But under a system of state socialism the situation would be wholly changed. Private capitalism is, in this respect, self-acting, and acts with absolute accuracy, because wage-capital being divided into a multitude of independent reservoirs, its waste at any one point brings about its own remedy. Each reservoir is like a mill-pond which automatically begins to dry up whenever its contents are employed in actuating a useless mill; and the man who has wasted his water is able to waste no more. But the moment the divisions between the reservoirs are broken down, and the separate capitals contained in them become, as would be the case under socialism, fused together like the waters of a single lake, the director of labour who so misused any portion of this fluid stock that the products of labour, as directed by him, failed to replace the wages, would not thereby be incapacitated from continuing his misdirections further; for the wage-capital dissipated by his incompetence could, under these conditions, always be replaced, and its loss more or less concealed, by fresh supplies which had a really different origin. It was only in consequence of conditions resembling these that the London County Council was enabled to continue for so long its service of Thames steamboats, in spite of the fact that the labour thus employed failed to reproduce, by the functions which it performed for the public, more than a fraction of capital which was necessarily consumed in its maintenance. Had labour been thus misdirected by any private capitalist, his misdirection of it would have soon been checked by his loss of the means of continuing it; but the County Council, with the purse of the community at its back, was able, by taxing the industrial successes of others, to refinance and prolong its own industrial failure.
Socialists wholly overlook the importance of these considerations. Many of them, for example, in the case of the London County Council's steamboats, defended that enterprise in spite of its financial failure, on the ground that the steamboats were a convenience to certain travellers at all events, who in all probability were persons of modest means, while the loss would be made good out of the pockets of the ratepayers who were presumably rich. But even if this argument were plausible as applied to a state of society in which the incomes of some men were greater than those of others, it would be absolutely inapplicable to conditions such as those desired by socialists, under which the incomes of all would be fractions, approximately equal, of a common stock to the production of which all contributed. For it must surely be apparent to even the meanest intelligence that whatever diminished the aggregate amount to be divided would diminish the fraction of it which falls to the share of each; and it ought to be equally apparent, though to many people it is not, that the labour of any labourer which is directed in such a way that the men consume more articles of utility than they produce, or fail to produce as many as they would do if directed better, has this precise effect of diminishing the divisible total, by making it either less than it has been or less than it would be otherwise.[10]