5. To answer this question, it is first necessary to inquire how far effective competition is realized in actual industry (_i. e._, in English industry, and for purposes of present-day theory, English industry of Cairnes’s time is a very proper system to consider); for wages and profits will be in proportion to the sacrifices undergone “wherever, and only so far as competition prevails among producers,” and laborers and capitalists have an “effective choice” in selecting from the various occupations in the industrial field. First, Cairnes gives a very clear explanation of the process by which the flow of capital and labor can be redistributed over the industrial field without the transfer of individual units already specialized.[182] This disposes of some exaggerated and erroneous ideas regarding the failure of competition; but the next step is taken by Cairnes himself, who points out an important limitation of competition not emphasized by previous writers. This limitation applies only to the competition of laborers: “The competition of capital being as we have seen, effective over the entire industry of each commercial country, it follows that so much of the value of commodities as goes to remunerate the capitalist’s sacrifice ... will correspond throughout the range of domestic industry with that portion of the cost which falls to the capitalist.”[183] Not so in the case of labor: “What we find, in effect, is, not a whole population competing indiscriminately for all occupations, but a series of industrial layers, superposed on one another, within each of which the various candidates for employment possess a real and effective power of selection, while those occupying the several strata are, for all purposes of effective competition, practically isolated from each other.” ... “We are thus compelled to recognize the existence of non-competing industrial groups as a feature of our social economy.”[184] 6. It follows from this that the exchange relations of commodities produced by laborers in different industrial groups are “not governed by the principle of cost of production.” And the result is much complicated, because even a single commodity is “very frequently” the product of the labor of more than one industrial group.[185] The terms of exchange between two commodities will be “governed by more than one principle.” “So far as the two commodities are the products of workmen in competition with each other, their values will be governed by cost of production, but so far as they proceed from workmen not in mutual competition, they will be governed by that other principle, yet to be ascertained, which governs normal values in the absence of competition.”[186]