Introduction
Real competition is considered the central regulating mechanism of capitalism (Chen & Chang, 2020). The study by Anwar Shaikh has explained that capital is a social form of wealth in a society that is driven by the motive of profit. It influences the conversion of capital into more capital and profit into more profit. Every business involved in such circumstances collides with each other which is the basis of real competition.
In a competitive industry, individual producers focused on the market to set prices by cutting the cost of production and focusing on market expansion. The approach of strategy to cost cutting can include reduction of employee wages, technical changes, etc. In consideration of the concept of real competition, this essay focuses on assessing the importance of interaction between the government and car manufacturers for the transition of electric vehicles in the global car industry. Along with this, the essay also focuses on developing the theoretical basis of the firm and its innovation and competitive strategy as explored in the article.
Discussion
In the contemporary era, the car manufacturing industry has become an area of consideration and exploration with extensive research. This is because car production causes a huge amount of pollution in the environment and the industry as well as the government are looking for alternative ways to reduce pollution and adopt sustainability. Many organizations from the car manufacturing industry have been involved in the production of a car that can run electric and reduce pollution. This has led to the emergence of electric vehicle concepts (Virmani, et al., 2021). Organizations like Tesla, Ford, Nissan, and Volkswagen have been involved in doing extensive research as well as the production of electric cars. Though organizations have been involved in the production of electric cars there are also certain issues that the companies encounter in business.
This is a reason to have better interaction between the governments and car manufacturers. Better interaction between the two parties can help to solve many issues existing in the operation of car manufacturers. The presence of effective interaction can eliminate barriers in business and increase the sales of electric cars. For example, an effective relationship between car manufacturers and government can help to remove logistics or supply chain related issues, taxation problems, and cross border transactions.
In the contemporary era, China is the largest manufacturer of car batteries in the world. Thus, organizations across the world are dependent on China to produce electric vehicles (Kumar, et al., 2021). But the political relationship between China and other countries like the USA, and the UK is affecting the supply chain. The electric car manufacturing organizations from those countries are facing problems to export raw materials. In this regard, it can be said that effective interaction between car manufacturers and government can help to remove the barriers in business.
Along with this, better interaction between the two parties can help to launch incentives for the customers of the government. Government can influence to consider the approach to reducing pollution from the environment. Not only do they incentivize the customers, but the government can also help in developing infrastructure.
Developing countries like India, and China have a huge number of users of cars but they lack the infrastructure that restricts organizations from establishing business and innovative cars (Li, et al., 2016). In this regard, the presence of better interaction between government and manufacturing organizations can help to understand the need for infrastructure for electric vehicle production.
On the other hand, the government and car manufacturer collaboration is also important to maintain the regulatory benchmark. Electric vehicles are still in a phase that can be considered developmental and thus the government has certain criteria to check the quality and efficiency of cars. For this purpose, interaction between car manufacturers and the government is needed. Overall, it suggests that interaction is needed to exist between the car manufacturers and the government that comes from both sides.
In consideration of the importance of interaction between the government and car manufactures, the research paper by Anwar Shaikh can be considered. The paper has incorporated different theories and views of an expert from the field of business as well as economics. In the paper, an Austrian economist claimed that competition has very little input to consider for any format or pattern of profits and prices in the market (Shaikh, 2016).
The economist has also rejected the concept associated with perfect competition. The economist also claimed that no single buyer or business has power in the market as all the firms produce identical products and there is no barrier to exit or entry into the market. Further, the author has explored the concept of perfect competition to develop a view or base. According to the author, perfect competition is a useful benchmark or tool used for evaluating the efficiency of markets as well as understanding the effects of market imperfections on economic outcomes.
Most importantly, the author explores and related the concept with neoclassical economics. By doing that, the author claims that union activity as well as government intervention in an industry is an unwarranted instrument in the market process (Shaikh, 2022). This concept suggests that the government and car manufacturers’ need for interaction needs to be demolished. In simpler words, there should not be any scope for the interaction between the two parties. This is because the involvement of government in the market collides with the concept of capitalism or real competition.
The government started to impose its rules and regulations which makes the real competition scenario, a complicated one. Government involvement can make it difficult for car manufacturers to impose rules and regulations for the production of cars. It would make huge difficulty for car manufacturers to change their designs (Shaikh, et al., 2020). In this regard, it can be said that the concept explored by the Austrian economist has contradicted the presence of interaction between government and car manufacturers as important.
However, Von Mises considers the involvement of the government as a factor that can have merely an impact on the car manufacturer. The author claims that a government can have very minimal influence over the production and business of the industry. The author also claims that the consumer is the element of a market or industry that controls the business.
Thus, the author speaks and explores in support of the interaction between the government and electric vehicle manufacturers. Based on the exploration by the author, it can be said that the interaction between the two parties can help the consumers to raise their voices or demand in front of the manufacturers (Shaikh & Jacobo, 2020).
The quality of vehicles can be improved and flaws can be removed with the approach too. In regards to the transition of the car industry business into electric vehicles, the customer input to the manufacturers by the government can also help to minimize the issues and introduce better electric vehicles in the market. The market will also be influenced and improved with the incorporation of a better relationship between the manufacturers and the government (Shaikh, 2016). In simpler words, a three way relationship between the customers, governments and manufacturers can help the overall car manufacturing industry to flourish in the market and increase the market share.
The overall analysis of the topic has also been effective to develop a concept regarding the theoretical understanding of the business from the article. It is understood that the theoretical understanding of a firm is dependent on the relationship that exists between the market and a firm. According to Anwar Shaikh, firms are shaped by the economic incentives as well as constraints that organizations face in the market.
The constraints of society and institutions are also considerable regarding the issue. The author also places a strong emphasis on the value of the production process in understanding business behavior (Shaikh, 2016). According to the author, by converting inputs into outputs, the production process creates value and this process’s characteristics influence business incentives and behavior. The author also highlights the significance of “economies of scale” that can result from the production process as well as enable businesses to lower costs and boost profits as they create more products.
The article also focuses on the influence of power as well as rivalry on a company’s behavior. Businesses may possess the ability to set prices above their marginal costs and generate monopoly profits. But it also makes the case that competition can constrain corporations’ behavior and market dominance, which results in having effective outcomes (Shaikh & Jacobo, 2020).
Further, the paper has also explored the development of innovation and competition by businesses a concept related to the contemporary market situation. According to Anwar Shaikh, creativity, as well as competition, are inseparably linked and supportive of each other.
Competition is the spur of innovation since it encourages businesses to create novel goods and methods that will give them an edge over rivals as stated by the author throughout the article by considering the views of other experts from the field. However, the author also acknowledges that market power can be explored from innovation as the companies create new goods or processes which can be able to capture a dominating position as well as raise prices above their expenses. It can lead to a situation of less competition as well as fewer incentives for new inventions.
The author further states that it is critical to simultaneously support innovation and competition in order to handle this potential trade-off. In this process, government plays an important role to maintain the flow of communication and interaction between the different parties.
However, this can be accomplished by merging policies that support spending on research and development, while simultaneously fostering competition and lowering entry barriers (Shaikh, 2016).
The article specifically highlights the value of intellectual property rights that are used for fostering innovation. However, the author also advises that these rights can be weighed in consideration of the requirement of fostering competition. A well-designed system of IP rights can encourage businesses to invest in R&D and launch new goods, but these rights must be restricted in terms of their duration and scope in order to prevent businesses from abusing their market dominance.
Conclusion
The study has explored the paper by Anwar Shaikh named Capitalism, Competition, Conflict, and Crises. By exploring the paper, the importance of the relationship between the car manufacturer and the government in transitioning the industry to electric vehicle products has been explored.
It is concluded that different perceptions or viewpoints have emerged regarding the importance of interaction. Organizations have been involved in the production of electric vehicles, but there are also some business challenges that corporations face. This justifies improved communication between the government and automakers. Many problems that arise in the functioning of vehicle manufacturers can be resolved with better communication between the two parties. Effective connections can break down barriers in business and boost sales of electric vehicles.
Effective communication between the government and the auto industry can help to resolve cross-border trade, taxation, and logistics-related concerns. Collaboration between the government and automakers is crucial for maintaining the legal standard. Since electric cars are still in the research stage, the government has set standards to assess the reliability and effectiveness of vehicles. Interaction between the government and the auto industry is required for this. According to the author, perfect competition is a valuable standard or instrument for assessing market effectiveness and comprehending how market flaws affect economic outcomes.
The author investigates the idea and connects it to neoclassical economics, which is crucial. By doing so, the author asserts that both union activity and government intervention in an industry are unnecessary market-processing tools. The evolution of innovation and business competitiveness, a notion connected to the state of the market today, has also been examined in the study. Anwar Shaikh asserts that competition and creativity are inextricably linked and mutually beneficial.
References
Chen, S. & Chang, Y., 2020. The impacts of real competition and virtual competition in digital game-based learning. Computers in Human Behavior, 104(1), p. 106171.
Kumar, R., Lamba, K. & Raman, A., 2021. Role of zero emission vehicles in sustainable transformation of the Indian automobile industry. Research in Transportation Economics, 90(1), p. 101064.
Li, Y., Zhan, C., de Jong, M. & Lukszo, Z., 2016. Business innovation and government regulation for the promotion of electric vehicle use: lessons from Shenzhen, China. Journal of Cleaner Production, 134(1), pp. 371-383.
Shaikh, A., 2016. Capitalism: Competition, conflict, crises. 01 ed. Oxford: Oxford University Press.
Shaikh, A., 2022. Marx, Sraffa and Classical Price Theory. Contributions to Political Economy, 41(1), pp. 58-76.
Shaikh, A., Coronado, J. & Nassif-Pires, L., 2020. On the empirical regularities of Sraffa prices. European Journal of Economics and Economic Policies: Intervention, 17(2), pp. 265-275.
Shaikh, A. & Jacobo, J., 2020. Economic arbitrage and the econophysics of income inequality. Rev. Behav. Econ, 7(1), pp. 299-315.
Virmani, N., Bera, S. & Kumar, R., 2021. Identification and testing of barriers to sustainable manufacturing in the automobile industry: a focus on Indian MSMEs. Benchmarking: An International Journal, 28(3), pp. 857-880.
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