Controversial claims about markets and competition

Competition can always lead to more efficient ways of meeting human needs.

Debate
This is a discussion post. Opinions in the text are the responsibility of the writer.

The publishers of the book Market People, Ola Innset, Sigurd Hverven, Oscar Dybedahl and Mimir Kristjánsson, will appear in his column on December 14 with several debatable complaints about markets and competition.

Central is the explanation of how market solutions have had an impact: “By presenting a story about the market economy as something natural, omniscient and for the benefit of absolutely everyone.”

It is a long story. Not surprisingly, he remains undocumented both in the chronicle and in the book.

Returning to the market

To be sure, markets have gradually gained more space in the economy at the expense of former state monopolies, detailed regulation, and centralized governance. Developments in countries like Norway and Sweden have shown this since the 1980s.

But what really accelerated the shift toward more pro-market and competition-friendly policy was something the authors of the article fail to mention: namely, the many bad experiences with the opposite.

The combined stability and productivity crisis of the late 1970s was much more severe in the United Kingdom and Sweden than in Norway, which in the same period could count on a boom in oil investments.

But the causes of the problems were practically the same. And they were rooted in a failed economic policy with several typical characteristics: high government management ambitions, selective industrial policy with a large element of subsidies and state-owned enterprises, increasing detailed regulation of business, lobbying by special interests, and highly marginal taxes high.

New competition

Repeated attempts were made to offset the negative results through inflation-driven monetary and fiscal policy. This was followed by rounds of price adjustment and combined wage settlements. It only hurt worse. The word “governance failure” saw the light of day, also in Norway.

Greater attention was paid to old and new economic theories on the connection between economic growth and the conditions of the productive framework and incentives for hard work, entrepreneurship, innovation and effective competition. Gradually they also gained more influence, across party lines and government colors.

In addition, new technology was opened to facilitate competition in areas previously reserved for state monopolies. For example, energy and telephony (mobile).

With the Internet, freer world trade and the establishment of the EU internal market, the scope and dynamics of the market were significantly strengthened. World GDP per capita increased 4.5 times from 1980 to 2019.

Open up new opportunities

The Nordic countries have also shown that the great benefits of the market economy can be combined with social justice and a robust and comprehensive welfare state.

Markets are certainly not suitable for everything in this world. Therefore, they are not used for everything. But effective competition will always keep us on track for better and more efficient ways of meeting human needs.

As long as we decide to keep that opportunity open.

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