Sec. 8. #Wide acceptance of competition.# On purely abstract and a priori grounds competition cannot be accorded an ethical sanction, as is sometimes assumed.  But because of the qualities above outlined, and because it meets in large measure the 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 the very nature of his doctrine, expect a discordant result.  In reality competition is rarely quite complete on both sides, and when it is not the weak usually suffer.  Men do not start with fair opportunities.  All that they may be entitled to have under competition