The only “sense” I can make out of “profits need to be competed away” is by going purely abstract. Suppose an industry X is profitable. As such, it will attract more participants. For simplicity, suppose also that total profits are fixed; then more participants in X means lower profits per participant. Supposing this trend repeats itself across all industries, profits will be reduced to 0.
This of course assumes everyone can become an entrepreneur (no barriers to entry), and there are no boom and bust cycles with inevitable consolidation.
tl;dr - this only makes sense in some hypothetical capitalism that never has or will exist.
More simply, it’s just the delusion that unlimited competition results in high quality outputs, and that these will be rewarded by the market.
Something something falling rates of profit yet more not only commodities, but capital, through this system?
