Revisiting Frank H. Knight's 'The Ethics of Competition'

20 Pages Posted: 5 May 2019

See all articles by Ross B. Emmett

Ross B. Emmett

Arizona State University (ASU) - Center for the Study of Economic Liberty; PERC - Property and Environment Research Center

Date Written: April 4, 2019

Abstract

James M. Buchanan revisited his mentor’s famous 1923 essay “The Ethics of Competition” in an essay written for the centenary celebration of Frank Knight’s birth in 1985. Buchanan’s paper focused on the first section of Knight’s essay, and outlined why it provided an inadequate criticism of a competitive market economy. Essentially, the essay was flawed by what Buchanan understood to be a methodological ambiguity which formed the basis for Knight’s ethical critique. A year later, in Buchanan’s Nobel Lecture, he made no reference to Knight, despite have widely acknowledged in other ways his general indebtedness to Knight’s appreciation for competitive markets in forming his own approach to public choice. After reviewing the structure of Buchanan’s criticism, the paper turns to examine what Knight did with his views on ethics, economics, and social/political organization after the mid-1920s. Knight’s Weberian turn led him to abandon the “successive approximation” method he had argued in favor of in Risk, Uncertainty and Profit (1921), and instead seek an economics that provided general insights from an ideal type analysis of market interaction, combined with a) a comparative social and political institutional analysis; and b) a comparative study of ethical systems to evaluate which was appropriate to the problems of a liberal, democratic society. At the end, a brief look at Buchanan’s movement toward Knight on methodological issues after his Nobel Lecture is examined. Buchanan’s changes come from a new appreciation for increasing cost and social ideas and norms, as well as his growing appreciation for Knight’s notion of democracy as “government by discussion.”

Keywords: Frank Knight, James Buchanan, Ethics of Competition

JEL Classification: B13, B15, B25, B31, B41

Suggested Citation

Emmett, Ross B., Revisiting Frank H. Knight's 'The Ethics of Competition' (April 4, 2019). Available at SSRN: https://ssrn.com/abstract=3366596 or http://dx.doi.org/10.2139/ssrn.3366596

Ross B. Emmett (Contact Author)

Arizona State University (ASU) - Center for the Study of Economic Liberty ( email )

CPCOMM 4th Floor
United States

PERC - Property and Environment Research Center

2048 Analysis Drive
Suite A
Bozeman, MT 59718
United States

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