Competition is at the heart of what makes capitalism so effective at increasing prosperity. Companies which fear losing their customers to current or future rivals are forced to keep their prices lower and to raise the quality of their products. Equally, businesses must provide adequate wages and working conditions in order to attract and retain workers. In the absence of competitive pressures, businesses become lazy, complacent and wasteful. Innovation slows, prices rise and workers see deteriorating conditions. The free enterprise system cannot provide liberty and rising living standards if markets operate as cosy cartels without real competition or consumer choice.
In recent years it seems that competitive pressures have diminished in a number of markets. The inevitable result is that consumers have become disillusioned about the benefits of big businesses. Polling undertaken last year which we published in The Road from Serfdom showed that roughly the same proportion of the population trust neither Big Government nor Big Companies (71% v 69%). An economy dominated by a big state operating alongside quasi-monopolistic big companies can deliver neither efficient nor equitable results.
Competition in the retail sector has seen supermarkets cut their prices and broaden their offerings for consumers – it is the perfect example for politicians to use when examining competition policy. It is therefore crucial that the next Government implements policies which will boost competition across a variety of sectors including banking, water, energy and transport.
All the main parties mentioned the word “competition” in their manifestos although not to the same extent or in the same way. The Conservatives mentioned competition six times and whilst Labour mentioned it seven times, three of those mentions were critical of it. In a document about twice the size of the other manifestos, the Liberal Democrats mentioned competition eight times; although two of those were critical. UKIP mentioned it twice and the Greens mentioned it just once in a promise to abolish competition in healthcare.