§ 8. Wide acceptance of competition. On purely abstract and a priori grounds competition cannot be accorded an unqualified ethical sanction, as is sometimes assumed. It is not always and necessarily "right" and "best" in an absolute sense. However, its dominant place is not a mere accident, but is a resultant of unending experimentation with different methods of distribution carried on since the beginning of human society. A method of distribution had to be found and retained that would work under the conditions of human nature at each stage of social progress; and competition has worked, however imperfectly, because it has met in large measure the pragmatic test. The competitive rule of distribution appeals to all men (even to those who denounce it) as having in many of its applications a moral character, as compared with the other possible methods of distribution. Indeed, the competitive rule is the only rule that does not involve either personal and arbitrary judgment (force, charity, and authority) or status. Even such a measure of justification as is found in status is traceable, in the long run, to competition. The case for a limited application of status (as in property and inheritance laws) is based upon its results in stimulating motives of effort and accumulation.9 When the rule of authority is applied to-day in the large field of public regulation where actual competition has become impossible, almost the only guiding rule is hypothetical competition. The just rate is felt to be that which in the long run would be just sufficient to afford "normal" incomes to labor and to capital, to call forth the necessary effort, skill, judgment, forethought, abstinence, and investment, if competition were at work, as it is not.10 Only this rule of hypothetical competition redeems these public rates from arbitrariness, favoritism, and force.

§9. "Economic harmonies" and discords. Every truth in political philosophy finds some exaggerated expression. Competition, as compared with status and custom, has some notable merits; and when the eighteenth century was throwing off some of the burdens inherited from the more static Middle Ages, competition appeared to be a panacea for all the ills of society.11 The belief in the benefits of competition and the virtues of economic freedom found its extremist expression in the first half of the nineteenth century in the doctrine of the "economic harmonies." According to this, if men are left entirely free to do as their interests dictate, the highest efficiency and best results for all will follow; the economic interests of all men are in harmony. Corresponding with this doctrine is the economic policy of extreme laissez faire.

But experience has shown that the economic interests of the individuals in a community are only partly, very rarely are they wholly, in harmony. There are three planes of competition in every market: that between sellers, that between buyers, and that between sellers on the one hand and buyers on the other.12 If at any point free competition is hindered, even the disciple of economic harmony must, from the very nature of his doctrine, expect a discordant result. In reality, competition is rarely quite complete on both sides, and when it is not the weak usually suffer. Men do not start with fair opportunities. All that they may be entitled to have under competition may be so little that social sympathy seeks to better the results; hence poor relief, public and private. Society as a whole has an interest in the outcome of the individual's economic struggle. It cannot see men starving or driven into crime. Moreover, when competition is the rule of valuation, it, like all valuations, partakes of the quality of those choosing —wise or foolish, good or evil.13 And though competition is the rule of democracy in economics, yet democracy cannot permit the economic vote of a vicious or of a foolish group to stand, where the goods, services, and prices resulting offend the prevailing public judgment and social conscience.

9 See above, § 2, note 3.

10 Compare, e.g., portions of chs. 9, 14, 21, 22, 28; and 31, § 16.

11 See ch. 32, §§ 11-13.

§ 10. Competition modified by charitable distribution. In practice the competitive method of distribution always has been modified or supplemented in varying degrees by the other methods. Important among these is charitable distribution. Charitable is here used in its original sense, as synonymous with benevolence and affection. First is parental love, the root and type of all the forms of charity. There is a complete lack of economic equivalence in the relation of parent and child in early years. The helpless infant does nothing for the parent, the parent gives all and does all for the child. Gradually, however, the balance is regained; as the years go on, not only do children repay in affection, but in many cases they repay in material ways. Especially in the factory districts and on the farm, the child sooner or later begins to reestablish the balance, becomes a worker, and contributes to the family income as much as the cost of his support, and finally more. A student of modern English town life has traced the curve of poverty traversed by the average poor family as the children are first an economic burden and later an aid to their parents. In the middle, or propertied, classes the children do not for many years cease to be a financial burden to their parents, and in most cases the economic balance is never reestablished. It is not to the parents, but to the succeeding generation, that the debt is tardily paid.

12 See Vol. I, p. 75.

13 See, e.g., Vol. I, pp. 25, 71, 205, 479, 509, 511, 513.

Friendship widens the range of generosity and multiplies the mass of gifts. Broad sentiments of humanity lead to gifts outside the range of personal affection and personal interest, to the beggar on the street, to institutions devoted to charity. In New York state alone a sum of more than $20,-000,000 a year is expended by institutional charities. About $512,000,000 in public benefactions were given in the United States by private donors in the year 1915, and in this respect that year was not exceptional. An enormous and increasing body of property is thus being year by year socialized, largely through bequests from persons without direct heirs. Great public subscriptions to the sufferers from unusual disasters, such as the Irish and the Indian famines, the Chicago fire, the Galveston flood, the San Francisco earthquake, the great European war, bespeak a widening generosity. Religion impels to the building of churches, to the support of priests, missions, and manifold religious undertakings. Charity in this connection is the expression of a sentiment that varies from the most intense personal affection to the broadest and most general humanitarian sentiment.