How to Think About Social Issues: Tips 11-12

11. Competition is not war:

Fuzzy thinkers have a tendency to confuse the commercial competition of the free-market with violent warfare. However, the two are completely different. Though sometimes businessmen will advocate for the use of coercion to advance their interests, this does not mean that free-market competition as such is the same as violent warfare. Consider a soccer game. The purpose of the soccer game is to determine which team is better at playing soccer. There are rules of the game to ensure, as much as possible, that factors other than the relative soccer-playing abilities of the two teams do not affect the outcome. Thus, if the players on one team decided to bring concealed pistols to the game, and went on to massacre the other team in order to ‘win’ the game, we cannot really talk about a soccer game anymore. The team with the pistols did not compete with the other team based on their soccer-playing abilities, but used violence to tilt the outcome in their favour.

Similar considerations apply to commercial competition. The purpose of commercial competition is to serve the consumers in the most economical, high-quality way. In contrast to soccer, this competition is not just to determine who is the ‘best’ at business, but to ensure that the people who are the best suited to serve the consumers in a particular way do so, and that others are spurred to surpass the established providers in consumer satisfaction, which is also a boon to the world’s consumers. There are rules of commerce to ensure, as much as possible, that factors other than the relative consumer-serving abilities of the competitors do not affect the outcome. Thus, if the operatives of one company decided to steal the products of another company or petitioned the government to prohibit the other company from competing with them, we cannot really talk about free-market competition anymore. The company employing coercion did not compete with other companies based on their ability to serve the consumers, and in doing so, both the world’s consumers and the potential competitors are injured.

Another spurious argument, which is related to the confusion described above, is to assert that rich companies and individuals can exert “economic power” over others, which is just as bad as coercive power. But, it is difficult to see why wealth equates to coercive power. Everyone in a market society has the right to either exchange or not exchange with anyone else. If a rich person decides that he would rather not pay $1000 to a cleaning lady for a day but would rather pay $200 to the cleaning lady for a day, the cleaning lady has the option of either accepting the $200 or not accepting it. To take away the “economic power” of the rich employer, the cleaning lady would have to have the right of forcing him to make any exchange that she saw fit, in this case perhaps $1000 or more. Also, the market ensures that the employer could not just pay $1 to the cleaning lady for a day, because presumably competing employers value her services more than $1 and would employ her instead, closer to the going market wage for cleaning ladies of her calibre.

Others say that free-market economists always go on about the consumers determining the production process, but not all consumers have an equal voice in determining this, hence the system is not fair and undemocratic. But the rich having greater relative consumption power is precisely what incentivizes them to serve the consumers effectively, as discussed in tip #4, otherwise why would they bother? Voluntary exchange and coercion are completely different things analytically, and to lump them together is to obfuscate one of the most important distinctions in the social sciences.

12. Define your terms:

When engaging in argument, about social issues in particular, it is very important that both participants agree on the definitions of the terms that they are using. Debates that revolve around two different definitions of a term are useless. Only when the term signifies the same thing in both participants’ minds can a proper discussion be held about the desirability of what that term signifies.

For example, there is a lot of disagreement over the meaning of the term ‘capitalism’. Marxists will say that capitalism is a stage of history, and that in this stage, there are various historical sub-stages of capitalism (early capitalism, late capitalism). Different economic policies are associated with these sub-stages, for example, early capitalism favours free-trade policies, while late capitalism favours protectionist policies. For the free-market economist though, capitalism is equated with the unhampered market and contrasted with government economic interventions and socialism, the ultimate government economic intervention. With this definition, it is absurd to say that protectionism is a late capitalist policy, by definition protectionism is a government intervention and hence a deviation from pure capitalism.

It is obvious how frustrating an argument between two disputants that held these two different definitions of capitalism would be. If both, for example, thought that protectionism was a bad thing, but one attributed it to late capitalism and another to government interventionism and thus not capitalism, then they would not really be disagreeing with one another, only wasting their time with definitional debating.

As another example, the word liberty is subject to an array of different definitions. Some think that liberty means the freedom to do whatever one wants, regardless of its effects on others. Thus, the freedom to rob, murder, and assault would be the most consistent realization of the call for liberty. Libertarians and free-market economists have a different definition though. For the libertarian Murray Rothbard, liberty is an outgrowth of the right to self-ownership and the corollary right to own property that one has created, homesteaded, or been given/sold. Thus, liberty for him means the respecting of people’s property rights in themselves and their justly-held material possessions. For free-market economist Ludwig von Mises, liberty can only exist in society, because it is defined as freedom from arbitrary interference with your person and property by other members of society. Thus, in the lawless jungle, there is no such thing as freedom, because there is no powerful authority to punish those who aggress against other people’s persons or property.

Whichever of the latter two definitions one adopts, it is clear that liberty definitely does not include the freedom to rob, murder, and assault. Again, a debate about the desirability of liberty between two disputants with these different definitions of liberty would be fruitless, because while both presumably agree that a world where everyone had the freedom to rob, murder, and assault would be bad, they are just arguing about definitional matters around the term liberty and not making any progress. A suggestion: if such definitional problems pop up in social controversies, come up with a new term to signify what you mean. For example, rather than speaking of capitalism to denote a free-market society, talk about an unhampered free-market society instead.