Competition in Capitalism, Socialism, and Economic Systems
This paper examines the role of competition across major economic and political systems, drawing on Wolfgang Kasper's entry in The Concise Encyclopedia of Economics. It covers how capitalism depends on competition to distribute wealth and prevent monopolistic power, while communism, socialism, monarchies, and fascism suppress it. The paper also explores crony capitalism and anti-trust violations, the informational function of prices, how competition extends beyond pricing to warranties and innovation, and the distinction between being pro-competition versus targeting a specific competitor. Examples from the airline industry and consumer technology illustrate key concepts.
- Competition Across Economic and Political Systems: How capitalism, communism, socialism, and monarchy treat competition
- Crony Capitalism and Anti-Trust Violations: How cronies collude to stifle fair competition
- The Positive Roles of Competition in an Economy: Benefits competition brings to buyers and markets
- The Role of Prices in a Competitive Market: How price competition benefits consumers
- Competition Beyond Prices: Warranties and Innovation: Non-price competition through warranties and innovation
- Pro-Competition vs. Pro-Competitor Strategies: Distinction between broad competition and targeting rivals
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What makes this paper effective
- Organizes a broad topic into focused question-and-answer sections, making complex economic concepts accessible and clearly delineated.
- Uses concrete, everyday examples — competing gasoline stations, hybrid vehicles, and Apple vs. Samsung — to ground abstract economic principles in recognizable situations.
- Consistently ties each point back to a single authoritative source, demonstrating how to build a coherent argument from one primary reference.
Key academic technique demonstrated
The paper demonstrates effective use of a single scholarly source across multiple analytical angles. Rather than simply summarizing Kasper's entry, the student applies it to a series of distinct questions — government systems, pricing signals, crony capitalism, and competitive strategy — showing how one authoritative text can support a multifaceted discussion when engaged critically and consistently.
Structure breakdown
The paper is organized around six implicit questions drawn from the assignment prompt, each functioning as a mini-analytical section. The opening section compares political and economic systems; subsequent sections address crony capitalism, the functions of competition and prices, non-price competition, and finally the conceptual distinction between pro-competition and pro-competitor orientations. A single Works Cited entry grounds the entire discussion.
Competition Across Economic and Political Systems
Capitalism thrives on competition and is "legitimized by competition" (Kasper). Competition serves as a mechanism for redistributing a society's wealth and helps prevent concentrations of power in the hands of a single company. By contrast, competition is largely absent in communist systems, where government committees govern prices and maintain control over all economic regulations. A similar suppression of competition exists in most socialist countries; as Kasper notes, "Property is theft" (4). In monarchies, the government imposes "coercive regulations" to protect state interests, while fascist governments are all-controlling — competition is a foreign concept in that style of governance. People are not free to form new businesses under fascism, communism, or monarchy.
Crony Capitalism and Anti-Trust Violations
Cronies sometimes form "competitive truces" (Kasper) by cutting deals on prices, which constitutes a violation of anti-trust laws. The world's airlines have in the past formed what Kasper called "The International Air Transport Association," an arrangement through which competing carriers agreed to fix airfares, schedules, and even "such petty details as meal services" (Kasper). When crony capitalists collude to stifle competition, Kasper explains, they "hide behind" a number of excuses for their illegal behavior: (a) "safeguarding jobs"; (b) "ensuring public health and safety"; and (c) "protecting national from foreign competition" (3). Crony capitalism, until a fair government dismantles it through anti-trust regulation, gives an unfair advantage to the companies involved in collusion — which is precisely why they pursue it.
The Positive Roles of Competition in an Economy
Competition performs many positive functions within an economy. It "obliges" people to remain alert — encouraging consumers, for example, to conduct thorough research when buying a house. Buyers in industry have the opportunity to survey the entire available field when purchasing raw materials for manufacturing. Competition works especially well when private property rights "are protected and people are free to make contracts under the rule of law" (Kasper 3). When honest competition exists, competitive prices "work like radio signals," as Kasper writes — that is, everyone is aware of the different prices available in the market, and a buyer does not need to know where those prices came from, only that they exist (1). This informational function of price signals is one of competition's most valuable contributions to a free market.
Works Cited
Kasper, W. (2008). Competition. The Concise Encyclopedia of Economics. Retrieved October 11, 2015, from http://econlib.org.
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