Competition, Coordination, Social Order

Responsible Business, Civil Society, and Government in an Open Society

by Jacek Giedrojć (Author)
©2017 Monographs 285 Pages


The author analyses competition as one of four coordinating mechanisms helping agents mutually to orientate their actions, avoid chaos, and produce social order. Competition is a key dimension of developed societies. It helps to structure and is also conducive to social change. Competing agents constrain one another, making it hard for anyone to change their position. They discover new routines the best of which may later be institutionalized. Competition is a solvent of power but only in relatively equal societies. Entrenched wealth or status restricts competition, thus impoverishing social order. The author also evaluates the theory of competition to explore such topics as corporate social responsibility, relations between government, business and civil society, and reflexivity in social sciences.

Table Of Contents

  • Cover
  • Title
  • Copyright
  • About the author
  • About the book
  • This eBook can be cited
  • Contents
  • Acknowledgements
  • Introduction
  • Chapter 1: Social Order and Discretion
  • Discretion
  • Power
  • Freedom
  • Chapter 2: Coordinating Mechanisms
  • Community
  • Second Order Mechanisms
  • Hierarchy
  • Deliberation
  • Competition
  • Chapter 3: Competition and Strategy
  • Strategy
  • Private Interest, Autonomy and Competition
  • Strategy and Theory
  • Strategy and Desire
  • Collective Strategy
  • Chapter 4: Implications
  • Reflexivity
  • Competition, Subjectivity and Rational Choice Theory
  • Preconditions for Competitive Order and Its Sustainability
  • Individualism vs. Collectivism
  • Inequalities – Storing Discretion
  • Government Promises of Discretion
  • Chapter 5: Competition in Economics
  • Neoclassical Model of Perfect Competition
  • Austrian School
  • Neoclassical vs. Austrian Insights on Competition
  • Ordoliberalism
  • Three Paradigms Compared
  • Chapter 6: Critical Views of Competition
  • Competition as a Counterproductive Rat Race
  • Hirschman and Boudon
  • Axelrod’s Tournaments: Cooperation or Defection?
  • Networks: an Alternative to Competition?
  • Chapter 7: Corporate Social Responsibility
  • Critics
  • Cynics
  • Enthusiasts
  • Cautious Optimists
  • Chapter 8: Doing Well by Doing Good or Doing Good by Doing Well?
  • Saving Capitalism
  • Transparency and Stakeholder Engagement
  • Theatres of CSR
  • Bottom of the Pyramid
  • Chapter 9: Government, Civil Society and Market
  • Government as Rationalistic Deliverance from Above
  • Civil Society and Market
  • What are Firms For?
  • Conclusions
  • Annex
  • Bibliography
  • Series Index

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I am grateful to Antoni Kamiński, Anna Lewicka-Strzałecka, Glynn Morgan, and Andrzej Rychard for helpful comments and suggestions on earlier drafts of this book. My thanks also go to captains Sascha Krien and Chris Jakubowski and other crew of MY B2 where the book was written. ← 9 | 10 →

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The ambition of this book is to show that competition, but not only market competition, is a key regulating mechanism present in all social spheres. Without competition, the ability to leave existing institutions and join or start new ones, agents would be trapped and open to exploitation by elites. Insiders find ways to exploit any static system, no matter how good or just. Therefore, competition is far too important to leave to economists. As will become clear, over-reliance on the market, or any particular institution, is inherently anti-competitive.

This book develops a theory of competition nestled in a broader theory of social order. While it is uncontroversial that community norms, hierarchical organisation and open deliberation contribute to social order, this cannot be said of competition. In fact, outside economics, much literature in social sciences contrasts competition with cooperation, denigrating competition as corrosive to social order. To Thorsten Veblen (1915), competition results from predatory propensities of the wealthy. By contrasting a speculator with an engineer, he describes competition not only as anti-social but also irrational, standing in the way of sensible management of the society. According to Fred Hirsch (1983), competition amounts to an unproductive, ever more exhausting rat race for the same prize. Competition is often associated with short-sighted selfishness, a “grab and run” mentality, and contrasted with cooperation oriented to the long-term and common good. Even theorists more sympathetic to competition, such as Amitai Etzioni, thought it necessary to severely constrain or “encapsulate” it.

The theory of social order discussed here is limited in its scope to that prevailing in contemporary liberal democracies. It is also focused on spheres of social life where many strangers interact and their actions need to be coordinated. Thus, it is more at home in associational life – civil society, market, workplace, politics – than religious, familial or erotic life.

Social order is understood as a state of affairs in which agents mutually orient their behaviour towards one another, avoid chaos, do not continually frustrate one another’s expectations, or get into one another’s way. Competition is one of the four coordinating mechanisms which together account for social order and its fragments such as institutions and organisations. The other mechanisms are community, hierarchy and deliberation. Analytically, I define coordinating mechanisms as ways in which agents’ discretion, freedom to act as they please, is constrained or allocated. Ontologically, the coordinating mechanisms are rooted in the states of minds of agents, their dispositions to behave in certain ways or ← 11 | 12 → accept certain types of behaviour, view them as legitimate. These dispositions are reflected in the observable routines or strategies crafted and followed by agents.

My approach is anti-reductionist in the sense that social order cannot be reduced to any of the four coordinating mechanisms. It also cannot be reduced to psychology or explained entirely with existing social norms or structures. Given that agents share limited space and other resources, they cannot ignore others’ values and interests – their discretion must be limited. Coordinating mechanisms allocate discretion in different ways. In the mechanism of community, agents have no discretion whatsoever; they strictly follow traditional ways which define everyone’s role and place in society. In a hierarchy, discretion is allocated top-down with a view of achieving some goal in a technocratic fashion – this is society seen as a factory. In deliberation, agents reason about how much discretion various agents should have in various situations. As a first approximation, deliberation will allocate discretion equally, or more precisely – according to the principle of avoidance of discontinuity whereby some agents would be treated differently relative to others in similar circumstances. Finally, in competition, agents win discretion by providing others with something they want. Competition amounts to individual pursuit of discretion through being useful to others. Competition is central to strategies of some agents; I will refer to them as leaders, social entrepreneurs or innovators who are not content with the status quo or the discretion allocated to them by society through other mechanisms. At the opposite end of the spectrum, other agents may be largely content with lives that require little or no discretion. The concept of discretion is abstract – a space in which one can do whatever they want, free from interference from others, but also the capacity to realise whatever goals, values or vision of good life one has. It overlaps somewhat with such concepts as freedom and power as formulated by Berlin, Arendt, Parsons and Aron. Dimensions of discretion include wealth, status (e.g. as a legal subject with rights and entitlements), privacy and free time. It has more to do with potential than achievement, but it is potential of which the subject is conscious, which he/she can utilise in their strategy, not merely some objective potential apparent to an external observer.

As understood here, specific coordinating mechanisms are not associated with any particular institutional spheres such as government, economy or civil society (e.g. hierarchy – government, competition – market, etc.). They are present in all institutional spheres, indeed in all institutions and organisations with the caveats noted above. Thus, in addition to social order at the society level, the theory helps understand smaller fragments of societies such as institutions and organisations. For example, in a hierarchically controlled organisation there are also elements ← 12 | 13 → of community (informal customs, organisational culture), competition (power struggles and distributional conflicts) and deliberation (internal opinion forum).

Competition has a structure-building capacity – competing agents exploit any opportunities and thus take-up slack in the system, making it more predictable. It contributes to the dynamic fluidity, which makes dramatic ruptures in social order less likely. Self-reliant agents, experimenting at their own risk, discover new routines which, if successful, may later become infused with value and institutionalised. Most importantly, because people – especially the insiders, elites – find ways to use any social structures to their advantage, even the best government regulation, open debate or public spirit are insufficient for upholding liberal order. Competition is the ultimate solvent of power and indispensable dimension of an open society.

The theory is methodologically individualistic. It denies collective rationality and explains social order as an interplay of strategies crafted by individuals. While it owes a lot to the rational choice paradigm, it engages in a friendly debate with it, especially its maximalist, normative version. The theory denies the external Cartesian perspective that would allow a definite judgment of what constitutes rational behaviour in any circumstances. Instead agents are seen as creating their own problems and solutions. This is not to deny individual rationality but merely to say that whatever rationality agents wield is not all-encompassing but local, fragmentary and relational. Agents craft and execute individual strategies in pursuit of discretion that enables them not only to achieve some end results but also to live as they think they should. In the process they initiate or join collective strategies – most goals can be achieved only, or more efficiently, with others. As members of the collective strategies, agents change perspective and with this new knowledge they can also adjust their individual strategies, possibly triggering changes in their participations in collective strategies. Social structures are temporarily stable patterns of interactions among such strategies that both constrain and enable agents. Any valid, supposedly valid, knowledge about social structures will be used by agents in altering their strategies better to further their interests and values. Thus, new knowledge about society will in turn alter social phenomena it describes. Hence comes one of the central thesis of this work – reflexivity of social sciences1. ← 13 | 14 →

Unlike in a rational choice paradigm, here agents are not assumed to have stable exogenous preferences, but craft their strategies by experimenting with goals and means in an iterative manner. Therefore, any descriptive or predictive theory about society is no more than a source of information and inspiration for agents to modify their strategies, thus ultimately changing the very social structures that the theory modelled. Normative theories are subject to the same limitation once their prescriptions are turned into practice.

It is competition’s contribution to the social change that is especially valuable. Competing agents experiment with new strategies, deviate from traditional ways of doing things, exit established collective strategies to form or join new ones. Most deviations are unsuccessful and innovators lose their social investment, the discretion they used up to effect the experiment. Successful innovations generate discretion, which is subsequently competed away by others who imitate, improve or leap-frog them. In the meantime, however, the discretion generated by a successful innovation provides room in which new experiments can take place. There are two ways in which this continual creation and dissolution of discretion can be prevented or disrupted. First, agents lacking discretion cannot afford to experiment. The Malthusian frontier and perfect competition are special cases of this. First, at the Malthusian frontier agents lack any discretion and failed experiments would have fatal consequences. Second, discretion accumulated by an agent may become permanent, no longer at risk of being competed away by other agents. This may be due to the others’ inability or unwillingness to compete, some barriers erected by the state or social norms restricting competition. In such cases discretion becomes entrenched. It may also spill over to different social spheres from that in which it was generated, thus becoming even more entrenched (e.g. from economy to polity). In well-functioning, competitive systems, successful innovators benefit temporarily, successful innovations spread with a hierarchy or deliberation and eventually become institutionalised, infused with values. Thus, tradition, “community” in my language, reflects the successful experiments from the past2. In Hayek’s words (1973), it captures wisdom that does not reside in any single mind and cannot be grasped by any single generation. ← 14 | 15 →

Thus, ideally discretion is in continuous circulation. Pockets of discretion are constantly created by agents and competed away with no agent’s discretion ever permanently protected from competition. This invites the question of whose responsibility it should be to sustain this circulation, with the natural inclination to put government in this role. This further leads to the question, which appears to be at the root of many disputes in social theory, of the ultimate nature of social order. For example, is competition enveloped in hierarchy, so to speak, or the other way around? This work denies the possibility that an open society can be reduced to either hierarchy or competition, or any other mechanism, with the caveat that all coordinating mechanisms are ultimately rooted in community. Social order of contemporary Western societies depends on a delicate balance between mechanisms. Each mechanism, when taken to the extreme, has to be saved from itself by the others, so to speak. By recognising the limits of competition (and that of any other mechanism), this book sketches a theory of social order in which competition is one of four mechanisms.

In a similar vein, the present theory helps bridge other oft-encountered theoretical contradictions between individualism and collectivism (and the ensuing distinction between economy and civil society) and agency and structure. According to the account presented here, agents’ strategies are crafted in the context of existing structures; ever more sophisticated individual and collective strategies are possible because they use existing structures as their material – they are recombinations of existing strategies. One society can be simultaneously more individualistic and collectivistic than another. Indeed, one person often is capable both of better developing their individual strategy and forming or joining a greater variety of more sophisticated collective strategies than another person. In fact, agents craft individual strategies and compete by joining exiting collective strategies. ← 15 | 16 →


ISBN (Hardcover)
Publication date
2017 (July)
Spontaneous coordination Strategy Freedom Power Reflexivity Ethical leadership Institutionalization
Frankfurt am Main, Bern, Bruxelles, New York, Oxford, Warszawa, Wien, 2017. 285 pp., 2 b/w ill.

Biographical notes

Jacek Giedrojć (Author)

Jacek Giedrojć studied economics in Poland and New Zealand. He holds an MBA from Harvard Business School and a PhD from the Institute of Philosophy and Sociology of the Polish Academy of Sciences.


Title: Competition, Coordination, Social Order