INFORMATION AND CO-ORDINATION IN AN EFFECTIVE COMPETITIVE PROCESS: Downie's evolutionary model as a means of resolving Richardson's problem with competition in the context of post-Marshallian economics
The task of the present chapter is to show that the problems of market coordination posed by Richardson are at least partially met by an evolutionary approach which recognises proprietary information, the passing of historical time and non-homogeneous expectations. This was demonstrated as early as Jack Downie's work The Competitive Process, also emanating from Oxford in the 1950s. Downie shared with Richardson not only a scepticism of Cambridge microeconomics, but also many of the solutions to the problems inherent in that orthodoxy. My argument will be that Richardson saw fundamental problems in the emerging neoclassical orthodoxy, while Downie presented a potential solution by replacing it with an alternative. While Richardson posed a problem and Downie at least implicitly suggested a solution all those years ago, the profession has chosen to examine either the problem or potential solutions only relatively recently. 2
Richardson was attempting a potentially fatal attack on the orthodox theory of markets by destroying its logical foundations. Like Philip Andrews (1964), Richardson was intent on demonstrating that the theory at the centre of our discipline was logically flawed and incapable of supporting the application made of that theory by academics and policymakers. But, unlike Andrews, Richardson was not an evangelist for some
Richardson argues that a perfectly competitive equilibrium cannot be approached because there is no means by which the information required for decision-makers can be provided; as a consequence, he argues, institutional forms observed in the world around us are attempts at solving the information problem so identified. These forms are generally identified by orthodox theory as 'market imperfections', but are required if the market is to work at all.