VIII. The Blessing of Competition

CHAPTER VIII THE BLESSING OF COMPETITION WHAT is work? Why do we do it? Do we work because we like it or because we have to? Are we working for ourselves or for others? Is our real interest in our work or in the work. of others who work for us? When the Government offers us a policy to promote employment, is it because we really want employment or because we want to qualify for a share in the product of the work of others? We have as a people developed a political mind which is about as far removed as anything can be from what is practical and feasible in the everyday work of life. Thus, when a workman has a wife and five children, we argue about the cost of living. We never mention his work; we never ask if it is good work. We are not interested to know whether it could be better done or what is the opinion of the consumer for whom it is done. We. do not even consider whether.the work is worth doing at all. We merely repeat the cost-of-living figure, and think of the five children. We as a people approach the industrial problem in the attitude of mind which would be appropriate .to a Board of Guardians, but which is simply destructive when applied to the problem of industry as a whole.

It would seem to be necessary to retrace our steps and to get back to the study of simple economics. I have already stated the old-fashioned object, as defined by Adam Smith, of " providing a plenti ful subsistence for the people," and we must think 91 92 The Return to Laisser Faire not first of what the people want, but first of what there is for them to have. - Secondly, how that which exists can be increased, and, thirdly, and only thirdly and lastly, of how this subsistence, plentiful or scarce as the case may be, can be made to satisfy the people's wants. To think in any other order must lead to disaster, and we are certainly thinking in the wrong order to-day. Our habit is, first to want something and then proceed to denounce, if not indeed to fight, the first convenient person or in stitution for failing to supply that want, without bothering to inquire whether the said person or insti tution has any sort of responsibility for the want or the absence of the means of supplying it, or any sort of power to solve the problem.

A perfect illustration of the political method, an illustration that. is perhaps the more perfect because the politicians are not directly concerned, is to be found in the recent history of rubber and cotton. The rubber people, each of them presumably hav ing a wife and five children, find that the price of rubber is inconveniently low to satisfy what they regard as their proper requirements. They there fore contrive, with the assistance of the Government in the Straits Settlements and our own Colonial Office, a scheme for the limitation of the output of rubber. This scheme works so satisfactorily as to cause the price of rubber in America to be doubled. The Americans, each of them having a wife and five children and thinking only of the cost of living, determine that something mus~ be done to def.eat the price of rubber and proceed to limit the output of The Blessing of Competition 93 cotton, in order to make its price proportionate to the rubber price.

This scheme, if successful, will reduce the amount of cotton available for the rest of us. That plan in its turn incommodes the cotton manufac turers of Lancashire, who, in the same way infected with the political mind, are each thinking of the cost of living and the wives and children. And so Mr. J. Maynard Keynes, the latest of the prophets of the new gospel of organisation, goes to Lancashire and devises a scheme for the limitation of the output of manufactured cotton. If this plan were to succeed, the rest of us would have to make one shirt do the work of two. Mr. Keynes, or one of his school, will then proceed to organise a scheme for the limitation of the output of laundry-work, which in its turn will involve the closing of some of the soap factories. So we shall have an ever-increasing number of organisations with ever-more complicated rules and regulations. We shall acquire more and more skill in the art of negativism and have an ever diminishing quantity of things to eat and wear and use.

The rubber folly is mercifully coming to an end, and it is much to be hoped that its lesson will be widely and seriously studied. A few years of the Collectivist folly in this field alone has not, it is true, ruined society, but it has robbed us of immense blessings that might by now have been ours. Future generations will have all their floors, if not their streets, covered with rubber, but only when compe tition once more gets going in this market. Mean94 The Return to Laisser Faire while the English share of the rubber trade of the world has been reduced from 75 per cent. to 50 per cent., and a few people, conspirators against com petition, have become wealthy, while everyone of the rest of us is definitely poorer. Hence I argue that we must start again to think of economics and trade and industry in simple, ele mentary and fundamental terms. I maintain that competition is a blessing and not a curse.

There is no subject upon, which the politician waxes more eloquent, or through which he appeals more successfully to that sloppy sentimentalism which bids fair to ruin us, than the subject of com petition. vVe are invited to believe that competition is a cruel and a wicked thing, and when we reach the political peroration and hear about "every man for himself and the Devil take the hindmost," our enthusiasm reaches its height. We applaud, vote and create new committees, and feel that we are really getting on with the new world. Is this really so?' If the eloquence that is applied to misrepresent ing the character of competition were applied to the corresponding and analagous force of gravity, I do not doubt that the same ignorant enthusiasm could in time be developed on behalf of an effort to abolish that also. The cruelty of the physical force of gravity is far worse than the supposed cruelty of the economic force of competition. From the cradle to the grave gravity threatens us with destruc tion.

Poets and writers could do far better with gravity The Blessing 01 Competition 9S than they can do with competition. It is directly opposed to the whole of the inspiration of upward and onward thought. All the emotions surrounding the thought of " Excelsior" are damped down by this horrid thing which the physicists identify for our destruction, and which is known as gravity. This analogy may sound frivolous, but the most super ficial examination will show that it is nothing of the kind. Competition does cause inconveniences, but so does gravity, and just as the physical world is held together by this force, which im poses odd inconveniences, so the economic world is absolutely dependent upon the force of competi tion. The moder~ habit of objection to competition arises from the modern political· folly of thinking of only one side oftrade and industry. We insist upon concentrating the whole of our attention upon the maker of an article, and forget altogether the other person or persons whose need of the article is the only excuse for the making of it or for the existence of the maker. Without competition no market would ever have come into being, and if the attempt to eliminate competition succeeded every market would wither and disappear. We should thus drift into forgetting one need after another . We should live simpler and harder and shorter lives, and generation by generation we should retrace our steps to barbarism and to Eden, all the time steadily reducing our numbers until eventually we all dis appeared.

We must organise, we must amalgamate, but on 96 The Return to Laisser Faire no account, say the Collectivists, must we compete. This unreasoning passion for organisation has, with in the last few years, shovelled money into the pockets of the company promoters, and turned the " bucket "shop into a gold mine. But apart from that little bit of wealth-making on behalf of bucket shop proprietors, this anti-competition notion is a devastating notion which robs humanity in the most disastrous way. We have succeeded in producing a state of affairs in which two men are able to occupy a position the work of which could very well be done byone. If we consider all those absurd federations with which we are afflicted, we find employers, mer chants and manufacturers engaged in similar iniquity, restricting and restraining, striving to get wealth out of scarcity and plundering the rest of us after the fashion in which we have been dealt with in regard to rubber during the past few years. So firmly has this obsession got hold of the public mind that to-day, when we discover that it is possible to send messages by beam wireless, a commission is immediately set up to safeguard the cable com panies from injury, and to see whether we may be permitted to enjoy the newly-found facilities of communication without damaging the interests of the old-fashioned cable. It would appear to be of much more importance, judging from these activi ties, that the cable companies should suffer no harm than that cheap means of communication should be made available to the public.

The Blessing of Competition 97 This nonsense about competition arises from the fact that we are thinking all the time of the producer and never of the consumer. The value of competi tion as a market maker is ignored; yet it is to com: petition that we owe every material amenity we pos sess. We have allowed public opinion on this question to become very seriously one-sided. In our endeavour to get rid of all that is meant by " wage slavery" we are forging chains of slavery for ourselves as consumers. But we are all of us much more directly interested in the economic posi tion as consumers than as producers. We have got away from that Victorian basis when we were producing wealth at a rate not only un precedented in history but, having regard to the limited facilities at our disposal, altogether extra ordinary. We are faced with two alternatives. Either we must stand in the market place to be hired as pro ducers, or stand in the queue to be rationed as con sumers. By our preference in the past for the market-place we have produced an ever-increasing quantity of wealth for the benefit of the community as a whole. We have yet to be sure that the system under which we stand in the queue to be rationed will produce anything wherewith to support us.

The tendency is for less and less to be pro duced. That leads me further back still to another old Victorian thought, a thought which was never ques tioned fifty years ago, but is very seriously ques tioned to-day. " The buyer settles the price, an 7 98 The Return to Laisser Faire article is worth what it will fetch, no more, no less." That seems to me to be a truth which wants preaching day and night, in season and out of season, a truth from which we are in vain trying to escape. I am perfectly well aware that a superficial view may not reveal this truth. When I, as a publisher, for instance, produce a novel and put 7s. 6d. on the cover, it looks as if 1 were fixing the price of the novel at 7s. 6d. In one way I am doing so. But if anyone thinks that is the whole truth he should visit my warehouse and store-rooms and see the tons of 75. 6d. novels for which no buyer will offer any price. That is the melancholy fate of many novels published to-day.

If we accept the theory that the buyer rules the price, we will see that it explodes the ideas under lying most arrangements of the trade unions and of federations and combines of all kinds. It throws a vivid light on that modern abuse-the costing sys tem. Karl Marx said that the price ofa commodity is equal to the cost plus the profit. He was, of course, profoundly wrong-yet we have in this country alone thousands of worthy people, who would put their hands on their hearts and swear they would never have anything to do with Socialism and Communism, actually accepting the false definition of Karl Marx. One result of the present situation is the frightful abuse of the science of cost accountancy. There never was so bad a case of a blessing turned into evil. Cost accountancy properly used-used as .a The Blessing of Competition 99 means of discovering economy-· is a great blessing. Cost accountancy as commonly used to-day, to try in accordance with the Marxian formu)a to justify prices that no market will pay, is an abuse and a scandal. We used to talk of a willing buyer and a willing seller. A business transaction used to be tested by the simple formula: "Was it associated with a willing buyer and a willing seller? " We have long since passed the time when there was a willing buyer, and we have nearly obliterated the willing seller.

The philologists will have presently to note a very significant change that has crept over the meaning of the word "authority." This may be due to the copious use of the word in the 2,500 Acts of Parlia ment which have endeavoured to regulate and to curtail industrial matters in the first quarter alone of the twentieth century. Every other clause in these precious documents sets out how some " authority" shall "do" something. It may be an Imperial Minister, or it may be a minor local authority, but it is always an " authority." Our every action has to be framed to ideas laid down by something which is called the" authority." It is really humorous to consider how the clerks in a parish council office, busy entering the wrong num bers in bad writing on some official form, are spoken of with awe and respect as "authorities." The practical builder, who spends his life acquiring a knowledge of the intricacies and technicalities of his trade, is, when mentioned by the rest of us, de scribed in terms which imply a certain amount of 100 The Return to Laisser Faire derogation and contempt as a "trader," or, worse still, as a "private trader," or perhaps a "profiteer." But the 'second cousin of the Mayor, who, having failed to get into any useful or produc tive employment, is jobbefd into a clerkship in the office of the borough surveyor, is dignified with the title of "the authority." If this same clerk, with his forms and licences, honours a building job with his presence, having travelled there in a municipal motor-car, the builder and the architect and the practical workers have to stand aside, almost remove their hats, and adopt an attitude of subservience to " the authority."

This illustration could be multiplied a thousand fold. "The relative positions of the householder who pays for the telephone and the young lady in the exchange on the permanent staff of the telephone " authority," will not bear a moment's serious economic consideration. When competition is eliminated real service disappears. We must begin again to understand that authority is always a negative thing. It can say" don't," but it can never say" do." It is, for instance, possible for the police constable to make quite sure that Charlie Chaplin does not make a film, but it is not possible for a constable or even a sergeant to make sure that he does. Imperial Parliament can sup press a trade and, as in the case of the drug traffic, it is sometimes advisable to do so. But Imperial Parliament cannot, in any conceivable circum stances, create or promote trade as a whole. There The Blessing 01 Competition IOI is not and never can be the slightest exception to this rule.

It is, of course, perfectly true that by prohibiting the import of bananas, Parliament can make it com mercially possible togrdw bananas in greenhouses in Birmingham, and the one or two people who would be so employed may, in the narrowness of their vision, form the impression that Parliament has created a trade for them; but they forget that the Government of Jamaica is likely to retaliate by pro hibiting the ilnport of the articles which previously paid for the bananas. They also forget that whether or not this happens, a banana does not take Acts of Parliament into consideration in deciding where it can grow, and that in limiting its choice of a nursery in this way, its quantity and its productivity are limited. The supply is diminished, its price en hanced, and the banana trade as a whole, considered as a service to the people of the world as a whole, is crippled, and the subsistence of the people as a whole to that extent reduced.

But authority in these days extends very much further down than Parliaments. We have myriads of authorities, all suppressing competition and indi viduality, from the Prime Minister to the secretary of the smallest trade union branch, everyone of them, in so far as they exercise their authority in the realm of production, working to restrain output, re strict exchange, limit supply, and reduce the quan tity of goods or services at the disposal of the rest of us. The irony of the situation lies in the fact that these restraints are generally imposed with the 102 The Return to Laisser Faire ostensible object of removing poverty. They always, however, create more poverty than they cure, and the combined effect of all of them is to so reduce our capacity for wealth production as to accelerate the impoverishment of all.