I'm not foolish enough to think that one single factor can explain the
cataclysmic consequences of an economic crisis.  However, the rhythm
of the US economy may be seen as one of periods of intense
competition/crises and prosperity/slack competition.  The acceleration
of productivity during the Great Depression and during our recent
crisis is indicative of what I mean.

I do not intend to suggest that inequality, deregulation,
shortsightedness, overconfidence and many other factors played a role
in what is unfolding today.

I have discussed this interpretation in a number of books.  The most
relevant would be The Confiscation of American Prosperity: From
Right-Wing Extremism and Economic Ideology to the Next Great
Depression (NY: Palgrave, 2007), which in October 2007, just as the
stock market peaked.


On Thu, Aug 25, 2011 at 9:59 PM, Steve Kates <[log in to unmask]> wrote:

>
> Finally, Michael Perelman wrote, “In my book on Keynes, I argued that
> his neglect of replacement investment left a gaping hole in his
> analysis. In later works, I explained how an insufficient level of
> replacement investment was leaving the economy vulnerable.  Finally in
> 2007 (before the crisis) I wrote about how this vulnerability would lead
> to a crisis.”
>
> I am tempted to agree with this if I have understood him correctly. If
> he is saying that allowing existing capital to deteriorate will lower an
> economy’s ability to employ, then I agree and that seems to me to be
> an extension of Mill’s point. But if he is also saying that this
> absence of replacement investment was the cause of the crisis, I would
> have to withhold my assent although it is something worth thinking
> about.
-- 
Michael Perelman
Economics Department
California State University
Chico, CA
95929

530 898 5321
fax 530 898 5901
http://michaelperelman.wordpress.com