INDIVIDUAL  AND  SOCIAL  ECONOMY

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protest  against  the  waste  of  the  wrecking  policy  in  modern
commerce,  by  which  old  businesses  are  ruined  by  the
speculative  operation  of  new  competitors  who  bring  with
them  no  intrinsic  superiority  of  production  sufficient  to
compensate  the  destruction  of  capital  value  and  the
disturbance  of  employment  which  they  cause.
§  22.  The  Difference  between  Individual  and
Social  Economy.
It  is  important  to  recognise  that  an  economy  of  production ­
  which  is  sufficient  to  enable  a  new  firm  to  cut
prices  and  to  get  business  is  not  necessarily  an  economy
at  all  from  the  standpoint  of  the  whole  commercial  community. ­
  If  a  new  firm  can  set  up  plant  to  produce
one-tenth  per  cent,  more  cheaply  the  goods  which  are
now  supplied  by  other  firms,  it  will  clearly  be  to  its
interest  to  do  so.  But  if  an  established  firm  discovered
this  new  cheaper  method  of  production,  it  would  only
set  up  the  new  plant  on  condition  that  the  cheapening
of  production  was  sufficiently  great  to  compensate  for  the
cancelling  of  the  old  plant  with  which  it  had  operated
hitherto.  The  new  firm  would  not  take  into  consideration
the  cancelling  of  old  capital,  the  established  firm  would
set  this  against  the  advantages  of  the  new  method,  and
would  only  adopt  the  new  method,  if  there  was  a
net  economy.  Now  the  industrial  community,  which  includes ­
  all  its  members  and  their  property,  may,  for  the
purpose  of  this  argument,  be  regarded  as  the  owners  of
all  the  forms  of  capital;  their  net  interest  then  is  measured
not  by  the  advantage  of  the  new  competing  firm,  but
by  that  of  the  firm  which  owns  the  older  forms  of  capital