Cooperation and competition both play a key role...
Cooperation and competition both play a key role for economic provisioning. Cooperation is not only crucial to facilitate joint production within households and firms (and, thereby, reap efficiency gains through specialization & increasing returns to scale), but also to overcome constellations, in which individual incentives lead to detrimental or worst-case outcomes (i.e. prisoner’s dilemma-like constellations). In this spirit, cooperation plays a key role for resolving the coordination problems underlying the provisioning of public goods or the upholding of social rules. Nonetheless, also competition has a useful role to play – e.g., to avoid the emergence of global or local monopolities or to allow for trial-error processes that contribute to the improvement and increasing diversity of products and services. Similarly, in politics, the presence & visibility of competing ideas is essential to formulate concrete alternatives, which in turn may contribute to improving public services or regulation.
This simple insight that prosperity & progress needs both – cooperation and competition – can be applied in a variety of contexts: With respect to the dominant mainstream approach in economics, we can identify some tension between the theoretical ideal of welfare-optimizing market competition and the empirical observation, that only very few actual markets conform to this theoretical ideal. Within heterodox economics, we can observe how sometimes competing hypotheses or policy stances are embedded in a rather cooperative, pluralist discourse. Finally, when reflecting on economic and social challenges, we can try to assess the basic characteristics of these challenges to infer whether we should confront them with cooperative or competitive strategies.
Climate heating, for instance, is a rather clear-cut collective action problem that needs cooperative solutions in the long-run. To establish such cooperation, trust is a prerequisite, which can be facilitated by signaling the willingness to cooperate (e.g., by playing tit-for-tat-like strategies). It is mainly for this latter reason – the need to signal the willingness to cooperate, especially by the more rich and powerful countries – why I think that rich countries have a strong obligation to speed up and incur much greater risks when it comes to the necessity of getting a socio-ecological transformation going.
As this argument is rather functional, it can be contrasted with other arguments, e.g., the observation that the large parts of historical pollution were emitted by industrialized countries or that related colonial dependencies are far from overcome. And indeed, cooperation or competition do, in most cases, not emerge spontaneously, but build on a history of past interactions and this history feeds back unto trust and the willingness to cooperate (a feature sometimes called ‘indirect reciprocity’). Economics is, from this perspective, indeed a moral science.
This moral dimension also impacts on the issue of climate heating. As rich countries have often opted for a competitive approach to foster their own advantage in the past, it seems somewhat unlikely that a simple ‘signal for cooperation’ will be able function as a path-breaking, game-changing event. But, even if the probability of success seems low, I fear we are left without alternative. Rich countries must act fast and try furiously to get a fundamental transformation going that, eventually, might not only transform their economic provisioning systems but also serve as a first and long-overdue step to partly redeem themselves for the era of colonialism and imperialism. However, as time goes by the political actions needed for such a change become more radical with any minute…
So, let’s hurry and best,
Jakob
PS: If you now wanna start thinking deeper about possible transformation strategies, here a two more conceptual papers that provide a good starting point by mapping current proposals on a general level (here) as well as from a finance-perspective (here).