foreign trade, which such policies would cause. There are better and less speculative methods of reducing inequality, which will be discussed in the next Part of this book. CHAPTER XI CATEGORIES AND PERSONS. The argument of the preceding chapters of this Part has dealt with the causes which determine the absolute and relative shares of categories. The main conclusion which has emerged is an apparent tendency, under modern conditions, for the relative share of property to increase at the expense of the relative share of work. For those who are primarily interested in the economic welfare of persons, the interest of such a discovery is only indirect and preliminary. In the next Part a direct study will be made of the inequality of personal incomes. No certain deduction can be drawn from the division of income between work and property regarding the division of income between persons. For this depends also upon the division of the total income from work among individual workers, the division of the total income from property among owners, and the cross classification between workers and owners. As Professor Cannan points out, "a distribution between property and labour extremely favourable to labour might be compatible with a large proportion of the people being in the most abject poverty, and a distribution extraordinarily favourable to property might be compatible with an equality of distribution hitherto unknown. When the distribution was favourable to labour, the property might be massed in few hands, and earnings very unequally distributed; when the distribution was favourable to property, the property might be widely distributed and earnings very equal." But, in the conditions of modern communities, where the greater part of the income from property goes to a numerically insignificant fraction of the population, while the great majority of the population derive nearly all their income from work, there is a presumption that an increase in the relative share of property will involve an increase in the inequality of incomes. Further, it is important to distinguish, from the point of view of its effects on welfare, between an increase in the amount of work which comes about through an increase in the number of workers, and one which comes about through an increase in their efficiency. In either case an increase in the amount of work will increase the absolute share of the workers in the total product. In the latter case it will certainly increase the earnings of the average worker, but in the former case it may or may not, being more likely to do so, the greater the elasticity of demand for work. 1 Economic Outlook, PP. 39-40. |