The law of competition (Berry)
November 20th, 2007 | Published in Economics, Quotes, Thoughts, War | 7 Comments
The law of competition implies that many competitors, competing on the “free market” without restraint, will ultimately and inevitably reduce the number of competitors to one. The law of competition, in short, is the law of war.
–Wendell Berry, “The Total Economy” in Citizenship Papers (2003), p. 68
[Berry is rhetorically winsome here, but I disagree with him. The law of competition is at work in nature, yet it rarely reduces the number of competitors to one. (And when it does, the winner loses.) It rarely reduces competitors to one in a free market, either. This may change with large technological companies because of the tremendous start-up costs and knowledge involved (notice that there are really only two big CPU manufacturers, Intel and AMD), but so far the American free market has not reduced all competitors to one, and it's been going on for quite a while now.
What's the alternative, anyway? Socialism isn't any better – see any economic analysis on the Soviet Union. It was horrible. A free market lets scarce resources get to the most needed places at the right prices very quickly. I'm not aware of any other economic system that is comparably efficient.]
November 20th, 2007 at 1:50 pm (#)
The alternative to free market capitalism is the kingdom of God – a biblical economy. The Church needs to have its own economy based not on competition, but on grace and unconditional love. See, for example, this blog‘s series on “The Church and Capitalism” as to what this might mean.
November 20th, 2007 at 1:54 pm (#)
Thanks for the link. Has that ever been tried historically? I can’t imagine an economy based on “grace and unconditional love” would work too well in a less than perfect society. I don’t think that kind of system would work very well in nature, either.
November 20th, 2007 at 1:56 pm (#)
And how efficient would that kind of system be? Would it be able to keep our level of prosperity (or higher)?
November 21st, 2007 at 4:20 am (#)
“I’m not aware of any other economic system that is comparably efficient.” Perhaps I missed the overall theme of your query (and the context of the quote), but why is efficiency considered the ultimate standard of a good economy? Which begs the larger question of what makes a good economy good/better/best?
November 21st, 2007 at 11:46 am (#)
Great question TJ. Efficiency might not be the ultimate standard, but I think it’s a good one. Non-efficient economies tend to promote corruption through bribes and such. Economics is, at root, “the study of the use of scarce resources which have alternative uses” (Sowell, Basic Economics, p. 2). So it seems that whatever system we have in place for that, it would use and distribute our scarce resources most efficiently. I think it should also promote fairness, internalize external costs as much as possible (like pollution), and contribute to the progress of humanity.
Josh
November 21st, 2007 at 6:21 pm (#)
I would suggest that the “ultimate standard” of economics should be good stewardship. Our resources are scarce not because of inefficiency, but because of overconsumption. Good stewardship of resources can ultimately address overconsumption, while efficiency cannot.
I also think it is unlikely that capitalism itself can keep up “our level of prosperity” given our scarce resources. Those resources aren’t infinite and, again, what is needed is stewardship, not prosperity or efficiency.
November 23rd, 2007 at 6:39 am (#)
Josh,
Thanks for the response. We so often like to speak in terms of efficiency and–what really concerns us–our increasing level of prosperity that we lose sight of other lenses like fairness, justice, etc. In many countries, including our current home in India, mere economical efficiency would still result in incredible injustice. Thanks again for the thoughts.
TJ