The previous post Natural Coopetition attempted to clarify human behavior a bit and touched on a number of issues that have since been explored in more depth. One that is worth further inquiry is the complementary roles of Competition and Cooperation.

Free-market competition is often described as “cutthroat” and “wasteful.” “Dog-eat-dog” rivalries are fueled by “greedy self-interests” operating according to “the law of the jungle” in which “survival of the fittest” is the only rule. In contrast, government regulation is said to have the potential to promote genuine cooperation in which citizens “pull together” to advance the common good. On the rhetorical battlefield, “competition” is too often out-gunned by “cooperation.”

But those who deplore free-market competition simply do not understand it. Competitive markets excel at promoting cooperation. Indeed, to succeed in the market requires great cooperative skills...

A mistake made by those who condemn competitive capitalism is to assume that competition and cooperation are two alternative means of achieving some end. Alternatives they are not. Competition and cooperation are not only complementary human relationships—each is an unavoidable reality of human society. A mark of a peaceful and prosperous society is that both competition and cooperation are channeled into their appropriate realms.

This essay by Don Boudreaux and Hugh Macaulay explores how both are necessary and beneficial when used appropriately, and how both are harmful when not well used.

When competition is stifled, all suffer.

Capitalism's critics insist that there is a cooperative way to allocate resources. People can meet together and agree who gets what. Early American colonists in Jamestown and Plymouth initially tried to avoid all competition and allocated resources exclusively by cooperative, collective decision. The result was starvation. When each settler realized that his food entitlement was independent of the amount of work he put in, too many settlers chose not to cooperate in the community's productive efforts. In both colonies, the specter of starvation forced the abandonment of these collectivist plans, and output then expanded.[1]

Similarly, the Marxist plan for distribution is a wonderfully cooperative, and detrimental, scheme. If needs are the basis upon which goods are allocated, it will pay each person to produce not goods but “needs.” It will pay people to move toward poverty, for only then will one's needs be maximized. Moreover, if others do not readily recognize these “needs,” it will pay those in “need” to exert efforts emphasizing the genuineness of their “needs.” Such cooperation on this score would produce not only universal poverty—society would be awash in nothing but “needs”—but also hostility among those who do not receive what they believe to be their due. Such an outcome is hardly a happy consequence for a cooperative society.

Just as importantly, competition though stifled is not eliminated, it just migrates to activities that reward it such as gaining political and bureaucratic power, and in a sense the competition to demonstrate need noted above is ... err ... competitive, but is destructive in every way. Cut throat competition which seeks to harm rivals without cooperating with consumers, such as monkey wrenching competitors, is harmful too.

Just as some forms of competition are harmful, some cooperative activities are destructive.

... not all varieties of cooperation are desirable. Labor unions are made up of cooperating workers. To the extent that unions secure special-interest legislation, the wages of workers cooperating in a union are raised at the expense of consumers and of non-unionized workers. Similarly, businesses often cooperate through trade associations that lobby effectively for import restrictions. Such cooperation yields benefits for the few at the greater expense of the many.

It isn't merely balance between competition and cooperation that is good, it is appropriate use.

Market discipline, in combination with the information conveyed in the form of market prices, ensures that each of us is cooperating with as many other people as possible, in the most effective manner possible. Far from undermining cooperation, the market enhances cooperation.

Competition is required to increase cooperation. This is a difficult concept for many, a messy concept that isn't cleanly this or that, not well suited to political slogans and talking points, too reminiscent of koans or other types of imprecise wisdom nuggets that seem better suited to monks than those engaged in the hurly-burly of striving for social power, but we really would benefit from an increase in comprehension of these more difficult concepts.

Consider this book, Oxymoronica: Paradoxical Wit & Wisdom From History's Greatest Wordsmiths, as a possible teaching aid. With a gift giving season approaching it may be useful to have a few such books in mind.