It is usually held by economists that the divi sion of labor is limited by the extent of the mar ket, and this is the case wherever the market does not permit the further limit imposed by the physical conditions of production to be reached. In many branches of industry the product is so large that all advantageous sub divisions are already made. If the plant is ex tended, it is simply by duplicating processes already in use. If the existing organization of the pin industry permits men to make 2,500,000 pins in a day, it is probable that a reduction of the demand to one-half the present amount would not materially change the method of manufacture, at least after a short interval. But a point would eventually be reached where a lessening of the demand would have that effect, and would induce the manufacturer to return to more primitive methods.
Freedom of trade is essential to a good indus trial organization. Political economy has been for a century and a quarter a weapon in the hands of those who have labored for greater freedom to the individual and to industrial classes to make such exchanges and such con tracts as seemed to them advantageous. It has been repeatedly pointed nut that restrictive laws, and laws framed in the interests of particular classes, are to be condemned, not solely for their injustice, but because they prevent the co operation of productive agents on such terms as will insure the largest product. There is no doubt that government action is often successful in giving higher values to certain commodities or services, and in depriving other commodities of a part of their natural market value. There is no doubt that governmental supervision often brings an ultimate social and economic gain. But the activity which is demanded in one period by the state of society is often continued into another and different set of conditions, when it becomes pernicious. The history of legislation in enlightened countries has been largely the repeal of antiquated restric tions and the removal of burdens that have be come unjust and economically disadvantageous. The mere repeal of a bad law, or the enactment of a good one, is often insufficient. What is needed is that there shall be such enlighten ment of public opinion that the freedom decreed or permitted by the legislature shall be in fact enjoyed. The present conditign of the labor organization movement in some of the cities of America is a case in point. There are nowhere laws making such organizations illegal. But there are many industrial establishments which do not permit their employees to form organiza tions. It might be difficult to secure to work men the freedom in this respect which their interests undoubtedly require without intrench ing upon the equal freedom of employers to dis charge such of their employees as are for any reason unsatisfactory. It might, however, be done in the case of all corporations enjoying public franchises, as a condition of the original granting of the franchise. The economic prin
ciple involved is that the social product is largest and of the greatest social utility, other things being equal, when none of the necessary factors of production labor under undue restraint, but when all are free to work in such combina tions as seem most profitable.
The abolition of special privileges of manu facture, such as were once granted by royal favor to companies or individuals, of laws forbidding the exportation of certain products and the importation of others, and of the usury laws, sufficiently illustrate the radical improvement secured by the fuller recognition of economic freedom. General regulations prescribing the conditions on which trade and industry may be carried on do not necessarily violate the principle. " They fix the plane above which competition is to take and apply alike to all. They interfere unjustifiably with industry only when they modify the distribution of wealth already produced. It is a different thing to establish a permanent social barrier at a cer tain place to which industry adjusts itself as to a river or mountain in the physical environ ment. The abolition of sweat shops, for exam ple, works no hardship so soon as it applies to the entire competitive field. Even saloon keep ers are apt to favor laws requiring saloons to be closed on Sundays and at certain hours of the night as soon as they are convinced that the requirement is to be universal.
The interests of society are promoted by each member seeking his own interest. The principle that the individual by seeking his own economic interest, by engaging in whatever occupation 1 H. C. Adams, The Relation of the State to Industry.
and pursuing it in whatever way will bring to him the greatest reward, is thereby promoting the general interests of society, has sometimes been transformed into the doctrine that the in terests of the individual and of society are always identical. There are many exceptions to the rule that the interests of society and those of individuals coincide ; but the general principle, that the individual in promoting his own eco nomic interest does thereby serve the interests of society, underlies our whole social organiza tion. Acceptance of this principle does not ex clude the consideration of other forces besides self-interest for the promotion of the interests of society. Reliance may be in part upon self interest, and in part upon civic, religious, or social motives. Any of these may come into conflict even with enlightened self-interest, and it may then be a question whether the act which is prompted by motives of self-interest will bring a benefit to society greater or less than that prompted by a different motive. All that can rightly be claimed for the economic mo tive of self-interest is that it does on the whole work advantageously to society, and that there is general harmony of individual interests with those of society.