ABSTRACT
The articles reprinted in this volume deal with two related themes — distribution of income and welfare — themes which he treated at length in The Industrial System (1910) and Work and Wealth (1914). The origins of Hobson’s work in this area lie in controversies which date from the 1880s, when the distribution of income between capital and labour was a burning social issue in both Britain and the United States. The classical theory, of which J. R. McCulloch and John Stuart Mill were the most prominent advocates, was centred around the concept of the wage fund. The wage fund was the name used for the stock of capital available for the payment of wages. By the 1860s, however, confidence in the classical system had been severely shaken, and economists were searching for an alternative explanation of how income was distributed between capital and labour, symptomatic of this collapse of confidence being Mill’s ‘recantation’ over the wage fund. Hobson’s work on distribution arose out of what has been called the ‘second round’ of the wage fund controversy, which took place, mostly on the pages of the newly established Quarterly Journal of Economics, in the late 1880s (see Gordon, 1973). ‘The law of the three rents’ (Article 1) was, along with J. B. Clark’s ‘Distribution as determined by a law of rent’ (Clark, 1891), one of the important papers in settling this controversy, out of which the theory of marginal productivity emerged.
