§ 6. Limitations upon intestate inheritance. A proposal less crude, and with strong reasons of social expediency in its favor, is to limit the right of intestate inheritance to persons that have been in essential economic and social relations with the deceased. The foregoing considerations show that the case for the right of gift in the lifetime of the giver is strongest; that for the right of bequest comes next. The man who has acquired wealth may usually be trusted to decide who bear to him close social or personal relations, and to say whose lives have in a measure furnished the motives of his activity. But the right of intestate inheritance by distant relatives is one that stands on weak social foundations. It is a survival from more patriarchial conditions when, in the large family or clan, the bond of unity was very strong. A truer test to-day of the proper limits for intestate inheritance is whether the wish to provide for these heirs has furnished the motive for the pro ducing and preserving of the wealth. The claims of those nearest in blood and closest in personal relations are strongest. Family affection and friendship form the strongest of social ties, and it is socially expedient to cultivate them. Motives for abstinence and industry must be strengthened. But the same test 'shows that the zealous regard of the American law for the rights of distant kinsmen in foreign lands or in dis tant quarters of this country is irrational, and is unjust to the community where the fortune was made. Public opinion tends strongly toward this idea.
Property rights as they exist are clearly seen not to be a product of pure reason. They are the result of social evolu tion, of historical accidents, of class legislation, and in many cases of selfish interests. Changing social conditions and ideas are bringing many changes in law, and further changes must be expected to come that will reduce the influence of inheritance of property in fostering status in distribution. Especially important are the increasing application of the pro gressive principle to incomes and and the de 5 See ch. 19.
velopment of insurance to put family savings into the form of terminable annuities instead of capital sums .° § 7. Some merits of competition. The dominant method of distribution to-day is that of competition.? It is evident from the voices of praise and of blame that competition has its good and its bad aspects. Let us observe first the good ones. Competition acts to distribute the working force over the field of industry wherever it is most needed. The remarkable (though far from perfect) adjustment of industry to the needs of each neighborhood is brought about by individual motives, not by centralized authority. Wherever consumers settle, stores are started and factories are built. Wherever work is to be done, men come in about the right number to do it. It is not mere chance that produces this result. The available skill is adjusted to varying needs by the delicate measurement of the market rate of wages. Two-sided competition gives a definite rule of price—the only definite impersonal rule. The theoretical competitive price is the standard to which things tend constantly to adjust themselves in an open market.° Competition is an essentially economic method as contrasted with the legal and personal methods above and later described, because it is impersonal and reducible to a rule of value. Dis tribution under competition is made, not with reference to ab stract ethical principles or to personal affection, but to the value of the product. Each worker strives to do what will
bring him the largest return, and the price others pay ex presses their estimates of the service in that market. Each seeking his own interest is led to make himself more valuable to others. In most cases and in large measure, competition stimulates men to sacrifice, to invention, to preparation; thus is zeal animated and are efforts sustained. In the economic realm, as is now seen to be the case in the biologic realm, cora See ch. 13, § 9 and § 10..
7 See ch. 32, § 10.
8 See Vol. I, pp. 54 and 66; also pp. 504-507 on an organic theory of value.
petition of some effective kind is an indispensable condition not only of progress but of life without degeneration. Mo nopoly, as we have noted, never has ceased to rest under the ban of Anglo-Saxon law, and therefore to exemplify compul sory as opposed to competitive distribution. A striking fea ture of the competitive method is its decentralization. Each helps to value the economic services of each. If one pays more for the services of the singer than for those of the cook, it is not because one would rather listen to the singing than to eat when starving, but because by apportioning one's income one can get the singing and the eating too. In the existing circumstances, the singer's services seem to the music lover to be worth paying for, and he backs his opinion with his money. So each• is measuring the services of all others, and all are valuing the services of each. It is distribution by valuation, and it is valuation by democracy, with all of the defects of the frail and foolish human beings who are expressing their choices.
§ 8. Wide acceptance of competition. On purely abstract and a priori grounds competition cannot be accorded an un qualified ethical sanction, as is sometimes assumed. It is not always and necessarily "right" and "best" in an absolute sense. However, its dominant place is not a mere accident, but is a resultant of unending experimentation with different methods of distribution carried on since the beginning of human society. A method of distribution had to be found and retained that would work under the conditions of human nature at each stage of social progress; and competition has worked, however imperfectly, because it has met in large measure the pragmatic test. The competitive rule of dis tribution 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, char ity, and authority) or status. Even such a measure of justifi cation as is found in status is traceable, in the long run, to competition. The case for a limited application of status (as in property and inheritance laws) is based upon its results in stimulating motives of effort and 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, fore thought, abstinence, and investment, if competition were at work, as it is not." Only this rule of hypothetical compe tition redeems these public rates from arbitrariness, favori tism, and force.