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FREE COMPETITION IN A WELL-REGULATED MARKET vs.
FREE COMPETITION IN AN UNREGULATED MARKET

September 18, 2017

by S.R.Weber

There is something to be said about competition, no matter what political leanings you have--something positive. Are you not competing against yourself if you play cards with yourself? Or play a simple computer game--against the computer, as it were, but it is in a way a competition with yourself, is it not? Or if you consider the results of the previous week, month, season as to something you did--daily work, perhaps-- and wish to improve on it? Or you would like, for the fun of it, to outperform the work put in by your collegues. And so also, competition, in a friendly sense, between friends, adds to the spirit of workmanship--to use that old and lovely word.

Competition in the sense of "free" means that, in a certain sense, nobody is babysitting as to the details and structure and process of the competition, nor deciding for you what you select as your area to work and compete in.

Now I have never believed much in those of the left who seem to think collaboration can overtake the role of competition--and, before the sentence has reached its full stop,--let me also say that I have never believed much in those of the right who seem to think regulations are hampering progress. Nor does this place me in the political centre. Rather, we are talking a dimension, like so many other dimensions, that haven't been reflected in the most public of political discourses for the past century--and which has its own 'left', 'centre' and 'right', even its own extremes. To clarify, consider the following postulates:

In an unregulated market:
* Free competition leads to some companies getting more successful than the others.
* Initially, this may be due to the fact that they have better products at more affordable prices.
* Their success, combined with the fact that the market is unregulated, will generally lead them to overtake or somehow eliminate the competitors.
* Having done this, the prices can go up and the quality of the products can go down.
* Then somebody notices this, and sets up alternative companies with better products at higher prices.
* But the governing company or set of companies will, in an unregulated market, move with irresistable force and skill to either overtake or eliminate these companies, and in the process will get even stronger than before.
* Eventually, the market stagnates completely.

Introduce, as remedy, the obvious idea of a "regulated market". This is not merely a regulation that says that milk bottles should have date stamps on them. In this context, regulation means chiefly that rarely-used and weak set of rules coming under the heading of "anti-trust" --famously used to split some American oil companies some decades ago, leading to the creation of e.g. Exxon, Inc. But we're talking anti-trust of a completely different kind--the kind it takes to reverse the typical development into stagnation that an unregulated market leads to, according to the just-mentioned postulate.

The type of regulation we would like can be called "extremely SMES-friendly laws". SMES, or Small and Medium Sized Enterprises, is a concept which constitutes but a tiny fraction of the types of companies that dominate the news of today's monopoly-loving stock exchanges. (Though in my opinion, that which in typical political jargon is called "medium-sized" is more properly called "rather big-sized".) And so in an extreme version, a SMES-friendly market regulation could be roughly like this:

* Any company, or set of companies operating under a trust or some overt or covert association, constituting an enterprise of more than, all in all, 50 employees is to be forcibly split up--if need by police action--into smaller units, and board members shall be banned for a decade to do anything in that market if they collude to make several companies act as one.

This is a regulation that would be outrageous and shocking not only to far right but also to moderate right, centre right, centre left, moderate left and pretty far out on the left as well. To scare the far left away from this, let's add that no government incl all their institutions should much supercede this size as well, unless there are objectively vital needs for it in a bundle of concrete cases. You see that this falls out of the political discussion completely: it is a totally different dimension --the dimension of size--and as people from all walks of life, of all political colours, far too often are in love with bigness, it is a fringe phenomenon that it is discussed at all--despite the occasional classic book dedicated to the theme "Small is Beautiful" (and indeed the most famous one with just this theme--though we approach them in a different manner here).

Let us consider, then, what this annoying regulation or postulated law could bring of benefits, by a new postulate:

In a regulated market:

* Free competition leads to some companies getting more successful than the others.
* Initially, this may be due to the fact that they have better products at more affordable prices.
* Their success, combined with the fact that the market is regulated, will however not lead to the overtaking or forced elimination of the less successful companies. Rather, some of the less successful companies will strive to, and succeed in, improving the quality of the products and reducing the prices, and will, at times, win over the winning company. While, other companies will vanish or remake themselves and find some other area in which they can more fruitfully compete.
* Since the market is regulated, free competition will also make it exciting for newcomers to start up entirely new companies competing with old companies and sometimes they will top the list of the most successful companies.
* In short, since the market is regulated, it will, like a river, cleanse itself continually, and contribute to a healthy and creative economy and a good society.

If you who read this agree to this possibility, then ask yourself: is there any channel--any whatsoever--that could be engaged to encourage dialogue and good thinking about such extreme SMES-friendly regulation alternatives? Any channel that YOU could use? Perhaps, then, over some decades, the political discourses might change and the suitable changes could come about here and there. But be sure, this is a very long-term activity indeed, to try and get this sort of stuff into the political mainstream.

***
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