this very entertaining and informative book: "The first half of my answer was surely correct, and I believe now even more than I did then in the market system's flexibility, adaptability, and resourcefulness in finding new ways to make money." (emphasis added)

That George Stigler was an amazingly powerful economic mind cannot be denied. What he is talking about in that passage is the resiliency or robustness of the market economy to changing circumstances and shocks. He is alluding to the dynamic adjustment properties of the market economy, and how those adjustments are guided by relative prices. But this characteristic of the market economy is not captured in the traditional textbook model of the competitive market. In fact, as Armen Alchian and William Allen write in University Economics (1972,111), "The facts of the world fly in the face of [the implications of the textbook model]." The problem isn't the reality of dynamic markets, the problem is in our formal depiction of them on the blackboard. Product differentiation, brand name quality, the pursuit of profit, etc. are all natural economic activities. The problem is due mainly to a "misleading" understanding of the concept of competition (see Alchian and Allen, 113, fn. 1, and also 11-14). Competition is an activity, not a state of affairs. Competition is omnipresent in a world of scarcity, the form of competition varies depending on institutional environment. As F. A. Hayek wrote in "The Meaning of Competition" (1940), "The confusion between the objective facts of the situation and the character of the human