Doesn’t capitalism create winners and losers through competition and conflict?
Question 58 in Faith Seeking Freedom: Updated & Expanded
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The most popular misunderstanding about free markets results from a misunderstanding of the term competition, probably because we use it in sports where there are winners and losers in a zero-sum game. Yet not all sports are zero-sum (some competitions have various tiers of “winners”), and the free market is especially not a zero-sum game.
A better way to think about competition is that it drives people to pursue the best interests of their customers in ways that rival other businesses. That is, good businesses compete in how much better they can serve customers, and customers reward the businesses that serve them better. This is not a situation of conflict, nor is it an either/or outcome. Even the “lesser” of the two businesses can still win a different customer base. And in reality, most of us want bad businesses to fail so owners can appropriate their resources to more productive uses for society.
In reality, free competition in the market aids in creating a more vibrant and dynamic economy where the needs of everyone are met to a greater degree. When the state is involved, it doesn’t create healthy competition; rather, it sows discord and breeds conflict because it causes businesses to compete for attention, favors, and special privileges. This kind of competition is a destructive force in an economy.