, , , , , , , , , , , ,

So I have been told repeatedly by someone who believes that competition is destructive and should be prohibited by law. Competition makes businesses fight one another for clients, forcing the less able out of business and causing stress to businesses and their employees alike.

And I have to agree! Competition can be a real pain in the ass! Take automobiles, for example:

If it hadn’t been for his destructive competitors, Henry Ford Sr. wouldn’t have had to rebuild his assembly line (in fact he wouldn’t have needed to build the assembly line that allowed him to rationalize and pay his workers better than any other industrialist of his time). He, and his successors, could have continued building Ford Ts until this day. They wouldn’t have had to worry about research and development, if nobody had tried to drive them out of business by giving the public better cars. We would all have been driving Ford Ts, and liking it! (If we could afford them!) OK, they weren’t as fast, or as economical, as modern cars, and they were also somewhat less comfortable and less safe. But at least the workers at the Ford factories wouldn’t have had to worry about Chrysler coming up with a new, smart model and forcing Ford to “restructure” and lay off workers.

(Of course Chrysler wouldn’t be hiring workers either…)

Ford T

Ford T

The Soviets understood this and granted a state monopoly to the Lada factories, ensuring that everybody in the USSR could have a Lada, if they had the patience to wait their turn for 10 or 12 years. Or had friends in the Party. And the Lada was a great car, really. Especially if the only alternatives – the competition – were East German Wartburgs or Yugoslavian Yugos.

Best of all, with the state owning the monopoly they also proved that, without the state nobody would own cars at all!

A Lada

A Lada

Destructive competition like this permeates everything. For example computers. In 1985, Intel Corporation produced the first 80386 processors, enabling the creation of Personal Computers that were more powerful than IBM’s middleware computers, the so-called minicomputers. IBM Corporation wisely decided not to produce PCs with the i386 processor, staying with the old and trustworthy i286 to protect their lucrative minicomputer market. Which would have worked like a charm if an upstart company called Compaq hadn’t taken the opportunity to get the jump on “Big Blue” by being the first to produce the new and powerful 386 PCs. IBM, who had until then been the undisputed leader on the computer market, suffered a devastating blow to their prestige.

Without Compaq’s destructive behavior, IBM wouldn’t have had to lay off hundreds of thousands of employees over the next ten years, forcing those employees to look for jobs with more forward-looking companies.

(Of course they wouldn’t have had to compete on giving the consumers newer and better computers, either. But the i286 was a fine processor, really. Who needs megabytes or even gigabytes of memory, terabytes of disk space, internet connections, graphical operating systems, and all that stuff anyway?)

On the software side, two young upstarts named Bill Gates and Paul Allen introduced a graphical operating system called Windows, which quickly drove most of the text-based user interfaces out of the market – forcing PC owners to learn to use the new graphical user interfaces.

Telephones are another example of the evils of competition:

Up until the 1990s, the telephone companies in Denmark held a state-guaranteed monopoly on telecommunication services, with a number of regional companies being granted a monopoly in their separate regions. Then the European Union stepped in and ruined everything by liberalizing the market. Which of course was a disaster for the existing companies.

A telephone we might still have been using!

A telephone we might still have been using!

It had happened regularly that phone customers in Denmark received huge bills for making calls to expensive phone numbers, for example phone sex lines. If the clients denied having made such calls, they were nonetheless forced to pay their bills, or their phone lines would be closed. Courts routinely ruled in favor of the telephone companies, since they could prove that the calls had been made on the lines, while the clients couldn’t prove that the calls hadn’t been made from the phones in their home, but rather from switch-boxes in the street.

With competition, the phone companies could no longer blackmail their clients and set their own prices for their “services”. They even had to offer push-button telephones some 20 or 30 years after these had been invented. (What’s wrong with dials? Just askin’!) And only a few years later came the cellular revolution, enabling clients to bring their phones everywhere.

It’s all competition’s fault! Without it, we wouldn’t constantly have to adapt to new technologies. Businesses could continue to produce the same old stuff year after year after year. Society would be at a safe, comfortable, stable standstill.

But of course, the most stable of all conditions is “death”! Which is what awaits a society without competition.