pragmatic tests, the competitive
rule of distribution appeals to all men (even to those who denounce
it) as having in many of its applications a moral character, as
compared with the other possible methods of distribution. Indeed,
the competitive rule is the only rule that does not involve either
personal and arbitrary judgment (force, charity, and authority) or
status. Even such measure of justification as is found in status (as
in property and inheritance laws) is traceable, in the long run, to
competition. The case for a limited application of status is based
upon its results in stimulating motives of effort and accumulation.[9]
When the rule of authority is applied to-day in the large field of
public regulation where _actual_ competition has become impossible,
almost the only guiding rule is _hypothetical_ competition. The
just rate is felt to be that which in the long run _would be_ just
sufficient to afford "normal" incomes to labor and to capital, to
call forth the necessary effort, skill, judgment, and forethought,
if competition _were_ at work, as it is not.[10] Only this rule
of hypothetical competition redeems these public rates from
arbitrariness, favoritism, and force.

Sec. 9. #"Economic harmonies" and discords.# Every truth in political
philosophy finds some exaggerated expression. Competition, as
compared with status and custom, has some notable merits; and when the
eighteenth century was throwing off some of the burdens inherited from
the more static Middle Ages, competition appeared to be a panacea for
all the ills of society.[11] The belief in the benefits of competition
and the virtues of economic freedom found its extremist expression
in the first half of the nineteenth century in the doctrine of "the
economic harmonies." According to this, if men are left entirely free
to do as their interests dictate, the highest efficiency and best
results for all will follow; the economic interests of all men are in
harmony. Corresponding with this doctrine is the economic policy of
extreme _laissez faire._

But experience has shown that the economic interests of the
individuals in a community are only partly very rarely are they
wholly, in harmony. There are three species of competition in every
market: that between sellers, that between buyers, and that between
sellers on the one hand and buyers on the other.[12] If at any point
free competition is hindered, even the disciple of economic harmony
must, from