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CHAPTER 2.: Restraints on Free Competition - Herbert Spencer, The Principles of Ethics, vol. 2 
The Principles of Ethics, introduction by Tibor R. Machan (Indianapolis: LibertyClassics, 1978). Vol. 2.
Part of: The Principles of Ethics, 2 vols.
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Restraints on Free Competition
395. Beyond those limits to the actions of individuals which it is the business of the state to maintain, individuals have to impose on themselves further limits, prompted by sympathetic consideration for their struggling fellow citizens. For the battle of life as carried on by competition, even within the bounds set by law, may have a mercilessness akin to the battle of life as carried on by violence. And each citizen, while in respect of this competition not to be restrained externally, ought to be restrained internally.
Among those who compete with one another in the same occupation, there must in all cases be some who are the more capable and a larger number who are the less capable. In strict equity the more capable are justified in taking full advantage of their greater capabilities; and where, beyond their own sustentation, they have to provide for the sustentation of their families, and the meeting of further claims, the sanction of strict equity suffices them. Usually, society immediately benefits by the putting out of their highest powers, and it also receives a future benefit by the efficient fostering of its best members and their offspring.
In such cases then–and they are the cases which the mass of society, constituted chiefly of manual workers, presents us with–justice needs to be but little qualified by beneficence.
396. This proposition is indeed denied, and the opposite proposition affirmed, by hosts of workers in our own day. Among the trade unionists, and among leading socialists, as also among those of the rank and file, there is now the conviction, expressed in a way implying indignant repudiation of any other conviction, that the individual worker has no right to inconvenience his brother worker by subjecting him to any stress of competition. A man who undertakes to do work by the piece at lower rates than would else be paid, and is enabled by diligence long continued to earn a sum nearly double that which he would have received as wages, is condemned as “unprincipled”! It is actually held that he has no right thus to take advantage of his superior powers and his greater energy; even though he is prompted to do this by the responsibilities a large family entails, and by a desire to bring up his children well: so completely have the “advanced” among us inverted the old ideas of duty and merit.
Of course their argument is that the man who thus “out-does” his fellow workers, and gets more money than they do, displaces by so much the demand for the labor of those who would else have been employed; and they further argue that, by executing the work at a smaller cost to the employer, he tends to lower the rate of wages: both of them regarded by these neo-economists, now so vociferous, as unmixed evils.
With them, as with nearly all thinkers about social and political affairs, the proximate result is the sole thing considered. Work and wages are alone thought of, and there is no thought given to the quantity of products, the concomitant prices of products, and the welfare of the consumers. Laborers and artisans conceived only as interested in getting high wages, are never conceived as interested in having cheap commodities; and there appears to be no conception that gain in the first end may involve loss in the second. When enlarging on the hardships entailed on those who, by cheaper piecework, are deprived of dearer day work, they ignore as irrelevant the fact that the article produced at less cost can be sold at less price; and that all artisans and laborers, in their capacity of consumers, benefit to that extent. Further they forget that the workers displaced become, after a time, available for other kinds of production: so benefiting the community as a whole, including all other workers.
We have here, in fact, but a new form of the old protest against machinery always complained of by those immediately affected, as robbing them of their livelihoods. Whether through human machinery or the machinery made of wood and iron, every improvement achieves an economy and dispenses with labor previously necessary; and if that change in the human machinery constituted by adoption of piecework, and the gaining of larger earnings by greater application, is to be reprobated because of the displacement of labor implied, so also must be reprobated every mechanical appliance which from the beginning has facilitated production. He was an “unprincipled” man who substituted ploughs for spades, who replaced the distaff by the spinning jenny, who brought into use steam pumping engines in place of hand pumps, or who outran horses on roads by locomotives on railways. It matters not whether we contemplate the living agents of production or the dead implements they use; every more economical arrangement eventually lowers prices and benefits people at large. The so-called unprincipled man does good to humanity, though he inflicts temporary evils on a small number; which in fact, every improvement inevitably must.
But there remains to note the marvelous inversion of thought and sentiment implied by this socialistic trade-union idea. The man who is superior in ability or energy is thought “unprincipled” in taking advantage of his superiority; while it is not apparently thought “unprincipled” on the part of the inferior to obtain benefit by preventing the superior from benefiting himself. If in any occupation the majority. who are less able, insist that the minority, who are more able, shall not be paid higher wages than they are, and shall not discredit them by doing more or better work, it is undeniable that the majority, or less able, do this for their own advantage. Either by requiring that the more skilled and the less skilled shall be paid at equal rates, they ensure for themselves higher average wages than they would have were there discriminating payments, or else, by excluding the keener competition of the more skilled, they escape the pressure or strain which would otherwise be brought to bear on them; and in one or both of these ways the majority advantage themselves at the cost of the minority. Now if the word “unprincipled” is to be rationally applied, it is to be applied to the man who does this; for no high-principled man wishes to obtain a benefit by tying another's hands. If they are conscientious in the proper sense of the word, those who form the majority, or inferior, will never dream of requiring that the minority, or superior, shall diminish their earnings by not using their powers; and still less will they dream of trying to gain by such a course. Contrariwise, each among them, regretting though he may his relative inferiority. and wishing though he may that he had the powers of those few more favored by nature, will resolve to make the best of his smaller powers; and so far from asking to have given to him the benefits which the greater powers of others yield, he will insist that he shall have none of such benefits–will refuse point-blank to have any benefits beyond those which his nature brings him: content if the better endowed yield not material but moral benefits to the less happily constituted. This is the truly principled man, and the unprincipled man is the one who does the reverse.
And then the high-principled man, prompted to this course by a sense of equity, will be further thus prompted by a beneficent regard for the race. If he is adequately endowed with the human ability to “look before and after,” he will see that a society which takes for its maxim, “It shall be as well for you to be inferior as to be superior,” will inevitably degenerate and die away in long-drawn miseries.
397. But on passing from the working part of the industrial organization to the regulating part, we pass into a sphere in which a beneficent limitation of activity is sometimes called for. While the advantage which superiority gives to an artisan over his fellow artisans is relatively small, and may properly be appropriated without limit, the advantage which superiority gives to the director of many artisans over other such directors, may become very great; and it may, in the absence of a sympathetic self-restraint, be used by him to the ruin of his competitors. Such an one, so long as he does not break the law directly or indirectly, is commonly thought warranted in pushing his advantage to the extreme; but an undeveloped ethical consciousness is thus shown.
Not many years since there lived in New York a man named Stewart, who, carrying on a wholesale and retail business on a vast scale, acquired a colossal fortune. A common practice of his was suddenly to lower his prices for a certain class of goods to an unremunerative rate, seriously damaging, if nothing more, numerous small traders, and greatly hampering, if he did not ruin, sundry large ones. Another practice was to encourage and aid some manufacturer in apparently a friendly spirit, and then, when he was largely indebted, come down upon him for immediate payment; selling him up and often buying his stock when he could not at once pay.
Competitive warfare carried on in this style, might not unfitly be called commercial murder; and were its flagitiousness to be measured by the pain inflicted, it might be held worse than murder, originally so called: the amount of suffering eventually caused among the ruined men and their families, being greater than that which many an assassin visits on his victims and others.
Such utter lack of negative beneficence is to be condemned not only because of the intense evils thus directly inflicted, but is also to be condemned in the interests of society. as defrauding it of those advantages which competition, normally carried on, yields. For though, while competitors are being forced to sell at unremunerative prices, the public benefits; yet, after competitors have been thrust to the wall and a practical monopoly achieved, there comes a more than compensating rise of prices, by which the public suffers. In brief, the forms of competition are employed to destroy competition.
And then, as we shall see hereafter under another head, the transgressing trader himself, and his belongings, do in the long run suffer indirectly. They are led into a type of life lower than they might otherwise have led.
In its application to cases of this kind, the popular maxim “Live and let live” may, then, be accepted as embodying a truth. Anyone who, by command of great capital or superior business capacity, is enabled to beat others who carry on the same business, is enjoined by the principle of negative beneficence to restrain his business activities, when his own wants and those of his belongings have been abundantly fulfilled; so that others, occupied as he is, may fulfill their wants also, though in smaller measure.
398. What is to be said in this connection concerning competition among professional men–especially among doctors and lawyers?
An eminent physician who gives advice to all patients asking it, including patients who have left the physicians they previously consulted, cannot be blamed for doing this; even though he has already an amply sufficient income. For, supposing his reputation to be deserved, the implication is that, by giving the advice asked, he diminishes suffering and perhaps saves life; and this he cannot well refuse to do out of regard for competing physicians. It may rightly be held, too, that he is justified in raising his fees. Did he not by doing this diminish the number of his patients, two evils would happen. The swarm would become so great that no one would get proper attention; and his own health would speedily so greatly suffer that he would become incapacitated. But negative beneficence may properly require that he shall send to some of his brother physicians patients suffering from trivial maladies, or maladies concerning the treatment of which there can be no doubt.
On turning from the consulting room to the law court, we meet with cases in which professional competition needs restraining, not by negative beneficence only. but by justice. A system under which a barrister is prepaid for services he may or may not render, as it chances–a system under which another barrister in less repute is also retained, and feed to do the work for him should he fail to appear–a system which proceeds by quasi-contract which is closed on the side of the one who pays but not closed on the side of the one who works, is clearly a vicious system. But such restraints on the taking of cases by counsel, as would result either from regard for the equitable claims of clients or from consideration for competitors, is said to be impracticable. We are told that at the bar a man must either take all the business which comes to him or lose his business. Now this plea, though perpetually repeated, may reasonably be doubted until the assertion that such would be the result had been verified by the proof that such has been the result. It requires a large faith to believe that one whose conscientiousness determines him to take no more work than he can efficiently perform, or else, from regard for his fellows, refuses cases that they may have them, cannot do this without losing all his cases. For since one who thus limited the number of his clients would, as a matter of course, deny himself to those whose causes he thought bad, the mere fact of his appearance in any cause would become a preliminary assurance that it was a good cause–an assurance weighing much with a jury; and how, under such circumstances, implying increased anxieties to obtain his services, the demand for them should decrease beyond the degree he desired, it is difficult to see.
Clearly in this case, such negative beneficence as is implied by relinquishment of business that competitors may benefit, is a concomitant of that justice which demands that pay shall not be received unless services are rendered, and is a concomitant of that social benefit which results if good causes have good advocates. Moreover, it is a concomitant of that normal regard for self which forbids excess of work.
399. Yet another form of competition must be dealt with, though it is difficult to deal with it satisfactorily. I refer to the competition between one who has, by discovery or invention, facilitated some kind of production, and those who carry on such production in the old way.
Here, if he undersells competitors, he does so not, as in the cases instanced, to drive them out of the business; but he does so as a collateral result of giving a benefit to society. As already said (sec. 306), he has made a new conquest over nature, and giving, as he inevitably does, the greater part of the advantage to the community, he may rightly retain for himself something more than is obtained by carrying on production as before. Still there comes the question–How far shall he push his advantage? Should not negative beneficence restrain him from ruining his competitors by underselling them too much? But to this the answer is that if he does not undersell them in a decided manner, he does not give to the public the advantage which he might give. Out of regard for the few he disregards the many.
One way only does there seem to be in which, while consulting the welfare of the community, and while justly maintaining his own claim to a well-earned reward, he may also show due consideration for those whose businesses he of necessity diminished or destroyed. He may either offer them the use of his improved appliance at a moderate royalty, or may make them his agents for the sale of his products: giving them, in either case, a great advantage over any others who may wish to stand in the like positions, and may thus at any rate diminish the injury to them if he does not even cancel it.
400. It is needless in this place to illustrate further the operation of negative beneficence in putting restraints on competition, in addition to those which justice maintains. With a population ever pressing on the means of subsistence, and amid struggles to attain higher positions and so be able, among other things, to rear offspring better, there must arise multitudinous cases in which natural capacities, or circumstances, or accidents, give to some great advantages over others similarly occupied. To what extent such advantages may be pushed, individual judgments, duly influenced by sympathy. must decide.
By refraining from certain activities which are at once legitimate and profitable, competitors may be benefited; and the question whether they should be so benefited must be answered by considering whether the wants of self and belongings have not been sufficiently regarded, and whether the welfare of competitors, as well as the welfare of society as a whole, do not enjoin desistance.