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 spaces 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 associated 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 circumstances which admitted of men meeting at arm's length, not as members of the same group, but as strangers. Gradually the assumption 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 assumed 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 assemblage of families has helped to add to the truth of the assertion 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 competitive 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 competitive society.
The literature describing change from the familial communism, typical of primitive society, to the competitive economy of modern capitalistic society is indicated in the bibliography.
b) The history of competition 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 buttressed by an appeal to Nature, greater than kings or ministers, and by an assertion 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 competition. To him competition was a protection against monopoly. "It [competition] 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 competition which forces everybody to have recourse to it for the sake of self-defence."[199]
Before Darwin, competition had been conceived in terms of freedom and of the natural harmony of interests. His use of the term introduced into competition the notion of struggle for existence and the survival of the fittest. This new conception, in which competition 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 destitution 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 massing 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 competition, works began to appear on the subject of unrestricted competition. The expressions "unfair" and "cut-throat" competition, 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 competition 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.
The ecological conception of society is that of a society created by competitive co-operation. Adam Smith's Wealth of Nations was a description of society in so far as it is a product of economic competition. David Ricardo, in his Principles of Political Economy, defined the process of competition more abstractly and states its consequences with more ruthless precision and consistency. "His theory," says Kolthamer in his introduction, "seems to be an everlasting justification of the status quo. As such at least it was used."
But Ricardo's doctrines were both "a prop and a menace to the middle classes," and the errors which they canonized have been the presuppositions of most of the radical and revolutionary programs since that time.
The socialists, adopting his theories of value and wages, interpreted Ricardo's crude expressions to their own advantage. To alter the Ricardian conclusions, they said, alter the social conditions upon which they depend: to improve upon subsistence wage, deprive capital of what it steals from labour—the value which labour creates. The land-taxers similarly used the Ricardian theory of rent: rent is a surplus for the existence of which no single individual is responsible—take it therefore for the benefit of all, whose presence creates it.[202]
The anarchistic, socialistic, and communistic doctrines, to which reference is made in the bibliography, are to be regarded as themselves sociological phenomena, without reference to their value as programs. They are based on ecological and economic conceptions of society in which competition is the fundamental fact and, from the point of view of these doctrines, the fundamental evil of society. What is sociologically important in these doctrines is the wishes that they express. They exhibit among other things, at any rate, the character which the hopes and the wishes of men take in this vast, new, restless world, the Great Society, in which men find themselves but in which they are not yet, and perhaps never will be, at home.
4. Competition and the "Inner Enemies": the Defectives, the Dependents, and the Delinquents
Georg Simmel, referring, in his essay on "The Stranger," to the poor and the criminal, bestowed upon them the suggestive title of "The Inner Enemies." The criminal has at all times been regarded as a rebel against society, but only recently has the existence of the dependent and the defective been recognized as inimical to the social order.[203]
Modern society, so far as it is free, has been organized on the basis of competition. Since the status of the poor, the criminal, and the dependent, has been largely determined by their ability or willingness to compete, the literature upon defectiveness, dependency, and delinquency may be surveyed in its relation to the process of competition. For the purposes of this survey the dependent may be defined as one who is unable to compete; the defective as the person who is, if not unable, at least handicapped, in his efforts to compete. The criminal, on the other hand, is one who is perhaps unable, but at any rate refuses, to compete according to the rules which society lays down.
Malthus' Essay on the Principle of Population first called attention to the pathological effects of the struggle for existence in modern society and emphasized the necessity of control, not merely in the interest of the defeated and rejected members of society, but in the interest of society itself. Malthus sought a mitigation, if not a remedy, for the evils of overpopulation by what he called "moral restraint," that is, "a restraint from marriage, from prudential motives, with a conduct strictly moral during the period of restraint." The alternatives were war, famine, and pestilence. These latter have, in fact, been up to very recent times the effective means through which the problem of overpopulation has been solved.
The Neo-Malthusian movement, under the leadership of Francis Place, Richard Carlile, and Robert Dale Owen in the decade of 1820-30 and of Charles Bradlaugh and Annie Besant in the decade of 1870-80, advocated the artificial restriction of the family. The differential decline in the birth-rate, that is, the greater decrease in the number of children in the well-to-do and educated classes as compared with the poor and uneducated masses, was disclosed through investigations by the Galton Eugenics Laboratory in England and characterized as a national menace. In the words of David Heron, a study of districts in London showed that "one-fourth of the married population was producing one-half of the next generation." In United States less exhaustive investigation showed the same tendency at work and the alarm which the facts created found a popular expression in the term "race-suicide."
It is under these circumstances and as a result of investigations and agitations of the eugenists, that the poor, the defective, and the delinquent have come to be regarded as "inner enemies" in a sense that would scarcely have been understood a hundred years ago.
Poverty and dependency in modern society have a totally different significance from that which they have had in societies in the past. The literature descriptive of primitive communities indicated that in the economic communism of a society based on kinship, famines were frequent but poverty was unknown. In ancient and medieval societies the dependency, where it was not professional, as in the case of the mendicant religious orders, was intimate and personal. In this respect it differed widely from the organized, official, and supervised philanthropy of our modern cities.
With the abolition of serfdom, the break-up of the medieval guilds, and the inauguration of a period of individual freedom and relatively unrestricted competition (laissez faire) which ushered in the modern industrial order, the struggle for existence ceased to be communal, and became individual. The new order based on individual freedom, as contrasted with the old order based on control, has been described as a system in which every individual was permitted to "go to hell in his own individual way." "The only purpose for which power can be rightfully exercised over any member of a civilized community, against his will," said Mill, "is to prevent harm to others. His own good either physical or moral is not a sufficient warranty." Only when the individual became a criminal or a pauper did the state or organized society attempt to control or assist him in the competitive struggle for existence.[204]
Since competitive industry has its beginnings in England, the study of the English poor laws is instructive. Under the influence of Malthus and of the classical economists the early writers upon poverty regarded it as an inevitable and natural consequence of the operation of the "iron laws" of political economy. For example, when Harriet Martineau was forced to admit, by the evidence collected by the Factory Commissioners in 1833, that "the case of these wretched factory children seems desperate," she goes on to add "the only hope seems to be that the race will die out in two or three generations."
Karl Marx, accepting the Ricardian economics, emphasized the misery and destitution resulting from the competitive process, and demanded the abolition of competition and the substitution therefor of the absolute control of a socialistic state.
Recent studies treat poverty and dependency as a disease and look to its prevention and cure. Trade unions, trade associations, and social insurance are movements designed to safeguard industry and the worker against the now generally recognized consequences of unlimited competition. The conceptions of industrial democracy and citizenship in industry have led to interesting and promising experiments.
In this connection, the efforts of employers to protect themselves as well as the community from accidents and occupational diseases may be properly considered. During and since the Great War efforts have been made on a grand scale to rehabilitate, re-educate, and restore to usefulness the war's wounded soldiers. This interest in the former soldiers and the success of the efforts already made has led to an increased interest in all classes of the industrially handicapped. A number of surveys have been made, in different parts of the country, of the crippled, and efforts are in progress to discover occupations and professions in which the deaf, the blind, and otherwise industrially handicapped can be employed and thus restored to usefulness and relative independence.
The wide extension of the police power in recent times in the interest of public health, sanitation, and general public welfare represents the effort of the government, in an individualistic society in which the older sanctions and securities no longer exist, to protect the individual as well as the community from the effects of unrestricted competition.
The literature of criminology has sought an answer to the enigma of the criminal. The writings of the European criminologists run the gamut of explanation from Lombroso, who explained crime as an inborn tendency of the criminal, to Tarde, who defines the criminal as a purely social product.
W. A. Bonger,[205] a socialist, has sought to show that criminality is a direct product of the modern economic system. Without accepting either the evidence or the conclusions of Bonger, it cannot be gainsaid that the modern offender must be studied from the standpoint of his failure to participate in a wholesome and normal way in our competitive, secondary society which rests upon the institution of private property and individual competition.
The failure of the delinquent to conform to the social code may be studied from two standpoints: (a) that of the individual as an organization of original mental and temperamental traits, and (b) that of a person with a status and a rôle in the social group. The book The Individual Delinquent, by William Healy, placed the study of the offender as an individual upon a sound scientific basis. That the person can and should be regarded as part and parcel of his social milieu has been strikingly illustrated by T. M. Osborne in two books, Within Prison Walls and Society and Prisons. The fact seems to be that the problem of crime is essentially like that of the other major problems of our social order, and its solution involves three elements, namely: (a) the analysis of the aptitudes of the individual and the wishes of the person; (b) the analysis of the activities of our society with its specialization and division of labor; and (c) the accommodation or adjustment of the individual to the social and economic environment.
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(8) Donovan, Frances. The Woman Who Waits. Boston, 1920.
(9) Fernald, Mabel R., Hayes, Mary H. S., and Dawley, Almena. A Study of Women Delinquents in New York State. With statistical chapter by Beardsley Ruml; preface by Katharine Bement Davis. Chap. xi, "Occupational History and Economic Efficiency," pp. 304-79. New York, 1920.
(10) Miner, Maude. The Slavery of Prostitution. A plea for emancipation. Chap. iii, "Social Factors Leading to Prostitution," pp. 53-88. New York, 1916.
(11) Ryckère, Raymond de. La Servante criminelle. Étude de criminologie professionelle. Paris, 1908.
1. The Struggle for Existence and the Survival of the Fittest.
2. Economic Competition and the Economic Equilibrium.
3. "Unfair" Competition and Social Control.
4. Competition versus Sentiment.
5. The History of the Market, the Exchange, the Board of Trade.
6. The Natural History of the Laissez-Faire Theory in Economics and Politics.
7. Competition, Money, and Freedom.
8. Competition and Segregation in Industry and in Society.
9. The Neo-Malthusian Movement and Race Suicide.
10. The Economic Order of Competition and "the Inner Enemies."
11. The History of the English Poor Law.
12. Unemployment and Poverty in a Competitive, Secondary Society.
13. Modern Economy and the Psychology of Intemperance.
14. Modern Industry, the Physically Handicapped and Programs of Rehabilitation.
15. Crime in Relation to Economic Conditions.
16. Methods of Social Amelioration: Philanthropy, Welfare Work in Industry, Social Insurance, etc.
17. Experiments in the Limitation of Competition: Collective Bargaining, Trade Associations, Trade Boards, etc.
1. In what fields did the popular conceptions of competition originate?
2. In what way does competition as a form of interaction differ from conflict, accommodation, and assimilation?
3. What do you understand to be the difference between struggle, conflict, competition, and rivalry?
4. What are the different forms of the struggle for existence?
5. In what different meanings do you understand Darwin to use the term "the struggle for existence"? How many of these are applicable to human society?
6. What do you understand Darwin to mean when he says: "The structure of every organic being is related, in the most essential yet often hidden manner, to that of all the other organic beings with which it comes into competition for food or residence, or from which it has to escape, or on which it preys"? Does his principle, in your opinion, also apply to the structure of social groups?
7. What examples of competition occur to you in human or social relations? In what respects are they (a) alike, (b) different, from competition in plant communities?
8. To what extent is biological competition present in modern human society?
9. Does competition always lead to increased specialization and higher organization?
10. What evidences are there in society of the effect of competition upon specialization and organization?
11. What do you understand Crile to mean by the sentence: "In every case the fate of each creature seems to have been staked upon one mechanism"? What is this mechanism with man?
12. Do you think that Crile has given an adequate explanation of the evolution of mind?
13. Is there a difference in the character of the struggle for existence of animals and of man?
14. What is the difference in competition within a community based on likenesses and one based on diversities?
15. Compare the ecological concept "reaction" with the sociological conception "control."
16. What do you understand by the expression "the reaction of a community is usually more than the sum of the reaction of the component species and individuals"? Explain.
17. How far can the terms migration, ecesis, and competition, as used by Clements in his analysis of the invasion of one plant community by another, be used in the analysis of the process by which immigrants "invade" this country, i.e., migrate, settle, and are assimilated, "Americanized"?
18. What are the social forces involved in (a) internal, (b) foreign, migrations?
19. What do you understand by the term segregation? To what extent are the social forces making for segregation (a) economic, (b) sentimental? Illustrate.
20. In what ways has immigration to the United States resulted in segregation?
21. Does the segregation of the immigrant in our American cities make for or against (a) competition, (b) conflict, (c) social control, (d) accommodation, and (e) assimilation?
22. What are the factors producing internal migration in the United States?
23. In what sense is the drift to the cities a result of competition?
24. What is Ripley's conclusion in regard to urban selection and the ethnic composition of cities?
25. What are the outstanding results of demographic segregation and social selection in the United States?
26. What, in your judgment, are the chief characteristics of inter-racial competition?
27. To what extent do you agree with Walker's analysis of the social forces involved in race suicide in the United States?
28. In what specific ways is competition now a factor in race suicide?
29. What will be the future effects of inter-racial competition upon the ethnic stock of the American people?
30. "There is a sense in which much of the orthodox system of political economy is eternally true." Explain.
31. To what extent and in what sense is economic competition unconscious?
32. What differences other than innate mental ability enter into competition between different social groups and different persons?
33. Who are your competitors?
34. Of the existence (as identified persons) of what proportion of these competitors are you unconscious?
35. What is meant by competitive co-operation? Illustrate. (See pp. 508, 558.)
36. What do you understand by the term "economic equilibrium"?
37. Is "economic equilibrium" identical with "social solidarity"? What is the relation, if any, between the two concepts?
38. To what extent does competition make for a natural harmony of individual interests?
39. What did Adam Smith mean by "an invisible hand"?
40. "Civilization is the resultant not of conscious co-operation but of the unconscious competition of individuals." Do you agree or disagree with this statement?
41. "By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it." What is the argument for and against this position?
42. Why has the laissez-faire theory in economics been largely abandoned?
43. What do you understand by the term "freedom"? How far may freedom be identified with freedom of competition?
44. Do you accept the conception of Bastiat that "competition is liberty"?
45. How does money make for freedom? Does it make for or against co-operation? Are co-operation and competition mutually antagonistic terms?
46. Under what circumstances do you have competition between individuals and competition between groups?
47. What do you understand by the statement that anarchism, socialism, and communism are based upon the ecological conceptions of society?
48. What is the difference between an opinion or a doctrine taken (a) as a datum, and (b) as a value?
49. From what point of view may the dependent, the delinquent, and the defective be regarded as "inner enemies"? Is this notion individualistic, socialistic, or how would you characterize it?