I do not think that in my two recent articles in this Review there is a single sentence that to any clear-headed man could form an excuse for such a misconception as Mr. Shaw’s, whereas there are pages which ought to have made it impossible. Indeed, a notice in the _Spectator_ disposes of Mr. Shaw by saying that he evades the real point raised by me, not meeting what I did say, and combating what I did not say. But, as I started with observing, magazine articles can rarely be exhaustive, and I will assume that some incompleteness or carelessness of expression on my part might have afforded, had these articles stood alone, some excuse for their critic. Mr. Shaw, however, is at pains to impress us that he has read other writings of mine on the same subject. He even remembers, after an interval of more than ten years, some letters I wrote to the _St. James’s Gazette_. It might, therefore, have been not unreasonable to expect that he would have referred to my recent volume, _Labour and the Popular Welfare_, which I expressly referred to in my two articles, and in which I said I had stated my position more fully. As an answer to Mr. Shaw I will quote from that volume now. The first Book deals with certain statistics as to production in this country, and the growth of the national income as related to the population. In the second Book I deal with the cause of this growth. I point out that the causes of production are not three, as generally stated—viz. Land, Labour, and Capital; but four—viz. Land, Labour, Capital, and Ability; and that the fourth is the sole source of that _increase_ in production which is the distinguishing feature of modern industrial progress. In thus treating Capital as distinct from Ability, I point out—taking a pumping-engine as an example—that capital creates a product which necessarily goes to its owner, _quâ_ owner, whether the owner is an individual or the State. I then proceed to show that fixed capital—_e.g._ an engine—is the result of circulating capital fossilised; and that circulating capital is productive only in proportion as it is under the control of Ability. For this reason I said that whilst it is _in process of being utilised_, Capital is connected with Ability as the brain is connected with the mind, it being the material means through which Ability controls Labour; and that thus from _a certain point of view_ the two are inseparable. I need not insist on this truth, because Mr. Shaw admits it. But Mr. Shaw will find a subsequent chapter (Book IV. chap. ii.) bearing the title, _Of the Ownership of Capital as distinct from its Employment by Ability_. From that chapter I quote the following passage:—