Competition and Morality in the European Union

The article is intended to draw attention on the possible incompatibility between two of the cornerstones of the European Union: competition and morality. My observations are going to be made from a economic – ethical perspective by using comments of prominent characters like: M. Weber, A. Smith, K. Marx, F. von Hayek.

I come from the generation and from that particular corner of Europe, where we grew up with the dream of the Union. Under the current developments, I cannot help feeling a slight twitch inside me, like somebody constantly grabbing my stomach with his fists and turning it upside down. Therefore, to relief myself a bit of the stress of tomorrows exam in Ethics & Economics and of my accumulated frustrations on the above mentioned topic, I decided to write this small articles.

Max Weber wrote in one of his work from 1905: “the capitalistic economy […] is an unalterable order of things […] that has come to dominate economic life, educates and selects the economic subjects which it needs through a process of economic survival of the fittest. It forces the individual, in so far as he is involved in the system of the market relationships, to conform to capitalistic rules of action.” Basically as Karl Homann, also remarks on the same passage, the capitalistic economic order is grounded in self-interest and corrects itself in accordance with its own laws: the market and competition. Consequently, it threats the individual with the elimination from the market process, if he refuses to come out of this competitive order. The concepts are best described by Adam Smith: “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.

Further on, Homann contrasts morality as being about solidarity, love and altruism, and it demands from the individual that he or she subordinates his or her interests to those of others. Sounds familiar? This solidarity poem, has become more like a national hymn of the European Unions politicians. It has so much been iterated, that it is interesting to see it in contrast with the other iterated leitmotiv: competition.

Now, to get to the point, I introduce yet another name, Götz Briefs, that perfectly describes the problem I want to describe:”in competition it is those with the lowest moral standard who survive in the long term, because in conflict situations compliance with higher moral standards brings with it competitive disadvantages.” Taking the case of the European Union, I sense that we have a bunch on the verge of being eliminated completely, being stripped completely of their competitive advantage and basically crucified in the name of market efficiency. On the one hand, the reason might be that those guilty of crime did in our case not necessarily obeyed the ‘higher moral standards’, but kinda went on and bent the limit morality the legally recognised limits. On the other hand, it would be nice to follow into the future and see who are going to be the ‘survivors’ and ask them if we are in the end, they play the solidarity cards or they play the low morals hands.

Karl Marx claimed that competition is inadmissible as the orienting mechanism of a truly humane economy. But I ask myself, if competition is the main cornerstone of the European Union, wasn’t Marx right that this is no humane economy? And that we are actually building a rather more European Empire? Does it mean that if we do not see other options to capitalism, that does not mean that there aren’t other still to be developed? What made us quit searching for alternatives? Further on from the economic perspective, Friedrich August von Hayek once argued with the respect to morality and competition: “efficient markets allow moral action only to extent that it turns out to be profitable.” Applying this on our patient, the union child, I would conclude that morality and subsequently solidarity, are definitely not trait of character that characterizes him, for it suffers from far too much debt.

A nice axiom indeed is that the economy ought to serve human beings. In our case the European citizen. Should we take the case of poor Greeks, we will conclude there is a lot of misfortune going on. The only game now in EU is on who has the money, the banks or the state? Ironically, nobody has a clear idea of who lends who? Does the state lends the banks the money which on the other side he lended from other banks? Money that in the end belongs to the citizen, meaning your voters? Which you should not get angry? Too complicated for this hour of the night/morning.

I will end now on Immanuel Kant’s note: “What should I do?” and leave you with Homann’s persistent question for you to chew on: How can moral norms and ideas be asserted under market and competitive conditions?

Ioana Dinu (Germany), February 2012
For more information and the original discussion paper please see:
Wettbewerb und Moral” (1990), Karl Homann
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