THE RELATION OF THE SCIENCE OF FINANCE TO POLITICAL ECONOMY.
§ 6. A few words will be necessary to justify the classification here insisted on.
In the Introduction to the general doctrine of Political Econ omy contained in the first volume of the present work, it is attempted to lead up to the general body of the science by means of the following named chapters : An Exposition of the Scientific Method necessary to the Attainment of Truth in our Branch of Knowledge, The Relation of Political Economy to the other Sciences, The Historical Development of the Body of Doc trines, Fundamental Concepts.
The unity of part and whole—of the Science of Finance with Political Economy —has been so fully pointed out in the Doc trine of Method that there is no need of repeating here, in con nection with this special point, what has already been said in discussing the general subject. It may therefore be sufficient simply to refer back to the earlier discussion. The meaning and import of the general principles, set forth after the fashion of the old school of thought ; the relation of deduction to induction, of hypothesis to empirical knowledge ; and more especially the value of financial history and financial statistics for the purposes of the Science of Finance ;—all this could be intelligibly dis cussed only with the aid of appropriate illustrations, and bearing in mind what has already been said in the general portion of the work. But this would necessitate a great deal of repetition, which will best be avoided by simply referring back to the general introduction for the whole matter.
I flatter myself that in this preliminary exposition, and more especially in those portions which touch the relation of what ought to be to what is in social life, I have said much that may be of substantial assistance toward clearing up existing miscon ceptions. This exposition has set aside that customary disrup tion of our science into a duality of problems, which is wont to insist on directing our attention at one time exclusively to the historical-statistical materials furnished by investigation and to their causal connection, and at another time to the solution of the questions of the day. The fallacy of this position has been exposed both as regards the Science of Finance in particular and as regards Political Economy in general. It has been set aside both in so far as its outcome is an historical quietism that ignores the presence in all the subject matter of history of a ceaseless drift in the direction of what is to be ; and it has also been set aside in so far as its meaning is a clamorous demand for innova tion, which, under the pressure of the impulses of the moment, overlooks the continuity of the past with the future.. The bring ing of these conflicting elements into harmony in the science and in the affairs of life, is the really conclusive test of the value of this preliminary methodological exposition which might seem to the superficial glance to be but an idle speculation.
As in the second chapter of the general introduction we dealt with the position of Political Economy within the domain of science generally, so here we shall attempt to trace more in detail the connection between the general science of Political Economy and the Science of Finance. In so doing we shall indicate the place held by Finance in the group of sciences that treat of industrial life. In performing this task we shall find that the fundamental principles peculiar to the Science of Finance will come to light of their own accord in the course of establishing this connection of the part with the whole, some what as was done for the general, sciences of Political Economy in the fourth chapter of our general introduction.
The historical development of the science, together with the necessary indication of the more important literature of the sub ject will also claim a chapter in this special introduction to the Science of Finance, just as was found necessary for the Science as a whole in the general introduction.
§ 7. The lines of connection between Political Economy and the Science of Finance are the following : In the first general subdivision of this work, which treats of the elements of industrial life, the central fact is The Wants of the People. Even at that point it was found necessary, in order not to leave unnoticed a factor of great consequence in the col lective needs of any community, to speak of The Demands of the Public Economy and to indicate their chief objects and aims (vol. i. secs. 213-216). The same chapter discusses the orderly relation and comparative importance of wants considered frdm the general economic standpoint, and at the same time, in dealing with the general problems of industrial society, it touches also upon the peculiar features of the public budget (vol. i. secs. 192 These several lines are taken up in the first book, treating of the Science of Finance, the first chapter of which, under the head of The Nature of the Public Economy, treats of the state and its functions, while the sixth and seventh chapters of the same book treat of Order and Sequence [Ordnung] in the Public Economy, and the Various Kinds of Public Expenditures and Demands [Bedarf].
But there are also other points at which work done in the first volume will serve in the way of introduction to the discussions of this first book : as, e. g., the discussion of The Structure and Activ ities of Industrial Society [Gestaltung des Wirthschaftslebens], which takes up the state as a constituent factor in the moral system (sec. 284); and again, under the head of The Organization of Social Life [ Gliederung des Zusammenlebens], where trade and other associations [ Verbande] are treated of in connection with so-called free competition (secs. Both topics are taken up again in the first chapter of Book I. following.
The question of voluntary action or coercion in public affairs is dealt with, partly in the discussion of associations (secs. 301-302) partly in treating of business activity (secs. 290-292). The fifth chapter of Book I. is devoted to this question. In its treatment of self-government, it also connects with the discussions of the chapter on the Division of Labor (secs. 246-247).
What has been said in the general portion of the work, under the head of The Disposition of Society into Groups, with respect to The Development of National Unity and of a Com munity of Nations (sec. 329-335), is taken up again in the fourth chapter following, in discussing The Structure and Relations of Public Bodies [ Gliederung der Ofentlichen Verbande].
Finally, the great problem that forms the main topic of every system of financial science, the theory of taxation, has already received due attention in the general theory of prices, under the . head of The Determination of Value within Public Bodies [Die Werthbestimmung in den Verbanden] (secs. 396-403).
The third chapter of Book I. connects with this discussion in treating of the various classes of contributions to the public expenditures. And two entire books of the Science of Finance (Books II. and III.) are occupied with the theory of taxation, general and special. While Book IV., finally, on Public Debts, is based on the general theory of credit previously discussed (vol. i. secs. 415-423).
This then is the relation of the general to the special portion of the work.