***] A weakness in his approach to this subject is reflected here in his comments about induction, deduction and Malthus [***
Keith, will you please expand on this. You can't just leave us hanging like this. Well, you can, but I hope you don't.
***Michael Lane has gone far to correcting the careless comments (in this speech) about induction and deduction [***
What does he (or you) mean by "careless comments"?
***] and Michael's effort to focus on a small scale application of the social credit solution does address what I regard as Douglas' "malthusian error". [***
What is his "malthusian error"?
--------------------------------------------
I've transcribed the first three pages of Dunhedin in plain text that I append below. Here, he discusses deduction, induction and mentions Malthus. --
Douglas at Dunedin, New Zealand, 1934
[pages 1-3 except last paragraph page 3 of pdf document.]
Mr. Chairman, Ladies and Gentlemen: I propose to take up your time for a little while with a certain number of considerations which you may not immediately connect with finance.
I assure you that, so far as the practical problem of dealing with the present situation is concerned, that these preliminary matters on which I wish to engage your attention are of primary importance.
Now I should like, first of all, to direct your attention to the fact that the advance of the world-- the progress of the world--depends ultimately upon what I might call a point of view. And the world has been for a considerable time operating, as you might say, within two divergent points of view, one of which is old--as we count age--and one of which has a later origin to which I will refer.
The first of these points of view, or habits of mind, as you might say, is called by those people who deal in the science of logic, the *deductive* habit of mind, which may be translated as the habit of arguing from the general to the particular. Let me explain what I mean, and what is meant by that.
Supposing you had never seen a cow, and the first sight that you had of a cow was on the skyline standing still. You would see a silhouette of a cow, and it would appear to have two legs, and someone would say, "That is a cow!" Now, if you had the deductive habit of mind you would immediately form a theory about cows and you would say, "That is a cow. All cows are black, all cows have two legs, and all cows stand still." And when somebody pointed out to you in the plains a red animal with white spots moving rapidly you would deny that that could possibly be a cow. No cow could possibly exhibit four legs, have white spots, or move about. You have a fixed theory about cows, and your consequent theory about cows does not fit in with that theory, and, therefore, it is not a cow. (Laughter).
That is the deductive habit of mind. It has produced certain results of value largely in the sphere of moral and intellectual advance, and perhaps the most outstanding example of the deductive type of mind was the great philosopher Aristotle, and his work is embodied in a book which is called "Aristotle's Ethics."
Now the great defect of the deductive habit of mind is that it is static, that is forms a theory--just as I was suggesting you could form a theory about cows-- and in its pure form that theory is eternal. No facts will shift it at all. Anything that does not conform with that theory is not a fact.
This deductive habit of mind persisted from long before the Christian era until down to about the middle of the 16th century, when a man arose who became Lord Chancellor of England--Francis Bacon--and he wrote two books, one of which was called "On the Advancement of Learning," and the other was called the "Novum Organum," which no doubt most of you know means "New Method." And among the things that he said was something like this. (In writing down my notes for what I am saying tonight I had to quote this from memory because I have not the books here in New Zealand). Bacon said: "Further speculation along the lines of these great ancients is fruitless. What is required is to cultivate the just relationship between the mind and things."
Now that may--if you sort it out of its rather ancient English--seem to you to be a very obvious thing for anybody to say, it was a completely new idea. It was an absolutely revolutionary method of thinking. It was the birth of the experimental method.
From that time onwards in certain lines of activity,
instead of its being possible to set up a theory, and say that theory is a good theory, and is eternal, we have got into the habit of mind in certain spheres of activity of saying any fact is a good fact, and a great fact is a good fact, but any theory against which anybody can bring a fact which will not fit into it, is a bad theory and should be discarded. I want you to grasp that idea because it is vital in connection with what we are talking about tonight.
Now, up to the time of, and, of course, for some time after the formulation of this theory, which is called the *deductive* method of thinking--the method of arguing from facts to a tentative theory which you discard as soon as it ceases to coincide with the facts, and this is the reverse of the idea of forming a rigid theory and blinding yourself to the fact--up to the time that this new inductive method of thought came into operation, I should like you to observe that from the material point of view the world made no progress whatever.
*The method by which people got food, board and clothes, and kept themselves against the storms, and the way they built ships, and the way they progressed--their transportation--and so forth, made for all practical purposes no advance whatever in the centuries, thousands of years, between the birth of Christ and the sixteenth century--none whatever.*
The formulation of a fixed set of ideas is a disregarding of facts. The world was warned against it nineteen hundred years ago, or so, when it was said that the letter killeth, but the spirit maketh alive. There is no doubt running through the warp and woof of things a certain amount of something that we can call absolute truth, but the form of that truth is always changing, and we are beginning to understand that even in a mathematical form is the theory of relativity. There is no such thing as absoluteness about any of these things at all.
*Now this modern civilisation in which we live--the civilisation of railway trains and electric power and motor cars and mass production and things of that kind--is the outcome of the inductive method of thought. The methods by which we judge in regard to matters of economics and finance and so forth are the outcome of deductive methods of thought, the kind of thought which says that all cows are black, have two legs, and never move.
*So far as our economic thinking is concerned, it has taken no cognizance, no notice whatever of the miraculous changes that have been brought about in the physical economic system by the inductive method of thought.
*There is nothing seriously changed about economic thinking of the real kind, from about, at any rate, the sixteenth century. Some critic who thought that he had discovered something which would be deadly to my views, said that such and such an opinion that I had expressed had been contributed by Sir Francis Somebody in 1610, and when I suggested that what somebody said about the economic system in 1610 was history and not news, he did not see the point.*
That is exactly what we do to-day when we argue in many cases about certain things that are interwoven with the existing state of affairs. You will hear people talking about the virtue of thrift and economy as connected with the present economic system. For instance, the Prime Minister of Canada--if he was correctly reported, and I only saw a very short report of what he had said--said that "Nothing but hard work and thrift would get Canada out of the difficulties in which it is." Now, that is exactly the sort of thing that might conceivably have been true about 300 years ago, and it has about as much to do with the present difficulty as the picture of cow on the hill silhouetted against the light. If hard work and thrift would have saved the farmers of Canada, they would have been saved long ago, because they are as hard-working as thrifty as any body of men in the world.
That is not to say that something that we might call economy and something that we might call thrift and hard work are not things which have an application perhaps even at all times, but their application to the situation changes because the situation changes, and the form in which it is true to say that economy and thrift are virtues of the economic system to-day is quite a different form to that in which it was true three or four hundred years ago.
*We are still, in our economic thinking, under the spell of a set of ideas which apply to an age of scarcity, and we are not living in an age of scarcity; we are living in a age of plenty, as the result of the application of the inductive method of thinking, and I want you to apply to what I am going to say, the inductive method of thinking. I want you to look at the facts, to discard any pre-conceived theories about them and see whether the facts correspond with what I might put forward as a tentative theory, or whether they correspond with your old pre-conceived ideas. That is why it is so necessary to realise these two different kinds of thinking.*
Now, what are the facts? I have gone over the facts in so many places, and I think it is so much common knowledge, the facts of the abundance of production at the present time, that I am really almost ashamed in inflict it upon you. But, as you know, there is hardly any staple product at the present time of which there is not an actual surplus, and there is no product of any kind whatever of which there is not an easily realisable potential surplus. We know that in Canada, as the result of hard work there is an enormous surplus of wheat. The same thing is probably true in the Western States of America. The United States Government is paying a bonus to farmers not to grow wheat--not a bonus to grow wheat, but a bonus NOT to grow wheat. The same thing is exactly true of cotton. I need not rub in the position in regard to wool in speaking to a New Zealand audience. I have no doubt the same thing is very nearly true in regard to wheat here. I have absolutely exact knowledge that three or four times as much wheat as is grown in Great Britain could easily be grown at the present time. The same thing is true as far as actual surpluses are concerned, in many staple lines.
Cows are being condemned on the plains of the Argentine. Sows are being killed with their litters in the United States to reduce the number of pigs. In every way you have this insane preconception that you have got to bring the standard of living in the world down to a pre-conceived idea, and you must not distribute the surpluses unless they are distributed on the lines laid down by the financial conventions now current.
Now these are actual surpluses, but consider the POTENTIAL surpluses! There is probably not a manufacturer, a farmer, a producer of any kind in any part of the western world, by which of course, I mean western in the cultural sense, which includes New Zealand, Australia, Canada, United States, Great Britain, and so forth who could not treble his output if he were asked to. The plant that he has is not working to anything like full capacity. He is not employing anything like the number of people who could be employed, and would be willing to be employed.
*In every possible way in which you can turn, behind this front line of actual surpluses you will find another, an enormously greater line of potential surpluses. No-body who will look on these facts with a completely un-biased eye could possibly suggest that we are not actually on the doorstep of a world of abounding plenty. But look at the lines that we take in face of a situation of that kind!* -- [to be continued]
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