Economic essays

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Monograph

Identifikator:: 1753623200

URN:: urn:nbn:de:zbw-retromon-136107

Document type:: Monograph

Title:: Economic essays

Place of publication:: New York

Publisher:: Macmillan

Year of publication:: 1927

Scope:: viii, 368 S.; Ill., graph. Darst.

Digitisation:: 2021

Collection:: Economics Books

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Document type:: Monograph

Structure type:: Chapter

Title:: The relation between statics and dynamics / John Maurice Clark

Collection:: Economics Books

THE RELATION BETWEEN STATICS AND DYNAMICS 63 fact, and actual expenses differ widely, so that their relation to price offers material for much inductive study.” Among the special situations of actual competition are those preferences and habits which give rise to “good-will,” and the ownership of brands which have some real or supposed uniqueness and thus have some of the quality of monopoly about them, but of which only the most successful can earn a consistent quasi- monopoly profit. Another situation is the state of mind among entrepreneurs which leads to sustaining the price in the face of the fact that the demand is falling off and will not take the full “supply” (a term which itself needs redefining for dynamic pur- poses). Those mores of business which resist cutthroat competi- tion and the “spoiling of the market” are phases of actual compe- tition, yet they have no place at all in the competition of abstract theory. Another situation is that of a trade in which there are one or more concerns so large that their price policy is said to “dominate” the trade, in spite of the existence of many smaller rivals. Such a situation cannot be fully and quantitatively explained by deduction from the assumption of independent and self-interested action, though a shrewd observer of human nature in business may make surmises which will afford useful first approximations and material to be tested by further inductive study. To mention only one specific instance, the degree and kind of competition among American railroads—which are clearly far from being complete monopolies—is probably not exactly the same as that found in any other business, and can best be handled by direct induction. ) age 10. The Business Cycle Assuming without argument the great importance of the busi- ness cycle and the need for inductive study in handling it, let us ask further what its effects are on some of the general assumptions which economic theory is accustomed to make and the tools it is accustomed to use. For one thing, in place of a universal ten- dency of supply and demand to equality, it exhibits a definite tendency toward persistent inequalities. And in place of supply of goods it forces us to look at the productive capacity or potential supply, if we are to get at the forces actively at work on the * This topic is given more extended treatment in Social Control of Business, Chap. IX.

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