CHAPTER V.

COMPETITION AND CUSTOM.

§ 1. Competition and Distribution. As already explained, according to the plan of this work, the distribution of wealth is regarded as mainly dependent upon the organisation of society for production. For the sake of clearness of exposition in the preceding chapters of this book I have adopted the analytic method, that is to say, I have taken the fully developed conceptions of private property and freedom of contract, and endeavoured to unfold their meaning and to describe broadly their operation in a modern industrial society in which other influences may be regarded provisionally, as of such minor importance that they may be neglected. The system examined may, for the sake of brevity, be called the system of competition; competition is supposed to rule supreme both in production and distribution. Government. provides a fair field or open market, and people make the best bargains they can as to the work they shall perform and the reward they shall receive; they accumulate or consume according to their fancy, and they leave their property to whom they please. In such a system there are of course combinations, but they are assumed to be the effect of the free actions of individuals; and in general all other combinations are disallowed by law.

But even in a modern industrial society, such as England, the actual influence of competition is modified by other forces which are too important to be neglected, and taking the whole world, these forces are, on balance, still

superior to competition. In the past the economic freedom of the individual was much more restricted, and the effects of these restrictions are still felt. It is convenient to have one word to indicate these various influences which modify competition, and probably the most suitable for the purpose is Custom.1

§ 2. Custom and Distribution. Custom, as opposed to competition, includes, in the first place, the mere force of habit, the vis inertia, which is opposed to any kind of change simply because it is a change. Habit of this kind is one of the chief causes of inequality of wealth; the paths to fortune are often made by breaking through routine. It is habit which is the chief element in the immobility of labour, and habit which imposes sumptuary laws on consumption. Habit, however, in this sense, is simply the negation of freedom.

But if economic forces are to be divided, as by Mill, into two great groups, and custom is to embrace all that is left over by competition, then habit, even if extended to include habitual obedience of the weaker to the stronger, is only an element in custom. Custom must be regarded not only as negative and inert, but as positive and active.

Take, for example, the medieval period. Nothing is more common than the assertion that in the Middle Ages people were governed by custom, and that competition was practically absent. But to make the assertion true, custom must mean much more than conforming to habit and routine. It must include the variety of regulations imposed by the feudal system, the Church, the guilds and the corporations; it must include even the laws of the central government, for from the economic standpoint laws are simply customs with a peculiar sanction. The essence of distribution, according to competition, is freedom of enterprise; the initiative is taken by individuals according to their own judgment; in distribution by custom, on the

1 For a critical analysis of custom, see Sidgwick's Principles, Bk. II., Ch. XII.

other hand, private judgment gives way to various forms of authority.

"The

§ 3. The Antagonism of Competition and Custom. farther we look back into history," says Mill,1 "the more we see all transactions and engagements under the influence of fixed customs. The reason is evident. Custom is the most powerful protector of the weak against the strong, their sole protector where there are no laws or government adequate to the purpose." This passage is a good illustration of the danger of taking broad surveys of universal history. A broad view is almost of necessity superficial. It is like studying geology through the wrong end of a telescope. Again, those reasons assigned for the great movements of history which are supposed to be evident, are generally erroneous. To assume that in "former times" custom prevailed — and the more the farther we go back simply because it was the most powerful protector of the weak against the strong, is a hypothesis that will not stand verification. Customs, which have had great influence in moulding the economic structure of societies in different times and places, have originated and endured in various ways and from various causes, but whether as the generating or continuing force, the protection of the weak against the strong is probably rather the exception than the rule. It would be much nearer the truth to say that customs have enabled the strong to tyrannise over the weak; and that only with the breaking down of customs the weak have escaped from slavery, serfdom, and other forms of oppression. This contention is borne out by reference to other customs, as, for example, religious superstitions 2; the attempt to assign what we should consider rational motives has generally only misled the investigator.

As already stated in the introduction, it is impossible to combine the systematic treatment of economic principles 1 Bk. II., Ch. IV., § 2.

2 Cf. The Golden Bough, by J. G. Frazer.

with an adequate account of the economic history even of a single country. At the same time it has been maintained that it is not sufficient, if political economy is to be regarded as a positive science, to make deductions from a few simple and general hypotheses. A large part of the remainder of the present book will accordingly be devoted to the examination of some of the principal modes in which competition has been modified by custom, using both terms in the evident sense. A description of all the modes is obviously impossible; but enough may be accomplished to throw light on the general problems of distribution. The principle adopted in the selection of customary forces will be to take those which have most influence, directly or indirectly, on various existing systems.

With the leading idea that the distribution of wealth is intertwined with the organisation of society for productive purposes, we may take in order land, labour, capital.

We have to answer two questions or groups of questions: (1) How are the occupation of land, the conditions of labour, and the employment of capital determined in the absence or modification of the system of private property? (2) How are rents, wages, and profits determined in the absence or partial suppression of competition? We shall then be in a position, in the next book, to consider these three great classes of income as cases of value mainly governed by freedom of exchange.

CHAPTER VI.

CUSTOM AND VILLAGE COMMUNITIES.

§ 1. Custom as affecting the Ownership and the Occupa tion of Land. To the average Englishman no distinction is more sharply marked than that between the landlord and tenant. It is commonly supposed that land belongs to its owners in the same sense as money or a watch. This has not been the theory of English law since the Conquest, nor has it been so in its full significance at any time. No absolute ownership of land is recognised by our law-books, except in the crown. All lands are supposed to be held immediately or mediately of the crown, though no rent or services may be payable and no grant from the crown is on record.1 The same view is expressed by another eminent authority: "The first thing the student has to do is to get rid of the idea of absolute ownership. Such an idea is quite unknown to the English law. No man is in law the absolute owner of lands. He can only hold an estate in them." 2

When we consider the powers of a modern land-owner over his land, that he may let it, mortgage it, sell it, leave it by will, allow it to run to waste, build on it, or sow it with salt, without any reference to the crown, the distinction may seem to partake of the character of a legal fiction. But the distinction like the survivals of rudimentary structures in animals- has important bearings upon the

1 This passage is abbreviated from Sir F. Pollock's Land Laws, p. 12, a work to which I am much indebted in many problems connected with land.

2 Williams' Real Property, p. 18.