Speaker
Description
The position of modern economic theory towards the analysis of competition carried out by Adam Smith in Chapter VII of the Wealth of Nations is somewhat paradoxical. On the one hand, Smith’s analysis of competition is generally regarded as one of his fundamental contributions, not only to our more general view of the functioning of a market economy, but also to economic analysis in the strict sense. Indeed, it would be difficult to find an approach in economic theory that denies what Smith argues in that chapter about the tendency of the “quantity brought to market” of commodities to adjust to their “effectual demand” via the transfer of productive capacity from one sector of the economic system to another. Yet, if we exclude the approach that follows Sraffa (1960), the fundamental conclusions that Smith drew from his analysis ― namely (a) the distinction between “market prices” and “natural prices”, these being understood as the prices that guarantee a uniform rate of profit, and (b) the need for economic analysis to concentrate on the determination of the latter ― are fundamentally absent from more recent economic theory. The aim of the paper is to provide a map of how more or less recent economic thought deals with Smith’s analysis of competition. Particular attention is paid to the way in which different approaches attempt to reconcile the high esteem in which Smith’s analysis is held with the neglect of the conclusions he drew from it.
| Organization | Roma Tre University |
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