What we find, in effect [continues Professor Cairnes], is not a whole population competing indiscriminately for all occupations, but a series of industrial layers, superimposed on one another, within each of which the various candidates for employment possess a real and effective power of selection, while those occupying the several strata are, for all purposes of effective compet.i.tion, practically isolated from each other.

We may perhaps venture to arrange them in some such order as this: first, at the bottom of the scale there would be the large group of unskilled or nearly unskilled laborers, comprising agricultural laborers, laborers engaged in miscellaneous occupations in towns, or acting in attendance on skilled labor. Secondly, there would be the artisan group, comprising skilled laborers of the secondary order--carpenters, joiners, smiths, masons, shoemakers, tailors, hatters, etc., etc.--with whom might be included the very large cla.s.s of small retail dealers, whose means and position place them within the reach of the same industrial opportunities as the cla.s.s of artisans. The third layer would contain producers and dealers of a higher order, whose work would demand qualifications only obtainable by persons of substantial means and fair educational opportunities; for example, civil and mechanical engineers, chemists, opticians, watchmakers, and others of the same industrial grade, in which might also find a place the superior cla.s.s of retail tradesmen; while above these there would be a fourth, comprising persons still more favorably circ.u.mstanced, whose ampler means would give them a still wider choice. This last group would contain members of the learned professions, as well as persons engaged in the various careers of science and art, and in the higher branches of mercantile business.

It is essential to the theory that not only workmen but their children should be confined to a producing group. The equalizing process may take place even though men do not actually abandon one occupation and enter another; for there exists, in the generation of young men not yet committed to any occupation, a disposable fund of labor which will gravitate naturally to the occupations that pay the largest wages. It is not necessary that blacksmiths should ever become shoemakers, or vice versa, but only that the children of both cla.s.ses of artisans should be free to enter the trade that is best rewarded.

Professor Cairnes does not claim that his cla.s.sification is exhaustive, nor that the demarcation is absolute:

No doubt the various ranks and cla.s.ses fade into each other by imperceptible gradations, and individuals from all cla.s.ses are constantly pa.s.sing up or dropping down; but while this is so, it is nevertheless true that the average workman, from whatever rank he be taken, finds his power of compet.i.tion limited for practical purposes to a certain range of occupations, so that, however high the rates of remuneration in those which lie beyond may rise, he is excluded from sharing them. We are thus compelled to recognize the existence of non-competing industrial groups as a feature of our social economy.

It will be seen that the compet.i.tion which is here under discussion is of an extraordinary kind; and the fact that the general term is applied to it without explanation is a proof of the vagueness of the conceptions of compet.i.tion with which acute writers have contented themselves.

Actual compet.i.tion consists invariably in an effort to undersell a rival producer. A carpenter competes with a carpenter because he creates a similar utility and offers it in the market. In the theory of Professor Cairnes the carpenter is the compet.i.tor of the blacksmith, because his children may enter the blacksmith's calling. In the actual practice of his own trade, the one artisan in no wise affects the other. It is potential compet.i.tion rather than actual that is here under discussion; and even this depends for its effectiveness on the action of the rising generation.

Modern methods of production have obliterated Professor Cairnes's dividing lines. Potential compet.i.tion extends to every part of the industrial field in which men work in organized companies. Throwing out of account the professions, a few trades of the highest sort, and the cla.s.s of labor which is performed by employers themselves and their salaried a.s.sistants, it is practically true that labor is in a universal ebb and flow; it pa.s.ses freely to occupations which are, for the time being, highly paid, and reduces their rewards to the general level.

This objection to the proposed grouping is not theoretical. The question is one of fact; it is the development of actual industry that has invalidated the theory which, in the seventies, expressed an important truth concerning economic relations in England. Moreover, the author of the theory antic.i.p.ated one change which would somewhat lessen its applicability to future conditions. He recorded his belief that education would prove a leveler, and that it would merge to some extent the strata of industrial society. The children of hod-carriers might become machinists, accountants, or lawyers when they could acquire the needed education. He admitted also that new countries afford conditions in which the lines of demarcation are faint. He was not in a position to appreciate the chief leveling agency, namely, the machine method of production as now extended and perfected. Education makes the laborer capable of things relatively difficult, and machines render the processes which he needs to master relatively easy. The so-called unskilled workmen stand on a higher personal level than those of former times; and the new methods of manufacturing are reducing cla.s.s after cla.s.s to that level. Mechanical labor is resolving itself into processes so simple that anyone may learn them. An old-time shoemaker could not become a watchmaker, and even his children would have found difficulties in their way had they attempted to master the higher trade; but a laster in a Lynn shoe factory can, if he will, learn one of the minute trades that are involved in the making of a Waltham watch. His children may do so without difficulty; and this is all that is necessary for maintaining the normal balance between the trades.

The largest surviving differences between workmen are moral. Bodily strength still counts for something, and mental strength for more; but the consideration which chiefly determines the value of a workman to the employer who intrusts to him costly materials and a delicate machine is the question of fidelity. Character is not monopolized by any social cla.s.s; it is of universal growth, and tends by the prominent part which it plays in modern industry, to reduce to their lowest terms the cla.s.s differences of the former era.

The rewards of professional life are gauged primarily by character and native endowment, and are, to this extent, open to the children of workmen. New barriers, however, arise here in the ampler education which, as time advances, is demanded of persons in these pursuits; and these barriers give to a part of the fourth and highest cla.s.s in the scheme that we are criticising a permanent basis of existence. Another variety of labor retains a pre-eminence based on native adaptations and special opportunities. It is the work of the employer himself. It is an organizing and directing function, and in large industries is performed only in part by the owners. A portion of this work is committed to hired a.s.sistants. Strictly speaking, the entrepreneur, or employer, of a great establishment is not one man, but many, who work in a collective capacity, and who receive a reward that, taken in the aggregate, const.i.tutes the "wages of superintendence." To some members of this administrative body the returns come in the form of salaries, while to others they come partly in the form of dividends; but if we regard their work in its entirety, and consider their wages in a single sum, we must cla.s.s it with entrepreneur's profits rather than with ordinary wages. It is a different part of the product from the sum distributed among day laborers; and this fact separates the administrative group from the cla.s.s considered in our present inquiry. Positions of the higher sort are usually gained either through the possession of capital or through relations to persons who possess it. Though clerkships of the lower grade demand no attainments which the children of workmen cannot gain, and though promotion to the higher grades is still open, the tendency of the time is to make the transition from the ranks of labor to those of administration more and more difficult. The true laboring cla.s.s is merging its subdivisions, while it is separating more sharply from the cla.s.s whose interests, in test questions, place them on the side of capital.

2. Compet.i.tion and the Natural Harmony of Individual Interests[193]

The general industry of the society never can exceed what the capital of the society can employ. As the number of workmen that can be kept in employment by any particular person must bear a certain proportion to his capital, so the number of those that can be continually employed by all the members of a great society must bear a certain proportion to the whole capital of that society and never can exceed that proportion. No regulation of commerce can increase the quant.i.ty of industry in any society beyond what its capital can maintain. It can only divert a part of it into a direction into which it might not otherwise have gone; and it is by no means certain that this artificial direction is likely to be more advantageous to the society than that into which it would have gone of its own accord.

Every individual is continually exerting himself to find out the most advantageous employment for whatever capital he can command. It is his own advantage, indeed, and not that of the society, which he has in view. But the study of his own advantage naturally, or rather necessarily, leads him to prefer that employment which is most advantageous to the society.

As every individual, therefore, endeavors as much as he can both to employ his capital in the support of domestic industry and so to direct that industry that its product may be of the greatest value; every individual necessarily labors to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest nor knows how much he is promoting it. By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner that its product may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always worse for the society that it was no part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good.

It is an affectation, indeed, not very common among merchants, and very few words need be employed in dissuading them from it.

What is the species of domestic industry which his capital can employ, and of which the product is likely to be of the greatest value, every individual, it is evident, can, in his local situation, judge much better than any statesman or lawgiver can do for him. The statesman who should attempt to direct private people in what manner they ought to employ their capitals would not only load himself with a most unnecessary attention but a.s.sume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it.

3. Compet.i.tion and Freedom[194]

What, after all, is compet.i.tion? Is it something that exists and acts of itself, like the cholera? No, compet.i.tion is simply the absence of oppression. In reference to the matters that interest me, I _prefer_ to choose for myself and I do not want anyone else to choose for me against my will; that's all. And if anyone undertakes to subst.i.tute his judgment for mine in matters that concern me I shall demand the privilege of subst.i.tuting my wishes for his in matters which concern him. What guaranty is there that this arrangement will improve matters? It is evident that compet.i.tion is liberty. To destroy liberty of action is to destroy the possibility and consequently the faculty of choosing, judging, comparing; it is to kill intelligence, to kill thought, to kill man himself. Whatever the point of departure, there is where modern reforms always end; in order to improve society it is necessary to annihilate the individual, upon the a.s.sumption that the individual is the source of all evil, and as if the individual was not likewise the source of all good.

4. Money and Freedom[195]

Money not only makes the relation of individuals to the group a more independent one, but the content of the special forms of a.s.sociations and the relations of the partic.i.p.ants to these a.s.sociations is subject to an entirely new process of differentiation.

The medieval corporations included in themselves all the human interests. A guild of cloth-makers was not an a.s.sociation of individuals which cultivated the interests of cloth-making exclusively. It was a community in a vocational, personal, religious, political sense and in many other respects. And however technical the interests that might be grouped together in such an a.s.sociation, they had an immediate and lively interest for all members. Members were wholly bound up in the a.s.sociation.

In contrast to this form of organization the capitalistic system has made possible innumerable a.s.sociations which either require from their members merely money contributions or are directed toward mere money interests. In the case of the business corporation, especially, the basis of organization of members is exclusively an interest in the dividends, so exclusively that it is a matter of entire indifference to the individual what the society (enterprise) actually produces.

The independence of the person of the concrete objects, in which he has a mere money interest, is reflected, likewise, in his independence, in his personal relations, of the other individuals with whom he is connected by an exclusive money interest. This has produced one of the most effective cultural formations--one which makes it possible for individuals to take part in an a.s.sociation whose objective aim it will promote, use, and enjoy without this a.s.sociation bringing with it any further personal connection or imposing any further obligation. Money has brought it about that one individual may unite himself with others without being compelled to surrender any of his personal freedom or reserve. That is the fundamental and unspeakably significant difference between the medieval form of organization which made no difference between the a.s.sociation of men as men and the a.s.sociation of men as members of an organization. The medieval form or organization united equally in one circle the entire business, religious, political, and friendly interests of the individuals who composed it.

III. INVESTIGATIONS AND PROBLEMS

1. Biological Compet.i.tion

The conception of compet.i.tion has had a twofold origin: in the notions (a) of the struggle for existence and (b) of the struggle for livelihood. Naturally, then, the concept of compet.i.tion has had a parallel development in biology and in economics. The growth of the notion in these two fields of thought, although parallel, is not independent. Indeed, the fruitful process of interaction between the differing formulations of the concept in biology and economics is a significant ill.u.s.tration of the cross-fertilization of the sciences.

Although Malthus was a political economist, his principle of population is essentially biological rather than economic. He is concerned with the struggle for existence rather than for livelihood. Reacting against the theories of Condorcet and of G.o.dwin concerning the natural equality, perfectability, and inevitable progress of man, Malthus in 1798 stated the dismal law that population tends to increase in geometrical progression and subsistence in arithmetical progression. In the preface to the second edition of his _Essay on the Principle of Population_ Malthus acknowledged his indebtedness to "Hume, Wallace, Dr. Adam Smith and Dr. Price." Adam Smith no doubt antic.i.p.ated and perhaps suggested to Malthus his thesis in such pa.s.sages in the _Wealth of Nations_ as, "Every species of animals naturally multiplies in proportion to the means of their subsistence," "The demand for men necessarily regulates the production of men." These statements of the relation of population to food supply, however, are incidental to Smith's general theories of economics; the contribution of Malthus lay in taking this principle out of its limited context, giving it the character of scientific generalization, and applying it to current theories and programs of social reform.

The debt of biology to Malthus is acknowledged both by Darwin and by Wallace. Fifteen months after Darwin had commenced his inquiry a chance reading of Malthus' _Essay on the Principle of Population_ gave him the clue to the explanation of the origin of species through the struggle for existence. During an attack of intermittent fever Wallace recalled Malthus' theory which he had read twelve years before and in it found the solution of the problem of biological evolution.

Although the phrase "the struggle for existence" was actually used by Malthus: Darwin, Wallace, and their followers first gave it a general application to all forms of life. Darwin in his _The Origin of Species_, published in 1859, a.n.a.lyzed with a wealth of detail the struggle for existence, the nature and forms of compet.i.tion, natural selection, the survival of the fittest, the segregation and consequent specialization of species.

Biological research in recent years has directed attention away from the theory of evolution to field study of plant and animal communities.

Warming, Adams, Wheeler, and others have described, in their plant and animal ecologies, the processes of compet.i.tion and segregation by which communities are formed. Clements in two studies, _Plant Succession_ and _Plant Indicators_, has described in detail the life-histories of some of these communities. His a.n.a.lysis of the succession of plant communities within the same geographical area and of the relations of compet.i.tive co-operation of the different species of which these communities are composed might well serve as a model for similar studies in human ecology.

2. Economic Compet.i.tion

Research upon compet.i.tion in economics falls under two heads: (a) the natural history of compet.i.tion, and (b) the history of theories of compet.i.tion.

a) Compet.i.tion on the economic level, i.e., of struggle for livelihood, had its origins in the market place. Sir Henry Maine, on the basis of his study of village communities, states in effect that the beginnings of economic behavior are first to be seen in neutral meeting places of strangers and foes.

In order to understand what a market originally was, you must try to picture to yourselves a territory occupied by village-communities, self-acting and as yet autonomous, each cultivating its arable land in the middle of its waste, and each, I fear I must add, at perpetual war with its neighbour.

But at several points, points probably where the domains of two or three villages converged, there appear to have been s.p.a.ces of what we should now call neutral ground. These were the Markets. They were probably the only places at which the members of the different primitive groups met for any purpose except warfare, and the persons who came to them were doubtless at first persons especially empowered to exchange the produce and manufactures of one little village-community for those of another. But, besides the notion of neutrality, another idea was anciently a.s.sociated with markets. This was the idea of sharp practice and hard bargaining.

What is the real origin of the feeling that it is not creditable to drive a hard bargain with a near relative or friend? It can hardly be that there is any rule of morality to forbid it. The feeling seems to me to bear the traces of the old notion that men united in natural groups do not deal with one another on principles of trade. The only natural group in which men are now joined is the family; and the only bond of union resembling that of the family is that which men create for themselves by friendship.

The general proposition which is the basis of Political Economy, made its first approach to truth under the only circ.u.mstances which admitted of men meeting at arm's length, not as members of the same group, but as strangers. Gradually the a.s.sumption of the right to get the best price has penetrated into the interior of these groups, but it is never completely received so long as the bond of connection between man and man is a.s.sumed to be that of family or clan connection.

The rule only triumphs when the primitive community is in ruins. What are the causes which have generalized a Rule of the Market until it has been supposed to express an original and fundamental tendency of human nature, it is impossible to state fully, so multifarious have they been. Everything which has helped to convert a society into a collection of individuals from being an a.s.semblage of families has helped to add to the truth of the a.s.sertion made of human nature by the Political Economists.[196]

The extension of the relations of the market place to practically all aspects of life having to do with livelihood has been the outcome of the industrial revolution and the growth of Great Society. Standardization of commodities, of prices, and of wages, the impersonal nature of business relations, the "cash-nexus" and the credit basis of all human relations has greatly extended the external compet.i.tive forms of interaction. Money, with its abstract standards of value, is not only a medium of exchange, but at the same time symbol par excellence of the economic nature of modern compet.i.tive society.

The literature describing change from the familial communism, typical of primitive society, to the compet.i.tive economy of modern capitalistic society is indicated in the bibliography.

b) The history of compet.i.tion as a concept in political economy goes back to the Physiocrats. This French school of economists, laying stress upon the food supply as the basis and the measure of the wealth of the nation, demanded the abolition of restrictions upon agricultural production and commerce. The Physiocrats based their theories upon the natural rights of individuals to liberty.

The miserable state of the nation seemed to demand a _volte face_. Taxes were many and indirect. Let them be single and direct. Liberty of enterprise was shackled. Let it be free.

State-regulation was excessive. _Laissez-faire!_ Their economic plea for liberty is b.u.t.tressed by an appeal to Nature, greater than kings or ministers, and by an a.s.sertion of the natural, inherent rights of man to be unimpeded in his freedom except so far as he infringes upon that of others.[197]

While the Physiocrats emphasized the beneficent effects of freedom in industry to which the individual has a natural right, Adam Smith, in his book _The Wealth of Nations_, emphasized the advantages of compet.i.tion.

To him compet.i.tion was a protection against monopoly. "It [compet.i.tion]

can never hurt either the consumer or the producer; on the contrary it must tend to make the retailers both sell cheaper and buy dearer than if the whole trade was monopolized by one or two persons!"[198] It was at the same time of benefit to both producer and consumer. "Monopoly is a great enemy to good management which can never be universally established but in consequence of that free and universal compet.i.tion which forces everybody to have recourse to it for the sake of self-defence."[199]

Before Darwin, compet.i.tion had been conceived in terms of freedom and of the natural harmony of interests. His use of the term introduced into compet.i.tion the notion of struggle for existence and the survival of the fittest. This new conception, in which compet.i.tion appears as a fundamental process in all life, has been a powerful prop to the laissez faire policy and has led to its continuance regardless of the misery and dest.i.tution which, if it did not create, it certainly did not remedy.

The works of Herbert Spencer, the greatest expounder of the doctrine of evolution, contain a powerful ma.s.sing of evidence in favor of laissez faire as a conclusion to be drawn from a scientific study of human behavior. "Nothing but the slow modifications of human nature by the discipline of social life," he said, "can produce permanently advantageous changes. A fundamental error pervading the thinking of nearly all parties, political and social, is that evils admit of immediate and radical remedies."[200]

With the growth of large-scale production with the tendency to the formation of combinations and monopolies, as a result of freedom of compet.i.tion, works began to appear on the subject of unrestricted compet.i.tion. The expressions "unfair" and "cut-throat" compet.i.tion, which occur frequently in recent literature, suggest the new point of view. Another euphemism under which other and more far-reaching proposals for the limitation of compet.i.tion and laissez faire have been proposed is "social justice." In the meantime the trend of legislation in England for a hundred years, as Mr. A. V. Dicey[201] has pointed out, has been, in spite of Herbert Spencer, away from the individualistic and in the direction of a collectivistic social order. This means more legislation, more control, and less individual liberty.

The full meaning of this change in law and opinion can only be fully understood, however, when it is considered in connection with the growth of communication, economic organization, and cities, all of which have so increased the mutual interdependence of all members of society as to render illusory and unreal the old freedoms and liberties which the system of laissez faire was supposed to guarantee.

3. Compet.i.tion and Human Ecology