Quotes on Competition
"The price of monopoly is upon every occasion the highest which can be got. The natural price, or the price of free competition, on the contrary, is the lowest which can be taken, not upon every occasion indeed, but for any considerable time altogether. The one is upon every occasion the highest which can be squeezed out of the buyers, or which, it is supposed, they will consent to give: The other is the lowest which the sellers can commonly afford to take, and at the same time continue their business."
"After all, what is competition? Is it something that exists and has a life of its own, like cholera? No. Competition is merely the absence of oppression. In things that concern me, I want to make my own choice, and I do not want another to make it for me without regard for my wishes; that is all. And if someone proposes to substitute his judgment for mine in matters that concern me, I shall demand to substitute my judgment for his in matters that concern him. What guarantee is there that this will make things go any better? It is evident that competition is freedom. To destroy freedom of action is to destroy the possibility, and consequently the power, of choosing, of judging, of comparing; it amounts to destroying reason, to destroying thought, to destroying man himself. Whatever their starting point, this is the ultimate conclusion our modern reformers always reach; for the sake of improving society they begin by destroying the individual, on the pretext that all evils come from him, as if all good things did not likewise come from him."
"I do not hesitate to say that competition, which, indeed, we could call freedom-despite the aversion it inspires and the tirades directed against it-is essentially the law of democracy. It is the most progressive, the most egalitarian, the most universally leveling of all the laws to which Providence has entrusted the progress of human society. It is this law of competition that brings one by one within common reach the enjoyment of all those advantages that Nature seemed to have bestowed gratis on certain countries only."
"In commerce, as in everything else, by the word competition is meant the struggle of two or more individuals who aspire to the same advantage, and vie with each other to obtain it; the end to be attained is different, and in many respects, the means of attaining it are different also."
"The term competition 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."
"Capitalism, in the terminology of these foes of liberty, democracy, and the market economy, means the economic policy advocated by big business and millionaires. Confronted with the fact that some—but certainly not all-wealthy entrepreneurs and capitalists nowadays favor measures restricting free trade and competition and resulting in monopoly, they say: Contemporary capitalism stands for protectionism, cartels, and the abolition of competition. It is true, they add, that at a definite period of the past British capitalism favored free trade both on the domestic market and in international relations. This was because at that time the class interests of the British bourgeoisie were best served by such a policy. Conditions, however, changed and today capitalism, i.e., the doctrine advocated by the exploiters, aims at another policy.
It has already been pointed out that this doctrine badly distorts both economic theory and historical facts. There were and there will always be people whose selfish ambitions demand protection for vested interests and who hope to derive advantage from measures restricting competition. Entrepreneurs grown old and tired and the decadent heirs of people who succeeded in the past dislike the agile parvenus who challenge their wealth and their eminent social position. Whether or not their desire to make economic conditions rigid and to hinder improvements can be realized, depends on the climate of public opinion. The ideological structure of the nineteenth century, as fashioned by the prestige of the teachings of the liberal economists, rendered such wishes vain. When the technological improvements of the age of liberalism revolutionized the traditional methods of production, transportation, and marketing, those whose vested interests were hurt did not ask for protection because it would have been a hopeless venture. But today it is deemed a legitimate task of government to prevent an efficient man from competing with the less efficient. Public opinion sympathizes with the demands of powerful pressure groups to stop progress. The butter producers are with considerable success fighting against margarine and the musicians against recorded music. The labor unions are deadly foes of every new machine. It is not amazing that in such an environment less efficient businessmen aim at protection against more efficient competitors.
It would be correct to describe this state of affairs in this way: Today many or some groups of business are no longer liberal; they do not advocate a pure market economy and free enterprise, but, on the contrary, are asking for various measures of government interference with business. But it is entirely misleading to say that the meaning of the concept of capitalism has changed and that 'mature capitalism'—as the American Institutionalists call it—or 'late capitalism'—as the Marxians call it—is characterized by restrictive policies to protect the vested interests of wage earners, farmers, shopkeepers, artisans, and sometimes also of capitalists and entrepreneurs. The concept of capitalism is as an economic concept immutable; if it means anything, it means the market economy. One deprives oneself of the semantic tools to deal adequately with the problems of contemporary history and economic policies if one acquiesces in a different terminology. This faulty nomenclature becomes understandable only if we realize that the pseudo-economists and the politicians who apply it want to prevent people from knowing what the market economy really is. They want to make people believe that all the repulsive manifestations of restrictive government policies are produced by 'capitalism.'"
"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 fact that the sellers must outdo one another by offering better or cheaper goods and services, and that the buyers must outdo one another by offering higher prices."
"The rich, the owners of the already operating plants, have no particular class interest in the maintenance of free competition. They are opposed to confiscation and expropriation of their fortunes, but their vested interests are rather in favor of measures preventing newcomers from challenging their position. Those fighting for free enterprise and free competition do not defend the interests of those rich today. They want a free hand left to unknown men who will be the entrepreneurs of tomorrow and whose ingenuity will make the life of coming generations more agreeable. They want the way left open to further economic improvements. They are the spokesmen of material progress."
"These grumblers do not realize that the tremendous progress of technological methods of production and the resulting increase in wealth and welfare were feasible only through the pursuit of those liberal policies which were the practical application of the teachings of economics. It was the ideas of the classical economists that removed the checks imposed by age-old laws, customs, and prejudices upon technological improvement and freed the genius of reformers and innovators from the straitjackets of the guilds, government tutelage, and social pressure of various kinds. It was they that reduced the prestige of conquerors and expropriators and demonstrated the social benefits derived from business activity. None of the great modern inventions would have been put to use if the mentality of the precapitalistic era had not been thoroughly demolished by the economists. What is commonly called the 'industrial revolution' was an offspring of the ideological revolution brought about by the doctrines of the economists. The economists exploded the old tenets: that it is unfair and unjust to outdo a competitor by producing better and cheaper goods; that it is iniquitous to deviate from the traditional methods of production; that machines are an evil because they bring about unemployment; that it is one of the tasks of civil government to prevent efficient businessmen from getting rich and to protect the less efficient against the competition of the more efficient; that to restrict the freedom of entrepreneurs by government compulsion or by coercion on the part of other social powers is an appropriate means to promote a nation's well-being. British political economy and French Physiocracy were the pacemakers of modern capitalism. It is they that made possible the progress of the applied natural sciences that has heaped benefits upon the masses."
"By competition, I refer to a situation that exists when the basic rules of the free society are observed — when everyone possesses the basic rights of private property and freedom of contract. Competition is not a mode of conduct that anyone has to promote institutionally. It develops naturally and necessarily among persons who are free to pursue their own interests."
"One after another, researchers across the country have concluded that children do not learn better when education is transformed into a competitive struggle. Why? First, competition often makes kids anxious and that interferes with concentration. Second, competition doesn't permit them to share their talents and resources as cooperation does, so they can't learn from one another. Finally, trying to be Number One distracts them from what they're supposed to be learning. It may seem paradoxical, but when a student concentrates on the reward (an A or a gold star or a trophy), she becomes less interested in what she's doing. The result: Performance declines."
"Unfortunately, the Sherman Act was never intended to protect competition. It was a blatantly protectionist act designed to shield smaller and less efficient businesses from their larger competitors. There never was a golden age of antitrust. The standard account of the origins of antitrust is a myth."
"For the mainstream of economic theory the notion of competition has come to be associated with the absence of market power (to effect change in price or product quality). A competitive market is one in which no firm possesses market power...
Following a long tradition in economics going back at least to Adam Smith, [Austrian Economists] define a competitive market not as a situation where no participant or potential participant has the power to make any difference, but as a market where no potential participant faces nonmarket obstacles to entry."
"In Israel Kirzner’s view, one of the most important reasons for open, competitive markets is for individuals to have the profit incentives and the chance to benefit from alertness. The free-market institutional order creates the conditions under which people will be more likely to have the motivation to be alert, even though we can never know ahead of time what their creative discoveries will generate and unearth.
But why should the discovery and earning of such profits be considered 'good' from the wider social point of view? Part of Kirzner’s answer is a development of Hayek’s insight that corresponding to the division of labor in society is an inevitable division of knowledge. Each of us possesses only a small fraction of all the knowledge and information in the world, and yet somehow all of our interdependent activities must be coordinated for each of us to benefit from the specializations and expertise of our fellow men.
Hayek emphasized that the coordination of the actions of millions of specialized producers and consumers around the global market is brought about through the price system. Any change in someone’s willingness or ability to supply or demand any product anywhere in the market is registered through a change in the price of the good, service, or resource in question.
Furthermore, such changes are occurring all the time in a world of unceasing change. The resulting changes in market prices due to shifts in supply and demand conditions are constantly creating new profit or loss situations.
A central task of the entrepreneur, Kirzner has argued, is to be alert to these shifts in market conditions and indeed to anticipate them as best he can.
His role in the market economy is to bring about modifications and transformations in what goods are produced, where they are produced, and with which methods of production, so that production activities are continuously tending to reflect the actual patterns of consumer demand.
Through his alertness to profits to be gained and losses to be avoided, the entrepreneur ensures the adjustments to change that are required for a process of continual coordination of market activities, upon which both the existing and an improving standard of living are dependent."
"Competition advocates have won many victories over the last few decades. We have largely won the intellectual debate: Economists and legal scholars around the globe now recognize the benefits of competition to consumers and to the economy as a whole."
"For human beings competition is not the negation of cooperation but a form of it. We know this because when competition is forcibly suppressed, cooperation breaks down and something like the real law of the jungle takes its place."
"Those who would banish competition would also have to banish free cooperation. All that would be left would be forced cooperation, with the state dictating the terms. Compulsory cooperation is what went on in the gulag and concentration camp. In fact, there's nothing cooperative about it at all. It's just compulsion."
"Prices adjust to equate how much people want to buy with how much they want to sell.
And if people want to buy more than they did before, prices rise. If people want to sell more than they did before, prices fall.
Supply and demand. Buyers are competing with each other. Sellers are competing with each other.
The prices we observe emerge from this competition."
"In this regard, we recognize that when innovation leads to dynamic efficiency improvements and a period of market power, it is not a departure from competition, but it is a particular type of competition, and one that we should be careful not to mistake for a violation of the antitrust laws."
"Economic competition takes place in markets - meeting grounds of intending suppliers and buyers. Typically, a few sellers compete to attract favorable offers from prospective buyers. Similarly, intending buyers compete to obtain good offers from suppliers. When a contract is concluded, the buyer and seller exchange property rights in a good, service, or asset. Everyone interacts voluntarily, motivated by self-interest."