Perfect competition and the transformation of economics /

The time is ripe for a book such as this. After becoming firmly established, the model of perfect competition reigned supreme over the analytical and quantitative milieu of the world of economics. Machovec wants to demolish the persistent notion as propounded by Frank Knight in 1921 in his classic Risk, Uncertainty and Profit that an unpolished yet definitely palpable version of perfect competition did exist in the classical economics. The author is quite successful in his endeavor. The evidence presented in support of the main argument is systematic and effective. One of Machovec's contentions is that the acceptance and sustained use of perfect competition, especially the assumption of perfect knowledge, has led to the undesirable obliteration of the dynamic and crucial role of entrepreneur. This criticism of perfect competition is as serious as it is right. According to the author, the classicists viewed competition as a magnificent dynamic process in which the play of commercially aggressive behavior comes to fruition in terms of innovations and technological change. The belief in the static efficiency of perfect competition led both to flawed theoretical development and economic policy. To a literate economist, not much is new in the book, but the author refreshingly uses the theoretical arguments in support of his hypothesis. Helpful notes and bibliography. This work will add much to the knowledge of upper-division undergraduate and graduate students in economics. C. J. Talele; Columbia State Community College