Competition; C. R. La Dow

Charles R. La Dow COMPETITION COMPETITION occurs when one strives to do better, qualitatively or quantitatively, something which others are doing. It also happens when one provides a unique good, or service, or one which provides an acceptable substitute for a going thing. Since many risks are inher ent in any endeavor, and no one can predict, with certainty, what re sources will be required to bring it to a successful conclusion, the individ ual (personal or corporate) is jus tified in charging for his efforts all the market will bear. His customers will tell him soon enough if he is charging too much either by trading elsewhere, or doing without his pro duct. There is no competition where everyone wins. To the consumer, there are no indispensable goods excepting air, Mr. La Dow, of San Diego, is a retired teecher of social studies with an ongoing concern for maximiz Ing the freedom of the Individual.

554 water, and minimal living space. The former two are free goods, ex cepting the cost of storage and deliv ery of the water. Basic living space has never been an issue in civilized societies outside the rarity of banishment. As for all the rest, in cluding food and shelter, the options are too manifold to.permit anything being called indispensable. This marks the ultimate power of the consumer and assures us that the producer, or entrepreneur, can never take advantage of him. When competition for the favor of the consumer has created the im mense variety of goods and services now available in our society, the simplicity of this process becomes obscure. Pundits, intellectuals, politicians, and those who are low in the competitive scale are spurred by envy of this cornucopia of material wealth. They find rationalization for their envy in such ideologies as COMPETITION 555 Marxism, or ((Christian Socialism."

Ignoring the evident reality that there is less disparity between our richest and our poorest citizens than in any other past or present society, they make ever-increasing demands for redistribution of national income by political force. War is being waged on the miracle of competition. They are trying to ukill the goose that laid the golden egg." Conspiracy? The chief gambit in this war on competition is the charge of conspir acy. Big business, so the claim goes, is conspiring to gobble up the small firm and bilk the consumer. Conspir acy is one of the most difficult in dictments either to prove or dis prove, but especially difficult to dis prove when envy is the majority witness. After all, corporate execu tives do talk to one another and do direct their policies, including prices, with some regard to what they learn from one another, as well as from consumers. There are also interlocking directorates and a good deal of mobility of executives be tween corporations. (There appears to be no oversupply of executive tal ent and experience.) So, charges of the existence of an ((inner circle" in any industry are easy to believe in the light of envy.

However, a fair and general ob servation informs us that such ap pearance of collusion exists in human affairs at all levels. The non-pejorative word for it is coopera tion. And, the peculiar thing about it is that those who are most ada mantly opposed to ((corporate con spiracy" are the most enthusiastic adherents of cooperation. Indeed, the centerpiece of Franklin D. Roose velt's New Deal was industry-wide collusion and blatant price fixing. While the Supreme Court declared the NRA vehicle of that policy un constitutional (one conservative de cision in this era which has stood), its spirit still lives among the ((liberal" Democrats. It is quite clear that they have no real objection to conspiracy-as long as they direct it. Their tacit excuse, even some times explicit, is that their motives are pure, while those of corporate tycoons are rather uniformly sus pect, if not downright venal. For most of this century, their intellec tual apologists, from Lincoln Stef fens to John Galbraith, have been able to peddle this conception of affairs to the constituency of envy.

Blaming the Advertiser A companion scapegoat to corpo rate conspiracy has been advertis ing. The liberal claim that advertis ing is corrupting the public taste, endangering the public health, and impoverishing the common people also calls for inspection. As for health and longevity, they have im proved throughout our history, most 556 THE FREEMAN September especially recently. It is only fair to suppose that advertising is more an answer to public taste than its cause. It is also fair to ask what liberal intellectuals have contributed to the improvement of public taste. It seems reasonably obvious that Gen eral Motors, General Electric, American Tobacco, and others have had Iittle impact on the taste for bad art and literature and trivial educa tion which are the foundations of consumer choice. On the other hand, liberals seem to be at the forefront of every movement toward the elimi nation of discriminative taste, just as they have led in the trivializa tion, even vulgarization, of the school curricula.

On the broader view, the case against advertising in general would seem to be as dubious as that against corporate conspiracy. Unbi ased observation suggests that ad vertising is much more the caterer to public taste than its creator. In any event, corporate advertising power is more than matched by that of its detractors, who have gained support of the Food and Drug Ad ministration, E.P.A., and the Sur geon General, among many others too numerous to mention. Indeed, governmental meddling with competition, including dis criminative antitrust suits, render corporate intrigue much more likely to occur, if not downright necessary. If the great firms do not combine Uin restraint of government," it is not at all impossible that they will eventu ally lose the opportunity to compete. Such an eventuality certainly lurks in the plans of Ralph Nader, as well as in the Galbraithian critique, which would make them kennel dogs of the state.

When the efforts of Common Cause to deny corporate use of funds in political self-defense through lob bying and political contributions, the politicized clout of Big Labor, and support of their enemies by the American Civil Liberties Union are taken into consideration, survival of competitive Big Business does seem in question. Long-term corporate obeisance to, if not connivance in, creeping inflation further mars the fighting chance for competition's survival, for it has conceded the ul timate (money) power to the politi cians. GovernmentInvolvement Finally, if we wish to be honest about it, we must recognize that there is· now only one viable source of genuine conspiracy in restraint of trade: that to be found in our gov ernments, federal, state, and local. For, aided by the blight of ((revenue sharing," teeming bureaucracy has now nosed into the smallest hamlet in the land. Regional agencies of every kind abound in frustration of competi1980 COMPETITION 557 tion. Combined with inflation, they have all but brought construction to a standstill, effectively throttling competition in the housing industry.

Auto builders seem headed toward a similar slump, with other industries expected to follow. The signs of ((re cession" are generally faced with acceptance that the economy needs ((cooling down" and consumers will restrict spending. High interest rates, credit controls, a slight fiat money squeeze, and a token balanc ing of the budget are expected to halt inflation. An Hexcess profits tax" on the oil companies has been added to this assault on competition. With this on top of at least 42 per cent of the nation's product falling into the control of government, it is difficul t to imagine how competition can be strengthened. Healthy competition, combined with honest private cooperation will only be revived when government is forced to relinquish its monopoly of conspiracy in restraint of trade and is made to concentrate upon its basic duty marked by common and statu tory law, as prescribed by the Con stitution, and the maintenance of domestic peace, security, and the furtherance of peaceful commerce among nations.

As in England and elsewhere, the state has run the course in attempt ing to manage private competition and has proved its utter incompe tence to assume that task. Neglect ing its constitutional duties, our federal government has saddled its people with perennial national debt, misappropriated private property (both by inflation and by exorbitant taxation) in the unconstitutional transfer of wealth, overregulated all private activities, and made a shambles of our relations with the rest of the world. The list of grievances against George III, in the Declaration of Independence, reads like a cata logue of the vices which our own government now perpetrates upon us. No revolution is now called for because the proper documents are all still in place. All we need to do is put into office men who understand, and will abide by, the ((highest law in the land." The proper business of all genuine intellectuals is to edu cate the populace to that end. @ IDEAS ON LIBERTY Trade THERE is nothing so useful to man in general, nor so beneficial to particular societies and individuals, as trade. This is the alma mater, at whose plentiful breast all mankind are nourished.

HENRY FIELDING Arthur Shenfield LAW LEGISLATION AND LIBERTY: Hayek'sCompleted Trilogy IN 1973 Professor Hayek published the first volume, under the heading Rules and Order, of a trilogy enti tled Law, Legislation and Liberty. Its place in the long development of his thought in the field of legal and political theory was examined in ((The New Thought ofF. A. Hayek" (Modern Age, Winter 1976), which offered the observation: (tlf we may judge from the standard established by the first volume, the scholarly world can await a feast of analysis Arthur Shenfield, British economist, writer, and bar rister-at-Iaw, has been regent's professor of econom ics at the University of California and visiting profes sor of economics at the University of Dallas; in 1978 he was visiting professor at the University of San Diego Law School. He resides in Old Windsor, Berk shire, England. This article is here"reprinted by permission from the Spring 1980 issue of Modern Age, a quarterly re view published by the Intercollegiate Studies Insti tute, Inc., 14 South Bryn Mawr Avenue, Bryn Mawr, Pennsylvania 19010.