Competition as market progress: An Austrian rationale
for agent-based modeling
Guinevere Liberty Nell
Published online: 23 June 2009
Springer Science + Business Media, LLC 2009
Abstract Economists recognize competition as fundamental to economic science.
General equilibrium is not competition; Austrians, like other economists, have
sometimes confused the two. The socialist calculation debate and the elimination of
competition by socialists in the Soviet Union offer insight into danger of using an
equilibrium framework to study competition. Current policy models are based on a
general equilibrium framework, but heterogeneous interactive agent-based models
are rising to challenge them. Austrian economists should embrace this new direction
and guide the creation of agent-based models of the economy.
JEL codes D50
John Hicks said that, without competition, “the basis on which economic laws can be
constructed is therefore shorn away.” Similarly, Francis Edgeworth said that, under
conditions of monopoly, rather than competition, theoretical economists “would be
deprived of their occupation.” John Stuart Mill said, “Only through the principle of
competition has political economy any pretension of a science” (Hutchison 1981:
226). Each of these economists regarded market competition as the basis for the
science of economics. Without it, the science could not answer basic queries about
production, allocation of resources, efficiency, or any other economic question.
Marx agreed with this. The “bourgeois” science would be dead. However, he also
believed that this science would not be necessary, as the “bourgeois” economic laws
would no longer apply.
Yet, denying the laws of economics, and everything
Rev Austrian Econ (2010) 23:127–145
Bukharin summed it up, saying “the end of the capitalist commodity society will be the end of political
economy” (cited in Cohen 1980).
G. L. Nell (*)
The Heritage Foundation, Washington, DC, USA
G. L. Nell
George Mason University, Fairfax, VA, USA