and landlord. And in this process, let it be again remarked, the Socialists maintain, and very plausibly, there need be no violence or even abruptness. The process might be half accomplished before many people knew that it had begun. For the State would not forcibly extinguish any private enterprises. It would extinguish them only by successfully competing against them-by producing the same quality of goods, selling them at the same or even lower price, and at the same time paying higher wages. It would, in fact, exIt would, in fact, extinguish the competitive system by competition.

And supposing this process to be completed, what will be the social result? The result, in this country, according to the Fabian essayists, will be as follows: The aggregate income of the country will continue to grow as heretofore; but for argument's sake we may estimate it at its present figure, which is, roughly speaking, about thirteen hundred millions. About a third of this, say the essayists, represents interest on capital, and about an eighth the actual wages of ability, or exceptional productive talent. The highest exceptional talent, they say, could be had, in the open market, for £800; and were the highest wages of ability cut down to this, we should diminish its existing wages by nearly one half. Such being the case, nearly half the existing wages of ability, and the entire profits of capital, would be diverted from the pockets of the able men and the present possessors of capital, and would find its way into the pockets of the State. The sum which the State would thus become possessed of would be something like five hundred million pounds; and this would constitute an addition to the existing wages fund, and would be employed in raising the wages of the entire community. When this is done, the Socialistic transformation will be complete. There will still be a capitalistic employer, and there will still be wage-earning producers; but the capitalistic employer will virtually be a committee of the producers; and instead of taking for itself any portion of the product, will only collect this product, and pool it; and then, in the shape of wages, return to the producers, not,

as the private employers do, only a part of it, but the whole. In one sense private property will be as secure then as it is now. Each man's wages or income will be absolutely his own, and all the articles of consumption and enjoyment which he buys with it. The only kind of property which will have been Socialized will be, not articles of consumption, but the means of production; and the Socialization of these last will mean merely that each citizen has an equal share in them, just as if all were equal shareholders in some existing railway company, in which they were all at the same time wage-receiving employés. Their income will thus consist of wages supplemented by profits. Their wages may vary, but the profits that supplemented each man's wages will be the same. Then, with the State for employer, there will be full work for all, for every one will have the right to demand access to the means of labor; and of his own labor, as Mr. Sidney Webb says, "he will obtain the full result." To distribute products or riches "according to the labor done by each in the collective search for them"-this, says the editor of the volume, "is the desire of Socialism;" and the process above described is the process by which the desire will be accomplished.

It remains for a moment to look under the surface and consider the forces to which this evolutionary movement is, according to the Socialists, due. Conscious endeavor is the last, and in some respects the least. At all events it would be unless there was some stream of tendency with which it coincided; and this stream of tendency consists of a treble series of events. The first is the growth of population, which necessarily results in a vast portion of the community being landless; the second is the change in the methods of industry-even of agricultural industrywhich makes individual ownership of the means of production impossible, and at the same time teaches the workers how to act in concert, and familiarizes them with the idea of social, as opposed to individual production; and the third is the growth of political democracy, which is the inevitable result of education, the diffusion of news, and rapid travelling. Industrial democ

at the present day; and that the modern increase in the productivity of industrial exertion, is due to the development of the latter, not of the former. But all these later forms of industrial exertion the orthodox economists include under the one term Labor. Thus they speak of the "labor of the sa vant,' "the labor of the inventor,' "the labor of the superintendent." That is to say, they recognize and admit theoretically that labor is of two kinds, or that the word means two things; and that one kind of labor is a universal faculty, and the other a scarce faculty. But this recognition is only occasional; the truth involved in it is never analyzed, or incorporated with their general theory; and although on these rare occasions they admit that the word labor means two things, yet in all their practical arguments, without any exception, they invariably and persistently use it as if it meant only one thing; and that one thing is average muscular labor, to the exclusion of labor of any other kind. As an instance of this I cited in my book the title of one of Mill's chapters in his Principles of Political Economy, which he calls "The Probable Future of the Laboring Classes," explicitly and exclusively meaning by these classes the mass of wage-earning manual laborers. And the Fabian essayists repeat Mill's confusion. It permeates their whole volume. They too recognize intermittently that Labor can be said to be the sole producer of wealth only if by Labor we understand two things; but like Mill they reason practically as if the word meant only one. Here, for instance, is the editor of the Fabian volume striking in the opening essay the key-note of the whole argument. Shareholder and landlord," he says, "live alike on the produce extracted from their property by the labor of the proletariat. And if we want to know exactly what he means by labor, we have only to refer to the beginning of the same paragraph. He tells us that labor is a form of human exertion," the acquisition of which is a mere question of provender." There is always a supply of it tending to be in excess of the demand. Laborers, he says, "breed like rabbits ;" and he expressly declares

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that it is the labor of men like these that " piles up the wealth" of the possessing and employing classes.

Now what I have urged in my book, Labor and the Popular Welfare, is that. so long as the word Labor is used in this sense, it is impossible to reason or even think clearly about production, if we apply the same word also to the exertions of the inventing, the discovering, and managing class whose interests are represented as being not only different from, but opposed to, those of the laboring class. Accordingly, to the exceptional faculties of the former I gave a distinct name-Ability. I pointed out that the moment we make language in this way correspond with fact, the absurdity of saying that labor "piles up all the wealth" of the " shareholder and the landlord" becomes self-evident. Ability, even the Socialists admit, has some part in the piling up, or in other words, produces some portion of the pile; so that instead of saying that Labor produces, or piles up, all the wealth of the community, we are driven to say something that is very different-we are driven to say that it produces only a certain fraction of it; and then comes the question, what fraction? As soon as we come to see this, the whole case of theoretic Socialism is lost. Its main logical weapon breaks in two in its hands. I will point out how and why.

I have explained in Labor and the Popular Welfare the principles on which the product of Labor is to be discriminated from the product of Ability, and also the way in which those principles are to be applied. The principles are merely principles of ordinary logical analysis: the application is a question of industrial history. Put briefly, what I said was as follows:

So far as production is concerned, the great economic fact of the modern world is the constant increase in the amount of wealth that results from the exertions of the same number of men. To take our own country for an example, there is, in proportion to the popu lation, about three times as much produced now as there was in the days of our great-grandfathers. That is to say, two-thirds of our existing national income is due to the action of some

force the development of which is new since that comparatively recent time. Now this force is not some new development of labor-of labor as defined by the Socialists-of that muscular force which can always be had for asking the force which, as the Fabians say, "breeds like rabbits." Muscular force is no more powerful now than it was then; nor is the muscular skill greater. The most exquisite work that mere manual effort can accomplish has been accomplished long ago, and we cannot surpass it now. The sole cause, then, of this increment has not been Labor, but the gradual concentration of the moral and intellectual faculties of exceptional men on the problem of directing Labor. These faculties thus concentrated constitute Industrial Ability, or to put it more shortly-Ability. It is the increasing operation of Ability that has been the sole new factor in production, and therefore it is to Ability that the modern increment in wealth is due. In other words, about two thirds of our present national income is produced, not by Labor, but by Ability. In Labor and the Popular Welfare this calculation is carefully worked out, but it is enough here to put it in this brief form.

Now it is this fundamental fact that Socialism ignores-Socialism generally, and the Fabian essayists in particular; and in the case of these special writers this lacuna in their analysis can be made all the more clear in connection with the above criticism, because they not only, like Mill, recognize in an intermittent way that Ability is a productive force of some kind, but they actually call it by the name I myself have given to it. They call it Ability. They even speak of "the rent of Ability," defining this as the quantity by which the products of the able man exceed those of the average laborer; and they admit on these occasions that, while Labor is a universal faculty, the more productive forms of Ability are by comparison extremely rare. The editor of the volume, for instance, speaks of it in the opening pages as a function of those scarce brains, which are not the least of Nature's capricious gifts." Now if the writers had followed out the train of thought latent

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in this admission, their entire reasoning would have been inevitably altered; but they never do this. They only at intervals recognize this truth, to drop it; and instead of incorporating into it their logical system, they leave it lying, useless and detached, on the surface.

This procedure on their part is mainly due to the fact that they have never clearly seen what Ability really is, and in what precise way, as a productive agent, it differs from Labor. The true difference, which I have explained at length in Labor and the Popular Welfare, is as follows. Labor, of whatever degree, skilled or unskilled, is a kind of industrial exertion which begins and ends with the particular task or material on which each laborer is engaged-whether it is carrying a sack of coals, fixing a brick in its place, riveting the plates of a ship, or scraping a true surface for the slide-valve of a steam-engine. Some of these forms of labor are skilled, some unskilled. One will bring the man who performs it fifteen shillings a week, another four guineas, or even more. But each has this characteristic in common, that it begins and ends with the individual sack carried, the individual surface made true, and so forth. But Ability is a form of industrial exertion which influences the labor of an indefinite number of men on an indefinite number of tasks, either by supplying each simultaneously with a similar assistance in performing his task, or with some given pattern by which he is to work, or by correlating the different exertions of different bodies of laborers. For instance, so far as Labor is concerned, precisely the same kind and quality of force is exerted in digging a canal and in digging a railway cutting or throwing up a railway embankment. But what has transformed canal-transit into railwaytransit has been the Ability of a minority of men operating on a vast army of laborers, and entirely transfiguring the result, while the Labor has remained unchanged. And what is true of the creation of railways is true of modern progress and modern production generally. The entire growth of wealth in the modern world is an increment which has been added by Ability to the old product of Labor. The Fabian essay

ists, often as they mention Ability, have, as I say, never attempted an accurate analysis of its character and its functions; but the moment they do so, and connect this analysis with the rest of their theory, the above conclusion is inevitable. It leaps to light.

For the elucidation of this truth, so fatal to the Socialistic theory, the Socialists themselves are to be thanked. The orthodox economists dealt with the laborer's reward only under the aspect of the wages paid him by an employer, and treated it as something regulated by supply and demand. The Socialistic economists have done signal service by insisting that this is a wrong, or at least a one-sided, view of the matter; and that the true view of the point at issue is obtained not by inquiring what Labor receives under the existing system, but by inquiring what Labor produces; by insisting that wages are merely a disguised form of what is produced by the laborer, and by declaring that the wage-question is at bottom this-Does the laborer get the whole of his produce? Or does he get only part? But here comes the point which the Socialists fail to see. If the reward of Labor is to be considered in this way, the reward of Ability must be so considered likewise; and the question is forced upon us, What proportion of the national income does Ability produce? or, in other words, what does that small minority of men produce, who in virtue, as the Fabians say, "of Nature's capricious gifts," possess that rare faculty? And the answer is arrived at in the way above indicated. This small minority produces all that portion of the national income which, without the assistance of its "rare gifts," the majority could not produce.

Such is the principle by which the respective products of these two faculties must be discriminated. Let us now come to the application of the principle. This, as I said, can be made only by the assistance of actual experience, and especially the facts of experience, extending over considerable periods, as recorded in industrial history. In Labor and the Popular Welfare I took the products of the industry of a population of ten million persons in this country a hundred years ago; and

for argumentative purposes made Labor a present of the total produce. It is impossible to maintain that mere Labor, the faculty" that breeds like rabbits," divorced from the control of Ability, can produce more than the total which, in the days of our grandfathers and great-grandfathers, was produced by Labor and Ability together. Starting, then, with the above exaggerated estimate of what Labor can produce, I showed what the total product of Labor in this country is at the present time; the result being that Labor at this moment produces less than five thirteenths of the existing national income, and Ability eight thirteenths. The wages of Labor, however, are about seven thirteenths of the whole; that is to say, Labor receives to-day at least forty per cent more than it produces.

The whole materials of this conclusion are in the Fabian volume itself. Over and over again is the admission made that in order to maintain production in its present state of efficiency, still more to increase it, the State will require "the scarce brains" just as much as private enterprise does now; but the writers fail to see the enormous results of this admission. I am not speaking now of the precise figures in the calculation just made. They are matters not of theory, but of historical detail. But some result substantially the same as what I have mentioned inevitably follows from the reasoning of all the Fabian writers, when once their unconscious admissions have been expanded into their full significance. The only theoretical answer possible, which bears any semblance of plausibility, is one which they have not given, but which they might give; and I will mention it for two reasons-firstly, because its plausibility at first sight is so great; and, secondly, because by dwelling on its falsehood, we shall have our attention fixed on a fundamental economic truth, which has hitherto by all schools been altogether neglected, and which will throw additional light on the calculation made above.

The plausible answer is this. It may be said that if Ability is to be held to produce all that part of the product which is over and above what Labor could have produced without its assist