The Rationale of Reward

Book I

Of Rewards in General

Chapter XV


When a potion of the matter of reward is allotted for the purchase of services, ought the liberty of competition tobe submitted?---in any, and what cases?---what is the general rule, and what are the exceptions?---in the case of that species of service?---for what species of reward?

If popular opinion be allowed to determine, the question concerning the general rule is already answered. In all cases in which no particular reason can be given to the contrary the liberty of competition ought to be admitted upon the largest scale. Yet to thin decision of the public, the practice of nation that is, of those who bear the sway in nations is by no means uniformly conformable: there are privileges and there are exclusions---pursuits open to one set, closed to another set of men: all governments have been more or less infected with that intermeddling disposition, which believes it can give perfection to particular species of service, by appropriating its exercise exclusively to particular individuals.

That there may be cases fit to be excepted out of the above general rule, is allowed: hut before we come to the consideration of the exceptions, let us see how the matter stands upon principle---whether the people are most right, or their rulers.

And in the first place, by way of illustration, let us stop a moment to examine the connexion there is upon this occasion between reward and punishment. Let us suppose, apprehensions are entertained of the prevalence of murder and incendiarism. Against a particular person the suspicions are stronger than against any one else. There is as yet no law against either of those offences. The sovereign, intending to do his utmost to guard the state against those calamities sends for the suspected person, and prohibits him from committing any such crimes, under such penalties as he thinks proper: for the suspected person, observe, and for him only; there being as yet no general law prohibiting such enormities and everybody else being left at perfect liberty. If it were possible that any such incident could have happened within time of history, should not we pronounce at once that either the nation could not yet have emerged from a state of the profoundest barbarism, or else that the sovereign so acting would not have been in his right mind. Such, however, is the exact counterpart of the policy of him, who wanting a service to be performed of such a nature as that, for aught he can be certain, there are several competent to perform it---some better than others, and each man, according to the motives that are given him, better than himself---commits the business to one in exclusion of the rest.

If penal laws must be applicable to all, that there may be a chance of preventing all offences, the offer of reward ought to be general, that there may be a chance of obtaining services, and of obtaining the best.

If we inquire in detail for the reasons why competition for reward, and for everything else which can be bestowed in the way of producing service, should be as open and as free as possible, the question may be considered in two points of view---first, as it concerns the interests of those for whose sake the service wanted is to be performed; secondly, as it concerns the interest of those by whom the service might come to be performed.

With regard to the former set of interests, it has already been observed, as a reason for the employment of reward as a fitter instrument than punishment for attaining a given degree of excellence, the idea of which has already been conceived by the person who wishes it to be attained, that the chance is greater when reward is employed as the incitement than when use is made of punishment because punishment can only operate upon few selected individuals, and should they be unequal to the task, would be altogether employed in ruin. Whatever number you select, you forego all the chance which you might have of the service being performed by any one else. The case is equally the same when rewards are offered to a selected few. Allowing the liberty of competition, you may propose rewards to any number without expense---you pay it but to one: you do not pay it till the service is performed; and the chance of its being performed is in proportion to the number of persons to whom it is proposed.

Another advantage which reward has over punishment, as we have seen, is, that by means of the former, the value of the service may be brought to an indefinitely high degree of perfection. But this can only be effected by means of a free competition. In this way, and this only, can individuals be led to exert their faculties. Were the reward proposed to one only, having rendered the degree of service sufficient to entitle him to the reward be would stop there: to make the exertions necessary to carry it to any higher degree of perfection, would be to trouble himself to no purpose. But let reward be offered to that one of two competitors, for example, who best performs the service: unless either of them know exactly the degree of skill possessed by the other, and knows it to be clearly inferior to his own, each will exert himself to his utmost, since the more perfect he makes his work, the better chance has he of gaining the reward. The matter is so ordered, that for every part of the greatest degree of service he can possibly find means to render, there will be a motive to induce him to render it. The same reasoning may be applied to any other number of competitors; and the chance of perfection will be increased, if the faculties of the competitors are equal in proportion to their number.

Should he who has the disposal of the reward assert---``I am acquainted with an individual more competent than any other to perform the service in question, and with whom no one can be placed in competition''---his assertion is exposed to this dilemma: upon a fair trial of skill, either this person will stand first, or he will not: if he stand first, the competition is not to his prejudice, but redounds to his honour; if another excel him, the advantage of a free competition is proved. Partiality is either mischievous or unnecessary.

We next consider the question as it affects the interest of those who might be admitted as competitors.

Reward in its own nature is a good: all competitors think so, and that a balance of good remains even after deducting the evil of that labour, whatever it be, which is expended in the performance of the service, or they would not be competitors. He who has the disposal of the reward thinks so, or he would neither offer it, nor be so anxious as he sometimes is to secure it for those to whom he wishes to give a preference. But when there is no special reason to the contrary, why should not all the members of a state have a chance of obtaining the goods to be distributed in that state? To exclude any man from any chance be might have of bettering himself, is at best a hardship: if no special reason can be given for it, it is injustice, and one of those species of injustice which, if administered on pretence of delinquency, would openly bear the name of punishment.

It may be objected, that if a free competition were allowed, ``the number of competitors would be very great, while the reward being confined to one, or to a very small number, one only will be paid for his labour; the lot of the rest would be lost labour and disappointment: that the public would be losers by their labours being diverted from service of greater utility, and that the service would, without this competition, be performed in a sufficient degree of perfection, or if performed in any higher degree, would be of no further use.''

The following considerations may serve as a reply to these objections. Where there is nothing more than the mere loss of labour to those who can afford to lose it, or of any thing else to those who can afford to part with it, the possible amount of mischief, be it what it may, can afford no sufficient reason for narrowing competition. If there be the pain of disappointment after trial, there has been the pleasure of expectation before trial; and the latter, there is reason to believe, is upon an average much greater than the former. The pleasure is of longer continuance; it fills a larger space in the mind; and the larger, the longer it continues. The pain of disappointment comes on in a moment, and gives place to the first dawning of a new hope, or is driven out by other cares. If it be true, that the principal part of happiness consists in hope, and that but few of our hopes are completely realized, it would be necessary, that men might be spared from disappointment, to shut them out from joy.

It may further be observed, that the liberty of competition seldom includes so many as, if considered with regard to the particular nature of the service, it would seem to include. Where it is not restrained by institution, it is often restrained by nature, and that sometimes within very narrow bounds. Services depending on opportunity, are confined to those to whom fortune shall have given the opportunity;---services depending on science or on art, are confined to those whom education and practice have familiarized with the science or the art,---services depending on station, are confined to one, or to the few, if there be more than one, who at the time in question are invested with that station. Thus the objection derived from the too great number of competitors is almost always without foundation.

It also often happens, that, independently of the reward given to the successful candidate, the service even of the unsuccessful pays itself. This is more particularly apt to be the case with regard to services of indefinite eminence which depend on skill. Some develops their talents---others obtain notoriety; one discourse obtains the reward---twenty candidates have improved their minds in endeavouring to obtain it. The athletic exercises, which on such a vast variety of occasions were celebrated throughout ancient Greece, seem to have been open to all comers: it was but one at each game that could obtain the prize, but even the unsuccessful combatants found a sort of subordinate advantage in the reputation of having contended, and in the advances made by them in those energies, which at that time of day gave a distinguished lustre to every one who excelled in them.

It may even happen, that the service of the successful shall be no object, and that the services looked to on the part of him who institutes the reward shall be those which are performed by the unsuccessful. The Grecian games just mentioned, may be taken as an example. The strength of the successful combatant was no sensible advantage to the country: the object aimed at was the encouragement of personal prowess and skill. In this country, the prizes given at horse-races have a similar sort of object. From the few horses who win, the public may reap no particular advantage; but the horses which are beaten, or never contend for the prize, are improved by the emulation to which it has given birth.

By the English Government, very ample rewards are offered to him who shall discover the most perfect and practicable mode of ascertaining a ships longitude at sea. One effect of this reward is to divert from their employments a multitude of artists and students in various branches of physical science, of whom a few only can be recompensed for their expense and labour. To pay all that would try, might probably be impracticable; but the benefit of the service appears to counterbalance this inconvenience; and in point of fact, the persons who can suppose themselves qualified to contend in such a race are so few, that this inconvenience can scarcely be very considerable. Were the same reward to be given for running, boxing, or wrestling, the common businesses of life would be deserted, and all the world would become runners, boxers, and wrestlers.

Amongst the Athenians, rewards not vastly inferior, considering the difference in the value of money and the common rate of living, were actually given to such athletic exercises. But the Athenians were as much in the right so to do, as we should be in the wrong to imitate them. In those days, when success in war depended almost entirely upon bodily address and vigour, encouraging the performance of these exercises was disciplining an army, and the national wealth could suffer little, since the labours of agriculture were chiefly carried on by slaves.

The advantages resulting from the most unlimited freedom of competition therefore are---1. Chance of success increased according to the number of competitors; 2. Chance of the highest success increased by invigorating the increased effort of each competitor; 3. Equality established; 4. Number of works multiplied; 5. Latent talents developed.

The cases to which this principle may be applied are much more extensive than might at first view be imagined: it covers a great part of the field of legislation; it may be applied to ecclesiastical, to fiscal, to administrative, and to constitutional laws. This rule is in direct opposition to the fundamental principle of Hindoo legislation. In that country, every man belongs to a caste from which he cannot separate himself. To each caste belongs the exercise of certain professions: there is a caste of learned men, a caste of warriors, and a caste of labourers. Emulation is thus reduced within the narrowest bounds, and the energies of the people are stifled.

This principle is opposed to those ecclesiastical regulations, by which all who refuse to sign certain articles of belief, or refuse to pronounce a certain number of words concerning theological subjects, are excluded from certain professions. The greater the number of individuals thus excluded. the greater the loss sustained by the diminution of competition in the performance of those services.

This principle is in direct contradiction to a multitude of fiscal and administrative laws, establishing exclusive privileges in favour of certain branches of commerce and trade; fixing the price of commodities, and the places at which they are to be bought and sold; prohibiting the entry or the exit of various productions of agriculture or of manufactures. These are so many expedients limiting competition, and are injurious to the national wealth.

The father of political economy has from this principle in a manner created a new science: the application he has made of it to the laws relating to trade, has nearly exhausted the subject (Wealth of Nations).

By two opposite competitions, prices are fixed. Competition among the purchasers secures to the producers a sufficient compensation for the outlay of their capital and labour: competition among the sellers, serving as a counterpoise to the other, produces a cheap market, and reduces the prices of commodities to the lowest sum for which it is worth while to produce them. The difference between a low price and a high price is a reward offered to the purchaser by one seller for the service he will render to him, by granting what remains to be gained, to him instead of to his competitor who requires more.

In all trades, and in all arts, competition secures to the public, not only the lowest price but the best work. Whatever degree of superiority is possessed by one commodity over another of the same description, meets with its reward either in the quantity sold, or in the price at which it is sold.

As to stores of every description of which the public stands in need, why is not the competition left open to all who may choose to undertake the supply? It is not difficult to find the determining reason: it is more convenient to serve a friend, a dependent, or a partizan, than a person unknown, or perhaps an enemy. But this is not an avowable reason: for the public, some other must be sought. Open competition would, it is said, produce a multitude of rash contractors. The terms in appearance most advantageous to governments would commonly be offered by some rash adventurer who, in the end would be found unable to fulfil his engagements. When the time came for the performance his part of the contract, the stores in question would not be provided, and the service would suffer irreparable injury. It is important that the men with whom we deal should be well known. In some cases these reasons may not be without foundation but they are most frequently illusory.

The very nature of the reward may sometimes render it necessary to depart from the system of competition. It is not every office that can be offered to every one disposed to undertake it. Ought the education of a prince to be offered to him who writes the best treatise upon that education? No: such an office requires qualities and virtues, and particularly a knowledge of the world which might not be possessed by the philosopher who had resolved the problem.

Ought the office of master of the mint to be offered to any one who produces the best die? No: this important duty requires a probity, an exactness, a habit of regularity, which has no connexion with manual skill. This is a reason, and the only reason, for not offering such offices to all the world; but it is no reason for not attaching to this service another reward, to which all the world might aspire.

Some services, which are not directly susceptible of open competition, are so indirectly; that is, by making the competition consist in the performance of some preliminary service, the execution of which may serve as a test of a man's ability to perform the principal service. This is what is done in the case of extensive architectural works, when artists are invited to give in their plans and their models: this is all that the nature of the service allows of.[2]

When,some years ago, it was designed to erect in the neighbourhood of London, at the public expense, a Penitentiary House, the mode of unlimited competition was adopted, in order to obtain plans for it. The superintendents received sixty-five plans, from among which they had the opportunity of making a selection, instead of the one which they would have received, had the system of favouritism been pursued. If, without reward, a plan superior to the best of those thus obtained has since been devised, it must be attributed to the share which chance has in every new invention: the offer of a reward may accelerate the development of new ideas, without enabling an individual to complete the arrangement of his plans at a given moment.

When the British parliament offered a reward of £ 20,000 for the discovery of a mode of finding the longitude, they were not guilty of the absurdity of confining the competition to the professors of natural philosophy and astronomy at Oxford and Cambridge. To resolve the problem of the best system of legislation, is more important and more difficult. Why, in mixed governments, has it been hitherto confined to the members of the legislative body, and in monarchies, to the chancellor? The determining reason is abundantly clear: Those who were in possession of the power---those to whom it belongs to propose this problem, are ashamed to make a public avowal of their own incapacity to solve it; they carefully avoid all acknowledgments of their own incapacity or indolence; they are willing that their labours should be rendered as little burdensome as possible, by following the ordinary routine, and not that they should be increased by the exhibition of the necessity of reform. In a word, they desire not to be advised, but to be obeyed. While subject to the influence of such circumstances, it can be considered no matter of surprise that they should, as far as possible have made the science of legislation an exclusive monopoly. The interests of human nature cry aloud against this contemptible jealousy. The problem of the best system of laws ought to be proposed to the whole world: it belongs to the whole world to solve it.

Frederic the Great twice attempted to make a general reform in the laws of his kingdom: both times he applied to a single chancellor. The first of them, too contented with himself to suspect he could stand in need of assistance from others, produced a work the most insignificant of any which had appeared. The second, M. Von Carmer, after having completed his labours, acted very differently, and much better: before it received the authority of a law, he presented it to the public, with an invitation to learned men to communicate to him their observations upon it; seconding his invitations by the offer of rewards. It is with regret that I am constrained to ask why did not he, who had in this respect thus far surpassed all his predecessors, act still more nobly? Why only ask for criticism upon a given work?---why not ask for the work itself? Why limit the invitation to Germans alone, as though there were no genius out of Germany?---why limit the reward to a sum below the price of those snuff-boxes which are presented to a foreign minister, for the service he performs in departing when he is recalled. The richest diamond in bis master's crown would not have been too great a reward for him who should thus have given to all the others a new and before-unknown splendour.

On different occasions, public spirited individuals and societies have endeavoured to supply, from their slender resources, the neglect of governments, and have offered larger rewards than the chancellor of the Great Frederic. That which they could not offer and which it did not depend upon them to offer, was the reward which the minds best adapted for the accomplishment of such an undertaking would esteem above every other---I mean, the assurance that their labours would be judged by those who could give them authority---who could make them useful.

In conclusion, I do not say, that with regard to certain services, sufficient reasons may not be found for altogether excluding competition, but that in every such case these reasons ought to be ready to be rendered, otherwise it ought to be lawful to conclude that they do not exist.

[RR, Book I, Chapter XIV] [RR, Book I, Chapter XVI]