ABSTRACT
The survey of perfect competition contained in the preceding section ends on the verge of an idyllic picture. A superficial knowledge of laissez-faire theory certainly seems to suggest the existence of an inhumanly perfect system inscrutably directed by some hidden power in such a way that all are rewarded according to their deserts and all enabled to satisfy their needs. The old economic analysis, which appears on examination to be in substance, and on its own assumptions, correct, suggests to the mind a just and orderly world. The practical significance of this is overwhelming. A general control of the distribution of social resources which thus ignores the difference between different persons’ needs is surely vitiated at the root. The possessor of the water, acting on the principles of free exchange and free prices, would refuse to give the thirsty man even a pint of water except in return for the highest price the latter was willing to pay.
