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justified solely by State necessity, should be replaced by the proper recognition of the State as a direct contributor to production, through the security, communications, health, knowledge and other elements of human efficiency it maintains. The State may also be regarded as the representative of the Community in its claim to the economic rents derived from the natural powers of the soil and the land values due to the growth of a population with ever advancing needs. So far as the 'unearned surplus' is not wanted to evoke and sustain by higher wages the higher efficiency of labour, it forms the proper income which a civilised State requires for the performance of those public services that are not paid by the individual beneficiaries. Such public income, whether applied as capital or extended in furnishing current consumable services, will, if levied in the proper way, reduce the volume of those private incomes which would otherwise pass into over-saving, and, as excessive industrial capital, precipitate another cyclical depression.

The equalisation of incomes, therefore, whether obtained by diverting rents, monopoly profits, and other surplus into wages, or by drawing them into the State coffers to be expended upon social services, so far from injuring the fabric and productivity of industry, as some economists pretend, will react favourably upon industry in two ways.

First, by restoring the economically right adjustment between saving and spending, it will give fuller and more regular use to industrial capital.

Secondly, by raising the real income of the workers