Abstract
As emphasised in Chapter 1, this work is concerned with the way we look at economic behaviour. In this respect, generations of novel developments in economic theory building have developed an ability to portray and interpret the world in an impressive variety of perspectives. The theory of the firm is one arena in which the near gymnastic agility of economic analysis has been well exercised. Assuming adequate data, a microeconomist should be capable of analysing a given market or industry using perfect competition, monopolistic competition, monopoly, oligopoly1 utility maximising, sales revenue maximising, behavioural, M-Form and X-efficiency theories of the firm. The result is the theory of the firm has developed a decathlete’s all round facility for dealing with empirical exercises.
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Notes and References
There are a number of alternative approaches in this category, including games theory.
See, for example, Crew, 1975, p.117.
Leach, 1974, pp. 14–15 and p.120, note 1, provides a useful reminder that interpretations of structuralism are subject to strong debate amongst proponets and that interpretations (including Piaget’s) can be individualistic.
In talking of ‘the conventional economic approach’, in principle we include managerial theories of the firm in this category. In practice, for the reasons discussed above, we mean the traditional consumer theory and neoclassical theories of the firm of the type outlined in Henderson and Quandt (1971).
For a criticism that this interpretation is too simplistic, see Lévi-Strauss, 1963, p.89.
By behaviourism, we mean the psychological school associated with Watson and Skinner among others. This clarification is made necessary by the confusing tendency of some recent references in the theory of the firm to describe Cyert and March’s behavioural theory as ‘behaviourism’.
Modern developments in behaviourism have been characterised as S-O-R theory with O standing for organism. This is because the manner in which the organism processes information has become recognised as a central concern.
This was a major reason for the approach to behavioural theory adopted in Kay (1979).
I am grateful to Alec Vass, Department of Physics, Heriot-Watt University for this way of expressing the differences in approach.
At this point Hayek is comparing his interpretation with Koestler’s in ‘The Act of Creation’.
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© 1982 Neil M. Kay
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Kay, N.M. (1982). Systems and Structure. In: The Evolving Firm. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-06112-9_2
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