Competition and the Commercial Spirit

I came across this gem while reading Hayek’s discussion of private monopoly and competition in Law, Legislation and Liberty. Hayek is discussing the relationship between competition and economic rationality, disputing those who argue that economic rationality or the ‘commercial spirit’ needs to exist for competition to work. In contrast, Hayek argues that the relationship works the other way round: bring in competition and people will be forced to embrace economic rationality in order to survive:

This should be remembered particularly by those who are inclined to argue that competition will not work among people who lack the spirit of enterprise:  let merely a few rise and be esteemed and powerful because they have successfully tried new ways, even if they may be in the first instance foreign intruders, and let those tempted to imitate them be free to do so, however few they may be in the first instance, and that spirit of enterprise will emerge by the method with can produce it.

The suggestion that competition can be introduced by ‘foreign intruders’ caught my eye. I think Paul Bremer took this literally.


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