Competition (Economics) and Libertarianism
"1) a process, 2) a state of affairs"
competition (economics) Competition in *economics has, at least, two distinct interpretations: 1) a process, 2) a state of affairs.
1) Competition as a process is how many economists since Adam Smith (1773-1790) have understood the term and how *Austrian School economists do today. This tends to focus on the dynamic and real-world aspects of competition. But within this outlook some emphasise the equilibrating tendency, such as Israel M. Kirzner (1930- ), while others emphasise the “creative destruction”, such as the non-Austrian-School economist Joseph Alois Schumpeter (1883-1950).
2) Competition as a state of affairs is how neoclassical economists since Frank H. Knight (1885-1972) have understood the term. This looks more at the mathematical and diagrammatic aspects of static models of different market structures, including *monopoly, oligopoly and, most famously, *perfect competition. The combination of mathematics and static models gives the appearance of scientific rigour but it is not clear that it has promoted a better understanding of real economic phenomena.
(This is an entry from A LIBERTARIAN DICTIONARY: Explaining a Philosophical Theory [draft currently being revised]. Asterisks indicate other entries.)
By training, Schumpeter was as Austrian as possible. He earned his doctorate under Eugen von Böhm-Bawerk at the University of Vienna. However, he is not particularly associated with the Austrian School as it has developed as a distinct school of thought. He perhaps deserves partial responsibility for the popular notion among economists that the insights of Menger et al. were included in the neoclassical synthesis which became dominant in Europe and the US during the early 20th century. Mises accepted this idea early in his career, but later came to believe that the Austrian insights had not been adequately appreciated.