The term “competition,” writes Ludwig von Mises, as applied to the conditions of animal life signifies the rivalry between animals which manifests itself in their search for food. We may call this phenomenon biological competition. Biological competition must not be confused with social competition, i.e., the striving of individuals to attain the most favorable position in the system of social cooperation. In a totalitarian system, social competition manifests itself in the endeavors of people to court the favor of those in power. In the market economy, competition manifests itself in the facts that the sellers must outdo one another by offering better or cheaper goods and services. In dealing with this variety of social competition, we must guard ourselves against various popular fallacies. FULL ARTICLE
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I find the historical element of this excerpt interesting. After articulating clearly why competition results in the allocation of capital to particular industries, Mises singularly fails to see that he has completely disproven his “second connotation of monopoly.”
His line of thinking predicts Rothbard’s devestating attack on the theory of monopoly. It is not suprising that, of all of Rothbard’s work, Mises appears to have been most impressed by this achievement.
I must also point out that this excerpt contains a gem of a sentence, “All the sophisticated lucubrations caviling at the metaphysical connotations of the adjective free as applied to competition are spurious; they have no reference whatever to the catallactic problem of competition.” That is pretty impressive from a non-native speaker!
“In a totalitarian system, social competition manifests itself in the endeavors of people to court the favor of those in power.”
I was reminded of this yesterday, when NCR announced they were moving their headquarters from Dayton, OH to Atlanta, GA, along with 1300 jobs. The response from local politicians was “We were not given a chance to compete.” The first thought that occurred to me was that the city has been competing with every other location on the planet for the last 125 years that NCR has kept their HQ here. I was surprised to see what Mises describes so clearly on display, politicians effectively saying, “We were not given a chance to accept bribes in return for political favors.”
Socialists regularly use the concept of animal-like competition as a club against free markets. It rightfully disgusts most people. We seriously need to get away from the evolutionary “survival of the fittest” analogy of capitalism and promote Mises’ social competition. Competition within free markets is like competition in sports, not like the death struggle in the animal kingdom.
Ben,
Can you reference Rothbard’s “devestating attack on the theory of monopoly”? To clarify, this is not a challenge but simply my interest in learning more.
Is social competition not simply a root of biological competition? In the competition for food, a prisoners’ dilemma emerged where the dominant strategy is not to cooperate but the optimal strategy for all parties is to cooperate. Food comes much easier when labor can be divided. Thus some sort of agreement must have been formed to increase the cost of free-riding beyond that of cooperation. Even animals are capable of such agreements–wolves for instance who hunt in packs. The point is, in human beings biological competition is merely the predecessor of social competition.
Sean,
Very true, since all human motives are generated from the biological being itself. The desire for increased social status is definitely rooted in our survival instinct.
Noting that (nasty) competition for the govt’s favor is characteristic of non-market economies is a good insight. And, importantly, it’s evaded by collectivists.
And in another turnaround, consider that the market is competition in cooperation. I believe that Mises said this. Those who are best at producing in cooperation with the production of others, via a market, will make the most money.
Mashuri,
Rothbard’s critique of the theory of monopoly can be found in Man, Economy and State. Here is a link:
http://mises.org/rothbard/mes/chap10a.asp
The next time a collectivist praises cooperation, ask if he means market cooperation or gulag cooperation.
Sometimes you have to embrace competition. It makes you work harder and provide more.
Biological competition has been taking place in earth since millions of years, competition manifests everywhere not only in humans but animals.
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