Free Competition Is Voluntary Cooperation
Edward C. Harwood
[An essay written by E.C. Harwood in 1956. Reprinted
from the American Institute for Economic Research bulletin, Research
Reports, Vol. LIX, No.23, 7 December 1992]
From the viewpoint of anyone
who is considering all the economic activities of a social
group, "free competition" is another name for
voluntary cooperation. This may seem a surprising statement,
especially in modern times when many advocates of cooperative
enterprise are criticizing competition and the profit motive.
That cooperation is the opposite of competition seems to be
generally assumed. However, careful analyses of the economic
activities for which these words are names reveal that "free
competition" and "voluntary cooperation" are two
different names for the same economic behavior.
Sometimes the specific use of a word becomes plainer when placed in
contrast with that which is not referred to. This step in the analysis
is especially important for the word "competition" because
it is so often associated with war. Phrases such as the "wasteful
warfare of competitive enterprise" or the "commercial war"
are common figures of speech. In order to avoid this seriously
misleading association of ideas, the vital differences between free
competition and war must be considered carefully.
Competition vs. War
Reference to any standard dictionary and brief consideration of the
customary uses of these words facilitate explaining the association of
competition and war.
Webster's International Dictionary (Second Edition) includes
in its definition of competition the following phrases: "the act
of seeking what another is endeavoring to gain at the same time;
common strife for the same object; strife for superiority; rivalry for
a prize." The word "competition" is common in
describing sporting events of one kind or another. In this connection,
common usage speaks of the winner, perhaps identifying him as the
recipient of a prize; and his rivals in the contest are said to have
been defeated The words, win and lose, victory and defeat, also are
associated with war. Armies march onto victory or defeat; and to the
winner go the spoils of war, a circumstance that tends to make war
even more closely associated with competition for prizes.
That most human beings have formed the habit of associating ideas
long has been noted. Only those individuals who develop the additional
habit of discrimination necessary for scientific analysis can
successfully avoid the fallacies that may be introduced when
conclusions are drawn from a careless association of ideas. Therefore,
one can readily understand how the close association of such striking
ideas as winning, losing, victory, and defeat should have encouraged
the generally accepted notion that competition is analogous to war.
When a specific definition of war is used, the difference between it
and competition becomes more clear. Webster's first definition of war
is "the state or fact of exerting violence or force against
another." In this connection, of course, "violence" is
used in its most extreme sense. Every war that has been fought has
proved again that there cannot be any Marquis of Queensberry rules for
Therefore, war is essentially different from free competition. In
games, and even in the prize ring, unrestricted violence against the
opponent is never permitted; whereas in war it is the accepted mode of
conduct. As everyone knows who has trained soldiers for the
battlefield, much of the training period is devoted to overcoming
acquired habits of fair play, to teaching that a blow below the belt
is not only permitted, but is essential to victory. What could
possibly be farther removed from free competition?
The distinction between warfare and free competition becomes even
more sharply defined when the dictionary's use of "competition"
in connection with economic problems is considered. The definition is:
"the effort of two or more parties, acting independently, to
secure the custom of a third party by the offer of the most favorable
terms." Restating the definition for war emphasizes the contrast:
"state or fact of using violence against another." These
more precise applications of terms reveal that writers who associate
free competition with war seriously mislead their readers as well as
We know, then, that competition is not analogous to war, but that of
course does not prove the opening assertion, "From the viewpoint
of anyone who is considering all the economic activities of a social
group, 'free competition' is another name for voluntary cooperation."
Inasmuch as the behavior named "competition" has now been
somewhat clarified, the next step is to analyze the actions described
by the word "co-operation." Also to be made clear is the
significance of "voluntary" as contrasted with "involuntary"
Voluntary vs. Involuntary Competition
The word "cooperate" is simply defined as "to act or
operate jointly with another or others," Usually a common
objective is implied, such for example as their mutual benefit.
Therefore, although two or more parties are involved in a war, the
fact that all concerned are using violence against others does not
make them joint operators in the sense in which those words are used
in describing cooperation. Evidently, therefore, cooperation and
competition have at least something in common, inasmuch as each
excludes the idea of war.
We now consider what behavior is referred to by "voluntary"
as contrasted with "involuntary" cooperation. Again the
selection of certain notions that should be excluded will be helpful.
Except for a Robinson Crusoe cast upon a desert isle, or an
occasional hermit who has wholly withdrawn from contact with his
fellow men, all human beings must cooperate with their fellows to a
certain minimum degree. The unalterable circum stances of man's
existence force cooperation. In fact, the species would soon cease to
exist if this minimum of cooperation, including cooperation between
the sexes, were discontinued. For all practical purposes, therefore,
every living individual must cooperate with others to some extent.
For the purposes of this discussion, analyzing what the minimum
degree of cooperation must be at any particular time or place is not
essential. We need only remember that the unalterable circumstances of
man's existence force upon him some degree of cooperation. To
cooperation required for the preservation of the race (such as the
cooperation of a mother nursing her child) we apply the name "inevitable
After the boundary of cooperation forced by unalterable circumstances
is passed, customs, institutions, and laws established by men may face
cooperation on the part of individuals. Such involuntary cooperation
may be so extensive that virtually all the economic activities of men
are prescribed by the state or other agency that forces the maximum
degree of involuntary cooperation.
What Is Free Competition?
In an earlier section of this discussion, the phrase "free
competition" was used repeatedly, but only competition was
described. Inasmuch as the ideas suggested by the qualifying word "free"
are essential to a clear understanding of the subject, description of
what is meant by "free competition" is necessary.
Many writers who use this phrase "free competition" fail to
realize that competition implies action in accordance with certain
rules of procedure. Free competition, therefore, does not carry any
implication of a "free for all" fight, with gouging, biting,
lacking, and scratching all permitted. Evidently, the rules and
regulations governing or affecting competition may tend to create a
fair field with no favor; or they may, on the other hand, through the
award of special privileges of one kind or another, give advantages to
some that are denied to their fellows. The phrase "free
competition" implies the former condition. "Free
competition," therefore, implies that each individual concerned
must of course comply with the rates, but that the rules, including
all the customs, institutions, and laws of the social group, are such
as to ensure a fair field with no favor. Furthermore, there is no
implication that free competition has ever actually existed or does
now exist in any locality. It may have existed in the past, may exist
somewhere at present, and conceivably may exist in the future at some
time or place, but the fact that it does not now exist in the United
States, for example, does not lessen the usefulness of the notion for
the purpose of this discussion.
Referring again to the economic behavior called "competition,"
we repeat the definition: "the effort of two or more parties,
acting independently, to secure the custom of a third party by the
offer of the most favorable terms." In other words, economic
competition is the effort of two or more people to produce and offer a
commodity or service for a third party on the most advantageous
exchange basis from his point of view. In short, where there is free
competition the competitors are striving to perform those economic
functions that are most desirable from the viewpoint of the consumer,
and of course nearly all of the consumers are likewise competitive
producers. (In this connection, specialization or the division of
labor not only increases the effectiveness of human effort but also
raises to a higher level the minimum degree of cooperation required in
an economic society.)
If now we enlarge our viewpoint, so that instead of considering only
a few individuals, we regard the social group in its entirety, free
competition is seen to be that situation in which men are voluntarily
cooperating. All of the group, by purchasing what they prefer,
encourage those best qualified to provide the desired economic things
including services. Each of the group who is offering things in the
markets voluntarily seeks to cooperate by performing in that economic
role where he can most effectively serve his fellows and thereby
maximize his own reward in the marketplace. In practical effect, under
perfectly free competition, producers cooperate with consumers by
endeavoring to provide (he best of whatever is desired at the least
cost. Thus "competition" and "cooperation" become,
under such conditions, merely different labels for the same highly
efficient economic behavior.
Also important in this connection is the fact that the economic
behavior we label "free competition" or 'Voluntary
cooperation" results in the greatest possible total of benefits
for all who participate. Unlike the competition in games where some
lose what the victors win, and unlike war where even the winner may
lose more than he gains, freely competitive economic behavior enables
each participant participant to gain the greatest possible reward by
voluntarily cooperating in a procedure whereby all concerned benefit.
One need only look about the world and observe conditions as they are
to see the facts brought out in this discussion. In the early days of
this country, when free land was available for the taking, the Nation
was closer to a condition of perfectly free competition or voluntary
cooperation than it is today. Perhaps the world's nearest approach to
free competition or voluntary cooperation still is found in this
country, in spite of the increasing interference with free competition
that has resulted from the growth of special privilege and government
intervention. In Russia, on the other hand, there is today [
1956 - Ed.] nearly the opposite extreme. There is what was
originally intended to be a fully cooperative society, but free
competition has been nearly eliminated, and we find in its place
involuntary cooperation, forced labor, in fact widespread slavery.
Both careful reasoning and the obvious facts point to the same
conclusion, that "free competition" is another name for
voluntary cooperation, and that the elimination of free competition
leads to a condition of involuntary cooperation, that is, slavery.
In this brief discussion we have not attempted to ascertain whether
or not free competition is desirable. That, no doubt, depends on the
results to be achieved, the personal desires of those who are
involved, and many other factors. Once the public fully realizes that
free competition is voluntary cooperation, much nonsense that has been
written on the subject can be discarded; and a fresh start can be made
in the consideration of pressing problems, with the confident
expectation of more useful results.
Since E. C. Harwood wrote this
luminous essay nearly 40 years ago, overt criticism of
competitive economies has become muted. This would appear to be
mainly a result of the collapse of command economies around the
globe. Critics do continue to complain about economic conditions
and to attribute many of the deficiencies they perceive to such
hallmarks of competitive economies as private property and
price-driven decision-making by individuals. However, because
they no longer have any clear alternative to offer, they have
been reduced to "Yes the market works, but what about...."
The "what abouts" today may range from "poverty"
in general (and "homelessness" in particular) to the "environment,"
or even vague concerns about a "lost sense of community"
(which usually seems to amount to complaints from the well-born
and/or highly credentialed that they do not have as much power
as they feel they deserve).
In short it is now far more widely accepted that, as Col.
Harwood put it, "... the economic behavior we label 'free
competition' or 'voluntary cooperation results in the greatest
possible total of benefits for all who participate," and
the critics are left to complain about 1) the distribution of
those benefits and 2) the effects of steps toward free
Simplistically, the former concern prompts calls for additional
special privileges and the latter involves opposition to the
removal of such privileges. Efforts to impose or maintain
special privileges are a "negative sum game," because
the gains of the beneficiaries are less than the actual losses
and/or lost opportunities imposed on everyone else. If truly
free competition results in the greatest possible total
benefits, then restricting the freedom of some participants by
granting special privileges to others will reduce that total.
Efforts to gain or retain special privilege thus resemble
another "negative sum game": physical combat. Perhaps
as a result, the language of conflict ("trade wars,"
etc.) continues to intrude into discussions of the economy, and
because of the continued confusion between the political and
economic processes, we have yet to witness the "fresh start
... in the consideration of pressing problems" that was
called for by E. C. Harwood so long ago.