Competition as Cooperation Serves Customers

What does it mean to cooperate? It might be defined as coordinating our activities with one another toward a shared end. This simple definition allows us to consider whether some things that do not appear to be cooperative, such as competition, actually are forms of cooperation.

The Theology of Work Project commentary on Proverbs states that business is at heart a form of cooperation. The passage describes the proper relationship between cooperation and competition with helpful precision:

The near-universal ascendancy of market economies is arguably due to the benefits of competition. But business, politics and other forms of competition are at heart forms of cooperation, albeit with significant competitive aspects. Society fosters competition in order that all may thrive.

The statement that business is at heart a form of cooperation will strike many as implausible. But no goods or services could be delivered to customers without many people cooperating. Within each company, coworkers must cooperate. Cooperation also takes place across companies. More than one company, and sometimes very many of them, cooperate in the production of any given good or service. Buyers (customers) must cooperate with sellers (companies) in the activity of commerce to obtain those goods and services.

Cooperation is the basic reality of economic activity. Competition is a second-order effect of this cooperation. When customers have multiple options of companies with which they will cooperate as buyers of goods and services, the companies must compete with one another to see who can cooperate more efficiently to deliver value to customers.

Strange as it may sound, competing with one another ethically – with right motivation and just conduct – can actually be a form of cooperation. If Honda and Ford each compete to make and sell cars that serve customers best, customers benefit from  better cars, prices and service. This fulfils God’s own design for work. As Dorothy Sayers puts it, “The very first demand that his religion makes upon the carpenter is that he should make good tables.”[1]

Sometimes making good products is aided by intentional cooperation, as with safety and engineering standards (e.g. tire ratings and sizes). Sometimes this means buying parts from one another’s supply chains or servicing one another’s vehicles. Cooperation must never be undertaken in order to harm customers, such as colluding to set prices or undermining environmental regulations. Competition must never aim to damage the other company (for example by false advertising) and thereby reduce customers’ access to quality choices. In ethical markets, companies compete within the bounds of love for customers and respect for one another.

Competition as Cooperation Serves Society

A well-structured marketplace shaped by ethical competition also reduces economic conflict by encouraging value creation – that is, work and economic exchange that operate for mutual benefit rather than benefitting one person at the expense of another. Work can create value by reorganizing the raw material of God’s creation, and economic exchange can create value by moving resources from those who need a particular good or service less to those who need it more. By creating value, people can meet their own economic needs not by taking value away from others but by increasing the total amount of value in the world.

For example, a steel mill turns iron ore into steel girders. This benefits iron ore miners (by giving them an income) and city dwellers (by making it possible to build apartment buildings) as well as the mill owners and workers. It does not merely take money away from city dwellers and give it to ore miners and mill owners and workers, but instead leaves everyone better off. Work has created value because the product, steel girders, is more useful (i.e., has greater value) than iron ore. Economic exchange has created value because the city dwellers need (i.e., value) the girders more than the money they paid for them, while the miners and millers need (i.e., value) the money more than the iron ore they used up. All parties are better off after the manufacture and sale of the girders than before. In this way, sellers support themselves and their households not at the expense of customers but precisely by serving customers.[1] This is true even though a company is always in a certain level of competition with its customers over price. That is, the product creates value, but there is still a certain amount of tension over the price, meaning how much of the value accrues to the seller and how much to the buyer. The tension between the seller’s good and the buyer’s good can never be fully removed, and thus the temptation to benefit ourselves by harming others will always be with us. By giving each party multiple choices, ethical competition creates the most opportunities and support for pursuing value creation rather than merely transfer of wealth.

Ethically sound approaches to economics recognize that cooperation is the basic reality and that ethical competition serves cooperative ends. True, when the level of competition is increased it can create a social environment of rapid change, economic dislocation, migration and impermanent institutions. In every economy, provision must be made for those who cannot provide for themselves by competing. None of this proves that competition is not serving the needs of social cooperation. Quite the contrary, a highly competitive environment often serves the public good and facilitates social cooperation better than the available alternatives. Those who lose their jobs when a company goes out of business are in relatively good shape if there are many competitor companies where they may look for a new job, but not in such good shape if there are few or no competitors left in the industry.

Let’s look more specifically at how our participation in economic competition can align with our definition of cooperation. The definition requires coordination “toward a shared end.” If competition is to be a form of cooperation, this implies the existence of a common or public good that all companies pursue as they compete.[2] The proper, shared end of competition is the central purpose Scripture identifies for our work and exchange – to meet the economic needs of our households and communities, and to promote the general flourishing of our world. Competition is not always in fact directed toward this end, because many people and companies do not recognize this as a goal. However, competition is in fact oriented toward the public good when people and organizations identify serving customers and making the world a better place as their goal. This is a challenge to the view that prevails in some quarters that the primary or even sole purpose of business is to make money for shareholders; in fact, there is no reason a business cannot compete as much to serve customers as to deliver shareholder return, and the two are often compatible.

To the degree that competitors are not motivated by love of God and neighbor (or some other internalized ethic) to serve the common good, it is necessary for society to create laws and regulations to protect the common good. In a fallen world, this is inevitable. Yet regulation is a poor substitute for love. Society would be much better served if most or all of its people were committed to working, and even competing, based on serving a common good, rather than only their own interests. This is one of the purposes of a theology of work, to help people work and compete in ways that serve God and neighbor, and not only themselves.

Paul’s athletic metaphor is very rich in this regard. Athletes often talk about tough competition “bringing out their best.” In sports, following the rules and doing your best to beat the other team fair and square can be a way of cooperating with the other team to produce an outcome both desire – namely a good, enjoyable game in which both teams play their best and the better team wins. Excellence and accomplishment are promoted. Similarly, working hard to beat competing companies by serving customers better can be a way of cooperating with those competitors to produce an outcome both desire – an efficient marketplace that provides the best possible good and services while delivering returns to investors.

Ethical competition may not seem to involve coordinating, which by our definition is a quality of cooperation. Indeed, direct and explicit coordination between competitors in order to reduce competition is normally illegal and unethical because it involves colluding against customers. However, coordination between competitors does occur at a higher social level and can serve the common good. Tangible examples include trade organizations, publicity and lobbying for the industry as a whole, securing supply chains, setting industry standards, training institutes and (in countries where the law permits it) collective bargaining. These tangible forms of cooperation establish the existence of shared norms and, at the deepest level, the recognition of a common humanity across competing firms.

This, in turn, points toward an even higher social level of cooperation. The most important purpose of the economic system – especially in the price-setting function of markets – is to facilitate a vast coordination among competing economic actors. Buyers seek to buy better goods at lower prices; sellers seek to produce and sell more profitably. If the economic system and the larger ecosystem of social institutions are functioning as they should, prices will rise and fall to allow supply to find demand and vice versa. This allocates existing goods and services more effectively than any other system, and—perhaps more importantly—gives the most effective incentives for guiding investment in future goods and services.

This social coordination function of economic exchange, structured by ethical competition as a form of cooperation, is becoming more and more important in light of globalization. Market exchange is the only method yet discovered that is able to effectively coordinate the actions of very large numbers of very diverse people and organizations toward shared ends that benefit all. We will always need governmental organizations to accomplish the political good that economic systems cannot accomplish on their own. Conversely, we will always need markets to accomplish the economic good that political systems cannot accomplish on their own.

Competition as Cooperation Serves Competitors

Surprisingly, vigorous competition helps, rather than harms, the competitors themselves. If Honda delivers more value to customers, that will force Ford to improve, and vice versa. This brings to mind the proverb, “Iron sharpens iron, and one person sharpens the wits of another. (Proverbs 27:17). Tough, unrelenting pressure from others is often the way we become our best. In this way, being a tough competitor can be a way of loving both our competitors and our societies. Countries that suppress competition by selecting a “national champion” company in a particular industry eventually discover that they have not enabled the company to thrive, but have set it on a path to complacency, mediocrity, and ultimately failure.

Isn’t it still possible that competitors harm one another by competing? If Ford succeeds in making vehicles customers want and selling them at lower prices than Honda, won’t Honda’s employees lose their jobs and stockholders lose their investments?

Not necessarily. Michael Porter, a professor at Harvard Business School, emphasizes that competition does not mean competing to “be the best” or “be number one,” which implies a zero-sum competition focused on defeating rivals – one company wins by causing another company to lose. Rather, competition means competing to “be unique,” to create value for customers in ways your rivals don’t. Value can be created in many different ways for many different customers, so there is room in a competitive market for many companies to flourish, as long as they compete to be unique as value creators rather than all seeking to serve customers in the same (“best”) way.

Ford’s success does not, by itself, force Honda to go out of business. It forces Honda to search for an alternative way to serve customers, one that satisfies needs Ford isn’t satisfying. Ford may beat Honda hands down in, say, the truck market, but Honda can respond by focusing on other markets, such as economy cars. Even within the economy car market, if Ford beats Honda at making one kind of economy car, Honda can find another kind of economy car to make that Ford doesn’t make (or doesn’t make as well). Honda goes out of business only if it cannot find any alternative opportunities to serve customers sustainably—in which case, keeping Honda in operation when it’s not succeeding at serving people is neither a sustainable option nor a morally preferable one.

In an interview at Harvard Business School, Porter was asked to summarize “the most common strategy mistakes.” He replied:

The granddaddy of all mistakes is competing to be the best, going down the same path as everybody else and thinking that somehow you can achieve better results. This is a hard race to win. So many managers confuse operational effectiveness with strategy.

Another common mistake is confusing marketing with strategy. It’s natural for strategy to arise from a focus on customers and their needs. So in many companies, strategy is built around the value proposition, which is the demand side of the equation. But . . . it’s about the supply side as well, the unique configuration of activities that delivers value. Strategy links choices on the demand side with the unique choices about the value chain (the supply side). You can’t have competitive advantage without both.[1]

In other words, the goal lies not in persuading customers that you deliver value, but in actually delivering it. It is not to defeat competitors in delivering value, but to deliver value uniquely, through a distinct matching of your own (unique) abilities to customers’ needs.

In one widely used text, Joan Magretta summarizes Porter’s key insight:

Competition to be unique reflects a different mind-set and a different way of thinking about the nature of competition. Here, companies pursue distinctive ways of competing aimed at serving different sets of needs and customers. The focus, in other words, is on creating superior value for the chosen customers, not on imitating and matching rivals….

Competing to be unique is unlike warfare in that one company’s success does not require its rivals to fail. It is unlike competition in sports because every company can chose to invent its own game. A better analogy…might be the performing arts. There can be many good singers and actors – each outstanding and successful in a distinctive way. Each finds and creates an audience. The more good performers there are, the more audiences grow and the arts flourish. This kind of value creation is the essence of positive-sum value creation….

To be sure, not every company will succeed. Competition will weed out the underperformers. But companies that do a good job can earn sustainable returns because they create more value.[2]

All this is congruent with the idea of competition as cooperation. It identifies the function of competition in terms of producing or promoting shared goods. It specifically repudiates the idea that harming or defeating rivals should be the purpose of competitive activity. Competitors seek to create value for customers, enriching themselves by enriching others and putting pressure on their rivals to do the same.

Competition as Cooperation Sometimes Requires Self-Sacrifice

So far, we have been describing cooperation and competition in God’s original design – what they would look like if we still rightly reflected the image of the triune God who is love. It is essential to get our bearings from God himself and from his original design of our nature if we are to build our views in light of a sound standard.

To many people, however, any discussion about God’s design for a perfect world feels abstract and disconnected from real life. Whatever we may speculate about competition in an unfallen world, the world is in fact fallen. That is our reality now, and we often feel the brokenness of the present more intensely than we do our connection to our original nature – or the glorious future God has for us in Christ.

In the present evil age, economic competition is never perfectly ethical in practice, and is often practiced in unethical ways. As participants in competitive economic markets, our daily responsibility is to ensure that we engage in competition ethically and encourage ethical competition in others, motivated by love for all human beings.

The burden of ethics can be a heavy one. We may strive to compete ethically, but our competitors may not. Even if our competitors do not get the better of us by cheating in ways we refuse to do, loving our competitors – practicing competition as cooperation – is hard to do. It involves exerting ourselves and putting our interests at risk well above and beyond the minimum of expected behavior that is conventionally set for economic competitors. We may pay a high price for our decision to engage in competition ethically. Or we may find that unethical competition by others exploits us even to the point of preventing us from supporting ourselves and those who depend on us.

That is why the Cross matters so much to how we compete. The Cross is the only way back to the holy love of God in the Trinity. The image of that holy love is being restored in Christ, who died so God could reclaim us, and we are to imitate Christ as a mode of unity with him, so that the image of God can be restored in us as well. We must take up our cross and die daily to follow Christ (Matthew 16:24-28).

Death to self, on the model of the Cross, is central to Christian ethics. John Calvin called this kind of self-denial “the sum of the Christian life.”[1] To engage in economic competition with the goal of benefiting customers and the public, and even our competitors themselves, involves us in an economic way of life centered on Christ-like self-denial.

This death to self is, of course, directly against the wishes of our fallen nature. We have no power in ourselves to conform ourselves to the cross of Christ. We live in the power of the Holy Spirit that makes us able to live as Christ bids.

This begins with a reformation of our own sinfulness. Evil is not just “out there” among our economic competitors, it is “in here,” in our hearts. Because of the fall, we ourselves have come to hate our competitors and want to justify advancing ourselves at their expense. As we seek to serve others self-sacrificially, as Christ did, we experience perennial tension over understanding ourselves as agents of God’s holy love, bringing that holy love into the world through our love of others, and being sinners forgiven by grace, humbly remembering that it is really God who wins all the important victories over evil, not us.

That said, evil is certainly also “out there,” and the New Testament emphasizes the power of evil in the world. With regard to economic competition, the fall imposes great restrictions on the depth and scale of social cooperation we can expect from the world. When we hold up the standard of competition as cooperation in loving and creative ways, including by our willingness to sacrifice our own advantage for its sake, we issue a challenge to worldly economic ideologies. Competition as cooperation provides a realistic way for pluralistic societies to orient individual and corporate economic activity toward the common good and other ethically sound ends. This will challenge both those who idolize market competition and those who deny that it is possible to engage in competition ethically.

We have emphasized that the Cross restores the image of God and the original design of our nature. However, the Cross points us forward as well as backward. It goes beyond merely restoring creation, because it emphasizes death to self as a way of life. The Cross, and the resurrection power of the Holy Spirit conforming us to it, makes it possible for us to engage in self-sacrificial acts and to live today in a way that actively anticipates the future consummation of God’s kingdom. We may choose, for example, to help a co-worker succeed in a project that benefits our customers, even though we know doing so may lead to the co-worker being promoted ahead of us to a new position. We may choose to oppose, or even to reveal to the outside world, actions of our organization that exploit others, even though we know we may lose our job as a result. We may choose to campaign for regulations necessary to restrain unfair competition, even though spending the time to do so brings nothing of direct value to us.

The Cross applies not only to our individual actions, but to the actions of peoples and nations. Revelation 21-22 shows God’s people coming into the New Jerusalem as “the nations,” not merely as a large aggregation of otherwise unconnected and undifferentiated individuals. Cultural structures, which had participated and in some cases even originated in the fall (Genesis 10-11) are redeemed, not just private individuals. “The nations,” as nations, gather to walk in God’s light (Revelation 21:24), reverently bring their glory and honor before him as their gift and service to him (Revelation 21:26) and receive the healing power of the tree of life (Revelation 22:2). Even the nations’ distinct political offices (Revelation 21:24) and diverse languages (Revelation 13:7) remain. And “they will be his peoples [laoi is plural] and God himself will be with them as their God” (Revelation 21:3). What had been the unique designation of Israel (Genesis 17:7-8, Jeremiah 32:38, Ezekiel 37:27) now applies to every nation.

Pentecost points our present-day lives forward toward this future reality in which cultural structures will be redeemed. Jesus sends his people in the power of the Spirit to “make disciples of all nations” (Matthew 28:18-19). To this end, at Pentecost he pours out the Spirit on his people to give people in diverse nations the power to follow him and conform their lives to the Cross, not erasing their cultural diversity but using their diverse cultures as vehicles of discipleship (Acts 2:5-13). Pentecost establishes that discipleship occurs in the midst of fallen cultural structures, using those structures as vehicles through which we can practice the transformation of the gospel by the Spirit.

Dallas Willard, who wrote extensively on why the church must approach cultural structures in this way, distilled the idea into this powerful sentence: “Discipleship is not for the church; the church is for discipleship, and discipleship is for the world.”[2]

None of this implies that the church should develop a cultural agenda separate from discipleship to Christ. Discipleship to Christ is the only goal, and any cultural agenda that is autonomous from discipleship is an idol. Moreover, humility about our own position as finite creatures – and sinful ones at that – is always needed. The church’s role is not to promulgate what it considers to be a set of godly socio-economic dictates that must be obeyed by all humanity, but to equip the people of God to learn how to work and compete in ways that serve their neighbors.

Competition as Cooperation Requires Formation

One way of summing up the practical imperative of ethical competition would be this: As much as you can, let the pressures of competition spur you on to deliver better value to customers, not to get ahead by damaging customers or your competitors. In a fallen world, doing this is difficult and painful. Market mechanisms do not ensure it will be done, but only provide the opportunity. The actual loving of neighbors is up to us. But it can be done, it is being done by many all around us, and we must do more of it.

At the personal level, the basic change is attitudinal. Do I view my competitor as a neighbor? How can I develop goodwill toward my competitors? Paul says just as we once viewed God with hate but now approach him in love, we need a corresponding change in attitude toward our other people (2 Corinthians 5:16).

One of the most important practical things we can do is to pray regularly for our competitors and for our competitive situation. It is doubtful that we will find any more effective way to mortify our pride, envy and greed than to ask God to provide for the good of those with whom we compete. We can pray for this directly, bringing our competitors before the Lord by name and petitioning for their good. We can also incorporate this into our prayers for blessing upon our own work, asking that the Lord would use our service to our customers to drive our competitors either to improve or to find new and different avenues of service. We can ask God to create a healthy, constructive environment for competition in our sector of the economy.

A natural next step from this interior dialogue is to ask God’s help to control our external dialogue and “tame the tongue” (James 3:8). How do we describe our competitors when we talk about them with coworkers and others? As obstacles to our own success, or still worse as enemies to be defeated? Economic competitors must restrain the desire to trash talk opposing teams, just like athletes and fans. While the Lord’s command to love our enemies implies that we can have enemies, there is no general need to see economic competitors as enemies (although they may be so in some cases). At any rate, we should not talk about our competitors in ways that dehumanize them or imply we desire their harm. We can instead describe them as benchmarks against which we measure our own success, a barometer of what is and is not serving customers well, and a source of discipline and accountability that keeps us focused on our mission.

At a deeper level, how do we describe the purpose of our work and our organization? When we describe our goal, do we describe the kind of common or public good toward which competition could coordinate our actions with those of our competitors? Or do we only talk about how we serve our own good?

This leads naturally to a third and vitally important step. Do our actions match these words? Are we, in fact, focused on providing for the economic needs of our households and communities, and promoting the flourishing of our neighbors and world? Does our organization seek to succeed by creating value for customers, and to distinguish itself from competitors by the unique value it creates? Is serving the customer the central goal of our work? Is improving the value we deliver to customers at the heart of our competitive strategy? The more we do, the more we aim at that shared goal toward which we want the market to coordinate the activity of ourselves and our competitors.

And of course it is imperative that we keep ourselves and our companies honest. The temptation to advance ourselves by hindering the work of our competitors rather than by serving customers well is perennial. This is why Scripture denounces theft, fraud and exploitation so frequently and so severely.

The idea that competition is cooperation is reflected in several of the Theology of Work Project commentaries (e.g, Matthew 5:7 and Romans 12:1-3), and these provide helpful thoughts about specific steps we can take to follow that path. The commentary on Proverbs emphasizes the question of what happens to those who lose the competition:

The proper penalty for failure in competition is not to be crushed or driven to poverty, but to be transformed or diverted to more productive work. Companies go out of business, but their successful rivals do not become monopolies. …Careers rise and fall, but the proper penalty for failure is not “You’ll never work in this town again,” but “What help do you need to find something better suited to your talents?” The wisest individuals and organizations learn how to engage in competition that makes the most of each player’s participation and offers a soft landing for those who lose today’s contest, but may make a valuable contribution tomorrow.

The commentary on Luke 6:27-36 makes a similar point: “At the corporate level, it means not crushing your competition, suppliers or customers, especially with unfair or unproductive actions such as frivolous lawsuits, monopolization, false rumors, stock manipulation, and the like."

The commentary on Philippians 1:27-2:11 offers two tangible ways to avoid pride in competitive circumstances:

As we have seen, ambition — even competition — is not necessarily bad…but unfairly advancing your own agenda is. It forces you to adopt an inaccurate, inflated assessment of yourself (“conceit”), which puts you into an ever more remote fantasyland where you can be effective neither in work nor in faith. There are two antidotes. First, make sure that your success depends on and contributes to others’ success. This generally means operating in genuine teamwork with others in your workplace. Second, continually seek accurate feedback about yourself and your performance. You may find that your performance is actually excellent, but if you learn that from accurate sources, it is not conceit. The simple act of accepting feedback from others is a form of humility, since you subordinate your self-image to their image of you. Needless to say, this is helpful only if you find accurate sources of feedback.

The Christian faith community can also play a role as the unique place of spiritual transformation and as a community that brings together people of all cultural groups – even economic competitors. Churches can reframe our understanding of competition by holding up ethical competition, or competition as cooperation, over against stereotypical understandings that absolutize competition to the exclusion of cooperation. They can convene occupation-specific conversations about what ethical competition might look like, and how it could be promoted in each field of endeavor.

We should also look beyond the personal and the ecclesial to the public. We should oppose unjust forms of competition that might be institutionalized in our environments, and seek ways of expanding opportunity to those disadvantaged in competition, such as the poor, the disabled and the marginalized. This can be exceptionally challenging if the status quo that we seek to change happens to benefit us. Yet a biblical perspective on competition urges us to reform unjust systems even if it raises competitive pressure on ourselves. (It can help to remember how much we often benefit from being under competitive pressure.)