mck@ratex.UUCP (Daniel Kian Mc Kiernan) (05/11/85)
Lines marked '>>>' are those of Gadfly; lines marked '>>' are mine; lines marked '>' are those of Tim Sevener. >>>[...] Capitalism has its strong points, but the misery brought >>>about by boom-and-bust overproduction is not one of them. >> >>Business cycles are indeed not a strong point of Capitalism; nor are they a >>weak point. They are, in fact, not a point of Capitalism at all, but rather >>of government manipulation of the money supply which distorts patterns of >>savings and investment. > >Come now, Dan, surely you jest. Cycles are a phenomenon of *any* >dynamic system, be it economic, ecological or biological. Tim, not all economic cycles are what are referred to as 'business cycles' or 'trade cycles'. Business cycles are a PARTICULAR type of cycle; videlicet, they are quasi-regular oscillations in the overall level of business activity. >In order for there to be *no* economic cycles whatsoever the >system would have to be *constantly* at the exact equilibrium point. >Plausibly the only way such a system could exist would be if were >actually no longer dynamic whatsover-i.e. either stagnant or dead. True, but I never claimed that there would 'be *no* economic cycles'; I said that cycles of a particular type (business cycles) are not a characteristic of Capitalism. >Indeed the whole point of neoclassical economic theory (and Marx' >statements about the dynamism of Capitalism) is that supply and >demand are dynamic and constantly shifting- such things as >price controls restrict such dynamic changes in price and supply. I am unconfortable with your claiming that the whole point of Neo-Classical economics is that supply and demand are constantly shifting; orthodox Neo-Classical economics frequently loses sight of this point, and some Classical economists were well aware of this point. >As conditions shift the equilibrium point also shifts-but responding >to these shifts involves lag effects and other factors. Yep. >As I have pointed out earlier, it is possible theoretically for >the market system to become more and more erratic under the >conditions of the cobweb effect. And as I pointed out earlier, the theory involved is unrealistically simplistic; it assumes that producers have only previous-period prices on which to make their plans. Elsewhere, you have objected to the unrealism of orthodox Neo-Classical assumptions, so why adopted some of them here? >Statements such as the above [marked '>>'] make me wonder if you are studying >economics as a science or Libertarianism as a simplistic >ideology totally divorced from either reality or logic. It's conceivable that one who thought that 'business cycles' referred to any fluctuation within any economy might think as much, but now you know better. >At the same time, I think it is just as much a mistake to assume >that economic cycles do not exist in centrally planned economies. >It is merely that such economic cycles are different in character >from market cycles and probably more tied to political shifts. Yep, but don't lose sight of the fact that business cycles are a particular type of economic cycle. Back later, DKMcK