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Journal of Economic Literature. Mar , Vol. Annotated Listing of New Books. If we are to undertake a valuation of life as a preliminary to valuing industry, it is likely that we may never approach the second undertaking. The best escape from this predicament is to start from some generally accepted concept which indicates, even if it does not express fully, the desirable in life. Such a term I take to be 'organic welfare. It perhaps appears to thrust into the forefront of consideration the physical basis of life. But the organic concept, when liberally interpreted and applied, carries no such restrictive implication, and its distinctively biological association should not rule it out from the work of wider valuation here required.

As a provisional statement of our standard of valuation, 'organic welfare' has two advantages. In the first place, it supplies an admittedly sound method of estimating those physical costs and utilities with which the major part of industry and of its product is associated. Even in the most advanced civilisation of to-day, economic processes are primarily physical in the efforts they evoke and in the needs they satisfy; the expenditure and recoupment of physical energy constitute the first and most prominent aspect of industry.

In tracing the origins of human industry, we shall find this rooted in what appear as half-instinctive animal functions for the satisfaction of 'organic' needs, individual or racial. The primitive direction of productive effort is evidently 'organic. It insists upon regarding the productive effort which goes into any work of production and the satisfaction which proceeds from the consumption of any product, not as a separate cost and a separate utility, but in their total bearing upon the life of the producer or consumer.

The mechanical separatism of the ordinary economic view follows from a treatment in which the labour bestowed on a product is only a 'cost' in the same sense as the raw materials and tools employed in making it, all alike purchased as separate commodities at a market in which they figure as fractions of a Supply. Similarly with the ordinary economic treatment of consumption. Each consumable is regarded as yielding a quality of utility or satisfaction valued on its own account, whereas in reality its consumable value depends upon the ways in which it affects the entire organic process of consumption.

Every speeding-up of a machine-process, or every reduction of the hours of labour, affects for good or evil both the economic and the human efficiency of the whole man: every rise or fall of remuneration for his labour similarly reacts upon the standard of life. Nor is this all. Current economic science has not only treated each cost and each utility as a separate item or unit of economic power, it has treated each man as two men, producer and consumer.

J.A. Hobson

The acquiescence in the economic tendency towards a constantly increasing specialisation of man as producer, a constantly increasing generalisation of man as consumer, is only intelligible upon the supposition that the arts of production and consumption have no relation to one another.

In a word, it obliges us to value every act of production or consumption with regard to its aggregate effect upon the life and character of the agent. Finally, a 'social' interpretation of industry is not possible except by treating society as an organic structure.

Whether society be regarded as an 'organism' with a life conceived as comprising and regulating the life of its individuals, in the same manner as a biological organism that of its cells, or as an 'organisation' contrived by individuals entirely for the furtherance of their private ends, it must be treated as a vital structure capable of working well or working ill. I say vital structure, not spiritual structure, for I hold the tendency to interpret social organisation exclusively in terms of ethical ends, and as existing simply for 'the realisation of an ethical order,' to be unwarranted.

The men who form or constitute a Society, or who enter any sort of social organisation, enter body and soul, they carry into it the inseparable character of the organic life, with all the physical and spiritual activities and purposes it contains. Particular modes of social organisation, as, for example, a Church, may be treated as directed primarily to spiritual ends, though even there the separation is not finally valid. But society in the broader sense, even though conceived not as an 'organism' but merely as an organisation, must be regarded as existing for various sorts of human purposes.

For the impulses to form societies are rooted in broad instincts of gregariousness and of sexual and racial feeling, which are best described as organic, and, though these instincts become spiritualised and rationalised with the progress of the human mind, they never cease to carry a biological import.

Even though one takes, therefore, the extremely individualistic view of Society, regarding it as nothing more than a set of arrangements for furthering the life of individual men and women, entirely a means or instrument for achieving the ends of 'personality,' our human valuation of industry will require consideration of its reactions upon the structure and working of these social arrangements. But this organic treatment of Society is, of course, still more essential, if we consider society not merely as a number of men and women with social instincts and social aspects of their individual lives, but as a group-life with a collective body, a collective consciousness and will, and capable of realising a collective vital end.

The disposition to convert sociology into a study, on the one hand, of social feelings in the individual man, on the other of social institutions that are only forms through which these feelings express themselves, is to my mind a wholly inadequate conception of the science of Society. The study of the social value of individual men no more constitutes sociology than the study of cell life constitutes human physiology. A recognition of the independent value of the good life of a society is essential to any science or art of Society. To a Greek or a Roman, the idea that the city existed merely for the production of good citizens, and without an end or self of its own, would never have seemed plausible.

Nor to any Christian, familiar with the idea and the sentiment of the Church as a society of religious men and women, would it occur that such Society had no life or purpose other than that contained in its individual members. Society must then be conceived, not as a set of social relations, but as a collective organism, with life, will, purpose, meaning of its own, as distinguished from the life, will, purpose, meaning, of the individual members of it.

To those who boggle at the extension of the biological term 'organism' to society, asking awkward questions as to the whereabouts of the social sensorium, and the integument of a society, Or whether a political, a religious, an industrial Society do not conflict and overlap, I would reply that these difficulties are such as arise whenever an extension of boundaries occurs in the intellectual world. The concept 'organism' as applied to the life of animals and vegetables, is not wholly appropriate to describe the life of a society, but it is more appropriate than any other concept, and some concept must be applied.

If some qualification is desired, no objection can be raised against the term super-organism except its length. What is necessary is that some term should be used to assist the mind in realising clearly that all life proceeds by the cooperation of units working, not each for its separate self, but for a whole, and attaining their separate well-being in the proper functioning of that whole.

As the structure of the organic cell, the organ, and the organism illustrate this cooperative and composite life, so with the larger groupings which we call societies. An animal organism is a society of cells. So far as the difficulty arising from the narrowly biological use of the term organism is concerned, that is rapidly disappearing before the advance of psychology. For modern biology is coming more and more to realise its early error in seeking to confine itself to the study of life as a merely physical phenomenon.

Biology and psychology are constantly drawing into closer relations, with the result that a new science of psycho-biology is already coming into being. In building, thus far, upon a foundation of organic concepts, one is no longer properly exposed to the suspicion of ignoring or disparaging the psychical phenomena which constitute man's spiritual nature. As biology, thus treating the entire organic nature of man, becomes an individual psycho-physics, so must sociology, treating the wider organic nature of man, become a collective psychophysics.

While then the respective importance of the welfare of the individual and of society may still be difficult to define, the admission of society as a psycho-physical structure, with human ends of its own, will involve its proper recognition in the appraisement of every sort of human value. Our task, that of devising a method of valuation of industry, will evidently demand that economic processes shall be considered, not only in their bearing upon individual lives, but in their bearing upon the welfare of society. Indeed, it is difficult to see how any reasonable person can confront the grave practical problems presented by the industrial societies of to-day, such as those contained in individual, class, sex, national differentiation of economic functions, without realising that the hypothesis of humanity as itself a collective organism can alone furnish any hope of their rational solution.

The significance of the organic conception in any human valuation of industrial acts or products is evident. It requires us to value each act or product both from the standpoint of the individual and of the society to which he belongs, and it furnishes a harmony of the two areas of interest. The baffling problems everywhere presented to thought by the apparent contradiction of the unity and the diversity of nature, the whole and the parts, the general and the particular, find their clearest practical solution in the fact and consciousness of man's social nature, his recognition that in feeling and in action he is both an individual and a member of a number of social groups, expanding in a series of concentric circles from family and city to humanity, and in dimmer outline to some larger cosmic organism.

For our economic valuation, the harmony of this narrower and wider treatment of human nature is of profound and obvious importance. It will require us, in considering the vital costs and satisfactions involved in the production and consumption of goods, to have regard to their effects, not only upon the individuals who produce and consume the goods, but upon the city, nation, or other society to which they belong. Human welfare will be not merely the welfare of human beings taken as an aggregate, but of society regarded as an organic unity.

The most delicate economic and spiritual issues of adjustment will be found to relate to the provisions for harmonising the order and the growth of the narrower and the wider organisms. While, then, biology has in the past been too arrogant in pressing distinctively physical implications of the term 'organism' into the dawning science of sociology, and in distorting the true conception of social evolution by enforcing narrow interpretations of selection and survival, this is no ground for refusing to utilise the terminology which, better than any other, expresses the relations of parts to wholes in every sort of living substance.

The contradictions of Production and Consumption, Cost and Utility, Physical and Spiritual Welfare, Individual and Social Welfare, all find their likeliest mode of reconcilement and of harmony in the treatment of society as an organism. Labour employed in productive work of industry is usually excluded from the category of national 'wealth,' though it is sometimes regarded as 'personal wealth'. But there is no sufficient reason for this exclusion.

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Any increase of the efficiency of the labour of a nation is evidently as much an increase of its total vendible resources as an increase in its instrumental capital would be. Exchange is simply an ordinary branch of production, mainly consisting of wholesale and retail trade. Distribution has, of course, another and an important economic signification, being applied to the laws determining the apportionment of the product.

The Common-sense of Political Economy. How potent a source of intellectual confusion this separation of producer and consumer is, may be best illustrated from the commonly accepted treatment of the theory of taxation, which regards 'consumers' as a different class of beings from 'producers' for purposes of incidence of taxes. There are doubtless those who will remain dissatisfied with this insistence upon the extension of organism and the conception of the humanly desirable in terms of 'organic' welfare.

They would insist that the conscious personality of an individual or of a society transcends organism, as the latter does mechanism, and that our standard and measure of welfare should be expressed in psychical terms of personality. This point of view has recently been concisely and powerfully restated by Dr. Haldane Mechanism, Life and Personality. But though there is much to say for treating personality as the intrinsic quality of our humanist standard, I decided against the course on a balance of intellectual expediency, preferring to retain the clearness and force of the organic concept while spiritualising it to meet the requirements of ascending life.

Cost of Living

Although it is no part of my purpose to endeavour to set forth the facts and laws of the historical evolution of modern industry, it will be useful to make some brief allusion to the origins of industry and property, so as to give concrete meaning to the stress laid upon organic processes in our interpretation. For just in proportion as it is realised that industry has all its earliest roots in the primary organic needs of man, will assent more easily be given to the proposal to adhere to the organic conception of welfare in valuing modern economic processes. It is not easy to ascertain where the activities which we term industrial first emerge in the evolution of organic life.

Every organism selects, appropriates, and assimilates matter from its environment, in order to provide for growth or waste of tissue and energy given out in the general course of its vital processes, including the activities of procuring food, protection against organic or inorganic dangers, and the generation, rearing, and protection of offspring. Nutrition and function are the terms usually applied to describe the primary balance of the vital processes of intaking and outputting energy.

The organism feeds itself in order to work. It seems at first as if we had here laid down in the origins of organic life a natural economy of production and consumption. But do the organic processes of feeding, choosing, appropriating, and assimilating food, constitute consumption, and do the other activities for which food is utilised constitute production?

Reflection will show that there is very little intellectual service in pressing sharply this distinction. The active life of an organism consists in a round of nutritive, protective, generative processes, each of which, from the standpoint of individual and species, may be regarded alike as productive and consumptive.

A plant drives its suckers into the soil in search of the foods it needs, disposes its leaves to utilise the light and air or for protection against the wind, assimilates its organic food by the use of its stock of chlorophyl, distributes it throughout its system for maintenance and growth, and directs that growth so as to safeguard its own existence and to provide itself with favourable opportunities of fertilisation by insect or other agencies.

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If due account be taken both of the cellular life within the individual and of the specific life of this plant organism, the whole of the processes or activities appears to be nutritive, each act of nutrition being associated with some other function in the evolution of the cell, the organism, the species. It would be as plausible to assert that every other function, protective, generative, or other, was undertaken for the nutrition of the individual or the species, as to assert the opposite.

But, without entering into the delicate metaphysics of this question, we may confidently affirm that in this elementary organic life nutrition and function cannot be regarded as mutually exclusive processes, while the economic contrasts of production and consumption, work and enjoyment, cost and utility, have no clear application. If we approach a stage nearer to human life, we begin to find, in the life of either the lower or higher animals, some organic activities to which the term industry appears applicable. The long, arduous, complex and painful output of energy, consciously put forth by many animals in the search for food, sometimes in the storage of food, in the provision of shelter, in some instances in the use of tools or weapons, in processes of cooperation and division of labour for migration, protection, or combat, certainly approaches what we recognise as industry.

It involves a painstaking interference with the material environment for the purposive attainment of some distinct object consciously regarded as desirable, which is of the essence of industry. It may, however, be objected that such processes, though resembling human industry in the intricacy and technical skill involved, are not really purposive in the rational sense, but are merely instinctive, and that, as such, they ought to be distinguished from the rational conduct of human industry. Thus, it is contended that, though the efforts given out by many animals in procuring food, protection against enemies, or provision of shelter, formally correspond with familiar processes of human industry, the direction of instinct makes the application of this term improper.

But, as we proceed further into our psychological analysis of human work, we shall find so large an element of admitted instinct in many forms of it as to preclude us from admitting that 'rational' direction is essential to industry. It is, therefore, permissible for us to give a provisional recognition to such animal activities as containing some, at any rate, of the essential characteristics of 'work' or 'industry'.

Indeed, the evident resemblance of these regular activities of animals in seeking food, shelter and protection, to the activities of primitive man applied to the same definitely organic satisfactions, would preclude us from denying to the lower animals what we must admit in the case of men. For, even in primitive men, possessing a certain use of tools and weapons, and a higher degree of cunning in dealing with their environment, the drive and direction of organic instincts and impulses, as distinguished from reflection and reason, appear to be hardly less dominant than in their animal kindred.

Unless we arbitrarily reserve the concepts work and industry for a higher stage of social evolution, in which some measure of settled life with tribal and personal property and calculated provision for future wants have emerged, it will be well to seek the roots of the elaborated industrial system which we wish to interpret in these rudimentary and mainly instinctive activities of animals and savage men.

In examining these organic activities lying at the basis of human industry, we shall light at the outset upon one fact of extreme significance, viz. Hunting, fighting, mating, the care and protection of the young, indeed all actions which possess what is called 'survival value' or biological utility, are endowed with a pleasure bonus as a bribe for their performance. Nature endows most organically useful efforts with concurrent enjoyment. But, though in these 'organic functions' many animals give out a great deal of 'laborious' effort, commingled with elements of play or of incipient art, as in the dancing, singing and decorative operations of birds, to none of them is the word 'industry' fully applicable.

We do not seem to enter the definitely economic sphere until we find animals sufficiently reasonable to interfere in a conscious way with their environment, for tolerably distant ends. For, though much industrial production and consumption will continue to be either instinctive or automatic in their operation, a growing element of conscious purpose will become essential to the ordered conduct of all industrial processes. The conscious conception of more distant ends and the growing willingness to make present sacrifices for their attainment are the plainest badges of this industrial progress.

When a being is aware of these purposes he has entered a rational economy. As this more rational economy proceeds, the marks which distinguish it from a purely instinctive organic economy become evident. The instinctive economy allows little scope for individuality of life, the dominant drive of its 'implicit' purpose is specific, i. The spirit of the hive in bee-life is the fullest expression of this subservience of the individual life to the corporate life and of the present generation to the series of generations constituting the specific life.

But everywhere the dominion of instinct implies the absorption of the individual life in promoting the ends of the species: successful parenthood is the primary work of the individual. It might almost be said that the dawn of reason is the dawn of selfishness.

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For rational economy involves a conscious realisation of the individual self, with ends of its own to be secured and with opportunities for securing them. The earliest conception of this separate self and its ends will naturally tend to be in terms of merely or mainly physical satisfaction. Thus the displacement of the instinctive by the rational economy is evidently a critical era, attended with grave risks due to the tendency towards an over-assertion of the individual self and a consequent weakening of the forces making for specific life.

Man, the newly conscious individual, may perversely choose to squander organic resources 'intended' by nature for the race upon his own personal pleasures and needs. He may refuse to make as a matter of rational choice those personal efforts and sacrifices for family and race which no animal, subject to the drive of instinct, is able to 'think' of refusing. Such may be an effect of the release from the life of organic instincts. The increasing supply of foods and other sources of physical satisfaction he may apply to build up for himself a life of super-brutal hedonism.

Only as this animal self becomes spiritualised and socialised, does the social race-life reassert its sway upon the higher plane of human consciousness. But it is of importance to realise that a first effect of reason, operating to direct the purposive activities, is to liberate the 'self' from the dominion of the specific life, and to enable it to seek and obtain separate personal satisfactions.

For with this power comes the fact and the sense of 'personal property' which play so large a part in industry.

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Early industry and early property are largely directed by the requirements of this dawning sense of personality. Though the origins of industry are doubtless found in the promptings of organic utility, they are not of a narrowly 'utilitarian' character. We do not find the earliest industries of man closely confined to the satisfaction of what might seem the most urgent of his organic needs, food, shelter, protection against enemies.

The elements of play and ornament are so prevalent in early industries as to suggest the theory, which some anthropologists press far, that adornment for personal glory is the dominant origin of industry and property. Even the taming of domestic animals was, he held, first undertaken for amusement or for the worship of the gods. The strong attraction of most savage or backward peoples in our day towards articles of ornament and play which afford expression to naive personal pride, appears to support this view. Primitive man certainly does not evolve towards industrial civilisation by a logically sane economy of satisfying first his most vitally important material needs, and then building on this foundation a superstructure of conveniences, comforts and luxuries, with the various industries appertaining thereto.

This economic man is nowhere found. Actual man, as many anthropologists depict him, appears to begin with the luxuries and dispenses with the conveniences. This non-utilitarian view of the origins of industry has, however, been driven to excess. There remains a large element of truth in the proverb 'Necessity is the mother of invention.

Fighting, hunting, mating, were presumably his first pursuits and the early arts or industries, at any rate on the male side, would be subsidiary to these pursuits. Any organised process or handling of matter which would make him a better fighter, hunter, suitor, would be likely to emerge as a craft or industry. This explains the apparent blend of utilitarian and non-utilitarian origins. In point of fact, most of the so-called ornamental activities and products have their evident biological uses.

They are not mere playthings. The adornment of the human body, the use of tatoos and masks, drums and gongs and other play-products, are partly, no doubt, for mere glory of self-assertion, itself an instinctive craving, but also for courtship, for recognition and for frightening enemies. While, then, it remains true that the sportive and artistic impulses are conspicuous in the early crafts, it is a mistake to disparage the organic utility of these processes. After man has made provision for the present necessities of the body, his superfluous energy naturally tends, either to preparatory play, the practice or imitation of biologically useful actions, or else to explorative, constructive, and decorative work in handling such materials as present themselves.

This curiosity about his surroundings, and the instinctive desire to construct and arrange them for his convenience, or for the dawning aesthetic satisfaction of his senses, or to impress the female of his race, these instincts undeniably coalesce with the drive of physical necessity to force man to apply his mind to the discovery and practice of the early arts and crafts.

But, though these distinctively male modes of manipulating the environment thus possess a utilitarian aspect, they do not furnish the beginnings of the chief industries which figure in civilised life. The beginnings of manufacture and of agriculture, as regular occupations, are commonly ascribed to women and to slaves. Those who conceive of the earliest human societies as matriarchal or gynaecocentric, the women forming fixed centres of order in the home and village, owning the children and the property attached to the home, regard women both as the inventors and the practitioners of the early handicrafts, including the cultivation of the soil.

The beginnings of the arts of pottery, basket-making, building, clothes-making, as well as digging, planting, milling and other processes of preparing food, were doubtless women's work in the first instance, though they were probably raised to the position of regular industries when slavery became common. It is, however, noteworthy that, even in those early handicrafts devoted to the most practical needs of life, the decorative instinct generally finds expression.

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Not only the weapons of the men, but the pots and pans and other domestic utensils of the women, carry carvings or mouldings, which testify to the play or art impulses. Leisure and pleasure thus appear as ingredients in the earliest industries. To whatever source, then, we trace the origins of industry, to the use of weapons, snares and other male apparatus for the fight and hunt, to the instincts of play, imitation and adornment as modes of self-expression and of pride, or to the more distinctively utilitarian work of women and of slaves around the home, we find play or pleasure mingled with the work.

This profoundly interesting truth is attested by the long surviving presence of the song and other rhythmic activities in many forms of associated labour, as well as in the dancing which in primitive societies was an almost invariable accompaniment of all important enterprises, war, hunting and harvesting, and which still survives among us in the Harvest home.

Though in slave industries this lighter element doubtless dwindled very low, it seldom died out entirely, as the song of the galley-rowers, or of the Southern negroes in the cotton-fields, testifies. Where the handicrafts throve among free men in Europe, everywhere the motives of play, personal pride and prowess, find liberal expression in industry. This slight and necessarily speculative sketch of the origin of industry is designed to enforce two facts. In the first place, we can trace in every rudimentary industry the promptings of vital utility, laying the foundations of an economy of efforts and satisfactions which furthers the organic development of the individual and the race.

In the second place, we everywhere find what we call distinctively economic motives and activities almost inextricably intertwined, or even fused, with other motives and activities, sportive, artistic, religious, social and political. To trace the history of the process by which in modern civilisation economic or industrial activities have separated themselves from other activities, assuming more and more dominance, until the industrial System and the Business Man have become the most potent facts of life, would lie beyond our scope.

Nor is it at all necessary. What is important for us to realise, however, is that this process of industrialisation, through which the civilised peoples have been passing, is beyond all question the most powerful instrument of education. It appears to have done more to rationalise and to socialise men than all the higher and more spiritual institutions of man, so far as such comparisons are possible.

It has rationalised man chiefly by compelling him to exercise foresight and forethought, to subdue his will and train his active faculties to the performance of long and intrinsically disagreeable tasks, in order to realise some more and more distant object of desire, and by obliging him to recognise the rigorous laws of causation in his calculations. It has socialised him by weaving an ever more elaborate tissue of common interests between him and a growing number of his fellow men, and by compelling him to engage in closer co-operation with them for the attainment of his ends.

Though this socialisation is far more advanced in objective fact than in thought and feeling, it remains true that the direct and indirect association of larger and more various bodies or men in modern industry and commerce is the first condition and the strongest stimulus to the expansion and intensification of the social will.

It is this orderly rational system of industry, employing, as it does, the organic powers of man for the satisfaction of his organic needs, that we seek to submit to valuation. The immense variety and complexity of the arts and crafts of which such a system of human industry consists, the long interval of time which often intervenes between acts of production and of consumption, the differences of personality between those who perform the efforts of production and those who utilise or enjoy the fruits of those efforts in consumption, immensely remote as they appear from the simple organic economy of primitive man, do not escape an ultimate dependence upon organic laws and conditions.

A human valuation, therefore, must insist upon expressing them in terms of organic welfare, individual and social. As human activities and enjoyments ascend in the process we term civilisation, we shall expect to find this organic life becoming more psychical, in the sense that their modes are more 'reasonable' and the emotions that attach to them are more spiritual, i. So too we shall expect industrial progress to contribute to a growing adjustment between the individual and the social economy, restoring under the form of reasonable social service to the more highly individualised members of a modern society an increasing measure of that subservience to the organic welfare of mankind which instinct was able to secure upon a lower plane of conscious life.

Approaching on its concrete side the economic system the human values of which we seek to ascertain, we find it to consist in a series of productive processes bringing various goods and services into marketable shape, accompanied by a series of consumptive processes in which these goods and services are used, wasted, or otherwise disposed of by those who buy them for personal uses. The former set of processes, as we have recognised, occupy a place of so much greater prominence and publicity as virtually to absorb the science of industry or 'economics', leaving to the processes of consumption an obscure and entirely subordinate position.

Our organic or human valuation starts with a protest against this assumption of inequality in the arts of production and consumption. Its interpretation of economic processes will be disposed to lay as much stress upon the history of the various commodities after they leave the shop-counter and pass into the possession of consumers as before. The human good and evil associated with economic 'wealth' must, viewed from the organic standpoint, depend as much upon the nature of its consumption as upon the nature of its production.

This consideration will determine our method of applying the human standard of values. Accepting at the outset the convenient distinction between the processes of production and consumption, we shall approach the economic system at the point where the two processes meet, that is to say where wealth emerges from the productive processes as income, in order to pass as such into the possession of persons entitled to consume it. To make the enquiry simpler and more easily intelligible, we will ignore for the present all the extra-national or cosmopolitan conditions of modern industry, and assume that we are dealing with a closed national system producing, distributing, and consuming the two thousand million pounds' worth of goods and services roughly estimated to constitute the current annual income of the British nation.

Now the habit of regarding wealth and income in terms of money is so deep-seated and persistent as to make it difficult for ordinary 'business' men to realise these words in any other than a monetary sense. The ordinary mind has to break through a certain barrier of thought and feeling in order even to present to itself the significance of 'real' wages or 'real' income, as distinguished from money wages and money income. It requires some effort of mind to realise even the two obviously important factors of the increase of population and the shift of prices, which, when once realised, so evidently affect the bearing of the money income upon the national welfare.

Year after year trade reports and other official documents, in comparing the relative economic position of the various nations or the fluctuations of trade within a single nation, habitually encourage this misleading influence of the financial standard by publishing crude, uncorrected monetary values as if they were indicative of industrial facts, and statesmen take such figures as valid evidence on which to base a policy. As regards the particular object of our enquiry, this obsession of the general ind by the monetary standard makes it impossible for us even to assume that all our leaders attach a clear and consistent meaning to the term 'real' income.

It is not quite easy at first to grasp the central and essential fact that every receipt of any sort of income, whether as wages, rent, salary, interest, profit, fees or otherwise, involves the coming into being of a bit of 'real' income in the shape of some material goods or some saleable service.