ABSTRACT
A competitive market system, the best method so far devised for reconciling freedom with service to the community, requires a minimum of three conditions for its effective operation: law and order; the absence of monopoly; and a satisfactorily working monetary system. Without these, the pursuit of individual self-interest will result in harm, instead of benefit, to the economy. Without law and order, some individuals will be able to benefit themselves by theft or fraud rather than by work. In conditions of monopoly, some firms can make larger profits by restricting supplies than by producing more of what the public wants; and in conditions either of inflation or deflation individuals, in quite reasonably trying to safeguard their own positions, tend to intensify the ills from which the economy is suffering. None of the conditions is, of course, absolute. The economy will continue to function even though some robberies and frauds take place, even though competition is less than perfect, and even though the general level of prices is not altogether stable. But the less perfectly they are satisfied the greater will be the loss of social benefit, and if any one of them is wholly absent the whole system will break down.
