The first is his old fallacy that it is floating capital, or money bearing interest, that is the cause of profits, instead of the efficiency of the instruments of production, or fixed capital, in which this money is invested; and this is why he declares that an actually running manufactory or mill has no effect either on profits or wages! - a proposition farther than which, I submit, absurdity could not go. The second reason is his confounding the value of floating capital or money when there is no business doing, with its value when trade is enjoying an abounding prosperity; much in the same way as we have already seen the orthodox economists confounding the difference between the cheapness of a bankrupt stock, and the cheapness that comes from a new invention or improvement in machinery, or from a new chemical process. The value of money may be high, and its interest as much as

7 or 10 per cent, because trade and credit are shaky, as was the case before the great Gurney bank failure of 1866; on the other hand it may be high when trade is prosperous and expanding, inasmuch as industrial capitalists will readily give 7 or 10 per cent, for accommodation if they can see their way to a profit of 15 or 20 per cent, for the use of it. Or again, the value of money may be low because trade is so stagnant that no one dare venture to use it, as was the case after the Gurney failure when it sank as low as 2 per cent.; but it may also be low because business is at once so sound and so brisk that the money returns from industrial investments pour into the banks in greater streams than they are taken out. Now, with Profits it is quite different. You cannot have a high rate of profits both when capital is blown away in wars and bubble companies or is destroyed by fire or flood, and when trade is prosperous, credit good, new means of transport opened up, and new improvements and inventions are constantly being introduced; inasmuch as in the one case the instruments of production themselves are destroyed, and the powers of Nature which function through them and give their services gratuitously to man, are in abeyance; whereas in the other case they are in full swing and co-operating with him with all their might.

That Mill should not have seen this distinction, but have kept labouring away at his belated idea that mere circulating capital, that is to say floating capital not yet invested in these instruments of production, was either going to cause profits to fall to a minimum or to prevent them from doing so; and further that he should have declared that fixed capital, that is to say these very instruments of production themselves, had no influence whatever either way on profits or wages, are only other instances of how thoroughly unsound the orthodox economy in general, and this special system of Mill's in particular, are through and through.

So far then we may say that all those laws of Political Economy which hang on these fundamental propositions of Mill's, and which are got by his having cut the wheel of wealth in two, and thrown one half of it away as useless, must be false. And parenthetically, we may remark in passing, that the very fact that these fundamental propositions can each be turned into its opposite with equal truth, is itself a proof that a true science of Political Economy must be constructed on the symbol of a circle or wheel; for there is no realm either of mechanics, physiology, or psychology, in which antithetical propositions can be asserted of a thing with equal truth (and where the full truth requires the equal recognition of both) but must in its dynamics follow the laws of a circle or wheel.

It is evident, then, without further analysis, that laws of Production which end in such point-blank opposites as the above, can at best be only half truths; and that when used, as they are by Mill, as premises for the deduction of other laws of the Science, these deductions must be false also, and owing to their insidiousness, must be more seductive than if the premises on which they were founded were altogether false.

It is the same with the laws of Distribution, on which he specially prided himself as his main contribution to the Science. Beginning by assuming that the whole product of Industry is divided into Rent, Profits, and Wages, he first institutes separate and independent inquiries into the laws regulating the share of the product which shall fall to each of these in turn, and when he has discovered them to his satisfaction, he then proposes, in a separate chapter, to demonstrate their truth by showing how they will behave in combination, when thrown on an enlarged screen and seen in the inarch of industry as a whole. Now if we can show that in this section of his work he everywhere mixes up Politics with Economics, not only in the unnatural combinations of the premises from which he starts, but in the economic laws of distribution which he illustrates through and by means of them as well, it will be sufficient of itself to make us reject his conclusions, without taxing unduly the reader's patience by a detailed analysis of each separate argument. The following are samples of the impossible combinations which he posits as his premises.

The first is, that Population is increasing but that Capital and Inventions are stationary; the second, that Capital is increasing but Population and Inventions stationary; the third, that Capital and Population are both increasing, while Inventions are stationary; and the fourth, that Inventions are increasing but Population and Capital are stationary. Now to begin with, these combinations are as impossible as if he were to assume one or other organ of a living body to be dead and rigid, while the rest were pursuing their natural functions; as unnatural, as the centaurs, or mermaids, the winged bulls of the Assyrians, or the eagle-headed and dog-faced gods of the Egyptians; as contradictory, as if he were to assume a mouth the size of a crocodile's in combination with a stomach the size of a minnow's, the wings of a bird with the bones of an elephant, or aught else that on the face of it is fantastic, irrelevant, or absurd. And it is evident, is it not, that with a medley of political, social, and economic elements thrown into the melting pot in the very premises of your Science, you could bring out whatever fantastic laws of Political Economy in particular you pleased, just as you could in reference to fish, bird, mammal, or man.