IT CANNOT be repeated too often that the case of perfect competition owes the fundamental importance which it always had and still has in economic theory to certain properties characteristic of it and neither to any tendency in the facts to conform to it nor any “desirability” of the state of things it depicts. From the beginning of scientific analysis of economic phenomena until comparatively recent times most economists would, it is true, have based the claims of free competition on the latter two grounds, the first of which we now all agree to be untenable, while the second is simply another illustration of how difficult it is in our field to acquire a scientific habit of mind. Their work, however, is not invalidated by these facts. For by virtue of those properties the theory of perfect competition still remains a useful and almost indispensable background with which to compare, and therefore by which to understand, any other situation, however far removed it may be from it. In view of the fact that some of our institutionalist friends are still known to harbor a belief that a typical theorist believes in free competition as a fact or, still worse, that he “advocates” it, it may even not be superfluous to point out that the theory of free competition is the only avenue to a rational theory of planning and of centralistic socialism.