A correspondent suggested that I read Kenneth Boulding's "In Defense
of Monopoly" (Quarterly Journal of Economics, 1945). I'm glad I did.
I really haven't read anything by Boulding before. He seems to have
been an interesting guy. In the paper, he has a little sketch of a
sort of monetarist version of Keynesianism. I would be interesting to
see what other pre-Keynesian Keynesianisms there were before the
orthodoxy took hold after World War II. (One version is Kalecki's.)
His basic presumption is that competitive capitalism suffers from an
inherent tendency toward deflation. He follows the pessimism of 1945,
including (but not citing) Alvin Hansen's secular stagnationism.
Without war, there will be deflation, even hyperdeflation.
Unlike to some monetarist or new-classical types, B thought of
deflation as a bad thing, becoming a vicious circle, a downward fall
into depression. This is where the "defense of monopoly" comes in.
It's a microeconomic "solution" to deflation. In the article,
"monopoly" describes not only regular monopolies but also
protectionist tariffs and labor unions. In the case of (war-driven)
inflation, non-price rationing was at the time generally accepted as a
way to restrict demand. B's flip side is that monopoly (broadly
defined) can resist deflation by restricting supply.
His logic is different from the standard crap. Most NC economists see
people and firms as simply responding to price signals. Though it's
not totally clear, B seems to say that people and firms also respond
to signals arising from unemployment and general deflationary
conditions, so that labor unions are a _response_ to unemployment more
than causing it (as in classical economics).
In the end, however, B would rather not have monopoly (despite the
title of the article). He prefers expansionary monetary policy
instead.
It's interesting how people wrote back then. There's hardly any math.
It's more of an essay.