From the moment when price liberalization took place in our country, the previously unknown competition law began to work. Pricing completely and completely left the jurisdiction of the state, which previously had always independently set prices in both retail and wholesale trade, and they remained solid for decades. Currently, this process is extremely flexible and only the law of competition controls it.
Act
The law of competition began to act immediately, as soon as pricing was oriented to supply and demand, to maximize profits, when capital was able to freely overflow, then the triad of market, motivation, competition triumphed. Antitrust laws appeared, spreading more and more widely and over time being observed more strictly.
Previously, the law of competition was replaced by competition among manufacturers, and this was also an incentive, but "live" profit much more contributes to increased labor productivity, and therefore technological progress is developing more rapidly. With regard to the productive forces, the monopolies have never been shy about creating complete arbitrariness. However, now a significantly larger part of the profit is being built up by increasing labor productivity.
A bit of history
Antitrust laws were not created suddenly, gradually establishing the most rational correlation of competition and monopoly, preventing the destructive consequences of ill-conceived actions. The first foundations of the law of competition were published in 1890 (Sherman Act, or the Antitrust Act) in the United States. Thus, for the first time competition was taken under the protection of the state itself.
In the USSR, the laws of marketing products radically differed from capitalist ones. The economy was planned, where the lack of principles of the law of competition did not create conditions for the anarchy of production, and sales were calculated regardless of the problems of surplus value and did not create the need to search for the most profitable markets. The capitalist is obliged to choose special commercial operations, for the successful implementation of which any paths are justified up to advertising fraud, product falsification. The main thing is to oust the competitor.
Such principles
For greater profit, it is profitable for the capitalist to even artificially create difficulties in marketing this or that product, and the worse things go for rivals (including consumers too!), The more additional profit will clearly emerge. The system of laws of competition is such that universal values and the more so the development of individual countries are much lower among the priorities of the capitalist than obtaining immediate and as high a profit as possible.
Thus, for many decades, capital has been pumping oil in the Middle East, in every way preventing countries that own resources from creating their own oil refining industry. In particular, our country drives only raw materials for sale, since it is precisely these conditions that create global business, these are the laws of competition in the economy of capitalist countries.
And just like other owners of rich deposits, our country purchases oil products made from our own oil from foreign capital, but at higher prices than those that would have been formed during the processing of oil on the spot.
Artificial shortage
Has the capitalist ever been interested in the fate of consumers? The main condition of economic law is free competition, but this is what remains in words. In reality, the opposite happens. The capitalist needs to raise prices as high as possible in order to get more income at the expense of consumers. Therefore, the deficit of a product that is created artificially is beneficial for him. For example, the sale of petroleum products is almost always regulated this way.
The economic law of competition should lead to that objective process when the quality of services and products is constantly increasing, and their unit price is decreasing. However, judging by the realities, this principle works poorly. All low-quality and all too expensive products should be washed out of the markets. But for the implementation of these processes, at least a high-quality antitrust law is needed.
It should be
Entrepreneurship is a way of making a profit by satisfying consumer demand with its offer of precisely those goods that consumers are currently demanding. But here we see the effect of the law of competition, regulated not in favor of social needs. Even if the direction of activity by the entrepreneur is chosen successfully, if there is the ability to produce the best quality goods with the lowest costs, the entrepreneur may not win in the competition.
The reason for this is the invisible laws of the market. Competition is almost never fair. It should have a very strong impact on the behavior of each market entity. And it has. The laws of supply and demand are much less effective. With truly free competition, all excessively high and too low prices should move toward averaging, towards an equilibrium point.
However, for some reason this does not happen. Equality of the warring parties in the competition does not work. Surely, different rules of the competitive game apply here, without the direct involvement of the competition of competitors in identifying the equilibrium price and the clearly indicated quantity of the necessary goods.
Strategic decisions
For successful work in a market economy, an optimization approach is needed with the establishment of a relationship between economic indicators, technical and organizational. It is necessary to study market mechanisms: the laws of saving time, scale, competition, and other dependencies.
And strategic decisions need an exceptionally detailed analysis of supply and demand, dependencies between them, increasing unforeseen costs, loss of profitability, economic interconnections of production and consumption, scale of production and much more.
An indispensable condition for the operation of economic laws is competition, and the analysis should be carried out not only at the level of the existing company, but also at the industry level: how does the competition mechanism, antitrust law, what are the forms of competition in the industry and what is its strength.
Market structure
A market economy can be represented by a monopoly or oligopoly, monopolistic competition, or perfect, pure competition. The shape of the market depends on the number of original products that have a patent, on the quality of information (advertising) about the goods needed by the consumer. The current competition law should help predict prices, competitors' capabilities and the factors that determine it.
For example, several companies produce identical products. It can be compared by specific price indices (the ratio "price - useful effect", which reflects the consumer properties of this product under certain conditions). All firms will try to develop a product model with the best performance. Competition - competition, when the independent actions of business entities do not provide an opportunity to limit the chances of success of rivals or otherwise affect the created general conditions for movement on the product market of these products.
Competitive fight
This is a tense struggle, where both individuals and legal entities fight for the buyer, otherwise, with the strict competition law, the manufacturer simply cannot survive. It is necessary for each seller of services and goods to find more favorable conditions for the production of the product and its sale, to expand the market by improving the quality and lowering the individual value of the goods. Then you get extra profit (excess income).
And since competition is an indispensable condition for the operation of economic laws, this forces the producer to throw all available forces into the struggle for priority in the market space. If the market was occupied by monopolistic producers, who receive superprofits through the introduction of monopoly prices, competition weakens. As a result, the economy does not develop, production becomes less efficient. Then the state is forced to intervene in the development of competition.
Functions: regulatory and stimulating
Competition constantly has a huge impact on any costs of the manager who produces the product. It is thanks to her that a market equilibrium should be achieved in the sale of goods.
Its main function is regulatory. An inflow of capital to the most profitable sectors is ensured, since prices are set competitively, due to which there is a balance between needs and production.
Another function of competition is stimulating. Manufacturers confront the struggle for the conditions of production and the market, and this is an incentive for the development of business executives who are forced to innovate and make optimal use of resources - both labor and raw materials.
Functions: controlling and differentiating
Competition should ensure the full development of technology, management efficiency and the quality of resources. This is its controlling function: control over the comparability of costs and necessary costs in production, compliance with product quality, control over the changing needs of society.
In addition, differentiation is an important function of competition: producers of the same product have completely different results on the market. The best conditions go to a manufacturer that outperforms its competitors by increasing production efficiency, taking public requests into account, and the like. Competitiveness also determines profit growth.
The law of competition as the law of nature
Any phenomenon contains both features and general properties, that is, individual and specific. Economic laws are no exception. The general thing here is that any laws of nature or society are objective independent of consciousness. This means that they will act even if we do not know anything about them.
The law of the market - value, demand, supply, competition - also exists regardless of the knowledge of market participants. The subjects of the labor market are hired workers and employers. The latter can be represented by any enterprises, firms (state, individual, partnerships, corporations and so on). Wage workers are the owners of the workforce. Unions of entrepreneurs and trade unions make the world market a single system with holistic trade, financial and economic ties.
