Elwin Tobing

Competition Is Still the Name of the Game

Like people of all nations, Indonesians dream of having a competitive nation of their own. However, it takes not only an enormous amount of hard work but also the right attitude to realize such a dream. Alas, in this respect, we still have a lot to learn. Case in point: the pervasive phobia of neoliberalism.

The prevailing understanding of neoliberalism among many Indonesians, from presidential candidates to the layman, is almost identical to that of neocolonialism: the strong inhumanly exploiting the weak, where free markets are just the modern version of forced trading. But too many fail to recognize the reality that we are currently living in the most competitive era in history.

In almost all aspects of life, success is determined by how competitive an entity is. This is also true in the context of nations, for which the current and future trends clearly point to an increasingly intense competition among nations. Various global regulations that have been intensively promoted in the last few decades — from free trade to financial liberalization — are all aimed at enhancing competition among nations. Competition, it is believed, will promote higher economic growth and result in better standards of living.

Neoliberalism is about competition.

Studies have shown the positive effects of competition on economic growth. One branch of study considers firms as entities operating under profit-maximizing behavior and examines the effect of competition on their investments in technology. The idea is that more intense competition stimulates innovation, innovation creates efficiency and efficiency promotes higher economic growth.

Another branch examines the effects of competition on efficiency. The idea is that less competition creates inefficiency — a tenet of economics spurred on by the insights of Adam Smith, who asserted that any monopoly not acquired due to innovation is a great enemy to good management. In other words, free markets induce competition that in turn creates efficiency.

In an annual study of 58 countries, the World Economic Forum’s Global Competitiveness Report 2000 found that competition had a positive effect on per-capita incomes. Proxied by antitrust policies, the effectiveness of competition proves to be important in explaining the international differences in income per capita. The explanation is simple: the imperfect competition found in regulated sectors tends to be accompanied by inefficient use of resources that, in turn, lowers economic growth.

The economic activities that produce competitive societies are socially embedded in complex organizational contexts called firms. As Harvard professor Michael Porter argues, firms, not nations, compete in the global market. Faced with unrelenting competition, firms are forced to innovate, be more productive and more efficient, in order to survive and become successful. In other words, competitive firms produce a competitive nation.

Thus, neoliberalism is about tough competition among firms.

But firms are a combination of people, machines and management. All of these center on people, and this implies a fundamental truth: Competitive firms are created by competitive individuals. Microsoft is created by the competitive Bill Gates and Paul Allen, Apple by Steve Jobs, Amazon by Jeff Bezos.

True, competition will leave some on the losing end. But contrary to popular belief, competition does not need be brutal, as real competition teaches competitors to respect both themselves and their opponents. Competition also teaches individuals to take responsibility for their actions. And true competition recognizes a set of rules and information that is accessible to all players.

This suggests that the winning factor in competition is strategy and innovation. Almost all a firm needs to compete is to utilize available information about the strengths and weaknesses of opponents as well as to compete with itself (self-competition). As it turns out, self-competition plays an important role in success. Bill Gates was once asked whether he would still enjoy his work if the competition for his company was scarce. He replied, “Even if there weren’t great companies to match with, the thrill of self-competition would keep me coming to the office.”

The success of Japanese firms in the 1970s and 80s was not due to their ability to outperform foreign firms in the international markets, but rather due to their ability to compete in the home market. One study found that Japanese competitiveness was associated with competition in the home market, not collusion, cartels or government intervention.

Building a winning nation begins with individuals, then progresses to a broader entity: family, society and nation. It demands the spirit of competition from each individual, a spirit that continuously equips us with knowledge, strategy and the ability to innovate. Individuals who strive to be more creative, innovative, hard-working, disciplined and responsible will be more competitive.

Thus the imperative of today’s world is that we must embrace the current and future paradigm of success — being competitive — to seriously prepare our nation to succeed in the future. The stories of Samsung, Hyundai and HSBC in the international market, which have become testimonials to the success of South Korea and Hong Kong, should teach us that those who embrace the paradigm and prepare themselves for tough competition are likely to be victorious. In contrast, those who deny and reject the paradigm, without selecting a legitimate and convincing alternative, will be left behind.

As the saying goes, adopt, adapt and excel or be defeated!


Elwin Tobing is associate professor of economics at the School of Business and Management, Azusa Pacific University, in California.