Ifindustrywereinfacttheirrational，unjustandutterlyinhumananarchyitissometimesrepresentedtobe，itwouldnotholdtogetherfortwenty-fourhours。Notmerelyistheindividualbusinessinitsnormalstateafinelyadjusted，accurately-workingcomplexofhumanskill，industryandcooperativegood-will，butthelargerandlesscentralisedstructures，whichwecalltradesandmarkets，showawonderfulintricacyoforderintheirformandworking。TofeedthethousandsofmillsandworkshopsofEnglandwithafairlyregularsupplyofcountlessmaterialsdrawnfromthewideworld，tofeedthemillionsofmouthsofourpeoplewiththeirregularsupplyofdailyfood，arenotableachievementsofindustrialorder。

Inconcentrating，aswemust，ourchiefthoughtuponthedisorderofthesystem，theplaceswhereitfails，andthedamageofsuchfailure，wegainnothingbyexaggeratingtheindustrialmaladiesandtheirsocialinjuries。

Theproportionsoforderanddisorder，healthanddisease，humancostandhumanutility，intheworkingofourindustrialsystemarebestascertainedbyturningoncemoretoourconcretemassofwealth，ourincome，andenquiringintothequantitativemethodofitsdistribution。

Inexaminingthehumancostsinvolvedinagivenoutputoflabour-power(andofotherproductiveenergy)werecognisedthatverymuchdependedupontheconditionsofthatoutput，andparticularlyuponthelengthandintensityoftheworking-dayandworking-week。

Similarly，inexaminingthehumanutilitygotfromtheconsumptionofagivenquantityofgoods，werecognisedthatitwilldependuponthesortandthenumberofpersonswhoreceiveitforconsumption。

SofrombothsidesofthequestionweapproachthecentralissueofthedistributionofWealth。

Ifthe£；2，000，000，000ofgoodswerefoundtobesodistributedinthemodesoftheirproductionastoinvolvenoburdenoftoilandnoinjuryupontheproducers，whiletheyweresodistributedinincomeastoinvolvenowasteordamageinconsumption，thehumanutilityitrepresentedwouldreachamaximumandcostwouldbezero。

If，ontheotherhand，thesamegoodswerelargelyproducedbyill-nourishedlabourers，workinglonghoursunderbadhygienicconditions，andusingcapitallargelyfurnishedbythepainfulandinjurioussavingofthepoor，whilethedistributionofthegoodswassuchastoassignthebulkofthemtoasmallaffluentclass，themasseslivingonabaresubsistencelevel，thehumanutilityofsuchasystemwouldbeverysmall，itshumancostverygreat。Judgedindeedfromanyrightstandardofcivilisation，anindustrialsocietyofthelattersortmightrepresentaminusquantityofhumanwelfare。

Theremightevenbetwonationsofequalpopulationandeconomicincome，equallyprosperousfromthestandpointofstatisticsofcommerce，whichnevertheless，byreasonofthedifferentapportionmentofworkandincome，stoodpolesasunderineverytruecountofhumanprosperity。

§；3。NowtheHumanLawofDistribution，initsapplicationtoindustry，aims，aswehaveseen，todistributeWealth，inrelationtoitsproductionontheonehandanditsconsumptionontheother，soastosecuretheminimumofHumanCostsandthemaximumofHumanUtility。Nobareruleofabsoluteequality，baseduponthedoctrineofequalrights，equalpowersorequalneeds，willconducetothisresult。Thenotionthattheclaimsofjusticeorhumanitywouldbemetbyrequiringfromallpersonsanequalcontributiontothegeneraloutputofproductiveenergyismanifestlyfoolishandimpracticable。

Torequirethesameoutputofenergyfromastrongasfromaweakman，fromanoldasfromayoung，fromawomanasfromaman，toignorethoseactualdifferencesofage，sex，health，strengthandskill，wouldberejectedatonceasapreposterousapplicationofhumanequality。

Ifsuchanequaloutputwererequired，itcouldonlybeobtainedbyanaveragetaskwhichwouldundulytaxthepowersoftheweak，andwouldwastemuchofthepowersofthestrong。Asimilarhumaneconomyholdsoftheprovisionofcapitalthroughsaving。Toimposesavinguponworkingfolkwhoseincomebarelymaintainsthefamilyefficiency，whenotherfolkpossesssurplus-incomesoutofwhichthesociallynecessarycapitalcanbeprovided，isamanifestlywastefulpolicy。Thosewhohavenotruepowertosaveshouldnotbecalledupontoundergothis"cost":allsavingshouldcomeproportionatelyoutofhigherincomeswhereitinvolvesnohumansacrifice。Alike，asregardslabourandcapital，thetruesocialeconomyisexpressedintheprinciplethateachshouldcontributeinaccordancewithhisability。

Itshouldbesimilarlyevidentthatexactequalityofincomesinmoneyoringoodsforallpersonsisnotlesswasteful，orlesssociallyinjurious。

Icannotprofesstounderstandbywhatreasoningsomeso-calledSocialistsdefendanidealorderinwhicheverymemberofsociety，man，womanandchild，shouldhaveanabsolutelyequalshareofthegeneralincome。Theneedsofpeople，theircapacitytogetutilityoutofincomesbyconsumingit，arenomoreequalthantheirpowersofproduction。Neitherinrespectoffood，orclothing，orthegeneralmaterialstandardofcomfort，cananysuchequalityofneedsbealleged。Tosaythatabigstrongman，givingoutacorrespondinglylargeoutputofenergy，needsexactlythesamesupplyoffoodasasmallweaklyman，whoseoutputisathirdasgreat，wouldbeasridiculousastopretendthatafifty-horsepowerengineneedednomorefuelthanaten-horsepowerone。

Norwillthedifferencesinonesetofneedsbecloselycompensatedinanother。Mankindisnotequalinthesensethatallpersonshavethesamenumberoffacultiesdeveloped，orcapableofdevelopment，tothesameextent，anddemandingthesameaggregateamountofnutriment。Tomaintaincertainordersofproductiveefficiencywilldemandamuchlargerconsumptionthantomaintainothers。Becausedifferencesofincomeandexpenditureexistatpresentwhicharemanifestlyunjustandinjurious，thatisnoreasonforinsistingthatalldifferencesareunwarrantable。Equalityofopportunitydoesnotimplyequalitybutsomeinequalityofincomes。Foropportunitydoesnotconsistinthemerepresenceofsomethingwhichamancanuse，irrespectiveofhisowndesiresandcapacities。Abanquetdoesnotpresentthesameamountofopportunitytoafullmanastoahungryman，toaninvalidastoarobustdigestion。

£；1，000，spentinlibraryequipmentforuniversitystudents，representsfarmoreeffectiveopportunitythanthesamesumspentonlibraryequipmentinacommunitywherefewcanreadorcaretoreadanybookworthreading。

Equalityofopportunityinvolvesthedistributionofincomeaccordingtocapacitytouseit，andtoassumeanabsoluteequalityofsuchcapacityisabsurd。

Itmaynodoubtbeurgedthatitisdifficulttomeasureindividualneedsandcapacitiessoastoapplythetrueorganicmodeofdistribution。

Thisistrueandanypracticalrulesforadjustingincome，orfordistributionoftheproduct，accordingtoneeds，willbelikelytoinvolvesomewaste。

Butthatisnoreasonforadoptingaprincipleofdistributionwhichmustinvolvegreatwaste。Howeverdifficultitmaybetodiscoverandestimatedifferencesofneedsinindividualsorclassesofmen，toignorealldifferencesinsuresamaximumofwaste。For，assuming，asitdoes，asingleaverageorstandardman，towhichtypenoactualmanconforms，itinvolvesanecessarywasteineachparticularcase。Everyone，inaword，wouldunderthismechanicalinterpretationofequalitypossesseitheralargerorasmallerincomethanhecoulduse。Suchadoctrine，thoughsometimespreachedbypersonswhocallthemselvessocialists，isreallyasurvivaloftheeighteenth-centurydoctrineofindividualrights，graftedontoatheoryoftheuniformityofhumannaturethatiscontradictedbytheentiretrendofscience。

Thislevellingdoctrineonlyservestobuttresstheexistingformsofinequality，bypresentingintheguiseofreformaspuriousequality，thefollyandthewasteofwhichareobviouseventotheleastreflectingofmankind。

§；4。Distributionofincomeaccordingtoneeds，orabilitytouseit，doesnot，indeed，dependforitspracticalvalidityupontheapplicationofexactanddirectmeasurementsofneeds。Thelimitsofanysortofdirectmeasurementevenofmaterialneedsappearinanydiscussionofthescienceofdietetics。Butinexactthoughsuchscienceis，itcanfurnishcertainvalidreasonsfordifferentstandardsoffoodindifferentoccupations，andforotherdiscriminationsrelatingtorace，age，sexandvigour。Whatholdsoffoodwillalsoholdofhousing，leisure，modesofrecreationandintellectualconsumption。Normustitbeforgottenthat，forexpenditure，thefamilyisthetrueunit。Thesizeandageofthefamilyiscertainlyarelevantfactorinestimatingneeds，andinanydistributiononaneedsbasismustbetakenintoaccount。

Publicbodies，andlesscommonlyprivateforms，infixingsalariesandwages，areconsciouslyguidedbysuchconsiderations。Theideaistoascertainthesumwhichwillmaintainaworker，withorwithoutafamily，inaccordancewitheconomicefficiency，andhavingregardtotheacceptedconventionsoftheclassfromwhichhewillbedrawn。Havingdeterminedthis"proper"salaryorwage，theyseektogetthebestmanforthework。

Itistruethattheconventionalfactorloomssobiginthisprocessasoftentoobscurethenaturaleconomy。WhenitisdeterminedbyamunicipalitythatitsTownClerkoughtothave£；1500ayearanditsdustman22s。

aweek，itappearsapalpablestrainingoflanguagetosuggestthatdifferencesof"needs"correspondtothisdescrepancyofpay。For，thoughitistruethatintheexistingstateofthemarketforlegalabilityandexperiencethetownmaynotbeabletogetareallygoodtownclerkforless，thatstateofthelegalmarketisitselftheresultofartificialrestrictionsinopportunityofeducationandofcompetition，whichhavenonaturalbasisandwhichasocietyversedinsoundsocialeconomywillalter。Butthefactthattheexistinginterpretationofneedsisfrequentlyartificialandexaggeratedmustnotleadustoignoretheelementoftruthembodiedinit。Thewagesofpolicemen，therealwagesofsoldiersandsailors，aredeterminedwithconsciousrelationtotheneedsofable-bodiedmenengagedinhardphysicalwork，andwithsomeregardtotheexistenceofawifeandfamily。ButIneednotlabourthepointofthedifferencebetweenthesalaryandthe"commodity"viewoflabour。Theacceptanceamongallthoughtfulemployersof"theeconomyofhighwages"appliedwithinreasonablelimitsisitselftheplainesttestimonytotheactualityofthe"needs"

basisofincome。Thatunlessyoupayamanenoughtosatisfyhisneeds，youcannotgetfromhimhisfullpowerofwork，isapropositionwhichwouldmeetwithuniversalacceptance。

Butitwillcommonlybeaddedthatthesafestwayofmeasuringneedsisbymeansofoutput。Thisoutput，measuredbywork-time，orbypiece，orbyacombinationofthetwo，stillremainsthegeneralbasisofpayment。

Howfaristhisconformabletoourtheoryofhumandistribution，accordingtoneeds？Thatthereissomeconformitywill，Ithink，beeasilyperceived。

Ifonedockerunloadstwiceasmuchgrainortimberasanotherdockerinthesametime，orifonehewerworkingunderthesameconditions"gets"

twiceasmuchcoalasanother，thereisareasonablepresumptionthatthelargeractualquantityoflabourhastakenagooddealmore"outofhim"。

Puttingthecomparisononitsbarestphysicalbasis，therehasbeenalargerexpenditureoftissueandofenergy，whichmustbereplacedbyalargerconsumptionoffood。Astrongmandoingmuchworkmaynotbeexertinghimselfmorethanaweakmandoinglittlework。Butallthesamethereissomeproportionbetweentherespectivevaluesoftheiroutputofphysicalenergyandtheirintakeoffood。This，ofcourse，isapurelyPhysiologicalapplicationofourlawofhumandistribution。Itappliesbothtosortsofworkandtoindividualcasesinthesamesortofwork，andconstitutesan"organic"basisfordifferenceof"class"wagesandindividualwages。

Weurgethatitisapplicabletootherfactorsofconsumptionthanfood，andthroughoutthewholeareaofproductionandconsumption。Butappliedasapracticalprinciplefordeterminingdistinctionsofclassorgradepayment，andstillmoreforindividualpaymentwithinaclass，ithasaverylimitedvalidity。Rigorouslyapplieditisthepure"commodity"viewoflabour，theantithesisofthe"salary"viewwhichbestexpressesthe"needs"economy。But，thoughoutputcannotbetakenasanaccuratemeasureof"needs"forthepurposeofremuneration，itclearlyoughttobetakenintoaccount。Thepracticalreformerwillindeedrightlyinsistthatitmustbetakenintoaccount。Forhewillpointoutthatoutputisaquestionnotmerelyofphysiologicalbutstillmoreofmoralstimulus。

Astrongmanwillnotputoutmoreproductiveenergythanhisweakerfellowunlessheknowsheistogetmorepay；askilfulmancannotbereliedupontousehisfullskillunlesshepersonallygainsbydoingso。Ifthesenseofsocialservicewerestrongerthanitis，abonusforextrastrengthorskillmightbeunnecessary。Butashumannatureactuallystands，thisstimulustodoa"best"thatisbetterthantheaverage，mustberegardedasamoral"need"tobecountedforpurposesofremunerationalongwiththephysiologicalneeds。Toomuchneednotbemadeofthisdistinctivelyselfishfactor。Inmanysortsofwork，indeed，itmaynotbelargeenoughtoclaimrecognitioninremuneration。Butwhereitisimportant，theapplicationofourneedseconomyofdistributionmustprovideforit。Thisadmissiondoesnotintheleastinvalidateourorganiclaw。Forthemoralnatureofamanisas"natural"ashisphysicalnature。Bothareamenabletoeducation，andwitheducationwillcomechangeswhichwillhavetheirjustreactionsuponthepolicyofremuneration。

§；5。Theorganiclawofdistributioninregardingneedswill，therefore，takeasfullanaccountasitcanbothoftheunityandthediversityofhumannature。Therecognitionof"common"humanitywillcarryanadequateprovisionoffood，shelter，health，educationandotherprimenecessariesoflife，soastoyieldequalsatisfactionofsuchrequirementstoallmembersofthecommunity。Thisminimumstandardoflifewillbesubstantiallythesameforalladultpersons，andforallfamiliesofequalsizeandage。Uponthisstandardofhumanuniformitywillbeerectedcertaindifferencesofdistribution，adjustedtothespecificneedsofanyclassorgroupwhoseworkorphysicalconditionsmarksitoutasdifferentfromothers。Thepresentinequalitiesofincome，solargelybaseduponconventionalortraditionalclaims，wouldfindlittleornosupportunderthisapplicationoftheorganiclaw。Indeed，itseemsunlikelythatanyspecificrequirementsofindustrialorprofessionallifewouldbulksolargelyininterpretinghumanneedsastowarrantanywidediscriminationofincomes。Thereseemsnoreasontomaintainthatalawyer"soradoctor"sfamilywouldrequire，orcouldadvantageouslyspend，alargerincomethanabricklayer"s，inasocietywhereequalityofeducationalandotheropportunitiesobtained。

But，iftherewereanysortsofworkwhich，byreasonofthespecialcallstheymadeuponhumanfaculties，orofthespecialconditionstheyimposed，requiredanexpenditureoutofthecommon，theorganiclawofdistributionaccordingtoneedswouldmakeprovisionforthesameasanadditiontothestandardminimum。Solikewisethehoursoflabourwouldbevariedfromastandardworking-daytomeetthecaseofworkunusuallyintenseorwearinginitsincidence。Towhatextentsocietywouldfinditnecessarytorecogniseindividualdifferencesofefficiencywithineachgradeasagroundforparticularremuneration——andhowfarsuchclaimswouldrepresent，notpaymentaccordingtotrueneedsbutpowertoextortapersonalrent——

isaquestionwhichcanonlybeansweredbyexperience。Itmay，however，beregardedascertainthatthehighindividualrentswhichprevailatpresentinskilledmanualandmenialwork，couldnotbemaintained。Forthesehighratesdependuponconditionsofsupplyandofdemandwhichwouldnotthenexist。Theenormousfeeswhichspecialistsofreputeinthelawormedicinecanobtaindepend，partly，upontheinequalityofeducationalandsocialopportunitiesthatlimitsthesupplyofablemenintheseprofessions；

partly，uponotherinequalitiesofincomethatenablecertainpersonstoaffordtopaysuchfees。Equalityofopportunityandevenanapproximateequalisationofincomewoulddestroyboththesesourcesofhighrentsofability。Whatappliesintheprofessionswouldapplyineverytrade。Individual"rents"ofabilitymightsurvive，buttheymustbebroughtwithinanarrowcompass。

While，then，theselfishnessofindividualmanmightgiveaslighttwisttotheapplicationofthesocialpolicyofdistributionaccordingtoneeds，itwouldnotimpairitssubstantialvalidityandpracticability。

Thusweseethislawofdistribution，operativeasapurelyphysicaleconomyintheapportionmentofenergyformechanicalwork，operativeasabiologicaleconomythroughthewholerangeoforganiclife，isstrictlyapplicableasaprincipleofsocialeconomy。Itsproperapplicationtosocialindustrywouldenablethatsystemtofunctioneconomically，soastoproducethemaximumofhumanutilitywiththeminimumofhumancost。

§；6。Ifwecangetanindustrialorder，inwhicheverypersonisinducedtodiscoverandapplytotheserviceofsocietyhisbestabilitiesofbodyandmind，whilehereceivesfromsocietywhatisrequiredtosustainandtodevelopthoseabilities，andsotolivethebestandfullestlifeofwhichheiscapable，wehaveevidentlyreachedaformallysoundsolutionofthesocialproblemonitseconomicside。Wearenowinapositiontoapproachtheactualprocessesofeconomicdistributionthatprevailto-day，soastoconsiderhowfartheyconformtothissoundprincipleofhumanindustry。

Wearenotjustifiedattheoutsetinassumingthatanywidediscrepancywillbeadmitted。Onthecontrary，inmanyquarterstheresurvivesafirmconvictionthatouractualsystemofindustrydoesworkinsubstantialconformitywiththehumanlawofdistribution。

Theso-calledlaissez-fairetheoryofindustrialismbaseditsclaimstoutilityandequityuponanassertionofthevirtualidentityoftheeconomicandthehumandistribution。Ifeveryownerofcapitalorlabouroranyotherfactorofproductionwerefreetoapplyhisfactorinanyindustryandanyplacehechose，hewouldchoosethatindustryandthatplacewherethehighestremunerationforitsemploymentwasattainable。

Butsinceallremunerationforthefactorsofproductionisderivedfromtheproductitself，whichisdistributedamongtheownersoftheseveralfactors，itfollowsthatthehighestremunerationmustalwaysimplythemostproductiveuse。Thus，bysecuringcompletemobilityofcapitalandlabour，weensurebothamaximumproductionandanequitabledistribution。

"Ledasbyaninvisiblehand"，everyownerofcapital，labourorotherproductivepower，disposedofhisfactorinamanneratoncemostserviceabletotheproductionofthegeneralbodyofwealthandmostprofitabletohimself。Theapplicationofthistheory，ofcourse，assumedthateverybodykneworcouldgettoknowwhatemploymenthewouldbelikelytofindmostprofitableforhiscapitalorlabour，andwouldusethatknowledge。Itwas，moreover，heldthattheactualconditionsofindustryandcommercedidandmustsubstantiallyconformtothishypothesisofmobility。Anycircumstances，indeed，whichcontraveneditbyobstructingthemobilityandlibertyofemploymentweretreatedasexceptional。

Suchexceptionsweremonopolies，theexclusiveownersofwhichforbadefreedomofentryorofcompetitiontooutsidecapitalandlabour，andsecuredhigherratesofprofitthanprevailedinotherbusinesses。Theharmonyofperfectindividualismdemandedthatallsuchmonopolies，togetherwithprotectivedutiesandotherbarrierstocompletelibertyofcommerceandofindustry，shouldberemoved。Allproductivepowerwouldthenflowlikewaterthroughthevariousindustrialchannels，maintainingauniformlevelofefficientemployment，theproductbeingdistributedinaccordancewiththeseveralcostsofitsproductionandbeingabsorbedintheprocessesofproductiveconsumptionthatwererequiredtomaintainthecurrentvolumeofproductivepowerortoenhanceit。

Therewasalittledifficultyinthecaseofrentsofland。Thoughdifferentialrents，measuringthesuperiorproductivityofvariousgradesoflandascomparedwiththeleastproductivelandinuse，werenecessarypaymentstolandowners，theycouldnotrankascostsandcouldnotbeproductivelyconsumed。Solikewisewiththescarcityrents，paidevenfortheleastproductivelandswherethesupplyforcertainuseswasrestricted。Bothscarcityanddifferentialrentswereclassedassurplus。Butthoughthemagnitudeofthisexceptionalelementmightseemtohavebeenafatalflawintheindividualistharmony，acharacteristicmodeofescapewasfoundinthedoctrineofparsimonywhichprevailed。

Thougheconomicrentscouldnotbeproductivelyconsumedbytheirrecipients，theyfurnishedanaturalfundofsavings，soprovidingthegrowingvolumeofnewcapitalwhichwasnecessarytosetlabourtoproductivework。So，byasomewhatliberalinterpretation，itwascontendedthat"thesimplesystemofnaturalliberty"，evenoperatingonabasisofprivateownershipofland，drewfromeachmanthebestandfullestuseofhisproductivepowers，andpaidhimwhatwaseconomicallynecessarytomaintainandtoevokethosepowers。Earlycriticsofthistheory，ofcourse，pointedoutthattheinterpretationofdistribution"accordingtoneeds"wasdefectivefromthestandpointofhumanity，sincetheonlyneedstakenintoaccountwereefficiencyforproductivework，thenourishmentandstimulustoproducealargerquantityofmarketablegoods，nottheattainmentofthehigheststandardofhumanwell-being。

Buttomosteconomistsofthatdaysuchacriticismseemedunmeaning，sodominantintheirmindswastheconceptionofeconomicwealthastheindexandtheinstrumentofhumanwelfare。

§；7。Itiscommonlyassertedandassumedthatthislaissez-fairetheoryisdead，andthattheattainmentofaharmonyofsocialwelfare，bythefreeintelligentplayofindividualself-interestinthedirectionofeconomicforces，hasbeendisplacedbysometheoryofconsciouscooperativeorcorporatedirectioninwhichtheStatetakesaleadingpart。Butatthisverytime，whenthepolicyofeverycivilisednationisengagedmoreandmoreincheckingmonopoliesandindustrialprivilegesupontheonehand，andinplacingrestraintsuponthehavocofunfetteredcompetitionontheother，adistinctandpowerfulrevivalofaneconomictheoryofproductionanddistributionundistinguishableinitsessentialsfromthecrude18thcenturylaissez-fairehassetin。Largelyinfluencedbythedesiretoapplymathematics，soastosecureaplaceforeconomicsasan"exact"science，manyEnglishandAmericaneconomistshavecommittedthemselvestoa"marginalist"doctrine，whichforitsefficiencyrestsuponassumptionsofinfinitedivisibilityofthefactorsofproduction，andfrictionlessmobilityoftheirflowintoallthechannelsofindustryandcommerce。

Theseassumptionsgranted，capitalandlabourflowintoallemploymentsuntilthelastdropineachisequallyproductive，theproductsofthe"marginal"orfinaldropsexchangingonabasisofabsoluteequalityandearningfortheirownersanequalpayment。AmongEnglisheconomistsMr。

Wicksteedhassetoutthisdoctrineinallitseconomicapplicationsmostfully。Heshowshowbyadelicatebalanceofpreferences"atthemargins"

i。e。，inreferencetothelastportionofeachsupplyofordemandforanythingthatisboughtorsold，theremustbebroughtaboutanexactequivalenceofutility，ofworth，andofremuneration，forthemarginalincrementsinallemployment。"Sofarastheeconomicforcesworkwithoutfriction，theysecuretoeveryonetheequivalentofhisindustrialsignificanceatthepartoftheindustrialorganismatwhichheisplaced。"2Elsewhere3

heasseveratesthat，asregardstheworkersinanyemployment，thismeansthat"theyarealreadygettingasmuchastheirworkisworth，"andthatiftheyaretogetmore，this"more"canonlybegoteitheroutof"communalfunds，"orbymakingtheirworkworthmore。ThesameapplicationofthemarginalistdoctrineismadebyProfessorChapman。"Thetheory，then，merelydeclaresthateachpersonwilltendtoreceiveashiswagehisvalue——

thatis，thevalueofthismarginalproduct-nomoreandnoless。Inordertogetmorethanheactuallydoesget，hemustbecomemorevaluable，——

workharder，forinstance——thatis，hemustaddmoretotheproductinwhichheparticipated。"4Thisispreciselytheold"laissez-faire，laissez-aller"

teaching，fortifiedbytheconceptionthatsomespecialvirtueattachestotheequalisingprocesswhichgoeson"atthemargin"ofeachemploymentofthefactorsofproduction。

The"lawofdistribution"whichemergesisthateveryownerofanyfactorofproduction"tendstoreceiveasremuneration"exactlywhatitis"worth"。Nowthis"law"isdoublydefective。Itsfirstdefectarisesfromthefactthateconomicscienceassignsnoothermeaningtothe"worth"

or"value"ofanythingthanwhatitactuallygetsinthemarket。Tosay，therefore，thatanybody"getswhatheisworth"，ismerelyanidenticalproposition，andconveysnoknowledge。Theseconddefectistherelianceupona"tendency"whichfalselyrepresentsthenormalfactsandforces。

Itisfalseinthreerespects。Itassumesinthefirstplaceaninfinitedivisibilityoftheseveralfactors，necessarytosecuretheaccuratebalanceof"preferences"atthemargins。Itnextassumesperfectmobilityorfreedomofaccessforallcapitalandlabourintoallavenuesofemployment。Finally，itassumesastaticalconditionofindustry，sothattheadjustmentofthefactorsonabasisofequalproductivityandequalremunerationatthemarginsmayremainundisturbed。Allthreeassumptionsareunwarranted。

Veryfewsortsofrealcapitalorlabourapproachtheidealofinfinitedivisibilitywhichmarginalismrequires。Anindividualworker，sometimesagroup，isusuallytheminimal"drop"oflabour，andcapitalisonlyinfinitelydivisiblewhenitisexpressedintermsofmoney，insteadofplants，machinesorotherconcreteunits。Stilllessisitthecasethatcapitalorlabourflowsor"tends"toflowwithperfectaccuracyandlibertyofmovementintoeverychannelofemploymentwhereitisrequired，soastoaffordequalityofremunerationattheseveralmargins。Lastly，inmostindustrialsocietiestheconstantchangestakingplace，involumeandinmethodsofindustry，entailacorrespondingdiversityintheproductivityandtheremunerationofthecapitalandlabouremployedinthevariousindustries"atthemargin。"5

§；8。Thisslightlytechnicaldisquisitionisrenderednecessarybythewideacceptancewhich"marginalism"haswoninacademiccircles。

Itsexpositorsareabletodeducefromitpracticalpreceptsveryacceptabletothosepoliticiansandbusinessmenwhowishtoshowtheinjustice，thedamageandthefinalfutilityofallattemptsofthelabouringclasses，bytheorganisedpressureoftradeunionismorbypolitics，togethigherwagesorotherexpensiveimprovementsoftheconditionsoftheiremployment。

Forif"marginalism"canprovethat，asProfessorChapmanholds，"inordertogetmorethanheactuallydoesget，hemustbecomemorevaluable-workharder，forexample，"ithasevidentlyre-createdthedefencesagainsttheattacksoftheworkersuponthefortressesofcapitalwhichwereformerlysuppliedbythewage-fundtheoryinitsmostrigorousform。

Ifwagescanonlyriseonconditionoftheworkersworkingharderorbetter，nodivergenceofinterestsexistsbetweencapitalandlabour，noinjusticeisdonetoanyclassoflabour，howeverlowits"worth"maybe，andnoremedyexistsforpovertyexceptthroughimprovedefficiencyoftheworkers。Ifourpoliticaleconomistscanbringthisgospelofmarginalismhometotheheartsandheadsoftheworking-classes，theywillsetasidealltheirfoolishattempttogethigherwagesoutofrentsandpropertyandwillsetthemselvestoproducingbyharder，moreskilfulandmorecarefullabouranenlargedproduct，thewholeorpartofwhichmaycometothembytheinevitableoperationoftheeconomiclawofequaldistributionatthemargin!

Itisrighttoaddthatanattemptissometimesmadetobringmarginalismintoameasureofconformitywiththenotoriousfactthatlargediscrepanciesexistintheratesofremunerationforcapitalorlabourorbothinvariousindustries，bytreatingtheseinequalitiesasbrieftemporaryexpedientsforpromotingthe"freeflows"ofproductivepowerfromlesssociallyproductiveintomoresociallyproductivechannels，andforstimulatingimprovementsintheartsofindustry。Abnormalgains，ofthenatureofprizesorbonuses，arethusobtainablebyindividualemployment，orbygroupsofemployers，whoarepioneersinsomenewindustryorintheintroductionofsomenewinventionorothereconomy。Buttheserewardsofspecialmerit，itisargued，arenotlasting，butdisappearsosoonastheyhaveperformedtheirsociallyserviceablefunctionofdrawingintothefavouredemploymentstheincreasedquantityofnewproductivepowerwhichwillrestoretheequalityofproductivityandremuneration"atthemargins"。

Now，evenwereitpossibletoacceptthisrehabilitationoflaissez-fairetheory，acceptingthisequalising"tendency"aspredominantandnormal，andclassifyingallopposingtendenciesasmerefriction，itwouldnotsupplyalawofdistributionthatwouldsatisfytheconditionsofour"human"

law。Itwouldaffordnosecurityofdistributionaccordingto"needs"，orhumancapacityofutilisingwealthforthepromotionofthehigheststandardofindividualandsocialwelfare。Itwouldremainanideallygooddistributiononlyinthesensethatitwouldsoapportiontheproductastofurnishtoallproducersastimuluswhichwouldevoketheirbestproductivepowers，socontributingtomaximisetheaggregateproductionofmarketablegoods。Onlysofarasmanwasregardedasaneconomicbeing，concernedmerelyinthenourishmentandimprovementofhismarketablewealth-producingfaculties，woulditbeasoundeconomy。

Justasinthecaseoftheolder，cruder"freedomofcompetition"，itrestsuponthefundamentalassumptionthatalltheproduct，therealincomeofthecommunity，willbeabsorbedin"productiveconsumption"，defrayingthebare"costs"ofmaintainingandimprovingtheproductivepowersofcapital，labourandability，forthefurtherproductionofobjectiveeconomicgoodsandservices。Itwouldremainopentotheobjectionthatitassumedanidentityofeconomicwealthandhumanwelfarewhichisinadmissible，andthatitrefusedtoprovidethatsubordinationofeconomicproductionandconsumptiontothelargerconceptionofhumanwelfarewhichsoundprinciplesofhumanityrequire。Thoughallworkmightbemostproductivelyapplied，itmightstillcontainexcessiveelementsofhumancost，andthoughallproductswereproductivelyconsumedmanyofthefinerneedsofindividualmenandofsocietymightstillremainwithoutsatisfaction。

§；9。Butthefulldivergencebetweentheoperationoftheactualeconomiclawofdistributionandthehumanlawcanbestbediscoveredbyunmaskingthefundamentalfalsehoodofallformsofthelaissez-faireorcompetitiveeconomy，viz。，theassumptionthatthenationalincometendstobedistributedinajusteconomyofcosts。Isthereinfactanyoperativelawwhichdistributesor"tends"todistributethe£；2，000，000，000

worthofgoodsthatformourincome，sothatall，orevenmostofit，actsasanecessarYfoodandstimulustoevokethefullandbestproductiveworkofthosewhoreceiveit？Or，iftherearefailuresinthiseconomicaldistribution，aretheysofew，sosmall，andsoephemeral，thattheymayreasonablybetreatedas"friction"，orasthatadmixtureoferrororwastewhichisunavoidableinallhumanarrangements？

Nowitisofcoursetruethatthenationalincomemustcontinuallyprovideforthesubsistenceofthelabour，abilityandcapital，requiredtomaintaintheexistingstructureofindustryandthecurrentoutputofgoodsandservices。Thebrain-workersandthehand-workersofeverysortandgrade，fromartistandinventortoroutinelabourer，mustbecontinuouslysuppliedwiththematerialandnon-materialconsumablessufficienttoenablethemtoreplaceintheirownpersons，orthroughtheiroffspring，thephysicalandpsychicalwearandtearinvolvedintheirwork。Thefertilityofthesoil，therawmaterials，fuel，buildings，toolsandmachines，requisiteinthevariousproductiveprocesses，mustsimilarlybemaintainedoutofthecurrentoutput。Thesebarecostsofsubsistence，thewages，salariesanddepreciationfundsnecessarytoreplacethewearandtearofthehumanandmaterialagentsofproduction，areafirstchargeuponthenationaldividend。Torefusethepaymentswhichprovidethissubsistencewouldbesuicidalonthepartoftheadministratorsoftheincome。Theyrank，fromthestandpointofsociety6ascostsofproduction。Iftheproductwhichresultsfromtheproductiveuseofthesefactorsexceedswhatisnecessarytodefraythesecosts，thesurplusmaybeemployedineitheroftwoways。

Itmaybedistributedamongtheproductiveclassesinextra-paymentssoastoevokebyasetofeconomically-adjustedstimulisuchenlargedorimprovedefficiencyaswillprovideforalargerorabetterproductinthefuture。Inasocietyofaprogressiveorderwherethenumbersorthewholesomeneeds，orboth，areontheincrease，nosurplus，howeverlarge，canbeexcessiveforsuchprovision。Asociallysoundandjustdistributionofthesurpluswouldbeonewhichabsorbeditentirelyinwhatmaybecalledthe"costsofgrowth"。This，however，doesnotbyanymeansimplythatthewholeofthesurplusmustadvantageouslybedistributeddirectlyamongtheindividualownersoflabour，abilityorsavingpower，inordertoevokefromthemthemaximumextensionoftheirseveralproductivepowers。

Agooddealofthesurplusmay，indeed，bethusappliedinhigherindividualincomesofproducers。ButtheState，politicallyorganisedsociety，mustlooktothe"surplus"foritscosts，notonlyofupkeepbutofprogress。ForwhateverpartwemayassigntotheStateinaidingindustrialproduction，allwillagreethatmuchofitswork，intheprotectionandimprovementoftheconditionsoflife，isessentialtothestabilityandprogressofindustry，andinvolves"costs"whichcanonlybemetbyaparticipationintheindustrialdividend。

ItmayevenbeurgedthattheclaimsoftheStatetomaintenanceandprogressareequaltotheclaimsofindividualsuponthesurplus。Foritisevidentthatindustrialprogressdemandsthatbothindividualandsocialstimuliandnutrimentofprogressmustbeprovidedfromthesurplusbysomeconsideredadjustmentoftheirseveralclaims。Asurplus，thusproperlyapportionedinextra-subsistencewagesandotherpaymentstoproducersandinpublicincome，wouldbeproductivelyexpendedandwouldthuscontributetothemaximumpromotionofhumanwelfare。7

§；10。Butthoughinsuchasocietyasoursacertainpartofthesurplusisthus"productively"applied，andisrepresentedinindustrialandhumanprogress，alargepartisnotsoexpendedin"costsofprogress"。

Alargequantityof"surplus"iseverywheredivertedintounproductivechannels。Theincomewhichshouldgotoraisetheefficiencyoflabour，toevokemoresaving，andtoimprovethepublicservices，islargelytakenbyprivateownersofsomefactorofproductionwhoareinapositiontoextortfromsocietyapaymentwhichevokesnoincreaseofproductiveefficacy，butissheerwaste。Thispowertoextortsuperfluousandunearnedincomeisattherootofeverysocial-economicmalady。Indeed，itoftengoesbeyondthediversionofsurplusfromproductiveintounproductivechannels。

Itoftenencroachesuponcostsofmaintenance。Forthevitalstatisticsoflargeclassesoflabourshowthatthefood，housingandotherelementsofrealwages，areinsufficientfortheupkeepofanormalworkinglifeandfortherearingofahealthyandefficientoffspring。Thismeansthatsurplusisactuallyeatinginto"costs"，inthatthecostsofmaintenance，whichsoundbusinessadministrationautomaticallysecuresforthecapitalemployed，arenotsecuredforthelabour。Thereasonwhythispolicy，whichfromthesocialstandpointissuicidal，canneverthelessbepractised，isobvious。Forthecapital"belongsto"thebusiness，inasenseinwhichthelabourdoesnot。Asweatingeconomywhich"letsdown"theinstrumentsofcapitalisofnecessityunprofitabletotheindividualfirms:asimilarsweatingeconomyappliedtotheinstrumentsoflabourneednotbeunprofitable。

Tothenationasawhole，indeed，regardedmerelyasagoods-producingbody，anysuchwithholdingofthetruecostsofmaintenancemustbeunprofitable。

Buttherearebusinesses，ortrades，where"sweated"labourmaybeprofitabletotheemployersortheownersofcapital。Therearemanymorewheresuchawage-policy，thoughnotreallyprofitable，appearsso，andisactuallypractisedas"soundbusiness"。Howlargeaproportionofthe14，000，000

wage-earnerswhoseincomesarepaidoutofour£；2，000，000，000comeunderthiscategoryof"sweated"workers，wecannothereprofitablydiscuss。

But，apartfromthegreatbulkofcasualworkersinalllessskilledtrades，therearelargestrataofskilledandtrainedadult-labourinthestapletradesofthecountrywhicharenotpaidafullsubsistencewage。Sucharethelargebodiesofwomenemployedinfactoriesandworkshopsandinretailtrade，atwagesvaryingbetweeneightandfourteenshillings。Indeed，itmaysafelybeassertedthattheaveragewageofanadultworking-womaninthiscountry，notindomesticservice，isasweatingwage，definitelybelowtrueeconomicmaintenance，andstillmorebelowthedecenthumanrequirementsoflife。ThesamestatementalsoholdsofthewageofagriculturallabourinmostdistrictsofthemiddleandsoutherncountiesofEngland。

Insuchemploymentsthetrueeconomic"costs"ofmaintenancearenotprovidedoutof

thepresentdistributionofthenationalincome。Ofafarwiderrangeoflabourisittruethatthetruewagesofprogressiveefficiency，whichwehaveseenarevitaltotheeconomicprogressofthenation，arewithheld。Thoughthisdeprivationdoesnotformthewholecaseforlabourasstatedfromthe"human"standpoint，itconstitutestheheaviesteconomiccountagainstthecurrentdistributionofwealth。Thefullphysicalandspiritualnutriment，thematerialcomforts，theeducation，leisure，recreation，mobilityandbroadexperienceoflife，requisiteforanalert，resourceful，intelligent，responsible，progressiveworking-class，arenotprovidedeitherbythepresentwage-system，orbythegrowingsupplementswhichthecommunalactionoftheStateandthemunicipalityaremakingtotheindividualincomesoftheworkers。Outofthe£；2，000，000，000awhollyinsufficientsumisdistributedinwagesofprogressiveefficiencyforlabour。

Incertainotherrespectsalsothecurrent"costs"distributionisexceedinglydefective。Thesavingwhichgoestoprovidefortheenlargementofthecapitalstructureofindustryisverywastefullyprovided。Alargeproportionofsuchsavingsasarecontributedoutofworking-classincomesinvolvesanencroachmentupontheircostsofprogressiveefficiency，andrepresents，fromthestandpointbothoftheindividualfamilyandofsociety，badeconomy。Moreover，themethodsofcollectionandofapplicationofsuchcapitalaresowastefulandsoinsecureastorenderworking-classthriftabywordintheannalsofbusinessadministration。

§；11。Butthesedeficienciesintheeconomyof"costs"canonlybeunderstoodbyastudyofthatlargesectionofthenationalincomewhichinitsdistributionfurnishesnofoodorstimuluswhatevertoanyformofproductiveenergy。Evenintheidealistlaissez-faireeconomicswesawthatrentoflandwasdistinguishedfromthewages，interestandprofits，whichconstitutedthe"costsofproduction"，andwasdescribedas"surplus"。

Itwasrecognisedthat，wherelandwasrequiredforanyproductivepurpose，itsownerswouldreceiveinpaymentforitsuseanyportionoftheproduct，oritssellingvalue，whichremainedoverafterthecompetitivelydetermined"costs"ofcapitalandlabourhadbeendefrayed。Thepaymentwaseconomicallynecessarybecausesuitablelandformostindustrialuseswasscarce，andtheamountofthepaymentwoulddependuponhowmuchwasleftwhencapitalandlabourhadreceivedtheirshare。Forthelandlordwouldtakeallthesurplus。Therearethosewhostillinsistthattheownersoflandareeverywhereinthispositionofresiduarylegatees。Land，theythink，isalwaysrelativelyscarce，capitalandlabouralwaysandeverywhererelativelyabundant。Freecompetitionthenbetweentheownersoftherelativelyabundantfactorswill

keepdownthepriceforthemtobare"costs"，leavingamaximumamountofsurpluswhichtheso-calledland"monopolists"willreceiveasrent。

Thissurplusevokesnoproductivityfromthesoiloritsowners；itspaymentdoesnothingtostimulateanyartofindustry。But，ifthelandownerdidnottakeit，anditwaskeptbyfarmersasprofits，orbylabourersaswages，itwouldbejustaswastefulfromtheproductivestandpoint，asifitpassedasrent，for，uponthehypothesisofsucheconomists，thefullcompetitivewagesandprofitsaretheonlypaymententitledtocountascost，andnoadditiontosuchpaymentswouldincreasetheproductivityofcapitalorlabour。

§；12。Nowthoughtherehavebeentimesandcountriesinwhichrentoflandwastheonlyconsiderablesurplus，thisisnotthecaseinanydevelopedindustrialcommunitytoday。Otherfactorsofproduction，capital，ability，oreveninsomeinstanceslabour，sharewithlandthepowertoextortscarcityprices。

Thehypotheticalabundance，mobilityandfreedomofcompetition，whichshouldprevailamongallownersofcapital，abilityandlabour，keepingdownalltheirremunerationtoacommonminimum，areeverywherefalsifiedbyindustrialfacts。Atvariouspointsinindustrycapitalormanagerialabilityisfoundstronglyentrenchedagainstthecompetitionofoutsiders，andabletosetlimitsuponinternalcompetition。Whereverthisconditionisfound，theownersofthecapitalortheabilitysoadvantageouslyplacedareabletoobtaina"surplus"，which，initsoriginanditseconomicnatureandeffects，nowisediffersfromtheeconomicrentsofland。Thefluidityandcompletefreedomwhichappeartoattachtothetermcapital，solongaswetreatitinitsabstractfinancialcharacter，disappearassoonasforcapitalwesubstitutecertainskilfullymademachineryconstructedunderpatentrightsandoperatedbymoreorlesssecretprocesses，turningout，withtheassistanceofcarefullytrained。andorganisedlabour，goodswhichenjoyahalf-superstitiousfameandspecialfacilitiesofmarket。

Anexaminationofthecapitalistsystemwilldiscloseineveryfieldofindustrynumerousinstancesofbusinessesorgroupsofbusinesses，sometimesconstitutingwholetrades，whichbyreasonofsomeadvantageinobtainingrawmaterials，transportormarketingfacilities，publiccontracts，legalprivilegeorprotection，byusingsomesuperiorprocessofmanufacture，skillinadvertising，establishedreputation，financialbacking，orbysheermagnitudeofoperations，arescreenedfromthefullforceoffreecompetition，andareearninginterestandprofitsfarexceedingtheminimum。