“We need more cooperation and less competition in our economy.”

You’ve probably heard variations of this sentiment from politicians, pundits, and well-meaning friends who worry that market competition creates a harsh, uncaring society. The underlying assumption is clear: competition and cooperation are opposites. If we want people to work together harmoniously, we need less of the brutal dog-eat-dog competition that capitalism supposedly encourages.

This framing presents a false choice that fundamentally misunderstands both competition and cooperation.

In our last post, we explored how competition in capitalism differs completely from zero-sum contests. Business competition isn’t about defeating opponents. It’s about creating value for customers. But there’s an even deeper insight here: market competition is actually one of the most sophisticated forms of cooperation ever developed.

Think about what happens when you walk into a grocery store. Thousands of people you’ve never met have cooperated to stock those shelves. Farmers grew the produce, truckers transported it, warehouse workers sorted it, and store employees displayed it—all so you can buy what you need. None of these people know you personally. Most have never even thought about you. Yet they’ve all worked together to serve your needs.

How does this cooperation happen without anyone organizing it? Through the competitive process of trying to earn your business.

The farmer who grows the best tomatoes at the most reasonable price gets your money. The trucking company that delivers them fresh and on time gets paid. The grocery store that offers the best selection and service gets your repeat visits. Competition for your dollars coordinates the actions of thousands of strangers into a cooperative network that serves your interests.

This network of coincidental coordination is what economist F.A. Hayek charmingly called a “cosmos,” but is more commonly referred to as a “spontaneous order.” Individuals pursuing their own interests through voluntary exchange end up cooperating to benefit everyone, even though cooperation wasn’t their primary goal. The baker doesn’t bake bread because he cares about you personally. He does it to earn a living. But the result is fresh bread for your table.

Contrast this with mandated cooperation, the kind that critics of capitalism often advocate. When government agencies or central planners try to organize economic activity directly, what they’re really doing is replacing voluntary cooperation with coercive coordination. Instead of people cooperating because it benefits them, they’re forced to cooperate whether it makes sense or not.

Consider the Soviet Union’s famous five-year plans. These represented massive attempts at economic cooperation, with millions of people supposedly working together toward common goals. But because this cooperation was mandated rather than voluntary, it produced shortages, waste, and economic stagnation. Factory managers hit their quotas by producing heavy, useless goods because they were measured by weight, not value. Farmers abandoned food crops to grow industrial crops they weren’t suited for because central planners said so.

The problem wasn’t lack of cooperation. It was lack of genuine competition. Without competitive pressure to serve customers effectively, “cooperation” became an exercise in following orders rather than creating value.

Even within individual companies, the most effective cooperation emerges from competitive dynamics. Sales teams compete to land the biggest clients, but this competition drives them to cooperate more effectively with customer service, product development, and fulfillment teams. Engineers compete for recognition and advancement, but this pushes them to collaborate on solving technical problems that serve customers better.

When companies suppress internal competition through rigid bureaucracy or guaranteed job security, cooperation often breaks down. People become more concerned with following procedures than achieving results. Innovation slows. Customer service suffers. The company becomes less competitive in the marketplace, ultimately threatening everyone’s job security.

This pattern reveals why market competition produces better cooperation than top-down coordination. Competition creates feedback mechanisms that reward effective cooperation and punish ineffective cooperation. When people can choose where to spend their money, time, and talents, they naturally gravitate toward organizations that cooperate most effectively to serve their needs.

But what about areas where cooperation seems to break down? What about environmental problems, for example, where individual businesses might pollute while passing costs onto society?

These situations don’t represent failures of competition. They represent failures to properly define the competitive playing field. As we’ve discussed previously, environmental problems typically occur when property rights aren’t clearly established or enforced. When businesses can impose costs on others without permission, that’s not competition—it’s the absence of proper competitive rules.

The solution isn’t less competition but better competitive frameworks that ensure all costs and benefits are accounted for in market transactions. When polluting becomes expensive and cleaning up becomes profitable, businesses suddenly discover remarkable powers of cooperation in solving environmental problems.

The same principle applies to smaller-scale cooperation. Neighborhood businesses cooperate on marketing events, shared parking, and community improvement projects because they compete for the same pool of local customers. A quick glance at the sponsor signs at any Little League game or local fairgrounds shows exactly that. Their cooperation makes the entire area more attractive, benefiting everyone.

Professional associations, industry standards, and trade organizations all emerge from competitive dynamics. Competitors cooperate to establish common standards because customers value compatibility and reliability. They share information about best practices because reputation matters in competitive markets. They work together on research and development because innovation benefits everyone who can implement it effectively.

This voluntary, market-driven cooperation tends to be more effective than mandated cooperation precisely because it’s based on mutual benefit rather than external compulsion. When people cooperate because they choose to, they bring creativity, enthusiasm, and genuine commitment to the effort. When they cooperate because they’re forced to, they bring compliance at best and resentment at worst.

The false choice between competition and cooperation misses the deeper truth: in free markets, competition and cooperation are two sides of the same coin. Businesses compete by cooperating more effectively than their rivals. They cooperate with suppliers, employees, and customers in order to compete more successfully with other businesses.

This isn’t a bug in the capitalist system—it’s the feature that makes capitalism so effective at organizing human activity productively. Instead of requiring people to suppress their individual interests for some greater good, capitalism harnesses individual interests to serve the greater good through voluntary exchange and competitive cooperation. In other words, it works with human nature instead of against it.

The next time someone argues we need less competition and more cooperation, remember that market competition produces the most extensive, effective, and genuinely voluntary cooperation in human history. It’s not competition versus cooperation. It’s competition as the engine of cooperation.

Learn more about capitalism here.