THE PLACE OF INTEREST IN ECONOMICS

In discussing the theory of distribution, we shall, there-fore, abandon the classical point of view entirely. Theclassical concepts of distribution are quite inappropriateto explain the every day facts of life and the economicstructure. The phrase distribution of wealth, as under-stood by the ordinary man, implies the problem of therelative wealth of individuals, the problem of the richand the poor. But the separation of the aggregate in-come into four abstract magnitudes, even if correctlydone, has little to do with the question of how muchincome the different individuals in society receive.

Only on condition that society was composed of fourindependent and mutually exclusive groups, laborers,landlords, enterprisers, and capitalists, would the fourfolddivision of the classical economists be even partially ade-quate to explain the actual distribution of income. Infact, the four classes all overlap. The enterpriser is al-most invariably a genuine capitalist and usually alsoperforms labor; the capitalist is frequently a landlordand laborer, and even the typical laborer is today oftena small capitalist and sometimes a landlord. It is truethat a century ago in England the lines of social classifi-cation corresponded roughly to the abstract divisions pro-posed at that time by the classical economists. But thisfact is of little significance except as explaining histori-cally the origin of the classical theory of distribution. 4

§5. Interest and Personal Distribution

The main problem of distribution, as I see it, is con-cerned with the determination and explanation of theamounts and values of capitals and incomes possessed

4 See Cannan, Edwin, Theories oj Production and Distribution. Lon-don, P. S. King & Son, 1903.

[ 333 ]