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Competition, Coordination, Social Order

Responsible Business, Civil Society, and Government in an Open Society

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Jacek Giedrojć

The author analyses competition as one of four coordinating mechanisms helping agents mutually to orientate their actions, avoid chaos, and produce social order. Competition is a key dimension of developed societies. It helps to structure and is also conducive to social change. Competing agents constrain one another, making it hard for anyone to change their position. They discover new routines the best of which may later be institutionalized. Competition is a solvent of power but only in relatively equal societies. Entrenched wealth or status restricts competition, thus impoverishing social order. The author also evaluates the theory of competition to explore such topics as corporate social responsibility, relations between government, business and civil society, and reflexivity in social sciences.

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Chapter 5: Competition in Economics

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In this chapter I enter into a friendly debate with the theories of competition developed in economics, especially the neoclassical paradigm of perfect competition. The key insight of the neoclassical paradigm to which my framework owes a lot is about competition’s structural capacity. Among the points of disagreement are narrow utilitarian foundations of neoclassical economics resulting from its Hobbesian conception of human nature, its tautological character with respect to postulated equilibrium and unrealistic assumptions with regard to human cognitive capacities. As a result of the assumed equilibrium the neoclassical paradigm lacks an account of how competition works, indeed has no room for such an account. I will further argue that, in terms of my framework, the neoclassical paradigm advances the view of competition as enveloped in hierarchy, a technical solution to the problem of allocating resources given known tastes and production functions — a vain attempt to apply decision theory to social interactions.

The neoclassical lack of an account for how competition works is criticised by the Austrian School, which sees competition as a process of discovering new knowledge. The problems with the Austrian account include their virtual denial of a rationale for other coordinating mechanisms, thereby viewing competition as the ultimate coordinating mechanism enveloping all others. Many Austrian school economists downplay the possibility of accumulation of private power and appear unconcerned about radical ruptures in community norms and values ultimately undermining the legitimacy of competition. As a result, the paradigm struggles to give a coherent account...

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