Michael Perelman wrote:
I am sorry I do not have time for a more detailed response to this interesting thread. One of the themes I have been playing with in my writings is the idea that industries with high fixed costs and low marginal costs are prime candidates for bankruptcy without some constraint on competition.
My own PhD work on this issue (in little Zimbabwe) found, from 1974, a very high OCC in Department 1 - particularly metals processing - and rapid overaccumulation (measured by inventory stocks that started piling up, via a Census of Production that was quite accurate), but then a pretty quick contagion throughout the economy. There's no intrinsic reason why it has to hit Dep't 1 first though; think of how many service sector activities get overaccumulated very quickly (you remember those kombi taxis in SA, Michael? a prime case, as one of David Harvey's Oxford PhD students, Meshack Khosa, showed).
