The enemies of the free market distort the role that competition plays in the free market.
Competition is not a foundational element of the free market.
The free market is about freedom.
In the free market, people own their resources and have the ability to use their resources as they see fit.
Intelligent people seek to make the most of their resources. Such people will study the market and engage in business with others who help them achieve their goal.
As a free person, I seek to engage with businesses and people who will help me make the most of my limited resources. I avoid those who waste my resources.
Free people actively seek cooperation. They engage in relations that help them achieve their ends and avoid those that do not.
In the free market people have the ability to choose their relations. This creates a system where people compete in their ability to cooperate.
When I slam my silver quarter down in exchange for a plate of grub, I am not competing with the restaurant. In this transaction I am engaged in cooperation with the restaurant in the task of getting food. The restaurant might be in competition with the two bit diner on the corner. The physical transaction is an act of cooperation.
Competition is not foundational to the free market. Sane people do not run out into the street to find a competitor. People actively seek mutually beneficial relations.
Cooperation is the key to the free market. Since we all want to make the most of our resources, free people compete to see who is best at cooperating with others.
When looking at a free market, one is apt to see a great deal of competition. I would even go as far as to say that lack of competition is a sign that a market is not free. The lack of competition indicates that an artificial force compels people to do business with a single vender.
Vibrant competition is a hallmark of the free market, but it is not a foundational principle.
The foundational principle of the free market is freedom. Free people choose their associations. Free people actively seek to cooperate with others. Since free people seek to make the most of their resources, they seek to associate with others who are best at cooperating.
The competition arises from people actively seeking mutually beneficially relations. Because people compete in their ability to cooperate they become more effective.
It is fair to say that the lack of competition is a sign that a market is not free. However, it is the freedom to choose our associations and our ability to cooperate that makes the free market a success.
The enemies of freedom de-emphasize the role of cooperation and over-emphasize the role of competition in the free market. I even had teachers who defined the free market as a socio-economic system where people compete with eachother and socialism is one in which people cooperate.
Defenders of freedom would be wise to counter this attack.
A sane person does not walk out in the street seeking competitors. Sane people actively seek those who can help them achieve their personal goals.
In a free society people compete in their ability to cooperate. By competing in our ability to cooperate, free people expand their capabilities and accomplish more than top-down structures that seek to force people into cooperative structures.
Showing posts with label competition. Show all posts
Showing posts with label competition. Show all posts
Wednesday, October 26, 2011
Tuesday, November 17, 2009
Competing for Government Largess
In past posts I've argued that the role of competition in the free market has been way over played. "Freedom" is the operative word of the free market. Free people choose will compete and cooperate on multiple levels through their lives.
For example, health care is an act in which a doctor and patient engage in a cooperative effort to improve the patient's health. Different doctors might compete for the patient's business. The patient will often choose a doctor based on which doctor is the most cooperative.
A multidimensional free market system has greater substance than simple competition. The free market excels because it tends to create a mix where the competition exists at levels that tend to improve service.
Government regulation and financed industries add a political dimension to markets. This political dimension tends to throw the system off kilter.
When government is involved, the players in the market compete on who is best at getting the government cash, or they compete on who is best able to game the regulatory regime.
Government tends to have a diversionary effect which transforms a market from a system optimized to the needs of the individuals to one optimized to the state's political concerns.
The proponents of government controlled health care often use the term "competition" in their rhetoric; however, improvement does not come from the mere existence of competion, but from the form of the competition.
As health is an attribute of the individual, the private market for insurance has a strong track record for improving care because the system hones competition to the needs of the patient.
NOTE: The introduction of third party insurance appears to have had a negative effect similar to government control as doctors are forced to compete on their ability to please the insurance company and not on the needs of the patient.
Using the fact that insurance is a bad model for health care does not really justify creating an even worse system.
The form of the competition matters more than the existence of competition. We would see the greatest improvement in health care if created a structure where people self-financed their care.
Making the government the primary player in health care will lead to stagnation even if there are token competitions that make health care providers compete for government largess.
For example, health care is an act in which a doctor and patient engage in a cooperative effort to improve the patient's health. Different doctors might compete for the patient's business. The patient will often choose a doctor based on which doctor is the most cooperative.
A multidimensional free market system has greater substance than simple competition. The free market excels because it tends to create a mix where the competition exists at levels that tend to improve service.
Government regulation and financed industries add a political dimension to markets. This political dimension tends to throw the system off kilter.
When government is involved, the players in the market compete on who is best at getting the government cash, or they compete on who is best able to game the regulatory regime.
Government tends to have a diversionary effect which transforms a market from a system optimized to the needs of the individuals to one optimized to the state's political concerns.
The proponents of government controlled health care often use the term "competition" in their rhetoric; however, improvement does not come from the mere existence of competion, but from the form of the competition.
As health is an attribute of the individual, the private market for insurance has a strong track record for improving care because the system hones competition to the needs of the patient.
NOTE: The introduction of third party insurance appears to have had a negative effect similar to government control as doctors are forced to compete on their ability to please the insurance company and not on the needs of the patient.
Using the fact that insurance is a bad model for health care does not really justify creating an even worse system.
The form of the competition matters more than the existence of competition. We would see the greatest improvement in health care if created a structure where people self-financed their care.
Making the government the primary player in health care will lead to stagnation even if there are token competitions that make health care providers compete for government largess.
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