Wednesday, April 18, 2012

Competition - Frédéric Bastiat - Pt 2


Let us now see how competition works.
Man, under the influence of self-interest, always and inevitably seeks out the conditions that will give his services their greatestvalue. He is quick to realize that there are three ways in which he may use the gifts of God to his own special advantage:2
  • 1. He may appropriate to his own exclusive use these gifts themselves.
  • 2. Or he alone may know the techniques by which they may be put to use.
  • 3. Or he may possess the only implement by which their cooperation can be secured.
In every one of these cases he gives little of his own labor in exchange for a great deal of others' labor. His services have great relative value, and we tend to assume that the excess value resides inherently in the natural resource. If this were so, this value could not be diminished. What proves that value is, instead, created by services is, as we shall see, the fact that competition simultaneously diminishes both value and services.
1. Natural resources, the gifts of God, are not uniformly distributed over the earth's surface. What an infinite range of plant life extends from the land of the pine to the land of the palm tree! Here the soil is more fertile, there the warmth of the sun more vivifying; stone is found in one place, lime in another; iron, copper, oil in yet others. Water power is not to be found everywhere; the action of the winds cannot everywhere be turned to our profit. The mere fact of the distance that separates us from things necessary to us can make an incalculable difference in the obstacles our efforts encounter; even man's faculties vary, to a certain extent, according to climate and race.
It is easy to see that, were it not for the law of competition, this inequality in the distribution of God's gifts would result in a corresponding difference in men's material prosperity.
Any person finding a natural advantage within reach would turn it to his own profit, but not to that of his fellow men. They would be allowed to share in what he possessed only as he distributed it and at an exorbitant price that he would set arbitrarily. He could place any value he pleased on his services. We have already seen that the two extremes between which value is set are the pains taken by the one performing the service and the pains spared the one receiving it. If it were not for competition, nothing would prevent the setting of the value at the upper limit. For example, the inhabitant of the tropics would say to the European: “Thanks to my sun, I can obtain a given amount of sugar, coffee, cocoa, or cotton for labor equal to ten, whereas you, who in your cold part of the world are obliged to resort to greenhouses, heaters, and storage barns, can produce them only for labor equal to a hundred. You ask me for my sugar, my coffee, my cotton, and you would not be at all disturbed if, in arriving at my price, I considered only the pains I took. But I, on the other hand, am particularly aware of the pains I save you, for I know they are what determine how much you will be willing to pay, and I set my demands accordingly. Since I can do for pains equal to ten what you in your country do for pains equal to a hundred, it is certain that you would refuse if I were to demand of you, in return for my sugar, a product that would cost you painsequal to a hundred and one; but I ask only for pains equal to ninety-nine. You may very well be upset about it for a while, but you will come around, for at that rate the exchange is still to your advantage. You find these terms unfair; but after all, it is to me, not you, that God has given a warm climate. I know that I am in a position where I can exploit this boon of Providence by refusing it to you unless you are willing to pay me a surcharge, for I have no competition. So, here are my sugar, my cocoa, my coffee, my cotton. Take them on my terms, produce them yourself, or go without them.”
It is true that the European could in his turn speak in like fashion to the inhabitant of the tropics: “Excavate your land, dig mines, look for iron and coal, and count yourself fortunate if you find them; for, if you don't, I am determined to raise my demands to the limit. God has given us both of these precious gifts. First, we take as much of them as we need; then, we forbid others to take any unless they pay us a special levy on our windfall.”
Even if transactions were carried on in this manner, it still would not be possible, from the strictly scientific point of view, to attribute to natural resources the value that resides essentially in services. But it would be understandable if this mistake were made, for the result would be the same. Services would still be exchanged for services, but would evidence no tendency to be measured by effort, by labor. The gifts of God would be personal privileges and not common blessings, and we could perhaps complain with some reason of having been treated by the Author of all things in so hopelessly unfair a manner. Would we, then, be brothers here below? Could we consider ourselves the children of a common Father? The absence of competition, that is, of liberty, would exclude any idea of fraternity. Nothing would be left of the republican motto of “Liberty, Equality, Fraternity.”
But let competition appear on the scene, and there will be no more of these one-sided transactions, of these seizures of the gifts of God, of this revolting exorbitance in the evaluation of services, of these inequalities in the exchange of efforts.
And let us note, first of all, that competition must necessarily intervene, called into being, as it is, by the very fact of these inequalities. Labor instinctively moves in the direction that promises it the best returns, and thus unfailingly brings to an end the abnormal advantage it enjoyed; so that inequality is merely a spur that, in spite of ourselves, drives us on toward equality. This is one of the finest examples of teleology in the social machine. Infinite goodness, which has distributed its blessings over the earth, has, it would seem, selected the greedy producer as its agent for effecting their equitable distribution among all mankind, and it certainly is a wonderful sight to see self-interest continually bringing about the very thing it always tries to prevent. Man, as a producer, is necessarily, irresistibly, attracted toward the largest possible rewards for his services, and by that very fact always brings them back into line. He pursues his own interest, and what does he promote, unwittingly, unwillingly, unintentionally? The general good.
Thus, to return to our example, the inhabitant of the tropics, by the very fact that he realizes exorbitant profits from exploiting the gifts of God, attracts competition. Human labor flocks there with an eagerness that, if I may so express myself, is proportional to the magnitude of the inequality, and is not content until the inequality has been eliminated. Through the effect of competition we see tropical labor equal to ten successively exchanged for European labor equal to eighty, then sixty, then fifty, then forty, then twenty, and finally ten. There is no reason, under the natural laws of society, why things should not reach this point, that is, why services exchanged should not be measured in terms of labor performed and pains taken, with the gifts of God being thrown in gratis by both parties. So, when things do reach this point, we must realize, with gratitude, how great a revolution has taken place. First, the pains taken by both parties are now equal, which should satisfy our desire for justice. Then, what has become of the gift of God? This deserves the reader's full attention. No one has been deprived of it. Let us not, in this matter, be taken in by the clamor raised by the tropical producer. In so far as he is himself a consumer of sugar, cotton, or coffee, the Brazilian still profits from the heat of the sun; for this beneficent body has not ceased to help him in the work of production. All that he has lost is his unfair power to levy a surcharge on the consumption of the inhabitants of Europe. The gift of Providence, because it was free of charge, had to, and did, become common to all; for what is free of charge and what is common to all are essentially one and the same.
God's gift has become—and I beg the reader not to forget that I am using a particular case to illustrate a universal phenomenon—common to all. This is not a flight of rhetoric, but the statement of a mathematical truth. Why has this wonderful fact not been understood? Because communal wealth is always achieved in the form of value that has been eliminated, and our minds have great difficulty in grasping what is expressed negatively. But, I ask, when, in order to get a certain amount of sugar, coffee, or cotton, I offer only a tenth of the pains I should have had to take in order to produce them myself, and for the reason that in Brazil the sun performs nine-tenths of the work, is it not true that I am exchanging labor for labor? And do I not, in a positive sense, receive, in addition to the Brazilian's labor, and into the bargain, the help that the tropical climate has contributed? Can I not state with complete accuracy that I, like all men, share in Nature's bounty in producing these things on the same terms as an Indian or a South American, that is, gratis?
England has an abundance of coal mines. This is, beyond doubt, of great local advantage, particularly if we assume, as I shall in order to simplify the illustration, that there is no coal on the Continent. As long as no exchange takes place, the advantage this gives to the English consists in the fact that they have more fuel than other nations and have it for less pains, for less expenditure of valuable time. As soon as exchange is introduced, taking no account of competition, their exclusive possession of the mines enables them to demand large sums in payment and thus to set a high price on their pains. Not being able to go to these pains ourselves, or to appeal elsewhere, we shall be obliged to submit. English labor engaged in this type of work will be very highly paid; in other words, coal will be expensive, and Nature's bounty can be considered to be lavished on one nation, and not on all mankind.
But this state of things cannot last; a great natural and social law is opposed to it, viz., competition. Precisely because this type of labor is highly paid in England, it will be in great demand there, for men are always in quest of high wages. The number of miners will increase, both through new recruits transferring from other industries and through the new generation of local miners' sons entering their fathers' trade. They will offer their services for less; they will be satisfied with a constantly decreasing rate, until it reaches the normal amount generally paid for similar work in the entire country. This means that the price of English coal will go down in France; that a given amount of French labor will obtain a greater and greater amount of English coal, or rather of English labor as it is represented in the coal; it means, in a word, and this is what I wish to point out, that the gift that Nature appeared to have conferred on England was in reality conferred on all mankind. Coal from Newcastle is bestowed gratis on all men. This is neither paradox nor exaggeration; the coal is bestowed without cost, like water from a rushing stream, provided only that men take thepains to get it or to compensate the pains of those who get it for them. When we buy coal, it is not the coal that we pay for, but the labor required to extract it and to transport it. All that we do is to offer what we consider as an equal amount of labor in wines or silks. So great has been Nature's bounty toward France that the amount of labor we offer in return is not more than we should have had to perform if the coal deposits had been located in France. Competition has put both nations on an equal footing as far as coal is concerned, except for the slight and unavoidable differences due to distance and transportation costs.
I have offered two illustrations, and, in order to make the phenomenon the more impressive by reason of its size, I have chosen international operations on a very large scale. For that reason I am afraid that I may have failed to make the reader realize that the same phenomenon constantly takes place all about us and in our most ordinary transactions. Let him, then, be good enough to pick out the most humble objects, a glass, a nail, a slice of bread, a piece of cloth, a book. I ask him to reflect a little on these unpretentious articles. Let him ask himself what an incalculable amount of gratuitous utility would, were it not for competition, have indeed remained free of charge for their producers, but would never have become free of charge for humanity; that is, would never have become common to all. He may well say to himself, as he buys his bread, that, thanks to competition, he pays nothing for what is done by the sun, the rain, the frost, the laws of vegetation, or even, despite all that is said, for what is done exclusively by the soil. He pays nothing for the law of gravitation set to work by the miller, nothing for the law of combustion set to work by the baker, nothing for the strength of the horses set to work by the deliveryman. Let him reflect that he pays only for services rendered, pains taken by human agents; that, were it not for competition, he would have had to pay an additional charge for all that is done by these natural resources; that this charge would have been limited only by the difficulty he would have experienced in producing the bread with his own hands; that, consequently, a whole lifetime of labor would not have been enough to meet the price he would have been asked to pay. Let him realize that there is not a single article he uses that might not give rise to the same reflection, and that this holds true for every person on the face of the earth; and then he will understand the flaw in the socialist theories, which, viewing only the surface of things, only society's outer shell, have so irresponsibly railed against competition, that is to say, against human freedom. Then he will understand that competition, which insures that the gifts of Nature so inequitably distributed over the globe will retain their double character of being free of charge and common to all, must be considered as the principle of a fair and natural equalization; that it must be admired as the force that holds in check selfish impulses, with which it combines so skillfully that competition serves as both a restraint on greed and a spur to the activity of self-interest. It deserves to be blessed as the most striking manifestation of God's impartial concern for all His creatures.
From the preceding discussion it is possible to arrive at the solution of one of the most controversial of questions: that of free trade among nations. If it is true, as seems to me incontestable, that the various nations of the world are led by competition to exchange with one another nothing but their labor, their efforts, which are gradually brought to a common level, and to include, into the bargain, the natural advantages each one enjoys; how blind and illogical, then, are those nations that by legislative action reject foreign goods on the grounds that they are cheap, that they have little value in proportion to their total utility, that is, for the very reason that they contain a high degree of gratuitous utility!
I have already said, and I repeat now, that a theory inspires me with confidence when I see that it agrees with universal practice. Now, it is certain that nations would carry on certain kinds of exchange with one another if they were not forcibly forbidden to do so. It takes the bayonet to prevent them; hence, it is wrong to prevent them.
2. Another factor that puts certain men in an exceptionally favorable position as regards remuneration is their exclusive knowledge of the techniques for utilizing the forces of Nature. What we call an invention is a conquest over Nature won by human genius. We must observe how these admirable and peaceful conquests, which originally are a source of wealth for those who make them, soon become, under the influence of competition, the gratuitous and common heritage of all mankind.
The forces of Nature do indeed belong to everyone. Gravitation, for example, is common property; it surrounds us, permeates us, rules over us. Nevertheless, if there were only one way to harness it for a given practical result, and if some man knew this way, he could set a very high price on his pains or refuse to take them at all unless a considerable amount were given in return. His demands in this respect would go as high as the point at which they would impose on the consumers a greater sacrifice than the old method would entail. He may have succeeded, for example, in eliminating nine-tenths of the labor required for producing article x. But at the present time x has a current market price that has been established by the pains it takes to produce it in the ordinary way. The inventor sells x at the market price; in other words, he is paid ten times more for his pains than are his competitors. This is the first phase of the invention.
Let us note, first of all, that this in no wise outrages justice. It is just that the man who reveals a new and useful process to the world should receive his reward: to each according to his ability.
Let us note further that up to this point mankind, the inventor excepted, has benefited only potentially, by anticipation so to speak, since, in order to obtain article x, everyone but him is still obliged to make the same sacrifices as before.
At this juncture, however, the invention enters its second phase, the phase of imitation. Excessive compensations by their very nature arouse covetousness. The new process spreads, the price of x steadily drops, and the remuneration also declines, more and more rapidly as the time interval between the invention and its imitations lengthens, that is, as it becomes easier and easier, and less and less risky, to copy the invention, and consequently less and less worth while. Certainly there is nothing in all this that could not be sanctioned by the most enlightened and impartial legislation.
At last the invention reaches its third and final phase, the phase of universal distribution, where it is common property, and free of charge to all. Its full cycle has been run once competition has brought the returns for the producers of article x into line with the prevailing and normal rate for similar types of labor. Then the nine-tenths of the pains that are eliminated by the hypothetical invention represent a conquest of Nature for the benefit of all mankind. The utility of article x remains the same; but nine-tenths of it have been supplied by gravitation, which was originally common to all in theory, and has now become common to all in fact in this special application. This is proved by the fact that all consumers on the face of the earth may now buy article x for one-tenth of what it once cost them. The rest of the cost has been eliminated by the new technique.
If the reader will stop to consider that every human invention has run this cycle, that x is here the algebraic sign for wheat, clothing, books, ships, for whose production an incalculable quantity of pains, or value, has been eliminated by the plow, the loom, the printing press, and the sail; that this observation applies to the humblest tool as well as to the most complex machinery, to the nail, the wedge, the lever, even as to the steam engine and the telegraph; he will understand, I hope, how this problem is solved within the human family, how a steadily greater and moreequitably distributed amount of utility or enjoyment becomes the return for a given amount of human labor.
3. I have already shown how competition brings into the gratuitous and common domain both the forces of Nature and the processes by which they are harnessed. It remains for me to show that it performs the same function for the implements by means of which these forces are put to work.
It is not enough that there should exist in Nature forces like heat, light, gravitation, electricity; it is not enough that human intelligence should be able to conceive of a way of utilizing them. There is still need for implements to make these concepts of the mind a reality and for provisions to support men while they are occupied with this task.
Possession of capital is a third factor that, as respects remuneration, is favorable to a man or a class of men. He who has at his disposal the tool the worker needs, the raw materials on which the labor is to be performed, and the means of subsistence during the operation, is in a position to demand a remuneration; the principle involved is certainly just, for capital merely represents pains previously taken and not yet rewarded. The capitalist is in a good position to lay down the law, true enough; yet let us note that, even when he faces no competition, there is a limit beyond which he may not press his claims. This limit is the point at which his payment would eat up all the advantages that his service would provide. Hence, there is no excuse for talking, as people often do, about thetyranny of capital, since never, even in the most extreme cases, can its presence be more harmful to the worker's lot than its absence. The capitalist, like the man from the tropics who has at his disposal a certain degree of heat that Nature has denied other men, like the inventor who possesses the secret of a process unknown to his fellow men, can do no more than say: “Do you desire the use of my labor? I set a given price on it. If you find it too high, do as you have done heretofore: go without it.”
But competition intervenes among the capitalists. Implements, raw materials, and provisions can help to create utility only if they are put to work; hence, there is rivalry among capitalists to find a use for their capital. Since the amount by which this rivalry forces them to reduce their claims below the maximum limits that I have just determined brings about a reduction in the price of the product, this amount represents, therefore, a net profit, a gratuitous gain for the consumer, that is, for mankind!
It is evident here that cost can never be completely eliminated; since all capital represents some pains that have been taken, the principle of remuneration is always implied.
Transactions involving capital are subject to the universal law of all exchange, which is never carried out unless it is to the mutual advantage of the two contracting parties. This advantage, although it tends to be equal on both sides, may accidentally be greater for one than for the other. The return on capital is subject to a limit beyond which no one will consent to borrow; this limit is zero service for the borrower. Likewise, there is a limit below which no one will consent to make a loan; this limit is zero return for the lender. This is self-evident. If the demands of either party are raised to the point of zero advantage for the other, the loan becomes impossible. The return on capital fluctuates between these two extremes, raised toward the upper limit by competition among borrowers, brought back toward the lower limit by competition among lenders; so that, through a necessity that is in harmony with justice, it rises when capital is scarce and falls when capital is abundant.
Many economists believe that the number of borrowers increases more rapidly than capital can be formed, and hence that the natural trend of interest is upwards. The facts are conclusive in favor of the contrary opinion, and we observe that the effect of civilization everywhere is to lower the rate on the hire of capital. This rate, it is said, was 30 or 40 per cent in Rome; it is still 20 per cent in Brazil, 10 per cent in Algiers, 8 per cent in Spain, 6 per cent in Italy, 5 per cent in Germany, 4 per cent in France, 3 per cent in England, and even less in Holland. Now, all this amount by which, through progress, the interest on capital has been reduced, though lost to the capitalist, is not lost to mankind. If the rate of interest, starting at 40, falls to 2 per cent, it means a drop of 38 out of 40 parts for this item in the cost of production of all commodities. They will reach the consumer freed from this charge in the proportion of nineteen-twentieths; this force, then, like the forces of Nature, like more efficient techniques, results in abundance, equalization, and, ultimately, a general rise in the standard of living for the human race.
I still have to say a few words about the competition that labor creates for itself, a subject that has recently inspired so much sentimental rhetoric. But is it really necessary? Has the subject not been exhaustively treated, for the careful reader, by all that has already been said? I have proved that, thanks to competition, men cannot for long receive an abnormal return for the co-operation ofthe forces of Nature, for knowing special techniques, or for possessing the instruments whereby these forces are put to work. To do this is to prove that efforts tend to be exchanged on an equal footing, or, in other words, that value tends to be proportional to labor. This being so, I do not really understand what is meant by competition among workers. I understand even less how it could be harmful to their situation, since, in this respect workers are also consumers; the laboring class includes everybody, and in fact itself comprises the great community that in the last analysis reaps the rewards of competition and the benefits accruing from the steady elimination of value resulting from progress.
The course of development is as follows: Services are exchanged for services, or value for value. When a man (or a group of men) appropriates a natural resource or acquires a new technique, he bases his charges, not on the pains he takes, but on those he spares others. He raises his demands to the highest possible limit, without ever being able thereby to injure the welfare of others. He assigns the greatest possible value to his services. But gradually, through the effect of competition, this value tends to correspond to the pains he has taken; so that the full course has been run when his pains are exchanged for equal pains, every one of which represents the means of transmitting a growing amount of gratuitous utility, beneficial to the entire community. Such being the case, it would be a glaring inconsistency to say that competition hurts the workers.
And yet this is constantly being said, and it is even widely accepted. Why? Because this word “worker” is used to mean one particular class, not the great community of all those who work. This community is divided into two groups. On one side are placed all those who have capital, who live entirely or in part on previous labor or on intellectual labor or on the proceeds of taxation; on the other are placed those who have only their hands and their wages, those who, to use the time-honored expression, form the proletariat. The relations of these two classes with each other are observed, and the question is asked whether, in view of the nature of these relations, the competition carried on by the wage earners among themselves is not harmful to their interests.
The situation of these men, it is said, is essentially precarious. Since they receive their wages daily, they live from day to day. During the bargaining that, in every free system, goes on before terms are reached, they are unable to wait; they must, no matter what, find work for the morrow or die. If this is not entirely true of all of them, it is at least true of many of them, of enough of them to depress the entire class; for the most hard-pressed, the most wretchedly poor, are the ones who capitulate first, and they set the general wage scale. In consequence, wages tend to be set at the lowest rate compatible with bare subsistence; and in this state of things the least bit of added competition among the workers is a veritable calamity, since for them it is not a question of a lower standard of living, but of not being able to live at all.
Certainly there is much truth, too much truth, in actual fact, in this allegation. To deny the sufferings and the miserable conditions prevailing among this class of men who perform the physical labor of the work of production would be shutting our eyes to the truth. The fact is that what we rightly term the social problem is related to the deplorable state of a great number of our fellow men, for, although other classes of society are not immune to many anxieties, many sufferings, economic reverses, crises, and upheavals, it is, nevertheless, true that freedom would be considered as the solution to the problem, if freedom did not appear helpless in curing this running sore that we call pauperism.
And since it is with this question that the social problem is most concerned, the reader will understand that I cannot analyze it here. Would to God that its solution might be the outcome of this whole book of mine, but obviously it cannot come from a single chapter!
I am now concerned with setting forth certain general laws that I believe to be harmonious, and I am confident that the reader also has become aware that these laws exist, that they tend toward the common sharing of all things and consequently toward equality. But I have not tried to deny that their action has been greatly hindered by disturbing factors. If, then, at the present moment we encounter any shocking fact of inequality, how can we interpret it until we know both the normal laws of the social order and the disturbing factors?
On the other hand, I have not sought to deny the existence of evil or its mission. I have felt entitled to state that, since man has been given free will, the term “harmony” need not be confined to a total system from which evil would be excluded; for free will implies error, at least as a possibility, and error is evil. Social harmony, like everything else that involves man, is relative; evil constitutes a necessary part of the machinery designed to conquer error, ignorance, and injustice, by bringing into play two great laws of our nature; responsibility and solidarity.
Since pauperism is an existing fact, must its existence be imputed to the natural laws that govern the social order or rather to human institutions that perhaps work contrary to these laws or, finally, to the victims themselves, who by their own errors and mistakes must have called down upon their heads so severe a punishment?
In other words: Does pauperism exist by divine plan or, on the contrary, because of some artificial element still remaining in our political order or as individual retribution? Fate, injustice, individual responsibility? To which of these three causes must this frightful sore be attributed?
I do not hesitate to say that it cannot be the result of the natural laws that have been the object of our study throughout this book, since these laws all tend toward equality under improved conditions, that is, toward bringing all men closer together in their enjoyment of a constantly rising standard of living. Hence, this is not the place to delve into the problem of poverty.
For the moment, if we wish to consider separately that class of workers who carry out the more physical part of the work of production, and who, without sharing, generally speaking, in its profits, live on fixed earnings that we call “wages,” the question that we must ask is this: Without taking into account either the goodness or the badness of our economic institutions or the woes that the members of the proletariat may have brought upon themselves, what is, as far as they are concerned, the effect of competition?
For this class of people, as for all others, the effect of competition is twofold. They are aware of it both as buyers and as sellers of services. The error of all those who write on this subject is that they never see more than one side of the question, like physicists who, if they understood only the law of centrifugal force, would believe and constantly predict that all is lost. Provide them with incorrect data, and you will see with what flawless logic they will lead you to their conclusions of doom. The same may be said of the lamentations that the socialists base on their exclusive preoccupation with the phenomenon of centrifugal competition, if I may use such an expression. They forget that there is also centripetal competition, and that is enough to reduce their theories to childish rantings. They forget that the worker, when he goes to market with the wages he has earned, is the center toward which countless industries are directed, and that he then profits from the universal competition of which the industries all complain in their turn.
It is true that the members of the proletariat, when they consider themselves as producers, as suppliers of labor or services, also complain of competition. Let us admit, then, that competition is to their advantage on the one hand, and to their disadvantage on the other; the question is to determine whether the balance is favorable or unfavorable, or whether there are compensating factors.
Unless I have expressed myself very badly, the reader now realizes that in this wonderful mechanism the interplay of various aspects of competition, apparently so antagonistic, brings about, as its singular and reassuring result, a balance that is favorable to all simultaneously, because of the gratuitous utility that steadily enlarges the circle of production and constantly falls within the communal domain. Now, what becomes free of charge and common to all is advantageous to all and harmful to none; we can even add, and with mathematical certainty, that it is advantageous to everyone in direct proportion to his previous state of poverty. This part of gratuitous utility, which competition has forced to become common to all, makes value tend to correspond to labor, to the obvious benefit of the worker. This, too, provides the basis for the solution of the social problem that I have tried to keep constantly before the reader, and which only the veil of misconceptions born of habit can prevent him from seeing, namely, that for a given amount of labor each one receives a sum of satisfactions whose tendency is to increase and to be distributed equally.
Furthermore, the condition of the worker is the result, not of one economic law, but of all of them. To understand his condition, to discover what is in store for him, what his future holds, is the one and only function of political economy; for, from its point of view, what else can there be in the world except workers? I am wrong, for there are also plunderers. What gives services their just value? Freedom. What deprives them of their just value? Oppression. Such is the cycle that we have still to traverse.
As for the fate of the working class, which carries out the more immediate work of production, we can evaluate it only when we are in a position to know how the law of competition combines with those of wages and of population and also the disrupting effects of unjust taxation and monopoly.
I shall add only a few more words on competition. It is quite clear that a decrease in the sum total of satisfactions distributed among men is a result that would be foreign to the nature of competition. Does it tend to make this distribution unequal? Nothing on earth is clearer than that competition, after attaching, so to speak, a greater proportion of utility to every service, to every value, works unceasingly to level the services themselves, to make them proportional to efforts. Is competition not the spur that turns men toward productive and away from unproductive careers? Its natural action is, therefore, to assure greater equality and at the same time a higher and higher social level.
Let us, however, understand what we mean by equality. It does not imply identical rewards for all men, but rewards in keeping with the quantity and quality of their efforts.
A host of circumstances contributes to making the remuneration of labor unequal (I am speaking now of free labor subject to the laws of competition). On close examination we discover that this alleged inequality, nearly always just and necessary, is in reality nothing else than actual equality.
All other things being equal, more profit can be had from dangerous labor than from labor that is not; from trades that require a long apprenticeship and outlays that remain unproductive for a long time, implying on the part of the family the long-sustained exercise of certain virtues, than from those in which physical strength alone is necessary; from the professions that demand trained minds and refined tastes, than from trades where nothing is needed beyond one's two hands. Is all this not just? Now, competitionnecessarily establishes these distinctions; society does not need Fourier or M. Louis Blanc to decide the matter.
Among these various factors the one most generally decisive is inequality of training; and here, as everywhere else, we see competition exerting its twofold influence, leveling classes and raising the general standard of society.
If we think of society as being composed of two strata placed one above the other, with intelligence predominant in the one, and brute force predominant in the other, and if we study the natural relations of these two strata with each other, we shall readily notice that the first one possesses a power of attraction, while in the second there is a force of aspiration, and these two work together to form the two strata into one. The very inequality of rewards inspires the lower stratum with a burning desire to reach the higher regions of well-being and leisure, and this desire is encouraged by gleams from the light that illuminates the upper classes. Teaching methods are improved; books cost less; instruction is acquired more rapidly and cheaply; learning, which had been monopolized by a single class or even caste, veiled in a dead language or in hieroglyphics, is written and printed in the vernacular, permeates the atmosphere, so to speak, and is breathed in like the air.
Nor is this all. Even while more universal and more equal education is working to bring the two social strata together, very important economic factors that are connected with the great law of competition accelerate their fusion. Progress in the knowledge of the laws of mechanics constantly decreases the proportion of brute labor in any operation. The division of labor, by simplifying and isolating each one of the operations that contribute to turning out the finished product, places within the reach of all new industries that previously were open only to a few. Moreover, a complex of various types of labor that originally required highly diversified skills becomes, with the mere passing of time, simple routine and is performed by the least skillful, as has happened in agriculture. Agricultural techniques, which, in antiquity, earned for their discoverers honors approaching deification, are today so completely the heritage and almost the monopoly of the most brutish sort of men, that this most important branch of human industry has become almost taboo, so to speak, for the well-bred. It is possible to draw false conclusions from all this and to say: “We do indeed observe that competition lowers remunerations in all countries, in all trades and professions, in all ranks of society, that it levels them downwards; but this means that the wages for unskilled labor, for mere physical exertion, will become the norm, the standard for all remuneration.”
The reader has misunderstood me if he does not perceive that competition, which tends to bring all excessive remunerations into line with a more or less uniform average, necessarily raises this average. This is galling, I admit, to men in their capacity as producers; but it results in improving the general lot of the human race in the only respects in which improvement may reasonably be expected: in well-being, in financial security, in increased leisure, in moral and intellectual development, and, in a word, in respect to all that relates to consumption.
Will the objection be made that mankind has not made the progress that this theory would seem to imply?
I shall reply, in the first place, that competition in modern society is far from playing its natural role. Our laws inhibit it at least as much as they encourage it; and to answer the question whether inequality is due to the presence or the absence of competition, we need only observe who the men are who occupy the limelight and dazzle us with their scandalous fortunes, to assure ourselves that inequality, in so far as it is artificial and unjust, is based on conquest, monopolies, restrictions, privileged positions, high government posts and influence, administrative deals, loans from the public funds—with all of which competition has no connection.
Secondly, I believe that we fail to appreciate the very real progress that has been made since the very recent times from which we must date the partial emancipation of labor. It has been said with much truth that it takes a great deal of scientific insight to observe the facts that are constantly before our eyes. The present level of consumption enjoyed by an honest and industrious working-class family does not surprise us because habit has familiarized us with this strange situation. If, however, we were to compare the standard of living that this family has attained with the one that would be its lot in a hypothetical social order from which competition had been excluded; if statisticians could measure with precision instruments, as with a dynamometer, its labor in relation to its satisfactions at two different periods; we should realize that freedom, despite all still-existing restrictions on it, has wrought a miracle so enduring that for that very reason we fail to be aware of it. The total proportion of human effort that has been eliminated in achieving any given result is truly incalculable. There was a time when the day's work of an artisan would not have bought him the crudest sort of almanac. Today for five centimes, or the fiftieth part of his daily wage, he can buy a paper containing enough printed matter for a volume. I could say the same thing for clothing, transportation, shipping, illumination, and a host of satisfactions. To what are these results due? To the fact that a tremendous proportion of human labor, which must be paid for, has been replaced by the gratuitous forces of Nature. This represents value that has been eliminated, that no longer requires payment. It has been replaced, through the action of competition, by gratuitous and common utility; and, let us note, when, through progress, the cost of a given commodity happens to drop, the labor required to pay for it that is saved the poor man is always proportionately greater than that saved the wealthy man, as can be demonstrated mathematically.
Finally, this constantly growing flood of utility, poured forth by labor and pumped through all the veins of the social body by competition, is not to be measured entirely in terms of present material comforts. Much of it is absorbed into the rising tide of ever increasing new generations; it is diffused over an increased population, in accordance with the laws, closely related to our present subject, which will be set forth in another chapter.

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