DO WE NEED FREE COMPETITION?

The importance of the freedom of competition is probably a self-evident assertion for competition lawyers, economists and civil servants dealing with this issue. However, a lot of businessmen, politicians or even average people see the world in a different way. Instead of the abstract world of impressive theories and competition they are much more interested in actual matters, like job security or the monthly rate of overheads (not to mention the values that are truly important from the perspective of Mankind).

In its 27 November issue the Frankfurter Allgemeine (FAZ) newspaper devoted a whole page to the results of the survey conducted by the Institut für Demoskopie Allensbach. The piece was given the not so promising title of “Stille Liebe zur Planwirtschaft”. The conclusion of the article is that residential support of free market economy is not that obvious even in the country regarded as the economic engine of Europe. People still expect the state to provide solutions for several problems. The FAZ recalls what an ambiguous choice it was of the Germans to vote for the free market after World War II: economists of France and the United Kingdom in those days were thinking in terms of centralized economies. The pro-market change of perspective led by Ludwig Erhardt could only be considered as an economic wonder afterwards. According to the results of the survey, it would be just as equally important for today’s politicians to campaign for market economy and competition.

According to 61% of the respondents, the level of social fairness has decreased recently in Germany and only 7% of them believe that it has increased. An encouraging fact though is that 66% of the respondents associate welfare with the market and only 26% with the state. 23% of the respondents link deficit to the market, while 40% of the respondents relate it to the state. The lack of efficiency is overwhelmingly attached to the state, and, not surprisingly, bureaucracy as well. The market is blamed for negative consequences related to craving, aggression and exploitation. A higher proportion of respondents put the blame on the market for high prices (49% compared to 35% who think it is the state to be held responsible). Respondents simply do not expect social justice from the market (only 12% do so, as opposed to the 43% who regard this as a competence of the state).

The responses given to the following conflict situations are also very informative. Let us assume that the country is undergoing a serious economic crisis. In order to remedy the negative consequences, the state decides to launch a serious economic intervention and therefore fixes the prices, subsidises distressed businesses and bans redundancies. However, the situation is still not getting any better. What should be the next step? Well, only 15% of the respondents felt that in such a situation ineffective state intervention should be withdrawn. 40% of the respondents were of the opinion that the state should not retreat, but uphold its previous position. However, 25% of the respondents (10% more than those who were pro-market) thought that the state should actually take on a more active role to resolve the problems.

The other question concerned the implementation of a price regulation scheme managed by the state. Respondents were asked if they would support the state fixing the prices of basic food products so that they would be available to everybody, or if they think this measure would result in a reduced range of products due to a loss of motivation among some companies to manufacture their products (as they would only be making a low - or even negative - profit). Most of the respondents voted in favour of the former, interventionist solution (46%), with only 37% of the respondents realising the drawbacks of the well-intentioned price regulation scheme.

Regarding the house-rental fee, which is a topic that affects a lot of people in Germany, the number of those in favour of the supply-demand mechanism was more overwhelming: almost two thirds of the respondents would prefer rental fees regulated by the State.

For many years, the Competition Culture Centre of the GVH (Hungarian Competition Authority) has been reinvesting some of the revenue collected from fines to promote the importance of competition both for academics and the general public. Not only the above-mentioned German survey, but also the surveys conducted by GVH and our research centre show that pro-competition advertising activity is constantly needed. Controlled free competition, even if it is not a value in itself, is a tool and mechanism vitally important for the success of a well performing economy and society. However, as this hypothesis is not evident for many, it needs to be proven from time to time.

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