But competition intervenes among the capitalists.

Frédéric Bastiat
Economic Harmonies

After examining the redistribution aspect of competition concerning natural strengths and innovation, Frédéric Bastiat looks at the action of competition on capital. There is no doubt the mechanism is identical.

If the capitalist may be able to set the price of his competitive advantage, this price is limited by the price that consumers are willing to pay if the capitalist were absent. It is worth it emphasising this point given the hostile environment that is still around today – the capitalist is not doing any more harm that if he were not here with his capital, therefore, to make the capital available to others can only be beneficial. More interestingly, capitalists are competing between themselves in order to use their capital in the best possible way. As a consequence, the price of their service will necessarily be reduced in order to reach a market price and therefore, once again not be able to benefit unduly from their position (I note in passing that the best way to become rich quickly is to compete successfully agains somebody who is already rich). 

Other quotes from Competition:
Introduction – Part 1 – Part 2 – Part 3 – Part 4 – Part 5 – Part 6 – Conclusion

Leave a Reply

Your email address will not be published. Required fields are marked *