and the dissolving theories of Protagoras, a philosopher arose who stood aloof from both extremes, and whose difficult sayings were never really under- stood or valued until our time. Heraclitus, of Ephesus, deposited his book in the temple of Diana. The book has perished, like the temple and the worship, but its fragments have been collected and interpreted with incredible ard our, by the scholars# the divines, the philosophers, and politicians who have been engaged the most intensely in the toil and stress of this century. The most renowned logician of the last century adopted everyone of his propositions; and the most brilliant agitator among Continental Socialists com- posed a work of eight hundred and forty pages to celebrate his memory.
Heraclitus complained that the masses were deaf to truth, and knew not that one good man counts for more than thou- sands; but he held the existing order in no superstitious reverence. Strife, he says, is the source and the master of all things. Life is perpetual motion, and repose is death. No man can plunge twice into the same current, for it is always flowing and passing, and is never the same. The only thing fixed and certain in the midst of change is the universal and sovereign reason, which all men may not perceive, but which is common to all. Laws are sustained by no human authority, but by virtue of their derivation from the one law that is divine. These sayings, which recall the grand outlines of political truth which we have found in the Sacred Books, and carry us forward to the latest teaching of our most en- lightened contemporaries, would bear a good deal of elucida- tion and comment. Heraclitus is, unfortunately, so obscure that Socrates could not understand him, and I won't pretend to have succeeded better.
If the topic of my address was the history of political science, the highest and the largest place would belong to Plato and Aristotle. The Laws of the one, the Politics of the other, are, if I may trust my own experience, the books from which we may learn the most about the principles of politics. The penetration with which those great masters of thought an- alysed the institutions of Greece, and exposed their vices, is not surpassed by anything in later literature; by Burke or Hamilton, the best political writers of the last century; by Tocqueville or Roscher, the most eminent of our own. But Plato and Aristotle were philosophers, studious not of unguided freedom, but of intelligent government. They saw the disastrous effects of ill-directed striving for liberty; and they resolved that it was better not to strive for it, but to be content with a strong administration, prudently adapted to make men prosperous and happy.
Now liberty and good government do not exclude each other; and there are excellent reasons why they should go together.,Libertyisnotameanstoahigherpoliticalend. It is itself the highest political end. It is not for the sake of a good public administration that it is required, but for se- curity in the pursuit of the highest objects of civil society, and of private life. Increase of freedom in the State may sometimes promote mediocrity, and give vitality to prejudice; it may even retard useful legislation, diminish the capacity for war, and restrict the boundaries of Empire. It might be plausibly argued that, if 'many things would be worse in
England or Ireland under an intelligent despotism, some things would be managed better; that the Roman govern- ment was more enlightened under Augustus and Antoninus than under the Senate, in the days of Marius or of Pompey. A .generous spirit prefers that his country should be poor, and weak, and of no account, but free, rather than powerful, prosperous, and enslaved. It is better to be the citizen of a humble commonwealth in the Alps, without a prospect of influence beyond the narrow' frontier, than a subject of the superb autocracy that overshadows half of Asia and of Europe. But it may be urged, on the other side, that liberty,is not the sum or the substitute of all the things men ought to live for; that to be real it must' be circumscribed, and that the limits of circumscription vary; that advancing civilisation invests the State with increased rights and duties, and imposes increased burdens and constraint on the subject; that a highly, instructed and intelligent community may perceive the benefit of compulsory obligations which, at a lower stage, would be thought unbearable; that liberal progress is not vague or' indefinite, but aims at a point where the public is subject to'no restrictions but those of which it feels the ad- vantage; that a free 'country may be less capable of doing much for the advancement of religion, the prevention of
vice, or the relief of suffering, than one that does not 'shrink from confronting great emergencies by some sacrifice of individual rights, and some concentration of power; and that the supreme political object ought to be sometimes postponed to still higher moral objects. My argument involves no collision with these qualifying reflections. We are dealing, not with the effects of freedom, but with its causes. We are seeking out the influences which brought arbitrary government under control, either by the diffusion of power, or by the appeal to an authority which transcends all government, and among those influences the greatest philosophers of Greece have no claim to be reckoned.
It is the Stoics who emancipated mankind from its sub- jugation to despotic rule, and whose enlightened and elevated views of life bridged the chasm that separates the ancient from the Christian state, and led the way to freedom. Seeing how little security there is that the laws of any land shall be wise or just, and that the unanimous will of a people and the assent of nations are liable to err, the Stoics looked beyond those narrow barriers, and above those inferior sanctions, for the principles that ought to regulate the lives of· men and the existence of society. They made it known that there is a will superior to the collective will of man, and a law that overrules those of Solon and Lycurgus. Their test of good government is its conformity to principles that can be traced to a higher legislator. That which we must obey, that to which we are bound to reduce all civil authorities, and to sacrifice every earthly interest, is that immutable law which is perfect and eternal as God Himself, which proceeds from His nature, and reigns over heaven and earth and over all the nations.
The great question is to discover, not what governments prescribe, but what they ought to prescribe; for no prescrip- tion is valid against the conscience· of mankind. Before God, there is neither Greek nor barbarian, neither rich nor poor, and the slave is as good as his master, for by birth all men are free; they are citizens of that universal commonwealth which embraces all the world, brethren of one family, and children of God. The true guide of our conduct is no outward author- ity, but the voice of God, who comes down to dwell in our souls, who knows all our thoughts, to whom are owing all the truth we know, and all the good we do; for vice is voluntary, 'and virtue comes from the grace of the heavenly spirit within. What the teaching of that divine voice is, the philosophers who had imbibed the sublime ethics of the Porch went on to expound: It is not enough to act up to the written law, or to give all men their due; we ought to give them more than their due, to be generous and beneficent, to devote ourselves for the good of others, seeking our reward in self- denial and sacrifice, acting from the motive of sympathy and not of personal advantage. Therefore we must treat others as we wish to be treated by them, and must persist until death in doing good to our enemies, regardless of unworthiness and ingratitude. For we must be at war with evil, but at peace with men, and it is better to suffer than to commit injustice. True freedom, says the most eloquent of the Stoics, consists in obeying God. A State governed by such principles as these would have been free far beyond the measure of Greek or Roman freedom; for they open a door to religious toleration, and close it against slavery. Neither conquest nor purchase, said Zeno, can make one man the property of
These doctrines were adopted and applied by the great
jurists of the Empire. The law of nature, they said, is superior to the written law, and slavery contradicts the law of nature. Men have no right to do what they please with their own, or to make profit out of another's loss. Such is the political wisdom of the ancients, touching the foundations of liberty, as we find it in its highest development, in Cicero, and Seneca, and Philo, a Jew of Alexandria. Their writings im- press upon us the greatness of the work of preparation for the Gospel which had been accomplished among men on the eve of the mission of the Apostles. St. Augustine, after quot- ing Seneca, exclaims: "What more could a Christian say than this Pagan has said?" The enlightened pagans had reached nearly the last point attainable without a new dispensation, when the fulness of time was come. We have.seen the breadth and the splendour of .the domain of Hellenic thought, and it has brought us to the threshold of a greater kingdom. The best of the later classics speak almost the language of Christianity, and they border on its spirit.
But in all that I have been able to cite from classical litera- ture, three things are wanting, - representative government, the emancipation of the slaves, and liberty of conscience. There were, it is true, deliberative assemblies, chosen by the people; and confederate cities, of which, both in Asia and Africa, there were so many leagues, sent their delegates to sit in Federal Councils. But government by an elected Parlia- ment was even in theory a thing unknown. It is congruous with the nature of Polytheism to admit some measure of toleration. And Socrates, when he avowed that he must obey God rather than the Athenians, and the Stoics, when they set the wise man above the law, were very near giving utter- ance to the principle. But it was first proclaimed and es- tablishedby enactment, not in polytheistic and philosophical Greece, but in India, by Asoka, the earliest of the Buddhist kings, two hundred and fifty years before the birth of Christ.
Slavery has been, far more than intolerance, the perpetual curse and reproach of ancient civilisation, and although its rightfulness was disputed as early as the days of Aristotle, and was implicitly, if not definitely, denied by several Stoics, the moral philosophy of the Greeks and Romans, as well as their practice, pronounced decidedly in its favour. But there was one extraordinary people who, in this as in other things, anticipated the purer precept that was to come. Philo of Alexandria is one of the writers whose views on society were most advanced. He applauds not only liberty but equality in the enjoyment of wealth. He believes that a limited de- mocracy, purged of its grosser elements, is the· most perfect government, and will extend itself gradually over all the world. By freedom he understood the following of God. Philo, though he required that the condition of the slave should be made compatible with the wants and claims of his higher nature, did not absolutely condemn slavery. But he
has put on record the customs of the Essenes of Palestine, a people who, uniting the wisdom of the Gentiles with the faith  of the Jews, led lives which were uncontaminated by the surrounding civilisation, and were the first to reject slavery both in principle and practice. They formed a religious community rather than a State, and their numbers did not exceed 4,000. But their example testifies to how great a height religious men· were able to raise their conception· of society even without the succour of the New Testament, and affords the strongest condemnation of their contemporaries.
This, then, is the conclusion to which our survey brings us: there is hardly a truth in politics or in the system of the rights of man that was not grasped by the wisest of the Gentiles and the Jews, or that they did not declare with a refinement of thought and a nobleness of expression that later writers could never surpass. I might go on for hours, reciting to you passages on the law of nature and the duties of man, so solemn and religious that though they come from the profane theatre on the Acropolis, and from the Roman fo- rum, you would deem that you were listening to the hymns of Christian churches and· the discourse of ordained divines. But although the maxims of the great classic teachers, of Sophocles, and Plato, and Seneca, and the glorious examples of public virtue were in the mouths of all men, there was no power in them to avert the doom of that-civilisation for which the blood of so many patriots and the genius of such incom- parable writers had been wasted in vain. The liberties of the ancient nations were crushed beneath a hopeless and inevi- table despotism, and their vitality was spent, when the new power came forth from Galilee, giving what was wanting to the efficacy of human knowledge to redeem societies as well as men. 

Friday, October 26, 2012


The conflict between liberty under divine authority and the absolutism of human authorities ended disastrously. In the year 622 a supreme effort was made at Jerusalem to reform and preserve the State. The High Priest produced from the temple of Jehovah the book.of the deserted and forgotten law, and both king and people bound themselves by solemn oaths to observe it. But that early example of limited mon- archy and of the supremacy of law neither lasted nor spread; and the forces by which freedom has conquered must be sought elsewhere. In the very year 586, in which the flood of Asiatic despotism closed over the city which had been, and was destined again to be, the sanctuary of freedom in the East, a new· home was prepared for it in the West, where, guarded by the sea and the mountains, and by valiant hearts, that stately plant was reared under whose shade we dwell,
and which is extending its invincible arms so slowly and yet so surely over the civilised world.
According to a famous saying of the most famous authoress of the Continent, liberty is ancient, and it is despotism that is new. It has been the pride of recent historians to vindicate the truth of that maxim. The heroic age of'Greece confirms it, and it is still more conspicuously true of Teutonic Europe. Wherever we can trace the earlier life of the Aryan nations we discover germs which favouring circumstances and as- siduous culture might have developed into free societies. They exhibit some sense of common interest in common concerns, little reverence for external authority, and an im- perfect sense of the function and supremacy of the State. Where the division of property and labour is incomplete there is little division of classes and of power. Unti
l societies are tried by the complex problems of civilisation they may escape despotism, as societies that are undisturbed by religious di- versity avoid persecution. In general, the forms of the patri- archal age failed to resist the growth of absolute States when the difficulties and temptations of advancing life began to tell; and with one sovereign exception, which is not within my scope to-day, it is scarcely possible to, trace their survival in the institutions of later times. Six hundred years before  the birtho£ Christ absolutism held unbounded sway. Throughout the East it was propped by the unchanging in- fluence of priests and armies. In the West, where there were no sacred books requiring trained interpreters, the priest- hood acquired no preponderance, and when the kings were overthrown their powers passed to aristocracies of birth. What followed, during many generations, was the cruel domination of class over class, the oppression of the poor by the rich, and of the ignorant by the wise. The spirit of that domination found passionate utterance in the verses of the aristocratic poet Theognis, a man of genius and refinement, who avows that he longed to drink the blood of his political adversaries. From these oppressors the people of many cities sought deliverance in the less intolerable tyranny of revo- lutionary usurpers. The remedy gave new shape and energy to the evil. The tyrants were often men of surprising capacity and merit, like some of those who, in the fourteenth century, made themselves lords of Italian cities; but rights secured by equal laws and by sharing power existed nowhere.
From this universal degradation the. world was rescued by the most gifted of the nations. Athens, which like other cities was distracted and oppressed by a privileged class, avoided violence and appointed Solon to revise its laws. It was the happiest choice that history records. Solon was not only the wisest man to be found in Athens, .but the most profound political genius of antiquity; and the easy, blood- less, and pacific revolution by which he accomplished the de- liverance of his country was the first step in a career which our age glories in pursuing, and instituted a power which has done. more than anything, except revealed religion, for the regeneration of society. The upper·class had possessed the right of making and administering the laws, and he left them in possession, only transferring to wealth what had been the privilege of birth. To the rich, who alone had the means of sustaining the burden of public service in taxation and war, Solon gave a share of power proportioned to the demands made on their resources. The poorest classes were exempt from direct taxes, but were excluded from office. Solon gave them a voice in electing magistrates from the classes above them, and the right of calling them to account. This concession, apparently so slender, was the beginning of a mighty change. It introduced the idea that a man ought to have a voice in selecting those to whose rectitude and wisdom he is compelled to trust his fortune, his family, and his life. And this idea completely inverted the notion of human authority, for it inaugurated the reign of moral influence where all political power had depended on moral force. Government by consent superseded government by compul- sion, and the pyramid which had stood on a point was made to stand upon its base. By making every citizen the guardian of his own interest Solon admitted the element of democracy into the State. The greatest glory of a ruler, he said, is to create a popular government. Believing that no man can be entirely trusted, he subjected all who exercised power to the vigilant control of those for whom they acted.
The only resource against political disorders that had been known till then was the concentration of power. Solon un- dertook to effect the same object by the distribution of power. He gave to the common people as much influence as he thought them able to employ, that the State might be exempt from arbitrary government. It is the essence of democracy, he said, to obey no master but the law. Solon recognised the principle that political forms are not final or inviolable, and must adapt themselves to facts; and he provided so well for the revision of his constitution, without breach of continuity or loss of stability, that for centuries after his death the Attic orators attributed to him, and quoted by his name, the whole structure of Athenian law. The direction of its growth was determined by the fundamental doctrine of Solon, that politi- cal power ought to be commensurate with public service. In the Persian war the services of the democracy eclipsed those of the Patrician orders, for the fleet that swept the
Asiatics from the Aegean Sea was manned by the poorer Athenians. That class, whose valour had saved the State and had preserved European civilisation, had gained a title to increase of influence and privilege. The offices of State, which had been a monopoly of the rich, were thrown open to the poor, and in order to make sure that they should obtain their share, all but the highest commands were distributed by lot.
Whilst the ancient authorities were decaying, there was no accepted standard of moral and political right to make the framework of society fast in the midst of change. The instability that had seized on .the forms threatened the very principles of government. The national beliefs were yielding to doubt, and doubt was not yet making way for knowledge. There had been a time when the obligations of public as well as private life were identified with the will of the gods. But that time had passed. Pallas, the ethereal goddess of the Athenians, and the Sun God whose oracles, delivered from the temple between the twin summits of Parnassus, did so much for the Greek nationality,. aided in keeping up a lofty ideal of religion; but when the enlightened men of Greece
learnt to apply their keen faculty of reasoning to the system of their inherited belief, they became quickly conscious that the conceptions of the gods corrupted the life and degraded the minds of the public. Popular morality could not be sus- tained by the popular religion. The moral instruction which was no longer supplied by the gods could not yet be found in books. There was no venerable code expounded by experts, no doctrine proclaimed by men of reputed sanctity like those teachers of the far East whose words still rule the fate of nearly half mankind. The effort to account for things by close observation and exact reasoning began by destroying. There came a time when the philosophers of the Porch and the Academy wrought the dictates of wisdom and virtue into a system so consistent and profound that it has vastly short- ened the task of the Christian divines. But that time had not yet come.
The epoch of doubt and transition during which the Greeks passed from the dim fancies of mythology to the fierce light of science was the age of Pericles, and the endeavour to substitute certain truth for the prescriptions of impaired authorities, which was then beginning to absorb the energies of the Greek intellect, is the grandest movement in the profane annals of mankind, for to it we owe, even after the im- measurable progress accomplished by Christianity, much of our philosophy and far the better part of the political knowl- edge we possess. Pericles, who was at the head of the Athenian government, was the first statesman who encountered the problem which the rapid weakening of traditions forced on the political world. No authority in morals or in politics remained unshaken by the motion that was in the air. No guide could be confidently trusted; there was no available criterion to appeal to, for the means of controlling or deny- ing convictions that prevailed among the people. The popu- lar sentiment as to what was right might be mistaken, but it was subject0 to no test. The people were, for practical pur- poses, the seat of the knowledge of good and evil. The people,
therefore, were the seat of power.
The political philosophy of Pericles consisted of this con-

clusion. He resolutely struck away all the props that still sustained the artificial preponderance of wealth. For the ancient doctrine that power goes with land, he introduced the idea that power ought to be so equitably diffused as to afford equal security to all. That one part of the community should govern the whole, or that one class should make laws for another, he declared to be tyrannical. The abolition of privi- lege would have served only to transfer the supremacy from the rich to the poor, if Pericles had not redressed the balance by restricting the right of citizenship to Athenians of pure descent. By this measure the class which formed what we should call the third estate was brought down to 14,000 citi- zens, and became about equal in numbers with the higher ranks. Pericles held that every Athenian who neglected to take his part in the public business inflicted an injury on
the commonwealth. That none might be excluded by poverty, he caused the poor to be paid for their attendance out of the funds of the State; for his administration of the federal tribute had brought together a treasure of more than two million sterling. The instrument of his sway was the art of speaking. He governed by persuasion. Everything was decided by argumentin open deliberation, and every influence bowed before the ascendancy of mind. The idea that the object of constitutions is not to confirm the predominance of any interest, but to prevent it; ·to preserve with equal care the independence of labour and the security of property; to make the rich safe against envy, and the poor against oppression, marks the highest .level attained by the. statesmanship of Greece. It hardly survived the great patriot who conceived it; .and all history has been occupied with the endeavour to upset the balance of power by giving the advantage to money,land, or numbers. A generation followed that has never been equalled in talent - a generation of men whose works, . in poetry and eloquence, are still the envy of the world, and in history, philosophy, and politics remain unsurpassed.. But it produced no successor to Pericles, and no wan was able to wield the sceptre that fell from his hand.
It was a momentous step in the progress of nations when the principle that every interest .should have the right and the means of asserting itself was adopted by the Athenian Constitution. But for those who were beaten in the vote there was no redress. The law did not check the. triumph of ma- joritiesor rescue the minority from the dire penalty . of hav- ing been outnumbered. When the overwhelming influence of Pericles was removed, the conflict between classes raged without restraint, and the slaughter that befell the higher ranks in the Peloponnesian war gave an irresistible pre- ponderance to the lower. The restless and inquiring spirit of the Athenians was prompt to unfold.the reason of every institution and the consequences of every principle, and their Constitution ran its course from infancy to decrepitude with unexampled speed.
Two men's lives span the interval from the first admission of popular influence, under Solon, to· the. downfall of the State. Their history furnishes the classic example of the peril of democracy under conditions singularly favourable. For the Athenians were not only brave and patriotic.and capable of generous sacrifice, but they were the most religious of the Greeks. They venerated the Constitution which had given them prosperity, and equality, and freedom, and never  questioned the fundamental laws which regulated the enor- mous power of the Assembly. They tolerated considerable variety of opinion and great licence of speech; and their humanity towards their slaves roused the indignation even of the most intelligent partisan of aristocracy. Thus they became the only people of antiquity that grew great by demo- cratic institutions. But the possession of unlimited power, which corrodes the conscience, hardens the heart, and con- founds the understanding of monarchs, exercised its de- moralising influence on the illustrious ·democracy of Athens.
It is bad to be oppressed by a minority, but it is worse to be oppressedbyamajority. Forthereisareserveoflatentpower in the masses which, if it is called into play, the minority can seldom resist. But from the absolute will of an entire people there is no appeal, no redemption, no refuge but treason. The humblest and most numerous class of the Athenians united the legislative, the judicial, and, in part, the executive power. The philosophy that was then in the ascendant taught them that there is no law superior to that of the State - the lawgiver is above the law.
It followed that the sovereign people had a right to do whatever was within its power, and was bound by no rule of right or wrong but its own judgment of expediency. On a memorable occasion the· assembled Athenians declared it monstrous that they should be prevented from doing what- ever they chose. No force that existed could restrain them; and they resolved that no duty should restrain them, and that they would be bound by no laws that were not of their own making. In this way the emancipated people of Athens be- came a tyrant; and their government, the pioneer of Euro- pean freedom, stands condemned with a terrible unanimity by all the wisest of the ancients. They ruined their city by attempting to conduct war by debate in the marketplace. Like the French Republic, they put their unsuccessful com- manders to death. They treated their dependencies with such injustice that they lost their maritime Empire. They
plundered the rich until the rich conspired with the public enemy, and they crowned their guilt by the martyrdom of Socrates.
When the absolute sway of numbers had endured for near a quarter of a century, nothing but bare·existence was left for the State to lose; and the Athenians, wearied and de- spondent, confessed the true cause of their ruin. They un- derstood that for liberty, justice, and equal laws, it is as necessary that democracy should restrain itself as it had been that it should restrain the oligarchy. They resolved to take their stand once mor~upon the ancient ways, and to restore the order of things which had subsisted when the monopoly of power had been taken.from the rich and had not been acquired by the poor. After a first restoration had failed, which is only memorable because Thucydides, whose judg- ment in politics is never at fault, pronounced it the best government Athens had enjoyed, the attempt was renewed with more experience and greater singleness of purpose. The hostile parties were reconciled, and proclaimed an amnesty, the first in history. They resolved to govern by concurrence. The laws, which had the sanction of tradition, were reduced to a code; and no act of the sovereign assembly was valid with which they might be found to disagree. Between the sacred lines of the Constitution which were to remain in- violate, and the decrees which met from time to time the needs and notions of the day, a broad distinction was drawn;
and the fabric ofa law which had been the work of genera- tions was made independent of momentary variations in the popular will. The repentance of the Athenians came too late to save the Republic. But the lesson of their experience endures for all times, for it teaches that government by.the whole people, being the government of the most numerous and most powerful class, is an evil of the same nature as unmixed monarchy, and requires, for nearly the same reasons, institutions that·shall protect it against itself, and shall up- hold the permanent reign of law againstarbitrary revolutions of opinion.