Competition: the Safeguard and Promoter of General Welfare

Abstract

Competition in economic discussion means competition in trade. To this I shall confine my attention, although the law of competition applies generally to all human activities, just as the law of gravitation governs universally the physical world. When two or more persons are engaged in the same kind of business of production or trade, or in different kinds of business, which, although different, are mutually competitive, we have actual competition between them, each competitor measuring his strength against the other. When one person is engaged in any particular business, but there is an opportunity for another one or more to engage in it, we have potential competition. The effect of potential competition is substantially the same as that of actual competition. In each case the competitor, or the sole trader who is subject to potential competition, must exert himself to maintain himself in the competitive struggle. This in itself is an important advantage, for many men, if not most men, contrary to the belief of our socialistic friends, exert themselves only when they are obliged to do so. But there is a further advantage, for under the stimulus of the rivalry the competitor or sole trader will normally do more than merely try to maintain himself. He will exert himself to accumulate a surplus over and above what is necessary for his maintenance and support. He will exert himself to achieve a positive success and to excel his rival. The effect, therefore, of competition is to quicken the energy, to develop the powers and to render more efficient the action of each party to the competitive struggle, and, so far as it has this effect, it is wholly and unqualifiedly beneficial. To it the world is indebted for the inventions, improved processes of manufacture, improved organization of industry and trade and the great energy with which industry and trade have been prosecuted-all of which has rendered possible the enormous increase in the wealth of the world during