Michael Pollock asks
Like who? And where did they expound the ideas that were the oppositeof what was in their textbooks?
Like who? A. T. Hadley, Economics, 1896. He wrote
"The price which will induce new competitors to enter the field is also much higher than that which will lead old ones to withdraw. No concern will quit competition as long as it can pay an appreciable part of its interest charges. It is better to lose part of your interest on every piece of goods you sell than to lose the whole of it on every piece you do not sell. As long as the price received more than covers the expense of wages and materials , each of the old factories will continue to compete. Even if it changes ownership by foreclosure it will remain in operation. But, on the other hand, no new competitor will be called into being unless the price is high enough to afford a liberal profit, after paying interest, maintenance, and other charges on fixed capital invested under modern methods. Thus prices, instead of constantly tending to gravitate toward an equitable figure, oscillate between two extremes. The rate of production, at figures which give a fair profit, is usually either much larger than the rate of consumption, or much smaller. In the former case, prices are unremunerative and unjust to the producer; in the latter case, they are oppressive to the consumer. The average price resulting from such fluctuations may perhaps be a fair one; but the wide changes of price are disastrous to all parties concerned."
So he didn't see an equilibrium but oscillation between extremes. Hadley later became President of Yale (1920?) and I think might have been president of the AEA. Hadley's passage from 1896 is pretty close in insight to what Huber had in the WSJ last Thursday -- and the remedy he pushed -- don't enforce antitrust and don't regulate -- was the same as well.
Interesting that Larry Summers who later became president of Harvard wrote something close to that with Brad De Long in 2001. What is it about the Ivy universities that they keep hiring apologists for capitalism? (rhetorical question.)
Gene Coyle
Michael Pollak wrote:
Weirdly enough, these same 19th C. economists wrote neoclassical textbooks that taught just the opposite.Like who? And where did they expound the ideas that were the opposite of what was in their textbooks? I'm sure you've written a book on this so you can just fob me off with the title :o) Michael
