First of all, "competitive markets" is a euphemism, not a social-scientific term that picks out a real-world economic system. What defenders of "competitive markets", or "free enterprise", or whatever actually mean to defend is capitalism. They mean to defend a profit-driven social system in which the means of production are the private property of a small class. This isn't a merely semantic point. "Free enterprise" is so obviously ideological that even apologists for capitalism are smart enough to avoid it these days--after all, whose "freedom" are we talking about here, and what's "enterprising" about a fat cat who extracts profit from thousands of workers who do all of the actual work? But "competitive markets" has an intuitive pull for many, so it's worth examining more closely.
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The intuitive pull derives from the fact that some alternatives to "competition" require that we embrace unfairness, punish the diligent, and reward the undeserving. There is something to this idea inasmuch as there clearly are--and even socialists concede this much--specific contexts in which competition is a good thing, where it would be unfair not to reward the "winner", and so on. For example, there are many sports-related contexts--here the "context" is defined by the particular rules of the game or practice--where we would reject any alternative to fair competition. So competition isn't inherently bad and we may even prefer it in certain specific contexts--games, contests, awards and honors, music and film auditions, etc.
So, the ideological move here isn't to invoke competition per se, but to vastly over-extend it to all spheres of social life, i.e. to assume that competitive interactions are the model for all human interactions. You'll notice, of course, that even many liberals accept this move and couch their claims for redistribution in the language of "leveling the playing field." This accepts the competitive-game metaphor but rejects the idea that the players are equally prepared to play. But, pace liberals, it is anything but obvious that competition is desirable outside of the rather specific contexts I named above. It strikes me as rather perverse to think of decisions that have profound effects on people's lives--and on the future of the planet!--on the model of a fair game. "Who should be granted access to medical care?"... "I don't know, why don't we have a big ping-pong tournament and whoever makes it to the finals gets health insurance... The rules of the game are fair, aren't they? And winners deserve to be rewarded, don't they?".
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Still, because of the "intuitiveness" of neoliberal norms of "fair competitive play", defenders of capitalism find it useful to argue that the system tends to actually embody those norms. But what exactly is the relationship between capitalism and "fair competition"? I'd like to suggest that, upon close examination, there isn't much of a relationship at all.
Competition happens at many levels throughout capitalist societies, but always in highly concrete and class specific ways. For examples, workers don't compete with capitalists--they may struggle against one another, but there is no meaningful sense in which they compete against one another since they each have divergent interests and goals. They're playing different "games", so to speak. Of course, within each class they both compete amongst themselves. But, as we'll see, there is no sense in which the abstract concept of "fairness" applies to their respective competitions.
When workers are pitted against one another in an individualistic struggle for scarce employment--which is often, but not always--it is anything but fair since racism, gender oppression, xenophobia, and other forms of oppression are operative. Moreover, this competition among individual workers tends to increase the bargaining power of the employer and drive down wages--again, clearly not a "fair" consequence for the working class writ large. And, of course, when capitalists are pitted against one another in a struggle to maximize profits--which leads them to try to cut costs and soak up as much market share as possible, lest they are eclipsed by competing firms--there is no sense in which this is fair either. This becomes especially obvious when we look at the global economy where military and non-economic forms of power are wielded by blocs of capitalists against others. To be sure, under capitalism there are other forms of competition--among municipal, state and national governments for business investment, for instance, which often fosters a "race to the bottom"--that we could talk about. But the fact remains that to praise the abstract notion of "competitive markets" is to talk in vague terms the obscure the actual class contexts of real competition.
But what about our main topic--namely, the link between "competitive markets" and innovation? As I say, the notion of a "competitive market" is vague and abstract. Which competition are we talking about here? My sense is that when people say "competitive markets create innovation" they clearly aren't referring to competition among, say, municipalities or among workers for scarce jobs. On the contrary, they're speaking from the perspective of capitalists, so what they mean to say is that competition among capitalists forces them to innovate. Once this is established, they prey upon the formal, abstract nature of the idea of "innovation" to argue that capitalism has an inbuilt tendency to produce new technologies that improve the lives of all--and make the world "greener" and more efficient.
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Now it is true that competition among capitalist firms forces them--whether the agents who run them like it or not--to try to maximize profit. It's also true that this competition forces capitalists to take a large portion of that profit and re-invest in expanded production, since a firm that fails to do this--other things equal--will tend to lose out to firms that do. This often leads capitalist firms to try to look for technological innovations which will lower costs and increase output--all the better to accumulate more profit than competitors.
But that is where the link between capitalist production and innovation ends. There is no general sense in which capitalism can be said, abstractly, to be "innovative". It puts pressures on certain specific classes to try to secure very specific kinds of innovations--just as it creates pressure to avoid (or even to destroy) other kinds of innovations. The innovations capitalism creates incentives for are those that maximize profit--e.g. those which reduce labor costs, increase output, and so on. There is no necessary link between this kind of innovation and the kind of innovation that improves human well-being and creates a more sustainable world. In fact, capitalism creates massive barriers to innovations that could have the potential to vastly improve our lives and save the environment--all because they are not profitable at all, or not profitable in the short term, or because they actually threaten existing profits.
The ideological here confusion arises when "innovation" is emptied of content and praised in an abstract way. But nobody values innovation as such. I don't think we need more innovative ways of killing human beings, for instance. And neither do I think we need more innovative means of cutting down trees or mining the earth for fossil fuels. Moreover, I could care less about innovative new ways to count the number of grains of sand on the planet or the number of blades of grass in Harvard quads. Innovation as such is pretty worthless. We only give a shit about innovation if it pertains to something we already value.
So, we have to ask two questions: first, what is it that capitalists are competing and innovating for, and, second, is that thing itself good? The answers are simple: to the first: profit, and to the second: no, it's not so good if you care about the planet and the human beings that live on it.
After all, it is highly profitable to destroy the environment in the short-run. And any serious attempt to stop environmental destruction would threaten the investments--topping out in trillions upon trillions of dollars--of entire industries and, indeed, of entire blocs of industries associated with nation-states involved in imperialist struggles against others. It is, as Lenin once wrote of the attempt to moralistically demand peace among warring imperialist states, a mere "pious wish" to think that we can stop ecological destruction within the confines of capitalist competition.
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One final thought: Surely a defender of "competitive" capitalism could retort: but if socialism--i.e. the democratic control of production--is to succeed, won't there have to be competitions for which ideas are best? Won't democratic assemblies have to consider and weigh alternative proposals and won't this process need to be competitive if its to succeed in selecting the best course of action? And isn't this rather like capitalist markets?
The analogy between democracy and markets is a bad one. Democracy, properly understood, is not a competition among isolated individuals with divergent private interests. It is, rather, a collective, deliberative process among equals--aimed at realizing common goals--where the force of the better argument carries the day. The "medium" of democratic social interaction is public reasoning--i.e. a public process of putting forward considerations for or against pursuing some collective course of action. If democratic interaction is communicative, capitalist market competition is blind and anonymous. It has nothing to do with rational, collective deliberation about a shared course of action for the common good--it's hallmark is atomized, isolated individuals pursuing merely private ends which may or may not be reflective. Bargaining and haggling are what people do in marketplaces, whereas collective assessment and rational debate characterize democratic assemblies.
Moreover, capitalist competition takes place in such a way that no one party to the competition gets to set the basic priorities or ends for which all compete. In capitalism, the basic priority of maximizing profit is fixed in advance--it is not itself one priority among many about which people are allowed to debate. By contrast, in a socialist society, people would consider alternative proposals in a direct, rational way by debating together--as equals--which is most likely to produce the best outcomes for all. Moreover, a socialist society is, by definition, one in which people have the power to collectively self-determine which priorities society shall pursue and what kind of shared life together they want to live. There's nothing competitive about that at all--there is no individual struggle to see who is the "winner". It's rather more like the process of scientific inquiry, where various hypotheses are put forward by individual scientists who, as a community of rational inquirers, test and evaluate those hypotheses to see which of them is most likely to be correct. Of course, if socialist democracy shares formal characteristics in common with scientific inquiry it is substantively different in that it explicitly emphasizes the fact we must choose and reflectively endorse the basic priorities and goals of social cooperation. But the science-democracy analogy is still, I think, a highly illuminating one.
1 comment:
How fitting that you wrote this on the same day this article was published: http://www.theverge.com/2012/7/5/3138711/five-years-after-the-iphone-carriers-are-the-biggest-threat-to-innovation-editorial
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