[PEN-L:33505] Re: Re: Re: Right wing sees the light! (almost)

[Eugene Coyle <eugenecoyle@xxxxxxx>]

Michael Pollock asks

>  Like who?  And where did they expound the ideas that were the opposite
> > of 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