raise the plane or ethical level of competition, changing it from brutal warfare into a contest in which there are prizes for all, but in which the prizes are graded according to the energy and ability of the contestants.

Coöperation. The statement that our age is one of competition is misleading if it gives the impression that every individual is always struggling against all of his fellows. On the contrary, the achievements of modern industrial civilization would be impossible without a far-reaching coöperation between individuals. Employers and employees may quarrel and bargain about the wage contract, but when they have settled their relations for a week or a year, they become coöperators for that period in the conduct of the business enterprise in which they are engaged. Again, there is an unconscious coöperation between those who work upon a commodity in the different stages of the process from raw material to finished product. The division of labor itself is coöperation on a splendid scale. Competition merely determines the conditions on which the coöperation takes place. If these conditions could be determined in some other manner, it would be possible to conceive of the elimination of competition from our industrial system, but coöperation itself is so vital and fundamental that its elimination would mean a return to barbarism.

Monopoly. Everywhere in the industrial field the tendency toward monopoly is present. Business men endeavor so far as possible to shelter themselves from the effects of the competitive struggle by means of some privilege, but if none is to be found, and if competition becomes very keen, they endeavor to combine with other business men. But while this attempt to escape competition is universal, it is only under certain conditions, not generally present, that it is at all likely to succeed. The possibility of success is least in agriculture and in mercantile business, where new enterprises are started rather easily because no special privileges stand in the way and because no very large capital is required to work efficiently. It is greatest in mining and transportation, where special privileges are present and where large fixed capital is required. Scarcely anywhere is it possible wholly

to escape competition, and we are still warranted in speaking of the present era as a competitive rather than a monopolistic age.

Side by side with the growth of monopoly there is an increase in government control of industry. The desire of the business man is to be uncontrolled, but wherever he succeeds in throwing off the control exercised by his competitors, he inevitably substitutes that of the government.

Custom. Custom plays an important part in our economic activity as well as in every other department of social life, although its sway is not so marked as in former ages or among primitive peoples. The custom of giving gratuities, or tips, to servants is in many places so strong as to have almost the force of law. Again, today much of our personal expenditure is controlled by what custom has declared to be proper rather than by any act of our own individual reason. Any attempt to lower wages which would make impossible the maintenance of a customary standard of living would be stubbornly resisted. And, as we shall see in a later chapter, the "good-will" of a business, which is often a durable source of business profits, is built up, in large measure, on its ability to get people into the habit or custom of trading with it. Custom is the result of habit, and is continually broken into by our tendency to imitate a leader who proposes a new line of action. While custom may have its beneficent aspect in preventing hasty and impulsive changes, it frequently retards progress and causes our legislation and judicial decisions to lag behind industrial development.

QUESTIONS AND EXERCISES

1. Give further illustrations of the difference between positive and negative freedom.

2. Describe the property relations existing in the Amana Society, or in other communistic groups.

3. What regulations concerning the inheritance of property are in force in your state?

4. To what extent are gambling contracts valid? Why does the law differentiate them from ordinary business contracts?

5. Compare the legal freedom of workingmen today with the conditions described in the Wealth of Nations, Book i, Chap. x, Part ii.

6. Compare the rights of patentees in Bauer v. O'Donnell, 229 U. S. 1 (1912), with those allowed in Henry v. Dick Co., 224 U. S. 1 (1911). 7. What do you regard as "unfair" advertising? Give examples.

REFERENCES

BLISS, W. D. P. Encyclopedia of Social Reform (new ed.), article on Amana Community. See also on same subject, ELY, R. T., in Harper's Monthly Magazine, October, 1902.

ELY, R. T. Property and Contract, in their Relations to the Distribution of Wealth, Vol. 1, pp. 94 and ff.; Vol. ii, pp. 755–821.

GREEN, T. H. "Liberal Legislation and Freedom of Contract," in his Works (edited by Nettleship), Vol. iii.

LEWIŃSKI, J. S. The Origin of Property.

MILL, J. S. On Liberty, Chap. iv.

MILL, J. S. Principles of Political Economy, Book ii, Chaps. i. and ii. NICHOLSON, J. SHIELD. Principles of Political Economy, Vol. i, Book ii, Chaps. ii-viii.

Reports of the United States Commissioner of Patents.

ROGERS, E. S. Good Will, Trade Marks, and Unfair Trading.

SIDGWICK, HENRY. Principles of Political Economy, Book ii, Chap. xii.

STEPHENS, J. F. Liberty, Equality, and Fraternity.

WEBB, SIDNEY and BEATRICE. Industrial Democracy, Vol. ii, pp. 562-572. WYMAN, BRUCE. The Control of the Market.

CHAPTER III

THE EVOLUTION OF ECONOMIC SOCIETY

THE evolution of economic society is but one of many points of view from which the development of mankind may be considered. The history of literature, the history of government, the history of religion, each treats of man in one line of his activities. Many thinkers have considered the economic activities of mankind as the one fundamental factor in social progress, determining in the long run even our moral and religious ideas. But human life is complex, and it is improbable that any simple explanation suffices for all of its aspects. The economic factor, however, is clearly of fundamental importance in the sense that the higher things in life cannot be gained if man's entire time is spent in getting a mere subsistence, so that economic progress, or increasing control over the forces of nature, must accompany general social advancement, at least for the mass of the community. Under primitive methods of production, only a select few can have the leisure which is a necessary condition of a high standard of living. The greater the total social product, the better the possible satisfaction of the true economic wants of all; and, other things being equal, the more satisfactory the foundation on which to rear a high democratic civilization.

The Economic Stages. Many attempts have been made to divide economic history into different stages through which mankind passed in arriving at modern industrial civilization. These attempts have been the subject of lively criticism, but it appears that the classification which in the past has been most widely used is still, with some modifications, the most serviceable, and in the main, this will be followed in the present chapter.

The basis of this classification is the increasing power of man

over nature. This is the fundamental fact in man's economic development, and his position in the scale of economic civilization is higher in proportion as this power over nature increases. Increasing control of nature is accompanied by changes in man himself, especially by a growth and diversification of his wants, so that we may say that economic civilization consists largely in wanting many things and in learning how to make and use them. From this standpoint economic history may be divided into the following stages: (I) Direct Appropriation; (II) The Pastoral Stage; (III) The Agricultural Stage; (IV) The Handicraft Stage; (V) The Industrial Stage.

I. DIRECT APPROPRIATION

Primitive man depends upon finding things, not upon making them. This does not mean that the lowest examples of mankind that we know do absolutely nothing in the way of transforming the materials of nature for use. The lowest types know the use of fire and have rude tools, but, nevertheless, the farther back we go, the more complete do we find the reliance on nature. One cannot read descriptions of the Negritos, Veddahs, Fuegians, or native Australians without being impressed with the similarity between the economy of these peoples and that of the lower animals. But there are many tribes commonly regarded as savages that show a great advancement over those that have been mentioned. Among the North American Indians, for example, we find a rude sort of cultivation of the soil along with hunting and fishing. Such soil cultivation has been termed "hoe-culture," and is to be distinguished from agriculture with the aid of domesticated animals found in a later stage of development.

This kind of agriculture is found in its highest state of development among the Negroes of Africa. "The ground for cultivation," says Ratzel, "is cleared by means of fire, or with the hatchet or small ax. On the east coast a broad chopper with a spear-shaped blade and short handle is also used. The lance or spearhead has, in general, to serve many peaceful purposes. Larger trees are killed by barking. Thorny branches are placed as a border to the fields, under the shelter of which close, thick hedges gradually grow up. The