Rubin Gives Presidential Address at Southern Economic Association
Contact: Amy Smorodin
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November 25, 2013 – Economists “have committed a fundamental semantic error” by focusing on the term competition and ignoring the cooperative nature of markets, explained TPI senior fellow Paul Rubin in his Presidential Address to the Southern Economic Association this past weekend. By correctly emphasizing cooperation, economists could help combat the “emporiophobia,” or the fear of markets that is prevalent in the general public and current political discourse.
In his address, Rubin, Dobbs Professor of Economics at Emory University, remarked that anti-market bias is widespread despite the fact that “®he market economy has provided incredible wealth to societies, and to everyone in those societies. Compared to pre-market or non-market economies, real incomes are higher, consumption possibilities are vastly greater, life expectancy is greatly increased, health is much better.” He blamed this phenomenon in part on economists’ focus on competition, which Rubin described as “odd” because cooperation, not competition is the goal of a market economy. “Cooperation is at the heart of economics,” Rubin explained, and “competition is a tool for obtaining better cooperation.”
Rubin asserted that every transaction is cooperative because both the buyer and seller expect to achieve some gain or benefit, an idea that may seem self-evident to economists but is not necessarily obvious to others. Even when competitive relationships exist, he continued, it is competition to cooperate with sellers or buyers. “The purpose of competition is not to harm competitors,” Rubin stated, “Rather, the successful competitor is the agent who can cooperate with more other agents…”
Furthermore, for non-economists, the term “competition” brings to mind a “zero-sum” event, where there is a definite winner and loser. However, markets are not comprised of a fixed number of assets to be won or lost. “[A] cooperative environment is a positive sum, and everyone can win,” Rubin explained. “Voluntary market transactions are the essence of win-win positive sum cooperative behaviors. Both parties to a transaction must expect to gain, or the transaction will not occur. But this perception is lost if we characterize economic interactions as competitive.”
Rubin also urged his fellow economists to advance the concept that capitalism is a moral way to organize economic activity. “This system is moral because it maximizes human welfare. It provides the most goods and services feasible, and provides them in the least cost way. No other system can make this claim,” he explained. “People do not fully grasp the moral benefits of capitalism because we tend to focus on competition, which is only a tool, rather than cooperation, which is the actual goal of the economic system.”
“If we economists can shift attention from the tool of competition to the goal of cooperation,” Rubin concluded,” we can perhaps reduce the amount of emporiophobia in the political marketplace.”
Rubin’s prepared remarks are available on the TPI website.
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