A Market Process Theory of the Firm
An Alternative to the Neoclassical Model
- Available for pre-order. Item will ship after July 15, 2021
Neoclassical economics has been criticized from various angles by orthodox schools. The same can be said about its particular branch: the theory of the firm. This book demonstrates how a successful theory of the firm can be presented without flawed notions of a neoclassical framework and used to comprehend actual business history. The author argues that we should start from the assumption that businesses are inevitably heterogeneous, as that is their nature, in the process of economic evolution. The book offers an in-depth exploration of neoclassical limitations by examining each of the small details associated with the famous MR=MC rules. It follows a step by step approach, which starts off with neoclassical assumptions and then moves into more empirically sound theory, based both on modelling logic and rooted in real world examples. The author presents a novel discussion on the size of the firm, both in terms of classifying a firm’s expansion and about the factors which limit the size of the firm and argues how formal pricing theory can be built using more heterogeneous assumptions about firms. Further, there is a discussion on how firms are rooted in amorphous industries, which helps to explain economic progress better by emphasizing the importance of economic experiments, mistakes and bankruptcies. This is a valuable reference for scholars and researchers who are interested in a range of topics from microeconomics, through pricing theory to industrial organization, history of economic thought and managerial economics.
Table of Contents
Instead of an introduction
1. The neoclassical theory of the firm: its application and limitations
The fundamental law of neoclassical economics 6
The problem with MC curve: do the limitations apply to this side of firm’s activity?
The problem with the MC classification: are fixed costs significant only in the long run?
The problem with profit maximization: can it be considered the firm’s objective?
2. Theoretical imputation and real calculation
Value and imputed value
The law of costs and monetary imputation
Prices as information carriers in a heterogeneous world
Judgment, business decisions and ownership
3. The firm’s size and limitations
The firm’s size and expansion
The Nature of the Firm by Ronald Coase
Empirical barriers to business expansion
4. Imponderability of firms
Firms as value creators
Innovation and the firm
What are new things?
A firm is never constans
5. The organics of the industry and firms
Industries and diffusion of innovations
Market economy as evolutionary rationalizer
6. Firms’ mistakes and economic evolution
Legal and political factors
Internal factors (entrepreneurial and managerial)
Business history as a dead-end street?
Social perception and firms
Instead of Conclusions
Mateusz Machaj is Associate Professor at the Institute of Economic Sciences, the University of Wroclaw, Poland. He has published articles on various economic issues in such journals as Critical Review, American Journal of Economics and Sociology, Econ Journal Watch, Prague Economic Papers and Quarterly Journal of Austrian Economics. He is the author of the following monographs: Capitalism, Socialism and Property Rights: Why Market Socialism Cannot Substitute the Market; Money, Interest and the Structure of Production: Resolving Some Puzzles in the Theory of Capital; and a popular book The Rise and Fall of the First Galactic Empire: Star Wars and Political Philosophy.