The essence of the industrial Revolution is the substitution of competition for the medieval regulations which had previously controlled the production and distribution of wealth.On this account it.IS not only one of the most important facts of English history,but Europe owes to it the growth of two great systems of thought -Economic Science,and its antithesis,Socialism.The development of Economic Science in England has four chief landmarks,each connected with the name of one of the four great English economists.The first is the publication of Adam Smith's Wealth of Nations in 1776,in which he investigated the causes of wealth and aimed at the substitution of industrial freedom for a system of restriction.The production of wealth,not the welfare of man,was what Adam Smith had primarily before his mind's eye;in his own words,'the great object of the Political Economy of every country is to increase the riches and power of that country.'His great book appeared on the eve of the industrial Revolution.A second stage in the growth of the science is marked by Malthus's Essay on Population,published in 1798,which may be considered the product of that revolution,then already in full swing.Adam Smith had concentrated all his attention on a large production;Malthus directed his inquiries,not to the causes of wealth but to the causes of poverty,and found them in his theory of population.A third stage is marked by Ricardo's Principles of Political Economy and Taxation,which appeared in 1817,and in which Ricardo sought to ascertain the laws of the distribution of wealth.Adam Smith had shown how wealth could be produced under a system of industrial freedom,Ricardo showed how wealth is distributed under such a system,a problem which could not have occurred to any one before his time.
The fourth stage is marked by John Stuart Mill's Principles of Political Economy,published in 1848.Mill himself asserted that 'the chief merit of his treatise'was the distinction drawn between the laws of production and those of distribution,and the problem he tried to solve was,how wealth ought to be distributed.A great advance was made by Mill's attempt to show what was and what was not inevitable under a system of free competition.In it we see the influence which the rival system of Socialism was already beginning to exercise upon the economists.
The whole spirit of Mill's book is quite different from that of any economic works which had up to his time been written in England.Though a re-statement of Ricardo's system,it contained the admission that the distribution of wealth is the result of 'particular social arrangements,'and it recognised that competition alone is not a satisfactory basis of society.
Competition,heralded by Adam Smith,and taken for granted by Ricardo and Mill,is still the dominant idea of our time;though since the publication of the Origin of Species,we hear more of it under the name of the 'struggle for existence.'I wish here to notice the fallacies involved in the current arguments on this subject.In the first place it is assumed that all competition is a competition for existence.This is not true.There is a great difference between a struggle for mere existence and a struggle for a particular kind of existence.For instance,twelve men are struggling for employment in a trade where there is only room for eight;four are driven out of that trade,but they are not trampled out of existence.A good deal of competition merely decides what kind of work a man is to do;though of course when a man can only do one kind of work,it may easily become a struggle for bare life.It is next assumed that this struggle for existence is a law of nature,and that therefore all human interference with it is wrong.To that I answer that the whole meaning of civilisation is interference with this brute struggle.
We intend to modify the violence of the fight,and to prevent the weak being trampled under foot.
Competition,no doubt,has its uses.Without competition no progress would be possible,for progress comes chiefly from without;it is external pressure which forces men to exert themselves.Socialists,however,maintain that this advantage is gained at the expense of an enormous waste of human life and labour,which might be avoided by regulation.But here we must distinguish between competition in production and competition in distribution,a difference recognised in modern legislation,which has widened the sphere of contract in the one direction,while it has narrowed it in the other.For the struggle of men to outvie one another in production is beneficial to the community;their struggle over the division of the joint produce is not.The stronger side will dictate its own terms;and as a matter of fact,in the early days of competition the capitalists used all their power to oppress the labourers,and drove down wages to starvation point.This kind of competition has to be checked;there is no historical instance of its having lasted long without being modified either by combination or legislation,or both.In England both remedies are in operation,the former through Trades Unions,the latter through factory legislation.In the past other remedies were applied.It is this desire to prevent the evils of competition that affords the true explanation of the fixing of wages by Justices of the Peace,which seemed to Ricardo a remnant of the old system of tyranny in the interests of the strong.
