I recall reading something that really stuck with me, for a while, then I forgot the exact words.
It was a quote, I think by an Austrian, who said that the free market was a race to eliminate profit. Capitalism abhors a profit. Something like that.
The idea was that is some company is making a good deal of profit, another company is attracted to the industry and sells their product at a lower price. Competition then removes the possibility of inequitable profits and the consumers are happy.
That sounds like something a neoclassical would say. Neo classicals can’t really explain the phenomena of profits; to them, it’s just the result of continuous change in preferences (arbitrage). Now Austrian’s don’t deny this (they call that entrepreneurial profits), but they believe that profit (originary interest) is a real and independent economic phenomenon (based on time preference). Thus the Neo Classical theoretical construct of perfectly competitive markets has a 0% profit rate; the Austrians flat out reject this.
Don’t Austrians tend to only refer to entrepreneurial profit, when they say profit? Don’t they consider it a bit of a misnomer to classify interest as a kind of profit? In Mises’ construction of functional distribution, interest, wages, and profit are functionally distinct, if often empirically indistinct, components of proceeds. Man qua capitalist earns interest, qua laborer earns wages, qua entrepreneur earns profit.
Conceived in this way, the notion of the evenly rotating economy as the elimination of profits is perfectly in line with Austrian thought.
