Dissatisfaction with Perfection Competition and with the Notion of Market Equilibrium

A characteristic feature of the Austrian approach to economic theory is its emphasis on the market as a process, rather than as a configuration of prices, qualities, and quantities that are consistent with each other in that they produce a market equilibrium situation. This feature of Austrian economics is closely bound up with dissatisfaction with the general use made of the concept of perfect competition.

Ludwig M. Lachmann indicated that his own unhappiness with the notion of equilibrium primarily concerns the usefulness of the Walrasian general-equilibrium construction rather than that of the simple Marshallian partial-equilibrium construction. But it is precisely in the context of the simple short-run one-good market that I shall point out some of the shortcomings of the equilibrium approach.

--Israel M. Kirzner, "Equilibrium versus Market Process," in The Foundations of Modern Austrian Economics, ed. Edwin G. Dolan (Kansas City: Sheed and Ward, 1976), 115.