Competition is defined as “the act of seeking or endeavoring to gain what another is endeavoring to gain at the same time.” But competition in modern industrial life is not merely a struggle to appropriate an existing good. The very contest, as over the control of a market, may and probably will lead to cheaper and larger production, and thus to the benefit of society. Competition is a selective process in our modern economic society, and through it we have the survival of the fittest. “Competition,” so runs the proverb, “is the soul of trade.” There is, to be sure, a dark side to the picture, for economic competition involves the defeat of the weaker party, but this does not necessarily mean his destruction, for his very
failure may sharpen his faculties and secure his ultimate success, or at worst he may find employment under his successful rival. But here again it is being urged that competition is brutal and that we should go back to the mediaeval method of regulation by custom, or resort to combination and monopoly. We are now witnessing experiments in both directions, but competition still remains the controlling force of modern economic society, and bids fair to continue so. It should however be the function of society to raise the ethical level of competition.
Industrial liberty has been developed even more slowly and painfully than the institution of private property, and has in some instances not yet been wholly won. Slavery and serfdom have given way before the higher and more beneficent conception of freedom or liberty. We believe today that a man generally knows what is best for him and will utilize his opportunities to the best advantage; that by giving him a maximum of freedom the welfare of society will at the same time be best promoted. Consequently, in our modern industrial society, a man is given not only social and religious liberty, but is free to move, to choose his occupation, to produce and to trade, to associate with his fellows, and to expend his income as he will. But here again, while the prevailing rule is liberty, society has found it necessary to lay restrictions upon the abuse of this liberty. It is not enough even to regard the industrial world as a great game in which each may act as he pleases provided only he observes the rules of the game. A higher conception of responsibility and duty must accompany freedom of action if we are to secure the best results.
The term “industrial society” has already been frequently used and needs a somewhat fuller explanation. About the year 1760 there took place in England what is usually called the Industrial Revolution. A number of inventions were made which rendered
it possible to use steam-driven machinery in the manufacture, first of textile and then of other goods. Manufactures were removed from the home, where they had hitherto been carried on, to the factory. Capital began to be used in large masses, machinery displaced hand tools, and the laborer ceased to own the implements with which he worked. Men, machines, and capital were massed in the factory and organized under the management of a new set of industrial organizers for the purpose of producing goods for a world market. The development of such an industrial society has been attended by the minute division of labor, by a growing separation of classes, by concentration of the population in urban centers, by the increasing cost and complexity of machinery, by the development of improved methods of transportation and of credit, by the combination of labor and of capital, by the enormous increase of production, and by the growing concentration of wealth.
The introduction of power manufacture completely revolutionized industry. The independent workman with his own tools was superseded by the factory, the small producer has given way in turn to the trust. With the introduction of expensive machinery it became necessary to organize capital on a large scale. Corporations with limited liability were organized for the manufacture of goods, the exploitation of mines, the building of railroads, and the carrying on of trade. As methods of production improved industry became more and more concentrated, and finally huge trusts took over the operation of combined plants. The business unit has grown increasingly larger, and the need and power of capital have become increasingly important. Capital has played a role of growing significance and has become more and more powerful in modern economic life. Indeed the name “capitalistic production” has been applied to modern industry because of the predominant importance of capital in all lines of
wealth production. Impersonal, growing by sheer force of its own momentum, capital is often thought of as intensely selfish and even cruel. Abuses which have arisen in the development of modern capitalistic industry must be remedied, but attacks upon capital itself are misguided and rest upon a mistaken analysis of methods of production.
Before the introduction of the factory system, under the so-called “domestic” system of industry, the laborer carried on his work in his own home, where he provided the raw material, owned his own tools, furnished the motive power—his muscles—and was his own master. Today every one of these conditions is changed—the work is carried on in the factory, the raw material, the tools, the motive power are all provided by the capitalist, the laborer contributing only his own more or less skilled labor, while the conditions under which he carries on his work are largely determined for him. He is no longer his own master. To protect himself against the growing power of capital the worker has organized with his fellows into trade unions. These seek to meet the monopolistic power of capital by exerting a monopolistic control over labor. While they realize that modern productive processes cannot be carried on without capital, they also insist that labor is equally essential. They claim that capital has received more than its fair share of their joint production and has exploited labor; consequently they insist that labor must now demand its just reward and enforce the claim by strikes and by raising wages. To enforce their monopoly, the policy of the closed shop is often enforced. The interests of capital and labor have thus often been made to appear antagonistic instead of complementary to one another. Frequently in their struggles the interests of the consumer have been entirely lost sight of.
These conflicts in the productive processes of modern economic society have led many people to look to the state
as the regulator of industry and to invoke state aid or state interference along many lines. Maladjustments in the labor contract, mistaken production, leading perhaps to speculation and financial panics, abuses of power by corporate interests, discriminations by railroads, and similar irregularities are made the excuse for an appeal to state authority. Some would even go so far as to have the state take over and manage all productive enterprises; but socialism is as yet a protest rather than a constructive force. In the last analysis the state is the regulator of all industrial undertakings, for they all concern society. The state must hold the balance even and see that fair play is given to all groups and all classes; but the greatest amount of freedom compatible with economic justice must be sought for. It is a difficult question how far the state must interfere in the conduct or management of industrial enterprises in order to secure social justice. There is a decided tendency at present to a strengthening of the regulative power of the state for the protection of the weaker classes of society. And yet on the whole the institution of private property, free competition, and a maximum of individual liberty remain the fundamental conditions of our economic life.