July 11, 2018 / 4:12 PM / 2 months ago

Breakingviews - Hadas: World Cup reveals competitive market secret

LONDON (Reuters Breakingviews) - Sports fans consider the World Cup to be a showcase of bitter competitive rivalry. Passions run so high that the soccer championship sometimes seems like a substitute for war. Yet the matches are basically peaceful. Moreover, the ritual conflicts are merely the visible surface of a great structure built on strong and deep foundations of cooperation. This combination of sharing and fighting has a parallel in the economy – competitive markets.

France's Samuel Umtiti celebrates scoring their first goal with Olivier Giroud. REUTERS/Lee Smith

Cooperation obviously plays an important role in sport. Teams have to work together. Success requires players to put their common cause before personal animosity. At a more fundamental level, shared rules of play are what differentiate games from a free-for-all.

The cooperation extends well past the athletes. The World Cup, like the Olympics, can only work if a host of businesses work together and a group of politicians take a break from subverting their enemies. The super-sporting unity is especially impressive in Russia this year. After all, most of the governments of the countries that participated in the tournament rightly believe Moscow has contributed more than its share to rising global political tensions.

The roots of the sporting unity extend much deeper. There is a global soccer industry, with a single standard of excellence and a single purpose – to play as well as possible. This purpose transcends the necessarily temporary loyalties to national and league sides. Without the common goal, players who line up for opposing club teams could not form tight-knit national units for the World Cup.

The ethos of cooperation and the higher loyalty to the good of the game extend far beyond the relatively superficial contests to win the next great prize. Common standards of training start with the youth leagues that have helped tiny Iceland and once-again mighty England this year. The commonality rises all the way to FIFA, the sport’s international governing body. Deep problems with corruption have not stopped it from turning soccer into a global enterprise.

Sharing even co-exists with competition. It’s not just the ritual handshakes. Managers happily borrow new ideas from the industry leaders. Trainers, doctors and other support staff discuss best practice among themselves.

That bitter rivalries seem to be nourished by a largely peaceful and unified soccer community may seem a paradox. Without all the commonality, the game would be less beautiful, if it could be played at all. It is as if peace were a prerequisite of war.

Actually, soccer and other sports merely reflect the complexity of human nature. People always work together. Cooperation is often grudging, but is absolutely necessary for the success of any group project. But most people also have violent emotions and a strong desire to prove themselves in competition with others. For any part of society to work well, it must develop people’s cooperative side while respecting and restraining their aggression.In other words, adult life requites merging unity with difference. And that life is enhanced by fairly played noble contests. Sport can teach these contrasting virtues. That was exactly the intention of the British educators and upper-class students who codified the rules of soccer in the mid-19th century.

The competitive markets so praised by the liberal economists of the same period are quite similar to sporting fixtures. However, economists who promote the virtues of competition often have the limited perspective of soccer fans. They think of the market economy as more or less perfect competition – not as a mix of sharing, caring and carefully controlled fighting.

In fact, though, successful markets really are much more like soccer than universal conflict. Bureaucratic companies are like national or club teams. Both have extensive and mostly obeyed rules. Both work because fairly open competition brings the best possible results. And in both, the common interest of all the competitors is protected.

Even one the largest practical problems of competitive markets resembles that of the global soccer complex. Competitive industries tend to turn into cosy oligopolies, as the best companies gather up the best talent and achieve the lowest costs. Similarly, national soccer leagues are generally dominated by a handful of rich teams. The later stages of the World Cup are almost always a contest among a small group of European and South American nations.

There is one important difference between sport and business. Soccer’s rules are fixed, so it is not susceptible to the sort of creative destruction which has brought so much technological progress to modern economies. However, there is some progress in sport too. Most experts think that the beautiful game is far more sophisticated than in the past.

Many critics of what they consider to be the hyper-competitive modern economy have been taking some time off from bashing capitalism to watch World Cup matches. They can learn from the sport. The more exciting the play, the more shared effort went into it.  That’s the way with competition in the economy too.

Breakingviews

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