“Competition” is an active, not a passive, noun. It applies to the entire
sphere of economic activity, not merely to production, but also to trade; it
implies the necessity of taking action to affect the conditions of the market
in one’s own favor.
The error of the nineteenth-century observers was that they restricted a wide
abstraction—competition—to a narrow set of particulars, to the “passive”
competition projected by their own interpretation of classical economics. As a
result, they concluded that the alleged “failure” of this fictitious “passive
competition” negated the entire theoretical structure of classical economics,
including the demonstration of the fact that laissez-faire is the most
efficient and productive of all possible economic systems. They concluded that
a free market, by its nature, leads to its own destruction—and they came to
the grotesque contradiction of attempting to preserve the freedom of the market
by government controls, i.e., to preserve the benefits of laissez-faire by
abrogating it.