Now this method of 'splitting the difference ' in things that are by their very nature individual and personal, is the most crude of all scientific processes, and in using it the orthodox economists have at a stroke stripped off all those differential advantages and inequalities between one industrial undertaking and another which it is the very game of business men to capture, and which once captured are used as stepping-stones to still further economic advantages - advantages, it is to be observed, which are not pursued with the philanthropic object of redistributing them again among less fortunate rivals for the purpose of putting the profits of all alike on an equality, but entirely with the object of keeping them for themselves. To lop them off, therefore, by striking an average among them, is to lop off not what is accidental, but what is essential in the very process of money getting; and is not only a cheap and easy but a most fallacious way of making profits tend to equality. And as for capital flowing backwards and forwards from one industry to another according to the scale of relative profits, until the profits are reduced to an equality, - this is equally illusory.

For the amount of capital in a country is not, as we have so often repeated, a fixed and rigid thing, which cannot leave one occupation without stripping another bare, but, on the contrary, when put on the wheel of wealth, becomes as elastic as a piece of rubber when consumption is stimulated and the wheel is made to revolve faster; so that all businesses whatever that can show a working profit, reproduce in the act each its own capital; and however much of it may overflow into the more favoured and profitable trades, the rest are not necessarily denuded, but on the contrary their capital is increased. It is only when the wheel slows, and all businesses are alike depressed, that the least favoured ones find difficulty in keeping afloat through being denuded of their capital; and then it is not because their capital has been transferred to the more prosperous trades, but more probably because it has been extinguished altogether. It is only when rival traders in the same line of business meet as combatants, that the one trade can denude the other of its capital or extinguish it altogether by taking away its customers from it; - but in any case where is the tendency to equality? On the contrary, it is to still greater inequality.

But the most paradoxical perhaps of all the reasons which have persuaded the orthodox economists into the belief that the profits of capital tend to equality, and one which comes, too, from their fixing their eye on the products of industry rather than on the instruments of production - on goods and prices, rather than on the land and machinery and the men that own them - is their making capital the result of saving, that is to say, of a mere negation, like the talent that was hidden in the napkin; while at the same time they have made it the positive and active agent in the production of wealth. But to see how this paradox has operated, it is necessary to retrace the historical evolution of the place occupied by capital in the orthodox economy. The Physiocrats and Adam Smith, it will be remembered, made Land the primary and active agency in the production of wealth, inasmuch as the earth was the fruitful womb and mother of all the wealth which was afterwards worked up by machinery and labour into its infinite variety of forms. Capital, on the other hand, they represented as coming out of what could be saved of the product from the maw of immediate consumption, and turned into money.

In other words, Capital had to come, by a process of saving, out of the superflux which the landlords shook off from their rents for the keep of the rest of the community; and so was a dependent or hanger-on of Rent as it were, on whose leavings, in short, it had to subsist or starve. But in the interval between Adam Smith and John Stuart Mill, Ricardo and others thought they had discovered that Rent, on the contrary, was after all really the dependent and hanger-on of Capital, inasmuch as it had to wait until Capital was served, and then to take the leavings for itself. But while accepting this position of Ricardo's, the orthodox economists since his time, including Mill, have continued to cling to the idea that this same Capital which had now become the generative and living initiative factor in their system, was the result of saving, that is to say, came out of a portion of its own dead product, instead of out of the active powers of Nature embodied and realized in its machinery and processes; in the same way as the Rent, which Capital supplanted in their system, had come out of the powers of Nature in the soil.

It was as great a stultification and anomaly as if they had represented the generative power of a tree as coming out of the savings made from its own fruit! And with result for their system, what? This namely, that having already fallen into the error of making Profits tend to equality through the illusion created in their minds by keeping their eyes fixed on dead products instead of on the living instruments of production from which they proceed; - on the equality of the prices of commodities in the central wholesale markets, on the equality of interest in the central exchanges, as well as on the nominal equality of profits in joint-stock concerns - they were now logically obliged to assume as well that whatever part of these products was set aside as savings (in other words Capital), must tend to equality also; forgetting, as we have seen, that in all these cases alike the equality is got either by striking an average among a number of real inequalities of prices and interest and profits, or by watering them down and subdividing them into equal shares, as in the case of the joint-stock companies; forgetting, that is to say, that it is only products in the abstract, and interest in the abstract, that tend to equality, - not the separate bits of concrete product, the separate bits of capital, which in actual fact are what are bought and sold, and which, as we have seen, are always inequalities; and that it is precisely the accumulation of these smaller inequalities which leads some men to fortune, while others remain in poverty.