seth
> -----Original Message-----
> From: michael perelman [SMTP:michael at ecst.csuchico.edu]
> Sent: Tuesday, August 18, 1998 9:25 PM
> To: lbo-talk at lists.panix.com
> Subject: Re: Global melodrama
>
> Seth asks me to try again to explain the puzzle. Suppose you have an
> economy made up of identical capital intensive factories [sounds like
> economics talk, doesn't it?]. Production goes up by 10%, so you have
> growth. But the factories all go bankrupt. [I am not pretending to
> be
> realistic]. The factories are one year old, but the owners are
> strapped for
> gold, so they sell their factories at half price to other people that
> are
> holding gold.
>
> You have 10% growth, but enormous capital losses. Where did the value
> go?
> It is as if [switching analogies] you have an enormous output of 486
> computers this year, just as the pentiums are ready to come on line
> (and
> companies will rush to buy the pentiums to be comepetitive with the
> other
> companies buying pentiums. The value of the 486's suddenly
> disappears.
>
> I hope this helps, but economic accounting is fundamentally
> metaphysical.
>
> Seth Ackerman wrote:
>
> > Maybe I'm being too accounting-oriented here, but economic growth
> means
> > growth in total income. If wages were stagnating and profits were
> > falling, who was getting the extra income?
> >
> > > -----Original Message-----
> > > From: michael perelman [SMTP:michael at ecst.csuchico.edu]
> > > Sent: Tuesday, August 18, 1998 6:12 PM
> > > To: lbo-talk at lists.panix.com
> > > Subject: Re: Global melodrama
> > >
> > > Seth asked how wages could stagnate while the economy grew, yet
> have
> > > profits fall. The solution to the riddle is that heavy competition
> > > propelled by technical change and over capacity caused capital to
> be
> > > devalued. Firms, especially railroads, went bankrupt.
> > >
> > > Barkley Rosser says that you can explain this outcome with
> monetarism.
> > > I
> > > agree that it is consistent with monetarism. I think that we
> would
> > > nearer
> > > to the truth by explaining the problem in terms of what was going
> on
> > > in the
> > > market for goods. Neither explanation is exclusive of the other.
> > >
> > > Seth Ackerman wrote:
> > >
> > > > Michael Perelman wrote:
> > > >
> > > > <<The economy grew during the "fast deflation" of the late 19th
> C.
> > > > Profits fell,
> > > > wages did not increase much, but the economy grew, leading some
> to
> > > deny
> > > > that any depression occured.>>
> > > >
> > > > How can the economy grow faster than the sum of wage growth and
> > > profit
> > > > growth?
> > > >
> > > > Seth Ackerman
> > > > FAIR
> > >
> > >
> > >
> > > --
> > > Michael Perelman
> > > Economics Department
> > > California State University
> > > Chico, CA 95929
> > >
> > > Tel. 530-898-5321
> > > E-Mail michael at ecst.csuchico.edu
> > >
>
>
>
> --
> Michael Perelman
> Economics Department
> California State University
> Chico, CA 95929
>
> Tel. 530-898-5321
> E-Mail michael at ecst.csuchico.edu
>