– Dave Doty (Adapted from Eden’s Bridge: The Marketplace in Creation and Mission)
There is little question that markets are competitive on several levels. Job seekers vie for positions matching their skills and interests. Producers compete at both ends of the process for resources and market share, and in the middle trying to attract the right employees and innovating processes. Customers contend for products, driven by the real or hyped desirability of a product and compelled by its relative availability.
The idea of competing for scarce resources, though a common notion in economics, sounds scarier than it truly is. The reality of material constraints (scarcity1) requires that choices be made. Scarcity forces economic choices into the realm of moral philosophy where processes and outcomes can be weighed against the good or evil they may bring about. Market competition does, however, produce several positive results.
Competition for scarce resources in an open market2 establishes value (price index), a largely self-regulating control in the distribution and use of resources. If the provider of a product or service decides to increase prices arbitrarily or cuts corners to save costs and quality drops, other providers may leverage market share away from the original provider. The hinge is value, decided in large part by the balance of price and quality no matter whether it is a product in a high-end niche market (such as yachts) or widely available, inexpensive products (such as printer paper). Discount pricing increases value so long as quality remains stable. The sale of poor quality products will be undermined by buyers seeking higher quality products at similar prices, or by producers stratifying markets at different value points through multi-tiered offerings, such as the automobile market.
Competition promotes product and technological development and stimulates increasing efficiencies in production, marketing, distribution, and service. Competition also stimulates economic growth as sophisticated markets—such as telecommunications and biotechnology—require increasingly complex products and processes and producers seek market advantage through innovation. Innovations in technological research, product development, production processes, and management recur in ongoing cycles. Competition in technological markets also motivates increased sophistication in public and private education, encouraging workers to not languish intellectually.
But open market economies are only marginally competitive. On the contrary, markets are essentially cooperative. Another insight in the Noam Chomsky essay mentioned earlier serves as a useful analogy. In children, the ability to acquire language is not determined by environment.3 There is apparently a genetic predisposition to learn language and acquiring a particular language only is incidental to the culture/family of origin. The differentiation of languages is, in other words, only a marginal component in the whole of the human capacity of language.
The competitive aspect of markets only exists at the margins in a similar way. The Olympic Games offer a useful analogy. The Games are made up of numerous athletic events which are only marginally competitive. Let me explain. The Olympic Games are run by the International Olympic Committee (IOC), facilitated by numerous not-for-profit national organizations, and funded by grants and donations from for-profit companies and individuals. Thousands of volunteers and athletes work together to stage the athletic events, raising funds, contracting for venues, serving food, or acting as volunteers in countless different ways.
Though there are significant differences in the constructs of various games and events, each individual event is also built on a cooperative model. The athletes compete according to established rules and agree to predetermined locations and times for each particular event. The opportunity for the athletes to compete is only made possible by a substantial amount of multi-level, far-reaching cooperative acts and agreements. The Olympic Games are essentially a cooperative endeavor providing a greater framework for the “marginal” competitiveness.
The marketplace operates the same way. It is built on the cooperative foundations of divided labor and specialization. These two aspects create the opportunity to grow wealth by improvements in products, services, and methods, such as in manufacturing or distribution. Wealth is increased as mutually-beneficial exchanges of value are carried out in increasingly efficient ways. The “competitive” marketplace is built on a much larger framework (foundation) of cooperation and would collapse without it.
Corporations are nothing more than cooperative human efforts seeking optimized profit (and perhaps pursuing other motives) through providing products or services to a willing market. Cooperation allows specialization to enhance efficiencies which in turn facilitate higher production rates. Doctors, lawyers, engineers, teachers, police, and production workers all offer the service of their time and expertise for a variety of motives (including their paycheck) and contribute to the overarching cooperative framework of the marketplace.
While companies or individual contracts may compete against others for market share, market functionality is inherently cooperative and universal, like the genetic predisposition of linguistic capacity, only differentiated by particular product or service niches, personal wants, and the constraints of local custom and law. Businesses consistently work with other businesses, such as vendors, subcontractors, and so on, to fill needs in more cost-effective ways. Some corporations pursue even greater market advantage by cooperating with those who might otherwise be viewed as competitors. From 1985 to 1988, for example, Toyota manufactured the Chevrolet Nova, a model Toyota marketed as the Sprinter. Toyota and Chevrolet are competitors but both companies gained economic advantage through this joint venture. Such symbiosis is mutually-beneficial as it fosters increased profitability by providing access to innovative and proprietary knowledge, and by lowering production costs through shared capacities.
Advanced economies host a high degree of specialization and hold enormous potential for increasing wealth, creature comfort, and physical well being. Sophisticated medical capabilities available in wealthier countries do not exist in less developed economies. These economies do not generate the wealth necessary to support the symbiotic (cooperative) relationship of improved health care systems and further economic development. Cooperation is an upward spiral.
And cooperation brings about deepening relationships between market players as it encourages collaboration, the pursuit of optimizing collective intelligence. Collaboration has been a long standing practice in a wide variety of enterprises and across organizational levels, including research departments, planning and strategizing groups, hunting parties, sports teams, and so on.4 These groups recognize the advantage of sharing information and creative ideas, and talking through options or possibilities. Market players are collaborating increasingly across departmental lines and even between competitive companies, sharing technologies and methods that may enhance the efficiencies of their various endeavors. Now collaboration has migrated to open systems, such as Linux, the computer operating system available free to anyone, which has given rise to software products like the Internet web browser Mozilla Firefox. Such free systems allow a broadening spectrum of commercial and personal uses without placing the burden of large investments in research and development or the expense of licensing agreements on a single firm.
Open collaboration offers the opportunity to take any number of endeavors to new levels of productivity unforeseen even one generation past. Human productivity has reached the point where enough wealth has been created to alleviate abject poverty, yet global unemployment still stands at 8.7 percent.5 The 281 million unemployed is a population roughly equal to 90 percent of the United States, the largest individual national economy in the world (the European Union is listed as one national economy), and more than one and three quarters the size of the U.S. labor force.6
While the majority of the global unemployed represent a disproportional number of illiterate, semi-literate, or under-educated workers, the sheer strength of brain trust represented by 281 million people can hardly be ignored. If this population could produce at the global average of individual productive output (about $11,200 USD, slightly below the per capita GDP for Costa Rica, ranked 98th globally),7 it represents about $3.15 trillion in additional annual global productive output, an increase of 4.2%.8 All the unemployed could be absorbed into the current global workforce, reducing workloads but dropping personal GDP and incomes by just 8.7 percent. But the increase of households with sustainable incomes would create new demand that would likely erase the reduction in workloads very quickly. . . a short term and marginal reduction in income that would come back with long term growth impact. Or new jobs could be created with the $6.5 trillion,9 invested in repairing and building infrastructure globally and in education, on-the-job training, and affordable housing in under-developed economies.
Like cooperation, collaboration is an upward spiral. Given recent advances in global electronic communications, collaboration encourages economic opportunity and equality across the divides of nationality, race, gender, and economic class. The potential contribution of every worker can be empowered and valued through collaboration. Farmers in Asia can work with agronomists in Europe, manufacturers in Brazil can work with distributors in Africa, and the flow of ideas can travel through fiber optic trunk lines from continent to continent in seconds.
The advantages of sharing information, whether it is raw data or creative strategies, can help erase historically dividing boundaries. The inefficiency and associated costs of social and political division become increasingly apparent as the interconnectedness of those contributions deepen and homogenous thinking is undermined. More boats can rise more quickly as cooperation and collaboration suggest more effective methodologies and technologies in production and distribution. Greater gains in output per capita can be achieved as collaboration moves from the limitations of old-model homogeneity (brainstorming and groupthink) to encouraging shared thinking from disparate points of view.10
Historically, predatory commerce, such as colonialism and slave trading, has committed enormous evil. But trade can foster peace as cooperative economic efforts seek to reach constructively across boundaries of isolation. Thomas Friedman introduced “The Golden Arches
Theory of Conflict Prevention” in his seminal work on globalization, The Lexus and the Olive Tree.11 He pointed out that no two countries that hosted McDonald’s restaurants had been to war since they had each had those establishments open. His point was that as countries establish trade with one another they are more apt to find ways to resolve conflicts peacefully than to risk losing the economic advantages of their trade agreements.
The global church has always had a mandate to care for the marginalized: widows, sojourners, orphans, and the poor. Business-as-mission practitioners, both business people and missions staffers working with non-government-organizations (NGOs), are attempting to fulfill that mandate by introducing economic development programs among the world’s poorest. Others are advocating for government and social reform where tyranny and cultural barriers result in economic oppression.
The church, as the people of God, has the opportunity to coordinate internal efforts toward greater cooperation and collaboration, not only to enhance effectiveness but witness as well. And a multitude of opportunities for the church exist to come along side those doing good in the world, whether in economic, social, political, or environmental reform and advancement. The collective brain trust of the church can be brought to bear to help resolve long-standing social ills, and has a moral obligation to do so. The marketplace is a critical venue in human society offering great opportunities to advance the mission of God in the world.
1 Scarcity may be real (actual) or “false” (artificial) and can be affected by coercion, such as by monopolistic efforts or collusion to restrict product availability or fix prices to optimize profits.
2 I prefer the phrase “open market” to “free market” because all markets are regulated to varying degrees by legal requirements and cultural norms. Prices and resource utilization in open markets are generally self-regulating. “Closed markets,” by contrast, are those where prices and resource utilization are subject to the top-down controls of common or public ownership and central planning (socialism and communism).
3 Chomsky, Noam. “New Horizons in the Study of Language and Mind” in The Essential Chomsky, edited by Arnold Arnove, 285–99. New York: The New Press, 2008, 289.
4See Keith Sawyer, Group Genius: The Creative Power of Collaboration (New York: Basic Books, 2007), on how collaboration can contribute substantially to most endeavors.
5 International Labor Organization, Global Employment Trends, January 2010, Geneva, Switzerland: International Labor Office, January, 2010, 9. Available online at: http://www.ilo.org
6 Central Intelligence Agency, Factbook. Available online at http://www.cia.gov.
8 Ibid., $3.15 trillion divided into global GDP ($74.54 trillion).
9 8.7% of $74.54 trillion.
10 Sawyer, “From Groupthink to Group Genius,” 59–72.
11 Friedman, Thomas L. “The Golden Arches Theory of Conflict Prevention,” in The Lexus and the Olive Tree, 248–75. New York: Anchor Books, 2000.