Essence of Competition

Chapter 3, Section 3: Essence of Competition

The desert island that Robinson once lived on is a one-man world, there competition doesn't exist. Although there'd be animals to compete with Robinson for food, there is no man vs. man competition there. In economics competition means the one between man and man — all postulates of economics are for man and most behaviors that economics explains are competition behaviors.

In Robinson's one-man world, there exist free goods, and economic goods as well. To get more of an economic good, Robinson must pay certain sacrifice. To eat one more fish, he need cut rest time; to collect more wood for fire, he need reduce apple planting; eating more wheat this year means eating less next year. In a word, on the island, Robinson faces short supply, not everything is free good and sacrifice is required, therefore like us he need choose among options. The only difference is: there is no man vs. man competition for Robinson.

In that one-man world, economics is fairly easy. We can use economics to explain Robinson's behaviors, and the whole explanation, if simplified, won't last more than two or three hours — for a thorough analysis two or three days would be surely enough. Just imagine, in Robinson's one-man world, there is no market, no price, no currency, inflation, or unemployment, and no law, police, or politics, not to mention arms, intermediary, contract or institution. Without these, economics can't be any deeper.

So the complexity and profundity of economics is all because one more man entered the one-man world. When there are two or more people in a world, they become a society — this is the clearest definition of "society". The joys of economics all stem from the existence of such "societies". We could even say: more than ninety nine percent of the complexity of economics is because we live in a world of more than one man.

Let's keep moving our reasoning on. An economic good must be better more than less. In a society, when one wants more of the good, others may want more as well. When monks are many and the gruel is meager, competition is inevitable. Competition is defined as more than one person demands an economic good. In the society we now live in, such goods are everywhere. Free goods, like fresh air, do exist, but the number is getting fewer and fewer.

In a society, economic good without competition is not easy to find. In principle, in a society an economic good doesn't have to be under competition, but examples are so few that one may need rack his brain to identify just one or two. More than sixty years ago I was attending the Wan Chai College in Hong Kong, fellow students then liked to fetch a cinema-issued brochure, called "show bridge", that briefed the story on show, when they entered a cinema. Because many students collected the brochures enthusiastically, old (out of date) "show bridges" became scarce and started to have price, some hard to get were even traded for several Hong Kong dollars. At the time several dollars meant one week's pocket money for me. Old "show bridges" became an economic good and had competition. After several years, the hobbies for collecting "show bridges" vanished, and students started to dislike and throw them away. But there was this student named Ting who loved "show bridges" so heavily that he didn't stop his collection. So for this weird student, old "show bridges" were an economic good (better more than less) but had no competition. This is one rare case that I know when an economic good has no competition. Time changes, today cinemas in Hong Kong don't issue such "show bridges" any more. I haven't met the student named Ting for fifty years, don't know how his piles of "show bridges" would eventually become.

In a society, nearly every economic good has competition. And the competition keeps going day after day. As everyone of us has been having competitions from morning to night and from young to old, we might be so accustomed that we don't even notice they are actually everywhere. The breakfast we eat is won through competition, as when one eats more someone else must eat less. In each competition someone "gains" and the other "loses" (Translator: quantitatively). Breakfast is so, lunch is, the bed for sleeping is, taking transit bus, going to school, sunbathing on the beach, watching TV at home, etc., all of them are!

So to speak, in a society we can hardly find a behavior without competition behind. "No competition", from the viewpoint of strict economics, can rarely be justified. Some unintelligible economic textbooks, when talking about monopoly and patent right, assert there'd be no competition. Yet the real fact is, monopoly and patent right only suppress one type of competition, some other type is surely enhanced at the same time, though. For example, people may strive for monopoly or patent right during competition, yet in a monopolized (or patented) market, they can still compete through similar or substitutable products for profit.

In a society without market, competitions are all around either, and they just take different forms. That strong prey on weak is competition, power struggle is, back-door dealing, seniority ranking, stratum privileges, etc., they all are forms of competition. The principle is quite clear: any time more than one person demands the same economic good, there exists competition.