Competition was never about protecting consumers.

I became suspect of the “competition protects consumer” narrative way back in 1987. In the spring of that year I started work part-time at a gas station. On the first day my manager explained to me how the gas station determined its gas prices. I told him I was under the impression that the station used some type of mathematical pricing formula ala what I learned in college as an economics major. “Bless” his heart. I can still see the look on his face when I laid that “what I learned in the classroom” nonsense on him. “No”, he said. “That’s not how you do it. What you do is each morning look across the street and see what the other station is charging and then change our prices to reflect theirs.”

It was a rude awakening for a 23-year old: that the theoretical stuff you learned as an undergrad was so much nonsense. That consumers of gas station fuel were being taken on a roller coaster ride of gas pricing based on what the gas station across the street was charging.

Of course, there are other factors that contribute to the changes in gasoline prices at the pump; the supply of oil, the price of a barrel of oil, decisions by oil supplying cartels, i.e. OPEC, the barriers to entering the local retail gas market, and regulations against price gouging. If local regulations allowed more retail gas operations to enter the market, in theory prices should fall. And if antitrust rules are enforced, retailers would be prohibited from acting in concert to raise prices. For the past 130 years this alleged consumer centric view of competition has dominated economic and legal thinking. As Americans left the farm and moved to the city, their self-reliance values were replaced by consumerist values. Americans became targets for a progressive philosophy that replaced self-reliance with the narrative of government protection. Trusts, large monopoly firms, had to be broken up to ensure that the emerging consumer class was not taken advantage of via high prices or low quality of services. “Competition” was to be the rallying cry.

But is competition as we know it today realistic or just a coopting of a term for political gain? What are firms really competing for and who does the promotion of competition actually benefit? In a corporate-capitalist system, analysis of any economic issue should begin with a question concerning the preferences of those holding capital. The entrepreneur and investor choose an activity that may result in increasing the amount of capital they hold at the end of the day. For the investor in particular she is concerned not primarily with consumer choice but with the ability of her capital to be placed and optimized in as many markets via as many opportunities as possible.

For the holder of capital, real competition is synonymous to the wealthy person in the Book of Matthew who gave his serfs a certain amount of talents and required that each one of them maximize returns on those talents. He wanted them to compete with each other like an episode from “The Highlander” with the victor receiving a portion of the returns in exchange for the labor they expended in generating those returns.

And the consumer’s role in this vendor competition? Simply, the consumer’s role is to be “coined.” Once the consumer gave up their willingness to be self-reliant, he put himself at the mercy of the entrepreneur and the investor. The consumer protection narrative is designed to ensure his comfort with exchanging personal and economic liberty with the convenience of having his needs provided by the capitalist. The illusion of choice makes him available for exploitation in the vendor competition scenario. The greater the number of consumers available for exploitation, the greater the opportunity for the entrepreneur to demonstrate to capital that it has the ability to maximize returns on and to capital. For the investor, this means that the larger the number of consumers, the more the market can be segmented and greater segmentation creates greater opportunities for creating monopolies within sub-markets. A monopoly structure leads, per microeconomic theory, to opportunities to increase prices. Contrary to the progressive narrative that a competitive market structure is the most desirable, a monopoly market structure is the ideal for entrepreneur and investor.

Consumer protection is valid only to the extent that it makes a buyer available for entrepreneur and investor exploitation. To limit the level of exploitation, the consumer should pursue self-reliance in as many areas of economic life as possible. It will require embracing more inconvenience in return for more peace and liberty.