We are, indeed, “fooling” with natural laws, and we can do so only at our peril. The law of competition and the law of co-operation or combination are what they have often been called, the centripetal and centrifugal forces of social economics. Competition is often a painful but really a merciful process; it weeds out the useless and the inefficient; selects unerringly its business leaders; destroys, but where it destroys builds up; rescues from the mass the individuals and processes most fitted to survive, and out of chaos brings order. It replaces obsolete with more perfect organization, and where such organization becomes unwieldy it replaces organization with individuals, reverting to the earlier type of industry. Thus the country store is succeeded by the store in which is sold but one line of goods, and this is succeeded by the mammoth type of country store, the great city’s department store; and the development of the last named type seems again to revert to the second—viz., a congeries of stores in which each is distinct from the other, each attaining a reputation for competitive excellence in one line of goods, thus illustrating in the retail trade the interplay of the forces of competition and combination.
Just as there is a limit fixed to the bounds of competition, so there is a limit to the bounds of combination. The maximum of combination and the maximum of efficiency are not the same. There is a point in the progress of combination beyond which it does not, or would not naturally advance—and that is when it reaches the maximum of efficiency. It seems very likely that the element of monopoly in society today forces combination far beyond the point of the most efficient co-operation.
These natural laws may not be “regulated.” Such laws are not for regulation, but for obedience. We may impede, we may interrupt their operation, but only to our injury. The most we can do is to regulate our institution by these laws, as we trim a sail to the wind and tides; we do not attempt to “regulate” wind and tides; and these laws of co-operation and competition are of the same order—natural laws which to disobey is to be destroyed.
We hear much superficial talk about “the wastes of competition.” The Socialists play into the hands of the trust apologists who defend them on the ground that competition leads to waste. Beyond the fact that competition has never yet been fully tried, that it has never yet been wholly free, and that such waste as it entails is inseparable from the natural process which weeds out the incompetent, the antedated and the unskilled—a process of which the waste is but incidental to the conservation—is that these combinations do not seek primarily to escape the waste of competition so much as to avail themselves of those artificial laws which prevent competition from doing its perfect work.
The term expressing the opposite of competition is not combination, but monopoly. Professor Jenks, in his work, “The Trust Problem,” falls into this error when he speaks of combinations in the retail trade as overcoming the “friction” of competition, instancing associations of hardware dealers, druggists, etc. Here, he says, we have an element of combination from which he assumes the element of competition has been eliminated. But his error is in the analogy he seeks to establish between such agreements from which the element of competition cannot be expelled, and agreements which are based upon the control of some special privilege created by law, and of which the great railroad and industrial trusts are examples, and which people have in mind when they talk of the “trust problem.”
Clearly no monopoly exists nor can be made to exist in the retail trade. Agreements may be made, but they will be broken; and the fact that they can be broken by isolated individuals who can thus separate themselves from the combination, and by their separation cause it to dissolve, is proof that the monopoly element does not exist. For the monopoly element in the possession of the great trusts is the potent weapon with which the combinations can compel the recalcitrant member to return, or beat him into starvation. From mere agreements in the retail trade, such as Professor Jenks instances, the primary element of monopoly being absent, desertions are fatal, and for this reason such combinations are never effective as means for extortion, though they do often arrest the sacrifices of keenly competing retailers. And the illicit intrusion of such examples is a favorite trick of the trust apologist, who, when the evils of the trust are pointed out, grows righteously indignant over the right of men to combine—which nobody seriously disputes—or points out with superfluous wealth of illustration how combination effects the cheapening of production—which nobody ever really denies. For the same reason labor unions cannot be considered as effective monopolies—though the trust apologist does not forget them in his special pleas—for the reason that they possess no effective legal privilege.
But to avoid a possible misunderstanding let us now answer a query which may have risen in the mind of the reader. Is competition or combination the beneficent law of industry? Both; for one is the complement of the other. They exist together, and together they effect the industrial progress of the world. But monopoly is the negation of both, since further combination or co-operation is no longer possible where monopoly is complete. And where there is competition there will be combination, healthy, rational, continuous, and competition will determine its development and direction. The defense of the trust based upon the economic benefits resulting from the elimination of the unskilled is a defense of the principle of combination present under free competition, and is in no sense a defense of monopoly of which what we know as the “trust” is the manifestation. Such discussion, together with much talk of the wastes of competition, which helps to swell so many pretentious works on the trust problem, is so much irrelevant “padding.”
That the trusts avail themselves of all possible economies in production has often been urged in their defense. Certainly such economies are not needed to secure a monopoly in possession, nor does it seem that the greatest incentives to their adoption are present. The sacrifice of inventions rather than their use by these great monopolies is proof that they do much to prevent such economies. A monopoly can be induced to accept only with difficulty improved devices which under the spur of competition it would gladly avail itself of. Thus in the Post-Office, which is a monopoly, though a Government monopoly, improvements are introduced only with the greatest difficulty.
If combination can of itself effect monopoly, why are huge sums set aside by these great corporations to influence legislation? Why are contributions made to the campaign funds of the two great parties? Is it not because these combinations seek to perpetuate their monopolistic privileges? It may be said that it is contributed to effect the defeat of “strike bills.” But what would a business partnership, not in some way dependent upon previously existing legislation, care about “strike bills”? Why does the American Sugar Refining Company (according to the testimony of Mr. Havemeyer) contribute in some states to the Republican campaign fund, and in other states to the Democratic campaign fund?
As an example of the kind of defense urged by the trust apologists here is a work entitled, “The Trust; Its Book,” containing articles from the pens of Charles R. Flint, James J. Hill, S. C. T. Dodd, Francis B. Thurber, and others. It is a plea of “confession and avoidance.” The authors fight shy of even the hated term monopoly, and content themselves with defending the right of combination. Not one of them appears to think that the popular outcry against trusts is founded on anything but utter ignorance; and they therefore devote themselves to showing the advantages of large scale production—as if that were the question. All this seems purely disingenuous. It is hardly conceivable that men who know so well the effects of monopoly, who know how potent has been the use by combination of existing laws securing the possession of special privileges, should write this way from any other motive than to becloud the issue. We can acquit them of intentional deception far less readily than the professors of political economy. The latter may be at once exonerated, since it is incredible that men who have become involved in the self-created subtleties of modern economics should retain sufficient clearness of comprehension to see anything in its proper relation.