Austrian And P-K On Competitive Process

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Compare and Contrast, Austrian and Post Keynesian criticisms of the standard neoclassical view of the competitive process. A competitive process cannot be defined objectively but has to be viewed subjectively from each different school of thought. The standard neoclassical school of thought also known as the marginalist school, views the competitive process as a static equilibrium state determined with the interaction of market forces and is formed at a market clearing price. Based on the assumption of economic agents being rational, aiming to maximise profits or utility, having perfect knowledge of market conditions and prices, and not suffering from any money illusion ensures that the neoclassical model market always clears. However, all schools don’t share the same approach. Firstly the Austrians, originally from Vienna, born during the 15th Century acquiring its greatest reputation in 70’s after F.A Hayek won the Nobel Prize, viewing competitive process as a dynamic process without any static equilibrium point. While the Post Keynesian’s, originally from John Maynard Keynes, subsequently led by Kalecki, Robinson, Kaldor and Davidson also contrast the neoclassical view of competitive process and like Austrians agree on the dynamic nature of a competitive process. The importance of the neoclassical school of thought cannot be denied as it bears the credit of forming the idea of defining the economic process and leading to the formation of other different school of thoughts. The comparison of both Post Keynesian School of thoughts and the Austrian school of thoughts has to be made with the view of the ‘standard neoclassical school of thought’. Austrians argue that the nature of competition is dynamic due to its constant movement through time (Hayek 1997.). The key difference in the Austrian school of thoughts and the neoclassical school of thoughts in the
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