What is free competition?

Free-competition means freedom from the initiation of physical force. Free competition is the freedom to produce, and the freedom to trade what one has produced, for ones own self-interest, i.e., in the pursuit of ones own happiness.

 

What is the foundation of free-competition?

Politically, free-competition is a consequence of the political right to life, liberty, property and the pursuit of happiness applied to the economic sphere of production and trade. 

Morally, competition among producers is founded not on service to consumers — which is a result; but, upon the pursuit of rational self-interest, i.e. the profit motive. Economically, its result is a free-market, i.e. free trade.

Observe that free-market competition presupposes a social system based on individual rights — and cannot exist without the protection of rights by government, e.g. what good is the right to produce (right to liberty) if one does not have the right to keep what one has created (right to property), the right to advertise what one has produced (right to free speech), the right to trade ones goods one ones own terms (right to property) and the right to benefit from what one has produced (right to the pursuit of happiness)?

Free-competition without individual rights is a contradiction in terms, it is an oxymoron. Of course, if one is a communist, fascist or socialist (all are different forms of a single evil principle: collectivism) and does not believe in individual rights then competition has an entirely different meaning.

What is the difference between competition under capitalism and competition under collectivist societies?

All social systems have competition, the only difference is that in capitalism, all such competition for economic power results in the creation of wealth, whereas in collectivist societies such competition for political power results in the destruction of wealth.

Under capitalism, competition is an economic process where men do not compete to put down others, but to raise their self up by creating values which are potentially unlimited, and raising their competitors up in the process.

Under all collectivist systems competition is a political process where men compete not to create values, but to lobby or kill for positions of political power which they can use to legally extort the wealth of their fellow men.

What is the key to the success of Capitalist competition?

The key to the success of capitalist competition is that it limits competition to the economic sphere of production, and removes it completely from the political arena of compulsion. Where capitalist competition leads to a free market; political competition leads to a mixed economy of warring pressure groups and if continued for long — a dictatorship.

Are not competition and cooperation opposites?

Contrary to those who prattle about “competition versus cooperation”, capitalism is the only system where voluntary cooperation can actually exist, as it banishes force from all relationships, making all exchanges voluntary. Contrast this with the “cooperation” of collectivist societies, where one man must “cooperate” with another, lest he desires to be fined, thrown in prison, or have a lead bullet pumped into his skull.

Capitalist competition is the one of the most economically practical forms of social cooperation, where every producer competes to see who can best cooperate with each other, and with the consumer. Such is the nature of capitalist competition.

How does one determine if a given action is anti-competitive or not?

As competition is simply the application of the principle of individual rights to the economic sphere of production and trade, its is the principle of rights that determines if any action is anti-competitive or not. If no rights rights are being violated, then neither is the principle of competition. Free-competition only has a single requirement: the protection of individual rights.

Do consumers have extra “consumer rights” in additional to individual rights?

No.’ One does not gain or lose rights by becoming the member of a group. One does not lose one’s rights when one becomes a producer; one does not gain rights by becoming a consumer. The only right the consumer has is the freedom to refuse or accept what producers offer them. The consumer has no right to force the producer to sell something, no more then the producer has the right to force the consumer to buy something. Only when the two mutually agree does an exchange take place. Neither party has to make a deal if they do not like their terms, they are free to go elsewhere.

As the consumer sets the terms on how his money is spent (i.e., on how his property is sold), as does the producer set terms on how his property is bought/sold. The producer’s job is not to serve the consumer’s interests, no more then it is the consumer’s job to serve the producer’s interests, both must serve their own interests. It is only when their interests coincide that a trade — a voluntary exchange of a value for value — takes place.

Doesn’t competition mean an “equal playing field”?

Competition does not mean “equal ability” (just like the right to life does not mean you will live as long or as prosperously as your neighbor). When any company uses its property in a way that does not benefit its competitors, it is not being anti-competitive. Competition does not mean that you do things to promote your competitors, but that you do things to improve your own position — if necessary at your rival’s market share; but never by violating your rival’s, or anyone else’s, rights. Equality under free- competition only means an “equal protection of rights”.

What sets prices of labor under capitalism?

The same system that sets prices. Not any particular businessman, but the free-market. It is competition between businesses for labor that pushes wages up; it is competition between laborers that pushes wages down (to reduce this competition between laborers unions create “union shops” which prevent non-union members from competing with them, by banning non-union members from working in the unionized field).

What happens when a company starts to make a higher profit in its industry, in comparison to other industries?

If any company is a single seller in any industry and starts making profits higher than other industries, due to high prices; it will attract competition into its industry, as other capitalists move their capital from less profitable markets to more profitable ones. If the profits are due to lower production costs, which other companies are unable to match, then the company deserves its profit.

What happens if a business attempts to charge prices lower than his competitors (“dumping”)?

If a business attempts to “corner the market” by charging prices that are too low (i.e., below its’ variable costs of production), the business may drive competitors out of the market temporarily (at the price of eating up its financial capital and eroding its profits); but, as soon as the business raises its’ prices (in order to reap profits in order to build back the capital it has given away by selling products below their variable cost), new competitors will enter the market.

The only way a company can gain profitably gain market share by lowering its’ prices, is if it can lower its costs of production. If a business can charge the lowest price because it has figured out how to build a better mousetrap (i.e., produce more for less), then it deserves whatever market share it can obtain.

How does free trade give rise to free competition?

It is this freedom to produce and trade — free from the threat of physical violence by private members, or public officials — that gives rise to capitalist free competition, as sellers compete with other sellers to exchange their goods for the buyer’s money; and buyer’s compete with other buyers to trade their money for the seller’s goods.

What is the meaning of competition under capitalism?

Competition under capitalism, is simply the right to life, liberty and property applied to the sphere of production and trade; free competition means that one is free to take an any action, unmolested by others, which does not violate the rights of others. This is the meaning of competition. In observing what competition is, please observe what it is not. It is this free-competition that gives rise to capitalism’s free-market.

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