claimed it will, there would naturally be a preference, altogether apart from any compulsion, for the public employment.

The third element is the distribution of income by the common authority; that is, the income of society, or the national dividend, as it is frequently called; and it is that part of the wealth produced by society which may be used for enjoyment after the material instruments of production have been maintained and suitably improved and extended. The common ownership and management of the material instruments of production necessarily result in ownership of the national dividend by the collectivity, in the first instance, just as now those who own and manage industry have the ownership of the products of industry, and from these products satisfy the claims of those who have participated in their production. It remains for the collectivity to distribute all the wealth produced for consumption among all the members of society.

As there is provision for work for all in the public service, so there must be provided an income for all. But this provision of income for all reaches even further than the ranks of the toilers. There must always be in society some who are physically or mentally incapable of toil, and socialism contemplates the provision of an income for these also.

The fourth element in socialism is private property in the larger proportion of income. It thus becomes at once apparent that modern socialism does not propose to abolish private property. Quite the contrary. Socialism maintains that private property is necessary for personal freedom and the full development of our faculties. The advantages of private property are claimed by the advocates of the existing social order as arguments for its maintenance; but socialism asserts that society, as at present constituted, is unable to secure to each one the private property which he requires. Socialism proposes to extend the institution of private property in such manner as to secure to each individual in society property in an annual income, which shall be, so far as practicable, sufficient to satisfy all rational wants and to protect all from those attacks upon personal freedom which proceed from the dependence of man upon man. The instruments of production do not exist for their own sake, but for the sake of products for consumption, which again have as their destination man's needs. Now, while private property in the instruments of production is to be reduced to its lowest terms, it is to be extended and strengthened in the products for the sake of which the instruments exist.

14. THE ORGANIZATION OF THE KAWEAH CO-OPERATIVE COLONY

The Kaweah Colony was founded as a voluntary association in 1885 and became a joint stock company in 1888 under the name of the "Kaweah Co-operative Colony Company of California, Limited." The number of members was then fixed at five hundred, applicants to be first passed upon by a board of trustees and then admitted according to priority of payment of the membership contribution of five hundred dollars. The capitalization was fixed at $250,000. All land and buildings and all other property except private dwellings and personal effects were held in common by the members. A controversy with the government over timber holdings interfered seriously with the success of the colony.

The outline subjoined is an ideal rather than an actual achievement, although it has been followed in its main lines and underlying principles.

A Model of a Co-operative State, consisting of Divisions (3), each under a Manager; Departments (13), each under a Superintendent; Bureaus (58), each under a Chief; and Sections, each under a Foreman. Divisions: I. Division of Production, II. Division of Distribution, III. Division of the Commonweal.

DIVISION I. (PRODUCTION)

(1) Department of Collection: Bureaus:

1. Fishing, 2. Hunting, 3. Woodmen, 4. Sand and clay collection. (2) Department of Extraction: Bureaus:

1. Metallic extraction, 2. Coal and oil extraction, 3. Lime extraction, 4. Slate, stone, marble quarries.

(3) Department of Growing: Bureaus:

1. Fish culture, 2. Fowl, 3. Insect, 4. Flesh, 5. Forage, 6. Grain, 7. Vegetables, 8. Fruits, 9. Fibres, 10. Miscellaneous growing.

(4) Department of Handicraft: Bureaus:

1. Bureau of food, 2. Clothing, 3. Shelter, 4. Decorations.

DIVISION II. (DISTRIBUTION)

(5) Department of Transportation: Bureaus:

1. Freight traffic, 2. Passenger traffic.

(6) Department of Storage: Bureaus:

1. Warehouses, 2. Stores.

(7) Department of Delivery: Bureaus:

1. Carrier delivery.

(8) Department of Finance: Bureaus:

1. General audits, 2. Accounts, 3. Cash, 4. Exchange.

1 Adapted by permission from W. C. Jones, “The Kaweah Experiment in Co-operation," Quarterly Journal of Economics, VI (1891–92), pp. 73-75.

DIVISION III. (COMMONWEAL)

(9) Department of Administration: Bureaus:

1. Legislation: Sections: (a) Referendum, (b) Initiative, (c) Imperative mandate.

2. Executive: Sections: (a) Assignment of colony labor, (b) Assignment of outside work.

3. Judiciary: Sections: (a) Court of public disputes, (b) Of private disputes, (c) Of prizes and rewards.

(10) Department of Education (Children and Adults): Bureaus:

1. The Colony Journal.

2. Physical Culture: Sections: (a) Gymnastics (Turnverein), (b) Drill: "Setting-up," (c) Boxing, fencing, wrestling, (d) Swimming, (e) Shooting, archery.

3. Mental Culture: (Speech-craft) Sections:

(a) Science: Heat, light, sound, motion, mechanics, electricity, chemistry, geology, zoology, mathematics, geography, history, astronomy, languages, philosophy, politics, sociology, metallurgy, logic, metaphysics, natural justice, or law, medicine.

(b) Literature: Poetry, prose, belles-lettres.

(c) Art: Music, painting, sculpture, architecture, drama, tragedy, comedy, choral music, the dance, ceremonials and festivals, debate, declamation, the band, flower culture, modeling, drawing, design.

4. Moral Culture: Sections: To teach the colonists to love courage, fidelity, truth, kindness, purity, generosity, love, selfsacrifice, independence, modesty, gentleness, toleration, mercy, gratitude, justice, forgiveness, temperance, politeness, honesty, conscientiousness, speech-craft, firmness, judgment, prudence, perseverance, industriousness; and to hate cowardice, falsehood, treachery, infidelity, cruelty, impurity, avarice, niggardliness, hatred, selfishness, servility, vanity, ferocity, bigotry, vindictiveness, bestiality, indulgence, rudeness, dishonesty, unscrupulousness, garrulity, weakness, vacillation, rashness, stupidity, frivolity, desistance, and laziness. These departments to be carried out by kindergarten, lecture, debate, classes, and the

press.

(11) Department of Public Service: Bureaus:

1. Public health, 2. Drainage, 3. Fertilizing, 4. Roads, 5. Ditches, 6. Water supply, 7. Heating, 8. Lighting, 9. Pneumatics, 10. Post-Office, 11. Telegraph and telephone, 12. Cleanliness, 13. Propaganda.

(12) Department of Amusements (should co-operate with the Department of Education): Bureaus:

1. Of scientific exhibition, 2. Athletic exhibition, 3. Social amusement. There should be constructed for these departments elegant, imposing, and artistic structures, which might be called the Forum, the Theater, the Amphitheater, the Arena, Academe,

etc.

(13) Department of Defence: Bureaus:

1. Fire Department, 2. National Guard.

E. The Terms Production, Distribution, and Consumption 15. THE ECONOMIST'S USE OF THE TERMS PRODUCTION, CONSUMPTION, AND DISTRIBUTION

A1

I. Production.-Production has been defined as the creation of utilities. That man cannot create matter is a familiar truth. All that he can do is to rearrange particles of matter so as to create form utilities; or move goods from one part of the world to another so as to create place utilities; or preserve goods from one period to another so as to create time utilities; or, finally, transfer goods from the ownership of one individual to that of another so as to create possession utilities. Any activity which contributes to the creation of utilities in any of these ways is production.

There are two essential factors in all productive processes: nature and man. Nature figures in production as an aggregate of materials and blind forces. Acting in conformity with invariable laws, she destroys as readily as she creates. Moreover, her productive services are always gratuitous to him who has the means and the intelligence to command them. Man, on the contrary, appears as a being with conscious purpose. He also destroys-not ruthlessly, however, as nature seems to do, but in order to gratify his wants. In production man is the directing, active agent, nature the obedient, passive agency. Man marshals the materials and productive forces which nature supplies in the ways that experience has taught him to be best, and he alone enjoys the fruits of productive enterprise.

Man and nature are the primary factors in production; secondary or derived from them is capital, the products of past industry used as Adapted by permission from H. R. Seager, Principles of Economics pp. 55, 122-23. (Henry Holt & Co., 1913.)

I

aids to further production. With the abundant evidence on every side of the dominant rôle which power machinery and other forms of capital play in production as now carried on there is little need to enlarge upon the significance of this third factor. To capital is chiefly due the efficiency of contemporary productive methods, as contrasted with those of one hundred and fifty years ago, and also the division of the working population into employers and employees. These truths are so familiar to everyone that it is not so much the importance of capital as the fact that it is not an independent but a derivative factor in production that requires emphasis.

[NOTE.-It has become the custom to refer to the factors or agents of production as land, labor, and capital. Occasionally a fourth, organization, is mentioned.]

2. Consumption.-Contrasted with production is consumption, the utilization of goods as a means to the gratification of wants. Consumption furnishes the principal motive for business activity. The utilization of goods as means to gratification must, for the sake of clearness, be sharply contrasted with productive utilization, as, for example, of fuel or raw materials in manufacturing. Such utilization, although sometimes described by the misleading phrase "productive consumption," is really production itself. It has nothing in common with consumption except that it, too, usually involves the destruction of the utilities in the goods utilized.

B1

Economics deals with the distribution of wealth among the different classes of which society is composed.

The most prominent characteristic of modern industrial life is that commodities are produced, as a rule, through the joint efforts of many individuals. There was a time when the blacksmith smelted his own iron and controlled each stage in the process until the finished nail or horseshoe was in the consumer's hands. Today, probably a thousand men have co-operated in the production of even so simple an article as a horseshoe. The value thus produced must be distributed in some way among the various producers. Those who have contributed labor receive wages; those who have contributed capital receive interest. What determines how large a share of the total value shall go to the laborers, how large a share to the owners of

Taken by permission from A. S. Johnson, Introduction to Economics, p. 9. (D. C. Heath & Co., 1909.)