one's capital, is to render any positive service,1 or that income from inherited property can be seriously regarded as payment for service rendered by the present owner. It is also very hard to believe that, if competing sellers of any commodity cease to compete and enter into a combination, as a result of which their output is deliberately restricted, the price of the commodity raised and their incomes largely increased by monoply profits, these increased incomes represent increased services rendered to society.

Suggestions of this kind, though capable of being so interpreted" as to be logically flawless, strain language to the breaking point. If made by rich men, poor men might be pardoned for thinking them disingenuous. When made by professional economists, they tend to discredit economic science in the eyes of the simple.

The proposition that justice requires that the distribution of income should be according to the value of services rendered in the existing state of society is logically distinct from the proposition that distribution in the existing state of society is in fact according to the value of services rendered. But, in practice, those who maintain the former generally maintain the latter also.3

§9 Having examined various interpretations of the doctrine that justice requires distribution according to deserts, we may now pass on to examine the doctrine that justice requires distribution according to needs. The meaning of "needs" is not altogether clear, but if

It might be thought more reasonable to regard the consumption of capital as a positive disservice to society, for which a diminution of income in the future is an inadequate penalty.

The identification of what should be with what is, or at any rate with what "is evolving," is the leading fallacy of Herbert Spencer's "Evolutionary Ethics," which was exposed by Huxley in his Romanes Lecture in 1893 (reprinted in his Essays Ethical and Political). But this fallacy seems to have trapped so eminent an economist as Principal Hadley, (Economios, pp. 18-19).

E.g., Smart and Professor J. B. Clark.

we understand by an individual's needs his capacity for making good use of income, this doctrine is identical in practical effect with the principle suggested in the last chapter for securing an ideal distribution from the point of view of economic welfare, provided that its application does not react unfavourably upon production and other relevant factors. Thus, as Professor Cannan points out, the principle of distribution according to need " is adopted in besieged cities, in ships short of provisions at sea, in hospitals and between members of the family unable to support themselves in every well conducted home. It is not adopted by 'nations,' not because it is not a good principle, but because the amount to be distributed would be immediately affected by the change in distribution and that in a very disastrous manner." It may be added that attempts have recently been made by various nations, both during and after the war, to adopt this principle to some extent by means of "rationing" various commodities and fixing maximum prices. For the condition of many nations during the past few years has closely resembled that of "besieged cities" or of ships short of provisions at sea." The principle of distribution according to need is, in fact, yet another example of a principle, which may be defended conditionally by reference to considerations of economic welfare, but not unconditionally by reference to considerations of justice.

It is a principle which, within the limits of prudence, may profitably be adopted by nations even in normal times. Much modern legislation, which creates what is spoken of later in this book as " income from civil rights," in effect transfers a certain amount of income from the general body of taxpayers to particular groups of persons, and this income is distributed, and is meant to be distri

1 Economic Outlook, p. 309.

* See Part III, Chapter III and Part IV, Chapter II below.

buted, in rough accordance with the needs of those who receive it. Its distribution on this principle may increase economic welfare both by diminishing the inequality of incomes and by increasing production. An important question, which needs further investigation, is how far, if at all, the principle of rationing and fixing maximum prices for necessaries can be profitably applied in time of peace.

In any case," it is certain," as Professor Cannan says, "that as a general rule approximations towards greater equality of income mean at the same time approximations towards distribution according to need, and should therefore be welcomed, whenever the advantage thus gained is not offset by an equal or greater loss resulting from damage to production."?

§10 The results reached in this chapter may be thus summed up. The current canons of economic justice, which we have examined, are seen to be largely inconsistent with one another, and this is specially the case with those which offer complete solutions of the problem of ideal distribution. "Who," as Mill asks, "shall decide between these appeals to conflicting principles of justice”? Thus, in the conflict between the ideals of distribution according to the value of work done and of distribution according to needs, "justice has two sides to it, which it is impossible to bring into harmony, and the two disputants have chosen opposite sides; the one looks to what it is just that the individual should receive, the other to what it is just that the community should give. Each, from its

1 Whether or not such transfers of income tend to increase production largely depends on how far they increase the health and efficiency of the recipients. This question is discussed further in Part III, Chapter II below. Such transfers may increase economic welfare not only by diminishing the inequality of incomes of different individuals during any given period, but also by diminishing the inequality of the incomes of given individuals during different periods. Compare Pigou, Wealth and Welfare, Part IV.

Economic Outlook, p. 310.

own point of view, is unanswerable; and any choice between them, on grounds of justice, must be perfectly arbitrary. Social utility alone can decide the preference."

But, while the canons of economic justice are highly disputable, the canons of economic welfare are, by comparison, matters of general agreement. There is comparatively little ground for dispute in the propositions that economic welfare will be increased, other things in each case being equal, by a more equal distribution of income, by an increase in production per head, by an increase, and by a more equal distribution, of leisure. It is probable that all these propositions would be accepted by a large majority among reflective and reasonable people. There is certainly no such majority unconditionally in favour of any one of the rival canons of economic justice.

We have seen, further, that some of the current canons of economic justice, such as equality of opportunity and distribution according to need, are defensible conditionally, by reference to considerations of economic welfare, but that, if applied unconditionally to the real world, with which alone we need concern ourselves, they would diminish economic welfare to a disastrous extent.

Although, however, certain canons of economic justice, if prudently and partially applied, may increase economic welfare, such prudent and partial applications are from another point of view only applications of the canons of economic welfare. Mill's saying that justice is included within the sphere of social utility is thus illustrated.

§II. In view of these conclusions, it is not surprising to find that most modern economists, in so far as they enter upon the discussion of economic ideals, base their arguments upon the ideal of social utility or economic

1 Utilitarianism, pp. 86-7.

welfare, rather than upon the ideal of economic justice. Sidgwick is driven, by the grave economic objections to the realisation of "distributive justice," to a direct discussion of "economic distribution." Marshall points out that "the tendency of careful economic study is to base the rights of private property, not on any abstract principle, but on the observation that in the past they have been inseparable from solid progress." Professor Pigou in his Wealth and Welfare is content to investigate "the general relations that subsist between economic welfare on the one hand, and, on the other hand, the magnitude, the distribution among people, and the distribution in time, of the national dividend." Finally, Professor Cannan has thus contrasted "the principles of equity and economy," in so far as they are in conflict with one another. It is indeed true, that " no government can afford to disregard the ideas of equity entertained by its subjects at any particular time. It is no use to try to forget the fact that men are generally prepared to sacrifice their economic interests on many altars, one of which is dedicated to justice. But of the two principles, Equity and Economy, Equity is ultimately the weaker. History, and indeed the recollection of every middleaged man, provide instances which go to show that the judgment of mankind about what is equitable is liable to change, and that one of the forces which cause it to change is mankind's discovery from time to time that what was supposed to be quite just and equitable in some particular matter has become, or perhaps always was, uneconomical."4

But the saying that equity should give way to economy, and that the ideal of economic welfare is a better guide

1 Principles of Political Economy, pp. 515 ff.

2 Principles of Economics, p. 48.

• Wealth and Welfare, p. 487.

History of Local Rates, p. 173.