WHY I CALL IT "EXCHANGE, SPECIALIZATION, COOPERATION." (That's the title of the set of notes I use for the introductory price theory, er, Principles of Microeconomics, course I teach from time to time ... next offering will be the fall of 2005, in'shallah.) Read and understand this quote from Catallarchy.

The free market, capitalism, is often described as a competitive system. Most economists appear to hold this view. Is competiton really a feature of capitalism or is it something else? I finally read Jared Diamond’s Guns, Germs, and Steel and have been considering how humans went from a familial socialist economy to market oriented trade. One thing that struck me, with all the subtlety of a brick through Bastiat’s window, was how competition existed prior to markets.
Consider two early stoneage people of different tribes encountering each other in the woods. Each exist solely on what they can gather or hunt, they have no real surpluses to trade. If either one is able to forage successfully in the area, the other’s foraging efforts are diminished. It is in the best interest of each to try to eliminate the other. Neither represents an opportunity for the other, they are in direct competition for the food in the immediate area.
Competition is a matter of nature no matter what societal organization we have. Even the definition of economics - the study of the allocation of scarce resources - alludes to competition. Whether a society is organized as a market economy or a socialist economy, there is a competition for scarce resources. What differentiates market economies from other economies is that in market economies individuals voluntarily cooperate to increase wealth and allocate resources.

The comments are worth reading as well.