Competition LO16681

Simon Buckingham (
Mon, 26 Jan 1998 12:02:40 -0800

Replying to LO16670 --

Srinath Srinivasa wrote about changing views on competition for it to
against it.

The idea of pitting employees against one another to achieve positive
outcomes such as learning and innovation is an interesting one. Of course,
incentives are heightened in competitive environments. In fact, many
employees are in competition with one another in today's static
organizations- the very nature of hierarchy is that many compete for
promotion to fewer places higher up the ranks. Unless of course you are in
Japan where seniority remains the overriding promotion criteria rather
than performance and where unsuccessful innovation tends to result in
moves sideways- discouraging risk-taking and innovation. Other implicit
forms of competition exist such as organizational politics to secure
scarce resources for a particular area of the company. These incentives
are always faulty because employees are not directly rewarded for
contributions as they would be in markets.

I truly sympathize with Srinath's discomfort at seeing unequal wealth
distribution with the few having so much and the many so little. The
important question to ask is how could those people afford that
gratification- was it because they were entreprenurial and earned a reward
for a risk taken or was it because they are cronies who are friends of the
political government. Too often it is the later and not the former.

The problem with many economies and the reason why capitalism is not
working is that there is too little competition and not too much. The fact
is that too few people share too much wealth. We need to move to
technological capitalism in which everyone can participate and markets are
contestable by anyone with a good innovative solution.

Srinath, you seem to be advocating that because competition does not
appear to be working, we need political governments to provide quality
education, care for the aged and drinking water. In fact, what we need to
get these services is more competition- it is the incentives conferred by
the profit motive from competitive free markets that stimulates the
development and implementation of the high levels of services you so
rightly wish for. It is the lack of choice and diversity of suppliers and
solutions that causes the poor level of schooling etc. that we see

To worry about short versus long term detracts attention from the core
issue- what is the long term anyway? Indeed, short-termism is a positive
thing in a fast changing unorganized world. It is government that is
short-termist anyway not competitive free markets- all they care about is
getting reelected.

Srinath, you make the dangerous mistake of all those who advocate
intervention rather than competition- you confuse means with ends, you see
outcomes but do not see why, and you advocate a return to the failed model
of non-competition to compensate for the affects of partial competition,
rather than realizing that what is needed is complete competition- more
competition that that which currently exists. If you choose to exercise
your vote in the forthcoming Indian elections for a socilist rather than
free market oriented party, then you will only perpetuate the outcomes
that dissatisfy you so much.

regards sincerely Simon Buckingham


Simon Buckingham <>

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