=Modern Theory: Free Contract.=--The distinctive feature of the modern development has been the tendency to abandon moral restrictions and to substitute a wage system, freedom of exchange, and free contract. It was maintained by the advocates of the new method that it was both more efficient and at least as just as the old. It was more efficient because it stimulated every one to make the best possible bargain. Surely every man is the most interested, and therefore the best promoter of his own welfare. And if each is getting the best results for himself, the good of the whole community will be secured. For--so ran the theory, when individualism had so far advanced--society is simply the aggregate of its members; the good of all is the sum of the goods of the members. The system also claimed to provide for justice between buyer and seller, capitalist and laborer, by the agencies noticed in the next paragraph. =Competition.=--To prevent extortionate prices on the one hand, or unduly low prices or wages on the other, the reliance was on _competition_ and the general principle of supply and demand. If a baker charges too high for his bread, others will set up shops and sell cheaper. If a money-lender asks too high interest, men will not borrow or will find a loan elsewhere. If a wage is too low, labor will go elsewhere; if too high, capital will not be able to find a profit and so will not employ labor--so runs the theory. Without analyzing the moral value of the theory at this point, we notice only that, so far as it assumes to secure fair bargains and a just distribution, it assumes the parties to the free contract to be really free. This implies that they are upon nearly equal footing. In the days of hand work and small industries this was at least a plausible assumption. But a new face was placed upon the situation by the _industrial revolution_.