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Embrace competition (it makes you a better person)
1000 ways to improve our lives / #49
Good morning from Berlin,
Are you a fan of the market economy?
Ok, maybe the question is a little weird. You can be a fan of people, music groups and football clubs. But from an economic system? So, to put it another way: Do you think it's good that our society is organized using markets?
When I ask this question to friends and acquaintances, I usually get this or a similar answer:
The market economy is a necessary evil.
By most people, the market economy is valued for its results (above all prosperity) and cursed for almost everything terrible: climate problems, injustice, and exploitation.
So today, because I'm a fan of the market economy, a defence speech for this economic system.
In my opinion, the core of the market economy is almost a promise of salvation. It gives men and women the freedom to offer and buy what they want.
That means no life in Cockaigne. Because freedom is subject to restrictions: Anyone who wants to sell products must have specific skills (e.g. in manufacturing or trading), and anyone who wants to have things needs the necessary change. And yet the basic idea of the market economy is the prerequisite for a self-determined life.
In practice, this freedom leads to competition, which is praised by some for bringing prosperity and demonized by others for promoting immoral behaviour and selfishness. But is the latter really true?
An example: In a small village, there was only one baker. After introducing the market economy, a villager also decides to open a bakery. What changes? Undoubtedly, the previous monopoly baker will be worse off. He has to be careful not to lose his customers to the newcomer. Both will have to fight for potential customers. And both have two options to do so: They must be cheaper and/or better than their competitor. As a result, the range of bread, rolls and pastries will increase while prices decrease.
Conclusion number one: Competition leads to more prosperity.
But what about morality? Doesn't tough competition between the two bakers spoil it?
Probably not. Think of the situation before the second baker started. When the long-established baker held the monopoly position, he had a great incentive to behave immorally. To save money, he could bake smaller rolls. And to have more free time, he may have shortened the opening hours and kept the range of goods small. He just had to be careful that his offer didn't get so bad and expensive that the villagers preferred to bake their own bread. Overall, however, there was an incentive to increase one's own prosperity (more money and free time) to the detriment of the villagers (higher prices, poorer supply).
In a competitive situation, the baker does not become a better person. But he simply can no longer afford his immoral behaviour because otherwise, the customers would switch to the competitor.
Conclusion number two: In a market economy, people are no more moral, but a functioning system rewards those who do good to others – a decisive argument for the market economy
Plus: History teaches that only those forms of society survive in the long run that do not constantly demand moral behaviour to make society work. Walter Eucken, the co-founder of the social market economy in Germany, once wrote that the general social rule should be set to enable people to live according to ethical principles. I am convinced, a functioning market economy offers this possibility.
Do you agree?
Tell your friends!
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