Thanks, Michael, for the quotation. I think that I understand the source 
of my difficulties with your previous post about fixed cost.

You opined about Wells:

> In short, Wells realized that competitive forces would not allow 
> producers to recover their investments in fixed capital. As a result, 
> the market would self-destruct. He recommended that industry be 
> allowed to organize itself into trusts, monopolies and cartels. 
> Nothing could be further from the teachings of Adam Smith and the 
> merchants! 

In your quote, there is only one use of the term "fixed." It is in this 
quoted statement. I am sure that you will agree that Wells seems to be 
referring to sunk costs, rather than fixed costs as they are presented 
in the modern textbooks.

Wells' claim, on the basis of your words, is that entrepreneurs are too 
stupid to avoid incurring sunk costs. He does not consider the 
possibility of preventing them from being stupid. Instead, he believes 
that the government should allow them to make up for their mistakes by 
improving their positions through trusts, monopolies and cartels.

In explaining this view, you refer to another dubious view held by Wells 
that the problem faced by the entrepreneurs was occurring during of an 
"overproduction crisis" that causes the prices of capital goods to fall. 
The entrepreneurs apparently made another mistake of not anticipating 
the "overproduction crisis."

To me, Wells' reasoning is very strange. It raises more questions than 
it answers. Can we trust the entrepreneurs or not? What is the cause of 
an overproduction crisis? How does falling prices of capital goods 
destroy industries?

On the surface, Wells seems like an advocate of laissez faire who does 
not understand free enterprise. But I will have to wait until I look 
more thoroughly at your book to understand the context of Wells' remarks..

Pat Gunning