The firm in disequilibrium: A market process view of firm organization and strategy

When understood as an inevitable inconsistency of individual plans, disequilibrium is not only a necessary condition for the existence, and hence understanding, of the market process as we know it, it is also the glue connecting three other “Austrian” themes. In equilibrium heterogeneity of resources would have no strategic significance, specific and private knowledge would be much less problematic, and no profits net of contractual rent payments would be earned. In the real world of disequilibrium firm differences are not a mystery, rent is not an indication of inefficiency or monopoly power, and there is room to analyze, admire, reward, and consult about successful business strategy. Rent appropriation comes from ownership of valuable resources. And a successful strategy, one that earns enhanced rents, is one that acquires ownership of valuable and value-creating resources. Such a strategy is dependent for its success on superior vision (or luck), something which cannot exist in equilibrium.