Competition and Rivalry
| DOI | http://doi.org/10.1111/j.1467-9299.1951.tb01431.x |
| Published date | 01 December 1951 |
| Date | 01 December 1951 |
| Author | H. Dawes |
Competition and Rivalry
By H.
DAWES
Mr.
Dawes, Secretary
to
the Durham Division
of
the National Coal Board,
was
formerly Board
of
Trade Controller
for
Wales.
HE
problem
of
finding measure-
T
ments of efficiency in the public
service and in nationalised industry,
and having found them of using them
to improve all-round perfarmance,
is, of course, extremely difficult.
It
has been talked over a great
deal during the past few years, par-
ticularly since the nationalisation pro-
gramme started in
1946.
Everywhere
the close relationship between effici-
ency and competition and rivalry is
recognised, but there is not universal
agreement on the nature or effects
of
this relationship. In this paper
it
will
be argued that rivalry, as distinct
from competition, can be effective in
stimulating efficiency in the national-
ised industries, even where conditions
of complete monopoly exist, and that
those
in
charge of these industries
seem well aware cf their opportunities
to utilise the innate desire which exists
in
most men and women to do better
than their neighbours.
It
will be well to begin by defining
terms and to emphasise the funda-
mental difference between competi-
tion
and
rivalry. The fact of com-
petition is, of course, well known in
all modern industrial societies, but as
a concept in sociology
it
appears in
many guises. Here
"
competition
"
means the state existing when pro-
ducers
or
suppliers of goods and
services sell in a common market.
They compete for the custom of the
same group of people.
"
Rivalry
",
however, means a situation in which
the producers, while having something
in common (for instance, they may be
making the same kind
of
thing), are
not supplying the same market. They
do
not try to sell to the same people.
One fundamental difference be-
tween competition and rivalry is
clear. Where industries
or
services
are in competition with each other,
failure may mean annihilation, where-
as in the case of rivalry, there are
no such consequences. Failure to out-
shine a rival does no more than pro-
vide evidence by which those in
authority can judge the quality of
their executives.
Only in recent years has the prob-
lem of incentives in public mono-
polies been seriously examined. This
is also true of the problems of
incentives in private industry, whether
monopoly or competitive, for until
the years just before the war
it
was
widely believed that the self-interest
of the entrepreneur would always
ensure efficiency except in monopoly
conditions. Through the period of
our
modern industrial history,
it
has
been assumed that
so
long as compe-
tition exists between businesses, there
is no need to worry about their
internal organisation, for the need to
avoid loss will lead the directors of
private firms constantly to
be
on
the
lookout for ways of reducing costs.
Increased
Interest
in
Efficiency
There were many other
reasons
why there was no great concern before
the war with the problem of efficiency
in public monopolies and with the
problem of incentives to efficiency.
For example, the great monopolistic
organs
of
government, the central
government departments, the armed
forces and local authorities, were
always treated as organisations
separate and apart from industry,
with very different methods of main-
313
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