FORTUNE — Great news America, you’re No. 1!

According to the annual rankings released Thursday by the IMD World Competitiveness Center, the United States has the most competitive economy in the world, when taking into account economic performance, efficiency of businesses and government, and infrastructure.

While the honor does say something about the country’s productive capacity, knowing that the American economy is the world’s most competitive comes as cold comfort to the nation’s unemployed and to those who have jobs but have not experienced real wage increases in a generation.

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Indeed, there are even some who believe that it is no coincidence the most competitive country is also the most economically unequal among advanced economies. William Davies of Goldsmiths, University of London recently postulated that the cultural obsession with competitiveness has led to vast income inequality across the rich world and especially in the United States and Britain. He argues that “neoliberalism,” an intellectual movement that gained prominence in the 1970s and helped usher the conservative revolutions of Ronald Reagan and Margaret Thatcher, has gone too far in its reverence for the market. Writes Davies:

At a key moment in the history of neoliberal thought, its advocates shifted from defending markets as competitive arenas amongst many, to viewing society-as-a-whole as one big competitive arena. Under the latter model, there is no distinction between arenas of politics, economics and society. To convert money into political power, or into legal muscle, or into media influence, or into educational advantage, is justifiable, within this more brutal, capitalist model of neoliberalism.

According to Davies, when public policy is aimed solely at increasing competitiveness to boost economic growth, government itself becomes an engine for economic inequality. After all, countries are diverse and composed of people with different talents who have a wide range of advantages in the form of education, family wealth, and plain luck. Government policy that focuses exclusively on fostering competition will inevitably amplify these differences.

It might seem odd to criticize public policy that encourages competition. After all, competition is at the core of capitalism. But capitalism doesn’t work without cooperation too. Even in the most cutthroat of private businesses, firms need employees to work together to solve problems and compensate for each other’s weaknesses.

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But failing to cooperate is about more than just public policy — it’s a cultural problem too. Even libertarian thinkers like Charles Murray of the American Enterprise Institute have condemned today’s wealthy for their lack of interest in creating a more cohesive society.

In a recent interview with The Wall Street Journal, Murray argued that the wealthy themselves are to blame for their negative public image. Once upon a time, Murray argues, the wealthy were more civic-minded and less conspicuous in their consumption. He says, “It’s an American tradition that you don’t get too big for your britches once you get rich…. Back in the 1960s or 50s, when I was growing up, the executives of the Maytag company, in the town where I lived, wouldn’t buy Cadillacs, that was getting too fancy, too flamboyant.” In other words, the wealthy felt they had a responsibility not just to themselves but to the community as well.

Whether, like Davies, you believe that income inequality is a problem in and of itself or, like Murray, that the real problem is a lack of economic progress for the less wealthy, the U.S. economy would benefit from a shift in focus from competition to collaboration. No matter how competitive an economy may be, if it doesn’t lead to better living standards for most of the population, it’s broken.