that its introduction by the direct intervention of the State would be unnecessary, ineffectual, and pernicious. I am disposed to think that Mr. Cairnes takes too despondent a view of the possibilities of progress that are comprised in the position of the wage-labourer, but it is precisely that view that has lent force to the socialist criticism of the present order of things, and to the socialist calls for a radical transformation by State agency. The main charges brought by socialists against the existing economy are the three following, all of which, they allege, are consequences of the capitalistic management of industry and unregulated competition:--1st, that it tends to reduce wages to the minimum required to give the labourer his daily bread, and that it tends to prevent them from rising above that minimum; 2nd, that it has subjected the labourer's life to innumerable vicissitudes, made trade insecure, mutable and oscillatory, and created relative over-population; and, 3rd, that it enables and even forces the capitalist to rob the labourer of the whole increase of value which is the fruit of his labour. These are the three great heads of their philippic against modern society: the hopeless oppression of the "iron and cruel law" of necessary wages, the mischief of incessant crises and changes and of the chaotic _régime_ of chance, and the iniquity of capital in the light of their doctrine of value. Let us examine them in their order. I. Socialists found their first charge partly on their interpretation of the actual historical tendency of things, and partly on the teaching of Ricardo and other economists on natural wages. Now, to begin with the question of historical fact, the effect which has been produced by the large system of production on the distribution of wealth and the general condition of the working class is greatly misconceived by them. So far as the distribution of wealth is concerned, the principal difference that has occurred may be described as the decadence of the lower middle classes, a decline both in the number of persons in proportion to population who enjoy intermediate incomes, and also in the relative amount of the average income they enjoy. Their individual income may be higher than that of the corresponding class 150 or 200 years ago, but it bears a less ratio to the average income of the nation. The reason of this decline is, of course, obvious. The yeomanry, once a seventh of our population, and the small masters in trade have gradually given way before the economic superiority of the large capital or other causes, and modern industry has as yet produced no other class that can, by position and numbers, fill their room; for though, no doubt, the great industries call into being auxiliary industries of various kinds, which are still best managed on the small scale by independent tradesmen, the number of middling incomes which the greater industries have thus