Collectivism Vs the Free Market/Competitive Market – Pt 2

The Foundation of Competitive Thought

Now we turn to competitive thought. In the competitive train of thought, equality of outcome is the last thing we care to achieve. Instead, this theory rests on the idea that we want to achieve equality of opportunity. We would not, under this viewpoint, ever try to level the playing field anymore than is necessary to ensure that monopolies–private or government-supported–are not able to form and destroy competition.

The highest goal of a competitive society, then, is that every individual is free to achieve as much as they are able and willing to sacrifice to achieve. The law is only to limit the means for that achievement where it is necessary to ensure that no one is barred from a chance to participate.

Monopolies then are the antithesis of a competitive society because they destroy individual ability to compete. The individual, furthermore, is the focus of a competitive society. They are not a cog in the wheel but are instead of value for themselves and as the main drivers of progress and innovation as they compete with those around them.

Individual liberty, says competitive thought, must be preserved in as great a measure as absolutely possible, and they should not be restricted from any achievement or avenue of success simply on the premise that they are not, perhaps, so useful to society in that realm as they would be in another.

There are many ways in which this works out, but the main point is that a competitive society is based on the individual and equality of opportunity as well as the preservation of as much liberty to compete as is possible.

The Objections to Competition

Now let us look at the objections made by collectivists to competition.

1. It isn’t fair because it doesn’t guarantee that everyone achieves roughly the same status in life.
2. It offers no security–what if something goes wrong for someone in a competitive society? There’s no safety net.
3. It leads to monopolistic behavior and laissez-faire capitalism.
4. Individuals could end up doing things that are not the most beneficial to society.
5. It promotes or operates on greed.
6. It promotes or operates on selfishness.
7. Rich people get richer by making poor people poorer.
8. People at the top can take advantage of people at the bottom.
9. Profit becomes the goal instead of finding the most beneficial things to do for society even if it doesn’t make profit.
10. It doesn’t care about equality.
11. It removes from government the power to step in wherever it may be necessary to stop unfair behavior or societally detrimental behavior.
12. It encourages rich people to increase their wealth and since profit-making is a bad goal, this is also bad.
13. It doesn’t foster a charitable mindset toward those in less well-off positions.
14. It keeps the little guy down.
15. It gives corporations the same rights as individuals.

Validity of the Accusations

It isn’t fair because it doesn’t guarantee that everyone achieves roughly the same status in life.

It is certainly true to say that a competitive market will not lead to everyone achieving the same outcome life. However, to make the determination that it is “unfair” really is not accurate in its entirety. The accusations coming from opponents of the free market/competitive market would be more honest if they defined what they meant by fair first. Fair, to a supporter of a collectivist society, means equality of outcome. In the utopian world they’re dreaming of, this equality of outcome will mean everyone being able to live comfortably if not well. At the least, no one will be starving on the streets. Their idea of fair is that there is an even distribution of wealth done in whatever way they may feel is best to ensure that no one is allowed to succeed too much while others are failing.

The problem is that a competitive market is also fair… In a totally different way. A competitive market focuses more on being fair in the sense that it ensure it does not deny people entry to any given field of work or business solely on the grounds that they are in a different class, of a different color, or whatever other discriminatory tactic might be used by those wishing to consolidate power. A true competitive system favors government intervention only where necessary to ensure that competition remains strong and monopolies do not form.

So in that sense, it is fair in the eyes of those supporting the system because while it is true that there will not be an equality of outcome, there is as much equality of opportunity as can be allowed, and no one is limited in their ability to achieve whatever they can by their own talents simply because someone else cannot achieve the same outcome.

Therefore, the issue here is more with the wording and the defining of terms. If you define fair clearly and let the audience know that to you, fair means that everyone gets the same outcome or that no one is allowed to become excessively rich if everyone else is not also excessively rich, then fine. This accusation is fair. A competitive market will not give you that version of fair.

But if you do not give that definition and you simply state the system is unfair unequivocally, you are being misleading and making an intellectually dishonest argument because the word “fair” has a usual meaning and value system, and it generally doesn’t include the assumption that it’s “not fair” for someone to gain more than another if the reasons for it are anything other than unethical and/or illegal behavior. In any argument, defining terms that differ from one group or viewpoint to another is key to being honest about what you are really saying and what you are not. A competitive system is not fair with the definition of fair that collectivists like to use. It is fair if you are looking at it from the other side.

It offers no security–what if something goes wrong for someone in a competitive society? There’s no safety net.

True.  You rise or fall on your own hard work and merits and the community you have built around you. A competitive market is just that: a market. It does not mean there are no systems in place at the local level or within communities to help out those less well off. For centuries, that is how smoothly functioning societies operated. You had community. You had the home. You had the church, even more to the point, helping the less well off.

Communities, historically, who have been less well off and sought to bring about the change from within necessary to allow them to compete in the economic sphere have gone from underperforming to high-performing. We see this in the Jewish community in America.

When the non-Western European Jews arrived, they lacked many of the skills and social graces necessary to succeed on various levels including economic ones. The community of Jews who did have what was needed and also others outside who wanted to help stepped in and guided where it was needed. The government didn’t do that. The community did. And now that community on the whole is successful. 

So, again, from a collectivist mindset, no. There is no government safety net, so this is a valid argument. But once again, the mistake here is in assuming that there are no other systems in place. The system of competitive economics wasn’t meant to extend into what was family and community life outside of the economical aspect of life.

It was not intended to discourage or encourage any community to come together. Instead, it left the decisions of how to support one another when at a low point to the communities themselves.

The real issue here is not that there is no safety net. The real issue is that the safety net is not one the government can provide if a competition-based system is to survive unobstructed by collectivism and planning minded individuals. The safety net is provided by community and family or by private charity organizations instead of being provided by the federal/national government in the form of some planning committee that makes all the rules.

It leads to monopolistic behavior and laissez-faire capitalism.

These are in fact the antithesis of a competitive economy! This claim is simply untrue. So long as the government protects competition but otherwise stays out of the way unless absolutely necessary (such as in the case of protecting individual rights from violations), the competition economy can function without ever turning into laissez-faire capitalism or leading to monopolistic behavior.

As we discussed in the previous article on objections to the collectivist systems, you actually don’t avoid monopolistic behavior in a collectivist economy anyway as the government eventually becomes the worst kind of monopoly. Competition-based economies actually provide the best shot, out of the systems we have, to avoid monopolies and laissez-faire capitalism.

So if I say that, then why did the US end up off the deep end with the mess we have now at the corporate level? Two reasons: heavier government involvement than was needed or should have occurred, and not enough government involvement to protect competition. These may sound as if they contradict, but let’s take an example from my state, Illinois, that recently cropped up. 

Comcast, a major electrical and internet provider, was found to be essentially bribing our Speaker of the House (Madigan) for better policies in their favor. Now Comcast, while not the only provider of wireless services, is the only one who owns the lines through which electricity and data has to flow. So, if you wish, you can go to someone else for your internet, but whoever provides it is still going to Comcast and paying them for permission to use those lines.

You then pay your provider and Comcast–the provider for the service and Comcast for delivering it. In order to protect that stranglehold on competition in this area, Comcast was giving jobs and other favors to Madigan’s people. Madigan is now facing corruption charges, and the company paid massive legal fees. Nonetheless, they still retain that stranglehold because of the unfair advantage they gained.

How is this relevant? Well, in this instance, the government got involved in a close relationship with a private enterprise. They were not there to regulate commerce in any way that is, at least in the US, given to them under law. They were engaging in activities meant to curtail competition, not encourage it. When this sort of behavior happens, government encourages monopolistic behavior and a laissez-faire capitalism that focuses not on competition but on survival of the fittest in an economic sense.

But when the government sees behaviors going on that reduce competition (such as price-setting or corruption schemes) and steps in to stop them through regulations, laws, and legal action, they are acting in the interest of preserving competition and are discouraging monopolistic, laissez-faire attitudes.

This allows the economy to continue growing as competition forces companies to constantly seek to improve to keep their edge and their share of the market, and this leads to better overall products for the consumer to choose from as companies compete for their dollar.

Individuals could end up doing things that are not the most beneficial to society.

By definition, yes. But why is this a bad thing? We’re talking about economics here, not mass murder. If a person chooses to put their effort into something they are not as good at but they are still able to get a job and generate wealth, why is this a bad thing?

To a planner, it is a bad thing because the individual is to serve the collective, not themselves. Their personal happiness can never be more important than that of others. Fundamentally, a collectivist system encourages self-sacrifice in the name of the perceived need of others. It is seen as virtuous, even, to do whatever would best serve the economy and society because you are sacrificing for the “greater good”. 

In practice, the difference can be illustrated as follows…

My degree is in accounting. The US needs accountants, and we get paid good money for our work if we move up the career ladder. Now, I am good at accounting. However, I really dislike it. It bores me out of my mind, and I would rather be doing anything else (almost).

So, in a competitive society, I am free to say, I may not be as good at plumbing (I know nothing about this, for the record), but I enjoy it and this is what I’m going to learn to do. I’m free to go do that even though I’m earning less and am not so useful to society as I could have been doing accounting, which I’m good at.

In a collectivist society, however, I am a cog in the smoothly functioning machine of the collective. I am not valued as an individual for the sake of my being an individual. I am valued for what I can contribute to the collective. So, in a collectivist society, it wouldn’t be unusual or unpraiseworthy to say that I should remain an accountant. Some would even go so far as to force me to remain an accountant. This is the difference between the two, fundamentally, even if the collectivist approach can take many shades. 

So, yes. Those making this argument are right. But this is precisely how a competitive economy works. Remember that our idea of fair in a competitive society is that no one is barred from trying. Now, they may never become good enough to be able to compete and so may end up having to either adapt and do something they are able to compete in or else fail and never live up to their potential. But the ideal and the goal that is striven for is that the individual gets to make that choice. Does every competitive economy live up to this? No. We live in an imperfect world, but it is the goal and should rightfully be so if you believe the individual matters.

As such, we have zero interest in forcing an individual to do what is best for society if it is at the expense of the competitiveness of the system or the opportunities provided for people of all types to compete and bring diversity to our work force.

It promotes or operates on greed.

Yes. Let me be a bit tongue-in-cheek here… As it turns out, humans are reward-driven creatures. I know. Shocking.

But back to being serious here, we don’t do anything unless it in some way benefits us, and we have a tendency to want things in general. Often I find those arguing about how the system promotes greed are defining greed to mean that a person wants to make money.

If the only goal of the entrepreneur in the competitive market is to make money by whatever means possible with no regard to morals or anything else, then that is the kind of greed that is a definite problem. Both myself and a collectivist could agree neither of us want to see that!

Unfortunately, we part ways on the other aspects of greed. There is nothing morally objectionable with always wanting more success or always striving to make more money because it is linked with that success. The caveat is that you can’t want it more than you care about not doing shady things. If you have no virtues and no morals, you will not end up being the sort who promotes competition. You will be the greed-crazed monster I’ve heard some people portray all capitalists as, and the accusations will be entirely fair. 

But in and of itself, this accusation is another issue of definition. It’s an obvious statement, but those arguing this way are assigning a moral value to greed that is not there in all cases. Greed is not purely evil in every case, and depending on how you define it, making a value judgement on it doesn’t even make sense. If it is simply the quality of wanting more, that is not a morally bad thing. Nothing wrong with wanting more. When you cross the line into not caring what you have to do to get more, then it does become a morally bad thing because you will do morally objectionable things in the pursuit of that greed.

It promotes or operates on selfishness.

Again, fundamentally true, but there’s a serious flaw in the reasoning with this. The flaw is that those arguing this acknowledge human selfishness only when it operates in the realm of morally unacceptable but refuse to recognize it when it actually leads to something that everyone considers morally good. It works both ways.

Referring back to my point on greed, we don’t do things when there aren’t any rewards, especially if there’s any sort of risk. Human beings are driven by what makes them feel good (or in other words, what benefits them in some way).

The benefit we get doesn’t need to be material. It could be as simple as feeling good about ourselves because we could help someone less well-off out. I know I feel good when I’m in a position to give that homeless woman begging on the street corner a bag of fresh fruit or a coffee.

I’m doing a good thing, but in all honesty, I wouldn’t do it if I didn’t get anything out of it at all. Maybe someone else would, but I have never met a single person who would do anything good if they didn’t at least gain a little out of it. Even if they are doing it for kind reasons, they’re still doing it for mixed reasons that include their own wants, desires, and feeling good.

So in this example, the homeless woman is benefiting from my selfishness. I’m self-centered in that I am doing it because it does something for me, but she isn’t paying me anything to do it, right? So she’s getting something “for free” while I walk away happy that I did a good thing.

Even in a religious context, this is true. Most religions have some form or reward and punishment system. Do good things, and you bring yourself rewards, whether now or later. Karma is built entirely on this concept. I mean, the Bible literally has entire passages that tell Christians they should be doing morally good things for God and that doing so is saving up treasure for an eternity in heaven. There are Bible passages all over that discuss how little things like giving a cup of cold water in the name of Jesus will not go unrewarded when done from a heart that is turned toward God. Once again, we see that it is a rewards system.

We do good things and bad things on the grounds of selfishness or self-interest, not just bad things. Like it or not, no system will ever get rid of operating selfishness in humanity. No one does anything for purely non-self-serving reasons, and we wouldn’t want to live in a world where that was required. What joy would there be in anything if we never got anything out of the good things we did (monetary or not)? We wouldn’t be very motivated to do those things if it didn’t make use feel good. 

So this point is another obvious but misleading one due to a failing in the logic and reasoning. It is valid only in so far as it is technically true that the system does operate off self-interest or selfishness.

Rich people get richer by making poor people poorer.

Not according to the statistics and history. What has been seen across the world is that the introduction of a competitive system not only leads to a rise in the living conditions of even the poorest of society, but it also leads to more opportunity for the poor to rise out of poverty. 

A system rigidly planned or monopolistic in nature has historically tended to exploit the poor for its own advantages on the principle, again, that they are just cogs in the machine of society doing their part. They are not needed to do anything above what they already do, and it is not a great concern that they do not perform better or grow.

As long as the class that was promised an improvement in their living conditions sees that improvement, a collectivist society need not concern itself with those at the bottom. They are playing their part. (Obviously not every collectivist society starts out thinking it will end up this way, but as we saw in the previous article, one of the major objections to collectivism is that it attracts the worst kinds of people to power, and those sorts of people care very little about the less fortunate who have no power to change their situation.)

To go back to the original accusation, in a competitive society, no one is forcing anyone to spend money on a product. No one is forcing anyone to work any particular job. Competitive societies operate on the notion that your labor is your own. No one is entitled to it, and if you feel that you are not being given your dues in exchange for your labor, you are free to leave at any time.

Because this is the principle it operates upon, there is a strong ability to bargain back and forth. You can switch jobs and work elsewhere, and so long as monopolies are discouraged, there will be many places to go with varying degrees of competition in wages and other aspects of the job because competition for labor is as fierce as competition for resources, particularly if the labor you can offer is specialized in some way that is in high demand. 

This means that the poorest among us have the ability to improve their situation. As their situation improves, no one is stopping them from moving up the social and economic ladder (in a properly functioning competitive society). Their success rests on their shoulders. Likewise, what they choose to do with what they now earn beyond their previous earnings is their own. When competition is encouraged and going healthily, there are options for where you put your money.

Do the rich get that money? If they make a product that those people need or want, and they sell it at a price that is better than the opponents’ or offer a superior product worth the same or higher than what their opponents charge, then yes. They make money off the poorer classes.

But the truth is, that is always the case in any business transaction. In terms of money, one party in any business transaction will walk out poorer if cash exchanges hands. But the question is not, did I walk away having gained the money or having given it? The question is, did I benefit from the transaction? And did the other person get something of equal value? My interest, if I am the businessman, is to make as much profit as I can to invest back into the business, cover my own expenses, or expand further.

But in order to do that in a competitive market, I must always operate knowing I cannot charge whatever I please. The other party can turn me down if my product is not worth as much to them as the amount of money or other compensation I am asking them to hand over is. So, in that sense, a competitive economy actually promotes the power of the buyer to make the trade more fair for them. I am, in a way, at their mercy because if they don’t buy my product, I don’t make any money on that unit. I lose it, in fact. 

Furthermore, if I am that businessman, I need to hire people to run the business. I can’t do it all on my own. So now I must compete with other businesses in the same field for the same labor pool whether large or small. Those workers don’t have to work for me, so I have to give them an incentive to choose me over someone else.

This is what we see in the US business environment of benefits, even in areas where employers are not required to offer a benefit. Often they will because they want you to work for them, not their competitor, especially if the labor pool is small in that field. So the money that I earn off the product will not only go into the business and paying me back for the risks I take in running it, but it will also go to pay those new employees I have whatever was bargained out between us in benefits and pay in exchange for their time and work.

In this way, then, the competitive market allows the money to go from the top down. We often call this “trickle down” economics, and historically, this has done as well or better than collectivist societies at redistributing wealth without significant government intervention. It is a cycle, and to say that the rich somehow get richer while the poor grow poorer is not proven out by the statistics or the history.

For more on this, I encourage you to take a look at the differences in the way economies are run in collectivist societies of varying stripes and then look at the way economies are run in competitive societies to see the differences. Historically, competitive societies have outperformed the most complete forms of collectivism every time and still generally outperform softer forms of collectivism or perform at the same rate. F.A. Hayek’s book Road to Serfdom gives some specific examples on this that may help aid you in studying these differences.

People at the top can take advantage of people at the bottom.

Again, not if the society functions in a truly competitive fashion. At least, the people at the top can’t exploit those at the bottom economically speaking. There may be issues with areas of individual rights that a government should deal with since the government is meant to protect basic human rights and civil liberties, not reduce, take, or grant them. But social life is not the same as economic life, even though at times they may be linked. Economically speaking, however, it simply isn’t true that a competitive system automatically allows for this.

A well-structured, well-built competitive market will not allow for this behavior or it will not allow for it on a grand scale for any length of time. That said, in every society, no matter how it is run, this is a possibility. However, when history has shown example after example of those at the top in collectivist societies taking advantage of those at the bottom, it is hard to make an honest argument that collectivism really manages this area better than competitive market systems do.

Profit becomes the goal instead of finding the most beneficial things to do for society even if it doesn’t make profit.

It doesn’t care about equality.

And this is another problem with terms. How are we defining equality? Equality of outcome or equality of opportunity? If it’s equality of outcome, then sure. Competitive markets focus on the individual and what they are able to achieve at their best. That’s different for everyone, and competitive markets believe no one should be held back from achieving success just because their neighbor couldn’t also make it. What competitive markets do strive for is equality of opportunity, meaning that to whatever degree is possible in that point of time, the goal is to avoid restricting certain jobs or fields to only certain people.

If you want equality of outcome and that is how you are defining equality, then be intellectually honest and say so. Because these days, no one means the same thing when they say equality as someone else also saying it. Some mean equality of outcome, and some equality of opportunity. Both sides should be clear on what type of equality they’re accusing the other side of not promoting.

It removes from government the power to step in wherever it may be necessary to stop unfair behavior or societally detrimental behavior.

Yes, it does. It does so because allowing the government the ultimate say-so on what is societally detrimental or unfair hands them power that is inevitably abused. Much better to instead grant the government only the power to step in when needed to ensure that individual rights are not violated and that competition is not being prevented by those in the industry already for the purposes of creating monopolies. This allows for the greatest amount of freedom while still ensuring there are enough rules to prevent a feudalistic system from resurging.

It encourages rich people to increase their wealth and since profit-making is a bad goal, this is also bad.

We’ve been over this a little, but to recap, this is only bad if you believe it’s somehow bad to want to succeed and be rewarded for your work. Plus, if you have wealth, it’s just smart money-management to want to increase it so you can worry about other things besides whether you’re going to be able to pay your bills on time. This doesn’t mean you look down on or somehow dislike those who do struggle with bills purely because you don’t have to.

It just means you have the money and the ability to increase it, so you do. There is nothing inherently evil about that. But if you think making a profit is bad or making lots of money is bad when other people do it, then I guess it is bad in your worldview, and there is nothing more I’ll ever be able to say that can persuade you otherwise. Once again, this depends on perspective.

It doesn’t foster a charitable mindset toward those in less well-off positions.

If this were true, it might be cause for concern because of course a charitable mindset is something we consider to be a good trait in people. Unfortunately for those arguing this, competitive set ups don’t foster a mindset of charity or the lack of that mindset either way.

As we’ve said earlier, human selfishness leads us to do things that make us feel good. Most people do feel good about being charitable, and in fact, many of the richest people in America do regularly donate to charities of their choosing. Their wealth and the system that allowed for its creation do not automatically turn them into misers or charitable people. It’s up to them and what they decide to do or not do which side they fall on.

It keeps the little guy down.

As we saw earlier in the whole rich becoming richer on the backs of the poor who are becoming poorer statement, this is patently false. Many factors beyond the type of economy have a hand in determining an individual’s success or failure, not the least of which includes family, community, and culture. The system is designed in a way that is meant to promote the ability of anyone, little guy or giant, to have a shot at success. Your choices are your own, and a competitive society makes it clear that generally, at least, your success is on your shoulders. They provide the opportunity, but that opportunity must be taken and the work put in along with the willingness to take a risk.

It gives corporations the same rights as individuals.

This is just not true. Even in the US, where people often criticize big business for running roughshod over consumers and getting away with too much, they still don’t have all the same rights as an individual. The individual in charge of them doesn’t lose their rights, but a corporation is a business entity and model, not a person. It doesn’t get “rights”.

There are many things the individuals within the business have a right to, but as a whole, the business is operating in the public sphere as an entity separate of those running it. It is not afforded the same rights as I am because it is neither a person nor a citizen of the United States. Suggesting otherwise defies sound reasoning and the reality of our laws.