e strife were to
continue, it would bid fair to involve them all in a common ruin. What
has actually developed is not such a battle of giants but a system of
armed neutralities and federations of giants. The new era is distinctly
one of consolidated forces; rival establishments are forming
combinations, and the principle of union is extending itself to the
labor and the capital in each of them. Laborers who once competed with
each other are now making their bargains collectively with their
employers. Employers who under the old regime would have worked
independently are merging their capital in corporations and allowing it
to be managed as by a single hand.

Predatory competition between unequal parties was the basis of the
Ricardian system. This process was vaguely conceived and never fully
analyzed; what was prominent in the thought of men in connection with it
was the single element of struggle. Mere effort to survive, the
Darwinian feature of the process, was all that, in some uses, the term
"competition" was made to designate. Yet the competitive action of an
organized society is systematic; each part of it is limited to a
specific field, and tends, within these limits, to self-annihilation.

An effort to attain a conception of competition that should remove some
of the confusion was made by Professor Cairnes. His system of
"non-competing groups" is a feature of his value theory, which is a
noteworthy contribution to economic thought. Mr. Mill had followed
Ricardo in teaching that the natural price of commodities is governed by
the cost of producing them. Professor Cairnes accepts this statement,
but attaches to it a meaning altogether new. He says, in effect:

Commodities do indeed exchange according to their cost of
production; but cost is something quite different from what
currently passes by that name. That is merely the outlay
incurred by the capitalist-employer for raw materials, labor,
etc. The real cost is the personal sacrifice made by the
producing parties, workmen as well as employers. It is not a
mercantile but a psychological phenomenon, a reaction upon the
men themselves occasioned by the effort of the laborer and the
abstinence of the capitalist. These personal sacrifices gauge
the market value of commodities within the fields in which, in
the terms of the theory, competition is free. The adjustment
takes place through the spontaneous mo