Competition, Coordination and Diversity

Competition, Coordination and Diversity

From the Firm to Economic Integration

New Thinking in Political Economy series

Pascal Salin

Competition, or the freedom to enter into a market, contributes greatly to the differentiation of human activities and therefore to economic progress. This fascinating book highlights the similarities between human systems at both the micro and macro level, and demonstrates how competition can positively affect the economic workings of firms and countries.

Chapter 1: The firm in a free society: following Frédéric Bastiat’s insights

Pascal Salin

Subjects: economics and finance, austrian economics

Extract

Frédéric Bastiat did not devote much attention to the problem of the firm, so taking an interest in his thoughts on the topic could seem strange. Yet, the foundations for a realistic theory of the firm (and, more generally, of the distribution of human activities) are found in Chapter 14, “Wages,” of Bastiat’s classic book Economic Harmonies (1863). Further, the way used by Bastiat to lay the foundations of his analysis are both original and profound. In the present chapter, I will review Bastiat’s approach, develop it more fully, and draw some practical and theoretical conclusions about the nature of the firm.