ON SLIDING SCALES AND ECONOMIC THEORY. 529 



they will, for good or for evil, exercise a permanent influence on the market 

 price, ho\YeTer wide the area of the market he. And a ' market,' in the 

 economic sense, we must remember, may cover a very large area. 



This conclusion conducts naturally to the consideration of the question 

 from the point of view which is at present of the most immediate impor- 

 tance to us — that of theoretic economics. And here I am prepared — and 

 the previous course of the argument has, I think, tended to this result — 

 to accept my critic's opinion, subject to my own interpretation and com- 

 mentary. I readily allow that, if an arbitrator fixes wages at too great a 

 distance above or below a competitive ' level,' in time the action of what 

 we may perhaps call external competition — modified, indeed, and retarded 

 by combination — will bring about a reversal of his decision. I do not see, 

 indeed, how he is to ascertain this competitive ' level ' save by examining 

 into the past history or present condition of a market — be it within or be 

 it outside of the limits of the organisations represented before him — where 

 combinations have influenced wages. Nor do I think that it would be 

 easy to determine the exact distance which would be ' appreciable ' 

 enough to upset his award. But, subject to these reservations — the latter 

 of which is, I admit, more important from the practical than fi'om the 

 theoretical point of view — I accept my critic's conclusion. And in 

 the same way it may be the case — and I for one would not question it — 

 that ' if a sliding-scale has the effect of making the wages paid nnder it 

 differ much from competitive wages it must break down.' But here a^ain 

 it is true — from the standpoint alike of theory and of practice — that these 

 ' competitive wages ' themselves will be influenced by the reflex action of 

 the two powerful combinations ; and that the exact amount of difference 

 which, for the purposes we are now considering, ought to be characterised 

 as ' much ' would be hard to determine. 



The truth, as I conceive it, may beexpressed in some such way as this : 

 combinations cannot entirely free themselves from competitive influences, 

 any more than competition can nullify the presence and action of com- 

 binations. Competition prescribes, as I think, at any particular time in 

 a market what I will follow Roscher in calling a maximum and a minimum 

 limit to wages; but 'theoretic economics,' based as they are on two- 

 sided, or at any rate on ' one-sided,' competition, cannot determine the 

 exact point between these two limits at which two combinations will, or 

 should, agree on a price. ' The existence,' then, ' of combinations on 

 either side ' does, as I have argued, ' banish ' ' to a very great extent ' — and 

 I must add myself, though my critic does not in his quotation from me, 

 this qualifying expression — it does banish ' to a very great extent all economic 

 considerations, so far at least ' — and here, again, I would emphasise the 

 addition of this qualifying clause — ' so far at least as the exact basis of a 

 settlement is concerned.' 



I do not intend to maintain, as my critic seems to imagine that I do, 

 that ' by means of arbitration and conciliation and sliding scales the 

 wages paid in a trade can be somehow or other removed from the arena 

 of competition ; ' but I do maintain that it is impossible to determine by 

 any theory, based, and based essentially, on the unrestrained freedom of 

 any fresh combatant to enter the lists or of anyone already within the 

 arena to withdraw — it is impossible to determine by any such theory the 

 exact issue of the contest when, in place of this unrestricted freedom, you 

 have the comparatively rigid and unvarying forces of two rival com- 

 binations. 



1888. 11 n 



