our socialist advocates demand the very reverse of this, forgetting that instead of remedying they would only aggravate existing evils. The state indeed may incite and encourage, where it is required, the insurance, saving, and credit organization; it may in the absence of another initiative urge on and compel even the foundation of appropriate institutions for this purpose among the people, under self-government or centralized authority, as occasion may require: but the state never can, and if it could it never must, become a universal creditor.

Now we come last to consider the relationship, as existing in the constituted order of society, between the forms of public economy, capitalistic modes of industry, and disinterested liberality. Owing to the salutary results of the principles of capitalism to produce, consume, and distribute all commodities in the cheapest and most effectual manner, the state leans upon it for support. Wherever it can be done the state leaves it to capitalistic enterprise to carry out public works, and to accept tenders for requisite supplies; it leans on liberality for support in the creation of benevolent institutions, honorary offices, and the activity of party politics. In return, the state supplements by its public functions what is needed to the capitalistic and private system of economy; and in their mutual support, and the proportionate development of every member in the community, we see the carrying out of the principles of national or political economy.

Here too we may observe the state authority first arising from the patriarchal form of the family, resting on the authority of the church or feudal proprietorships, gradually tends to constitutional forms of government. Later, the state hands over some of its functions to be performed by capitalistic private and col

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lective enterprise, and concentrates its powers towards the fuller development of its own peculiar branches. Thus it undergoes a similar morphology and is being moulded according to similar laws of development, to those prevailing, as we saw, in social economy. To return then to a public state communism, pure and simple, as the best mode of the world's economy, instead of simply purifying and further developing our present capitalistic forms, would be a lamentable step backwards.

But we could not go back even if we would, no more than we can hope for that ideal reaction to universal brotherhood for which French artisans are sighing, nor to that pristine family union of the whole human race. dreamed of by another section of communists, moved by Christian love. Individualization is the product of a more civilized state of society; just as community of interests, or having all things in common, is the most natural result of primitive forms of society, where the respect for patriarch or priest relegates to those authorities all power in social matters, and where abundance of rich uncultivated soil and simple requirements admit of undiscriminating use by all of the common property. That "invisible" community which unites all nations and different parts of the earth by means of commercial relations, and which heightens the interest in private property, is recognised in a later and more advanced age. The increase of population demands more intense economic effort in every individual member engaged in the struggle for existence; it would therefore be a fatal error to return to those earlier forms which prevailed under conditions which no longer exist.

The causes which led to the disappearance of the common exclude the adoption of that division of land which is clamoured for in our day by agrarian socialists.

But, whilst we regard any propagandism for community of property in land as a fatal reaction, we do not oppose a reform of the present system of land ownership in a direction towards co-operative proprietorship; in a period of unprecedented economic intensity and a constant increase of population, not only private but federal proprietorship seems indispensable.

In conclusion, let us add the authority of Aristotle in confirmation of the propositions laid down in this chapter. In spite of his imperfect conceptions regarding capital, his arguments against Plato's communism are well worth quoting. He starts from a most important fact in human experience, that "all men regard most what is their own, and care less for common property, or only just as much as concerns them "; that the brother or father of two thousand would be worse off than the cousin of a few. Which is better, he asks, for every one to say "this is mine," while they apply it equally to two thousand or ten thousand, or to say "this is mine under our present form of government? "for sure," he says, "it is better for any one to be a nephew in his private capacity than a son after this manner." See "Politics," Book ii., 3. (Congreve ed., p. 51 et seq.; Bohn's trans., p. 38.)

وو

Again, this great philosopher of antiquity shows how devoted liberality can only exist where there are close personal relations; "a little sweet mingled with much water disappears in the mixture." Respecting the three kinds of agricultural communism by the state, he fears a chief difficulty would arise in the dissatisfaction of those "who receive less though they work more." And in this respect Aristotle pointedly shows how that which Proudhon calls the "extortion practised by the powerful against the weak" will take place also in a

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community of goods; he recommends therefore private property. He shows that private property, so far from being the cause of quarrels and crimes, rather tends by a careful demarcation of meum and tuum to establish peace and contentment as far as possible. The likelihood of increased quarrels in the ideal communistic state is shown by the fact that even good friends are likely to fall out in a journey. Thus he defends property against communistic complaints ancient and modern. He also points out how liberality prompted by moral motives has a place in the economic system; "from a principle of virtue," he says, "they will perform good offices to each other according to the proverb 'all things are common among friends."" He is not ignorant of the enjoyment which lies in the consciousness of possessing and being able to distribute property, and that communism would prevent liberality; for, he says, without private property no one can appear liberal, or do any generous action." He is finally very decided against reducing society too much to state government. He shows how those who would make the state too much one (τοῖς λίαν ἓν ποιοῦσι Thu Tóλ) destroy thereby its very existence, it would be the same as wishing to reduce "symphony to homophony, or rhythm to one single foot." Such are the opinions of that great political and social economist; they show how far he was from sharing the opinions of modern socialists, who would reduce all forms of society to one monotonous system.

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CHAPTER III.

Capitalistic Forms of Industry, Property, and Income.-Function of Capital in Production and Distribution.-Comparative View and Analysis of the different Forms of Industry: Private, Co-operative, and Combined.-Objective Power of Capital, and Subjective Functions of the Capitalist in the various Forms of Industry.-Results of the foregoing Comparison in favour of the Co-operative System.-Permanent use of all Forms vindicated. The gradual Morphology of Economic Forms culminating in Federalism.—Income in the forms of Interest, Profit, Rent, specially Ground-rent.—The Rights of Property, Private and Collective, not excluded from the Federal System.-Prospects of the ultimate Triumph of Federal Principles, leading to a better Distribution of Property and Income.

IN our

modern economic system the leading organ, the motor of all economic exertion, as has been repeatedly stated, is capital and capitalistic enterprise. The position of the capitalist, and the nature of capitalistic forms of industry and property therefore, demand a separate and fuller treatment in this chapter. In the earlier part of this volume we have dwelt on the importance of capitalistic enterprise, and have pointed out how the movements of all productive forces are dependent on and directed by capital. We shall now endeavour to analyse, and compare with each other, the various capitalistic forms of industry, showing their relative merits and adaptability as well as their mutual dependence. But before doing so we must premise what applies in general to all capitalistic forms. We have to remind the reader that, the soul of all capitalistic forms of industry