Comment on Pereleman:

[Greg Nowell]

Mike Perelman:
Similarly, a widespread bankruptcy can lead to a
general revaluation of capital
goods, which can reinforce the initial shock.  However,
depressed conditions do,
in fact, lead to more pressure to innovate and improve
the capital stock.  During
booms, there is a tendency to just add more of the same
plant and equipment, what
economists call capital widening.

GN:
You might want to consider Sylos-Labini in all of
this.  He argues that there is always a certain impetus
to improve the productivity of capital stock, and that
since capital wears out, even in terms of relatively
depressed demand (or oligopoly) there will be
improvements in productivity.  He suggests ceteris
paribus this means that there will be a secular effect
to lay off workers, decreasing AD, with attendant
long-term problems that may be surmised.

ps.  I got your manuscript yesterday and it looks
interesting, but Jeezus, don't you believe in margins?
complainingly, gn

--
Gregory P. Nowell
Associate Professor
Department of Political Science, Milne 100
State University of New York
135 Western Ave.
Albany, New York 12222

Fax 518-442-5298