TRANSACTIONS OF SECTION F. 929 
‘animated moderation.’ Englishmen were sometimes reproached for being illogical, 
but this apparent want of logic was really another aspect of the quality of ani- 
mated moderation. Bagehot’s language was not very precise, but it was suggestive, 
and the lack of the quality of animated moderation was illustrated by three ten- 
dencies which were found in many different quarters, 
In the first place, there was the failure to recognise the difference between theory 
and practice. ‘This was illustrated by the use made of the conception of the ‘ un- 
earned increment.’ In the theory of rent there was a clear and definite distinction 
between what was earned and what was unearned, but this distinction was obscure 
and ill-defined in practice ; and so far as our conclusions rested on the nicety of 
the distinction they were inapplicable to practice. The principle of ‘ betterment’ 
formed in some respects an exception, for it implied a definiteness which was 
actually found in some cases, and it did not contemplate the possibility of an 
unearned decrement. The nicety of the distinction on which the conception of 
the ‘ unearned increment’ was based was realised more vividly when we considered 
the extension of it to other forms of wealth, which was made in General Walker's 
theory of business profits. 
In the second place, the use of the terms ‘ socialism’ and ‘socialistic’ might be 
considered. Mr. G. B. Shaw’s paper at the Bath Meeting and My. Sidney Webb's book 
on ‘Socialism in England ’ illustrated a vague and unsatisfactory use of the terms, 
for the question was essentially one of degree. Neither the sphere of the action of 
the State, nor the sphere of the freedom of the individual, was conceived by any 
but the most extreme writers or thinkers to be respectively so comprehensive and 
so exclusive as to embrace for itself the whole of life and action and to leave no 
room for the other; and a diflerence of degree was as important as a difference of 
kind in the matter of socialism and individualism. ‘The term should therefore be 
followed by an explanatory clause to show the sense in which it was used, and this 
was rarely done. 
In the third and last place, social reformers were apt to regard their own pet 
scheme as the one panacea, and to refuse to allow a place in the society of the 
future to the contemporanecus adoption of other schemes, This was a failing 
characteristic of some co-operators, who were also liable to exhibit the lack of 
discrimination considered before. And it was also found in some passages of so 
fair and impartial an advocate of profit-sharing as Mr. N. P.Gilman. The society 
of the future would, however, like the society of the past, in all probability be 
characterised by diversity and not by uniformity. 
3. The Use of Estimates of Aggregate Capital and Income as Measures of 
the Economic Welfare of Nations. By Epwin Cannan, M.A. 
If the wealth of a nation consists of the sum of the wealth of all its individual 
members, to compare the wealth of different nations we have only to add up the 
wealth of the individuals of whom each nation consists. But is this wealth which 
is to be added the individuals’ capitals or their incomes? It is usually considered 
to be their capitals, but it is much more reasonable to consider it their incomes. 
Some of the objections to taking incomes, and not capitals, are founded on a mis- 
leading conception of income, and others on a false analogy from the case of a 
single individual. Nations being of very different magnitude, aggregate income 
tells little till it is divided by population. The result of the division is a fiction 
called average income, which takes no account of distribution. But common sense 
teaches that very unequal distribution is uneconomic because it is ill-proportioned to 
needs, This might have been set down as‘ mere sentiment’ till the introduction 
of the Jevonian theory of value; but the decreasing utility of additional quantities 
of any commodity to an individual, which serves as the basis of that theory, also 
explains why inequality of income, or, strictly speaking, of expenditure, diminishes 
the utility of a given aggregate income. The fact that the distribution of income, 
as well as its amount, affects the economic welfare of a nation is fatal to the use of 
statistics of income, however perfect, as exact measures of the economic welfare 
of different nations, 
