Thursday, December 26, 2013

Markets ... Competition or Cooperation ... The Meaning of Words

The Affordable Care Act isn't going to be affordable, even when it's finally implemented, whenever that may be.

And Social Security doesn't involve affordable and genuine 'insurance,' even though it's called that.

Neither is named properly, and government knows best monopoly based inefficiencies and lack of customer focus are the norm. That's government ineptitude, waste and coercion in action.

It's the same for the U.S. Postal Service (stamps are going up in price again) and public education, including college.

Yet many, if not most, of We the People have some aversion to free markets and choose to believe, albeit wrongly, that government and elected politicians can and will protect us from ourselves.

But we have no such aversion to competition, of course, when we cheer for our favorite athletic teams. We just want our team to win and understand that losing is part of the game.

So let's change a word and call it free market cooperation instead of free market competition.

Calling it free market cooperation makes sense to me since free market activity requires the willingness, cooperation and consent of both buyer and seller in order for a market based transaction to occur.

How to Roll Back the Demonizing of Free Markets is subtitled ''Competition carries a negative connotation, despite its contributions to human happiness:'

"In a November manifesto, Pope Francis attacked the "tyranny of markets." It's the latest iteration of a mounting distaste for free markets. Here in the United States, we have twice elected a president who is attempting to engineer one-sixth of the economy with a centrally controlled mechanism for health insurance, and regulating as many other markets as he and his regulatory minions can. . . .
How can we explain this . . . fear of markets—given the overwhelming evidence that such institutions provide the greatest wealth, health and happiness for humankind?
Economists like myself deserve a part of the blame: The way we use the term competition instead of cooperation fosters anti-market bias. "Competition" carries a negative connotation because it implies winners and losers, and our minds naturally feel sympathy for the losers. But cooperation evokes a positive response: It's a win-win situation with no losers. And in fact the word competition doesn't depict market activity as aptly as the word cooperation. The "competitive economy" would be better described as the "cooperative economy."
Consider the most basic economic unit, the transaction. A transaction is cooperative because both parties gain from a voluntary exchange. There is competition in markets, but it's actually competition for the right to cooperate. Firms must compete for the privilege of selling to consumers—for the right to cooperate with consumers. Workers compete for the right to cooperate with employers. Competition matters because it ensures that the most efficient players will gain the right to cooperate on the best terms available. But competition plays a supporting role, while cooperation makes markets thrive.
Cooperation isn't just more important in the economic sphere—it's also more common. We cooperate with everyone involved in making all the products we buy and sell, millions of people we'll never know. We compete, on the other hand, with only a few individuals or firms....
This discussion may seem semantic, but words have meaning and power. People would feel much more favorably toward a "cooperative economy" than a "competitive economy."
Here's an example. Wal-Mart comes to town and several small businesses disappear. How do we represent that event? If we think in competitive terms, we say, "Wal-Mart has outcompeted small firms and driven them out of business." If we take a cooperative view of the same event, we say, "Wal-Mart has done a better job of cooperating with customers by selling them things on better terms, and the small firms were not able to cooperate as well." Same facts, but a very different emotional reaction....
Economists originally borrowed the competition metaphor from sports, events that exist to choose winners and losers. But in economics, everyone can win from exchange. Economists should make that distinction if they want to convince more people that a market economy is a powerful tool for human flourishing."
Summing Up
Whatever we choose to call it, cooperation or competition, the free market results in transactions involving the consensual and voluntary exchange of goods and services between individuals in contrast to government waste and coercion through inefficient non-customer focused bureaucracies and monopolies.

It's just the nature of the systems employed by a society and not the nature of the individuals who are employed by those systems.
The difference between market and government produced outcomes is tremendous and either increases or diminishes the general well being and prosperity of societies as a whole.
Less government and more free market 'cooperation' is essential to get people back to work, our economy growing strongly again, and our government and personal debt situation under control.
In the end, We the People must destroy our over-dependence on debt, or our debt will destroy us.
A 'cooperative economy' is simply a must.
That's my take.
Thanks. Bob.

1 comment:

  1. You're making a point that can't be stressed enough. Competition for the resources that exist in this world is a fact of life. What is important is structuring that competition so that it becomes cooperative. As Adam Smith's insight had it, no one will voluntarily make an exchange unless it will benefit them. People who promote market exchange occupy the moral high ground.

    Those who should be put on a 'shun list' by decent people are those who promote coercive exchange. I.e. socialists or various stripes.