Market competition is at the heart of the capitalist system. It serves as the driving force for creative innovation, the mechanism by which market supplies and demands are brought into coordinated balance for multitudes of goods, and an institutional setting for individuals to freely find their own place to best earn a living in society.

Yet, listening to the critics of capitalism, competition is made out to be a cruel and dehumanizing process that feeds unnecessary wants and desires, or has a tendency to evolve into anti-competitive market-based monopolies contrary to the "public interest." Competition fosters a "selfish" disregard for the "common good" and misdirects resources from their most important "socially valuable" uses.

Competition Through Political Means

As long as resources are scarce and social positions are too limited to satisfy everyone's desire to have a certain status in society, competition will exist. The crucial questions concern: how will it be decided what gets produced and for whom, and how shall social positions in society be determined and filled? For almost all of human history these questions were determined by conquest and coercion. Those with greater physical strength or manipulative guile used these superior abilities and skills to gain the goods they wanted and the status they desired over others.

In a competition between the physically "strong" and the "weak," it was often the case that "might made right." Pillage and plunder enabled some to seize the goods they wanted that others possessed and to then subjugate and enslave those they conquered to work for them and accept their conquerors as their legitimate masters.

Most, if not all, forms of competition were battles for political power and position. Closeness to the throne and having favor with the king or prince gave one control over land and people, and therefore possession of material wealth in the forms in which they existed in those earlier times. The mythologies of the aristocratic nobility – the lords of the manor –asserted that they were the repository of grace, charm and culture, the carriers of civilized manners and the benefactors of civilization. This hid from view that their appearance of leisure time for and attention to the "higher things" of life were only made possible – to the extent that any of them were actually concerned with anything other they their personal pleasures and pastimes –due to their success in having the legitimized authority to live off the productions of others.

Commerce and trade is as old as recorded history. Anyone who peruses, for instance, Marco Polo's (1254-1324) famous account of his journeys and experiences traveling to the China from Europe and back in the late 1200s finds descriptions of merchants and traders, businessmen and manufactures, and exporters and importers everywhere that went around the Mediterranean, the Middle East, Central Asia, and eastern and southern Asia. But all these market activities operated under various forms of government regulations, controls, restrictions and prohibitions, given the reach of and the methods of control by the political rulers of the time in different parts of the world.

Entry into professions, occupations and crafts, for example, were all controlled by trade guilds in the Europe of the Middle Ages. The guilds limited competitive entry into various lines of employments and they restricted the methods of production that sellers could use in manufacturing goods to those approved by the, respective, town and city guild associations. In the countryside, the peasants were tied to the land owned by the nobility, and bound within the tradition-based techniques of farming and craftsmanship to meet the needs of those living on the properties of the lords of the manor.