Leete explains that there is no longer any need for money to facilitate exchanges because the nation is the only producer and distributor of goods and services. Each year, the nation's wealth is divided evenly. Each citizen is issued a credit card for his share of the nation's wealth to purchase the goods and services he desires. Credit is not transferable, so there is no buying and selling between private citizens. The credit is more than enough to fulfill a citizen's needs, but there are provisions to manage the credit of those who spend recklessly. At the end of the year, any surplus credit returns to the nation. All citizens perform the same amount of labor, because the nation expects every citizen to do his best with his skills and abilities.
Julian asks why the average citizen would work so hard if he is guaranteed to receive the same pay as anyone else. Leete is surprised that Julian seems to think that only fear of poverty and love of luxury can motivate men to do their best. He reminds Julian that honor is also a motivation, pointing out the heroic acts of military men as an example. Now, a citizen's labor for the nation is the only means to gain honor and distinction. Each worker is assigned a grade and a class within his grade in recognition of his skill and effort. At fixed intervals, every worker is re-evaluated. Workers of higher standing are given first choice as to which part of their chosen industry to work in. For small, but still praiseworthy performance, there are numerous prizes and awards. Likewise, there are proportional punishments for those who fail to do their duty. Workers of higher grades are officers in the industrial army, and their performance is measured by the work of the men under their command. Those who are handicapped are given tasks suitable to their abilities. Those who cannot perform any tasks are not required to work. Julian is astonished that those who do not work can still claim an equal share of the nation's wealth as a right. Leete replies that even able-bodied men in a society derive benefits from the labor and skills of others.
Julian accompanies Edith on a shopping trip to her ward's distribution center, a beautiful, impressive public building. The nation tries to ensure that every citizen is within walking distance of a distribution center. After inspecting an astonishing variety of samples, Edith gives her order to the clerk, who transmits it by vacuum tube to Boston's central storehouse. Her goods will be delivered to her house before she gets home. The selection of goods is exactly the same in every distribution center, and even isolated villages are connected to storehouses by the tube system. Edith tells Julian that a citizen has 24-hour access to professionally-performed music, transmitted over a telephone connection. Julian is astonished at the wide selection of music on the day's program.
Julian no longer suffers from insomnia, because he falls asleep with the aid of the musical telephone. In the morning, Leete explains to Julian that many countries have converted to the same industrial system as the United States. Those that have not are slowly being transformed. An international council regulates the trade between nations. A country cannot charge more than it charges its own citizens for a good or service. International debts are averaged and settled every few years to prevent large trade imbalances from developing. Moreover, citizens are free to emigrate to other countries. Tourists trade their credit for cards of the country they visit. Afterwards, Edith shows Julian the family library, full of classics by the writers of Julian's day.
Julian joins the Leetes for dinner at a public kitchen. During the walk, a fierce storm overtakes Boston, but the pedestrians are protected by a large covering over the sidewalks, a public umbrella of sorts. Edith Leete is surprised to discover that, in Julian's day, certain jobs, such as that of a waiter, were considered "menial." Now that everyone belongs to the same class, there are no such attitudes.
The long discussions between Julian and Doctor Leete are a symbolic representation of the dialogue between Bellamy and his audience. Julian, as a product of the nineteenth-century society, represents Bellamy's readers. Doctor Leete, as the mouthpiece for Bellamy's ideas, represents Bellamy himself. Through Julian, Bellamy anticipates the questions and concerns of his audience about his proposals for social reform. He rationally and systematically responds to these questions and concerns through Doctor Leete.
Julian's first major question about twentieth-century society deals with the problem of motivating workers to do their best. Julian believes that workers will not do their best if they know that they will not only be the same no matter how they perform, but also that everyone else will receive exactly the same amount of credit at the end of the year. In the nineteenth century, wages and the threat of starvation provided the motivation for workers. If they did not work as hard as they could, they were fired and replaced with someone else. Doctor Leete explains that moral beliefs regarding work have changed. Everyone who does his or her best receives the same amount of credit, because doing one's best is considered a citizen's moral duty to the nation. Every citizen who does his or her best has performed this duty, even though some workers produce more than others.
While the nineteenth century prized individualism, the twentieth century prizes community and cooperation. Therefore, every citizen feels that it is his or her duty to contribute to the common good through his or her labor. Moreover, the twentieth century does not necessarily dispense entirely with individualism. All workers are honored with special recognition for their worthy actions through a standardized ranking system, so the twentieth century has merely adapted individualism. It honors individual efforts that contribute to the common good, rather than encouraging a system of "every man for himself." It is a system that rewards selfless individualism rather than the selfish individualism of the nineteenth century.
The nineteenth-century economy, based on private capital, weeded out inefficiency and waste through competition. Inefficient, wasteful businesses lost out to businesses that were more efficient; inefficient workers lost out to more efficient ones. Competition was the rule of the game: businesses competed with one another for customers, and workers competed with one another for jobs. Those who lost out in the competition starved. However, Bellamy proposes mutual cooperation as a far more efficient system than competition. Under a system of competition, money and time are quite frequently wasted. Workers who cannot adequately compete for jobs represent wasted labor. Failed business ventures represent wasted time and money. In Bellamy's imagined utopia, all capital is publicly owned and managed by the government. Labor is efficiently directed to centrally-controlled industries. Therefore, demand is much more closely matched to supply than it was in the nineteenth century.
Moreover, this system has not sacrificed personal freedom. Citizens are free to pursue the careers of their choice, and they are free to spend their yearly credit as they wish. Therefore, publicly owned capital does not infringe upon the consumer choice that nineteenth century society revered so much about their industrial economy. Bellamy presents his idea of a perfect society as one that is economically and morally sound. Devotion to the common good eliminates poverty and suffering as well as the massive waste that Bellamy perceives in the nineteenth-century competitive economy.
Bellamy hints at a much larger level of mutual cooperation when he describes the continuing evolution of international relations. Nations cooperate, rather than compete with one another. Doctor Leete predicts that all of humanity will eventually be united as one nation. Hence, Bellamy represents his ideas for social reform as a means to reduce wasteful and violent international conflict. However, Bellamy again exhibits some nineteenth-century biases of his own, characterizing South America, Africa, and Asia as inferior to Europe and the United States.
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