Competition: Classical and Neoclassical

Abstract

The classical theory of competition is analysed as a dynamic process of rivalry in the struggle of units of capital (or firms) to gain the largest possible market share for themselves at the expense of their rivals. We argue that the classical dynamic theory of competition is characteristically different from the neoclassical static conception of competition as an end-state, where actual prices and quantities produced are compared to those that would have been established had perfect competition prevailed. In fact, the neoclassical analysis of competition is quantitative in nature for its focus is on the number (manyness or fewness) and also the size of contestants. After a comparison of the two characteristically different conceptualizations of competition, the analysis continues with deriving the laws of classical or real competition between and within industries and their integration with the mediation of regulating capital.