The Freedom to Cooperate
Apparently, someone should share the writings of AIER founder E.C. Harwood with Pope Francis. In a recent address, the pope criticized libertarianism as being “selfish” and “antisocial.” This unfounded characterization of free market beliefs is nothing new. In fact, Harwood debunked this view in a 1961 piece entitled “Free Competition Is Voluntary Cooperation.”
Harwood posited that this view comes in part from a misunderstanding of the word “competition” stemming from its frequent association with war or sporting events. But the dictionary defines war as “the state or fact of exerting violence or force against another,” essentially imposing one’s will on another party to achieve a result. Competition in the economic sense is defined as “the effort of two or more parties, acting independently, to secure the custom of a third party by the offer of the most favorable terms.”
The act of cooperation — the securing of a third party’s custom — is just as important as besting an opponent. Mutual gains from trade, one of the foundational concepts of economics, is inherently cooperative in nature. The idea that two or more parties are all left better off by voluntary trade is obvious on its face: the trade would not be voluntary if any of the parties were made worse off. But free markets themselves are actually the sum of countless instances of such voluntary cooperation.
A level playing field is one of its most important requirements for Harwood’s conception of free competition:
“Free competition,” therefore, implies that each individual concerned must of course comply with the rules, but that the rules, including all the customs, institutions, and laws of the social group, are such as to ensure a fair field with no favor.
Harwood also emphasizes that purely free competition does not currently exist anywhere in the world, let alone the United States. He contrasts voluntary cooperation with involuntary cooperation, which can be forced by “customs, institutions, and laws.”
In conclusion, Harwood writes:
In this brief discussion we have not attempted to ascertain whether or not free competition is desirable. That, no doubt, depends on the results to be achieved, the personal desires of those who are involved, and many other factors. Once the public fully realizes that free competition is voluntary cooperation, much nonsense that has been written on the subject can be discarded; and a fresh start can be made in the consideration of pressing problems, with the confident expectation of more useful results.
Unfortunately, the same “nonsense” seems to characterize the debate over 50 years later.
Max Gulker
Max Gulker is a former Senior Research Fellow at the American Institute for Economic Research. He is currently a Senior Fellow with the Reason Foundation. At AIER his research focused on two main areas: policy and technology. On the policy side, Gulker looked at how issues like poverty and access to education can be addressed with voluntary, decentralized approaches that don’t interfere with free markets. On technology, Gulker was interested in emerging fields like blockchain and cryptocurrencies, competitive issues raised by tech giants such as Facebook and Google, and the sharing economy.
Gulker frequently appears at conferences, on podcasts, and on television. Gulker holds a PhD in economics from Stanford University and a BA in economics from the University of Michigan. Prior to AIER, Max spent time in the private sector, consulting with large technology and financial firms on antitrust and other litigation. Follow @maxg_econ.
