ABSTRACT

This chapter shows what part is played by perfect competition in achieving simplicity of analysis and unity of explanation. The value-construct of 1870 to 1900 employed only four principles to achieve its picture of inter-dependent rational self-interest. These principles were pre-reconciliation, action in pursuit of self-interest, diminishing marginal efficacy and perfect competition. Between the value-construct and the adding-up problem there subsists a mutual reinforcement. Within a framework of stark abstraction, the value-construct shows that the adding-up problem has an answer. The demonstration of that answer is the crowning achievement and chief justification of the value-construct. Non-perfect competition can consist in the non-fulfilment of any of the necessary conditions. The value analysts were concerned, on one hand to show that an encompassing system of rational self-interested and inter-conditioning choices could be conceived; on the other to examine these choices at close range to understand their variety of detailed circumstance.