We are taught that competition is good. Yet, we can think of a
depression as a symptom of heightened competition.
Within this framework, what happens during a depression is what happens
with greater competition. Business gets busy laying off workers,
installing new technology [yes, the depression was a period of rapid
technical change], and finding ways to rebuild their profits.
In terms of income shares, profits fall more than wages -- as we would
expect with more competition. But the fall in workers' standard of
living is a greater threat to their being [notwithstanding our imagery
of flying bankers following the stock market crash].
The government tries to avoid excess competiition [depressions] via
government spending (i.e. military expenditures) and a lenient policy
toward anti-competitive measures. Business will tend to organize and
consolidate until they can enjoy a new period of lax competition.
--
Michael Perelman
Economics Department
California State University
Chico, CA 95929
Tel. 916-898-5321
E-Mail [EMAIL PROTECTED]
