> can't Keynesian policies *change* the
> amount of exit and entry required? Why isn't it possible to expand demand
> to the point where all existing manufacturing capacity can be profitably
> employed?
Here is how I would respond to Josh: Monetary and fiscal policy can certainly increase capacity utilization. In doing so, it inhibits exit. Over the long run, this policy results in an accumulation of an older, often obsolete capital stock, leaving the economy in a more fragile condition.
I guess this "productive fragility" is an analogue to Minsky's financial fragility. -- Michael Perelman Economics Department California State University Chico, CA 95929
Tel. 530-898-5321 E-Mail michael at ecst.csuchico.edu