The Natural Instability of Markets : Expectations, Increasing Returns, and the Collapse of Capitalism

As Socialist states struggle to transform themselves into market economies and the United States privatizes everything from schooling to policing, the current crises in Russia and East Asia suggest that something might be amiss. In the rush to open societies to the benefits of competition, economists have overlooked the fundamental instability of competitive markets. What had seemed to be an invincible capitalist juggernaut may be reaching its apotheosis. A close look at market economies is more timely and crucial than ever. Michael Perelman argues that capitalism's victory is temporary, based as it is on an unrealistic understanding of the system's inherent risks. He analyzes the nature and causes of crisis within a market society, and along the way, he re-examines one of capitalism's most primary and unquestioned tenets, that the more competition there is, the better off society will be. This accessible book, garnished with plenty of examples and anecdotes, is an open-minded injection of common sense into the understanding of a capitalist society. Cover 1 Contents 6 Acknowledgments 8 Preface 10 Chapter 1 How Economists Work: A Prelude to the Main Theme of This Book 18 Chapter 2 The Imaginary World of Economic Equilibrium and Stability 30 Chapter 3 Cycles: Stability Within Instability 44 Chapter 4 Instability: Keynes, Schumpeter, Polanyi, and the Passenger Pigeon 58 Chapter 5 Competition in Biology and Competition in Economics 74 Chapter 6 Competition: The Hidden Costs of the Invisible Hand 94 Chapter 7 Managing Competition 120 Chapter 8 A Thumbnail Sketch of the Evolution of Competition in the U.S. Economy 142 Chapter 9 Inertia 154 Chapter 10 Loose Threads 178 Conclusion 182 References 184 Index 200 A 200 B 200 C 200 D 201 E 201 F 201 G 201 H 202 I 202 J 202 K 202 L 202 M 203 N 203 O 203 P 203 Q 204 R 204 S 204 T 205 U 205 V 205 W 205 X 205 Y 205