Walt Byars wrote:
But here is the rub. Couldn't the "conscious rivalry" theory of competition be grafted onto neoclassical economics?
As I understand it, neoclassical prices reflect the scarcity value of commodities, and competition is about access to the resources used to produce commodities. Market pricing, therefore, will allocate resources to their most efficient uses. It seems to me, however, that "conscious rivalry" is consistent with administered pricing, and thereby, contra to the idea that price reflects scarcity values. The passage below by Joan Robinson may be helpful in this regard.
Does NC economics really require that more concentrated industries earn higher profits (barring the intervention of the state or unions etc...)? As for Glick's comment, I have heard monopoly capital theorists state they don't rely on the quantity theory of competition. Same with other heterodox economists whose theories monopoly occupies a central role in.
I am not an expert on Glick's hypothesis, but I do recall that he claims only the average profit rates among industries tends to equalize; there is no claim that rates within an industry will tend to equalize. I have interpreted this to mean that a core/periphery structure could still exist even when profit rates between industries are equalizing. But I don't know Glick's view on this matter.
************************* Joan Robinson, from a post 1960 Introduction to a reprint of her Imperfect Competition: ************************* In manufacturing industry, the producer sets a prices and sells as much as the market will take; he therefore has to have a price policy. A perfectly competitive price policy would be continuously to follow the variations of demand so as always to be selling full capacity output (except when price fell below prime cost). This is clearly absurd. By this standard, competition is never perfect. Prices are formed by setting a gross margin, in terms of a percentage on prime costs, to cover overhead, amortization and net profit. To calculate the appropriate margin, it is necessary to estimate the expected sales from given plant and to take a view of what net profit may be hoped for. The prices of manufactures in the nature of the case are administered prices. With short-period fluctuations in demand, prices vary very little a song as money costs are constant. Output rises and falls with demand, and (as the overhead per unit of output falls and rises) the share of net profits rises and falls still more. Even in a seller's market when output is up to the limit set by capacity, firms usually prefer to lengthen delivery dates or ration customers, rather than to choke off demand by raising prices today for fear that it might be permanently lost. Movements of demand affect profits strongly, but prices hardly at all.
