scale in order to force new markets, or
steal the markets of one another, they are constantly driven to lower
their prices in order to effect sales; profits are driven to a minimum;
all the business energy at their command is absorbed by the strain of
the fight; any unforeseen fluctuations in the market brings on a crisis,
ruins the weaker combatants, and causes heavy losses all round. In
trades where the concentrative process has proceeded furthest this
warfare is naturally fiercest. But as the number of competing units
grows smaller, arbitration or union becomes more feasible. Close and
successful united action among a large number of scattered competitors
of different scales of importance, such as exist during the earlier
stage of capitalism, would be impossible. But where the number is small,
combination presents itself as possible, and in so much as the
competition is fiercer, the direct motive to such combination is
stronger. Hence we find that attempts are made to relieve the strain
among the largest businesses. The fiercest combatants weary of incessant
war and patch up treaties. The weapon of capitalist warfare is the power
of under-selling--"cutting prices." The most powerful firms consent to
sheathe this weapon, i.e. agree not to undersell one another, but to
adopt a common scale of prices. This action, in direct restraint of
competition, corresponds to the action of a trades union, and is
attained by many trades whose capital is not large or business highly
developed. Neither does it imply close union of friendly relations
between the combining parties. It is a policy dictated by the barest
instinct of self-preservation. We see it regularly applied in certain
local trades, especially in the production and distribution of
perishable commodities. Our bakers, butchers, dairy-men, are everywhere
in a constant state of suspended hostility, each endeavouring indeed to
get the largest trade for himself, but abiding generally by a common
scale of prices. Wherever the local merchants are not easily able to be
interfered with by outsiders, as in the coal-trade, they form a more or
less closely compacted ring for the maintenance of common terms, raising
and lowering prices by agreement. The possibility of successfully
maintaining these compacts depends on the ability to resist outside
pressure, the element of monopoly in the trade. When this power is
strong, a local ring of competing tradesmen may succeed in maintaining