[PEN-L:6726] Re: Competitiveness

[Michael Perelman <michael@xxxxxxxxxxxxxxxxx>]

The relationship between concentration and profits must be seen
dynamically.  The formation of U.S. Steel drove up the rate of profits
in steel.  Eventually, U.S. steel drifted into incompetence so extreme
that they had to ask the workers for give backs.

Now you get to the central contradiction of market economies.  As I
mentioned before, unrestrained competition lets markets self destruct.
Protection, whether of the Keynesian sort or of a more direct kind,
tends to let firms get lazy.  In a sense, Hayek was right about Keynes
and vice versa [but don't tell anyone that I mentioned Mr. H.]  That is,
if you interfere with the market, performance suffers.  If you don't
interfere, the market self-destructs.

Such is the lesson that I get from my study of U.S. economic history
over the long run.

Tavis Barr wrote:

>
> P.S.  My other question, for both Doug and Mike, is about concentration,
> since that's how the thread started.  Please note, I'm not a Monopoly
> Capital adherent, this is really just a question about logic: Is there
> any contradiction, IYHOs, between lower profitability and increased
> concentration?  Or increased differentiation?
>
>

--
Michael Perelman
Economics Department
California State University
Chico, CA 95929

Tel. 916-898-5321
E-Mail michael@xxxxxxxxxxxxxxxxx