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EHS Abstract Submission
(c) 1999 EH.Net
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Name: Michael Perelman
Email: michael@ecst.csuchico.edu
Institution: California State University, Chico
Co-author:
Title: Shocks: Inertia, Competition and the Absence of the Core
Internet Address of abstracted work:
By mail: Economics Department
California State University, Chico
Chico, CA 95929 USA
Language: English
Abstract:
Economic history often interprets shocks as exogenous events that throw an
economy off kilter. I propose that exogenous forces are what keeps an
economy stable.
An economy with high fixed and low marginal costs lacks a core. In such a
setting, unbridled competition will lead to a collapse. What makes such
events rare is the presence of non-market forces, such as regulations,
sticky wages, tradition, or a lack of vigorous competition. When crashes do
occur, competitive forces gather momentum and technical
change accelerates. I will use the depression of the late nineteenth century
to illustrate this perspective. Finally, I will take note of the fact that
many of these same economists, including John Bates Clark, laid the
foundation for modern neo-classical economics, which now excludes the
perspective that they held at the time.
Bibliography: Perelman, Michael. "Shocks: Inertia, Competition and the
Absence of the Core." Working paper, January 1999.
Subject: V
Geographical Area: 7
Country/Region: US
Time Period: 7
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