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Bonus Quotation of the Day…

… is from page 2 of Frank M. Machovec’s excellent 1995 volume, Perfect Competition and the Transformation of Economics (original emphasis):

unknownUntil the 1920s, the criterion employed by economists to evaluate whether or not a market was competitive (i.e., serving consumers) was freedom of entry.  Classical competitive analysis emphasized the incessant creation of profit via entrepreneurial action and reaction, not the hypothetical conditions that would exist if all profit opportunities were eradicated by the emergence of perfect knowledge.  To the classical economists, competition was the means by which information was gradually revealed to all participants, thereby altering expectations and behaviour, and driving the long-run market price toward average cost (natural value).  The notion of equilibrium, therefore, was of high interest to the classicals.  Their main interest, however, was insuring that the new political-economic framework of post-mercantilist society enabled the process of competition to continue churning, for they understood that it was through the knowledge-discovery process itself, not through the zero-profit endpoint of equilibrium, that the wealth of a nation was created and its welfare enhanced.