THE RELATION BETWEEN STATICS AND DYNAMICS 59 
real sense dependent on their continuance, and the refusal of an 
employer to continue dealing with an employee, in certain states 
of the labor market, may leave him an alternative which is 
anything but tolerable. There is real compulsion in such a situa- 
tion. Under competition, the compulsion is not the arbitrary 
doing of any one employer, but employers as a group may benefit 
by it; and competition is not perfect enough to prevent all com- 
pulsion of a more personal sort. 
Further, a transaction is supposed to be agreed to by both 
parties, but actual transactions often include many matters in 
which one or both of the parties exercise no choice or have no 
effective option. The terms and conditions of employment have 
never been very largely determined by free individual bargain, 
but rather by the custom of the trade, by the changing techniques 
of production at the command of the employer, by social legisla- 
tion and, of late, by collective bargaining, which is not an 
individual affair, and involves all the problems and difficulties 
of representative government. In some respects, what we have 
is not so much a system of free contract as one of standardized 
relations, into which one is free to enter or not, (subject to the 
general compulsion of entering into some relations in order to get 
a living), but many of the terms of which one is not free to 
change. And the methods of settling these standard terms, and 
the interests which control them, are evolving continually. 
The power to withhold, which is the key to the meaning of 
liberty, itself varies with changing economic conditions and legal 
institutions. Also the freedom of third parties—their immunity 
from having their interests infringed—is not absolute, and is itself 
evolving with the development of new kinds of injuries and new 
kinds of protections. The Federal Reserve System, a collective 
and not an individualistic institution, is one way of protecting 
business men from being caught in a panic as the result of the 
things other business men have done; and this protection could 
not be afforded by any more individualistic method. 
6. Collective Economic Personalities 
Modern business is carried on, not by individuals, but by vast 
collective organizations, to which the classical economists did not 
apply their individualistic principles. Free contract with such 
organizations is only a pseudo-individualism. In their operations