Every member of a human community is motivated by two elements in his psyche. One is competition. The other is cooperation. The maximum success of any community is obtained by the most efficient use of of that which drives our activity.
The third element of success is the method used by the community in governance of these value systems and the activity system that create the dynamics of living in that community. Governance (the activity of the institution of Government) range from the despotic to democratic to anarchy. It is that tripod foundation of competition, cooperation, and government upon which the success of every Human Community( Nation - Neighborhood - Group) rest.
It must be able to balance efficiency, with dynamic evolution of governance, and interdependant cooperation of activity.
Competition is the seeking of the prize. It can be as singular as running the fastest race or as balanced as quarterbacking the team or as constrained as building the wall against the flood. Competition is the focus of the capitalist economic system. In theory it will produce the most efficient production of Goods & Services by rewarding the most sucessful competitor with the greatest reward.
In practice, if the Game is left unregulated, the successful will use their reward to rig the Game to insure their advantage inthe continuing competition. They will use the power of success to control the process of governance to create operation rules(laws & regulating) to maintain their supremacy in the structure of society. The results will be a static structure in a world that is dynamic in Nature. It must inevitably resulting the corruption of Government and the decline of the Community.
The act of cooperation is the coming together of diverse people and/or skills to accomplish a project to benefit both group and individual. Society is by its very nature a group endeavor. Practically no single manufactured item in the possession of any individual was entirely of his own hand. Each is dependant on the Community for his survival and for any accumalation of surplus goods for him to possess.
In a society that has marginal produtive capacity, the cooperative nature is vital to the survival and growth of the community at large. There is a little room for exceptional individual reward and only top producers of leadership or skill to the well being of community are likely to enjoy special privilege.
One of the dangers of interdependence carried to excess is the insistence that all goods & service be equally distributed without regard to contribution to overall production by the individual. In times of subsistant production of limited duration in will largely be tolerated, but as efficiency increases surplus the competitive stand-outs will grow restless at the use of their produtive skill to sustain the non-productive members of society. This will inevitable lead to a lack of incentive to produce at a level that demands more effort. That will result in a failure to produce sufficient goods & service to maintain the Community. Economic failure will be the result in maintaining the viability of the whole community.
It is the third pillor of the community structure (Government) that creates the balance between competitive reward and sustenance of individual life. The integrity of Government in it power to balance the desire for exception reward with the provision of reasonalable survivability to each viable life in the community is essential to the long term growth and progress of the Community.
My own observation is that the use of the democratic process to determine the the relationship of economic process to the Social values is an essencial to proper balance between the two. If society moves to far toward an authoritarian structure, the advantage will tip to the holders of wealth and power and create an excessive state of poverty for every one else. If it moves to the lack of Governance found in anarchy the process will become chaotic. The production of Goods & Service will become insufficient and the community will fail.