century denied it with the approval of the best of their contemporaries and
of not the worst of their epigones, because they could not otherwise
explain the strange problem of human economics.

Then arose that giant of our science, one of the greatest minds of which
humanity can boast--Adam Smith. He restored the ancient wisdom of our
ancestors, and also clearly and irrefutably demonstrated what they had only
instinctively recognised--namely, that the increase of wealth depends upon
the productiveness of human labour. But while he threw round this truth the
enduring ramparts of his logic and of his sound understanding, he
altogether failed to see that the actual facts directly contradicted his
doctrine. He saw that wealth did _not_ increase step by step with the
increased productiveness of labour; but he believed he had discovered the
cause of this in the mercantilistic and physiocratic sins of the past. In
his day the historical sense was not sufficiently developed to save him
from the error of confounding the--erroneous--explanations of an existing
evil with its causes. Hence he believed that the course of economic events
would necessarily correspond fully with the restored laws of a sound
understanding--that is, that wealth would necessarily increase step by step
with the capacity of producing it, if only production were freed from the
legislative restraints and fiscal fetters which cramped it.

But even this delusion could not long prevail. Ricardo was the first of the
moderns who perceived that wealth did not increase in proportion to
industrial capacity, even when production and trade were, as Smith
demanded, freed from State interference and injury. He hit upon the
expedient of finding the cause of this incongruity in the nature of labour
itself. Since labour is the only source of value, he said, it cannot
increase value. A thing is worth as much as the quantity of labour put into
it; consequently, when with increasing productiveness of labour the amount