There’s No Market Process Independent of Competition

Many misconceptions about the nature of the free market system stem from an ignorance of who ultimately benefits from the market process. That the significant number of those who would benefit the most from the operations of the market—consumers—tend to also harbor much of the antagonisms against logically necessary features of the market highlights the unfortunate reality that the majority of people have yet to rightly understand how their best interests could be served by the mechanism of the market. Thus, it is not surprising that, in modern history, records abound of ambitious politicians, statesmen, and planners who have exploited this widespread ignorance in furthering utopian ends by means of eclectic and inherently contradictory policies which rational deliberation could easily expose as illusory.

One of the widely criticized features of the market system is the concept of catallactic competition. Unsurprisingly, the notion of free competition within the market society is bound to attract the severest censures, given its incompatibility with the ideological pre-possessions of most people, such as compelled egalitarianism and “social justice.” This article offers a defense of catallactic competition as an inherent feature of the social order of the division of labor and private ownership of the means of production. Through praxeological reasoning, this will illustrate the hidden effects of potential disruptions of the competitive order.

Catallactic Competition vs. Darwinian Competition

It is important to first make a clear distinction between competition as understood in the field of catallactics and competition as conceived in the Darwinian sense. Catallactic competition is an aspect of social cooperation, in which acting men consider outperforming fellow participants in serving consumers as a means toward the attainment of his own ends. It is not synonymous with the so-called “law of the jungle,” or the Darwinian conception of biological struggle for survival. As such, use of combative terms or phrases as “cut-throat,” “conquest,” or “crushing competitors” to describe the state of affairs in the field of catallactics are only misleading and, consequently, distract from serious deliberations on the subject matter. Put simply, catallactic competition precludes the initiation of force amongst market participants.

A Series of Competition

There cannot be a market independent of the process of competition. Viewing the market as a continuous process, rather than a state of equilibrium, in which there is no action, enables us to better grasp the fact that competition is always ongoing within distinct economic categories—entrepreneurs, capitalists, resource-owners, and consumers—as well as in their integrated functions. The market process is a series of competitive actions among various market participants acting to obtain scarce means which aid in the satisfaction of urgent wants. For instance, entrepreneurs—using economic calculation—embark on their buying factors. They compete based on the limit set by the anticipated prices of the marginal products. Because these resources are scarce and have alternative uses, they attempt to bid them away from other entrepreneurs who similarly evaluate and try to obtain these resources for alternative lines of production. Resource owners—through cooperating in the process—willingly offer up their resources for sale to the highest-bidding entrepreneur.

Consumers are also not immune to market competition as the products which they most urgently want are simultaneously desired by other consumers in the market. Submarginal buyers become excluded from obtaining those commodities and they are directed toward more capable buyers. Thus, purchasing and bargaining power become the determining factors in competition of each consumer in the market.

The Competitive Order and Monopoly

It is often asserted that competition precludes monopoly. But the concept of monopoly is often undefined. Monopoly is a concept with several connotations.

On the one hand, there is the connotation which implies absolute control of access to a vital resource, in which a single individual or group of individuals, through the use of force, exclude its employment by other users, whether in service of vested interests or according to arbitrary judgements. This would be the case in absolute dictatorship or a world-embracing socialist state, in which the Führer, production tzar, or some ruling bureaucracy dictates the circumstances of availability of these resources to other users. With regard to this connotation of monopoly, the above assertion can be said to be true.

On the other hand, there is the connotation of monopoly which entails control of access to definite quantities of a vital resource of production as a result of original appropriation or voluntary exchange. This could occur through previous entrepreneurial alertness, foresight, and accurate anticipation of the future state of the market. This allegedly leads to subsequent charging of a “monopoly price” for the resource in question. Before the emergence of the “monopoly,” every other entrepreneur, in executing their buying function, was free to compete in the acquisition of the resource up to the maximum quantity obtainable for future production, however, they underestimated the potential significance of the resource in relation to future market conditions.

It is important to note that this type of monopoly does not preclude free entry into the industry in question, nor does it preclude a market for potential substitutes to the monopoly good, thus, it is compatible with the competitive order. As Mises succinctly puts it in Human Action: “It would be a serious blunder to deduce from the antithesis between monopoly price and competitive price that the monopoly price is the outgrowth of the absence of competition. There is always catallactic competition in the market.” Furthermore, any attempts to coerce the decisions of this “monopolist”-entrepreneur into alternative actions, which—judged from his point of view—are dissatisfactory, become potentially disruptive of the competitive order.

Disruption of the Competitive Order

Given that the free market system is founded on the cooperation and voluntary interactions of individuals acting to satisfy their wants, it logically follows that any instance of coercive action by individuals or groups of individuals aimed at influencing the actions of other individuals become potentially disruptive of the competitive order which defines this system.

The most systematic threat to the competitive order is the fallacious economic doctrine which has increasingly gained greater acceptance in virtually every country of the world today, and which has become the basis of policies which are disruptive of the mechanism of social cooperation—interventionism. Interventionism advances the notion of a compatibility between free market capitalism and violent interventions of the state in economic affairs. Interventionism is purportedly a middle-of-the-road economic system between capitalism and socialism, that is, a third economic system of economic organization. However, as Mises succinctly remarks in his book The Middle of the Road Leads to Socialism,

Interventionism cannot be considered as an economic system destined to stay. It is a method for the transformation of capitalism into socialism by a series of successive steps.

While disregarding the inescapable interdependence of economic phenomena, proponents of the doctrine of interventionism view the economy as a compartmentalized, loosely-coupled system in which specific actions can be tailored towards various “compartments” of the economy in the hopes of obtaining desired outcomes. However, most policies advanced under interventionism almost always produce outcomes which, judged from the point of view of their initiators, are dissatisfactory. Most specifically, the policies directed towards the suppression of competition end up hurting the consumers whose needs would be better served in an unhampered market.

Arguments against competition have been offered based on imperfections of competition that allegedly would cause more woes than if competition were suppressed. But, as Hayek puts it in the book, Individualism and Economic Order,

…the evils which experience has shown to be the regular consequence of a suppression of competition are on a different plane from those which the imperfections of competition may cause.

For instance, the use of tariffs to suppress foreign competition in a domestic market usually end up raising the prices of locally-produced commodities, hurting the productivity of labor by shifting production from areas with favorable conditions to unfavorable areas, and encouraging cartelization and entrenched monopoly in the domestic market.

The Ultimate Beneficiaries of Free Competition

It is in the best interest of consumers—for whom every act of productive activity of the entrepreneur is directed—that the competitive order is preserved, for this would imply the possibility of better want satisfaction by accessing more attractive opportunities in the future. If consumers desire to satisfy various wants through the mechanism of the market, then they must realize that competition is an inherent feature of the market system and cannot be suppressed without hurting both their short- and long-term interests.

Originally Posted at https://mises.org/

zerohedge
Economics , News , Politics , Science
December 7, 2024
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From Marcus Aurelius To Omar Little: A Man’s Code Is Vital

Authored by Josh Stylman via The Brownstone Institute,

With Thanksgiving weekend still fresh in our memory, my gratitude centers not on the usual holiday platitudes, but on something that has become increasingly precious in our artificial age: authentic relationships – both family and lifelong friends – that deepen rather than fracture under pressure. What binds these relationships, I’ve come to realize, isn’t shared opinions or circumstances, but a shared code – an unwavering commitment to principles that transcends the shifting sands of politics and social pressure. I’m particularly grateful for my inner circle – friends I’ve known since elementary school and family members whose bonds have only strengthened through the crucible of recent years.

Like many others who spoke out against Covid tyranny, I watched what I thought were solid relationships dissolve in real time. As the owner of a local brewery and coach of my kids’ sports teams, I had been deeply embedded in my community – a “man about town” whose friendship and counsel others actively sought. Yet suddenly, the same people who had eagerly engaged with me would scurry when they saw me coming down the street. Professional networks and neighborhood connections evaporated at the mere questioning of prevailing narratives. They reacted this way because I broke orthodoxy, choosing to stand for liberal values – the very principles they claimed to champion – by rejecting arbitrary mandates and restrictions.

In this moment of testing, the difference between those who lived by a consistent code and those who simply followed social currents became starkly clear. Yet in retrospect, this winnowing feels more like clarification than loss. As surface-level relationships fell away, my core relationships – decades-long friendships and family bonds – not only endured but deepened. These trials revealed which bonds were authentic and which were merely situational.

The friendships that remained, anchored in genuine principles rather than social convenience, proved themselves infinitely more valuable than the broader network of fair-weather friends I lost.

What strikes me most about these enduring friendships is how they’ve defied the typical narrative of relationships destroyed by political divisions. As Marcus Aurelius observed, “The impediment to action advances action. What stands in the way becomes the way.” Despite taking opposite sides of the dialectic on political and cultural issues over the decades, we found ourselves united in opposition to the constitutional transgressions and rising tyranny of the past few years – the lockdowns, mandates, and systematic erosion of basic rights. This unity emerged not from political alignment but from a shared code: a commitment to first principles that transcends partisan divisions.

In these contemplative moments, I’ve found myself returning to Aurelius’s Meditations – a book I hadn’t opened since college until Joe Rogan and Marc Andreessen’s excellent conversation inspired me to revisit it. Aurelius understood that a personal code – a set of unwavering principles – was essential for navigating a world of chaos and uncertainty. The connection feels particularly apt – like my own friend group, Rogan’s platform exemplifies a code of authentic discourse in our age.

Critics, particularly on the political left, often talk about needing their “own Joe Rogan,” missing entirely what makes his show work: its genuine authenticity. Despite being historically left-leaning himself, Rogan’s willingness to engage in real-time thinking with guests across the ideological spectrum and across a broad variety of topics, his commitment to open inquiry and truth-seeking, has paradoxically led to his estrangement from traditional liberal circles – much like many of us who’ve found ourselves branded as apostates for maintaining consistent principles.

This commitment to a code of authentic discourse explains why organizations like Brownstone Institute – despite being routinely smeared as “far right” – have become a crucial platform for independent scholars, policy experts, and truth-seekers. I witnessed this firsthand at a recent Brownstone event, where, unlike most institutions that enforce ideological conformity, diverse thinkers engaged in genuine exploration of ideas without fear of orthodoxy enforcement. When attendees were asked if they considered themselves political liberals ten years ago, nearly 80% raised their hands.

These are individuals who, like my friends and me, still embrace core liberal values – free speech, open inquiry, rational debate – yet find themselves branded as right-wing or conspiracy theorists merely for questioning prevailing narratives.

What unites this diverse community is their shared recognition that the reality being presented to us is largely manufactured, as explored in “The Information Factory,” and their commitment to maintaining authentic discourse in an age of enforced consensus.

In The Wire, Omar Little, a complex character who lived by his own moral code while operating outside conventional society, famously declared, “A man got to have a code.” Though a stick-up man targeting drug dealers, Omar’s rigid adherence to his principles – never harming civilians, never lying, never breaking his word – made him more honorable than many supposedly “legitimate” characters. His unwavering dedication to these principles – even as a gangster operating outside society’s laws – resonates deeply with my experience.

Like Rogan’s commitment to open dialogue, like Brownstone’s dedication to free inquiry, like RFK Jr.’s determination to expose how pharmaceutical and agricultural interests have corrupted our public institutions: these exemplars of authentic truth-seeking mirror what I’ve found in my own circle. My friends and I may have different political views, but we share a code: a commitment to truth over comfort, to principle over party, to authentic discourse over social approval. This shared foundation has proven more valuable than any superficial agreement could be.

In these times of manufactured consensus and social control, the importance of this authentic foundation becomes even clearer. The 2012 Smith-Mundt Modernization Act, which made it legal to propagandize American citizens, merely formalized what many had long suspected. It represented the ultimate betrayal of the government’s code with its citizens – the explicit permission to manipulate rather than inform. As anyone not under the spell has come to realize – we’ve all been thoroughly “Smith-Mundt’ed.” This legal framework helps explain much of what we’ve witnessed in recent years, particularly during the pandemic – when those who proclaimed themselves champions of social justice supported policies that created new forms of segregation and devastated the very communities they claimed to protect.

This disconnect becomes even more apparent in the realm of charitable giving and social causes, where “virtue laundering” has become endemic. The absence of a genuine moral code is nowhere more evident than in our largest charitable institutions. While many charitable organizations do crucial work at the local level, there’s an unmistakable trend among large NGOs toward what a friend aptly calls the “philanthropath class.”

Consider the Clinton Foundation’s activities in Haiti, where millions in earthquake relief funds resulted in industrial parks that displaced farmers and housing projects that never materialized. Or examine the BLM Global Network Foundation, which purchased luxury properties while local chapters reported receiving minimal support. Even major environmental NGOs often partner with the world’s biggest polluters, creating an illusion of progress while fundamental problems persist.

This pattern reveals a deeper truth about the professional charitable class – many of these institutions have become purely extractive, profiting from and even amplifying the very issues they purport to solve. At the top, a professional philanthropic class collects fancy titles in their bios and flashes photos from charity galas while avoiding any genuine engagement with the problems they claim to address. Social media has democratized this performance, allowing everyone to participate in virtue theater – from black squares and Ukrainian flag avatars to awareness ribbons and cause-supporting emojis – creating an illusion of activism without the substance of real action or understanding. It’s a system entirely devoid of the moral code that once guided charitable work – the direct connection between benefactor and beneficiary, the genuine commitment to positive change rather than personal aggrandizement.

The power of a genuine code becomes most evident in contrast with these hollow institutions. While organizations and social networks fracture under pressure, I’m fortunate that my closest friendships and family bonds have only grown stronger. We’ve had fierce debates over the years, but our shared commitment to fundamental principles – to having a code – has allowed us to navigate even the most turbulent waters together. When the pandemic response threatened basic constitutional rights, when social pressure demanded conformity over conscience, these relationships proved their worth not despite our differences, but because of them.

As we navigate these complex times, the path forward emerges with striking clarity. From Marcus Aurelius to Omar Little, the lesson remains the same: a man gotta have a code. The crisis of authenticity in our discourse, the chasm between proclaimed and lived values, and the failure of global virtue-signaling all point to the same solution: a return to genuine relationships and local engagement. Our strongest bonds – those real relationships that have weathered recent storms – remind us that true virtue manifests in daily choices and personal costs, not in digital badges or distant donations.

This Thanksgiving, I found myself grateful not for the easy comforts of conformity but for those in my life who demonstrate real virtue – the kind that comes with personal cost and requires genuine conviction. The answer lies not in grand gestures or viral posts, but in the quiet dignity of living according to our principles, engaging with our immediate communities, and maintaining the courage to think independently. As both the emperor-philosopher and the fictional street warrior understood, what matters isn’t the grandeur of our station but the integrity of our code.

Returning one final time to Meditations, I’m reminded of Aurelius’s timeless challenge: “Waste no more time arguing about what a good man should be. Be one.”

Tyler Durden
Sat, 12/07/2024 – 23:20