Then company B comes along and sells same widget for 3 silver.
Company A will either learn to be more efficient and sell at 2-3 silver, or go out of business.
Perfect competition only happens in text books. In the real world monopolies, oligopolies, regulatory capture, control over social connections and capital, markets with asymmetric information (VCs vs public, employees vs companies), management consecrating itself into a class with its own interests , mean that companies can go on for 10-15 years before they are punished.
By the time the market wakes up you’ve switched 3 times and after 10 times you’re retired in the suburbs with a nice BMW. Who cares then.
This is quite a simplistic view of capitalism. Consider the Moloch effect[1] where rational choices in environments with hard coordination problems can lead to degenerating incentives.
Capitalism is not the same as free market; capitalism is rather a system where your economic power is mainly determinated by the amount of capital you have (money, investments, means of productions...) rather than class, bloodline, titles, popularity, or legislative regulations[2].
Capitalism is linked to free market in that they work well together: free markets want enterpreneuers to be compete for efficient capital gains and people with capital like how their economical power is only bounded by their capital (with the potential of an exponential growth). Apart from this ether can exist without the other.
This is how supporters would like them to work together, but there can be a lot of bugs and traps on the way.
I am not sure about the down votes (no reason for them in my opinion) but the casual jab at capitalism looks gratuitous and does not help making the argument seem stronger.
It's not gratuitous if it is central to the argument. The state of affairs they describe is dependent on a virtualized capitalist economy being in place.
Assume company A sells a widget for 10 silver
Then company B comes along and sells same widget for 3 silver. Company A will either learn to be more efficient and sell at 2-3 silver, or go out of business.