Competition

Peter Boettke:

In one of the papers that I read for the conference there is a discussion about how level is the playing field for different types of start-up enterprises, and how competitive the industries are that they enter into.

A lot of business literature often throws terms around from technical economics, but confuses the colloquial use of a term and the scientific meaning of the term. When text-book economics refers to competitive conditions, they do not mean activity of competing, but instead a set of conditions. When we discuss the idea of a level playing field we mean a fair race, not that the race isn't difficult.

When Austrian school economists speak of competition, they mean the activity of competing. It is analogous to sports competition --- there is rivalry, active seeking of competitive advantage, etc.

In my classrooms these days, some of the differences between neoclassical economics (the economics students mostly study in their textbooks) and austrian economics seem to be coming up more frequently. While Professor Boettke's post is mostly about the value of sports, this excerpt above points out one of the fundamental differences between neoclassical economics and austrian economics. Both approaches to economics use the word "competition," but very different ideas are meant when this word is used.