Chad Perrin: SOB

2 August 2006

Addressing Myths of Capitalistic Competition

Filed under: Liberty — apotheon @ 08:11

There are, by and large, two schools of thought about competition and capitalism. In brief, they are:

  • In a capitalistic economy approaching a free market, competition is unavoidable. Competition induces people to behave immorally, amorally, or unethically, and to live stressful, difficult lives. It leads to failures and disenfranchisement of nontrivial demographics. It produces economic stratification so that there is a financially insolvent underclass who cannot positively affect their lot in life. Competition only hurts people, and we would be better off if we eliminated competition. That is why (a certain amount of) centralized and universal economic management is necessary for a just society. Marx was right.
  • In a capitalistic economy approaching a free market, competition is unavoidable. Competition induces people to excel, to produce greater wealth not only for themselves but at least incidentally for others as well. As John F. Kennedy put it (yes, a Democrat, really!), “A rising tide lifts all boats.” Competition in the market economy encourages people to organize and work together to better compete with others, thus providing as well for coöperation that can achieve what we would not achieve on our own. In capitalistic societies approaching a free market, those of the lowest economic classes are often better off than those of the highest nonmanagement economic classes in the most strictly managed economies. Ayn Rand was right.

There are strengths and weaknesses to both arguments. Both contain truths and (at least implied) falsehoods. Both overlook some important factors.

  • Competition does not necessarily induce one to live immorally, amorally, or unethically.

    That is, of course, assuming you do not subscribe to religious or other metaphysical belief systems wherein competition is, itself, strictly forbidden. There are two forms of competition: the positive and the negative. Positive competition is that form of competition wherein one strives to do well, and measures one’s successes against those of others or against the difficulty of the challenges one faces. Negative competition is that form that induces wrong action, for it is the form of competition that involves “winning” by making everyone around oneself “lose”. This is the competitiveness that is practiced by corporations, which are sustained and empowered by governmental interference in the market economy to produce artificial structures of centralized power. It is only such de facto economic favoritism that allows for the existence of organizations large and powerful enough to actually attempt to achieve and maintain market domination on a macroeconomic scale.
  • Competition is unavoidable

    On the microeconomic scale, of course, one may engage in negative competitive practices regardless of the form of the economy in question (even in communistic economies of more than twenty people or so), and it is easily recognizable as unethical to pursue such practices — and, thus, illegal within any system of law approaching even a merely superficial state of justice. The only exception to this state of affairs is very small-scale collective economies, such as communes. The successes of such communes are dependent upon social pressures that are only effectively enforced when every single individual in that small economic tidepool is personally familiar with ever other single individual, and even then it depends on the relationships of those individuals. Once there are enough people that some are not personally familiar with others, competitive behavior necessarily begins to arise, thanks to the perceived security against personal opprobrium that comes with anonymity.
  • Competition is avoidable.

    The truth of the matter is that in a capitalistic economy approaching a (truly) free market, competition is every bit as avoidable on the individual scale as it is in any limited scope communistic system. Competition is something in which one engages when either one chooses to, or one is targeted by someone who wishes one ill. It is thus, in no wise, unavoidable, except in pathological edge cases. In addition, positive (financial) competitive practices can be avoided economy-wide, even though negative competitive practices cannot: this is a result of economies designed to suppress competition, such as socialistic economies, wherever they enjoy any kind of success. Only by eliminating the rewards of competition can one eliminate any competition, and when that competition is eliminated it is found that only positive competition is eliminated, on the whole. Negative competition still exists via black markets, in social realms, and by way of jockeying for influence in the economic management hierarchy. The only exception to this state of affairs is, as above, very small-scale collective economies.
  • Cooperation is better than competition.

    On individual scales, when operating in deadly earnest for important goals, it is generally better to coöperate than to compete. Individuals can achieve more by joining forces than working against one another, assuming similar goals and compatible methodologies. In a large-scale economy, individuals can find other individuals who share goals and methodologies, thus leading to voluntary coöperation. These coöperative encouragements are dependent, however, on either the existence of competition at the macroeconomic level or at least nigh-insurmountable challenges that stand in the individual’s way.
  • Competition is better than coöperation.

    Competition at a scale greater than the individual requires coöperation at the individual scale. The only way to achieve universal coöperation at these larger scales is at the point of a sword, while a competitive market introduces motivation to produce ever-greater wealth — not necessarily to accumulate it, but to generate it, which requires the exchange of wealth as it is produced, thus “spreading the wealth” as it were.

I may come up with more points about capitalistic competition later, but for the nonce I have run out of steam.

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All original content Copyright Chad Perrin: Distributed under the terms of the Open Works License