Cover image for The natural instability of markets : expectations, increasing returns, and the collapse of capitalism
The natural instability of markets : expectations, increasing returns, and the collapse of capitalism
Perelman, Michael.
Personal Author:
First edition.
Publication Information:
New York : St. Martin's Press, 1999.
Physical Description:
xiv, 188 pages ; 22 cm
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HB3711 .P377 1999 Adult Non-Fiction Central Closed Stacks

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As Socialist states struggle to transform themselves into market economies and the United States privatizes everything from schooling to policing, the current crises in Russia and East Asia suggest that something might be amiss. In the rush to open societies to the benefits of competition, economists have overlooked the fundamental instability of competitive markets. What had seemed to be an invincible capitalist juggernaut may be reaching its apotheosis. A close look at market economies is more timely and crucial than ever. Michael Perelman argues that capitalism's victory is temporary, based as it is on an unrealistic understanding of the system's inherent risks. He analyzes the nature and causes of crisis within a market society, and along the way, he re-examines one of capitalism's most primary and unquestioned tenets, that the more competition there is, the better off society will be. This accessible book, garnished with plenty of examples and anecdotes, is an open-minded injection of common sense into the understanding of a capitalist society.

Author Notes

MICHAEL PERELMAN is Professor of Economics at California State University, Chico.

Reviews 1

Choice Review

Perelman (Univ. of California, Chico) examines why unregulated markets are inherently unstable, how economists have learned to ignore this, what the consequences are for the capitalist system, and how biological models can help us understand the problem and uncover its solution. Each segment of this argument has been discussed at length in noteworthy books by other authors. Perelman's contribution is to raise an important topic and synthesize the standard arguments into a line of reasoning that leads to his favored solution to market instability: high wages (see also Perelman's earlier work, The Pathology of the US Economy: The Cost of a Low Wage System ,CH, Jan'94). Readers seeking more depth of analysis may wish to consult Daniel Hausman on the errors of economists (The Inexact and Separate Science of Economics, CH, Oct '92), Philip Mirowski on physical versus biological models in economics (More Heat than Light, 1989), Wolfgang F. Stopler on Schumpeter's dynamic models (Joseph Alois Schumpeter, CH, Jan'95), George Soros on expectations and financial crises (The Crisis of Global Capitalism, 1998), and William Greider on destructive competition and the contemporary crisis of capitalism (One World, Ready or Not: The Manic Logic of Global Capitalism, 1997). General readers; undergraduate students. M. Veseth; University of Puget Sound

Table of Contents

Acknowledgmentsp. vii
Prefacep. ix
Chapter 1 How Economists Work: A Prelude to the Main Theme of This Bookp. 1
Chapter 2 The Imaginary World of Economic Equilibrium and Stabilityp. 13
Chapter 3 Cycles: Stability Within Instabilityp. 27
Chapter 4 Instability: Keynes, Schumpeter, Polanyi, and the Passenger Pigeonp. 41
Chapter 5 Competition in Biology and Competition in Economicsp. 57
Chapter 6 Competition: The Hidden Costs of the Invisible Handp. 77
Chapter 7 Managing Competitionp. 103
Chapter 8 A Thumbnail Sketch of the Evolution of Competition in the U.S. Economyp. 125
Chapter 9 Inertiap. 137
Chapter 10 Loose Threadsp. 161
Conclusionp. 165
Referencesp. 167
Indexp. 183