don has not resulted in the creation of separate, self-contained boroughs, but rather in the organization of a group of federated municipalities to attend to those matters which are local as distinguished from the general problems of the county of London. The London county council remains practically undisturbed in the exercise of its former powers, and the more important financial matters acted on by the borough councils require the consent of the county council and the Local Government Board. In addition to this supervision, the borough accounts must pass that same careful scrutiny which is in vogue for the other localities of England. The new law is an important experiment with the borough system in a large urban centre and its practical working will be watched with great interest. Mr. Seager has placed the essential points of the plan before the reader in a useful and concise form.1 THE SIXTH ANNUAL ABSTRACT OF LABOUR STATISTICS OF THE UNITED KINGDOM3 for the year 1898 to 1899, has just appeared, and contains the usual tables on trade unions, co-operative societies, trade disputes, fluctuations in employment, rates of wages, hours of labor, etc. The completeness of the data presented testifies in an eloquent way to the greater maturity attained by labor organizations in the mother country. Questions which in the United States must still be answered by rough guess, have become there matters for exact statistical information. As compared with those for 1898, the figures for 1899 show gratifying improvement. The percentage of members of trade unions returned as unemployed fell from 3 per cent to 2.4 per cent. The membership of the unions increased from 1,611,384 to 1,644,591, while that of co-operative societies making returns increased from 1,511,152 to 1,593,279. As regards wages and hours of labor progress was even more marked. Weekly wages rose in the aggregate £85,820 during 1899, as compared with a rise of £80,815 during 1898. The hours of labor at the same time fell 114,114 hours during 1899, as compared with a fall of 81,917 hours in 1898. These figures show that the prosperity which the United States has enjoyed during the last year has not been, as so many American newspapers assume, merely a local phenomenon. THE "BUDGET" is just beginning to receive the attention it deserves from American writers on public finance. Students who wish to familiarize themselves with the most advanced continental opinions 1 Contributed by Dr. Samuel E. Sparling, University of Wisconsin. Pp. xv, 214. Price, 11 d. London: Eyre & Spottiswoode, 1900. on this subject will find Dr. Karl Willgren's "Das Staats-budget, dessen Auf bau und Verhältnis zur Staatsrechnung," exceedingly serviceable. The work is meritorious not only because it brings together in condensed form the views of such authorities as von Stein, Wagner and Stourm, but because it presents original conceptions of the nature of the budget and of the distinction between direct and indirect taxes. As is so often the case with German works it is without au index. REVIEWS. The Distribution of Wealth: A Theory of Wages, Interest and "It is conceivable that production might go on in an organized way without any change in the character of the operation. Men might conceivably produce to the end of time the same kinds of goods, and they might do it by the same processes. Their tools and materials might never change, and they might not alter for the better or for the worse the amount of wealth that industry would yield. Social production can thus be thought of as static." (P. 28.) It is with such an imaginary static society that Professor Clark's work on Distribution deals. " Heroically theoretical" though it is, it differs less from other treatises on the same subject than might at first be supposed. A static society is simply a society in which "natural," "normal" or "competitive "standards prevail; consequently, as the author points out, every writer who speaks of "normal values" or the "normal rate of wages" has such a society more or less clearly in mind. In confining his attention to static relations Professor Clark thus merely adopts, with fuller self-consciousness, the same method that has been employed by all constructive economists since Adam Smith. His merit is to differentiate more sharply than any of his predecessors, a static society from the dynamic state in which we live and to formulate independently the laws applicable to the former, before he turns, as he proposes to do in a second volume, to the complicating circumstances of the latter. The resulting study is full of original suggestion even to students conversant with the author's earlier writings. Not only is the conclusion as to the law of distribution essentially different from that of any other economist professing the "productivity theory," but the principles upon which it is based are all, or nearly all, fruits of Professor Clark's own analysis. Beginning logically with an emendation to the 1Pp. x, 137. Helsingfors: Central-Tryckeri, 1899. accepted marginal utility theory of value, which, as is well known, was itself formulated by Professor Clark independently of Jevons or the Austrians, each important link in the chain of reasoning-the distinction between capital and capital goods, the recognition that capital grows by qualitative rather than quantitive increments, and the perception that "pure capital" brings labor and its ripened fruits together instead of separating them,—has been patiently forged in the author's own workshop. The fact that many of these theories are already common property in no wise detracts from Professor Clark's credit for their origination. It merely testifies to his enlightened practice of making public each new scientific discovery as it has occurred during the twenty years in which he has been a contributor to economic literature. Appreciating the abstractness of his work, the author has provided all possible aids to its comprehension. In addition to a full index and a running marginal summary of the text, there is a sixteen-page table of contents "containing a condensed statement of the leading idea of each of the chapters." The exact nature of a static society is clearly set forth in the Preface, where the changes eliminated from such a state are enumerated as follows: (1) Changes in the number of laborers; (2) in the amount of capital; (3) in the methods of production (including the quality of labor and of capital and the forms of industrial organization), and (4) in the wants of consumers. Finally, all obstacles to free competition are assumed to be absent. In a society conforming to these conditions it is obvious that wealth would continue to be produced and consumed, and that the dominant forces determining the division of wealth between the factors in production would continue to operate. Activity and movement would not be suspended though progress would. A full knowledge of the relations prevailing in such an imaginary, static society is, in the author's opinion, as indispensable to an understanding of the phenomena of the dynamic state of reality, as is a knowledge of the laws of statics to an understanding of the phenomena of dynamics in mechanics. For convenience of review the treatise may be divided into three parts. The first six chapters are introductory. In addition to explaining at length the distinction between economic statics and economic dynamics, they indicate the moral bearings of the problem of distribution, criticise the traditional four-fold division of economics, on the ground that production and distribution are parallel processes mutually determining each other, and explain the universal principles applicable alike to a Crusoe and a social economy and of which use is made in the discussion which follows. The second part embraces Chapters VII to XIII, inclusive, and presents a proximate demonstration of the author's main conclusion that in a static society, profits being eliminated, labor and capital (which includes land) receive as their rewards what they specifically produce. This part is so full of illuminating analysis that it will probably be ranked as the best portion of the book, though it is less subtle than the part which follows. That competition tends to eliminate profits and to level wages and interest to uniform rates are familiar ideas. The proof that the rates established in a static society by unrestricted competition measure the specific productivity of labor and capital, is Professor Clark's contribution. Henry George suggested one possible demonstration of the productivity theory of wages in stating that wages are fixed by what the farmer cultivating free land can produce by his unaided labor. Though accurate so far as it goes, this statement suggests, when the inconsiderable number of farmers cultivating free land is considered, a situation in which the tail wags the dog. It is also defective since it implies the exploitation of all other laborers save those working on free land. A more plausible demonstration is supplied by reference to the circumstances of those laborers who use norent instruments of production of all kinds. Still a wider field in which productivity appears to control wages is presented by what the author calls the "zone of indifference" in each industry, that is the situation in which the hired laborer just earns enough for his employer to cover his wages. That many thousands of workmen are thus on the ragged edge of unemployment in every industrial centre does not admit of question. Since competition keeps all wages at a level and such men receive the equivalents of what they produce, it may be stated as a general law that the "final productivity of labor" determines the rate of wages. But this seems again to imply exploitation of laborers not on the margin and is different in terms if not in fact from the author's thesis; "wages equal the specific products of labor." Negative reasoning from a marginal man was the stage to which Von Thünen brought the productivity theory of wages. Clark brought it to the same stage independently and by means of his careful analysis of capital carries it on to his conclusion, which admits no shadow of exploitation. As President Hadley once stated at a meeting of the American Economic Association, it is a pity that Professor Clark's distinction between capital and capital goods was not made a couple of generations earlier. Nothing that that author or any other contemporary writer has contributed to economic discussion has proved such a solvent of mooted questions. Yet the distinction is simple. Capital goods are the tools, machines, buildings, seeds, mercantile stocks and other concrete aids to production. They are produced and used up in furthering subsequent production. Each has its life history that. may be traced and recorded like the biography of an individual laborer. Capital, on the other hand, is the fund of all capital goods looked at not as concrete instruments but as an abstract productive force. It is perennial, mobile and susceptible of measurement in terms of money. It is what the business man thinks of when he makes an estimate of his "capital" though he bases that estimate on an inventory of the capital goods in his establishment. Comparable with it, is abstract labor force which is also a perennial fund. Armed with these distinctions between capital force and the concrete forms of capital, and labor force and concrete laborers, the author proceeds to show that distribution in a static society may be regarded as the division of the wealth produced either into four rent funds or into wages and interest. The earnings of capital goods are rents. So are the earnings of individual laborers. The earnings of capital as a whole are again a rent, or a differential, as contrasted with wages determined by the specific productivity of labor. Or, if the student prefers, interest may be shown to be the specific product of capital and wages made to appear as a differential income or rent. In a static society the rent of each instrument of production is its specific product and the rent of all instruments together are the specific products of capital or interest. In the same way the rent of each laborer is his specific product, and the rent of all laborers the specific product of labor as a whole, or wages. Each one of these points is clearly established by the author's analysis. To reproduce it would be to repeat this portion of the book, no part of which is unessential to the argument. A word should be said, however, touching one link in the reasoning. In tracing the relations that prevail in a static society the author has occasion to show the effect that successive additions of capital have on the industrial organization as society approaches its static state. The supply of labor is assumed to have attained its full static proportions. The supply of capital is doubled. What does this involve? Not a duplication of all the instruments of production in existence, but a complete transformation of these instruments. The carpenter does not want two hammers but one hammer of superior quality. In general, additions to capital when the labor supply is fixed involve qualitative rather than quantitative changes. The point is simple, but one apt to escape attention. As is implied by what has just been said of the prominence Professor Clark gives to the rent formula in his theory of distribution, he holds the law of diminishing returns to be of general applicability. If the labor supply is fixed each successive addition to capital is less productive than the preceding. If the capital supply is fixed the same |