utilitarian arrangement is defined as the basis of conciliation between self-interested parties to a
contract, it is presupposed that both parties gain by the contract:127 that it does not seem to either
party to be their interest, rather than accept such an arrangement, to give up dealing at all with the
other party—seek, it may be, some third party, some other employment of their capital and labour,128
or at least to defer agreement with the other party, in view of the probability that they will reduce
their terms.129
The rationale of conciliation thus presented will doubtless not commend itself to many who
accept substantially identical principles invested in a different form. Uniformity is not to be expected
in the enunciation of first principles. The vital tenet is that each party must take account of and enter
into the wants and motives of the other party. When competition is no longer umpire, the economist
must abandon—if he ever maintained—the position of extreme solipsisms which Jevons in a solitary
but remarkable passage has propounded:—
Every mind is thus inscrutable to every other mind, and so no common denomination of
feeling seems to be possible.... The motive in one mind is weighed only against other motives in the
same mind, never against the motives in other minds. Each person is to other persons a portion of
the outward world.... Hence the weighing of motives must always be confined to the bosom of the
individual.130
Jevons himself has not remained consistently on this pinnacle of solitude. It is abandoned by
economists in general in the received theory of taxation, founded, as Mill says, on “ human wants
127. Consider the weighty passage referring to the principles on which courts of arbitration and
boards of conciliation should act, in Marshall's Economics of Industry (1879), Book III, chap. viii,
§2: “They must not set up by artificial means arrangements widely different from those which would
have been naturally brought about,” et seq. Compare Marshall's Preface to (L. L. Price's) Industrial
Peace, p. xxiii. “The arbitrator is compelled to take some account of the fighting forces of the two
sides; the necessity to be practical may compel him to go further than he would otherwise have done
away from an absolute standard of fairness.”
128. In the technical terms of Mathematical Psychics the utilitarian point in the contract-curve must
not be outside the points at which that curve is cut by the indifference curve.” It is significant that
this abstract representation is adapted to the first rather than the second of the two cases, in which
the utilitarian arrangement would not be accepted,—the case, for example, in which the capitalist
combination refuses the arrangement, because, considering it as permanently at work, they would
be worse off than if they were to transfer their capital to some other held of enterprise; not the ease
In which they defer making an agreement for strategic reasons, because, being better supplied for
siege, so to speak, than the other party, they hope to reduce them in ease of a stoke to submission.
Compare what was said above as to the advisability of not admitting this kind of strategy into
industrial combat waged under ideal conditions.
129. Compare Marshall, Economics of Industry, loc. cit.: “Mischief almost always results in the long
run from an award which gives to one side terms much worse than those which it knows it could
obtain by a strike or a lockout.”
130. Theory of Political Economy, edition 3, p. 14.