The BBC series Planet Earth II is one of the most beautiful nature documentaries ever produced. Yet although the world it captures is gorgeous and filmed in incredible detail, it isn’t one that most people would care to live in. One theme in particular recurs throughout each episode: the harsh conditions endured by animals in the wild. From tropical islands to mountain peaks to arid deserts, almost every species—and even the fiercest predators—face a constant, brutal battle for survival.
By revealing this world, Planet Earth II unintentionally provides an excellent example of the difference between the kind of competition that takes place in nature and the kind that takes places in the market economy. It’s especially a case study of the difference between what Mises called “biological competition” and “catallactic competition.” These concepts capture the harsh reality of life in the wild as compared to the benefits of human society and the division of labor.
Biological competition is the law of the jungle. Only the strong survive, and one animal’s gain is another’s loss. As Mises explains, in nature,
The means of subsistence are scarce. Proliferation tends to outrun subsistence. Only the fittest plants and animals survive. The antagonism between an animal starving to death and another that snatches the food away from it is implacable. (1949, pp. 273-274)
However, this type of competition is quite different from the one that exists as a result of human collaboration:
Social cooperation under the division of labor removes such antagonisms. It substitutes partnership and mutuality for hostility. The members of society are united in a common venture. (1949, p. 274)
Human beings are in a unique position to systematically collaborate in order to build social orders based on cooperation rather than violent exploitation. The division of labor allows us to escape the desperate struggle that Nature imposes on other species. Catallactic competition—competition in exchange—replaces the struggle for survival with a mutually-beneficial system of peaceful production and exchange: the market economy.
You might think the distinction between social and natural competition would be obvious, but unfortunately, it rarely is to critics of free markets. For example, it’s still commonly believed that the market economy is an inherently exploitative zero-sum game where the “losers” are unfairly impoverished and marginalized at the expense of the “winners.” In other words, market competition is a sort of variation of biological competition. And unsurprisingly, protectionism and wealth redistribution seem like natural solutions to the war between the haves and the have nots.
But of course, this portrait of commercial society is extremely misleading. It would be more accurate to say that market competition is like a friendly skirmish between the haves and the other haves. Specifically, competition between entrepreneurs enriches all members of society by allowing them to negotiate without conflict. Rather than a matter of life or death, market competition is a struggle to see which entrepreneurs can do the best job of increasing the welfare of others:
In the market economy competition manifests itself in the facts that the sellers must outdo one another by offering better or cheaper goods and services and that the buyers must outdo one another by offering higher prices. (1949, p. 274)
In fact, even failed entrepreneurs benefit from the market process, because as consumers they have access to the fruits of more successful entrepreneurs’ labors. They may go out of business, but they will benefit from the increased wealth created by their rivals, who must produce a stream of goods and services of increasing quantity and quality at increasingly lower prices. And as long as barriers to trade do not exist, even a failed entrepreneur can always attempt to get back in the game.
When we put it this way, the distinction between biological and catallactic competition doesn’t seem so ground-breaking. After all, it would be absurd to confuse a shopkeeper shouting out the price of apples with a vicious predator challenging rivals to a battle to the death. But that’s essentially the kind of confusion many critics of the market make when they portray trade as a zero-sum game. It only goes to show how important it is that we clarify even our most basic assumptions about what it means to be social creatures. Only peaceful social cooperation enables us to take advantage of the best parts of human life and escape the tyranny of biological competition.
Matt McCaffrey is assistant professor of enterprise at the University of Manchester.
