tics. According to
him political economy is a mixed science, its field being partly mental,
partly physical. It may be called a positive science, because its premises
are facts, but it is hypothetical in so far as the laws it lays down are
only approximately true, _i.e._ are only valid in the absence of
counteracting agencies. From this view of the nature of the science, it
follows at once that the method to be pursued must be that called by Mill
the physical or concrete deductive, which starts from certain known causes,
investigates their consequences and verifies or tests the result by
comparison with facts of experience. It may, perhaps, be thought that
Cairnes gives too little attention to the effects of the organism of
society on economic facts, and that he is disposed to overlook what Bagehot
called the postulates of political economy. (2) His analysis of cost of
production in its relation to value. According to Mill, the universal
elements in cost of production are the wages of labour and the profits of
capital. To this theory Cairnes objects that wages, being remuneration, can
in no sense be considered as cost, and could only have come to be regarded
as cost in consequence of the whole problem being treated from the point of
view of the capitalist, to whom, no doubt, the wages paid represent cost.
The real elements of cost of production he looks upon as labour, abstinence
and risk, the second of these falling mainly, though not necessarily, upon
the capitalist. In this analysis he to a considerable extent follows and
improves upon Senior, who had previously defined cost of production as the
sum of the labour and abstinence necessary to production. (3) His
exposition of the natural or social limit to free competition, and of its
bearing on the theory of value. He points out that in any organized society
there can hardly be the ready transference of capital from one employment
to another, which is the indispensable condition of free competition; while
class distinctions render it impossible for labour to transfer itself
readily to new occupations. Society may thus be regarded as consisting of a
series of non-competing industrial groups, with free competition among the
members of any one group or class. Now the only condition under which cost
of production will regulate value is perfect competition. It follows that
the normal value of commodities--the value which gives to the producers the
average and usual remunerati