TRANSACTIONS OF SECTION F. 481 
Greater still is the possibility of bringing existing towns into conformity with 
Garden City principles. Legislation is necessary to provide for the town 
planning of future suburbs and the improvement of existing towns. 
MONDAY, AUGUST 24. 
The following Papers were read :— 
1. The Influence of Distribution on Production. 
By Professor R. F. Irnvinz, M.A. 
The object of this paper was to suggest a line of inquiry rather than to 
attempt a complete demonstration. 
1. Owing partly to the fact that economists have often failed to give due 
weight to social reactions and interactions, the tendency has been to regard 
Distribution as a result, and as a result only. The social income is always a 
function of production; the amount which is actually distributed depends 
entirely upon the efficiency of the Productive system. 
2. There was no hint in the ‘Classical’ Political Economy that an improve- 
ment in Distribution—by which is meant an approach to greater equality— 
might lead to greater social well-being than actual increase of the income. 
Professor Pigou has recently shown, and most economists admit the validity of 
his reasoning, that ‘so long as the dividend as a whole is not diminished, a gain 
to the poor, achieved through more equal distribution, means an addition to 
economic welfare.’ This is the first step in the line of argument suggested. 
3. The next step is to show that at almost every stage of industrial evolution 
there has existed a fund which might have been redistributed without in any 
way impairing the efficiency of production. 
4. Except in so far as they have recognised the ‘economy of high wages’ or 
expressed, in stray passages, the belief that a more equal distribution would be 
a gain to production efficiency, economists have made no formal attempt to 
examine the further possibility that an improvement in distribution might lead 
to an increase in the dividend itself. It was the aim of this paper to suggest that 
carefully graduated approaches to greater equality will in the long run result 
in (1) a change in the direction of industry, and (2) an increase in the volume of 
production. 
5. The first point needs little elaboration. If the incomes of the wealthier 
classes, or, rather, the amounts they normally expend on consumption, were 
reduced by a given amount, and this amount distributed among the poorer 
members of the community, it is evident there would be, in consequence, (a) a 
diminished production of some of the luxuries of the rich, and (4) an increased 
production of the necessaries, comforts, and luxuries desired by the poorer 
classes. No matter how slight the increase of ‘purchasing power’ thus diffused 
among the latter, it will effect a change in the direction of industry. Society 
will begin to organise itself in a new way, better calculated to promote the 
general welfare. Fewer workers and less capital will be engaged in the service 
of wasteful ostentation and in the provision of luxuries which tend normally to 
diminish productivity. 
6. But this diffusion of purchasing power cannot stop at a mere diversion of 
industry. Given time, it will exercise a powerful stimulus on the whole produc- 
tive system. The new force of demand, coming as it does from the millions, 
will be persistent and reliable, and will set in motion forces which tend to 
progressive improvements in machinery, in processes, in organisation, and finally 
to reduced costs. It will tend also to increase the supply of ability by bringing 
new classes to a higher plane of existence. A ag 
7. There are, of course, limitations, but they are all capable of expansion, 
They are :— 
(a) Available natural resources. 
(6) The capacity of all classes to understand the situation 
to make the most of opportunities. 
1914. 
and to co-operate 
Il 
