sure resort to the best market, whatever be the thing that is to be bought or sold.

If competition be perfect, no question can be made of its result in an equable division of all burdens and diffusion of all benefits throughout the industrial society. Let us consider the laborers and the employers of labor in a state of active competition. Each laborer will sell his labor at the highest price which any employer can afford to give, since the employers are in competition among themselves for labor. Each employer will get his labor at the lowest price at which any laborer1 can afford to sell it, since the laborers are in competition among themselves for employment. The lowest price at which any laborer will sell his labor is thus the highest price which any employer can afford to pay. If we suppose the rate of wages to any single laborer to be reduced, be it ever so little, below the highest price which any employer can afford to pay, the competition among employers for the extra profit thus offered will speedily reduce that margin to the minimum. If again we suppose the wages obtained by a single laborer to be above the average of his class, the resort of his fellows to that better market will instantly afford his individual employer all the labor he requires at the usual rate. So much for the reduction or elevation of the wages of a single laborer below or above the standard; but if we suppose that standard to be lowered, and the wages of the whole body of laborers to be reduced, we shall then find a like satisfactory result wrought out in one of two ways; either the employers, getting their labor for less, will sell their products at correspondingly reduced prices, and the laborers will thus, as consum

We here assume the industrial quality of all laborers to be the Bame, and all employers to stand on the same footing as regards business capacity and credit.

"Every scene of competition is called a market."--F. W. New man, Lectures on Pol. Econ., p. 5.

ers,1 make good their nominal loss as producers, or, if prices be maintained, the enhanced profit thus afforded on each pound, bushel or yard of the product will incite each individual employer to produce all he can, and for this purpose to employ all the labor he can; and employers will thus be brought to bid against each other until the margin of extra profit wholly disappears, and the lowest price at which any laborer will sell his labor will thus again become the highest which any employer can afford to pay. On the other hand, if we suppose the standard of wages to be raised and the body of laborers to receive a larger compensation, then it will follow from the action of competition, that either prices will be raised correspondingly and the laborers lose as consumers what they have nominally gained as producers, or, prices remaining the same, the employers will find their profits trenched upon, and this, diminishing the motive to production, will diminish the employment offered, which will induce competition among the workmen for employment, which will restore the standard of wages.

The above account will hold good of laborers and employers found in the same locality and engaged in the same occupation. But if we assume laborers and employers to be dispersed among different localities and occupations, precisely the same result would, in a condition of absolute competition, be effected without loss and without delay. Laborers would seek employers or employers laborers, with perfect facility, across the dividing lines, whether territorial or industrial. All inequalities of condition would thus be immediately reduced. The effort of each to get the most possible for himself

"For this class (the prolétaires) as for all, the operation of com. petition is two-fold. They feel it both as buyers, and as sellers of services."-Bastiat, "Harmonies of Pol. Econ.," p. 280. Doubtless; but do they feel it equally, in their two capacities? For what Prof. Cairnes calls “the excessive friction” of retail trade, see p. 313–5.

would simply result, with equal strength and opportunities, in giving the same to all.

By the operation of the same principle, any burdensay, a tax-imposed arbitrarily upon any class, whether of persons, of industrial processes, or of products, is distri buted equally over the whole community. That burden, wherever first imposed, becomes an element in determining the actual net advantage enjoyed in their place by the class of persons, upon whom, or upon whose processes, or upon whose products, the burden is laid. The diminution thus effected in their substantial remuneration, will either cause their products to rise in price, while the same quantity is produced by the same number of laborers (which may be the case if the products are of prime importance or necessity); or laborers and employers will leave these avocations until the prices of their products, thus diminished in quantity, are raised by scarcity to a point which will afford wages to laborers and profits to employers equivalent, after full account be had of the exceptional burden, to those enjoyed in other departments of production. This is the reasoning of those who hold the diffusion theory of taxation.

Such is the operation of unhindered competition, achieving a beneficent distribution of the products of industry, equalizing all burdens and all benefits throughout the industrial community. These are the Economical Harmonies celebrated by Bastiat. Of course no one ever supposed that competition was perfect in any place, or in any department of human activity; but the political economists of the Manchester School have felt themselves at liberty to treat the questions of distribution precisely as if competition were perfect, regarding the failures as so far exceptional as not to impair the substantial validity of practical conclusions based on the assumption of universal competition. Our further course will lead us to investigate this assumption of a competition so general

that the exceptions thereto may for practical purposes be disregarded; and if we find the exceptions numerous and important, to inquire how far the conclusions based on competition alone require modification to meet the conditions disclosed.—But first, of a term just used. What is THE MANCHESTER SCHOOL OF POLITICAL ECONOMY?

It is usually spoken of as the school of Free Traders; 1 but this, in my estination, does not present the real characteristic of the class of writers included by the term. There were Free-traders before Manchester; there are Free-traders who are not of Manchester.

I should rather define the Manchester school to consist of those free traders who carry into the department of Distribution, that assumption of the economical sufficiency of competition which the whole body of free-traders accept when dealing with the questions of Exchange; who fail to recognize any differences between services and commodities, between men and merchandise, which require them to modify their doctrine of laissez faire, looking on a Manchester spinner as possessing the same mobility economically, as being under the same complete subjection to the impulses of pecuniary interest, as a bale of Manchester cottons on the wharf, free to go to India or Iceland as the difference of a penny in the price offered may determine; free-traders, who, to come down to single practical questions, object to laws against truck as an interference with the freedom of contract; who oppose exceptional legislation respecting 3 the employment of women under ground in mines and at

'Le point de départ des Katheder-socialisten est entiérement différent de celui des économistes orthodoxes, qu'ils designent sous le nom de Manchester-thum, ou secte de Manchester, parce que c'est en effet, l'ecole des libres échangistes qui a exposé avec plus de logique les dogmes du Credo ancien."-Laveleye.-Revue des Deux Mondes, 15 July, 1875.

See this term defined and truck practices described, pp. 324-42. • Fawcett, Speeches, p. 180.

factory labor during pregnancy and for the period im mediately succeeding confinement, on the ground that such matters should be regulated by the interest of the parties thereto; who, while perhaps approving, on social considerations, laws regulating the employment of children in mines and factories, yet deny that such regulations have any economical justification, holding that self-interest is here, again, a sufficient guide; who object to laws o compulsory rules respecting apprenticeship, or admission to the professions, to the governmental regulation or inspection of industrial operations, and to any and all acts of the state directed to the promotion of prudence and frugality on the part of the working classes. It was to the effects of such teaching that Prof. Cairnes referred when he said: "Laissez faire, freedom of contract, and phrases of like import, have of late become somewhat of bugbears, with a large number of people. It is enough to mention them to discredit by anticipation the most useful practical

scheme." 2

But it may be here asked, are not the Manchester economists merely more consistent and thorough than those who stop short in their advocacy of freedom from legal restraints when they leave the department of exchange; does it not amount to this, that the Manchesterians stick to their principles, while others do not? It is to be in a position to meet this question that I have stated the theory of competition so much at length; and I now answer, no question of principle is involved, but only a question of fact. N one will deny that if competition be perfect, a right distri bution will be effected by its agency, but on the other hand no one can claim that any such assurance exists if competition be seriously impaired. If laborers and employers

The Factory Act of 1844 was passed against the opposition of the majority of English economists in Parliament and out.

Essays in Pol. Econ. p. 251.