From: Alejandro Agafonow (alejandro_agafonow@YAHOO.ES)
Date: Fri Apr 20 2007 - 04:21:47 EDT
Is the Austrian view of market process equivalent to the C&C’s statistical equilibrium?
Recently Austrians have tended to talk about correct prices in the limited sense of market-clearing prices instead equilibrium prices. That’s because the balance of a market economy is a never ended phenomenon derived from entrepreneurs’ purpose to impede that balance.
In the neo-classical equilibrium entrepreneurs take prices only like data (parameters) and they have to adapt properly, never having the possibility to change or influence on these data. In the neo-classical mind instead of entrepreneurs we have producers who, in the long term, must equalize marginal prices to average costs.
In the Austrian market process entrepreneurs don’t only take prices like data but can change prices due to strategies, technology and future prices forecast. The existence of natural monopolies is an empirical proves of imbalance and entrepreneurship.
Austrians put the accent on price channel to transmit information and let the entrepreneur’s creativity and local knowledge to search for profitable ways of production. C&C put the accent on objective channels to transmit information about technical data in order to produce use values previously chosen by consumers.
C&C`s statistical equilibrium is too a never ended phenomenon. That’s because in any form of economic organization what constitute the primary data are on women and men’ minds.
So, answering the initial question: yes and no, Ja! Ja! Ja! It seems to be a missing piece in C&C`s statistical equilibrium: the entrepreneur’s creativity propelled by rivalry.
Is that good or bad? That’s the question.
Best regards,
Alejandro Agafonow
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