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succeeds by virtue of one's power to deceive, to swindle, or to
cheat. Animals practice deceit, though we do not call their
forms of deceit by such names as swindling, counterfeiting,
adulteration of goods, etc. By the persuasive methods are
meant all those methods whereby one succeeds by virtue of
one's power to persuade or to convince. One may beat one's
rival by being a more persuasive talker, whether one is striv-
ing for favors from the sovereign person or from the sover-
eign people, whether one is striving for the hand of a lady,
the decision of a jury, or the trade of a possible customer.
This form of conflict would remain even if we could elimi-
nate all other forms. Even under the most complete form of
communism there would remain abundant room for the per-
suasive forms of conflict. By the productive methods are
meant all those methods whereby one may beat one's rivals,
or gain advantages, by virtue of one's power to produce, to
serve, or to confer benefit.

The same persons may resort to more than one of these
methods in order to gain an advantage. When two farmers
compete in growing crops, they are struggling for existence, or
for economic advantage, by a productive method. When they
quarrel over a line fence and take their quarrel before a court
for adjudication, they are struggling by a persuasive method.
When they secretly alter or remove landmarks in order to gain
an advantage in their litigation, or when they bribe jurors, they
are struggling by a deceptive method. When they fall to



COMPETITION 39

fighting either with fists or with weapons, they are struggling by
a destructive method. When they change their methods in the
order just described, they are sinking lower and lower in the
scale ; that is, they are resorting to worse and worse methods
of struggling for existence or advantage. When they rival one
another in growing corn, there is more corn grown as the result
of that rivalry. The country is better fed and everyone is
better off, except possibly the one who is beaten, and even
he may very likely be better off than he would have been if
he had not competed at all. When two farmers quarrel over
a line fence and take it into court, no one gains any benefit
except the lawyers, and what the lawyers gain the litigants
lose. No new land is created by that conflict. No new wealth
is produced. The community is no better fed, and the liti-
gants have wasted their time. To change from persuasion to
deception, or from deception to physical force, is so clearly
to sink to a lower level that it is unnecessary to pursue the
topic farther.

Destructive and deceptive methods of brutes. It will be
apparent to anyone who will study the diagram that among
animals the destructive and deceptive methods are the charac-
teristic forms of struggle. They kill, maim, injure, rob, and
deceive one -another with no moral or legal restraints. They
may sometimes rise to the level of persuasion, as in the
courting process, but never to the level of production ; that
is, no animal ever tries to beat its rival by producing a larger
or better product or rendering a greater or better service.
Among human beings who have no moral sense, and who are
unrestrained by law and justice, the destructive and deceptive
methods of struggle will be followed, as well as the persuasive
and productive methods ; but the destructive and deceptive
methods are precisely the things that morals and laws are de-
signed to prevent. In any civilization worthy of the name,
and under any government worthy to stand overnight, men
are actually restrained by their own moral feelings, by the



40 PRINCIPLES OF POLITICAL ECONOMY

respect for the good opinions of their fellows, and by the
fear of legal penalties, from attempting to promote their own
interests by destruction or deception.

Meaning of crime. To say that men are restrained from
doing these things is not the same as to say that they are
absolutely prevented. Crime still flourishes, but it must be
remembered that what we call crimes for human beings are
not crimes for brutes, for the simple reason that brutes have
none of those restraints which men throw around themselves.
The fact that we call all destructive methods, and the more
grossly deceptive methods, crimes, and impose penalties against
them, shows that we are trying to raise the struggle for ex-
istence to a higher plane than that on which it is waged in
the subhuman world. The aim is to prevent destruction and
deception, and to compel men to succeed, if they succeed at
all, by persuasion or production. No government, however, is
so efficient that it can prevent all destruction or deception.
" The mills of man grind slowly and they grind exceeding
coarse." Besides, there are some more or less refined methods
of deception which have not even been declared illegal by
legislation. If we can so improve our legislation as to pro-
hibit every form of deception as well as destruction, and if
we can so improve our executive and judicial systems as to
prevent absolutely the violation of law, we shall have reached
the ideal of government control over the struggle for existence.
To stop productive competition and compel us all to struggle
for our own advantage by the persuasive methods would be a
distinct step backward.

Is it wrong to compete? There are a few people who object
on principle to all forms of competition, who believe that
the whole competitive system is morally wrong. This feeling,
however, is probably due to a failure to discriminate, as we
have tried to do in the preceding pages, between different kinds
of conflict. The horrors of war and other forms of destructive
conflict, the petty, skulking meanness which accompanies all



COMPETITION 41

forms of deceptive conflict, and even the jealousies and heart-
burnings which result from many forms of persuasive conflict,
have so impressed certain sensitive spirits as to cause them to
revolt against the very idea of competition in any form. Such
people ought never to play croquet, because there is com-
petition even there. An election is as truly competitive as any
form of business.

Universality of struggle. During the entire life of man on
this planet he has had to struggle in one way or another.
The reason why we are here to-day is because our ancestors
were successful in their struggles. They succeeded in living
and reproducing their kind in spite of all the enemies and
dangers which surrounded them. One reason why they strug-
gled so successfully was that they were valiant enough to wage
their fight with vigor and with spirit. That spirit we have in-
herited to such an extent that we cannot even amuse ourselves
without some kind of competition or struggle. It is as the
breath of life to our nostrils. It will be well for us if we can
harness this spirit to productive work rather than allow it to
waste itself in destruction, deception, or even in some fruitless
kinds of persuasion. The nation which succeeds best in so har-
nessing this spirit to production is the nation which should
normally grow rapidly in wealth, prosperity, and power.

Again, the great fact of scarcity, together with the fact,
pointed out in the preceding chapter, that we all prefer some
people to others, makes some form of competition inevitable
and eternal. As pointed out in Chapter II, when there is
not enough of a certain thing to go around and satisfy every-
body, all those who prefer themselves and their own families
to their rivals and their families will struggle to get their share
of the scarce article. When there are not enough of the high
offices to go round, there will be a similar struggle to get them.
These facts have always been present in human society and
always must remain, from the very nature of man and of the
universe in which he finds himself. From the very nature of



42 PRINCIPLES OF POLITICAL ECONOMY

the case we cannot all be leaders. If we were, there would
be no followers. We would all rather lead than follow ; we
would rather command than obey. Therefore we shall always
struggle for leadership and command. Nor can there be wealth
enough to go around and satisfy everyone. If there were,
wealth would cease to exist as wealth. Whenever you find
a thing so abundant as that, it has ceased to count as wealth.
Only those things are wealth of which we can say that more
is better than less. So long as we would rather have more
of a certain article than less of it, we shall strive to get
more. Competition, or struggle, is therefore unavoidable. The
thing to do is to make the most of it and to turn it, so far as
possible, into productive channels and out of the destructive
and deceptive channels.

The spirit in which one competes. In assuming the uni-
versality and permanence of competition in some form it is
not necessary to exclude such things as love, friendship,
neighborliness, and cooperation. Competitors in a friendly
game may be none the less friendly because they are com-
peting. It is only when they care more for victory or the
prize of victory than they do for friendship that there is any
conflict between competition and friendship. The cure for
this, however, is not the abolition of competition, but the
learning to care for the right things and to evaluate things
properly. When men care more for money, which is the
immediate prize of economic competition than for honor,
friendship, or justice, then competition is likely to be ruthless
and destructive. When men care more for offices, the imme-
diate prize of political competition, than for the welfare of the
country or the peace of the neighborhood, a political cam-
paign is likely to become a ruthless and destructive game.
And when football men care more for victory than for sport
or honor, football becomes a game unfit for gentlemen. In all
these cases the evil does not inhere in competition itself but in
the false system of valuations in the minds of the competitors.



COMPETITION 43

So long as business men realize that there are other things
more precious than money, so long as politicians realize that
there are other things more important than winning offices, so
long as football men realize that there are other things greater
than victory, all these forms of competition are thoroughly
compatible with the most sincere friendship.

It has been pointed out many times that the struggle for
the life of others is just as real a fact in life as the struggle
for the life of self, that mutual aid is as real as mutual
antagonism, and that cooperation has a place in our economic
system as well as competition. All this is true, but it must
not be allowed to obscure the fact that competition is a very
real thing also. Back of these apparent contradictions lies the
very important fact that human interests are sometimes har-
monious, and sometimes antagonistic, that they are never
wholly one or the other. Where the interests of men har-
monize, there is and always will be cooperation, provided they
are wise enough to understand it ; where their interests
conflict, there is and always will be competition.

Cooperation a form of competition. Even cooperation, as it
is generally practiced, is only a method of competing more
effectively. There is cooperation among the members of an
athletic team. Their teamwork consists in working together
smoothly and effectively, but the purpose of this teamwork,
or cooperation, is to enable them to compete more effectively
against the opposing team. It would be difficult to find or to
name an instance of cooperation which did not, directly or in-
directly, enable the cooperators to compete more successfully
than they were able to do when working alone as individuals.
It is really the principle of teamwork applied to business
competition. Within . the cooperating group, as within the
athletic team, competition among members is reduced. But com-
petition between cooperating groups, or between the group and
those outside the group, is quite as sharp as it would be if
there were no cooperative groups. Again, when a cooperative



44 PRINCIPLES OF POLITICAL ECONOMY

group becomes large, there arises within the group a certain
amount of competition for offices and other advantages.

Cooperation is an excellent thing under certain conditions,
and wherever the conditions call for it, every reasonable effort
should be made to encourage it ; but the encouragement should
be given with a full understanding of its limitations and of its
real relation to the competitive process. More cooperative
societies have failed than have succeeded. One of the principal
reasons for failure has been that the promoters have imagined
that there was in cooperation something inherently superior to
competition, and that it ought to be substituted for competition
anywhere and everywhere. The truth seems to be that coopera-
tion is called for only under certain special conditions where
teamwork is required in order to secure large results.

Where cooperation is successful. A careful study of coopera-
tion will show that it has seldom succeeded in the field of
production. Its chief successes have been achieved in mer-
chandizing, that is, in buying and selling. Except among a
few religious societies, which are held together by a powerful
religious sentiment, the author does not know of a single case
where cooperative farming has succeeded. By cooperative
farming is meant the running of the productive work of grow-
ing crops under a cooperative system. There are many cases,
however, in which groups of farmers have cooperated in buy-
ing and selling, in marketing their products, in purchasing
their supplies, and in securing capital on advantageous terms.
There are also many cases in which they have cooperated
in running creameries, cheese factories, and grain elevators.
These are parts of their marketing system. Again, it must be
remembered that the farmers do not themselves operate these
establishments. They own them and they furnish the capital
to run them, but they hire others to manage them and to do
the work. The men who work in these establishments are not
cooperators, but receive wages and salaries precisely as they
would if the establishments were owned by private individuals.



COMPETITION 45

Two fields for business competition. There is a fundamental
reason why cooperative enterprises have not flourished in the
field of production as often as they have in the field of buy-
ing and selling. This reason is found in the two kinds of
business competition, competitive production and competitive
bargaining. Competitive production always works well ; com-
petitive bargaining sometimes works well and sometimes works
badly. Since competitive production always works well, the
need for cooperative production is never sufficient to justify its
existence. No one has a sufficiently strong motive to induce
him to give his time and energy to the running of a coop-
erative society in the field of production. Since there are
no evils connected with competitive production, there is not
enough to be gained by cooperative production to lead anyone
to sacrifice his time and effort in order to make it succeed.

In the field of competitive bargaining, however, evils fre-
quently spring up. Where a small and compact body of
dealers are buying from a large and widely scattered body of
producers, the latter are at a great disadvantage in the bar-
gaining process. Where this is the case it is necessary for
the producers to get together in a cooperative organization in
order to bargain on equal terms with the dealers. Where there
is such a need as this, someone will have a motive that is
sufficiently strong to induce him to give his time and atten-
tion, to sit up nights, to labor in season and out of season,
to keep the cooperative society together and make it succeed.
Without some such motive as this, cooperation has seldom
or never succeeded.

Competitive consumption. There is another kind of com-
petition which always works badly. It is even worse than
competitive bargaining. It may be called competitive con-
sumption. By competitive consumption is meant a rivalry in
display, in ostentation, in the effort to outshine or to outdress
all one's neighbors, or at least not to be outshone or out-
dressed by them. This is not business competition, however,



46 PRINCIPLES OF POLITICAL ECONOMY

though it can be called a kind of economic competition.
Seeing that this is the worst form of competition, a kind
which always works badly, it would follow that the best kind
of cooperation would be a kind which would stop this process
of conspicuous waste and display. A few religious sects have
undertaken to do something in this direction, but they have
not been very popular. Vanity is apparently an even stronger
motive than greed itself. It is greed which leads to the worst
evils of competitive bargaining ; it is vanity which leads to the
worst evils of competitive consumption.

From what has been said it will appear that economic com-
petition is not synonymous with the productive methods of
struggling for existence as outlined in the beginning of this
chapter. There is such a thing, it is true, as competitive pro-
duction, but competitive bargaining is partly persuasive and
partly deceptive. It is persuasive when it takes the form of
clever advertising, of expert salesmanship, or of shrewd and
reasonably honest bargaining ; it is deceptive when cleverness
in advertising takes the form of artistic lying (of overstating
the merits of an article advertised), or when expert salesman-
ship takes the same form. Competitive consumption has no
productive features about it. The effort to keep up appear-
ances, to dress better than one can afford, to spend money for
purposes of display, are all deceptive, besides being wasteful
and to that extent destructive. These, however, are among
the more refined and less repulsive forms of destruction. For
this reason, perhaps, neither law nor public sentiment has
condemned them very definitely as yet.

In what fields cooperation may succeed. They who are
interested in promoting cooperation should bear all this in
mind. It is a waste of time and energy to try to substitute
cooperation for competition in all cases. In the first place, it
cannot be done, because, so long as people prefer themselves
and those who are near them to others who are farther from
them, competition in some form will exist. In the second



COMPETITION 47

place, even if cooperation could be substituted for competition,
it would be undesirable in many cases, though desirable in
others ; that is to say, there are some cases in which competi-
tion works so well that cooperation could not improve upon it.
To be more specific, competitive production, as stated before,
always works well. No one has yet succeeded in making coop-
eration in production, either on a large scale or on a small scale,
work successfully for a long period of time. This is not saying
that producers may not occasionally cooperate, as when farmers
help one another in special lines of work. In our rural com-
munities, especially in previous generations, there were many
barn raisings, log rollings, corn huskings, and other examples
of genuine and beneficial cooperation. But these events were
only incidents in a kind of life which remained, in spite of
them, predominantly competitive. Even competitive bargaining
sometimes works well. Where this is the case, nothing is to
be gained by cooperation, and it is therefore certain to fail,
because the cooperators will sooner or later lose their enthu-
siasm, when they see that they are not gaining anything by it,
that is, when they see that it is not working any better than
competition. The would-be cooperators should choose for their
field of effort some situation where competitive bargaining is
working badly. There they will have a chance of success.
But no cooperative scheme runs itself. Even where there is
a distinct and undoubted need for it, it will succeed only
when some capable person gives a great deal of time and
study and hard work to it.

Compulsion versus voluntary agreement. With an unerring
instinct for economic falsehood a certain class of writers have
persistently obscured this question of cooperation versus com-
petition by confusing it with working under compulsion ver-
sus working under freedom of contract. The Panama Canal
was not built cooperatively. The government of the United
States decided to hire others to do it instead of bargaining
with contractors. They who did the work did not cooperate,



48 PRINCIPLES OF POLITICAL ECONOMY

any more than the men who build our railroads and factories
or work on our streets. If a large number of farmers unite
to run a creamery or a shoe factory of their own, but do
not work in it themselves, they sometimes call it a coopera-
tive creamery or shoe factory. In reality it is only quasi coop-
erative. The people who do the work in the factory are
hired and have no more to say about the management than
they would have if the factory were owned by an ordinary
joint-stock corporation. A cooperative shoe factory, of the
class which we are now discussing, is merely an organization
formed for the purpose of bargaining for its shoes more suc-
cessfully than it could otherwise do. It finds that it can bar-
gain directly with workingmen, tanneries, and others to better
advantage than it can bargain with private owners of shoe
factories. That is the way in which the Panama Canal was
built. It was found that the government could bargain more
successfully with the engineers, directors, and workingmen than
with private contractors. It was as if a private citizen who
was about to build a house should decide to hire his own
workmen and foremen instead of bargaining with a contractor.

It is particularly erroneous to speak of an army as though
it were a cooperative body. It works under authority and
compulsion rather than under a system of free contracting.
Soldiers do whatever they are commanded to do and not what-
ever they see fit to bargain to do. Experience has shown that
armies can succeed in no other way. It has also shown that
industry can succeed on the basis of free contract, under which
no one does anything until he sees fit to contract to do so.
A little military experience will thoroughly convince our people
that the distinction between compulsion and freedom is not the
same as the distinction between cooperation and competition.

Cooperation in setting standards of consumption. There is
always an acute need for a kind of cooperation that can stop
competitive consumption. Unfortunately that need is hot very
widely understood. One reason why it costs us so much to



COMPETITION 49

live is that we are everlastingly trying to keep up with some-
one else. " It takes all my income," said a certain congressman,
"to keep up with my fool neighbors." He was expressing
in this picturesque manner one of the profound facts of our
economic life. 1 The things which cost us so much money are
not the things which we prize for their own sakes, but the
things which we feel that we must have because our neighbors
have them. We are, each of us, trying to live up to a stand-
ard set by someone else. Rich and poor alike are afflicted by
the same disease. The rich are doubtless more to blame than
the poor, but the poor cannot escape all blame. If they would
try to live rationally, and not try to keep pace with someone
else a little richer than themselves, they would not find it so
hard to make both ends meet. A little cooperation among
themselves, in the way of setting their own standards of dress
and fashion, would be a great help. If, likewise, the well-to-do
would not try to imitate those still richer, they could be saved
much worry and vexation of spirit. The individual finds him-
self almost helpless. " As well be out of the world as out of
style " is a saying which pretty well sums up the situation, so
far as the individual is concerned. But a large group of people
who would cooperate in the work of setting their own styles
need not be either out of style or out of the world. Educated
people who see the principle involved should take the lead.
In so doing they would not only be doing themselves a favor,
but they would be conferring a priceless benefit upon the
whole nation.

1 Compare also Mr. Irving Bacheller's book entitled " Keeping up with
Lizzie."



CHAPTER V
LAW AND GOVERNMENT

The need for law. Law and government have a most im-
portant part to perform in promoting the prosperity of the
people. Bagehot 1 has said that the first great need of primi-



Online LibraryThomas Nixon CarverPrinciples of political economy → online text (page 4 of 48)