Significance of Austrian and Post-Keynesian criticisms of the standard Essay

Significance of Austrian and Post-Keynesian criticisms of the standard neoclassical view of the competitive process - Essay Example These markets which are referred to in the neoclassical viewpoint are considered to be a group of optimizing individuals trading amongst each other at predetermined prices and are endowed with the means of production given (Henry,  2012, p. 321). The concept of competitive process in neoclassical view revolves around the utility optimization in an environment of Perfect Competition. Perfect Competition is where there is no market power exhibited by the firms and they act as the price takers. Thus, the extent of the market power indicated the competition in a particular market. The economists of this theory believe that the equilibrium is the point where the utility is maximized. Profit maximization is an example of this as it is a fundamental aspect of a firm within their market structure. Equilibrium, according to them, also provides the market clearing process to take place. As this theory has been providing a simple ideology for the functioning of the market under the Perfect Co mpetition, there are many modern economists who have considered the real life situations and concluded that a number of other factors are also to be included to analyze the competitive process in the markets (Leask, Parnell, 2005, p. 469). There have been some theorists that have criticized the traditional approach over the time as modern aspects were introduced, and so alternative schools of thought were created. Two of these alternative schools are the Austrian and the Post-Keynesian theories. The Austrian school of thought is rooted from the work of Menger, Hayek and Mises. The approach was concerned with the significance of Subjectivism,... This paper stresses that the perfect competition structure of the market is the key approach of the neoclassical theory of competition and on the other hand, the Austrian and Post-Keynesian theories emphasize on the importance of Oligopoly as greater in the modern economics. Being philosophically distant from one another, the neoclassic view had been under constant pressure throughout the years. As much as it is important to assess the criticisms, it is also important to assess the significance of those criticisms and their affects. The author talks that the concept of competitive process in neoclassical view revolves around the utility optimization in an environment of Perfect Competition. Perfect Competition is where there is no market power exhibited by the firms and they act as the price takers. Thus, the extent of the market power indicated the competition in a particular market. This report makes a conlusion that it is evident that the criticisms made by the Austrian and the Post-Keynesians hold a very significant impact on the business economics and this impact is unquestionable. These criticisms were a rise to much advancement that was needed in the modern economics. In fact, the impact that they had were not only on the academics but also on the general knowledge for the public. These criticisms drove the extensions to the neoclassical theories and gave them a sense of realism. These criticisms are however, significant only until the neoclassical school finds a way to enhance their role and advance their models to come up to the level of the two alternative schools. Modern economics and realism are the key factors to be looked upon.