The Concept of The “Pure-and-Perfect-Competition”

One definition of the “pure-and-perfect-competition (PPC)”:

Uniform products offered by all the sellers in the same industry, perfect knowledge, quantitative insignificance of each seller, no fear of retaliation by competitors in response to one’s actions, constant changes in price, and perfect ease of investment and disinvestment.

The “pure-and-perfect-competition” doctrine denounces capitalism because, as shown, businessmen refuse to suffer unnecessary losses.

Source: Capitalism by George Reisman

 

The PPC is just another example of a Utopia-like system. But mankind is imperfect therefore any social system will be imperfect. And since capitalism as well as socialism, communism, etc. is a social system it too will be imperfect. It is simple logic. But there are those who believe that man can evolve to be perfect by gov’t help. That gov’t can make a PPC system—hence socialism or even communism is formed as Karl Marx wanted.

In my college macroeconomics class I learned that equilibrium exists when supply equals demand. But this is just theoretical. It probably hardly ever happens. Supply and demand more than likely spirals chaotically around the equilibrium point. No gov’t I believe can ever prevent this behavior from happening. No matter how smart the economist they appoint. The free-market system is just too complex.