Competition also determines incomes and allocates goods.
Competition acts as both stick and carrot in economic life. If the
worker does not keep his hands to the machine, his employer will
replace him. If the employer does not treat his employee as well as
other employers would, the employee quits and goes somewhere el-
se. If the manufacturer does not run his shop efficiently, his custom-
mers will go where they can find better service at the same price or
equal service at a lower price. All of us, as producers, can be rep-
laced by those who are able and willing to do the job better or
cheaper.
On the other side, if we do our jobs well, we are more
likely to get a good reward. The successful manufacturer has
more customers and increases his revenues. The productive
worker gets higher wages and more responsibility.
Market creates competition. Competition creates incen-
tives. Incentives create better skills and higher productivity.
Productivity creates higher profits for manufacturers and higher
rewards for workers. Thus, competent work is better rewarded
in market economies than in planned or bureaucratic ones. This
is why competence is higher in countries with market economy.
Now, when firms in the parts of Germany can openly compete,
the Wartburg and Trabant have out to Opel and Volkswagen.
