02 May 2011

The 'Ambiguity of Competition' in economics and politics

What do we mean when we talk about competition and competitiveness? What is a "competitive environment?" It's one, we presume, where everyone, or at least many of us, have a fair chance for success. What does it mean for an individual or group to be "competitive?" That usually means that we have whatever it takes in terms of skills or resources to compete. Sometimes, as in business, a competitive environment is said to force people to become more competitive. That means the people have to adapt to more challenging circumstances. In politics, reformers want elections to be more competitive. That means, among other things, changing the shapes of electoral districts from gerrymandered formations that give one party or another an advantage to districts in which the two major parties, at least, have a more plausibly equal chance of victory.

What is the object of competition? That depends on context. The object of amateur sports, ideally, and especially the track and field events, is "stronger, higher, faster." In team sports, the object is a pennant or a trophy or the prestige of the best team. What about in business? In that field, economists talk of the "ambiguity of competition." Milton Friedman wrote that competition was not the same as rivalry, the object being not to destroy one's competitors but simply to secure one's own place in the market. For liberal economists, "perfect competition" is actually a state of equilibrium in which no competitor has the power to change the rules (prices, etc.) arbitrarily. According to Marxist economists John Bellamy Foster, Robert W. McChesney and R. Jamil Jonna, it has become an article of faith among classical liberal and neoliberal economists that perfect competition exists and will always exist, despite generations of findings that reveal a consistent impulse and a currently accelerating trend toward monopoly. Apologists for capitalism have argued, in effect, that we have to assume that perfect competition exists, or else the entire theoretical structure of liberal economics collapses. For the Marxists, meanwhile, monopoly is loosely defined, not as the triumph of one over all, but a state of affairs in which a small number of large competitors effectively collude to set the rules for any subsequent competition, including any number of practical or formal "barriers to entry" to deter newcomers.

What about competition in the political sphere? Apologists for the two-party system argue that anything other than a one-party system is, in effect, a system of perfect competition. When Republicans and Democrats have a roughly equal chance of victory, a county or a congressional district is deemed competitive. If independent newcomers fail to unseat one of the two dominant parties, it proves only that the newcomers are somehow insufficiently competitive. To observers without a stake in bipolarchy, however, the barriers to entry imposed by Democratic-Republican hegemony are obvious enough. If anything, the increasing commodification of politics has made some of those barriers more daunting. As the Monthly Review authors write regarding the global automobile industry, "There are no banks lining up to cut $50 billion checks to the fiftieth ranked firm so it can make a play to join the ranks of the big five." As politics grows more dependent upon money, the comparative poverty of independents becomes an even greater handicap.

According to Monthly Review, "[T]o the extent to which we speak of competition today, it is more likely to be oligopolistic rivalry, i.e., battles between monopoly-capitalist firms. Or to underline the irony, the greater the amount of discussion of cutthroat competition in media and business circles and among politicians and pundits, the greater the level of monopoly power in the economy." The two major American political parties exist in a similar state of oligopolistic rivalry. And just as apologists for capitalism insist that a time of increased consolidation is still a state of perfect competition, so apologists for bipolarchy argue that two-party politics is an even more perfect competition, and sufficiently competitive to render the complaints of independent losers irrelevant or contemptible. More so than in the economic sphere, the Democratic and Republican parties insist that they're the only choices that make sense and the only choices a free society needs. Their perpetual competition is supposed to prove that American politics is competitive in a way that affirms American superiority to one-party states and other authoritarian entities. In politics and business alike, the American ideal is that the newcomer with a good idea can leap into the fray and overcome all the advantages of past success and entrenched power. As long as we tell ourselves that the system remains competitive no matter what, we can blame any failure to challenge monopoly or duopoly (or monopsony, the prevalence of a single buyer rather than a single seller [e.g. WalMart]) on the failings of the challenger. The ambiguity of competition, as manipulated by the strongest competitors, may prove the inadequacy of competition as a model or metaphor for a truly free and truly orderly society.

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