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CapitalismCompetition, Conflict, Crises$
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Anwar Shaikh

Print publication date: 2016

Print ISBN-13: 9780199390632

Published to Oxford Scholarship Online: March 2016

DOI: 10.1093/acprof:oso/9780199390632.001.0001

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The Theory of Real Competition

The Theory of Real Competition

7 The Theory of Real Competition

Anwar Shaikh

Oxford University Press

This chapter develops the theory of real competition as the book’s theoretical foundation. Real competition, the central regulating mechanism of capitalism, is antagonistic in nature and turbulent in operation. Competition within an industry compels individual producers to set prices that keep them in the game, forces them to lower costs so that they can compete effectively, and produces a persistent differential in costs as new capitals enter and oldest ones are retired. In this context, competition within an industry turbulently equalizes selling prices and therefore dis-equalizes profit margin and profit rates. Competition between industries comes about through inter-industrial investment flows which focus on the lowest cost techniques that are generally reproducible (regulating capitals). The argument is compared to that of the Oxford Economic Research Group, Harrod, Kalecki, neoclassical, and post-Keynesian approaches, the business literature, and to the empirical evidence. A stochastic approach to the choice of technique closes the chapter.

Keywords:   real competition, costs, selling prices, investment flows, regulating capitals

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