For many years, the South Sea island of Utopia has been the home of a languid and lazy people, ruled by a benevolent King who is, in theory, an absolute monarch. His power, however, is held in check by two Wise Men, judges of the Utopian supreme court, who have only to denounce him for any lapse from political or social propriety to the Public Exploder in order to have the King exploded on the spot.

The present monarch, a great admirer of English culture, is deeply in love with the English governess he has hired to teach English ways to his two younger daughters. However, the governess (Lady Sophy) will have none of him, as the present Wise Men have forced him to write anonymous scurrilous (and untrue) articles about himself in a sort of tabloid newspaper; and Lady Sophy, having seen the articles, believes the King to be much beneath her in terms of respectability.

This is the state of affairs when the princess Zara, the King's eldest daughter, returns from college in England. Indignant at her father's degraded position, she comes up with a plan. She has brought with her six shining representatives of English culture (the Flowers of Progress) in order to completely reform Utopian institutions. One of them is a Company Promoter, and under his remarkable influence every Utopian citizen turns himself into a Company Limited (complete with Prospectus) and liable only for the amount of his declared capital, which does not include explosion!

Once they realize that this implies that the King is now immune to being exploded, the Wise Men and Public Exploder are understandably annoyed. They rouse the Utopian citizenry to revolt, on the grounds that the country is so healthy under the new sanitation that the doctors are starving, and the new laws have so extinguished crime and litigation that all the lawyers are out of work, etc.

Suddenly, however, Zara realizes she has left something out of her perfect emulation of English society: Government by Party! "No political measures will endure, because one Party will assuredly undo all that the other Party has done; and while grouse is to be shot, and foxes worried to death, the legislative action of the country will be at a standstill. Then there will be sickness in plenty, endless lawsuits, crowded jails, interminable confusion in the Army and Navy, and, in short, general and unexampled prosperity!"

The populace is well contented with this proposition, and the Wise Men are led off in defeat. And so they all married each other, and lived happily (well, prosperously, anyway) ever after.