Since there is no universally recognized meaning of socialism, and since our present interest in socialism is an economic one, we shall understand by socialism, economic socialism. The socialism which we shall discuss is the socialism which proposes that the state shall take possession of the material means of production; that is, of capital and land, and shall act as the sole enterpriser, deciding the conditions and terms upon which wealth shall be produced and saved. Moreover, according to our present conception of socialism the state shall lay down the principles according to which the wealth which is produced shall be divided among the producers of it. The principles of distribution may be that each worker is to receive an equal share of the product; or that each worker is to receive a share proportionate to the amount of work which he does; or each worker's share shall be in proportion to the sacrifice which he makes; or the division may be upon any other terms which seem desirable to the majority of the voters. After a sufficient amount of the industrial product has been set aside to renew the capital and after the remainder has been divided among the workers, the amount which is so divided shall become the individual property of the workers. There is to be common ownership of capital and land, but private ownership of consumption goods. The individual may save or waste his income as at present.

This, in general outline, is economic socialism. Many socialists, however, will not recognize it as a true picture of what socialism purposes to do. Some socialists, for instance, say that under socialism agricultural land is to be privately owned. Others say that under socialism, not the state, but the small group of workers in the local factory will manage production in the factory. Other socialists find still other objections to our statement of socialism. But it will probably be accepted by the majority of socialists as a correct statement of economic socialism.

These definite economic proposals that the state shall own the land and capital and shall manage production and supervise distribution are independent of the economic theory by which they are supported by socialists; and yet that economic theory has played such an important part in the discussion of socialism that it will be worth while to consider here some of its outstanding features. In the Marxian system of economic speculation there are three features which stand out with especial prominence. These are the theory of value, the theory of surplus value, and the alleged demonstration that socialism is fated by an economic necessity to be the solution of the present social injustice. These three features will be here discussed in the order named.