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The Ethics of Competition

How a Competitive Society is Good for All

Christoph Lütge

The concept of competition is frequently regarded with ambivalence. While its champions wholeheartedly endorse it for reasons of efficiency, critics believe competition undermines ethics. They denounce competitive thinking, call for modesty in profit-making, and rail against economisation. However, Christoph Lütge argues convincingly that intensified competition can work in favour of ethical goals, and that many criticisms of competition stem from an inadequate understanding of how modern societies and economies function. The author illustrates his view with examples from ecology, healthcare and education, and concludes with a call for more entrepreneurial spirit.
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Notes

Christoph Lütge

Introduction

1  In the original quotation: “Capitalism takes no prisoners, and it kills competition when it can, as Adam Smith explained about 200 years ago,” see: www.youtube.com/watch?v=iw9JH6VlcGk, last accessed October 29, 2018.

Chapter 1

1  See para. 8 of the second lecture “Moral Psychology: Philosophical Not Psychological” in Political Liberalism (Rawls 1993/2005, p. 166).
2  Mises 1922, p. 291 (in original: “Es ist nichts als eine Metapher, wenn man den Wettbewerb Wettkampf oder Kampf schlechthin nennt. Die Funktion des Kampfes ist Vernichtung, die des Wettbewerbs Aufbau”).
3  On this matter, see Mantzavinos 1994, p. 15.
4  In the cave of Lascaux, depictions of running and wrestling competitions were found that already went back 17,000 years.
5  www.marx2mao.com/PDFs/Lenin%20CW-Vol.%2026.pdf.
6  Hessel and Morin 2012, pp. 19 and 44f.
7  See Lam 2003.
8  See Chun 2012.
9  www.pressherald.com/2012/01/25/ceos-defend-capitalism-at-anguished-davos-forum, last accessed October 29, 2018.
10  Press release from Bundesärztekammer (German Medical Association) on May 23, 2013, www.bundesaerztekammer.de/presse/pressemitteilungen/news-detail/montgomery-zu-viel-wettbewerb-im-gesundheitswesen-ist-unethisch/.
11  As examples, see e.g. Moyo 2009, Shikwati 2005, 2012.
12  See e.g. the numerous examples in the work of the “grandmaster” of evolutionary theory, Ernst Mayr (2001).

Chapter 2

1  Richter 2012.
2  German original: “Jetzt sind die Staaten schon in einem so künstlichen Verhältnisse gegen einander, daß keiner in der inneren Cultur nachlassen kann, ohne gegen die andern an Macht und Einfluß zu verlieren; also ist, wo nicht der Fortschritt, dennoch die Erhaltung dieses Zwecks der Natur selbst durch die ehrsüchtigen Absichten derselben ziemlich gesichert. Ferner: bürgerliche Freiheit kann jetzt auch nicht sehr wohl angetastet werden, ohne den Nachtheil davon in allen Gewerben, vornehmlich dem Handel, dadurch aber auch die Abnahme der Kräfte des Staats im äußeren Verhältnisse zu fühlen … Obgleich z.B. unsere Weltregierer zu öffentlichen Erziehungsanstalten und überhaupt zu allem, was das Weltbeste betrifft, für jetzt kein Geld übrig haben, weil alles auf den künftigen Krieg schon zum Voraus verrechnet ist: so werden sie doch ihren eigenen Vortheil darin finden, die obzwar schwachen und langsamen eigenen Bemühungen ihres Volkes in diesem Stücke wenigstens nicht zu hindern.”
3  Similar statements can be found in Russell’s Education and the Social Order (1932): “It is difficult to suppress competition completely without destroying individuality” (p. 151).
4  Elsewhere Rawls uses competition as an ideal model for the effectiveness of the principles of justice, writing: “that a well-functioning competitive economy with good framework institutions is an ideal model anyway, showing how the principles of justice might be realized” (Rawls 1971/1999, p. 343).
5  Rawls 1981, p. 81.
6  Detailed comparisons in Schönwälder-Kuntze (2013) and Eckl (2013).
7  German Institute for Employment Research, April 2011.
8  The German Empire did not have a general closing time until 1900 (from 5 am to 9 pm on weekdays), with generous exceptions being made for groceries and bakeries. Jewish businesses were allowed to move their day of rest from Sunday to Saturday. Further restrictions were introduced under the Nazi regime and often maintained after 1945.
9  Süddeutsche Zeitung, May 19, 2010.
10  Cf. Hierholzer and Richter 2012 and Hüttl 1995.
11  Süddeutsche Zeitung, January 29, 2013.

Chapter 3

1  Macbeth, Act 1, Scene 7.
2  For more on this, see also Binmore 1994 and 1998.
3  Cicero 1959/44 BC, De officiis, pp. 150 f. (my italics).
4  This is the “bourgeois dignity” (McCloskey 2010).
5  See Mokyr 2011.
6  For example, Schmoller 1910.
7  “Das maßlose Glück: Ein Lob der Verschwendung,” Süddeutsche Zeitung, December 25, 2013.
8  Among the few exceptions are characters in the novels by American author Russell Roberts such as The Invisible Heart: An Economic Romance (2002).
9  See my criticism of Precht in Lütge 2010.
10  Hobbes 1651/2006, pp. 90f.
11  “Die BWL-Schwäche der deutschen Erfinder,” Die Welt, March 14, 2007.
12  Kerlin 2009.
13  See, for instance, Moyo 2009, Shikwati 2005 and 2012.
14  Der Spiegel, June 29, 2011.
15  Prien 1992, p. 75.
16  Old German original: “Es ist besser ein lehen in einer stat mit redlichenn erbguttern odder tzinsz gestifft, den hundert auff den zinszkauff … Aber das vorstehe ich nit, wie man mit hundert gülden mag des jarisz erwerden zwentzig.” Martin Luther, Werkausgabe (Works) 6, 466.13–467.6.
17  Kant 1785/1974, BA9.
18  As a whole, both Kant and Hegel are far less set against self-interest as is often claimed; see Schönwälder-Kuntze (2013).
19  Fetscher 1973, p. 211 (original: “sich bei Hegel … nirgends ein Hinweis auf die nützliche Funktion freier Konkurrenz findet”).
20  Here Habermas, in his interpretation of Peirce, is incorrect, in my view (1992, pp. 29 ff.). See Peirce 1877/1998, p. 5387 and Haskell 1984, pp. 210ff., as well as my comment in Lütge 2015, pp. 103f.
21  Originally in Terkel 1980.
22  Andreoni 1988.
23  “After playing repeatedly (against a new opponent each time), about 90% of subjects end up free riding after ten trials or so” (Binmore 2010).
24  Camerer 2003.
25  See Vaish et al. 2010.

Chapter 4

1  Cf. www.oekologische-plattform.de/wp-content/uploads/2011/12/bzu_2007-1.pdf.
2  www.bmub.bund.de/en/service/publications/downloads/details/artikel/greentech-made-in-germany-40-1/. The 2018 version of the report confirms most of these prognoses, even raising the annual growth rate of eco-technol ogies to 6.9%: https://www.bmu.de/media/zahlen-aus-dem-greentech-atlas-2018/.
3  www.brookings.edu/~/media/series/resources/0713_clean_economy.pdf.
4  www.americanprogress.org/issues/green/news/2011/10/03/10523/green-jobs-by-the-numbers-2/.
5  www.wri.org/blog/2017/01/china-leaving-us-behind-clean-energy-investment.
6  Interview with Li Lin from WWF China, May 24, 2011, www.beobachter.ch/natur-umweltschutz/umweltschutz-china-will-gruner-werden.
7  www.spiegel.de/wissenschaft/technik/0,1518,765919,00.html.
8  www.rand.org/content/dam/rand/pubs/research_reports/RR800/RR861/RAND_RR861.pdf.
9  China’s expansion of waste incineration remains unparalleled, cf. www.recyclingmagazin.de/2011/05/31/chinas-ausbau-der-abfallverbrennung-bleibt-beispielslos/.
10  www.wri.org/blog/2017/01/china-leaving-us-behind-clean-energy-investment.
11  www.wiwo.de/technologie/green/living/umweltschutz-fuer-china-wird-es-richtig-teuer/13545656.html.
12  www.theguardian.com/environment/2016/jun/20/china-to-generate-a-quarter-of-electricity-from-wind-power-by-2030.
13  www.wind-energie.de/infocenter/statistiken/deutschland/installierte-windenergieleistung-deutschland.
14  VDI Nachrichten, May 27, 2011.
15  www.chinadaily.com.cn/business/201703/10/content_28504540.htm.
16  www.spiegel.de/wissenschaft/technik/erneuerbare-energie-contra-kohlekraft-chinesen-hoffen-auf-gruene-wende-a-765919.html, last accessed October 29, 2018.
17  “China dreht Schmutz-Fabriken den Strom ab,” Spiegel, August 16, 2010, www.spiegel.de/wirtschaft/umweltschutz-china-dreht-schmutz-fabriken-den-strom-ab-a-712143.html, last accessed October 29, 2018.
18  Focus-Magazin 43/2005, pp. 122ff.
19  www.farmersjournal.ie/site/farming-Breeding-what-the-market-demands-14185.html.
20  See, for instance, Will et al. 2016.
21  See, for example, a study by the Institute for European Environmental Policy: Bowyer 2010.
22  Now profitable due to higher oil prices; see e.g. http://green.wiwo.de/innovation-fabrik-in-mannheim-macht-plastikmull-zu-ol/, last accessed October 29, 2018.
23  See for instance: www.dw.de/ich-war-eine-flasche-china-produ-ziert-pullis-aus-plastikabfall/a-2270578, last accessed October 29, 2018.
24  See, for example, recycling expert Rainer Bunge from the Hochschule für Technik Rapperswil: www.srf.ch/sendungen/kassensturz-espresso/services/interaktiv/aha/recycling-von-kreditkarten-ist-unsinn, last accessed October 29, 2018.
25  See, for example, Kemfert 2013 and Lütge 2013b.
26  Klaus Froböse: “Steigert das Product-Service System Cloud-Computing die Ökoeffizienz?” Centre for Sustainability Management, Leuphana, Universität Lüneburg, November 2012, www2.leuphana.de/umanagement/csm/content/nama/downloads/download_publikationen/Froboese_Steigert%20das%20PSS%20Cloud-Computing%20die%20Oekoeffizienz.pdf, last accessed October 29, 2018.
27  See www.bmel.de/SharedDocs/Pressemitteilungen/2014/042-DeutscherBiomarkt.html.

Chapter 5

1  http://www3.weforum.org/docs/GCR2018/05FullReport/TheGlobalCompetitivenessReport2018.pdf
2  See, for example, Thomas Steinfeld, “Contemporary Superstition,” Süddeutsche Zeitung, December 2, 2013.
3  Here, I’m simplifying and abridging the state of philosophy of science. See, in greater detail, Kuhn 1970.

Chapter 6

1  For example, Süddeutsche Zeitung, May 1, 2013.
2  Press release from Bundesärztekammer (German Medical Association), May 23, 2013, www.bundesaerztekammer.de/presse/pressemitteilungen/news-detail/montgomery-zu-viel-wettbewerb-im-gesundheitswesen-ist-unethisch, last accessed October 29, 2018.
3  www.destatis.de/DE/Publikationen/WirtschaftStatistik/Gesundheitswesen/20JahreKrankenhausstatistik.pdf.
4  We only take into account so-called “investor-owned (for-profit) hospitals” here; www.aha.org/research/rc/stat-studies/fast-facts.shtml.
5  See McGonigle and Chalmers 1992, Ainslie 1974, Bond et al. 2003, Chen et al. 2006, and, in general, Hurley and Nudds 2006.
6  Similarly, the argument of risk prevention was used for decades by the providers of ambulance services in order to block competition.
7  The Society for Quality Management in Health Care has indicated a number of such cases at www.gqmg.de.
8  www.faz.net/aktuell/wirtschaft/untenehmen/tk-chef-norbert-klusen-die-krankenkassen-sollten-privatisiert-werden-11779474.html. Incidentally, it should not go unmentioned that German Techniker-Krankenkasse (a health corporation under public law) was once a private insurance provider – like many other providers – until the 1930s.
9  See, for example, Süddeutsche Zeitung, November 4, 2013, p. 19.
10  After the 2009 German federal elections, social organizations vociferously warned, with near unanimity, against the dangers of privatization in the care sector; see Spiegel Online, October 21, 2009, www.spiegel.de/politik/deutschland/schwarz-gelber-zuzahlplan-sozialverbaende-warnen-vor-privatisierung-der-pflege-a-656540.html, last accessed October 29, 2018.
11  For numerous examples, see Meyer 1999 and 2009, and Sauerland 2007.
12  This is also clearly the view of representatives of established organizations; see e.g. Cremer 2007.
13  The same is also incidentally true of competition among daycare facilities: Again, increased competition with appropriate rules and strict quality controls is imperative here for controlling the rising costs of childcare, especially in a society that urgently needs more offspring.

Chapter 7

1  I advocate for the same position with the approach of order ethics. For more details, see Lütge 2015 and 2016, Lütge et al. 2016, and Lütge and Mukerji 2016.
2  See Pies et al. 2010.
3  The German Advertising Council thus voiced at least seven complaints, albeit among 407 examined campaigns.
4  Lütge 2012, pp. 24ff.
5  See also my critical article on ideas of sufficiency, Lütge 2013b.

Chapter 8

1  See e.g. Frey and Pommerehne 1993.
2  In slightly different contexts, political philosopher Wolfgang Kersting (2002), for instance, also repeatedly points to this.
3  In their song, “Einmal in vier Jahren,” the German band Die Toten Hosen also expresses zero-sum thinking: “We’re written off for dumb, as if we didn’t understand anything about the unwritten laws around which the world revolves. No wealth without poverty, no profit without deception” (“Wir lassen uns gern für dumm erklären, als würden wir nichts verstehen von den ungeschriebenen Gesetzen, um die Welt sich dreht. Keinen Reichtum ohne Armut, kein Gewinn ohne Betrug”).
4  www.gemconsortium.org.
5  www.deutsche-mittelstands-nachrichten.de/2013/11/57143/.
6  Press release of Cologne Institute for Economic Research, May 18, 2011. In greater detail, see Klein 2011.
7  For example: “New Survey Suggests Social Enterprises Out-Performing Mainstream Businesses,” The Guardian, July 9, 2013, www.theguardian.com/social-enterprise-network/2013/jul/09/survey-suggests-social-enterprises-outperform-business, last accessed October 29, 2018.

Chapter 9

1  Rathenau 1918, p. 90.