The term Austrian will include people like Shumpeter and Morgenstern. Competition is seen as a state of affairs of perfect knowledge and equilibrium by mainstream economists. This fails to provide explanations as to how those market prices have been achieved.
Austrians do not rely on the theory of perfect competition. Each individual reacts to the price which evolves from each of our actions. Austrians endorse Stigler’s concept of continuous upward notion from earlier rivalrous competition. Individuals are free to do the best they can in the market process. Market process is distinct from market equilibrium. Austrians see that at all times there are powerful forces to be discovered and taken advantage of – entrepreneurial profit opportunities. The market process is one of discovery. No outcome is ever known. One learns by experience.
This lecture was given to the Department of Economics of the University of Colorado on March 6th, 1978. Special thanks to Mr. Fred Glahe for his generous donation of this lecture audio to the Ludwig von Mises Institute.