Competition, Coordination and Diversity: From the Firm to Economic Integration.

AuthorRohac, Dalibor
PositionBook review

Competition, Coordination and Diversity: From the Firm to Economic Integration

Pascal Salin

Cheltenham: Edward Elgar, 2015, 305 pp.

The ambition of this volume is to "evaluate how coherent social systems can exist in spite of the extreme diversity of [their] components." It can be characterized as a consistent application of Austrian (or perhaps more narrowly Hayekian) thinking to a range of questions in economics and policy analysis--with a particular focus on the roles of dispersed knowledge, competition, and discovery; prices and economic coordination; and the effects of uncertainty, entrepreneurship and contracts. The book, based on a number of previously published and unpublished papers and essays, weaves together explorations in fields ranging from the theory of the firm, through international political economy and monetary economics, to the theory of consumer choice.

Pascal Salin, an honorary professor at Universite Paris-IX-Dauphine, counts among the leading classical liberal thinkers in France. In the 1960s and 1970s, he was instrumental in introducing the ideas of the Chicago School--and later of the Austrian School-into French academia and in nurturing an entire generation of promarket intellectuals in the country. While he has received international recognition--he served as the president of the Mont Pelerin Society between 1994 and 1996, for example--the bulk of his work was targeted at a French audience, with substantial contributions focused on Austrian monetary theory, the political philosophy of classical liberalism, fiscal affairs, and other subjects. This book provides the best overview of his work currently available in English.

The book starts with three essays on the theory of the firm and of the market process. The first one may well be the most original in the entire collection, expanding on Frederic Bastiat's theory of the firm. In his writings on wage formation, Bastiat, whose contributions as an early economic theorist are oftentimes downplayed because of his polemical and journalistic tone, discusses the reasons for the formation of companies. According to him, workers are averse to uncertainty and prefer a steady stream of payments to being obliged to cope with the constantly changing marketplace. It thus makes sense for them to enter into contractual arrangements with entrepreneurs who then become the residual claimant of the company. Besides providing a form of insurance against fluctuations in market...

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