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 16: The gap between Austrian economics and the mainstream

Pascal Salin

Subjects: economics and finance, austrian economics

Extract

There is a strange problem in economics that deserves to be solved or at least to be addressed: the whole of modern economics lies on a common and single foundation, namely the subjective theory of value. However, from this same foundation, several diverging – or even opposite – theories have developed. Now, any scientific approach consists of starting from an assumption (or set of assumptions) and deducting consequences through a logical process of reasoning. If the reasoning is correct – which implies that no additional and more or less specific assumption is added surreptitiously – one might always obtain exactly the same conclusions. In physics, for instance, different theories stem from different assumptions. As an example, one may assume that the sun revolves around the earth or vice versa. But whenever an assumption has been generally adopted, the same consequences are deducted by anyone. Scientific evolution consists of drawing still unknown consequences from the initial set of assumptions or performing a scientific revolution by changing the initial assumptions.

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