The proposal in the Fabian Basis to transfer industrial capital to the community ‘without compensation’ is open to still wider and more serious objection. The claim of socialism to be the future form of industrial organisation rests on its superior efficiency. It claims to prevail because it is best, and it needs no arbitrary exercise of power to carry it through. Theoretically and practically, from an economic and political, social, and moral point of view, it lays claim to superior competence to do the best for mankind by giving fuller scope to the free, many-sided development of the highest human life. In this and in other points the language of the Fabian Basis is too suggestive of the rigid and abstract collectivism set forth in the prevalent socialism. If we are to understand the true inwardness of our subject we must go behind the State. Rightly understood, socialism is concerned with principles and tendencies which are more fundamental than the State. As I have said in another place, ‘Socialism is a new type of social and economic organisation, the aim and tendency of which are to reform the existing society, the State included. It is a principle of social change which goes beyond and behind the existing State, which will modify the State, but does not depend upon it for its realisation.’[1] To be more precise, socialism is a principle of economic organisation, with the correlated social and ethical principles constituting a great ideal, to which the State must be made to conform. How far the State may in this way need to be transformed is a question which hardly concerns us at present. In the chapter on the Purified Socialism I attempted to show how ‘the true meaning of socialism is given in the dominating tendencies of social evolution.’[2] Through the fog of controversy we should clearly see that the fundamental principle of socialism is marked by extreme simplicity. The keynote of socialism is the principle of association. Only by associating for the ownership and control of land and capital can the people protect themselves against the evils of competition and monopoly. Only by association can they control and utilise the large industry for the general good. It means that industry should be carried on by free associated workers utilising a joint capital with a view to an equitable system of distribution. And in the political organisation of society it has for complement a like ideal, namely, that the old methods of force, subjection, and exploitation should give place to the principle of free association. Through the application and development of the principle of free association it seeks to transform State, municipality, and industry in all their departments.