SOCIALISM: PRINCIPLES AND OUTLOOK. Social ism, reduced to its simplest legal and practical expression, means the complete discarding of the institution of private property by transforming it into public property and the di vision of the resultant public income equally and indiscrimi nately among the entire population. Thus it reverses the policy of Capitalism, which means establishing private or "real" prop erty to the utmost physically possible extent, and then leaving distribution of income to take care of itself. The change involves a complete moral volte-face. In Socialism, private property is anathema and equal distribution of income the first consideration. In Capitalism, private property is cardinal and distribution left to ensue from the play of free contract and selfish interest on that basis, no matter what anomalies it may present.
I.
Socialism never arises in the earlier phases of Capitalism, as, for instance, among the pioneers of civilization in a country where there is plenty of land available for private appropriation by the last comer. The distribution which results under such cir cumstances presents no wider departures from a rough equality than those made morally plausible by their association with exceptional energy and ability at the one extreme, and with obvious defects of mind and character or accidental hard luck at the other. This phase, however, does not last long under modern conditions. All the more favourable sites are soon pri vately appropriated, and the later comers (provided by immigra tion or the natural growth of the population), finding no eligible land to appropriate, are obliged to live by hiring it at a rent from its owners, transforming the latter into a rentier class enjoying unearned incomes, which increase continually with the growth of the population until the landed class becomes a money lending or capitalist class also, capital being the name given to spare money. The resource of hiring land and spare money is open to those only who are sufficiently educated to keep accounts and manage businesses, most of whom spring from the propri etary class as younger sons. The rest have to live by being hired as labourers and artisans at weekly or daily wages; so that a rough division of society into an upper or proprietary class, a middle or employing and managing class, and a wage proletariat is produced. In this division the proprietary class is purely para sitic, consuming without producing. As the inexorable operation of the economic law of rent makes this class richer and richer as the population increases, its demand for domestic servants and for luxuries of all kinds creates parasitic enterprise and employment for the middle class and the proletariat, not only withdrawing masses of them from productive industry, but also fortifying itself politically by a great body of workers and em ployers who vote with the owners because they are as dependent on the owners' unearned incomes as the owners themselves.
Meanwhile, the competition of employers for custom, which leads to the production of a dozen articles to satisfy the demand for one, leads to disastrous crises of feverish over-production alternated with periods of bad trade ("booms" and "slumps"), making continuous employment of the proletariat impossible. When wages fall to a point at which saving also is impossible, the unemployed have no means of subsistence except public relief during the slumps.
It is in this phase of capitalistic development, attained in Great Britain in the 19th century, that Socialism arises as a revolt against a distribution of wealth that has lost all its moral plausibility. Colossal wealth is associated with unproductiveness and sometimes with conspicuous worthlessness of character; and lifetimes of excessive toil beginning in early childhood leave the toiler so miserably poor that the only refuge left for old age is a general workhouse, purposely made repulsive to deter prole tarians from resorting to it as long as they have strength enough left for the most poorly paid job in the labour market. The inequalities become monstrous: hard-working men get 4s. or 5s. a day (post-war rates) in full view of persons who get sev eral thousands a day without any obligation to work at all, and even consider industrial work degrading. Such variations in income defy all attempts to relate them to variations in personal merit. Governments are forced to intervene and readjust distri bution to some extent by confiscating larger and larger percent ages of incomes derived from property (income tax, super-tax, and estate duties) and applying the proceeds to unemployment insurance and extensions of communal services, besides protect ing the proletariat against the worst extremities of oppression by an elaborate factory code which takes the control of work shops and factories largely out of the hands of their proprietors, and makes it impossible for them to exact grossly excessive hours of labour from their employees, or to neglect their health, phys ical safety, and moral welfare with complete selfishness.